REM 1
Rule 1-5
A- Action commencement ( Section 3 and 5)
Section 3. Cases governed. — These Rules shall govern the procedure to be
observed in actions, civil or criminal and special proceedings.
(a) A civil action is one by which a party sues another for the
enforcement or protection of a right, or the prevention or redress of a
wrong, (1a, R2)
A civil action may either be ordinary or special. Both are governed
by the rules for ordinary civil actions, subject to the specific rules
prescribed for a special civil action. (n)
(b) A criminal action is one by which the State prosecutes a person
for an act or omission punishable by law. (n)
(c) A special proceeding is a remedy by which a party seeks to
establish a status, a right, or a particular fact. (2a, R2)
Section 5. Commencement of action. — A civil action is commenced by the
filing of the original complaint in court. If an additional defendant is
impleaded in a later pleading, the action is commenced with regard to him on
the dated of the filing of such later pleading, irrespective of whether the
motion for its admission, if necessary, is denied by the court. (6a)
Case No.1
ALDAY VS. FGU INSURANCE 350 SCRA 113
Topics: Jurisdiction, docket fees, permissive counterclaim, compulsory
counterclaim
FACTS:
Respondent FGU Insurance Corporation filed a complaint with the RTC of
Makati alleging that petitioner Evangeline K. Alday owed it P114,650.76,
representing unliquidated cash advances, unremitted costs of premiums
and other charges incurred by petitioner in the course of her work as an
insurance agent for respondent. Respondent also prayed for exemplary
damages, attorneys fees, and costs of suit. Petitioner filed her answer and by
way of counterclaim, asserted her right for the payment of P104,893.45,
representing direct commissions, profit commissions and contingent bonuses
earned from 1 July 1986 to 7 December 1986, and for accumulated premium
reserves amounting to P500,000.00.In addition, petitioner prayed for
attorneys fees, litigation expenses, moral damages and exemplary damages
for the allegedly unfounded action filed by respondent.
Respondent filed a Motion to Strike Out Answer With Compulsory
Counterclaim And To Declare Defendant In Default because petitioners
answer was allegedly filed out of time. However, the trial court denied the
motion similarly rejected respondents motion for reconsideration. A few
weeks later, respondent filed a motion to dismiss petitioners counterclaim,
contending that the trial court never acquired jurisdiction over the
same because of the non-payment of docket fees by petitioner. In
response, petitioner asked the trial court to declare her counterclaim as
exempt from payment of docket fees since it is compulsory and that
respondent be declared in default for having failed to answer such
counterclaim.
The trial court granted respondent’s motion to dismiss petitioner’s
counterclaim and consequently, denied petitioners motion. The court found
petitioners counterclaim to be merely permissive in nature and held
that petitioner’s failure to pay docket fees prevented the court from
acquiring jurisdiction over the same. The trial court similarly denied
petitioners motion for reconsideration.
The Court of Appeals sustained the trial court, finding that petitioners own
admissions, as contained in her answer, show that her counterclaim is
merely permissive.
ISSUES:
1. Is the counterclaim of petitioner permissive or compulsory? 

2. Is the counterclaim of petitioner exempt from the payment of docket fees
and therefore the court acquired 
jurisdiction over the same?

RULING: 

1. The counterclaim of petitioner is PERMISSIVE. In Valencia v. Court of
Appeals, this Court capsulized the criteria or tests that may be used in
determining whether a counterclaim is compulsory or permissive,
summarized as follows:
1. Are the issues of fact and law raised by the claim and counterclaim
largely the same?

2. Would res judicata bar a subsequent suit on defendants claim absent
the compulsory counterclaim rule?
3. Will substantially the same evidence support or refute plaintiff’s claim
as well as defendants counterclaim?
4. Is there any logical relation between the claim and the counterclaim?
Another test, applied in the more recent case of Quintanilla v. Court of
Appeals, is the compelling test of compulsoriness which requires a
logical relationship between the claim and counterclaim, that is, where
conducting separate trials of the respective claims of the parties would entail
a substantial duplication of effort and time by the parties and the court.
Tested against the abovementioned standards, petitioners counterclaim for
commissions, bonuses, and accumulated premium reserves is merely
permissive. The evidence required to prove petitioners claims differs from
that needed to establish respondent’s demands for the recovery of cash
accountabilities from petitioner, such as cash advances and costs of
premiums. The recovery of respondent’s claims is not contingent or
dependent upon establishing petitioners counterclaim, such that
conducting separate trials will not result in the substantial duplication
of the time and effort of the court and the parties. One would search the
records in vain for a logical connection between the parties’ claims. This
conclusion is further reinforced by petitioners own admissions since she
declared in her answer that respondents cause of action, unlike her own, was
not based upon the Special Agents Contract. However, petitioners claims for
damages, allegedly suffered as a result of the filing by respondent of its
complaint, are compulsory.
2. NO. The counterclaim being permissive, in order for the trial court to
acquire jurisdiction over the same, petitioner is bound to pay the prescribed
docket fees. It is not simply the filing of the complaint or appropriate
initiatory pleading, but the payment of the prescribed docket fee that vests a
trial court with jurisdiction over the subject-matter or nature of the action.
Where the filing of the initiatory pleading is not accompanied by payment of
the docket fee, the court may allow payment of the fee within a reasonable
time but in no case beyond the applicable prescriptive or reglementary
period. The same rule applies to permissive counterclaims, third-party
claims and similar pleadings, which shall not be considered filed until
and unless the filing fee prescribed therefor is paid. The court may allow
payment of said fee within a reasonable time but also in no case beyond its
applicable prescriptive or reglementary period.
Meanwhile, the compulsory counterclaim of petitioner for damages based on
the filing by respondent of an allegedly unfounded and malicious suit need
not be answered since it is inseparable from the claims of respondent. If
respondent were to answer the compulsory counterclaim of petitioner, it
would merely result in the former pleading the same FACTS raised in its
complaint.
_____________________________________________________________
Case #2 KOREA TECHNOLOGIES CO., LTD. VS. , HON. ALBERTO A.
LERMA, in his capacity as Presiding Judge of Branch 256 of Regional
Trial Court of Muntinlupa City, and PACIFIC GENERAL STEEL
MANUFACTURING CORPORATION, G.R. NO. 143581. JANUARY 7, 2008
TOPIC: Requirement of docket fees and certificate of non-forum shopping in
respondent’s Answer with counterclaim.
FACTS: Petitioner KOGIES and respondent PGSMC executed a Contract
whereby KOGIES would set up an LPG Cylinder Manufacturing Plant for
respondent. Respondent unilaterally cancelled the contract on the ground
that petitioner had altered the quantity and lowered the quality of the
machineries and equipment it delivered.
Petitioner opposed informing the latter that PGSMC could not unilaterally
rescind their contract nor dismantle and transfer the machineries and
equipment on mere imagined violations by petitioner. Petitioner then filed a
Complaint for Specific Performance against respondent before the RTC.
Respondent filed its Answer with Compulsory Counterclaim asserting that it
had the full right to dismantle and transfer the machineries and equipment
because it had paid for them in full as stipulated in the contract. KOGIES
filed a motion to dismiss respondent’s counterclaims arguing that when
PGSMC filed the counterclaims, it should have paid docket fees and filed a
certificate of non-forum shopping, and that its failure to do so was a fatal
defect. The RTC dismissed the petitioner’s motion to dismiss respondent’s
counterclaims as these counterclaims fell within the requisites of compulsory
counterclaims.
ISSUE/S: WON payment of docket fees and certificate of non-forum shopping
were required in the respondent’s Answer with counterclaim?
RULING: NO. The counterclaims of PGSMC were incorporated in its Answer
with Compulsory Counterclaim in accordance with Section 8 of Rule 11,
1997 Revised Rules of Civil Procedure, the rule that was effective at the time
the Answer with Counterclaim was filed. Sec. 8 on existing counterclaim or
cross-claim states, “A compulsory counterclaim or a cross-claim that a
defending party has at the time he files his answer shall be contained
therein.” As to the failure to submit a certificate of forum shopping, PGSMC’s
Answer is not an initiatory pleading which requires a certification
against forum shopping under Sec. 524 of Rule 7, 1997 Revised Rules of
Civil Procedure. It is a responsive pleading, hence, the courts a quo did not
commit reversible error in denying KOGIES’ motion to dismiss PGSMC’s
compulsory counterclaims. At the time PGSMC filed its Answer incorporating
its counterclaims against KOGIES, it was not liable to pay filing fees for said
counterclaims being compulsory in nature. We stress, however, that effective
AUGUST 16, 2004 under Sec. 7, Rule 141, as amended by A.M. No. 04-2-04-
SC, docket fees are now required to be paid in compulsory counterclaim or
cross-claims.
_____________________________________________________________
Case #3- LEONIDES MERCADO, represented by his heirs: Racquel D.
Mercado, Jimmy D. Mercado, Henry D. Mercado, Louricar D. Mercado
and Virgilio D. Mercado, petitioners, vs. COURT OF APPEALS and SAN
MIGUEL CORPORATION, respondents. G.R. No. 169576, October 17,
2008
TOPIC: Jurisdiction, Compulsory and Permissive Counterclaim

FACTS: Leonides Mercado had been distributing respondent San Miguel
Corporation’s (SMC’s) beer products in Quiapo, Manila since 1967. SMC
extended to him a P7.5 million credit line allowing him to withdraw goods on
credit.
Mercado failed to pay for the items he withdrew on credit. To secure
his purchases, Mercado assigned three China Banking Corporation (CBC)
certificates of deposit amounting to ₱5 million to SMC and executed. Citing
the continuing hold-out agreement (which allows SMC to encash China
Banking Corporation (CBC) certificates of deposit assigned by Mercado), it
asked CBC to release the proceeds of the assigned certificates of deposit.
CBC approved SMB’s request and informed Mercado.
He also submitted three surety bonds from Eastern Assurance and
Surety Corporation (EASCO) totaling ₱2.6 million
Mercado filed an action to annul the continuing hold-out agreement
and deed of assignment in the Regional Trial Court (RTC) of Manila. He
claimed that the continuing hold-out agreement allowed forfeiture without
the benefit of foreclosure. It was therefore void pursuant to Article 2088 of
the Civil Code. SMC filed its answer with counterclaim against Mercado. SMC
sought payment of the lees products he withdrew (or purchased on credit)
worth P7,468,153.75.
During trial, Mercado acknowledged the accuracy of SMC’s
computation of his outstanding liability. SMC filed a third-party complaint
against EASCO. Thus, the RTC dismissed the complaint and ordered
Mercado and Eastern Assurance and Surety Corporation (EASCO) (to the
extent of P2.6 million or the value of its bonds) to jointly and severally pay
SMC the amount of P7,468,153.75. The CA affirmed the RTC decision in toto.
On October 28, 2005, EASCO filed a petition for review on certiorari
in this Court13 but eventually agreed to settle its liability with SMC.14 The
petition was terminated on September 19, 2007
Mercado passed away and was substituted by his heirs who filed the
petition asserting that the CA erred in affirming the RTC decision in toto. The
said decision (insofar as it ordered Mercado to pay SMC P7,468,153.75) was
void. SMC’s counterclaim was permissive in nature. Inasmuch as SMC did
not pay docket fees, the RTC never acquired jurisdiction over the
counterclaim.
ISSUE/S: Whether SMC’s counterclaim was permissive in nature, whereby
payment of docket fees is necessary for the RTC to acquire jurisdiction.
RULING: No. A counterclaim (or a claim which a defending party may have
against any party) may be compulsory or permissive. A counterclaim that
(1) arises out of (or is necessarily connected with) the transaction or
occurrence that is the subject matter of the opposing party’s claim;
(2) falls within the jurisdiction of the court and
(3) does not require for its adjudication the presence of third parties over
whom the court cannot acquire jurisdiction, is compulsory. Otherwise, a
counterclaim is merely permissive.
When Mercado sought to annul the continuing hold-out agreement and deed
of assignment (which he executed as security for his credit purchases), he in
effect sought to be freed from them. While he admitted having outstanding
obligations, he nevertheless asserted that those were not covered by the
assailed accessory contracts. For its part, aside from invoking the validity of
the said agreements, SMC therefore sought to collect the payment for the
value of goods Mercado purchased on credit. Thus, Mercado’s complaint and
SMC’s counterclaim both touched the issues of whether the continuing hold-
out agreement and deed of assignment were valid and whether Mercado had
outstanding liabilities to SMC. The same evidence would essentially support
or refute Mercado’s claim and SMC’s counterclaim.
Based on the foregoing, had these issues been tried separately, the efforts of
the RTC and the parties would have had to be duplicated. Clearly, SMC’s
counterclaim, being logically related to Mercado’s claim, was
compulsory in nature. Consequently, the payment of docket fees was not
necessary for the RTC to acquire jurisdiction over the subject matter.
Case # 4 PROTON PILIPINAS CORPORATION, AUTOMOTIVE
PHILIPPINES, ASEA ONE CORPORATION and
AUTOCORP, Petitioners, v. BANQUE NATIONALE DE PARIS,1 Respondent.
TOPIC: Commencement of Action. Payment of the correct docket fees.
FACTS:
Proton availed of the credit facilities of BNP. To guarantee the
payment of its obligation, its co-petitioners Automotive Corporation
Philippines (Automotive), Asea One Corporation (Asea) and Autocorp Group
(Autocorp) executed a corporate guarantee2 to the extent of
US$2,000,000.00. BNP and Proton subsequently entered into three trust
receipt agreements.
Under their trust agreement, Proton would receive imported motor
vehicles and hold them in trust for BNP, to be applied to its obligations to it
in case the vehicles are not sold, Proton would return them to BNP with the
documents of title.
Proton failed to deliver the proceeds and to return the unsold motor
vehicles. Proton’s guarantors refused to pay its obligation so BNP filed a
complaint ordering them to pay the initial amount of US$1,544,984.40 with
accrued interest and other related charges (outstanding obligations).

RTC Makati Clerk of Court assessed the docket fees at P352,000. The
petitioners filed a motion to dismiss the complaint by BNP for failure to pay
the correct docket fees thus preventing the RTC from acquiring jurisdiction
over the case. In addition, the petitioners allege the prematurity of the
complaint since BNP did not priorly send a demand letter.
The RTC denied the motion to dismiss and the subsequent MR. The
CA denied the appeal by way of certiorari stating that Section 7(a), Rule 141
of the Rules of Court excludes interest accruing from the principal amount
being claimed in the pleading in the computation of the prescribed filing fees.
CA denied their MR.
The petitioners argue that pursuant to Administrative Circular 11-94,
interests claimed should be included in the computation of the docket fees.
Thus since BNP underpaid, RTC never acquired jurisdiction over the case.
ISSUES:
1.) Should the computation for payment of docket fees have included the
interest claimed by the complainant? 
 not alleged, or a relief different or more than that claimed in the pleading, the
2.) Did the trial court fail to acquire jurisdiction over the case for insufficient
docket fees? 
RULING: 
 collect the corresponding fees.
1. Yes. The clerk of court should thus have assessed the filing fee by taking
into consideration "the total sum claimed, inclusive of interest, damages
of whatever kind, attorney's fees, litigation expenses, and costs, or the
stated value of the property in litigation. In fine, the docket fees paid by
respondent were insufficient.
2. No. When the complaint was filed in 1998, Rule 141 had been amended by
Administrative Circular 11-94. In Manchester Development Corp. vs. CA, this
Court held that the court acquires jurisdiction over any case only upon
payment of the prescribed docket fees. However, that the ruling in
Manchester was clarified in Sun Insurance Office, Ltd vs. Asuncion when this
Court held that in the former there was an effort to defraud the government
in avoiding to pay the correct docket fees, whereas in the latter the plaintiff
demonstrated his willingness to abide by paying the additional fees as
required.
The ruling in Sun Insurance Office was echoed in the 2005 case of Heirs of
Bertuldo Hinog v. Hon. Achilles Melicor:
Plainly, while the payment of the prescribed docket fee is a jurisdictional
requirement, even its non-payment at the time of filing does not
automatically cause the dismissal of the case, as long as the fee is paid
within the applicable prescriptive or reglementary period, more so when the
party involved demonstrates a willingness to abide by the rules prescribing
such payment. Thus, when insufficient filing fees were initially paid by the
plaintiffs and there was no intention to defraud the government, the
Manchester rule does not apply.
Respondent merely relied on the assessment made by the Clerk of Court
which turned out to be incorrect. Respondent prayed for “accrued interest
subsequent to August 15, 1998 until finally fully paid.” The complaint having
been filed on September 7, 1998, respondent’s claim includes the interest
from August 16, 1998 until such date of filing. Respondent did not, however,
pay the filing fee corresponding to its claim for interest from August 16, 1998
until the filing of the complaint on September 7, 1998. As priorly discussed,
this is required under Rule 141, as amended by Administrative Circular 11-
94, which was the rule applicable at the time. Thus, as the complaint
currently stands, respondent cannot claim the interest from August 16, 1998
until September 7, 1998, unless respondent is allowed by motion to amend
its complaint within a reasonable time and specify the precise amount of
interest petitioners owe from August 16, 1998 to September 7, 1998 and pay
the corresponding docket fee.
Sec. 2. Fees as lien. - Where the court in its final judgment awards a claim
party concerned shall pay the additional fees which shall constitute a lien on
the judgment in satisfaction of said lien. The clerk of court shall assess and
In Ayala Corporation v. Madayag,43 in interpreting the third rule laid down
in Sun Insurance regarding awards of claims not specified in the pleading,
this Court held that the same refers only to damages arising after the
filing of the complaint or similar pleading as to which the additional
filing fee therefor shall constitute a lien on the judgment.
'The amount of any claim for damages, therefore, arising on or before the
filing of the complaint or any pleading should be specified. While it is true
that the determination of certain damages as exemplary or corrective
damages is left to the sound discretion of the court, it is the duty of the
parties claiming such damages to specify the amount sought on the basis of
which the court may make a proper determination, and for the proper
assessment of the appropriate docket fees. The exception contemplated as
to claims not specified or to claims although specified are left for
determination of the court is limited only to any damages that may
arise after the filing of the complaint or similar pleading for then it will
not be possible for the claimant to specify nor speculate as to the
amount thereof.44 (Emphasis and underscoring supplied; citation
omitted)ςηαñ
WHEREFORE, the petition is GRANTED in part. The July 25, 2001 Decision
and the December 18, 2001 Resolution of the Court Appeals are hereby
MODIFIED. The Clerk of Court of the Regional Trial Court of Makati City is
ordered to reassess and determine the docket fees that should be paid by
respondent, BNP, in accordance with the Decision of this Court, and direct
respondent to pay the same within fifteen (15) days, provided the applicable
prescriptive or reglementary period has not yet expired. Thereafter, the trial
court is ordered to proceed with the case with utmost dispatch.
Case No. 5
RUBY SHELTER BUILDERS AND REALTY DEVELOPMENT
CORPORATION, Petitioner, vs.HON. PABLO C. FORMARAN III, Presiding
Judge of Regional Trial Court Branch 21, Naga City, as Pairing Judge for
Regional Trial Court Branch 22, Formerly Presided By HON. NOVELITA
VILLEGAS-LLAGUNO (Retired 01 May 2006), ROMEO Y. TAN, ROBERTO
L. OBIEDO and ATTY. TOMAS A. REYES, Respondents. G.R. No.
175914 February 10, 2009
TOPIC: Payment of docket fees is not only mandatory, but also jurisdictional
FACTS:
Ruby Shelter, herein petitioner, obtained a loan amounting to
P95,700,620.00 from respondents Romeo Y. Tan (Tan) and Roberto L. Obiedo
(Obiedo) secured by real estate mortgages consisting of five (5) parcels of land
in the name of the petitioner. After several negotiations and despite the
extension granted by Tan and Obiedo, petitioner still wasn't able to pay. Tan
and Obiedo, by virtue of real estate mortgages, executed Deeds of Absolute
Sale in their favor consisting the five parcels of land. It is provided for in the
Memorandum Agreement that if petitioner fails to pay the loaned amount,
five Deeds of Absolute Sale would be executed in favor of Tan and Obiedo.
On March 16, 2006, petitioner filed a Complaint before the Regional Trial
Court for declaration of nullity of the deeds of sale and damages believing
that respondents' action was one which was incapable of pecuniary
estimation. Upon filing its complaint, petitioner paid docket fees amounting
to P13,644.25 as assessed by the Office of the Clerk of Court. It was stated
that it only wanted to annul the deeds of absolute sale, so therefor, no issue
of title or recovery of possession is present to classify it as a real action.
Pursuant to the Memorandum of Agreement, there was a provision which
states that if Ruby Shelter brought suit against respondents, it would be
amounting to P10,000,000.00 as liquidated damages inclusive of costs and
attorney's fees. Tan and Obiedo moved to dismiss the complaint contending
that the Regional Trial Court (RTC) did not acquire jurisdiction over the case
since the case involved recovery of real property making it a real action which
requires payment of docket fees equivalent to a percentage of the fair market
value of the land amounting to P720,392.60.
RTC and Court of Appeals both ruled in favor of Tan and Obiedo ordering
Ruby Shelter to pay additional docket fees. Hence, this petition.
ISSUE: Whether or not the RTC acquired jurisdiction over the case.
RULING: No.
In Manchester Development Corporation v. Court of Appeals, the Court
explicitly pronounced that "[t]he court acquires jurisdiction over any case
only upon the payment of the prescribed docket fee." Hence, the payment of
docket fees is not only mandatory, but also jurisdictional.
In Sun Insurance Office, Ltd. (SIOL) v. Asuncion, the Court laid down
guidelines for the implementation of its previous pronouncement in
Manchester under particular circumstances, to wit:
1. It is not simply the filing of the complaint or appropriate initiatory
pleading, but the payment of the prescribed docket fee, that vests a trial
court with jurisdiction over the subject matter or nature of the action. Where
the filing of the initiatory pleading is not accompanied by payment of the
docket fee, the court may allow payment of the fee within a reasonable time
but in no case beyond the applicable prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third-party claims and
similar pleadings, which shall not be considered filed until and unless the
filing fee prescribed therefor is paid. The court may also allow payment of
said fee within a reasonable time but also in no case beyond its applicable
prescriptive or reglementary period.
3. Where the trial court acquires jurisdiction over a claim by the filing of the
appropriate pleading and payment of the prescribed filing fee but,
subsequently, the judgment awards a claim not specified in the pleading, or
if specified the same has been left for determination by the court, the
additional filing fee therefor shall constitute a lien on the judgment. It shall
be the responsibility of the Clerk of Court or his duly authorized deputy to
enforce said lien and assess and collect the additional fee.
In the Petition at bar, petitioner did not pay the correct amount of docket
fees. Petitioner should pay docket fees in accordance with Section 7(a), Rule
141 of the Rules of Court, as amended. Consistent with the liberal tenor of
Sun Insurance, the RTC, instead of dismissing outright petitioner’s
Complaint, granted petitioner time to pay the additional docket fees. Despite
the seeming munificence of the RTC, petitioner refused to pay the additional
docket fees assessed against it, believing that it had already paid the correct
amount before, pursuant to Section 7(b)(1), Rule 141.
The docket fees under Section 7(a), Rule 141, in cases involving real property
depend on the fair market value of the same: the higher the value of the real
property, the higher the docket fees due. In contrast, Section 7(b)(1), Rule
141 imposes a fixed or flat rate of docket fees on actions incapable of
pecuniary estimation.
In order to resolve the issue of whether petitioner paid the correct amount of
docket fees, it is necessary to determine the true nature of its Complaint. The
dictum adhered to in this jurisdiction is that the nature of an action is
determined by the allegations in the body of the pleading or Complaint
itself, rather than by its title or heading. Petitioner persistently avers that
its Complaint is primarily for the annulment of the Deeds of Absolute Sale.
Based on the allegations and reliefs in the Complaint alone, one would get
the impression that the titles to the subject real properties still rest with
petitioner; and that the interest of respondents Tan and Obiedo in the same
lies only in the Deeds of Absolute Sale sought to be annulled. What petitioner
failed to mention in its Complaint was that respondents Tan and Obiedo
already had the Memorandum of Agreement, which clearly provided for the
execution of the Deeds of Absolute Sale, registered on the TCTs over the five
parcels of land, then still in the name of petitioner.
Petitioner never expressed surprise when such FACTS and
circumstances were established before the RTC, nor moved to amend its
Complaint accordingly. Even though the Memorandum of Agreement was
supposed to have long been registered on its TCTs over the five parcels of
land, petitioner did not pray for the removal of the same as a cloud on its
title. In the same vein, although petitioner alleged that respondents Tan and
Obiedo forcibly took physical possession of the subject real properties,
petitioner did not seek the restoration of such possession to itself. And
despite learning that respondents Tan and Obiedo already secured TCTs over
the subject properties in their names, petitioner did not ask for the
cancellation of said titles. The only logical and reasonable explanation is that
petitioner is reluctant to bring to the attention of the Court certain FACTS
and circumstances, keeping its Complaint safely worded, so as to institute
only an action for annulment of Deeds of Absolute Sale. Petitioner
deliberately avoided raising issues on the title and possession of the real
properties that may lead the Court to classify its case as a real action. No
matter how fastidiously petitioner attempts to conceal them, the allegations
and reliefs it sought in its Complaint appears to be ultimately a real action,
involving as they do the recovery by petitioner of its title to and possession of
the five parcels of land from respondents Tan and Obiedo.
A REAL ACTION is one in which the plaintiff seeks the recovery of real
property; or, as indicated in what is now Section 1, Rule 4 of the Rules of
Court, a real action is an action affecting title to or recovery of possession of
real property.
Section 7, Rule 141 of the Rules of Court, prior to its amendment by A.M. No.
04-2-04-SC, had a specific paragraph governing the assessment of the docket
fees for real action, to wit:
In a real action, the assessed value of the property, or if there is none, the
estimated value thereof shall be alleged by the claimant and shall be the
basis in computing the fees.
While it is true that petitioner does not directly seek the recovery of title or
possession of the property in question, his action for annulment of sale
and his claim for damages are closely intertwined with the issue of
ownership of the building which, under the law, is considered
immovable property, the recovery of which is petitioner's primary
objective. The prevalent doctrine is that an action for the annulment or
rescission of a sale of real property does not operate to efface the
fundamental and prime objective and nature of the case, which is to recover
said real property. It is a real action.
A real action indisputably involves real property. The docket fees for a real
action would still be determined in accordance with the value of the real
property involved therein; the only difference is in what constitutes the
acceptable value. In computing the docket fees for cases involving real
properties, the courts, instead of relying on the assessed or estimated value,
would now be using the fair market value of the real properties (as stated in
the Tax Declaration or the Zonal Valuation of the Bureau of Internal
Revenue, whichever is higher) or, in the absence thereof, the stated value of
the same.
WHEREFORE, premises considered, the instant Petition for Review is hereby
DENIED. The Decision, dated 22 November 2006, of the Court of Appeals in
CA-G.R. SP No. 94800, which affirmed the Orders dated 24 March 2006 and
29 March 2006 of the RTC, Branch 22, of Naga City, in Civil Case No. RTC-
2006-0030, ordering petitioner Ruby Shelter Builders and Realty
Development Corporation to pay additional docket/filing fees, computed
based on Section 7(a), Rule 141 of the Rules of Court, as amended, is hereby
AFFIRMED. Costs against the petitioner.
Case # 6-
SAINT LOUIS UNIVERSITY, INC., Petitioner, v. EVANGELINE C.
COBARRUBIAS, Respondent. G.R. No. 187104 : August 3, 2010
TOPIC: DOCKET FEES; APPEALS; PERFECTION; NON-PAYMENT-EFFECTS
FACTS: Cobarrubias is an associate professor of the petitioner and an active
member of the union of faculty and employees. The Collective Bargaining
Agreements contained the following provision that for teaching employees in
college who fail the yearly evaluation, who are retained for three cumulative
years in five years, shall be on forced leave for one regular semester during
which period all benefits due them shall be suspended. Petitioner placed
Cobarrubias on forced leave for failing to achieve the required rating points
(85, 77, and 72.9, below the required rating of 87).
To reverse the imposed forced leave, Cobarrubias sought recourse from the
CBA’s grievance machinery but the parties failed to settle their dispute.
Cobarruubias filed a case for illegal forced leave or illegal suspension with
DOLE but circulation and mediation again failed.
Cobarrubias argued that the CA already resolved the forced leave issue in a
prior case between the parties, CA-G.R. SP No. 90596,8 ruling that the forced
leave for teachers who fail their evaluation for three (3) times within a five-
year period should be coterminous with the CBA in force during the same
five-year period. On the other hand, Petitioner argued that said CA decision
is not yet final for there is still a pending appeal.
The VA dismissed the complaint, then Cobarrubias filed with the CA a
petition for review under Rule 43 of the Rules of Court, but failed to pay
the required filing fees and to attach to the petition copies of the
material portions of the record. The CA responded by dismissing the
petition for procedural lapses. Nevertheless, Cobarrubias filed a motion for
reconsiderationand attached copies of the material portions of the record and
the postal money orders.
She maintained that the ends of justice and fair play are better served if the
case is decided on its merits. The CA reinstated the petition.
ISSUE: Whether the CA is correct in reinstating the petition despite the
failure of Cobarrubias to pay the appeal docket fees on time.
HELD: Appeal is not a natural right but a mere statutory privilege, thus,
appeal must be made strictly in accordance with the provision set by
law.25 Rule 43 of the Rules of Court provides that appeals from the
judgment of the VA shall be taken to the CA, by filing a petition for review
within fifteen days from the receipt of the notice of judgment. Upon the filing
of the petition, the petitioner shall pay to the CA clerk of court the
docketing and other lawful fees; non-compliance with the procedural
requirements shall be a sufficient ground for the petition’s dismissal.
Thus, payment in full of docket fees within the prescribed period is not only
mandatory, but also jurisdictional. It is an essential requirement, without
which, the decision appealed from would become final and executory as
if no appeal has been filed.
Procedural rules are not to be belittled or dismissed simply because their
non-observance may have prejudiced a party's substantive rights; like all
rules, they are required to be followed. However, there are recognized
exceptions to their strict observance, such as:
(1) Most persuasive and weighty reasons;
 of Attorney in favor of her sister Daisy M. Placer (Placer) authorizing the
(2) To relieve a litigant from an injustice not commensurate with his failure to
comply with the prescribed procedure;
(3) Good faith of the defaulting party by immediately paying within a
reasonable time from the time of the default;
(4) The existence of special or compelling circumstances;
 occupying portion of the said property refused to vacate premises
(5) The merits of the case;
 despite demand. Petitioners and co-defendants asserted that they did not
(6) A cause not entirely attributable to the fault or negligence of the party
favored by the suspension of the rules;
(7) A lack of any showing that the review sought is merely frivolous and
dilatory;

(8) The other party will not be unjustly prejudiced thereby;

(9) Fraud, accident, mistake or excusable negligence without the appellant's
fault;

(10) Peculiar, legal and equitable circumstances attendant to each case;

(11) In the name of substantial justice and fair play;

(12) Importance of the issues involved; and

(13) Exercise of sound discretion by the judge, guided by all the attendant
circumstances.
Thus, there should be an effort, on the part of the party invoking liberality, to
advance a reasonable or meritorious explanation for his/her failure to
comply with the rules, in this case, no explanation has been given.
Case No. 7
ALONZO GIPA, IMELDA MARO LLANO, JUANITO LUDOVICE, VIRGILIO
GOJIT, DEMAR BIT ANGCOR, FELIPE MONTALBAN AND DAISY M.
PLACER,1 Petitioners,
vs.
SOUTHERN LUZON INSTITUTE as represented by its Vice-President For
Operations and Corporate Secretary, RUBEN G. ASUNCION, Respondent.
G.R. No.177425 June 18, 2014
TOPIC: “Concomitant to the liberal interpretation of the rules of procedure
should be an effort on the part of the party invoking liberality to adequately
explain his failure to abide by the rules." Those who seek exemption from the
application of the rule have the burden of proving the existence of exceptionally
meritorious reasons warranting such departure.”
Parties to a Civil Action; Rule 3, Sections 2 and 3.
FACTS: On February 26, 1996 respondent Southern Luzon Institute (SLI)
filed a complaint for recovery of ownership and possession with damages
against petitioners Gipa and others defendants including a certain Rosita
Montalban (Rosita). During trial, defendant Rosita executed a Special Power
latter to represent her in the case and to sign any and all papers in relation
thereto.
SLI alleged that it is the absolute owner of a parcel of land situated in Bulan,
Sorsogon. However, petitioners and co-defendants who had been informally
heed SLI’s demand to vacate as they believe that they have the right to stay
on the said property relying on the fact that they and their predecessors in
interest occupied the property since the 1950s.
The RTC ruled in favor of SLI having proven its ownership of the property by
preponderance of evidence. The said court gave weight to the Miscellaneous
Sales Application over the property which became the basis of the issuance of
title under its name and testimony of the draftsman of the National Housing
Authority. It rejected the claim of petitioners and co-defendants which only
relied on documentary evidence consisting mostly of tax declarations and
other documents which are self-serving and could not be conclusive evidence
of ownership. Petitioners and co-defendants filed a notice of appeal before the
CA.
The CA dismissed the appeal in its resolution since the it was not shown that
appellate court docket fees and other lawful fees were paid. Petitioners and
co-defendants promptly filed a motion for reconsideration to which they
attached a certification from the RTC that they paid the appeal fee in the
amount of P3000. The CA granted the motion and reinstated the appeal.
Subsequently, the CA through a resolution further required petitioners and
co-defendants to remit within ten days from notice the amount of P30 for
legal research fund which was apparently was not included in the P3000
appeal fee previously paid by them. Despite the lapse of nine (9) months from
their counsel’s receipt of said resolution, petitioners failed to comply. Hence,
the CA dismissed the appeal for nonpayment of the docket and other lawful
fees within the reglementary period as provided under Section 4 of Rule 41 of
the Rules of Court.
ISSUE/S:
1. Whether or not Placer should be included as a petitioner.
2. Whether or not the CA gravely erred in dismissing the appeal for the
failure of petitioners to remit the P30 for legal research fund after having
advanced a substantial portion of docket fees.
RULING:
1. The Court in accordance with the disquisition made in this decision
impleaded Placer but did not consider her as petitioner: “The caption of the
present Petition includes Placer as one of the petitioners. In fact, the other
petitioners even authorized her to sign the verification and certification of
non-forum shopping in their behalf. A review of the records, however, shows
that she was not one of the defendants before the RTC. Her only participation
therein was that she represented her sister Rosita as one of the defendants
by virtue of a Special Power of Attorney which the latter executed in her
favor. Notably in the present Petition, Placer appears to have been impleaded
in her personal capacity and not as Rosita’s representative. This cannot be
done. It bears emphasizing that an appeal on certiorari, as in this case, is a
continuation of the original suit. Hence, the parties in the original suit must
also be the parties in such an appeal. Placer, therefore, not being a party in
the complaint before the RTC has no personality to continue the same on
appeal and cannot be considered as a petitioner. At the most, her only role in
this Petition was to sign the verification and certification of non-forum
shopping for and in behalf of petitioners.” 

2. The petition fails. Petitioners concede to the fact that payment of the full
amount of docket fees within the prescribed period is not a mere
technicality of law or procedure but a jurisdictional requirement they
nevertheless they are praying for the relaxation of the application of the
rule on the payment of the appeal fee in the name of substantial justice
and equity. The Court held that "concomitant to the liberal interpretation of
the rules of procedure should be an effort on the part of the party invoking
liberality to adequately explain his failure to abide by the rules.” Those who
seek exemption from the application of the rule have the burden of proving
the existence of exceptionally meritorious reason warranting such departure.
Petitioners’ failure to advance any explanation as to why they failed to pay
the correct docket fees or to complete payment of the same within the period
allowed by the CA is thus fatal to their cause. Hence, a departure from the
rule on the payment of the appeal fee is unwarranted. 

Case No. 8
RODGING REYES, Petitioner, v. PEOPLE OF THE PHILIPPINES AND
SALUD M. GEGATO, Respondents. G.R. No. 193034, July 20, 2015
FACTS:
Petitioner, in a complaint filed by private respondent Salud M. Gegato, was
charged with Grave Threats before MCTC Bayugan, Agusan Del Sur.
Before arraignment, petitioner filed a Motion to Quash based on the ground
of jurisdiction and that the crime is not Grave Threats under Article 282 of
the Revised Penal Code, but Other Light Threats under Article 285,
paragraph 2 of the same Code.
MCTC found the petitioner guilty beyond reasonable doubt. On
appeal, the RTC rendered its judgment finding the petitioner guily beyond
reasonable doubt of Light threats. Thus, petitioner filed with the Court of
Appeals a Motion for Extension of Time to File a Petition for Review. However,
instead of filing a petition for review within the 15- day period allowed by the
CA, petitioner filed a second Motion for Extension of Time asking for another
15 days within which to file his petition for review. Afterwhich, petitioner filed
his petition. Hereafter, the CA, in its Resolution dated August 2, 2007,
dismissed the petition. The petitioner filed three Motions for Reconsiderations
before the CA, all of which were denied. Hence, the present petition.
ISSUE:
1. Whether or not the right of the petitioner to file an appeal under Rule 45
may be barred by filing three motions for reconsiderations

2. Whether or not the right to appeal may be barred by failure to pay correct
docket fees on time
 manifests its willingness to abide by the rules by paying additional docket
RULING:
YES. 1.At the outset, the Court emphasizes that second and subsequent
motions for reconsideration are, as a general rule, prohibited. Section 2, Rule
52 of the Rules of Court provides that "no second motion for reconsideration
of a judgment or final resolution by the same party shall be entertained." The
rule rests on the basic tenet of immutability of judgments. "At some point, a
decision becomes final and executory and, consequently, all litigations must
come to an end."
The general rule, however, against second and subsequent motions for
reconsideration admits of settled Neypes v. Court of Appeals, exceptions. In
the Court declared:
In setting aside technical infirmities and thereby giving due course to tardy
appeals, we have not been oblivious to or unmindful of the extraordinary
situations that merit liberal application of the Rules. In those situations
where technicalities were dispensed with, our decisions were not meant to
undermine the force and effectivity of the periods set by law. But we hasten
to add that in those rare cases where procedural rules were not stringently
applied, there always existed a clear need to prevent the commission of a
grave injustice. Our judicial system and the courts have always tried to
maintain a healthy balance between the strict enforcement of procedural
laws and the guarantee that every litigant be given the full opportunity for
the just and proper disposition of his cause.
2. YES. The circumstances surrounding this case do not warrant the
relaxation of the rules. Petitioner failed to present compelling justification or
reason to relax the rules of procedure. The CA ruled that, “[t]he petitioner's
attribution to inadvertence (as the cause) of his failure to indicate a complete
statement of material dates and to attach pertinent documents material to
the petition is not compelling or reasonable enough for the Court to disregard
the mandate in Rule 42, Sec. 3 of the Rules. The rule is that payment in full
of the docket fees within the prescribed period is mandatory.
In Manchester v. Court of Appeals , it was held that a court acquires
jurisdiction over any case only upon the payment of the prescribed docket
fee. The strict application of this rule was, however, relaxed two (2) years
after in the case of Sun Insurance Office, Ltd. v. Asuncion ,wherein the Court
decreed that where the initiatory pleading is not accompanied by the
payment of the docket fee, the court may allow payment of the fee within a
reasonable period of time, but in no case beyond the applicable prescriptive
or reglementary period. This ruling was made on the premise that the
plaintiff had demonstrated his willingness to abide by the rules by paying
United Overseas Bank v. Ros, the additional docket fees required. Thus, in
the more recent case of the Court explained that where the party does not
deliberately intend to defraud the court in payment of docket fees, and
fees when required by the court, the liberal doctrine enunciated in Sun
Insurance Office, Ltd., and not the strict regulations set in Manchester, will
apply. Admittedly, this rule is not without recognized qualifications. The
Court has declared that in appealed cases, failure to pay the appellate court
docket fee within the prescribed period warrants only discretionary as
opposed to automatic dismissal of the appeal and that the court shall
exercise its power to dismiss in accordance with the tenets of justice and fair
play, and with great deal of circumspection considering all attendant
circumstances.
In that connection, the CA, in its discretion, may grant an additional period
of fifteen (15) days only within which to file the petition for review upon
proper motion and the payment of the full amount of the docket and other
lawful fees and the deposit for costs before the expiration of the reglemetary
period and that no further extension shall be granted except for the most
compelling reason and in no case to exceed fifteen (15) days.
Petitioner now begs this Court for leniency in the interest of justice. While
there is a crying need to unclog court dockets, on the one hand, there is, on
the other, a greater demand for resolving genuine disputes fairly and
equitably, for it is far better to dispose of a case on the merit which is a
primordial end, rather than on a technicality that may result in injustice.
However, [i]t is only when persuasive reasons exist that the Rules may be
relaxed to spare a litigant of an injustice not commensurate with his failure
to comply with the prescribed procedure. In the present case, petitioner failed
to convince this Court of the need to relax the rules and the eventual
injustice that he will suffer if his prayer is not granted
Case No. 9
ELIZABETH SY-VARGAS, PETITIONER, VS. THE ESTATE OF ROLANDO
OGSOS, SR. AND ROLANDO OGSOS, JR., RESPONDENTS.
Facts:
Rolando Ogsos, Sr. and the Heirs of Fermina Pepico, on February 10,
1994, entered into a Contract of Lease covering 5 parcels of agricultural land
owned by the latter, with an area of 23 hectares, more or less, located in
Maaslum, Manjuyod, Negros Oriental. Ogsos, Sr. agreed to pay the Heirs of
Fermina 230 piculs or 290.95 liquid-kilogram (lkg.) of centrifugal sugar every
crop year, starting from crop year 1994-1995 to crop year 2000-2001, as
lease rental.
In, 1996 the lease contract was extended for three more years,
ending until the end of crop year 2004. On that same year, the said contract
was amended, and the lease rental modified from piculs or lkg. centrifugal
sugar every crop year to P 150,000.00 cash, beginning the crop year 1996-
1997.
On April 27, 2000, petitioner Elizabeth Sy-Vargas, and Kathryn, who
are among the heirs of Fermina, filed a Complaint for Specific
Performance and Damages against respondents, before the Regional
Trial Court of Dumaguete City, Branch 36, claiming that the lease
rentals from crop year 1994-1995 to crop year 1998-1999 were not paid.
The crop year 1999-2000 was not included by reason of the respondents’
abandonment of the leased premises.
Summons was served in May 2000, but respondent Ogsos, Jr. filed a
motion to admit answer and answer to complaint on December 17, 2002,
after two years that the complaint was filed. Petitioner filed on January 28,
2003 an opposition thereto, and moved to declare the respondents in
default, which the RTC granted.
The respondents filed a motion for reconsideration to the RTC, but
was denied. The respondents elevated the matter via a petition for certiorari
to the CA, where the petition was granted and remanded to the RTC. The CA
ordered the RTC to admit respondents’ answer to give them the opportunity
to be heard and to present their side on the merits of the case.
In their answer, respondents alleged that they had faithfully
complied with their obligations as stated in the lease contract and its
subsequent amendments. They denied abandoning the leased premises and
claimed that sometime in December 1998, petitioner unlawfully took
possession of the leased premises and appropriated for themselves the
sugarcane ready for harvest under the pretext that they would apply the
proceeds thereof to the unpaid rent. On March 22, 2000, Ogsos, Sr. died.
Respondents also averred that they lost profits when petitioner took
possession of the leased premises. Accordingly, the respondents filed a
counterclaim for the lost profits plus damages.
On June 6, 2005, respondents moved for the dismissal of the
complaint. The RTC dismissed the case without prejudice.
On December 15, 2005, respondents moved for the hearing of their
counterclaim. The RTC required petitioner to submit a comment, but none
was filed. On February 9, 2006, the RTC, in an Order, set the case for
reception of evidence on respondents’ counterclaim.
On February 28, 2006, respondents filed an Ex-Parte Motion to Set
Case for Pre-Trial, which was granted by the RTC. The petitioner and their
counsel failed to appear at the pre-trial and to file their pre-trial brief. Thus,
respondents filed a manifestation with motion to present evidence ex-parte,
praying that petitioner be declared in default, and that respondents be
allowed to present evidence on their counterclaim ex-parte, which the RTC
granted in an Order dated June 28, 2016.
Petitioner, on August 16, 2006, moved to quash the June 28, 2006
Order, which was denied on September 1, 2006 on the ground that the
period to ask for reconsideration or for the lifting of the order had already
lapsed.
On October 17, 2006, petitioner filed a motion to dismiss
respondents’ counterclaim, arguing that the same were permissive and that
respondents had not paid the appropriate docket fees. The RTC, denied the
said motion, declaring respondents’ counterclaim as compulsory; thus
holding that the payment of the required docket fees was no longer
necessary.
The RTC granted respondents’ counterclaim, and ordered
petitioner to pay respondents. In its ruling, it found that Ogsos, Sr.
faithfully paid the lease rentals during the crop years 1994-1997, but
eventually stopped their payments when petitioner took possession and
harvested the sugarcane in the leased premises. Petitioner appealed to the
CA.
The CA affirmed the ruling of the RTC. The CA ruled that the RTC
was correct in ruling that respondents’ counterclaim is not permissive but
compulsory; hence, payment of docket fees was not necessary.
The counsel of petitioner received the CA Decision on March 14,
2014. On March 31, 2014, petitioner filed their motion for reconsideration,
which was denied in the Resolution dated October 1, 2015 for being filed out
of time. Thus, this petition for review on certiorari.
ISSUES:
Whether or not the CA correctly ruled that respondents’ counterclaim
for damages is compulsory and not permissive in nature, and thus, no
payment of docket fees is required.
RULING:
The nature of a counterclaim is determinative of whether or not the
counterclaimant is required to pay docket fees. The rule in permissive
counterclaimants is that for the trial court to acquire jurisdiction, the
counterclaimant is bound to pay the prescribed docket fees. On the other
hand, the prevailing rule with respect to compulsory counterclaims is that no
filing fees are required for the trial court to acquire jurisdiction over the
subject matter.
In general, a counterclaim is any claim which a defending party may
have against an opposing party. A compulsory counterclaim is one which,
being cognizable by the regular courts of justice, arises out of or is
connected with the transaction or occurrence constituting the subject
matter of the opposing party’s claim and does not require for its
adjudication the presence of third parties of whom the court cannot
acquire jurisdiction. A compulsory counterclaim is barred if not set up in
the same action.
A counterclaim is permissive if it does not arise out of or is not
necessarily connected with the subject matter of the opposing party’s claim.
It is essentially an independent claim that may be filed separately in another
case.
In Spouses Mendiola v. CA, the Court had devised teists in
determining whether or not a counterclaim is compulsory is compulsory or
permissive:
The four tests to determine whether a counterclaim is compulsory or
not are the following, to wit: (a) Are the issues of fact or law raised by the
claim and the counterclaim largely the same? (b) Would res judicata bar a
subsequent suit on defendant’s claims, absent the compulsory counterclaim
rule? (c) Will substantially the same evidence support or refute plaintiff’s
claim as well as the defendant’s counterclaim? and (d) Is there any logical
relation between the claim and the counterclaim, such that the conduct of
separate trials of the respective claims of the parties would entail a
substantial duplication of effort and time by the parties and the court? If
these tests result in affirmative answers, the counterclaim is compulsory.
Based on the abovementioned standards, the Court finds that the
counterclaim of respondents is permissive in nature. This is because: (a) the
issue in the main case, is entirely different from the issue in the
counterclaim; (b) since petitioner and respondents’ respective causes of
action arouse from completely different occurrences, the latter would not be
barred by res judicata had they opted to litigate its counterclaim in a
separate proceeding; (c) the evidence required to prove petitioner’s claim that
respondents failed to pay lease rentals is likewise different from the evidence
required to prove respondents’ counterclaim that petitioner and Kathryn are
liable for damages for performing acts in bad faith; and (d) the recovery of
petitioner’s claim is not contingent or dependent upon proof of respondents’
counterclaim, such that conducting separate trials will not result in the
substantial duplication of the time and effort of the court and the parties.
By reason of the respondents’ counterclaim being permissive, and
not compulsory as held by the courts a quo, respondents are required to pay
docket fees. However, it must be clarified that respondents’ failure to pay the
required docket fees, per se, should not necessarily lead to the dismissal of
the counterclaim. It has long been settled that while the court acquires
jurisdiction over any case only upon the payment of the prescribed docket
fee, its non-payment at the time of the filing of the initiatory pleading does
not automatically cause its dismissal provided that: (a) the fees are paid
within a reasonable period; and (b) there was no intention on the part of
the claimant to defraud the government.
Here, respondents cannot be faulted for non-payment of docket fees
in connection with their counterclaim, primarily because as early as
November 16, 2006, the RTC had already found such counterclaim to be
compulsory in nature. Such finding was then upheld in the July 2, 2007,
RTC Decision and affirmed on appeal by the CA in its assailed Decision. As
such, the lower courts did not require respondents to pay docket fees and
even proceeded to rule on their entitlement thereto. Verily, respondents’
reliance on the findings of the courts a quo, albeit erroneous, exhibits their
good faith in not paying the docket fees. Instead, the docket fees required
shall constitute a judgment lien on the monetary awards in respondents’
favor. In Intercontinental Broadcasting Corporation v, Legasto, citing Section
2, Rule 141 of the Rules of Court, the Court held that in instances where a
litigant’s non-payment of docket fees was made in good faith and without any
intention of defrauding the government, the clerk of court of the court a quo
should be ordered to assess the amount of deficient docket fees due from
such litigant, which will constitute a judgment lien on the amount awarded
to him, and enforce such lien, as in this case.
Wherefore, the petition is DENIED. The Decision and Resolution of
the CA are hereby AFFIRMED with MODIFICATION. A judgment lien shall
be imposed on the monetary award given to the respondents corresponding
to the unpaid docket fees on the permissive counterclaim.
Case No. 10
WOODROW B. CAMASO, Petitioner, v. TSM SHIPPING (PHILS), INC.,
UTKILEN, AND/OR JONES TULOD, Respondents.
Facts
Camaso alleged that on July 15, 2014, he signed a contract of employment
with respondents TSM Shipping (Phils), Inc., Utkilen, artd Jones Tulod
(respondents) to work as a Second Mate on-board the vessel "M/V
Golfstraum," for a period of six (6) months and with basic monthly salary of
US$1,178.00.4On October 18, 2014, he joined his vessel of
assignment.5 Prior to said contract, Camaso claimed to have been working for
respondents for almost five (5) years and boarded eight (8) of their vessels.
Sometime in November 2013, Camaso complained of a noticeable obstruction
in his throat which he described as akin to a "fishbone coupled [with]
coughing."7 By February 2014, his situation worsened as he developed
lymph nodules on his jawline, prompting him to request for a medical
check-up while in Amsterdam. As Camaso was initially diagnosed with
tonsillar cancer, he was recommended for medical repatriation to
undergo extensive treatment. Upon repatriation to the Philippines on
September 8, 2014, he reported at respondents' office and was referred to a
certain Dr. Nolasco of St. Luke's Medical Center for testing. After a series of
tests, it was confirmed that Camaso was indeed suffering from tonsillar
cancer. Consequently, he underwent eight (8) chemotherapy sessions and
radiation therapy for 35 cycles which were all paid for by respondents. He
likewise received sickwage allowances from the latter.9Thereafter,
respondents refused to shoulder Camaso's medical expenses, thus,
forcing the latter to pay for his treatment. Believing that his sickness was
work-related and that respondents remained silent on their obligation,
Camaso filed the instant complaint for disability benefits, sickwage
allowance, reimbursement of medical and hospital expenses, and other
consequential damages before the National Labor Relations Commission
(NLRC), docketed as NLRC Case No. OFW (M) 07-09270-14. After efforts for
an amicable settlement between the parties failed, they were ordered to file
their respective position papers.
The LA and NLRC Rulings
In a Decision dated November 28, 2014, the Labor Arbiter (LA) ruled in
Camaso's favor and, accordingly, ordered respondents to pay him his total
and permanent disability benefits in the amount of US$60,000.00, plus ten
percent (10%) of the total money claims as attorney's fees. However, the LA
dismissed his other monetary claims for lack of merit.
On appeal, \NLRC promulgated a Decision14dated March 19, 2015 reversing
the LA ruling and, consequently, dismissed Camaso's complaint for lack of
merit. Camaso moved for its reconsideration, but was denied in a
Resolution15 dated April 28, 2015. Aggrieved, he filed a petition
for certiorari before the CA.
The CA Ruling
CA dismissed Camaso's petition "for non-payment of the required docketing
fees as required under Section 3, Rule 46 of the Revised Rules of Court."18
Dissatisfied, Camaso filed a Motion for Reconsideration dated August 29,
2015, arguing, inter alia, that a check representing the payment of the
required docket fees was attached to a copy of his petition filed before the CA.
He further claimed that upon verification of his counsel's messenger, the
Division Clerk of Court admitted that it was simply overlooked.
In a Resolution dated March 4, 2016, the CA denied Camaso's motion for lack
of merit. Citing the presumption of regularity of official duties, the CA gave
credence to the explanation of Myrna D. Almira, Officer-in-Charge of the CA
Receiving Section, that there was no cash, postal money order, or check
attached to Camaso's petition when it was originally filed before the CA.
In any event, the CA held that assuming that a check was indeed attached to
the petition, such personal check, i.e., Metrobank check dated July 6, 2015
under the personal account of a certain Pedro L. Linsangan, is not a mode
of payment sanctioned by the 2009 Internal Rules of the Court of
Appeals (2009 IRCA), which allows only payment in cash, postal money
order, certified, manager's or cashier's checks payable to the CA.
Hence, this petition.chanroblesvirtuallawlibrary
The Issue Before the Court
The primordial issue for the Court's resolution is whether or not the CA
correctly dismissed Camaso's petition for certiorari before it for nonpayment
of docket fees.
The Court's Ruling
The petition is meritorious.
Section 3, Rule 46 of the Rules of Court provides that in original actions filed
before the CA, such as a petition for certiorari, the payment of the
corresponding docket fees is required, and that the failure to comply with the
same shall be sufficient ground for the dismissal of such action, viz.:c
Section 3. Contents and filing of petition, effect of non-compliance with
requirements. - The petition shall contain the full names and actual
addresses of all the petitioners and respondents, a concise statement of the
matters involved, the factual background of the case, and the grounds relied
upon for the relief prayed for.
In actions filed under Rule 65, the petition shall further indicate the material
dates showing when notice of the judgment or final order or resolution
subject thereof was received, when a motion for new trial or reconsideration,
if any, was filed and when notice of the denial thereof was received.
x x x x
The petitioner shall pay the corresponding docket and other lawful fees
to the clerk of court and deposit the amount of P500.00 for costs at the
time of the filing of the petition.
The failure of the petitioner to comply with any of the foregoing
requirements shall be sufficient ground for the dismissal of the
petition. (Emphases and underscoring supplied)
In Bibiana Farms & Mills, Inc. v. NLRC, the Court nevertheless explained that
while non-payment of docket fees may indeed render an original action
dismissible, the rule on payment of docket fees may be relaxed whenever the
attending circumstances of the case so warrant:chanRoblesvirtualLawlibrary
Under the foregoing rule, non-compliance with any of the requirements shall
be a sufficient ground for the dismissal of the petition. Corollarily, the rule is
that a court cannot acquire jurisdiction over the subject matter of a
case, unless the docket fees are paid. And where the filing of the
initiatory pleading is not accompanied by payment of the docket fees,
the court may allow payment of the fee within a reasonable time but in
no case beyond the applicable prescriptive or reglementary period.
In several cases, however, the Court entertained certain exceptions due to
the peculiar circumstances attendant in these cases, which warrant a
relaxation of the rules on payment of docket fees. It was held in La Salette
College v. Pilotin [463 Phil. 785 (2003)], that the strict application of the
rule may be qualified by the following: first, failure to pay those fees
within the reglementary period allows only discretionary, not
automatic, dismissal; second, such power should be used by the court in
conjunction with its exercise of sound discretion in accordance with the
tenets of justice and fair play, as well as with a great deal of
circumspection in consideration of all attendant circumstances.
Thus, in Villamor v. [CA] [478 Phil. 728 (2004)], the Court sustained the
decision of the CA to reinstate the private respondents', appeal despite
having paid the docket fees almost one year after the notice of appeal was
filed, finding that there is no showing that the private respondents
deliberately refused to pay the requisite fee within the reglementary period
and abandon their appeal. The Court also found that it was imperative for
the CA to review the ruling of the trial court to avoid a miscarriage of justice.
Thus, the Court concluded, "Under the circumstances obtaining in the
case at bar, we see no cogent reason to reverse the resolutions of the
respondent court. It is the policy of the court to encourage hearing of
appeals on their merits. To resort to technicalities which the petitioner
capitalizes on in the instant petition would only tend to frustrate rather
than promote substantial justice."24 (Emphases and underscoring
supplied)

Verily, the failure to pay the required docket fees per se should not
necessarily lead to the dismissal of a case. It has long been settled that
while the court acquires jurisdiction over any case only upon the payment of
the prescribed docket fees, its non-payment at the time of filing of the
initiatory pleading does not automatically cause its dismissal provided that:
(a) the fees are paid within a reasonable period; and (b) there was no
intention on the part of the claimant to defraud the government. 25cralawred
Here, it appears that when Camaso filed his certiorari petition
through his counsel and via mail, a Metrobank check dated July 6, 2015
under the account name of Pedro L. Linsangan was attached thereto to serve
as payment of docket fees. Although this was not an authorized mode of
payment under Section 6, Rule VIII27 of the 2009 IRCA, the attachment of
such personal check shows that Camaso exerted earnest efforts to pay the
required docket fees. Clearly, this exhibits good faith and evinces his
intention not to defraud the government. In this relation, the assertion of
the Officer-in-Charge of the CA Receiving Section that there was no check
attached to Camaso's certiorari petition is clearly belied by the fact that when
it was examined at the Office of the Division Clerk of Court, the check was
found to be still stapled thereto.
In light of the foregoing circumstances, the Court deems it
appropriate to relax the technical rules of procedure in the interest of
substantial justice and, hence, remands the instant case to the CA for the
resolution of its substantial merits. Upon remand, the CA is directed to
order Camaso to pay the required docket fees within a reasonable period
of thirty (30) days from notice of such order.
WHEREFORE, the petition is GRANTED. The Resolutions dated August 12,
2015 and March 4, 2016 of the Court of Appeals (CA) in CA G.R. SP No.
141278-UDK are hereby SET ASIDE. Accordingly, the instant case
is REMANDED to the CA for further proceedings as discussed in this
Decision.
____________________________________________________________________________
Sec. 3. One suit for a single cause of action.
A party may not institute more than one suit for a single cause of
action.
Sec. 4. Splitting a single cause of action; effect of.
If two or more suits are instituted on the basis of the same cause of
action, THE FILING OF ONE OR A JUDGMENT UPON THE MERITS in any
one is available as a ground for the dismissal of the others.
Sec. 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 may have against an opposing party, subject
to the following conditions:
(a) The party joining the causes of action shall comply with the rules on
joinder of parties;
(b) The joinder shall NOT INCLUDE SPECIAL CIVIL ACTIONS or actions
governed by special rules;
(c) Where the causes of action are between the same parties but pertain to
different venues or jurisdictions, THE JOINDER MAY BE ALLOWED IN THE
REGIONAL TRIAL COURT PROVIDED ONE OF THE CAUSES OF ACTION
FALLS WITHIN THE JURISDICTION OF SAID COURT AND THE VENUE
LIES THEREIN; AND
(d) Where the claims in all the causes of action are principally for recovery of
money, the AGGREGATE AMOUNT claimed shall be the test of jurisdiction.
Case No. 1
DYNAMIC BUILDERS VS PRISBITERO 755 SCRA 90
Doctrine:
For local government infrastructure projects, Regional Trial Courts may issue
provisional injunctive reliefs against government infrastructure projects only
when (1) there are compelling and substantial constitutional violations; (2)
there clearly exists a right in esse ; (3) there is a need to prevent grave and
irreparable injuries; (4) there is a demonstrable urgency to the issuance of
the injunctive relief; and (5) when there are public interest at stake in
restraining or enjoining the project while the action is pending that far
outweighs (a) the inconvenience or costs to the party to whom the project is
awarded and (b) the public benefits that will result from the completion of the
project. The time periods for the validity of temporary restraining orders
issued by trial courts should be strictly followed. No preliminary injunction
should issue unless the evidence to support the injunctive relief is clear and
convincing.
FACTS:
On December 28, 2005, the Municipality of Valladolid, Negros Occidental,
through its Bids and Awards, published an invitation to bid for the
construction of a 1, 050 lineal meter rubble concrete seawall along the
municipality’s shoreline. It is known as the Construction Shoreline
Protection Project. On January 17, 2006, the Bids and Awards Committee
conducted a pre-bid conference attended by six (6) prospective contractors
including Dynamic Builders. Three (3) out of the seven (7) contractors that
had secured bidding documents in order to bid "submitted letters of
6
withdrawal."
On April 21, 2006, the Bids and Awards Committee issued Resolution No. 7
affirming the award of contract to HLJ
Thus, only the remaining four (4) bidders. Construction and Enterprise for
the construction of the 1,050-lineal-meter Construction Shoreline Protection
Project amounting to P31,922,420.37 On September 4, 2006 and pursuant to
Article XVII, Section 58 of Republic Act No. 9184, otherwise known as the
Government Procurement Reform Act, Dynamic Builders filed the Petition for
Certiorari before the Regional Trial Court of Bago City, Negros Occidental,
assailing Mayor Presbitero's Decision and Resolution Simultaneously,
Dynamic Builders filed a dated September 4, 2006 for prohibition with
application for temporary restraining order and/or writ of preliminary
injunction before the Supreme Court.
Petitioner Dynamic Builders submits that Article XVII, Section 58 of Republic
Act No. 9184 implicitly allowed it to simultaneously file a Petition for
Certiorari before the Regional Trial Court assailing the protest case on the
merits, and another Petition before this court for injunctive remedies.
ISSUE: Whether or not the petitioner has violated the rules on forum
shopping by instituting two suits before the RTC and SC
RULING:
Rule 2, Section 3 of the Rules of Court provides that "[a] party may not
institute more than one suit for a single cause of action." Moreover, Section 4
discusses the splitting of a single cause of action in that "if two or more suits
are instituted on the basis of the same cause of action, the filing of one or a
judgment upon the merits in any one is available as a ground for the
dismissal of the others." The splitting of a cause of action "violate[s] the
policy against multiplicity of suits, whose primary objective [is] to avoid
unduly burdening the dockets of the courts."
This Petition seeks to enjoin the execution of public respondent's Decision
and Resolution on the protest — the same Decision and Resolution sought to
be set aside in the Petition before the Regional Trial Court. In essence,
petitioner seeks the same relief through two separate Petitions filed before
separate courts. This violates the rule against forum shopping.
Private respondent alleges that petitioner did not even notify the Regional
Trial Court of Bago City, Negros Occidental, of its Petition filed before this
court.
The Rules of Court provides for original concurrent jurisdiction by the
Regional Trial Court, the Court of Appeals, and this court in entertaining
petitions for certiorari, prohibition, or mandamus. However, parties must
adhere to the principle of hierarchy of courts.
The hierarchy of courts must be respected. The doctrine with respect to
hierarchy of courts was designed so that this court will have more time to
focus on its constitutional tasks without the need to deal with causes that
also fall within the lower courts' competence.
This court acts on petitions for extraordinary writs under Rule 65 "only when
absolutely necessary or when serious and important reasons exist to justify
an exception to the policy." Consistent with these rules and doctrines, the
remedy contemplated by Article XVII, Section 58 of Republic Act No. 9184 is
either an action under Rule 65 before the Regional Trial Court or the proper
action filed before this court. However, direct resort to this court can
prosper only when the requisites for direct invocation of this court's
RULE 3
PARTIES TO CIVIL ACTIONS
Section 1. Who may be parties; plaintiff and defendant.
Only natural or juridical persons, or entities authorized by law may be
parties in a civil action. The term "plaintiff" may refer to the claiming party,
the counter-claimant, the cross-claimant, or the third (fourth, etc.) party
plaintiff. The term "defendant" may refer to the original defending party, the
defendant in a counterclaim, the cross-defendant, or the third (fourth, etc.)
party defendant.
JOINDER OF PARTIES
Sec. 6. Permissive joinder of parties.
All persons in whom or against whom any right to relief in respect to or
arising out of the same transaction or series of transactions is alleged to
exist, whether jointly, severally, or in the alternative, may, except as
otherwise provided in these Rules, join as plaintiffs or be joined as
defendants in one complaint, where any question of law or fact common
to all such plaintiffs or to all such defendants may arise in the action;
but the court may make such orders as may be just to prevent any plaintiff
or defendant from being embarrassed or put to expense in connection with
any proceedings in which he may have no interest.
Sec. 7. Compulsory joinder of INDISPENSABLE PARTIES.
Parties in interest without whom no final determination can be had of an
action shall be joined either as plaintiffs or defendants
Sec. 8. NECESSARY PARTY.
A necessary party is one who is not indispensable but who ought to be joined
as a party if complete relief is to be accorded as to those already parties,
or for a complete determination or settlement of the claim subject of the
action.
Sec. 12. CLASS SUIT.
 When the subject matter of the controversy is one of common or
general interest to many persons so numerous that it is
impracticable to join all as parties,
 a number of them which the court finds to be sufficiently numerous
and
 representative as to fully protect the interests of all concerned may
sue or defend for the benefit of all. Any party in interest shall have
the right to intervene to protect his individual interest.
Sec. 16. Death of party; duty of counsel.
` Whenever a party to a pending action dies, and the claim is not
thereby extinguished, it shall be the duty of his counsel to inform the court
within thirty (30) days after such death of the fact thereof, AND to give the
name and address of his legal representative or representatives. Failure of
counsel to comply with this duty shall be a ground for disciplinary action.
The heirs of the deceased may be allowed to be substituted for the
deceased, without requiring the appointment of an executor or administrator
and the court may appoint a guardian ad litem for the minor heirs.
The court shall forthwith order said legal representative or
representatives to appear and be substituted within a period of thirty (30)
days from notice.
If no legal representative is named by the counsel for the deceased
party, or if the one so named shall fail to appear within the specified period,
the court may order the opposing party, within a specified time, to procure
the appointment of an executor or administrator for the estate of the
deceased and the latter shall immediately appear for and on behalf of the
deceased. The court charges in procuring such appointment, if defrayed by
the opposing party, may be recovered as costs.
Sec. 17. Death or separation of a party who is a public officer.
When a public officer is a party in an action in his official capacity
and during its pendency dies, resigns, or otherwise ceases to hold office, the
action may be continued and maintained by or against his successor IF,
WITHIN THIRTY (30) DAYS AFTER THE SUCCESSOR TAKES OFFICE or
such time as may be granted by the court, it is satisfactorily shown to the
court by any party that there is a substantial need for continuing or
maintaining it and that the successor adopts or continues or threatens to
adopt or continue the action of his predecessor. Before a substitution is
made, the party or officer to be affected, unless expressly assenting thereto,
shall be given reasonable notice of the application therefor and accorded an
opportunity to be heard.
Sec. 18. INCOMPETENCY OR INCAPACITY.
If a party becomes incompetent or incapacitated, the court, upon motion with
notice, may allow the action to be continued by or against the incompetent or
incapacitated person assisted by his legal guardian or guardian ad
litem.
Sec. 19. TRANSFER OF INTEREST.
In case of any transfer of interest, the action may be continued by or
against the original party, UNLESS the court upon motion directs the person
to whom the interest is transferred to be substituted in the action or joined
with the original party.
Sec. 20. ACTION ON CONTRACTUAL MONEY CLAIMS.
When the action is for recovery of money arising from contract,
express or implied, and the defendant dies before entry of final judgment in
the court in which the action was pending at the time of such death, it shall
not be dismissed but shall instead be allowed to continue until entry of final
judgment. A favorable judgment obtained by the plaintiff therein shall be
enforced in the manner especially provided in these Rules for prosecuting
claims against the estate of a deceased person.
RELUCIO VS. LOPEZ 373 SCRA 578
TOPIC: REAL PARTY IN INTEREST; NECESSARY PARTY
FACTS:
Angelina Meija Lopez filed a petition for Appointment as Sole Administratix of
Conjugal Partnership of Properties, Forfeiture, etc. against her husband
Alberto Lopez and Imelda Relucio, for Alberto abandoned Angelina and her
four children and maintained an illicit relationship with Relucio.
"It was further alleged that defendant Lopez and petitioner Relucio, during
their period of cohabitation since 1976, have amassed a fortune consisting
mainly of stockholdings in Lopez-owned or controlled corporations,
residential, agricultural, commercial lots, houses, apartments and buildings,
cars and other motor vehicles, bank accounts and jewelry. These properties,
which are in the names of defendant Lopez and petitioner Relucio singly or
jointly or their dummies and proxies, have been acquired principally if not
solely through the actual contribution of money, property and industry of
defendant Lopez with minimal, if not nil, actual contribution from petitioner
Relucio
A motion to dismiss was filed by Relucio on the ground that Angelina Lopez
has no cause of action against her. The judge of the RTC denied her Motion
to Dismiss on the ground that some of the properties are registered in her
name. A motion for reconsideration was filed by Relucio but the same was
denied by the RTC. Relucio then filed a petition for certiorari with the CA
which denied the same.
Hence the appeal to the Supreme Court.

ISSUE: Whether Relucio is an indispensable party or only a necessary
party.
HELD: “A real party in interest is one who stands "to be benefited or
injured by the judgment of the suit."In this case, petitioner would not be
affected by any judgment in Special Proceedings M-3630.
If petitioner is not a real party in interest, she cannot be an indispensable
party. An indispensable party is one without whom there can be no final
determination of an action.19 Petitioner's participation in Special
Proceedings M-36-30 is not indispensable. Certainly, the trial court can issue
a judgment ordering Alberto J. Lopez to make an accounting of his conjugal
partnership with respondent, and give support to respondent and their
children, and dissolve Alberto J. Lopez' conjugal partnership with
respondent, and forfeit Alberto J. Lopez' share in property co- owned by him
and petitioner. Such judgment would be perfectly valid and enforceable
against Alberto J. Lopez. Nor can petitioner be a necessary party in Special
Proceedings M-3630.
A necessary party as one who is not indispensable but who ought to be
joined as party if complete relief is to be accorded those already parties,
or for a complete determination or settlement of the claim subject of
the action. In the context of her petition in the lower court, respondent
would be accorded complete relief if Alberto J. Lopez were ordered to account
for his alleged conjugal partnership property with respondent, give support to
respondent and her children, turn over his share in the co-ownership with
petitioner and dissolve his conjugal partnership or absolute community
property with respondent.
The complaint is by an aggrieved wife against her husband.
Nowhere in the allegations does it appear that relief is sought against
petitioner. Respondent's causes of action were all against her husband.
The first cause of action is for judicial appointment of respondent as
administratrix of the conjugal partnership or absolute community property
arising from her marriage to Alberto J. Lopez. Petitioner is a complete
stranger to this cause of action. Article 128 of the Family Code refers only to
spouses, to wit:
"If a spouse without just cause abandons the other or fails to comply with his
or her obligations to the family, the aggrieved spouse may petition the court
for receivership, for judicial separation of property, or for authority to be the
sole administrator of the conjugal partnership property xxx"
The administration of the property of the marriage is entirely between them,
to the exclusion of all other persons. Respondent alleges that Alberto J. Lopez
is her husband. Therefore, her first cause of action is against Alberto J.
Lopez. There is no right-duty relation between petitioner and respondent that
can possibly support a cause of action. In fact, none of the three elements of
a cause of action exists.
The second cause of action is for an accounting "by respondent
husband."14 The accounting of conjugal partnership arises from or is an
incident of marriage.
Petitioner has nothing to do with the marriage between respondent Alberto J.
Lopez. Hence, no cause of action can exist against petitioner on this ground.
Case # 2
CONSTANTE AMOR DE CASTRO and CORAZON AMOR DE
CASTRO, Petitioners, vs. COURT OF APPEALS and FRANCISCO
ARTIGO, Respondents.
TOPIC: REAL PARTY IN INTEREST; AGENCY
FACTS: Petitioners De Castro were co-owners of four (4) lots located at EDSA
corner New York and Denver Streets in Cubao, Quezon City. In a letter,
Francisco Antigo was authorized by the De Castros to act as real estate
broker in the sale of these properties for the amount of P23,000,000.00, five
percent (5%) of which will be given to him as commission.
Antigo found Times Transit Corporation, represented by its president Mr.
Rondaris, as a prospective buyer which desired to buy two (2) lots only,
specifically lots 14 and 15. Eventually, the sale of lots 14 and 15 was
consummated.
Antigo however received only P48,893.76 as commission. He asserted that
his total commission should be P352,500.00 which is five percent (5%) of the
agreed price of P7,050,000.00 paid by Times Transit Corporation to the De
Castro for the two (2) lots. Francisco Artigo then sued petitioners Constante
A. De Castro and Corazon A. De Castro to collect the unpaid balance of his
broker’s commission from the De Castros. One of the defenses advanced by
the De Castro is that complaint failed to implead their other siblings who
were co-owners as well.
CA: The Court of Appeals affirmed in toto the decision of the trial court.
Where it finds defendants Constante and Corazon Amor de Castro jointly and
solidarily liable to plaintiff the sum of
ISSUE: Whether or not the case should be dismissed
The De Castros argue that Artigo’s complaint should have been dismissed for
failure to implead all the co-owners of the two lots. The De Castros claim that
Artigo always knew that the two lots were co-owned by Constante and
Corazon with their other siblings Jose and Carmela whom Constante merely
represented. The De Castros contend that failure to implead such
indispensable parties is fatal to the complaint since Artigo, as agent of all the
four coowners, would be paid with funds co-owned by the four co-owners.
HELD: No. An indispensable party is one whose interest will be affected by
the court’s action in the litigation, and without whom no final determination
of the case can be had. The joinder of indispensable parties is mandatory and
courts cannot proceed without their presence. Whenever it appears to the
court in the course of a proceeding that an indispensable party has not been
joined, it is the duty of the court to stop the trial and order the inclusion of
such party.
However, the rule on mandatory joinder of indispensable parties is not
applicable to the instant case. Under the note/letter sent by the De Castro
to Antigo, a contract of agency was clearly constituted between
Constante and Artigo. Whether Constante appointed Artigo as agent, in
Constante’s individual or representative capacity, or both, the De Castros
cannot seek the dismissal of the case for failure to implead the other co-
owners as indispensable parties.
The De Castros admit that the other co-owners are solidarily liable under the
contract of agency, citing Article 1915 of the Civil Code, which reads: Art.
1915. If two or more persons have appointed an agent for a common
transaction or undertaking, they shall be solidarily liable to the agent for all
the consequences of the agency. The solidary liability of the four co-owners,
however, militates against the De Castros theory that the other co-owners
should be impleaded as indispensable parties. When the law expressly
provides for solidarity of the obligation, as in the liability of co-
principals in a contract of agency, each obligor may be compelled to pay
the entire obligation. The agent may recover the whole compensation from
any one of the co-principals, as in this case.
Case No. 3
G.R. No. 141463 - August 6, 2002
VICTOR ORQUIOLA and HONORATA ORQUIOLA, Petitioners, vs. HON.
COURT OF APPEALS, HON. VIVENCIO S. BACLIG, Presiding Judge,
Regional Trial Court, Branch 77, Quezon City, THE SHERIFF OF
QUEZON CITY and HIS/HER DEPUTIES and PURA KALAW LEDESMA,
substituted by TANDANG SORA DEVELOPMENT
CORPORATION, Respondents.
TOPIC: RULE 3 - Section 9. Non-joinder of necessary parties to be pleaded?
FACTS: Pura Kalaw Ledesma was the registered owner of Lot 689 located in
Tandang Sora, QC. This parcel of land was adjacent to certain portions of Lot
707 of the Piedad Estates, registered in the name of Herminigilda Pedro.
Pedro sold Lot 707-A and 707-B to Mariano Lising who then registered both
lots and Lot 707-C in the name of M.B. Lising Realty and subdivided them
into smaller lots. Certain portions of the subdivided lots were sold to third
persons including herein petitioners, spouses Victor and Honorata Orquiola
(1964).
Sometime in 1969, Ledesma filed a complaint, docketed as Civil Case No. Q-
12918, with the Regional Trial Court of Quezon City against Herminigilda
Pedro and Mariano Lising for allegedly encroaching upon Lot 689. During
the pendency of the action, Tandang Sora Development Corporation replaced
Ledesma as plaintiff by virtue of an assignment of Lot 689 made by Ledesma
in favor of said corporation.
On August 21, 1991, the trial court finally adjudged defendants Pedro and
Lising jointly and severally liable for encroaching on plaintiff’s land.
To prohibit Judge Baclig of the RTC-QC from issuing a writ of demolition and
the Quezon City sheriff from implementing the alias writ of execution,
petitioners filed with the CA a petition for prohibition with prayer for a
restraining order and preliminary injunction on April 17, 1998 on the ground
that they bought the subject parcel of land in good faith and for value, and
since they were not impleaded in Civil Case No. Q-12918, the writ of
demolition issued in connection therewith cannot be enforced against them
because to do so would amount to deprivation of property without due
process of law.
CA dismissed the petition and held that the petitioners were considered
privies who derived their rights from Lising by virtue of the sale and could be
reached by the execution order
ISSUE/S: WON the decision in the Civil Case Q-12918 can be enforced
against petitioners even though they were not impleaded thereto?
RULING: NO, petitioners are not privies (interested in the outcome of the
action) and cannot be bound by the judgment against Lising and his
predecessors-in-interests.
The Medina doctrine relied upon by the CA is markedly different from the one
before the court. In the present case, petitioners acquired the lot before the
commencement of Civil Case No. Q-12918 and petitioners acquired the
registered title in their own names.
In other words, the sale to petitioners was made before Pura Kalaw Ledesma
claimed the lot. Petitioners could reasonably rely on Mariano Lising’s
Certificate of Title which at the time of purchase was still free from any third
party claim.
CHINA BANKING CORPORATION VS. MERCEDES OLIVER 390 SCRA 263
Topic: RULES 1-5, Specifically in this case Rule 3, Sec . 7
FACTS: In August 1995, Pangan Lim, Jr. and a certain Mercedes M. Oliver
opened a joint account in China Banking Corporation (hereinafter
Chinabank) at EDSA Balintawak Branch. Lim and Oliver applied for a P17
million loan, offering as collateral a 7,782 square meter lot located in
Tunasan, Muntinlupa and covered by TCT No. S-50195 in the name of Oliver.
The bank approved the application. On November 17, 1995, Lim and Oliver
executed in favor of Chinabank a promissory note for P16,650,000, as well as
a Real Estate Mortgage on the property. The mortgage was duly registered
and annotated on the original title under the custody of the Registry of Deeds
of Makati and on the owners duplicate copy in the banks possession. The
mortgage document showed Mercedes Oliver’s address to be No. 95 Malakas
Street, Diliman, Quezon City. For brevity, she is hereafter referred to as
OLIVER ONE.
On November 18, 1996, respondent claiming that she is Mercedes M. Oliver
with postal office address at No. 40 J.P. Rizal St., San Pedro, Laguna, filed an
action for annulment of mortgage and cancellation of title with damages
against Chinabank, Register of Deeds, and Deputy Register of Deeds of
Makati. Respondent, whom we shall call as OLIVER TWO, claimed that she
was the registered and lawful owner of the land subject of the real estate
mortgage; that the owners duplicate copy of the title had always been in her
possession; and that she did not apply for a loan or surrender her title to
Chinabank.[2] She prayed that: (1) the owners duplicate copy surrendered to
Chinabank as well as the original title with the Registry of Deeds be
cancelled; (2) the mortgage be declared null and void; and (3) the Registry of
Deeds be ordered to issue a new and clean title in her name.
On January 31, 1997, Chinabank moved to dismiss the case for lack of
cause of action and non-joinder of an indispensable party, the
mortgagor. On March 13, 1997, Judge Norma C. Perello issued an order
denying the motion to dismiss. On April 7, 1997, Chinabank filed with the
Court of Appeals a petition for certiorari with prayer for the issuance of a writ
of preliminary injunction and/or restraining order to enjoin enforcement of
the March 13, 1997 order and further action on the case. The Court of
Appeals directed respondent Oliver Two to file her comment and deferred
action on the prayer for the issuance of the preliminary injunction pending
submission of the comment.
On June 30, 1997, respondent Oliver Two moved to declare petitioner
Chinabank in default. She pointed out that since petitioner received the
order denying the motion to dismiss on March 21, 1997, it had only until
April 7, 1997 to file its answer to the complaint. However, until the filing of
the motion for default, no answer had been filed yet. The trial court granted
the motion and declared petitioner in default in its order dated July 17,
1997. Accordingly, the Defendant Bank is declared in default as summons
was served on It as early as December 16, 1996, but until date they have not
filed an Answer nor any responsive pleading and instead, It filed a Motion to
Dismiss, which was denied by this Court on March 13, 1997.
The filing of a CERTIORARI to question the Orders by this Court did not toll
the period for Defendants to answer the complaint. Therefore, the
reglementary period for the filing of responsive pleading has long expired.
Consequently, petitioner Chinabank filed a supplemental petition on August
11, 1997, seeking annulment of the
July 17, 1997 order. It argued that the special civil action for certiorari filed
in the Court of Appeals interrupted the proceedings before the trial court,
thereby staying the period for filing the answer.
On June 1, 1998, the Court of Appeals promulgated the assailed decision,
finding no grave abuse of discretion committed by the trial judge in ruling
that the Rules of Court provided the manner of impleading parties to a case
and in suggesting that petitioner file an appropriate action to bring the
mortgagor within the courts jurisdiction. As to the judgment by default, the
Court of Appeals said that an order denying the motion to dismiss is
interlocutory and may not be questioned through a special civil action for
certiorari. In this case, petitioner Chinabank should have filed its answer
when it received the March 13, 1997 order denying the motion to dismiss.
The special civil action for certiorari with the Court of Appeals did not
interrupt the period to file an answer, there being no temporary restraining
order or writ of preliminary injunction issued.
ISSUE: Whether or not the mortgagor Mercedes Oliver, referred to as OLIVER
ONE, is an indispensable party to the case without whom no final
determination could be had of an action.
RULING: No. Petitioners contention is far from tenable. An indispensable
party is a party in interest, without whom no final determination can be had
of an action. However, mortgagor Oliver One’s absence from the case does
not hamper the trial court in resolving the dispute between respondent Oliver
Two and petitioner. A perusal of Oliver Twos allegations in the complaint
below shows that it was for annulment of mortgage due to petitioners
negligence in not determining the actual ownership of the property, resulting
in the mortgages annotation on TCT No. S-50195 in the Registry of Deeds
custody. To support said allegations, respondent Oliver Two had to prove (1)
that she is the real Mercedes M. Oliver referred to in the TCT, and (2) that
she is not the same person using that name who entered into a deed of
mortgage with the petitioner. This, respondent Oliver Two can do in her
complaint without necessarily impleading the mortgagor Oliver One. Hence,
Oliver One is not an indispensable party in the case filed by Oliver Two.
Further, a declaration of the mortgages nullity in this case will not
necessarily prejudice mortgagor Oliver One. The bank still needs to initiate
proceedings to go after the mortgagor, who in turn can raise other defenses
pertinent to the two of them. A party is also not indispensable if his presence
would merely permit complete relief between him and those already parties to
the action, or will simply avoid multiple litigation, as in the case of
Chinabank and mortgagor Oliver One. The latter’s participation in this case
will simply enable petitioner Chinabank to make its claim against her in this
case, and hence, avoid the institution of another action. Thus, it was the
bank who should have filed a third-party complaint or other action versus
the mortgagor Oliver One.
Case No. 5
LOTTE PHIL. CO., INC., Petitioners, v.ERLINDA DELA CRUZ, LEONOR
MAMAUAG, LOURDES CAUBA, JOSEPHINE DOMANAIS, ARLENE
CAGAYAT, AMELITA YAM, VIVIAN DOMARAIS, MARILYN ANTALAN,
CHRISTOPHER RAMIREZ, ARNOLD SAN PEDRO, MARISSA SAN PEDRO,
LORELI JIMENEZ, JEFFREY BUENO, CHRISTOPHER CAGAYAT, GERARD
CABILES, JOAN ENRIQUEZ, JOSEPH DE LA CRUZ, NELLY CLERIGO,
DULCE NAVARETTE, ROWENA BELLO, DANIEL RAMIREZ, AILEEN
BAUTISTA and BALTAZAR FERRERA, Respondents.
TOPIC: INDISPENSIBLE PARTY; NON-JOINDER – EFFECTS
FACTS: On December 14, 1995 and yearly thereafter until the year 2000, 7J
Maintenance and Janitorial Services (7J) entered into a contract with
petitioner Lotte Phil Co Inc(Lotte) to provide manpower for needed
maintenance, utility, janitorial and other services to the latter. In compliance
with the terms and conditions of the service contract, and to accommodate
the needs of Lotte for personnel/workers to do and perform piece works,
respondents Dela Cruz, Mamauag, Cauba, etc,, among others, were hired
and assigned to Lotte as repackers or sealers. However, either in October,
1999 or on February 9, 2000, Lotte dispensed with their services allegedly
due to the expiration/termination of the service contract by Lotte with 7J.
Respondents were never called back again
A labor complaint was filed by respondents against both Lotte and 7J, for
illegal dismissal, regularization, payment of corresponding backwages and
th
related employment benefits, 13 month pay, service incentive leave, moral
and exemplary damages and attorneys fees based on total judgment award.
Labor Arbiter Cresencio G. Ramos, Jr. rendered judgment declaring 7J as
employer of respondents and finding 7J guilty of illegal dismissal.
Respondents appealed to the National Labor Relations Commission (NLRC)
praying that Lotte be declared as their direct employer because 7J is merely a
labor-only contractor. NLRC affirmed the ruling that 7J is the employer of
respondents and solely liable for their claims. NLRC denied respondent’s MR.
Lotte prayed that the petition for certiorari filed by respondents in the Court
of Appeals be dismissed for failure to implead 7J who is a party interested in
sustaining the proceedings in court, pursuant to Section 3, Rule 46 of the
Revised Rules of Civil Procedure.
Court of Appeals reversed and set aside the rulings of the Labor Arbiter and
the NLRC and declared Lotte as the real employer of respondents and that 7J
who engaged in labor-only contracting was merely the agent of Lotte.
Respondents who performed activities directly related to Lottes business were
its regular employees under Art. 280 of the Labor Code. As such, they must
be accorded security of tenure and their services terminated only on just and
authorized causes.
ISSUE: WON 7J is an indispensable party and should have been impleaded
in respondent’s petition in the Court of Appeals?
HELD: YES
An indispensable party is a party in interest without whom no final
determination can be had of an action, and who shall be joined either as
plaintiffs or defendants. The joinder of indispensable parties is mandatory.
The presence of indispensable parties is necessary to vest the court with
jurisdiction, which is the authority to hear and determine a cause, the right
to act in a case. Thus, without the presence of indispensable parties to a suit
or proceeding, judgment of a court cannot attain real finality. The absence of
an indispensable party renders all subsequent actions of the court null and
void for want of authority to act, not only as to the absent parties but even as
to those present.
In the case at bar, 7J is an indispensable party. It is a party in interest
because it will be affected by the outcome of the case. The Labor Arbiter
and the NLRC found 7J to be solely liable as the employer of
respondents. The Court of Appeals however rendered Lotte jointly and
severally liable with 7J who was not impleaded by holding that the former is
the real employer of respondents. Plainly, its decision directly affected 7J.
Although 7J was a co-party in the case before the Labor Arbiter and the
NLRC, respondents failed to include it in their petition for certiorari in the
Court of Appeals. Hence, the Court of Appeals did not acquire jurisdiction
over 7J. No final ruling on this matter can be had without impleading 7J,
whose inclusion is necessary for the effective and complete resolution of the
case and in order to accord all parties with due process and fair play.
In Domingo v. Scheer, we held that the non-joinder of indispensable parties
is not a ground for the dismissal of an action and the remedy is to implead
the non-party claimed to be indispensable. Parties may be added by order of
the court on motion of the party or on its own initiative at any stage of the
action and/or such times as are just. If the petitioner refuses to implead an
indispensable party despite the order of the court, the latter may dismiss the
complaint/petition for the petitioner/plaintiff’s failure to comply therefor.

Case No. 6
DOMINGO CARABEO, Petitioner,
vs.SPOUSES NORBERTO and SUSAN DINGCO, Respondents. G.R.
No. 190823 April 4, 2011
TOPIC: DEATH OF PARTY - EFFECTS
FACTS: On July 10, 1990, petitioner) entered into a contract denominated as
"Kasunduan sa Bilihan ng Karapatan sa Lupa" with Spouses Norberto and
Susan Dingco (respondents) whereby petitioner agreed to sell his rights over
a 648 square meter parcel of unregistered land situated in Purok III,
Tugatog, Orani, Bataan to respondents for P38,000. Sometime in 1994,
respondents learned that the alleged problem over the land had been settled
and that petitioner had caused its registration in his name under Transfer
Certificate of Title No. 161806. They thereupon offered to pay the balance but
petitioner declined, drawing them to file a complaint before the Katarungan
Pambarangay. No settlement was reached, however, hence, respondent filed a
complaint for specific performance before the RTC of Balanga, Bataan.
After the case was submitted for decision or on January 31, 2001, petitioner
passed away. The records do not show that petitioner’s counsel informed
Branch 1 of the Bataan RTC, where the complaint was lodged, of his death
and that proper substitution was effected in accordance with Section 16,
Rule 3, Rules of Court. Petitioner’s counsel filed a Notice of Appeal with the
CA but the latter affirmed the RTC Decision. Petitioner’s motion for
reconsideration having been denied, the present petition for review was filed
by Antonio Carabeo, petitioner’s son.
ISSUE: WON petitioner’s death rendered respondents’ complaint against him
dismissible.
RULING: NO. The question as to whether an action survives or not depends
on the nature of the action and the damage sued for. In the causes of action
which survive, the wrong complained affects primarily and principally
property and property rights, the injuries to the person being merely
incidental, while in the causes of action which do not survive, the injury
complained of is to the person, the property and rights of property affected
being incidental. In the present case, respondents are pursuing a property
right arising from the kasunduan, whereas petitioner is invoking nullity of
the kasunduan to protect his proprietary interest. Assuming arguendo,
however, that the kasunduan is deemed void, there is a corollary obligation
of petitioner to return the money paid by respondents, and since the action
involves property rights, it survives.
Case No. 7
JUANA COMPLEX I HOMEOWNERS ASSOCIATION, INC., ANDRES C.
BAUTISTA, BRIGIDO DIMACULANGAN, DOLORES P. PRADO, IMELDA DE
LA CRUZ, EDITHA C. DY, FLORENCIA M. MERCADO, LEOVINO C.
DATARIO, AIDA A. ABAYON, NAPOLEON M. DIMAANO, ROSITA G.
ESTIGOY AND NELSON A. LOYOLA, PETITIONERS, VS. FIL-ESTATE
LAND, INC., FIL ESTATE ECOCENTRUM CORPORATION, LA PAZ
HOUSING AND DEVELOPMENT CORPORATION, WARBIRD SECURITY
AGENCY, ENRIQUE RIVILLA, MICHAEL E. JETHMAL AND MICHAEL
ALUNAN, RESPONDENTS.
FACTS:
Juana Complex I Homeowners Association, Inc. (JCHA), together with
individual residents of Juana Complex I and other neighboring
subdivisions, instituted a complaint for damages, in its own behalf and as a
class suit representing the regular commuters and motorists of Juana
Complex I and neighboring subdivisions who were deprived of the use of
La Paz Road, against Fil-Estate Land, Inc.
Accordingly, JCHA, et al. also prayed for the immediate issuance of a
Temporary Restraining Order (TRO) or a writ of preliminary injunction (WPI)
to enjoin Fil-Estate, et al. from stopping and intimidating them in their use of
La Paz Road. Fil-Estate, et al. filed a motion to dismiss arguing that the
complaint failed to state a cause of action and that it was improperly filed as
a class suit.
They claim that the excavation of La Paz Road would not necessarily give rise
to a common right or cause of action for JCHA, etal. against them since each
of them has a separate and distinct purpose and each may be affected
differently than the others. With regard to the issuance of the WPI, the
defendants averred that JCHA, et al. failed to show that they had a clear and
unmistakable right to the use of La Paz Road; and further claimed that La
Paz Road was a torrens registered private road and there was neither a
voluntary nor legal easement constituted over it. On February 26, 1999, Fil-
Estate, et al. filed a motion to dismiss arguing that the complaint failed to state
a cause of action and that it was improperly filed as a class suit.
ISSUES:
1. Whether or not the complaint was properly filed as a class suit?
HELD:
1. The necessary elements for the maintenance of a class suit are:1) the
subject matter of controversy is one of common or general interest to
many persons;2) the parties affected are so numerous that it is
 impracticable to bring them all to court; and3) the parties bringing
the class suit are sufficiently numerous or representative of the class
and can fully protect the interests of all concerned.
In this case, the suit is clearly one that benefits all commuters and
motorists who use La Paz Road. “The individuals sought to be represented
by private respondents in the suit are so numerous that it is impracticable to
join them all as parties and be named individually as plaintiffs in the
complaint.”
The subject matter of the instant case, i.e., the closure and excavation of the
La Paz Road, is initially shown to be of common or general interest to
many persons. The records reveal that numerous individuals have filed
manifestations with the lower court, conveying their intention to join private
respondents in the suit and claiming that they are similarly situated with
private respondents for they were also prejudiced by the acts of petitioners in
closing and excavating the La Paz Road. Moreover, the individuals sought to be
represented by private respondents in the suit are so numerous that it is
impracticable to join them all as parties and be named individually as plaintiffs
in the complaint. These individuals claim to be residents of various barangays
in Biñan, Laguna and other barangays in San Pedro, Laguna.
NOTES:
 Whether or not the complaint states a cause of action?
The question of whether the complaint states a cause of action is determined
by its averments regarding the acts committed by the defendant. Thus, it
must contain a concise statement of the ultimate or essential facts
constituting the plaintiff’s cause of action. The test of sufficiency of facts
alleged in the complaint as constituting a cause of action is whether or not
admitting the facts alleged, the court could render a valid verdict in
accordance with the prayer of said complaint. In the present case, the Court
finds the allegations in the complaint sufficient to establish a cause of action
 A writ of preliminary injunction is available to prevent a
threatened or continuous irremediable injury to parties before their
claims can be thoroughly studied and adjudicated. The requisites for
its issuance are: (1) the existence of a clear and unmistakable right
that must be protected; and (2) an urgent and paramount necessity
for the writ to prevent serious damage. For the writ to issue, the right
sought to be protected must be a present right, a legal right which
must be shown to be clear and positive. This means that the persons
applying for the writ must show that they have an ostensible right to
the final relief prayed for in their complaint.
ROGER V. NAVARRO, Petitioner,
vs.HON. JOSE L. ESCOBIDO, Presiding Judge, RTC Branch 37,
Cagayan de Oro City, and KAREN T. GO, doing business under the
name KARGO ENTERPRISES, Respondents. G.R. No.
153788 November 27, 2009
TOPIC: Real Parties in Interest, Indispensable Parties
FACTS: Respondent Karen T. Go filed two complaints before the RTC for
replevin and/or sum of money with damages against Navarro. In these
complaints, Karen Go prayed that the RTC issue writs of replevin for the
seizure of two (2) motor vehicles in Navarro’s possession. In his Answers,
Navarro alleged as a special affirmative defense that the two complaints
stated no cause of action, since Karen Go was not a party to the Lease
Agreements with Option to Purchase (collectively, the lease agreements) —
the actionable documents on which the complaints were based. RTC
dismissed the case but set aside the dismissal on the presumption that
Glenn Go’s (husband) leasing business is a conjugal property and thus
ordered Karen Go to file a motion for the inclusion of Glenn Go as co-
plaintiff as per Rule 4, Section 3 of the Rules of Court. Navarro filed a
petition for certiorari with the CA. According to Navarro, a complaint which
failed to state a cause of action could not be converted into one with a cause
of action by mere amendment or supplemental pleading. CA denied petition.
ISSUE: Whether or not Karen Go is a real party in interest.
RULING: YES. Karen Go is the registered owner of the business name Kargo
Enterprises, as the registered owner of Kargo Enterprises, Karen Go is the
party who will directly benefit from or be injured by a judgment in this case.
Thus, contrary to Navarro’s contention, Karen Go is the real party-in-
interest, and it is legally incorrect to say that her Complaint does not state a
cause of action because her name did not appear in the Lease Agreement
that her husband signed in behalf of Kargo Enterprises.
Glenn and Karen Go are effectively co-owners of Kargo Enterprises and
the properties registered under this name; hence, both have an equal
right to seek possession of these properties. Therefore, only one of the co-
owners, namely the co-owner who filed the suit for the recovery of the co-
owned property, is an indispensable party thereto. The other co-owners are
not indispensable parties. They are not even necessary parties, for a complete
relief can be accorded in the suit even without their participation, since the
suit is presumed to have been filed for the benefit of all co-owners.We hold
that since Glenn Go is not strictly an indispensable party in the action to
recover possession of the leased vehicles, he only needs to be impleaded as a
pro-forma party to thesuit, based on Section 4, Rule 4 of the Rules, which
states:
Section 4.Spouses as parties. — Husband and wife shall sue or be sued
jointly, except as provided by law.
Even assuming that Glenn Go is an indispensable party to the action,
misjoinder or non-joinder of indispensable
parties in a complaint is not a ground for dismissal of action as per Rule 3,
Section 11 of the Rules of Court .
Case No. 9
LAND BANK OF THE PHILIPPINES, Petitioner, v. EDUARDO M.
CACAYURAN, Respondent,
MUNICIPALITY OF AGOO, LA UNION, Intervenor.
G.R. No. 191667, April 22, 2015
TOPIC: Indispensable party
FACTS: The Municipality of Agoo entered into two loans with LBP in order to
finance a Redevelopment Plan of the Agoo Public Plaza. The Sangguniang
Bayan of the Municipality authorized the mayor Eufranio Eriguel to enter
into a P4M loan with LBP for the Public Plaza and again for the amount of
P28M to construct a commercial center called Agoo People’s Center within
the Plaza’s premises. The Municipality used as collateral a 2,323.75 sqm lot
at the south-eastern portion of the Plaza. Cacayuran and other residents
opposed the redevelopment of the Plaza as well as the means of the funding.
They claim that these are highly irregular, violative of the law, and
detrimental to public interest resulting in the desecration of the public plaza.
Cacayuran’s request for the documents relating to the plaza’s redevelopment
was not granted. Cacayuran invokes his taxpayer right and files a complaint
against LBP and officers of the municipality but does not include the
municipality itself as party- defendant. He questioned the validity of the loan
agreements and prays that the redevelopment is enjoined.
The municipal officers moved for the dismissal but were denied. LBP asserted
that Cacayuran did not have any cause of action because he was not privy to
the loan agreements.
RTC RULING: Subject loans are null and void. Resolutions approving the
procurement were passed irregularly and are thus ultra vires. Municipality is
not bound so it is the officers that will be held liable. Plaza lot is property for
public use and not valid as collateral.
LBP and the officers appealed to the
CA. The municipal officers’ appeal is deemed abandoned for failing to file an
appellants’ brief. LBP was given due course.
CA RULING: RTC decision affirmed with modification: Vice-Mayor Antonio
Eslao is free from personal liability. Cacayuran has locus standi as resident
and the issue is of transcendental importance to public interest. Resolutions
approving the loan are invalidly passed. Plaza lot is invalid as collateral.
Procurement is ultra vires LBP files petition for certiorari with SC.
Proceedings Before the SC: LBP petition is denied and CA decision
affirmed. LBP moves for reconsideration, Municipality of Agoo files a Motion
for Leave to Intervene with Pleading-In-Intervention Attached praying to be
included as party litigant. It contends that being a contracting party to the
subject loans, it is an indispensable party. Cacayuran insists that they are
not real party in interest because the complaint is against the municipal
officers in their personal capacity for their ultra vires acts not binding to the
municipality.
ISSUE: WON the Municipality of Agoo should be deemed an indispensable
party to the case
RULING: YES it is an indispensable party under Sec 7, Rule 3 of the Rules of
Court.
Sec 7, Rule 3 mandates that all indispensable parties are to be joined in a
suit as it is the party whose interest will be affected by the court’s action and
without whom no final determination of the case can be had. His legal
presence is an absolute necessity. Absence of the indispensable party
renders all subsequent actions of the court null and void for want of
authority to act.
Failure to implead any indispensable party is not a ground for the dismissal
of the complaint. The proper remedy is to implead them. In this case,
Cacayuran failed to implead the Municipality, a real party in interest and an
indispensable party that stands to be directly affected by any judicial
resolution. It is the contracting party and the owner of the public plaza. It
stands to be benefited or injured by the judgment of the case.
The decision of the RTC, affirmed with modification by the CA, and finally
affirmed by the SC is not binding upon the Municipality as it was not
impleaded as defendant in the case.
Subject motions are PARTLY GRANTED. Previous decisions are SET ASIDE.
Instant case is REMANDED to the RTC and Cacayuran is DIRECTED to
implead all indispensable parties
Case No. 10
MA. ELENA R. DIVINAGRACIA, AS ADMINISTRATRIX OF THE ESTATE
OF THE LATE SANTIAGO C. DIVINAGRACIA, Petitioner, v. CORONACION
PARILLA, CELESTIAL NOBLEZA, CECILIA LELINA, CELEDONIO
NOBLEZA, AND MAUDE NOBLEZA, Respondent.
FACTS:
FACTS: Conrado Sr. owns a 313-square parcel of land in Delgado Streets,
Iloilo City. During his lifetime, he contracted two marriages: (a) the first was
with Lolita Palermo with whom he had two (2) children, namely, Cresencio
and Conrado, Jr.; and (b) the second was with Eusela Niangar with whom he
had seven (7 namely, Mateo, Sr., Coronacion, Cecilia, Celestial, Celedonio,
Ceruleo,and Cebeleo, Sr. Conrado, Sr. also begot three (3) illegitimate
children, namely, Eduardo, Rogelio, and Ricardo.Mateo, Sr. pre-deceased
Conrado, Sr. and was survived by his children Felcon, Landelin, Eusela,
Giovanni, Mateo, Jr., Tito, and Gaylord. Cebeleo, Sr. also pre-deceased his
father and was survived by his wife, Maude, and children Cebeleo, Jr. and
Neobel.
According to Santiago, upon Conrado, Sr.’s death, Cresencio, Conrado, Jr.,
Felcon (in representation of his father, Mateo, Sr., and his siblings),
Coronacion, Celestial, Cecilia, Rogelio, Eduardo, and Ricardo sold their
respective interests over the subject land to Santiago for a consideration of
P447,695.66, which was, however, not signed by the other heirs who did not
sell their respective shares, namely, Ceruleo, Celedonio, and Maude (in
representation of his husband, Cebeleo, Sr., and their children).
However, Santiago was not able to have the TCT cancelled and the subject
document registered because of Ceruleo, Celedonio, and Maude’s refusal to
surrender the said title. This fact, coupled with Ceruleo, Celedonio,
and Maude’s failure to partition the subject land, prompted Santiago to file a
Complaint dated January 3, 1990 for
judicial partition and for receivership.
For their part, Ceruleo, Celedonio, and Maude maintained that Santiago had
no legal right to file an action for judicial partition nor compel them to
surrender the TCT because, purchase price of the shares sold to him; and (b)
the subject land is a conjugal asset of Conrado Sr. and Eusela inter alia : (a)
Santiago did not pay the full Niangar and, thus, only their legitimate issues
may validly inherit the same.
ISSUE:
1. Whether or not failure to plead indispensable parties in an action renders
all actions of the court null and void 2. Whether or not failure to implead may
cause the dismissal of the complaint.
 who were not impleaded and for the disposition of the case on the merits.
HELD:. YES. An indispensable party is one whose interest will be affected by
the court’s action in the litigation, and without whom no final determination
of the case can be had. The party’s interest in the subject matter of the suit
and in the relief sought are so inextricably intertwined with the other parties’
that his legal presence as a party to the proceeding is an absolute necessity.
In his absence, there cannot be a resolution of the dispute of the parties
before the court which is effective, complete, or equitable.
Thus, the absence of an indispensable party renders all subsequent actions
of the court null and void, for want of authority to act, not only as to the
absent parties but even as to those present. With regard to actions for
partition, Section 1, Rule 69 of the Rules of Court requires that all persons
interested in the property shall be joined as defendants. Thus, all the co-
heirs and persons having an interest in the property are indispensable
parties; as such, an action for partition will not lie without the joinder of the
said parties. The
aforementioned heirs – whether in their own capacity or in representation of
their direct ascendant – have vested rights over the subject land and, as
such, should be impleaded as indispensable parties in an action for partition
thereof. However, a reading of Santiago’s complaint shows that as regards
Mateo, Sr.’s interest, only Felcon was impleaded, excluding therefrom his
siblings and co-representatives. Similarly, with regard to Cebeleo, Sr.’s
interest over the subject land, the complaint impleaded his wife, Maude,
when pursuant to Article 972 of the Civil Code, the proper representatives to
his interest should have been his children, Cebeleo, Jr. and Neobel. Verily,
Santiago’s omission of the aforesaid heirs renders his complaint for partition
defective.
39
2. NO.
Heirs of Mesina v. Heirs of Fian, Sr.,
In the Court definitively explained that in instances of non-joinder of
indispensable parties, the proper remedy is to implead them and not to
dismiss the case, to wit:
The non-joinder of indispensable parties is not a ground for the
dismissal of an action. At any stage of a judicial proceeding and/or at such
times as are just, parties may be added on the motion of a party or on the
initiative of the tribunal concerned. If the plaintiff refuses to implead an
indispensable party despite the order of the court, that court may dismiss the
complaint for the plaintiff’s failure to comply with the order. The remedy is
to implead the non-party claimed to be indispensable. x x
40
x (Underscoring supplied; emphases in the original)
In view of the foregoing, the correct course of action in the instant case is to
order its remand to the RTC for the inclusion of those indispensable parties
Case No. 11
PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. and JENS
PETER HENRICHSEN, Petitioners,
vs. KLAUS K. SCHONFELD, Respondent.
G.R. NO. 166920; FEBRUARY 19, 2007)
Topics: Jurisdiction, venue, forum non conveniens
FACTS: Respondent is a Canadian citizen and was a resident of New
Westminster, British Columbia, Canada. He had been a consultant in the
field of environmental engineering and water supply and sanitation. Pacicon
Philippines, Inc. (PPI) is a corporation duly established and incorporated in
accordance with the laws of the Philippines. The president of PPI, Jens Peter
Henrichsen, who was also the director of PCIJ, was based in Tokyo, Japan.
Henrichsen commuted from Japan to Manila and vice versa, as well as in
other countries where PCIJ had business.
Respondent was employed by PCIJ, through Henrichsen, as Sector Manager
of PPI in its Water and Sanitation Department. However, PCIJ assigned him
as PPI sector manager in the Philippines. His salary was to be paid partly by
PPI and PCIJ. Henrichsen transmitted a letter of employment to respondent
in Canada, requesting him to accept the same and affix his conformity
thereto. Respondent made some revisions in the letter of employment and
signed the contract. He then sent a copy to Henrichsen.
Respondent arrived in the Philippines and assumed his position as PPI
Sector Manager. He was accorded the status of a resident alien. Respondent
received a letter from Henrichsen informing him that his employment had
been terminated effective August 4, 1999 for the reason that PCIJ and PPI
had not been successful in the water and sanitation sector in the Philippines.
However, on July 24, 1999, Henrichsen, by electronic mail, requested
respondent to stay put in his job after August 5, 1999, until such time that
he would be able to report on certain projects and discuss all the
opportunities he had developed.
Respondent filed a Complaint for Illegal Dismissal against petitioners PPI and
Henrichsen with the Labor Arbiter. The Labor Arbiter found, among others,
that the January 7, 1998 contract of employment between respondent and
PCIJ was controlling; the Philippines was only the "duty station" where
Schonfeld was required to work under the General Conditions of
Employment. PCIJ remained respondent’s employer despite his having been
sent to the Philippines. Since the parties had agreed that any differences
regarding employer-employee relationship should be submitted to the
jurisdiction of the court of arbitration in London, this agreement is
controlling.
On appeal, the NLRC agreed with the disquisitions of the Labor Arbiter and
affirmed the latter’s decision in toto.
Respondent then filed a petition for certiorari under Rule 65 with the CA. On
the issue of venue, the appellate court declared that, even under the
January 7, 1998 contract of employment, the parties were not precluded
from bringing a case related thereto in other venues. While there was, indeed,
an agreement that issues between the parties were to be resolved in the
London Court of Arbitration, the venue is not exclusive, since there is no
stipulation that the complaint cannot be filed in any other forum other than
in the Philippines.
ISSUE: Whether or not, the Labor Arbiter has jurisdiction over respondent’s
claim despite the fact that respondent, a foreign national, was hired abroad
by a foreign corporation, executed his employment contract abroad, and had
agreed that any dispute between them "shall be finally settled by the court of
arbitration in London.
RULING: The settled rule on stipulations regarding venue, as held by this
Court in the vintage case of Philippine Banking Corporation v. Tensuan, is
that while they are considered valid and enforceable, venue stipulations in a
contract do not, as a rule, supersede the general rule set forth in Rule 4 of
the Revised Rules of Court in the absence of qualifying or restrictive words.
They should be considered merely as an agreement or additional forum,
not as limiting venue to the specified place. They are not exclusive but,
rather permissive. If the intention of the parties were to restrict venue, there
must be accompanying language clearly and categorically expressing their
purpose and design that actions between them be litigated only at the place
named by them.
In the instant case, no restrictive words like "only," "solely," "exclusively in
this court," "in no other court save —," "particularly," "nowhere else
but/except —," or words of equal import were stated in the contract.33 It
cannot be said that the court of arbitration in London is an exclusive venue
to bring forth any complaint arising out of the employment contract.
Petitioners contend that respondent should have filed his Complaint in his
place of permanent residence, or where the PCIJ holds its principal office, at
the place where the contract of employment was signed, in London as stated
in their contract. By enumerating possible venues where respondent could
have filed his complaint, however, petitioners themselves admitted that the
provision on venue in the employment contract is indeed merely permissive.
Petitioners’ insistence on the application of the principle of forum non
conveniens must be rejected. The bare fact that respondent is a Canadian
citizen and was a repatriate does not warrant the application of the principle
for the following reasons:
First. The Labor Code of the Philippines does not include forum non
conveniens as a ground for the dismissal of the complaint.34
Second. The propriety of dismissing a case based on this principle requires a
factual determination; hence, it is properly considered as defense.35
Third. In Bank of America, NT&SA, Bank of America International, Ltd. v.
Court of Appeals,36 this Court held that:
x x x [a] Philippine Court may assume jurisdiction over the case if it chooses
to do so; provided, that the following requisites are met: (1) that the
Philippine Court is one to which the parties may conveniently resort to; (2)
that the Philippine Court is in a position to make an intelligent decision as to
the law and the FACTS; and, (3) that the Philippine Court has or is likely to
have power to enforce its decision. x x x
Admittedly, all the foregoing requisites are present in this case.
MA. TERESA CHAVES BIACO, Petitioner,
vs.PHILIPPINE COUNTRYSIDE RURAL BANK, Respondent.
G.R. No. 161417 February 8, 2007
FACTS: Biaco the husband of petitioner Ma. Teresa Chaves Biaco. Ernesto
obtained several loans from the respondent bank as evidenced by promissory
notes. As security for the payment of the said loans, Ernesto executed a real
estate mortgage in favor of the bank covering the parcel of land described in
Original Certificate of Title (OCT) No. P-14423. The real estate mortgages bore
the signatures of the spouses Biaco. When Ernesto failed to settle the above-
mentioned loans on its due date, respondent bank through counsel sent him
a written demand . The written demand, however, proved futile prompting
respondent bank to file a complaint for foreclosure of mortgage against the
spouses Ernesto and Teresa Biaco before the RTC of Misamis Oriental.
Summons was served to the spouses Biaco through Ernesto at his office.
Ernesto received the summons but for unknown reasons, he failed to file an
answer. Hence, the spouses Biaco were declared in default upon motion of
the respondent bank. The respondent bank was allowed to present its
evidence ex parte before the Branch Clerk of Court who was then appointed
by the court as Commissioner.
RTC rendered decision in favor of respondent. In case of non-payment within
the period, the Sheriff of this Court is ordered to sell at public auction the
mortgaged Lot, a parcel of registered land to satisfy the mortgage debt, and
the surplus if there be any should be delivered to the defendants spouses
ERNESTO and MA. THERESA [CHAVES] BIACO. In the event however[,] that
the proceeds of the auction sale of the mortgage[d] property is not enough to
pay the outstanding obligation, the defendants are ordered to pay any
deficiency of the judgment as their personal liability. Petitioner sought the
annulment of the Regional Trial Court decision contending that
extrinsic fraud prevented her from participating in the judicial
foreclosure proceedings. According to her, she came to know about the
judgment in the case only after the lapse of more than six (6) months after its
finality. . She moreover asserted that the trial court failed to acquire
jurisdiction because summons were served on her through her husband
without any explanation as to why personal service could not be made.
Petitioner further argues that the deficiency judgment is a personal judgment
which should be deemed void for lack of jurisdiction over her person.
CA ruled that judicial foreclosure proceedings are actions quasi in rem. As
such, jurisdiction over the person of the defendant is not essential as long as
the court acquires jurisdiction over the res. Noting that the spouses Biaco
were not opposing parties in the case, the Court of Appeals further ruled that
the fraud committed by one against the other cannot be considered extrinsic
fraud.
ISSUE: WON CA erred in ruling that there was no fraud perpetrated by
respondent upon her thereby violating her right to due process?
HELD: The appellate court acted well in ruling that there was no fraud
perpetrated by respondent bank upon petitioner, noting that the spouses
Biaco were co-defendants in the case and shared the same interest.
Whatever fact or circumstance concealed by the husband from the wife
cannot be attributed to respondent bank.
An action in personam is an action against a person on the basis of his
personal liability. An action in rem is an action against the thing itself
instead of against the person. An action quasi in rem is one wherein an
individual is named as defendant and the purpose of the proceeding is to
subject his interest therein to the obligation or lien burdening the property.
In an action in personam, jurisdiction over the person of the defendant is
necessary for the court to validly try and decide the case. In a proceeding in
rem or quasi in rem, jurisdiction over the person of the defendant is not a
prerequisite to confer jurisdiction on the court provided that the court
acquires jurisdiction over the res. Jurisdiction over the res is acquired either
(1) by the seizure of the property under legal process, whereby it is
brought into actual custody of the law; or (2) as a result of the
institution of legal proceedings, in which the power of the court is
recognized and made effective. In a proceeding in rem or quasi in rem, the
only relief that may be granted by the court against a defendant over whose
person it has not acquired jurisdiction either by valid service of summons or
by voluntary submission to its jurisdiction, is limited to the res. Similarly, in
this case, while the trial court acquired jurisdiction over the res, its
jurisdiction is limited to a rendition of judgment on the res. It cannot extend
its jurisdiction beyond the res and issue a judgment enforcing petitioner’s
personal liability. In doing so without first having acquired jurisdiction over
the person of petitioner, as it did, the trial court violated her constitutional
right to due process, warranting the annulment of the judgment rendered in
the case.
Case No. 3
BPI FAMILY SAVINGS BANK, INC., Petitioner, v. SPOUSES BENEDICTO &
TERESITA YUJUICO, Respondents.
G.R. No. 175796, July 22, 2015
Doctrine: An action to recover the deficiency after extrajudicial foreclosure of
a real property mortgage is a personal action because it does not affect title
to or possession of real property, or any interest therein.
FACTS: In 1996, the City of Manila filed a complaint against the respondents
for the expropriation of 5 parcels of land in Tondo, Manila and registered in
the name of respondents. 2 of the parcels of land were mortgaged to the
petitioner. In 2000, the Manila RTC rendered its judgment declaring the five
parcels of land expropriated for public use. The petitioner subsequently filed
a Motion to, but the RTC denied the motion for having been "filed out of
time." Hence, the petitioner decided to extrajudicially foreclose the mortgage
constituted on the two parcels of land subject of the respondents' loan. After
holding the public auction, the sheriff awarded the two lots to the petitioner
as the highest bidder. Claiming a deficiency, the petitioner sued the
respondents to recover such deficiency in the Makati RTC. The
respondents moved to dismiss the complaint on several grounds. The RTC
denied the motion to dismiss, while in CA, it granted the petition, opining
“Thus, a suit for recovery of the deficiency after the foreclosure of a mortgage
is in the nature of a mortgage action because its purpose is precisely to
enforce the mortgage contract; it is upon a written contract and upon an
obligation of the mortgage- debtor to pay the deficiency which is created by
law. As such, the venue of an action for recovery of deficiency must
necessarily be the same venue as that of the extrajudicial foreclosure of
mortgage.”
Issues: Whether or not the venue for the collection of deficiency is properly
laid.
Held: Yes. It is basic that the venue of an action depends on whether it is a
real or a personal action. According to Section 1, Rule 4 of the Rules of
Court, a real action is one that affects title to or possession of real property,
or an interest therein. The real action is to be commenced and tried in the
proper court having jurisdiction over the area wherein the real property
involved, or a portion thereof, is situated, which explains why the action is
also referred to as a local action. In contrast, the Rules of Court declares all
other actions as personal actions. Such actions may include those brought
for the recovery of personal property, or for the enforcement of some contract
or recovery of damages for its breach, or for the recovery of damages for the
commission of an injury to the person or property.The venue of a personal
action is the place 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, for which reason the action is considered a transitory one.
Based on the distinctions between real and personal actions, an action to
recover the deficiency after the extrajudicial foreclosure of the real property
mortgage is a personal action, for it does not affect title to or possession of
real property, or any interest therein. Given the foregoing, the petitioner
correctly brought the case in the Makati RTC because Makati was the
place where the main office of the petitioner was located. We underscore
that in civil proceedings, venue is procedural, not jurisdictional, and may be
waived by the defendant if not seasonably raised either in a motion to
dismiss or in the answer. Section 1, Rule 9 of the Rules of Court thus
expressly stipulates that defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived.
SECOND DIVISION
GPLANTERS DEVELOPMENT BANK, Petitioner, v. SPOUSES VICTORIANO
AND MELANIE RAMOS, Respondents. .R. No. 228617, September 20,
2017
REYES, JR., J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court, assailing the Decision1 dated July 5, 2016 and
Resolution2 dated December 7, 2016 of the Court of Appeals (CA) in CA-G.R.
SP No. 140264.
Antecedent Facts
The facts show that in July 2012, Spouses Victoriano and Melanie Ramos
(Spouses Ramos) applied for several credit lines with Planters Development
Bank (PDB) for the construction of a warehouse in Barangay Santo Tomas,
Nueva Ecija.3 The said application was approved for P40,000,000.00, secured
by Real Estate Mortgage4 dated July 25, 2012 over properties owned by the
spouses, particularly covered by Transfer Certificate of Title (TCT) Nos. 048-
2011000874 and 048-2011000875.
Subsequently, Spouses Ramos requested for additional loan and PDB
allegedly promised to extend them a further loan of P140,000,000.00, the
amount they supposed was necessary for the completion of the construction
of the warehouse with a capacity of 250,000 cavans of palay.5 Despite the
assurance of the bank, only P25,000,000.00 in additional loan was approved
and released by PDB, which was secured by a Real Estate Mortgage6 over
four (4) real properties covered by TCT Nos. 048-2012000909, 048-
2012000443, 048-2012000445, and 048-2012000446.
Due to financial woes, Spouses Ramos were not able to pay their obligations
as they fell due. They appealed to PDB for the deferment of debt servicing
and requested for a restructuring scheme but the parties failed to reach an
agreement.
On April 23, 2014, PDB filed a Petition for Extra-judicial Foreclosure of Real
Estate Mortgage under Act 3135, as amended, before the Regional Trial
Court of San Jose City, Nueva Ecija, which was docketed as EJF-2014-112-
SJC. A Notice to Parties of Sheriff's Public Auction Sale dated May 7, 2014
was thereafter issued.7
On June 18, 2014, Spouses Ramos filed a Complaint8 for Annulment of Real
Estate Mortgages and Promissory Notes, Accounting and Application of Subsequently, in an Order14 dated February 20, 2015, the RTC denied both
Payments, Injunction with Preliminary Injunction and Temporary Restraining motions, ratiocinating thus:
Order against PDB and its officers, namely, Ma. Agnes J. Angeles, Virgilio I. Necessarily, the defendants were allowed to Isle Motion to Dismiss before
Libunao, Carmina S. Magallanes and Norberto P. Siega, also before the RTC filing an Answer or responsive pleading. As a consequence of the Motion to
of San Jose City, Nueva Ecija, which was docketed as Civil Case No. 2014- Dismiss that the defendants filed, the running of the period during which the
485-SJC. rules required her to file her Answer was deemed suspended. When the Court
denied the Motion to Dismiss, therefore the defendants had the balance of
Instead of filing an Answer, PDB filed an Urgent Motion 9 to Dismiss, alleging the period for filing an Answer under Section 4, Rule 16 within which to file
that the venue of the action was improperly laid considering that the real the same but in no case less than five days, computed from the receipt of the
estate mortgages signed by the parties contained a stipulation that any suit notice of denial of the Motion to Dismiss. x x x x
arising therefrom shall be filed in Makati City only. 10 It further noted that the
complaint failed to state a cause of action and must therefore be dismissed.11 x x x x

Ruling of the RTC However, after the Court denied the Motion to Dismiss, the defendants filed
Motion for Reconsideration which is not precluded by the rules. Only after
In an Omnibus Order12 dated November 17, 2014, the RTC denied the Urgent this Court shall have denied it would the defendants become bound to file
Motion to Dismiss, the pertinent portions of which read as follows: the Answer to the Complaint. It is only if the defendants failed to file Answer
I. The Venue is Improperly Laid after the period given by the foregoing rules would the plaintiff be entitled to
have the defendants be declared in default. This was the same ruling of the
Pursuant to autonomy of contract, Venue can be waived. Rule 5, Section 4(d) Supreme Court in the case of Narciso v. Garcia, G.R. No. 196877, November
of the 1997 Rules of Civil Procedure allows parties to validly agree in writing 12, 2012.
before the filing of the action on the exclusive venue thereof. Indeed, on the
defendants they have the contract where the venue allegedly agreed upon by With regard to the Motion for Reconsideration of the Omnibus Order dated
them with the plaintiffs is Makati City. However, one of the contentions of the November 17, 2014, there being no new arguments presented, the Court
plaintiffs is that the contracts between them and the defendants take the finds no cogent reason to reconsider and reverse the said Omnibus Order.
form of an adhesion contract (par. 20, Complaint). As such, this Court has to
apply Section 1, Rule 4 of the 1997 Rules of Civil Procedure regarding the WHEREFORE, the Motion to Declare Defendants in Default and the Motion
venue of real actions to avoid ruling on the merits without any evidence that for Reconsideration are hereby DENIED.
would sufficiently support the same.
SO ORDERED.15
II. The Complaint Fails to State a Cause of Action. Aggrieved, PDB filed a petition for certiorari with the CA, imputing grave
abuse of discretion on the RTC for denying its motion to dismiss, despite the
With such an issue raised, the Court examined the records and it has to tell fact that the venue was clearly improperly laid.
the defendants that in civil cases before the Court orders the issuance of
summons, it looks on whether or not the facts alleged on the Complaint are Ruling of the CA
sufficient to constitute a cause of action and not whether the allegations of
fact are true. Hence, as summons were issued in this case, the Court had In a Decision16 dated July 5, 2016, the CA denied the petition, the pertinent
already found that the allegations in the Complaint are sufficient to portion of which reads as follows:
constitute a cause of action. The order of the public respondent in denying the motion to dismiss and the
consequent denial of the motion for reconsideration is correct and judicious.
x x x x Petitioner anchors its claim on the validity of the mortgage, and thereby the
provisional therein on venue must be upheld. On the other hand,
FOREGOING CONSIDERED, the Motion to Dismiss is hereby DENIED. respondents anchor its claim on the invalidity of the mortgage, and thereby
the complaint is filed in the proper venue. Clearly, no valid judgment can be
x x x x passed upon the allegations of both parties.17

SO ORDERED.13 Thus, having found no grave abuse on the part of the public respondent in
Unyielding, PDB filed a motion for reconsideration of the Omnibus Order denying the motion to dismiss and the resulting denial of the motion for
dated November 17, 2014, instead of filing an answer to the complaint. This reconsideration, We find no cogent reason to disturb or modify the assailed
prompted Spouses Ramos to file a motion to declare PDB in default. Decision. What the petitioners should have done was to file an answer to the
petition filed in the trial court, proceed to the hearing and appeal the decision
of the court if adverse to them.18 (b) Where the parties have validly agreed in writing before the filing of the
action on the exclusive venue thereof
WHEREFORE, premises considered, the petition is DENIED. The Omnibus Based on the foregoing, the general rules on venue admit of exceptions in
Order dated 17 November 2014 and the Order dated 20 February 2015 is Section 4 thereof, i.e., where a specific rule or law provides otherwise, or
hereby AFFIRMED in TOTO. when the parties agreed in writing before the filing of the action on the
exclusive venue thereof.
IT IS SO ORDERED.19
PDB filed a motion for reconsideration but the CA denied the same in its Stipulations on venue, however, may either be permissive or restrictive.
Resolution dated December 7, 2016, the dispositive portion of which reads, "Written stipulations as to venue may be restrictive in the sense that the suit
thus: may be filed only in the place agreed upon, or merely permissive in that the
WHEREFORE, in view of the foregoing, the motion for reconsideration is parties may file their suit not only in the place agreed upon but also in the
hereby DENIED. places fixed by law. As in any other agreement, what is essential is the
ascertainment of the intention of the parties respecting the matter."21
IT IS SO ORDERED.20
Unyielding, PDB filed the present petition with this Court, reiterating its Further, in Unimasters Conglomeration, Inc. v. Court of Appeals,22 the Court
claim that the CA erred in affirming the order of the RTC, which denied the elaborated, thus:
motion to dismiss despite the improper venue of the case. It argues that since Since convenience is the raison d'etre of the rules of venue, it is easy to
there is a stipulation on venue, the same should govern the parties. accept the proposition that normally, venue stipulations should be deemed
permissive merely, and that interpretation should be adopted which most
Ruling of this Court serves the parties' convenience. In other words, stipulations designating
venues other than those assigned by Rule 4 should be interpreted as
The petition is meritorious. designed to make it more convenient for the parties to institute actions
arising from or in relation to their agreements; that is to say, as simply
Rule 4 of the Rules of Civil Procedure provides the rules on venue in filing an adding to or expanding the venues indicated in said Rule 4.
action, to wit:
RULE 4 On the other hand, because restrictive stipulations are in derogation of this
general policy, the language of the parties must be so clear and categorical as
Venue of Actions to leave no doubt of their intention to limit the place or places, or to fix places
other than those indicated in Rule 4, for their actions. x x x.23
Section 1. Venue of real actions. — Actions affecting title to or possession of In view of the predilection to view a stipulation on venue as merely
real property, or interest therein, shall be commenced and tried in the proper permissive, the parties must therefore employ words in the contract that
court which has jurisdiction over the area wherein the real property involved, would clearly evince a contrary intention. In Spouses Lantin v. Judge
or a portion thereof, is situated. Lantion,24 the Court emphasized that "the mere stipulation on the venue of
an action is not enough to preclude parties from bringing a case in other
Forcible entry and detainer actions shall be commenced and tried in the venues. The parties must be able to show that such stipulation is exclusive.
municipal trial court of the municipality or city wherein the real property In the absence of qualifying or restrictive words, the stipulation should be
involved, or a portion thereof, is situated. deemed as merely an agreement on an additional forum, not as limiting
venue to the specified place."25
Section 2. Venue of personal actions. — All other actions may be commenced
and tried where the plaintiff or any of the principal plaintiffs resides, or In the instant case, there is an identical stipulation in the real estate
where the defendant or any of the principal defendants resides, or in the case mortgages executed by the parties, pertaining to venue. It reads as follows:
of a non-resident defendant where he may be found, at the election of the 18. In the event of suit arising from out of or in connection with this
plaintiff. mortgage and/or the promissory note/s secured by this mortgage, the parties
hereto agree to bring their causes of action exclusively in the proper court/s
x x x x of Makati, Metro Manila, the MORTGAGOR waiving for this purpose any
other venue.26 (Emphasis ours)
Section 4. When Rule not applicable. — This Rule shall not apply. In Spouses Lantin, the Court ruled that "the words exclusively and waiving
for this purpose any other venue are restrictive."27 Therefore, the employment
(a) In those cases where a specific rule or law provides otherwise; or of the same language in the subject mortgages signifies the clear intention of
the parties to restrict the venue of any action or suit that may arise out of the
mortgage to a particular place, to the exclusion of all other jurisdictions.
In view of the foregoing, the RTC should have granted the Urgent Motion to
Dismiss filed by PDB on the ground that the venue was improperly laid. The
complaint being one for annulment of real estate mortgages and promissory
notes is in the nature of a personal action, the venue of which may be fixed
by the parties to the contract. In this case, it was agreed that any suit or
action that may arise from the mortgage contracts or the promissory notes
must be filed and tried in Makati only. Not being contrary to law or public
policy, the stipulation on venue, which PDB and Spouses Ramos freely and
willingly agreed upon, has the force of law between them, and thus, should
be complied with in good faith.28
The CA, however, ruled that the RTC correctly denied the motion to dismiss
in view of the contradicting claim of the parties on the validity of the
mortgage contracts, which, in turn, affects the enforceability of the
stipulation on venue. The CA agreed with the RTC that the ruling on the
validity of the stipulation on venue depends on whether the mortgage is valid
which means there has to be full-blown hearing and presentation of evidence.
It added that what PDB should have done was to file an answer to the
complaint, proceed to trial and appeal the decision, if adverse to them. 29
The ruling of the CA renders meaningless the very purpose of the stipulation
on venue. In Unimasters, the Court emphasized:
Parties may by stipulation waive the legal venue and such waiver is valid and
effective being merely a personal privilege, which is not contrary to public
policy or prejudicial to third persons. It is a general principle that a person
may renounce any right which the law gives unless such renunciation would
be against public policy.30
In the present case, Spouses Ramos had validly waived their right to choose
the venue for any suit or action arising from the mortgages or promissory
notes when they agreed to the limit the same to Makati City only and
nowhere else. True enough, the stipulation on the venue was couched in a
language showing the intention of the parties to restrict the filing of any suit
or action to the designated place only. It is crystal clear that the intention
was not just to make the said place an additional forum or venue but the
only jurisdiction where any suit or action pertaining to the mortgage
contracts may be filed. There being no showing that such waiver was invalid
or that the stipulation on venue was against public policy, the agreement of
the parties should be upheld. It is therefore a grave abuse of discretion on
the part of the RTC to deny the motion to dismiss filed by PDB on the ground
of improper venue, especially when the said issue had been raised at the
most opportune time, that is, within the time for but before the filing of an
answer. The CA should have given this matter a more serious consideration
and not simply brushed it aside.
bank unilaterally increased to 9%. They likewise claimed that the penalty
interest rate of 3% was unconscionable. Further, they claimed that the
escalation clause provided in the mortgage contracts was violative of
Presidential Decree No. 1684.32These matters, however, do not affect the
validity of the mortgage contracts. Thus, with all the more reason that the
stipulation on venue should have been upheld pursuant to the ruling of the
Court in Briones v. Court of Appeals,33viz.:
[I]n cases where the complaint assails only the terms, conditions, and/or
coverage of a written instrument and not its validity, the exclusive venue
stipulation contained therein shall still be binding on the parties, and thus,
the complaint may be properly dismissed on the ground of improper venue.
Conversely, therefore, a complaint directly assailing the validity of the written
instrument itself should not be bound by the exclusive venue stipulation
contained therein and should be filed in accordance with the general rules on
venue. To be sure, it would be inherently consistent for a complaint of this
nature to recognize the exclusive venue stipulation when it, in fact, precisely
assails the validity of the instrument in which such stipulation is
contained.34
Spouses Ramos impliedly admitted the authenticity and due execution of the
mortgage contracts. They do not claim to have been duped into signing the
mortgage contracts or that the same was not their free and voluntary act.
While they may have qualms over some of the terms stated therein, the same
do not pertain to the lack of any of the essential elements of a contract that
would render it void altogether. Such being the case, the stipulation on venue
stands and should have been upheld by RTC and the CA.
WHEREFORE, the Decision dated July 5, 2016 and Resolution dated
December 7, 2016 of the Court of Appeals in CA-G.R. SP No. 140264
are REVERSED and SET ASIDE. Civil Case No. 2014-485-SJC is
hereby DISMISSED on the ground of improper venue.

Moreover, Spouses Ramos never really assailed the validity of the mortgage
contracts and promissory notes. Apparently, what they were only claiming
was that the said contracts contain stipulations which are illegal, immoral
and otherwise contrary to customs or public policy.31 For instance, they
alleged that the interest was pegged at an excessive rate of 8% which the
Filing of Small Claims Action the Clerk of Court in the court docket for civil cases and a copy thereof
A small claims action is commenced by filing with the court an accomplished forthwith served on the parties. The decision shall be final, executory and
and verified Statement of Claim (Form 1-SCC) in duplicate, accompanied by unappealable. When the decision is rendered, execution shall issue upon
a Certification Against Forum Shopping (Form 1-A-SCC), and two duly motion (Form 12-SCC) of the winning party.
certified photocopies of the actionable document/s subject of the claim, as
well as the affidavits of witnesses and other evidence to support the claim. An ordinary collection suit is filed for money claims
The plaintiff must state in the Statement of Claim if he/she/it is engaged in exceeding P300,000. If the aggregate amount of the money claim, exclusive
the business of lending, banking and similar activities, and the number of of interests and costs, exceeds P300,000, the Revised Rules of Procedure for
small claims cases filed within the calendar year regardless of judicial Small Claims Cases finds no application and the Rules of Civil Procedure
station. No formal pleading, other than the Statement of Claim/s described shall apply. If filed within Metro Manila, the Regional Trial Court (RTC) has
in this Rule, is necessary to initiate a small claims action. jurisdiction over cases where the aggregate money claim exceeds P400,000. If
the aggregate money is P400,000 or below, the action shall be filed before the
A small claims action must be filed in the city/municipality where the Metropolitan Trial Courts. If filed outside Metro Manila, the RTC has
plaintiff-claimant ordefendant resides. If the action involves private juridical jurisdiction where the aggregate money claim exceeds P300,000; if P300,000
entities, the principal place of business determines its residence. or below, then in the MTC, MTCC or MCTC and under the rules for small
The affidavits submitted under this Rule shall state only facts of direct claims. The rules on venue are the same as that of small claims (i.e.
personal knowledge of the affiants or based on authentic records, which are residence or principal place of business of the plaintiff or the defendant).
admissible in evidence. Upon the filing of the complaint and payment of the docket and legal fees, the
The plaintiff shall pay the docket and legal fees, unless allowed to litigate as Office of the Clerk of Court will docket it. Then, it will be raffled to one of the
an indigent. The maximum docket and legal fee is P3,500. However, if more branches in that court. Summons will be issued to the defendant in order to
than five (5) small claims are filed by one party within the calendar year, acquire jurisdiction over his person. If summons was properly served,
regardless of the judicial station, an additional filing fee of P500.00 shall be defendant will then file his Answer to the Complaint. Reply, Rejoinder and
paid for every claim filed after the fifth (5th) claim, and an additional P100.00 Sur-Rejoinder may be filed after the filing of the Answer. Upon the filing of
or a total of P600.00 for every claim filed after the tenth (10th) claim, and the last pleading, the case will be set for pre-trial.
another P100.00 or a total of P700 for every claim filed after the fifteenth During the Pre-Trial Conference, the possibility of amicable settlement will be
(15th) claim, progressively and cumulativel discussed and the case may be referred to mediation or conciliation. If the
Procedure case is not settled, then it will proceed to trial where the parties will be given
The court will then examine the claim. It may dismiss the case outright if it the opportunity to present their evidence.
finds grounds to justify the dismissal. If no ground for dismissal is found,
the court shall issue summons on the day of receipt of the Statement of
Claim, directing the defendant to submit a verified Response.
If the Defendant cannot be served with Summons, the court shall order the
Plaintiff to cause the service of summons within thirty (30) days from Notice.
Otherwise, the case shall be dismissed.
The court shall also issue a Notice to both parties, directing them to appear
before it on a specific date and time for hearing, with a warning that no
unjustified postponement shall be allowed.
The defendant shall file with the court and serve on the plaintiff a duly
accomplished and verified Response within a non–extendible period of ten
(10) days from receipt of summons. The Response shall be accompanied by
certified photocopies of documents, as well as affidavits of witnesses and
other evidence in support thereof. No evidence shall be allowed during the
hearing which was not attached to or submitted together with the Response,
unless good cause is shown for the admission of additional evidence.
The parties shall appear at the designated date of hearing personally or
through a representative authorized under a Special Power of Attorney.
However, a lawyer cannot appear to represent the party.
Decision and Execution
After the hearing, the court shall render its decision based on the facts
established by the evidence (Form 11-SCC), within twenty-four (24) hours
from termination of the hearing. The decision shall immediately be entered by