CASE DIGESTS ON CIVIL PROCEDURE

Atty. Jedrek Ng
Compiled by: Aingel Joy Domingo
Far Eastern University – Institute of Law
AY 2019-2020, Second Semester

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 TABLE OF CONTENTS
HOME DEVELOPMENT MUTUAL FUND v SPOUSES SEE ......................................................................................................... 3
AQUALAB PHILS INC v HEIRS OF PAGOBO ................................................................................................................................. 4
PALMIANO-SALVADOR v ANGELES.............................................................................................................................................. 5
SPOUSES RASDAS v ESTENOR ....................................................................................................................................................... 6
PACANA-CONTRERAS v ROVILA WATER SUPPLY INC ............................................................................................................ 7
POLANCO v CRUZ .............................................................................................................................................................................. 8
ESPIRITU v LAZARO.......................................................................................................................................................................... 9
PHILIPPINE NATIONAL BANK v SPOUSES PEREZ .................................................................................................................. 10
PERKIN ELMER SINGAPORE v DAKILA TRADING .................................................................................................................. 11
PHILIPPINE NATIONAL BANK v AZNAR.................................................................................................................................... 12
HEIRS OF MEDRANO v DE VERA ................................................................................................................................................. 13
BOARD OF REGENTS OF MSU v OSOP ........................................................................................................................................ 14
MALVAR v KRAFT FOODS PHILS INC. ........................................................................................................................................ 15
PACANA-CONTRERAS v. ROVILA WATER SUPPLY ................................................................................................................. 16
SALES v SABINO ............................................................................................................................................................................... 17
SPOUSES AFULUGENCIA v METROBANK .................................................................................................................................. 18
AIR PHILIPPINES CORPORATION v PENNSWELL................................................................................................................... 20
EAGLERIDGE DEVELOPMENT CORP v CAMERON GRANVILLE 3 ASSET MANAGEMENT ............................................ 21

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HOME DEVELOPMENT MUTUAL FUND v SPOUSES SEE
(omnibus motion rule)

FACTS: Respondent-spouses See were the highest bidders in the extrajudicial foreclosure sale of a property that
was mortgaged to petitioner HDMF or Pag-ibig. Despite the expiration of the redemption period, Pag-ibig refused
to surrender its certificate of the title to the spouses because it has not received the payment from the Sheriff yet
who failed to remit the same despite repeated deamnds.

Spouses then filed a complaint for specific performance with damages against Pag-ibig and Sheriff Arimado. The
parties entered into a compromise agreement which the trial court approved. In the event that the Sheriff fails to
pay HDMF or the spouses the amount, the Court, upon motion of the spouses, may issue the necessary writ of
execution.

When the Sheriff failed to meet his undertaking to pay, the trial court proceeded to rule on the issue of whether
Pag-ibig is liable to release the title to the spouses despite non-receipt of their payment. The RTC ruled in favor of
the spouses.

Pag-ibig filed a MR on the sole ground that Pag-ibig should not be compelled to release the title because the sheriff
has yet to deliver the sum of money. The trial court denied the motion and explained that the parties’ compromise
agreement duly authorized the court to rule on Pag-ibig’s liability to the spouses despite the Sheriff's
nonremittance of the proceeds of the auction. The decision attained finality hence the trial court issued a writ of
execution of the Decision.

On appeal to the CA, the petitioner maintained that the second decision is null and void for having been issued
without a trial. Appeal denied.

ISSUE: Whether petitioner was entitled to a trial prior to the rendition of the second Decision

HELD: NO. Pag-ibig did not object to the absence of a trial when it sought a reconsideration of the decision. Instead,
Pag-ibig raised the following lone argument in their motion: “Pag-ibig should not be compelled to release the title
to the spouses because the sheriff has yet to deliver to Pag-ibig the sum of money.”

Under the Omnibus Motion Rule embodied in Section 8 of Rule 15 of the Rules of Court, all available objections that
are not included in a party’s motion shall be deemed waived.

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AQUALAB PHILS INC v HEIRS OF PAGOBO
(ground for motion to dismiss)

FACTS: The respondents filed a complaint for paritition, declaration of nullity of documents, cancellation of TCRs,
reconveyance with right of legal redemption against Aqualab, the Register of Deeds of Lapu-lapu City.

Aqualab filed its motion to dismiss on the grounds of (1) prescription of the action for declaration of nullity of
documents, cancellation of TCTs, and reconveyance; and (2) no cause of action for partition and legal redemption
of the mother title of subject lots. The RTC granted the motion to dismiss. On appeal, the CA reversed the RTC
decision.

ISSUE: Whether the complaint could be dismissed on the ground of prescription

HELD: NO. In filing a motion to dismiss, the movant hypothetically admits the truth of the material and relevant
facts alleged and pleaded in the complaint. By filing its motion to dismiss, Aqualab hypothetically admitted the
veracity of respondents’ continuous possession of subject lots until 1991 when Aqualab disturbed such possession.
Aqualab likewise hypothetically admitted the fraudulent and illegal conveyances of subject lots. Prescription, as a
ground for a motion to dismiss, is adequate when the complaint, on its face, shows that the action has already
prescribed.

Such is not the case in this instance. Respondents have duly averred continuous possession until 1991 when such
was allegedly disturbed by Aqualab. Being in possession of the subject lots—hypothetically admitted by Aqualab—
respondents’ right to reconveyance or annulment of title has not prescribed or is not time-barred.

Verily, an action for annulment of title or reconveyance based on fraud is imprescriptible where the plaintiff is in
possession of the property subject of the acts. And the prescriptive period for the reconveyance of fraudulently
registered real property is 10 years, reckoned from the date of the issuance of the certificate of title, if the plaintiff
is not in possession. Thus, one who is in actual possession of a piece of land on a claim of ownership thereof may
wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right.

In the instant case, as hypothetically admitted, respondents were in possession until 1991, and until such
possession is disturbed, the prescriptive period does not run. Since respondents filed their complaint in 1994, or
three years after their possession was allegedly disturbed, it is clear that prescription has not set in, either due to
fraud or constructive trust. Besides, if the plaintiff, as the real owner of the property, remains in possession of the
property, the prescriptive period to recover title and possession of the property does not run against him. In such a
case, an action for reconveyance, if nonetheless filed, would be in the nature of a suit for quieting of title, an action
that is imprescriptible.

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PALMIANO-SALVADOR v ANGELES
(grounds for motion to dismiss)

FACTS: Angeles, through Diaz, filed a complaint for ejectment against Salvador. The MeTC ruled in his favor. In the
appeal filed by Salvador, she alleged, among others, that Diaz, who filed the complaint for ejectment, had no
authority whatsoever from Angeles at the time of filing of the suit. Appeal denied. The CA affirmed.

ISSUE: Whether the complaint should be dismissed on the ground that Diaz was not authorized by Angeles to file it

HELD: YES. This basic issue has been ignored by the MeTC and the RTC, while the CA absolutely failed to address it,
despite petitioner’s insistence on it from the very beginning, i.e., in her Answer filed with the MeTC.

The complaint before the MeTC was filed in the name of respondent, but it was one Diaz who executed the
verification and certification dated October 12, 1994, alleging therein that he was respondent’s attorney-in-fact.
There was, however, no copy of any document attached to the complaint to prove Diaz’s allegation regarding the
authority supposedly granted to him. This prompted petitioner to raise in her Answer and in her Position Paper,
the issue of Diaz’s authority to file the case. More than a year after the complaint was filed, respondent attached to
his Reply and/or Comment to Respondent’s (herein petitioner) Position Paper, a document entitled SPA
supposedly executed by respondent in favor of Diaz. However, said SPA was executed only more than a month after
the complaint was filed, appearing to have been notarized by one McGuire of Santa Clara County. Observe, further,
that there was no certification from the Philippine Consulate General in San Francisco, California, U.S.A, that said
person is indeed a notary public in Santa Clara County, California. Verily, the court cannot give full faith and credit
to the official acts of said McGuire, and hence, no evidentiary weight or value can be attached to the document
designated as an SPA. Thus, there is nothing on record to show that Diaz had been authorized by respondent to
initiate the action against petitioner.

If a complaint is filed for and in behalf of the plaintiff by one who is not authorized to do so, the complaint is not
deemed filed. An unauthorized complaint does not produce any legal effect. Hence, the court should dismiss the
complaint on the ground that it has no jurisdiction over the complaint and the plaintiff.

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SPOUSES RASDAS v ESTENOR
(grounds pleaded as affirmative defenses)

FACTS: Respondent filed a complaint for recovery of ownership and possession over a percel of land against the
petitioners. The RTC ruled in favor of the petitioners. On appeal, the CA reversed the judgment of the RTC. The
decision became final and executory after a petition for certiorari assailing its validity was dismissed by the SC.
Thereafter, a Writ of Execution and Writ of Demolition was issued against petitioners, who were ordered to
demolish their houses, structures, and improvements on the property.

Petitioners then filed a complaint against respondent for just compensation and preliminary injunction with RTO.
Respondent countered with a Motion to Dismiss, arguing that petitioners’ complaint was barred by res judicata,
owing to the final and executory judgment of the CA. Motion was denied. before trial proper could begin,
respondent filed a motion for preliminary hearing on the affirmative defense of lack of jurisdiction and res judicata.

RTC declared itself “constrained to apply the principle of res judicata,” thus reversing its earlier order. The RTC
concluded that the earlier decision of the CA had already settled that petitioners were builders in bad faith.

On appeal, CA affirmed the RTC decision. On appeal to the SC, the petitioners argue that since respondents’ Motion
to Dismiss on the ground of res judicata had already been denied, the consequent preliminary hearing on the
special defenses which precluded the dismissal of the complaint was null and void

ISSUE: Whether the complaint should be dismissed

HELD: YES. The general rule is that the preliminary hearing applies only if no motion to dismiss has been filed. This
is expressly provided under the rule, which relevantly states “if no motion to dismiss has been filed, any of the
grounds for dismissal may be pleaded as an affirmative defense in the answer and, in the discretion of the court, a
preliminary hearing may be had thereon as if a motion to dismiss had been filed.”

An exception was carved out in one case wherein the Court noted that while Section 6 disallowed a preliminary
hearing of affirmative defenses once a motion to dismiss has been filed, such hearing could nonetheless be had if
the trial court had not categorically resolved the motion to dismiss. Such circumstance does not obtain in this case,
since the RTC denied the motion to dismiss prior to the filing of the answer and the motion for preliminary hearing.

The judge who had earlier denied the motion to dismiss, Mirasol, was different from the judge who later authorized
the preliminary hearing, de Alban, a circumstance that bears some light on why the RTC changed its mind on the
motion to dismiss. Still, this fact does not sanction the staging of a preliminary hearing on affirmative defenses
after the denial of the motion to dismiss. If a judge disagrees with his/her predecessor’s previous ruling denying a
motion to dismiss, the proper recourse is not to conduct a preliminary hearing on affirmative defenses, but to
utilize the contested ground as part of the basis of the decision on the merits.

On the part of the movant whose motion to dismiss had already been filed and denied, the proper remedy is to file
a MR of the denial of the motion. If such motion for reconsideration is denied, the ground for the dismissal of the
complaint may still be litigated at the trial on the merits. Clearly, the denial of a motion to dismiss does not
preclude any future reliance on the grounds relied thereupon. However, nothing in the rules expressly authorizes a
preliminary hearing of affirmative defenses once a motion to dismiss has been filed and denied. Thus, the strict
application of Section 6, Rule 16 in this case should cause the SC to rule that the RTC erred in conducting the
preliminary hearing.

However, there is an exceptional justification to overlook this procedural error and nonetheless affirm the
dismissal of the complaint. The complaint in question is so evidently barred by res judicata, it would violate the
primordial objective of procedural law to secure a just, speedy and inexpensive disposition of every action and
proceeding should the Court allow this prohibited complaint from festering the judicial system. Indeed, the rule
sanctioning the liberal construction of procedural rules is tailor-made for a situation such as this, when a by-the
numbers application of the rule would lead to absurdity, such as the continued litigation of an obviously barred
complaint.

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PACANA-CONTRERAS v ROVILA WATER SUPPLY INC
(nature and purpose of pre-trial)

FACTS: Petitioners Rebecca and Rosalie, children of sps Lourdes and Luciano Pacana, filed a case against
respondents for accounting and damages. They filed their complaint in their own names although Rosalie was
authorized by Lourdes through a SPA. Lourdes died.

During the pre-trial, respondents manifested to the RTC that a substitution of the parties was necessary in light of
the deaths of Lourdes and Luciano. They further stated that they would seek dismissal of the complaint because the
petitioners are not the real party in interest. The pre-trial pushed through as scheduled and the RTC directed the
respondents to put into writing their earlier manifestation. However, the motion to dismiss on the grounds, among
others, that the petitioners are not the real parties in interest and they have no valid cause of action against the
respondents was filed only after the conclusion of the pre-trial conference/after the period to file an answer has
lapsed. The RTC denied the motion for being filed out of time which was reversed on appeal to the CA.

ISSUE: Whether the motion to dismiss should be granted.

HELD: NO. That the respondents did not allege in their answer the subject grounds is apparent through their
argument, both in their motion to dismiss and in their comment, that it was only during the pre-trial stage that they
verbally manifested and invited the attention of the lower court on their grounds for dismissal. They relied on
Section 2(g) and (i), Rule 1852 of the Rules of Court that the nature and purpose of the pre-trial include, among
others, the propriety of dismissing the action should there be a valid ground therefor and matters which may aid in
the prompt disposition of the action.

The respondents are not correct. The rules are clear and require no interpretation. Pursuant to Section 1, Rule 9 of
the Rules of Court, a motion to dismiss based on the grounds invoked by the respondents may be waived if not
raised in a motion to dismiss or alleged in their answer. On the other hand, “the pre-trial is primarily intended to
make certain that all issues necessary to the disposition of a case are properly raised. The purpose is to obviate the
element of surprise, hence, the parties are expected to disclose at the pre-trial conference all issues of law and fact
which they intend to raise at the trial, except such as may involve privileged or impeaching matter.”

The issues submitted during the pre-trial are thus the issues that would govern the trial proper. The dismissal of
the case based on the grounds invoked by the respondents are specifically covered by Rule 16 and Rule 9 of the
Rules of Court which set a period when they should be raised; otherwise, they are deemed waived.

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POLANCO v CRUZ
(notice of pre-trial)

FACTS: Respondent Cruz, through her attorney in fact, Virgilio, filed a complaint for damages against petitoners for
allegedly destroying her palay crops. The trial court dismissed the case due to respondent’s failure to prosecute.
The CA reversed the decision on appeal.

On appeal to the SC, the petitioners allege that respondent failed to comply with the mandate of the Rules of Civil
Procedure to promptly move for the setting of the case for pre-trial; that “heavy pressures of work” does not justify
the failure to move for the setting of the case for pre-trial. Petitioners thus prayed for the nullification of the
Decision and Resolution of the CA and the affirmation of the dismissal of the complaint by the trial court.

ISSUE: Whether the case should be dismissed for respondent's failure to prosecute

HELD: NO. Section 1, Rule 18 Rules of Civil Procedure imposes upon the plaintiff the duty to promptly move ex
parte to have the case set for pre-trial after the last pleading has been served and filed. Failure on the part of the
plaintiff to comply with said duty without any justifiable cause may result to the dismissal of the complaint for
failure to prosecute his action for an unreasonable length of time or failure to comply with the rules of procedure.

It must be stressed that even if the plaintiff fails to promptly move for pre-trial without any justifiable cause for
such delay, the extreme sanction of dismissal of the complaint might not be warranted if no substantial prejudice
would be caused to the defendant, and there are special and compelling reasons which would make the strict
application of the rule clearly unjustified.

In this case, the dismissal of respondent’s complaint is too severe a sanction for her failure to file a motion to set
the case for pre-trial. It must be pointed out that respondent prosecuted her action with utmost diligence and with
reasonable dispatch since filing the complaint - she filed an opposition to petitioners’ motion to dismiss the
complaint; a comment to petitioners’ MR of the order of the trial court; and an Answer to Counterclaim of
petitioners. When the trial court issued an order dismissing the case, respondent filed without delay a MR; and
upon its denial, she immediately filed a Notice of Appeal.

While “heavy pressures of work” was not considered a persuasive reason to justify the failure to set the case for
pre-trial in Olave v. Mistas, however, unlike the respondents in the said case, herein respondent never failed to
comply with the Rules of Court or any order of the trial court at any other time. Failing to file a motion to set the
case for pre-trial was her first and only technical lapse during the entire proceedings. Neither has she manifested
an evident pattern or a scheme to delay the disposition of the case nor a wanton failure to observe the mandatory
requirement of the rules.

Accordingly, the ends of justice and fairness would best be served if the parties are given the full opportunity to
litigate their claims and the real issues involved in the case are threshed out in a full-blown trial. Besides,
petitioners would not be prejudiced should the case proceed as they are not stripped of any affirmative defenses
nor deprived of due process of law.

This is not to say that adherence to the Rules could be dispensed with. However, exigencies and situations might
occasionally demand flexibility in their application. On several occasions, the Court relaxed the rigid application of
the rules of procedure to afford the parties opportunity to fully ventilate the merits of their cases. This is in line
with the time-honored principle that cases should be decided only after giving all parties the chance to argue their
causes and defenses. Technicality and procedural imperfection should thus not serve as basis of decisions.

Finally, A.M. No. 03-1-09-SC states that: “Within five days from date of filing of the reply, the plaintiff must
promptly move ex parte that the case be set for pre-trial conference. If the plaintiff fails to file said motion within
the given period, the Branch COC shall issue a notice of pre-trial.” As such, the clerk of court of Branch 17 of the
Regional Trial Court of Malolos should issue a notice of pre-trial to the parties and set the case for pre-trial.

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ESPIRITU v LAZARO
(notice of pre-trial)

FACTS: The petitioners and Mariquit filed a complaint for recovery of personal property with damages and
preliminary attachment against the respondents. The trial court granted the prayer for preliminary attachment
and the corresponding writ was subsequently issued after petitioners posted a bond.

Ultimately, the trial court dismissed the complaint due to petitioners’ failure to prosecute for an unreasonable
length of time. The court noted that despite the lapse of time since respondents filed a cautionary answer,
petitioners failed to file a motion to set the case for pre-trial, which under Section 1, Rule 18 is petitioners’ duty as
plaintiffs. The CA affirmed the dismissal.

ISSUE: Whether the case should be dismised for petitioners' failure to prosecute

HELD: YES. In every action, the plaintiffs are duty-bound to prosecute their case with utmost diligence and with
reasonable dispatch. Parallel to this is the defendants’ right to have a speedy disposition of the case filed against
them, essentially, to prevent their defenses from being impaired.

Since the incidents occurred prior to the effectivity of A.M. No. 03-1-09-SC on August 16, 2004, the guidelines
stated therein should not be made applicable to this case. Instead, the prevailing rule and jurisprudence at that
time should be utilized in resolving the case. Section 1 of Rule 18 imposes upon the plaintiff the duty to set the case
for pre-trial after the last pleading is served and filed. Under Section 3 of Rule 17, failure to comply with the said
duty makes the case susceptible to dismissal for failure to prosecute for an unreasonable length of time or failure
to comply with the rules.

Respondents Lazaro filed the Cautionary Answer with Manifestation and Motion to File a Supplemental/Amended
Answer. Believing that the pending motion had to be resolved first, petitioners waited for the court to act on the
motion to file a supplemental answer. Despite the lapse of almost one year, petitioners kept on waiting, without
doing anything to stir the court into action. In any case, petitioners should not have waited for the court to act on
the motion to file a supplemental answer or for the defendants to file a supplemental answer.

The rule clearly states that the case must be set for pre-trial after the last pleading is served and filed. Since
respondents already filed a cautionary answer and petitioners did not file any reply to it, the case was already ripe
for pre-trial.

It bears stressing that the sanction of dismissal may be imposed even absent any allegation and proof of the
plaintiff’s lack of interest to prosecute the action, or of any prejudice to the defendant resulting from the failure of
the plaintiff to comply with the rules. The failure of the plaintiff to prosecute the action without any justifiable
cause within a reasonable period of time will give rise to the presumption that he is no longer interested in
obtaining the relief prayed for.

In this case, there was no justifiable reason for petitioners’ failure to file a motion to set the case for pretrial.
Petitioners’ stubborn insistence that the case was not yet ripe for pre-trial is erroneous. Although petitioners state
that there are strong and compelling reasons justifying a liberal application of the rule, the Court finds none in this
case. The burden to show that there are compelling reasons that would make a dismissal of the case unjustified is
on petitioners, and they have not adduced any such compelling reason.

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PHILIPPINE NATIONAL BANK v SPOUSES PEREZ
(notice of pre-trial)

FACTS: Sps Perez obtained a revolving credit line from PNB secured by several chattel mortages over palay stocks
inventory and REM over real properties. Sps Perez defaulted, prompting PNB to institute extrajudicial foreclosure
proceedings over the aforementioned securities

Sps Perez filed an Amended Complaint for Release or Discharge of Mortgaged Properties, Breach of Contract,
Declaration of Correct Amount of Obligation, Injunction, Damages, Annulment of Sheriff’s Notice of Extra-Judicial
Sale, with a Prayer for the Issuance of a Preliminary Mandatory Injunctive Writ and a TRO.

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

PNB filed a Petition for Certiorari (with Prayer for the Issuance of an Ex-Parte TRO/Writ of Preliminary Injunction)
before the CA seeking the annulment of the Order of Execution, the Writ of Execution, and the two orders. PNB
then filed a Supplement to the Petition for Certiorari (with Urgent Prayer for the Issuance of an Ex-Parte TRO/Writ
of Preliminary Injunction) and an Urgent Motion for the Issuance of an Ex-Parte TRO with Supplement to Petition,
respectively.

The CA granted the petition. It ruled that the sending of a notice of pre-trial is mandatory and that the Order dated
March 8, 2006 issued by the trial court cannot be considered as such.

ISSUE: Whether the order issued by the trial court is considered notice of pre-trial

HELD: NO. Section 3, Rule 18 of the Rules on Civil Procedure requires that “[t]he notice of pre-trial shall be served
on counsel, or on the party who has no counsel.” The word “shall” denotes the mandatory character of the rule.
Thus, the rule undoubtedly requires the trial court to send a notice of pre-trial to the parties.

More importantly, the notice of pre-trial seeks to notify the parties of the date, time and place of the pre-trial and
to require them to file their respective pre-trial briefs within the time prescribed by the rules. Its absence,
therefore, renders the pre-trial and all subsequent proceedings null and void. The absence of the notice of pre-trial
constitutes a violation of a person’s constitutional right to due process. Further, the Court ruled that all subsequent
orders, including the default judgment, are null and void and without effect.

In the case at bar, the order issued by the trial court merely spoke of a “hearing on March 8, 2006” and required
PNB “to prepare and complete x x x a statement of account.” The said order does not mention anything about a pre-
trial to be conducted by the trial court.

In contrast, the Notice of Pre-trial issued by the trial court categorically states that a pre-trial is to be conducted,
requiring the parties to submit their respective pre-trial briefs. What is more, PNB even claims that it failed to
receive a copy of the said order. Clearly, no amount of reasoning will logically lead to the conclusion that the trial
court issued, or that PNB received, a notice of pre-trial.

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

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PERKIN ELMER SINGAPORE v DAKILA TRADING
(appearance of parties)

FACTS: Respondents entered into a Distirbution Agreement with PEIA. Under the Distribution Agreement,
respondent shall order the products of PEIA, which it shall sell in the Philippines, either from PEIA itself or from
PEIP, an affiliate of PEIA.

However, PEIA unilaterally terminated the Distribution Agreement, prompting respondent to file a Complaint for
Collection of Sum of Money and Damages with Prayer for Issuance of a Writ of Attachment against PEIA and PEIP.
Petitioner subsequently filed with the RTC a Special Appearance and Motion to Dismiss on the ground, among
others, that the RTC did not acquire jurisdiction over the person of the petitioner. The RTC denied the motion. CA
affirmed.

ISSUE: Whether the court acquired jurisdiction over the petitioner

HELD: NO. As a rule, even if the service of summons upon the defendant or respondent in a civil case is defective,
the court can still acquire jurisdiction over his person when he voluntary appears in court or submits himself to its
authority. Nonetheless, voluntary appearance, as a mode of acquiring jurisdiction over the person of the defendant,
is inapplicable in this case.

A party who makes a special appearance in court for the purpose of challenging the jurisdiction of said court, based
on the invalidity of the service of summons, cannot be considered to have voluntarily submitted himself to the
jurisdiction of the court. In this case, petitioner has been consistent in all its pleadings in assailing the service of
summons upon it and the jurisdiction of the RTC over its person. Thus, the petitioner cannot be declared in
estoppel when it filed an Answer ad cautelam with compulsory counterclaim before the RTC while the instant
Petition was still pending before the SC. The petitioner had no other choice but to file an Answer; otherwise, the
RTC would have declared that petitioner had waived its right to file responsive pleadings. Neither can the
compulsory counterclaim contained in petitioner’s Answer ad cautelam be considered as voluntary appearance of
petitioner before the RTC.

Petitioner seeks to recover damages and attorney’s fees as a consequence of the unfounded suit filed by
respondent against it. Thus, petitioner’s compulsory counterclaim is only consistent with its position that the
respondent wrongfully filed a case against it and the RTC erroneously exercised jurisdiction over its person.

Distinction must be made as to the jurisdiction of the RTC over respondent’s complaint and over petitioner’s
counterclaim—while it may have no jurisdiction over the former, it may exercise jurisdiction over the latter. The
compulsory counterclaim attached to petitioner’s Answer ad cautelam can be treated as a separate action, wherein
petitioner is the plaintiff while respondent is the defendant. Petitioner could have instituted a separate action for
the very same claims but, for the sake of expediency and to avoid multiplicity of suits, it chose to demand the same
in the same civil case.

Jurisdiction of the RTC over the subject matter and the parties in the counterclaim must thus be determined
separately and independently from the jurisdiction of the same court in the same case over the subject matter and
the parties in respondent’s complaint. Moreover, even though the petitioner raised other grounds in its Motion to
Dismiss aside from lack of jurisdiction over its person, the same is not tantamount to its voluntary appearance or
submission to the authority of the court a quo.

Estoppel by jurisdiction must be unequivocal and intentional. It would be absurd to hold that petitioner
unequivocally and intentionally submitted itself to the jurisdiction of the court by seeking other reliefs to which it
might be entitled when the only relief that it could properly ask from the trial court is the dismissal of the
complaint against it. Thus, the allegation of grounds other than lack of jurisdiction with a prayer “for such other
reliefs” as may be deemed “appropriate and proper” cannot be considered as unequivocal and intentional estoppel.

In sum, the SC found that the petitioner did not submit itself voluntarily to the authority of the court. Hence, the
RTC failed to acquire jurisdiction over the person of the petitioner.

11
PHILIPPINE NATIONAL BANK v AZNAR
(requisites for intervention)

FACTS: In respondents' desire to rehabilitate RISCO, they contributed an amount of P212M used in the purchase of
3 parcels of land. The titles were issued in the name of RISCO. The amount contributed constitued as liens and
encumbrances on the on the said properties. Thereafter, various subsequent annotations were made on the same
title including the Notice of Attachment and Writ of Execution in favor of PNB.

PNB was the highest bidder hence a TCT was issued infavor of PNB. The respondents then filed a complaint against
PNB seeking the quieting of their title to the subject properties, declaratory relief, cancelation of TCT, and
reconveyance with TRO and prleiminary injunction.

The RTC ruled against PNB ruling that there was an express trust created over the subject properties whereby
RISCO was the trustee and the stockholders, Aznar et al, were the beneficiaries. The CA reveresed ruling that the
monetary contributions are characterized as a loan secured by a lien on the lots hence the PNB is directed to pay
Aznar. On appeal to the SC, PNB alleged, among others, that Aznar et al have no right to ask for quieting of title of
the properties.

ISSUE: Whether Aznar et al have the right to ask for quieting of title of the properties

HELD: NO. Aznar, et al., have no right to ask for the quieting of title of the properties at issue because they have no
legal and/or equitable rights over the properties that are derived from the previous registered owner which is
RISCO, the pertinent provision of the law is Section 2 of the Corporation Code which states that “[a] corporation is
an artificial being created by operation of law, having the right of succession and the powers, attributes and
properties expressly authorized by law or incident to its existence.”

As a consequence thereof, a corporation has a personality separate and distinct from those of its stockholders and
other corporations to which it may be connected. Thus, the interest of the stockholders over the properties of the
corporation is merely inchoate and therefore does not entitle them to intervene in litigation involving corporate
property.

In the case at bar, there is no allegation, much less any proof, that the corporate existence of RISCO has ceased and
the corporate property has been liquidated and distributed to the stockholders. The records only indicate that, as
per SEC Certification, the SEC merely suspended RISCO’s Certificate of Registration due to its non-submission of
SEC required reports and its failure to operate for a continuous period of at least five years.

Verily, Aznar, et al., who are stockholders of RISCO, cannot claim ownership over the properties at issue in this case
on the strength of the Minutes which, at most, is merely evidence of a loan agreement between them and the
company. There is no indication or even a suggestion that the ownership of said properties were transferred to
them which would require no less that the said properties be registered under their names. For this reason, the
complaint should be dismissed since Aznar, et al., have no cause to seek a quieting of title over the subject
properties. At most, what Aznar, et al., had was merely a right to be repaid the amount loaned to RISCO.
Unfortunately, the right to seek repayment or reimbursement of their contributions used to purchase the subject
properties is already barred by prescription.

12
HEIRS OF MEDRANO v DE VERA
(requisites of intervention)

FACTS: Hilaria and Elena waived all their hereditary rights to a land in favor of Medrano. When Hilaria and Elena
died, some of their children executed separate Deeds of Confirmation of Private Document and Renunciation of
Rights in favor of Medrano. They likewise affirmed in said documents that Medrano had been occupying and
possessing the subject property as owner since September 1982.

Due to the refusal of the other children to sign a similar renunciation, Medrano filed a Complaint for quieting of
title, reconveyance… against them. De Vera filed an Answer with Counterclaim presenting himself as the real party-
in-interest on the ground that some of the defendants had executed a Deed of Renunciation of Rights in his favor.

Medrano filed a Motion to Expunge Answer with Counterclaim of Vera and to Declare Defendants in Default. She
argued that respondent De Vera had no personality to answer the complaint since he was not authorized by the
named defendants to answer in their behalf.

The trial court admitted De Vera’s Answer with Counterclaim. In the same Order, the court declared the named
defendants in default for not answering the complaint despite valid service of summons. Medrano then asked the
court to order De Vera to file a pleading-in-intervention so that he could be properly named as a defendant in the
case. The trial court granted Medrano’s motion and ordered De Vera to file a pleading-in-intervention. De Vera did
not comply. The RTC then ruled against De Vera which was reversed by the CA.

ISSUE: Whether De Vera could participate in the case without filing a motion to intervene

HELD: YES. De Vera’s interest is not independent of or severable from the interest of the named defendants. De
Vera is a transferee pendente lite of the named defendants. His rights were derived from the named defendants
and, as transferee pendente lite, he would be bound by any judgment against his transferors under the rules of res
judicata. Thus, De Vera’s interest cannot be tried separately from the interest of the named defendants.

It was therefore wrong for the trial court to have tried Medrano’s case against the named defendants (by allowing
Medrano to present evidence ex parte against them) after it had already admitted De Vera’s answer. What the trial
court should have done is to treat De Vera as having been joined as a party-defendant. As transferee pendente lite,
De Vera may be allowed to join the original defendants under Rule 3, Section 19.

The provision gives the trial court discretion to allow or disallow the substitution or joinder by the transferee.
While the rule allows for discretion, the paramount consideration should be the protection of the parties’ interests
and their rights to due process. In the instant case, the circumstances demanded that the trial court had already
admitted De Vera’s answer when it declared the original defendants in default. As there was a transferee pendente
lite whose answer had already been admitted, the trial court should have tried the case on the basis of that answer.

Thus, the default of the original defendants should not result in the ex parte presentation of evidence because De
Vera filed the answer. The SC noted that under Rule 3, Section 19, the substitution or joinder of the transferee is
“upon motion”, and De Vera did not file any motion for substitution or joinder. However, this technical flaw may be
disregarded for the fact remains that the court had already admitted his answer.

The purpose of intervention is to enable a stranger to an action to become a party in order for him to protect his
interest and for the court to settle all conflicting claims. In this case, De Vera is not a stranger to the action but a
transferee pendente lite. As mentioned, a transferee pendente lite is deemed joined in the pending action from the
moment when the transfer of interest is perfected.

De Vera’s failure to file a pleading-in-intervention will not change the violation of his right to due process. The ex
parte presentation of evidence had already been terminated when the trial court required De Vera to file his
pleading-in-intervention. Even if he complied with the order to file a pleading-in-intervention, the damage had
already been done. The case should be remanded to the trial court for trial based on De Vera’s answer and with his
participation.

13
BOARD OF REGENTS OF MSU v OSOP
(requisites of intervention)

FACTS: Respondent Osop is the former Chancellor of the MSU-GSC campus. Osop retired but thereafter appointed
as a substitute for another professor. Muslim, the succeding chancellor renewed Osop's appointment which was
duly noted by the MSU Bord of Regents.

However, Muslim caused to be served upon offices of MSU-GSC a letter addressed to Osop stating in essence that
Prof. Dadula whom Osop have been serving as substitute has returned and that the services of Osop will have to
end. Ramos stated that Osop was hired in view of the study leave of Fuerzas. Muslim hpwever reiterated his earlier
order to Ramos to already distribute Osop's teaching load.

Osop then filed before the RTC a complaint for Injunction with Prayer for Writ of Preliminary Injunction/TRO,
Damages against Muslim and Ramos. Muslim and Ramos filed before the RTC a Motion to Dismiss. RTC dismissed
the case which the CA reversed on appeal. The MSU filed a motion to intervene before the CA which was dismissed.

ISSUE: Whether the MSU has the right to intervene

HELD: NO. Jurisprudence describes intervention as “a remedy by which a third party, not originally impleaded in
the proceedings, becomes a litigant therein to enable him, her or it to protect or preserve a right or interest which
may be affected by such proceedings.” “The right to intervene is not an absolute right; it may only be permitted by
the court when the movant establishes facts which satisfy the requirements of the law authorizing it.”

While undoubtedly, MSU has a legal interest in the outcome of the case, it may not avail itself of the remedy of
intervention simply because MSU is not a third party in the proceedings herein.

In Osop’s Amended Complaint before the RTC, MSU was already impleaded as one of the defendants in Civil Case
No. 6381. MSU came under the jurisdiction of the RTC when it was served with summons. It participated in Civil
Case No. 6381, where it was represented by Atty. Fontanilla, counsel for Muslim and Ramos, who was deputized by
the OSG as counsel for MSU. MSU adopted the Answer to the Amended Complaint of its co-defendants, Muslim and
Ramos, and also joined Muslim and Ramos in subsequent pleadings filed before the RTC in Civil Case No. 6381.
Evidently, the rights and interests of MSU were duly presented before the RTC in Civil Case No. 6381.

Unfortunately, the RTC issued the Orders dated March 20, 2003 and August 21, 2003 in Civil Case No. 6381 adverse
to MSU and its co-defendants, Muslim and Ramos. The Orders dated March 20, 2003 and August 21, 2003 of the
RTC in Civil Case No. 6381 granted summary judgment in Osop’s favor. Muslim filed his Petition for Certiorari and
Prohibition in CA-G.R. SP No. 82052 which is still pending before the CA. Consequently, the SC is careful not to
make any declarations herein that will prematurely judge the merits of CA-G.R. SP No. 82052.

MSU, on its part, neither filed an appeal nor a Petition for Certiorari before the Court of Appeals to challenge the
adverse RTC Orders. MSU sat on its rights. Despite receiving on September 2, 200367 a copy of the RTC Order
dated August 21, 2003 (denying the Motion for Reconsideration of the RTC Order dated March 20, 2003 filed by
MSU, together with Muslim and Ramos) in Civil Case No. 6381, MSU did not act until it filed its Motion for
Intervention on January 14, 200568 in CA-G.R. SP No. 82052, after an interval of 16 months. Evidently, it was
already way beyond the reglementary period for MSU to file an appeal or a Petition for Certiorari. The RTC Orders
dated March 20, 2003 and August 21, 2003 had already become final and executory as to MSU. It cannot now
circumvent the finality of the RTC Orders by seeking to intervene in CA-G.R. SP No. 82052 and thereby, to unduly
benefit from the timely action taken by Muslim, who alone, filed the Petition in CA-G.R. SP No. 82052.

14
MALVAR v KRAFT FOODS PHILS INC.
(requisites for intervention)

FACTS: KFPI hired Malvar as its Corporate Planning Manager. Respondent Bautista, as Chairman of the Board of
KFPI, sent Malvar a memo directing her to explain why no administrative sanctions should be imposed on her for
possible breach of trust and confidence and for willful violation of company rules and regulations. Following the
submission of her written explanation, an investigating body wa s formed. In due time, she was placed under
preventive suspension. Ultimately, she was served a notice of termination.

Malvar filed a complaint for illegal suspension and illegal dismissal against KFPI and Bautista in the NLRC. The
Labor Arbiter found and declared her suspension and dismissal illegal, and ordered her reinstatement, and the
payment of her full backwages, inclusive of allowances and other benefits, plus attorney’s fees. The NLRC affirmed
the decision. The CA affirmed the lower court's decision on appeal (though reversing the order of reinstatement;
instead, directing the payment of separation pay to Malvar). LA found the total monetary award of Malvar to ~27M.
Respondents went to the CA assailing the NLRC's setting aside of the computation by the LA. Petition was granted.

The parties then entered into a compromise agreement while the case was pending before the SC. Malvar then file
a motion to dismiss/withdraw case in view of the compromise agreement. Before the SC could act on the motion,
the Court received a motion for intervention to protect attorney's rights from the Law Firm of Dasal, Llasos, and
Associates whereby it shought that both Malvar and KFPI be held to pay the Intervenor's contingent fees.

Subsequently, to the Intervenor’s surprise, Malvar unceremoniously and without any justifiable reason terminated
its legal service and required it to withdraw from the case. Hence, the Intervenor reluctantly filed a Manifestation
(With Motion to Withdraw as Counsel for Petitioner) but stated the desire of the Intervenor to assert and claim its
contingent fee notwithstanding its withdrawal as counsel.

ISSUE: Whether the Motion for Intervention to protect attorney’s rights can prosper

HELD: YES. An attorney is entitled to have and to receive a just and reasonable compensation for services
performed at the special instance and request of his client. The attorney who has acted in good faith and honesty in
representing and serving the interests of the client should be reasonably compensated for his service. The Court
disapproves of the tendencies of clients compromising their cases behind the backs of their attorneys for the
purpose of reducing or completely setting to naught the stipulated contingent fees. Thus, the Court grants the
Intervenor’s Motion for Intervention to Protect Attorney’s Rights as a measure of protecting the Intervenor’s right
to its stipulated professional fees that would be denied under the compromise agreement. The Court does so in the
interest of protecting the rights of the practicing Bar rendering professional services on contingent fee basis.

Nonetheless, the claim for attorney’s fees does not void or nullify the compromise agreement between Malvar and
the respondents. There being no obstacles to its approval, the Court approves the compromise agreement. The
Court adds, however, that the Intervenor is not left without a remedy, for the payment of its adequate and
reasonable compensation could not be annulled by the settlement of the litigation without its participation and
conformity. It remains entitled to the compensation, and its right is safeguarded by the Court because its members
are officers of the Court who are as entitled to judicial protection against injustice or imposition of fraud
committed by the client as much as the client is against their abuses as her counsel. In other words, the duty of the
Court is not only to ensure that the attorney acts in a proper and lawful manner, but also to see to it that the
attorney is paid his just fees. Even if the compensation of the attorney is dependent only on winning the litigation,
the subsequent withdrawal of the case upon the client’s initiative would not deprive the attorney of the legitimate
compensation for professional services rendered.

The basis of the intervention is the written agreement on contingent fees contained in the engagement executed
between Malvar and the Intervenor. The Intervenor’s withdrawal from the case neither cancelled nor terminated
the written agreement on the contingent attorney’s fees. Nor did the withdrawal constitute a waiver of the
agreement. On the contrary, the agreement continued between them because the Intervenor’s Manifestation (with
Motion to Withdraw as Counsel for Petitioner) explicitly called upon the Court to safeguard its rights under the
written agreement.

15
PACANA-CONTRERAS v. ROVILA WATER SUPPLY
(requisites for intervention)

FACTS: Petitioners Rebecca and Rosalie, children of sps Lourdes and Luciano Pacana, filed a case against
respondents for accounting and damages. They filed their complaint in their own names although Rosalie was
authorized by Lourdes through a SPA. Lourdes died.

During the pre-trial, respondents manifested to the RTC that a substitution of the parties was necessary in light of
the deaths of Lourdes and Luciano. They further stated that they would seek dismissal of the complaint because the
petitioners are not the real party in interest. However, the motion to dismiss on the grounds, among others, that
the petitioners are not the real parties in interest and they have no valid cause of action against the respondents
was filed only after the conclusion of the pre-trial conference/after the period to file an answer has lapsed. The
RTC denied the motion for being filed out of time which was reversed on appeal to the CA.

ISSUE: Whether there was a failure to implead the real parties in interest (sps Pacana)

HELD: A distinction between a real party in interest and an indispensable party is in order. A real party in interest
is the party who stands to be benefited or injured by the judgment of the suit, or the party entitled to the avails of
the suit. On the other hand, an indispensable party is a party in interest without whom no final determination can
be had of an action, in contrast to a necessary party, which 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. If a suit is not brought in the name of or against the real party in
interest, a motion to dismiss may be filed on the ground that the complaint states no cause of action. However, the
dismissal on this ground entails an examination of whether the parties presently pleaded are interested in the
outcome of the litigation, and not whether all persons interested in such outcome are actually pleaded. The latter
query is relevant in discussions concerning indispensable and necessary parties, but not in discussions concerning
real parties in interest. Both indispensable and necessary parties are considered as real parties in interest.

Spouses Pacaña were not impleaded as parties-plaintiffs who are indispensable parties to the case. Without their
inclusion, there can be no final determination of the case. They possess such an interest that a final decree would
necessarily affect their rights. The courts cannot proceed without their presence.

The failure to implead indispensable parties is a curable error. In Galicia v. Vda. De Mindo, the Court allowed the
intervention of the indispensable parties instead of dismissing the complaint. In another case, the Court held that
the Court has full powers to amend the processes, pleadings, proceedings and decisions by substituting as party-
plaintiff the real party in interest. The Court has the power to avoid delay and to order its amendment in order to
implead an indispensable party. As such, the proper remedy in the case is to implead the indispensable parties
especially when their non-inclusion is merely a technical defect.

Pursuant to the Rules of Court, 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. If the plaintiff refuses to implead an indispensable party despite the order of
the court, then the court may dismiss the complaint for the plaintiff’s failure to comply with a lawful court order.
The operative act that would lead to the dismissal of the case would be the refusal to comply with the directive of
the court for the joinder of an indispensable party to the case. Upon the death of the spouses, their ownership and
rights over their properties were transmitted to their heirs, including herein petitioners. The heirs, whose
hereditary rights are to be affected by the case, are deemed indispensable parties who should be impleaded.
Therefore, the heirs of the spouses Pacaña, except the petitioners who are already parties to the case and Lagrimas
who intervened, are hereby ordered impleaded as parties-plaintiffs.

16
SALES v SABINO
(depositions pending action/appeal; uses; scope of examination)

FACTS: Respondent filed a complaint for damages against, among others, the petitioner. Before any responsive
pleading could be filed, the respondent notified the defendants that he will take the deposition of one Corral before
the Clerk of Court, RTC Pasig City. The deposition on oral examination of Corral was taken in the presence and with
the active participation of petitioner’s counsel who even lengthily cross-examined the deponent.

Respondent had the deposition of Corral marked as her Exhibits “DD” and “EE,”. Upon conclusion of her
evidentiary presentation, respondent made a Formal Offer of Exhibits. Petitioner opposed the admission of Exhs.
“DD” and “EE” and even asked that they be expunged from the records on the ground that the jurisdictio nal
requirements for their admission under Section 4, Rule 23 of the Rules of Court, infra, were not complied with. He
also downplayed the evidentiary value of Exhibit “BB”. The RTC admitted these as evidence. On appeal, the CA
affirmed the RTC decision.

ISSUE: Whether the requirements of Section 4, Rule 24 (now Section 3) of the Revised Rules of Court were satisfied
by the respondent when it presented a certification attesting to the fact that deponent has left the country but
silent as to whether or not at the time his deposition was offered in evidence is in the Philippines

Whether the petitioner in cross-examining the deponent during the taking of his deposition waived any and all
objections in connection therewith.

HELD: YES and NO. While depositions may be used as evidence in court proceedings, they are generally not meant
to be a substitute for the actual testimony in open court of a party or witness. Any deposition offered during a trial
to prove the facts therein set out, in lieu of the actual oral testimony of the deponent in open court, may be opposed
and excluded on the ground of hearsay. However, depositions may be used without the deponent being called to
the witness stand by the proponent, provided the existence of certain conditions is first satisfactorily established.
Five exceptions for the admissibility of a deposition are listed in Section 4, Rule 23 of the Rules of Court. Among
these is when the witness is out of the Philippines.

The trial court had determined that deponent Corral was abroad when the offer of his deposition was made. This
factual finding of absence or unavailability of witness to testify deserves respect, having been adequately
substantiated. The certification by the Bureau of Immigration—Exh. “BB”—provides that evidentiary support.
Accordingly, the attribution of grave abuse of discretion on the part of the trial court must be struck down. It has
been said to be customary for courts to accept statements of parties as to the unavailability of a witness as a
predicate to the use of depositions. Had deponent Corral indeed returned to the Philippines, petitioner could have
presented evidence to show that such was the case. However, the petitioner does not even assert the return as a
fact, only offering it as a possibility since no contrary proof had been adduced.

The second issue of whether petitioner is estopped from objecting to the use of Corral’s deposition as part of
respondent’s evidence is no longer determinative of the outcome of this case. It matters not that opportunity for
cross-examination was afforded during the taking of the deposition; for normally, the opportunity for cross-
examination must be accorded a party at the time the testimonial evidence is actually presented against him during
the trial or hearing. In fine, the act of cross-examining the deponent during the taking of the deposition cannot,
without more, be considered a waiver of the right to object to its admissibility as evidence in the trial proper. In
participating, therefore, in the taking of the deposition, but objecting to its admissibility in court as evidence,
petitioner did not assume inconsistent positions. He is not, thus, estopped from challenging the admissibility of the
deposition just because he participated in the taking thereof.

Section 29, Rule 23 of the Rules of Court lends support to such conclusion. It provides that, while errors and
irregularities in depositions as to notice, qualifications of the officer conducting the deposition, and manner of
taking the deposition are deemed waived if not objected to before or during the taking of the deposition, objections
to the competency of a witness or the competency, relevancy, or materiality of testimony may be made for the first
time at the trial and need not be made at the time of the taking of the deposition, unless they could be obviated at
that point.

17
SPOUSES AFULUGENCIA v METROBANK
(effect of failure to serve written interrogatories)

FACTS: Petitioners filed a complaint against respondents. After the filing of the parties’ pleadings and with the
conclusion of pre-trial, petitioners filed a Motion for Issuance of Subpoena Duces Tecum Ad Testificandum to
require Metrobank’s officers to appear and testify as the petitioners’ initial witnesses during the hearing for the
presentation of their evidence-in-chief.

Metrobank filed an Opposition arguing that for lack of a proper notice of hearing, the Motion must be denied; that
being a litigated motion, the failure of petitioners to set a date and time for the hearing renders the Motion
ineffective and pro forma. Metrobank’s officers — who are considered adverse parties — may not be compelled to
appear and testify in court for the petitioners since they were not initially served with written interrogatories; that
petitioners have not shown the materiality and relevance of the documents sought to be produced in court; and
that petitioners were merely fishing for evidence. The RTC denied the motion which the CA affirmed on appeal.

ISSUE: Whether the motion should be denied

HELD: YES. [Metrobank was notified of the Motion for Issuance of Subpoena Duces Tecum Ad Testificandum; in
fact, it filed a timely Opposition thereto. The technical defect of lack of notice of hearing was thus cured by the filing
of the Opposition.]

In civil cases, the procedure of calling the adverse party to the witness stand is not allowed, unless written
interrogatories are first served upon the latter. One of the purposes of the above rule is to prevent fishing
expeditions and needless delays. It will be presumed that a party who does not serve written interrogatories on the
adverse party beforehand will most likely be unable to elicit facts useful to its case if it later opts to call the adverse
party to the witness stand as its witness. Instead, the process could be treated as a fishing expedition or an attempt
at delaying the proceedings; it produces no significant result that a prior written interrogatories might bring.

Besides, since the calling party is deemed bound by the adverse party’s testimony, compelling the adverse party to
take the witness stand may result in the calling party damaging its own case. Otherwise stated, if a party cannot
elicit facts or information useful to its case through the facility of written interrogatories or other mode of
discovery, then the calling of the adverse party to the witness stand could only serve to weaken its own case as a
result of the calling party’s being bound by the adverse party’s testimony, which may only be worthless and instead
detrimental to the calling party’s cause.

Another reason for the rule is that by requiring prior written interrogatories, the court may limit the inquiry to
what is relevant, and thus prevent the calling party from straying or harassing the adverse party when it takes the
latter to the stand. Thus, the rule not only protects the adverse party from unwarranted surprises or harassment; it
likewise prevents the calling party from conducting a fishing expedition or bungling its own case. Using its own
judgment and discretion, the court can hold its own in resolving a dispute, and need not bear witness to the parties
perpetrating unfair court practices such as fishing for evidence, badgering, or altogether ruining their own cases.

In this case, petitioners seek to call Metrobank’s officers to the witness stand as their initial and main witnesses,
and to present documents in Metrobank’s possession as part of their principal documentary evidence. This is
improper. Petitioners may not be allowed, at the incipient phase of the presentation of their evidence-inchief at
that, to present Metrobank’s officers — who are considered adverse parties as well, based on the principle that
corporations act only through their officers and duly authorized agents — as their main witnesses; nor may they be
allowed to gain access to Metrobank’s documentary evidence for the purpose of making it their own. This is
tantamount to building their whole case from the evidence of their opponent. The burden of proof and evidence
falls on petitioners, not on Metrobank; if petitioners cannot prove their claim using their own evidence, then the
adverse party Metrobank may not be pressured to hang itself from its own defense.

It is true that under the Rules, a party may, for good cause shown and to prevent a failure of justice, be compelled
to give testimony in court by the adverse party who has not served written interrogatories. But what petitioners

18
seek goes against the very principles of justice and fair play; they would want that Metrobank provide the very
evidence with which to prosecute and build their case from the start. This they may not be allowed to do.

Finally, the Court may not turn a blind eye to the possible consequences of such a move by petitioners. As one of
their causes of action in their Complaint, petitioners claim that they were not furnished with specific documents
relative to their loan agreement with Metrobank at the time they obtained the loan and while it was outstanding. If
Metrobank were to willingly provide petitioners with these documents even before petitioners can present
evidence to show that indeed they were never furnished the same, any inferences generated from this would
certainly not be useful for Metrobank. One may be that by providing petitioners with these documents, Metrobank
would be admitting that indeed, it did not furnish petitioners with these documents prior to the signing of the loan
agreement, and while the loan was outstanding, in violation of the law.

19
AIR PHILIPPINES CORPORATION v PENNSWELL
(production or inspection of documents or things)

FACTS: Respondent delivered and sold to petitioner sundry goods in trade. Under the contracts, petitioner's total
outstanding obligation amounted to ~449K. For failure of the petitioner to comply with its obligation, respondent
filed a complaint for sum of money.

During the pendency of the trial, petitioner filed a Motion to Compel respondent to give a detailed list of the
ingredients and chemical components of various following products. The RTC granted the motion. Respondent
sought reconsideration of the foregoing Order, contending that it cannot be compelled to disclose the chemical
components sought because the matter is confidential. RTC reversed itself. On appeal, the CA affirmed the RTC
decision.

ISSUE: Whether the motion should be granted

HELD: NO. The chemical composition, formulation, and ingredients of respondent’s special lubricants are trade
secrets within the contemplation of the law. Respondent was established to engage in the business of general
manufacturing and selling of, and to deal in, distribute, sell or otherwise dispose of goods, wares, merchandise,
products and similar preparations, among others. The manufacture and production of respondent’s products
proceed from a formulation of a secret list of ingredients. In the creation of its lubricants, respondent expended
efforts, skills, research, and resources. What it had achieved by virtue of its investments may not be wrested from
respondent on the mere pretext that it is necessary for petitioner’s defense against a collection for a sum of money.
Section 1, Rule 27 of the Rules of Court permits parties to inspect documents or things upon a showing of good
cause before the court in which an action is pending. The production or inspection of documents or things as a
mode of discovery sanctioned by the Rules of Court may be availed of by any party upon a showing of good cause
therefor before the court in which an action is pending. The court may order any party: a) to produce and permit
the inspection and copying or photographing of any designated documents, papers, books, accounts, letters,
photographs, objects or tangible things, which are not privileged; which constitute or contain evidence material to
any matter involved in the action; and which are in his possession, custody or control; or b) to permit entry upon
designated land or other property in his possession or control for the purpose of inspecting, measuring, surveying,
or photographing the property or any designated relevant object or operation thereon.

Rule 27 sets an unequivocal proviso that the documents, papers, books, accounts, letters, photographs, objects or
tangible things that may be produced and inspected should not be privileged. The documents must not be
privileged against disclosure. Such a condition is in addition to the requisite that the items be specifically
described, and must constitute or contain evidence material to any matter involved in the action and which are in
the party’s possession, custody or control.

Section 2429 of Rule 130 draws the types of disqualification by reason of privileged communication, to wit: (a)
communication between husband and wife; (b) communication between attorney and client; (c) communication
between physician and patient; (d) communication between priest and penitent; and (e) public officers and public
interest. There are, however, other privileged matters that are not mentioned by Rule 130. Among them are the
following: (a) editors may not be compelled to disclose the source of published news; (b) voters may not be
compelled to disclose for whom they voted; (c) trade secrets; (d) information contained in tax census returns; and
(d) bank deposits.

Thus, there is substantial basis for respondent to seek protection of the law for its proprietary rights over the
detailed chemical composition of its products.

20
EAGLERIDGE DEVELOPMENT CORP v CAMERON GRANVILLE 3 ASSET MANAGEMENT
(production or inspection of documents or things)

FACTS: Petitioners EDC and sureties Naval an Oben are the defendants in a collection suit filed by EIB and is
currently pending before the RTC. Petitioners filed a Motion for Production/Inspection of the Loan Sale and
Purchase Agreement (LSPA). Respondent Cameron filed its Comment alleging that petitioners have not shown
“good cause” for the production of the LSPA and that the same is allegedly irrelevant to the case a quo. The RTC
denied the motion for failure to show good cause. On appeal, the CA dismissed the petition.

ISSUE: Whether the motion for production/inspection of the LSPA should be granted.

HELD: YES. The provision on production and inspection of documents is one of the modes of discovery sanctioned
by the Rules of Court in order to enable not only the parties, but also the court to discover all the relevant and
material facts in connection with the case pending before it.

Generally, the scope of discovery is to be liberally construed so as to provide the litigants with information
essential to the fair and amicable settlement or expeditious trial of the case. Although the grant of a motion for
production of document is discretionary on the part of the trial court judge, nevertheless, it cannot be arbitrarily or
unreasonably denied because to do so would impair the party-litigant’s fundamental right to due process. The test
to be applied by the trial judge in determining the relevancy of documents and the sufficiency of their description
is one of reasonableness and practicability.

The question was whether respondent had acquired a valid title to the credit, i.e., EDC’s outstanding loan
obligation, and whether it had a right to claim from petitioners. In fact, petitioners had maintained in their motions
before the trial court the nullity or non-existence of the assignment of credit purportedly made between
respondent and EIB (the original creditor).

As respondent Cameron’s claim against the petitioners relies entirely on the validity of the Deed of Assignment, it
is incumbent upon respondent Cameron to allow petitioners to inspect all documents relevant to the Deed,
especially those documents which, by express terms, were referred to and identified in the Deed itself. The LSPA,
which pertains to the same subject matter—the transfer of the credit to respondent is manifestly useful to
petitioners’ defense.

Furthermore, under Section 17, Rule 132 of the 1997 Rules of Court, when part of a writing or record is given in
evidence by one party, the whole of the same subject may be inquired into by the other, and when a detached
writing or record is given in evidence, any other writing or record necessary to its understanding may also be given
in evidence. Since the Deed of Assignment was produced in court by respondent and marked as one of its
documentary exhibits, the LSPA which was made a part thereof by explicit reference and which is necessary for its
understanding may also be inevitably inquired into by petitioners.

In this light, the relevance of the LSPA sought by petitioners is readily apparent.

21