FIRST DIVISION

[G.R. No. 166302. July 28, 2005]

LOTTE PHIL. CO., INC., petitioner, vs. 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.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari[1] assails the July 9, 2004 decision [2] of
the Court of Appeals in CA-G.R. SP No. 72732 and its November 26, 2004
resolution[3] denying reconsideration thereof.
The established facts of this case are as follows:
Privaterespondent(petitionerherein)LottePhils.,Inc.(Lotte)isadomestic
corporation.Petitioners(respondentsherein)areamongthosewhowerehiredand
assignedtotheconfectioneryfacilityoperatedbyprivaterespondent.
OnDecember14,1995andyearlythereafteruntiltheyear20007JMaintenance
andJanitorialServices(7J)enteredintoacontractwithprivaterespondentto
providemanpowerforneededmaintenance,utility,janitorialandotherservicestothe
latter.Incompliancewiththetermsandconditionsoftheservicecontract,andto
accommodatetheneedsofprivaterespondentforpersonnel/workerstodoand
performpieceworks,petitioners,amongothers,werehiredandassignedtoprivate
respondentasrepackersorsealers.
However,eitherinOctober,1999oronFebruary9,2000,privaterespondent
dispensedwiththeirservicesallegedlyduetotheexpiration/terminationoftheservice
contractbyrespondentwith7J.Theywereeithertoldhwagmunakayongpumasok
attatawagannalangkungmaygawa;orwereaskedtowaitpagmagrereportsila
satrabaho.Unfortunately,petitionerswerenevercalledbacktoworkagain.
Aggrieved,petitionerslodgedalaborcomplaintagainstbothprivaterespondentLotte
and7J,forillegaldismissal,regularization,paymentofcorrespondingbackwagesand
relatedemploymentbenefits,13thmonthpay,serviceincentiveleave,moraland
exemplarydamagesandattorneysfeesbasedontotaljudgmentaward.[4]
On February 28, 2001, Labor Arbiter Cresencio G. Ramos, Jr., rendered
judgment[5] declaring 7J as employer of respondents. [6] The arbiter also found
7J guilty of illegal dismissal [7] and ordered to reinstate respondents, [8] pay
P2,374,710.00 as backwages, P713,648.00 as 13 th month pay and
P117,000.00 as service incentive leave pay.[9]

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. In its decision[10] dated April 24, 2002, the
NLRC found no cogent reason to disturb the findings of the labor arbiter and
affirmed its ruling that 7J is the employer of respondents and solely liable for
their claims.
Respondents motion for reconsideration was denied by the NLRC in a
resolution dated June 18, 2002.
Undaunted, they filed a petition for certiorari in the Court of
Appeals[11] against the NLRC and Lotte, insisting that their employer is Lotte
and not 7J.
Lotte, however, denied that respondents were its employees. It prayed
that the petition 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.
On July 9, 2004, the Court of Appeals reversed and set aside the rulings
of the Labor Arbiter and the NLRC. In its decision, the Court of Appeals
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.
Lottes motion for reconsideration was denied, hence this petition, on the
following issues:
8.Whetherornotpetitionerhereinhadtheburdenofprooftoestablishbeforethe
proceedingsintheCourtofAppealsthat7JMaintenanceandJanitorialServicewas
notalaboronlycontractor.
8.1.WhetherornotthePetitioninCAG.R.SPNo.72732isdismissibleforfailure
tocomplywithSection3,Rule46inrelationtoSection5,Rule65ofthe1997Rules
ofCivilProcedure.[12]
We first resolve the procedural issue raised by petitioner. Lotte asserts
that 7J is an indispensable party and should have been impleaded in
respondents petition in the Court of Appeals. It claims that the petition before
the Court of Appeals was dismissible for failure to comply with Section 3,
[13]
Rule 46 in relation to Section 5 [14] of Rule 65 of the Revised Rules of Civil
Procedure.
Petitioners contention is tenable.
An indispensable party is a party in interest without whom no final
determination can be had of an action, [15] and who shall be joined either as
plaintiffs or defendants.[16] The joinder of indispensable parties is mandatory.
[17]
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.[18] Thus, without the presence of indispensable parties to a suit

or proceeding, judgment of a court cannot attain real finality.[19] 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.[20]
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.
In Domingo v. Scheer,[21] we held that the non-joinder of indispensable
parties is not a ground for the dismissal of an action [22] and the remedy is to
implead the non-party claimed to be indispensable. [23] 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/plaintiffs failure to comply therefor.[24]
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 light of the foregoing, the Court sees no need to discuss the second
issue raised by petitioner.
WHEREFORE, the July 9, 2004 decision of the Court of Appeals in CAG.R. SP No. 72732 and the November 26, 2004 resolution, are SET ASIDE.
Let the case be REMANDED to the Court of Appeals to include 7J
Maintenance and Janitorial Services as an indispensable party to the case for
further proceedings.
SO ORDERED.
[13]

SEC. 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.

The failure of the petitioner to comply with any of the foregoing

requirements shall be sufficient ground for the dismissal of the petition.

[14]

SEC. 5. Respondents and costs in certain cases. When the petition filed
relates to the acts or omissions of a judge, court, quasi-judicial agency,
tribunal, corporation, board, officer or person, the petitioner shall join,
as private respondent or respondents with such public respondent or
respondents, the person or persons interested in sustaining the
proceedings in the court; and it shall be the duty of such private
respondents to appear and defend, both in his or their own behalf and
in behalf of the public respondent or respondents affected by the
proceedings, and the costs awarded in such proceedings in favor of the
petitioner shall be against the private respondents only, and not against
the judge, court, quasi-judicial agency, tribunal, corporation, board,
officer or person impleaded as public respondent or respondents.
THIRD DIVISION

LEONIS NAVIGATION CO., INC. and WORLD

MARINE PANAMA, S.A.,
Petitioners,
- versus -

CATALINO U. VILLAMATER and/or The Heirs

of the Late Catalino U. Villamater, represented
herein by Sonia Mayuyu Villamater; and
NATIONAL LABOR RELATIONS
COMMISSION,
Respondents.

G.R. No. 179169

Present:
CORONA, J.,
Chairperson,
VELASCO, JR.,
NACHURA,
PERALTA, and
MENDOZA, JJ.
Promulgated:
March 3, 2010

x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:

This is a petition for review on certiorari[1] under Rule 45 of the Rules of

Court, seeking to annul and set aside the Decision [2] dated May 3, 2007 and the
Resolution[3]dated July 23, 2007 of the Court of Appeals (CA) in CA-G.R. SP No.
85594, entitled Leonis Navigation Co., Inc., et al. v. Catalino U. Villamater, et al.

The antecedents of this case are as follows:

Private respondent Catalino U. Villamater (Villamater) was hired as Chief
Engineer for the ship MV Nord Monaco, owned by petitioner World Marine
Panama, S.A., through the services of petitioner Leonis Navigation Co., Inc. (Leonis),
as the latters local manning agent. Consequent to this employment, Villamater, on
June 4, 2002, executed an employment contract, [4] incorporating the Standard Terms
and Conditions Governing the Employment of Filipino Seafarers on Board OceanGoing Vessels as prescribed by the Philippine Overseas Employment Administration
(POEA).
Prior to his deployment, Villamater underwent the required Pre-Employment
Medical Examination (PEME). He passed the PEME and was declared Fit to
Work.[5] Thereafter, Villamater was deployed on June 26, 2002.
Sometime in October 2002, around four (4) months after his deployment,
Villamater suffered intestinal bleeding and was given a blood transfusion. Thereafter,
he again felt weak, lost considerable weight, and suffered intermittent intestinal
pain. He consulted a physician in Hamburg, Germany, who advised hospital
confinement. Villamater was diagnosed with Obstructive Adenocarcinoma of the
Sigmoid, with multiple liver metastases, possibly local peritoneal carcinosis and
infiltration of the bladder, possibly lung metastasis, and anemia; Candida Esophagitis;
and Chronic Gastritis. He was advised to undergo chemotherapy and continuous
supportive treatment, such as pain-killers and blood transfusion.[6]
Villamater was later repatriated, under medical escort, as soon as he was
deemed fit to travel. As soon as he arrived in the Philippines, Villamater was referred
to company-designated physicians. The diagnosis and the recommended treatment
abroad were confirmed. He was advised to undergo six (6) cycles of
chemotherapy. However, Dr. Kelly Siy Salvador, one of the company-designated
physicians, opined that Villamaters condition appears to be not work-related, but
suggested a disability grading of 1.[7]
In the course of his chemotherapy, when no noticeable improvement occurred,
Villamater filed a complaint[8] before the Arbitration Branch of the National Labor
Relations Commission (NLRC) for payment of permanent and total disability benefits
in the amount of US$80,000.00, reimbursement of medical and hospitalization
expenses in the amount of P11,393.65, moral damages in the sum of P1,000,000.00,
exemplary damages in the amount of P1,000,000.00, as well as attorneys fees.
After the submission of the required position papers, the Labor Arbiter
rendered a decision[9] dated July 28, 2003 in favor of Villamater, holding that his
illness was compensable, but denying his claim for moral and exemplary
damages. The Labor Arbiter disposed as follows
WHEREFORE, foregoing premises considered, judgment is
hereby rendered declaring complainants illness to be compensable and
ordering respondents LEONIS NAVIGATION CO., INC. and WORLD
MARINE PANAMA, S.A. liable to pay, jointly and severally,
complainant CATALINO U. VILLAMATER, the amount of

US$60,000.00 or its Philippine Peso equivalent at the time of actual

payment, representing the latters permanent total disability benefits
plus ten percent (10%) thereof as Attorneys Fees.
All other claims are dismissed for lack of merit.
SO ORDERED.[10]
Petitioners appealed to the NLRC. Villamater also filed his own appeal,
questioning the award of the Labor Arbiter and claiming that the 100% degree of
disability should be compensated in the amount of US$80,000.00, pursuant to Section
2, Article XXI of the ITF-JSU/AMOSUP Collective Bargaining Agreement (CBA)
between petitioners and Associated Marine Officers & Seamens Union of the
Philippines, which covered the employment contract of Villamater.
On February 4, 2004, the NLRC issued its resolution, [11] dismissing the
respective appeals of both parties and affirming in toto the decision of the Labor
Arbiter.
Petitioners filed their motion for reconsideration of the February 4, 2004
resolution, but the NLRC denied the same in its resolution dated June 15, 2004.
Aggrieved, petitioners filed a petition for certiorari under Rule 65 of the Rules
of Court before the CA. After the filing of the required memoranda, the CA rendered
its assailed May 3, 2007 Decision, dismissing the petition. The appellate court,
likewise, denied petitioners motion for reconsideration in its July 23, 2007
Resolution.
Hence, this petition based on the following grounds, to wit:
First, the Court of Appeals erroneously held that [the]
Commissions Dismissal Decision does not constitute grave abuse of
discretion amounting to lack or excess of jurisdiction but mere error of
judgment, considering that the decision lacks evidentiary support and
is contrary to both evidence on record and prevailing law and
jurisprudence.
Second, the Court of Appeals seriously erred in upholding the
NLRCs decision to award Grade 1 Permanent and Total Disability
Benefits in favor of seaman Villamater despite the lack of factual and
legal basis to support such award, and more importantly, when it
disregarded undisputed facts and substantial evidence presented by
petitioners which show that seaman Villamaters illness was not workrelated and hence, not compensable, as provided by the Standard
Terms of the POEA Contract.

Third, the Court of Appeals erred in holding that non-joinder of

indispensable parties warrant the outright dismissal of the Petition for
Review on Certiorari.
Fourth, the Court of Appeals erroneously held that final and
executory decisions or resolutions of the NLRC render appeals to
superior courts moot and academic.
Last, the Court of Appeals seriously erred in upholding the
award of attorneys fees considering that the grant has neither factual
nor legal basis.[12]
Before delving into the merits of this petition, we deem it fit to discuss the
procedural issues raised by petitioners.
First. It is worthy to note that the CA dismissed the petition, considering that
(1) the June 15, 2004 Resolution of the NLRC had already become final and
executory on June 26, 2004, and the same was already recorded in the NLRC Book of
Entries of Judgments; and that (2) the award of the Labor Arbiter was already
executed, thus, the case was closed and terminated.
According to Sections 14 and 15, Rule VII of the 2005 Revised Rules of
Procedure of the NLRC
Section 14. Finality of decision of the commission and entry
of judgment. a) Finality of the Decisions, Resolutions or Orders of
the Commission. Except as provided in Section 9 of Rule X, the
decisions, resolutions or orders of the Commission shall become final
and executory after ten (10) calendar days from receipt thereof by the
parties.
b) Entry of Judgment. Upon the expiration of the ten (10)
calendar day period provided in paragraph (a) of this Section, the
decision, resolution, or order shall be entered in a book of entries
of judgment.
The Executive Clerk or Deputy Executive Clerk shall consider
the decision, resolution or order as final and executory after sixty (60)
calendar days from date of mailing in the absence of return cards,
certifications from the post office, or other proof of service to parties.
Section 15. Motions for reconsideration. Motion for
reconsideration of any decision, resolution or order of the Commission
shall not be entertained except when based on palpable or patent
errors; provided that the motion is under oath and filed within ten (10)
calendar days from receipt of decision, resolution or order, with proof
of service that a copy of the same has been furnished, within the
reglementary period, the adverse party; and provided further, that only
one such motion from the same party shall be entertained.

Should a motion for reconsideration be entertained

pursuant to this SECTION, the resolution shall be executory after
ten (10) calendar days from receipt thereof.[13]
Petitioners received the June 15, 2004 resolution of the NLRC, denying their
motion for reconsideration, on June 16, 2004. They filed their petition
for certiorari before the CA only on August 9, 2004,[14] or 54 calendar days from the
date of notice of the June 15, 2004 resolution. Considering that the above-mentioned
10-day period had lapsed without petitioners filing the appropriate appeal, the NLRC
issued an Entry of Judgment dated June 28, 2004.
Moreover, by reason of the finality of the June 15, 2004 NLRC resolution, the
Labor Arbiter issued on July 29, 2004 a Writ of Execution. [15] Consequently, Leonis
voluntarily paid Villamaters widow, Sonia M. Villamater (Sonia), the amount
of P3,649,800.00, with Rizal Commercial and Banking Corporation (RCBC)
Managers Check No. 0000008550[16] dated August 12, 2004, as evidenced by the
Acknowledgment Receipt[17] dated August 13, 2004, and the Cheque Voucher[18] dated
August 12, 2004. Following the complete satisfaction of the judgment award, the
Labor Arbiter issued an Order[19] dated September 8, 2004 that reads
There being complete satisfaction of the judgment award as
shown by the record upon receipt of the complainant of the amount
of P3,649,800.00, voluntarily paid by the respondent, as full and final
satisfaction of the Writ of Execution dated July 29, 2004; and finding
the same to be not contrary to law, morals, good custom, and public
policy, and pursuant to Section 14, Rule VII of the Rules of Procedure
of the National Labor Relations Commission (NLRC), this case is
hereby
ordered DISMISSED with
prejudice,
and
considered CLOSED and TERMINATED.
SO ORDERED.
Petitioners never moved for a reconsideration of this Order regarding the
voluntariness of their payment to Sonia, as well as the dismissal with prejudice and
the concomitant termination of the case.
However, petitioners argued that the finality of the case did not render the
petition for certiorari before the CA moot and academic. On this point, we agree with
petitioners.
In the landmark case of St. Martin Funeral Home v. NLRC,[20] we ruled that
judicial review of decisions of the NLRC is sought via a petition for certiorari under
Rule 65 of the Rules of Court, and the petition should be filed before the CA,
following the strict observance of the hierarchy of courts. Under Rule 65, Section 4,
[21]
petitioners are allowed sixty (60) days from notice of the assailed order or
resolution within which to file the petition. Thus, although the petition was not filed

within the 10-day period, petitioners reasonably filed their petition

for certiorari before the CA within the 60-day reglementary period under Rule 65.
Further, a petition for certiorari does not normally include an inquiry into the
correctness of its evaluation of the evidence. Errors of judgment, as distinguished
from errors of jurisdiction, are not within the province of a special civil action
for certiorari, which is merely confined to issues of jurisdiction or grave abuse of
discretion. It is, thus, incumbent upon petitioners to satisfactorily establish that the
NLRC acted capriciously and whimsically in order that the extraordinary writ
of certiorari will lie. By grave abuse of discretion is meant such capricious and
whimsical exercise of judgment as is equivalent to lack of jurisdiction, and it must be
shown that the discretion was exercised arbitrarily or despotically.
The CA, therefore, could grant the petition for certiorari if it finds that the
NLRC, in its assailed decision or resolution, committed grave abuse of discretion by
capriciously, whimsically, or arbitrarily disregarding evidence that is material to or
decisive of the controversy; and it cannot make this determination without looking
into the evidence of the parties. Necessarily, the appellate court can only evaluate the
materiality or significance of the evidence, which is alleged to have been capriciously,
whimsically, or arbitrarily disregarded by the NLRC, in relation to all other evidence
on record.[22] Notably, if the CA grants the petition and nullifies the
decision or resolution of the NLRC on the ground of grave abuse of discretion
amounting to excess or lack of jurisdiction, the decision or resolution of the NLRC is,
in contemplation of law, null and void ab initio; hence, the decision or resolution
never became final and executory.[23]
In the recent case Bago v. National Labor Relations Commission,[24] we had
occasion to rule that although the CA may review the decisions or resolutions of the
NLRC on jurisdictional and due process considerations, particularly when the
decisions or resolutions have already been executed, this does not affect the statutory
finality of the NLRC decisions or resolutions in view of Rule VIII, Section 6 of the
2002 New Rules of Procedure of the NLRC, viz.:
RULE VIII
xxxx
SECTION 6. EFFECT OF FILING OF PETITION FOR
CERTIORARI ON EXECUTION. A petition for certiorari with the
Court of Appeals or the Supreme Court shall not stay the execution of
the assailed decision unless a temporary restraining order is issued by
the Court of Appeals or the Supreme Court.[25]
Simply put, the execution of the final and executory decision or resolution of
the NLRC shall proceed despite the pendency of a petition for certiorari, unless it is
restrained by the proper court. In the present case, petitioners already paid
Villamaters widow, Sonia, the amount of P3,649,800.00, representing the total and
permanent disability award plus attorneys fees, pursuant to the Writ of Execution
issued by the Labor Arbiter. Thereafter, an Order was issued declaring the case as

closed and terminated. However, although there was no motion for reconsideration
of this last Order, Sonia was, nonetheless, estopped from claiming that the
controversy had already reached its end with the issuance of the Order closing and
terminating the case. This is because the Acknowledgment Receipt she signed when
she received petitioners payment was without prejudice to the final outcome of the
petition for certiorari pending before the CA.
Second. We also agree with petitioners in their position that the CA erred in
dismissing outright their petition for certiorari on the ground of non-joinder of
indispensable parties. It should be noted that petitioners impleaded only the then
deceased Villamater[26] as respondent to the petition, excluding his heirs.
Rule 3, Section 7 of the Rules of Court defines indispensable parties as those
who are parties in interest without whom there can be no final determination of an
action.[27] They are those parties who possess such an interest in the controversy that a
final decree would necessarily affect their rights, so that the courts cannot proceed
without their presence.[28] A party is indispensable if his interest in the subject matter
of
the
suit
and
in
the
relief
sought is inextricably intertwined with the other parties interest.[29]
Unquestionably, Villamaters widow stands as an indispensable party to this case.
Under Rule 3, Section 11 of the Rules of Court, neither misjoinder nor nonjoinder of parties is a ground for the dismissal of an action, thus:
Sec. 11. Misjoinder and non-joinder of parties. Neither
misjoinder nor non-joinder of parties is ground for dismissal of an
action. Parties may be dropped or added by order of the court on
motion of any party or on its own initiative at any stage of the action
and on such terms as are just. Any claim against a misjoined party may
be severed and proceeded with separately.
The proper remedy is to implead the indispensable party at any stage of the
action. The court, either motu proprio or upon the motion of a party, may order the
inclusion of the indispensable party or give the plaintiff an opportunity to amend his
complaint in order to include indispensable parties. If the plaintiff ordered to include
theindispensable party refuses to comply with the order of the court, the complaint
may be dismissed upon motion of the defendant or upon the court's own motion. Only
upon unjustified failure or refusal to obey the order to include or to amend is the
action dismissed.[30]
On the merits of this case, the questions to be answered are: (1) Is Villamater
entitled to total and permanent disability benefits by reason of his colon cancer? (2) If
yes, would he also be entitled to attorneys fees?
As to Villamaters entitlement to total and permanent disability benefits,
petitioners argue, in essence, that colon cancer is not among the occupational diseases
listed under Section 32-A of the POEA Standard Terms and Conditions Governing the
Employment of Filipino Seafarers On-Board Ocean Going Vessels (POEA Standard

Contract), and that the risk of contracting the same was not increased by Villamaters
working conditions during his deployment. Petitioners posit that Villamater had
familial history of colon cancer; and that, although dietary considerations may be
taken, his diet -- which might have been high in fat and low in fiber and could have
thus increased his predisposition to develop colon cancer -- might only be attributed
to him, because it was he who chose what he ate on board the vessels he was assigned
to. Petitioners also cited the supposed declaration of their company-designated
physicians who attended to Villamater that his disease was not work-related.
We disagree.
It is true that under Section 32-A of the POEA Standard Contract, only two
types of cancers are listed as occupational diseases (1) Cancer of the epithelial
lining of the bladder (papilloma of the bladder); and (2) cancer, epithellematous or
ulceration of the skin or of the corneal surface of the eye due to tar, pitch, bitumen,
mineral oil or paraffin, or compound products or residues of these
substances. Section 20 of the same Contract also states that those illnesses not listed
under Section 32 are disputably presumed as work-related. Section 20 should,
however, be read together with Section 32-A on the conditions to be satisfied for an
illness to be compensable,[31] to wit:
For an occupational disease and the resulting disability or death
to be compensable, all the following conditions must be established:
1.

The seafarers work must involve the risk described herein;

2.

The disease was contracted as a result of the seafarers exposure

to the described risks;

3.

The disease was contracted within a period of exposure and

under such other factors necessary to contract it;

4.

There was no notorious negligence on the part of the seafarer.

Colon cancer, also known as colorectal cancer or large bowel cancer, includes
cancerous growths in the colon, rectum and appendix. With 655,000 deaths worldwide
per year, it is the fifth most common form of cancer in the United States of
America and the third leading cause of cancer-related deaths in the Western
World. Colorectal cancers arise from adenomatous polyps in the colon. These
mushroom-shaped growths are usually benign, but some develop into cancer over
time. Localized colon cancer is usually diagnosed through colonoscopy.[32]
Tumors of the colon and rectum are growths arising from the inner wall of the
large intestine. Benign tumors of the large intestine are called polyps. Malignant
tumors of the large intestine are called cancers. Benign polyps can be easily removed
during colonoscopy and are not life-threatening. If benign polyps are not removed
from the large intestine, they can become malignant (cancerous) over time. Most of

the cancers of the large intestine are believed to have developed as polyps. Colorectal
cancer can invade and damage adjacent tissues and organs. Cancer cells can also
break away and spread to other parts of the body (such as liver and lung) where new
tumors form. The spread of colon cancer to distant organs is called metastasis of the
colon cancer. Once metastasis has occurred in colorectal cancer, a complete cure of
the cancer is unlikely.[33]
Globally, colorectal cancer is the third leading cause of cancer in males and
the fourth leading cause of cancer in females. The frequency of colorectal cancer
varies around the world. It is common in the Western world and is rare in Asia and
in Africa. In countries where the people have adopted western diets, the incidence of
colorectal cancer is increasing.[34]
Factors that increase a persons risk of colorectal cancer include high fat
intake, a family history of colorectal cancer and polyps, the presence of polyps in the
large intestine, and chronic ulcerative colitis.[35]
Diets high in fat are believed to predispose humans to colorectal cancer. In
countries with high colorectal cancer rates, the fat intake by the population is much
higher than in countries with low cancer rates. It is believed that the breakdown
products of fat metabolism lead to the formation of cancer-causing chemicals
(carcinogens). Diets high in vegetables and high-fiber foods may rid the bowel of
these carcinogens and help reduce the risk of cancer.[36]
A persons genetic background is an important factor in colon cancer
risk. Among first-degree relatives of colon-cancer patients, the lifetime risk of
developing colon cancer is 18%. Even though family history of colon cancer is an
important risk factor, majority (80%) of colon cancers occur sporadically in patients
with no family history of it. Approximately 20% of cancers are associated with a
family history of colon cancer. And 5% of colon cancers are due to hereditary colon
cancer syndromes. Hereditary colon cancer syndromes are disorders where affected
family members have inherited cancer-causing genetic defects from one or both of the
parents.[37]
In the case of Villamater, it is manifest that the interplay of age, hereditary,
and dietary factors contributed to the development of colon cancer. By the time he
signed his employment contract on June 4, 2002, he was already 58 years old, having
been born on October 5, 1943,[38] an age at which the incidence of colon cancer is
more likely.[39] He had a familial history of colon cancer, with a brother who
succumbed to death and an uncle who underwent surgery for the same illness. [40] Both
the Labor Arbiter and the NLRC found his illness to be compensable for permanent
and total disability, because they found that his dietary provisions while at sea
increased his risk of contracting colon cancer because he had no choice of what to eat
on board except those provided on the vessels and these consisted mainly of high-fat,
high-cholesterol, and low-fiber foods.
While findings of the Labor Arbiter, which were affirmed by the NLRC, are
entitled to great weight and are binding upon the courts, nonetheless, we find it also
worthy to note that even during the proceedings before the Labor Arbiter, Villamater
cited that the foods provided on board the vessels were mostly meat, high in fat and
high in cholesterol. On this matter, noticeably, petitioners were silent when they

argued that Villamaters affliction was brought about by diet and genetics. It was only
after the Labor Arbiter issued his Decision, finding colon cancer to be compensable
because the risk was increased by the victuals provided on board, that petitioners
started claiming that the foods available on the vessels also consisted of fresh fruits
and vegetables, not to mention fish and poultry. It is also worth mentioning that while
Dr. Salvador declared that Villamaters cancer appears to be not work-related, she
nevertheless suggested to petitioners Disability Grade 1, which, under the POEA
Standard Contract, shall be considered or shall constitute total and permanent
disability.[41] During his confinement in Hamburg, Germany, Villamater was
diagnosed to have colon cancer and was advised to undergo chemotherapy and
medical treatment, including blood transfusions. These findings were, in fact,
confirmed by the findings of the company-designated physicians. The statement of
Dr. Salvador that Villamaters colon cancer appears to be not work-related remained
at that, without any medical explanation to support the same. However, this
statement, not definitive as it is, was negated by the same doctors suggestion of
Disability Grade 1. Under Section 20-B of the Philippine Overseas Employment
Administration-Standard Employment Contract (POEA-SEC), it is the companydesignated physician who must certify that the seafarer has suffered a permanent
disability, whether total or partial, due to either injury or illness, during the term of his
employment.[42]
On these points, we sustain the Labor Arbiter and the NLRC in granting total
and permanent disability benefits in favor of Villamater, as it was sufficiently shown
that his having contracted colon cancer was, at the very least, aggravated by his
working conditions,[43] taking into consideration his dietary provisions on board, his
age, and his job as Chief Engineer, who was primarily in charge of the technical and
mechanical operations of the vessels to ensure voyage safety. Jurisprudence provides
that to establish compensability of a non-occupational disease, reasonable proof of
work-connection and not direct causal relation is required. Probability, not the
ultimate degree of certainty, is the test of proof in compensation proceedings.[44]
The Labor Arbiter correctly awarded Villamater total and permanent disability
benefits, computed on the basis of the schedule provided under the POEA Standard
Contract, considering that the schedule of payment of benefits under the ITFJSU/AMOSUP CBA refers only to permanent disability as a result of an accident or
injury.[45]
By reason of Villamaters entitlement to total and permanent disability
benefits, he (or in this case his widow Sonia) is also entitled to the award of attorneys
fees, not under Article 2208(2) of the Civil Code, [w]hen the defendants act or
omission has compelled the plaintiff to litigate with third persons or to incur expenses
to protect his interest, but under Article 2208(8) of the same Code, involving actions
for indemnity under workmens compensation and employers liability laws.
WHEREFORE, the petition is DENIED and the assailed May 3, 2007
Decision and the July 23, 2007 Resolution of the Court of Appeals
are AFFIRMED. Costs against petitioners.
SO ORDERED.
[21]

SEC. 4. When and where position filed. The petition shall be filed not

later than sixty (60) days from notice of the judgment, order or resolution. In case a
motion for reconsideration or new trial is timely filed, whether such motion is
required or not, the sixty (60) day period shall be counted from notice of the denial of
said motion.
[24]
G.R. No. 170001, April 4, 2007, 520 SCRA 644.
[25]
This rule has been substantially incorporated in the NLRC 2005 Revised
Rules of Procedure, which became effective on January 6, 2006, thus:
RULE XI
xxxx
Section 10. Effect of Petition for Certiorari on Execution.A petition for
certiorari with the Court of Appeals or the Supreme Court shall not stay the execution
of the assailed decision unless a restraining order is issued by said courts.
[26]
He died on January 4, 2004.
SECOND DIVISION
G.R. No. L-72714 June 29, 1989
MELECIO V. EMATA, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT, HON. DANIEL C. MACARAEG
in his capacity as Presiding Judge of Branch LV, Regional Trial Court of
Manila and SERVICEWIDE SPECIALISTS. INC., respondents.
Melecio Virgilio Emata Law Office for petitioner.
Nelson A Loyola for private respondent.

REGALAD0, J.:
On July 18, 1985 the then Intermediate Appellate Court promulgated a
decision in AC-G.R. CV No. 02939-R 1affirming in toto the decision of the
Regional Trial Court of Manila, Branch LV, in Civil Case No. 141977 2 an
action for replevin and damages.
The factual antecedents culminating in and constituting the bases of both
decisions had their inchoation in petitioner's purchase of a car on installment
from Violago Motor Sales Corporation (Violago, for brevity) with a down
payment of P 14,982.00. Petitioner likewise executed in favor of the seller a
promissory note and a chattel mortgage over the car as security for the
payment of the note. Said promissory note provides:
For value received, I/We, jointly and severally promise to pay
VIOLAGO MOTOR SALES CORPORATION or order, at its
office in the (sic) San Fernando, Pampanga the principal sum of
fifty seven thousand two hundred four pesos only (P 57,204.00)
Philippine currency, which amount includes interest at 12% per

annum based on the diminishing balance, the said principal

sum, to be payable, without need of notice or demand, in
installments of the amounts following and at the dates
hereinafter set forth, to wit: P 1,589.00 monthly for 36 months
due and payable on the 25th day of each month starting
SEPTEMBER 25, 1978 thru and inclusive of AUGUST 25,
1981 ..., provided that interest at 14% per annum shall be added
on each unpaid installment from maturity hereof until fully paid. 3
Thus, the total amount that the petitioner was supposed to pay was P
72,186.00, with P 57,204.00 as the balance after deducting the down
payment. The total amount payable was P 22,246.00 more than the "list cash
price" of P 49,940.00 for said vehicle.
After the execution of said documents, Violago endorsed the promissory note
and assigned the chattel mortgage to Filinvest Credit Corporation (hereafter,
Filinvest for short) upon payment by the latter of P 34,958.00, the unpaid
balance of the list cash price of the car. Three years later, Filinvest assigned
to private respondent Servicewide Specialists, Inc. the remaining installment
balance due on and corresponding to the period from February 25, 1981 to
August 25, 1981.
Alleging non-payment of five (5) consecutive installments from February 25 to
June 25, 1981, private respondent initiated the case in the trial court for a writ
of replevin to effect the seizure of the car or, alternatively, for the payment by
petitioner of the sum of P 1,332.40, with interest thereon of fourteen percent
(14%) per annum from July 10, 1981 until fully paid and, additionally, for
attorney's fees and costs of suit.
Herein petitioner, in answer thereto and as summarized by the court a quo,
alleged that "the promissory note does not express the true intent and
agreement of the parties, the same having been procured through fraud,
deceit, trickery and misrepresentation, that the chattel mortgage was intended
to secure the payment of P 34,958.00 which was the unpaid balance of the
purchase price of the Toyota car; that he was made to sign the note and the
mortgage in blank; that he has paid, and even overpaid, Filinvest by P
9,388.22; that the promissory note by inflating its value and charging more
than the prescribed rates in violation of the Financing Company Act (Republic
Act No. 5980) violates the Usury Law; that the note and the mortgage are null
and void; and that the demand set forth in the complaint has long been
extinguished." 4 Furthermore, petitioner claimed that Filinvest, aside from
charging usurious interest as earlier stated, violated the provisions of the
Truth in Lending Act (Republic Act No. 3765) for failure to provide him a copy
of the disclosure statement containing entries required by said law. He
consequently set up a counterclaim against Filinvest for various items of
damages and attorney's fees all amounting to more than P 1,100,000.00. 5
On November 5, 1981, petitioner filed a "Motion to Implead Filinvest Credit
Corporation" on the theory that "for all legal purposes the corporation sought
to be impleaded is the real party in interest" because it retained interest over

the balance of the petitioner's account in spite of its assignment to private

respondent. 6 An opposition thereto was filed by private respondent
corporation on January 18, 1982. 7
Subsequently, in its order of April 26, 1982, the court below held in abeyance
the pre-trial hearing of the case since, "(u)pon motion of Atty. Melecio Virgilio
Emata," said petitioner was given a "Period of fifteen (15) days to file the thirdparty complaint against the third party defendant (Filinvest)." 8 Petitioner ,
however, did not file any third-party complaint, hence the trial court set the
case for pre-trial on May 3, 1983, it being understood that petitioner was no
longer interested in impleading the herein private respondent as a third-party
defendant therein.
On May 2, 1983, petitioner filed an urgent motion to cancel the scheduled pretrial and the trial court reset the same to June 9, 1983. Another motion for
postponement of the scheduled pre-trial filed by petitioner on June 8, 1983
was denied by the lower court, which consequently issued an order declaring
petitioner as in default for failure to appear at the pre-trial of June 9, 1983.
Respondent corporation was then allowed to present evidenceex
parte despite an opposition of petitioner.
However, upon a subsequent motion of petitioner, in its order of August 17,
1983 the trial court not only lifted the default order but also allowed him to
cross-examine private respondent's sole witness "as a last opportunity to
adduce evidence in support of the material allegations of his answer." The
same order declared that the order of April 26, 1982, hereinbefore stated,
must be maintained since petitioner had opted not to comply therewith, hence
his motion to implead Filinvest was in effect already resolved in said order of
April 26, 1982. 9
At the continuation of the trial on September 1, 1983, the court a quo, in order
to 587654321 simplify the proceedings, allowed both parties to submit their
respective lists of payments made by petitioner to respondent corporation,
with the court determining the proper application of each payment. The parties
then filed their respective memoranda and submitted the case for decision.
On March 6, 1984, judgment was rendered by the trial court as follows:
WHEREFORE, premises considered, judgment is hereby
rendered against the defendant and in favor of the plaintiff,
ordering the former to deliver to the latter the Toyota Car
hereinabove described, or to pay the latter the sum of P
11,332.40, plus interest thereon at the rate of 14% per annum.
In either case, the defendant is also ordered to pay the plaintiff
the following sums: P 2,800.00 as attorney's fees and P 424.50
as bonding fees.

Should the defendant fail to satisfy, or comply with the foregoing,

his bondsman or surety, Sanpiro Insurance Corporation, shall be
hable therefor in accordance with the counter-bond.
With costs against the defendant.

10

Petitioner takes exception to respondent court's affirmance of said decision,

hence this petition. Petitioner raises both procedural and substantive issues.
Initially, he complains that the trial court erred in requiring him to file a thirdparty complaint against Filinvest, instead of impleading the latter either as
party plaintiff or defendant. 11 He insists that Filinvest is the real party in
interest in the present case and it should be impleaded under Rule 3 of the
Rules of Court which provides:
Sec. 10. Unwilling co-plaintiff. -If the consent of any party who
should be joined as plaintiff can not be obtained, he may be
made a defendant and the reason therefor shall be stated in the
complaint.
Sec. 11. Misjoinder and non-joinder of parties. -Misjoinder of
parties is not ground for dismissal of an action. Parties may be
dropped or added by order of the court on motion of any party or
on its own initiative at any stage of the action and on such terms
as are just. Any claim against a party may be severed and
proceeded with separately.
which he complements with a provision in Rule 6, to wit:
Sec. 14. Bringing new parties. When the presence of parties
other than those to the original action is required for the granting
of complete relief in the determination of a counterclaim or
cross-claim, the court shall order them to be brought in as
defendants if jurisdiction over them can be obtained.
Concededly, additional parties may be brought in under the above-quoted
provisions of the Rules. A third-party complaint, however, is not to be
eschewed or disregarded in the procedural scheme since it may, in fact, be
the very vehicle for impleading a third person as a party to the case. Thus, for
purposes of Section 14 of Rule 6, above quoted, the court may authorize the
filing of the proper third-party complaint to implead the other parties not
included in the original complaint, in keeping with the injunction that "all
pleadings shall be liberally construed so as to do substantial justice." 12
We reject petitioner's complaint that the order of the court a quo requiring the
filing of a third-party complaint is improper. A third- party complaint is "a claim
that a defending party may, with leave of court, file against a person not a
party to the action, called the third- party defendant, for contribution,
indemnity, subrogation or any other relief in respect of his opponent's
claim." 13 Obviously, a third-party complaint against Filinvest, had petitioner
filed the same, would be a claim in respect of the plaintiffs claim since the

former arises from the same transaction on which the plaintiffs claim is based,
that is, the promissory note which was eventually assigned to private
respondent. 14 Although the petitioner did not admit in his answer that any
amount is due from the corporation sought to be impleaded, that is not
indicative of nor does it support his thesis of the alleged impropriety of a thirdparty complaint. Apparently, petitioner failed to take into consideration that the
remedy is also applicable where the defendant seeks "any other relief in
respect of his opponent's claim," a remedial grant of power broad enough to
include the relief he seeks in the case at bar.
Petitioner cannot rely on the provisions of Section 10, Rule 3 which envisages
a party who should be joined as a plaintiff but who does not assent to such
joinder. Obviously and necessarily, such unwilling party must be a real party in
interest. In the case at bar, Filinvest's position and the evidence thereon was
that it was not a real party in interest, as it was no longer entitled to the avails
of the suit by reason of the anterior assignment it made in favor of private
respondent. Hence, at the very least, its capacity was in issue and it would be
a case of proceduralpetitio principii for the trial court to have categorized it as
an unwilling co-plaintiff, with the procedural consequences thereof, although
such operative issue was still unresolved. Furthermore, the option lies with the
plaintiff on whether or not to join an additional party in his complaint. The
original plaintiff cannot be compelled, on the mere representations of the
defendant, to implead anyone, especially if it does not appear that such
joinder is proper or is necessary for the complete and expeditious adjudication
of the case.
Nor can the general rule in Section 11, Rule 3, on the power to order the
addition or dropping of a party at any stage of action, be of solace to the
petitioner. This is a power addressed to the sound discretion of the court to be
exercised on such terms as are just, and by this is meant that it must be just
to all the other parties. 15 Obviously, given the facts of this case, the trial court
wisely exercised its discretion in refusing to give in to the unjustified
importunings of petitioner.
Petitioner should be reminded that the courts, as the arbiters of the rights of
the parties, stand in a better position and are clothed with ample authority to
rule on the procedural measures that are proper in cases before them. If a
party believes that the order of the court is not in accordance with law, he is
not without other alternative remedial avenues. If, on the other hand, the order
does not suffer from any legal infirmities, the same is binding on the parties
and to this they must submit with grace. We cannot but be displeased with
petitioner's unseemly motivation and stance when he "adopted an attitude of
inaction and completely ignored" the order of the trial court requiring the filing
of a third-party complaint, especially in view of the factual finding that it was
he who manifested on April 26, 1982 that he would file said third party
complaint . 16
Apart from all these considerations, the inclusion of Filinvest would at any rate
have been a useless recourse in the light of the fact that the arguments on
which this petition is moored are bereft of merit .

On the issue of usury, the present rule that usury at present is legally nonexistent 17 would not apply to the instant case. The present controversy arose
before the adoption on December 3, 1982 of Resolution No. 224 by the
Central Bank Monetary Board on which the existing rule is based.
Nevertheless, the records of this case reveal that the Usury Law, Act No.
2655, is not applicable thereto. The amount added to the cash price of the car
is what is commonly known as the "time price differential" and not interest
within the meaning of the Usury Law. The law is applicable only in case of a
loan or forbearance of money, goods or credit which is not the case here. The
transaction involved here being admittedly a conditional sale based on an
installment plan and not a loan, it has been held that the alleged increase in
the price of the article sold cannot be considered a mere pretext to cover a
usurious loan. "The increase in price, when the sale is on credit serves not
only to cover the expenses generally entailed by such transactions on credit,
but also to encourage cash sales, so useful to commerce. It is up to the
purchaser to decide which price he prefers in making the purchase. ... if on
the contrary, he prefers to buy on credit, he cannot complain of the increase of
the price demanded by the vendor. " 18
Neither is the Usury Law applicable to the assignment of indebtedness to
Filinvest and to private respondent. The Financing Company Act provides for
the rate of the purchase discount that may be availed of by a financing
company. The purchase discount is defined as the "difference between the
value of the receivable purchased or credit assigned, and the net amount paid
by the finance company for such purchase or assignment, exclusive of fees,
service charges, interest and other charges incident to the extension of the
credit." 19 Under Section 5 of the same Act, it is provided that:
In case of assignment of credit or the buying of installment
papers, accounts receivable and the evidences of indebtedness
by financing companies, the purchase discount, exclusive of
interest and other charges, shall be limited to fourteen per cent
(14%), or such percentage as may be prescribed by the
Monetary Board of the value of the credit assigned or the value
of the installment papers, accounts .receivable and other
evidences of indebtedness purchased baged on a period of
twelve months or less, and to one and one-sixth per cent (I -1/
6%), or such percentage as may be prescribed by the Monetary
Board, for each additional month or fraction thereof in excess of
twelve months, regardless of the terms and conditions of the
assignment or purchase.
The petitioner avers that the amount of P 22,246.00, or forty-four and fivehundredths percent (44.05%), added to the list cash price is way above the
purchase discount prescribed by Republic Act No. 5980, as well as Central
Bank Circular No. 586 providing for nineteen percent (19%) per annum as the
effective rate of yield from purchase of receivables. 20 We do not have to
unnecessarily clutter this decision with unduly involved or extensively complex
computations to demonstrate the incorrectness of petitioner's position. The

finding of the trial court, that the stipulated interest in the promissory note is
well within the allowable rate, is adequately supported by the evidence of
record. Although, forty-four and five- hundredths percent (44.05%) was added
to the list cash price of the car, the same was actually spread over a threeyear period of amortization. Thus, whether it be fourteen percent (14%) plus
one and one-sixth percent (1-1/6%) under Republic Act No. 5980 or nineteen
percent (19%) under Circular No. 586, it is clear that the yield or purchase
discount, as the case may be, is within the limits prescribed by law.
No violation of the Truth in Lending Act, Republic Act No. 3765, was
established either. The disclosure statement furnished to petitioner shows on
its face that it contains all the data required by law and that it was signed by
the seller on July 31, 1978 before the assignment of the indebtedness to
private respondent. We agree with private respondent that the petitioner, a
practicing lawyer for more than twenty years, would not be so gullible or
negligent as to sign documents in blank knowing fully well the legal
implications and consequences of such action . 21 Of course, petitioner does
not deny that Filinvest had nothing to do with the disclosure statement since it
is the private respondent which is obligated to furnish, as in fact it did furnish,
petitioner a copy of said statement . 22
Regarding the computations of the petitioner based on the formula provided
by Circular No. 158 of the Central Bank implementing the Truth in Lending
Act, 23 petitioner should not confuse "time price differential" with the "simple
annual rate" determined by the formula. "Simple annual rate" is the uniform
percentage which represents the ratio, on an annual basis, between the
finance charges and the amount to be financed. It is not the measure of the
total amount that is allowed to be added to the cash price.
IN VIEW OF THE FOREGOING, no reversible error having been committed
by respondent court, its assailed decision is hereby AFFIRMED
SO ORDERED.
Melencio-Herrera (Chairperson), Paras and Sarmiento, JJ., concur.
Padilla, J., took no part.
FIRST DIVISION

[G.R. No. 142924. December 5, 2001]

TEODORO B. VESAGAS, and WILFRED D. ASIS, petitioners, vs. The

Honorable COURT OF APPEALS and DELFINO RANIEL and
HELENDA RANIEL,respondents.
DECISION

PUNO, J.:
Before us is the instant Petition for Review on Certiorari assailing the Decision,
dated July 30, 1999, of the Court of Appeals in CA-G.R. SP No. 51189, as well as its
Resolution, dated March 16, 2000, which denied petitioners Motion for
Reconsideration.
The respondent spouses Delfino and Helenda Raniel are members in good
standing of the Luz Village Tennis Club, Inc. (club). They alleged that petitioner
Teodoro B. Vesagas, who claims to be the clubs duly elected president, in conspiracy
with petitioner Wilfred D. Asis, who, in turn, claims to be its duly elected vicepresident and legal counsel, summarily stripped them of their lawful membership,
without due process of law. Thereafter, respondent spouses filed a Complaint with the
Securities and Exchange Commission (SEC) on March 26, 1997 against the
petitioners. It was docketed as SEC Case No. 03-97-5598.[1]In this case, respondents
asked the Commission to declare as illegal their expulsion from the club as it was
allegedly done in utter disregard of the provisions of its by-laws as well as the
requirements of due process. They likewise sought the annulment of the amendments
to the by-laws made on December 8, 1996, changing the annual meeting of the club
from the last Sunday of January to November and increasing the number of trustees
from nine to fifteen. Finally, they prayed for the issuance of a Temporary Restraining
Order and Writ of Preliminary Injunction. The application for TRO was denied by
SEC Hearing Officer Soller in an Order dated April 29, 1997.
Before the hearing officer could start proceeding with the case, however,
petitioners filed a motion to dismiss on the ground that the SEC lacks jurisdiction over
the subject matter of the case. The motion was denied on August 5, 1997. Their
subsequent move to have the ruling reconsidered was likewise denied. Unperturbed,
they filed a petition for certiorari with the SEC En Banc seeking a review of the
hearing officers orders. The petition was again denied for lack of merit, and so was
the motion for its reconsideration in separate orders, dated July 14, 1998 and
November 17, 1998, respectively. Dissatisfied with the verdict, petitioners promptly
sought relief with the Court of Appeals contesting the ruling of the Commission en
banc. The appellate court, however, dismissed the petition for lack of merit in a
Decision promulgated on July 30, 1999. Then, in a resolution rendered on March 16,
2000, it similarly denied their motion for reconsideration.
Hence, the present course of action where the petitioners raise the following
grounds:
C.1.TherespondentCourtofAppealscommittedareversibleerrorwhenit
determinedthattheSEChasjurisdictionin03975598.[2]
C.2.TherespondentCourtofAppealscommittedareversibleerrorwhenitmerely
upheldthetheoreticalpoweroftheSECHearingOfficertoissueasubpoenaandto
citeapersonincontempt(actuallyanonissueofthepetition)whileitshuntedaway
theissueofwhetherthathearingofficermayholdapersonincontemptfornot
obeyingasubpoenawherehisresidenceisbeyondfifty(50)kilometersfromtheplace
ofhearingandnotransportationexpensewastenderedtohim.[3]

In support of their first assignment of error, petitioners contend that since its
inception in the 1970s, the club in practice has not been a corporation. They add that
it was only the respondent spouses, motivated by their own personal agenda to make
money from the club, who surreptitiously caused its registration with the SEC. They
then assert that, at any rate, the club has already ceased to be a corporate
body. Therefore, no intra-corporate relations can arise as between the respondent
spouses and the club or any of its members. Stretching their argument further,
petitioners insist that since the club, by their reckoning is not a corporation, the SEC
does not have the power or authority to inquire into the validity of the expulsion of the
respondent spouses. Consequently, it is not the correct forum to review the
challenged act. In conclusion, petitioners put respondent spouses to task for their
failure to implead the club as a necessary or indispensable party to the case.
These arguments cannot pass judicial muster.
Petitioners attempt to impress upon this court that the club has never been a
corporation is devoid of merit. It must fail in the face of the Commissions explicit
finding that the club was duly registered and a certificate of incorporation was issued
in its favor, thus:
Weagreewiththehearingofficerthatthegroundsraisedbypetitionerintheir
motiontodismissarefactualissues,theveracityofwhichcanonlybeascertainedina
fullblownhearing.Recordsshowthattheassociationisdulyregisteredwiththe
associationandacertificateofincorporationwasissued.Clearly,the
Commissionhasjurisdictionoverthesaidassociation.Astopetitioners
allegationthattheregistrationoftheclubwasdonewithouttheknowledgeofthe
members,thisisacircumstancewhichwasnotdulyprovenbythepetitioner(sic)in
his(sic)motiontodismiss.[4]
It ought to be remembered that the question of whether the club was indeed registered
and issued a certification or not is one which necessitates a factual inquiry. On this
score, the finding of the Commission, as the administrative agency tasked with among
others the function of registering and administering corporations, is given great
weight and accorded high respect. We therefore have no reason to disturb this factual
finding relating to the clubs registration and incorporation.
Moreover, by their own admission contained in the various pleadings which they
have filed in the different stages of this case, petitioners themselves have considered
the club as a corporation. This admission, under the rules of evidence, binds them and
may be taken or used against them.[5] Since the admission was made in the course of
the proceedings in the same case, it does not require proof, and actually may be
contradicted only by showing that it was made through palpable mistake or that no
such admission was made.[6] Noteworthy is the Minute of the First Board
Meeting[7] held on January 5, 1997, which contained the following pertinent portions:
11.UnanimouslyapprovedbytheBoardaResolutiontoDissolvethecorporate
structureofLVTCwhichisfiledwiththeSEC.Suchresolutionwillbeformulated
byAtty.FredAsistobereadyonorbeforethethirdweekofJanuary
1997.Meanwhile,theoperationalstructureoftheLVTCwillhenceforthbereverted
toitsformerstatusasanordinaryclub/Association.[8]

Similarly, petitioners Motion to Dismiss[9] alleged:

1.ThisCommissionhasnojurisdictionovertheLuzVillageTennisClubnotonly
becauseitwasnotimpleadedbutbecausesince5January1997,ithadalreadyrid
itself,asithadtoinordertomaintainrespectanddecencyamongitsmembers,
oftheunfortunateexperienceofbeingacorporatebody.Thusatthetimeofthe
filingofthecomplaint,theclubhadalreadydissolveditscorporateexistenceand
hasfunctionedasamereassociationofrespectableandrespectingindividual
memberswhohaveassociatedthemselvessincethe1970sxxx[10]
The necessary implication of all these is that petitioners recognized and
acknowledged the corporate personality of the club. Otherwise, there is no cogency
in spearheading the move for its dissolution. Petitioners were therefore well aware of
the incorporation of the club and even agreed to get elected and serve as its
responsible officers before they reconsidered dissolving its corporate form.
This brings us to petitioners next point. They claim in gratia argumenti that
while the club may have been considered a corporation during a brief spell, still, at the
time of the institution of this case with the SEC, the club was already dissolved by
virtue of a Board resolution.
Again, the argument will not carry the day for the petitioner. The Corporation
Code establishes the procedure and other formal requirements a corporation needs to
follow in case it elects to dissolve and terminate its structure voluntarily and where no
rights of creditors may possibly be prejudiced, thus:
Sec.118.Voluntarydissolutionwherenocreditorsareaffected.Ifdissolutionofa
corporationdoesnotprejudicetherightsofanycreditorhavingaclaimagainstit,the
dissolutionmaybeeffectedbymajorityvoteoftheboardofdirectorsortrusteesand
byaresolutiondulyadoptedbytheaffirmativevoteofthestockholdersowningat
leasttwothirds(2/3)oftheoutstandingcapitalstockoratleasttwothirds(2/3)ofthe
membersatameetingtobehelduponcallofthedirectorsortrusteesafterpublication
ofthenoticeoftime,placeandobjectofthemeetingforthree(3)consecutiveweeks
inanewspaperpublishedintheplacewheretheprincipalofficeofsaidcorporationis
located;andifnonewspaperispublishedinsuchplace,theninanewspaperof
generalcirculationinthePhilippines,aftersendingsuchnoticetoeachstockholderor
membereitherbyregisteredmailorbypersonaldeliveryatleast30dayspriortosaid
meeting.Acopyoftheresolutionauthorizingthedissolutionshallbecertifiedbya
majorityoftheboardofdirectorsortrusteesandcountersignedbythesecretaryofthe
corporation.TheSecuritiesandExchangeCommissionshallthereuponissuethe
certificateofdissolution.[11]
We note that to substantiate their claim of dissolution, petitioners submitted only two
relevant documents: the Minutes of the First Board Meeting held on January 5, 1997,
and the board resolution issued on April 14, 1997 which declared to continue to
consider the club as a non-registered or a non-corporate entity and just a social
association of respectable and respecting individual members who have associated
themselves, since the 1970s, for the purpose of playing the sports of tennis x x
x.[12] Obviously, these two documents will not suffice. The requirements mandated
by the Corporation Code should have been strictly complied with by the members of

the club. The records reveal that no proof was offered by the petitioners with regard
to the notice and publication requirements. Similarly wanting is the proof of the
board members certification. Lastly, and most important of all, the SEC Order of
Dissolution was never submitted as evidence.
We now resolve whether the dispute between the respondents and petitioners is a
corporate matter within the exclusive competence of the SEC to decide. In order that
the commission can take cognizance of a case, the controversy must pertain to any of
the following relationships: a) between the corporation, partnership or association and
the public; b) between the corporation, partnership or association and its stockholders,
partners, members, or officers; c) between the corporation, partnership, or association
and the state as far as its franchise, permit or license to operate is concerned; and d)
among the stockholders, partners or associates themselves.[13] The fact that the parties
involved in the controversy are all stockholders or that the parties involved are the
stockholders and the corporation, does not necessarily place the dispute within the
loop of jurisdiction of the SEC. [14] Jurisdiction should be determined by considering
not only the status or relationship of the parties but also the nature of the question that
is the subject of their controversy.[15]
We rule that the present dispute is intra-corporate in character. In the first place,
the parties here involved are officers and members of the club. Respondents claim to
be members of good standing of the club until they were purportedly stripped of their
membership in illegal fashion. Petitioners, on the other hand, are its President and
Vice-President, respectively. More significantly, the present conflict relates to, and in
fact arose from, this relation between the parties. The subject of the complaint,
namely, the legality of the expulsion from membership of the respondents and the
validity of the amendments in the clubs by-laws are, furthermore, within the
Commissions jurisdiction.
Well to underscore is the date when the original complaint was filed at the SEC,
which was March 26, 1997. On that date, the SEC still exercised quasi-judicial
functions over this type of suits. It is axiomatic that jurisdiction is conferred by the
Constitution and by the laws in force at the time of the commencement of the action.
[16]
In particular, the Commission was thereupon empowered, under Sec. 5 of P.D.
902-A, to hear and decide cases involving intra-corporate disputes, thus:
SEC.5.InadditiontotheregulatoryandadjudicativefunctionsoftheSecuritiesand
ExchangeCommissionovercorporations,partnershipsandotherformsofassociation
registeredwithitasexpresslygrantedunderexistinglawsanddecrees,itshallhave
originalandexclusivejurisdictiontohearanddecidecasesinvolving:
xxx
b)Controversiesarisingoutofintracorporateorpartnershiprelations,betweenand
amongstockholders,membersorassociates;betweenanyorallofthemandthe
corporation,partnershiporassociationofwhichtheyarethestockholders,members
orassociates,respectively;andbetweensuchcorporation,partnershiporassociation
andthestateinsofarasitconcernstheirindividualfranchiseorrighttoexistassuch
entity;
xxx.[17]

The enactment of R.A. 8799, otherwise known as the Securities Regulation Code,
however, transferred the jurisdiction to resolve intra-corporate controversies to courts
of general jurisdiction or the appropriate Regional Trial Courts, thus:
5.2.TheCommissionsjurisdictionoverallcasesenumeratedunderSection5of
PresidentialDecreeNo.902AisherebytransferredtotheCourtsofgeneral
jurisdictionortheappropriateRegionalTrialCourt:Provided,thattheSupreme
CourtintheexerciseofitsauthoritymaydesignatetheRegionaltrialCourtbranches
thatshallexercisejurisdictionoverthesecases.TheCommissionshallretain
jurisdictionoverpendingcasesinvolvingintracorporatedisputessubmittedforfinal
resolutionwhichshouldberesolvedwithinone(1)yearfromtheenactmentofthis
Code.TheCommissionshallretainjurisdictionoverpendingsuspensionof
payments/rehabilitationcasesfiledasof30June2000untilfinallydisposed.[18]
On August 22, 2000, we issued a resolution, in A.M. No. 00-8-10-SC, wherein we
DIRECT(ed) the Court Administrator and the Securities and Exchange Commission
to cause the actual transfer of the records of such cases and all other SEC cases
affected by R.A. No. 8799 to the appropriate Regional Trial Courts x x x. [19] We also
issued another resolution designating certain branches of the Regional Trial Court to
try and decide cases formerly cognizable by the SEC.[20] Consequently, the case at bar
should now be referred to the appropriate Regional Trial Court.
Before we finally write finis to the instant petition, however, we will dispose of
the two other issues raised by the petitioners.
First is the alleged failure of the respondents to implead the club as a necessary or
indispensable party. Petitioners contend that the original complaint should be
dismissed for not including the club as one of the respondents therein. Dismissal is
not the remedy for non-joinder of parties. Under the Rules, the remedy is to implead
the non-party, claimed to be necessary or indispensable, in the action, thus:
SEC.11.Misjoinderandnonjoinderofparties.Neithermisjoindernornon
joinderofpartiesisagroundfordismissalofanaction.Partiesmaybedroppedor
addedbyorderofthecourtonmotionofanypartyoronitsowninitiativeatanystage
oftheactionandonsuchtermsasarejust.Anyclaimagainstamisjoinedpartymay
beseveredandproceededwithseparately.[21]
The other issue is with regard to the alleged oppressive subpoenas and orders
issued by Hearing Officer Soller, purportedly without or in excess of authority. In
light of PD 902-As repeal, the need to rule on the question of the extent of the
contempt powers of an SEC hearing officer relative to his authority to issue
subpoenas and orders to parties involved in intra-corporate cases, or potential
witnesses therein has been rendered academic. The enactment of RA 8799 mooted
this issue as SEC hearing officers, now bereft of any power to resolve disputes, are
likewise stripped of their power to issue subpoenas and contempt orders incidental to
the exercise of their quasi-judicial powers.
At any rate, it taxes our credulity why the petitioners insist in raising this issue in
the case at bar. The so-called oppressive subpoenas and orders were not directed to
them. They were issued to the clubs secretary, Purita Escobar, directing her to appear
before the Commission and bring certain documents of the club, that were supposedly

under her possession or control. It is obvious that the petitioners are not the proper
parties to assail the oppressiveness of the subpoenas or the orders, and impugn their
validity. Elementary is the principle that only those who expect to be adversely
affected by an order can complain against it. It is their addressee, Purita Escobar, who
can assail their alleged oppressiveness. Petitioners protestation has therefore no legal
leg to stand on.
IN VIEW WHEREOF, finding no cogent reason to disturb the assailed
Decision, the petition is DENIED. In conformity with R.A. 8799, SEC Case No. 0397-5598, entitled Delfino Raniel and Helenda Raniel v. Teodoro B. Vesagas and
Wilfred D. Asis is referred to the Regional Trial Court of the Ninth Judicial Region,
Branch 33[22] located in Agusan del Norte (Butuan City), one of the designated special
commercial courts pursuant to A.M. No. 00-11-03-SC.
SO ORDERED.
[5]

SEC. 26. Admissions of a party. The act, declaration or omission of a party as to

relevant fact may be given in evidence against him. (Section 26, Rule 130, Rules of
Court.)
[6]

SEC. 4. Judicial admissions. An admission, verbal or written, made by a party in

the course of the proceedings in the same case, does not require proof. The admission
may be contradicted only by showing that it was made through palpable mistake or
that no such admission was made. (Section 4, Rule 129, Rules of Court.)

FIRST DIVISION

EPIFANIO SAN JUAN, JR.,

G.R. No. 167321

Petitioner,
Present:

- versus -

PANGANIBAN, C.J., Chairperson,

YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,

JUDGE RAMON A. CRUZ,

REGIONAL TRIAL
COURT, BRANCH 224,

CALLEJO, SR., and

CHICO-NAZARIO, JJ.

QUEZON CITY and ATTY.

Promulgated:

TEODORICO A. AQUINO,
Respondents.

July 31, 2006

x--------------------------------------------------x

DECISION

CALLEJO, SR., J.:

Before the Court is a Petition for Review on Certiorari of the Resolution[1] of
the Court of Appeals (CA) in CA-G.R. SP No. 87458 dismissing the Petition
forCertiorari with Prayer for Issuance of a Temporary Restraining Order and/or Writ
of Preliminary Injunction of petitioner Epifanio San Juan, Jr., as well as its
Resolution[2]denying the motion for reconsideration thereof.
The Antecedents
Loreto Samia San Juan executed a Last Will and Testament naming Oscar Casa
as one of the devisees therein. Upon Loretos death on October 25, 1988, Atty.
Teodorico A. Aquino filed a petition for the probate of the will in the Regional Trial
Court (RTC) of Quezon City. The case was raffled to Branch 224 of the court and
was docketed as Special Proceedings No. 98-36118.
While the petition was pending, Oscar Casa died intestate on May 24,
1999. The firm of Aquino, Galang, Lucas, Espinoza, Miranda & Associates entered
their appearance as counsel of Federico Casa, Jr., who claimed to be one of the heirs
of Oscar Casa and their representative.
On August 14, 2002, the probate court issued an Order denying the entry of
appearance of said law firm, considering that Federico Casa, Jr. was not the executor
or administrator of the estate of the devisee, hence, cannot be substituted for the
deceased as his representative as required by Section 16, Rule 3 of the Rules of
Court. OnNovember 22, 2002, the court issued an order directing Aquino to secure
the appointment of an administrator or executor of the estate of Oscar Casa in order
that the appointee be substituted in lieu of the said deceased.
On February 26, 2003, Aquino filed a pleading entitled Appointment of
Administrator signed by Candelaria, Jesus, Arlyn, Nestor, Edna, Benhur, Federico,
Rafael and Ma. Eden, all surnamed Casa, on February 24, 2003, praying that one of

them, Federico Casa, Jr., be designated as administrator of the estate of the deceased
and that he be substituted for the deceased.
NOW THEREFORE, in compliance with the ORDER of the
Probate Court, cited above, we, the legal heirs of the deceased OSCAR
CASA, unanimously designate and appoint FEDERICO CASA, JR., as
the ADMINISTRATOR of the property to be inherited by the deceased
OSCAR CASA, in the WILL of the late LORETO SAMIA SAN
JUAN, considering that FEDERICO CASA, JR., is the nearest
accessible heir to attend the hearing of the probate of the will and is
most competent to assume the responsibilities and the duties of the
ADMINISTRATOR. We authorize him to represent us the heirs of the
deceased OSCAR CASA, on the hearing of the probate of the will of
the testatrix and to perform such duties as might be required by the
Probate Court; to take possession of the properties designated in the
WILL upon distribution by the appointed ADMINISTRATOR of the
Estate of LORETO SAMIA SAN JUAN. (emphasis supplied)[3]
In compliance with the order of the court, Epifanio San Juan filed a Motion
to Declare Appointment of Administrator As Inadequate or Insufficient. [4] He
maintained that the heirs should present an administrator of the estate of Oscar Casa
as the representative of the estate in the case.
In his reply, Aquino stated that, under Section 16, Rule 3 of the Rules of Court,
the heirs of Oscar Casa may be substituted for the deceased without need for
appointment of an administrator or executor of the estate. He also claimed that the
court is enjoined to require the representative to appear before the court and be
substituted within the prescribed period.
On December 2, 2003, the RTC issued an Order denying the motion of San
Juan. Contrary to its Order dated November 22, 2002, the court held that there was,
after all, no need for the appointment of an administrator or executor as substitute for
the deceased devisee. It is enough, the court declared, that a representative be
appointed as provided in Section 16, Rule 3 of the Rules of Court.[5]
San Juan received a copy of the December 2, 2003 Order on December 15,
2003 and filed, on December 30, 2003, a motion for reconsideration thereof. Citing
the ruling of this Court in Lawas v. Court of Appeals,[6] he averred that, under Section
16, Rule 3 of the Rules of Court, while the court may allow the heirs of the deceased
to be substituted in cases of unreasonable delay in the appointment of an executor or
administrator, or where the heirs resort to an extrajudicial settlement of the estate,
priority is still given to the legal representative of the deceased, that is, the executor or
administrator of the estate. Moreover, in case the heirs of the deceased will be
substituted, there must be a prior determination by the probate court of who the
rightful heirs are. He opined that this doctrine is in line with Article 1058 of the New
Civil Code, and the provisions of Section 6, Rule 78 and Section 2, Rule 79 of the
Rules of Court. In this case, however, the alleged heirs of Oscar Casa did not file any
petition for the appointment of an administrator of his estate; hence, Federico Casa, Jr.
is not qualified to be appointed as substitute for the deceased devisee. San

Juan pointed out that the December 2, 2003 Order of the probate court contravened
its August 14, 2002 and November 22, 2002 Orders.[7]
The motion for reconsideration was denied on February 27, 2004 where the
probate court declared that it had carefully evaluated the arguments raised by the
parties and found no compelling ground or cogent reason to set aside its December 2,
2003 Order.[8] Petitioner received a copy of the Order on March 18, 2004.
On May 7, 2004, San Juan filed a Motion to Admit his second motion for
reconsideration dated May 6, 2004, appending thereto the December 2, 2003 Order of
the RTC.[9] He cited Torres, Jr. v. Court of Appeals,[10] where it was held that the
purpose behind the rule on substitution of parties is the protection of the right of every
party to due process, to ensure that the deceased party would continue to be properly
represented in the suit through the duly appointed legal representative of his
estate. The need for substitution of heirs is based on the right to due process accruing
to every party in any proceeding, and the exercise of judicial power to hear and
determine a cause presupposes that the trial court acquires jurisdiction over the
persons of the parties.
San Juan emphasized that it is only in the absence of an executor or
administrator that the heirs may be allowed by the court to substitute the deceased
party. He averred that the purported heirs simply agreed among themselves to appoint
a representative to be substituted for the deceased, which is contrary to the
requirement of a prior hearing for the court to ascertain who the rightful heirs
are. The Orders of the Court dated December 2, 2003 and February 27, 2004 may be
used by purported heirs in order to inherit properties from estates of deceased
parties, which will then allow the rules of procedure to be used as an instrument for
fraud and undermining due process.[11] San Juan reiterated the rulings of this Court
in Dela Cruz v. Court of Appeals [12] and Lawas v. Court of Appeals,[13] that court
proceedings conducted or continued without a valid substitution of a deceased party
cannot be accorded validity and binding effect. He prayed that the February 27, 2004
Order be reconsidered and a new order be issued as follows:
(a)
declaring the Appointment of Administrator
dated February 14, 2003 insufficient or inadequate compliance with the
rules of procedure on substitution of a deceased party;
(b)
directing petitioner to secure from the appropriate court
the appointment of an administrator of the estate of the deceased Oscar
Casa; and
(c)
directing that further proceedings in the case be
deferred until after the substitution of the deceased Oscar Casa by the
court-appointed administrator or executor of his estate.
Oppositor prays for other and further reliefs which may be just
and equitable.[14]
On June 11, 2004, the probate court issued an order denying the second motion
for reconsideration of San Juan. It noted that the motion merely reiterated the same

arguments in his first motion for reconsideration which had already been passed
upon. Citing the rulings in Montaano v. Suesa[15] and Riera v. Palmanori,[16] it
concluded that there was no need for the appointment of an administrator of the estate
of the deceased Oscar Casa at that stage of the proceedings since a legatee is not
considered either as an indispensable or necessary party in the probate of a will.[17]
When San Juan received a copy of the June 11, 2004 Order of the trial court, he
filed, on July 23, 2004, a motion for reconsideration thereof. He took exception to the
probate courts reliance in the Montaano and Riera cases, as claiming that said
rulings were not relevant to the issue of the validity of the appointment of Federico
Casa Jr., by the alleged heirs of Oscar Casa, as administrator and substitute for the
deceased devisee. He insisted that the cases dealt only with the question of whether
or not the probate court can rule on the validity of the provisions of the will; they do
not involve the same issue presented by the oppositor, namely, whether or not a
substitution of a legatee under the will who died during the probate proceedings may
be done by simply submitting an Appointment of Administrator, or whether or not
there is a need for a deceased legatee to be substituted by his/her duly appointed legal
representative or administrator of his estate.
San Juan further posited that the estate court, sitting as a probate court, does not
only decide on the questions of identity and testamentary capacity of the testator and
the due execution of the will; it is likewise charged with the settlement of the estate of
the testator after the will has been approved. Thus, the probate court must not only
determine the validity of the will, but also the rightful heirs, legatees and devisees for
the purpose of settling the estate of the testator.[18]
Aquino opposed the motion, contending that it was, in fact, a third motion for
reconsideration, a prohibited pleading under Section 3, Rule 37 of the 1997 Rules of
Civil Procedure.[19]
On September 8, 2004, the probate court issued an Order sustaining Aquinos
argument and denied the motion for reconsideration of San Juan.[20]
San Juan, now petitioner, filed a petition for certiorari with the CA
on November 22, 2004 for the nullification of the orders issued by the probate court
on the following grounds:
A.
THE RESPONDENT REGIONAL TRIAL COURT OF
QUEZON CITY GRAVELY ABUSED ITS DISCRETION WHICH
AMOUNTS TO LACK, OR IN EXCESS, OF JURISDICTION IN
RULING THAT THE APPOINTMENT OF ADMINISTRATOR
DATED FEBRUARY 14, 2003 MADE BY PRIVATE RESPONDENT
IS IN ACCORDANCE WITH THE RULES ON CIVIL PROCEDURE
ON PROPER SUBSTITUTION OF PARTIES.
B.
THE RESPONDENT REGIONAL TRIAL COURT OF
QUEZON CITY GRAVELY ABUSED ITS DISCRETION WHICH
AMOUNTS TO LACK, OR IN EXCESS, OF JURISDICTION IN
DENYING DUE COURSE TO PETITIONERS MOTION FOR
RECONSIDERATION ON THE GROUND THAT SAID MOTION IS

A THIRD MOTION FOR RECONSIDERATION WHICH IS A

PROHIBITED PLEADING UNDER SEC. 5, RULE 37 OF THE
RULES OF COURT.[21]
On December 1, 2004, the CA dismissed the petition on the ground that it was
filed beyond the 60-day period counted from notice to petitioner of the trial
courtsFebruary 27, 2004 Order. The appellate court declared that the May 6,
2004 motion for reconsideration of petitioner was a pro forma motion because it was
a second motion for reconsideration which sought the same relief as the first motion,
hence, did not toll the running of the 60-day period. [22] The appellate court cited the
ruling of this Court inUniversity of Immaculate Concepcion v. Secretary of Labor and
Employment.[23]
Petitioner filed a motion for reconsideration of the resolution of the CA,
contending that the orders sought to be reconsidered by him were interlocutory, hence,
cannot be considered pro forma or forbidden by the Rules of Court. He cited the
rulings of this Court in Dizon v. Court of Appeals,[24] Philgreen Trading Construction
Corporation v. Court of Appeals,[25] and the cases cited in the latter decision.
[26]
However, on February 24, 2005, the CA resolved to deny the motion of petitioner.
[27]

Petitioner now seeks relief from this Court, via a petition for review
on certiorari, for the reversal of the resolutions of the appellate court. He raises the
following issues:
(A)
WHETHER OR NOT THE SIXTY-DAY PERIOD FOR FILING A
PETITION FOR CERTIORARI UNDER RULE 65 OF THE RULES
OF COURT IS RECKONED FROM NOTICE OF DENIAL OF THE
FIRST
MOTION
FOR
RECONSIDERATION
OF
AN
INTERLOCUTORY ORDER EVEN THOUGH A SECOND AND
THIRD MOTION FOR RECONSIDERATION (WHICH ARE NOT
PROHIBITED MOTIONS) OF THE SAME INTERLOCUTORY
ORDER HAD BEEN FILED AND WERE LATER DENIED.
(B)
WHETHER OR NOT A PERSON NOMINATED AS
ADMINISTRATOR BY PURPORTED HEIRS OF A DEVISEE OR
LEGATEE IN A WILL UNDER PROBATE MAY VALIDLY
SUBSTITUTE FOR THAT DEVISEE OR LEGATEE IN THE
PROBATE PROCEEDINGS DESPITE THE FACT THAT SUCH
ADMINISTRATOR IS NOT THE COURT-APPOINTED
ADMINISTRATOR OF THE ESTATE OF THE DECEASED
DEVISEE OR LEGATEE.[28]
On the first issue, petitioner avers that the reckoning of the 60-day period for
filing a petition for certiorari under Rule 65 of the Rules of Court from the notice of
denial of the first motion for reconsideration is applicable only if the subject of the
petition is a judgment, final resolution, or order. It does not apply if the subject of the
petition is merely an interlocutory order. He points out that the reason for this is that

only one motion for reconsideration of a judgment or final order is allowed under
Section 5, Rule 37 of the Rules of Court. A second motion for reconsideration of
a judgment or final order is a prohibited pleading; hence, the period for filing a
petition for certiorari may not be reckoned from notice of denial of such second and
prohibited motion for reconsideration. Petitioner asserts that a second (or even a
third) motion for reconsideration of an interlocutory order is not prohibited; hence, the
60-day period for filing a petition for certiorari may be reckoned from notice of
denial of subsequent motions for reconsideration.
Petitioner further claims that the Orders dated December 2, 2003, February 27,
2004, June 11, 2004 and September 8, 2004 issued by the RTC are only interlocutory
orders. They deal solely with the issue concerning the proper substitution of the
deceased Oscar Casa who is one of the devisees and legatees named in the purported
will of the testatrix, Loreto San Juan, which is the subject matter of the probate
proceedings pending with the respondent court. Said orders did not terminate or
finally dispose of the case but left something to be done by the respondent court
before the case is finally decided on the merits. The assailed orders do not go into the
merits of the probate case, particularly on the due execution and validity of the
will. It pertains only to the proper substitution of the parties. Thus, the orders are not
final orders from which no second or third motion for reconsideration may be filed.
[29]
It cannot also be said that the second motion for reconsideration did not toll the
running of the reglementary period for filing a petition for certiorari, considering that
there is no prohibition in the filing of a second motion for reconsideration of an
interlocutory order. Furthermore, there is no intention on the part of petitioner to
delay proceedings before the lower court when he filed the third motion for
reconsideration, as he only sought to correct the probate courts patently erroneous
application of the law. Petitioner emphasizes that he filed the petition
for certiorari with the CA in view of the grave abuse of discretion which amounted to
lack of or excess of jurisdiction committed by respondent trial court when it
wrongfully assumed in its Order denying the third motion for reconsideration that the
order sought to be reconsidered is a final order on the merits of the case and that the
motion for reconsideration is a third motion for reconsideration of a final order.[30]
The petition is denied for lack of merit.
We agree with the ruling of the CA that the petition for certiorari filed by
petitioner in the appellate court was time-barred. However, the raison detre for its
ruling is incorrect.
Contrary to the ruling of the CA, the proscription against a pro forma motion
applies only to a final resolution or order and not to an interlocutory one. The ruling
of this Court in University of Immaculate Concepcion v. Secretary of Labor and
Employment[31] involved a final order of the NLRC and not an interlocutory order.
In this case, the December 2, 2003 Order of the trial court denying the motion
of petitioner to consider insufficient or inadequate respondents compliance with its
November 22, 2002 Order is interlocutory. The order does not finally dispose of the
case, and does not end the task of the court of adjudicating the parties contentions
and determining their rights and liabilities as regards each other but obviously
indicates that other things remain to be done. Such order may not be questioned

except only as part of an appeal that may eventually be taken from the final judgment
rendered in the case.[32] It bears stressing however that while the motion for
reconsideration filed by petitioner assailing the December 2, 2003 Order of the trial
court based on the same grounds as those alleged in his first motion is not pro forma,
such second motion for reconsideration can nevertheless be denied on the ground that
it is merely a rehash or a mere reiteration of grounds and arguments already passed
upon and resolved by the court. Such a motion cannot be rejected on the ground that
a second motion for reconsideration of an interlocutory order is forbidden by law or
by the Rules of Court.[33]
Section 4, Rule 65 of the Rules of Civil Procedure as amended by the resolution
of the Court in Bar Matter No. 00-2-03-SC which took effect on September 1, 2000,
reads:
Sec. 4. Where and when petition filed. The petition shall be
filed not later than sixty (60) days from notice of the judgment, order
or resolution. In case a motion for reconsideration or new trial is
timely filed, whether such motion is required or not, the sixty (60) day
period shall be counted from notice of the denial of the said motion.
The petition shall be filed in the Supreme Court or, if it relates
to the acts or omissions of a lower court or of a corporation, board,
officer or person, in the Regional Trial Court exercising jurisdiction
over the territorial area as defined by the Supreme Court. It may also
be filed in the Court of Appeals whether or not the same is in the aid of
its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its
appellate jurisdiction. If it involves the acts or omissions of a quasijudicial agency, unless otherwise provided by law or these rules, the
petition shall be filed in and cognizable only by the Court of Appeals.
No extension of time to file the petition shall be granted except
for compelling reason and in no case exceeding fifteen (15) days.
Thus, there are three essential dates that must be stated in a petition
for certiorari brought under Rule 65 of the Rules of Court for the nullification of a
judgment, resolution or order: (1) the date when notice of the judgment, resolution or
order was received; (2) when a motion for a new trial or reconsideration of the
judgment, order or resolution was submitted; and (3) when notice of the denial thereof
was received by petitioner.
The requirement of setting forth the three (3) dates in a petition
for certiorari under Rule 65 of the Rules of Court is for the purpose of determining its
timeliness, considering that a petition is required to be filed not later than 60 days
from notice of the judgment, order or resolution sought to be nullified.[34]
We agree with the ruling of the CA that the petition for certiorari filed by
petitioner with the CA on November 22, 2004 was filed beyond the 60-day period
therefor. Petitioner received, on March 18, 2004, the February 27, 2004 Order of the
court denying his motion for reconsideration of the December 2,
2003 Order. Petitioner had 60 days from March 18, 2004 or until May 17,

2004 within which to file his petition for certiorari. However, petitioner filed his
petition for certiorari with the CA only onNovember 22, 2004.
The 60-day period should not be reckoned from petitioners receipt on June
11, 2004 of the denial of his May 7, 2004 second motion for reconsideration. The 60day period shall be reckoned from the trial courts denial of his first motion for
reconsideration, otherwise indefinite delays will ensue.[35]
We note that the parties articulated their stance in their respective pleadings not
only on the timeliness of the petition for certiorari in the CA but also on the validity
of the assailed December 2, 2003 Order of the trial court. Ordinarily, in view of the
dismissal of the petition because it was time-barred, the Court will no longer delve
into and resolve the other issues raised in the petition. However, in this case, we find
it appropriate and necessary to resolve once and for all the issue of whether there is a
need for the appointment of an administrator of the estate of Oscar Casa, or whether it
is enough that he be substituted by his heirs.
Section 16, Rule 3 of the 1997 Rules of Civil Procedure reads:
Sec. 16. Death of party; duty of counsel. Whenever a party to
a pending action dies, and the claim is not thereby extinguished, it shall
be the duty of his counsel to inform the court within thirty (30) days
after such death of the fact thereof, and to give the name and address of
his legal representative or representatives. Failure of counsel to
comply with this duty shall be a ground for disciplinary action.
The heirs of the deceased may be allowed to be substituted for
the deceased, without requiring the appointment of an executor or
administrator and the court may appoint a guardian ad litemfor the
minor heirs.
The court shall forthwith order said legal representative or
representatives to appear and be substituted within a period of thirty
(30) days from notice.
If no legal representative is named by the counsel for the
deceased party, or if the one so named shall fail to appear within the
specified period, the court may order the opposing party, within a
specified time, to procure the appointment of an executor or
administrator for the estate of the deceased and the latter shall
immediately appear for and on behalf of the deceased. The court
charges in procuring such appointment, if defrayed by the opposing
party, may be recovered as costs.
The rule is a revision of Section 17, Rule 3 of the Rules of Court which reads:
Death of party. After a party dies and the claim is not thereby
extinguished, the court shall order, upon proper notice, the legal
representative of the deceased to appear and to be substituted for the
deceased, within a period of thirty (30) days, or within such time as

may be granted. If the legal representative fails to appear within said

time, the court may order the opposing party to procure the
appointment of a legal representative of the deceased within a time to
be specified by the court, and the representative shall immediately
appear for and on behalf of the interest of the deceased. The court
charges involved in procuring such appointment, if defrayed by the
opposing party, may be recovered as costs. The heirs of the deceased
may be allowed to be substituted for the deceased, without requiring
the appointment of an executor or administrator and the court may
appoint guardian ad litem for the minor heirs.[36]
The second paragraph of the rule is plain and explicit: the heirs may be
allowed to be substituted for the deceased without requiring the appointment of an
administrator or executor. However, if within the specified period a legal
representative fails to appear, the court may order the opposing counsel, within a
specified period, to process the appointment of an administrator or executor who shall
immediately appear for the estate of the deceased.[37] The pronouncement of this
Court in Lawas v. Court of Appeals[38] (relied upon by petitioner), that priority is given
to the legal representative of the deceased (the executor or administrator) and that it is
only in case of unreasonable delay in the appointment of an executor or administrator,
or in cases where the heirs resort to an extrajudicial settlement of the estate that the
court may adopt the alternative of allowing the heirs of the deceased to be substituted
for the deceased, is no longer true.[39] In Gochan v. Young,[40] a case of fairly recent
vintage, the Court ruled as follows:
The above-quoted rules, while permitting an executor or
administrator to represent or to bring suits on behalf of the deceased,
do not prohibit the heirs from representing the deceased. These rules
are easily applicable to cases in which an administrator has already
been appointed. But no rule categorically addresses the situation in
which special proceedings for the settlement of an estate have already
been instituted, yet no administrator has been appointed. In such
instances, the heirs cannot be expected to wait for the appointment of
an administrator; then wait further to see if the administrator appointed
would care enough to file a suit to protect the rights and the interests of
the deceased; and in the meantime do nothing while the rights and the
properties of the decedent are violated or dissipated.
The Rules are to be interpreted liberally in order to promote
their objective of securing a just, speedy and inexpensive disposition of
every action and proceeding. They cannot be interpreted in such a way
as to unnecessarily put undue hardships on litigants. For the protection
of the interests of the decedent, this Court has in previous instances
recognized the heirs as proper representatives of the decedent, even
when there is already an administrator appointed by the court. When
no administrator has been appointed, as in this case, there is all the
more reason to recognize the heirs as the proper representatives of the
deceased. Since the Rules do not specifically prohibit them from
representing the deceased, and since no administrator had as yet been
appointed at the time of the institution of the Complaint with the SEC,

we see nothing wrong with the fact that it was the heirs of John D.
Young, Sr. who represented his estate in the case filed before the
SEC. (Emphasis supplied)[41]
The heirs of the estate of Oscar Casa do not need to first secure the appointment
of an administrator of his estate, because from the very moment of his death, they
stepped into his shoes and acquired his rights as devisee/legatee of the deceased
Loreto San Juan. Thus, a prior appointment of an administrator or executor of the
estate of Oscar Casa is not necessary for his heirs to acquire legal capacity to be
substituted as representatives of the estate. [42] Said heirs may designate one or some
of them as their representative before the trial court.
Hence, even on the threshold issue raised in the RTC and in the petition
for certiorari in the CA, the assailed order of the RTC is correct.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. Costs
against petitioner.
SO ORDERED.
THIRD DIVISION

[G.R. No. 162788. July 28, 2005]

Spouses JULITA DE LA CRUZ and FELIPE DE LA CRUZ, petitioners, vs.

PEDRO JOAQUIN, respondent.
DECISION
PANGANIBAN, J.:
The Rules require the legal representatives of a dead litigant to be
substituted as parties to a litigation. This requirement is necessitated by due
process. Thus, when the rights of the legal representatives of a decedent are
actually recognized and protected, noncompliance or belated formal
compliance with the Rules cannot affect the validity of the promulgated
decision. After all, due process had thereby been satisfied.
The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules of Court,
assailing the August 26, 2003 Decision [2] and the March 9, 2004
Resolution[3] of the Court of Appeals (CA) in CA-GR CV No. 34702. The
challenged Decision disposed as follows:

WHEREFORE,theforegoingconsidered,theappealisDISMISSEDandtheassailed
decisionaccordinglyAFFIRMEDintoto.Nocosts.[4]
On the other hand, the trial courts affirmed Decision disposed as follows:
WHEREFORE,judgmentisherebyrendered:
a)declaringtheDeedofAbsoluteSale(Exh.D)andKasunduan
(ExhibitB),tobeasalewithrightofrepurchase;
b)orderingtheplaintifftopaythedefendantsthesumofP9,000.00
bywayofrepurchasingthelandinquestion;
c)orderingthedefendantstoexecuteadeedofreconveyanceofsaid
landinfavoroftheplaintiffafterthelatterhaspaidthemthe
amountofP9,000.00torepurchasethelandinquestion;
d)orderingthedefendantstoyieldpossessionofthesubjectlandto
theplaintiffafterthelatterhaspaidthemtheamountofP9,000.00
torepurchasethepropertyfromthem;and
e)orderingthedefendantstopaytheplaintifftheamount
ofP10,000.00asactualandcompensatorydamages;theamount
ofP5,000[.00]asexemplarydamages;theamountofP5,000.00as
expensesoflitigationandtheamountofP5,000.00bywayof
attorneysfees.[5]
The Facts
The case originated from a Complaint for the recovery of possession and
ownership, the cancellation of title, and damages, filed by Pedro Joaquin
against petitioners in the Regional Trial Court of Baloc, Sto. Domingo, Nueva
Ecija.[6] Respondent alleged that he had obtained a loan from them in the
amount of P9,000 on June 29, 1974, payable after five (5) years; that is, on
June 29, 1979. To secure the payment of the obligation, he supposedly
executed a Deed of Sale in favor of petitioners. The Deed was for a parcel of
land in Pinagpanaan, Talavera, Nueva Ecija, covered by TCT No. T-111802.
The parties also executed another document entitled Kasunduan. [7]
Respondent claimed that the Kasunduan showed the Deed of Sale to be
actually an equitable mortgage.[8] Spouses De la Cruz contended that this
document was merely an accommodation to allow the repurchase of the
property until June 29, 1979, a right that he failed to exercise. [9]
On April 23, 1990, the RTC issued a Decision in his favor. The trial court
declared that the parties had entered into a sale with a right of repurchase.
[10]
It further held that respondent had made a valid tender of payment on two

separate occasions to exercise his right of repurchase. [11] Accordingly,

petitioners were required to reconvey the property upon his payment. [12]
Ruling of the Court of Appeals
Sustaining the trial court, the CA noted that petitioners had given
respondent the right to repurchase the property within five (5) years from the
date of the sale or until June 29, 1979. Accordingly, the parties executed
the Kasunduan to express the terms and conditions of their actual agreement.
[13]
The appellate court also found no reason to overturn the finding that
respondent had validly exercised his right to repurchase the land. [14]
In the March 9, 2004 Resolution, the CA denied reconsideration and
ordered a substitution by legal representatives, in view of respondents death
on December 24, 1988.[15]
Hence, this Petition.[16]
The Issues
Petitioners assign the following errors for our consideration:
I.PublicRespondentTwelfthDivisionoftheHonorableCourtofAppeals
seriouslyerredindismissingtheappealandaffirmingintototheDecisionofthetrial
courtinCivilCaseNo.SD838;
II.PublicRespondentTwelfthDivisionoftheHonorableCourtofAppeals
likewiseerredindenying[petitioners]MotionforReconsiderationgiventhefacts
andthelawthereinpresented.[17]
Succinctly, the issues are whether the trial court lost jurisdiction over the
case upon the death of Pedro Joaquin, and whether respondent was guilty of
forum shopping.[18]
The Courts Ruling
The Petition has no merit.
First Issue:
Jurisdiction
Petitioners assert that the RTCs Decision was invalid for lack of
jurisdiction.[19] They claim that respondent died during the pendency of the

case. There being no substitution by the heirs, the trial court allegedly lacked
jurisdiction over the litigation.[20]
Rule on Substitution
When a party to a pending action dies and the claim is not extinguished,
the Rules of Court require a substitution of the deceased. The procedure is
specifically governed by Section 16 of Rule 3, which reads thus:
[21]

Section16.Deathofaparty;dutyofcounsel.Wheneverapartytoapending
actiondies,andtheclaimisnottherebyextinguished,itshallbethedutyofhis
counseltoinformthecourtwithinthirty(30)daysaftersuchdeathofthefactthereof,
andtogivethenameandaddressofhislegalrepresentativeorrepresentatives.
Failureofcounseltocomplywiththisdutyshallbeagroundfordisciplinaryaction.
Theheirsofthedeceasedmaybeallowedtobesubstitutedforthedeceased,without
requiringtheappointmentofanexecutororadministratorandthecourtmayappointa
guardianadlitemfortheminorheirs.
Thecourtshallforthwithordersaidlegalrepresentativeorrepresentativestoappear
andbesubstitutedwithinaperiodofthirty(30)daysfromnotice.
Ifnolegalrepresentativeisnamedbythecounselforthedeceasedparty,orifthe
onesonamedshallfailtoappearwithinthespecifiedperiod,thecourtmayorderthe
opposingparty,withinaspecifiedtime,toprocuretheappointmentofanexecutoror
administratorfortheestateofthedeceased,andthelattershallimmediatelyappearfor
andonbehalfofthedeceased.Thecourtchargesinprocuringsuchappointment,if
defrayedbytheopposingparty,mayberecoveredascosts.
The rule on the substitution of parties was crafted to protect every partys
right to due process.[22] The estate of the deceased party will continue to be
properly represented in the suit through the duly appointed legal
representative.[23] Moreover, no adjudication can be made against the
successor of the deceased if the fundamental right to a day in court is denied.
[24]

The Court has nullified not only trial proceedings conducted without the
appearance of the legal representatives of the deceased, but also the
resulting judgments.[25] In those instances, the courts acquired no jurisdiction
over the persons of the legal representatives or the heirs upon whom no
judgment was binding.[26]
This general rule notwithstanding, a formal substitution by heirs is not
necessary when they themselves voluntarily appear, participate in the case,
and present evidence in defense of the deceased. [27] These actions negate
any claim that the right to due process was violated.
The Court is not unaware of Chittick v. Court of Appeals,[28] in which the
failure of the heirs to substitute for the original plaintiff upon her death led to

the nullification of the trial courts Decision. The latter had sought to recover
support in arrears and her share in the conjugal partnership. The children
who allegedly substituted for her refused to continue the case against their
father and vehemently objected to their inclusion as parties. [29] Moreover,
because he died during the pendency of the case, they were bound to
substitute for the defendant also. The substitution effectively merged the
persons of the plaintiff and the defendant and thus extinguished the obligation
being sued upon.[30]
Clearly, the present case is not similar, much less identical, to the factual
milieu of Chittick.
Strictly speaking, the rule on the substitution by heirs is not a matter of
jurisdiction, but a requirement of due process. Thus, when due process is not
violated, as when the right of the representative or heir is recognized and
protected, noncompliance or belated formal compliance with the Rules cannot
affect the validity of a promulgated decision. [31] Mere failure to substitute for a
deceased plaintiff is not a sufficient ground to nullify a trial courts decision.
The alleging party must prove that there was an undeniable violation of due
process.
Substitution in
the Instant Case
The records of the present case contain a Motion for Substitution of Party
Plaintiff dated February 15, 2002, filed before the CA. The prayer states as
follows:
WHEREFORE,itisrespectfullyprayedthattheHeirsofthedeceasedplaintiff
appelleeasrepresentedbyhisdaughterLourdesdelaCruzbesubstitutedasparty
plaintiffforthesaidPedroJoaquin.
Itisfurtherprayedthathenceforththeundersignedcounsel[32]fortheheirsofPedro
Joaquinbefurnishedwithcopiesofnotices,orders,resolutionsandotherpleadingsat
itsaddressbelow.
Evidently, the heirs of Pedro Joaquin voluntary appeared and participated
in the case. We stress that the appellate court had ordered [33] his legal
representatives to appear and substitute for him. The substitution even on
appeal had been ordered correctly. In all proceedings, the legal
representatives must appear to protect the interests of the deceased. [34] After
the rendition of judgment, further proceedings may be held, such as a motion
for reconsideration or a new trial, an appeal, or an execution. [35]
Considering the foregoing circumstances, the Motion for Substitution may
be deemed to have been granted; and the heirs, to have substituted for the
deceased, Pedro Joaquin. There being no violation of due process, the issue
of substitution cannot be upheld as a ground to nullify the trial courts
Decision.

Second Issue:
Forum Shopping
Petitioners also claim that respondents were guilty of forum shopping, a
fact that should have compelled the trial court to dismiss the Complaint.
[36]
They claim that prior to the commencement of the present suit on July 7,
1981, respondent had filed a civil case against petitioners on June 25, 1979.
Docketed as Civil Case No. SD-742 for the recovery of possession and for
damages, it was allegedly dismissed by the Court of First Instance of Nueva
Ecija for lack of interest to prosecute.
Forum Shopping Defined
Forum shopping is the institution of two or more actions or proceedings
involving the same parties for the same cause of action, either simultaneously
or successively, on the supposition that one or the other court would make a
favorable disposition.[37] Forum shopping may be resorted to by a party
against whom an adverse judgment or order has been issued in one forum, in
an attempt to seek a favorable opinion in another, other than by an appeal or
a special civil action for certiorari.[38]
Forum shopping trifles with the courts, abuses their processes, degrades
the administration of justice, and congests court dockets. [39] Willful and
deliberate violation of the rule against it is a ground for the summary dismissal
of the case; it may also constitute direct contempt of court. [40]
The test for determining the existence of forum shopping is whether the
elements of litis pendentia are present, or whether a final judgment in one
case amounts to res judicata in another.[41] We note, however, petitioners
claim that the subject matter of the present case has already been litigated
and decided. Therefore, the applicable doctrine is res judicata.[42]
Applicability of Res Judicata
Under res judicata, a final judgment or decree on the merits by a court of
competent jurisdiction is conclusive of the rights of the parties or their privies,
in all later suits and on all points and matters determined in the previous suit.
[43]
The term literally means a matter adjudged, judicially acted upon, or
settled by judgment.[44] The principle bars a subsequent suit involving the
same parties, subject matter, and cause of action. Public policy requires that
controversies must be settled with finality at a given point in time.
The elements of res judicata are as follows: (1) the former judgment or
order must be final; (2) it must have been rendered on the merits of the
controversy; (3) the court that rendered it must have had jurisdiction over the
subject matter and the parties; and (4) there must have been -- between the
first and the second actions -- an identity of parties, subject matter and cause
of action.[45]

Failure to Support Allegation

The onus of proving allegations rests upon the party raising them. [46] As to
the matter of forum shopping and res judicata, petitioners have failed to
provide this Court with relevant and clear specifications that would show the
presence of an identity of parties, subject matter, and cause of action between
the present and the earlier suits. They have also failed to show whether the
other case was decided on the merits. Instead, they have made only bare
assertions involving its existence without reference to its facts. In other
words, they have alleged conclusions of law without stating any factual or
legal basis. Mere mention of other civil cases without showing the identity of
rights asserted and reliefs sought is not enough basis to claim that respondent
is guilty of forum shopping, or that res judicata exists.[47]
WHEREFORE, the Petition is DENIED and the assailed Decision and
Resolution are AFFIRMED. Costs against petitioners.
SO ORDERED.
Sandoval-Gutierrez, Corona, Carpio-Morales, and Garcia, JJ., concur.

[16]

The case was deemed submitted for decision on December 10, 2004, upon
this Courts receipt of the respective Memoranda of petitioners and
respondent. Petitioners Memorandum was signed by Atty. George
Erwin M. Garcia; respondents Memorandum, by Attys. Nicolas P.
Lapea Jr. and Gilbert F. Ordoa.

[17]

Petition, pp. 6-7; rollo, pp. 8-9. Petitioners erred in phrasing the
assignment of errors, since the CA should not be impleaded as a
respondent in a Petition for Review on Certiorari. 4, Rule 45, Rules of
Court.

[18]

Petition, p. 5; rollo, p. 7.
This Court will not address the allegations that were not raised
in the Petition, but only in petitioners Memorandum. In the Courts
Resolution dated October 13, 2004, the parties were directed to submit
their respective Memoranda without raising new issues. In their
Memorandum, petitioners added paragraphs alleging that respondent
had failed to make a valid tender of payment and abandoned their right
to the repurchase agreement. These are factual issues that are not
proper in a Petition for Review on Certiorari. (1, Rule 45, Rules of
Court) Moreover, it would be against the fundamental right to due
process if these allegations are considered without hearing private
respondent and the CA on this matter. A Petition for review essentially
charges the lower court with reversible errors. How can there be any
such mistakes with respect to a matter not raised and taken up in the
assailed Decision?

[21]

Actions that survive against the decedents representatives are as follows:

(1) actions to recover real or personal property or an interest thereon,

(2) actions to enforce liens thereon, (3) actions to recover damages for
an injury to a person or a property. 1, Rule 87 of the Rules of Court.
See also Board of Liquidators v. Heirs of M. Kalaw et al., 127 Phil. 399,
414, August 14, 1967.
[42]

Litis pendentia refers to the pendency of another action between the same
parties involving the same cause of action. Compania General de
Tobacos de Filipinas v. Court of Appeals, 422 Phil. 405, 423, November
29, 2001.
This ground is also referred to as lis pendens or auter action
pendant. Buan v. Lopez, 229 Phil. 65, 68, October 13, 1986.
To be more accurate, petitioners should have alleged, not simply
the rule on forum shopping, but also res judicata as a ground to
dismiss respondents Complaint. See Employees Compensation
Commission v. Court of Appeals, supra, p. 518.
EN BANC

G.R. No. L-11567

July 17, 1958

ARSENIO FERRERIA, ET AL., petitioners-appellees,

vs.
MANUELA IBARRA VDA. DE GONZALES, ET AL., respondents-appellants.
F. M. Ejercito for respondents.
Pedro R. Manago for petitioner.
MONTEMAYOR, J.:
This is quite an old case, about a landlord and some of her tenants, which had
its origin in a complaint filed by some of said tenants was back on February 3,
1947. The thing involved is about twenty cavans of palay. But under the
present law, the appeal from a resolution of the Court of Agrarian Relations
had to come directly to this Tribunal.
Manuela Ibarra Vda. de Gonzales presumably owned a parcel of land in
Umingan, Pangasinan, cultivated by tenants. After the sharing of the crop for
the agricultural year 1946-47 by her overseer, Luis Tecson, a number of the
tenants, dissatisfied with their share on the basis of 60-40, claiming that they
were entitled to 70% of said crop, filed complaints with the Tenancy Division of
the Department of Justice. It would appear, however, that only tenant Arsenio
Ferreria continued with his complaint, his co-complainants having withdrawn
theirs. Ferreria's complaint was filed not only against Manuela Ibarra, but also
against the overseer, Luis Tecson. During the pendency of the case, Manuela
died on November 27, 1948. Counsel for Ferreria filed a petition for
substitution which was granted by order of the Department of Justice, dated
December 9, 1948, which also set the case for hearing on January 6, 1949.

The said order of December 9, 1948, at the bottom thereof, made mention of
Manolita Gonzales as residing at 272 Buendia St., Rizal City. The return of
service of said order supposedly by the Sheriff (Annex C), shows that a copy
of the same was left with one Aurora Gonzales, niece of Manolita Gonzales,
apparently living in said address. It may be stated in passing that Manolita
Gonzales claims that she did not own the land in question; that her only right
and interest in it was as an heir, being one of the five surviving children of
Manuel.
The scheduled hearing was held in the absence of Manolita Gonzales.
Decision was finally rendered in the case on May 18, 1951. On May 23, 1952,
the Court of Industrial Relations, then in charge of tenancy cases, issued a
writ of execution of the judgment, the dispositive part of said decision in part
reading as follows:
IN VIEW OF ALL THE FOREGOING, the respondent landlord and/or
her duly authorized representative is/are hereby ordered to deliver to
the petitioner-tenant Arsenio C. Ferreria the balance of 20.6 cavanes of
palay equivalent to 10% of his share to complete his 70% participation
in the crop harvested for the agricultural year 1946-1947, or its money
value at the Naric price of palay in the locality, within 15 days from
receipt of this decision.
Another portion of the dispositive part reproduced, states that the complaints
of the other complainants were dismissed.
On receipt of a copy of this writ of execution, Luis Tecson and Manolita
Gonzales each filed a petition to set aside said writ. Luis claimed that it was
true that he was an overseer of Manuela Ibarra, but that upon her death on
November 27, 1948, the possession that he held of the land as overseer
passed on to the administrator of the estate; that thereafter, he no longer had
anything to do with said property, and that in the distribution of the crop for
1946-1947, the share of Manuela was duly delivered by him to her, and that
any claim by Ferreria should be filed with and against her estate. On her part,
Manolita claimed that she was surprised to receive a copy of the writ of
execution because she was never made a party to the case and had never
been served any process or notice of hearing therein, and that an examination
of the record of the case would show that from the inception of the case up to
the rendering of the decision, her name was never mentioned by any of the
parties, and that it was a surprise to find her name included in the title of the
decision as one of the defendants, although the body of said decision never
mentioned her name; that although she was one of the five heirs of Manuel
Ibarra, she, Manolita, was not the actual owner of the estate which was then
under probate proceedings in the Court of First Instance of Rizal; and that if
Ferreria had any claim against the estate, he should file the same to be
passed upon by the probate court. Both Luis and Manolita asked that the writ
of execution be set aside.
It would seem that nothing was done about the petitions, and after the
creation of the Court of Agrarian Relations, Judge Tomas P. Panganiban

finally took action on the same, and by order of August 23, 1956, overruled
the same, holding that under the law creating the Court of Agrarian Relations,
said court had exclusive and original jurisdiction to try, investigate, and settle
all cases, matters and disputes arising between landlord and tenant, and that
the case at bar was purely a dispute between landlord and tenant. Both
petitioners Luis and Manolita asked for reconsideration of the order, Manolita
emphasizing her contention that she was deprived of her day in court due to
the failure of plaintiff Ferreria to make the proper substitution, citing Rule 3,
Section 17, above-reproduced. In a resolution dated October 29, 1956, the
Agrarian Court held that Manuela Ibarra had been duly substituted by
Manolita Gonzales, and that service of the order of substitution was duly
served upon her. We reproduce the pertinent portion of the resolution:
Anent the first ground, it appears that respondent Manuela Ibarra Vda.
de Gonzales was duly substituted upon her death by Manolita
Gonzales Vda. de Carungcong in a petition filed by counsel for the
petitioners on December 9, 1948, and granted by the representative of
the former Tenancy Division, now Court of Agrarian Relations, on the
same date. A copy of the order granting the petition for substitution was
sent to Manolita Gonzales Vda. de Carungcong, through the Chief of
Police of Rizal City, by registered mail on December 9, 1948.
Therefore, respondent Manolita was duly notified of the hearing set on
January 6, January 26, March 26, April 21, May 7, June 7, and July 1,
all in the year 1949, but these hearings had to be cancelled due to the
absence of the respondents on January 6, 1949 and their several
motions for postponement on the subsequent dates. On July 2, 1949,
the hearing proceeded in the absence of the respondents during which
petitioners presented their evidence. Notwithstanding several chances
given to the respondents to present their evidence on August 5, 1949
and September 20, 1949, respondents persistently failed to appear.
However, on February 3, 1950, counsel for the respondents cross
examined one witness of the petitioners and finally, on March 4, 1950
respondents presented their evidence, with the exception of Manolita
Gonzales de Carungcong (who) never appeared.
The Agrarian Court further said that if Manolita did not care to appear before
the former Tenancy Division, she cannot now complain that she was deprived
of her day in court; and that as to Luis Tecson, since the decision orders "the
respondent landlord and/or her duly authorized representative" to deliver to
the petitioner Ferreria the balance of 20.6 cavans of palay, Luis Tecson, as
overseer and duly authorized representative of the landlord, must comply with
the decision of the court, and that his counsel's contention that the property
involved was within the jurisdiction of the probate court was incorrect, for the
reason that the palay ordered to be delivered, properly belonged to Ferreria
as his share in the crop and, therefore, it was not part of the estate under
administration, neither was it a claim against the estate.
Both Manolita and Luis have filed the present petition to review the order of
August 23, 1956, denying the petitions to lift the writ of execution and the
order of October 29, 1956, denying the petition for reconsideration. The

petition was given due course and appellee Ferreria was required to answer,
which he did. Thereafter, both parties filed memoranda in support of their
contentions.
The first question to be determined is whether or not there was a valid
notification or service of the order granting the petition for substitution on
Manolita Gonzales. It will be remembered that a copy of the order was never
served on Manolita personally, but upon her niece, Aurora Gonzales. In other
words it was substituted service. Section 8, Rule 7, regarding the service of
summons, provides as follows:
SEC. 8. Substituted service. If the defendant cannot be promptly
served as required in the preceding, service may be effected by leaving
copies of the summons at the defendant's dwelling house or usual
place of abode with some person of suitable age and discretion then
residing there or by leaving the copies at defendant's office or regular
place of business with some competent person in charge thereof or
upon the defendant by registered mail.
As to the service of court orders, we have Sections 3 and 4 of Rule 27, which
read as follows:
SEC. 3. Modes of service. Service of pleadings, motions, notices,
orders, judgments and other papers, shall be made either personally or
by mail.
SEC. 4. Personal service. Service of the papers may be made by
delivering personally a copy to the party or his attorney, or by leaving it
in his office with his clerk or with a person having charge thereof. If no
person is found in his office, or his office is not known, then by leaving
the copy, between the hours of eight in the morning and six in the
evening, at the party's or attorney's residence, if known, with a person
of sufficient discretion to receive the same.
We find that under none of these above-quoted provisions of the Rules of
Court had Manolita been duly served with the order of substitution. According
to her, at the time, she was not living at 272 Buendia St., where copy of the
order was left with Aurora who lived in that place. The rules require that the
copy should be left at the residence or office of the one served, or with
someone living therein. Furthermore, Manolita claims that she never received
the copy left with her niece and that they were not living together.
The other question is whether or not there had been a valid substitution. Rule
3, Section 17, of the Rule of Court provides as follows:
SEC. 17. Death of party. After a party die and the claim in not
thereby extinguished, the court shall order, upon proper notice, the
legal representative of the deceased to appear and to be substituted
for the deceased, within a period of thirty (30) days, or within such time
as may be granted. If the legal representative fails to appear within said

time, the court may order the opposing party to procure the
appointment of a legal representative of the decease within a time to
be specified by the court, and the representative shall immediately
appear for and on behalf of the interest of the deceased. The court
charges involved in procuring such appointment, if defrayed by the
opposing party, may be recovered as costs. The heirs of the deceased
may be allowed to be substituted for the deceased, without requiring
the appointment of an executor or administrator and the court may
appoint guardian litem for the minor heirs.
In the present case, there is no question that there had been no court order
for the legal representative of Manuela Ibarra to appear, nor had any such
legal representative ever appeared in court to be substituted for the
deceased; neither had complainant Ferreria ever procured the appointment of
such legal representative of the deceased, nor had the heirs of the deceased,
including Manolita ever asked to be allowed to be substituted for the
deceased Manuela. As a result, the hearings were held without the presence
of Manolita Gonzales. True, Atty. Emilio Fernandez, it seems, originally
represented Manuela and apparently, Luis Tecson, and continued within their
representation, but Manolita now argues that with the death of Manuela
Ibarra, his relationship as counsel for Manuela ceased, and what is more, he
was never authorized to appear for Manolita Gonzales. Inasmuch as Manolita
Gonzales was never validly served a copy of the order granting the
substitution and that, furthermore, a valid substitution was never effected,
consequently, the court never acquired jurisdiction over Manolita Gonzales for
the purpose of making her a party to the case and making the decision
binding upon her, either personally or as legal representative of the estate of
her mother Manuela.
However, we agree with the Agrarian Court in so far as it holds that it has
exclusive jurisdiction over cases involving tenancy. The fact that the landlord
dies not mean that the relation of landlord and tenant ends, because the
estate continues to be the landlord and if, as in this case, it is found that
during the lifetime of Manuela Ibarra, the sharing of crop for the agricultural
year 1946-1947 should have been on the basis of 70-30, instead of 60-40,
and therefore, the owed Ferreria 10% of said crop, then said obligation
remained a charge on her estate after she died and there was no necessity
for the tenant to file a claim for this 10% with the probate court in charge of
the estate.
As to Luis Tecson, we agree with him in his contention that in the sharing of
the crop for the agricultural year 1946-1947, he acted merely as an overseer
and that he gave the share corresponding to the owner to Manuela, and that
since then, specially after her death, he had nothing more to do with the land.
It is clear that the obligation to deliver to tenant Ferreria 10% of that crop of
the agricultural year, should it be later found that the basis should have been
70-30, instead of 60-40, rests with the estate of Manuela through the
administrator and not with Luis Tecson, whose relation as overseer had long
ceased.

In connection with the basis of sharing of the crop for the agricultural year
1946-1947, Manolita in her pleadings claims that her mother furnished the
work animals, seeds, and other facilities used in the cultivation and that
consequently, the share should have been on the 50-50 basis. Ferreria claims
the contrary. These conflicting claims should be finally determined by the
Agrarian Court.
In view of the foregoing, we hereby set aside not only the writ of execution,
the resolution of the Agrarian Court and its order denying the motion for
reconsideration of the same, now sought to be reviewed, but also the original
decision of the Tenancy Division for lack of jurisdiction. The case is hereby
ordered remanded to the Court of Agrarian Relations for further proceedings,
in which proceedings, the Agrarian Court may bear in mind and consider the
rulings and holdings contained in this decision, specially with regards to
substitution of parties and the liability of Luis Tecson in relation to any palay
which Ferreria may be found to be entitled to. No costs.
Paras, C. J., Bengzon, Reyes, A., Bautista Angelo, Concepcion, Reyes, J. B.
L., Endencia and Felix, JJ., concur.

FIRST DIVISION
GENEROSO SALIGUMBA,
ERNESTO SALIGUMBA, and
HEIRS OF SPOUSES VALERIA
SALIGUMBA AND ELISEO
SALIGUMBA, SR.,
Petitioners,

G.R. No. 143365

Present:
PUNO, C.J., Chairperson,
CARPIO,
CORONA,
AZCUNA, and
TINGA,* JJ.

- versus -

MONICA PALANOG,
Promulgated:
Respondent.
December 4, 2008
x------------------------- -------------------------x

DECISION
CARPIO, J.:

The Case
This is a petition for review of the Decision dated 24 May 2000 of the Regional
Trial Court, Branch 5, Kalibo, Aklan (RTC-Branch 5) in Civil Case No. 5288 for
Revival of Judgment. The case is an offshoot of the action for Quieting of Title with
Damages in Civil Case No. 2570.

The Facts
Monica Palanog, assisted by her husband Avelino Palanog (spouses Palanogs),
filed a complaint dated 28 February 1977 for Quieting of Title with Damages against
defendants,
spouses
Valeria Saligumba and Eliseo Saligumba,
Sr.
(spouses Saligumbas),
before
the
Regional
Trial
Court,
Branch
3, Kalibo, Aklan (RTC-Branch 3). The case was docketed as Civil Case No. 2570. In
the complaint, spouses Palanogs alleged that they have been in actual, open, adverse
and continuous possession as owners for more than 50 years of a parcel of land
located in Solido, Nabas, Aklan. The spouses Saligumbas allegedly prevented them
from entering and residing on the subject premises and had destroyed the barbed
wires enclosing the land. Spouses Palanogs prayed that they be declared the true and
rightful owners of the land in question.
When the case was called for pre-trial on 22 September 1977,
Atty. Edilberto Miralles (Atty. Miralles), counsel for spouses Saligumbas, verbally
moved for the appointment of a commissioner to delimit the land in
question. Rizalino Go, Deputy Sheriff of Aklan, was appointed commissioner and
was directed to submit his report and sketch within 30 days. [1] Present during the
delimitation were spouses Palanogs, spouses Saligumbas, and Ernesto Saligumba,
son of spouses Saligumbas.[2]
After submission of the Commissioners Report, spouses Palanogs, upon
motion, were granted 10 days to amend their complaint to conform with the items
mentioned in the report.[3]
Thereafter, trial on the merits ensued. At the hearing on 1 June 1984, only the
counsel for spouses Palanogs appeared. The trial court issued an order resetting the
hearing to 15 August 1984 and likewise directed spouses Saligumbas to secure the
services of another counsel who should be ready on that date. [4] The order sent
to EliseoSaligumba, Sr. was returned to the court unserved with the notation Party
Deceased while the order sent to defendant Valeria Saligumba was returned with the
notation Party in Manila.[5]
At the hearing on 15 August 1984, spouses Palanogs direct examination was
suspended and the continuation of the hearing was set on 25 October 1984. The trial
court stated that Atty. Miralles, who had not withdrawn as counsel for
spouses Saligumbas despite his appointment as Municipal Circuit Trial Court judge,
would be held responsible for the case of spouses Saligumbas until he formally

withdrew as counsel. The trial court reminded Atty. Miralles to secure the consent of
spouses Saligumbas for his withdrawal.[6] A copy of this order was sent to
Valeria Saligumba but the same was returned unserved with the notation Party
in Manila.[7]
The hearing set on 25 October 1984 was reset to 25 January 1985 and the trial
court directed that a copy of this order be sent to Eliseo Saligumba, Jr. at COA,
PNB,Manila.[8]
The presentation of evidence for spouses Palanogs resumed on 25 January
1985 despite the motion of Atty. Miralles for postponement on the ground that his
client was sick. The exhibits were admitted and plaintiffs spouses Palanogs rested
their case. Reception of evidence for the defendants spouses Saligumbas was
scheduled on 3, 4, and 5 June 1985.[9]
On 3 June 1985, only spouses Palanogs and counsel appeared. Upon motion of
the spouses Palanogs, spouses Saligumbas were deemed to have waived the
presentation of their evidence.
On 3 August 1987, after a lapse of more than two years, the trial court
considered the case submitted for decision.
On 7 August 1987, RTC-Branch 3 rendered a judgment in Civil Case No. 2570
declaring spouses Palanogs the lawful owners of the subject land and ordering
spousesSaligumbas, their agents, representatives and all persons acting in privity with
them to vacate the premises and restore possession to spouses Palanogs.
The trial court, in a separate Order dated 7 August 1987, directed that a copy of
the courts decision be furnished plaintiff Monica Palanog and defendant
ValeriaSaligumba.
Thereafter, a motion for the issuance of a writ of execution of the said decision
was filed but the trial court, in its Order dated 8 May 1997, ruled that since more than
five years had elapsed after the date of its finality, the decision could no longer be
executed by mere motion.
Thus, on 9 May 1997, Monica Palanog (respondent), now a widow, filed a
Complaint seeking to revive and enforce the Decision dated 7 August 1987 in Civil
Case No. 2570 which she claimed has not been barred by the statute of limitations.
She impleaded petitioners Generoso Saligumba and Ernesto Saligumba, the heirs and
children of the spouses Saligumbas, as defendants. The case was docketed as Civil
Case No. 5288 before the RTC-Branch 5.
Petitioner Generoso Saligumba, for himself and in representation
of his
brother Ernesto who was out of the country working as a seaman, engaged the
services of the Public Attorneys Office, Kalibo, Aklan
which filed a motion for
time to allow them to file a responsive pleading. Petitioner Generoso Saligumba filed
his Answer[10]alleging that:
(1) respondent had no cause of action; (2) the
spouses Saligumbas died while Civil Case No. 2570 was pending and no order of
substitution was issued and hence, the trial was null and void; and (3) the court did

not acquire jurisdiction over the heirs of the spouses Saligumbas and therefore, the
judgment was not binding on them.
Meanwhile, on 19 December 1997, the trial court granted respondents motion
to implead additional
defendants
namely, Eliseo Saligumba,
Jr.
and
Eduardo Saligumba, who are also the heirs and children of spouses Saligumbas.
[11]
They were, however, declared in default on 1 October 1999 for failure to file any
responsive pleading.[12]
The Trial Courts Ruling
On 24 May 2000, the RTC-Branch 5 rendered a decision in favor of respondent
ordering the revival of judgment in Civil Case No. 2570. The trial court ruled that the
non-substitution of the deceased spouses did not have any legal significance. The land
subject of Civil Case No. 2570 was the exclusive property of defendant
ValeriaSaligumba who inherited the same from her deceased parents. The death of her
husband, Eliseo Saligumba, Sr., did not change the complexion of the ownership of
the property that would require his substitution. The spouses Saligumbas children,
who are the petitioners in this case, had no right to the property while
Valeria Saligumba was still alive. The trial court further found that when defendant
Valeria Saligumba died, her lawyer, Atty. Miralles, did not inform the court of the
death of his client. The trial court thus ruled that the non-substitution of the deceased
defendant was solely due to the negligence of counsel. Moreover, petitioner
Ernesto Saligumba could not feign ignorance of Civil Case
No. 2570 as he was
present during the delimitation of the subject land. The trial court likewise held that
the decision in Civil Case No. 2570 could not be the subject of a collateral attack.
There must be a direct action for the annulment of the said decision.
Petitioners elevated the matter directly to this Court. Hence, the present petition.
The Courts Ruling
The instant case is an action for revival of judgment and the judgment sought
to be revived in this case is the decision in the action for quieting of title with
damages in Civil Case No. 2570. This is not one for annulment of judgment.
An action for revival of judgment is no more than a procedural means of
securing the execution of a previous judgment which has become dormant after the
passage of five years without it being executed upon motion of the prevailing party. It
is not intended to re-open any issue affecting the merits of the judgment debtors case
nor the propriety or correctness of the first judgment.[13] An action for revival of
judgment is a new and independent action, different and distinct from either the
recovery of property case or the reconstitution case, wherein the cause of action is the
decision itself and not the merits of the action upon which the judgment sought to be
enforced is rendered.[14] Revival of judgment is premised on the assumption that the
decision to be revived, either by motion or by independent action, is already final
and executory.[15]
The RTC-Branch 3 Decision dated 7 August 1987 in Civil Case
No. 2570 had
been rendered final and executory by the lapse of time with no motion for

reconsideration nor appeal having been filed. While it may be true that the judgment
in Civil Case No. 2570 may be revived and its execution may be had, the issue now
before us is whether or not execution of judgment can be issued against petitioners
who claim that they are not bound by the RTC-Branch 3 Decision dated 7 August
1987 in Civil Case No. 2570.
Petitioners contend that the RTC-Branch 3 Decision of 7 August 1987 in Civil
Case No. 2570 is null and void since there was no proper substitution of the deceased
spouses Saligumbas despite the trial courts knowledge that the deceased
spouses Saligumbas were no longer represented by counsel. They argue that they were
deprived of due process and justice was not duly served on them.
Petitioners argue that the trial court even acknowledged the fact of death of
spouses Saligumbas but justified the validity of the decision rendered in that case
despite lack of substitution because of the negligence or fault of their counsel.
Petitioners contend that the duty of counsel for the deceased spouses Saligumbas to
inform the court of the death of his clients and to furnish the name and address of the
executor, administrator, heir
or legal representative of the decedent under Rule 3
presupposes adequate
or active representation by counsel. However, the relation
of attorney
and client was already terminated by the appointment of counsel on
record, Atty. Miralles, as Municipal Circuit Trial Court judge even before the deaths
of the spouses Saligumbas were known. Petitioners invoke the Order of 1 June
1984 directing the spouses Saligumbas to secure the services of another lawyer to
replace Atty. Miralles. The registered mail containing that order was returned to the
trial court with the notation that Eliseo Saligumba, Sr. was deceased. Petitioners
thus question the decision in Civil Case
No. 2570 as being void and of no legal
effect because their parents were not duly represented by counsel of record.
Petitioners further argue that they have never taken part in the proceedings in Civil
Case No. 2570 nor did they voluntarily appear or participate in the case. It is unfair to
bind them in a decision rendered against their deceased parents. Therefore, being a
void judgment, it has no legal nor binding effect on petitioners.
Civil Case No. 2570 is an action for quieting of title with damages which is an
action involving real property. It is an action that survives pursuant to Section 1, Rule
87[16] as the claim is not extinguished by the death of a party. And when a party dies
in an action that survives, Section 17 of Rule 3 of the Revised Rules of
Court[17] provides for the procedure, thus:
Section 17. Death of Party. - After a party dies and the claim is
not thereby extinguished, the court shall order, upon proper notice,
the legal representative of the deceased to appear and to be substituted
for the deceased, within a period of thirty (30) days, or within such
time as may be granted. If the legal representative fails to appear
within said time, the court may order the opposing party to procure the
appointment of a legal representative of the deceased within a time to
be specified by the court, and the representative shall immediately
appear for and on behalf of the interest of the deceased. The court
charges involved in procuring such appointment, if defrayed by the
opposing party, may be recovered as costs. The heirs of the deceased
may be allowed to be substituted for the deceased, without requiring

the appointment of an executor or administrator and the court may

appoint guardian ad litem for the minor heirs. (Emphasis supplied)
Under the express terms of Section 17, in case of death of a party, and upon
proper notice, it is the duty of the court to order the legal representative or heir of the
deceased to appear for the deceased. In the instant case, it is true that the trial court,
after receiving an informal notice of death by the mere notation in the envelopes,
failed to order the appearance of the legal representative or heir of the deceased. There
was no court order for deceaseds legal representative or heir to appear, nor did any
such legal representative ever appear in court to be substituted for the deceased.
Neither did the respondent ever procure the appointment of such legal representative,
nor did the heirs ever ask to be substituted.
It appears that Eliseo Saligumba, Sr. died on 18 February 1984 while
Valeria Saligumba died on 2 February 1985. No motion for the substitution of the
spouses was filed nor an order issued for the substitution of the deceased
spouses Saligumbas in
Civil
Case
No.
2570.
Atty. Miralles and
petitioner Eliseo Saligumba, Jr., despite notices sent to them to appear, never
confirmed the death of Eliseo Saligumba, Sr. and Valeria Saligumba. The record is
bereft of any evidence proving the death of the spouses, except the mere notations in
the envelopes enclosing the trial courts orders which were returned unserved.
Section 17 is explicit that the duty of the court to order the legal representative
or heir to appear arises only upon proper notice. The notation Party-Deceased on
theunserved notices could not be the proper notice contemplated by the rule. As the
trial court could not be expected to know or take judicial notice of the death of a party
without the proper manifestation from counsel, the trial court was well within its
jurisdiction to proceed as it did with the case. Moreover, there is no showing that the
courts proceedings were tainted with irregularities.[18]
Likewise, the plaintiff or his attorney or representative could not be expected to
know of the death of the defendant if the attorney for the deceased defendant did not
notify the plaintiff or his attorney of such death as required by the rules. [19] The judge
cannot be blamed for sending copies of the orders and notices to defendants spouses
in the absence of proof of death or manifestation to that effect from counsel.[20]
Section 16, Rule 3 of the Revised Rules of Court likewise expressly provides:
SEC. 16. Duty of attorney upon death, incapacity
or incompetency of party. - Whenever a party to a pending case dies,
becomes incapacitated or incompetent, it shall be the duty of his
attorney to inform the court promptly of such death, incapacity

or incompetency, and to give the name and residence of his executor,

administrator, guardian or other legal representative.
It is the duty of counsel for the deceased to inform the court of the death of his client.
The failure of counsel to comply with his duty under Section 16 to
inform the court of the death of his client and the non-substitution of such party will
not invalidate the proceedings and the judgment thereon if the action survives the
death of such party. The decision rendered shall bind the partys successor-ininterest.[21]
The rules operate on the presumption that the attorney for the deceased party is
in a better position than the attorney for the adverse party to know about the death of
his client and to inform the court of the name and address of his legal representative.
[22]

Atty. Miralles continued to represent the deceased spouses even after the latters
demise. Acting on their behalf, Atty. Miralles even asked for postponement of the
hearings and did not even confirm the death of his clients nor his appointment as
Municipal Circuit Trial Court judge. These clearly negate petitioners contention that
Atty.Miralles ceased to be spouses Saligumbas counsel.
Atty. Miralles still remained the counsel of the spouses Saligumbas despite the
alleged appointment as judge. Records show that when Civil Case No. 2570 was
called for trial on 25 October 1984, Atty. Miralles appeared and moved for a
postponement. The 25 October 1984 Order reads:
ORDER
Upon petition of Judge Miralles who is still the counsel on
record of this case and who is held responsible for anything that will
happen in this case, postpone the hearing of this case to JANUARY 25,
1985 AT 8:30 in the morning. x x x[23]
The trial court issued an Order dated 1 June 1984 directing the defendants to secure
the services of another counsel. This order was sent to Eliseo Saligumba, Sr. by
registered mail but the same was returned with the notation Party-Deceased while
the notice to Valeria Saligumba was returned with the notation Party
in Manila.[24] EliseoSaligumba, Sr. died on 18 February 1984. When
Atty. Miralles appeared in court on 25 October 1984, he did not affirm nor inform the
court of the death of his client. There was no formal substitution. The trial court
issued an order resetting the hearing to 25 January 1985 and directed that a copy of
the order be furnished petitioner EliseoSaligumba, Jr. at COA, PNB, Manila by
registered mail.[25] When the case was called on 25 January 1985,
Atty. Miralles sought for another postponement on the ground that his client was sick
and under medical treatment in Manila.[26] Again, there was no manifestation from
counsel about the death of Eliseo Saligumba, Sr. The trial court issued an Order

dated 25 January 1985 setting the reception of evidence for the defendants on 3, 4,
and 5 June 1985. A copy of this order was sent to Eliseo Saligumba, Jr. by registered
mail. Nonetheless, as the trial court in Civil Case No. 5288 declared, the nonsubstitution of Eliseo Saligumba, Sr. did not have any legal significance as the land
subject of Civil Case No. 2570 was the exclusive property of Valeria Saligumba who
inherited it from her deceased parents.
This notwithstanding, when Valeria Saligumba died on 2 February 1985,
Atty. Miralles again did not inform the trial court of the death of Valeria Saligumba.
There was no formal substitution nor submission of proof of death of
Valeria Saligumba.
Atty. Miralles was remiss in his duty under Section 16, Rule 3
of the Revised Rules of Court. The counsel of record is obligated to protect his
clients interest until he is released from his professional relationship with his client.
For its part, the court could recognize no other representation on behalf of the client
except such counsel of record until a formal substitution of attorney is effected.[27]
An attorney must make an application to the court to withdraw as counsel, for
the relation does not terminate formally until there is a withdrawal of record; at least,
so far as the opposite party is concerned, the relation otherwise continues until the end
of the litigation.[28] Unless properly relieved, the counsel is responsible for the conduct
of the case.[29] Until his withdrawal shall have been approved, the lawyer remains
counsel of record who is expected by his client as well as by the court to do what the
interests of his client require. He must still appear on the date of hearing for the
attorney-client relation does not terminate formally until there is a withdrawal of
record.[30]
Petitioners should have questioned immediately the validity of the proceedings
absent any formal substitution. Yet, despite the courts alleged lack of jurisdiction
over the persons of petitioners, petitioners never bothered to challenge the same, and
in fact allowed the proceedings to go on until the trial court rendered its decision.
There was no motion for reconsideration, appeal or even an action to annul the
judgment in Civil Case No. 2570. Petitioners themselves could not feign ignorance of
the case since during thependency of Civil Case No. 2570, petitioner
Ernesto Saligumba, son of the deceased spouses, was among the persons present
during the delimitation of the land in question before the Commissioner held on 5
November 1977.[31] Petitioner Eliseo Saligumba, Jr. was likewise furnished a copy of
the trial courts orders and notices. It was only the Answer filed by
petitioner Generoso Saligumba in Civil Case No. 5288 that confirmed the dates when
the spouses Saligumbas died and named the latters children. Consequently,
Atty. Miralles was responsible for the conduct of the case since he had not been
properly relieved as counsel of record. His acts bind his clients and the latters
successors-in-interest.
In the present case for revival of judgment, the other petitioners have not shown
much
interest
in
the
case.
Petitioners Eliseo Saligumba,
Jr.
and
Eduardo Saligumba were declared in default for failure to file their answer. Petitioner
Ernesto Saligumba was out of the country working as a seaman. Only
petitioner Generoso Saligumba filed an Answer to the complaint. The petition filed in
this Court was signed only by petitioner Generoso Saligumba as someone signed on
behalf of petitioner Ernesto Saligumbawithout the latters authority to do so.

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 24

May 2000 of the Regional Trial Court, Branch 5, Kalibo, Aklan in Civil Case No.
5288. Costs against petitioners.
SO ORDERED.
[16]

Section 1, Rule 87 of the Revised Rules of Court provides:

SECTION 1. Actions which may and which may not be
brought against executor or administrator. - No action upon a
claim for the recovery of money or debt or interest thereon shall be
commenced against the executor or administrator; but actions to
recover real or personal property, or an interest therein, from the estate,
or to enforce a lien thereon, and actions to recover damages for an
injury to person or property, real or personal, may be commenced
against him.

[17]

Spouses Eliseo Saligumba, Sr. and Valeria Saligumba died before

the effectivity of the 1997 Rules
on Civil Procedure. Section 17, Rule 3 of
the Rules of Court was amended and is now Section 16,
Rule 3 of the 1997 Rules
on Civil Procedure which reads:
Section 16. Death of a 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.

FIRST DIVISION

G.R. Nos. L-42699 to L-42709 May 26, 1981

THE HEIRS OF THE LATE FLORENTINA NUGUID VDA. DE
HABERER, petitioner,
vs.
COURT OF APPEALS, ** FEDERICO MARTINEZ, BALDOMERO MANALO,
FAUSTINO BAGALAWIS, FEDERICO STA. TERESA, ANGELITO KING,
GREGORIO DEL ROSARIO, LEODOVICO TORRES, LEON SORIANO,
SANTIAGO TUMANG, LUIS PASTOR and CRISTINO
LIBRAMANTE,respondents.

TEEHANKEE, J.:1wph1.t
The Court grants the petition for review by way of appeal from the Resolutions
of respondent Court of Appeals dated November 24, 1975 and January 15,
1976 dismissing the appeal of the late Florentino Nuguid Vda. de Haberer in
CA-G. R. No. 5368090-R and ordering all pleadings filed in said cases after
the death of said appellant stricken off the records, for having been issued
with grave error of law if not with grave abuse of discretion and remands the
case for proper proceedings and determination of the appeal on the merits.
This case originated from the Court of First Instance of Rizal where the late
Florentina Nuguid Vda. de Haberer as the duly registered owner filed in 1964
and 1965 (11) complaints for recovery of possession of the parcel of land
evidenced by Transfer Certificate of Title No. 15043 of the Register of Deeds
of Rizal issued in her name, situated at Mandaluyong, Rizal, alleging that
private respondents had surreptitiously entered the land and built their houses
thereon.
The lower court, after trial on the merits, rendered a consolidated decision,
dated May 26, 197 l, dismissing all the complaints. On motion of the late
Florentina Nuguid Vda. de Haberer the cases were reopened and retried on
grounds of newly discovered evidence. On September 15, 1972, the lower
court issued an order reviving its decision of May 26, 1971. The decision was
thus appealed to the Court of Appeals.
In the Court of Appeals, the cases were erroneously dismissed once before,
on the ground that the appeal was allegedly filed out of time. The issue was
brought to this Court in Cases Nos. L-39366 and L-39620-29, entitled
"Florentina Nuguid Vda. de Haberer vs. Federico Martinez, et al., 1 On
January 29, 1975, this Court rendered its judgment setting aside the appellate
court's dismissal of the appeal and ordering the reinstatement of the same for
proper disposition on the merits, having found "that contrary to respondent
court's erroneous premises and computation, petitioner duly and timely
perfected her appeal within the reglementary period and in compliance with
the material data rule requiring that the Record on Appeal state such data as
will show that the appeal was perfected on time. "

The cases were remanded to the Court of Appeals where appellant was
required to file printed brief within forty-five days from her receipt of notice.
Three days before the period was to expire, or on June 18, 1975, appellant's
counsel requested for an extension of time within which to file appellant's
brief. Respondent court in a resolution dated June 23, 1975 granted the
request and gave appellant a 90-day extension (with warning of no further
extension) from receipt on June 27, 1975 or up to September 25, 1975 within
which to file the appellant's printed brief. On June 23, 1975, private
respondent opposed the extension by filing a "Motion to Set Aside Order
Granting Extension of Time to File Brief." Appellant was directed by
respondent court to comment on the said opposition and appellant's counsel
complied by submitting its comments on July 15, 1975.
In the meantime, appellant Florentina Nuguid Vda. de Haberer had died on
May 26, 1975. Appellant's counsel Attorneys Bausa, Ampil and Suarez
accordingly gave respondent court notice of the death of their client in their
motion of June 28, 1975 and asked for the suspension of the running of the
period within which to file the appellant's brief pending the appointment of an
executor of the estate left by their client in the Court of First Instance of
Quezon City (Sp. Proc. No. Q-2026) where a petition for the probate of the
alleged will of the deceased had been filed by another lawyer, Atty. Sergio
Amante. Respondents in turn contended that the lawyers of he deceased had
"no longer any legal standing and her atorneys could no longer act for and in
her behalf for the reason that their client-attorney relationship had been
automatically erminated or severed" and asked that the appeal be dismissed
for failure to prosecute." 2
Since their motion of June 28, 1975 remained unacted upon and the original
extension granted by the respondent court for the deceased appellant to file
her printed brief was about to expire, her counsel filed on September 18, 1975
a manifestation and/or motion asking either for an extension of sixty (60) days
and/or resolution suspending the running of the period within which to submit
appellant's printed brief. Still, respondent, court remained silent.
Not certain whether their services would still be retained by the heirs of the
deceased, counsel for the late Florentina Nuguid Vda. de Haberer reiterated
their request in a motion dated November 14, 1975 either for an extension of
time to file appellant's brief or for the issuance of a resolution suspending the
running of the period for filing the same, pending the appointment of an
administrator or executor of the estate of the deceased appellant.
Finally, acting on counsel's motion of November 14, 1975, respondent court
denied the request for extension and at the same time dismissed the appeal,
ruling in its resolution dated November 24, 1975 as follows:1wph1.t
Upon consideration of the manifestation and/or for another
extension to file appellant's brief dated November 14, 1975, filed
by counsel for the appellant on the grounds therein stated, and
considering that appellant has already been given a total of one
hundred ninety-five (195) days within which to file brief, the

Court Resolved to deny the motion for another extension to file

brief and to dismiss the appeal.
Counsel for the deceased appellant forthwith filed their urgent motion for
reconsideration of December 8, 1975 explaining their predicament that the
requests for extension/suspension of period to file brief was due to the
uncertainty that their services may no longer be retained by the heirs or legal
representatives of their deceased client but they felt obligated to preserve the
right of such heirs/successors to continue the appeal pursuant to Rule 3,
Section 17 of the Rules of Court, pending the settlement of the question of
who among them should be the executor of the deceased's estate and
presented therewith, for admission, the printed "brief for the appellant" the
printing of which they had deferred "for professional ethical considerations,"
pending respondent court's action on their request for suspension of the
period. They further submitted therewith copies of 2 separate orders of
September 3, 1975 and August 26, 1975 issued by the Court of Agrarian
Relations and the Court of First Instance both at Guimba, Nueva Ecija,
respectively, wherein the deceased Florentina Nuguid Vda. de Haberer was
party-defendant, granting the deceased's counsel's prayer to hold in
abeyance further proceedings therein pending the appointment of an
administrator for the estate of the deceased.
Respondent court, however, denied reconsideration, per its Resolution of
January 15, 1976 citing the general principle that "litigants have no right to
assume that such extensions will be granted as a matter of course." But
respondent court erred in applying this general principle and summarily
denying reconsideration and denying admission of the appellant's brief
conditioned upon the administrator of the deceased's estate making his
appearance upon his appointment and being granted leave to file his
supplemental brief/memorandum, 3 in view of the intervening event of
appellant's death and the interposition of the equally established principle that
the relation of attorney and client is terminated by the death of the client, as
acknowledged by respondent court itself as well as respondents. ln the
absence of a retainer from the heirs or authorized representatives of his
deceased client, the attorney would thereafter have no further power or
authority to appear or take any further action in the case, save to inform the
court of the client's death and take the necessary steps to safeguard the
deceased's rights in the case.
This is what the deceased's counsel did in the case at bar. They properly
informed respondent court of the death of the appellant and sought
suspension of the proceedings and of the period for filing appeliant's brief
pending the appointment of the executor of the deceased's estate in the
proper probate proceedings filed with the Court of First Instance of Quezon
City. Section 17, Rule 3 of the Rules of Court 4 sets the rule on substitution of
parties in case of death of any of the parties. Under the Rule, it is the court
that is called upon, after notice of a party's death and the claim is not thereby
extinguished, to order upon proper notice the legal representative of the
deceased to appear within a period of 30 days or such tlnie as it may grant.
Since no administrator of the estate of the deceased appellant had yet been

appointed as the same was still pending determination in the Court of First
Instance of Quezon City, the motion of the deceased's counsel for the
suspension of the running of the period within which to file appellant's brief
was well-taken. More, under the Rule, it should have set a period for the
substitution of the deceased party with her legal representative or heirs, failing
which, the court is called upon to order the opposing party to procure the
appointment of a legal representative of the deceased at the cost of the
deceased's estate, and such representative shall then "immediately appear
for and on behalf of the interest of the deceased."
Respondent court gravely erred in not following the Rule and requiring the
appearance of the legal representative of the deceased and instead
dismissing the appeal of the deceased who yet had to be substituted in the
pending appeal. Thus, it has been held that when a party dies in an action
that survives, and no order is issued by the court for the appearance of the
legal representative or of the heirs of the deceased in substitution of the
deceased, and as a matter of fact no such substitution has ever been
effected, the trial held by the court without such legal representatives or heirs
and the judgment rendered after such trial are null and void because the court
acquired no jurisdiction over the persons of the legal representatives or of the
heirs upon whom the trial and the judgment would be binding. 5
Respondent court therefore erred in ruling that since upon the demise of the
party-appellant, the attorney-client relationship between her and her counsels
"was automatically severed and terminated," whatever pleadings filed by said
counsel with it after the death of said appellant "are mere scraps of paper." 6 If
at all, due to said death on May 25, 1975 and severance of the attorney-client
relationship, further proceedings and specifically the running of the original
45-day period for filing the appellnt's brief should be legally deemed as having
been automatically suspended, until the proper substitution of the deceased
appellant by her executor or administrator or her heirs shall have been
effected within the time set by respondent court pursuant to the cited Rule.
Respondent court likewise gravely erred in dismissing the appeal on "(its)
belief that the supervening death of the appellant Florentina Nuguid Vda. de
Haberer rendered the continuance of the appeal unnecessary" on the basis of
a totally inapplicable citation of a ruling in Velasco vs. Rosenberg, 29 Phil.
212, 214 that "If pending appeal, an event occurs which renders it impossible
for the appellate court to grant any relief, the appeal will be dismissed."
Manifestly, the appenant's death in no way impedes that the deceased's
appeal to recover the parcel of land registered in her name be continued and
determined for the benefit of her estate and heirs.
Prescinding from the foregoing, justice and equity dictate under the
circumstances of the case at bar that the rules, while necessary for the
speedy and orderly administration of justice, should not be applied with the
rigidity and inflexibility of respondent court's resolutions. 7 What should guide
judicial action is the principle that a party litigant is to be given the fullest
opportunity to establish the merits of his complaint or defense rather than for
him to lose life, liberty, honor or property on technicalities. 8 A liberal, rather

than a strict and inflexible adherence to the Rules, is justified not only
because appellant (in this case, her estate and/or heirs) should be given
every opportunity to be heard but also because no substantial injury or
prejudice can well be caused to the adverse parties principally, since they are
in actual possession of the disputed land. 9 The better and certainly the more
prudent course of action in every judicial proceeding is to hear both sides and
decide on the merits rather than dispose of a case on
technicalities, 10 especially where no substantial prejudice is caused to the
adverse party. 11
The dismissal of an appeal based on the appellant's failure to file brief is
based on a power granted to respondent Court of Appeals and not on a
specific and mandatory duty imposed upon it by the Rules. 12 Since the power
or authority is not mandatory but merely directory, the exercise thereof
requires a great deal of circumspection, considering all the attendant
circumstances. 13 The failure of an appellant to file his brief within the time
prescribed does not have the effect of dismissing the appeal
automatically. 14 Rather, the Court of Appeals has the discretion to dismiss or
not to dismiss appellant's appeal, which discretion must be a sound one to be
exercised in accordance with the tenets of justice and fair play having in mind
the circumstances obtaining in each case. l5
Paraphrasing what the Court stressed in the leading case of Berkenkotter vs.
Court of Appeals, 16 a reading of the appellant's brief discloses that
petitioners-appellants have a prima facie meritorious case which should be
properly determined on the merits and "the element of rigidity should not be
affixed to procedural concepts and made to cover the matter," 17 for to dismiss
the appeal would not serve the ends of justice.
A final note: On March 19, 1976, counsels submitted with their Manifestation
the written authority dated January 20, 1976 individually signed by instituted
heirs and/or legal representatives of the testate estate of the deceased
Florentina Nuguid Vda. de Haberer granting said counsels full authority to file
and prosecute the case and any other incidental cases for and in their
behalf, 18 which was duly noted in the Court's Resolution of March 26, 1976.
Such manifestation and authority may be deemed the formal substitution of
the deceased by her heirs, as in fact they appear as petitioners in the title of
the case at bar. Hence, the proper determination of the pending appeal may
now proceed, as herein directed.
ACCORDINGLY, the petition is granted and respondent court's resolutions of
November 24, 1975 and January 15, 1976 are set aside. The appellant's brief
filed with respondent court in the pending appeal in CA-G.R. Nos. 53680-90-R
is ordered admitted and the cases are remanded to respondent, Court of
Appeals for further proceedings and proper determination of the appeal on the
merits. With costs against private respondents.
The Court has noted that upon recommendation of the Solicitor General in
Adm. Case No. 2148 entitled"Francisco Ortigas, Jr., et al. vs. Atty. Felipe C.
Navarro" that counsel for respondents Felipe C. Navarro be disbarred for

"gross misconduct and/or malpractice," he has been suspended from the

practice of law during the pendency of said proceedings. The Court, however,
directs that copy of this decision be served on said counsel for the sole
purpose of apprising private respondents through him of the promulgation of
this judgment and to require respondents (1) to inform the Court of their new
counsel, if any, and to direct him to enter his appearance or (2) if they have no
new or other counsel, to inform the Court of their respective addresses for
purposes of service of the Court's processes, within ten (10) days from notice
hereof.
Makasiar, Guerrero, De Castro **and Melencio-Herrera, JJ.,
concur.1wph1.t

Footnotes1wph1.t
4 Section 17, Rule 3 reads, to wit:
Death of party.After a party dies and the claim is not thereby
extinguished, the court shall order, upon proper notice, the legal
representative of the deceased to appear and to be substituted
for the deceased, within a period of thirty (30) days, or within
such time as may be granted. If the legal representative fails to
appear within such said time, the court may order the opposing
party to procure the appointment of a legal representative of the
deceased within a time to be specified by the court, and the
representative shall immediately appear for and on behalf of the
interest of the deceased. The court charges involved in
procuring such appointment, if defrayed by the opposing party,
may be recovered as costs. The heirs of the deceased may be
allowed to be substituted for the deceased, without requiring the
appointment of an executor or administrator and the court may
appoint guardian ad litem for the minor heirs.
EN BANC
G.R. No. L-18936

May 23, 1967

INTESTATE ESTATE OF ENCARNACION ELCHICO Vda. de FERNANDO,

deceased.
NATIVIDAD E. IGNACIO and LEONOR E. ALMAZAN, administratricesappellants,
vs.
PAMPANGA BUS COMPANY, INC., claimant appellee.
Paterno R Canlas for administratrices-appellants.
Manuel O. Chan and A G. Martinez for claimant-appellee.
SANCHEZ, J.:

The present case has its roots in the proceedings hereinafter to be recited:
August 29, 1951. Pampanga Bus Company, Inc. (referred to herein as
Pambusco) lodged its complaint in the Court of First Instance of Manila
against two (2) defendants Valentin Fernando and Encarnacion Elchico Vda.
de Fernando. The suit was to collect P105,000.00 upon a contractual
obligation.1
January 23, 1955. Encarnacion Elchico Vda. de Fernando died. By this time,
Pambusco in the foregoing civil case had already presented its evidence and
submitted its case.
March 23, 1955. Intestate proceedings were filed.2 Notice to the estate's
creditors was given for them to file their claims within six (6) months from this
date, the first publication of the notice.
April 16, 1955. On Pambusco's motion, the court in the civil case ordered
Jose Nicolas, then administrator, to substitute for the deceased Encarnacion
Elchico Vda. de Fernando as one of the defendants. No objection to this order
was registered.
July 15, 1955. Pambusco amended its complaint in the civil case naming
therein administrator Jose Nicolas and original defendant Valentin Fernando,
as defendants. The court, without objection, admitted this amended complaint
on August 27, 1955.
Jose Nicolas, as such administrator, filed an amended answer with
counterclaim against Pambusco. The date of filing said answer is not of
record. In due course, Nicolas presented his evidence.
December 11, 1958. After trial on the merits, the Court of First Instance of
Manila rendered judgment in the civil case (Civil Case 14578), as follows:
Wherefore, judgment is hereby rendered in favor of the plaintiff and
against the defendants, ordering the latter to pay the former the sum of
NINETY-THREE THOUSAND PESOS (P93,000.00) together with the
costs of these proceedings. Defendants' counterclaim is hereby
dismissed.
The two defendants appealed.
May 28, 1960. The Court of Appeals affirmed the judgment, thus
As plaintiff's complaint is well founded and meritorious and the
evidence of record justify the award of P93,000.00 in its favor, it stands
to reason that defendants' counterclaims were correctly dismissed.
Wherefore, the judgment appealed from is hereby affirmed without
pronouncement as to costs.3

Both defendants appealed by certiorari to this Court. Valentin Fernando's

appeal4 was dismissed for having been filed out of time. The appeal of the
estate of Encarnacion Elchico Vda. de Fernando, 5 raising issues of fact,
likewise dismissed.
February 25, 1959. We go back to Special Proceeding 25256, Intestate Estate
of Encarnacion Elchico Vda. Fernando. On this day, while defendants in Civil
Case 14576 were perfecting their appeal from the judgment the Court of First
Instance, Pambusco registered its contingent claim in these special
proceedings for whatever money judgment may be rendered in his favor in
the civil suit.
January 25, 1961. The judgment in the civil case having reached finality,
Pambusco moved in the intestate proceedings that the heirs and/or the
present joint administratrices, Natividad E. Ignacio and Leonor E. Almazan, be
ordered to pay P46,500.00, the share of the deceased in the judgment debt.
The administratrices opposed. Ground: Pambusco's claim is time-barred.
March 13, 1961. Resolving Pambusco's motion, the probate court (in Sp.
Proc. 25256) issued an order, the dispositive part of which is as follows:
Wherefore, the Court hereby allows said amount of P46,500.00 to be
paid by the heirs and/or the joint administratrices; but no payment
thereof shall be made until after the administratrices shall have
informed the Court in writing as to the existence of other unsettled
money claims against the estate and of the sufficiency of the assets
available for payment of all the debts.
In harmony with the foregoing, the Court hereby orders said
administratrices to inform the Court, within ten (10) days from the
notice of this order, of the other unsettled money together with the
amount of each, and of the sufficiency or insufficiency of the assets
available for payment of all the debts.
By order of May 24, 1961, the probate court denied the motion to reconsider
the foregoing order.
The administratrices came to this Court on appeal.
Given the facts just recited, was Pambusco's claim properly admitted by the
probate court?
It will be remembered that at the time Encarnacion Elchico Vda. de Fernando
died, the civil case against her and the other defendant Valentin Fernando
had not yet been decided by the Court of First Instance of Manila. That case,
however, was prosecuted with the assent of the administrator of her estate
to final conclusion.

1. This situation brings to the fore a consideration of Section 21, Rule 3 of the
Rules of Court,6 which reads:
SEC. 21. Where claim does not survive. When the action is for
recovery of money, debt or interest thereon, and the defendant dies
before final judgment in the Court of First Instance, it shall be
dismissed to be prosecuted in the manner especially provided in these
rules.
The Philosophy behind the rule which provides for the dismissal of the civil
case is that, upon the death of defendant, all money claims should be filed in
the testate or interstate proceedings "to avoid useless duplicity of
procedure."7 Obviously, the legal precept just quoted is procedural in nature. It
outlines the method by which an action for recovery of money, debt or interest
may continue, upon the terms therein prescribed. Whether the original suit for
the recovery of money as here proceeds to its conclusion, or is
dismissed and the claim covered thereby filed with the probate court, one
thing is certain: no substantial rights of the parties are prejudiced.
But is there justification for the civil case to go on in spite of the death of
Encarnacion Elchico Vda. de Fernando "before final judgment in the Court of
First Instance?"
2. At the time of the death of defendant Encarnacion Elchico Vda. de
Fernando, plaintiff Pambusco had already closed its evidence and submitted
its case. Her administrator substituted. By this substitution, the estate had
notice of the claim. The estate was thus represented. The administrator did
not complain of the substitution. At no time did the estate of the deceased
impugn the authority of the regular courts to determine the civil case. Much
less did it seek abatement of the civil suit. On the contrary, its administrator
took active steps to protect the interests of the estate. He joined issue with
plaintiff. He filed an amended answer. He counterclaimed. He went to trial.
Defeated in the Court of First Instance, he appealed to the Court of Appeals.
He even elevated that civil case to this Court. Now that the judgment has
become final, the estate cannot be heard to say that said judgment
reached after a full dress trial on the merits will now go for naught. The
estate has thus waived its right to have Pambusco's claim re-litigated in the
estate proceedings. For, though presentment of probate claims is imperative,
it is generally understood that it may be waived by the estate's
representative.8 And, waiver is to be determined from the administrator's "acts
and conduct."9 Certainly, the administrator's failure to plead the statute of
nonclaims, his active participation, and resistance to plaintiff's claim, in the
civil suit, amount to such waiver. 10
3. Courts are loathe to overturn a final judgment. Judicial proceedings are
entitled to respect. Non quieta movere.11 Plaintiff's claim has passed the test
in three courts of justice: the Court of First Instance, the Court of Appeals and
this Court. The judgment in plaintiff's favor should be enforced. Appellants'
technical objection after judgment had become final in the civil case that
plaintiff's claim should have been litigated in the probate court does not impair

the validity of said judgment. For, such objection does not go into the court's
jurisdiction over the subject matter.
In Laserna vs. Altavas, 68 Phil. 703, suit was started by Jose Altavas against
Jose Laserna Paro to recover P4,500.00 as attorney's fees. The Court of First
Instance decided in plaintiff's favor. During the pendency of Laserna's appeal
in this Court, he died. Aristona Laserna, the administratrix of Laserna's estate,
substituted. This Court affirmed the judgment. Altavas subsequently filed in
the estate proceedings a motion to direct the administratrix to pay the
judgment for P4,500.00 in his favor. The court granted this motion. On appeal,
the administratrix urged that Altavas' claim "was definitely barred by the
statute of nonclaim," because of his failure "to present it before the committee
on claims and appraisal."12 This Court there stated.13
x x x we are of the opinion and so hold that, upon the facts and
circumstances of the present case, the claim of Jose Altavas, although
it did not survive the deceased, need not have to be presented before
the committee on claims and appraisal principally because that claim is
already an adjudicated claim by final pronouncement by this Court in
G.R. No. 40038. To countenance appellant's theory would be to convert
a claim duly passed upon, and determined not only by the Court of
First Instance but by this Court into a contested claim, once again, . . .
and "obliging a creditor whose claim had already been passed upon by
the Court to submit himself to the committee on claims and to pass
over again through the endless process of presenting his evidence
which he had already done." ... It also appears that the substitution of
the defendant in civil case No. 2961, for the recovery of attorney's fees,
was effected at the instance of the defendant and appellant therein,
Aristona Laserna. She had an opportunity to contest that claim, and
when her contention was overruled she did not impugn the jurisdiction
of the Supreme Court. Neither does it appear that during the pendency
of the appeal in the Supreme Court she moved for the abatement or
suspension of the proceedings because of the provisions of sections
119, 700 and 703 of the Code of Civil Procedure. Under the
circumstances it is unjust to defeat the claim of the appellee and to
hold that it had been barred by the statute of nonclaim.14
4. Of course, it is correct to say that upon the demise a defendant in a civil
action planted on a claim which does not survive, such claim should be
presented to the probate court for allowance, if death occurs before final
judgment in the Court of First Instance. But, procedural niceties aside, the
revival of the civil action against the administrator, the decedent's
representative, "is generally considered equivalent to presentation" of such
claim in probate court, 15 "dispenses with the actual presentation of the
claim." 16 The soundness of this proposition commands assent. Because, the
administrator represent the deceased's estate itself, is an alter ego of the
heirs. More than this, he is an officer of the probate court. 17 In the
circumstances, presentment of Pambusco's 1950 claim ad abundantiorem
cautelam was at best reduced to a mere formality.

5. It matters not that Pambusco's said claim was filed with the probate court
without the six-month period from March 25, 1955, set forth in the notice to
creditors. For, Section 2, Rule 86, permits acceptance of such belated claims.
Says Section 2: 18
SEC. 2. Time within which claims shall be filed. In the notice
provided in the preceding section, the court shall state the time for the
filing of claims against the estate, which shall not be more than twelve
(12) nor less than six (6) months after the date of the first publication of
the notice. However, at any time before an order of distribution is
entered, on application of a creditor who has failed to file his claim
within the time previously limited, the court may, for cause shown and
on such terms as are equitable, allow such claim to be filed within a
tune not exceeding one (1) month.
Here, the claim was filed in the probate court on February 25, 1959, while the
defendants in the civil case were still perfecting their appeal therein. The
record does not show that the administrator objected thereto upon the ground
that it was filed out of time. The pendency of that case, we are persuaded to
say, is a good excuse for tardiness in the filing of the claim. 19 And, the order
of final distribution is still to be given.
Besides, the order of the lower court of March 18, 1961 allowing payment of
appellee's claim "impliedly granted said appellee an extension of time within
which to file said claim." 20 The probate court's discretion has not been
abused. It should not be disturbed. 21
For the reasons given, we vote to affirm the order of the lower court of March
13, 1961 and May 24, 1961, under review. Costs against appellants. So
ordered.
2

Special Proceedings 25256, Court of First Instance of Manila, entitled

"Intestate Estate of Encarnacion Elchico Vda. de Fernando, deceased,"
the present case.
12

The committee on claims and appraisal has been abolished. Money

claims are now presented directly to the court.
14

The Code of Civil Procedure (Act 190) provides:

"SEC. 119. Death of party. In case a party to an action dies
while the action is pending, the action shall not abate reason
thereof, but the court on motion may allow the action proceeding
to be continued by or against his executor, administrator, or
other legal representative, and the judgment, if it for the
payment of costs and against the executor, administrator, or
other legal representative, shall be that he pay in due course of
administration: Provided, nevertheless, That if the action for the
recovery of money, debt, or damages against the deceased, it

shall be discontinued, and the claim thereafter be prosecuted as

provided in section six hundred and eighty-six.
"SEC. 686. Committee to be sworn and may administer oaths.
The committee appointed to appraise the estate and, allow
claims as hereinbefore provided, shall act under oath, and may
administer oaths to parties and witnesses upon the trial
questions before them. They may try and decide upon claims
which by law survive against executors or administrators, except
claims for the possession of or title to real estate; and examine
and allow claims at their present value, which are payable at a
future day, although such claims are payable in specific articles
and they may set off demands in favor of the estate against
demands against the estate, and determine the balance due
either way."
"SEC. 700. Suits pending against the estate to be discontinued.
All actions commenced against the deceased persons, the
recovery of money, debt, or damages, and pending at time the
committee are appointed, shall be discontinued, and the
property, if any therein attached, shall be discharged from
attachment, and the claim embraced in such action may be
presented to the committee, who shall allow the party prevail the
costs of such action to the time of its discontinuance."
"SEC. 703. Certain actions survive. Actions to recover the title
or possession of real estate, buildings, or any interest therein,
action to recover damages for an injury to person or property,
real or personal and actions to recover the possession of
specific articles of personal property, shall survive, and may be
commenced and prosecuted by or against the executor on
administrator; but all other actions commenced against the
deceased before his death shall be discontinued, and the claims
therein involved presented before the committee as herein
provided."

THIRD DIVISION
G.R. No. 150135

October 30, 2006

SPOUSES ANTONIO F. ALGURA and LORENCITA S.J.

ALGURA, petitioners,
vs.
THE LOCAL GOVERNMENT UNIT OF THE CITY OF NAGA, ATTY.
MANUEL TEOXON, ENGR. LEON PALMIANO, NATHAN SERGIO and
BENJAMIN NAVARRO, SR., respondents.

DECISION

VELASCO, JR., J.:

Anyone who has ever struggled with poverty
knows how extremely expensive it is to be poor.
James Baldwin
The Constitution affords litigantsmoneyed or poorequal access to the
courts; moreover, it specifically provides that poverty shall not bar any person
from having access to the courts.1 Accordingly, laws and rules must be
formulated, interpreted, and implemented pursuant to the intent and spirit of
this constitutional provision. As such, filing fees, though one of the essential
elements in court procedures, should not be an obstacle to poor litigants'
opportunity to seek redress for their grievances before the courts.
The Case
This Petition for Review on Certiorari seeks the annulment of the September
11, 2001 Order of the Regional Trial Court (RTC) of Naga City, Branch 27, in
Civil Case No. 99-4403 entitled Spouses Antonio F. Algura and Lorencita S.J.
Algura v. The Local Government Unit of the City of Naga, et al., dismissing the
case for failure of petitioners Algura spouses to pay the required filing
fees.2 Since the instant petition involves only a question of law based on facts
established from the pleadings and documents submitted by the parties, 3 the
Court gives due course to the instant petition sanctioned under Section 2(c) of
Rule 41 on Appeal from the RTCs, and governed by Rule 45 of the 1997
Rules of Civil Procedure.
The Facts
On September 1, 1999, spouses Antonio F. Algura and Lorencita S.J. Algura
filed a Verified Complaint dated August 30, 1999 4 for damages against the
Naga City Government and its officers, arising from the alleged illegal
demolition of their residence and boarding house and for payment of lost
income derived from fees paid by their boarders amounting to PhP 7,000.00
monthly.
Simultaneously, petitioners filed an Ex-Parte Motion to Litigate as Indigent
Litigants,5 to which petitioner Antonio Algura's Pay Slip No. 2457360 (Annex
"A" of motion) was appended, showing a gross monthly income of Ten
Thousand Four Hundred Seventy Four Pesos (PhP 10,474.00) and a net pay
of Three Thousand Six Hundred Sixteen Pesos and Ninety Nine Centavos
(PhP 3,616.99) for [the month of] July 1999.6 Also attached as Annex "B" to

the motion was a July 14, 1999 Certification 7 issued by the Office of the City
Assessor of Naga City, which stated that petitioners had no property declared
in their name for taxation purposes.
Finding that petitioners' motion to litigate as indigent litigants was meritorious,
Executive Judge Jose T. Atienza of the Naga City RTC, in the September 1,
1999 Order,8 granted petitioners' plea for exemption from filing fees.
Meanwhile, as a result of respondent Naga City Government's demolition of a
portion of petitioners' house, the Alguras allegedly lost a monthly income of
PhP 7,000.00 from their boarders' rentals. With the loss of the rentals, the
meager income from Lorencita Algura's sari-sari store and Antonio Algura's
small take home pay became insufficient for the expenses of the Algura
spouses and their six (6) children for their basic needs including food, bills,
clothes, and schooling, among others.
On October 13, 1999, respondents filed an Answer with Counterclaim dated
October 10, 1999,9 arguing that the defenses of the petitioners in the
complaint had no cause of action, the spouses' boarding house blocked the
road right of way, and said structure was a nuisance per se.
Praying that the counterclaim of defendants (respondents) be dismissed,
petitioners then filed their Reply with Ex-Parte Request for a Pre-Trial
Setting10 before the Naga City RTC on October 19, 1999. On February 3,
2000, a pre-trial was held wherein respondents asked for five (5) days within
which to file a Motion to Disqualify Petitioners as Indigent Litigants.
On March 13, 2000, respondents filed a Motion to Disqualify the Plaintiffs for
Non-Payment of Filing Fees dated March 10, 2000. 11 They asserted that in
addition to the more than PhP 3,000.00 net income of petitioner Antonio
Algura, who is a member of the Philippine National Police, spouse Lorencita
Algura also had a mini-store and a computer shop on the ground floor of their
residence along Bayawas St., Sta. Cruz, Naga City. Also, respondents
claimed that petitioners' second floor was used as their residence and as a
boarding house, from which they earned more than PhP 3,000.00 a month. In
addition, it was claimed that petitioners derived additional income from their
computer shop patronized by students and from several boarders who paid
rentals to them. Hence, respondents concluded that petitioners were not
indigent litigants.
On March 28, 2000, petitioners subsequently interposed their Opposition to
the Motion12 to respondents' motion to disqualify them for non-payment of
filing fees.
On April 14, 2000, the Naga City RTC issued an Order disqualifying
petitioners as indigent litigants on the ground that they failed to substantiate
their claim for exemption from payment of legal fees and to comply with the
third paragraph of Rule 141, Section 18 of the Revised Rules of Court
directing them to pay the requisite filing fees.13

On April 28, 2000, petitioners filed a Motion for Reconsideration of the April
14, 2000 Order. On May 8, 2000, respondents then filed their
Comment/Objections to petitioner's Motion for Reconsideration.
On May 5, 2000, the trial court issued an Order 14 giving petitioners the
opportunity to comply with the requisites laid down in Section 18, Rule 141,
for them to qualify as indigent litigants.
On May 13, 2000, petitioners submitted their Compliance 15 attaching the
affidavits of petitioner Lorencita Algura16 and Erlinda Bangate,17 to comply with
the requirements of then Rule 141, Section 18 of the Rules of Court and in
support of their claim to be declared as indigent litigants.
In her May 13, 2000 Affidavit, petitioner Lorencita Algura claimed that the
demolition of their small dwelling deprived her of a monthly income amounting
to PhP 7,000.00. She, her husband, and their six (6) minor children had to rely
mainly on her husband's salary as a policeman which provided them a
monthly amount of PhP 3,500.00, more or less. Also, they did not own any
real property as certified by the assessor's office of Naga City. More so,
according to her, the meager net income from her small sari-sari store and the
rentals of some boarders, plus the salary of her husband, were not enough to
pay the family's basic necessities.
To buttress their position as qualified indigent litigants, petitioners also
submitted the affidavit of Erlinda Bangate, who attested under oath, that she
personally knew spouses Antonio Algura and Lorencita Algura, who were her
neighbors; that they derived substantial income from their boarders; that they
lost said income from their boarders' rentals when the Local Government Unit
of the City of Naga, through its officers, demolished part of their house
because from that time, only a few boarders could be accommodated; that the
income from the small store, the boarders, and the meager salary of Antonio
Algura were insufficient for their basic necessities like food and clothing,
considering that the Algura spouses had six (6) children; and that she knew
that petitioners did not own any real property.
Thereafter, Naga City RTC Acting Presiding Judge Andres B. Barsaga, Jr.
issued his July 17, 200018 Order denying the petitioners' Motion for
Reconsideration.
Judge Barsaga ratiocinated that the pay slip of Antonio F. Algura showed that
the "GROSS INCOME or TOTAL EARNINGS of plaintiff Algura [was]
10,474.00 which amount [was] over and above the amount mentioned in
the first paragraph of Rule 141, Section 18 for pauper litigants residing outside
Metro Manila."19 Said rule provides that the gross income of the litigant should
not exceed PhP 3,000.00 a month and shall not own real estate with an
assessed value of PhP 50,000.00. The trial court found that, in Lorencita S.J.
Algura's May 13, 2000 Affidavit, nowhere was it stated that she and her
immediate family did not earn a gross income of PhP 3,000.00.
The Issue

Unconvinced of the said ruling, the Alguras instituted the instant petition
raising a solitary issue for the consideration of the Court: whether petitioners
should be considered as indigent litigants who qualify for exemption from
paying filing fees.
The Ruling of the Court
The petition is meritorious.
A review of the history of the Rules of Court on suits in forma
pauperis (pauper litigant) is necessary before the Court rules on the issue of
the Algura spouses' claim to exemption from paying filing fees.
When the Rules of Court took effect on January 1, 1964, the rule on pauper
litigants was found in Rule 3, Section 22 which provided that:
Section 22. Pauper litigant.Any court may authorize a litigant to
prosecute his action or defense as a pauper upon a proper showing
that he has no means to that effect by affidavits, certificate of the
corresponding provincial, city or municipal treasurer, or otherwise.
Such authority[,] once given[,] shall include an exemption from
payment of legal fees and from filing appeal bond, printed record and
printed brief. The legal fees shall be a lien to any judgment rendered in
the case [favorable] to the pauper, unless the court otherwise provides.
From the same Rules of Court, Rule 141 on Legal Fees, on the other hand,
did not contain any provision on pauper litigants.
On July 19, 1984, the Court, in Administrative Matter No. 83-6-389-0 (formerly
G.R. No. 64274), approved the recommendation of the Committee on the
Revision of Rates and Charges of Court Fees, through its Chairman, then
Justice Felix V. Makasiar, to revise the fees in Rule 141 of the Rules of Court
to generate funds to effectively cover administrative costs for services
rendered by the courts.20 A provision on pauper litigants was inserted which
reads:
Section 16. Pauper-litigants exempt from payment of court fees.
Pauper-litigants include wage earners whose gross income do not
exceed P2,000.00 a month or P24,000.00 a year for those residing in
Metro Manila, and P1,500.00 a month or P18,000.00 a year for those
residing outside Metro Manila, or those who do not own real property
with an assessed value of not more than P24,000.00, or not more than
P18,000.00 as the case may be.
Such exemption shall include exemption from payment of fees for filing
appeal bond, printed record and printed brief.
The legal fees shall be a lien on the monetary or property judgment
rendered in favor of the pauper-litigant.

To be entitled to the exemption herein provided, the pauper-litigant

shall execute an affidavit that he does not earn the gross income
abovementioned, nor own any real property with the assessed value
afore-mentioned [sic], supported by a certification to that effect by the
provincial, city or town assessor or treasurer.
When the Rules of Court on Civil Procedure were amended by the 1997
Rules of Civil Procedure (inclusive of Rules 1 to 71) in Supreme Court
Resolution in Bar Matter No. 803 dated April 8, 1997, which became effective
on July 1, 1997, Rule 3, Section 22 of the Revised Rules of Court was
superseded by Rule 3, Section 21 of said 1997 Rules of Civil Procedure, as
follows:
Section 21. Indigent party.A party may be authorized to litigate his
action, claim or defense as an indigent if the court, upon an ex parte
application and hearing, is satisfied that the party is one who has no
money or property sufficient and available for food, shelter and basic
necessities for himself and his family.
Such authority shall include an exemption from payment of docket and
other lawful fees, and of transcripts of stenographic notes which the
court may order to be furnished him. The amount of the docket and
other lawful fees which the indigent was exempted from paying shall be
a lien on any judgment rendered in the case favorable to the indigent,
unless the court otherwise provides.
Any adverse party may contest the grant of such authority at any time
before judgment is rendered by the trial court. If the court should
determine after hearing that the party declared as an indigent is in fact
a person with sufficient income or property, the proper docket and other
lawful fees shall be assessed and collected by the clerk of court. If
payment is not made within the time fixed by the court, execution shall
issue for the payment thereof, without prejudice to such other sanctions
as the court may impose.
At the time the Rules on Civil Procedure were amended by the Court in Bar
Matter No. 803, however, there was no amendment made on Rule 141,
Section 16 on pauper litigants.
On March 1, 2000, Rule 141 on Legal Fees was amended by the Court in
A.M. No. 00-2-01-SC, whereby certain fees were increased or adjusted. In
this Resolution, the Court amended Section 16 of Rule 141, making it Section
18, which now reads:
Section 18. Pauper-litigants exempt from payment of legal fees.
Pauper litigants (a) whose gross income and that of their immediate
family do not exceed four thousand (P4,000.00) pesos a month if
residing in Metro Manila, and three thousand (P3,000.00) pesos a
month if residing outside Metro Manila, and (b) who do not own real

property with an assessed value of more than fifty thousand

(P50,000.00) pesos shall be exempt from the payment of legal fees.
The legal fees shall be a lien on any judgment rendered in the case
favorably to the pauper litigant, unless the court otherwise provides.
To be entitled to the exemption herein provided, the litigant shall
execute an affidavit that he and his immediate family do not earn the
gross income abovementioned, nor do they own any real property with
the assessed value aforementioned, supported by an affidavit of a
disinterested person attesting to the truth of the litigant's affidavit.
Any falsity in the affidavit of a litigant or disinterested person shall be
sufficient cause to strike out the pleading of that party, without prejudice
to whatever criminal liability may have been incurred.
It can be readily seen that the rule on pauper litigants was inserted in Rule
141 without revoking or amendingSection 21 of Rule 3, which provides for
the exemption of pauper litigants from payment of filing fees. Thus, on March
1, 2000, there were two existing rules on pauper litigants; namely, Rule 3,
Section 21 and Rule 141, Section 18.
On August 16, 2004, Section 18 of Rule 141 was further amended in
Administrative Matter No. 04-2-04-SC, which became effective on the same
date. It then became Section 19 of Rule 141, to wit:
Sec. 19. Indigent litigants exempt from payment of legal fees.
INDIGENT LITIGANTS (A) WHOSE GROSS INCOME AND THAT OF
THEIR IMMEDIATE FAMILY DO NOT EXCEED AN AMOUNT
DOUBLE THE MONTHLY MINIMUM WAGE OF AN EMPLOYEE AND
(B) WHO DO NOT OWN REAL PROPERTY WITH A FAIR MARKET
VALUE AS STATED IN THE CURRENT TAX DECLARATION OF
MORE THAN THREE HUNDRED THOUSAND (P300,000.00)
PESOS SHALL BE EXEMPT FROM PAYMENT OF LEGAL FEES.
The legal fees shall be a lien on any judgment rendered in the case
favorable to the indigent litigant unless the court otherwise provides.
To be entitled to the exemption herein provided, the litigant shall
execute an affidavit that he and his immediate family do not earn a
gross income abovementioned, and they do not own any real
property with the fair value aforementioned, supported by an
affidavit of a disinterested person attesting to the truth of the
litigant's affidavit. The current tax declaration, if any, shall be
attached to the litigant's affidavit.
Any falsity in the affidavit of litigant or disinterested person shall be
sufficient cause to dismiss the complaint or action or to strike out the
pleading of that party, without prejudice to whatever criminal liability
may have been incurred. (Emphasis supplied.)

Amendments to Rule 141 (including the amendment to Rule 141, Section 18)
were made to implement RA 9227 which brought about new increases in filing
fees. Specifically, in the August 16, 2004 amendment, the ceiling for the gross
income of litigants applying for exemption and that of their immediate family
was increased from PhP 4,000.00 a month in Metro Manila and PhP 3,000.00
a month outside Metro Manila, to double the monthly minimum wage of an
employee; and the maximum value of the property owned by the applicant
was increased from an assessed value of PhP 50,000.00 to a maximum
market value of PhP 300,000.00, to be able to accommodate more indigent
litigants and promote easier access to justice by the poor and the
marginalized in the wake of these new increases in filing fees.
Even if there was an amendment to Rule 141 on August 16, 2004, there was
still no amendment or recall of Rule 3, Section 21 on indigent litigants.
With this historical backdrop, let us now move on to the sole issuewhether
petitioners are exempt from the payment of filing fees.
It is undisputed that the Complaint (Civil Case No. 99-4403) was filed on
September 1, 1999. However, the Naga City RTC, in its April 14, 2000 and
July 17, 2000 Orders, incorrectly applied Rule 141, Section 18 on Legal
Fees when the applicable rules at that time were Rule 3, Section 21 on
Indigent Party which took effect on July 1, 1997 and Rule 141, Section 16
on Pauper Litigants which became effective on July 19, 1984 up to February
28, 2000.
The old Section 16, Rule 141 requires applicants to file an ex-parte motion to
litigate as a pauper litigant by submitting an affidavit that they do not have a
gross income of PhP 2,000.00 a month or PhP 24,000.00 a year for those
residing in Metro Manila and PhP 1,500.00 a month or PhP 18,000.00 a year
for those residing outside Metro Manila or those who do not own real property
with an assessed value of not more than PhP 24,000.00 or not more than PhP
18,000.00 as the case may be. Thus, there are two requirements: a) income
requirementthe applicants should not have a gross monthly income of more
than PhP 1,500.00, and b) property requirementthey should not own
property with an assessed value of not more than PhP 18,000.00.
In the case at bar, petitioners Alguras submitted the Affidavits of petitioner
Lorencita Algura and neighbor Erlinda Bangate, the pay slip of petitioner
Antonio F. Algura showing a gross monthly income of PhP 10,474.00, 21 and a
Certification of the Naga City assessor stating that petitioners do not have
property declared in their names for taxation.22 Undoubtedly, petitioners do not
own real property as shown by the Certification of the Naga City assessor and
so the property requirement is met. However with respect to the income
requirement, it is clear that the gross monthly income of PhP 10,474.00 of
petitioner Antonio F. Algura and the PhP 3,000.00 income of Lorencita Algura
when combined, were above the PhP 1,500.00 monthly income threshold
prescribed by then Rule 141, Section 16 and therefore, the income
requirement was not satisfied. The trial court was therefore correct in
disqualifying petitioners Alguras as indigent litigants although the court should

have applied Rule 141, Section 16 which was in effect at the time of the filing
of the application on September 1, 1999. Even if Rule 141, Section 18 (which
superseded Rule 141, Section 16 on March 1, 2000) were applied, still the
application could not have been granted as the combined PhP 13,474.00
income of petitioners was beyond the PhP 3,000.00 monthly income
threshold.
Unrelenting, petitioners however argue in their Motion for Reconsideration of
the April 14, 2000 Order disqualifying them as indigent litigants 23 that the rules
have been relaxed by relying on Rule 3, Section 21 of the 1997 Rules of Civil
procedure which authorizes parties to litigate their action as indigents if the
court is satisfied that the party is "one who has no money or property sufficient
and available for food, shelter and basic necessities for himself and his
family." The trial court did not give credence to this view of petitioners and
simply applied Rule 141 but ignored Rule 3, Section 21 on Indigent Party.
The position of petitioners on the need to use Rule 3, Section 21 on their
application to litigate as indigent litigants brings to the fore the issue on
whether a trial court has to apply both Rule 141, Section 16 and Rule 3,
Section 21 on such applications or should the court apply only Rule 141,
Section 16 and discard Rule 3, Section 21 as having been superseded by
Rule 141, Section 16 on Legal Fees.
The Court rules that Rule 3, Section 21 and Rule 141, Section 16 (later
amended as Rule 141, Section 18 on March 1, 2000 and subsequently
amended by Rule 141, Section 19 on August 16, 2003, which is now the
present rule) are still valid and enforceable rules on indigent litigants.
For one, the history of the two seemingly conflicting rules readily reveals that
it was not the intent of the Court to consider the old Section 22 of Rule 3,
which took effect on January 1, 1994 to have been amended and superseded
by Rule 141, Section 16, which took effect on July 19, 1984 through A.M. No.
83-6-389-0. If that is the case, then the Supreme Court, upon the
recommendation of the Committee on the Revision on Rules, could have
already deleted Section 22 from Rule 3 when it amended Rules 1 to 71 and
approved the 1997 Rules of Civil Procedure, which took effect on July 1,
1997. The fact that Section 22 which became Rule 3, Section 21 on indigent
litigant was retained in the rules of procedure, even elaborating on the
meaning of an indigent party, and was also strengthened by the addition of a
third paragraph on the right to contest the grant of authority to litigate only
goes to show that there was no intent at all to consider said rule as expunged
from the 1997 Rules of Civil Procedure.
Furthermore, Rule 141 on indigent litigants was amended twice: first on
March 1, 2000 and the second on August 16, 2004; and yet, despite these two
amendments, there was no attempt to delete Section 21 from said Rule 3.
This clearly evinces the desire of the Court to maintain the two (2) rules on
indigent litigants to cover applications to litigate as an indigent litigant.

It may be argued that Rule 3, Section 21 has been impliedly repealed by the
recent 2000 and 2004 amendments to Rule 141 on legal fees. This position is
bereft of merit. Implied repeals are frowned upon unless the intent of the
framers of the rules is unequivocal. It has been consistently ruled that:
(r)epeals by implication are not favored, and will not be decreed, unless
it is manifest that the legislature so intended. As laws are presumed to
be passed with deliberation and with full knowledge of all existing ones
on the subject, it is but reasonable to conclude that in passing a
statute[,] it was not intended to interfere with or abrogate any former
law relating to same matter, unless the repugnancy between the two is
not only irreconcilable, but also clear and convincing, and flowing
necessarily from the language used, unless the later act fully embraces
the subject matter of the earlier, or unless the reason for the earlier act
is beyond peradventure removed. Hence, every effort must be used to
make all acts stand and if, by any reasonableconstruction they can
be reconciled, the later act will not operate as a repeal of the
earlier.24 (Emphasis supplied).
Instead of declaring that Rule 3, Section 21 has been superseded and
impliedly amended by Section 18 and later Section 19 of Rule 141, the Court
finds that the two rules can and should be harmonized.
The Court opts to reconcile Rule 3, Section 21 and Rule 141, Section 19
because it is a settled principle that when conflicts are seen between two
provisions, all efforts must be made to harmonize them. Hence, "every statute
[or rule] must be so construed and harmonized with other statutes [or rules] as
to form a uniform system of jurisprudence." 25
In Manila Jockey Club, Inc. v. Court of Appeals, this Court enunciated that in
the interpretation of seemingly conflicting laws, efforts must be made to first
harmonize them. This Court thus ruled:
Consequently, every statute should be construed in such a way that will
harmonize it with existing laws. This principle is expressed in the legal
maxim 'interpretare et concordare leges legibus est optimus
interpretandi,' that is, to interpret and to do it in such a way as to
harmonize laws with laws is the best method of interpretation. 26
In the light of the foregoing considerations, therefore, the two (2) rules can
stand together and are compatible with each other. When an application to
litigate as an indigent litigant is filed, the court shall scrutinize the affidavits
and supporting documents submitted by the applicant to determine if the
applicant complies with the income and property standards prescribed in the
present Section 19 of Rule 141that is, the applicant's gross income and that
of the applicant's immediate family do not exceed an amount double the
monthly minimum wage of an employee; and the applicant does not own real
property with a fair market value of more than Three Hundred Thousand
Pesos (PhP 300,000.00). If the trial court finds that the applicant meets the

income and property requirements, the authority to litigate as indigent litigant

is automatically granted and the grant is a matter of right.
However, if the trial court finds that one or both requirements have not been
met, then it would set a hearing to enable the applicant to prove that the
applicant has "no money or property sufficient and available for food, shelter
and basic necessities for himself and his family." In that hearing, the adverse
party may adduce countervailing evidence to disprove the evidence presented
by the applicant; after which the trial court will rule on the application
depending on the evidence adduced. In addition, Section 21 of Rule 3 also
provides that the adverse party may later still contest the grant of such
authority at any time before judgment is rendered by the trial court, possibly
based on newly discovered evidence not obtained at the time the application
was heard. If the court determines after hearing, that the party declared as an
indigent is in fact a person with sufficient income or property, the proper
docket and other lawful fees shall be assessed and collected by the clerk of
court. If payment is not made within the time fixed by the court, execution
shall issue or the payment of prescribed fees shall be made, without prejudice
to such other sanctions as the court may impose.
The Court concedes that Rule 141, Section 19 provides specific standards
while Rule 3, Section 21 does not clearly draw the limits of the entitlement to
the exemption. Knowing that the litigants may abuse the grant of authority, the
trial court must use sound discretion and scrutinize evidence strictly in
granting exemptions, aware that the applicant has not hurdled the precise
standards under Rule 141. The trial court must also guard against abuse and
misuse of the privilege to litigate as an indigent litigant to prevent the filing of
exorbitant claims which would otherwise be regulated by a legal fee
requirement.
Thus, the trial court should have applied Rule 3, Section 21 to the application
of the Alguras after their affidavits and supporting documents showed that
petitioners did not satisfy the twin requirements on gross monthly income and
ownership of real property under Rule 141. Instead of disqualifying the
Alguras as indigent litigants, the trial court should have called a hearing as
required by Rule 3, Section 21 to enable the petitioners to adduce evidence to
show that they didn't have property and money sufficient and available for
food, shelter, and basic necessities for them and their family.27 In that hearing,
the respondents would have had the right to also present evidence to refute
the allegations and evidence in support of the application of the petitioners to
litigate as indigent litigants. Since this Court is not a trier of facts, it will have to
remand the case to the trial court to determine whether petitioners can be
considered as indigent litigants using the standards set in Rule 3, Section 21.
Recapitulating the rules on indigent litigants, therefore, if the applicant for
exemption meets the salary and property requirements under Section 19 of
Rule 141, then the grant of the application is mandatory. On the other hand,
when the application does not satisfy one or both requirements, then the
application should not be denied outright; instead, the court should apply the

"indigency test" under Section 21 of Rule 3 and use its sound discretion in
determining the merits of the prayer for exemption.
Access to justice by the impoverished is held sacrosanct under Article III,
Section 11 of the 1987 Constitution. The Action Program for Judicial Reforms
(APJR) itself, initiated by former Chief Justice Hilario G. Davide, Jr., placed
prime importance on 'easy access to justice by the poor' as one of its six
major components. Likewise, the judicial philosophy of Liberty and
Prosperity of Chief Justice Artemio V. Panganiban makes it imperative that the
courts shall not only safeguard but also enhance the rights of individuals
which are considered sacred under the 1987 Constitution. Without doubt, one
of the most precious rights which must be shielded and secured is the
unhampered access to the justice system by the poor, the underprivileged,
and the marginalized.
WHEREFORE, the petition is GRANTED and the April 14, 2000 Order
granting the disqualification of petitioners, the July 17, 2000 Order denying
petitioners' Motion for Reconsideration, and the September 11, 2001 Order
dismissing the case in Civil Case No. RTC-99-4403 before the Naga City
RTC, Branch 27 are ANNULLED andSET ASIDE. Furthermore, the Naga City
RTC is ordered to set the "Ex-Parte Motion to Litigate as Indigent Litigants" for
hearing and apply Rule 3, Section 21 of the 1997 Rules of Civil Procedure to
determine whether petitioners can qualify as indigent litigants.
No costs.
SO ORDERED.
Quisumbing, J., Chairperson, Carpio, Carpio Morales, and Tinga, JJ., concur.
27

A 'family' shall exclusively comprise the spouses and their children. 'Basic
necessities,' on the other hand, include clothing, medical attendance and even
education and training for some profession, trade, or vocation under Section
290 of the Civil Code.