NESTL PHILIPPINES1 v.

FY SONS2
2006 / Corona / Exceptions to hearsay rule > Entries in the course of business
FACTS
On 23 Dec 1988, Nestl and FY Sons entered into a distributorship agreement3 whereby
Nestl would supply its products to FY Sons to distribute to its food service outlets. FY Sons
executed a deed of assignment in favor of Nestl, assigning a time deposit of Calixto
Laureano in the amount of P500k to secure FY Sons credit purchases from Nestl. Laureano
also executed a special power of attorney, authorizing FY Sons to use the time deposit as
collateral.
On 2 Jul, Nestl fined FY Sons P20k for allegedly selling 50 Krem-Top liquid coffee creamer
cases to Lu Hing Market (Tarlac), as this was purportedly proscribed by the agreement. FY
Sons paid the fine. When the same product was sold to Augustus Bakery and Grocery,
another fine (P40k) was imposed for the same reason.
On 19 Oct, FY Sons (through counsel) wrote Nestl to demand damages and to
complain about the latters breaches of their agreement and the various acts of bad faith.
On 5 Nov, Nestl sent FY Sons a demand letter and notice of termination, alleging that FY
Sons had outstanding accounts of P995k~. When the alleged accounts were not settled,
Nestl applied the P500k time deposit as partial payment.
FY Sons filed a complaint for damages against Nestl, alleging bad faith (see p. 627).
Nestl made representations of rendering support, so FY Sons was lured into
executing an agreement.
FY Sons invested money, time, and effort, only for Nestl to breach the agreement by
committing various acts of bad faith.
By the agreements termination, Nestl would obtain market gains made by FY Sons
at the latters efforts and expenses.
EVIDENCE FOR FY SONS
Testimony of Florentino Yue, Jr.
Director and officer

EVIDENCE FOR NESTL

Testimony of Cristina Rayos
Prepared statement of account on the
basis of the invoices and delivery
orders corresponding to the alleged
overdue accounts of FY Sons

RTC ruled in favor of FY Sons, and the CA affirmed with modification as to the amount of
damages.
Nestl failed to provide support; it unjustifiably refused to deliver stocks; the
imposition of the P20k fine was void for having no basis; Nestl terminated the
agreement without sufficient basis and in bad faith.
Nestl failed to prove FY Sons alleged outstanding obligation.

1 Nestl is engaged in the manufacture and distribution of Nestl products nationwide.

2 FY Sons is engaged in trading, marketing, selling and distributing food items to restaurants and food service items.
3 The agreement expired at the end of 1989, so a renewal agreement was executed on 22 Jan 1990. A supplemental agreement
was executed on 27 Jun 1990, to take effect 1 Jul. [Areas covered: Baguio, Dagupan, Angeles, Bulacan, Pampanga, Urdaneta, La
Union, Tarlac, Olongapo]

Nestles Statement of Account showing the alleged unpaid balance is undated,

and it does not show receipt thereof by FY Sons, and when, if such indeed was
received.
o There are no supporting documents to sustain such unpaid accounts.
Re: Cristina Rayos
o She admitted that the invoices corresponding to the alleged overdue accounts
are not signed, because that there were delivery orders covering the
transactions. However, she did not identify the signatures on the delivery
orders as the persons who received the goods for Nestl.
o She could not have identified the same, for she was not involved in the
delivery, as she is only in charge of the records and documents on all
accounts receivables as part of her duties as Credit and Collection Manager.
o

ISSUE & HOLDING

WON the case at hand involves entries made in the course of business. NO. Rule
130.43 is inapplicable.
WON CA is correct in disregarding Rayos testimony. YES. Rayos was incompetent to
testify on WON the invoices and delivery orders turned over to her correctly reflected
the details of the deliveries made.

RATIO
Rule 130.43. Entries in the course of business.Entries made at, or near the time of the
transactions to which they refer, by a person deceased or unable to testify, who was in a
position to know the facts therein stated, may be received as prima facie evidence, if such
person made the entries in his professional capacity or in the performance of duty and in the
ordinary or regular course of business or duty.
This provision is inapplicable because IT DOES NOT INVOLVE ENTRIES MADE IN THE COURSE
OF BUSINESS.
Rayos testified on a statement of account she prepared on the basis of invoices and
delivery orders which she knew nothing about. She had no personal knowledge of the
facts on which the accounts were based since, admittedly, she was not involved in
the delivery of goods and was merely in charge of the records and documents of all
accounts receivable as part of her duties as credit and collection manager.
She knew nothing of the truth or falsity of the facts stated in the invoices and
delivery orders (whether such deliveries were in fact made in the amounts and on the
dates stated, or whether they were actually received by FY Sons).
She was not even the credit and collection manager during the period the agreement
was in effect.
She merely obtained these documents from another without any personal knowledge
of their contents.
The invoices and delivery orders presented by Nestl were self-serving. Having generated
these documents, Nestl could have easily fabricated them. Nestls failure to present any
competent witness to identify the signatures and other information in those invoices and
delivery orders cast doubt on their veracity.
Re: FY Sons witness Yue, Jr.
Nestl: Yue admitted in open court that FY Sons had an unpaid obligation to Nestl of
around P900k.
FY Sons: This statement was merely in response to the judges question on what
ground Nestl supposedly terminated the agreement. Yue was not being asked, nor
was he addressing, the truth of such ground.
SC: Nestl is WRONG, as it took Yues statement out of context; cannot be considered
a judicial admission.
Others
NESTL
FY Sons did not deny that it received the
goods covered by the invoices and was
therefore deemed to have admitted this.
Termination valid because of FY Sons failure
to pay its overdue accounts, so why are we
made to pay actual damages?
FY Sons documentary evidence to prove
actual damages in the amount of P4.2M~
should not have been considered because FY
Sons complaint only prayed for an award of
P1M. Also, the court acquires jurisdiction

SUPREME COURT
WRONG; NO ADMISSION. From the very
beginning, FY Sons position was that Nestl
concocted falsified charges of non-payment
to justify the termination of their agreement.
Nestl was not able to prove that FY Sons
had unpaid accounts, thus debunking the
claim of a valid termination. Nestl is also
guilty of various acts which violated the
provisions of the agreement.
FY Sons paid docket fees based on the
amounts prayed for in its complaint. It also
adduced evidence to prove its losses. Had
the courts awarded a sum more than the
amount prayed for, an additional filing fee

over the claim only upon payment of the

prescribed docket fee.

would have been assessed and imposed as a

lien on the judgment. However, the courts
limited their award to the amount prayed for.

Re: Nestls pecuniary liabilities and claims

Nestl was not able to prove that FY Sons had unpaid accounts
o Nestl is not entitled to the supposed unpaid balance
o The refund of the P500k time deposit with interest is called for, since its
seizure was improper
Nestl, being at fault and in bad faith, and there being no proof that FY Sons was
guilty of any wrongdoing, cannot claim moral and exemplary damages and attorneys
fees
CA AFFIRMED.
YUCHENGCO v. REPUBLIC
(G.R. No. 131127, June 8, 2000) Civil Law/ Oblicon/ Constructive Trust: Constructive trust is
that created by reason of equity to answer the demands of justice and prevent unjust
enrichment. It arises against one, who, by fraud, duress or abuse of confidence, obtains or
holds the legal right to property which he ought not, in equity and good conscience, hold.
Correspondingly, actions thereon prescribe after ten (10) years as provided by Article 1144
of the Civil Code: The following actions must be brought within ten (10) years from the time
the right of action accrues: (1) upon a written contract; (2) upon an obligation created by
law; and (3) upon a judgment. Article 1154 of the Civil Code is applicable by parallelism: the
period during which the obligee was prevented by fortuitous event from enforcing his right is
not reckoned against him
Manchester Development Corporation vs Court of Appeals GR No. 75919 May 7,
1987
Facts:
This was originally a case of an action for torts and damages and specific performance with
a prayer for temporary restraining order. The damages were not specifically stated in the
prayer but the body of the complaint assessed a P78.75M damages suffered by the
petitioner. The amount of docket fees paid was only P410.00. The petitioner then amended
the complaint and reduced the damages to P10M only.
Issues:
When does a court acquire jurisdiction?
Does an amended complaint vest jurisdiction in the court?
Ruling:
The court acquires jurisdiction over any case only upon the payment of the prescribed
docket fee. An amendment of the complaint or similar pleading will not thereby vest
jurisdiction in the court, much less the payment of the docket fee based on the amounts
sought in the amended pleading.
Sun Insurance v Asuncion Digest
G.R. Nos. 79937-38 February 13, 1989
Facts:

Petitioner Sun Insurance (or SIOL) files a complaint for the annulment of a decision on the
consignation of fire insurance policy. Subsequently, the Private Respondent (PR) files a
complaint for the refund of premiums and the issuance of a writ of preliminary attachment in
a civil case against SIOL. In addition, PR also claims for damages, attorneys fees, litigation
costs, etc., however, the prayer did not state the amount of damages sought although from
the body of the complaint it can be inferred to be in amount of P 50 million. Hence, PR
originally paid only PhP 210.00 in docket fees.The complaint underwent a number of
amendments to make way for subsequent re-assessments of the amount of damages sought
as well as the corresponding docket fees. The respondent demonstrated his willingness to
abide by the rules by paying the additional docket fees as required.
Issue: Did the Court acquire jurisdiction over the case even if private respondent did not pay
the correct or sufficient docket fees?
YES.
It was held that it is not simply the filing of the complaint or appropriate initiatory pleading,
but the payment of the prescribed docket fee, that vests a trial court with jurisdiction over
the subject matter or nature of the action. Where the filing of the initiatory pleading is not
accompanied by payment of the docket fee, the court may allow payment of the fee within a
reasonable time but in no case beyond the applicable prescriptive or reglamentary period.
Same rule goes for permissive counterclaims, third party claims and similar pleadings.
In herein case, obviously, there was the intent on the part of PR to defraud the government
of the docket fee due not only in the filing of the original complaint but also in the filing of
the second amended complaint. However, a more liberal interpretation of the rules is called
for considering that, unlike in Manchester, the private respondent demonstrated his
willingness to abide by the rules by paying the additional docket fees as required.
Where a trial court acquires jurisdiction in like manner, but subsequently, the judgment
awards a claim not specified in the pleading, or if specified the same has been left for
determination by the court, the additional filing fee shall constitute a lien on the judgment. It
shall be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said
lien and assess and collect the additional fee.

REDENA v. COURT OF APPEALS

Petitioners:Tancredo Redena
Respondents:The Court of Appeals and Leocadio Redena
Ponente: GARCIA, J.

Doctrine:Petition for Relief under Rule 38 may be filed only before the MTC or RTC which
decided the case. It may only be filed in the same case and same court in which the petition
arose.

FACTS:
1. An action for partition was filed by petitioner Tancredo against his older half-brother
Leocadio, herein respondent, before the RTC of San Pablo, Laguna.
2. The complaint alleges that the parties common father left several pieces of realty
(Three properties were mentioned). RTC confined its decision to only one piece of
property that was co-owned by the father and the parties in this case. The other
properties were not included in the partition because the RTC stated that it belonged
to Leocadio.
3. December 11, 1997, petitioner filed with the trial court a notice of appeal.
4. On September 28, 1998, the CA directed the petitioner to file his appellants brief. The
period to file was extended by the CA.
5. March 9, 1999, the CA considered the appeal abandoned and dismissed it because
the appellants brief was not filed within the period given.
6. November 8, 1999 (8 months after), petitioner filed a motion for reconsideration. CA
denied the motion.
7. December 28, 1999, petitioner filed a Petition for Relief before the CA. CA denied the
petition.
8. CA states that Petition for Relief may not be filed before the CA. Petition for Relief,
based on the past and present Rules of Court, may only be filed in the MTC or RTC.
ISSUE:
1. WON Petition for Relief may be filed.
RULING + RATIO:
1. No. Negligence of Petitioner is not an excusable negligence which prevented him from
perfecting his appeal..
To recapitulate, petitioner is not entitled to relief under Rule 38, Section 2 of the
Rules of Court. He was not prevented from filing his notice of appeal by fraud,
accident, mistake or excusable negligence, as in fact he filed one. The relief
afforded by Rule 38 will not be granted to a party who seeks to be relieved from
the effects of the judgment when the loss of the remedy of law was due to his
own negligence, or a mistaken mode of procedure for that matter; otherwise, the
petition for relief will be tantamount to reviving the right of appeal which has
already been lost, either because of inexcusable negligence or due to a mistake
of procedure by counsel.21 The Rules allow a petition for relief only when there is
no other available remedy, and not when litigants, like the petitioner, lose a
remedy by negligence.
Under Section 2 of Rule 38, supra, of the Rules of Court, a party prevented from
taking an appeal from a judgment or final order of a court by reason of fraud,
accident, mistake or excusable negligence, may file in the same court and in the
same case a petition for relief praying that his appeal be given due course. This
presupposes, of course, that no appeal was taken precisely because of any of the
aforestated reasons which prevented him from appealing his case.
A petition for relief under Rule 38 cannot be availed of in the CA, the latter being
a court of appellate jurisdiction.
It needs to be filed in the same court and in the same case. Applicable for both
RTC and MTC.
In this case, Petitioner had all the opportunity to appeal his case and also to file
his appellants brief. However, he failed to file the appellants brief. His motion for
reconsideration was also filed late.

The negligence of his counsel was not gross negligence.

DISPOSITION:
WHEREFORE, the instant petition is DISMISSED and the assailed resolutions of the CA are
AFFIRMED.
No pronouncement as to costs.
MERLIZA A. MUOZ, Petitioner, VS. PEOPLE OF THE PHILIPPINES, Respondent
G.R. No. 162772, March 14, 2008
FACTS:

Petitioner is the wife of Ludolfo P. Muoz Jr. owner and operator of L.P. Munoz
Construction (Muoz Construction).
On August 3, 2000, Ludolfo took a loan of P500,000.00, at 5% interest, from Sunwest
Construction and Development Corporation (Sunwest). Ludolfo issued to Sunwest a
DBP check, postdated September 3, 2000, for P500,000.00.
On September 3, 2000, Ludolfo sought an extension of his loan by replacing the DBP
check with RCBC check for P500,000.00, drawn by petitionerand postdated December
3, 2000.
On February 5, 2001 Sunwest deposited the RCBC check with the BPI which
presented it to the drawee bank RCBC, but the latter dishonored the check for
insufficiency of funds.
February 8, 2001, Sunwest sent by registered mail a letter addressed to Ludolfo,
informing him of the dishonor of the RCBC check and demanding that he make good
the check or pay the amount thereof within five days from receipt of said notice. The
letter was received on the same day by Eden Barnedo at Munoz Construction
On March 14, 2001, Sunwest sent another letter, this time addressed to petitioner,
informing her of the dishonor of the RCBC check and demanding that she pay the
said check within five days from receipt of the letter.
In Merlizas reply toSunwest, she explained that Sunwest and Muoz Construction
hadmutual claims against each other:
o Muoz Construction had a claim against Sunwest for P10,000,000.00,
including a 15% advance payment, for two river control projects
o whileSunwest had a claim against Muoz Construction for P500,000.00. Given
that the claim of Muoz Construction was bigger than that of Sunwest,
Petitioner treated the first claim as having automatically offset, covered or paid the
second claim as represented by the amount of the RCBC check.
Criminal complaintfiled by Elizaldy S. Co, Sunwest president, the Municipal Trial Court
in Cities (MTCC), charging petitioner with violation of B.P. Blg. 22.
MTCC rendered a Decision finding petitioner guilty.
RTC affirmed decision of MTCC

ISSUE: Whether or not Elizaldy S. Co is an authorized representative of Sunwest wherein she

can represent the corporation in filing a suit against the petitioner
There is an issue on technicality in this case.

The SC affirmed the decision of the CA in dismissing the complaint. It held that,
failure to serve copy of the petition on the adverse party or to show proof of service
thereof is a fatal defect, which the petition can be dismissed. In the present case,
petitioner failed to serve copy of her petition on the Solicitor General as counsel of
the adverse party, the People of the Philippines. Hence, the CA did not commit any
reversible error in dismissing her petition.

In the present case, while upon motion for reconsideration, she utterly failed to
convince the Court that the substantial grounds cited therein far transcend its
technical deficiencies as would justify the resolution of her petition on its merits
rather than form.

First, petitioner insists that the criminal case filed against her, should have been
dismissed for lack of authority of Elizaldy Co to file the same on behalf of Sunwest,
the payee of the RCBC check.
o In Tam Wing Tak v. Makasiar, the Court affirmed the dismissal of a criminal
case for violation of B.P. Blg. 22 for lack of authority of the private
complainant, which ruled that: X XXUnder Section 36 of the Corporation Code,
read in relation to Section 23, it is clear that where a corporation is an injured
party, its power to sue is lodged with its board of directors or trustees. X XX
o There was failure to show any proof that he was authorized or deputized or
granted specific powers to sue for and on behalf of the firm.
Same as in a recent case of Ilusorio v. Ilusorio,

However, in both cases, the deficiency in the complaint was challenged by the
accused at the preliminary investigation stage, or before he entered a plea upon
arraignment. On the contrary, in the present case, petitioner questioned the authority
of Elizaldy Co after arraignment and completion of the prosecution's presentation of
evidence. Thus, she is barred from raising such objection under Section 9, Rule 117
of the Rules of Court.

Second, petitioner harps on the purported lack of notice to her of the dishonor of the RCBC
check. However, there is documentary evidence that on March 20, 2001, letter of petitioner
to Sunwest where she expressly acknowledged receiving the March 14, 2001 notice of
dishonor
of
the
RCBC
check.
Case : Monzon v Relova
Doctrine : A cause of action is the act or omission by which a party violates the right of
another. A cause of action exists if the elements are present:
1. Right in favor of plaintiff by whatever means and under whatever law it arises or is
created
2. An obligation on the part of the named defendant to respect or not to violate such
right
3. An act or omission on the part of such defendant violative of the right of plaintiff or
constituting breach of the obligation of defendant to the plaintiff for which the latter
may maintain an action for recovery of damages
Fast Recit : Spouses Relova and Perez filed a petition for injunction since Monzon issued
promissory notes to the respective spouses with lots as security (2A- Perez, Lot 2B- Relova).
Monzon was indebted to Coastal Lending which foreclosed the property due to the nonpayment of Monzons 3.4 million debt. Addio was the highest bidder in the sale. There was
an excess of 1.6 M from Addios payment of 5M. The Spouses contend that they should be

given the residue as stated in Rule 68, Sec 4. The residue money is with Atty. Luna (clerk of
court). However, case at bar involves Extrajudicial Foreclosure (Act 3135) and not Rule 68s
judicial foreclosure. Spouses do not have cause of action against Atty. Luna. Case is
remanded back to trial court to check if motion for injunction is to be treated as complaint
for collection of money.
Facts :
Spouses Relova and Perez filed a petition for Injunction. They allege that Monzon
issued a promissory note in favor of sps. Perez. The amount was P600K and secured
by Lot2A in Brgy Kaybagal, Tagaytay City with about 300 sqm. A deed of absolute
sale over the parcel of land was later executed in favor of the Perez spouses.

The same thing happened with sps. Relova wherein a promissory note in the amount
of P200k was issued secured by Lot2B with about 200 sqm. There was a 5% interest
per month. A deed of conditional sale over the parcel of land was later issued in favor
of sps. Relova.

Monzon was indebted to the Coastal Lending Corporation. Coastal Lending then
extrajudicially foreclosed the property of Monzon which included Lots 2A and 2B. The
winning bidder in this extrajudicial foreclosure was Addio properties. Of the amount
paid by Addio, there was a residue of roughly P1.6M (indebtedness of Monzon was
only around P3.4M while Addio paid P5M for the property thats why theres an
excess). This residue is in the custody of Atty. Luna as Branch Clerk of Court.

Monzon argues that she has already fulfilled her obligation to the spouses via dacion
en pago evidenced by the Deed of Conditional Sale and the Deed of Absolute Sale.

RTC:

Due to Monzon and counsels absence on said hearing date despite due notice,
granted an oral Motion by the respondents by issuing an Order allowing the ex
parte presentation of evidence by respondents.
Atty. Luna should deliver the residue to spouses Relova and Perez. At this point in
time, Addio properties intervened.

CA: Affirmed RTC, denied Monzons appeal re : violation of due process since she was not
allowed to present in court again after not appearing in first hearing (order of default)
Issue : Whether or not there was a cause of action against Atty Luna. No.
Held.
SC : Reversed and set aside the ruling of the CA. Atty. Luna should not deliver the residue to
the spouses since Rule 68 governs judicial foreclosure and the issue at bar is under Act 3135
Extrajudicial Foreclosure.
Also, the SC ruled that the Failure to file a responsive pleading within the reglementary
period is the sole ground for an order of default and not the non-appearance during oral
motion.
The case is remanded back to trial court for respondents to submit a manifestation where
the petition for injunction should be treated as complaint for the collection of money.
Ratio:

Rule 68 governs judicial foreclosure of mortgages. Extrajudicial foreclosure of mortgages

which was what transpired in the case at bar is governed by Act 3135. Unlike Rule 68, Act
3135 does not grant to junior encumbrancers the right to receive the balance of the
purchase price. The only right given to second mortgagees in said issuances is the right to
redeem foreclosed property pursuant to Sec 6 of Act 3135 any person having lien on the
property subsequent to mortgage or deed of trust under which the property is sold, may
redeem the same at any time within the term of one yr from and after date of the sale.
A cause of action is the act or omission by which a party violates the right of another. A
cause of action exists if the elements are present:
1. Right in favor of plaintiff by whatever means and under whatever law it arises or is
created
2. An obligation on the part of the named defendant to respect or not to violate such
right
3. An act or omission on the part of such defendant violative of the right of plaintiff or
constituting breach of the obligation of defendant to the plaintiff for which the latter
may maintain an action for recovery of damages
In view of the foregoing, the respondent spouses do not have a cause of action against Atty
Luna for the delivery of amounts. The case should be dismissed in so far Atty Luna is
concerned but the same is not necessarily true with respect to Monzon.
The case is remanded back to trial court for respondents to submit a manifestation where
the petition for injunction should be treated as complaint for the collection of money. If
respondents answer in affirmative, case shall proceed with presentation of evidence for
defense. If Monzon successful in proving defense of dacion en pago, there would be double
sales with Addio. The remedy of respondent is to recover possession. If Addio is entitled to
properties, respondents remedy is to file action for damages against Monzon.
If respondents answer in negative, the case shall be dismissed without prejudice to the
exercise of respondents rights as mortgage creditors. They will be first mortgagor if their
mortgage was executed prior to execution of contract with Addio.

Sea-Land Service, Inc. v. Intermediate Appellate Court (153 SCRA 552 )

Post under case digests, Commercial Law at Thursday, February 23, 2012 Posted by
Schizophrenic Mind
Facts: Sea-Land, a foreign shipping and forwarding company licensed to do business in the
Philippines, received from Sea-borne Trading Company in California, a shipment consigned to
Sen Hiap Hing, the business name used by Cue. The shipper not having declared the value
of the shipment , no value was indicated in the bill of lading. The shipment was discharged
in Manila, and while awaiting transshipment to Cebu, the cargo was stolen and never
recovered.
The trial court sentenced Sea-Land to pay Cue P186,048 representing the Philippine
currency value of the lost cargo, P55, 814 for unrealized profit and P25,000 for attorneys
fees. CA affirmed the trial courts decision.
Issue: Whether or not Sea-Land is liable to pay Cue.
Held: There is no question of the right of a consignee in a bill of lading to recover from the
carrier or shipper for loss of, or damage to, goods being transported under said bill, although

that document may have been drawn up only by the consignor and the carrier without the
intervention of the consignee.
Since the liability of a common carrier for loss of or damage to goods transported by it under
a contract of carriage os governed by the laws of the country of destination and the goods in
question were shipped from the United States to the Philippines, the liability of Sea-Land has
Cue is governed primarily by the Civil Code, and as ordained by the said Code,
supplementary, in all matters not cluttered thereby, by the Code of Commerce and special
laws. One of these supplementary special laws is the Carriage of goods by Sea Act (COGSA),
made applicable to all contracts for the carriage by sea to and from the Philippines Ports in
Foreign Trade by Comm. Act. 65.
Even if Section 4(5) of COGSA did not list the validity and binding effect of the liability
limitation clause in the bill of lading here are fully substantial on the basis alone of Article
1749 and 1750 of the Civil Code. The justices of such stipulation is implicit in its giving the
owner or shipper the option of avoiding accrual of liability limitation by the simple expedient
of declaring the value of the shipment in the bill of lading.
The stipulation in the bill of lading limiting the liability of Sea-Land for loss or damages to the
shipment covered by said rule to US$500 per package unless the shipper declares the value
of the shipment and pays additional charges is valid and binding on Cue.
Manliclic v. Calaunan
Ponente: Chico-Nazario
Third Division
Nature: Petition for review on certiorari
FACTS:
1. The vehicles involved in this case are: (1) Philippine Rabbit Bus owned by petitioner
PRBLI and driven by petitioner Mauricio Manliclic; and (2) owner-type jeep owned by
respondent Modesto Calaunan and driven by Marcelo Mendoza
2. At approximately Kilometer 40 of the North Luzon Expressway in Barangay Lalangan,
Plaridel, Bulacan, the two vehicles collided.
- The front right side of the Philippine Rabbit Bus hit the rear left side of the jeep
causing the latter to move to the shoulder on the right and then fall on a ditch with
water resulting to further extensive damage.
- Respondent suffered minor injuries while his driver was unhurt.
3. By reason of such collision, a criminal case was filed charging petitioner Manliclic with
Reckless Imprudence Resulting in Damage to Property with Physical Injuries.
4. Subsequently on 2 December 1991, respondent filed a complaint for damages against
petitioners Manliclic and PRBLI
5. The criminal case was tried ahead of the civil case.
6. When the civil case was heard, counsel for respondent prayed that the transcripts of
stenographic notes (TSNs) of the testimonies in the criminal case be received in
evidence in the civil case in as much as these witnesses are not available to testify in the
civil case.
7. The versions of the parties are summarized by the trial court as follows:

Respondents version:

According to the respondent and his driver, the jeep was cruising at the speed of 60
to 70 kilometers per hour on the slow lane of the expressway when the Philippine
Rabbit Bus overtook the jeep and in the process of overtaking the jeep, the Philippine
Rabbit Bus hit the rear of the jeep on the left side.

At the time the Philippine Rabbit Bus hit the jeep, it was about to overtake the jeep.
In other words, the Philippine Rabbit Bus was still at the back of the jeep when the
jeep was hit.

Fernando Ramos corroborated the testimony of and Marcelo Mendoza. He said that
he was on another jeep following the Philippine Rabbit Bus and the jeep of plaintiff
when the incident took place. He testified that the jeep of plaintiff swerved to the
right because it was bumped by the Philippine Rabbit bus from behind.

Petitioners version:
-

The petitioner explained that when the Philippine Rabbit bus was about to go to the
left lane to overtake the jeep, the latter jeep swerved to the left because it was to
overtake another jeep in front of it.

Petitioner PRBLI maintained that it observed and exercised the diligence of a good
father of a family in the selection and supervision of its employee

8. RTC ruled in favor of the respondent. CA found no reversible error and affirmed the RTCs
decision.
ISSUES:
1. Whether the TSNs from the criminal case may be admitted in evidence for the civil case.
2. Whether the petitioner, Manliclic, may be held liable for the collision and be found
negligent notwithstanding the declaration of the CA in the criminal case that there was
an absence of negligence on his part.
3. Whether the petitioner, PRBLI, exercised due diligence and supervision of its employee.
HELD: The petitioner, Manliclic, is civilly liable for the damages for his negligence or reckless
imprudence based on quasi-delict. The PRBLI is held solidarily liable for the damages caused
by the petitioner Manliclics negligence.
1. Admissibility of the TSNs
Petitioners contention:
- The TSNs should not be admitted to evidence for failure to comply with the requisites
of Sec. 47, Rule 130 of the ROC
- The petitioner, PRBLI, had no opportunity to cross examine the witnesses because
the criminal case was filed exclusively against Manliclic.
- Admission of the TSNs will deprive the petitioner of due process.
Court:
- The testimonies are still admissible on the ground that the petitioner failed to object
on their admissibility.
- Failure to object to the inclusion of the evidence is a waiver on the provision of the
law.

In addition, the petitioner even offered in evidence the TSN containing the testimony
of Ganiban.
The court disagrees that it would deprive the petitioner of due process. For the failure
of the petitioner to object at the proper time, it waived its right to object for the non
compliance with the ROC.

2. Civil liability arising from crime v. Quasi-delict/Culpa Acquiliana

Petitioner:
- The version of the petitioner deserves more credit as the petitioner was already
acquitted by the CA of the charge of Reckless imprudence resulting in damage to
property with physical injuries.
Court:
- From the complaint, it can be gathered that the civil case for damages was one
arising from or based on quasi-delict: Petitioner Manliclic was sued for his negligence
or reckless imprudence in causing the collision, while petitioner PRBLI was sued for
its failure to exercise the diligence of a good father in the selection and supervision of
its employees
it appears that petitioner Manliclic was acquitted not on reasonable doubt, but on
the ground that he is not the author of the act complained of which is based on
Section 2(b) of Rule 111 of the Rules of Criminal Procedure which reads:
(b) Extinction of the penal action does not carry with it extinction of the civil, unless the
extinction proceeds from a declaration in a final judgment that the fact from which the
civil might arise did not exist.

In spite of said ruling, petitioner Manliclic can still be held liable for the mishap. The
afore-quoted section applies only to a civil action arising from crime or ex delicto and
not to a civil action arising from quasi-delict or culpa aquiliana.
The extinction of civil liability referred to in the quoted provision, refers exclusively to
civil liability founded on Article 100 of the Revised Penal Code, whereas the civil
liability for the same act considered as a quasi-delict only and not as a crime is not
extinguished even by a declaration in the criminal case that the criminal act charged
has not happened or has not been committed by the accused.

In sum, the court distinguished civil liability arising from a crime and that arising from
quasi-delict:
CIVIL LIABILITY ARISING FROM A CRIME
(a) if an accused is acquitted based on reasonable doubt on his guilt, his civil liability
arising from the crime may be proved by preponderance of evidence only.
(b) if an accused is acquitted on the basis that he was not the author of the act or
omission complained of (or that there is declaration in a final judgment that the fact
from which the civil might arise did not exist), said acquittal closes the door to civil
liability based on the crime or ex delicto.
CIVIL LIABILITY ARISING FROM QUASI-DELICT
- A quasi-delict or culpa aquiliana is a separate legal institution under the Civil Code
with a substantivity all its own, and individuality that is entirely apart and
independent from a delict or crime.

The same negligence causing damages may produce civil liability arising from a
crime under the Penal Code, or create an action for quasi-delicts or culpa extracontractual under the Civil Code. The acquittal of the accused, even if based on a
finding that he is not guilty, does not carry with it the extinction of the civil liability
based on quasi delict.
civil liability arising from quasi-delict or culpa aquiliana, same will not be
extinguished by an acquittal, whether it be on ground of reasonable doubt or that
accused was not the author of the act or omission complained of (or that there is
declaration in a final judgment that the fact from which the civil liability might arise
did not exist).
An acquittal or conviction in the criminal case is entirely irrelevant in the civil
case based on quasi-delict or culpa aquiliana.
The petitioners urge the court to give more credence to their version of the story
however, as they constitute a question of fact, it may not be raised as a subject for a
petition for review. Findings of the trial court and appellate court are binding on the
Supreme Court.
The testimony of the petitioner about the jeep of the respondent overtaking another
vehicle in the criminal case was not consistent with what he gave to the investigator
which is evidently a product of an after-thought
If one would believe the testimony of the defendant, Mauricio Manliclic, and his
conductor, Oscar Buan, that the Philippine Rabbit Bus was already somewhat parallel
to the jeep when the collision took place, the point of collision on the jeep should
have been somewhat on the left side thereof rather than on its rear. Furthermore, the
jeep should have fallen on the road itself rather than having been forced off the
road.

3. PRBLIs liability
- Under Article 2180 of the New Civil Code, when an injury is caused by the negligence
of the employee, there instantly arises a presumption of law that there was
negligence on the part of the master or employer either in the selection of the
servant or employee, or in supervision over him after selection or both.
- The liability of the employer under Article 2180 is direct and immediate; it is not
conditioned upon prior recourse against the negligent employee and a prior showing
of the insolvency of such employee. Therefore, it is incumbent upon the private
respondents to prove that they exercised the diligence of a good father of a family in
the selection and supervision of their employee.
Petitioners contention:
- PRBLI maintains that it had shown that it exercised the required diligence in the
selection and supervision of its employees
- In the matter of selection, it showed the screening process that petitioner Manliclic
underwent before he became a regular driver.
- As to the exercise of due diligence in the supervision of its employees, it argues that
presence of ready investigators is sufficient proof that it exercised the required due
diligence in the supervision of its employees
Court:
- In the selection of prospective employees, employers are required to examine them
as to their qualifications, experience and service records. In the supervision of
employees, the employer must formulate standard operating procedures, monitor
their implementation and impose disciplinary measures for the breach thereof.
- As the negligence of the employee gives rise to the presumption of negligence on the
part of the employer, the latter has the burden of proving that it has been diligent not
only in the selection of employees but also in the actual supervision of their work.

The trial court found that petitioner PRBLI exercised the diligence of a good father of
a family in the selection but not in the supervision of its employees
it seems that the Philippine Rabbit Bus Lines has a very good procedure of recruiting
its driver as well as in the maintenance of its vehicles. There is no evidence though
that it is as good in the supervision of its personnel.
o no evidence introduced that there are rules promulgated by the bus company
regarding the safe operation of its vehicle and in the way its driver should
manage and operate the vehicles
o no showing that somebody in the bus company has been employed to oversee
how its driver should behave while operating their vehicles
o The presence of ready investigators after the occurrence of the accident is not
enough. Same does not comply with the guidelines set forth with regard to the
supervision.
o Regular supervision of employees, that is, prior to any accident, should have been
shown and established.
o the lack of supervision can further be seen by the fact that there is only one set of
manual containing the rules and regulations for all the drivers
For failure to adduce proof that it exercised the diligence of a good father of a family
in the selection and supervision of its employees, petitioner PRBLI is held solidarily
responsible for the damages caused by petitioner Manliclics negligence.

DISPOSITIVE:
WHEREFORE, premises considered, the instant petition for review is DENIED. The decision of
the Court of Appeals is AFFIRMED with the MODIFICATION that (1) the award of moral
damages shall be reduced to P50,000.00; and (2) the award of exemplary damages shall be
lowered to P50,000.00.
Balagtas v Court of Appeals
GR No. 109073, 1999
Facts:

On November 18, 1991, the officers of Danao Police Station and Pardo Sub-Station
took Rutchel Apostol from the house of Eduardo Balagtas without any warrant of
arrest.
On December 4, 1991, Eduardo Balagtas, acting on behalf of Rutchel Apostol,
initiated special proceedings for habeas corpus,before the Regional Trial Court of
Cebu City. He theorized that sometime in May 1991, Rutchel started to reside with
him in Cebu City because of her desire to undertake spiritual studies at the Chaitanya
Mission. On the same day, the trial Court issued an order directing the public
respondents to bring the body of Rutchel before it on December 9, 1991, at 10:40
P.M., and to show cause why Rutchel Apostol had been deprived of her liberty and/or
petitioner was denied rightful custody of Rutchel.
On December 9, 1991, the public respondents did not produce the body of Rutchel
Apostol. As a result, the Trial Court issued another Order giving them five (5) days to
submit their opposition to the petition, and resetting the hearing to December 27,
1991, at 10:00 A.M.
The respondents explained in their Comment that they merely responded to Mrs.
Apostols request for assistance in locating her daughter, who voluntarily returned
home with her to Iloilo City on the day that she was located.

The Commissioners report tends to show that Rutchel still wishes to join the
Chaitanya Mission in Cebu City and that she is presently in the house of her parents,
where she is not free to do what she wants and likes to do.
The Regional Trial Court of origin rendered a Decision dismissing the Complaint for
lack of cause of action since it has been shown that Rutchel Apostol was under the
care and custody of her parents and not being illegally detained by the respondents.
The Court of Appeals affirmed the decision of the RTC, rationating:
xxx The thrust of the petitioners complaint is that Rutchel Apostol was
forcibly taken and abducted on November 18, 1991 and that respondents continue to
detain her at the Pardo Police Sub-station and/or Danao Police Station. The essential
allegations of the petition were not proven, and the petition was correctly dismissed.
xxx

Issue:

Whether or not Mrs. Angeles Apostol who is illegally detaining Rutchel should have
been impleaded as a respondent in the case.
Whether or not Rutchel was illegally detained.

Ruling:
1st Issue
Explicit is the following provision of the Revised Rules of Court:
Section 2, Rule 3.- A real party in interest is the party who stands to be
benefited or injured by the judgment in the suit, or the party entitled to the
avails of the suit. Unless otherwise authorized by law or these Rules, every
action must be prosecuted or defended in the name of the real party in
interest.

The trial Court did not acquire jurisdiction over the person of Rutchels mother (Mrs.
Angeles Apostol) since she was not impleaded as defendant and neither did she
intervene in the case as required by the Rules. No judgment could be pronounced
against her; otherwise, she would be deprived of the rudiments of due process.
Petitioner has no cause of action against her and therefore, the respondent Court
correctly dismissed the Petition. If the suit is not brought in the name of or against
the real party in interest, a motion to dismiss may be filed on the ground that the
Complaint states no cause of action (Sec. 1(g), Rule 16). The respondents sufficiently
explained that they conducted police surveillance and merely acted upon the
directive of the PNP officials who, in turn, performed their duties as requested by
Rutchels mother.
A real party in interest is the party who could be benefited or injured by the judgment
or the party entitled to the avails of the suit.

2nd Issue
Assuming arguendo that the mother of Rutchel was impleaded, still the petitioner
failed to substantiate the petition for habeas corpus. The facts clearly indicate that

Rutchel is on her right mind, not to mention her being one of the topnotchers in the
Midwifery Licensure Examination given by the Professional Regulations
Commission. She was not forcibly detained or abducted by her mother, the fact
being that she voluntarily went with her mother after the latter persuaded her to
return to their home in Iloilo City. There was no amount of force employed on her,
which would amount to deprivation of liberty.
Petition is DISMISSED for lack of merit.

VLASON ENTERPRISES CORPORATION

v.
COURT OF APPEALS and DURAPROOF SERVICES, represented by its General
Manager, Cesar Urbino Sr. G.R. Nos. 121662-64, July 6, 1999, THIRD DIVISION
(Panganiban,
J.
) FACTS:
Poro Point Shipping Services was then acting as the local agent of Omega Sea Transport
Company of Honduras & Panama (Omega) when it requested permission for its vessel M/V
Star Ace, experiencing engine trouble, to unload its cargo and have it stored in the Philippine
Ports Authority compound in San Fernando, La Union while awaiting transhipment to
Hongkong. It approved by the Bureau of Customs. Howvever, the customs personnel still
boarded the vessel when it docked on the suspicion that it was the hijacked M/V Silver Med
owned by Med Line Philippines and that its cargo would be smuggled into the country. The
vessel and its cargo were seized. A notice of hearing was served on its consignee, Singkong
Trading Co. of Hongkong, and its shipper, Dusit International Co., Ltd of Thailand. While
seizure proceedings were ongoing, three typhoons hit La Union, and the vessel ran aground
and was abandoned. A salvage agreement was entered into with the respondent Duraproof
Services to secure and repair the vessel. The warrant of seizure was lifted upon finding that
there was no fraud. However, the Customs Commissioner declined to issue a clearance and
even forfeited the vessel and its cargo. A decision was decreed for the forfeiture and sale of
the cargo in favor of the government. Seeking to enforce its preferred lien, the Duraproof
filed a petition for certiorari, prohibition and mandamus before the RTC of Manila attacking
the actions of the Bureau. PPA, Rep. Silverio Mangaoang and Med Line Phils. were are named
as respondents. Subsequently, Duraproof amended its petition as to include former District
Collector Quiray, PPA Port Manager Adolfo Amor, Jr., Vlason Enterprises Singkong Trading
Company, Dusit International Co., Inc., Thai-Nan Enterprises Ltd. And Thai-United Trading
Co., Ltd as respondents. In both its petitions, there was failure to allege against Vlason
Enterprises or pray for a relief against it. Summonses for the amended petition were served
to the respondents and their counsels. Summons by publication were allowed to be served
upon the alien respondents who had no representatives in the country. The cases against the
other respondents were dismissed on the grounds of litis pendentia and lack of jurisdiction
despite Duraproof moving to declare them in default. Duraproof again moved to declare the
other respondents in default. There was no record that these motions were acted upon.
Thereafter, Duraproof amended again its petition with supplemental petition. The rest of the
respondents were declared in default and Duraproof was allowed to present its evidence.
With regard to Vlason Entreprises, it was alleged that it exhibited constant intimidation and
harassment and incurred heavy overhead expenses causing irreparable damages. The trial
court rendered a decision in favor of Duraproof. Vlason, by special appearance, filed a
motion for reconsideration on the grounds it was not impleaded, served summons or
declared in default. It also filed a special appearance before the CA praying that the levy be
lifted off its properties, or a TRO be issued against the auction. Its motion was granted and
the previous decision was reversed. However, Duraproof countered that although Vlason
filed the motion for reconsideration in a timely manner, it has otherwise failed to include a

notice of hearing making its motion a mere scrap of paper Duraproof filed a motion to file a
supplemental petition impleading Vlason as one of the respondents. It was granted by the
CA. Furthermore, it was able to obtain a writ of preliminary injunction against the
respondents to prevent them from interfering in the transfer of the vessel and its cargo from
the PPA compound. Hence, this appeal.
ISSUE: Whether or not Vlason Enterprises was properly served with summons. HELD: No.
Appeal GRANTED.
A corporation may be served summons through its agents or officers who under the Rules
are designated to accept service of process. A summons addressed to a corporation and
served on the secretary of its president binds that corporation. This is based on the rationale
that service must be made on a representative so integrated with the corporation sued, that
it is safe to assume that said representative had sufficient responsibility and discretion to
realize the importance of the legal papers served and to relay the same to the president or
other responsible officer of the corporation being sued. The secretary of the president
satisfies this criterion. This rule requires, however, that the secretary should be an employee
of the corporation sought to be summoned. Only in this manner can there be an assurance
that the
secretary will bring home to the corporation [the] notice of the filing of the action against
it.
In the present case, Bebero was the secretary of Angliongto, who was president of both VSI
and petitioner, but she was an employee of VSI, not of petitioner. The piercing of the
corporate veil cannot be resorted to when serving summons. Doctrinally, a corporation is a
legal entity distinct and separate from the members and stockholders who compose it.
However, when the corporate fiction is used as a means of perpetrating a fraud, evading an
existing obligation, circumventing a statute, achieving or perfecting a monopoly or, in
generally perpetrating a crime, the veil will be lifted to expose the individuals composing it.
None of the foregoing exceptions has been shown to exist in the present case. Quite the
contrary, the piercing of the corporate veil in this case will result in manifest injustice. This
we cannot allow. Hence, the corporate fiction remains. Petitioner claims that the trial court
did not acquire jurisdiction over it, because the former had not been served summons anew
for the Second Amended Petition or for the Second Amended Petition with Supplemental
Petition. We disagree. Although it is well-settled that an amended pleading supersedes the
original one, which is thus deemed withdrawn and no longer considered part of the record, it
does not follow
ipso facto
that the service of a new summons for amended petitions or complaints is required. Where
the defendants have already appeared before the trial court by virtue of a summons on the
original complaint, the amended complaint may be served upon them without need of
another summons, even if new causes of action are alleged.
After it is acquired, a courts jurisdiction continues until the case
is finally terminated. Conversely, when defendants have not yet appeared in court and no
summons has been validly served, new summons for the amended complaint must be
served on them. It is not the change of cause of action that gives rise to the need to serve
another summons for the amended complaint, but rather the acquisition of jurisdiction over
the persons of the defendants. If the trial court has not yet acquired jurisdiction over them, a
new service of summons for the amended complaint is required. In this case, the trial court
obviously labored under the erroneous impression that petitioner had already been placed
under its jurisdiction since it had been served summons through the secretary of its
president. Thus, it dispensed with the service on petitioner of new summons for the
subsequent amendments of the Petition. We have already ruled, however, that the first
service of summons on petitioner was invalid. Therefore, the trial court never acquired
jurisdiction, and the said court should have required a new service of summons for the
amended Petitions.

the president or other responsible officer of the corporation being sued. The secretary of the
president satisfies this criterion. This rule requires, however, that the secretary should be an
employee of the corporation sought to be summoned. Only in this manner can there be an
assurance that the
secretary will bring home to the corporation [the] notice of the filing of the action against
it.
In the present case, Bebero was the secretary of Angliongto, who was president of both VSI
and petitioner, but she was an employee of VSI, not of petitioner. The piercing of the
corporate veil cannot be resorted to when serving summons. Doctrinally, a corporation is a
legal entity distinct and separate from the members and stockholders who compose it.
However, when the corporate fiction is used as a means of perpetrating a fraud, evading an
existing obligation, circumventing a statute, achieving or perfecting a monopoly or, in
generally perpetrating a crime, the veil will be lifted to expose the individuals composing it.
None of the foregoing exceptions has been shown to exist in the present case. Quite the
contrary, the piercing of the corporate veil in this case will result in manifest injustice. This
we cannot allow. Hence, the corporate fiction remains. Petitioner claims that the trial court
did not acquire jurisdiction over it, because the former had not been served summons anew
for the Second Amended Petition or for the Second Amended Petition with Supplemental
Petition. We disagree. Although it is well-settled that an amended pleading supersedes the
original one, which is thus deemed withdrawn and no longer considered part of the record, it
does not follow
ipso facto
that the service of a new summons for amended petitions or complaints is required. Where
the defendants have already appeared before the trial court by virtue of a summons on the
original complaint, the amended complaint may be served upon them without need of
another summons, even if new causes of action are alleged.
After it is acquired, a courts jurisdiction continues until the case
is finally terminated. Conversely, when defendants have not yet appeared in court and no
summons has been validly served, new summons for the amended complaint must be
served on them. It is not the change of cause of action that gives rise to the need to serve
another summons for the amended complaint, but rather the acquisition of jurisdiction over
the persons of the defendants. If the trial court has not yet acquired jurisdiction over them, a
new service of summons for the amended complaint is required. In this case, the trial court
obviously labored under the erroneous impression that petitioner had already been placed
under its jurisdiction since it had been served summons through the secretary of its
president. Thus, it dispensed with the service on petitioner of new summons for the
subsequent amendments of the Petition. We have already ruled, however, that the first
service of summons on petitioner was invalid. Therefore, the trial court never acquired
jurisdiction, and the said court should have required a new service of summons for the
amended Petitions
the president or other responsible officer of the corporation being sued. The secretary of the
president satisfies this criterion. This rule requires, however, that the secretary should be an
employee of the corporation sought to be summoned. Only in this manner can there be an
assurance that the
secretary will bring home to the corporation [the] notice of the filing of the action against
it.
In the present case, Bebero was the secretary of Angliongto, who was president of both VSI
and petitioner, but she was an employee of VSI, not of petitioner. The piercing of the
corporate veil cannot be resorted to when serving summons. Doctrinally, a corporation is a
legal entity distinct and separate from the members and stockholders who compose it.
However, when the corporate fiction is used as a means of perpetrating a fraud, evading an
existing obligation, circumventing a statute, achieving or perfecting a monopoly or, in
generally perpetrating a crime, the veil will be lifted to expose the individuals composing it.

None of the foregoing exceptions has been shown to exist in the present case. Quite the
contrary, the piercing of the corporate veil in this case will result in manifest injustice. This
we cannot allow. Hence, the corporate fiction remains. Petitioner claims that the trial court
did not acquire jurisdiction over it, because the former had not been served summons anew
for the Second Amended Petition or for the Second Amended Petition with Supplemental
Petition. We disagree. Although it is well-settled that an amended pleading supersedes the
original one, which is thus deemed withdrawn and no longer considered part of the record, it
does not follow
ipso facto
that the service of a new summons for amended petitions or complaints is required. Where
the defendants have already appeared before the trial court by virtue of a summons on the
original complaint, the amended complaint may be served upon them without need of
another summons, even if new causes of action are alleged.
After it is acquired, a courts jurisdiction continues until the case
is finally terminated. Conversely, when defendants have not yet appeared in court and no
summons has been validly served, new summons for the amended complaint must be
served on them. It is not the change of cause of action that gives rise to the need to serve
another summons for the amended complaint, but rather the acquisition of jurisdiction over
the persons of the defendants. If the trial court has not yet acquired jurisdiction over them, a
new service of summons for the amended complaint is required. In this case, the trial court
obviously labored under the erroneous impression that petitioner had already been placed
under its jurisdiction since it had been served summons through the secretary of its
president. Thus, it dispensed with the service on petitioner of new summons for the
subsequent amendments of the Petition. We have already ruled, however, that the first
service of summons on petitioner was invalid. Therefore, the trial court never acquired
jurisdiction, and the said court should have required a new service of summons for the
amended Petitions.
(NEMENCIO C. EVANGELISTA VS. CARMELINO M. SANTIAGO, G.R. NO. 157447,
APRIL 29, 2005, CHICO-NAZARIO, J.)
Lack of legal capacity to sue means that the plaintiff is not in the exercise of his civil rights,
or does not have the necessary qualification to appear in the case, or does not have the
character or representation he claims. On the other hand, a case is dismissible for lack of
personality to sue upon proof that the plaintiff is not the real party-in-interest, hence
grounded on failure to state a cause of action. The term "lack of capacity to sue" should not
be confused with the term "lack of personality to sue." While the former refers to a plaintiffs
general disability to sue, such as on account of minority, insanity, incompetence, lack of
juridical personality or any other general disqualifications of a party, the latter refers to the
fact that the plaintiff is not the real party- in-interest. Correspondingly, the first can be a
ground for a motion to dismiss based on the ground of lack of legal capacity to sue; whereas
the second can be used as a ground for a motion to dismiss based on the fact that the
complaint, on the face thereof, evidently states no cause of action.
Spouses Francisco and Angela Tankiko v Justiano Cezar, et. al. GR No. 131277, February 2,
1999
Facts:
Respondents are the actual occupants and residents of a parcel of land herein referred to as
Lot 3714 who introduced improvements thereon and are sales patent applicants of the said
lot. They were religiously paying taxes on the property. They filed an action for reconveyance
and damages against the petitioners. Apparently, an original certificate of title (OCT) was
issued to the petitioners after acquiring said lot from the heirs of the lots alleged former
owner Patricio Salcedo who acquires his title to the lot by virtue of a decree of registration

upon the decision of the cadastral court. Respondents assail the validity of the title of
Salcedo by citing the Consing decision of the court that involves the neighboring lot 3715
with the following observation: (1) there is no showing that a decision has been made on
the Cadastral proceedings cited by the petitioners with no records thereof in the Land
Registration Commission and (2) they found a decision that renders Lot 3715 and Lot 3714
public lands.

RTC decision: Dismissed the petition for lack of merit, recognizing the petitioners as the
owner of the property in litigation by virtue of their certificates of title while giving
respondents 90 days to vacate the property.
Court of Appeals decision: Set aside the RTC decision allowing respondents to stay within the
property pending the final termination of the administrative proceedings for cancellation of
petitioners title and final terminal of the action for reversion and annulment of title. It also
ordered the annotation of lis pendens on the OCT.
Petitioners now insist that the respondents have no capacity to file the complaint because
they are not owners of the land but merely an applicant for a patent thereof which makes
them not a real party of interest to the case. The CA contends that although the respondents
have no capacity to file an action for reconveyance and damages, for reason of equity, it
finds the necessity to resolve the issue of possession in the land on question.
Issue:
Whether or not the respondents are the proper parties to initiate the present suit?
Ruling:
The court did not find justification on reason for equity to be appreciated in the case. Equity
is only invoked when the plaintiff has a clear right that it seeks to enforce and would be
violated if the action filed were to be dismissed for lack of standing. The respondents do not
have any enforceable right over their claim to the land for merely an applicant and there is
no guarantee that their application will be ruled in their favor. Moreover, they are not the
real part of interest by the fact that they admit that they are only applicants and not owners
of the land in dispute. Section 101 of the Public Land Act provides that only the State has the
right to institute an action for reconveyance of a public land. A "real party in interest" is one
who stands to be benefited or injured by the judgment in the suit. To have a legal standing in
a suit, the party should have substantial interest in the case in that the party will sustain a
direct injury as a result of an act. The interest contemplated here is material interest in issue
that will be affected by the decree. The respondents only have an incidental interest not
contemplated by law. The SC ruled that the respondents have no legal standing to sue and
not the real party of interest in the case. The CA decision was reversed and set aside.
Kilosbayan vs morato
FACTS:
An organization of civic-spirited citizens, taxpayers and members of Congress questioned
the lease of lottery equipment by the Philippine Charity and Sweepstakes Office (PCSO) on

the ground that it was similar to the same previous contract earlier nullified by the Supreme
Court.
ISSUE:
Whether or not there is a violation of the Constitution.
HELD:
Petitioners have no standing to challenge the validity of the contract. Legal standing is a
special concern in constitutional law, because in some cases the suits are brought not by
parties who have been personally injured, but by concerned citizens, taxpayers, or voters
who sue in the public interest. It is not an issue in the case, since no constitutional question
is actually involved. Since petitioners are not parties to the contract or were prejudicial in
their rights with respect to one of the contracting parties who claim to have a right to take
part in a public bidding, they have no interest in the contract as would entitle them to bring
this suit.
ERNESTO R. SALENGA

510 SCRA 74 December 6, 2006 (How subject matter or

nature of the action determined)

FACTS:
Paciencia Regala owns a seven (7)-hectare fishpond located at Sasmuan, Pampanga. Her
Attorney-in-Fact Faustino R. Mercado leased the fishpond to Eduardo Lapid for a three (3)year period. Lessee Eduardo Lapid in turn sub-leased the fishpond to Rafael Lopez during the
last seven (7) months of the original lease. Ernesto Salenga was hired by Eduardo Lapid as
fishpond watchman (bante-encargado). In the sub-lease, Rafael Lopez rehired respondent
Salenga. Ernesto Salenga Salenga, sent the demand letter to Rafael Lopez and Lourdes
Lapid for unpaid salaries and non-payment of the 10% share in the harvest. Salenga was
promted to file a Complaint before the Provincial Agrarian Reform Adjudication Board
(PARAB), Region III, San Fernando, Pampanga docketed as DARAB Case No. 552-P93 entitled
Ernesto R. Salenga v. Rafael L. Lopez and Lourdes L. Lapid for Maintenance of Peaceful
Possession, Collection of Sum of Money and Supervision of Harvest.
Pending resolution of the agrarian case, the instant case was instituted by petitioner Antonio
Baltazar, an alleged nephew of Faustino Mercado, through a Complaint-Affidavit against
private respondents before the Office of the Ombudsman which was docketed as OMB-1-943425 entitled Antonio B. Baltazar v. Eulogio Mariano, Jose Jimenez, Jr., Toribio Ilao, Jr. and
Ernesto Salenga for violation of RA 3019. Petitioner maintains that respondent Ilao, Jr. had
no jurisdiction to hear and act on DARAB Case No. 552-P93 filed by respondent Salenga as
there was no tenancy relation between respondent Salenga and Rafael L. Lopez, and thus,
the complaint was dismissible on its face.
ISSUE:
Whether or not the petitioner has legal standing to pursue the instant petition?
Whether or not the Ombudsman likewise erred in reversing his own resolution where
it was resolved that accused as Provincial Agrarian Adjudicator has no jurisdiction
over a complaint where there exist no tenancy relationship?

HELD:
The "real-party-in interest" is "the party who stands to be benefited or injured by the
judgment in the suit or the party entitled to the avails of the suit. The Complaint-Affidavit
filed before the Office of the Ombudsman, there is no question on his authority and legal
standing. The Ombudsman can act on anonymous complaints and motu proprio inquire into
alleged improper official acts or omissions from whatever source, e.g., a newspaper.
Faustino Mercado, is an agent himself and as such cannot further delegate his agency to
another. An agent cannot delegate to another the same agency. Re-delegation of the agency
would be detrimental to the principal as the second agent has no privity of contract with the
former. In the instant case, petitioner has no privity of contract with Paciencia Regala, owner
of the fishpond and principal of Faustino Mercado.
The facts clearly show that it was not the Ombudsman through the OSP who allowed
respondent Ilao, Jr. to submit his Counter-Affidavit. It was the Sandiganbayan who granted
the prayed for re-investigation and ordered the OSP to conduct the re-investigation . The
OSP simply followed the graft courts directive to conduct the re-investigation after the
Counter-Affidavit of respondent Ilao, Jr. was filed. Indeed, petitioner did not contest nor
question the August 29, 1997 Order of the graft court. Moreover, petitioner did not file any
reply-affidavit in the re-investigation despite notice.
The nature of the case is determined by the settled rule that jurisdiction over the subject
matter is determined by the allegations of the complaint. The nature of an action is
determined by the material averments in the complaint and the character of the relief
sought not by the defenses asserted in the answer or motion to dismiss.
Respondent Salengas complaint and its attachment clearly spells out the jurisdictional
allegations that he is an agricultural tenant in possession of the fishpond and is about to be
ejected from it, clearly, respondent Ilao, Jr. could not be faulted in assuming jurisdiction as
said allegations characterize an agricultural dispute. Besides, whatever defense asserted in
an answer or motion to dismiss is not to be considered in resolving the issue on jurisdiction
as it cannot be made dependent upon the allegations of the defendant.
WHEREFORE, the instant petition is DENIED for lack of merit, and the Order and the October
30, 1998 Memorandum of the Office of the Special Prosecutor in Criminal Case No. 23661
(OMB-1-94-3425) are hereby AFFIRMED IN TOTO, with costs against petitioner.