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The Supreme Court held that what must be followed The present case is not a mere action for the recovery
in this case is Rule 88, Section 1. This includes action of money nor a claim for money arising from
to recover real and personal property from estate, contract. The action involves the alleged negligence
actions to enforce a lien, and actions to recover of Kalaw in entering into the contracts, to
damages for injury to person or property. In this case, theprejudice of NACOCO and the bad faith of the
the third kind of action is applicable. The defendant BOD for subsequently approving it. The suit involves
maliciously caused the party to incur unnecessary alleged tortious acts.
expense, thus it is injurious to partys property.
NOTE: the case was rendered moot because Because it involves tort, it survived the death of
according to the CFI the parties have arrived at an Kalaw.
amicable settle of their differences and dismissed the
appeal. Sps. Algura v. City of Naga (2006)
Facts:
Board of Liquidators v. Heirs of Deceased Spouses Antonio and Lorencita Algura filed an action
Maximo M. Kalaw (1967) for damages against the city government of Naga for
Facts: demolishing their house. Allegedly, the house
NACOCO was established with Maxilom kalaw as blocked the road right of way and was thus a
general maanger. It was authorized to buy and sell nuisance per se. The spouses filed a motion for them
coconut products to get rid of foreigner middlemen to litigate as indigents, attaching thereto documentary
who employed unscrupulous schemes to earn so proof that Antonio, a policeman, had a monthly gross
much to the detriment of poor coconut planters. income of P10,474 and a net pay of P3,616.99.
NACOCO, through Maximo Kalaw, entered into Initially, the motion was granted.
copra trading contracts with major copra buyers here The respondents filed a motion to disqualify
and abroad, including General Foods, Pacific petitioners from non-payment of filing fees.
Vegetable Company, and Louis Dreyfus Co. According to respondents, the first floor of the
However, 3 typhoons devastated the country and the petitioners 2-story house had a sari-sari store and a
coconut trees were severely damaged. The copra computer shop. The second floor was the petitioners
trading contracts executed by NACOCO became residence and was also partly rented to boarders.
unprofitable. Petitioners were disqualified as indigent litigants
Louis Dreyfus Company, sued NACOCO for because they were not able to meet the standards
undelivered copra. under Rule 141, Section 18 (used to be Sec. 16, now
NACOCO as a separate juridical personality, sued its Sec. 19) which sets a specific qualifying amount (at
own Board of Directors headed by its general that time, those outside MM having a gross income
manager Maximo Kalaw, for negligence and bad faith not exceeding 1,500) for pauper litigants.
for entering into the unprofitable contracts.
during the pendency of the case, NACOCO was Petitioners now challenge this ruling.
abolished and the Board of Liquidators was entrusted
with settling and closing its affairs. Later on, Maximo Issue: w/n the disqualification order was proper
Kalaw died. Held: NO, Rule 141, Section 19 (previously Sec. 16
and Sec.18) providing for definite standards (gross
Issues: w/N the action was personal to Maximo income) for pauper litigants does not conflict with
Kalaw Rule 3, Sec. 21.
W/N the action survived the death of Kalaw It is true that the petitioners failed to meet the
requirements of Rule 141, Sec.19 but it was wrong to
Held: No. The action was not personal to Kalaw. disqualify them outright. The court should have
Heirs of Kalaw: the judgment is unenforceable called for a hearing,` as provided in Rule 3, Sec.21,
against them because the action was a claim for to ascertain the petitioners financial status. Only
money against the decedent, arising from contract, after the hearing can the judge decide on whether or
express or implied, which must be filed in the estate not they qualify to litigate as indigents.