[G.R. No. 73765. August 26, 1991.] and HK$3,965.50 at the rates of 1.7% per month (or HK$111.
and HK$3,965.50 at the rates of 1.7% per month (or HK$111.40 per day), 18.5% per annum (or
HANG LUNG BANK, LTD., petitioner, vs. HON. FELINTRIYE G. SAULOG, Presiding Judge,
Regional Trial Court, National Capital Judicial Region, Branch CXLII, Makati, Metro Manila
and CORDOVA CHIN SAN, respondents.
Belo, Abiera & Associates for petitioner.
Castelo Law Office for private respondent.
DECISION
FERNAN,C. J p:
Challenged in this petition for certiorari which is anchored on grave abuse of discretion, are
two orders of the Regional Trial Court, Branch CXLII of Makati, Metro Manila dismissing the
complaint for collection of a sum of money and denying the motion for reconsideration of the
dismissal order on the ground that petitioner, a Hongkong-based bank, is barred by the
General Banking Act from maintaining a suit in this jurisdiction.
The records show that on July 18, 1979, petitioner Hang Lung Bank, Ltd., which was not doing
business in the Philippines, entered into two (2) continuing guarantee agreements with
Cordova Chin San in Hongkong whereby the latter agreed to pay on demand all sums of money
which may be due the bank from Worlder Enterprises to the extent of the total amount of two
hundred fifty thousand Hongkong dollars (HK $250,000). 1
Worlder Enterprises having defaulted in its payment, petitioner filed in the Supreme Court of
Hongkong a collection suit against Worlder Enterprises and Chin San. Summonses were
allegedly served upon Worlder Enterprises and Chin San at their addresses in Hongkong but
they failed to respond thereto. prLL
Consequently, the Supreme Court of Hongkong issued the following:
"J U D G M E N T
"THE 14th DAY OF JUNE, 1984
"No notice of intention to defend having been given by the 1st and 2nd Defendants herein, IT
IS THIS DAY ADJUDGED that:
"(1) the 1st Defendant (Ko Ching Chong Trading otherwise known as the Worlder
Enterprises) do pay the Plaintiff the sum of HK$, 117,968.36 together with interest on the
respective principal sums of HK$196,591.38, HK$200,216.29, HK$526,557.63, HK$49,350.00
HK$101.48 per day), 1.85% per month (or HK$324.71 per day), 1.55% per month (or HK$25.50
per day) and 1.7% per month (or HK$2.25 per day) respectively from 4th May 1984 up to the
date of payment; and
"(2) the 2nd Defendant (Cordova Chin San) do pay the Plaintiff the sum of HK$279,325.00
together with interest on the principal sum of HK$250,000.00 at the rate of 1.7% per month
(or HK$141.67 per day) from 4th May 1984 up to the date of payment.
"AND IT IS ADJUDGED that the 1st and 2nd Defendants do pay the Plaintiff the sum of
HK$970.00 fixed costs.
"N.J. BARNETT
Registrar"
Thereafter, petitioner through counsel sent a demand letter to Chin San at his Philippine
address but again, no response was made thereto. Hence, on October 18, 1984, petitioner
instituted in the court below an action seeking "the enforcement of its just and valid claims
against private respondent, who is a local resident, for a sum of money based on a transaction
which was perfected, executed and consummated abroad." 2
In his answer to the complaint, Chin San raised as affirmative defenses: lack of cause of action,
incapacity to sue and improper venue. 3
Pre-trial of the case was set for June 17, 1985 but it was postponed to July 12, 1985. However,
a day before the latter pre-trial date, Chin San filed a motion to dismiss the case and to set the
same for hearing the next day. The motion to dismiss was based on the grounds that petitioner
had no legal capacity to sue and that venue was improperly laid.
Acting on said motion to dismiss, on December 20, 1985, the lower court 4 issued the following
order:
"On defendant Chin San Cordova's motion to dismiss, dated July 10, 1985; plaintiff's opposition,
dated July 12, 1985; defendant's reply, dated July 22, 1985; plaintiff's supplemental opposition,
dated September 13, 1985; and defendant's rejoinder filed on September 23, 1985, said
motion to dismiss is granted.
"Section 14, General Banking Act provides:
'No foreign bank or banking corporation formed, organized or existing under any laws other
than those of the Republic of the Philippines, shall be permitted to transact business in the
Philippines, or maintain by itself any suit for the recovery of any debt, claims or demands
1
whatsoever until after it shall have obtained, upon order of the Monetary Board, a license for
that purpose.'
"Plaintiff Hang Lung Bank, Ltd. with business and postal address at the 3rd Floor, United Centre,
95 Queensway, Hongkong, does not do business in the Philippines. The continuing guarantee,
Annexes 'A' and 'B' appeared to have been transacted in Hongkong. Plaintiff's Annex 'C' shows
that it had already obtained judgment from the Supreme Court of Hongkong against defendant
involving the same claim on June 14, 1984.
"The cases of Mentholatum Company, Inc. versus Mangaliman, 72 Phil. 524 and Eastern
Seaboard Navigation, Ltd. versus Juan Ysmael & Company, Inc., 102 Phil. 1-8, relied upon by
plaintiff, deal with isolated transaction in the Philippines of foreign corporation. Such
transaction though isolated is the one that conferred jurisdiction to Philippine courts, but in
the instant case, the transaction occurred in Hongkong.
"Case dismissed. The instant complaint not the proper action.
"SO ORDERED." 5
Petitioner filed a motion for the reconsideration of said order but it was denied for lack of
merit. 6 Hence, the instant petition for certiorari seeking the reversal of said orders "so as to
allow petitioner to enforce through the court below its claims against private respondent as
recognized by the Supreme Court of Hongkong." 7
Petitioner asserts that the lower court gravely abused its discretion in: (a) holding that the
complaint was not the proper action for purposes of collecting the amount guaranteed by Chin
San "as recognized and adjudged by the Supreme Court of Hongkong;" (b) interpreting Section
14 of the General Banking Act as precluding petitioner from maintaining a suit before
Philippine courts because it is a foreign corporation not licensed to do business in the
Philippines despite the fact that it does not do business here, and (c) impliedly sustaining
private respondent's allegation of improper venue. LLpr
We need not detain ourselves on the issue of improper venue. Suffice it to state that private
respondent waived his right to invoke it when he forthwith filed his answer to the complaint
thereby necessarily implying submission to the jurisdiction of the court. 8
The resolution of this petition hinges on a determination of whether petitioner foreign
banking corporation has the capacity to file the action below.
Private respondent correctly contends that since petitioner is a bank, its capacity to file an
action in this jurisdiction is governed by the General Banking Act (Republic Act No. 337),
particularly Section 14 thereof which provides:
"SEC. 14. No foreign bank or banking corporation formed, organized or existing under any laws
other than those of the Republic of the Philippines shall be permitted to transact business in
the Philippines, or maintain by itself or assignee any suit for the recovery of any debt, claims,
or demand whatsoever, until after it shall have obtained, upon order of the Monetary Board,
a license for that purpose from the Securities and Exchange Commissioner. Any officer,
director or agent of any such corporation who transacts business in the Philippines without
the said license shall be punished by imprisonment for not less than one year nor more than
ten years and by a fine of not less than one thousand pesos nor more than ten thousand
pesos." (45 O.G. No. 4, 1647, 1649-1650).
In construing this provision, we adhere to the interpretation given by this Court to the almost
identical Section 69 of the old Corporation Law (Act No. 1459) which reads:
"SEC. 69. No foreign corporation or corporation formed, organized, or existing under any laws
other than those of the Philippines shall be permitted to transact business in the Philippines
or maintain by itself or assignee any suit for the recovery of any debt, claim, or demand
whatever, unless it shall have the license prescribed in the section immediately preceding. Any
officer, director or agent of the corporation or any person transacting business for any foreign
corporation not having the license prescribed shall be punished by imprisonment for not less
than six months nor more than two years or by a fine of not less than two hundred pesos nor
more than one thousand pesos, or by both such imprisonment and fine, in the discretion of
the Court."
In a long line of cases, this Court has interpreted this last quoted provision as not altogether
prohibiting a foreign corporation not licensed to do business in the Philippines from suing or
maintaining an action in Philippine courts. 9 What it seeks to prevent is a foreign corporation
doing business In the Philippines without a license from gaining access to Philippine courts. As
elucidated in Marshall-Wells Co. vs. Elser & Co., 46 Phil. 70.
"The object of the statute was to subject the foreign corporation doing business in the
Philippines to the jurisdiction of its courts. The object of the statute was not to prevent it from
performing single acts but to prevent it from acquiring a domicile for the purpose of business
without taxing the steps necessary to render it amenable to suit in the local courts. The
implication of the law is that it was never the purpose of the Legislature to exclude a foreign
corporation which happens to obtain an isolated order for business from the Philippines from
securing redress from Philippine courts, and thus, in effect, to permit persons to avoid their
contract made with such foreign corporation. The effect of the statute preventing foreign
corporations from doing business and from bringing actions in the local courts, except on
compliance with elaborate requirements, must not be unduly extended or improperly applied.
2
It should not be construed to extend beyond the plain meaning of its terms, considered in
connection with its object, and in connection with the spirit of the entire law."
The fairly recent case of Universal Shipping Lines vs. Intermediate Appellate Court, 10
although dealing with the amended version of Section 69 of the old Corporation Code, Section
133 of the Corporation Code (Batas Pambansa Blg. 68), but which is nonetheless apropos,
states the rule succinctly: "it is not the lack of the prescribed license (to do business in the
Philippines) but doing business without license, which bars a foreign corporation from access
to our courts."
Thus, we have ruled that a foreign corporation not licensed to do business in the Philippines
may file a suit in this country due to the collision of two vessels at the harbor of Manila 11
and for the loss of goods bound for Hongkong but erroneously discharged in Manila. 12
Indeed, the phraseologies of Section 14 of the General Banking Act and its almost identical
counterpart Section 69 of the old Corporation Code are misleading in that they seem to require
a foreign corporation, including a foreign bank or banking corporation, not licensed to do
business and not doing business in the Philippines to secure a license from the Securities and
Exchange Commission before it can bring or maintain an action in Philippine courts. To avert
such misimpression, Section 133 of the Corporation Code is now more plainly worded thus:
"No foreign corporation transacting business in the Philippines without a license, or its
successors or assigns, shall be permitted to maintain or intervene in any action, suit or
proceeding in any court or administrative agency of the Philippines."
Under this provision, we have ruled that a foreign corporation may sue in this jurisdiction for
infringement of trademark and unfair competition although it is not doing business in the
Philippines 13 because the Philippines was a party to the Convention of the Union of Paris for
the Protection of Industrial Property. 14
We even went further to say that a foreign corporation not licensed to do business in the
Philippines may not be denied the right to file an action in our courts for an isolated transaction
in this country. 15
Since petitioner foreign banking corporation was not doing business in the Philippines, it
may not be denied the privilege of pursuing its claims against private respondent for a
contract which was entered into and consummated outside the Philippines. Otherwise we
will be hampering the growth and development of business relations between Filipino citizens
and foreign nationals. Worse, we will be allowing the law to serve as a protective shield for
unscrupulous Filipino citizens who have business relationships abroad. prLL
In its pleadings before the court, petitioner appears to be in a quandary as to whether the suit
below is one for enforcement or recognition of the Hongkong judgment. Its complaint states:
"COMES NOW Plaintiff, by undersigned counsel, and to this Honorable Court, most respectfully
alleges that:
"1. Plaintiff is a corporation duly organized and existing under and by virtue of the laws
of Hongkong with business and postal address at the 3rd Floor, United Centre, 95 Queensway,
Hongkong, not doing business in the Philippines, but is suing for this isolated transaction, but
for purposes of this complaint may be served with summons and legal processes of this
Honorable Court, at the 6th Floor, Cibeles Building, 6780 Ayala Avenue, Makati, Metro Manila,
while defendant Cordova Chin San, may be served with summons and other legal processes of
this Honorable Court at the Municipality of Moncada, Province of Tarlac, Philippines;
"2. On July 18, 1979 and July 25, 1980, the defendant executed Continuing Guarantees,
in consideration of plaintiff's from time to time making advances, or coming to liability or
discounting bills or otherwise giving credit or granting banking facilities from time to time to,
or on account of the Wolder Enterprises (sic), photocopies of the Contract of Continuing
Guarantees are hereto attached as Annexes 'A' and 'B', respectively, and made parts hereof;
"3. In June 1984, a complaint was filed by plaintiff against the Wolder Enterprises (sic)
and defendant Cordova Chin San, in The Supreme Court of Hongkong, under Case No. 3176,
and pursuant to which complaint, a judgment dated 14th day of July, 1984 was rendered by
The Supreme Court of Hongkong ordering to (sic) defendant Cordova Chin San to pay the
plaintiff the sum of HK$279,325.00 together with interest on the principal sum of
HK$250,000.00 at the rate of HK$1.7% per month or (HK$141.67) per day from 4th May, 1984
up to the date the said amount is paid in full, and to pay the sum of HK$970.00 as fixed cost, a
photocopy of the Judgment rendered by The Supreme Court of Hongkong is hereto attached
as Annex 'C' and made an integral part hereof;
"4. Plaintiff has made demands upon the defendant in this case to pay the aforesaid
amount the last of which is by letter dated July 16, 1934 sent by undersigned counsel, a
photocopy of the letter of demand is hereto attached as Annex 'D' and the Registry Return
Card hereto attached as Annex 'E' respectively, and made parts hereof. However, this
notwithstanding, defendant failed and refused and still continue to fail and refuse to make any
payment to plaintiff on the aforesaid amount of HK$279,325.00 plus interest on the principal
sum of HK$250,000.00 at the rate of (HK$1141.67) per day from May 4, 1984 up to the date of
payment;
"5. In order to protect and safeguard the rights and interests of herein plaintiff, it has
engaged the services of undersigned counsel, to file the suit at bar, and for whose services it
3
has agreed to pay an amount equivalent to 25% of the total amount due and owing, as of and
by way of attorney's fees plus costs of suit.

"WHEREFORE, premises considered, it is most respectfully prayed of this Honorable Court that
judgment be rendered ordering the defendant:

"a) To pay plaintiff the sum of HK$279,325.00 together with interest on the principal
sum of HK$250,000.00 at the rate of HK$1.7% (sic) per month (or HK$141.67 per day) from
May 4, 1984 until the aforesaid amount is paid in full;

"b) To pay an amount equivalent to 25% of the total amount due and demandable as of
and by way of attorney's fees, and

"c) To pay costs of suit, and

"Plaintiff prays for such other and further reliefs, to which it may by law and equity, be
entitled." 16

The complaint therefore appears to be one of the enforcement of the Hongkong judgment
because it prays for the grant of the affirmative relief given by said foreign judgment. 17
Although petitioner asserts that it is merely seeking the recognition of its claims based on the
contract sued upon and not the enforcement of the Hongkong judgment, 18 it should be noted
that in the prayer of the complaint, petitioner simply copied the Hongkong judgment with
respect to private respondent's liability. prLL

However, a foreign judgment may not be enforced if it is not recognized in the jurisdiction
where affirmative relief is being sought. Hence, in the interest of justice, the complaint should
be considered as a petition for the recognition of the Hongkong judgment under Section 50
(b), Rule 39 of the Rules of Court in order that the defendant, private respondent herein, may
present evidence of lack of jurisdiction, notice, collusion, fraud or clear mistake of fact and law,
if applicable.

WHEREFORE, the questioned orders of the lower court are hereby set aside. Civil Case No.
8762 is reinstated and the lower court is directed to proceed with dispatch in the disposition
of said case. This decision is immediately executory. No costs.

SO ORDERED.

4
[G.R. No. L-27906. January 8, 1987.]
CONVERSE RUBBER CORPORATION, petitioner, vs. UNIVERSAL RUBBER PRODUCTS, INC. and
TIBURCIO S. EVALLE, DIRECTOR OF PATENTS, respondents.
Paredes, Poblador, Nazareno, Azada & Tomacruz for petitioner.
RESOLUTION
FERNAN, J p:
The undisputed facts of the case are as follows:
Respondent Universal Rubber Products, Inc. filed an application with the Philippine Patent
office for registration of the trademark "UNIVERSAL CONVERSE AND DEVICE" used on rubber
shoes and rubber slippers.
Petitioner Converse Rubber Corporation filed its opposition to the application for registration
on grounds that:
a] The trademark sought to be registered is confusingly similar to the word
"CONVERSE" which is part of petitioner's corporate name "CONVERSE RUBBER CORPORATION"
as to likely deceive purchasers of products on which it is to be used to an extent that said
products may be mistaken by the unwary public to be manufactured by the petitioner; and,
b] The registration of respondent's trademark will cause great and irreparable injury to
the business reputation and goodwill of petitioner in the Philippines and would cause damage
to said petitioner within the meaning of Section 8, R.A. No. 166, as amended.
Thereafter, respondent filed its answer and at the pre-trial, the parties submitted the following
partial stipulation of facts:
"1] The petitioner's corporate name is 'CONVERSE RUBBER CORPORATION' and has been
in existence since July 31, 1946; it is duly organized under the laws of Massachusetts, USA and
doing business at 392 Pearl St., Malden, County of Middlesex, Massachusetts;
2] Petitioner is not licensed to do business in the Philippines and it is not doing business
on its own in the Philippines; and,
3] Petitioner manufactures rubber shoes and uses thereon the trademarks 'CHUCK
TAYLOR' and 'ALL STAR AND DEVICE'. 1
At the trial, petitioner's lone witness, Mrs. Carmen B. Pacquing, a duly licensed private
merchant with stores at the Sta. Mesa Market and in Davao City, testified that she had been
selling CONVERSE rubber shoes in the local market since 1956 and that sales of petitioner's
rubber shoes in her stores averaged twelve to twenty pairs a month purchased mostly by
basketball players of local private educational institutions like Ateneo, La Salle and San Beda.
Mrs. Pacquing, further stated that she knew petitioner's rubber shoes came from the United
States "because it says there in the trademark Converse Chuck Taylor with star red or blue and
is a round figure and made in U.S.A.." 2 In the invoices issued by her store, the rubber shoes
were described as "Converse Chuck Taylor", 3 "Converse All Star," 4 "All Star Converse Chuck
Taylor, " 5 or "Converse Shoes Chuck Taylor." 6 She also affirmed that she had no business
connection with the petitioner.
Respondent, on the other hand, presented as its lone witness the secretary of said corporation
who testified that respondent has been selling on wholesale basis "Universal Converse"
sandals since 1962 and "Universal Converse" rubber shoes since 1963. Invoices were
submitted as evidence of such sales. The witness also testified that she had no idea why
respondent chose "Universal Converse" as a trademark and that she was unaware of the name
"Converse" prior to her corporation's sale of "Universal Converse" rubber shoes and rubber
sandals.
Eventually, the Director of Patents dismissed the opposition of the petitioner and gave due
course to respondent's application. His decision reads in part:
". . . the only question for determination is whether or not the applicant's partial appropriation
of the Opposer's [petitioner's] corporate name is of such character that in this particular case,
it is calculated to deceive or confuse the public to the injury of the corporation to which the
name belongs . . .
. . . I cannot find anything that will prevent registration of the word 'UNIVERSAL CONVERSE' in
favor of the respondent. In arriving at this conclusion, I am guided by the fact that the opposer
failed to present proof that the single word "CONVERSE' in its corporate name has become so
identified with the corporation that whenever used, it designates to the mind of the public
that particular corporation.
The proofs herein are sales made by a single witness who had never dealt with the petitioner . . .
the entry of Opposer's [petitioner's] goods in the Philippines were not only effected in a very
insignificant quantity but without the opposer [petitioner] having a direct or indirect hand in
the transaction so as to be made the basis for trademark pre-emption. cdphil
Opposer's proof of its corporate personality cannot establish the use of the word 'CONVERSE'
in any sense, as it is already stipulated that it is not licensed to do business in the Philippines,
and is not doing business of its own in the Philippines. If so, it will be futile for it to establish
5
that 'CONVERSE' as part of its corporate name identifies its rubber shoes. Besides, it was also
stipulated that opposer [petitioner], in manufacturing rubber shoes uses thereon the
trademark 'CHUCK TAYLOR' and 'ALL STAR and DEVICE' and none other.
Furthermore, inasmuch as the Opposer never presented any label herein, or specimen of its
shoes, whereon the label may be seen, notwithstanding its witness' testimony touching upon
her identification of the rubber shoes sold in her stores, no determination can be made as to
whether the word 'CONVERSE' appears thereon.
. . . the record is wanting in proof to establish likelihood of confusion so as to cause probable
damage to the Opposer." 7
Its motion for reconsideration having been denied by the respondent Director of Patents,
petitioner instituted the instant petition for review.
As correctly phrased by public respondent Director of Patents, the basic issue presented for
our consideration is whether or not the respondent's partial appropriation of petitioner's
corporate name is of such character that it is calculated to deceive or confuse the public to the
injury of the petitioner to which the name belongs.
"A trade name is any individual name or surname, firm name, device or word used by
manufacturers, industrialists, merchants and others to identify their businesses, vocations or
occupations." 8 "As the trade name refers to the business and its goodwill . . . the trademark
refers to the goods." 9 The ownership of a trademark or tradename is a property right which
the owner is entitled to protect "since there is damage to him from confusion or reputation or
goodwill in the mind of the public as well as from confusion of goods. The modern trend is to
give emphasis to the unfairness of the acts and to classify and treat the issue as fraud." 10
From a cursory appreciation of the petitioner's corporate name "CONVERSE RUBBER
CORPORATION,' it is evident that the word "CONVERSE" is the dominant word which identifies
petitioner from other corporations engaged in similar business. Respondent, in the stipulation
of facts, admitted petitioner's existence since 1946 as a duly organized foreign corporation
engaged in the manufacture of rubber shoes. This admission necessarily betrays its knowledge
of the reputation and business of petitioner even before it applied for registration of the
trademark in question. Knowing, therefore, that the word "CONVERSE" belongs to and is being
used by petitioner, and is in fact the dominant word in petitioner's corporate name,
respondent has no right to appropriate the same for use on its products which are similar to
those being produced by petitioner.
"A corporation is entitled to the cancellation of a mark that is confusingly similar to its
corporate name." 11 "Appropriation by another of the dominant part of a corporate name is
an infringement." 12
Respondent's witness had no idea why respondent chose "UNIVERSAL CONVERSE" as
trademark and the record discloses no reasonable explanation for respondent's use of the
word "CONVERSE" in its trademark. Such unexplained use by respondent of the dominant
word of petitioner's corporate name lends itself open to the suspicion of fraudulent motive to
trade upon petitioner's reputation, thus:
"A boundless choice of words, phrases and symbols is available to one who wishes a trademark
sufficient unto itself to distinguish his product from those of others. When, however, there is
no reasonable explanation for the defendant's choice of such a mark though the field for his
selection was so broad, the inference is inevitable that it was chosen deliberately to deceive."
13
The testimony of petitioner's witness, who is a legitimate trader as well as the invoices
evidencing sales of petitioner's products in the Philippines, give credence to petitioner's claim
that it has earned a business reputation and goodwill in this country. The sales invoices
submitted by petitioner's lone witness show that it is the word "CONVERSE" that mainly
identifies petitioner's products, i.e. "CONVERSE CHUCK TAYLOR," 14 "CONVERSE ALL STAR," 15
"ALL STAR CONVERSE CHUCK TAYLOR," 16 or "CONVERSE SHOES CHUCK and TAYLOR." 17 Thus,
contrary to the determination of the respondent Director of Patents, the word "CONVERSE"
has grown to be identified with petitioner's products, and in this sense, has acquired a second
meaning within the context of trademark and tradename laws.
Furthermore, said sales invoices provide the best proof that there were actual sales of
petitioner's products in the country and that there was actual use for a protracted period of
petitioner's trademark or part thereof through these sales. "The most convincing proof of use
of a mark in commerce is testimony of such witnesses as customers, or the orders of buyers
during a certain period." 18 Petitioner's witness, having affirmed her lack of business
connections with petitioner, has testified as such customer, supporting strongly petitioner's
move for trademark pre-emption.
The sales of 12 to 20 pairs a month of petitioner's rubber shoes cannot be considered
insignificant, considering that they appear to be of high expensive quality, which not too many
basketball players can afford to buy. Any sale made by a legitimate trader from his store is a
commercial act establishing trademark rights since such sales are made in due course of
business to the general public, not only to limited individuals. It is a matter of public knowledge
that all brands of goods filter into the market, indiscriminately sold by jobbers, dealers and
merchants not necessarily with the knowledge or consent of the manufacturer. Such actual
6
sale of goods in the local market establishes trademark use which serves as the basis for any
action aimed at trademark pre-emption. It is a corollary logical deduction that while Converse
Rubber Corporation is not licensed to do business in the country and is not actually doing
business here, it does not mean that its goods are not being sold here or that it has not earned
a reputation or goodwill as regards its products. The Director of Patents was, therefore, remiss
in ruling that the proofs of sales presented "was made by a single witness who had never dealt
with nor had never known opposer [petitioner] . . . without Opposer having a direct or indirect
hand in the transaction to be the basis of trademark pre-emption."
Another factor why respondent's application should be denied is the confusing similarity
between its trademark "UNIVERSAL CONVERSE AND DEVICE" and petitioner's corporate name
and/or its trademarks "CHUCK TAYLOR" and "ALL STAR DEVICE" which could confuse the
purchasing public to the prejudice of petitioner. cdll
The trademark of respondent "UNIVERSAL CONVERSE and DEVICE" is imprinted in a circular
manner on the side of its rubber shoes. In the same manner, the trademark of petitioner which
reads "CONVERSE CHUCK TAYLOR" is imprinted on a circular base attached to the side of its
rubber shoes.
The determinative factor in ascertaining whether or not marks are confusingly similar to each
other "is not whether the challenged mark would actually cause confusion or deception of the
purchasers but whether the use of such mark would likely cause confusion or mistake on the
part of the buying public. It would be sufficient, for purposes of the law, that the similarity
between the two labels is such that there is a possibility or likelihood of the purchaser of the
older brand mistaking the new brand for it." 19 Even if not all the details just mentioned were
identical, with the general appearance alone of the two products, any ordinary, or even
perhaps even [sic] a not too perceptive and discriminating customer could be deceived . . ." 20
When the law speaks of "purchaser," the reference is to ordinary average purchasers. 21 "It is
not necessary in either case that the resemblance be sufficient to deceive experts, dealers, or
other persons specially familiar with the trademark or goods involved." 22
The similarity in the general appearance of respondent's trademark and that of petitioner
would evidently create a likelihood of confusion among the purchasing public. But even
assuming, arguendo, that the trademark sought to be registered by respondent is distinctively
dissimilar from those of the petitioner, the likelihood of confusion would still subsists, not on
the purchaser's perception of the goods but on the origins thereof. By appropriating the word
"CONVERSE," respondent's products are likely to be mistaken as having been produced by
petitioner. "The risk of damage is not limited to a possible confusion of goods but also includes
confusion of reputation if the public could reasonably assume that the goods of the parties
originated from the same source. 23
It is unfortunate that respondent Director of Patents has concluded that since the petitioner is
not licensed to do business in the country and is actually not doing business on its own in the
Philippines, it has no name to protect in the forum and thus, it is futile for it to establish that
"CONVERSE" as part of its corporate name identifies its rubber shoes. That a foreign
corporation has a right to maintain an action in the forum even if it is not licensed to do
business and is not actually doing business on its own therein has been enunciated many times
by this Court. In La Chemise Lacoste, S.A. vs. Fernandez, 129 SCRA 373, this Court, reiterating
Western Equipment and Supply Co. vs. Reyes, 51 Phil. 115, stated that: LibLex
". . . a foreign corporation which has never done any business in the Philippines and which is
unlicensed and unregistered to do business here, but is widely and favorably known in the
Philippines through the use therein of its products bearing its corporate and tradename, has a
legal right to maintain an action in the Philippines to restrain the residents and inhabitants
thereof from organizing a corporation therein bearing the same name as the foreign
corporation, when it appears that they have personal knowledge of the existence of such a
foreign corporation, and it is apparent that the purpose of the proposed domestic corporation
is to deal and trade in the same goods as those of the foreign corporation.
"We further held:
xxx xxx xxx
"'That company is not here seeking to enforce any legal or control rights arising from, or
growing out of, any business which it has transacted in the Philippine Islands. The sole purpose
of the action:
"'Is to protect its reputation, its corporate name, its goodwill, whenever that reputation,
corporate name or goodwill have, through the natural development of its trade, established
themselves.' And it contends that its rights to the use of its corporate and trade name:
"'Is a property right, a right in rem, which it may assert and protect against all the world, in any
of the courts of the world even in jurisdictions where it does not transact business just
the same as it may protect its tangible property, real or personal against trespass, or
conversion. Citing sec. 10, Nims on Unfair Competition and Trademarks and cases cited; secs.
21-22, Hopkins on Trademarks, Trade Names and Unfair Competition and cases cited.' That
point is sustained by the authorities, and is well stated in Hanover Star Mining Co. vs. Allen and
Wheeler Co. [208 Fed., 513], in which the syllabus says:
"'Since it is the trade and not the mark that is to be protected, a trademark acknowledges no
territorial boundaries of municipalities or states or nations, but extends to every market where
the trader's goods have become known and identified by the use of the mark.'"
7
The ruling in the aforecited case is in consonance with the Convention of the Union of Paris for
the Protection of Industrial Property to which the Philippines became a party on September
27, 1965. Article 8 thereof provides that "a trade name [corporate name] shall be protected in
all the countries of the Union without the obligation of filing or registration, whether or not it
forms part of the trademark." [emphasis supplied]

The object of the Convention is to accord a national of a member nation extensive protection
"against infringement and other types of unfair competition" [Vanitary Fair Mills, Inc. vs. T.
Eaton Co., 234 F. 2d 633]

The mandate of the aforementioned Convention finds implementation in Sec. 37 of RA No.

166, otherwise known as the Trademark Law: Cdpr

"Sec. 37. Rights of Foreign Registrants-Persons who are nationals of, domiciled in, or have a
bona fide or effective business or commercial establishment in any foreign country, which is a
party to an international convention or treaty relating to marks or tradenames on the
repression of unfair competition to which the Philippines may be a party, shall be entitled to
the benefits and subject to the provisions of this Act . . .

"Tradenames of persons described in the first paragraph of this section shall be protected
without the obligation of filing or registration whether or not they form parts of marks."
[emphasis supplied.]

WHEREFORE, the decision of the Director of Patents is hereby set aside and a new one entered
denying Respondent Universal Rubber Products, Inc.'s application for registration of the
trademark "UNIVERSAL CONVERSE AND DEVICE" on its rubber shoes and slippers.

SO ORDERED.

8
SECOND DIVISION
[G.R. No. 73722. February 26, 1990.]
THE COMMISSIONER OF CUSTOMS, petitioner, vs. K.M.K. GANI, INDRAPAL & CO., and the
HONORABLE COURT OF TAX APPEALS, respondents.
Armando S. Padilla for private respondent.
DECISION
SARMIENTO, J p:
This is a review of the decision of the Court of Tax Appeals disposing as follows:
WHEREFORE, the subject ten (10) cartons of Articles are hereby released to the carrying airline
for immediate transshipment to the country of destination under the terms of the contract of
carriage. No costs.
SO ORDERED. 1
The pertinent facts may be summarized thus:
On September 11, 1982, two (2) containers loaded with 103 cartons of merchandise covered
by eleven (11) airway bills of several supposedly Singapore-based consignees arrived at the
Manila International Airport on board Philippine Air Lines (PAL) Flight PR 311 from Hongkong.
The cargoes were consigned to these different entities: K.M.K Gani (hereafter referred to as
K.M.K.) and Indrapal and Company (hereafter referred to as INDRAPAL), the private
respondents in the petition before us; and Sin Hong Lee Trading Co., Ltd., AAR TEE Enterprises,
and C. Ratilal, all purportedly based in Singapore.
While the cargoes were at the Manila International Airport, a "reliable source" tipped off the
Bureau of Customs that the said cargoes were going to be unloaded in Manila. Forthwith, the
Bureau's agency on such matters, the Suspected Cargo and Anti-Narcotics (SCAN), dispatched
an agent to verify the information. Upon arriving at the airport, the SCAN agent saw an empty
PAL van parked directly alongside the plane's belly from which cargoes were being unloaded.
When the SCAN agent asked the van's driver why he was at the site, the driver drove away in
his vehicle. The SCAN agent then sequestered the unloaded cargoes. llcd
The seized cargoes consisted of 103 cartons "containing Mogadon and Mandrax tablets, Sony
T.V. sets 1 546R/176R kw, Sony Betamax SL5800, and SL5000, Cassette Stereos with
Headphone (ala walkman), Casio Calculators, Pioneer Car Stereos, Yamaha Watches, Eyeglass
Frames, Sunglasses, Plastic Utility Bags, Perfumes, etc." These goods were transferred to the
International Cargo Terminal under Warrant of Seizure and Detention and thereafter subjected
to Seizure and Forfeiture proceedings for "technical smuggling."
At the hearing, Atty. Armando S. Padilla entered his appearance for the consignees K.M.K. and
INDRAPAL. The records of the case do not show any appearance of the consignees in person.
Atty. Padilla moved for the transshipment of the cargoes consigned to his clients. On the other
hand, the Solicitor General avers that K.M.K. and INDRAPAL did not present any testimonial or
documentary evidence. The Collector of Customs at the then Manila International Airport
(MIA), now Ninoy Aquino International Airport (NAIA), ruled for the forfeiture of all the cargoes
in the said containers (Seizure Identification No. 4993-82, dated July 14, 1983). Consequently,
Atty. Padilla ostensibly on behalf of his two clients, K.M.K. and INDRAPAL appealed the order
to the Commissioner of Customs. 2
The Commissioner of Customs affirmed the finding of the Collector of Customs (Customs
Case No. 83-85, January, 1984), of the presence of the intention to import the said goods in
violation of the Dangerous Drugs Act 3 and Central Bank Circular No. 808 in relation to the
Tariff and Customs Code. 4
The Commissioner added the following findings of fact: 5
1. There is a direct flight from Hongkong to Singapore, thus making the transit through
Manila more expensive, tedious, and circuitous.
2. The articles were grossly misdeclared, considering that Singapore is a free port.
3. The television sets and betamax units seized were of the American standard which
is popularly used in Manila, and not of the European standard which is used in Singapore.
4. One of the shippers is a Filipino national with no business connection with her
alleged consignee in Singapore.
5. The alleged consignee of the prohibited drugs confiscated has no authority to import
Mogadon or Mandrax.
Upon these findings, the Commissioner concluded that there was an "intent to unlade" in
Manila, thus, an attempt to smuggle goods into the country.
Taking exception to these findings, Atty. Armando S. Padilla, again as counsel of the
consignees K.M.K and Indrapal, appealed to the respondent Court of Tax Appeals (CTA). He
argued in the CTA that K.M.K. and INDRAPAL were "entitled to the release of their cargoes for
transshipment to Singapore so manifested and covered by the Airway bills as in transit, . . .
contending that the goods were never intended importations into the Philippines and the
9
same suffer none of any affiliating breaches allegedly found attributable to the other
shipments under the Customs and related laws." 6
The CTA reversed the decision of the Commissioner of Customs. Hence this petition.
The petitioner raises the following errors:
1. THE COURT OF TAX APPEALS ERRED IN ENTERTAINING THE PETITION FOR REVIEW
NOTWITHSTANDING HEREIN PRIVATE RESPONDENTS' FAILURE TO ESTABLISH THEIR
PERSONALITY TO SUE IN A REPRESENTATIVE CAPACITY.
2. THE COURT OF TAX APPEALS ERRED IN RULING THAT THE SUBJECT GOODS WERE
IMPORTATIONS NOT INTENDED FOR THE PHILIPPINES BUT FOR SINGAPORE, THUS, NOT
VIOLATING THE LAW ON TECHNICAL SMUGGLING UNDER THE TARIFF AND CUSTOMS CODE.
The issues before us are therefore: (1) whether or not the private respondents failed to
establish their personality to sue in a representative capacity, hence making their action
dismissable, and (2) whether or not the subject goods were importations intended for the
Philippines in violation of the Tariff and Customs Code. cdphil
We answer both questions in the affirmative.
The law is clear: "No foreign corporation transacting business in the Philippines without a
license, or its successors or assigns, shall be permitted to maintain or intervene in any action,
suit or proceeding in any court or administrative agency of the Philippines; but such
corporation may be sued or proceeded against before Philippine courts or administrative
tribunals on any valid cause of action recognized under Philippine laws." 7
However, the Court in a long line of cases has held that a foreign corporation not engaged in
business in the Philippines may not be denied the right to file an action in the Philippine
courts for an isolated transaction. 8
Therefore, the issue on whether or not a foreign corporation which does not have a license
to engage in business in this country can seek redress in Philippine courts boils down as to
whether it is doing business or merely entered into an isolated transaction in the Philippines.
The fact that a foreign corporation is not doing business in the Philippines must be disclosed
if it desires to sue in Philippine courts under the "isolated transaction rule." Without this
disclosure, the court may choose to deny it the right to sue. 9
In the case at bar, the private respondents K.M.K. and INDRAPAL aver that they are "suing
upon a singular and isolated transaction." But they failed to prove their legal existence or
juridical personality as foreign corporations. Their unverified petition before the respondent
Court of Tax Appeals merely stated:
1. That petitioner "K.M.K. Gani" is a single proprietorship doing business in accordance
with the laws of Singapore with address at 99 Greenfield Drive, Singapore, Rep. of Singapore,
while Petitioner "INDRAPAL and COMPANY" is a firm doing business in accordance with the
laws of Singapore with office address at 97 High Street, Singapore 0641, Republic of Singapore,
and summons as well as other Court process may be served to the undersigned lawyer;
2. That the Petitioner's (sic) are sueing (sic) upon a singular and isolated transaction. 10
We are cognizant of the fact that under the "isolated transaction rule," only foreign
corporations and not just any business organization or entity can avail themselves of the
privilege of suing before Philippine courts even without a license. Counsel Armando S. Padilla
stated before the respondent Court of Tax Appeals that his clients are "suing upon a singular
and isolated transaction." But there is no proof to show that K.M.K. and INDRAPAL are indeed
what they are represented to be. It has been simply stated by Attorney Padilla that K.M.K. Gani
is "a single proprietorship," while INDRAPAL is "a firm," and both are "doing business in
accordance with the laws of Singapore . . .," with specified addresses in Singapore. In cases of
this nature, these allegations are not sufficient to clothe a claimant of suspected smuggled
goods of juridical personality and existence. The "isolated transaction rule" refers only to
foreign corporations. Here the petitioners are not foreign corporations. They do not even
pretend to be so. The first paragraph of their petition before the Court, containing the
allegation of their identities, does not even aver their corporate character. On the contrary,
K.M.K. alleges that it is a "single proprietorship" while INDRAPAL hides under the vague
identification as a "firm," although both describe themselves with the phrase "doing business
in accordance with the laws of Singapore."
Absent such proof that the private respondents are corporations (foreign or not), the
respondent Court of Tax Appeals should have barred their invocation of the right to sue within
Philippine jurisdiction under the "isolated transaction rule" since they do not qualify for the
availment of such right.
As we had stated before:
But merely to say that a foreign corporation not doing business in the Philippines does not
need a license in order to sue in our courts does not completely resolve the issue in the present
case. The proposition, as stated, refers to the right to sue; the question here refers to pleading
and procedure. It should be noted that insofar as the allegations in the complaint have a
bearing on appellant's capacity to sue, all that is averred is that they are both foreign
corporations existing under the laws of the United States. This averment conjures two
10
alternative possibilities: either they are engaged in business in the Philippines or they are not
so engaged. If the first, they must have been duly licensed in order to maintain this suit; if the
second, if (sic) the transaction sued upon is singular and isolated, no such license is required.
In either case, the qualifying circumstance is an essential part of the element of plaintiff's
capacity to sue and must be affirmatively pleaded. 11
In this connection, we note also a fatal defect in the pleadings of the private respondents.
There is no allegation as to who is the duly authorized representative or resident agent in our
jurisdiction. All we have on record are the pleadings filed by Attorney Armando S. Padilla who
represents himself as the counsel for the private respondents.
xxx xxx xxx
It is incumbent on plaintiff to allege sufficient facts to show that he is concerned with the cause
of action averred, and is the party who has suffered injury by reason of the acts of defendant;
in other words, it is not enough that he alleges a cause of action existing in favor of someone,
but he must show that it exists in favor of himself. The burden should not be placed on
defendant to show that plaintiff is not the aggrieved person and that he has sustained no
damages. It is also necessary for plaintiff to allege facts showing that the causes of action
alleged accrued to him in the capacity in which he sues, and for this purpose it is necessary for
someone for one who sues otherwise than in his individual capacity to allege his authority.
xxx xxx xxx
The plaintiff must show, in his pleading, his right and interest in the subject matter of the suit;
and a complaint which does not show that plaintiff has the requisite interest to enable him to
maintain his action should be dismissed for insufficiency . . . 12
xxx xxx xxx
The appearance of Atty. Armando S. Padilla as counsel for the two claimants would not suffice.
Generally, a "lawyer is presumed to be properly authorized to represent any cause in which he
appears, and no written power of attorney is required to authorize him to appear in court for
his client." 13 Nevertheless, although the authority of an attorney to appear for and on behalf
of a party may be assumed, it can still be questioned or challenged by the adverse party
concerned. 14
The presumption established under the provision of Section 21, Rule 138 of the Revised Rules
of Court is disputable. 15 The requirement for the production of authority is essential because
the client will be bound by his acquiescence resulting from his knowledge that he was being
represented by said attorney. 16
The Solicitor General, representing the petitioner-appellant, not only questions the authority
of Atty. Armando S. Padilla to represent the private respondents but also the latter's capacity
to sue: LLpr
. . . While it is alleged that the summons and court processes may be served to herein private
respondents' counsel who filed the unverified petition before the Court of Tax Appeals, the
allegation would be insufficient for the purpose of binding foreign corporations as in the
instant case. To be sure, the admitted absence of special power of attorney in favor of their
counsel, the relationship with the latter, if at all, is merely that of a lawyer-client relationship
and definitely not one of a principal-agent. Such being the case, said counsel cannot bind nor
compromise the interest of private respondents as it is possible that the latter may disown the
former's representation to avoid civil or criminal liability. In this respect, the Court cannot
assume jurisdiction over the person of private respondents, notwithstanding the filing of the
unverified petition in question.
Apart from the foregoing, Section 4, Rule 8, Revised Rules of Court mandates that facts
showing the capacity of a party to sue or be sued; or the authority of a party to sue or be sued
in a representative capacity; or the legal existence of an organized association of person (sic)
that is made a party, must be averred. In like manner, the rule is settled that in case where the
law denies a foreign corporation to maintain a suit unless it has previously complied with
certain requirements, then such compliance or exemption therefrom, becomes a necessary
averment in the complaint (Atlantic Mutual Inc. Co. v. Cebu Stevedoring Co., Inc. 17 SCRA 1037;
vide: Sec. 4, Rule 8, Revised Rules of Court). In the case at bar, apart from merely alleging that
private respondents are foreign corporation (sic) and that summons may be served to their
counsel, their petition in the Court of Tax Appeals is bereft of any other factual allegation to
show their capacity to sue or be sued in a representative capacity in his jurisdiction. 17
The representation and the extent of the authority of Atty. Padilla have thus been expressly
challenged. But he ignored such challenge which leads us to the only conclusion that he has
no authority to appear for such clients if they exist, which we even doubt. In cases like this, it
is the duty of the government officials concerned to require competent proof of the
representation and authority of any claimant of any goods coming from abroad and seized by
our customs authorities or otherwise appearing to be illegally imported. This desired
meticulousness, strictness if you may, should extend to their representatives and counsel. Our
government has lost considerable sums of money due to such dubious claims or claimants.
Apropos the second issue, suffice it to state that we agree with the findings, already
enumerated and discussed at the outset, made by the Collector of Customs in his decision,
dated July 14, 1983, which was affirmed and amplified by the decision of the Commissioner of
Customs, that those constitute sufficient evidence to support the conclusion that there was an
11
intention to unlade the seized goods in the Philippines instead of its supposed destination,
Singapore. There is no need of belaboring them anymore.

WHEREFORE, the petition is GRANTED; the decision of the Court of Tax Appeals is SET ASIDE,
and the decision of the petitioner is hereby REINSTATED.

No costs.

12
[G.R. No. 97816. July 24, 1992.]
MERRILL LYNCH FUTURES, INC., petitioner, vs. HON. COURT OF APPEALS, and the SPOUSES
PEDRO M. LARA and ELISA G. LARA, respondents.
Sycip, Salazar, Hernandez & Gatmaitan for petitioner.
Renato T. Paguio for private respondent.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; MOTION TO DISMISS; FAILURE TO STATE A
CAUSE OF ACTION; RULE. the Lara Spouses' motion to dismiss was founded on two (2)
grounds: (a) that the plaintiff has no legal capacity to sue, and (b) that the complaint states no
cause of action (Sec. 1 [d], and [g], Rule 16, Rules of Court). As regards the second ground, i.e.,
that the complaint states no cause of action, the settled doctrine of course is that said ground
must appear on the face of the complaint, and its existence may be determined only by the
allegations of the complaint, considering of other facts being proscribed, and any attempt to
prove extraneous circumstances not being allowed. The test of the sufficiency of the facts
alleged in a complaint as constituting a cause of action is whether or not, admitting the facts
alleged, the court might render a valid judgment upon the same in accordance with the prayer
of the complaint. Indeed, it is error for a judge to conduct a preliminary hearing and receive
evidence on the affirmative defense of failure of the complaint to state a cause of action.
2. ID.; ID.; ID.; NO LEGAL CAPACITY TO SUE AS A GROUND; CONSTRUED. The other
ground for dismissal relied upon, i.e., that the plaintiff has no legal capacity to sue may be
understood in two senses: one, that the plaintiff is prohibited or otherwise incapacitated by
law to institute suit in Philippine Courts, or two, although not otherwise incapacitated in the
sense just stated, that it is not a real party in interest.
3. ID.; ID.; ID.; ID.; RULE WHEN SAID GROUND CANNOT BE FOUND IN THE AVERMENTS
OF THE COMPLAINT. The Lara Spouses contend that ML Futures has no capacity to sue them
because the transactions subject of the complaint were had by them, not with the plaintiff ML
FUTURES, but with Merrill Lynch Pierce Fenner & Smith, Inc. Evidence is quite obviously
needed in this situation, for it is not to be expected that said ground, or any facts from which
its existence may be inferred, will be found in the averments of the complaint. When such a
ground is asserted in a motion to dismiss, the general rule governing evidence on motions
applies. The rule is embodied in Section 7, Rule 133 of the Rules of Court. "SEC. 7. Evidence on
motion. When a motion is based on facts not appearing of record the court may hear the
matter on affidavits or depositions presented by the respective parties, but the court may
direct that the matter be heard wholly or partly on oral testimony or depositions."
4. ID.; ID.; ID.; ID.; APPLICATION TO FOREIGN CORPORATIONS DOING BUSINESS IN THE
PHILIPPINES WITHOUT LICENSE; CASE AT BAR. There was, to be sure, no affidavit or
deposition attached to the Lara Spouses' motion to dismiss or thereafter proffered in proof of
the averments of their motion. The motion itself was not verified. What the spouses did do
was to refer in their motion to documents which purported to establish that it was not with
ML FUTURES that they had therefore been dealing, but another, distinct entity, Merril Lynch,
Pierce, Fenner & Smith, Inc., copies of which documents were attached to the motion. It is
significant that ML FUTURES raised no issue relative to the authenticity of the documents thus
annexed to the Laras' motion. In fact, its arguments subsumed the genuineness thereof and
even adverted to one or two of them. Its objection was centered on the propriety of taking
account of those documents as evidence, considering the established principle that no
evidence should be received in the resolution of a motion to dismiss based on an alleged failure
of the complaint to state a cause of action. There being otherwise no question respecting the
genuineness of the documents, nor of their relevance to at least one of the grounds for
dismissal i.e., the prohibition on suits in Philippine Courts by foreign corporations doing
business in the country without license it would have been a superfluity for the Court to
require prior proof of their authenticity, and no error may be ascribed to the Trial Court in
taking account of them in the determination of the motion on the ground, not that the
complaint fails to state a cause of action as regards which evidence is improper and
impermissible but that the plaintiff has no legal capacity to sue respecting which proof
may and should be presented. Neither may ML FUTURES argue with any degree of tenability
that it had been denied due process in the premises. As just pointed out, it was very clear from
the outset that the claim of lack of its capacity to sue was being made to rest squarely on the
documents annexed thereto, and ML FUTURES had more than ample opportunity to impugn
those documents and require their authentication, but did not do so. To sustain its theory that
there should have been identification and authentication, and formal offer, of those
documents in the Trial Court pursuant to the rules of evidence would be to give unwarranted
importance to technicality and make it prevail over the substance of the issue.
5. ID.; ID.; PARTIES IN CIVIL ACTIONS; FOREIGN CORPORATION DOING BUSINESS IN THE
PHILIPPINES WITHOUT LICENSE; CASE AT BAR. The first question then, is, as ML FUTURES
formulates it, whether or not the annexes, assuming them to be admissible, establish that (a)
ML FUTURES is prohibited from suing in Philippine Courts because doing business in the
country without a license, and that (b) it is not a real party in interest since the Lara Spouses
had not been doing business with it, but with another corporation, Merrill Lynch, Pierce,
Fenner & Smith, Inc. The Court is satisfied that the facts on record adequately establish that
ML FUTURES, operating in the United States, had indeed done business with the Lara Spouses
in the Philippines over several years, had done so at all times through Merrill Lynch Philippines,
Inc. (MLPI), a corporation organized in this country, and had executed all these transactions
13
without ML FUTURES being licensed to so transact business here, and without MLPI being
authorized to operate as a commodity futures trading advisor. These are the factual findings
of both the Trial Court and the Court of Appeals. These, too, are the conclusions of the
Securities & Exchange Commission which denied MLPI's application to operate as a commodity
futures trading advisor, a denial subsequently affirmed by the Court of Appeals. Prescinding
from the proposition that factual findings of the Court of Appeals are generally conclusive, this
Court has been cited to no circumstance of substance to warrant reversal of said Appellate
Court's findings or conclusions in this case. The Court is satisfied, too, that the Laras did
transact business with ML FUTURES through its agent corporation organized in the Philippines,
it being unnecessary to determine whether this domestic firm was MLPI (Merrill Lynch
Philippines, Inc.) or Merrill Lynch Pierce Fenner & Smith (MLPI's alleged predecessor). The fact
is that ML FUTURES did deal with futures contracts in exchanges in the United States in behalf
and for the account of the Lara Spouses, and that on several occasions the latter received
account documents and money in connection with those transactions. Given these facts, if
indeed the last transaction executed by ML FUTURES in the Laras's behalf had resulted in a loss
amounting to US $160,749.69; that in relation to this loss, ML FUTURES had credited the Laras
with the amount of US $ 75,913.42 which it (ML FUTURES) then admittedly owed the
spouses and thereafter sought to collect the balance, US $84,836.27, but the Laras had
refused to pay (for the reasons already above stated), the crucial question is whether or not
ML FUTURES may sue in Philippine Courts to establish and enforce its rights against said
spouses, in light of the undeniable fact that it had transacted business in this country without
being licensed to do so.
6. ID.; ID.; ID.; ONE WHO HAS DEALT WITH A CORPORATION OF FOREIGN ORIGIN AS A
CORPORATE ENTITY IS ESTOPPED TO DENY ITS CORPORATE EXISTENCE AND CAPACITY TO SUE
CASE AT BAR. In other words, if it be true that during all the time that they were transacting
with ML FUTURES, the Laras were fully aware of its lack of license to do business in the
Philippines, and in relation to those transactions had made payments to, and received money
from it for several years, the question is whether or not the Lara Spouses are now estopped to
impugn ML FUTURES capacity to sue them in the courts of the forum. The rule is that a party
is estopped to challenge the personality of a corporation after having acknowledged the same
by entering into a contract with it. [SEE Ohta Development Co. v. Steamship 'Pompey,' et al.,
49 Phil. 117 120 (1926); Asia banking Corporation v. Standard Products Co., 46 Phil. 144 (1924)]
And the "doctrine of estoppel to deny corporate existence applies to foreign as well as to
domestic corporations;" [14 C.J. 227] "one who has dealt with a corporation of foreign origin
as a corporate entity is estopped to deny its corporate existence and capacity." [36 Am Jur 2d,
pp. 296-297, although there is authority that said doctrine "does not, by analogy, require that
such person be held estopped to deny that the corporation has complied with the local
statutes imposing conditions, restrictions, and regulations on foreign corporations and that it
has acquired thereby the right to do business in the state"] The principle "will be applied to
prevent a person contracting with a foreign corporations from later taking advantage of its
noncompliance with the statutes, chiefly in cases where such person has received the benefits
of the contract (Sherwood v. Alvis, 83 Ala 115, 3 So 307, limited and distinguished in Dudley v.
Collier, 87 Ala 431, 6 So 304; Spinney v. Miller 114 Iowa 210, 86 NW 317), where such person
has acted as agent for the corporation and has violated his fiduciary obligations as such, and
where the statute does not provide that the contract shall be void, but merely fixes a special
penalty for violation of the statute." The doctrine was adopted by this Court as early as 1924
in Asia Banking Corporation v. Standard Products Co., in which the following pronouncement
was made: "The general rule that in the absence of fraud a person who has contracted or
otherwise dealt with an association in such a way as to recognize and in effect admit its legal
existence as corporate body is thereby estopped to deny its corporate existence in any action
leading out of or involving such contract or dealing, unless its existence is attacked for causes
which have arisen since making the contract or other dealing relied on as an estoppel and this
applies to foreign as well as domestic corporations. (14 C.J. 227; Chinese Chamber of
Commerce vs. Pua Te Ching, 14 Phil. 222)." There would seem to be no question that the Laras
received benefits generated by their business relations with ML FUTURES. Those business
relations, according to the Laras themselves, spanned a period of seven (7) years; and they
evidently found those relations to be of such profitability as warranted their maintaining them
for that not insignificant period of time; otherwise, it is reasonably certain that they would
have terminated their dealings with ML FUTURES much, much earlier. In fact, even as regards
their last transaction, in which the Laras allegedly suffered a loss in the sum of US$160,749.69,
the Laras nonetheless still received some monetary advantage, for ML FUTURES credited them
with the amount of US $75,913.42 then due to them, thus reducing their debt to US $84,836.27.
Given these facts, and assuming that the Lara Spouses were aware from the outset that ML
FUTURES had no license to do business in this country and MLPI, no authority to act as broker
for it, it would appear quite inequitable for the Laras to evade payment of an otherwise
legitimate indebtedness due and owing to ML FUTURES upon the plea that it should not have
done business in this country in the first place, or that its agent in this country, MLPI, had no
license either to operate as a "commodity and/or financial futures broker."
DECISION
NARVASA, C.J p:
The capacity of a foreign corporation to maintain an action in the Philippines against residents
thereof, is the principal question in the appellate proceedings at bar. The issue arises from the
undisputed facts now to be briefly narrated.
14
On November 23, 1987, Merrill Lynch Futures, Inc. (hereafter, simply ML FUTURES) filed a
complaint with the Regional Trial Court at Quezon City against the Spouses Pedro M. Lara and
Elisa G. Lara for the recovery of a debt and interest thereon, damages, and attorney's fees. 1
In its complaint ML FUTURES described itself as
a) "a non-resident foreign corporation, not doing business in the Philippines, duly
organized and existing under and by virtue of the laws of the state of Delaware, U.S.A.;" as well
as
b) "a 'futures commission merchant' duly licensed to act as such in the futures markets
and exchanges in the United States, . . . essentially functioning as a broker . . . (executing)
orders to buy and sell futures contracts received from its customers on U.S. futures
exchanges."
It also defined a "futures contract" as a "contractual commitment to buy and sell a
standardized quantity of a particular item at a specified future settlement date and at a price
agreed upon, with the purchase or sale being executed on a regulated futures exchange." LLjur
In its complaint ML FUTURES alleged the following:
1) that on September 28, 1983 it entered into a Futures Customer Agreement with the
defendant spouses (Account No. 138-12161), in virtue of which it agreed to act as the latter's
broker for the purchase and sale of futures contracts in the U.S.;
2) that pursuant to the contract, orders to buy and sell futures contracts were
transmitted to ML FUTURES by the Lara Spouses "through the facilities of Merrill Lynch
Philippines, Inc., a Philippine corporation and a company servicing plaintiff's customers;" 2
3) that from the outset, the Lara Spouses "knew and were duly advised that Merrill
Lynch Philippines, Inc. was not a broker in futures contracts," and that it "did not have a license
from the Securities and Exchange Commission to operate as a commodity trading advisor (i.e.,
'and entity which, not being a broker, furnishes advice on commodity futures to persons who
trade in futures contracts');
4) that in line with the above mentioned agreement and through said Merill Lynch
Philippines, Inc., the Lara Spouses actively traded in futures contracts, including "stock index
futures" for four years or so, i.e., from 1983 to October, 1987, 3 there being more or less
regular accounting and corresponding remittances of money (or crediting or debiting) made
between the spouses and ML FUTURES;
5) that because of a loss amounting to US $160,749.69 incurred in respect of three (3)
transactions involving "index futures," and after setting this off against an amount of US
$75,913.42 then owing by ML FUTURES to the Lara Spouses, said spouses became indebted to
ML FUTURES for the ensuing balance of US $84,836.27, which the latter asked them to pay;
6) that the Lara Spouses however refused to pay this balance, "alleging that the
transactions were null and void because Merrill Lynch Philippines, Inc., the Philippine company
servicing accounts of plaintiff, . . . had no license to operate as a 'commodity and/or financial
futures broker.'"
On the foregoing essential facts, ML FUTURES prayed (1) for a preliminary attachment against
defendant spouses' properties "up to the value of at least P2,267,139.50," and (2) for judgment,
after trial, sentencing the spouses to pay ML FUTURES:
a) the Philippine peso equivalent of $84,836.27 at the applicable exchange rate on date
of payment, with legal interest from the date of demand until full payment;
b) exemplary damages in the sum of at least P500,000,00; and LLjur
c) attorney's fees and expenses of litigation as may be proven at the trial.
Preliminary attachment issued ex parte on December 2, 1987, and the defendant spouses were
duly served with summons.
They then filed a motion to dismiss dated December 18, 1987 on the grounds that:
(1) plaintiff ML FUTURES had "no legal capacity to sue" and
(2) its "complaint states no cause of action since . . . (it) is not the real party in interest."
In that motion to dismiss, the defendant spouses averred that:
a) although not licensed to do so, ML FUTURES had been doing business in the
Philippines "at least for the last four (4) years," this being clear from the very allegations of the
complaint; consequently, ML FUTURES is prohibited by law "to maintain or intervene in any
action, suit or proceeding in any court or administrative agency of the Philippines;" and
b) they had never been informed that Merrill Lynch Philippines, Inc. was not licensed
to do business in this country; and contrary to the allegations of the complaint, all their
transactions had actually been with MERRILL LYNCH PIERCE FENNER & SMITH, INC., and not
with ML FUTURES (Merrill Lynch Futures, Inc.), in proof of which they attached to their motion
to dismiss copies of eight (8) agreements, receipts or reminders, etc., executed on standard
printed forms of said Merrill Lynch Pierce Fenner & Smith Inc. 4
15
ML FUTURES filed an OPPOSITION to the defendant spouses' motion to dismiss. In that motion
a) it drew attention to paragraph 4 of its complaint, admitted by defendants, that the
latter "have been actively trading in futures contracts . . . in U.S. futures exchanges from 1983
to 1987," and ask, "If the trading . . . (was) made in U.S., how could plaintiff be doing business
in the Philippines?"
b) it also drew attention to a printed form of "Merrill Lynch Futures, Inc." filled out and
signed by defendant spouses when they opened an account with ML FUTURES, in order to
supply information about themselves, including their bank's name
(1) in which appear the following epigraph: "Account introduced by Merrill Lynch
International, Inc.," and the following statements, to wit:
"This Commodity Trading Advisor (Merrill Lynch, Pierce, Fenner & Smith Philippines, Inc.) is
prohibited by the Philippine Securities and Exchange Commission from accepting funds in the
trading advisor's name from a client of Merrill Lynch Futures, Inc. for trading commodity
interest. All funds in this trading program must be placed with Merrill Lynch Futures, Inc.;"
and
". . . It is agreed between MERRILL LYNCH, PIERCE, FENNER & SMITH INC., and other account
carrying MERRILL LYNCH entities and their customers that all legal relationships between them
will be governed by applicable laws in countries outside the Philippines where sale and
purchase transactions take place."
c) and it argued that
(1) it is not permitted for defendant spouses to present "evidence" in connection with
a motion to dismiss based on failure of the complaint to state a cause of action; cdphil
(2) even if the documents appended to the motion to dismiss be considered as
admissible "evidence," the same would be immaterial since the documents refer to a different
account number: 138-12136, the defendants' account number with ML FUTURES being 138-
12161;
(3) it is a lie for the defendant spouses to assert that they were never informed that
Merrill Lynch Philippines, Inc. had not been licensed to do business in the Philippines; and
(4) defendant spouses should not be allowed to "invoke the aid of the court with
unclean hands."
The defendant spouses filed a REPLY reaffirming their lack of awareness that Merrill Lynch
Philippines, Inc. (formerly registered as Merrill Lynch, Pierce, Fenner & Smith Philippines, Inc.)
5 did not have a license, claiming that they learned of this only from inquiries with the
Securities & Exchange Commission which elicited the information that it had denied said
corporation's application to operate as a commodity futures trading advisor a denial
subsequently affirmed by the Court of Appeals (Merrill Lynch Philippines, Inc. v. Securities &
Exchange Commission, CA-G.R. No. 10821-SP, Nov. 19, 1987). The spouses also submitted
additional documents (Annexes J to R) involving transactions with Merrill Lynch Pierce Fenner
& Smith, Inc., dating back to 1980, stressing that all but one of the documents "refer to Account
No. 138-12161 which is the very account that is involved in the instant complaint."
ML FUTURES filed a Rejoinder alleging it had given the spouses a disclosure statement by which
the latter were made aware that the transactions they were agreeing on would take place
outside of the Philippines, and that "all funds in the trading program must be placed with
Merrill Lynch Futures, Inc."
On January 12, 1988, the Trial Court promulgated an Order sustaining the motion to dismiss,
directing the dismissal of the case and discharging the writ of preliminary attachment. It later
denied ML FUTURES's motion for reconsideration, by Order dated February 29, 1988. ML
FUTURES appealed to the Court of Appeals. 6
In its own decision promulgated on November 27, 1990, 7 the Court of Appeals affirmed the
Trial Court's judgment. It declared that the Trial Court had seen "through the charade in the
representation of MLPI and the plaintiff that MLPI is only a trading advisor and in fact it is a
conduit in the plaintiff's business transactions in the Philippines as a basis for invoking the
provisions of Section 133 of the Corporation Code," 8 viz.:
"SEC. 133. Doing business without a license. No foreign corporation transacting
business in the Philippines without a license, or its successors or assigns, shall be permitted to
maintain or intervene in any action, suit or proceeding in any court or administrative agency
in the Philippines; but such corporation may be sued or proceeded against before Philippine
courts or administrative tribunals on any valid cause of action recognized under Philippine
laws."
It also declared that the evidence established that plaintiff had in fact been "doing business"
in this country in legal contemplation, adverting to Mentholatum v. Mangaliman, 72 Phil. 524,
528-530, and Section 1 of Republic Act No. 5455 reading as follows: 9
"SEC. 1. Definition and scope of this ACT . (1) As used in this Act, the term `investment' shall
mean equity participation in any enterprise formed, organized, or existing under the laws of
the Philippines; and the phrase `doing business' shall INCLUDE soliciting orders, purchases,
16
service contracts, opening offices, whether called `liaison' offices or branches; appointing
representatives or distributors who are domiciled in the Philippines or who in any calendar
year stay in the Philippines for a period or periods totalling one hundred eighty days or more;
participating in the management, supervision or control of any domestic business firm, entity
or corporation in the Philippines; AND ANY OTHER ACT OR ACTS THAT IMPLY A CONTINUITY
OF COMMERCIAL DEALINGS OR ARRANGEMENTS AND CONTEMPLATE TO THAT EXTENT THE
PERFORMANCE OF ACTS OR WORKS, OR THE EXERCISE OF SOME FUNCTIONS NORMALLY
INCIDENT TO, AND IN PROGRESSIVE PROSECUTION OF COMMERCIAL GAIN OR OF THE
PURPOSE AND OBJECT OF THE BUSINESS ORGANIZATION ." cdrep
As regards the claim that it was error for the Trial Court to place reliance on the decision of the
Court of Appeals in CA-G.R. No. 10821-SP sustaining the finding of the Securities & Exchange
Commission that ML FUTURES was doing business in the Philippines since that judgment
was not yet final and ML FUTURES was not a party to that proceeding, the Court of Appeals
ruled that there was no need to belabor the point considering that there was, in any event,
"adequate proof of the activities of MLPI . . . which manifestly show that the plaintiff (ML
FUTURES) performed a series of business acts, consummated contracts and undertook
transactions for the period from 1983 to October 1987," and because ML FUTURES had done
so without license, it consequently had "no legal personality to bring suit in Philippine courts."
Its motion for reconsideration having been denied, 10 ML FUTURES has appealed to this Court
on certiorari. Here, it submits the following issues for resolution:
"(a) Whether or not the annexes appended by the Laras to their Motion to Dismiss and
Reply filed with the Regional Trial Court, but never authenticated or offered, constitute
admissible evidence.
(b) Whether or not in the proceedings below, ML FUTURES has been accorded
procedural due process.
(c) Whether or not the annexes, assuming them to be admissible, established that ML
FUTURES was doing business in the Philippines without a license."
As just stated, the Lara Spouses' motion to dismiss was founded on two (2) grounds: (a) that
the plaintiff has no legal capacity to sue, and (b) that the complaint states no cause of action
(Sec. 1 [d], and [g], Rule 16, Rules of Court).
As regards the second ground, i.e., that the complaint states no cause of action, the settled
doctrine of course is that said ground must appear on the face of the complaint, and its
existence may be determined only by the allegations of the complaint, considering of other
facts being proscribed, and any attempt to prove extraneous circumstances not being allowed.
11 The test of the sufficiency of the facts alleged in a complaint as constituting a cause of action
is whether or not, admitting the facts alleged, the court might render a valid judgment upon
the same in accordance with the prayer of the complaint. 12 Indeed, it is error for a judge to
conduct a preliminary hearing and receive evidence on the affirmative defense of failure of the
complaint to state a cause of action. 13
The other ground for dismissal relied upon, i.e., that the plaintiff has no legal capacity to sue
may be understood in two senses: one, that the plaintiff is prohibited or otherwise
incapacitated by law to institute suit in Philippine Courts, 14 or two, although not otherwise
incapacitated in the sense just stated, that it is not a real party in interest. 15 Now, the Lara
Spouses contend that ML Futures has no capacity to sue them because the transactions subject
of the complaint were had by them, not with the plaintiff ML FUTURES, but with Merrill Lynch
Pierce Fenner & Smith, Inc. Evidence is quite obviously needed in this situation, for it is not to
be expected that said ground, or any facts from which its existence may be inferred, will be
found in the averments of the complaint. When such a ground is asserted in a motion to
dismiss, the general rule governing evidence on motions applies. The rule is embodied in
Section 7, Rule 133 of the Rules of Court.
"SEC. 7. Evidence on motion. When a motion is based on facts not appearing of record the
court may hear the matter on affidavits or depositions presented by the respective parties, but
the court may direct that the matter be heard wholly or partly on oral testimony or
depositions."
There was, to be sure, no affidavit or deposition attached to the Lara Spouses' motion to
dismiss or thereafter proffered in proof of the averments of their motion. The motion itself
was not verified. What the spouses did do was to refer in their motion to documents which
purported to establish that it was not with ML FUTURES that they had therefore been dealing,
but another, distinct entity, Merril Lynch, Pierce, Fenner & Smith, Inc., copies of which
documents were attached to the motion. It is significant that ML FUTURES raised no issue
relative to the authenticity of the documents thus annexed to the Laras' motion. In fact, its
arguments subsumed the genuineness thereof and even adverted to one or two of them. Its
objection was centered on the propriety of taking account of those documents as evidence,
considering the established principle that no evidence should be received in the resolution of
a motion to dismiss based on an alleged failure of the complaint to state a cause of action.
There being otherwise no question respecting the genuineness of the documents, nor of their
relevance to at least one of the grounds for dismissal i.e., the prohibition on suits in
Philippine Courts by foreign corporations doing business in the country without license it
would have been a superfluity for the Court to require prior proof of their authenticity, and no
error may be ascribed to the Trial Court in taking account of them in the determination of the
17
motion on the ground, not that the complaint fails to state a cause of action as regards
which evidence is improper and impermissible but that the plaintiff has no legal capacity to
sue respecting which proof may and should be presented. cdll
Neither may ML FUTURES argue with any degree of tenability that it had been denied due
process in the premises. As just pointed out, it was very clear from the outset that the claim of
lack of its capacity to sue was being made to rest squarely on the documents annexed thereto,
and ML FUTURES had more than ample opportunity to impugn those documents and require
their authentication, but did not do so. To sustain its theory that there should have been
identification and authentication, and formal offer, of those documents in the Trial Court
pursuant to the rules of evidence would be to give unwarranted importance to technicality
and make it prevail over the substance of the issue.
The first question then, is, as ML FUTURES formulates it, whether or not the annexes, assuming
them to be admissible, establish that (a) ML FUTURES is prohibited from suing in Philippine
Courts because doing business in the country without a license, and that (b) it is not a real
party in interest since the Lara Spouses had not been doing business with it, but with another
corporation, Merrill Lynch, Pierce, Fenner & Smith, Inc.
The Court is satisfied that the facts on record adequately establish that ML FUTURES, operating
in the United States, had indeed done business with the Lara Spouses in the Philippines over
several years, had done so at all times through Merrill Lynch Philippines, Inc. (MLPI), a
corporation organized in this country, and had executed all these transactions without ML
FUTURES being licensed to so transact business here, and without MLPI being authorized to
operate as a commodity futures trading advisor. These are the factual findings of both the Trial
Court and the Court of Appeals. These, too, are the conclusions of the Securities & Exchange
Commission which denied MLPI's application to operate as a commodity futures trading
advisor, a denial subsequently affirmed by the Court of Appeals. Prescinding from the
proposition that factual findings of the Court of Appeals are generally conclusive, this Court
has been cited to no circumstance of substance to warrant reversal of said Appellate Court's
findings or conclusions in this case.
The Court is satisfied, too, that the Laras did transact business with ML FUTURES through its
agent corporation organized in the Philippines, it being unnecessary to determine whether this
domestic firm was MLPI (Merrill Lynch Philippines, Inc.) or Merrill Lynch Pierce Fenner & Smith
(MLPI's alleged predecessor). The fact is that ML FUTURES did deal with futures contracts in
exchanges in the United States in behalf and for the account of the Lara Spouses, and that on
several occasions the latter received account documents and money in connection with those
transactions.
Given these facts, if indeed the last transaction executed by ML FUTURES in the Laras's behalf
had resulted in a loss amounting to US $160,749.69; that in relation to this loss, ML FUTURES
had credited the Laras with the amount of US $ 75,913.42 which it (ML FUTURES) then
admittedly owed the spouses and thereafter sought to collect the balance, US $84,836.27,
but the Laras had refused to pay (for the reasons already above stated), the crucial question is
whether or not ML FUTURES may sue in Philippine Courts to establish and enforce its rights
against said spouses, in light of the undeniable fact that it had transacted business in this
country without being licensed to do so. In other words, if it be true that during all the time
that they were transacting with ML FUTURES, the Laras were fully aware of its lack of license
to do business in the Philippines, and in relation to those transactions had made payments to,
and received money from it for several years, the question is whether or not the Lara Spouses
are now estopped to impugn ML FUTURES capacity to sue them in the courts of the forum.
The rule is that a party is estopped to challenge the personality of a corporation after having
acknowledged the same by entering into a contract with it. 16 And the "doctrine of estoppel
to deny corporate existence applies to foreign as well as to domestic corporations;" 17 "one
who has dealt with a corporation of foreign origin as a corporate entity is estopped to deny its
corporate existence and capacity." 18 The principle "will be applied to prevent a person
contracting with a foreign corporations from later taking advantage of its noncompliance with
the statutes, chiefly in cases where such person has received the benefits of the contract
(Sherwood v. Alvis, 83 Ala 115, 3 So 307, limited and distinguished in Dudley v. Collier, 87 Ala
431, 6 So 304; Spinney v. Miller 114 Iowa 210, 86 NW 317), where such person has acted as
agent for the corporation and has violated his fiduciary obligations as such, and where the
statute does not provide that the contract shall be void, but merely fixes a special penalty for
violation of the statute. . . ." 19
The doctrine was adopted by this Court as early as 1924 in Asia Banking Corporation v.
Standard Products Co., 20 in which the following pronouncement was made: 21
"The general rule that in the absence of fraud a person who has contracted or otherwise dealt
with an association in such a way as to recognize and in effect admit its legal existence as
corporate body is thereby estopped to deny its corporate existence in any action leading out
of or involving such contract or dealing, unless its existence is attacked for causes which have
arisen since making the contract or other dealing relied on as an estoppel and this applies to
foreign as well as domestic corporations. (14 C.J. 227; Chinese Chamber of Commerce vs. Pua
Te Ching, 14 Phil. 222)."
There would seem to be no question that the Laras received benefits generated by their
business relations with ML FUTURES. Those business relations, according to the Laras
themselves, spanned a period of seven (7) years; and they evidently found those relations to
18
be of such profitability as warranted their maintaining them for that not insignificant period of
time; otherwise, it is reasonably certain that they would have terminated their dealings with
ML FUTURES much, much earlier. In fact, even as regards their last transaction, in which the
Laras allegedly suffered a loss in the sum of US$160,749.69, the Laras nonetheless still received
some monetary advantage, for ML FUTURES credited them with the amount of US $75,913.42
then due to them, thus reducing their debt to US $84,836.27. Given these facts, and assuming
that the Lara Spouses were aware from the outset that ML FUTURES had no license to do
business in this country and MLPI, no authority to act as broker for it, it would appear quite
inequitable for the Laras to evade payment of an otherwise legitimate indebtedness due and
owing to ML FUTURES upon the plea that it should not have done business in this country in
the first place, or that its agent in this country, MLPI, had no license either to operate as a
"commodity and/or financial futures broker." Cdpr

Considerations of equity dictate that, at the very least, the issue of whether the Laras are in
truth liable to ML FUTURES and if so in what amount, and whether they were so far aware of
the absence of the requisite licenses on the part of ML FUTURES and its Philippine
correspondent, MLPI, as to be estopped from alleging that fact as a defense to such liability,
should be ventilated and adjudicated on the merits by the proper trial court.

WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 16478 dated November
27, 1990 and its Resolution of March 7, 1991 are REVERSED and SET ASIDE, and the Regional
Trial Court at Quezon City, Branch 84, is ORDERED to reinstate Civil Case No. Q-52360 and
forthwith conduct a hearing to adjudicate the issues set out in the preceding paragraph on the
merits.

SO ORDERED.

Padilla, Regalado and Nocon, JJ., concur.

19
[G.R. No. 58028. April 18, 1989.]
CHIANG KAl SHEK SCHOOL, petitioner, vs. COURT OF APPEALS and FAUSTINA FRANCO OH,
respondents.
SYLLABUS
1. REMEDIAL LAW; PARTIES IN A CIVIL ACTION; FAILURE OF SCHOOL TO INCORPORATE
DOES NOT EXEMPT IT FROM SUIT AS A JURIDICAL ENTITY. It is true that Rule 3, Section 1, of
the Rules of Court clearly provides that "only natural or juridical persons may be parties in a
civil action." It is also not denied that the school has not been incorporated. However, this
omission should not prejudice the private respondent in the assertion of her claims against the
school. As a school, the petitioner was governed by Act No. 2706 as amended by C.A. No. 180,
which provided as follows: Unless exempted for special reasons by the Secretary of Public
Instruction, any private school or college recognized by the government shall be incorporated
under the provisions of Act No. 1459 known as the Corporation Law, within 90 days after the
date of recognition, and shall file with the Secretary of Public Instruction a copy of its
incorporation papers and by-laws. Having been recognized by the government, it was under
obligation to incorporate under the Corporation Law within 90 days from such recognition. It
appears that it had not done so at the time the complaint was filed notwithstanding that it had
been in existence even earlier than 1932. The petitioner cannot now invoke its own non-
compliance with the law to immunize it from the private respondent's complaint.
2. ID.; ID.; SCHOOL HAVING REPRESENTED ITSELF AS POSSESSED OF JURIDICAL
PERSONALITY ESTOPPED FROM DENYING THE SAME. There is no question that having
contracted with the private respondent every year for thirty two years and thus represented
itself as possessed of juridical personality to do so, the petitioner Chiang Kai Shek School is
now estopped from denying such personality to defeat her claim against it. According to Article
1431 of the Civil Code, "through estoppel an admission or representation is rendered
conclusive upon the person making it and cannot be denied or disproved as against the person
relying on it."
3. LABOR LAW; CHARITABLE INSTITUTIONS COVERED THEREIN. It is clear now that a
charitable institution is covered by the labor laws although the question was still unsettled
when this case arose in 1968. At any rate, there was no law even then exempting such
institutions from the operation of the labor laws (although they were exempted by the
Constitution from ad valorem taxes). Hence, even assuming that the petitioner was a
charitable institution as it claims, the private respondent was nonetheless still entitled to the
protection of the Termination Pay Law, which was then in force.
4. ID.; TERMINATION OF EMPLOYMENT; DISMISSAL OF PERMANENT EMPLOYEE
WITHOUT CAUSE AND DUE NOTICE NOT PROPER. The Court holds, after considering the
particular circumstance of Oh's employment, that she had become a permanent employee of
the school and entitled to security of tenure at the time of her dismissal. Since no cause was
shown and established at an appropriate hearing, and the notice then required by law had not
been given, such dismissal was invalid. The private respondent's position is no different from
that of the rank-and-file employees involved in Gregorio Araneta University Foundation v.
NLRC, of whom the Court had the following to say: Undoubtedly, the private respondents'
positions as deans and department heads of the petitioner university are necessary in its usual
business. Moreover, all the private respondents have been serving the university from 18 to
28 years. All of them rose from the ranks starting as instructors until they became deans and
department heads of the university. A person who has served the University for 28 years and
who occupies a high administrative position in addition to teaching duties could not possibly
be a temporary employee or a casual.
5. ID.; ID.; ILLEGAL DISMISSAL DONE IN WANTON AND OPPRESSIVE MANNER, AWARD
OF MORAL AND EXEMPLARY DAMAGES PROPER. We find that the private respondent was
arbitrarily treated by the petitioner, which has shown no cause for her removal nor had it given
her the notice required by the Termination Pay Law. As the respondent court said, the
contention that she did not report one week before the start of classes is a flimsy justification
for replacing her. She had been in its employ for all of thirty-two years. Her record was
apparently unblemished. There is no showing of any previous strained relations between her
and the petitioner. Oh had every reason to assume, as she had done in previous years, that
she would continue teaching as usual. It is easy to imagine the astonishment and hurt she felt
when she was flatly and without warning told she was dismissed. There was not even the
amenity of a formal notice of her replacement, with perhaps a graceful expression of thanks
for her past services. She was simply informed she was no longer in the teaching staff. To put
it bluntly, she was fired. For the wrongful act of the petitioner, the private respondent is
entitled to moral damages. As a proximate result of her illegal dismissal, she suffered mental
anguish, serious anxiety, wounded feelings and even besmirched reputation as an experienced
teacher for more than three decades. We also find that the respondent court did not err in
awarding her exemplary damages because the petitioner acted in a wanton and oppressive
manner when it dismissed her.
DECISION
CRUZ, J p:
An unpleasant surprise awaited Fausta F. Oh when she reported for work at the Chiang Kai
Shek School in Sorsogon on the first week of July, 1968. She was told she had no assignment
20
for the next semester. Oh was shocked. She had been teaching in the school since 1932 for a
continuous period of almost 33 years. And now, out of the blue, and for no apparent or given
reason, this abrupt dismissal.
Oh sued. She demanded separation pay, social security benefits, salary differentials, maternity
benefits and moral and exemplary damages. 1 The original defendant was the Chiang Kai Shek
School but when it filed a motion to dismiss on the ground that it could not be sued, the
complaint was amended. 2 Certain officials of the school were also impleaded to make them
solidarily liable with the school.
The Court of First Instance of Sorsogon dismissed the complaint. 3 On appeal, its decision was
set aside by the respondent court, which held the school suable and liable while absolving the
other defendants. 4 The motion for reconsideration having been denied, 5 the school then
came to this Court in this petition for review on certiorari.
The issues raised in the petition are:
1. Whether or not a school that has not been incorporated may be sued by reason
alone of its long continued existence and recognition by the government.
2. Whether or not a complaint filed against persons associated under a common name
will justify a judgment against the association itself and not its individual members.
3. Whether or not the collection of tuition fees and book rentals will make a school
profit-making and not charitable.
4. Whether or not the Termination Pay Law then in force was available to the private
respondent who was employed on a year-to-year basis.
5. Whether or not the awards made by the respondent court were warranted.
We hold against the petitioner on the first question. It is true that Rule 3, Section 1, of the
Rules of Court clearly provides that "only natural or juridical persons may be parties in a civil
action." It is also not denied that the school has not been incorporated. However, this omission
should not prejudice the private respondent in the assertion of her claims against the school.
LLphil
As a school, the petitioner was governed by Act No. 2706 as amended by C.A. No. 180, which
provided as follows:
Unless exempted for special reasons by the Secretary of Public Instruction, any private school
or college recognized by the government shall be incorporated under the provisions of Act No.
1459 known as the Corporation Law, within 90 days after the date of recognition, and shall file
with the Secretary of Public Instruction a copy of its incorporation papers and by-laws.
Having been recognized by the government, it was under obligation to incorporate under the
Corporation Law within 90 days from such recognition. It appears that it had not done so at
the time the complaint was filed notwithstanding that it had been in existence even earlier
than 1932. The petitioner cannot now invoke its own non-compliance with the law to
immunize it from the private respondent's complaint.
There should also be no question that having contracted with the private respondent every
year for thirty two years and thus represented itself as possessed of juridical personality to do
so, the petitioner is now estopped from denying such personality to defeat her claim against
it. According to Article 1431 of the Civil Code, "through estoppel an admission or
representation is rendered conclusive upon the person making it and cannot be denied or
disproved as against the person relying on it."
As the school itself may be sued in its own name, there is no need to apply Rule 3, Section 15,
under which the persons joined in an association without any juridical personality may be sued
with such association. Besides, it has been shown that the individual members of the board of
trustees are not liable, having been appointed only after the private respondent's dismissal. 6
It is clear now that a charitable institution is covered by the labor laws 7 although the question
was still unsettled when this case arose in 1968. At any rate, there was no law even then
exempting such institutions from the operation of the labor laws (although they were
exempted by the Constitution from ad valorem taxes). Hence, even assuming that the
petitioner was a charitable institution as it claims, the private respondent was nonetheless still
entitled to the protection of the Termination Pay Law, which was then in force.
While it may be that the petitioner was engaged in charitable works, it would not necessarily
follow that those in its employ were as generously motivated. Obviously, most of them would
not have the means for such charity. The private respondent herself was only a humble school
teacher receiving a meager salary of P180.00 per month.
At that, it has not been established that the petitioner is a charitable institution, considering
especially that it charges tuition fees and collects book rentals from its students. 8 While this
alone may not indicate that it is profit-making, it does weaken its claim that it is a non-profit
entity. llcd
The petitioner says the private respondent had not been illegally dismissed because her
teaching contract was on a yearly basis and the school was not required to rehire her in 1968.
The argument is that her services were terminable at the end of each year at the discretion of
21
the school. Significantly, no explanation was given by the petitioner, and no advance notice
either, of her relief. After teaching year in and year out for all of thirty-two years, the private
respondent was simply told she could not teach any more.
The Court holds, after considering the particular circumstance of Oh's employment, that she
had become a permanent employee of the school and entitled to security of tenure at the time
of her dismissal. Since no cause was shown and established at an appropriate hearing, and the
notice then required by law had not been given, such dismissal was invalid.
The private respondent's position is no different from that of the rank-and-file employees
involved in Gregorio Araneta University Foundation v. NLRC, 9 of whom the Court had the
following to say:
Undoubtedly, the private respondents' positions as deans and department heads of the
petitioner university are necessary in its usual business. Moreover, all the private respondents
have been serving the university from 18 to 28 years. All of them rose from the ranks starting
as instructors until they became deans and department heads of the university. A person who
has served the University for 28 years and who occupies a high administrative position in
addition to teaching duties could not possibly be a temporary employee or a casual.
The applicable law is the Termination Pay Law, which provided:
SECTION 1. In cases of employment, without a definite period, in a commercial,
industrial, or agricultural establishment or enterprise, the employer or the employee may
terminate at any time the employment with just cause; or without just cause in the case of an
employee by serving written notice on the employer at least one month in advance, or in the
case of an employer, by serving such notice to the employee at least one month in advance or
one-half month for every year of service of the employee, whichever, is longer, a fraction of at
least six months being considered as one whole year.
The employer, upon whom no such notice was served in case of termination of employment
without just cause may hold the employee liable for damages.
The employee, upon whom no such notice was served in case of termination of employment
without just cause shall be entitled to compensation from the date of termination of his
employment in an amount equivalent to his salaries or wages corresponding to the required
period of notice. . . .
The respondent court erred, however, in awarding her one month pay instead of only one-half
month salary for every year of service. The law is quite clear on this matter. Accordingly, the
separation pay should be computed at P90.00 times 32 months, for a total of P2,880.00. Cdpr
Parenthetically, R.A. No. 4670, otherwise known as the Magna Carta for Public School Teachers,
confers security of tenure on the teacher upon appointment as long as he possesses the
required qualification. 10 And under the present policy of the Department of Education,
Culture and Sports, a teacher becomes permanent and automatically acquires security of
tenure upon completion of three years in the service. 11
While admittedly not applicable to the case at bar, these rules nevertheless reflect the attitude
of the government on the protection of the worker's security of tenure, which is now
guaranteed by no less than the Constitution itself. 12
We find that the private respondent was arbitrarily treated by the petitioner, which has shown
no cause for her removal nor had it given her the notice required by the Termination Pay Law.
As the respondent court said, the contention that she did not report one week before the start
of classes is a flimsy justification for replacing her. 13 She had been in its employ for all of
thirty-two years. Her record was apparently unblemished. There is no showing of any previous
strained relations between her and the petitioner. Oh had every reason to assume, as she had
done in previous years, that she would continue teaching as usual.
It is easy to imagine the astonishment and hurt she felt when she was flatly and without
warning told she was dismissed. There was not even the amenity of a formal notice of her
replacement, with perhaps a graceful expression of thanks for her past services. She was
simply informed she was no longer in the teaching staff. To put it bluntly, she was fired.
For the wrongful act of the petitioner, the private respondent is entitled to moral damages.
14 As a proximate result of her illegal dismissal, she suffered mental anguish, serious anxiety,
wounded feelings and even besmirched reputation as an experienced teacher for more than
three decades. We also find that the respondent court did not err in awarding her exemplary
damages because the petitioner acted in a wanton and oppressive manner when it dismissed
her. 15
The Court takes this opportunity to pay a sincere tribute to the grade school teachers, who are
always at the forefront in the battle against illiteracy and ignorance. If only because it is they
who open the minds of their pupils to an unexplored world awash with the magic of letters
and numbers, which is an extraordinary feat indeed, these humble mentors deserve all our
respect and appreciation.
WHEREFORE, the petition is DENIED. The appealed decision is AFFIRMED except for the award
of separation pay, which is reduced to P2,880.00. All the other awards are approved. Costs
against the petitioner.
This decision is immediately executory.
22
SO ORDERED.

Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

23
SECOND DIVISION
[G.R. No. L-55687. July 30, 1982.]
JUASING HARDWARE, petitioner, vs. THE HONORABLE RAFAEL T. MENDOZA, Judge of the Court
of First Instance of Cebu, and PILAR DOLLA, respondents.
Luis V. Diones, Paulito Y. Cabrera and Victor C. Laborte for petitioner.
Amado D. Seno for respondents.
SYNOPSIS
In a complaint for the collection of a sum of money filed against private respondent Dolla by
petitioner Juasing Hardware, a single proprietorship, represented by its manager Ong Bon
Yong, respondent Judge Mendoza, after petitioner had rested its case, issued an order on
motion of private respondent, dismissing the case due to petitioner's lack of legal capacity to
sue, petitioner not being either a natural nor a juridical person. The trial court also denied
petitioner's motion for the admission of an Amended Complaint to correct the designation of
the party plaintiff for being too late since the amendment is substantial. Hence, this petition.
The Supreme Court held that the defect of the complaint is merely formal, not substantial, and
no unfairness or surprise to respondent Dolla would result by allowing the amendment, the
purpose of which is to conform to procedural rules or to correct a technical error.
Petition granted.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; WHO MAY BE PARTIES IN A CIVIL ACTION; SOLE
PROPRIETORSHIPS NOT AUTHORIZED TO BRING SUIT IN COURT. There is no law authorizing
sole proprietorships to bring suit in court. The law merely recognizes the existence of a sole
proprietorship as a form of business organization conducted for profit by a single individual
and requires the proprietor or owner thereof to secure licenses and permits, register the
business name, and pay taxes to the national government. It does not vest juridical or legal
personality upon the sole proprietorship nor empower it to file or defend an action in court.
2. ID.; ID.; COMPLAINT; AMENDMENT THEREOF TO CORRECT DEFECT IN DESIGNATION
OF PARTIES, AUTHORIZED AS A RULE; CASE AT BAR. The amendment of the complaint in the
case instant to correct the designation of the party plaintiff in the lower court is authorized by
Rule 10 of the Revised Rules of Court. The defect is merely formal not substantial. Substitution
of the party plaintiff would not constitute a change in the identity of the parties. No unfairness
or surprise to private respondent Dolla would result by allowing the amendment, the purpose
of which is merely to conform to procedural rules or to correct a technical error. The case of
Alonzo vs. Villamor, et al. (16 Phil. 315) applied Section 110 of the Code of Civil Procedure
authorizing the court "in furtherance of justice . . . (to) allow a party to amend any pleading or
proceeding and at any stage of the action, in either the Court of First Instance or the Supreme
Court, by adding or striking out the name of any party, either plaintiff or defendant, or by
correcting a mistake in the name of a party . . ." In the more recent case of Shaffer vs. Palma
(L-24115, March 1, 1968, 22 SCRA 934), the Court had stated that "(t)he courts should be liberal
in allowing amendments to pleadings to avoid multiplicity of suits and in order that the real
controversies between the parties are presented and the case decided on the merits without
unnecessary delay." This rule applies with more reason and with greater force when, as in the
case at bar, the amendment sought to be made refers to a mere matter of form and no
substantial rights are prejudiced.
DECISION
GUERRERO, J p:
In this special civil action for certiorari, petitioner Juasing Hardware seeks to annul the Orders
of respondent Judge dated September 5, 1980 and October 21, 1980 issued in Civil Case No.
R-18386.
Records show the pertinent factual and procedural antecedents of the instant Petition to be
as follows: prcd
On August 17, 1979, Juasing Hardware, alleging to be a single proprietorship duly organized
and existing under and by virtue of the laws of the Philippines and represented by its manager
Ong Bon Yong, filed a complaint for the collection of a sum of money against Pilar Dolla. 1 The
complaint charged that defendant Dolla failed and refused to pay, despite repeated demands,
the purchase price of items, materials and merchandise which she bought from the plaintiff.
2 In her Answer, defendant stated, among others, that she "has no knowledge about plaintiff's
legal personality and capacity to sue as alleged in . . . the complaint." 3 The case proceeded to
pre-trial and trial. After plaintiff had completed the presentation of its evidence and rested its
case, defendant filed a Motion for Dismissal of Action (Demurrer to Evidence) 4 praying that
the action be dismissed for plaintiff's lack of legal capacity to sue. Defendant in said Motion
contended that plaintiff Juasing Hardware is a single proprietorship, not a corporation or a
partnership duly registered in accordance with law, and therefore is not a juridical person with
legal capacity to bring an action in court. Plaintiff filed an Opposition and moved for the
admission of an Amended Complaint. 5
24
Resolving the foregoing controversy, respondent Judge issued the Order dated September 5,
1980 dismissing the case and denying admission of the Amended Complaint. Pertinent
portions of said Order follow:
"The Answer of the defendant to the complaint alleged the lack of legal capacity to sue of the
plaintiff as contained in its affirmative defense. Inspite of the allegation that plaintiff has no
legal capacity to sue, the plaintiff insisted in proceeding to trial instead of amending the
Complaint. During the trial, it was found out that the affirmative defense of defendant of
plaintiff's lack of legal capacity to sue is very evident for plaintiff Juasing Hardware is a single
proprietorship which is neither a partnership nor a corporation. The amendment therefore is
now too late it being substantial.
"In view of all the foregoing, this case is hereby DISMISSED with costs de oficio." 6
Plaintiff's Motion for Reconsideration of the above Order was denied in another Order issued
by respondent Judge on October 21, 1980. 7
The sole issue in this case is whether or not the lower court committed a grave abuse of
discretion when it dismissed the case below and refused to admit the Amended Complaint
filed by therein plaintiff, now herein petitioner, Juasing Hardware.
Rule 3 of the Revised Rules of Court provides as follows:
"Sec. 1. Who may be parties. Only natural or juridical persons or entities authorized by
law may be parties in a civil action."
Petitioner is definitely not a natural person; nor is it a juridical person as defined in the New
Civil Code of the Philippines thus:
"Art. 44. The following are juridical persons:
(1) The State and its political subdivisions;
(2) Other corporations, institutions and entities for public interest or purpose, created
by law; their personality begins as soon as they have been constituted according to law;
(3) Corporations, partnerships and associations for private interest or purpose to which
the law grants a juridical personality, separate and distinct from that of each shareholder,
partner or member."
Finally, there is no law authorizing sole proprietorships like petitioner to bring suit in court.
The law merely recognizes the existence of a sole proprietorship as a form of business
organization conducted for profit by a single individual, and requires the proprietor or owner
thereof to secure licenses and permits, register the business name, and pay taxes to the
national government. It does not vest juridical or legal personality upon the sole proprietorship
nor empower it to file or defend an action in court. Cdpr
Thus, the complaint in the court below should have been filed in the name of the owner of
Juasing Hardware. The allegations in the body of the complaint would show that the suit is
brought by such person AS proprietor or owner of the business conducted under the name
and style "Juasing Hardware". The descriptive words "doing business as `Juasing Hardware'"
may be added in the title of the case, as is customarily done.
Be that as it may, petitioner's contention that respondent Judge erred in not allowing the
amendment of the complaint to correct the designation of the party plaintiff in the lower court,
is impressed with merit. Such an amendment is authorized by Rule 10 of the Revised Rules of
Court which provides thus:
"Sec. 4. Formal Amendments. A defect in the designation of the parties may be summarily
corrected at any stage of the action provided no prejudice is caused thereby to the adverse
party." (Italics supplied.)
Contrary to the ruling of respondent Judge, the defect of the complaint in the instant case is
merely formal, not substantial. Substitution of the party plaintiff would not constitute a change
in the identity of the parties. No unfairness or surprise to private respondent Dolla, defendant
in the court a quo, would result by allowing the amendment, the purpose of which is merely
to conform to procedural rules or to correct a technical error.
In point is the case of Alonzo vs. Villamor, et al. 8 which applied Sec. 110 of the Code of Civil
Procedure authorizing the court "in furtherance of justice . . . (to) allow a party to amend any
pleading or proceeding and at any stage of the action, in either the Court of First Instance or
the Supreme Court, by adding or striking out the name of any party, either plaintiff or
defendant, or by correcting a mistake in the name of a party . . ." In the Alonzo case, Fr. Eladio
Alonzo, a priest of the Roman Catholic Church, brought an action to recover from therein
defendants the value of certain properties taken from the Church. The defendants contended
that Fr. Alonzo was not the real party in interest. This Court, speaking through Justice Moreland,
ordered the substitution of the Roman Catholic Apostolic Church in the place and stead of
Eladio Alonzo as party plaintiff, and aptly held in this wise:
". . . Defect in form cannot possibly prejudice so long as the substantial is clearly evident . . .
"No one has been misled by the error in the name of the party plaintiff. If we should by reason
of this error send this case back for amendment and new trial, there would be on the retrial
the same complaint, the same answer, the same defense, the same interests, the same
25
witnesses, and the same evidence. The name of the plaintiff would constitute the only Aquino, J., I concur. It should appear in the amended complaint (a copy which was not attached
difference between the old trial and the new. In our judgment there is not enough in a name to the petition) that the plaintiff is Ong Hua or Huat, doing business under the tradename,
to justify such action. Juasing Hardware, and in the body of the complaint the personal circumstances of Ong Hua
should be stated.
"There is nothing sacred about processes or pleadings, their forms or contents. Their sole
purpose is to facilitate the application of justice to the rival claims of contending parties. They Escolin, J., in the result.
were created, not to hinder and delay, but to facilitate and promote, the administration of
justice. They do not constitute the thing itself, which courts are always striving to secure to
litigants. They are designed as the means best adapted to obtain that thing. In other words,
they are a means to an end. When they lose the character of the one and become the other
the administration of justice is at fault and courts are correspondingly remiss in the
performance of their obvious duty. prcd

"The error in this case is purely technical. To take advantage of it for other purposes than to
cure it, does not appeal to a fair sense of justice. Its presentation as fatal to the plaintiff's case
smacks of skill rather than right. A litigation is not a game of technicalities in which one, more
deeply schooled and skilled in the subtle art of movement and position, entraps and destroys
the other. It is, rather, a contest in which each contending party fully and fairly lays before the
court the facts in issue and then, brushing aside as wholly trivial and indecisive all
imperfections of form and technicalities of procedure, asks that justice be done upon the
merits. Lawsuits, unlike duels, are not to be won by a rapier's thrust. Technicality, when it
deserts its proper office as an aid to justice and becomes its great hindrance and chief enemy,
deserves scant consideration from courts. There should be no vested rights in technicalities.
No litigant should be permitted to challenge a record of a court . . . for defect of form when his
substantial rights have not been prejudiced thereby." 9

We reiterate what this Court had stated in the more recent case of Shaffer vs. Palma 10 that
"(t)he courts should be liberal in allowing amendments to pleadings to avoid multiplicity of
suits and in order that the real controversies between the parties are presented and the case
decided on the merits without unnecessary delay." 11 This rule applies with more reason and
with greater force when, as in the case at bar, the amendment sought to be made refers to a
mere matter of form and no substantial rights are prejudiced. 12

WHEREFORE, the Petition is hereby granted. The Orders dated September 5, 1980 and October
21, 1980 are hereby annulled, and the lower court is hereby ordered to admit the Amended
Complaint in conformity with the pronouncements in this Decision. No costs.

SO ORDERED.

Barredo (Chairman), Concepcion, Jr., Abad Santos, and De Castro, JJ., concur.

26
FIRST DIVISION
[G.R. No. 78646. July 23, 1991.]
PABLO RALLA, substituted by his wife and co-defendant CARMEN MUNOZ-RALLA, and his legal
heirs, HILDA RALLA-ALMINE, BELISTA, RENE RALLA-BELISTA and GERARDO M. RALLA,
petitioners, vs. PEDRO RALLA, substituted by his legal heirs, LEONI, PETER, and MARINELA, all
surnamed RALLA, and COURT OF APPEALS, respondents.
Rafael Triunfante and Teodorico C. Almine, Jr. for petitioners.
Ruben R. Basa for private respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; REAL PARTY-IN-INTEREST; CONSTRUED. The
real party-in-interest is the party who stands to be benefited or injured by the judgment or the
party entitled to the avails of the suit. "Interest" within the meaning of the rule means material
interest, an interest in issue and to be affected by the decree, as distinguished from mere
interest in the question involved, or a mere incidental interest. As a general rule, one having
no right or interest to protect cannot invoke the jurisdiction of the court as a party-plaintiff in
an action.
2. ID.; ID.; ID.; VALIDLY DISINHERITED HEIR; NO LEGAL PERSONALITY TO QUESTION THE
SALE BETWEEN CO-HEIR AND DECEDENT. A validly disinherited heir, and not claiming to be
a creditor of his deceased father, Pedro Ralla had no legal personality to question the deed of
sale dated November 29, 1957, between Rosendo Ralla and his son Pablo. Legally speaking,
Pedro Ralla was a stranger to the transaction as he did not stand to benefit from its annulment.
His disinheritance had rendered him hors de combat.
DECISION
CRUZ, J p:
Rosendo Ralla had two sons, Pablo and Pedro. The father apparently loved the former but not
the latter. Pablo and his family lived with Rosendo, who took care of all the household
expenses. Pablo administered part of the family properties and received a monthly salary of
P250.00 plus part of the produce of the land. Pedro lived with his mother, Paz Escarella, in
another town. He was not on good terms with his father.
Paz Escarella died in 1957 and the two brothers partitioned 63 parcels of land she left as her
paraphernal property. The partition was sustained by this Court in G.R. Nos. 63253-54 on April
27, 1989. 1 Meanwhile, on December 22, 1958, Rosendo executed a will disinheriting Pedro
and leaving everything he owned to Pablo, to whom he said he had earlier sold a part of his
property for P10,000.00. Rosendo himself filed for the probate of the will but pendente lite
died on October 1, 1960.
On November 3, 1966, the probate judge converted SP 564 into an intestate proceeding. On
February 28, 1978, a creditor of the deceased filed a petition for the probate of Rosendo's will
in SP 1106, which was heard jointly with SP 564. On August 3, 1979, the order of November 3,
1966, was set aside.
The last will and testament of Rosendo Ralla was allowed on June 7, 1982, 2 but on October
20,1982, the disinheritance of Pedro was disapproved. 3 This order was elevated to the Court
of Appeals in AC-G.R. Nos. 00472, 00489.
In a decision dated July 25, 1986, the Court of Appeals 4 reversed the trial court and reinstated
the disinheritance clause after finding that the requisites of a valid disinheritance had been
complied with in the will. The appellate court noted that Pedro had threatened to kill his father,
who was afraid of him and had earlier sued him for slander and grave oral defamation.
The decision was assailed before this Court in G.R. Nos. 76657-58, which was dismissed in our
resolution of August 26, 1987, reading as follows:
. . . Assuming that, as claimed, the petitioners' counsel received a copy of the questioned
decision only on August 15, 1980 (although it should have been earlier because it was mailed
to him at his address of record on July 28, 1986), they had 15 days, or until August 30, 1986,
within which to move for its reconsideration or appeal therefrom by certiorari to this Court.
Instead, they filed on August 28, 1986, a motion for extension of time to file a motion for
reconsideration, which was not allowed under our ruling in Habaluyas Enterprises, Inc. v.
Japson, 142 SCRA 208, and so did not interrupt the running of the reglementary period. Indeed,
even if the period were to be counted from October 7, 1986, when notice of the denial of the
motion for extension was received by the petitioners, the petition would still be 30 days late,
having been filed on December 8, 1986. Moreover, the petitioners have not shown that the
questioned decision is tainted with grave abuse of discretion or that it is not in accord with law
and jurisprudence. For these reasons, the Court Resolved to DISMISS the petition.
The motion for reconsideration was denied with finality in the following resolution dated
October 26, 1987:
. . . The Court, after deliberation, Resolved to DENY with finality the motion for reconsideration,
wherein the petitioners pray that they be relieved from the effects of our ruling in Habaluyas
Enterprises, Inc. v. Japson, 142 SCRA 208, under which the petition was denied for tardiness.
Counsel are expected to be abreast of current developments in law and jurisprudence and
27
cannot plead ignorance thereof as an excuse for non-compliance with the same. As earlier
observed, the petition was filed extremely late, and, moreover, it was inadequate even on the
merits, same having failed to show that the questioned decision was tainted with grave abuse
of discretion or reversible error.
What is involved in the present petition is the correctness of the decision of the respondent
court annulling the deed of sale executed by Rosendo Ralla in favor of Pablo over 149 parcels
of land. Pedro had filed on May 19, 1972, a complaint to annul the transaction on the ground
that it was simulated. 5 The original decision of the trial court declared the sale null and void.
6 In the resolution of the motion for reconsideration, however, Judge Jose F. Madara
completely reversed himself and held the deed of sale to be valid. 7 This order was in turn set
aside by the respondent court, which reinstated the original decision invalidating the deed of
sale.
It is indeed intriguing that the trial judge should, in resolving the motion for reconsideration,
make a complete turnabout on the basis of the same evidence and jurisprudence that he
considered in rendering the original decision. It is no less noteworthy that the respondent
court, after studying the two conclusions reached by him, saw fit to sustain his original findings
as the correct appreciation of the evidence and the applicable law.
But we find that, regardless of these curious resolutions, the petition must nevertheless be
sustained albeit not on the ground that the deed of sale was indeed valid. The Court is inclined
to support the findings of the respondent court. However, we do not and cannot make any
decision on this matter because of one insuperable obstacle. That obstacle is the proper party
personality of Pedro Ralla to question the transaction.
The decision of the Court of Appeals in AC-G.R. Nos. 00472, 00489 approved the disinheritance
of Pedro Ralla. That decision was appealed to this Court, but the petition for review was
dismissed as above related. The decision has long since become final. Since then, Pedro Ralla
no longer had the legal standing to question the validity of the sale executed by Rosendo in
favor of his other son Pablo.
The real party-in-interest is the party who stands to be benefited or injured by the judgment
or the party entitled to the avails of the suit. "Interest" within the meaning of the rule means
material interest, an interest in issue and to be affected by the decree, as distinguished from
mere interest in the question involved, or a mere incidental interest. As a general rule, one
having no right or interest to protect cannot invoke the jurisdiction of the court as a party-
plaintiff in an action. 8
As the sole heir, Pablo Ralla had the right to inherit the totality of his father's estate after
payment of all its debts. Even if it be assumed that the deed of sale was indeed invalid, the
subject-matter thereof nevertheless devolved upon Pablo as the universal successor of his
father Rosendo. In his will, Rosendo claimed the 149 parcels as "part of my property" as
distinguished from the conjugal estate which he had earlier sold to Pablo. Significantly,
Pedro did not deny this description of the property in his Comment to the present petition,
confining himself to assailing the validity of the sale. prcd
The Court must note the lackadaisical attitude of the heirs of Pedro Ralla, who substituted him
upon his death. They seem to have lost interest in this litigation, probably because of the
approval of their father's disinheritance by the respondent court. When the parties were
required to submit their respective memoranda after we gave due course to this petition, the
petitioners did but not the private respondents. Although the period to do so had already
expired, the Court relaxed its rules to give the private respondents another opportunity to
comply with the requirement. When the resolution of August 22, 1990, could not be served
upon the private respondents' counsel, we directed that it be served on the private
respondents themselves. 9 On January 18, 1991, the heirs of Pedro Ralla informed the Court
that they were retaining another counsel and asked that they be furnished a copy of the
petition and given 30 days within which to file their memorandum. 10 This motion was granted.
The records show that they received a copy of the petition on February 26, 1991, but their
memorandum was never filed. On May 29, 1991, the Court, noting this omission, finally
resolved to dispense with the memorandum and to decide this case on the basis of the
available records.
Our decision is that as a validly disinherited heir, and not claiming to be a creditor of his
deceased father, Pedro Ralla had no legal personality to question the deed of sale dated
November 29, 1957, between Rosendo Ralla and his son Pablo. Legally speaking, Pedro Ralla
was a stranger to the transaction as he did not stand to benefit from its annulment. His
disinheritance had rendered him hors de combat.
WHEREFORE, the decision of the respondent court dated January 23, 1987, is set aside and
another judgment is hereby rendered dismissing Civil Case 194 (originally Civil Case 4624) in
the Regional Trial Court of Ligao, Albay, Branch 5.
SO ORDERED.
Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ ., concur.
28
FIRST DIVISION
[G.R. No. 97463. June 26, 1992.]
JESUS M. IBONILLA, DOLORES R. GAPAS, WILFRED BATERINA AZUCENA TABLANTE, ERNESTO
SANTIAGO, ENRIQUE AUZA, INOCENCIO BUOT, JR., GENE PASAJE, RODOLFO SAN GABRIEL,
JUANITA ABELLANOSA, CAROLINA BONIEL, EPPE CRISPO, ILDEFONSO TINAPAY, LUCIA OMPAD,
CATALINA SICAD, ABRAHAN BARRIOQUINTO, ANTONIO ELISER, ALBERTO TAGALOG,
LEONARDA ESPINA, LUCILE GEMARINO, ROMEO PINATEL, HERNAN ESTABILLA, LEO PELLETERO,
BENITO PALER, JERICO BOLAMBAO, NOEL CAMORO, REYNALDO VILLAROSA, RAMIL MANAYON,
JOSELITO MILAY, MANUEL LABITAD, THERESA TINAPAY, CATHERINE MARTIN, SUSAN ROLLAN,
CRISELDA CANA, MARIFE CEBALLOS, JANICE ALBINO, ROLANDO S. TABUNA, ANTONIO ALISER,
MA. PAULETTE C. LEDRES, MIRA COLITA, MODESTO CORTES, HERNAN ESTAVILLA, JOANN
ESPINA, SEVERINO LEBUMFACIL, ROBERTO REGALADO, KELLY AYUDA, MARINO OCHEA,
CARMELITA ARANCO, VICTORIA TOMARONG, LOLITA MALAGAR, WILLY REPOLLO, ANABELLA
TRUZ, ARLENE DONAN, GEOVANI ROMARATE, MACARIO GUARIN, JULIUS POLAYAPOY,
WILSON BORDADORA, DARWIN LLESOL, and BONIFACIO ILLUSTRISIMO, petitioners, vs.
PROVINCE OF CEBU, CEBU STATE COLLEGE OF SCIENCE & TECHNOLOGY (College of Agriculture)
formerly Sudlon Agricultural School/Cebu (Sudlon) Agricultural School, its BOARD OF
TRUSTEES and/or members, namely, DR. LOURDES QUISUMBING, DR. ATANASIO ELMA, DR.
FRANCISCO B. CONCILLO, MR. TOMAS RAMOS and HON. EMILIO M. R. OSMEA, ALOUIN
VILLAHERMOSA and the COURT OF APPEALS, Manila, respondents.
Valentino Legaspi for petitioners.
Benedicto G. Cobarde, Marino E. Martinquilla and Gildardo O. Magno for the Province of Cebu.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; PARTIES IN AN ACTION; REAL PARTY-IN-
INTEREST; DEFINED; CASE AT BAR. The numerous petitioners are admittedly not the owners
of the lots in question. They do not claim any interest in them that was violated, nor have they
suffered any injury that might warrant a grant of relief. Clearly, the finding of the appellate
court and the trial court that they are not real parties in interest who may sue to quiet the title
to the properties in question, is correct. Only a real party in interest is allowed to prosecute
and defend an action in court (Sec. 2, Rule 3 of the Rules of Court). "By 'real party in interest'
is meant such party who would be benefited or injured by the judgment or entitled to the
avails of the suit . . . A real party in interest-plaintiff is one who has a legal right, while a real
party in interest-defendant is one who has a correlative legal obligation whose act or omission
violates the legal right of the former." (Lee vs. Romillo, Jr., 161 SCRA 589.) ". . . And by real
interest, is meant a present substantial interest, as distinguished from a mere expectancy, or
a future, contingent, subordinate or consequential interest (Garcia vs. David, 67 Phil. 279; Cited
in Rules of Court, Vol. I by Moran, p. 144 [1970 edition]).
DECISION
GRIO-AQUINO, J p:
This is a petition for review on certiorari of the decision dated February 8, 1991 of the Court of
Appeals in CA-G.R. CV No. 24536, affirming the decision dated November 8, 1989 of the
Regional Trial Court of Cebu City which dismissed the petitioners' complaint for Quieting of
Title against the private and public respondents. LibLex
In 1952, the use and usufruct of 40 parcels of land was granted to the Cebu (Sudlon)
Agricultural School. On March 18, 1960, the province donated the lots to the school with a
view to bringing about the conversion of the Cebu (Sudlon) Agricultural School into a regional
one, subject to two (2) conditions, namely: (1) that if the School ceases to operate, the
ownership of the lots will automatically revert to the Provincial Government or Cebu, and (2)
that the School cannot alienate, lease or encumber the properties.
Pursuant to BP Blg. 412, incorporating and consolidating as one school system certain
vocational schools in the Province of Cebu, the Cebu (Sudlon) Agricultural School became an
extension of the Cebu State College of Agriculture in 1983.
On November 18, 1988, the Province of Cebu demanded the return of the 40 donated lots, on
the ground that the donation was void ab initio as the Cebu (Sudlon) Agricultural School did
not have the personality to be a donee of real property.
The petitioners (officials, faculty and employees of the Cebu [Sudlon] Agricultural School,
parents of the enrolled students, and various school organizations) opposed the rescission of
the donation. They filed an action to quiet title to the lots.
Answering the complaint, the Province of Cebu alleged that the Deed of Donation in favor of
the School was null and void, and, as the Cebu Sudlon Agricultural School ceased to exist and
operate as such, the lots should he reconveyed to the Province of Cebu which admittedly plans
to use them as a site for the residences of the Regional Trial Court Judges, an NBI Drug
Rehabilitation Center, and other government offices.
On March 10, 1989, the Province of Cebu filed a motion to dismiss the action on the ground
that it had become moot and academic because on February 1, 1989, the Province of Cebu,
represented by Governor Emilio M.R. Osmea, and the Cebu State College of Science and
Technology (CSCST), represented by then Secretary Lourdes R. Quisumbing, entered into a
Memorandum of Agreement (Annex A) over the subject parcels of land, allocating nineteen
29
(19) lots to the Province of Cebu, twenty three (23) lots to the school, and reserving Lot No. The Court of Appeals correctly observed that the execution of the Memorandum of Agreement
1033 (covered by TCT No. 21411) for a national government center and DECS regional office. which the Board of Trustees of the School ratified, laid to rest the controversy on whether the
The agreement was ratified by the Sangguniang Panlalawigan and the Board of Trustees of the Province of Cebu may recover all or only some of the lots it had donated in 1960 to the Cebu
school. (Sudlon) Agricultural School, now the Cebu State College of Agriculture.

Despite the agreement between the province and the school, the petitioners refused to WHEREFORE, finding no reversible error in the decision of the Court of Appeals, the petition
withdraw their suit. cdrep for review is DENIED for lack of merit. LLpr

On November 8, 1989, the trial court dismissed the complaint on the ground that the plaintiffs, SO ORDERED.
now petitioners, are not real parties in interest. The dispositive part of its decision reads:
Cruz, Medialdea and Bellosillo, JJ ., concur.
"Otherwise stated, the plaintiffs are not the real parties in interest. Without any more resolving
the issue whether or not the Memorandum of Agreement is either legal or was executed
illegally by the Secretary of Education, Dismissal of this case is the only option.

"The foregoing considered, judgment is hereby rendered directing dismissal of this case,
without pronouncement as to costs." (p. 73, Rollo.)

The petitioners appealed to the Court of Appeals which, on February 8, 1991, affirmed the
decision of the trial court.

We have deliberated on the petition for review of that decision, but failed to discover any
cogent reason for setting it aside. The numerous petitioners are admittedly not the owners of
the lots in question. They do not claim any interest in them that was violated, nor have they
suffered any injury that might warrant a grant of relief. Clearly, the finding of the appellate
court and the trial court that they are not real parties in interest who may sue to quiet the title
to the properties in question, is correct.

Only a real party in interest is allowed to prosecute and defend an action in court (Sec. 2, Rule
3 of the Rules of Court).

"By 'real party in interest' is meant such party who would be benefited or injured by the
judgment or entitled to the avails of the suit . . . A real party in interest-plaintiff is one who has
a legal right, while a real party in interest-defendant is one who has a correlative legal
obligation whose act or omission violates the legal right of the former." (Lee vs. Romillo. Jr.,
161 SCRA 589.)

". . . And by real interest. is meant a present substantial interest, as distinguished from a mere
expectancy, or a future, contingent, subordinate or consequential interest (Garcia vs. David,
67 Phil. 279: Cited in Rules of Court, Vol. I by Moran, p. 144 [1970 edition]).

30
SECOND DIVISION
[G.R. No. 121159. December 16, 2002.]
VSC COMMERCIAL ENTERPRISES, INC., petitioner, vs. COURT OF APPEALS, OSCAR ESTOPACE
and JOSE SILAPAN, respondents.
Romeo S. Salinas for petitioner.
Caballero Aumentado & Montes Law Offices for private respondents.
SYNOPSIS
Private respondents Oscar Estopace and Jose Silapan filed with the Regional Trial Court of
Manila a complaint against the Register of Deeds of Manila and petitioner VSC alleging that
that they are bona-fide stallholders inside the 'Pamilihang Sentral ng Sta. Mesa', for about ten
(10) years or so prior to the institution of the action, and as such they have been paying their
market fees to defendant VSC Commercial Enterprises, Inc. under the latter's claim that it is
the registered owner of the lot and building known as the 'Pamilihang Sentral ng Sta. Mesa.
Private respondents cited several documents annexed to their complaint showing that private
respondent's title is "fraudulent, spurious and highly questionable." They prayed for the
cancellation of defendant VSC's title over the subject property to qualified applicants in
accordance with law. Instead of filing an Answer, petitioner VSC filed a Motion to Dismiss
mainly on the ground that private respondents are not the real parties in interest, as such, they
have no cause of action against the corporation. The lower court dismissed the complaint.
Private respondents appealed the said order to the Court of Appeals. The appellate court
reversed and set aside the order of dismissal and remanded the case to the court of origin for
further proceedings. Petitioner filed a Motion for Reconsideration, but was denied. Hence, the
present petition imputing grave abuse of discretion on the part of the appellate court in
allowing respondents to prosecute the case despite the clear allegations that respondents are
not the real parties in interest. SDIaCT
The Supreme Court found the petition meritorious. Private respondents are mere lessees of
the property in question. As such, they have no present substantial and personal interest with
respect to issues involving ownership of the disputed property. The only interest they have, in
the event that petitioner's title over the subject property is cancelled and ownership reverts
to the State, is the hope that they become qualified buyers of the subject parcel of land.
Undoubtedly, such interest is a mere expectancy. Even the private respondents themselves
claim that in case of reversion of ownership to the State, they only have "pre-emptive rights"
to buy the subject property; that their real interest over the said property is contingent upon
the government's consideration of their application as buyers of the same. It is only the
government that has the personality to bring an action for the cancellation of petitioner's title
and reversion of ownership of the subject property to the State. Section 101 of the Public Land
Act categorically declares that only the government may institute an action to recover
ownership of a public land.
SYLLABUS
1. CIVIL LAW; GENERAL PRINCIPLES OF LAW; ESTOPPEL; AS LESSEES, PETITIONERS ARE
ESTOPPED FROM QUESTIONING PETITIONER'S TITLE, EVEN ON THE GROUND THAT THE
SUBJECT PROPERTY BELONGS TO THE STATE. We agree with the petitioner that private
respondents are barred from questioning the former's title over the subject property. In a long
line of cases, this Court has consistently held that the private respondents, as lessees, who had
undisturbed possession for the entire term under the lease, are estopped to deny their
landlord's title, or to assert a better title not only in themselves, but also in some third person,
including the State, while they remain in possession of the leased premises and until they
surrender possession to the landlord. In the present case, it as undisputed that there exists a
lessor-lessee relationship between petitioner and private respondents, the latter being among
the persons who lease a portion of the subject property owned by herein petitioner. Clearly,
therefore, private respondents, as lessees, are estopped from questioning petitioner's title,
even on the ground that the subject property properly belongs to the State. HCTEDa
2. REMEDIAL LAW; CIVIL PROCEDURE; PARTIES TO CIVIL ACTIONS; PARTIES IN
INTEREST; AS MERE LESSEES OF THE PROPERTY IN QUESTION, PRIVATE RESPONDENTS HAVE
NO PRESENT SUBSTANTIAL AND PERSONAL INTEREST WITH RESPECT TO ISSUES INVOLVING
OWNERSHIP OF THE DISPUTED PROPERTY. Under Rule 3, Section 2 of the Revised Rules of
Court, a real party in interest is defined as "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." "Interest" within the
meaning of the rule means material interest, an interest in issue and to be affected by the
decree, as distinguished from mere interest in the question involved, or a mere incidental
interest. The interest of the party must also be personal and not one based on a desire to
vindicate the constitutional right of some third and unrelated party. Real interest, on the other
hand, means a present substantial interest, as distinguished from a mere expectancy or a
future, contingent, subordinate, or consequential interest. In the case at bar, the private
respondents are mere lessees of the property in question. As such, they have no present
substantial and personal interest with respect to issues involving ownership of the disputed
property. The only interest they have, in the event that petitioner's title over the subject
property is cancelled and ownership reverts to the State, is the hope that they become
qualified buyers of the subject parcel of land. Undoubtedly, such interest is a mere expectancy.
Even the private respondents themselves claim that in case of reversion of ownership to the
State, they only have "pre-emptive rights" to buy the subject property; that their real interest
31
over the said property is contingent upon the government's consideration of their application
as buyers of the same. It is settled that a suit filed by a person who is not a party in interest
must be dismissed. It is only the government that has the personality to bring an action for the
cancellation of petitioner's title and reversion of ownership of the subject property to the State.
Section 101 of the Public Land Act categorically declares that only the government may
institute an action to recover ownership of a public land.
DECISION
AUSTRIA-MARTINEZ, J p:
The present petition for review on certiorari brought before us by VSC Commercial Enterprises,
Inc. (VSC) seeks the reversal of the decision of the Court of Appeals promulgated on June 16,
1994 reversing and setting aside the order of dismissal, dated March 15, 1991, of Civil Case No.
90-55411 issued by the Regional Trial Court of Manila (Branch 21) and the resolution of the
appellate court, dated July 7, 1995, denying petitioner's motion for reconsideration. ATESCc
The facts of the case are as follows:
On December 12, 1990, herein private respondents Oscar Estopace and Jose Silapan filed with
the Regional Trial Court of Manila a complaint against the Register of Deeds of Manila and
petitioner VSC alleging:
"3. . . . that they are bona-fide stallholders inside the 'Pamilihang Sentral ng Sta. Mesa',
for about ten (10) years or so prior to the institution of this action;
"4. As such stallholders, plaintiffs have been paying their market fees to defendant VSC
Commercial Enterprises, Inc. under the latter's claim that he (sic) was the registered owner of
the lot and building known as the 'Pamilihang Sentral ng Sta. Mesa;'
"5. Of late, the plaintiffs came into possession of certain documents which would
indicate that TCT No. 153406 of the Register of Deeds of Manila (which is in the name of VSC
Commercial Enterprises, Inc.), 1 originating as it did after several transfers of titles, from O.C.T.
No. 2863 covers lands not in Sta. Mesa, Manila but lands situated either in Caloocan, Mariquina
Estate or in San Juan, Metro Manila;" 2
In support thereof, private respondents cited several documents annexed to their complaint
showing that TCT No. 153406 is "fraudulent, spurious and highly questionable." They pray for
the cancellation of defendant VSC's title over the subject property claiming that:
"13. As a consequence of the cancellation of said title of land, the land thereunder (sic)
remains with or reverts to the estate (sic) disposable to qualified applicants to buy the said
land in accordance with law;
"14. As stallholders, the plaintiffs together with the other several stallholders on this land
would have pre-emptive rights over this government property." 3
Instead of filing an Answer, petitioner VSC filed a Motion to Dismiss on the following grounds:
"PLAINTIFFS ARE NOT THE REAL PARTIES IN INTEREST. AS SUCH, THEY HAVE NO CAUSE OF
ACTION AGAINST THE HEREIN DEFENDANT.
"THE COMPLAINT STATES NO CAUSE OF ACTION CONSIDERING THAT PLAINTIFFS ARE
ESTOPPED FROM ASSERTING TITLE OF THE PROPERTY LEASED BY THEM FROM THE HEREIN
DEFENDANT.
"AND ASSUMING BUT WITHOUT ADMITTING THAT PLAINTIFFS ARE THE REAL PARTIES IN
INTEREST AND HAVE CAUSE OF ACTION AGAINST DEFENDANT, THE CLAIM OR DEMAND SET
FORTH IN THE PLAINTIFFS' COMPLAINT HAS ALREADY PRESCRIBED OR OTHERWISE
EXTINGUISHED." 4
On March 15, 1991, the lower court issued an order dismissing the complaint. 5
Private respondents appealed the said order to the Court of Appeals.
On June 16, 1994, the appellate court rendered the assailed decision, the dispositive portion
of which reads:
"ACCORDINGLY, the order of dismissal of Civil Case No. 90-55411 is hereby REVERSED and SET
ASIDE. The records of the case are ordered remanded to the Court of origin or the Regional
Trial Court of Manila, Branch 21 for appropriate hearing and/or for further proceedings. We
make no pronouncement as to costs.
"SO ORDERED." 6
Petitioner VSC filed a Motion for Reconsideration but the appellate court, in a Resolution
issued on July 7, 1995, denied the same. 7
Hence, herein petition raising the following Assignment of Errors:
I
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN ORDERING THE TRIAL
COURT FOR FURTHER PROCEEDING/TRIAL OF THE RESPONDENTS' COMPLAINT DESPITE ITS
32
FINDINGS THAT RESPONDENTS ARE MERE LESSEES OR TENANTS OF THE PETITIONER'S
PROPERTY COVERED BY TRANSFER CERTIFICATE OF TITLE NO. 153406 WHICH RESPONDENTS
SEEK TO ANNUL IN THE SAID COMPLAINT. IN SO DOING, THE COURT OF APPEALS PATENTLY
VIOLATED ARTICLE 1436 OF THE CIVIL CODE OF THE PHILIPPINES AS WELL AS SECTION 3(b),
RULE 131 OF THE RULES OF COURT AND OTHER JURISPRUDENCE ON THE MATTER.
II
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN ALLOWING THE
RESPONDENTS TO PROSECUTE THE SAID COMPLAINT DESPITE THE CLEAR ALLEGATIONS
THEREIN THAT RESPONDENTS ARE NOT THE REAL PARTY IN INTEREST TO PROSECUTE THE
SAME. IN SO DOING, THE COURT OF APPEALS VIOLATED SECTION 2, RULE 3 OF THE RULES OF
COURT.
III
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN ORDERING THE TRIAL
COURT TO CONTINUE FURTHER PROCEEDINGS OF THE SAID RESPONDENTS' COMPLAINT
DESPITE THE PARTIES CLEAR ADMISSION OF FACTS AND EVIDENCE ON RECORD THAT THE
CAUSE OF ACTION STATED IN THE SAID COMPLAINT HAS ALREADY PRESCRIBED. IN SO DOING,
THE COURT OF APPEALS VIOLATED SECTION 32 OF PRES. DECREE NO. 1529 AS WELL AS
SEVERAL JURISPRUDENCE ON THE MATTER.
The petition is impressed with merit. CAETcH
Private respondents do not directly assert title to the thing leased as against petitioner. Instead,
they contend that petitioner's title over the subject property is void, praying that the same
should be cancelled and the disputed property should be reverted back to the State.
We agree with the petitioner that private respondents are barred from questioning the
former's title over the subject property. In a long line of cases, this Court has consistently held
that the private respondents, as lessees, who had undisturbed possession for the entire term
under the lease, are estopped to deny their landlord's title, or to assert a better title not only
in themselves, but also in some third person, including the State, while they remain in
possession of the leased premises and until they surrender possession to the landlord. 8 In the
present case, it as undisputed that there exists a lessor-lessee relationship between petitioner
and private respondents, the latter being among the persons who lease a portion of the subject
property owned by herein petitioner. Clearly, therefore, private respondents, as lessees, are
estopped from questioning petitioner's title, even on the ground that the subject property
properly belongs to the State.
Moreover, we also agree with petitioner that private respondents are not the real parties in
interest.
Under Rule 3, Section 2 of the Revised Rules of Court, a real party in interest is defined as "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." "Interest" within the meaning of the rule means material interest, an
interest in issue and to be affected by the decree, as distinguished from mere interest in the
question involved, or a mere incidental interest. 9 The interest of the party must also be
personal and not one based on a desire to vindicate the constitutional right of some third and
unrelated party. 10 Real interest, on the other hand, means a present substantial interest, as
distinguished from a mere expectancy or a future, contingent, subordinate, or consequential
interest. 11
In the case at bar, the private respondents are mere lessees of the property in question. As
such, they have no present substantial and personal interest with respect to issues involving
ownership of the disputed property. The only interest they have, in the event that petitioner's
title over the subject property is cancelled and ownership reverts to the State, is the hope that
they become qualified buyers of the subject parcel of land. Undoubtedly, such interest is a
mere expectancy. Even the private respondents themselves claim that in case of reversion of
ownership to the State, they only have "pre-emptive rights" to buy the subject property; 12
that their real interest over the said property is contingent upon the government's
consideration of their application as buyers of the same. 13 It is settled that a suit filed by a
person who is not a party in interest must be dismissed. 14
It is only the government that has the personality to bring an action for the cancellation. of
petitioner's title and reversion of ownership of the subject property to the State. Section 101
of the Public Land Act categorically declares that only the government may institute an action
to recover ownership of a public land. The principle enunciated in Sumail vs. CFI 15 is applicable
in the resolution of the present controversy. In the said case, this Court held:
"Under Section 101 above reproduced, only the Solicitor General or the officer acting in his
stead may bring the action for reversion. Consequently, Sumail may not bring such action or
any action which would have the effect of canceling a free patent and the corresponding
certificate of title issued on the basis thereof, with the result that the land covered thereby
will again form part of the public domain. Furthermore, there is another reason for withholding
legal personality from Sumail. He does not claim the land to be his private property. . . .
Consequently, even if the parcel were declared reverted to the public domain, Sumail does not
automatically become owner thereof. He is a mere public land applicant like others who might
apply for the same."
The same principle was reiterated in Lucas vs. Durian 16 and in Nebrada vs. Heirs of Alivio. 17
33
Considering that private respondents have no valid cause of action against herein petitioners,
the issue on prescription has perforce been rendered off-tangent and therefore there is no
longer any need to resolve the same.
WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of
Appeals, dated June 16, 1994 and July 7, 1995 are REVERSED and SET ASIDE. The Order of the
Regional Trial Court of Manila (Branch 21) dated March 15, 1991, dismissing the complaint in
Civil Case No. 90-55411, is REINSTATED.
Let copy of herein decision be furnished the Office of the Solicitor General for proper
information and guidance. cAECST
SO ORDERED.
Bellosillo, Mendoza, Quisumbing and Callejo, Sr., JJ., concur.
EN BANC
[G.R. No. L-4935. May 28, 1954.]
J.M. TUASON & CO., INC., represented by its Managing PARTNER, GREGORIO ARANETA, INC.,
plaintiff-appellee, vs. QUIRINO BOLAOS, defendant-appellant.
Araneta & Araneta for appellee.
Jose A. Buendia for appellant.
SYLLABUS
1. PARTIES; REAL PARTY IN INTEREST; ATTORNEY MAY BRING ACTION IN THE
PLAINTIFF'S NAME. Section 2 of the Rules of Court requires that an action be brought in the
name of, but not necessarily by, the real property interest. In fact the practice is for an
attorney-at-law to bring the action, that is, to file the complaint, in the name of the plaintiff.
2. ID.; CORPORATION AS PARTY MAY BE REPRESENTED BY ANOTHER PERSON.
NATURAL OR JUDICIAL. There is nothing against one corporation being represented by
another person, natural or juridical, in a suit in court, for the true rule is that "although a
corporation has no power to enter into a partnership, it may nevertheless enter into a joint
venture with another where the nature of that venture is in line with the business authorized
by its charter." (Wyoming-Indiana Oil Gas Co. vs. Weston, 80 A.L.R., 1043, citing 2 Fletcher Cyc.
E. 1082.)
3. COMPLAINTS; AMENDMENTS TO CONFIRM TO EVIDENCE NOT NECESSARY TO
RENDER JUDGMENT ON FACTS PROVED THOUGH NOT ALLEGED. Where the facts shown
entitled plaintiff to relief other than that asked for, no amendment to the complaint is
necessary, especially where defendant has himself raised the point on which recovery is based,
and the appellate court may treat the pleading as amended to confirm to the evidence,
although the pleadings were not actually amended. (Citing Maran, Rules of Court, 1952 ed.,
389-390.)
4. LAND REGISTRATION; REOPENING OF DECREE AFTER ONE YEAR, NOT ALLOWED.
A decree of registration can no longer be impugned on the ground of fraud, error or lack of
notice to defendant, after one year has elapsed from the issuance and entry of the decree.
Neither could the decree be collaterally attacked by any person claiming title to, or interest in,
the land prior to the registration proceedings, nor could title to that land in derogation of that
of plaintiff be acquired by adverse possession or prescription since adverse, notorious and
continuous possession under claim of ownership is ineffective against Torrens title ands the
right to secure possession under a decree of registration does not prescribe.
5. ACTIONS; IDENTITY OF CAUSE OF ACTION. Where one action is for the recovery
of ownership and the other is for recovery of possession, there is no identity of cause of action.
6. ID.; CLASS SUIT. Where the action seeks relief for each individual plaintiff and not
relief for and on behalf of others, the action is not a class suit.
DECISION
REYES, J p:
This is an action originally brought in the Court of First Instance of Rizal, Quezon City Branch,
to recover possession of registered land situated in barrio Tatalon, Quezon City.
Plaintiff's complaint was amended three times with respect to the extent and description of
the land sought to be recovered. The original complaint described the land as a portion of a
lot registered in plaintiff's name under Transfer Certificate of Title No. 37686 of the land record
of Rizal Province and as containing an area of 13 hectares more or less. But the complaint was
amended by reducing the area to 6 hectares, more or less, after defendant had indicated the
plaintiff's surveyors the portion of land claimed and occupied by him. The second amendment
became necessary and was allowed following the testimony of plaintiff's surveyors that a
portion of the area was embraced in another certificate of title, which was plaintiff's Transfer
Certificate of Title No. 37677. And still later, in the course of trial, after defendant's surveyor
and witness, Quirino Feria, had testified that the area occupied and claimed by defendant was
34
about 13 hectares, as shown in his Exhibit 1, plaintiff again, with the leave of court, amended
its complaint to make its allegations conform to the evidence.
Defendant, in his answer, sets up prescription and title in himself thru "open, continuous,
exclusive and public and notorious possession (of the land in dispute) under claim of ownership,
adverse to the entire world by defendant and his predecessors in interest" from "time
immemorial". The answer further alleges that registration of the land in dispute was obtained
by plaintiff or its predecessors in interest thru "fraud or error and without knowledge (of) or
notice either personal or thru publication to defendant and/or predecessors in interest." The
answer therefore prays that the complaint be dismissed with costs and plaintiff required to
reconvey the land to defendant or pay its value.
After trial, the lower court rendered judgment for plaintiff, declaring defendant to be without
any right to the land in question and ordering him to restore possession thereof to plaintiff
and to pay the latter a monthly rent of P132.62 from January, 1940, until he vacates the land,
and also to pay the costs.
Appealing directly to this court because of the value of the property involved, defendant makes
the following assignment of errors:
"I. The trial court erred in not dismissing the case on the ground that the case was not
brought by the real party in interest.
"II. The trial court erred in admitting the third amended complaint.
"III. The trial court erred in denying defendant's motion to strike.
"IV. The trial court erred in including in its decision land not involved in the litigation.
"V. The trial court erred in holding that the land in dispute is covered by transfer
certificates of Title Nos. 37686 and 37677.
"VI. The trial court erred in not finding that the defendant is the true and lawful owner
of the land.
"VII. The trial court erred in finding that the defendant is liable to pay the plaintiff the
amount of P132.62 monthly from January, 1940, until he vacates the premises.
"VIII. The trial court erred in not ordering the plaintiff to reconvey the land in litigation to
the defendant."
As to the first assigned error, there is nothing to the contention that the present action is not
brought by the real party in interest, that is, by J. M. Tuason & Co., Inc. What the Rules of Court
require is that an action be brought in the name of, but not necessarily by, the real party in
interest. (Section 2, Rule 2.) In fact the practice is for an attorney-at-law to bring the action,
that is to file the complaint, in the name of the plaintiff. That practice appears to have been
followed in this case, since the complaint is signed by the law firm of Araneta & Araneta,
"counsel for plaintiff" and commences with the statement "Comes now plaintiff, through its
undersigned counsel." It is true that the complaint also states that the plaintiff is "represented
herein by its Managing Partner Gregorio Araneta, Inc.", another corporation, but there is
nothing against one corporation being represented by another person, natural or juridical, in
a suit in court. The contention that Gregorio Araneta, Inc. can not act as managing partner for
plaintiff on the theory that it is illegal for two corporations to enter into a partnership is
without merit, for the true rule is that "though a corporation has no power to enter into a
partnership, it may nevertheless enter into a joint venture with another where the nature of
that venture is in line with the business authorized by its charter." (Wyoming-Indiana Oil Gas
Co. vs. Weston, 80 A. L. R., 1043, citing 2 Fletcher Cyc. of Corp., 1082.) There is nothing in the
record to indicate that the venture in which plaintiff is represented by Gregorio Araneta, Inc.
as "its managing partner" is not in line with the corporate business of either of them.
Errors II, III, and IV, referring to the admission of the third amended complaint, may be
answered by mere reference to section 4 of Rule 17, Rules of Court, which sanctions such
amendment. It reads:
SEC. 4. Amendment to conform to evidence. When issues not raised by the pleadings are
tried by express or implied consent of the parties, they shall be treated in all respects, as if
they had been raised in the pleadings. Such amendment of the pleadings as may be necessary
to cause them to conform to the evidence and to raise these issues may be made upon motion
of any party at my time, even after judgment; but failure so to amend does not affect the result
of the trial of these issues. If evidence is objected to at the trial on the ground that it is not
within the issues made by the pleadings, the court may allow the pleadings to be amended
and shall be so freely when the presentation of the merits of the action will be subserved
thereby and the objecting party fails to satisfy the court that the admission of such evidence
would prejudice him in maintaining his action or defense upon the merits. The court may grant
a continuance to enable the objecting party to meet such evidence."
Under this provision amendment is not even necessary for the purpose of rendering judgment
on issues proved though not alleged. Thus, commenting on the provision, Chief Justice Moran
says in his Rules of Court:
"Under this section, American courts have, under the New Federal Rules of Civil Procedure,
ruled that where the facts shown entitled plaintiff to relief other than that asked for, no
amendment to the complaint is necessary, especially where defendant has himself raised the
35
point on which recovery is based, and that the appellate court treat the pleadings as amended
to conform to the evidence, although the pleadings were not actually amended." (I Moran,
Rules of Court, 1952 ed., 389-390.)
Our conclusion therefore is that specification of error II, III, and IV are without merit.
Let us now pass on the errors V and VI. Admitting, through his attorney, at the early stage of
the trial, that the land in dispute "is that described or represented in Exhibit A and in Exhibit B
enclosed in red pencil with the name Quirino Bolaos," defendant later changed his lawyer
and also his theory and tried to prove that the land in dispute was not covered by plaintiff's
certificate of title. The evidence, however, is against defendant, for it clearly establishes that
plaintiff is the registered owner of lot No. 4-B-3-C, situate in barrio Tatalon, Quezon City, with
an area of 5,297,429.3 square meters, more or less, covered by transfer certificate of title No.
37686 of the land records of Rizal province, and of lot No. 4-B-4, situated in the same barrio,
having an area of 74,789 square meters, more or less, covered by transfer certificate of title
No. 37677 of the land records of the same province, both lots having been originally registered
on July 8, 1914 under original certificate of title No. 735. The identity of the lots was established
by the testimony of Antonio Manahan and Magno Faustino, witnesses for plaintiff, and the
identity of the portion thereof claimed by defendant was established by the testimony of his
own witness, Quirico Feria. The combined testimony of these three witnesses clearly shows
that the portion claimed by defendant is made up of a part of lot 4 B- 3-C and major on portion
of lot 4-B-4, and is well within the area covered by the two transfer certificates of title already
mentioned. This fact also appears admitted in defendant's answer to the third amended
complaint.
As the land in dispute is covered by plaintiff's Torrens certificate of title and was registered in
1914, the decree of registration can no longer be impugned on the ground of fraud, error or
lack of notice to defendant, as more than one year has already elapsed from the issuance and
entry of the decree. Neither could the decree be collaterally attacked by any person claiming
title to, or interest in, the land prior to the registration proceedings. (Sorogon vs. Makalintal,
1 45 Off. Gaz., 3819.) Nor could title to that land in derogation of that of plaintiff, the registered
owner, be acquired by prescription or adverse possession. (Section 46, Act No. 496.) Adverse,
notorious and continuous possession under claim of ownership for the period fixed by law is
ineffective against a Torrens title. (Valiente vs. Judge of CFI of Tarlac, 2 etc., 45 Off. Gaz., Supp.
9, p. 43.) And it is likewise settled that the right to secure possession under a decree of
registration does not prescribe. (Francisco vs. Cruz, 43 Off. Gaz., 5105, 5109-5110.) A recent
decision of this Court on this point is that rendered in the case of Jose Alcantara et al., vs.
Marinao et al., 92 Phil., 796. This disposes of the alleged errors V and VI.
As to error VII, it is claimed that 'there was no evidence to sustain the finding that defendant
should be sentenced to pay plaintiff P132.62 monthly from January, 1940, until he vacates the
premises." But it appears from the record that the reasonable compensation for the use and
occupation of the premises, as stipulated at the hearing was P10 a month for each hectare and
that the area occupied by defendant was 13.2619 hectares. The total rent to be paid for the
area occupied should therefore be P132.62 a month. It also appears from the testimony of J.
A. Araneta and witness Emigdio Tanjuatco that as early as 1939 an action of ejectment had
already been filed against defendant. And it cannot be supposed that defendant has been
paying rents, for he has been asserting all along that the premises in question "have always
been since time immemorial in open, continuous, exclusive and public and notorious
possession and under claim of ownership adverse to the entire world by defendant and his
predecessors in interest." This assignment of error is thus clearly without merit.
Error No. VIII is but a consequence of the other errors alleged and needs for further
consideration.
During the pendency of this case in this Court appellant, thru other counsel, has filed a motion
to dismiss alleging that there is pending before the Court of First Instance of Rizal another
action between the same parties and for the same cause and seeking to sustain that allegation
with a copy of the complaint filed in said action. But an examination of that complaint reveals
that appellant's allegation is not correct, for the pretended identity of parties and cause of
action in the two suits does not appear. That other case is one for recovery of ownership, while
the present one is for recovery of possession. And while appellant claims that he is also
involved in that other action because it is a class suit, the complaint does not show that such
is really the case. On the contrary, it appears that the action seeks relief for each individual
plaintiff and not relief for and on behalf of others. The motion for dismissal is clearly without
merit.
Wherefore, the judgment appealed from is affirmed, with costs against the appellant.
Paras, C.J., Pablo, Bengzon, Montemayor, Jugo, Bautista Angelo, Labrador and Concepcion, JJ.,
concur.
36
[GRN . L-8663 October 31, 1957]

BIENVENIDO LIM, plaintiff and appellant, vs. DEE HAO KIM (alias MARIANO MABASA), ET AL.,
defendants and appellees.

Appeal by plaintiff from the order of the Manila court of first instance dismissing, upon motion
and without trial, his complaint to recover his wife's share (and its fruits) in the estate left by
her deceased father. He included his wife as codefendant because she was unwilling to sue
with him.

Dee Chian Hong died intestate in Manila on February 1, 1945 leaving valuable stock in financial
and commercial institutions, Crispina Dee was one of his legitimate children and the other
fourteen defendants were other heirs.

In March 1946 these other heirs executed an extrajudical settlement of the estate, dividing it
among themselves, and in fraud of Crispina, awarded nothing to her.

In April 1948 plaintiff Bienvenide, Lim married Crispina; and in March 1954 he filed his action
demanding a new partition, delivery of Crispina's inheritance. together with its income, and
attorney's fees. Defendants filed a motion to dismiss on the grounds of lack of personality and
prescription. Crispina submitted a motion to dismiss, alleging that plaintiff's complaint usurped
a cause of action completely hers, and that she had never authorized him to institute any
action concerning the estate of her deceased father.

After hearing the parties, the court dismissed the action. The contract of partition was not void,
but merely voidable in so far as it concerns strangers who had mistakenly been included in the
partition, as alleged by plaintiff. Consequently, so long as it was not avoided, the contract had
its effects; and when plaintiff married Crispina in 1948 such partition agreement was existing.
Wherefore, to all intents and purposes there was no inheritance brought by her to the
marriage; hence, her husband acquired no rights thereto. Not only that but the wife objects to
the action, and under Article 1382 of the Civil Code the husband may not maintain actions of
any kind whatsoever with respect to the paraphernal property, without the intervention or
consent of the wife. Anyway, her conduct practically amounts to a renunciation or disposition
of her share or paraphernal property.

Judgment affirmed, with costs against appellant.

Bengzon, J., ponente.

37
[G.R. No. L-14242. September 20, 1920.]
JULIAN REYES ET AL., plaintiffs-appellants, vs. FRANCISCA CORDERO, MARIA CORDERO, and
AMANDO GATMAITAN, defendants-appellees.
Gabriel N. Trinidad and Fernando Torrillo for appellants.
Ambrosio Santos for appellee Gatmaitan.
No appearance for the other appellees.
SYLLABUS
1. ACTION FOR PARTITION; ADVERSED CLAIMANT NOT PROPER PARTY DEFENDANT.
Where in an action for partition it is alleged in the complaint that one of the defendants is
made a party because he is in possession of the property sought to be partitioned, claiming a
supposed interest adverse to that of the plaintiffs, there is a misjoinder of parties defendant,
and the complaint is subject to demurrer on that ground.
2. ID.; WHEN JOINDER OF THIRD PERSON PROPER. In an action for partition the
joinder of a third person is proper, when it is alleged in the complaint that he is in possession
as a coowner, or that the interest claimed by him consists in his having been subrogated to the
right of one of the coowners by assignment, sale, or other mode of transferring ownership, as
in that case his claim is limited to that part of the property that may be allotted to him in the
partition.
3. ID.; WHEN AN ACTION FOR EJECTMENT. If in an action for partition a third parson
is joined who claims an interest adverse to that of the plaintiffs, then the action becomes one
for ejectment or unlawful entry, and cannot be maintained upon demurrer, for otherwise it
would serve as a means by which the plaintiff could investigate the right or interest said third
person claims to possess in the property sought to be partitioned.
DECISION
ARAULLO, J p:
The complaint presented in the Court of First Instance of Bulacan prayed that after trial
judgment be rendered ordering the partition, in accordance with law, of the land described in
paragraph 2 thereof. To this end the plaintiffs alleged that they and the defendants Francisca
Cordero and Maria Cordero were the descendants of the owner of said parcel of land, Leon
Alfaro, who died long ago in the municipality of Paombong, Province of Bulacan; that upon his
death one of his daughters, Felipa Alfaro, now deceased, mother of the defendants Francisca
and Maria Cordero, succeeded him in the possession thereof; and that said land was still
undivided property of the heirs. It was also alleged in paragraph 6 of the complaint that the
other defendant, Amando Gatmaitan, was made a party because he was in possession of said
land, claiming a supposed interest adverse to that of the plaintiffs.
To the complaint a demurrer was presented by the defendant Amando Gatmaitan on the
grounds of misjoinder of parties in that he was made a party defendant and that the facts
alleged did not constitute a cause of action as to him. After hearing, the court by order of
February 9, 1918, sustained the demurrer, to which order the plaintiffs excepted. The plaintiff
not having amended their complaint within the time fixed by the rules of court, the court
dismissed the case as to said defendant, Amando Gatmaitan, to which action of the lower court
the plaintiffs also excepted and brought the case to this court on appeal by bill of exceptions.
The question presented in this proceeding is whether the defendant Amando Gatmaitan, who
is neither a descendant of the deceased Leon Alfaro, nor a coheir or coowner of the plaintiffs
and the other two defendants, as to the land described in the complaint, may be made a party
to the suit for partition instituted by the plaintiffs, or, in other words, whether his joinder as a
party defendant was proper.
An action for partition of real property, as the name itself clearly suggests, is a judicial
controversy between persons who, being coowners or coparceners thereof, seek to secure a
division or partition among them of the common property, giving to each one the part
corresponding to him.
The right to bring such action or to ask at any time for the division of the common property
belongs solely to a coowner or coparcener (art. 400, Civil Code, and section 181, Code of Civil
Procedure). The action for partition of real property cannot therefore be instituted except by
the coowners or coparceners of said property, and cannot be maintained against persons who
are not such, because in an action for partition of such property it is an indispensable requisite
that there should be common ownership of the thing and that the parties, plaintiffs and
defendants, should be coowners or coparceners.
"NATURE AND OBJECTS OF PARTITION. The object of partition proceedings is to enable
those who own property as joint tenants, or coparceners or tenants in common, to put an end
to the tenancy so as to vest in each a sole estate in specific property or an allotment of the
lands or tenements. . . ." (Ruling Case Law, vol. 20, p. 716, paragraph 2.)
". . . It is generally held that it is a prerequisite to the maintenance of a proceeding for the
compulsory partition of lands that the petitioner have, at the commencement of such
proceedings, an actual or constructive possession, in common with the defendants, of the land
sought to be partitioned. . . ." (Id., p. 730, paragraph 13.)
38
This court has laid down the doctrine in several cases, among them, that of Rodriguez vs.
Ravilan 917 Phil., 63), that:
"In an action for the partition of property held in common, it is assumed that the parties by
whom it is prosecuted are all coowners or coproprietors of the property to be divided, as he
who claims or demands the partition of property of common ownership must necessarily have
the status of coproprietor of the undivided property.
"In such an action for partition the question of common ownership is not to be argued, nor the
fact as to whether the interest parties are or are not the owners of the property in question,
but only as to how, and in what manner, and in what proportion the said property of common
ownership shall be distributed among the interested parties by order of the court."
The appellants admit in their brief that it is not alleged in the complaint that the defendant
Amando Gatmaitan is made a party for the reason that he is owner or possessor of the
property in that capacity; and they state that, as it has been alleged therein that he is in
possession of the land and claims a supposed interest opposed to that of the plaintiffs, these
facts are matters of proof, the burden of which is upon the plaintiffs. This is just the error
committed by the plaintiffs. Had it been alleged that the possession of the defendant was in
the capacity of coowner with the plaintiffs or that his interest opposed to that of the latter
consists in his having been subrogated by assignment, sale, or other mode of transferring
ownership, to the proprietary right which any of the other defendants had in the property in
question, then the joinder of the defendant Gatmaitan as such would have been proper,
inasmuch as every coowner has the absolute right of his part and consequently may alienate,
assign, or mortgage it and even substitute another in its enjoyment, the effect of the alienation
being of course limited to the part which may be adjudicated to him upon the division of the
thing in common (art. 399, Civ. Code). Said defendant, as coowner and coparcener, as to a part
of the property, would have the right to be a party to the partition proceeding, and, in such
case, if he is not joined as defendant, he could intervene. This is the reason why it is provided
in section 183 of the Code of Civil Procedure that the complaint in partition proceedings should,
besides stating the nature of the title of the plaintiff and describing the real property sought
to be partitioned, also name as defendant every tenant in common coheir or other person
interested in said property. But he could by no means be joined in the complaint as defendant,
with the right to prove his common ownership with the plaintiffs and the other two defendants
or his corresponding right to the property, because this would amount to converting the
partition proceeding into another proceeding for ejectment or unlawful entry against said
defendant; and it would serve as a means by which the plaintiffs could investigate the right or
interest which the defendant Gatmaitan claims to possess in the property which is the subject-
matter of the complaint for partition.
"One who holds property in common and pro indiviso with others has a perfect right to have
a division made of the same. No hindrance to the exercise and effectiveness of this right can
lie in any conveyance made of various portions of the property by some of the cotenants
thereof in favor of other persons, for the law, besides granting these latter the right to a voice
in the division of the thing owned in common and to object to any division made without their
concurrence, considers them, in an action for the partition of real estate, as subrogated to the
rights of the vendors in the portion of the property in their possession. (Arts. 399, 400, 403,
and 1051, Civil Code; sec. 762, Code of Civil Procedure.)" (Dancel vs. Dancel, 29 Phil., 25.)
". . . It has been held that under a statute providing that during the pendency of any partition
suit any person claiming to be interested in the premises may appear and assert his right, the
right to intervene is given to all persons claiming an interest in the land, whether under the
common title sought to be partitioned or by titled independent thereof. But even under
statutes allowing the adjudication of the rights and interests of the parties to a bona fide
partition suit, an action for partition cannot be used as a substitute for the action of the
ejectment nor for the sole purpose of testing a legal title." (Ruling Case Law, vol. 20, p. 730,
paragraph 12.)
Neither would the doctrine laid down by this court in Araullo vs. Araullo (3 Phil., 567), relied
upon by the plaintiffs, justify the joinder of Amando Gatmaitan as defendant, in view of the
allegations of the complaint as to him. In that case, the property sought to be partitioned was
in the actual possession of third persons who enjoyed possession as owners without being
joined as parties to the proceeding, that is, they claimed to be owners of the property by virtue
of a title opposed to that of both the plaintiffs and the defendants, and the commissioners
who were to effect the partition had already been appointed by the court. This court declared
that the proceedings could not be continued because the commissioners appointed to effect
the partition had no right, for the purpose of taking a view as required by law, to enter lands
possessed by third persons as owners, who were not made parties in the partition proceeding;
but the following is stated in the body of the decision: "Whether the persons should be made
parties to the partition suit and their claims there determined, or whether an independent
action must be brought against them, we do not decide." Therefore this court did not hold in
that case, as appellants seem to have understood, that in a complaint for partition of property
in order that the proceedings might be continued those persons should be joined as
defendants who, being in possession of the property or part thereof, alleged themselves to be
the owners thereof by virtue of a title opposed to that of the parties to the proceeding, or
claim an interest adverse also to theirs; on the contrary the court abstained from deciding it,
and did not determine whether they should be included as parties in the same proceeding or
whether a new and independent action should be instituted against them.
39
Nevertheless it is indisputable that when the property which is yet undivided among various
coowners has been usurped or is in the possession of a third person who claims a title opposed
to that of the former, the common owners thereof may recover it in a proper proceeding, for,
as the supreme court of Spain has held in its decision of April 6, 1896 (79 Jur. Civ., 641), "Any
coowner of an undivided property may bring an action to recover it for the benefit of all." This
once more shows that a person cannot be joined as defendant, who does not possess the
property as coowner or joint owner, but by virtue of a title the nature of which is unknown but
opposed to those seeking partition thereof as coowners, or who possesses the same under a
claim of interest opposed to the latter. A person who like the defendant, Amando Gatmaitan,
is in this situation, may be sued in another proceeding, but not in a proceeding for partition.

The demurrer filed by said defendant to the complaint was therefore correctly sustained and
the plaintiffs not having amended it within the time fixed by the rules of court, the dismissal
thereof as to said defendant was proper.

The order appealed from is therefore affirmed, with costs. So ordered.

Mapa, C.J., Johnson, Malcolm, Avancena, and Villamor, JJ., concur.

40
[G.R. No. 94005. April 6, 1993.]
LUISA LYON NUAL, herein represented by ALBERT NUAL, and ANITA NUAL HORMIGOS,
petitioners, vs. THE COURT OF APPEALS and EMMA LYON DE LEON in her behalf and as
guardian ad litem of the minors HELEN SABARRE and KENNY SABARRE, EDUARDO GUZMAN,
MERCEDEZ LYON TAUPAN, WILFREDO GUZMAN, MALLY LYON ENCARNACION and DORA LYON
DELAS PEAS, respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT; ONCE IT BECOMES FINAL, MAY NO
LONGER BE MODIFIED IN ANY RESPECT; EXCEPTIONS. In the case of Manning International
Corporation v. NLRC, (195 SCRA 155, 161 [1991]) We held that ". . ., nothing is more settled in
the law than that when a final judgment becomes executory, it thereby becomes immutable
and unalterable. The judgment may no longer be modified in any respect, even if the
modification is meant to correct what is perceived to be an erroneous conclusion of fact or
law, and regardless of whether the modification is attempted to be made by the Court
rendering it or by the highest Court of land. The only recognized exceptions are the correction
of clerical errors or the making of so-called nunc pro tunc entries which cause no prejudice to
any party, and, of course, where the judgment is void." Furthermore, "(a)ny amendment or
alteration which substantially affects a final and executory judgment is null and void for lack
of jurisdiction, including the entire proceedings held for that purpose."
2. ID.; ID.; ID.; ID.; REMEDY OF AGGRIEVED PARTY. In the case at bar, the decision of
the trial court in Civil Case No. 872 has become final and executory. Thus, upon its finality, the
trial judge lost his jurisdiction over the case. Consequently, any modification that he would
make, as in this case, the inclusion of Mary Lyon Martin would be in excess of his authority.
The remedy of Mary Lyon Martin is to file an independent suit against the parties in Civil Case
No. 872 and all other heirs for her share in the subject property, in order that all the parties in
interest can prove their respective claims.
DECISION CAMPOS, JR., J p:
This is a petition for review on certiorari of the decision ** dated February 22, 1990 of the
Court of Appeals in CA-G.R. CV No. 14889 entitled "Emma Lyon de Leon, et al., plaintiffs-
appellees versus Luisa Lyon Nual, now deceased herein represented by Albert Nual, et al.,
defendants appellants," dismissing petitioners' appeal and affirming the trial court's order ***
dated January 9, 1987 for the inclusion of Mary Lyon Martin as one of the heirs who shall
benefit from the partition.
The facts as culled from the records of the case are as follows.
This case originated from a suit docketed as Civil Case No. 872 filed by Emma Lyon de Leon in
her behalf and as guardian ad litem of the minors Helen Sabarre and Kenny Sabarre, Eduardo
Guzman, Mercedes Lyon Taupan, Wilfredo Guzman, Mally Lyon Encarnacion and Dona Lyon
de las Peas, (herein private respondents) against Luisa Lyon Nual, now deceased and herein
represented by her heirs, Albert Nual and Anita Nual Hormigos (herein petitioners), for
partition and accounting of a parcel of land located in Isabela, Basilan City. Subject parcel of
land was formerly owned by Frank C. Lyon and May Ekstrom Lyon, deceased parents of Helen,
Dona, Luisa, Mary, Frank and William James. Private respondents claimed that said parcel of
land, formerly covered by Transfer Certificate of Title No. 3141 in the name of Frank C. Lyon,
has been in possession of petitioner Luisa Lyon Nual since 1946 and that she made no
accounting of the income derived therefrom, despite demands made by private respondents
for the partition and delivery of their shares.
On December 17, 1974, after trial and hearing, the then Court of First Instance (now Regional
Trial court) rendered its judgment in favor of private respondents and ordered the partition of
the property but dismissing private respondents' complaint for accounting. The dispositive
portion of the judgment reads as follows: prcd
"WHEREFORE, judgment is hereby rendered ordering the partition of the land covered by
Transfer Certificate of Title No. 3141 among the plaintiffs and defendant. The parties shall
make partition among themselves by proper instruments of conveyance, subject to the Court's
confirmation, should the parties be unable to agree on the partition, the court shall appoint
commissioners to make the partition, commanding them to set off to such party in interest
such part and proportion of the property as the Court shall direct. Defendant is further ordered
to pay plaintiffs attorney's fees in the sum of P2,000.00." 1
On July 30, 1982, the order of partition was affirmed in toto by the Court of Appeals in CA-G.R.
No. 57265-R. The case was remanded to the court of origin for the ordered partition. 2
On May 17, 1984, an order for the issuance of the writ of execution was issued by the court a
quo. 3
On July 17, 1984, Mary Lyon Martin, daughter of the late Frank C. Lyon and Mary Ekstrom Lyon,
assisted by her counsel filed a motion to quash the order of execution with preliminary
injunction. In her motion, she contends that not being a party to the above-entitled case her
rights, interests, ownership and participation over the land should not be affected by a
judgment in the said case; that the order of execution is unenforceable insofar as her share,
right, ownership and participation is concerned, said share not having been brought within the
Jurisdiction of the court a quo. She further invokes Section 12, Rule 69 of the Rules of Court. 4
41
On June 26, 1985, the trial court issued an order revoking the appointment of the three
commissioners and in lieu thereof, ordered the issuance of a writ of execution. 5
On February 4, 1986, the said court issued an order appointing a Board of Commissioners to
effect the partition of the contested property. 6
On May 28, 1986, the trial court dismissed the motion to quash order of execution with
preliminary injunction filed by Mary Lyon Martin and directed the partition of the property
among the original party plaintiffs and defendants. 7
On September 24, 1986, the Commissioners manifested to the trial court that in view of the
fact that the name of Mary Lyon Martin also appears in the Transfer Certificate of Title, she
could therefore be construed as one of the heirs. A ruling from the trial court was then sought.
8 SO ORDERED." 16
On September 29, 1986, the lower court issued an order directing the counsel of Emma Lyon
de Leon to furnish the court within five days from receipt thereof all the names the of heirs
entitled to share in the partition of the subject property. 9
On October 1, 1986, the petitioners filed a manifestation praying that the court issue an order
directing the partition of the property in consonance the decision dated December 17, 1974
of the trial court the order of said court dated May 28, 1986. 10
Without ruling on the manifestation, the lower court issued an order directing the Board of
Commissioners to immediately partition the said property. 11
On January 3, 1987, the private respondents filed motion for clarification as to whether the
partition of property is to be confined merely among the party plaintiffs and defendants, to
the exclusion of Mary Lyon Martin. 12
On January 9, 1987, the lower court issued the assailed order directing the inclusion of Mary
Lyon Martin as co-owner with a share in the partition of the property, to wit:
"After a perusal of the decision of the Court of Appeals CA-G.R. No. 57265-R, where this case
was appealed by the unsatisfied parties, there is a finding that Mary now Mary Lyon Martin is
one of the legitimate children of Frank C. Lyon and Mary Ekstrom. (Page 3 of the decision).
In view of this finding, it would be unfair and unjust if she would be left out in the partition of
this property now undertaking (sic) by the said court appointed commissioners.
WHEREFORE, premises considered, the court appointed commissioners is hereby directed to
include Mary Lyon Martin as co-owner in the said property subject of partition with the
corresponding shares adjudicated to her. LLjur
SO ORDERED." 13
Petitioners' motion for reconsideration 14 of the aforesaid order was denied by the trial court.
15
On February 22, 1990 the Court of Appeals rendered its decision dismissing petitioners' appeal,
the dispositive portion of which reads as follows:
"WHEREFORE, premises considered, there being no legal impediment to the inclusion of Mary
Lyon Martin by the court-appointed Board of Commissioners as one of the heirs who shall
benefit from the partition, the instant appeal is DISMISSED for lack of merit.
NO COSTS.
Petitioners' motion for reconsideration was denied on June 6, 1990. 17
Petitioners filed this petition for review alleging that the Court of Appeals has decided
questions of substance contrary to law and the applicable decisions of this Court, for the
following reasons:
"1.) BY SUSTAINING THE ORDER OF THE REGIONAL TRIAL COURT DIRECTING THE COURT
APPOINTED BOARD OF COMMISSIONERS TO INCLUDE MARY L. MARTIN TO SHARE IN THE
PARTITION OF THE PROPERTY IN LITIGATION DESPITE THE FACT, OVER WHICH THERE IS NO
DISPUTE, THAT SHE HAS NOT LITIGATED EITHER AS A PARTY PLAINTIFF OR DEFENDANT IN CIVIL
CASE NO. 872, IT HAS REFUSED TO RECOGNIZE THAT THE REGIONAL TRIAL COURT HAS NO
JURISDICTION TO AMEND OR MODIFY THE JUDGMENT IN CIVIL CASE NO. 872 AND THE
REGIONAL TRIAL COURT'S ORDER DATED 28 MAY 1986 WHICH HAS BECOME FINAL AND
EXECUTORY.
2.) WHEN THE COURT OF APPEALS HAS CATEGORICALLY STATED THAT MARY L. MARTIN
"NEVER LITIGATED AS ONE OF THE PLAINTIFFS IN SAID CASE," AND HER ONLY PARTICIPATION
THEREIN WAS SIMPLY CONFINED "AS A WITNESS FOR DEFENDANT-SISTER LUISA LY ON
NUAL," AND TO ALLOW HER TO SHARE IN THE PARTITION THIS LATE WITHOUT REQUIRING A
PROCEEDING WHERE THE PARTIES COULD PROVE THEIR RESPECTIVE CLAIMS, IS
TANTAMOUNT TO DENYING THE NUALS OF THEIR RIGHT TO DUE PROCESS. 18
The crux of this case is whether of not the trial court may order the inclusion of Mary L. Martin
as co-heir entitled to participate in the partition of the property considering that she was
neither a party plaintiff nor a party defendant in Civil Case No. 872 for partition and accounting
42
of the aforesaid property and that the decision rendered in said case has long become final
and executory.

Petitioners contend that the trial court's decision dated December 14, 1974 in Civil Case No.
872 ordering the partition of the parcel of land covered by Transfer Certificate of Title No. 3141
among plaintiffs and defendants has long become final and executory. Hence the trial court
has no jurisdiction to issue the questioned Order dated January 9, 1987 ordering the Board of
Commissioners to include Mary Lyon Martin to share in the partition of said property despite
the fact that she was not a party to the said case. Said Order, therefore, resulted in an
amendment or modification of its decision rendered in Civil Case No. 872.

We find merit in the instant petition.

In the ease of Manning International Corporation v. NLRC, 19 We held that ". . ., nothing is
more settled in the law than that when a final judgment becomes executory, it thereby
becomes immutable and unalterable. The judgment may no longer be modified in any respect,
even if the modification is meant to correct what is perceived to be an erroneous conclusion
of fact or law, and regardless of whether the modification is attempted to be made by the
Court rendering it or by the highest Court of land. The only recognized exceptions are the
correction of clerical errors or the making of so-called nunc pro tunc entries which cause no
prejudice to any party, and, of course, where the judgment is void."

Furthermore, "(a)ny amendment or alteration which substantially affects a final and executory
judgment is null and void for lack of jurisdiction, including the entire proceedings held for that
purpose." 20

In the case at bar, the decision of the trial court in Civil Case No. 872 has become final and
executory. Thus, upon its finality, the trial judge lost his jurisdiction over the case.
Consequently, any modification that he would make, as in this case, the inclusion of Mary Lyon
Martin would be in excess of his authority. LLpr

The remedy of Mary Lyon Martin is to file an independent suit against the parties in Civil Case
No. 872 and all other heirs for her share in the subject property, in order that all the parties in
interest can prove their respective claims.

WHEREFORE, the petition is GRANTED. The Order dated January 9, 1987 of the trial Court as
affirmed by the Court of Appeals is hereby REVERSED and SET ASIDE. The decision of the trial
court dated December 17, 1974 in Civil Case No. 872 is hereby REINSTATED.

43
[G.R. No. L-47494. May 15, 1978.]
AIDA ROBLES, Accompanied by her husband Rafael Penolio, petitioners, vs. COURT OF APPEALS,
* ANICETO B. PARREO, and THE REGISTER OF DEEDS OF NEGROS OCCIDENTAL respondents.
Ramon C. Ditching & Rolando C. Medalla for petitioners.
Arsenio Acua & Associates for respondents.
SYNOPSIS
Petitioner, heir to the extent of 1/4 share of the estate, was not a signatory to a general power
of attorney executed by his co-heirs authorizing her uncle to alienate and encumber the
properties in dispute. When the disputed properties were sold and a new transfer titles to the
whole of said properties were issued to the respondent-vendee after the Register of Deeds
allowed the power of attorney to be registered as a declaration of heirship, petitioner sued
respondent-vendee and the Register of Deeds for the cancellation of titles and for legal
redemption. The lower court dismissed the complaint. On appeal, respondent appellate court
held that the vendors (the other co-heirs) were indispensable parties and remanded the case
to the lower court so that the petitioner can be required to implead the indispensable and
necessary parties in the case and for subsequent hearing for the issuance of a new judgment.
The Supreme Court ruled that petitioner's co-heirs who sold the properties to respondent-
vendee are not indispensable parties and the action filed by the petitioner could be completely
adjudicated even without them, much more so with regard to her action as co-heir for legal
redemption of the properties from said respondent-vendee under Article 1088 of the Civil
Code.
Judgment set aside and case remanded for determination of the merits of the appeal.
SYLLABUS
1. PARTIES; INDISPENSABLE PARTIES; VENDORS-COHEIRS NOT INDISPENSABLE PARTIES
IN ACTION FOR CANCELLATION OF VENDEE'S TITLE AND FOR LEGAL REDEMPTION FILED BY
EXCLUDED HEIR. The vendors-coheirs are not indispensable parties in an action brought by
an heir for cancellation of the vendee's titles insofar as they were issued for the whole of the
properties sold to the exclusion of said heir's share notwithstanding that she was not a party
to the sale, and for legal redemption as a coheir of the properties thus sold to respondent
vendee under Article 1088 of the Civil Code.
2. ID.; ID.; ID.; REMEDIES OF VENDEE. That the vendors-coheirs have a right to justify
the legality of their sale to respondent to avoid being held liable for damages or possible
criminal responsibility if the sale should be adjudged invalid does not make them indispensable
parties without whom the excluded heir's action questioning the validity of the issuance of the
titles for the whole of the properties cannot be completely adjudicated. The vendee can call
the vendors-coheirs as witnesses on his behalf or implead them as third-parties defendants in
a third-party complaint to justify the sale of the properties or else answer to his by way of
damages or he can file a separate action against said vendors-coheirs by way of enforcing the
warranty made by them as vendors of the properties should the contract of sale be adjudged
invalid.
3. ID.; ID.; ID.; JURISPRUDENCE. Where the principal action is one for legal
redemption under Article 1088 of the Civil Code the excluded heir and the vendee are the only
indispensable parties to the exclusion of the vendors-coheirs. The trial court has no obligation
to order the inclusion of the seller-coheir either as party plaintiff or party defendant in the
case, because while he may be a necessary party, still he is not indispensable in the sense that
the matter before it could not be completely adjudicated without him and where the deed of
sale in favor of the vendee clearly states that what is being sold is an undivided portion of the
land jointly owned by the vendor and his co-heirs, the vendee is conclusively presumed to
know the law that under such circumstances, the coheirs are entitled to redeem the portion
being sold within 30 days from notice in writing of the sale, under Article 1088 of the New Civil
Code. In effect, he is a vendee with notice of the right of redemption by the vendor's coheirs,
and if the vendee believed he had a claim against the vendor by reason of the warranty, it was
his duty to have filed a third-party complaint against the latter.
DECISION
TEEHANKEE, J p:
The Court gets aside respondent court's decision which would require petitioner to implead
certain parties and remands the appeal for determination on its merits. The vendors-coheirs
of petitioner are not indispensable parties in the action brought by her for cancellation of the
vendee's titles insofar as they were issued for the whole of the properties sold to the exclusion
of petitioner's share notwithstanding that she was not a party to the sale and for legal
redemption as a coheir of the properties thus sold to respondent vendee under Article 1088
of the Civil Code.
As found by the Court of Appeals, petitioner Aida Robles is the granddaughter of the deceased
Eligio A. Robles (being the child of Eligio's deceased son Jose). In his lifetime, Eligio registered
his title to Lot No. 1304 with an area of 4.2038 hectares of the Escalante Cadastre and the
certificate of title thereto was issued in his name and that of his wife Melania Cuaycong. Eligio
had also started registration proceedings for another lot, No. 1305-A with an area of 5.8685
hectares and after his death, title thereto was issued in the name of his surviving spouse and
44
in the name of "the heirs of Eligio Robles". These two properties pertaining to the conjugal
estate of Eligio and Melania constitute the disputed properties at bar.
On June 20, 1957, Melania as surviving spouse and nine other children besides Eva Robles,
another granddaughter of the deceased Eligio (sister of petitioner Aida), who were the
deceased's heirs to the extent of 43/44 executed a general power of attorney in favor of
Francisco (a son) to alienate and encumber the disputed properties, reciting therein that the
signatories are the owners of the properties, although they were not joined by petitioner Aida
who is also an heir of the deceased's estate to the extent of 1/44.
In October, 1960, Francisco by virtue of the power of attorney executed a private deed of sale
of the properties in favor of respondent Aniceto B. Parreo and later executed on January 20,
1965 a notarized deed of sale of the properties in favor of said respondent for the price of
P4,300.00. LLjur
The power of attorney was registered in the office of the respondent Register of Deeds of
Negros Occidental and was apparently treated as a Declaration of Heirship and thereafter new
transfer titles to the whole of said properties were issued in favor of the vendee Parreo.
On September 18, 1967, petitioner Aida Robles as plaintiff filed a complaint in the Negros
Occidental court of first instance against respondents Parreo and Register of Deeds praying
for cancellation of the titles issued in respondent Parreo's name and that she be allowed, as
a 1/44 coheir and co-owner of the properties to redeem the same from said respondent
vendee.
The lower court dismissed the complaint and on appeal respondent court held that the sellers
(the other coheirs) were indispensable parties and should have been impleaded and rendered
its decision that "the judgment of the LOWER COURT is hereby set aside and let this case be,
as it is, hereby ordered remanded to the LOWER COURT so that plaintiff can be required to
implead the indispensable and necessary parties in the case and for subsequent hearing for
the issuance of a new judgment."
Respondent appellate court held that "(T)here is a procedural error in the CASE BELOW. Since
plaintiff was suing defendant for cancellation of his ownership of the DISPUTED PROPERTY sold
to him by the SELLERS, the latter were indispensable parties and should have been impleaded.
They had a right to justify the legality of their sale of the DISPUTED PROPERTY to defendant in
order to free themselves from damages in favor of defendant if the sale should be adjudged
invalid. Moreover, they should be given the chance to justify the sale if only to avoid possible
criminal responsibility for estafa based on false allegation of ownership (Art. 315, 2[a], Revised
Penal Code), " and added that "The general rule is that if an indispensable party is not
impleaded, the case should be dismissed. . . . Rather than affirm the decision dismissing
plaintiff's complaint, which will not definitely settle the controversy between the plaintiff and
the other parties, this case should be remanded to the LOWER COURT . . . ."
Petitioner's motion for reconsideration stressing that her act is one for legal redemption
against respondent as vendee (against whom precisely the right of redemption is exercised)
was denied by respondent court which ruled that "the SELLERS would not be indispensable
parties if what they had sold to defendant was only their respective participations in the
DISPUTED PROPERTY. But what was sold was the entirety of the DISPUTED PROPERTY, with the
SELLERS claiming full ownership over the same. The SELLERS took the position that plaintiff
was not a co owner of the DISPUTED PROPERTY. As a matter of fact, in the 'NOTICE OF
DECLARATION OF HEIRSHIP', the SELLERS excluded plaintiff as an heir of ELIGIO and therefore
not a co-owner of the DISPUTED PROPERTY. If plaintiff is held entitled to redeem and the
redemption is held binding on the SELLERS, defendant will have causes of action, civil and
criminal, against the SELLERS for having sold to him, as all the owners thereof, the entirety of
the DISPUTED PROPERTY. Without the SELLERS being made parties in the CASE BELOW, the
redemption should not be allowed."
Hence, this petition which asserts that petitioner's coheirs who sold the properties to
respondent Parreo are not in dispensable parties but that her suit could be completely
adjudicated without them, much more so with regard to her action as coheir for legal
redemption of the properties from said respondent vendee under Article 1088 of the Civil Code.
cdphil
We find merit in the petition.
Petitioner's action for cancellation of titles was in reality not one "for cancellation of
(respondent's) ownership of the disputed property sold to him by the sellers" as perceived by
respondent court but rather one questioning the validity of respondent Register of Deeds'
issuing the titles to the whole of the properties in disregard of petitioner's 1/44 share therein
and against existing laws and regulations. As stated in the petition, 1 respondent Register of
Deeds was impleaded "because, by his obvious negligence or act of indiscretion, he unduly
accommodated respondent Parreo to cure a legal defect or legal deficiency of the documents
covering the sale, via a short-cut method, by allowing the General Power of Attorney to be
registered as a 'Declaration of Heirship' (which, in effect, left out the petitioner and transferred
ownership of the disputed property in 'totality' to respondent Parreo) instead of requiring
the presentation of a separate and true 'Declaration of Heirship' executed by all the heirs. This
requirement is all the more necessary, if it is noted that the General Power of Attorney
presented was no longer the original copy, but only a certified true copy from the Notary Public,
and was executed by the vendor co-heirs on June 20, 1957, or nearly eight (8) years prior to
the date of its registration on February 23, 1965. Furthermore, the Register of Deeds did not
45
require the presentation of a 'written notice to all possible redemptioners'. All these faults,
which fall squarely on the shoulders of respondents Parreo and the Register of Deeds,
resulted in the irregular issuance of titles which are now sought to be cancelled.
"The vendors-coheirs of petitioner are not indispensable parties insofar as this phase of the
action against the Register of Deeds is concerned. The fact cited by respondent court that they
have a right to justify the legality of their sale to respondent to avoid being held liable for
damages or possible criminal responsibility if the sale should be adjudged invalid does not
make them indispensable parties without whom petitioner's action cannot be completely
adjudicated. Respondent Parreo could have called them as witnesses on his behalf or
impleaded them as third-parties defendants in a third-party complaint to justify the sale of the
properties or else answer to him by way of damages (but it is too late now for such a third-
party complaint); at any rate, said respondent still has the right of filing a separate action
against the vendors-coheirs by way of enforcing the warranty made by them as vendors of the
properties.
The imprecision of petitioner's complaint has caused some confusion. But it appears evident
that the action for cancellation of titles impleading the Register of Deeds is one assailing his
acts as wrongful and without authority in law, but that petitioner's "action for cancellation of
titles, issued in favor of respondent Parreo, pertains only to her own rights and interests and
does not affect the true rights and interests of the vendors-coheirs. Against respondent
Parreo, the action instituted is based on the premise that he did not acquire all the rights and
interests on the property, subject of sale. His acquisition is limited only to the rights and
interests of the vendors-coheirs who signed the General Power of Attorney and does not
include the rights and interests of a co-heir, herein petitioner, Aida Robles, who did not sign,"
as is clearly stated in the petition. 2
5 where we held that "the trial court had no obligation to order the inclusion of the vendor
either as a party plaintiff or party defendant in the case, because while he may be a necessary
party, still he is not indispensable in the sense that the matter before it could not be completely
adjudicated without him. The deed of sale in favor of appellant clearly states that what is being
sold is an undivided 1/5 portion of the land jointly owned by the vendor and his brothers and
nephew. The vendee-appellant is, therefore, conclusively presumed to know the law that
under such circumstances, the co-heirs are entitled to redeem the portion being sold within
30 days from notice in writing of the sale, under Article 1088 of the New Civil Code. In effect,
he is a vendee with notice of the right of redemption by the vendor's coheirs," and that
"moreover, if vendee-appellant believed he had a claim against the vendor by reason of the
warranty, it was his duty to have filed a third-party complaint against the latter . . . ."
Respondent court should therefore have adjudged the appeal on its merits, and if the facts be
as they are indicated in its decision, to wit, the petitioner is indeed a coheir and coowner of
1/44 of the properties and that her coowners-coheirs had sold the same or their hereditary
rights thereto without notice to her, petitioner's action for redemption of the properties must
be sustained.
ACCORDINGLY, the judgment of respondent court is hereby set aside and the case is remanded
to it for determination of the merits of the appeal, in consonance with the Court's observations
in this decision. No costs.

Such action for cancellation is really secondary and is but a means of enforcing petitioner's
claim as a coheir and undivided co-owner of 1/44 of the properties as a granddaughter of the
deceased Eligio Robles, which has been found as a fact by respondent court as well as by the
trial court which held that "The court accepts as a sufficiently established fact that plaintiff
being the daughter of Jose Robles and therefore one of the granddaughters of Eligio Robles, is
one among the latter's heirs, in the same manner as plaintiff's sister, Eva Robles. The court also
takes note that plaintiff was not a signatory to the general power of attorney, Exh. 'A' pursuant
to which conveyance to the defendant of said lots were made by Francisco Robles." 3

Petitioner's principal action is really therefore one for legal redemption under Article 1088 of
the Civil Code. 4 Insofar as the exercise of such right of redemption is concerned, petitioner
as a co-heir and respondent Parreo as the buyer are the only indispensable parties to the
exclusion of the sellers-coheirs. This was expressly so ruled by the Court in Castillo vs. Samonte,

46
[G.R. No. L-9782. April 26, 1957.]
HILARION CORTEZ, plaintiff-appellant, vs. JUAN AVILA, defendant-appellee.
Amado D. Aquino, Jose D. Bacolor and Godofredo Aquino, Jr., for appellant.
Meliton Pajarillaga for appellee.
SYLLABUS
1. PUBLIC LAND LAW; REVIEW OF DECISION OF THE DIRECTOR OF LANDS; REQUISITE
BEFORE DECISION MAY BE REVIEWED BY THE COURT. It is well settled that, before the
decisions of administrative bodies can be brought to courts for review, all administrative
remedies must first be exhausted, especially in disputes concerning public lands, where the
findings of said administrative bodies, as to questions of fact, are declared by statute to be
"conclusive" (C. A. 141, sec. 4; Lamb vs. Phipps, 22 Phil., 456; Arnedo vs. Aldanese, 63 Phil.,
768; R. Lopez vs. Court of Tax Appeals, 100 Phil, 850). In the case at bar, plaintiff seeks, in effect,
a review of the decision of the Director of Lands the causing a patent to be issued to defendant,
yet, he does not appear to have asked the Director of Lands to reconsider said decision, or to
have appealed therefrom to the Secretary of Agriculture and Natural Resources, who controls
said official and is the officer charged with carrying out the provisions of the Public Land Law.
Having failed to exhaust all the administrative remedies, plaintiff cannot seek relief in the
courts of Justice.
DECISION
CONCEPCION, J p:
This is an appeal, taken by plaintiff Hilarion Cortez, from an order granting a motion to dismiss
of defendant, Juan Avila, and dismissing the former's complaint, without pronouncement as
to costs.
Plaintiff, Hilarion Cortez, alleges in said complaint that since 1935, he has continuously, publicly
and adversely occupied a parcel of land, of about sixteen (16) hectares, situated in the Barrio
of Conversion, Municipality of Pantabangan, Province of Nueva Ecija, more particularly
described in said pleading, and included within the land "described in the Original Certificate
of Title No. P-1318 in the name (now) of Juan Avila, the herein defendant; that in November,
1946, Cortez applied for a homestead patent on said 16-hectare lot, the same being a public
land; that his homestead application was duly approved by the Director of Lands, on June 25,
1947; that, having complied with all the conditions essential to the issuance of a patent, he
filed his final proof thereon in May, 1952; that, as a result, the issuance of a homestead patent
in his favor was recommended by the investigating public lands inspector as well as by the
District Land Officer of Nueva Ecija, in an indorsement to the Director of Lands, dated June 6,
1952; that for reasons unknown to plaintiff, said homestead patent has not been issued to him,
although he has already become the "equitable owner" of the lot aforementioned; that
defendant Avila had filed a free patent application for the same lot, knowing that it had been
in continuous and actual possession of the plaintiff since 1935, and despite his (Avila's)
knowledge, actual or presumed, of the submission of plaintiff's aforementioned final proof;
that through threat, intimidation and force, Avila succeeded in occupying said lot, in or about
June, 1953, to the exclusion of the plaintiff; that on October 15, 1954, Avila secured a free
patent on said lot, by alleging falsely, in his free patent application, that he and his
predecessors in interest were in possession of said lot, continuously, since July 4, 1925, and by
misrepresenting to the "table" public lands inspector who allegedly made the investigation
relative to said free patent application of Avila, that he had complied with the legal
requirements therefor; that less than a year has elapsed, since the issuance of said original
certificate of title in favor of Avila; and that, in consequence of the aforementioned acts of
Avila, plaintiff has suffered damages amounting to P6,400 a year, apart from the sum of P5,000
by way of attorney's fees. Plaintiff prays the Court to:
1. "Order the cancellation of the free patent of the defendant and the Certificate of
Title issued to him and to register the same in the name of the plaintiff;
2. "Restore possession of the premises to the herein plaintiff;
3. "Order defendant to pay the plaintiff the amount of P6400 for each year that he is in
possession until it is returned to plaintiff, and further, to order defendant to pay the amount
of P5000.00 as attorneys' fees;
4. "Issue such order and remedies as may be equitable in the premises."
As above stated, Avila filed a motion to dismiss alleging that plaintiff has no legal capacity to
sue, because the land in dispute is part of the public domain, and, hence, an action to recover
the same may be instituted exclusively by the Government, through the Solicitor-General.
Appellant now maintains that the lower court erred in granting said motion, upon the ground
that, having complied with the conditions essential to be entitled to a patent, he is the
equitable owner of the lot in question, and that the Government could not have maintained
the present action, the same being for the benefit of the plaintiff, in his private capacity.
Obviously, plaintiff herein has "legal capacity" to sue, which is independent of the public or
private character of the lot in controversy. This does not mean, however, that he has a cause
of action, or that his appeal should prosper.
47
To begin with, an indispensable party is lacking. The complaint is predicated upon the major
premise that plaintiff is the equitable owner of said lot, for he has fully satisfied the
prerequisites to the issuance of a homestead patent in his favor. This pretense implies that
said lot was a public land; that the legal, as well as the equitable, title thereto used to be in the
State; and that, although still its legal owner, the State has already been divested of its
equitable title, and plaintiff has acquired it, he having fulfilled all the conditions essential for
the issuance of a patent in his name. Thus, the issue raised cannot be determined without
affecting the interest of the State, which is not a party in this proceeding, and, hence, cannot
protect and defend therein such interest.

Ordinarily, when a complaint is defective by reason of failure to include an indispensable party,

reasonable opportunity to amend said pleading must be given, and the action should not be
dismissed, except when plaintiff fails or refuses to include said party, or the latter cannot be
sued. In the case at bar, such policy need not be followed, for plaintiff has not exhausted the
administrative remedies available to him. Indeed, he seeks, in effect, a review of the decision
of the Director of Lands in causing a patent to be issued to defendant Avila. Yet, plaintiff does
not appear to have asked the Director of Lands to reconsider said decision, or to have appealed
therefrom to the Secretary of Agriculture and Natural Resources, who controls said official and
is the "officer charged with carrying out the provisions" of our revised public land law (C. A.
141, sec. 3). It is well settled that, before the decisions of administrative bodies can be brought
to courts for review, all administrative remedies must first be exhausted, especially in disputes
concerning public lands, where the finding of said administrative bodies, as to questions of fact,
are declared by statute to be "conclusive" (C. A. 141, sec. 4; Lamb vs. Phipps., 22 Phil., 456;
Arnedo vs. Aldanese, 63 Phil., 768; R. Lopez vs. Court of Tax Appeals, 100, Phil., 850).

"A party aggrieved by an erroneous decision of the federal land department must exhaust his
remedies in that department before he can resort to the courts, and where one instituting a
contest in a local land office against a homestead entry did not appeal to the general land
office or the secretary of the interior from an order dismissing the contest because not
sufficiently regular to constitute a valid contest, he was bound thereby, and he could not resort
to the courts." Kendall vs. Long, 66 Wash. 62, 119 p. 9 (Footnote 98a, 50 C. J. 1093, 1094.)

As we held in Eloy Miguel vs. Anacleta M. Vda. de Reyes 93 Phil., 542), having failed to exhaust
his remedy in the administrative branch of the Government, plaintiff "cannot now seek relief
in the courts of justice."

Wherefore, the order appealed from is hereby affirmed, with costs against plaintiff-appellant.
It is so ordered.

Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Labrador, Reyes, J.B.L., Endencia
and Felix, JJ., concur.
48
[G.R. No. 103301. December 8, 1995.]
SERVICEWIDE SPECIALISTS INCORPORATED, petitioner, vs. HON. COURT OF APPEALS and
ARMANDO CUSTODIO, JR., respondents.
Labaguis, Loyola, Angara and Associates for petitioner.
Balgos & Perez for private respondent.
SYLLABUS
REMEDIAL LAW; PROVISIONAL REMEDIES; REPLEVIN; MORTGAGOR OF A CHATTEL
MORTGAGE; INDISPENSABLE PARTY IN AN ACTION FOR RECOVERY OF POSSESSION OF THE
MORTGAGED PROPERTY. Rule 60 of the Rules of Court allows a plaintiff, in an action for the
recovery of possession of personal property, to apply for a writ of replevin if it can be shown
that he is "the owner of the property claimed . . . or is entitled to the possession thereof." The
plaintiff need not be the owner so long as he is able to specify his right to the possession of
the property and his legal basis therefor. The question then, insofar as the matter finds relation
to the instant case, is whether or not the plaintiff (herein petitioner) who has predicated his
right on being the mortgagee of a chattel mortgage should implead the mortgagor in his
complaint that seeks to recover possession of the encumbered property in order to effect its
foreclosure. The answer has to be in the affirmative. In a suit for replevin, a clear right of
possession must be established. A foreclosure under a chattel mortgage may properly be
commenced only once there is default on the part of the mortgagor of his obligation secured
by the mortgage. The replevin in the instant case has been sought to pave the way for the
foreclosure of the object covered by the chattel mortgage. The conditions essential for that
foreclosure would be to show, firstly, the existence of the chattel mortgage and, secondly, the
default of the mortgagor. These requirements must be established since the validity of the
plaintiff's exercise of the right of foreclosure are inevitably dependent thereon. It would thus
seem, considering particularly an adverse and independent claim of ownership by private
respondent, that the lower court acted improvidently when it granted the dismissal of the
complaint against Dollente, albeit on petitioner's (then plaintiff) plea, on the ground that the
"non-service of summons upon Ernesto Dollente (would) only delay the determination of the
merits of the case, to the prejudice of the parties." In Imson v. Court of Appeals, we have
explained: " . . . An indispensable party is one whose interest will be affected by the court's
action in the litigation, and without whom no final determination of the case can be had. The
party's interest in the subject matter of the suit and in the relief sought are so inextricably
intertwined with the other parties' that his legal presence as a party to the proceeding is an
absolute necessity. In his absence there cannot be a resolution of the dispute of the parties
before the court which is effective, complete, or equitable. "Conversely, a party is not
indispensable to the suit if his interest in the controversy or subject matter is distinct and
divisible from the interest of the other parties and will not necessarily be prejudiced by a
judgment which does complete justice to the parties in court. He is not indispensable if his
presence would merely permit complete relief between him and those already parties to the
action or will simply avoid multiple litigation." Without the presence of indispensable parties
to a suit or proceeding, a judgment of a court cannot attain real finality.
DECISION
VITUG, J p:
This petition of Servicewide Specialists, Incorporated, seeks a review on certiorari of the 30th
August 1991 decision of the Court of Appeals 1 in CA-G.R. CV No. 20289 setting aside the
judgment of the Regional Trial Court of Manila, Branch 19, 2 which disposed of then Civil Case
No. 83-18536, a suit for replevin and damages, as follows:
"WHEREFORE, judgment is hereby rendered, in favor of plaintiff and against the defendant
Armando Custodio, Jr., ordering him to deliver and return the motor vehicle in question,
complete with accessories and equipment; and in the event that manual delivery of the said
motor vehicle cannot be effected, ordering said defendant to pay the sum of P54,642.50, plus
interest at the rate of 14% per annum, from June 18, 1983 until fully paid, and to pay the costs.
"SO ORDERED." 3
The litigation concerns a motor vehicle, a Colt Gallant Sigma 1600E, 1977 model, 4-door sedan,
colored Baikal White, with Serial No. A-121-UL-493 and Engine No. 2G-171-34. The decisions
of both the appellate court and the trial court rest on the following representation of the facts:
"Plaintiff's evidence shows that, on August 29, 1977, Eleuterio Bondoc executed and delivered
to Carmark Philippines a promissory note in the sum of P66,119.04, payable in installments,
Exhibit A, and in order to secure payment, a chattel mortgage was executed in favor of Carmark
Philippines over the aforementioned motor vehicle, Exhibit B, which was subsequently
assigned in favor of Filinvest Corporation, with the conformity of Eleuterio Bondoc, Exhibit C.
"On July 27, 1979, Eleuterio Bondoc, as vendor, executed a deed of sale with assumption of
mortgage of the balance of the account in favor of Cesar Dollente, Exhibits D and D-1, which,
upon approval by Filinvest Corporation, Cesar Dollente executed and delivered to Filinvest
Corporation a promissory note in the amount of P37,528.83, payable in installments, Exhibit E.
On October 26, 1979, Cesar Dollente, as vendor, executed a deed of sale with assumption of
mortgage over the aforementioned vehicle for the balance of his account in favor of Ernesto
Dollente, Exhibit E. On September 28. 1979. Ernesto Dollente executed and delivered to
Filinvest Corporation promissory note for the sum of P37,528.83, payable in monthly
installments. This obligation was secured by a chattel mortgage executed between Cesar
49
Dollente and Ernesto Dollente, which was annotated and registered, Exhibit B-1. Subsequently,
Filinvest Corporation assigned all its rights and interests on the promissory note and chattel
mortgage to plaintiff, with notice to Ernesto Dollente. The original defendant Ernesto Dollente,
having defaulted in the payment of the monthly installments which fell due on June 15, 1979
up to September 15, 1981, plaintiff demanded from said defendant the payment of the entire
balance, which includes interest thereon and to return the motor vehicle in question. By
reason of the refusal of the original defendant to pay the entire balance and to surrender
possession of the subject motor vehicle, this case was filed and, upon its filing, upon motion,
a writ of seizure was issued and the same was implemented by the sheriff. A counter-replevin
bond having been filed, defendant Armando Custodio, Jr. had obtained possession of the
mortgaged vehicle.
"Traversing the plaintiff's claim, defendant's evidence shows that, on September 8, 1978,
defendant Armando Custodio, Jr. obtained the motor vehicle in question by purchase from
Ernesto Dollente, Exhibit 1. Ernesto Dollente bought the same on April 14, 1978 from Venus
Motor Sales, Exhibits 2 and 3. When defendant bought the said vehicle from Ernesto Dollente,
he was issued a clearance from the Constabulary Highway Patrol Group, Exhibits 4 and 4-A.
Since then defendant has been possessing the vehicle in question. This vehicle was previously
registered at Urdaneta, Pangasinan." 4
Finding preponderance of the evidence in favor of herein petitioner, the lower court ruled:
"The claim of herein defendant that, Ernesto Dollente's breach of the chattel mortgage should
not bind him, because he is not a privy to such contract, is hardly acceptable, for the reason
that the registration of the chattel mortgage is an effective and binding notice to him of its
existence. The transaction of Ernesto Dollente, which led to the transfer of the registration of
this motor vehicle in favor of defendant Armando Custodio, Jr., is doubtful and must have been
conveniently arranged or manipulated to effect this transfer. It is settled that once a mortgage
is registered with the Register of Deeds and in the Land Transportation Commission, it is
binding against anybody, including defendant Armando Custodio, Jr. As correctly pointed out,
in purchasing the motor vehicle in question, defendant Armando Custodio, Jr. knew or, at least,
was presumed to know, by the mere fact that the mortgage was registered in the Office of the
Register of Deeds, as in this case, the said chattel mortgage was subject to a mortgage lien." 5
On appeal to it, the Court of Appeals saw merit in the contention of private respondent that
the dismissal at the instance of petitioner himself of the amended complaint against Ernesto
Dollente after a failure of summons on him, was "fatal to the entire action" Dollente being, in
the considered view of the appellate court, an indispensable party to the proceedings. The
appellate court elaborated:
". . . it is abundantly clear that the dismissal of the complaint as against the principal defendant
Dollente has robbed the action of any cause for survival. The replevin suit owed its existence
to an alleged right to possession of the motor vehicle, which right in turn was founded on the
alleged default of Dollente. Now, since 'the case against Ernesto Dollente' was dismissed, albeit
without prejudice, there remains no cause of action against said defendant in the case. And
since, there is no distinct cause of action against the remaining defendant, herein appellant
Custodio, there remains no provable cause in the action. The plaintiff's right to possession of
the car in case which is 'conditioned upon the fact of actual default on the part of the principal
obligor' the existence of which fact may naturally be the subject of controversy' could not
properly be established in the absence, and after the plaintiff-initiated exclusion, of the
principal obligor and principal defendant. There is no question, under the circumstances, that
Dollente was an indispensable party in the action. His presence is indispensable, essential and
compulsory if a final determination of the action should be achieved (Sec. 7, Rule 3).
"It was clearly an error for the trial court to have proceeded with the case without the
indispensable Dollente. The judgment rendered by the trial court following such flawed
proceedings is therefore ineffectual and ineffective." 6
While, in its present petition for review on certiorari, Servicewide has raised a number of points,
the crucial issue still remains, however, to be whether or not an action filed by the mortgagee
for replevin to effect a foreclosure of the property covered by the chattel mortgage would
require that the mortgagor be so impleaded as an indispensable party thereto.
Rule 60 of the Rules of Court allows a plaintiff, in an action for the recovery of possession of
personal property, to apply for a writ of replevin if it can be shown that he is "the owner of the
property claimed . . . or is entitled to the possession thereof." 7 The plaintiff need not be the
owner so long as he is able to specify his right to the possession of the property and his legal
basis therefor. The question then, insofar as the matter finds relation to the instant case, is
whether or not the plaintiff (herein petitioner) who has predicated his right on being the
mortgagee of a chattel mortgage should implead the mortgagor in his complaint that seeks to
recover possession of the encumbered property in order to effect its foreclosure.
The answer has to be in the affirmative. 8 In a suit for replevin, a clear right of possession must
be established. A foreclosure under a chattel mortgage may properly be commenced only once
there is default on the part of the mortgagor of his obligation secured by the mortgage. The
replevin in the instant case has been sought to pave the way for the foreclosure of the object
covered by the chattel mortgage. The conditions essential for that foreclosure would be to
show, firstly, the existence of the chattel mortgage and, secondly, the default of the mortgagor.
These requirements must be established since the validity of the plaintiff's exercise of the right
of foreclosure are inevitably dependent thereon. It would thus seem, considering particularly
50
an adverse and independent claim of ownership by private respondent, that the lower court
acted improvidently when it granted the dismissal of the complaint against Dollente, albeit on
petitioner's (then plaintiff) plea, on the ground that the "non-service of summons upon Ernesto
Dollente (would) only delay the determination of the merits of the case, to the prejudice of
the parties." 9 In Imson v. court of Appeals, we have explained:

" . . . An indispensable party is one whose interest will be affected by the court's action in the
litigation, and without whom no final determination of the case can be had. The party's interest
in the subject matter of the suit and in the relief sought are so inextricably intertwined with
the other parties' that his legal presence as a party to the proceeding is an absolute necessity.
In his absence there cannot be a resolution of the dispute of the parties before the court which
is effective, complete, or equitable.

"Conversely, a party is not indispensable to the suit if his interest in the controversy or subject
matter is distinct and divisible from the interest of the other parties and will not necessarily be
prejudiced by a judgment which does complete justice to the parties in court. He is not
indispensable if his presence would merely permit complete relief between him and those
already parties to the action or will simply avoid multiple litigation." 10

Without the presence of indispensable parties to a suit or proceeding, a judgment of a court

cannot attain real finality. 11

Having arrived at the foregoing conclusion, the Court need not take up the other issues raised
by petitioner.

In passing, the failure of summons upon Ernesto Dollente, per the Sheriff's Return dated July
19, 1983, 12 is said to have been due to defendant's being no longer a resident "at the given
address as per information gathered from the present occupant of the premises." It appears
that the remedial measures provided in Rule 14 of the Rules of Court regrettably have not been
properly availed of; for instance, substitute service of summons under Section 8 thereof could
have been resorted to. 13

WHEREFORE, the decision of the Court of Appeals is AFFIRMED. Costs against petitioner.

SO ORDERED.

51
[G.R. No. L-17828. August 31, 1963.]
LIGAYA MINA, JAIME MINA, SILVINA MINA, FAUSTA MINA, PABLO MINA and MIGUEL MINA,
the minors represented by PILAR LAZO as guardian-ad-litem, plaintiffs-appellants, vs.
ANTONIO PACSON, CRISPINO MEDINA and CRESENCIA MINA, defendants-appellees.
F. A. Pelmoka for plaintiffs-appellants.
Castelo Law Office for defendants-appellees.
SYLLABUS
1. DISMISSAL OF ACTIONS; FAILURE TO PROSECUTE; FAILURE TO COMPLY WITH ORDER
TO IMPLEAD INDISPENSABLE PARTY. Appellants' contention that the dismissal of the
complaint in the previous action was "at the indirect instance of the plaintiffs through inaction
or omission," is not supported by the facts of the case, because the order of the court
dismissing the complaint in the first case contained the warning that should the plaintiffs fail
to comply with its order to implead the surviving widow of the deceased and other necessary
parties, the case would be dismissed, and it was because of plaintiffs' refusal to comply with
this express mandate that the dismissal was ordered. The dismissal was, therefore, justified
under Rule 30, Section 3 of the Rules of Court. (Garchitorena, et al. vs. De los Santos, et al., G.
R. No. L-17045, June 20, 1962.)
2. ID.; ID.; NEGLIGENCE OF CLIENT AND COUNSEL. The argument of appellants that
the dismissal of the previous case was due to the negligence of plaintiffs' lawyer for which the
plaintiffs-appellants should not be made to suffer, is not correct; it was not due to the
negligence of their counsel alone but that of themselves also that the required amendment
was not made. Besides, even if the failure was due to the lawyer alone, such failure would not
relieve them of the responsibility resulting from the neglect of their lawyer, for the client is
bound by the action of his counsel. (Valerio vs. Sec. of Agriculture, G. R. No. L-18587, April 23,
1963, and other cases cited.)
3. JUDGMENTS; RES JUDICATA; COMPLETE IDENTITY NECESSARY; PARTIES NOT
INCLUDED AND MATTERS NOT RAISED IN PREVIOUS CASE NOT BARRED. The previous order
of dismissal bars the present complaint only as to matters already presented in the previous
care, like the action for annulment of the deeds of sale as regards the defendants named
therein, but matters not raised and parties not included in the previous case are not barred,
like the action for the recognition of the filiation of the plaintiffs against the defendant widow
of the deceased alleged father.
DECISION
LABRADOR, J p:
This is an appeal from an order of the Court of First Instance of Nueva Ecija, Hon. Felix Makasiar,
presiding, in its Civil Case No. 3296, entitled "Ligaya Mina, et al., plaintiffs vs. Crispino Medina,
et al., defendants," dismissing the complaint filed in this case. The appellant also appeals
against the order denying the motion for reconsideration of the order of dismissal.
The facts necessary to understand the nature of the issues presented in this appeal, as gleaned
from the pleadings, may be briefly stated as follows: Plaintiffs Ligaya, Jaime, Silvina, Fausta,
Pablo and Miguel, all surnamed Mina, are alleged to be the illegitimate children of the
deceased Joaquin Mina with plaintiff Pilar Lazo from 1933-1958, while married to Antonia
Pacson. Joaquin Mina died in August, 1958, leaving no descendants nor ascendants except his
widow, the defendant herein Antonia Pacson. On April 9, 1958, Joaquin Mina, then still living,
executed a deed of absolute sale (Annex "B" to Complaint) of three parcels of land situated in
the municipality of Muoz, Nueva Ecija, in favor of the defendants Crispino Medina and
Cresencia Mina for the sum of P12,000. On April 15, 1958 again he executed another deed of
sale (Annex "C" to Complaint) of 13 parcels of land covered by 12 transfer certificates of title
to the same spouses Crispino Medina and Cresencia Mina. Both deeds of sale bear the
conformity of his wife Antonia Pacson.
In the complaint filed in the Court of First Instance of Nueva Ecija in the case which originated
this appeal, it is alleged that plaintiffs are illegitimate children of the deceased Joaquin Mina
begotten by him with Pilar Lazo during the period from 1933 to 1958 while Joaquin Mina was
lawfully married to Antonia Pacson; that the plaintiff Pablo Mina is a recognized illegitimate
child of the deceased Joaquin Mina; that Joaquin Mina died intestate leaving no ascendants or
descendants, except his widow Antonio Pacson; that he left various parcels of land
enumerated in the complaint but that on April 9, 1950 the defendants connived and secured
from Joaquin Mina, who was ill and did not know what he was doing, the execution of the two
deeds of sale without consideration, fictitiously and fraudulently, transferring his properties to
the spouses Crispino Medina and Cresencia Mina; and that by reason of said acts, defendants
have caused moral anguish, anxiety and embarrassment to plaintiffs, causing them damages
amounting to P10,000; that plaintiffs pray that they be declared recognized illegitimate
children of the deceased Joaquin Mina, entitled to share in the properties left by him as such
illegitimate children; that the deeds of sale, Annexes "B" and "C" be declared fictitious,
fraudulent and, therefore, null and void; and that defendants be required to deliver to
plaintiffs' possession one- fourth of said properties together with P10,000 for moral damages.
Upon the filing of the complaint the defendants presented a motion to dismiss the complaint
on the ground of res judicata, alleging that a similar action had previously been presented as
Civil Case No. 3015 in the same court, and by the same parties against Crispino Medina and
52
Cresencia Mina, in which the same allegations of plaintiffs' status and fraudulent conveyance
of the properties to defendants are alleged, together with a prayer for moral damages in the
sum of P20,000. It appears, however, that in the complaint filed in said Civil Case No. 3015, no
prayer is made for the declaration of the filiation of the plaintiffs in relation or with respect to
the deceased Joaquin Mina.
The Motion to dismiss also copied an order of the court issued in said Civil Case No. 3015 which
reads as follows:
"Acting on the Motion filed by the defendants on December 22, 1958 for the reconsideration
of the order dated December 8, 1958, and considering that the present action is not only for
annulment of deeds of sale but also for partition (paragraphs 8 and 11 of the complaint and
paragraph 4 of the prayer thereof); that to avoid multiplicity of suits, the complex action to
establish filiation and for partition or for recovery of inheritance may be brought in the same
case (Lopez v. Lopez, 68 Phil. 227; Escoval v. Escoval, 48 O.G. 615; Edades v. Edades, L-8964,
July 31, 1956); and that Antonia Pacson, the surviving widow and the other intestate heirs of
the deceased Joaquin Mina, or necessary parties are not made a party in this case (Briz v. Briz,
43 Phil. 763), the plaintiffs are hereby directed to amend their complaint within fifteen (15)
days from receipt hereof by including as party defendant the surviving widow of the deceased
Joaquin Mina and other necessary parties.
"Should the plaintiffs fail to comply with this order, this case will be dismissed."
Lastly, another order of the same court dated February 9, 1959 was quoted, the dispositive
part of which reads:
"The fifteen-day period granted to the plaintiffs having elapsed without said order having been
complied with, the Court hereby dismisses this case, without pronouncement as to costs."
Opposition to the motion to dismiss was presented on behalf of the plaintiffs by their attorney
to which a reply was filed on behalf of the defendants. A rejoinder was also filed after which
Judge Genaro Tan Torres, then presiding over the court, sustained the motion to dismiss in an
order which reads as follows:
"After a careful consideration of the joint motion to dismiss of defendants Antonia Pacson and
the spouses Crispino Medina and Cresencia Mina, dated November 11, 1959, the opposition
thereto dated November 24, 1959, and the reply of the defendants to the opposition, dated
December 7, 1959, the Court is of the opinion that said motion to dismiss is well taken; hence
this case is hereby dismissed without costs.
"Plaintiffs' motion for time to submit rejoinder, dated December 10, 1959, is hereby denied
because it will only unnecessarily delay the termination of this case.
"So ordered.
"Cabanatuan City, December 18, 1959."
A motion for the reconsideration of the order of the court dismissing the action having been
denied, the plaintiffs in the present case prosecuted this appeal directly to this Court.
As shown above the question to be resolved is whether or not the order dismissing the
previous Civil Case No. 3015 bars the present civil action No. 3296 of the Court of First Instance
of Nueva Ecija.
In the first error assigned by the appellants in their brief it is argued that the dismissal of the
complaint in the previous action was in fact "at the indirect instance of the plaintiffs through
inaction or omission." We do not find this claim justified by the facts of the case. The order of
the court dismissing the complaint in the first case contains the following warning: "Should the
plaintiffs fail to comply with this order, this case will be dismissed." In the face of this express
warning given in the court's order the dismissal can not be said to have been "at the indirect
instance of the plaintiffs;" it was in fact caused by plaintiffs' refusal to comply with the express
mandate contained in the order of dismissal. The dismissal, therefore, was justified under Rule
30, Section 3 of the Rules of Court, which reads:
"SEC. 3. Failure to prosecute. When plaintiff fails to appear at the time of the trial, or to
prosecute his action for an unreasonable length of time, or to comply with these rules or any
order of the court, the action may be dismissed upon motion of the defendant or upon the
court's own motion. This dismissal shall have the effect of an adjudication upon the merits,
unless otherwise provided by court."
The above provision of the Rules was invoked in the case of Garchitorena, et al. vs. De los
Santos, et al., G.R. No. L-17045, June 30, 1962, wherein this Court held:
"To order an amendment to a complaint within a certain period in order to implead as party
plaintiff or defendant one who is not a party to the case lies within the discretion of the Court.
And where it appears that the person to be impleaded is an indispensable party, the party to
whom such order is directed has no other choice but to comply with it. His refusal or failure to
comply with the order is a ground for the dismissal of his complaint pursuant to Section 3, Rule
30, of the Rules of Court . . ."
Under the second assignment of error it is argued that the dismissal of the previous case was
brought about by the negligence, gross or criminal, of plaintiffs' lawyer for which the plaintiffs-
appellants should not be made to suffer. The argument is not true to fact. The failure to amend
was a result not of the neglect of the lawyer alone but also of the plaintiffs-appellants
themselves. Had the plaintiffs taken even an ordinary interest in the result of the action that
53
they had filed, they would have been able to secure information from their lawyer that the
case had been dismissed for failure to amend. Upon receipt of such information, plaintiffs
could have applied to the court for relief under Rule 38 of the Rules of Court and could have
had the complaint amended as directed in the order of dismissal. It is not alone negligence of
their counsel, therefore, but of themselves also that the required amendment was not made.
But assuming for the sake of argument that the failure was due to the lawyer alone, such failure
would not relieve them of the responsibility resulting from the neglect of their lawyer, for the
client is bound by the action of his counsel. (Isaac v. Mendoza, G.R. No. L-2830, June 21, 1951;
Vivero v. Santos, et al., G.R. No. L-8105, Feb. 28, 1956; Fernandez v. Tan Tiong Tick, G.R. No. L-
15877, April 28, 1961; Gordulan v. Gordulan, G.R. No. L-17722, Oct. 9, 1962; Valerio v. Sec. of
Agriculture, G.R. No. L-18587, April 23, 1963.)

In the third assignment of error it is claimed that there is no complete identity between the
parties in the first case and those in the case at bar. The statement is true because in the
previous case Antonia Pacson was not included as party-defendant. As a matter of fact the
order decided that Pacson was to be included as party- defendant. As the latter, therefore, the
previous order of dismissal does not bar the present complaint, not only because she was not
made a party but also because the issue of filiation of the parties- plaintiffs was not raised in
the previous case, although such issue was necessary for the plaintiffs to be able to maintain
their right of action. In view of this fact the present action should be considered barred in
respect to the action for the annulment of the deeds of sale and as regards the defendants
spouses Crispino Medina and Cresencia Mina; but as to the case for the declaration of the
plaintiffs as illegitimate children and heirs of the deceased Joaquin Mina this latter case is not
barred by the previous action as above explained and may still be prosecuted.

WHEREFORE, the order of dismissal is hereby modified in the sense that the action for the
recognition of the filiation of the plaintiffs should be allowed to continue against the defendant
Antonia Pacson; but the dismissal of the action for the annulment of the deeds of sale in
affirmed. Without costs. Bengzon, C.J., Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L.,
Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.

54
SECOND DIVISION
[G.R. No. 22909. January 28, 1925.]
VICTORIANO BORLASAS, ET AL., plaintiffs-appellants, vs. VICENTE POLISTICO, ET AL.,
defendants-appellees.
Sumulong & Lavides for appellants.
Ramon Diokno for appellees.
SYLLABUS
1. PLEADING AND PRACTICE; PARTIES; RIGHT OF ONE OR MORE TO SUE IN BEHALF OF
OTHERS IN LIKE INTEREST. In an action against the officers of a voluntary association to wind
up its affairs and to enforce an accounting for money and property in their possession, it is not
necessary to make all members of the association parties to the action.
DECISION
STREET, J p:
This action was instituted in the Court of First Instance of Laguna on July 25, 1917, by Victoriano
Borlasa and others against Vicente Polistico and others, chiefly for the purpose of securing the
dissolution of a voluntary association named Turnuhan Polistico & Co., and to compel the
defendants to account for and surrender the money and property of the association in order
that is affairs may be liquidated and its assets applied according to law. The trial judge having
sustained a demurrer for defect of parties and the plaintiffs electing not to amend, the cause
was dismissed, and from this order an appeal was taken by the plaintiffs to this court.
The material allegations of the complaint, so far as affects the present appeal, are to the
following effect: In the month of April, 1911, the plaintiffs and defendants, together with
several hundred other persons, formed an association under the name of Turnuhan Polistico
& Co. Vicente Polistico, the principal defendant herein, was elected president and treasurer of
the association, and his house in Lilio, Laguna, was made its principal place of business. The
life of the association was fixed at fifteen years, and under the by-laws each member obligated
himself to pay to Vicente Polistico, as president-treasurer, before 3 o'clock in the afternoon of
every Sunday the sum of 50 centavos, except that on every fifth Sunday the amount was P1, if
the president elected to call this amount, as he always did. It is alleged that from April, 1911,
until April, 1917, the sums of money mentioned above were paid weekly by all of the members
of the society with few irregularities. The inducement to these weekly contributions was found
in provisions of the by-laws to the effect that a lottery should be conducted weekly among the
members of the association and that the successful member should be paid the amount
collected each week, from which, however, the president-treasurer of the society was to
receive the sum of P200, to be held by him as funds of the society.
It is further alleged that by virtue of these weekly lotteries Vicente Polistico, as president-
treasurer of the association, received sums of money amounting to P74,000, more or less, in
the period stated, which he still retains in his power or has applied to the purchase of real
property largely in his own name and partly in the names of others. The defendants in the
complaint are the members of the board of directors of the association, including Vicente
Polistico, as president-treasurer, Alfonso Noble, secretary, Felix Garcia and Vivencio Zulaybar,
as promoters (propagandistas), and Afroniano de la Pea and Tomas Orencia, as members
(vocales) of the board.
In an amended answer the defendants raised the question of lack of parties and set out a list
of some hundreds of persons whom they alleged should be brought in as parties defendant on
the ground, among others, that they were in default in the payment of their dues to the
association. On November 28, 1922, the court made an order requiring the plaintiffs to amend
their complaint within a stated period so as to include all of the members of the Turnuhan
Polistico & Co. either as plaintiffs or defendants. The plaintiffs excepted to this order, but
acquiesced to the extent of amending their complaint by adding as additional parties plaintiff
some hundreds of persons, residents of Lilio, said to be members of the association and
desirous of being joined as plaintiffs. Some of these new plaintiffs had not been named in the
list submitted by the defendants with their amended answer; and on the other hand many
names in said list were here omitted, it being claimed by the plaintiffs that the persons omitted
were not residents of plaintiffs that the persons omitted were not residents of Lilio but
residents of other places and that their relation to the society, so far as the plaintiffs could
discover, was fictitious. The defendants demurred to the amended complaint on the ground
that it showed on its face a lack of necessary parties and this demurrer was sustained, with the
ultimate result of the dismissal of the action, as stated in the first paragraph of this opinion.
This trial judge appears to have supposed that all the members of the Turnuhan Polistico & Co.
should be brought in either plaintiffs or defendants. This notion is entirely mistaken. The
situation involved is precisely the one contemplated in section 118 of the Code of Civil
Procedure, where one or more may sue for the benefit of all. It is evident from the showing
made in the complaint, and from the proceedings in the court below, that it would be
impossible to make all of the persons in interest parties to the case and to require all of the
members of the association to be joined as parties would be tantamount to a denial of justice.
The general rule with reference to the making of parties in a civil action requires, of course,
the joinder of all necessary parties wherever possible, and the joinder of all indispensable
55
parties under any and all conditions, the presence of those latter being a sine qua non of the The order appealed from is reversed, the demurrer of the defendants based upon supposed
exercise of judicial power. The class suit contemplates an exceptional situation where there lack of parties is overruled, and the defendants are required to answer to the amended
are numerous persons all in the same plight and all together constituting a constituency whose complaint within the time allowed by law and the rules of the court. The costs of this appeal
presence in the litigation is absolutely indispensable to the administration of justice. Here the will be paid by the defendants. So ordered.
strict application of the rule as to indispensable parties would require that each and every
individual in the class is sufficiently represented to enable the court to deal properly and justly Johnson, Malcolm, Villamor, Ostrand, Johns, and Romualdez, JJ., concur.
with that interest and with all other interests involved in the suit. In the class suit, then,
representation of a class interest which will be affected by the judgment is indispensable; but
it is not indispensable to make each member of the class an actual party.

A common illustration in American procedure of the situation justifying a class suit is that
presented by the creditors' bill, which is filed by one party interested in the estate of an
insolvent, to secure the distribution of the assets distributable among all the creditors. In such
cases the common practice is for one creditor to sue as plaintiff in behalf of himself and other
creditors. (Johnson vs. Waters, 111 U.S. S., 640; 28 Law. ed., 547.) Another illustration is found
in the case of Smith vs. Swormstedt (16 How., 288; 14 Law. ed., 942), where a limited number
of individuals interested in a trust for the benefit of superannuated preachers were permitted
to maintain an action in their own names and as representatives of all other persons in the
same right.

His Honor, the trial judge, in sustaining this demurrer was possibly influenced to some extent
by the case of Rallonza vs. Evangelista (15 Phil., 531); but we do not consider that case
controlling, inasmuch as that was an action for the recovery of real property and the different
parties in interest had determinable, though undivided interests, in the property there in
question. In the present case, the controversy involves an indivisible right affecting many
individuals whose particular interest is of indeterminate extent and is incapable of separation.

The addition of some hundreds of persons to the number of the plaintiffs, made in the
amendment to the complaint of December 13, 1922, was unnecessary, and as the presence of
so many parties is bound to prove embarrassing to the litigation from death or removal, it is
suggested that upon the return of this record to the lower court for further proceedings, the
plaintiff shall again amended their complaint by dismissing as to unnecessary parties plaintiffs,
but retaining a sufficient number of responsible persons to secure liability for costs and fairly
to represent all the members of the association.

There is another feature of the complaint which makes a slight amendment desirable, which
is, that the complaint should be made to show on its face that the action is intended to be
litigated as a class suit. We accordingly recommend that the plaintiffs further amend by adding
after the names of the parties plaintiffs the words, "in their own behalf and in behalf of other
members of Turnuhan Polistico & Co."

56
[G.R. No. L-34124. April 30, 1985.]
MR. & MRS. TADEO P. DAEL, petitioners, vs. THE HON. BERNARDO TEVES, as Presiding Judge,
Court of First Instance of Misamis Oriental, Branch VIII and DIONISIO EDOROT, VIDAL EDOROT,
PONCIANO EDOROT, PETRA EDOROT, DIOSDADA EDOROT, JUANA EDOROT, and the latae
HERMINIGILDO EDOROT, represented by his heirs. VICTOR EDOROT, PEDRITO EDOROT and
JACOBO EDOROT, respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; ACTION; FAILURE TO COMPLY WITH ORDER TO
AMEND, GROUND FOR DISMISSAL OF COMPLAINT. The heirs of deceased defendants in the
case at bar being clearly indispensable parties, respondent Judge acted properly in ordering
the amendment of the complaint so as to include the said heirs as defendants. Since the
petitioners failed to comply with this Order, respondent Judge acted within his prerogative in
dismissing the complaint pursuant to Section 3, Rule 17 of the Rules of Court which provides
that "Where the Court orders the plaintiff to amend its complaint within a certain period of
time in order to implead as party defendants one who is not a party to the case but who is an
indispensable party, plaintiff's refusal to comply with such order is a ground for the dismissal
of the complaint."
2. ID.; ID.; ID.; RELIANCE ON RULE 3, SEC. 16, RULES OF COURT, MISPLACED; CASE AT
BAR. Petitioners now claim that their failure to amend the complaint was due to the fact
that private respondents' counsel failed to inform the Court of the names of the heirs and/or
representatives of the deceased defendants (Herminigildo and Petra Edorot) pursuant to
Section 16, Rule 3, New Rules of Court. We find petitioners' reliance on the aforequoted
provision as misplaced. Rule 3, Section 16 of the Rules applies to a situation where a party
(whether plaintiff or defendant) dies after the filing of the complaint and during the pendency
of the case. Thus is not the situation in the case at bar since the two defendants, whose heirs
are to be impleaded died even before the filing of the complaint.
3. ID.; ID.; ID.; AMENDMENT OF COMPLAINT; STILL REQUIRED DESPITE WAIVER OF ONE
OF THE HEIRS. The other contention of petitioners that there is no more necessity of
amending the complaint because allegedly an affidavit of waiver of rights have been executed
by one Victor Edorot is also not meritorious, It is not disputed that said Victor Edorot is only
one of the heirs of deceased defendant Herminigildo Edorot. He is not the sole owner of the
entire interest of Herminigildo. Neither is his waiver binding upon the other heirs of said
deceased.
4. ID.; ID.; NON-CONTENTIOUS MOTION; MAY BE ACTED UPON WITHOUT PROOF OF
SERVICE TO ADVERSE PARTY. Finally, anent the contention of petitioners that private
respondents "ex-parte manifestation" did not comply with the required notice of motions
pursuant to Sections 4, 5 and 6 of Rule 15 of the Rules of Court, suffice it to state that the said
"manifestation" informing the Court that petitioners have not complied with the order to
amend the complaint, is not a litigated or contentious motion and may be acted upon even
without proof of service on the adverse party.
DECISION
CUEVAS, J p:
Petition for Review on Certiorari of the Order of the Hon. respondent Presiding Judge of the
Court of First Instance of Misamis Oriental Branch VIII, issued on July 27, 1971 in Civil Case
No. 3531 entitled "Mr. & Mrs. Tadeo P. Dael versus Dionisio Edorot, et al", dismissing
petitioners' complaint; and his Honor's order of August 12, 1971 denying petitioners' motion
for reconsideration of the said order of dismissal.
On October 19, 1970, petitioners filed with the then Court of First Instance of Misamis Oriental,
a complaint for: "Ownership, Recovery of Possession & Damages" against the private
respondents. The case was docketed in the said court as Civil Case No. 3531.
The complaint, among others, alleged that petitioners, then plaintiffs, are the true and
absolute owners in fee simple of a parcel of land with an area of 18,000 square meters, more
or less, situated at Aplaya, Jasaan, Misamis Oriental, having purchased the same from the late
Esteban Edorot on May 17, 1962; and that sometime in the month of February 1964, after the
death of Esteban Edorot, the defendants (herein private respondents) by means of force,
threats and intimidation surreptitiously occupied the said property.
Private respondents, through counsel, filed their Answer with Counterclaim on January 18,
1971, claiming that the property in question is owned by them pro-indiviso by inheritance from
their deceased parents.
The issue having been joined, the case was set for pre-trial on various occasions in Branch VIII
of the Court of First Instance of Misamis Oriental then still presided by the Hon. Severo Malvar
"to give the parties more chance to arrive at an amicable settlement." 1 In all these pre-trial
conferences, counsel for private respondents and respondent Vidal Edorot appeared. The
latter had a special power of attorney to appear for defendants Dionisio, Diosdada, Ponciano
and Juana. The two other defendants, Petra and Herminigildo, died long before the filing of
the complaint. LexLib
After June 2, 1971, Judge Severo Malvar was transferred to another judicial district and
respondent Judge Bernardo Teves was appointed to take his place.
57
On June 29, 1971 when the case was set for pre-trial for the first time before respondent Judge
Bernardo Teves, an Order reading as follows
"Considering that, as manifested before the Court, two of the defendants died before the filing
of this case; the plaintiffs are hereby given until July 15, 1971 within which to file an amended
complaint to include the heirs or representatives of said deceased defendants, furnishing copy
thereof to Atty. Dumlao."
was issued by the respondent Judge.
On July 27, 1971, counsel for private respondents filed an Ex-Parte Manifestation, praying that
the case be dismissed pursuant to Section 3, Rule 17 of the Rules of Court for failure of
petitioners to comply with the aforequoted order of the Court to file an amended complaint.
Acting thereon, the trial court on July 27, 1971 issued the order now assailed dismissing the
complaint, which reads
"As prayed for by the defendants, through counsel, Atty. Florentino Dumlao, Jr. in his ex-parte
manifestation of July 27, 1971, which the Court finds well-founded, this case is hereby
dismissed for failure of the plaintiffs to comply with the Order of this Court dated June 29,
1971. No pronouncement as to costs.
SO ORDERED."
Petitioners' motion to reconsider the foregoing Order having been denied, they now come
before Us through the instant petition, contending that respondent Judge
1. acted without jurisdiction or with grave abuse of discretion in ordering petitioners
to file an amended complaint, to include the alleged heirs and or representatives of
respondents Petra Edorot and Herminigildo Edorot, deceased;
2. committed a legal error in admitting respondents' ex-parte motion to dismiss Civil
Case No. 3531 and in issuing the order dismissing Civil Case No. 3531; and
3. acted without or in excess of its jurisdiction in denying petitioners' motion for
reconsideration.
In their complaint, petitioners (then plaintiffs) claim that they are the owners of the parcel of
land in question. 2 Private respondents, on the other hand, in their Answer controvert such
assertion. 3 They also claim to be the owners and possessors, pro-indiviso by inheritance from
their deceased parents, of the subject litigated parcel. Necessarily then, deceased defendants
Herminigildo Edorot and Petra Edorot have an undivided interest, right and participation
adverse to that of the petitioners' in the property in litigation. Since both of them are already
dead (Herminigildo died on September 29, 1969 and Petra died on April 5, 1970) even prior to
the filing of the complaint against them in the court below and their interest in the property
in question having inured by intestacy to their heirs, the latter thereby became the real parties
in interest who should be impleaded as defendants without whom no final determination of
Civil Case No. 3531 can be had. Decidedly then they are indispensable parties who should be
compulsory joined as defendants in the instant case. Sections 2 and 7, Rule 3 of the Rules of
Court provides
"Section 2. Parties in interest. Every action must be prosecuted and defended in the
name of the real party in interest. All persons having an interest in the subject of the action
and in obtaining the relief demanded shall be joined as plaintiffs. All persons who claim an
interest in the controversy or the subject thereof adverse to the plaintiff, or who are necessary
to complete determination or settlement of the question involved therein shall be joined as
defendants."
"Section 7. Compulsory joinder of indispensable parties. Parties in interest without
whom no final determination can be had of an action shall be joined either as plaintiffs or
defendants."
The heirs of deceased defendants in the case at bar being clearly indispensable parties,
respondent Judge acted properly in ordering the amendment of the complaint so as to include
the said heirs as defendants. Since the petitioners failed to comply with this Order, respondent
Judge acted within his prerogative in dismissing the complaint 4 pursuant to Section 3, Rule
17 of the Rules of Court which provides that
"If the plaintiff fails to appear at the time of the trial, or to prosecute his action for
unreasonable length of time, or to comply with these rules or any order of the court, the action
maybe dismissed upon motion of the defendant or upon the court's own motion. This dismissal
shall have the effect of an adjudication upon the merits unless provided by the court. (Italics
supplied).
Thus, it has been held that
"Where the Court orders the plaintiff to amend its complaint within a certain period of time in
order to implead as party defendants one who is not a party to the case but who is an
indispensable party, plaintiff's refusal to comply with such order is a ground for the dismissal
of the complaint." (Garchitorena, et al. vs. de los Santos, et al., No. L-17045, June 30, 1962, 115
Phil. 490, citing Bautista vs. Teodoro, 54 O.G. 619; Dizon vs. Garcia, et al., G.R. No. L-14690,
November 29, 1960)
58
Petitioners now claim that their failure to amend the complaint was due to the fact that private
respondents' counsel failed to inform the Court of the names of the heirs and/or
representatives of the deceased defendants (Herminigildo and Petra Edorot) pursuant to
Section 16, Rule 3, New Rules of Court which provides

"Section 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." (Italics supplied)

We find petitioners' reliance on the aforequoted provision as misplaced. Rule 3, Section 16 of

the Rules applies to a situation where a party (whether plaintiff or defendant) dies after the
filing of the complaint and during the pendency of the case. Thus is not the situation in the
case at bar since the two defendants, whose heirs are to be impleaded died even before the
filing of the complaint. llcd

The other contention of petitioners that there is no more necessity of amending the complaint
because allegedly an affidavit of waiver of rights have been executed by one Victor Edorot is
also not meritorious, It is not disputed that said Victor Edorot is only one of the heirs of
deceased defendant Herminigildo Edorot. He is not the sole owner of the entire interest of
Herminigildo. Neither is his waiver binding upon the other heirs of said deceased.

Finally, anent the contention of petitioners that private respondents "ex-parte manifestation"
did not comply with the required notice of motions pursuant to Sections 4, 5 and 6 of Rule 15
of the Rules of Court, suffice it to state that the said "manifestation" informing the Court that
petitioners have not complied with the order to amend the complaint, is not a litigated or
contentious motion and may be acted upon even without proof of service on the adverse party.
5 In fact, under Section 3 of Rule 17, quoted earlier, the Court can motu proprio or on its own
motion, dismiss the case for failure to comply with its order.

Upon the foregoing facts, We find that respondent Judge committed no error in dismissing the
complaint. However, to avoid injustice, such dismissal should not operate as an adjudication
on the merits. 6

WHEREFORE, the lower court's Order of dismissal, which should be understood to be without
prejudice, is AFFIRMED. Cost against petitioners.

59
[G.R. No. L-18707. February 28, 1967.]
AGUSTIN O. CASEAS, plaintiff-appellant, vs. CONCEPCION SANCHEZ VDA. DE ROSALES
(substituted by her heirs), ROMEO S. ROSALES, ET AL., defendants-appellees.
Juan L. Pastrana for plaintiff-appellant.
Francisco Ro. Cupin and Wenceslao B. Rosales for defendants-appellees.
SYLLABUS
1. CIVIL ACTIONS; DEATH OF A PARTY; EFFECT OF ORDER TO AMEND PRIOR TO
SUBSTITUTION OF PARTIES. Instead of ordering the substitution of the deceased's legal
representatives in accordance with Rule 3, Section 37, of the Rules of Court, the trial court
directed the surviving plaintiff to amend the complaint and when the latter failed to comply
therewith, the said court dismissed the complaint for such non- compliance. HELD: Inasmuch
as there was no obligation on the part of the plaintiff-appellant herein to amend his complaint
in Civil Case No. 261, any such imposition being void, his failure to comply with such an order
did not justify the dismissal of his complaint. Grounded as it was upon a void order, the
dismissal was itself void.
2. ID.; CAUSE OF ACTION DEFINED. A cause of action is an act or omission of one
party in violation of the legal right or rights of the other (Ma-ao Sugar Central vs. Barrios, 79,
Phil., 666).
3. PRESCRIPTION; TRUST RELATIONSHIP A PROPER DEFENSE. Insofar as the issue of
prescription is concerned, this Court is of the view that it should defer resolution on it until
after Civil Case No. 780 shall have been tried on the merits, considering that one of the
defenses set up by the appellant against the said issue is the existence of a trust relationship
over the property in dispute.
DECISION
REGALA, J p:
This is an appeal from the order of dismissal entered by the Court of First Instance of Agusan
in Civil Case No. 780, entitled Agustin Caseas vs. Concepcion Sanchez Vda. de Rosales, et al.
On August 21, 1952, Rodolfo Araas and Agustin O. Caseas filed with the Court of First
Instance of Agusan, under Civil Case No. 261, a complaint for specific performance and
enforcement of their alleged right under a certain deed of sale, and damages against the
spouses Jose A. Rosales and Concepcion Sanchez. They alleged that sometime in 1939, Agustin
O. Caseas acquired from Rodolfo Araas, under a deed of assignment, the latter's rights and
interest over a parcel of land covering an area of more or less than 2,273 square meters and
designated as Lot No. 445-A of the Butuan Cadastre No. 84 (Psd 4943); that Rodolfo Araas, in
turn, acquired the said property from the spouses Jose A. Rosales and Concepcion Sanchez
under a deed of sale executed on March 18, 1939 under the terms of which, however, the
actual transfer of the aforesaid land unto the vendee would be made only on or before
February 18, 1941; and that despite the above documented transactions, and despite the
arrival of the stipulated period for the execution of the final deed of transfer, the vendors
spouses refused to fulfill their obligation to effect such transfer of the said lot to the vendee
Rodolfo Araas, or his assignee, the herein appellant, Agustin O. Caseas. Thus, the principal
relief prayed for in the above complaint was for an order directing the defendants- spouses to
"execute a deed of absolute sale of the property described in the complaint in favor of the
assignee, plaintiff Agustin O. Caseas."
After the defendants spouses had filed their answer to the above complaint, but before trial,
the counsel for the plaintiffs gave notice to the trial court that plaintiff Rodolfo Araas and
defendant Jose A. Rosales had both died. In view of the said manifestation, the lower court, in
an order dated April 27, 1956, directed the surviving plaintiff, Agustin O. Caseas, to amend
the complaint to effect the necessary substitution of parties thereon. The said surviving
plaintiff, however, failed altogether to comply with the aforementioned order of April 27, 1956
to the end that on July 18, 1957, the lower court issued the following order:
"Until this date no amended complaint was filed by the attorney for the plaintiffs. This shows
abandonment and lack of interest on the part of the plaintiffs. This being an old case, for failure
on the part of the counsel for the plaintiffs to comply with the order of this Court the same is
hereby dismissed without pronouncement as to costs."
As no appeal was taken from the above order of dismissal, the same, in due time, became final.
On April 18, 1960, Agustin O. Caseas, the same plaintiff Caseas in Civil Case No. 261, filed
with the same Court of First Instance of Agusan, under Civil Case No. 780, another complaint
against the widow and heirs of the late Jose A. Rosales "to quiet, and for reconveyance of, title
to real property, with damages." This suit referred itself to the very same property litigated
under Civil Case No. 261 and asserted exactly the same allegations as those made in the former
complaint, to wit: "that the plaintiff (Agustin O. Caseas) has acquired the above-described
property by purchase from its previous owner, Rodolfo Araas, now deceased, . . .; and said
Rodolfo Araas had in turn acquired the same property by virtue of another deed of sale
executed by Jose A. Rosales, now also deceased," (Par. 3, Complaint) "that under the terms
and stipulations of paragraph 2 of the deed of sale (between Rosales and Araas), . . . Jose A.
Rosales was to hold title to the land in question in favor of Rodolfo Araas or the latter's assigns
and successors in interest for a period of five (5) years from February 19, 1936, at the
60
expiration of which said Jose A. Rosales was to execute a document conveying absolutely the
title to the land in question in favor of the aforementioned Rodolfo Araas or his assigns and
successors in interest" (Par. 9, Complaint); "despite which obligation the defendants refused,
even after the expiration of the stipulated period to "convey title to the land in question and
to execute the corresponding document covering the same." (Par. 12, Complaint) In the
premises, the plaintiff prayed for judgment "quieting the title of the plaintiff to the land in
question and ordering the defendants to execute a deed of conveyance of the same in favor
of the said plaintiff" plus costs and damages.
To the above complaint, the defendants filed a motion to dismiss on several grounds, namely;
res judicata, prescription, lack of cause of action, failure to include indispensable parties, and
that the contract subject of the complaint was void ab initio. After the plaintiff had filed his
opposition to the above motion, the lower court issued the order under appeal dismissing the
complaint. Of the above grounds, though, the lower court relied alone on the defendants' plea
of res judicata, lack of cause of action and prescription. The material portion of this order of
dismissal reads:
"The Court, however, believes that this action is barred by prior judgment. The order of
dismissal in Civil Case No. 261 was already final and has the effect of an adjudication upon the
merits. The parties in Civil Case No. 261 and in this case are substantially the same; the subject
matter is the same and there is identity of cause of action. All the elements of res judicata are
therefore present.
"Moreover, the complaint states no cause of action if its purpose is to quiet title, because the
plaintiff has as yet no title to the land in question. Precisely, this action is brought in order to
acquire or secure title by compelling the defendants to execute a deed of sale in favor of the
plaintiff. However, this action for specific performance cannot also prosper because being
based upon an agreement in writing it is already barred by prescription as the period of ten
years has long expired when the present complaint was filed."
The appeal at bar assails the above determination that Civil Case No. 780 is barred by a prior
judgment and by prescription and that the same states no cause of action. It is on these issues,
therefore, that this Court shall dispose of this appeal.
We find for the appellant.
When certain of the parties to Civil Case No. 261 died and due notice thereof was given to the
trial court, it devolved on the said court to order, not the amendment of the complaint, but
the appearance of the legal representatives of the deceased in accordance with the procedure
and manner outlined in Rule 3, Section 17 of the Rules of Court, which provides:
"Sec. 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."
In the case of Barrameda vs. Barbara, 90 Phil, 718, this court held that an order to amend the
complaint, before the proper substitution of parties as directed by the aforequoted rule has
been effected, is void and imposes upon the plaintiff no duty to comply therewith to the end
that an order dismissing the said complaint, for such non-compliance, would similarly be void.
In a subsequent case, Ferreira et al vs. Gonzalez, et al., G.R. No. L-11567, July 17, 1958, this
court affirmed a similar conclusion on the determination that the continuance of a proceedings
during the pendency of which a party thereto dies, without such party having been validly
substituted in accordance with the rules, amounts to a "lack of jurisdiction."
The facts of this case fit four square into the Barrameda case abovecited, save for the minor
variance that in the former two of the litigants died while only one predeceased the case in
Barrameda. Here, as in Barrameda, during the pendency of civil case, notice was given to the
trial court of the deaths of one of the plaintiffs and one of the defendants in it. Instead of
ordering the substitution of the deceased's legal representatives in accordance with Rule 3
section 17, of the Rules of Court, the trial Court directed the surviving plaintiff to amend the
complaint and when the latter failed to comply therewith, the said court dismissed the
complaint for such non- compliance. We must hold, therefore, as We did in Barrameda that
inasmuch as there was no obligation on the part of the plaintiff- 'appellant herein to amend
his complaint in Civil Case No. 261, any such imposition being void, his failure to comply with
such an order did not justify the dismissal of his complaint. Grounded as it was upon a void
order, the dismissal was itself void.
Consequently, as the dismissal of Civil Case No. 261 was void, it clearly may not be asserted to
bar the subsequent prosecution of the same or identical claim.
Finally, We find ourselves unable to share the appellees' view that the appellant's complaint
under Civil Case No. 780 failed to state a sufficient cause of action. A cause of action is an act
or omission of one party in violation of the legal right or rights of the other (Ma-ao Sugar
61
Central vs. Barrios, 79 Phil. 666) and both these elements were clearly alleged in the aforesaid
complaint.

Insofar as the issue of prescription is concerned, this Court is of the view that it should defer
resolution on it until after Civil Case No. 780 shall have been tried on the merits, considering
that one of the defenses set up by the appellant against the said issue is the existence of a
trust relationship over the property in dispute.

In view of all the foregoing, the order dated January 20, 1961 dismissing Civil Case No. 780 is
hereby set aside and the said case is ordered remanded to the court of origin for trial on the
merits. Costs against the appellees.

Concepcion, C. J., Reyes, J. B. L., Dizon, Makalintal, Bengzon, J. P., Zaldivar, Sanchez, and Ruiz
Castro, JJ., concur.

62
[G.R. No. L-4227. January 28, 1952.]
JOSE BARRAMEDA, DOLORES B. MAGADIA, and JULIAN BARRAMEDA, JR., plaintiffs-appellees,
vs. PAULINO BARBARA and MARCELA BARBARA, defendants-appellants.
Jose M. Pea, for appellees.
Serafin & Abad, for appellants.
SYLLABUS
1. PARTY; DEATH OF PARTY; DUTY OF ATTORNEY FOR DECEASED PARTY. Under Sec.
16, Rule 3 of the Rules of Court it is the duty of the attorney for the deceased defendant to
inform the Court of his client's death and furnish it with the name and residence of the
executor, administrator, or legal representative of the deceased. This rule must have taken
into consideration the fact that the attorney for the deceased party is in a better position that
the attorney for the other party to ascertain who are the legal representative or heirs of his
deceased client. This duty should not be shifted to the plaintiff or his attorney.
2. ID.; ID.; NON-COMPLIANCE WITH COURT'S ORDER. Although the attorney for the
deceased defendant did not furnish the name of the legal representative of his deceased client,
the court directly ordered the plaintiffs to make the substitution without previously requiring
the defendants to do so. Consequently, the order of the court requiring the plaintiffs to make
substitution without previously ordering the attorney for the defendants to name the legal
representative and ordering the latter to appear, was a violation of Rule 3, sections 16 and 17,
and was, therefore, void. The non-compliance with the order could not be considered as failure
to prosecute. The fault of the defendants should not be attributed to the plaintiffs, making the
latter suffer the serious consequences.
3. ID.; ID.; STANDING IN COURT OF DECEASED PARTY. As the defendant had died,
the attorney representing him could not file a motion to dismiss for, his client being dead, he
had no longer any standing in court; he had no personality and could not have been
represented by an attorney.
DECISION
JUGO, J p:
The facts of this case as gathered from the decision of the Court of First Instance of Camarines
Sur, may be summarized as follows:
In the case entitled Paulino Barbara and Marcela Barbara vs. Julian Barrameda, Civil Case No.
R-119 of said court, Paulino and Marcela Barbara (defendants-appellants herein) filed a
complaint against Julian Barrameda (deceased father of the herein plaintiffs- appellees),
alleging that Barrameda refused to allow the redemption of the land in question herein, which
according to them had been mortgaged to Barrameda for the sum of P270, the original
mortgagor and mortgagee being Jacoba Buyet and Juan Reis, respectively. Juan Reis assigned
his rights as mortgagee to Julian Barrameda. Jacoba Buyet was succeeded by her heirs Paulino
and Marcela Barbara. Julian Barrameda filed an answer alleging that the transaction between
him and Jacoba Buyet was not a mortgage but a sale with pacto de retro and that neither
Jacoba Buyet nor her heirs had redeemed the land within the stipulated period of six years,
and, consequently, he, Julian Barrameda, had become the absolute owner of the property in
question.
After the above pleadings had been filed and while the case was pending hearing, the court,
after being informed that Julian Barrameda had died, ordered the plaintiffs to amend their
complaint so as to substitute the legal representatives of Julian Barrameda as defendants.
Although seven months had elapsed since the plaintiffs were notified of said order, they had
failed to comply with it.
On May 7, 1947, counsel for the deceased defendant Julian Barrameda filed a motion for
dismissal on the ground that in failing to file an amended complaint, the plaintiffs in said case,
R-119 (defendants-appellants herein), showed lack of interest in prosecuting the case. The
court granted the motion, dismissing the case in its order dated May 13, 1947.
The plaintiffs herein, Jose and Julian Barrameda, Jr., and Dolores B. Magadia, heirs of Julian
Barrameda, filed a complaint, dated August 26, 1947, in the present case, No. 843 of the Court
of First Instance of Camarines Sur, against Paulino and Marcela Barbara (plaintiffs in case No.
R-119), alleging the facts above stated, and praying that they be declared the owners of the
property in question and that the defendants be ordered to indemnify them in the sum of P200
per annum as damages from May, 1947 until the defendants should vacate the land.
The defendants herein Paulino and Marcela Barbara filed an answer, alleging in substance, that
the deed which the plaintiffs claim to be of sale with pacto de retro was only of mortgage,
which was null and void because their deceased mother Jacoba Buyet, who executed it, had
no authority to do so, as the property belonged exclusively to their deceased father Pascual
Barbara; that they had been in possession of the land as owners for more than twenty years.
The answer of the defendants ends with the prayer that the document in question be declared
null and void; that if it is declared valid, it be considered only as a mortgage or guaranty of one-
half of the property in question; and that they be ordered to pay to the plaintiffs only half of
the sum of P270 with costs against the plaintiffs.
63
The plaintiffs in the present case filed a motion entitled "Motion to Dismiss the Counterclaim
of the Defendants and Render Judgment in accordance with the Allegations in the Complaint,"
based on the grounds:
"1. That the cause of action stated in said counterclaim is barred by prior judgment.
2. That the said counterclaim states no cause of action.
3. That the answer does not allege any valid defense."
The trial court, without receiving evidence and rejecting the allegations of the answer on the
ground that the prior dismissal under Rule 30, section 3, was a final adjudication on the merits,
rendered judgment in the present case declaring the plaintiffs owners of the land in question
and ordering the defendants in the present case to deliver the possession to the plaintiffs, and
to pay the costs.
The defendants herein appealed to the Court of Appeals which, considering that all the
questions raised are of law and not of fact, certified the present case to this Court, which
accepted it.
The order of dismissal for failure to prosecute in the other case, No. R-119, was based on the
failure of the plaintiffs to comply with the order of the court to amend the complaint so as to
substitute as defendants the heirs or representatives of the deceased defendant Julian
Barrameda.
Rule 3, section 16, reads as follows:
"Duty of attorney upon death or incapacity of a party. Whenever a party to a pending case
dies or becomes insane, it shall be the duty of his attorney to inform the court promptly of
such death or insanity and to give the name and residence of the executor or administrator,
guardian, or other legal representatives of the deceased or insane."
Section 17 of the same rule, reads as follows:
"Death of party. After a party dies and the claims 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."
It will be seen that it was the duty of the attorney for the deceased Julian Barrameda to inform
the court of Barrameda's death and furnish it with the name and residence of the executor,
administrator, guardian, or legal representative of the deceased. The attorney of the deceased
or somebody else, who does not appear of record, may have informed the court of the death
of Julian Barrameda, but said attorney did not furnish the name and residence of the executor,
administrator, guardian, or legal representative of his deceased client, in accordance with
section 16, Rule 3, above quoted. This rule must have taken into consideration the fact that
the attorney for the deceased party is in a better position than the attorney of the other party
to ascertain who are the legal representatives or heirs of his deceased client. This duty should
not be shifted to the plaintiff or his attorney. As a consequence of section 16, the court, under
section 17, orders the legal representative of the deceased party, whose name must have been
furnished before hand by his attorney, to appear and substitute the deceased within thirty
days. It is only after the failure of the legal representative to comply with said order that the
court, under section 17, will order the opposing party to procure the appointment of a legal
representative within the time to be specified by the court, to appear in behalf of the interest
of the deceased party. It should be understood that under section 17, the heirs of the deceased
may appear instead of an executor or administrator, with a guardian ad litem for the minor
heirs. In the present case, although the attorney for the deceased Barrameda did not furnish
the name of the legal representative of his deceased client, the court directly ordered the
plaintiffs to make the substitution without previously requiring the defendants to do so.
Consequently, the order of the court requiring the plaintiffs to make the substitution without
previously ordering the attorney for the defendants to name the legal representative and
ordering the latter to appear, was a violation of Rule 3, sections 16 and 17, and was, therefore,
void. The non- compliance with that order could not be considered as failure to prosecute. The
fault of the defendants should not be attributed to the plaintiffs, making the latter suffer the
serious consequences that are claimed to have ensued.
It is stated in the appealed decision:
". . . So on May 7, 1947, counsel for the defendant Julian Barrameda filed a motion for
dismissal. . . ."
On May 7, 1947, Julian Barrameda was already dead. How could the attorney represent him in
filing the motion? Julian Barrameda, being dead, had no longer any standing in court; he had
no personality and could not have been represented by an attorney. But if it had been the heirs
of the deceased Barrameda who were represented in filing the motion to dismiss (which was
64
not so), then instead of filing a motion for dismissal they should have appeared as defendants
in lieu of the deceased Julian Barrameda. If they had appeared in court to file a motion for
dismissal, they could and should have appeared as defendants as it was their duty to do under
sections 16 and 17 of Rule 3, without shifting this duty to the plaintiffs.

In view of the foregoing, the decision appealed from is set aside and the case is ordered
returned to the trial court for further and appropriate proceedings, with costs against the
appellees. It is so ordered.

Paras, C.J., Pablo, Bengzon, Padilla, Montemayor, Reyes and Bautista Angelo, JJ., concur.

65
[G.R. No. L-41107. February 28, 1979.]
AMANDA L. VDA. DE DELA CRUZ, ET AL., petitioners, vs. HON. COURT OF APPEALS, MARCELO
ABAGA, MARGARITA D. JOSE, MARTINA D. JOSE, QUIRINO D. JOSE, TEOFILO D. JOSE, ET AL.,
respondents.
Angel C. Ungson, Jr. for petitioner.
Juan J. de Dios and Simplicio M. Sevilleja for private respondents.
SYNOPSIS
Felix Jose and 114 other tenants were defendants in a suit for ejectment and collection of
unpaid rentals in the Court of Agrarian Relations. Felix Jose died before the termination of the
action, but no substitution was affected. Judgment was rendered against deceased Felix Jose
and his co-defendants. Some of his co-defendants brought the case to the Supreme Court on
certiorari, but the petition was dismissed for failure to file brief. Thereafter, the conjugal
properties of deceased Felix Jose and his wife were levied and sold at public auction. The heirs
of deceased Felix Jose, through another counsel, thereafter moved to substitute the deceased
and to set aside the decision, the writ of execution and the sale of public auction. The trial
court allowed the substitution but denied the motion to set aside the proceedings. The
substituted defendants then appealed to the Court of Appeals which rendered judgment in
their favor. Hence, this petition for review.
The Supreme Court affirmed the decision of the Court of Appeals holding that no valid
substitution having been affected after Jose's death, the trial court never acquired jurisdiction
over his heirs for the purpose of making them decision binding upon them.
Judgment affirmed.
SYLLABUS
1. CIVIL PROCEDURE; PARTIES; SURVIVAL OF ACTIONS; RULE APPLIED TO EJECTMENT
OF AGRICULTURAL LESSEES. The provisions of Rule 17, Sec. 3 of the Rules of Court which
provides for substitution of parties in actions which survive are applicable to a complaint for
ejectment of agricultural tenants, since an action is not extinguished on account of Sections 9,
Rep. Act 1199 (Rep. Act 6389, Code of Agrarian Reforms), which provides in effect that in case
of death or permanent incapacity of the agricultural lessee, the leasehold shall continue
between the lessor and the persons enumerated in said section which include the descendants
of the deceased.
2. ID.; ID.; ID.; EFFECT OF LACK OF SUBSTITUTION. The continuance of a proceeding
during the pendency of which a party thereto dies, without such party having been validly
substituted in accordance with the rules, amounts to lack jurisdiction. Assuming that
jurisdiction was acquired at the outset over the defendant, it was inevitably impaired on his
death pending the proceedings such that unless and until a legal representative is for him duly
named and within the jurisdiction of the court, no adjudication in the cause could be accorded
any validity or binding effect on any party, in representation of the deceased, without
trenching upon the fundamental right to a day court which is the very essence of the
constitutionally enshrined guarantee of due process.
3. ID.; ID.; SUBSTITUTION BASED ON RIGHT TO DUE PROCESS. The need for
substitution is based on the right of a party to due process. One may infer from the use of the
word "shall" in Rule 3, Sec. 17, Revised Rules of Court that substitution is indeed a mandatory
requirement in actions surviving the deceased. And in statutes relating to procedure, every act
which is jurisdictional, or of the essence of the proceedings, or is prescribed for the protection
or benefit of the party affected, is mandatory.
4. ID.; ID.; ID.; SUBSTITUTION SHOULD BE ORDERED EVEN AFTER JUDGMENT.
Substitution should be ordered even after judgment has been rendered since proceedings may
still be taken, like an execution; and the legal representative must appear to protect the
interests of the deceased and in all such proceedings.
5. APPEAL; FINDINGS OF FACTS OF COURT OF APPEALS. In a petition for review on
certiorari, where only questions law may be raised, the findings of facts by the Court of Appeals
are in general, final and conclusive, except when (1) the conclusion is a finding grounded
entirely on speculation; (2) the inference is manifestly mistaken, absurd or impossible; (3)
there is a grave abuse of discretion; (4) the judgment is based on a misapprehension of facts;
(5) the Court of Appeals in making its findings, went beyond the issues of the case and the
same are contrary to the submission of both appellant and appellee.
6. ID.; RES JUDICATA; DISMISSAL OF APPEAL. The dismissal of the appeal by the
Supreme Court for failure of the petitioners to file their brief or memorandum within the
prescribed period could not bar the heirs of the deceased from questioning all the proceedings,
particularly if the fact is considered that there could not have been a final judgment on the
merits since in the first place, jurisdiction over the deceased defendant was lacking in the lower
court, since no substitution was effected after the death of deceased.
DECISION
DE CASTRO, J p:
66
This is a petition for certiorari seeking to review the decision of the Court of Appeals in case
CA-G.R. No. 47331-R entitled "Amanda L. Vda. de dela Cruz, et al., plaintiffs-appellees, versus
Marcelo Abaga, Margarita D. Jose, et al., defendants." The questioned decision ordered the
setting aside of the decision rendered by the Court of Agrarian Relations in CAR Case No. 115-
TP-59 and 116-TP-59 and proceedings subsequent thereto insofar as it affected the deceased
defendant Felix Jose or his heirs, the private respondents in this petition.
As narrated by the Court of Appeals in its decision, it appears that plaintiffs (herein petitioners)
filed an action ejectment and collection of unpaid rentals against Felix Jose and 114 other
tenants on November 23, 1959 in the Court Agrarian Relations, Tayug, Pangasinan. Their
complaint alleged that Felix Jose is a tenant over a 4.5 ha. landholding in plaintiffs' hacienda in
Tayug, Pangasinan, paying a fixed rental of 850 kilos of palay per hectare per agricultural year;
that he failed to pay in full his rentals and despite plaintiffs' repeated demands, Felix Jose
refused to vacate the landholding and to pay his obligation. 1 In a join answer filed through
their counsel, Atty. Fausto G. Cabotaje, defendant Felix Jose and his 114 co-defendants denied
the material averments of the complaint, alleging payment of all the rentals of their respective
landholdings. Thereafter, trial was commenced. However, as found by the Court of Appeals,
"before termination thereof, or on June 5, 1961, Felix Jose died at the Eastern Pangasinan
Provincial General Hospital in Tayug, Pangasinan (Record, Vol. 1, p. 509). It appears that Jose's
demise no substitution of defendant was effected." 2
Then on March 29, 1962, the trial court rendered judgment against Felix Jose together with
the other defendants holding him liable to plaintiffs for 6,432 kilos of palay as unpaid rentals.
Some of his co-defendants then brought the case to the Supreme Court for review on certiorari
where it was docketed as G. R. No. L-19930-19935. However, the petition was dismissed on
November 30, 1962 due to the petitioners' failure to file their brief (Appellee's Brief, pp. 2-8).
Thereafter on plaintiffs' motion, the Court of Agrarian Relations issued an order of execution
(Appendix B of Appellant's Brief, pp. 54-60). On May 3, 1963, a writ of execution to effect
ejectment was entered (Appendix C, Appellants' Brief, pp. 60-69). To satisfy the award of
damages under the decision of the Court of Agrarian Relations, the conjugal properties of the
deceased Felix Jose and his wife were sold at public auction. A certificate of sale dated July 31,
1969 was later issued in favor of plaintiff Amanda L. Vda. de la Cruz as highest bidder. The
sheriff's final deed of sale followed on August 17, 1970. llcd
On October 27, 1970, the heirs of the deceased defendant, through their new counsel, Atty.
Juan V. Landingin, filed a motion to substitute the deceased and to set aside as null void the
decisions, orders, writ of execution and sale at public auction made and entered against the
latter. The trial court allowed the substitution "for the purposes of whatever proceedings may
still be allowed in this case" (p. 23, rollo) but denied the motion to set aside the decision, orders,
writ of execution and the public auction sale. The motion for reconsideration was likewise
denied. The substituted defendants then appealed to the Court of Appeals, raising mainly the
question of the validity of the lower court's decision on the ground that despite it's awareness
of the death of said defendant, no substitution was ordered before decision was rendered on
March 29, 1962.
The Court of Appeals found the appeal meritorious. Against its decision, a motion for
reconsideration was filed but was denied. Hence, this petition for review on certiorari, alleging
mainly that the Court of Appeals erred: 3
1. "in entertaining an appeal from the order of the Court of Agrarian Relations, in
reversing the decision of the Court of Agrarian Relations of March 29, 1962, setting aside the
same and the auction sale of July 2, 1969, the certificate of sale dated July 31, 1969, and the
final deed of sale of August 17, 1979," with respect to Felix Jose, considering that a period of
more than eight (8) years had elapsed from the rendition of the decision of the trial court to
the filing of the motion for substitution:
2. "in not considering the decision of the Supreme Court in cases G.R. Nos. L-19930-
19935 as having the effect of res judicata, based not only on the general application of the rule
but on the basis of the agreement of the parties before the Court of Agrarian Relations that
the cases be heard jointly and one decision for all the cases is sufficient.
3. "in finding that the trial was still going on and not yet terminated when Felix Jose
died on June 5, 1961, and that the continuance of the trial after the death of defendant,
without such partly having been substituted in accordance with the aforesaid Rule amounts to
lack of jurisdiction."
To begin with, the Court of Appeals found that the defendant Felix Jose died before the
termination of the trial, contrary to petitioner's claim that when said defendant died, the trial
was already terminated (pp. 11, rollo), and hence, there was no denial of due process. Whether
defendant died before or after termination of trial is not all that important because one thing
is certain; that he died before the rendition of judgment. This fact was known to the Judge of
the Court of Agrarian Relations (Appellant's Brief, pp. 48-49), who in his decision placed the
word "dead" in parenthesis beside the name of Felix Jose (Appendix A, Appellants' Brief, p. 49).
The Court of Appeals took this into consideration when it held that the decision of said court
was a "patent nullity" insofar as Felix Jose was concerned. As stated by the Appellate Court, no
substitution of the deceased was ordered by the trial court, in disregard of the provisions of
Rule 3, Sec. 17, Rules of Court which reed thus: cdrep
SEC. 17. Death of a 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
67
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 be appoint guardian ad litem
for the minor heirs.
In Caseas vs. Rosales (19 SCRA 466). Caisip vs. Cabangon (109 Phil, 154) and Bonilla vs.
Barcena (71 SCRA 495), this Court held that in case of the death of a party and due notice is
given to the trial court, it is the duty of the court to order the legal representative of the
deceased to appear for him, in the manner outlined in the aforementioned Rule. Considering
the complaint was for ejectment of the tenants, (defendant, being one of them) the provisions
of said section and the rulings in the aforementioned cases are indeed applicable to the
present case, where the action or the claim is not extinguish account of Section 9, RA 1199,
(now RA 6389, Code of Agrarian Reforms) which provides in effect that in case of death or
permanent incapacity of the agricultural lessee, the leasehold shall continue between the
lessor and the persons enumerated in said Section which include the descendants of the
deceased. But as noted by the Court of Appeals 4 : "it appears that no legal representative
was ever summoned pear in court; that no legal representative appeared to be substituted;
and that plaintiffs did not procure the appointment of such legal representatives." As a result,
the "continuance of a proceeding during the pendency of which a party thereto dies, without
such having been validly substituted in accordance with the rules, amounts to lack of
jurisdiction." 5 The same ruling was given in the earlier case of Ferreria vs. Gonzales (104 Phil.
143), where this Court set aside the decision of the Court of Agrarian Relations because "no
valid substitution was effected, consequently, the court never acquired jurisdiction over
appellant for the purpose of making the decision binding upon her either personally or as legal
representative of the estate of her deceased mother." Assuming that jurisdiction was ever
acquired at the outset over defendant Felix Jose, it was: llcd
"inevitably impaired on the death of the protestee pending the proceedings below such that
unless and until a legal representative is for him duly named and within the jurisdiction of the
trial court, no adjudication in the cause could have been accorded any validity or binding effect
on any party, in representation of the deceased, without trenching upon the fundamental right
to a day in court which is the very essence of the constitutionally enshrined guarantee of due
process." 6
The need therefore for substitution is based on the right of a party to due process. Summing
up then the previous ruling 5 this Court in the afore-cited cases, and noting that the Rule 3,
Sec. 17, Revised Rules of Court uses the word "shall', one infers that substitution is indeed a
mandatory requirement in actions surviving the deceased. It has been held that in "statutes
relating to procedure . . . every act which is jurisdictional, or of the essence of the proceedings,
or is prescribed for the protection or benefit of the party affected, is mandatory." 7 The
petitioners, however, take the contrary view, pointing to the case of Lota vs. Tolentino (90 Phil.
831) to argue that the said section involves only a procedural requirement (Petitioners' Brief,
p. 16). A reading of the said case shows that the nature of the action filed by the plaintiff was
purely personal since it was for accounting and liquidation of the partnership, and on
defendant's death, the claim we extinguished.
In any case, substitution should be ordered even after judgment has been rendered since
proceedings may still be taken-as was done in this case like an execution; and the legal
representative must appear to protect the interests of the deceased and in all such
proceedings. 8 In this instance, however, the Court of Appeals found that there is "no showing
that the appellants were notified of the decision dated March 29, 1962 or of the auction sale
held thereafter." 9 Petitioners take issue with the Appellate Court on this point. But since the
present petition is for review on certiorari, where "only questions of law may be raised," (R.
45, Sec. 2, Revised Rules of Court), this Court has held in a number of cases that findings of
facts by the Court of Appeals are; in general, final and conclusive (Chan vs. Court of Appeals,
33 SCRA 737; Ramirez Te. Corp. vs. Bank of America, 32 SCRA 191; Castro vs. Tamporong, 78
Phil. 804 to name a few), except when: 10
1. the conclusion is a finding grounded entirely on speculation,
2. the inference made is manifestly mistaken, absurd or impossible;
3. there is a grave abuse of discretion;
4. the judgment is based on a misapprehension of facts;
5. the Court of Appeals is making its findings, went beyond the issues of the case and
the same are contrary to the submission of both appellant and appellee.
None of the above exceptions however applies to the case at bar, so there is no reason to
disturb the findings of the Court of Appeals.
Petitioners also contend that since two of the private respondents were co-respondents with
their father in the complaint before the Court of Agrarian Relations, petitioners "believe that
they were supposed to have represented their father in the appeal to the Supreme Court.
"Likewise, they maintain that the decision of the Court in the said appeal operated as res
judicata on all matters which might have been litigated and decided before the judgment
became final (pp. 7-9, rollo). prLL
68
With reference to the first objection, it is worthy to note that the herein private respondents
were sued in their individual capacity for their separate and respective obligations. The
dismissal of the appeal by the Supreme Court for failure of the petitioners to file their brief or
memorandum within the prescribed period could not, therefore, bar the heirs of the deceased
from questioning all the proceedings, particularly if the fact is considered that there could not
have been a final judgment on the merits since in the first place, jurisdiction over the deceased
defendant was lacking in the lower court, as heretofore shown. Accordingly there can be no
res judicata as contended by petitioner. 11

IN VIEW OF THE FOREGOING, We hereby affirm the decision of the Court of Appeals, No
pronouncement as to costs.

SO ORDERED.

69
[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.
Bausa, Ampil and Suarez for petitioner.
Felipe C. Navarro for private respondents.
SYNOPSIS
During her lifetime, Florentina Nuguid Vda. de Haberer appealed from a decision of the trial
court dismissing her eleven complaints for recovery of possession of a parcel of land which
was registered in her name. Upon her death, her counsel filed three motions respectively on
June 28, 1975, September 18, 1975, and November 24, 1975 notifying the court of appellant's
death and praying either for the suspension of the running of the period for filing appellant's
brief pending the appointment of an executor of her estate in the Court of First Instance, or an
extension of sixty days. Acting only on the third motion, the appellate court denied the request
for extension and dismissed the appeal on the ground that appellant had already been given a
total of 195 days within which to file her brief. A motion for reconsideration of the order
wherein the appellant's brief was also presented for admission was likewise denied by the
court stating that litigants have no right to assume that such extension will be granted as a
matter of right. Hence, is petition.
The Supreme Court held, that upon notice of appellants' death, the Rules of Court calls upon
the court to require the appearance of the deceased's legal representative instead of
dismissing the appeal; and that the court, in exercising its discretion to dismiss an appeal on
the ground of failure to file appellant's brief, must do so in accordance with the tenets of justice
and fair play, having in mind the circumstances of the case, and without applying the Rules
with rigidity and inflexibility.
Petition granted. Appellant's brief ordered admitted and the case remanded to the appellate
court for further proceedings.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; APPEALS; DISMISSAL FOR FAILURE TO FILE
APPELLANT'S BRIEF DUE TO HER DEATH; NOT PROPER WHERE COURT FAILED TO REQUIRE
DECEASED'S SUBSTITUTION; CASE AT BAR. Section 17, Rule 3 of the Rules of Court sets the
rule on substitution of parties in case of death of any of the parties. Under the Rules, it is the
court that is called upon, after notice of a party's death and the claim is not extinguished, to
order upon proper notice the legal representative of the deceased to appear within a period
of 30 days or such time as it may grant. The Rule further provides, that the court should set a
period for the substitution of the deceased party with her legal representative or heirs, falling
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." Thus, in the case at bar where deceased's counsel duly notified the court of their
client's death, the court gravely erred in not following the Rules and requiring in 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. 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.
2. ID.; ID.; PARTIES TO AN ACTION; DEATH OF PARTY; ORDER OF SUBSTITUTION
REQUIRED BY THE RULES; ABSENCE THEREOF RENDERS PROCEEDINGS VOID. Where 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.
3. ID.; ID.; ID.; ID.; EFFECT THEREOF ON ATTORNEY-CLIENT RELATIONSHIP; CASE AT BAR.
It is error for respondent court to rule that since upon the demise of the party-appellant,
the attorney-client relationship between her and counsel "was automatically severed and
terminated," whatever pleadings filed by said counsel with it after the death of said appellant
"are mere scraps of paper." If at all, due to said death and severance of the attorney-client
relationship, further proceedings and specifically the running of the original 45-day period for
filing the appellant'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 Rules.
4. ID.; ID.; APPEALS; DISMISSAL; SUPERVENING DEATH OF APPELLANT IN CASE AT BAR
DOES NOT RENDER CONTINUANCE OF APPEAL UNNECESSARY. Respondent court 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 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
70
grant any relief, the appeal will be dismissed." Manifestly, the appellant'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.
5. ID.; ID.; LIBERAL AND RELAXED APPLICATION OF RULES. 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. 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. 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, especially
where no substantial prejudice is caused to the adverse party.
6. ID.; ID.; APPEAL; DISMISSAL ON GROUND OF FAILURE TO FILE APPELLANT'S BRIEF;
NOT AUTOMATIC BUT MERELY DISCRETIONARY. The dismissal of an appeal 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. Since the power or
authority is not mandatory but merely directory, she exercise thereof requires a great deal of
circumspection, considering all the attendant circumstances. The failure of an appellant to file
his brief within the time prescribed does not have the effect of dismissing the appeal
automatically. 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.
Thus, where a reading of the appellant's brief discloses that petitioners-appellants have a
prima facie meritorious case, the same 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," for to dismiss the appeal would not serve the ends of justice.
DECISION
TEEHANKEE, J p:
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 Florentina Nuguid Vda. de Haberer in CA-G.R. No. 53680-90-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 eleven (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,
1971, 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
71
been filed by another lawyer, Atty. Sergio Amante. Respondents in turn contended that the
lawyers of the deceased had "no longer any legal standing and her attorneys could no longer
act for and in her behalf for the reason that their client-attorney relationship had been
automatically terminated 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:
"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. In 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 appellant'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 time 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
72
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 appellant'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 appellant'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. 5
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 thereof.
Makasiar, Guerrero, De Castro ** and Melencio-Herrera, JJ., concur.
73
[G.R. No. L-45809. December 12, 1986.]
SOCORRO SEPULVEDA LAWAS, petitioner, vs. COURT OF APPEALS, HON. BERNARDO LL. SALAS,
[as Judge, CFI, Cebu, Branch VIII], and PACIFICO PELAEZ, respondents.
Jesus Yray for petitioner.
Teodoro Almase for respondents.
SYLLABUS
1. LEGAL ETHICS; ATTORNEY-CLIENT RELATIONSHIP; TERMINATION THEREOF; DEATH
OF CLIENT TERMINATES CONTRACT WITH COUNSEL FOR THE DECEASED. The former
counsels for the deceased defendant, Pedro Sepulveda, complied with Section 16, Rule 3 of
the Rules of Court by filing a notice of death on May 21, 1975. They also correctly manifested
in open court at the hearing of the case on November 27, 1975, that with the death of their
client their contract with him was also terminated and none of the heirs of the deceased had
renewed the contract, and the heirs had instead engaged the services of other lawyers in the
intestate proceedings. Both the respondent trial judge and the Court of Appeals erred in
considering the former counsels of the deceased defendant as counsels for the heirs of the
deceased. The statement in the decision of the Court of Appeals that "the appearance of the
lawyers of their deceased father in court on January 13, 1976 (Annex K) carries the
presumption that they were authorized by the heirs of the deceased defendant" is erroneous.
As this Court held in People vs. Florendo (177 Phil. 16), "the attorneys for the offended party
ceased to be the attorneys for the deceased upon the death of the letter, the principal."
Moreover, such a presumption was not warranted in view of the manifestation of said lawyers
in open court on November 27, 1975 that they were not representing the heirs of the deceased
defendant.
2. REMEDIAL LAW; CIVIL PROCEDURE; DEATH OF PARTY; EFFECT THEREOF; LEGAL
REPRESENTATIVE TO APPEAR AND SUBSTITUTE FOR THE DECEASED; EXCEPTIONS. Section
17 of Rule 3 provides as follows: "Death of party. After a party dies and the claim is not
thereby extinguished, the court shall order, upon 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 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 chargers
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 liten for the minor heirs." Under the said Rule, priority is given to the legal representative
of the deceased, that is, the executor or administrator of his estate. It is only in cases 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.
DECISION
FERIA, J p:
This is an appeal by certiorari under Rule 45 of the Revised Rules of Court from the decision of
the Court of Appeals which dismissed the petition for certiorari under Rule 65 of said Rules
against respondent Judge Bernardo Ll. Salas of the Court of First Instance of Cebu.
The antecedent facts are briefly as follows:
Private respondent Pacifico Pelaez filed a Complaint on December 6, 1972 against petitioner's
father, Pedro Sepulveda, for ownership and partition of certain parcels of land. Defendant
Pedro Sepulveda filed his Answer dated December 31, 1972 resisting the claim and raising the
special defenses of laches, prescription and failure to ventilate in a previous special proceeding.
During the presentation of evidence for the plaintiff, the defendant died on March 25, 1975.
On May 21, 1975, counsels for the deceased defendant filed a notice of death wherein were
enumerated the thirteen children and surviving spouse of the deceased.
On May 5, 1975, petitioner filed a petition for letters of administration and she was appointed
judicial administratrix of the estate of her late father in July, 1976.
At the hearing of the case on November 27, 1975, Attys. Domingo Antigua and Serafin
Branzuela, former counsels for the deceased defendant, manifested in open court that with
the death of their client, their contract with him was also terminated and none of the thirteen
children nor the surviving spouse had renewed the contract, but instead they had engaged the
services of other lawyers in the intestate proceedings.
Notwithstanding the manifestation of the former counsels of the deceased defendant, the
respondent trial judge set the case for hearing on January 13, 1976 and sent the notice of
hearing to said counsels.
On January 13, 1976, the respondent trial judge issued three orders. The first order substituted
the heirs of the deceased defendant, namely, his thirteen children and surviving spouse, as
defendants; the second order authorized Atty. Teodoro Almase, counsel for the plaintiff, to
present his evidence in the absence of Attys. Antigua and Branzuela; and the third order
treated the case submitted for decision, after the plaintiff had presented his evidence and
74
rested his case, and directed that said counsels and the fourteen heirs of the deceased
defendant be furnished copies thereof.
On January 28, 1976, the respondent trial judge rendered a decision against the heirs of the
deceased defendant.
On February 19, 1976, ten of the children of the deceased defendant, who apparently did not
know that a decision had already been rendered, filed an Answer in substitution of the
deceased defendant through their counsel, Atty. Jesus Yray. This was denied admission by the
respondent trial judge for being already moot and academic because of the earlier decision.
On March 9, 1976, the widow and two other children of the deceased defendant, through their
counsel Atty. Delfin Quijano, filed a motion for substitution and for reconsideration of the
decision dated January 28, 1976. On April 7, 1976, the respondent trial judge issued an order
setting aside his decision and setting the case in the calendar for cross-examination of the
plaintiff, Pacifico Pelaez, with a proviso that said order was applicable only to the three heirs
who had filed the motion. On July 14, 1976, the respondent trial judge lifted the order setting
aside his decision, despite the verbal petition for postponement of the hearing made by one
of the three heirs on the ground of the absence of their counsel.
On July 9, 1976, petitioner, who had been appointed judicial administratrix of the estate of the
deceased defendant and who was one of the heirs who had filed an Answer on February 19,
1976, filed a motion to intervene and/or substitute the deceased defendant. On August 25,
1976, the respondent trial judge denied the motion for the reason that the decision had
already become final.
Petitioner then filed a special civil action of certiorari with the Court of Appeals to annul the
proceedings in the respondent trial court. However, the Court of Appeals dismissed the
petition for certiorari. Hence, the present appeal.
The appeal is meritorious.
Section 16 of Rule 3 provides as follows:
"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."
The former counsels for the deceased defendant, Pedro Sepulveda, complied with this rule by
filing a notice of death on May 21, 1975. They also correctly manifested in open court at the
hearing of the case on November 27, 1975, that with the death of their client their contract
with him was also terminated and none of the heirs of the deceased had renewed the contract,
and the heirs had instead engaged the services of other lawyers in the intestate proceedings.
Both the respondent trial judge and the Court of Appeals erred in considering the former
counsels of the deceased defendant as counsels for the heirs of the deceased. The statement
in the decision of the Court of Appeals that "the appearance of the lawyers of their deceased
father in court on January 13, 1976 (Annex K) carries the presumption that they were
authorized by the heirs of the deceased defendant" is erroneous. As this Court held in People
vs. Florendo (77 Phil. 16), "the attorneys for the offended party ceased to be the attorneys for
the deceased upon the death of the latter, the principal." Moreover, such a presumption was
not warranted in view of the manifestation of said lawyers in open court on November 27,
1975 that they were not representing the heirs of the deceased defendant.
Consequently, when on the same date, November 27, 1975, the respondent trial judge issued
an order setting the continuation of the trial of the case on January 13, 1976, with notices sent
to Atty. Almase for the plaintiff and Attys. Antigua and Branzuela for the deceased defendant,
he acted with grave abuse of discretion amounting to excess of jurisdiction.
It was only at the hearing on January 13, 1976 that the respondent trial judge issued an order
substituting the deceased defendant with his fourteen heirs. This was followed with an order
authorizing counsel for the plaintiff to present his evidence in the absence of Attys. Antigua
and Branzuela, and lastly, an order treating the case as submitted for decision.
In the order of the respondent trial judge dated November 10, 1976, denying petitioner's
motion for reconsideration of the order denying her motion for intervention (Annex 1 of the
Comment), mention was made of the delayed arrival of Attys. Antigua and Branzuela at the
hearing on January 13, 1976 and of their being allowed to cross-examine the plaintiff himself.
The refusal of said former counsels of the deceased defendant to cross-examine the plaintiff
was justified
". . . in view of the intervening event of appellant's death and the interposition of the equally
established principle that the relationship of attorney and client is terminated by the death of
the client, as acknowledged by respondent court itself as well as respondents. In the absence
of a retainer from the heirs or authorized representatives of his deceased client, the attorney
would 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
decedent's rights in the case." (Vda. de Haberer vs. Court of Appeals, May 26, 1981, 104 SCRA
534, 540)
75
Moreover, as above stated, petitioner had as early as May 5, 1975 filed a petition for letters of
administration, and the same was granted in July, 1975.
Section 17 of Rule 3 provides as follows:
"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."
As this Court has held:
". . . 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 time 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. (Ordoveza vs. Raymundo,
63 Phil. 275 [1936]; Obut vs. Court of Appeals, et al., 70 SCRA 546)" (Vda. de Haberer vs. Court
of Appeals, supra, p. 541.)
Under the said Rule, priority is given to the legal representative of the deceased, that is, the
executor or administrator of his estate. It is only in cases 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.
In the case at bar, in view of the pendency of Special Proceeding No. 37-SF, Intestate Estate of
Pedro Sepulveda, and the pending application of petitioner to be appointed judicial
administratrix of the estate, the respondent trial judge should have awaited the appointment
of petitioner and granted her motion to substitute the deceased defendant.
While the lower courts correctly held that the death of Pedro Sepulveda did not obliterate his
verified Answer to the Complaint filed by private respondent and that the Answer filed by the
ten heirs and the Answer filed by the Administratrix were both unnecessary, the said heirs or
the administratrix could, with leave of court, file an Amended Answer.
In view of the foregoing, the Court rules that the proceedings conducted by the respondent
trial judge after the death of the deceased defendant are null and void.
WHEREFORE, the decision of the Court of Appeals is reversed; the petition for certiorari is
granted; petitioner is ordered substituted for the deceased defendant, Pedro Sepulveda; and
the proceedings conducted by the respondent trial judge after the death of the deceased
defendant, including the decision rendered by him on January 28, 1976, are set aside; with
costs against private respondent.
SO ORDERED.
Fernan, Alampay, Gutierrez, Jr. and Paras, JJ ., concur.
76
[G.R. No. 91879. July 6, 1992.] GRIO-AQUINO, J p:

HEIRS OF MAXIMO REGOSO, petitioners, vs. THE HON. COURT OF APPEALS and BELEN CRUZ The heirs of Maximo Regoso seek a review of the resolution dated October 9, 1989 of the Court
REGOSO, respondents. of Appeals in CA-G.R. No. 20183 dismissing the appeal filed by Regoso's former counsel.

Juanito L. Andrade for petitioner. The case involves an action for judicial partition of property with accounting and damages (Civil
Case No. 1464-V-81), which was filed by Belen Cruz-Regoso against her husband, Maximo
Francisco C. Burgos for private respondent. Regoso, in the Regional Trial Court, Branch XV of Malolos, Bulacan.
SYLLABUS On November 14, 1988, the trial court rendered a decision, the dispositive portion of which
1. REMEDIAL LAW; CIVIL PROCEDURE; PARTIES IN A CIVIL ACTIONS; DUTY OF reads:
ATTORNEY UPON DEATH OF PARTY. Under the rules [Sections 16 and 17, Rule 3 of the Rules "WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant,
of Court], it is the duty of the attorney for the deceased defendant to inform the court of his as follows:
client's death and to furnish the court with the names and residences of the executor,
administrator, or legal representative of the deceased. The rules operate on the presumption "1. Declaring the land situated at Sampalukan, Calvario, Meycauayan, Bulacan as
that the attorney for the deceased party is in a better position than the attorney for the paraphernal property of the plaintiff and the building and improvement thereon as conjugal
adverse party to know about the death of his client and to inform the court of the names and property of the parties;
addresses of his legal representative or representatives.
"2. Declaring the properties situated at Galas, Quezon City and Echague, Isabela as
2. ID.; ID.; EFFECT OF JUDGMENT; RULE IN CASE OF DEATH OF A PARTY. The conjugal properties of the parties;
supervening death of the defendant, Maximo Regoso, did not extinguish his wife's action for
partition of their conjugal assets, for it is an action that survives. The trial of the case on the "3. Requiring the defendant to render an accounting of all income derived from the
merits was already finished before the defendant died. Since it was not informed about that aforementioned properties; and
event, the trial court may not be faulted for proceeding to render judgment without ordering "4. Adjudging the defendant to pay the following amounts:
the substitution of the deceased defendant. Its judgment is valid and binding upon the
defendant's legal representatives or successors-in-interest, insofar as his interest in the "a) P5,000.00 as moral damages;
property subject of the action is concerned (Florendo, et al. vs. Coloma, et al., 129 SCRA 304).
However, the validity of the judgment of the trial court was not affected by the defendant's "b) P5,000.00 as exemplary damages; and
demise for the action survived. The decision is binding and enforceable against the successors- "c) P5,000.00 as attorney's fees. llcd
in-interest of the deceased litigant by title subsequent to the commencement of the action
[Section 49(b) Rule 39, Rules of Court; Florendo, et al. vs. Coloma, et al., 129 SCRA 304]. "With costs against the defendant." (p. 25, Rollo.)

3. ID.; ID.; APPEAL; MAY BE DISMISSED IF FILED BY A PARTY NOT AUTHORIZED TO DO
SO. Attorney Javier's appeal from the decision of the trial court was correctly dismissed by
the appellate court for upon the death of Maximo Regoso, Attorney Javier's authority to
represent him also expired. The notice of appeal which Attorney Javier filed on behalf of the
decedent was an unauthorized pleading, hence, invalid (Barrameda, et al. vs. Barbara, et al.,
90 Phil. 718; Caseas vs. Rosales, 19 SCRA 462).
DECISION
Regoso died on January 17, 1985 after the case had been submitted for decision, but he was
not substituted as defendant by his heirs because, apparently, the trial court was not informed
of his death until the decision had been promulgated on November 14, 1988.
On November 29, 1988, Regoso's counsel, Attorney Adriano Javier, Sr., filed a notice of appeal
which the trial court approved. The appeal was docketed in the Court of Appeals as CA-G.R.
No. 20183.

77
The plaintiff, Belen Cruz-Regoso, through counsel, moved to dismiss the appeal on the ground
that the deceased defendant ceased to have legal personality and that Attorney Javier's
authority to represent him was terminated or expired upon his demise, hence, the notice of
appeal filed by said counsel was invalid, a worthless piece of paper.
The Court of Appeals issued a resolution on October 6, 1989, dismissing the appeal. It held:
"It is a well-established rule that a lawyer-client relationship is terminated upon the death of
the client. The lawyer's authority to appear for his client automatically ceases (5 Am. Jur. 282).
The only exceptions are when there is a contract for the lawyer's services up to judgment, or
when his fees are on a contingent basis, and also when his appearance is coupled with an
interest (7 CJS 945, 946). Since not one of the above exceptions obtains in this case, it is obvious
that when Attorney Javier filed the notice of appeal after his client's death, he no longer had
any authority to appear for him. Hence, the notice of appeal filed by him was a mere scrap of
paper and without any legal effect.
"WHEREFORE, the instant appeal is hereby DISMISSED." (pp. 27-28, Rollo.)
The motion for reconsideration filed by the heirs' new counsel was likewise denied by the
Court of Appeals.
Hence, the present petition in which the petitioners, as heirs of the late Maximo Regoso, allege
that the Appellate Court erred in dismissing their appeal and in not declaring that the judgment
which the trial court rendered after the death of said defendant, was null and void.
The petition has no merit.
Under the rules, it is the duty of the attorney for the deceased defendant to inform the court
of his client's death and to furnish the court with the names and residences of the executor,
administrator, or legal representative of the deceased. Sections 16 and 17, Rule 3 of the Rules
of Court provide: LLjur
"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.
"Sec. 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."
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 names and addresses of his legal representative or representatives.
In the case at bar, no such notice of death, nor a motion for substitution of the deceased
defendant, was ever made. Hence, the trial court could not be expected to know or take
judicial notice of the death of defendant, Maximo Regoso, without the proper manifestation
from his counsel. It must be remembered that the fault or negligence was Attorney Javier's
alone (Llantero vs. Court of Appeals, 105 SCRA 609; Chittick vs. Court of Appeals, 166 SCRA
219; Pulido vs. CA, 122 SCRA 63).
The supervening death of the defendant, Maximo Regoso, did not extinguish his wife's action
for partition of their conjugal assets, for it is an action that survives. The trial of the case on
the merits was already finished before the defendant died. Since it was not informed about
that event, the trial court may not be faulted for proceeding to render judgment without
ordering the substitution of the deceased defendant. Its judgment is valid and binding upon
the defendant's legal representatives or successors-in-interest, insofar as his interest in the
property subject of the action is concerned (Florendo, et al. vs. Coloma, et al., 129 SCRA 304).
Attorney Javier's appeal from the decision of the trial court was correctly dismissed by the
appellate court for upon the death of Maximo Regoso, Attorney Javier's authority to represent
him also expired. The notice of appeal which Attorney Javier filed on behalf of the decedent
was an unauthorized pleading, hence, invalid (Barrameda, et al. vs. Barbara, et al., 90 Phil. 718;
Caseas vs. Rosales, 19 SCRA 462).
However, the validity of the judgment of the trial court was not affected by the defendant's
demise for the action survived. The decision is binding and enforceable against the successors-
in-interest of the deceased litigant by title subsequent to the commencement of the action
[Section 49(b), Rule 39, Rules of Court; Florendo, et al. vs. Coloma, et al., 129 SCRA 304].
This is in line with the following provisions of the Rules of Court:
78
"Sec. 49. EFFECT OF JUDGMENTS. The effect of a judgment or final order rendered by a
court or judge of the Philippines, having jurisdiction to pronounce the judgment or order, may
be as follows: LexLib

xxx xxx xxx

"(b) In other cases the judgment or order is, with respect to the matter directly adjudged
or as to any other matter that could have been raised in relation thereto, conclusive between
the parties and their successors-in-interest by title subsequent to the commencement of the
action or special proceeding, litigating for the same thing and under the same title and in the
same capacity." (Section 49(b), Rule 39, New Rules of Court.)

Thus, a judgment in an ejectment case may be enforced not only against defendants therein
but also against the members of their family, their relatives, or privies who derived their right
of possession from the defendants (Ariem vs. De los Angeles, 49 SCRA 343). The same rule
applies to the successors-in-interest of a deceased party in an action that survives, if the
decision should go against the latter (Florendo, Jr. vs. Coloma, 129 SCRA 304, 305.)

WHEREFORE, the petition for review is hereby DENIED.

SO ORDERED.

Cruz, Medialdea and Bellosillo, JJ., concur.

79
[G.R. No. 96296. June 18, 1992.]
RAFAEL S. DIZON, in his capacity as Administrator of the Estate of the Deceased JOSE P.
FERNANDEZ, REDENTOR MELO, ELIODORO C. CRUZ, PIER 8 ARRASTRE & STEVEDORING
SERVICES, INC., COMPAIA MARITIMA, PASIG STEVEDORING COMPANY, INC., and WESTERN
PACIFIC CORPORATION, petitioners, vs. HON. COURT OF APPEALS, HON. PROTACIO C. STO.
TOMAS, Judge, RTC, Branch 14, Ligao, Albay, and JOSE BALDE, respondents.
Rafael S. Dizon for petitioners.
Delfin De Vera Law Office for private respondent.
SYLLABUS
1. REMEDIAL LAW; ACTIONS; EFFECTS OF DEFENDANT'S DEATH IN A CIVIL CASE. The
effects of the death of a defendant in a civil suit are dependent upon the nature of the action:
whether (a) the action is a personal one for "recovery of money, debt or interest thereon," or
(b) is not for said purpose, i.e., it is a real action, or one for recovery of personal property "or
to enforce a lien thereon, and actions to recover damages for an injury to person or property,
real or personal." The effects of the defendant's death are dependent, as well, on the time of
his demise.
2. ID.; ID.; ID.; RULE WHERE ACTION IS FOR RECOVERY OF MONEY AND DEFENDANT
DIES BEFORE FINAL JUDGMENT. The law says that "(w)hen the action is for recovery of
money, debt or interest thereon, and the defendant dies before final judgment in the Court of
First Instance (now Regional Trial Court), it shall be dismissed to be prosecuted in the manner
especially provided in these rules." The "especial" manner of the prosecution of said money
claims against the decedent is set forth in Rule 86 of the Rules of Court, in connection with the
judicial proceedings for the settlement of the estate of a deceased person.
3. ID.; ID.; ID.; ID.; REASON. "The reason for the dismissal of the ordinary action," as
a noted commentator stresses, "is that upon the death of the defendant a testate or intestate
proceeding shall be instituted in the proper court wherein all his creditors must appear and
file their claims which shall be paid proportionately out of the property left by the deceased.
It is, therefore, to avoid useless duplicity of procedure that the ordinary action must be wiped
out from the ordinary courts."
4. ID.; ID.; ID.; RULE WHERE ACTION IS FOR RECOVERY OF MONEY AND DEFENDANT
DIES AFTER FINAL JUDGMENT. If the defendant dies after final judgment of the Regional
Trial Court, the action (for money, debt or interest thereon) is not dismissed, and an appeal
may be taken by or against the administrator; but if that judgment against the deceased
becomes final and executory, it shall be enforced, not by execution under Rule 39, but in
accordance with Section 5 of Rule 86, i.e., by presenting the same as a claim against the estate.
5. ID.; ID.; ID.; RULE IN OTHER CASES. If, on the other hand, the claim against the
defendant is other than for "money, debt or interest thereon" i.e., it is a real action, or one
for recovery of personal property "or to enforce a lien thereon, and actions to recover damages
for an injury to person or property, real of personal," and the defendant dies, the claim
against him is not thereby extinguished, and the action will not be dismissed but continue
against the decedent's legal representative. (Section 17, Rule 3, Revised Rules of Court)
6. ID.; ID.; NO PROHIBITION ON FILING OF SECOND MOTION FOR RECONSIDERATION
OF AN INTERLOCUTORY ORDER; CASE AT BAR. It was error for the Trial Court to deny Atty.
Dizon's motion dated November 21, 1989 for reconsideration of the Orders of April 24,
October 17, and October 25, 1989, on the ground that it was in effect a second motion for
reconsideration and "the rules does (sic) not allow a second motion for reconsideration
without first securing leave of court . . ." There is no such rule as regards interlocutory orders
like those sought to be reconsidered. The Trial Judge might possibly have had in mind Section
4, Rule 37 of the Rules of Court, governing a "second motion for new trial, based on a ground
not existing nor available when the first motion was made," but the section clearly applies only
to final judgments, not to interlocutory orders. The Trial Judge might have had in mind Section
1, Rule 52 pertinently providing that "(n)o more than one motion for re-hearing or
reconsideration shall be filed without express leave of court," but again, it is clear that the
proviso applies only to final judgments of the Court of Appeals, not to interlocutory orders or
resolutions. The Trial Judge might have had in view Section 11 of Batas Pambansa Bilang 129
(Judiciary Reorganization Act of 1980) which inter alia decrees that "no second motion for
reconsideration shall be entertained," or paragraph 4 of the Interim or Transitional Rules
relative to the implementation of said B.P. Blg. 129, promulgated by this Court, declaring that
"(n)o party shall be allowed a second motion for reconsideration of a final order or judgment";
but again these provisions obviously have reference not to interlocutory orders but to final
judgments or orders. A second motion attacking an interlocutory order might possibly be
denied on the ground that it is a "rehash" or mere reiteration of grounds and arguments
already passed upon and resolved by the Court; it cannot be rejected on the ground that a
second motion for reconsideration of an interlocutory order is forbidden by law.
7. ID.; SPECIAL CIVIL ACTION; CERTIORARI; REFUSAL TO APPLY EXPLICIT MANDATE OF
RULES OF COURT, A GRAVE ABUSE OF DISCRETION; CASE AT BAR. In adamantly refusing to
dismiss the action against the deceased Fernandez so that the claim against him might be filed
in the special proceedings for the settlement of his estate, it is clear that His Honor was refusing
to apply an explicit mandate of the Rules of Court although well aware of it, and of the fact
that no reason existed in the record for excepting the case at bar from the operation of the
80
rule. Such a refusal, in other words, may not be deemed to constitute "merely an error of
judgment and not of jurisdiction," as the Court of Appeals characterizes it, but as an outright
defiance of the plain provisions of the Rules of Court which had been insistently brought to his
attention; an act therefore, executed without any justification in law, whimsically, capriciously,
and oppressively; an act, in short, done with grave abuse of discretion.
8. LABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR ARBITERS; WITH EXCLUSIVE
ORIGINAL JURISDICTION OVER MONEY CLAIMS ARISING FROM EMPLOYER-EMPLOYEE
RELATIONSHIP; CASE AT BAR. The complaint set forth claims for money arising from
employer-employee relations. Now, at the time that the complaint was filed, in 1975, exclusive
jurisdiction over such "money claims arising from employer-employee relations" as well "all
other cases or matters arising from employer-employee relations," was vested by the law in
the Labor Arbiters of the National Labor Relations Commission. That jurisdiction remained
substantially unaffected by subsequent amendments of the Labor Code up to 1989, when
Republic Act No. 6715 became effective, except that for a time, about three (3) years, Labor
Arbiters were divested of competence to "entertain claims for moral or other forms of
damages." The claims in question do not involve "wages, rates of pay, hours of work and other
terms and conditions of employment." They do constitute, however, a "termination dispute,"
and are actually "claims for actual, moral, exemplary and other forms of damages arising from
employer-employee relations," unaccompanied by a prayer for reinstatement. As such they
are, as the law clearly says, within the "original and exclusive jurisdiction" of Labor Arbiters. In
other words, whether under the law at present in force, or that at the time of the filing of the
complaint, Jose Balde's cause falls within the exclusive original jurisdiction of the Labor
Arbiters and not of the Regional Trial Court (formerly, Court of First Instance).
9. REMEDIAL LAW; ACTIONS; ISSUES CAN NOT BE RAISED FOR THE FIRST TIME ON
APPEAL; JURISDICTIONAL DEFECT, AN EXCEPTION; CASE AT BAR. The jurisdictional defect in
the proceedings has not been explicitly put at issue in the appeal at bar, although references
appear in the pleadings to the various motions filed by Fernandez and his co-defendants with
the Regional Trial Court to dismiss the action for want of jurisdiction over the nature of the
suit instituted by Jose Balde. This omission is of no moment. Excepted from the general rule
that in appellate proceedings in the Court of Appeals or this Court, "no error . . . will be
considered unless stated in the assignment of errors and properly argued in the brief" (or
otherwise raised as an issue), are (1) errors which "affect the jurisdiction over the subject
matter," (2) "plain errors," and (3) "clerical errors."
DECISION
NARVASA, C .J p:
In the original action which has given rise to the proceedings at bar 1 instituted in 1975 by
the plaintiff Jose Balde (private respondent herein) principally for the recovery of damages
resulting from the allegedly illegal termination of his employment from the so-called
"Fernandez Companies" 2 effected by herein petitioners one of the defendants, Jose P.
Fernandez, denominated the "principal" one, died before final judgment of the Trial Court. The
legal consequences of that party's death are what are now chiefly in issue.
The complaint filed in the Court a quo 3 named as defendants the six (6) petitioner
corporations herein, as well as (1) Jose P. Fernandez "in his own personal capacity and/or as
Chairman of the Board, President, or Director" of said firms; (2) Redentor R. Melo, "in his own
personal capacity and/or as Chief Legal Counsel of Pier 8 Arrastre & Stevedoring Services, Inc.;"
and (3) Eliodoro C. Cruz, "in his own personal capacity and/or as a legal assistant" in the same
company. It alleged that Balde was "summarily ousted and dismissed" from his job as "Chief
Accountant and Credit & Collection Manager of Pier 8 Arrastre and Stevedoring Services . . .
(since) 1973 and Chief Accountant of Western Pacific Corporation . . . (since) 1974."
The defendants filed a motion to dismiss on the ground that the Court had no jurisdiction over
the nature of the action, which was essentially a " 'money claim' arising from an employer-
employee relationship" exclusively cognizable by the National Labor Relations Commission,
and that no official decision had yet been reached regarding termination of Balde's
employment. 4 The defendants also filed a supplemental motion urging dismissal of the action
because venue had been improperly laid. 5 After oppositions were filed to both motions, the
Court issued an Order holding "in abeyance the resolution . . . (thereof) until pre-trial is
conducted and evidence is presented . . . without prejudice to dismissing the case when the
ground for dismissal becomes apparent." 6
The defendants thereafter presented their "Answer with Compulsory Counterclaim," which
contained specific denials and qualified admissions of the averments of the complaint; alleged
as affirmative defenses the same grounds alleged in their motions to dismiss, and the fact that
they had acted entirely in accordance with law and in all good faith in discharging Balde from
employment, he having "done acts prejudicial and inimical to their interests and (which) have
caused damage;" and seeking recovery of moral, actual and exemplary damages resulting from
Balde's "completely unfounded and baseless action." 7 Pre-trial and trial ensued after Balde
filed his answer to the counterclaim and a reply to the answer.
Balde's presentation of his evidence-in-chief was concluded upon the admission by the Court
of his exhibits over the defendants' objections, by Order dated October 21, 1987.
Some two weeks afterwards, or more precisely on November 7, 1987, defendant Jose P.
Fernandez died. Notice thereof was given to the Court by his counsel, through a manifestation
dated November 16, 1987.
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As intimated in the opening paragraph of this Decision, the death of Fernandez brought up the
question of the legal consequences of that demise, and the action that the Trial Court should
properly take in view thereof. For the sake of clarity, and the better to gauge the propriety of
the action actually taken by Trial Court, the narration of the material facts is interrupted at this
point, so that a brief exposition of the applicable law may be made.
The effects of the death of a defendant in a civil suit are dependent upon the nature of the
action: whether (a) the action is a personal one for "recovery of money, debt or interest
thereon," 8 or (b) is not for said purpose, 9 i.e., it is a real action, 10 or one for recovery of
personal property "or to enforce a lien thereon, and actions to recover damages for an injury
to person or property, real or personal." 11 The effects of the defendant's death are
dependent, as well, on the time of his demise.
The law says that "(w)hen the action is for recovery of money, debt or interest thereon, and
the defendant dies before final judgment in the Court of First Instance (now Regional Trial
Court), it shall be dismissed to be prosecuted in the manner especially provided in these rules."
12
The "especial" manner of the prosecution of said money claims against the decedent is set
forth in Rule 86 of the Rules of Court, 13 in connection with the judicial proceedings for the
settlement of the estate of a deceased person. "The reason for the dismissal of the ordinary
action," as a noted commentator stresses, "is that upon the death of the defendant a testate
or intestate proceeding shall be instituted in the proper court wherein all his creditors must
appear and file their claims which shall be paid proportionately out of the property left by the
deceased. It is, therefore, to avoid useless duplicity of procedure that the ordinary action must
be wiped out from the ordinary courts." 14
If the defendant dies after final judgment of the Regional Trial Court, the action (for money,
debt or interest thereon) is not dismissed, and an appeal may be taken by or against the
administrator; 15 but if that judgment against the deceased becomes final and executory, it
shall be enforced, not by execution under Rule 39, but in accordance with Section 5 of Rule 86,
16 i.e., by presenting the same as a claim against the estate.
If, on the other hand, the claim against the defendant is other than for "money, debt or interest
thereon" i.e., it is a real action, 17 or one for recovery of personal property "or to enforce
a lien thereon, and actions to recover damages for an injury to person or property, real or
personal," supra 18 and the defendant dies, the claim against him is not thereby
extinguished, and the action will not be dismissed but continue against the decedent's legal
representative. Section 17, Rule 3 specifies the procedure to be followed, viz:
". . . 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."
The record discloses that the Court did not dismiss the action as against the deceased
defendant, Fernandez, conformably with Section 21, Rule 3. What it did was: (a) to require the
defendants' new counsel, former Supreme Court Justice Arsenio P. Dizon, by Order dated
November 21, 1987, "to effect the substitution of said deceased defendant within thirty (30)
days . . .," 19 (a requirement it reiterated in another Order dated October 4, 1988); and (b) on
later learning that said Justice Dizon was the Administrator of the Fernandez Estate, to require
the latter, by Order dated January 2, 1989, to appear before it on February 4, 1989 (later reset
to March 6, 1989) "to be substituted as party defendant for and in behalf of the deceased Jose
P. Fernandez". The Trial Judge was obviously proceeding in accordance with Section 17, Rule
3; and it was doing so quite erroneously, since the action against the deceased and his co-
defendants was clearly one for the "recovery of money, debt or interest thereon" which, by
direction of Section 21 of the same Rule, should "be dismissed to be prosecuted in the manner
especially provided in these rules," at least in so far as concerned the deceased defendant.
Justice Dizon was unable to appear at the hearing of March 6, 1989, on account of the poor
state of his health at the time. This he alleged in a telegram to the Court, and in a subsequent
formal motion, seeking on that account a resetting of the hearing to "either April 17, 18 and
28/89 or May 1, 2 and 3/89." 20 Unfortunately, neither the telegram nor the motion was
received by the Trial Court in time. Hence, by Order dated March 6, 1989, the Court directed
plaintiff Jose Balde to formally move in writing to have the case submitted for decision by
reason of the defendants' failure to appear despite notice.
When the defendants received notice of the Order of March 6, 1989, they promptly moved for
reconsideration through Atty. Rafael Dizon, under date of March 18, 1989. 21 By Order dated
March 31, 1989, the Trial Court, without referring to its earlier Order of March 6, 1989, re-
scheduled the hearing on April 24, 1989, but required that "if and when Atty. Arsenio Dizon
shall still be indisposed during the next hearing, one of the associates of the law firm shall
appear for the defendants in order to avoid further delay in the disposition of this case . . .
82
(considering that) this case was filed since 1975 and this case could not be disposed of because
of continuous postponement by the parties." 22
However, notice of the Order of March 31, 1989 resetting the hearing on April 24, 1989
sent from Ligao, Albay, was not received by the defendants in Metro Manila until the very day
of the hearing, April 24, 1989. Atty. Rafael Dizon immediately dispatched a telegram to the
Court that same day, reading as follows: "RECEIVED COPY MARCH 31, 1989 ORDER SETTING
HEARING OF CIVIL CASE, 528 APRIL 24 ONLY TODAY APRIL 24, 1989. REQUEST RESET TO MAY
2,14, 25, 31, JUNE 1, 2, 1989. FORMAL MOTION TO FOLLOW." The telegram evidently came
too late. What the Court had before it when the case was called at the appointed hour on April
24, 1989 was Atty. Dizon's motion dated March 18, 1989 for reconsideration of the Order of
March 6, 1989, which had already been granted (the Court having on March 31, 1989, reset
the hearing on April 24, 1989). The Court then proceeded to declare said motion of April 18,
1989 "moot and academic" and, in view of the defendants' absence at the hearing of April 24,
1989, to consider the case submitted for decision. These dispositions it made in the following
Order, to wit:
"When this case was called for hearing this morning, the court received the Motion seeking for
reconsideration of the order dated March 6, 1989 considering this case submitted for decision,
for failure of counsel for the defendants to appear on the said setting. The record shows that
the order sought to be reconsidered by defendants has already been reconsidered by this court,
when the court ordered on March 31, 1989 to set this case for today.
The Motion for Reconsideration filed by Atty. Rafael S. Dizon, now appearing as counsel for
the defendants, is hereby considered moot and academic.
In view, however, of the fact that the defendants and counsel failed to appear today without
justifiable cause, on motion of plaintiff, this case is hereby ordered submitted for decision
based on the evidence so far presented."
According to the petitioners, notices of the Orders of April 24, 1989 and March 31, 1989 were
never served on them or their counsel. 23 This is why, under date of October 19, 1989, they
filed a "Motion to Resolve Motion for Reconsideration dated March 18, 1989 and to Set Case
for Hearing." 24 This last motion was resolved by the Trial Court now presided over by Hon.
Protacio C. Sto. Tomas in an Order dated October 17, 1989. In said Order the Court quoted
verbatim the Order of April 24, 1989 of "Hon. Salvador D. Silerio, then Presiding Judge of this
Court;" pointed out that said order of April 24, 1989 "has not been reconsidered and set aside;"
and directed the immediate transmittal, "pursuant to an existing Administrative Order issued
by the Supreme Court, . . . (of) the records . . . to Judge Salvador D. Silerio, Presiding Judge of
RTC, Branch 8, Legazpi City for him to render the corresponding decision." 25
The petitioners received copy of the Order of October 17, 1989 on November 7, 1989. On the
same day, they also received a copy of another Order of the same Court dated October 25,
1989, 26 dealing with their motion of October 19, 1989 and reading as follows:
"The records disclosed that the Motion to Resolve Motion for Reconsideration dated March
18, 1989 and to Set Case for Hearing filed by Atty. Rafael S. Dizon dated October 19, 1989 has
already been resolved and acted upon, in the sense, that this case was already submitted for
decision as of April 24, 1989 signed by Hon Salvador D. Silerio, presiding Judge, copy of which
was furnished Atty. Rafael Dizon. Atty. Dizon appears not to have a fixed address as the order
of the court sent to him addressed at 5th Floor, Strata Building, Emerald Avenue, Ortigas
Commercial Complex, Pasig, Metro Manila has not been claimed by said counsel.
Examining the instant motion, we find that it does not conform with the mandatory
requirements of Sections 4, 5 and 6 of Rule 15 of the Rules of Court.
Wherefore, the motion is denied."
On November 21, 1989, the petitioners once again filed a motion for reconsideration, this time
directed against the Orders of April 24, October 17, and October 25, 1989. In that motion,
denominated "Motion for Reconsideration with Motion to Dismiss," 27 the petitioners
1) averred that they had failed to appear at the hearing on April 24, 1989 at 8:30 a.m.,
as directed in the Order of March 31, 1989, because they received notice thereof "ONLY ON
THE VERY SAME DAY AND PAST THE TIME OF THE SCHEDULED Hearing," as stated in their
telegram on April 24, 1989; and
2) argued that, "due to defendant Jose P. Fernandez' death on November 7, 1987" and
in light of "Rule 3, Sec. 21," the case "must necessarily be dismissed and prosecuted pursuant
to Sec. 1, Rule 87 of the Rules of Court."
The petitioners set the motion for hearing on December 6, 1989 at 8:30 A.M. furnishing copy
thereof on adverse counsel by registered mail. In anticipation of his attendance at the hearing
of his motion, Atty. Rafael Dizon booked passage on the PAL flight from Manila to Legazpi City
on December 5, 1989 and from Legazpi to Manila on December 6, 1989. 28
Events however made it impossible for Atty. Dizon to appear at the sala of Judge Sto. Tomas
on December 6, 1989. These events, specified by Dizon, were those resulting from the aborted
coup d'etat on December 1, 1989, i.e., "the closure of the Manila Domestic Airport, the
indefinite cancellation of all domestic airline flights and the unavailability of public
transportation going out of Metro Manila." Alleging these as basis, Atty. Dizon sought a
resetting of the hearing on his motion to December 20, 1989, through a telegram, 29 and an
"Urgent Motion to Reset" dated December 4, 1989. 30
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The Court denied the telegraphic request for postponement, in an Order dated December 6,
1989, viz.:
"When the Motion for Reconsideration with Motion to Dismiss dated November 21, 1989 was
called for hearing, the movant Rafael S. Dizon failed to appear notwithstanding that this is the
date set forth by him. However, a telegram has been received wherein said movant prays for
a postponement of the hearing of said motion alleging that a formal motion will follow.
Examining the records, we find that the first motion for reconsideration dated March 18, 1989
was already resolved and denied by this Court in its order of October 25, 1989. This being the
case, and considering that the rules does not allow a second motion for reconsideration
without first securing leave of court, the instant motion for reconsideration dated November
21, 1989 is DENIED."
In view of the foregoing development, the petitioners felt constrained to institute, as they did
institute in the Court of Appeals a special civil action of certiorari to annul and set aside the
Trial Court's five (5) Orders just mentioned, of April 24, May 29, October 17, October 25, and
December 6, 1989. 31 Their action failed. The Appellate Tribunal declared that upon the facts,
it was "not prepared to rule that respondent Court's issuance of the assailed orders is tainted
with grave abuse of discretion calling for the application of the extra-ordinary writ of
certiorari," and accordingly dismissed their petition. More particularly, it ruled that
1) "the alleged error committed by respondent Court in not dismissing the complaint
against the deceased defendant Jose Fernandez, if at all, is merely an error of judgment and
not of jurisdiction," and hence, not correctible by the special civil action of certiorari under
Rule 65;
2) "even if the claim against the deceased . . . Fernandez may be dismissed, it does not
necessarily follow that the complaint in Civil Case No. 528-LV should be dismissed in toto,
considering that there are other defendants in the case, and considering further that some of
the defendants, the principals at that, are corporate entities with separate juridical
personalities;" and
3) "if petitioners did not receive copies of the orders issued by respondent Court, it was
for the reason that they have been continuously changing their address."
Their motion for reconsideration having been denied, by Resolution of the Court of Appeals
dated November 21, 1990, the petitioners have appealed to this Court. Here they contend
that:
1) "The Rules of Court mandate the dismissal of the case and not substitution of the
deceased defendant;" and
2) They "had a valid/justifiable cause for failing to appear in the scheduled hearing."
The private respondent's two-page comment dated February 16, 1991 submitted in response
to the Court's requirement therefor, does nothing except to assert, basically, that "there is no
showing at all that the Hon. Court of Appeals acted with grave abuse of discretion," contrary
to the petitioners' claim of "patent excess of jurisdiction and/or grave abuse of discretion" on
the part of the Appellate Court." 32
By this Court's Resolution of April 15, 1991, the petition was given due course and memoranda
required of the parties, which have since been submitted. 33
The first point raised by petitioners is well taken. As already stated, 34 the law is quite explicit
and leaves the Trial Court with no choice: "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
(now Regional Trial Court), it shall be dismissed to be prosecuted in the manner especially
provided in these rules." 35 It was therefore error for the Trial Court to decline to dismiss the
suit as against the deceased Fernandez and to insist on continuing with the action as to
Fernandez by ordering his substitution by his administrator. 36
It was error, too, for the Trial Court to deny Atty. Dizon's, motion dated November 21, 1989
for reconsideration of the Orders of April 24, October 17, and October 25, 1989, on the ground
that it was in effect a second motion for reconsideration and "the rules does (sic) not allow a
second motion for reconsideration without first securing leave of court . . ." There is no such
rule as regards interlocutory orders like those sought to be reconsidered. The Trial Judge might
possibly have had in mind Section 4, Rule 37, of the Rules of Court, governing a "second motion
for new trial, based on a ground not existing nor available when the first motion was made,"
but the section clearly applies only to final judgments, not to interlocutory orders. The Trial
Judge might have had in mind Section 1, Rule 52 pertinently providing that "(n)o more than
one motion for re-hearing or reconsideration shall be filed without express leave of court," but
again, it is clear that the proviso applies only to final judgments of the Court of Appeals, not to
interlocutory orders or resolutions. The Trial Judge might have had in view Section 11 of Batas
Pambansa Bilang 129 (Judiciary Reorganization Act of 1980) which inter alia decrees that "no
second motion for reconsideration shall be entertained," or paragraph 4 of the Interim or
Transitional Rules relative to the implementation of said B.P. Blg. 129, promulgated by this
Court, declaring that "(n)o party shall be allowed a second motion for reconsideration of a final
order or judgment;" but again these provisions obviously have reference not to interlocutory
orders but to final judgments or orders. A second motion attacking an interlocutory order
might possibly be denied on the ground that it is a "rehash" or mere reiteration of grounds and
arguments already passed upon and resolved by the Court; it cannot be rejected on the ground
that a second motion for reconsideration of an interlocutory order is forbidden by law.
84
The question that now arises is whether these errors amount to grave abuse of discretion on
the part of the Trial Judge. The first does. In adamantly refusing to dismiss the action against
the deceased Fernandez so that the claim against him might be filed in the special proceedings
for the settlement of his estate, it is clear that His Honor was refusing to apply an explicit
mandate of the Rules of Court although well aware of it, and of the fact that no reason existed
in the record for excepting the case at bar from the operation of the rule. Such a refusal, in
other words, may not be deemed to constitute "merely an error of judgment and not of
jurisdiction," as the Court of Appeals characterizes it, but as an outright defiance of the plain
provisions of the Rules of Court which had been insistently brought to his attention; an act
therefore, executed without any justification in law, whimsically, capriciously, and
oppressively; an act, in short, done with grave abuse of discretion. 37
What has just been stated makes inconsequential the failure of Atty. Dizon to appear before
the Court on December 6, 1989, the date set by him for the hearing of his motion for
reconsideration of November 21, 1989 in which he asked that said hearing be reset because
fortuitous events precluded his appearance, and reiterated the prayer that the action be
dismissed as against defendant Fernandez because of the latter's demise. For even assuming
that Atty. Dizon's failure to receive notices of, and consequent omission to appear at, the
hearings of February 4, 1989, March 6, 1989 and April 24, 1989 were inexcusable, because the
failure to receive said notices was due to his "continuously changing his address," as the Court
of Appeals points out, that circumstance did not make unmeritorious the motion for dismissal
of the suit as against deceased Fernandez. It must be mentioned, however, in fairness to Atty.
Dizon, that he had as a matter of fact made preparations for presenting himself before the
Trial Court at the hearing of December 6, 1989, booking passage on Philippine Airlines on
December 5, 1989, and that the closure of airports and cancellation of domestic flights on
account of the aborted coup d'etat of December 1, 1989 of which the Court takes judicial
notice had indeed made impossible his intended appearance before the Trial Court on the
appointed day, December 6, 1989.
Not to be overlooked in this case is the nature of the complaint instituted by Jose Balde in the
Trial Court, 38 which upon sufficient reflection is disclosed as pertaining to the exclusive
jurisdiction of the Labor Arbiters of the Department of Labor and Employment and not the
regular courts of justice. That complaint alleged that Balde was "summarily ousted and
dismissed" from his job as "Chief Accountant and Credit & Collection Manager of Pier 8
Arrastre and Stevedoring Services . . . (a job he had held since) 1973 and Chief Accountant of
Western Pacific Corporation . . . (held since) 1974." It averred that despite his having worked
efficiently and caused an increase in the profitability of the companies, and allegedly on
evidence known by defendant Cruz to be sham that he (Balde) was implicated in some
anomaly in the procurement of supplies and spare parts said defendant Cruz
unceremoniously relieved him of his duties and sealed and searched his personal belongings;
that on his (Balde's) insistence, an investigation was eventually conducted by defendant Melo,
the Chief Legal Counsel, ostensibly to ascertain the truth but which was actually nothing but
an "inquisition" characterized by "malice, bias, prejudice and partiality," at which he was not
accorded full opportunity to defend himself; and that Fernandez, the highest corporate official
in the corporations, turned a deaf ear to Balde's pleas for a "speedy and impartial
investigation." Upon these factual assertions, the complaint prayed for the payment by the
defendants to Balde of actual, moral, and exemplary damages in the aggregate amount of
P1,100,000.00, attorney's fees in the sum of P100,000.00, and "such other reliefs equitable in
the premises." It did not include reinstatement as a specific relief.
The complaint, in other words, set forth claims for money arising from employer-employee
relations. Now, at the time that the complaint was filed, in 1975, exclusive jurisdiction over
such "money claims arising from employer-employee relations" 39 as well "all other cases or
matters arising from employer-employee relations," 40 was vested by the law in the Labor
Arbiters of the National Labor Relations Commission. 41 That jurisdiction remained
substantially unaffected by subsequent amendments of the Labor Code up to 1989, 42 when
Republic Act No. 6715 became effective, except that for a time, about three (3) years, Labor
Arbiters were divested of competence to "entertain claims for moral or other forms of
damages." 43
Under Republic Act No. 6715, 44 embodying the latest amendments to the Labor Code of the
Philippines, the following cases inter alia fall within the "original and exclusive jurisdiction" of
Labor Arbiters, to wit:
xxx xxx xxx
(2) Termination disputes;
(3) If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of employment;
(4) Claims for actual, moral, exemplary and other forms of damages arising from
employer-employee relations;
xxx xxx xxx
(6) Except claims for employees compensation, social security, medicare and maternity
benefits, all other claims arising from employer-employee relations, including those persons
in domestic or household services, involving an amount not exceeding five thousand pesos
(P5,000.00) whether or not accompanied with a claim for reinstatement."
85
The claims in question do not involve "wages, rates of pay, hours of work and other terms and
conditions of employment." They do constitute, however, a "termination dispute," and are
actually "claims for actual, moral, exemplary and other forms of damages arising from
employer-employee relations," unaccompanied by a prayer for reinstatement. As such they
are, as the law clearly says, within the "original and exclusive jurisdiction" of Labor Arbiters. In
other words, whether under the law at present in force, or that at the time of the filing of the
complaint, Jose Balde's cause falls within the exclusive original jurisdiction of the Labor
Arbiters and not of the Regional Trial Court (formerly, Court of First Instance).

To be sure, this jurisdictional defect in the proceedings has not been explicitly put at issue in
the appeal at bar, although references appear in the pleadings to the various motions filed by
Fernandez and his co-defendants with the Regional Trial Court to dismiss the action for want
of jurisdiction over the nature of the suit instituted by Jose Balde. This omission is of no
moment. Excepted from the general rule that in appellate proceedings in the Court of Appeals
or this Court, "no error . . . will be considered unless stated in the assignment of errors and
properly argued in the brief" (or otherwise raised as an issue), are (1) errors which "affect the
jurisdiction over the subject matter," (2) "plain errors," and (3) "clerical errors." 45

WHEREFORE, the Decision of the Court of Appeals promulgated on July 20, 1990 and its
Resolution dated November 21, 1990, in CA-G.R. SP No. 19602, as well as the Orders of the
Regional Trial Court (Branch 14) at Ligao, Albay in Civil Case No. 528-LV dated May 9, 1989,
October 17, 1989, October 25, 1989 and December 6, 1989 are REVERSED and SET ASIDE, and
said Civil Case No. 528-LV is ORDERED DISMISSED for lack of jurisdiction of the subject matter
and, as regards the deceased Jose P. Fernandez, on the additional ground set forth in Section
17, Rule 3 of the Rules of Court, without pronouncement as to costs.

SO ORDERED.

86
[G.R. No. L-40336. October 24, 1975.]
LAMBERTO V. TORRIJOS, petitioner, vs. THE HONORABLE COURT OF APPEALS, respondent.
Alexander H. Brillantes and Romulo R. Candoy for petitioner.
Solicitor General Estelito P. Mendoza, Assistant Solicitor General Santiago M. Kapunan and
Solicitor Simfronio I. Ancheta for respondent.
SYNOPSIS
Wakat Diamnuan and his wife sold their 1/4 share of a parcel of land in favor of Torrijos. Five
years later, the entire property, including the share of Wakat and his wife, were sold to Victor
de Guia. Hence, Torrijos prosecuted Wakat for estafa. After trial, the judge convicted Wakat
ordering the latter, among other things to indemnify Torrijos in the sum of P7,493. The second
paragraph of the dispositive portion of the decision stated that "whatever damages may have
been suffered by Torrijos before the deed of sale in favor of Victor de Guia was made by the
accused and his co-owners may be the subject of some other action, perhaps civil, but not in
this case." The indemnity was raised from P7,493 to P25,000 on motion of Torrijos.
When his motion to reconsider was denied by the Court a quo, accused appeals to the Court
of Appeals. Meanwhile, the accused died, for which reason his counsel moved to dismiss the
appeal under paragraph 1 of Article 89 of the Revised Penal Code, which provides that the
death of a convict extinguishes, not only the personal penalties, but also the "pecuniary
penalties," if the death occurs before final judgment. Torrijos opposed the motion on the
ground that the term "pecuniary penalty" should not include civil liability decreed by the lower
court in favor of the offended party, as the civil action therefor was not reserved, much less
filed separately from the criminal actions. The Court of Appeals sustained the motion to
dismiss.
The Supreme Court held that the appeal should proceed with respect to the issue of civil
liability of the accused, and the title of the case shall include the name of petitioner as offended
party or plaintiff-appellee and the legal representative of heirs of deceased accused
substituted as defendants-appellants.
SYLLABUS
1. CRIMINAL LAW; WHEN CIVIL LIABILITY IS EXTINGUISHED BY DEATH. The extinction
of civil liability follows the extinction of criminal liability under Article 89, only when the civil
liability arises from the criminal act as its only basis. Stated differently, where the civil liability
does not exist independently of the criminal responsibility, the extinction of the latter by death,
ipso facto extinguishes the former, provided the death supervenes before final judgment. the
said principle does not apply in a crime of estafa where the civil liability springs neither solely
nor originally from the crime itself but from a civil contract of purchase and sale. Thus, in the
case at bar, the crime of estafa did not exist until the accused re-sold the property to a second
vendee about 5 years after the first sale to the first vendee. If the accused did not comply with
the sale he executed in favor of the first vendee after receiving the purchase price from the
latter, but before the second sale to the second there is no question that the accused would
be merely civilly liable through an action by the first vendee either for specific performance
with damages or for rescission of contract also with damages. If rescission were pursued by
the first vendee, the vendor would be liable to refund the purchase price as well as be
responsible in damages. Consequently, the civil liability of the accused in the estafa cases
survives his death;. because death is not a valid cause for the extinguishment of civil
obligations.
2. ID.; CIVIL LIABILITY; HUMAN RELATIONS; WHEN ACCUSED MAY BE HELD CIVILLY
LIABLE INDEPENDENTLY OF HIS CRIMINAL LIABILITY. Under Article 19, 20 and 21 of the Civil
Code on Human Relations, a person accused of estafa for executing a second sale of the
property which he had already sold to the offended party may be held civilly liable,
independently of his criminal liability, despite his death before final conviction.
3. CRIMINAL PROCEDURE; WHEN CRIMINAL CASE MAY BE REOPENED TO PROVE
DAMAGES. A criminal case may be reopened in order that the offended party can prove
damages, although the decision therein convicting the accused had already become final and
executory and made no award of damages upon the ground that the information failed to
alleged any damages suffered; or the aggrieved party may appeal from an unsatisfactory award,
as long as he did not reserve hid right to file a separate civil action or has not waived his right
to civil indemnity arising from the offense.
4. ID.; APPEAL; OFFENDED PARTY MAY APPEAL FROM AWARD OF DAMAGES. The
offended party in a criminal case may be allowed to appeal with respect to the civil liability of
the accused despite the fact that the decision of conviction had already become final and had
been executed, either because the accused fully served the sentence or was then serving
sentence, and the names of the offended parties may be included in the title of said cases.
Similarly, an appeal may be allowed to proceed with respect to the civil liability of the accused
where judgment of conviction has not become final by reason of the appeal of the accused,
who died during the pendency of the appeal.
5. ID.; ID.; ID.; IF DEATH SUPERVENES AFTER JUDGMENT OF THE COURT OF FIRST
INSTANCE BUT PENDING APPEAL, ACTION FOR RECOVERY OF DAMAGES MAY NOT BE
DISMISSED. The provision of Section 21 of Rule 3 of the Revised Rules of Court that if
defendant dies before the final judgment in the Court of First Instance, an action for recovery
87
of money, debt or interest thereon "shall be dismissed to be prosecuted in manner specially
provided in these rules," means that the claim should be presented in the testate or intestate
proceedings over the estate of the deceased. The implication is that if death supervenes after
the judgment of the Court of First Instance but pending appeal in the appellate court, the
action for the recovery of money may not be dismissed. In such case, the name of the offended
party shall be included in the title of the case as plaintiff-appellee and the legal representatives
or the heirs of the deceased accused should be substituted as defendants-appellants.
DECISION
MAKASIAR, J p:
Petitioner seeks the reversal of the order of the respondent Court of Appeals dated February
20, 1975.
The undisputed facts are as follows:
Wakat Diamnuan and his wife were the registered owners of one-fourth share of a parcel of
land containing an area of 39.9643 hectares situated in Sitio Cacuban, Barrio Gumatdang,
Pitogon, Benguet, covered by OCT No. O-36, issued in their names and in the names of Kangi
Erangyas, and the heirs of Komising Tagle, who owned the remaining portions.
On May 11, 1968, Wakat Diamnuan and his wife sold their one-fourth share in favor of
petitioner Torrijos for P7,493.00. the deed of sale, however, was refused registration because
Torrijos, who produced OCT No. O-36, did not have the copies thereof held by the other co-
owners, Kangi Erangyas and heirs of Komising Tagle.
In 1969, the entire property, together with the share of Wakat Diamnuan and his wife, was
sold to Victor de Guia for P189,379.50. Hence, Torrijos prosecuted Wakat Diamnuan for estafa
before the Baguio Court of First Instance, docketed as Criminal Case No. 70 entitled "People of
the Philippines versus Wakat Diamnuan."
After trial, the trial Judge convicted the accused in a decision dated January 17, 1973 sentencing
him to an imprisonment of 3 months of arresto mayor, to pay a fine of P7,493.00 with
subsidiary imprisonment, to indemnify petitioner Lamberto Torrijos in the sum of P7,493.00
and to pay the costs. The trial Judge added as the second paragraph of the dispositive portion
of the decision that "Whatever damages may have been suffered by Torrijos before the Deed
of Sale in favor of Victor de Guia was made by the accused and his co-owners may be the subject
of some other action, perhaps civil, but not in this case."
Upon motion for reconsideration filed by complainant Torrijos, in an order dated March 5,
1973, the trial court modified its decision by increasing the indemnity in favor of Torrijos from
P7,493.00 to P25,000.00 and the fine from P7,493.00 to P25,000.00.
On March 7, 1973, the accused filed a motion for the reconsideration of the order of March 5,
1973, which was denied by the court a quo in an order dated April 11, 1973. Thereafter, the
accused appealed to the Court of Appeals.
On August 5, 1973, the accused died, for which reason his counsel moved to dismiss the appeal
under paragraph 1 of Article 89 of the Revised Penal Code, which provides that the death of a
convict extinguishes, not only the personal penalties, but also the "pecuniary penalties" as long
as the death occurs before final judgment.
Complainant Torrijos opposed the said motion to dismiss appeal on the ground that the term
"pecuniary penalty" should not include civil liability in favor of the offended party, which was
decreed by the trial court in this case, as the civil action therefor was not reserved, much less
filed separately from the criminal action.
The respondent Court of Appeals sustained the motion, which is shared by the Solicitor
General, and forthwith issued the challenged order dated February 20, 1975 dismissing the
appeal.
Hence, this petition.
It should be stressed that the extinction of civil liability follows the extinction of the criminal
liability under Article 89, only when the civil liability arises from the criminal act as its only basis.
Stated differently, where the civil liability does not exist independently of the criminal
responsibility, the extinction of the latter by death, ipso facto extinguishes the former,
provided, of course, that death supervenes before final judgment. The said principle does not
apply in instant case wherein the civil liability springs neither solely nor originally from the
crime itself but from a civil contract of purchase and sale. The estafa or swindle existed only
after the subsequent sale by the accused of the same interest in favor of Victor de Guia. There
was no crime of estafa until the accused re-sold the same property to another individual about
5 years after the first sale to Torrijos. If the accused did not comply with the sale he executed
in favor of Torrijos in 1964, after his receipt of the purchase price from Torrijos, but before the
second sale to Victor de Guia in 1969, there is no question that the accused would be merely
civilly liable either through an action by Torrijos for specific performance with damages or for
rescission of contract also with damages. If rescission were pursued by the first vendee, the
vendor would be liable to refund the purchase price as well as be responsible in damages.
Consequently, in the case at bar, the civil liability of the accused survives his death; because
death is not a valid cause for the extinguishment of civil obligations.
88
Thus, WE held that, despite the acquittal based on death for the crime of homicide or physical
injuries or damage to property through reckless imprudence, notwithstanding the absence of
any reservation to file a civil action, such acquittal does not preclude the offended party from
pursuing a civil action for damages based on tort or culpa aquiliana. And the civil action based
on tort or contract need not be reserved (Tan vs. Standard Vacuum Oil Co., et. al., 91 Phil. 972;
Dionisio, et al. vs. Alvendia, et. al., 102 Phil. 443, 445-447; Chan vs. Yatco, L-11162, April 30,
1958; Capuno vs. Pepsi Cola, 13 SCRA 658).
Then again, Articles 19, 20 and 21 of the New Civil Code on human relations establish the civil
liability of the accused in this particular case independently of his criminal liability, despite his
death before final conviction.
Article 19 directs that "every person must, in the exercise of his right and the performance of
his duties, act with justice, give anymore his due, and observe honesty and good faith." The
accused in the case at bar, by executing a second sale of the property which he already sold to
the offended party, certainly did not observe honesty nor good faith, much less act with justice
to the complaining witness.
Article 20 provides that "every person who, contrary to law, willfully or negligently causes
damage to another, shall indemnify the latter for the same." Certainly in deliberately selling
again the same property to another person after he had sold the same to the offended party,
the accused willfully or intentionally inflicted damage on the offended party, to whom
indemnification therefor shall be made by him.
Article 21 states that "any person who willfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy, shall compensate the latter for the
damage." It is patent that the act of the accused in the case at bar in alienating the same
property which he already sold to the complainant, has violated all the rules of morality and
good customs. Hence, he should be answerable to the offended party for the injury thus
caused to him. Even if the moral wrong or injury does not constitute a violation of the statute,
his civil liability under this article subsists (Velayo vs. Shell Co., 100 Phil. 186). In the instant
case, the wrong committed by the accused is a breach of statutory as well as moral law, for
there was deceit perpetrated on both the first and second vendees.
Consequently, while the death of the accused herein extinguished his criminal liability
including fine, his civil liability based on the laws of human relations aforecited, remains.
Moreover, in "People of the Philippines, plaintiff and appellee. Nicolas Manuel, aggrieved or
offended party-appellant, vs. Celestino Coloma, defendant and appellee," WE ruled that a
criminal case may be reopened in order that the offended party can prove damages, although
the decision therein convicting the accused had already become final and made no award of
damages upon the ground that the information failed to allege any damages suffered; or the
aggrieved party may appeal from an unsatisfactory award, as long as he did not reserve his
right to file a separate civil action or has not waived his right to civil indemnity arising from the
offense (105 Phil. 1287-1288; see also People vs. Rodriguez, 97 Phil. 349; People vs. Ursua, 60
Phil. 252; People vs. Celorico, 67 Phil. 185). In said Coloma case, Chief Justice, then Associate
Justice, Roberto Concepcion, stated the rationale, thus:
". . . every criminal case involves two actions, one criminal and another civil. From a judgment
convicting the accused, two appeals may, accordingly, be taken. The accused may seek a
review of said judgment, as regards both actions. Similarly, the complainant may appeal, with
respect only to the civil action, either because the lower court has refused or failed to award
damages, or because the award made is unsatisfactory to him. The right of either to appeal or
not to appeal, in the event of conviction of the accused, is not dependent upon the other. The
complainant may not, by expressing his conformity to the award of damages, prevent the
accused from appealing, either from said award or, from the judgment of conviction. Neither
may the accused, by acquiescing thereto, prevent the complainant from appealing therefrom,
insofar as the civil liability is concerned. Upon the other hand, an appeal by the complainant,
with respect to the aforementioned civil liability, would not impose upon the accused the legal
obligation to appeal. He may choose not to appeal from the judgment of conviction, and, hence,
the same may become final and executory, and may be fully executed, without prejudice to
the aforementioned appeal taken by the complainant. In the language of this Court, in People
vs. Ursua (60 Phil. 252, 254-255):
'The right of the injured persons in an offense to take part in its prosecution and to appeal for
purposes of the civil liability of the accused (section 107, General Orders No. 58), necessarily
implies that such right is protected in the same manner as the right of the accused to his
defense. If the accused has the right within fifteen days to appeal from the judgment of
conviction, the offended party should have the right within the same period to appeal from so
much of the judgment as is prejudicial to him, and his appeal should not be made dependent
on that of the accused. If upon appeal by the accused the court altogether loses its jurisdiction
over the case, the offended party would be deprived of his right to appeal, although fifteen
days have not yet elapsed from the date of the judgment, if the accused files his appeal before
the expiration of said period. Therefore, if the court, independently of the appeal of the
accused, has jurisdiction, within fifteen days from the date of the judgment, to allow the
appeal of the offended party, it also has jurisdiction to pass upon the motion for
reconsideration filed by the private prosecution in connection with the civil liability of the
accused.'
"The case of People vs. Rodriguez (decided on July 29, 1955) is, even more, in point. The facts
therein were: On March 24, 1952, Rodriguez was convicted of abduction with consent and
89
sentenced accordingly. Thereupon, he commenced to serve the sentence. Three days later,
the complainant moved that he be ordered to indemnify her. On April 5, the court granted this
motion and ordered Rodriguez to pay her P1,000.00, with subsidiary imprisonment in case of
insolvency. On May 7, the corresponding writ of execution was issued, and on May 12, the
sheriff levied upon a house of the defendant, who, subsequently, asked the court to set aside
its order on April 5 and said writ of execution. This petition was granted on August 9 upon the
ground that the judgment rendered on March 24, 1952 became final on that date, he having
immediately begun to serve his sentence, and that, hence, the court had no jurisdiction to
enter the order of April 5, granting indemnity to the offended party. In a unanimous decision,
planned by Mr. Justice Padilla, we held, after quoting from People vs. Ursua, supra, that the
trial court had retained its jurisdiction over the civil phase of the case, despite service of the
penalty meted out to the accused, and that no error had been committed, in the order of April
5, 1952, in ordering him to indemnify the offended party in the amount of P1,000.00, before
the expiration of the fifteen (15) days period provided for the appeal.
"Referring now to the issue raised by the appeal of complainant herein, it will be recalled that,
in order to justify the absence of an award for damages in its decision of conviction, the lower
court said therein that 'the information failed to allege any damages suffered.' This was the
very reason by the lower court in People vs. Celorico (67 Phil. 185, 186), in refusing to allow
the prosecution to prove damages, which was eventually declared erroneous, for the reason
that:.
"'Every person criminally liable for a felony is also civilly liable (Art. 100, Revised Penal Code).
The civil liability of the accused is determined in the criminal action, unless the injured party
expressly waives such liability or reserves his right to have civil damages determined in a
separate action. (Art. 112, Spanish Code of Criminal Procedure in relation to sec. 107 of
General Orders No. 58; vide, also, U.S. vs. Heery, 25 Phil. 600, and cases therein cited.) Here,
there was no waiver or reservation of civil liability, and evidence should have been allowed to
establish the extent of the injuries by the offended party and to recover the same, if proven.'
(Emphasis ours.)"
Finally, Section 21 of Rule 3 of the Revised Rules of Court, provides that if defendant dies
before the final judgment in the Court of First Instance, an action for the recovery of money,
debt or interest thereon "shall be dismissed to be prosecuted in the manner specially provided
in these rules," meaning the claim should be presented in the testate or intestate proceedings
over the estate of the deceased. The implication is that if death supervenes after the judgment
of the Court of First Instance but pending appeal in the appellate court, the action for the
recovery of money may not be dismissed. In such case, the name of the offended party shall
be included in the title of the case as plaintiff-appellee and the legal representatives or the
heirs of the deceased accused should be substituted as defendants-appellants.
Consequently, the appeal in the case at bar should proceed with respect to the right of
petitioner herein as offended party in the criminal case to recover the civil liability in the
amount of P25,000.00 awarded by the trial court.
WHEREFORE, THE CHALLENGED ORDER DATED FEBRUARY 20, 1975 IS HEREBY SET ASIDE, THE
APPEAL SHALL PROCEED WITH RESPECT TO THE ISSUE OF CIVIL LIABILITY OF THE ACCUSED
APPELLANT, AND THE TITLE OF THE CASE SHALL INCLUDE THE NAME OF PETITIONER AS
OFFENDED PARTY OR PLAINTIFF-APPELLEE AND THE LEGAL REPRESENTATIVE OR HEIRS OF THE
DECEASED ACCUSED SUBSTITUTED AS DEFENDANTS-APPELLANTS. NO COSTS.
Teehankee (Actg. Chairman), Aquino and Martin, JJ., concur. Muoz Palma, J., concurs in the
result.

To repeat, the offended parties in the Coloma and Rodriguez cases were allowed to appeal
despite the fact that the decision of conviction had already become final and had been
executed, either because the accused had fully served the sentence or was then serving
sentence; and the names of the offended parties were included in the title of said cases.

In the case at bar, there is greater reason to allow the appeal to proceed with respect to the
civil liability of the accused as the judgment of conviction did not become final by reason of
the appeal of the accused, who died during the pendency of the appeal.

90
[G.R. Nos. L-33252-54. January 20, 1978.]
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. LICERIO P. SENDAYDIEGO, JUAN
SAMSON and ANASTACIO QUIRIMIT, defendants. JUAN SAMSON, defendant-appellant.
PROVINCE OF PANGASINAN, Offended Party-Appellee, vs. HEIRS OF LICERIO P. SENDAYDIEGO,
defendants-appellants.
Norberto J. Quisumbing for appellant Sendaydiego.
Donato J. Rillera for appellant Samson.
Office of the Solicitor General for appellee.
SYNOPSIS
Licerio P. Sendaydiego, provincial treasurer of Pangasinan, in conspiracy with Juan Samson, as
an employee of a lumber store, and with Anastacio Quirimit, the provincial auditor as an
accompliance, used six forged provincial vouchers to embezzle from the road and bridge fund
the total sum of P57,048.23. They were charged with malversation through falsification. After
trial the lower court acquitted the auditor and found Sendaydiego and Samson guilty as
principals of malversation through falsification of public documents.
Pending appeal, Sendaydiego died. By resolution of the Supreme Court, his appeal as to this
Criminal liability was dismissed, but the court resolved to continue exercising appellate
jurisdiction over his possible civil liability for the monetary claims of the province of Pangasinan
arising from the alleged criminal acts complained of, as if no criminal case had been instituted
against him, thus making applicable, in determining his civil liability, Article 30 of the Civil Code.
The title of the case was thus amended to show its civil aspect.
The Supreme Court held that the crime committed are not complex, but separate crimes of
falsification and malversation; because in the six vouchers the falsification was used to conceal
the malversation. Each falsification and each malversation constituted independent offenses
which must be punished separately. Since Samson, a private person, conspired with an
accountable public officer in committing malversation, he is also guilty of malversation.
Samson and the estate of the late Sendaydiego were held solidarily liable to indemnify the
province of Pangasinan.
SYLLABUS
1. CRIMINAL LAW; DEATH; APPELLANT'S DEATH PENDING APPEAL EXTINGUISHES HIS
CRIMINAL LIABILITY. The death of appellant during the pendency of his appeal or before the
judgment of conviction rendered against him by the lower court became final and executory
extinguished his criminal liability, meaning his obligation to serve the personal or
imprisonment penalties and his liability to pay the fines or pecuniary penalties.
2. ID.; ID.; CIVIL LIABILITY SURVIVES DEATH OF APPELLANT. Where the death of the
accused occurred after final judgment was rendered by the Court of First Instance, which
convicted him of the crime charged and ordered him to indemnify the offended party, the
claim of the offended party for civil liability survives.
3. ID.; CIVIL ACTION DEEMED INSTITUTED WITH CRIMINAL ACTION ABSENT EXPRESS
WAIVER OR RESERVATION. The civil action for the civil liability is deemed impliedly
instituted with the criminal action in the absence of express waiver or its reservation in a
separate action. The civil action for the civil liability is separate and distinct from the criminal
action.
4. ID.; APPEAL; APPELLATE COURT MAY CONTINUE EXERCISING APPELLATE
JURISDICTION OVER ACCUSED'S POSSIBLE CIVIL LIABILITY, NOTWITHSTANDING DISMISSAL OF
APPEAL ON ACCOUNT OF DEATH. Notwithstanding the dismissal of the appeal of deceased
appellant insofar as his criminal liability is concerned, the appellate court may continue to
exercise appellate jurisdiction over his possible civil liability for the money claims of
complainant arising from the alleged criminal acts complained of, as if no criminal case had
been instituted against him, thus making applicable, in determining his civil liability, Article 30
of the Civil Code. For that purpose the heirs of administrator or administrator deceased's
estate will be substituted for the deceased insofar as the civil action for the civil liability is
concerned (Secs. 16 and 17, Rule 3, Rules of court); and the title of the criminal case should be
amended to show its civil aspect.
5. CRIMINAL PROCEDURE; PRIVATE PROSECUTOR; CRIMINAL ACTION MUST BE
PROSECUTED UNDER THE DIRECTION AND CONTROL OF THE FISCAL. Where the record
shows that at every hearing the provincial fiscal, the city fiscal or an assistant fiscal were
present together with the private prosecutor, there was substantial compliance with the rule
that the criminal action should be "prosecuted under the direction and control of the fiscal"
and that "the provincial fiscal shall represent the province" in any court. (Sec. 4, Rule 110, Rules
of Court; sec. 1683, Revised Administrative Code.)
6. ID.; JUDGES; DISQUALIFICATION; JUDGE WHO CONDUCTED PRELIMINARY
INVESTIGATION NOT DISQUALIFIED TO TRY CASE ON THE MERITS. Section 13, Rule 112 of
the Rules of Court, in allowing a Court of First Instance to conduct a preliminary investigation,
does not disqualify it from trying the case it had found probable cause and after the fiscal, as
directed by the Court, had filed the corresponding information. The rule assumes that the
Judge, who conducted the preliminary investigation, could impartially try the case on the
merits.
91
7. ID.; ID.; ID.; ID. The case of a Judge of the Court of First Instance, who conducts a
preliminary investigation and then tries the case on the merits, is similar to a situation where
an inferior court conducts a preliminary investigation of a grave or less grave offense falling
within the concurrent jurisdiction of the Court of First Instance and the inferior court. In such
a case, the inferior court after terminating the preliminary investigation is not obligated ( por
delicadeza) to remand the case to the Court of First Instance for trial. The inferior court has
the option to try the case on the merits. The assumption is that the inferior court can try the
case without any ingrained bias or undue prejudice.
8. EVIDENCE; SIGNATURES MAY BE DELIBERATELY DISGUISED. Signatures may be
deliberately disguised with the dishonest intention of denying the same as and when necessary.
9. ID.; PERSON IN POSSESSION OF FALSIFIED DOCUMENT IS PRESUMED TO BE THE
AUTHOR OF THE FALSIFICATION. The rule is that if a person had in his possession a falsified
document and he made use of it (uttered it), taking advantage of it and profiting thereby, the
presumption is that he is the material author of the falsification. This is especially true if the
use of uttering of the forged documents was so closely connected in time with the forgery that
the user of possessor may be proven to have the capacity of committing the forgery, or to have
close connection with the gorgers, and therefore, had complicity in the forgery.
10. ID.; FALSIFICATION; USE OF DIFFERENT FORMS OF SIGNATURES. The deviousness
of falsification perpetrated by the accused is shown by the fact that he uses one form of
signature for his crooked transactions with the provincial government and another form of
signature for his valid transactions or papers.
11. ID.; ID.; SEPARATE MALVERSATIONS AND FALSIFICATIONS. If the falsification is
resorted to for the purpose of hiding the malversation, the falsification and malversation are
separate offenses. Thus, where the provincial treasurer, as the custodian of the money forming
part of the road and bridge fund, effected payments to his co-accused for construction
materials supposedly delivered to the province for various projects when in fact no such
materials were delivered, and to camouflage or conceal the defraudation, the accused used
six vouchers which had genuine features and which appear to be extrinsically authentic but
which were intrinsically fake, the crimes committed are not complex but separate crimes of
falsification and malversation. The falsifications cannot be regarded as constituting one
continuing offense impelled by a single criminal impulse. Each falsification of a voucher
constitutes one crime. The falsification of six couchers constitutes six separate or distinct
offenses; and each misappropriation as evidenced by a provincial voucher constitutes a
separate offense.
12. ID.; MALVERSATION; CRIMINAL LIABILITY; PRIVATE PERSON CONSPIRING WITH
PUBLIC OFFICER. A private person conspiring with an accountable officer in committing
malversation is also guilty of malversation. A different rule prevails with respect to a stranger
taking part in the commission of parricide or qualified theft. In such cases, the stranger is not
guilty of parricide or qualified theft but only of murder or homicide, as the case may be, and
simple theft.
13. PENALTY; SERVICE OF MULTIPLE PENALTIES. In the service of twelve penalties
meted to defendant, the threefold limit provided for in article 70 of the Revised Penal Code
should be observed, meaning that the maximum penalty that he should serve is three times
the indeterminate sentence of twelve (12) years to seventeen (17) years, the severest penalty
imposed on him, or thirty-six (36) years to fifty-one (51) years. The maximum duration of his
sentence should not exceed forty (40) years.
BARREDO, J., concurring:
1. APPEAL; DISMISSAL OF APPEAL DUE TO DEATH OF ACCUSED FROM A JUDGMENT OF
CONVICTION, AMOUNTS TO ACQUITTAL. The dismissal of an appeal, due to death of
appellant, from a judgment of conviction by a trial court does not result in the affirmance of
such conviction, but amounts to an acquittal of the appellant based on the constitutionally
mandated presumption of innocence in his favor that can be overcome only by a finding of
guilt, something that his death prevents the court from making. Death extinguishes the crime,
and corollarily, all its consequence.
2. ID.; ID.; ESTATE OF ACCUSED NOT EXONERATED FROM CIVIL LIABILITY. The
dismissal of an appeal in criminal cases, by reason of appellant's death, amounts to his
acquittal and carries with it exemption from or extinction of the civil liability as if the court had
held that the action from which the civil action might arise did not exist (Sec. 2(4), Rule 111).
But this does not exonerate the estate from another kind of civil liability for indemnity,
restitution, or reparation, for under the pertinent provisions of Human Relations of the Civil
Code. Particularly Article 30, the total absolution of appellant based on his death is immaterial,
since this provision contemplates prosecution of civil liability arising from a criminal offense
without the need of any criminal proceeding to prove the commission of the crime as such,
that is, without having to prove the criminal liability of defendant so long as his act causing
damage or prejudice to the offended party is proven by preponderance of evidence.
3. ACTIONS; EFFECT OF DEATH OF ACCUSED BEFORE CONVICTION ON THE CIVIL
ACTION FOR DAMAGES. While Article 29 of the Civil Code unequivocally authorizes the filing
of "a civil action for damages for the same act or omission," It does not say that the civil action
joined with the criminal action, as provided for in Section 1 of Rule 111, shall service and be
the one continued. What is left to the offended party after the death of the accused before
conviction is the right to institute a civil action for damages for the same act or omission
92
pursuant to Article 29 and 30 of the Civil Code and Sections 2 and 3(c) of Rule 111 of the Rules
of Court.
4. APPEALS; DISMISSAL OF APPEAL IN CRIMINAL CASES BY REASON OF APPELLANT'S
DEATH. When appeal in criminal cases have to be dismissed by reason of the death of the
appellant, it is not proper to qualify such dismissal as limited to that of the criminal liability of
the appellant. The dismissal should be unqualified and that the offended parties concerned
should be left to pursue their remedies, if they so desire, in the appropriate civil action
contemplated both in the Civil Code and in Rule 111.
5. OBLIGATION; SIMULTANEOUS LIABILITY OF ACTOR FOR THE SAME ACT. A party
aggrieved by an act criminal in nature has the right to indemnity, restitution or reparation,
notwithstanding the absence or failure of the usual criminal prosecution, in view of the
provisions of the pertinent articles of the Civil Code on Human Relations and Section 2 of Rule
111. The same act or set of facts can be the subject of obligations arising at the same time thru
different modes contemplated in Article 1157 of the Civil Code. Thus, that an act of omission
is punished by law, thereby making the actor civilly liable therefor, does not exclude
simultaneous liability of the actor for the same act viewed also as one giving rise to an
obligation under another law, and/or under a contract, quasi-contract or quasi-delict, with the
qualification that the aggrieved party cannot recover damages more than once for the same
act or omission (Art. 2177, Civil Code).
DECISION
AQUINO, J p:
In these three cases of malversation through falsification, the prosecution's theory is that in
1969 Licerio P. Sendaydiego, the provincial treasurer of Pangasinan, in conspiracy with Juan
Samson y Galvan, an employee of a lumber and hardware store in Dagupan City, and with
Anastacio Quirimit, the provincial auditor, as an accomplice, used six (6) forged provincial
vouchers in order to embezzle from the road and bridge fund the total sum of P57,048.23.
The provincial voucher involved in these cases has several part. In the upper part with the
legend "ARTICLE OR SERVICE" the nature of the obligation incurred is indicated. That part is
supposed to be signed by two officials of the provincial engineer's office and by the governor's
representative.
The middle part of the voucher contains five numbered printed paragraphs. Paragraph 1 is a
certificate to be signed by the creditor. It is stated therein that the creditor vouches that the
expenses "were actually and necessarily incurred". In the instant cases paragraph 1 was not
signed presumably because it is not relevant to the purchase of materials for public works
projects.
Paragraph 2 is a certification that the expenses are correct and have been lawfully incurred. It
is signed by the provincial engineer.
Paragraph 3 contains these words: "Approved for pre-audit and payment, appropriations and
funds being available therefor." This is signed by the provincial treasurer.
Paragraph 4 is a certification which, as filled up in Exhibit K, Voucher No. 10724 dated February
28, 1969, reads: LibLex
"I certify that this voucher has been pre-audited and same may be paid in the amount of
sixteen thousand seven hundred twenty-seven and 52/100 (P16,727.52) in cash or in check,
provided there is sufficient fund to cover the payment."
This is signed by the auditor.
Paragraph 5 is a certification signed by the provincial treasurer that the account mentioned in
the provincial engineer's certification "was paid in the amount and on the date shown below
and is chargeable as shown in the summary hereof. . . ." It may be noted that the provincial
treasurer signs two parts of the voucher.
Following paragraph 5, and as referred to therein, is the receipt of payment signed by the
creditor. As accomplished in Exhibit K, the receipt reads (it was signed according to the
prosecution by Juan Samson, a point which is disputed by him):
"Received this 31st day of March, 1969, from L. P. Sendaydiego, Treasurer, Province of
Pangasinan, the sum of sixteen thousand seven hundred twenty-seven pesos & 52/100
(16,727.52) in full payment of the above stated account, which I hereby certify to be correct.
Paid by Check No. ...........
CARRIED CONSTR. SUPPLY CO.
By:
(Sgd.) JUAN SAMSON"
According to the prosecution, Samson also signed on the left margin of the six vouchers below
the stamped words: "Presented to Prov. Treasurer. By Juan Samson."
Voucher No. 10724 (Exh. K). This provincial voucher, dated February 28, 1969, evidences
the payment of P16,727.52 to the Carried Construction Supply Co. of Dagupan City for lumber
93
and hardware materials supposedly used in the repair of the bridge in Barrio Libertad at the
Umingan-Tayug road in Pangasinan along the Nueva Ecija boundary (Exh. K). The voucher
makes reference to invoice No. 3327 and other supporting papers.
The falsity of the provincial voucher is proven by the following circumstances:
(a) That there was no project for the repair of the bridge at Barrio Libertad (p. 1; Exh. Z).
(b) That the amount of P16,727.52 was never received by the Carried Construction
Supply Co. The alleged official receipts No. 3025 of the company dated March, 1969 (Exh. K-6)
is forged.
(c) That the lumber and materials mentioned in Exhibit K were never delivered by the
company to the provincial government.
(d) That in the provincial voucher, Exhibit K, and in the supporting requisition and issue
voucher (RIV) No. 2206 dated January 29, 1969 (Exh. A), covering the same lumber and
hardware materials, the signatures of the following officials were forged: Salvador F. Oropilla,
senior civil engineer; Rodolfo P. Mencias, supervising civil engineer; Victoriano M. Servilleja,
acting provincial engineer, and Ricardo B. Primicias,, chief of equipment of the governor's
office. These four officials denied that their signatures in the two vouchers, Exhibits A and B,
are their genuine signatures.
(e) That the imprint of the rubber stamp on Exhibits A and B, containing the words
"Approved: For and By Authority of the Governor (signed) Ricardo B. Primicias, Chief of
Equipment", is not the imprint of the genuine rubber stamp used in Primicias' office.
(f) That charge invoice No. 3327 of the Carried Construction Supply Co. dated February
18, 1969, containing a description and the prices of the lumber and hardware materials (Exh.
B), is fake because, according to Ambrosio Jabanes, the company's assistant manager, the
company's invoice No. 3327 was issued to the Mountain Agricultural College (Exh. II-1).
Oropilla denied that his alleged signature on Exhibit B is his signature.
(g) That three other documents, supporting the provincial voucher (Exh. K), were also
forged. Those documents are the taxpayer's certificate dated February 10, 1969 (Exh. C) stating
that no tax is due on the goods sold in the fake invoice No. 3327 and the two certificates as to
the samples of lumber allegedly purchased from the Carried Construction Supply Co., (Exh. D
and E). Narciso P. Martinez, a district forester, denied that his signatures in Exhibits D and E
are his genuine signatures.
(h) That Angelo C. Manuel, the checker of the provincial auditor's office, denied that his
signature on the left margin is his signature (Exh. A-10).
The forged character of provincial voucher No. 10724 (Exh. K) is incontrovertible.
Other five forged vouchers. Five other provincial vouchers evidencing supposed payments
of certain amounts to the Carried Construction Supply Co. for lumber and hardware materials
supposedly used in the repair of other bridges were also falsified. These five vouchers are the
following:
(1) Voucher No. 11995 dated April 29, 1969 evidencing the payment of P14,571.81 for
lumber and hardware materials allegedly used in the repair of Bayaoas bridge at the
Urbiztondo-Pasibi Road (Exh. O).
(2) Voucher No. 11869 dated April 15, 1969 evidencing the payment of P5,187.28 for
lumber and hardware materials allegedly used in the repair of the Panganiban bridge at the
Umingan-Tayug Road (Exh. P).
(3) Voucher No. 11870 dated April 28, 1969 evidencing the payment of P6,290.60 for
lumber and hardware materials allegedly used in the repair of the Cabatuan bridge at the
Umingan-Guimba Road (Exh. Q).
(4) Voucher No. 11871 dated April 15, 1969 evidencing the payment of P9,769.64 for
lumber and hardware materials allegedly used in the repair of the Casabar bridge at the
Binalonan-San Manuel Road (Exh. R).
(5) Voucher No. 11872 dated April 15, 1969 evidencing the payment of P4,501.38 for
lumber and hardware materials allegedly used in the repair of the Baracbac bridge at the
Umingan-Guimba Road (Exh. S).
As in the case of voucher No. 10724 (Exh. K), Oropilla, Mencias, and Primicias declared that
their signatures in the said five vouchers are not their genuine signatures. Samson, who hand-
carried the said vouchers for processing, did not turn over to the provincial auditor's office the
papers supporting the said vouchers after the vouchers had been pre-audited. Hence, those
supporting papers could not be presented in evidence.
Jabanes, the aforementioned assistant manager of the Carried Construction Supply Co.,
testified that the lumber and hardware materials mentioned in the five vouchers were never
delivered by his company to the provincial government. The charge invoices mentioned in the
said vouchers were cancelled invoices issued to the Mountain Agricultural College. The
projected repairs of the bridges were fictitious. llcd
The company's cashier testified that the company never received the payments for the lumber
and hardware materials. The receipts evidencing payments (Exh. K-6, KK to KK-4) are fake
official receipts. The cashier produced in court the genuine official receipts (Exh. LL to LL-7)
94
bearing the serial numbers of the fake receipts. The genuine receipts do not refer to
transactions with the provincial government.
Samson played a stellar role in the processing of the six vouchers. He used to be an employee
of the provincial treasurer's office. He resigned and worked with several firms doing business
with the provincial government. In 1969 he was the collector of the Carried Construction
Supply Co. He represented that firm in its dealings with the offices of the governor, provincial
auditor, provincial engineer and provincial treasurer. He was personally known to those
provincial officials and the employees of their offices (21-22 Sendaydiego's brief).
The six (6) forged provincial vouchers, with their respective supporting papers, were hand-
carried by Samson. He delivered the papers to Carmencita Castillo, the ledger clerk in the
provincial engineer's office, for recording and for her signature (Exh. DD).
Thereafter, Samson brought the papers to the provincial treasurer's office. Marcelo Crusada,
a laborer in that office who performed the chore of recording the vouchers and payrolls,
recorded Vouchers Nos. 11869, 11871 and 11872 (Exh. P, R, and S). Crusada's initials appear
on the upper lefthand corner of the said vouchers with the date "4/17/69"
Samson signed on the left margin of the vouchers to indicate that he presented them to the
provincial treasurer's office. Crusada said that after Samson had presented the said papers to
him, Samson brought them to Ricardo Baraan, the bookkeeper of the provincial treasurer's
office, for processing and for the latter's signature (Exh. WW).
From Baraan's office, Samson hand-carried the vouchers to the provincial auditor's office. He
asked Virginia Cruz, a clerk, to record the same (Exh. CC).
Afterwards, Samson asked Donato Rosete, the assistant provincial treasurer, to initial the
vouchers. After Rosete had initialled the vouchers, Samson went to the provincial treasurer's
office where the amounts covered by the vouchers were paid by Sendaydiego to him in cash
(instead of by check) as representative of the Carried Construction Supply Co. (Exh. EE). He
received the payments on March 31 and April 29 and 28 (four payments on that date) as shown
on the face of the vouchers.
The signatures of Sendaydiego and Quirimit, the auditor, on the said six vouchers are
admittedly authentic. Sendaydiego signed the vouchers ahead of Rosete, his assistant.
Sendaydiego's defense is that he signed the vouchers in the honest belief that the signatures
therein of the provincial officials concerned were genuine because the vouchers had been pre-
audited and approved by the auditor.
Samson denied the authenticity of his two signatures on each of the six vouchers showing that
he received from Sendaydiego the amounts covered thereby as representative of the lumber
and hardware firm (Exh. OO to TT) and that he presented the vouchers to the provincial
treasurer's office (Exh. 6-12 Samson). Sendaydiego testified that Samson's signatures are
genuine.
In connection with the six vouchers, Sendaydiego, Samson and Quirimit were charged with
malversation through falsification in three cases docketed as follows:
1. Criminal Case No. 23349 involving provincial voucher No. 10724 dated February 28,
1969 in the sum of P16,727.52 (Exh. K), L-33252.
2. Criminal Case No. 23350 involving provincial vouchers Nos. 11869, 11870, 11871
dated April 15 (two dates) 28 and 15, 1969 for the respective amounts of P5,187.28, P6,290.60,
P9,769.64 and P4,501,38 (four vouchers, Exh. P, Q, R and S), now L-33253.
3. Criminal Case No. 23351 involving provincial voucher No. 11955 dated April 29, 1969
in the sum of P14,571.81 (Exh. O), now L-33254.
After trial, the lower court acquitted the auditor, Quirimit and found Sendaydiego and Samson
guilty of malversation through falsification of public or official documents, imposing each of
the following penalties:
(1) In Criminal Case No. 23349, an indeterminate sentence of twelve years, ten months
and twenty-one-days, as minimum, to eighteen years, two months and twenty-one days of
reclusion temporal, as maximum, and a fine of P16,727.52 and to indemnify solidarily the
provincial Government of Pangasinan in the same amount;
(2) In Criminal Case No. 23350, the penalty of reclusion perpetua, and a fine of
P29,748.90 and to indemnify solidarily the provincial government of Pangasinan in the same
amount; and
(3) In Criminal Case No. 23351, an indeterminate sentence of twelve years, ten months
and twenty-one days, as minimum, to eighteen years, two months and twenty one days of
reclusion temporal, as maximum, and a fine of P14,571.81 and to indemnify solidarily the
provincial government of Pangasinan in the same amount.
Sendaydiego and Samson appealed to this Court.
Sendaydiego died on October 5, 1976. His appeal as to his criminal liability was dismissed.
Death extinguished his criminal liability but his civil liability remained. The resolution of July 8,
1977 dismissing Sendaydiego's appeal reads as follows: prcd
"The death of appellant Sendaydiego during the pendency of his appeal or before the
judgment of conviction rendered against him by the lower court became final and executory
95
extinguished his criminal liability, meaning his obligation to serve the personal or
imprisonment penalties and his liability to pay the fines or pecuniary penalties (Art. 89[1],
Revised Penal Code; 1 Viada, Codigo Penal, 4th Ed., 565).
"The claim of complainant Province of Pangasinan for the civil liability survived Sendaydiego
because his death occurred after final judgment was rendered by the Court of First Instance of
Pangasinan, which convicted him of three complex crimes of malversation through falsification
and ordered him to indemnify the Province in the total sum of P61,048.23 (should be
P57,048.23).
"The civil action for the civil liability is deemed impliedly instituted with the criminal action in
the absence of express waiver or its reservation in a separate action (Sec. 1, Rule 111 of the
Rules of Court). The civil action for the civil liability is separate and distinct from the criminal
action (People and Manuel vs. Coloma, 105 Phil. 1287; Roa vs. De la Cruz, 107 Phil. 8).
"'When the action is for the recovery of money' '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 Rule 87 of the Rules of Court (Sec. 21, Rule 3 of the Rules of Court).
"The implication is that, if the defendant dies after a money judgment had been rendered
against him by the Court of First Instance, the action survives him. It may be continued on
appeal (Torrijos vs. Court of Appeals, L-40336, October 24, 1975; 67 SCRA 394).
"The accountable public officer may still be civilly liable for the funds improperly disbursed
although he has no criminal liability (U. S. vs. Elvina, 24 Phil. 230; Philippine National Bank vs.
Tugab, 66 Phil. 583).
"In view of the foregoing, notwithstanding the dismissal of the appeal of the deceased
Sendaydiego insofar as his criminal liability is concerned, the Court Resolved to continue
exercising appellate jurisdiction over his possible civil liability for the money claims of the
Province of Pangasinan arising from the alleged criminal acts complained of, as if no criminal
case had been instituted against him, thus making applicable, in determining his civil liability,
Article 30 of the Civil Code (Note: The lower court had issued an order of attachment against
him on January 13, 1970 for the sum of P36,487 and in the brief for said appellant, there is no
specific assignment of error affecting the civil liability fixed by the trial court.) and, for that
purpose, his counsel is directed to inform this Court within ten (10) days of the names and
addresses of the decedent's heirs or whether or not his estate is under administration and has
a duly appointed judicial administrator. Said heirs or administrator will be substituted for the
deceased insofar as the civil action for the civil liability is concerned (Secs. 16 and 17, Rule 3,
Rules of Court). According to Sendaydiego's brief, he had a wife and ten children named Arturo,
Licerio, Jr., Prospero, Regulo, Eduardo, Cesar, Nola, Aida, Wilfredo and Manolo (deceased).
"The title of this case should be amended to show its civil aspect by adding thereto the
following: 'Province of Pangasinan vs. Heirs of Licerio P. Sendaydiego.'"
Sendaydiego's appeal will be resolved only for the purpose of showing his criminal liability
which is the basis of the civil liability for which his estate would be liable.
Sendaydiego's appeal; civil liability of his estate. In view of Sendaydiego's death, it is not
necessary to resolve his first two assignments of error, wherein he assails the imposition of
reclusion perpetua as a cruel and unusual penalty and wherein it is argued that there is no
complex crime of malversation through falsification committed by negligence.
In the third assignment of error, it is contended that the trial court erred in allowing private
prosecutors Millora and Urbiztondo to prosecute the case, thereby allegedly subjecting the
accused to proceedings marked by undue publicity, pre-judgment, bias and political self-
interest.
Atty. Vicente D. Millora, a senior member of the provincial board actually handled the
prosecution of the case from the preliminary investigation, which started on June 5, 1969, up
to the termination of the trial on July 29, 1970.
At the commencement of the preliminary investigation, the counsel for the accused auditor
inquired whether Atty. Millora was authorized by the provincial board to act as private
prosecutor in representation of the province of Pangasinan, the offended part. Atty. Millora
replied that there was a board resolution designating him as private prosecutor.
The acting provincial commander, who filed the complaints, manifested to the trial court that
he had authorized Atty. Millora to act as private prosecutor (4-8 tsn June 5, 1969).
Another defense counsel filed a written motion to inhibit Millora and the others as private
prosecutors. The lower court denied the motion in its order of June 18, 1969 (p. 40, Record of
Criminal Case No. 23350).
After the termination of the preliminary investigation conducted by the lower court, the
provincial fiscal of Pangasinan and the city fiscal of Dagupan City filed three informations
against the accused all dated November 4, 1969.
At the commencement of the trial on February 23, 1970 the city fiscal, an assistant provincial
fiscal, and Atty. Millora, the private prosecutor, appeared for the prosecution. The city fiscal
moved "that the private prosecutor (Millora) be authorized to conduct the examination
subject to our (the fiscal's) control and supervision". The trial court granted the motion (7 tsn).
prcd
96
At the hearing on April 23, 1970 the same city fiscal moved that Atty. Urbiztondo be authorized
to examine the prosecution witnesses under his supervision and control. The trial court
granted the motion (155 tsn).
The record shows that at every hearing the provincial fiscal, the city fiscal or an assistant fiscal
were present together with the private prosecutor.
Under the foregoing circumstances, we believe that there was substantial compliance with the
rule that the criminal action should be "prosecuted under the direction and control of the
fiscal" and that "the provincial fiscal shall represent the province" in any court (Sec. 4, Rule 110,
Rules of Court; sec. 1683, Revised Administrative Code).
The observation of Sendaydiego's counsel, that the imposition of reclusion perpetua "could
have been the result of the undue publicity, prejudgment, bias and political self-interest which
attended the proceedings", is not well founded. The trial court's decision dispels any doubt as
to its impartiality. The evidence in the three cases is mainly documentary. The unassailable
probative value of the documents involved. rather than bias and prejudice, was the decisive
factor on which the trial court anchored the judgment of conviction.
Moreover, as already adverted to, Sendaydiego's death had rendered moot the issue as to the
propriety of the imposition of reclusion perpetua. And, as will be shown later, reclusion
perpetua cannot be imposed in these cases because the crimes committed were not complex.
The other seven assignments of error made by Sendaydiego's counsel refer to the trial court's
conclusion that Sendaydiego and Samson are guilty beyond reasonable doubt of malversation
through falsification or, specifically, that the provincial treasurer, in signing the six vouchers,
evinced "malice or fraud and that there must have been connivance between" the two.
Several circumstances indicate that Sendaydiego conspired with Samson. Donato N. Rosete,
the assistant provincial treasurer, testified that, contrary to the usual procedure, he affixed his
initial to paragraph 3 of the vouchers after Sendaydiego had signed it. Rosete adhered to that
unusual procedure because the interested party, Samson, who hand carried the vouchers,
approached Rosete after he (Samson) had conferred with the provincial treasurer and Samson
told Rosete to initial the voucher because it was areglado na (already settled) since the
treasurer had already signed the voucher (54 tsn July 3, 1969).
Rosete's testimony and affidavit confute appellant Sendaydiego's contention that the trial
court erred in finding that he signed the questioned vouchers before Rosete had placed his
initial in them. After the treasurer had signed the voucher, Rosete's duty to initial it was only
ministerial (75 tsn July 3, 1969).
The bookkeeper in the treasurer's office testified that he indicated in the vouchers that the
amounts covered thereby should be paid in cash. That indication was made by means of the
symbol "A-1-1" placed at the bottom of the vouchers under the column "Account Number".
The bookkeeper was instructed by Samson to place that symbol. Samson told him that he
(Samson) had an understanding with Treasurer Sendaydiego that the payment should be made
in cash. There were instances when the treasurer insisted on payment by check to creditors
other than Juan Samson.
The cash payments were made to Samson in the inner office of the provincial treasurer where
the cashier was summoned to make the cash payments (11-12 tsn July 9, 1969; p. 11, Exh. EE).
As noted by the trial court, it was unusual that the payments should be made in the treasurer's
office when that was a ministerial chore of the cashier.
The cash payments were made to Samson even if Samson had no power of attorney from the
Carried Construction Supply Co. authorizing him to receive the payments. The space in the
vouchers for the signature of the witness, who should be present when the payments were
received, was blank. The treasurer did not bother to have a witness to attest to the payments
or to require the exhibition of Samson's residence certificate.
Another apt observation of the trial court is that the forged character of the six vouchers would
have been unmasked by the supposed creditor, Carried Construction Supply Co., if the
payments had been made by means of checks. The company on receiving the checks would
have returned them to the treasurer because it knew that there was no reason to make any
payments at all. The trial court said that the cash payments prove Sendaydiego's collusion with
Samson.
Sendaydiego's counsel assails the lower court's finding that there was a conspiracy between
the provincial treasurer and Samson as shown by the fact that the amounts covered by the
vouchers were paid to Samson by the cashier in the treasurer's inner office. That point was
testified to by Rosete, the assistant provincial treasurer.
The cashier, Napoleon Ulanday, would have been the best witness on how and where the
payments were made. However, Ulanday died before the preliminary investigation was started.
On May 27, 1969, after the anomalies were unearthed, he wrote a letter to the provincial
treasurer, stating that he paid to Samson the amounts covered by five vouchers in the
presence of Salazar K. Misal and Josefina E. Pulido (Exh. 13).
Rosete was in a position to state that the cash payments were made to Samson in the
treasurer's inner office because his table was near the main door of the treasurer's office or
was about fifteen meters away (18 tsn). Rosete always knew when the cashier went to the
treasurer's office because the cashier was summoned by means of a buzzer (long buzz), and
97
when the cashier came out of the treasurer's office, he would be holding the voucher (12-13
tsn).
Sendaydiego's counsel stressed that no gross negligence can be imputed to the treasurer
(malversation is a crime which can be committed by means of dolo or culpa and the penalty in
either case is the same). This argument does not deserve serious consideration because the
facts proven by the prosecution show that he had a tieup with Samson and that he acted
maliciously in signing the six questioned vouchers.
The last contention put forward for Sendaydiego is that, because the trial court acquitted the
auditor, then the treasurer's exoneration follows as a matter of course. We see no merit in
that contention because the evidence for the prosecution against Sendaydiego is not the same
as its evidence against the auditor. For that reason, the auditor was charged only as an
accomplice, whereas, the treasurer was charged as a principal. The auditor based his defense
on the undeniable fact that the treasurer had approved the six vouchers "for pre-audit and
payment" before they were passed upon by the auditor. In short, the auditor was misled by
the treasurer's certification which the auditor apparently assumed to have been made in good
faith when in truth it was made in bad faith.
We are convinced after a minutes examination of the documentary and oral evidence and an
unprejudiced consideration of the arguments of Sendaydiego's learned counsel that his
criminal liability was established beyond reasonable doubt and, therefore, the civil liability of
his estate for the amounts malversed was duly substantiated.
Samson's appeal. Samson's brief has no statement of facts. He contends that the trial court
erred in disregarding the expert testimony that his signatures on the vouchers are not his
signatures; in finding that he forged the vouchers and received the proceeds thereof, and in
relying on circumstantial evidence as proof of conspiracy.
As a preliminary issue, Samson argues that Judge Eloy B. Bello should have inhibited himself
"in fairness to the accused, in the interest of justice, and as a gesture of delicadeza" because
he had conducted the preliminary investigation. LexLib
Our searching study of the record fails to sustain Samson's insinuation that he was prejudiced
by the fact that the Judge, who conducted the preliminary investigation, was the one who tried
the case and convicted him. Judge Bello tried the case fairly. His conduct of the trial does not
show that he had already prejudged their guilt.
Section 13, Rule 112 of the Rules of Court, in allowing a Court of First Instance to conduct a
preliminary investigation, does not disqualify it from trying the case after it had found probable
cause and after the fiscal, as directed by the Court had filed the corresponding information.
The rule assumes that the Judge, who conducted the preliminary investigation, could
impartially try the case on the merits.
We cannot assume that judges as a rule are opinionated and narrow-minded insomuch that
they would invariably be iron-bound by their findings at the preliminary investigation.
The case of a Judge of the Court of First Instance, who conducts a preliminary investigation
and then tries the case on the merits, is similar to a situation where an inferior court conducts
a preliminary investigation of a grave or less grave offense falling within the concurrent
jurisdiction of the Court First Instance and the inferior court. In such a case, the inferior court
after terminating the preliminary investigation is not obligated ( por delicadeza) to remand the
case to the Court of First Instance for trial. The inferior court has the option to try the case on
the merits. (People vs. Palmon, 86 Phil. 350; Natividad vs. Robles, 87 Phil. 834; People vs.
Colicio, 88 Phil. 196). The assumption is that the inferior court can try the case without any
ingrained bias or undue prejudice.
Samson sought to prove, through Lieutenant Colonel Jose G. Fernandez, retired chief of the
Constabulary crime laboratory, a handwriting expert, that his signatures on the vouchers are
not his signatures.
Fernandez found that the questioned signatures and the alleged genuine signatures
(exemplars) of Samson have fundamental differences. The expert concluded that the
questioned signatures and the exemplar signatures of Samson were not written by one and
the same person (Exh. 20).
After examining the questioned and genuine signatures and analyzing the evidence and
contentions of the parties, we find that the expert is correct in declaring that (as admitted by
the trial court) there are radical differences between the questioned and authentic signatures.
But the expert is in error in concluding that Samson did not forge the questioned signatures or
in implying that Samson had no hand in the writing thereof.
The truth is that Samson used two forms of signature. His supposed genuine signatures found
in his residence certificates, income tax returns and the genuine official receipt of the Carried
Construction Supply Co. are "in an arcade form or rounded form of writing". The surname
Samson is encircled.
On the other hand, the questioned signatures used in Samson's transactions with the
provincial government are in angular form; his surname is not encircled, and the questioned
signatures terminate in angular and horizontal strokes.
98
Samson was consistent in his fakeries. Knowing that the six vouchers evidenced fictitious
transactions, he used therein his fake signature, or the signature which is different from his
signature in genuine documents. He used his forged signatures in the six fake official receipts
of the Carried Construction Supply Co., stating that the amounts covered by the six vouchers
were received by him (Exh. K-6, KK to KK-4). the expert admitted that a person may have two
forms of signature (186 tsn July 16, 1970).
Signatures may be deliberately disguised with the dishonest intention of denying the same as
and when necessary (Mehta, Identification of Handwriting and Cross Examination of Experts,
pp. 4th Ed., 1970, p. 224; Harrison, Suspect Documents 418-419).
Sendaydiego himself testified that the questioned signatures of Samson in the six vouchers
were Samson's signatures (94-99 tsn July 31, 1969).
Fernandez, the handwriting expert, declared that the questioned signatures of Samson in the
vouchers were written by only one person (264-265 tsn July 16, 1970). LLjur
The evidence conclusively proves that Samson, as the representative or collector of the
supposed creditor, Carried Construction Supply Co., hand-carried the vouchers in question to
the offices of the provincial engineer, treasurer and auditor and then back to the treasurer's
office for payment. He actually received the cash payments. Under those circumstances,
Samson is presumed to be the forger of the vouchers.
The rule is that if a person had in his possession a falsified document and be made use of it
(uttered it), taking advantage of it and profiting thereby, the presumption is that he is the
material author of the falsification. This is especially true if the use or uttering of the forged
documents was so closely connected in time with the forgery that the user or possessor may
be proven to have the capacity of committing the forgery, or to have close connection with
the forgers, and therefore, had complicity in the forgery. (U.S. vs. Castillo, 6 Phil. 453; People
vs. De Lara, 45 Phil. 754; People vs. Domingo, 49 Phil. 28; People vs. Astudillo, 60 Phil. 338;
People vs. Manansala, 105 Phil. 1253).
In the absence of a satisfactory explanation, one who is found in possession of a forged
document and who used or uttered it is presumed to be the forger (Alarcon vs. Court of
Appeals, L-21846, March 31, 1967, 19 SCRA 688; People vs. Caragao, L-28258, December 27,
1969, 30 SCRA 993).
Samson's use of one form of signature for his crooked transaction with the provincial
government and another form of signature of his valid transactions or papers shows the
deviousness of the falsifications perpetrated in these cases. (Note that Sendaydiego signed the
certification in the first voucher, Exhibit K, stating that proceeds thereof were paid Samson but
Sendaydiego did not sign the same certification in the other five forged vouchers, Exhibits O,
P, Q, R and S).
As to the question of conspiracy, the statement of Samson's counsel on page 19 of his brief,
that "the trial court made absolutely no finding of any supposed conspiracy" between Samson
and Sendaydiego, is not correct.
We have already noted that the trial court explicitly stated that the circumstance that
Sendaydiego signed the six vouchers ahead of his assistant shows that there was "malice or
fraud" on the part of Sendaydiego and that there was connivance between Samson and
Sendaydiego when the proceeds of the vouchers were paid to Samson in Sendaydiego's inner
office, instead of in the cashier's office (p. 23, 26, Decision, Appendix to Samson's brief). The
trial court said that the fact that Sendaydiego allowed payment in cash shows "his collusion"
with Samson (Ibid, p. 26).
Samson's contention that the trial court merely conjectured that he had received the proceeds
of the vouchers is not well-taken. The trial court's finding on that point is based on very strong
circumstantial evidence (assuming that it was not proven that Samson signed the vouchers).
Samson vehemently argues that there is no evidence that the total sum of P57,048.23 paid
under the six vouchers "was really misappropriated". He asserts that the six vouchers are
genuine (although he contends that his signatures thereon are forgeries) and that there is no
proof that the amounts covered thereby were not paid for the construction materials indicated
therein. He insists that the materials were actually delivered to the province.
These contentions appear to be untenable in the light of the declaration of Jabanes, the
assistant manager of Carried Construction Supply Co., the alleged supplier, that the materials
shown in the six vouchers were never delivered by the company (Exh. HH).
And Leticia Sevilleja (wife of the provincial engineer), who was employed as cashier of the
Carried Construction Supply Co., denied that Samson turned over to the company the proceeds
of the six vouchers which he was supposed to have collected for the company from
Sendaydiego. The six vouchers appear to be fake principally because they evidence fictitious
sales of construction materials.
Under the said circumstances, it cannot be contended that there was no malversation after
Sendaydiego admitted that Samson acknowledged in the six vouchers that he received from
Treasurer Sendaydiego the total sum of P57,048.23.
The assertion of Samson's counsel on page 29 of his brief, that the finding as to his guilt is
based on a shaky foundation or is predicated on circumstances which were not proven, is not
correct.
99
Recapitulation: In resum, it appears that the provincial treasurer wants to base his
exculpation on his belief that in the six vouchers the signatures of Samson and the officials in
the provincial engineer's office appeared to be genuine and on the fact that the auditor had
approved the vouchers. The treasurer claimed that he acted in good faith in approving the
payments of the proceeds of the vouchers to Samson as the representative of the supplier,
Carried Construction Co.
On the other hand, Samson, by impugning his signatures in the vouchers, denied that he
received the said amounts from the cashier of the treasurer's office.
These conflicting versions of the treasurer and Samson have to be resolved in the light of the
inexpugnable fact that Samson had hand-carried the vouchers and followed up their
processing in the offices of the provincial engineer, treasurer and auditor (Exh. AA, p. 1, Exh.
CC, p. 2; Exh. DD; Exh. W and EE, p. 5) and that Samson's principal, the Carried Construction
Supply Co., denied having sold to the provincial government the construction materials
described in the six vouchers and denied having received from Samson the prices of the alleged
sales.
The result is that Samson's denial of his signatures in the six vouchers and in the six receipts
(Exh. K-6 and KK to KK-4) and the provincial treasurer's pretension of having acted in good faith
or having committed an honest mistake have to be disbelieved.
The unavoidable conclusion is that Sendaydiego and Samson were in cahoots to defraud the
provincial government and to camouflage the defraudation by means of the six vouchers which
have some genuine features and which appear to be extrinsically authentic but which were
intrinsically fake.
Penalties. The trial court and the parties assumed that three complex crimes of malversation
through falsification of public documents were committed in this case. That assumption is
wrong.
The crimes committed in these three cases are not complex. Separate crimes of falsification
and malversation were committed. These are not cases where the execution of a single act
constitutes two grave or less grave felonies or where the falsification was used as a means to
commit malversation.
In the six vouchers the falsification was used to conceal the malversation. It is settled that if
the falsification was resorted to for the purpose of hiding the malversation, the falsification
and malversation are separate offenses (People vs. Cid, 66 Phil. 354; People vs. Villanueva, 58
Phil. 671; People vs. Garalde, 52 Phil. 1000; People vs. Regis, 67 Phil. 43).
In the Regis case, supra, where the modus operandi is similar to the instant cases, the
municipal treasurer made it appear in two official payrolls dated April 30 and May 2, 1931 that
some persons worked as laborers in a certain street project at Pinamungahan, Cebu. In that
way, the two amounts covered by the payrolls, P473.70 and P271.60, were appropriated and
taken from the municipal funds. As a matter of fact, no such work was done in the said street
project and the persons mentioned in both payrolls had not performed any labor.
It was held in the Regis case, that the falsification and malversation did not constitute a
complex crime because the falsifications were not necessary means for the commission of the
malversations. Each falsification and each malversation constituted independent offenses
which must be punished separately.
The municipal treasurer was convicted of two falsification and two malversations. Four distinct
penalties were imposed.
In the instant cases, the provincial treasurer, as the custodian of the money forming part of
the road and bridge fund, could have malversed or misappropriated it without falsifying any
voucher. The falsification was used as a device to prevent detection of the malversation.
The falsifications cannot be regarded as constituting one continuing offense impelled by a
single criminal impulse.
Each falsification of a voucher constitutes one crime. The falsification of six vouchers
constitutes six separate or distinct offenses (People vs. Madrigal-Gonzales, 117 Phil. 956).
And each misappropriation as evidenced by a provincial voucher constitutes a separate offense.
The six misappropriations evidenced by the six vouchers constitute six distinct offenses (U.S.
vs. Sacramento, 53 Phil. 639).
The overall result is that in these three cases six separate offenses of falsification and six
separate crimes of malversation were committed. Appellant Samson is a co-principal in each
of the said twelve offenses.
As already stated, he is presumed to be the author of the falsification because he was in
possession of the forged vouchers and he used them in order to receive public monies from
the provincial treasurer. cdrep
He is a co-principal in the six crimes of malversation because he conspired with the provincial
treasurer in committing those offenses. The trial court correctly ruled that a private person
conspiring with an accountable public officer in committing malversation is also guilty of
malversation (People vs. Rodis, 105 Phil. 1294; U.S. vs. Ponte, 20 Phil. 379; U.S. vs. Dato and
Lustre, 37 Phil. 359; U.S. vs. Dowdell, 11 Phil. 4; People vs. Caluag, 94 Phil. 457).
100
Note that a different rule prevails with respect to a stranger taking part in the commission of
parricide or qualified theft. In such cases, the stranger is not guilty of parricide or qualified
theft but only of murder or homicide, as the case may be, and simple theft, by reason of
paragraph 3, article 62 of the Revised Penal Code (People vs. Patricio, 46 Phil. 875 and People
vs. Valdellon, 46 Phil. 245).
Falsification of a public document committed by a private person is punished in article 172(1)
of the Revised Penal Code by prision correccional in its medium and maximum periods and a
fine of not more than P5,000.
For the malversation of the sum of P5,187.28 and P4,501.38, respectively covered by vouchers
Nos. 11869 and 11872 (Exh. P and S), the penalty provided in paragraph 2 of article 217 of the
Revised Penal Code is prision mayor minimum and medium.
For the malversation of the sums of P6,290.60 and P9,769.64, respectively covered by
vouchers Nos. 11870 and 11871 (Exh. Q and R) the penalty provided in paragraph 3 of article
217 is prision mayor maximum of reclusion temporal minimum.
For the malversation of the sums of P16,727.52 and P14,571.81 respectively covered by
vouchers Nos. 10724 and 10995 (Exh. K and O), the penalty provided in paragraph 4 of article
217 is reclusion temporal medium and maximum.
In each of the malversation cases, a fine equal to the amount malversed should be added to
the imprisonment penalty.
In the twelve cases the penalty should be imposed in the medium period since there are no
modifying circumstances (Arts. 64[1] and 65, Revised Penal Code). Samson is entitled to an
indeterminate sentence.
WHEREFORE, Samson is convicted of six crimes of falsification of a public document and six
crimes of malversation.
In lieu of the penalties imposed by the trial court, he is sentenced to the following penalties:
For each of the six falsifications of the vouchers (Exh. K, O, P, Q, R and S), Samson is sentenced
to an indeterminate penalty of two (2) years of prision correccional minimum, as minimum, to
four (4) years of prision correccional medium, as maximum, and to pay a fine of three
thousand pesos.
For the malversation of the sum of P16,727.52 covered by voucher No. 10724 (Exh. K), Samson
is sentenced to an indeterminate penalty of twelve (12) years of prision mayor maximum, as
minimum, to seventeen (17) years of reclusion temporal medium, as maximum; to pay a fine
in the amount of P16,727.52, and to indemnify the province of Pangasinan in the same amount
(Criminal Case No. 23349, L-33252). LLpr
For the malversation of the sum of P14,571.81 covered by voucher No. 11995 (Exh. O), Samson
is sentenced to an indeterminate penalty of twelve (12) years of prision mayor maximum, as
minimum, to seventeen (17) years of reclusion temporal medium, as maximum; to pay a fine
in the sum of P14,571.81, and to indemnify the province of Pangasinan in the same amount
(Criminal Case No. 23351, L-33254).
For the malversation of the sum of P6,290.60 covered by voucher No. 11870 (Exh. Q), Samson
is sentenced to an indeterminate penalty of nine (9) years of prision mayor medium, as
minimum, to thirteen (13) years of reclusion temporal minimum, as maximum; to pay a fine of
P6,290.60, and to indemnify the province of Pangasinan in the same amount (Criminal Case
No. 23350, L-33253).
For the malversation of the sum of P9.769.64 covered by voucher No. 11871 (Exh. R), Samson
is sentenced to an indeterminate penalty of nine (9) years of prision mayor medium, as
minimum, to thirteen (13) years of reclusion temporal minimum, as maximum; to pay a fine of
P9,769.64, and to indemnify the province of Pangasinan in the same amount (Criminal Case
No. 23350, L-33253).
For the malversation of the sum of P5,187.28, covered by voucher No. 11869 (Exh. P), Samson
is sentenced to an indeterminate penalty of five (5) years of prision correccional maximum, as
minimum, to eight (8) of prision mayor minimum, as maximum; to pay a fine of P5,187.28,
and to indemnify the province of Pangasinan in the same amount (Criminal Case No. 23350, L-
33253).
For the malversation of the sum of P4,501.38 covered by voucher no. 11872 (Exh. S), Samson
is sentenced to an indeterminate penalty of five (5) years of prision correccional maximum, as
minimum, to eight (8) years of prision mayor minimum, as maximum; to pay a fine of P4,501.38,
and to indemnify the province of Pangasinan in the same amount (Criminal Case No. 23350, L-
33253).
In the service of the twelve penalties meted to Samson, the threefold limit provided for in
article 70 of the Revised Penal Code should be observed (People vs. Escares, 102 Phil. 677),
meaning that the maximum penalty that he should serve is three times the indeterminate
sentence of twelve (12) years to seventeen (17) years, the severest penalty imposed on him,
or thirty-six (36) years to fifty-one (51) years (See People vs. Peas, 68 Phil. 533).
101
The maximum duration of his sentences should not exceed forty (40) years (Penultimate par.
of art. 70; People vs. Alisub, 69 Phil. 362; People vs. Concepcion, 59 Phil. 518, 68 Phil. 530 and
69 Phil. 58).

The estate of the late Licerio P. Sendaydiego is ordered to indemnify the province of
Pangasinan in the sum of P57,048.23. Samson and the said estate are solidarily liable for the
said indemnity (Art. 110, Revised Penal Code). Samson should pay one-half of the costs.

SO ORDERED.

Antonio, Concepcion, Jr. and Santos, JJ., concur.

Fernando, J., took no part.

102
[G.R. No. 88297. March 22, 1990.]
JUDGE ENRIQUE T. JOCSON, EDILBERTO Y. EMPESTAN, and ATTY. PRESTON V. BARBASA,
petitioners, vs. HON. COURT OF APPEALS and BANK OF THE PHILIPPINE ISLANDS (BACOLOD
MAIN BRANCH), respondents.
Preston V. Barbasa for and in his own behalf.
Agustin T. Locsin for respondent Bank of the Philippine Islands.
SYLLABUS
1. REMEDIAL LAW; PARTIES TO CIVIL ACTIONS; TRANSFEREE PENDENTE LITE; MERELY
PROPER PARTY NOT INDISPENSABLE. We hold that the respondent court erred when it
declared that the decision rendered by the trial court was not binding on BPI because it had
not been substituted for the original defendant and had not been notified of the proceedings
against them. Rule 3 of Sec. 20 of the Rules of Court provides: SEC. 20. Transfer of Interest.
In case of any transfer of interest, the action may be continued by or against the original party
unless the court upon motion directs the person to whom the interest is transferred to be
substituted in the action or joined with the original party. This Court has declared in a number
of decisions that a transferee pendente lite stands in exactly the same position as its
predecessor-in-interest, the original defendant, and is bound by the proceedings had in the
case before the property was transferred to it. It is a proper but not an indispensable party as
it would in any event be bound by the judgment against his predecessor. This would follow
even if it is not formally included as a defendant through an amendment of the complaint.
2. ID.; ID.; ID.; DUTY TO SUBSTITUTE AS PARTY LITIGANT LIES ON TRANSFEREE IN CASE
AT BAR. Sec. 4, Art. II, of the Articles of Merger between BPICC and BPI states that: SEC. 4.
BPI shall acquire as liquidating dividends all of the assets of BPICC, it being understood that in
consonance with the pertinent provisions of the Corporation Code, BPI shall be responsible
and liable for all the liabilities and obligations of BPICC in the same manner as if BPI itself
incurred such liabilities or obligations, and any claim, action or proceeding pending by or
against BPICC shall be prosecuted by or against BPI. Neither the rights of creditors nor any lien
upon the property of BPICC shall be impaired by the merger. Accordingly, BPI categorically
agreed in Sec. 2, Art III of the same instrument that: SEC. 2. BPI shall take such measures as it
may deem necessary or advisable to substitute itself in all suits and proceedings where BPICC
is a party and to substitute its name for BPICC in all titles, documents, deeds and papers where
BPICC appears as a party. From the above stipulations, it is clear that the duty to substitute BPI
in the proceedings before the trial court fell on BPI itself and not on any other party. It did not
discharge that duty. Consequently, it cannot now claim that it is not bound by the judgment of
February 10, 1988. Whether its failure to do so was due to negligence or to a desire to evade
possible liability, there is no question that BPI should not benefit from such omission.
3. ID.; ID.; ID.; APPEAL MADE BY TRANSFEROR BENEFITS THE TRANSFEREE. We do
not agree that the judgment of the trial court against BPI has become final and executory
because only FFLC and BPICC had appealed. There is a contradiction here. Surely, if the
judgment is considered binding upon BPI as a transferee pendente lite, it should follow that
the appeal made by the original party would also, by the same token, redound to the
transferee's benefit. As it is the transferee that may ultimately be required to satisfy the
judgment if it is affirmed on appeal, it is only fair that it be deemed to have also appealed,
together with its predecessor-in-interest, from the decision of February 10, 1988.
4. ID.; ID.; ID.; COURT HAS POWER TO IMPLEAD IN SUBSTITUTION THE TRANSFERREE
AS A REAL PARTY IN INTEREST IN FURTHERANCE OF JUSTICE. We hereby declare it
impleaded in substitution of the Bank of the Philippine Islands Credit Corporation. This step is
in consonance with the settled rule that By section 110 of the Code of Civil Procedure courts
are authorized and directed to allow a party to amend any pleading or proceeding at any stage
of the action, in furtherance of justice and upon such terms, if any, as may be proper; section
503 of the same code prohibits the reversal of any judgment on merely formal or technical
grounds or for such error as has not prejudiced the rights of the excepting party. Under these
provisions of law, this court has the power to amend by substituting the name of the real party
in interest.
5. ID.; APPEAL ONCE PERFECTED, TRIAL COURT LOSES JURISDICTION OVER THE CASE.
The appeal of Civil Case No. 2567 was perfected on March 15, 1988, and the trial court as a
consequence lost jurisdiction over the matter. Hence, Judge Jocson had no more authority to
order the issuance of the final writ of execution on October 25, 1988, when the case had
already come under the exclusive appellate jurisdiction of the Court of Appeals and was, in
fact, still pending resolution.
6. ID.; VERBOSE AND ACCORDINGLY DISORGANIZED PLEADINGS FROWNED UPON.
The Court cannot end this opinion without remarking on the slipshod and clumsy manner in
which the petition was prepared. Extremely verbose and annoyingly disorganized, besides
containing extraneous matters that only cluttered the record and unnecessarily took up the
time of this tribunal, it could have been dismissed outright for insufficiency (or over-
sufficiency) in form. Counsel should realize that conciseness of pleadings can advance one's
cause much better than pretentious presentations that more often than not only reveal a
paucity of logic and a sorry confusion over the issues of the case.
DECISION
103
CRUZ, J p:
On April 26, 1982, petitioner Preston V. Barbasa bought a brand new car from Southern Motors
with Filinvest Finance and Leasing Corp. (FFLC) financing the account. This account was later
assigned to Filinvest Credit Corp. (FCC), FFLC's sister company. On July 7, 1983, the car was
repossessed by FFLC. On November 8, 1983, the petitioner, claiming that FFLC had acted
illegally and maliciously, filed a complaint for damages against it. 1 Subsequently, the Bank of
the Philippine Islands Credit Corporation (BPICC) having bought FCC, the complaint was
amended to include BPICC as co-defendant. 2 On July 31, 1987, during the pendency of the
case, the Bank of the Philippine Islands (BPI) acquired all the assets of its wholly-owned
subsidiary, BPICC, as part of a SEC-approved merger plan. The merger was made known to the
court by the petitioners, but BPI was not formally impleaded or substituted for BPICC. The
defendants continued to be FFLC and BPICC. cdphil
On February 10, 1988, the trial court decided in favor of the private petitioner. 3 On February
22, 1988, Barbasa filed a motion for execution of the judgment. On the same day, respondents
FFLC and BPICC filed a notice of appeal. 4 On March 4, 1988, Judge Enrique T. Jocson granted
partial execution pending appeal for the sum of P400,000.00 upon a bond of P500,000.00. 5
On March 15, 1988, the notice of appeal was approved, with the court ordering the elevation
of the records to the Court of Appeals. 6 On March 21, 1988, in view of the BPI merger, the
writ of partial execution was served against the bank. The bank, under protest, delivered to
the petitioner TCT No. 121486 to secure the judgment. 7 It then filed several motions to recall
the issued writ, arguing that it was null and void because BPI had never been notified of the
proceedings. 8
Upon denial of its motions, BPI filed a petition for certiorari with this Court. The case was,
however, remanded to the Court of Appeals. During the pendency of the appeal, the trial court
issued an order dated October 12, 1988, holding that since BPI had not appealed the decision
of February 10, 1988, the same had become final and executory as to it. 9 Accordingly, on
October 25, 1988, Judge Jocson ordered the issuance of a writ of final execution against BPI,
at the same time lifting the earlier writ of partial execution. 10
The order of October 25, 1988, was, upon remand, reversed by the respondent court in its
decision dated March 7, 1989. 11 It declared that (1) the writ of partial execution was irregular
since no special reason warranted its issuance; (2) the writ of final execution could not be
issued against BPI since it was BPI Credit Corporation (formerly Fil-Invest Credit Corporation)
that was merged with the Bank of the Philippine Islands and consequently it was BPI that
should have been notified of the subsequent proceedings in Civil Case No. 2567. It rejected the
claim that notice to BPICC was notice to the BPI, stressing that the merger was made as early
as July 31, 1987, before the decision was promulgated, and no corresponding substitution had
been made of the surviving corporation (BPI) in place of the absorbed defendants. prcd
The petition before us challenges these rulings of the respondent court.
We hold that the respondent court erred when it declared that the decision rendered by the
trial court was not binding on BPI because it had not been substituted for the original
defendant and had not been notified of the proceedings against them.
Rule 3, Sec. 20 of the Rules of Court provides:
SEC. 20. Transfer of Interest. In case of any transfer of interest, the action may be
continued by or against the original party unless the court upon motion directs the person to
whom the interest is transferred to be substituted in the action or joined with the original
party.
This Court has declared in a number of decisions that a transferee pendente lite stands in
exactly the same position as its predecessor-in-interest, the original defendant, and is bound
by the proceedings had in the case before the property was transferred to it. It is a proper but
not an indispensable party as it would in any event be bound by the judgment against his
predecessor. This would follow even if it is not formally included as a defendant through an
amendment of the complaint. 12
It is a no less significant consideration that Sec. 4, Art. II, of the Articles of Merger between
BPICC and BPI states that: Cdpr
SEC. 4. BPI shall acquire as liquidating dividends all of the assets of BPICC, it being
understood that in consonance with the pertinent provisions of the Corporation Code, BPI shall
be responsible and liable for all the liabilities and obligations of BPICC in the same manner as
if BPI itself incurred such liabilities or obligations, and any claim, action or proceeding pending
by or against BPICC shall be prosecuted by or against BPI. Neither the rights of creditors nor
any lien upon the property of BPICC shall be impaired by the merger. 13
and, accordingly, BPI categorically agreed in Sec. 2, Art III of the same instrument that:
SEC. 2. BPI shall take such measures as it may deem necessary or advisable to substitute
itself in all suits and proceedings where BPICC is a party and to substitute its name for BPICC
in all titles, documents, deeds and papers where BPICC appears as a party. 14
From the above stipulations, it is clear that the duty to substitute BPI in the proceedings before
the trial court fell on BPI itself and not on any other party. It did not discharge that duty.
Consequently, it cannot now claim that it is not bound by the judgment of February 10, 1988.
104
Whether its failure to do so was due to negligence or to a desire to evade possible liability,
there is no question that BPI should not benefit from such omission.

We do not agree that the judgment of the trial court against BPI has become final and
executory because only FFLC and BPICC had appealed. There is a contradiction here. Surely, if
the judgment is considered binding upon BPI as a transferee pendente lite, it should follow
that the appeal made by the original party would also, by the same token, redound to the
transferee's benefit. As it is the transferee that may ultimately be required to satisfy the
judgment if it is affirmed on appeal, it is only fair that it be deemed to have also appealed,
together with its predecessor-in-interest, from the decision of February 10, 1988. cdphil

To erase all doubt as to the status of the Bank of the Philippine Islands in the case below, we
hereby declare it impleaded in substitution of the Bank of the Philippine Islands Credit
Corporation. This step is in consonance with the settled rule that

By section 110 of the Code of Civil Procedure 15 courts are authorized and directed to allow
a party to amend any pleading or proceeding at any stage of the action, in furtherance of
justice and upon such terms, if any, as may be proper; section 503 16 of the same code
prohibits the reversal of any judgment on merely formal or technical grounds or for such error
as has not prejudiced the rights of the excepting party. Under these provisions of law, this
court has the power to amend by substituting the name of the real party in interest. 17

It is no longer necessary to determine the validity of the writ of partial execution as this was
lifted by Judge Jocson when he ordered the issuance of the writ of final execution on October
25, 1988. But the latter writ is a different matter. The appeal of Civil Case No. 2567 was
perfected on March 15, 1988, and the trial court as a consequence lost jurisdiction over the
matter. Hence, Judge Jocson had no more authority to order the issuance of the final writ of
execution on October 25, 1988, when the case had already come under the exclusive appellate
jurisdiction of the Court of Appeals and was, in fact, still pending resolution. 18

The Court cannot end this opinion without remarking on the slipshod and clumsy manner in
which the petition was prepared. Extremely verbose and annoyingly disorganized, besides
containing extraneous matters that only cluttered the record and unnecessarily took up the
time of this tribunal, it could have been dismissed outright for insufficiency (or over-
sufficiency) in form. Counsel should realize that conciseness of pleadings can advance one's
cause much better than pretentious presentations that more often than not only reveal a
paucity of logic and a sorry confusion over the issues of the case. LexLib

WHEREFORE, the challenged decision of the respondent court is hereby MODIFIED as above
indicated. The orders of the trial court dated October 12, 1988 and October 25, 1988, are
REVERSED and the writ of final execution is declared NULL and VOID. It is so ordered.

105
[G.R. No. L-21707. March 18, 1967.]
FELIPE ACAR, ET AL., petitioners, vs. HON. INOCENCIO ROSAL, in his capacity as Executive Judge,
Court of First Instance of Negros Oriental, 12th Judicial District, respondent.
F . S. Villarin for petitioners.
Jose B. Navarro for respondent.
SYLLABUS
1. PLEADING AND PRACTICE; PAUPER LITIGANT; WHO MAY LITIGATE AS SUCH. An
applicant for leave to sue in forma pauperis, need not be a pauper; the fact that he is able-
bodied and may earn the necessary money is no answer to his statement that he has not
sufficient means to prosecute the action or to secure the costs (14 Am. Jur. 31). It suffices that
plaintiff is indigent (Ibid.), tho not a public charge. cdasia
2. ID.; ID.; PAUPER AND INDIGENT PERSONS DIFFERENTIATED. The difference
between "paupers" and indigent persons is that the latter are "persons who have no property
or source of income sufficient for their support aside from their own labor, though self-
supporting when able to work and in employment" (Black's Law Dictionary, p. 915, "Indigent",
citing People vs. Schoharie County, 121 NY 345, 24 NE 830). It is therefore in this sense of being
indigent that "pauper" is taken when referring to suits in forma pauperis.
3. ID.; ID.; CLASS SUIT; EXEMPTION FROM PAYMENT OF DOCKET FEES. It is further
argued that the docket fee of P14,500 could very well be shouldered by petitioners since there
are around 9,000 of them. Held, since the action is a class suit, the payment of docket fee
would be directly charged upon the ten named petitioners, not upon the unnamed "9,000
other laborers". And even if the latter should bear said payment, they would pay about P1.60
each, which, as cost of pressing their respective average demand of P1,600 each is a substantial
imposition on a seasonal farm laborer earning barely subsistent wages. This is only the initial
fee; subsequent fees and charges would have to be paid. The philosophy underlying the
constitutional mandate of free access to the courts notwithstanding poverty, therefore, calls
for exemption of herein petitioners from payment of legal fees in their assertion and claim of
substantial rights under the Sugar Act of 1952.
4. ID.; ID.; PETITION TO SUE AS PAUPER LITIGANT DENIED; REMEDY. Since
petitioners' supporting evidence of indigence is adequate, showing in their favor, as plaintiffs
in the suit before respondent Judge, the right not to be denied free access to the courts by
reason of poverty, and they were excluded from the use and enjoyment thereof, mandamus
lies to enforce it. Appeal was unavailing because they were not even accorded the status of
litigants.
DECISION
BENGZON, J.P., J p:
All over the world, Constitutions share one purpose: to protect and enhance the people's
interest, as a nation collectively and as persons individually. The Philippine Constitution is no
exception. Interpretation of its provisions, therefore, should be done with a view to realizing
this fundamental objective. Among the provisions in our Constitution is one both timely and
far-reaching, as it affects the people at large and relates to social justice problems of the day.
It is Subsec. 21, Sec. 1 of Art. III: "Free access to the courts shall not be denied to any person
by reason of poverty." It is the one involved in this case. cda
A suit was filed in the Court of First Instance of Negros Oriental on February 21, 1963 by ten
persons for their own behalf and that of 9,000 other farm laborers working off and on in sugar
cane plantations at the Bais milling district, Negros Oriental, against Compaia General de
Tabacos de Filipinas, Central Azucarera de Bais, Compaia Celulosa de Filipinas, Ramon Barata,
Aurelio Montinola, Sr., and Miguel Franco. Plaintiffs sought to recover their alleged
participations or shares amounting to the aggregate sum of P14,031,836.74, in the sugar,
molasses, bagasse and other derivatives based on the provisions of Republic Act 809 (The
Sugar Act of 1952), particularly Sections 1 and 9 thereof:
"SECTION 1. In the absence of written milling agreements between the majority of
planters and the millers of sugar-cane in any milling district in the Philippines, the unrefined
sugar produced in that district from the milling by any sugar central of the sugar-cane of any
sugar-cane planter or plantation owner, as well as all by-products and derivatives thereof, shall
be divided between them as follows:
"Sixty per centum for the planter, and forty per centum for the central in any milling district
the maximum actual production of which is not more than four hundred thousand piculs:
Provided, That the provisions of this section shall not apply to sugar centrals with an actual
production of less than one hundred fifty thousand piculs;
"Sixty-two and one-half per centum for the planter, and thirty- seven and one-half per centum
for the central in any milling district the maximum actual production of which exceeds four
hundred thousand piculs but does not exceed six hundred thousand piculs;
"Sixty-five per centum for the planter, and thirty-five per centum for the central in any milling
district the maximum actual production of which exceeds six hundred thousand piculs but does
not exceed nine hundred thousand piculs;
106
"Sixty-seven and one-half per centum for the planter, and thirty- two and one-half per centum
for the central in any milling district the maximum actual production of which exceeds nine
hundred thousand piculs but does not exceed one million two hundred thousand piculs; cdll
"Seventy per centum for the planter, and thirty per centum for the central in any milling district
the maximum actual production of which exceeds one million two hundred thousand piculs.
"By actual production is meant the total production of the mill for the crop year immediately
preceding."
xxx xxx xxx
"SECTION 9. In addition to the benefits granted by the Minimum Wage Law, the
proceeds of any increase in the participation granted the planters under this Act and above
their present share shall be divided between the planter and his laborers in the plantation in
the following proportion:
"Sixty per centum of the increased participation for the laborers and forty per centum for the
planters. The distribution of the share corresponding to the laborers shall be made under the
supervision of the Department of Labor.
"The benefits granted to laborers in sugar plantations under this Act and in the Minimum Wage
Law shall not in any way be diminished by such labor contracts known as 'by the piece,' 'by the
volume,' 'by the area,' or by any other system of 'pakyaw,' the Secretary of Labor being hereby
authorized to issue the necessary orders for the enforcement of this provision."
Furthermore, plaintiffs asked thereunder as well as by separate motion, that the
aforementioned court authorize them to sue as pauper litigants, under Sec. 22, Rule 3 of the
Rules of Court:
"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 favorably to the pauper, unless the court otherwise provides."
llcd
invoking Sec. 1, subsec. (21) of Art. III of the Constitution of the Philippines. They alleged that
they had no means to pay the docket fee of P14,500.00, being laborers dependent solely on
their daily wages for livelihood and possessed of no properties. And in support of the foregoing,
the ten named plaintiffs submitted certificates of the municipal treasurers of their places of
residence stating that they have no real property declared in their names in said municipalities.
Acting on the petition to litigate in forma pauperis, the Court of First Instance issued an order
on May 27, 1963 denying the same upon the ground that the plaintiffs have regular
employment and sources of income and, thus, cannot be classified as poor or paupers.
Plaintiffs sought reconsideration of said order but reconsideration was denied in an order
dated June 11, 1963. Assailing said two CFI orders and asserting their alleged right not to be
denied free access to the courts by reason of poverty, plaintiffs in said case filed herein, on
August 1, 1963, the present special civil action or certiorari and mandamus. Petition to litigate
as pauper in the instant case before Us was also filed. And on August 16, 1963, We allowed
petitioners herein to litigate in this Court as paupers and required respondent to answer.
Respondent's answer was filed on November 2, 1963. After hearing on February 10, 1964 this
case was submitted for decision.
The sole issue herein is whether petitioners were deprived, by the orders in question, of free
access to the courts by reason of poverty. In denying petitioners' motion to litigate as paupers,
respondent Judge adopted the definition of "pauper" in Black's Law Dictionary (at p. 1284) as
"a person so poor that he must be supported at public expense". And, as afore-stated, he ruled
that petitioners are not that poor. LLjur
Such interpretation, to our mind, does not fit with the purpose of the rules on suits in forma
pauperis and the provision of the Constitution, in the Bill of Rights, that: "Free access to the
courts shall not be denied to any person by reason of poverty." As applied to statutes or
provisions on the right to sue in forma pauperis, the term has a broader meaning. It has thus
been recognized that: "An applicant for leave to sue in forma pauperis need not be a pauper;
the fact that he is able-bodied and may earn the necessary money is no answer to his
statement that he has not sufficient means to prosecute the action or to secure the costs" (14
Am. Jur. 31). It suffices that plaintiff is indigent (Ibid.), tho not a public charge. And the
difference between "paupers" and "indigent" persons is that the latter are "persons who have
no property or source of income sufficient for their support aside from their own labor, though
self-supporting when able to work and in employment" (Black's Law Dictionary, p. 913,
"Indigent", citing People vs. Schoharie County, 121 NY 345, 24 NE 830). It is therefore in this
sense of being indigent that "pauper" is taken when referring to suits in forma pauperis. Black's
Law Dictionary in fact defines pauper, thus: "A person so poor that he must be supported at
public expense; also a suitor who, on account of poverty, is allowed to sue or defend without
being chargeable with costs" (p. 1284, emphasis supplied).
It is further argued that the docket fee of P14,500 could very well be shouldered by petitioners
since there are around 9,000 of them. It must be remembered, however, that the action in
107
question was filed by way of a class suit. And the Rules of Court allowing such procedure state Concepcion, C .J ., Reyes, J .B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and Castro, JJ .,
under Sec. 12, Rule 3: concur.

"SECTION 12. Class suit. When the subject matter of the controversy is one of
common or general interest to many persons, and the parties are so numerous that it is
impracticable to bring them all before the court, one or more may sue or defend for the benefit
of all. But in such case the court shall make sure that the parties actually before it are
sufficiently numerous and representative so that all interests concerned are fully protected.
Any party in interest shall have a right to intervene in protection of his individual interest."
cdtai

So that in the suit before respondent Judge the ten named petitioners herein are the ones
suing, albeit for the benefit of all the others. It follows that the payment of docket fee would
be directly charged upon them, not upon the unnamed "9,000 other laborers." And even if the
9,000 other laborers should later bear the payment of said docket fee of P14,500, the same
would be spread among them at about P1.60 each. Said cost of pressing their respective
average demand of P1.60 each is, to Our mind, a substantial imposition on a seasonal farm
laborer earning barely subsistent wages. And as pointed out, this is only the initial fee;
subsequent fees and charges would have to be paid. The philosophy underlying the
constitutional mandate of free access to the courts notwithstanding poverty, therefore, calls
for exemption of herein petitioners from payment of the aforesaid legal fees in their assertion
and claim of substantial rights under the Sugar Act of 1952.

Returning to the purpose of all Constitutions, as mentioned earlier, We find this course the
most sensible, logical and practical construction demanded by the free access clause of the
Constitution. For a contrary interpretation could not make said provision the living reality that
it is designed to be.

As regards the fact that the supporting certifications of indigence refer only to the ten named
plaintiffs, suffice it to reiterate that this involves a class suit, where it is not practicable to bring
all the other 9,000 laborers before the court. This Court finds the supporting evidence of
indigence adequate, showing in petitioners' favor, as plaintiffs in the suit before respondent
Judge, the right not to be denied free access to the courts by reason of poverty. Since they
were excluded from the use and enjoyment of said right, mandamus lies to enforce it. Appeal
was unavailing, since they were not even accorded the status of litigants, for non-payment of
docket fee; and perfecting an appeal would have presented the same question of exemption
from legal fees, appeal bond and similar requisites.

Wherefore, petitioners are declared entitled to litigate as paupers in their class suit before
respondent Judge and the latter is hereby ordered to grant their petition to litigate in forma
pauperis. No costs. So ordered. cdasia
108
[G.R. No. L-49247. March 13, 1979.]
REPUBLIC OF THE PHILIPPINES, petitioner, vs. HON. WENCESLAO M. POLO, Presiding Judge,
Court of First Instance of Samar, Branch V (Calbayog City); BASILIO ROSALES, TRINIDAD D.
ENRIQUEZ, JOSE ROO, CESAR DEAN, MARIA S. QUESADA, AURORA SOLIMAN, JAIME ROCO
and HERMINIGILDO ROSALES, respondents.
Office of the Solicitor General for petitioner.
Noblejas, Sorreta & Associates for respondents.
SYNOPSIS
In a land registration case, the Solicitor General requested the city fiscal to represent him in
the trial court, but the Solicitor General made his own separate appearance as counsel for the
State. In that "notice of appearance", he expressly requested that he should be served in
Manila with "all notices of hearings, orders, resolutions, decisions and other processes" and
indicated therein that "only notices of orders, resolutions and decisions served on his will bind"
the Government. Notice of the decision in said case was received by the Solicitor on May 25,
1978, and by the city fiscal on May 11, 1978. The issue is whether the thirty-day period to
perfect appeal should be reckoned from the service of the decision upon the fiscal or from the
time it was served upon the Solicitor General.
The Supreme Court held that the thirty-day period to appeal should be counted from the date
when the Solicitor General received a copy of the decision because the service of the decision
upon the city fiscal did not operate as a service upon the Solicitor General.
SYLLABUS
1. PLEADINGS; SERVICE; SERVICE OF DECISION ON THE CITY FISCAL NOT A SERVICE
UPON THE SOLICITOR GENERAL. In a land registration case where it appears that although
the Solicitor General requested the city fiscal to represent him in the trial court, he,
nevertheless made his own separate appearance as counsel for the State and indicated in his
notice of appearance that "only notices of orders, resolutions and decisions served on him will
bind" the Government, it was held that the thirty-day period to perfect appeal shall be counted
from the date when the Solicitor General received a copy of the decision because the service
of the decision upon the city fiscal did not operate as a service upon the Solicitor General. It is
obvious that, strictly speaking, the city fiscal did not directly represent the Government. He
was merely a surrogate of the Solicitor General whose office, "as the law office of the
Government of the Republic of the Philippines", is the entity that is empowered to "represent
the Government in all registration and related proceedings" (Sec. 1(e) Presidential Decree No.
478).
2. APPEAL; PETITION FOR REVIEW TREATED AS A MANDAMUS ACTION. A petition
for review to compel the trial court to give due course to the Government's appeal may be
treated as mandamus action. (Sec. 15, Rule 41, Rules of Court.) Such a petition could have been
filed in the Court of Appeals in aid of its appellate jurisdiction (Sec. 30, Judiciary Law). But it
may also properly be filed in the Supreme Court which has concurrent jurisdiction with the
Court of Appeals to issue the writ of mandamus.
3. ID.; TARDINESS OF SERVICE OF MOTION FOR RECONSIDERATION. Respondents
contend that the Solicitor General's motion for reconsideration, which was filed on June 23,
1978 or on 29th day, did not interrupt the period of appeal because they were personally
served with a copy of the motion on June 27, 1978 or three days after the expiration of the
period. They invoke the ruling that a motion for reconsideration, which was not served upon
the adverse party, could not be entertained and it did not interrupt the period for appeal. Held,
The instant case is not a case where there was no service of all of the motion for
reconsideration. It is a case where the service of motion was late. But the tardiness is more
apparent than real because if the Solicitor General's office, on June 23, 1978 had opted to send
a copy of the motion for registered mail, that copy would have reached them most likely after
June 27, 1978, when they were personally served with a copy thereof.
4. RULES OF COURT; SUSPENSION OF RULES. In the interest of justice, the Supreme
Court may except a particular case from the operation of its own rules.
BARREDO, J., concurring:
1. PLEADINGS; SERVICE OF PLEADING UPON COUNSEL OF RECORDS. Service of
pleadings and processes is legally effective only when it is made to the counsel of record, and
the mere fact that an attorney appears at the trial or at any stage of the proceedings in
collaboration with or in representation of the former does not make the latter a counsel of
record.
2. ID.; SERVICES OF MOTION FOR NEW TRIAL. Unlike in the making of an appeal
under Section 3 of Rule 41 in which it is required to also serve upon the adverse party the
notice of appeal, the appeal bond and the record on appeal within the period that the said
notice, bond and record should be filed with the court, there is no such requirement of service
of the motion for new trial within the period for appeal under Rule 37. Neither is there such a
requirement under Rule 38 relative to the petition for relief. But, of course, it is indispensable
that the adverse party be duly notified of the hearing of the motion for new trial. Reasonably
construed, Section 6 of Rule 15 does not imperatively mandate that if the notice of hearing is
not served within the period specified in Section 4 of the same rule (at least 3 days before the
hearing) the court must deny the motion. In any case, it is within the discretion of the court as
109
the interests of justice may require under the obtaining circumstances of the case to order the
corresponding service before hearing and acting on the motion.
DECISION
AQUINO, J p:
This case is about the timeliness of the Governments appeal in a land registration case. The
Court of First Instance of Samar in a decision dated May 10, 1978 in LRC Case No. N-86-CC
granted the application of Basilio Rosales, Herminigildo Rosales, Trinidad D. Enriquez, Jose
Roo, Maria S. Quesada, Cesar Dean, Aurora Soliman and Jaime Roco for the registration of
thirteen lots (including a small island), with a total area of about seven hectares, located at
Barangay Malahug, Tinambacan, Calbayog City.
A copy of that decision was received in the Solicitor General's Office on May 25, 1978. On June
23, 1978 or twenty-nine days after service of the said decision, the Solicitor General filed a
motion for reconsideration. A copy of the order denying that motion was received in the
Solicitor General's Office on August 18, 1978. On that same date, he filed a notice of appeal
and a motion for an extension of thirty days from August 19 (last day of the thirty-day
reglementary period) within which to file the record on appeal. The motion for extension was
not acted upon. The record on appeal was filed on September 15, 1978 or within the period
sought in the motion for extension. cdll
The lower court disapproved the record on appeal and did not give due course to the
Government's appeal because the record on appeal was allegedly filed out of time. The lower
court reasoned out that the thirty-day period should be computed, not from May 25, 1978,
when the Solicitor General was served with a copy of the decision, but from May 11, 1978,
when the city fiscal of Calbayog City, who represented the Solicitor General at the hearings,
was served with that decision.
Disagreeing with that order, the Solicitor General, in behalf of the Republic of the Philippines,
filed this petition for review to compel the lower court to give due course to the appeal. The
case may be treated as a mandamus action to require the trial court to allow to Government's
appeal (Sec. 15, Rule 41, Rules of Court).
The issue is whether the thirty-day period should he reckoned from the service of the decision
upon the fiscal or from the time it was served upon the Solicitor General.
We hold that the thirty-day period should be counted from the date when the Solicitor General
received a copy of the decision because the service of the decision upon the city fiscal did not
operate as a service upon the Solicitor General.
It should be clarified that, although the Solicitor General requested the city fiscal to represent
him in the trial court, he, nevertheless, made his own separate appearance as counsel for the
State. In that "notice of appearance", he expressly requested that he should be served in
Manila with "all notices of hearings, orders, resolutions, decisions and other processes" and
that such service is distinct from the service of notices and other papers on the city fiscal.
The Solicitor General also indicated in his "notice of appearance" that he "retains supervision
and control of the representation in this case and has to approve withdrawal of the case, non-
appeal or other actions which appear to compromise the interests of the Government" and
that "only notices of orders, resolutions and decisions served on him will bind" the
Government.
The Solicitor General in requesting the city fiscal to represent him at the hearings called the
attention of that official to Circular No. 41 of the Secretary of Justice dated November 28, 1973
wherein provincial and city fiscals; were advised that, in cases where they represent the
Solicitor General, "service on the Solicitor General shall be the basis" " for the purpose of
finality of the decision".
In this case, it is obvious that, strictly speaking, the city fiscal did not directly represent the
Government. He was merely a surrogate of the Solicitor General whose office, "as the law
office of the Government of the Republic of the Philippines", is the entity that is empowered
to "represent the Government in all land registration and related proceedings" (Sec. 1[e],
Presidential Decree No. 478).
The trial court in disallowing the Government's appeal relied on the ruling that the service of
the decision in a land registration case on the fiscal is necessarily a service on the Solicitor
General (Republic vs. Reyes, L-35545, June 18, 1976, 71 SCRA 4Z6, 436-437).
That ruling is not applicable to this case because in the Reyes case the fiscal as representative
of the Solicitor General, was authorized not only to attend hearings but also to file pleadings
for the Government. In the instant case, the city fiscal's authority was confined to attending
the hearings. The Office of the Solicitor General was the one that filed the pleadings and
motions in the lower court. Cdpr
The Solicitor General in his petition herein observed that it was the ruling in the Reyes case
that prompted his office "to revise completely the letter of authority to fiscals representing"
him by making it clear that it is the service of the decision on the Solicitor General that would
bind the Government.
The respondents contend that the petition for review is unwarranted because the Solicitor
General stated in his notice of appeal that he was appealing to the Court of Appeals. They
110
argue that the petition is not a special civil action of certiorari since no jurisdictional errors
were committed by the trial court and, therefore, this Court should not entertain the petition.

As already stated, the petition should be regarded as an action for mandamus. That petition
could have been filed in the Court of Appeals in aid of its appellate jurisdiction (Sec. 30,
Judiciary Law). But it was also properly filed in this Court which has concurrent jurisdiction with
the Court of Appeals to issue the writ of mandamus. (Breslin vs. Luzon Stevedoring Co., 84 Phil.
618, 625; Salva vs. Palacio, 90 Phil. 731, 734).

The private respondents further contend that the Solicitor General's motion for
reconsideration, which was filed on June 23, 1978 or on the twenty-ninth day, did not interrupt
the period for appeal because they were personally served with a copy of the motion on June
27, 1978 or three days after the expiration of the period. They invoke the ruling that a motion
for reconsideration, which was not served upon the adverse party, could not be entertained
and did not interrupt the period for appeal (Cabatit vs. Court of Agrarian Relations, 120 Phil.
56; National Development Company vs. CIR and National Textile Workers Union, 116 Phil.
1085).

The instant case is not a case where there was no service at all of the motion for
reconsideration, It is a case where the service of the motion was late. But the tardiness is more
apparent than real because if the Solicitor General's office, on June 23, 1978, had opted to
send a copy of that motion to the private respondents by registered mail, that copy would
have reached them most likely after June 27, 1978, when they were personally served with a
copy thereof. (See ruling that in the interest of justice, this Court may except a particular case
from the operation of its own rules. U.S. vs. Breitling, 15 L. ed. 900, 902; C. Viuda de Ordoveza
vs. Raymundo, 63 Phil. 275, 278; Republic vs. Court of Appeals, L-31303-04, May 31, 1978).

WHEREFORE, we hold that the appeal was perfected seasonably. The trial court's order
disallowing petitioner's appeal is reversed and set aside. It is directed to pass upon the record
on appeal, and, if found to be sufficient, to give due course to petitioner's appeal. No costs.

SO ORDERED.

Antonio, Concepcion Jr., Santos and Abad Santos and Fernando, JJ., concur.

111
[G.R. No. L-61997. November 15, 1982.]
REPUBLIC OF THE PHILIPPINES & TRADERS ROYAL BANK, petitioners, vs. ELFREN PARTISALA
and HON. MIDPANTAO L. ADIL, in his capacity as Presiding Judge of the 2nd Branch of the Court
of First Instance of Iloilo, respondents.
The Solicitor General for petitioners.
Antonio C. Singson private prosecutor and counsel for Traders Royal Bank.
Enrique Arguelles and Eugenio Original for respondents.
SYNOPSIS
Charged by petitioner bank with estafa, private respondent pleaded guilty and was forth with
"sentenced to suffer an indeterminate imprisonment of from Four (4) Years, Two (2) Months
and One (1) Day, minimum to Six (6)Years of prision correctional, maximum, together with all
the accessory penalties provided by law and to pay the cost." Private respondent promptly
filed an application for probation which the prosecution opposed. After a series of pleadings,
and before the trial judge could act on the application, the Acting Provincial Fiscal intervened
by filing a "Motion to Correct Error in Computation of Penalty and to Hold in Abeyance Petition
for Probation," wherein he advanced the proposition that private respondent should have
been sentenced to a penalty higher than six years which would make him ineligible for
probation. The trial judge denied the motion for being filed out of time, since the motion to
correct was brought after the accused's conviction had become final by reason of the filing of
the application for probation, and that the motion, if granted, will place the accused in double
jeopardy. When respondent judge granted the application for probation, this petition was filed
with the Court of Appeals which certified the same to the Supreme Court, the issues raised
being purely legal.
The Supreme Court held that the sentence imposed by respondent judge, whether correct or
not, is valid because he had jurisdiction to impose it; that since the motion to correct error in
computation of penalty was filed after the accused's conviction had become final, the sentence
was already beyond the trial court's reach, including the Supreme Court; and that only the
Solicitor General can bring or defend actions on behalf of the Republic of the Philippines,
henceforth, actions filed in the name of the Republic if not initiated by the Solicitor General
will be summarily dismissed.
Petition dismissed.
SYLLABUS
1. CONSTITUTIONAL LAW; JUDICIARY; SUPREME COURT; JURISDICTION OVER
QUESTIONS OF LAW IS EXCLUSIVE; PETITIONS ERRONEOUSLY FILED WITH THE COURT OF
APPEALS SHOULD BE CERTIFIED TO THE SUPREME COURT. True the Court of Appeals has
"original jurisdiction to issue writs of mandamus, prohibition, injunction, certiorari, habeas
corpus, and all other auxiliary writs and process in aid of its appellate jurisdiction" (Sec. 30,
Judiciary Act, as amended) but true also is that the Supreme Court has exclusive jurisdiction
on final judgments and decrees of inferior courts in "cases in which only errors or questions of
law are involved." (Sec. 17, idem.) In the instant case, the issues raised in the petition for
certiorari were purely legal, hence, the Court of Appeals where said petition was erroneously
filed, had to certify it to the Supreme Court.
2. CRIMINAL LAW; PROBATION; PROBATION LAW (P.D. NO. 968); APPLICATION FOR
PROBATION; FILING THEREOF CONSTITUTES WAIVER OF RIGHT TO APPEAL AND RENDERS
CONVICTION FINAL; CASE AT BAR. Under P.D. No. 968, the Probation Law, a convict who
files a petition for probation automatically waives his right to appeal and therefore his
conviction becomes final. Hence, a motion (to correct) brought after an application for
probation has been filed is filed out of time. Moreover, the motion, if granted, will place the
accused in double jeopardy.
3. REMEDIAL LAW; ACTIONS; PARTIES; REPUBLIC OF THE PHILIPPINES CAN BE
REPRESENTED ONLY BY THE SOLICITOR GENERAL AS A RULE; NON-OBSERVANCE THEREOF
WARRANTS SUMMARY DISMISSAL OF ACTIONS. Only the Solicitor General can bring or
defend actions on behalf of the Republic of the Philippines. Henceforth, actions filed in the
name of the Republic of the Philippines will be summarily dismissed.
DECISION
ABAD SANTOS, J p:
This is a special civil action for certiorari. Off-hand it can be said that the petition is frivolous.
It was also filed in the wrong court the Court of Appeals. True the Court of Appeals has
"original jurisdiction to issue writs of mandamus, prohibition, injunction, certiorari, habeas
corpus, and all other auxiliary writs and process in aid of its appellate jurisdiction" (Sec. 30,
Judiciary Act, as amended) but true also is that the Supreme Court has exclusive jurisdiction
on final judgments and decrees of inferior courts in "cases in which only errors or questions of
law are involved." (Sec. 17, idem.) This is such a case so that the Court of Appeals had to certify
it to Us.
In Criminal Case No. 10997 of the Court of First Instance of Iloilo, Elfren Partisala was accused
of estafa upon complaint of his employer The Traders Royal Bank. He pleaded guilty and was
forthwith "sentenced to suffer an indeterminate imprisonment of from Four (4) Years, two (2)
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Months and One (1) Day, minimum, to Six (6) Years of prision correccional, maximum, together
with all the accessory penalties provided for by law and to pay the costs." He was also ordered
to reimburse to the bank the amount malversed. Immediately after he was sentence, Partisala
filed an application for probation. Three weeks later, an assistant provincial fiscal and the
private prosecutor opposed the application for probation. They argued that Partisala can best
be rehabilitated in prison and if he is set free he might commit other crimes. There followed a
reply to the opposition; a supplement to the opposition; a memorandum to support the
application; and a rejoinder to the reply. So far, so good. LLphil
But before the trial judge could act on the application which appears to have attracted
attention because the Sangguniang Bayan of Calinog, Iloilo, in special session passed a
resolution wherein it "RESOLVED to manifest, as this Body do hereby manifest, the alarm and
vehement sentiment of the people of this Municipality over the reprehensible conduct of
Elfren Partisala for his abstraction and misappropriation of the peoples' savings and deposits
and other funds of the Calinog Branch of the Traders Royal Bank," the Acting Provincial Fiscal
no less intervened. He sought to educate the trial judge by filing a "MOTION TO CORRECT
ERROR IN COMPUTATION OF PENALTY AND TO HOLD IN ABEYANCE PETITION FOR
PROBATION." He advanced the proposition that Partisala should have been sentenced to a
penalty higher than six years which would then make him ineligible for probation. (Sec. 9, par.
a, Probation Law, as amended.) But even the learned fiscal was not absolutely certain as to the
correct penalty. Firstly, he said the penalty "is between 6 years, 8 months, 21 days to 8 years."
But alternatively he said that the imposable penalty can also "be in the medium period of
prision mayor, which has a range of from 8 years 1 day to 10 years." He asked that the
sentenced imposed on Partisala be "corrected."
Predictably, the trial judge denied the motion. He gave two reasons for the denial, namely:
"1. The motion is in the nature of a motion for reconsideration. As such it should have
been filed before the sentence of the accused became final. It is elementary that a motion for
reconsideration should be based on the same grounds as those for a new trial for the two
remedies are the same. Under Rule 121, Section 1, a motion for new trial should be filed before
the finality of a conviction.
"Under P.D. No. 968, the Probation Law, a convict who files a petition for probation
automatically waives his right to appeal and therefore his conviction becomes final. Therefore,
the instant motion is filed out of time.
"2. The motion, if granted will place the accused in double jeopardy. (People vs. Taruc,
G.R. No. L-8229, Nov. 28, 1955; People vs. Ang Cho Kio, L-6687-6688)."
A motion for reconsideration was filed but denied. In the meantime, the trial judge granted
Partisala's application for probation.
The instant petition prays that the orders of the trial judge denying the motion to correct,
denying the motion to reconsider the denial, and granting the application for probation be
annulled; that the correct penalty be imposed on Partisala; and that his application for
probation be denied.
We do not have to decide whether or not the penalty which the trial judge imposed on
Partisala is correct. For correct or not, it is a valid sentence because the trial judge had
jurisdiction to impose it. So for the reasons given by him when he denied the motion to correct,
the sentence was already beyond his reach, including this Court. cdll
It is to be noted the Republic of the Philippines is one of the petitioners herein. The one who
signed the petition for the Republic is a mere second assistant provincial fiscal, albeit he is the
Officer-in-Charge of the Iloilo Provincial Fiscal's Office. We make it known that only the
Solicitor General can bring or defend actions on behalf of the Republic of the Philippines.
Henceforth actions filed in the name of the Republic of the Philippines if not initiated by the
Solicitor General will be summarily dismissed.
WHEREFORE, the petition is dismissed for lack of merit. The preliminary injunction which was
issued by the Court of Appeals is hereby dissolved. No costs.
SO ORDERED.
Makasiar, Concepcion, Jr., Guerrero, Escolin, Relova and Gutierrez, Jr., JJ., concur.
Fernando, C.J., De Castro, Melencio-Herrera, Plana and Vasquez, JJ., concur in the result.
Teehankee, J., took no part.
Aquino, J., the People of the Philippines not the Republic, should be the petitioner.
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