PERSONAL ACTIONS AND REAL ACTIONS:

FAR EAST BANK AND TRUST COMPANY (FEBTC) and/or BANK OF THE PHILIPPINE
ISLANDS vs. SPOUSES ROMULO PLAZA and WILMA PLAZA

FACTS:

Charlie Ang obtained from petitioners a loan of P2,158,000.00 using as collateral a piece of land
owned by respondent-spouses; hence the mortgage to petitioners.When Ang failed to pay the
loans upon maturity, petitioners started proceedings to foreclose the mortgage.
Respondent-spouses offered to pay the mortgage indebtedness of P2,158,000.00. Petitioners
accepted the check only as partial payment without prejudice to the remaining balance of the
loans. Respondents now insist that they have already paid the loans in full and that petitioners
should release the mortgage in view of the payment. However, the mortgage has not been
Released.

Respondents filed a civil action against petitioner banks and Charlie Ang for release of the real
estate mortgage and damages with prayer for temporary restraining order and issuance of writ
of injunction. On the other hand, petitioners alleged that the action to enjoin foreclosure of
mortgage was a real action and there was no showing that the docket fees were paid based on
the assessed or estimated value of the real property involved.

Both the Regional Trial Court of Cebu and the Court of Appeals denied the petition. Hence,
Petitioners filed this petition for review.

Petitioners maintain that the civil action filed by respondents for the release of the mortgage is a
real action, not a personal action of specific performance because it involves title to real
property or any interest therein and the ultimate objective of the civil action involves recovery of
ownership of the real property. Since it is a real action, petitioners assert that the trial court did
not acquire jurisdiction over the case due to non-payment of the prescribed docket fees.

Respondents contend on the other hand that the civil case is a personal one as it involves a
cancellation of real estate mortgage. Respondents primary action is to compel acceptance of
their payment of the mortgage debt and not necessarily to enjoin foreclosure. Since title to
property is not involved, it is a personal action.

ISSUE:

Whether or not the action filed by the respondent-spouses is a personal action.

RULING:

The action filed by respondent-spouses before the RTC is a personal action. An action to
compel the mortgagee to accept payment and for the consequent cancellation of a real estate
mortgage is a personal action if the mortgagee has not foreclosed the mortgage and the
mortgagor is in possession of the premises since neither the mortgagors title to nor possession
of the property is in question. Accordingly, validity of the real estate mortgage is not an issue in
this case for there is no foreclosure yet of the mortgage. Hence, there is no title to the land to be
affected by the action.

WHEREFORE, there being no reversible error committed by the Court of Appeals, the petition is
DENIED.
EFFECT OF DEATH OF PARTY LITIGANT:

MARIA LUISA CARANDANG vs. HEIRS OF QUIRINO A. DE GUZMAN

FACTS:

Quirino de Guzman and the Spouses Carandang are stockholders as well as corporate officers
of Mabuhay Broadcasting System (MBS for brevity), with equities at fifty four percent (54%) and
forty six percent (46%) respectively. Thereafter, MBS increased its capital stock, so the spouses
Carandang yet again subscribed to the increase. De Guzman claims that, part of the payment
for these subscriptions were paid by him so he sent a demand letter to the spouses Carandang
for the payment of P336,375.

The spouses Carandang refused to pay the amount, contending that a pre-incorporation
agreement was executed between Arcadio Carandang and de Guzman, whereby the latter
promised to pay for the stock subscriptions of the former without cost, in consideration for
Arcadio Carandangs technical expertise, his newly purchased equipment, and his skill in
repairing and upgrading radio/communication equipment therefore, there is no indebtedness on
their part.

de Guzman filed his complaint, seeking to recover the P336,375 together with damages. The
RTC ruled and thereby affirmed by the CA that herein petitioners are jointly and severally liable
for their loan to de Guzman.

Hence, this Petition for Review.

ISSUE:

Whether or not the RTC Decision is void for failing to comply with Section 16, Rule 3 of the
Rules of Court.

RULING:

The Spouses Carandang posits that 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 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 such as in the present case.

In the case at bar, not only do the heirs of de Guzman interpose no objection to the jurisdiction
of the court over their persons; they are actually claiming and embracing such jurisdiction. The
heirs of de Guzman had no objection to being bound by the Decision of the RTC. But the same
is not relevant in this case for it had already been submitted for decision before the RTC on 4
June 1998, several months before the passing away of de Guzman on 19 February 1999.
Hence, no further proceedings requiring the appearance of de Guzmans counsel were
conducted before the promulgation of the RTC Decision. Consequently, de Guzmans counsel
cannot be said to have no authority to appear in trial, as trial had already ceased upon the death
of de Guzman.

In sum, the RTC Decision is valid despite the failure to comply with Section 16, Rule 3 of the
Rules of Court, because of the express waiver of the heirs to the jurisdiction over their persons,
and because there had been, before the promulgation of the RTC Decision, no further
proceedings requiring the appearance of de Guzmans counsel.

Therefore, the case was DENIED for lack of merit.

EFFECT OF THE SIGNATURE OF COUNSEL IN A PLEADING:

NELLIE VDA. DE FORMOSO and her children, namely, MA. THERESA

FORMOSO-PESCADOR, ROGER FORMOSO, MARY JANE FORMOSO, BERNARD
FORMOSO and PRIMITIVO MALCABA vs. PHILIPPINE NATIONAL BANK, FRANCISCO
ARCE, ATTY. BENJAMIN BARBERO, and
ROBERTO NAVARRO
FACTS:

Nellie Panelo Vda. De Formoso (Nellie) and her children executed a special power of attorney in
favor of Primitivo Malcaba (Malcaba) authorizing him, among others, to secure all papers and
documents including the owners copies of the titles of real properties pertaining to the loan with
real estate mortgage originally secured by Nellie and her late husband, Benjamin S. Formoso,
from Philippine National Bank, Vigan Branch (PNB). The Formosos sold the subject mortgaged
real properties to Malcaba through a Deed of Absolute Sale. Thereafter, Malcaba and his lawyer
went to PNB to fully pay the loan obligation including interests in the amount of₱2,461,024.74.
PNB, however, allegedly refused to accept Malcabas tender of payment and to release the
mortgage or surrender the titles of the subject mortgaged real properties. Hence, the petitioners
filed a Complaint for Specific Performance against PNB before the Regional Trial Court of
Vigan, Ilocos Sur (RTC) praying, among others, that PNB be ordered to accept the amount of
₱2,461,024.74 as full settlement of the loan obligation of the Formosos.

RTC rendered a decision in favor of the petitioners. PNB filed a motion for reconsideration but it
was denied for failure to comply with Rule 15, Section 5 of the 1997 Rules of Civil Procedure.
PNB then filed a Notice of Appeal but it was dismissed for being filed out of time.

ISSUE:

Whether or not Rule 15, Section 5 of the 1997 Rules of Civil Procedure was complied with in
this case.

RULING:

The petition lacks merit. The verification and certification of non-forum shopping was signed by
only one (Mr. Primitivo Macalba) of the many petitioners. As decided in the case Loquias vs.
Office of the Ombudsman, substantial compliance will not suffice in the matter involving strict
observance of the Rules. Likewise, the certification of non-forum shopping requires personal
knowledge of the party who executed the same and that petitioners must show reasonable
cause for failure to personally sign the certification. Utter disregard of the Rules cannot just be
rationalized by harping on the policy of liberal construction.
The petitioners basically argue that they have substantially complied with the requirements
provided under the 1997 Rules of Civil Procedure on Verification and Certification of Non-Forum
Shopping and it should be liberally construed, since only questions of law are raised in a petition
for certiorari and no factual issues that require personal knowledge of the petitioners. On the
other hand, PNB counters that the mandatory rule on the certification against forum shopping
requires that all of the six (6) petitioners must sign, namely: Nellie Vda. De Formoso and her
children Ma. Theresa Formoso-Pescador, Roger Formoso, Mary JaneFormoso, and Bernard
Formoso, and Primitivo Malcaba. Therefore, the signature alone of Malcaba on the certification
is insufficient. PNB further argues that Malcaba was not even a party or signatory to the contract
of loan entered into by his co-petitioners. Neither was there evidence that Malcaba is a relative
or a co-owner of the subject properties. It likewise argues that, contrary to the stance of the
petitioners, the issue raised before the CA, as to whether or not the petitioners were entitled to
moral and exemplary damages as well as attorneys fees, is a factual one.

However, Certiorari is an extraordinary, prerogative remedy and is never issued as a matter of

right. Accordingly, the party who seeks to avail of it must strictly observe the rules laid down by
law. The failure of the petitioner to comply with any of the requirements provided under and
Section 1, Rule 65 of the 1997 Rules of Civil Procedure shall be sufficient ground for the
dismissal of the petition. Moreover, failure to comply with the requirements in Sections 4 and 5
of Rule 7 shall not be curable by mere amendment of the complaint or other initiatory pleading
but shall be cause for the dismissal of the case without prejudice, unless otherwise provided,
upon motion and after hearing.

The petition for certiorari filed with the CA stated the following names as petitioners: Nellie
Panelo Vda. De Formoso, Ma. Theresa Formoso-Pescador, Roger Formoso, Mary Jane
Formoso, Bernard Formoso, Benjamin Formoso, and Primitivo Malcaba. Admittedly, among the
seven (7) petitioners mentioned, only Malcaba signed the verification and certification of
non-forum shopping in the subject petition. There was no proof that Malcaba was authorized by
his co-petitioners to sign for them. There was no special power of attorney shown by the
Formosos authorizing Malcaba as their attorney-in-fact in filing a petition for review on certiorari.
Neither could the petitioners give at least a reasonable explanation as to why only he signed the
verification and certification of non-forum shopping.

From the petition itself, it appears that the petitioners counsel had a copy of the transcript of
stenographic notes which was in his cabinet all along and only discovered it when he was
disposing old and terminated cases. If he was only attentive to his records, he could have filed a
motion for reconsideration or a notice of appeal in behalf of the petitioners.

WHEREFORE, the petition is DENIED.

AMENDMENT:

ONG PENG vs. JOSE CUSTODIO

FACTS:

The present suit was instituted by Ong Peng against Jose Custodio to recover the sum of
P2,527.30, with interest, representing the value of goods and materials obtained by defendant
from plaintiff. The complaint was filed on April 15, 1958, and on April 30 defendant moved to
dismiss the complaint on the ground that plaintiff's cause of action had already prescribed.
Plaintiff answered defendant's motion and attached to his answer an amended complaint, which
set forth the promissory note supporting the claim.

On May 21, the court admitted the amended complaint on the ground that no objection thereto
had been filed, and on May 28, it denied the motion to dismiss. Copy of the order of the court
admitting the amended complaint was furnished attorney for the defendant by ordinary mail on
May 31, and copy of the order denying the motion to dismiss was sent by registered mail and
received by the defendant on June 16. On June 27, as the defendant had not filed an answer to
the amended complaint, plaintiff moved that the defendant be declared in default.

On June 28, the court granted the motion, declaring defendant in default defendant presented a
motion to set aside the order of default and to allow him to file his answer. The court denied the
motion to lift the order of default and entered judgment ordering defendant to pay plaintiff the
sum of P2,527.30.

The defendant filed a motion for reconsideration and objection to this motion was presented by
the plaintiff stating that he was present at the time that defendant Jose Custodio signed the
promissory note in the presence of Ong Peng and Wong Tap, another Chinese clerk. The court
denied the petition and after the denial of another motion for reconsideration, the present appeal
was presented.

Defendant-appellant argues that Custodio never came under the jurisdiction of the court for the
purposes of the amended complaint because the same was not served upon him with summons
and in accordance with Section 10, Rule 27 of the Rules of Court.

ISSUE AND RULING:

1. WHETHER OR NOT THE CONTENTION HAS MERIT.

In the case at bar, the amended complaint contained no new matter; it only sets forth the
promissory note upon which the cause of action is based. The defendant also had already
appeared when the amended complaint was served-defendant had, in fact, presented a motion
to dismiss.We rule that after the defendant has appeared by virtue of a summons, as in this
case, and presented a motion to dismiss, he may be served with the amended complaint,
without need of another summons, and in the same form and manner ordinary motions or
papers are served, thus: If he (defendant) had not yet appeared, a new summons must be
served upon him as regards the amended complaint, otherwise the court would have no power
to try the new causes of action alleged therein, unless be had lodged an answer thereto.

Simply sending a copy of the amended complaint to the defendant by registered mail is not
equivalent to service of summons in such case. However, if the defendant had already appeared
in response to the first summons, so that he was already in court when the amended complaint
was filed, then ordinary service of that pleading upon him, personally or by mail, would be
sufficient, and no new summons need be served . The defendant never claimed that he did not
receive the amended complaint in the ordinary course of mail and his only objection thereto was
the fact that no summons was served upon him with regard thereto.

The opposition to the motion to dismiss and the amended complaint were served attorney for
the defendant in May 12 by registered mail. Said counsel was also furnished copy of the court's
order admitting the amended complaint in May 31. Assuming that the defendant received the
copy of the amended complaint five days after May 12, or on May 17, and a copy of the order of
the court about June 6, the court's order declaring him in default on June 28, is justifiable, for
the reason that the time for filing an answer to the amended complaint commenced from the
date of service of such amended complaint.

Under Section 3, Rule 8 of the Rules of Court, the court is not obliged to immediately hold a
hearing on the motion to dismiss; it is granted the discretion to defer the hearing and
determination thereof until the trial if the ground alleged therein does not appear to be
indubitable.

On the other hand, the right of a plaintiff under Section 1 of Rule 17 to amend his pleading once
as a matter of course before a responsive pleading (which a motion to dismiss is not one) is
served, has been held to be one which the court should always grant, otherwise mandamus will
lie against it. If the defendant really had any valid defense, this should have been brought at the
first opportunity, that is, by the first motion to set aside the order of default. we find that the court
did not abuse its discretion in refusing to grant a reconsideration of the order of default and to
set aside the consequent judgment ordering the defendant to pay the sum demanded in the
complaint.

WHEREFORE, the appeal is hereby dismissed.

 PAN-ASIATIC TRAVEL CORP vs. COURT OF APPEALS

FACTS:

Destinations Travel Phil., Inc. filed a complaint against Pan-Asiatic Travel Corp. for the refund of
the price of alleged unutilized airplane tickets issued by the latter for passengers recruited by
the former, which refund allegedly totalled P48,742.33. PAN-ASIATIC, by way of special
appearance, filed a Motion to Dismiss for the sole purpose of objecting to the trial court's
jurisdiction over its person on the ground that it was not properly served with summons.

On January 4, 1982 the trial court rendered judgment by default against PAN-ASIATIC, which
received a copy of the decision on January 25, 1982. Thereafter, petitioner filed its Omnibus
Motion to Lift Order of Default and to Vacate Judgment by Default, alleging that the trial court's
decision was rendered without jurisdiction because petitioner was never served with summons
on the Second Amended Complaint, and and a Motion for Reconsideration when it got denied.

While the Motion for Reconsideration filed by the petitioner was pending, it subsequently filed its
notice of appeal, appeal bond and record on appeal, and at the same time withdrew its Motion
for Reconsideration which withdrawal was granted by the trial court.

DESTINATIONS filed a Motion for Execution which the trial court granted. Meanwhile, the
appeal of PAN-ASIATIC, was Dismissed on the ground that the Decision had become final and
executory and that the appeal was filed beyond the reglementary period. So PAN-ASIATIC filed
a petition for certiorari and mandamus before the Court of Appeals, alleging that the trial court
acted without jurisdiction in dismissing the appeal and in issuing the writ of execution. The
appellate tribunal dismissed the petition. Hence, this present action.

ISSUE and RULING:

1. WHETHER OR NOT THE TRIAL COURT HAD JURISDICTION OVER THE PERSON OF
PETITIONER WHEN IT RENDERED THE DECISION OF JANUARY 4, 1982.

If the defendant had appeared in the action, service of an amended complaint (which introduces
a new cause of action) in the same manner as any other pleading or motion is sufficient, even if
no new summons is served. This ruling was reiterated in the case of Ong Peng v. Custodio in
more categorical terms: If he (defendant) had not yet appeared, a new summons must be
served upon him as regards the amended complaint, otherwise the court would have no power
to try the new causes of action alleged therein, unless he had lodged an answer thereto.

Simply sending a copy of the amended complaint to the defendant by registered mail is not
equivalent to service of summons in such case. However, if the defendant had already appeared
in response to the first summons, so that he was already in court when the amended complaint
was filed, then ordinary service of that pleading upon him, personally or by mail, would be
sufficient, and no new summons need be served upon him.

In the instant case, summons on the first amended complaint was properly served on
PAN-ASIATIC. After which, the company filed several motions for extension of time all of which
motions were granted by the trial court. With the filing of these motions, PAN-ASIATIC had
effectively appeared in the case and voluntarily submitted itself to the jurisdiction of the court.

Hence, no new summons on the Second Amended Complaint was necessary, ordinary service
being sufficient. PAN-ASIATIC was properly served with a copy of the Second Amended
Complaint and that on June 9, 1981, it received a copy of the Order admitting said Second
Amended Complaint. Since it failed to serve and file its Answer within fifteen (15) days from
June 9, 1981, the trial court was correct in declaring the company in default, in holding trial ex
parte, and in eventually rendering judgment by default.

WHEREFORE, the petition is hereby DISMISSED.