"Island of Fear" Newsweek vs. IAC 1. Causative event 2. Sugarcane planters files libel case against Newsweek in CFI.

Newsweek files MTD. CFI denies MTD. 4. Newsweek files petition for certiorari in IAC to annul the order of CFI denying the MTD. IAC affirms order of denial of CFI. 5. Newsweek files a special civil action for certiorari, prohibition with preliminary injunction in SC. Statement of the issues On identifiability as element of libel On libel against a class On class suit On privileged communication On the remedy of special civil action to annul interlocutory order of MTD denial On the failure to state a cause of action Newsweek wins Causative event: 14 litigants (4 associations and 10 individuals) claim to represent 8,500. Incorporated associations of sugarcane planters in Negros Occidental claiming to have 8,500 members and several individual sugar planters, filed Civil Case in their own behalf and/or as a class suit in behalf of all sugarcane planters in the province of Negros Occidental, against petitioner and two of petitioners' non-resident correspondents/reporters Fred Bruning and Barry Came. The complaint alleged that petitioner and the other defendants committed libel against them by the

publication of the article "An Island of Fear" in the February 23, 1981 issue of petitioner's weekly news magazine Newsweek. The article supposedly portrayed the island province of Negros Occidental as a place dominated by big landowners or sugarcane planters who not only exploited the impoverished and underpaid sugarcane workers/laborers, but also brutalized and killed them with impunity. Class suit for libel: Complainants therein alleged that said article, taken as a whole, showed a deliberate and malicious use of falsehood, slanted presentation and/or misrepresentation of facts intended to put them (sugarcane planters) in bad light, expose them to public ridicule, discredit and humiliation here in the Philippines and abroad, and make them objects of hatred, contempt and hostility of their agricultural workers and of the public in general. They prayed that defendants be ordered to pay them PlM as actual and compensatory damages, and such amounts for moral, exemplary and corrective damages as the court may determine, plus expenses of litigation, attorney's fees and costs of suit. A photo copy of the article was attached to the complaint. Newsweek's MTD: (1) lack of cause of action (2) fails to state a cause of action The complaint made no allegation that anything contained in the article complained of regarding sugarcane planters referred specifically to any one of the private respondents; that libel can be committed only against individual reputation; and that in cases where libel is claimed to have been directed at a group, there is actionable defamation only if the libel can be said to reach beyond the mere collectivity to do damage to

a specific, individual group member's reputation. CFI's denial of MTD, as affirmed by IAC / Issues : (1) complaint on its face states a valid cause of action, and (2) whether the article is actionable or not is a matter of evidence. Identifiability as element of libel: It is essential in libel that the victim is identifiable. Where a group or class of persons, as in the case at bar, claim to have been defamed, for it is evident that the larger the collectivity, the more difficult it is for the individual member to prove that the defamatory remarks apply to him. When libel against group possible: the statement must be so sweeping or all-embracing as to apply to every individual in that group or class, or sufficiently specific so that each individual in the class or group can prove that the defamatory statement specifically pointed to him, so that he can bring the action separately, if need be. On class suit: We have here a case where each of the plaintiffs has a separate and distinct reputation in the community. They do not have a common or general interest in the subject matter of the controversy. On privileged communication: The disputed portion of the article which refers to plaintiff Sola and which was claimed to be libelous never singled out plaintiff Sola as a sugar planter. The news report merely stated that the victim had been arrested by members of a special police unit brought into the area by Pablo Sola, the mayor of Kabankalan. Hence, the report, referring as it does to an official act performed by an elective public official, is within the realm of privilege and

protected by the constitutional guarantees of free speech and press. On failure to state cause of action: The specific allegation in the complaint, to the effect that the article attributed to the sugarcane planters the deaths and brutalization of sugarcane workers, is not borne out by a perusal of the actual text. ----"Airport" MIAA vs. Rivera Village Lessee Homeowners Assoc., Inc.
1. Causative

event 2. Rivera Village files petition for mandamus and prohibition with prayer for issuance of a preliminary injunction in RTC Pasay. MIAA files Answer. RTC denies preliminary injunction and dismisses petition for lack of merit. 3. Rivera Village appeals to the CA. CA reverses the RTC and remands the case. 4. MIAA files petition for review on certiorari in SC. Statement of the issues On real parties-in-interest On class suit On representative suit On writ of mandamus On Executive Secretary as indispensable party On writ of preliminary injunction MIAA wins Table of authorities:

Contract of lease: between CAA (later MIAA) and lessees for 25 years, over 4-hectare lot in Pasay, from May 1965 to May 1990. EO 778 (May 1982): creating MIAA, transferring existing assets of the MIA to MIAA, and vesting the latter with the power to administer and operate the MIA. EO 903 (July 1983): specifically requires the approval of the President of the Philippines before any disposition by sale or any other mode may be made concerning the property transferred to MIAA. Conceptual Development Plan: use the land for airportrelated activities PD 1517 or Urban Land Reform Act, Proclamation No. 1967: identify parcels of urban land as part of the Urban Land Reform Zone, specify certain areas in Metro Manila, including Rivera Village, as areas for priority development or urban land reform zones, and prohibit the eviction of occupant families from such lands. PD 2016: special law specifically prohibiting the eviction of tenants from lands identified as areas for priority development. PD 1818: bars the issuance of a restraining order, preliminary injunction or preliminary mandatory injunction in any case, dispute or controversy involving infrastructure projects of the government or any public utility operated by the government. Sec. 5c, RA 7279 or Comprehensive and Continuing Urban Development and Housing Program: power of government to reserve areas, to exempt them from coverage of urban development program. Article 1670, Civil Code: implied renewal of lease upon acceptance of rental payments

Causative event: Civil Aeronautics Administration (CAA), later to become MIAA, manages MIA (later NAIA). It extended 25-year lease contract to employee-lessees over 4-hectare lot in Pasay, from 1965 to 1990. On 1995, MIAA stopped issuing accrued rental bills and refused to accept rental payments from the lessees, on the ground of the Conceptual Development Plan. Rivera Village's petition: segregate the lot from the plan. MIAA's Answer: complaint fails to state a cause of action because of: (1) the expiration of the lease contract, and (2) homeowners association's lack of personality to sue. it was only the board of directors of the association, as distinguished from the members thereof, which authorized respondent to act as its representative in the suit. RTC's Order of Dismissal: (1) PD 1818: prohibition on injunction (2) Failed to state a cause of action (as per MIAA Answer) (3) Reservation power of government under RA 7279 CA's rversal of RTC: (1) Construed as a class suit: the association is suing on behalf of its members. (2) Art. 1670, Civil Code: implied renewal. (3) Vested rights of lessees under PD 1517 and related laws. (4) RA 7279: If the government lot has not been utilized during the ten (10)-year period for the purpose for which it has been reserved prior to 1983, then said lot is encompassed by the law and is subject to distribution to the legitimate and qualified residents of the area after appropriate proceedings have been undertaken.

(5) PD 1818 is general law, while PD 2016 is special law. Issues: (1) WON association has legal personality to sue? (2) WON mandamus lies in this action? Real party in interest: A case is dismissible for lack of personality to sue upon proof that the plaintiff is not the real party-in-interest, hence grounded on failure to state a cause of action. Class suit: the petition does not allege the existence and prove the requisites of a class suit. Board of Optometry vs. Colet: must exercise utmost caution before allowing a class suit, which is the exception to the requirement of joinder of all indispensable parties. For while no difficulty may arise if the decision secured is favorable to the plaintiffs, a quandary would result if the decision were otherwise as those who were deemed impleaded by their selfappointed representatives would certainly claim denial of due process. Representative suit: (1) If a complaint is filed by one who claims to represent a party as plaintiff but who, in fact, is not authorized to do so, such complaint is not deemed filed and the court does not acquire jurisdiction over the complaint. (2) Defect can be cured: include beneficiaries in the title of the petition. Mandamus: no clear legal right since association has not yet complied with requirements of NHA to avail of rights under PD 1517 and related laws.

Mandamus is premature because there is still administrative remedy. Dismiss for failure to state cause of action. ES participation: while it is true that the ownership and administration of the airport and its surrounding land was assigned to MIAA subject to existing rights, which we may here understand to be the rights granted under PD 1517, EO 903 specifically requires the approval of the President of the Philippines before any disposition by sale or any other mode may be made concerning the property transferred to MIAA. ES is therefore an indispensable party. --"Sulpicio Lines" Re: Request of Heirs of Dona Paz
1. Causative

event 2. Plaintiffs filed a class suit for complaint for damages against Sulpicio Lines. 3. Plaintiffs filed a motion for leave to file case as pauper litigant. Executive Judge grants the motion to 7 out of 27 parties. 4. Plaintiffs sent letter to SC asking to set aside order, and seeking exemption from payment of filing fees to all 27 litigants. Sulpicio Lines files its Comment. 5. SC issues ruling. On class suit vs. permissive joinder of parties On "true class actions"

Examples of true class actions Examples of false class actions On pauper litigants Sulpicio wins

Causative event: "the worst sea disaster in history"-- the sinking of the vessel Doa Paz caused by its collision with another vessel. Class suit for damages: P1.5 billion in the name and on behalf of relatives or heirs of victims of the disaster. 27 representatives on behalf of approximately 4,000 persons, who are close relatives and legal heirs of passengers of Dona Paz. All 4,000 are residing in Samar, Leyte and Metro Manila. Pauper litigant: because they are poor, and the case is of national concern. Filing fees would be P6 million. Judge only granted to 7 out of 27. Sulpicio Lines' Comment: there were only 1,493 passengers on board the Doa Paz at the time of the tragedy, not 4,000. Class suit vs. permissive joinder of parties: Class suit: single right of action pertaining to numerous persons. e.g. Derivative suit: In such a suit, there is one, single right of action pertaining to numerous stockholders, not multiple rights belonging separately to several, distinct persons. Permissive: multiple rights of action belonging separately to different persons.

e.g. 1. Employees may join in a single action to obtain relief from employer. the plaintiff each have a material interest only in the damages properly due to him, not in those that may be payable to the others, although their rights thereto arise from the same transaction. In other words, there are as many rights of action as there are plaintiffs joined in the action. 2. The owner of a tract of land whose property has been illegally occupied by many persons claiming different portions thereof, may bring a single action against all illegal occupants thereof, in accordance with this rule of permissive joinder of parties. True class actions: involves the enforcement of a right which is joint, common, or secondary or derivative. ... (It) is a suit wherein, but for the class action device, the joinder of all interested parties would be essential. Involves principles of compulsory joinder, were it not for the numerosity of the class members. A judgment in a class suit, whether favorable or unfavorable to the class, is binding under res judicata principles upon all the members of the class, whether or not they were before the court. Examples of true class actions: 1. An action instituted by several hundred members of voluntary association against their officers to compel them wind up the association's affairs and render an accounting the money and property in their possession has been held be a class suit. a to of to

2. an action for libel flied in behalf of 8,500 sugarcane planters has been held not to be a class suit since 'each of the plaintiffs has a separate and distinct reputation in the community ... (and) do not have a common or general interest in the subject matter of the controversy. Examples of false class actions: 1. An action by shareholders of a banking corporation, for example, to enforce their right to subscribe to stock left unsubscribed by other stockholders who failed to exercise their own right to do so on or before a stipulated date, was held not to be a class suit since each one of them had determinable interest. each one had a right, if any, only to his respective portion of the stocks (or a definite number of shares) ... and (no one) of them had any right to, or any interest in, the stock to which another was entitled. Paper litigants: "national importance," does not under any existing law or rule justify excusing such parties from paying the requisite judicial fees or costs. --Filipinas Port Services (rep. by stockholders) vs. Board of Directors of Filipinas Port
1. Causative

event 2. Cruz (stockholder) files a derivative suit against Board of Directors, in SEC, for damages. BOD files Answer with Counterclaim. RA 8799: transferred jurisdiction to RTC.

RTC issues decision in favor of Cruz. 3. BOD appeals to the CA. CA reverses the RTC, in favor of BOD. BOD files Motion for Nunc Pro Tunc Order 4. Cruz et al. files petition for review on certiorari in SC. Statement of issues On powers of the BOD On creation of positions On fixing remuneration of officers On acquiescence of Cruz On mismanagement On accommodation theory On management prerogative On payment of salaries On nature of derivative suit On requisites of derivative suit On why this suit is a valid derivative suit

Causative event: Cruz, former president of the corporation, filed a derivative suit questioning the boards creation of the following positions with a monthly remuneration of P13,050.00 each, and the election thereto of certain members of the board. 1. creation of an executive committee in 1991 composed of seven (7) members of the board with compensation of P500.00 for each member per meeting, an office which, to Cruz, is not provided for in the by-laws of the corporation and whose function merely duplicates those of the President and General Manager; 2. increase in the emoluments of the Chairman, VicePresident, Treasurer and Assistant General Manager which

increases are greatly disproportionate to the volume and character of the work of the directors holding said positions; 3. re-creation of the positions of Assistant VicePresidents (AVPs) for Corporate Planning, Operations, Finance and Administration, and the election thereto of board members Edgar C. Trinidad, Eliezer de Jesus, Mary Jean D. Co and Henry Chua, respectively; and 4. creation of the additional positions of Special Assistants to the President and the Board Chairman, with Fortunato V. de Castro and Arsenio Lopez Chua elected to the same, the directors elected/appointed thereto not doing any work to deserve the monthly remuneration of P13,050.00 each. Ratio: Under the Corporation Code, where a corporation is an injured party, its power to sue is lodged with its board of directors or trustees. But an individual stockholder may be permitted to institute a derivative suit in behalf of the corporation in order to protect or vindicate corporate rights whenever the officials of the corporation refuse to sue, or when a demand upon them to file the necessary action would be futile because they are the ones to be sued, or because they hold control of the corporation. In such actions, the corporation is the real party-in-interest while the suing stockholder, in behalf of the corporation, is only a nominal party. Here, the action below is principally for damages resulting from alleged mismanagement of the affairs of Filport

by its directors/officers, it being alleged that the acts of mismanagement are detrimental to the interests of Filport. Thus, the injury complained of primarily pertains to the corporation so that the suit for relief should be by the corporation. However, since the ones to be sued are the directors/officers of the corporation itself, a stockholder, like petitioner Cruz, may validly institute a derivative suit to vindicate the alleged corporate injury, in which case Cruz is only a nominal party while Filport is the real party-in-interest. For sure, in the prayer portion of petitioners petition before the SEC, the reliefs prayed were asked to be made in favor of Filport. Besides, the requisites before a derivative suit can be filed by a stockholder are present in this case, to wit: a) the party bringing suit should be a shareholder as of the time of the act or transaction complained of, the number of his shares not being material; b) he has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for the appropriate relief but the latter has failed or refused to heed his plea; and c) the cause of action actually devolves on the corporation, the wrongdoing or harm having been, or being caused to the corporation and not to the particular stockholder bringing the suit. Indisputably, petitioner Cruz (1) is a stockholder of Filport; (2) he sought without success to have its board of directors remedy what he perceived as wrong when he wrote a letter

requesting the board to do the necessary action in his complaint; and (3) the alleged wrong was in truth a wrong against the stockholders of the corporation generally, and not against Cruz or Minterbro, in particular. In the end, it is Filport, not Cruz which directly stands to benefit from the suit. And while it is true that the complaining stockholder must show to the satisfaction of the court that he has exhausted all the means within his reach to attain within the corporation itself the redress for his grievances, or actions in conformity to his wishes, nonetheless, where the corporation is under the complete control of the principal defendants, as here, there is no necessity of making a demand upon the directors. The reason is obvious: a demand upon the board to institute an action and prosecute the same effectively would have been useless and an exercise in futility. In fine, we rule and so hold that the petition filed with the SEC at the instance of Cruz, which ultimately found its way to the RTC of Davao City as Civil Case No. 28,552-2001, is a derivative suit of which Cruz has the necessary legal standing to institute. --"Anastacia's share" Oscar Reyes vs. RTC, Zenith Insurance Corp, Rodrigo Reyes
1. Causative

event 2. Zenith Insurance Corp. and Rodrigo files derivative suit in SEC against Oscar. Oscar files Answer with Counterclaim RA 8799: transferred jurisdiction to RTC. Oscar files Motion to Declare Complaint as Nuisance or Harassment Suit. RTC denies Oscar's Motion.

3. Oscar

files petition for certiorari/prohibition/mandamus in

CA. CA affirms RTC order. 4. Oscar files petition for review in SC. Statement of issues On jurisdiction of Special Commercial Courts On specific allegation of fraud On bill of particulars On intra-corporate controversy / relationship test / nature of controversy test Applying the relationship test Applying the nature of controversy test On settlement of estate On derivative suit Applying the requisites of derivative suit Oscar wins Causative event: Oscar and Rodrigo are siblings. Their parents died. The share of their mother has not yet been partitioned, while share of father has been partitioned. Oscar: 8,715,637 sh. Mother: 136,598 sh. Rodrigo: 4,250 sh. Oscar is in control of Zenith Corp. Rodrigo's Derivative suit: (1) Accounting of funds and assets of Zenith Insurance (2) Determine shares of parents which were fraudulently appropriated by Oscar, and were not included in the settlement of estate. Oscar's Answer with Counterclaim: Oscar asserted, as a

defense, that he purchased the subject shares with his own funds from the unissued stocks of Zenith, and that the suit is not a bona fide derivative suit because the requisites therefor have not been complied with. Ratio: Rodrigos bare claim that the complaint is a derivative suit will not suffice to confer jurisdiction on the RTC (as a special commercial court) if he cannot comply with the requisites for the existence of a derivative suit. These requisites are:

a. the party bringing suit should be a shareholder during the time of the act or transaction complained of, the number of shares not being material; b. the party has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for the appropriate relief, but the latter has failed or refused to heed his plea; and c. the cause of action actually devolves on the corporation; the wrongdoing or harm having been or being caused to the corporation and not to the particular stockholder bringing the suit.

Based on these standards, we hold that the allegations of the present complaint do not amount to a derivative suit. First, as already discussed above, Rodrigo is not a shareholder with respect to the shareholdings originally belonging to Anastacia; he only stands as a transferee-heir whose rights to the share are inchoate and unrecorded. With respect to his own individually-held shareholdings, Rodrigo has not alleged any individual cause or basis as a

shareholder on record to proceed against Oscar. Second, in order that a stockholder may show a right to sue on behalf of the corporation, he must allege with some particularity in his complaint that he has exhausted his remedies within the corporation by making a sufficient demand upon the directors or other officers for appropriate relief with the expressed intent to sue if relief is denied. Lastly, we find no injury, actual or threatened, alleged to have been done to the corporation due to Oscars acts. If indeed he illegally and fraudulently transferred Anastacias shares in his own name, then the damage is not to the corporation but to his co-heirs; the wrongful transfer did not affect the capital stock or the assets of Zenith. As already mentioned, neither has Rodrigo alleged any particular cause or wrongdoing against the corporation that he can champion in his capacity as a shareholder on record. In summary, whether as an individual or as a derivative suit, the RTC sitting as special commercial court has no jurisdiction to hear Rodrigos complaint since what is involved is the determination and distribution of successional rights to the shareholdings of Anastacia Reyes. Rodrigos proper remedy, under the circumstances, is to institute a special proceeding for the settlement of the estate of the deceased Anastacia Reyes, a move that is not foreclosed by the dismissal of his present complaint. --Chua vs. Torres, Beltran
1. Causative

event

2. Beltran

files criminal action against Christine Chua in MTC. 3. Christine Chua institutes action for damages in RTC. Impleads brother Jonathan Chua as necessary coplaintiff. RTC dismisses action. 4. 4. Christine Chua files petition for review in SC. Statement of issues On the verification requirement On real parties in interest On necessary party Example of necessary party / Seno vs. Mangubat Why Jonathan was a misjoined party On effect of lack of signature of misjoined party On effect of misjoinder Christine wins. Causative event: Jorge is owner of Caltex service center, while Beltran is an employee. Jonathan issued to Caltex a check. Check was dishonored. Beltran instituted a criminal action for BP 22 against Christine Chua, sister of Jonathan Chua. The police officers tasked with serving the warrant looked for her in her residence, in the auto repair shop of her brother, and even at the Manila Central University were she was enrolled as a medical student, all to the alleged embarrassment and social humiliation of Christine. Action for damages: malicious prosecution or serious defamation in prosecuting petitioner resulting from the issuance of a check she herself did not draw, and served cause for a claim of moral damages. (P2m) Necessary co-plaintiff: There was no allegation in the complaint of any damage or injury sustained by Jonathan, and the prayer therein expressly named petitioner as the only

party to whom respondents were sought to recompense. Neither did Jonathan Chua sign any verification or certification against forum-shopping, although petitioner did sign an attestation, wherein she identified herself as the principal plaintiff. Dismissal: on the ground that Jonathan Chua had not executed a certification against forum-shopping. Section 5, Rule 7 of the Rules of Civil Procedure, the rule requiring the certification, makes no distinction whether the plaintiff required to execute the certification is a principal party, a nominal party or a necessary party. Issue: whether or not a co-plaintiff impleaded only as a necessary party, who however has no claim for relief or is not asserting any claim for relief in the complaint, should also make a certification against forum shopping? Real party in interest: The subject complaint does not allege any rights of Jonathan Chua violated by respondents, present any rights of his to be enforced, or seek in his behalf any rights to the avails of suit. In short, Jonathan claims nothing, and for nothing, in the subject complaint. If he alone filed the complaint, it would have been dismissed on the ground that the complaint states no cause of action, instituted as it was by a person who was not a real party in interest. Necessary party: She however fails to demonstrate how Jonathan can be considered as a necessary party, other than by noting that he was the one who really issued the check in controversy. Such fact, if proven, may establish the malice of respondents in filing the criminal case against petitioner for violation of B.P. 22, but does not create the need to require

Jonathans participation as a necessary party. Example of necessary party / Seno vs. Mangubat: Petitioner therein sold her property through a deed of sale to three vendees. Two of the vendees then sold their shares to the third buyer, who then sold the property to another set of persons. Thereafter, petitioner, who claimed that the true intent of the first sale was an equitable mortgage, filed a complaint seeking the reformation of the deed of sale and the annulment of the second sale. The question arose whether the two vendees who had since disposed of their shares should be considered as indispensable parties or necessary parties. However, should the lower court therein grant the prayer for the reformation of the deed of sale, the ruling will undoubtedly have an effect on such parties, on matters such as the purchase price which they may have received, and on whatever transmission of rights that may have occurred between them and the vendor. Misjoinder: Since the misjoined party plaintiff receives no recognition from the court as either an indispensable or necessary party-plaintiff, it then follows that whatever action or inaction the misjoined party may take on the verification or certification against forum-shopping is inconsequential. Hence, it should not have mattered to the RTC that Jonathan Chua had failed to sign the certification against forumshopping, since he was misjoined as a plaintiff in the first place. --Memoracion Cruz (rep. Ed Cruz) vs. Oswaldo Cruz

1. Causative

event 2. Memo Cruz files complaint in RTC against son Oswaldo Cruz. Memo Cruz dies. Oswaldo files MTD. RTC dismisses case. Ed Cruz (son-heir) files Manifestation to retain counsel. Ed Cruz files MR, but it was denied. 3. Memo Cruz (via Ed Cruz) appeals to CA. CA affirms RTC ruling, in favor of Oswaldo. 4. Memo Cruz (via Ed Cruz) files petition for review in SC. Statement of issues On action surviving death of plaintiff On Art. 777, Civil Code / On rationale of action surviving death of party in Bonilla vs. Barcena On why the petition for annulment of deed of sale survives death of Memoracion On duty of court to order substitution Memo Cruz wins. Causative event: Memoracion Cruz owns a parcel of land during her union with common-law husband (deceased) Guido Cruz. But her son, Oswaldo, transferred the title to the land in his and his wife's names under TCT by virtue of a Deed of Sale. So she filed a complaint for Annulment of Deed of Sale, Reconveyance & Damages in RTC, but she died during the action. Oswaldo's MTD: (1) the plaintiffs reconveyance action is a personal action which does not survive a partys death, and (2) to allow the case to continue would result in legal absurdity whereby one heir is representing the defendant

[and is a] co-plaintiff in this case. Issue: WON this is a purely personal action which does not survive death of a party? Action surviving death of plaintiff: If the case affects primarily and principally property and property rights, then it survives the death of the plaintiff or petitioner. Bonilla vs. Barcena: Article 777 of the Civil Code provides "that the rights to the succession are transmitted from the moment of the death of the decedent." From the moment of the death of the decedent, the heirs become the absolute owners of his property, subject to the rights and obligations of the decedent, and they cannot be deprived of their rights thereto except by the methods provided for by law. The right of the heirs to the property of the deceased vests in them even before judicial declaration of their being heirs in the testate or intestate proceedings. When [plaintiff], therefore, died[,] her claim or right to the parcels of land x x x was not extinguished by her death but was transmitted to her heirs upon her death. Her heirs have thus acquired interest in the properties in litigation and became parties in interest in the case. There is, therefore, no reason for the respondent Court not to allow their substitution as parties in interest for the deceased plaintiff. Substitution: substitution of legal representatives or heirs is a formal substitution. Also: exclude Oswaldo from being a

legal representative, because he is an adverse party. --Gojo vs. Goyala, Almoguera

1. Causative

event 2. Gojo files petition for consolidation of ownership in trial court. Goyala files Answer with Counterclaim. Wife dies. Goyala files Manifestation to amend Complaint. Trial issues order for plaintiff Gojo to amend the complaint. Goyala files MTD. Trial court dismisses complaint. Goyala files Motion to declare Gojo in default in respect to counterclaim. Trial court grants Goyala's counterclaim. 3. Gojo appeals to the SC. Statement of issues On compulsory counterclaims Order of dismissal is void because substitution was not made Not proper to dismiss when a compulsory counterclaim is pleaded Gojo wins. Causative event: Goyala and his wife Almoguera sold to Goyo an agricultural land under "Deed of Pacto de Retro", with term of one year. 10 years after the execution, Gojo now wants to consolidate his ownership. Goyala's Answer with Counterclaim: equitable mortgage.

Counterclaim: reformation of the deed. Although the deed was executed or drawn in the form of a pacto de retro sale, the true and real intention of the parties thereto was that the same was a mere mortgage to secure the payment of the original loan of P750.00 together with the additional amount received. (Alternative prayer: if it is indeed a true pacto de retro sale, order a deed of resale or repurchase). Goyala's Manifestation: informed court of death, and substitution of heir-children. Goyala's MTD: neglected to submit the amended complaint required of him. Goyala's Motion to declare default: transaction to be construed as equitable mortgage. Allow Goyala to redeem property, and to cancel pacto de retro sale. Gojo's appeal: (a) the said counterclaim "falls within the category of compulsory counterclaim" which does not call for an independent answer as the complaint already denies its material allegations; and (b) the dismissal of the complaint in this case without prejudice carried with it the dismissal of the said counterclaim. Compulsory counterclaim: it arises out of or is necessarily connected with transaction or occurrence that is the subject matter of the complaint. It is compulsory in the sense that it is within the jurisdiction of the court, does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction,

and will be barred in the future if not set up in the answer to the complaint in the same case. It is now settled that a plaintiff who fails or chooses not to answer a compulsory counterclaim may not be declared in default, principally because the issues raised in the counterclaim are deemed automatically joined by the allegations of the complaint. In the instant case, there can be no doubt that appellant's counterclaim was a compulsory one in as much as it arises out of or is necessarily connected with transaction or occurrence that is the subject matter of the complaint; the complaint alleged that the right of appellee to repurchase the property in question had already expired and asked for an order of consolidation; on the other hand, appellant's counterclaim was for reformation of the deed claiming that it was only a mortgage. Thus the counterclaim was clearly inconsistent with and directly controverted; the whole theory and basic allegations of the complaint. In consequence, appellant's complaint stood as the answer to appellee's counterclaim; hence, the incorrectness of the trial court's order declaring the appellant in default in regard to said counterclaim is evident. SC ruling: 1. It is a compulsory counterclaim. 2. The dismissal of complaint carries dismissal of compulsory counterclaim. 3. HOWEVER, order of dismissal is void-When certain of the parties to Civil Case 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.

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". --Heirs of Medrana vs. De Vera The trial court misjudged De Veras interest in Civil Case No. U-7316. It held that De Veras right to participate in the case was independent of the named defendants. Because of its ruling that De Vera had an independent interest, the trial court considered his interest as separate from Medranos claims against the named defendants, and allowed the latter to be tried separately. Thus, it admitted De Veras Answer with Counterclaim but declared the named defendants in default and allowed the ex parte presentation of evidence by Medrano against the named defendants. The trial courts approach is seriously flawed because De Veras interest is not independent of or severable from the interest of the named defendants. De Vera is a transferee pendente lite of the named defendants (by virtue of the Deed of Renunciation of Rights that was executed in his favor during the pendency of Civil Case No. U-7316). His rights were derived from the named defendants and, as transferee pendente lite, he would be bound by any judgment against his transferors under the rules of res judicata.[45] Thus, De Veras interest cannot be considered and tried separately from the interest of the named defendants. It was therefore wrong for the trial court to have tried

Medranos case against the named defendants (by allowing Medrano to present evidence ex parte against them) after it had already admitted De Veras answer. What the trial court should have done is to treat De Vera (as transferee pendente lite) as having been joined as a party-defendant, and to try the case on the basis of the answer De Vera had filed and with De Veras participation. As transferee pendente lite, De Vera may be allowed to join the original defendants under Rule 3, Section 19: SEC. 19. 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. (Emphasis supplied)

The above provision gives the trial court discretion to allow or disallow the substitution or joinder by the transferee. Discretion is permitted because, in general, the transferees interest is deemed by law as adequately represented and protected by the participation of his transferors in the case. There may be no need for the transferee pendente lite to be substituted or joined in the case because, in legal contemplation, he is not really denied protection as his interest is one and the same as his transferors, who are already parties to the case.[46] While the rule allows for discretion, the paramount consideration for the exercise thereof should be the protection of the parties interests and their rights to due process. In the instant case, the circumstances demanded that the trial court

exercise its discretion in favor of allowing De Vera to join in the action and participate in the trial. It will be remembered that the trial court had already admitted De Veras answer when it declared the original defendants in default. As there was a transferee pendente lite whose answer had already been admitted, the trial court should have tried the case on the basis of that answer, based on Rule 9, Section 3(c): Effect of partial default. When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented.

Thus, the default of the original defendants should not result in the ex parte presentation of evidence because De Vera (a transferee pendente lite who may thus be joined as defendant under Rule 3, Section 19) filed an answer. The trial court should have tried the case based on De Veras answer, which answer is deemed to have been adopted by the nonanswering defendants. To proceed with the ex parte presentation of evidence against the named defendants after De Veras answer had been admitted would not only be a violation of Rule 9, Section 3(c), but would also be a gross disregard of De Veras right to due process. This is because the ex parte presentation of evidence would result in a default judgment which would bind not just the defaulting defendants, but also De Vera, precisely because he is a transferee pendente lite. This would result in an anomaly wherein De Vera would be bound by a default judgment even if he had filed an answer and expressed a

desire to participate in the case. We note that under Rule 3, Section 19, the substitution or joinder of the transferee is upon motion, and De Vera did not file any motion for substitution or joinder. However, this technical flaw may be disregarded for the fact remains that the court had already admitted his answer and such answer was on record when the ex parte presentation of evidence was allowed by the court. Because De Veras answer had already been admitted, the court should not have allowed the ex parte presentation of evidence. We are not persuaded by petitioners insistence that De Vera could not have participated in the case because he did not file a motion to intervene. The purpose of intervention is to enable a stranger to an action to become a party in order for him to protect his interest and for the court to settle all conflicting claims. Intervention is allowed to avoid multiplicity of suits more than on due process considerations. The intervenor can choose not to participate in the case and he will not be bound by the judgment. In this case, De Vera is not a stranger to the action but a transferee pendente lite. As mentioned, a transferee pendente lite is deemed joined in the pending action from the moment when the transfer of interest is perfected.[49] His participation in the case should have been allowed by due process considerations.[50] We likewise adopt with approval the appellate courts observation that De Veras failure to file a pleading-inintervention will not change the long foregone violation of his right to due process. The ex parte presentation of evidence

had already been terminated when the trial court required De Vera to file his pleading-in-intervention. Even if he complied with the order to file a pleading-in-intervention, the damage had already been done. The precipitate course of action taken by the trial court rendered compliance with its order moot. Given the Courts finding that the ex parte presentation of evidence constituted a violation of due process rights, the trial courts judgment by default cannot bind De Vera. A void judgment cannot attain finality and its execution has no basis in law. The case should be remanded to the trial court for trial based on De Veras answer and with his participation. --Del Castillo vs. Jaymalin, Bitranco, L. Ammen
1. Causative

event 2. Father del Castillo files action for recovery of damages against bus company and operator in trial court. Bus companies file their defenses. Severo dies. Bus companies files Motion for Annulment of Proceedings due to death of Severo Del Castillo. Severo's counsel files Motion to Admit Amended Complaint substituting Severo's son-in-law, Wenceslao Haloc, by virtue of a Deed of Assignment. Trial court admits amended complaint. But trial court dismisses the case. 3. Haloc appeals to SC. Statement of issues

On applicable rule: transfer of rights Haloc/del Castillo wins.

Causative event: Mario del Castillo, a deaf-mute son of Severo del Castillo, fell from bus. Bus is owned by Bitranco. Operator is AL Ammen. Severo is the sole heir. Defenses of bus company and operator: due diligence in selection & supervision / proximate cause is negligence of deceased Deed of Assignment: assigning rights to the indemnity for the death of son, from Severo to son-in-law Haloc. Dismissal by trial court: Since Severo del Castillo died before the conclusion of this case, this action died with him. Wenceslao Haloc is without personality to continue this case. He is not even an heir of Severo del Castillo. Issues: 1) In construing the Deed of Assignment as not a deed that transfers any benefit to the transferee. 2) In dismissing the case in virtue of the death of Severo del Castillo after the deed of assignment was executed and further still after the evidence testimonial and documentary were already presented. Transfer of rights: The rights of Severo to claim damages for his son were transferable. Severo had transferred his rights as plaintiff to Wenceslao Haloc but after the assignment the case continued in Severo's name and there was no immediate and formal substitution of party plaintiff. This is but a formality, however, and the fact remains that, after the

assignment, the substantial plaintiff and real party in interest became Haloc, with Severo as a sort of trustee of whatever fruits the litigation would bring. The proper procedure would have been for the transferee to have been substituted for the transferor as plaintiff. ... where an assignable right has been transferred before action brought, the proceeding ought to be instituted in the name of the assignee; and where an assignment is effect pendente lite, it is proper to have the assignee substituted for the original plaintiff. If such substitution should not be effected and the transfer of the right of action should not be brought to the attention of the court, the original plaintiff, if successful in the litigation, would hold the fruits of the action as a sort of trustee for the use and benefit of his assignee. ... Conclusion: action did not die with him. --Carabeo vs. Sps. Dingco (A) in holding that the element of a contract, i.e., an object certain is present in this case. (B) in considering it unfair to expect respondents who are not lawyers to make judicial consignation after herein petitioner allegedly refused to accept payment of the balance of the purchase price. (C)

 in upholding the validity of the contract, "Kasunduan sa Bilihan ng Karapatan sa Lupa," despite the lack of spousal consent, (underscoring supplied) and proffering that (D) [t]he death of herein petitioner causes the dismissal of the action filed by respondents; respondents cause of action being an action in personam. (underscoring supplied) The petition fails. The pertinent portion of the kasunduan reads:8 xxxx Na ako ay may isang partial na lupa na matatagpuan sa Purok 111, Tugatog, Orani Bataan, na may sukat na 27 x 24 metro kuwadrado, ang nasabing lupa ay may sakop na dalawang punong santol at isang punong mangga, kayat ako ay nakipagkasundo sa mag-asawang Norby Dingco at Susan Dingco na ipagbili sa kanila ang karapatan ng nasabing lupa sa halagang P38,000.00. x x x x (underscoring supplied) That the kasunduan did not specify the technical boundaries of the property did not render the sale a nullity. The requirement that a sale must have for its object a determinate thing is satisfied as long as, at the time the contract is entered into, the object of the sale is capable of being made determinate without the necessity of a new or further agreement between the parties.9 As the above-quoted portion

of the kasunduan shows, there is no doubt that the object of the sale is determinate. Clutching at straws, petitioner proffers lack of spousal consent. This was raised only on appeal, hence, will not be considered, in the present case, in the interest of fair play, justice and due process.10 Respecting the argument that petitioners death rendered respondents complaint against him dismissible, Bonilla v. Barcena11 enlightens: The question as to whether an action survives or not depends on the nature of the action and the damage sued for. In the causes of action which survive, the wrong complained [of] affects primarily and principally property and property rights, the injuries to the person being merely incidental, while in the causes of action which do not survive, the injury complained of is to the person, the property and rights of property affected being incidental. (emphasis and underscoring supplied) In the present case, respondents are pursuing a property right arising from the kasunduan, whereas petitioner is invoking nullity of the kasunduan to protect his proprietary interest. Assuming arguendo, however, that the kasunduan is deemed void, there is a corollary obligation of petitioner to return the money paid by respondents, and since the action involves property rights,12 it survives. It bears noting that trial on the merits was already concluded before petitioner died. Since the trial court was not informed of petitioners death, it may not be faulted for proceeding to render judgment without ordering his substitution. Its judgment is thus valid and binding upon petitioners legal

representatives or successors-in-interest, insofar as his interest in the property subject of the action is concerned.13 In another vein, the death of a client immediately divests the counsel of authority.14 Thus, in filing a Notice of Appeal, petitioners counsel of record had no personality to act on behalf of the already deceased client who, it bears reiteration, had not been substituted as a party after his death. The trial courts decision had thereby become final and executory, no appeal having been perfected. --(past cases - digest) (future cases - digest) Oposa vs Factoran / Newsweek vs IAC /// MIAA vs Rivera Village /// Re: Heirs of Dona Paz /// Filipinas Port Services vs Go /// Reyes vs RTC of Makati // Marcos case / Agent Orange / Chua vs Beltran /// Cruz vs Cruz /// Gojo vs Goyala /// Heirs of Medrana vs De Vera / Del Castillo vs Jaymalin /// Carabeo vs Sps. Dingco /