CIVPRO Case Compilation

Civil Procedure-Dean Jara
Case Compilation
FIRST DIVISION
IRENE SANTE AND REYNALDO SANTE,
Petitioners,
G.R. No.
173915
- versus HON. EDILBERTO T. CLARAVALL, in his capacity as Presiding

Judge of Branch 60, Regional Trial Court of Baguio City, and
VITA N. KALASHIAN,
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
VILLARAMA, JR., J.:
Before this Court is a petition for certiorari[if !supportFootnotes][1][endif] under Rule 65 of the 1997
Rules of Civil Procedure, as amended, filed by petitioners Irene and Reynaldo Sante
assailing the Decision[if !supportFootnotes][2][endif] dated January 31, 2006 and the Resolution[if !
supportFootnotes][3][endif]
dated June 23, 2006 of the Seventeenth Division of the Court of
Appeals in CA-G.R. SP No. 87563. The assailed decision affirmed the orders of the
Regional Trial Court (RTC) of Baguio City, Branch 60, denying their motion to dismiss the
complaint for damages filed by respondent Vita Kalashian against them.
The facts, culled from the records, are as follows:
On April 5, 2004, respondent filed before the RTC of Baguio City a complaint for
damages[if !supportFootnotes][4][endif] against petitioners. In her complaint, docketed as Civil Case
No. 5794-R, respondent alleged that while she was inside the Police Station of Natividad,
Pangasinan, and in the presence of other persons and police officers, petitioner Irene
Sante uttered words, which when translated in English are as follows, How many rounds
of sex did you have last night with your boss, Bert? You fuckin bitch! Bert refers to Albert
Gacusan, respondents friend and one (1) of her hired personal security guards detained
at the said station and who is a suspect in the killing of petitioners close relative.
Petitioners also allegedly went around Natividad, Pangasinan telling people that she is
protecting and cuddling the suspects in the aforesaid killing. Thus, respondent prayed
that petitioners be held liable to pay moral damages in the amount of P300,000.00;
P50,000.00 as exemplary damages; P50,000.00 attorneys fees; P20,000.00 litigation
expenses; and costs of suit.
Petitioners filed a Motion to Dismiss [if !supportFootnotes][5][endif] on the ground that it was the
Municipal Trial Court in Cities (MTCC) and not the RTC of Baguio, that had jurisdiction
over the case. They argued that the amount of the claim for moral damages was not
more than the jurisdictional amount of P300,000.00, because the claim for exemplary
damages should be excluded in computing the total claim.
On June 24, 2004,[if !supportFootnotes][6][endif] the trial court denied the motion to dismiss citing
our ruling in Movers-Baseco Integrated Port Services, Inc. v. Cyborg Leasing
Corporation.[if !supportFootnotes][7][endif] The trial court held that the total claim of respondent
2013400059
amounted to P420,000.00 which was above the jurisdictional amount for MTCCs outside
Metro Manila. The trial court also later issued Orders on July 7, 2004 [if !supportFootnotes][8][endif]
and July 19, 2004,[if !supportFootnotes][9][endif] respectively reiterating its denial of the motion to
dismiss and denying petitioners motion for reconsideration.
Aggrieved, petitioners filed on August 2, 2004, a Petition for Certiorari and Prohibition, [if !
docketed as CA-G.R. SP No. 85465, before the Court of Appeals.
Meanwhile, on July 14, 2004, respondent and her husband filed an Amended Complaint [if
!supportFootnotes][11][endif]
increasing the claim for moral damages from P300,000.00 to
P1,000,000.00. Petitioners filed a Motion to Dismiss with Answer Ad Cautelam and
Counterclaim, but the trial court denied their motion in an Order[if !supportFootnotes][12][endif]
dated September 17, 2004.
Hence, petitioners again filed a Petition for Certiorari and Prohibition[if !supportFootnotes][13][endif]
before the Court of Appeals, docketed as CA-G.R. SP No. 87563, claiming that the trial
court committed grave abuse of discretion in allowing the amendment of the complaint to
increase the amount of moral damages from P300,000.00 to P1,000,000.00. The case
was raffled to the Seventeenth Division of the Court of Appeals.
On January 23, 2006, the Court of Appeals, Seventh Division, promulgated a decision in
CA-G.R. SP No. 85465, as follows:
WHEREFORE, finding grave abuse of discretion on the part of [the] Regional Trial Court
of Baguio, Branch 60, in rendering the assailed Orders dated June 24, 2004 and July
[19], 2004 in Civil Case No. 5794-R the instant petition for certiorari is GRANTED. The
assailed Orders are hereby ANNULLED and SET ASIDE. Civil Case No. 5794-R for
damages is ordered DISMISSED for lack of jurisdiction.
SO ORDERED.[if !supportFootnotes][14][endif]
The Court of Appeals held that the case clearly falls under the jurisdiction of the MTCC
as the allegations show that plaintiff was seeking to recover moral damages in the
amount of P300,000.00, which amount was well within the jurisdictional amount of the
MTCC. The Court of Appeals added that the totality of claim rule used for determining
which court had jurisdiction could not be applied to the instant case because plaintiffs
claim for exemplary damages was not a separate and distinct cause of action from her
claim of moral damages, but merely incidental to it. Thus, the prayer for exemplary
damages should be excluded in computing the total amount of the claim.
On January 31, 2006, the Court of Appeals, this time in CA-G.R. SP No. 87563, rendered
a decision affirming the September 17, 2004 Order of the RTC denying petitioners Motion
to Dismiss Ad Cautelam. In the said decision, the appellate court held that the total or
aggregate amount demanded in the complaint constitutes the basis of jurisdiction. The
Court of Appeals did not find merit in petitioners posture that the claims for exemplary
Civil Procedure-Dean Jara Case Compilation
2013400059
damages and attorneys fees are merely incidental to the main cause and should not be
included in the computation of the total claim.
The Court of Appeals additionally ruled that respondent can amend her complaint by
increasing the amount of moral damages from P300,000.00 to P1,000,000.00, on the
ground that the trial court has jurisdiction over the original complaint and respondent is
entitled to amend her complaint as a matter of right under the Rules.
Unable to accept the decision, petitioners are now before us raising the following issues:
I.
WHETHER OR NOT THERE WAS GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR IN EXCESS OF JURISDICTION ON THE PART OF THE (FORMER)
SEVENTEENTH DIVISION OF THE HONORABLE COURT OF APPEALS WHEN IT
RESOLVED THAT THE REGIONAL TRIAL COURT OF BAGUIO CITY BRANCH 60 HAS
JURISDICTION OVER THE SUBJECT MATTER OF THE CASE FOR DAMAGES
AMOUNTING TO P300,000.00;
II.
WHETHER OR NOT THERE WAS GRAVE ABUSE OF DISCRETION ON THE PART OF
THE HONORABLE RESPONDENT JUDGE OF THE REGIONAL TRIAL COURT OF
BAGUIO BRANCH 60 FOR ALLOWING THE COMPLAINANT TO AMEND THE
COMPLAINT (INCREASING THE AMOUNT OF DAMAGES TO 1,000,000.00 TO
CONFER JURISDICTION OVER THE SUBJECT MATTER OF THE CASE DESPITE
THE PENDENCY OF A PETITION FOR CERTIORARI FILED AT THE COURT OF
APPEALS, SEVENTH DIVISION, DOCKETED AS CA G.R. NO. 85465. [if !supportFootnotes][15]
[endif]
In essence, the basic issues for our resolution are:

[if !supportLists]1)
[endif]Did the RTC acquire jurisdiction over the case? and
[if !supportLists]2)
[endif]Did the RTC commit grave abuse of discretion in
allowing the amendment of the complaint?
Petitioners insist that the complaint falls under the exclusive jurisdiction of the MTCC.
They maintain that the claim for moral damages, in the amount of P300,000.00 in the
original complaint, is the main action. The exemplary damages being discretionary
should not be included in the computation of the jurisdictional amount. And having no
jurisdiction over the subject matter of the case, the RTC acted with grave abuse of
discretion when it allowed the amendment of the complaint to increase the claim for
moral damages in order to confer jurisdiction.
In her Comment,[if !supportFootnotes][16][endif] respondent averred that the nature of her complaint
is for recovery of damages. As such, the totality of the claim for damages, including the
exemplary damages as well as the other damages alleged and prayed in the complaint,
such as attorneys fees and litigation expenses, should be included in determining
jurisdiction. The total claim being P420,000.00, the RTC has jurisdiction over the
complaint.
We deny the petition, which although denominated as a petition for certiorari, we treat as
a petition for review on certiorari under Rule 45 in view of the issues raised.
Section 19(8) of Batas Pambansa Blg. 129,[if !supportFootnotes][17][endif] as amended by Republic
Act No. 7691,[if !supportFootnotes][18][endif] states:
SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original
jurisdiction:
xxxx
(8) In all other cases in which the demand, exclusive of interest, damages of whatever
kind, attorneys fees, litigation expenses, and costs or the value of the property in
controversy exceeds One hundred thousand pesos (P100,000.00) or, in such other
cases in Metro Manila, where the demand, exclusive of the abovementioned items
exceeds Two hundred thousand pesos (P200,000.00).
Section 5 of Rep. Act No. 7691 further provides:
SEC. 5. After five (5) years from the effectivity of this Act, the jurisdictional
amounts mentioned in Sec. 19(3), (4), and (8); and Sec. 33(1) of
Batas Pambansa Blg. 129 as amended by this Act, shall be
adjusted to Two hundred thousand pesos (P200,000.00). Five (5)
years thereafter, such jurisdictional amounts shall be adjusted
further to Three hundred thousand pesos (P300,000.00):
Provided, however, That in the case of Metro Manila, the
abovementioned jurisdictional amounts shall be adjusted after
five (5) years from the effectivity of this Act to Four hundred
thousand pesos (P400,000.00).
Relatedly, Supreme Court Circular No. 21-99 was issued declaring that the first
adjustment in jurisdictional amount of first level courts outside of Metro Manila from
P100,000.00 to P200,000.00 took effect on March 20, 1999. Meanwhile, the second
adjustment from P200,000.00 to P300,000.00 became effective on February 22, 2004 in
accordance with OCA Circular No. 65-2004 issued by the Office of the Court
Administrator on May 13, 2004.
Based on the foregoing, there is no question that at the time of the filing of the complaint
on April 5, 2004, the MTCCs jurisdictional amount has been adjusted to P300,000.00.
But where damages is the main cause of action, should the amount of moral damages
prayed for in the complaint be the sole basis for determining which court has jurisdiction
or should the total amount of all the damages claimed regardless of kind and nature,
such as exemplary damages, nominal damages, and attorneys fees, etc., be used?
In this regard, Administrative Circular No. 09-94[if !supportFootnotes][19][endif] is instructive:
xxxx
2. The exclusion of the term damages of whatever kind in determining the

jurisdictional amount under Section 19 (8) and Section 33 (1) of
B.P. Blg. 129, as amended by R.A. No. 7691, applies to cases
where the damages are merely incidental to or a consequence of
the main cause of action. However, in cases where the claim
for damages is the main cause of action, or one of the
causes of action, the amount of such claim shall be
considered in determining the jurisdiction of the court.
(Emphasis ours.)
Case Compilation
In the instant case, the complaint filed in Civil Case No. 5794-R is for the recovery of
damages for the alleged malicious acts of petitioners. The complaint principally sought an
award of moral and exemplary damages, as well as attorneys fees and litigation
expenses, for the alleged shame and injury suffered by respondent by reason of
petitioners utterance while they were at a police station in Pangasinan. It is settled that
jurisdiction is conferred by law based on the facts alleged in the complaint since the latter
comprises a concise statement of the ultimate facts constituting the plaintiffs causes of
action.[if !supportFootnotes][20][endif] It is clear, based on the allegations of the complaint, that
respondents main action is for damages. Hence, the other forms of damages being
claimed by respondent, e.g., exemplary damages, attorneys fees and litigation expenses,
are not merely incidental to or consequences of the main action but constitute the
primary relief prayed for in the complaint.
In Mendoza v. Soriano,[if !supportFootnotes][21][endif] it was held that in cases where the claim for
damages is the main cause of action, or one of the causes of action, the amount of such
claim shall be considered in determining the jurisdiction of the court. In the said case, the
respondents claim of P929,000.06 in damages and P25,000 attorneys fees plus P500
per court appearance was held to represent the monetary equivalent for compensation of
the alleged injury. The Court therein held that the total amount of monetary claims
including the claims for damages was the basis to determine the jurisdictional amount.
Also, in Iniego v. Purganan,[if !supportFootnotes][22][endif] the Court has held:
The amount of damages claimed is within the jurisdiction of the RTC, since it
is the claim for all kinds of damages that is the basis of
determining the jurisdiction of courts, whether the claims for
damages arise from the same or from different causes of action.
Considering that the total amount of damages claimed was P420,000.00, the
Court of Appeals was correct in ruling that the RTC had
jurisdiction over the case.
Lastly, we find no error, much less grave abuse of discretion, on the part of the Court of
Appeals in affirming the RTCs order allowing the amendment of the original complaint
from P300,000.00 to P1,000,000.00 despite the pendency of a petition for certiorari filed
before the Court of Appeals. While it is a basic jurisprudential principle that an
amendment cannot be allowed when the court has no jurisdiction over the original
complaint and the purpose of the amendment is to confer jurisdiction on the court,[if !
here, the RTC clearly had jurisdiction over the original complaint and
amendment of the complaint was then still a matter of right.[if !supportFootnotes][24][endif]
WHEREFORE, the petition is DENIED, for lack of merit. The Decision and
Resolution of the Court of Appeals dated January 31, 2006 and June 23, 2006,
respectively, are AFFIRMED. The Regional Trial Court of Baguio City, Branch 60 is
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DIRECTED to continue with the trial proceedings in Civil Case No. 5794-R with
deliberate dispatch.
No costs.
SO ORDERED.
G.R. No. L-2352

July 26, 1910
ELADIO ALONSO, plaintiff-appellee,
vs.
TOMAS VILLAMOR, ET AL., defendants-appellants.
Ledesma, Sumulong and Quintos, for appellants.J. C. Knudson, for appellee.
MORELAND, J.:
This is an action brought to recover of the defendants the value of certain articles taken
from a Roman Catholic Church located in the municipality of Placer, and the rental value
of the church and its appurtenances, including the church cemetery, from the 11th day of
December, 1901, until the month of April, 1904. After hearing the evidence, the court
below gave judgment in favor of the plaintiff for the sum of P1,581, with interest at 6 per
cent from the date of the judgment. The said sum of P1,581 was made up of two items,
one of which, P741, was for the value of the articles taken from the church, and the other,
P840, the rental value of the premises during the occupations by defendants. From this
judgment the defendants appealed to this court.
It appears that the defendants were on the 11th day of December, 1901, members of the
municipal board of the municipality of Placer, and that they on that date addressed to the
plaintiff in this case, who was the priest in charge of the church, its appurtenances and
contents, the following letter:
PLACER, 11th December, 1901.
R. P. ELADIO ALONSO, Benedicto, Suriago.
ESTEEMED PADRE: After saluting you, we take the liberty of writing you that in the
municipality of which we have charged we have received an order from the provincial
fiscal, dated the 5th instant, which says: "The cemeteries, convents, and the other
buildings erected on land belonging to the town at the expense of the town and
preserved by it belong to the town, and for this reason the municipality is under the
obligation of administering them and of collecting the revenues therefrom, and for this
reason we notify you that from this date all of the revenues and products therefrom must
be turned into the treasury of the municipality in order that the people may properly
preserve them.
In the same way we notify you that the image of St. Vicente which is now in the church,
as it is an image donated to the people by its owner, by virtue of said order is also the
property of said people, and therefore the alms which are given it by the devotees thereof
must be also turned into the municipal treasury for the proper preservation of the church
and for other necessary purposes. We hope that you will view in the proper light and that
you will deliver to the bearer of this letter the key of the alms box of the said image in
order that we may comply with our obligation in conformity with the dispositions of said
order.
We beg to remain as always by your spiritual sons. Q. B. S. M.
2013400059
(Signed) ANDRES OJEDA.

TOMAS VILLAMOR.
ANDRES CALINAUAN.
BERNARDINO TANDOY.
EUSEBIO LIRIO.
ELEUTERIO MONDAYA.
MAXIMO DELOLA.
SEGUNDO BECERRO.
ONOFRE ELIMANCE.
On the 13th of December, 1901, the defendants took possession of the church and its
appurtenances, and also of all of the personal property contained therein. The plaintiff, as
priest of the church and the person in charge thereof, protested against the occupation
thereof by the defendants, but his protests received no consideration, and he was
summarily removed from possession of the church, its appurtenances and contents.
The only defense presented by the defendants, except the one that the plaintiff was not
the real party in interest, was that the church and other buildings had been erected by
funds voluntarily contributed by the people of that municipality, and that the articles within
the church had been purchased with funds raised in like manner, and that, therefore, the
municipality was the owner thereof.
The question as to the ownership of the church and its appurtenances, including the
convent and cemetery, was before this court on the 23rd day of September, 1908, in an
action entitled "The Roman Catholic Apostolic Church against the municipality of Placer." 1
Substantially the same facts were presented on the part of the defendants in that case as
are presented by the defendants in this. The question there litigated was the claim upon
the part of the municipality of ownership of said church and its appurtenances on the
ground that according to Spanish law the Roman Catholic Apostolic Church was not the
owner of such property, having only the use thereof for ordinary ecclesiastical and
religious purposes, and that the true owner thereof was the municipality or the State by
reason of the contributions by them, or by the people, of the land and of the funds with
which the buildings were constructed or repaired. The court decided in that case that the
claim of the defendants was not well founded and that the property belonged to the
Roman Catholic Church. The same question was discussed and decided in the case of
Barlin vs. Ramirez (7 Phil. Rep., 41), and the case of The Municipality of Ponce vs.
Roman Catholic Apostolic Church in Porto Rico (28 Sup. Ct. Rep., 737, 6 Off. Gaz.,
1213).
We have made a careful examination of the record and the evidence in this case and we
have no doubt that the property sued for was, at the time it was taken by the defendants,
the property of the Roman Catholic Church, and that the seizure of the same and
occupation of the church and its appurtenances by the defendants were wrongful and
illegal. We are also convinced, from such examination, that the conclusions of the court
below as to the value of the articles taken by the defendants and of the rent of the church
for the time of its illegal occupation by the defendants were correct and proper. While
some objection was made on appeal by counsel for the defendants that the value of the
articles taken and of the rent of the church and its appurtenances had not been proved
by competent evidence, no objection to the introduction of the evidence of value was
made at the trial and we can not consider that question raised for the first time here.
We have carefully examined the assignments of error made by counsel for defendants on
this appeal. We find none of them well founded. The only one which deserves especial
attention at our hands is the one wherein the defendants assert that the court below
erred in permitting the action to be brought and continued in the name of the plaintiff
instead of in the name of the bishop of the diocese within which the church was located,
or in the name of the Roman Catholic Apostolic Church, as the real party in interest.
It is undoubted the bishop of the diocese or the Roman Catholic Apostic Church itself is
the real party in interest. The plaintiff personally has no interest in the cause of action.
Section 114 of the Code of Civil Procedure requires that every action must be prosecuted
in the name of the real party in interest. The plaintiff is not such party.
Section 110 of the Code of Civil Procedure, however, provides:
SEC. 110. Amendments in general. The court shall, in furtherance of justice, and on
such terms, if any, as may be proper, 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, or a mistaken or inadequate allegation or
description in any other respect so that the actual merits of the controversy may speedily
be determined, without regard to technicalities, and in the most expeditious, and
inexpensive manner. The court may also, upon like terms, allow an answer or other
pleading to be made after the time limited by the rules of the court for filing the same.
Orders of the court upon the matters provided in this section shall be made upon motion
filed in court, and after notice to the adverse party, and an opportunity to be heard.
Section 503 of the same code provides:
SEC. 503. Judgment not to be reversed on technical grounds. No judgment shall be
reversed on formal or technical grounds, or for such error as has not prejudiced the real
rights of the excepting party.
We are confident under these provisions that this court has full power, apart from that
power and authority which is inherent, to amend the process, pleadings, proceedings,
and decision in this case by substituting, as party plaintiff, the real party in interest. Not
only are we confident that we may do so, but we are convinced that we should do so.
Such an amendment does not constitute, really a change in the identity of the parties.
The plaintiff asserts in his complaint, and maintains that assertion all through the record,
that he is engaged in the prosecution of this case, not for himself, but for the bishop of
the diocesenot by his own right, but by right of another. He seeks merely to do for the
bishop what the bishop might do for himself. His own personality is not involved. His own
rights are not presented. He claims no interest whatever in the litigation. He seeks only
the welfare of the great church whose servant he is. Gladly permits his identity to be
wholly swallowed up in that of his superior. The substitution, then, of the name of the
bishop of the diocese, or the Roman Catholic Apostolic Church, for that of Padre Alonso,
as party plaintiff, is not in reality the substitution of one identity for another, of one party
for another, but is simply to make the form express the substance. The substance is
there. It appears all through the proceedings. No one is deceived for an instant as to
Case Compilation
whose interest are at stake. The form of its expression is alone defective. The
substitution, then, is not substantial but formal. Defect in mere form can not possibly so
long as the substantial is clearly evident. Form is a method of speech used to express
substance and make it clearly appear. It is the means by which the substance reveals
itself. If the form be faulty and still the substance shows plainly through no, harm can
come by making the form accurately expressive of the substance.
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 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 witnesses, and the same evidence. The name of the plaintiff would constitute the
only difference between the old trial and the new. In our judgment there is not enough in
a name to justify such action.
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 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.
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 desserts 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 of these Islands for defect of form when his substantial
rights have not been prejudiced thereby.
In ordering this substitution, we are in accord with the best judicial thought. (McKeighan
vs. Hopkins, 19 Neb., 33; Dixon vs. Dixon, 19 Ia., 512; Hodges vs. Kimball, 49 Ia., 577;
Sanger vs. Newton, 134 Mass., 308; George vs. Reed, 101 Mass., 378; Bowden vs.
Burnham, 59 Fed. Rep., 752; Phipps and Co. vs. Hurlburt, 70 Fed. Rep., 202; McDonal
vs. State, 101 Fed. Rep., 171; Morford vs. Diffenbocker, 20 N. W., 600; Costelo vs.
Costelo vs. Crowell, 134 Mass., 280; Whitaker vs. Pope, 2 Woods, 463, Fed. Cas. no.
17528; Miller vs. Pollock, 99 Pa. St., 202; Wilson vs. Presbyterian Church, 56 Ga., 554;
Wood vs. Circuit Judge, 84 Mich., 521; Insurance Co, vs. Mueller, 77 Ill., 22; Farman vs.
Doyle, 128 Mich., 696; Union Bank vs. Mott, 19 How. Pr., 114; R. R. Co. vs. Gibson, 4
Ohio St., 145; Hume vs. Kelly, 28 Oreg., 398.)
It is therefore, ordered and decreed that the process, pleadings, proceedings and
decision in this action be, and the same are hereby, amended by substituting the Roman
Catholic Apostolic Church in the place and stead of Eladio Alonso as party plaintiff, that
the complaint be considered as though originally filed by the Catholic Church, the answer
thereto made, the decision rendered and all proceedings in this case had, as if the said
2013400059
institution which Father Eladio Alonso undertook to represent were the party plaintiff, and
that said decision of the court below, so amended, is affirmed, without special finding as
to the costs.
Arellano, C. J., Torres, Johnson and Trent, JJ., concur.
G.R. No. 29155, Larena v. Villanueva, 53 Phil. 923

content follows
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
November 5, 1928
G.R. No. 29155
JOSEFINA RUBIO DE LARENA, plaintiff-appellant,
vs.
HERMENEGILDO VILLANUEVA, defendant-appellee.
Abad Santos, Camus and Delgado and Jose Montano for appellant. Del Rosario
and Del Rosario for appellee.
OSTRAND, J.:
The case at bar is a sequel to case G. R. No. 21706, Josefina Rubio de Larena vs.
Hermenegildo Villanueva, decided on March 26, 1924.[[1]] In that case we affirmed a
decision of the Court of First Instance ordering the rescission of a lease of the Tacgajan
Sugar Plantation and the payment by the defendant-lessee of the unpaid balance of the
rent for the agricultural year 1920-1922 in the sum of P5,949.28 with interest from August
26, 1922, an for P8,000 in rent for the agricultural year 1921-1923. The decision also
provided that the possession of the leased land be delivered to the plaintiff.
Shortly after the record was returned to the court below, a writ of execution was issued,
but before levy was made the parties came to an agreement, under which the money
judgment was to be satisfied by the payment of P10,500 in cash and the transfer to the
plaintiff of a dwelling house situated in the municipality of Bais. The agreement was
carried out in accordance with its terms, and on September 30, 1924, the following
document was executed by the plaintiff:
Habiendo llegado a un convenio entre la que subscribe, ejecutante, en la causa civil No.
67 decidida por la Corte Suprema, y el ejecutado, Don Hermenegildo Villanueva, por la
presente declaro haber recibido del Sheriff Provincial de Negros Oriental, y mi entera
satisfaccion la suma de diez mil quinientos pesos (P10,500), mas una casa residencial
con su solar, situada en la plaza del Municipio de Bais, Provincia de Negros Oriental,
cuyas descripciones aparecen an un ocumento aparte, por el importnte de la
ejecusacion expidida por el Jusgado de Negros Oriental al 14 de mayo de 1924, en vitud
de una decision de la Corte Suprema. Con este queda definitivamente cumplimentada
esta ejecucion.
Y para que asi conste, firmo la presente en el Municipio de Bais, Provincia de Negros
Oriental, I. F., ante el Sheriff Provincial de esta Provincia de Negros Oriental y el Notario
Publico Don Francisco Romero, que ratifica este compromiso.
(Fda.) JOSEFINA RUBIO, Vda. DE LARENA
2013400059
Firmado en presencia de:

(Fdos.) BRAULIO RUBIO
FRANCISCO PINERO
(ACKNOWLEDGMENT)
In the meantime, the defendant had harvested the sugarcane crop produced in the
agricultural year 1922-1924, and after having satisfied the aforesaid money judgment, he
also continued in possession of the plantation long enough to appropriate to himself the
following ratoon cane crop.
The present action was brought on April 13, 1925, but the last amended complaint,
setting forth three causes of action, was not filed until June 17, 1927. As her first cause of
action the plaintiff, after a preliminary statement of the origin of the controversy, alleges
that while case G. R. No. 21706 was on appeal to the Supreme Court, the defendant
knew positively that the aforesaid lease was declared rescinded by the Court of First
Instance on September 8, 1923, and that he, the defendant, also knew that he thereafter
was not entitled to the possession of the aforesaid hacienda; that he, nevertheless, in
bad faith continued in such possession during the agricultural year 1922-1924 and
appropriated to himself the cane harvest for that year, which after deducting the share of
the sugar central, produced 1,679.02 piculs for his own benefit, which sugar was sold by
him for the sum of P13 a picul; that the plaintiff has demanded payment to her of the total
value of said 1,679.02 piculs, amounting to P21,827.26, but that the defendant refuses to
pay. The plaintiff, therefore, asks judgment for the sum of P21,827.26 upon the first
cause of action.
For the second cause of action the plaintiff alleges that under the contract of lease of the
Tacgajan Hacienda, one of the obligations assumed by the defendant was that he would
use the care of a good father of the family in conserving the tools, agricultural
implements, draft animals, and other effects enumerated in an inventory made at the time
the defendant entered in possession under the lease; that he was further obligated to
return said property to the plaintiff, but that he return said property to the plaintiff, but that
he returned only a part that he returned only a part thereof and failed to returned only a
part thereof and failed to return 4 carabaos, 4 vacunos, 1 corn mill, 4 wagons, 106 steel
rails, 14 plows, 1 table, 1 scale, an 1 telephone, the total value of the property
enumerated being P3,596 for which amount, plus P500 in damages, the plaintiff asks
judgment under her second cause of action.
As a third cause of action the plaintiff alleges that the harvest of sugar cane illegally
made by the defendant in 1924 left ratoon sugar cane in the fields of the hacienda, which
sugar can was the property of the plaintiff, and that during the year 1925, the defendant
illegally harvested said ratoon cane together with some recently planted cane, which
harvested after deducting the share of the sugar central, produced 1,613.25 piculs of
sugar, which the defendant sold for his own benefit at the price of P13 per picul, the total
amount received by him being P20,962.25 for which the plaintiff demands judgment.
In his answer to the first and third causes of action, the defendants alleges that according
to the pleadings in case G. R. No. 21706, the two causes of action were included in that
case and, therefore, must be considered res adjudicata. In regard to the second cause of
action the defendant pleads the general issue and sets up as a special defense that
assuming that the property referred to in said cause of action was missing, it loss was
due to its total extinction by ordinary use, for which the defendant could not be held
responsible. For all three causes of action, the defendant sets up as a special defense
the document executed by the plaintiff on September 30, 1924, acknowledging the
satisfaction of the judgment in case G. R. No. 21706.

Upon trial the Court of First Instance sustained the defendant's special defense and
absolved him from the complaint with the cost against the plaintiff, whereupon the latter
appealed to this court.
We do not think that the court below erred in absolving the defendant from liability upon
the second cause of action. It is not without significance that in her original complaint the
plaintiff claimed only 5 plows, 6 carts, 3 carabaos an 4 vacunos, the total value of which
was alleged to be P1,360; in the first amended complaint filed over two years later, the
same claim was made, but in the last amended complaint a number of other articles were
included, thus increasing the claim to P3,596. The court below found that the weight of
the evidence showed that the missing draft animals died from rinderpest and that the
other personal property was turned over to the provincial sheriff for delivery to the plaintiff
before the writ of execution was returned to the court. If so, the action would lie against
the sheriff rather than against the defendant.
As to the first cause of action the defendant argues that it was included in the prayer of
an amended complaint filed in case G. R. No. 21706 and that, although no express
determination thereof was made in the decision of the case, it must, nevertheless, be
regarded as res judicata. That such is not the case is very clear. The Code of Civil
Procedure says:
That only is deemed to have been so adjudged in a former judgment which appears upon
its face to have been so adjudged, or which was actually and necessarily included
therein or necessary thereto. (Sec. 307, Code of Civil Proc.)
But the defendant maintains that the plaintiff having had an opportunity to ventilate the
matter in the former case, she cannot now enforce the same cause of action in the
present case. Properly speaking, this argument does not involve the doctrine of res
judicata but rests on the well-known an, in American law, firmly established principle that
a party will not be permitted to split up a single cause of action an make it the basis for
several suits. But that is not this case. The rule is well established that when a lease
provides for the payment of the rent in separate installments, each installment is an
independent cause of action, though it has been held and is good law, that in an action
upon such a lease for the recovery of rent, the installments due at the time the action
brought must be included in the complaint an that failure to o so will constitute a bar to a
subsequent action for the payment of that rent. The aforesaid action, G. R. No. 21706,
was brought on August 23, 1922, the plaintiff demanding payment of then sue rent in
addition to the rescission of the lease. On July 27, 1923, the plaintiff filed a motion for an
amendment to paragraph 6 of the complaint adding to that paragraph the following
sentence:
Que tambien ha vencido ya el tercer ano el arrendamiento de la finca en cuestion y que
tampoco ha pagado el demandao el canon correspondiente a icho ano.
The plaintiff also amended the prayer of the complaint by asking judgment for rent for
years subsequent to 1922. The motion was granted, and the case came up for trial on
July 30, 1923, and on September 8, 1923, the trial court rendered its decision giving
judgment for rent up to and including the rent for the agricultural year ending in 1923. The
lease did not provide for payment of rent in advance or at any definite time, an it appears
plainly from the record that the rent for an agricultural year was not considered due until
the end of the corresponding year. It follows that the rent for the agricultural year 19221924 ha not become sue time of the trial of the case and that consequently the trial court
could not render judgment therefore. The action referred to is, therefore, no bar to the
Case Compilation
first cause of action in the present litigation.

The defendant places much weigh upon the document of September 30, 1924,
hereinbefore quoted. The document speaks for itself, and it will be readily seen that it is
merely a receipt for the satisfaction of the money judgment in the case G. R. No. L-21706
and has nothing to with the present case.
The only question in regard to the first cause of action relates to the amount of the
damages. The plaintiff contends that the defendant was a possessor in bad faith, and
therefore, must pay the value of the fruits of the land in accordance with article 455 of the
Civil Code. Under the circumstances of the case, we cannot so hold. The defendant held
possession under the contract of lease until said contract was rescinded. The contract
contained no special provision for the procedure in effecting the rescission, and it follows
that it could only be accompanied by a final judgment of the court. The judgment in case
G. R. No. L-210706 did not become final until March 27, 192, when our decision on
appeal was rendered. As that must have been close to the end of the harvest and milling
of the sugar crop for the period to which the first cause of action refers, we do not think
that the defendant should be required to pay more than the amount of the stipulated rent
for the period, i. e., the sum of P8,000 with interest rent for that period, i. e., the sum of
P8,000 with interest. (Lerma vs. De la Cruz, 7 Phil., 581.)
The action for terminating the lease was brought under article 1124 of the Civil Code, an
it may, perhaps, he said that properly speaking, the subject matter of the action was a
resolution of the contract an not a rescission. That may be true, but it is a distinction
without a difference; in their case a judicial declaration would be necessary for the
cancellation of the contract in the absence of a special agreement.
Very little need be said in regard to the third cause of action. It relates to a period
subsequent to the complete termination of the lease by final judicial order. The defendant
had then no right whatever to the possession of the land or to the fruits thereof, and in
removing the fruits, he acted in bad faith. This being the case, he must pay for the fruits
received by him, less the necessary expenses of production. (Arts. 455 and 453 of the
Civil Code.) As his bad faith commence long before the fruits in question were produced,
he is not entitled to any part of the net proceeds of the crop. The evidence shows that the
net ratoon crop of the year 1924-1925 was 1,613.25 piculs of sugar, and according to the
defendant's own statement, the market value of the sugar was in the neighborhood of
P11 per picul an the costs of production about P4.50. The net result is that under the third
cause of action, the defendant must pay to the plaintiff the sum of P10,486.13 with
interest.
For the reason stated, the judgment of the court below is affirmed in regard to the second
cause of action. It is reversed as to the first and third causes of action, and it is hereby
ordered that the plaintiff have and recover from the defendant the sum of P18,486.13
with interest at the rate of 6 per cent per annum from April 13, 1925, the date of the filing
of the complaint. No costs will be allowed. So ordered.
Avancea, C. J., Johnson Street, Malcolm, Villamor, Romualdez, an Villa-Real, JJ.,
concur.
ORDER AMENDING DECISION
December 10, 1928
OSTRAND, J.:
In the motion filed by the defendant on November 14, 1928 our attention is called to a
mathematical error in that we, in discussing the plaintiff's third cause of action, failed to
take into consideration the fact that one-half of the gross ratoon crop produced on the
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land in question in the agricultural year 1924-1925 was ceded to the sugar central as
compensation for the milling of the cane and that the defendant paid the expenses of the
production of the total or gross crop. Page 8 of the aforesaid decision is therefore
amended so as to read as follows:
Very little need be said in regard to the third cause of action. It relates to a period
subsequent to complete termination of the lease by final judicial order. The defendant
had then no right whatever to the possession of the land or to the fruits thereof, and in
removing the fruits, he acted in bad faith. This being the case, he must pay for the fruits
received by him, less the necessary expenses of production (Arts. 455 and 453 of the
Civil Code.) As his bad faith commenced long before the fruits in question were
produced, he is not entitled to any part of the net proceeds of the crop. The evidence
shows that the gross ratoon crop for the year 1924-1925 was 3,226.50 piculs of sugar,
and according to the defendant's own statement, the market value of the sugar was in
the neighborhood of P11 per picul and the cost of production about P4.50. The defendant
received only one-half of the gross crop, the other half going to the sugar central as
compensation for the milling of the cane, but the defendant paid the cost of production
both of his share of the sugar and that of the sugar central. The net result is that under
the third cause of action, the defendant must pay to the plaintiff the sum of P3,226.50
with interest.
"For the reasons stated, the judgment of the court below is affirmed in regard to the
second cause of action. It is reversed as to the first an third causes of action, an it is
hereby ordered that the plaintiff have and recover from the defendant the sum of
P11,226.50 with interest at the rate of 6 per cent per annum from April 13, 1925, the date
of the filing of the complaint. No costs will be allowed." So ordered.
Avancea, C. J., Johnson, Street, Malcolm, Villamor, Romualdez, and Villa-Real, JJ.,
concur.
G.R. No. L-32958
November 8, 1930
BLOSSOM AND COMPANY, INC., plaintiff-appellant,
vs.
MANILA GAS CORPORATION, defendant-appellee.
Harvey and O'Brien for appellant.Ross, Lawrence and Selph and John B. Miller for
appellee.
STATEMENT
In its complaint filed March 3, 1927, the plaintiff alleges that on September 10, 1918, it
entered into a contract with the defendant in which the plaintiff promised and undertook
to purchase and receive from the defendant and the defendant agreed to sell and deliver
to the plaintiff, for a period of four years, three tons of water gas tar per month from
September to January 1, 1919 and twenty tons per month after January 1, 1919, for the
remaining period of the contract; one-half ton of coal gas tar a month from September to
January 1, 1919, and six tons per month after January 1, 1919, for the remainder of the
contract, delivery to be made at the plant of the defendant in the City of Manila, without
containers and at the price of P65 per ton for each kind of gas tar, it being agreed that
this price should prevail only so long as the raw materials coal and crude oil used by
the defendant in the manufacture of gas should cost the defendant the same price as
that prevailing at the time of the contract, and that in the event of an increase or
2013400059
decrease in the cost of raw material there would be a corresponding increase or

decrease in the price of the tar. That on January 31, 1919, this contract was amended so
that it should continue to remain in force for a period of ten years from January 1, 1919,
and it was agreed that the plaintiff should not be obliged to take the qualities of the tars
required during the year 1919, but that it might purchase tars in such quantities as it
could use to advantage at the stipulated price. That after the year 1919 the plaintiff would
take at least the quantities specified in the contract of September 10, 1918, to be taken
from and after January 1, 1919, and that at its option it would have the right to take any
quantity of water gas tar in excess of the minimum quantity specified in that contract and
up to the total amount of output of that tar of defendant's plant and also to take any
quantity of coal gas tar in excess of the minimum quantity specified in that contract and
up to 50 per cent of defendant's entire output of coal gas tar, and that by giving the
defendant ninety days' notice, it would have the right at its option to take the entire output
of defendant's coal gas tar, except such as it might need for its own use in and about its
plant. That in consideration of this modification of the contract of September 10, 1918,
plaintiff agreed to purchase from the defendant of certain piece of land lying adjacent to
its plant at the price of P5 per square meter, the proof of which is evidenced by Exhibit C.
That pursuant to Exhibit C, defendant sold and conveyed the land to the plaintiff which in
turn executed a mortgage thereon to the defendant for P17,140.20, to secure the
payment of the balance of the purchase price.
It is then alleged:
VIII. That about the last part of July, 1920 the defendant herein, the Manila Gas
Corporation willfully, and deliberately breached its said contract, Exhibit C, with the
plaintiff by ceasing to deliver any coal and water gas tar to it thereunder solely because
of the increased price of its tar products and its desire to secure better prices therefor
than plaintiff was obliged to pay to it, notwithstanding the frequent and urgent demands
made by the plaintiff upon it to comply with its aforesaid contract by continuing to deliver
the coal and water gas tar to the plaintiff thereunder, but the said defendant flatly refused
to make any deliveries under said contract, and finally on November 23, 1923, the
plaintiff was forced to commence action against the defendant herein in the Court of First
Instance of Manila, being case No. 25352, of that court entitled 'Blossom & Co., plaintiff,
vs. Manila Gas Corporation, defendant,' to recover the damages which it had up to that
time suffered by reason of such flagrant violation of said contract on the part of the
defendant herein, and to obtain the specific performance of the said contract and after
due trial of that action, judgment was entered therein in favor of the plaintiff herein and
against the said defendant, the Manila Gas Corporation, for the sum of P26,119.08, as
the damages suffered by this plaintiff by the defendant's breach of said contract from
July, 1920, up to and including September, 1923, with legal interest thereon from
November 23, 1923, and for the costs but the court refused to order the said defendant
to resume the delivery of the coal and water gas tar to the plaintiff under said contract,
but left the plaintiff with its remedy for damages against said defendant for the
subsequent breaches of said contract, which said decision, as shown by the copy
attached hereto as Exhibit G, and made a part hereof, was affirmed by our Supreme
Court on March 3, 1926;
IX. That after the defendant had willfully and deliberately violated its said contract as
herein-before alleged, and the plaintiff suffered great damage by reason thereof, the
plaintiff claimed the right to off- set its damages against the balance due from it to said
defendant on account of the purchase of said land from the defendant, and immediately
thereupon and notwithstanding said defendant was justly indebted to the plaintiff at that
time as shown by the judgment of the Court Exhibit G, in more that four times the amount
due to it from the plaintiff, the said defendant caused to be presented against the plaintiff
a foreclosure action, known as the Manila Gas Corporation versus Blossom & Company,
No. 24267, of the Court of First Instance of Manila, and obtained judgment therein
ordering that Blossom & Company pay the last installment and interest due on said land
or else the land and improvements placed thereon by the plaintiff would be sold as
provided by law in such cases to satisfy the same, and the said defendant proceeded
with the sale of said property under said judgment and did everything in its power to sell
the same for the sole purpose of crushing and destroying the plaintiff's business and thus
rendering it impossible for the plaintiff herein to continue with its said contract in the event
that said defendant might in the future consider it more profitable to resume performance
of the same, but fortunately the plaintiff was able to redeem its property as well as to
comply with its contract and continued demanding that the defendant performed its said
contract and deliver to it the coal and water gas tar required thereby.
That the defendant made no deliveries under its contract, Exhibit C, from July, 1920 to
March 26, 1926, or until after the Supreme Court affirmed the judgment of the lower court
for damages in the sum of P26, 119.08. 1
It is then alleged that:
. . . On March 26, 1926 the said defendant offered to resume delivery to the plaintiff from
that date of the minimum monthly quantities of tars stated in its contract ,and the plaintiff
believing that the said defendant was at least going to try to act in good faith in the
further performance of its said contract, commenced to accept deliveries of said tars from
it, and at once ascertained that the said defendant was deliberately charging it prices
much higher than the contract price, and while the plaintiff accepted deliveries of the
minimum quantities of tars stated in said contract up to and including January, 1927,
(although it had demanded deliveries of larger quantities thereunder, as hereinafter
alleged) and paid the increased prices demanded by the defendant, in the belief that it
was its duty to minimize the damages as much as possible which the defendant would be
required to pay to it by reason of its violation of said contract, it has in all cases done so
under protest and with the express reservation of the right to demand from the said
defendant an adjustment of the prices charged in violation of its contract, and the right to
the payment of the losses which it had and would suffer by reason of its refusal to make
additional deliveries under said contract, and it also has continuously demanded that the
said defendant furnish to it statements supported by its invoices showing the cost prices
if its raw materials coal and crude oil upon which the contract price of the tars in
question is fixed, which is the only way the plaintiff has to calculate the true price of said
tars, but said defendant has and still refuses to furnish such information, and will
continue to refuse to do so, unless ordered to furnish such information to the plaintiff by
the court, and the plaintiff believes from the information which it now has and so alleges
that the said defendant has overcharged it on the deliveries of said tars mentioned in the
sum of at least P10,000, all in violation of the rights of the plaintiff under its said contract
with the defendant.
That on January 31, 1926 and pursuant to Exhibit C. plaintiff notified the defendant in
writing that commencing with the month of August, 1926 it desired to take delivery of 50
per cent of defendant's coal tar production for that month and that on November 1, 1926,
it desired to take the entire output of defendant's coal gas tar, but that the defendant
refused and still refuses to make such deliveries unless plaintiff would take all of its water
Case Compilation
gas tar production with the desired quantity of coal gas tar which refusal was a plain
violation of the contract. That on January 29, 1927, and in accord with Exhibit C, plaintiff
notified the defendant in writing that within ninety days after the initial delivery to it of its
total coal gas tar production or in February, 1927, it would require 50 per cent of its total
water gas tar production and that in April 1927, it would require the total output of the
defendant of both coal and water gas tars, and that it refused to make either of such
deliveries.
It is then alleged:
XIV. That as shown by the foregoing allegations of this complaint, it is apparent that
notwithstanding the plaintiff in this case has at all times faithfully performed all the terms
and conditions of said contract, Exhibit C, on its part of be performed, and has at all
times and is now ready, able and willing to accept and pay for the deliveries of said coal
and water gas tars required by said contract and the notices given pursuant thereto, the
said defendant, the Manila Gas Corporation, does not intend to comply with its said
contract, Exhibit C, and deliver to the plaintiff at the times and under the terms and
conditions stated therein the quantities of coal and water gas tars required by said
contract, and the several notices given pursuant thereto, and that it is useless for the
plaintiff to insist further upon its performance of the said contract, and for that reason he
only feasible course for the plaintiff to pursue is to ask the court for the rescission of said
contract and for the full damages which the plaintiff has suffered from September, 1923,
and will suffer for the remainder of said contract by reason of the defendant's failure and
refusal to perform the same, and the plaintiff has so notified the said defendant.
That since September, 1923, by reason of the bad faith of the defendant, the plaintiff has
been damaged in the sum of P300,000, for which it prays a corresponding judgment, and
that the contract, Exhibit C, be rescinded and declared void and without force and effect.
After the filing and overruling of its demurrer, the defendant filed an answer in the nature
of a general and specific denial and on April 10, 1928, and upon stipulation of the parties,
the court appointed W. W. Larkin referee, "to take the evidence and, upon completion of
the trial, to report his findings of law and fact to the court."
July 18, 1928, the defendant filed an amended answer in which it alleged as an
affirmative defense, first, that the complaint does not state facts sufficient to constitute
cause of action the reason that a prior adjudication has been had of all the issues
involved in this action, and, second, "that on or about the 16th day of June, 1925, in an
action brought in the Court of First Instance of the City on Manila, Philippine Islands,
before the Honorable Geo. R. Harvey, Judge, by Blossom & Company, plaintiff, vs.
Manila Gas Corporation, defendant, being civil case No. 25353, of said court, for the
same cause of action as that set fourth in the complaint herein, said plaintiff recovered
judgment upon the merits thereof, against said defendant decreeing a breach of the
contract sued upon herein, and awarding damages therefor in the sum of P26,119.08
with legal interest from November 23, 1923, and costs of suit, which judgment was upon
appeal affirmed by the Supreme Court of the Philippine Islands, in case G. R. No. 24777
of said court, on the 3d day of March, 1926 and reported in volume 48 Philippines
Reports at page 848," and it prays that plaintiff's complaint be dismissed with costs.
After the evidence was taken the referee made an exhaustive report of sixty-pages in
which he found that the plaintiff was entitled to P56,901.53 damages, with legal interest
from the date of the filing on the complaint, to which both parties filed numerous
exceptions
In its decision the court says:
2013400059
Incidental references have been made to the referee's report. It was admirably prepared.
Leaving aside the question of damages and the facts upon which the referee assessed
them, the facts are not in dispute at least not in serious dispute. They appear in the
documentary evidence and this decision is based upon documents introduced into
evidence by plaintiff. If I could have agreed with the referee in respect to the question of
law, I should have approved his report in toto. If defendant is liable for the damages
accruing from November 23, 1923, the date the first complaint was filed, to April 1st,
1926, the date of resumption of relations; and if defendant, after such resumption of
relations, again violated the contract, the damages assessed by the referee, are, to my
way of thinking, as fair as could be estimated. He went to tremendous pains in figuring
out the details upon which he based his decision. Unfortunately, I cannot agree with his
legal conclusions and the report is set aside except wherein specifically approved.
It is unnecessary to resolve specifically the many exceptions made by both partied to the
referee's report. It would take much time to do so. Much time has already been spent in
preparing this decision. Since both parties have informed me that in case of adverse
judgment ,and appeal would be taken, I desire to conclude the case so that delay will be
avoided.
Let judgment be entered awarding damages to plaintiff in the sum of P2,219.60, with
costs.
From which plaintiff only appealed and assigns twenty-four different errors, of which the
following are material to this opinion:
I. The trial court erred in holding that this suit in so far as the damages from November,
1923, to March 31, 1926, are concerned , is res adjudicata.
II. The trial court erred in holding that the defendant repudiated the contract in question
as a whole, and that the plaintiff when it brought its first suit to collect damages had
already elected and consented to the dissolution of the contract, and its choice once
made, being final, it was estopped to claim that the contract was alive when that suit was
brought.
xxx
xxx
xxx
VII. The trial court erred in refusing to sustain plaintiff's third exception to the legal
interpretation placed on the contract in this case by the referee with reference to quantity
of tars and his conclusion with respect to the terms thereof that:
"1. Plaintiff must take and defendant must deliver either the minimum or maximum
quantity of water gas tar and not any quantity from the minimum to the maximum and/or
"2. Plaintiff must take either the minimum and any quantity up to fifty per cent of entire
output of coal gas tar.
"3. With ninety days' notice by plaintiff to defendant the former must take and the latter
must deliver total output of both tars, except such as might be needed by defendant for
use in and about its plants and not any quantity from the minimum up to total output of
both tars." (See page 47, Referee's report.)
And in holding that the option contained in said contract, taking into consideration the
purposes of both parties in entering into the contract, was a claimed by defendant: all the
water gas tar and 50 per cent of the coal gas tar upon immediate notice and all tars upon
ninety day's notice.
VIII. The trial court erred in refusing to sustain plaintiff's fourth exception to the finding
and conclusion of the referee that from the correspondence between the parties it was
apparent that plaintiff did not make a right use of its option, and that the letter of June 25,
1926, and the subsequent demands, with exception of the letter of July 31, 1926, were
2013400059
not made in pursuance to the terms of the contract, and that defendant had no liability in
refusing to comply therewith, and in allowing plaintiff damages only for the failure of the
defendant to deliver quantities shown in Exhibits Ref. 21 and 22. (See pages 51, 52,
Referee's report.)
IX. The trial court erred in finding and holding that the demands of plaintiff for additional
tars under its contract with the defendant were extravagant and not made in good faith,
and that when it wrote to defendant that it desired maximum quantities of coal gas tars
and only minimum of water gas tars, but with the reservation of going back to minimum
quantities of both at any time it chose, it announced its intention f breaching the contract,
and defendant was under no obligation to deliver maximum quantities of either tars, and
since this was the efficient cause of the failure of defendant to deliver or plaintiff to accept
tars, the blame is attribute to plaintiff, and it cannot recover for a rescission.
xxx
xxx
xxx
XXIII. The trial court erred in refusing to sustain plaintiff's seventeenth exception to the
finding and conclusion of the referee that the plaintiff is entitled to recover from the
defendant only the following sums:
Water gas tar (Exhibit Ref. 21)
P38,134.60
Coal gas tar (Exhibit Ref. 22)
16,547.33
Overcharges on deliveries (Exhibit Ref. 23)
2,219.60
or a total of
56,901.53
with interest, and in not awarding to the plaintiff as damages in this case the sum of
P319,253.40, with legal interest thereon from the date of filing the complaint in this case,
in the manner and form computed but it, and in awarding damages to the plaintiff for the
sum of only P2,219.60. with costs.
xxx
xxx
xxx
JOHNS, J.:
In this action plaintiff seeks to recover damages from the defendant which it claims to
have sustained after September, 1923, arising from, and growing out of, its original
contract of September 10, 1918, as modified on January 1, 1919, to continue for a period
of ten years from that date.
In paragraph VIII of its complaint, plaintiff alleges that about the last part of July, 1920,
the defendant "willfully and deliberately breached its said contract," and that it "flatly
refused to make any deliveries under said contract, and finally on November 23, 1923," it
was forced to commence action in the Court of First Instance against the defendant
known as case No. 25352, to recover the damages which it had then sustained by
reason of such flagrant violation of said contract on the part of the defendant, in which
judgment was rendered in favor of the plaintiff and against the defendant for
P26,1119.08, as damages suffered by this plaintiff by the defendant's breach of said
contract from July 1920, up to and including September, 1923, with legal interest thereon
from November 23, 1923, and for the costs," in which the court refused to order the
defendant to resume the delivery of the coal and water gas tar to the plaintiff, in accord
with said contract, but left it with its remedy for damages against the defendant for any
10
subsequent breaches of the contract. A copy of that judgment, which was later affirmed
by this court, is attached to, marked Exhibit G, and made a part of, the complaint in this
action.
In their respective briefs, opposing counsel have much to say about the purpose and
intent of the judgment, and it is vigorously asserted that it was never intended that it
should be or become a bar to another action by the plaintiff to recover any damages it
may have sustained after September, 1923, during the remainder of the ten-year period
of that contract. Be that as it may, it must be conceded that the question as to what would
be the legal force and effect of that judgment in that case was never presented to, or
decided by, the lower court or this court. In the very nature of things, neither court in that
case would have the power to pass upon or decided the legal force and effect of its own
judgment, for the simple reason that it would be premature and outside of the issues of
any pleading, and could not be raised or presented until after the judgment became final
and then only by an appropriate plea, as in this case.
Plaintiff specifically alleges that the defendant willfully and deliverately breached the
contract and "flatly refused to make any deliveries under said contract," by reason of.
which it was forced to and commenced its former action in which it was awarded
P26,119.08 damages against the defendant by reason of its breach of the contract from
July, 1920, to September, 1923.
In the final analysis, plaintiff in this action seeks to recover damages growing out of, and
arising from, other and different breaches of that same contract after November, 1923, for
the remainder of the ten-year period, and the question is thus squarely presented as to
whether the rendition of the former judgment is a bar to the right of the plaintiff to recover
damages from and after September, 1923, arising from, and growing out of, breaches of
the original contract of September 10, 1918, as modified on January 1, 1919. That is to
say, whether the plaintiff, in a former action, having recovered judgment for the damages
which it sustained by reason of a breach of its contract by the defendant up to
September, 1923, can now in this action recover damages it may have sustained after
September, 1923, arising from, and growing out of, a breach of the same contract, upon
and for which it recovered its judgment in the former action.
In the former action in which the judgment was rendered, it is alleged in the compliant:
"7. That about the last part of July or the first part of August, 1920, the Manila Gas
Corporation, the defendant herein, without any cause ceased delivering coal and water
gas tar to the plaintiff herein; and that from that time up to the present date, the plaintiff
corporation, Blossom & Company, has frequently and urgently demanded of the
defendant, the Manila Gas Corporation, that it comply with its aforesaid contract Exhibit A
by continuing to deliver coal and water gas tar to this plaintiff but that the said
defendant has refused and still refuses, to deliver to the plaintiff any coal and water gas
tar whatsoever under the said contract Exhibit A, since the said month of July 1920.
"9. That owing to the bad faith of the said Manila Gas Corporation, defendant herein, in
not living up to its said contract Exhibit A, made with this plaintiff, and refusing now to
carry out the terms of the same, be delivering to this plaintiff the coal and water gas tar
mentioned in the said Exhibit A, has caused to this plaintiff great and irreparable
damages amounting to the sum total of one hundred twenty- four thousand eight hundred
forty eight pesos and seventy centavos (P124,848,70);and that the said defendant
corporation has refused, and still refuses, to pay to this plaintiff the whole or any part of
the aforesaid sum.
"10. That the said contract Exhibit A, was to be in force until January 1, 1929, that is to
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say ten (10) years counted from January 1, 1929; and that unless the defendant again
commence to furnish and supply this plaintiff with coal and water gas tar, as provided for
in the said contract Exhibit A, the damages already suffered by this plaintiff will
continually increase and become larger and larger in the course of years preceding the
termination of the said contract on January 1, 1929."
In that action plaintiff prays for judgment against the defendant:
"(a) That upon trial of this this cause judgment be rendered in favor of the plaintiff and
against the defendant for the sum of P124,8484.70), with legal interest thereon from
November 23, 1923;
"(b) That the court specifically order the defendant to resume the delivery of the coal and
water gas tar to the plaintiff under the terms of the said contract Exhibit A of this
complaint."
In the final analysis, plaintiff must stand or fall on its own pleadings, and tested by that
rule it must be admitted that the plaintiff's original cause of action, in which it recovered
judgment for damages, was founded on the ten-year contract, and that the damages
which it then recovered were recovered for a breach of that contract.
Both actions are founded on one and the same contract. By the terms of the original
contract of September 10, 1018, the defendant was to sell and the plaintiff was to
purchase three tons of water gas tar per month form September to January 1, 1919, and
twenty tons of water gas tar per month after January 1, 1919, one-half ton of coal gas tar
per month from September to January 1, 1919, and six tons of coal gas tar per month
after January 1, 1919. That from and after January 1, 1919, plaintiff would take at least
the quantities specified in the contract of September 10, 1918, and that at its option, it
would have the right to take the total output of water gas tar of defendant's plant and 50
per cent of the gross output of its coal gas tar, and upon giving ninety days' notice, it
would have the right to the entire output of coal gas tar, except such as the defendant
might need for its own use. That is to say, the contract provided for the delivery to the
plaintiff from month to month of the specified amounts of the different tars as ordered and
requested by the plaintiff. In other words, under plaintiff's own theory, the defendant was
to make deliveries from month to month of the tars during the period of ten years, and it
is alleged in both complaints that the defendant broke its contract, and in bad faith
refused to make any more deliveries.
In 34 Corpus Juris, p. 839, it is said:
As a general rule a contract to do several things at several times in its nature, so as to
authorize successive actions; and a judgment recovered for a single breach of a
continuing contract or covenant is no bar to a suit for a subsequent breach thereof. But
where the covenant or contract is entire, and the breach total, there can be only one
action, and plaintiff must therein recover all his damages.
In the case of Rhoelm vs, Horst, 178 U. U., 1; 44 Law. ed., 953, that court said:
An unqualified and positive refusal to perform a contract, though the performance thereof
is not yet due, may, if the renunciation goes to the whole contract, be treated as a
complete breach which will entitle the injured party to bring his action at once.
15 Ruling Case Law, 966, 967, sec. 441 says:
Similarly if there is a breach by the vendor of a contract for the sale of goods to be
delivered and paid for in installments, and the vendee maintains an action therefor and
recovers damages, he cannot maintain a subsequent action to recover for the failure to
deliver later installments.
In Pakas vs. Hollingshead, 184 N. Y., 211; 77 N. E., 40; 3 L. R. A. (N. S.), 1024, the
11
2013400059
syllabus says:
Upon refusal, by the seller, after partial performance, longer to comply with his contract to
sell and deliver a quantity of articles in installments the buyer cannot keep the contract in
force and maintain actions for breaches as they occur but must recover all his damages
in one suit.
And on page 1044 of its opinion, the court say:
The learned counsel for the plaintiff contends that the former judgment did not constitute
a bar to the present action but that the plaintiff had the right to elect to waive or disregard
the breach, keep the contract in force, and maintain successive actions for time to time
as the installments of goods were to be delivered, however numerous these actions
might be. It is said that this contention is supported in reason and justice, and has the
sanction of authority at least in other jurisdictions. We do not think that the contention can
be maintained. There is not as it seems to us any judicial authority in this state that gives
it any substantial support. On the contrary, we think that the cases, so far as we have
been able to examine them, are all the other way, and are to the effect that, inasmuch as
there was a total breach of the contract by the defendant's refusal to deliver, the plaintiff
cannot split up his demand and maintain successive actions, but must either recover all
his damages in the first suit or wait until the contract matured or the time for the delivery
of all the goods had arrived. In other words, there can be but one action for damages for
a total breach of an entire contract to deliver goods, and the fact that they were to be
delivered in installment from time to time does not change the general rule.
The case of L. Bucki & Son Lumber Co. vs. Atlantic Lumber Co. (109 Federal, 411), of
the United States Circuit Court of Appeals for the Fifth Circuit, is very similar.
The syllabus says:
1. CONTRACTS CONSTRUCTION ENTIRE CONTRACT. A contract was made
for the sale of a large quantity of logs to be delivered in monthly installments during a
period of eight years, payments to be made also in installments at times having relation
tot he deliveries. It contained stipulations as to such payments, and guaranties as to the
average size of the logs to be delivered in each installment. Held, that it was an entire
contract, and not a number of separate and independent agreements for the sale of the
quantity to be delivered and paid for each month, although there might be breaches of
the minor stipulations and warranties with reference thereto which would warrant suits
without a termination of the contract.
2. JUDGMENTS MATTERS CONCLUDED ACTION FOR BREACH OF
INDIVISIBLE CONTRACT. The seller declared the contract terminated for alleged
breaches by the purchaser, and brought suit for general and special damages the latter
covering payments due for installments of logs delivered. By way of set-off and
recoupment against this demand, the purchaser pleaded breaches of the warranty as to
the size of the logs delivered during the months for which payment had not been made.
Held, that the judgment in such action was conclusive as to all claims or demands or
either party against the other growing out of the entire contract, and was a bar to a
subsequent suit brought by the purchaser to recover for other breaches of the same
warranty in relation to deliveries made in previous months.
On page 415 of the opinion, the court says:
When the contract was ended, the claims of each party for alleged breaches and
damages therefor constituted an indivisible demand; and when the same, or any part of
the same, was pleaded, litigation had, and final judgment rendered, such suit and
judgment constitute a bar to subsequent demands which were or might have been
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litigated (Baird vs. U. S., 96 U. S., 430; 24 L. ed., 703.)

In Watts vs. Weston (238 Federal, 149), Circuit Court of Appeals, Second Circuit, the
syllabus says:
1. JUDGMENTS 593 JUDGMENT AS BAR MATTERS CONCLUDED. Where
a continuing contract was terminated by the absolute refusal of the party whose action
was necessary to further perform, a claim for damages on account of the breach
constituted as indivisible demand, and when the same or any part of the same was
pleaded, litigated, and final judgment rendered, such suit and judgment constitute a bar
to subsequent demands which were or might have been litigated therein.
And on page 150 of the opinion, the court says:
It is enough to show the lack of merit in the present contention to point out as an
inexorable rule of law that, when Kneval's contract was discharged by his total
repudiation thereof, Watt's claims for breaches and damages therefor constituted an
indivisible demand, and when the same, or any part of the same, was pleaded, litigation
had and final judgment rendered, such suit and judgment constitute a bar to subsequent
demands which were or might have been litigated." (Bucki, etc., Co. vs. Atlantic, etc.,
Co., 109 Fed. at page 415; 48 C. C. A., 459; Cf. Landon vs. Bulkley, 95 Fed., 344; 337 C.
C. A., 96.)
The rule is usually applied in cases of alleged or supposed successive breaches, and
consequently severable demands for damages; but if the contract has been discharged
by breach, if suit for damages is all that is left, the rule is applicable, and every demand
arising form that contract and possessed by any given plaintiff must be presented (at
least as against any given defendant) in one action; what the plaintiff does not advance
he foregoes by conclusive presumption.
Inn Abbott vs. 76 Land and Water Co. (118 Pac., 425; 161 Cal., 42), at page 428, the
court said:
In Fish vs. Folley, 6 Hill (N. Y.), 54, it was held, in accord with the rule we have discussed,
that, where the defendant had covenanted that plaintiff should have a continual supply of
water for his mill from a dam, and subsequently totally failed to perform for nine years,
and plaintiff brought an action for the breach and recovered damages sustained by him to
that time, the judgment was a bar to a second action arising from subsequent failure to
perform, on the theory that, although he covenant was a continuing one in one sense, it
was an entire contract, and a total breach put an end to it, and gave plaintiff the right to
sue for an equivalent in damages.
In such a case it is no warrant for a second action that the party may not be able to
actually prove in the first action all the items of the demand, or that all the damage may
not then have been actually suffered. He is bound to prove in the first action not only
such damages as has been actually suffered, but also such prospective damage by
reason of the breach as he may be legally entitled to, for the judgment he recovers in
such action will be a conclusive adjudication as to the total damage on account of the
breach.
It will thus be seen that, where there is a complete and total breach of a continuous
contract for a term of years, the recovery of a judgment for damages by reason of the
breach is a bar to another action on the same contract for and on account of the
continuous breach.
In the final analysis is, there is no real dispute about any material fact, and the important
and decisive question is the legal construction of the pleadings in the former case and in
this case, and of the contract between the plaintiff and the defendant of January 1, 1920.
12
The complaint on the former case specifically alleges that the defendant "has refused
and still refuses, to deliver to the plaintiff any coal and water gas tar whatsoever under
the said contract Exhibit A, since the said month of July, 1920." " That owing to the bad
faith of the said Manila Gas Corporation, defendant herein, in not living up to its said
contract Exhibit A, made with this plaintiff, and refusing now to carry out the terms of the
same." That is a specific allegation not only a breach of the contract since the month of
July, 1920, but of the faith of the defendant in its continuous refusal to make deliveries of
any coal and water gas tar. That amended complaint was filed on July 11, 1924, or four
years after the alleged bad faith in breaking the contract.
Having recovered damages against it, covering a period of four years, upon the theory
that the defendant broke the contract, and in bad faith refused to make deliveries of
either of the tars, how can the plaintiff now claim and assert that the contract is still in
fierce and effect? In the instant case the plaintiff alleges and relies upon the ten year
contract on January 11, 1920, which in bad faith was broken by the defendant. If the
contract was then broken, how can it be enforced in this action?
It is admitted that the defendant never made any deliveries of any tar from July, 1920, to
April, 1936. Also that it made nine deliveries to plaintiff of the minimum quantities of coal
and water gas tar from April 7, 1926, to January 5, 1927.
Plaintiff contends that such deliveries were made under and in continuation of the old
contract.
March 26, 1926, after the decision of this court affirming the judgment in the original
action, plaintiff wrote the defendant:
. . . It is our desire to take deliveries of at least the minimum quantities set forth therein
and shall appreciate to have you advise us how soon you will be in a position to make
deliveries; . . .
. . . In view of the fact that you have only effected settlement up to November 23, 1923,
please inform us what adjustment you are willing to make for the period of time that has
since elapsed without your complying with the contract.
In response to which on March 31, 1926, the defendant wrote this letter to the plaintiff:
In reply to your letter of March 26th, 1926, in regard to tar, we beg to advise you that we
are prepared to furnish the minimum quantities of coal and water gas tars as per your
letter, viz: twenty tons of water gas tar and six tons of coal gas tar. The price figured on
present costs of raw materials is P39.01 ) Thirty-nine and 01/100 Pesos) per ton of water
gas and P33.59 (Thirty-three and 59/100 Pesos) per ton of coal tar.
We shall expect you to take delivery and pay for the above amount of tars at our factory
on or before April 7th prox.
Thereafter we shall be ready to furnish equal amounts on the first of each month. Kindly
make your arrangements accordingly.
On January 29, 1927, the plaintiff wrote the defendant that:
On July 31st last, we made demand upon you, under the terms of our tar contract for 50
per cent of your total coal tar production for that month and also served notice on you
that beginning 90 days from August 1st we would require you total output of coal tar
monthly; this in addition to the 20 tons of water gas tar provided for in the contract to be
taken monthly.
xxx
xxx
xxx
We are here again on your for your total output of coal tar immediately and the regular
minimum monthly quantity of water gas tar. In this connection we desire to advise you
that within 90 days of your initial delivery to us of your total coal tar output we will require
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50 per cent of your total water gas tar output, and, further, that two months thereafter we
will require your total output of both tars.
February 2, 1927, the defendant wrote the plaintiff:
Replying to your letter of Jan. 29, we would sat that we have already returned to you the
check enclosed there with. As we have repeatedly informed you we disagree with you as
to the construction of your contract and insist that you take the whole output of both tars
if you wish to secure the whole of the coal tar.
With regard to your threat of further suits we presume that you will act as advised. If you
make it necessary we shall do the same.lawphil.net
From an analysis of these letters it clearly appears that the plaintiff then sought to reply
upon and enforce the contract of January 1, 1920, and that defendant denied plaintiff's
construction of the contract, and insisted "that you take the whole output of both tars if
you wish to secure the whole of the coal tar."
February 28, 1927, the plaintiff wrote the defendant:
In view of your numerous violations of and repeated refusal and failure to comply with the
terms and provisions of our contract dated January 30-31, 1919, for the delivery to us of
water and coal gas tars, etc., we will commence action," which it did.
The record tends to show that tars which the defendant delivered after April 7, 1926,
were not delivered under the old contract of January 1, 1920, and that at all times since
July 1920, the defendant has consistently refused to make any deliveries of any tars
under that contract.
The referee found as a fact that plaintiff was entitled to P2,219.60 for and on account of
overcharges which the defendant made for the deliveries of fifty-four tons of coal gas tar,
and one hundred eighty tons of water gas tar after April, 1926, and upon that point the
lower says:
The fourth charge that plaintiff makes is meritorious. The price was to be fixed on the
basis of raw materials. The charge for deliveries during 1926 were too high. In this I
agree with entirely with the referee and adopt his findings of fact and calculations. (See
Referee's report, p. 83) The referee awarded for overcharge during the period aforesaid,
the sum of P2,219.60. The defendant was trying to discharge plaintiff from buying tars
and made the price of raw material appear as high as possible.
That finding is sustained upon the theory that the defendant broke its contract which it
made with the plaintiff for the sale and delivery of the tars on and after April, 1926.
After careful study of the many important questions presented on this appeal in the
exhaustive brief of the appellant, we are clearly of the opinion that, as found by the lower
court, the plea of res judicata must be sustained. The judgment of the lower court is
affirmed.
It is so ordered, with costs against the appellant.
Johnson, Street, Malcolm, Villamor, Ostrand, Romualdez, and Villa-Real, JJ., concur.
[G.R. No. 161135. April 8, 2005]
SWAGMAN HOTELS AND TRAVEL, INC., petitioner, vs. HON. COURT OF APPEALS,
and NEAL B. CHRISTIAN, respondents.
DECISION
DAVIDE, JR., C.J.:
May a complaint that lacks a cause of action at the time it was filed be cured by the
13
2013400059
accrual of a cause of action during the pendency of the case? This is the basic issue
raised in this petition for the Courts consideration.
Sometime in 1996 and 1997, petitioner Swagman Hotels and Travel, Inc., through Atty.
Leonor L. Infante and Rodney David Hegerty, its president and vice-president,
respectively, obtained from private respondent Neal B. Christian loans evidenced by
three promissory notes dated 7 August 1996, 14 March 1997, and 14 July 1997. Each of
the promissory notes is in the amount of US$50,000 payable after three years from its
date with an interest of 15% per annum payable every three months. [1] In a letter dated
16 December 1998, Christian informed the petitioner corporation that he was terminating
the loans and demanded from the latter payment in the total amount of US$150,000 plus
unpaid interests in the total amount of US$13,500.[2]
On 2 February 1999, private respondent Christian filed with the Regional Trial Court of
Baguio City, Branch 59, a complaint for a sum of money and damages against the
petitioner corporation, Hegerty, and Atty. Infante. The complaint alleged as follows: On 7
August 1996, 14 March 1997, and 14 July 1997, the petitioner, as well as its president
and vice-president obtained loans from him in the total amount of US$150,000 payable
after three years, with an interest of 15% per annum payable quarterly or every three
months. For a while, they paid an interest of 15% per annum every three months in
accordance with the three promissory notes. However, starting January 1998 until
December 1998, they paid him only an interest of 6% per annum, instead of 15% per
annum, in violation of the terms of the three promissory notes. Thus, Christian prayed
that the trial court order them to pay him jointly and solidarily the amount of US$150,000
representing the total amount of the loans; US$13,500 representing unpaid interests from
January 1998 until December 1998; P100,000 for moral damages; P50,000 for attorneys
fees; and the cost of the suit.[3]
The petitioner corporation, together with its president and vice-president, filed an Answer
raising as defenses lack of cause of action and novation of the principal obligations.
According to them, Christian had no cause of action because the three promissory notes
were not yet due and demandable. In December 1997, since the petitioner corporation
was experiencing huge losses due to the Asian financial crisis, Christian agreed (a) to
waive the interest of 15% per annum, and (b) accept payments of the principal loans in
installment basis, the amount and period of which would depend on the state of business
of the petitioner corporation. Thus, the petitioner paid Christian capital repayment in the
amount of US$750 per month from January 1998 until the time the complaint was filed in
February 1999. The petitioner and its co-defendants then prayed that the complaint be
dismissed and that Christian be ordered to pay P1 million as moral damages; P500,000
as exemplary damages; and P100,000 as attorneys fees.[4]
In due course and after hearing, the trial court rendered a decision [5] on 5 May 2000
declaring the first two promissory notes dated 7 August 1996 and 14 March 1997 as
already due and demandable and that the interest on the loans had been reduced by the
parties from 15% to 6% per annum. It then ordered the petitioner corporation to pay
Christian the amount of $100,000 representing the principal obligation covered by the
promissory notes dated 7 August 1996 and 14 March 1997, plus interest of 6% per
month thereon until fully paid, with all interest payments already paid by the defendant to
the plaintiff to be deducted therefrom.
The trial court ratiocinated in this wise:
(1) There was no novation of defendants obligation to the plaintiff. Under Article 1292 of
the Civil Code, there is an implied novation only if the old and the new obligation be on
2013400059
every point incompatible with one another.

The test of incompatibility between the two obligations or contracts, according to an
imminent author, is whether they can stand together, each one having an independent
existence. If they cannot, they are incompatible, and the subsequent obligation novates
the first (Tolentino, Civil Code of the Philippines, Vol. IV, 1991 ed., p. 384). Otherwise, the
old obligation will continue to subsist subject to the modifications agreed upon by the
parties. Thus, it has been written that accidental modifications in an existing obligation do
not extinguish it by novation. Mere modifications of the debt agreed upon between the
parties do not constitute novation. When the changes refer to secondary agreement and
not to the object or principal conditions of the contract, there is no novation; such
changes will produce modifications of incidental facts, but will not extinguish the original
obligation. Thus, the acceptance of partial payments or a partial remission does not
involve novation (id., p. 387). Neither does the reduction of the amount of an obligation
amount to a novation because it only means a partial remission or condonation of the
same debt.
In the instant case, the Court is of the view that the parties merely intended to change the
rate of interest from 15% per annum to 6% per annum when the defendant started
paying $750 per month which payments were all accepted by the plaintiff from January
1998 onward. The payment of the principal obligation, however, remains unaffected
which means that the defendant should still pay the plaintiff $50,000 on August 9, 1999,
March 14, 2000 and July 14, 2000.
(2) When the instant case was filed on February 2, 1999, none of the promissory notes
was due and demandable. As of this date however, the first and the second promissory
notes have already matured. Hence, payment is already due.
Under Section 5 of Rule 10 of the 1997 Rules of Civil Procedure, a complaint which
states no cause of action may be cured by evidence presented without objection. Thus,
even if the plaintiff had no cause of action at the time he filed the instant complaint, as
defendants obligation are not yet due and demandable then, he may nevertheless
recover on the first two promissory notes in view of the introduction of evidence showing
that the obligations covered by the two promissory notes are now due and demandable.
(3) Individual defendants Rodney Hegerty and Atty. Leonor L. Infante can not be held
personally liable for the obligations contracted by the defendant corporation it being clear
that they merely acted in representation of the defendant corporation in their capacity as
General Manager and President, respectively, when they signed the promissory notes as
evidenced by Board Resolution No. 1(94) passed by the Board of Directors of the
defendant corporation (Exhibit 4).[6]
In its decision[7] of 5 September 2003, the Court of Appeals denied petitioners appeal and
affirmed in toto the decision of the trial court, holding as follows:
In the case at bench, there is no incompatibility because the changes referred to by
appellant Swagman consist only in the manner of payment. . . .
Appellant Swagmans interpretation that the three (3) promissory notes have been
novated by reason of appellee Christians acceptance of the monthly payments of
US$750.00 as capital repayments continuously even after the filing of the instant case is
a little bit strained considering the stiff requirements of the law on novation that the
intention to novate must appear by express agreement of the parties, or by their acts that
are too clear and unequivocal to be mistaken. Under the circumstances, the more
reasonable interpretation of the act of the appellee Christian in receiving the monthly
payments of US$750.00 is that appellee Christian merely allowed appellant Swagman to
14
pay whatever amount the latter is capable of. This interpretation is supported by the letter
of demand dated December 16, 1998 wherein appellee Christian demanded from
appellant Swagman to return the principal loan in the amount of US$150,000 plus unpaid
interest in the amount of US$13,500.00
...
Appellant Swagman, likewise, contends that, at the time of the filing of the complaint,
appellee Christian ha[d] no cause of action because none of the promissory notes was
due and demandable.
Again, We are not persuaded.
...
In the case at bench, while it is true that appellant Swagman raised in its Answer the
issue of prematurity in the filing of the complaint, appellant Swagman nonetheless failed
to object to appellee Christians presentation of evidence to the effect that the promissory
notes have become due and demandable.
The afore-quoted rule allows a complaint which states no cause of action to be cured
either by evidence presented without objection or, in the event of an objection sustained
by the court, by an amendment of the complaint with leave of court (Herrera, Remedial
Law, Vol. VII, 1997 ed., p. 108).[8]
Its motion for reconsideration having been denied by the Court of Appeals in its
Resolution of 4 December 2003,[9] the petitioner came to this Court raising the following
issues:
I. WHERE THE DECISION OF THE TRIAL COURT DROPPING TWO DEFENDANTS
HAS BECOME FINAL AND EXECUTORY, MAY THE RESPONDENT COURT OF
APPEALS STILL STUBBORNLY CONSIDER THEM AS APPELLANTS WHEN THEY
DID NOT APPEAL?
II. WHERE THERE IS NO CAUSE OF ACTION, IS THE DECISION OF THE LOWER
COURT VALID?
III. MAY THE RESPONDENT COURT OF APPEALS VALIDLY AFFIRM A DECISION OF
THE LOWER COURT WHICH IS INVALID DUE TO LACK OF CAUSE OF ACTION?
IV. WHERE THERE IS A VALID NOVATION, MAY THE ORIGINAL TERMS OF
CONTRACT WHICH HAS BEEN NOVATED STILL PREVAIL?[10]
The petitioner harps on the absence of a cause of action at the time the private
respondents complaint was filed with the trial court. In connection with this, the petitioner
raises the issue of novation by arguing that its obligations under the three promissory
notes were novated by the renegotiation that happened in December 1997 wherein the
private respondent agreed to waive the interest in each of the three promissory notes
and to accept US$750 per month as installment payment for the principal loans in the
total amount of US$150,000. Lastly, the petitioner questions the act of the Court of
Appeals in considering Hegerty and Infante as appellants when they no longer appealed
because the trial court had already absolved them of the liability of the petitioner
corporation.
On the other hand, the private respondent asserts that this petition is a mere ploy to
continue delaying the payment of a just obligation. Anent the fact that Hegerty and Atty.
Infante were considered by the Court of Appeals as appellants, the private respondent
finds it immaterial because they are not affected by the assailed decision anyway.
Cause of action, as defined in Section 2, Rule 2 of the 1997 Rules of Civil Procedure, is
the act or omission by which a party violates the right of another. Its essential elements
are as follows:
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1. A right in favor of the plaintiff by whatever means and under whatever law it arises or is
created;
2. An obligation on the part of the named defendant to respect or not to violate such right;
and
3. Act or omission on the part of such defendant in violation of the right of the plaintiff or
constituting a breach of the obligation of the defendant to the plaintiff for which the latter
may maintain an action for recovery of damages or other appropriate relief.[11]
It is, thus, only upon the occurrence of the last element that a cause of action arises,
giving the plaintiff the right to maintain an action in court for recovery of damages or other
appropriate relief.
It is undisputed that the three promissory notes were for the amount of P50,000 each and
uniformly provided for (1) a term of three years; (2) an interest of 15 % per annum,
payable quarterly; and (3) the repayment of the principal loans after three years from
their respective dates. However, both the Court of Appeals and the trial court found that a
renegotiation of the three promissory notes indeed happened in December 1997
between the private respondent and the petitioner resulting in the reduction not waiver of
the interest from 15% to 6% per annum, which from then on was payable monthly,
instead of quarterly. The term of the principal loans remained unchanged in that they
were still due three years from the respective dates of the promissory notes. Thus, at the
time the complaint was filed with the trial court on 2 February 1999, none of the three
promissory notes was due yet; although, two of the promissory notes with the due dates
of 7 August 1999 and 14 March 2000 matured during the pendency of the case with the
trial court. Both courts also found that the petitioner had been religiously paying the
private respondent US$750 per month from January 1998 and even during the pendency
of the case before the trial court and that the private respondent had accepted all these
monthly payments.
With these findings of facts, it has become glaringly obvious that when the complaint for
a sum of money and damages was filed with the trial court on 2 February 1999, no cause
of action has as yet existed because the petitioner had not committed any act in violation
of the terms of the three promissory notes as modified by the renegotiation in December
1997. Without a cause of action, the private respondent had no right to maintain an
action in court, and the trial court should have therefore dismissed his complaint.
Despite its finding that the petitioner corporation did not violate the modified terms of the
three promissory notes and that the payment of the principal loans were not yet due
when the complaint was filed, the trial court did not dismiss the complaint, citing Section
5, Rule 10 of the 1997 Rules of Civil Procedure, which reads:
Section 5. Amendment to conform to or authorize presentation of evidence. When issues
not raised by the pleadings are tried with the 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 any time,
even after judgment; but failure 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 do so
with liberality if the presentation of the merits of the action and the ends of substantial
justice will be subserved thereby. The court may grant a continuance to enable the
amendment to be made.
According to the trial court, and sustained by the Court of Appeals, this Section allows a
15
2013400059
complaint that does not state a cause of action to be cured by evidence presented
without objection during the trial. Thus, it ruled that even if the private respondent had no
cause of action when he filed the complaint for a sum of money and damages because
none of the three promissory notes was due yet, he could nevertheless recover on the
first two promissory notes dated 7 August 1996 and 14 March 1997, which became due
during the pendency of the case in view of the introduction of evidence of their maturity
during the trial.
Such interpretation of Section 5, Rule 10 of the 1997 Rules of Civil Procedure is
erroneous.
Amendments of pleadings are allowed under Rule 10 of the 1997 Rules of Civil
Procedure in order that the actual merits of a case may be determined in the most
expeditious and inexpensive manner without regard to technicalities, and that all other
matters included in the case may be determined in a single proceeding, thereby avoiding
multiplicity of suits.[12] Section 5 thereof applies to situations wherein evidence not within
the issues raised in the pleadings is presented by the parties during the trial, and to
conform to such evidence the pleadings are subsequently amended on motion of a party.
Thus, a complaint which fails to state a cause of action may be cured by evidence
presented during the trial.
However, the curing effect under Section 5 is applicable only if a cause of action in fact
exists at the time the complaint is filed, but the complaint is defective for failure to allege
the essential facts. For example, if a complaint failed to allege the fulfillment of a
condition precedent upon which the cause of action depends, evidence showing that
such condition had already been fulfilled when the complaint was filed may be presented
during the trial, and the complaint may accordingly be amended thereafter.[13] Thus, in
Roces v. Jalandoni,[14] this Court upheld the trial court in taking cognizance of an
otherwise defective complaint which was later cured by the testimony of the plaintiff
during the trial. In that case, there was in fact a cause of action and the only problem was
the insufficiency of the allegations in the complaint. This ruling was reiterated in Pascua
v. Court of Appeals.[15]
It thus follows that a complaint whose cause of action has not yet accrued cannot be
cured or remedied by an amended or supplemental pleading alleging the existence or
accrual of a cause of action while the case is pending. [16] Such an action is prematurely
brought and is, therefore, a groundless suit, which should be dismissed by the court upon
proper motion seasonably filed by the defendant. The underlying reason for this rule is
that a person should not be summoned before the public tribunals to answer for
complaints which are immature. As this Court eloquently said in Surigao Mine
Exploration Co., Inc. v. Harris:[17]
It is a rule of law to which there is, perhaps, no exception, either at law or in equity, that to
recover at all there must be some cause of action at the commencement of the suit.
As observed by counsel for appellees, there are reasons of public policy why there
should be no needless haste in bringing up litigation, and why people who are in no
default and against whom there is yet no cause of action should not be summoned
before the public tribunals to answer complaints which are groundless. We say
groundless because if the action is immature, it should not be entertained, and an action
prematurely brought is a groundless suit.
It is true that an amended complaint and the answer thereto take the place of the
originals which are thereby regarded as abandoned (Reynes vs. Compaa General de
Tabacos [1912], 21 Phil. 416; Ruyman and Farris vs. Director of Lands [1916], 34 Phil.,
2013400059
428) and that the complaint and answer having been superseded by the amended
complaint and answer thereto, and the answer to the original complaint not having been
presented in evidence as an exhibit, the trial court was not authorized to take it into
account. (Bastida vs. Menzi & Co. [1933], 58 Phil., 188.) But in none of these cases or in
any other case have we held that if a right of action did not exist when the original
complaint was filed, one could be created by filing an amended complaint. In some
jurisdictions in the United States what was termed an imperfect cause of action could be
perfected by suitable amendment (Brown vs. Galena Mining & Smelting Co., 32 Kan.,
528; Hooper vs. City of Atlanta, 26 Ga. App., 221) and this is virtually permitted in
Banzon and Rosauro vs. Sellner ([1933], 58 Phil., 453); Asiatic Potroleum [sic] Co. vs.
Veloso ([1935], 62 Phil., 683); and recently in Ramos vs. Gibbon (38 Off. Gaz., 241).
That, however, which is no cause of action whatsoever cannot by amendment or
supplemental pleading be converted into a cause of action: Nihil de re accrescit ei qui
nihil in re quando jus accresceret habet.
We are therefore of the opinion, and so hold, that unless the plaintiff has a valid and
subsisting cause of action at the time his action is commenced, the defect cannot
be cured or remedied by the acquisition or accrual of one while the action is
pending, and a supplemental complaint or an amendment setting up such afteraccrued cause of action is not permissible. (Emphasis ours).
Hence, contrary to the holding of the trial court and the Court of Appeals, the defect of
lack of cause of action at the commencement of this suit cannot be cured by the accrual
of a cause of action during the pendency of this case arising from the alleged maturity of
two of the promissory notes on 7 August 1999 and 14 March 2000.
Anent the issue of novation, this Court observes that the petitioner corporation argues
the existence of novation based on its own version of what transpired during the
renegotiation of the three promissory notes in December 1997. By using its own version
of facts, the petitioner is, in a way, questioning the findings of facts of the trial court and
the Court of Appeals.
As a rule, the findings of fact of the trial court and the Court of Appeals are final and
conclusive and cannot be reviewed on appeal to the Supreme Court[18] as long as they
are borne out by the record or are based on substantial evidence.[19] The Supreme Court
is not a trier of facts, its jurisdiction being limited to reviewing only errors of law that may
have been committed by the lower courts. Among the exceptions is when the finding of
fact of the trial court or the Court of Appeals is not supported by the evidence on record
or is based on a misapprehension of facts. Such exception obtains in the present case.[20]
This Court finds to be contrary to the evidence on record the finding of both the trial court
and the Court of Appeals that the renegotiation in December 1997 resulted in the
reduction of the interest from 15% to 6% per annum and that the monthly payments of
US$750 made by the petitioner were for the reduced interests.
It is worthy to note that the cash voucher dated January 1998 [21] states that the payment
of US$750 represents INVESTMENT PAYMENT. All the succeeding cash vouchers
describe the payments from February 1998 to September 1999 as CAPITAL
REPAYMENT.[22] All these cash vouchers served as receipts evidencing private
respondents acknowledgment of the payments made by the petitioner: two of which were
signed by the private respondent himself and all the others were signed by his
representatives. The private respondent even identified and confirmed the existence of
these receipts during the hearing. [23] Significantly, cognizant of these receipts, the private
respondent applied these payments to the three consolidated principal loans in the
16
summary of payments he submitted to the court.[24]

Under Article 1253 of the Civil Code, if the debt produces interest, payment of the
principal shall not be deemed to have been made until the interest has been covered. In
this case, the private respondent would not have signed the receipts describing the
payments made by the petitioner as capital repayment if the obligation to pay the interest
was still subsisting. The receipts, as well as private respondents summary of payments,
lend credence to petitioners claim that the payments were for the principal loans and that
the interests on the three consolidated loans were waived by the private respondent
during the undisputed renegotiation of the loans on account of the business reverses
suffered by the petitioner at the time.
There was therefore a novation of the terms of the three promissory notes in that the
interest was waived and the principal was payable in monthly installments of US$750.
Alterations of the terms and conditions of the obligation would generally result only in
modificatory novation unless such terms and conditions are considered to be the
essence of the obligation itself.[25] The resulting novation in this case was, therefore, of
the modificatory type, not the extinctive type, since the obligation to pay a sum of money
remains in force.
Thus, since the petitioner did not renege on its obligation to pay the monthly installments
conformably with their new agreement and even continued paying during the pendency
of the case, the private respondent had no cause of action to file the complaint. It is only
upon petitioners default in the payment of the monthly amortizations that a cause of
action would arise and give the private respondent a right to maintain an action against
the petitioner.
Lastly, the petitioner contends that the Court of Appeals obstinately included its President
Infante and Vice-President Hegerty as appellants even if they did not appeal the trial
courts decision since they were found to be not personally liable for the obligation of the
petitioner. Indeed, the Court of Appeals erred in referring to them as defendantsappellants; nevertheless, that error is no cause for alarm because its ruling was clear that
the petitioner corporation was the one solely liable for its obligation. In fact, the Court of
Appeals affirmed in toto the decision of the trial court, which means that it also upheld the
latters ruling that Hegerty and Infante were not personally liable for the pecuniary
obligations of the petitioner to the private respondent.
In sum, based on our disquisition on the lack of cause of action when the complaint for
sum of money and damages was filed by the private respondent, the petition in the case
at bar is impressed with merit.
WHEREFORE, the petition is hereby GRANTED. The Decision of 5 September
2003 of the Court of Appeals in CA-G.R. CV No. 68109, which affirmed the Decision of 5
May 2000 of the Regional Trial Court of Baguio, Branch 59, granting in part private
respondents complaint for sum of money and damages, and its Resolution of 4
December 2003, which denied petitioners motion for reconsideration are hereby
REVERSED and SET ASIDE. The complaint docketed as Civil Case No. 4282-R is
hereby DISMISSED for lack of cause of action.
No costs.
SO ORDERED.
Quisumbing, Ynares-Santiago, Carpio, and Azcuna, JJ., concur.
Case Compilation
2013400059
:
Republic of the Philippines

Supreme Court
Baguio City
April
2010
20,
EN BANC
ATTY. SYLVIA BANDA, CONSORICIA O. PENSON, RADITO V.
PADRIGANO, JEAN R. DE MESA, LEAH P. DELA CRUZ,
ANDY V. MACASAQUIT, SENEN B. CORDOBA, ALBERT
BRILLANTES, GLORIA BISDA, JOVITA V. CONCEPCION,
TERESITA G. CARVAJAL, ROSANNA T. MALIWANAG,
RICHARD ODERON, CECILIA ESTERNON, BENEDICTO
CABRAL, MA. VICTORIA E. LAROCO, CESAR ANDRA,
FELICISIMO GALACIO, ELSA R. CALMA, FILOMENA A.
GALANG, JEAN PAUL MELEGRITO, CLARO G. SANTIAGO,
JR., EDUARDO FRIAS, REYNALDO O. ANDAL, NEPHTALIE
IMPERIO, RUEL BALAGTAS, VICTOR R. ORTIZ, FRANCISCO
P. REYES, JR., ELISEO M. BALAGOT, JR., JOSE C.
MONSALVE, JR., ARTURO ADSUARA, F.C. LADRERO, JR.,
NELSON PADUA, MARCELA C. SAYAO, ANGELITO
MALAKAS, GLORIA RAMENTO, JULIANA SUPLEO, MANUEL
MENDRIQUE, E. TAYLAN, CARMELA BOBIS, DANILO
VARGAS, ROY-LEO C. PABLO, ALLAN VILLANUEVA,
VICENTE R. VELASCO, JR., IMELDA ERENO, FLORIZA M.
CATIIS, RANIEL R. BASCO, E. JALIJALI, MARIO C. CARAAN,
DOLORES M. AVIADO, MICHAEL P. LAPLANA, GUILLERMO
G. SORIANO, ALICE E. SOJO, ARTHUR G. NARNE, LETICIA
SORIANO, FEDERICO RAMOS, JR., PETERSON CAAMPUED,
RODELIO L. GOMEZ, ANTONIO D. GARCIA, JR., ANTONIO
GALO, A. SANCHEZ, SOL E. TAMAYO, JOSEPHINE A.M.
COCJIN, DAMIAN QUINTO, JR., EDLYN MARIANO, M.A.
MALANUM, ALFREDO S. ESTRELLA, and JESUS MEL
SAYO,
Petitioners,
G.R.
No.
166620
x--------------------------------------------------x
DECISION
LEONARDO-DE CASTRO, J.:
The present controversy arose from a Petition for Certiorari and prohibition
challenging the constitutionality of Executive Order No. 378 dated October 25, 2004,
issued
by
President
Gloria
Macapagal
Arroyo
(President
Arroyo). Petitioners
characterize their action as a class suit filed on their own behalf and on behalf of all their
- versus -
co-employees at the National Printing Office (NPO).
EDUARDO R. ERMITA, in his capacity as Executive

Secretary,THE DIRECTOR GENERAL OF THE PHILIPPINE
INFORMATION AGENCY andTHE NATIONAL TREASURER,
Respondents.
The NPO was formed on July 25, 1987, during the term of former President
Corazon C. Aquino (President Aquino), by virtue of Executive Order No. 285[1] which
Promulgated
17

provided, among others, the creation of the NPO from the merger of the Government
Printing Office and the relevant printing units of the Philippine Information Agency
(PIA). Section 6 of Executive Order No. 285 reads:
SECTION 6. Creation of the National Printing Office.
There is hereby created a National Printing Office out of the merger
of the Government Printing Office and the relevant printing units of the
Philippine Information Agency. The Office shall have exclusive
printing jurisdiction over the following:
a.
Printing, binding and distribution of all standard and
accountable forms of national, provincial, city and municipal
governments, including government corporations;
b.
Printing of officials ballots;
c.
Printing of public documents such as the
Official Gazette, General Appropriations Act, Philippine Reports, and
development information materials of the Philippine Information
Agency.
The Office may also accept other government printing jobs,
including government publications, aside from those enumerated
above, but not in an exclusive basis.
The details of the organization, powers, functions,
authorities, and related management aspects of the Office shall be
provided in the implementing details which shall be prepared and
promulgated in accordance with Section II of this Executive Order.
The Office shall be attached to the Philippine Information
Agency.
2013400059
SECTION 1. The NPO shall continue to provide printing
services to government agencies and instrumentalities as
mandated by law. However, it shall no longer enjoy exclusive
jurisdiction over the printing services requirements of the
government over standard and accountable forms. It shall have
to compete with the private sector, except in the printing of
election paraphernalia which could be shared with the Bangko
Sentral ng Pilipinas, upon the discretion of the Commission on
Elections consistent with the provisions of the Election Code of 1987.
SECTION 2. Government agencies/instrumentalities may
source printing services outside NPO provided that:
2.1
The printing services to be provided by the private
sector is superior in quality and at a lower cost than what is offered by
the NPO; and
2.2
The private printing provider is flexible in terms of
meeting the target completion time of the government agency.
SECTION 3. In the exercise of its functions, the amount
to be appropriated for the programs, projects and activities of the
NPO in the General Appropriations Act (GAA) shall be limited to
its income without additional financial support from the
government. (Emphases and underscoring supplied.)
Pursuant
to Executive
Order
No.
378, government
agencies
and
instrumentalities are allowed to source their printing services from the private sector
through competitive bidding, subject to the condition that the services offered by the
private supplier be of superior quality and lower in cost compared to what was offered by
the NPO. Executive Order No. 378 also limited NPOs appropriation in the General
Appropriations Act to its income.
On October 25, 2004, President Arroyo issued the herein assailed Executive
Order No. 378, amending Section 6 of Executive Order No. 285 by, inter alia, removing
the exclusive jurisdiction of the NPO over the printing services requirements of
government agencies and instrumentalities. The pertinent portions of Executive Order
No. 378, in turn,provide:
Perceiving Executive Order No. 378 as a threat to their security of tenure as

employees of the NPO, petitioners now challenge its constitutionality, contending that:
(1) it is beyond the executive powers of President Arroyo to amend or repeal Executive
Order No. 285 issued by former President Aquino when the latter still exercised
legislative powers; and (2) Executive Order No. 378 violates petitioners security of
tenure, because it paves the way for the gradual abolition of the NPO.
18
Case Compilation
2013400059
An action does not become a class suit merely because it is

designated as such in the pleadings. Whether the suit is or is not a
class suit depends upon the attending facts, and the complaint, or
other pleading initiating the class action should allege the
existence of the necessary facts, to wit, the existence of a subject
matter of common interest, and the existence of a class and the
number of persons in the alleged class, in order that the court
might be enabled to determine whether the members of the class
are so numerous as to make it impracticable to bring them all
before the court, to contrast the number appearing on the record
with the number in the class and to determine whether claimants
on record adequately represent the class and the subject matter
of general or common interest. (Emphases ours.)
We dismiss the petition.
Before proceeding to resolve the substantive issues, the Court must first delve
into a procedural matter. Since petitioners instituted this case as a class suit, the Court,
thus, must first determine if the petition indeed qualifies as one. In Board of Optometry
v. Colet,[2] we held that [c]ourts 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 self-appointed representatives would certainly claim denial of due
process.
Here, the petition failed to state the number of NPO employees who would be
affected by the assailed Executive Order and who were allegedly represented by
petitioners. It was the Solicitor General, as counsel for respondents, who pointed out that
there were about 549 employees in the NPO.[4] The 67 petitioners undeniably comprised
Section 12, Rule 3 of the Rules of Court defines a class suit, as follows:
Sec. 12. Class suit. When the subject matter of the
controversy is one of common or general interest to many persons so
numerous that it is impracticable to join all as parties, a number of
them which the court finds to be sufficiently numerous and
representative as to fully protect the interests of all concerned may
sue or defend for the benefit of all. Any party in interest shall have the
right to intervene to protect his individual interest.
a small fraction of the NPO employees whom they claimed to represent. Subsequently,
32 of the original petitioners executed an Affidavit of Desistance, while one signed a
letter denying ever signing the petition,[5] ostensibly reducing the number of petitioners to
34. We note that counsel for the petitioners challenged the validity of the desistance or
withdrawal of some of the petitioners and insinuated that such desistance was due to
pressure from people close to the seat of power. [6] Still, even if we were to disregard
the affidavit of desistance filed by some of the petitioners, it is highly doubtful that a
From the foregoing definition, the requisites of a class suit are: 1) the subject
matter of controversy is one of common or general interest to many persons; 2) the
parties affected are so numerous that it is impracticable to bring them all to court; and 3)
the parties bringing the class suit are sufficiently numerous or representative of the class
sufficient, representative number of NPO employees have instituted this purported class
suit. A perusal of the petition itself would show that of the 67 petitioners who signed the
Verification/Certification of Non-Forum Shopping, only 20 petitioners were in fact
mentioned in the jurat as having duly subscribed the petition before the notary public. In
other words, only 20 petitioners effectively instituted the present case.
and can fully protect the interests of all concerned.

Indeed, in MVRS Publications, Inc. v. Islamic Dawah Council of the Philippines,
[3]
In Mathay v. The Consolidated Bank and Trust Company, the Court held that:
[7]
Inc., we observed that an element of a class suit or representative suit is theadequacy

of representation. In determining the question of fair and adequate representation of
members of a class, the court must consider (a) whether the interest of the named party
19
2013400059
is coextensive with the interest of the other members of the class; (b) the proportion of
Second, petitioners maintain that the issuance of Executive Order No. 378
those made a party, as it so bears, to the total membership of the class; and (c) any
would lead to the eventual abolition of the NPO and would violate the security of tenure
other factor bearing on the ability of the named party to speak for the rest of the class.
of NPO employees.
Previously, we held in Ibaes v. Roman Catholic Church[8] that where the

interests of the plaintiffs and the other members of the class they seek to represent are
Anent the first ground raised in the petition, we find the same patently without
merit.
diametrically opposed, the class suit will not prosper.

It is a well-settled principle in jurisprudence that the President has the power to
It is worth mentioning that a Manifestation of Desistance, [9] to which the
previously mentioned Affidavit of Desistance
[10]
reorganize the offices and agencies in the executive department in line with the
was attached, was filed by the President
Presidents constitutionally granted power of control over executive offices and by virtue
of the National Printing Office Workers Association (NAPOWA). The said manifestation
of previous delegation of the legislative power to reorganize executive offices under
expressed NAPOWAs opposition to the filing of the instant petition in any court. Even if
existing statutes.
we take into account the contention of petitioners counsel that the NAPOWA President
had no legal standing to file such manifestation, the said pleading is a clear indication
In Buklod ng Kawaning EIIB v. Zamora,[12] the Court pointed out that Executive
that there is a divergence of opinions and views among the members of the class sought
Order No. 292 or the Administrative Code of 1987 gives the President continuing
to be represented, and not all are in favor of filing the present suit. There is here an
authority to reorganize and redefine the functions of the Office of the President. Section
apparent conflict between petitioners interests and those of the persons whom they
31, Chapter 10, Title III, Book III of the said Code, is explicit:
claim to represent. Since it cannot be said that petitioners sufficiently represent the
interests of the entire class, the instant case cannot be properly treated as a class suit.
As to the merits of the case, the petition raises two main grounds to assail the
constitutionality of Executive Order No. 378:
First, it is contended that President Arroyo cannot amend or repeal Executive

Order No. 285 by the mere issuance of another executive order (Executive Order No.
378). Petitioners maintain that former President Aquinos Executive Order No. 285 is a
legislative enactment, as the same was issued while President Aquino still had legislative
powers under the Freedom Constitution;[11] thus, only Congress through legislation can
validly amend Executive Order No. 285.
20
Sec. 31. Continuing Authority of the President to Reorganize

his Office. The President, subject to the policy in the Executive
Office and in order to achieve simplicity, economy and efficiency,
shall have continuing authority to reorganize the administrative
structure of the Office of the President. For this purpose, he may
take any of the following actions:
(1) Restructure the internal organization
of the Office of the President Proper, including
the immediate Offices, the President Special
Assistants/Advisers System and the Common Staff
Support System, by abolishing, consolidating or
merging units thereof or transferring functions
from one unit to another;
(2) Transfer any function under the
Office of the President to any other Department
or Agency as well as transfer functions to the
Case Compilation
Office of the President from other Departments

and Agencies; and
(3) Transfer any agency under the
Office of the President to any other department
or agency as well as transfer agencies to the
Office of the President from other Departments or
agencies. (Emphases ours.)
2013400059
Office of the President Proper, including the immediate Offices, the President Special
Assistants/Advisers System and the Common Staff Support System, by abolishing,
consolidating or merging units thereof or transferring functions from one unit to another,
and (b) to transfer functions or offices from the Office of the President to any other
Department or Agency in the Executive Branch, and vice versa.
Concomitant to such power to abolish, merge or consolidate offices in the Office
Interpreting the foregoing provision, we held in Buklod ng Kawaning EIIB, thus:
of the President Proper and to transfer functions/offices not only among the offices in the
But of course, the list of legal basis authorizing the President
to reorganize any department or agency in the executive branch does
not have to end here. We must not lose sight of the very source of the
power that which constitutes an express grant of power. Under
Section 31, Book III of Executive Order No. 292 (otherwise known as
the Administrative Code of 1987), the President, subject to the policy
in the Executive Office and in order to achieve simplicity, economy
and efficiency, shall have the continuing authority to reorganize the
administrative structure of the Office of the President. For this
purpose, he may transfer the functions of other Departments or
Agencies to the Office of the President. In Canonizado v.
Aguirre [323
SCRA
312
(2000)], we
ruled
that
reorganizationinvolves
the
reduction
of
personnel,
consolidation of offices, or abolition thereof by reason of
economy or redundancy of functions. It takes place when there
is an alteration of the existing structure of government offices or
units therein, including the lines of control, authority and
responsibility between them. The EIIB is a bureau attached to the
Department of Finance. It falls under the Office of the
President. Hence, it is subject to the Presidents continuing authority
to reorganize.[13] (Emphasis ours.)
Office of President Proper but also the rest of the Office of the President and the
Executive Branch, the President implicitly has the power to effect less radical or less
substantive changes to the functional and internal structure of the Office of the President,
including the modification of functions of such executive agencies as the exigencies of
the service may require.
In the case at bar, there was neither an abolition of the NPO nor a removal of
any of its functions to be transferred to another agency. Under the assailed Executive
Order No. 378, the NPO remains the main printing arm of the government for all kinds of
government forms and publications but in the interest of greater economy and
encouraging efficiency and profitability, it must now compete with the private sector for
certain government printing jobs, with the exception of election paraphernalia which
remains the exclusive responsibility of the NPO, together with the Bangko Sentral ng
Pilipinas, as the Commission on Elections may determine. At most, there was a mere
alteration of the main function of the NPO by limiting the exclusivity of its printing
It is undisputed that the NPO, as an agency that is part of the Office of the Press
responsibility to election forms.[15]
Secretary (which in various times has been an agency directly attached to the Office of
the Press Secretary or as an agency under the Philippine Information Agency), is part of
the Office of the President.
[14]
There is a view that the reorganization actions that the President may take with
respect to agencies in the Office of the President are strictly limited to transfer of
functions and offices as seemingly provided in Section 31 of the Administrative Code of
Pertinent to the case at bar, Section 31 of the Administrative Code of 1987

quoted above authorizes the President (a) to restructure the internal organization of the
21
1987.

However, Section 20, Chapter 7, Title I, Book III of the same Code significantly
provides:
Sec. 20.
Residual Powers. Unless Congress provides
otherwise, the President shall exercise such other powers and
functions vested in the President which are provided for under
the laws and which are not specifically enumerated above, or which
are not delegated by the President in accordance with law. (Emphasis
ours.)
Pursuant to Section 20, the power of the President to reorganize the Executive
Branch under Section 31 includes such powers and functions that may be provided for
2013400059
Sec. 62. Unauthorized organizational
changes. Unless otherwise created by law or
directed by the President of the Philippines, no
organizational unit or changes in key positions in any
department or agency shall be authorized in their
respective organization structures and be funded
from appropriations by this Act.
The foregoing provision evidently shows that the President
is authorized to effect organizational changes including the creation
of offices in the department or agency concerned.
The contention of petitioner that the two provisions are riders
deserves scant consideration. Well settled is the rule that every law
has in its favor the presumption of constitutionality. Unless and until a
specific provision of the law is declared invalid and unconstitutional, the
same is valid and binding for all intents and purposes. [17] (Emphases
ours)
under other laws. To be sure, an inclusive and broad interpretation of the Presidents
power to reorganize executive offices has been consistently supported by specific
provisions ingeneral appropriations laws.
Buklod ng Kawaning EIIB v. Zamora,[18] where the Court upheld as valid then
President Joseph Estradas Executive Order No. 191 deactivating the Economic
Intelligence and Investigation Bureau (EIIB) of the Department of Finance, hewed closely
In the oft-cited Larin v. Executive Secretary,[16] the Court likewise adverted to

certain provisions of Republic Act No. 7645, the general appropriations law for 1993, as
among the statutory bases for the Presidents power to reorganize executive agencies,
to the reasoning in Larin. The Court, among others, also traced from the General
Appropriations Act[19] the Presidents authority to effect organizational changes in the
department or agency under the executive structure, thus:
to wit:
Section 48 of R.A. 7645 provides that:
Sec. 48. Scaling Down and Phase Out of
Activities of Agencies Within the Executive Branch.
The heads of departments, bureaus and offices
and agencies are hereby directed to identify their
respective activities which are no longer essential in
the delivery of public services and which may be
scaled down, phased out or abolished, subject to
civil [service] rules and regulations. x x x. Actual
scaling down, phasing out or abolition of the
activities shall be effected pursuant to Circulars
or Orders issued for the purpose by the Office of the
President.
Said provision clearly mentions the acts of "scaling down,
phasing out and abolition" of offices only and does not cover the
creation of offices or transfer of functions. Nevertheless, the act
of creating and decentralizing is included in the subsequent
provision of Section 62, which provides that:
22
We adhere to the precedent or ruling in Larin that this provision

recognizes the authority of the President to effect organizational
changes in the department or agency under the executive
structure. Such a ruling further finds support in Section 78 of Republic
Act No. 8760. Under this law, the heads of departments, bureaus, offices
and agencies and other entities in the Executive Branch are directed (a)
to conduct a comprehensive review of their respective mandates,
missions, objectives, functions, programs, projects, activities and
systems and procedures; (b) identify activities which are no longer
essential in the delivery of public services and which may be scaled
down, phased-out or abolished; and (c) adopt measures that will
result in the streamlined organization and improved overall
performance of their respective agencies. Section 78 ends up with
the mandate that the actual streamlining and productivity improvement in
agency organization and operation shall be effected pursuant to
Circulars or Orders issued for the purpose by the Office of the President.
x x x.[20] (Emphasis ours)
Case Compilation
2013400059
Notably, in the present case, the 2003 General Appropriations Act, which was
Implicitly, the aforequoted provisions in the appropriations law recognize the
reenacted in 2004 (the year of the issuance of Executive Order No. 378), likewise gave
power of the President to reorganize even executive offices already funded by the said
the President the authority to effect a wide variety of organizational changes in any
appropriations act, including the power to implement structural, functional, and
department or agency in the Executive Branch. Sections 77 and 78 of said Act provides:
operational adjustments in the executive bureaucracy and, in so doing, modify or

realign appropriations of funds as may be necessary under such reorganization. Thus,
Section 77. Organized Changes. Unless otherwise

provided by law or directed by the President of
the Philippines, no changes in key positions or organizational units in
any department or agency shall be authorized in their respective
organizational structures and funded from appropriations provided by
this Act.
Section 78. Institutional Strengthening and Productivity
Improvement in Agency Organization and Operations and
Implementation of Organization/Reorganization Mandated by
Law. The Government shall adopt institutional strengthening and
productivity improvement measures to improve service delivery and
enhance productivity in the government, as directed by the
President of the Philippines. The heads of departments, bureaus,
offices, agencies, and other entities of the Executive Branch shall
accordingly conduct a comprehensive review of their respective
mandates, missions, objectives, functions, programs, projects,
activities and systems and procedures; identify areas where
improvements are necessary; and implement corresponding
structural, functional and operational adjustments that will result
in streamlined organization and operations and improved
performance and productivity: PROVIDED, That actual streamlining
and productivity improvements in agency organization and operations,
as authorized by the President of the Philippines for the purpose,
including the utilization of savings generated from such activities, shall
be in accordance with the rules and regulations to be issued by the
DBM, upon consultation with the Presidential Committee on Effective
Governance: PROVIDED, FURTHER, That in the implementation of
organizations/reorganizations, or specific changes in agency
structure, functions and operations as a result of institutional
strengthening or as mandated by law, the appropriation,
including the functions, projects, purposes and activities of
agencies concerned may be realigned as may be necessary:
PROVIDED, FINALLY, That any unexpended balances or savings in
appropriations may be made available for payment of retirement
gratuities and separation benefits to affected personnel, as authorized
under existing laws. (Emphases and underscoring ours.)
23
insofar as petitioners protest the limitation of the NPOs appropriations to its own income
under Executive Order No. 378, the same is statutorily authorized by the above
provisions.
In the 2003 case of Bagaoisan v. National Tobacco Administration,[21] we upheld
the streamlining of the National Tobacco Administration through a reduction of its
personnel and deemed the same as included in the power of the President to reorganize
executive offices granted under the laws, notwithstanding that such streamlining neither
involved an abolition nor a transfer of functions of an office. To quote the relevant portion
of that decision:
In the recent case of Rosa Ligaya C. Domingo, et al. vs. Hon.
Ronaldo D. Zamora, in his capacity as the Executive Secretary, et
al., this Court has had occasion to also delve on the Presidents power
to reorganize the Office of the President under Section 31(2) and (3) of
Executive Order No. 292 and the power to reorganize the Office of the
President Proper. x x x
xxxx
The first sentence of the law is an express grant to the President of
a continuing authority to reorganize the administrative structure of the
Office of the President. The succeeding numbered paragraphs are
not in the nature of provisos that unduly limit the aim and scope
of the grant to the President of the power to reorganize but are to
be viewed in consonance therewith. Section 31(1) of Executive
Order No. 292 specifically refers to the Presidents power to restructure
the internal organization of the Office of the President Proper, by
abolishing, consolidating or merging units hereof or transferring
functions from one unit to another, while Section 31(2) and (3) concern
executive offices outside the Office of the President Proper allowing
the President to transfer any function under the Office of the President
to any other Department or Agency and vice-versa, and the transfer of
any agency under the Office of the President to any other department
or agency and vice-versa.

In the present instance, involving neither an abolition nor
transfer of offices, the assailed action is a mere reorganization
under the general provisions of the law consisting mainly
of streamlining the NTA in the interest of simplicity, economy and
efficiency. It is an act well within the authority of the
President motivated and carried out, according to the findings of the
appellate court, in good faith, a factual assessment that this Court
could only but accept.[22] (Emphases and underscoring supplied.)
In the more recent case of Tondo Medical Center Employees Association v.
2013400059
the power to reorganize the Office of the President in recognition
of the recurring need of every President to reorganize his or her
office to achieve simplicity, economy and efficiency. To remain
effective and efficient, it must be capable of being shaped and
reshaped by the President in the manner the Chief Executive deems fit
to carry out presidential directives and policies.
The Administrative Code provides that the Office of the
President consists of the Office of the President Proper and the
agencies under it. The agencies under the Office of the President are
identified in Section 23, Chapter 8, Title II of the Administrative Code:
Sec. 23. The Agencies under the Office of
the President.The agencies under the Office of the
President refer to those offices placed under the
chairmanship of the President,those under the
supervision and control of the President, those
under the administrative supervision of the Office of
the President, those attached to it for policy and
program coordination, and those that are not placed
by law or order creating them under any specific
department.
Court of Appeals,[23] which involved a structural and functional reorganization of the

Department of Health under an executive order, we reiterated the principle that the
power of the President to reorganize agencies under the executive department by
executive or administrative order is constitutionally and statutorily recognized. We held
in that case:
This Court has already ruled in a number of cases that
the President may, by executive or administrative order, direct the
reorganization of government entities under the Executive
Department. This is also sanctioned under the Constitution, as well as
other statutes.
Section 17, Article VII of the 1987 Constitution, clearly
states:
[T]he president shall have control of all executive
departments, bureaus and offices. Section 31, Book III, Chapter 10
of Executive Order No. 292, also known as the Administrative Code of
1987 reads:
SEC. 31. Continuing Authority of the
President to Reorganize his Office - The President,
subject to the policy in the Executive Office and in
order to achieve simplicity, economy and efficiency,
shall have continuing authority to reorganize the
administrative structure of the Office of the
President. For this purpose, he may take any of the
following actions:
xxxx
In Domingo v. Zamora [445 Phil. 7 (2003)], this Court
explained the rationale behind the Presidents continuing authority
under the Administrative Code to reorganize the administrative
structure of the Office of the President. The law grants the President
24
xxxx
The power of the President to reorganize the executive
department is likewise recognized in general appropriations laws. x
x x.
xxxx
Clearly, Executive Order No. 102 is well within the constitutional
power of the President to issue. The President did not usurp any
legislative prerogative in issuing Executive Order No. 102. It is an
exercise of the Presidents constitutional power of control over
the executive department, supported by the provisions of the
Administrative Code, recognized by other statutes, and
consistently affirmed by this Court.[24] (Emphases supplied.)
Subsequently,
we
ruled
in Anak
Mindanao Party-List
Group
Secretary[25] that:
The Constitutions express grant of the power of control in the
President justifies an executive action to carry out reorganization
measures under a broad authority of law.
v.
Executive
Case Compilation
In enacting a statute, the legislature is presumed to have

deliberated with full knowledge of all existing laws and jurisprudence
on the subject. It is thus reasonable to conclude that in passing a
statute which places an agency under the Office of the President, it
was in accordance with existing laws and jurisprudence on the
Presidents power to reorganize.
In establishing an executive department, bureau or office, the
legislature necessarily ordains an executive agencys position in the
scheme of administrative structure. Such determination is primary, but
subject to the Presidents continuing authority to reorganize the
administrative structure. As far as bureaus, agencies or offices in the
executive department are concerned, the power of control may justify
the President to deactivate the functions of a particular office. Or a law
may expressly grant the President the broad authority to carry out
reorganization measures. The Administrative Code of 1987 is one
such law.[26]
2013400059
To reiterate, we find nothing objectionable in the provision in Executive Order

No. 378 limiting the appropriation of the NPO to its own income. Beginning
with Larin and in subsequent cases, the Court has noted certain provisions in
the general appropriations laws as likewise reflecting the power of the President to
reorganize executive offices or agencies even to the extent of modifying and realigning
appropriations for that purpose.
Petitioners contention that the issuance of Executive Order No. 378 is an

invalid exercise of legislative power on the part of the President has no legal leg to stand
on.
In all, Executive Order No. 378, which purports to institute necessary reforms in
The issuance of Executive Order No. 378 by President Arroyo is an exercise of
a delegated legislative power granted by the aforementioned Section 31, Chapter 10,
Title III, Book III of the Administrative Code of 1987, which provides for the continuing
government in order to improve and upgrade efficiency in the delivery of public services
by redefining the functions of the NPO and limiting its funding to its own income and to
transform it into a self-reliant agency able to compete with the private sector, is well
within the prerogative of President Arroyo under her continuing delegated legislative
authority of the President to reorganize the Office of the President, in order to achieve
power to reorganize her own office. As pointed out in the separate concurring opinion of
simplicity, economy and efficiency. This is a matter already well-entrenched in
our learned colleague, Associate Justice Antonio T. Carpio, the objective behind
jurisprudence. The reorganization of such an office through executive or administrative
Executive Order No. 378 is wholly consistent with the state policy contained in Republic
order is also recognized in the Administrative Code of 1987. Sections 2 and 3, Chapter
Act No. 9184 or the Government Procurement Reform Act to encourage competitiveness
2, Title I, Book III of the said Code provide:

Sec. 2. Executive Orders. - Acts of the President providing for
rules of a general or permanent character in implementation or
execution of constitutional or statutory powers shall be
promulgated in executive orders.
Sec. 3. Administrative Orders. - Acts of the President which
relate to particular aspects of governmental operations in pursuance
of his duties as administrative head shall be promulgated
inadministrative orders. (Emphases supplied.)
by extending equal opportunity to private contracting parties who are eligible and
qualified.[27]
To be very clear, this delegated legislative power to reorganize pertains only to

the Office of the President and the departments, offices and agencies of the executive
branch and does not include the Judiciary, the Legislature or the constitutionally-created
or mandated bodies. Moreover, it must be stressed that the exercise by the President of
the power to reorganize the executive department must be in accordance with the
Constitution, relevant laws and prevailing jurisprudence.
25
2013400059
In this regard, we are mindful of the previous pronouncement of this Court

in Dario v. Mison[28] that:
A careful review of the records will show that petitioners utterly failed to
substantiate their claim. They failed to allege, much less prove, sufficient facts to show
Reorganizations in this jurisdiction have been regarded

as valid provided they are pursued in good faith. As a general rule,
a reorganization is carried out in good faith if it is for the purpose of
economy or to make bureaucracy more efficient. In that event, no
dismissal (in case of a dismissal) or separation actually occurs
because the position itself ceases to exist. And in that case, security of
tenure would not be a Chinese wall. Be that as it may, if the abolition,
which is nothing else but a separation or removal, is done for political
reasons or purposely to defeat security of tenure, or otherwise not in
good faith, no valid abolition takes place and whatever abolition is
done, is void ab initio. There is an invalid abolition as where there is
merely a change of nomenclature of positions, or where claims of
economy are belied by the existence of ample funds. (Emphasis ours.)
that the limitation of the NPOs budget to its own income would indeed lead to the
abolition of the position, or removal from office, of any employee. Neither did petitioners
present any shred of proof of their assertion that the changes in the functions of the NPO
were for political considerations that had nothing to do with improving the efficiency of, or
encouraging operational economy in, the said agency.
In sum, the Court finds that the petition failed to show any constitutional
infirmity or grave abuse of discretion amounting to lack or excess of jurisdiction in
President Arroyos issuance of Executive Order No. 378.
Stated alternatively, the presidential power to reorganize agencies and offices

in the executive branch of government is subject to the condition that such
reorganization is carried out in good faith.
If the reorganization is done in good faith, the abolition of positions, which
WHEREFORE, the petition is hereby DISMISSED and the prayer for a

Temporary
Restraining
Order
and/or
Writ
of
Preliminary
Injunction
is
hereby DENIED. No costs.

SO ORDERED.
results in loss of security of tenure of affected government employees, would be

valid. InBuklod ng Kawaning EIIB v. Zamora,[29] we even observed that there was no
such thing as an absolute right to hold office. Except those who hold constitutional
offices, which provide for special immunity as regards salary and tenure, no one can be
said to have any vested right to an office or salary.[30]
This brings us to the second ground raised in the petition that Executive
Order No. 378, in allowing government agencies to secure their printing requirements
from the private sector and in limiting the budget of the NPO to its income, will
purportedly lead to the gradual abolition of the NPO and the loss of security of tenure of
its present employees. In other words, petitioners avow that the reorganization of the
NPO under Executive Order No. 378 is tainted with bad faith. The basic evidentiary rule
is that he who asserts a fact or the affirmative of an issue has the burden of proving it.[31]
26
G.R. No. 153788

November 27, 2009
ROGER V. NAVARRO, Petitioner,
vs.
HON. JOSE L. ESCOBIDO, Presiding Judge, RTC Branch 37, Cagayan de Oro City,
and KAREN T. GO, doing business under the name KARGO ENTERPRISES,
Respondents.
DECISION
BRION, J.:
This is a petition for review on certiorari1 that seeks to set aside the Court of Appeals
(CA) Decision2 dated October 16, 2001 and Resolution3 dated May 29, 2002 in CA-G.R.
SP. No. 64701. These CA rulings affirmed the July 26, 20004 and March 7, 20015 orders
of the Regional Trial Court (RTC), Misamis Oriental, Cagayan de Oro City, denying
petitioner Roger V. Navarros (Navarro) motion to dismiss.
BACKGROUND FACTS
On September 12, 1998, respondent Karen T. Go filed two complaints, docketed as Civil
Case Nos. 98-599 (first complaint)6 and 98-598 (second complaint),7 before the RTC for
replevin and/or sum of money with damages against Navarro. In these complaints, Karen
Case Compilation
Go prayed that the RTC issue writs of replevin for the seizure of two (2) motor vehicles in
Navarros possession.
The first complaint stated:
1. That plaintiff KAREN T. GO is a Filipino, of legal age, married to GLENN O. GO, a
resident of Cagayan de Oro City and doing business under the trade name KARGO
ENTERPRISES, an entity duly registered and existing under and by virtue of the laws of
the Republic of the Philippines, which has its business address at Bulua, Cagayan de
Oro City; that defendant ROGER NAVARRO is a Filipino, of legal age, a resident of 62
Dolores Street, Nazareth, Cagayan de Oro City, where he may be served with summons
and other processes of the Honorable Court; that defendant "JOHN DOE" whose real
name and address are at present unknown to plaintiff is hereby joined as party defendant
as he may be the person in whose possession and custody the personal property subject
matter of this suit may be found if the same is not in the possession of defendant
ROGER NAVARRO;
2. That KARGO ENTERPRISES is in the business of, among others, buying and selling
motor vehicles, including hauling trucks and other heavy equipment;
3. That for the cause of action against defendant ROGER NAVARRO, it is hereby stated
that on August 8, 1997, the said defendant leased [from] plaintiff a certain motor vehicle
which is more particularly described as follows
Make/Type FUSO WITH MOUNTED CRANE
Serial No. FK416K-51680
Motor No. 6D15-338735
Plate No. GHK-378
as evidenced by a LEASE AGREEMENT WITH OPTION TO PURCHASE entered into by
and between KARGO ENTERPRISES, then represented by its Manager, the
aforementioned GLENN O. GO, and defendant ROGER NAVARRO xxx; that in
accordance with the provisions of the above LEASE AGREEMENT WITH OPTION TO
PURCHASE, defendant ROGER NAVARRO delivered unto plaintiff six (6) post-dated
checks each in the amount of SIXTY-SIX THOUSAND THREE HUNDRED THIRTYTHREE & 33/100 PESOS (P66,333.33) which were supposedly in payment of the agreed
rentals; that when the fifth and sixth checks, i.e. PHILIPPINE BANK OF
COMMUNICATIONS CAGAYAN DE ORO BRANCH CHECKS NOS. 017112 and
017113, respectively dated January 8, 1998 and February 8, 1998, were presented for
payment and/or credit, the same were dishonored and/or returned by the drawee bank
for the common reason that the current deposit account against which the said checks
were issued did not have sufficient funds to cover the amounts thereof; that the total
amount of the two (2) checks, i.e. the sum of ONE HUNDRED THIRTY-TWO
THOUSAND SIX HUNDRED SIXTY-SIX & 66/100 PESOS (P132,666.66) therefore
represents the principal liability of defendant ROGER NAVARRO unto plaintiff on the
basis of the provisions of the above LEASE AGREEMENT WITH RIGHT TO
PURCHASE; that demands, written and oral, were made of defendant ROGER
NAVARRO to pay the amount of ONE HUNDRED THIRTY-TWO THOUSAND SIX
HUNDRED SIXTY-SIX & 66/100 PESOS (P132,666.66), or to return the subject motor
vehicle as also provided for in the LEASE AGREEMENT WITH RIGHT TO PURCHASE,
but said demands were, and still are, in vain to the great damage and injury of herein
plaintiff; xxx
4. That the aforedescribed motor vehicle has not been the subject of any tax assessment
and/or fine pursuant to law, or seized under an execution or an attachment as against
27
2013400059
herein plaintiff;
xxx
8. That plaintiff hereby respectfully applies for an order of the Honorable Court for the
immediate delivery of the above-described motor vehicle from defendants unto plaintiff
pending the final determination of this case on the merits and, for that purpose, there is
attached hereto an affidavit duly executed and bond double the value of the personal
property subject matter hereof to answer for damages and costs which defendants may
suffer in the event that the order for replevin prayed for may be found out to having not
been properly issued.
The second complaint contained essentially the same allegations as the first complaint,
except that the Lease Agreement with Option to Purchase involved is dated October 1,
1997 and the motor vehicle leased is described as follows:
Make/Type FUSO WITH MOUNTED CRANE
Serial No. FK416K-510528
Motor No. 6D14-423403
The second complaint also alleged that Navarro delivered three post-dated checks, each
for the amount of P100,000.00, to Karen Go in payment of the agreed rentals; however,
the third check was dishonored when presented for payment.8
On October 12, 19989 and October 14, 1998,10 the RTC issued writs of replevin for both
cases; as a result, the Sheriff seized the two vehicles and delivered them to the
possession of Karen Go.
In his Answers, Navarro alleged as a special affirmative defense that the two complaints
stated no cause of action, since Karen Go was not a party to the Lease Agreements with
Option to Purchase (collectively, the lease agreements) the actionable documents on
which the complaints were based.
On Navarros motion, both cases were duly consolidated on December 13, 1999.
In its May 8, 2000 order, the RTC dismissed the case on the ground that the complaints
did not state a cause of action.
In response to the motion for reconsideration Karen Go filed dated May 26, 2000, 11 the
RTC issued another order dated July 26, 2000 setting aside the order of dismissal. Acting
on the presumption that Glenn Gos leasing business is a conjugal property, the RTC
held that Karen Go had sufficient interest in his leasing business to file the action against
Navarro. However, the RTC held that Karen Go should have included her husband,
Glenn Go, in the complaint based on Section 4, Rule 3 of the Rules of Court (Rules). 12
Thus, the lower court ordered Karen Go to file a motion for the inclusion of Glenn Go as
co-plaintiff.1avvphi1
When the RTC denied Navarros motion for reconsideration on March 7, 2001, Navarro
filed a petition for certiorari with the CA, essentially contending that the RTC committed
grave abuse of discretion when it reconsidered the dismissal of the case and directed
Karen Go to amend her complaints by including her husband Glenn Go as co-plaintiff.
According to Navarro, a complaint which failed to state a cause of action could not be
converted into one with a cause of action by mere amendment or supplemental pleading.
On October 16, 2001, the CA denied Navarros petition and affirmed the RTCs order.13
The CA also denied Navarros motion for reconsideration in its resolution of May 29,
2002,14 leading to the filing of the present petition.
THE PETITION
Navarro alleges that even if the lease agreements were in the name of Kargo
Enterprises, since it did not have the requisite juridical personality to sue, the actual
2013400059
parties to the agreement are himself and Glenn Go. Since it was Karen Go who filed the
complaints and not Glenn Go, she was not a real party-in-interest and the complaints
failed to state a cause of action.
Navarro posits that the RTC erred when it ordered the amendment of the complaint to
include Glenn Go as a co-plaintiff, instead of dismissing the complaint outright because a
complaint which does not state a cause of action cannot be converted into one with a
cause of action by a mere amendment or a supplemental pleading. In effect, the lower
court created a cause of action for Karen Go when there was none at the time she filed
the complaints.
Even worse, according to Navarro, the inclusion of Glenn Go as co-plaintiff drastically
changed the theory of the complaints, to his great prejudice. Navarro claims that the
lower court gravely abused its discretion when it assumed that the leased vehicles are
part of the conjugal property of Glenn and Karen Go. Since Karen Go is the registered
owner of Kargo Enterprises, the vehicles subject of the complaint are her paraphernal
properties and the RTC gravely erred when it ordered the inclusion of Glenn Go as a coplaintiff.
Navarro likewise faults the lower court for setting the trial of the case in the same order
that required Karen Go to amend her complaints, claiming that by issuing this order, the
trial court violated Rule 10 of the Rules.
Even assuming the complaints stated a cause of action against him, Navarro maintains
that the complaints were premature because no prior demand was made on him to
comply with the provisions of the lease agreements before the complaints for replevin
were filed.
Lastly, Navarro posits that since the two writs of replevin were issued based on flawed
complaints, the vehicles were illegally seized from his possession and should be returned
to him immediately.
Karen Go, on the other hand, claims that it is misleading for Navarro to state that she has
no real interest in the subject of the complaint, even if the lease agreements were signed
only by her husband, Glenn Go; she is the owner of Kargo Enterprises and Glenn Go
signed the lease agreements merely as the manager of Kargo Enterprises. Moreover,
Karen Go maintains that Navarros insistence that Kargo Enterprises is Karen Gos
paraphernal property is without basis. Based on the law and jurisprudence on the matter,
all property acquired during the marriage is presumed to be conjugal property. Finally,
Karen Go insists that her complaints sufficiently established a cause of action against
Navarro. Thus, when the RTC ordered her to include her husband as co-plaintiff, this was
merely to comply with the rule that spouses should sue jointly, and was not meant to cure
the complaints lack of cause of action.
THE COURTS RULING
We find the petition devoid of merit.
Karen Go is the real party-in-interest
The 1997 Rules of Civil Procedure requires that every action must be prosecuted or
defended in the name of the real party-in-interest, i.e., 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.15
Interestingly, although Navarro admits that Karen Go is the registered owner of the
business name Kargo Enterprises, he still insists that Karen Go is not a real party-ininterest in the case. According to Navarro, while the lease contracts were in Kargo
Enterprises name, this was merely a trade name without a juridical personality, so the
28
actual parties to the lease agreements were Navarro and Glenn Go, to the exclusion of
Karen Go.
As a corollary, Navarro contends that the RTC acted with grave abuse of discretion when
it ordered the inclusion of Glenn Go as co-plaintiff, since this in effect created a cause of
action for the complaints when in truth, there was none.
We do not find Navarros arguments persuasive.
The central factor in appreciating the issues presented in this case is the business name
Kargo Enterprises. The name appears in the title of the Complaint where the plaintiff was
identified as "KAREN T. GO doing business under the name KARGO ENTERPRISES,"
and this identification was repeated in the first paragraph of the Complaint. Paragraph 2
defined the business KARGO ENTERPRISES undertakes. Paragraph 3 continued with
the allegation that the defendant "leased from plaintiff a certain motor vehicle" that was
thereafter described. Significantly, the Complaint specifies and attaches as its integral
part the Lease Agreement that underlies the transaction between the plaintiff and the
defendant. Again, the name KARGO ENTERPRISES entered the picture as this Lease
Agreement provides:
This agreement, made and entered into by and between:
GLENN O. GO, of legal age, married, with post office address at xxx, herein referred to
as the LESSOR-SELLER; representing KARGO ENTERPRISES as its Manager,
xxx
thus, expressly pointing to KARGO ENTERPRISES as the principal that Glenn O. Go
represented. In other words, by the express terms of this Lease Agreement, Glenn Go
did sign the agreement only as the manager of Kargo Enterprises and the latter is clearly
the real party to the lease agreements.
As Navarro correctly points out, Kargo Enterprises is a sole proprietorship, which is
neither a natural person, nor a juridical person, as defined by Article 44 of the Civil Code:
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.
Thus, pursuant to Section 1, Rule 3 of the Rules, 16 Kargo Enterprises cannot be a party
to a civil action. This legal reality leads to the question: who then is the proper party to file
an action based on a contract in the name of Kargo Enterprises?
We faced a similar question in Juasing Hardware v. Mendoza,17 where we said:
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.
Thus, the complaint in the court below should have been filed in the name of the owner
of Juasing Hardware. The allegation 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 to the title of the case, as is customarily done. 18 [Emphasis
Case Compilation
supplied.]
This conclusion should be read in relation with Section 2, Rule 3 of the Rules, which
states:
SEC. 2. Parties in interest. A real party in interest is the party who stands to be
benefited or injured by the judgment in the suit, or the party entitled to the avails of the
suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted
or defended in the name of the real party in interest.
As the registered owner of Kargo Enterprises, Karen Go is the party who will directly
benefit from or be injured by a judgment in this case. Thus, contrary to Navarros
contention, Karen Go is the real party-in-interest, and it is legally incorrect to say that her
Complaint does not state a cause of action because her name did not appear in the
Lease Agreement that her husband signed in behalf of Kargo Enterprises. Whether
Glenn Go can legally sign the Lease Agreement in his capacity as a manager of Kargo
Enterprises, a sole proprietorship, is a question we do not decide, as this is a matter for
the trial court to consider in a trial on the merits.
Glenn Gos Role in the Case
We find it significant that the business name Kargo Enterprises is in the name of Karen T.
Go,19 who described herself in the Complaints to be "a Filipino, of legal age, married to
GLENN O. GO, a resident of Cagayan de Oro City, and doing business under the trade
name KARGO ENTERPRISES."20 That Glenn Go and Karen Go are married to each
other is a fact never brought in issue in the case. Thus, the business name KARGO
ENTERPRISES is registered in the name of a married woman, a fact material to the side
issue of whether Kargo Enterprises and its properties are paraphernal or conjugal
properties. To restate the parties positions, Navarro alleges that Kargo Enterprises is
Karen Gos paraphernal property, emphasizing the fact that the business is registered
solely in Karen Gos name. On the other hand, Karen Go contends that while the
business is registered in her name, it is in fact part of their conjugal property.
The registration of the trade name in the name of one person a woman does not
necessarily lead to the conclusion that the trade name as a property is hers alone,
particularly when the woman is married. By law, all property acquired during the
marriage, whether the acquisition appears to have been made, contracted or registered
in the name of one or both spouses, is presumed to be conjugal unless the contrary is
proved.21 Our examination of the records of the case does not show any proof that Kargo
Enterprises and the properties or contracts in its name are conjugal. If at all, only the
bare allegation of Navarro to this effect exists in the records of the case. As we
emphasized in Castro v. Miat:22
Petitioners also overlook Article 160 of the New Civil Code. It provides that "all property
of the marriage is presumed to be conjugal partnership, unless it be prove[n] that it
pertains exclusively to the husband or to the wife." This article does not require proof
that the property was acquired with funds of the partnership. The presumption
applies even when the manner in which the property was acquired does not appear. 23
[Emphasis supplied.]
Thus, for purposes solely of this case and of resolving the issue of whether Kargo
Enterprises as a sole proprietorship is conjugal or paraphernal property, we hold that it is
conjugal property.
Article 124 of the Family Code, on the administration of the conjugal property, provides:
Art. 124. The administration and enjoyment of the conjugal partnership property
shall belong to both spouses jointly. In case of disagreement, the husbands decision
29
2013400059
shall prevail, subject to recourse to the court by the wife for proper remedy, which must
be availed of within five years from the date of the contract implementing such decision.
xxx
This provision, by its terms, allows either Karen or Glenn Go to speak and act with
authority in managing their conjugal property, i.e., Kargo Enterprises. No need exists,
therefore, for one to obtain the consent of the other before performing an act of
administration or any act that does not dispose of or encumber their conjugal property.
Under Article 108 of the Family Code, the conjugal partnership is governed by the rules
on the contract of partnership in all that is not in conflict with what is expressly
determined in this Chapter or by the spouses in their marriage settlements. In other
words, the property relations of the husband and wife shall be governed primarily by
Chapter 4 on Conjugal Partnership of Gains of the Family Code and, suppletorily, by the
spouses marriage settlement and by the rules on partnership under the Civil Code. In the
absence of any evidence of a marriage settlement between the spouses Go, we look at
the Civil Code provision on partnership for guidance.
A rule on partnership applicable to the spouses circumstances is Article 1811 of the Civil
Code, which states:
Art. 1811. A partner is a co-owner with the other partners of specific partnership property.
The incidents of this co-ownership are such that:
(1) A partner, subject to the provisions of this Title and to any agreement between the
partners, has an equal right with his partners to possess specific partnership
property for partnership purposes; xxx
Under this provision, Glenn and Karen Go are effectively co-owners of Kargo Enterprises
and the properties registered under this name; hence, both have an equal right to seek
possession of these properties. Applying Article 484 of the Civil Code, which states that
"in default of contracts, or special provisions, co-ownership shall be governed by the
provisions of this Title," we find further support in Article 487 of the Civil Code that allows
any of the co-owners to bring an action in ejectment with respect to the co-owned
property.
While ejectment is normally associated with actions involving real property, we find that
this rule can be applied to the circumstances of the present case, following our ruling in
Carandang v. Heirs of De Guzman.24 In this case, one spouse filed an action for the
recovery of credit, a personal property considered conjugal property, without including the
other spouse in the action. In resolving the issue of whether the other spouse was
required to be included as a co-plaintiff in the action for the recovery of the credit, we
said:
Milagros de Guzman, being presumed to be a co-owner of the credits allegedly extended
to the spouses Carandang, seems to be either an indispensable or a necessary party. If
she is an indispensable party, dismissal would be proper. If she is merely a necessary
party, dismissal is not warranted, whether or not there was an order for her inclusion in
the complaint pursuant to Section 9, Rule 3.
Article 108 of the Family Code provides:
Art. 108. The conjugal partnership shall be governed by the rules on the contract of
partnership in all that is not in conflict with what is expressly determined in this Chapter or
by the spouses in their marriage settlements.
This provision is practically the same as the Civil Code provision it superseded:
Art. 147. The conjugal partnership shall be governed by the rules on the contract of
partnership in all that is not in conflict with what is expressly determined in this Chapter.
2013400059
In this connection, Article 1811 of the Civil Code provides that "[a] partner is a co-owner
with the other partners of specific partnership property." Taken with the presumption of
the conjugal nature of the funds used to finance the four checks used to pay for
petitioners stock subscriptions, and with the presumption that the credits themselves are
part of conjugal funds, Article 1811 makes Quirino and Milagros de Guzman co-owners of
the alleged credit.
Being co-owners of the alleged credit, Quirino and Milagros de Guzman may separately
bring an action for the recovery thereof. In the fairly recent cases of Baloloy v. Hular and
Adlawan v. Adlawan, we held that, in a co-ownership, co-owners may bring actions for
the recovery of co-owned property without the necessity of joining all the other co-owners
as co-plaintiffs because the suit is presumed to have been filed for the benefit of his coowners. In the latter case and in that of De Guia v. Court of Appeals, we also held that
Article 487 of the Civil Code, which provides that any of the co-owners may bring an
action for ejectment, covers all kinds of action for the recovery of possession.
In sum, in suits to recover properties, all co-owners are real parties in interest. However,
pursuant to Article 487 of the Civil Code and relevant jurisprudence, any one of them
may bring an action, any kind of action, for the recovery of co-owned properties.
Therefore, only one of the co-owners, namely the co-owner who filed the suit for the
recovery of the co-owned property, is an indispensable party thereto. The other coowners are not indispensable parties. They are not even necessary parties, for a
complete relief can be accorded in the suit even without their participation, since the suit
is presumed to have been filed for the benefit of all co-owners.25 [Emphasis supplied.]
Under this ruling, either of the spouses Go may bring an action against Navarro to
recover possession of the Kargo Enterprises-leased vehicles which they co-own. This
conclusion is consistent with Article 124 of the Family Code, supporting as it does the
position that either spouse may act on behalf of the conjugal partnership, so long as they
do not dispose of or encumber the property in question without the other spouses
consent.
On this basis, we hold that since Glenn Go is not strictly an indispensable party in the
action to recover possession of the leased vehicles, he only needs to be impleaded as a
pro-forma party to the suit, based on Section 4, Rule 4 of the Rules, which states:
Section 4. Spouses as parties. Husband and wife shall sue or be sued jointly, except as
provided by law.
Non-joinder of indispensable parties not ground to dismiss action
Even assuming that Glenn Go is an indispensable party to the action, we have held in a
number of cases26 that the misjoinder or non-joinder of indispensable parties in a
complaint is not a ground for dismissal of action. As we stated in Macababbad v.
Masirag:27
Rule 3, Section 11 of the Rules of Court provides that neither misjoinder nor nonjoinder of
parties is a ground for the dismissal of an action, thus:
Sec. 11. Misjoinder and non-joinder of parties. Neither misjoinder nor non-joinder of
parties is ground for dismissal of an action. Parties may be dropped or added by order of
the court on motion of any party or on its own initiative at any stage of the action and on
such terms as are just. Any claim against a misjoined party may be severed and
proceeded with separately.
In Domingo v. Scheer, this Court held that the proper remedy when a party is left out is to
implead the indispensable party at any stage of the action. The court, either motu proprio
or upon the motion of a party, may order the inclusion of the indispensable party or give
30
the plaintiff opportunity to amend his complaint in order to include indispensable parties.
If the plaintiff to whom the order to include the indispensable party is directed refuses to
comply with the order of the court, the complaint may be dismissed upon motion of the
defendant or upon the court's own motion. Only upon unjustified failure or refusal to obey
the order to include or to amend is the action dismissed.
In these lights, the RTC Order of July 26, 2000 requiring plaintiff Karen Go to join her
husband as a party plaintiff is fully in order.
Demand not required prior
to filing of replevin action
In arguing that prior demand is required before an action for a writ of replevin is filed,
Navarro apparently likens a replevin action to an unlawful detainer.
For a writ of replevin to issue, all that the applicant must do is to file an affidavit and
bond, pursuant to Section 2, Rule 60 of the Rules, which states:
Sec. 2. Affidavit and bond.
The applicant must show by his own affidavit or that of some other person who
personally knows the facts:
(a) That the applicant is the owner of the property claimed, particularly describing it,
or is entitled to the possession thereof;
(b) That the property is wrongfully detained by the adverse party, alleging the cause
of detention thereof according to the best of his knowledge, information, and belief;
(c) That the property has not been distrained or taken for a tax assessment or a fine
pursuant to law, or seized under a writ of execution or preliminary attachment, or
otherwise placed under custodia legis, or if so seized, that it is exempt from such seizure
or custody; and
(d) The actual market value of the property.
The applicant must also give a bond, executed to the adverse party in double the value
of the property as stated in the affidavit aforementioned, for the return of the property to
the adverse party if such return be adjudged, and for the payment to the adverse party of
such sum as he may recover from the applicant in the action.
We see nothing in these provisions which requires the applicant to make a prior demand
on the possessor of the property before he can file an action for a writ of replevin. Thus,
prior demand is not a condition precedent to an action for a writ of replevin.
More importantly, Navarro is no longer in the position to claim that a prior demand is
necessary, as he has already admitted in his Answers that he had received the letters
that Karen Go sent him, demanding that he either pay his unpaid obligations or return the
leased motor vehicles. Navarros position that a demand is necessary and has not been
made is therefore totally unmeritorious.
WHEREFORE, premises considered, we DENY the petition for review for lack of merit.
Costs against petitioner Roger V. Navarro.
SO ORDERED.
G.R. No. 177429
November 24, 2009
ANICIA VALDEZ-TALLORIN, Petitioner,
vs.
HEIRS OF JUANITO TARONA, Represented by CARLOS TARONA, ROGELIO
TARONA and LOURDES TARONA, Respondents.
DECISION
Case Compilation
ABAD, J.:
This case is about a courts annulment of a tax declaration in the names of three
persons, two of whom had not been impleaded in the case, for the reason that the
document was illegally issued to them.
The Facts and the Case
On February 9, 1998 respondents Carlos, Rogelio, and Lourdes Tarona (the Taronas)
filed an action before the Regional Trial Court (RTC) of Balanga, Bataan, 1 against
petitioner Anicia Valdez-Tallorin (Tallorin) for the cancellation of her and two other
womens tax declaration over a parcel of land.
The Taronas alleged in their complaint that, unknown to them, in 1981, the Assessors
Office of Morong in Bataan cancelled Tax Declaration 463 in the name of their father,
Juanito Tarona (Juanito), covering 6,186 square meters of land in Morong, Bataan. The
cancellation was said to be based on an unsigned though notarized affidavit that Juanito
allegedly executed in favor of petitioner Tallorin and two others, namely, Margarita
Pastelero Vda. de Valdez and Dolores Valdez, who were not impleaded in the action. In
place of the cancelled one, the Assessors Office issued Tax Declaration 6164 in the
names of the latter three persons. The old man Taronas affidavit had been missing and
no copy could be found among the records of the Assessors Office.2
The Taronas further alleged that, without their fathers affidavit on file, it followed that his
tax declaration had been illegally cancelled and a new one illegally issued in favor of
Tallorin and the others with her. The unexplained disappearance of the affidavit from
official files, the Taronas concluded, covered-up the falsification or forgery that caused
the substitution.3 The Taronas asked the RTC to annul Tax Declaration 6164, reinstate
Tax Declaration 463, and issue a new one in the name of Juanitos heirs.
On March 6, 1998 the Taronas filed a motion to declare petitioner Tallorin in default for
failing to answer their complaint within the allowed time. 4 But, before the RTC could act
on the motion, Tallorin filed a belated answer, alleging among others that she held a copy
of the supposedly missing affidavit of Juanito who was merely an agricultural tenant of
the land covered by Tax Declaration 463. He surrendered and waived in that affidavit his
occupation and tenancy rights to Tallorin and the others in consideration of P29,240.00.
Tallorin also put up the affirmative defenses of non-compliance with the requirement of
conciliation proceedings and prescription.
On March 12, 1998 the RTC set Tallorins affirmative defenses for hearing 5 but the
Taronas sought reconsideration, pointing out that the trial court should have instead
declared Tallorin in default based on their earlier motion.6 On June 2, 1998 the RTC
denied the Taronas motion for reconsideration 7 for the reasons that it received Tallorins
answer before it could issue a default order and that the Taronas failed to show proof that
Tallorin was notified of the motion three days before the scheduled hearing. Although the
presiding judge inhibited himself from the case on motion of the Taronas, the new judge
to whom the case was re-raffled stood by his predecessors previous orders.
By a special civil action for certiorari before the Court of Appeals (CA), 8 however, the
Taronas succeeded in getting the latter court to annul the RTCs March 12 and June 2,
1998 orders.9 The CA ruled that the RTC gravely abused its discretion in admitting
Tallorins late answer in the absence of a motion to admit it. Even if petitioner Tallorin had
already filed her late answer, said the CA, the RTC should have heard the Taronas
motion to declare Tallorin in default.
31
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Upon remand of the case, the RTC heard the Taronas motion to declare Tallorin in
default,10 granted the same, and directed the Taronas to present evidence ex parte.11
On January 30, 2002 the RTC rendered judgment, a) annulling the tax declaration in the
names of Tallorin, Margarita Pastelero Vda. de Valdez, and Dolores Valdez; b) reinstating
the tax declaration in the name of Juanito; and c) ordering the issuance in its place of a
new tax declaration in the names of Juanitos heirs. The trial court also ruled that
Juanitos affidavit authorizing the transfer of the tax declaration had no binding force
since he did not sign it.1avvphi1
Tallorin appealed the above decision to the CA, 12 pointing out 1) that the land covered by
the tax declaration in question was titled in her name and in those of her two co-owners;
2) that Juanitos affidavit only dealt with the surrender of his tenancy rights and did not
serve as basis for canceling Tax Declaration 463 in his name; 3) that, although Juanito
did not sign the affidavit, he thumbmarked and acknowledged the same before a notary
public; and 4) that the trial court erred in not dismissing the complaint for failure to
implead Margarita Pastelero Vda. de Valdez and Dolores Valdez who were indispensable
parties in the action to annul Juanitos affidavit and the tax declaration in their favor.13
On May 22, 2006 the CA rendered judgment, affirming the trial courts decision.14 The CA
rejected all of Tallorins arguments. Since she did not assign as error the order declaring
her in default and since she took no part at the trial, the CA pointed out that her claims
were in effect mere conjectures, not based on evidence of record. 15 Notably, the CA did
not address the issue Tallorin raised regarding the Taronas failure to implead Margarita
Pastelero Vda. de Valdez and Dolores Valdez as indispensable party-defendants, their
interest in the cancelled tax declarations having been affected by the RTC judgment.
Questions Presented
The petition presents the following questions for resolution by this Court:
1. Whether or not the CA erred in failing to dismiss the Taronas complaint for not
impleading Margarita Pastelero Vda. de Valdez and Dolores Valdez in whose names, like
their co-owner Tallorin, the annulled tax declaration had been issued;
2. Whether or not the CA erred in not ruling that the Taronas complaint was barred by
prescription; and
3. Whether or not the CA erred in affirming the RTCs finding that Juanitos affidavit had
no legal effect because it was unsigned; when at the hearing of the motion to declare
Tallorin in default, it was shown that the affidavit bore Juanitos thumbmark.
The Courts Rulings
The first question, whether or not the CA erred in failing to dismiss the Taronas complaint
for not impleading Margarita Pastelero Vda. de Valdez and Dolores Valdez in whose
names, like their co-owner Tallorin, the annulled tax declaration had been issued, is a
telling question.
The rules mandate the joinder of indispensable parties. Thus:
Sec. 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 and
defendants.16
Indispensable parties are those with such an interest in the controversy that a final
decree would necessarily affect their rights, so that the courts cannot proceed without
their presence.17 Joining indispensable parties into an action is mandatory, being a
requirement of due process. Without their presence, the judgment of the court cannot
2013400059
attain real finality.

Judgments do not bind strangers to the suit. The absence of an indispensable party
renders all subsequent actions of the court null and void. Indeed, it would have no
authority to act, not only as to the absent party, but as to those present as well. And
where does the responsibility for impleading all indispensable parties lie? It lies in the
plaintiff.18
Here, the Taronas sought the annulment of the tax declaration in the names of defendant
Tallorin and two others, namely, Margarita Pastelero Vda. de Valdez and Dolores Valdez
and, in its place, the reinstatement of the previous declaration in their father Juanitos
name. Further, the Taronas sought to strike down as void the affidavit in which Juanito
renounced his tenancy right in favor of the same three persons. It is inevitable that any
decision granting what the Taronas wanted would necessarily affect the rights of such
persons to the property covered by the tax declaration.
The Court cannot discount the importance of tax declarations to the persons in whose
names they are issued. Their cancellation adversely affects the rights and interests of
such persons over the properties that the documents cover. The reason is simple: a tax
declaration is a primary evidence, if not the source, of the right to claim title of ownership
over real property, a right enforceable against another person. The Court held in Uriarte
v. People19 that, although not conclusive, a tax declaration is a telling evidence of the
declarants possession which could ripen into ownership.
In Director of Lands v. Court of Appeals, 20 the Court said that no one in his right mind
would pay taxes for a property that he did not have in his possession. This honest sense
of obligation proves that the holder claims title over the property against the State and
other persons, putting them on notice that he would eventually seek the issuance of a
certificate of title in his name. Further, the tax declaration expresses his intent to
contribute needed revenues to the Government, a circumstance that strengthens his
bona fide claim to ownership.21
Here, the RTC and the CA annulled Tax Declaration 6164 that belonged not only to
defendant Tallorin but also to Margarita Pastelero Vda. de Valdez and Dolores Valdez,
which two persons had no opportunity to be heard as they were never impleaded. The
RTC and the CA had no authority to annul that tax declaration without seeing to it that all
three persons were impleaded in the case.
But the Taronas action cannot be dismissed outright. As the Court held in Plasabas v.
Court of Appeals,22 the non-joinder of indispensable parties is not a ground for dismissal.
Section 11, Rule 3 of the 1997 Rules of Civil Procedure prohibits the dismissal of a suit
on the ground of non-joinder or misjoinder of parties and allows the amendment of the
complaint at any stage of the proceedings, through motion or on order of the court on its
own initiative. Only if plaintiff refuses to implead an indispensable party, despite the order
of the court, may it dismiss the action.
There is a need, therefore, to remand the case to the RTC with an order to implead
Margarita Pastelero Vda. de Valdez and Dolores Valdez as defendants so they may, if
they so desire, be heard.
In view of the Courts resolution of the first question, it would serve no purpose to
consider the other questions that the petition presents. The resolution of those questions
seems to depend on the complete evidence in the case. This will not yet happen until all
the indispensable party-defendants are impleaded and heard on their evidence.
WHEREFORE, the Court GRANTS the petition and SETS ASIDE the decision of the
Regional Trial Court of Balanga, Bataan in Civil Case 6739 dated January 30, 2002 and
32
the decision of the Court of Appeals in CA-G.R. CV 74762 dated May 22, 2006. The
Court REMANDS the case to the Regional Trial Court of Balanga, Bataan which is
DIRECTED to have Margarita Pastelero Vda. de Valdez and Dolores Valdez impleaded
by the plaintiffs as party-defendants and, afterwards, to hear the case in the manner
prescribed by the rules.
SO ORDERED.
G.R. No. 196894

March 3, 2014
JESUS G. CRISOLOGO and NANETTE B. CRISOLOGO, Petitioners,
vs.
JEWM AGRO-INDUSTRIAL CORPORATION, Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court challenging
the May 6, 2011 Decision1 of the Court of Appeals (CA), in CA-G.R. SP No. 03896-MIN,
which affirmed the September 27, 2010,2 October 7, 20103 and November 9, 20104
Orders of the Regional Trial Court, Davao City, Branch 14 (RTC-Br. 14), in Civil Case No.
33,551-2010, an action for Cancellation of Lien. It is entitled "JEWM Agro-Industrial
Corporation v. The Registry of Deeds for the City of Davao. Sheriff Robert Medialdea.
John & Jane Does. and all persons acting under their directions.
This controversy stemmed from various cases of collection for sum of money filed
against So Keng Kok, the owner of various properties including two (2) parcels of land
covered by TCT Nos. 292597 and 292600 (subject properties), which were attached by
various creditors including the petitioners in this case. As a result, the levies were
annotated on the back of the said titles.
Petitioners Jesus G. Crisologo and Nannette B. Crisologo (Spouses Crisologo) were the
plaintiffs in two (2) collection cases before RTC, Branch 15, Davao City (RTC-Br. 15),
docketed as Civil Case Nos. 26,810-98 and 26,811-98, against Robert Limso, So Keng
Koc, et al. Respondent JEWM Agro-Industrial Corporation (JEWM) was the successor-ininterest of one Sy Sen Ben, the plaintiff in another collection case before RTC, Branch 8,
Davao City (RTC-Br. 8), docketed as Civil Case No. 26,513-98, against the same
defendants.
On October 19, 1998, RTC-Br. 8 rendered its decision based on a compromise
agreement, dated October 15, 1998, between the parties wherein the defendants in said
case were directed to transfer the subject properties in favor of Sy Sen Ben. The latter
subsequently sold the subject properties to one Nilda Lam who, in turn, sold the same to
JEWM on June 1, 2000. Thereafter, TCT Nos. 325675 and 325676 were eventually
issued in the name of JEWM, both of which still bearing the same annotations as well as
the notice of lis pendens in connection with the other pending cases filed against So
Keng Kok.
A year thereafter, Spouses Crisologo prevailed in the separate collection case filed
before RTC-Br. 15 against Robert Lim So and So Keng Koc (defendants). Thus, on July
1, 1999, the said defendants were ordered to solidarily pay the Spouses Crisologo. When
this decision attained finality, they moved for execution. On June 15, 2010, a writ was
Case Compilation
eventually issued.
Acting on the same, the Branch Sheriff issued a notice of sale scheduling an auction on
August 26, 2010. The notice of sale included, among others, the subject properties
covered by TCT Nos. 325675 and 325676, now, in the name of JEWM.
In the same proceedings, JEWM immediately filed its Affidavit of Third Party Claim and
the Urgent Motion Ad Cautelam. It prayed for the exclusion of the subject properties from
the notice of sale. In an order, dated August 26, 2010, however, the motion was denied.
In turn, the Spouses Crisologo posted a bond in order to proceed with the execution.
To protect its interest, JEWM filed a separate action for cancellation of lien with prayer for
the issuance of a preliminary injunction before RTC-Br. 14, docketed as Civil Case No.
33,551-2010. It prayed for the issuance of a writ of preliminary injunction to prevent the
public sale of the subject properties covered in the writ of execution issued pursuant to
the ruling of RTC-Br. 15; the cancellation of all the annotations on the back of the
pertinent TCTs; and the issuance of a permanent injunction order after trial on the merits.
"The Register of Deeds of Davao City, Sheriff Robert Medialdea, John and Jane Does
and all persons acting under their direction" were impleaded as defendants.
At the scheduled hearing before RTC-Br. 14 on September 22, 2010, Spouses
Crisologos counsel appeared and filed in open court their Very Urgent Manifestation
questioning the authority of the said court to restrain the execution proceedings in RTCBr. 15. JEWM opposed it on the ground that Spouses Crisologo were not parties in the
case.
On September 24, 2010, Spouses Crisologo filed an Omnibus Motion praying for the
denial of the application for writ or preliminary injuction filed by JEWM and asking for their
recognition as parties. No motion to intervene was, however, filed as the Spouses
Crisologo believed that it was unnecessary since they were already the John and Jane
Does named in the complaint.
In the Order, dated September 27, 2010, RTC-Br. 14 denied Spouses Crisologos
Omnibus Motion and granted JEWMs application for a writ of preliminary injunction.
On October 1, 2010, Spouses Crisologo filed a Very Urgent Omnibus Motion before
RTC-Br. 14 praying for reconsideration and the setting aside of its September 27, 2010
Order. This was denied in the RTC Br.-14s October 7, 2010 Order for lack of legal
standing in court considering that their counsel failed to make the written formal notice of
appearance. The copy of this order was received by Spouses Crisologo on October 22,
2010. It must be noted, however, that on October 27, 2010, they received another order,
likewise dated October 7, 2010, giving JEWM time to comment on their Very Urgent
Omnibus Motion filed on October 1, 2010. In its Order, dated November 9, 2010,
however, RTC-Br. 14 again denied the Very Urgent Motion previously filed by Spouses
Crisologo.
On November 12, 2010, JEWM moved to declare the "defendants" in default which was
granted in an order given in open court on November 19, 2010.
Spouses Crisologo then filed their Very Urgent Manifestation, dated November 30, 2010,
arguing that they could not be deemed as defaulting parties because they were not
referred to in the pertinent motion and order of default.
On November 19, 2010, Spouses Crisologo filed with the CA a petition for certiorari 5
under Rule 65 of the Rules of Court assailing the RTC-Br. 14 orders, dated September
27, 2010, October 7, 2010 and November 9, 2010, all of which denied their motion to be
recognized as parties. They also prayed for the issuance of a Temporary Restraining
Order (TRO) and/or a Writ of Preliminary Injunction.
33
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In its Resolution, dated January 6, 2011, the CA denied the application for a TRO, but
directed Spouses Crisologo to amend their petition. On January 19, 2011, the Spouses
Crisologo filed their Amended Petition6 with prayers for the issuance of a TRO and/or writ
of preliminary injunction, the annulment of the aforementioned orders of RTC Br. 14, and
the issuance of an order dissolving the writ of preliminary injunction issued in favor of
JEWM.
Pending disposition of the Amended Petition by the CA, JEWM filed a motion on
December 6, 2010 before RTC-Br. 14 asking for the resolution of the case on the merits.
On January 10, 2011, RTC-Br. 14 ruled in favor of JEWM, with the dispositive portion of
its Decision7 stating as follows:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of the
plaintiff as follows:
1. the preliminary writ of injunction issued on October 5, 2010 is hereby made
permanent;
2. directing herein defendant Registry of Deeds of Davao City where the subject lands
are located, to cancel all existing liens and encumbrances on TCT No. T-325675 and T325676 registered in the name of the plaintiff, and pay the
3. cost of suit.
SO ORDERED.8
Spouses Crisologo then filed their Omnibus Motion Ex Abudanti ad Cautelam, asking
RTC- Br. 14 to reconsider the above decision. Because no motion for intervention was
filed prior to the rendition of the judgment, a certificate, dated March 17, 2011, was
issued declaring the January 10, 2011 decision final and executory.
On May 6, 2011, the CA eventually denied the Amended Petition filed by Spouses
Crisologo for lack of merit. It ruled that the writ of preliminary injunction subject of the
petition was already fait accompli and, as such, the issue of grave abuse of discretion
attributed to RTC-Br. 14 in granting the relief had become moot and academic. It further
held that the failure of Spouses Crisologo to file their motion to intervene under Rule 19
rendered Rule 65 inapplicable as a vehicle to ventilate their supposed right in the case.9
Hence, this petition.
ISSUES
I. The Court of Appeals erred in holding that the action for Cancellation of Annotations
may proceed even without notice to and impleading the party/ies who caused the
annotations, in clear contravention of the rule on joinder of parties and basic due
process.
II. The Court of Appeals erred in applying a very constrictive interpretation of the rules in
holding that a motion to intervene is the only way an otherwise real party in interest could
participate.
III. The Court of Appeals erred in denying our application for the issuance of a temporary
restraining order and/or a writ of preliminary injunction.
IV. The Court of Appeals erred in holding that the issues raised by petitioners before it
[had] been mooted by the January 10, 2011 decision of RTC Branch 14.10
Spouses Crisologo submit as error the CA affirmation of the RTC- Br. 14 ruling that the
action for cancellation may proceed without them being impleaded. They allege
deprivation of their right to due process when they were not impleaded in the case before
RTC-Br. 14 despite the claim that they stand, as indispensable parties, to be benefited or
injured by the judgment in the action for the cancellation of annotations covering the
subject properties. They cite Gonzales v. Judge Bersamin, 11 among others, as authority.
2013400059
In that case, the Court ruled that pursuant to Section 108 of Presidential Decree (P.D.)
No. 1529, notice must be given to all parties in interest before the court may hear and
determine the petition for the cancellation of annotations on the certificates of title.
The Spouses Crisologo also question the statement of the CA that their failure to file the
motion to intervene under Rule 19 before RTC-Br. 14 barred their participation in the
cancellation proceedings. They put emphasis on the courts duty to, at the very least,
suspend the proceedings before it and have such indispensable parties impleaded.
As to the ruling on the denial of their application for the issuance of a TRO or writ of
preliminary injunction, Spouses Crisologo claim that their adverse interest, evinced by
the annotations at the back of the certificates of title, warranted the issuance of a TRO or
writ of preliminary injunction against JEWMs attempt to cancel the said annotations in
violation of their fundamental right to due process.
Lastly, Spouses Crisologo cast doubt on the CA ruling that the issues presented in their
petition were mooted by the RTC-Br. 14 Decision, dated January 10, 2011. Having been
rendered without impleading indispensable parties, the said decision was void and could
not have mooted their petition.
In their Comment,12 JEWM asserts that Spouses Crisologos failure to file a motion to
intervene, pleadings-in-intervention, appeal or annulment of judgment, which were plain,
speedy and adequate remedies then available to them, rendered recourse to Rule 65 as
improper; that Spouses Crisologo lacked the legal standing to file a Rule 65 petition since
they were not impleaded in the proceedings before RTC-Br. 14; and that Spouses
Crisologo were not indispensable parties since their rights over the properties had been
rendered ineffective by the final and executory October 19, 1998 Decision of RTC-Br. 8
which disposed unconditionally and absolutely the subject properties in favor of its
predecessor-in-interest.
JEWM further argues that, on the assumption that Section 108 of P.D. No. 1529 applies,
no notice to Spouses Crisologo was required because they were not real parties-ininterest in the case before RTC-Br. 14, or even if they were, their non-participation in the
proceedings was because of their failure to properly intervene pursuant to Rule 19; and,
lastly, that the case before RTC-Br. 14 became final and executory because Spouses
Crisologos did not perfect an appeal therefrom, thus, rendering the issues in the CA
petition moot and academic.
In their Reply,13 Spouses Crisologo restate the applicability of Section 108 of P.D. No.
1529 to the effect that any cancellation of annotation of certificates of title must be carried
out by giving notice to all parties-in-interest. This they forward despite their recognition of
the mootness of their assertion over the subject properties, to wit:
Again, we respect JAICs position that "the claims of subsequent attaching creditors
(including petitioners) have been rendered moot and academic, and hence the entries in
favor of said creditors have no more legal basis and therefore must be cancelled." But we
likewise at least ask a modicum of respect by at least being notified and heard.14
The Ruling of the Court
The crux of this controversy is whether the CA correctly ruled that RTC-Br. 14 acted
without grave abuse of discretion in failing to recognize Spouses Crisologo as
indispensable parties in the case for cancellation of lien.
In this respect, the Court agrees with Spouses Crisologo.
In an action for the cancellation of memorandum annotated at the back of a certificate of
title, the persons considered as indispensable include those whose liens appear as
annotations pursuant to Section 108 of P.D. No. 1529,15 to wit:
34
Section 108. Amendment and alteration of certificates. -No erasure, alteration or

amendment shall be made upon the registration book after the entry of a certificate of
title or of a memorandum thereon and the attestation of the same by the Register of
Deeds, except by order of the proper Court of First Instance. A registered owner or other
person having an interest in registered property, or, in proper cases, the Register of
Deeds with the approval of the Commissioner of Land Registration, may apply by petition
to the court upon the ground that the registered interests of any description, whether
vested, contingent, expectant inchoate appearing on the certificate, have terminated and
ceased; or that new interest not appearing upon the certificates have arisen or been
created; or that an omission or error was made in entering a certificate or memorandum
thereon, or on any duplicate certificate; x x x or upon any other reasonable ground; and
the court may hear and determine the petition after notice to all parties in interest, and
may order the entry or cancellation of a new certificate, the entry or cancellation of a
memorandum upon a certificate, or grant any other relief upon such terms and
conditions, requiring security or bond if necessary, as it may consider proper.
In Southwestern University v. Laurente, 16 the Court held that the cancellation of the
annotation of an encumbrance cannot be ordered without giving notice to the parties
annotated in the certificate of title itself. It would, thus, be an error for a judge to contend
that no notice is required to be given to all the persons whose liens were annotated at the
back of a certificate of title.
Here, undisputed is the fact that Spouses Crisologos liens were indeed annotated at the
back of TCT Nos. 325675 and 325676. Thus, as persons with their liens annotated, they
stand to be benefited or injured by any order relative to the cancellation of annotations in
the pertinent TCTs. In other words, they are as indispensable as JEWM itself in the final
disposition of the case for cancellation, being one of the many lien holders.
As indispensable parties, Spouses Crisologo should have been joined as defendants in
the case pursuant to Section 7, Rule 3 of the Rules of Court, to wit:
SEC. 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.17
The reason behind this compulsory joinder of indispensable parties is the complete
determination of all possible issues, not only between the parties themselves but also as
regards other persons who may be affected by the judgment.18
In this case, RTC-Br. 14, despite repeated pleas by Spouses Crisologo to be recognized
as indispensable parties, failed to implement the mandatory import of the aforecited rule.
In fact, in Sps. Crisologo v. Judge George E. Omelio,19 a related administrative case, the
Court found the trial judge guilty of gross ignorance of the law when it disregarded the
claims of Spouses Crisologo to participate. In part, the Court stated:
This is not the first time Judge Omelio has rendered a decision affecting third parties
interests, without even notifying the indispensable parties. In the first disputed case,
JEWM Agro-Industrial Corporation v. Register of Deeds, Sheriff Medialdea, John & Jane
Does and all persons acting under their directions, Judge Omelio failed to cause the
service of proper summons upon the John and Jane Does impleaded in the complaint.
Even when Sps. Crisologo voluntarily appeared in court to be recognized as the John
and Jane Does, Judge Omelio refused to acknowledge their appearance and ordered the
striking out of Sps. Crisologos' pleadings. For this reason, the Investigating Justice
recommended admonishing Judge Omelio for failing to recognize the Sps.Crisologo as
indispensable parties in that case.
Case Compilation
xxx
xxx
xxx
Clearly, the cancellation of the annotation of the sale without notifying the buyers, Sps.
Crisologo, is a violation of the latters right to due process. Since this is the second time
that Judge Omelio has issued an order which fails to notify or summon the indispensable
parties, we find Judge Omelio guilty of gross ignorance of the law, with a warning that
repetition of the same or similar act will merit a stiffer penalty in the future.
xxx
WHEREFORE, We find Judge George E. Omelio GUILTY of four counts of the serious
charge of gross ignorance of the law for the following acts: (a) refusing to recognize
Spouses Jesus G. Crisologo and Nannette B. Crisologo as indispensable parties; in
violation of the latter's right to due process. Accordingly, we impose upon Judge George
E. Omelio the penalty of fine of Forty Thousand Pesos (P40,000.00), with a warning that
repetition of the same or similar acts will be dealt with more severely.
SO ORDERED.20
The trial court should have exercised prudence in denying Spouses Crisologos pleas to
be recognized as indispensable parties. In the words of the Court, "Judge Omelio should
be penalized for failing to recognize Sps. Crisologo as indispensable parties and for
requiring them to file a motion to intervene, considering that a simple perusal of the
certificates of title would show Sps. Crisologos adverse rights because their liens are
annotated at the back of the titles."21
This manifest disregard of the basic rules and procedures constitutes a grave abuse of
discretion.
In State Prosecutors II Comilang and Lagman v. Judge Medel Belen, 22 the Court held as
inexcusable abuse of authority the trial judges "obstinate disregard of basic and
established rule of law or procedure." Such level of ignorance is not a mere error of
judgment. It amounts to "evasion of a positive duty or to a virtual refusal to perform a duty
enjoined by law, or to act at all in contemplation of law," 23 or in essence, grave abuse of
discretion amounting to lack of jurisdiction.
Needless to say, judges are expected to exhibit more than just a cursory acquaintance
with statutes and procedural laws. They must know the laws and apply them properly in
good faith as judicial competence requires no less.24
Despite the clear existence of grave abuse of discretion on the part of RTC-Br. 14, JEWM
asserts technical grounds on why the CA did not err in dismissing the petition via Rule
65. It states that:
a) The Crisologos could have used other available remedies such as intervention under
Rule 19, an appeal of the judgment, or even an annulment of judgment, which are, by all
means, plain, speedy and adequate remedies in the ordinary course of law;
b) The Crisologos lack legal standing to file the Rule 65 petition since they were not
impleaded in the Branch 14 case.
The rule is that a petition for certiorari under Rule 65 is proper only if there is no appeal,
or any plain speedy, and adequate remedy in the ordinary course of law.
In this case, no adequate recourse, at that time, was available to Spouses Crisologo,
except resorting to Rule 65.
Although Intervention under Rule 19 could have been availed of, failing to use this
remedy should not prejudice Spouses Crisologo. It is the duty of RTC-Br. 14, following
the rule on joinder of indispensable parties, to simply recognize them, with or without any
motion to intervene. Through a cursory reading of the titles, the Court would have noticed
the adverse rights of Spouses Crisologo over the cancellation of any annotations in the
35
2013400059
subject TCTs.
Neither will appeal prove adequate as a remedy since only the original parties to an
action can appeal.25 Here, Spouses Crisologo were never impleaded. Hence, they could
not have utilized appeal as they never possessed the required legal standing in the first
place.
And even if the Court assumes the existence of the legal standing to appeal, it must be
remembered that the questioned orders were interlocutory in character and, as such,
Spouses Crisologo would have to wait, for the review by appeal, until the rendition of the
judgment on the merits, which at that time may not be coming as speedy as practicable.
While waiting, Spouses Crisologo would have to endure the denial of their right, as
indispensable parties, to participate in a proceeding in which their indispensability was
obvious. Indeed, appeal cannot constitute an adequate, speedy and plain remedy.
The same is also true if recourse to Annulment of Judgment under Rule 47 is made since
this remedy presupposes a final judgment already rendered by a trial court.
At any rate, the remedy against an interlocutory order, not subject of an appeal, is an
appropriate special civil action under Rule 65, provided that the interlocutory order is
rendered without or in excess of jurisdiction or with grave abuse of discretion. Only then
is certiorari under Rule 65 allowed to be resorted to.26
This takes particular relevance in this case where, as previously discussed, RTC-Br. 14
acted with grave abuse of discretion in not recognizing Spouses Crisologo as
indispensable parties to the pertinent action.
Based on the above, recourse to the CA via Rule 65 would have already been proper,
except for one last issue, that is, Spouses Crisologos legal standing to file the same.
JEWM cites DBP v. COA27 where the Court held:
The petition for certiorari under Rule 65, however, is not available to any person who
feels injured by the decision of a tribunal, board or officer exercising judicial or quasi
judicial functions. The person aggrieved under Section 1 of Rule 65 who can avail of the
special civil action of certiorari pertains only to one who was a party in the proceedings
before the court a quo, or in this case before the COA. To hold otherwise would open the
courts to numerous and endless litigations.
Under normal circumstances, JEWM would be correct in their averment that the lack of
legal standing on the part of Spouses Crisologo in the case before RTC-Br. 14 prevents
the latters recourse via Rule 65.
This case, however, is an exception. In many instances, the Court has ruled that
technical rules of procedures should be used to promote, not frustrate the cause of
justice. Rules of procedure are tools designed not to thwart but to facilitate the attainment
of justice; thus, their strict and rigid application may, for good and deserving reasons,
have to give way to, and be subordinated by, the need to aptly dispense substantial
justice in the normal cause.28
Be it noted that the effect of their non-participation as indispensable parties is to preclude
the judgment, orders and the proceedings from attaining finality. Time and again, the
Court has ruled that the absence of an indispensable party renders all subsequent
actions of the court null and void for want of authority to act, not only as to the absent
parties but even to those present. Consequently, the proceedings before RTC-Br. 14
were null and void including the assailed orders, which may be "ignored wherever and
whenever it exhibits its head."29
To turn a blind eye to the said nullity and, in turn, rule as improper the recourse to Rule
65 by the lack of legal standing is to prolong the denial of due process to the persons
2013400059
whose interests are indispensible to the final disposition of the case. It will only result in a
protracted litigation as Spouses Crisologo will be forced to rely on a petition for the
annulment of judgment before the CA (as the last remaining remedy), which may again
reach this Court.1wphi1 To prevent multiplicity of suits and to expedite the swift
administration of justice, the CA should have applied liberality by striking down the
assailed orders despite the lack of legal standing on the part of Spouses Crisologo to file
the Rule 65 petition before it. Besides, this lacking requirement, of which Spouses
Crisologo were not even at fault, is precisely the reason why this controversy arose.
All told, the CA erred in dismissing the amended petition filed before it and in not finding
grave abuse of discretion on the part of RTC-Br. 14.
WHEREFORE, the petition is GRANTED. The May 6, 2011 Decision of the Court of
Appeals is NULLIFIED and SET ASIDE. The September 27, 2010, October 7, 2010 and
November 9, 2010 Orders of the Regional Trial Court, Branch 14, Davao City, are
likewise NULLIFIED and SET ASIDE. Civil Case No. 33,551-2010 is hereby REMANDED
to the trial court for further proceedings. The respondent is ordered to implead all parties
whose annotations appear at the back of Transfer Certificate of Title Nos. 325675 and
325676.
SO ORDERED.
G.R. No. 186610, July 29, 2013
POLICE SENIOR SUPERINTENDENT DIMAPINTO MACAWADIB, Petitioner, v. THE
PHILIPPINE NATIONAL POLICE DIRECTORATE FOR PERSONNEL AND RECORDS
MANAGEMENT, Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking to nullify and set aside the Decision 1 and Resolution2 of the Court of Appeals
(CA), dated December 17, 2008 and February 25, 2009, respectively, in CA-G.R. SP No.
02120-MIN. The assailed CA judgment nullified the December 4, 2001 Decision 3 of the
Regional Trial Court (RTC) of Marawi City, Branch 8, in Spl. Proc. No. 782-01, while the
questioned CA Resolution denied petitioner's Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:cralawlibrary
Petitioner was a police officer with the rank of Police Senior Superintendent. On July 30,
2001, pursuant to the provisions of Section 39 of Republic Act 6975, otherwise known as
the Department of the Interior and Local Government Act of 1990, the Chief of
Directorial Staff of the Philippine National Police (PNP) issued General Order No. 1168,
enumerating the names of commissioned officers who were subject to compulsory
retirement on various dates in the month of January 2002 by virtue of their attainment of
the compulsory retirement age of 56. Among the names included in the said Order was
that of petitioner, who was supposed to retire on January 11, 2002, as the files of the
PNP Records Management Division indicate that he was born on January 11, 1946.
On September 3, 2001, petitioner filed an application for late registration of his birth with
the Municipal Civil Registrar's Office of Mulondo, Lanao del Sur. In the said application,
36
petitioner swore under oath that he was born on January 11, 1956. The application was,
subsequently, approved.
On October 15, 2001, petitioner filed with the RTC of Marawi City, Branch 8, a Petition for
Correction of Entry in the Public Service Records Regarding the Birth Date. Pertinent
portions of his allegations are as follows:cralawlibrary
xxxx
1. That herein petitioner is 45 years old, married, Filipino citizen, PNP (Police
Superintendent) by occupation and resident of Camp Bagong Amai, Pakpak, Marawi City.
x x x;chanrobleslawlibrary
2. That on January 11, 1956, herein petitioner was born in Mulondo, Lanao del Sur, x x x,
copy of his live birth certificate is attached and marked as Annex A, for ready
reference;chanr0blesvirtualawlibrary
3. That when petitioner herein joined with (sic) the government service, particularly the
local police force and later on the Integrated National Police, he honestly entered his
birth date as January 11, 1946, while in his (sic) Government Service Insurance System
(GSIS, in short) and National Police Commission, he erroneously entered his birth date
as January 11, 1946, which entry are honestly based on estimation, as Muslim (sic) in the
south do not register their marriages and births before;chanr0blesvirtualawlibrary
4. That herein petitioner has correctly entered his true and correct birth date, January 11,
1956, in his Service Record at the National Headquarters, Philippine National Police,
Directorate for Personnel and Records Management, Camp Crame, Quezon City, copy of
which is attached and marked as Annex B, x x x;chanrobleslawlibrary
5. That herein petitioner is submitting Joint Affidavit of two (2) disinterested person (sic) x
x x;chanrobleslawlibrary
6. That this petition is not intended to defraud anybody but to establish the true and
correct birth date of herein petitioner.
x x x x4cralaw virtualaw library
The petition was docketed as Spl. Proc. No. 782-01.
On December 4, 2001, the RTC rendered its Decision, disposing as follows:cralawlibrary
WHEREFORE, judgment is hereby rendered in favor of petitioner DIMAPINTO BABAI
MACAWADIB, to wit:cralawlibrary
1. Ordering the Chief, Records Management, PNP NHQ, Camp Crame, Quezon City, to
make a correction upon the birth date of herein petitioner to January 11,
1956;chanr0blesvirtualawlibrary
Case Compilation
2013400059
2. Ordering the Director, Personnel and Records Management Service, NAPOLCOM,

Makati City, to make correction upon the birth date of herein petitioner from January 11,
1946 to January 11, 1956; and
3. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PNP-DPRM IS

NOT ESTOPPED FROM ASSAILING THE VALIDITY OF THE RTC DECISION IN
SPECIAL PROCEEDING NO. 782-01.
3. Ordering the Chief[,] Records of the Civil Service Commission, Manila and all other
offices concern (sic), to make the necessary correction in the Public Records of herein
petitioner to January 11, 1956.
SO ORDERED.5
4. THE HONORABLE COURT OF APPEALS ERRED IN NOT DISMISSING CA-G.R. SP

NO. 02120-[MIN] FOR BEING INSUFFICIENT IN FORM AND SUBSTANCE. 11
Subsequently, the RTC issued an Entry of Final Judgment 6 indicating therein that its
December 4, 2001 Decision in Spl. Proc. No. 782-01 has become final and executory on
March 13, 2002.
On January 8, 2008, herein respondent filed a Petition for Annulment of Judgment with
Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary
Injunction with the CA, seeking to nullify the above-mentioned Decision of the RTC on
the ground that the trial court failed to acquire jurisdiction over the PNP, an unimpleaded
indispensable party.7cralaw virtualaw library
On December 17, 2008, the CA promulgated its assailed Decision with the following
dispositive portion:cralawlibrary
WHEREFORE, finding the instant petition impressed with merit, the same is hereby
GRANTED. The assailed Decision dated December 4, 2001 of the respondent court in
Spl. Proc. No. 782-01 is NULLIFIED and SET ASIDE. Also, so as to prevent further
damage upon the PNP, let a permanent injunction issue in the meantime, barring the
private respondent Dimapinto Babai Macawadib from continuing and prolonging his
tenure with the PNP beyond the mandatory retirement age of fifty-six (56) years.
SO ORDERED.8cralaw virtualaw library
Petitioner filed a Motion for Reconsideration,9 but the CA denied it in its Resolution10
dated February 25, 2009.
Hence, the instant petition with the following Assignment of Errors:cralawlibrary
1. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PNP-[DPRM]
IS AN INDISPENSABLE PARTY IN SPECIAL PROCEEDING NO. 782-01 AND THAT
THE RTC HAVE (sic) NOT ACQUIRED JURISDICTION OVER THE PERSON OF THE
PNP-DPRM.
2. THE HONORABLE COURT OF APPEALS ERRED IN NOT DISMISSING CA-G.R. SP
NO. 02120-MIN DESPITE THE FACT THAT THE ASSAILED RTC DECISION DATED
DECEMBER 4, 2001 IN SPECIAL PROCEEDING NO. 782-01 HAS LONG BECOME
FINAL AND EXECUTORY AND WAS IN FACT FULLY AND COMPLETELY EXECUTED
AFTER THE PNP-DPRM CORRECTED THE DATE OF BIRTH OF THE PETITIONER
FROM JANUARY 11, 1946 TO JANUARY 11, 1956.
37
In his first assigned error, petitioner contends that respondent is not an indispensable
party. The Court is not persuaded. On the contrary, the Court agrees with the ruling of the
CA that it is the integrity and correctness of the public records in the custody of the PNP,
National Police Commission (NAPOLCOM) and Civil Service Commission (CSC) which
are involved and which would be affected by any decision rendered in the petition for
correction filed by herein petitioner. The aforementioned government agencies are, thus,
required to be made parties to the proceeding. They are indispensable parties, without
whom no final determination of the case can be had. An indispensable party is defined as
one who has such an interest in the controversy or subject matter that a final adjudication
cannot be made, in his absence, without injuring or affecting that interest. 12 In the fairly
recent case of Go v. Distinction Properties Development and Construction, Inc.,13 the
Court had the occasion to reiterate the principle that:cralawlibrary
Under Section 7, Rule 3 of the Rules of Court, "parties in interest without whom no final
determination can be had of an action shall be joined as plaintiffs or defendants." If there
is a failure to implead an indispensable party, any judgment rendered would have no
effectiveness. It is "precisely when an indispensable party is not before the court
(that) an action should be dismissed. The absence of an indispensable party
renders all subsequent actions of the court null and void for want of authority to
act, not only as to the absent parties but even to those present." The purpose of the
rules on joinder of indispensable parties is a complete determination of all issues not only
between the parties themselves, but also as regards other persons who may be affected
by the judgment. A decision valid on its face cannot attain real finality where there is want
of indispensable parties.14
Citing previous authorities, the Court also held in the Go case that:cralawlibrary
The general rule with reference to the making of parties in a civil action requires the
joinder of all indispensable parties under any and all conditions, their presence being a
sine qua non of the exercise of judicial power. (Borlasa v. Polistico, 47 Phil. 345, 348) For
this reason, our Supreme Court has held that when it appears of record that there are
other persons interested in the subject matter of the litigation, who are not made parties
to the action, it is the duty of the court to suspend the trial until such parties are made
either plaintiffs or defendants. (Pobre, et al. v. Blanco, 17 Phil. 156). x x x Where the
petition failed to join as party defendant the person interested in sustaining the
proceeding in the court, the same should be dismissed. x x x When an indispensable
party is not before the court, the action should be dismissed.15
The burden of procuring the presence of all indispensable parties is on the
plaintiff.16cralaw virtualaw library
2013400059
In the instant case, there is a necessity to implead the PNP, NAPOLCOM and CSC
because they stand to be adversely affected by petitioner's petition which involves
substantial and controversial alterations in petitioner's service records. Moreover, as
correctly pointed out by the Office of the Solicitor General (OSG), if petitioner's service is
extended by ten years, the government, through the PNP, shall be burdened by the
additional salary and benefits that would have to be given to petitioner during such
extension. Thus, aside from the OSG, all other agencies which may be affected by the
change should be notified or represented as the truth is best ascertained under an
adversary system of justice.
he is less than twenty-three years of age. Moreover, realistically speaking, it would be

difficult to believe that a 14-year old minor would serve as a police officer, much less a
chief of police.
As the above-mentioned agencies were not impleaded in this case much less given
notice of the proceedings, the decision of the trial court granting petitioner's prayer for the
correction of entries in his service records, is void. As mentioned above, the absence of
an indispensable party renders all subsequent actions of the court null and void for want
of authority to act, not only as to the absent parties but even as to those present. 17cralaw
virtualaw library
It can be argued that petitioner's belatedly registered certificate of live birth, as a public
document, enjoys the presumption of validity. However, petitioner merely relied on such
presumption without presenting any other convincing or credible evidence to prove that
he was really born in 1956. On the contrary, the specific facts attendant in the case at
bar, as well as the totality of the evidence presented during the hearing of the case in the
court a quo, sufficiently negate the presumption of regularity accorded to petitioner's
belatedly registered birth certificate.
On the question of whether or not respondent is estopped from assailing the decision of
the RTC for failure of the OSG, as government representative, to participate in the
proceedings before the trial court or to file an opposition to petitioner's petition for
correction of entries in his service records, this Court rules that such an apparent
oversight has no bearing on the validity of the appeal which the petitioner filed before the
CA. Neither can the State, as represented by the government, be considered in estoppel
due to the petitioner's seeming acquiescence to the judgment of the RTC when it initially
made corrections to some of petitioner's records with the PNP. This Court has reiterated
time and again that the absence of opposition from government agencies is of no
controlling significance, because the State cannot be estopped by the omission, mistake
or error of its officials or agents.18 Nor is the Republic barred from assailing the decision
granting the petition for correction of entries if, on the basis of the law and the evidence
on record, such petition has no merit.19cralaw virtualaw library
As to the second and last assigned errors, suffice it to say that considering that the
assailed decision of the RTC is null and void, the same could not have attained finality.
Settled is the rule that a void judgment cannot attain finality and its execution has no
basis in law.20cralaw virtualaw library
At this juncture, it may not be amiss to point out that, like the CA, this Court cannot help
but entertain serious doubts on the veracity of petitioner's claim that he was indeed born
in 1956. The late registration of petitioner's certificate of live birth on September 3, 2001
was made forty-five (45) years after his supposed birth and a mere 34 days after the
PNP's issuance of its Order for his compulsory retirement. He had all the time to make
such registration but why did he do it only when he was about to retire?
The Court, likewise, agrees with the observation of the OSG that, if petitioner was indeed
born in 1956, he would have been merely 14 years old in 1970 when he was appointed
as Chief of Police of Mulondo, Lanao del Sur. This would not have been legally tenable,
considering that Section 9 of RA 4864, otherwise known as the Police Act of 1966,
provides, among others, that a person shall not be appointed to a local police agency if
38
The Court also gives credence to the pronouncement made by the CA which took judicial
notice that in the several hearings of the petition before the appellate court where the
petitioner was present, the CA observed that in the several hearings of this petition
before Us where the private respondent was present, he does not really appear to be 52
years old but his old age of 62.21cralaw virtualaw library
In this regard, it is also apropos to mention that, in cases of correction or change of

information based on belatedly registered birth certificates, the CSC no longer requires a
court order to warrant such correction or change of information in its records. However, in
an apparent move to safeguard its records, the CSC imposes the submission of
additional evidence that would prove the veracity of the entries in a belatedly registered
birth certificate. Thus, the CSC, in its Memorandum Circular No. 31, dated November 20,
2001, demands that, aside from the said birth certificate, the person requesting the
correction or change of information must submit other authenticated supporting
documents, such as baptismal certificate, affidavits of two disinterested witnesses, and
[o]ther employment, [p]ersonal or [s]chool [r]ecords which would support the entry
reflected in the delayed registered birth certificate and which entry is requested to be
reflected in the records of the Commission as the true and correct entry. In the instant
case, petitioner was only able to submit affidavits of two witnesses, who were not really
proven to be disinterested and whose testimonies were not even tested in the crucible of
cross-examination. On the contrary, the other pieces of documentary evidence on record,
such as his marriage certificate, and his school and service records, contradict his claims
and show that he was, in fact, born in 1946.
WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated
December 17, 2008 and the Resolution dated February 25, 2009 of the Court of Appeals,
in CA-G.R. SP No. 02120-MIN, are hereby AFFIRMED.
SO ORDERED.
G.R. No. 198010
August 12, 2013
REPUBLIC OF THE PHILIPPINES, PETITIONER,
vs.
DR. NORMA S. LUGSANAY UY, RESPONDENT.
DECISION
Case Compilation
PERALTA, J.:
Assailed in this petition for review on certiorari under Rule 45 of the Rules of Court are
the Court of Appeals (CA)1 Decision2 dated February 18, 2011 and Resolution3 dated July
27, 2011 in CA-G.R. CV No. 00238-MIN. The assailed decision dismissed the appeal
filed by petitioner Republic of the Philippines and, consequently, affirmed in toto the June
28, 2004 Order4 of the Regional Trial Court (RTC), Branch 27, Gingoog City in Special
Proceedings No. 230-2004 granting the Petition for Correction of Entry of Certificate of
Live Birth filed by respondent Dr. Norma S. Lugsanay Uy; while the assailed resolution
denied petitioner's motion for reconsideration.
The facts of the case are as follows:
On March 8, 2004, respondent filed a Petition for Correction of Entry in her Certificate of
Live Birth.5 Impleaded as respondent is the Local Civil Registrar of Gingoog City. She
alleged that she was born on February 8, 1952 and is the illegitimate daughter of Sy Ton
and Sotera Lugsanay6 Her Certificate of Live Birth 7 shows that her full name is "Anita Sy"
when in fact she is allegedly known to her family and friends as "Norma S. Lugsanay."
She further claimed that her school records, Professional Regulation Commission (PRC)
Board of Medicine Certificate,8 and passport9 bear the name "Norma S. Lugsanay." She
also alleged that she is an illegitimate child considering that her parents were never
married, so she had to follow the surname of her mother.10 She also contended that she
is a Filipino citizen and not Chinese, and all her siblings bear the surname Lugsanay and
are all Filipinos.11
Respondent allegedly filed earlier a petition for correction of entries with the Office of the
Local Civil Registrar of Gingoog City to effect the corrections on her name and citizenship
which was supposedly granted.12 However, the National Statistics Office (NSO) records
did not bear such changes. Hence, the petition before the RTC.
On May 13, 2004, the RTC issued an Order 13 finding the petition to be sufficient in form
and substance and setting the case for hearing, with the directive that the said Order be
published in a newspaper of general circulation in the City of Gingoog and the Province
of Misamis Oriental at least once a week for three (3) consecutive weeks at the expense
of respondent, and that the order and petition be furnished the Office of the Solicitor
General (OSG) and the City Prosecutors Office for their information and guidance. 14
Pursuant to the RTC Order, respondent complied with the publication requirement.
On June 28, 2004, the RTC issued an Order in favor of respondent, the dispositive
portion of which reads:
WHEREFORE, premises considered, the instant petition is hereby GRANTED. THE
CITY CIVIL REGISTRAR OF GINGOOG CITY, or any person acting in his behalf is
directed and ordered to effect the correction or change of the entries in the Certificate of
Live Birth of petitioners name and citizenship so that the entries would be:
a As to petitioners name :
)
First Name
: NORMA
Middle Name
: SY
Last Name
: LUGSANAY
39
2013400059
b As to petitioners nationality/citizenship :
) : FILIPINO
SO ORDERED.15
The RTC concluded that respondents petition would neither prejudice the government
nor any third party. It also held that the names "Norma Sy Lugsanay" and "Anita Sy" refer
to one and the same person, especially since the Local Civil Registrar of Gingoog City
has effected the correction. Considering that respondent has continuously used and has
been known since childhood as "Norma Sy Lugsanay" and as a Filipino citizen, the RTC
granted the petition to avoid confusion.16
On February 18, 2011, the CA affirmed in toto the RTC Order. The CA held that
respondents failure to implead other indispensable parties was cured upon the
publication of the Order setting the case for hearing in a newspaper of general circulation
for three (3) consecutive weeks and by serving a copy of the notice to the Local Civil
Registrar, the OSG and the City Prosecutors Office. 17 As to whether the petition is a
collateral attack on respondents filiation, the CA ruled in favor of respondent, considering
that her parents were not legally married and that her siblings birth certificates uniformly
state that their surname is Lugsanay and their citizenship is Filipino. 18 Petitioners motion
for reconsideration was denied in a Resolution dated July 27, 2011.
Hence, the present petition on the sole ground that the petition is dismissible for failure to
implead indispensable parties.
Cancellation or correction of entries in the civil registry is governed by Rule 108 of the
Rules of Court, to wit:
SEC. 1. Who may file petition. Any person interested in any act, event, order or decree
concerning the civil status of persons which has been recorded in the civil register, may
file a verified petition for the cancellation or correction of any entry relating thereto, with
the Regional Trial Court of the province where the corresponding civil registry is located.
SEC. 2. Entries subject to cancellation or correction. Upon good and valid grounds, the
following entries in the civil register may be cancelled or corrected: (a) births; (b)
marriages; (c) deaths; (d) legal separations; (e) judgments of annulments of marriage; (f)
judgments declaring marriages void from the beginning; (g) legitimations; (h) adoptions;
(i) acknowledgments of natural children; (j) naturalization; (k) election, loss or recovery of
citizenship; (l) civil interdiction; (m) judicial determination of filiation; (n) voluntary
emancipation of a minor; and (o) changes of name.
SEC. 3. Parties. When cancellation or correction of an entry in the civil register is
sought, the civil registrar and all persons who have or claim any interest which would be
affected thereby shall be made parties to the proceeding.
SEC. 4. Notice and Publication. Upon the filing of the petition, the court shall, by an
order, fix the time and place for the hearing of the same, and cause reasonable notice
thereof to be given to the persons named in the petition. The court shall also cause the
order to be published once a week for three (3) consecutive weeks in a newspaper of
general circulation in the province.
SEC. 5. Opposition. The civil registrar and any person having or claiming any interest
under the entry whose cancellation or correction is sought may, within fifteen (15) days
from notice of the petition, or from the last date of publication of such notice, file his
opposition thereto.
SEC. 6. Expediting proceedings. The court in which the proceeding is brought may
make orders expediting the proceedings, and may also grant preliminary injunction for
2013400059
the preservation of the rights of the parties pending such proceedings.

SEC. 7. Order. After hearing, the court may either dismiss the petition or issue an order
granting the cancellation or correction prayed for. In either case, a certified copy of the
judgment shall be served upon the civil registrar concerned who shall annotate the same
in his record.19
In this case, respondent sought the correction of entries in her birth certificate,
particularly those pertaining to her first name, surname and citizenship. She sought the
correction allegedly to reflect the name which she has been known for since childhood,
including her legal documents such as passport and school and professional records.
She likewise relied on the birth certificates of her full blood siblings who bear the
surname "Lugsanay" instead of "Sy" and citizenship of "Filipino" instead of "Chinese."
The changes, however, are obviously not mere clerical as they touch on respondents
filiation and citizenship. In changing her surname from "Sy" (which is the surname of her
father) to "Lugsanay" (which is the surname of her mother), she, in effect, changes her
status from legitimate to illegitimate; and in changing her citizenship from Chinese to
Filipino, the same affects her rights and obligations in this country. Clearly, the changes
are substantial.
It has been settled in a number of cases starting with Republic v. Valencia 20 that even
substantial errors in a civil registry may be corrected and the true facts established
provided the parties aggrieved by the error avail themselves of the appropriate adversary
proceeding.21 The pronouncement of the Court in that case is illuminating:
It is undoubtedly true that if the subject matter of a petition is not for the correction of
clerical errors of a harmless and innocuous nature, but one involving nationality or
citizenship, which is indisputably substantial as well as controverted, affirmative relief
cannot be granted in a proceeding summary in nature. However, it is also true that a right
in law may be enforced and a wrong may be remedied as long as the appropriate
remedy is used. This Court adheres to the principle that even substantial errors in a civil
registry may be corrected and the true facts established provided the parties aggrieved
by the error avail themselves of the appropriate adversary proceeding. x x x
What is meant by "appropriate adversary proceeding?" Blacks Law Dictionary defines
"adversary proceeding" as follows:
One having opposing parties; contested, as distinguished from an ex parte application,
one of which the party seeking relief has given legal warning to the other party, and
afforded the latter an opportunity to contest it. Excludes an adoption proceeding.22
In sustaining the RTC decision, the CA relied on the Courts conclusion in Republic v.
Kho,23 Alba v. Court of Appeals, 24 and Barco v. Court of Appeals, 25 that the failure to
implead indispensable parties was cured by the publication of the notice of hearing
pursuant to the provisions of Rule 108 of the Rules of Court. In Republic v. Kho, 26
petitioner therein appealed the RTC decision granting the petition for correction of entries
despite respondents failure to implead the minors mother as an indispensable party. The
Court, however, did not strictly apply the provisions of Rule 108, because it opined that it
was highly improbable that the mother was unaware of the proceedings to correct the
entries in her childrens birth certificates especially since the notices, orders and decision
of the trial court were all sent to the residence she shared with them.27
In Alba v. Court of Appeals, 28 the Court found nothing wrong with the trial courts decision
granting the petition for correction of entries filed by respondent although the
proceedings was not actually known by petitioner. In that case, petitioners mother and
guardian was impleaded in the petition for correction of entries, and notices were sent to
40
her address appearing in the subject birth certificate. However, the notice was returned
unserved, because apparently she no longer lived there. Thus, when she allegedly
learned of the granting of the petition, she sought the annulment of judgment which the
Court denied. Considering that the petition for correction of entries is a proceeding in
rem, the Court held that acquisition of jurisdiction over the person of the petitioner is,
therefore, not required and the absence of personal service was cured by the trial courts
compliance with Rule 108 which requires notice by publication.29
In Barco v. Court of Appeals,30 the Court addressed the question of whether the court
acquired jurisdiction over petitioner and all other indispensable parties to the petition for
correction of entries despite the failure to implead them in said case. While recognizing
that petitioner was indeed an indispensable party, the failure to implead her was cured by
compliance with Section 4 of Rule 108 which requires notice by publication. In so ruling,
the Court pointed out that the petitioner in a petition for correction cannot be presumed to
be aware of all the parties whose interests may be affected by the granting of a petition. It
emphasized that the petitioner therein exerted earnest effort to comply with the
provisions of Rule 108. Thus, the publication of the notice of hearing was considered to
have cured the failure to implead indispensable parties.
In this case, it was only the Local Civil Registrar of Gingoog City who was impleaded as
respondent in the petition below. This, notwithstanding, the RTC granted her petition and
allowed the correction sought by respondent, which decision was affirmed in toto by the
CA.
We do not agree with the RTC and the CA.
This is not the first time that the Court is confronted with the issue involved in this case.
Aside from Kho, Alba and Barco, the Court has addressed the same in Republic v.
Coseteng-Magpayo,31 Ceruila v. Delantar,32 and Labayo-Rowe v. Republic.33
In Republic v. Coseteng-Magpayo,34 claiming that his parents were never legally married,
respondent therein filed a petition to change his name from "Julian Edward Emerson
Coseteng Magpayo," the name appearing in his birth certificate to "Julian Edward
Emerson Marquez Lim Coseteng." The notice setting the petition for hearing was
published and there being no opposition thereto, the trial court issued an order of general
default and eventually granted respondents petition deleting the entry on the date and
place of marriage of parties; correcting his surname from "Magpayo" to "Coseteng";
deleting the entry "Coseteng" for middle name; and deleting the entry "Fulvio Miranda
Magpayo, Jr." in the space for his father. The Republic of the Philippines, through the
OSG, assailed the RTC decision on the grounds that the corrections made on
respondents birth certificate had the effect of changing the civil status from legitimate to
illegitimate and must only be effected through an appropriate adversary proceeding. The
Court nullified the RTC decision for respondents failure to comply strictly with the
procedure laid down in Rule 108 of the Rules of Court. Aside from the wrong remedy
availed of by respondent as he filed a petition for Change of Name under Rule 103 of the
Rules of Court, assuming that he filed a petition under Rule 108 which is the appropriate
remedy, the petition still failed because of improper venue and failure to implead the Civil
Registrar of Makati City and all affected parties as respondents in the case.
In Ceruila v. Delantar,35 the Ceruilas filed a petition for the cancellation and annulment of
the birth certificate of respondent on the ground that the same was made as an
instrument of the crime of simulation of birth and, therefore, invalid and spurious, and it
falsified all material entries therein. The RTC issued an order setting the case for hearing
with a directive that the same be published and that any person who is interested in the
Case Compilation
petition may interpose his comment or opposition on or before the scheduled hearing.
Summons was likewise sent to the Civil Register of Manila. After which, the trial court
granted the petition and nullified respondents birth certificate. Few months after,
respondent filed a petition for the annulment of judgment claiming that she and her
guardian were not notified of the petition and the trial courts decision, hence, the latter
was issued without jurisdiction and in violation of her right to due process. The Court
annulled the trial courts decision for failure to comply with the requirements of Rule 108,
especially the non-impleading of respondent herself whose birth certificate was
nullified.1wphi1
In Labayo-Rowe v. Republic,36 petitioner filed a petition for the correction of entries in the
birth certificates of her children, specifically to change her name from Beatriz V.
Labayu/Beatriz Labayo to Emperatriz Labayo, her civil status from "married" to "single,"
and the date and place of marriage from "1953-Bulan" to "No marriage." The Court
modified the trial courts decision by nullifying the portion thereof which directs the
change of petitioners civil status as well as the filiation of her child, because it was the
OSG only that was made respondent and the proceedings taken was summary in nature
which is short of what is required in cases where substantial alterations are sought.
Respondents birth certificate shows that her full name is Anita Sy, that she is a Chinese
citizen and a legitimate child of Sy Ton and Sotera Lugsanay. In filing the petition,
however, she seeks the correction of her first name and surname, her status from
"legitimate" to "illegitimate" and her citizenship from "Chinese" to "Filipino." Thus,
respondent should have impleaded and notified not only the Local Civil Registrar but also
her parents and siblings as the persons who have interest and are affected by the
changes or corrections respondent wanted to make.
The fact that the notice of hearing was published in a newspaper of general circulation
and notice thereof was served upon the State will not change the nature of the
proceedings taken.37 A reading of Sections 4 and 5, Rule 108 of the Rules of Court shows
that the Rules mandate two sets of notices to different potential oppositors: one given to
41
2013400059
the persons named in the petition and another given to other persons who are not named
in the petition but nonetheless may be considered interested or affected parties. 38
Summons must, therefore, be served not for the purpose of vesting the courts with
jurisdiction but to comply with the requirements of fair play and due process to afford the
person concerned the opportunity to protect his interest if he so chooses.39
While there may be cases where the Court held that the failure to implead and notify the
affected or interested parties may be cured by the publication of the notice of hearing,
earnest efforts were made by petitioners in bringing to court all possible interested
parties.40 Such failure was likewise excused where the interested parties themselves
initiated the corrections proceedings;41 when there is no actual or presumptive awareness
of the existence of the interested parties;42 or when a party is inadvertently left out.43
It is clear from the foregoing discussion that when a petition for cancellation or correction
of an entry in the civil register involves substantial and controversial alterations, including
those on citizenship, legitimacy of paternity or filiation, or legitimacy of marriage, a strict
compliance with the requirements of Rule 108 ofthe Rules of Court is mandated. 44 If the
entries in the civil register could be corrected or changed through mere summary
proceedings and not through appropriate action wherein all parties who may be affected
by the entries are notified or represented, the door to fraud or other mischief would be set
open, the consequence of which might be detrimental and far reaching.45
WHEREFORE, premises considered, the petition is hereby GRANTED. The Court of
Appeals Decision dated February 18, 2011 and Resolution dated July 27, 20011 in CAG.R. CV No. 00238-MIN, are SET ASIDE. Consequently, the June 28, 2004 Order of the
Regional Trial Court, Branch 27, Gingoog City, in Spl. Proc. No. 230-2004 granting the
Petition for Correction of Entry of Certificate of Live Birth filed by respondent Dr. Norma
S. Lugsanay Uy, is NULLIFIED.
SO ORDERED.

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Civil Procedure-Dean Jara

- versus HON. EDILBERTO T. CLARAVALL, in his capacity as Presiding

Civil Procedure-Dean Jara Case Compilation

In essence, the basic issues for our resolution are:

2. The exclusion of the term damages of whatever kind in determining the

Civil Procedure-Dean Jara

G.R. No. L-2352

Civil Procedure-Dean Jara Case Compilation

(Signed) ANDRES OJEDA.

Civil Procedure-Dean Jara

G.R. No. 29155, Larena v. Villanueva, 53 Phil. 923

Civil Procedure-Dean Jara Case Compilation

Firmado en presencia de:

satisfaction of the judgment in case G. R. No. 21706.

Civil Procedure-Dean Jara

first cause of action in the present litigation.

Civil Procedure-Dean Jara Case Compilation

decrease in the cost of raw material there would be a corresponding increase or

Civil Procedure-Dean Jara

Civil Procedure-Dean Jara Case Compilation

Coal gas tar (Exhibit Ref. 22)

Overcharges on deliveries (Exhibit Ref. 23)

Civil Procedure-Dean Jara

Civil Procedure-Dean Jara Case Compilation

litigated (Baird vs. U. S., 96 U. S., 430; 24 L. ed., 703.)

Civil Procedure-Dean Jara

Civil Procedure-Dean Jara Case Compilation

every point incompatible with one another.

Civil Procedure-Dean Jara

Civil Procedure-Dean Jara Case Compilation

summary of payments he submitted to the court.[24]

Civil Procedure-Dean Jara

Republic of the Philippines

LEONARDO-DE CASTRO, J.:

co-employees at the National Printing Office (NPO).

EDUARDO R. ERMITA, in his capacity as Executive

Civil Procedure-Dean Jara Case Compilation

Printing of officials ballots;

Perceiving Executive Order No. 378 as a threat to their security of tenure as

Civil Procedure-Dean Jara

An action does not become a class suit merely because it is

We dismiss the petition.

and can fully protect the interests of all concerned.

Inc., we observed that an element of a class suit or representative suit is theadequacy

Civil Procedure-Dean Jara Case Compilation

Previously, we held in Ibaes v. Roman Catholic Church[8] that where the

diametrically opposed, the class suit will not prosper.

was attached, was filed by the President

of previous delegation of the legislative power to reorganize executive offices under

First, it is contended that President Arroyo cannot amend or repeal Executive

Sec. 31. Continuing Authority of the President to Reorganize

Civil Procedure-Dean Jara

Office of the President from other Departments

Concomitant to such power to abolish, merge or consolidate offices in the Office

Interpreting the foregoing provision, we held in Buklod ng Kawaning EIIB, thus:

responsibility to election forms.[15]

Pertinent to the case at bar, Section 31 of the Administrative Code of 1987

Civil Procedure-Dean Jara Case Compilation

In the oft-cited Larin v. Executive Secretary,[16] the Court likewise adverted to

We adhere to the precedent or ruling in Larin that this provision

Civil Procedure-Dean Jara

Implicitly, the aforequoted provisions in the appropriations law recognize the

appropriations act, including the power to implement structural, functional, and

operational adjustments in the executive bureaucracy and, in so doing, modify or