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#1

G.R. No. 186979

August 11, 2010

SOCORRO LIMOS, ROSA DELOS REYES and SPOUSES ROLANDO DELOS REYES and EUGENE
DELOS REYES Petitioners,
vs.
SPOUSES FRANCISCO P. ODONES and ARWENIA R. ODONES, Respondents.
TOPIC: AFFIRMATIVE DEFENSES, RULE 26 ROC
FACTS:
Private respondents-spouses Francisco and Arwenia Odones, filed a complaint for Annulment of Deed,
Title and Damages against herein petitioners. The complaint alleged that spouses Odones are the owners of a
940- square meter parcel of land by virtue of an Extrajudicial Succession of Estate and Sale executed by the
surviving grandchildren and heirs of Donata Lardizabal in whom the original title to the land was registered.
It took a while before respondents decided to register the document of conveyance; and when they did,
they found out that the lands Original Certificate of Title (OCT) was cancelled and replaced by Transfer
Certificate of Title (TCT) No. 329427 in the name of herein petitioners.
Petitioners were able to secure the TCT by virtue of a Deed of Absolute Sale allegedly executed by
Donata Lardizabal and her husband Francisco Razalan on April 18, 1972. Petitioners then subdivided the lot
among themselves and had TCT No. 329427 cancelled.
Respondents sought the cancellation of these new TCTs on the ground that the signatures of Donata
Lardizabal and Francisco Razalan in the 1972 Deed of Absolute Sale were forgeries, because they died on
June 30, 1926 and June 5, 1971, respectively.
In their answer, petitioners pleaded affirmative defenses, which also constitute grounds for dismissal of
the complaint. These grounds were: (1) failure to state a cause of action inasmuch as the basis of respondents
alleged title is void; (2) non-joinder of the other heirs of Donata Lardizabal as indispensable parties; and (3)
respondents claim is barred by laches.
In their Reply, respondents denied the foregoing affirmative defenses, and insisted that the Extrajudicial
Succession of Estate and Sale was valid. Thereafter, petitioners served upon respondents a Request for
Admission of some matters. Respondents failed to respond to the Request for Admission, prompting
petitioners to file a Motion to Set for Preliminary Hearing on the Special and Affirmative Defenses, arguing that
respondents failure to respond or object to the Request for Admission amounted to an implied admission
pursuant to Section 2 of Rule 26 of the Rules of Court. Respondents filed a comment on the Motion,
contending that the facts sought to be admitted by petitioners were not material and relevant to the issue of the
case as required by Rule 26 of the Rules of Court.

ISSUE:

Whether the affirmative defences raised by the petitioner are valid.

HELD:
No. the matters set forth in petitioners Request for Admission were the same affirmative defenses
pleaded in their Answer which respondents already traversed in their Reply. The said defenses were likewise
sufficiently controverted in the complaint and its annexes. In effect, petitioners sought to compel respondents
to deny once again the very matters they had already denied, a redundancy, which if abetted, will serve no
purpose but to delay the proceedings and thus defeat the purpose of the rule on admission as a mode of
discovery which is to expedite trial and relieve parties of the costs of proving facts which will not be disputed on
trial and the truth of which can be ascertained by reasonable inquiry.
A request for admission is not intended to merely reproduce or reiterate the allegations of the requesting
partys pleading but should set forth relevant evidentiary matters of fact described in the request,
whose purpose is to establish said partys cause of action or defense. Unless it serves that purpose, it is
pointless, useless, and a mere redundancy.
Verily then, if the trial court finds that the matters in a Request for Admission were already admitted or
denied in previous pleadings by the requested party, the latter cannot be compelled to admit or deny them
anew. In turn, the requesting party cannot reasonably expect a response to the request and thereafter, assume
or even demand the application of the implied admission rule in Section 2, Rule 26. Moreover, jurisprudence
has always been firm and constant in declaring that when the affirmative defense raised is failure to state a
cause of action, a preliminary hearing thereon is unnecessary, erroneous, and improvident

#2
G.R. No. 147377

August 10, 2007

DR. EMMANUEL VERA, Petitioner,


vs.
ERNESTO F. RIGOR and THE COURT OF APPEALS, Respondents.
TOPIC: PRE-TRIAL BRIEF
FACTS:
On November 19, 1996, Ernesto Rigor, respondent, filed with the Regional Trial Court (RTC), Branch
22, Malolos, Bulacan a complaint for sum of money with damages against Dr. Emmanuel Vera, petitioner.
Respondent alleged in his complaint that petitioner purchased from him a brand new Ultrasound Scanner,
Model HS 120, for P410,000.00. Petitioner paid P120,000.00 as downpayment, leaving a balance
of P290,000.00. Despite respondents demand, petitioner failed to pay the same. In his answer, petitioner
claimed that he received the machine on a trial basis. However, when tested, its performance was
unsatisfactory. Moreover, the hospital where the machine was to be installed has no funds. Respondent offered
a new brand of Ultrasound Scanner but it turned out to be an old model.
During the pre-trial conference, the parties failed to reach an amicable settlement, hence, the trial court
terminated the pre-trial and set the case for initial hearing on March 6, 1997 at nine oclock in the
morning. However, upon motion of respondents counsel, the trial was reset to May 20, 1997, then to July 17,
1997. During the hearing on this date, the trial court, upon manifestation of petitioners counsel, realized that
respondent failed to file a pre-trial brief. On July 28, 1997, petitioner filed a motion to dismiss the complaint
raising as ground respondents failure to file a pre-trial brief. On September 30, 1997, the trial court issued a
Resolution granting the motion and dismissing the complaint.
ISSUE:
Whether the complaint is dismissible for respondents failure to file a pre-trial brief.
HELD:
Yes. Section 6, Rule 18 of the 1997 Rules of Civil Procedure, as amended, provides:
SEC. 6. Pre-trial Brief. The parties shall file with the court and serve on the adverse party, in
such manner as shall ensure their receipt thereof at least three (3) days before the date of the pre-trial,
their respective pre-trial briefs which shall contain, among others:
(a) A statement of their willingness to enter into amicable settlement or alternative modes of
dispute resolution, indicating the desired terms thereof;
(b) A summary of admitted facts and proposed stipulation of facts;
(c) The issues to be tried or resolved;

(d) The documents or exhibits to be presented, stating the purpose thereof;


(e) A manifestation of their having availed or their intention to avail themselves of discovery
procedures or referral to commissioners; and
(f) The number and names of the witnesses, and the substance of their respective testimonies.
Failure to file the pre-trial brief shall have the same effect as failure to appear at the pre-trial.
Corollarily, Section 5 of the same Rule states:
SEC. 5. Effect of Failure to Appear. The failure of the plaintiff to appear when so required pursuant to
the next preceding section shall be cause for dismissal of the action. The dismissal shall be with
prejudice, unless otherwise ordered by the court. x x x
Section 7 likewise provides:
SEC. 7. Record of pre-trial. The proceedings in the pre-trial shall be recorded. Upon the termination
thereof, the court shall issue an order which shall recite in detail the matters taken up in the conference,
the action taken thereon, the amendments allowed to the pleadings, and the agreements or admissions
made by the parties as to any of the matters considered. Should the action proceed to trial, the order
shall explicitly define and limit the issues to be tried. The contents of the order shall control the
subsequent course of the action, unless modified before trial to prevent manifest injustice.
Clearly, the above Rule mandatorily requires the parties to seasonably file their briefs and failure to do
so shall be cause for the dismissal of the action.
As mentioned earlier, respondent did not file a pre-trial brief in violation of the above Rule. But what
surprised us is the fact that the trial court conducted the pre-trial conference on January 21, 1997 despite the
lack of respondents pre-trial brief and thereafter terminated the same. It was only on July 17, 1997 during the
initial hearing (after two postponements) that the trial judge came to know, after being apprised by petitioners
counsel, that respondent did not file a pre-trial brief.
While the trial judge erroneously proceeded with the trial conference, the fact remains that respondent
did not file a pre-trial brief. Pursuant to Section 6, Rule 18 quoted above, such failure is a cause for dismissal
of the action. We have to emphasize that pre-trial and its governing rules are not technicalities which the
parties may ignore or trifle with.

#3
G.R. No. 193821, November 23, 2015
PHIL-AIR CONDITIONING CENTER, Petitioner,
vs.
RCJ LINES AND ROLANDO ABADILLA, JR., Respondent.
TOPIC: ATTACHMENT BOND
FACTS:
On various dates between March 5, 1990, and August 29, 1990, petitioner Phil-Air sold to respondent
RCJ Lines four Carrier Paris 240 air-conditioning units for buses (units). The units included compressors,
condensers,
evaporators,
switches,
wiring,
circuit
boards,
brackets,
and
fittings.
The total purchases amounted to P1,240,000.00 as shown on a sales invoice dated November 5, 1990. RCJ
Lines paid P400,000.00, leaving a balance of P840,000.00. RCJ Lines accepted the delivery of the units, which
Phil-Air then installed after they were inspected by RCJ Lines president Rolando Abadilla, Sr.
Phil-Air allegedly performed regular maintenance checks on the units pursuant to the one-year warranty
on parts and labor. After some months from installation, Phil-Air supposedly boosted the capacity of the units
by upgrading them to the Carrier Paris 280 model. It also purportedly repaired the control switch panel of one
of the units for an additional cost of P60,000.00.RCJ Lines issued three post-dated checks in favor of Phil-Air
to partly cover the unpaid balance. All the post-dated checks were dishonored when Phil-Air subsequently
presented them for payment. Phil-Air sent a demand letter11 to Rolando Abadilla, Sr. on April 7, 1992, asking
him to fund the post-dated checks. In view of the failure of RCJ Lines to pay the balance despite demand, PhilAir filed on April 1, 1998 the complaint for sum of money with prayer for the issuance of a writ of preliminary
attachment.
In its answer with compulsory counterclaim, RCJ Lines admitted that it purchased the units in the total
amount of PI,240,000.00 and that it had only paid P400,000.00. It refused to pay the balance because Phil-Air
allegedly breached its warranty. RCJ Lines averred that the units did not sufficiently cool the buses despite
repeated repairs. Phil-Air purportedly represented that the units were in accord with RCJ Lines' cooling
requirements as shown in Phil-Air's price quotation.
The RTC granted the application for the issuance of a writ of preliminary attachment after Phil-Air
posted an attachment bond in the amount of P1,656,000.00. The attachment, however, was later lifted when
the RTC granted RCJ Lines' urgent motion to discharge the writ of attachment. RCJ Lines posted a counterbond in the same amount as the attachment bond.

ISSUE:

Whether Phil-Air should reimburse RCJ Lines for the counter- bond premium and its alleged
unrealized profits.
HELD:

No. Phil-Air cannot be held directly liable for the costs adjudged to and the damages sustained
by RCJ Lines because of the attachment. Section 4 of Rule 57 positively lays down the rule that the
attachment bond will pay "all the costs which may be adjudged to the adverse party and
all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that
the applicant was not entitled thereto."
The RTC, instead of declaring Phil-Air liable for the alleged unrealized profits and counterbond premium, should have ordered the execution of the judgment award on the attachment bond. To
impose direct liability to Phil-Air would defeat the purpose of the attachment bond, which was not
dissolved despite the lifting of the writ of preliminary attachment.
The order to refund the counter-bond premium is likewise erroneous. The premium payment
may be deemed a cost incurred by RCJ Lines to lift the attachment. Such cost may be charged
against the attachment bond.

#4
G.R. No. 193158

November 11, 2015

PHILIPPINE HEALTH INSURANCE CORPORATION, Petitioners,


vs.
OUR LADY OF LOURDES HOSPITAL, Respondent.
TOPIC: MODES OF DISCOVERY
FACTS:
Our Lady of Lourdes Hospital (OLLH), allegedly filed two claims of the same amount of PhilHealth
benefits involving the same patient for the same diagnosis and covering the same period of confinement. As a
result, Petitioner Philippine Health Insurance Corporation (PHIC), a government corporation created to
administer and implement the country's National Health Insurance Program filed a Complaint with its Legal
Sector - Prosecution Department against OLLH for the administrative offense of filing multiple claims.
After the parties were directed to file their respective Position Papers, OLLH moved to defer the
submission of its position paper pending the answer of the PHIC President and CEO to the written
interrogatories as well as the inspection and copying of the original transmittal letter and all other claims.
According to OLLH, these modes of discovery were availed of because its representatives were denied and/or
not given access to documents and were not allowed to talk to PHIC personnel with regard to the charge.
The PHIC Arbitration Department denied OLLHs motion. The Motion for Reconsideration filed by OLLH
suffered the same fate. However, the Court of Appeals reversed the Order.
In their petition to the Supreme Court, PHIC asserts that OLLH' s overt acts clearly reveal its intent to
delay the administrative proceedings because the material points which OLLH seeks to establish in its resort to
modes of discovery were already presented in the pleadings and documents it submitted for consideration of
the Arbiter.

ISSUE:

Whether the respondents resort to the modes of discovery is correct


HELD:
No. The CA erred in reversing the arbiters order which denied respondents motion.
Through written interrogatories, a party may elicit from the adverse party or parties any facts or matter
that are not privileged and are material and relevant to the subject of the pending action. Like other modes of
discovery authorized by the Rules, the purpose of written interrogatories is to assist the parties in clarifying the
issues and in ascertaining the facts involved in a case. On the other hand, the provision on production and
inspection of documents is to enable not only the parties but also the court (in this case, the PHIC Arbitration
Department) to discover all the relevant and material facts in connection with the case pending before it. It
must be shown, therefore, that the documents sought to be produced, inspected and/or copied/photographed
are material or contain evidence relevant to an issue involved in the action.
In this case, the questions contained in the written interrogatories sought to elicit facts that could
already be seen from the allegations as well as attachments of the Complaint and the Verified Answer.
Specifically, the entries in the three (3) Validation Report that OLLH sought to be identified and/or explained by
PHIC are either immaterial or irrelevant or, even if material or relevant, are self-explanatory and need no
further elaboration from PHIC. Thus, the interrogatories were frivolous and need not be answered. Aside from
this, the PHIC Arbitration Department correctly observed that the written interrogatories were mistakenly
addressed to the President and CEO of PHIC, who could not competently answer, either based on his job
description or first-hand experience, issues that arose from and related to the filing and processing of claims.
We likewise find as self-serving the allegation of OLLH that its representatives were denied access to
the documents pertaining to the subject PhilHealth claim and, at the same time, were not allowed to talk to any
of the PhilHealth personnel.
All the issues and queries raised by OLLH in its written interrogatories and motion for
production/inspection may be addressed in a hearing to be held after submission of the position paper of the
parties. If the Arbiter deemed it necessary, based on the required pleadings already submitted g may be
conducted wherein witnesses who testify may be subjected to clarificatory questions. In such hearing, the
Arbiter
has
the
power
to
issue subpoena
ad
testificandum and duces
tecum; he
may
issue subpoenas requiring attendance and testimony of witnesses or the production of documents and other
material/s necessary. In effect, these serve the same purposes of the modes of discovery.

#5
G.R. No. 214054, August 05, 2015
NG MENG TAM, Petitioner,
vs.
CHINA BANKING CORPORATION, Respondent.
TOPIC: THE JUDICIAL AFFIDAVIT RULE
FACTS:
A collection suit was filed by China Banking Corporation (China Bank) against Ever Electrical
Manufacturing Company Inc. (Ever) and petitioner Ng Meng Tam, alleging that it granted Ever a loan which the
latter defaulted in its payment.
Petitioner served interrogatories to the respondent and required Mr. George C. Yap, Account Officer of
the Account Management Group, to answer. However, since Yaps answer was found to be evasive and not
responsive, petitioner applied for the issuance of a subpoena duces tecum and ad testificandum against the
latter pursuant to Section 6, Rule 25 of the Revised Rules of Court.
China Bank objected citing Section 5 of the JAR, saying that Yap cannot be compelled to testify in court
because petitioner did not obtain and present George Yaps judicial affidavit.
Petitioner contended that Section 5 does not apply to Yap because it specifically excludes adverse
party witnesses and hostile witnesses from its application.

However, the RTC disagreed with petitioner and denied the latters motion to examine Yap without
executing a judicial affidavit. In essence, the RTC ruled that Section 5 did not apply to Yap since he was an
adverse witness and he did not unjustifiably decline to execute a judicial affidavit.
ISSUE:
Whether Section 5 of the JAR includes adverse party and hostile witnesses.
HELD:
No. Section 5 of the JAR does not apply to adverse party witnesses
While we agree with the RTC that Section 5 has no application to Yap as he was presented as a hostile
witness we cannot agree that there is need for a finding that witness unjustifiably refused to execute a judicial
affidavit.
Section 5 of the JAR contemplates a situation where there is a (a) government employee or official or (b)
requested witness who is not the (1) adverse partys witness nor (2) a hostile witness. If this person either (a)
unjustifiably declines to execute a judicial affidavit or (b) refuses without just cause to make the relevant
documents available to the other party and its presentation to court, Section 5 allows the requesting party to
avail of issuance of subpoena ad testificandum or duces tecum under Rule 21 of the Rules of Court. Thus,
adverse party witnesses and hostile witnesses being excluded they are not covered by Section 5. Expressio
unius est exclusion alterius: the express mention of one person, thing, or consequence implies the exclusion of
all others.
Here, Yap is a requested witness who is the adverse partys witness. Regardless of whether he
unjustifiably declines to execute a judicial affidavit or refuses without just cause to present the documents,
Section 5 cannot be made to apply to him for the reason that he is included in a group of individuals expressly
exempt from the provisions application.
The situation created before us begs the question: if the requested witness is the adverse partys witness
or a hostile witness, what procedure should be followed?
The JAR being silent on this point, we turn to the provisions governing the rules on evidence covering
hostile witnesses specially Section 12, Rule 132 of the Rules of Court which provides:
SEC. 12. Party may not impeach his own witness. Except with respect to witnesses referred to in
paragraphs (d) and (e) of Section 10, the party producing a witness is not allowed to impeach his
credibility.
A witness may be considered as unwilling or hostile only if so declared by the court upon adequate
showing of his adverse interest, unjustified reluctance to testify, or his having misled the party into calling him
to the witness stand.
The unwilling or hostile witness so declared, or the witness who is an adverse party, may be impeached
by the party presenting him in all respects as if he had been called by the adverse party, except by evidence of
his bad character. He may also be impeached and cross-examined by the adverse party, but such crossexamination must only be on the subject matter of his examination-in-chief.

#6
G.R. No. 152643

August 28, 2008

CONCEPCION CUENCO VDA. DE MANGUERRA and THE HON. RAMON C. CODILLA, JR., Presiding
Judge of the Regional Trial Court of Cebu City, Branch 19, petitioners,
vs.
RAUL RISOS, SUSANA YONGCO, LEAH ABARQUEZ and ATTY. GAMALIEL D.B. BONJE, respondents.
TOPIC: DEPOSITION (Rule 23 vis--vis Rule 119)
FACTS:
In a case of Estafa Through Falsification of Public Document against respondents, Petitioner
Conception, who was advised to stay in Manila for further treatment due to upper gastro-intestinal bleeding,
through Counsel filed a motion to take the latters deposition due to her weak physical condition and old age,
which limited her freedom of mobility.
The RTC granted the motion and directed that Concepcions deposition be taken before the Clerk of
Court. The respondents motion for reconsideration was denied by the trial court. The court ratiocinated that

procedural technicalities should be brushed aside because of the urgency of the situation, since Concepcion
was already of advanced age. The deposition was finally taken at her residence.
However, the CA decided in favor of respondents declaring depositions void declaring that the
examination of prosecution witnesses, as in the present case, is governed by Section 15, Rule 119 of the
Revised Rules of Criminal Procedure and not Rule 23 of the Rules of Court. The latter provision, said the
appellate court, only applies to civil cases. Pursuant to the specific provision of Section 15, Rule 119,
Concepcions deposition should have been taken before the judge or the court where the case is pending,
which is the RTC of Cebu, and not before the Clerk of Court of Makati City; and thus, in issuing the assailed
order, the RTC clearly committed grave abuse of discretion.
The CA added that the rationale of the Rules in requiring the taking of deposition before the same court
is the constitutional right of the accused to meet the witnesses face to face. The appellate court likewise
concluded that Rule 23 could not be applied suppletorily because the situation was adequately addressed by a
specific provision of the rules of criminal procedure.
ISSUE:
Whether petitioner is exempted from Sec. 15, Rule 119 of the ROC, thus, Rule 23 of the 1997 Rules of
Civil Procedure applies to the deposition of petitioner.
HELD:
No. In the case at bench, in issue is the examination of a prosecution witness, who, according to the
petitioners, was too sick to travel and appear before the trial court. Section 15 of Rule 119 thus comes into
play, and it provides:
Section 15. Examination of witness for the prosecution. When it satisfactorily appears that a
witness for the prosecution is too sick or infirm to appear at the trial as directed by the court, or has to
leave the Philippines with no definite date of returning, he may forthwith be conditionally examined
before the court where the case is pending. Such examination, in the presence of the accused, or in his
absence after reasonable notice to attend the examination has been served on him, shall be conducted
in the same manner as an examination at the trial. Failure or refusal of the accused to attend the
examination after notice shall be considered a waiver. The statement taken may be admitted in behalf
of or against the accused.
Petitioners contention that Concepcions advanced age and health condition should exempt her from
the application of Section 15, Rule 119 of the Rules of Criminal Procedure, and thus, calls for the application of
Rule 23 of the Rules of Civil Procedure is wrong.
The very reason offered by the petitioners to exempt Concepcion from the coverage of Rule 119 is at
once the ground which places her squarely within the coverage of the same provision. Rule 119 specifically
states that a witness may be conditionally examined: 1) if the witness is too sick or infirm to appear at the trial;
or 2) if the witness has to leave the Philippines with no definite date of returning. Thus, when Concepcion
moved that her deposition be taken, had she not been too sick at that time, her motion would have been
denied. Instead of conditionally examining her outside the trial court, she would have been compelled to
appear before the court for examination during the trial proper.
Undoubtedly, the procedure set forth in Rule 119 applies to the case at bar. It is thus required that the
conditional examination be made before the court where the case is pending. It is also necessary that the
accused be notified, so that he can attend the examination, subject to his right to waive the same after

reasonable notice. As to the manner of examination, the Rules mandate that it be conducted in the same
manner as an examination during trial, that is, through question and answer.
Rule 119 categorically states that the conditional examination of a prosecution witness shall be made
before the court where the case is pending. Contrary to petitioners contention, there is nothing in the rule
which may remotely be interpreted to mean that such requirement applies only to cases where the witness is
within the jurisdiction of said court and not when he is kilometers away, as in the present case. Therefore, the
court may not introduce exceptions or conditions. Neither may it engraft into the law (or the Rules)
qualifications not contemplated. When the words are clear and categorical, there is no room for interpretation.
There is only room for application.

#7
G.R. No. 180909

January 19, 2011

EXXONMOBIL PETROLEUM AND CHEMICAL HOLDINGS, INC. - PHILIPPINE BRANCH, Petitioner,


vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.

TOPIC: RULE 16, SECTION 6 OF THE 1997 RULES OF CIVIL PROCEDURE


FACTS
Petitioner Exxon is a foreign corporation duly organized and existing under the laws of the State of
Delaware, United States of America. It is authorized to do business in the Philippines through its Philippine
Branch. It is engaged in the business of selling petroleum products to domestic and international carriers.

In 2003, Exxon filed a petition for review with the CTA claiming a refund or tax credit in representing the
amount of excise taxes paid on Jet A-1 fuel and other petroleum products it sold to international carriers from
November 2001 to June 2002.
During Exxons preparation of evidence, the CIR filed a motion to first resolve the issue of whether or
not Exxon was the proper party to ask for a refund. Exxon filed its opposition to the motion.
In 2005, the CTA First Division issued a resolution sustaining the CIRs position and dismissing Exxons
claim for refund. Exxon filed a motion for reconsideration, but this was denied.
Exxon filed a petition for review with the CTA En Banc assailing the Resolution of the CTA First Division
which dismissed the petition for review, and the subsequent Resolution which affirmed the said ruling.
The CTA En Banc dismissed the petition for review and affirmed the two resolutions of the First
Division. Exxon filed a motion for reconsideration, but it was denied.
Exxon went to the Court via a petition for review on certiorari under Rule 45 to set aside the Decision of
the CTA-En Banc and its Resolution denying petitioners motion for reconsideration.
Exxon opines that the CIRs motion is essentially a motion to dismiss filed out of time, as it was
filed after petitioner began presenting evidence more than a year after the filing of the Answer. By praying that
Exxon be declared as not the proper party to ask for a refund, the CIR asked for the dismissal of the petition,
as the grant of the Motion to Resolve would bring trial to a close.
Moreover, Exxon states that the motion should have also complied with the three-day notice and tenday hearing rules provided in Rule 15 of the Rules of Court. Since the CIR failed to set its motion for any
hearing before the filing of the Answer, the motion should have been considered a mere scrap of paper.
Finally, citing Maruhom v. Commission on Elections and Dimaporo (387 Phil. 491), Exxon argues that a
defendant who desires a preliminary hearing on special and affirmative defenses must file a motion to that
effect at the time of filing of his answer.
The CIR, on the other hand, counters that it did not file a motion to dismiss. Instead, the grounds for
dismissal of the case were pleaded as special and affirmative defenses in its Answer. Therefore, the issue of
"whether or not petitioner is the proper party to claim for a tax refund of the excise taxes allegedly passed on
by Caltex and Petron" was included as one of the issues in the Joint Stipulation of Facts and Issues signed by
petitioner and respondent.
The CIR now argues that nothing in the Rules requires the preliminary hearing to be held before the
filing of an Answer. However, a preliminary hearing cannot be held before the filing of the Answer precisely
because any ground raised as an affirmative defense is pleaded in the Answer itself.
Further, the CIR contends that the case cited by petitioner, Maruhom v. Comelec, does not apply here.
In the said case, a motion to dismiss was filed after the filing of the answer. And, the said motion to dismiss
was found to be a frivolous motion designed to prevent the early termination of the proceedings in the election
case therein. Here, the Motion to Resolve was filed not to delay the disposition of the case, but rather, to
expedite proceedings.
ISSUE:
Whether the assailed decisions erred in affirming the dismissal of petitioners claim for refund based on
respondents "motion to resolve first the issue of whether or not the petitioner is the proper party that may ask

for a refund," since said motion is essentially a motion to dismiss, which should have been denied outright by
the court of tax appeals for having been filed out of time.
HELD:
Rule 16, Section 6 of the 1997 Rules of Civil Procedure provides:
SEC. 6. Pleading grounds as affirmative defenses. - If no motion to dismiss has been filed, any of
the grounds for dismissal provided for in this Rule may be pleaded as an affirmative defense in the
answer, and in the discretion of the court, a preliminary hearing may be had thereon as if a motion to
dismiss had been filed.
The dismissal of the complaint under this section shall be without prejudice to the prosecution in the
same or separate action of a counterclaim pleaded in the answer.
This case is a clear cut application of the above provision. The CIR did not file a motion to dismiss.
Thus, it pleaded the grounds for dismissal as affirmative defenses in its Answer and thereafter prayed for the
conduct of a preliminary hearing to determine whether petitioner was the proper party to apply for the refund of
excise taxes paid.
The determination of this question was the keystone on which the entire case was leaning. If Exxon
was not the proper party to apply for the refund of excise taxes paid, then it would be useless to proceed with
the case. It would not make any sense to proceed to try a case when petitioner had no standing to pursue it.
In the case of California and Hawaiian Sugar Company v. Pioneer Insurance and Surety Corporation
(399 Phil. 795) the Court held that:
Considering that there was only one question, which may even be deemed to be the very
touchstone of the whole case, the trial court had no cogent reason to deny the Motion for Preliminary
Hearing. Indeed, it committed grave abuse of discretion when it denied a preliminary hearing on a
simple issue of fact that could have possibly settled the entire case. Verily, where a preliminary hearing
appears to suffice, there is no reason to go on to trial. One reason why dockets of trial courts are
clogged is the unreasonable refusal to use a process or procedure, like a motion to dismiss, which is
designed to abbreviate the resolution of a case.

#8
G.R. No. 185527

July 18, 2012

HARRY L. GO, TONNY NGO, JERRY NGO AND JANE GO, Petitioners,
vs.
THE PEOPLE OF THE PHILIPPINES and HIGHDONE COMPANY, LTD., ET AL., Respondents.

TOPIC: TAKING OF DEPOSITION IN CIVIL AND CRIMINAL CASES


FACTS:

Petitioners were charged before the Metropolitan Trial Court (MeTC) of Manila for Other Deceits under
Article 318 of the Revised Penal Code. Upon arraignment, petitioners pleaded not guilty to the charge.
The prosecution's complaining witness, Li Luen Ping, a frail old businessman from Laos, Cambodia,
traveled from his home country back to the Philippines in order to attend the hearing. However, trial dates were
subsequently postponed due to his unavailability.
In 2005, the private prosecutor filed with the MeTC a Motion to Take Oral Deposition of Li Luen Ping,
alleging that he was being treated for lung infection at the Cambodia Charity Hospital in Laos, Cambodia and
that, upon doctor's advice, he could not make the long travel to the Philippines by reason of ill health.
Notwithstanding petitioners' Opposition, the MeTC granted the motion after the prosecution complied
with the directive to submit a Medical Certificate of Li Luen Ping. Petitioners sought its reconsideration which
the MeTC denied, prompting petitioners to file a Petition for Certiorari before the RTC.
In 2006, the RTC granted the petition and declared the MeTC Orders null and void. The RTC held that
Section 17, Rule 23 of the Rules of Court on the taking of depositions of witnesses in civil cases cannot apply
suppletorily to the case since there is a specific provision in the Rules of Court with respect to the taking of
depositions of prosecution witnesses in criminal cases, which is primarily intended to safeguard the
constitutional rights of the accused to meet the witness against him face to face.
Upon denial by the RTC of their motion for reconsideration, the prosecution elevated the case to the
Court of Appeals.
The Court of Appeals promulgated the assailed Decision which held that no grave abuse of discretion
can be imputed upon the MeTC for allowing the deposition-taking of the complaining witness Li Luen Ping
because no rule of procedure expressly disallows the taking of depositions in criminal cases and that, in any
case, petitioners would still have every opportunity to cross-examine the complaining witness and make timely
objections during the taking of the oral deposition either through counsel or through the consular officer who
would be taking the deposition of the witness.
The Court of Appeals denied petitioners' motion for reconsideration.
The petitioners went to the Court via Petition for Review on Certiorari under Rule 45 seeking the
nullification and setting aside the Decision and Resolution of the Court of Appeals, which reversed the Order of
the Regional Trial Court and upheld the grant of the prosecutions motion to take the testimony of a witness by
oral depositions in Laos, Cambodia.
ISSUE:
Whether the Court of Appeals is correct.
HELD:
No, the Court of Appeals is not correct.
The examination of witnesses must be done orally before a judge in open court. This is true especially
in criminal cases where the Constitution secures to the accused his right to a public trial and to meet the
witnesses against him face to face. The requirement is the "safest and most satisfactory method of
investigating facts" as it enables the judge to test the witness' credibility through his manner and deportment
while testifying. It is not without exceptions, however, as the Rules of Court recognizes the conditional

examination of witnesses and the use of their depositions as testimonial evidence in lieu of direct court
testimony.
Even in criminal proceedings, there is no doubt as to the availability of conditional examination of
witnesses both for the benefit of the defense, as well as the prosecution. The Court's ruling in the case of
Vda. de Manguerra v. Risos (563 SCRA 499) explicitly states that
"x x x As exceptions, Rule 23 to 28 of the Rules of Court provide for the different modes of
discovery that may be resorted to by a party to an action. These rules are adopted either to perpetuate
the testimonies of witnesses or as modes of discovery. In criminal proceedings, Sections 12, 13 and 15,
Rule 119 of the Revised Rules of Criminal Procedure, which took effect on December 1, 2000, allow the
conditional examination of both the defense and prosecution witnesses."
The procedure under Rule 23 to 28 of the Rules of Court allows the taking of depositions in civil cases,
either upon oral examination or written interrogatories, before any judge, notary public or person authorized to
administer oaths at any time or place within the Philippines; or before any Philippine consular official,
commissioned officer or person authorized to administer oaths in a foreign state or country, with no additional
requirement except reasonable notice in writing to the other party.
But for purposes of taking the deposition in criminal cases, more particularly of a prosecution witness
who would forseeably be unavailable for trial, the testimonial examination should be made before the court, or
at least before the judge, where the case is pending as required by the clear mandate of Section 15, Rule 119
of the Revised Rules of Criminal Procedure. The pertinent provision reads thus:
SEC. 15. Examination of witness for the prosecution. When it satisfactorily appears that a
witness for the prosecution is too sick or infirm to appear at the trial as directed by the court, or has to
leave the Philippines with no definite date of returning, he may forthwith be conditionally examined
before the court where the case is pending. Such examination, in the presence of the accused, or in his
absence after reasonable notice to attend the examination has been served on him shall be conducted
in the same manner as an examination at the trial. Failure or refusal of the accused to attend the
examination after notice shall be considered a waiver. The statement taken may be admitted in behalf
of or against the accused.
Since the conditional examination of a prosecution witness must take place at no other place than the
court where the case is pending, the Regional Trial Court properly nullified the MeTC's orders granting the
motion to take the deposition of Li Luen Ping before the Philippine consular official in Laos, Cambodia. The
Court quotes with approval the RTC's ratiocination in this wise:
The condition of the private complainant being sick and of advanced age falls within the
provision of Section 15 Rule 119 of the Rules of Court. However, said rule substantially provides that he
should be conditionally examined before the court where the case is pending. Thus, this Court
concludes that the language of Section 15 Rule 119 must be interpreted to require the parties to
present testimony at the hearing through live witnesses, whose demeanor and credibility can be
evaluated by the judge presiding at the hearing, rather than by means of deposition. Nowhere in the
said rule permits the taking of deposition outside the Philippines whether the deponent is sick or not.
Certainly, to take the deposition of the prosecution witness elsewhere and not before the very same
court where the case is pending would not only deprive a detained accused of his right to attend the
proceedings but also deprive the trial judge of the opportunity to observe the prosecution witness' deportment
and properly assess his credibility, which is especially intolerable when the witness' testimony is crucial to the
prosecution's case against the accused. This is the import of the Court's ruling in Vda. de Manguerra where the
Court further declared that

While we recognize the prosecution's right to preserve the testimony of its witness in order to
prove its case, we cannot disregard the rules which are designed mainly for the protection of the
accused's constitutional rights. The giving of testimony during trial is the general rule. The conditional
examination of a witness outside of the trial is only an exception, and as such, calls for a strict
construction of the rules.
It is argued that since the Rules of Civil Procedure is made explicitly applicable in all cases, both civil
and criminal as well as special proceedings, the deposition-taking before a Philippine consular official under
Rule 23 should be deemed allowable also under the circumstances.
However, the suggested suppletory application of Rule 23 in the testimonial examination of an
unavailable prosecution witness has been categorically ruled out by the Court in the same case of Vda. de
Manguerra, as follows:
It is true that Section 3, Rule 1 of the Rules of Court provides that the rules of civil procedure
apply to all actions, civil or criminal, and special proceedings. In effect, it says that the rules of civil
procedure have suppletory application to criminal cases. However, it is likewise true that criminal
proceedings are primarily governed by the Revised Rules of Criminal Procedure.
Considering that Rule 119 adequately and squarely covers the situation in the instant case, we
find no cogent reason to apply Rule 23 suppletorily or otherwise."
Thus, the Court of Appeals ignored the procedure under the Revised Rules of Criminal Procedure for
taking the deposition of an unavailable prosecution witness when it upheld the trial court's order allowing the
deposition of prosecution witness Li Luen Ping to take place in a venue other than the court where the case is
pending. This was certainly grave abuse of discretion.

#9
G.R. No. 175733

WESTMONT BANK (now UNITED OVERSEAS BANK PHILS.), Petitioner,


vs.
FUNAI PHILIPPINES CORPORATION, SPOUSES ANTONIO and SYLVIA YUTINGCO, PANAMAX
CORPORATION, PEPITO ONG NGO, RICHARD N. YU, AIMEE R. ALBA, ANNABELLE BAESA, NENITA
RESANE, and MARIA ORTIZ, Respondents.
TOPIC: FAILURE TO STATE COUSE OF ACTION VIS--VIS LACK OF CAUSE OF ACTION
FACTS:
Respondents obtained loans from Westmont Bank (Westmont), now United Overseas Bank Phils., in
the aggregate amount of P10,000,000.00, secured by several promissory notes (PNs) with different maturity
dates.
However, Funai and Sps. Yutingco (original defendants) defaulted in the payment of the said loan
obligations when they fell due, and ignored Westmonts demands for payment. Hence, the Westmont filed a
complaint for sum of money, with prayer for the issuance of a writ of preliminary attachment before the RTC.
Westmont filed an Amended Complaint impleading as additional defendants, Panamax, Ngo, Aimee R.
Alba, Richard N. Yu, Annabelle Baesa, and Nenita Resane (additional defendants), and praying that they be
declared as mere alter egos, conduits, dummies, or nominees of Sps. Yutingco to defraud their creditors,
including Westmont. Then, Westmont filed a Second Amended Complaint adding Maria Ortiz to the roster of
additional defendants.
The additional defendants moved to dismiss the complaints and, thereafter, filed their Answer, alleging
that: (a) the complaints stated no cause of action against them, considering the lack of legal tie or vinculum
juris with Westmont; and (b) they were not parties-in-interest in the case absent any proof linking them to the
transaction between Westmont and the original defendants.
Westmont moved for a judgment on the pleadings.
In a Decision, the RTC dismissed the amended and second amended complaints for failure to state a
cause of action against the additional defendants and ordered the return of the items wrongfully seized, to the
premises of Panamax in Sta. Lucia.
The RTC ruled that the additional defendants had no participation or any corresponding duty
whatsoever relative to the subject PNs, which were executed only by the original defendants in favor of
Westmont; hence, the latter cannot maintain an action against said additional defendants. The RTC further
held that Westmonts imputation that the additional defendants acted as dummies, conduits, and alter egos of
the original defendants are but mere inferences of fact, and not a narration of specific acts or set of facts or
ultimate facts required in a complaint to entitle the plaintiff to a remedy in law. Thus, it concluded that the
complaint failed to state a cause of action against the additional defendants.
In a Decision, the Court of Appeals affirmed the Regional Trial Court Decision. It ruled that Westmont
has no cause of action against the additional defendants as they had no participation whatsoever in the
execution of the subject PNs.
Dissatisfied, Westmont filed a petition for partial review on certiorari64 before the Court.

ISSUE:
Whether the Court of Appeals gravely erred in not considering additional defendants as necessary
parties to the case.
HELD:
The petition lacks merit.
At the outset, it must be stressed that the case was submitted for judgment on the pleadings, on
Westmonts motion. Hence, other than the hearing on the motion to discharge the attached items, no full-blown
trial was conducted on the case.
In the case at bar, both the RTC and the CA were one in dismissing Westmonts Amended and Second
Amended Complaints as to the additional defendants, but differed on the grounds therefor i.e., the RTC held
that said complaints failed to state a cause of action, while the CA ruled that there was no cause of action, as
to the additional defendants.
"Failure to state a cause of action and lack of cause of action are distinct grounds to dismiss a
particular action. The former refers to the insufficiency of the allegations in the pleading, while the latter to the
insufficiency of the factual basis for the action. Dismissal for failure to state a cause of action may be raised at
the earliest stages of the proceedings through a motion to dismiss under Rule 16 of the Rules of Court, while
dismissal for lack of cause of action may be raised any time after the questions of fact have been resolved on
the basis of stipulations, admissions or evidence presented by the plaintiff."
Considering that, in this case, no stipulations, admissions, or evidence have yet been presented, it is
perceptibly impossible to assess the insufficiency of the factual basis on which Sheriff Cachero asserts his
cause of action. Hence, the ground of lack of cause of action could not have been the basis for the dismissal of
this action.
Nonetheless, the Amended and Second Amended Complaints are still dismissible on the ground of
failure to state a cause of action, as correctly held by the RTC.
"A complaint states a cause of action if it sufficiently avers the existence of the three (3)
essential elements of a cause of action, namely: (a) a right in favor of the plaintiff by whatever means
and under whatever law it arises or is created; (b) an obligation on the part of the named defendant to
respect or not to violate such right; and (c) an act or omission on the part of the named defendant
violative of the right of the plaintiff or constituting a breach of the obligation of defendant to the plaintiff
for which the latter may maintain an action for recovery of damages. If the allegations of the complaint
do not state the concurrence of these elements, the complaint becomes vulnerable to a motion to
dismiss on the ground of failure to state a cause of action."
Judicious examinations of Westmonts Amended and Second Amended Complaints readily show their
failure to sufficiently state a cause of action as the allegations therein do not proffer ultimate facts which would
warrant an action against the additional defendants for the collection of the amount due on the subject PNs. In
imputing liability to the additional defendants, Westmont merely alleged in its Second Amended Complaint:
"Panamax, Ngo, Alba, Yu, Baesa and Resane are impleaded herein for being mere alter egos,
conduits, dummies or nominees of defendants spouses Antonio and Sylvia Yutingco to defraud
creditors, including herein plaintiff [Westmont].
xxxx

Maria Ortiz is impleaded herein for being mere alter ego, conduit, dummy or nominee of
defendants spouses Antonio and Sylvia Yutingco to defraud creditors, including herein
plaintiff [Westmont]."
The aforecited allegations partake of the nature of mere conclusions of law, unsupported by a particular
averment of circumstances that will show why or how such inferences or conclusions were arrived at as to
bring the controversy within the trial courts jurisdiction. There is no explanation or narration of facts that would
disclose why the additional defendants are mere alter egos, conduits, dummies or nominees of the original
defendants to defraud creditors, contrary to the requirement of Section 5, Rule 8 of the Rules of Court that the
circumstances constituting fraud must be stated with particularity, thus, rendering the allegation of fraud simply
an unfounded conclusion of law. It must be pointed out that, in the absence of specific averments, the
complaint presents no basis upon which the court should act, or for the defendant to meet it with an intelligent
answer and must, perforce, be dismissed for failure to state a cause of action, as what the RTC did.
It bears to stress that "while the facts alleged in the complaint are hypothetically admitted by the
defendant, who moves to dismiss the complaint on the ground of failure to state a cause of action, it must,
nevertheless, be remembered that the hypothetical admission extends only to the relevant and material
facts well pleaded in the complaint, as well as inferences fairly deductible therefrom." Verily, the filing of
the motion to dismiss assailing the sufficiency of the complaint "does not admit the truth of mere epithets of
fraud; nor allegations of legal conclusions; nor an erroneous statement of law; nor mere inferences or
conclusions from facts not stated; nor mere conclusions of law; nor allegations of fact the falsity of which is
subject to judicial notice; nor matters of evidence; nor surplusage and irrelevant matter; nor scandalous matter
inserted merely to insult the opposing party; nor to legally impossible facts; nor to facts which appear
unfounded by a record incorporated in the pleading, or by a document referred to; nor to general averments
contradicted by more specific averments."

#10
G.R. No. 201248, March 11, 2015
LETICIA NAGUIT AQUINO, MELVIN NAGUIT, ROMMEL NAGUIT, ELMA NAGUIT TAYAG, YSSEL L.
NAGUIT, ROSALINA NAGUIT AUMENTADO, RIZEL NAGUIT CUNANAN, CARIDAD NAGUIT PARAJAS,
MILLIE NAGUIT FLORENDO, MARNEL NAGUIT, EDUARDO NAGUIT, JOSE NAGUIT, ZOILO NAGUIT,
AND AMELIA NAGUIT DIZON, REPRESENTED BY YSSEL L. NAGUIT, Petitioners.
vs.
CESAR B. QUIAZON, AMANDA QUIAZON, JOSE B. QUIAZON AND REYNALDO B. QUIAZON,
REPRESENTED BY JAIME B. QUIAZON, Respondent.

TOPIC: FAILURE TO STATE CAUSE OF ACTION VIS--VIS LACK OF CAUSE OF ACTION


FACTS:
On December 16, 2005, a complaint for Annulment and Quieting of Title was filed before the RTCBranch 59 by the petitioners, alleged as the heirs of the late Epifanio Makam and Severina Bautista, who
acquired a house and lot situated in Magalang, Pampanga, consisting of 557 square meters, by virtue of a
Deed of Sale; that since then, they and their predecessors-in-interest had been in open, continuous, adverse,
and notorious possession for more than a hundred years, constructing houses and paying real estate taxes on
the property; That sometime in June 2005, they received various demand letters from the respondents,
claiming ownership over the subject property and demanding that they vacate the same.
The Register of Deeds (ROD) of San Fernando, Pampanga thereafter confirmed that the property had
been titled in the name of respondents and declared that the said title was invalid, ineffective, voidable or
unenforceable; the petitioners claim that they were the true owners of the said property. Hence, they prayed
that the title be cancelled and a new title be issued in their favor.
In their answer, respondents asserted that they were the absolute owners of the subject and denied
the allegations in the complaint and proffered affirmative defenses with counterclaims. RTC
dismissed
petitioners' complaint. It found that respondents' predecessors-in-interest, were declared the absolute owners
of the subject property and ruled that the deed of sale had become invalid having found that petitioners had
lost whatever right they had on the property from the moment the said decision was rendered and an OCT was
issued. Finding that petitioners were not holders of any legal title over the property and were bereft of any
equitable claim thereon. Anent petitioners' argument that only the complaint may be considered in determining
the sufficiency of the cause of action, the RTC ruled that under Section 2 in relation to Section 6, Rule 16 of the
Rules of Court, a preliminary hearing on the affirmative defense in the answer might be had at the discretion of
the court, during which the parties could present their arguments and their evidence. RTC denied petitioners'
motion for reconsideration.
The CA likewise dismissed petitioners' appeal. It explained that under Section 6, Rule 16 of the Rules
of Court, a court is allowed to conduct a preliminary hearing, motu proprio, on the defendant's affirmative
defenses, including the ground of "lack of cause of action or failure to state a cause of action." The rule speaks
of affirmative defenses that are grounds for a motion to dismiss. Indubitably, lack of cause of action or failure to
state a cause of action, being one of the grounds for a motion to dismiss, is included thereby. To rule otherwise
would render nugatory the provision of Section 6, Rule 16 and would make the holding of a preliminary
hearing a plain exercise in futility. The CA gave credence to the evidence presented by
respondents and noted that, except for petitioners' bare allegation that respondents' title was
invalid, there was nothing more to support the same. The CA, therefore, found that petitioners did not have

the title required to avail of the remedy of quieting of title, while respondents had sufficiently proven the
validity of their Torrens title. Hence, the subject petition.

ISSUE:
Whether the CA erred in affirming the dismissal of petitioners' complaint on the ground of lack of cause
of action or failure to state a cause of action.

HELD:
The Court notes that respondents' arguments made no assertion that the complaint failed to state a
cause of action. The court discussed that ground of "lack of cause of action" has been frequently confused
with the ground of "failure to state a cause of action," and this is the situation prevailing in the present
case.
The terms were, in fact, used interchangeably by both the respondents and the lower courts.
The distinction between the grounds of "failure to state a cause of action" and "lack of cause of action" was
aptly discussed in Dabuco vs. Court of Appeals.
Although the two grounds were used interchangeably, it can be gleaned from the decisions of both the
trial court and the CA that respondents' defense of "lack of cause of action" was actually treated as a "failure to
state a cause of action," which is a ground for a motion to dismiss under Rule16.The trial court held a
preliminary hearing resolving the ground of "lack of cause of action" pursuant to Section 6 of Rule 16, which
allows the court to hold a preliminary hearing on grounds for dismissal provided in the same rule that have
been raised as an affirmative defense in the answer.
The familiar test for determining whether a complaint did or did not state a cause of action against the
defendants is whether or not, admitting hypothetically the truth of the allegations of fact made in the complaint,
a judge may validly grant the relief demanded in the complaint. It is error for the court to take cognizance
of external facts or hold preliminary hearings to determine their existence. If the allegation in a
complaint furnish sufficient basis by which the complaint may be maintained, the same should not be
dismissed regardless of the defenses that may be assessed by the defendants. In the case at bench,
petitioners' cause of action relates to an action to quiet title under Article 476 of the Civil Code.
In order that an action for quieting of title may prosper, two requisites must concur: (1) the plaintiff or
complainant has a legal or equitable title or interest in the real property subject of the action; and (2) the deed,
claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid
or inoperative despite its prima facie appearance of validity or legal efficacy. The petitioners complaint posted
relevant allegations as to the cause of action for quieting of title. It is readily apparent from the complaint that
petitioners alleged that (1) they had an interest over the subject property by virtue of a Deed of Sale; and that
(2) the title of respondents under TCT No. 213777-R was invalid, ineffective, voidable or unenforceable.
Hypothetically admitting these allegations as true, as is required in determining whether a complaint fails to
state a cause of action, petitioners may be granted their claim. The trial court should have limited itself to
examining the sufficiency of the allegations in the complaint. It was proscribed from inquiring into the truth of
the allegations in the complaint or the authenticity of any of the documents referred or attached to the
complaint, as these were deemed hypothetically admitted by the respondents. Exceptions and Section 6 of
Rule 16 not applicable. Pointing to the exception that inquiry was not confined to the complaint if evidence had
been presented in the course of hearings related to the case, the CA ruled that it was within the trial court's
discretion to receive and consider other evidence aside from the allegations in the complaint in
resolving a party's affirmative defense. It held that this discretion was recognized under Section 6 of Rule 16 of
the Rules of Court, which allowed the court to conduct a preliminary hearing, motu proprio, on the defendant's
affirmative defense if no corresponding motion to dismiss was filed. Respondents answer which raised the

affirmative defenses of "lack of cause of action, prescription, and res judicata," reveals that they alleged
that "plaintiffs have no valid, legal and sufficient cause of action against the defendants." It is at this
point that it must again be emphasized that it is not "lack or absence of cause of action" that is a ground
for dismissal of the complaint under Rule 16, but rather, that "the complaint states no cause of action."
The issue submitted to the court was, therefore, the determination of the sufficiency of the allegations in
the complaint to constitute a cause of action and not whether those allegations of fact were true, as there was
a hypothetical admission of facts alleged in the complaint.
An affirmative defense, raising the ground that there is no cause of action as against the defendants
poses a question of fact that should be resolved after the conduct of the trial on the merits. The lower courts
also relied on the exception that external evidence may be considered when received "in the course of
hearings related to the case. It is of note that although the trial court might not have erred in holding a
preliminary hearing on the affirmative defenses of prescription and res judicata, it is readily apparent from the
decisions of the lower courts that no disquisition whatsoever was made on these grounds. It cannot be denied
that evidence in support of the ground of "lack of cause of action" was received and given great weight by the
trial court. In fact, all the evidence given credence by the trial court was only in support of the ground of "lack of
cause of action." This all the more highlight that the trial court erred in receiving evidence to determine whether
the complaint failed to state a cause of action.
Although neither the RTC nor the CA ruled on the affirmative defenses of prescription and res judicata,
it appears that this case could not have been dismissed on these grounds. First, an action to quiet title is
imprescriptible if the plaintiffs are in possession of the property, which is the situation prevailing in the present
case. Second, there appears to be neither res judicata nor a violation of the prohibition against forum shopping
considering that Civil Case No. 5487 had been dismissed, without prejudice, years before petitioners
initiated their complaint for quieting of title. In sum, the trial court erred in dismissing the complaint on the
ground of failure to state a cause of action. Evidence should have been received not during a preliminary
hearing under Section6 of Rule 16, but should have been presented during the course of the trial. Court
granted the petition and the case is ordered remanded to the RTC for trial on the merits of the case.

#11
G.R. No. 197802, November 11, 2015
ZUNECA PHARMACEUTICAL, AKRAM ARAIN AND/OR VENUS ARAIN, M.D. DBA ZUNECA
PHARMACEUTICAL, Petitioners,
vs.
NATRAPHARM, INC., Respondent.
TOPIC: INJUNCTION
FACTS:
Natrapharm, an all-Filipino pharmaceutical company, manufactures and sells a medicine with generic
name CITICOLINE for heart and stroke patients, and marketed under the trademark ZYNAPSE obtained
from the Intellectual Property Office under Certificate of Trademark Registration No. 4-2007-005596 granted on
November 24, 2007.
On the other hand, as early as 2001, and unknown to Natrapharm, Zuneca Pharmaceutical, Arram
Anain and/or Venus Arain, had been selling a medicine imported from Pakistan, an anti-convulsant under the
generic name CARBAMAZEPINE under an unregistered trademark, ZYNAPS, pronounced the same as
ZYNAPSE. Natrapharm claims that Zuneca is selling Zynaps in drugstores all over the country where
Zynapse is also sold, has serious and disfiguring side-effects, and the sale of the same in drugstores may give
rise to medicine switching.
When Natrapharm issued a cease-and-desist letter to Zuneca pointing out its claims, the latter refused
to heed its demand, pointing out that it had been issued by the Bureau of Food and Drugs a Certificate of
Product Registration as early as 2003, which allowed them to sell CARBAMAZEPINE under the trademark
ZYNAPS. Natrapharm then filed a complaint against Zuneca for trademark infringement for violation of RA
8293 with prayer for temporary restraining order and/or writ of preliminary injunction, citing Section 122 of RA
8293 which gives it exclusive right to use the name ZYNAPSE and to exclude others. Zuneca argued
otherwise, averring that it enjoyed prior use of the brand name ZYNAPS by virtue of the Certificate of Product
Registration issued by the BFAD in 2003.
On March 12, 2008, the RTC denied the application for a writ of preliminary injunction, citing the
reasons when it first ruled on the denial of issuance of a temporary restraining order, that is, that Zuneca had
prior right over the mark. The RTC reasoned out that Natrapharm cannot avail of injunctive relief. Though the
holder of a valid trademark, it may not invoke ascendancy or superiority of its CTR (Certificate of Trademark
Registration) over the CPR (certificate of product registration), as the latter is evidence of Zunecas prior use.
On petition for certiorari to the CA, the latter initially affirmed the RTC order, but reversed itself on
motion for reconsideration by Natrapharm. Thus, Zuneca elevated the case to the Supreme Court. In the
meantime, on December 2, 2011, the RTC rendered a decision on the main case, ruling in favor of
Natrapaham. Because of this development, Natrapaham moved to dismiss the petition before the Supreme
Court, arguing that the RTC Decision was a full adjudication on the merits of the main issue of trademark
infringement. It contended that the present petition is moot and academic, it only involving an ancillary writ.
Zuneca believes otherwise, since the RTC decision had not yet attained finality, thus the present petition had
not been rendered moot.

ISSUE:
Whether the present petition had become moot and academic in view of the RTC Decision on the main
case which ruled in favor of Natrapharm.

HELD:
The Court held that the issues raised in the instant petition have been rendered moot and academic
given the RTCs December 2, 2011 Decision on the merits of the case.
Rule 58 of the Rules of Court provides for both preliminary and permanent injunction. Section 1, Rule
58 provides for the definition of preliminary injunction:
SECTION 1. Preliminary injunction defined; classes. A preliminary injunction is an order granted at
any stage of an action or proceeding prior to the judgment or final order, requiring a party or a court,
agency or a person to refrain from a particular act or acts. It may also require the performance of a
particular act or acts, in which case it shall be known as a preliminary mandatory injunction.
On the other hand, Section 9 of the same Rule defines a permanent injunction in this wise:
SEC. 9. When final injunction granted. If after the trial of the action it appears that the applicant is
entitled to have the act or acts complained of permanently enjoined, the court shall grant a final
injunction perpetually restraining the party or person enjoined from the commission or continuance of
the act or acts or confirming the preliminary mandatory injunction.
A writ of preliminary injunction is generally based solely on initial and incomplete evidence. The
evidence submitted during the hearing on an application for a writ of preliminary injunction is not conclusive or
complete for only a sampling is needed to give the trial court an idea of the justification for the preliminary
injunction pending the decision of the case on the merits. As such, the findings of fact and opinion of a court
when issuing the writ of preliminary injunction are interlocutory in nature and made even before the trial on the
merits is commenced or terminated.
By contrast a permanent injunction, based on Section 9, Rule 58 of the Rules of Court, forms part of the
judgment on the merits and it can only be properly ordered only on final judgment. A permanent injunction may
thus be granted after a trial or hearing on the merits of the case and a decree granting or refusing an injunction
should not be entered until after a hearing on the merits where a verified answer containing denials is filed or
where no answer is required, or a rule to show cause is equivalent to an answer.
As such a preliminary injunction, like any preliminary writ and any interlocutory order, cannot survive the
main case of which it is an incident; because an ancillary writ of preliminary injunction loses its force and effect
after the decision in the main petition.
In Casilan v. Ybaez, this Court stated:
As things stand now, this Court can no longer interfere with the preliminary injunctions issued by the Leyte
court in its cases Nos. 2985 and 2990, because such preliminary writs have already been vacated, being
superseded and replaced by the permanent injunction ordered in the decision on the merits rendered on 21
March 1962. And as to the permanent injunction, no action can be taken thereon without reviewing the judgment
on the merits, such injunction being but a consequence of the pronouncement that the credits of Tiongson and
Montilla are entitled to priority over that of Casilan. Since the court below had the power and right to determine
such question of preference, its judgment is not without, nor in excess of, jurisdiction; and even assuming that its
findings are not correct, they would, at most, constitute errors of law, and not abuses of discretion, correctible by
certiorari. The obvious remedy for petitioner Casilan was a timely appeal from the judgment on the merits to the

Court of Appeals, the amount involved being less than P200, 000. But the judgment has become final and
unappealable and cannot be set aside through certiorari proceedings.

Here, this Court is being asked to determine whether the CA erred by issuing a permanent injunction in
a case which questioned the propriety of the denial of an ancillary writ. But with the RTCs December 2, 2011
Decision on the case for Injunction, Trademark Infringement, Damages and Destruction, the issues raised in
the instant petition have been rendered moot and academic. We note that the case brought to the CA on a
petition for certiorari merely involved the RTCs denial of respondents application for a writ of preliminary
injunction, a mere ancillary writ. Since a decision on the merits has already been rendered and which includes
in its disposition a permanent injunction, the proper remedy is an appeal from the decision in the main case.

#12
G.R. No. 185145

February 5, 2014

SPOUSES VICENTE AFULUGENCIA and LETICIA AFULUGENCIA, Petitioners,


vs.
METROPOLITAN BANK & TRUST CO. and EMMANUEL L. ORTEGA, Clerk of Court, Regional Trial Court
and Ex-Officio Sheriff, Province of Bulacan, Respondents.
TOPIC: SUBPOENA
FACTS:
Petitioners, spouses Vicente and Leticia Afulugencia, filed a Complaint for nullification of mortgage,
foreclosure, auction sale, certificate of sale and other documents, with damages, against respondents
Metropolitan Bank & Trust Co. and Emmanuel L. Ortega before the Regional Trial Court of Malolos City.
Metrobank is a domestic banking corporation existing under Philippine laws, while Ortega is the Clerk
of Court and Ex-Officio Sheriff of the Malolos RTC.
After the filing of the parties pleadings and with the conclusion of pre-trial, petitioners filed a Motion for
Issuance of Subpoena Duces Tecum Ad Testificandum to require Metrobanks officers to appear and testify as
the petitioners initial witnesses during the August 31, 2006 hearing for the presentation of their evidence-inchief, and to bring the documents relative to their loan with Metrobank, as well as those covering the
extrajudicial foreclosure and sale of petitioners 200-square meter land in Meycauayan, Bulacan.
Metrobank filed an Opposition10 arguing that for lack of a proper notice of hearing, the Motion must be
denied; that being a litigated motion, the failure of petitioners to set a date and time for the hearing renders the
Motion ineffective and that pursuant to Sections 1 and 611 of Rule 25 of the Rules, Metrobanks officers who
are considered adverse parties may not be compelled to appear and testify in court for the petitioners since
they were not initially served with written interrogatories.
Petitioners submitted a Reply 12 to Metrobanks Opposition, stating that the lack of a proper notice of
hearing was cured by the filing of Metrobanks Opposition; that applying the principle of liberality.
On October 19, 2006, the trial court issued an Order13 denying petitioners Motion for Issuance of
Subpoena Duces Tecum Ad Testificandum, thus: Petitioners filed a Motion for Reconsideration15 pleading for
leniency in the application of the Rules and claiming that the defective notice was cured by the filing of
Metrobanks Opposition, which they claim is tantamount to notice.
In an Opposition16 to the Motion for Reconsideration, Metrobank insisted on the procedural defect of
improper notice of hearing, arguing that the rule relative to motions and the requirement of a valid notice of
hearing are mandatory and must be strictly observed. The trial court denied petitioners Motion for
Reconsideration.

Petitioners filed a Petition for Certiorari with the CA asserting this time that their Motion for Issuance of
Subpoena is not a litigated motion; it does not seek relief, but aims for the issuance of a mere process. For
these reasons, the Motion need not be heard.
The CA dismissed the petition Praying that the assailed CA dispositions be set aside and that the Court
allow the issuance of the subpoena, petitioners assert that the questioned Motion is not a litigated motion,
since it seeks not a relief, but the issuance of process. They insist that a motion which is subject to notice and
hearing under Sections 4 and 5 of Rule 15 is an application for relief other than a pleading; since no relief is
sought but just the process of subpoena, the hearing and notice requirements may be done away with.
Petitioners add that the Rules should have been liberally construed in their favor, and that Metrobanks
filing of its Opposition be considered to have cured whatever defect the Motion suffered from.
Metrobank essentially argues in its Comment30 that the subject Motion for the issuance of a subpoena
is a litigated motion, especially as it is directed toward its officers, whose testimony and documentary evidence
would affect it as the adverse party in the civil case. Thus, the lack of a proper notice of hearing renders it
useless and a mere scrap of paper.

ISSUE:
Whether the CA committed reversible errors in requiring notice and hearing for a mere motion for
subpoena of respondent banks officers when such requirements apply only to deposition under sec. 6, rule 25,
rules of court.

HELD:
The Court denied the Petition.
On the procedural issue, it is quite clear that Metrobank was notified of the Motion for Issuance of
Subpoena; in fact, it filed a timely Opposition thereto. The technical defect of lack of notice of hearing was thus
cured by the filing of the Opposition.
As a rule, in civil cases, the procedure of calling the adverse party to the witness stand is not allowed,
unless written interrogatories are first served upon the latter. This is embodied in Section 6, Rule 25 of the
Rules.
One of the purposes of the above rule is to prevent fishing expeditions and needless delays; it is there
to maintain order and facilitate the conduct of trial. It will be presumed that a party who does not serve written
interrogatories on the adverse party beforehand will most likely be unable to elicit facts useful to its case if it
later opts to call the adverse party to the witness stand as its witness. Instead, the process could be treated as
a fishing expedition or an attempt at delaying the proceedings.
Another reason for the rule is that by requiring prior written interrogatories, the court may limit the
inquiry to what is relevant, and thus prevent the calling party from straying or harassing the adverse party when
it takes the latter to the stand.
Thus, the rule not only protects the adverse party from unwarranted surprises or harassment; it likewise
prevents the calling party from conducting a fishing expedition or bungling its own case.
In the present case, petitioners seek to call Metrobanks officers to the witness stand as their initial and
main witnesses, and to present documents in Metrobanks possession as part of their principal documentary
evidence. This is improper. Petitioners may not be allowed, at the incipient phase of the presentation of their
evidence-in-chief at that, to present Metrobanks officers who are considered adverse parties as well, based
on the principle that corporations act only through their officers and duly authorized agents34 as their main
witnesses; nor may they be allowed to gain access to Metrobanks documentary evidence for the purpose of

making it their own. This is tantamount to building their whole case from the evidence of their opponent. The
burden of proof and evidence falls on petitioners, not on Metrobank; if petitioners cannot prove their claim
using their own evidence, then the adverse party Metrobank may not be pressured to hang itself from its own
defense.
It is true that under the Rules, a party may, for good cause shown and to prevent a failure of justice, be
compelled to give testimony in court by the adverse party who has not served written interrogatories. But what
petitioners seek goes against the very principles of justice and fair play; they would want that Metrobank
provide the very evidence with which to prosecute and build their case from the start. This they may not be
allowed to do.

#13
G.R. No. 150135

October 30, 2006

SPOUSES ANTONIO F. ALGURA and LORENCITA S.J. ALGURA, petitioners,


vs.
THE LOCAL GOVERNMENT UNIT OF THE CITY OF NAGA, ATTY. MANUEL TEOXON, ENGR. LEON
PALMIANO, NATHAN SERGIO and BENJAMIN NAVARRO, SR., respondents.
TOPIC: INDIGENT/PAUPER LITIGANTS (Section 19, Rule 141 and Section 21, Rule 3, Rules of Court)
FACTS:
Spouses Algura (herein petitioners) filed a Verified Complaint for damages against the Naga City
Government and its officers, arising from the alleged illegal demolition of their residence and boarding house
and for payment of lost income derived from fees paid by their boarders.
Simultaneously, petitioners filed an Ex-Parte Motion to Litigate as Indigent Litigants, to which petitioner
Antonio Algura's Pay Slip was appended, showing a gross monthly income of PhP 10,474.00 and a net pay of
PhP 3,616.99 for the month of July 1999. Also attached to the motion was a Certification issued by the Office
of the City Assessor of Naga City, which stated that petitioners had no property declared in their name for
taxation purposes.
Finding that petitioners' motion to litigate as indigent litigants was meritorious, the Executive Judge of
the Naga City RTC granted petitioners' plea for exemption from filing fees.
Respondents filed a Motion to Disqualify the Plaintiffs for Non-Payment of Filing Fees. They asserted
that in addition to the more than PhP 3,000.00 net income of petitioner Antonio Algura, who is a member of the
Philippine National Police, spouse Lorencita Algura also had a mini-store and a computer shop on the ground
floor of their residence along Bayawas St., Sta. Cruz, Naga City. Also, respondents claimed that petitioners'
second floor was used as their residence and as a boarding house, from which they earned more than PhP
3,000.00 a month. In addition, it was claimed that petitioners derived additional income from their computer
shop patronized by students and from several boarders who paid rentals to them. Hence, respondents
concluded that petitioners were not indigent litigants.
The Naga City RTC issued an Order disqualifying petitioners as indigent litigants on the ground that
they failed to substantiate their claim for exemption from payment of legal fees and to comply with the third
paragraph of Rule 141, Section 18 of the Revised Rules of Courtdirecting them to pay the requisite filing
fees.

Petitioners filed a Motion for Reconsideration of the Order. Then, respondents filed their
Comment/Objections to petitioner's Motion for Reconsideration.
The trial court issued an Order giving petitioners the opportunity to comply with the requisites laid down
in Section 18, Rule 141, for them to qualify as indigent litigants.
Petitioners submitted their Compliance attaching the affidavits of petitioner Lorencita Algura and Erlinda
Bangate, to comply with the requirements of then Rule 141, Section 18 of the Rules of Court and in support of
their claim to be declared as indigent litigants.
In her Affidavit, petitioner Lorencita Algura claimed that the demolition of their small dwelling deprived
her of a monthly income amounting to PhP 7,000.00. She, her husband, and their six (6) minor children had to
rely mainly on her husband's salary as a policeman which provided them a monthly amount of PhP 3,500.00,
more or less. Also, they did not own any real property as certified by the assessor's office of Naga City. More
so, according to her, the meager net income from her small sari-sari store and the rentals of some boarders,
plus the salary of her husband, were not enough to pay the family's basic necessities.
To buttress their position as qualified indigent litigants, petitioners also submitted the affidavit of Erlinda
Bangate, who attested under oath, that she personally knew spouses Antonio Algura and Lorencita Algura,
who were her neighbors; that they derived substantial income from their boarders; that they lost said income
from their boarders' rentals when the Local Government Unit of the City of Naga, through its officers,
demolished part of their house because from that time, only a few boarders could be accommodated; that the
income from the small store, the boarders, and the meager salary of Antonio Algura were insufficient for their
basic necessities like food and clothing, considering that the Algura spouses had six (6) children; and that she
knew that petitioners did not own any real property.
Thereafter, Naga City RTC Acting Presiding Judge Andres B. Barsaga, Jr. issued his Order denying the
petitioners' Motion for Reconsideration.
Judge Barsaga ratiocinated that the pay slip of Antonio F. Algura showed that the "GROSS INCOME or
TOTAL EARNINGS of plaintiff Algura [was] Php10,474.00 which amount [was] over and above the amount
mentioned in the first paragraph of Rule 141, Section 18 for pauper litigants residing outside Metro
Manila." Said rule provides that the gross income of the litigant should not exceed PhP 3,000.00 a month and
shall not own real estate with an assessed value of PhP 50,000.00. The trial court found that, in Lorencita S.J.
Algura's Affidavit, nowhere was it stated that she and her immediate family did not earn a gross income of PhP
3,000.00.
ISSUE:
Whether petitioners should be considered as indigent litigants who qualify for exemption from paying
filing fees.
HELD:
Yes.
It is undisputed that the Complaint (Civil Case No. 99-4403) was filed on September 1, 1999. However,
the Naga City RTC, in its April 14, 2000 and July 17, 2000 Orders, incorrectly applied Rule 141, Section 18
on Legal Fees (which took effect on March 1, 2000 by virtue of A.M. No. 00-2-01-SC) when the applicable
rules at that time were Rule 3, Section 21 on Indigent Party which took effect on July 1, 1997 and Rule 141,
Section 16 on Pauper Litigants which became effective on July 19, 1984 up to February 28, 2000.
The old Section 16, Rule 141 requires applicants to file an ex-parte motion to litigate as a pauper
litigant by submitting an affidavit that they do not have a gross income of PhP 2,000.00 a month or PhP
24,000.00 a year for those residing in Metro Manila and PhP 1,500.00 a month or PhP 18,000.00 a year for

those residing outside Metro Manila or those who do not own real property with an assessed value of not more
than PhP 24,000.00 or not more than PhP 18,000.00 as the case may be. Thus, there are two requirements: a)
income requirementthe applicants should not have a gross monthly income of more than PhP 1,500.00, and
b) property requirementthey should not own property with an assessed value of not more than PhP
18,000.00.
In the case at bar, petitioners Alguras submitted the Affidavits of petitioner Lorencita Algura and
neighbor Erlinda Bangate, the pay slip of petitioner Antonio F. Algura showing a gross monthly income of PhP
10,474.00,21 and a Certification of the Naga City assessor stating that petitioners do not have property declared
in their names for taxation. Undoubtedly, petitioners do not own real property as shown by the Certification of
the Naga City assessor and so the property requirement is met. However with respect to the income
requirement, it is clear that the gross monthly income of PhP 10,474.00 of petitioner Antonio F. Algura and the
PhP 3,000.00 income of Lorencita Algura when combined, were above the PhP 1,500.00 monthly income
threshold prescribed by then Rule 141, Section 16 and therefore, the income requirement was not satisfied.
The trial court was therefore correct in disqualifying petitioners Alguras as indigent litigants although the court
should have applied Rule 141, Section 16 which was in effect at the time of the filing of the application on
September 1, 1999. Even if Rule 141, Section 18 (which superseded Rule 141, Section 16 on March 1, 2000)
were applied, still the application could not have been granted as the combined PhP 13,474.00 income of
petitioners was beyond the PhP 3,000.00 monthly income threshold.
Unrelenting, petitioners however argue in their Motion for Reconsideration of the April 14, 2000 Order
disqualifying them as indigent litigants that the rules have been relaxed by relying on Rule 3, Section 21 of the
1997 Rules of Civil procedure which authorizes parties to litigate their action as indigents if the court is satisfied
that the party is "one who has no money or property sufficient and available for food, shelter and basic
necessities for himself and his family." The trial court did not give credence to this view of petitioners and
simply applied Rule 141 but ignored Rule 3, Section 21 on Indigent Party.
The position of petitioners on the need to use Rule 3, Section 21 on their application to litigate as
indigent litigants brings to the fore the issue on whether a trial court has to apply both Rule 141, Section 16 and
Rule 3, Section 21 on such applications or should the court apply only Rule 141, Section 16 and discard Rule
3, Section 21 as having been superseded by Rule 141, Section 16 on Legal Fees.
The Court rules that Rule 3, Section 21 and Rule 141, Section 16 (later amended as Rule 141, Section
18 on March 1, 2000 and subsequently amended by Rule 141, Section 19 on August 16, 2003, which is now
the present rule) are still valid and enforceable rules on indigent litigants.
For one, the history of the two seemingly conflicting rules readily reveals that it was not the intent of the
Court to consider the old Section 22 of Rule 3, which took effect on January 1, 1994 to have been amended
and superseded by Rule 141, Section 16, which took effect on July 19, 1984 through A.M. No. 83-6-389-0. If
that is the case, then the Supreme Court, upon the recommendation of the Committee on the Revision on
Rules, could have already deleted Section 22 from Rule 3 when it amended Rules 1 to 71 and approved the
1997 Rules of Civil Procedure, which took effect on July 1, 1997. The fact that Section 22 which became Rule
3, Section 21 on indigent litigant was retained in the rules of procedure, even elaborating on the meaning of an
indigent party, and was also strengthened by the addition of a third paragraph on the right to contest the grant
of authority to litigate only goes to show that there was no intent at all to consider said rule as expunged from
the 1997 Rules of Civil Procedure.
Furthermore, Rule 141 on indigent litigants was amended twice: first on March 1, 2000 and the second
on August 16, 2004; and yet, despite these two amendments, there was no attempt to delete Section 21 from
said Rule 3. This clearly evinces the desire of the Court to maintain the two (2) rules on indigent litigants to
cover applications to litigate as an indigent litigant.
It may be argued that Rule 3, Section 21 has been impliedly repealed by the recent 2000 and 2004
amendments to Rule 141 on legal fees. This position is bereft of merit. Implied repeals are frowned upon
unless the intent of the framers of the rules is unequivocal. It has been consistently ruled that:

(r)epeals by implication are not favored, and will not be decreed, unless it is manifest that the
legislature so intended. As laws are presumed to be passed with deliberation and with full knowledge of
all existing ones on the subject, it is but reasonable to conclude that in passing a statute[,] it was not
intended to interfere with or abrogate any former law relating to same matter, unless the repugnancy
between the two is not only irreconcilable, but also clear and convincing, and flowing necessarily from
the language used, unless the later act fully embraces the subject matter of the earlier, or unless the
reason for the earlier act is beyond peradventure removed. Hence, every effort must be used to make
all acts stand and if, by any reasonable construction they can be reconciled, the later act will not
operate as a repeal of the earlier.
Instead of declaring that Rule 3, Section 21 has been superseded and impliedly amended by Section
18 and later Section 19 of Rule 141, the Court finds that the two rules can and should be harmonized.
The Court opts to reconcile Rule 3, Section 21 and Rule 141, Section 19 because it is a settled
principle that when conflicts are seen between two provisions, all efforts must be made to harmonize them.
Hence, "every statute [or rule] must be so construed and harmonized with other statutes [or rules] as to form a
uniform system of jurisprudence."
In the light of the foregoing considerations, therefore, the two (2) rules can stand together and are
compatible with each other. When an application to litigate as an indigent litigant is filed, the court shall
scrutinize the affidavits and supporting documents submitted by the applicant to determine if the applicant
complies with the income and property standards prescribed in the present Section 19 of Rule 141that is, the
applicant's gross income and that of the applicant's immediate family do not exceed an amount double the
monthly minimum wage of an employee; and the applicant does not own real property with a fair market value
of more than Three Hundred Thousand Pesos (PhP 300,000.00). If the trial court finds that the applicant meets
the income and property requirements, the authority to litigate as indigent litigant is automatically granted and
the grant is a matter of right.
However, if the trial court finds that one or both requirements have not been met, then it would set a
hearing to enable the applicant to prove that the applicant has "no money or property sufficient and available
for food, shelter and basic necessities for himself and his family." In that hearing, the adverse party may
adduce countervailing evidence to disprove the evidence presented by the applicant; after which the trial court
will rule on the application depending on the evidence adduced. In addition, Section 21 of Rule 3 also provides
that the adverse party may later still contest the grant of such authority at any time before judgment is rendered
by the trial court, possibly based on newly discovered evidence not obtained at the time the application was
heard. If the court determines after hearing, that the party declared as an indigent is in fact a person with
sufficient income or property, the proper docket and other lawful fees shall be assessed and collected by the
clerk of court. If payment is not made within the time fixed by the court, execution shall issue or the payment of
prescribed fees shall be made, without prejudice to such other sanctions as the court may impose.
The Court concedes that Rule 141, Section 19 provides specific standards while Rule 3, Section 21
does not clearly draw the limits of the entitlement to the exemption. Knowing that the litigants may abuse the
grant of authority, the trial court must use sound discretion and scrutinize evidence strictly in granting
exemptions, aware that the applicant has not hurdled the precise standards under Rule 141. The trial court
must also guard against abuse and misuse of the privilege to litigate as an indigent litigant to prevent the filing
of exorbitant claims which would otherwise be regulated by a legal fee requirement.
Thus, the trial court should have applied Rule 3, Section 21 to the application of the Alguras after their
affidavits and supporting documents showed that petitioners did not satisfy the twin requirements on gross
monthly income and ownership of real property under Rule 141. Instead of disqualifying the Alguras as indigent
litigants, the trial court should have called a hearing as required by Rule 3, Section 21 to enable the petitioners
to adduce evidence to show that they didn't have property and money sufficient and available for food, shelter,
and basic necessities for them and their family.27 In that hearing, the respondents would have had the right to
also present evidence to refute the allegations and evidence in support of the application of the petitioners to
litigate as indigent litigants. Since this Court is not a trier of facts, it will have to remand the case to the trial

court to determine whether petitioners can be considered as indigent litigants using the standards set in Rule
3, Section 21.
Recapitulating the rules on indigent litigants, therefore, if the applicant for exemption meets the salary
and property requirements under Section 19 of Rule 141, then the grant of the application is mandatory. On the
other hand, when the application does not satisfy one or both requirements, then the application should not be
denied outright; instead, the court should apply the "indigency test" under Section 21 of Rule 3 and use its
sound discretion in determining the merits of the prayer for exemption.
Access to justice by the impoverished is held sacrosanct under Article III, Section 11 of the 1987
Constitution. The Action Program for Judicial Reforms (APJR) itself, initiated by former Chief Justice Hilario G.
Davide, Jr., placed prime importance on 'easy access to justice by the poor' as one of its six major
components. Likewise, the judicial philosophy of Liberty and Prosperity of Chief Justice Artemio V. Panganiban
makes it imperative that the courts shall not only safeguard but also enhance the rights of individualswhich
are considered sacred under the 1987 Constitution. Without doubt, one of the most precious rights which must
be shielded and secured is the unhampered access to the justice system by the poor, the underprivileged, and
the marginalized.
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