CIVIL PROCEDURE: PARTIES TO A CIVIL ACTION

G.R. No. 205179 July 18, 2014

GERVE MAGALLANES, Petitioner, vs. PALMER ASIA, INC., Respondent.

The Case

This is a petition for review that seeks to set aside the Decision1 dated 17 September 2012 of the
Court of Appeals (CA) in CA-G.R. SP No. 111314 and the Resolution2 dated 14 January 2013
which denied the Motion for Reconsideration dated 25 September 2012.

The Facts

Andrews International Product, Inc. (Andrews) is a domestic corporation that manufactures and
sells fire extinguishers. Gerve Magallanes (Magallanes) was employed by Andrews as a Sales
Agent.3

Magallanes negotiated with three (3) prospective buyers of Andrews fire extinguishers: Cecile
Arboleda, Jose Cruz, and Proceso Jarobilla, who all issued checks payable to Andrews. These
checks, however, bounced.4

Angel Palmiery (Palmiery), the President of Andrews, returned the bum checks to Magallanes.
Desirous of obtaining his accrued commissions, and upon the advice of Palmiery, Magallanes
signed Sales Invoices covering the fire extinguishers that were intended to be sold to the
prospective buyers, and he also issued five (5) checks covering the purchase price of the items:

Check
Bank Date of check Date deposited Amount
number

Citytrust Banking
000721 28 July 1993 25 January 1994 17,740.00
Corp.

Citytrust Banking
000743 2 September 1993 25 January 1994 16,440.00
Corp.

Prudential Bank 001579 7 January1994 7 January 1994 49,230.00

Prudential Bank 001582 9 January1994 18 January 1994 19,880.00

Prudential Bank 001585 15 January 1994 17 January 1994 P 45,440.00

Total 148,800.20

However, Magallanes checks weredishonored upon presentment to the bank.

Sometime in 1995, Andrews and another corporation, Palmer Asia, Inc. (Palmer), entered into an
agreement whereby all the business of Andrews was going to be handled byPalmer. As explained
by Palmer:

a change of name was in order to appeal to a bigger and more sophisticated market. Hence,
Palmer Asia was born. Being a family corporation and since the change of name was more of a
marketing strategy, all legal niceties were dispensed with. Andrews x x x thus ceased to be active
in the business.5

Thus, Andrews remained to be existing, but not operational. It was neither dissolved nor
liquidated. There was no transfer of assets and liabilities in the legal sense. Palmer simply took
over the business of Andrews.6

According to Magallanes, Andrews demanded payment of the value of the checks. Since the
demands wereunheeded, Magallanes was charged with several counts of violation of Batas
Pambansa Bilang 22 (B.P. 22) under several informations all dated 28 March 1997. The cases
were docketed as Criminal Case Nos. 211340-44 in Branch 62 of the Metropolitan Trial Court of
Makati City (MeTC Branch 62). Palmiery was authorized to file suiton behalf of Andrews.7 Upon
being arraigned on 13 November 1997, Magallanes pled not guilty.8

On 16 March 1998, Escudero Marasigan Sta. Ana & E.H. Villareal (EMSAVILL), the counsel of
Andrews, entered its appearance as counsel for Palmer in Criminal Case Nos. 217336-44 entitled
Palmer Asia, Inc. v. Gerve Magallanes, filed before Branch 67 ofthe Metropolitan Trial Court of
Makati City (MeTC Branch 67). The docket numbers as stated in the Entry of Appearance differ
fromthe docket numbers of the cases filed by Andrews. Also, the Entry of Appearance was filed
before Branch 67 of the MeTC and not Branch 62, where the cases were previously filed.
Furthermore, there was no mention of the relationship between Andrews and Palmer. Lastly,
there was no registry receipt or stamp or signature or any other mark which could indicate that
Magallanes was furnished a copy of the document.9

On 10 August 2003, Palmiery appeared before the MeTC Branch 62 and explained that Andrews
transferred its assets, and relinquished control of its operations to Palmer. Thus, on 16September
2004, Magallanes filed an Omnibus Motion to Disqualify PrivateProsecutor and to Strike Out
Testimony of Angel Palmiery (Omnibus Motion). According to Magallanes, since the assets and
credits of Andrews were transferred to Palmer, the real party in interest in this case is Palmer and
not Andrews. Therefore, the criminal case should have been instituted by Palmer. Magallanes
also asserted that:

[i]ndeed the private prosecutor was hired by Palmer x x x solely for its own account and not by
Andrews x x x for otherwise how can the Private Prosecutor explain the alleged direct payment
of Palmer x x x of its attorneys fees in the present case. The problem however is that Palmer x x
x has no right to participate in the present case as the recitals of the information refer to
Andrews x x x. Hence, the private prosecutor should be thereupon disqualified x x x.10

Thus, Palmer filed its Opposition to Magallanes motion, claiming that:

3.01.4 As a marketing strategy, Andrews Internationals business thus operated under the banner
of Palmer Asia. Palmer Asia had exactly the same officers, occupied the samebusiness office,
retained all its employees and agents, had the same customers and sold the same products.
3.01.6 Seen another way, Palmer Asiacan be seen as in effect, for purposes of this litigation, an
agent of Andrews International. x x x [A]n agency can be constituted in any form, even by sheer
implication derived from the conduct of the parties.11

In its Joint Order dated 8 March 2005, the MeTC Branch 62 denied the motion filed by
Magallanes for lack of merit.12 It also acquitted Magallanes, but held him civilly liable.The
dispositive portion of the Joint Decision13 dated 10 December 2008 reads:

WHEREFORE, foregoing considered, the accused GERVE MAGALLANES is ACQUITTED of the

offense charged for lack of proof beyond reasonable doubt in Criminal Cases No. 211340,
211341, 211341, 211342, 211343 and 211344. He is ordered to pay the private complainant, the
corresponding face value of the checks subject of the Criminal Cases No. 211340, 211341,
211342, 211343 and 211344, by way of civil liability, with 12% interest per annum counted from
June 10, 1994, until the amount shall have been paid; attorneys fees at 10% of the total face
value of the subject checks; and to pay the costs.

In case of execution of civil liability, the Clerk of Court is directed to determine and enforce
collection of any unpaid docket or other lawful fees in accordance with Rule 111, Sec. 1-b in
relation to Rule 141. SO ORDERED.14

Magallanes filed a Partial Appeal before Branch 61 of the Regional Trial Court of Makati (RTC
Branch 61). According to Magallanes, the checks were not issued for valuable consideration since
the Sales Invoices, as well as the transactions reflectedin the invoices were simulated and
fictitious. He also claimed that as a Sales Agent, he is not liable for the bum checks issued by the
prospective buyers of Andrews.15 Andrews, as the private complainant mentioned in the Joint
Decision of MeTC Branch 62, did not file any appeal.

When the parties were required by the RTC Branch 61 to submit their respective memoranda,
the memorandum for the complainant was filed by Palmer, and not Andrews. The memorandum
was prepared by EMSAVILL16 and received by Magallanes on 9 March 2009.17

The RTC Branch 61, in its Decision18 dated 25 May 2009, held that Magallanes was not civilly
liable for the value of the checks because "the x x x complaining juridical entity has not fully
established the existence of a debt by Mr. Magallanes in its favor."19 Thus, Palmer filed a motion
for reconsideration on 15 June 2009,20 which was denied by the RTC in its Resolution dated 14
October 2009.21 Andrews did not file a motion for reconsideration.

Thus, Palmer filed a petition for review under Rule 42 of the Rules of Civil Procedure before the
CA. It alleged that the RTC erred in reversing the decision of the MeTC Branch 62 and absolving
Magallanes from civil liability. Andrews did not file a petition for review with the CA.

Magallanes then filed his Comments to Petition for Review (ad cautelam) with Motion to Dismiss
Due to Finality of Judgment, wherein he alleged that:

The Decision of the Regional Trial Court of Makati City dated 25 May 2003 has already attained
finalitythere being no appeal interposed by Andrews International Products, Inc.
Petitioner Palmer Asia, Inc. is not, can not and has never been a party plaintiff litigant in the civil
aspect of Criminal Case Nos. 211340, 211341, 211342, 211343, 21134[4] before the
Metropolitan Trial Court of Makati, Branch 62 for alleged violation of Batas [Pambansa] Bilang 22
and in the appealed Criminal Cases 09-031 to 035 [before the] Regional Trial Court of Makati City,
Branch 61.22

The Ruling of the CA

The CA ruled against Magallanes. It held that Magallanes issued the checks for a consideration
because hederived pecuniary benefit from it (collection of accrued commissions). According to
the court a quo:

The Supreme Court [has] held thatupon issuance of a check, in the absence of evidence to the
contray, it is presumed that the same was issued for valuable consideration which may consist
either in some right, interest, profit or benefit accruing to the party who makes the contract, or
some forebearance, detriment, loss or some responsibility, to act, or labor, or service given,
suffered or undertaken by the other side. Under the Negotiable Instruments Law, it is presumed
that every party to an instrument acquires the same for a consideration or for value. In the
instant case, respondent failed topresent convincing evidence to overthrow the presumption and
prove that the checks were indeed issued without valuable consideration. In fact, respondent
categorically admitted that he issued the subject bum checks in order for him to collect his
pending commissions with petitioner.23

Aggrieved, Magallanes then filed the instant petition before this Court.

Issues: The petition alleges that the CA erred in not dismissing Palmers petition for review under
Rule 42 based on lack of jurisdiction and finality of judgment of the RTCs Joint Decision24 and in
ruling that Magallanes failed to rebut the presumption of consideration in the issuance of the
checks.25 The Ruling of this Court

We grant the petition. The RTC Decision absolving Magallanes from civil liability has attained
finality, since no appeal was interposed by the private complainant, Andrews. WhilePalmer filed
a petition for review before the CA, it is not the real party in interest; it was never a party to the
proceedings at the trial court.

Under our procedural rules, "a case is dismissible for lack of personality to sue upon proof that
the plaintiff is not the real party-ininterest, hence grounded on failure to state a cause of
action."26 In the instant case, Magallanes filed a motion to dismiss in accordance with the Rules
of Court, wherein he claimed that:

x x x the obvious and only real party in interest in the filing and prosecution of the civil aspect
impliedlyinstituted with x x x the filing of the foregoing Criminal Cases for B.P. 22 is Andrews
International Products, Inc.

The alleged bounced checks issued by x x x Magallanes were issued payable in the name of
Andrews International Products, Inc. The [n]arration of [facts] in the several Informations for
violation of B.P. 22 filed against Magallanes solely mentioned the name of Andrews International
Products, Inc.27

The real party in this case is Andrews, not Palmer. Section 2 of Rule 3 of the Rules of Court
provides: Sec. 2.Parties in interest. A real party in interest is the party who stands to be
benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit.
Unless otherwise authorized by law or these Rules, every action must be prosecuted or
defended in the name of the real party in interest.

In Goco v. Court of Appeals,28 we explained that:

This provision has two requirements: 1) to institute an action, the plaintiff must be the real party
in interest; and 2) the action must be prosecuted in the name of the real party in interest.
Interest within the meaning of the Rules of Court means material interest or an interest in issue
to be affected by the decree or judgment of the case, as distinguished from mere curiosity about
the question involved. One having no material interest to protect cannot invoke the jurisdiction
of the court as the plaintiff in an action.

Parties who are not the real parties in interest may be included in a suit in accordance with the
provisions of Section 3 of Rule 3 of the Rules of Court:

Sec. 3. Representatives as parties. Where the action is allowed to be prosecuted or defended by

a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in
the title of the case and shall be deemed to be the real party in interest. A representative may be
a trustee of an express trust, a guardian, an executor or administrator, or a party authorizedby
law or these Rules. An agent acting in his own name and for the benefit of an undisclosed
principal may sue or be sued without joining the principal except when the contract involves
things belonging to the principal.

The CA erred in stating that Palmer and Andrews are the same entity.29 These are two separate
and distinct entities claiming civil liability against Magallanes. Andrews was the payee of the bum
checks, and the former employer of Magallanes. It filed the complaint for B.P. 22 before MeTC
Branch 62. Thus when the MeTC Branch 62 ordered Magallanes to "pay the private complainant
the corresponding face value of the checks x x x",30 it was referring to Andrews, not Palmer.

Palmer, on the other hand, was first mentioned in an Entry of Appearance filed by its counsel
EMSAVILL (also the counsel of Andrews) before MeTC Branch 67 in connection with Palmer Asia,
Inc. v. Gerve Magallanes.Palmer also filed the Memorandum required by the RTC.

Although Andrews relinquished control of its business to Palmer, it was never dissolved and thus
remained existing. This was stated in Palmers Comment and Opposition.31 Quoting the Order
dated 8 March 2005 of the MeTC Branch 62 denying Magallanes Omnibus Motion, Palmer
explained that:

Under the Corporation Code, specifically Sections 117, 118 120 and 121, a corporation can only
be dissolved in two ways, voluntary and involuntary. In the case of Andrews International, no
document was presented that majority of its Board of Directors passed a [r]esolution
terminationg its corporate life. No complaint was also filed with the Securities and Exchange
Commission to involuntarilyterminate the same, thus, for all intents and purposes, it is still
existing although not operational.32 (Emphasis in the original)

Given the foregoing facts, it is clear that the real party in interest here is Andrews. Following the
Rules of Court, the action should be in the name of Andrews. As previously mentioned, Andrews
instituted the action before the MeTC Branch 62 but it was Palmer which filed a petition for
review before the CA. In fact, the case at the CA was entitled Palmer Asia, Inc. v. Gerve
Magallanes.

In NM Rothschild & Sons (Australia) Limited v. Lepanto Consolidated Mining Company,33 NM

Rothschild changed its name to Investec Australia Limited, in accordance with Australian law,
pending resolution of its petition before this Court. Thus, when we required the parties to file
memoranda, NM Rothschild referred to itself as Investec Australia Limited (formerly "NM
Rothschild & Sons [Australia] Limited"). Lepanto sought the dismissal of the case because the
petition was not filed by the real party in interest. We held that:

[The] submissions of petitioner on the change of its corporate name [are] satisfactory and [we]
resolve not to dismiss the present Petition for Review on the ground of not being prosecuted
under the name of the real party in interest. While we stand by our pronouncement in Philips
Exporton the importance of the corporate name to the very existence of corporations and the
significance thereof in the corporations right to sue, we shall not go so far as to dismiss a case
filed by the proper party using its former name when adequate identification is presented. A real
party in interest isthe party who stands to be benefited or injured by the judgment in the suit, or
the party entitled to the avails of the suit. There is no doubt in our minds thatthe party who filed
the present Petition, having presented sufficient evidence of its identity and being represented
by the same counsel as that of the defendant in the case sought to be dismissed, is the entity
that will be benefited if this Court grants the dismissal prayed for.34

This case is different, however, because it involves two separate and distinct entities. The
corporation thatinitiated the complaint for B.P. 22 is different from the corporation that filed the
memorandum at the RTC and the petition for review before the CA. It appears that Palmer is
suing Magallanes in its own right, not as agent of Andrews, the real party in interest.

Even assuming arguendothat Palmer is correct in asserting that it is the agent of Andrews, the
latter should have been included in the title of the case, in accordance withprocedural rules.

Admittedly, in his Omnibus Motion filed before the MeTC Branch 62, Magallanes concluded
differently sayingthat the real party in interest is Palmer and not Andrews. This conclusion was
based on Palmierys testimony dated 10 August 2003 that Andrews transferred all its "assets and
credits" to Palmer.35

Procedural rules forbid parties tochange the theory of the case on appeal. In Bote v. Spouses
Veloso,36 we defined the theory of the case as:

[a] comprehensive and orderly mental arrangement of principle and facts, conceived and
constructed for the purpose of securing a judgment or decree of a court in favor of a litigant; the
particular line of reasoning of either party to a suit, the purpose being to bring together certain
facts of the case in a logical sequence and to correlate them in a way that produces in the
decision makers minda definite result or conclusion favored by the advocate.

The rationale for this rule was discussed in the earlier case of Goyanko, Jr. v. United Coconut
Planters Bank:37

[Changing the theory of the case] violates basic rules of fair play, justice and due
process.1wphi1 Our rulings are clear - "a party who deliberately adopts a certain theory upon
which the case was decided by the lower court will not be permitted to change [it] on appeal";
otherwise, the lower courts will effectively be deprived of the opportunity todecide the merits of
the case fairly. Besides, courts of justice are devoid of jurisdiction to resolve a question not in
issue.

However, the change in Magallanesposture was due to the confusing testimony of Palmiery. We
quote below portions of Palmierys testimony dated 16 September 2004, the same date the
Omnibus Motion was filed:

Atty. Bermudez: Mr. Palmiery, the last hearing you undertook to bring before this Court the Deed
of Assignment and Liabilities of Andrews to Palmer Asia, do you have it with you now?

A: No, Sir.

Q: Why?

A: There is no assignment.

Q: There was no assignment?

A: Yes, because it was mentioned by our lawyer a while ago it was not a legal transfer, it was a
marketing transfer because the owners, the office, the line of business are exactly the same.38
(Emphasis supplied)

EMSAVILL, counsel for Palmer and Andrews, even clarified in their Opposition to Magallanes'
Omnibus Motion that:

x x x [A]ccused loses sight of the fact that Mr. Palmiery is an ordinary layman, not versed with the
technicalities of the law. Expectedly, ordinary laymen, such as Mr. Palmiery, do not fully
appeciate and understand the legal implications of x x x technicaJ and legal term[s] such as
"transfer of assets and liabilities."39

Thus, since Magallanes timely filed a motion to dismiss based on valid grounds, we rule that the
CA erred in denying the said motion.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated 17 September
2012 and the Resolution dated 14 January 2013 are hereby REVERSED and SET ASIDE. The
Decision of the Makati Regional Trial Court, Branch 61, is hereby REINSTATED. SO ORDERED.
G.R. No. 168979 December 2, 2013

REBECCA PACAA-CONTRERAS and ROSALIE PACAA, Petitioners, vs. ROVILA WATER SUPPLY,
INC., EARL U KOKSENG, LILIA TORRES, DALLA P. ROMANILLOS and MARISSA GABUYA,
Respondents.

Before the Court is a petition for review on certiorari1 under Rule 4 of the Rules of Court seeking
the reversal of the decision2 dated January 27, 2005 and the resolution3 dated June 6, 2005 of
the Courts of Appeals (CA) in CA-G.R. SP No. 71551. The CA set aside the orders dated February
28, 20024 and April 1, 20025 of the Regional Trial Court (RTC), Branch 8, Cebu City, which denied
the motion to dismiss for reconsideration respectively, of respondents Rovila Water Supply, Inc.
(Rovilla, Inc.), Earl U. Kokseng, Lialia Torres, Dalla P. Romanillos and Marissa Gabuya.

THE FACTUAL ANTECEDENTS

Petitioners Rebecca Pacaa-Contreras and Rosalie Pacaa, children of Lourdes Teves Pacaa and
Luciano Pacaa, filed the present case against Rovila Inc., Earl, Lilia, Dalla and Marisa for
accounting and damages.6

The petitioners claimed that their family has long been known in the community to be engaged
in the water supply business; they operated the "Rovila Water Supply" from their family
residence and were engaged in the distribution of water to customers in Cebu City. The
petitioners alleged that Lilia was a former trusted employee in the family business who hid
business records and burned and ransacked the family files. Lilia also allegedly posted security
guards and barred the members of the Pacaa family from operating their business. She then
claimed ownership over the family business through a corporation named "Rovila Water Supply,
Inc." (Rovila Inc.) Upon inquiry with the Securities and Exchange Commission (SEC), the
petitioners claimed that Rovila Inc. was surreptitiously formed with the respondents as the
majority stockholders. The respondents did so by conspiring with one another and forming the
respondent corporation to takeover and illegally usurp the family business registered name.7

In forming the respondent corporation, the respondents allegedly used the name of Lourdes as
one of the incorporators and made it appear in the SEC documents that the family business was
operated in a place other than the Pacaa residence. Thereafter, the respondents used the
Pacaa familys receipts and the deliveries and sales were made to appear as those of the
respondent Rovila Inc. Using this scheme, the respondents fraudulently appropriated the
collections and payments.8

The petitioners filed the complaint in their own names although Rosalie was authorized by
Lourdes through a sworn declaration and special power of attorney (SPA). The respondents filed
a first motion to dismiss on the ground that the RTC had no jurisdiction over an intra-corporate
controversy.9

The RTC denied the motion. On September 26, 2000, Lourdes died10 and the petitioners
amended their complaint, with leave of court, on October 2, 2000 to reflect this development.11

They still attached to their amended complaint the sworn declaration with SPA, but the caption
of the amended complaint remained the same.12

On October 10, 2000, Luciano also died.13

The respondents filed their Answer on November 16, 2000.14

The petitioners sister, Lagrimas Pacaa-Gonzales, filed a motion for leave to intervene and her
answer-in-intervention was granted by the trial court. At the subsequent pre-trial, the
respondents manifested to the RTC that a substitution of the parties was necessary in light of the
deaths of Lourdes and Luciano. They further stated that they would seek the dismissal of the
complaint because the petitioners are not the real parties in interest to prosecute the case. The
pre-trial pushed through as scheduled and the RTC directed the respondents to put into writing
their earlier manifestation. The RTC issued a pre-trial order where one of the issues submitted
was whether the complaint should be dismissed for failure to comply with Section 2, Rule 3 of
the Rules of Court which requires that every action must be prosecuted in the name of the real
party in interest.15

On January 23, 2002,16 the respondents again filed a motion to dismiss on the grounds, among
others, that the petitioners are not the real parties in interest to institute and prosecute the case
and that they have no valid cause of action against the respondents.

THE RTC RULING

The RTC denied the respondents motion to dismiss. It ruled that, save for the grounds for
dismissal which may be raised at any stage of the proceedings, a motion to dismiss based on the
grounds invoked by the respondents may only be filed within the time for, but before, the filing
of their answer to the amended complaint. Thus, even granting that the defenses invoked by the
respondents are meritorious, their motion was filed out of time as it was filed only after the
conclusion of the pre-trial conference. Furthermore, the rule on substitution of parties only
applies when the parties to the case die, which is not what happened in the present case.17

The RTC likewise denied the respondents motion for reconsideration.18

The respondents filed a petition for certiorari under Rule 65 of the Rules of Court with the CA,
invoking grave abuse of discretion in the denial of their motion to dismiss. They argued that the
deceased spouses Luciano and Lourdes, not the petitioners, were the real parties in interest.
Thus, the petitioners violated Section 16, Rule 3 of the Rules of Court on the substitution of
parties.19

Furthermore, they seasonably moved for the dismissal of the case20 and the RTC never acquired
jurisdiction over the persons of the petitioners as heirs of Lourdes and Luciano.21

THE CA RULING

The CA granted the petition and ruled that the RTC committed grave abuse of discretion as the
petitioners filed the complaint and the amended complaint as attorneys-in-fact of their parents.
As such, they are not the real parties in interest and cannot bring an action in their own names;
thus, the complaint should be dismissed22 pursuant to the Courts ruling in Casimiro v. Roque and
Gonzales.23

Neither are the petitioners suing as heirs of their deceased parents.1awp++i1 Pursuant to
jurisprudence,24 the petitioners should first be declared as heirs before they can be considered
as the real parties in interest. This cannot be done in the present ordinary civil case but in a
special proceeding for that purpose. The CA agreed with the respondents that they alleged the
following issues as affirmative defenses in their answer: 1) the petitioners are not the real
parties in interest; and 2) that they had no legal right to institute the action in behalf of their
parents.25

That the motion to dismiss was filed after the period to file an answer has lapsed is of no
moment. The RTC judge entertained it and passed upon its merit. He was correct in doing so
because in the pre-trial order, one of the submitted issues was whether the case must be
dismissed for failure to comply with the requirements of the Rules of Court. Furthermore, in
Dabuco v. Court of Appeals,26 the Court held that the ground of lack of cause of action may be
raised in a motion to dismiss at anytime.27

The CA further ruled that, in denying the motion to dismiss, the RTC judge acted contrary to
established rules and jurisprudence which may be questioned via a petition for certiorari. The
phrase "grave abuse of discretion" which was traditionally confined to "capricious and whimsical
exercise of judgment" has been expanded to include any action done "contrary to the
Constitution, the law or jurisprudence[.]"28

THE PARTIES ARGUMENTS

The petitioners filed the present petition and argued that, first, in annulling the interlocutory
orders, the CA unjustly allowed the motion to dismiss which did not conform to the rules.29

Specifically, the motion was not filed within the time for, but before the filing of, the answer to
the amended complaint, nor were the grounds raised in the answer. Citing Section 1, Rule 9 of
the Rules of Court, the respondents are deemed to have waived these grounds, as correctly held
by the RTC.30

Second, even if there is non-joinder and misjoinder of parties or that the suit is not brought in
the name of the real party in interest, the remedy is not outright dismissal of the complaint, but
its amendment to include the real parties in interest.31

Third, the petitioners sued in their own right because they have actual and substantial interest in
the subject matter of the action as heirs or co-owners, pursuant to Section 2, Rule 3 of the Rules
of Court.32

Their declaration as heirs in a special proceeding is not necessary, pursuant to the Courts ruling
in Marabilles, et al. v. Quito.33

Finally, the sworn declaration is evidentiary in nature which remains to be appreciated after the
trial is completed.34
The respondents reiterated in their comment that the petitioners are not the real parties in
interest.35

They likewise argued that they moved for the dismissal of the case during the pre-trial
conference due to the petitioners procedural lapse in refusing to comply with a condition
precedent, which is, to substitute the heirs as plaintiffs. Besides, an administrator of the estates
of Luciano and Lourdes has already been appointed.36

The respondents also argued that the grounds invoked in their motion to dismiss were timely
raised, pursuant to Section 2, paragraphs g and i, Rule 18 of the Rules of Court. Specifically, the
nature and purposes of the pre-trial include, among others, the dismissal of the action, should a
valid ground therefor be found to exist; and such other matters as may aid in the prompt
disposition of the action. Finally, the special civil action of certiorari was the proper remedy in
assailing the order of the RTC.37

THE COURTS RULING

We find the petition meritorious. Petition for certiorari under Rule 65 is a proper remedy for a
denial of a motion to dismiss attended by grave abuse of discretion

In Barrazona v. RTC, Branch 61, Baguio City,38 the Court held that while an order denying a
motion to dismiss is interlocutory and non-appealable, certiorari and prohibition are proper
remedies to address an order of denial made without or in excess of jurisdiction. The writ of
certiorari is granted to keep an inferior court within the bounds of its jurisdiction or to prevent it
from committing grave abuse of discretion amounting to lack or excess of jurisdiction.

The history and development of the ground "fails to state a cause of action" in the 1940, 1964
and the present 1997 Rules of Court Preliminarily, a suit that is not brought in the name of the
real party in interest is dismissible on the ground that the complaint "fails to state a cause of
action."39

Pursuant to jurisprudence,40 this is also the ground invoked when the respondents alleged that
the petitioners are not the real parties in interest because: 1) the petitioners should not have
filed the case in their own names, being merely attorneys-in-fact of their mother; and 2) the
petitioners should first be declared as heirs. A review of the 1940, 1964 and the present 1997
Rules of Court shows that the fundamentals of the ground for dismissal based on "failure to state
a cause of action" have drastically changed over time. A historical background of this particular
ground is in order to preclude any confusion or misapplication of jurisprudence decided prior to
the effectivity of the present Rules of Court. The 1940 Rules of Court provides under Section 10,
Rule 9 that:

Section 10. Waiver of defenses- Defenses and objections not pleaded either in a motion to
dismiss or in the answer are deemed waived; except the defense of failure to state a cause of
action, which may be alleged in a later pleading, if one is permitted, or by motion for judgment
on the pleadings, or at the trial on the merits; but in the last instance, the motion shall be
disposed of as provided in section 5 of Rule 17 in the light of any evidence which may have been
received. Whenever it appears that the court has no jurisdiction over the subject-matter, it shall
dismiss the action. [underscoring supplied]

This provision was essentially reproduced in Section 2, Rule 9 of the 1964 Rules of Court, and we
quote:

Section 2. Defenses and objections not pleaded deemed waived. Defenses and objections not
pleaded either in a motion to dismiss or in the answer are deemed waived; except the failure to
state a cause of action which may be alleged in a later pleading, if one is permitted, or by motion
for judgment on the pleadings, or at the trial on the merits; but in the last instance, the motion
shall be disposed of as provided in section 5 of Rule 10 in the light of any evidence which may
have been received. Whenever it appears that the court has no jurisdiction over the
subject-matter, it shall dismiss the action. [underscoring supplied]

Under the present Rules of Court, this provision was reflected in Section 1, Rule 9, and we quote:

Section 1. Defenses and objections not pleaded. Defenses and objections not pleaded either
in a motion to dismiss or in the answer are deemed waived. However, when it appears from the
pleadings or the evidence on record that the court has no jurisdiction over the subject matter,
that there is another action pending between the same parties for the same cause, or that the
action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.
[underscoring supplied]

Notably, in the present rules, there was a deletion of the ground of "failure to state a cause of
action" from the list of those which may be waived if not invoked either in a motion to dismiss or
in the answer. Another novelty introduced by the present Rules, which was totally absent in its
two precedents, is the addition of the period of time within which a motion to dismiss should be
filed as provided under Section 1, Rule 16 and we quote:

Section 1. Grounds. Within the time for but before filing the answer to the complaint or
pleading asserting a claim, a motion to dismiss may be made on any of the following grounds:
xxx [underscoring supplied]

All these considerations point to the legal reality that the new Rules effectively restricted the
dismissal of complaints in general, especially when what is being invoked is the ground of
"failure to state a cause of action." Thus, jurisprudence governed by the 1940 and 1964 Rules of
Court to the effect that the ground for dismissal based on failure to state a cause of action may
be raised anytime during the proceedings, is already inapplicable to cases already governed by
the present Rules of Court which took effect on July 1, 1997. As the rule now stands, the failure
to invoke this ground in a motion to dismiss or in the answer would result in its waiver. According
to Oscar M. Herrera,41 the reason for the deletion is that failure to state a cause of action may be
cured under Section 5, Rule 10 and we quote:

Section 5. Amendment to conform to or authorize presentation of evidence. When issues not

raised by the pleadings are tried with the express or implied consent of the parties they shall be
treated in all respects as if they had been raised in the pleadings. Such amendment of the
pleadings as may be necessary to cause them to conform to the evidence and to raise these
issues may be made upon motion of any party at any time, even after judgment; but failure to
amend does not effect the result of the trial of these issues. If evidence is objected to at the trial
on the ground that it is not within the issues made by the pleadings, the court may allow the
pleadings to be amended and shall do so with liberality if the presentation of the merits of the
action and the ends of substantial justice will be subserved thereby. The court may grant a
continuance to enable the amendment to be made.

With this clarification, we now proceed to the substantial issues of the petition.1wphi1

The motion to dismiss in the present case based on failure to state a cause of action was not
timely filed and was thus waived

Applying Rule 16 of the Rules of Court which provides for the grounds for the dismissal of a civil
case, the respondents grounds for dismissal fall under Section 1(g) and (j), Rule 16 of the Rules
of Court, particularly, failure to state a cause of action and failure to comply with a condition
precedent (substitution of parties), respectively. The first paragraph of Section 1,42

Rule 16 of the Rules of Court provides for the period within which to file a motion to dismiss
under the grounds enumerated. Specifically, the motion should be filed within the time for, but
before the filing of, the answer to the complaint or pleading asserting a claim. Equally important
to this provision is Section 1,43

Rule 9 of the Rules of Court which states that defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived, except for the following grounds: 1) the
court has no jurisdiction over the subject matter; 2) litis pendencia; 3) res judicata; and 4)
prescription. Therefore, the grounds not falling under these four exceptions may be considered
as waived in the event that they are not timely invoked. As the respondents motion to dismiss
was based on the grounds which should be timely invoked, material to the resolution of this case
is the period within which they were raised. Both the RTC and the CA found that the motion to
dismiss was only filed after the filing of the answer and after the pre-trial had been concluded.
Because there was no motion to dismiss before the filing of the answer, the respondents should
then have at least raised these grounds as affirmative defenses in their answer. The RTCs
assailed orders did not touch on this particular issue but the CA ruled that the respondents did,
while the petitioners insist that the respondents did not. In the present petition, the petitioners
reiterate that there was a blatant non-observance of the rules when the respondents did not
amend their answer to invoke the grounds for dismissal which were raised only during the
pre-trial and, subsequently, in the subject motion to dismiss.44

The divergent findings of the CA and the petitioners arguments are essentially factual issues.
Time and again, we have held that the jurisdiction of the Court in a petition for review on
certiorari under Rule 45, such as the present case, is limited only to questions of law, save for
certain exceptions. One of these is attendant herein, which is, when the findings are conclusions
without citation of specific evidence on which they are based.45

In the petition filed with the CA, the respondents made a passing allegation that, as affirmative
defenses in their answer, they raised the issue that the petitioners are not the real parties in
interest.46
On the other hand, the petitioners consistently argued otherwise in their opposition47 to the
motion to dismiss, and in their comment48 and in their memorandum49 on the respondents
petition before the CA. Our examination of the records shows that the CA had no basis in its
finding that the respondents alleged the grounds as affirmative defenses in their answer. The
respondents merely stated in their petition for certiorari that they alleged the subject grounds in
their answer. However, nowhere in the petition did they support this allegation; they did not
even attach a copy of their answer to the petition. It is basic that the respondents had the duty
to prove by substantial evidence their positive assertions. Considering that the petition for
certiorari is an original and not an appellate action, the CA had no records of the RTCs
proceedings upon which the CA could refer to in order to validate the respondents claim. Clearly,
other than the respondents bare allegations, the CA had no basis to rule, without proof, that the
respondents alleged the grounds for dismissal as affirmative defenses in the answer. The
respondents, as the parties with the burden of proving that they timely raised their grounds for
dismissal, could have at least attached a copy of their answer to the petition. This simple task
they failed to do. That the respondents did not allege in their answer the subject grounds is
made more apparent through their argument, both in their motion to dismiss50 and in their
comment,51 that it was only during the pre-trial stage that they verbally manifested and invited
the attention of the lower court on their grounds for dismissal. In order to justify such late
invocation, they heavily relied on Section 2(g) and (i), Rule 1852 of the Rules of Court that the
nature and purpose of the pre-trial include, among others, the propriety of dismissing the action
should there be a valid ground therefor and matters which may aid in the prompt disposition of
the action. The respondents are not correct. The rules are clear and require no interpretation.
Pursuant to Section 1, Rule 9 of the Rules of Court, a motion to dismiss based on the grounds
invoked by the respondents may be waived if not raised in a motion to dismiss or alleged in their
answer. On the other hand, "the pre-trial is primarily intended to make certain that all issues
necessary to the disposition of a case are properly raised. The purpose is to obviate the element
of surprise, hence, the parties are expected to disclose at the pre-trial conference all issues of
law and fact which they intend to raise at the trial, except such as may involve privileged or
impeaching matter."53

The issues submitted during the pre-trial are thus the issues that would govern the trial proper.
The dismissal of the case based on the grounds invoked by the respondents are specifically
covered by Rule 16 and Rule 9 of the Rules of Court which set a period when they should be
raised; otherwise, they are deemed waived.

The Dabuco ruling is inapplicable in the present case; the ground for dismissal "failure to state a
cause of action" distinguished from "lack of cause of action"

To justify the belated filing of the motion to dismiss, the CA reasoned out that the ground for
dismissal of "lack of cause of action" may be raised at any time during the proceedings, pursuant
to Dabuco v. Court of Appeals.54

This is an erroneous interpretation and application of Dabuco as will be explained below.

First, in Dabuco, the grounds for dismissal were raised as affirmative defenses in the answer
which is in stark contrast to the present case.
Second, in Dabuco, the Court distinguished between the dismissal of the complaint for "failure to
state a cause of action" and "lack of cause of action." The Court emphasized that in a dismissal of
action for lack of cause of action, "questions of fact are involved, [therefore,] courts hesitate to
declare a plaintiff as lacking in cause of action. Such declaration is postponed until the
insufficiency of cause is apparent from a preponderance of evidence.

Usually, this is done only after the parties have been given the opportunity to present all
relevant evidence on such questions of fact."55

In fact, in Dabuco, the Court held that even the preliminary hearing on the propriety of lifting the
restraining order was declared insufficient for purposes of dismissing the complaint for lack of
cause of action. This is so because the issues of fact had not yet been adequately ventilated at
that preliminary stage. For these reasons, the Court declared in Dabuco that the dismissal by the
trial court of the complaint was premature. In the case of Macaslang v. Zamora,56 the Court
noted that the incorrect appreciation by both the RTC and the CA of the distinction between the
dismissal of an action, based on "failure to state a cause of action" and "lack of cause of action,"
prevented it from properly deciding the case, and we quote:

Failure to state a cause of action and lack of cause of action are really different from each other.
On the one hand, failure to state a cause of action refers to the insufficiency of the pleading, and
is a ground for dismissal under Rule 16 of the Rules of Court. On the other hand, lack of cause [of]
action refers to a situation where the evidence does not prove the cause of action alleged in the
pleading. Justice Regalado, a recognized commentator on remedial law, has explained the
distinction: xxx What is contemplated, therefore, is a failure to state a cause of action which is
provided in Sec. 1(g) of Rule 16. This is a matter of insufficiency of the pleading. Sec. 5 of Rule 10,
which was also included as the last mode for raising the issue to the court, refers to the situation
where the evidence does not prove a cause of action. This is, therefore, a matter of insufficiency
of evidence. Failure to state a cause of action is different from failure to prove a cause of action.
The remedy in the first is to move for dismissal of the pleading, while the remedy in the second
is to demur to the evidence, hence reference to Sec. 5 of Rule 10 has been eliminated in this
section. The procedure would consequently be to require the pleading to state a cause of action,
by timely objection to its deficiency; or, at the trial, to file a demurrer to evidence, if such motion
is warranted. [italics supplied]

Based on this discussion, the Court cannot uphold the dismissal of the present case based on the
grounds invoked by the respondents which they have waived for failure to invoke them within
the period prescribed by the Rules. The Court cannot also dismiss the case based on "lack of
cause of action" as this would require at least a preponderance of evidence which is yet to be
appreciated by the trial court. Therefore, the RTC did not commit grave abuse of discretion in
issuing the assailed orders denying the respondents motion to dismiss and motion for
reconsideration. The Court shall not resolve the merits of the respondents grounds for dismissal
which are considered as waived.

Other heirs of the spouses Pacaa to be impleaded in the case.

It should be emphasized that insofar as the petitioners are concerned, the respondents have
waived the dismissal of the complaint based on the ground of failure to state a cause of action
because the petitioners are not the real parties in interest. At this juncture, a distinction
between a real party in interest and an indispensable party is in order. In Carandang v. Heirs of
de Guzman, et al.,57 the Court clarified these two concepts and held that "[a] real party in
interest is the party who stands to be benefited or injured by the judgment of the suit, or the
party entitled to the avails of the suit. On the other hand, an indispensable party is a party in
interest without whom no final determination can be had of an action, in contrast to a necessary
party, which is one who is not indispensable but who ought to be joined as a party if complete
relief is to be accorded as to those already parties, or for a complete determination or
settlement of the claim subject of the action. xxx If a suit is not brought in the name of or against
the real party in interest, a motion to dismiss may be filed on the ground that the complaint
states no cause of action. However, the dismissal on this ground entails an examination of
whether the parties presently pleaded are interested in the outcome of the litigation, and not
whether all persons interested in such outcome are actually pleaded. The latter query is relevant
in discussions concerning indispensable and necessary parties, but not in discussions concerning
real parties in interest. Both indispensable and necessary parties are considered as real parties in
interest, since both classes of parties stand to be benefited or injured by the judgment of the
suit."

At the inception of the present case, both the spouses Pacaa were not impleaded as
parties-plaintiffs. The Court notes, however, that they are indispensable parties to the case as
the alleged owners of Rovila Water Supply. Without their inclusion as parties, there can be no
final determination of the present case. They possess such an interest in the controversy that a
final decree would necessarily affect their rights, so that the courts cannot proceed without their
presence. Their interest in the subject matter of the suit and in the relief sought is inextricably
intertwined with that of the other parties.58

Jurisprudence on the procedural consequence of the inclusion or non-inclusion of an

indispensable party is divided in our jurisdiction. Due to the non-inclusion of indispensable
parties, the Court dismissed the case in Lucman v. Malawi, et al.59 and Go v. Distinction
Properties Development Construction, Inc.,60 while in Casals, et al. v. Tayud Golf and Country
Club et al.,61 the Court annulled the judgment which was rendered without the inclusion of the
indispensable parties. In Arcelona et al. v. Court of Appeals62 and Bulawan v. Aquende,63 and
Metropolitan Bank & Trust Company v. Alejo et al.64 the Court ruled that the burden to implead
or order the impleading of an indispensable party rests on the plaintiff and on the trial court,
respectively. Thus, the non-inclusion of the indispensable parties, despite notice of this infirmity,
resulted in the annulment of these cases. In Plasabas, et al. v. Court of Appeals, et al.,65 the Court
held that the trial court and the CA committed reversible error when they summarily dismissed
the case, after both parties had rested their cases following a protracted trial, on the sole ground
of failure to implead indispensable parties. Non-joinder of indispensable parties is not a ground
for the dismissal of an action. The remedy is to implead the non-party claimed to be
indispensable. However, in the cases of Quilatan, et al. v. Heirs of Quilatan, et al.66 and Lagunilla,
et al. v. Monis, et al.,67 the Court remanded the case to the RTC for the impleading of
indispensable parties. On the other hand, in Lotte Phil. Co., Inc. v. Dela Cruz,68PepsiCo, Inc. v.
Emerald Pizza, 69 and Valdez Tallorin, v. Heirs of Tarona, et al.,70 the Court directly ordered that
the indispensable parties be impleaded. Mindful of the differing views of the Court as regards
the legal effects of the non-inclusion of indispensable parties, the Court clarified in Republic of
the Philippines v. Sandiganbayan, et al.,71that the failure to implead indispensable parties is a
curable error and the foreign origin of our present rules on indispensable parties permitted this
corrective measure. This cited case held:

Even in those cases where it might reasonably be argued that the failure of the Government to
implead the sequestered corporations as defendants is indeed a procedural aberration xxx, slight
reflection would nevertheless lead to the conclusion that the defect is not fatal, but one
correctible under applicable adjective rules e.g., Section 10, Rule 5 of the Rules of Court
[specifying the remedy of amendment during trial to authorize or to conform to the evidence];
Section 1, Rule 20 [governing amendments before trial], in relation to the rule respecting
omission of so-called necessary or indispensable parties, set out in Section 11, Rule 3 of the
Rules of Court. It is relevant in this context to advert to the old familiar doctrines that the
omission to implead such parties "is a mere technical defect which can be cured at any stage of
the proceedings even after judgment"; and that, particularly in the case of indispensable parties,
since their presence and participation is essential to the very life of the action, for without them
no judgment may be rendered, amendments of the complaint in order to implead them should
be freely allowed, even on appeal, in fact even after rendition of judgment by this Court, where
it appears that the complaint otherwise indicates their identity and character as such
indispensable parties." Although there are decided cases wherein the non-joinder of
indispensable parties in fact led to the dismissal of the suit or the annulment of judgment, such
cases do not jibe with the matter at hand. The better view is that non-joinder is not a ground to
dismiss the suit or annul the judgment. The rule on joinder of indispensable parties is founded
on equity. And the spirit of the law is reflected in Section 11, Rule 3 of the 1997 Rules of Civil
Procedure. It prohibits the dismissal of a suit on the ground of non-joinder or misjoinder of
parties and allows the amendment of the complaint at any stage of the proceedings, through
motion or on order of the court on its own initiative. Likewise, jurisprudence on the Federal
Rules of Procedure, from which our Section 7, Rule 3 on indispensable parties was copied, allows
the joinder of indispensable parties even after judgment has been entered if such is needed to
afford the moving party full relief. Mere delay in filing the joinder motion does not necessarily
result in the waiver of the right as long as the delay is excusable.

In Galicia, et al. v. Vda. De Mindo, et al.,72 the Court ruled that in line with its policy of promoting
a just and inexpensive disposition of a case, it allowed the intervention of the indispensable
parties instead of dismissing the complaint. Furthermore, in Commissioner Domingo v. Scheer,73
the Court cited Salvador, et al. v. Court of Appeals, et al.74 and held that the Court has full powers,
apart from that power and authority which are inherent, to amend the processes, pleadings,
proceedings and decisions by substituting as party-plaintiff the real party in interest. The Court
has the power to avoid delay in the disposition of this case, and to order its amendment in order
to implead an indispensable party. With these discussions as premises, the Court is of the view
that the proper remedy in the present case is to implead the indispensable parties especially
when their non-inclusion is merely a technical defect. To do so would serve proper
administration of justice and prevent further delay and multiplicity of suits. Pursuant to Section 9,
Rule 3 of the Rules of Court, parties may be added by order of the court on motion of the party
or on its own initiative at any stage of the action. If the plaintiff refuses to implead an
indispensable party despite the order of the court, then the court may dismiss the complaint for
the plaintiffs failure to comply with a lawful court order.75

The operative act that would lead to the dismissal of the case would be the refusal to comply
with the directive of the court for the joinder of an indispensable party to the case.76
Obviously, in the present case, the deceased Pacaas can no longer be included in the complaint
as indispensable parties because of their death during the pendency of the case. Upon their
death, however, their ownership and rights over their properties were transmitted to their heirs,
including herein petitioners, pursuant to Article 77477 in relation with Article 77778 of the Civil
Code.

In Orbeta, et al. v. Sendiong,79 the Court acknowledged that the heirs, whose hereditary rights
are to be affected by the case, are deemed indispensable parties who should have been
impleaded by the trial court. Therefore, to obviate further delay in the proceedings of the
present case and given the Courts authority to order the inclusion of an indispensable party at
any stage of the proceedings, the heirs of the spouses Pacaa, except the petirioners who are
already parties to the case are Lagrimas Pacaa-Gonzalez who intervened in the case, are hereby
ordered impleaded as parties-plaintiffs.

WHEREFORE, the petition is GRANTED. The decision dated January 27, 2005 and the resolution
date June 6, 2005 of the Court of Appeals in CA-G.R. SP No. 71551 are REVERSED and SET ASIDE.
The heirs of the spouses Luciano and Lourdes Pacaa, except herein petitioner and Lagrimas
Pacaa-Gonzalez, are ORDERED IMPLEADED as parties plaintiffs and the RTC is directed tp
proceed with the trial of the case with DISPATCH.

SO ORDERED.
G.R. No. 102900 October 2, 1997

MARCELINO ARCELONA, TOMASA ARCELONA-CHIANG and RUTH ARCELONA, represented by

their attorney-in-fact, ERLINDA PILE, petitioners, vs. COURT OF APPEALS, REGIONAL TRIAL
COURT OF DAGUPAN CITY, Branch XL, and MOISES FARNACIO, respondents.

What are the remedies and the grounds therefor to invalidate a final and executory judgment?
May extraneous matters, not found in the records of the original case, be used to void such final
judgment? Procedurally, may an independent action for annulment of a decision filed in the
Court of Appeals prosper in the face of a claim that the remedy of intervention could have been
availed of in the regional trial court during the original proceedings? Are allthe co-owners pro
indiviso of a real property indispensable parties? Does the non-inclusion of some of such
co-owners in a suit involving tenancy over said property constitute sufficient ground to nullify
the final decision rendered in such case?

The Case

These are the main questions raised in this petition for review of the Decision1 in CA G.R. SP No.
24846 promulgated on July 16, 1991 by the Court of Appeals2 denying petitioners' plea for
annulment of a final and executory judgment rendered by the Regional Trial Court of Dagupan
City, Branch 40, in Civil Case No. D-7240, and the Resolution3 promulgated on November 21,
1991 by the appellate court denying their motion for reconsideration.

The Facts

Petitioners Marcelino Arcelona, Tomasa Arcelona-Chiang and Ruth Arcelona are natural-born
Filipinos who are now naturalized Americans residing in California, U.S.A. Petitioner Ruth
Arcelona is the surviving spouse and legal heir of the deceased Benedicto Arcelona, brother of
Marcelino and Tomasa. Together with their three sisters Pacita Arcelona-Olanday, Maria
Arcelona-Arellano and Natividad Arcelona-Cruz (hereinafter collectively referred to as Olanday,
et al.) petitioners are co-owners pro-indiviso of a fishpond which they inherited from their
deceased parents.4 The six Arcelonas (two brothers and four sisters) are named as co-owners in
Transfer Certificate of Title No. 34341 which evidences ownership over the fishpond.

On March 4, 1978, a contract of lease over the fishpond was executed between Cipriano Tandoc
and Olanday, et al. The lease contract was for a period of three (3) years but was renewed up to
February 2, 1984.5

Private Respondent Moises Farnacio was appointed in turn by Tandoc as caretaker-tenant of the
same fishpond, effective on the date the contract of lease was executed. After the termination of
the lease contract, the lessee (Tandoc) surrendered possession of the leased premises to the
lessors, Olanday, et al.

Three days thereafter, on February 7, 1984, Private Respondent Farnacio instituted Civil Case
D-7240 for "peaceful possession, maintenance of security of tenure plus damages, with motion
for the issuance of an interlocutory order" against Olanday, et al., before Respondent Regional
Trial Court of Dagupan City, Branch 40. The case was intended to maintain private respondent as
tenant of the fishpond.6

On October 31, 1984, the trial court rendered a decision in favor of private respondent, the
dispositive portion of which reads:7

WHEREFORE, in the light of the foregoing considerations, this Court hereby renders
judgment as follows; to wit:

1. Declaring and recognizing Moises Farnacio as tenant-caretaker over the fishpond in

question located at Lomboy District, Dagupan City;

2. Ordering the defendants to maintain plaintiff in the peaceful possession and cultivation of
said fishpond, with all the rights accorded and obligations imposed upon him by law;

3. Ordering the Branch Clerk of Court to withdraw and deliver to the plaintiff all the
amounts deposited with this Court; and

4. All others claims of the parties are hereby denied for lack of merit.

Olanday, et al. elevated the decision to the then Intermediate Appellate Court (IAC)8 which
affirmed with slight modification the decision of the trial court on May 31, 1985. On appeal, this
Court9 sustained the IAC decision in G.R. No. 71217. On May 25, 1991, after remand of the case
to the court of origin, private respondent was placed in possession of the entire property
covered by TCT 34341.

Petitioners then filed with Respondent Court of Appeals a petition for annulment of the
aforesaid judgment against private respondent and the implementing sheriff.10 The case was
docketed as CA GR SP No. 24846. On May 8, 1991, Respondent Court issued a resolution
directing petitioners "to implead as party defendant the Regional Trial Court of Dagupan City,
Branch 50, Dagupan City."11 Respondent Court promulgated in due course the assailed Decision
and Resolution.

Dissatisfied, petitioners lodged this petition for review before us on May 10, 1992. On August 24,
1992, due course was granted to the petition, and the parties filed their respective memoranda.

The Issues

In their Memorandum dated November 7, 1992, petitioners allege that Respondent Court of
Appeals has committed the following errors:12

I. The Respondent Court of Appeals erred in ruling that the sole and only ground
for annulment of judgment is extrinsic fraud.

II. The Respondent Court of Appeals erred when it failed to consider that lack of
due process and jurisdiction over the persons of the petitioners are also valid
grounds for annulment of judgment.
 III. In annulment of judgment the grounds should be based solely on the records of
the case. It is then an error for the Respondent Court of Appeals to consider
matters extraneous to the records of the case.

IV. The Respondent Court of Appeals erred in ruling that petitioners should have
intervened in the proceedings for issuance of writ of execution before the lower
court.

V. The Respondent Court of Appeals erred in ruling that the petitioners are
estopped or are guilty of laches in questioning the decision of the lower court.

The Court believes that these five assigned errors may be condensed into three issues:

(1) May a final judgment be annulled on the ground of lack of jurisdiction (over the
subject matter and/or over the person of indispensable parties) and denial of due
process, aside from extrinsic fraud?

(2) May extraneous matters, not found in the records of the original case, be used
in voiding or defending the validity of such final judgment?

(3) Procedurally, will an independent action for annulment of the decision of the
regional trial court (which was affirmed both by the Court of Appeals and the
Supreme Court) filed before the Court of Appeals prosper, or is intervention before
the court of origin the only remedy?

The Court's Ruling

The petition is meritorious.

First Issue: Grounds for Annulment of Final Judgment

Petitioners contend that Respondent Court of Appeals erred in decreeing "the all-sweeping and
categorical pronouncement that the sole and only ground for annulment of judgment is extrinsic
fraud," and in thereby ignoring various Supreme Court rulings that a final judgment may also be
annulled for "a) lack of jurisdiction over the subject matter; b) lack of jurisdiction over the
persons of necessary or indispensable parties; and c) lack of due process."13Petitioners argue
that, being co-owners of the subject property, they are "indispensable parties."14 Inasmuch as
they were not impleaded in Civil Case D-7240, "the questioned judgment of the lower court is
void insofar as the petitioners are concerned for want of jurisdiction over their persons and [for]
lack of due process."15 Petitioners "do not see any reason why a person who was not made a
party at all could not assail the same proceedings involving his property and affecting his rights
and interests."16

Petitioners further maintain that since "the case involves the personal status of the private
respondent, or relates to, or the subject of which is property within the Philippines, then the
petitioners as non-residents" are entitled to extra-territorial service,17 which is a "due process
requirement." As they were never served with summons, to "bar them [from] questioning the
proceedings of the lower court will be compounding injustice . . . . If a party to a case can assail
the proceedings for defective service of summons," the same right should be afforded to a
person who was not made a party at all.18

Public respondent disposed of petitioners' above contention in this

wise:19

First. Annulment of judgment, as the Supreme Court had occasion to rule, rests on a single
ground: extrinsic fraud (Canlas vs. Court of Appeals, 170 [sic] SCRA 160, 170). Islamic Da'
Wah Council of the Phils. vs. Court of Appeals, 178, 186, citing Anuran vs. Aquino, 38 Phil. 29,
emphatically announced that there can be no question as to the right of any person
adversely affected by a judgment to maintain an action to enjoin its enforcement and to
have it declared a nullity on the ground of fraud and collusion practiced in obtaining the
judgment when such fraud is extrinsic or collateral to the matters involved in the issues
raised at the trial which resulted in such judgment.

Clearly, there is nothing in the petition that extrinsic fraud, as Macabingkil defines it, indeed
vitiated the proceedings during the trial of Civil Case No. D-7240.

The essence of the instant petition is worded by the petitioners as follows:

The common property involved in this case is covered by a Torrens Title,

specifically mentioning the co-owners thereof. To bind the entire property and the
owners thereof, all the registered owners must be impleaded. The private
respondent ONLY IMPLEADED the three co-owners, excluding the petitioners
herein. For the petitioners to be bound by the questioned decision, such would
really be a derogation of their constitutional right to due process. The questioned
decision, too, suffers the fatal defect of utter want of jurisdiction.

Accordingly, since the petition for annulment of judgment is not based on the ground of
extrinsic fraud, the petition suffers from a basic and fundamental infirmity that deprives
petitioners of a valid cause of action against respondents herein.

We hold that the Court of Appeals erred in limiting the ground(s) for annulment of judgment to
only one, namely, extrinsic fraud. While it is true that in the cited cases of Canlas vs. CA20 and
Islamic Da' Wah Council of the Philippines vs. Court of Appeals,21 this Court said that a judgment
"may be annulled on the ground of extrinsic or collateral fraud,"22 we should hasten to add that
in Macabingkil vs. People's Homesite and Housing Corporation,23where the above ruling on
annulment of judgment was based, we held that there are really three ways by which a final
judgment may be attacked: 24

Under existing rules, there are three (3) ways by which a final and executory judgment may
be set aside. The first is by petition for relief from judgment under Rule 38 of the Revised
Rules of Court, when judgment has been taken against the party through fraud, accident,
mistake or excusable negligence, in which case the petition must be filed within sixty (60)
 days after the petitioner learns of the judgment, but not more than six (6) months after
such judgment was entered. The second is by direct action to annul and enjoin the
enforcement of the judgment. This remedy presupposes that the challenged judgment is
not void upon its face, but is entirely regular in form, and the alleged defect is one which is
not apparent upon its face or from the recitals contained in the judgment.[fn: Abbain v.
Chua, 22 SCRA 798; Cadano v. Cadano, 49 SCRA 33; Anuran v. Aquino, 38 Phil. 329] As
explained in Banco Espaol-Filipino v. Palanca, [fn: 37 Phil. 291, 949] "under accepted
principles of law and practice, long recognized in American courts, the proper remedy in
such case, after the time for appeal or review has passed, is for the aggrieved party to bring
an action enjoining the judgment, if not already carried into effect; or if the property has
already been disposed of, he may institute suit to recover it." The third is either a direct
action, as certiorari, or by a collateral attack against the challenged judgment (which is) is
void upon its face, or that the nullity of the judgment is apparent by virtue of its own
recitals. As aptly explained by Justice Malcolm in his dissent in Banco Espaol-Filipino v.
Palanca, supra, "A judgment which is void upon its face, and which requires only an
inspection of the judgment roll to demonstrate its want of vitality is a dead limb upon the
judicial tree, which should be lopped off, if the power so to do exists."

Since the aforementioned decision in Civil Case No. Q-5866 is not void upon its face, it may
only be annulled by direct action on the ground of fraud.

It is only extrinsic or collateral fraud, as distinguished from intrinsic fraud, however, that can
serve as a basis for the annulment of judgment. [Aring v. Original, 6 SCRA 1021, 1025;
Velasco v. Velasco, 2 SCRA 736] Fraud has been regarded as extrinsic or collateral, within the
meaning of the rule, "where it is one the effect of which prevents a party from having a trial,
or real contest, or from presenting all of his case to the court, or where it operates upon
matters pertaining, not to the judgment itself, but to the manner in which it was procured
so that there is not a fair submission of the controversy." [46 Am. Jur. 913] . . . .

It is clear then that to set aside a final and executory judgment, there are three remedies
available to a litigant: first, a petition for relief from judgment under Rule 38 of the Rules of
Court25 on grounds of fraud, accident, mistake and excusable negligence filed within sixty (60)
days from the time petitioner learns of the judgment but not more than six (6) months from the
entry thereof; second, a direct action to annul the judgment on the ground of extrinsic fraud;
and third, a direct action for certiorari or collateral attack to annul a judgment that is void upon
its face or void by virtue of its own recitals. Thus, Macabingkil did not preclude the setting aside
of a decision that is patently voidwhere mere inspection of the judgment is enough to
demonstrate its nullity on grounds of want of jurisdiction or non-compliance with due process of
law. This doctrine is recognized in other cases: 26

. . . . There is no question that a final judgment may be annulled. There are, however, certain
requisites which must be established before a judgment can be the subject of an action for
annulment. "Under the present procedure, aside from the reliefs provided in these two
sections (Secs. 1 & 2, Rule 38), there is no other means whereby the defeated party may
procure final and executory judgment to be a set aside with a view to the renewal of the
litigation, unless (a) the judgment is void for want of jurisdiction or for lack of due process of
law, or (b) it has been obtained by fraud." (I Moran's Rule of Court 1950 Ed., 697, citing
Anuran v. Aquino, 38 Phil. 29; Banco Espaol-Filipino v. Palanca, 37 Phil. 921). Reason of
 public policy which favors the stability of judicial decisions are (sic) mute in the presence of
fraud which the law abhors (Garchitorena vs. Sotelo, 74 Phil. 25).

On the one hand, extrinsic fraud is the ground to annul a voidable final judgment; the
declaration of nullity of a patently void final judgment, on the other, is based on grounds other
than extrinsic fraud. To say, then, that petitioners can avail themselves only of the ground of
extrinsic fraud and no other is to fail to appreciate the true meaning and ramifications of
annulment/nullity.

Jurisdiction is conferred by law. Its exercise must strictly comply with the legal requisites;
otherwise, a challenge on the ground of lack of jurisdiction may be brought up anytime. Such
jurisdiction normally refers to jurisdiction over the subject. As an example, in a case involving the
issuance of a new owner's duplicate certificate of title, the original of which was lost, stolen or
destroyed, the court must strictly comply with the requisites of Section 109 of P.D. 1529;
otherwise, its jurisdiction may be attacked anytime. Thus, we ruled in New Durawood Co. Inc. vs.
Court of Appeals:27

In Demetriou vs. Court of Appeals, et al., [238 SCRA 158, at 162 (November 14, 1994)] this
Court ruled:

In Serra Serra v. Court of Appeals (195 SCRA 482 [1991]), on facts analogous to
those involved in this case, this Court already held that if a certificate of title has
not been lost but is in fact in the possession of another person, the reconstituted
title is void and the court rendering the decision has not acquired jurisdiction.
Consequently the decision may be attacked any time.

In the instant case, the owner's duplicate certificates of title were in the possession of Dy
Quim Pong, the petitioner's chairman of the board and whose family controls the petitioner
corporation. Since said certificates were not in fact "lost or destroyed," there was no
necessity for the petition filed in the trial court for the "Issuance of New Owner's Duplicate
Certificates of Title . . . ," In fact, the said court never acquired jurisdiction to order the
issuance of new certificates. Hence, the newly issued duplicates are themselves null and
void.

It is obvious that this lapse happened because private respondents and respondent judge
failed to follow the procedure set forth in P.D. No. 1529 which, as already stated, governs
the issuance of new owner's duplicate certificates of title.

Section 109 of the said law provides, inter alia, that "due notice under oath" of the loss or
theft of the owner's duplicate certificate "shall be sent by the owner or by someone in his
behalf to the Register of Deeds . . ." (emphasis supplied). In this case, while an affidavit of
loss was attached to the petition in the lower court, no such notice was sent to the Register
of Deeds.

Private respondents tried to convince the Court that by their failure to locate Francis
Dytiongsee, they had no other recourse but to file a petition for reconstitution. Sec. 107 of
the P.D. 1529, however, states that the remedy, in case of the refusal or failure of the holder
 in this case, the petitioner to surrender the owner's duplicate certificate of title, is a
"petition in court to compel surrender of the same to the Register of Deeds," and not a
petition for reconstitution.

Ineluctably, a judgment rendered without jurisdiction over the subject matter is void. As we
elucidated in Leonor vs. CA:28

Clearly and unequivocally, the summary procedure under Rule 108, and for that matter
under Art. 412 of the Civil Code, cannot be used by Mauricio to change his and Virginia's
civil status from married to single and of their three children from legitimate to illegitimate.
Neither does the trial court, under said Rule, have any jurisdiction to declare their marriage
null and void and as a result thereof, to order the local civil registrar to cancel the marriage
entry in the civil registry. Further, the respondent trial judge gravely and seriously abused
his discretion in unceremoniously expanding his very limited jurisdiction under such rule to
hear evidence on such a controversial matter as nullity of a marriage under the Civil Code
and/or Family Code, a process that is proper only in ordinary adversarial proceedings under
the Rules.

Jurisdiction over the Persons of Indispensable Parties

True, the above dispositions refer to jurisdiction over the subject matter. Basic considerations of
due process, however, impel a similar holding in cases involving jurisdiction over the persons of
indispensable parties which a court must acquire before it can validly pronounce judgments
personal to said defendants. Courts acquire jurisdiction over a party plaintiff upon the filing of
the complaint. On the other hand, jurisdiction over the person of a party defendant is assured
upon the service of summons in the manner required by law or otherwise by his voluntary
appearance. As a rule, if a defendant has not been summoned, the court acquires no jurisdiction
over his person, and a personal judgment rendered against such defendant is null and void.29 A
decision that is null and void for want of jurisdiction on the part of the trial court is not a
decision in the contemplation of law and, hence, it can never become final and executory.30

Rule 3, Section 7 of the Rules of Court, defines indispensable parties as parties-in-interest

without whom there can be no final determination of an action. As such, they must be joined
either as plaintiffs or as defendants. The general rule with reference to the making of parties in a
civil action requires, of course, the joinder of all necessary parties where possible, and the
joinder of all indispensable parties under any and all conditions, their presence being a sine qua
non for the exercise of judicial power.31 It is precisely "when an indispensable party is not before
the court (that) the action should be dismissed."32 The absence of an indispensable party
renders all subsequent actions of the court null and void for want of authority to act, not only as
to the absent parties but even as to those present.33

Petitioners are co-owners of a fishpond. Private respondent does not deny this fact, and the
Court of Appeals did not make any contrary finding. The fishpond is undivided; it is impossible to
pinpoint which specific portion of the property is owned by Olanday, et al. and which portion
belongs to petitioners. Thus, it is not possible to show over which portion the tenancy relation of
private respondent has been established and ruled upon in Civil Case D-7240. Indeed, petitioners
should have been properly impleaded as indispensable parties. Servicewide Specialists,
Incorporated vs. Court of Appeals34 held that no final determination of a case could be made if
an indispensable party is not impleaded:

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

Formerly, Article 487 of the old Civil Code provided that "any one of the co-owners may bring an
action in ejectment." It was subsequently held that a co-owner could not maintain an action in
ejectment without joining all the other co-owners. Former Chief Justice Moran, an eminent
authority on remedial law, explains:35

. . . . As held by the Supreme Court, were the courts to permit an action in ejectment to be
maintained by a person having merely an undivided interest in any given tract of land, a
judgment in favor of the defendants would not be conclusive as against the other co-owners
not parties to the suit, and thus the defendant in possession of the property might be
harassed by as many succeeding actions of ejectment, as there might be co-owners of the
title asserted against him. The purpose of this provision was to prevent multiplicity of suits
by requiring the person asserting a right against the defendant to include with him, either as
co-plaintiffs or as co-defendants, all persons standing in the same position, so that the
whole matter in dispute may be determined once and for all in one litigation.

Contrariwise, it is logical that a tenant, in an action to establish his status as such, must implead
all the pro-indivisoco-owners; in failing to do so, there can be no final determination of the
action. In other words, a tenant who fails to implead all the co-owners cannot establish with
finality his tenancy over the entire co-owned land.

Co-owners in an action for the security of tenure of a tenant are encompassed within the
definition of indispensable parties; thus, all of them must be impleaded. As defined:36

An indispensable party is a party who has such an interest in the controversy or subject
matter that a final adjudication cannot be made, in his absence, without injuring or affecting
that interest, a party who has not only an interest in the subject matter of the controversy,
but also has an interest of such nature that a final decree cannot be made without affecting
his interest or leaving the controversy in such a condition that its final determination may be
wholly inconsistent with equity and good conscience. It has also been considered that an
indispensable party is a person in whose absence there cannot be a determination between
the parties already before the court which is effective, complete, or equitable. Further, an
indispensable party is one who must be included in an action before it may properly go
forward.

A person is not an indispensable party, however, if his interest in the controversy or subject
matter is separable from the interest of the other parties, so that it will not necessarily be
directly or injuriously affected by a decree which does complete justice between them. Also,
 a person is not an indispensable party if his presence would merely permit complete relief
between him and those already parties to the action, or if he has no interest in the subject
matter of the action. It is not a sufficient reason to declare a person to be an indispensable
party that his presence will avoid multiple litigation.

Clearly, the decision in Civil Case D-7240 cannot bind petitioners and cannot adjudicate the
entire co-owned property, not even that portion belonging to Olanday et al., ownership of the
property being still pro-indiviso. Obviously, the failure to implead petitioners barred the lower
court from making a final adjudication. Without the presence of indispensable parties to a suit or
proceeding, a judgment therein cannot attain finality.37

Ergo, res inter alios judicatae nullum aliis praejudicarium faciunt.38 Thus, the Court, through
former Chief Justice Marcelo B. Fernan, held that a person who was not impleaded in the
complaint cannot be bound by the decision rendered therein, for no man shall be affected by a
proceeding in which he is a stranger.39

Admittedly, in this case, the want of jurisdiction of the trial court in rendering its decision in Civil
Case No. D-7240 is not patent on the face of said judgment. However, there were glaring
documentary and testimonial pieces of evidence referred to by the trial court in its decision
which should have prompted it to inquire further whether there were other indispensable
parties who were not impleaded. These facts and circumstances should have forewarned the
trial court that it had not acquired jurisdiction over a number of indispensable parties. In
American jurisprudence, the nullity of a decision arising from lack of jurisdiction may be
determined from the record of the case, not necessarily from the face of the judgment only.40
We believe that this rule should be applied to this case, considering that in the assailed trial
court's decision, referrals were made to crucial evidence which if scrutinized would readily reveal
that there were indispensable parties omitted.

First, the decision referred to the subject property "as Lot No. 3312 of the Cadastral Survey."41
This lot was particularly described in private respondent's Complaint dated February 6, 1984
filed in Civil Case D-7240.42Obviously such description was copied by private respondent from
the transfer certificate of title over the subject fishpond issued on August 12, 1975 naming all
the co-owners, including the herein petitioners and the fact of their foreign residences, thus:43

IT IS HEREBY CERTIFIED that certain land situated in the City of Dagupan, formerly in the
Province of Pangasinan bounded and described as follows:

A parcel of land (Lot 3312 of the Cadastral Survey of Dagupan), situated in the City
of Dagupan . . . .

is registered in accordance with the provisions of the Land Registration Act in the name of
PACITA ARCELONA, married to Miguel Ulanday; TOMASA ARCELONA, married to Tung Ming
Chiang; MARCELINO V. ARCELONA, married to Soledad Tiongco; MARIA V. ARCELONA,
married to Oreste Arellano; BENEDICTO V. ARCELONA, married to Ruth Suget; and
NATIVIDAD ARCELONA, married to Agrimero Cruz; all of legal age, Filipinos, the second and
fifth named residents of Los Angeles, California, U.S.A., third & fourth of Manila; first of
Villasis, Pangasinan & the last named of Lingayen, Pangasinan as owner thereof in fee simple,
 subject to such of the incumbrances mentioned in Section 39 of said Act as may be
subsisting, and to Entered at the City of Dagupan Philippines, on the 12th day of August in
the year nineteen hundred and seventy five at 4:00 p m.

Considering that private respondent was suing to establish his status as a tenant over the subject
fishpond, the responsibility for impleading all the indispensable parties undeniably rested on him
as provided under Rule 3 of the Rules of Court. Section 2 of Rule 3 requires that "every action
must be prosecuted and defended in the name of the real party in interest. All persons having an
interest in the subject of the action and in obtaining the relief demanded shall be joined as
plaintiffs." Further, Section 7 of the same rule states that "(p)arties in interest without whom no
final determination can be had of an action shall be joined either as plaintiffs or defendants."

Second, Respondent Court of Appeals ruled that private respondent "in his motion to dismiss
(before said Court) alleged that petitioners knew of the lessee as revealed by the testimony of
Pacita Olanday, one of the defendants in Civil Case No. D-7240 and a sister of petitioners. (TSN,
pp. 15-16, hearing of October 2, 1984, Civil Case No. D-7240)." That being so, why did private
respondent fail to include petitioners as defendants in the case below? It should be noted that
the lease contract was between Cipriano Tandoc and Olanday, et al. Private respondent, a
caretaker-tenant of Tandoc, knew or should have known that there were co-owners other than
Olanlday, et al. And even conceding arguendo that petitioners had authorized Olanday, et al. to
enter into a lease contract with Tandoc, this fact did not authorize the latter to represent
petitioners in the civil case he brought. Under Rule 9, Section 9 of the Rules of Court, the pleader
is required to set forth the names, if known to him, of persons who ought to be parties, if
complete relief is to be accorded to those who are already parties but who are not joined; and to
state why they have been omitted. Surely, he brought suit to establish his status as a tenant. It is
thus his responsibility to state the names of all the persons against whom he wants to establish
his status as tenant.

Third, both the private respondent and the trial court knew of the obvious omission of petitioners
as party defendants. Telling is the fact that, by reciting part of the transcript of stenographic
notes, private respondent himself provided clear evidence in his memorandum that he knew of
the existence of other co-owners who were not impleaded in his case against Olanday et al.:44

As admitted by Pacita Olanday, one of the defendants in Civil Case No. D-7240, the
petitioners know of the lease with Cipriano Tandoc; they were authorized to lease the
shares of the petitioners. Here is the testimony of Pacita Olanday:

ATTY. VINLUAN:

Q. You made mentioned that you were authorized by your brothers and sister who
are (sic) residing in the United States to enter into a contract. Did these brothers
and sister of yours make any special power of attorney authorizing you to that
effect?

A. I talked with my brothers when they "balik-bayan", they said I will make an
agreement. (tsn. October 2, 1984 pp. 15 and 16 CV# D-7240).
He also knew that in executing the lease, Pacita Olanday represented only her sisters (Maria and
Natividad) who were residing in the Philippines. Definitely, at the time of the execution of the
contract, she had no brother residing in the Philippines because her only brothers, Marcelino
and Benedicto Arcelona, (the latter now deceased and represented in this case by Petitioner
Ruth Arcelona) were living in California. This fact can be deduced from the recitals of the RTC
decision:45

It is undisputed in the records that the defendants (referring to Olanday, et al.) are
co-owners and civil law lessors of a fishpond otherwise known as Lot No. 3312 of the
Cadastral Survey of Dagupan City; that as owners, they entered into a Contract of Lease (Exh.
"1") with one Cipriano Tandoc dated March 4, 1978 for a term of three (3) years from
February 2, 1982, which contract was renewed for another two (2) years up to February 2,
1984. On the 31st of January, 1984, Exhibit "3", an "Affidavit of Surrender of Rights and
Possession of Lessee over a Fishpond" was executed between Cipriano Tandoc and Pacita
Olanday who signed for herself and in behalf of her two (2) sisters. Plaintiff Moises Farnacio
was however, instituted as caretaker-tenant over the same fishpond by Cipriano Tandoc on
the date of the Contract of Lease was entered into between the owners-lessors and Cipriano
Tandoc. The private agreement (Exh. "D") signed by Cipriano Tandoc and Moises Farnacio is,
however, assailed in a criminal case for falsification in the Fiscal's Office." (Emphasis
supplied).

In fact, only these co-owners who are residing in the Philippines were joined as defendants in
Civil Case D-7240. But the mention of Pacita's relatives who were residing abroad should have
made the trial court aware of the existence of indispensable parties who were not yet
impleaded.

Despite this knowledge of the apparent defect in the complaint and in its jurisdiction, the trial
court did not take the initiative to implead petitioners as defendants or to order private
respondent to do so, contrary to the clear mandate of Rule 3, Sec. 11 of the Rules of Court46
which provides:

Sec. 11. Misjoinder and non-joinder of parties. Misjoinder of parties is not ground for
dismissal of an action. Parties may be dropped or added by order of the court on motion of
any party or on its own initiative at any stage of the action and on such terms as are just.
Any claim against a party may be severed and proceeded with separately.

The foregoing testimony on the existence of other co-owners was a clear signal that
indispensable parties had not yet been impleaded. Indeed, this knowledge should have put the
private respondent and the trial court on guard. The burden to implead or to order the
impleading of indispensable parties is placed on private respondent and on the trial court,
respectively. Since no evidence was presented to prove that petitioners were aware of the civil
case filed against Olanday et al., they cannot be faulted for not intervening therein.

In sum, we hold that the nullity of a judgment grounded on lack of jurisdiction may be shown not
only by what patently appears on the face of such decision but also by documentary and
testimonial evidence found in the records of the case and upon which such judgment is based.
Before ending our discussion on the first issue, we must stress that the then Intermediate
Appellate Court and this Court, in affirming the RTC decision in Civil Case No. D-7240 which we
here nullify, had not been given the occasion to rule on the issue of the trial court's jurisdiction
over the persons of indispensable parties; verily, this question had not been raised before the
two appellate courts. The review of civil cases by appellate courts is confined only to the issues
raised by the parties. Hence, appellate courts do not have the privilege or the opportunity
afforded the trial courts to consider matters beyond the specifically contested issues, e.g.,
jurisdiction over indispensable parties, as in this case. Such lack of jurisdiction could not have
been known by the appellate courts, including this Court, as it was not patent from the
documents or submissions filed before them. The issue raised before the then Intermediate
Appellate Court and this Court was formulated in this wise: "(t)he validity of private respondent's
claim that he is a tenant of the petitioners' fishpond, with security of tenure as such assured
under the law, is the basic question presented in this appeal."47 We underscore the fact that the
issue of whether all the indispensable parties had been validly impleaded, if at all, had not been
raised at that time. In any event, whether the indispensable parties were actually impleaded and
jurisdiction over them was acquired was a factual question for the trial court to determine.
Consistent with the basic doctrine that factual findings of lower courts are binding on appellate
courts unless covered by the recognized exceptions,48 appellate courts must be able to rely on
the implied affirmation of the trial court that jurisdiction had been acquired over indispensable
parties, especially when this was not raised as an issue on appeal. The responsibility for
impleading indispensable parties for the exhaustive trial of a case cannot rest on this forum or
on the then Intermediate Appellate Court. Indeed, the Decision of this Court affirming the said
trial court's decision is captioned only as "Pacita A. Olanday, Maria A. Arellano and Natividad A.
Cruz, petitioners, vs. Intermediate Appellate Court and Moises Farnacio, respondents", clearly
indicating that petitioners herein had been omitted as indispensable parties in the proceedings
before the trial court and before the appellate tribunals. Substantial justice requires that this
error be now rectified.

Second Issue: Estoppel and Laches

Apart from holding that there was only one ground to annul a judgment, namely, extrinsic fraud,
the appellate court using extraneous evidence also found that estoppel and laches had set
in against petitioners, thereby barring them from asserting lack of jurisdiction over their persons.
These "extraneous matters" are stated by the Respondent Court in this wise:

. . . True, indeed, that petitioners were not original parties to the action and that the
decision embraces half of the property in dispute belonging to petitioners as co-owners
thereof. But they cannot now complain they were denied due process. It will be recalled
that the contract of lease was entered with one Cipriano Tandoc on March 4, 1978 for a
term of three years, which contract was renewed for another two years up to February 2,
1984. During all the years of the existence of the lease contract, it would be incredulous for
petitioners to assert that they never knew of such lease agreement from their three sisters,
the defendants herein. Petitioners raised no overt protest against the lease contract
executed by their sisters with Cipriano Tandoc in 1978 and renewed in 1982. Petitioners
took no direct action to promptly disavow or disaffirm the action taken by their sisters to
lease the entire property to Tandoc.

It is likewise unbelievable that during all the years that the subject property (fishpond) is
 under litigation in Civil Case No. D-7240 from 1984 to 1991, petitioners were not aware that
their property is subject of the controversy. By their continued silence, they have permitted
the acts of their sisters in leasing the property and they cannot now be heard, after a
prolonged period of time, to denounce such acts as done without their knowledge and
consent. The rule of acquiescence by silence has estopped petitioners to deny the reality of
the state of things which they made to appear to exist and upon which others have been led
to reply. Parties must take the consequences of the position they assume. Sound ethics
require that the apparent in its effects and consequences should be as if it were real, and
the law properly so regards. (Metro Manila Transit Corporation vs. Morales, 173 SCRA 629,
633).

In Santiago Syjuco, Inc. vs. Castro, 175 SCRA 171, 192, it was held, inter alia:

. . . . Likewise, in Criminal Case No. 16866 for falsification against respondent Farnacio
before Branch 3 of the Municipal Trial Court of Dagupan City, witness Juan Bernal testified
that the petitioners herein Tomasa Arcelona, Marcelino Arcelona and Ben Arcelona
authorized their sisters Natividad Cruz, Corazon Arcelona, Pacita Olanday to lease the
fishpond to Cipriano Tandoc. (TSN, pp. 5-6, hearing of August 10, 1987 in Criminal Case No.
16866).49

Petitioners balk at these pronouncements, arguing that in annulment of judgments, "the

grounds thereof must be based solely on the records of the case." They contend that "to permit
the court's record to be contradicted or varied by evidence dehors would render such records of
no avail." Petitioners contend that Respondent Court of Appeals erred in taking into account "the
proceedings in Criminal Case No. 16866 to show alleged knowledge of the petitioners herein of
the lease of the property to Cipriano Tandoc."50 Petitioners submit that the bone of contention in
this case is

not knowledge of the petitioners of the Lease Contract executed by Pacita Olanday et al.
and Cipriano Tandoc, but whether the petitioners knew of the case filed by private
respondent against Pacita Olanday et al. involving their common property.

Petitioners stress that Private Respondent Farnacio is "a total stranger" and has absolutely no
privity of interest with them because it was Tandoc, not Farnacio, who entered into a lease
contract with Olanday, et al.51

Petitioners deny any concealment or deception on their part that would constitute estoppel.
They contend that in the transfer certificate of title, their names "were specifically mentioned as
co-owners of the property on which the private respondent sought to be installed in physical
possession as tenant."52 They aver that Respondent Court of Appeals' finding that they had
knowledge of the lease contract "is based on presumption not on clear and convincing
evidence." Assuming, according to petitioners, that they can be held in estoppel, it can only be
as against Cipriano Tandoc, not private respondent who "was never a party to the lease
contract."53

Since the judgment is void "insofar as the petitioner are concerned for lack of jurisdiction [over]
their persons and for want of due process," and since they "were never given the opportunity to
institute any action to protect their interest," petitioners contend that to bar them now by laches
and estoppel "will create an unfair and unjust situation." For as petitioners candidly state, they
"do not question the pronouncement that private respondent is the tenant of Pacita Olanday et
al."; however, they submit that the issue in this case is whether private respondent "is also the
tenant of herein petitioners entitled to be placed in physical possession and cultivation of their
undetermined share in the property without [petitioners] being made parties in the case."54

Private respondent counters that "Pacita Olanday . . . testified that she was authorized to lease
the share of . . . petitioners." According to private respondent, while petitioners were in the
Philippines, they were informed of the appointment of private respondent as caretaker-tenant of
the entire fishpond, and they did not object to such appointment.55 Further, private respondent
contends that petitioners failed to intervene in the case before the writ of execution was granted
on "May 5, 1991" despite the "appearance . . . of their counsel, Atty. Marina Cruz, when the
motion for issuance of said writ was heard." Private respondent adds that he was "impliedly
recognized" as a tenant when petitioners "received their corresponding shares [i]n the lease
rental of the property from the private respondent, through Olanday, et al. and their counsel,
Atty. Marina Cruz."56

As correctly put by petitioners, we hold that Respondent Court of Appeals, in deciding the
petition to declare the judgment void, cannot consider extraneous matters to vary what the
records bear. In other words, the Court of Appeals cannot annul or declare null the assailed
decision with such extraneous matters. The validity or nullity of the said decision must stand or
fall on its own face and the evidence on record.

In an action to declare a judgment void because of lack of jurisdiction over the parties or subject
matter, only evidence found in the records of the case can justify the annulment of the said
judgment. Contrariwise, the nullity of the judgment due to lack of jurisdiction may be proved at
most by the evidence on record but never by extraneous evidence. Sen. Vicente J. Francisco aptly
explains this in his treatise on the Rules of Court:57

The validity of a final judgment may be attacked on the ground that the judgment or order
is null and void, because the court had no power or authority to grant the relief or no
jurisdiction over the subject matter or over the parties or both. The aggrieved party may
attack the validity of the final judgment by a direct action or proceeding in order to annul
the same, as certiorari, which is not incidental to, but is the main object of the proceeding.
The validity of a final judgment may also be attacked collaterally as when a party files a
motion for the execution of the judgment and the adverse party resists the motion by
claiming that the court has no authority to pronounce the judgment and that the same is
null and void for lack of jurisdiction over the subject matter or over the parties.

In cases of collateral attack, the principles that apply have been stated as follows: "The
legitimate province of collateral impeachment is void judgments. There and there alone can
it meet with any measure of success. Decision after decision bears this import: "In every
case the field of collateral inquiry is narrowed down to the single issue concerning the void
character of the judgment and the assailant is called upon to satisfy the court that such is
the fact. To compass his purpose of overthrowing the judgment, it is not enough that he
shows a mistaken or erroneous decision or a record disclosing non-jurisdictional
 irregularities in the proceedings leading up to the judgment. He must go beyond this and
show to the court, generally from the fact of the record itself, and not by extraneous
evidence that the judgment complained of is utterly void. If he can do that his attack will
succeed for the cases leave no doubt respecting the right of a litigant to collaterally impeach
a judgment that he can prove to be void.

The reason for the rule of exclusion of extraneous proof to show that the judgment
complained of is utterly void for lack of jurisdiction has been expressed in the following
words: "The doctrine that the question of jurisdiction is to be determined by the record
alone, thereby excluding extraneous proof seems to be the natural unavoidable result of
that stamp of authenticity which, from the earliest times, was placed upon the "record,"
and which gave it such "uncontrollable credit and verity that no plea, proof, or averment
could be heard to the contrary." . . . Any rule, . . . would be disastrous in its results, since to
permit the court's record to be contradicted or varied by evidence dehors would render
such records of no avail and definite sentences would afford but slight protection to the
rights of parties once solemnly adjudicated.

We should add, however, that where an action for annulment of judgment is grounded on
extrinsic fraud, extraneous evidence is admitted. We have held that, although a person need not
be a party to the judgment sought to be annulled by reason of extrinsic fraud, he must prove his
allegation that the judgment was obtained by the use of fraud and collusion and that he would
be adversely affected thereby.58 Fraud must be extraneous, otherwise, there would be no end to
litigation. Extrinsic fraud refers to any fraudulent act committed by a prevailing party outside the
trial of the case, whereby the defeated party has been prevented from fully exhibiting his side of
the case, because of fraud or deception practiced on him by his opponent.59 As distinctly defined
in Cosmic Lumber Corporation vs. Court of Appeals, et al.:60

There is extrinsic fraud within the meaning of Sec. 9, par. (2), of B.P. Blg. 129, where it is one
the effect of which prevents a party from hearing a trial, or real contest, or from presenting
all of his case to the court, or where it operates upon matters, not pertaining to the
judgment itself, but to the manner in which it was procured so that there is not a fair
submission of the controversy. In other words, extrinsic fraud refers to any fraudulent act of
the prevailing party in the litigation which is committed outside of the trial of the case,
whereby the defeated party has been prevented from exhibiting fully his side of the case by
fraud or deception practiced on him by his opponent. (fn: Makabingkil v. PHHC, No. L-29080,
17 August 1976, 72 SCRA 326, 343-344) Fraud is extrinsic where the unsuccessful party has
been prevented from exhibiting fully his case, by fraud or deception practiced on him by his
opponent, as keeping him away from court, a false promise of a compromise; or where the
defendant never had knowledge of the suit, being kept in ignorance by the acts of the
plaintiff; or where an attorney fraudulently or without authority connives at his defeat;
these and similar cases which show that there has never been a real contest in the trial or
hearing of the case are reasons for which a new suit may be sustained to set aside and
annul the former judgment and open the case for a new and fair hearing. (fn: Id., p. 344
citing U.S. v. Throckmorton, 25 L. Ed. 93, 95)

In deciding the "petition for annulment of judgment" which should be a "petition to declare
judgment void" Respondent Court of Appeals should not have considered the following
matters which find no support from the records and are thus considered "extraneous": (1) the
assumption that petitioners knew of the five-year lease contract with private respondent and the
pendency of Civil Case No. D-7240 from 1984 to 1991; and (2) the testimony of Juan Bernal in a
separate criminal case before another court concerning the authority granted to Olanday et al.
and where petitioners were not parties. The rule is that the nullity of the decision arising from
want of jurisdiction and/or due process should appear from the records of the case. And the
validity of the judgment cannot be anchored on mere suppositions or speculations, as
Respondent Court did.

Equally important, the finding of estoppel and laches by Respondent Court is not supported by
the evidence on record. The silence of petitioners can easily be explained by the fact that they
were not in the country during the pendency of the subject civil case. Such absence from the
country was never rebutted by private respondent. Even in the proceedings antecedent to this
case before us now, petitioners were merely represented by their attorney-in-fact.61 Moreover,
they were not at all impleaded as parties in the judgment sought to be voided. Neither were
they properly served summons. The indelible fact is that they were completely ignored.

In any event, we ruled in Alabang Development Corporation vs. Valenzuela62 that no laches
attach when the judgment is null and void for want of jurisdiction:

The herein respondents attribute laches to the petitioners for not appealing from the order
of the lower court denying their motion to intervene and motion for new trial hence
allowing the said order/decision to become final. There is no laches nor finality of any
decision to speak of since the decision under question is herein pronounced null and void
for having been rendered without jurisdiction. Prescinding therefrom, as admitted by
themselves in their comment, the judgment of reconstitution is "ineffective" against the
owners of lands covered thereby who were not joined as parties in the proceeding. As the
Court ruled in Bernal case on the matter of intervention [fn: 93 SCRA at pp. 247, 248] "a
valid judgment cannot even be rendered where there is want of indispensable parties' such
as petitioners who hold subsisting Torrens Title to the properties in question and "this
aspect of the case commands the joinder of indispensable parties to allow them to uphold
their interests based upon the Torrens titles they hold overrides any question of later
intervention." Petitioners have precisely availed of the proper, speedy and adequate remedy
of the present special civil action of certiorari and prohibition to annul and set aside for
want of jurisdiction the decision and all proceedings of respondent judge.

On the other hand, the doctrine of estoppel is predicated on and finds its roots in equity which,
broadly defined, is justice according to natural law and right. It is a principle intended to prevent
a clear case of injustice. The term is hardly separable from a waiver of right. Estoppel, like laches,
must be intentional and unequivocal, for when misapplied, it can easily become a most
convenient and effective means of injustice. Estoppel is a principle that, as a rule, can be invoked
only in highly exceptional and legitimate cases.63 In Cruz vs. Court of Appeals,64 we reiterated the
requisites of estoppel:

In Kalalo vs. Luz, [fn: 34 SCRA 337] We held that the essential elements of estoppel in
respect to the party claiming it are: (a) lack of knowledge and of the means of knowledge of
the truth as the facts in question; (b) reliance, in good faith, upon the conduct or statements
of the party to be estopped; and (c) action or inaction based thereon of such character as to
 change the position or status of the party claiming the estoppel, to his injury, detriment, or
prejudice.

The herein facts ineluctably show the absence of the first element in this case. Inasmuch as
there is no proof that petitioners had knowledge of the pending tenancy case filed by private
respondent, it is only fair that they should not be held in estoppel for failing to intervene in and
to question the jurisdiction of the trial court in Civil Case No. D-7240. Thus, private respondent
may not say that he was misled into believing that petitioners knew of the lease contract and of
the litigation of Civil Case No. D-7240. Undisputedly, from the evidence on record, petitioners
had no such knowledge.

Petitioners' receipt of lease rentals cannot be used as proof of recognition of private respondent
as a caretaker-tenant. This issue was not raised in the lower court and is being alleged for the
first time before us. Well-settled is the doctrine that questions not raised in the lower courts
cannot be raised for the first time on appeal.65

Third Issue: Intervention as a Remedy of Petitioners

Petitioners contend that Respondent Court of Appeals erred when it ruled that their only
remedy was intervention during the execution stage of Civil Case No. D-7240. Inasmuch as
"annulment of judgment could be made either collaterally or directly," petitioners insist that
their resort to "direct action in annulling the Decision of the lower court should not be taken
against them."66 Moreover, petitioners argue that "in proceedings for execution of a final
decision or judgment, it is the ministerial duty of the court of origin to issue the writ."67
Petitioners add that because their action would result in the "modification, alteration, and
annulment of the judgment, the specific provision of law that annulment of judgment of the
Regional Trial Court is within the exclusive jurisdiction of the Court of Appeals should prevail."68

Private respondent counters that petitioners deliberately did not intervene "to afford them
opportunity to question, as they now question, the validity of any decision to be rendered in said
case, . . . in the event of an adverse decision."69

We hold that intervention is not the only remedy to assail a void final judgment. There is no
procedural rule prescribing that petitioners' intervention in the hearing for the issuance of a writ
is the only way to question a void final judgment. As already stated, petitioners were not aware
of such hearing. Besides, as already discussed, a direct action is available in assailing final
judgments grounded on extrinsic fraud, while a direct or a collateral action may be used to show
lack of jurisdiction.

The assailed Decision of Respondent Court of Appeals cites certain cases allowing intervention as
follows:70

A case in which an execution has been issued is regarded as still pending so that all
proceedings in the execution are proceedings in the suit. There is no question that the court
which rendered the judgment has a general supervisory control over its process of
execution and this power carries with it the right to determine every question of fact and
law which may be involved in the execution. (Suson vs. Court of Appeals, 172 SCRA 70, 75,
 citing Paman vs. Severis, 115 SCRA 709; Seavan Carrier vs. GTI Sportswear, 137 SCRA 580)

These cases, which require intervention of parties who may be adversely affected by the
decision, are not applicable. In the cited Suson vs. Court of Appeals,71 the parties, though not
impleaded, knew of the case and were in fact directed by the trial court to intervene, but they
refused to do so. These particular facts are absent in the instant case where, to repeat,
petitioners were abroad when Civil Case D-7240 was prosecuted.

In any event, as earlier pointed out, jurisprudence upholds the soundness of an independent
action to declare as null and void a judgment rendered without jurisdiction as in this case. In
Leonor vs. Court of Appeals,72 Petitioner Virginia A. Leonor, through a "petition for certiorari,
prohibition and mandamus . . . sought the nullification of both the decision dated December 14,
1992 and the order dated February 24, 1993 of the trial court for having been issued in excess of
jurisdiction and/or with grave abuse of discretion."73 We held in that case that:74

A void judgment for want of jurisdiction is no judgment at all. It cannot be the source of any
right nor the creator of any obligation. All acts performed pursuant to it and all claims
emanating from it have no legal effect. Hence, it can never become final and any writ of
execution based on it is void: ". . . it may be said to be a lawless thing which can be treated
as an outlaw and slain at sight, or ignored wherever and whenever it exhibits its head."

WHEREFORE, the petition for certiorari is GRANTED. The Decision of Respondent Court of
Appeals is hereby REVERSED and SET ASIDE. The decisions in Civil Case No. D-7240, AC-G.R.
SP-05237-CAR and G.R. No. L-71217 are ANNULLED and SET ASIDE for lack of jurisdiction. No
costs.

SO ORDERED.
G.R. No. 194024 April 25, 2012

PHILIP L. GO, PACIFICO Q. LIM and ANDREW Q. LIM Petitioners, vs. DISTINCTION
PROPERTIES DEVELOPMENT AND CONSTRUCTION, INC. Respondent.

Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure assailing the March 17, 2010 Decision1 and October 7, 2010 Resolution2 of the
Court of Appeals (CA) in CA-G.R. SP No. 110013 entitled "Distinction Properties
Development & Construction, Inc. v. Housing Land Use Regulatory Board (NCR), Philip L. Go,
Pacifico Q. Lim and Andrew Q. Lim."

Factual and Procedural Antecedents:

Philip L. Go, Pacifico Q. Lim and Andrew Q. Lim (petitioners) are registered individual owners
of condominium units in Phoenix Heights Condominium located at H. Javier/Canley Road, Bo.
Bagong Ilog, Pasig City, Metro Manila.

Respondent Distinction Properties Development and Construction, Inc. (DPDCI) is a

corporation existing under the laws of the Philippines with principal office at No. 1020 Soler
Street, Binondo, Manila. It was incorporated as a real estate developer, engaged in the
development of condominium projects, among which was the Phoenix Heights Condominium.

In February 1996, petitioner Pacifico Lim, one of the incorporators and the then president of
DPDCI, executed a Master Deed and Declaration of Restrictions (MDDR)3 of Phoenix Heights
Condominium, which was filed with the Registry of Deeds. As the developer, DPDCI
undertook, among others, the marketing aspect of the project, the sale of the units and the
release of flyers and brochures.

Thereafter, Phoenix Heights Condominium Corporation (PHCC) was formally organized and
incorporated. Sometime in 2000, DPDCI turned over to PHCC the ownership and possession
of the condominium units, except for the two saleable commercial units/spaces:

1. G/F Level BAS covered by Condominium Certificate of Title (CCT) No. 21030 utilized
as the PHCCs administration office, and

2. G/F Level 4-A covered by CCT No. PT-27396/C-136-II used as living quarters by the
building administrator.

Although used by PHCC, DPDCI was assessed association dues for these two units.

Meanwhile, in March 1999, petitioner Pacifico Lim, as president of DPDCI, filed an Application
for Alteration of Plan4pertaining to the construction of 22 storage units in the spaces adjunct to
the parking area of the building. The application, however, was disapproved as the proposed
alteration would obstruct light and ventilation.

In August 2004, through its Board,5 PHCC approved a settlement offer from DPDCI for the
set-off of the latters association dues arrears with the assignment of title over CCT Nos.
21030 and PT-27396/C-136-II and their conversion into common areas. Thus, CCT Nos.
PT-43400 and PT-43399 were issued by the Registrar of Deeds of Pasig City in favor of
PHCC in lieu of the old titles. The said settlement between the two corporations likewise
included the reversion of the 22 storage spaces into common areas. With the conformity of
PHCC, DPDCIs application for alteration (conversion of unconstructed 22 storage units and
units GF4-A and BAS from saleable to common areas) was granted by the Housing and Land
Use Regulatory Board (HLURB).6

In August 2008, petitioners, as condominium unit-owners, filed a complaint7 before the HLURB
against DPDCI for unsound business practices and violation of the MDDR. The case was
docketed as REM- 080508-13906. They alleged that DPDCI committed misrepresentation in
their circulated flyers and brochures as to the facilities or amenities that would be available in
the condominium and failed to perform its obligation to comply with the MDDR.

In defense, DPDCI denied that it had breached its promises and representations to the public
concerning the facilities in the condominium. It alleged that the brochure attached to the
complaint was "a mere preparatory draft" and not the official one actually distributed to the
public, and that the said brochure contained a disclaimer as to the binding effect of the
supposed offers therein. Also, DPDCI questioned the petitioners personality to sue as the
action was a derivative suit.

After due hearing, the HLURB rendered its decision8 in favor of petitioners. It held as invalid
the agreement entered into between DPDCI and PHCC, as to the alteration or conversion of
the subject units into common areas, which it previously approved, for the reason that it was
not approved by the majority of the members of PHCC as required under Section 13 of the
MDDR. It stated that DPDCIs defense, that the brochure was a mere draft, was against
human experience and a convenient excuse to avoid its obligation to provide the facility of the
project. The HLURB further stated that the case was not a derivative suit but one which
involved contracts of sale of the respective units between the complainants and DPDCI,
hence, within its jurisdiction pursuant to Section 1, Presidential Decree (P.D.)No. 957 (The
Subdivision and Condominium Buyers Protective Decree), as amended. The decretal
portion of the HLURB decision reads:

WHEREFORE, in view of the foregoing, judgment is hereby rendered:

1. Ordering respondent to restore/provide proper gym facilities, to restore the hallway at

the mezzanine floor.

2. Declaring the conversion/alteration of 22 storage units and Units GF4-A and BAS as
illegal, and consequently, and ordering respondent to continue paying the condominium
dues for these units, with interest and surcharge.

3. Ordering the Respondent to pay the sum of Php998,190.70, plus interests and
surcharges, as condominium dues in arrears and turnover the administration office to
PHCC without any charges pursuant to the representation of the respondent in the
brochures it circulated to the public with a corresponding credit to complainants
individual shares as members of PHCC entitled to such refund or reimbursements.

4. Ordering the Respondent to refund to the PHCC the amount of Php1,277,500.00,

representing the cost of the deep well, with interests and surcharges with a
corresponding credit to complainants individual shares as members of PHCC entitled
to such refund or reimbursements.

5. Ordering the Respondent to pay the complainants moral and exemplary damages in
the amount of 10,000.00 and attorneys fees in the amount of 10,000.00.
All other claims and counterclaims are hereby dismissed accordingly.

IT IS SO ORDERED.9

Aggrieved, DPDCI filed with the CA its Petition for Certiorari and Prohibition10 dated August 11,
2009, on the ground that the HLURB decision was a patent nullity constituting an act without
or beyond its jurisdiction and that it had no other plain, speedy and adequate remedy in the
course of law.

On March 17, 2010, the CA rendered the assailed decision which disposed of the case in
favor of DPDCI as follows:

WHEREFORE, in view of the foregoing, the petition is GRANTED. Accordingly, the assailed
Decision of the HLURB in Case No. REM-0800508-13906 is ANNULLED and SET ASIDE and
a new one is entered DISMISSING the Complaint a quo.

IT IS SO ORDERED.11

The CA ruled that the HLURB had no jurisdiction over the complaint filed by petitioners as the
controversy did not fall within the scope of the administrative agencys authority under P.D.
No. 957. The HLURB not only relied heavily on the brochures which, according to the CA, did
not set out an enforceable obligation on the part of DPDCI, but also erroneously cited Section
13 of the MDDR to support its finding of contractual violation.

The CA held that jurisdiction over PHCC, an indispensable party, was neither acquired nor
waived by estoppel. Citing Carandang v. Heirs of De Guzman,12 it held that, in any event, the
action should be dismissed because the absence of PHCC, an indispensable party, rendered
all subsequent actuations of the court void, for want of authority to act, not only as to the
absent parties but even as to those present.

Finally, the CA held that the rule on exhaustion of administrative remedies could be relaxed.
Appeal was not a speedy and adequate remedy as jurisdictional questions were continuously
raised but ignored by the HLURB. In the present case, however, "[t]he bottom line is that the
challenged decision is one that had been rendered in excess of jurisdiction, if not with grave
abuse of discretion amounting to lack or excess of jurisdiction."13

Petitioners filed a motion for reconsideration14 of the said decision. The motion, however, was
denied by the CA in its Resolution dated October 7, 2010.

Hence, petitioners interpose the present petition before this Court anchored on the following

GROUNDS

(1)

THE COURT OF APPEALS ERRED IN HOLDING THAT THE HLURB HAS NO

JURISDICTION OVER THE INSTANT CASE;

(2)

THE COURT OF APPEALS ALSO ERRED IN FINDING THAT PHCC IS AN

 INDISPENSABLE PARTY WHICH WARRANTED THE DISMISSAL OF THE CASE BY
REASON OF IT NOT HAVING BEEN IMPLEADED IN THE CASE;

(3)

THE COURT OF APPEALS HAS LIKEWISE ERRED IN RELAXING THE RULE ON

NON-EXHAUSTION OF ADMINISTRATIVE REMEDIES BY DECLARING THAT THE
APPEAL MAY NOT BE A SPEEDY AND ADEQUATE REMEDY WHEN
JURISDICTIONAL QUESTIONS WERE CONTINUOUSLY RAISED BUT IGNORED BY
THE HLURB; and

(4)

THAT FINALLY, THE COURT A QUO ALSO ERRED IN NOT GIVING DUE RESPECT
OR EVEN FINALITY TO THE FINDINGS OF THE HLURB.15

Petitioners contend that the HLURB has jurisdiction over the subject matter of this case. Their
complaint with the HLURB clearly alleged and demanded specific performance upon DPDCI
of the latters contractual obligation under their individual contracts to provide a back-up
water system as part of the amenities provided for in the brochure, together with an
administration office, proper gym facilities, restoration of a hallway, among others. They point
out that the violation by DPDCI of its obligations enumerated in the said complaint squarely
put their case within the ambit of Section 1, P.D. No. 957, as amended, enumerating the
cases that are within the exclusive jurisdiction of the HLURB. Likewise, petitioners argue that
the case was not a derivative suit as they were not suing for and in behalf of PHCC. They
were suing, in their individual capacities as condominium unit buyers, their developer for
breach of contract. In support of their view that PHCC was not an indispensable party,
petitioners even quoted the dispositive portion of the HLURB decision to show that complete
relief between or among the existing parties may be obtained without the presence of PHCC
as a party to this case. Petitioners further argue that DPDCIs petition before the CA should
have been dismissed outright for failure to comply with Section 1, Rule XVI of the 2004 Rules
of Procedure of the HLURB providing for an appeal to the Board of Commissioners by a party
aggrieved by a decision of a regional officer.

DPDCI, in its Comment,16 strongly objects to the arguments of petitioners and insists that the
CA did not err in granting its petition. It posits that the HLURB has no jurisdiction over the
complaint filed by petitioners because the controversies raised therein are in the nature of
"intra-corporate disputes." Thus, the case does not fall within the jurisdiction of the HLURB
under Section 1, P.D. No. 957 and P.D. No. 1344. According to DPDCI, petitioners sought to
address the invalidation of the corporate acts duly entered and executed by PHCC as a
corporation of which petitioners are admittedly members of, and not the acts pertaining to
their ownership of the units. Such being the case, PHCC should have been impleaded as a
party to the complaint. Its non-inclusion as an indispensable party warrants the dismissal of
the case. DPDCI further avers that the doctrine of exhaustion is inapplicable inasmuch as the
issues raised in the petition with the CA are purely legal; that the challenged administrative act
is patently illegal; and that the procedure of the HLURB does not provide a plain, speedy and
adequate remedy and its application may cause great and irreparable damage. Finally, it
claims that the decision of the HLURB Arbiter has not attained finality, the same having been
issued without jurisdiction.

Essentially, the issues to be resolved are: (1) whether the HLURB has jurisdiction over the
complaint filed by the petitioners; (2) whether PHCC is an indispensable party; and (3)
whether the rule on exhaustion of administrative remedies applies in this case.

The petition fails.

Basic as a hornbook principle is that jurisdiction over the subject matter of a case is conferred
by law and determined by the allegations in the complaint which comprise a concise
statement of the ultimate facts constituting the plaintiff's cause of action. The nature of an
action, as well as which court or body has jurisdiction over it, is determined based on the
allegations contained in the complaint of the plaintiff, irrespective of whether or not the plaintiff
is entitled to recover upon all or some of the claims asserted therein. The averments in the
complaint and the character of the relief sought are the ones to be consulted. Once vested by
the allegations in the complaint, jurisdiction also remains vested irrespective of whether or not
the plaintiff is entitled to recover upon all or some of the claims asserted therein.17 Thus, it was
ruled that the jurisdiction of the HLURB to hear and decide cases is determined by the nature
of the cause of action, the subject matter or property involved and the parties.18

Generally, the extent to which an administrative agency may exercise its powers depends
largely, if not wholly, on the provisions of the statute creating or empowering such agency.19
With respect to the HLURB, to determine if said agency has jurisdiction over petitioners
cause of action, an examination of the laws defining the HLURBs jurisdiction and authority
becomes imperative. P.D. No. 957,20 specifically Section 3, granted the National Housing
Authority (NHA) the "exclusive jurisdiction to regulate the real estate trade and business."
Then came P.D. No. 134421 expanding the jurisdiction of the NHA (now HLURB), as follows:

SECTION 1. In the exercise of its functions to regulate the real estate trade and business and
in addition to its powers provided for in Presidential Decree No. 957, the National Housing
Authority shall have exclusive jurisdiction to hear and decide cases of the following nature:

(a) Unsound real estate business practices;

(b) Claims involving refund and any other claims filed by subdivision lot or condominium
unit buyer against the project owner, developer, dealer, broker or salesman; and

(c) Cases involving specific performance of contractual and statutory obligations filed by
buyers of subdivision lot or condominium unit against the owner, developer, dealer,
broker or salesman.

This provision must be read in light of the laws preamble, which explains the reasons for
enactment of the law or the contextual basis for its interpretation.22 A statute derives its vitality
from the purpose for which it is enacted, and to construe it in a manner that disregards or
defeats such purpose is to nullify or destroy the law.23 P.D. No. 957, as amended, aims to
protect innocent subdivision lot and condominium unit buyers against fraudulent real estate
practices.24 The HLURB is given a wide latitude in characterizing or categorizing acts which
may constitute unsound business practice or breach of contractual obligations in the real
estate trade. This grant of expansive jurisdiction to the HLURB does not mean, however, that
all cases involving subdivision lots or condominium units automatically fall under its
jurisdiction. The CA aptly quoted the case of Christian General Assembly, Inc. v. Ignacio,25
wherein the Court held that:

The mere relationship between the parties, i.e., that of being subdivision owner/developer and
subdivision lot buyer, does not automatically vest jurisdiction in the HLURB. For an action to
fall within the exclusive jurisdiction of the HLURB, the decisive element is the nature of the
action as enumerated in Section 1 of P.D. 1344. On this matter, we have consistently held that
the concerned administrative agency, the National Housing Authority (NHA) before and now
the HLURB, has jurisdiction over complaints aimed at compelling the subdivision developer to
comply with its contractual and statutory obligations.26 [Emphases supplied]

In this case, the complaint filed by petitioners alleged causes of action that apparently are not
cognizable by the HLURB considering the nature of the action and the reliefs sought. A
perusal of the complaint discloses that petitioners are actually seeking to nullify and invalidate
the duly constituted acts of PHCC - the April 29, 2005 Agreement27 entered into by PHCC with
DPDCI and its Board Resolution28 which authorized the acceptance of the proposed
offsetting/settlement of DPDCIs indebtedness and approval of the conversion of certain
units from saleable to common areas. All these were approved by the HLURB. Specifically,
the reliefs sought or prayers are the following:

1. Ordering the respondent to restore the gym to its original location;

2. Ordering the respondent to restore the hallway at the second floor;

3. Declaring the conversion/alteration of 22 storage units and Units GF4-A and BAS as
illegal, and consequently, ordering respondent to continue paying the condominium dues
for these units, with interest and surcharge;

4. Ordering the respondent to pay the sum of PHP998,190.70, plus interest and
surcharges, as condominium dues in arrears and turnover the administration office to
PHCC without any charges pursuant to the representation of the respondent in the
brochures it circulated to the public;

5. Ordering the respondent to refund to the PHCC the amount of PHP1,277,500.00,

representing the cost of the deep well, with interests and surcharges;

6. Ordering the respondent to pay the complainants moral/exemplary damages in the

amount of PHP100,000.00; and

7. Ordering the respondent to pay the complainant attorneys fees in the amount of
PHP100,000.00, and PHP3,000.00 for every hearing scheduled by the Honorable
Office.29

As it is clear that the acts being assailed are those of PHHC, this case cannot prosper for
failure to implead the proper party, PHCC.

An indispensable party is defined as one who has such an interest in the controversy or
subject matter that a final adjudication cannot be made, in his absence, without injuring or
affecting that interest.30 In the recent case of Nagkakaisang Lakas ng Manggagawa sa Keihin
(NLMK-OLALIA-KMU) v. Keihin Philippines Corporation,31 the Court had the occasion to state
that:

Under Section 7, Rule 3 of the Rules of Court, "parties in interest without whom no final
determination can be had of an action shall be joined as plaintiffs or defendants." If there is a
failure to implead an indispensable party, any judgment rendered would have no effectiveness.
It is "precisely when an indispensable party is not before the court (that) an action should be
dismissed. The absence of an indispensable party renders all subsequent actions of the
court null and void for want of authority to act, not only as to the absent parties but even to
those present." The purpose of the rules on joinder of indispensable parties is a complete
determination of all issues not only between the parties themselves, but also as regards other
persons who may be affected by the judgment. A decision valid on its face cannot attain real
finality where there is want of indispensable parties.32 (Underscoring supplied)

Similarly, in the case of Plasabas v. Court of Appeals,33 the Court held that a final decree would
necessarily affect the rights of indispensable parties so that the Court could not proceed
without their presence. In support thereof, the Court in Plasabas cited the following authorities,
thus:

"The general rule with reference to the making of parties in a civil action requires the joinder of
all indispensable parties under any and all conditions, their presence being a sine qua non of
the exercise of judicial power. (Borlasa v. Polistico, 47 Phil. 345, 348) For this reason, our
Supreme Court has held that when it appears of record that there are other persons
interested in the subject matter of the litigation, who are not made parties to the action, it is the
duty of the court to suspend the trial until such parties are made either plaintiffs or defendants.
(Pobre, et al. v. Blanco, 17 Phil. 156). x x x Where the petition failed to join as party defendant
the person interested in sustaining the proceeding in the court, the same should be dismissed.
x x x When an indispensable party is not before the court, the action should be dismissed.
(People, et al. v. Rodriguez, et al., G.R. Nos. L-14059-62, September 30, 1959) (sic)

"Parties in interest without whom no final determination can be had of an action shall be
joined either as plaintiffs or defendants. (Sec. 7, Rule 3, Rules of Court). The burden of
procuring the presence of all indispensable parties is on the plaintiff. (39 Amjur [sic] 885). The
evident purpose of the rule is to prevent the multiplicity of suits by requiring the person
arresting a right against the defendant to include with him, either as co-plaintiffs or as
co-defendants, all persons standing in the same position, so that the whole matter in dispute
may be determined once and for all in one litigation. (Palarca v. Baginsi, 38 Phil. 177, 178).

From all indications, PHCC is an indispensable party and should have been impleaded, either
as a plaintiff or as a defendant,34 in the complaint filed before the HLURB as it would be directly
and adversely affected by any determination therein. To belabor the point, the causes of
action, or the acts complained of, were the acts of PHCC as a corporate body. Note that in the
judgment rendered by the HLURB, the dispositive portion in particular, DPDCI was ordered (1)
to pay 998,190.70, plus interests and surcharges, as condominium dues in arrears and
turnover the administration office to PHCC; and (2) to refund to PHCC 1,277,500.00,
representing the cost of the deep well, with interests and surcharges. Also, the HLURB
declared as illegal the agreement regarding the conversion of the 22 storage units and Units
GF4-A and BAS, to which agreement PHCC was a party.

Evidently, the cause of action rightfully pertains to PHCC. Petitioners cannot exercise the
same except through a derivative suit. In the complaint, however, there was no allegation that
the action was a derivative suit. In fact, in the petition, petitioners claim that their complaint is
not a derivative suit.35 In the cited case of Chua v. Court of Appeals,36 the Court ruled:

For a derivative suit to prosper, it is required that the minority stockholder suing for and on
behalf of the corporation must allege in his complaint that he is suing on a derivative cause of
action on behalf of the corporation and all other stockholders similarly situated who may wish
to join him in the suit. It is a condition sine qua non that the corporation be impleaded as a
party because not only is the corporation an indispensable party, but it is also the present rule
that it must be served with process. The judgment must be made binding upon the corporation
in order that the corporation may get the benefit of the suit and may not bring subsequent suit
against the same defendants for the same cause of action. In other words, the corporation
must be joined as party because it is its cause of action that is being litigated and because
judgment must be a res adjudicata against it. (Underscoring supplied)

Without PHCC as a party, there can be no final adjudication of the HLURBs judgment. The
CA was, thus, correct in ordering the dismissal of the case for failure to implead an
indispensable party.

To justify its finding of contractual violation, the HLURB cited a provision in the MDDR, to wit:

Section 13. Amendment. After the corporation shall have been created, organized and
operating, this MDDR may be amended, in whole or in part, by the affirmative vote of Unit
owners constituting at least fifty one (51%) percent of the Unit shares in the Project at a
meeting duly called pursuant to the Corporation By Laws and subject to the provisions of the
Condominium Act.

This citation, however, is misplaced as the above-quoted provision pertains to the amendment
of the MDDR. It should be stressed that petitioners are not asking for any change or
modification in the terms of the MDDR. What they are really praying for is a declaration that
the agreement regarding the alteration/conversion is illegal. Thus, the Court sustains the
CAs finding that:

There was nothing in the records to suggest that DPDCI sought the amendment of a part or
the whole of such MDDR. The cited section is somewhat consistent only with the principle that
an amendment of a corporations Articles of Incorporation must be assented to by the
stockholders holding more than 50% of the shares. The MDDR does not contemplate, by
such provision, that all corporate acts ought to be with the concurrence of a majority of the
unit owners.37

Moreover, considering that petitioners, who are members of PHCC, are ultimately challenging
the agreement entered into by PHCC with DPDCI, they are assailing, in effect, PHCCs acts
as a body corporate. This action, therefore, partakes the nature of an "intra-corporate
controversy," the jurisdiction over which used to belong to the Securities and Exchange
Commission (SEC), but transferred to the courts of general jurisdiction or the appropriate
Regional Trial Court (RTC), pursuant to Section 5b of P.D. No. 902-A,38 as amended by
Section 5.2 of Republic Act (R.A.) No. 8799.39

An intra-corporate controversy is one which "pertains to any of the following relationships: (1)
between the corporation, partnership or association and the public; (2) between the
corporation, partnership or association and the State in so far as its franchise, permit or
license to operate is concerned; (3) between the corporation, partnership or association and
its stockholders, partners, members or officers; and (4) among the stockholders, partners or
associates themselves."40

Based on the foregoing definition, there is no doubt that the controversy in this case is
essentially intra-corporate in character, for being between a condominium corporation and its
members-unit owners. In the recent case of Chateau De Baie Condominium Corporation v.
Sps. Moreno,41 an action involving the legality of assessment dues against the condominium
owner/developer, the Court held that, the matter being an intra-corporate dispute, the RTC
had jurisdiction to hear the same pursuant to R.A. No. 8799.

As to the alleged failure to comply with the rule on exhaustion of administrative remedies, the
Court again agrees with the position of the CA that the circumstances prevailing in this case
warranted a relaxation of the rule. The doctrine of exhaustion of administrative remedies is a
cornerstone of our judicial system. The thrust of the rule is that courts must allow
1 wphi1

administrative agencies to carry out their functions and discharge their responsibilities within
the specialized areas of their respective competence.42 It has been held, however, that the
doctrine of exhaustion of administrative remedies and the doctrine of primary jurisdiction are
not ironclad rules. In the case of Republic of the Philippines v. Lacap,43 the Court enumerated
the numerous exceptions to these rules, namely: (a) where there is estoppel on the part of the
party invoking the doctrine; (b) where the challenged administrative act is patently illegal,
amounting to lack of jurisdiction; (c) where there is unreasonable delay or official inaction that
will irretrievably prejudice the complainant; (d) where the amount involved is relatively so
small as to make the rule impractical and oppressive; (e) where the question involved is
purely legal and will ultimately have to be decided by the courts of justice; (f) where judicial
intervention is urgent; (g) where the application of the doctrine may cause great and
irreparable damage; (h) where the controverted acts violate due process; (i) where the issue
of non-exhaustion of administrative remedies has been rendered moot; (j) where there is no
other plain, speedy and adequate remedy; (k) where strong public interest is involved; and (l)
in quo warranto proceedings.44 [Underscoring supplied]

The situations (b) and (e) in the foregoing enumeration obtain in this case. The challenged
decision of the HLURB is patently illegal having been rendered in excess of jurisdiction, if not
with grave abuse of discretion amounting to lack or excess of jurisdiction. Also, the issue on
jurisdiction is purely legal which will have to be decided ultimately by a regular court of law. As
the Court wrote in Vigilar v. Aquino:45

It does not involve an examination of the probative value of the evidence presented by the
parties. There is a question of law when the doubt or difference arises as to what the law is on
a certain state of facts, and not as to the truth or the falsehood of alleged facts. Said question
at best could be resolved only tentatively by the administrative authorities. The final decision
on the matter rests not with them but with the courts of justice. Exhaustion of administrative
remedies does not apply, because nothing of an administrative nature is to be or can be done.
The issue does not require technical knowledge and experience but one that would involve
the interpretation and application of law.

Finally, petitioners faulted the CA in not giving respect and even finality to the findings of fact
of the HLURB. Their reliance on the case of Dangan v. NLRC,46 reiterating the well-settled
principles involving decisions of administrative agencies, deserves scant consideration as the
decision of the HLURB in this case is manifestly not supported by law and jurisprudence.
Petitioners, therefore, cannot validly invoke DPDCIs failure to fulfill its obligation on the
basis of a plain draft leaflet which petitioners were able to obtain, specifically Pacifico Lim,
having been a president of DPDCI. To accord petitioners the right to demand compliance with
the commitment under the said brochure is to allow them to profit by their own act. This, the
Court cannot tolerate.

In sum, inasmuch as the HLURB has no jurisdiction over petitioners complaint, the Court
sustains the subject decision of the CA that the HLURB decision is null and void ab initio. This
disposition, however, is without prejudice to any action that the parties may rightfully file in the
proper forum. WHEREFORE, the petition is DENIED. SO ORDERED.
G.R. No. 186993 August 22, 2012

THEODORE and NANCY ANG, represented by ELDRIGE MARVIN B. ACERON, Petitioners, vs.
SPOUSES ALAN and EM ANG, Respondents.

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking
to annul and set aside the Decision1 dated August 28, 2008 and the Resolution2 dated February
20, 2009 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 101159. The assailed decision
annulled and set aside the Orders dated April 12, 20073 and August 27, 20074 issued by the
Regional Trial Court (RTC) of Quezon City, Branch 81 in Civil Case No. Q-06-58834.

The Antecedent Facts

On September 2, 1992, spouses Alan and Em Ang (respondents) obtained a loan in the amount
of Three Hundred Thousand U.S. Dollars (US$300,000.00) from Theodore and Nancy Ang
(petitioners). On even date, the respondents executed a promissory note5 in favor of the
petitioners wherein they promised to pay the latter the said amount, with interest at the rate of
ten percent (10%) per annum, upon demand. However, despite repeated demands, the
respondents failed to pay the petitioners.

Thus, on August 28, 2006, the petitioners sent the respondents a demand letter asking them to
pay their outstanding debt which, at that time, already amounted to Seven Hundred Nineteen
Thousand, Six Hundred Seventy-One U.S. Dollars and Twenty-Three Cents (US$719,671.23),
inclusive of the ten percent (10%) annual interest that had accumulated over the years.
Notwithstanding the receipt of the said demand letter, the respondents still failed to settle their
loan obligation.

On August 6, 2006, the petitioners, who were then residing in Los Angeles, California, United
States of America (USA), executed their respective Special Powers of Attorney6 in favor of
Attorney Eldrige Marvin B. Aceron (Atty. Aceron) for the purpose of filing an action in court
against the respondents. On September 15, 2006, Atty. Aceron, in behalf of the petitioners, filed
a Complaint7 for collection of sum of money with the RTC of Quezon City against the
respondents.

On November 21, 2006, the respondents moved for the dismissal of the complaint filed by the
petitioners on the grounds of improper venue and prescription.8 Insisting that the venue of the
petitioners action was improperly laid, the respondents asserted that the complaint against
them may only be filed in the court of the place where either they or the petitioners reside. They
averred that they reside in Bacolod City while the petitioners reside in Los Angeles, California,
USA. Thus, the respondents maintain, the filing of the complaint against them in the RTC of
Quezon City was improper.

The RTC Orders

On April 12, 2007, the RTC of Quezon City issued an Order9 which, inter alia, denied the
respondents motion to dismiss. In ruling against the respondents claim of improper venue, the
court explained that:
Attached to the complaint is the Special Power of Attorney x x x which clearly states that plaintiff
Nancy Ang constituted Atty. Eldrige Marvin Aceron as her duly appointed attorney-in-fact to
prosecute her claim against herein defendants. Considering that the address given by Atty.
Aceron is in Quezon City, hence, being the plaintiff, venue of the action may lie where he resides
as provided in Section 2, Rule 4 of the 1997 Rules of Civil Procedure.10

The respondents sought reconsideration of the RTC Order dated April 12, 2007, asserting that
there is no law which allows the filing of a complaint in the court of the place where the
representative, who was appointed as such by the plaintiffs through a Special Power of Attorney,
resides.11

The respondents motion for reconsideration was denied by the RTC of Quezon City in its Order12
dated August 27, 2007.

The respondents then filed with the CA a petition for certiorari13 alleging in the main that,
pursuant to Section 2, Rule 4 of the Rules of Court, the petitioners complaint may only be filed
in the court of the place where they or the petitioners reside. Considering that the petitioners
reside in Los Angeles, California, USA, the respondents assert that the complaint below may only
be filed in the RTC of Bacolod City, the court of the place where they reside in the Philippines.

The respondents further claimed that, the petitioners grant of Special Power of Attorney in favor
of Atty. Aceron notwithstanding, the said complaint may not be filed in the court of the place
where Atty. Aceron resides, i.e., RTC of Quezon City. They explained that Atty. Aceron, being
merely a representative of the petitioners, is not the real party in interest in the case below;
accordingly, his residence should not be considered in determining the proper venue of the said
complaint.

The CA Decision

On August 28, 2008, the CA rendered the herein Decision,14 which annulled and set aside the
Orders dated April 12, 2007 and August 27, 2007 of the RTC of Quezon City and, accordingly,
directed the dismissal of the complaint filed by the petitioners. The CA held that the complaint
below should have been filed in Bacolod City and not in Quezon City. Thus:

As maybe clearly gleaned from the foregoing, the place of residence of the plaintiffs
attorney-in-fact is of no moment when it comes to ascertaining the venue of cases filed in behalf
of the principal since what should be considered is the residence of the real parties in interest,
i.e., the plaintiff or the defendant, as the case may be. Residence is the permanent home the
place to which, whenever absent for business or pleasure, one intends to return. Residence is
vital when dealing with venue. Plaintiffs, herein private respondents, being residents of Los
Angeles, California, U.S.A., which is beyond the territorial jurisdiction of Philippine courts, the
case should have been filed in Bacolod City where the defendants, herein petitioners, reside.
Since the case was filed in Quezon City, where the representative of the plaintiffs resides,
contrary to Sec. 2 of Rule 4 of the 1997 Rules of Court, the trial court should have dismissed the
case for improper venue.15

The petitioners sought a reconsideration of the Decision dated August 28, 2008, but it was
denied by the CA in its Resolution dated February 20, 2009.16

Hence, the instant petition.

Issue: In the instant petition, the petitioners submit this lone issue for this Courts resolution:

WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF LAW WHEN IT
RULED THAT THE COMPLAINT MUST BE DISMISSED ON THE GROUND THAT VENUE WAS NOT
PROPERLY LAID.17

The Courts Ruling: The petition is denied.

Contrary to the CAs disposition, the petitioners maintain that their complaint for collection of
sum of money against the respondents may be filed in the RTC of Quezon City. Invoking Section 3,
Rule 3 of the Rules of Court, they insist that Atty. Aceron, being their attorney-in-fact, is deemed
a real party in interest in the case below and can prosecute the same before the RTC. Such being
the case, the petitioners assert, the said complaint for collection of sum of money may be filed in
the court of the place where Atty. Aceron resides, which is the RTC of Quezon City.

On the other hand, the respondents in their Comment18 assert that the petitioners are
proscribed from filing their complaint in the RTC of Quezon City. They assert that the residence
of Atty. Aceron, being merely a representative, is immaterial to the determination of the venue
of the petitioners complaint.

The petitioners complaint should have been filed in the RTC of Bacolod City, the court of the
place where the respondents reside, and not in RTC of Quezon City.

It is a legal truism that the rules on the venue of personal actions are fixed for the convenience
of the plaintiffs and their witnesses. Equally settled, however, is the principle that choosing the
venue of an action is not left to a plaintiffs caprice; the matter is regulated by the Rules of
Court.19

The petitioners complaint for collection of sum of money against the respondents is a personal
action as it primarily seeks the enforcement of a contract. The Rules give the plaintiff the option
of choosing where to file his complaint. He can file it in the place (1) where he himself or any of
them resides, or (2) where the defendant or any of the defendants resides or may be found. The
plaintiff or the defendant must be residents of the place where the action has been instituted at
the time the action is commenced.20

However, if the plaintiff does not reside in the Philippines, the complaint in such case may only
be filed in the court of the place where the defendant resides. In Cohen and Cohen v. Benguet
Commercial Co., Ltd.,21 this Court held that there can be no election as to the venue of the filing
of a complaint when the plaintiff has no residence in the Philippines. In such case, the complaint
may only be filed in the court of the place where the defendant resides. Thus:

Section 377 provides that actions of this character "may be brought in any province where the
defendant or any necessary party defendant may reside or be found, or in any province where
the plaintiff or one of the plaintiffs resides, at the election of the plaintiff." The plaintiff in this
action has no residence in the Philippine Islands. Only one of the parties to the action resides
here. There can be, therefore, no election by plaintiff as to the place of trial. It must be in the
province where the defendant resides. x x x.22 (Emphasis ours)

Here, the petitioners are residents of Los Angeles, California, USA while the respondents reside
in Bacolod City. Applying the foregoing principles, the petitioners complaint against the
respondents may only be filed in the RTC of Bacolod City the court of the place where the
respondents reside. The petitioners, being residents of Los Angeles, California, USA, are not
given the choice as to the venue of the filing of their complaint.

Thus, the CA did not commit any reversible error when it annulled and set aside the orders of
the RTC of Quezon City and consequently dismissed the petitioners complaint against the
respondents on the ground of improper venue.

In this regard, it bears stressing that the situs for bringing real and personal civil actions is fixed
by the Rules of Court to attain the greatest convenience possible to the litigants and their
witnesses by affording them maximum accessibility to the courts.23 And even as the regulation of
venue is primarily for the convenience of the plaintiff, as attested by the fact that the choice of
venue is given to him, it should not be construed to unduly deprive a resident defendant of the
rights conferred upon him by the Rules of Court.24

Atty. Aceron is not a real party in interest in the case below; thus, his residence is immaterial
to the venue of the filing of the complaint.

Contrary to the petitioners claim, Atty. Aceron, despite being the attorney-in-fact of the
petitioners, is not a real party in interest in the case below. Section 2, Rule 3 of the Rules of
Court reads: Sec. 2. Parties in interest. A real party in interest is the party who stands to be
benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit.
Unless otherwise authorized by law or these Rules, every action must be prosecuted or
defended in the name of the real party in interest. (Emphasis ours)

Interest within the meaning of the Rules of Court means material interest or an interest in issue
to be affected by the decree or judgment of the case, as distinguished from mere curiosity about
the question involved.25 A real party in interest is the party who, by the substantive law, has the
right sought to be enforced.26 Applying the foregoing rule, it is clear that Atty. Aceron is not a real
party in interest in the case below as he does not stand to be benefited or injured by any
judgment therein. He was merely appointed by the petitioners as their attorney-in-fact for the
limited purpose of filing and prosecuting the complaint against the respondents. Such
appointment, however, does not mean that he is subrogated into the rights of petitioners and
ought to be considered as a real party in interest. Being merely a representative of the
petitioners, Atty. Aceron in his personal capacity does not have the right to file the complaint
below against the respondents. He may only do so, as what he did, in behalf of the petitioners
the real parties in interest. To stress, the right sought to be enforced in the case below belongs to
the petitioners and not to Atty. Aceron. Clearly, an attorney-in-fact is not a real party in
interest.27
The petitioners reliance on Section 3, Rule 3 of the Rules of Court to support their conclusion
that Atty. Aceron is likewise a party in interest in the case below is misplaced. Section 3, Rule 3 of
the Rules of Court provides that:

Sec. 3. Representatives as parties. Where the action is allowed to be prosecuted and defended
by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in
the title of the case and shall be deemed to be the real property in interest. A representative
may be a trustee of an expert trust, a guardian, an executor or administrator, or a party
authorized by law or these Rules. An agent acting in his own name and for the benefit of an
undisclosed principal may sue or be sued without joining the principal except when the contract
involves things belonging to the principal. (Emphasis ours)

Nowhere in the rule cited above is it stated or, at the very least implied, that the representative
is likewise deemed as the real party in interest. The said rule simply states that, in actions which
are allowed to be prosecuted or defended by a representative, the beneficiary shall be deemed
the real party in interest and, hence, should be included in the title of the case.

Indeed, to construe the express requirement of residence under the rules on venue as applicable
to the attorney-in-fact of the plaintiff would abrogate the meaning of a "real party in interest", as
defined in Section 2 of Rule 3 of the 1997 Rules of Court vis--vis Section 3 of the same Rule.28

On this score, the CA aptly observed that:

As may be unerringly gleaned from the foregoing provisions, there is nothing therein that
expressly allows, much less implies that an action may be filed in the city or municipality where
either a representative or an attorney-in-fact of a real party in interest resides. Sec. 3 of Rule 3
merely provides that the name or names of the person or persons being represented must be
included in the title of the case and such person or persons shall be considered the real party in
interest. In other words, the principal remains the true party to the case and not the
representative. Under the plain meaning rule, or verba legis, if a statute is clear, plain and free
from ambiguity, it must be given its literal meaning and applied without interpretation. xxx29
(Citation omitted)

At this juncture, it bears stressing that the rules on venue, like the other procedural rules, are
designed to insure a just and orderly administration of justice or the impartial and even-handed
determination of every action and proceeding. Obviously, this objective will not be attained if
the plaintiff is given unrestricted freedom to choose the court where he may file his complaint or
petition. The choice of venue should not be left to the plaintiff's whim or caprice. He may be
impelled by some ulterior motivation in choosing to file a case in a particular court even if not
allowed by the rules on venue.30

WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED. The

Decision dated August 28, 2008 and Resolution dated February 20, 2009 rendered by the Court
of Appeals in CA-G.R. SP No. 101159 are AFFIRMED. SO ORDERED.
G.R. No. 178611 January 14, 2013

ESTRELLA ADUAN ORPIANO, Petitioner, vs. SPOUSES ANTONIO C. TOMAS and MYRNA U.
TOMAS, Respondents.

Considerations of expediency cannot justify a resort to procedural shortcuts. The end does not
justify the means; a meritorious case cannot overshadow the condition that the means
employed to pursue it must be in keeping with the Rules.

Assailed in this Petition for Review on Certiorari1 are the May 7, 2007 Decision2 of the Court of
Appeals (CA) which dismissed the petition in CA-G.R. SP No. 97341, and its June 28, 2007
Resolution3 denying petitioner's motion for reconsideration.

Factual Antecedents

Petitioner Estrella Aduan Orpiano (Estrella) is the widow of Alejandro Orpiano (Alejandro). Part
of their conjugal estate is an 809.5-square meter lot in Quezon City covered by Transfer
Certificate of Title (TCT) No. RT-23468 (the lot).

In 1979, a Decision was rendered by the defunct Juvenile and Domestic Relations Court (JDRC) of
Quezon City declaring Estrella an absent/absentee spouse and granting Alejandro the authority
to sell the lot. The JDRC Decision was annotated on the back of TCT No. RT-23468.

On March 19, 1996, Alejandro sold the lot on installment basis to respondent spouses Antonio
and Myrna Tomas (the Tomas spouses) for 12,170,283.00. That very same day, a new title TCT
No. N-152326 was issued in the name of the Tomas spouses despite the fact that the purchase
price has not been paid in full, the spouses having been given until December of that same year
to complete their payment.

On October 28, 1996, Alejandro filed Civil Case No. Q-96-29261 (the collection case) in the
Regional Trial Court (RTC) of Quezon City, Branch 226 (the collection court), seeking collection of
the balance of the price in the amount of 4,314,100.00 supposedly left unpaid by the Tomas
spouses, with damages.[4]

During the pendency of the collection case, Alejandro passed away. His heirs, Estrella included,
were substituted in his stead in the collection case. Estrella moved to amend the Complaint to
one for rescission/annulment of sale and cancellation of title, but the court denied her motion.
She next moved to be dropped as party plaintiff but was again rebuffed.

On June 11, 2005, Estrella filed Civil Case No. Q-05-56216 (the annulment case) for annulment of
the March 1996 sale and cancellation of TCT No. N-152326, with damages, against the Tomas
spouses and the Register of Deeds of Quezon City which was impleaded as a nominal party.5 The
case was raffled to Branch 97 of the Quezon City RTC (the annulment court). In her Complaint,
Estrella claimed that the 1979 declaration of her absence and accompanying authority to sell the
lot were obtained by Alejandro through misrepresentation, fraud and deceit, adding that the
May 1979 JDRC Decision was not published as required by law and by the domestic relations
court. Thus, the declaration of absence and Alejandros authority to sell the lot are null and void.
Correspondingly, the ensuing sale to the Tomas spouses should be voided, and TCT No.
N-152326 cancelled.

In their Answer to the annulment Complaint, the Tomas spouses prayed for the dismissal thereof
on the ground of forum shopping, arguing that the filing of the annulment case was prompted by
the denial of Estrellas motion initiated in the collection case to amend the Complaint to one for
annulment of sale. The annulment case is Estrellas attempt at securing a remedy which she
could not obtain in the collection case. The Tomas spouses added that the dismissal of the
annulment case would preclude the possibility that the two courts might render conflicting
decisions.

After pre-trial in the annulment case, the court proceeded to tackle the issue of forum shopping.
The parties submitted their respective memoranda touching on the sole issue of whether
Estrella is guilty of forum shopping.

Ruling of the Regional Trial Court

On September 25, 2006, the trial court issued an Order6 dismissing the annulment case. It
sustained the view taken by the Tomas spouses that Estrella filed the annulment case only
because the collection court denied her motion to amend the case to one for annulment of the
sale, and thus the annulment case was Estrellas attempt at obtaining a remedy which she could
not secure in the collection case. It added that because the two cases involve the same subject
matter, issues, and parties, there indeed is a possibility that conflicting decisions could be
rendered by it and the collection court, the possibility made even greater because the two cases
involve antithetical remedies.

Estrella moved for reconsideration but the court was unmoved.

Ruling of the Court of Appeals

On December 27, 2006, Estrella filed with the CA a Petition for Certiorari7 questioning the
September 25, 2006 Order of the annulment court. The appellate court, however, could not be
persuaded. Finding no grave abuse of discretion in the annulment court's dismissal of the
annulment case, the CA found that Estrella was indeed guilty of forum shopping in filing the
annulment suit while the collection case was pending. Applying the test articulated in a
multitude of decided cases that where a final judgment in one case will amount to res judicata
in another it follows that there is forum shopping. The CA held that a final judgment in the
collection case ordering the Tomas spouses to pay the supposed balance of the price will
necessarily result in a finding that the sale between Alejandro and the Tomas spouses is a valid
sale. This then would prevent a declaration of nullity of the sale in the annulment case.

Accordingly, the CA dismissed Estrellas Petition for Certiorari. Her Motion for Reconsideration
was likewise denied, hence the present Petition.

Issue

The sole issue to be resolved in this case is whether there is indeed forum shopping.
Petitioners Arguments

Estrella argues that it was Alejandro and not she who initiated the collection case, and that she,
their two children, and Alejandros four illegitimate children were merely substituted in the case
as his heirs by operation of law; thus, she should not be bound by the collection case. She claims
that in the first place, she was not privy to Alejandros sale of the lot to the Tomas spouses.
Having been unwillingly substituted in the collection case, she forthwith moved to amend the
Complaint in order to include, as one of the remedies sought therein, annulment of the sale
insofar as her conjugal share in the lot is concerned. But the court denied her motion. Next, she
moved to be dropped or stricken out as plaintiff to the collection case, but again, the trial court
rebuffed her.

Estrella maintains that on account of these repeated denials, she was left with no other
alternative but to institute the annulment case. She claims that since the collection case does
not further her interest which is to seek annulment of the sale and recover her conjugal share
and the collection court would not grant her motions to amend and to be dropped or stricken
out as party plaintiff therein, she thus has a right to maintain a suit to have the sale annulled. It
is therefore erroneous for the CA to state that she initiated the annulment suit only for the
purpose of obtaining a favorable ruling in said court, which she could not achieve in the
collection court.

She further adds that there is obviously no identity of parties, cause of action, or reliefs prayed
for between the collection and annulment cases; the two involve absolutely opposite reliefs. She
stresses the fact that she is seeking annulment of the sale with respect only to her conjugal share,
and not those of her co-heirs.

Respondents Arguments

The Tomas spouses, apart from echoing the trial court and the CA, emphasize that the rule
prohibiting forum shopping precisely seeks to avoid the situation where the two courts the
collection court and the annulment court might render two separate and contradictory
decisions. If the annulment case is allowed to proceed, then it could result in a judgment
declaring the sale null and void, just as a decision in the collection case could be issued ordering
them to pay the balance of the price, which is tantamount to a declaration that the sale is valid.

They add that Estrella could no longer question the 1979 JDRC Decision, having failed to
challenge the same immediately upon obtaining notice thereof; she did not even bother to have
her declaration of absence lifted. They claim that after the lapse of 26 years, prescription has
finally set in. They likewise argue that if both cases are allowed to remain pending, a ridiculous
situation could arise where, after having paid the balance as ordered by the collection court,
they could lose not only the lot but also their payments in case a decision in the annulment court
is rendered nullifying and canceling the sale and ordering the return of the lot to Alejandros
heirs, Estrella included.

Our Ruling: The petition must be denied.

"Forum shopping is defined as an act of a party, against whom an adverse judgment or order has
been rendered in one forum, of seeking and possibly getting a favorable opinion in another
forum, other than by appeal or special civil action for certiorari. It may also be the institution of
two or more actions or proceedings grounded on the same cause on the supposition that one or
the other court would make a favorable disposition. x x x It is expressly prohibited x x x because
it trifles with and abuses court processes, degrades the administration of justice, and congests
court dockets. A willful and deliberate violation of the rule against forum shopping is a ground
for summary dismissal of the case, and may also constitute direct contempt."8

Although the Court believes that Estrella was not prompted by a desire to trifle with judicial
processes, and was acting in good faith in initiating the annulment case, still the said case should
be dismissed because it produces the same effect which the rule on forum shopping was
fashioned to preclude. If the collection case is not dismissed and it, together with the annulment
case, proceeds to finality, not only do we have a possibility of conflicting decisions being
rendered; an unfair situation, as envisioned by the Tomas spouses, might arise where after
having paid the balance of the price as ordered by the collection court, the cancellation of the
TCT and return of the property could be decreed by the annulment court. Besides, allowing the
two cases to remain pending makes litigation simply a game of chance where parties may hedge
their position by betting on both sides of the case, or by filing several cases involving the same
issue, subject matter, and parties, in the hope of securing victory in at least one of them. But, as
is already well known, the "trek to justice is not a game of chance or skill but rather a quest for
truth x x x."9

Moreover, allowing Estrella to proceed with the annulment case while the collection case is still
pending is like saying that she may accept the deed of sale and question it at the same time. For
this is the necessary import of the two pending cases: joining as plaintiff in the collection case
implies approval of the deed, while suing to declare it null and void in the annulment court
entails a denunciation thereof. This may not be done. "A person cannot accept and reject the
same instrument"10 at the same time. It must be remembered that "the absence of the consent
of one (spouse to a sale) renders the entire sale null and void, including the portion of the
conjugal property pertaining to the spouse who contracted the sale."11

The Court realizes the quandary that Estrella motivated by the solitary desire to protect her
conjugal share in the lot from what she believes was Alejandros undue interference in disposing
the same without her knowledge and consent finds herself in. While raring to file the
annulment case, she has to first cause the dismissal of the collection case because she was by
necessity substituted therein by virtue of her being Alejandros heir; but the collection court
nonetheless blocked all her attempts toward such end. The collection court failed to
comprehend her predicament, her need to be dropped as party to the collection case in order to
pursue the annulment of the sale.

As plaintiff in the collection case, Estrella though merely succeeding to Alejandros rights was
an indispensable party, or one without whom no final determination can be had in the collection
case.12 Strictly, she may not be dropped from the case. However, because of her dual identity,
first as heir and second as owner of her conjugal share, she has been placed in the unique
position where she has to succeed to her husbands rights, even as she must protect her
separate conjugal share from Alejandros perceived undue disposition. She may not seek to
amend the cause of action in the collection case to one for annulment of sale, because this
adversely affects the interests of her co-heirs, which is precisely to obtain payment of the
supposed balance of the sale price.

Nor may Estrella simultaneously maintain the two actions in both capacities, as heir in the
collection case and as separate owner of her conjugal share in the annulment case. This may not
be done, because, as was earlier on declared, this amounts to simultaneously accepting and
rejecting the same deed of sale. Nor is it possible to prosecute the annulment case
simultaneously with the collection case, on the premise that what is merely being annulled is the
sale by Alejandro of Estrellas conjugal share. To repeat, the absence of the consent of one
spouse to a sale renders the entire sale null and void, including the portion of the conjugal
property pertaining to the spouse who contracted the sale.

Undoubtedly, Estrella had the right to maintain the annulment case as a measure of protecting
her conjugal share. There thus exists a just cause for her to be dropped as party plaintiff in the
collection case so that she may institute and maintain the annulment case without violating the
rule against forum shopping. Unless this is done, she stands to lose her share in the conjugal
property. But the issue of whether the sale should be annulled is a different matter
altogether.1wphi1

Under the Rules, parties may be dropped or added by order of the court on motion of any party
or on its own initiative at any stage of the action and on such terms as are just.13 Indeed, it would
have been just for the collection court to have allowed Estrella to prosecute her annulment case
by dropping her as a party plaintiff in the collection case, not only so that she could protect her
conjugal share, but also to prevent the interests of her co-plaintiffs from being adversely affected
by her conflicting actions in the same case. By seeking to be dropped from the collection case,
Estrella was foregoing collection of her share in the amount that may be due and owing from the
sale. It does not imply a waiver in any manner that affects the rights of the other heirs.

While Estrella correctly made use of the remedies available to her amending the Complaint
and filing a motion to drop her as a party she committed a mistake in proceeding to file the
annulment case directly after these remedies were denied her by the collection court without
first questioning or addressing the propriety of these denials. While she may have been
frustrated by the collection courts repeated rejection of her motions and its apparent inability to
appreciate her plight, her proper recourse nevertheless should have been to file a petition for
certiorari or otherwise question the trial courts denial of her motion to be dropped as plaintiff,
citing just reasons which call for a ruling to the contrary. Issues arising from joinder or misjoinder
of parties are the proper subject of certiorari.14

In fine, we reiterate that considerations of expediency cannot justify a resort to procedural

shortcuts. The end does not justify the means; a meritorious case cannot overshadow the
condition that the means employed to pursue it must be in keeping with the Rules.

WHEREFORE, premises considered, the Petition is DENIED for lack of merit.

SO ORDERED.
G.R. No. 169706 February 5, 2010

SPOUSES WILLIAM GENATO and REBECCA GENATO, Petitioners, vs. RITA VIOLA, Respondent.

When there is a conflict between the title of the case and the allegations in the complaint, the
latter prevail in determining the parties to the action. Jurisprudence directs us to look beyond
the form and into the substance so as to render substantial justice to the parties and determine
speedily and inexpensively the actual merits of the controversy with least regard to
technicalities.

In the present Petition for Review, petitioners assail the September 9, 2005 Decision1 of the
Court of Appeals (CA) in CA-G.R. SP No. 89466 which affirmed the Decision of the Office of the
President. The Office of the President affirmed the Decision of the Housing and Land Use
Regulatory Board (HLURB), First Division which granted the motion to quash the writ of
execution issued in HLURB Case No. REM-102491-4959 (REM-A-950426-0059).

Factual Antecedents

In October 1991, a complaint titled "VILLA REBECCA HOMEOWNERS ASSOCIATION, INC. versus
MR. WILLIAM GENATO and spouse REBECCA GENATO" was filed with the HLURB. The said
complaint was verified by 34 individuals, including the respondent herein, who referred to
themselves as the "Complainants" who "caused the preparation of the foregoing Complaint".2
The complaint stated that on various dates, complainants executed Contracts to Sell and/or
Lease Purchase Agreements with the Sps. Genato pertaining to housing units in Villa Rebecca
Homes Subdivision. Sometime thereafter the HLURB issued a cease and desist order (CDO)
enjoining the collection of amortization payments. This CDO was subsequently lifted. Thereafter,
complainants went to the Sps. Genato with the intention of resuming their amortization
payments. The latter however refused to accept their payments and instead demanded for a
lump sum payment of all the accrued amortizations which fell due during the effectivity of the
CDO.

From the disorganized, bordering on incomprehensible, complaint, it can be gleaned that the
following reliefs are prayed for: 1) That Sps. Genato accept the complainants' monthly
amortization payments corresponding to the period of effectivity of the (subsequently lifted)
CDO, without any penalty; 2) That the computation of interest on delinquent payments be at 3%
per month and not compounded; 3) That Sps. Genato be responsible for correcting the
deficiencies in the construction and replacement of sub-standard materials to conform with the
plans and specifications; 4) That Sps. Genato be held answerable/liable to make good their
undertaking to provide individual deep wells for the homeowners; 5) That Sps. Genato be
responsible for maintaining the street lights and payment of the corresponding electric bills; 6)
That Sps. Genato maintain the contract price of the units for sale and not increase the prices;
and 7) That Sps. Genato be made accountable for the unregistered dwelling units.

On March 8, 1995, the Housing Arbiter rendered a Decision, the dispositive portion of which
states:

WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering
complainants to resume payment of their monthly amortization from date hereof pursuant to
the agreement. Likewise, it is hereby ordered that respondents correct the deficiencies in the
construction of the complaining occupants' units so as to conform to that which is specified in
the plans and specification of the buildings, as well as observe proper drainage requirements
pursuant to law. Likewise, respondents are hereby directed to immediately put up commercial
wells and/or water pumps or facilities in the Villa Rebecca Subdivision and to reimburse
complainants and unit occupants of their total expenditures incurred for their water supply.3

On appeal to the HLURB Board of Commissioners, the Decision was modified, inter alia, by the
additional directive for the complainants to pay 3% interest per month for the unpaid
amortizations due from June 29, 1991. The dispositive portion of the Decision of the HLURB
Board of Commissioners states:

WHEREFORE, premises considered, the decision of the Arbiter is hereby MODIFIED to read as
follows:

1. Ordering complainants to pay respondent the remaining balance of the purchase price.
Complainant must pay 3% interest per month for unpaid amortizations due from June 29,
1991. Thereafter complainant must pay its amortization in accordance with the original
term of the contract. These must be complied with upon finality of this decision.

2. Ordering the respondent to:

a. Accept the amortization payment;

b. Provide drainage outfall;

c. Provide the project with water facilities; and

d. Reimburse complainant the following:

d.1 Electric Bills in the amount of 3,146.66

d.2 Cost of construction of water supply to be determined by an appraiser

mutually acceptable to the parties.

Number 2.d to 2.e [sic] must be complied with within thirty (30) days from finality of this
decision. SO ORDERED.4

This Decision, after being revised and then reinstated, subsequently became final and executory.

On May 26, 2000, Arbiter Marino Bernardo M. Torres issued the Writ of Execution. In connection
therewith, the sheriff seized Rita Viola's two delivery trucks and 315 sacks of rice. Respondent
Viola then filed an Urgent Motion to Quash Execution, with Prayers for Issuance of Temporary
Restraining Order, Clarification and Computation of Correct Amount of Money Judgment and
Allowance of Appeal.
After various incidents and pleadings by the opposing parties, the two trucks were ordered
released. The 315 sacks of rice, however, were sold at public auction to the highest bidder,5
petitioner Rebecca Genato in the amount of 189,000.00.6

On December 15, 2000, Arbiter Torres issued an Order denying respondent Viola's motion to
quash the writ of execution and directed her to pay the Sps. Genato the amount of 739,133.31.
The dispositive portion of the Order reads:

WHEREFORE, premises considered, the motion to quash writ of execution is hereby DENIED.

Movant Rita Viola is hereby directed to pay to the respondents the amount of 739,133.31 in
payment of their amortizations up to August 2000.

The bond posted by the movant in compliance with the directive of this Office is likewise ordered
cancelled.

SO ORDERED.7

Viola appealed the said Order and on January 10, 2003, the HLURB, First Division rendered a
Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the movants' respective Motions to Quash the Writ of
Execution are hereby GRANTED. Accordingly, the Orders dated December 15, [2000] are hereby
SET ASIDE. The respondents are directed to credit as payment the value of the 315 sacks of rice
in the amount of 318,500.00, which were seized and auctioned to the account of movant Viola.

SO ORDERED.8

The Sps. Genato appealed the said Decision to the Office of the President. On November 8, 2004,
the Office of the President affirmed in toto the Decision of the HLURB, First Division. The motion
for reconsideration filed by the Sps. Genato was denied. They thus elevated the case to the CA.
As previously mentioned, the CA affirmed the Decision of the Office of the President and
disposed as follows:

WHEREFORE, premises considered, the petition is DENIED and the assailed decision dated
November 4, 2004 and resolution dated March 31, 2005 of the Office of the President in O.P.
Case No. 03-B-057 are hereby AFFIRMED. SO ORDERED.9

The Sps. Genato no longer filed a motion for reconsideration, they instead filed the present
petition for review.

Issues

Petitioners raise the following issues:

1. WHETHER THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE HLURB HAS NOT
ACQUIRED JURISDICTION OVER THE PERSON OF RESPONDENT RITA VIOLA.
2. WHETHER AFTER THE DECISION HAS BECOME FINAL AND EXECUTORY THE HLURB COULD
STILL RULE ON THE LACK OF JURISDICTION OVER THE PERSON OF RITA VIOLA.

3. WHETHER RESPONDENT VIOLA CAN CLAIM AN AMOUNT HIGHER THAN WHAT APPEARS ON
SHERIFF'S CERTIFICATE OF SALE.

4. WHETHER THE RULE THAT FINDINGS OF FACTS AND CONCLUSIONS OF ANY ADJUDICATIVE
BODY SHOULD BE CONSIDERED AS BINDING AND CONCLUSIVE ON THE APPELLATE COURT, IS
APPLICABLE IN THE CASE AT BAR.10

Petitioners' Arguments

Petitioners contend that the CA erred in applying the case of Duero v. Court of Appeals,11 which
held that the lack of jurisdiction of the court over an action cannot be waived. They submit that
"jurisdiction of the court over an action" is different from "jurisdiction over the person". They say
that the latter was what the HLURB was referring to because it stated that Rita Viola was never
impleaded. They contend that jurisdiction over the person can be conferred by consent expressly
or impliedly given, as in the case of Rita Viola.

Petitioners also assert that the HLURB Decision subject of the writ of execution has long been
final and executory, hence, said Decision can no longer be modified. They further assert that the
execution of the said Decision is a ministerial duty of the HLURB.

Petitioners further argue that the best evidence of the value of the 315 sacks of rice seized and
auctioned off is the Sheriff's Certificate of Sale; hence the Board's ruling crediting to the account
of Viola an amount other than that stated in the Certificate of Sale has no sound basis.

Finally, the petitioners contend that the findings and conclusions of an adjudicative body
resulting from an erroneous application of law are not binding on the appellate courts.

Respondent's Arguments

On the other hand, respondent contends that the HLURB did not acquire jurisdiction over her
person since she was not a party to the case; hence, the HLURB decision is a nullity as against
her and therefore never acquired finality. With a void judgment, the resultant execution was
likewise void.

She also argues that, since the levy and auction were illegal, the correct valuation of the 315
sacks of rice is not the price paid at the auction but its actual value of 318,500.00.

Our Ruling: The petition has merit.

At the outset, it is worth mentioning that except for respondent Rita Viola, all the other
individual members/buyers/owners of the respective housing units have already paid and settled
their obligations with Sps. Genato.12 Hence, in the present case we only focus on the matters
involving Rita Viola.
For a more orderly presentation, we address the fourth issue raised by petitioners first.

Non-applicability of the doctrine on the binding effect of findings of facts and conclusions of an
adjudicative body

Indeed findings of fact and conclusions of an adjudicative body like the HLURB, which can be
considered as a trier of facts on specific matters within its field of expertise, should be
considered as binding and conclusive upon the appellate courts. This is in addition to the fact
that it was in a better position to assess and evaluate the credibility of the contending parties
and the validity of their respective evidence. However, these doctrines hold true only when such
findings and conclusions are supported by substantial evidence.13

In the present case, we find it difficult to find sufficient evidential support for the HLURB's
conclusion that it did not acquire jurisdiction over the person of Viola. We are thus persuaded
that there is ample justification to disturb the findings of the HLURB.

The HLURB acquired jurisdiction over Viola

It is not the caption of the pleading but the allegations therein that are controlling.14 The
inclusion of the names of all the parties in the title of a complaint is a formal requirement under
Section 3, Rule 7 of the Rules of Court. However, the rules of pleadings require courts to pierce
the form and go into the substance.15 The non-inclusion of one or some of the names of all the
complainants in the title of a complaint, is not fatal to the case, provided there is a statement in
the body of the complaint indicating that such complainant/s was/were made party to such
action. This is specially true before the HLURB where the proceedings are summary in nature
without regard to legal technicalities obtaining in the courts of law16 and where the pertinent
concern is to promote public interest and to assist the parties in obtaining just, speedy and
inexpensive determination of every action, application or other proceedings.17

Respondent Viola, although her name did not appear in the title as a party, was one of the
persons who caused the preparation of the complaint and who verified the same. The
allegations in the body of the complaint indicate that she is one of the complainants. She
categorically considered, and held out, herself as one of the complainants from the time of the
filing of the complaint and up to the time the decision in the HLURB case became final and
executory. To repeat, the averments in the body of the complaint, not the title, are controlling.18
Hence, having been set forth in the body of the complaint as a complainant, Viola was a party to
the case.

For clarity, the complaint should have been amended to reflect in the title the individual
complainants. There being a "defect in the designation of the parties", its correction could be
summarily made at any stage of the action provided no prejudice is caused thereby to the
adverse party.19 In the present case, the specification of the individual complainants in the title
of the case would not constitute a change in the identity of the parties. Only their names were
omitted in the title but they were already parties to the case, most importantly, they were heard
through their counsel whom they themselves chose to prepare the complaint and represent
them in the case before the HLURB. No unfairness or surprise to the complainants, including
Viola, or to the Sps. Genato would result by allowing the amendment, the purpose of which is
merely to conform to procedural rules or to correct a technical error.20

It is now too late to dismiss this petition, and, in effect, nullify all proceedings had before the
HLURB on the ground that Viola does not appear to have been impleaded as a party. The error or
defect is merely formal and not substantial and an amendment to cure such defect is expressly
authorized by Sec. 4, Rule 10 of the Rules of Court.21

Moreover, it was only when the final and executory judgment of the HLURB was already being
executed against Viola that she, for the first time, reversed her position; and claimed that she
was not a party to the case and that the HLURB did not acquire jurisdiction over her. Viola is
estopped22 from taking such inconsistent positions. Where a party, by his or her deed or conduct,
has induced another to act in a particular manner, estoppel effectively bars the former from
adopting an inconsistent position, attitude or course of conduct that causes loss or injury to the
latter. The doctrine of estoppel is based upon the grounds of public policy, fair dealing, good
faith and justice, and its purpose is to forbid one to speak against his own act, representations,
or commitments to the injury of one to whom they were directed and who reasonably relied
thereon. After petitioners had reasonably relied on the representations of Viola that she was a
complainant and entered into the proceedings before the HLURB, she cannot now be permitted
to impugn her representations to the injury of the petitioners.1avvphi1

At this point, it may be beneficial to elaborate on the matter of jurisdiction. Jurisdiction is

defined as the power and authority of a court to hear, try and decide a case.23 In order for the
court or an adjudicative body to have authority to dispose of the case on the merits, it must
acquire jurisdiction over the subject matter and the parties.24Elementary is the distinction
between jurisdiction over the subject matter and jurisdiction over the person. Jurisdiction over
the subject matter is conferred by the Constitution or by law. In contrast, jurisdiction over the
person is acquired by the court by virtue of the party's voluntary submission to the authority of
the court or through the exercise of its coercive processes. Jurisdiction over the person is
waivable unlike jurisdiction over the subject matter which is neither subject to agreement nor
conferred by consent of the parties.25 In civil case, courts acquire jurisdiction over the plaintiffs
upon the filing of the complaint, while jurisdiction over the defendants is acquired either
through the service of summons upon them in the manner required by law or through their
voluntary appearance in court and their submission to its authority.26

The act of filing the complaint with the HLURB is unequivocally a voluntary submission by the
complainants, including Viola, to the authority of the HLURB. Clearly, the HLURB acquired
jurisdiction over Viola, who was one of the complainants, upon the filing of their complaint.

Final and executory judgment may no longer be modified

The April 27, 1999 HLURB Resolution,27 reinstating the December 18, 1996 Decision,28 has long
been final and executory. Nothing is more settled in the law than that a decision that has
acquired finality becomes immutable and unalterable and may no longer be modified in any
respect even if the modification is meant to correct erroneous conclusions of fact or law and
whether it was made by the court that rendered it or by the highest court of the land.29The only
recognized exceptions to the general rule are the correction of clerical errors, the so-called nunc
pro tuncentries which cause no prejudice to any party, void judgments, and whenever
circumstances transpire after the finality of the decision rendering its execution unjust and
inequitable.30 None of the exceptions is present in this case. The HLURB decision cannot be
considered a void judgment, as it was rendered by a tribunal with jurisdiction over the subject
matter of the complaint and, as discussed above, with jurisdiction over the parties. Hence, the
same can no longer be modified.

Amount to be credited on account

of the sale of property levied upon

After a judgment has gained finality, it becomes the ministerial duty of the court or quasi-judicial
tribunal to order its execution.31 In the present case, the final and executory HLURB decision was
partially executed by the sale of the 315 sacks of rice belonging to Viola.

In determining the amount to be credited to the account of Viola, we look at the Sheriff's Partial
Report and the Sheriff's Certificate of Sale. Both documents state that in the auction sale of the
315 sacks of rice, Mrs. Rebecca Genato submitted the highest bid in the amount of 189,000.00.
Drawing from Section 19, Rule 39 of the Rules of Court which states that "all sales of property
under execution must be made at public auction, to the highest bidder," it naturally follows that
the highest bid submitted is the amount that should be credited to the account of the judgment
debtor.

WHEREFORE, the petition is GRANTED. The assailed September 9, 2005 Decision of the Court of
Appeals is REVERSED and SET ASIDE and the December 15, 2000 Order of Arbiter Marino
Bernardo M. Torres is REINSTATED and AFFIRMED.

SO ORDERED.
G.R. No. 152272 March 5, 2012

JUANA COMPLEX I HOMEOWNERS ASSOCIATION, INC., ANDRES C. BAUTISTA,

BRIGIDO DIMACULANGAN, DOLORES P. PRADO, IMELDA DE LA CRUZ, EDITHA C. DY,
FLORENCIA M. MERCADO, LEOVINO C. DATARIO, AIDA A. ABAYON, NAPOLEON M.
DIMAANO, ROSITA G. ESTIGOY and NELSON A. LOYOLA, Petitioners,
vs.
FIL-ESTATE LAND, INC., FIL ESTATE ECOCENTRUM CORPORATION, LA PAZ
HOUSING AND DEVELOPMENT CORPORATION, WARBIRD SECURITY AGENCY,
ENRIQUE RIVILLA, MICHAEL E. JETHMAL and MICHAEL ALUNAN, Respondents.

x-----------------------x

G. R. No. 152397

FIL-ESTATE LAND, INC., FIL ESTATE ECOCENTRUM CORPORATION, LA PAZ

HOUSING AND DEVELOPMENT CORPORATION, WARBIRD SECURITY AGENCY,
ENRIQUE RIVILLA, MICHAEL E. JETHMAL and MICHAEL ALUNAN, Petitioners,
vs.
JUANA COMPLEX I HOMEOWNERS ASSOCIATION, INC., ANDRES C. BAUTISTA,
BRIGIDO DIMACULANGAN, DOLORES P. PRADO, IMELDA DE LA CRUZ, EDITHA C. DY,
FLORENCIA M. MERCADO, LEOVINO C. DATARIO, AIDA A. ABAYON, NAPOLEON M.
DIMAANO, ROSITA G. ESTIGOY and NELSON A. LOYOLA, Respondents.

DECISION

MENDOZA, J.:

Before the Court are two (2) consolidated petitions assailing the July 31, 2001 Decision1 and
February 21, 2002 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 60543, which
annulled and set aside the March 3, 1999 Order3 of the Regional Trial Court, Branch 25, Bian,
Laguna (RTC), granting the application for the issuance of a writ of preliminary injunction, and
upheld the June 16, 2000 Omnibus Order4 denying the motion to dismiss.

The Facts:

On January 20, 1999, Juana Complex I Homeowners Association, Inc. (JCHA), together with
individual residents of Juana Complex I and other neighboring subdivisions (collectively
referred as JCHA, et. al.), instituted a complaint5for damages, in its own behalf and as a class
suit representing the regular commuters and motorists of Juana Complex I and neighboring
subdivisions who were deprived of the use of La Paz Road, against Fil-Estate Land, Inc.
(Fil-Estate), Fil-estate Ecocentrum Corporation (FEEC), La Paz Housing & Development
Corporation (La Paz), and Warbird Security Agency and their respective officers (collectively
referred as Fil-Estate, et al.).

The complaint alleged that JCHA, et al. were regular commuters and motorists who
constantly travelled towards the direction of Manila and Calamba; that they used the entry and
exit toll gates of South Luzon Expressway (SLEX) by passing through right-of-way public road
known as La Paz Road; that they had been using La Paz Road for more than ten (10) years;
that in August 1998, Fil-estate excavated, broke and deliberately ruined La Paz Road that led
to SLEX so JCHA, et al. would not be able to pass through the said road; that La Paz Road
was restored by the residents to make it passable but Fil-estate excavated the road again;
that JCHA reported the matter to the Municipal Government and the Office of the Municipal
Engineer but the latter failed to repair the road to make it passable and safe to motorists and
pedestrians; that the act of Fil-estate in excavating La Paz Road caused damage, prejudice,
inconvenience, annoyance, and loss of precious hours to them, to the commuters and
motorists because traffic was re-routed to narrow streets that caused terrible traffic congestion
and hazard; and that its permanent closure would not only prejudice their right to free and
unhampered use of the property but would also cause great damage and irreparable injury.

Accordingly, JCHA, et al. also prayed for the immediate issuance of a Temporary Restraining
Order (TRO) or a writ of preliminary injunction (WPI) to enjoin Fil-Estate, et al. from stopping
and intimidating them in their use of La Paz Road.

On February 10, 1999, a TRO was issued ordering Fil-Estate, et al, for a period of twenty (20)
days, to stop preventing, coercing, intimidating or harassing the commuters and motorists
from using the La Paz Road. 6

Subsequently, the RTC conducted several hearings to determine the propriety of the issuance
of a WPI.

On February 26, 1999, Fil-Estate, et al. filed a motion to dismiss7 arguing that the complaint
failed to state a cause of action and that it was improperly filed as a class suit. On March 5,
1999, JCHA, et al. filed their comment8 on the motion to dismiss to which respondents filed a
reply.9

On March 3, 1999, the RTC issued an Order 10 granting the WPI and required JCHA, et al. to
post a bond.

On March 19, 1999, Fil-Estate, et al. filed a motion for reconsideration11 arguing, among others,
that JCHA, et al. failed to satisfy the requirements for the issuance of a WPI. On March 23,
1999, JCHA, et al. filed their opposition to the motion.12

The RTC then issued its June 16, 2000 Omnibus Order, denying both the motion to dismiss
and the motion for reconsideration filed by Fil-Estate, et al.

Not satisfied, Fil-Estate, et al. filed a petition for certiorari and prohibition before the CA to
annul (1) the Order dated March 3, 1999 and (2) the Omnibus Order dated June 16, 2000.
They contended that the complaint failed to state a cause of action and that it was improperly
filed as a class suit. With regard to the issuance of the WPI, the defendants averred that
JCHA, et al. failed to show that they had a clear and unmistakable right to the use of La Paz
Road; and further claimed that La Paz Road was a torrens registered private road and there
was neither a voluntary nor legal easement constituted over it.13

On July 31, 2001, the CA rendered the decision partially granting the petition, the dispositive
portion of which reads:

WHEREFORE, the petition is hereby partially GRANTED. The Order dated March 3, 1999
granting the writ of preliminary injunction is hereby ANNULLED and SET ASIDE but the
portion of the Omnibus Order dated June 16, 2000 denying the motion to dismiss is upheld.

SO ORDERED.14
The CA ruled that the complaint sufficiently stated a cause of action when JCHA, et al. alleged
in their complaint that they had been using La Paz Road for more than ten (10) years and that
their right was violated when Fil-Estate closed and excavated the road. It sustained the RTC
ruling that the complaint was properly filed as a class suit as it was shown that the case was
of common interest and that the individuals sought to be represented were so numerous that
it was impractical to include all of them as parties. The CA, however, annulled the WPI for
failure of JCHA, et al. to prove their clear and present right over La Paz Road. The CA ordered
the remand of the case to the RTC for a full-blown trial on the merits.

Hence, these petitions for review.

In G.R. No. 152272, JCHA, et al. come to this Court, raising the following issues:

a) THE HONORABLE COURT OF APPEALS, IN HOLDING THAT A FULL-BLOWN TRIAL

ON THE MERITS IS REQUIRED TO DETERMINE THE NATURE OF THE LA PAZ
ROAD, HAD DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF
SUPERVISION.
b) THE HONORABLE COURT OF APPEALS, IN HOLDING THAT THE PETITIONERS
FAILED TO SATISFY THE REQUIREMENTS FOR THE ISSUANCE OF A WRIT OF
PRELIMINARY INJUNCTION, HAD DECIDED NOT IN ACCORD WITH LAW AND WITH
THE APPLICABLE DECISIONS OF THE SUPREME COURT.15

In G.R. No. 152397, on the other hand, Fil-Estate, et al. anchor their petition on the following
issues:

1. The Court of Appeals declaration that respondents Complaint states a cause of

action is contrary to existing law and jurisprudence.
2. The Court of Appeals pronouncement that respondents complaint was properly filed
as a class suit is contrary to existing law and jurisprudence.
3. The Court of Appeals conclusion that full blown trial on the merits is required to
determine the nature of the La Paz Road is contrary to existing laws and jurisprudence.16

JCHA, et al. concur with the CA that the complaint sufficiently stated a cause of action. They,
however, disagree with the CAs pronouncement that a full-blown trial on the merits was
necessary. They claim that during the hearing on the application of the writ of injunction, they
had sufficiently proven that La Paz Road was a public road and that commuters and motorists
of their neighboring villages had used this road as their means of access to the San Agustin
Church, Colegio De San Agustin and to SLEX in going to Metro Manila and to Southern
Tagalog particularly during the rush hours when traffic at Carmona Entry/Exit and Susana
Heights Entry/Exit was at its worst.

JCHA, et al. argue that La Paz Road has attained the status and character of a public road or
burdened by an apparent easement of public right of way. They point out that La Paz Road is
the widest road in the neighborhood used by motorists in going to Halang Road and in
entering the SLEX-Halang toll gate and that there is no other road as wide as La Paz Road
existing in the vicinity. For residents of San Pedro, Laguna, the shortest, convenient and safe
route towards SLEX Halang is along Rosario Avenue joining La Paz Road.

Finally, JCHA, et al. argue that the CA erred when it voided the WPI because the public nature
of La Paz Road had been sufficiently proven and, as residents of San Pedro and Bian,
Laguna, their right to use La Paz Road is undeniable.

In their Memorandum,17 Fil-Estate, et al. explain that La Paz Road is included in the parcels of
land covered by Transfer Certificates of Title (TCT) Nos. T-120008, T-90321 and T-90607, all
registered in the name of La Paz. The purpose of constructing La Paz Road was to provide a
passageway for La Paz to its intended projects to the south, one of which was the Juana
Complex I. When Juana Complex I was completed, La Paz donated the open spaces,
drainage, canal, and lighting facilities inside the Juana Complex I to the Municipality of Bian.
The streets within the subdivisions were then converted to public roads and were opened for
use of the general public. The La Paz Road, not being part of the Juana Complex I, was
excluded from the donation. Subsequently, La Paz became a shareholder of FEEC, a
consortium formed to develop several real properties in Bian, Laguna, known as Ecocentrum
Project. In exchange for shares of stock, La Paz contributed some of its real properties to the
Municipality of Bian, including the properties constituting La Paz Road, to form part of the
Ecocentrum Project.

Fil-Estate, et al. agree with the CA that the annulment of the WPI was proper since JCHA, et
al. failed to prove that they have a clear right over La Paz Road. Fil-Estate, et al. assert that
JCHA, et al. failed to prove the existence of a right of way or a right to pass over La Paz Road
and that the closure of the said road constituted an injury to such right. According to them, La
Paz Road is a torrens registered private road and there is neither a voluntary nor legal
easement constituted over it. They claim that La Paz Road is a private property registered
under the name of La Paz and the beneficial ownership thereof was transferred to FEEC
when La Paz joined the consortium for the Ecocentrum Project.

Fil-Estate, et al., however, insist that the complaint did not sufficiently contain the ultimate
facts to show a cause of action. They aver the bare allegation that one is entitled to something
is an allegation of a conclusion which adds nothing to the pleading.

They likewise argue that the complaint was improperly filed as a class suit for it failed to show
that JCHA, et al. and the commuters and motorists they are representing have a well-defined
community of interest over La Paz Road. They claim that the excavation of La Paz Road
would not necessarily give rise to a common right or cause of action for JCHA, et al. against
them since each of them has a separate and distinct purpose and each may be affected
differently than the others.

The Courts Ruling: The issues for the Courts resolution are: (1) whether or not the
complaint states a cause of action; (2) whether the complaint has been properly filed as a
class suit; and (2) whether or not a WPI is warranted.

Section 2, Rule 2 of the Rules of Court defines a cause of action as an act or omission by
which a party violates the right of another. A complaint states a cause of action when it
contains three (3) essential elements of a cause of action, namely: (1) the legal right of the
plaintiff, (2) the correlative obligation of the defendant, and (3) the act or omission of the
defendant in violation of said legal right.18

The question of whether the complaint states a cause of action is determined by its averments
regarding the acts committed by the defendant.19 Thus, it must contain a concise statement of
the ultimate or essential facts constituting the plaintiffs cause of action.20 To be taken into
account are only the material allegations in the complaint; extraneous facts and
circumstances or other matters aliunde are not considered.21
The test of sufficiency of facts alleged in the complaint as constituting a cause of action is
whether or not admitting the facts alleged, the court could render a valid verdict in accordance
with the prayer of said complaint.22 Stated differently, if the allegations in the complaint furnish
sufficient basis by which the complaint can be maintained, the same should not be dismissed
regardless of the defense that may be asserted by the defendant.23

In the present case, the Court finds the allegations in the complaint sufficient to establish a
cause of action. First,JCHA, et al.s averments in the complaint show a demandable right
over La Paz Road. These are: (1) their right to use the road on the basis of their allegation that
they had been using the road for more than 10 years; and (2) an easement of a right of way
has been constituted over the said roads. There is no other road as wide as La Paz Road
existing in the vicinity and it is the shortest, convenient and safe route towards SLEX Halang
that the commuters and motorists may use. Second, there is an alleged violation of such right
committed by Fil-Estate, et al. when they excavated the road and prevented the commuters
and motorists from using the same. Third, JCHA, et al. consequently suffered injury and that a
valid judgment could have been rendered in accordance with the relief sought therein.

With respect to the issue that the case was improperly instituted as a class suit, the Court
finds the opposition without merit.

Section 12, Rule 3 of the Rules of Court defines a class suit, as follows:

Sec. 12. Class suit. When the subject matter of the controversy is one of common or
general interest to many persons so numerous that it is impracticable to join all as parties, a
number of them which the court finds to be sufficiently numerous and representative as to fully
protect the interests of all concerned may sue or defend for the benefit of all. Any party in
interest shall have the right to intervene to protect his individual interest.

The necessary elements for the maintenance of a class suit are: 1) the subject matter of
controversy is one of common or general interest to many persons; 2) the parties affected are
so numerous that it is impracticable to bring them all to court; and 3) the parties bringing the
class suit are sufficiently numerous or representative of the class and can fully protect the
interests of all concerned.24

In this case, the suit is clearly one that benefits all commuters and motorists who use La Paz
Road. As succinctly stated by the CA:

The subject matter of the instant case, i.e., the closure and excavation of the La Paz Road, is
initially shown to be of common or general interest to many persons. The records reveal that
numerous individuals have filed manifestations with the lower court, conveying their intention
to join private respondents in the suit and claiming that they are similarly situated with private
respondents for they were also prejudiced by the acts of petitioners in closing and excavating
the La Paz Road. Moreover, the individuals sought to be represented by private respondents
in the suit are so numerous that it is impracticable to join them all as parties and be named
individually as plaintiffs in the complaint. These individuals claim to be residents of various
barangays in Bian, Laguna and other barangays in San Pedro, Laguna.

Anent the issue on the propriety of the WPI, Section 3, Rule 58 of the Rules of Court lays
down the rules for the issuance thereof. Thus:

(a) That the applicant is entitled to the relief demanded, and the whole or part of such
 relief consists in restraining the commission or continuance of the acts complained of, or
in the performance of an act or acts, either for a limited period or perpetually;

(b) That the commission, continuance or non-performance of the act or acts complained
of during the litigation would probably work injustice to the applicant; or

(c) That a party, court, or agency or a person is doing, threatening, or attempting to do, or
is procuring or suffering to be done, some act or acts probably in violation of the rights of
the applicant respecting the subject of the action or proceeding, and tending to render the
judgment ineffectual.

A writ of preliminary injunction is available to prevent a threatened or continuous irremediable

injury to parties before their claims can be thoroughly studied and adjudicated.25 The requisites
for its issuance are: (1) the existence of a clear and unmistakable right that must be protected;
and (2) an urgent and paramount necessity for the writ to prevent serious damage.26 For the
writ to issue, the right sought to be protected must be a present right, a legal right which must
be shown to be clear and positive.27 This means that the persons applying for the writ must
show that they have an ostensible right to the final relief prayed for in their complaint.28

In the case at bench, JCHA, et al. failed to establish a prima facie proof of violation of their
right to justify the issuance of a WPI. Their right to the use of La Paz Road is disputable since
they have no clear legal right therein. As correctly ruled by the CA:

Here, contrary to the ruling of respondent Judge, private respondents failed to prove as yet
that they have a clear and unmistakable right over the La Paz Road which was sought to
be protected by the injunctive writ. They merely anchor their purported right over the La Paz
Road on the bare allegation that they have been using the same as public road right-of-way
for more than ten years. A mere allegation does not meet the standard of proof that would
warrant the issuance of the injunctive writ. Failure to establish the existence of a clear right
which should be judicially protected through the writ of injunction is a sufficient ground for
denying the injunction.

Consequently, the case should be further heard by the RTC so that the parties can fully prove
their respective positions on the issues. 1wphi1

Due process considerations dictate that the assailed injunctive writ is not a judgment on the
merits but merely an order for the grant of a provisional and ancillary remedy to preserve the
status quo until the merits of the case can be heard. The hearing on the application for
issuance of a writ of preliminary injunction is separate and distinct from the trial on the merits
of the main case. 29 The evidence submitted during the hearing of the incident 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.30 There are vital facts
that have yet to be presented during the trial which may not be obtained or presented during
the hearing on the application for the injunctive writ.31 Moreover, the quantum of evidence
required for one is different from that for the other.32

WHEREFORE, the petitions are DENIED. Accordingly, the July 31, 2001 Decision and
February 21, 2002 Resolution of the Court of Appeals in CA-G.R. SP No. 60543 are
AFFIRMED.

SO ORDERED.
G.R. No. L-63559 May 30, 1986

NEWSWEEK, INC., petitioner, vs. THE INTERMEDIATE APPELLATE COURT, and NATIONAL
FEDERATION OF SUGARCANE PLANTERS INC., BINALBAGAN-ISABELA PLANTERS ASSOCIATION,
INC., ASOCIACION DE AGRICULTORES DE LA CARLOTA, LA CASTELLANA y PONTEVEDRA, INC.,
DONEDCO PLANTERS ASSOCIATION INC., ARMANDO GUSTILO, ENRIQUE ROJAS, ALFREDO
MONTELIBANO, JR., PABLO SOLA, JOSE MONTALVO, VICENTE GUSTILO, JOSEPH MARANON,
ROBERTO CUENCA, JOSE SICANGCO, FLORENCIO ALONSO, MIGUEL GATUSLAO, PEDRO YULO,
MARINO RUBIN and BENJAMIN BAUTISTA, respondents.

Petitioner, Newsweek, Inc., a foreign corporation licensed to do business in the Philippines, in

this special action for certiorari, prohibition with preliminary injunction, seeks to annul the
decision of the Intermediate Appellate Court dated December 17, 1982 sustaining the Order of
the then Court of First Instance of Bacolod City which denied petitioner's Motion to Dismiss the
complaint for libel filed by private respondents (Civil Case No. 15812), and the Resolution dated
March 10, 1983 which denied its Motion for Reconsideration.

It appears that on March 5, 1981, private respondents, incorporated associations of sugarcane

planters in Negros Occidental claiming to have 8,500 members and several individual sugar
planters, filed Civil Case No. 15812 in their own behalf and/or as a class suit in behalf of all
sugarcane planters in the province of Negros Occidental, against petitioner and two of
petitioners' non-resident correspondents/reporters Fred Bruning and Barry Came. The complaint
alleged that petitioner and the other defendants committed libel against them by the publication
of the article "An Island of Fear" in the February 23, 1981 issue of petitioner's weekly news
magazine Newsweek. The article supposedly portrayed the island province of Negros Occidental
as a place dominated by big landowners or sugarcane planters who not only exploited the
impoverished and underpaid sugarcane workers/laborers, but also brutalized and killed them
with imprunity. Complainants therein alleged that said article, taken as a whole, showed a
deliberate and malicious use of falsehood, slanted presentation and/or misrepresentation of
facts intended to put them (sugarcane planters) in bad light, expose them to public ridicule,
discredit and humiliation here in the Philippines and abroad, and make them objects of hatred,
contempt and hostility of their agricultural workers and of the public in general. They prayed that
defendants be ordered to pay them PlM as actual and compensatory damages, and such
amounts for moral, exemplary and corrective damages as the court may determine, plus
expenses of litigation, attorney's fees and costs of suit. A photo copy of the article was attached
to the complaint.

On November 5, 1981, petitioner filed a motion to dismiss on the grounds that (1) the printed
article sued upon is not actionable in fact and in law; and (2) the complaint is bereft of
allegations that state, much less support a cause of action. It pointed out the non-libelous nature
of the article and, consequently, the failure of the complaint to state a cause of action. Private
respondents filed an Opposition to the motion to dismiss and petitioner filed a reply.

On March 17, 1982, the trial court denied the motion to dismiss, stating that the grounds on
which the motion to dismiss are predicated are not indubitable as the complaint on its face
states a valid cause of action; and the question as to whether the printed article sued upon its
actionable or not is a matter of evidence. Petitioner's motion for reconsideration was denied on
May 28, 1982.

On June 18, 1982, petitioner filed a petition for certiorari with respondent Court (CA-G. R. No.
14406) seeking the annulment of the aforecited trial court's Orders for having been issued with
such a grave abuse of discretion as amounting to lack of jurisdiction and praying for the dismissal
of the complaint for failure to state a cause of action.

As earlier stated, respondent Court affirmed the trial court's Orders in a Decision dated
December 17, 1982 and ordered the case to be tried on the merits on the grounds that -(1) the
complaint contains allegations of fact which called for the presentation of evidence; and (2)
certiorari under Rule 65 cannot be made to substitute for an appeal where an appeal would lie
at a proper time. Subsequently, on March 10, 1983, the respondent Court denied petitioner's
Motion for Reconsideration of the aforesaid decision, hence this petition.

The proper remedy which petitioner should have taken from the decision of respondent Court is
an appeal by certiorari under Rule 45 of the Rules of Court and not the special civil action of
certiorari and prohibition under Rule 65 of said Rules. However, since the petition was filed on
time within fifteen days from notice of the Resolution denying the motion for reconsideration,
we shall treat the same as a petition for review on certiorari. The two (2) issues raised in the
petition are: (1) whether or not the private respondents' complaint failed to state a cause of
action; and (2) whether or not the petition for certiorari and prohibition is proper to question
the denial of a motion to dismiss for failure to state a cause of action.

First, petitioner argues that private respondents' complaint failed to state a cause of action
because the complaint made no allegation that anything contained in the article complained of
regarding sugarcane planters referred specifically to any one of the private respondents; that
libel can be committed only against individual reputation; and that in cases where libel is claimed
to have been directed at a group, there is actionable defamation only if the libel can be said to
reach beyond the mere collectivity to do damage to a specific, individual group member's
reputation.

We agree with petitioner.

In the case of Corpus vs. Cuaderno, Sr. (16 SCRA 807) this Court ruled that "in order to maintain a
libel suit, it is essential that the victim be identifiable (People vs. Monton, L-16772, November 30,
1962), although it is not necessary that he be named (19 A.L.R. 116)." In an earlier case, this
Court declared that" ... defamatory matter which does not reveal the Identity of the person upon
whom the imputation is cast, affords no ground of action unless it be shown that the readers of
the libel could have Identified the personality of the individual defamed." (Kunkle vs.
Cablenews-American and Lyons 42 Phil. 760).

This principle has been recognized to be of vital importance, especially where a group or class of
persons, as in the case at bar, claim to have been defamed, for it is evident that the larger the
collectivity, the more difficult it is for the individual member to prove that the defamatory
remarks apply to him. (Cf. 70 ALR 2d. 1384).

In the case of Uy Tioco vs. Yang Shu Wen , 32 Phil. 624, this Court held as follows:
 Defamatory remarks directed at a class or group of persons in general language only,
are not actionable by individuals composing the class or group unless the statements
are sweeping; and it is very probable that even then no action would lie where the
body is composed of so large a number of persons that common sense would tell those
to whom the publication was made that there was room for persons connected with
the body to pursue an upright and law abiding course and that it would be
unreasonable and absurd to condemn all because of the actions of a part. (supra p.
628).

It is evident from the above ruling that where the defamation is alleged to have been directed at
a group or class, it is essential that the statement must be so sweeping or all-embracing as to
apply to every individual in that group or class, or sufficiently specific so that each individual in
the class or group can prove that the defamatory statement specifically pointed to him, so that
he can bring the action separately, if need be.

We note that private respondents filed a "class suit" in representation of all the 8,500 sugarcane
planters of Negros Occidental. Petitioner disagrees and argues that the absence of any
actionable basis in the complaint cannot be cured by the filing of a class suit on behalf of the
aforesaid sugar planters.

We find petitioner's contention meritorious.

The case at bar is not a class suit. It is not a case where one or more may sue for the benefit of
all (Mathay vs. Consolidated Bank and Trust Company, 58 SCRA 559) or where the representation
of class interest affected by the judgment or decree is indispensable to make each member of
the class an actual party (Borlaza vs. Polistico, 47 Phil. 348). We have here a case where each of
the plaintiffs has a separate and distinct reputation in the community. They do not have a
common or general interest in the subject matter of the controversy.

The disputed portion of the article which refers to plaintiff Sola and which was claimed to be
libelous never singled out plaintiff Sola as a sugar planter. The news report merely stated that
the victim had been arrested by members of a special police unit brought into the area by Pablo
Sola, the mayor of Kabankalan. Hence, the report, referring as it does to an official act performed
by an elective public official, is within the realm of privilege and protected by the constitutional
guarantees of free speech and press.

The article further stated that Sola and the commander of the special police unit were arrested.
The Court takes judicial notice of this fact. (People vs. Sola, 103 SCRA 393.)

The second issue to be resolved here is whether or not the special civil action of certiorari or
prohibition is available to petitioner whose motion to dismiss the complaint and subsequent
motion for reconsideration were denied.

As a general rule, an order denying a motion to dismiss is merely interlocutory and cannot be
subject of appeal until final judgment or order is rendered. (Sec. 2 of Rule 4 1). The ordinary
procedure to be followed in such a case is to file an answer, go to trial and if the decision is
adverse, reiterate the issue on appeal from the final judgment. The same rule applies to an order
denying a motion to quash, except that instead of filing an answer a plea is entered and no
appeal lies from a judgment of acquittal.

This general rule is subject to certain exceptions. If the court, in denying the motion to dismiss or
motion to quash, acts without or in excess of jurisdiction or with grave abuse of discretion, then
certiorari or prohibition lies. The reason is that it would be unfair to require the defendant or
accused to undergo the ordeal and expense of a trial if the court has no jurisdiction over the
subject matter or offense, or is not the court of proper venue, or if the denial of the motion to
dismiss or motion to quash is made with grave abuse of discretion or a whimsical and capricious
exercise of judgment. In such cases, the ordinary remedy of appeal cannot be plain and
adequate. The following are a few examples of the exceptions to the general rule.

In De Jesus vs. Garcia (19 SCRA 554), upon the denial of a motion to dismiss based on lack of
jurisdiction over the subject matter, this Court granted the petition for certiorari and prohibition
against the City Court of Manila and directed the respondent court to dismiss the case.

In Lopez vs. City Judge (18 SCRA 616), upon the denial of a motion to quash based on lack of
jurisdiction over the offense, this Court granted the petition for prohibition and enjoined the
respondent court from further proceeding in the case.

In Enriquez vs. Macadaeg (84 Phil. 674), upon the denial of a motion to dismiss based on
improper venue, this Court granted the petition for prohibition and enjoined the respondent
judge from taking cognizance of the case except to dismiss the same.

In Manalo vs. Mariano (69 SCRA 80), upon the denial of a motion to dismiss based on bar by
prior judgment, this Court granted the petition for certiorari and directed the respondent judge
to dismiss the case.

In Yuviengco vs. Dacuycuy (105 SCRA 668), upon the denial of a motion to dismiss based on the
Statute of Frauds, this Court granted the petition for certiorari and dismissed the amended
complaint.

In Tacas vs. Cariaso (72 SCRA 527), this Court granted the petition for certiorari after the motion
to quash based on double jeopardy was denied by respondent judge and ordered him to desist
from further action in the criminal case except to dismiss the same.

In People vs. Ramos (83 SCRA 11), the order denying the motion to quash based on prescription
was set aside on certiorari and the criminal case was dismissed by this Court.

Respondent Court correctly stated the general rule and its exceptions. However, it ruled that
none of the exceptions is present in the case at bar and that the case appears complex and
complicated, necessitating a full-blown trial to get to the bottom of the controversy.

Petitioner's motion to dismiss is based on the ground that the complaint states no cause of
action against it by pointing out the non-libelous nature of the article sued upon. There is no
need of a trial in view of the conclusion of this Court that the article in question is not libelous.
The specific allegation in the complaint, to the effect that the article attributed to the sugarcane
planters the deaths and brutalization of sugarcane workers, is not borne out by a perusal of the
actual text.

The complaint contains a recital of the favorable working conditions of the agricultural workers
in the sugar industry and the various foundations and programs supported by planters'
associations for the benefit of their workers. Undoubtedly, the statements in the article in
question are sweeping and exaggerated; but, paraphrasing the ruling in the Uy Tioco case above
quoted, it would be unreasonable and absurd to condemn the majority of the sugarcane planters,
who have at heart the welfare of their workers, because of the actions of a part. Nonetheless,
articles such as the one in question may also serve to prick the consciences of those who have
but are not doing anything or enough for those who do not have.

On the other hand, petitioner would do well to heed the admonition of the President to media
that they should check the sources of their information to ensure the publication of the truth.
Freedom of the press, like all freedoms, should be exercised with responsibility.

WHEREFORE, the decision of the Intermediate Appellate Court is reversed and the complaint in
Civil Case No. 15812 of the Court of First Instance of Negros Occidental is dismissed, without
pronouncement as to costs.

SO ORDERED.
G.R. No. 160426 January 31, 2008

CAPITOLINA VIVERO NAPERE, petitioner, vs. AMANDO BARBARONA and GERVACIA MONJAS
BARBARONA, respondents.

Petitioner Capitolina Vivero Napere interposes this petition for review to assail the Court of
Appeals Decision1 dated October 9, 2003, which upheld the validity of the Regional Trial Courts
decision despite failure to formally order the substitution of the heirs of the deceased defendant,
petitioners husband.

The case stems from the following antecedents:

Respondent Amando Barbarona is the registered owner of Lot No. 3177, situated in Barangay
San Sotero (formerly Tambis), Javier, Leyte and covered by Original Certificate of Title (OCT) No.
P-7350. Lot No. 3176, covered by OCT No. 1110 in the name of Anacleto Napere, adjoins said lot
on the northeastern side. After Anacleto died, his son, Juan Napere, and the latters wife, herein
petitioner, planted coconut trees on certain portions of the property with the consent of his
co-heirs.

In their complaint, respondents alleged that in April 1980, the spouses Napere, their relatives
and hired laborers, by means of stealth and strategy, encroached upon and occupied the
northeastern portion of Lot No. 3177; that the Naperes harvested the coconut fruits thereon,
appropriated the proceeds thereof, and, despite demands, refused to turn over possession of
the area; that in April 1992, a relocation survey was conducted which confirmed that the
respondents property was encroached upon by the Naperes; that on the basis of the relocation
survey, the respondents took possession of this encroached portion of the lot and harvested the
fruits thereon from April 1993 to December 1993; but that in January 1994, the Naperes
repeated their acts by encroaching again on the respondents property, harvesting the coconuts
and appropriating the proceeds thereof, and refusing to vacate the property on demand.

On November 10, 1995, while the case was pending, Juan Napere died. Their counsel informed
the court of Juan Naperes death, and submitted the names and addresses of Naperes heirs.

At the pre-trial, the RTC noted that the Naperes were not contesting the respondents right of
possession over the disputed portion of the property but were demanding the rights of a planter
in good faith under Articles 445 and 455 of the Civil Code.

On October 17, 1996, the RTC rendered a Decision against the estate of Juan Napere, thus:

WHEREFORE, this Court finds in favor of the plaintiff and against the defendant, hereby
declaring the following:

a) The estate of Juan Napere is liable to pay the amount of ONE HUNDRED SEVENTY-NINE
THOUSAND TWO HUNDRED (P179,200.00) PESOS in actual damages;

b) The estate of Juan Napere shall be liable to pay FIVE THOUSAND (P5,000.00) PESOS in
litigation expenses, and the
 c) Cost[s] of suit. SO ORDERED.2

Petitioner appealed the case to the Court of Appeals (CA), arguing, inter alia, that the judgment
of the trial court was void for lack of jurisdiction over the heirs who were not ordered
substituted as party-defendants for the deceased.

On October 9, 2003, the CA rendered a Decision affirming the RTC Decision.3 The appellate court
held that failure to substitute the heirs for the deceased defendant will not invalidate the
proceedings and the judgment in a case which survives the death of such party.

Thus, this petition for review where the only issue is whether or not the RTC decision is void for
lack of jurisdiction over the heirs of Juan Napere. Petitioner alleges that the trial court did not
acquire jurisdiction over the persons of the heirs because of its failure to order their substitution
pursuant to Section 17,4 Rule 3 of the Rule of Court; hence, the proceedings conducted and the
decision rendered by the trial court are null and void.

The petition must fail.

When a party to a pending case dies and the claim is not extinguished by such death, the Rules
require the substitution of the deceased party by his legal representative or heirs. In such case,
counsel is obliged to inform the court of the death of his client and give the name and address of
the latters legal representative.

The complaint for recovery of possession, quieting of title and damages is an action that survives
the death of the defendant. Notably, the counsel of Juan Napere complied with his duty to
inform the court of his clients death and the names and addresses of the heirs. The trial court,
however, failed to order the substitution of the heirs. Nonetheless, despite this oversight, we
hold that the proceedings conducted and the judgment rendered by the trial court are valid.

The Court has repeatedly declared that failure of the counsel to comply with his duty to inform
the court of the death of his client, such that no substitution is effected, will not invalidate the
proceedings and the judgment rendered thereon if the action survives the death of such party.5
The trial courts jurisdiction over the case subsists despite the death of the party.

Mere failure to substitute a deceased party is not sufficient ground to nullify a trial courts
decision. The party alleging nullity must prove that there was an undeniable violation of due
process.6

Strictly speaking, the rule on substitution by heirs is not a matter of jurisdiction, but a
requirement of due process.7The rule on substitution was crafted to protect every partys right
to due process.8 It was designed to ensure that the deceased party would continue to be
properly represented in the suit through his heirs or the duly appointed legal representative of
his estate.9 Moreover, non-compliance with the Rules results in the denial of the right to due
process for the heirs who, though not duly notified of the proceedings, would be substantially
affected by the decision rendered therein.10 Thus, it is only when there is a denial of due process,
as when the deceased is not represented by any legal representative or heir, that the court
nullifies the trial proceedings and the resulting judgment therein.11
Formal substitution by heirs is not necessary when they themselves voluntarily appear,
participate in the case, and present evidence in defense of the deceased.12 In such case, there is
really no violation of the right to due process. The essence of due process is the reasonable
opportunity to be heard and to submit any evidence available in support of ones defense.13
When due process is not violated, as when the right of the representative or heir is recognized
and protected, noncompliance or belated formal compliance with the Rules cannot affect the
validity of a promulgated decision.14

In light of these pronouncements, we cannot nullify the proceedings before the trial court and
the judgment rendered therein because the petitioner, who was, in fact, a co-defendant of the
deceased, actively participated in the case. The records show that the counsel of Juan Napere
and petitioner continued to represent them even after Juans death. Hence, through counsel,
petitioner was able to adequately defend herself and the deceased in the proceedings below.
Due process simply demands an opportunity to be heard and this opportunity was not denied
petitioner.

Finally, the alleged denial of due process as would nullify the proceedings and the judgment
thereon can be invoked only by the heirs whose rights have been violated. Violation of due
process is a personal defense that can only be asserted by the persons whose rights have been
allegedly violated.15 Petitioner, who had every opportunity and who took advantage of such
opportunity, through counsel, to participate in the trial court proceedings, cannot claim denial of
due process.

WHEREFORE, premises considered, the petition is DENIED DUE COURSE. The Decision of the
Court of Appeals, dated October 9, 2003, in CA-G.R. CV No. 56457, is AFFIRMED.

SO ORDERED.