(Neither a dead person nor his estate may be party plaintiff in a court action; deceased person does not

have such
legal entity to bring an action; he may not be named a party defendant in a court action…)

G.R. No. 63145 October 5, 1999

SULPICIA VENTURA, petitioner,

vs.
HON. FRANCIS J. MILITANTE, in His Capacity as Presiding Judge, Regional Trial Court, 7th Judicial District,
Branch XII, Cebu City; and JOHN UY, respondent.

PUNO, J.:

This is a Petition for Certiorari assailing the Order 1 of public respondent directing her to file an Answer to the
Complaint for a Sum of Money with Damages filed by private respondent after denying her Motion to Dismiss. 2

There is no dispute as to the following relevant facts:

Private respondent filed a Complaint for a Sum of Money and Damages against petitioner which reads:

REPUBLIC OF THE PHILIPPINES

COURT OF FIRST INSTANCE OF CEBU

14th Judicial District

BRANCH ___

MR. JOHN UY, Proprietor of Cebu

Textar Auto Supply,

Plaintiff,

-versus- CIVIL CASE NO. R-21968

For: SUM OF MONEY AND

DAMAGES

ESTATE OF CARLOS NGO as

represented by surviving

spouse Ms. SULPICIA VENTURA,

Defendant.

COMPLAINT

PLAINTIFF, thru counsel, unto this Honorable Court, most respectfully states that:

1. He is of legal age, Filipino and proprietor of Cebu Textar Auto Supply whose postal address is at
177 Leon Kilat St., Cebu City, while the defendant is an estate of Carlos Ngo as represented by
 surviving spouse Ms. Sulpicia Ventura with residence and postal address at-Back [sic] of Chong Hua
Hospital, Cebu City where summons and other processes of the Court could be effected;

2. During the lifetime of Carlos Ngo he was indebted with the plaintiff in the amount of P48,889.70 as
evidenced by the hereto attached statement marked as Annexes A and A-1 which account was
obtained by him for the benefit of his family;

3. Said obligation is already due and demandable and the defendant thru Ms. Ventura who is
ostensibly taking care of the properties/estate of deceased Carlos Ngo, refused, failed and neglected
and still continues to refuse, fail and neglect to pay despite repeated demands;

4. As a consequence of the refusal to pay the plaintiff was compelled to retain the services of
counsel with whom he contracted to pay P10,000.00 as attorney's fees. Upon institution of this
complaint, he has further incurred initial litigation expenditures in the sum of P4,000.00.1âwphi 1.nêt

WHEREFORE, this Honorable Court is most respectfully prayed to render judgment for the plaintiff
by —

1. Ordering the defendant to pay the plaintiff the sum of P48,889.70 plus interest until the obligation
is fully paid;

2. Ordering the defendant to pay the plaintiff the amount of P10,000.00 as attorney's fees plus
P4,000.00 as reimbursement of the initial litigation expenditures.

FURTHER plaintiff prays for such other relief or remedy in accordance with law, justice and equity.

Cebu City, Philippines, March 29, 1982.

xxx xxx xxx 3

Petitioner moved to dismiss the foregoing complaint on the ground that "the estate of Carlos Ngo has no legal
personality," the same being "neither a natural nor legal person in contemplation of law" 4 .

In his Opposition to Motion to Dismiss, 5 petitioner insisted that since "the money claim subject of this case actually
represents the costs of automotive spare parts/replacements contracted by deceased Carlos Ngo during his lifetime
for the benefit/business of the family . . . the conjugal partnership . . . shall be accountable for the payment
thereof." 6 Subsequently, private respondent's counsel manifested that he is poised to "amend the complaint in order
to state the correct party defendant that he intends to sue in this case" 7. The public respondent gave private
respondent fifteen (15) days to make the amendment.

Petitioner filed a Motion for Reconsideration 8 of the order of public respondent permitting private respondent to
amend his complaint. First, she argued that the action instituted by the private respondent to recover P48,889.70,
representing the unpaid price of the automotive spare parts purchased by her deceased husband during his lifetime,
is a money claim which, under Section 21, Rule 3 of the Revised Rules of Court, does not survive, the same having
been filed after Carlos Ngo had already died. Second, she claimed that the public respondent never acquired
jurisdiction over the subject matter of the case which, being an action to recover a sum of money from a deceased
person, may only be heard by a probate court.

Private respondent opposed the foregoing motion. 9 He insisted that petitioner, being the wife of the deceased
Carlos Ngo, is liable to pay the obligation which benefited their family.

Public respondent issued an Order giving private respondent twenty four (24) hours to file his amended complaint
"so that the Court can determine for itself whether there is really a cause of action against the defendant who would
be substituted to the Estate of Carlos Ngo," considering that "it would seem from the arguments of counsel for
plaintiff . . . that the debt incurred by the deceased Carlos [sic] Ngo was in behalf of the conjugal partnership so that
the wife of Carlos Ngo might be liable to pay the obligation." 10
Private respondent then filed his Amended Complaint 11 with the new allegations underscored therein as follows:

REPUBLIC OF THE PHILIPPINES

COURT OF FIRST INSTANCE OF CEBU

14th Judicial District

BRANCH XII

MR. JOHN UY, Proprietor of Cebu

Textar Auto Supply,

Plaintiff,

-versus- CIVIL CASE NO. R-21968

For: SUM OF MONEY AND

MS. SULPICIA VENTURA, DAMAGES

Defendant.

AMENDED COMPLAINT

PLAINTIFF thru counsel, unto this Honorable Court most respectfully states that:

1. . . .

2. During the lifetime of Carlos Ngo he and his wife, the defendant herein are indebted with the
plaintiff in the amount of P48,889.70 as evidenced by the hereto attached statement marked as
Annexes A and A-1 which account was obtained for the benefit of their family and is being confirmed
by their son Roy Ngo per his signature marked as Annex "A-2";

3. . . .

4. For several times, the defendant had concealed herself in her house when the plaintiff's
representative went to her residence to collect payment of the said account;

5. . . .

xxx xxx xxx12

Petitioner filed a Comment to Plaintiff's Amended Complaint.13 She reiterated that whether the unsecured debt was
contracted by her husband alone or as a charge against the conjugal partnership of gains, it cannot be denied that
her husband was now deceased, the said debt does not survive him, the conjugal partnership of gains is terminated
upon the death of one of the spouses, and the debts and charges against the conjugal partnership of gains may only
be paid after an inventory is made in the appropriate testate or intestate proceeding.

Private respondent filed a Rejoinder to Defendant's Comment. 14 He countered that the defendant in his amended
complaint was now petitioner and that she was not deceased, hence the inapplicability of the legal rules on the
abatement of money claims in case the defendant dies pending their prosecution.
Public respondent issued the herein assailed order which reads as follows:

ORDER

This case is called today to deal on the motion for reconsideration of the order of this Court dated
November 16, 1982 denying the motion of the defendant to dismiss the complaint.

In its order of November 16, 1982, the Court in the interest of justice advised the plaintiff to make the
proper amendment so that the proper party defendant may be impleaded considering that the motion
to dismiss then was anchored on the ground that the estate of Carlos Ngo was not a natural nor
juridical person, hence it could not be sued. On December 23, 1982, the plaintiff amended its
complaint and this time the defendant is already Sulpicia Ventura. The defendant now argues that
even the amended complaint would show that this is really a collection of a debt of the conjugal
partnership of deceased Carlong [sic] Ngo and his wife.

Perusing the amended complaint, the Court finds that in Paragraph 2 the allegation states: "During
the lifetime of Carlos Ngo, he and his wife, the defendant, are indebted with the plaintiff in the
amount of P48,689.70, (sic) etc.," so that the indebtedness was incurred by Carlos Ngo and
defendant Sulpicia Ventura and since Carlos Ngo is now dead that will not preclude the plaintiff from
filing a case against the living defendant, Sulpicia Ventura.

WHEREFORE, the motion for reconsideration is hereby DENIED and the defendant may file her
answer within fifteen (15) days from today.

IT IS SO ORDERED. 15

Petitioner scurried to this Court praying that the foregoing order of the public respondent be set aside and the
amended complaint of private respondent, ordered dismissed. 16

We grant the petition.

First. Sec. 1, Rule 3 of the Revised Rules of Court provided that "only natural or judicial persons, or entities
authorized by law may be parties in a civil action". This was the rule in 1982 at the time that private respondent filed
his complaint against petitioner. In 1997, the rules on civil procedure were revised, but Sec. 1, Rule 3 remained
largely unaltered, except for the change of the word, "judicial" to "juridical".

Parties may be either plaintiffs or defendants. The plaintiff in an action is the party complaining, and a proper party
plaintiff is essential to confer jurisdiction on the court.17 In order to maintain an action in a court of justice, the plaintiff
must have an actual legal existence, that is, he, she or it must be a person in law and possessed of a legal entity as
either a natural or an artificial person, and no suit can be lawfully prosecuted save in the name of such a person. 18

The rule is no different as regards party defendants. It is incumbent upon a plaintiff, when he institutes a judicial
proceeding, to name the proper party defendant to his cause of action.19 In a suit or proceeding in personam of an
adversary character, the court can acquire no jurisdiction for the purpose of trial or judgment until a party defendant
who actually or legally exists and is legally capable of being sued, is brought before it. 20 It has even been held that
the question of the legal personality of a party defendant is a question of substance going to the jurisdiction of the
court and not one of procedure. 21

The original complaint of petitioner named the "estate of Carlos Ngo as represented by surviving spouse Ms.
Sulpicia Ventura" as the defendant. Petitioner moved to dismiss the same on the ground that the defendant as
named in the complaint had no legal personality. We agree.

Neither a dead person nor his estate may be a party plaintiff in a court action. A deceased person does not have
such legal entity as is necessary to bring action so much so that a motion to substitute cannot lie and should be
denied by the court. 22 An action begun by a decedent's estate cannot be said to have been begun by a legal person,
since an estate is not a legal entity; such an action is a nullity and a motion to amend the party plaintiff will not
likewise lie, there being nothing before the court to amend. 23 Considering that capacity to be sued is a correlative of
the capacity to sue, to the same extent, a decedent does not have the capacity to be sued and may not be named a
party defendant in a court action. 24

Second. It is clear that the original complaint of private respondent against the estate of Carlos Ngo was a suit
against Carlos Ngo himself who was already dead at the time of the filing of said complaint. At that time, and this
private respondent admitted, no special proceeding to settle his estate had been filed in court. As such, the trial
court did not acquire jurisdiction over either the deceased Carlos Ngo or his estate.

To cure this fatal defect, private respondent amended his original complaint. In his amended complaint, private
respondent deleted the estate of Carlos Ngo and named petitioner as the defendant. When petitioner, in her
comment to the amended complaint, reasoned that the conjugal partnership of gains between her and Carlos Ngo
was terminated upon the latter's death and that the debt which he contracted, assuming it was a charge against the
conjugal property, could only be paid after an inventory is made in the appropriate testate or intestate proceeding,
private respondent simply reiterated his demand that petitioner pay her husband's debt which, he insisted,
redounded to the benefit of everyone in her family.

It is true that amendments to pleadings are liberally allowed in furtherance of justice, in order that every case may so
far as possible be determined on its real facts, and in order to speed the trial of causes or prevent the circuitry of
action and unnecessary expense. 25 But amendments cannot be allowed so as to confer jurisdiction upon a court
that never acquired it in the first place. 26 When it is evident that the court has no jurisdiction over the person and the
subject matter and that the pleading is so fatally defective as not to be susceptible of amendment, or that to permit
such amendment would radically alter the theory and the nature of the action, then the court should refuse the
amendment of the defective pleading and order the dismissal of the case. 27

Moreover, as correctly argued by petitioner, the conjugal partnership terminates upon the death of either
spouse. 28After the death of one of the spouses, in case it is necessary to sell any portion of the conjugal property in
order to pay outstanding obligations of the partnership, such sale must be made in the manner and with the
formalities established by the Rules of Court for the sale of the property of deceased persons. 29 Where a complaint
is brought against the surviving spouse for the recovery of an indebtedness chargeable against said conjugal
property, any judgment obtained thereby is void. 30 The proper action should be in the form of a claim to be filed in
the testate or intestate proceedings of the deceased spouse. 31

In many cases as in the instant one, even after the death of one of the spouses, there is no liquidation of the
conjugal partnership. This does not mean, however, that the conjugal partnership continues. 32 And private
respondent cannot be said to have no remedy. Under Sec. 6, Rule 78 of the Revised Rules of Court, he may apply
in court for letters of administration in his capacity as a principal creditor of the deceased Carlos Ngo if after thirty
(30) days from his death, petitioner failed to apply for administration or request that administration be granted to
some other person. 1âwphi 1.nêt

WHEREFORE, the instant petition for certiorari is GRANTED. The Amended Complaint filed by private respondent
is HEREBY DISMISSED.

SO ORDERED.

Pardo and Ynares-Santiago, JJ., concur.

(Indispensable party is a party in interest w/o whom no final determination can be had of an action w/o the party
being impleaded…)

G.R. No. 125567 June 27, 2000

ANTONIO (ANTONINO) SAMANIEGO, JOSE DE LA CRUZ, JOHN SAMANIEGO, ERNESTO SANTOS,

MACARIO DE LA CRUZ, ANDRES PASTORIN, BENETRITO DE LA CRUZ, JESUS BATAC and RODOLFO
LAGUISMA, petitioners,
vs.
VIC ALVAREZ AGUILA, JOSEPHINE TAGUINOD and SECRETARY OF THE DEPARTMENT OF AGRARIAN
REFORM, respondents.
MENDOZA, J.

This is a petition for review on certiorari of the decision1 of the Court of Appeals, dated January 25, 1996, denying
petitioners' appeal from a decision of the Office of the President.

The sole issue in this case is whether the Office of the President is an indispensable party in an appeal from its
decision and, therefore, must be impleaded pursuant to the Rules of Civil Procedure. For reasons to be discussed,
we hold that it is not; accordingly, we remand the case to the Court of Appeals for review on the merits.

Petitioners are tenants in a landholding with an aggregate area of 10.4496 hectares, more or less, in Patul (now
Malvar), Santiago, Isabela. The land belongs to Salud Aguila, whose children, Vic Alvarez Aguila and Josephine
Taguinod, are private respondents.

It appears that the land in question was identified by the Department of Agrarian Reform (DAR)-Region 2 as
covered by the Operation Land Transfer Program of the government. In 1976, Aguila, in behalf of her children,
herein private respondents, filed a petition for exemption from the coverage of P.D. No. 27. Petitioners opposed the
application on the ground that Aguila's transfer of the title to the lands to her children was in violation of the rules
and regulations of the DAR. 1âwphi 1.nêt

In its August 21, 1991 decision, the Regional Director granted the application for exemption. On appeal to the DAR,
the decision was affirmed in a decision dated September 28, 1992. However, on motion of petitioners, the DAR
reversed its ruling and denied private respondents' application for exemption and declared petitioners the rightful
farmer-beneficiaries of the land.

Private respondents appealed to the Office of the President which, in a decision, dated January 1, 1995, stated:

WHEREFORE, premises considered, the Order, dated January 6, 1993, of the Department of Agrarian
Reform is hereby SET ASIDE. The earlier order of that Department, dated September 28, 1992, is hereby
CONFIRMED and REINSTATED with a modification that subject landholdings are not covered by the OLT
program of the government pursuant to P.D. No. 27.

Petitioners appealed to the Court of Appeals, but their petition was dismissed. The appellate court held:

It is very clear from the allegations in the Petition For Review that the questioned decision and resolution
were both issued by the Office of the President. As such, the Office of the President is an indispensable
party to the case. Failure to implead said Office is fatal to the petitioners' cause and, hence, should be
dismissed. (Cf: Sec.2, Rule 3, Revised Rules of Court.)

Time and again, it has been held that the joinder of indispensable parties is mandatory. Unless they are
impleaded, the action cannot proceed and the omission is fatal to the plaintiff's cause. (United Paracale
Mining Co. vs. Court of Appeals, et. al., 232 SCRA 663, 666.)

Petitioners moved for a reconsideration, contending that under Administrative Circular No. 1-95, the Office of the
President need not be impleaded. However, their motion was denied.

Hence, this petition.

First. At the time petitioners brought their case to the Court of Appeals, the procedure governing appeals to said
court from quasi-judicial agencies was embodied in Revised Administrative Circular No. 1-95, which provides in
relevant parts:

TO: COURT OF APPEALS, COURT OF TAX APPEALS, THE SOLICITOR GENERAL, THE
GOVERNMENT CORPORATE COUNSEL, ALL MEMBERS OF THE GOVERNMENT
PROSECUTION SERVICE, AND ALL MEMBERS OF THE INTEGRATED BAR OF THE
PHILIPPINES.
 SUBJECT: RULES GOVERNING APPEALS TO THE COURT OF APPEALS FROM JUDGMENTS
OR FINAL ORDERS OF THE COURT OF TAX APPEALS AND QUASI-JUDICIAL AGENCIES.

1. Scope. — These rules shall apply to appeals from judgments or final orders of the Court of Tax Appeals
and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the
exercise of its quasi-judicial functions. Among these agencies are the Civil Service Commission, Central
Board of Assessment Appeals, Securities and Exchange Commission, Land Registration Authority, Social
Security Commission, Office of the President, Civil Aeronautics Board, etc.

xxx xxx xxx

6. Contents of petition. — The petition for review shall (a) state the full names of the parties to the
case,without impleading the court or agencies either as petitioners or respondents . . . . (Emphasis added).

Thus, it is clear that petitioners' failure to implead the Office of the President does not warrant the dismissal of the
case as it is in accordance with this circular. It is not true that the Office of the President is not included within the
scope of this circular. It is, as can plainly be seen above.

Second. The Court of Appeals held that in appeals from decisions of the Office of the President, the latter is an
indispensable party. This is error. Under Rule 7, §3 of the Rules of Civil Procedure, an indispensable party is a party
in interest without whom no final determination can be had of an action without that party being impleaded.
Indispensable parties are those with such an interest in the controversy that a final decree would necessarily affect
their rights, so that the court cannot proceed without their presence.2 "Interest", within the meaning of this rule,
should be material, directly in issue and to be affected by the decree, as distinguished from a mere incidental
interest in the question
involved.3 On the other hand, a nominal or pro forma party is one who is joined as a plaintiff or defendant, not
because such party has any real interest in the subject matter or because any relief is demanded, but merely
because the technical rules of pleadings require the presence of such party on the record.4

In the case at bar, even assuming that the Office of the President should have been impleaded by petitioner, it is
clear that the Office of the President is merely a pro forma party, in the same way that a respondent court is a pro
forma party in special civil actions for certiorari. 1avvphi1

The issue in the petition before the Court of Appeals is whether a private land should be exempted from the
coverage of P.D. No 27. Whatever happens to that case and whoever wins would not bring any prejudice or gain to
the government. The only participation of the Office of the President in this case is its role as the office which
entertains appeals from decisions of the DAR. Indeed, the very reason that the appellate court excused the Office of
the Solicitor General from filing a comment is that it deemed that the case involved "purely private interests."

WHEREFORE, the decision of the Court of Appeals, dated January 25, 1996, and its resolution, dated July 5, 1996,
are hereby REVERSED and the Court of Appeals is ORDERED to decide the case on the merits with deliberate
speed. 1âw phi 1.nêt

SO ORDERED.

Bellosillo, Quisumbing, Buena and De Leon, Jr., JJ., concur.

(Class suit)

A.M. No. 88-1-646-0 March 3, 1988

RE: REQUEST OF THE PLAINTIFFS, HEIRS OF THE PASSENGERS OF THE DOÑA PAZ TO SET ASIDE THE
ORDER DATED JANUARY 4, 1988 OF JUDGE B.D. CHINGCUANGCO.

The Court deliberated on the letter-request of Atty. Pablito M. Rojas dated January 5, 1988, the comments thereon
of Quezon City Executive Judge B.D. Chingcuangco and of counsel for Sulpicio Lines et al, and the reply to said
comments.
It appears that on January 4, 1988 a complaint for damages amounting to more than one and a half billion pesos
was filed in the name and behalf of the relatives or heirs of the victims of "the worst sea disaster in history:" the
sinking of the vessel Doña Paz caused by its collision with another vessel. The complaint characterized the action
thereby instituted as a "lass suit",prosecuted by the twenty-seven (27) named plaintiffs in their behalf and in
presentation of the approximately 4,000 persons . . . (who also) are all close relatives and legal heirs of the
passengers of the Doña Paz" (par. 5). The action's character as a class suit results, it is claimed, from "the subject
matter . . . (thereof being) of general or common interest to 4,000 persons, more or less, all of whom are residing
variously in Samar, Leyte and Metro Manila;" and its institution is proper because the Identified plaintiffs are
sufficiently numerous and representative to fully protect the interests of all" (par. 3). The complaint prayed that —

... judgment be rendered in favor of the plaintiffs and all other persons embraced in this class suit,
and against the defendants, ordering them to pay to the former, jointly and severally, as follows:

a) From P200,000.00 to P400,000.00 per victim or passenger who perished in the sinking of the
vessel DOÑA PAZ, by way of actual or compensatory, moral and exemplary damages, or the total
amount of from P800,000,000.00 to Pl,200,000,000.00 (should be P1,600,000,000.00) for all of the
4,000 passengers on board said vessel;

b) an amount which this Honorable Court may deem just and reasonable as and by way of attorney's
fees and, under the circumstances of this case, P10,000,000.00 would be reasonable;

xxx xxx xxx

Together with the complaint, the plaintiffs filed a "MOTION FOR LEAVE TO FILE CASE AS PAUPER LITIGANT."
They alleged that "a big majority ... (of them) are poor and have no sufficient means to finance the filing of this case
especially because, considering the gargantuan amount of damages involved, the amount of filing fee alone will run
to several thousands of pesos," that in view thereof and the fact that the case was one of "national concern as
shown by the public outcry and sustained publicity that it has evoked,' the Court "may be justified in ... (allowing
them) to file the instant suit as pauper litigants or, in the alternative, (ruling) that the legal fees incident to the filing of
this case may constitute a lien on whatever judgment may be recovered by the plaintiffs therein." On the same day,
their counsel submitted a certification of the City Assessor of Quezon City of even date to the effect "that according
to the assessment records x x there is no property whether land or improvements registered for taxation purposes in
the . . names of' seven (7) of the named plaintiffs.

By Order dated January 4, 1988, the motion was granted by Judge Chingcuangco in his capacity as Executive
Judge only in so far as said seven (7) plaintiffs were concerned, but not as regards the case.

It is this order that the plaintiffs, in their counsel's aforementioned letter of January 5, 1988, request this Court to set
aside. They ask that they all instead be allowed to prosecute the case as pauper litigants and they be exempt from
paying filing fees which they say have "been assessed in the amount of P6,060,252.50 based on the total maximum
claim of P1,200,000,000.00 as per the complaint."

In the comment (dated January 22, 1988) submitted by him in response to this Court's direction, Judge
Chingcuangco declared that he had opted to leave the matter of the propriety of the class suit "to the sound
judgment of the branch to which this case may be raffled," although he personally "would have freely allowed all
plaintiffs to litigate as pauper litigants and close ... (his) eyes to the fact that one of them is the present Clerk of this
Court and another regional trial court judge;"and that he had 'suggested to the plaintiffs' counsel to seek the
assistance of the highest tribunal of the land with the fond hope that it may once again exercise its highly-regarded
judicial activism by allowing that which this Executive Judge cannot do, that is, allow, in the highest interest of public
service, all plaintiffs to litigate as pauper litigants, and consider the case as a class suit."

The defendants, Sulpicio Lines, Inc., et al., in their own comment, point out that there were only 1,493 passengers
on board the Doña Paz at the time of the tragedy, not 4,000; they have not been remiss in attending to the
immediate needs and claims of the the legal basis for the claim and the amount of damages recoverable;"' it is
doubtful whether 27 plaintiffs are sufficiently numerous and representative to fully protect the interests of all the suit
preempts the other claimants' cause of action as to the amount of recovery and as to the venue of the suit; there are
in truth only seven plaintiffs qualified to sue as pauper litigants; and the claimants not authorized to sue as paupers
may continue with the action.
In the first place, it is not the rule governing class suits under Section 12, Rule 3 of the Rules of Court that in truth is
involved in the proceedings at bar, but that concerning permissive joinder of parties in Section 6 of the same Rule
3. 1 It is perhaps not inappropriate for the Court to avail of the opportunity that the proceeding at bar presents to
point out the distinctions between the two rules, as these appear to have been missed by the petitioners and even
by the Court a quo.

The first cited provision reads as follows:

SEC. 12. Class Suit. — When the subject matter of his controversy is one of csurvivors and next of
kin of the victims; each claimant is a class unto himself in terms of ommon or general interest to
many persons, and the parties are so numerous that it is impracticable to bring them all before the
court, one or more may sue or defend for the benefit of all. But in such case the court shall make
sure that the parties actually before it are sufficiently numerous and representative so that all
interests concerned are fully protected. Any party in interest shall have a right to intervene in
protection of his individual interest.

What is contemplated, as will be noted, is that (a) the subject matter in controversy is of common or general interest
to many persons, and (b) those persons are so numerous as to make it impracticable to bring them all before the
court. Illustrative of the rule is a so-called derivative suit brought in behalf of numerous stockholders of a corporation
to perpetually enjoin or nullify what is claimed to be a breach of trust or an ultra vires act of the company's board of
directors. 2 In such a suit, there is one, single right of action pertaining to numerous stockholders, not multiple rights
belonging separately to several, distinct persons.

On the other hand, if there are many persons who have distinct, separate rights against the same party or group of
parties, but those rights arise from the same transaction or series of transactions and there are common questions
of fact or law resulting therefrom, the former may join as plaintiffs in one action against the same defendant. This is
authorized by the above mentioned joinder-of- parties rule in Section 6 of Rule 3.

SEC. 6. Permissive joinder of parties. — All persons in whom or against whom any right to relief in
respect to or arising out of the same transaction or series of transaction is alleged to exist, whether
jointly, severally, or in the alternative, may, except as otherwise provided in these rules, join as
plaintiffs or be joined as defendants in one complaint, where any question of law or fact common to
all such plaintiffs or to all such defendants may arise in the action; but the court may make such
orders as may be just to prevent any plaintiff or defendant from being embarrassed or put texpense
in connection with any proceedings in which he may have no interests.

For instance, it has been held that employees dismissed by their employer on the same occasion for substantially
the same reasons, allegedly without cause or justification, may join as plaintiff in a single action to obtain relief from
their employer. 3 In such a case, the plaintiff each have a material interest only in the damages properly due to him,
not in those that may be payable to the others, although their rights thereto arise from the same transaction. In other
words, there are as many rights of action as there are plaintiffs joined in the action. Similarly, the owner of a tract of
land whose property has been illegally occupied by many persons claiming different portions thereof, may bring a
single action against all illegal occupants thereof, in accordance with this rule of permissive joinder of parties. 4 The
right of action is not unal but plural, there being as many rights asserted in the action as there are defendants, each
defendant having an interest only in the portion of the land occupied by him.

It is true that in both juridical situations, similar essential factors exist i.e., the same transaction or series of
transactions is involved; and common questions of fact or law are at issue. What makes the situation a proper case
for a class suit is the circumstance that there is only one right or cause of action pertaining or belonging in common
to many persons, not separately or severally to distinct individuals.

The "true" class action, which is the invention of equity, is one which involves the enforcement of a
right which is joint, common, or secondary or derivative. ... (It) is a suit wherein, but for the class
action device, the joinder of all interested parties would be essential. 5

A "true class actions" — distinguished from the so-called hybrid and the spurious class action in U.S.
Federal Practice-involves principles of compulsory joinder, since . . (were it not) for the numerosity of
the class members all should ... (be) before the court. Included within the true class suit ... (are) the
 shareholders' derivative suit and a class action by or against an unincorporated association. ... A
judgment in a class suit, whether favorable or unfavorable to the class, is binding under res
judicata principles upon all the members of the class, whether or not they were before the court. It is
the non-divisible nature of the right sued on which determines both the membership of the class and
the res judicata effect of the final determination of the right. 6

The object of the suit is to obtain relief for or against numerous persons as a group or as an integral entity, and not
as separate, distinct individuals whose rights or liabilities are separate from and independent of those affecting the
others. 7

An action instituted by several hundred members of a voluntary association against their officers to compel them to
wind up the association's affairs and render an accounting of the money and property in their possession has been
held to be a class suit. 8 In that case there was in truth only one single right of action sought to be enforced by the
numerous plaintiff, not separate, individual, distinct rights pertaining independently to them. 9

On the other hand — unlike an action by numerous stockholders (which is properly a class suit) to restrain an
unauthorized act of a corporation's board of directors, e.g., to extend or shorten the corporate life or increase capital
stock of incur bonded indebtedness without the specified majority vote prescribed by the Corporation Law, in which
the right sought to be vindicated is single, common and general, not multiple and separate and distinct from each
other's 10 — an action by shareholders of a banking corporation, for example, to enforce their right to subscribe to
stock left unsubscribed by other stockholders who failed to exercise their own right to do so on or before a stipulated
date, was held not to be a class suit since each one of them 'had determinable interest; each one had a right, if any,
only to his respective portion of the stocks (or a definite number of shares) ... and (no one) of them had any right to,
or any interest in, the stock to which another was entitled."11So, too, an action for libel flied in behalf of 8,500
sugarcane planters has been held not to be a class suit since 'each of the plaintiffs has a separate and distinct
reputation in the community ... (and) do not have a common or general interest in the subject matter of the
controversy. 12 But in all these instances, and prescinding from pragmatic considerations, a permissive joinder of
parties would have been perfectly proper in accordance with the aforecited Section 6 of Rule 3 .13

The other factor that serves to distinguish the rule on class suits from that of permissive joinder of parties is, of
course, the numerousness of parties involved in the former. The rule is that for a class suit to be allowed, it is
needful inter alia that the parties be so numerous that it would be impracticable to bring them all before the court.

The case at bar not being a proper one for a class suit, it follows that the action may not be maintained by a
representative few in behalf of all the others. Be all this as it may, as regards the computation of the amount
involved in the action for purposes of determining the original jurisdiction over it, and the correlative matter of the
amount of filing fees to be paid, it is immaterial whether the rule applied be that on class suits or permissive joinder
of parties. For in either case, it is the totality of the amounts claimed by or against the parties that determines
jurisdiction, exclusive only of interest and costs. 14

The second question-whether or not the numerous claimants, should they join as parties plaintiff, may be allowed to
sue as pauper litigants, not because they are shown to be without means to maintain their suits, but on the ground
of the alleged "national importance" of the subject matter, or upon an unverified averment that most of them are
impecunious-yields another negative answer.

The rule on the matter is clear. A party may be allowed to litigate in forma pauper is only. . upon a
proper showing that he has no means to that effect by affidavits, certificate of the corresponding
provincial, city or municipal treasurer, or otherwise. 15

Thus, every would be litigant who seeks exemption from the payment of the fees prescribed for maintaining an
action must establish, not simply allege, his lack of means Where there is a multiplicity of such parties, each must
show such lack, in propria persona as it were. And that the particular circumstances or possible consequences of an
actual or contemplated suit are such as to transcend the narrow personal interests of the immediate parties thereto
and to so impinge upon the wider interests of the people at large as to assume an aspect of "national importance,"
does not under any existing law or rule justify excusing such parties from paying the requisite judicial fees or costs.
It should moreover be quite obvious that the denial of the privilege to prosecute as paupers litigant to those who do
not qualify as such cannot in any sense be deemed a denial of free access to the courts by reason of poverty, 16 as
counsel for the plaintiffs suggests.

Everyone — and the members of the Court are no exception — deplores that tragedy that claimed so many
unsuspecting victims in what has been described, to repeat, as 'the worst single -disaster' in maritime history.
Everyone condoles and symphatizes with those whom the victims, both known and unknown, left behind, many of
whom were denied even the small consolation of being able to bury their dead. Everyone undoubtedly hopes and
wishes that these survivors may quickly obtain adequate recompense for the untimely loss of their loved ones. But
sympathy and commiseration however-well-deserved, are not considerations that would justifiably argue for bending
or dispensing with the observance of the rules which prescribe now such vindication may be obtained in the courts
of law.

WHEREFORE, the order complained of being in accordance with law, the solicitation to set aside the same, and to
be exempted from observance of the rule on paupers litigant, is DENIED. The authority to litigate in the form of a
class action is likewise DENIED.

(Effect of death of the client to the atty-client relationship…)

G.R. Nos. L-42699 to L-42709 May 26, 1981

THE HEIRS OF THE LATE FLORENTINA NUGUID VDA. DE HABERER, petitioner,

vs.
COURT OF APPEALS, ** FEDERICO MARTINEZ, BALDOMERO MANALO, FAUSTINO BAGALAWIS, FEDERICO STA. TERESA, ANGELITO
KING, GREGORIO DEL ROSARIO, LEODOVICO TORRES, LEON SORIANO, SANTIAGO TUMANG, LUIS PASTOR and CRISTINO
LIBRAMANTE, respondents.

TEEHANKEE, J.: 1äwph ï1.ñët

The Court grants the petition for review by way of appeal from the Resolutions of respondent Court of Appeals dated
November 24, 1975 and January 15, 1976 dismissing the appeal of the late Florentino Nuguid Vda. de Haberer in
CA-G. R. No. 53680—90-R and ordering all pleadings filed in said cases after the death of said appellant stricken off
the records, for having been issued with grave error of law if not with grave abuse of discretion and remands the
case for proper proceedings and determination of the appeal on the merits.

This case originated from the Court of First Instance of Rizal where the late Florentina Nuguid Vda. de Haberer as
the duly registered owner filed in 1964 and 1965 (11) complaints for recovery of possession of the parcel of land
evidenced by Transfer Certificate of Title No. 15043 of the Register of Deeds of Rizal issued in her name, situated at
Mandaluyong, Rizal, alleging that private respondents had surreptitiously entered the land and built their houses
thereon.

The lower court, after trial on the merits, rendered a consolidated decision, dated May 26, 197 l, dismissing all the
complaints. On motion of the late Florentina Nuguid Vda. de Haberer the cases were reopened and retried on
grounds of newly discovered evidence. On September 15, 1972, the lower court issued an order reviving its decision
of May 26, 1971. The decision was thus appealed to the Court of Appeals.

In the Court of Appeals, the cases were erroneously dismissed once before, on the ground that the appeal was
allegedly filed out of time. The issue was brought to this Court in Cases Nos. L-39366 and L-39620-29, entitled
"Florentina Nuguid Vda. de Haberer vs. Federico Martinez, et al., 1 On January 29, 1975, this Court rendered its
judgment setting aside the appellate court's dismissal of the appeal and ordering the reinstatement of the same for
proper disposition on the merits, having found "that contrary to respondent court's erroneous premises and
computation, petitioner duly and timely perfected her appeal within the reglementary period and in compliance with
the material data rule requiring that the Record on Appeal state such data as will show that the appeal was
perfected on time. "
The cases were remanded to the Court of Appeals where appellant was required to file printed brief within forty-five
days from her receipt of notice. Three days before the period was to expire, or on June 18, 1975, appellant's
counsel requested for an extension of time within which to file appellant's brief. Respondent court in a resolution
dated June 23, 1975 granted the request and gave appellant a 90-day extension (with warning of no further
extension) from receipt on June 27, 1975 or up to September 25, 1975 within which to file the appellant's printed
brief. On June 23, 1975, private respondent opposed the extension by filing a "Motion to Set Aside Order Granting
Extension of Time to File Brief." Appellant was directed by respondent court to comment on the said opposition and
appellant's counsel complied by submitting its comments on July 15, 1975.

In the meantime, appellant Florentina Nuguid Vda. de Haberer had died on May 26, 1975. Appellant's counsel
Attorneys Bausa, Ampil and Suarez accordingly gave respondent court notice of the death of their client in their
motion of June 28, 1975 and asked for the suspension of the running of the period within which to file the appellant's
brief pending the appointment of an executor of the estate left by their client in the Court of First Instance of Quezon
City (Sp. Proc. No. Q-2026) where a petition for the probate of the alleged will of the deceased had been filed by
another lawyer, Atty. Sergio Amante. Respondents in turn contended that the lawyers of he deceased had "no
longer any legal standing and her atorneys could no longer act for and in her behalf for the reason that their client-
attorney relationship had been automatically erminated or severed" and asked that the appeal be dismissed for
failure to prosecute." 2

Since their motion of June 28, 1975 remained unacted upon and the original extension granted by the respondent
court for the deceased appellant to file her printed brief was about to expire, her counsel filed on September 18,
1975 a manifestation and/or motion asking either for an extension of sixty (60) days and/or resolution suspending
the running of the period within which to submit appellant's printed brief. Still, respondent, court remained silent.

Not certain whether their services would still be retained by the heirs of the deceased, counsel for the late Florentina
Nuguid Vda. de Haberer reiterated their request in a motion dated November 14, 1975 either for an extension of
time to file appellant's brief or for the issuance of a resolution suspending the running of the period for filing the
same, pending the appointment of an administrator or executor of the estate of the deceased appellant.

Finally, acting on counsel's motion of November 14, 1975, respondent court denied the request for extension and at
the same time dismissed the appeal, ruling in its resolution dated November 24, 1975 as follows: 1äw phï1.ñët

Upon consideration of the manifestation and/or for another extension to file appellant's brief dated
November 14, 1975, filed by counsel for the appellant on the grounds therein stated, and
considering that appellant has already been given a total of one hundred ninety-five (195) days
within which to file brief, the Court Resolved to deny the motion for another extension to file brief and
to dismiss the appeal.

Counsel for the deceased appellant forthwith filed their urgent motion for reconsideration of December 8, 1975
explaining their predicament that the requests for extension/suspension of period to file brief was due to the
uncertainty that their services may no longer be retained by the heirs or legal representatives of their deceased
client but they felt obligated to preserve the right of such heirs/successors to continue the appeal pursuant to Rule 3,
Section 17 of the Rules of Court, pending the settlement of the question of who among them should be the executor
of the deceased's estate and presented therewith, for admission, the printed "brief for the appellant" the printing of
which they had deferred "for professional ethical considerations," pending respondent court's action on their request
for suspension of the period. They further submitted therewith copies of 2 separate orders of September 3, 1975
and August 26, 1975 issued by the Court of Agrarian Relations and the Court of First Instance both at Guimba,
Nueva Ecija, respectively, wherein the deceased Florentina Nuguid Vda. de Haberer was party-defendant, granting
the deceased's counsel's prayer to hold in abeyance further proceedings therein pending the appointment of an
administrator for the estate of the deceased.

Respondent court, however, denied reconsideration, per its Resolution of January 15, 1976 citing the general
principle that "litigants have no right to assume that such extensions will be granted as a matter of course." But
respondent court erred in applying this general principle and summarily denying reconsideration and denying
admission of the appellant's brief conditioned upon the administrator of the deceased's estate making his
appearance upon his appointment and being granted leave to file his supplemental brief/memorandum, 3 in view of
the intervening event of appellant's death and the interposition of the equally established principle that the relation of
attorney and client is terminated by the death of the client, as acknowledged by respondent court itself as well as
respondents. ln the absence of a retainer from the heirs or authorized representatives of his deceased client, the
attorney would thereafter have no further power or authority to appear or take any further action in the case, save to
inform the court of the client's death and take the necessary steps to safeguard the deceased's rights in the case.

This is what the deceased's counsel did in the case at bar. They properly informed respondent court of the death of
the appellant and sought suspension of the proceedings and of the period for filing appeliant's brief pending the
appointment of the executor of the deceased's estate in the proper probate proceedings filed with the Court of First
Instance of Quezon City. Section 17, Rule 3 of the Rules of Court 4 sets the rule on substitution of parties in case of
death of any of the parties. Under the Rule, it is the court that is called upon, after notice of a party's death and the
claim is not thereby extinguished, to order upon proper notice the legal representative of the deceased to appear
within a period of 30 days or such tlnie as it may grant. Since no administrator of the estate of the deceased
appellant had yet been appointed as the same was still pending determination in the Court of First Instance of
Quezon City, the motion of the deceased's counsel for the suspension of the running of the period within which to
file appellant's brief was well-taken. More, under the Rule, it should have set a period for the substitution of the
deceased party with her legal representative or heirs, failing which, the court is called upon to order the opposing
party to procure the appointment of a legal representative of the deceased at the cost of the deceased's estate, and
such representative shall then "immediately appear for and on behalf of the interest of the deceased."

Respondent court gravely erred in not following the Rule and requiring the appearance of the legal representative of
the deceased and instead dismissing the appeal of the deceased who yet had to be substituted in the pending
appeal. Thus, it has been held that when a party dies in an action that survives, and no order is issued by the court
for the appearance of the legal representative or of the heirs of the deceased in substitution of the deceased, and as
a matter of fact no such substitution has ever been effected, the trial held by the court without such legal
representatives or heirs and the judgment rendered after such trial are null and void because the court acquired no
jurisdiction over the persons of the legal representatives or of the heirs upon whom the trial and the judgment would
be binding. 5

Respondent court therefore erred in ruling that since upon the demise of the party-appellant, the attorney-client
relationship between her and her counsels "was automatically severed and terminated," whatever pleadings filed by
said counsel with it after the death of said appellant "are mere scraps of paper." 6 If at all, due to said death on May
25, 1975 and severance of the attorney-client relationship, further proceedings and specifically the running of the
original 45-day period for filing the appellnt's brief should be legally deemed as having been automatically
suspended, until the proper substitution of the deceased appellant by her executor or administrator or her heirs shall
have been effected within the time set by respondent court pursuant to the cited Rule.

Respondent court likewise gravely erred in dismissing the appeal on "(its) belief that the supervening death of the
appellant Florentina Nuguid Vda. de Haberer rendered the continuance of the appeal unnecessary" on the basis of
a totally inapplicable citation of a ruling in Velasco vs. Rosenberg, 29 Phil. 212, 214 that "If pending appeal, an
event occurs which renders it impossible for the appellate court to grant any relief, the appeal will be dismissed."
Manifestly, the appenant's death in no way impedes that the deceased's appeal to recover the parcel of land
registered in her name be continued and determined for the benefit of her estate and heirs.

Prescinding from the foregoing, justice and equity dictate under the circumstances of the case at bar that the rules,
while necessary for the speedy and orderly administration of justice, should not be applied with the rigidity and
inflexibility of respondent court's resolutions. 7 What should guide judicial action is the principle that a party litigant is
to be given the fullest opportunity to establish the merits of his complaint or defense rather than for him to lose life,
liberty, honor or property on technicalities. 8 A liberal, rather than a strict and inflexible adherence to the Rules, is
justified not only because appellant (in this case, her estate and/or heirs) should be given every opportunity to be
heard but also because no substantial injury or prejudice can well be caused to the adverse parties principally, since
they are in actual possession of the disputed land. 9 The better and certainly the more prudent course of action in
every judicial proceeding is to hear both sides and decide on the merits rather than dispose of a case on
technicalities, 10 especially where no substantial prejudice is caused to the adverse party. 11

The dismissal of an appeal based on the appellant's failure to file brief is based on a power granted to respondent
Court of Appeals and not on a specific and mandatory duty imposed upon it by the Rules. 12 Since the power or
authority is not mandatory but merely directory, the exercise thereof requires a great deal of circumspection,
considering all the attendant circumstances. 13 The failure of an appellant to file his brief within the time prescribed
does not have the effect of dismissing the appeal automatically. 14 Rather, the Court of Appeals has the discretion to
dismiss or not to dismiss appellant's appeal, which discretion must be a sound one to be exercised in accordance
with the tenets of justice and fair play having in mind the circumstances obtaining in each case. l5

Paraphrasing what the Court stressed in the leading case of Berkenkotter vs. Court of Appeals, 16 a reading of the appellant's brief discloses that petitioners-
appellants have a prima facie meritorious case which should be properly determined on the merits and "the element of rigidity should not be affixed to procedural
concepts and made to cover the matter," 17 for to dismiss the appeal would not serve the ends of justice.

A final note: On March 19, 1976, counsels submitted with their Manifestation the written authority dated January 20,
1976 individually signed by instituted heirs and/or legal representatives of the testate estate of the deceased
Florentina Nuguid Vda. de Haberer granting said counsels full authority to file and prosecute the case and any other
incidental cases for and in their behalf, 18 which was duly noted in the Court's Resolution of March 26, 1976. Such
manifestation and authority may be deemed the formal substitution of the deceased by her heirs, as in fact they
appear as petitioners in the title of the case at bar. Hence, the proper determination of the pending appeal may now
proceed, as herein directed.

ACCORDINGLY, the petition is granted and respondent court's resolutions of November 24, 1975 and January 15,
1976 are set aside. The appellant's brief filed with respondent court in the pending appeal in CA-G.R. Nos. 53680-
90-R is ordered admitted and the cases are remanded to respondent, Court of Appeals for further proceedings and
proper determination of the appeal on the merits. With costs against private respondents.

The Court has noted that upon recommendation of the Solicitor General in Adm. Case No. 2148 entitled "Francisco
Ortigas, Jr., et al. vs. Atty. Felipe C. Navarro" that counsel for respondents Felipe C. Navarro be disbarred for "gross
misconduct and/or malpractice," he has been suspended from the practice of law during the pendency of said
proceedings. The Court, however, directs that copy of this decision be served on said counsel for the sole purpose
of apprising private respondents through him of the promulgation of this judgment and to require respondents (1) to
inform the Court of their new counsel, if any, and to direct him to enter his appearance or (2) if they have no new or
other counsel, to inform the Court of their respective addresses for purposes of service of the Court's processes,
within ten (10) days from notice hereof.

Makasiar, Guerrero, De Castro **and Melencio-Herrera, JJ., concur. 1äwphï1.ñët

(Tests to determine whether action survives or not…)

G.R. No. L-41715 June 18, 1976

ROSALIO BONILLA (a minor) SALVACION BONILLA (a minor) and PONCIANO BONILLA (their father) who
represents the minors, petitioners,
vs.
LEON BARCENA, MAXIMA ARIAS BALLENA, ESPERANZA BARCENA, MANUEL BARCENA, AGUSTINA
NERI, widow of JULIAN TAMAYO and HON. LEOPOLDO GIRONELLA of the Court of First Instance of
Abra, respondents.

Federico Paredes for petitioners.

Demetrio V. Pre for private respondents.

MARTIN, J:

This is a petition for review 1 of the Order of the Court of First Instance of Abra in Civil Case No. 856, entitled
Fortunata Barcena vs. Leon Barcena, et al., denying the motions for reconsideration of its order dismissing the
complaint in the aforementioned case.

On March 31, 1975 Fortunata Barcena, mother of minors Rosalio Bonilla and Salvacion Bonilla and wife of
Ponciano Bonilla, instituted a civil action in the Court of First Instance of Abra, to quiet title over certain parcels of
land located in Abra.
On May 9, 1975, defendants filed a written motion to dismiss the complaint, but before the hearing of the motion to
dismiss, the counsel for the plaintiff moved to amend the complaint in order to include certain allegations therein.
The motion to amend the complaint was granted and on July 17, 1975, plaintiffs filed their amended complaint.

On August 4, 1975, the defendants filed another motion to dismiss the complaint on the ground that Fortunata
Barcena is dead and, therefore, has no legal capacity to sue. Said motion to dismiss was heard on August 14, 1975.
In said hearing, counsel for the plaintiff confirmed the death of Fortunata Barcena, and asked for substitution by her
minor children and her husband, the petitioners herein; but the court after the hearing immediately dismissed the
case on the ground that a dead person cannot be a real party in interest and has no legal personality to sue.

On August 19, 1975, counsel for the plaintiff received a copy of the order dismissing the complaint and on August
23, 1975, he moved to set aside the order of the dismissal pursuant to Sections 16 and 17 of Rule 3 of the Rules of
Court. 2

On August 28, 1975, the court denied the motion for reconsideration filed by counsel for the plaintiff for lack of merit.
On September 1, 1975, counsel for deceased plaintiff filed a written manifestation praying that the minors Rosalio
Bonilla and Salvacion Bonilla be allowed to substitute their deceased mother, but the court denied the counsel's
prayer for lack of merit. From the order, counsel for the deceased plaintiff filed a second motion for reconsideration
of the order dismissing the complaint claiming that the same is in violation of Sections 16 and 17 of Rule 3 of the
Rules of Court but the same was denied.

Hence, this petition for review.

The Court reverses the respondent Court and sets aside its order dismissing the complaint in Civil Case No. 856
and its orders denying the motion for reconsideration of said order of dismissal. While it is true that a person who is
dead cannot sue in court, yet he can be substituted by his heirs in pursuing the case up to its completion. The
records of this case show that the death of Fortunata Barcena took place on July 9, 1975 while the complaint was
filed on March 31, 1975. This means that when the complaint was filed on March 31, 1975, Fortunata Barcena was
still alive, and therefore, the court had acquired jurisdiction over her person. If thereafter she died, the Rules of Court
prescribes the procedure whereby a party who died during the pendency of the proceeding can be substituted.
Under Section 16, Rule 3 of the Rules of Court "whenever a party to a pending case dies ... it shall be the duty of his
attorney to inform the court promptly of such death ... and to give the name and residence of his executor,
administrator, guardian or other legal representatives." This duty was complied with by the counsel for the deceased
plaintiff when he manifested before the respondent Court that Fortunata Barcena died on July 9, 1975 and asked for
the proper substitution of parties in the case. The respondent Court, however, instead of allowing the substitution,
dismissed the complaint on the ground that a dead person has no legal personality to sue. This is a grave error.
Article 777 of the Civil Code provides "that the rights to the succession are transmitted from the moment of the
death of the decedent." From the moment of the death of the decedent, the heirs become the absolute owners of his
property, subject to the rights and obligations of the decedent, and they cannot be deprived of their rights thereto
except by the methods provided for by law. 3 The moment of death is the determining factor when the heirs acquire
a definite right to the inheritance whether such right be pure or contingent. 4 The right of the heirs to the property of
the deceased vests in them even before judicial declaration of their being heirs in the testate or intestate
proceedings. 5 When Fortunata Barcena, therefore, died her claim or right to the parcels of land in litigation in Civil
Case No. 856, was not extinguished by her death but was transmitted to her heirs upon her death. Her heirs have
thus acquired interest in the properties in litigation and became parties in interest in the case. There is, therefore, no
reason for the respondent Court not to allow their substitution as parties in interest for the deceased plaintiff.

Under Section 17, Rule 3 of the Rules of Court "after a party dies and the claim is not thereby extinguished, the
court shall order, upon proper notice, the legal representative of the deceased to appear and be substituted for the
deceased, within such time as may be granted ... ." The question as to whether an action survives or not depends
on the nature of the action and the damage sued for. 6 In the causes of action which survive the wrong complained
affects primarily and principally property and property rights, the injuries to the person being merely incidental, while
in the causes of action which do not survive the injury complained of is to the person, the property and rights of
property affected being incidental. 7 Following the foregoing criterion the claim of the deceased plaintiff which is an
action to quiet title over the parcels of land in litigation affects primarily and principally property and property rights
and therefore is one that survives even after her death. It is, therefore, the duty of the respondent Court to order the
legal representative of the deceased plaintiff to appear and to be substituted for her. But what the respondent Court
did, upon being informed by the counsel for the deceased plaintiff that the latter was dead, was to dismiss the
complaint. This should not have been done for under the same Section 17, Rule 3 of the Rules of Court, it is even
the duty of the court, if the legal representative fails to appear, to order the opposing party to procure the
appointment of a legal representative of the deceased. In the instant case the respondent Court did not have to
bother ordering the opposing party to procure the appointment of a legal representative of the deceased because
her counsel has not only asked that the minor children be substituted for her but also suggested that their uncle be
appointed as guardian ad litem for them because their father is busy in Manila earning a living for the family. But the
respondent Court refused the request for substitution on the ground that the children were still minors and cannot
sue in court. This is another grave error because the respondent Court ought to have known that under the same
Section 17, Rule 3 of the Rules of Court, the court is directed to appoint a guardian ad litem for the minor heirs.
Precisely in the instant case, the counsel for the deceased plaintiff has suggested to the respondent Court that the
uncle of the minors be appointed to act as guardian ad litem for them. Unquestionably, the respondent Court has
gravely abused its discretion in not complying with the clear provision of the Rules of Court in dismissing the
complaint of the plaintiff in Civil Case No. 856 and refusing the substitution of parties in the case.

IN VIEW OF THE FOREGOING, the order of the respondent Court dismissing the complaint in Civil Case No. 856 of
the Court of First Instance of Abra and the motions for reconsideration of the order of dismissal of said complaint are
set aside and the respondent Court is hereby directed to allow the substitution of the minor children, who are the
petitioners therein for the deceased plaintiff and to appoint a qualified person as guardian ad litem for them. Without
pronouncement as to costs.

SO ORDERED.

Teehankee (Chairman), Makasiar, Esguerra and Muñoz Palma, JJ., concur.

(Nullity of proceedings in case of non-substitution despite notice or knowledge of death of party…)

G.R. No. L-45809 December 12, 1986

SOCORRO SEPULVEDA LAWAS, petitioner,

vs.
COURT OF APPEALS, HON. BERNARDO LL. SALAS, [as Judge, CFI, Cebu, Branch VIII], and PACIFICO
PELAEZ, respondents.

Jesus Yray for petitioner.

Teodoro Almase for respondents.

FERIA, J.:

This is an appeal by certiorari under Rule 45 of the Revised Rules of Court from the decision of the Court of Appeals
which dismissed the petition for certiorari under, Rule 65 of said Rules against respondent Judge Bernardo L. Salas
of the Court of First Instance of Cebu. The antecedent facts are briefly as follows:

Private respondent Pacifico Pelaez filed a Complaint on December 6, 1972 against petitioner's father, Pedro
Sepulveda, for ownership and partition of certain parcels of land. Defendant Pedro Sepulveda filed his Answer dated
December 31, 1972 resisting the claim and raising the special defenses of laches, prescription and failure to
ventilate in a previous special proceeding. During the presentation of evidence for the plaintiff, the defendant died on
March 25, 1975. On May 21, 1975, counsels for the deceased defendant filed a notice of death wherein were
enumerated the thirteen children and surviving spouse of the deceased.

On May 5, 1975, petitioner filed a petition for letters of administration and she was appointed judicial administratrix
of the estate of her late father in July, 1976.

At the hearing of the case on November 27, 1975, Attys. Domingo Antigua and Serafin Branzuela, former counsels
for the deceased defendant, manifested in open court that with the death of their client, their contract with him was
also terminated and none of the thirteen children nor the surviving spouse had renewed the contract, but instead
they had engaged the services of other lawyers in the intestate proceedings.

Notwithstanding the manifestation of the former counsels of the deceased defendant, the respondent trial judge set
the case for hearing on January 13, 1976 and sent the notice of hearing to said counsels.

On January 13, 1976, the respondent trial judge issued three orders. The first order substituted the heirs of the
deceased defendant, namely, his thirteen children and surviving spouse, as defendants; the second order
authorized Atty. Teodoro Almase, counsel for the plaintiff, to present his evidence in the absence of Attys. Antigua
and Branzuela and the third order treated the case submitted for decision, after the plaintiff had presented his
evidence and rested his case, and directed that said counsels and the fourteen heirs of the deceased defendant be
furnished copies thereof.

On January 28, 1976, the respondent trial judge rendered a decision against the heirs of the deceased defendant.

On February 19, 1976, ten of the children of the deceased defendant, who apparently did not know that a decision
had already been rendered, filed an Answer in-substitution of the deceased defendant through their counsel Atty.
Jesus Yray. This was denied admission by the respondent trial judge for being already moot and academic because
of the earlier decision.

On March 9, 1976, the widow and two other children of the deceased defendant, through their counsel Atty. Delfin
Quijano, filed a motion for substitution and for reconsideration of the decision dated January 28, 1976. On April 7,
1976, the respondent trial judge issued an order setting aside his decision and setting the case in the calendar for
cross-examination of the plaintiff, Pacifico Pelaez, with a proviso that said order was applicable only to the three
heirs who had filed the motion. On July 14, 1976, the respondent trial judge lifted the order setting aside his
decision, despite the verbal petition for postponement of the hearing made by one of the three heirs on the ground
of the absence of their counsel.

On July 9, 1976, petitioner, who had been appointed judicial administratrix of the estate of the deceased defendant
and who was one of the heirs who had filed an Answer on February 19, 1976, filed a motion to intervene and/or
substitute the deceased defendant. On August 25, 1976, the respondent trial judge denied the motion for the reason
that the decision had already become final.

Petitioner then filed a special civil action of certiorari with the Court of Appeals to annul the proceedings in the
respondent trial court. However, the Court of Appeals dismissed the petition for certiorari. Hence, the present
appeal.

The appeal is meritorious.

Section 16 of Rule 3 provides as follows:

Duty of attorney upon death, incapacity, or incompetency of party. — Whenever a party to a pending case
dies, becomes incapacitated or incompetent, it shall be the duty of his attorney to inform the court promptly
of such death, incapacity or incompetency, and to give the name and residence of his executor,
administrator, guardian or other legal representative.

The former counsels for the deceased defendant, Pedro Sepulveda, complied with this rule by filing a notice of
death on May 21, 1975. They also correctly manifested in open court at the hearing of the case on November 27,
1975, that with the death of their client their contract with him was also terminated and none of the heirs of the
deceased had renewed the contract, and the heirs had instead engaged the services of other lawyers in the
intestate proceedings.

Both the respondent trial judge and the Court of Appeals erred in considering the former counsels of the deceased
defendant as counsels for the heirs of the deceased. The statement in the decision of the Court of Appeals that "the
appearance of the lawyers of their deceased father in court on January 13, 1976 (Annex K) carries the presumption
that they were authorized by the heirs of the deceased defendant" is erroneous. As this Court held in People vs.
Florendo (77 Phil. 16), "the attorneys for the offended party ceased to be the attorneys for the deceased upon the
death of the latter, the principal. " Moreover, such a presumption was not warranted in view of the manifestation of
said lawyers in open court on November 27, 1975 that they were not representing the heirs of the deceased
defendant.

Consequently, when on the same date, November 27, 1975, the respondent trial judge issued an order setting the
continuation of the trial of the case on January 13, 1976, with notices sent to Atty. Almase for the plaintiff and Attys.
Antigua and Branzuela for the deceased defendant, he acted with grave abuse of discretion amounting to excess of
jurisdiction.

It was only at the hearing on January 13, 1976 that the respondent trial judge issued an order substituting the
deceased defendant with his fourteen heirs. This was followed with an order authorizing counsel for the plaintiff to
present his evidence in the absence of Attys. Antigua and Branzuela, and lastly, an order treating the case as
submitted for decision.

In the order of the respondent trial judge dated November 10, 1976, denying petitioner's motion for reconsideration
of the order denying her motion for intervention (Annex 1 of the Comment), mention was made of the delayed arrival
of Attys. Antigua and Branzuela at the hearing on January 13, 1976 and of their being allowed to cross-examine the
plaintiff himself.

The refusal of said former counsels of the deceased defendant to cross-examine the plaintiff was justified —

... in view of the intervening event of appellant's death and the interposition of the equally established
principle that the relationship of attorney and client is terminated by the death of the client, as acknowledged
by respondent court itself as well as respondents. In the absence of a retainer from the heirs or authorized
representatives of his deceased defendant the attorney would have no further power or authority to appear
or take any further action in the case, save to inform the court of the client's death and take the necessary
steps to safeguard the decedent's rights in the case. (Vda. de Haberer vs. Court of Appeals, May 26, 1981,
104 SCRA 534, 540)

Moreover, as above stated, petitioner had as early as May 5, 1975 filed a petition for letters of administration, and
the same was granted in July, 1975.

Section 17 of Rule 3 provides as follows:

Death of party. After a party dies and the claim is not thereby extinguished, the court shag order, upon
proper notice, the legal representative of the deceased to appear and to be substituted for the deceased,
within a period of thirty (30) days, or within such time as may be granted. If the legal representative fails to
appear within said time, the court may order the opposing party to procure the appointment of a legal
representative of the deceased within a time to be specified by the court, and the representative shall
immediately appear for and on behalf of the interest of the deceased. The court charges involved in
procuring such appointment, if defrayed by the opposing party, may be recovered as costs. The heirs of the
de ceased may be allowed to be substituted for the deceased, without requiring the appointment of an
executor or administrator and the court may appoint guardian ad litem for the minor heirs.

As this Court has held:

... Under the Rule, it is the court that is called upon, after notice of a party's death and the claim is not
thereby extinguished, to order upon proper notice the legal representative of the deceased to appear within
a period of 30 days or such time as it may grant. Since no administrator of the estate of the deceased
appellant had yet been appointed as the same was still pending determination in the Court of First Instance
of Quezon City, the motion of the deceased's counsel for the suspension of the running of the period within
which to file appellant's brief was well-taken. More, under the Rule, it should have set a period for the
substitution of the deceased party with her legal representative or heirs, failing which, the court is called
upon to order the opposing party to procure the appointment of a legal representative of the deceased at the
cost of the deceased's estate, and such representative shall then 'immediately appear for and on behalf of
the interest of the deceased.
 Respondent court gravely erred in not following the Rule and requiring the appearance of the legal
representative of the deceased and instead dismissing the appeal of the deceased who yet had to be
substituted in the pending appeal Thus, it has been held that when a party dies in an action that survives,
and no order is issued by the court for the appearance of the legal representative or of the heirs of the
deceased in substitution of the deceased, and as a matter of fact no such substitution has ever been
effected, the trial held by the court without such legal representatives or heirs and the judgment rendered
after such trial are null and void because the court acquired no jurisdiction over the persons of the legal
representatives or of the heirs upon whom the trial and the judgment would be binding. (Ordoveza vs.
Raymundo, 63 Phil 275 [1936]; Obut vs. Court of Appeals, et al., 70 SCRA 546) (Vda. de Haberer vs. Court
of Appeals, supra, p. 541.

Under the said Rule, priority is given to the legal representative of the deceased, that is, the executor or
administrator of his estate. It is only in cases of unreasonable delay in the appointment of an executor or
administrator, or in cases where the heirs resort to an extrajudicial settlement of the estate, that the court may adopt
the alternative of allowing the heirs of the deceased to be substituted for the deceased.

In the case at bar, in view of the pendency of Special Proceeding No. 37-SF Intestate Estate of Pedro Sepulveda,
and the pending application of petitioner to be appointed judicial administratrix of the estate, the respondent trial
judge should have awaited the appointment of petitioner and granted her motion to substitute the deceased
defendant.

While the lower courts correctly held that the death of Pedro Sepulveda did not obliterate his verified Answer to the
Complaint filed by private respondent and that the Answer filed by the ten heirs and the Answer filed by the
Administratrix were both unnecessary, the said heirs or the administratrix could, with leave of court, file an Amended
Answer.

In view of the foregoing, the Court rules that the proceedings conducted by the respondent trial judge after the death
of the deceased defendant are null and void.

WHEREFORE, the decision of the Court of Appeals is reversed; the petition for certiorari is granted; petitioner is
ordered substituted for the deceased defendant, Pedro Sepulveda; and the proceedings conducted by the
respondent trial judge after the death of the deceased defendant, including the decision rendered by him on January
28, 1976, are set aside; with costs against private respondent.

SO ORDERED.

Fernan, Alampay, Gutierrez, Jr., and Paras, JJ., concur.

(Meaning of residence for purposes of venue…)

G.R. No. 80380 September 28, 1988

CARLOS BELL RAYMOND and AGUSTIN ALBA, petitioners,

vs.
HON. COURT OF APPEALS, HON. RICARDO M. ILARDE, etc., and SANTIAGO BITERA, respondents.

Lenin R. Victoriano for petitioners.

Cirilo T. Ganzon for respondents.

NARVASA, J.:

The petition for review on certiorari filed with this Court by the petitioners Raymond and Alba seeks reversal of the decision of the Court of Appeals which
dismissed for lack of merit their petition for certiorari and prohibition; that petition, in turn, had assailed the refusal of the respondent Judge to dismiss the action
filed against petitioners by private respondent Santiago Bitera on the ground of improper venue. By Resolution dated February 1, 1988, this Court required the
respondents to comment on the petition within a ten-day period which expired on February 29,1988. Upon motions timely filed by private respondent, said period
was extended by a total of thirty (30) days. This notwithstanding, no word has been received from private respondent on whom is reposed, by established rule, the
function of sustaining the challenged action of the respondent Courts. Be this as it may, since the relevant facts are not and cannot be disputed, and only one legal
issue is raised, the Court has resolved to give due course to the petition and decide that issue on the merits.

A complaint for damages was filed with the Regional Trial Court of Iloilo by Santiago Bitera against Carlos Bell
Raymond and Agustin Alba. The latter moved to dismiss the action on the ground of improper venue. They argued
that although Bitera's complaint gives his address as 240-C Jalandoni Street, Iloilo City, he is, and for many years
has been actually residing at the so-called UPSUMCO Compound, Bais City, he being the officer-in-charge of the
business firm known as UPSUMCO, which has offices at Bais and Manjuyod Negros Oriental, and that, indeed, his
affidavit, appended to his complaint, contains his affirmation that lie is "a resident of the UPSUMCO Compound, City
of Bais and shows (in the jurat) that his residence certificate had been issued at Manjuyod Negros Oriental. The
Trial Court however denied their motion to dismiss. They then filed a special civil action of certiorari and prohibition
with the Court of Appeals. But, as above stated, they fared no better in that court. It dismissed their petition, saying:

Why Bitera chose to file this action for damages in Iloilo City instead of in Dumaguete City is beyond
this Court, even as the pleadings show that plaintiff is actually residing at UPSUMCO, the
defendants are both residents of UPSUMCO, the cause of damages arose out of a controversy in
the UPSUMCO and because of plaintiffs and defendant's positions as officer and board members of
Upsumco.

While it would seem the height of inequity were We to allow plaintiff to bring suit in Iloilo City instead
of in Dumaguete City on the basis of his allegation that his permanent place of abode is in Iloilo City
and he only temporarily resides in Bais City, Dumaguete City, it is, however, the plaintiff who is given
the right to elect where to bring his action. As plaintiff chose his legal domicile or residence, We
cannot compel him to bring suit in the place where he has his temporary residence. 1

According to Section 2, Rule 4 of the Rules of Court, personal actions, such as Bitera's, "may be commenced and
tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the
plaintiffs resides, at the election of the plaintiff." The term, where a person "resides," or "residence," may be
understood as synonymous with domicile: as referring to a person's "permanent home, the place to which,
whenever absent for business or pleasure, one intends to return," and it has been held that "a man can have but
one domicile at a time." 2 The term may also be taken in another sense, and it is this which is germane to the
determination of venue, as meaning a person's actual residence, different and distinct from his permanent one, or
domicile, where he was born and reared, and e.g., where he usually casts his vote during elections. Thus this Court
has held that venue was improperly laid in a case where the complaint was filed in the Court of First Instance of
Ilocos Norte by the plaintiff who was born and reared in that province, but whose actual residence at time of suit was
admittedly at Quezon
City. 3 In another case, where the plaintiffs instituted a personal action4 in the Court of First Instance at Lipa City,
claiming that their domicile was San Juan, Batangas, the Court declared the venue to be erroneously selected in
view of the fact that the plaintiffs' place of abode, where they actually reside, was at Quezon City. 5

Garcia Fule v. Court of Appeals 6 definitively explained and settled the meaning to be put to the words "reside" or
"residence" as used in the venue provisions:

2. But, the far-ranging question is this: What does the term 'resides' mean? Does it refer to the actual
residence or domicile of the decedent at the time of his death? We lay down the doctrinal rule that
the term "resides" connotes ex vi termini "actual residence" as distinguished from legal residence or
domicile this term "resides," like the terms "residing" and "residence," is elastic and should be
interpreted in the light of the object or purpose of the statute or rule in which it is employed. In the
application of venue statutes and rules-Section 1, Rule 73 of the Revised Rules of Court is of such
nature-residence rather than domicile is the significant factor. Even where the statute uses the word
domicile still it is construed as meaning residence and not "domicile" in the technical sense. Some
cases make a distinction between the terms "residence" and "domicile" but as generally used in
statutes fixing venue, the terms are synonymous, and convey the same meaning as the term
"inhabitant." In other words, "resides" should be viewed or understood in its popular sense, meaning
the personal, actual or physical habitation of a person, actual residence or place of abode. It signifies
physical presence in a place and actual stay thereat. In this popular sense, the term means merely
residence, that is, personal residence, not legal residence or domicile. Residence simply requires
 bodily presence as an inhabitant in a given place, while domicile requires bodily presence in that
place and also an intention to make it one's domicile ... 7

It therefore clearly appears that both the respondent Judge and the Court of Appeals, the former in the first instance
and the latter on review, committed reversible legal error, if not grave abuse of discretion, in not dismissing Bitera's
action despite the fact that its venue had clearly been improperly laid, and had been seasonably objected to on that
ground by petitioners in a motion to dismisses.8

WHEREFORE, the questioned Order of the respondent Judge denying petitioner's motion to dismiss and the
Decision of the Court of Appeals affirming said order are REVERSED AND SET ASIDE. Civil Case No. 17354 of the
Regional Trial Court of Iloilo City, Branch XXVI, is hereby DISMISSED on the ground that venue has been
improperly laid. No pronouncement as to costs.

SO ORDERED.

Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

G.R. No. 104175 June 25, 1993

YOUNG AUTO SUPPLY CO. AND NEMESIO GARCIA, petitioners,

vs.
THE HONORABLE COURT OF APPEALS (THIRTEENTH DIVISION) AND GEORGE CHIONG
ROXAS, respondents.

Angara, Abello, Concepcion, Regala & Cruz for petitioners.

Antonio Nuyles for private respondent.

QUIASON, J.:

Petitioners seek to set aside the decision of respondent Court of Appeals in CA-G.R. SP No. 25237, which reversed
the Order dated February 8, 1991 issued by the Regional Trial Court, Branch 11, Cebu City in Civil Case No. CEB
6967. The order of the trial court denied the motion to dismiss filed by respondent George C. Roxas of the complaint
for collection filed by petitioners.

It appears that sometime on October 28, 1987, Young Auto Supply Co. Inc. (YASCO) represented by Nemesio
Garcia, its president, Nelson Garcia and Vicente Sy, sold all of their shares of stock in Consolidated Marketing &
Development Corporation (CMDC) to Roxas. The purchase price was P8,000,000.00 payable as follows: a
downpayment of P4,000,000.00 and the balance of P4,000,000.00 in four post dated checks of P1,000,000.00 each.

Immediately after the execution of the agreement, Roxas took full control of the four markets of CMDC. However,
the vendors held on to the stock certificates of CMDC as security pending full payment of the balance of the
purchase price.

The first check of P4,000,000.00, representing the down-payment, was honored by the drawee bank but the four
other checks representing the balance of P4,000,000.00 were dishonored. In the meantime, Roxas sold one of the
markets to a third party. Out of the proceeds of the sale, YASCO received P600,000.00, leaving a balance of
P3,400,000.00 (Rollo, p. 176).

Subsequently, Nelson Garcia and Vicente Sy assigned all their rights and title to the proceeds of the sale of the
CMDC shares to Nemesio Garcia.

On June 10, 1988, petitioners filed a complaint against Roxas in the Regional Trial Court, Branch 11, Cebu City,
praying that Roxas be ordered to pay petitioners the sum of P3,400,00.00 or that full control of the three markets be
turned over to YASCO and Garcia. The complaint also prayed for the forfeiture of the partial payment of
P4,600,000.00 and the payment of attorney's fees and costs (Rollo, p. 290).

Roxas filed two motions for extension of time to submit his answer. But despite said motion, he failed to do so
causing petitioners to file a motion to have him declared in default. Roxas then filed, through a new counsel, a third
motion for extension of time to submit a responsive pleading.

On August 19, 1988, the trial court declared Roxas in default. The order of default was, however, lifted upon motion
of Roxas.

On August 22, 1988, Roxas filed a motion to dismiss on the grounds that:

1. The complaint did not state a cause of action due to non-joinder of indispensable parties;

2. The claim or demand set forth in the complaint had been waived, abandoned or otherwise
extinguished; and

3. The venue was improperly laid (Rollo, p. 299).

After a hearing, wherein testimonial and documentary evidence were presented by both parties, the trial court in an
Order dated February 8, 1991 denied Roxas' motion to dismiss. After receiving said order, Roxas filed another
motion for extension of time to submit his answer. He also filed a motion for reconsideration, which the trial court
denied in its Order dated April 10, 1991 for being pro-forma (Rollo, p. 17). Roxas was again declared in default, on
the ground that his motion for reconsideration did not toll the running of the period to file his answer.

On May 3, 1991, Roxas filed an unverified Motion to Lift the Order of Default which was not accompanied with the
required affidavit or merit. But without waiting for the resolution of the motion, he filed a petition for certiorari with the
Court of Appeals.

The Court of Appeals sustained the findings of the trial court with regard to the first two grounds raised in the motion
to dismiss but ordered the dismissal of the complaint on the ground of improper venue (Rollo, p. 49).

A subsequent motion for reconsideration by petitioner was to no avail.

Petitioners now come before us, alleging that the Court of Appeals
erred in:

1. holding the venue should be in Pasay City, and not in Cebu City (where both petitioners/plaintiffs
are residents;

2. not finding that Roxas is estopped from questioning the choice of venue (Rollo, p. 19).

The petition is meritorious.

In holding that the venue was improperly laid in Cebu City, the Court of Appeals relied on the address of YASCO, as
appearing in the Deed of Sale dated October 28, 1987, which is "No. 1708 Dominga Street, Pasay City." This was
the same address written in YASCO's letters and several commercial documents in the possession of Roxas
(Decision, p. 12; Rollo, p. 48).

In the case of Garcia, the Court of Appeals said that he gave Pasay City as his address in three letters which he
sent to Roxas' brothers and sisters (Decision, p. 12; Rollo, p. 47). The appellate court held that Roxas was led by
petitioners to believe that their residence is in Pasay City and that he had relied upon those representations
(Decision, p. 12, Rollo, p. 47).

The Court of Appeals erred in holding that the venue was improperly laid in Cebu City.
In the Regional Trial Courts, all personal actions are commenced and tried in the province or city where the
defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at
the election of the plaintiff [Sec. 2(b) Rule 4, Revised Rules of Court].

There are two plaintiffs in the case at bench: a natural person and a domestic corporation. Both plaintiffs aver in
their complaint that they are residents of Cebu City, thus:

1.1. Plaintiff Young Auto Supply Co., Inc., ("YASCO") is a domestic corporation duly organized and
existing under Philippine laws with principal place of business at M. J. Cuenco Avenue, Cebu City. It
also has a branch office at 1708 Dominga Street, Pasay City, Metro Manila.

Plaintiff Nemesio Garcia is of legal age, married, Filipino citizen and with business address at Young
Auto Supply Co., Inc., M. J. Cuenco Avenue, Cebu City. . . . (Complaint, p. 1; Rollo, p. 81).

The Article of Incorporation of YASCO (SEC Reg. No. 22083) states:

THIRD That the place where the principal office of the corporation is to be established or located is
at Cebu City, Philippines (as amended on December 20, 1980 and further amended on December
20, 1984) (Rollo, p. 273).

A corporation has no residence in the same sense in which this term is applied to a natural person. But for practical
purposes, a corporation is in a metaphysical sense a resident of the place where its principal office is located as
stated in the articles of incorporation (Cohen v. Benguet Commercial Co., Ltd., 34 Phil. 256 [1916] Clavecilla Radio
System v. Antillon, 19 SCRA 379 [1967]). The Corporation Code precisely requires each corporation to specify in its
articles of incorporation the "place where the principal office of the corporation is to be located which must be within
the Philippines" (Sec. 14 [3]). The purpose of this requirement is to fix the residence of a corporation in a definite
place, instead of allowing it to be ambulatory.

In Clavencilla Radio System v. Antillon, 19 SCRA 379 ([1967]), this Court explained why actions cannot be filed
against a corporation in any place where the corporation maintains its branch offices. The Court ruled that to allow
an action to be instituted in any place where the corporation has branch offices, would create confusion and work
untold inconvenience to said entity. By the same token, a corporation cannot be allowed to file personal actions in a
place other than its principal place of business unless such a place is also the residence of a co-plaintiff or a
defendant.

If it was Roxas who sued YASCO in Pasay City and the latter questioned the venue on the ground that its principal
place of business was in Cebu City, Roxas could argue that YASCO was in estoppel because it misled Roxas to
believe that Pasay City was its principal place of business. But this is not the case before us.

With the finding that the residence of YASCO for purposes of venue is in Cebu City, where its principal place of
business is located, it becomes unnecessary to decide whether Garcia is also a resident of Cebu City and whether
Roxas was in estoppel from questioning the choice of Cebu City as the venue.

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals appealed from is SET ASIDE and
the Order dated February 8, 1991 of the Regional Trial Court is REINSTATED.

SO ORDERED.

Cruz, Griño-Aquino and Bellosillo, JJ., concur.

(Stipulation of venue by the parties; when stipulation is mandatory or restrictive…)

G.R. No. 119657 February 7, 1997

UNIMASTERS CONGLOMERATION, INC., petitioner,

vs.
COURT OF APPEALS and KUBOTA AGRI MACHINERY PHILIPPINES, INC., respondents.
NARVASA, C.J.:

The appellate proceeding at bar turns upon the interpretation of a stipulation in a contract governing venue of
actions thereunder arising.

On October 8, 1988 Kubota Agri-Machinery Philippines, Inc. (hereafter, simply KUBOTA) and Unimasters
Conglomeration, Inc. (hereafter, simply UNIMASTERS) entered into a "Dealership Agreement for Sales and
Services" of the former's products in Samar and Leyte Provinces.1 The contract contained, among others:

1) a stipulation reading: ". . . All suits arising out of this Agreement shall be filed with/in the proper Courts of Quezon
City," and

2) a provision binding UNIMASTERS to obtain (as it did in fact obtain) a credit line with Metropolitan Bank and Trust
Co.-Tacloban Branch in the amount of P2,000,000.00 to answer for its obligations to KUBOTA.

Some five years later, or more precisely on December 24, 1993, UNIMASTERS filed an action in the Regional Trial
Court of Tacloban City against KUBOTA, a certain Reynaldo Go, and Metropolitan Bank and Trust Company-
Tacloban Branch (hereafter, simply METROBANK) for damages for breach of contract, and injunction with prayer for
temporary restraining order. The action was docketed as Civil Case No. 93-12-241 and assigned to Branch 6.

On the same day the Trial Court issued a restraining order enjoining METROBANK from "authorizing or effecting
payment of any alleged obligation of . . (UNIMASTERS) to defendant . . KUBOTA arising out of or in connection with
purchases made by defendant Go against the credit line caused to be established by . . (UNIMASTERS) for and in
the amount of P2 million covered by defendant METROBANK . . or by way of charging . . (UNIMASTERS) for any
amount paid and released to defendant . . (KUBOTA) by the Head Office of METROBANK in Makati, Metro-Manila .
. ." The Court also set the application for preliminary injunction for hearing on January 10, 1994 at 8:30 o'clock in the
morning.

On January 4, 1994 KUBOTA filed-two motions. One prayed for dismissal of the case on the ground of improper
venue (said motion being set for hearing on January 11, 1994). The other prayed for the transfer of the injunction
hearing to January 11, 1994 because its counsel was not available on January 10 due to a prior commitment before
another court.

KUBOTA claims that notwithstanding that its motion to transfer hearing had been granted, the Trial Court went
ahead with the hearing on the injunction incident on January 10, 1994 during which it received the direct testimony
of UNIMASTERS' general manager, Wilford Chan; that KUBOTA's counsel was "shocked" when he learned of this
on the morning of the 11th, but was nonetheless instructed to proceed to cross-examine the witness; that when said
counsel remonstrated that this was unfair, the Court reset the hearing to the afternoon of that same day, at which
time Wilford Chan was recalled to the stand to repeat his direct testimony. It appears that cross-examination of
Chan was then undertaken by KUBOTA's lawyer with the "express reservation that . . (KUBOTA was) not (thereby)
waiving and/or abandoning its motion to dismiss;" and that in the course of the cross-examination, exhibits
(numbered from 1 to 20) were presented by said attorney who afterwards submitted a memorandum in lieu of
testimonial evidence.2

On January 13, 1994, the Trial Court handed down an Order authorizing the issuance of the preliminary injunction
prayed for, upon a bond of P2,000,000.00.3 And on February 3, 1994, the same Court promulgated an Order
denying KUBOTA's motion to dismiss. Said the Court:

The plaintiff UNIMASTERS Conglomeration is holding its principal place of business in the City of
Tacloban while the defendant . . (KUBOTA) is holding its principal place of business in Quezon City.
The proper venue therefore pursuant to Rules of Court would either be Quezon City or Tacloban City
at the election of the plaintiff. Quezon City and Manila (sic), as agreed upon by the parties in the
Dealership Agreement, are additional places other than the place stated in the Rules of Court. The
filing, therefore, of this complaint in the Regional Trial Court in Tacloban City is proper.
Both orders were challenged as having been issued with grave abuse of discretion by KUBOTA in a special civil
action of certiorari and prohibition filed with the Court of Appeals, docketed as CA-G.R. SP No. 33234. It contended,
more particularly, that (1) the RTC had "no jurisdiction to take cognizance of . . (UNIMASTERS') action considering
that venue was improperly laid," (2) UNIMASTERS had in truth "failed to prove that it is entitled to the . . writ of
preliminary injunction;" and (3) the RTC gravely erred "in denying the motion to dismiss."4

The Appellate Court agreed with KUBOTA that — in line with the Rules of Court5 and this Court's relevant rulings6 —
the stipulation respecting venue in its Dealership Agreement with UNIMASTERS did in truth limit the venue of all
suits arising thereunder only and exclusively to "the proper courts of Quezon City."7 The Court also held that the
participation of KUBOTA's counsel at the hearing on the injunction incident did not in the premises operate as a
waiver or abandonment of its objection to venue; that assuming that KUBOTA's standard printed invoices provided
that the venue of actions thereunder should be laid at the Court of the City of Manila, this was inconsequential since
such provision would govern "suits or legal actions between petitioner and its buyers" but not actions under the
Dealership Agreement between KUBOTA and UNIMASTERS, the venue of which was controlled by paragraph No.
7 thereof; and that no impediment precludes issuance of a TRO or injunctive writ by the Quezon City RTC against
METROBANK-Tacloban since the same "may be served on the principal office of METROBANK in Makati and
would be binding on and enforceable against, METROBANK branch in Tacloban."

After its motion for reconsideration of that decision was turned down by the Court of Appeals, UNIMASTERS
appealed to this Court. Here, it ascribes to the Court of Appeals several errors which it believes warrant reversal of
the verdict, namely:8

1) "in concluding, contrary to decisions of this . . Court, that the agreement on venue between petitioner
(UNIMASTERS) and private respondent (KUBOTA) limited to the proper courts of Quezon City the venue of any
complaint filed arising from the dealership agreement between . . (them);"

2) "in ignoring the rule settled in Philippine Banking Corporation vs. Tensuan,9 that 'in the absence of qualifying or
restrictive words, venue stipulations in a contract should be considered merely as agreement on additional forum,
not as limiting venue to the specified place;" and in concluding, contrariwise, that the agreement in the case at bar
"was the same as the agreement on venue in the Gesmundo case," and therefore, the Gesmundo case was
controlling; and

3) "in concluding, based solely on the self-serving narration of . . (KUBOTA that its) participation in the hearing for
the issuance of a . . preliminary injunction did not constitute waiver of its objection to venue."

The issue last mentioned, of whether or not the participation by the lawyer of KUBOTA at the injunction hearing
operated as a waiver of its objection to venue, need not occupy the Court too long. The record shows that when
KUBOTA's counsel appeared before the Trial Court in the morning of January 11, 1994 and was then informed that
he should cross-examine UNIMASTERS' witness, who had testified the day before, said counsel drew attention to
the motion to dismiss on the ground of improper venue and insistently attempted to argue the matter and have it
ruled upon at the time; and when the Court made known its intention (a) "to (resolve first the) issue (of) the
injunction then rule on the motion to dismiss," and (b) consequently its desire to forthwith conclude the examination
of the witness on the injunction incident, and for that purpose reset the hearing in the afternoon of that day, the 11th,
so that the matter might be resolved before the lapse of the temporary restraining order on the 13th, KUBOTA's
lawyer told the Court: "Your Honor, we are not waiving our right to submit the Motion to Dismiss." 10 It is plain that
under these circumstances, no waiver or abandonment can be imputed to KUBOTA.

The essential question really is that posed in the first and second assigned errors, i.e., what construction should be
placed on the stipulation in the Dealership Agreement that" (a)ll suits arising out of this Agreement shall be filed
with/in the proper Courts of Quezon City."

Rule 4 of the Rules of Court sets forth the principles generally governing the venue of actions, whether real or
personal, or involving persons who neither reside nor are found in the Philippines or otherwise. Agreements on
venue are explicitly allowed. "By written agreement of the parties the venue of an action may be changed or
transferred from one province to another." 11 Parties may by stipulation waive the legal venue and such waiver is
valid and effective being merely a personal privilege, which is not contrary to public policy or prejudicial to third
persons. It is a general principle that a person may renounce any right which the law gives unless such renunciation
would be against public policy. 12
Written stipulations as to venue may be restrictive in the sense that the suit may be filed only in the place agreed
upon, or merely permissive in that the parties may file their suit not only in the place agreed upon but also in the
places fixed by law (Rule 4, specifically). As in any other agreement, what is essential is the ascertainment of the
intention of the parties respecting the matter.

Since convenience is the raison d'etre of the rules of venue, 13 it is easy to accept the proposition that normally,
venue stipulations should be deemed permissive merely, and that interpretation should be adopted which most
serves the parties' convenience. In other words, stipulations designating venues other than those assigned by Rule
4 should be interpreted as designed to make it more convenient for the parties to institute actions arising from or in
relation to their agreements; that is to say, as simply adding to or expanding the venues indicated in said Rule 4.

On the other hand, because restrictive stipulations are in derogation of this general policy, the language of the
parties must be so clear and categorical as to leave no doubt of their intention to limit the place or places, or to fix
places other than those indicated in Rule 4, for their actions. This is easier said than done, however, as an
examination of precedents involving venue covenants will immediately disclose.

In at least thirteen (13) cases, this Court construed the venue stipulations involved as merely permissive. These are:

1. Polytrade Corporation v. Blanco, decided in 1969. 14 In this case, the venue stipulation was as follows:

The parties agree to sue and be sued in the Courts of Manila.

This Court ruled that such a provision "does not preclude the filing of suits in the residence of the plaintiff or the
defendant. The plain meaning is that the parties merely consented to be sued in Manila. Qualifying or restrictive
words which would indicate that Manila and Manila alone is the venue are totally absent therefrom. It simply is
permissive. The parties solely agreed to add the courts of Manila as tribunals to which they may resort. They did not
waive their right to pursue remedy in the courts specifically mentioned in Section 2(b) of Rule 4."

The Polytrade doctrine was reiterated expressly or implicitly in subsequent cases, numbering at least ten (10).

2. Nicolas v. Reparations Commission, decided in 1975. 15 In this case, the stipulation on venue read:

. . . (A)ll legal actions arising out of this contract . . may be brought in and submitted to the
jurisdiction of the proper courts in the City of Manila.

This Court declared that the stipulation does not clearly show the intention of the parties to limit the venue of the
action to the City of Manila only. "It must be noted that the venue in personal actions is fixed for the convenience of
the plaintiff and his witnesses and to promote the ends of justice. We cannot conceive how the interest of justice
may be served by confining the situs of the action to Manila, considering that the residences or offices of all the
parties, including the situs of the acts sought to be restrained or required to be done, are all within the territorial
jurisdiction of Rizal. . . Such agreements should be construed reasonably and should not be applied in such a
manner that it would work more to the inconvenience of the parties without promoting the ends of justice.

3. Lamis Ents. v. Lagamon, decided in 1981. 16 Here, the stipulation in the promissory note and the chattel mortgage
specified Davao City as the venue.

The Court, again citing Polytrade, stated that the provision "does not preclude the filing of suits in the residence of
plaintiff or defendant under Section 2(b), Rule 4, Rules of Court, in the absence of qualifying or restrictive words in
the agreement which would indicate that the place named is the only venue agreed upon by the parties. The
stipulation did not deprive . . (the affected party) of his right to pursue remedy in the court specifically mentioned in
Section 2(b) of Rule 4, Rules of Court. Renuntiato non praesumitur."

4. Capati v. Ocampo, decided in 1982 17 In this case, the provision of the contract relative to venue was as follows:

. . . (A)ll actions arising out, or relating to this contract may be instituted in the Court of First Instance
of the City of Naga.
The Court ruled that the parties "did not agree to file their suits solely and exclusively with the Court of First Instance
of Naga;" they "merely agreed to submit their disputes to the said court without waiving their right to seek recourse
in the court specifically indicated in Section 2 (b), Rule 4 of the Rules of Court."

5. Western Minolco v. Court of Appeals, decided in 1988. 18 Here, the provision governing venue read:

The parties stipulate that the venue of the actions referred to in Section 12.01 shall be in the City of
Manila.

The court restated the doctrine that a stipulation in a contract fixing a definite place for the institution of an action
arising in connection therewith, does not ordinarily supersede the general rules set out in Rule 4, and should be
construed merely as an agreement on an additional forum, not as limiting venue to the specified place.

6. Moles v. Intermediate Appellate Court, decided in 1989. 19 In this proceeding, the Sales Invoice of a linotype
machine stated that the proper venue should be Iloilo.

This Court held that such an invoice was not the contract of sale of the linotype machine in question; consequently
the printed provisions of the invoice could not have been intended by the parties to govern the sale of the machine,
especially since said invoice was used for other types of transactions. This Court said: "It is obvious that a venue
stipulation, in order to bind the parties, must have been intelligently and deliberately intended by them to exclude
their case from the reglementary rules on venue. Yet, even such intended variance may not necessarily be given
judicial approval, as, for instance, where there are no restrictive or qualifying words in the agreement indicating that
venue cannot be laid in any place other than that agreed upon by the parties, and in contracts of adhesion."

7. Hongkong and Shanghai Banking Corp. v. Sherman, decided in 1989. 20 Here the stipulation on venue read:

. . (T)his guarantee and all rights, obligations and liabilities arising hereunder shall be construed and
determined under and may be enforced in accordance with the laws of the Republic of Singapore.
We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under
this guarantee. . .

This Court held that due process dictates that the stipulation be liberally construed. The parties did not thereby
stipulate that only the courts of Singapore, to the exclusion of all the others, had jurisdiction. The clause in question
did not operate to divest Philippine courts of jurisdiction.

8. Nasser v. Court of Appeals, decided in 1990, 21 in which the venue stipulation in the promissory notes in question
read:

. . (A)ny action involving the enforcement of this contract shall be brought within the City of Manila,
Philippines.

The Court's verdict was that such a provision does not as a rule supersede the general rule set out in Rule 4 of the
Rules of Court, and should be construed merely as an agreement on an additional forum, not as limiting venue to
the specified place.

9. Surigao Century Sawmill Co., Inc. v. Court of Appeals, decided in 1993: 22 In this case, the provision concerning
venue was contained in a contract of lease of a barge, and read as follows:

. . . (A)ny disagreement or dispute arising out of the lease shall be settled by the parties in the proper
court in the province of Surigao del Norte.

The venue provision was invoked in an action filed in the Regional Trial Court of Manila to recover damages arising
out of marine subrogation based on a bill of lading. This Court declared that since the action did not refer to any
disagreement or dispute arising out of the contract of lease of the barge, the venue stipulation in the latter did not
apply; but that even assuming the contract of lease to be applicable, a statement in a contract as to venue does not
preclude the filing of suits at the election of the plaintiff where no qualifying or restrictive words indicate that the
agreed place alone was the chosen venue.
10. Philippine Banking Corporation, v. Hon. Salvador Tensuan, etc., Circle Financial Corporation, at al., decided in
1993. 23 Here, the stipulation on venue was contained in promissory notes and read as follows:

I/We hereby expressly submit to the jurisdiction of the courts of Valenzuela any legal action which
may arise out of this promissory note.

This Court held the stipulation to be merely permissive since it did not lay the venue in Valenzuela exclusively or
mandatorily. The plain or ordinary import of the stipulation is the grant of authority or permission to bring suit in
Valenzuela; but there is not the slightest indication of an intent to bar suit in other competent courts. The Court
stated that there is no necessary or customary connection between the words "any legal action" and an intent strictly
to limit permissible venue to the Valenzuela courts. Moreover, since the venue stipulations include no qualifying or
exclusionary terms, express reservation of the right to elect venue under the ordinary rules was unnecessary in the
case at bar. The Court made clear that "to the extent Bautista and Hoechst Philippines are inconsistent with
Polytrade (an en banc decision later in time than Bautista) and subsequent cases reiterating Polytrade, Bautista and
Hoechst Philippines have been rendered obsolete by the Polytrade line of cases."

11. Philippine Banking Corporation v. Hon. Salvador Tensuan, etc., Brinell Metal Works Corp., et al., decided in
1994: 24 In this case the subject promissory notes commonly contained a stipulation reading:

I/we expressly submit to the jurisdiction of the courts of Manila, any legal action which may arise out
of this promissory note.

the Court restated the rule in Polytrade that venue stipulations in a contract, absent any qualifying or
restrictive words, should be considered merely as an agreement on additional forum, not limiting venue to
the specified place. They are not exclusive, but rather, permissive. For to restrict venue only to that place
stipulated in the agreement is a construction purely based on technicality; on the contrary, the stipulation
should be liberally construed. The Court stated: "The later cases of Lamis Ents v. Lagamon [108 SCRA
1981], Capati v. Ocampo [113 SCRA 794 [1982], Western Minolco v. Court of Appeals [167 SCRA 592
[1988], Moles v. Intermediate Appellate Court [169 SCRA 777 [1989], Hongkong and Shanghai Banking
Corporation v. Sherman [176 SCRA 331], Nasser v. Court of Appeals [191 SCRA 783 [1990] and just
recently, Surigao Century Sawmill Co. v. Court of Appeals [218 SCRA 619 [1993], all treaded the path
blazed by Polytrade. The conclusion to be drawn from all these is that the more recent jurisprudence shall
properly be deemed modificatory of the old ones."

The lone dissent observed: "There is hardly any question that a stipulation of contracts of adhesion, fixing venue to
a specified place only, is void for, in such cases, there would appear to be no valid and free waiver of the venue
fixed by the Rules of Courts. However, in cases where both parties freely and voluntarily agree on a specified place
to be the venue of actions, if any, between them, then the only considerations should be whether the waiver (of the
venue fixed by the Rules of Court) is against public policy and whether the parties would suffer, by reason of such
waiver, undue hardship and inconvenience; otherwise, such waiver of venue should be upheld as binding on the
parties. The waiver of venue in such cases is sanctioned by the rules on jurisdiction."

Still other precedents adhered to the same principle.

12. Tantoco v. Court of Appeals, decided in 1977. 25 Here, the parties agreed in their sales contracts that the courts
of Manila shall have jurisdiction over any legal action arising out of their transaction. This Court held that the parties
agreed merely to add the courts of Manila as tribunals to which they may resort in the event of suit, to those
indicated by the law: the courts either of Rizal, of which private respondent was a resident, or of Bulacan, where
petitioner resided.

13. Sweet Lines, Inc. v. Teves, promulgated in 1987. 26 In this case, a similar stipulation on venue, contained in the
shipping ticket issued by Sweet Lines, Inc. (as Condition 14) —

. . that any and all actions arising out or the condition and provisions of this ticket, irrespective of
where it is issued, shall be filed in the competent courts in the City of Cebu
 — was declared unenforceable, being subversive of public policy. The Court explained that the philosophy
on transfer of venue of actions is the convenience of the plaintiffs as well as his witnesses and to promote
the ends of justice; and considering the expense and trouble a passenger residing outside of Cebu City
would incur to prosecute a claim in the City of Cebu, he would most probably decide not to file the action at
all.

On the other hand, in the cases hereunder mentioned, stipulations on venue were held to be restrictive, or
mandatory.

1. Bautista vs. De Borja, decided in 1966. 27 In this case, the contract provided that in case of any litigation arising
therefrom or in connection therewith, the venue of the action shall be in the City of Manila. This Court held that
without either party reserving the right to choose the venue of action as fixed by law, it can reasonably be inferred
that the parties intended to definitely fix the venue of the action, in connection with the contract sued upon in the
proper courts of the City of Manila only, notwithstanding that neither party is a resident of Manila.

2. Gesmundo v. JRB Realty Corporation, decided in 1994. 28 Here the lease contract declared that

. . (V)enue for all suits, whether for breach hereof or damages or any cause between the LESSOR
and LESSEE, and persons claiming under each, . . (shall be) the courts of appropriate jurisdiction in
Pasay City. . .

This Court held that: "(t)he language used leaves no room for interpretation. It clearly evinces the parties' intent to
limit to the 'courts of appropriate jurisdiction of Pasay City' the venue for all suits between the lessor and the lessee
and those between parties claiming under them. This means a waiver of their right to institute action in the courts
provided for in Rule 4, sec. 2(b)."

3. Hoechst Philippines, Inc. v. Torres, 29 decided much earlier, in 1978, involved a strikingly similar stipulation, which
read:

. . (I)n case of any litigation arising out of this agreement, the venue of any action shall be in the
competent courts of the Province of Rizal.

This Court held: "No further stipulations are necessary to elicit the thought that both parties agreed that any action
by either of them would be filed only in the competent courts of Rizal province exclusively."

4. Villanueva v. Mosqueda, decided in 1982. 30 In this case, it was stipulated that if the lessor violated the contract of
lease he could be sued in Manila, while if it was the lessee who violated the contract, the lessee could be sued in
Masantol, Pampanga. This Court held that there was an agreement concerning venue of action and the parties were
bound by their agreement. "The agreement as to venue was not permissive but mandatory."

5. Arquero v. Flojo, decided in 1988. 31 The condition respecting venue — that any action against RCPI relative to
the transmittal of a telegram must be brought in the courts of Quezon City alone — was printed clearly in the upper
front portion of the form to be filled in by the sender. This Court held that since neither party reserved the right to
choose the venue of action as fixed by Section 2 [b], Rule 4, as is usually done if the parties mean to retain the right
of election so granted by Rule 4, it can reasonably be inferred that the parties intended to definitely fix the venue of
action, in connection with the written contract sued upon, in the courts of Quezon City only.

An analysis of these precedents reaffirms and emphasizes the soundness of the Polytrade principle. Of the essence
is the ascertainment of the parties' intention in their agreement governing the venue of actions between them. That
ascertainment must be done keeping in mind that convenience is the foundation of venue regulations, and that
construction should be adopted which most conduces thereto. Hence, the invariable construction placed on venue
stipulations is that they do not negate but merely complement or add to the codal standards of Rule 4 of the Rules of
Court. In other words, unless the parties make very clear, by employing categorical and suitably limiting language,
that they wish the venue of actions between them to be laid only and exclusively at a definite place, and to disregard
the prescriptions of Rule 4, agreements on venue are not to be regarded as mandatory or restrictive, but merely
permissive, or complementary of said rule. The fact that in their agreement the parties specify only one of the
venues mentioned in Rule 4, or fix a place for their actions different from those specified by said rule, does not,
without more, suffice to characterize the agreement as a restrictive one. There must, to repeat, be accompanying
language clearly and categorically expressing their purpose and design that actions between them be litigated only
at the place named by them, 32 regardless of the general precepts of Rule 4; and any doubt or uncertainty as to the
parties' intentions must be resolved against giving their agreement a restrictive or mandatory aspect. Any other rule
would permit of individual, subjective judicial interpretations without stable standards, which could well result in
precedents in hopeless inconsistency.

The record of the case at bar discloses that UNIMASTERS has its principal place of business in Tacloban City, and
KUBOTA, in Quezon City. Under Rule 4, the venue of any personal action between them is "where the defendant or
any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of
the plaintiff." 33 In other words, Rule 4 gives UNIMASTERS the option to sue KUBOTA for breach of contract in the
Regional Trial Court of either Tacloban City or Quezon City.

But the contract between them provides that " . . All suits arising out of this Agreement shall be filed with / in the
proper Courts of Quezon City," without mention of Tacloban City. The question is whether this stipulation had the
effect of effectively eliminating the latter as an optional venue and limiting litigation between UNIMASTERS and
KUBOTA only and exclusively to Quezon City.

In light of all the cases above surveyed, and the general postulates distilled therefrom, the question should receive a
negative answer. Absent additional words and expressions definitely and unmistakably denoting the parties' desire
and intention that actions between them should be ventilated only at the place selected by them, Quezon City — or
other contractual provisions clearly evincing the same desire and intention — the stipulation should be construed,
not as confining suits between the parties only to that one place, Quezon City, but as allowing suits either in Quezon
City or Tacloban City, at the option of the plaintiff (UNIMASTERS in this case).

One last word, respecting KUBOTA's theory that the Regional Trial Court had "no jurisdiction to take cognizance of .
. (UNIMASTERS') action considering that venue was improperly laid." This is not an accurate statement of legal
principle. It equates venue with jurisdiction; but venue has nothing to do with jurisdiction, except in criminal actions.
This is fundamental. 34 The action at bar, for the recovery of damages in an amount considerably in excess of
P20,000,00, is assuredly within the jurisdiction of a Regional Trial Court. 35 Assuming that venue were improperly
laid in the Court where the action was instituted, the Tacloban City RTC, that would be a procedural, not a
jurisdictional impediment — precluding ventilation of the case before that Court of wrong venue notwitstanding that
the subject matter is within its jurisdiction. However, if the objection to venue is waived by the failure to set it up in a
motion to dismiss, 36 the RTC would proceed in perfectly regular fashion if it then tried and decided the action.

This is true also of real actions. Thus, even if a case "affecting title to, or for recovery of possession, or for partition
or condemnation of, or foreclosure of mortgage on, real property" 37 were commenced in a province or city other than
that "where the property or any part thereof lies," 38 if no objection is seasonably made in a motion to dismiss, the
objection is deemed waived, and the Regional Trial Court would be acting entirely within its competence and
authority in proceeding to try and decide the suit. 39

WHEREFORE, the appealed judgment of the Court of Appeals is REVERSED, the Order of the Regional Trial Court
of Tacloban City, Branch 6, dated February 3, 1994, is REINSTATED and AFFIRMED, and said Court is DIRECTED
to forthwith proceed with Civil Case No. 93-12-241 in due course.

SO ORDERED.

Padilla, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco, Hermosisima, Jr.,
Panganiban and Torres, Jr., JJ., concur.

(Requisites of a compulsory and a permissive counterclaim…)

G.R. No. 101883 December 11, 1992

SPOUSES LYDIA and VIRGILIO MELITON,* petitioners,

vs.
COURT OF APPEALS and NELIA A. ZIGA, represented by her Attorney-in-Fact RAMON A.
AREJOLA,** respondents.

REGALADO, J.:

In its judgment in CA-G.R. No. 250911 promulgated on August 9, 1991, respondent Court of Appeals annulled and
set aside the orders dated February 22, 1991 and March 18, 1991 of the Regional Trial Court of Naga City, Branch
27, in Civil Case No. RTC 89-1942 thereof and ordered the dismissal of petitioner's complaint filed herein, hence
this appeal by certiorari.

On June 22, 1988, private respondent Nelia Ziga, in her own behalf and as attorney-in-fact of Alex A. Ziga and
Emma A. Ziga-Siy, filed a complaint, docketed as Civil Case No. RTC 88-1480 of the Regional Trial Court, Branch
27, Naga City,2 against herein petitioner Lydia Meliton for rescission of a contract of lease over a parcel of land
situated at Elias Angeles Street, Naga City. Alleged as grounds therefor were said petitioner's failure, as lessee, to
deposit the one month rental and to pay the monthly rentals due; her construction of a concrete wall and roof on the
site of a demolished house on the leased premises without the lessor's written consent; and here unauthorized
sublease of the leased property to a third party.

On July 29, 1988, petitioner Lydia Meliton filed an answer to the complaint denying the material averments thereof
and setting up three counterclaims for recovery of the value of her kitchenette constructed on the leased parcel of
land and which was demolished by private respondent, in the amount of P34,000.00; the value of the improvements
introduced in the kitchenette to beautify it, in the amount of P10,000.00, plus the value of the furniture and fixtures
purchased for use in the kitchenette in the amount of P23,000.00; and moral damages in the amount of P20,000.00
aside from attorney's fees of P5,000.00 and P250.00 per court appearance, with litigation expenses in the amount of
P1,000.00. 3

On May 29, 1989, the trial court, on motion of private respondent contending that her cause of action had already
become moot and academic by the expiration of the lease contract on February 7, 1989, dismissed the complaint.
The counterclaims of petitioner Lydia Meliton were also dismissed for non-payment of the docket fees, ergo the trial
court's holding that thereby it had not acquired jurisdiction over the same. 4

On December 6, 1989, petitioners Lydia Meliton and Virgilio Meliton filed a complaint against private respondent for
recovery of the same amounts involved and alleged in their counterclaims in Civil Case No. RTC 88-1480, which
complaint was docketed as Civil Case No. RTC 89-1942 5 and likewise assigned to Branch 27 of the same trial
court.

On February 15, 1991, private respondent filed a motion to dismiss the complaint on the ground that the cause of
action therein was barred by prior judgment in Civil Case No. RTC 88-1480, the order of dismissal wherein was
rendered on May 29, 1989. 6

On February 22, 1991, the court below denied private respondent's motion to dismiss the complaint in Civil Case
No. RTC 89-1942 on the ground that the dismissal of the petitioner's counterclaims in Civil Case No. RTC 88-1480
is not an adjudication on the merits as the court did not acquire jurisdiction over the counterclaims for failure of
petitioner Lydia Meliton to pay the docket fees, hence the said dismissal does not constitute a bar to the filing of the
later complaint. 7

Private respondent's motion for reconsideration of the foregoing order was denied by the lower court for lack of merit
in its order of March 18, 1991. 8 Dissatisfied therewith, private respondent filed a petition for certiorari with this Court. In our resolution dated April 29,
1991, we referred this case to the Court of Appeals for proper determination and disposition pursuant to Section 9, paragraph 1, of B.P. Blg. 129,9 where it was
docketed as CA-G.R. SP No. 25093.

In a decision promulgated on August 9, 1991, the Court of Appeals granted the petition, the pertinent part of which
reads:

xxx xxx xxx

 The respondents' counterclaim against the petitioner in Civil Case No. RTC 88-1480 (Annex E,
petition) is a compulsory counterclaim, it having (arisen) out of or being necessarily connected with
the transaction or occurrence subject matter of the petitioner's complaint. The failure of the
respondents to seek a reconsideration of the dismissal of their counterclaim or to take an appeal
therefrom rendered the dismissal final. Such dismissal barred the prosecution of their counterclaim
by another action (Section 4, Rule 9, Revised Rules of Court; Javier vs. IAC, 171 SCRA 605).

The respondent Court, therefore, in issuing the orders complained of (Annexes G and I, petition),
gravely abused its discretion amounting to lack of jurisdiction.

WHEREFORE, the petition for certiorari is GRANTED. Accordingly, the orders complained of
(Annexes G and I, petition) are annulled and set aside and the respondents' complaint in Civil Case
No. RTC 89-1942 before the respondent Court, DISMISSED. Costs against the respondents, except
the respondent Court. 10

Petitioners are now before use, assailing the said judgment of the Court of Appeals and praying for the annulment
thereof.

The present petition requires the resolution of two principal issues, to wit: (1) whether or not the counterclaims of
petitioners are compulsory in nature; and (2) whether or not petitioners, having failed to seek reconsideration of or to
take an appeal from the order of dismissal of their counterclaims, are already barred from asserting the same in
another action.

1. Considering Section 4 of Rule 9 of the Rules of Court, a counterclaim is compulsory if (a) it arises out of, or is
necessarily connected with, the transaction or occurrence which is the subject matter of the opposing party's claim;
(b) it does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction;
and (c) the court has jurisdiction to entertain the claim.

It has been postulated that while a number of criteria have been advanced for the determination of whether the
counterclaim is compulsory or permissive, the "one compelling test of compulsoriness" is the logical relationship
between the claim alleged in the complaint and that in the counterclaim, that is, where conducting separate trials of
the respective claims of the parties would entail a substantial duplication of effort and time, as where they involve
many of the same factual and/or legal issues.

The phrase "logical relationship" is given meaning by the purpose of the rule which it was designed to implement.
Thus, a counterclaim is logically related to the opposing party's claim where, as already stated, separate trials of
each of their respective claims would involve a substantial duplication of effort and time by the parties and the
courts. Where multiple claims involve many of the same factual issues, or where they are offshoots of the same
basic controversy between the parties, fairness and considerations of convenience and of economy require that the
counterclaimant be permitted to maintain his cause of action. 11

In the aforesaid Civil Case No. 88-1480, all the requisites of a compulsory counterclaim are present. The
counterclaims, as this term is now broadly defined, are logically related to the complaint. Private respondent's
complaint was for rescission of the contract of lease due to petitioner Lydia Meliton's breach of her obligations under
the said contract. On the other hand, petitioner's counterclaims were for damages for unlawful demolition of the
improvements she introduced pursuant to her leasehold occupancy of the premises, as well as for the filing of that
civil suit which is contended to be clearly unfounded.

Both the claims therein of petitioners and private respondent arose from the same contract of lease. The rights and
obligations of the parties, as well as their potential liability for damages, emanated from the same contractual
relation. Petitioners' right to claim damages for the unlawful demolition of the improvements they introduced on the
land was based on their right of possession under the contract of lease which is precisely the very same contract
sought to be rescinded by private respondent in her complaint. The two actions are but the consequences of the
reciprocal obligations imposed by law upon and assumed by the parties under their aforesaid lease contract. That
contract of lease pleaded by private respondent constitutes the foundation and basis relied on by both parties for
recovery of their respective claims.
The relationship between petitioners' counterclaims and private respondent's complaint is substantially the same as
that which exists between a complaint for recovery of land by the owner and the claim for improvements introduced
therein by the possessor. As we have ruled, in actions for ejectment or for recovery of possession of real property, it
is well settled that the defendant's claims for the value of the improvements on the property or necessary expenses
for its preservation are required to be interposed in the same action as compulsory couterclaims. In such cases, it is
the refusal of the defendant to vacate or surrender possession of the premises that serves as the vital link in the
chain of facts and events, and which constitutes the transaction upon which the plaintiff bases his cause of action. It
is likewise an "important part of the transaction constituting the subject matter of the counterclaim" of defendant for
the value of the improvements or the necessary expenses incurred for the preservation of the property. They are
offshoots of the same basic controversy between the parties, that is, the right of either to the possession of the
property. 12

On the foregoing considerations, respondent Court of Appeals correctly held that the counterclaims of petitioners
are compulsory in nature.

2. Petitioners having alleged compulsory counterclaims, the next point of inquiry is whether or not petitioners are
already barred from asserting said claims in a separate suit, the same having been dismissed in the preceding one.
The answer is in the negative.

It is indeed the rule, embodied in Section 4, Rule 9 of the Rules of Court, that a counterclaim not set up shall be
barred if it arises out of or is necessarily connected with the transaction or occurrence that is the subject matter of
the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court
cannot acquire jurisdiction. However, said rule is not applicable to the case at bar.

Contrary to the claim of private respondent, it cannot be said that therein petitioners failed to duly interpose their
causes of action as counterclaims in the previous action. Petitioners' claims were duly set up as counterclaims in the
prior case but the same were dismissed by reason of non-payment of docket fees. The ruling of respondent Court of
Appeals to the effect that the failure of petitioners to appeal or to move for reconsideration of the said order of
dismissal bars them from asserting their claims in another action cannot be upheld.

Firstly, where a compulsory counterclaim is made the subject of a separate suit, it may be abated upon a plea
of auter action pendant or litis pendentia and/or dismissed on the ground of res judicata, 13 depending on the stage
or status of the other suit.

Both defenses are unavailing to private respondent. The present action cannot be dismissed either on the ground
of litis pendentia since there is no other pending action between the same parties and for the same cause, nor on
the ground of res judicata.

In order that a prior judgment will constitute a bar to a subsequent case, the following requisites must concur: (1) the
judgment must be final; (2) the judgment must have been rendered by a court having jurisdiction over the subject
matter and the parties; (3) the judgment must be on the merits; and (4) there must be between the first and second
actions, identity of parties, of subject matter, and of causes of action. 14

The first case, Civil Case No. RTC 88-1480, was dismissed upon motion of private respondent, plaintiff therein,
under Section 2 of Rule 17. Dismissal thereunder is without prejudice, except when otherwise stated in the motion to
dismiss or when stated to be with prejudice in the order of the court. 15 The order of dismissal of the first case was
unqualified, hence without prejudice and, therefore, does not have the effect of an adjudication on the merits. On a
parity of rationale, the same rule should apply to a counterclaim duly interposed therein and which is likewise
dismissed but not on the merits thereof.

Moreover, in the same order of dismissal of the complaint, the counterclaims of herein petitioners were dismissed by
reason of the fact the court a quo had not acquired jurisdiction over the same for non-payment of the docket fees.
On that score, the said dismissal was also without prejudice,
since a dismissal on the ground of lack of jurisdiction does not constitute res judicata, 16 there having been no
consideration and adjudication of the case on the merits.

The dismissal of the case without prejudice indicates the absence of a decision on the merits and leaves the parties
free to litigate the matter in a subsequent action as though the dismissal action had not been commenced. 17 The
discontinuance of a case not on the merits does not bar another action on the same subject matter. 18 Evidently,
therefore, the prior dismissal of herein petitioners' counterclaims is not res judicata and will not bar the filing of
another action based on the same causes of action.

Secondly, a reading of the order of dismissal will show that the trial court, in dismissing the complaint of private
respondent, did not intend to prejudice the claims of petitioners by barring the subsequent judicial enforcement
thereof. As stated therein, "(t)he court in dismissing the counterclaim(s) has taken into account the fact that a
counterclaim partakes of the nature of a complaint and/or a cause of action against the plaintiffs." 19 This is a clear
indication, deducible by necessary implication, that the lower court was aware of the fact that petitioners could avail
of the causes of action in said counterclaims in a subsequent independent suit based thereon and that there was no
legal obstacle thereto. That this was the import and intendment of that statement in its order dismissing petitioners'
counterclaims in Civil Case No. RTC 88-1480 was categorically confirmed by the very same court, wherein Civil
Case No. RTC 89-1942 was also subsequently filed, in its assailed orders denying private respondent's motion to
dismiss the latter case on the ground of res judicata.

This is also concordant with the rule governing dismissal of actions by the plaintiff after the answer has been served
as laid down in Rule 17 of the Rules of Court, which is summarized as follows: An action shall not be dismissed at
the request of the plaintiff after the service of the answer, except by order of the court and upon such terms and
conditions as the court deems proper. The trial court has the judicial discretion in ruling on a motion to dismiss at the
instance of the plaintiff. It has to decide whether the dismissal of the case should be allowed, and if so, on what
terms and conditions. 20

In dismissing private respondent's complaint, the trial court could not but have reserved to petitioners, as a condition
for such dismissal, the right to maintain a separate action for damages. Petitioners' claims for damages in the three
counterclaims interposed in said case, although in the nature of compulsory counterclaims but in light of the
aforesaid reservation in the dismissal order, are consequently independent causes of action which can be the
subject of a separate action against private respondent.

An action for damages specifically applicable in a lessor-lessee relationship is authorized in Article 1659 of the Civil
Code which provides that:

Art. 1659. If the lessor or the lessee should not comply with the obligations set forth in articles 1654
and 1657, the aggrieved party may ask for the rescission of the contract and indemnification for
damages, or only the latter, allowing the contract to remain in force.

Paragraph 3 of Article 1654 of the same Code requires that the lessor must "maintain the lessee in the peaceful and
adequate enjoyment of the lease for the entire duration of the contract." 21 The aggrieved party has the alternative
remedies, in case of contractual breach, of rescission with damages, or for damages only, "allowing the contract to
remain in force."

The act of private respondent in demolishing the structures introduced by petitioners on the property leased and the
improvements therein during the existence of the lease contract is a clear violation by her, as lessor, of her
obligation mandated by paragraph 3, Article 1654 of the Civil Code. The said violation gave rise to a cause of action
for damages in favor of herein petitioners.

Lastly, even assuming arguendo that the bar under the rule on compulsory counterclaims may be invoked, the
peculiar circumstances of this case irresistibly and justifiedly warrant the relaxation of such rule.

The court a quo dismissed petitioners' counterclaims for non-payment of docket fees pursuant to our then ruling
in Manchester Development Corporation, et al. vs. Court of Appeals, et al., 22 before its modification. The failure of
petitioners to seek reconsideration of or to take an appeal from the order of dismissal of the counterclaim should not
prejudice their right to file their claims in a separate action because they were thereby made to understand and
believe that their counterclaims were merely permissive and could be the subject of a separate and independent
action. Under the Rules, there is no need to pay docket fees for a compulsory counterclaim. 23 The ruling
in Manchester applies specifically to permissive counterclaims only, thereby excluding compulsory counterclaims
from its purview, 24 and that was the ruling of the court below to which the litigants therein submitted. Had the trial
court correctly specified that petitioners' counterclaims were compulsory, petitioners could have objected to the
dismissal sought by private respondent on the ground that said counterclaims could not remain pending for
independent adjudication. 25

Furthermore, under the Manchester doctrine, the defect cannot be cured by an amendment of the complaint or
similar pleadings, much less the payment of the docket fee. Hence, the only remedy left for the petitioners was to file
a separate action for their claims and to pay the prescribed docket fees therein within the applicable and
reglementary period, which is what they did in the case at bar in obedience and deference to the judicial mandate
laid down in their case. At any rate, the ambivalent positions adopted by the lower court can be considered cured by
what we have construed as effectively a reservation in its order of dismissal for the filing of a complaint based on the
causes of action in the dismissed counterclaims.

This, then, is one case where it is necessary to heed the injunction that the rules of procedure are not to be applied
in a rigid and technical sense. After all, rules of procedure are used only to help secure substantial justice. They
cannot be applied to prevent the achievement of that goal. Form cannot and should not prevail over
substance. 26Absent a specific requirement for stringent application, the Rules of Court are to be liberally construed
to the end that no party shall be deprived of his day in court on technicalities. The courts in our jurisdiction are
tribunals both of law and equity. Hence, under the antecedents of this case, we are persuaded that even if only to
approximate that desirable measure of justice we are sworn to dispense, this controversy should be resolved on the
merits.

WHEREFORE, the questioned judgment of respondent Court of Appeals is hereby REVERSED and SET ASIDE.
Civil Case No. RTC 89-1942 is hereby REINSTATED and the Regional Trial Court of Naga City, Branch 27, or
wherever the case has been assigned, is directed to proceed with deliberate dispatch in the adjudication thereof.

SO ORDERED.

Narvasa, C.J., Feliciano, Nocon and Campos, Jr., JJ., concur.

(Forum shopping; tests to determine forum shopping…)

G.R. No. 117186 June 29, 1995

ALAN M. LOYOLA, petitioner,

vs.
COURT OF APPEALS, THE HON. JUDGE MARIA CARILLO ZALDIVAR in her capacity as the Presiding Judge
of the RTC, Kalibo, Branch 6; THE HON. EDUARDO R. AVELINO, in his capacity as the presiding Judge of
the MCTC, Macato-Tangalan, and ANICETO FERNANDEZ III, respondents.

DAVIDE, JR., J.:

After the issues were joined with the filing of the comments on the petition, we resolved to decide this case on the
merits in view of the novel issue presented, namely, whether the public respondent Court of Appeals committed a
reversible error in dismissing the petitioner's petition for review and in upholding (a) the order of the 4th Municipal
Circuit Trial Court (MCTC) of Macato-Tangalan, Aklan, of 30 May 1994 denying the petitioner's motion to dismiss
Election Protest Case No. 94-02 based on a claim that it was not accompanied by a certification of non-forum
shopping required in Administrative Circular No. 04-94 of this Court, and (b) the decision of Branch 6 of the Regional
Trial Court (RTC) of Kalibo, Aklan, of 13 June 1994, denying the petitioner's petition for certiorari and mandamus the
order of the MCTC.

It appears that in the barangay election of 9 May 1994, the Board of petitioner was proclaimed on 10 May 1994 by
the Barangay Board of Canvassers as the duly elected Punong Barangay of barangay Poblacion of the Municipality
of Tangalan, Aklan.

On 18 May 1994, private respondent Aniceto Fernandez III, the defeated candidate for Punong Barangay, filed with
the 4th MCTC of Macato-Tangalan an election protest against the petitioner which was docketed as Election protest
Case No. 94-02. On that same date, respondent Judge Eduardo R. Avelino of the said court issued an order
directing the issuance of summons to the petitioner, directing the latter to answer the petition within five days from
receipt thereof, and setting the hearings of the case for 25 May to 31 May 1994. The protest was not accompanied
by a certification of non-forum shopping required under Administrative Circular No. 04-94 of this Court which took
effect on 1 April 1994. However, the following day or on 19 May 1994, in compliance with the said circular, the
private respondent submitted to the MCTC his certification of non-forum shopping.

On 25 May 1994, the petitioner filed a motion to dismiss the protest for the private respondent's failure to strictly
comply with Administrative Circular No. 04-94. He claims that the filing of the certification on 19 May 1994 was
merely the private respondent's desperate attempt to cure the jurisdictional flaw of his petition.

On 30 May 1994, the MCTC issued an order denying the motion to dismiss and, in support of the denial, it reasoned
thus:

The issues to be resolved are the following:

(a) Is Administrative Circular No. 04-94, a substantive law or merely a procedural law
that governs pleading, practice or procedure?

(b) If it is a procedural Law, it is strictly construed in accordance with its terminology

or it may be given a Literal interpretation to give effect to its spirit and purpose?

(c) Is it applicable to election protest for barangay offices where public interests are
involved?

In pursuance to the provisions of the Constitution, the Supreme Court promulgated the Rules of
Court as a uniform rule governing pleading, practice and procedure in all courts of the Philippines. In
the exercise of said power and authority, the Supreme Court issued several amendatory rules, one
of which is Administrative Circular No. 04-94. Being a procedural law, the requirements of said
circular is not jurisdictional in character.

Rule 1, Sec. 2 of the Revised Rules of Court provides:

These rules shall be liberally construed in order to promote their object and to assist
the parties in obtaining just, speedy, and inexpensive determination of every action
and proceeding.

A perusal of the record shows that protestant Aniceto D. Fernandez, III submitted the required
affidavit of Non-Forum Shopping on May 19, 1994, a day after the filing of his petition. Although the
affidavit in question was not simultaneously filed with his petition, the Court considers the same as
substantial compliance.

If we look into the spirit and purpose of Administrative Circular No. 04-94, it was apparently intended
to curtail the pernicious practice of forum shopping, which was considered as one of the factors that
caused backlog in the court dockets.

Obviously, a protestant in an election protest for barangay office cannot conduct forum shopping in
any other courts because the Omnibus Election Code confers the exclusive and original jurisdiction
to try the same to the Municipal Trial Court.

Election contest involves public interest. It imposed upon the court the imperative duty to ascertain
by all means within its command, the real candidate who was chosen by the electorate. It has been
postulated as a fundamental principle in election cases, that technicalities or procedural barriers
should not be allowed to stand if the same would tend to defeat, rather than promote, the interest of
justice.

Rule 143 of the Revised Rules of Court states:

 These rules shall not apply to land registration, cadastral and election cases,
naturalization and insolvency proceedings, and other cases, not herein provided for,
except by analogy or in a suppletory character and whenever practicable and
convenient.

If the Court believes that the application of Administrative Circular No. 04-94 in its suppletory
character is impracticable and inconvenient under the circumstances, the same may not be strictly
applied to election cases.

By legislative fiat the trial of election cases shall be conducted in a summary manner without the
cumbersome procedure prescribed for ordinary litigations in order that its results may be determined
in the shortest time possible.

Contesting the denial of his motion to dismiss, the petitioner filed with Branch 6 of the RTC of Aklan a petition
for certiorari and mandamus with damages and attorney's fees. The case was docketed as Special Civil Action No.
4828. He prayed therein that a temporary restraining order be issued enjoining respondent Judge Avelino from
proceeding with the hearing, revision, and recount in the election protest case. He also prayed that, after hearing,
Judge Avelino be directed to dismiss the election protest and that the private respondent be ordered to pay to the
petitioner actual damages, attorney's fees, and litigation expenses.

In a decision rendered on 13 June 1994, the RTC of Aklan, per Judge Maria Carillo Zaldivar, denied the petition for
lack of merit. Regarding the submission of the certification of non-forum shopping a day after the filing of the protest,
it held that "amendments and/or supplements to a complaint is a matter of right before the Answer is filed."

It further ruled that Administrative Circular No. 04-94 does not apply to election cases which are covered by a
special law; in any event, the circular is suppletory to the Rules of Court, and Section 2, Rule 1 of the latter provides
that the rules shall be liberally construed in order to promote their object and to assist the parties in obtaining a just,
speedy, and inexpensive determination of every action and proceeding.

Finally, it opined that since the MCTC in this case is a single sala court, the private respondent cannot go elsewhere
but to such court; besides, Administrative Circular No. 04-94 is a formal procedural requirement which could be
cured before the actual trial is conducted and that since the certification of non-forum shopping was filed within a
reasonable time before the petitioner filed his answer, the Circular was substantially petitioner filed his answer, the
Circular was substantially complied with.

His motion to reconsider the decision having been denied by the RTC, the petitioner filed with the Court of Appeals
a petition for review, docketed as CA-G.R. SP No. 34695, to set aside the denial order of the MCTC and the
decision of the RTC.

In its decision of 22 August 1994, the Court of Appeals dismissed the petition because no error was committed by
the MCTC and RTC. It agreed with the said courts that there was substantial compliance with Administrative
Circular No. 04-94. It further stated:

Moreover, while we believe that the Non-Forum Certification is essential under the
circular, same is not jurisdictional but only a formal requirement, non-compliance
therewith shall cause the dismissal of the action. It is also mandatory but at the same
time curable, specially so when timely or seasonably complied with.

Failing in his bid to obtain a reconsideration of the decision, the petitioner instituted the instant petition for review.

The core issues for our determination are (1) whether Administrative Circular No. 04-94 is mandatory and
jurisdictional; and (2) whether it is applicable in election cases.

I.

By the clear language of the second sanction imposed by Administrative Circular No. 04-94, to wit:
 2. Any violation of this Circular shall be a cause for the dismissal of the Complaint, petition,
application or other initiatory pleading, upon motion and after hearing. However any clearly willful
and deliberate forum shopping by any party and his counsel through the filing of multiple complaints
or other initiatory pleadings to obtain favorable action shall be a ground for summary dismissal
thereof and shall constitute direct contempt of court. Furthermore, the submission of a false
certification or non-compliance with the undertakings therein, as provided in Paragraph 1 hereof,
shall constitute indirect contempt of court, without prejudice to disciplinary proceedings against the
counsel and the filing of a criminal action against the guilty party.

it is evident that the Circular is mandatory.

It is not, however, jurisdictional. Jurisdiction over the subject or nature of the action is conferred by law.1 Otherwise
stated, there is lack of jurisdiction over the nature of the action where the type of action is reposed by law in certain
other courts. 2

Substantial compliance with the Circular is sufficient. This Circular expanded or broadened the applicability of
Circular No. 28-91 of this Court. 3 In Gabionza vs. Court of Appeals,4 this Court held that substantial compliance
therewith is sufficient for:

It is scarcely necessary to add that Circular No. 28-91 must be so interpreted and applied as to
achieve the purposes projected by the Supreme Court when it promulgated that Circular. Circular
No. 28-91 was designed to serve as an instrument to promote and facilitate the orderly
administration of justice and should not be interpreted with such absolute literalness as to subvert its
own ultimate and legitimate objective or the goal of all rules of procedure — which is to achieve
substantial justice as expeditiously as possible.

In this case, it is a fact that the certification of non-forum shopping was filed by the private respondent on 19 May
1994, a day after he filed his election protest. Since the proclamation of the results of the election was made by the
barangay board of canvassers on 10 May 1994, the private respondent, pursuant to Section 9 of R.A. 6679,5 had ten
days therefrom or until 20 May 1994 within which to file an election protest. The filing of the certification was
therefore still within the period for filing an election protest. Accordingly, although the certification was not filed
simultaneously with the initiatory pleading, its filing within the reglementary period was a substantial compliance with
Administrative Circular No. 04-94.

The fact that the Circular requires that it be strictly complied with merely underscores its mandatory nature in that it
cannot be dispensed with or its requirements altogether disregarded, but it does not thereby interdict substantial
compliance with its provisions under justifiable circumstances.

II.

We do not agree with the MCTC that Administrative Circular No. 04-94 is not applicable to election cases because it
is merely amendatory of the Rules of Court and the latter, pursuant to Rule 143 thereof, is not applicable to election
cases. There is nothing in the Circular that indicates that it does not apply to election cases. On the contrary, it
expressly provides that the requirements therein, which are in addition to those in pertinent provisions of the Rules
of Court and existing circulars, "shall be strictly complied with in the filing of complaints, petitions, applications or
other initiatory pleadings in all courts and agencies other than the Supreme Court and the Court of Appeals." Ubi lex
non distinguit, nec nos distinguere debemus.

Nor are we persuaded by its ruling that considering that the MCTC has after all the original and exclusive jurisdiction
over the election protest, the certification was unnecessary since the private respondent could not have filed the
case anywhere else. The argument fails to consider the possibility of a party availing, rightly or wrongly, of other
legal remedies; or of filing the same election protest in more than one MTC, despite the erroneous venues; or of
even being unaware of the original exclusive jurisdiction of the MTC over such election protests and filing one of the
protests in the RTC by mistake.

WHEREFORE, the instant petition is DENIED and the Municipal Circuit Trial Court of Macato-Tangalan, Aklan, is
directed to proceed with dispatch in the hearing and resolution of Election Protest Case No. 94-02. This decision is
immediately executory.
Costs against the petitioner.

SO ORDERED.

G.R. No. 121545 November 14, 1996

EMPLOYEES' COMPENSATION COMMISSION (ECC) and GOVERNMENT SERVICE INSURANCE SYSTEM

(GSIS), petitioners,
vs.
COURT OF APPEALS and LILIA S. ARREOLA, respondents.

DAVIDE, JR., J.:

Did the respondent Court of Appeals err in holding that the nature of the private respondent's work increased the
risk of contracting ureterolithiasis, thereby entitling her to compensation under P.D. No. 626, as amended? This
issue confronts us in this petition for the review of the decision of the Court of Appeals of 7 August 1995 in CA-G.R
SP No. 34223. 1

The antecedent facts are summarized in the challenged decision as follows:

Lilia Arreola [private respondent herein] was employed as a Chemical Laboratory Technician in the
National Bureau of Investigation on March 23, 1972.

Thereafter, Arreola was promoted as Senior Chemical Technician, Chemical Engineer, and finally as
Engineer II.

As Engineer II, Arreola performs the following duties:.

1. Makes researches on and designs equipment needed to facilitate conclusive analysis by Forensic
Chemist:

2. Computes cost of proposed equipment based on designs made;

3. Performs instrumental analysis of drugs, insecticides, volatile poisons, fuels and inorganic
compounds, using gas (GS) and liquid (LC) chromatograph, UV, VIS and IR Spectrophotometers;

4. Incharge (sic) of the supervision, maintenance and repair of modem chemical laboratory
equipment installed in the Bureau;

5. Computes cost of analysis performed;

6. Attends to field cases and takes paraffin casts at the morgue and in the office;

7. Renders holiday and night duties once a week and help the chemist in the examinations on
incoming cases during the tour of duty;

8. Assists the supervisor and chemist of the unit in conducting researches on some special cases;

9. May assist NBI Agents in field work re investigation of industrial companies engaged in nefarious
activities;

10. Performs other duties assigned to me (her) by (sic) supervisor from time to time. (Annex "B" of
the instant Petition).
 Sometime in May, 1993, Arreola suffered pains at her left flank accompanied by nausea, vomiting,
and low moderate fever. Her medical examination revealed the presence of stone deposits at her left
urethra.

On May 18, 1993, Arreola underwent Ureterolithiasis (L) S/P Ureterolithomy (L) operation, followed
by regular check-ups and medication for one month. She spent P16,019.00 for her hospital bills,
doctor's fees, x-ray, laboratory analysis, and medicine.

On June 16, 1993, Arreola filed with the GSIS an application for compensation benefit under PD No.
626, as amended.

On July 17, 1993, the GSIS denied her claim on the grounds that her ailment "Ureterolithiasis left" is
a non-occupational disease; and that she failed to show that her position as Engineer II of the NBI
has increased the risk of contracting the sickness.

Upon the denial of Arreola's request for reconsideration with the GSIS, she interposed an appeal to
the Employees' Compensation Commission, docketed as ECC Case No. 6494.

On December 2. 1993, the ECC rendered a decision, the pertinent portions of which read:

After a study of the records of the case, he failed to find proof that appellant's
ailment, Ureterolithiasis left, Ureterolithomy, left, was brought about by her duties as
Engineer II at the National Bureau of Investigation. Where the ailment is not the
direct or customary result of the employment and the herein appellant failed to show
proof that the risk of contracting the disease was increased by her work and working
conditions, the claim for compensation cannot be sustained. This is the clear
implication of Section I (B) of Rule III of the Rules Implementing PD 626, as
amended, which explicitly provides that "for the sickness and the resulting disability
or death to be compensable, the sickness must be the result of an occupational
disease listed under the rules with conditions set therein satisfied, otherwise, proof
must be shown that the risk of contracting it is increased by the working conditions.

xxx xxx xxx

Based on the foregoing discussions, the case therefore, is not meritorious for
compensation benefits under the Employees Compensation Law (P) 6262 (sic), as
amended.

FOR ALL THE FOREGOING, the decision appealed from is hereby AFFIRMED and
the instant case is Dismissed for lack of merit.

SO ORDERED. 2

We also note that the Employees' Compensation Commission (ECC) made the following observations:

Moreover, medical findings show that Ureterolithiasis is the presence of renal stones in the ureter.
The ureter conveys urine from the renal pelvis to the bladder. When stones in the renal pappillae or
within the urinary collecting system break loose, they enter the ureter or occlude the ureteropelvic
causing obstruction and pain.

Urinary stones usually arise because of the breakdown of a delicate balance. The kidneys must
conserve water, but they must also excrete materials that have low solubility. These two opposing
requirements must be balanced against one another during adaptation to a particular combination of
diet and activity. (Reference: Harrison's Principles of Internal Medicine, 11th Edition, pp. 1211-
1212). 3
Undaunted by the two adverse judgments, Arreola then filed a petition for review with the Court of Appeals. She
insisted that she was entitled to compensation under P.D. No. 626, as amended, since she was able to prove that
the exigency and nature of her work as Engineer II of the National Bureau of Investigation (NBI) greatly increased
the risk of contracting the ailment.

In their Comments to the above petition, herein petitioners (respondents below) Government Service Insurance
System (GSIS) and ECC reiterated their stand that Arreola's disease was not included in the list of occupational
diseases and the risk of contracting it had not been proved to have been increased by the nature of the petitioner's
work.4

In its decision of 7 August, 1995, 5 the Court of Appeals sustained the position of Arreola, reversed the appealed
decision of the ECC, and ordered the GSIS to pay Arreola "the amount due her under P.D. 626, as amended." 6 In
support of its disposition, the appellate court stated:

The nature of the work of petitioner Arreola as Engineer II in the National Bureau of Investigation
deals with research; instrumental analysis of drugs, insecticides, volatile poisons, fuels, and
inorganic compound; attendance to field cases; taking of paraffin casts at morgue and in the office;
and assisting NBI agents in field work in the matters of investigation of industrial corporations
engaged in nefarious activities.

It is, therefore, safe to conclude that the exingency (sic) of petitioner's assigned tasks was such that
she had to forego urination in order not to interrupt the flow of concentration. In addition, tension,
stress, and pressure must have aggravated her physical condition.

The Supreme Court in Narazo vs. Employees' Compensation

Commission 7 held that ". . . [i]t may be added that teachers have a tendency to sit for hours on end,
and to put off or postpone emptying their bladders when it interferes with their teaching hours or
preparation of lesson plans. From human experience, prolonged sitting down and putting off
urination result in stagnation of the urine. This encourages the growth of bacteria in the urine, and
affects the delicate balance between bacterial multiplication rates and the host defense
mechanisms. Delayed excretion may permit the retention and survival of micro-organisms posing
factors to pyelonephritis and uremia. Thus, while We may concede that these illnesses are not
directly caused by the nature of the duties of a teacher, the risk of contracting the same is certainly
aggravated by their working habits necessitated by demands of job efficiency.

Similarly, considering the nature of the work of herein petitioner, the same could have increased the
risk of contracting the disease. We thus find her entitled to receive compensation benefits under PD
No. 626, as amended.8

In addition, the Court of Appeals commented that the ECC failed to appreciate the petitioner's more than twenty
years of devoted public service, which earned her successive promotions to greater responsibilities and the fact that
she had been performing the strenuous and demanding task of Chemical Engineer. It also quoted Santos
vs. Employees' Compensation Commission, 9 which reiterates that claims falling under the Employee's
Compensation Act should be liberally resolved to fulfill its essence as a social legislation designed to afford relief to
the working man and woman in our society. 10

The petitioners forthwith appealed to us from the decision of the Court of Appeals by way of this petition for review
under Rule 45 of the Rules of Court. They contend that the appellate court's determination that Arreola's work
increased the risk of her contracting ureterolithiasis is "pure speculation." The petitioners pointedly state that there is
no need to apply Article 4 of the Labor Code on the liberal interpretation of social legislation when the provisions of
such are clear.

In her Comment, Arreola posits that while it is true that ureterolithiasis is not a listed occupational disease, yet under
the "increased risk" theory, she has sufficiently proved that her claim for compensation is meritorious. Moreover, she
satisfactorily established that the nature of her work for the past twenty years, as former Chemical Lab Technician
and Chemical Engineer, and currently as Engineer II, made her miss important health habits such as regularly
drinking water and urinating. She then chides the petitioners for making her claim for compensation a circuitous and
painful path.
After a further evaluation of the case and assessment of the arguments of the parties, we rule for the private
respondent and affirm the challenged decision of the Court of Appeals.

P.D. No. 626 (27 December 1974) further amended Title II of Book IV on the ECC and State Insurance fund of the
Labor Code of the Philippines (P.D. No. 442, as amended). This law abandoned the presumption of compensability
and the theory of aggravation under the Workmen's Compensation Act. 11 For the sickness and resulting disability or
death to be compensable, the claimant must prove that: (a) the sickness must be the result of an occupational
disease listed under Annex "A" of the Rules on Employees' Compensation, or (b) the risk of contracting the disease
was increased by the claimant's working conditions. 12 This means that if the claimant's illness or disease is not
included in the said Annex "A," then he is entitled to compensation only if he can prove that the risk of contracting
the illness or disease was increased by his working conditions. 13

Despite the abandonment of the presumption of compensability established by the old law, the present law has not
ceased to be an employees' compensation law or a social legislation; hence, the liberality of the law in favor of the
working man and woman still prevails, and the official agency charged by law to implement the constitutional
guarantee of social justice should adopt a liberal attitude in favor of the employee in deciding claims for
compensability, 14 especially in light of the compassionate policy towards labor which the 1987 Constitution vivifies
and enhances. 15 Elsewise stated, a humanitarian impulse, dictated by no less than the Constitution itself under the
social justice policy, calls for a liberal and sympathetic approach to legitimate appeals of disabled public
servants; 16or that all doubts to the right to compensation must be resolved in favor of the employee or laborer.
Verily, the policy is to extend the applicability of the law on employees' compensation to as many employees who
can avail of the benefits thereunder. 17

The private respondent concedes that her ailment, ureterolithiasis, is not included in Annex "A" of the Rules on
Employees' Compensation. Nevertheless, she asserts that she was able to prove that the risk of contracting it was
increased by the exigency and nature of her work. Her burden of evidence did not require the presentation of proof
beyond reasonable doubt nor a preponderance of evidence. It was enough that she adduced substantial evidence.
In cases filed before administrative or quasi-judicial bodies, like the ECC, a fact is deemed established if it is
supported by substantial evidence or that amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion. 18 It was then enough if the private respondent was able to show that the nature of
her work or her working conditions increased the risk of her contracting ureterolithiasis. Certainly, it was not
necessary for her to breach the parameters of substantial evidence and to cross the difficult area of preponderance
of evidence. We agree with the Court of Appeals that the private respondent successfully discharged her burden of
evidence and convincingly showed that, indeed, the nature of her work or her working conditions increased the risk
of contracting ureterolithiasis.

According to the ECC in its impugned decision, ureterolithiasis is the presence of renal stones in the ureter and
urinary stones usually arise because of the breakdown of a delicate balance. Quoting Harrison's Principles of
Internal Medicine, 11th edition, it added: "The kidneys must conserve water, but they must excrete materials that
have low solubility. These two opposing requirements must be balanced against one another during adaptation to a
particular combination of diet and activity."19

In the 13th Edition of Harrison's Principles of Internal Medicine, vol. 2 (International Edition, 1994), page 1330, we
find the following entries:

PATHOGENESIS OF STONES

Urinary stones usually arise because of the breakdown of a delicate balance. The kidneys must
conserve water, but they also must excrete materials that have a low solubility. These two opposing
requirements must be balanced during adaptation to diet, climate, and activity. The problem is
mitigated to some extent by the fact that urine contains substances that inhibit crystallization of
calcium salts and others that bind calcium in soluble complexes. These protective mechanisms are
less than perfect. When the urine becomes supersaturated with insoluble materials, because
excretion rates are excessive and/or because water conservation is extreme, crystals form and may
grow and aggregate to form a stone. (emphasis supplied)

Clearly then, diet, climate, and activity are important considerations in achieving the delicate balance. Note,
however, that climate was excluded from the quotation made by the ECC.
The following are factors which contribute to the development of stones:

Geographic factors contribute to the development of stones. In developing countries, children —

especially prepubescent boys — are prone to bladder calculi. In industrialized countries, most calculi
are seen in adults as renal or ureteral stones. Areas of high humidity and elevated temperatures
appear to be contributing factors, and the incidence of symptomatic ureteral stones is greatest
during hot summer months.

Diet and fluid intake may be important factors in the development of urinary stones. Excess intake of
calcium, oxalate, and puriness can increase the incidence of stones in predisposed individuals.
Additionally, water or other fluid intake is important in preventing urolithiasis. Persons in sedentary
occupations have a higher incidence of stones that manual laborers.

Genetic factors may contribute to urinary stone formation. Cystinuria is an autosomal recessive
disorder. Homozygous individuals have markedly increased excertion of cystine and frequently have
numerous recurrent episodes of urinary stones despite attempts to optimize medical treatment.
Renal tubular acidosis appears to be transmitted as a hereditary trait, and urolithiasis occurs in up to
75% of patients affected with this disorder. 20 (Emphasis supplied)

It is thus medically established that the environment (included in geographic factor), water or other fluid intake and
the nature of the occupation — sedentary or otherwise — are important factors in the development or inhibition of
urinary stones or ureterolithiasis in general. Certainly, too, the regularity of urination plays an important role since
withholding urine for sometime may disturb the balance. It is not denied that the private respondent's work exposed
her to drugs, insecticides, volatile poisons, fuels and inorganic compounds, and chemical laboratory equipment.
Moreover, she attended to field cases and rendered holiday and night duties once a week and helped the chemists
in the examinations of incoming cases. Neither have the petitioners refuted the claim of the private respondent that
she missed some important health habits such as regularly drinking enough water and urination. As to the latter, the
Court of Appeals concluded that "the exigency of [Arreola's] assigned tasks was such that she had to forego
urination in order not to interrupt the flow of concentration."

All told then, the Court of Appeals committed no reversible error in its challenged decision. It is apropos at this
juncture to reiterate what we said in Vicente vs. Employees' Compensation Commission. 21

The court takes this occasion to stress once more its abiding concern for the welfare of government
workers, especially the humble rank and file, whose patience, industry, and dedication to duty have
often gone unheralded, but who, in spite of very little recognition, plod on dutifully to perform their
appointed tasks. It is for this reason that the sympathy of the law on social security is toward its
beneficiaries, and the law, by its own terms, requires a construction of utmost liberality in their favor.
It is likewise for this reason that the Court disposes of this case and ends a workingman's struggle
for his just dues.

The private respondent, however, is entitled to only twelve thousand six hundred and nineteen pesos (P12,619.00)
and not P16,619.00, as the records are bereft of any substantiation representing her expenses for X-ray
(P1,600.00), laboratory analysis (P300.00), and medicines (P1,500.00).

IN VIEW WHEREOF, the decision of the Court of Appeals in CA-G.R SP No. 34223 is hereby AFFIRMED, and the
Government Service Insurance System is hereby ordered to pay private respondent Ms. Lilia B. Arreola the sum of
P12,619.00 as compensation. No pronouncement as to costs.

SO ORDERED.

(Conditions precedent before a complaint may be filed…)

G.R. No. 111416 September 26, 1994

FELICIDAD UY, petitioner,

vs.
HON. MAXIMO C. CONTRERAS, Presiding Judge, Metropolitan Trial Court, Branch 61, Makati, Metro Manila;
HON. MAURO M. CASTRO, Provincial Prosecutor of Pasig, Metro Manila; SUSANNA ATAYDE and WINNIE
JAVIER, respondents.

Albon & Serrano Law Office for petitioner.

Ramon M. Velez for private respondents.

DAVIDE, JR., J.:

Assailed in this petition for certiorari under Rule 65 of the Rules of Court is the order dated 2 July 1993 of public
respondent Judge Maximo C. Contreras of Branch 61 of the Metropolitan Trial Court (MTC) of Makati, Metro Manila,
denying the petitioner's motion to dismiss Criminal Cases Nos. 145233 and 145234 for slight physical injuries. The
motion to dismiss is based on the failure of the private respondents, as the offended parties therein, to comply with
Section 6 of P.D. No. 1508 and Section 18 of the 1991 Revised Rule on Summary Procedure requiring prior referral
of disputes to the Lupong Tagapamayapa of the proper barangay.

At the outset, it must be stated that were it not for the importance of the issue to be resolved in the light of the
revised law on katarungang pambarangay provided for in the Local Government Code of 1991 (R.A. No. 7160)
which took effect on 1 January 1992, 1 this Court would have declined to accept the invocation of its original
jurisdiction to issue the extraordinary writ prayed for. We have already ruled that while it is true that this Court, the
Court of Appeals, and the Regional Trial Courts have concurrent original jurisdiction to issue writs of certiorari,
prohibition, mandamus, quo warranto, and habeas corpus, such concurrence does not accord litigants unrestrained
freedom of choice of the court to which application therefor may be directed. There is a hierarchy of courts
determinative of the venue of appeals which should also serve as a general determinant of the proper forum for the
application for the extraordinary writs. A becoming regard for this judicial hierarchy by the petitioner and her lawyers
ought to have led them to file the petition with the proper Regional Trial Court. 2

The antecedent facts as disclosed by the pleadings of the parties are not complicated.

Petitioner subleased from respondent Susanna Atayde (hereinafter Atayde) the other half of the second floor of a
building located at corner Reposo and Oliman Streets, Makati, Metro Manila. She operated and maintained therein a
beauty parlor. 3

The sublease contract expired on 15 April 1993. However, the petitioner was not able to remove all her movable
properties.

On 17 April 1993, an argument arose between the petitioner and Atayde when the former sought to withdraw from
the subleased premises her remaining movable properties such as cabinets, shelves, frames, a mirror, a shampoo
bowl, and an airconditioning casing. 4 The argument degenerated into a scuffle between the petitioner, on the one
hand, and Atayde and several of Atayde's employees, including private respondent Winnie Javier
(hereinafter Javier), on the other.

On 21 April 1993, the private respondent had themselves medically examined for the alleged injuries inflicted on
them by the petitioner. 5

On 23 April 1993, the private respondents filed a complaint with the barangay captain of Valenzuela, Makati, which
was docketed as Barangay Cases Nos. 1023 6 and 1024. 7

The confrontation of the parties was scheduled by the barangay captain for 28 April 1993. On the said date, only the
petitioner appeared. The barangay captain then reset the confrontation to 26 May 1993. 8

On 11 May 1993, the Office of the Provincial Prosecutor of Rizal filed two informations for slight physical injuries
against the petitioner with the MTC of Makati, which were docketed as Criminal Cases Nos. 145233 and 145234
and assigned to Branch 61 thereof.
On 21 May 1993, public respondent Judge Contreras of Branch 61 ordered the petitioner to submit her counter-
affidavit and those of her witnesses.

On 14 June 1993, the petitioner submitted the required counter-

affidavits. 9 In her own counter-affidavit, the petitioner specifically alleged the prematurity of the filing of the criminal
cases for failure to undergo conciliation proceedings as she and the private respondents are residents of
Manila. 10She also attached to it a certification by the barangay captain of Valenzuela, Makati, dated 18 May 1993,
that there was an ongoing conciliation between Atayde and the petitioner in Barangay Case No. 1023. 11

On 18 June 1993, the petitioner filed a motion to dismiss Criminal Cases Nos. 145233 and 145234 for non-
compliance with the requirement of P.D. No. 1508 on prior referral to the Lupong Tagapamayapa and pursuant to
Section 18 of the 1991 Revised Rule on Summary Procedure.

On 2 July 1993, public respondent Judge Contreras handed down an order denying the motion to dismiss, pertinent
portions of which read:

The court finds the motion to be without sufficient merit. In the first place, the offense subject of
these cases accussed in Makati, Metro Manila on April 17, 1993; that Barangay Valenzuela of the
Municipality of Makati had started the conciliation proceedings between the parties but as of May 18,
1993 nothing has been achieved by the barangay (Annex "2" of the Counter-Affidavit of the
accused); that the above-entitled cases were filed directly with this court by the public prosecutor on
May 11, 1993; and the accused and her witnesses had already filed their counter-affidavits and
documents. At this stage of the proceedings, the court believes that the accused had already waived
the right to a reconciliation proceedings before the barangay of Valenzuela, Makati considering that
accused and complainant are residents of different barangays; that the offense charged occurred in
the Municipality of Makati; and finally, this offense is about to prescribe.

Under the foregoing circumstances, the court believes, and so holds, that the complainants may go
directly to the court where their complaint is about to prescribe or barred by statute of limitations
pursuant to Section 6 of PD 1508." 12

A motion to reconsider the above order was denied on 5 August 1993.

Hence this special civil action for certiorari. The petitioner contends that the respondent judge committed grave
abuse of discretion amounting to lack of jurisdiction when he denied the motion to dismiss considering that the
private respondents failed to comply with the mandatory requirement of P.D. No. 1508, now embodied in Section
412 of the Local Government Code of 1991 and further required under the 1991 Revised Rule on Summary
Procedure.

In their Comment, the private respondents contend that the denial of the motion to dismiss is proper because prior
referral of the dispute to the lupon is not applicable in the case of private respondent Javier since she and the
petitioner are not residents of barangays in the same city or municipality or of adjoining barangays in different cities
or municipalities and that referral to the lupon is not likewise required if the case may otherwise be barred by the
statute of limitations. Moreover, even assuming arguendo that prior referral to the lupon applies to the case of
private respondent Atayde, the latter had, nevertheless, substantially complied with the requirement.

In its Comment, the Office of the Solicitor General agrees with the petitioner that Criminal Cases Nos. 145233 and
145234 should be dismissed for non-compliance with Sections 408, 409, 410, and 412 of the Local Government
Code of 1991 in relation to Section 7, Rule VI of the Rules Implementing P.D. No. 1508.

The petitioner replied to the comments of the private respondents and of the Office of the Solicitor General. The
private respondents filed a rejoinder to the petitioner's reply to their comment and a reply to the comment of the
Office of the Solicitor General.

In the Resolution of 16 May 1994, this Court gave due course to the petition and required the parties to submit their
respective memoranda, which the petitioner and the private respondents complied with. The Office of the Solicitor
General, in view of its prior submission, moved that it be excused from filing a memorandum.
The petition is impressed with merit.

The law on the katarungang pambarangay was originally governed by P.D. No. 1508 which was enacted on 11 June
1978. However, the Local Government Code of 1991, specifically Chapter 7, Title I, Book III thereof, 13 revised the
law on the katarungang pambarangay. As a consequence of this revision, P.D. No. 1508 was expressly repealed
pursuant to Section 534(b) of the Code. Pertinent portions of Chapter 7, Title I, Book III thereof read as follows:

Sec. 408. Subject Matter for Amicable Settlement; Exception Thereto. — The luppon of each
barangay shall have authority to bring together the parties actually residing in the same city or
municipality for amicable settlement of all disputes except:

(a) Where one party is the government or any subdivision or instrumentality thereof;

(b) Where one party is a public officer or employee, and the dispute relates to the performance of his
official functions;

(c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five thousand
pesos (P5,000.00);

(d) Offenses where there is no private offended party;

(e) Where the dispute involves real properties located in different cities or municipalities unless the
parties thereto agree to submit their differences to amicable settlement by an appropriate lupon;

(f) Disputes involving parties who actually reside in barangays of different cities or municipalities,
except where such barangay units adjoin each other and the parties thereto agree to submit their
differences to amicable settlement by appropriate lupon;

(g) Such other classes of disputes which the President may determine in the interest of justice or
upon the recommendation of the Secretary of Justice.

The court in which non-criminal cases not falling within the authority of the lupon under this Code are
filed may, at anytime before trial, motu proprio refer the case to the lupon concerned for amicable
settlement.

Sec. 409. Venue. — (a) Disputes between persons actually residing in the same barangay shall be
brought for amicable settlement before the lupon of said barangay.

(b) Those involving actual residents of different barangays within the same city or municipality shall
be brought in the barangay where the respondent or any of the respondents actually resides, at the
election of the complainant.

(c) All disputes involving real property or any interest therein shall be brought in the barangay where
the real property or the larger portion thereof is situated.

(d) Those arising at the workplace where the contending parties are employed or at the institution
where such parties are enrolled for study shall be brought in the barangay where such workplace or
institution is located.

Objections to venue shall be raised in the mediation proceedings before the punong barangay;
otherwise, the same shall be deemed waived. Any legal question which may confront the punong
barangay in resolving objections to venue herein referred to may be submitted to the Secretary of
Justice or his duly designated representative whose ruling thereon shall be binding.

Sec. 410. Procedure for Amicable Settlement. — . . .

 xxx xxx xxx

(c) Suspension of prescriptive period of offenses. — While the dispute is under mediation,
conciliation, or arbitration, the prescriptive periods for offenses and cause of action under existing
laws shall be interrupted upon filing of the complaint with the punong barangay. The prescriptive
periods shall resume upon receipt by the complainant of the complaint or the certificate of
repudiation or of the certification to file action issued by the lupon or pangkat secretary: Provided,
however, That such interruption shall not exceed sixty (60) days from the filing of the complaint with
the punong barangay.

xxx xxx xxx

Sec. 412. Conciliation. — (a) Pre-condition to filing of complaint in court. — No complaint, petition,
action, or proceeding involving any matter within the authority of the lupon shall be filed or instituted
directly in court or any other government office for adjudication, unless there has been a
confrontation between the parties before the lupon chairman or the pangkat, and that no conciliation
or settlement has been reached as certified by the lupon secretary or pangkat secretary as attested
to by the luponchairman or pangkat chairman or unless the settlement has been repudiated by the
parties thereto.

(b) Where parties may go directly to court. — The parties may go directly to court in the following
instances:

(1) Where the accused is under detention;

(2) Where a person has otherwise been deprived of personal liberty calling
for habeas corpus proceedings;

(3) Where actions are coupled with provisional remedies such as preliminary
injunction, attachment, delivery of personal property, and support pendente lite; and

(4) Where the action may otherwise be barred by the statute of limitations.

xxx xxx xxx

Sec. 415. Appearance of Parties in Person. — In all katarungang pambarangay proceedings, the
parties must appear in person without the assistance of counsel or representative, except for minors
and incompetents who may be assisted by their next-of-kin who are not lawyers.

Pursuant to the authority vested in him under Section 421 of the Code, the Secretary of Justice promulgated
the Katarungang Pambarangay Rules to implement the revised law on katarungang pambarangay. Sections 8 and
11 of Rule VI (Amicable Settlement of Disputes) thereof provide in part as follows:

SECTION 8. Failure to appear. —

a. Sanctions

The complaint may be dismissed when complainant, after due notice, refuses or
willfully fails to appear without justifiable reason on the date set for mediation,
conciliation or arbitration. Such dismissal ordered by the Punong Barangay/Pangkat
Chairman after giving the complainant an opportunity to explain his non-appearance
shall be certified to by the Lupon or Pangkat Secretary as the case may be, and shall
bar the complainant from seeking judicial recourse for the same cause of action as
that dismissed.

xxx xxx xxx

 Sec. 11. Suspension of prescriptive period of offenses and cause of action. — The prescriptive
periods for offenses and causes of action under existing laws shall be interrupted upon filing of the
complaint with the Punong Barangay. The running of the prescriptive periods shall resume upon
receipts by the complainant of the certificate of repudiation or of the certification to file action issued
by the Lupon or Pangkat Secretary: Provided, however, that such interruption shall not exceed sixty
(60) days from the filing of the complaint with the Punong Barangay. After the expiration of the
aforesaid period of sixty days, the filing of the case in court or government office for adjudication
shall be subject to the provision of paragraph (b) (4) of Rule VIII of these Rules.

It may thus be observed that the revised katarungang pambarangay law has at least three new significant features,
to wit:

1. It increased the authority of the lupon in criminal offenses from those punishable by imprisonment
not exceeding thirty days or a fine not exceeding P200.00 in P.D. No. 1508 to those offenses
punishable by imprisonment not exceeding one year or a fine not exceeding P5,000.00.

2. As to venue, it provides that disputes arising at the workplace where the contending parties are
employed or at the institution where such parties are enrolled for study, shall be brought in the
barangay where such workplace or institution is located.

3. It provides for the suspension of the prescriptive periods of offenses during the pendency of the
mediation, conciliation, or arbitration process. Paragraph (c) of Section 410 of the law, however,
suffers from some ambiguity when it provides that the prescriptive periods "shall resume upon
receipt by the complainant of the complaint or the certificate of repudiation or of the certification to
file action issued by the lupon or pangkat secretary." What is referred to as receipt by
the complainant of the complaint is unclear; obviously, it could have been a drafting oversight.
Accordingly, in the above quoted Section 11 of the Rules and Regulations issued by the Secretary of
Justice, the phrase "the complaint or" is not found, such that the resumption of the running of the
prescriptive period shall, properly, be from receipt by the complainant of the certificate of repudiation
or the certification to file action issued by the lupon or the pangkat secretary. Such suspension,
however, shall not exceed sixty days.

The first feature has necessarily broadened the jurisdiction of the lupon and if the mediation and conciliation process
at that level would be effectively pursued, few cases would reach the regular courts, justice would be achieved at
less expense to the litigants, cordial relationships among protagonists in a small community would be restored, and
peace and order therein enhanced.

The second feature, which is covered by paragraph (d), Section 409 of the Local Government code, also broadens
the authority of the lupon in the sense that appropriate civil and criminal cases arising from incidents occurring in
workplaces or institutions of learning shall be brought in the barangay where such workplace or institution is located.
That barangay may not be the appropriate venue in either paragraph (a) or paragraph (b) of the said section. This
rule provides convenience to the parties. Procedural rules including those relating to venue are designed to insure a
fair and convenient hearing to the parties with complete justice between them as a result.14 Elsewise stated,
convenience is the raison d'etre of the rule on venue.

The third feature is aimed at maximizing the effectiveness of the mediation, conciliation, or arbitration process. It
discourages any intentional delay of the referral to a date close to the expiration of the prescriptive period and then
invoking the proximity of such expiration as the reason for immediate recourse to the courts. It also affords the
parties sufficient time to cool off and face each other with less emotionalism and more objectivity which are essential
ingredients in the resolution of their dispute. The sixty-day suspension of the prescriptive period could spell the
difference between peace and a full-blown, wearisome, and expensive litigation between the parties.

While P.D. No. 1508 has been repealed by the Local Government Code of 1991, the jurisprudence built thereon
regarding prior referral to the lupon as a pre-condition to the filing of an action in court remains applicable because
its provisions on prior referral were substantially reproduced in the Code.

In Peregrina vs. Panis,15 this Court stated:

 Thus, Morata vs. Go, 125 SCRA 444 (1983), and Vda. de Borromeo vs. Pogoy, 126 SCRA 217
(1983) have held that P.D. No. 1508 makes the conciliation process at the Barangay level a
condition precedent for the filing of a complaint in Court. Non-compliance with that condition
precedent could affect the sufficiency of the plaintiff's cause of action and make his complaint
vulnerable to dismissal on the ground of lack of cause of action or prematurity. The condition is
analogous to exhaustion of administrative remedies, or the lack of earnest efforts to compromise
suits between family members, lacking which the case can be dismissed.

The parties herein fall squarely within the ambit of P.D. No. 1508. They are actual residents in the
same barangay and their disputes does not fall under any of the excepted cases." (Emphasis
omitted)

Such non-compliance is not, however, jurisdictional. This Court said so in Garces vs. Court of Appeals: 16

In fine, we have held in the past that prior recourse to the conciliation procedure required under P.D.
1508 is not a jurisdictional requirement, non-compliance with which would deprive a court of its
jurisdiction either over the subject matter or over the person of the defendant. Where, however, the
fact of non-compliance with and non-observance of such procedure has been seasonably raised as
an issue before the court first taking cognizance of the complaint, dismissal of the action is proper.

xxx xxx xxx

The precise technical effect of failure to comply with the requirement of P.D. 1508 where applicable
is much the same effect produced by non-exhaustion of administrative remedies; the complaint
becomes afflicted with the vice of pre-maturity; the controversy there alleged is not ripe for judicial
determination. The complaint becomes vulnerable to a motion to dismiss. (emphasis omitted)

There were, of course, cases where this Court ruled that the failure of the defendant to seasonably invoke non-
referral to the appropriate lupon operated as a waiver thereof. 17 Furthermore, when such defect was initially present
when the case was first filed in the trial court, the subsequent issuance of the certification to file action by the
barangay, which constituted substantial compliance with the said requirement, cured the defect. 18

On 15 October 1991, this Court promulgated the Revised Rule on Summary Procedure.19 Section 18 thereof
provides:

Sec. 18. Referral to Lupon. — Cases requiring referral to the Lupon for conciliation under the
provisions of Presidential Decree No. 1508 where there is no showing of compliance with such
requirement, shall be dismissed without prejudice, and may be revived only after such requirement
shall have been complied with. This provision shall not apply to criminal cases where the accused
was arrested without a warrant.

In the proceeding before the court a quo, the petitioner and the respondent had in mind only P.D. No. 1508. The
petitioner further invoked the aforequoted Section 18. None knew of the repeal of the decree by the Local
Government Code of 1991. Even in her instant petition, the petitioner invokes the decree and Section 18 of the
Revised Rule on Summary Procedure. However, the private respondents, realizing the weakness of their position
under P.D. No. 1508 since they did refer their grievances to what might be a wrong forum under the decree,
changed tack. In their Comment, they assert that on 20 April 1993 Atayde "filed a complaint against petitioner before
the barangay council of Barangay Valenzuela, Makati, in compliance with the requirement of the Katarungang
Pambarangay Law under the Local Government Code." 20 Yet, in a deliberate effort to be cunning or shrewd, which
is condemnable for it disregards the virtue of candor, they assert that the said law is not applicable to their cases
before the court a quo because (a) the petitioner and respondent Atayde are not residents of barangays in the same
city or municipality; (b) the law does not apply when the action, as in the said cases, may otherwise be barred by the
statute of limitations; and (c) even assuming that the law applies insofar as Atayde is concerned, she has
substantially complied with it.

The Office of the Provincial Prosecutor of Rizal should have exerted enough diligence to inquire from the private
respondents if prior referral to the lupon was necessary before filing the informations.
Respondent judge did not do any better. His total unawareness of the Local Government Code of 1991, more
specifically on the provisions on the Katarungang pambarangay, is distressing. He should have taken judicial notice
thereof, ever mindful that under Section 1, Rule 129 of the Rules of Court, courts are mandatorily required to take
judicial notice of "the official acts of the legislative, executive and judicial departments of the Philippines." We have
ruled that a judge is called upon to exhibit more than just a cursory acquaintance with the statutes and procedural
rules. 21 He should have applied the revised katarungang pambarangay law under the Local Government Code of
1991. Had he done so, this petition would not have reached us and taken valuable attention and time which could
have been devoted to more important cases.

In view of the private respondents' failure to appear at the first scheduled mediation on 28 April 1993 for which the
mediation was reset to 26 May 1993, no complaint for slight physical injuries could be validly filed with the MTC of
Makati at any time before such date. The filing then of Criminal Cases Nos. 145233 and 145234 with the said court
on 11 May 1993 was premature and, pursuant to paragraph (a), Section 412 of the Local Government Code,
respondent Judge Contreras should have granted the motion to dismiss the criminal cases. He cannot justify its
denial by taking refuge under Section 6 of P.D. No. 1508 (more properly, Section 412(b)(4) of the Local Government
Code of 1991) which states that the parties may go directly to court where the action is about to prescribe. This is
because, as earlier stated, pursuant to paragraph (c), Section 410 of the Code, the prescriptive period was
automatically suspended for a maximum period of sixty days from 23 April 1993 when the private respondents filed
their complaints with the lupon of Valenzuela Makati.

Moreover, having brought the dispute before the lupon of barangay Valenzuela, Makati, the private respondents are
estopped from disavowing the authority of the body which they themselves had sought. Their act of trifling with the
authority of the lupon by unjustifiably failing to attend the scheduled mediation hearings and instead filing the
complaint right away with the trial court cannot be countenanced for to do so would wreak havoc on the barangay
conciliation system.

Granting arguendo that the petitioner did inflict the alleged physical injuries, the offense for which she may be liable
would only be slight physical injuries under paragraph (2), Article 266 of the Revised Penal Code, considering that
per the medical certificates 22 the injuries sustained by the private respondents would "heal" in nine days "in the
absence of complication" and there is no showing that the said injuries incapacitated them for labor or would require
medical attendance for such period. The penalty therefor would only be "arresto menor or a fine not exceeding 200
pesos and censure." These penalties are light under Article 25 of the Revised Penal Code and would prescribe
in two months pursuant to Article 90.

Accordingly, since the slight physical injuries charged in Criminal Cases Nos. 145233 and 145234 were allegedly
inflicted on 17 April 1993, the prescriptive period therefor would have expired two months thereafter. Nevertheless,
its running was tolled by the filing of the private respondents' complaints with the lupon of Valenzuela, Makati, on 23
April 1993 and automatically suspended for a period of sixty days, or until 22 June 1993. If no mediation or
conciliation could be reached within the said period of suspension and, accordingly, a certification to file action is
issued, the private respondents would still have fifty-six days within which to file their separate criminal complaints
for such offense. Evidently, there was no basis for the invocation by the respondent judge of the exception provided
for in paragraph (b), Section 412 of the Local Government Code.

Neither are we persuaded by the reasoning of the respondent Judge that the petitioner "had already waived the right
to a reconciliation proceedings before the barangay of Valenzuela, Makati, considering that the accused and the
complainant are residents of different barangays." The petitioner did not waive the reconciliation proceedings before
the lupon of Valenzuela, Makati; she submitted to it and attended the scheduled conciliation on 28 April 1993 and
invoked the pre-condition of referral to the lupon in her counter-affidavit. 23

Nor would this Court accept the contention of the private respondent that the parties could not agree on a
compromise and that they had to request the barangay captain to issue a certification to file action. 24 The request is
dated 23 June 1993, 25 or nearly one and a half months after Criminal Cases Nos. 145233 and 145234 were filed
with the court a quo. Evidently, this was done to support their contention in the said court that, in any event, there
was substantial compliance with the requirement of referral to the lupon. It must be stressed that the private
respondents, after failing to appear at the initial confrontation and long after the criminal cases were filed, had no
right to demand the issuance of a certification to file action.
The respondent judge thus acted with grave abuse of discretion in refusing to dismiss Criminal Cases Nos. 145233
and 145234.

Before closing these cases, this Court wishes to emphasize the vital role which the revised katarungang
pambarangay law plays in the delivery of justice at the barangay level, in promoting peace, stability, and progress
therein, and in effectively preventing or reducing expensive and wearisome litigation. Parties to disputes cognizable
by the lupon should, with sincerity, exhaust the remedies provided by that law, government prosecutors should
exercise due diligence in ascertaining compliance with it, and trial courts should not hesitate to impose the
appropriate sanctions for non-compliance thereof.

WHEREFORE, the instant petition is GRANTED. The Orders of respondent Judge of 2 July 1993 and 5 August
1993 in Criminal Cases Nos. 145233 and 1452334, both entitled "People of the Philippines vs. Felicidad Uy" are
hereby SET ASIDE and the respondent Judge is hereby DIRECTED to DISMISS said cases within ten (10) days
from receipt of a copy of this decision.

Costs against the private respondents.

SO ORDERED.

G.R. No. 109068 January 10, 1994

GAUDENCIO GUERRERO, petitioner,

vs.
REGIONAL TRIAL COURT OF ILOCOS NORTE, BR. XVI, JUDGE LUIS B. BELLO, JR., PRESIDING, and
PEDRO G. HERNANDO, respondents.

Juan Jacito for petitioner.

Alipio V. Flores for private respondent.

BELLOSILLO, J.:

Filed by petitioner as an accion publicana1 against private respondent, this case assumed another dimension when
it was dismissed by respondent Judge on the ground that the parties being brother-in-law the complaint should have
alleged that earnest efforts were first exerted towards a compromise.

Admittedly, the complaint does not allege that the parties exerted earnest towards a compromise and that the same
failed. However, private respondent Pedro G. Hernando apparently overlooked this alleged defect since he did not
file any motion to dismiss nor attack the complaint on this ground in his answer. It was only on 7 December 1992, at
the pre-trial conference, that the relationship of petitioner Gaudencio Guerrero and respondent Hernando was noted
by respondent Judge Luis B. Bello, Jr., they being married to half-sisters hence are brothers-in-law, and on the basis
thereof respondent Judge gave petitioner five (5) days "to file his motion and amended complaint" to allege that the
parties were very close relatives, their respective wives being sisters, and that the complaint to be maintained
should allege that earnest efforts towards a compromise were exerted but failed. Apparently, respondent Judge
considered this deficiency a jurisdictional defect.

On 11 December 1992, Guerrero moved to reconsider the 7 December 1992 Order claiming that since brothers by
affinity are not members of the same family, he was not required to exert efforts towards a compromise. Guerrero
likewise argued that Hernando was precluded from raising this issue since he did not file a motion to dismiss nor
assert the same as an affirmative defense in his answer.

On 22 December 1992, respondent Judge denied the motion for reconsideration holding that "[f]ailure to allege that
earnest efforts towards a compromise is jurisdictional such that for failure to allege same the court would be
deprived of its jurisdiction to take cognizance of the case." He warned that unless the complaint was amended
within five (5) days the case would be dismissed.
On 29 January 1993, the 5-day period having expired without Guerrero amending his complaint, respondent Judge
dismissed the case, declaring the dismissal however to be without prejudice.

Guerrero appeals by way of this petition for review the dismissal by the court a quo. He raises these legal issues: (a)
whether brothers by affinity are considered members of the same family contemplated in Art. 217, par. (4), and Art.
222 of the New Civil Code, as well as under Sec. 1, par. (j), Rule 16, of the Rules of Court requiring earnest efforts
towards a compromise before a suit between them may be instituted and maintained; and, (b) whether the absence
of an allegation in the complaint that earnest efforts towards a compromise were exerted, which efforts failed, is a
ground for dismissal for lack of jurisdiction.

The Constitution protects the sanctity of the family and endeavors to strengthen it as a basic autonomous social
institution.2 This is also embodied in Art. 149,3 and given flesh in Art. 151, of the Family Code, which provides:

Art. 151. No suit between members of the same family shall prosper unless it should appear from
the verified complaint or petition that earnest efforts toward a compromise have been made, but that
the same had failed. If it is shown that no such efforts were in fact made, the case must be
dismissed.

This rule shall not apply to cases which may not be the subject of compromise under the Civil Code.

Considering that Art. 151 herein-quoted starts with the negative word "No", the requirement is mandatory4 that the
complaint or petition, which must be verified, should allege that earnest efforts towards a compromise have been
made but that the same failed, so that "[i]f it is shown that no such efforts were in fact made, the case must be
dismissed."

Further, Art. 151 is contemplated by Sec. 1, par. (j), Rule 16, of the Rules of Court which provides as a ground for
motion to dismiss "(t)hat the suit is between members of the same family and no earnest efforts towards a
compromise have been made."

The Code Commission, which drafted the precursor provision in the Civil Code, explains the reason for the
requirement that earnest efforts at compromise be first exerted before a complaint is given due course —

This rule is introduced because it is difficult to imagine a sadder and more tragic spectacle than a
litigation between members of the same family. It is necessary that every effort should be made
toward a compromise before a litigation is allowed to breed hate and passion in the family. It is
known that a lawsuit between close relatives generates deeper bitterness than between strangers . .
. A litigation in a family is to be lamented far more than a lawsuit between strangers . . . 5

But the instant case presents no occasion for the application of the
above-quoted provisions. As early as two decades ago, we already ruled in Gayon v. Gayon6 that the enumeration
of "brothers and sisters" as members of the same family does not comprehend "sisters-in-law". In that case, then
Chief Justice Concepcion emphasized that "sisters-in-law" (hence, also "brothers-in-law") are not listed under Art.
217 of the New Civil Code as members of the same family. Since Art. 150 of the Family Code repeats essentially
the same enumeration of "members of the family", we find no reason to alter existing jurisprudence on the matter.
Consequently, the court a quo erred in ruling that petitioner Guerrero, being a brother-in-law of private respondent
Hernando, was required to exert earnest efforts towards a compromise before filing the present suit.

In his Comment, Hernando argues that ". . . although both wives of the parties were not impleaded, it remains a
truism that being spouses of the contending parties, and the litigation involves ownership of real property, the
spouses' interest and participation in the land in question cannot be denied, making the suit still a suit between half-
sisters . . ."7

Finding this argument preposterous, Guerrero counters in his Reply that his "wife has no actual interest and
participation in the land subject of the . . . suit, which the petitioner bought, according to his complaint, before he
married his wife."8 This factual controversy however may be best left to the court a quo to resolve when it resumes
hearing the case.
As regards the second issue, we need only reiterate our ruling in
O'Laco v. Co Cho Chit,9 citing Mendoza v. Court of Appeals, 10 that the attempt to compromise as well as the inability
to succeed is a condition precedent to the filing of a suit between members of the same family, the absence of such
allegation in the complaint being assailable at any stage of the proceeding, even on appeal, for lack of cause of
action.

It is not therefore correct, as petitioner contends, that private respondent may be deemed to have waived the
aforesaid defect in failing to move or dismiss or raise the same in the Answer. On the other hand, we cannot sustain
the proposition of private respondent that the case was, after all, also dismissed pursuant to Sec. 3, Rule 17, of the
Rules of Court 11 for failure of petitioner to comply with the court's order to amend his complaint.

A review of the assailed orders does not show any directive which Guerrero supposedly defied. The Order of 7
December 1992 merely gave Guerrero five (5) days to file his motion and amended complaint with a reminder that
the complaint failed to allege that earnest efforts were exerted towards a compromise. The Order of 22 December
1992, which denied Guerrero's motion for reconsideration, simply stated that "Plaintiff if it (sic) so desire must
amend the complaint otherwise, the court will have to dismiss the case (emphasis supplied) . . ." The Order of 29
January 1993 dismissing the case without prejudice only made reference to an earlier order "admonishing" counsel
for Guerrero to amend the complaint, and an "admonition" is not synonymous with "order". Moreover, since the
assailed orders do not find support in our jurisprudence but, on the other hand, are based on an erroneous
interpretation and application of the law, petitioner could not be bound to comply with them. 12

WHEREFORE, the petition is GRANTED and the appealed Orders of

7 December 1992, 22 December 1992 and 29 January 1993 are SET ASIDE. The Regional Trial Court of Laoag
City, Branch 16, or whichever branch of the court the case may now be assigned, is directed to continue with Civil
Case
No. 10084-16 with deliberate dispatch.

SO ORDERED.