Beruflich Dokumente
Kultur Dokumente
Alipio Yabo was the owner of Lot No. 6080 and Lot No. 6180 situated in
Barrio Bulua, Cagayan de Oro City, containing an area of 1,267 and 3,816
square meters, respectively. Title thereto devolved upon his nine children,
namely, Victoriano, Procopio, Lope, Jose, Pelagia, Baseliza, Francisca,
Maria, and Gaudencia, upon his death sometime before or during the second
world war.
On 28 April 1976, Pastor Makibalo, who is the husband of Maria Yabo, one of
Alipio's children, filed with the then Court of First Instance of Misamis Oriental
a complaint, docketed as Civil Case No. 5000, against the spouses Alberto
and Elpia Yabo for "Quieting of Title, Annulment of Documents, and
Damages." In the complaint, he alleged that he owned a total of eight shares
of the subject lots, having purchased the shares of seven of Alipio's children
and inherited the share of his wife, Maria, and that except for the portion
corresponding to Gaudencia's share which he did not buy, he occupied,
cultivated, and possessed continuously, openly, peacefully, and exclusively
the two parcels of land. He then prayed that he be declared the absolute
owner of 8/9 of the lots in question. 1
The plaintiffs then prayed that (a) they, as well as defendant Pastor Makibalo,
in representation of his wife, and Enecia Cristal, in representation of
Gaudencia, be declared as the owners of the lots; (b) the Salvador spouses
be declared as having no rights thereto except as possible assignees of their
co-defendants, Pastor Makibalo and Enecia Cristal; (c) the lots be partitioned
according to law among the aforementioned co-owners; and (d) the
defendants be made to pay for the value of the fruits they harvested from the
lots and for moral and exemplary damages, attorney's fees, expenses of the
litigation, and costs of the suit.
The two cases were consolidated and jointly heard by Branch 5 of the Court
of First Instance of Cagayan de Oro City.
He was married to Maria Yabo who died on 17 March 1962. 4 In August 1949,
Jose and Victoriano, both surnamed Yabo, sold their respective shares in the
disputed lots to one Pedro Ebarat, and in 1952 the latter sold both shares to
Pastor Makibalo. 5 Ebarat formalized this conveyance by executing an
Affidavit of Waiver and Quitclaim dated 30 May 1969 in favor of Pastor. 6
On 16 January 1951, the heirs of the late Lope Yabo sold Lope's shares in the
litigated properties to one Dominador Canomon, 7 who, in turn, sold the same
to Pastor. 8 Canomon afterwards executed an Affidavit of Waiver and
Quitclaim in favor of the latter. 9
Pastor Makibalo likewise purchased the shares of Baseliza in the two lots in
1942, of Procopio in 1957, of Francisca in 1958, and of Pelagia in 1967. The
only share he did not buy was that of Gaudencia. After every purchase, he
took possession of the portions bought and harvested the products thereof. 10
In 1966, Pastor sold back to Alberto a portion of Lot No. 6180 which was
formerly the share of Alberto's father, Procopio. 11
In December 1968, Pastor mortgaged the two lots to the spouses Eulogio and
Remedios Salvador. 12 On 26 September 1978, he executed a document
denominated as a "Confirmation and Quitclaim" whereby he waived all his
rights, interests, and participation in the lots in favor of the Salvador
spouses. 13
On the other hand, by their evidence, l4 the spouses Alberto and Elpia Yabo
tried to prove that they had repurchased from Pastor Makibalo the share of
Procopio, which was previously sold to Pastor, and had bought the shares of
Jose and Maria. 15
Filoteo Yabo denied having sold the share of his father, Lope Yabo, in the
contested lots and disowned his signature and those of his mother, brothers,
and sisters appearing at the back of Exhibit "C". 16
Ignacio Yabo testified that his father, Victoriano Yabo, did not know how to
write and sign his name. He further declared that he had no knowledge that
his father affixed his thumbmark in the document marked as Exhibit "A"
purporting to alienate his father's share in the disputed lots. l7
On 15 January 1983, the trial court rendered its decision 18 holding as follows:
As Jose Yabo was no longer the owner of the one-ninth (1/9) shares
which he sold to Alberto Yabo and Elpia Yabo under Exh. 3, the sale is
null and void, and Alberto and Elpia acquired nothing because Jose
Yabo had no more title, right or interest to dispose of.
...
As regards the shares of Lope Yabo, the same had been sold by his
surviving spouse Juana Legaspi, and his children Filoteo, Andresa,
Jovita, Bonifacio, and Rundino for P105.00 on January 16, 1951 to
Dominador Conomon (Exh. C and C-1), who in turn sold it to Pastor
Makibalo in 1952, executing a formal Deed of Waiver and Quitclaim on
May 30, 1969
(Exh. D).
Exh. C is an ancient document, being more than 30 years old and has
been in the possession of Pastor Makibalo and then the spouses
Eulogio and Remedios Salvador — who had an interest in its
preservation. The claim of Filoteo Yabo that the signatures appearing
in Exh. C are not his and those of his brothers and sisters are of no
avail, for if they were not the ones who affixed those signatures and so
they did not sell the shares of their father Lope Yabo, why did they not
then take possession of said shares — they remained silent from 1951
to September 16, 1976 a period of 25 years. They are now [e]stopped
by laches.
On March 10, 1966 Pastor Makibalo sold back to Alberto Yabo the share
of Procopio Yabo in Lot 6180 (Exh. 1 and 2), but there is nothing to
show that. Pastor Makibalo also sold back Procopio's share in Lot 6080.
While Maria Yabo died on March 17, 1962, and so one-fourth (1/4) of the
shares of Baseliza, Victoriano, Jose, Lope, and Francisca, or one-fourth
of five-ninth (5/9) of both lots and one-fourth (1/4) of Lot 6080 should go
to the children of the brothers and sisters of Maria Yabo by virtue of the
provisions of Article 1001 of the New Civil Code, the latter have lost their
rights thereto by laches for their inaction for a very long period and their
rights have become stale. On the other hand, Pastor Makibalo who had
been in possession of the whole of the eight shares in both Lots 6080
and 6180, enjoying the fruits thereof exclusively, uninterruptedly,
publicly, peacefully, and continuously from the death of Maria Yabo up to
the filing of the complaint in Civil Case No. 5174 on October 8, 1976, or
a period of 14 years, had acquired title to the whole of the eight shares
in Lot 6080 and seven shares in Lot 6180 (the share of Procopio in Lot
6180 had been sold back to Alberto Yabo).
Doc. No. 720, recorded on page 28 of Notarial Register No. VII, and
acknowledged before Notary Public Isidro S. Baculio (Exh. E)
[purportedly executed by Maria Yabo and Pastor Makibalo] is hereby
declared null and void, and so the Office of the City Fiscal is directed to
cause an investigation of this matter to find out the person or persons
responsible for the falsification of the said document, and if the evidence
warrants, to file the corresponding criminal action in court. The Office of
the City Assessor of Cagayan de Oro City is, likewise, directed to cause
the cancellation of Tax Declarations Nos. 33553, marked as Exh. H-3,
33557, marked as Exh. H-2, both in the name of Alberto Yabo, for
having been issued on the basis of a falsified document. Let copies of
this decision be furnished the Offices of the City Fiscal and City
Assessor, both of Cagayan de Oro City.
SO ORDERED. 19
The defendants in Civil Case No. 5000 and the plaintiffs in Civil Case No.
5174 appealed from the decision to the Court of Appeals on 19 August
1983. 20
In its decision of 3 February 1993, 21 the Court of Appeals held that (a) Maria
Yabo did not sell her share to Alberto and Elpia Yabo; (b) prescription and
laches have not run against the private respondents with respect to the 1/9
share of Maria Yabo in the estate of her father and to her conjugal share in
the portions acquired from her brothers and sisters; and (c) Procopio never
sold his share in Lot No. 6080 to Pastor Makibalo. More specifically it stated:
...
While acknowledging. that upon the death of Maria Yabo on March 17,
1962, one-half (1/2) of the share of Maria Yabo in Lots 6080 and 6180
and one-half (1/2) of Maria Yabo's conjugal share in the portions bought
from Basiliza, Victoriano, Jose, Lope, Pelagia and Francisca should go
to the children of the brothers and sisters of Maria in accordance with
Article 1001 of the Civil Code, the lower court rule that said children
have lost their rights by laches "for their inaction for a very long period
and their rights have become stale" (Decision, p. 16; Record, Vol. 2, p.
158).
While between March 17, 1962 when Maria Yabo died and October 8,
1976, when Civil Case No. 5174 for partition was filed, was a period of
more than fourteen (14) years, that alone to our mind would not suffice
to establish laches or prescription. Upon the death of Maria Yabo,
appellee Pastor Makibalo and appellants and the other children of the
brothers and sisters of Maria, by operation of law become co-owners of
the one-ninth (1/9) share of Maria as heir of her father Alipio and the
conjugal share of Maria in the portions acquired from Basiliza,
Victoriano, Jose, Lope, Pelagia and Francisca. Time alone is not a
decisive factor. Appellee Pastor Makibalo, it must be remembered, is the
husband of Maria and, therefore, an uncle in-law of appellants. In our
culture, a demand by an heir or heirs for partition immediately upon the
death of a relative is more often taken not as a legitimate assertion of a
right but of something else, like greed. It must also be noted that the
spouses, the appellee Pastor Makibalo and his deceased wife Maria,
were childless and, therefore, appellants and the other children of the
brothers and sisters of Maria must have felt that at any rate the property
would go to them in the course of time. This probably explains why
appellants started asserting their right over the property only after
appellee Pastor Makibalo sold the same to the spouses Eulogio and
Remedios Salvador. Besides, Lots 6080 and 6180 have a combined
area only of 5,083 square meters and before the development of
Northern Mindanao, and even in 1962 when Maria Yabo died, were not
that valuable. This is shown by the fact that each heir sold his other
share only for P110.00.
As we have said not time alone. In the early case of Cortes v. Oliva, 33
Phil. 480, it was held that"(o)rdinarily, possession by one joint owner will
not be presumed to be adverse to the others, but will, as a rule, be held
to be for the benefit of all. Much stronger evidence is required to show
an adverse holding by one of several joint owners than by a stranger;
and in such cases, to sustain a plea of prescription, it must always
clearly appear that one who was originally a joint owner has repudiated
the claims of his co-owners, and that his co-owners were apprised or
should have been apprised of his claim of adverse and exclusive
ownership before the alleged prescription began to run (at page 484).
This ruling on prescription should apply with equal force to laches.
The third assignment of error challenges the finding of the lower court
that "there is nothing to show that Pastor Makibalo also sold back
Procopio's share in Lot 6080" (Decision, p. 16; Records, Vol. 2,p. 158).
Exhibits 1 and 2 cover only Procopio's share in Lot 6180. In other words,
Exhibits 1 and. 2 conveyed back to Alberto Yabo only his father,
Procopio's share in Lot 6180.
But from the evidence it appears that Procopio Yabo never sold his
share in Lot 6080 to Pastor Makibalo. So there was no need to convey
back Procopio's share in Lot 6080.
(1) 1/9 of Lots 6080 end 6180 should be given to the heirs of
Gaudencia Yabo or their successors and assigns;
(2) 1/9 of Lot 6180 should go to Alberto Yabo and his wife Elpia
Yabo;
(3) 1/9 of Lot 6080 should be given to the heirs of Procopio Yabo
and their successors end assigns, including Alberto Yabo;
(4) The 1/9 share of Maria Yabo in Lots 6080 and 6180 should be
partitioned: One-half (1/2) for the surviving spouse Pastor Makibalo
(now the spouses Eulogio Salvador and Remedios Salvador) and
the other half for the children of the brothers and sisters of Maria
Yabo in equal shares.
(5) The remaining 6/9, one-half (1/2) of which is conjugal between
Maria Yabo and appellee Pastor Makibalo should be partitioned
three-fourths (3/4) for Pastor Makibalo (now the spouses Eulogio
Salvador and Remedios Salvador) and one-fourth (1/4) for the
children of the brothers and sisters of Maria Yabo in equal shares.
Article 160 of the Civil Code provides that all property of the marriage is
presumed to belong to the conjugal partnership, unless it be proved that it
pertains .exclusively to the husband or to the wife. Since the shares of Jose,
Victoriano, Lope, Baseliza, Procopio, and Francisca in Lot No. 6180 and Lot
No. 6080 had been purchased by Pastor during his marriage with Maria, and
there is no proof that these were acquired with his exclusive money, the same
are deemed conjugal properties. Not forming part of the conjugal partnership
are: (1) the 1/9 share inherited by Maria which remained as her exclusive
property pursuant to Article 146 (2) of the Civil Code; (2) the 1/9 share of
Gaudencia which was not sold to Pastor; and (3) the 1/9 share of Pelagia
which was acquired by Pastor in 1967 or five years after the death of his wife
and which was therefore his exclusive property.
There is, thus; merit in the petitioners' first assigned error. The Court of
.Appeals should have excluded from the conjugal partnership the share of
Pelagia which Pastor had acquired after his wife's death.
It has been said that Article 494 of the Civil Code which provides that each co-
owner may demand at any time the partition of the common property implies
that an action to demand partition is imprescriptible or cannot be barred by
laches. 29 The imprescriptibility of the action cannot, however, be invoked
when one of the co-owners has possessed the property as exclusive owner
and for a period sufficient to acquire it by prescription. 30
This Court has held that the possession of a co-owner is like that of a trustee
and shall not be regarded as adverse to the other co-owners but in fact as
beneficial to all of them. 31 Acts which may be considered adverse to
strangers may not be considered adverse insofar as co-owners are
concerned. A mere silent possession by a co-owner, his receipt of rents, fruits
or profits from the property, the erection of buildings and fences and the
planting of trees thereon, and the payment of land taxes, cannot serve as
proof of exclusive ownership, if it is not borne out by clear and convincing
evidence that he exercised acts of possession which unequivocably
constituted an ouster or deprivation of the rights of the other co-owners. 32
In Pangan vs. Court of Appeals, 34 this Court had occasion to lay down
specific acts which are considered as acts of repudiation:
The issuance of the certificate of title would constitute an open and clear
repudiation of any trust, and the lapse of more than 20 years, open and
adverse possession as owner would certainly suffice to vest title by
prescription.
The prescriptive period may only be counted from the time petitioners
repudiated the trust relation in 1955 upon the filing of the complaint for
recovery of possession against private respondents so that the
counterclaim of the private respondents contained in their amended
answer wherein they asserted absolute ownership of the disputed realty
by reason of the continuous and adverse possession of the same is well
within the l0-year prescriptive period.
The records do not show that Pastor Makibalo adjudicated to himself the
whole estate of his wife by means of an affidavit filed with the Office of the
Register of Deeds as allowed under Section 1 Rule 74 of the Rules of Court,
or that he caused the issuance of a certificate of title in his name or the
cancellation of the tax declaration in Alipio's name and the issuance of a new
one in his own name. The only act which may be deemed as a repudiation by
Pastor of the co-ownership over the lots is his filing on 28 April 1976 of an
action to quiet title (Civil Case No. 5000). The period of prescription started to
run only from this repudiation. However, this was tolled when his co-heirs, the
private respondents herein, instituted on 8 October 1976 an action for partition
(Civil Case No. 5174) of the lots. Hence, the adverse possession by Pastor
being for only about six months would not vest in him exclusive ownership of
his wife's estate, and absent acquisitive prescription of ownership, laches and
prescription of the action for partition will not lie in favor of Pastor. 35
The issue presented by the petitioners in their third assigned error involves a
question of fact. This Court is not ordinarily a trier of facts, its jurisdiction being
limited to errors of law. Thus; the findings of facts of the Court of Appeals are
as a rule deemed conclusive. However, when the findings of facts of the
appellate court vary with those of the trial court, this Court has to review the
evidence in order to arrive at the correct findings. 36
In the instant case, a conflict in the findings of facts of the lower courts exists.
The trial court found that Pastor was the owner of Procopio's share in Lot No.
6080, as there was nothing to show that he sold it back to Alberto Yabo. The
respondent court on the other hand, held that Procopio Yabo never sold his
share in Lot No. 6080 to pastor, thus, there was no need to convey it back to
Procopio's son, Alberto.
Q In whose land?
Q What relation has that land to the two (2) parcels of land under
litigation?
A I bought already.
Q So, will you please tell the Honorable Court, why Alberto Yabo is
staying on that land when you said you have bought that land already.
Q When was that when you said that Alberto Yabo requested a portion?
A In 1967.
COURT:
A Their share being inherited from their father Procopio was the portion
they requested.
COURT
Q Yes. Did you grant that?
A Yes.
Q That is the area you sold to Alberto Yabo, pursuant to his request?
A Because that was the land they inherited from their father that was
what they requested.
Q All right. So that, the area now being occupied by Alberto Yabo?
A We did not make any receipt in favor of AlbertoYabo because they got
only the receipt of that of his father.
Q You mean to say, that the receipt which Procopio signed when he sold
his share for [sic] the document which Alberto got?
A Yes.
COURT:
All right.
Q Now, for how much did you buy. the shares of each of the brothers
and sisters of your wife?
Q When you sold back to Alberto Yabo, the portion corresponding to the
share of his father Procopio in the Poblacion, how much did he pay you?
A The same.
Q By the same, you are referring by the same amount of One Hundred
Ten (P110.00) Pesos?
A Yes, Sir. The same amount. 37
The petitioners contend that the sales or conveyances made by Alipio's heirs
were for their consolidated shares in the two lots. If this was so, and the
receipt which Procopio signed when he sold his consolidated share to Pastor
was turned over to Alberto, the inevitable conclusion is that Alberto redeemed
his father's share in both lots, not only in Lot: No. 6180. This conclusion is
further buttressed by the above-quoted testimony of Pastor that he bought the
shares (consolidated) of each of Alipio's heirs for P110.00 and that when he
sold back to Alberto the former share of Procopio, Alberto paid him the same
amount of P110.00.
However, since the share of Procopio in the two litigated parcels of land was
purchased by Pastor during his marriage with Maria, the same became
conjugal property, and half of it formed part of Maria's estate upon her death
in 1962. Accordingly, Pastor's resale in favor of Alberto could only be valid
with respect to Pastor's one-half (1/2) conjugal share and one-fourth (1/4)
hereditary share as heir of Maria. 38 The remaining one-fourth (1/4) should go
to Pastor's co-heirs, the private respondents herein.
Section 1, Rule 69 of the Rules of Court requires that all persons interested in
the land sought to be partitioned must be joined as defendants in the
complaints. All co-owners and persons having an interest in the property are
considered indispensable parties and an action for partition will not lie without
the joinder of said persons. 39 It has been held that the absence of an
indispensable party in a case renders ineffective all the proceedings
subsequent to the filing of the complaint including the judgment. 40
It must be recalled that in Civil Case No. 5174 the private respondents sought
the partition of the two lots based on the co-ownership which arose from the
right of succession to Alipio's estate. Since Jose Yabo confirmed, through his
thumbmark in the verification of the complaint, that he had already parted with
his share in Alipio's estate, he in effect admitted that he had ceased to be a
co-owner of the two lots which comprised his father's estate. Thus, his non-
joinder as a party-plaintiff in the complaint would appear to be proper. He
does not, as well, appear to be an indispensable party in Civil Case No. 5000.
As it turned out, however, the evidence and the issues which cropped up
rendered imperative the determination of the conjugal assets of Pastor
Makibalo and Maria Yabo and the partition of the latter's estate among her
heirs. Her estate consists of one-half(½) of the conjugal properties, which
should then be divided pursuant to Article 1001 of the Civil Code since the
marriage produced no child; thus: one-half (½) to Pastor, and the other half to
her brother Jose, and to her nephews and nieces.
In Alonso, it was held that under Section 110 of the Code of Civil Procedure
— whose first paragraph is substantially the same as the aforesaid Section 1
of Rule 10 — and Section 503 thereof, this Court "has full power, apart from
that power and authority which is inherent, to amend the process, pleadings,
proceedings, and decision in this case by substituting, as party plaintiff, the
real party in interest." Our ruling in Cuyugan states:
We, however, do not believe that the case should be dismissed for
plaintiff's failure to join her husband. (Sec. 11, Rule 2, Rules of Court).
Nor should the case be remanded to the court below and a new trial
ordered on this account. The complaint may and should be amended
here, to cure the defect of party plaintiffs, after final decision is rendered.
Section 11, Rule 2, and Section 2, Rule 17, explicitly authorize such
procedure. As this Court had occasion to say in Quison vs. Salud, (12
Phil., 109, 116), "a second action would be but a repetition of the first
and would involve both parties, plaintiffs and defendant, in much
additional expense and would cause much delay, in that way defeating
the purpose of the section, which is expressly stated to be "that the
actual merits of the controversy may speedily be determined without
regard to technicalities and in the most expeditious and inexpensive
manner." (See also Diaz vs. De la Rama, 73 Phil., 104)
To avoid further delay in the disposition of this case, we declare Civil Case
No. 5174 as thus duly amended. Consequently, Jose Yabo may participate in
the partition of the estate of Maria Yabo. The fourth assigned error must then
be rejected.
(b) 1/2 for the private respondents, including Jose Yabo or his
heirs;
(b) 1/4 for the other private respondents, including Jose Yabo or his
heirs;
(5) 5/9 shares which became the conjugal properties of Pastor Makibalo
and Maria Yabo to be divided thus:
(b) ¼ for the private respondents, including Jose Yabo or his heirs.
No pronouncement as to costs.
SO ORDERED.
41 It provides:
42 They provide:
SO ORDERED. 3
The litigation concerns a motor vehicle, a Colt Galant Sigma 1600E, 1977
model, 4-door sedan, colored Baikal White, with Serial No. A-121-UL-493 and
Engine No. 2G-171-34. The decisions of both the appellate court and the trial
court rest on the following representation of the facts:
On appeal to it, the Court of Appeals saw merit in the contention of private
respondent that the dismissal at the instance of petitioner himself of the
amended complaint against Ernesto Dollente after a failure of summons on
him, was "fatal to the entire action" Dollente being, in the considered view of
the appellate court, an indispensable party to the proceedings. The appellate
court elaborated:
It was clearly an error for the trial court to have proceeded with the case
without the indispensable Dollente. The judgment rendered by the trial
court following such flawed proceedings is therefore ineffectual and
ineffective. 6
While, in its present petition for review on certiorari, Servicewide has raised a
number of points, the crucial issue still remains, however, to be whether or not
an action filed by the mortgagee for replevin to effect a foreclosure of the
property covered by the chattel mortgage would require that the mortgagor be
so impleaded as an indispensable party thereto.
Rule 60 of the Rules of Court allows a plaintiff, in an action for the recovery of
possession of personal property, to apply for a writ of replevin if it can be
shown that he is "the owner of the property claimed . . . or is entitled to the
possession thereof." 7 The plaintiff need not be the owner so long as he is
able to specify his right to the possession of the property and his legal basis
therefor. The question then, insofar as the matter finds relation to the instant
case, is whether or not the plaintiff (herein petitioner) who has predicated his
right on being the mortgagee of a chattel mortgage should implead the
mortgagor in his complaint that seeks to recover possession of the
encumbered property in order to effect its foreclosure.
The answer has to be in the affirmative. 8 In a suit for replevin, a clear right of
possession must be established. A foreclosure under a chattel mortgage may
properly be commenced only once there is default on the part of the
mortgagor of his obligation secured by the mortgage. The replevin in the
instant case has been sought to pave the way for the foreclosure of the object
covered by the chattel mortgage. The conditions essential for that foreclosure
would be to show, firstly, the existence of the chattel mortgage and, secondly,
the default of the mortgagor. These requirements must be established since
the validity of the plaintiffs exercise of the right of foreclosure are inevitably
dependent thereon. It would thus seem, considering particularly an adverse
and independent claim of ownership by private respondent, that the lower
court acted improvidently when it granted the dismissal of the complaint
against Dollente, albeit on petitioner's (then plaintiff) plea, on the ground that
the "non-service of summons upon Ernesto Dollente (would) only delay the
determination of the merits of the case, to the prejudice of the
parties." 9 In Imson v. Court of Appeals, we have explained:
Having arrived at the foregoing conclusion, the Court need not take up the
other issues raised by petitioner.
In passing, the failure of summons upon Ernesto Dollente, per the Sheriffs
Return dated July 19, 1983, 12 is said to have been due to defendant's being
no longer a resident "at the given address as per information gathered from
the present occupant of the premises." It appears that the remedial measures
provided in Rule 14 of the Rules of Court regrettably have not been properly
availed of; for instance, substitute service of summons under Section 8
thereof could have been resorted to. 13
SO ORDERED.
Footnotes
THIRD DIVISION
[G.R. No. 141970. September 10, 2001]
METROPOLITAN BANK, & TRUST COMPANY, petitioner, vs. Hon.
FLORO T. ALEJO, in His Capacity as Presiding Judge of Branch
172 of the Regional Trial Court of Valenzuela; and SY TAN SE,
represented by his Attorney-in-Fact, SIAN SUAT
NGO, respondents.
DECISION
PANGANIBAN, J.:
The Case
“This resolves the petition for annulment of judgment based on ‘external (sic)
fraud’ filed by petitioner Metropolitan Bank and Trust Company seeking to
annul the Decision dated August 12, 1998 rendered by respondent judge,
Honorable Floro T. Alejo, Presiding Judge of the Regional Trial Court, Branch
172, Valenzuela, Metro Manila, in Civil Case No. 4930-V-96 entitled ‘Sy Tan
Se, represented by his attorney-in-fact Sian Suat Ngo v. Raul Acampado, et
al.
“This Court has observed that petitioner knew of the questioned Decision
sometime [i]n October 1998 (Petition, Rollo, p. 3). This being the case,
petitioner should have first sought recourse by way of petition for relief from
judgment under Rule 38 of the 1997 Rules of Civil Procedure. Accordingly,
the petition for annulment of judgment is DENIED DUE COURSE and
DISMISSED outright for being insufficient in form and substance (Section 2,
Rule 47, 1997 Rules of Civil Procedure).”
The Facts
On November 21, 1995[3] and January 30, 1996,[4] Spouses Raul and
Cristina Acampado obtained loans from petitioner in the amounts
of P5,000,000 and P2,000,000, respectively. As security for the payment of
these credit accommodations, the Acampados executed in favor of petitioner
a Real Estate Mortgage[5] and an Amendment of Real Estate Mortgage[6] over
a parcel of land registered in their names. The land was covered by TCT No.
V-41319 in the Registry of Deeds of Valenzuela City, where the contracts
were also registered on November 20, 1995 and January 23, 1996,
respectively.[7]
On June 3, 1996, a Complaint for Declaration of Nullity of TCT No. V-
41319 was filed by Respondent Sy Tan Se against Spouses Acampado. In
the Regional Trial Court (RTC) of Valenzuela, Branch 172, it was docketed as
Civil Case No. 4930-V-96,[8] the progenitor of the present controversy.
Despite being the registered mortgagee of the real property covered by
the title sought to be annulled, petitioner was not made a party to Civil Case
No. 4930-V-96,[9] nor was she notified of its existence.
Because the spouses defaulted in the payment of their loan, extrajudicial
foreclosure proceedings over the mortgaged property were initiated on April
19, 1997.
On June 17, 1997, the sheriff of Valenzuela conducted an auction sale of
the property, during which petitioner submitted the highest and winning
bid.[10] On July 15, 1997, a Certificate of Sale was issued in its favor. [11] This
sale was entered in the Registry of Deeds of Valenzuela on July 28, 1997.
When the redemption period lapsed exactly a year after, on July 28, 1998,
petitioner executed an Affidavit of Consolidation of Ownership to enable the
Registry of Deeds of Valenzuela to issue a new TCT in its name.
Upon presentation to the Register of Deeds of the Affidavit of
Consolidation of Ownership, petitioner was informed of the existence of the
August 12, 1998 RTC Decision in Civil Case No. 4930-V-96, annulling TCT
No. V-41319. The dispositive portion of the Decision[12] stated:
SO ORDERED.”
On January 27, 1999, petitioner filed with the Court of Appeals a Petition
for Annulment of the RTC Decision.
For being insufficient in form and substance, the Petition for Annulment
was outrightly dismissed by the CA. It ruled that petitioner ought to have filed,
instead, a petition for relief from judgment or an action for quieting of title.
Hence, this Petition.[13]
Issues
“II
x x x [W]hether or not the judgment of the trial court in Civil Case No. 4930-V-
96 should be annulled.”[14]
It must be emphasized that petitioner was never a party to Civil Case No.
4930-V-96. In Lagula et al. v. Casimiro et al.,[15] the Court held that -- relative
to a motion for relief on the ground of fraud, accident, mistake, or excusable
negligence -- Rule 38 of the Rules of Court “only applies when the one
deprived of his right is a party to the case.” Since petitioner was never a party
to the case or even summoned to appear therein, then the remedy of relief
from judgment under Rule 38 of the Rules of Court was not proper. This is
plainly provided in the italicized words of the present provision just quoted.
Second, in denying petitioner’s Motion for Reconsideration of the Decision
dismissing the Petition for Annulment of Judgment, the Court of Appeals
reasoned that another remedy, an action for quieting of title, was also
available to petitioner.
We do not agree. It should be stressed that this case was instituted to
ask for relief from the peremptory declaration of nullity of TCT No. V-41319,
which had been issued without first giving petitioner an opportunity to be
heard. Petitioner focused on the judgment in Civil Case No. 4930-V-96 which
adversely affected it, and which it therefore sought to annul. Filing an action
for quieting of title will not remedy what it perceived as a disregard of due
process; it is therefore not an appropriate remedy.
Equally important, an action for quieting of title is filed only when there is
a cloud on title to real property or any interest therein. As defined, a “cloud on
title is a semblance of title which appears in some legal form but which is in
fact unfounded.”[16] In this case, the subject judgment cannot be considered
as a cloud on petitioner’s title or interest over the real property covered by
TCT No. V-41319, which does not even have a semblance of being a title.
It would not be proper to consider the subject judgment as a cloud that
would warrant the filing of an action for quieting of title, because to do so
would require the court hearing the action to modify or interfere with the
judgment or order of another co-equal court. Well-entrenched in our
jurisdiction is the doctrine that a court has no power to do so, as that action
may lead to confusion and seriously hinder the administration of
justice.[17] Clearly, an action for quieting of title is not an appropriate remedy in
this case.
Third, private respondent cites a last remedy: the intervention by
petitioner in Civil Case No. 4930-V-96. The availability of this remedy hinges
on petitioner’s knowledge of the pendency of that case, which would have
otherwise been alerted to the need to intervene therein. Though presumed by
private respondent, any such knowledge prior to October 1998 is, however,
emphatically denied by petitioner.
The Petition for Annulment before the Court of Appeals precisely alleged
that private respondent purposely concealed the case by excluding petitioner
as a defendant in Civil Case No. 4930-V-96, even if the latter was an
indispensable party. Without due process of law, the former intended to
deprive petitioner of the latter’s duly registered property right. Indeed, the
execution of the Decision in Civil Case No. 4930-V-96 necessarily entailed its
enforcement against petitioner, even though it was not a party to that
case. Hence, the latter concludes that annulment of judgment was the only
effective remedy open to it.
The allegation of extrinsic fraud, if fully substantiated by a preponderance
of evidence, may be the basis for annulling a judgment. [18] The resort to
annulment becomes proper because of such allegation, coupled with the
unavailability of the other remedies pointed to by respondents.
“An indispensable party is a party who has such an interest in the controversy
or subject matter that a final adjudication cannot be made, in his absence,
without injuring or affecting that interest[;] a party who has not only an interest
in the subject matter of the controversy, but also has an interest of such
nature that a final decree cannot be made without affecting his interest or
leaving the controversy in such a condition that its final determination may be
wholly inconsistent with equity and good conscience. It has also been
considered that an indispensable party is a person in whose absence there
cannot be a determination between the parties already before the court which
is effective, complete, or equitable. Further, an indispensable party is one
who must be included in an action before it may properly go forward.
“The evident aim and intent of the Rules regarding the joinder of
indispensable and necessary parties is a complete determination of all
possible issues, not only between the parties themselves but also as regards
to other persons who may be affected by the judgment. A valid judgment
cannot even be rendered where there is want of indispensable parties.” [24]
[13]
This case was deemed submitted for resolution on January 25, 2001, upon
receipt by this Court of respondent’s 3-page Memorandum, which was signed
by Atty. Melencio A. Cea. Petitioner’s Memorandum, signed by Atty. Renato
B. Corpuz Jr. of Santiago Corpuz & Ejercito, was filed earlier on December
29, 2000.
THIRD DIVISION
[G.R. No. 139306. August 29, 2000]
MARIA MERCEDES NERY, BENJAMIN NERY, MARIA PAZ NERY,
APOLINAR NERY and ROBERTO FRANCISCO NERY -- all
represented by LICINIUS ABADIANO and LOURDES DEL RIO
ESPIRITU, petitioners, vs. GABRIEL LEYSON, JOSEFINA LEYSON
POBLETE, FE LEYSON, ESPERANZA LEYSON, CARIDAD
LEYSON, ESTATES OF DECEASED Spouses JOSE LEYSON and
LOURDES VELEZ, respondents.
DECISION
PANGANIBAN, J.:
The Case
The Facts
The facts of this case are summarized by the CA, as follows: [4]
“After the death of Mercedes del Rio, her heirs executed an Extrajudicial
Partition and Declaration of Heirs dated January 28, 1964 covering the share
of Mercedes del Rio in the land in question. The death of Mercedes del Rio
was duly annotated on O.C.T. No. RO-0083 (Exh. A-1) on February 27,
1964. On December 2, 1964, a Notice of Lis Pendens (Re-Civil Case No. R-
8646 C.F.I. of Cebu) was executed and annotated on the title by Atty. Regino
Hermosisima representing Lourdes Leyson, et al. It appears that the Leysons
had filed a case for annulment and cancellation of O.C.T. No. RO-0083. The
[petitioners] claim that they were not made parties to said case and that
although their mother Mercedes del Rio was impleaded as defendant, she
was already dead when Civil Case No. [R-]8646 was filed in 1964. They
maintain that the decision in Civil Case No. [R-]8646 does not bind them for
they [were] not parties thereto, hence, the same [was] null and void.
“They therefore filed this case [docketed as Civil Case No. 2379-L] seeking
the declaration of nullity of T.C.T. No. 119747 in the name of the Leysons and
of the judicial proceedings in Civil Case No. [R-]8646.
“[Respondents’] evidence, on the other hand, show that the land in dispute,
Lot No. 73 of Cadastral Survey of Opon (now Lapu-Lapu City) is titled in their
names under T.C.T. No. 19747 which was derived from O.C.T. No.
15615. Appearing in the said title is the name of their father Jose S. Leyson
who acquired the land through purchase from Rosario Miranda. They were in
possession of the property until 1963 when Agatona del Corro and her
children took over the possession of the same. Lot No. 73 of the Cadastral
Survey of Opon (now Lapu-Lapu City) covered by T.C.T. No. 19747 became
the subject of litigation in Civil Case No. R-8646 entitled ‘Lourdes Velez
Leyson, Josefina Leyson Poblete, Fe Leyson, Esperanza Leyson, Caridad
Leyson and Gabriel Leyson versus Agatona del Corro, Antolin del Rio,
Consuelo del Rio, Mercedes del Rio, Socorro del Rio, Lourdes del Rio and
Eduardo del Rio. The case was filed on December 2, 1964 before the then
Court of First Instance of Cebu, Branch V.
“The trial court in Civil Case No. [R-]8646 rendered a Decision on May 2,
1968 in favor of plaintiffs Lourdes V. Leyson, et al., and against therein
defendants Agatona del Corro, et al. The dispositive portion of said decision
reads as follows:
‘IN VIEW OF THE FOREGOING findings, the Court hereby renders judgment
in favor of the plaintiffs and against the defendants:
‘(1) Setting aside the order of this Court dated September 23, 1963
reconstituting the Original Certificate of Title for Lot No. 73 of the Opon
Cadastre;
‘(3) Declaring the plaintiffs’ Transfer Certificate of Title No. 19747 for
Lot No. 73 valid and with legal force and effect;
‘(4) Declaring the herein plaintiffs to be the real and absolute owners of
Lot No. 73;
‘(5) Ordering the defendants to pay jointly and severally to the plaintiffs
the sum of P4,800.00 as actual damages;
‘(6) To pay P2,000.00 representing attorney’s fees and to pay the costs
of the suit.
‘SO ORDERED.’
“For failure of the defendants Agatona del Corro, et al. to appeal the decision
of the Court of Appeals, the same xxx [became] final and executory on April
10, 1976 as shown by the Entry of Judgment (Exh. ‘3’ and ‘3-A’).
“Subsequent to the finality of the appellate court’s decision in Civil Case No.
R-8646 on April 10, 1976, there were efforts on the part of the Leysons to
execute the decision in Civil Case No. R-8646 but for one reason or another,
the same did not materialize as testified to by one of the [respondents] in the
present case, Caridad V. Leyson. x x x.”
The CA ruled that petitioners’ action for annulment of title and judicial
proceedings was not barred by res judicata, which was inapplicable, but by
the principle of conclusiveness of judgment under Rule 39, Section 49, par.
(c) of the Rules of Court. The issue of which between the two reconstituted
titles was valid and genuine was settled by the CA in the earlier case
docketed as CA-GR No. 45678-R, which ruled:
“Insofar as the two titles existing over the same parcel of land are concerned,
[w]e agree with the lower court that TCT No. 19747 should prevail, and that
the reconstituted OCT No. RO-0083 should be cancelled. Upon the facts set
forth above, it is evident that OCT No. 15615 and TCT No. 8834, both in the
names of the defendants, have been cancelled. Said title[s], or either of them,
therefore, may no longer be validly reconstituted. The provisions of Republic
Act No. 26 are applicable and their mandate must be obeyed. According to
said law, reconstitution of the lost or destroyed title may be ordered by the
court only if, after hearing, it finds, among others, that the documents
represented as supported by parole evidence or otherwise, are sufficient and
proper to warrant the reconstitution, and that the petitioner is the registered
owner of the property or has an interest therein, and that said certificate of title
was in force at the time it was lost or destroyed (Section 15). As plaintiffs’ title
had already cancelled the title relied upon by the defendants in their petition
for reconstitution, it follows that the reconstitution of the latter was null and
void and, therefore, the court a quo was correct in ordering its cancellation.”
The petitioners’ action for annulment was filed fifteen years after the
above-mentioned judgment had become final on April 10, 1976. The long
period of time that had lapsed precluded them from further prosecuting the
same issue. Finally, a regional trial court has no jurisdiction to annul the
judgment of a co-equal court; jurisdiction in such cases lies in the Court of
Appeals.
Hence, this Petition.[8]
Issues
Insisting that they were deprived of their day in court, petitioners, in their
Memorandum, raise the following issues:[9]
“1. Whether or not the Court of Appeals erred in ruling that the petitioners’
cause of action was barred by the principle of conclusiveness of judgment
under Rule 39, Section 49, Paragraph (c) of the Rules of Court.
“2. Whether or not the Court of Appeals erred in ruling that the decision in
Civil Case No. R-8646, as affirmed by the Court of Appeals in CA-GR No.
45678-R, [became] final and executory against herein petitioners.”
“(c) In any other litigation between the same parties or their successors
in interest, that only is deemed to have been adjudged in a former judgment
which appears upon its face to have been so adjudged, or which was actually
and necessarily included therein or necessary thereto.”[10]
To bar the petitioners’ action for annulment on the ground of res judicata,
the following elements should be present: (1) the judgment being sought to
bar the new action must be final; (2) the decision must have been rendered by
a court having jurisdiction over the subject matter and the parties; (3) the
disposition of the case must be based on a judgment or an order on the
merits; and (4) there must be identity of parties, subject matter and causes of
action.[11]
There is clearly no identity of parties between Civil Case R-8646 and
2379-L.[12] The petitioners were indispensable parties in Civil Case R-8646, as
they were the legal heirs of Mercedes del Rio, who was one of the registered
owners in OCT RO-0083/15615 which covered the disputed
land. Furthermore, she has been dead since 1942 or years before Civil Case
R-8646 was filed in 1964. The joinder of indispensable parties or parties in
interest, without whom there can be no final determination of an action is
compulsory under Rule 3, Section 7 of the Rules of Court.[13]
However, petitioners were never served summons; neither did they join
their relatives in filing the Answer and Amended Answer. Nor were they given
a chance to set up their own defenses against the respondents’ claim of
ownership over the disputed lot. Plainly then, the trial court did not acquire
jurisdiction over them.
Respondents, on the other hand, contend that the trial court acquired
jurisdiction over the petitioners when they failed to notify the lower court of the
death of Mercedes del Rio during the trial of Civil Case R-8646. We
disagree. Under Section 16, Rule 3 of the Rules of Court, only in a pending
case is the counsel of a party required to inform the court in case the client
dies or becomes incapacitated or incompetent. A pending case necessarily
implies that the court has already acquired jurisdiction over the person of the
party who died or became incapacitated or incompetent. Prior to this
development, the trial court cannot impose such requirement on the counsel
for the defendants; Section 16 of Rule 3 thus finds no application to this
case. On the other hand, it is the duty of the plaintiff to implead all the
necessary or indispensable parties for the complete determination of the
action. OCT RO-0083/15615 reveals that Mercedes del Rio was a registered
co-owner of the disputed lot, but she was not placed under the jurisdiction of
the trial court in Civil Case No. R-8646. Neither were her heirs.
Respondents also posit that the service of summons on the petitioners
could be dispensed with, since there is substantial identity between the
mother and the siblings of Mercedes del Rio, on the one hand, and the
petitioners on the other. The reason for this substantial identity is that the
petitioners represent the same interest as the other defendants in Civil Case
R-8646. Again, we disagree. True, res judicata is not defeated by a minor
difference of parties, as it does not require absolute but only substantial
identity of parties.[14] But there is substantial identity only when the “additional”
party acts in the same capacity or is in privity with the parties in the former
action.[15] This is not so in the present case. Co-owners are not parties inter
se in relation to the property owned in common.[16] A subsequent action by a
co-heir, who did not join the earlier dismissed action for recovery of property,
should not be barred by prior judgment.[17] Neither will conclusiveness of
judgment apply because there was no identity of parties.
In view of the foregoing discussion, petitioners should not be bound by
the decision in Civil Case No. R-8646. This, however, does not justify the
reversal of the assailed Decision. As will now be explained, the petitioners’
action suffers from a fatal defect which prevents their action for annulment
from prospering.
The reason why the herein Petition cannot be granted is the trial court’s
lack of jurisdiction to annul a final judgment of a co-equal court. Petitioners
allege that the decision in Civil Case R-8646 passed upon the validity of OCT
RO-0083/15615. Such allegation makes the root of their present action one
for annulment of a final judgment. This Court cannot ignore the fact that such
action is outside the jurisdiction of the RTC. On this point, the CA ruled, albeit
in passing, that “xxx the court a quo does not have the jurisdiction to annul the
judgment of a regional trial court as jurisdiction thereon is lodged with the
Court of Appeals.”[18] We sustain the Court of Appeals on this point.
Section 9 of BP 129,[19] as amended, vests in the CA “[e]xclusive
jurisdiction over actions for annulment of judgments of regional trial courts
xxx.”[20] Hence, even if the trial court in Civil Case No. R-8646 did not acquire
jurisdiction over the petitioners, the trial court in Civil Case No. 2379-L cannot
annul the final judgment in Civil Case No. R-8646, as jurisdiction over the
subject matter, which in this case is annulment of final judgment, is vested by
law in a higher court, the CA.[21]
WHEREFORE, the Petition is DENIED and, for the reasons above-stated,
the assailed Decision and Resolution are AFFIRMED. Costs against the
petitioners.
SO ORDERED.
Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.
THIRD DIVISION
DECISION
QUISUMBING, J.:
This is a Petition for Review seeking to reverse and set aside the
Decision[1] dated January 31, 2003 of the Court of Appeals in CA-G.R. SP.
No. 69771.
As project owner, the BCDA was tasked to sell the Heritage Park
Investment Certificates to the public and buyers become certificate
holders. The certificate gives the PNB the absolute legal and beneficial title
to Heritage Park in trust for the certificate holders. The PNB, as trustee, shall
protect the values of the assets in the trust, receive and have custody over the
proceeds from the sale of the certificates, administer the various funds,
including disbursements for project costs and related expenses, turnover the
Perpetual Care Fund to the Successor Trustee, turnover custody over
documents pertaining to the Heritage Park and the residual funds to BCDA,
and turnover all the documents and records to the Board of Trustees after
completion of the project.[3]
PEA, as project manager, is tasked to implement and complete the
various engineering works and improvements of Heritage Park.
On May 31, 2001, petitioner filed a complaint[8] against the PEA before
the Construction Industry Arbitration Commission (CIAC) where it sought to
recover payment for its progress billings on the said projects.
SO ORDERED.[10]
SO ORDERED.[13]
II
THE COURT OF APPEALS COMMITTED GROSS AND
REVERSIBLE ERROR AND DECIDED QUESTIONS OF
SUBSTANCE IN A WAY NOT IN ACCORDANCE WITH LAW
AND THE APPLICABLE DECISIONS OF THE HONORABLE
COURT WHEN IT RULED THAT RESPONDENT HPMC IS
ALLEGEDLY A REAL PARTY-IN-INTEREST OR AN
INDISPENSABLE PARTY CONSIDERING THAT THE
HONORABLE COURT HAS ALREADY CONCLUSIVELY
RULED THAT THERE WAS NO VALID NOVATION OF THE
CONSTRUCTION AGREEMENTS BETWEEN PETITIONER UY
AND PEA. IN FACT, THE COURT OF APPEALS ALREADY
DISMISSED A SIMILAR PETITION FILED BY RESPONDENT
HPMC INVOKING THE SAME GROUNDS AS IN ITS
PETITION A QUO.
III
THE COURT OF APPEALS COMMITTED GROSS
REVERSIBLE ERROR IN GRANTING THE EXTRAORDINARY
REMEDIES OF PROHIBITION AND INJUNCTION TO ENJOIN
THE EXECUTION OF THE AWARD IN CIAC CASE NO. 21-
2001, CONSIDERING THAT:
A. RESPONDENT HPMC DOES NOT HAVE ANY
RIGHT, MUCH LESS A CLEAR AND
UNMISTAKABLE RIGHT, WHICH WOULD ENTITLE
IT TO THE EXTRAORDINARY REMEDIES OF
PROHIBITION AND INJUNCTION.
B. RESPONDENT HPMC MISERABLY FAILED TO
ESTABLISH THAT IT WOULD SUFFER ANY
INJURY, MUCH LESS GRAVE AND IRREPARABLE
INJURY, AS A RESULT OF THE EXECUTION OF
THE SAID AWARD.
C. RESPONDENT HPMC’S SAID PETITION FOR
INJUNCTION/PROHIBITION WAS FATALLY
DEFECTIVE IN BOTH FORM AND SUBSTANCE;
AND HENCE, SHOULD HAVE BEEN DISMISSED.
D. RESPONDENT HPMC WAS CLEARLY GUILTY OF
FORUM-SHOPPING WHEN IT FILED ITS PETITION
FOR INJUNCTION/PROHIBITION WITH THE
COURT OF APPEALS DURING THE PENDENCY OF
A SIMILAR PETITION WITH THE HONORABLE
COURT (G.R. NO. 148133).
IV
THE COURT OF APPEALS COMMITTED GROSS
REVERSIBLE ERROR WHEN IT WENT BEYOND THE
ISSUES OF THE CASE AND THE ALLEGATIONS IN
RESPONDENT HPMC’S PETITION BY DECLARING THE
CIAC DECISION DATED 18 DECEMBER 2001, THE
AMENDED WRIT OF EXECUTION DATED 25 MARCH 2002,
AND THE AMENDED NOTICE OF GARNISHMENT DATED 27
MARCH 2002 AS ALLEGEDLY VOID AB INITIO.[14]
Simply stated, the issues for our resolution are: (1) Is HPMC a real
party-in-interest or an indispensable party? (2) Does CIAC have jurisdiction
over the dispute? and (3) Was the grant of the writs of injunction/prohibition
proper?
It has come to the Court’s attention that from the inception of the case,
PEA informed the CIAC that pursuant to the PFTA and the Deed of
Assignment, all its rights and obligations under the contract have already
been assigned to private respondent.[26]
The responsibility of impleading all the indispensable parties rests on
the plaintiff. The defendant does not have the right to compel the plaintiff to
prosecute the action against a party if he does not wish to do so, but the
plaintiff will have to suffer the consequences of any error he might commit in
exercising his option.[27]
SO ORDERED.
DECISION
CARPIO, J.:
The Case
Antecedent Facts
Around noontime of 26 June 1993, a Country Bus Lines passenger bus with
plate number NYA 241 collided with a tricycle bearing plate number TC RV
126 along Captain M. Palo Street, Sta. Ines, Mabalacat, Pampanga. On 1
October 1993, tricycle driver Tuazon filed a complaint for damages against
Mrs. Cerezo, as owner of the bus line, her husband Attorney Juan Cerezo
("Atty. Cerezo"), and bus driver Danilo A. Foronda ("Foronda"). The complaint
alleged that:
7. At the time of the incident, plaintiff [Tuazon] was in his proper lane
when the second-named defendant [Foronda], being then the driver
and person in charge of the Country Bus with plate number NYA 241,
did then and there willfully, unlawfully, and feloniously operate the said
motor vehicle in a negligent, careless, and imprudent manner without
due regard to traffic rules and regulations, there being a "Slow Down"
sign near the scene of the incident, and without taking the necessary
precaution to prevent loss of lives or injuries, his negligence,
carelessness and imprudence resulted to severe damage to the tricycle
and serious physical injuries to plaintiff thus making him unable to walk
and becoming disabled, with his thumb and middle finger on the left
hand being cut[.]4
The records show that the Cerezo spouses participated in the proceedings
before the trial court. The Cerezo spouses filed a comment with motion for bill
of particulars dated 29 April 1994 and a reply to opposition to comment with
motion dated 13 June 1994.6 On 1 August 1994, the trial court issued an
order directing the Cerezo spouses to file a comment to the opposition to the
bill of particulars. Atty. Elpidio B. Valera ("Atty. Valera") of Valera and Valera
Law Offices appeared on behalf of the Cerezo spouses. On 29 August 1994,
Atty. Valera filed an urgent ex-parte motion praying for the resolution of
Tuazon’s motion to litigate as a pauper and for the issuance of new summons
on the Cerezo spouses to satisfy proper service in accordance with the Rules
of Court.7
On 30 August 1994, the trial court issued an order resolving Tuazon’s motion
to litigate as a pauper and the Cerezo spouses’ urgent ex-parte motion. The
order reads:
At the hearing on August 30, 1994, the plaintiff [Tuazon] testified that
he is presently jobless; that at the time of the filing of this case, his son
who is working in Malaysia helps him and sends him once in a while
P300.00 a month, and that he does not have any real property.
Attached to the Motion to Litigate as Pauper are his Affidavit that he is
unemployed; a Certification by the Barangay Captain of his poblacion
that his income is not enough for his family’s subsistence; and a
Certification by the Office of the Municipal Assessor that he has no
landholding in the Municipality of Mabalacat, Province of Pampanga.
The Court is satisfied from the unrebutted testimony of the plaintiff that
he is entitled to prosecute his complaint in this case as a pauper under
existing rules.
On the other hand, the Court denies the prayer in the Appearance and
Urgent Ex-Parte Motion requiring new summons to be served to the
defendants. The Court is of the opinion that any infirmity in the service
of the summons to the defendant before plaintiff was allowed to
prosecute his complaint in this case as a pauper has been cured by
this Order.
On 14 November 1994, the trial court issued an order directing the Cerezo
spouses to file their answer within fifteen days from receipt of the order. The
Cerezo spouses did not file an answer. On 27 January 1995, Tuazon filed a
motion to declare the Cerezo spouses in default. On 6 February 1995, the trial
court issued an order declaring the Cerezo spouses in default and authorizing
Tuazon to present his evidence. 9
The docket fees and other expenses in the filing of this suit shall be lien
on whatever judgment may be rendered in favor of the plaintiff.
SO ORDERED.10
Tuazon did not testify but presented documentary evidence to prove the
participation of the Cerezo spouses in the case. Tuazon presented the
following exhibits:
On 4 March 1998, the trial court issued an order13 denying the petition for
relief from judgment. The trial court stated that having received the decision
on 25 June 1995, the Cerezo spouses should have filed a notice of appeal
instead of resorting to a petition for relief from judgment. The trial court
refused to grant relief from judgment because the Cerezo spouses could have
availed of the remedy of appeal. Moreover, the Cerezo spouses not only
failed to prove fraud, accident, mistake or excusable negligence by conclusive
evidence, they also failed to prove that they had a good and substantial
defense. The trial court noted that the Cerezo spouses failed to appeal
because they relied on an expected settlement of the case.
The Cerezo spouses subsequently filed before the Court of Appeals a petition
for certiorari under Section 1 of Rule 65. The petition was docketed as CA-
G.R. SP No. 48132.14 The petition questioned whether the trial court acquired
jurisdiction over the case considering there was no service of summons on
Foronda, whom the Cerezo spouses claimed was an indispensable party. In a
resolution15 dated 21 January 1999, the Court of Appeals denied the petition
for certiorari and affirmed the trial court’s order denying the petition for relief
from judgment. The Court of Appeals declared that the Cerezo spouses’
failure to file an answer was due to their own negligence, considering that
they continued to participate in the proceedings without filing an answer.
There was also nothing in the records to show that the Cerezo spouses
actually offered a reasonable settlement to Tuazon. The Court of Appeals also
denied Cerezo spouses’ motion for reconsideration for lack of merit.
The Cerezo spouses filed before this Court a petition for review
on certiorari under Rule 45. Atty. Cerezo himself signed the petition, docketed
as G.R. No. 137593. On 13 April 1999, this Court rendered a resolution
denying the petition for review on certiorari for failure to attach an affidavit of
service of copies of the petition to the Court of Appeals and to the adverse
parties. Even if the petition complied with this requirement, the Court would
still have denied the petition as the Cerezo spouses failed to show that the
Court of Appeals committed a reversible error. The Court’s resolution was
entered in the Book of Entries and Judgments when it became final and
executory on 28 June 1999.16
Undaunted, the Cerezo spouses filed before the Court of Appeals on 6 July
1999 a petition for annulment of judgment under Rule 47 with prayer for
restraining order. Atty. Valera and Atty. Dionisio S. Daga ("Atty. Daga")
represented Mrs. Cerezo in the petition, docketed as CA-G.R. SP No.
53572.17 The petition prayed for the annulment of the 30 May 1995 decision
of the trial court and for the issuance of a writ of preliminary injunction
enjoining execution of the trial court’s decision pending resolution of the
petition.
The Court of Appeals denied the petition for annulment of judgment in a
resolution dated 21 October 1999. The resolution reads in part:
In this case, records show that the petitioner previously filed with the
lower court a Petition for Relief from Judgment on the ground that they
were wrongfully declared in default while waiting for an amicable
settlement of the complaint for damages. The court a quo correctly
ruled that such petition is without merit. The defendant spouses admit
that during the initial hearing they appeared before the court and even
mentioned the need for an amicable settlement. Thus, the lower court
acquired jurisdiction over the defendant spouses.
Wherefore, the instant petition could not be given due course and
should accordingly be dismissed.
SO ORDERED.18
The lower court admits the fact that no summons was served on
defendant Foronda. Thus, jurisdiction over the person of defendant
Foronda was not acquired, for which reason he was not held liable in
this case. However, it has been proven that jurisdiction over the other
defendants was validly acquired by the court a quo.
xxx
Records show that the petitioner previously filed with the lower court a
Petition for Relief from Judgment on the ground that they were
wrongfully declared in default while waiting for an amicable settlement
of the complaint for damages. The court a quo correctly ruled that such
petition is without merit, jurisdiction having been acquired by the
voluntary appearance of defendant spouses.
Once again, it bears stressing that having availed of a petition for relief,
the remedy of annulment of judgment is no longer available.
SO ORDERED.20
The Issues
On 7 February 2000, Mrs. Cerezo, this time with Atty. Daga alone
representing her, filed the present petition for review on certiorari before this
Court. Mrs. Cerezo claims that:
The petition has no merit. As the issues are interrelated, we shall discuss
them jointly.
Mrs. Cerezo claims she did not receive any copy of the order declaring the
Cerezo spouses in default. Mrs. Cerezo asserts that she only came to know of
the default order on 25 June 1995, when she received a copy of the decision.
On 10 July 1995, Mrs. Cerezo filed before the trial court a petition for relief
from judgment under Rule 38, alleging "fraud, mistake, or excusable
negligence" as grounds. On 4 March 1998, the trial court denied Mrs.
Cerezo’s petition for relief from judgment. The trial court stated that Mrs.
Cerezo could have availed of appeal as a remedy and that she failed to prove
that the judgment was entered through fraud, accident, mistake, or excusable
negligence. Mrs. Cerezo then filed before the Court of Appeals a petition
for certiorari under Section 1 of Rule 65 assailing the denial of the petition for
relief from judgment. On 21 January 1999, the Court of Appeals dismissed
Mrs. Cerezo’s petition. On 24 February 1999, the appellate court denied Mrs.
Cerezo’s motion for reconsideration. On 11 March 1999, Mrs. Cerezo filed
before this Court a petition for review on certiorari under Rule 45, questioning
the denial of the petition for relief from judgment. We denied the petition and
our resolution became final and executory on 28 June 1999.
On 6 July 1999, a mere eight days after our resolution became final and
executory, Mrs. Cerezo filed before the Court of Appeals a petition for
annulment of the judgment of the trial court under Rule 47. Meanwhile, on 25
August 1999, the trial court issued over the objection of Mrs. Cerezo an order
of execution of the judgment in Civil Case No. 7415. On 21 October 1999, the
Court of Appeals dismissed the petition for annulment of judgment. On 20
January 2000, the Court of Appeals denied Mrs. Cerezo’s motion for
reconsideration. On 7 February 2000, Mrs. Cerezo filed the present petition
for review on certiorari under Rule 45 challenging the dismissal of her petition
for annulment of judgment.
Mrs. Cerezo admitted that she received a copy of the trial court’s decision on
25 June 1995. Based on this admission, Mrs. Cerezo had at least three
remedies at her disposal: an appeal, a motion for new trial, or a petition
for certiorari.
Mrs. Cerezo could have appealed under Rule 4124 from the default judgment
within 15 days from notice of the judgment. She could have availed of the
power of the Court of Appeals to try cases and conduct hearings, receive
evidence, and perform all acts necessary to resolve factual issues raised in
cases falling within its appellate jurisdiction.25
Mrs. Cerezo also had the option to file under Rule 3726 a motion for new trial
within the period for taking an appeal. If the trial court grants a new trial, the
original judgment is vacated, and the action will stand for trial de novo. The
recorded evidence taken in the former trial, as far as the same is material and
competent to establish the issues, shall be used at the new trial without
retaking the same.27
Mrs. Cerezo also had the alternative of filing under Rule 65 28 a petition
for certiorari assailing the order of default within 60 days from notice of the
judgment. An order of default is interlocutory, and an aggrieved party may file
an appropriate special civil action under Rule 65.29 In a petition for certiorari,
the appellate court may declare void both the order of default and the
judgment of default.
Clearly, Mrs. Cerezo had every opportunity to avail of these remedies within
the reglementary periods provided under the Rules of Court. However, Mrs.
Cerezo opted to file a petition for relief from judgment, which is availableonly
in exceptional cases. A petition for relief from judgment should be filed within
the reglementary period of 60 days from knowledge of judgment and six
months from entry of judgment, pursuant to
When a party has another remedy available to him, which may either
be a motion for new trial or appeal from an adverse decision of the trial
court, and he was not prevented by fraud, accident, mistake or
excusable negligence from filing such motion or taking such appeal, he
cannot avail himself of this petition. Indeed, relief will not be granted to
a party who seeks avoidance from the effects of the judgment when the
loss of the remedy at law was due to his own negligence; otherwise the
petition for relief can be used to revive the right to appeal which has
been lost thru inexcusable negligence.
After our resolution denying Mrs. Cerezo’s petition for relief became final and
executory, Mrs. Cerezo, in her last ditch attempt to evade liability, filed before
the Court of Appeals a petition for annulment of the judgment of the trial court.
Annulment is available only on the grounds of extrinsic fraud and lack of
jurisdiction. If based on extrinsic fraud, a party must file the petition within four
years from its discovery, and if based on lack of jurisdiction, before laches or
estoppel bars the petition. Extrinsic fraud is not a valid ground if such fraud
was used as a ground, or could have been used as a ground, in a motion for
new trial or petition for relief from judgment.32
Mrs. Cerezo insists that lack of jurisdiction, not extrinsic fraud, was her ground
for filing the petition for annulment of judgment. However, a party may avail of
the remedy of annulment of judgment under Rule 47 only if the ordinary
remedies of new trial, appeal, petition for relief from judgment, or other
appropriate remedies are no longer available through no fault of the
party.33 Mrs. Cerezo could have availed of a new trial or appeal but through
her own fault she erroneously availed of the remedy of a petition for relief,
which was denied with finality. Thus, Mrs. Cerezo may no longer avail of the
remedy of annulment.
In any event, the trial court clearly acquired jurisdiction over Mrs. Cerezo’s
person. Mrs. Cerezo actively participated in the proceedings before the trial
court, submitting herself to the jurisdiction of the trial court. The defense of
lack of jurisdiction fails in light of her active participation in the trial court
proceedings. Estoppel or laches may also bar lack of jurisdiction as a ground
for nullity especially if raised for the first time on appeal by a party who
participated in the proceedings before the trial court, as what happened in this
case.34
For these reasons, the present petition should be dismissed for utter lack of
merit. The extraordinary action to annul a final judgment is restricted to the
grounds specified in the rules. The reason for the restriction is to prevent this
extraordinary action from being used by a losing party to make a complete
farce of a duly promulgated decision that has long become final and
executory. There would be no end to litigation if parties who have
unsuccessfully availed of any of the appropriate remedies or lost them
through their fault could still bring an action for annulment of
judgment.35 Nevertheless, we shall discuss the issues raised in the present
petition to clear any doubt about the correctness of the decision of the trial
court.
Mrs. Cerezo contends that the basis of the present petition for annulment is
lack of jurisdiction. Mrs. Cerezo asserts that the trial court could not validly
render judgment since it failed to acquire jurisdiction over Foronda. Mrs.
Cerezo points out that there was no service of summons on Foronda.
Moreover, Tuazon failed to reserve his right to institute a separate civil action
for damages in the criminal action. Such contention betrays a faulty
foundation. Mrs. Cerezo’s contention proceeds from the point of view of
criminal law and not of civil law, while the basis of the present action of
Tuazon is quasi-delict under the Civil Code, not delict under the Revised
Penal Code.
The same negligent act may produce civil liability arising from a delict under
Article 103 of the Revised Penal Code, or may give rise to an action for a
quasi-delict under Article 2180 of the Civil Code. An aggrieved party may
choose between the two remedies. An action based on a quasi-delict may
proceed independently from the criminal action.36 There is, however, a
distinction between civil liability arising from a delict and civil liability arising
from a quasi-delict. The choice of remedy, whether to sue for a delict or a
quasi-delict, affects the procedural and jurisdictional issues of the action. 37
The trial court thus found Mrs. Cerezo liable under Article 2180 of the Civil
Code. Article 2180 states in part:
The responsibility of two or more persons who are liable for a quasi-delict is
solidary.40 Where there is a solidary obligation on the part of debtors, as in
this case, each debtor is liable for the entire obligation. Hence, each debtor is
liable to pay for the entire obligation in full. There is no merger or renunciation
of rights, but only mutual representation.41 Where the obligation of the parties
is solidary, either of the parties is indispensable, and the other is not even a
necessary party because complete relief is available from either.42 Therefore,
jurisdiction over Foronda is not even necessary as Tuazon may collect
damages from Mrs. Cerezo alone.
The action can be brought directly against the person responsible (for
another), without including the author of the act. The action against the
principal is accessory in the sense that it implies the existence of a
prejudicial act committed by the employee, but it is not subsidiary in the
sense that it can not be instituted till after the judgment against the
author of the act or at least, that it is subsidiary to the principal action;
the action for responsibility (of the employer) is in itself a principal
action.46
Thus, there is no need in this case for the trial court to acquire jurisdiction
over Foronda. The trial court’s acquisition of jurisdiction over Mrs. Cerezo is
sufficient to dispose of the present case on the merits.
We hold that the trial court had jurisdiction and was competent to decide the
case in favor of Tuazon and against Mrs. Cerezo even in the absence of
Foronda. Contrary to Mrs. Cerezo’s contention, Foronda is not an
indispensable party to the present case. It is not even necessary for Tuazon
to reserve the filing of a separate civil action because he opted to file a civil
action for damages against Mrs. Cerezo who is primarily and directly liable for
her own civil negligence. The words of Justice Jorge Bocobo in Barredo v.
Garcia still hold true today as much as it did in 1942:
x x x [T]o hold that there is only one way to make defendant’s liability
effective, and that is, to sue the driver and exhaust his (the latter’s)
property first, would be tantamount to compelling the plaintiff to follow a
devious and cumbersome method of obtaining relief. True, there is
such a remedy under our laws, but there is also a more expeditious
way, which is based on the primary and direct responsibility of the
defendant under article [2180] of the Civil Code. Our view of the law is
more likely to facilitate remedy for civil wrongs, because the procedure
indicated by the defendant is wasteful and productive of delay, it being
a matter of common knowledge that professional drivers of taxis and
other similar public conveyances do not have sufficient means with
which to pay damages. Why, then, should the plaintiff be required in all
cases to go through this roundabout, unnecessary, and probably
useless procedure? In construing the laws, courts have endeavored to
shorten and facilitate the pathways of right and justice.50
Interest at the rate of 6% per annum is due on the amount of damages
adjudged by the trial court.51 The 6% per annum interest shall commence
from 30 May 1995, the date of the decision of the trial court. Upon finality of
this decision, interest at 12% per annum, in lieu of 6% per annum, is due on
the amount of damages adjudged by the trial court until full payment.
WHEREFORE, we DENY the instant petition for review. The Resolution dated
21 October 1999 of the Court of Appeals in CA-G.R. SP No. 53572, as well as
its Resolution dated 20 January 2000 denying the motion for reconsideration,
is AFFIRMED with the MODIFICATION that the amount due shall earn legal
interest at 6% per annum computed from 30 May 1995, the date of the trial
court’s decision. Upon finality of this decision, the amount due shall earn
interest at 12% per annum, in lieu of 6% per annum, until full payment.
SO ORDERED.
26 Section 1. Grounds of and period for filing motion for new trial or
reconsideration. — Within the period for taking an appeal, the
aggrieved party may move the trial court to set aside the judgment or
final order and grant a new trial for one or more of the following causes
materially affecting the substantial rights of said party:
xxx
27 Sections 1 and 6, Rule 37.
28 Section 1. Petition for certiorari. – When any tribunal, board, or
officer exercising judicial or quasi-judicial functions has acted without or
in excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, or
any plain, speedy, and adequate remedy in the ordinary course of law,
a person aggrieved thereby may file a verified petition in the proper
court, alleging the facts with certainty and praying that judgment be
rendered annulling or modifying the proceedings of such tribunal, board
or officer, and granting such incidental reliefs as law and justice may
require.
xxx
Section 4. Where petition filed. – The petition may be filed not later
than sixty (60) days from notice of judgment, order or resolution sought
to be assailed in the Supreme Court; or, if it relates to the acts or
omissions of a lower court or of a corporation, board, officer or person,
in the Regional Trial Court exercising jurisdiction over the territorial
area as defined by the Supreme Court. It may also be filed in the Court
of Appeals whether or not the same is in aid of its appellate jurisdiction,
or in the Sandiganbayan if it is in aid of its jurisdiction. If it involves acts
or omissions of a quasi-judicial agency, and unless otherwise provided
by law or these Rules, the petition shall be filed in and cognizable only
by the Court of Appeals.
29 Section 1, Rule 41.
30 Section 1. Petition for relief from judgment, order, or other
proceedings. – When a judgment or final order is entered, or any other
proceeding is thereafter taken against a party in any court through
fraud, accident, mistake, or excusable negligence, he may file a
petition in such court and in the same case praying that the judgment,
order or proceeding be set aside.
SECOND DIVISION
RESOLUTION
QUISUMBING, J.:
This petition for review[1] seeks the reversal of the decision dated June 1,
1998, of the Court of Appeals in CA-G.R. SP No. 43836, dismissing China
Banking Corporation’s petition for certiorari to annul the two orders of the
Regional Trial Court of Muntinlupa City, Branch 276, which earlier denied
petitioner’s motion to dismiss and then declared the bank in default in Civil
Case No. 96-219. The appellate court also denied petitioner’s motion for
reconsideration in a resolution dated September 30, 1998.
The facts of this case are culled from the records.
In August 1995, Pangan Lim, Jr. and a certain Mercedes M. Oliver
opened a joint account in China Banking Corporation (hereinafter Chinabank)
at EDSA Balintawak Branch. Lim introduced Oliver to the bank’s branch
manager as his partner in the rice and palay trading business. Thereafter,
Lim and Oliver applied for a P17 million loan, offering as collateral a 7,782
square meter lot located in Tunasan, Muntinlupa and covered by TCT No. S-
50195 in the name of Oliver. The bank approved the application. On
November 17, 1995, Lim and Oliver executed in favor of Chinabank a
promissory note for P16,650,000, as well as a Real Estate Mortgage on the
property. The mortgage was duly registered and annotated on the original
title under the custody of the Registry of Deeds of Makati and on the owner’s
duplicate copy in the bank’s possession. The mortgage document showed
Mercedes Oliver’s address to be No. 95 Malakas Street, Diliman, Quezon
City. For brevity, she is hereafter referred to as “Oliver One.”
On November 18, 1996, respondent claiming that she is Mercedes M.
Oliver with postal office address at No. 40 J.P. Rizal St., San Pedro, Laguna,
filed an action for annulment of mortgage and cancellation of title with
damages against Chinabank, Register of Deeds Atty. Mila G. Flores, and
Deputy Register of Deeds Atty. Ferdinand P. Ignacio. Respondent, whom we
shall call as “Oliver Two,” claimed that she was the registered and lawful
owner of the land subject of the real estate mortgage; that the owner’s
duplicate copy of the title had always been in her possession; and that she did
not apply for a loan or surrender her title to Chinabank.[2] She prayed that: (1)
the owner’s duplicate copy surrendered to Chinabank as well as the original
title with the Registry of Deeds be cancelled; (2) the mortgage be declared
null and void; and (3) the Registry of Deeds be ordered to issue a new and
clean title in her name.[3]
On January 31, 1997, Chinabank moved to dismiss the case for lack of
cause of action and non-joinder of an indispensable party, the mortgagor.
On March 13, 1997, Judge Norma C. Perello issued an order denying the
motion to dismiss, stating that:
Acting on the Motion To Declare Defendant Bank in Default, and finding the
same to be legally tenable is granted.
The filing of a CERTIORARI to question the Orders by this Court did not toll
the period for Defendants to answer the complaint.
Therefore, the reglementary period for the filing of responsive pleading has
long expired.
It is SO ORDERED.[5]
II
III
IV
VI
VII
VIII
[9] SEC. 2, Rule 3, Rules of Court: Parties in interest. – A real party in interest
is the party who stands to be benefited or injured by the judgment in the suit,
or the party entitled to the avails of the suit. Unless otherwise authorized by
law or these Rules, every action must be prosecuted or defended in the name
of the real party in interest.
[11]SEC. 11, Rule 3, 1997 Rules of Civil Procedure: Misjoinder and non-
joinder of parties. – Neither misjoinder nor non-joinder of parties is ground for
dismissal of an action. Parties may be dropped or added by order of the court
on motion of any party or on its own initiative at any stage of the action and on
such terms as are just. Any claim against a misjoined party may be severed
and proceeded with separately.
[14] SEC. 7, Rule 65, 1997 Rules of Civil Procedure: Expediting proceedings;
injunctive relief. – The court in which the petition is filed may issue
orders expediting the proceedings, and it may also grant a temporary
restraining order or a writ of preliminary injunction for the preservation
of the rights of the parties pending such proceedings. The petition
shall not interrupt the course of the principal case unless a temporary
restraining order or a writ of preliminary injunction has been issued
against the public respondent from further proceeding in the case.
THIRD DIVISION
YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
INTRA STRATA ASSURANCE
CORPORATION and BUREAU OF Promulgated:
CUSTOMS,
Respondents. June 27, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CHICO-NAZARIO, J.:
Failing to secure from petitioners the payment of the face value of the
two bonds, despite several demands sent to each of them as surety under the
Indemnity Agreements, ISAC filed with the RTC on 24 October 1995 an action
against petitioners to recover the sum of P1,034,649.00, plus 25% thereof
or P258,662.25 as attorney’s fees. ISAC impleaded the BOC “as a necessary
party plaintiff in order that the reward of money or judgment shall be adjudged
unto the said necessary plaintiff.”[4] The case was docketed as Civil Case No.
95-1584.
Petitioners contend that their obligation to ISAC is not yet due and
demandable. They cannot be made liable by ISAC in the absence of an
actual forfeiture of the subject bonds by the BOC and/or an explicit
pronouncement by the same bureau that ISAC is already liable on the said
bonds. In this case, there is yet no actual forfeiture of the bonds, but merely a
recommendation of forfeiture, for no writ of execution has been issued against
such bonds.[10] Hence, Civil Case No. 95-1584 was prematurely filed by
ISAC. Petitioners further argue that:
The subject bonds, Instrata Bonds No. 5770 and No. 7154, became
due and demandable upon the failure of petitioner Autocorp Group to comply
with a condition set forth in its undertaking with the BOC, specifically to re-
export the imported vehicles within the period of six months from their date of
entry. Since it issued the subject bonds, ISAC then also became liable to the
BOC. At this point, the Indemnity Agreements already give ISAC the right to
proceed against petitioners via court action or otherwise.
Even when the BOC already admitted that it not only made a demand
upon ISAC for the payment of the bond but even filed a complaint against
ISAC for such payment,[13] such demand and complaint are not necessary to
hold petitioners liable to ISAC for the amount of such bonds. Petitioners’
attempts to prove that there was no actual forfeiture of the subject bonds are
completely irrelevant to the case at bar.
It is worthy to note that petitioners did not impugn the validity of the
stipulation in the Indemnity Agreements allowing ISAC to proceed against
petitioners the moment the subject bonds become due and demandable, even
prior to actual forfeiture or payment thereof. Even if they did so, the Court
would be constrained to uphold the validity of such a stipulation for it is but a
slightly expanded contractual expression of Article 2071 of the Civil Code
which provides, inter alia, that the guarantor may proceed against the
principal debtor the moment the debt becomes due and demandable. Article
2071 of the Civil Code provides:
Petitioners also invoke the alleged lack of demand on the part of ISAC
on petitioners as regards Instrata Bond No. 5770 before it instituted Civil Case
No. 95-1584. Even if proven true, such a fact does not carry much weight
considering that demand, whether judicial or extrajudicial, is not required
before an obligation becomes due and demandable. A demand is only
necessary in order to put an obligor in a due and demandable obligation in
delay,[14] which in turn is for the purpose of making the obligor liable for
interests or damages for the period of delay.[15] Thus, unless stipulated
otherwise, an extrajudicial demand is not required before a judicial
demand, i.e., filing a civil case for collection, can be resorted to.
ISAC included the BOC “as a necessary party plaintiff in order that the
reward of money or judgment shall be adjudged unto the said necessary
plaintiff.”[16]
Petitioners assail this inclusion of the BOC as a party in Civil Case No.
95-1584 on the ground that it was not properly represented by the Solicitor
General. Petitioners also contend that the inclusion of the BOC as a party in
Civil Case No. 95-1584 “is highly improper and should not be countenanced
as the net result would be tantamount to collusion between Intra Strata and
the Bureau of Customs which would deny and deprive petitioners their
personal defenses against the BOC.”[17]
In its assailed Decision, the Court of Appeals did not find merit in
petitioners’ arguments on the matter, holding that when the BOC forfeited the
subject bonds issued by ISAC, subrogation took place so that whatever right
the BOC had against petitioners were eventually transferred to ISAC. As
ISAC merely steps into the shoes of the BOC, whatever defenses petitioners
may have against the BOC would still be available against ISAC.
Should the BOC then be dropped as a party to Civil Case No. 95-
1584?
The subject matter of Civil Case No. 95-1584 is the liability of Autocorp
Group to the BOC, which ISAC is also bound to pay as the guarantor who
issued the bonds therefor. Clearly, there would be no complete settlement of
the subject matter of the case at bar – the liability of Autocorp Group to the
BOC – should Autocorp Group be merely ordered to pay its obligations with
the BOC to ISAC. BOC is, therefore, a necessary party in the case at bar,
and should not be dropped as a party to the present case.
It can only be conceded that there was an irregularity in the manner the
BOC was joined as a necessary party in Civil Case No. 95-1584. As the
BOC, through the Solicitor General, was not the one who initiated Civil Case
No. 95-1584, and neither was its consent obtained for the filing of the same, it
may be considered an unwilling co-plaintiff of ISAC in said action. The proper
way to implead the BOC as a necessary party to Civil Case No. 95-1584
should have been in accordance with Section 10, Rule 3 of the Rules of
Court, viz:
ISAC cannot be said to have stepped into the shoes of the BOC,
because the BOC still retains said rights until it is paid. ISAC’s right to file
Civil Case No. 95-1584 is based on the express provision of the Indemnity
Agreements making petitioners liable to ISAC at the very moment ISAC’s
bonds become due and demandable for the liability of Autocorp Group to the
BOC, without need for actual payment by ISAC to the BOC. But it is still
correct to say that all the defenses available to petitioners against the BOC
can likewise be invoked against ISAC because the latter’s contractual right to
proceed against petitioners only arises when the Autocorp Group becomes
liable to the BOC for non-compliance with its undertakings. Indeed, the
arguments and evidence petitioners can present against the BOC to prove
that Autocorp Group’s liability to the BOC is not yet due and demandable
would also establish that petitioners’ liability to ISAC under the Indemnity
Agreements has not yet arisen.
Second, making the BOC a necessary party to Civil Case No. 95-1584
actually allows petitioners to simultaneously invoke its defenses against both
the BOC and ISAC. Instead of depriving petitioners of their personal defenses
against the BOC, Civil Case No. 95-1584 actually gave them the opportunity
to kill two birds with one stone: to disprove its liability to the BOC and, thus,
negate its liability to ISAC.
We must take note at this point that petitioners have not presented any
evidence of this alleged amendment as to the effectivity of the bonds.[21] Be
that as it may, even if there was indeed such an amendment, such would not
cause the exoneration of petitioner Rodriguez from liability on the bonds.
The Court of Appeals, in its assailed Decision, held that the use of the
term guarantee in a contract does not ipso facto mean that the contract is one
of guaranty. It thus ruled that both petitioners assumed liability as a regular
party and obligated themselves as original promissors, i.e., sureties, as shown
in the following provisions of the Indemnity Agreement:
xxxx
This, however, would not cause a reversal of the Decision of the Court
of Appeals. The Court of Appeals was correct that even
granting arguendo that there was a modification as to the effectivity of the
bonds, petitioners would still not be absolved from liability since they had
authorized ISAC to consent to the granting of any extension, modification,
alteration and/or renewal of the subject bonds, as expressly set out in the
Indemnity Agreements:
SO ORDERED.
THIRD DIVISION
DECISION
PANGANIBAN, J.:
The Case
"The petition for annulment of judgment in Civil Case No. V-1040 of Branch
81 of the Regional Trial Court of Romblon raising essentially intrinsic fraud
and factual issues, in addition, the Court resolved to DISMISS the
petition."[2] (sic)
The Facts
The following undisputed facts may be gleaned from the pleadings of the
parties.
The land in question was Lot No. 898 of the Romblon Cadastre with a
total area of 10,891 square meters. It was originally leased from Sancho
Magdato by Cebu Portland Cement Corporation (CEPOC), a government-
owned and controlled corporation.
In 1961, CEPOC sold its buildings, equipment, machinery and other
structures to Filipinas Marble Corporation (FILMARCO), which continued
paying rentals to Magdato. FILMARCO, in turn, subleased the premises to
Imperial Marble & Exploration Corporation (IMEC).
Subsequently, FILMARCO obtained a loan in the amount of US$5 million
from the Development Bank of the Philippines (DBP). As a security, it
executed a chattel mortgage over its properties on the land. In 1987, DBP
transferred to the Asset Privatization Trust (APT) its financial claim against
FILMARCO. In 1990, APT placed a caretaker in the area to oversee the
safekeeping of the mortgaged properties.
When FILMARCO failed to pay rentals, the heirs of Sancho Magdato filed
before the RTC Civil Case No. V-1040 for quieting of title, recovery of
possession and ownership of the land, and damages against FILMARCO and
IMEC.
For failure to file an answer to the Complaint, both FILMARCO and IMEC
were declared in default. Respondents were then allowed to present evidence
ex parte. Thereafter, the trial court rendered its assailed Decision, which
became final and executory when neither FILMARCO nor IMEC appealed.
APT allegedly learned of the suit only on December 20, 1994 when the
Writ of Execution was served on its caretakers at the leased premises. The
caretakers refused to vacate the premises.
Respondent narrated the subsequent events in this wise: "A series of
motions and manifestations were filed by respondents and APT. Respondents
moved to have the APT-appointed caretakers cited in contempt; this was
denied by the trial court. On the other hand, APT asked for quashal of the Writ
on ground that it was not a party to the case and could, thus, not be forced to
comply with the Writ of Execution; furthermore, APT asked also for the pull-
out and removal of respondents from the property. The first prayer of APT
was not granted by the trial court even as it confirmed that APT was not party
to the case; the latter prayer of APT was denied by the trial court. A motion for
reconsideration by APT of the denial of the latter relief proved fruitless as the
trial court remained steadfast in its decision to confirm respondents as the
owners of the property."
On December 21, 1998, APT filed before the Court of Appeals a Petition
for the annulment of the RTC Decision. As earlier stated, the CA resolved to
dismiss the Petition.
Hence, this recourse to this Court.[6]
The Issues
"Whether or not sufficient ground exists for the annulment of the trial court's
decision dated January 31, 1994 due to extrinsic fraud.
II
III
"Whether or not the decision dated January 31, 1994 of the trial court may be
enforced against APT despite the fact that APT [was] not a party in Civil Case
No. V-1040.
IV
"Whether or not APT was denied due process in the proceeding before the
trial court held in Civil Case No. V-1040.
In the main, petitioner asks the Court to resolve two issues: (a) whether
the RTC Decision should be annulled due to extrinsic fraud, and (b) whether
the respondents were able to prove ownership of the parcel of land.
“On February 3, 1987, Administrative Order No. 14 was issued (Approving the
Identification of and Transfer to the National Government of Certain Assets
and Liabilities of the Development Bank of the Philippines and the Philippine
National Bank) as implemented by the Deed of Transfer dated February 27,
1987, executed by and between DBP and the Government of the Republic of
the Philippines, whereby DBP's rights, title and interest over the financial
claim against Filipinas Marble Corporation (FILMARCO) were transferred to
the National Government.
“On February 27, 1987, the Trust Agreement was executed by and between
the National Government and the APT under which the former constituted the
latter as its trustee over the Trust Properties defined therein, among which
[was] the above-mentioned financial claim against FILMARCO.
“Thus, what was transferred by DBP to the National Government through the
APT, consisted merely of the financial claim against FILMARCO. APT, even
up to the present, remains to be a mere director, or, in other words, the holder
of a financial claim against FILMARCO."[16] (Emphasis found in the original.)
is without basis. APT should not and can not be held liable to settle other
separate liabilities of FILMARCO."[18] (Emphasis supplied.)
From the foregoing, it is quite clear that APT does not claim to be either
the owner or the possessor of the land or of the FILMARCO equipment
thereon. APT was merely the creditor of FILMARCO.
Because APT has no interest in the parcel of land, it does not stand to be
benefitted or injured by the suit before the trial court, which, as earlier noted,
sought the recovery of possession and ownership only of the land, not of the
mortgaged property located thereon.
The concern of APT was to collect the loan, which had been acquired by
FILMARCO from DBP and secured by a mortgage over FILMARCO's
equipment. That interest has not been affected by the action seeking the
recovery of the land on which the property is located. Verily, the ownership
and the possession of the land are immaterial to APT's claim against the
equipment.
That the action for recovery of possession necessarily includes the
removal of equipment located thereon does not make APT an a indispensable
party. As noted earlier, FILMARCO, not APT or DBP, was the owner of the
said equipment. Hence, respondents acted correctly in impleading
FILMARCO, not APT or DBP. Certainly, if the claim of APT is adversely
affected by the removal or transfer of the property to another place, it should
proceed against FILMARCO, not against respondents. Such transfer or
removal is the concern of FILMARCO, not the respondents. In any event, it
should be underscored that the civil action seeks the recovery of the land, not
of the equipment thereon.
In sum, the Court finds that petitioner failed to show substantial interest in
the civil action which would render it an indispensable party. Accordingly,
there was no reason for respondents to implead it as defendant before the
trial court. Hence, its non-joinder does not constitute an extrinsic fraud.
SECOND DIVISION
PUNO, J.
Chairman,
- versus - AUSTRIA-MARTINEZ,
CALLEJO,
TINGA, and
CHICO-NAZARIO, JJ.
JORGE TORRES and
ANTONIO BELTRAN,
Respondents. August 30, 2005
x---------------------------------------------------------------------x
DECISION
TINGA, J.:
The Court settles an issue, heretofore undecided, on whether the
absence of the signature in the required verification and certification against
forum-shopping of a party misjoined as a plaintiff is a valid ground for the
dismissal of the complaint. We rule in the negative.
The relevant facts in this Petition for Review are culled from the records.
Preliminarily, it bears noting that Jonathan Chua did not sign as well
any verification to the complaint, ostensibly in violation of Section 7, Rule 4 of
the Rules of Civil Procedure. The RTC failed to mention such fact, as does
petitioner in her present petition. In their arguments before this Court,
respondents do refer in passing to the verification requirement [15], but do not
place any particular focus thereto. The verification requirement is separate
from the certification requirement.[16] It is noted that as a matter of practice,
the verification is usually accomplished at the same time as the certification
against forum-shopping; hence the customary nomenclature, “Verification and
Certification of Non Forum-Shopping” or its variants. For this reason, it is quite
possible that the RTC meant to assail as well the failure of Jonathan Chua to
verify the complaint.
The subject complaint does not allege any rights of Jonathan Chua
violated by respondents, present any rights of his to be enforced, or seek in
his behalf any rights to the avails of suit. In short, Jonathan claims nothing,
and for nothing, in the subject complaint. If he alone filed the complaint, it
would have been dismissed on the ground that the complaint states no cause
of action, instituted as it was by a person who was not a real party in interest.
Instead, what the Court may rule upon is whether the absence of the
signature of the person misjoined as a party-plaintiff in either the verification
page or certification against forum-shopping is ground for the dismissal of the
action. We rule that it is not so, and that the RTC erred in dismissing the
instant complaint. There is no judicial precedent affirming or rejecting such a
view, but we are comfortable with making such a pronouncement. A misjoined
party plaintiff has no business participating in the case as a plaintiff in the first
place, and it would make little sense to require the misjoined party in
complying with all the requirements expected of plaintiffs.
At the same time, Section 11, Rule 3 of the 1997 Rules of Civil
Procedure states:
SO ORDERED.
[3]Docketed as Criminal Case No. 205058. Neither the parties nor the
case record offer any account of any succeeding developments in this
criminal case, although those developments would bear no relevance to the
resolution of this petition.
[7]The prayer states: ‘WHEREFORE, it is respectfully prayed that, after
due notice and hearing, judgment be rendered by this Honorable Court
ordering the defendants, jointly and severally, to pay plaintiff Christine Chua
the following amounts: xxx” Id. at 14.
[13]An appeal to a final order of the RTC wherein only questions of law
are raised or involved shall be to the Supreme Court by petition for review on
certiorari in accordance with Rule 45. See Section 2(c), Rule 41, Rules of Civil
Procedure, in relation to Section 1, Rule 41.
[18]See Section 4, Rule 7, Rules of Civil Procedure.
[19]See Section 2, Rule 3, Rules of Civil Procedure.
[27]Id.at 119. “In an action to reform a deed, all parties claiming an
interest in the land or any part thereof purportedly conveyed by the instrument
sought to be reformed, and whose interests will be affected by the reformation
of the instrument are necessary parties to the action.” Toyota Motor Phil. v.
Court of Appeals, G.R. No. 102881, 7 December 1992 citing Kemp v.
Funderburk, 224 NC 353, 30 SE 2d 155.
[29]UnderSection 10, Rule 3 of the 1997 Rules of Civil Procedure, if the
consent of a party who should be joined as plaintiff cannot be obtained, he
may instead be joined as a defendant and the reasons therefore to be stated
in the complaint.
[32]“It is thus clear that in a case of misjoinder of parties — which in this
case is the co-filing of the petition for suspension of payments by both the
Yutingcos and the EYCO group — the remedy has never been to dismiss the
petition in its entirety but to dismiss it only as against the party upon whom the
tribunal or body cannot acquire jurisdiction. The result, therefore, is that the
petition with respect to EYCO shall subsist and may be validly acted upon by
the SEC. The Yutingcos, on the other hand, shall be dropped from the petition
and be required to pursue their remedies in the regular courts of competent
jurisdiction.” Union Bank of the Philippines v. Court of Appeals, 352 Phil. 808,
828 (1998).
[33]This is assuming of course that those plaintiffs who stand as real
parties in interest do not concurrently or similarly perform those same acts or
omissions as the misjoined parties that would serve to prejudice the cause of
action. Thus, assuming that the plaintiff standing as a real party in interest and
the misjoined plaintiff both fail to verify the complaint, the suit may be
dismissed but on account of the failure of the plaintiff/real party in interest. In
the same situation, the similar failure of the misjoined plaintiff to verify the
complaint will not be sufficient to justify the non-dismissal of the complaint,
citing this decision as basis.
GANCAYCO, J.:
This case stemmed from a complaint filed by plaintiffs on August 29, 1969
seeking 1) the reformation of a Deed of Sale executed in favor of defendant
Marcos Mangubat and, 2) the annulment of a subsequent sale to defendant
spouses Francisco Luzame and Vergita Penaflor of a parcel of land in Barrio
Dongalo, Paranaque, Rizal covered by OCT No. 1197 of the Land Registry of
Rizal.
The material allegations of the complaint so far as they affect the present
appeal are to the following effect: that plaintiff Crisanta Seno, a widow,
approached defendant Marcos Mangubat sometime in 1961 to negotiate with
him a mortgage over the subject parcel of land so she can pay off a previous
indebtedness; that she had herein defendant agreed on a mortgage for the
sum of P15,000.00 with interest of 2% a month payable every month and that
as long as the interest is being paid, the mortgage over the property will not
be foreclosed; that on the assurance of defendant Marcos Mangubat, a
practicing lawyer, that he win respect their true agreement on the mortgage,
plaintiff Crisanta F. Seno agreed to the execution of a Deed of Absolute Sale
over the subject property for a consideration of P5,000.00 in favor of
defendant Marcos Mangubat and certain Andres Evangelista and Bienvenido
Mangubat on July 17, 1961; 3 that defendant Marcos Mangubat was able to
obtain a title in his name and the other alleged vendees Andres Evangelista
and Bienvenido Mangubat; that on January 8, 1962 Andres Evangelista and
Bienvenido Mangubat executed a Deed of Absolute Sale transferring their
share in the subject property to defendant Marcos Mangubat; that defendant
Marcos Mangubat was able to obtain a title over the subject property in his
name by virtue of this latter sale; that plaintiff Crisanta F. Seno continued
paying defendant Marcos Mangubat the usurious 2% interest per month; that
sometime in 1963, when plaintiff Crisanta F. Seno failed to pay the monthly
interest of 2%, she was sued for ejectment by defendant Marcos Mangubat
alleging non-payment of rentals; that sometime in the later week of January
1969, plaintiff Crisanta F. Seno learned that defendant Marcos Mangubat sold
the subject property in favor of spouses Francisco Luzame and Vergita
Penaflor for the sum of P10,000.00 on January 14, 1969; 4 that defendant
spouses Francisco Luzame and Vergita Penaflor bought the property in bad
faith since they had knowledge of the circumstances surrounding the
transaction between plaintiff and defendant Marcos Mangubat; that defendant
spouses Luzame filed an ejectment case against plaintiff Crisanta Seno for
alleged non-payment of rentals.
On motion of defendant spouses Luzame and Penaflor, the trial court ordered
on October 20, 1975 the inclusion as defendants of Andres Evangelista and
Bienvenido Mangubat on the ground that they are indispensable parties, on
December 29, 1971, plaintiffs filed their amended complaint in compliance
with the court's order of October 20, impleading Andres Evangelista and
Bienvenido Mangubat as defendants.
The newly impleaded defendants moved for the dismissal of the case against
them on the ground of prescription which motion was granted by the court in
its order of July 3, 1972, the dispositive portion of which reads —
The motion for reconsideration filed by the plaintiffs of the foregoing order was
denied by the trial court in its order of January 17, 1973; 6 hence, an appeal
was brought before the Court of Appeals praying for the reversal of the orders
of the court a quo dated September 27, 1972 and January 17, 1973 and for
the remand of the case to the court a quo for further proceedings.
The Court of Appeals certified the instant case to this Court holding that the
assignment of errors made by plaintiffs in their appeal raised purely legal
questions, to wit —
Indispensable parties are those with such an interest in the controversy that a
final decree would necessarily affect their rights, so that the courts cannot
proceed without their presence. Necessary parties are those whose presence
is necessary to adjudicate the whole controversy, but whose interests are so
far separable that a final decree can be made in their absence without
affecting them. 10
In the present case, there are no rights of defendants Andres Evangelista and
Bienvenido Mangubat to be safeguarded if the sale should be held to be in
fact an absolute sale nor if the sale is held to be an equitable mortgage.
Defendant Marcos Mangubat became the absolute owner of the subject
property by virtue of the sale to him of the shares of the aforementioned
defendants in the property. Said defendants no longer have any interest in the
subject property. However, being parties to the instrument sought to be
reformed, their presence is necessary in order to settle all the possible issues
of tile controversy. Whether the disputed sale be declared an absolute sale or
an equitable mortgage, the rights of all the defendants will have been amply
protected. Defendants-spouses Luzame in any event may enforce their rights
against defendant Marcos Mangubat.
In fact the plaintiffs were not after defendants Andres Evangelista and
Bienvenido Mangubat as shown by their non-inclusion in the complaint and
their opposition to the motion to include said defendants in the complaint as
indispensable parties. It was only because they were ordered by the court a
quo that they included the said defendants in the complaint. The lower court
erroneously held that the said defendants are indispensable parties.
We, therefore, need to settle the next issue of whether the action against
them has prescribed in view of Art. 1144, Civil Code, which provides:
The following actions must be brought ten years from the time
the right of action accrues:
The complaint clearly alleged that the deed of sale executed on July 17, 1961
did not express the true intention of the parties and should be reformed into
the mortgage it actually was. Such allegations are binding for purposes of
determining the motion to dismiss (which hypothetically admits the allegations
in the complaint). The prescriptive period for such actions based upon a
written contract and for reformation thereof is ten years as provided in Article
1144 of the Civil Code. Such right to reformation is expressly recognized in
Article 1365 of the same Code which provides:
Article 1605 of the Civil Code 13 in conjunction with Article 1604 14 likewise
allows the apparent vendor to ask for the reformation of the instrument.
In Aetna, the defendant Barber Lines Far East Service was impleaded for the
first time in the amended complaint which was filed after the one-year period
for prescription. The order of the lower court dismissing the amended
complaint against the said defendant was affirmed by this Court.
Anent the third and fourth issues, the theory of the plaintiffs is that the
complaint should not have been dismiss as against said defendants but
instead the court a quo should have proceeded with a trial on the merits
because there is an issue of fact appearing on the pleadings, that is, that
defendants Andres Evangelista and Bienvenido Mangubat were mere
dummies of defendant Marcos Mangubat.
The plaintiffs now maintain that assuming the action against defendants
Andres Evangelista and Bienvenido Mangubat had already prescribed, this
defense was personal to them and could not legally encompass the position
of defendant Marcos Mangubat; that the latter defendant, could be held solely
responsible to plaintiffs, having become absolute owner of the property
subject matter of the July 17, 1961 instrument, or in the least he could be held
accountable for his 1/3 share of the property. 20
One case which the lower court particularly applied to justify dismissal of the
case against the other defendants was Pillado vs. Francisco. 21 In said case,
plaintiffs filed an action for the annulment of the contract of sale of a certain
real estate executed by the Philippine National Bank (PNB) in favor of the
spouses Estela Francisco and Vivencio Lasala Defendant PNB submitted an
answer while defendant spouses filed a motion to dismiss on the ground that
the complaint stated no cause of action and that plaintiffs have no legal
capacity to sue. Said defendant spouses subsequently filed an additional
motion to dismiss on the ground that the cause of action of plaintiff, if any, had
prescribed. The court ordered the dismissal of the complaint which dismissal
became final. Plaintiffs then asked the court to continue the case against PNB
but the latter moved for the dismissal on the ground that the court had lost, or
had been divested of its jurisdiction over the case through the release of the
defendant spouses, who were indispensable parties. The court granted the
motion to dismiss holding that defendant spouses who were the vendees
were indispensable parties in an action for the rescission of the sale. From
this order, the plaintiff appealed to this Court. This Court affirmed the order
holding that the indispensable parties having been discharged by the trial
court, the Court is no longer in a position to grant the plaintiff's demands,
principally the revocation of the Deed of Sale in their favor.
It further appears from the complaint that plaintiffs were well aware of the
transfer of the title from the name of plaintiff Crisanta Seno to the names of
defendants Marcos Mangubat, Andres Evangelista and Bienvenido Mangubat
and subsequently to the name of defendant Marcos Mangubat alone as early
as 1963 when the ejectment case was filed against plaintiffs, and also they
did not do anything about it.
The essence of laches is not merely lapse of time. It is essential that there be
also acquiescence in the alleged wrong or lack of diligence in seeking a
remedy. 27 The doctrine of laches or of "stale demands" is based on public
policy which requires, for the peace of society, the discouragement of stale
claims and, unlike the statute of limitations not a mere question of time but is
principally a question of the inequity or unfairness of permitting a right or claim
to be enforced or asserted. 28
Defendant spouses, however, claim that they came to know of the existence
of the original title of plaintiff Crisanta Seno only when they verified the title to
the land in 1969 when it was being offered to them by co-defendant Marcos
Mangubat. They deny that they are neighbors much less friends of plaintiffs,
This Court had occasion to rule that possession by the appellees, either by
themselves or through their predecessors in interest, if there was such
possession at all, would be unavailing against the holder of a Torrens
Certificate of Title covering the parcels of land now in question. 35
We therefore hold and find that defendants spouses Luzame are purchasers
in good faith and for value of the questioned property.
SO ORDERED.
8 Under the Old Rules of Court, Sec. 8, Rule 3, the term used
was "necessary parties", while under the present rules, the
same section uses the term "proper parties". The present
section is a total reproduction of the old rule except for these two
terms. It is therefore to be understood that all references to the
term "necessary parties' shall mean "proper parties."
FIRST DIVISION
DECISION
CHICO-NAZARIO, J.:
The spouses Carandang then filed before this Court the instant Petition
for Review on Certiorari, bringing forth the following issues:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED MANIFEST ERROR IN FAILING TO STRICTLY
COMPLY WITH SECTION 16, RULE 3 OF THE 1997 RULES
OF CIVIL PROCEDURE.
II.
III.
IV.
V.
The spouses Carandang claims that the Decision of the RTC, having
been rendered after the death of Quirino de Guzman, is void for failing to
comply with Section 16, Rule 3 of the Rules of Court, which provides:
The spouses Carandang posits that such failure to comply with the
above rule renders void the decision of the RTC, in adherence to the following
pronouncements inVda. de Haberer v. Court of Appeals[5] and Ferreria v. Vda.
de Gonzales[6]:
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
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 judgment
would be binding.[7]
In the present case, there had been no court order for the
legal representative of the deceased to appear, nor had any
such legal representative appeared in court to be substituted for
the deceased; neither had the complainant ever procured the
appointment of such legal representative of the deceased,
including appellant, ever asked to be substituted for the
deceased. As a result, no valid substitution was effected,
consequently, the court never acquired jurisdiction over
appellant for the purpose of making her a party to the case and
making the decision binding upon her, either personally or as a
representative of the estate of her deceased mother.[8]
However, unlike jurisdiction over the subject matter which is conferred
by law and is not subject to the discretion of the parties,[9] jurisdiction over the
person of the parties to the case may be waived either expressly or
impliedly.[10] Implied waiver comes in the form of either voluntary appearance
or a failure to object.[11]
In the cases cited by the spouses Carandang, we held that there had
been no valid substitution by the heirs of the deceased party, and therefore
the judgment cannot be made binding upon them. In the case at bar, not only
do the heirs of de Guzman interpose no objection to the jurisdiction of the
court over their persons; they are actually claiming and embracing such
jurisdiction. In doing so, their waiver is not even merely implied (by their
participation in the appeal of said Decision), but express (by their explicit
espousal of such view in both the Court of Appeals and in this Court). The
heirs of de Guzman had no objection to being bound by the Decision of the
RTC.
It also pays to look into the spirit behind the general rule requiring a
formal substitution of heirs. The underlying principle therefor is not really
because substitution of heirs is a jurisdictional requirement, but because non-
compliance therewith results in the undeniable violation of the right to due
process of those who, though not duly notified of the proceedings, are
substantially affected by the decision rendered therein. [12] Such violation of
due process can only be asserted by the persons whose rights are claimed to
have been violated, namely the heirs to whom the adverse judgment is sought
to be enforced.
In sum, the RTC Decision is valid despite the failure to comply with
Section 16, Rule 3 of the Rules of Court, because of the express waiver of the
heirs to the jurisdiction over their persons, and because there had been,
before the promulgation of the RTC Decision, no further proceedings requiring
the appearance of de Guzman’s counsel.
Before proceeding with the substantive aspects of the case, however,
there is still one more procedural issue to tackle, the fourth issue presented by
the spouses Carandang on the non-inclusion in the complaint of an
indispensable party.
The spouses Carandang claim that, since three of the four checks used
to pay their stock subscriptions were issued in the name of Milagros de
Guzman, the latter should be considered an indispensable party. Being such,
the spouses Carandang claim, the failure to join Mrs. de Guzman as a party-
plaintiff should cause the dismissal of the action because “(i)f a suit is not
brought in the name of or against the real party in interest, a motion to dismiss
may be filed on the ground that the complaint states no cause of action.” [14]
The spouses Carandang are indeed correct that “(i)f a suit is not
brought in the name of or against the real party in interest, a motion to dismiss
may be filed on the ground that the complaint states no cause of
action.”[18] However, what dismissal on this ground entails is an examination
of whether the parties presently pleaded are interested in the outcome of the
litigation, and not whether all persons interested in such outcome are actually
pleaded. The latter query is relevant in discussions concerning indispensable
and necessary parties, but not in discussions concerning real parties in
interest. Both indispensable and necessary parties are considered as real
parties in interest, since both classes of parties stand to be benefited or
injured by the judgment of the suit.
Consequently, assuming that the four checks created a debt for which
the spouses Carandang are liable, such credits are presumed to be conjugal
property. There being no evidence to the contrary, such presumption
subsists. As such, Quirino de Guzman, being a co-owner of specific
partnership property,[22] is certainly a real party in interest. Dismissal on the
ground of failure to state a cause of action, by reason that the suit was
allegedly not brought by a real party in interest, is therefore unwarranted.
Other than the indispensable and necessary parties, there is a third set
of parties: the pro-forma parties, which are those who are required to be
joined as co-parties in suits by or against another party as may be provided by
the applicable substantive law or procedural rule.[25] An example is provided
by Section 4, Rule 3 of the Rules of Court:
In this connection, Article 1811 of the Civil Code provides that “[a]
partner is a co-owner with the other partners of specific partnership
property.” Taken with the presumption of the conjugal nature of the funds
used to finance the four checks used to pay for petitioners’ stock
subscriptions, and with the presumption that the credits themselves are
part of conjugal funds, Article 1811 makes Quirino and Milagros de
Guzman co-owners of the alleged credit.
Articles 1236 and 1237 are clear that, even in cases where the debtor
has no knowledge of payment by a third person, and even in cases where the
third person paid against the will of the debtor, such payment would produce a
debt in favor of the paying third person. In fact, the only consequences for the
failure to inform or get the consent of the debtor are the following: (1) the third
person can recover only insofar as the payment has been beneficial to the
debtor; and (2) the third person is not subrogated to the rights of the creditor,
such as those arising from a mortgage, guarantee or penalty.[35]
Q: Now, can you tell this Honorable Court how do you feel
with respect to the Complaint of the plaintiff in this case
charging you that you paid for this year and asking
enough to paid (sic) your tax?
A: We have paid already, so, we are not liable for anything
payment (sic).[41]
Petitioners claim that the late Quirino A. de Guzman, Sr. had admitted
the existence of the pre-incorporation agreement by virtue of paragraphs 13
and 14 of their Answer and paragraph 4 of private respondents’ Reply.
In effect, the spouses Carandang are relying on the fact that Quirino de
Guzman stated that he admitted paragraph 14 of the Answer, which
incidentally contained the opening clause “(h)aving mutually agreed on the
above arrangements, x x x.”
All the foregoing considered, we hold that Quirino de Guzman had not
admitted the alleged pre-incorporation agreement. As there was no
admission, and as the testimony of Arcardio Carandang was stricken off the
record, we are constrained to rule that there was no pre-incorporation
agreement rendering Quirino de Guzman liable for the spouses Carandang’s
stock subscription. The payment by the spouses de Guzman of the stock
subscriptions of the spouses Carandang are therefore by way of loan which
the spouses Carandang are liable to pay.
Finally, the Court of Appeals also upheld the RTC Decision insofar as it
decreed a solidary liability. According to the Court of Appeals:
No costs.
SO ORDERED.
[21] CIVIL CODE, Article 417 provides:
“The following are also considered as personal property:
(1) Obligations and actions which have for their object movables
and demandable sums, and
(2) Shares of stock of agricultural, commercial and industrial
entities, although they may have real estate.”
According to the eminent civilist Arturo M. Tolentino, the term
“obligations” in this article really means credits, and includes all kinds
of credits. (Tolentino, Commentaries and Jurisprudence on the Civil
Code of the Philippines, Vol. II, 1992 Ed., p. 25.) Black’s Law
Dictionary defines credit as “(t)he correlative of a debt; that is, a debt
considered from the creditor’s standpoint, or that is incoming or due to
one.” (Black’s Law Dictionary, Sixth Ed., p. 367.)
[22] CIVIL CODE, Article 1811, in connection with Family Code, Article
108.
[32] Take note, however, that this applies only with respect to co-
owners as party-plaintiffs, by virtue of Article 487 of the Civil Code. As
party-defendants, the same co-owners are all indispensable
parties. (See Arcelona v. Court of Appeals, G.R. No. 102900, 2
October 1997, 280 SCRA 20, 39.
[35] See also Article 1425.
Art. 1425. When without the knowledge or against the will of the
debtor, a third person pays a debt which the obligor is not legally
bound to pay because the action thereon has prescribed, but the
debtor later voluntarily reimburses the third person, the obligor cannot
recover what he has paid.
SECOND DIVISION
DECISION
MARTINEZ, J.:
Under Article 161 of the Civil Code, what debts and obligations contracted
by the husband alone are considered “for the benefit of the conjugal
partnership” which are chargeable against the conjugal partnership? Is a
surety agreement or an accommodation contract entered into by the husband
in favor of his employer within the contemplation of the said provision?
These are the issues which we will resolve in this petition for review.
The petitioner assails the decision dated April 14, 1994 of the respondent
Court of Appeals in “Spouses Alfredo and Encarnacion Ching vs. Ayala
Investment and Development Corporation, et. al.,” docketed as CA-G.R. CV
No. 29632,[1] upholding the decision of the Regional Trial Court of Pasig,
Branch 168, which ruled that the conjugal partnership of gains of
respondents-spouses Alfredo and Encarnacion Ching is not liable for the
payment of the debts secured by respondent-husband Alfredo Ching.
A chronology of the essential antecedent facts is necessary for a clear
understanding of the case at bar.
Philippine Blooming Mills (hereinafter referred to as PBM) obtained
a P50,300,000.00 loan from petitioner Ayala Investment and Development
Corporation (hereinafter referred to as AIDC). As added security for the credit
line extended to PBM, respondent Alfredo Ching, Executive Vice President of
PBM, executed security agreements on December 10, 1980 and on March 20,
1981 making himself jointly and severally answerable with PBM’s
indebtedness to AIDC.
PBM failed to pay the loan. Thus, on July 30, 1981, AIDC filed a case for
sum of money against PBM and respondent-husband Alfredo Ching with the
then Court of First Instance of Rizal (Pasig), Branch VIII, entitled “Ayala
Investment and Development Corporation vs. Philippine Blooming Mills and
Alfredo Ching,” docketed as Civil Case No. 42228.
After trial, the court rendered judgment ordering PBM and respondent-
husband Alfredo Ching to jointly and severally pay AIDC the principal amount
of P50,300,000.00 with interests.
Pending appeal of the judgment in Civil Case No. 42228, upon motion of
AIDC, the lower court issued a writ of execution pending appeal. Upon AIDC’s
putting up of an P8,000,000.00 bond, a writ of execution dated May 12, 1982
was issued. Thereafter, petitioner Abelardo Magsajo, Sr., Deputy Sheriff of
Rizal and appointed sheriff in Civil Case No. 42228, caused the issuance and
service upon respondents-spouses of a notice of sheriff sale dated May 20,
1982 on three (3) of their conjugal properties. Petitioner Magsajo then
scheduled the auction sale of the properties levied.
On June 9, 1982, private respondents filed a case of injunction against
petitioners with the then Court of First Instance of Rizal (Pasig), Branch XIII,
to enjoin the auction sale alleging that petitioners cannot enforce the judgment
against the conjugal partnership levied on the ground that, among others, the
subject loan did not redound to the benefit of the said conjugal
partnership.[2] Upon application of private respondents, the lower court issued
a temporary restraining order to prevent petitioner Magsajo from proceeding
with the enforcement of the writ of execution and with the sale of the said
properties at public auction.
AIDC filed a petition for certiorari before the Court of
Appeals,[3] questioning the order of the lower court enjoining the
sale. Respondent Court of Appeals issued a Temporary Restraining Order on
June 25, 1982, enjoining the lower court[4] from enforcing its Order of June 14,
1982, thus paving the way for the scheduled auction sale of respondents-
spouses conjugal properties.
On June 25, 1982, the auction sale took place. AIDC being the only
bidder, was issued a Certificate of Sale by petitioner Magsajo, which was
registered on July 2, 1982. Upon expiration of the redemption period,
petitioner sheriff issued the final deed of sale on August 4, 1982 which was
registered on August 9, 1983.
In the meantime, the respondent court, on August 4, 1982, decided CA-
G.R. SP No. 14404, in this manner:
“WHEREFORE, the petition for certiorari in this case is granted and
the challenged order of the respondent Judge dated June 14, 1982
in Civil Case No. 46309 is hereby set aside and nullified. The same
petition insofar as it seeks to enjoin the respondent Judge from
proceeding with Civil Case No. 46309 is, however, denied. No
pronouncement is here made as to costs. x x x x.”[5]
On September 3, 1983, AIDC filed a motion to dismiss the petition for
injunction filed before Branch XIII of the CFI of Rizal (Pasig) on the ground
that the same had become moot and academic with the consummation of the
sale. Respondents filed their opposition to the motion arguing, among others,
that where a third party who claims ownership of the property attached or
levied upon, a different legal situation is presented; and that in this case, two
(2) of the real properties are actually in the name of Encarnacion Ching, a
non-party to Civil Case No. 42228.
The lower court denied the motion to dismiss. Hence, trial on the merits
proceeded. Private respondents presented several witnesses. On the other
hand, petitioners did not present any evidence.
On September 18, 1991, the trial court promulgated its decision declaring
the sale on execution null and void. Petitioners appealed to the respondent
court, which was docketed as CA-G.R. CV No. 29632.
On April 14, 1994, the respondent court promulgated the assailed
decision, affirming the decision of the regional trial court. It held that:
“The loan procured from respondent-appellant AIDC was for the
advancement and benefit of Philippine Blooming Mills and not for
the benefit of the conjugal partnership of petitioners-appellees.
xxx xxx xxx
As to the applicable law, whether it is Article 161 of the New Civil
Code or Article 1211 of the Family Code-suffice it to say that the two
provisions are substantially the same. Nevertheless, We agree with
the trial court that the Family Code is the applicable law on the
matter x x x x x x.
Article 121 of the Family Code provides that ‘The conjugal
partnership shall be liable for: x x x (2) All debts and obligations
contracted during the marriage by the designated Administrator-
Spouse for the benefit of the conjugal partnership of gains x x
x.’ The burden of proof that the debt was contracted for the benefit
of the conjugal partnership of gains, lies with the creditor-party
litigant claiming as such. In the case at bar, respondent-appellant
AIDC failed to prove that the debt was contracted by appellee-
husband, for the benefit of the conjugal partnership of gains.”
The dispositive portion of the decision reads:
“WHEREFORE, in view of all the foregoing, judgment is hereby
rendered DISMISSING the appeal. The decision of the Regional
Trial Court is AFFIRMED in toto.”[6]
Petitioner filed a Motion for Reconsideration which was denied by the
respondent court in a Resolution dated November 28, 1994.[7]
Hence, this petition for review. Petitioner contends that the “respondent
court erred in ruling that the conjugal partnership of private respondents is not
liable for the obligation by the respondent-husband.”
Specifically, the errors allegedly committed by the respondent court are
as follows:
“I. RESPONDENT COURT ERRED IN RULING THAT THE
OBLIGATION INCURRED BY RESPONDENT HUSBAND DID
NOT REDOUND TO THE BENEFIT OF THE CONJUGAL
PARTNERSHIP OF THE PRIVATE RESPONDENT.
II RESPONDENT COURT ERRED IN RULING THAT THE ACT OF
RESPONDENT HUSBAND IN SECURING THE SUBJECT LOAN
IS NOT PART OF HIS INDUSTRY, BUSINESS OR CAREER
FROM WHICH HE SUPPORTS HIS FAMILY.”
Petitioners in their appeal point out that there is no need to prove that
actual benefit redounded to the benefit of the partnership; all that is
necessary, they say, is that the transaction was entered into for the benefit of
the conjugal partnership. Thus, petitioners aver that:
“The wordings of Article 161 of the Civil Code is very clear: for the
partnership to be held liable, the husband must have contracted the
debt ‘for the benefit of’ the partnership, thus:
(A) If the husband himself is the principal obligor in the contract, i.e., he
directly received the money and services to be used in or for his own business
or his own profession, that contract falls within the term “x x x x obligations for
the benefit of the conjugal partnership.” Here, no actual benefit may be
proved. It is enough that the benefit to the family is apparent at the time of the
signing of the contract. From the very nature of the contract of loan or
services, the family stands to benefit from the loan facility or services to be
rendered to the business or profession of the husband. It is immaterial, if in
the end, his business or profession fails or does not succeed. Simply stated,
where the husband contracts obligations on behalf of the family business, the
law presumes, and rightly so, that such obligation will redound to the benefit
of the conjugal partnership.
(B) On the other hand, if the money or services are given to another person or
entity, and the husband acted only as a surety or guarantor, that contract
cannot, by itself, alone be categorized as falling within the context of
“obligations for the benefit of the conjugal partnership.” The contract of loan
or services is clearly for the benefit of the principal debtor and not for the
surety or his family. No presumption can be inferred that, when a husband
enters into a contract of surety or accommodation agreement, it is “for the
benefit of the conjugal partnership.” Proof must be presented to establish
benefit redounding to the conjugal partnership.
Thus, the distinction between the Cobb-Perez case, and we add, that
of the three other companion cases, on the one hand, and that of Ansaldo,
Liberty Insurance and Luzon Surety, is that in the former, the husband
contracted the obligation for his own business; while in the latter, the husband
merely acted as a surety for the loan contracted by another for the latter’s
business.
The evidence of petitioner indubitably show that co-respondent Alfredo
Ching signed as surety for the P50M loan contracted on behalf of
PBM. Petitioner should have adduced evidence to prove that Alfredo Ching’s
acting as surety redounded to the benefit of the conjugal partnership. The
reason for this is as lucidly explained by the respondent court:
“The loan procured from respondent-appellant AIDC was for the
advancement and benefit of Philippine Blooming Mills and not for
the benefit of the conjugal partnership of petitioners-
appellees. Philippine Blooming Mills has a personality distinct and
separate from the family of petitioners-appellees - this despite the
fact that the members of the said family happened to be
stockholders of said corporate entity.”
xxx xxx xxx
x x x. The burden of proof that the debt was contracted for the
benefit of the conjugal partnership of gains, lies with the creditor-
party litigant claiming as such. In the case at bar, respondent-
appellant AIDC failed to prove that the debt was contracted by
appellee-husband, for the benefit of the conjugal partnership of
gains. What is apparent from the facts of the case is that the
judgment debt was contracted by or in the name of the Corporation
Philippine Blooming Mills and appellee-husband only signed as
surety thereof. The debt is clearly a corporate debt and respondent-
appellant’s right of recourse against appellee-husband as surety is
only to the extent of his corporate stockholdings. It does not extend
to the conjugal partnership of gains of the family of petitioners-
appellees. x x x x x x.” [17]
Petitioners contend that no actual benefit need accrue to the conjugal
partnership. To support this contention, they cite Justice J.B.L. Reyes’
authoritative opinion in the Luzon Surety Company case:
“I concur in the result, but would like to make of record that, in my
opinion, the words ‘all debts and obligations contracted by the
husband for the benefit of the conjugal partnership’ used in Article
161 of the Civil Code of the Philippines in describing the charges
and obligations for which the conjugal partnership is liable do not
require that actual profit or benefit must accrue to the conjugal
partnership from the husband’s transaction; but it suffices that the
transaction should be one that normally would produce such benefit
for the partnership. This is the ratio behind our ruling in Javier vs.
Osmeña, 34 Phil. 336, that obligations incurred by the husband in
the practice of his profession are collectible from the conjugal
partnership.”
The aforequoted concurring opinion agreed with the majority decision that
the conjugal partnership should not be made liable for the surety agreement
which was clearly for the benefit of a third party. Such opinion merely
registered an exception to what may be construed as a sweeping statement
that in all cases actual profit or benefit must accrue to the conjugal
partnership. The opinion merely made it clear that no actual benefits to the
family need be proved in some cases such as in the Javier case. There, the
husband was the principal obligor himself. Thus, said transaction was found
to be “one that would normally produce x x x benefit for the partnership.” In
the later case of G-Tractors, Inc., the husband was also the principal obligor -
not merely the surety. This latter case, therefore, did not create any
precedent. It did not also supersede the Luzon Surety Company case, nor
any of the previous accommodation contract cases, where this Court ruled
that they were for the benefit of third parties.
But it could be argued, as the petitioner suggests, that even in such kind
of contract of accommodation, a benefit for the family may also result, when
the guarantee is in favor of the husband’s employer.
In the case at bar, petitioner claims that the benefits the respondent family
would reasonably anticipate were the following:
(a) The employment of co-respondent Alfredo Ching would be
prolonged and he would be entitled to his monthly salary
of P20,000.00 for an extended length of time because of the loan he
guaranteed;
(b) The shares of stock of the members of his family would
appreciate if the PBM could be rehabilitated through the loan
obtained;
(c) His prestige in the corporation would be enhanced and his
career would be boosted should PBM survive because of the loan.
However, these are not the benefits contemplated by Article 161 of the
Civil Code. The benefits must be one directly resulting from the loan. It
cannot merely be a by-product or a spin-off of the loan itself.
In all our decisions involving accommodation contracts of the
husband,[18] we underscored the requirement that: “there must be the
requisite showing x x x of some advantage which clearly accrued to the
welfare of the spouses” or “benefits to his family” or “that such obligations are
productive of some benefit to the family.” Unfortunately, the petition did not
present any proof to show: (a) Whether or not the corporate existence of
PBM was prolonged and for how many months or years; and/or (b) Whether
or not the PBM was saved by the loan and its shares of stock appreciated, if
so, how much and how substantial was the holdings of the Ching family.
Such benefits (prospects of longer employment and probable increase in
the value of stocks) might have been already apparent or could be anticipated
at the time the accommodation agreement was entered into. But would those
“benefits” qualify the transaction as one of the “obligations x x x for the benefit
of the conjugal partnership”? Are indirect and remote probable benefits, the
ones referred to in Article 161 of the Civil Code? The Court of Appeals in
denying the motion for reconsideration, disposed of these questions in the
following manner:
“No matter how one looks at it, the debt/credit extended by
respondents-appellants is purely a corporate debt granted to PBM,
with petitioner-appellee-husband merely signing as surety. While
such petitioner-appellee-husband, as such surety, is solidarily liable
with the principal debtor AIDC, such liability under the Civil Code
provisions is specifically restricted by Article 122 (par. 1) of the
Family Code, so that debts for which the husband is liable may not
be charged against conjugal partnership properties. Article 122 of
the Family Code is explicit – ‘The payment of personal debts
contracted by the husband or the wife before or during the marriage
shall not be charged to the conjugal partnership except insofar as
they redounded to the benefit of the family.’
Respondents-appellants insist that the corporate debt in question
falls under the exception laid down in said Article 122 (par.
one). We do not agree. The loan procured from respondent-
appellant AIDC was for the sole advancement and benefit of
Philippine Blooming Mills and not for the benefit of the conjugal
partnership of petitioners-appellees.
x x x appellee-husband derives salaries, dividends benefits from
Philippine Blooming Mills (the debtor corporation), only because
said husband is an employee of said PBM. These salaries and
benefits, are not the ‘benefits’ contemplated by Articles 121 and 122
of the Family Code. The ‘benefits’ contemplated by the exception in
Article 122 (Family Code) is that benefit derived directly from the
use of the loan. In the case at bar, the loan is a corporate loan
extended to PBM and used by PBM itself, not by petitioner-
appellee-husband or his family. The alleged benefit, if any,
continuously harped by respondents-appellants, are not only
incidental but also speculative.”[19]
We agree with the respondent court. Indeed, considering the odds
involved in guaranteeing a large amount (P50,000,000.00) of loan, the
probable prolongation of employment in PBM and increase in value of its
stocks, would be too small to qualify the transaction as one “for the benefit” of
the surety’s family. Verily, no one could say, with a degree of certainty, that
the said contract is even “productive of some benefits” to the conjugal
partnership.
We likewise agree with the respondent court (and this view is not
contested by the petitioners) that the provisions of the Family Code is
applicable in this case. These provisions highlight the underlying concern of
the law for the conservation of the conjugal partnership; for the husband’s
duty to protect and safeguard, if not augment, not to dissipate it.
This is the underlying reason why the Family Code clarifies that the
obligations entered into by one of the spouses must be those that redounded
to the benefit of the family and that the measure of the partnership’s liability is
to “the extent that the family is benefited.”[20]
These are all in keeping with the spirit and intent of the other provisions of
the Civil Code which prohibits any of the spouses to donate or convey
gratuitously any part of the conjugal property.[21] Thus, when co-respondent
Alfredo Ching entered into a surety agreement he, from then on, definitely put
in peril the conjugal property (in this case, including the family home) and
placed it in danger of being taken gratuitously as in cases of donation.
In the second assignment of error, the petitioner advances the view that
acting as surety is part of the business or profession of the respondent-
husband.
This theory is new as it is novel.
The respondent court correctly observed that:
“Signing as a surety is certainly not an exercise of an industry or
profession, hence the cited cases of Cobb-Perez vs. Lantin; Abella
de Diaz vs. Erlanger & Galinger; G-Tractors, Inc. vs. CA do not
apply in the instant case. Signing as a surety is not embarking in a
business.”[22]
We are likewise of the view that no matter how often an executive acted or
was persuaded to act, as a surety for his own employer, this should not be
taken to mean that he had thereby embarked in the business of suretyship or
guaranty.
This is not to say, however, that we are unaware that executives are often
asked to stand as surety for their company’s loan obligations. This is
especially true if the corporate officials have sufficient property of their own;
otherwise, their spouses’ signatures are required in order to bind the conjugal
partnerships.
The fact that on several occasions the lending institutions did not require
the signature of the wife and the husband signed alone does not mean that
being a surety became part of his profession. Neither could he be presumed
to have acted for the conjugal partnership.
Article 121, paragraph 3, of the Family Code is emphatic that the payment
of personal debts contracted by the husband or the wife before or during the
marriage shall not be charged to the conjugal partnership except to the extent
that they redounded to the benefit of the family.
Here, the property in dispute also involves the family home. The loan is a
corporate loan not a personal one. Signing as a surety is certainly not an
exercise of an industry or profession nor an act of administration for the
benefit of the family.
On the basis of the facts, the rules, the law and equity, the assailed
decision should be upheld as we now uphold it. This is, of course, without
prejudice to petitioner’s right to enforce the obligation in its favor against the
PBM receiver in accordance with the rehabilitation program and payment
schedule approved or to be approved by the Securities & Exchange
Commission.
WHEREFORE, the petition for review should be, as it is hereby, DENIED
for lack of merit.
SO ORDERED.
Regalado, (Chairman), Melo, Puno, and Mendoza, JJ., concur.
THIRD DIVISION
JUANA COMPLEX I HOMEOWNERS G.R. No. 152272
ASSOCIATION, INC., ANDRES C.
BAUTISTA, BRIGIDO
DIMACULANGAN, DOLORES P.
PRADO, IMELDA DE LA CRUZ,
EDITHA C. DY, FLORENCIA M.
MERCADO, LEOVINO C. DATARIO,
AIDA
A. ABAYON, NAPOLEON M.
DIMAANO, ROSITA G. ESTIGOY and
NELSON A.
LOYOLA,
Petitioners,
- versus -
ENRIQUE RIVILLA,
MICHAEL E. JETHMAL
Respondents.
x-------------------------------------------x
Petitioners,
G. R. No. 152397
- versus -
Promulgated:
March 5, 2012
X -------------------------------------------------------------------------------------- X
DECISION
MENDOZA, J.:
Before the Court are two (2) consolidated petitions assailing the July
31, 2001 Decision[1] and February 21, 2002 Resolution[2] of the Court of
Appeals (CA) in CA-G.R. SP No. 60543, which annulled and set aside the
March 3, 1999 Order[3] of the Regional Trial Court, Branch 25, Biñan,
Laguna (RTC), granting the application for the issuance of a writ of
preliminary injunction, and upheld the June 16, 2000 Omnibus
Order[4] denying the motion to dismiss.
The Facts:
The complaint alleged that JCHA, et al. were regular commuters and
motorists who constantly travelled towards the direction of Manila and
Calamba; that they used the entry and exit toll gates of South Luzon
Expressway (SLEX) by passing through right-of-way public road known as La
Paz Road; that they had been using La Paz Road for more than ten (10)
years; that in August 1998, Fil-estate excavated, broke and deliberately ruined
La Paz Road that led to SLEX so JCHA, et al. would not be able to pass
through the said road; that La Paz Road was restored by the residents to
make it passable but Fil-estate excavated the road again; that JCHA reported
the matter to the Municipal Government and the Office of the Municipal
Engineer but the latter failed to repair the road to make it passable and safe to
motorists and pedestrians; that the act of Fil-estate in excavating La Paz
Road caused damage, prejudice, inconvenience, annoyance, and loss of
precious hours to them, to the commuters and motorists because traffic was
re-routed to narrow streets that caused terrible traffic congestion and hazard;
and that its permanent closure would not only prejudice their right to free and
unhampered use of the property but would also cause great damage and
irreparable injury.
Accordingly, JCHA, et al. also prayed for the immediate issuance of a
Temporary Restraining Order (TRO) or a writ of preliminary
injunction (WPI) to enjoin Fil-Estate, et al. from stopping and intimidating them
in their use of La Paz Road.
On February 10, 1999, a TRO was issued ordering Fil-Estate, et al, for
a period of twenty (20) days, to stop preventing, coercing, intimidating or
harassing the commuters and motorists from using the La Paz Road. [6]
On March 3, 1999, the RTC issued an Order [10] granting the WPI and
required JCHA, et al. to post a bond.
The RTC then issued its June 16, 2000 Omnibus Order, denying both
the motion to dismiss and the motion for reconsideration filed by Fil-Estate, et
al.
On July 31, 2001, the CA rendered the decision partially granting the
petition, the dispositive portion of which reads:
SO ORDERED.[14]
The CA ruled that the complaint sufficiently stated a cause of action
when JCHA, et al. alleged in their complaint that they had been using La Paz
Road for more than ten (10) years and that their right was violated when Fil-
Estate closed and excavated the road. It sustained the RTC ruling that the
complaint was properly filed as a class suit as it was shown that the case was
of common interest and that the individuals sought to be represented were so
numerous that it was impractical to include all of them as parties. The CA,
however, annulled the WPI for failure of JCHA, et al. to prove their clear and
present right over La Paz Road. The CA ordered the remand of the case to
the RTC for a full-blown trial on the merits.
In G.R. No. 152272, JCHA, et al. come to this Court, raising the
following issues:
(A)
(B)
In G.R. No. 152397, on the other hand, Fil-Estate, et al. anchor their
petition on the following issues:
I.
II.
JCHA, et al. argue that La Paz Road has attained the status and
character of a public road or burdened by an apparent easement of public
right of way. They point out thatLa Paz Road is the widest road in the
neighborhood used by motorists in going to Halang Road and in entering the
SLEX-Halang toll gate and that there is no other road as wide as La Paz
Road existing in the vicinity. For residents of San Pedro, Laguna, the shortest,
convenient and safe route towards SLEX Halang is along Rosario
Avenuejoining La Paz Road.
Finally, JCHA, et al. argue that the CA erred when it voided the WPI
because the public nature of La Paz Road had been sufficiently proven and,
as residents of San Pedro and Biñan, Laguna, their right to use La Paz Road
is undeniable.
Fil-Estate, et al. agree with the CA that the annulment of the WPI was
proper since JCHA, et al. failed to prove that they have a clear right over La
Paz Road. Fil-Estate, et al. assert that JCHA, et al. failed to prove the
existence of a right of way or a right to pass over La Paz Road and that the
closure of the said road constituted an injury to such right. According to
them, La Paz Road is a torrens registered private road and there is neither a
voluntary nor legal easement constituted over it. They claim that La Paz
Road is a private property registered under the name of La Paz and the
beneficial ownership thereof was transferred to FEEC when La Paz joined the
consortium for the Ecocentrum Project.
Fil-Estate, et al., however, insist that the complaint did not sufficiently
contain the ultimate facts to show a cause of action. They aver the bare
allegation that one is entitled to something is an allegation of a conclusion
which adds nothing to the pleading.
They likewise argue that the complaint was improperly filed as a class
suit for it failed to show that JCHA, et al. and the commuters and motorists they
are representing have a well-defined community of interest over La Paz Road. They
claim that the excavation of La Paz Road would not necessarily give rise to a
common right or cause of action for JCHA, et al. against them since each of them
has a separate and distinct purpose and each may be affected differently than the
others.
The Court’s Ruling
The issues for the Court’s resolution are: (1) whether or not the
complaint states a cause of action; (2) whether the complaint has been
properly filed as a class suit; and (2) whether or not a WPI is warranted.
With respect to the issue that the case was improperly instituted as a
class suit, the Court finds the opposition without merit.
Section 12, Rule 3 of the Rules of Court defines a class suit, as follows:
Sec. 12. Class suit. – When the subject matter of the
controversy is one of common or general interest to many
persons so numerous that it is impracticable to join all as
parties, a number of them which the court finds to be sufficiently
numerous and representative as to fully protect the interests of
all concerned may sue or defend for the benefit of all. Any party
in interest shall have the right to intervene to protect his
individual interest.
The necessary elements for the maintenance of a class suit are: 1) the
subject matter of controversy is one of common or general interest to many
persons; 2) the parties affected are so numerous that it is impracticable to
bring them all to court; and 3) the parties bringing the class suit are sufficiently
numerous or representative of the class and can fully protect the interests of
all concerned.[24]
In this case, the suit is clearly one that benefits all commuters and
motorists who use La Paz Road. As succinctly stated by the CA:
Anent the issue on the propriety of the WPI, Section 3, Rule 58 of the
Rules of Court lays down the rules for the issuance thereof. Thus:
In the case at bench, JCHA, et al. failed to establish a prima facie proof of
violation of their right to justify the issuance of a WPI. Their right to the use of La Paz
Road is disputable since they have no clear legal right therein. As correctly ruled by
the CA:
SO ORDERED.
EN BANC
EN BANC
San Juan, Africa, Gonzales & San Agustin Law Offices for private
respondents.
FERIA, J.:
On March 17, 1982, the trial court denied the motion to dismiss, stating that
the grounds on which the motion to dismiss are predicated are not indubitable
as the complaint on its face states a valid cause of action; and the question as
to whether the printed article sued upon its actionable or not is a matter of
evidence. Petitioner's motion for reconsideration was denied on May 28,
1982.
On June 18, 1982, petitioner filed a petition for certiorari with respondent
Court (CA-G. R. No. 14406) seeking the annulment of the aforecited trial
court's Orders for having been issued with such a grave abuse of discretion
as amounting to lack of jurisdiction and praying for the dismissal of the
complaint for failure to state a cause of action.
The proper remedy which petitioner should have taken from the decision of
respondent Court is an appeal by certiorari under Rule 45 of the Rules of
Court and not the special civil action of certiorari and prohibition under Rule
65 of said Rules. However, since the petition was filed on time within fifteen
days from notice of the Resolution denying the motion for reconsideration, we
shall treat the same as a petition for review on certiorari. The two (2) issues
raised in the petition are: (1) whether or not the private respondents'
complaint failed to state a cause of action; and (2) whether or not the petition
for certiorari and prohibition is proper to question the denial of a motion to
dismiss for failure to state a cause of action.
In the case of Corpus vs. Cuaderno, Sr. (16 SCRA 807) this Court ruled that
"in order to maintain a libel suit, it is essential that the victim be identifiable
(People vs. Monton, L-16772, November 30, 1962), although it is not
necessary that he be named (19 A.L.R. 116)." In an earlier case, this Court
declared that" ... defamatory matter which does not reveal the Identity of the
person upon whom the imputation is cast, affords no ground of action unless it
be shown that the readers of the libel could have Identified the personality of
the individual defamed." (Kunkle vs. Cablenews-American and Lyons 42 Phil.
760).
In the case of Uy Tioco vs. Yang Shu Wen , 32 Phil. 624, this Court held as
follows:
It is evident from the above ruling that where the defamation is alleged to
have been directed at a group or class, it is essential that the statement must
be so sweeping or all-embracing as to apply to every individual in that group
or class, or sufficiently specific so that each individual in the class or group
can prove that the defamatory statement specifically pointed to him, so that he
can bring the action separately, if need be.
We note that private respondents filed a "class suit" in representation of all the
8,500 sugarcane planters of Negros Occidental. Petitioner disagrees and
argues that the absence of any actionable basis in the complaint cannot be
cured by the filing of a class suit on behalf of the aforesaid sugar planters.
The case at bar is not a class suit. It is not a case where one or more may sue
for the benefit of all (Mathay vs. Consolidated Bank and Trust Company, 58
SCRA 559) or where the representation of class interest affected by the
judgment or decree is indispensable to make each member of the class an
actual party (Borlaza vs. Polistico, 47 Phil. 348). We have here a case where
each of the plaintiffs has a separate and distinct reputation in the community.
They do not have a common or general interest in the subject matter of the
controversy.
The disputed portion of the article which refers to plaintiff Sola and which was
claimed to be libelous never singled out plaintiff Sola as a sugar planter. The
news report merely stated that the victim had been arrested by members of a
special police unit brought into the area by Pablo Sola, the mayor of
Kabankalan. Hence, the report, referring as it does to an official act performed
by an elective public official, is within the realm of privilege and protected by
the constitutional guarantees of free speech and press.
The article further stated that Sola and the commander of the special police
unit were arrested. The Court takes judicial notice of this fact. (People vs.
Sola, 103 SCRA 393.)
The second issue to be resolved here is whether or not the special civil action
of certiorari or prohibition is available to petitioner whose motion to dismiss
the complaint and subsequent motion for reconsideration were denied.
This general rule is subject to certain exceptions. If the court, in denying the
motion to dismiss or motion to quash, acts without or in excess of jurisdiction
or with grave abuse of discretion, then certiorari or prohibition lies. The reason
is that it would be unfair to require the defendant or accused to undergo the
ordeal and expense of a trial if the court has no jurisdiction over the subject
matter or offense, or is not the court of proper venue, or if the denial of the
motion to dismiss or motion to quash is made with grave abuse of discretion
or a whimsical and capricious exercise of judgment. In such cases, the
ordinary remedy of appeal cannot be plain and adequate. The following are a
few examples of the exceptions to the general rule.
In De Jesus vs. Garcia (19 SCRA 554), upon the denial of a motion to dismiss
based on lack of jurisdiction over the subject matter, this Court granted the
petition for certiorari and prohibition against the City Court of Manila and
directed the respondent court to dismiss the case.
In Lopez vs. City Judge (18 SCRA 616), upon the denial of a motion to quash
based on lack of jurisdiction over the offense, this Court granted the petition
for prohibition and enjoined the respondent court from further proceeding in
the case.
In Enriquez vs. Macadaeg (84 Phil. 674), upon the denial of a motion to
dismiss based on improper venue, this Court granted the petition for
prohibition and enjoined the respondent judge from taking cognizance of the
case except to dismiss the same.
In Manalo vs. Mariano (69 SCRA 80), upon the denial of a motion to dismiss
based on bar by prior judgment, this Court granted the petition for certiorari
and directed the respondent judge to dismiss the case.
In Yuviengco vs. Dacuycuy (105 SCRA 668), upon the denial of a motion to
dismiss based on the Statute of Frauds, this Court granted the petition for
certiorari and dismissed the amended complaint.
In Tacas vs. Cariaso (72 SCRA 527), this Court granted the petition for
certiorari after the motion to quash based on double jeopardy was denied by
respondent judge and ordered him to desist from further action in the criminal
case except to dismiss the same.
In People vs. Ramos (83 SCRA 11), the order denying the motion to quash
based on prescription was set aside on certiorari and the criminal case was
dismissed by this Court.
Respondent Court correctly stated the general rule and its exceptions.
However, it ruled that none of the exceptions is present in the case at bar and
that the case appears complex and complicated, necessitating a full-blown
trial to get to the bottom of the controversy.
Petitioner's motion to dismiss is based on the ground that the complaint states
no cause of action against it by pointing out the non-libelous nature of the
article sued upon. There is no need of a trial in view of the conclusion of this
Court that the article in question is not libelous. The specific allegation in the
complaint, to the effect that the article attributed to the sugarcane planters the
deaths and brutalization of sugarcane workers, is not borne out by a perusal
of the actual text.
The complaint contains a recital of the favorable working conditions of the
agricultural workers in the sugar industry and the various foundations and
programs supported by planters' associations for the benefit of their workers.
Undoubtedly, the statements in the article in question are sweeping and
exaggerated; but, paraphrasing the ruling in the Uy Tioco case above quoted,
it would be unreasonable and absurd to condemn the majority of the
sugarcane planters, who have at heart the welfare of their workers, because
of the actions of a part. Nonetheless, articles such as the one in question may
also serve to prick the consciences of those who have but are not doing
anything or enough for those who do not have.
On the other hand, petitioner would do well to heed the admonition of the
President to media that they should check the sources of their information to
ensure the publication of the truth. Freedom of the press, like all freedoms,
should be exercised with responsibility.
SO ORDERED.
SECOND DIVISION
The issue posed in this appeal is whether or not plaintiff corporation (non-
stock may institute an action in behalf of its individual members for the
recovery of certain parcels of land allegedly owned by said members; for the
nullification of the transfer certificates of title issued in favor of defendants
appellees covering the aforesaid parcels of land; for a declaration of "plaintiff's
members as absolute owners of the property" and the issuance of the
corresponding certificate of title; and for damages.
I
Appellant contends, as a first assignment of error, that the trial court acted
without authority and jurisdiction in dismissing the amended complaint when
the Secretary of Justice had already approved the transfer of the case to any
one of the two branches of the Court of First Instance of Malolos, Bulacan.
Appellant confuses the jurisdiction of a court and the venue of cases with the
assignment of cases in the different branches of the same Court of First
Instance. Jurisdiction implies the power of the court to decide a case, while
venue the place of action. There is no question that respondent court has
jurisdiction over the case. The venue of actions in the Court of First Instance
is prescribed in Section 2, Rule 4 of the Revised Rules of Court. The laying of
venue is not left to the caprice of plaintiff, but must be in accordance with the
aforesaid provision of the rules. 2The mere fact that a request for the transfer
of a case to another branch of the same court has been approved by the
Secretary of Justice does not divest the court originally taking cognizance
thereof of its jurisdiction, much less does it change the venue of the action. As
correctly observed by the trial court, the indorsement of the Undersecretary of
Justice did not order the transfer of the case to the Malolos Branch of the
Bulacan Court of First Instance, but only "authorized" it for the reason given
by plaintiff's counsel that the transfer would be convenient for the parties. The
trial court is not without power to either grant or deny the motion, especially in
the light of a strong opposition thereto filed by the defendant. We hold that the
court a quo acted within its authority in denying the motion for the transfer the
case to Malolos notwithstanding the authorization" of the same by the
Secretary of Justice.
II
Viewed in the light of existing law and jurisprudence, We find that the trial
court correctly dismissed the amended complaint.
Thus, when "the notion of legal entity is used to defeat public convenience,
justify wrong, protect fraud, or defend crime, ... the law will regard the
corporation as an association of persons, or in the case of two corporations,
merge them into one, the one being merely regarded as part or instrumentality
of the other. 11 The same is true where a corporation is a dummy and serves
no business purpose and is intended only as a blind, or an alter ego or
business conduit for the sole benefit of the stockholders. 12 This doctrine of
disregarding the distinct personality of the corporation has been applied by
the courts in those cases when the corporate entity is used for the evasion of
taxes 13 or when the veil of corporate fiction is used to confuse legitimate
issue of employer-employee relationship, 14 or when necessary for the
protection of creditors, in which case the veil of corporate fiction may be
pierced and the funds of the corporation may be garnished to satisfy the debts
of a principal stockholder. 15 The aforecited principle is resorted to by the
courts as a measure protection for third parties to prevent fraud, illegality or
injustice. 16
It has not been claimed that the members have assigned or transferred
whatever rights they may have on the land in question to the plaintiff
corporation. Absent any showing of interest, therefore, a corporation, like
plaintiff-appellant herein, has no personality to bring an action for and in
behalf of its stockholders or members for the purpose of recovering property
which belongs to said stockholders or members in their personal capacities.
III
In order that a class suit may prosper, the following requisites must be
present: (1) that the subject matter of the controversy is one of common or
general interest to many persons; and (2) that the parties are so numerous
that it is impracticable to bring them all before the court. 20
Under the first requisite, the person who sues must have an interest in the
controversy, common with those for whom he sues, and there must be that
unity of interest between him and all such other persons which would entitle
them to maintain the action if suit was brought by them jointly. 21
Here, there is only one party plaintiff, and the plaintiff corporation does not
even have an interest in the subject matter of the controversy, and cannot,
therefore, represent its members or stockholders who claim to own in their
individual capacities ownership of the said property. Moreover, as correctly
stated by the appellees, a class suit does not lie in actions for the recovery of
property where several persons claim Partnership of their respective portions
of the property, as each one could alleged and prove his respective right in a
different way for each portion of the land, so that they cannot all be held to
have Identical title through acquisition prescription. 23
Having shown that no cause of action in favor of the plaintiff exists and that
the action in the lower court cannot be considered as a class suit, it would be
unnecessary and an Idle exercise for this Court to resolve the remaining issue
of whether or not the plaintiffs action for reconveyance of real property based
upon constructive or implied trust had already prescribed.
Footnotes