THIRD DIVISION

[G.R. No. 111401. October 17, 1996.]

ERIBERTO G. VALENCIA, substituted by his heirs: REBECCA S. VDA. DE
VALENCIA, MA. CAROLINA S. VALENCIA, MA. ANTONETTE S.
VALENCIA, PETER GELVIC S. VALENCIA, JOSE THERONE S. VALENCIA
and MA. SOPHEA S. VALENCIA, petitioners, vs. COURT OF APPEALS,
RICARDO BAGTAS and MIGUEL BUNYE, respondents.
Gamaliel P. Magsaysay for petitioners.
Roberto C. Bermejo for private respondents.
SYLLABUS
1.
REMEDIAL LAW; ACTIONS; SPLITTING A SINGLE CAUSE OF
ACTION; EFFECT. If a party-litigant splits his single cause of action, the
other action or actions filed may be dismissed by invoking litis pendentia,
pursuant to Section 1(e), Rule 16 of the Revised Rules of Court. A party who
splits his single cause of action cannot be accused of also "violating the rule
against litis pendentia" as the former, a malpractice, gives rise to the latter, a
ground for a motion to dismiss. This is made clear by Section 4, Rule 2 of the
Rules, which speaks of cause and effect: "Sec. 4. Effect of splitting a single
cause of action. If two or more complaints are brought for different parts of
a single cause of action, the filing of the first may be pleaded in abatement of
the other or others, in accordance with Section 1(e) of Rule 16, and a
judgment upon the merits in any one is available as a bar in the others.
TCHcAE
2.
ID.; ID.; MOTION TO DISMISS; LITIS PENDENTIA; REQUISITES.
The requisites for the existence of litis pendentia as a ground for dismissal
of an action are as follows: 1) identity of parties, or at least such parties as
represent the same interests in both actions; 2) identity of rights asserted and
relief prayed for, the relief being founded on the same facts; and 3) the
identity with respect to the two preceding particulars in the two cases is such
that any judgment that may be rendered in the pending case, regardless of
which party is successful, would amount to res adjudicata in the other case.
3.
ID.; ID.; ID.; ID.; NOT AVAILABLE WHERE ONE WAS FOUNDED
ON VIOLATIONS OF LEASE CONTRACT WHILE THE OTHER WAS FOR
DAMAGES CAUSED BY PETITIONERS' VIOLATION OF IAC's
RESTRAINING ORDER. There may have been identity of parties in the
two actions, but the other two requisites are not similarly satisfied. The case
in Bulacan was of course founded upon alleged violations by the private

1|Page

respondents as lessees of certain stipulations in their lease contract with

petitioner, and therefore, it cannot be gainsaid that the rights asserted (by
petitioner as lessor and relief sought therein i.e., rescission of the lease
contract) were entirely different from those asserted in Manila. The latter
case stemmed from the prejudice suffered by private respondents due to
petitioner's violation of the IAC's restraining orders for the observance of
status quo between the parties, the relief demanded therein consisting of
factual, moral and exemplary damages. Thus, the respondent Court
committed no reversible error in holding that "the causes of action in two
cases are not the same; they are founded on different acts; the rights
violated are different; and the reliefs sought are also different." The res
judicata test when applied to the two cases in question indicate in no
uncertain terms that regardless of whoever will ultimately prevail in the
Bulacan case, the final judgment therein whether granting or denying
rescission of the lease contract will not be conclusive between the parties
in the Manila case, and vice versa. In other words, to our mind, the outcome
of the Bulacan case has nothing to do with whether petitioner should be held
liable for the damage inflicted upon private respondents as a result of his
violating the IAC restraining orders, the two cases having arisen from
different acts and environmental circumstances.
4.
ID.; ID.; ID.; FORUM-SHOPPING; TEST. Petitioner's allegations
to the contrary notwithstanding, forum-shopping is not present in the case at
bar. The established rule is that for forum-shopping to exist, both actions
must involve the same transactions, same essential facts and circumstances
and must raise identical causes of actions, subject matter, and issues. As
held by this Court in a recent case: "The test for determining whether a party
violated the rule against forum-shopping has been laid down in the 1986
case of Buan vs. Lopez (145 SCRA 34, October 13, 1986), also by Chief
Justice Narvasa, and that is, forum shopping exists where the elements of
litis pendentia are present or where a final judgment in one case will amount
to res judicata in the other . . ."
5.
ID.; ID.; ID.; ID.; WILL NOT APPLY WHERE FINAL JUDGMENT IN
EITHER CASE WOULD NOT BE RES JUDICATA TO THE OTHER. We
have already established that litis pendentia could not have been properly
pleaded to abate the second action brought in Manila, and that a final
judgment in either case would not be res judicata with respect to the other.
Thus, the allegation of forum-shopping must fail. CDaTAI
6.
ID.; ID.; ID.; ID.; RATIONALE ON PROHIBITION THEREON. In
Jose Cuenco Borromeo, et al., vs. Hon. Intermediate Appellate Court, et al.,
this Court capsulized the essence of what is abhorrent in the malpractice of
forum-shopping, and the following excerpt shows why there can be no forum-

shopping in this case: "Ultimately, what is truly important to consider in

determining whether forum-shopping exists or not is the vexation caused the
courts and parties-litigant by a party who asks different courts to rule on the
same or related causes and/or to grant the same or substantially the same
reliefs, in the process creating the possibility of conflicting decisions being
rendered by the different fora upon the same issue."
7.
ID.; ID.; COUNTERCLAIMS; TEST FOR DETERMINING
COMPULSORY OR PERMISSIVE COUNTERCLAIMS; NATURE OF
SPECIFIC COUNTERCLAIMS; CASE AT BAR. Petitioner erroneously
insists that private respondents' claim for damages should have been made
through a compulsory counterclaim in the same action for rescission. This
could not have been done as the same cannot be considered or treated as a
compulsory counterclaim in the Bulacan case. This Court, in an early case,
stated certain criteria or tests by which the compulsory or permissive nature
of specific counterclaims can be determined, summarized as follows: "1. Are
the issues of fact and law raised by the claim and counterclaim largely the
same? 2. Would res judicata bar a subsequent suit on defendant's claim
absent the compulsory counterclaim rule? 3. Will substantially the same
evidence support or refute plaintiff's claim as well as defendant's
counterclaim? 4. Is there any logical relation between the claim and the
counterclaim? In this instance, the answers to all four queries are in the
negative.
8.
ID.; PROVISIONAL REMEDIES; PRELIMINARY MANDATORY
INJUNCTION; BOND; PURPOSE IS TO ANSWER FOR DEFENDANTS'
LOSS OR DAMAGES BY REASON OF THE INJUNCTION AND NOT FOR
ANY ACTUATION OF THE PETITIONER. Petitioner's argument that the
bond he posted for the issuance by the Bulacan trial court of the writ of
preliminary mandatory injunction could have answered for the damages
claimed by private respondents is untenable. Such bond was required for a
specific purpose, to wit: "(b) The plaintiff files with the clerk or judge of the
court in which the action is pending a bond executed to the party enjoined, in
an amount to be fixed by the court, to the effect that the plaintiff will pay to
such party all damages which he may sustain by reason of the injunction if
the court should finally decide that the plaintiff was not entitled thereto." No
further scrutiny is necessary. The said bond was supposed to answer only for
damages which may be sustained by private respondents, against whom the
mandatory injunction was issued, by reason of the issuance thereof, and not
to answer for damages caused by the actuations of petitioner, which may or
may not be related at all to the implementation of the mandatory injunction.
The purpose of the injunction bond is to protect the defendant against loss or
damage by reason of the injunction in case the court finally decides that the
plaintiff was not entitled to it, and the bond is usually conditioned accordingly.

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Thus the bondsmen are obligated to account to the defendant in the

injunction suit for all damages, or costs and reasonable counsel's fees,
incurred or sustained by the latter in case it is determined that the injunction
was wrongfully issued. In the case at bar, the damages and expenses
sustained by private respondents were a result of the willful contravention by
petitioner of the IAC restraining orders, and thus, outside the coverage of the
injunction bond. ESTDcC
DECISION
PANGANIBAN, J p:
Should the action for rescission of a lease contract (commenced by
petitioner-lessor against private respondents-lessees) be deemed to bar
on the ground of litis pendentia an action for damages brought by private
respondents by reason of petitioner's violation of the restraining orders
issued by the Court of Appeals which required the parties to maintain the
status quo insofar as the lease relationship is concerned?
The Court answers this query in the negative while resolving the instant
petition for review on certiorari, which assails the Decision 1 of the
respondent Court of Appeals 2 promulgated on February 18, 1993 in CAG.R. CV No. 27590, affirming the decision 3 of the trial court 4 awarding
moral and exemplary damages plus attorney's fees to herein private
respondents.
The Facts
The facts are not controverted by the parties, and therefore, the factual
recitals in the trial court's decision, which were quoted by the respondent
appellate court in its own Decision, are hereinbelow reproduced: 5
"The evidence shows that (private respondents) were lessees of a 24hectare fishpond owned by (petitioner as substituted by his heirs) located at
Paombong, Bulacan. The lease is covered by a lease contract by and
between the said parties (Exh. A). The lease [executed on March 1, 1982]
was supposed to have expired on May 1987, but before the said date,
(petitioner) filed [on June 25, 1984, a complaint against (private respondents)
for the rescission of the lease contract. The Regional Trial Court of Malolos,
Bulacan which took cognizance of said case issued a writ of preliminary
Mandatory Injunction ordering (private respondents) to surrender to the
(petitioner) possession of the fishpond. In view whereof, (private
respondents) filed a Petition for Certiorari with the Intermediate Appellate
Court. The said court on September 21, 1984 issued a restraining order
enjoining (petitioner) and the Regional Trial Court from enforcing the

mandatory injunction (Exh. J of [private respondents] and Exh. 11 of

[petitioner]).

The evidence for the prosecution was brought forth through the testimonies
of Ricardo Bagtas and Miguel Bunye and its Exhibits A to CC.

At the hearing in the Intermediate Appellate Court the parties agreed to

maintain a status quo and the fishpond hut would be utilized by (private
respondents) until the case is resolved by the Regional Trial Court of Malolos
(Exh. N). However, despite this order of the Appellate Court (petitioner) filed
an ex-parte motion for the designation of a member of the Philippine
Constabulary to maintain order in the place which the Regional Trial Court of
Malolos granted. With said order (petitioner) with the aid of PC men was able
to eject plaintiffs from the main hut. (Petitioner) and their men also dried up a
portion of the leased property where (private respondents) have previously
scattered chemicals and fertilizer to grow fish food. As a result no fish food
grew causing damage to (private respondents).

Instead of presenting evidence . . ., (petitioner) filed [on February 24, 1989] a

Second Motion to Dismiss which was opposed by counsel for (private
respondents). The Second Motion to Dismiss was denied by the court [on
April 13, 1989]. 6

(Private respondents) were also prevented from transferring the bigger fish to
a more spacious portion of the fishpond resulting in death to many fishes
which again caused damages to (private respondents). Subsequently
another person came to the fishpond and introduced himself as the new
lessee. The Regional Trial Court of Malolos then issued another order (Exh.
5-2) declaring that all the fishes located in the fishpond remain the properties
of (private respondents) subject to their disposal, however the same was not
honored by (petitioner).
(Private respondents) then appealed again to the IAC which issued a
resolution enjoining (petitioner) to maintain and observe status quo (Exh. VVI), and subsequently another resolution categorically declaring (petitioner)
Valencia without right of possession under status quo, and to vacate the
main hut of the fishpond (Exh. Y). It was only then that (private respondents)
gained complete and total control of the subject fishpond including its huts.
(Private respondents) are now asking [the Regional Trial Court of Manila] for
exemplary damages worth P400,000.00, moral damages of P400,000.00,
attorney's fees of P100,000.00 and costs of suit.
A Motion to Dismiss was filed by (petitioner) on April 8, 1985 which was
opposed by (private respondents). The Motion to Dismiss was denied by the
court on March 4, 1986. A Motion for Reconsideration was filed by
(petitioner) which was denied by the court.
After (petitioner) filed his Answer, pre-trial was set on November 14, 1986
and the same was terminated on February 26, 1987. Trial on the merits was
held on April 3, 1987.

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On August 31, 1989, the (petitioner) Eriberto Valencia testified, however his
testimony was not terminated in view of the objection of counsel for the
(private respondents) who claimed that the questions propounded to the
witness touched on matters which have been passed upon by the Regional
Trial Court of Malolos.
(Petitioner) contended that proceedings in this court [RTC of Manila] should
be suspended until after the case in the Regional Trial Court of Malolos
which was appealed to the Court of Appeals is resolved, and filed a Motion to
this effect, but the court denied the same."
The trial court gave counsel for petitioner time to file the necessary
pleadings, as prayed for, but he failed to do so. During the subsequent
hearing, neither petitioner nor his counsel appeared. The trial court thus
deemed petitioner to have waived his right to present further evidence, and
the case was considered submitted for decision. On March 23, 1990, the trial
court ruled in favor of private respondents, the fallo of its decision reading as
follows: 7
"WHEREFORE, premises considered, the court orders defendant (petitioner
herein) to pay the plaintiffs moral damages in the amount of P30,000.00,
exemplary damages in the amount of P20,000.00 and to pay plaintiffs
P10,000.00 as and for attorney's fees."
Petitioner and private respondents, being equally dissatisfied with the
decision of the trial court, appealed to respondent Court. Petitioner alleged
litis pendentia and contested the award of damages by the trial court; private
respondents on the other hand were aggrieved that the trial court failed to
award actual damages, and in addition sought an increase in the amount of
moral and exemplary damages granted.
On appeal, respondent Court affirmed the decision of the Manila RTC, and
held that there was no litis pendentia: 8
"It is not disputed that there was another suit, Civil Case No. 7554-M, then
pending before the Regional Trial Court in Bulacan between plaintiffsappellants and defendant-appellant. To be sure, that case involved the same

property. There, appellant Valencia sought the rescission of the lease

contract he had entered into with plaintiffs on March 1, 1982. He based his
claim upon the alleged failure of plaintiffs to abide by the stipulations of their
agreement. In this case under consideration, plaintiffs Bagtas and Bunye are
asking for compensation for the damages that they had sustained by reason
of Valencia's violation of certain resolutions issued by this Court in (CA)-G.R.
SP No. 04283 (Exhs. 'J' & 'N'). Clearly, the causes of action in the two cases
are not the same; they are founded on different acts; the rights violated are
different; and the reliefs sought are also different. Consequently, defendantappellant's submission that lis pendens is a ground for dismissal of plaintiffs'
suit is not valid."
The dispositive portion of the now-assailed Decision reads: 9
"WHEREFORE, judgment is hereby rendered affirming the appealed
decision with the modification that plaintiffs-appellants [private respondents
herein] are hereby additionally awarded the sum of P50,000.00 as and for
actual damages. Costs against defendant-appellant [herein petitioner].
Petitioner's motion for reconsideration dated March 9, 1993 was denied by
respondent Court. Thus he comes to us seeking relief.

happened since the date of the pleading sought to be supplemented." 12 He

insists that the filing of a compulsory counterclaim is the proper recourse
considering that petitioner had posted a bond in the rescission case to
answer for damages that private respondents might suffer by reason of the
issuance of the preliminary mandatory injunction. 13 He also ventures to say
that the case filed with the Manila court can even be considered as a form of
"forum shopping." 14
In fine, petitioner asserts that under the rule on litis pendentia the action for
rescission filed with the Bulacan court bars the action for damages filed in
Manila. It is interesting to note that petitioner does not contest the
correctness of the award of damages made by respondent Court; he merely
insists on the dismissal (?) of the case for damages on the ground of litis
pendentia, there being a pending case for rescission in which private
respondents could have asserted their claim for damages. This being his
lone assigned issue, the clear and unavoidable implication is that if his
contention is struck down, he is deemed to have waived any objection
against the award of damages by respondent Court.
The Court's Ruling
Petitioner's arguments are legally tenuous and patently unmeritorious.

The Issue
Litis Pendencia and Splitting of a Single Cause of Action
Petitioner raises the following lone "legal issue:" 10
"THE DENIAL ORDERS AND THE DECISION OF THE MANILA COURT IN
CIVIL CASE NO. 85-29514 AND THE DECISION OF RESPONDENT
COURT IN CA-G.R. CV NO. 27590 ARE NOT IN ACCORD WITH THE LAW
AND THE DECISIONS ON LITIS PENDENTIA."
Petitioner contends that the error in the Decision lies in its failure to properly
appreciate the complaint filed with the Manila court, which, when taken
together with private respondents' documentary and testimonial evidence,
discloses that the alleged wrongful acts for which they claimed damages
arose out of, were connected with, and/or were incidents of the proceedings
in the action for rescission before the Bulacan court. Petitioner claims that
the action for damages commenced by private respondents constitutes
splitting of a single cause of action which is prohibited by the Revised Rules
of Court. 11

Before discussing the petition on the merits, it is well to clarify certain

concepts at the outset. If a party-litigant splits his single cause of action, the
other action or actions filed may be dismissed by invoking litis pendentia,
pursuant to Section 1(e), Rule 16 of the Revised Rules of Court. 15 A party
who splits his single cause of action cannot be accused of also "violating the
rule against litis pendentia" as the former, a malpractice, gives rise to the
latter, a ground for a motion to dismiss. This is made clear by Section 4, Rule
2 of the Rules, which speaks of cause and effect:
"Sec. 4. Effect of splitting a single cause of action. If two or more
complaints are brought for different parts of a single cause of action, the filing
of the first may be pleaded in abatement of the other or others, in accordance
with Section 1 (e) of Rule 16, and a judgment upon the merits in any one is
available as a bar in the others.
Now, to the main issues.

Petitioner argues that, for the aforesaid reasons, if indeed private

respondents suffered any damage, they should have filed a compulsory
counterclaim or supplemental pleading for the alleged acts of violation of
restraining orders which are "transactions, occurrence or event which have

4|Page

No Litis Pendentia

This Court has consistently held, in a long line of cases, that the requisites
for the existence of litis pendentia as a ground for dismissal of an action are
as follows:

the IAC restraining orders, the two cases having arisen from different acts
and environmental circumstances.
No Forum Shopping

1)
identity of parties, or at least such parties as represent the same
interests in both actions;
2)
identity of rights asserted and relief prayed for, the relief being
founded on the same facts; and
3)
the identity with respect to the two preceding particulars in the two
cases is such that any judgment that may be rendered in the pending case,
regardless of which party is successful, would amount to res adjudicata in the
other case. 16
There may have been identity of parties in the two actions, but the other two
requisites are not similarly satisfied. The case in Bulacan was of course
founded upon alleged violations by the private respondents as lessees of
certain stipulations in their lease contract with petitioner, and therefore, it
cannot be gainsaid that the rights asserted (by petitioner as lessor) and relief
sought therein (i.e., rescission of the lease contract) were entirely different
from those asserted in Manila. The latter case stemmed from the prejudice
suffered by private respondents due to petitioner's violation of the IAC's
restraining orders for the observance of status quo between the parties, the
relief demanded therein consisting of actual, moral and exemplary damages.
Thus, the respondent Court committed no reversible error in holding that "the
causes of action in the two cases are not the same; they are founded on
different acts; the rights violated are different; and the reliefs sought are also
different."
The third requisite constitutes the test of identity in the aforestated
particulars, and in connection therewith, this Court quoted 1 Cyc., 28 17 thus:
"A plea of the pendency of a prior action is not available unless the prior
action is of such a character that, had a judgment been rendered therein on
the merits, such a judgment would be conclusive between the parties and
could be pleaded in bar of the second action." (emphasis supplied)
The res judicata test when applied to the two cases in question indicate in no
certain terms that regardless of whoever will ultimately prevail in the Bulacan
case, the final judgment therein whether granting or denying rescission of
the lease contract will not be conclusive between the parties in the Manila
case, and vice versa. In other words, to our mind, the outcome of the
Bulacan case has nothing to do with whether petitioner should be held liable
for the damage inflicted upon private respondents as a result of his violating

5|Page

Petitioner's allegations to the contrary notwithstanding, forum-shopping is not

present in the case at bar. The established rule is that for forum-shopping to
exist, both actions must involve the same transactions, same essential facts
and circumstances and must raise identical causes of actions, subject
matter, and issues. 18 As held by this Court in a recent case. 19
"The test for determining whether a party violated the rule against forumshopping has been laid down in the 1986 case of Buan vs. Lopez (145 SCRA
34, October 13, 1986), also by Chief Justice Narvasa, and that is, forumshopping exists where the elements of litis pendentia are present or where a
final judgment in one case will amount to res judicata in the other . . ."
(emphasis supplied)
We have already established that litis pendentia could not have been
properly pleaded to abate the second action brought in Manila, and that a
final judgment in either case would not be res judicata with respect to the
other. Thus, the allegation of forum-shopping must fail.
In Jose Cuenco Borromeo, et al., vs. Hon. Intermediate Appellate Court, et
al., 20 this Court capsulized the essence of what is abhorrent in the
malpractice of forum-shopping, and the following excerpt shows why there
can be no forum-shopping in this case:
"Ultimately, what is truly important to consider in determining whether forumshopping exists or not is the vexation caused the courts and parties-litigant
by a party who asks different courts to rule on the same or related causes
and/or to grant the same or substantially the same reliefs, in the process
creating the possibility of conflicting decisions being rendered by the different
fora upon the same issue."
Claim for Damages Not A Compulsory Counterclaim
Petitioner erroneously insists that private respondents' claim for damages
should have been made through a compulsory counterclaim in the same
action for rescission. This could not have been done as the same cannot be
considered or treated as a compulsory counterclaim in the Bulacan case.
This Court, in an early case, 21 stated certain criteria or tests by which the
compulsory or permissive nature of specific counterclaims can be
determined, summarized as follows:

"1.
Are the issues of fact and law raised by the claim and counterclaim
largely the same?
2.
Would res judicata bar a subsequent suit on defendant's claim
absent the compulsory counterclaim rule?
3.
Will substantially the same evidence support or refute plaintiff's claim
as well as defendant's counterclaim?
4.
Is there
counterclaim?"

any

logical

relation

between

the

claim

and

the

In his instance, the answers to all four queries are in the negative.
Was Injunction Bond Sufficient Protection?
Petitioner's argument that the bond he posted for the issuance by the
Bulacan trial court of the writ of preliminary mandatory injunction could have
answered for the damages claimed by private respondents is untenable.
Such bond was required for a specific purpose, to wit: 22
"(b)
The plaintiff files with the clerk or judge of the court in which the
action is pending a bond executed to the party enjoined, in an amount to be
fixed by the court, to the effect that the plaintiff will pay to such party all
damages which he may sustain by reason of the injunction if the court should
finally decide that the plaintiff was not entitled thereto."
No further scrutiny is necessary. The said bond was supposed to answer
only for damages which may be sustained by private respondents, against
whom the mandatory injunction was issued, by reason of the issuance
thereof, and not to answer for damages caused by the actuations of
petitioner, which may or may not related at all to the implementation of the
mandatory injunction. The purpose of the injunction bond is to protect the
defendant against loss or damage by reason of the injunction in case the
court finally decides that the plaintiff was not entitled to it, and the bond is
usually conditioned accordingly. Thus, the bondsmen are obligated to
account to the defendant in the injunction suit for all damages, or costs and
reasonable counsel's fees, incurred or sustained by the latter in case it is
determined that the injunction was wrongfully issued. 23
In the case at bar, the damages and expenses sustained by private
respondents were a result of the willful contravention by petitioner of the IAC
restraining orders, and thus, outside the coverage of the injunction bond.

6|Page

WHEREFORE, in view of the foregoing, the instant petition is hereby

DENIED and the appealed Decision and Resolution are AFFIRMED. Costs
against petitioner.
SO ORDERED.
Narvasa, C .J ., Davide, Jr., Melo and Francisco, JJ ., concur.

of pleadings in order that all matters in the action in dispute between the
parties may be completely determined in a single proceeding. The amended
complaint, in the instant case, was filed not to delay nor alter the cause of
action of the first complaint but rather to obviate the splitting of the cause of
action and to obtain a speedy determination of the controversy in one
proceeding without regard to technicality. The amended complaint merely
impleaded Metropolitan as a party defendant in the first complaint and
included in said complaint the cause of action alleged in the second
complaint which was already dismissed. Furthermore, petitioners had not yet
filed any responsive pleading to the first complaint when respondent
corporation filed the motion to amend its complaint.
2.
ID.; ID.; CONCLUSIVENESS OF JUDGMENT; NOT APPLICABLE
IN CASE AT BAR; REASON THEREFOR. Petitioners contend that the
appellate court acted without jurisdiction or with grave abuse of discretion
amounting to lack of jurisdiction in admitting the amended complaint of the
respondent Corporation, considering that the previous dismissal of the
second complaint for violating the rule against splitting a cause of action
barred its reinstitution by the amendment of the first complaint. In said
judgment, it was held that there was a splitting of a cause of action in the first
and second complaint, therefore the rule against splitting of a cause of action
barred the second complaint as enunciated in the cases of Jimenez vs.
Camara [107 Phil. 590] and City of Bacolod vs. San Miguel Brewery, [29
SCRA 819] resulting in an outright denial of the amended complaint.
SECOND DIVISION
[G.R. No. 79903. July 23, 1992.]
CONTECH CONSTRUCTION TECHNOLOGY &
DEVELOPMENT
CORPORATION, JERRY A. KHO, WEIJEN A. KHO and WILLEN A. KHO,
petitioners, vs. COURT OF APPEALS and GREENBELT SQUARE, INC.,
respondents.
Luna, Sison & Manas for petitioner.
SYLLABUS
1.
REMEDIAL LAW; CIVIL PROCEDURE; AMENDMENT OF
PLEADINGS; RULE; SATISFIED IN CASE AT BAR. Under Section 2,
Rule 10 of the Revised Rules of Court, a party is given a right to file an
amended pleading within the time and upon the conditions specified in the
rule and without the necessity of obtaining leave of court since a party may
amend his pleading once as a matter of course at any time before a
responsive pleading is served. This rule expressly authorizes the amendment

7|Page

DECISION
NOCON, J p:
This is a petition for certiorari and prohibition with preliminary injunction to
annul and set aside the decision dated July 24, 1987 of the Court of Appeals
1 directing the Regional Trial Court of Pasig, Branch CLXIV in Civil Case No.
45321 to admit the amended complaint of respondent Greenbelt Square, Inc.
and to proceed with the trial of said case.
It appears on record that on August 8, 1980, petitioner Contech Construction
Technology & Development Corporation, as contractor, and private
respondent Greenbelt Square, Inc., as owner, entered into an Agreement
whereby the former undertook the construction, equipping, furnishing and
supplying of materials for a theater and restaurant building for consideration
of P20,069,694.00. 2
Pursuant to said Agreement, petitioners secured from the Philippine British
Assurance Co., Inc. (Phil-British for brevity), a bond of P2,000,000.00 under
Bond No. 0746 to guarantee the payment of the labor and materials used in

connection with the construction project, 3 from the Metropolitan Insurance

Co. (Metropolitan for brevity); P4,000,000.00 under Surety No.
80/G(13)00853 to secure the full and faithful performance of the petitioners 4
and Surety No. 80/G(10)00457 for P2,000,000.00 to guarantee the supply of
cement and steel bars needed for said project. 5
On October 21, 1981, respondent Corporation terminated the Agreement
upon petitioners' failure to comply with the terms and conditions of said
Agreement. 6 Respondent Corporation, likewise, sent Phil-British and
Metropolitan notices of claim for petitioners' failure to perform their part of the
Agreement. cdll
Petitioners, thereafter, withdrew their men and equipments from the
construction site and respondent Corporation contracted the services of R.N.
Construction Co., Inc. to finish the building project. However, upon
petitioners' refusal to pay their obligation to respondent Corporation, the
latter, on March 24, 1982, simultaneously filed with the Court of First
Instance of Rizal two separate complaints against petitioners and their
sureties for breach of contract.
In the first complaint which was docketed as Civil Case No. 45321,
respondent Corporation had petitioners and Phil-British as party defendants
for the collection of a sum of money, while the second complaint which was
docketed as Civil Case No. 45322, petitioners and Metropolitan were also
party defendants for the collection of a sum of money.
On June 3, 1982, petitioners filed a motion to dismiss the second complaint
on the ground of the pendency of the first complaint likewise between the
same parties for the same cause, which motion was denied by the trial court.
However, upon appeal to the Intermediate Appellate Court, 7 the appellate
court on May 4, 1984 held that there was a splitting of a cause of action
when the two complaints were filed simultaneously, hence, the orders of the
trial court dated May 17, 1983 and July 25, 1983 denying the motion to
dismiss and the motion for reconsideration were nullified. Said decision of the
appellate court became final on August 2, 1984.
On August 8, 1984, respondent Corporation filed before the lower court
where the first complaint was pending, a motion for leave to amend its
complaint and to consolidate the two cases, which motion was denied on
October 3, 1984. Accordingly, respondent Corporation filed a motion for
reconsideration on October 29, 1984, which was also denied on January 13,
1987.

8|Page

Thereafter, respondent Corporation filed a petition for certiorari and

mandamus with the appellate court alleging grave abuse of discretion on the
part of the trial court in denying its motion to amend the complaint.
The appellate court, on July 24, 1987, rendered a decision giving due course
to respondent Corporation's petition and directed the trial court to admit the
amended complaint of the respondent corporation. Consequently, petitioner
filed a motion for reconsideration on August 11, 1987 which was denied on
August 27, 1987.
Hence, this petition.
Petitioners contend that the appellate court acted without jurisdiction or with
grave abuse of discretion amounting to lack of jurisdiction in admitting the
amended complaint of the respondent Corporation, considering that the
previous dismissal of the second complaint for violating the rule against
splitting a cause of action barred its reinstitution by the amendment of the
first complaint.
Section 2, Rule 10 of the Revised Rules of Court provides that:
"A party may amend his pleading once as a matter of course at any time
before a responsive pleading is served or, if the pleading is one to which no
responsive pleading is permitted and the action has not been placed upon
the trial calendar, he may so amend it at any time within ten (10) days after it
is served." Cdpr
Under this rule, a party is given a right to file an amended pleading within the
time and upon the conditions specified in the rule and without the necessity
of obtaining leave of court since a party may amend his pleading once as a
matter of course at any time before a responsive pleading is served. This rule
expressly authorizes the amendment of pleadings in order that all matters in
the action in dispute between the parties may be completely determined in a
single proceeding. The amended complaint, in the instant case, was filed not
to delay nor alter the cause of action of the first complaint but rather to
obviate the splitting of the cause of action and to obtain a speedy
determination of the controversy in one proceeding without regard to
technicality. The amended complaint merely impleaded Metropolitan as a
party defendant in the first complaint and included in said complaint the
cause of action alleged in the second complaint which was already
dismissed. Furthermore, petitioners had not yet filed any responsive pleading
to the first complaint when respondent corporation filed the motion to amend
its complaint. As correctly held by the appellate court:

"It is a recognized rule of procedure that pleadings shall be construed

liberally so as to render substantial justice to the parties and in order that
actual merits of the controversy may speedily be determined without regard
to technicalities and in the most expeditious and inexpensive manner. The
judicial attitude has always been favorable and liberal in allowing
amendments to a pleading. The rationale behind the rule is to avoid
multiplicity of suits and in order that the real controversies between the
parties are presented, their rights are determined and the case decided on
the merits without unnecessary delay. When the situation is such that if the
proposed amendment is not allowed, another action would be instituted, thus
making two actions, two trials, and two appeals possible and probable, the
said amendment should be admitted. Hence, should the trial court find the
allegations in the pleadings to be inadequate, it should allow the party
concerned to file proper amendments to pleadings in accordance with the
mandate of the Rules of Court that amendments to pleadings are favored
and should be liberally allowed.

Bacolod vs. San Miguel Brewery, 10 resulting in an outright denial of the

amended complaint.

Applying the foregoing principles to the instant case, there is no doubt that
the respondent Court committed a grave and serious abuse of discretion in
not admitting the amended complaint. The records of the case indicate that
the motion for leave to admit the amended complaint was filed before a
responsive pleading was filed. In fact, no responsive pleading has yet been
filed by the private respondents. Their opposition filed on August 15, 1984 is
not a responsive pleading within the contemplation of the rule. Consequently,
the filing by the petitioner of an amended complaint was erroneously denied
by the respondent Court, the same being a matter of right. Indeed, in such a
situation, an error of the trial court in refusing such amendment is controllable
by mandamus.

SO ORDERED.

Moreover, the Court, after assiduously examining and comparing the original
and amended complaint, is of the opinion that the amendment sought to be
included did not in any manner change the cause of action nor was it
intended for delay, which considerations appear to be the only ground for
denying a motion for leave to amend under section 3 of Rule 10 of the Rules
of Court." 8
Petitioners also contend that the rule of conclusiveness of judgment is
applicable in this case in view of the finality of the judgment of the appellate
court dismissing the second complaint which was being reintroduced by a
mere amendment of the first complaint. In said judgment, it was held that
there was a splitting of a cause of action in the first and second complaint,
therefore the rule against splitting of a cause of action barred the second
complaint as enunciated in the cases of Jimenez vs. Camara 9 and City of

9|Page

We do not agree.
The rulings in the aforementioned cases are not applicable in the case at bar
since both cases refer to a situation wherein the second complaint, which
cause of action should be included in the first complaint, was filed after a final
decision was rendered on the merits. In this case, the first and second
complaint were not yet set for pre-trial or trial because petitioners had not yet
filed any responsive pleading to both complaints, therefore the amendment
should be allowed since said amendment will not delay the proceeding and
there was no change in respondent Corporation's cause of action.
WHEREFORE, the petition for certiorari and prohibition with preliminary
injunction is hereby DENIED for lack of merit.

Narvasa, C .J ., and Regalado, JJ ., concur.

Padilla, J., No part, in view of prior relationship with private respondent.
Footnotes
1.
In CA-G.R. SP No. 11226, penned by Justice Justo P. Torres, Jr.
with the concurrence of Justice Josue N. Bellosillo and Justice Oscar M.
Herrera.
2.

Id., at p. 87.

3.

Id., at pp. 91-92.

4.

Id., at pp. 62-63.

5.

Id., at pp. 64-65.

6.

Id., at p. 66.

7.
AC-G.R. SP No. 01578, penned by Justice Lino M. Patajo and
concurred in by Justice Simeon M. Gopengco and Justice Jose F. Racela, Jr.
8.

CA's Decision, pp. 6-7; Rollo, pp. 30-31.

9.

107 Phil. 590.

10.

29 SCRA 819.

C o p y r i g h t 1 9 9 4 - 1 9 9 9 C D T e c h n o l o g i e s A s i a, I n c.

G.R. No. 73679 July 23, 1992

HONESTO B. VILLAROSA vs. CRESENCIANO B. TRAJANO
SECOND DIVISION
[G.R. No. 73679. July 23, 1992.]
HONESTO B. VILLAROSA, RODOLFO VALLEJO, MARIO NOCUM,
ALFREDO DE LA CRUZ, CRISOSTOMO SALVADOR, LUCY HERMOSA,
RICARDO SAHAGUN, OSCAR BINSOL, REY YABUT, LUIS TUBERA,
NINIO ARRIOLA, RODOLFO MACEDA, EVELIO REGASPE, REY
EUGENIO, BENJAMIN AMIDO, MANUEL NAZARIO, JOSE BUENO,
SALVADOR HERNANDEZ, NORBERTO SORIANO, HERMINIO YABUT,
ALADINO YABUT and ILAW AT BUKLOD NG MANGGAGAWA (IBM),
petitioners, vs. HON. CRESENCIANO B. TRAJANO, IN HIS CAPACITY AS
DIRECTOR, BUREAU OF LABOR RELATIONS, EDILBERTO GALVEZ,
SEVERINO MERON, RENATO REGALA, VENANCIO TEODORO, JOSE
PADILLA, MOISES DAYAO, NONATO FLORES, MANUEL GALINGANA,
NEHEMIAS MARQUEZ, ALFREDO COLOMEDA, DIONISIO OLEDAN,
ALBERTO SAMONTE, EDUARDO DIONISIO, BENIGNO LEONERO,
ALMARIO BULALAYAO, ANDRES SALVADOR, RENATO BERNARDO,
EDUARDO BATISATIC, WILLIAM MERENE AND SAN MIGUEL
CORPORATION, respondents.
Juanito M. Caling and Renato L. Ramos for petitioners.
Angara, Abello, Concepcion, Regala & Cruz for San Miguel Corp.
Leopoldo M. Redublo for private respondents.
SYLLABUS
1.
LABOR AND SOCIAL LEGISLATION; LABOR ORGANIZATION;
ELECTION OF OFFICERS THEREOF; RULE. The Labor Code then
enforced in 1985 mandates that members of a labor organization shall elect
their officers by secret ballot at intervals of not more than three (3) years.

10 | P a g e

2.
ID.; ID.; ID.; DISQUALIFICATION OF ELECTED OFFICER; WOULD
NOT VEST A RIGHT TO PERSON OBTAINING THE SECOND HIGHEST
NUMBER OF VOTES TO THE OFFICE. it would be appropriate to remind
petitioners that even if the disqualification of private respondents could be
justified, the petitioners certainly cannot be declared winners in the disputed
election. The mere fact that petitioner Villarosa obtained the second highest
number of votes does not mean that he will thereby be considered as the
elected IBM Labor Union President if private respondent is disqualified.
3.
REMEDIAL LAW; CIVIL PROCEDURE; DISMISSAL OF CASES;
WARRANTED WHEN CERTAIN EVENTS OR CIRCUMSTANCES HAVE
TAKEN PLACE DURING THE PENDENCY THEREOF WHICH WOULD
RENDER THE CASE MOOT AND ACADEMIC. After a careful
consideration of the facts of this case, We are of the considered view that the
expiration of the tenure of the private respondents by operation of law 3
years after the disputed election on or around December 6, 1988 have
rendered the issues raised by petitioners moot and academic. And even if, by
chance, these same private respondents had been elected to the same
offices on or around December 6, 1991. This Court ruled recently that: ". . . It
is pointless and unrealistic to insist on annulling an election of officers whose
terms had already expired. We would have thereby a judgment on a matter
which cannot have any practical legal effect upon a controversy, even if
existing, and which, in the nature of things, cannot be enforced. We must
consequently abide by our consistent ruling that where certain events or
circumstances have taken place during the pendency of the case which
would render the case moot and academic, the petition should be
dismissed."
DECISION
NOCON, J p:
This is a petition for certiorari with a prayer for a writ of preliminary injunction
filed by petitioners, Honesto Villarosa, et al., seeking the annulment of (1) the
Order of December 5, 1985 and the Resolution of January 3, 1986 which
decreed the holding of the election for officers of the Ilaw at Buklod ng
Manggagawa (IBM) Labor Union on December 6, 1985 and (2) the results of
said election wherein private respondents, Edilberto Galvez, et al., were
proclaimed winners and praying that another election be held if the
proclamation of petitioners as duly elected officers would not be feasible.
The facts of this case as succinctly summarized by the Solicitor General are:
"On October 29, 1985, BLR Case No. A-7-160-85, an appealed case
involving three (3) consolidated intra-union conflict cases, for violation of

respondent union's constitution and by-laws, was decided by public

respondent Director of the Bureau of Labor Relations, the dispositive portion
of his Resolution, among others, states: prcd
'WHEREFORE, and in the interest of fair play, the appealed Order is hereby
set aside and a new one entered in the following tenor
xxx

xxx

xxx

6)
Ordering a general election of officers of IBM within ten (10) working
days from receipt of this Decision, the necessary expenses for which shall be
applied to the union funds in deposit.
The Labor Organization Division, this Bureau, shall conduct the holding of
the election and shall hold pre-election conference as may be necessary to
thresh out the mechanics of the election.
SO ORDERED.'
"In compliance with the aforementioned order, the Bureau of Labor Relations
headed by Mrs. Margarita Enriquez conducted a pre-election conference on
November 11, 1985, where the parties agreed to set the date of election on
November 29, 1985, the last day of the filing of certificates of candidacy on or
before November 22, 1985, and for the management of San Miguel
Corporation (SMC for short) to submit a list of union member based on the
October 31, 1985 payroll on November 19, 1985.
"On November 19, 1985, the list of qualified voters as agreed upon was
submitted by the SMC, copy furnished the contending parties. The parties
likewise approved the Rules or Regulations prepared by BLR COMELEC to
govern the conduct of the local election. Another pre-election conference was
set on November 22, 1985 for the inclusion and exclusion of voters as well
as the submission of the names of the union members inadvertently omitted
from the list submitted by the management.
"On November 22, 1985, the date agreed upon by the contending parties as
the last day for the filing of certificates of candidacy as well as the inclusion
and inclusion of employees participating in the local election, the parties
again agreed to re-set the election date to November 29, 1985.
"On November 25, 1985, petitioner Villarosa filed a motion and/or petition to
disqualify the ticket headed by private respondent Edilberto Galvez from
participating as candidates in the election of officers of the Ilaw at Buklod Ng
Manggagawa (IBM) because being officers/members of a rival union, their

11 | P a g e

participation constituted an act of disloyalty, disqualifying them from

competing under the union's constitution and by-laws.
"On November 26, 1985, petitioner filed a motion for deferment of the
scheduled election on November 29, 1985, until the charge of disloyalty
against Edilberto Galvez and others was resolved.
"In their opposition, private respondent Galvez and his group sought the
dismissal of the aforementioned twin motions to disqualify and to defer the
scheduled election for having been filed out of time as the last day for filing of
the certificates of candidacy and inclusion and exclusion of employees
participating in the election was on November 22, 1985. As to the charge of
disloyalty, they maintained that public respondent Bureau of Labor Relations
had no jurisdiction to rule on the issue as it was the National Council of the
union which had the power to hear and decide intra-union problems of this
nature. At any rate, it was stressed that no act of disloyalty was committed
when Galvez organized BLM, a rival union, considering that the Labor Code
allows workers to form or join any organization of their choice during the
freedom period.
"In the pre-election conference on November 26, 1985, the parties,
nevertheless, agreed to re-schedule the holding of the election to December
6, 1985.
"On December 5, 1985, respondent Bureau of Labor Relations issued an
order resolving the twin motions, the dispositive portion of which states:
LLphil
'A perusal of the present motion, as well as the argument presented in
support thereof, shows that the ground relied upon by movant to disqualify
Galvez, et al., is not among those enumerated in the union constitution and
by-laws, and therefore said motions have no basis to stand on.
'At any rate, if indeed Edilberto Galvez, et al., committed acts of disloyalty
which had undermined the principles and objectives of IBM, such question
can be passed upon by the general membership in the election without
prejudice to ventilation and resolution of the issue in accordance with the
union constitution and by-laws.
'IN VIEW THEREOF, and as above qualified, the present motion are hereby
denied for lack of merit. Let the election of officers of Ilaw at Buklod Ng
Manggagawa (IBM) set on December 6, 1985 proceed as scheduled.'
"On December 6, 1985, the election proceeded and was supervised by the
respondent Bureau of Labor Relations. The results were:

"In a Resolution dated January 31, 1986, respondent Director of the Bureau
of Labor Relations denied the petitioners' motion for reconsideration and
proclaimed private respondents headed by Edilberto Galvez as the duly
elected officers of IBM union. The dispositive portion of the Resolution reads
as follows:

For National President:

Galvez, Edilberto B.

1,422

Villarosa, Honesto B.

568

Villarante, Carlos

331

"For membership in the Executive Board, private respondents Severino O.

Meron, Renato L. Regala, Venancio c. Teodoro, Jose B. Padilla, Moises
Dayao, Morato Flores, Manuel Salingana, Nehemias Marques Oledan
likewise won in the election.
"On December 10, 1985, petitioners filed a motion for reconsideration of the
order dated December 5, 1985, denying the twin motions to disqualify and to
defer the scheduled election. On the same date, petitioners also filed an 'IBM
Election Protest and Motion for Reconsideration' (dated December 10, 1985)
on the results of the December 6, 1985 IBM election of officers. They
reiterate their stand that the elected candidates belonging to the Buklod at
Lakas Ng Manggagawa (BLM) are not members of good standing of the IBM
since they had committed acts of disloyalty by organizing the BLM and
competing against IBM on the certification election held in 1980 and 1983.
"On December 16, 1985, private respondents Edilberto Galvez and others
filed an 'Opposition/Motion to Dismiss' to petitioners' election protest and
motion for reconsideration.
"On January 3, 1986, public respondent dismissed the petitioners' election
protest and motion for reconsideration of the Order of December 5, 1985, the
dispositive portion of the order of dismissal is as follows:
'WHEREFORE, the election protests and motion for reconsideration of the
Order of December 5, 1985, are hereby dismissed for lack of merit. Let the
necessary amount be released to the outgoing set of officers by the National
Capital Region from the union dues and agency fees deposited therein to
defray the operational expenses of the union including the salaries or
allowances of union officers entitled thereto from the period the deposit
commenced and until 31 December 1985. All expenditures and
disbursements by virtue of such a release shall be accounted for to this
Office.'
"On January 10, 1986, petitioners filed an unsigned motion
reconsideration of the aforementioned decision of public respondent.

12 | P a g e

for

'WHEREFORE, the Order dated January 3, 1986 is hereby affirmed.

Accordingly, Edilberto Galvez and all who won in the election conducted on 6
December 1985 are hereby proclaimed duly elected officers of the Ilaw at
Buklod ng Manggagawa (IBM).' cdll
"Hence, this petition." 1
We gave due course to this petition on April 12, 19882 but petitioners' prayer
for a writ of preliminary injunction was not granted. 3
The Labor Code then enforced in 1985 mandates that members of a labor
organization shall elect their officers by secret ballot at intervals of not more
than three (3) years. 4
The election being contested was held December 6, 1985. Three (3) years
hence, another election should have been held on December 6, 1988 as this
Court did not restrain the public respondent and respondent corporation from
recognizing the assumption of the private respondents as duly elected
officers of the IBM labor union. Another three (3) years thereafter, another
election should have been held on December 6, 1991 in accordance with
law. 5
After a careful consideration of the facts of this case, We are of the
considered view that the expiration of the tenure of the private respondents
by operation of law 3 years after the disputed election on or around
December 6, 1988 have rendered the issues raised by petitioners moot
and academic.
And even if, by chance, these same private respondents had been elected to
the same offices on or around December 6, 1991.
This Court ruled recently that:
". . . It is pointless and unrealistic to insist on annulling an election of officers
whose terms had already expired. We would have thereby a judgment on a
matter which cannot have any practical legal effect upon a controversy, even
if existing, and which, in the nature of things, cannot be enforced. We must
consequently abide by our consistent ruling that where certain events or
circumstances have taken place during the pendency of the case which

would render the case moot and academic, the petition should be
dismissed." 6
At this junction, it would be appropriate to remind petitioners that even if the
disqualification of private respondents could be justified, the petitioners
certainly cannot be declared winners in the disputed election. The mere fact
that petitioner Villarosa obtained the second highest number of votes does
not mean that he will thereby be considered as the elected IBM Labor Union
President if private respondent is disqualified. 7

the Department of Labor and Employment outside of the sixty-day period

immediately before the date of expiry of such five year term of the Collective
Bargaining Agreement. All other provisions of the Collective Bargaining
Agreement shall be renegotiated not later than three (3) years after its
execution . . .'"
Thus, in the petition at bar, after the certification election on
or around December 6, 1991, the next certification election would be held on
or around December 6, 1996.

Accordingly, this case is DISMISSED for being moot and academic.

6.

Manalad vs. Trajano, 174 SCRA 328.

SO ORDERED.

7.

Ibid, p. 329.

Narvasa, C.J. and Regalado, J., concur.

Padilla, J., took no part, part in view of equity interest in private corespondent SMC.

C o p y r i g h t 1 9 9 4 - 1 9 9 9 C D T e c h n o l o g i e s A s i a, I n c.

Footnotes
G.R. No. 96091 July 22, 1992
1.

Rollo, pp. 137-142.

2.

Rollo. p. 173.

3.

Ibid. pp. 110, 173.

PEOPLE OF THE PHIL. vs. ALFREDO L. HOBLE

FIRST DIVISION
[G.R. No. 96091. July 22, 1992.]
4.
Article 242. Rights and conditions of membership in a labor
organization. . . .
(c) The members shall elect their officers by secret ballot at intervals
of not more than three (3) years. . . ." [Labor Code PD 442, as amended
(1986)].
5.
R.A. 6715, approved March 2, 1989 and effective March 21, 1989
deleted above quoted Article 242 (c). On the representation aspect, the
following was incorporated:
"SEC. 21. There shall be incorporated after Article 253 of the
same Code a new article which shall read as follows:
'ART. 253-A. Terms of a Collective Bargaining Agreement.
Any Collective Bargaining Agreement that the parties may enter into shall,
insofar as the representation aspect is concerned, be for a term of five (5)
years. No petition questioning the majority status of the incumbent bargaining
agent shall the entertained and no certification election shall be conducted by

13 | P a g e

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. ALFREDO

HOBLE y LEONARDO, accused-appellant.
The Solicitor General for plaintiff-appellee.
Trinidad, Reverente, Makalintal, Cabrera and Monsod Law Office
accused-appellant.

for

SYLLABUS
1.
REMEDIAL LAW; EVIDENCE; CREDIBILITY OF WITNESSES; NOT
AFFECTED BY MINOR INCONSISTENCIES; CASE AT BAR. In the case
before Us, the testimonies of the prosecution witnesses clearly point to a
negotiation or agreement between appellant and Sgt. Lopez to consummate
the sale of "shabu". This is evident from the testimony of Sgt. Lopez who said
that upon his "thumb's up" signal, which was pre-arranged through the
confidential informer, he (Sgt. Lopez) was allowed inside the car of appellant
where he stayed for some 3 to 5 minutes. The signal of Sgt. Lopez indicated

that he was the companion of appellant's contact in that place, who also
happened to be the NARCOM confidential informer. Patrolman Cario
corroborated the testimony of Sgt. Lopez that he spent some 3 to 5 minutes
inside the car before he lighted his cigarette, also as pre-arranged, indicating
that the "transaction" was already on and that his back-up team should now,
as they did, pounce on the pushers. The relatively short period of time spent
by Sgt. Lopez in the car of appellant further indicates that a brief negotiation
preceded the delivery by the appellant of the "shabu". The minor
discrepancies in the testimonies of the prosecution witnesses do not impair
the credibility and substance of the evidence for the government, more so, as
in the instant case, where there is direct proof that the NARCOM agents
through Sgt. Lopez actually and directly received the "shabu" from appellant.
2.
ID.; CRIMINAL PROCEDURE; WARRANTLESS SEARCH;
DEEMED LAWFUL WHEN CONDUCTED AS AN INCIDENT TO LAWFUL
ARREST. As regards his contention that the evidence consisting of
"shabu" crystals is inadmissible in evidence because unlawfully procured
through warrantless search, it must be stressed anew that he was caught
transporting and delivering a regulated drug in flagrante delicto.
Consequently, a peace officer or any private person for that matter may,
without warrant, arrest a person when, in his presence, the person to be
arrested has committed, is actually committing, or is attempting to commit, an
offense; and, that a person lawfully arrested may be searched for dangerous
weapons or anything which may be used as proof of the commission of an
offense, without a search warrant. Consequently, the warrantless search
being an incident to a lawful arrest, is in itself lawful.
3.
CRIMINAL LAW; DANGEROUS DRUG ACT; SALE OF
PROHIBITED DRUGS; NON-PRESENTATION OF MARKED MONEY, NOT
FATAL TO THE PROSECUTION THEREOF. As regards the marked
money, it is likewise settled that its absence does not create a hiatus in the
evidence for the prosecution so long as the prohibited or regulated drug
given or delivered by the appellant was presented before the court and that
the appellant was clearly identified as the offender. In fact, in the instant
case, the evidence clearly shows that appellant himself handed to Sgt. Lopez
the "shabu" inside the former's car.
4.
ID.; ID.; POSSESSION OF PROHIBITED DRUGS BY NON-USER;
PRESUMPTION. It has been held that possession of prohibited drugs
coupled with the fact that the possessor is not a user thereof cannot indicate
anything else but the intention to sell, distribute or deliver the prohibited stuff.
Moreover, the provision under which appellant is charged provides that it is
not only the sale which is penalized by law but also the administration,
dispensation, delivery, transportation and distribution of regulated drugs.

14 | P a g e

Sec. 15, Art. III, of the Dangerous Drugs Act of 1972, as amended. Thus,
assuming for the sake of argument that no transaction of sale occurred,
appellant was nevertheless caught transporting and delivering 4 grams of
"shabu" to Sgt. Lopez without license or lawful authority. There was therefore
no error on the part of the trial court in finding accused Alfredo Hoble guilty of
violating Sec. 15, Art. III, of the Dangerous Drugs Act of 1972, as amended.
DECISION
BELLOSILLO, J p:
ALFONSO HOBLE Y LEONARDO is before Us on appeal from a judgment of
the court a quo finding him guilty of violation of Sec. 15, Art. III, of the
Dangerous Drugs Act of 1972, 1 as amended, and imposing upon him a life
imprisonment and a fine of P20,000.00, and to pay the costs of suit.
Appellant Hoble was charged in the court below and accordingly sentenced
for having possessed, sold and delivered (to another) on May 21, 1989, four
(4) grams of methamphetamine ("shabu") in San Fernando, Pampanga, in
concert with one Victor Javier y Tobias, without having been licensed,
authorized and/or permitted to do so. After trial however the court a quo
acquitted Javier on reasonable doubt. Hence, Sec. 21, Art. IV, which refers to
attempt or conspiracy to commit the crime, is no longer relevant in this
appeal of Hoble.
On May 21, 1989, a confidential informer reported to the Commanding
Officer of the 3rd Narcotics Regional Command at Camp Olivas, San
Fernando, Pampanga, that a certain "Sixto" of Las Pias, Metro Manila, was
to deliver five (5) 2 grams of "shabu" to Barangay Dolores on board a white
Toyota Corolla with Plate No. NFT-917.
Acting on the report, the Commanding Officer, Capt. Fernando L.
Bustamante, alerted his agents and organized a team to entrap the "pusher".
Tapped for the operation was Sgt. Buenaventura Lopez, who was designated
as poseur-buyer and "friend" of the confidential informer, together with Sgt.
Bienvenido Andulan and Pat. Edwin Cario, who composed the back-up
team.
The informer also told the NARCOM agents that he had a prior arrangement
with the accused that a buyer would stand by at the "target place" in
Barangay Dolores near the small bridge and would make a "thumb's up"
signal once the Toyota car would arrive. cdrep
Conformably with the planned operation, Sgt. Lopez, Sgt. Andulan and Pat.
Cario, together with the unnamed informer, boarded a passenger jeepney to

Barangay Dolores. Some twenty (2) meters before reaching the designated
place, Sgt. Andulan and Pat. Cario alighted from the jeepney and stayed
behind at the waiting shed along the road, while Sgt. Lopez and the informer
proceeded to the "target place". Then the informer "disengaged" from Sgt.
Lopez and disappeared. 3
At about 12:30 o'clock that noon, the awaited car appeared. As planned, Sgt.
Lopez made the "thumb's up" sign and flagged the car down. The car
stopped and Sgt. Lopez hopped in per their prior arrangement with the
informer who, incidentally, was also the contact man of the "pushers". As
soon as Sgt. Lopez entered the car, "Sixto", who turned out to be the
accused Alfredo Hoble, showed him the stuff that was taken from the glove
compartment of his car and handed it to him. Sgt. Lopez immediately
recognized the merchandise as "shabu" because of his prior training on
dangerous drugs at Camp Crame. He then lighted a cigarette to signal to his
back-up team to pounce on the accused, thus confirming the delivery of the
forbidden stuff. Sgt. Andulan and Pat. Cario then arrested the accused who
was at the time in the company of Victor Javier. The NARCOM agents
brought the accused Alfredo Hoble and Victor Javier to their office for proper
disposition. 4 Accordingly, both Hoble and Javier were charged although the
latter was acquitted on reasonable doubt.
At the trial, Sgt. Lopez and Pat. Cario testified on their respective
participations in the buy-bust operation, while Maj. Marlyn Salangad,
Forensic Chemist Officer of the PC Crime Laboratory, told the trial court that
the physical, chemical and confirmatory tests of the specimens 5 taken from
the accused were positive of methamphetamine hydrochloride or "shabu".
On the other hand, both accused Hoble and Javier denied having sold
"shabu" in Barangay Dolores on May 21, 1989. According to them, they were
on their way to the house of a certain Armie Guiao to request her to buy dutyfree imported goods for them. However, near the crossing of Barangay
Dolores armed men also riding in a car suddenly blocked them and there
was another car with armed men bearing long arms parked not far from the
crossing. The armed men alighted from their car and searched them, after
which they were shown something by the armed men who said the stuff was
"shabu". 6
After trial, the court a quo sustained the version of the prosecution as regards
accused-appellant Alfredo Hoble and adjudged him guilty beyond reasonable
doubt of the crime charged and sentenced him to life imprisonment and to
pay a fine of P20,000.00 without subsidiary imprisonment in case of
insolvency, plus the costs of suit. 7 As earlier intimated, accused Victor
Javier was acquitted on reasonable doubt. LexLib

15 | P a g e

Accused Hoble now appeals his conviction imputing to the trial court ERROR
in (a) admitting in evidence the decision of the Regional Trial Court of Pasay
City (Exhs. "L", "L-1" and "L-2") which influenced and affected the judgment
of the court a quo: (b) admitting in evidence the "Certificate Re Good
Conduct of Search" (Exhs. "F" and "F-1") despite having been obtained in
violation of his constitutional right to counsel during custodial investigation;
(c) giving full credence to the testimonies of the prosecution witnesses
despite glaring inconsistencies; and, (d) admitting the aluminum foil (Exhs.
"J" and "J-1") despite the same having been obtained through warrantless
search of his vehicle.
Turning to the first error assigned, appellant claims that the objectivity of the
trial court was unduly undermined when it admitted in evidence the decision
of the Regional Trial Court of Pasay City in Crime. Case No. 88-0785-P 8
wherein he was also found guilty of selling and delivering "shabu" for which
he was sentenced to reclusion perpetua. 9 He argues that the decision
should not have been admitted because it was still under reconsideration,
and that the information against him did not allege recidivism nor habituality.
This is no error. Obviously, appellant read out of context the portion of the
decision of the court a quo which makes reference to that of the Regional
Trial Court of Pasay City in said Crim. Case No. 88-0785-P, to wit:
"It is not therefore true that the accused Hoble did not receive any notice of
hearing of the aforestated case that was the reason why he did not go to the
said court anymore after his arraignment, the truth is that he jumped bail in
the aforesaid case . . ."
From the foregoing, it is clear that the court a quo merely cited Exh. "L" in
order to refute the claim of appellant that he did not know if there were
hearings held in the aforesaid case. The appealed decision itself shows that
it treats lengthily of the entrapment operation leading to his arrest in flagrante
delicto while delivering or transporting "shabu" and based his conviction on
the evidence leading to his entrapment and consequent arrest.
As regards the second assigned error, appellant contends that the
"Certification Re Good Conduct of Search" (Exh. "F") which he signed
should not have been admitted in evidence as it was procured during
custodial investigation in violation of his constitutional right to counsel. It is
his position that this exhibit amounts to a confession that the search made
was in order and that he indeed committed the offense charged.
It must be stressed that the records do not disclose that appellant was ever
subjected to custodial investigation, thus no extrajudicial confession was
obtained from him. All that the records show is that appellant and his co-

accused were booked in Camp Olivas as shown by the Booking Sheet (Exh.
"D"), and the Arrest Report (Exh. "E"). With respect to Exh. "F", it appears
that it was merely executed for the purpose of showing that the NARCOM
officers arrested appellant and his co-accused in an orderly manner and in
no way signified admission of the commission of the offense. As correctly
observed by the trial court:
"One thing very significant to note is that the accused did not give any
confession or extrajudicial statement of admission. The evidence for the
prosecution consists mainly of the testimonies of the witnesses presented
and documents and not a confession of the accused made during the
investigation." 10
For his third assigned error, appellant argues that the trial court ignored
material inconsistencies in the testimonies of prosecution witnesses which, if
considered, would have established their lack of credibility. He avers that one
prosecution witness testified that there was no marked money used, 11 while
another testified that there was marked money but it was not given to the
suspects. 12 He insists that the absence of marked money indicates
indubitably the incredibility of the prosecution witnesses, but more
importantly the error in charging the proper offense, for, if at all, it could just
have been possession under Sec. 8, Art. II, and not pushing under Sec. 21,
Art. IV, 13 of the Dangerous Drugs Act of 1972, as amended. Appellant also
points out that prosecution witnesses differed as to the exact time when the
apprehension of the witnesses was effected. llcd
The argument is without merit. It is well settled that minor inconsistencies in
statements given during the testimony will not affect the credibility of the
prosecution witnesses. 14
In People v. Claudio, 15 We ruled:
"Credence is accorded to the prosecution's evidence, more so as it consisted
mainly of testimonies of policemen. Law enforcers are presumed to have
regularly performed their duty in the absence of proof to the contrary (People
v. de Jesus, 145 SCRA 521). We also find no reason from the records why
the prosecution witnesses should fabricate their testimonies and implicate
appellant of such a serious crime (see People v. Bautista, 147 SCRA 500)."

Lopez indicated that he was the companion of appellant's contact in that

place, who also happened to be the NARCOM confidential informer. 17
Patrolman Cario corroborated the testimony of Sgt. Lopez that he spent
some 3 to 5 minutes inside the car before he lighted his cigarette, also as
pre-arranged, indicating that the "transaction" was already on and that his
back-up team should now, as they did, pounce on the pushers. The relatively
short period of time spent by Sgt. Lopez in the car of appellant further
indicates that a brief negotiation preceded the delivery by the appellant of the
"shabu".
The minor discrepancies in the testimonies of the prosecution witnesses do
not impair the credibility and substance of the evidence for the government,
more so, as in the instant case, where there is direct proof that the NARCOM
agents through Sgt. Lopez actually and directly received the "shabu" from
appellant. 18
As regards the marked money, it is likewise settled that its absence does not
create a hiatus in the evidence for the prosecution so long as the prohibited
or regulated drug given or delivered by the appellant was presented before
the court and that the appellant was clearly identified as the offender. 19 In
fact, in the instant case, the evidence clearly shows that appellant himself
handed to Sgt. Lopez the "shabu" inside the former's car. 20
It has been held that possession of prohibited drugs coupled with the fact
that the possessor is not a user thereof cannot indicate anything else but the
intention to sell, distribute or deliver the prohibited stuff. 21 Moreover, the
provision under which appellant is charged provides that it is not only the
sale which is penalized by law but also the administration, dispensation,
delivery, transportation and distribution of regulated drugs. Sec. 15, Art. III, of
the Dangerous Drugs Act of 1972, as amended, provides:
"Sec. 15.
Sale, Administration, Dispensation, Delivery, Transportation
and Distribution of Regulated Drugs. The penalty of life imprisonment to
death and a fine ranging from twenty thousand to thirty thousand pesos shall
be imposed upon any person who, unless authorized by law, shall sell,
dispense, deliver and transport or distribute any regulated drug . . . "
In People v. de la Cruz, 22 We held:

In the case before Us, the testimonies of the prosecution witnesses clearly
point to a negotiation or agreement between appellant and Sgt. Lopez to
consummate the sale of "shabu". This is evident from the testimony of Sgt.
Lopez who said that upon his "thumb's up" signal, which was pre-arranged
through the confidential informer, he (Sgt. Lopez) was allowed inside the car
of appellant where he stayed for some 3 to 5 minutes. 16 The signal of Sgt.

16 | P a g e

"Suffice it to say that even if the money given to De la Cruz was not
presented in court, the same would not militate against the People's case. In
fact, there was even no need to prove that the marked money was handed to
the appellants in payment of the goods. The crime could have been
consummated by the mere delivery of the prohibited drugs. What the law

proscribes is not only the act of selling but also, albeit not limited to, the act
of delivering. In the latter case, the act of knowingly passing a dangerous
drug to another personally or otherwise, and by any means, with or without
consideration, consummates the offense."
Thus, assuming for the sake of argument that no transaction or sale
occurred, appellant was nevertheless caught transporting and delivering 4
grams of "shabu" to Sgt. Lopez without license or lawful authority. There was
therefore no error on the part of the trial court in finding accused Alfredo
Hoble guilty of violating Sec. 15, Art. III, of the Dangerous Drugs Act of 1972,
as amended.
As regards his contention that the evidence consisting of "shabu" crystals
(Exhs. "J" and "J-1") is inadmissible in evidence because unlawfully procured
through warrantless search, it must be stressed anew that he was caught
transporting and delivering a regulated drug in flagrante delicto.
Consequently, a peace officer or any private person for that matter may,
without warrant, arrest a person when, in his presence, the person to be
arrested has committed, is actually committing, or is attempting to commit, an
offense; 23 and, that a person lawfully arrested may be searched for
dangerous weapons or anything which may be used as proof of the
commission of an offense, without a search warrant. 24 Consequently, the
warrantless search being an incident to a lawful arrest, is in itself lawful. 25
In fine, on the basis of the facts as reported by the trial court, which We find
sufficiently supported by the evidence, We hold that the guilt of the accusedappellant has been established beyond reasonable doubt.
WHEREFORE, the judgment of the court a quo convicting the accused
Alfredo Hoble y Leonardo of violation of Sec. 15, Art. III, of the Dangerous
Drugs Act of 1972, as amended, is hereby AFFIRMED. Costs against
accused-appellant.
SO ORDERED.

17 | P a g e

action filed is a personal action or a real action. After all, personal actions
may be instituted in the Regional Trial Court (then Court of First Instance)
where the defendant or any of the defendants resides or may be found, or
where the plaintiff or any of the plaintiff's resides, at the election of the
plaintiff. On the other hand, real actions should be brought before the
Regional Trial Court having jurisdiction over the territory in which the subject
property or part thereof lies.

FIRST DIVISION
[G.R. No. 49475. September 28, 1993.]
JORGE C. PADERANGA, petitioner, vs. Hon. DIMALANES B. BUISSAN,
Presiding Judge, Court of First Instance of Zamboanga del Norte, Branch III
and ELUMBA INDUSTRIES COMPANY, represented by its General
Manager, JOSE J. ELUMBA, respondents.
SYLLABUS
1.
REMEDIAL LAW; CIVIL PROCEDURE; ACTIONS; PERSONAL
ACTION IN PERSONAM; DISTINGUISHED FROM ACTION IN REM. In
the case before us, it is indubitable that the action instituted by private
respondent against petitioner affects the parties alone, not the whole world.
Hence, it is an action in personam, i.e., any judgment therein is binding only
upon the parties properly impleaded. However, this does not automatically
mean that the action for damages and to fix the period of the lease contract
is also a personal action. For, a personal action may not necessarily be an
action in personam and a real action may not at the same time be an action
in rem. In Hernandez v. Rural Bank of Lucena, Inc., we held thus In a
personal action, the plaintiff seeks the recovery of personal property, the
enforcement of a contract or the recovery of damages. In a real action, the
plaintiff seeks the recovery of real property, or, as indicated in Section 2(a) of
Rule 4, a real action is an action affecting title to real property or for the
recovery of possession, or for partition or condemnation of, or foreclosure of
a mortgage on, real property. An action in personam is an action against a
person on the basis of his personal liability, while an action in rem is an
action against the thing itself, instead of against the person. Hence, a real
action may at the same time be an action in personam and not necessarily
an action in rem.
2.
ID.; ID.; ID.; ID.; ID.; EFFECT ON VENUE. Consequently, the
distinction between an action in personam and an action in rem for purposes
of determining venue is irrelevant. Instead, it is imperative to find out if the

18 | P a g e

3.
ID.; ID.; ID.; ID.; ID.; APPLICATION IN ACTION FOR DAMAGES
ARISING BREACH OF LEASE CONTRACT; CASE AT BAR. While the
instant action is for damages arising from an alleged breach of the lease
contract, it likewise prays for the fixing of the period of lease at five (5) years.
If found meritorious, private respondent will be entitled to remain not only as
lessee for another five (5) years but also to the recovery of the portion earlier
taken from him as well. This is because the leased premises under the
original contract was the whole commercial space itself and not just the
subdivided portion thereof. While it may be that the instant complaint does
not explicitly pray for recovery of possession, such is the necessary
consequence thereof. The instant action therefore does not operate to efface
the fundamental and prime objective of the nature of the case which is to
recover the one-half portion repossessed by the lessor, herein petitioner.
Indeed, where the ultimate purpose of an action involves title to or seeks
recovery of possession, partition or condemnation of, or foreclosure of
mortgage on, real property, such an action must be deemed a real action and
must perforce be commenced and tried in the province where the property or
any part thereof lies.
DECISION
BELLOSILLO, J p:
We are called upon in this case to determine the proper venue of an action to
fix the period of a contract of lease which, in the main, also prays for
damages. Cdpr
Sometime in 1973, petitioner JORGE C. PADERANGA and private
respondent ELUMBA INDUSTRIES COMPANY, a partnership represented
by its General Manager JOSE J. ELUMBA, entered into an oral contract of
lease for the use of a commercial space within a building owned by petitioner
in Ozamiz City. 1 The lease was for an indefinite period although the rent of
P150.00 per month was paid on a month-to-month basis. ELUMBA
INDUSTRIES COMPANY utilized the area under lease as the Sales Office of
Allied Air Freight in Ozamiz City.

On 4 April 1977, PADERANGA subdivided the leased premises into two (2)
by constructing a partition wall in between. He then took possession of the
other half, which repossession was said to have been undertaken with the
acquiescence of the local manager of ELUMBA, 2 although private
respondent maintains that this is not the case. 3 At any rate, the validity of
the repossession is not here in issue.
On 18 July 1977, private respondent instituted an action for damages 4
which, at the same time, prayed for the fixing of the period of lease at five (5)
years, before the then Court of First Instance of Zamboanga del Norte based
in Dipolog City. 5 Petitioner, a resident of Ozamiz City, moved for its
dismissal contending that the action was a real action which should have
been filed with the Court of First Instance of Misamis Occidental stationed in
Ozamiz City where the property in question was situated. LLphil

Private respondent appears to be confused over the difference between

personal and real actions vis-a-vis actions in personam and in rem. The
former determines venue; the latter, the binding effect of a decision the court
may render over a party, whether impleaded or not. cdphil
In the case before us, it is indubitable that the action instituted by private
respondent against petitioner affects the parties alone, not the whole world.
Hence, it is an action in personam, i.e., any judgment therein is binding only
upon the parties properly impleaded. 9 However, this does not automatically
mean that the action for damages and to fix the period of the lease contract
is also a personal action. For, a personal action may not necessarily be an
action in personam and a real action may not at the same time be an action
in rem. In Hernandez v. Rural Bank of Lucena, Inc., 10 we held thus

On 6 November 1978, respondent Judge Dimalanes B. Buissan denied the

Motion to Dismiss and held that Civil Case No. 2901 merely involved the
enforcement of the contract of lease, and while affecting a portion of real
property, there was no question of ownership raised. 6 Hence, venue was
properly laid.

In a personal action, the plaintiff seeks the recovery of personal property, the
enforcement of a contract or the recovery of damages. In a real action, the
plaintiff seeks the recovery of real property, or, as indicated in section 2(a) of
Rule 4, a real action is an action affecting title to real property or for the
recovery of possession, or for partition or condemnation of, or foreclosure of
a mortgage on, real property.

Petitioner pleaded for reconsideration of the order denying his Motion to

Dismiss. He contended that while the action did not involve a question of
ownership, it was nevertheless seeking recovery of possession; thus, it was
a real action which, consequently, must be filed in Ozamiz City. 7

An action in personam is an action against a person on the basis of his

personal liability, while an action in rem is an action against the thing itself,
instead of against the person. Hence, a real action may at the same time be
an action in personam and not necessarily an action in rem.

On 4 December 1978, respondent judge denied reconsideration. 8 While

admitting that Civil Case No. 2901 did pray for recovery of possession, he
nonetheless ruled that this matter was not the main issue at hand; neither
was the question of ownership raised. Not satisfied, petitioner instituted the
present recourse.

Consequently, the distinction between an action in personam and an action

in rem for purposes of determining venue is irrelevant. Instead, it is
imperative to find out if the action filed is a personal action or a real action.
After all, personal actions may be instituted in the Regional Trial Court (then
Court of First Instance) where the defendant or any of the defendants resides
or may be found, or where the plaintiff or any of the plaintiffs resides, at the
election of the plaintiff. 11 On the other hand, real actions should be brought
before the Regional Trial Court having jurisdiction over the territory in which
the subject property or part thereof lies. 12

PADERANGA argues that inasmuch as ELUMBA seeks to recover

possession of the portion surrendered to him by the local manager of private
respondent, as well as to fix the period of lease at five (5) years, Dipolog City
could not be the proper venue of the action. It being a real action, venue is
laid in the court having jurisdiction over the territory in which the property lies.
ELUMBA counters that the present action is chiefly for damages arising from
an alleged breach in the lease contract; hence, the issue of recovery of
possession is merely incidental. ELUMBA further argues that the action is
one in personam and not in rem. Therefore venue may be laid in the place
where plaintiff or defendant resides at the option of plaintiff.

19 | P a g e

While the instant action is for damages arising from an alleged breach of the
lease contract, it likewise prays for the fixing of the period of lease at five (5)
years. If found meritorious, private respondent will be entitled to remain not
only as lessee for another five (5) years but also to the recovery of the
portion earlier taken from him as well. This is because the leased premises
under the original contract was the whole commercial space itself and not
just the subdivided portion thereof.

While it may be that the instant complaint does not explicitly pray for recovery
of possession, such is the necessary consequence thereof. 13 The instant
action therefore does not operate to efface the fundamental and prime
objective of the nature of the case which is to recover the one-half portion
repossessed by the lessor, herein petitioner. 14 Indeed, where the ultimate
purpose of an action involves title to or seeks recovery of possession,
partition or condemnation of, or foreclosure of mortgage on, real property, 15
such an action must be deemed a real action and must perforce be
commenced and tried in the province where the property or any part thereof
lies.
Respondent judge, therefore, in denying petitioner's Motion to Dismiss
gravely abused his discretion amounting to lack or excess of jurisdiction.
WHEREFORE, the Petition for Prohibition is GRANTED. The Orders of 6
November 1978 and 4 December 1978 of respondent Judge Dimalanes B.
Buissan are SET ASIDE. The branch of the Regional Trial Court of Dipolog
City where Civil Case No. 2901 may be presently assigned is DIRECTED to
DISMISS the case for improper venue. This decision is immediately
executory.
Costs against private respondent ELUMBA INDUSTRIES COMPANY.

8.

CFI Order, 4 December 1978; Rollo, p. 72.

9.
Ching v. Court of Appeals, G.R. No. 59731, 11 January 1990, 181
SCRA 9.
10.

No. L-29791, 10 January 1978, 81 SCRA 75, 84-85.

11.
Fortune Motors (Phils.), Inc. v. Court of Appeals, G.R. No. 76431, 16
October 1989, 178 SCRA 565, citing Sec. 1, Rule 4, Revised Rules of Court.
12.
Carandang v. Court of Appeals, No. L-44932, 15 April 1988, 160
SCRA 266.
13.

Tenorio v. Pao, No. L-48117, 27 November 1986, 146 SCRA 74.

14.
Punsalan, Jr. v. Vda. de Lacsamana, G.R. No. 55729, 28 March
1983, 121 SCRA 331.
15.

Sec. 2, par. (a), Rule 4, Revised Rules of Court.

C o p y r i g h t 1 9 9 4 - 1 9 9 9 C D T e c h n o l o g i e s A s i a, I n c.

SO ORDERED.
Cruz, Davide, Jr. and Quiason, JJ ., concur.

A.M. No. RTJ-91-672 September 28, 1993

Footnotes

SPS. JOSE AND ILUMINADA SY BANG vs. ANTONIO MENDEZ, SR.

1.

Amended Petition, p. 4; Rollo, p. 78.

EN BANC

2.

Motion to Dismiss, p. 4; Annex "D", Amended Petition.

[A.M. No. RTJ-91-672. September 28, 1993.]

3.

Complaint, p. 3; Annex "C", Amended Petition.

SPOUSES JOSE SY BANG AND ILUMINADA TAN, complainants, vs.

JUDGE ANTONIO MENDEZ, SR., respondent.

4.
Docketed as Civil Case No. 2901. Private respondent seeks the
following amounts as damages: (a) P100,000.00 as moral damages; (b)
P50,000 as exemplary damages; (c) P5,000.00 as attorney's fees; and, (d)
P1,000.00 as costs of suit.

Eduardo R. Santos for complainants.

Edmundo T. Zepeda for respondent.

5.

Raffled to Branch III.

SYLLABUS

6.

CFI Order, 6 November 1978; Rollo, p. 67.

7.

Motion for Reconsideration, p. 1; Rollo, p. 68.

1.
REMEDIAL LAW; CIVIL PROCEDURE; VENUE; CONSTRUED.
In his report and recommendation which was received by this Court on April
16, 1993, Justice Herrera made the following findings and recommendations

20 | P a g e

which this Court adopts, viz.: "Under BP Blg. 129, the Supreme Court shall
define the territory over which a branch of the Regional Trial Court shall
exercise its authority. The territory thus defined shall be deemed to be the
territorial area of the branch concerned for purposes of determining the
venue of all suits, proceedings or action, whether civil or criminal, as well as
determining the Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts over which the said branch may exercise
appellate jurisdiction. The power therein granted shall be exercised with a
view to making the courts readily accessible to the people of the different
parts of the region and making the attendance of litigants and witnesses as
inexpensive as possible (Section 18, B.P. Blg. 129). Pursuant thereto,
Administrative Circular No. 7, Series of 1983, delimited the territorial area
between the branch sitting in Calauag and the branch sitting in Gumaca
separately from the other. "Respondent judge committed no infraction in
acting on the complaint which was directly filed before the GUMACA court
despite the fact that the subject matter of the complaint is located in Calauag
which does not fall within his territorial area for purposes of venue albeit
within the same region, there being no question that he has jurisdiction or the
power to decide the case on the merits as distinguished from venue which
deals merely on the locality, the place where the suit may be had (Dacoycoy
v. Intermediate Appellate Court, 195 SCRA 644).
2.
ID.; ID.; ID.; COMPLAINT MAY NOT BE MOTU PROPRIO
DISMISSED FOR IMPROPER VENUE; RULE. What would have been
improper was for respondent Judge to motu proprio dismiss the complaint for
improper venue. "As pointed out in Dacoycoy: "Dismissing the complaint on
the ground of improper venue is certainly not the appropriate course of action
at this stage of the proceeding, particularly as venue in inferior courts as well
as in the courts of first instance (now RTC), may be waived expressly or
impliedly. Where defendant fails to challenge timely the venue in a motion to
dismiss as provided by Section 4, Rule 4 of the Rules of Court, and allows
the trial to be held and a decision to be rendered, he cannot on appeal or in a
special action be permitted to challenge belatedly the wrong venue, which is
deemed waived. (Ocampo vs. Domingo, 38 SCRA 134 (1971). "Thus, unless
and until the defendant objects to the venue in a motion to dismiss, the
venue cannot be truly said to have been improperly laid, as for all practical
intents and purposes, the venue, though technically wrong, may be
acceptable to the parties for whose convenience the rules on venue had
been devised. The trial court cannot pre-empt the defendant's prerogative to
object to the improper laying of the venue by motu propio dismissing the
case (Dacoycoy vs. IAC, 195 SCRA 644) "In this case petitioner did not
timely raise the propriety of the venue but instead filed his answer with
counterclaim. In so doing, petitioner as defendant waived improper venue

21 | P a g e

(Section 4, Rule 4, [Rules of Court]; International Trading Corporation vs.

M.V. Zillena, G.R. No. 102904, October 30, 1992, [215 SCRA 309]).
3.
ID.; ID.; FORUM SHOPPING; NOT APPLICABLE IN CASE AT BAR.
"Forum shopping may not be attributed to Respondent Judge who has
nothing to do with the filing of the case with the Gumaca Court. This was not
his choice but that of the plaintiff brought about by unforeseen
circumstances. When Civil Case No. 2137 was filed, there was no Presiding
Judge at Calauag. Plaintiff's complaint in Makati was ordered dismissed by
the Court of Appeals, but even before the decision could become final and
executory, the complaint alleged that defendants were already starting to
perform the acts complained of. Plaintiff believes that it is entitled to an
injunction and hence resorted to the next available remedy which was the
filing of another case not in Calauag because there was no Judge but
in the Gumaca Court whose writ is enforceable in the same region where the
property is located. The fact that the complaint was originally intended to be
filed in Calauag is shown by the caption of the Complaint. If the original
intention was to file it in Gumaca, then that is the Court which would have
been placed in the Caption of the Complaint. "The complaint as formulated
by the plaintiff made it appear that the issue before the Court of Appeals
simply is venue while the issue before respondent Judge is the need for the
issuance of a preliminary injunction. Altho(ugh) the denial of venue by the
Court of Appeals in the Makati Court would result, as it did, in the lifting of the
preliminary injunction issued by the latter, it is undeniable that the same
remedy may thereafter be sought for (sic) in the proper venue without
violating the rule on forum shopping. Basically, the remedy of injunction was
not obtained in Makati not because it is unmeritorious, but only because the
Court of Appeals ruled that the Makati Court is without authority to grant the
injunction it being an improper venue. This means that injunction may be
sought for (sic) before the Court with proper authority to grant the writ. "Upon
the other hand, there was no Presiding Judge in Branch 61 of the Gumaca
Court. Only respondent Judge of Branch 62 was available, and since an
urgent matter was presented before him for action, hence, he has no choice
but to act one way or the other on the premises. "There was no need to
secure a prior authorization from the Supreme Court for respondent Judge to
act on the application for the issuance of a preliminary mandatory injunction
for as a court, it has jurisdiction to act on the case and to issue writs
enforceable within its region. The only limitation thereto is the rule on venue
which respondent Judge may not apply motu proprio. "What may probably
taint the action with forum shopping is that at the time the complaint was filed
in Gumaca, there was still a pending motion for reconsideration before the
Court of Appeals of its decision ordering the dismissal of the Makati case.
Given, however, the circumstances of the case, We are not prepared to

conclude that in acting on the complaint before him, respondent Judge

consented to forum shopping.

v. Development Bank of the Philippines and Spouses Jose Sy Bang and

Iluminada Tan."

4.
LEGAL ETHICS; JUDGES; MUST SHOW IMPARTIALITY IN THEIR
DECISIONS; CASE AT BAR. What has not been satisfactorily explained
by respondent Judge, is why he immediately denied petitioner's
Manifestation and Motion seeking the dismissal of Civil Case No. 2137-G on
the ground of pendency of another case on the same cause of action
between the litigant before the Makati Regional Trial Court Civil Case No.
90-3511 even before the scheduled date of hearing on the ground that it is
moot and academic. The motion was set for hearing on May 23, 1991 at 2:00
o'clock in the afternoon, only for complainant to find out that respondent
Judge denied the motion without a hearing on May 21, 1991 for being moot
and academic (Annex E Ad. Complaint). There was still pending at the time a
Motion For Reconsideration of the decision dismissing the Makati case,
before the Court of Appeals. When respondent Judge denied the Motion To
Dismiss based on the pendency of another action, the Makati case was still
pending. The motion for reconsideration of the decision dismissing the
Makati case was only denied per resolution of the Court of Appeals on May
22, 1991, and in any event then, respondent Judge could not have
immediately learned of such denial to justify his declaration on May 21, 1992
that the motion before him has become moot and academic. "The action of
respondent Judge in peremptorily and prematurely denying the Motion To
Dismiss before the scheduled date of hearing without granting complainant a
chance to be heard on their motion, is highly improper justifiably giving rise to
a perceived partiality. By this singular act respondent rendered the totality of
his past conduct on the case suspect. To the complainants' perception, this
is a confirmation of their suspicion that respondent Judge was partial to the
plaintiff. Such conduct is not in consonance with the dictum that his conduct
at all times must not only be characterized with propriety and decorum but
above all else must be above suspicion. The Judge must not only be
impartial (Fernandez v. Presbiterio, 79 SCRA 61). A litigant is entitled to no
less than the cold neutrality of an impartial judge. Respondent's action has
placed his integrity, independence and impartiality under a cloud which is in
violation of the code of judicial conduct which requires every judge to be an
embodiment of competence, integrity and independence."

On February 11, 1992, the Court referred the complaint to Associate Justice
Oscar M. Herrera of the Court of Appeals for investigation, report and
recommendation.

DECISION
PUNO, J p:
This is an administrative case filed by complainant-spouses Jose Sy Bang
and Iluminada Tan against respondent judge for gross impropriety, blatant
partiality, serious irregularities and knowingly issuing unjust orders in Civil
Case No. 2137-G entitled, "Suarez Agro-Industrial Development Corporation

22 | P a g e

On April 16, 1993, Justice Herrera submitted a report which established the
following facts:
Two (2) lots, with an ice plant and improvements thereon situated at
Calauag, Quezon, were originally owned by DBP and were leased to Suarez
Agro-Industrial Corporation (corporation, for brevity) for a period of one year
starting on July 1, 1983. After the one year period, DBP allowed the
corporation to continue leasing said properties on a monthly basis. The
corporation, however, became delinquent in its rental payments. From the
period July 1987 until September 1990, its unpaid rentals amounted to
P650,000.00. Thus, on August 16, 1990, DBP demanded that the corporation
vacate the properties. It refused. On December 15, 1990, DBP sold the
properties to complainant-spouses. They were duly registered in their names.
On December 21, 1990, complainants again demanded that the corporation
vacate the properties. Once more, the demand was refused. The
complainants then filed with the Municipal Trial Court of Calauag, Quezon an
ejectment suit (docketed as Civil Case No. 814) against the corporation. The
court issued a restraining order 1 enjoining the corporation from further
operating the ice plant. Not to be outdone, the corporation filed an action for
specific performance and annulment of sale with preliminary injunction
against DBP and the spouses before the Makati RTC, Branch 134 (docketed
as Civil Case No. 90-3511). 2
The spouses filed a motion to dismiss Civil Case No. 90-3511 for improper
venue 3 considering that the subject lots were situated in Calauag, Quezon.
The motion was, however, denied and a writ of preliminary injunction was
issued enjoining the spouses from taking possession of the subject
properties. The spouses elevated the case to the Court of Appeals on
certiorari. In a decision dated April 15, 1991,
4 the Court of Appeals
declared the Makati RTC to be devoid of authority to hear the case and
ordered its dismissal. A motion for reconsideration filed on May 10, 1991 5
was denied in a Resolution dated May 22, 1991 on the ground that it was
filed out of time.
While the above case was pending before the Makati RTC (the corporation's
period to file a motion for reconsideration not having as yet lapsed), the
corporation filed on April 24, 1991 the same action (for specific performance

and annulment of sale, with preliminary and prohibitory injunction) against

the same parties (DBP and the spouses), this time before the RTC of
Gumaca, Quezon, Branch 62, presided by respondent judge (docketed as
Civil Case No. 2137-G). 6 At this point, it is noteworthy to mention that there
were only two (2) RTC branches in Gumaca, Quezon (Branches 61 and 62)
and both were then presided by the respondent judge, he being the pairing
judge in Branch 61.
On even date, respondent judge issued a temporary restraining order (TRO)
against DBP and the spouses. 7 Hearing on the prayer for injunction was
set on May 9, 1991. However, the TRO was not implemented for the spouses
had already entered and were in possession of the premises even before the
petition was filed. 8 Since the court failed to order the spouses to restore
possession of the property to the corporation, an ex-parte motion to amend
said TRO 9 was made by the corporation. The motion was granted in an
Order dated April 30, 1991 and the date of hearing was reset to May 7, 1991.
The spouses still refused to leave the premises claiming that the plaintiff
corporation had not posted a bond and the writ did not state to whom
possession of the premises should be surrendered. 10
At the hearing held on May 8, 1991, both parties presented evidence on the
issue of whether or not the preliminary mandatory injunction should be
granted. In an Order of even date,
11 respondent judge considered the
case submitted for decision within twenty (20) days from April 30, 1991.
Thereafter, on May 14, 1991, respondent judge granted the writ of injunction
upon the filing of a one million peso bond 12 by the corporation.
On May 17, 1991, the corporation filed an ex-parte motion to approve the
bond issued by Plaridel Surety and Insurance Co. 13
On May 18, 1991, the spouses filed a Manifestation and Motion before
respondent judge informing the latter of the pendency before the Makati RTC
of the same action between the same parties and thus prayed for the
dismissal of the Gumaca case. The motion was denied by respondent judge
in an Order dated May 21, 1991, 14 for being moot and academic.
In sum, complainant-spouses charge respondent judge with the following:
I.
Respondent judge had no jurisdiction to hear and decide cases
falling under the territorial jurisdiction of the RTC of Calauag, Quezon without
first securing an authority from the Supreme Court.

II.
Respondent judge issued the Orders dated April 26, April 30 and
May 14, all of 1991, which were all designed to place the subject properties
under the control of the corporation, without due process and hearing.
III.
The bond approved by the respondent judge for the issuance of the
injunction is questionable for it lacks the bond number and the records do not
show that the premiums were paid. Likewise, respondent judge was fully
aware that the insurance company was bankrupt and hence, the injunction
remains until now to be unsupported by an adequate bond.
IV.
The Order of respondent judge dated May 24, 1991 to break open
the subject premises was issued without any hearing.
V.
The Order of respondent judge dated May 8, 1991 submitting civil
case no. 2137-G for decision is highly irregular and premature for
complainants have not as yet filed their answer to the complaint nor were
they ever declared in default.
In his Comment dated October 17, 1991,
these charges, thus:

15 respondent judge answered

I.
He has authority to hear Civil Case No. 2137-G for jurisdiction over a
case is conferred by law in a given province upon all the RTC branches in
general, and not over specific branches therein. In any case, pursuant to
Rule 4, Section 4 of the Rules of Court, the spouses waived the defect of
improper venue when they filed their answer with counter-claim.
II.
His ex-parte Order dated April 24, 1991, granting the issuance of a
TRO against the spouses, is not prohibited under Section 5, Rule 58 of the
Rules of Court. His other questioned Orders were issued to implement the
TRO. On the other hand, his Order dated April 30, 1991 granting the
preliminary mandatory injunction was given only after both parties adduced
evidence in the hearing of May 8, 1991.
III.
Although he was informed that there was a similar case involving the
same parties and cause of action before the Makati RTC, he denied the
spouses' motion to dismiss on the ground that it has become moot and
academic. He explained that the Court of Appeals, in a Resolution dated May
22, 1991, denied the motion for reconsideration filed by the corporation. The
denial amounted to a termination of the case pending with the Makati RTC,
thus rendering moot and academic the ground alleged in the motion to
dismiss.
IV.
A copy of the bond filed by the corporation (Rollo, p. 120) clearly
shows that it has a number. Further, the Rules of Court do not require that

23 | P a g e

hearing be conducted prior to the approval of a bond. What is only required is

that a copy thereof be served upon the defendant and such was done in this
case.
V.
There was no premature submission of the case for decision. What
was submitted for decision was not the merit of the case itself but the issue
of whether or not the court should grant a preliminary mandatory injunction
since the TRO originally issued on April 24, 1991 and subsequently amended
on April 30, 1991 would expire twenty (20) days thereafter.
In his report and recommendation which was received by this Court on April
16, 1993, Justice Herrera made the following findings and recommendations
which this Court adopts, viz.:
"1.
With Respect To the Improper Filing and action by Respondent
Judge on the Complaint.
"Under BP Blg. 129, the Supreme Court shall define the territory over which
a branch of the Regional Trial Court shall exercise its authority. The territory
thus defined shall be deemed to be the territorial area of the branch
concerned for purposes of determining the venue of all suits, proceedings or
action, whether civil or criminal, as well as determining the Metropolitan Trial
Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts over which
the said branch may exercise appellate jurisdiction. The power therein
granted shall be exercised with a view to making the courts readily
accessible to the people of the different parts of the region and making the
attendance of litigants and witnesses as inexpensive as possible (Section 18,
B.P. Blg. 129). Pursuant thereto, Administrative Circular No. 7, Series of
1983, delimited the territorial area between the branch sitting in Calauag and
the branch sitting in Gumaca separately from the other.
"Respondent judge committed no infraction in acting on the complaint which
was directly filed before the GUMACA court despite the fact that the subject
matter of the complaint is located in Calauag which does not fall within his
territorial area for purposes of venue albeit within the same region, there
being no question that he has jurisdiction or the power to decide the case on
the merits as distinguished from venue which deals merely on the locality,
the place where the suit may be had (Dacoycoy v. Intermediate Appellate
Court, 195 SCRA 644). What would have been improper was for respondent
Judge to motu proprio dismiss the complaint for improper venue.
"As pointed out in Dacoycoy:
"Dismissing the complaint on the ground of improper venue is certainly not
the appropriate course of action at this stage of the proceeding, particularly

24 | P a g e

as venue in inferior courts as well as in the courts of first instance (now

RTC), may be waived expressly or impliedly. Where defendant fails to
challenge timely the venue in a motion to dismiss as provided by Section 4,
Rule 4 of the Rules of Court, and allows the trial to be held and a decision to
be rendered, he cannot on appeal or in a special action be permitted to
challenge belatedly the wrong venue, which is deemed waived. (Ocampo vs.
Domingo, 38 SCRA 134 (1971).
"Thus, unless and until the defendant objects to the venue in a motion to
dismiss, the venue cannot be truly said to have been improperly laid, as for
all practical intents and purposes, the venue, though technically wrong, may
be acceptable to the parties for whose convenience the rules on venue had
been devised. The trial court cannot pre-empt the defendant's prerogative to
object to the improper laying of the venue by motu propio dismissing the
case (Dacoycoy vs. IAC, Supra)."
"In this case petitioner did not timely raise the propriety of the venue but
instead filed his answer with counterclaim. In so doing, petitioner as
defendant waived improper venue (Section 4, Rule 4, [Rules of Court];
International Trading Corporation vs. M.V. Zillena, G.R. No. 102904, October
30, 1992, [215 SCRA 309]).
"2.

The charge of FORUM SHOPPING.

"Forum shopping may not be attributed to Respondent Judge who has

nothing to do with the filing of the case with the Gumaca Court. This was not
his choice but that of the plaintiff brought about by unforeseen
circumstances. When Civil Case No. 2137 was filed, there was no Presiding
Judge at Calauag. Plaintiff's complaint in Makati was ordered dismissed by
the Court of Appeals, but even before the decision could become final and
executory, the complaint alleged that defendants were already starting to
perform the acts complained of. Plaintiff believes that it is entitled to an
injunction and hence resorted to the next available remedy which was the
filing of another case not in Calauag because there was no Judge but
in the Gumaca Court whose writ is enforceable in the same region where the
property is located. The fact that the complaint was originally intended to be
filed in Calauag is shown by the caption of the Complaint. If the original
intention was to file it in Gumaca, then that is the Court which would have
been placed in the Caption of the Complaint.
"The complaint as formulated by the plaintiff made it appear that the issue
before the Court of Appeals simply is venue while the issue before
respondent Judge is the need for the issuance of a preliminary injunction.
Altho(ugh) the denial of venue by the Court of Appeals in the Makati Court
would result, as it did, in the lifting of the preliminary injunction issued by the

latter, it is undeniable that the same remedy may thereafter be sought for
(sic) in the proper venue without violating the rule on forum shopping.
Basically, the remedy of injunction was not obtained in Makati not because it
is unmeritorious, but only because the Court of Appeals ruled that the Makati
Court is without authority to grant the injunction it being an improper venue.
This means that injunction may be sought for (sic) before the Court with
proper authority to grant the writ.
"Upon the other hand, there was no Presiding Judge in Branch 61 of the
Gumaca Court. Only respondent Judge of Branch 62 was available, and
since an urgent matter was presented before him for action, hence, he has
no choice but to act one way or the other on the premises.
"There was no need to secure a prior authorization from the Supreme Court
for respondent Judge to act on the application for the issuance of a
preliminary mandatory injunction for as a court, it has jurisdiction to act on
the case and to issue writs enforceable within its region. The only limitation
thereto is the rule on venue which respondent Judge may not apply motu
proprio.
"What may probably taint the action with forum shopping is that at the time
the complaint was filed in Gumaca, there was still a pending motion for
reconsideration before the Court of Appeals of its decision ordering the
dismissal of the Makati case. Given, however, the circumstances of the case,
We are not prepared to conclude that in acting on the complaint before him,
respondent Judge consented to forum shopping.
"3.

On the Impropriety of the Preliminary Mandatory Injunction.

"The Order granting the issuance of a writ of preliminary mandatory

injunction was first upheld by the First Division of the Court of Appeals in CAG.R. SP No. 25225, promulgated on January 21, 1992, with the Court
declaring improper venue as having been waived by petitioners. The decision
was, however, amended on February 02, 1993 declaring the writ of
preliminary mandatory injunction as void, but not on improper venue, but
because of the impropriety of the writ, there being no existing right in favor of
plaintiff as an essential element for the issuance of an injunction . . . At this
writing there is yet no Entry of Judgment, and from our verification, an appeal
on certiorari has been filed with the Supreme Court. The determination of its
propriety being judicial in nature, and sub judice at that, we refrain from
making any finding on the propriety of the writ until the issue is finally
decided.
"Parenthetically, there was no need for a hearing on the order to break open
which is but an implementation of the writ of preliminary mandatory

25 | P a g e

injunction. There is a rule that there is even no need for the Sheriff to secure
a break open order where the character of the writ in their hands authorized
them if necessary to break open the apartment. The officer enforcing the writ
has the right to employ force necessary to enable him to enter the house and
enforce the judgment (Arcadio v. Ylagan 143 SCRA 168).
"In this case, the temporary mandatory injunction directed the sheriff to eject
the defendants from the premises and maintain the status quo ante before
the petition was filed. At that point of time, the issuance was made within the
allowable 20-day period when a judge is granted discretion to issue a
temporary restraining order ex-parte pending determination of whether or not
a preliminary injunction may issue.
"The statement of respondent Judge in its Order of May 8, 1991 which reads:
"This Civil Case No. 2137-G was submitted for decision within twenty (20)
days from April 30, 1991."
was explained by respondent Judge to refer to the hearing on the application
for preliminary mandatory injunction and that what was deemed submitted for
decision within twenty days was not the case itself but the application for the
issuance of a writ of preliminary mandatory injunction which the Judge must
decide within twenty (20) days from the issuance of Temporary Restraining
Order and not from the termination of the hearing of the application. The
temporary restraining order in this case was issued on April 24 and not April
30 which was the date when the temporary order was amended. The writ
was issued on May 14, 1992 which is the 20th day from the date the
restraining order was issued on April 24.
"4.

Approval of defective Bond.

"Complainant assails respondent Judge for approving the bond issued by the
Plaridel Surety for the issuance of preliminary mandatory injunction which
complainant learned was bankrupt and was blacklisted and prohibited by the
Supreme Court, and in furnishing the complainant with a bond different from
that filed in Court. The bond adverted to is Annex R-1, R-2 of the petition (pp.
117-126). No evidence has, however, been adduced on the claim of
complainant that the surety was blacklisted at the time of its approval or that
if it was, that this was known to respondent Judge. The rules do not require a
hearing on the approval of the bond, provided that the Judge is satisfied with
the solvency of the surety. On the other hand, the injunction may be lifted
based on the insufficiency of the bond (Section 6 Rule 58). Significantly,
there appears to be no petition for the lifting or dissolution of the writ of
preliminary mandatory injunction based on insufficiency of petitioner's bond.

"5.
Improperly acting on defendant's Motion before the Set Date For
Hearing.
"What has not been satisfactorily explained by respondent Judge, is why he
immediately denied petitioner's Manifestation and Motion seeking the
dismissal of Civil Case No. 2137-G on the ground of pendency of another
case on the same cause of action between the litigant before the Makati
Regional Trial Court Civil Case No. 90-3511 even before the scheduled
date of hearing on the ground that it is moot and academic. The motion was
set for hearing on May 23, 1991 at 2:00 o'clock in the afternoon, only for
complainant to find out that respondent Judge denied the motion without a
hearing on May 21, 1991 for being moot and academic (Annex E Ad.
Complaint). There was still pending at the time a Motion For Reconsideration
of the decision dismissing the Makati case, before the Court of Appeals.
When respondent Judge denied the Motion To Dismiss based on the
pendency of another action, the Makati case was still pending. The motion
for reconsideration of the decision dismissing the Makati case was only
denied per resolution of the Court of Appeals on May 22, 1991, and in any
event then, respondent Judge could not have immediately learned of such
denial to justify his declaration on May 21, 1992 that the motion before him
has become moot and academic.
"The action of respondent Judge in peremptorily and prematurely denying
the Motion To Dismiss before the scheduled date of hearing without granting
complainant a chance to be heard on their motion, is highly improper
justifiably giving rise to a perceived partiality. By this singular act respondent
rendered the totality of his past conduct on the case suspect. To the
complainants' perception, this is a confirmation of their suspicion that
respondent Judge was partial to the plaintiff. Such conduct is not in
consonance with the dictum that his conduct at all times must not only be
characterized with propriety and decorum but above all else must be above
suspicion. The Judge must not only be impartial (Fernandez v. Presbiterio,
79 SCRA 61). A litigant is entitled to no less than the cold neutrality of an
impartial judge.
Respondent's action has placed his integrity, independence and impartiality
under a cloud which is in violation of the code of judicial conduct which
requires every judge to be an embodiment of competence, integrity and
independence."
On July 9, 1993, this Court received a Manifestation from complainantspouses further alleging that despite respondent judge's knowledge of the
bankruptcy of Plaridel Surety, he still admitted the bond issued by said
company to secure the issuance of the writ of preliminary mandatory
injunction in Civil Case No. 2137-G. Complainant-spouses aver that since

26 | P a g e

February 10, 1992, respondent judge knew of the bankruptcy of Plaridel

Surety for on said date, he received a telegram from one Atty. Gabalones of
the Office of the Clerk of Court, this Court, advising all judges that Plaridel
Surety's authority to operate as a bonding entity has been suspended. 16
Further, complainants aver that when they filed a motion requesting that
plaintiff corporation be ordered to file a substitute bond, respondent judge,
instead of granting outright their motion, still gave the corporation an
opportunity to explain why the same should not be granted.
Complainants further seek the dismissal of respondent judge because the
latter refused to dismiss the case upon their motion filed on July 2, 1993 on
the ground that plaintiff-corporation submitted its pre-trial brief five (5) days
after the pre-trial hearing held on May 14, 1993.
It will be noted that complainant-spouses' Manifestation was filed on July 5,
1993, long after the instant complaint has been submitted by both parties for
resolution. Nevertheless, its circumspect consideration on the merits will not
alter the conclusions earlier set forth in this Decision.
With respect to the alleged knowledge of respondent judge regarding the
insolvency of Plaridel Surety, the fact is that the bond supporting the
issuance of the preliminary mandatory injunction in Civil Case No. 2137 was
approved by the respondent judge way back in May of 1991 while the
telegram advising respondent judge of the suspension of authority of Plaridel
Surety to operate as a bonding entity was received by him only on February
10, 1992. Clearly then, respondent judge committed no error in approving
said bond for at that time, Plaridel Surety's authority to operate has not yet
been suspended by the proper authorities.
Complainant-spouses further question the Order of respondent judge in still
requiring the corporation to show cause why it should not be made to post a
substitute bond. Under the circumstances, it cannot be fairly charged that
respondent judge was favoring the corporation. Indeed, it was prudent of the
respondent judge to hear the side of the corporation on the incident
considering that more than a year has passed since Plaridel Surety's
authority to operate was suspended in January 1992. There was nothing
improper for the respondent judge to inquire about the status of the surety
company before cancelling the original bond.
Lastly, complainant-spouses would have respondent judge declare the
corporation to be non-suited or as in default for failure to file its pre-trial brief
on time. On this point, the Court notes that this is not the proper forum to
question the alleged error of judgment committed by respondent judge.
Under the Rules, complainants have sufficient remedy to question

respondent's ruling on the matter by way of petition for certiorari before the
appellate courts.
WHEREFORE, premises considered, respondent JUDGE ANTONIO
MENDEZ, SR., Presiding Judge of the Regional Trial Court, Branch 62,
Gumaca, Quezon, is hereby CENSURED. He is further admonished to
exercise greater care and be more circumspect in the performance of his
official duties for repetition of the same or similar act in the future shall be
dealt with more severely by this Court.
SO ORDERED.
Narvasa, C .J ., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino, Regalado,
Davide, Jr., Romero, Nocon, Bellosillo, Melo, Quiason and Vitug, JJ .,
concur.

THIRD DIVISION
[G.R. No. 84628. November 16, 1989.]

27 | P a g e

HEIRS OF ILDEFONSO COSCOLLUELA, SR., INC., petitioner, vs. RICO

GENERAL INSURANCE CORPORATION, COURT OF APPEALS (11th
Division), and HON. ENRIQUE T. JOCSON, Judge, Regional Trial Court of
Negros Occidental Branch, respondents.

limited to the relevant and material facts well pleaded in the complaint and
inferences fairly deducible therefrom. The admission does not extend to
conclusions or interpretations of law; nor does it cover allegations of fact the
falsity of which is subject to judicial notice." (U. Baez Electric Light Co. v.
Abra Electric Cooperative, Inc., 119 SCRA 90 [1982])

Ildefonso S. Villanueva and Rolando N. Medalla for petitioner.

Limbaga, Bana-ag, Bana-ag & Associates for private respondent.
SYLLABUS
1.
REMEDIAL LAW; CIVIL PROCEDURE; COMPLAINT; REQUISITES
FOR THE EXISTENCE OF A CAUSE OF ACTION. After a review of the
records, the Court finds that the allegations set forth in the complaint
sufficiently establish a cause of action. The following are the requisites for
the existence of a cause of action: (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (2) an
obligation on the part of the named defendant to respect, or not to violate
such right; and (3) an act or omission on the part of the said defendant
constituting a violation of the plaintiff's right or a breach of the obligation of
the defendant to the plaintiff. (Cole v. Vda. de Gregoria, 116 SCRA 670
[1982]; Baliwag Transit, Inc. v. Ople, G. R. No. 57642, March 16, 1989).
2.
ID.; ID.; ID.; ID.; INSURER'S REFUSAL TO PAY PETITIONER'S
CLAIM AND THE LATTER'S INCURRENCE OF COST FOR LEGAL
ASSISTANCE, A SUFFICIENT CAUSE OF ACTION. The facts as alleged
clearly define the existence of a right of the petitioner to a just claim against
the insurer for the payment of the indemnity for a loss due to an event
against which the petitioner's vehicle was insured. The insurance contract
mentioned therein manifests a right to pursue a claim and a duty on the part
of the insurer or private respondent to compensate the insured in case of a
risk insured against. The refusal of the insurer to satisfy the claim and the
consequent loss to the petitioner in incurring the cost of acquiring legal
assistance on the matter constitutes a violation or an injury brought to the
petitioner. There is, therefore, a sufficient cause of action upon which the trial
court can render a valid judgment. (Taedo v. Bernad, et al., G. R. No.
66520, August 30, 1988).
3.
ID.; ID.; ID.; A MOTION TO DISMISS COMPLAINT ON GROUND
OF FAILURE TO STATE A CAUSE OF ACTION ADMITS THE TRUTH OF
THE FACTS THEREIN; EXCEPTION TO THE PRINCIPLE. The Court is
very much cognizant of the principle that a motion to dismiss on the ground
of failure to state a cause of action stated in the complaint hypothetically
admits the truth of the facts therein. The Court notes the following limitations
on the hypothetical admission: "The hypothetical admission is however

28 | P a g e

4.
COMMERCIAL LAW; INSURANCE; PROVISION LIMITING
LIABILITY MUST BE INTERPRETED LIBERALLY IN FAVOR OF THE
INSURED. We also reiterate the established rule that when the terms of
an insurance contract contain limitations on liability, the court "should
construe them in such a way as to preclude the insurer from non-compliance
with his obligations." (Taurus Taxi Co. Inc. v. Capital Insurance and Surety
Company, Inc., 24 SCRA 454 [1968]) A policy of insurance with a narration
of exceptions tending to work a forfeiture of the policy shall be interpreted
liberally in favor of the insured and strictly against the insurance company or
the party for whose benefit they are inserted. (Eagle Star Insurance, Ltd. v.
Chia Yu, 96 Phil. 696 [1955]; Trinidad v. Orient Protective Asso., 67 Phil. 181
[1939]; Serrano v. Court of Appeals, 130 SCRA 327 [1984]; and National
Power Corp. v. Court of Appeals, 145 SCRA 533 [1986])
5.
ID.; ID.; ID.; FAILURE TO ESTABLISH THAT LOSS WAS DUE TO
RISK NOT INSURED RENDERS INSURERS LIABLE; CASE AT BAR.
We agree with the petitioner's claim that the burden of proof to show that the
insured is not liable because of an excepted risk is on the private respondent.
The Rules of Court in its Section 1, Rule 131 provides that "each party must
prove his affirmative allegations." (Summit Guaranty and Insurance Co., Inc.
vs. Court of Appeals, 110 SCRA 241 [1981]; Tai Tong Chuache & Co. v.
Insurance Commissioner, 158 SCRA 366 [1988]; Paris-Manila Perfume Co.
v. Phoenix Assurance Co., 49 Phil. 753 [1926]). Where the insurer denies
liability for a loss alleged to be due to a risk not insured against, but fails to
establish the truth of such fact by concrete proofs, the Court rules that the
insurer is liable under the terms and conditions of the policy by which it has
bound itself. In this case, the dismissal order without hearing and reception of
evidence to prove that the firing incident was indeed a result of a civil
commotion, rebellion or insurrection constitutes reversible error on the part of
the trial court.
6.
REMEDIAL LAW; CIVIL PROCEDURE; MOTION TO DISMISS;
DETERMINATION OF INSURER'S LIABILITY MUST NOT BE THRESHED
OUT IN A MOTION TO DISMISS BUT IN A FULL-BLOWN TRIAL. The
Court stresses that it would be a grave and dangerous procedure for the
courts to permit insurance companies to escape liability through a motion to
dismiss without the benefit of hearing and evidence every time someone is
killed, or as in this case, property is damaged in an ambush. The question on

the nature of the firing incident for the purpose of determining whether or not
the insurer is liable must first be threshed out and resolved in a full-blown
trial.

DECISION

7.
ID.; ID.; ID.; ID.; GOVERNMENT'S PROCLAMATION AS TO
EXISTENCE OF REBELLION NOT NECESSARY; ISSUE DEVELOPS
DURING TRIAL OR MUST AWAIT LEGISLATION. The evidence to be
received does not even have to relate to the existence of an official
government proclamation of the nature of the incident because the latter is
not an explicit requirement in the exception clause resolved in a mere motion
to dismiss and is, for purposes of this petition for review on certiorari,
immaterial. This particular issue on when to take cognizance of a rebellion for
purposes of the law on contracts and obligations should have been
developed during the trial on the merits or may have to await remedial
legislation in Insurance Law or a decision in a more appropriate case.

The main issues raised in this petition for review on certiorari are whether the
Court of Appeals erred in: (1) affirming the dismissal by the trial court of the
complaint for damages on the ground of lack of cause of action, and in (2)
denying due course to a petition for certiorari on the ground that the remedy
of the petitioner to assail said order is appeal.

8.
ID.; APPEAL; WHERE THE JUDGE RULED OUT THE REMEDY OF
APPEAL, RECOURSE MUST BE THROUGH SPECIAL CIVIL ACTION.
The judge ruled out the remedy of appeal which was supposed to be availed
of as a matter of right. In filing a petition for certiorari, the petitioner was
acting upon the instructions of the judge. Under a situation where there was
no more plain, speedy and adequate remedy in the ordinary course of law,
the only available recourse was to file a special civil action of certiorari to
determine whether or not the dismissal order was issued with grave abuse of
discretion.
9.
ID.; APPEAL; RECOURSE FROM THE DECISION OF THE
REGIONAL TRIAL COURT IN ITS APPELLATE JURISDICTION TO THE
COURT OF APPEALS IS BY PETITION FOR REVIEW. A petition for
review before the Court of Appeals could have been availed of if what is
challenged is an adverse decision of the Regional Trial Court in its appellate
capacity affirming, modifying or reversing a decision of a municipal trial court
or lower tribunal. (Section 22, Batas Pambansa Blg. 129 and Section 22 (6)
of the Interim Rules).
10.
ID.; ID.; RECOURSE FROM THE DECISION OF THE REGIONAL
TRIAL COURT ON A COMPLAINT ORIGINALLY FILED WITH IT IS BY
FILING A NOTICE OF APPEAL. In this case, the petitioner assailed the
dismissal order of the Regional Trial Court of a complaint originally filed with
it. This adverse order which had the effect of a judgment on the merits, may
be appealed to the Court of Appeals by filing a notice of appeal within fifteen
(15) days from receipt of notice of the order both on questions of law and of
fact, (Section 39, Batas Pambansa Blg. 129 and Section 19 (a) of the Interim
Rules).

29 | P a g e

GUTIERREZ, JR., J p:

Petitioner, Heirs of Ildefonso Coscoluella, Inc. is a domestic corporation and

the registered owner of an Isuzu KBD Pick-up truck bearing Motor No.
663296 and Plate No. UV-FAW-189. The vehicle was insured with the private
respondent Rico General Insurance Corporation for a consideration of
P100,000.00 excluding third party liability under Commercial Vehicle Policy
No. CV-122415 per Renewal Certificate No. 02189. The premiums and other
expenses for insurance paid covered the period from October 1, 1986 to
October 1, 1987. Cdpr
On August 28, 1987 and within the period covered by the insurance, the
insured vehicle was severely damaged and rendered unserviceable when
fired upon by a group of unidentified armed persons at Hacienda Puyas,
Barangay Blumentritt, Murcia, Negros Occidental. In the same incident, four
persons died.
Petitioner filed its claim of P80,000.00 for the repair of the vehicle but private
respondent, in a letter dated October 8, 1987, refused to grant it. As a
consequence, the petitioner was prompted to file a complaint with the
Regional Trial Court, 6th Judicial Region, Branch 47 at Bacolod City,
docketed as Civil Case No. 4707, to recover the claim of P80,000.00 plus
interest and attorney's fees.
The private respondent filed a motion to dismiss alleging that the complaint
lacks a cause of action because the firing by armed men is a risk excepted
under the following provisions in the insurance policy:
"The Company shall not be liable under any Section of the Policy in respect
of:
1.

...

2.

...

3.
Except in respect of claims arising under Sections I and II of the
policy, any accident, loss, damage or liability directly or indirectly, proximately

or remotely occasioned by, contributed to by or traceable to, or arising out of,

or in connection with flood, typhoon, hurricane, volcanic eruption, earthquake
or other convulsion of nature, invasion, the act of foreign enemies, hostilities
or warlike operations (whether war be declared or not), civil commotion,
mutiny, rebellion, insurrection, military or usurped power, or by any direct or
indirect consequences of any of the said occurrences and in the event of any
claim hereunder, the insured shall prove that the accident, loss or damage or
liability arose independently of, and was in no way connected with, or
occasioned by, or contributed to, any of the said occurrences, or any
consequence thereof, and in default of such proof, the Company shall not be
liable to make any payment in respect of such claim." (Italics supplied; see
Rollo, p. 33, 71) LexLib
The private respondent alleged that the firing was "an indirect consequence
of rebellion, insurrection or civil commotion." The petitioner opposed the
motion, saying that the quoted provision does not apply in the absence of an
official governmental proclamation of any of the above-enumerated
conditions.
The trial court ordered the dismissal of the complaint for lack of cause of
action stating that the damage arose from a civil commotion or was a direct
result thereof. (Rollo, p. 37)
A motion for reconsideration filed by the petitioner was denied by the trial
court which further noted that "Courts can take effective cognizance of the
general civil disturbance in the country akin to civil war without any executive
proclamation of the existence of such unsettling condition." (Rollo, p. 38)
A second motion for reconsideration was filed but was later withdrawn.
Petitioner filed a notice of appeal which was given due course. However, the
trial court, stated in its order that "the records of the case will not be
transmitted to the Court of Appeals, the appropriate remedy being (a) petition
for review by way of certiorari." In that same order, the trial court took
cognizance of the withdrawal of the second motion for reconsideration but
noted the police blotter appended to said motion which showed that "other
than M-16 Armalite Rifles (the number of which were not specified for
unknown reasons), nothing else was taken by the attackers." (Rollo, p. 40)
Thereafter, the petitioner filed a petition for certiorari with the Court of
Appeals. The appellate court denied the petition, affirmed the trial court's
dismissal order, and also ruled that an appeal in the ordinary course of law,
not a special civil action of certiorari, is the proper remedy for the petitioner in
assailing the dismissal order.

30 | P a g e

Hence, this petition to review the respondent appellate court's decision.

Petitioner asserts that its complaint states a cause of action since ultimate
facts were alleged as follows: LLphil
"3. That, on August 28, 1987, the ISUZU KBD PICK-UP referred to in the
preceding paragraph was damaged as a result of an incident at Hda. Puyas,
Barangay Blumentritt, Murcia, Negros Occidental, when it was fired upon by
a group of unidentified armed persons causing even the death of four (4)
persons and rendering the said vehicle almost totally damaged and
unserviceable;
4. That when the said incident occurred on August 28, 1987, the said
ISUZU KBD PICK-UP was insured by the defendant for P100,000.00
excluding third-party liability under Commercial Vehicle Policy No.
CV/122415 per Renewal Certificate No. 02189 a copy of which is herewith
attached as Annex "B"; and with the premiums and other expenses thereon
duly paid for under Official Receipt No. 691, dated September 8, 1986,
covering the period from October 1, 1986 to October 1, 1987, a copy of the
same being attached hereto as Annex "C";
5. That, the damage on said motor vehicle being a "fait accompli" and that
it was insured by the defendant at the time it was damaged, it is the
obligation of the defendant to restore the said vehicle to its former physical
and running condition when it was insured however defendant refused and
still refuses and fails, despite demands in writing made by plaintiff and its
counsel to that effect, copies of said letters attached hereto as Annexes "D"
& "E";
6. That, for purposes of restoring the ISUZU KBD PICK-UP insured by the
defendant to its former physical and running condition when it was insured,
as mentioned above, would cost P80,000.00, which will include repair,
repainting, replacement of spare parts, labor, etc., the said amount having
arrived at upon inspection and appraisal of the said motor vehicle by
knowledgeable and technical people;
7. That, as a consequence of defendant's refusal to settle or pay the just
claim of plaintiff, plaintiff has been compelled to hire the legal services of
counsel for the protection of its rights and interest at the agreed fee of
P15,000.00, for and as attorney's fees, which sum plaintiff is claiming from
the defendant." (At pp. 29-30, Rollo)
Petitioner further maintains that the order of dismissal was erroneous in that:
it overlooked the principle that a motion to dismiss a complaint on the ground
of failure to state a cause of action hypothetically admits the allegations in

the complaint; no trial was held for the reception of proof that the firing
incident was a direct or indirect result of a civil commotion, mutiny,
insurrection or rebellion; private respondent had the burden of proof to show
that the cause was really an excepted risk; and in any case, the nature of the
incident as a "civil disturbance" must first be officially proclaimed by the
executive branch of the government. Private respondent, on the other hand,
argues that the accident was really a result of a civil commotion, one of the
fatalities being a military officer. (Rollo, p. 59)
After a review of the records, the Court finds that the allegations set forth in
the complaint sufficiently establish a cause of action. The following are the
requisites for the existence of a cause of action: (1) a right in favor of the
plaintiff by whatever means and under whatever law it arises or is created;
(2) an obligation on the part of the named defendant to respect, or not to
violate such right; and (3) an act or omission on the part of the said
defendant constituting a violation of the plaintiff's right or a breach of the
obligation of the defendant to the plaintiff. (Cole v. Vda. de Gregoria, 116
SCRA 670 [1982]; Baliwag Transit, Inc. v. Ople, G. R. No. 57642, March 16,
1989)
The facts as alleged clearly define the existence of a right of the petitioner to
a just claim against the insurer for the payment of the indemnity for a loss
due to an event against which the petitioner's vehicle was insured. The
insurance contract mentioned therein manifests a right to pursue a claim and
a duty on the part of the insurer or private respondent to compensate the
insured in case of a risk insured against. The refusal of the insurer to satisfy
the claim and the consequent loss to the petitioner in incurring the cost of
acquiring legal assistance on the matter constitutes a violation or an injury
brought to the petitioner. LLphil
There is, therefore, a sufficient cause of action upon which the trial court can
render a valid judgment. (Taedo v. Bernad, et al., G.R. No. 66520, August
30, 1988).
The Court is very much cognizant of the principle that a motion to dismiss on
the ground of failure to state a cause of action stated in the complaint
hypothetically admits the truth of the facts therein. The Court notes the
following limitations on the hypothetical admission:
"The hypothetical admission is however limited to the relevant and material
facts well pleaded in the complaint and inferences fairly deducible therefrom.
The admission does not extend to conclusions or interpretations of law; nor
does it cover allegations of fact the falsity of which is subject to judicial
notice." (U. Baez Electric Light Co. v. Abra Electric Cooperative, Inc., 119
SCRA 90 [1982])

31 | P a g e

Applying the above principle, we hold that the private respondent's motion to
dismiss hypothetically admits the facts alleged in the complaint. We do not
find anything in the complaint which does not deserve admission by the
motion since there are no "conclusions or interpretations of law" nor
"allegations of fact the falsity of which is subject to judicial notice." It is clear
that the complaint does no more and no less than state simply that the van
was damaged due to the firing by unidentified armed men. Since the
complaint does not explicitly state nor intimate civil strife which private
respondent insists to be the cause of the damage, the motion to dismiss
cannot go beyond the admission of the facts stated and inferences
reasonably deducible from them. Any other assertion by the private
respondent is subject to proof. Meanwhile, the sufficiency of the petitioner's
cause of action has been shown since, admitting the facts alleged, a valid
judgment can be rendered.
The private respondent's invocation of the exceptions clause in the insurance
policy as the basis for its non-liability and the consequent dismissal of the
complaint is without merit. We also reiterate the established rule that when
the terms of an insurance contract contain limitations on liability, the court
"should construe them in such a way as to preclude the insurer from noncompliance with his obligations." (Taurus Taxi Co. Inc. v. Capital Insurance
and Surety Company, Inc., 24 SCRA 454 [1968]) A policy of insurance with a
narration of exceptions tending to work a forfeiture of the policy shall be
interpreted liberally in favor of the insured and strictly against the insurance
company or the party for whose benefit they are inserted. (Eagle Star
Insurance, Ltd. v. Chia Yu, 96 Phil. 696 [1955]; Trinidad v. Orient Protective
Asso., 67 Phil. 181 [1939]; Serrano v. Court of Appeals, 130 SCRA 327
[1984]; and National Power Corp. v. Court of Appeals, 145 SCRA 533 [1986])
The facts alleged in the complaint do not give a complete scenario of the real
nature of the firing incident. Hence, it was incumbent upon the trial judge to
have made a deeper scrutiny into the circumstances of the case by receiving
evidence instead of summarily disposing of the case. Contrary to what the
respondent appellate court says, this case does not present a pure question
of law but demands a factual determination of whether the incident was a
result of events falling under the exceptions to the liability of private
respondent contained in the policy of insurance. LexLib
We agree with the petitioner's claim that the burden of proof to show that the
insured is not liable because of an excepted risk is on the private respondent.
The Rules of Court in its Section 1, Rule 131 provides that "each party must
prove his affirmative allegations." (Summit Guaranty and Insurance Co., Inc.
vs. Court of Appeals, 110 SCRA 241 [1981]; Tai Tong Chuache & Co. v.
Insurance Commissioner, 158 SCRA 366 [1988]; Paris-Manila Perfume Co.

v. Phoenix Assurance Co., 49 Phil. 753 [1926]). Where the insurer denies
liability for a loss alleged to be due to a risk not insured against, but fails to
establish the truth of such fact by concrete proofs, the Court rules that the
insurer is liable under the terms and conditions of the policy by which it has
bound itself. In this case, the dismissal order without hearing and reception of
evidence to prove that the firing incident was indeed a result of a civil
commotion, rebellion or insurrection constitutes reversible error on the part of
the trial court.
The Court stresses that it would be a grave and dangerous procedure for the
courts to permit insurance companies to escape liability through a motion to
dismiss without the benefit of hearing and evidence every time someone is
killed, or as in this case, property is damaged in an ambush. The question on
the nature of the firing incident for the purpose of determining whether or not
the insurer is liable must first be threshed out and resolved in a full-blown
trial.
The evidence to be received does not even have to relate to the existence of
an official government proclamation of the nature of the incident because the
latter is not an explicit requirement in the exception clause resolved in a mere
motion to dismiss and is, for purposes of this petition for review on certiorari,
immaterial. This particular issue on when to take cognizance of a rebellion for
purposes of the law on contracts and obligations should have been
developed during the trial on the merits or may have to await remedial
legislation in Insurance Law or a decision in a more appropriate case.
The petitioner also questions the reasoning of the Court of Appeals in
denying due course to the petition for certiorari. The appellate court said that
even assuming for the sake of argument that the dismissal order by the trial
court was not procedurally correct for lack of hearing, there was only an
"error of judgment or procedure" correctible only by appeal then available in
the ordinary course of law and not by a special civil action of certiorari which
cannot be a substitute for appeal.
The records show that the remedy of appeal was actually intended to be
pursued by petitioner. However, the appeal was rendered unfeasible when
the trial judge refused to transmit the records to the appellate court. (see
Rollo, p. 40) The judge, in effect, ruled out the remedy of appeal which was
supposed to be availed of as a matter of right. In filing a petition for certiorari,
the petitioner was acting upon the instructions of the judge. Under a situation
where there was no more plain, speedy and adequate remedy in the ordinary
course of law, the only available recourse was to file a special civil action of
certiorari to determine whether or not the dismissal order was issued with
grave abuse of discretion. cdrep

32 | P a g e

It is apparent, moreover, that the respondent appellate court failed to

appreciate the petitioner's predicament. The trial judge, aside from
dismissing the complaint which we now rule to have a sufficient cause of
action, likewise prevented an ordinary appeal to prosper in contravention of
what is provided for by the rules of procedure.
The April 6, 1988 order of the trial judge stating that the appropriate remedy
was a petition for review by way of certiorari is deplorable. The lower court
cannot even distinguish between an original petition for certiorari and a
petition for review by way of certiorari. A petition for review before the Court
of Appeals could have been availed of if what is challenged is an adverse
decision of the Regional Trial Court in its appellate capacity affirming,
modifying or reversing a decision of a municipal trial court or lower tribunal.
(Section 22, Batas Pambansa Blg. 129 and Section 22 (6) of the Interim
Rules). In this case, the petitioner assailed the dismissal order of the
Regional Trial Court of a complaint originally filed with it. This adverse order
which had the effect of a judgment on the merits, may be appealed to the
Court of Appeals by filing a notice of appeal within fifteen (15) days from
receipt of notice of the order both on questions of law and of fact, (Section
39, Batas Pambansa Blg. 129 and Section 19 (a) of the Interim Rules). This
was exactly what petitioner did after its motion for reconsideration was
denied. Unfortunately, the trial judge failed to see the propriety of this
recourse. And the Court of Appeals compounded the problem when it denied
the petitioner any remedy arising from the Judge's wrong instructions.
The filing of the petition for certiorari was proper. Petitioner has satisfactorily
shown before the respondent appellate court that the trial judge "acted
whimsically in total disregard of evidence material to and even decisive of the
controversy". (Pure Foods Corp. v. National Labor Relations Commission, G.
R. No. 78591, March 21, 1989). LLjur
The extraordinary writ of certiorari is always available where there is no
appeal or any other plain, speedy and adequate remedy in the ordinary
course of law. (Tropical Homes, Inc. v. National Housing Authority, 152
SCRA 540 [1987]; Pure Foods Corp. v. NLRC, supra).
Since the petitioner was denied the remedy of appeal, the Court deems that
a certiorari petition was in order.
WHEREFORE, considering the foregoing, the petition is hereby GRANTED.
The decision of the respondent Court of Appeals affirming the dismissal
order by the Regional Trial Court. is hereby REVERSED and SET ASIDE.
Let the case be remanded to the lower court for trial on the merits.
SO ORDERED.

Fernan, C.J., Feliciano, Bidin and Cortes, JJ., concur.

essential elements are: (1) legal right of the plaintiff; (2) correlative obligation
of the defendant; and (3) an act or omission of the defendant in violation of
said legal right.
2.
ID.; APPEAL; PARTY CANNOT CHANGE HIS THEORY ON
APPEAL; REASON. In the original complaint, petitioner Bank, as plaintiff,
sued respondent Sima Wei on the promissory note, and the alternative
defendants, including Sima Wei, on the two checks. On appeal from the
orders of dismissal of the Regional Trial Court, petitioner Bank alleged that
its cause of action was not based on collecting the sum of money evidenced
by the negotiable instruments stated but on quasi-delict a claim for
damages on the ground of fraudulent acts and evident bad faith of the
alternative respondents. This was clearly an attempt by the petitioner Bank to
change not only the theory of its case but the basis of his cause of action. It
is well-settled that a party cannot change his theory on appeal, as this would
in effect deprive the other party of his day in court.

SECOND DIVISION
[G.R. No. 85419. March 9, 1993.]
DEVELOPMENT BANK OF RIZAL, plaintiff-petitioner, vs. SIMA WEI and/or
LEE KIAN HUAT, MARY CHENG UY, SAMSON TUNG, ASIAN
INDUSTRIAL PLASTIC CORPORATION and PRODUCERS BANK OF THE
PHILIPPINES, defendants-respondents.
Yngson & Associates for petitioner.
Henry A. Reyes & Associates for Samso Tung & Asian Industrial Plastic
Corporation.
Eduardo G. Castelo for Sima Wei.
Monsod, Tamargo & Associates for Producers Bank.
Rafael S. Santayana for Mary Cheng Uy.
SYLLABUS
1.
REMEDIAL LAW; CAUSE OF ACTION; DEFINITION AND
ESSENTIAL ELEMENTS. A cause of action is defined as an act or
omission of one party in violation of the legal right or rights of another. The

33 | P a g e

3.
NEGOTIABLE INSTRUMENTS LAW; CHECKS; MUST BE
DELIVERED TO THE PAYEE TO GIVE EFFECT THERETO. A negotiable
instrument, of which a check is, is not only a written evidence of a contract
right but is also a species of property. Just as a deed to a piece of land must
be delivered in order to convey title to the grantee, so must a negotiable
instrument be delivered to the payee in order to evidence its existence as a
binding contract. Section 16 of the Negotiable Instruments Law, which
governs checks, provides in part: "Every contract on a negotiable instrument
is incomplete and revocable until delivery of the instrument for the purpose of
giving effect thereto. . . ." The payee of a negotiable instrument acquires no
interest with respect thereto until its delivery to him. Delivery of an instrument
means transfer of possession, actual or constructive, from one person to
another. Without the initial delivery of the instrument from the drawer to the
payee, there can be no liability on the instrument. Moreover, such delivery
must be intended to give effect to the instrument.
DECISION
CAMPOS, JR., J p:
On July 6, 1986, the Development Bank of Rizal (petitioner Bank for brevity)
filed a complaint for a sum of money against respondents Sima Wei and/or
Lee Kian Huat, Mary Cheng Uy, Samson Tung, Asian Industrial Plastic
Corporation (Plastic Corporation for short) and the Producers Bank of the
Philippines, on two causes of action:
(1)
To enforce payment of the balance of P1,032,450.02 on a
promissory note executed by respondent Sima Wei on June 9, 1983; and

(2)
To enforce payment of two checks executed by Sima Wei, payable
to petitioner, and drawn against the China Banking Corporation, to pay the
balance due on the promissory note.
Except for Lee Kian Huat, defendants filed their separate Motions to Dismiss
alleging a common ground that the complaint states no cause of action. The
trial court granted the defendants' Motions to Dismiss. The Court of Appeals
affirmed this decision, * to which the petitioner Bank, represented by its Legal
Liquidator, filed this Petition for Review by Certiorari, assigning the following
as the alleged errors of the Court of Appeals. 1
(1)
THE COURT OF APPEALS ERRED IN HOLDING THAT THE
PLAINTIFF-PETITIONER HAS NO CAUSE OF ACTION AGAINST
DEFENDANTS-RESPONDENTS HEREIN. LibLex
(2)
THE COURT OF APPEALS ERRED IN HOLDING THAT SECTION
13, RULE 3 OF THE REVISED RULES OF COURT ON ALTERNATIVE
DEFENDANTS IS NOT APPLICABLE TO HEREIN DEFENDANTSRESPONDENTS.
The antecedent facts of this case are as follows:
In consideration for a loan extended by petitioner Bank to respondent Sima
Wei, the latter executed and delivered to the former a promissory note,
engaging to pay the petitioner Bank or order the amount of P1,820,000.00 on
or before June 24, 1983 with interest at 32% per annum. Sima Wei made
partial payments on the note, leaving a balance of P1,032,450.02. On
November 18, 1983, Sima Wei issued two crossed checks payable to
petitioner Bank drawn against China Banking Corporation, bearing
respectively the serial numbers 384934, for the amount of P550,000.00 and
384935, for the amount of P500,000.00. The said checks were allegedly
issued in full settlement of the drawer's account evidenced by the promissory
note. These two checks were not delivered to the petitioner-payee or to any
of its authorized representatives. For reasons not shown, these checks came
into the possession of respondent Lee Kian Huat, who deposited the checks
without the petitioner-payee's indorsement (forged or otherwise) to the
account of respondent Plastic Corporation, at the Balintawak branch,
Caloocan City, of the Producers Bank. Cheng Uy, Branch Manager of the
Balintawak Branch of Producers Bank, relying on the assurance of
respondent Samson Tung, President of Plastic Corporation, that the
transaction was legal and regular, instructed the cashier of Producers Bank
to accept the checks for deposit and to credit them to the account of said
Plastic Corporation, inspite of the fact that the checks were crossed and
payable to petitioner Bank and bore no indorsement of the latter. Hence,
petitioner filed the complaint as aforestated.

34 | P a g e

The main issue before Us is whether petitioner Bank has a cause of action
against any or all of the defendants, in the alternative or otherwise.
A cause of action is defined as an act or omission of one party in violation of
the legal right or rights of another. The essential elements are: (1) legal right
of the plaintiff; (2) correlative obligation of the defendant; and (3) an act or
omission of the defendant in violation of said legal right. 2
The normal parties to a check are the drawer, the payee and the drawee
bank. Courts have long recognized the business custom of using printed
checks where blanks are provided for the date of issuance, the name of the
payee, the amount payable and the drawer's signature. All the drawer has to
do when he wishes to issue a check is to properly fill up the blanks and sign
it. However, the mere fact that he has done these does not give rise to any
liability on his part, until and unless the check is delivered to the payee or his
representative. A negotiable instrument, of which a check is, is not only a
written evidence of a contract right but is also a species of property. Just as a
deed to a piece of land must be delivered in order to convey title to the
grantee, so must a negotiable instrument be delivered to the payee in order
to evidence its existence as a binding contract. Section 16 of the Negotiable
Instruments Law, which governs checks, provides in part:
"Every contract on a negotiable instrument is incomplete and revocable until
delivery of the instrument for the purpose of giving effect thereto. . . ."
Thus, the payee of a negotiable instrument acquires no interest with respect
thereto until its delivery to him. 3 Delivery of an instrument means transfer of
possession, actual or constructive, from one person to another. 4 Without the
initial delivery of the instrument from the drawer to the payee, there can be
no liability on the instrument. Moreover, such delivery must be intended to
give effect to the instrument. LexLib
The allegations of the petitioner in the original complaint show that the two
(2) China Bank checks, numbered 384934 and 384935, were not delivered to
the payee, the petitioner herein. Without the delivery of said checks to
petitioner-payee, the former did not acquire any right or interest therein and
cannot therefore assert any cause of action, founded on said checks,
whether against the drawer Sima Wei or against the Producers Bank or any
of the other respondents.
In the original complaint, petitioner Bank, as plaintiff, sued respondent Sima
Wei on the promissory note, and the alternative defendants, including Sima
Wei, on the two checks. On appeal from the orders of dismissal of the
Regional Trial Court, petitioner Bank alleged that its cause of action was not
based on collecting the sum of money evidenced by the negotiable

instruments stated but on quasi- delict a claim for damages on the ground
of fraudulent acts and evident bad faith of the alternative respondents. This
was clearly an attempt by the petitioner Bank to change not only the theory of
its case but the basis of his cause of action. It is well-settled that a party
cannot change his theory on appeal, as this would in effect deprive the other
party of his day in court. 5

of Rizal for any amount under the promissory note allegedly signed by her.
cdphil
SO ORDERED.

Notwithstanding the above, it does not necessarily follow that the drawer
Sima Wei is freed from liability to petitioner Bank under the loan evidenced
by the promissory note agreed to by her. Her allegation that she has paid the
balance of her loan with the two checks payable to petitioner Bank has no
merit for, as We have earlier explained, these checks were never delivered to
petitioner Bank. And even granting, without admitting, that there was delivery
to petitioner Bank, the delivery of checks in payment of an obligation does
not constitute payment unless they are cashed or their value is impaired
through the fault of the creditor. 6 None of these exceptions were alleged by
respondent Sima Wei.
Therefore, unless respondent Sima Wei proves that she has been relieved
from liability on the promissory note by some other cause, petitioner Bank
has a right of action against her for the balance due thereon.
However, insofar as the other respondents are concerned, petitioner Bank
has no privity with them. Since petitioner Bank never received the checks on
which it based its action against said respondents, it never owned them (the
checks) nor did it acquire any interest therein. Thus, anything which the
respondents may have done with respect to said checks could not have
prejudiced petitioner Bank. It had no right or interest in the checks which
could have been violated by said respondents. Petitioner Bank has therefore
no cause of action against said respondents, in the alternative or otherwise.
If at all, it is Sima Wei, the drawer, who would have a cause of action against
her co-respondents, if the allegations in the complaint are found to be true.
With respect to the second assignment of error raised by petitioner Bank
regarding the applicability of Section 13, Rule 3 of the Rules of Court, We
find it unnecessary to discuss the same in view of Our finding that the
petitioner Bank did not acquire any right or interest in the checks due to lack
of delivery. It therefore has no cause of action against the respondents, in the
alternative or otherwise.

THIRD DIVISION
[G.R. No. 94093. August 10, 1993.]

In the light of the foregoing, the judgment of the Court of Appeals dismissing
the petitioner's complaint is AFFIRMED insofar as the second cause of
action is concerned. On the first cause of action, the case is REMANDED to
the trial court for a trial on the merits, consistent with this decision, in order to
determine whether respondent Sima Wei is liable to the Development Bank

35 | P a g e

FAR EAST MARBLE (PHILS.), INC., LUIS R. TABUENA, JR. and RAMON
A. TABUENA, petitioners, vs. HONORABLE COURT OF APPEALS and
BANK OF PHILIPPINE ISLANDS, respondents.

Minerva C. Genevea for petitioners.

necessary to make the mortgage valid enforceable must be proven during

the trial (Ortiz v. Garcia, 15 Phil. 192 [1910]).

Sabino B. Padilla IV for Bank of Philippine Islands.

SYLLABUS
1.
REMEDIAL LAW; CIVIL PROCEDURE; CAUSE OF ACTION;
ELEMENTS; CASE AT BAR. Basically, a cause of action consists of three
elements, namely: (1) the legal right of the plaintiff; (2) the correlative
obligation of the defendant; and (3) the act or omission of the defendant in
violation of said legal right (Nabus vs. Court of Appeals, et al., 193 SCRA
732 [1991]); Rebollido vs. Court of Appeals et al., 170 SCRA 800 [1989])
These elements are manifest in BPI's complaint, particularly when it was
therein alleged that: (1) for valuable consideration, BPI granted several
loans, evidenced by promissory notes, and extended credit facilities in the
form of trust receipt to Far East (photocopies of said notes and receipt were
duly attached to the Complaint); (2) said promissory notes and trust receipts
had matured; and (3) despite repeated requests and demands for payment
thereof, Far East had failed and refused to pay.
2.
ID.; ID.; COMPLAINT; DEFINED; ALLEGATIONS IN THE
COMPLAINT; ULTIMATE FACTS; DEFINED; EVIDENTIARY FACTS,
DEFINED; WHEN COMPLAINT SUFFICIENT; CASE AT BAR. Section 3
of Rule 6 state that a "complaint is a concise statement of the ultimate facts
constituting the plaintiff's cause or causes of action." Further elaborating
thereon, Section 1 of Rule 8 declares that every pleading, including, of
course, a complaint, "shall contain in a methodical and logical form, a plain,
concise and direct statement of the ultimate facts . . . omitting the statement
of mere evidentiary facts." "Ultimate facts" are the essential and substantial
facts which either form the basis of the primary right and duty or which
directly make up the wrongful acts or omissions of the defendant (Tantuico,
Jr. vs. Republic of the Phil., et al., 204 SCRA [1991]), while "evidentiary
facts" are those which tend to prove or establish said ultimate facts . . . A
complaint is sufficient if it contains sufficient notice of the cause of action
even though the allegation may be vague or indefinite, for in such case, the
recourse of the defendant would be to file a motion for a bill of particulars
(Ramos vs. Condez, 20 SCRA 1146 [1967]). It is indeed the better rule that,
pleadings, as well as remedial laws, should be liberally construed so that the
litigants may have ample opportunity to prove their respective claims so as to
void possible denial of substantial justice due to legal technicalities (Adamo,
et al. vs. Intermediate Appellate Court, et al., 191 SCRA 195 [1990]). In the
case at bar, the circumstances of BPI extending loans and credit to Far East
and the failure of the latter to pay and discharge the same upon maturity are
the only ultimate facts which have to be pleaded, although the facts

36 | P a g e

3.
ID.; APPEALS; JURISDICTION; OVER APPEALS RAISING ONLY
PURE QUESTIONS OF LAW; OVER APPEALS INVOLVING BOTH
QUESTIONS OF LAW AND FACT. There is no dispute with respect to the
fact that when an appeal raised only pure question of law, it is only this Court
which has jurisdiction to entertain the same (Article VIII, Section 5 (2) (e),
1987 Constitution; Rule 45, Rule of Court; see also Santos, Jr. vs. Court of
Appeals, 152 SCRA [1987]). On the other hand, appeals involving both
questions of law and fact fall within the exclusive appellate jurisdiction of the
Court of Appeals.
4.
ID.; ID.; QUESTION OF LAW DISTINGUISHED FROM QUESTION
OF FACT; CASE AT BAR. It has been held in a number of cases (Medina
vs. Asistio, Jr., 191 SCRA 218 [1990]; Gan vs. Licup Design Group, Inc.,
G.R. No. 94264, July 24, 1990, En Banc, Minute Resolution; Pilar
Development Corp. vs. Intermediate Appellate Court, et al.., 146 SCRA 215
[1986]; Ramos vs. Pepsi-Cola Bottling Co., 19 SCRA 289 [1967];
Consolidated Mines, Inc. vs. Court of Tax Appeals, et al., 58 SCRA 618
[1974]), that there is a "question of law" when there is doubt or difference of
facts and which does not call for an examination of the probative value of the
evidence presented by the parties-litigants. On the other hand, there is a
"question of fact" when the doubt or controversy arises as to the truth or
falsity of the alleged facts. Simply put, when there is no dispute as to fact, the
question of whether or not the conclusion drawn therefrom is correct is a
question of law . . . From the foregoing exchange of pleading, the conflicting
allegations of fact by the contending parties sprung forth. It is thus quite
obvious that the controversy centered on, and the doubt arose with respect
to, the very existence of previous demands for payment allegedly made by
BPI on petitioner Far East, receipt of which was denied by the latter. This
dispute or controversy inevitably raised a question of fact. Such being the
case, the appeal taken by BPI to the Court of Appeals was proper.
DECISION
MELO, J p:
This has reference to a petition for review by certiorari seeking the reversal of
the decision of the Court of Appeals dated June 26, 1990, in CA-G.R. CV No.
14404 (Bellosillo (P), Marigomen, Sempio-Diy, JJ.) which set aside the order
of the Regional Trial Court of the National Capital Judicial Region (Manila,
Branch XIV), dated June 1, 1987 and remanded the case to the court a quo
for further proceedings on the grounds that the complaint for foreclosure of
chattel mortgage with replevin had not prescribed and that, there being a

cause of action, further proceedings, including the resolution of the motion for
summary judgment may be pursued. LLpr

1986 is P2,170,476.62 as itemized in a statement of account, copy of which

is attached hereto and made an integral part hereof as Annex K.

The antecedent facts of the case may be chronicled as follows:

8.
That because of Far East's failure and refusal to pay its long past
due obligations under the Trust Receipts above alleged, plaintiff was
constrained to file this suit . . .

On February 5, 1987, herein private respondent Bank of the Philippine

Islands (BPI) filed a complaint for foreclosure of chattel mortgage with
replevin against petitioner Far East Marble (Phils.), Inc. (Far East), Ramon A.
Tabuena and Luis R. Tabuena, Jr. which was docketed as Civil Case No. 8739345 of Branch XIV of the Regional Trial Court of the National Capital
Judicial Region stationed in Manila. LexLib

xxx

xxx

xxx

The complaint pertinently alleged:

10.
That in September 1976 Far East executed in favor of . . . plaintiff
Bank . . . a Chattel Mortgage, photocopy of which is attached hereto and
made an integral part hereof as Annex L, to secure the payment of its loan
obligations including interests and related charges . . .

FIRST CAUSE OF ACTION AGAINST FAR EAST

xxx

2.
That on various dates and for valuable consideration, the defendant
Far East received from Commercial Bank and Trust Company . . . now
merged with and into the plaintiff Bank . . . several loans evidenced by
promissory notes executed by said Far East, photo copies of which are
attached hereto and made integral parts hereof as Annexes A, B and C.

CAUSE OF ACTION AGAINST INDIVIDUAL DEFENDANTS RAMON A.

TABUENA AND LUIS R. TABUENA, JR.

3.
That said promissory notes . . . have long matured but despite
repeated requests and demands for payment thereof with interests and
related charges due, Far East has failed and refused to pay. The account
due on said promissory notes with interests and related charges as of 10
September 1986 is P4,471,854.32 itemized in a statement of account, copy
of which is attached hereto and made a part hereof as Annex D.
4.
That because of Far East's failure and refusal in bad faith to pay its
long past due obligations under the promissory notes above alleged, plaintiff
was constrained to file this suit . . .
SECOND CAUSE OF ACTION AGAINST FAR EAST
6.
That on various dates and for valuable consideration, the defendant
Far East received from and was extended by . . . plaintiff Bank . . . credit
facilities in the form of Trust Receipts, photo copies of which are hereto
attached and made integral parts hereof as Annexes E, F, G, H, I and J.
7.
That said Trust Receipts . . . have long matured and despite
repeated requests and demands for payment thereof with interests and
related charges due Far East has failed and refused to pay. The amount due
on said Trust Receipts with interests and related charges as of 10 September

37 | P a g e

xxx

xxx

13.
That in September 1976, defendants Ramon A. Tabuena and Luis R.
Tabuena, Jr. executed in favor of . . . plaintiff Bank . . . a "continuing
guaranty" photocopy of which is attached hereto and made a part hereof as
Annex M, whereby they bind themselves, jointly and severally, to answer for
the loan obligations to the Bank of defendant Far East. cdphil
14.
That despite requests and demands for their payment of Far East's
long past due accounts, said defendants Ramon A. Tabuena and Luis R.
Tabuena, Jr. have failed and refused to pay said Far East accounts and have
already defaulted in their solidary obligation under said "continuing
Guaranty."
15.
That because of the failure and refusal of defendants Ramon A.
Tabuena and Luis R. Tabuena, Jr. in bad faith to pay Far East's past due
accounts under their solidary obligation stipulated in said "Continuing
Guaranty," . . . plaintiff has been constrained to file suit against them . . .
(pp. 32-36, Rollo.)
On March 10, 1987, Far East filed an answer with compulsory counterclaim
admitting the genuineness and due execution of the promissory notes
attached as Annexes A, B, and C to the complaint, but alleging further that
said notes became due and demandable on November 19, 1976, May 24,
1976, and November 19, 1976, respectively. On the basis of the maturity
dates of the notes, Far East thereupon raised the affirmative defenses of
prescription and lack of cause of action as it denied the allegation of the

complaint that BPI had made previous repeated requests and demands for
payment. Far East claimed that during the more than 10 years which elapsed
from the dates of maturity of said obligations up to the time the action for
foreclosure of the chattel mortgage securing said obligations was filed, it had
not received from BPI or its predecessor any demand for payment and thus,
it had "labored under the belief that they [the obligations] have already been
written off" in the books of BPI. Moreover, Far East denied the genuineness
and due execution of the trust receipts and of the Statement of Account (pp.
78-79, Rollo). A motion to hear affirmative defenses was attached to the
answer.
On March 16, 1987, BPI filed an opposition to the motion to hear affirmative
defenses, alleging that its causes of action against Far East have not
prescribed, since within 10 years from the time its cause of action accrued,
various written extrajudicial demands (attached thereto as Annexes "A" and
"A-1") were sent by BPI and received by Far East. Moreover, BPI offered
several written documents whereby Far East supposedly acknowledged its
debt to BPI (Annexes "B" to "B-6"). Withal, BPI maintained, the ten-year
prescriptive period to enforce its written contract had not only been
interrupted, but was renewed.
On the same date, BPI filed a motion for summary judgment on the ground
that since Far East had admitted the genuineness and due execution of the
promissory notes and the deed of chattel mortgage annexed to its complaint,
there was no genuine issue as to any material fact, thus entitling BPI to a
favorable judgment as a matter of law in regard to its causes of action and on
its right to foreclose the chattel mortgage.
On June 1, 1987, the trial court issued an order to the following effect:
WHEREFORE, the Court issues this Order:
1 Dismissing the complaint against the defendant Far East Marble (Phils.)
Inc. for lack of cause of action and on grounds of pre[s]cription:
2 Denying for lack of merit the Motion for Summary Judgment and the
Supplemental Motion for Summary Judgment;
3 Striking off from the records the order of March 6, 1987 and recalling the
writ of replevin issued by this Court, and dismissing all the contempt charges;
4 Ordering the Sheriff to desist permanently from enforcing the writ of
seizure and to return all the property seized by him under the Writ of
Replevin, to the defendant Far East Marble (Phils.) Inc. immediately from

38 | P a g e

receipt of a copy of this order, and in case of his failure to do so, the value
thereof shall be charged against the replevin bond. (pp. 89-90, Rollo.)
An appeal therefrom was forthwith interposed by BPI, assailing the findings
of the trial court with respect to its finding that BPI's cause of action has
prescribed and the consequent denial of the motion for summary judgment.
On June 26, 1990, the Court of Appeals rendered a decision setting aside
the June 1, 1987 order of the court of origin and remanding the case to said
court for further proceedings, "including the resolution anew of plaintiff's
motion for summary judgment . . . , reception of the evidence of the parties
and, thereafter, to decide the case as the facts may warrant." (pp. 98-99,
Rollo.) llcd
Hence, the instant petition for review on certiorari filed by Far East, anchored
on the following assigned errors:
I
THE COURT OF APPEALS ERRED WHEN IT DISREGARDED THE
FINDINGS OF THE TRIAL COURT THAT PRESCRIPTION HAS SET IN
OBLIVIOUS OF THE FACT THAT THIS FINDING WAS REACHED AFTER
DUE HEARING.
II
THE COURT OF APPEALS GRAVELY ERRED IN RULING FOR A
REOPENING OF THE TRIAL FOR THE RECEPTION OF EVIDENCE ON
BOTH ISSUES OF PRESCRIPTION AND SUMMARY JUDGMENT WHEN
THESE WERE ALREADY TRIED AND WEIGHED BY THE TRIAL COURT.
III
THE COURT OF APPEALS ERRED IN ASSUMING JURISDICTION OVER
THE CASE CONSIDERING THAT THE ISSUES RAISED THEREIN
INVOLVE PURE QUESTIONS OF LAW. (p. 14, Rollo.)
The issue of jurisdiction being basic, we shall endeavor to dispose of it ahead
of the other topics raised by petitioners.
Petitioner Far East maintains the position that the Court of Appeals stepped
beyond the limits of its authority when it assumed jurisdiction over the appeal
filed by BPI inasmuch as said appeal raised only the pure questions of law of
whether or not the trial court erred: (1) in dismissing BPI's complaint for lack
of cause of action; (2) in finding that BPI's cause of action had prescribed;

and (3) in ruling that BPI is not entitled to summary judgment on its causes of
action against Far East. Consequently, Far East contends, BPI should have
taken its case directly to this Court.
There is no dispute with respect to the fact that when an appeal raises only
pure questions of law, it is only this Court which has jurisdiction to entertain
the same (Article VIII, Section 5 (2)(e), 1987 Constitution; Rule 45, Rules of
Court; see also Santos, Jr. vs. Court of Appeals, 152 SCRA 378 [1987). On
the other hand, appeals involving both questions of law and fact fall within
the exclusive appellate jurisdiction of the Court of Appeals. At this point,
there seems to be a need to distinguish a question of law from a question of
fact.
It has been held in a number of cases (Medina vs. Asistio, Jr., 191 SCRA
218 [1990]; Gan vs. Licup Design Group, Inc., G.R. No. 94264, July 24,
1990, En Banc, Minute Resolution; Pilar Development Corp. vs. Intermediate
Appellate Court, et al., 146 SCRA 215 [1986]; Ramos vs. Pepsi-Cola Bottling
Co., 19 SCRA 289 [1967]; Consolidated Mines, Inc. vs. Court of Tax
Appeals, et al., 58 SCRA 618 [1974], that there is a "question of law" when
there is doubt or difference of opinion as to what the law is on certain state of
facts and which does not call for an examination of the probative value of the
evidence presented by the parties-litigants. On the other hand, there is a
"question of fact" when the doubt or controversy arises as to the truth or
falsity of the alleged facts. Simply put, when there is no dispute as to fact, the
question of whether or not the conclusion drawn therefrom is correct is a
question of law.
In the case at bar, BPI alleged in its complaint (Rollo, p. 42) that on various
dates and for valuable consideration, it extended to Far East several loans,
evidenced by promissory notes, and credit facilities in the form of trust
receipts, and that despite repeated requests and demands for payment
thereof , Far East had failed and refused to pay. Thus, BPI sought
foreclosure of the chattel mortgage securing such indebtedness.
In its answer (Rollo, p. 78), Far East admitted the genuineness and due
execution of the promissory notes involved in the case, but denied BPI's
allegation that repeated demands for payment were made by BPI on it. Far
East then raised the affirmative defenses of prescription and lack of cause of
action, arguing that since the promissory notes matured in 1976 while BPI
filed its action of foreclose the chattel mortgage only in 1987 (or more than
10 years from the time its cause of action accrued), and there being no
demand for payment which would interrupt the period of prescription for
instituting said action, BPI's claims have prescribed. LLphil

39 | P a g e

BPI, however, countered that its allegation of repeated demands on Far East
for payment sufficiently stated a cause of action; that within ten years from
the time its cause of action accrued in 1976; it sent written extrajudicial
demands on Far East requesting payment of its due and outstanding
obligations; that within that 10-year period, it received written
acknowledgments of debt from Far East; and, that these demands for
payment and acknowledgments of debt effectively interrupted and renewed
the prescriptive period. Worth noting is the fact that the acknowledgment of
debt and the demands for payment, including the affidavits of BPI's counsel
who prepared the demand letters and that of BPI's messenger who allegedly
personally delivered said letters to Far East were duly annexed to BPI's
pleadings.
From the foregoing exchange of pleadings, the conflicting allegations of fact
by the contending parties sprung forth. It is thus quite obvious that the
controversy centered on, and the doubt arose with respect to, the very
existence of previous demands for payment allegedly made by BPI on
petitioner Far East, receipt of which was denied by the latter. This dispute or
controversy inevitably raised a question of fact. Such being the case, the
appeal taken by BPI to the Court of Appeals was proper.
We now come to petitioner's first two assigned errors.
The trial court's finding that BPI's claims due to prescription, can no longer
prosper, is inextricably connected with, and underpinned by, its other
conclusion that BPI's allegation that it made "repeated requests and
demands for payment" is not sufficient to state a cause of action. Moreover,
in its questioned Order (Rollo, p. 88) dated June 1, 1987, the trial court held
that:
Apart from the fact that the complaint failed to allege that the period of
prescription was interrupted, the phrase "repeated requests and demands for
payment" is vague and incomplete as to establish in the minds of the
defendant, or to enable the Court to draw a conclusion, that demands or
acknowledgment [of debt] were made that could have interrupted the period
of prescription. (p. 88, Rollo.)
Seemingly, therefore, the trial court believed that the interruption of the
prescriptive period to institute an action is an ULTIMATE FACT which had to
be expressly and indispensably pleaded by BPI in its complaint, and that
failure to so alleged such circumstance is fatal to BPI's cause of action.
We believe and hold otherwise. LLphil

Section 3 of Rule 6 states that a "complaint is a concise statement of the

ultimate facts constituting the plaintiff's cause or causes of action." Further
elaborating thereon, Section 1 of Rule 8 declares that every pleading,
including, of course, a complaint, "shall contain in a methodical and logical
form, a plain, concise and direct statement of the ultimate facts . . . omitting
the statement of mere evidentiary facts." "Ultimate facts" are the essential
and substantial facts which either form the basis of the primary right and duty
or which directly make up the wrongful acts or omissions of the defendant
(Tantuico, Jr. vs. Republic of the Phils., et al., 204 SCRA 428 [1991], while
"evidentiary facts" are those which tend to prove or establish said ultimate
facts.
What then are the ultimate facts which BPI had to allege in its complaint so
as to sufficiently establish its cause of action?
Basically, a cause of action consists of three elements, namely: (1) the legal
right of the plaintiff; (2) the correlative obligation of the defendant; and (3) the
act or omission of the defendant in violation of said legal right (Nabus vs.
Court of Appeals, et al., 193 SCRA 732 [1991]); Rebollido vs. Court of
Appeals, et al., 170 SCRA 800 [1989]). These elements are manifest in BPI's
complaint, particularly when it was therein alleged that: (1) for valuable
consideration, BPI granted several loans, evidenced by promissory notes,
and extended credit facilities in the form of trust receipts to Far East
(photocopies of said notes and receipts were duly attached to the
Complaint); (2) said promissory notes and trust receipts had matured; and (3)
despite repeated requests and demands for payment thereof, Far East had
failed and refused to pay.
Clearly then, the general allegation of BPI that "despite repeated requests
and demands for payment, Far East has failed to pay" is sufficient to
establish BPI's cause of action. Besides, prescription is not a cause of action;
it is a defense which, having been raised should, as correctly ruled by the
Court of Appeals (DBP vs. Ozarraga, 15 SCRA 48 [1965]), be supported by
competent evidence. But even as Far East raised the defense of prescription,
BPI countered to the effect that the prescriptive period was interrupted and
renewed by written extrajudicial demands for payment and acknowledgment
by Far East of the debt.
A complaint is sufficient if it contains sufficient notice of the cause of action
even though the allegation may be vague or indefinite, for in such case, the
recourse of the defendant would be to file a motion for a bill of particulars
(Ramos vs. Condez, 20 SCRA 1146 [1967]). It is indeed the better rule that,
pleadings, as well as remedial laws, should be liberally construed so that the
litigants may have ample opportunity to prove their respective claims so as to
avoid possible denial of substantial justice due to legal technicalities

40 | P a g e

(Adamao, et al. vs. Intermediate Appellate Court, et al., 191 SCRA 195
[1990]).
In the case at bar, the circumstances of BPI extending loans and credits to
Far East and the failure of the latter to pay and discharge the same upon
maturity are the only ultimate facts which have to be pleaded, although the
facts necessary to make the mortgage valid and enforceable must be proven
during the trial (Ortiz v. Garcia, 15 Phil. 192 [1990]). LibLex
In fine, the finding of the trial court that prescription has set in is primarily
premised on a misappreciation of the sufficiency of BPI's allegation as above
discussed. The records will show that the hearing conducted by the trial court
was merely pro forma and the trial judge did not sufficiently address the issue
of whether or not a demand for payment was in fact made by BPI and duly
received by herein petitioner Far East.
WHEREFORE, the instant petition is hereby DENIED and the decision of the
Court of Appeals hereby AFFIRMED. No special pronouncement is made as
to costs.
SO ORDERED.

Alfredo
Chicote
for
Eduardo Gutierrez Repide and Felix Socias for appellee.

appellant.

ROMUALDEZ, J.:
The point at issue in this case is whether or not the judgment rendered by
1
this court on January 12, 1909, in the case R. G. No. 4604 and No. 4244 of
the Court of First Instance of Manila is effective between the parties in that
case. Said parties were notified of that judgment on February 13, 1909, and
the record of the case was returned to the Court of First Instance of origin,
the same having been recorded and filed in said court on the 15th of the
same month and year (folio 485 of said record).
On the 25th of the same month and year, the plaintiff, winner in that case,
presented his bill of costs in the Court of First Instance, to which the case
had been returned.
On the 24th of February, 1914, the plaintiff moved the Court of First Instance
to enter judgment in accordance with said decision of this court which
modified the judgment involved in that appeal, sentencing the defendant to
pay plaintiff, instead of P94,222.50, the sum of P93,963.30 with interest
thereon at 8 per cent per annum from January 1, 1906 with costs. Granting
this motion, the Court of First Instance rendered judgment in harmony with
the opinion of this court.
On March 19, 1918, a writ of execution was issued upon that judgment,
which was returned unsatisfied to the Court of First Instance, no property of
the defendant having been found.
Republic
SUPREME
Manila

of

the

Philippines
COURT

On the 15th of February, 1922, the plaintiff brought suit against the same
defendant, praying that judgment be rendered reviving, and giving effect to
the judgment in question.

EN BANC
G.R. No. L-19827

April 6, 1923

GUTIERREZ
HERMANOS, plaintiff-appellee,
vs.
ANTONIO DE LA RIVA, defendant-appellant.

41 | P a g e

On the 5th of November of the same year a new execution was issued, of
which no return appears to have been made.

The first point that presents itself for our consideration is whether the period
of five years fixed by section 443 of the Code of Civil Procedure within which
an execution can be issued upon a judgment must be computed from
February 26, 914, the date of the judgment entered by the Court of First
Instance in accordance with the decision of this court, or from January 12,
1909, the date of the judgment of this court.

If the former proposition is correct then the writs of execution issued on the
19th of March, and 5th of November, 1918, were within the five-year period
fixed by said section 443 of the Code of Civil Procedure. But if said period of
five years begins to run not from February 26, 1914, but from January 12,
1909, then said executions issued in the year 1918 are of no legal effect.
To solve this question, it is necessary to determine the legal effect of the
judgment entered by the Court of First Instance on February 26, 1914. The
plaintiff alleges that such judgment was entered in accordance with the
dispositive part of the decision of this court wherein, among other things, it is
said:
Twenty days after notification of this decision, let judgment be
entered in accordance herewith, and ten days thereafter, let the
record be remanded to the court of origin for proper proceedings.
It is argued that as in this decision it is ordered that judgment be entered in
accordance therewith, the Court of First Instance, at the instance of the
plaintiff, entered such a judgment on February 26, 1914. But such an order of
this court was not, and could have been, addressed to the Court of First
Instance, because right after that order it was directed that, after the entry of
such a judgment in accordance with the decision, the record be remanded to
the court of origin for proper proceedings. Under these orders it was
impossible for the Court of First Instance to enter judgment before the record
of the case was remanded thereto.
This order of the Supreme Court, which is usually contained in its decisions,
is in harmony with the provision of section 506 of the Code of Civil Procedure
and rules 33 and 34 of the Rules of this court, which are as follows:
SEC. 506 (Code of Civil Procedure). In all cases heard by the
Supreme Court on bills of exception, its judgments shall be remitted
to the Courts of First Instance from which the actions respectively
came into the Supreme Court; and for this purpose it shall be the
duty of the clerk of the Supreme Court, within ten days after the
close of any term, to remit to the clerks of Courts of First Instance,
notices of all judgments of the Supreme Court in actions brought
from the Courts of First Instance respectively. Upon receiving the
notice so remitted, the clerk of the Court of First Instance shall
entered the same upon his docket and file the notice with the other
papers in the action.

42 | P a g e

The judgment so remitted shall be executed by the Court of First

Instance, in the same manner as though the action had not been
carried to the Supreme Court. But the Supreme Court may, by
special order, direct any particular judgment to be remitted to the
proper Court of First Instance at any time, without awaiting the end of
the term.
Art. 33 (Rules of the Supreme Court). Upon the publication of the
decision, the clerk shall mail notice thereof to the respective parties
or their counsel, and judgment shall not be entered until ten days
after such publication.
Art. 34 (Rules of the Supreme Court). Five days after entry of
judgment the clerk shall remand the case to the lower court, unless
notice is given, pursuant to rule 40 of intention to petition the
Supreme Court of the United State for a writ of certiorari, in which
event the mittimus shall be stayed pending action by this court upon
such notice.
The judgement that the Supreme Court ordered entered in accordance with
its decision was the one to be entered by the clerk of said court before
remanding the case to the court origin. And as the matter of fact, the clerk of
the Supreme Court on February 3, 1909, entered the judgement required by
said court to be entered, which is on folio 499 of the record of said civil case
No. 4244, and which literally is as follows:
UNITED STATES OF AMERICA
SUPREME COURT OF THE PHILIPPINE ISLANDS
GUTIERREZ
Plaintiffs

and

HERMANOS,
appellee,

VERSUS
ANTONIO
DE
LA
Defendant and appellant.

RIVA,

JUDGMENT
February
3,
1909.
16
Judgment
Book
Register No. 4604.

This Court having regularly acquired jurisdiction for the trial of the above
entitled cause, submitted by both parties for decision, after consideration
thereof by the court upon the record, its decision and order for judgment
having been filed on the 12th day of January, nineteen hundred and nine;

By virtue thereof the judgment of the Court of First Instance of Manila dated
twenty-first day of May, nineteen hundred and seven, and from which this
appeal was taken is hereby modified by changing the amount of P94,222.50
therein stated for P93,963.30, and as thus modified, said judgment is
affirmed, and it is ordered that judgment be entered against the defendant for
the sum of P93,963.30, with interest thereon at the rate of eight per centum
per annum from January 1, 1906, with the costs in the court below, and
without special pronouncement as to the costs on this appeal.
It is further ordered that . . . recover from . . . the sum of P as costs.
(Sgd.)
Clerk
of
Philippine Islands

J.
the

E.
Supreme

Court

of

BLANCO
the

Therefore the judgment entered by the Court of First Instance on February

26, 1914, is not the judgment ordered by the Supreme Court to be entered,
for such judgment had already been entered by the clerk of this court on
February 3, 1909. Such a judgment of the Court of First Instance under date
of February 26, 1914, was and is an unnecessary proceeding and has no
legal effect.
The true and legally effective judgment is the one entered by the clerk of the
Supreme Court on February 3, 1909. And from this date the five years
mentioned in section 443 of the Code of Civil Procedure must be, and are
computed, which section provides:
The party in whose favor judgment is given, may, at any time within
five years after the entry thereof, have a writ of execution issued for
its enforcement, as hereinafter provided.
Therefore the writs of execution issued in the year 1918 were issued long
after the period of five years fixed by the legal provision just quoted and
consequently they have no legal effect.
The other point remaining to be considered has reference to the action
brought by the plaintiff by the filing of a complaint on February 15, 1922, from
which this appeal originated. The question at issue is whether or not this
action is tenable, taking into account the date it was filed. It is based on
section 447 of the Code of Civil Procedure, the English and Spanish texts of
which are as follows:

43 | P a g e

Enforcement of judgment after lapse of five years. In all cases, a

judgment may be enforced after the lapse of five years from the date
of its entry, and before the same shall have been barred by any
statute of limitation, by an action instituted in regular form, by
complaint, as other actions are instituted.
Del cumplimiento de la sentencia despues de trancurridos cinco
aos. En todos los casos puede exigirse el cumplimiento de una
sentencia despues del vencimiento de cinco aos desde la fecha de
su inscripcion y antes que quede prescrita, por virtud de cualquier
ley de prescripcion, mediante demanda interpuesta en la forma
acostumbrada.
The question that presents itself for our consideration is whether or not the
judgment under discussion has already prescribed, to solve which it would be
necessary to determine when the period of prescription of said judgment has
begun to run. If it began on the day it was rendered, that is to say, February
3, 1909, then the complaint which was filed on February 15, 1922, cannot
prosper because the judgment has already prescribed, inasmuch as from the
first to the last of said dates more than ten years have elapsed which is the
period of prescription of judgment under section 43, No. 1, of the Code of
Civil Procedure.
Civil actions other than for the recovery of real property can only be
brought within the following periods after the right of action accrues:
1. Within ten years: An action upon agreement, contract, or promise
in writing, or upon the judgment or decree of a court. . . .
But if the period of limitation did not begin to run on February 3, 1909, but
after the lapse of the five years within which the plaintiff could get an
execution upon said judgment, then under the section just quoted, the
complaint by which this action was commenced was presented on time,
having been filed before the expiration of the prescriptive period. But in
adopting this view, we encounter a serious difficulty and that is the fact that
section 447 of the Code of Civil Procedure above quoted provides that and
before the same shall have been barred. So that the action provided in this
section must be brought before the judgment prescribes. If the words we
have underscored had not been added to this provision, it would not be
difficult to hold that the action referred to in this section may be brought
within ten years from the expiration of the five years within which execution
can be issued upon the judgment, considerable, without admitting, that the
action provided by law in said section accrues and exists only after the

expiration of the five years fixed for the execution of the judgement. But it
must be noted in the first place that in interpreting this section 447 of the
Code of Civil Procedure, we must not, according to the maxim "noscitur a
sociis," lose sight of the provisions concerning the prescription abovementioned; and construing said section 447 in this way, the conclusion one
arrives at is that after the expiration of the five years within which execution
can be issued upon a judgment, the winning party can revive it only in the
manner therein provided so long as the period of ten years does not expire
from the date of said judgment, according to section 43, No. 1, of the same
Code.
In the second place, it cannot be said that the cause of action of the winning
party to enforce a judgment accrues only after the expiration of the five years
within which he may obtain an execution. The right of said winning party to
enforce the judgment against the defeated party, begins to exist the moment
the judgment is final; and this right, according to our Code of Procedure,
consists in having an execution of the judgment issued during the first five
years next following, and in commencing after that period the proceeding
provided in section 447 to revive it, and this latter remedy can be pursued
only before the judgment prescribed, that is to say, during the five years next
following. It is so much an action to ask for an execution as it is to file a
complaint for reviving it, because, as we know, by action is meant the legal
demand of the right or rights one may have.
Many definitions of the term "action" have been given by the courts.
It has been defined as the legal demand of one's right, or rights; the
lawful demand of one's rights, or rights; the lawful demand of one's
rights in the form given by law; a demand of a right in a court of
justice; the lawful demand of one's right in a court of justice; the legal
and formal demand of one's right from another person or party, made
and insisted on in a court of justice; a claim made before a tribunal;
an assertion in a court of justice of a right given by law; a demand or
legal proceeding in a court of justice to secure one's rights; the
prosecution of some demand in a court of justice; the means by
which men litigate with each other; the means that the law has
provided to put the cause of action into effect; the formal means or
method of pursuing and recovering one's right in a court of justice;
the rightful method of obtaining in court what is due to any one; the
prescribed mode of enforcing a right in the proper tribunal; a
remedial instrument of justice whereby redress is obtained for any
wrong committed or right withheld; a proceeding in court, whether of
equity or law; a suit or process by which a demand is made of a
right, in a court of justice; a proceeding at law to enforce a private
right or to redress a private wrong; a civil proceeding taken in a court

44 | P a g e

of law to enforce a right; a judicial proceeding for the prevention or

redress of a wrong; a proceeding by one party against another to try
their mutual rights; an ordinarily proceeding in a court of Justice by
which one party prosecutes another for the enforcement or
protection of a right, the redress or prevention of a wrong, or the
punishment of a public offense; a judicial proceeding which will, if
prosecuted effectually, result in a judgment. (1 Corpus Juris, pp. 924,
925.)
As may be seen, this word action has many meanings among which is
included not only the bringing of a suit in court, but also the claiming of a right
one may have, such as the right to have an execution issued upon a
favorable judgment.
The definition given by our Code of Civil Procedure of the word action has
not escaped our attention, which definition describes an ordinarily action; but
this narrow meaning of the word action is not the one to be given when it is
desired to define what is the meant by cause of action in section 43 of said
Code. This is the more true in this case because in the Spanish translation of
said section 1, the word action in not defined, but instead the meaning of the
word " juicio" is explained.
In the third place, if it is held that after the expiration of the five years within
which execution can be issued upon a judgment, the winning party has still
ten years within which to revive it, then the judgment would not prescribe
until after fifteen years, which is against No. 1 of section 43 of the same
Code.
And it cannot be said that such is the letter, and much less, the intention of
the law, for there is nothing is section 447 of the said Code, making this new
period different from the one prescribed in said section 43, No. 1, or
reconciling these two provisions, there being no other way of reconciling
them than to say that after the expiration of the first five years next following
the judgment, there remain to the victorious party only another five years to
revive it.
Prescription is a matter of positive legislation and cannot be established by
mere implications or deductions.
The views of the courts as to the character of statutes of limitation
have varied considerably. Originally such a statute was regarded as
one of repose and not one of presumption. Subsequently the
tendency of judicial opinions was that the statute was one of

presumption rather than of repose. Following this the courts again

viewed with favor the doctrine first advanced, and adopted the view,
which prevails at the present day, to the effect that it is a statute or
repose, the object of which is to suppress fraudulent and stale claims
from springing up at great distances of time, and surprising the
parties or their representatives, when all the proper vouchers and
evidence are lost, or the facts have become obscure from the lapse
of time, or the defective memory or death or removal of witnesses. . .
. (17 R. C. L., 664, 665.)
As a consequence of all of the foregoing, the writs of execution issued in the
year 1918 upon the judgment of February 3, 1909, are of no legal effect and
the herein complaint filed February 15, 1922, was presented after said
judgment has prescribed.
Wherefore the conclusion is inevitable that the plaintiff has no right to bring
this action and its complaint must be dismissed.
For all of the foregoing the judgment appealed from is reversed, and the
complaint dismissed, without express finding as to costs. So ordered.
Araullo, C.J., Street Malcolm and Villamor JJ., concur.

FIRST DIVISION

[A.M. No. RTJ-93-1031. January 28, 1997]

RODRIGO B. SUPENA, petitioner, vs. JUDGE ROSALIO G. DE LA

ROSA, respondent.
DECISION
HERMOSISIMA, JR., J.:
In his verified complaint dated June 16, 1993, Mr. Rodrigo B. Supena,
President of Mortgagee BPI Agricultural Development Bank (BAID, for short),
charges respondent Judge Rosalio G. de la Rosa with gross ignorance of the
law for issuing an unlawful Order, dated May 25, 1993, in Foreclosure Case

45 | P a g e

No. 93-822, entitled, "BPI Agricultural Development Bank v. PQL Realty

Incorporated." The Order in effect held in abeyance the public auction sale
set on May 26, 1993, per Notice of Extrajudicial Sale of one (1) parcel of
land, together with the building and all the improvements existing thereon,
described and covered by TCT No. 112644 of the Registry of Deeds of
Manila, on the basis of a mere Ex-Parte Motion to Hold Auction Sale in
Abeyance filed by Mortgagor, PQL Realty Incorporated (PQL, for short).
The antecedent facts are as follows:
On April 1, 1993, mortgagee BAID decided to extrajudicially foreclose
[1]
the Real Estate Mortgage executed by mortgagor PQL in the former's
favor. Accordingly, BAID petitioned the Ex-Officio Sheriff of Manila to take
the necessary steps for the foreclosure of the mortgaged property and its
sale to the highest bidder.
On April 21, 1993, Jesusa P. Maningas, the Clerk of Court and ExOfficio Sheriff of Manila, issued a Notice of Extrajudicial Sale, scheduling the
public auction sale on May 26, 1993 at 10:00 o'clock a.m. in front of the City
Hall Building, Manila. Said notice was subsequently published in the
People's Journal Tonight on May 4, 11 and 19, 1993.
However, on May 25, 1993, or one day before the scheduled sale, the
Hon. Rosalio G. de la Rosa, in his capacity as Executive Judge of the
Regional Trial Court of Manila, issued an Order holding in abeyance the
scheduled public auction sale, on the basis of a mere ex-parte motion filed by
PQL, a copy of which was received by mortgagee-complainant only on May
31, 1993. Complainant avers that, said order is, for all practical intents and
purposes, a restraining order for an indefinite period, issued without the
proper case being filed and without the benefit of notice and hearing, or even
an injunction bond from which the mortgagee may seek compensation and
restitution for the damages it may suffer by reason of the improper
cancellation of the auction sale.
The only ground relied upon by the ex-parte Motion, "that the parties
have agreed to hold the foreclosure proceedings in Makati and not in
Manila," is patently without merit, according to the complainant, as the venue
of foreclosure proceedings is fixed by law and cannot be subject of
stipulation. In sum, complainant submits that the actuations of respondent
judge in granting the ex-parte motion of mortgagor were without basis and
highly suspicious.
Respondent, in his comment, maintains that he held in abeyance the
extrajudicial foreclosure and sale of the property mortgaged supposed to be
held on May 26, 1993 and instead scheduled the same for hearing on June
16, 1993 (which however did not transpire), to determine two issues: first,

whether the venue in Foreclosure Proceeding No. 93-822 was improperly

laid in light of the stipulation in the "Loan Agreement" duly entered into by
both parties and acknowledged before a Notary Public which provides:
"14) VENUE OF ACTIONS Any action or suit brought under this
Agreement or any other documents related hereto shall be instituted in the
[2]
proper Courts of Makati, Metro Manila, Republic of the Philippines."
and, secondly, in order to determine the veracity of the mortgagor's
allegation that the Five Hundred Thousand Pesos (P500,000.00) paid to BPI
Agri-Bank last January, 1993 does not reflect and does not appear to have
been credited or deducted from the accounts of mortgagor. It was, allegedly,
under the principle of fair play, equity and substantial justice which compelled
[3]
him to issue the Order dated May 25, 1993.
We find the respondent judge culpable as charged.
Any judge, worthy of the robe he dons, or any lawyer, for that matter,
worth his salt, ought to know that different laws apply to different kinds of
sales under our jurisdiction. We have three different types of sales, namely:
an ordinary execution sale, a judicial foreclosure sale, and an extrajudicial
foreclosure sale. An ordinary execution sale is governed by the pertinent
provisions of Rule 39 of the Rules of Court on Execution, Satisfaction and
Effect of Judgments. Rule 68 of the Rules, captioned Foreclosure of
Mortgage, governs judicial foreclosure sales. On the other hand, Act No.
3135, as amended by Act No. 4118, otherwise known as "An Act to Regulate
the Sale of Property under Special Powers Inserted in or Annexed to Real
Estate Mortgages," applies in cases of extrajudicial foreclosure sales of real
[4]
estate mortgages.
The case at bench involves an extrajudicial foreclosure sale of a real
estate mortgage executed by mortgagor PQL in favor of mortgagee BAID. If
the main concern of respondent judge in holding in abeyance the auction
sale in Manila scheduled on May 26, 1993 was to determine whether or not
venue of the execution sale was improperly laid, he would have easily been
enlightened by referring to the correct law, definitely not the Rules of Court,
which is Act No. 3135, as amended particularly Sections 1 and 2, viz:
"SECTION 1. When a sale is made under a special power inserted in or
attached to any real estate mortgage hereafter made as security for the
payment of money or the fulfillment of any other obligation, the provisions of
the following sections shall govern as to the manner in which the sale and
redemption shall be effected, whether or not provision for the same is made
in the power.

46 | P a g e

SEC. 2. Said sale cannot be made legally outside of the province in which
the property sold is situated; and in case the place within said province in
which the sale is to be made is the subject of stipulation, such sale shall be
made in said place or in the municipal building of the municipality in which
the property or part thereof is situated."
Here, the real property subject of the sale is situated in Felix Huertas
[5]
Street, Sta. Cruz, Manila. Thus, by express provision of Section 2, the sale
cannot be made outside of Manila. Moreover, were the intention of the
parties be considered with respect to venue in case the properties mortgaged
be extrajudicially foreclosed, they even unequivocably stipulated in the Deed
of Real Estate Mortgage itself under paragraph 15 that:
"xxx

xxx
xxx

It is hereby agreed that in case of foreclosure of this mortgage under Act

3135, as amended by Act 4118, the auction sale, in case of properties
[6]
situated in the province, shall be held at the capital thereof."
Respondent judge, therefore, had no valid reason to entertain any doubt
as to the propriety of the venue of the auction sale in Manila. The law as well
as the intention of the parties cannot be more emphatic in this regard.
Respondent judge, however, refers to the venue stipulation in the Loan
Agreement signed by the parties to the effect that, "Any action or suit brought
under this Agreement or any other documents related hereto shall be
[7]
instituted in the proper courts of Makati x x x." And under the pertinent
provisions of Rule 4 of the Rules of Court on Venue of Actions, which
provide:
"Sec. 2. Venue in Courts of First Instance (a) Real actions. Actions
affecting title to, or for recovery of possession, or partition or condemnation
of, orforeclosure of mortgage on, real property, shall be commenced and
tried in the province where the property or any part thereof lies.
Sec. 3. Venue by agreement. By written agreement of the parties the
venue of an action may be changed or transferred from one province to
another."
venue of the auction sale should have been laid in Makati as mutually agreed
upon by the parties.

Again, in this regard, we reiterate that the law in point here is Act No.
3135, as amended, which is a special law, dealing particularly on
extrajudicial foreclosure sales of real estate mortgages, and not the general
provisions of the Rules of Court on Venue of Actions. In fact, even Section 5,
Rule 4, is quite explicit in stating that:
"When rule not applicable. This rule shall not apply in those cases where
a specific rule or law provides otherwise."

"14) VENUE OF ACTIONS Any action or suit brought under this

Agreement or any other documents related hereto shall be instituted in the
proper Courts of Makati, Metro Manila, Republic of the Philippines."
Written stipulations as to venue are either mandatory or permissive. In
interpreting stipulations, inquiry must be made as to whether or not the
agreement is restrictive in the sense that the suit may be filed only in the
place agreed upon or merely permissive in that the parties may file their suits
[12]
not only in the place agreed upon but also in the places fixed by the rules.

The failure of respondent to recognize this is an utter display of ignorance of

the
law
to
which
he
swore
to
maintain
professional
[8]
competence. Furthermore, provisions quoted by respondent under Rule 4
pertains to the venue of actions, which an extrajudicial foreclosure is
not. Section 1, Rule 2 defines an action in this wise:

In Polytrade Corporation v. Blanco,

involved read:

"Action means an ordinary suit in a court of justice, by which one party

prosecutes another for the enforcement or protection of a right, or the
prevention or redress of a wrong."

The Court, in ruling that venue had been properly laid in the then Court of
First Instance of Bulacan (the place of defendant's residence), said:

[9]

Hagans v. Wislizenus does not depart from this definition when it states
that "[A]n action is a formal demand of one's legal rights in a court of justice
in the manner prescribed by the court or by the law. x x x." It is clear that
the determinative or operative fact which converts a claim into an "action or
suit" is the filing of the same with a "court of justice." Filed elsewhere, as
with some other body or office not a court of justice, the claim may not be
[10]
categorized under either term. Unlike an action, an extrajudicial
foreclosure of real estate mortgage is initiated by filing a petition not with any
[11]
court of justice but with the office of the sheriff of the province where the
sale is to be made. By no stretch of the imagination can the office of the
sheriff come under the category of a court of justice. And as aptly observed
by the complainant, if ever the executive judge comes into the picture, it is
only because he exercises administrative supervision over the sheriff. But
this administrative supervision, however, does not change the fact that
extrajudicial foreclosures are not judicial proceedings, actions or suits.
Granting arguendo that an extrajudicial foreclosure sale can be
classified as an "action or suit" (which it is not) and that the venue stipulation
in the Loan Agreement would gain relevance, respondent judge still
committed a grievous error in holding the auction sale in abeyance due to
improper laying of venue. We again quote the subject stipulation for easy
reference, to wit:

47 | P a g e

[13]

the stipulation on venue there

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

"x x x. An accurate reading, however, of the stipulation, 'The parties agree to

sue and be sued in the Courts of Manila,' does not preclude the filing of suits
in the residence of plaintiff or defendant. The plain meaning is that the
parties merely consented to be sued in Manila. Qualifying or restrictive words
which would indicate that Manila and Manila alone is the venue are totally
absent therefrom. We cannot read into that clause that plaintiff and
defendant bound themselves to file suits with respect to the last two
transactions in question only or exclusively in Manila. For, that agreement
did not change or transfer venue. It simply is permissive. The parties solely
agreed to add the courts of Manila as tribunals to which they may
resort. They did not waive their right to pursue remedy in the courts
specifically mentioned in Section 2 (b) of Rule 4. Renuntiatio non
[14]
praesumitur."
[15]

In Lamis Ents. v. Lagamon,

following stipulation:

the promissory note sued on had the

"In case of litigation, jurisdiction shall be vested in the Court of Davao City."
The collection suit was instituted in the then Court of First Instance of Tagum,
Davao, where the defendant resides, and not in Davao City as
stipulated. We rejected the defense of improper venue and, citing the case
of Polytrade, therein held:

"x x x. Anent the claim that Davao City had been stipulated as the venue,
suffice it to say that a stipulation as to venue does not preclude the filing of
suits in the residence of plaintiff or defendant under Section 2 (b), Rule 4,
Rules of Court, in the absence of qualifying or restrictive words in the
agreement which would indicate that the place named is the only venue
agreed upon by the parties. The stipulation did not deprive Maningo of his
right to pursue remedy in the court specifically mentioned in Section 2 (b)-of
[16]
Rule 4, Rules of Court, Renuntiatio non praesumitur. x x x.
[17]

In Western Minolco v. Court of Appeals,

the clause on venue read:

"The parties stipulate that the venue of the actions referred to in Section
12.01 [Article XII of the Agreement] shall be in the City of Manila."
The initial action was commenced in the then Court of First Instance of
Baguio and Benguet instead of Manila. This Court took the occasion to
reiterate once more the Polytrade doctrine:
"x x x. In any event, it is not entirely amiss to restate the doctrine
that stipulations in a contract, which specify a definite place for the institution
of an action arising in connection therewith, do not, as a rule, supersede the
general rules on the matter set out in Rule 4 of the Rules of Court, but should
be construed merely as an agreement on an additional forum, not as limiting
[18]
venue to the specified place.
It is true that there have been early decisions of the Supreme Court
inconsistent with the Polytrade line of cases, notably Bautista v. de
[19]
[20]
Borja. and Hoechst Philippines, Inc. v. Torres. However, Lamis
Enterprises and Western Minolco followed by Moles v. Intermediate
[21]
Appellate Court, Hongkong and Shanghai Banking Corporation v.
[22]
[23]
Sherman, Nasser v. Court of Appeals, and Surigao Century Sawmill
[24]
Co., Inc. v. Court of Appeals settled the matter by treading the path blazed
by Polytrade. Hence, the inevitable conclusion to be drawn, which
respondent judge should have appreciated and followed, is
that Bautista and Hoechst Philippines have been rendered obsolete by
the Polytrade line of cases. Needless to say, the more recent jurisprudence
shall be deemed modificatory of the old ones. Restating the settled rule,
therefore, as belabored by this Court in Philippine Banking Corporation v.
[25]
Tensuan, venue stipulations in a contract, while considered valid and
enforceable, do not as a rule supersede the general rule set forth in Rule 4 of
the Revised Rules of Court. In the absence of qualifying or restrictive words,
they should be considered merely as an agreement on additional forum, not

48 | P a g e

as limiting venue to the specified place. They are not exclusive but, rather
permissive.
Notwithstanding the above fundamental considerations, respondent
judge still issued the May 25, 1993 Order stopping indefinitely the foreclosure
sale scheduled the following day on May 26, 1993. Clearly, he can be held
accountable for ignorance of the foregoing jurisprudential developments on
the applicable rules governing venue stipulations.
It has been said that when the law transgressed is elementary, the
[26]
failure to know or observe it constitutes gross ignorance of the law. In this
case, a mere reference by respondent judge to Act No. 3135, as opposed to
Rule 4 of the Revised Rules of Court, as well as the Deed of the Real Estate
Mortgage itself, would dictate that there is no justification whatsoever for him
to hold in abeyance the extrajudicial foreclosure sale scheduled on May 26,
1993 in front of the City Hall of Manila. A judge owes it to the public and to
the legal profession to know the very law he is supposed to apply to a given
[27]
controversy as mandated by the Code of Judicial Conduct. He is called
upon to exhibit more than just a cursory acquaintance with the statutes and
[28]
procedural rules. There will be great faith in the administration of justice if
there be a belief on the part of the parties that the occupants of the bench
cannot justly be accused of an apparent deficiency in their grasp of legal
[29]
principles. Unfortunately, respondent judge, instead of inspiring faith and
confidence in the administration of justice, committed a rank disservice to its
cause when he issued the May 25, 1993 Order based on the inapplicable
provisions of the Rules of Court.
As to the second averment of respondent judge, that he issued the May
25, 1993 Order so as to determine the truthfulness of the mortgagor's
allegation that the P500,000.00 previously paid to the mortgagee BAID was
not duly credited nor deducted from the accounts of the mortgagor, suffice it
to state that the same, by no means, provide any justification for the highly
questionable actuation of respondent judge in issuing the subject
Order. This matter, respondent judge ought to have known, should have
been the subject of a proper court action for the purpose of seeking a
temporary restraining order with prayer for a possible injunction to stop the
scheduled extrajudicial foreclosure sale. Definitely, a mere ex-parte Motion to
Hold Auction Sale in Abeyance is not the proper remedy, and this recourse
by PQL evinces a clear attempt on its part to shortcut the entire
process. Unfortunately, respondent judge fell prey to this scheme, wittingly
or unwittingly. Instead of providing some legal justification for his irregular
conduct in issuing the questioned Order, this flimsy argument advanced by
the respondent judge all the more has convinced this Court of his culpability.

WHEREFORE, the Court, resolving to hold respondent Judge Rosalio

G. de la Rosa administratively liable for gross ignorance of the law, imposes
on him a FINE of P2,000.00, the same to be deducted from whatever
retirement benefits he may be entitled to receive from the government.
SO ORDERED.

On January 7, 1966, Philippine Commercial and Industrial Bank (PCIB) filed

a complaint against Alpha Insurance and Surety Co., Inc., (ALPHA),
Community Builders, Inc. and Filadelfo Rojas in the Court of First Instance
(CFI) of Manila. The complaint alleged that Community Builders and Rojas
borrowed P 150,000 from PCIB, that ALPHA issued Surety Bond No. G-1689
in the amount of P 50,000 to guarantee payment of the loan, and that upon
maturity the defendants failed to pay.
In its answer with cross-claim against Community Builders and Rojas,
ALPHA admitted having issued Surety Bond No. G-1689 but alleged that the
P 150,000 debt had been paid by virtue of the assignment by Rojas to PCIB
of his receivables from the Armed Forces of the Philippines. As special
defense, ALPHA alleged that the promissory note evidencing the loan is
dated later than the surety bond which was issued for an amount less than
the debt. (The promissory note is dated September 26, 1962 while the surety
bond is dated August 22, 1960.)
During the pre-trial, Rojas and Community Builders failed to appear; hence,
they were declared as in default. ALPHA reiterated its defenses stated
above, namely, (1) that the bond was issued for less than the amount of the
debt, (2) that it was issued earlier, and (3) that the debt had been paid.

Republic
SUPREME
Manila

of

the

Philippines
COURT

THIRD DIVISION
G.R. No. L-34959 March 18, 1988
PHILIPPINE
COMMERCIAL
and
INDUSTRIAL
BANK petitioner,
vs.
THE HONORABLE COURT OF APPEALS & ALPHA INSURANCE and
SURETY COMPANY, INC., respondents.

CORTES, J.:

49 | P a g e

These were reflected in the following pre-trial order dictated by the trial judge
in open court:
At the pre-trial conference, the parties agreed that the
defendant defendants Filadelfo Rojas and Community
Builders Co., Inc. secured a loan from the plaintiff in the
amount of P 150,000 for which they executed a promissory
note dated September 26, 1962. In order to secure the
payment of this obligation which was to mature January 24,
1963, the defendants assigned their receivables based on
three contracts which they had with the Armed Forces of the
Philippines, plus the surety bond issued by the defendant
Alpha Insurance & Surety Co., Inc. in the amount of P
50,000. Notwithstanding repeated demands and the
expiration of the promissory note, the defendants failed to
pay their obligation.
The defendants Filadelfo Rojas and Community Builders
have been declared as in default for failure to appear at the
pre-trial conference.

The remaining defendant Alpha Insurance and Surety Co.,

Inc. now contends that it is not bound by the surety bond for
the reason that it was issued for less than the amount of the
plaintiffs claim and that the same was issued prior to the
execution of the promissory note, and that the obligation had
already been fully paid by the assignment of the receivables.
The issue, therefore, is whether the defendants have already
paid the amount stated in the promissory note by virtue of
the assignment aforesaid.

Filadelfo Rojas and Community Builders Co., Inc., as

principals and the Alpha Insurance and Surety Co., Inc., as
surety, executed jointly and severally in the City of Manila,
Philippines, Alpha Bond No. G-1689 in the amount of
P50,000 to guarantee the payment by the said principals of
their obligation to the plaintiff in accordance with the terms
and conditions recited in the said promissory note, copy of
the surety bond is attached hereto as Annex "B" and made
integral part hereof by reference;
while the corresponding denial in the answer of ALPHA states:

On the basis of this issue, let the trial hereof on the merits
be, as it is hereby, set for December 19, 1966, at 8:30 a.m.
SO ORDERED.
After trial, the CFI rendered judgment in favor of PCIB and against Rojas,
Community Builders and ALPHA, ordering them to pay P50,000 plus
attorney's fees and costs. The Court further ordered defendants Rojas and
Community Builders to pay the remaining P100,000.
Rojas and Community Builders appealed to the Court of Appeals. However,
since their counsel could not be served with the notice to file brief, their
appeal was dismissed.
ALPHA likewise appealed to the appellate court which reversed the decision
of the CFI on the ground that it was not shown that the surety bond bears
any relation to the promissory note. Hence, this petition, PCIB raising a
purely procedural issue. Petitioner contends that the appellate court erred in
ruling in favor of ALPHA on the basis of a question of fact which had not
been raised before the CFI and which is not within the issues raised in the
pleadings, nor in the pre-trial order.
The issue raised calls for a determination of whether or not the relation of the
surety bond to the promissory note was ever raised as an issue in the
Answer filed by ALPHA or in the pretrial conference held between the
parties.
The pertinent allegation in PCIB's complaint reads:
3. That in conjunction with the aforesaid promissory note
entered into by and between the plaintiff and the defendants

50 | P a g e

3. (Defendant) ADMITS the material allegations of paragraph

3 of the complaint in so far as the same refers to its surety
bond (Annex "B") only; that it has no knowledge nor
information sufficient to form a belief as to the truth of the
rest of the averments therein concerning the promissory note
(Annex "A") hence, it specifically denies the rest of the
allegations having reference to the promissory note;
PCIB contends that paragraph (3) of the complaint states three material facts
which are separable from each other, to wit
(a) That defendants Filadelfo Rojas and Community Builders
Co., Inc., as principals, and respondent Alpha Insurance and
Surety Co., Inc., as surety, executed Surety Bond No. G1689 (Annex "B" of the complaint);
(b) That the said surety was executed to guarantee the
payment of the promissory note (Annex "A" of the
complaint); and
(c) That the guarantee thus made secures the performance
of the obligations of Filadelfo Rojas and Community Builders
Co., Inc. as set forth or recited in the promissory note (Annex
"A" of the complaint).
It is asserted that since the answer of ALPHA "admits the allegations of
paragraph (3) of the complaint in so far as the same refers to its surety
bond," then what was admitted was not only the execution of the surety bond
but also that the surety bond was issued to secure the promissory note.

Hence, the answer did not raise any issue as to the relation of the security
bond to the promissory note.
One basic rule in interpretation of pleadings is that "pleadings (should) be
liberally construed to do substantial justice." [Rule 6, Sec. 15] Constructions
which result in absurdity must also be avoided. If we construe paragraph 3 of
the answer together with paragraph 2 in which ALPHA denied knowledge of
the debt contracted by Rojas and Community Builders, which debt was
evidenced by the promissory note, it is clear that ALPHA could not have
admit ted that the surety bond it issued secured the payment of the debt. It
would have been inconsistent for ALPHA to claim in paragraph 2 that it was
unaware of the debt, and then to admit in paragraph 3 that the surety bond it
issued was executed to secure the debt. In fact, a reading of the suretyship
contract readily shows that it was executed on August 22, 1960 to secure the
P 50,000 discounting line credit accommodation granted by PCIB to
Community Builders. At the time Surety Bond G-1689 was executed, the
promissory note for P 150,000 dated September 26, 1962 was not yet
executed. The Court thus rules that paragraph 3 of the answer of ALPHA
merely admitted the execution of Surety Bond No. G-1689, but did not admit,
nay, denied, that said bond secured the debt of Rojas and Community
Builders. In view of the specific denial, the relation of the bond to the debt
was properly raised as an issue in the Answer.
We next consider the pre-trial order.
PCIB calls the attention of this Court to that portion of the pre-trial order
which reads:
The issue, therefore, is whether the defendants have already
paid the amount stated in the promissory note by virtue of
the assignment aforesaid.
and contends that since the trial court has so limited the issue, then ALPHA
can no longer raise the defense that the bond bears no relation to the
promissory note.
The pertinent provision of the Rules of Court provides:
Sec. 4. Record of pre-trial results. After the pre-trial the
court shall make an order which recites the action taken at
the conference, the amendments allowed to the pleadings,
and the agreements made by the parties as to any of the

51 | P a g e

matters considered. Such order shall limit the issues for trial
to those not disposed of by admissions or agreements of
counsel and when entered controls the subsequent course
of action, unless modified before trial to prevent manifest
injustice. (Emphasis supplied.)
While the rule provides that the pre-trial order of the court "controls the
subsequent course of action," it is categorical that the issues for trial must be
limited to "those not, disposed of by admissions or agreements of counsel."
In other words, the court has no discretion to exclude from trial issues not
resolved by voluntary agreement between the parties.
The pre-trial order clearly states that ALPHA claimed that "it is not bound by
the surety bond for the reason that it was issued for less than the amount of
the plaintiff s claim and that the same was issued prior to the execution of the
promissory note." This particular issue not having been disposed of by
admissions or agreements during the pre-trial, it remained a proper subject of
litigation. In fact, this particular issue was raised by respondent ALPHA not
only in its brief filed with the Court of Appeals, but even before the trial court,
in its Memorandum and Motion for Reconsideration.
One other important aspect of this case compels the Court to affirm the
decision of the Court of Appeals insofar as it absolves ALPHA from any
liability to PCIB. Even as appellate courts do not normally consider those
errors not properly assigned or specified, the rule is not, without qualification.
As the Court stated in Insular Life Assurance Co., Ltd. Employees
Association- NATU v. Insular Life Assurance Co., Ltd., et al [G.R. No. L25291, March 10, 1977, 76 SCRA 50, 61-62]:
. . (T)he Supreme Court has ample authority to review and
resolve matters not assigned and specified as errors by
either of the parties in the appeal if it finds the consideration
and determination of the same essential and indispensable
in order to arrive at a just decision in the case. This Court,
thus, has the authority to waive the lack of proper
assignment of errors if the unassigned errors closely relate
to errors properly pinpointed out or if the unassigned errors
refer to matters upon which the determination of the
questions raised by the errors properly assigned depend.
The same also applies to issues not specifically raised by
the parties. The Supreme Court, likewise, has broad
discretionary powers, in the resolution of a controversy, to

take into consideration matters on record which the parties

fail to submit to the Court as specific questions for
determination. Where the issues raised also rest on other
issues not specifically presented, as long as the latter issues
bear relevance and close relation to the former and as long
as they arise from matters on record, the Court has authority
to include them in its discussion of the controversy as well as
to pass upon them. In brief, in those cases wherein
questions not particularly raised by the parties surface as
necessary for the complete adjudication of the rights and
obligations of the parties and such questions fall within the
issues already framed by the parties, the interests of justice
dictate that the Court consider and resolve them.
This qualification applies to the instant case.
It is basic that liability on a bond is contractual in nature and is ordinarily
restricted to the obligation expressly assumed therein. The extent of a
surety's liability is determined only by the clause of the contract of suretyship.
It cannot be extended by implication, beyond the terms of the contract.
[Zenith Insurance Corp. v. CA et al., No. 57957, December 29, 1982, 119
SCRA 485.]
In the case at bar, Surety Bond No. G-1689 was executed to secure a
discounting line of credit accommodation granted by PCIB to Community
Builders Co., Inc. in the amount of P50.000.
PCIB contends that the loan evidenced by the promissory note signed by
Filadelfo Rojas, both in his personal capacity and as President of Community
Builders, was granted in line with the credit accommodation secured by the
surety bond; hence, ALPHA is liable for the debt.
Note however that by the express terms of Surety Bond No. G-1689, ALPHA
bound itself to pay the discounting line of Community Builders only which has
a personality distinct and separate from Rojas. The promissory note, on the
other hand, was signed both by Rojas and by Community Builders. Also, the
amount of the credit line which ALPHA agreed to secure was only P50,000;
whereas, the promissory note was for P150,000. Clearly therefore, the debt
on which PCIB bases its action is not within the purview of the Surety Bond
No. G-1689. Thus, even granting that Rojas and Community Builders offered
Surety Bond No. G-1689 as security for the P150,000 debt, ALPHA, which
merely undertook to secure a P50,000 credit line of Community Builders,
cannot be held answerable for the debt.

52 | P a g e

WHEREFORE, the petition is hereby DENIED. The appealed decision is

AFFIRMED.
SO ORDERED.

enforcement or protection of a right, or the prosecution or redress of a wrong.

2
The cause of action must always consist of two elements: (1) the plaintiff's
primary right and the defendant's corresponding primary duty, whatever may
be the subject to which they relate person, character, property or contract;
and (2) the delict or wrongful act or omission of the defendant, by which the
primary right and duty have been violated. 3 The cause of action is
determined not by the prayer of the complaint but by the facts alleged. 4
The term right of action is the right to commence and maintain an action. 5 In
the law on pleadings, right of action is distinguished from cause of action in
that the former is a remedial right belonging to some persons, while the latter
is a formal statement of the operative facts that give rise to such remedial
right. The former is a matter of right and depends on the substantive law,
while the latter is a matter of statement and is governed by the law of
procedure. 6
The right of action springs from the cause of action, but does not accrue until
all the facts which constitute the cause of action have occurred. 7 When
there is an invasion of primary rights, then and not until then does the
adjective or remedial law become operative, and under it arise rights of
action. There can be no right of action until there has been a wrong a
violation of a legal right and it is then given by the adjective law. 8
FIRST DIVISION
[G.R. Nos. 92029-30 : December 20, 1990.]
192 SCRA 507
NICANOR G. DE GUZMAN, JR., Petitioner, vs. HON. COURT OF
APPEALS, Former Fifth Division, HON. REGIONAL TRIAL COURT, National
Capital Judicial Region, Br. 48, Manila, and ENRIQUE KP. TAN,
Respondents.

DECISION

GANCAYCO, J.:

A cause of action is the fact or combination of facts which affords a party a

right to judicial interference in his behalf. 1 An action means an ordinary suit
in a court of justice, by which one party prosecutes another for the

53 | P a g e

The herein petition for review on Certiorari of a decision of the Court of

Appeals dated January 30, 1990 in CA G.R. No. 22481 9 puts into test the
sufficiency of the cause of action of a complaint filed in the Regional Trial
Court of Manila.: nad
The undisputed antecedents are that on September 15, 1988, petitioner filed
a complaint for damages and other equitable reliefs in the trial court, the
relevant allegations of which are as follows:
"3. Plaintiff and defendant have been friends and in the course of this
relationship, they have exchanged mutual favors and
accommodations, including discounting of check for cash.
4. More than seven (7) years ago, several checks were issued by
plaintiff to defendant in exchange for cash which probably amounted
to P280,900.00. In due time, these checks were either fully paid,
settled, extinguished or condoned by agreement of the parties, and
for which reason, plaintiff did not anymore redeem the checks
precisely because they have been close and mutual friends.
5.a. Lately, however, plaintiff received from defendant's
lawyer a demand letter dated 1988 supposedly detailing out
therein the former's obligation to the latter, as follows:

Principal Amount

P280,900.00

(Value of 66 dishonored checks)

Legal Interest at

235,956.00

1% per Month (For 84

months or 7 years)
Attorney's Collection

51,685.00

Fee (At 10% Only)

TOTAL Amount Due

P568,541.00
========

Copy of said letter is attached hereto as Annex A and made

an integral part hereof.
b. The claim of P568,541.00 is not due and owing from the
plaintiff to the defendant because, as already stated, the
amounts of the checks issued to defendant some more than
(7) years ago, were either fully paid, settled, extinguished or
treated as condoned by agreement of the parties.
6. In the said letter, Annex A hereof, defendant threatened to
"institute the proper action and hold (plaintiff liable for the
consequence," in the following manner:
. . . unfortunately, you had not heeded his (defendant's)
request and so we hereby inform you that this shall definitely
be our last letter to you on this matter and we are giving you
a final period of ten (10) days from receipts hereof to remit
full payment of said sum of P568,541.00, otherwise, without
need of further advice to you, we shall institute the proper
action and hold you liable for the consequence.:-cralaw
7. Defendant knows fully well that the sum of P568,541.00 is not
wholly or partly due or owing to him from plaintiff particularly the
huge, fantastic, and unwarranted claim for alleged legal interests in

54 | P a g e

the sum of P235,956.00 which roughly accounts for 84% of the

alleged principal amount being collected by defendant from plaintiff
under his ill-tenored Annex A hereof, and the unwarranted claim for
attorney's collection fees of P51,685.00.
8. Plaintiff is very reluctant to file the instant complaint against his
defendant friend but was gravely agitated to do so because of a
clearly perceived and palpable injury to him as unequivocally
expressed in defendant's letter, Annex A hereof.
9. In the circumstances given, defendant has kept possession of the
alleged checks amounting to P280,900.00 at the expense of plaintiff
and since the obligation thereunder has either been fully or wholly
paid, settled, extinguished, or condoned by agreement of the parties,
defendant holds them without just or legal ground and is bound to
return them to plaintiff.
10. In writing the letter, Annex A hereof and demanding therein an
obligation from plaintiff which is not due and owing from the latter,
defendant failed to act with justice, observe honesty and good faith.
11. To prosecute the instant action, plaintiff has incurred actual
expenses in the sum of at least P15,000.00.
12. In the circumstances herein-above given, defendant acted in a
wanton, reckless, oppressive, or malevolent manner. Hence,
exemplary damages in the sum of P200,000.00 should be imposed
against the defendant for the public good, in addition to other
damages claimed herein.
13. Nominal damages should be adjudicated against the defendant
in order that the right of plaintiff which has been invaded by the
defendant, may be vindicated or recognized, and not for the purpose
of indemnifying the plaintiff for any loss suffered by the latter.
14. To prosecute the case herein, plaintiff has retained the services
of counsel at the agreed attorney's fees of P75,000.00.
WHEREFORE, it is respectfully prayed that, after due hearing
judgment be rendered in favor of plaintiff and against defendant, as
follows:
1. Ordering defendant to pay plaintiff the sum of P15,000.00
as actual or compensatory damages;
2. Ordering the defendant to pay plaintiff the exemplary
damages in the sum of P200,000.00;

3. Ordering defendant to return to plaintiff the several checks

mentioned in Annex A of the complaint and adjudicating
nominal damages in favor of plaintiff and against the
defendant;
4. Ordering defendant to pay plaintiff the sum of P75,000.00
for and as attorney's fees; and
5. Ordering the defendant to pay the costs of the suit.: nad
Plaintiff prays for other relief just and proper in the premises of the
case." 10
On October 8, 1988, private respondent filed a motion to dismiss the
complaint for lack of cause of action and prescription. An opposition thereto
was filed by petitioner to which a reply was made by private respondent.
After a rejoinder was submitted by petitioner, on November 24, 1988 the trial
court dismissed the complaint for failure to state a cause of action. 11
A motion for reconsideration thereof filed by petitioner, which was opposed
by private respondent, and to which a reply was filed by petitioner, was
denied by the trial court on March 17, 1989. 12
Hence, petitioner filed a petition for Certiorari and mandamus and other relief
in the Court of Appeals against said orders of the trial court. As earlier stated,
on January 30, 1990, the Court of Appeals rendered its decision dismissing
the appeal with costs against petitioner.
Thus, the herein petition whereby petitioner alleges that the trial court
committed a grave abuse of discretion in issuing the questioned orders dated
November 24, 1988 and March 17, 1989, and that the Court of Appeals did
likewise in dismissing the appeal of petitioner thereby disregarding a
question of substance not in accord with law.
The petition is impressed with merit.
A reading of the complaint shows that it is therein alleged that more than
seven (7) years ago, several checks were issued by petitioner to private
respondent in exchange for cash amounting to P280,900.00; that in due time,
said checks were "either fully paid, settled, extinguished or condoned by
agreement of the parties" so petitioner did not anymore redeem the checks
because of their friendship; that on August 30, 1988, private respondent's
lawyer sent a letter of demand to petitioner to pay said principal amount plus
interest and attorney's fees with a total amount due of P568,541.00, which
claim is not due and owing having been settled between the parties; that in
said letter threat of court action was made causing injury to petitioner; that
private respondent illegally withheld the petitioner's checks which should be
returned to petitioner; that for private respondent's act of demanding

55 | P a g e

payment for an obligation not due and for the former's failure to act with
justice, observe honesty and good faith, petitioner prays for relief by way of
actual, exemplary and nominal damages, and also prays that the private
respondent be ordered to return to petitioner the checks mentioned in the
complaint, and to pay the costs.
Contrary to the findings of the lower court and the appellate court that the
complaint states no cause of action, this Court finds and so holds that it
states a sufficient cause of action.
It must be remembered that when a party files a motion to dismiss the
complaint for lack of cause of action he is deemed to hypothetically admit the
allegations thereof.
From the allegation of the complaint in this case it appears that, (1) petitioner
has a primary right, because of having paid his obligation to private
respondent, to have the checks he issued to cover the amount returned to
him or otherwise cancelled by private respondent; and (2) the primary right of
was violated when private respondent demanded payment of a settled
obligation relying on the very checks of petitioner he had not returned.
Consequently, on account of such demand for payment for an obligation duly
settled, the petitioner thereby suffered damages 13 and should be afforded
such relief as prayed for in the complaint.:-cralaw
Contrary to the observation made by the appellate court, the cause of action
had not prescribed. The cause of action accrued only on August 20, 1988
when in a demand letter for payment private respondent thereby committed a
wrongful act against petitioner. The complaint was filed promptly on
September 15, 1988, well within the four (4) year prescriptive period of an
action of this nature. 14
WHEREFORE, the petition is GRANTED and the questioned decision of the
Court of Appeals dated January 30, 1990 as well as the questioned orders of
the Regional Trial Court of Manila dated November 24, 1988 and March 17,
1989, are hereby REVERSED AND SET ASIDE. Let the records of this case
be remanded to the trial court for further proceedings. Costs against private
respondent.
SO ORDERED.

G.R. No. 111077 July 14, 1994

VIRGILIO B. GESMUNDO and EDNA C. GESMUNDO, petitioners,
vs.
JRB REALTY CORPORATION, JAIME R. BLANCO, and HON. OSCAR B.
PIMENTEL, in his capacity as Presiding Judge of Branch 148 of the Regional
Trial Court of Makati, respondents.
Virgilio B. Gesmundo on his own and wife's behalf.

apartment units; that on November 18, 1992, petitioners sent respondents a

letter asking for reconsideration of the termination of their lease; that on
November 27, 1992, respondents sent petitioners a statement of accounts
reiterating their letter of November 9, 1992; that on November 28, 1992,
petitioners were forced to vacate the leased premises and consequently they
leased an apartment at P2,500.00 monthly; and that respondents' action was
"unwarranted, unjustified, malicious, abusive, and capricious." Petitioners
prayed for P33,500.00 as actual or compensatory damages; P1,000,000.00
as moral damages; P50,000.00 as attorney's fees, and costs.

Blanco Law Firm for private respondents.

Respondents moved to dismiss the case on the ground that the venue of the
action had been improperly laid in the RTC of Makati. They contended that
pursuant to their lease contract, the venue of the action was in a court of
competent jurisdiction in Pasay City.

MENDOZA, J.:

In their opposition to the motion to dismiss, petitioners alleged that their

cause of action is not based on the lease contract and, therefore, the case is
not covered by the stipulation as to venue. Instead it is governed by the
3
general rule as to venue stated in Rule 4, sec. 2(b). They also alleged that
even assuming that the stipulation is applicable, it does not operate to limit
the venue to Pasay City but merely provides for an additional forum.

This is a petition for review on certiorari of the order of the Regional Trial
Court of Makati (Branch 148), dismissing on the ground of improper venue a
complaint which the spouses Virgilio B. Gesmundo and Edna C. Gesmundo
2
filed against the JRB Realty Corporation and Jaime R. Blanco.
The facts of the case are as follows:
On April 7, 1980, petitioner Virgilio B. Gesmundo, as lessee, and respondent
JRB Realty Corporation, represented by its president, respondent Jaime R.
Blanco, as lessor, entered into a lease contract covering Room 116, Blanco
Suites, at 246 Villaruel St., Pasay City, the parties stipulating that the

On May 28, 1990, the trial court dismissed petitioners' action on the ground
of improper venue. On July 9, 1993, it denied their motion for
reconsideration.
Hence this petition based on the following grounds:
I.

venue for all suits, whether for branch hereof or damages or

any cause between the LESSOR and the LESSEE, and
persons claiming under each, being the courts of appropriate
jurisdiction in Pasay City. . .
On March 19, 1993, petitioners filed the complaint below for damages
against respondents. They alleged that from April 8, 1980 to November 1992,
they had been in possession of the leased premises; that on or about
November 9, 1992, they were; "shocked and stunned" upon receiving
respondents' letter terminating their lease effective November 30, 1992; that
no other tenant in the building had been sent a similar letter; that during their
conversation over the telephone, respondent Blanco told petitioner Virgilio B.
Gesmundo that since the Corporation for which the latter works did not pay
him (Blanco) his retainer fees, he did not want petitioners in any of his

56 | P a g e

THE HONORABLE COURT BELOW ERRED IN

CONSIDERING THE ACTION FOR DAMAGES AS REAL
ACTION AND NOT PERSONAL.
II.
THE HONORABLE COURT BELOW ERRED IN
CONSIDERING THE LEASE CONTRACT EXECUTED
BETWEEN ONLY ONE OF THE PETITIONERS AND ONLY
ONE OF THE PRIVATE RESPONDENTS APPLICABLE TO
THE INSTANT COMPLAINT.

III.
THE HONORABLE COURT ERRED IN CONSIDERING
THE COMPLAINT AS BASED ON THE CONTRACT OF
LEASE.
IV.
THE HONORABLE COURT BELOW ERRED IN UTILIZING
THE VERY ACT COMPLAINED OF (THE RIGHT ABUSED)
TO DEFEAT THE COMPLAINT FILED BY PETITIONERS.
V.
THE HONORABLE COURT BELOW ERRED IN
ATTEMPTING TO CAUSE THE FILING OF THE
COMPLAINT IN A JURISDICTION OTHER THAN THE
PLACE WHERE ALL THE PARTIES ARE FOUND
WITHOUT ANY JUSTIFIABLE REASON.
VI.
THE HONORABLE COURT ERRED IN SUSTAINING A
DISMISSAL SOLELY GROUNDED ON A TECHNICALITY.
VII.
ASSUMING FOR THE SAKE OF ARGUMENT THAT THE
LEASE AGREEMENT IS APPLICABLE, THE HONORABLE
COURT BELOW ERRED IN CONSIDERING THE
PROVISION STIPULATING THE VENUE OF THE ACTION
EXCLUSIVISTIC.
These contentions boil down to one main issue: whether venue was properly
laid in the Regional Trial Court of Makati.
We hold in the negative. We have in the past held stipulations limiting venue
4
as valid and binding on the contracting parties, based on Rule 4, sec. 3
which provides:

57 | P a g e

Venue by agreement. By written agreement of the parties,

the venue of an action may be changed or transferred from
one province to another.
In the case at bar, it is clear from the parties' contract that the venue of any
action which they might bring are the courts of competent jurisdiction in
Pasay City, whether the action is for "breach [of the lease agreement] or
damages or any other cause between the LESSOR and LESSEE and
persons claiming under each."
The language used leaves no room for interpretation. It clearly evinces the
parties' intent to limit to the "courts of appropriate jurisdiction of Pasay City"
the venue of all suits between the lessor and lessee and those between
parties claiming under them. This means a waiver of their right to institute
action in the courts provided for in Rule 4, sec. 2(b).
5

This case, therefore, differs from the cases cited by petitioner. It is true that
6
in Polytrade Corporation v. Blanco, a stipulation that "The agree to sue and
be sued in the City of Manila" was held to merely provide an additional forum
in the absence of any qualifying or restrictive words. But here, by laying in
Pasay City the venue for all suits, the parties made it plain that in no other
place may they bring suit against each other for "breach [of their lease
contract] or damages or any other cause between [them] and persons
claiming under each [of them]."
The stipulation in this case is similar to that involved in Hoechst Philippines,
7
Inc. v. Torres where the parties agreed that "in case of any litigation arising
out of this agreement, the venue of any action shall be in the competent
courts of the Province of Rizal." This court held: "No further stipulations are
necessary to elicit the thought that both parties agreed that any action by
either of them would be filed only in the competent courts of Rizal province
8
exclusively." The similarity in the language used in the stipulation in this
case and that in the Hoechst case is striking. Again, in Villanueva v.
9
Mosqueda it was stipulated that if the lessor violated the contract of lease
he could be sued in Manila, while if it was the lessee who violated the
contract, the lessee could be sued in Masantol, Pampanga. It was held that
there was an agreement concerning venue of action and that the parties
were bound by their agreement. The agreement as to venue was not
permissive but mandatory.
Petitioners contend that neither they nor the private respondent Jaime
Blanco reside in Pasay City. This fact is, however, irrelevant to the resolution
of the issue in this case since parties do stipulate concerning the venue of an

action without regard to their residence. In one case, it was held that the
parties stipulated that the venue of action shall be in the City of Manila. It was
held that it was reasonable to infer that the parties intended to fix the venue
of their action, in connection with the contract sued upon, in the proper court
of the City of Manila only, notwithstanding that neither one was a resident of
10
Manila.
It is nonetheless contended that the stipulation as to venue is inapplicable
because (1) only one of the petitioners (Virgilio B. Gesmundo) and only one
of the private respondents (JRB Realty) are parties to the lease contract and
(2) their cause of action is not based on the lease contract.
The contention is without merit. Petitioner Edna C. Gesmundo is the wife of
the lessee Virgilio B. Gesmundo, while Jaime R. Blanco is the president of
the lessor JRB Realty Corporation. Their inclusion in this case is not
necessary. What is more, as already noted, by its terms the stipulation
applies not only to the parties to the contract but to "any persons claiming
under each."
Petitioners claim that their cause of action is not based on the lease contract
because it seeks neither its implementation nor its the cancellation. The
contention is also without merit. Petitioners' action is for alleged breach of the
lease contract which, it is contended, was terminated to spite
11
them. Petitioners view this act of respondents as an abuse of right under
arts. 19, 20, and 21 of the Civil Code, warranting an award of damages. Their
cause of action is ultimately anchored on their right under the lease contract
and, therefore, they cannot avoid the limitation as to the venue in that
contract.
Nor is there any warrant for petitioners' view that a motion to dismiss on the
ground of improper venue is based on a "mere technicality" which "does not
even pretend to invoke justice" and, therefore, must not be sustained. As we
12
have in other cases held, "procedural rules are not to be belittled or
dismissed simply because their non-observance may have resulted in
prejudice to a party's substantive rights. Like all rules, they are required to be
followed except only for the most persuasive of reasons when they may be
relaxed to relieve a litigant of an injustice not commensurate with the degree
of his thoughtlessness in not complying with the procedure prescribed." Here
what is involved is no less than the parties' agreement to limit the venue of
any action between them and those claiming under them under the contract.
Petitioners must abide by that agreement.

58 | P a g e

WHEREFORE, the petition is DENIED and the order appealed from is

AFFIRMED.
SO ORDERED.

G.R. No. L-23233

September 28, 1967

LUIS
ENGUERRA,
vs.
ANTONIO DOLOSA, defendant-appellee.
Esteban
Escalante,
Jr.
Ruben M. Paps for defendant-appellee.

plaintiff

for

-appellant,

plaintiff-appellant.

CONCEPCION, C.J.:
Appeal, by plaintiff Luis Enguerra, from an order of dismissal of the
Court of First Instance of Sorsogon.
Plaintiff Enguerra was chief baker for the De Lux Bakery and Grocery,
in Sorsogon, Sorsogon, from June 18, 1959 to October 8, 1961. On
December 14, 1961, he filed, with the municipal court of Sorsogon,
Sorsogon, a complaint, against defendant Antonio Dolosa, as owner of said
establishment, to recover the sum of P4,056.00, for unpaid overtime services
allegedly rendered during said period. The court having later dismissed said
complaint, Enguerra appealed to the Court of First Instance of Sorsogon,
where the case was docketed as Civil Case No. 1800.
Soon thereafter, or on January 24, 1963, Enguerra filed, with the same
Court of First Instance, another complaint against Dolosa, which was
docketed as Civil Case No. 1804, to recover the following:
1. Termination Pay
2. Underpayment of wages
3. Compensatory Damages, unearned
income from unjustified dismissal
4. Compensatory Damages, unpaid
overtime
5. Moral Damages
Exemplary Damages
Attorney's fees

P392.74
64.90
6,363.22
4,347.89
5,000.00
2,500.00
3,500.00

On motion of Dolosa, he was granted, on February 6, 1963, an

extension of 30 days, "counted from to-day," to submit his answer. On March
8, 1963, he filed, instead, a motion to dismiss, upon the ground that said
pending case No. 1800 is an action between the same parties for the same
cause of action, and that the complaint in case No. 1804 violates "the rule
against splitting a cause of action." Subsequently, or on March 12, 1963,
Enguerra sought to have Dolosa declared in default, upon the ground that his
motion to dismiss has been filed one (1) day late, and that it was merely pro
forma, because of which it did not suspend the running of the period to file
his answer. The Court of First Instance granted the motion to dismiss and
denied the motion to declare Dolosa in default. A reconsideration of the
orders to this effect having been denied, Enguerra interposed the present
appeal, directly to the Supreme Court, alleging that the lower court had erred
(a) in not declaring Dolosa in default; and (b) in dismissing the complaint
herein.
As regards the first alleged error, Enguerra maintains that the
extension of 30 days granted in the order of February 6, 1963, expired on
March 7, 1963, because the order stated that said period should be "counted
from today," which, Enguerra maintains, should be understood to mean from
February 6 to March 7, 1963. An identical theory was rejected in Ulpiando vs.
1
Court of Agrarian Relations, in the following language:
The petitioners raise procedural questions. On 2 August 1957
the respondents received a copy of the decision dated 22 July 1957
(See Annexes E & F). On 15 August they filed a "petition for
extension of time to file motion for reconsideration," dated 13 August,
because of lack of material time to read the voluminous transcript of
stenographic notes and for that reason they could not readily
formulate their arguments in support of the motion for
reconsideration (Annex F). On the same day, 15 August, the Court
entered an order granting the respondents "fifteen (15) days counted
from today within which to file their motion for reconsideration of the
decision rendered on July 29, 1957 (should be 22) in the instant
case." (Italics supplied.) On August 30, the respondents mailed their
motion for reconsideration in the post office of Cuyapo, Nueva Ecija.
The petitioners claim that counting from 15 August, the day the 15day period commenced to run, to 30 August, when the respondents
mailed their motion for reconsideration, 16 days already had
elapsed, and contend that the Court had already lost jurisdiction of
the case and could no longer reconsider its decision dated 22 July.
xxx

59 | P a g e

xxx

xxx

Rule 28 of the Rules of Court provides:

"In computing any period of time prescribed or allowed
by these rules, by order of court, or by any applicable
statute, the day of the act, event, or default after which the
designated period of time begins to run is not to be included.
The last day of the period so computed is to be included,
unless it is a Sunday or a legal holiday, in which event the
time shall run until the end of the next day which is neither a
Sunday nor a holiday."1awphl.nt
This rule adopts the exclude-the-first and include-the-last day
method for computing any period of time. Therefore, excluding the
day when the order granting their petition for extension of time to file
motion for reconsideration was entered by the Court (15 August) and
including the day the respondents mailed their motion for
reconsideration (30 August), only 15 days had elapsed. Hence, the
respondents' motion for reconsideration was filed within the
extension of time granted by the Court.
No reason had been advanced, and we find none, to depart from this
view, which is in line with the spirit and the letter of our laws and the Rules of
Court, and is, accordingly, reiterated.
As regards the second procedural ground of the objection to the
motion to dismiss, it should be noted that a motion is said to be pro
forma when it is apparent therefrom that the movant has not endeavored to
make it reasonably persuasive or convincing, his purpose being merely to
gain time or to delay the proceedings. In the case at bar, the motion explicitly
states "that there is another action pending between the same parties for the
same cause, namely: Luis Enguerra vs. Antonio Dolosa Civil Case No.
1800, now pending before this Honorable Court;" and "that the filing of the
above entitled case is a violation of the rule against splitting a cause of
action."
Having thus expressed, not only the legal grounds for the motion, but,
also the particular and concrete facts upon which said grounds rely with
specification of the title and number of the case on which the motion was
based and of the court before which the case is pending, coupled with the
other circumstances hereinafter adverted to and appearing in the records of
2
both cases said motion, manifestly, is not pro forma and its presentation
suspended the running of the period for the filing of defendant's answer.

60 | P a g e

The next and most important question for determination is whether or

not Civil Case No. 1800 is for the same cause of action as Civil Case No.
1804, both being admittedly between the same parties. In this connection, it
should be noted that the basis of the complaints in both cases is the same,
namely: that Enguerra's rights as Dolosa's chief baker, from June 18, 1959 to
October 8, 1961, have been violated by the latter. The alleged violations may
have several aspects, such as: 1) underpayment of wages; 2) nonpayment of
overtime; 3) transfer, allegedly equivalent to unjustified dismissal, and,
hence, the claim for separation pay; 4) damages (compensatory, moral and
exemplary, and attorney's fees). Yet, the cause of action the spring from
which the right to sue emanates was only one and the same breach of
their contract of employment, without which none of the claims made by
plaintiff would have no leg to stand on.
The statutory provisions regarding termination pay, minimum wage,
overtime and damages are as much a part of said contract of employment as
the pertinent provisions of the Civil Code on obligations and contracts, in
general, and on lease of services, in particular. The difference between
underpayment of wages on a given day and nonpayment of overtime for
work done on the same day, is not insofar as the cause of action therefore
is concerned materially at variance from that which exists between said
underpayment of wages for the day given and the similar underpayment of
wages for the next day. Indeed, if one month later, the aggrieved laborer
should decide to sue the employer for breach of contract, it is obvious that
the former cannot file a complaint for someeffects of such breach,
and another complaint for its other effects. He must include in the complaint
his claim for the underpayment for the aforementioned two (2) days, both
3
being overdue at the time of the commencement of the action. Similarly, if
underpayment of the minimum wage for a given day or month were coupled
with failure or refusal to pay overtime, for the same day or month, a
complaint filed thereafter should include both, underpayment of wages and
overtime pay. In other words, Courts should not sanction a complaint for one,
and another action for the other. Hence, in his own complaint herein, plaintiff
has, in fact, included his claims for alleged underpayment of wages,
overtime, compensatory, moral, and exemplary damages, and attorney's
fees, under one cause of action.
He is in estoppel, therefore, to deny that the cause of action asserted
in both cases is one and the same. At any rate, it is clear that the overtime
claimed in the present case is the very object of Case No. 1800. Moreover, it
is well settled that damages incidental to a cause of action cannot be made
4
the subject of a suit independent from the principal cause.

WHEREFORE, the order appealed from should be, as it is hereby,

affirmed, with costs against plaintiff, Luis Enguerra. It is so ordered.

61 | P a g e

G.R. No. 74938-39 January 17, 1990

ANGELINA
J.
MALABANAN, petitioner,
vs.
GAW CHING and THE INTERMEDIATE APPELLATE COURT, respondents.
G.R. No. L-75524-25 January 17, 1990
LEONIDA CHY SENOLOS, LEONARD CHAN and LEONSO CHY CHAN,
petitioners,
vs.
INTERMEDIATE APPELLATE COURT and GAW CHING, respondents.
Puruganan, Chato, Chato, Chato & Tan and Romero, Lagman, Torres,
Arrieta & Evangelista for petitioners in 75524-25.
Quiason, Makalintal, Barot & Torres for petitioners in 74938-39.
Limqueco & Macaraeg Law Office and Herminio T. Sugay for respondent
Gaw Ching.
RESOLUTION

FELICIANO, J.:
The two (2) Petitions before us G.R. Nos. 74938-39 and 75524-25
assail the decision of the then Intermediate Appellate Court in A.C.-G.R. CV
Nos. 05136-05137 dated 31 January 1986, which reversed the decision of
the Regional Trial Court in two (2) consolidated cases, namely: Civil Case
No. R-81-416 and Civil Case No. R-82-6789. Upon motion of petitioners, we
ordered the consolidation of the two (2) Petitions.
Respondent Gaw Ching instituted two (2) cases against petitioners Angelina
Malabanan, Leonida Senolos, et al. in connection with the sale of piece of
land located in Binondo, Manila. The first case, Civil Case No. R-81-416,
sought to annul such sale and to enjoin the demolition of a building standing
on that piece of land, and also prayed for the award of damages. The second
case, Civil Case No. G.R. 82-6798, demanded damages from petitioner
Senolos for bringing about the demolition of the building.

62 | P a g e

The following facts found by the trial court, and adopted and incorporated by
the appellate court, are undisputed:
Evidence for plaintiff showed that Gaw Ching has been
leasing the house and lot located [in] 697-699 Asuncion
Street, Binondo, Manila from Mr. Jabit since 1951. Plaintiff
conducted his business (Victoria Blacksmith Shop) on the
ground floor and lived on the second floor. When Mr. Jabit
died, his daughter, defendant Malabanan continued to lease
the premises to plaintiff but at an increased rental of
P1,000.00 per month. Before the increase, Gaw Ching paid
P700.00 per month, as evidenced by receipts of rentals.
There was no written contract of lease between plaintiff and
Mr. Jabit as to its duration but the rentals were evidently,
paid monthly. On April 27, 1980, Angelina Malabanan told
him that she was selling the house and lot for P5,000.00 per
square meter. Plaintiff told her however, that the price is
prohibitive. On May 13, 1980, defendant Malabanan wrote
plaintiff, reiterating that she was selling the house and lot at
P5,000.00 per square meter and that if he is not agreeable,
she will sell it to another person. After receiving the letter,
plaintiff turned over the letter to his counsel, Atty. Sugay.
Gaw Ching claims that he is not in a position to buy the
property at P5,000.00 per square meter because it was
expensive. Subsequently, Gaw Ching tried to pay the rent for
June, 1980, but Malabanan refused to accept it. Plaintiff's
counsel advised him to deposit the rentals in a bank which
he did, after which, his counsel wrote Malabanan informing
her about the deposit (Exh. B). On October 2, 1980, plaintiff
received another letter from defendant Malabanan which he
gave to his counsel who told him that said defendant is
offering the house and lot at P5,000.00 per square meter
and that if he is not agreeable, she will sell the premises to
another person at P4,000.00 per square meter. Plaintiff
testified that he was willing to buy the subject property at
P4,000.00 but hastened to add that it was still expensive and
did not ask his counsel to write Malabanan about it. So, also,
it was the opinion of his counsel that it was not necessary to
reply because the context of the letter was invariably a
threat. On November 3, 1980, plaintiff received another letter
from Defendant Malabanan, informing him that the premises
in question had already been sold to defendant Leonida
Senolos. This time, Atty. Sugay sent a reply dated
November 24, 1980, requesting that the pertinent documents

of the sale be sent to them but according to plaintiff, they

were not furnished a copy of said sale. Consequently,
plaintiff received a letter from Atty. Techico dated December
5, 1980 demanding that he vacate the premises and to pay
the arrearages in rentals from October to December, as they
were more importantly, going to repair and convert the
dwelling into a warehouse. Atty. Sugay sent a reply dated
February 17, 1981 (Exh. C) requesting Atty. Techico to
furnish them with the Deed of Sale and TCT because he
doubted the veracity of the sale. It took a long time before
Atty. Sugay's letter was answered and he was never
furnished a copy of the Deed of Sale and Transfer Certificate
of Title. After exerting all efforts, plaintiff finally was able to
procure a copy of the Deed of Sale and TCT No. 14789
(Exh- A) which reflected that the date of entry of the Deed of
Sale was December 9, 1980, whereas the Deed of Sale was
dated August 23, 1979 (Exh. I). Plaintiff then told Atty. Sugay
to file a civil case against defendants. On October 7, 1981,
Atty. Techico sent a reply to Atty. Sugay's letter of February
17, 1981 (Exh K). Plaintiff presented the receipt of rentals he
paid (Exhs. L to L-6). He deposited the monthly rentals
which Malabanan refused to accept, with the Pacific Banking
Corporation (Exh. M). At a later period, plaintiff had to move
out of the premises when it was demolished by the
defendant. Gaw Ching however, admitted that he was not
yet a Filipino Citizen at the time the offer to sell was
made, i.e., on April 27, 1980, May 13, 1980 and October 2,
1980 and that he became a Filipino citizen only on October
7, 1980, when he was issued a certificate of naturalization
(Exh. 1-Malabanan). He did not, however, inform Malabanan
on the matter of his newly acquired citizenship. Likewise,
Gaw Ching admitted that he did not make any counter-offer
in writing so as to price the property.
As to plaintiffs claim for damages, he testified, that this was
motivated by the incident on November 16, 1981, while he
was on the ground floor, when there was a sudden
brownout, and around 50 people came thereat, climbed the
roof with the use of a ladder, cut the electric wires and
started banging the roof. Plaintiff, his wife, and mother-in-law
were in the house and about 7 laborers were in the shop
when the incident happened. Plaintiff then immediately
called up Atty. Sugay and told him that Leonida Senolos
called some people to demolish the house. Plaintiff further

63 | P a g e

testified that ... he was not notified of the demolition. . . . On

that same day, Atty. Sugay arrived at about 10:00 a.m. and
told plaintiff that he was going to the City Hall. When Atty.
Sugay came back, he was with Roldan (Building Inspector),
who ordered that the demolition be stopped, but Leonida
Senolos refused to heed the order. Atty. Sugay and Roldan
went back to the City Hall. . . . At about 3:00 p.m., Atty.
Sugay came back with another person from the City Hall
who presented a letter to Leonida Senolos to which
defendant affixed her signature. The formal letter was dated
November 6, 1981 addressed to Leonida Senolos by
Romulo del Rosario, City Engineer and Building Officer.
Upon receipt of the letter, the policeman remained but the
demolition continued. Plaintiff together with Atty. Sugay, and
the City Hall official, went to the police precinct where the
City Hall Official talked with somebody in the precinct. It was
only when they returned to the premises at about 4:00 p.m.
with a policeman that the demolition was stopped. . . .
On cross examination, plaintiff admitted that he received a
letter from the Office of the City Engineer dated July 29,
1981 (Exh. 1-Senolos) condemning the building. He also
admitted that he was furnished a copy of the Demolition
Order (Exh. 2-Senolos) to which he affixed his signature.
After receiving Exhibits "I" and "2," Gaw Ching still refused to
vacate the premises because he was told that the building
was still in good condition and he continued paying the
monthly rental.
On redirect, plaintiff declared that after receiving the notice
of the City Engineer, he filed a complaint with the Ministry of
Public Works and Highways by reason of which, the MPWH
issued an order that the demolition to be stopped. (Exh. 3).
xxx xxx xxx
Another witness presented by plaintiff was Felix Tienzo,
Actg. Chief of Enforcement Division, (Ministry of Public
Works and Highways). . .
Mr. Felix Tienzo believes that the City of Manila was correct
in ordering the demolition of the building but he intended to

hold in abeyance the demolition of the building only in

obedience to the order of the MPWH. However, both Mr.
Tienzo and Mr. Roldan claim that they do not usually receive
an order from the MPWH stopping the demolitions.
xxx xxx xxx

the building, the majority held that the same was unwarranted and
that even if petitioner Senolos had a demolition order,
that order of demolition was valid only if there are no more
tenants residing in the building. If there are tenants and they
refused to vacate, the order of demolition is unavailing. It
could not rise higher than the Civil Code and the Rules of
3
Court.

On 10 August 1984, the trial court rendered a decision which upheld the
validity of the contract of sale between petitioner Malabanan and petitioner
Senolos. The trial court declared that petitioner Malabanan had not violated
Sections 4 and 6 of Presidential Decree No. 1517 in relation to Presidential
Proclamation No. 1893 and Letter of Instruction (LOI) No. 935 which provide
for a preemptive right on the part of a lessee over leased property. The trial
court stressed that respondent Gaw Ching had been given ample opportunity
to exercise any right of first refusal he might have had, but he had chosen not
to do so.
Respondent Gaw Ching went on appeal to the then Intermediate Appellate
Court. By a vote of three (3) to two (2), the appellate court voted to reverse
the decision of the trial court and hence to nullify the contract of sale between
2
petitioners Malabanan and Senolos inter se. The majority also held that the
transaction between petitioners was vitiated by fraud, deceit and bad faith
allegedly causing damage to respondent Gaw Ching. Petitioners were held
liable jointly and severally to respondent for moral, exemplary and actual
damages in the amount of P350,000.00 and for attorney's fees in the amount
of P20,000.00
for the indulgence in inequitous conduct to plaintiffappellant's (respondent Gaw Ching) prejudice and for the
unwarranted demolition of the building by defendantsappellees (petitioners herein) after the issuance of the
cease-and-desist order on October 30, 1981.
While holding that the land in question was located outside the
Urban Land Reform Zone declared by Proclamations Nos. 1767 and
1967, the majority ruled that circumstances surrounding the sale of
the land to petitioner Senolos had rendered that sale null and void.
The majority were here referring to the finding that when petitioner
Malabanan offered in October 1980 to sell the land involved to
respondent Gaw Ching at P5,000.00 per square meter, that land had
already been sold to petitioner Senolos as early as August 1979 for
only P1,176.48 per square meter. On the matter of the demolition of

In the instant Petitions for Certiorari, petitioners assail both the annulment of
the deed of sale and the grant of P350,000.00 worth of "moral, exemplary
and actual damages" to respondent Gaw Ching.
We believe that the Petitions must be granted.
I
The firmly settled rule is that strangers to a contract cannot sue either or both
of the contracting parties to annul and set aside that contract. Article 1397 of
the Civil Code embodies that rule in the following formulation:
Art. 1397. The action for the annulment of contracts may be
instituted by all who are thereby obliged principally or
subsidiarily. However, persons who are capable cannot
allege the incapacity of those with whom they contracted;
nor can those who exerted intimidation, violence, or undue
influence, or employed fraud, or caused mistake base their
action upon these flaws of the contract. (Emphasis supplied)
Article 1397 itself follows from Article 1311 of the Civil Code which
establishes the fundamental rule that:
Art. 1311. Contracts take effect only between the parties,
their assigns and heirs, except in case where the rights and
obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law. The heir
is not liable beyond the value of the property he received
from the decedent.
xxx xxx xxx
(Emphasis supplied)

64 | P a g e

As long ago as 1912, this Court in Ibanez v. Hongkong and

4
Shanghai Bank, pointed out that it is the existence of an interest in
a particular contract that is the basis of one's right to sue for
nullification of that contract and that essential interest in a given
contract is, in general, possessed only by one who is a party to the
contract. In Ibanez, Mr. Justice Torres wrote:
From these legal provisions it is deduced that it is the
interest had in a given contract, that is the determining
reason of the right which lies in favor of the party obligated
principally or subsidiarily to enable him to bring an action for
the nullity of the contract in which he intervened, and,
therefore, he who has no right in a contract is not entitled to
prosecute an action for nullity, for, according to the
precedents established by the courts, the person who is not
a party to a contract nor has any cause of action or
representation from those who intervened therein, is
manifestly without right of action and personality such as to
enable him to assail the validity of the contract. (Decisions of
the Supreme Court of Spain, of April 18, 1901, and
November 23, 1903, pronounced in cases requiring an
5
application of the preinserted article 1302 of the Civil Code.
Mr. Justice Torres went on to indicate a possible qualification to the
above general principle, that is, a situation where a non-party to a
contract could be allowed to bring an action for declaring that
contract null:
He who is not the party obligated principally or subsidiarily in
a contract may perhaps be entitled to exercise an action for
nullity, if he is prejudiced in his rights with respect to one of
the contracting parties; but, in order that such be the case, it
is indispensable to show the detriment which positively
would result to him from the contract in which he had no
intervention
xxx xxx xxx
(Emphasis supplied)
There is an important and clear, albeit implicit, limitation upon the
right of a person who is in fact injured by the very operation of a
contract between two (2) third parties to sue to nullify that contract:

65 | P a g e

that contract may be nullified only to the extent that such nullification
is absolutely necessary to protect the plaintiff's lawful rights. It may
be expected that in most instances, an injunction restraining the
carrying out of acts in fact injurious to the plaintiff's rights would be
sufficient and that there should be no need to set aside the contract
itself which is a res inter alios acta and which may have any number
of other provisions, implementation of which might have no impact at
all upon the plaintiff's rights and interests.
What is important for present purposes is that respondent Gaw Ching,
admittedly a stranger to the contract of sale of a piece of land between
petitioners Malabanan and Senolos inter se, does not fall within the possible
exception recognized in Ibanez v. Hongkong & Shanghai Bank. In the first
place, Gaw Ching had no legal right of preemption in respect of the house
and lot here involved. The majority opinion of the appellate court itself
explicitly found that the subject piece of land is locatedoutside the Urban
7
Land Reform Zones declared pursuant to P.D. No. 1517. Even assuming
for purposes of argument merely, that the land here involved was in fact
embraced in a declared Urban Land Reform Zone (which it was not), Gaw
Ching would still not have been entitled to a right of preemption in respect of
8
the land sold. In Santos v. Court of Appeals, this Court held that the
preemptive or redemptive rights of a lessee under P.D. No. 1517 exists only
in respect of the urban land under lease on which the tenant or lessee had
built his home and in which he had resided for ten (10) years or more and
that, in consequence, where both land and building belong to the lessor, that
preemptive or redemptive right was simply not available under the law.
Finally, we are unable to understand the respondent appellate court's view
that respondent Gaw Ching having been a long-time tenant of the property in
question, had acquired a preferred right to purchase that property. This
holding is simply bereft of any legal basis. We know of no law, outside the
Urban Land Reform Zone or P.D. No. 1517, that grants such a right to a
lessee no matter how long the period of the lease has been. If such right
9
existed at all, it could only have been created by contract; respondent Gaw
Ching does not, however, pretend that there had been such a contractual
stipulation between him and petitioners.
In the second place, assuming once again, for present purposes only, that
respondent Gaw Ching did have a preemptive right to purchase the land from
petitioner Malabanan (which he did not), it must be stressed that petitioner
Malabanan did thrice offer the land to Gaw Ching but the latter had
consistently refused to buy. Since Gaw Ching did not in fact accept the offer
to sell and did not buy the land, he suffered no prejudice, and could not have

suffered any prejudice, by the sale of the same piece of land to petitioner
Senolos. No fraud was thus worked upon him notwithstanding his insinuation
that the sale of the land to petitioner Senolos had preceded the offer of the
same piece of land to himself.
In the third place, and contrary to the holding of the majority appellate court
opinion, the fact that Gaw Ching had been lessee of the house and lot was
simply not enough basis for a right to bring an action to set aside the contract
of sale between the petitioners inter se. A lessee, it is elementary, cannot
attack the title of his lessor over the subject matter of the lease. 10 Moreover,
the lease contract between petitioner Malabanan and respondent Gaw Ching
must in any case be held to have lapsed when the leased house was
condemned and the order of demolition issued.
II
We consider next petitioners' claim that the appellate court erred grievously
in imposing upon them an award of P350,000.00 for "moral, exemplary and
actual damages" not only because petitioners had "indulged in inequitous
conduct to [respondent Gaw Ching's] prejudice" but also "for the unwarranted
demolition of the building by [petitioners] after the issuance of the cease and
desist order on October 30, 1981."
Here again, we are compelled to hold that the appellate court lapsed into
reversible error. The relevant conclusions of fact which the trial court arrived
at are set out in its decision in the following manner:
On the legality of the demolition necessarily raising the
question: (3) whether or not plaintiff was notified within a
reasonable period of time of the demolition, and
a fortioriwhether this admittedly exercise of police power, the
validity of which was already being determined by the Court
could be stopped by a pretenatural [sic] administrative order
from the office of the Assistant Secretary for Operation of the
MPWH brought about by an appeal by a person other than
the owner of the building, which office had not done anything
to immediately forestall the imminent injury to person and
damage to property. (Please seeP.D. 1096, Rule XII, Sec. 5
thereof).
In the first place, the claim of the plaintiff that the demolition
of the house rented by him came as a surprise, is fiercely
contradicted by his own evidence. A copy of the demolition

66 | P a g e

order is attached to the complaint as Annex "L", now marked

as Exhibit "9" for the defendant Senolos, unmistakably show
that plaintiff received a copy of the order of demolition from
the City Engineer's Office, approved by the Mayor, on
October 5, 1981.
Verily, the present action before the Court is procedurally
and substantially correct in abating a nuisance. This exercise
of police power is not only being cordoned sanitaired [sic] by
the doctrinal pronouncements, the provisions of Art. 482 in
relation to Art. 436 of the Civil Code, Sections 275 and 276
of the compilation of ordinances of the City of Manila but
also by Rule VII, par. 5 of the implementing Rules and
Regulations of the National Building Code of the Philippines
(P.D. 1096). Indeed, the latter law does not authorize any
person other than the owner, to appeal the order of the City
Engineer to the Ministry of Public Works and Highways. This
is the position espoused by the City Legal Officer of Manila
in defense of the City Engineer and the Mayor, in opposition
to the move of the plaintiff to dismiss the order of demolition
as improvidently issued.
The demolition was invariably a valid exercise of police
power which may be ordered done by the authorities or
caused to be done at the expense of the owner. The
exigency is made more demanding especially, the
demolition, when it was ordered stopped thru an order
inadvertently issued, as it was not as a consequence of an
appeal by the owner of the building, but by the lessee, was
during its last stages.
It therefore stands to reason that the order of demolition
which is unquestionably legal could not be stopped by an
inoperative administrative order, assuming that the appeal to
the MPWH could validly be filed by the lessee, as it was filed
only during the finishing touches of a demolition. Decidedly,
the move exude physiological features of delay. This is
compounded by the failure of the MPWH to act assertively,
which in a sense, could be interpreted as an admission that
the issuance of the order was inopportune.
On the claim for damages predicated on (4) whether or not
there was an indscriminate careless handling and pilferage

of the properties of the plaintiff, causing their loss or

destruction:
It is readily explained that between October 5, 1981 to
November 6,1981, plaintiff could have avoided the
misplaced fear, but assuming without having necessarily to
concede that he was not able to guard against an actual
demolition on November 6, 1981, rendering him so helpless,
and prompting him to just sit on the sidewalk and watch the
demolition team wreck the building indiscriminately, thereby
causing destruction and loss of his personal properties, such
as: (a) office equipment; (b) assorted tools; (c) machines; (d)
finished products; and (e) steel box containing jewelries. The
claim is almost too good to be true, considering first, that
these items were so huge that they could not be spirited
away without being noticed and, secondly; it has been
established that there was a policeman detailed to the
demolition scene from the start of the said demolition, to
whom he could have easily reported the matter, caused the
apprehension of the culprits, and prevent the loss of his
personal properties, thirdly, he could have grabbed the steel
box containing jewelries if this were the last thing he would
have done. Waiting idly by the sidewalk and watching your
properties pilfered by persons whom you could have
successfully identified at the time and referring the matter to
the policeman on duty, which plaintiff did not do, is certainly
against the natural order of things and the legal presumption
that a person takes great care of his concern. Plaintiff
strongly relies on the alleged illegal and indiscriminate
destruction of his properties as basis for his claim for
damages. Truth to tell, there was no suddenness or
indiscriminate destruction of plaintiffs property nor pilferage
thereof, as alleged, in the demolition of the house owned by
the defendant. The order was lawful as it was an abatement
of a nuisance and the dismantling of the house owned by
defendant Senolos could only be conceived as having been
carried out in a manner consistent only with utmost care.
Conversely, its indiscriminate destruction is contrary to the
interest of the defendant Senolos as it is a truism that every
bit of useful material should be preserved either for use of, or
for profit of the owner. It would be sheer folly to assume that
the demolition team would have taken a selective method of
care for the still serviceable materials of the house and a
destructive stance for the properties of the occupants.

67 | P a g e

Understandably, the unorthodox position taken by plaintiff

would not only lose his residence but also his place of
business.
By and large, the basis for the claim for damages do not
physically nor imaginatively exist, for it has defied reason
11
and common sense.
We note that the majority opinion chose to disregard the above
conclusions of fact of the trial court and instead quoted extensively
from respondent Gaw Ching's brief and, presumably relied upon
such brief The majority opinion, however, failed to indicate why it
preferred Gaw Ching's version of the facts set out in his brief over
the trial court's findings. No indication was offered where the trial
court had fallen into error or what evidence had been
misapprehended by it. In this situation, the Court considers that it
must go back to the trial court's findings of fact in line with the timehonored rule that such findings are entitled to great respect from
appellate courts since the trial court judge had the opportunity to
examine the evidence directly and to listen to the witnesses and
observe their demeanor while testifying.
It appears therefore that firstly, the order of condemnation or demolition had
been issued by the proper authorities which order was valid and subsisting at
the time the demolition was actually carried out. Secondly, under Section 5.3
of Rule VII entitled "Abandonment/Demolition of Buildings" of the Rules and
Regulations Implementing the National Building Code of the Philippines (P.D.
No. 1096, as amended dated 19 February 1977), an order for demolition may
be appealed, by the owner of the building or installation to be demolished, to
the Secretary of Public Works and Highways. In the case at bar, it was
respondent Gaw Ching, a lessee merely of the building condemned that
sought to block the implementation of the demolition order. It does not even
appear from the record whether or not Gaw Ching actually filed a formal
appeal to the Secretary, even though he was not entitled to do so. What does
12
appear from the record is that Gaw Ching's counsel, Atty. Sugay, was able
to obtain a letter dated 6 November 1981 from the Office of the City Engineer
and Building Official, enclosing a xerox copy of a letter from the Assistant
Secretary for Operations, Ministry of Public Works and Highways, "directing
this office to hold the demolition in abeyance." This letter, which
did not purport to set aside the order of demolition, was served upon the
demolition team on site while the demolition was in progress. After some
13
hesitation, the demolition was in fact stopped.

It is worth noting that officials from the Office of the City Engineer, City of
Manila, testified that it was not "normal practice to receive an order from the
Ministry of Public Works and Highways stopping demolitions."
In the fourth place, respondent Gaw Ching, in the action that he had filed
before the Regional Trial Court of Manila to set aside the contract of sale
between petitioners Malabanan and Senolos, had sought preliminary
injunction precisely to restrain the implementation of the order for demolition.
That application for preliminary injunction was denied by the trial court and
the order for demolition was implemented only after such denial. Thus, there
was no subsisting court order restraining the demolition at the time such
demolition was carried out.
In the fifth place, Gaw Ching had ample notice of the demolition order and
had adequate time to remove his belongings from the premises if he was
minded to obey the order for demolition. He chose not to obey that order. If
he did suffer any lossesthe trial court did not believe his claims that he
didhe had only himself to blame.
ACCORDINGLY, The Court Resolved to GRANT the Petition and to
REVERSE and SET ASIDE the Decision of the then Intermediate Appellate
Court dated 31 January 1986 and its Resolution dated 5 June 1986, in ACG.R. CV Nos. 05136-05137. The Decision of the trial court dated 10 August
1984 in consolidated Civil Cases Nos. R-81-416 and R-82-6798, is hereby
REINSTATED. No pronouncement as to costs.
Fernan C.J., Gutierrez, Jr. and Corts, JJ., concur.

68 | P a g e

G.R. No. L-25134

October 30, 1969

THE
CITY
OF
BACOLOD, plaintiff-appellee,
vs.
SAN MIGUEL BREWERY, INC., defendant-appellant.
First Assistant City Fiscal Raymundo O. Rallos for plaintiff-appellee.
Picazo and Agcaoili for defendant-appellant.
BARREDO, J.:

the plaintiff herein the P0.01 bottling tax per case of soft drinks
thereby refusing to pay the P0.03 bottling tax per case of soft drinks
which amounted to P26,306.54 at P0.02 per case of soft drinks such
as coca cola and tru orange manufactured or bottled by said
company as per statement submitted by the Assistant City Treasurer
of Bacolod City herewith attached as Annex "C" of this complaint;
and praying
... that judgment be rendered for the plaintiff:

An appeal from the decision of the Court of First Instance of Negros

Occidental in its Civil Case No. 7355, ordering the San Miguel Brewery, Inc.
to pay to the City of Bacolod the sum of P36,519.10, representing surcharges
on certain fees which, under existing ordinances of the City of Bacolod, the
San Miguel Brewery should have paid quarterly to the treasurer of the said
city for and/or during the period from July, 1959 to December, 1962, but
which were paid only on April 23, 1963.

"(a) Ordering the defendant to pay the plaintiff the bottling

taxes of P0.03 per case of soft drinks as provided for in
Section 1, Ordinance No. 66, Series of 1949, as amended by
Ordinance No. 150, Series of 1959, as well as the sum of
P26,306.54 representing unpaid bottling taxes due with legal
rate of interest thereon from the date of the filing of this
complaint until complete payment thereof; ... costs, etc."'

On February 17, 1949, the City Council of Bacolod passed Ordinance No.
66, series of 1949 imposing upon "any person, firm or corporation engaged
in the manufacturer bottling of coca-cola, pepsi cola, tru orange, lemonade,
and other soft drinks within the jurisdiction of the City of Bacolod, ... a fee of
ONE TWENTY-FOURTH (1/24) of a centavo for every bottle thereof," plus "a
surcharge of 2% every month, but in no case to exceed 24% for one whole
year," upon "such local manufacturers or bottler above-mentioned who will
be delinquent on any amount of fees due" under the ordinance.

In due time, appellant filed its answer. This was followed by a stipulation of
facts between the parties, whereupon, the court rendered judgment on
November 12, 1960; with the following dispositive portion:

In 1959, this ordinance was amended by Ordinance No. 150, series of 1959,
by increasing the fee to "one-eighth (1/8) of a centavo for every bottle
thereof." In other words, the fee was increased from P0.01 to P0.03 per case
of soft drinks. Appellant refused to pay the additional fee and challenged the
validity of the whole ordinance.

Appellant appealed from the said decision to this Court where it pressed the
question of the invalidity of the abovementioned taxing ordinances. In that
appeal (G.R. No. L-18290), however, this Court affirmed the decision
appealed from and upheld the constitutionality of the questioned ordinances
and the authority of the appellee to enact the same. For reasons not extant in
the record, it was already after this decision had become final when appellee
moved for the reconsideration thereof, praying that the same be amended so
as to include the penalties and surcharges provided for in the ordinances.
Naturally, the said motion was denied, for the reason that "the decision is
already final and may not be amended." When execution was had before the
lower court, the appellee again sought the inclusion of the surcharges
referred to; and once again the move was frustrated by the Court of First
Instance of Negros Occidental which denied the motion, as follows:

Under date of March 23, 1960, appellee sued appellant in Civil Case No.
5693 of the Court of First Instance of Negros Occidental, with the
corresponding Complaint alleging, inter alia:
3. That the defendant, Manager of the San Miguel Brewery,
Bacolod Coca Cola Plant, Bacolod Branch since the approval of
Ordinance No. 66, Series of 1949 as amended by Ordinance No.
150, Series of 1959, which took effect on July 1, 1959, only paid to

69 | P a g e

WHEREFORE, San Miguel Brewery Inc. is ordered to pay to the

plaintiff the sum of P26,306.54 and the tax at the rate of three
centavos per case levied in Ordinance No. 66 and 150 from March,
1960, and thereafter. Costs against the defendant.

Acting upon the motion dated October 24, 1963, filed by the
Assistant City Fiscal, Raymundo Rallos, counsel for the plaintiff, and
the opposition thereto filed by attorneys for the defendants dated
November 9, 1963, as well as the reply to the opposition of counsel
for the defendants dated December 5, 1963, taking into
consideration that the decision of this Court as affirmed by the
Supreme Court does not specifically mention the alleged surcharges
claimed by the plaintiff-appellee, the Court hereby resolves to deny,
as it hereby denies, the aforesaid motion, for not being meritorious.
Failing thus in its attempt to collect the surcharge provided for in the
ordinances in question, appellee filed a second action (Civil Case No. 7355)
to collect the said surcharges. Under date of July 10, 1964, it filed the
corresponding complaint before the same Court of First Instance of Negros
Occidental alleging, inter alia, that:
6. That soon after the decision of the Honorable Supreme Court
affirming the decision of the Hon. Court, the defendant herein on
April 23, 1963 paid to the City of Bacolod, the amount of ONE
HUNDRED FIFTY SIX THOUSAND NINE HUNDRED TWENTY
FOUR PESOS and TWENTY CENTAVOS (P156,924.20) as taxes
from July, 1959 to December, 1962 in compliance with the provision
of Section 1, Ordinance No. 66, Series of 1949, as amended by
Ordinance No. 150, Series of 1959, which corresponds to the taxes
due under said section in the amount of P0.03 per case of soft soft
drinks manufactured by the defendant, but refused and still
continued refusing to pay the surcharge as provided for under
Section 4 of Ordinance No. 66, Series of 1949, as amended by
Ordinance No. 150, Series of 1959, which reads as follows:
"SEC. 4 A surcharge of 2% every month, but in no case to
exceed 24% for one whole year, shall be imposed on such
local manufacturer or bottlers above mentioned who will be
delinquent on any amount of fees under the ordinance."
which up to now amounted to THIRTY SIX THOUSAND FIVE
HUNDRED
NINETEEN
PESOS
AND
TEN
CENTAVOS
(P36,519.10), as shown by the certified statement of the office of the
City Treasurer of Bacolod City herewith attached as Annex "E" and
made an integral part of this complaint;
7. That the said interest and/or penalties to the said bottling taxes
which defendant refused to pay have long been overdue;

70 | P a g e

and again praying

... that judgment be rendered for the plaintiff:
(a) Ordering the defendant to pay the penalty and/or interest
therein Section 4 of Ordinance No. 66, Series of 1949, as
amended by Ordinance No. 150, Series of 1959 the total
amount of THIRTY SIX THOUSAND FIVE HUNDRED
NINETEEN PESOS and TEN CENTAVOS (P36,519.10),
representing the surcharges from August, 1959 to
December, 1962, inclusive, and the 24% penalty computed
as of June 30, 1964, from the amount of P152,162.90, with
legal rate of interest thereon from the date of the filing of this
complaint until complete payment thereof;" plus costs, etc.
On July 24, 1964, appellant filed a motion to dismiss the case on the grounds
that: (1) the cause of action is barred by a prior judgment, and (2) a party
may not institute more than one suit for a single cause of action. This motion
was denied by the court a quo in its order dated August 22, 1964; so
appellant filed its answer wherein it substantially reiterated, as affirmative
defenses, the above-mentioned grounds of its motion to dismiss. Thereafter,
the parties submitted the case for judgment on the pleadings, whereupon,
the court rendered judgment on March 11, 1965 with the following dispositive
portion: .
IN VIEW THEREOF, judgment is hereby rendered ordering the
defendant San Miguel Brewery, Inc. to pay to the plaintiff the sum of
P36,519.10 representing the surcharges as provided in section 4 of
Ordinance 66, series of 1949 of the City of Bacolod. No costs.
Appellants moved for reconsideration but its motion was denied, hence, the
instant appeal.
Appellant has only one assignment of error, to wit:
THE LOWER COURT ERRED IN FINDING THE APPELLANT
LIABLE TO THE APPELLEE FOR THE SUM OF P36,519.10
REPRESENTING SURCHARGES AS PROVIDED IN TAX
ORDINANCE NO. 66, SERIES OF 1949, AS AMENDED, OF THE
CITY OF BACOLOD.

Under this, it argues that the action of appellee cannot be maintained

because (1) a party may not institute more than one suit for a single cause of
action; and (2) appellee's action for recovery of the surcharges in question is
barred by prior judgment.
We find appellant's position essentially correct. There is no question that
appellee split up its cause of action when it filed the first complaint on March
23, 1960, seeking the recovery of only the bottling taxes or charges plus
legal interest, without mentioning in any manner the surcharges.
The rule on the matter is clear. Sections 3 and 4 of Rule 2 of the Rules of
Court of 1940 which were still in force then provided:
SEC. 3. Splitting a cause of action, forbidden. A single cause of
action cannot be split up into two or more parts so as to be made the
subject of different complaints. .
SEC. 4. Effect of splitting. If separate complaints were brought for
different parts of a single cause of action, the filing of the first may be
pleaded in abatement of the others, and a judgment upon the merits
in either is available as a bar in the others.
Indeed, this rule against the splitting up of a cause of action is an old one. In
fact, it preceded the Rules of Court or any statutory provision. In Bachrach
1
Motor Co., Inc. vs. Icarangal et al., this Court already explained its meaning,
origin and purpose, thus:
But, even if we have no such section 708 of our Code of Civil
Procedure, or section 59 of the Insolvency Law, we have still the rule
against splitting a single cause of action. This rule, though not
contained in any statutory provision, has been applied by this court in
all appropriate cases. Thus, in Santos vs. Moir (36 Phil. 350, 359),
we said: "It is well recognized that a party cannot split a single cause
of action into parts and sue on each part separately. A complaint for
the recovery of personal property with damages for detention states
a single cause of action which cannot be divided into an action for
possession and one for damages; and if suit is brought for
possession only a subsequent action cannot be maintained to
recover the damages resulting from the unlawful detention." In Rubio
de Larena vs. Villanueva (53 Phil. 923, 927), we reiterated the rule
by stating that "... a party will not be permitted to split up a single
cause of action and make it the basis for several suits" and that
when a lease provides for the payment of the rent in separate

71 | P a g e

installments, each installment constitutes an independent cause of

action, but when, at the time the complaint is filed, there are several
installments due, all of them constitute a single cause of action and
should be included in a single complaint, and if some of them are not
so included, they are barred. The same doctrine is stated inLavarro
vs. Labitoria (54 Phil. 788), wherein we said that "a party will not be
permitted to split up a single cause of action and make it a basis for
several suits" and that a claim for partition of real property as well as
for improvements constitutes a single cause of action, and a
complaint for partition alone bars a subsequent complaint for the
improvements. And in Blossom & Co. vs. Manila Gas
Corporation (55 Phil. 226-240), we held that "as a general rule a
contract to do several things at several times is divisible in its nature,
so as to authorize successive actions; and a judgment recovered for
a single breach of a continuing contract or covenant is no bar to suit
for a subsequent breach thereof. But where the covenant or contract
is entire, and the breach total, there can be only one action, and
plaintiff must therein recover all his damages.
The rule against splitting a single cause of action is intended "to
prevent repeated litigation between the same parties in regard to the
same subject of controversy; to protect defendant from unnecessary
vexation; and to avoid the costs and expenses incident to numerous
suits." (1 C.J. 1107) It comes from that old maximnemo debet bis
vexare pro una et eadem causa (no man shall be twice vexed for
one and the same cause). (Ex parte Lange, 18 Wall 163, 168; 21
Law Ed. 872; also U.S. vs. Throckmorton, 98 U.S. 61; 25 Law Ed.
93). And it developed, certainly not as an original legal right of the
defendant, but as an interposition of courts upon principles of public
policy to prevent inconvenience and hardship incident to repeated
and unnecessary litigations. (1 C. J. 1107).
In the light of these precedents, it cannot be denied that appellant's failure to
pay the bottling charges or taxes and the surcharges for delinquency in the
payment thereof constitutes but one single cause of action which under the
above rule can be the subject of only one complaint, under pain of either of
them being barred if not included in the same complaint with the other. The
error of appellee springs from a misconception or a vague comprehension of
the elements of a cause of action. The classical definition of a cause of
action is that it is "a delict or wrong by which the rights of the plaintiff are
violated by the defendant." Its elements may be generally stated to be (1) a
right existing in favor of the plaintiff; (2) a corresponding obligation on the
part of the defendant to respect such right; and (3) an act or omission of the
plaintiff which constitutes a violation of the plaintiff's right which defendant

had the duty to respect. For purposes, however, of the rule against splitting
up of a cause of action, a clearer understanding can be achieved, if together
with these elements, the right to relief is considered.
In the last analysis, a cause of action is basically an act or an omission or
several acts or omissions. A single act or omission can be violative of various
rights at the same time, as when the act constitutes juridically a violation of
several separate and distinct legal obligations. This happens, for example,
when a passenger of a common carrier, such as a taxi, is injured in a
collision thereof with another vehicle due to the negligence of the respective
drivers of both vehicles. In such a case, several rights of the passenger are
violated, inter alia, (1) the right to be safe from the negligent acts of either or
both the drivers under the law on culpa-acquiliana or quasi-delict; (2) the
right to be safe from criminal negligence of the said drivers under the penal
laws; and (3) the right to be safely conducted to his destination under the
contract of carriage and the law covering the same, not counting anymore
the provisions of Article 33 of the Civil Code. The violation of each of these
rights is a cause of action in itself. Hence, such a passenger has at least
three causes of action arising from the same act. On the other hand, it can
happen also that several acts or omissions may violate only one right, in
which case, there would be only one cause of action. Again the violation of a
single right may give rise to more than one relief. In other words, for a single
cause of action or violation of a right, the plaintiff may be entitled to several
reliefs. It is the filing of separate complaints for these several reliefs that
constitutes splitting up of the cause of action. This is what is prohibited by the
rule.
In the case at bar, when appellant failed and refused to pay the difference in
bottling charges from July 1, 1959, such act of appellant in violation of the
right of appellee to be paid said charges in full under the Ordinance, was one
single cause of action, but under the Ordinance, appellee became entitled,
as a result of such non-payment, to two reliefs, namely: (1) the recovery of
the balance of the basic charges; and (2) the payment of the corresponding
surcharges, the latter being merely a consequence of the failure to pay the
former. Stated differently, the obligation of appellant to pay the surcharges
arose from the violation by said appellant of the same right of appellee from
which the obligation to pay the basic charges also arose. Upon these facts, it
is obvious that appellee has filed separate complaints for each of two reliefs
related to the same single cause of action, thereby splitting up the said cause
of action.
The trial court held that inasmuch as there was no demand in the complaint
in the first case for the payment of the surcharges, unlike in the case

72 | P a g e

of Collector of Internal Revenue vs. Blas Gutierrez, et al., G.R. No. L-13819.
May 25, 1960, wherein there was such a demand, there is no bar by prior
judgment as to said surcharges, the same not having been "raised as an
issue or cause of action in Civil Case No. 5693." This holding is erroneous.
Section 4 of Rule 2, above-quoted, is unmistakably clear as to the effect of
the splitting up of a cause of action. It says, "if separate complaints are
brought for different parts (reliefs) of a single cause of action, the filing of the
first (complaint) may be pleaded in abatement of the others, and a judgment
upon the merits in either is available as a bar in the others." In other words,
whenever a plaintiff has filed more than one complaint for the same violation
of a right, the filing of the first complaint on any of the reliefs born of the said
violation constitutes a bar to any action on any of the other possible reliefs
arising from the same violation, whether the first action is still pending, in
which event, the defense to the subsequent complaint would be litis
pendentia, or it has already been finally terminated, in which case, the
2
defense would be res adjudicata. Indeed, litis pendentia and res adjudicata,
on the one hand, and splitting up a cause of action on the other, are not
separate and distinct defenses, since either of the former is by law only the
result or effect of the latter, or, better said, the sanction for or behind it.
It thus results that the judgment of the lower court must be, as it is hereby,
reversed and the complaint of appellee is dismissed. No costs.

G.R. No. L-82330 May 31, 1988

THE DIAL CORPORATION, C & T REFINERY INC., NALIN Sdn. Bhb.
BERISFORD COMMODITIES, LTD., and PACIFIC MOLASSES
COMPANY, petitioners,
vs.
THE HON. CLEMENTE M. SORIANO, Presiding Judge, Regional Trial
Court, Branch 3, MANILA PUBLIC RESPONDENT and IMPERIAL
VEGETABLE OIL COMPANY, INC., respondents.
Guerrero & Torres Law Office for petitioners.
Abad & Associates for respondents.

GRIO-AQUINO, J.:
The petitioners are foreign corporations organized and existing under the
laws of the United States, the United Kingdom, and Malaysia, are not
domiciled in the Philippines, nor do they have officers or agents, place of
business, or property in the Philippines; they are not licensed to engage, and
are not engaged, in business here. The respondent Imperial Vegetable Oil
Company, Inc. (or "IVO" for brevity) is a Philippine corporation which through
its president, Dominador Monteverde, had entered into several contracts for
the delivery of coconut oil to the petitioners. Those contracts stipulate that
any dispute between the parties will be settled through arbitration under the
rules of either the Federation of Oils Seeds and Fats Association (FOSFA) or
the National Institute of Oil Seed Products (NIOP). Because IVO defaulted
under the contracts, the petitioners and 15 others, initiated arbitration
proceedings abroad, and some have already obtained arbitration awards
against IVO.
On April 8, 1987, IVO filed a complaint for injunction and damages against
nineteen (19) foreign coconut oil buyers including the petitioners, with whom
its president, Dominador Monteverde, had entered into contracts for the
delivery of coconut oil (Civil Case No. 87-40166, RTC Manila entitled
"Imperial Vegetable Oil Co., Inc. vs. Dial Corporation et al."). IVO repudiated
Monteverde's contracts on the grounds that they were mere "paper trading in
futures" as no actual delivery of the coconut oil was allegedly intended by the
parties; that the Board of Directors of IVO convened in a special meeting on
March 21, 1987 and removed Dominador Monteverde from his position as

73 | P a g e

president of the corporation, named in his place, Rodrigo Monteverde, and

disowned Dominador Monteverde's allegedly illegal and unauthorized acts;
that the defendants have allegedly "harassed" IVO to comply with
Dominador's contracts and to come to a settlement with them. IVO prayed for
the issuance of a temporary restraining order or writ of preliminary injunction
to stop the defendants from harassing IVO with their insistent demands to
recognize the contracts entered into by Dominador Monteverde and from
portraying the IVO as one that defaults on its contracts and obligations and
has fallen into bad times and from interfering with IVO's normal conduct of
business. IVO also prayed that the defendants pay it moral damages of P5
million, actual damages of P10 million, exemplary damages of P5 million,
attorney's fees of P1 million, P3,000 per appearance of counsel, and
litigation expenses.
On motion of IVO, respondent Judge authorized it to effect extraterritorial
service of summons to all the defendants through DHL Philippines
corporation (Annex B). Pursuant to that order, the petitioners were served
with summons and copy of the complaint by DHL courier service.
On April 25, 1987, without submitting to the court's jurisdiction and only for
the purpose of objecting to said jurisdiction over their persons, the petitioners
filed motions to dismiss the complaint against them on the ground that the
extraterritorial service of summons to them was improper and that hence the
court did not acquire jurisdiction over them. On December 15, 1987, the court
denied their motions to dismiss and upheld the validity of the extraterritorial
service of summons to them on the ground that "the present action relates to
property rights which lie in contracts within the Philippines, or which
defendants claim liens or interests, actual or inchoate, legal or equitable (par.
2, complaint). And one of the reliefs demanded consists, wholly or in part, in
excluding the defendants from any interest in such property for the reason
that their transactions with plaintiff's former president are ultra vires."
Furthermore, "as foreign corporations doing business in the Philippines
without a license, they opened themselves to suit before Philippine courts,
pursuant to Sec. 133 of the Corporation Code of the Philippines." (Annex H)
The petitioners' motions for reconsideration of that order were also denied by
the court (Annex M), hence this petition for certiorari with a prayer for the
issuance of a temporary retraining order which We granted.
The petition is meritorious.
Section 17, Rule 14 of the Rules of Court provides:

Section 17. Extraterritorial service. When the defendant

does not reside and is not found in the Philippines and the
action affects the personal status of the plaintiff or relates to,
or the subject of which is, property within the Philippines, in
which the defendant has or claims a lien or interest, actual or
contingent, or in which the relief demanded consists, wholly
or in part, in excluding the defendant from any interest
therein, or the property of the defendant has been attached
within the Philippines, service may, by leave of court, be
effected out of the Philippines by personal service as under
section 7; or by publication in a newspaper of general
circulation in such places and for such time as the court may
order, in which case a copy of the summons and order of the
court shall be sent by registered mail to the last known
address of the defendant, or in any other manner the court
may deem sufficient. Any order granting such leave shall
specify a reasonable time, which shag not be less than sixty
(60) days after notice, within which the defendant must
answer.
Only in four (4) instances is extraterritorial service of summons proper,
namely: "(1) when the action affects the personal status of the plaintiffs; (2)
when the action relates to, or the subject of which is, property within the
Philippines, in which the defendant has or claims a lien or interest, actual or
contingent; (3) when the relief demanded in such action consists, wholly or in
part, in excluding the defendant from any interest in property located in the
Philippines; and (4) when the defendant non-resident's property has been
attached within the Philippines" (De Midgely vs. Fernandos, 64 SCRA 23).
The complaint in this case does not involve the personal status of the
plaintiff, nor any property in the Philippines in which the defendants have or
claim an interest, or which the plaintiff has attached. The action is purely an
action for injunction to restrain the defendants from enforcing against IVO
("abusing and harassing") its contracts for the delivery of coconut oil to the
defendants, and to recover from the defendants P21 million in damages for
such "harassment." It is clearly a personal action as well as an
action in personam, not an action in rem or quasi in rem. "An action in
personam is an action against a person on the basis of his personal liability,
while an action in remedies is an action against the thing itself, instead of
against the person." (Hernandez vs. Rural Bank of Lucena, Inc., 76 SCRA
85). A personal action is one brought for the recovery of personal property,
for the enforcement of some contract or recovery of damages for its breach,
or for the recovery of damages for the commission of an injury to the person

74 | P a g e

or property (Hernandez vs. Development Bank of the Philippines, 71 SCRA

292).<re||an1w>
As Civil Case No. 87-40166 is a personal action, personal or substituted
service of summons on the defendants, not extraterritorial service, is
necessary to confer jurisdiction on the court. The rule is explained in Moran's
Comments on the Rules of Court thus:
As a general rule, when the defendant is not residing and is
not found in the Philippines, the Philippine courts cannot try
any case against him because of the impossibility of
acquiring jurisdiction over his person unless he voluntarily
appears in court. But, when the action affects the personal
status of the plaintiff residing in the Philippines, or is
intended to seize or dispose of any property, real or
personal, of the defendant located in the Philippines, it may
be validly tried by the Philippine courts, for then, they have
jurisdiction over the res, i.e., the personal status of the
plaintiff or the property of the defendant and their jurisdiction
over the person of the non-resident defendant is not
essential. Venue in such cases may be laid in the province
where the property of the defendant or a part thereof
involved in the litigation is located. (5 Moran's Comments on
the Rules of Court, 2nd Ed., p. 105.)
In an action for injunction, extraterritorial service of summons and complaint
upon the non-resident defendants cannot subject them to the processes of
the regional trial courts which are powerless to reach them outside the region
over which they exercise their authority (Sec. 3-a, Interim Rules of Court;
Sec. 21, subpar. 1, B.P. Blg. 129). Extraterritorial service of summons will not
confer on the court jurisdiction or power to compel them to obey its orders.
Neither may the court by extraterritorial service of summons acquire
jurisdiction to render and enforce a money judgment against a non-resident
defendant who has no property in the Philippines for "the fundamental rule is
that jurisdiction in personam over non-residents, so as to sustain a money
judgment, must be based upon personal service within the state which
renders the judgment "(Boudard vs. Tait, 67 Phil. 170, 174).
Respondents' contention that "the action below is related to property within
the Philippines, specifically contractual rights that petitioners are enforcing
against IVO" is specious for the "contractual rights" of the petitioners are not
property found in the Philippines for the petitioners have not filed an action in

the local courts to enforce said rights. They have not submitted to the
jurisdiction of our courts.
The lower court invoked Section 33 of the Corporation Code which provides
that a "foreign corporation transacting business in the Philippines without a
license may be sued or proceeded against before Philippine courts or
administrative tribunal on any valid cause of action recognized under
Philippine laws." It assumed that the defendants (herein petitioners) are
doing business in the Philippines, which allegation the latter denied. Even if
they can be considered as such, the Corporation Code did not repeal the
rules requiring proper service of summons to such corporations as provided
in Rule 14 of the Rules of Court and Section 128 of the Corporation Code.
The respondent court's finding that, by filing motions to dismiss, the
petitioners hypothetically admitted the allegations of the complaint that they
are doing business in the Philippines without any license, and that they may
be served with summons and other court processes through their agents or
representatives enumerated in paragraph 2 of the complaint, is contradicted
by its order authorizing IVO to summon them by extraterritorial service, a
mode of service which is resorted to when the defendant is not found in the
Philippines, does not transact business here, and has no resident agent on
whom the summons may be served.
WHEREFORE, We hold that the extraterritorial service of summons on the
petitioners was improper, hence null and void. The petition for certiorari is
granted.
The orders dated April 24, 1987 (Annex B) and December 15, 1987 (Annex
H) of the respondent Judge are hereby set aside. The complaint in Civil Case
No. 87-40166 is hereby dismissed as against the petitioners for failure of the
court to acquire jurisdiction over them.
SO ORDERED.

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G.R. No. L-24772

May 27, 1968

RUPERTO
G.
CRUZ,
ET
AL., plaintiffs-appellees,
vs.
FILIPINAS INVESTMENT and FINANCE CORPORATION, defendantappellant.
Villareal, Almacen, Navarra and Associates for plaintiffs-appellees.
Sycip, Salazar, Luna, Manalo and Feliciano for defendant-appellant.
REYES, J.B.L., J.:
Appeal interposed by Filipinas Investment & Finance Corporation from the
decision of the Court of First Instance of Rizal (Quezon City) in Civil Case
No. Q-7949.1vvphi1.nt
In the action commenced by Ruperto G. Cruz and Felicidad V. Vda. de
Reyes in the Court of First Instance of Rizal (Civil Case No. Q-7949), for
cancellation of the real estate mortgage constituted on the land of the latter 1
in favor of defendant Filipinas Investment & Finance Corporation (as
assignee of the Far East Motor Corporation), the parties submitted the case
for decision on the following stipulation of facts:
1. Their personal circumstances and legal capacities to sue and be
sued;
2. That on July 15, 1963, plaintiff Ruperto G. Cruz purchased on
installments, from the Far East Motor Corporation, one (1) unit of
Isuzu Diesel Bus, described in the complaint, for P44,616.24,
Philippine Currency, payable in installments of P1,487.20 per month
for thirty (30) months, beginning October 22, 1963, with 12 % interest
per annum, until fully paid. As evidence of said indebtedness, plaintiff
Cruz executed and delivered to the Far East Motor Corporation a
negotiable promissory note in the sum of P44,616.24, ...;

agreed to give, additional security for his obligation besides the

chattel mortgage, Annex "B"; that said additional security was given
by plaintiff Felicidad Vda. de Reyes in the form of SECOND
MORTGAGE on a parcel of land owned by her, together with the
building and
5. That said land has an area of 68,902 square meters, more or less,
and covered by Transfer Certificate of Title No. 36480 of the Registry
of Deeds of Bulacan in the name of plaintiff Mrs. Reyes; and that it
was at the time mortgaged to the Development Bank of the
Philippines to secure a loan of P2,600.00 obtained by Mrs. Reyes
from that bank;
6. That also on July 15, 1963, the Far East Motor Corporation for
value received indorsed the promissory note and assigned all its
rights and interest in the Deeds of Chattel Mortgage and in the Deed
of Real Estate Mortgage (Annexes "A", "B" and "B-l") to the
defendant, Filipinas Investment & Finance Corporation, with due
notice of such assignment to the plaintiffs...;
7. That plaintiff Cruz defaulted in the payment of the promisory note
(Annex "A") ; that the only sum ever paid to the defendant was Five
Hundred Pesos (P500.00) on October 2, 1963, which was applied as
partial payment of interests on his principal obligation; that,
notwithstanding defendant's demands, Cruz made no payment on
any of the installments stipulated in the promissory note;
8. That by reason of Cruz's default, defendant took steps to foreclose
the chattel mortgage on the bus; that said vehicle had been
damaged in an accident while in the possession of plaintiff Cruz;
9. That at the foreclosure sale held on January 31, 1964 by the
Sheriff of Manila, the defendant was the highest bidder, defendant's
bid being for Fifteen Thousand Pesos (P15,000.00)...;

3. That to secure the payment of the promissory note, Annex "A",

Cruz executed in favor of the seller, Far East Motor Corporation, a
chattel mortgage over the aforesaid motor vehicle...;

10. That the proceeds of the sale of the bus were not sufficient to
cover the expenses of sale, the principal obligation, interests, and
attorney's fees, i.e., they were not sufficient to discharge fully the
indebtedness of plaintiff Cruz to the defendant;

4. That as no down payment was made by Cruz, the seller, Far East
Motor Corporation, on the very improvements thereon, in San
Miguel, Bulacan...; same date, July 15, 1963, required and Cruz

11. That on February 12, 1964, preparatory to foreclosing its real

estate mortgage on Mrs. Reyes' land, defendant paid the mortgage

76 | P a g e

indebtedness of Mrs. Reyes to the Development Bank of the

Philippines, in the sum of P2,148.07, the unpaid balance of said
obligation...;

There is no controversy that, involving as it does a sale of personal property

on installments, the pertinent legal provision in this case is Article 1484 of the
2
Civil Code of the Philippines, which reads:

12. That pursuant to a provision in the real estate mortgage contract,

authorizing the mortgagee to foreclose the mortgage judicially or
extra-judicially, defendant on February 29, 1964 requested the
Provincial Sheriff of Bulacan to take possession of, and sell, the land
subject of the Real Estate Mortgage, Annex "B-1", to satisfy the sum
of P43,318.92, the total outstanding obligation of the plaintiffs to the
defendant, as itemized in the Statement of Account, which is made a
part hereof as Annex "F"...;

ART. 1484. In a contract of sale of personal property the price of

which is payable in installments, the vendor may exercise any of the
following remedies:

13. That notices of sale were duly posted and served to the
Mortgagor, Mrs. Reyes, pursuant to and in compliance with the
requirements of Act 3135...;
14. That on March 20, 1964, plaintiff Reyes through counsel, wrote a
letter to the defendant asking for the cancellation of the real estate
mortgage on her land, but defendant did not comply with such
demand as it was of the belief that plaintiff's request was without any
legal basis;
15. That at the request of the plaintiffs, the provincial Sheriff of
Bulacan held in abeyance the sale of the mortgaged real estate
pending the result of this action.
Passing upon the issues which, by agreement of the parties, were limited to
(1) "Whether defendant, which has already extrajudicially foreclosed the
chattel mortgage executed by the buyer, plaintiff Cruz, on the bus sold to him
on installments, may also extrajudicially foreclose the real estate mortgage
constituted by plaintiff Mrs. Reyes on her own land, as additional security, for
the payment of the balance of Cruz' Obligation, still remaining unpaid"; and
(2) whether or not the contending parties are entitled to attorney's fees the
court below, in its decision of April 21, 1965, sustained the plaintiffs' stand
and declared that the extrajudicial foreclosure of the chattel mortgage on the
bus barred further action against the additional security put up by plaintiff
Reyes. Consequently, the real estate mortgage constituted on the land of
said plaintiff was ordered cancelled and defendant was directed to pay the
plaintiffs attorney's fees in the sum of P200.00. Defendant filed the present
appeal raising the same questions presented in the lower court.

77 | P a g e

(1) Exact fulfillment of the obligation, should the vendee fail to pay;
(2) Cancel the sale, should the vendee's failure to pay cover two or
more installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendee's failure to pay cover two or more
installments. In this case, he shall have no further action against the
purchaser to recover any unpaid balance of the price. Any
agreement to the contrary shall be void.
The aforequoted provision is clear and simple: should the vendee or
purchaser of a personal property default in the payment of two or more of the
agreed installments, the vendor or seller has the option to avail of any one of
these three remedies either to exact fulfillment by the purchaser of the
obligation, or to cancel the sale, or to foreclose the mortgage on the
purchased personal property, if one was constituted. These remedies have
3
been recognized as alternative, not cumulative, that the exercise of one
4
would bar the exercise of the others. It may also be stated that the
established rule is to the effect that the foreclosure and actual sale of a
mortgaged chattel bars further recovery by the vendor of any balance on the
5
purchaser's outstanding obligation not so satisfied by the sale. And the
reason for this doctrine was aptly stated in the case of Bachrach Motor Co.
vs. Millan, supra, thus:
Undoubtedly the principal object of the above amendment 6 was to
remedy the abuses committed in connection with the foreclosure of
chattel mortgages. This amendment prevents mortgagees from
seizing the mortgaged property, buying it at foreclosure sale for a low
price and then bringing suit against the mortgagor for a deficiency
judgment. The almost invariable result of this procedure was that the
mortgagor found himself minus the property and still owing
practically the full amount of his original indebtedness. Under this
amendment the vendor of personal property, the purchase price of
which is payable in installments, has the right to cancel the sale or

foreclose the mortgage if one has been given on the property.

Whichever right the vendor elects he need not return to the
purchaser the amount of the installments already paid, "if there be in
agreement to that effect". Furthermore, if the vendor avails himself of
the right to foreclose the mortgage the amendment prohibits him
from bringing an action against the purchaser for the unpaid balance.
It is here agreed that plaintiff Cruz failed to pay several installments as
provided in the contract; that there was extrajudicial foreclosure of the chattel
mortgage on the said motor vehicle; and that defendant-appellant itself
bought it at the public auction duly held thereafter, for a sum less than the
purchaser's outstanding obligation. Defendant-appellant, however, sought to
collect the supported deficiency by going against the real estate mortgage
which was admittedly constituted on the land of plaintiff Reyes as additional
security to guarantee the performance of Cruz' obligation, claiming that what
is being withheld from the vendor, by the proviso of Article 1484 of the Civil
Code, is only the right to recover "against the purchaser", and not a recourse
to the additional security put up, not by the purchaser himself, but by a third
person.
There is no merit in this contention. To sustain appellant's argument is to
overlook the fact that if the guarantor should be compelled to pay the balance
of the purchase price, the guarantor will in turn be entitled to recover what
she has paid from the debtor vendee (Art. 2066, Civil Code) ; so that
ultimately, it will be the vendee who will be made to bear the payment of the
balance of the price, despite the earlier foreclosure of the chattel mortgage
given by him. Thus, the protection given by Article 1484 would be indirectly
subverted, and public policy overturned.
Neither is there validity to appellant's allegation that, since the law speaks of
"action", the restriction should be confined only to the bringing of judicial suits
or proceedings in court.
The word "action" is without a definite or exclusive meaning. It has been
invariably defined as
... the legal demand of one's right, or rights; the lawful demand of
one's rights in the form given by law; a demand of a right in a court of
justice; the lawful demand of one's right in a court of justice; the legal
and formal demand of ones rights from another person or party,
made and insisted on in a court of justice; a claim made before a
tribunal; an assertion in a court of justice of a right given by law; a
demand or legal proceeding in a court of justice to secure one's

78 | P a g e

rights; the prosecution of some demand in a court of justice; the

means by which men litigate with each other; the means that the law
has provided to put the cause of action into effect;.... (Gutierrez
Hermanos vs. De la Riva, 46 Phil. 827, 834-835).
Considering the purpose for which the prohibition contained in Article 1484
was intended, the word "action" used therein may be construed as referring
to any judicial or extrajudicial proceeding by virtue of which the vendor may
lawfully be enabled to exact recovery of the supposed unsatisfied balance of
the purchase price from the purchaser or his privy. Certainly, an extrajudicial
foreclosure of a real estate mortgage is one such proceeding.
The provision of law and jurisprudence on the matter being explicit, so that
this litigation could have been avoided, the award by the lower court of
attorney's fees to the plaintiff's in the sum of P200.00 is reasonable and in
order.
However, we find merit in appellant's complaint against the trial court's failure
to order the reimbursement by appellee Vda. de Reyes of the amount which
the former paid to the Development Bank of the Philippines, for the release of
the first mortgage on the land of said appellee. To the extent that she was
benefited by such payment, plaintiff-appellee Vda. de Reyes should have
been required to reimburse the appellant.
WHEREFORE, the decision appealed from is modified, by ordering plaintiffappellee Felicidad Vda. de Reyes to reimburse to defendant-appellant
Filipinas Investment & Finance Corporation the sum of P2,148.07, with legal
interest thereon from the finality of this decision until it is fully paid. In all
other respects, the judgment of the court below is affirmed, with costs against
the defendant-appellant.

G.R. No. L-5402

January 28, 1911

CAYETANO
DE
LA
CRUZ, plaintiff-appellee,
vs.
EL SEMINARIO DE LA ARCHIDIOCESIS DE MANILA, ET AL., defendantsappellants.
Hartigan
and
Gibbs and Gale for appellee.

Rohde

for

appellants.

TRENT, J.:
The appellee, Cayetano de la Cruz, was a member and the president of a
Methodist Episcopal religious association at Dinalupijan, Province of Bataan,
Philippine Islands. The members of this association, including Cayetano de
la Cruz, having decided to lease a building site and erect thereon a chapel,
made voluntary contributions for that purpose, Cayetano de la Cruz being
among those who contributed. Cayetano de la Cruz, as such member and
president, was then authorized by the association to lease a certain building
site and to use the funds contributed for the purpose of constructing a
chapel. So on the 17th of May, 1907, he leased from one J. C. Miller, the
agent of the appellant, His Grace Jeremiah J. Harty, Archbishop of Manila
and administrator of the hacienda of Dinalupijan, for a period of two years, a
certain lot or parcel of land, being a part of that hacienda and which is fully
described in the written contract of lease, agreeing to pay as rental P2 per
year, the first year's rent to be paid in advance. On the execution of this
lease Cayetano de la Cruz, as member and president of the Methodist
Episcopal association, was placed in possession of this lot or building site
and proceeded to construct thereon a chapel for the use of the said religious
association. About the time this chapel was completed an action of forcible
entry and detainer was commenced by one Raymundo Sinsuangco in the
justice of the peace court of Dinalupijan, in which Cayetano de la Cruz, as
lessee of the lot upon which the chapel was constructed, and J. C. Miller, as
agent and representative of the appellants, who, in such capacity executed
said lease, as lessor, were made defendants. Judgment was rendered
against the defendants in the action. The appellants in the case at bar were
duly notified of the judgment of the justice of the peace and were requested
to appeal to the Court of First Instance. No appeal was taken and the
judgment becoming final was executed in such a manner that the abovementioned chapel was completely destroyed. Subsequently thereto, and on
the 21st of October, 1907, Cayetano de la Cruz commenced this action in the
Court of First Instance of the city of Manila against the appellants to recover
the sum of P2,000 as damages for a breach of the rental contract. To this

79 | P a g e

complaint the appellants, through their attorneys, presented a demurrer,

based upon the following grounds: (1) That the Court of First Instance of the
city of Manila was without jurisdiction to try and determine this action for the
reason that damages for injuries caused to real property situated in the
Province of Bataan is sought to be recovered; and (2) the complaint fails to
allege facts sufficient to constitute a cause of action. This demurrer was
overruled, the appellants duly noting their exception.
After all the evidence had been submitted by both parties, the appellee, after
due notice to the appellants, presented an amended complaint, to conform,
as he alleged, with the agreed statement of facts and the admissions made
by the appellants in their answer. This amended complaint was admitted by
the court without objection on the part of the appellants. The amended
complaint is the same as the original complaint, with the following
exceptions: (1) A number of unnamed person were made parties plaintiff; (2)
in paragraph 2 of the amended complaint it is alleged that Cayetano de la
Cruz was the president, agent, and member of the Methodist Episcopal
religious association: and (3) a judgment for only P402 was asked.
The court below on the 29th of March, 1909, rendered judgment in favor of
the appellees and against the appellants for the sum of P402, P2 being the
rent for the first year paid in advance, and the P400 being the agreed value
of the chapel which was destroyed by the sheriff in executing the judgment
rendered by the justice of the peace.
The appellants after noting their exception to the judgment and making a
motion for a new trial, which motion was overruled and exception thereto
noted, appealed to this court, and now insist:
1. That as this action is one for damages to real estate situated in the
Province of Bataan, under the provisions of section 377 of the Code of Civil
Procedure the Court of First Instance of the city of Manila had no jurisdiction;
2. The court below erred in admitting the amended complaint by which the
other members of the religious association, jointly interested with Cayetano
de la Cruz, were made parties plaintiff; and,
3. That the appellants are not liable for the consequences of the judgment of
the justice of the peace.
The demurrer was properly overruled. This is not an action to recover
damages to real estate; it is an action for breach of covenant in a lease. The

fact that the damages to real estate are involved, as an incident to the breach
of the contract, does not change the character of the action. Such an action
is personal and transistory. The rule is well stated in the case of Neil vs.
Owen (3 Tex., 145), wherein the court said (p. 146):

correspondingly appropriate that he should represent and act for them in this
action. In permitting this court is not thwarting their will or endangering their
interest, but, rather, is carrying out their desires and purposes as they have
already expressed them.

If the action is founded on privity of contract between the parties,

then the action whether debt or covenant, is transitory. But if there is
no privity of contract and the action is founded on privity of estate
only, such a covenant that runs with the land in the hands of the
remote grantees, then the action is local and must be brought in the
country wherein the land lies.

In the third assignment of error it is insisted that the appellants are not liable
for the consequences of the judgment of the justice of the peace, for the
reason that according to that judgment the plaintiff, in violation of the rights of
Raymundo Sinsuangco, entered upon the lot in question. It is argued that the
plaintiff should not have entered into possession of this lot in violation of the
rights of Sinsuangco, but that he should have acquired possession by due
judicial process, and that having entered into possession in this manner he
must suffer the consequences of his illegal acts. In this we can not agree.
When this rental contract was executed the lot in question was vacant. The
agent, Miller, led the plaintiff to believe that he could place him in legal
possession of the lot. It was upon this theory that the plaintiff entered into this
contract and paid the rent for the first year. The record does not affirmatively
show that Miller placed the plaintiff in possession of this lot, but in the
absence of proof to the contrary we think it fair to presume that this occurred.
Miller then placed the plaintiff in possession of this lot, but not in the legal
possession of same. He himself did not have the legal possession as was
shown by the proof before the justice of the peace. Sinsuangco was the
person who was in the actual possession and Miller should have known this
and he should have known at the time he entered into the contract with the
plaintiff that he could not place the plaintiff in legal, peaceful, and quiet
possession of this lot. The plaintiff took possession under these
circumstances and proceeded to construct the chapel, which was afterwards
destroyed in the execution of the judgment of the justice of the peace. In the
contract entered into between Miller and the plaintiff, it was Miller's duty to
place the plaintiff legally in possession of this lot and maintain him in the
peaceful and quiet possession of the same during the entire period of the
contract.

In an action on a covenant contained in a lease, whether begun by

the lessor against the lessee, or by the lessee against the lessor, the
action is transitory because it is founded on a mere privity of
contract. (Thursby vs. Plant, cited in vol. 5, Ency. Plead. & Prac., p.
362.)
In general, also, actions which are founded upon contracts are
transitory. In an action upon a lease for nonpayment of rent or other
breach of covenants, when the action is founded on the privity of
contract it is transitory and the venue may laid in any county. (22
Ency. Plead. & Prac., pp. 782-783.)
Therefore, section 377 of the Code of Civil Procedure, which provides,
among other things, that actions to recover damages for injuries to real
estate shall be brought in the province where the land, or a part thereof, is
situated, is not applicable. (Molina vs. De la Riva, 6 Phil. Rep., 12.) The
amended complaint clearly states facts sufficient to constitute a cause of
action. (Sec. 90, Code of Civil Procedure.)
The defendants in the second assignment of error assert that the plaintiff
ought not to have been allowed to amend his complaint so as to make him
the representative of all the persons interested in the subject matter of this
action. We are of the opinion that such amendment was properly allowed.
Section 110 of the Code of Civil Procedure is exceedingly broad in its term
and there is no disposition in this court to narrow its term or meaning. We are
also of the opinion that this is particularly the class of action to which section
118 of the Code of Civil Procedure refers. It would be exceedingly difficult
and expensive to require that all persons interested be made parties plaintiff.
To avoid this was the very purpose in enacting section 118. The plaintiff, as
appears from the record, is the person chosen by the members of the
association in question to look after and represent their interest and it is

80 | P a g e

The rights and obligations of lessor and lessee are treated in articles 1554 to
1574, inclusive, of the Civil Code. Article 1554 provides:
The lessor is obligated:
xxx

xxx

xxx

3. To maintain the lessee in the peaceful enjoyment of the premises

for the entire period of the contract.

Article 1568 is as follows:

If the thing leased is lost or any of the contracting parties do not
comply with what has been stipulated, the provisions of article 1182
and 1183 shall be respectively observed.
Article 1101 provides:
Those who in fulfilling their obligations are guilty of fraud, negligence,
or delay, and those who in any manner whatsoever act in
contravention of the stipulations of the same, shall be subject to
indemnify for the losses and damages caused thereby.
Under this contract of lease it was the duty of the defendants to give the
plaintiff the legal possession of the premises. This they did not do.
The defendants failed in the performance of their contract, and, as we have
seen by article 1101 of the Civil Code, the person who fails in the
performance of his obligations shall be subject to indemnify for the losses
and damages caused thereby. "The true measure of damages for the breach
of such a contract is what the plaintiff has lost by the breach." (Lock vs.
Furze, L. R. 1, C. P., 441; Dexter vs. Manley, 4 Cush. (Mass.), 14.)
The sum of P402, in our opinion, not being excessive damages for the
injuries caused by the breach of contract on the part of the defendants, the
judgment should be and the same is hereby affirmed, with costs against the
appellants. So ordered.

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