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3) that from the outset, the Lara Spouses "knew and were duly advised that HELD:
Merrill Lynch Philippines, Inc. was not a broker in futures contracts," and that it
"did not have a license from the Securities and Exchange Commission to 1. The facts on record adequately establish that ML FUTURES, operating in
operate as a commodity trading advisor (i.e., 'an entity which, not being a the United States, had indeed done business with the Lara Spouses in the
broker, furnishes advice on commodity futures to persons who trade in futures Philippines over several years, had done so at all times through Merrill Lynch
contracts'); Philippines, Inc. (MLPI), a corporation organized in this country, and had
executed all these transactions without ML FUTURES being licensed to so
4) that in line with the above mentioned agreement and through said Merrill transact business here, and without MLPI being authorized to operate as a
Lynch Philippines, Inc., the Lara Spouses actively traded in futures contracts, commodity futures trading advisor. These are the factual findings to both the
5. One year into the second term of the Representative Agreement, ITEC
COMMUNICATION MATERIALS AND DESIGN, INC. decided to terminate the same because of the alleged violation of ASPAC in its
vs. contractual commitment as stipulated in their agreements.
THE COURT OF APPEALS
6. ITEC charged the petitioners and another Philippine Corporation, DIGITAL
FACTS: BASE COMMUNICATIONS, INC. the President of which is likewise petitioner
Aguirre, of using knowledge and information of ITEC's products specifications
1. Petitioners COMMUNICATION MATERIALS AND DESIGN, INC. and to develop their own line of equipment and product support, which are similar,
ASPAC MULTI-TRADE INC. are both domestic corporations, while petitioner if not identical to ITEC's own, and offering them to ITEC's former customer.
Francisco S. Aguirre is their President and majority stockholder. Private
Respondents ITEC, INC. and/or ITEC, INTERNATIONAL, INC. are 7. On January 31, 1991, ITEC, INC. filed a complaint with the Regional Trial
corporations duly organized and existing under the laws of the State of Court of Makati and sought to enjoin, first, preliminarily and then, after trial,
Alabama, United States of America (a foreign corporation not licensed to do permanently; (1) DIGITAL, CMDI, and Francisco Aguirre and their agents and
business in the Philippines). business associates, to cease and desist from selling or attempting to sell to
PLDT and to any other party, products which have been copied or
2. On August 14, 1987, ITEC entered into a contract with ASPAC referred to manufactured "in like manner, similar or identical to the products, wares and
as "Representative Agreement" initially for a term of 24 months and was equipment of plaintiff," and (2) defendant ASPAC, to cease and desist from
renewed for another 24 months. Pursuant to the contract, ITEC engaged using in its corporate name, letter heads, envelopes, sign boards and
ASPAC as its "exclusive representative" in the Philippines for the sale of business dealings, plaintiff's trademark, internationally known as ITEC; and
ITEC's products, in consideration of which, ASPAC was paid a stipulated the recovery from defendants in solidum, damages of at least P500,000.00,
commission (signed by G.A. Clark and Francisco S. Aguirre, presidents of attorney's fees and litigation expenses.
ITEC and ASPAC).
8. Defendants filed a motion to dismiss on the following grounds: (1) That
3. Through a "License Agreement" theyve entered into on November 10, plaintiff has no legal capacity to sue as it is a foreign corporation doing
1988, ASPAC was able to incorporate and use the name "ITEC" in its own business in the Philippines without the required BOI authority and SEC
name. ASPAC Multi-Trade, Inc. became legally and publicly known as ASPAC- license, and (2) that plaintiff is simply engaged in forum shopping which
ITEC (Philippines) which sold electronic products, exported by ITEC, to their justifies the application against it of the principle of "forum non conveniens".
sole customer, the Philippine Long Distance Telephone Company.
1. Petitioner Alfred Hahn is a Filipino citizen doing business under the 6. Petitioner protested, claiming that the termination of his exclusive
name and style "Hahn-Manila." On the other hand, private respondent dealership would be a breach of the Deed of Assignment and insisted
BayerischeMotorenWerkeAktiengesellschaft (BMW) is a non- that as long as the assignment of its trademark and device subsisted,
Gresident foreign corporation existing under the laws of the former he remained BMW's exclusive dealer in the Philippines because the
Federal Republic of Germany, with principal office at Munich, assignment was made in consideration of the exclusive dealership.
Germany.
9. Hahn found the proposal unacceptable thus, on May 14, 1993, he 13. Hahn opposed the motion and argued that BMW was doing business
filed a complaint for specific performance and damages against BMW in the Philippines through him as its agent, as shown by the fact that
to compel it to continue the exclusive dealership. Later he filed an BMW invoices and order forms were used to document his
amended complaint to include an application for temporary restraining transactions; that he gave warranties as exclusive BMW dealer; that
order and for writs of preliminary, mandatory and prohibitory injunction BMW officials periodically inspected standards of service rendered by
to enjoin BMW from terminating his exclusive dealership. him; and that he was described in service booklets and international
publications of BMW as a "BMW Importer" or "BMW Trading
10. The case was raffled to Branch 104 of the Quezon City Regional Trial Company" in the Philippines.
Court, which on June 14, 1993 issued a temporary restraining order.
Summons and copies of the complaint and amended complaint were 14. The trial court deferred resolution of the motion to dismiss until after
served on the private respondent through the Department of Trade trial on the merits for the reason that the grounds advanced by BMW
and Industry, pursuant to Rule 14, 14 of the Rules of Court. The in its motion did not seem to be indubitable.
order, summons and copies of the complaint and amended complaint
were later sent by the DTI to BMW via registered mail on June 15, 15. BMW did not file any reconsideration and instead filed a petition
1993 and received by the latter on June 24, 1993. for certiorari with the Court of Appeals.
11. On June 30, 1993, the trial court granted the writ of preliminary 16. Court of Appeals dismissed petitioner's complaint against BMW and
injunction upon the filing of a bond of P100, 000.00. On July 13, 1993, held that petitioner was a mere indentor or broker and not an agent
following the posting of the required bond, a writ of preliminary because he alone had contacts with individuals or entities interested
injunction was issued. in acquiring BMW vehicles.
12. On July 1, 1993, BMW moved to dismiss the case, contending that 17. Hence, this appeal by Petitioner contending that the Court of Appeals
the trial court did not acquire jurisdiction over it through the service of erred (1) in finding that the trial court gravely abused its discretion in
summons on the Department of Trade and Industry, because it deferring action on the motion to dismiss and (2) in finding that private
(BMW) was a foreign corporation and it was not doing business in the
HELD: YES.The Supreme Court held that agency is shown when Hahn
claimed he took orders for BMW cars and transmits them to BMW. Then BMW
fixes the down payment and pricing charges and will notify Hahn of the
scheduled production month for the orders, and reconfirm the orders by
signing and returning to Hahn the acceptance sheets.
IMSON vs CA
FACTS:
HELD: NO
o In full settlement of its liability under the laws and the said
For Lim Tanhu to apply to the case at bench, it must be established that:
insurance contract, defendant Western Guaranty shall pay plaintiff o (1) petitioner has common cause of action against private
(herein petitioner); respondents and the other defendants in Civil Case No. 248-R; and
o (2) all the defendants are indispensable parties to the case.
o This compromise agreement shall in no way waive nor prejudice Cause of action has a fixed meaning in this jurisdiction. It is the delict or
plaintiffs (herein petitioner's) rights to proceed against the other wrong by which the right of the plaintiff is violated by the defendant. The
defendants with respect the remainder of his claims; question as to whether a plaintiff has a cause of action is determined by
the averments in the pleadings pertaining to the acts of the defendant.
o This compromise agreement shall be a full and final settlement of Whether such acts give him a right of action is determined by substantive
the issues between plaintiff (herein petitioner) and defendant law.
Lim Tanhu will not apply to the case at bench for there is no showing that
Western Guaranty;
petitioner has a common cause of action against the defendants in Civil
Trial Court dismissed the complaint for damages, after 18 months the Case No. 248-R.
private respondent moved to dismiss all the cases against the defendants
Defendants in Civil Case No. 248-R are not all indispensable parties. An
since they are all indispensable parties under a common cause of action,
indispensable party is one whose interest will be affected by the court's
the dismissal of the case against defendant insurer must result in the
action in the litigation, and without whom no final determination of the
dismissal of the suit against all of them. The trial court denied the motion. case can be had. The party's interest in the subject matter of the suit and
in the relief sought are so inextricably intertwined with the other parties'
Private respondent Holiday Hills Stock and Breeding Farm Corporation that his legal presence as a party to the proceeding is an absolute
assailed the denial order through a Petition for Certiorari, Prohibition necessity. In his absence there cannot be a resolution of the dispute of
and Mandamus With Restraining Order filed with respondent Court of the parties before the court which is effective, complete, or equitable.
Appeals. Conversely, a party is not indispensable to the suit if his interest in the
controversy or subject matter is distinct and divisible from the interest of
the other parties and will not necessarily be prejudiced by a judgment
CA reversed the trial court applied the doctrine laid down in Lim Tanhu v.
which does complete justice to the parties in court. He is not
Hon. Ramolete, adverted to essays that in a common cause of action indispensable if his presence would merely permit complete relief between
where all the defendants are indispensable parties, the court's power to
Civpro/rule 2 & 3/mpperez Page 10
him and those already parties to the action, or will simply avoid multiple
litigation.
It is true that all of petitioner's claims in Civil Case No. 248-R is premised
on the wrong committed by defendant truck driver. Concededly, the truck
driver is an indispensable party to the suit.
It is easy to see that if any of them had not been impleaded as defendant,
the case would still proceed without prejudicing the party not impleaded.
Thus, if petitioner did not sue Western Guaranty Corporation, the omission
would not cause the dismissal of the suit against the other defendants.
Even without the insurer, the trial court would not lose its competency to
act completely and validly on the damage suit. The insurer, clearly, is not
an indispensable party in Civil Case No. 248-R.
When the two vehicles were negotiating a curve along the highway, the A. As previously stated, respondents cause of action against petitioners arose
passenger bus overtook the jeepney. In so doing, the passenger bus hit out of the same transaction. Thus, the amount of the demand shall be the
the left rear side of the jeepney and sped away. totality of the claims
Thus, petitioner applied for and was granted a credit line by the United
Coconut Planters Bank (UCPB), International Exchange Bank (IEBank),
and Security Bank Corporation (SBC). Petitioner also applied with the Asia
United Bank (AUB) an irrevocable domestic standby letter of credit in
favor of respondent. All these banks separately executed several
undertakings setting the terms and conditions governing the drawing of
money by respondent from these banks.
SIOK PING TANG vs SUBIC BAY DISTRIBUTION INC Petitioner allegedly failed to pay her obligations to respondent despite
FACTS: demand, thus, respondent tried to withdraw from these bank undertakings.
Petitioner then filed with the Regional Trial Court (RTC) of Quezon City
separate petitions against the banks for declaration of nullity of the several
Held: Yes. The CA correctly ruled that formal substitution of heirs is not
necessary when the heirs themselves voluntarily appeared, participated in the
case and presented evidence in defense of deceased defendant. As
expounded by CA: jurisprudential rule is that failure to make the substitution is
a jurisdictional defect, purpose of this procedural rule is to comply with due
process requirements. For the case to continue, the real party in interest must
be substituted for the deceased. The real party in interest is the one who
would be affected by the judgment. It could be the administrator or executor or
the heirs. In the instant case, the heirs are the proper substitutes. Substitution
gives them the opportunity to continue the defense for the deceased.
Substitution is important because such opportunity to defend is a requirement
to comply with due process. The following are the active participation of the
heirs in the defence after the death of Salazar:
1.lawyer did not stop representing the deceased which lasted for about two STATE INVESTMENT HOUSE VS. CA
more years,counsel was allowed by the petitioner who was well aware of the
instant litigation to continue appearing as counsel until August 23, 1993 when Facts:
the challenged decision was rendered.
Cheng Ban Yek (CBY) is a domestic corp. engaged in business of
2.The wife testified in court and declared that her husband is already manufacturing edible oil bearing the brand BAGUIO OIL and in the
deceased. She new therefore that there was a litigation against her husband, conduct of its business, it incurred millions of pesos obligation tp Pet.
which her and her childrens interest are involve. SIHI and ALLIED BANKING CORP who is the creditor of SIHI.
CBY and SIHI entered into an Agreement for the restructuring of
3.The petition for judgement was filed 1 and after the decision was CBY's obligations to its creditors but excluding ALLIED.
rendered. Mortgage Indenture was executed by CBY and FOUR SEAS as
mortgagors and SIHI as mortgagees involving 23 parcels of registered
4.Jurisdiction by estoppel, which jurisdiction over the person may be acquired land and improvements.
by simple appearance of the person in court. CBY defaulted in the payment of its obligations which are due and
demandable. SIHI notified the creditor's committee of CBY that it
Consequently, it undeniably being evident that the heirs themselves would institute proceedings for the enforcement of the remedies under
sought their day in court and exercise their right to due process. The the Mortgage indenture and later on the committee authorized SIHI to
HELD:NEGATIVE.
Sec 19, Rule 3: transfer of interestin case of any transfer of interest, the action
may be continued by or against the original party, unless the court upon
motion directs the person to whom the interest is transferred to be substituted RIVIERA FILIPINA, INC. vs. COURT OF APPEALS
in the action or joined with the original party.
Facts:
It has been held that a transferee PENDENTE LITE does not hav to be
included or impleaded by name in order to be bound by judgement because 1. November 23, 1982, respondent Juan L. Reyes (Reyes, for brevity) executed
the action or suit may be continued for or against the original party or to the a Contract of Lease with Riviera. The ten-year (10) renewable lease of
transferor and still be binding on the transferee. Riviera, which started on August 1, 1982, involved a 1,018 square meter
parcel of land located along Edsa, Quezon City, covered and described in
FIL NIPPON as transferee of SIHI's interestspendentelite, is not even an
indispensable party in the case.
Civpro/rule 2 & 3/mpperez Page 21
Transfer Certificate of Title No. 186326 of the Registry of Deeds of Quezon 6. To answer the foregoing letter and confirm their telephone conversation on
City in the name of Juan L. Reyes. the matter, Riviera sent a letter dated November 22, 1988 to Atty. Juan,
counsel for Reyes, expressing Rivieras interest to purchase the subject
2. The said parcel of land was subject of a Real Estate Mortgage executed by property and that Riviera is already negotiating with Reyes which will take a
Reyes in favor of Prudential Bank. Since the loan with Prudential Bank couple of days to formalize. Riviera increased its offer to Five Thousand
remained unpaid upon maturity, the mortgagee bank extrajudicially foreclosed Pesos (P5,000.00) per square meter but Reyes did not accede to said price as
the mortgage thereon. At the public auction sale, the mortgagee bank it was still lower than his quoted price of Six Thousand Pesos (P6,000.00) per
emerged as the highest bidder. The redemption period was set to expire on square meter. Angeles asked Reyes to give him until the end of November
March 7, 1989. Realizing that he could not possibly raise in time the money 1988 for Rivieras final decision.
needed to redeem the subject property, Reyes decided to sell the same.
7. In a letter dated December 2, 1988, Angeles wrote Reyes confirming Rivieras
3. Reyes offered to sell the subject property to Riviera, through its President intent to purchase the subject property for the fixed and final price of Five
Vicente C. Angeles, for Five Thousand Pesos (P5,000.00) per square Thousand Pesos (P5,000.00) per square meter, complete payment within sixty
meter. However, Angeles bargained for Three Thousand Five Hundred Pesos (60) to ninety (90) days which offer is what we feel should be the market price
(P3,500.00) per square meter. Since Reyes was not amenable to the said of your property. Angeles asked that the decision of Reyes and his written
price and insisted on Five Thousand Pesos (P5,000.00) per square meter, reply to the offer be given within fifteen (15) days since there are also other
Angeles requested Reyes to allow him to consult the other members of the properties being offered to them at the moment.
Board of Directors of Riviera.
8. In response to the foregoing letter, Atty. Juan sent a letter to Riviera dated
4. Seven (7) months later, or sometime in October 1988, Angeles communicated December 5, 1988 informing Riviera that Rivieras offer is not acceptable to
with Reyes Rivieras offer to purchase the subject property for Four Thousand his client. He further expressed, let it be made clear that, much as it is the
Pesos (P4,000.00) per square meter. However, Reyes did not accept the earnest desire of my client to really give you the preference to purchase the
offer. This time he asked for Six Thousand Pesos (P6,000.00) per square subject property, you have unfortunately failed to take advantage of such
meter since the value of the property in the area had appreciated in view of opportunity and thus lost your right of first refusal in sale of said property.
the plans of Araneta to develop the vicinity.
9. Meanwhile, on December 4, 1988, Reyes confided to Rolando P. Traballo, a
5. In a letter dated November 2, 1988, Atty. Irineo S. Juan, acting as counsel for close family friend and President of Cypress, his predicament about the
Reyes, informed Riviera that Reyes was selling the subject property for Six nearing expiry date of the redemption period of the foreclosed mortgaged
Thousand Pesos (P6,000.00) per square meter, net of capital gains and property with Prudential Bank, the money for which he could not raise on time
transfer taxes, registration fees, notarial fees and all other attendant charges. thereby offering the subject property to him for Six Thousand Pesos
(P6,000.00) per square meter. Traballo expressed interest in buying the said
12. Following the meeting, Angeles sent a letter dated February 4, 1989 to Reyes, 16. Following trial on the merits, the trial court dismissed the complaint of Riviera
through Atty. Alinea, that his offer is Five Thousand Pesos (P5,000.00) per as well as the counterclaims and cross-claims of the other parties.
square meter payment of which would be fifty percent (50%) down within thirty
(30) days upon submission of certain documents in three (3) days, the balance 17. Dissatisfied with the decision of the trial court, both parties appealed to the
payable in five (5) years in equal monthly installments at twelve percent (12%) Court of Appeals. However, the appellate court, through its Special Seventh
interest in diminishing balance. With the terms of this second offer, Angeles Division, rendered a Decision dated June 6, 1994 which affirmed the decision
admittedly downgraded the previous offer of Riviera on December 2, 1988. of the trial court in its entirety.
Being merely a representative of the petitioners, Atty. Aceron in his On October 21, 1985, three days before the expiration of the redemption
personal capacity does not have the right to file the complaint below against period, petitioner Fortune Motors filed a complaint for annulment of the
the respondents. He may only do so, as what he did, in behalf of the extrajudicial foreclosure sale alleging that the foreclosure was premature
petitioners the real parties in interest. To stress, the right sought to be because its obligation to the Bank was not yet due, the publication of the
enforced in the case below belongs to the petitioners and not to Atty. notice of sale was incomplete, there was no public auction, and the price for
which the property was sold was "shockingly low".
Aceron. Clearly, an attorney-in-fact is not a real party in interest.
Before summons could be served private respondent Bank filed a motion to
dismiss the complaint on the ground that the venue of the action was
improperly laid in Manila for the realty covered by the real estate mortgage is
situated in Makati, therefore the action to annul the foreclosure sale should be
filed in the Regional Trial Court of Makati.
The motion was opposed by petitioner Fortune Motors alleging that its action
"is a personal action" and that "the issue is the validity of the extrajudicial
FORTUNE MOTORS v CA foreclosure proceedings" so that it may have a new one year period to
redeem.
FACTS: On March 29,1982 up to January 6,1984, private respondent
Metropolitan Bank extended various loans to petitioner Fortune Motors in the On January 8, 1986 an order was issued by the lower court reserving the
total sum of P32,500,000.00 (according to the borrower; or P34,150,000.00 resolution of the Bank's motion to dismiss until after the trial on the merits as
according to the Bank) which loan was secured by a real estate mortgage on the grounds relied upon by the defendant were not clear and indubitable.
the Fortune building and lot in Makati, Rizal.
The Bank filed a motion for reconsideration of the order dated January 8, 1986
Due to financial difficulties and the onslaught of economic recession, the but it was denied by the lower court in its order dated May 28, 1986.
petitioner was not able to pay the loan which became due.
Personal actions upon the other hand, may be instituted in the 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.
A prayer for annulment or rescission of contract does not operate to efface the
true objectives and nature of the action which is to recover real property.
3. City Judge, on September 18, 1963, denied the motion to dismiss for
lack of merit and set the case for hearing.
4. Hence, the Clavecilla Radio System filed a petition for prohibition with
preliminary injunction with the Court of First Instance praying that the
City Judge, Honorable Agustin Antillon, be enjoined from further
proceeding with the case on the ground of improper venue.
5. CFI held that the Clavecilla Radio System may be sued either in
Manila where it has its principal office or in Cagayan de Oro City
where it may be served, as in fact it was served, with summons
through the Manager of its branch office in said city.
Subsequently, Nelson Garcia and Vicente Sy assigned all their rights and title
to the proceeds of the sale of the CMDC shares to Nemesio Garcia. On 10
June 1988, YASCO and Garcia filed a complaint against Roxas in the
Regional Trial Court, Branch 11, Cebu City, praying that Roxas be ordered to
pay them the sum of P3,400,000.00 or that full control of the three markets be
turned over to YASCO and Garcia. The complaint also prayed for the forfeiture
of the partial payment of P4,600,000.00 and the payment of attorney's fees
and costs. Failing to submit his answer, and on 19 August 1988, the trial court
declared Roxas in default. The order of default was, however, lifted upon
motion of Roxas. On 22 August 1988, Roxas filed a motion to dismiss. After a
hearing, wherein testimonial and documentary evidence were presented by
both parties, the trial court in an Order dated 8 February 1991 denied Roxas'
motion to dismiss. After receiving said order, Roxas filed another motion for
extension of time to submit his answer. He also filed a motion for
Civpro/rule 2 & 3/mpperez Page 29
reconsideration, which the trial court denied in its Order dated 10 April 1991 within the Philippines." The purpose of this requirement is to fix the residence
for being pro-forma. Roxas was again declared in default, on the ground that of a corporation in a definite place, instead of allowing it to be ambulatory.
his motion for reconsideration did not toll the running of the period to file his Actions cannot be filed against a corporation in any place where the
answer. On 3 May 1991, Roxas filed an unverified Motion to Lift the Order of corporation maintains its branch offices. The Court ruled that to allow an
Default which was not accompanied with the required affidavit of merit. But action to be instituted in any place where the corporation has branch offices,
without waiting for the resolution of the motion, he filed a petition for certiorari would create confusion and work untold inconvenience to said entity. By the
with the Court of Appeals. The Court of Appeals dismissal of the complaint on same token, a corporation cannot be allowed to file personal actions in a place
the ground of improper venue. A subsequent motion for reconsideration by other than its principal place of business unless such a place is also the
YASCO was to no avail. YASCO and Garcia filed the petition. residence of a co-plaintiff or a defendant. With the finding that the residence of
YASCO for purposes of venue is in Cebu City, where its principal place of
Issue: Whether the venue for the case against YASCO and Garcia in Cebu business is located, it becomes unnecessary to decide whether Garcia is also
City was improperly laid. a resident of Cebu City and whether Roxas was in estoppel from questioning
the choice of Cebu City as the venue. The decision of the Court of Appeals
Held: A corporation has no residence in the same sense in which this term is was set aside.
applied to a natural person. But for practical purposes, a corporation is in a
metaphysical sense a resident of the place where its principal office is located
as stated in the articles of incorporation. The Corporation Code precisely
requires each corporation to specify in its articles of incorporation the "place
where the principal office of the corporation is to be located which must be