Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
FACTS: Petitioners filed a complaint for cancellation of title to property. Petitioners alleged that said titles are spurious,
fictitious and were issued "under mysterious circumstances," considering that the holders thereof including their
predecessors-in-interest were never in actual, adverse and physical possession of the property, rendering them
ineligible to acquire title to the said property under the Friar Lands Act. 8 Petitioners also sought to nullify Original
Certificate of Title (OCT) No. 614 from which the foregoing titles sought to be cancelled originated or were derived.
Respondent Genuino Ice Co., Inc. filed a motion to dismiss on the ground that the complaint states no cause of action
because petitioners are not real parties-in-interest; that no relief may be granted as a matter of law; and that petitioners
failed to exhaust administrative remedies, but it was denied by the trial court. Respondent moved for reconsideration but
the same was denied. Petitioners filed a "Second Amended Complaint" which sought to annul, in addition to the titles
already alleged in the original complaint, another 4 titles to property. The second Amended complaint stated that the
petitioners and their predecessors-in-interest are among those who have been in actual, adverse, peaceful and continuous
possession in concept of owners of unregistered parcels of land situated at Sitio Mabilog, Barangay Culiat, Quezon City,
Metro Manila. That the above-described real property is a portion of a friar land known as "Piedad Estate," which
property is intended for distribution among the bona fide occupants thereof pursuant to the Friar Lands Act.
Respondent moved to dismiss the Second Amended Complaint on the following grounds: a) The complaint states no
cause of action because: (1) on the allegations alone, plaintiffs (petitioners) are not real parties in interest who may bring
suit to cancel defendants' (including respondent) titles; (2) based on the allegations and prayer of the complaint, no relief,
as a matter of law, may be granted; b) Prescription has set in. The trial court denied respondent's motion to dismiss the
Second Amended Complaint. Its motion for reconsideration was likewise denied hence respondent filed a petition for
certiorari with the Court of Appeals. The appellate court granted respondent's petition for certiorari and dismissed
petitioners' Second Amended Complaint for failure to state a cause of action.
ISSUE: WON the second amended complaint stated the ultimate facts.
HELD: The basic rules of proper pleading and procedure require that every pleading shall contain in a methodical and
logical form, a plain, concise and direct statement of the ultimate facts on which the party pleading relies for his claim or
defense, as the case may be, omitting the statement of mere evidentiary facts. And in all averments of fraud or mistake,
the circumstances constituting fraud or mistake must be stated with particularity.
"Ultimate facts" means the essential facts constituting the plaintiff's cause of action, or such facts as are so essential
that they cannot be stricken out without leaving the statement of the cause of action inadequate. "Cause of action" has
been defined as an act or omission of one party in violation of the legal right or rights of the other; and its essential
elements are: 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 named defendant violative of the right of the plaintiff or constituting a breach of the obligation of defendant to the
plaintiff for which the latter may maintain an action for recovery of damages. If these elements are not extant, the
complaint becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of action. In the resolution
of a motion to dismiss based on failure to state a cause of action, only the facts alleged in the complaint as well as its
annexes must be considered. The test in such case is whether a court can render a valid judgment on the complaint based
upon the facts alleged and pursuant to the prayer therein.
Corollarily, the question of whether or not a complaint states a cause of action against a defendant or the action is
premature is one of law. The trial court can consider all the pleadings filed, including annexes, motions and the evidence
on record. However in so doing, the trial court does not rule on the truth or falsity of such documents. It merely includes
such documents in the hypothetical admission. Any review of a finding of lack of cause of action based on these
documents would not involve a calibration of the probative value of such pieces of evidence but would only limit itself to
the inquiry of whether the law was properly applied given the facts and these supporting documents. Therefore, what
would inevitably arise from such a review are pure questions of law, and not questions of fact. The trial court must
likewise apply relevant statutes and jurisprudence in determining whether the allegations in a complaint establish a cause
of action. While it focuses on the complaint, a court clearly cannot disregard decisions material to the proper
appreciation of the questions before it. In resolving a motion to dismiss, every court must take cognizance of decisions
this Court has rendered because they are proper subjects of mandatory judicial notice. The said decisions, more
importantly, form part of the legal system, and failure of any court to apply them shall constitute an abdication of its duty
to resolve a dispute in accordance with law, and shall be a ground for administrative action against an inferior court
magistrate.
Considering the foregoing, it is not difficult to see the need for particularity and incipient substantiation in the
petitioners' Second Amended Complaint.
First, their initial claim that OCT 614 of which all the other subject titles are derivatives is null and void, has been
proven wrong. OCT 614 did legally exist and was previously issued in the name of the Philippine Government in 1910
under the provisions of Act 496.
Second, the Ad Hoc Committee of the then Ministry of Natural Resources, which was specifically tasked to investigate
the historical background of the Piedad Estate, found that as early as the period prior to the Second World War, all lots in
the Piedad Estate had already been disposed of.
Third, the Piedad Estate has been placed under the Torrens system of land registration, which means that all lots therein
are titled.
Fourth, as held in the Balicudiong case, one who acquires land under the Friar Lands Act, as well as his successors-in-
interest, may not claim successional rights to purchase by reason of occupation from time immemorial, which means that
petitioners' claimed actual, adverse, peaceful and continuous possession of the subject property is really of no moment
unless it is shown that their predecessors-in-interest were actual settlers and occupants at the time said lands were
acquired by the Government, and whose rights were not disregarded even though they were in occupation of the same
before the government acquired the land; yet, no period of time in relation to adverse possession is alleged.
Petitioners' Second Amended Complaint betrays no more than an incomplete narration of facts unsupported by
documentary or other exhibits; the allegations therein partake of conclusions of law unsupported by a particular averment
of circumstances that will show why or how such inferences or conclusions were arrived at. It is replete with sweeping
generalizations and inferences derived from facts that are not found therein. While there are allegations of fraud upon the
claim that the subject titles were fictitious, spurious and obtained under "mysterious circumstances," the same are not
specific to bring the controversy within the trial court's jurisdiction. There is no explanation or narration of facts as
would show why said titles are claimed to be fictitious or spurious, contrary to the requirement of the Rules that the
circumstances constituting fraud must be stated with particularity; otherwise, the allegation of fraud would simply be an
unfounded conclusion of law. In the absence of specific averments, the complaint is defective, for it presents no basis
upon which the court should act, or for the defendant to meet it with an intelligent answer.
PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC. and TAGUM PLASTICS, INC. vs SWEET LINES,
INC., DAVAO VETERANS ARRASTRE AND PORT SERVICES, INC. and HON. COURT OF APPEALS
FACTS: A maritime suit 1 was commenced on May 12, 1978 by herein petitioner Philippine American General Insurance
Co., Inc. (Philamgen) and Tagum Plastics, Inc. (TPI) against private respondents Sweet Lines, Inc. (SLI) and Davao
Veterans Arrastre and Port Services, Inc. (DVAPSI), along with S.C.I. Line (The Shipping Corporation of India Limited)
and F.E. Zuellig, Inc., as co-defendants in the court a quo, seeking recovery of the cost of lost or damaged shipment plus
exemplary damages, attorney's fees and costs allegedly due to defendants' negligence.
The vessel SS `VISHVA YASH' belonging to or operated by the foreign common carrier, took on board at Baton
Rouge, LA, two (2) consignments of cargoes for shipment to Manila and later for transhipment to Davao City, consisting
of 600 bags Low Density Polyethylene 631 and another 6,400 bags Low Density Polyethylene 647, both consigned to
the order of Far East Bank and Trust Company of Manila, with arrival notice to Tagum Plastics, Inc., Madaum, Tagum,
Davao City. Said cargoes were covered, respectively, by Bills of Lading Nos. 6 and 7 issued by the foreign common
carrier. The necessary packing or Weight List, as well as the Commercial Invoices accompanied the shipment. The
cargoes were likewise insured by the Tagum Plastics Inc. with plaintiff Philippine American General Insurance Co., Inc.
The said vessel arrived at Manila and discharged its cargoes in the Port of Manila for transhipment to Davao City. For
this purpose, the foreign carrier awaited and made use of the services of the vessel called M/V 'Sweet Love' owned and
operated by defendant interisland carrier.
Subject cargoes were loaded in Holds Nos. 2 and 3 of the interisland carrier. These were commingled with similar
cargoes belonging to Evergreen Plantation and also Stanfilco. The shipment(s) were discharged from the interisland
carrier into the custody of the consignee. A later survey conducted on July 8, 1977, upon the instance of the plaintiff,
shows that the cargo covered by Bill of Lading No. 25 or (2)6, supposed to contain 6,400 bags of Low Density
Polyethylene 647 originally inside 160 pallets, there were delivered to the consignee 5,413 bags in good order condition.
The survey shows shortages, damages and losses. Of the 600 bags of Low Density Polyethylene 631, the survey
conducted on the same day shows an actual delivery to the consignee of only 507 bags in good order
condition.Therefore, of said shipment totalling 7,000 bags, originally contained in 175 pallets, only a total of 5,820 bags
were delivered to the consignee in good order condition, leaving a balance of 1,080 bags. Such loss from this particular
shipment is what any or all defendants may be answerable.
Before trial, a compromise agreement was entered into between petitioners, as plaintiffs, and defendants S.C.I. Line
and F.E. Zuellig, upon the latter's payment of P532.65 in settlement of the claim against them. Whereupon, the trial court
in its order granted plaintiffs' motion to dismiss grounded on said amicable settlement and the case as to S.C.I. Line and
F.E. Zuellig was consequently "dismissed with prejudice and without pronouncement as to costs."The trial court
thereafter rendered judgment in favor of herein petitioners. On this point, in denying petitioner's motion for
reconsideration, the Court of Appeals resolved that although the bills of lading were not offered in evidence, the
litigation obviously revolves on such bills of lading which are practically the documents or contracts sued upon, hence,
they are inevitably involved and their provisions cannot be disregarded in the determination of the relative rights of the
parties thereto.Due to the reversal on appeal by respondent court of the trial court's decision on the ground of
prescription, in effect dismissing the complaint of herein petitioners, and the denial of their motion for reconsideration,
petitioners filed the instant petition for review on certiorari.
On the first issue, petitioners contend that it was error for the Court of Appeals to reverse the appealed decision on
the supposed ground of prescription when SLI failed to adduce any evidence in support thereof and that the bills of
lading said to contain the shortened periods for filing a claim and for instituting a court action against the carrier were
never offered in evidence.
ISSUE: WON the prescriptive period is valid and legal
HELD: Respondent court correctly passed upon the matter of prescription, since that defense was so considered and
controverted by the parties. This issue may accordingly be taken cognizance of by the court even if not inceptively raised
as a defense so long as its existence is plainly apparent on the face of relevant pleadings. In the case at bar, prescription
as an affirmative defense was seasonably raised by SLI in its answer, except that the bills of lading embodying the same
were not formally offered in evidence, thus reducing the bone of contention to whether or not prescription can be
maintained as such defense and, as in this case, consequently upheld on the strength of mere references thereto.
As petitioners are suing upon SLI's contractual obligation under the contract of carriage as contained in the bills of
lading, such bills of lading can be categorized as actionable documents which under the Rules must be properly pleaded
either as causes of action or defenses, 18 and the genuineness and due execution of which are deemed admitted unless
specifically denied under oath by the adverse party. The rules on actionable documents cover and apply to both a cause
of action or defense based on said documents. In the present case and under the aforestated assumption that the time limit
involved is a prescriptive period, respondent carrier duly raised prescription as an affirmative defense in its answer
setting forth paragraph 5 of the pertinent bills of lading which comprised the stipulation thereon by parties, to wit:
Claims for shortage, damage, must be made at the time of delivery to consignee or agent, if container shows exterior
signs of damage or shortage. Claims for non-delivery, misdelivery, loss or damage must be filed within 30 days from
accrual. Suits arising from shortage, damage or loss, non-delivery or misdelivery shall be instituted within 60 days from
date of accrual of right of action. Failure to file claims or institute judicial proceedings as herein provided constitutes
waiver of claim or right of action. In no case shall carrier be liable for any delay, non-delivery, misdelivery, loss of
damage to cargo while cargo is not in actual custody of carrier."
Petitioners' failure to specifically deny the existence, much less the genuineness and due execution, of the
instruments in question amounts to an admission. Judicial admissions, verbal or written, made by the parties in the
pleadings or in the course of the trial or other proceedings in the same case are conclusive, no evidence being required to
prove the same, and cannot be contradicted unless shown to have been made through palpable mistake or that no such
admission was made. Moreover, when the due execution and genuineness of an instrument are deemed admitted because
of the adverse party's failure to make a specific verified denial thereof, the instrument need not be presented formally in
evidence for it may be considered an admitted fact. Even granting that petitioners' averment in their reply amounts to a
denial, it has the procedural earmarks of what in the law on pleadings is called a negative pregnant, that is, a denial
pregnant with the admission of the substantial facts in the pleading responded to which are not squarely denied. It is in
effect an admission of the averment it is directed to. 25 Thus, while petitioners objected to the validity of such agreement
for being contrary to public policy, the existence of the bills of lading and said stipulations were nevertheless impliedly
admitted by them.
We find merit in respondent court's comments that petitioners failed to touch on the matter of the non-presentation of
the bills of lading in their brief and earlier on in the appellate proceedings in this case, hence it is too late in the day to
now allow the litigation to be overturned on that score, for to do so would mean an over-indulgence in technicalities.
Hence, for the reasons already advanced, the non-inclusion of the controverted bills of lading in the formal offer of
evidence cannot, under the facts of this particular case, be considered a fatal procedural lapse as would bar respondent
carrier from raising the defense of prescription. Petitioners' feigned ignorance of the provisions of the bills of lading,
particularly on the time limitations for filing a claim and for commencing a suit in court, as their excuse for non-
compliance therewith does not deserve serious attention.In the case at bar, there is neither any showing of compliance by
petitioners with the requirement for the filing of a notice of claim within the prescribed period nor any allegation to that
effect. It may then be said that while petitioners may possibly have a cause of action, for failure to comply with the
above condition precedent they lost whatever right of action they may have in their favor or, taken in another sense, that
remedial right or right to relief had prescribed.
LIAM LAW vs. OLYMPIC SAWMILL CO. and ELINO LEE CHI
FACTS: Plaintiff loaned P10,000.00, without interest, to defendant partnership and defendant Elino Lee Chi, as the
managing partner. The loan became ultimately due on January 31, 1960, but was not paid on that date, with the debtors
asking for an extension of three months, or up to April 30, 1960. On March 17, 1960, the parties executed another loan
document. Payment of the P10,000.00 was extended to April 30, 1960, but the obligation was increased by P6,000.00.
Defendants again failed to pay their obligation by April 30, 1960 and, on September 23, 1960, plaintiff instituted this
collection case. Defendants admitted the P10,000.00 principal obligation, but claimed that the additional P6,000.00
constituted usurious interest.
Upon application of plaintiff, the Trial Court issued a writ of Attachment on real and personal properties of
defendants located at Karanglan, Nueva Ecija. After the Writ of Attachment was implemented, proceedings before the
Trial Court versed principally in regards to the attachment. Then, an Order was issued by the Trial Court stating that
"after considering the manifestation of both counsel in Chambers, the Court hereby allows both parties to simultaneously
submit a Motion for Summary Judgment. The plaintiff filed his Motion for Summary Judgment on January 31, 1961,
while defendants filed theirs on February 2, 1961. The Trial Court rendered decision ordering defendants to pay plaintiff
"the amount of P10,000.00 plus the further sum of P6,000.00 by way of liquidated damages . . . with legal rate of interest
on both amounts from April 30, 1960." It is from this judgment that defendants have appealed.
ISSUE: WON the claim of usury should have been deemed admitted by plaintiff as it was "not denied specifically and
under oath"
HELD: NO. Section 9 of the Usury Law (Act 2655) provided: The person or corporation sued shall file its answer in
writing under oath to any complaint brought or filed against said person or corporation before a competent court to
recover the money or other personal or real property, seeds or agricultural products, charged or received in violation of
the provisions of this Act. The lack of taking an oath to an answer to a complaint will mean the admission of the facts
contained in the latter."
The foregoing provision envisages a complaint filed against an entity which has committed usury, for the recovery of
the usurious interest paid. In that case, if the entity sued shall not file its answer under oath denying the allegation of
usury, the defendant shall be deemed to have admitted the usury. The provision does not apply to a case, as in the
present, where it is the defendant, not the plaintiff, who is alleging usury.
Moreover, for sometime now, usury has been legally non-existent. Interest can now be charged as lender and
borrower may agree upon. The Rules of Court in regards to allegations of usury, procedural in nature, should be
considered repealed with retroactive effect. "Statutes regulating the procedure of the courts will be construed as
applicable to actions pending and undetermined at the time of their passage. Procedural laws are retrospective in that
sense and to that extent." ". . . Section 24(d), Republic Act No. 876, known as the Arbitration Law, which took effect on
19 December 1953, and may be retroactively applied to the case at bar because it is procedural in nature . . ."
Between the two rules, there is no incompatibility that would preclude the application of either one of them. To begin
with, Section 3 of Rule 9 governs the procedure which the trial court is directed to take when a defendant fails to file an
answer. According to this provision, the court "shall proceed to render judgment granting the claimant such relief as his
pleading may warrant," subject to the court's discretion on whether to require the presentation of evidence ex parte. The
same provision also sets down guidelines on the nature and extent of the relief that may be granted. In particular, the
court's judgment "shall not exceed the amount or be different in kind from that prayed for nor award unliquidated
damages." As in other civil cases, basic is the rule that the party making allegations has the burden of proving them by a
preponderance of evidence. Moreover, parties must rely on the strength of their own evidence, not upon the weakness of
the defense offered by their opponent. This principle holds true, especially when the latter has had no opportunity to
present evidence because of a default order. Needless to say, the extent of the relief that may be granted can only be as
much as has been alleged and proved with preponderant evidence required under Section 1 of Rule 133.
Regarding judgments by default, it was explained that complainants are not automatically entitled to the relief
prayed for, once the defendants are declared in default. Favorable relief can be granted only after the court has
ascertained that the relief is warranted by the evidence offered and the facts proven by the presenting party. In Pascua,
this Court ruled that "it would be meaningless to require presentation of evidence if every time the other party is declared
in default, a decision would automatically be rendered in favor of the non-defaulting party and exactly according to the
tenor of his prayer. This is not contemplated by the Rules nor is it sanctioned by the due process clause."
SPS. LAUS vs CA
FACTS: Private respondent Consuelo P. Torres filed against "Loredo Alfaro-Laus and John Doe" a complaint for the
collection of a sum of money. The defendants in the said case are the petitioners in the instant petition. The complaint
alleges that petitioner Loreto Alfaro-Laus executed a promissory note in favor of the private respondent under which the
former undertook to pay the latter the amount of Sixty-Six Thousand Pesos (P66,000.00) after three (3) months from the
date thereof. Upon maturity of the said promissory note, however, only Eleven Thousand Pesos (P11,000.00) was paid;
despite the receipt of a demand letter from the private respondent, petitioners made no further payments. Thus, the
former filed the aforementioned complaint praying for the payment of the unpaid balance of P55,000.00 "plus interest at
the rate of ten per cent (10%), compounded monthly beginning February 21, 1989, and twenty-five per cent (25%) of the
entire amount due for and as attorney's fees, such being in accordance with the terms and conditions set forth in the
promissory note."
Deputy Sheriff Romero S. Cruz proceeded to the petitioners' address at 122 Molave Park Subdivision, Paraaque,
Metro Manila to serve the summons and a copy of the complaint. Failing to serve the summons personally upon the
petitioners after waiting for ten (10) minutes, he resorted to a substituted service through one Josephine Areola, who
purportedly represented herself to be the maid of the said petitioners. On the same date, Deputy Sheriff Cruz executed
and filed a return. The petitioners did not file any answer. Consequently, upon motion of the private respondent, the trial
court issued an order declaring the former in default and setting the ex parte presentation of the private respondent's
evidence. The petitioners claim that they received this 29 December 1989 Order only on 22 January 1990.
The trial court rendered a judgment by default against the petitioners; it ordered the latter to pay the private
respondent the amount P55,000.00 at the rate of 10%. Before receiving a copy of the 22 January 1990 decision,
petitioners, by way of a special appearance, filed a motion to dismiss the case for lack of jurisdiction over their persons.
They allege that the service of summons was ineffective because it was not indicated in the return that the sheriff had
first exerted efforts to serve the same personally before resorting to substituted service. The trial court denied the motion
to dismiss for lack of merit on the ground that it had already rendered a judgment by default on 24 January 1990.
Petitioners received a copy of this order on 24 March 1990. In the meantime, the trial court issued a writ of execution.
Public respondent Deputy Sheriff Nilo Cabang, pursuant to a writ of execution issued by the trial court, levied upon
petitioners' properties consisting of a 1983 Mitsubishi Galant Sedan and a men's ring. Petitioners filed a motion for
reconsideration and they reiterated therein the contention that the trial court did not acquire jurisdiction over their
persons because of the defective service of summons and further avers that Josephine Areola, the person who supposedly
received the summons is not even known to the defendants. It turned out from their investigation that said Josephine
Areola was just a guest of one of their maid (sic) who stayed for only about a week. Furthermore Josephine Areola was
just a child of about ten to eleven years old and would not be expected to know what to do with the documents handed to
her. The trial court denied the petitioners' motion for reconsideration and held that there was a proper service of
summons because contrary to Loreto Alfaro-Laus' statement that Areola was a guest of their maid for a week, it was
proven that Areola was in fact the very person who, on 3 July 1989, received the demand letter sent by the private
respondent.
Petitioners filed with the Court of Appeals a petition for certiorari, prohibition and injunction with application for a
restraining order to set aside the trial court's Orders and to dismiss the case. Petitioners insisted therein that the trial court
committed grave abuse of discretion and a grave error in denying their motion to dismiss and the motion to reconsider
said denial despite the lack of jurisdiction over their persons. They likewise challenged the denial of such motion to
dismiss which was based solely on the ground that a judgment by default had already been rendered. The respondent
Court of Appeals promulgated its decision denying the petition for lack of merit. It ruled that it was the defendants-
petitioners who erred in filing a motion to dismiss at that late stage of the proceedings. A motion to dismiss on the
ground that the Court has no jurisdiction over the person of the defendants is proper only when made within the
reglementary period for filing a responsive pleading and before such responsive pleading is filed. In this case, the
defendants-petitioners' motion to dismiss was filed five (5) months after the complaint was filed and only after a default
judgment had already been rendered by the respondent Court. Thus, it was rather too late in the day for the defendants-
petitioners' motion to dismiss to be considered by the respondent Court. In the proper exercise of its sound judicial
discretion, the respondent Court did not err in denying the motion to dismiss on the ground that a judgment by default
had already been rendered. Respondent sheriff Nilo Cabang sold at a public auction the levied men's ring an oval
diamond set in yellow gold to the private respondent for P140,000.00, and the Galant car to Atty. Leonardo Perez, Jr.,
counsel for the latter, for P180,000.00. Both were the highest bidders. The MR was denied.
ISSUE: WON the trial court acquired jurisdiction over the persons of the petitioners by virtue of the substituted service
of summons
HELD: NO. Since the petitioners did not voluntarily submit to the jurisdiction of the trial court, proper service of
summons became imperative. If the service effected in the case at bar was, as claimed by the petitioners, invalid, the trial
court acquired no jurisdiction over their persons. In such an instance, the order of default, judgment by default and writ
of execution issued by the trial court would be null and void. . . . Since the substituted service of summons in this case
was not validly effected, the trial court did not acquire jurisdiction over the persons of the petitioners. The order of
default, the judgment by default, the writ of execution issued by it, as well as the auction sale of the petitioners'
properties levied on execution are, therefore, all null and void. The general rule in this jurisdiction is that summons must
be personally served; pursuant to Section 7, Rule 14 of the Revised Rules of Court, such personal service is to be
accomplished by "handing a copy thereof to the defendant in person, or, if he refuses to receive it, by tendering it to
him." However, if this mode of service cannot be effected within a reasonable time, substituted service may be resorted
to under Section 8 of the same Rule.
A perusal of the sheriff's return in the case at bar readily reveals that it does not (a) indicate the impossibility of
service of summons within a reasonable time, (b) specify the efforts exerted to locate the petitioners and (c) state that it
was served on a person of sufficient age and discretion residing therein. The fact of the matter is that as disclosed in his
testimony taken in connection with the motion for reconsideration, and the affidavit he prepared in conjunction with such
hearing. Deputy Sheriff Cruz resorted to a substituted service on his first and only attempt to effect a personal
service. Upon being informed that the petitioners were not around at that time, he immediately resorted to a substituted
service through Josephine Areola, a person whose age he did not even know or attempt to discover. He did not even
inquire about the whereabouts of the petitioners, the time they were expected to return home, the hours of the day they
could be contacted at their house or the location of their offices, if any, in order that he could faithfully comply with the
requirement of personal service. It is all too obvious that no earnest efforts were exerted by Deputy Sheriff Cruz to effect
the personal service of summons.
Both parties agree that the petitioners were the defendants in Civil Case No. Q-89-3327. However, petitioner Loreto
Alfaro-Laus is erroneously mentioned in the complaint as Loredo. On the other hand, petitioner Pepito Laus, the husband
of Loreto, is merely designated as JOHN DOE. The latter was impleaded as a co-defendant presumably on the theory
that the liability sought to be enforced is a conjugal partnership liability. In short, Loreto's husband was sued as an
indispensable party; it is clear that the trial court treated him as such when in its decision, ordered the defendants, not just
Loreto, to pay the adjudged amounts. The sheriff's return of service indisputably discloses that no summons was even
attempted to be served on petitioner Pepito Laus. Sheriff Cruz unequivocally states therein that the "duplicate copy of the
same together with the complaint and its annexes was duly served upon defendant Loredo (sic) Laus of 122 Molave Park
Subd. Paraaque M. M. thru JOSEPHINE AREOLA, maid of Loredo Daus (sic) of same address. Neither Deputy Sheriff
Cruz nor the private respondent had volunteered additional information to the effect that at some other time, summons
was in fact served on Pepito Laus. Accordingly, the trial court never acquired jurisdiction over his person. And yet, while
it concedes in its 29 December 1989 Order that the substituted service of summons was valid only for Loreto, it declared
the defendants and not only her in default. The court could have easily avoided this misdoing if it only examined
the records before issuing the order. On this score alone, the judgment by default is fatally flawed.
Some further comments, en passant, on the ratiocination of the respondent Court are in order. It is not accurate for the
latter to have said that the petitioners' motion to dismiss was not filed seasonably because it was filed beyond the
reglementary period provided in the Revised Rules of Court. Such a conclusion would doubtless be correct if there was a
valid service of summons. If, however, a defendant has not been properly summoned, the period to file a motion to
dismiss for lack of jurisdiction over his person does not commence to run until he voluntarily submits to the jurisdiction
of the court, since the court has no jurisdiction to adjudicate the controversy as to him until such time. In this case,
petitioners did not voluntarily submit to the jurisdiction of the trial court. Consequently, the period to file a responsive
pleading did not even commence to run.
In the first place, it is axiomatic that a void judgment can never become final and executory and may even be assailed
or impugned at any time. An action to declare the nullity of a void judgment does not prescribe. 41 Secondly, the motion
to dismiss in this case was filed before the petitioners received a copy of the decision by default. Since the said motion is
based on the lack of jurisdiction over the persons of the petitioners which, if true in fact, We have found it to be so
would result in the nullification not only of the default order but of the decision as well, then for all legal intents and
purposes, the latter was covered by the motion. This was precisely the orientation of the trial court when it allowed the
parties to submit evidence to support the motion to reconsider the Order of 5 March 1990 denying the motion to dismiss.
It would certainly not have gone that far if it thought otherwise for by then, the decision had already become final. Its
suggestion that the petitioners should have filed a motion to set aside the order of default on the ground that they had
failed to file the answer on grounds of fraud, accident, mistake or excusable negligence or a motion for new trial or a
petition for relief from judgment, is untenable for it begs the question. Besides, as shown above, petitioners' failure to file
the answer was not based on any of these grounds, but stood on the void service of summons.
PHIL. PORTS AUTHORITY (PPA) vs WILLIAM GOTHONG & ABOITIZ (WG&A), INC
FACTS: Petitioner William Gothong & Aboitiz, Inc. (WG&A), is a duly organized domestic corporation engaged in the
shipping industry. Respondent Philippine Ports Authority (PPA), upon the other hand, is a government-owned and
controlled company created and existing by virtue of the provisions of P.D. No. 87 and mandated under its charter to
operate and administer the country's sea port and port facilities.
After the expiration of the lease contract of Veterans Shipping Corporation over the Marine Slip Way in the North
Harbor, petitioner WG&A requested respondent PPA for it to be allowed to lease and operate the said facility. Thereafter,
then President Estrada issued a memorandum addressed to the Secretary of the Department of Transportation and
Communication (DOTC) and the General Manager of PPA, stating to the effect that in a meeting, the Economic
Coordinating Council (ECC) has approved the request of petitioner WG&A to lease the Marine Slip Way from January 1
to June 30, 2001 or until such time that respondent PPA turns over its operations to the winning bidder for the North
Harbor Modernization Project. Pursuant to the said Memorandum, a Contract of Lease was prepared by respondent PPA.
The said contract was eventually conformed to and signed by the petitioner company, through its President/Chief
Executive Officer Endika Aboitiz, Jr. Thereafter, in accordance with the stipulations made in the lease agreement, PPA
surrendered possession of the Marine Slip Way in favor of the petitioner.
However, believing that the said lease already expired on June 30, 2001, respondent PPA subsequently sent a letter to
petitioner WG&A dated November 12, 2001 directing the latter to vacate the contested premises not later than November
30, 2001 and to turnover the improvements made therein pursuant to the terms and conditions agreed upon in the
contract. In response, petitioner WG&A wrote PPA urging the latter to reconsider its decision to eject the former. Said
request was denied by the PPA via a letter. Petitioner WG&A commenced an Injunction suit before the Regional Trial
Court of Manila. Petitioner claims that the PPA unjustly, illegally and prematurely terminated the lease contract. It
likewise prayed for the issuance of a temporary restraining order to arrest the evacuation. In its complaint, petitioner also
sought recovery of damages for breach of contract and attorney's fees. Then, petitioner WG&A amended its complaint
for the first time. The complaint was still denominated as one for Injunction with prayer for TRO. In the said amended
pleading, the petitioner incorporated statements to the effect that PPA is already estopped from denying that the correct
period of lease is "until such time that the North Harbor Modernization Project has been bidded out to and operations
turned over to the winning bidder. It likewise included, as its third cause of action, the additional relief in its prayer, that
should the petitioner be forced to vacate the said facility, it should be deemed as entitled to be refunded of the value of
the improvements it introduced in the leased property.
Following the first amendment in the petitioner's complaint, respondent PPA submitted its answer. Meanwhile, the
TRO sought by the former was denied by the trial court. Petitioner later moved for the reconsideration of the said Order.
Shortly thereafter, petitioner filed a Motion to Admit Attached Second Amended Complaint. This time, however, the
complaint was already captioned as one for Injunction with Prayer for Temporary Restraining Order and/or Writ of
Preliminary Injunction and damages and/or for Reformation of Contract. Also, it included as its fourth cause of action
and additional relief in its prayer, the reformation of the contract as it failed to express or embody the true intent of the
contracting parties. The admission of the second amended complaint met strong opposition from the respondent PPA. It
postulated that the reformation sought for by the petitioner constituted substantial amendment, which if granted, will
substantially alter the latter's cause of action and theory of the case. The respondent judge issued an Order denying the
Admission of the Second Amended Complaint. Petitioner filed a motion for reconsideration of the aforesaid order but the
same was again denied.
Respondent WG&A then filed a petition for certiorari with the CA seeking the nullification of the aforementioned
RTC orders. The CA granted respondent's petition, thereby setting aside the RTC orders and directing the RTC to admit
respondent's second amended complaint pursuant to Section 3, Rule 10 of the 1997 Rules of Civil Procedure. Petitioner
moved for reconsideration but the same was denied. Hence, the present petition
ISSUE: WON the CA erred in ruling that the RTC committed grave abuse of discretion when it denied the admission of
the second amended complaint.
HELD: NO. The RTC applied the old Section 3, Rule 10 of the Rules of Court: Section 3. Amendments by leave of
court. after the case is set for hearing, substantial amendments may be made only upon leave of court. But such leave
may be refused if it appears to the court that the motion was made with intent to delay the action or that the cause of
action or defense is substantially altered. Orders of the court upon the matters provided in this section shall be made
upon motion filed in court, and after notice to the adverse party, and an opportunity to be heard.
instead of the provisions of the 1997 Rules of Civil Procedure, amending Section 3, Rule 10, to wit: SECTION 3.
Amendments by leave of court. Except as provided in the next preceding section, substantial amendments may be made
only upon leave of court. But such leave may be refused if it appears to the court that the motion was made with intent to
delay. Orders of the court upon the matters provided in this section shall be made upon motion filed in court, and after
notice to the adverse party, and an opportunity to be heard.
Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil Procedure amended the former rule in such manner that
the phrase "or that the cause of action or defense is substantially altered" was stricken-off and not retained in the new
rules. The clear import of such amendment in Section 3, Rule 10 is that under the new rules, " the amendment may (now)
substantially alter the cause of action or defense." This should only be true, however, when despite a substantial change
or alteration in the cause of action or defense, the amendments sought to be made shall serve the higher interests of
substantial justice, and prevent delay and equally promote the laudable objective of the rules which is to secure a "just,
speedy and inexpensive disposition of every action and proceeding." The application of the old Rules by the RTC almost
five years after its amendment by the 1997 Rules of Civil Procedure patently constitutes grave abuse of discretion.
YOUNG vs SPS. SY
FACTS: There are two cases that are consolidated. Both petitions originated from a Complaint for Nullification of
Second Supplemental Extra-judicial Settlement, Mortgage, Foreclosure Sale and Tax Declaration filed by the petitioner
with the RTC. Genalyn D. Young (petitioner), in her Complaint, alleged that the extra-judicial partition executed by her
natural mother, Lilia Dy Young which adjudicated an unregistered parcel of land solely in favor of the latter, is
unenforceable, since at the time of the execution, she (petitioner) was only 15 years old and no court approval had been
procured; that the partition had been registered with the Register of Deeds; that Lilia Dy obtained a loan from spouses
Manuel Sy and Victoria Sy (respondents) and mortgaged the subject property; that the property was foreclosed and sold
to the highest bidder, respondent Manuel Sy; that a Certificate of Sale for this purpose had been registered with the
Register of Deeds; and that, thereafter, respondents obtained in their name a tax declaration over the property in question.
The petitioner filed with the RTC a Motion to Admit Supplemental Complaint, attaching the Supplemental Complaint
wherein petitioner invoked her right, as co-owner, to exercise the legal redemption. The RTC denied the Motion.
Petitioner filed a Petition for Certiorari and Mandamus under Rule 65 of the Rules of Court. The CA promulgated its
Decision denying the Petition for Certiorari and Mandamus and held that the cause of action of the petitioner in the
Supplemental Complaint is entirely different from the original complaint; that the Supplemental Complaint did not
merely supply its deficiencies; and that, at any rate, in the event the trial court issues an adverse ruling, the petitioner can
still appeal the same, hence, the petition under Rule 65 is not proper.
While the Petition for Certiorari and Mandamus (re: Supplemental Complaint) was pending in the CA, trial in the
RTC continued. On the day before the hearing slated for, the petitioner filed a Motion to Cancel Hearing, alleging that
she was indisposed. On the day of the hearing, respondents, through counsel, objected to the postponement and moved
for the dismissal of the case for non-suit. The RTC sustained the objection and dismissed the complaint. The RTC denied
the petitioner's Motion for Reconsideration. Then, the RTC issued an Order correcting the first Order due to a
typographical error. The petitioner filed a Notice of Appeal questioning the foregoing RTC Orders. The CA rendered a
Decision in favor of the petitioner, reversing and setting aside the RTC Orders. The respondents filed their Motion for
Reconsideration, and based on the records before the Court, this case is still pending in the CA. On top of the foregoing
appeal, the petitioner, four months after filing her Notice of Appeal to the CA, filed with the CA a Petition for Certiorari
under Rule 65 to annul the same RTC Orders that comprise the subject matter of the ordinary appeal. The CA denied the
Petition for Certiorari and held that the dismissal of the case by the RTC on the ground of non prosequitur has the effect
of an adjudication upon the merits; that an order of dismissal, whether right or wrong, is a final order that may constitute
an error of judgment correctible by ordinary appeal and not by certiorari; that the petitioner actually chose the mode of
ordinary appeal by filing a Notice of Appeal; and that since the remedy of appeal was available, then the petition for
certiorari, being an extraordinary remedy, must fail.
ISSUE: WON the denial of the Motion to Admit Supplemental Complaint is proper.
HELD:
The courts a quo held that the Supplemental Complaint constituted a substantial amendment of the original
complaint; that the relief prayed for in the former is inconsistent with the latter; and that the causes of action of both are
likewise different. This is incorrect. Section 6, Rule 10 of the Revised Rules of Court provides: SECTION 6.
Supplemental Pleadings. Upon motion of a party the court may, upon reasonable notice and upon such terms as are
just, permit him to serve a supplemental pleading setting forth transactions, occurrences or events which have happened
since the date of the pleading sought to be supplemented. The adverse party may plead thereto within ten (10) days from
notice of the order admitting the supplemental pleading.
As its very name denotes, a supplemental pleading only serves to bolster or add something to the primary pleading. A
supplement exists side by side with the original. It does not replace that which it supplements. Moreover, a supplemental
pleading assumes that the original pleading is to stand and that the issues joined with the original pleading remained an
issue to be tried in the action. It is but a continuation of the complaint. Its usual office is to set up new facts which justify,
enlarge or change the kind of relief with respect to the same subject matter as the controversy referred to in the original
complaint. The purpose of the supplemental pleading is to bring into the records new facts which will enlarge or change
the kind of relief to which the plaintiff is entitled; hence, any supplemental facts which further develop the original right
of action, or extend to vary the relief, are available by way of supplemental complaint even though they themselves
constitute a right of action.
In this case, the consolidation of title over the subject property in the name of respondent Manuel Sy and the issue as
to whether it precluded petitioner as alleged co-owner from exercising the right of legal redemption, are new matters that
occurred after the filing of the original complaint. The relief prayed for in the Supplemental Complaint, which is the
exercise of the right of legal redemption accorded to co-owners of property, is germane to and intertwined with the cause
of action in the Complaint for the nullification of the "Second Supplemental to the Extrajudicial Partition" on the ground
that it lacked the approval of a guardianship court. The petitioner's right to redeem the property is dependent on the
nullification of the partition which is the subject of the original complaint. Unless the partition is nullified or declared
without any force or effect, the petitioner will not be considered a co-owner of the property and, consequently, she will
be unable to exercise any right of legal redemption under Article 1620 of the Civil Code granted to co-owners of
property. The right of legal redemption as co-owner is conferred by law and is merely a natural consequence of co-
ownership. Hence, the petitioner's cause of action for legal redemption as embodied in her Supplemental Complaint
stems directly from and is an extension of her rights as co-owner of the property subject of the Complaint.
Furthermore, the evidence required to prove petitioner's right of legal redemption in the Supplemental Complaint will
be exactly the same evidence required to prove the nullification of the partition in the Complaint. If a separate action is
filed for the subject covered by the Supplemental Complaint, there will be multiplicity of suits. Should a separate
complaint be filed before the nullification of the partition, the same would be dismissed for being premature pending the
resolution of the Complaint for nullification. After all, the respondents have the right to file a supplemental answer to the
Supplemental Complaint, conformably with Section 7, Rule 11 of the Rules of Court which reads:
SEC. 7. Answer to supplemental complaint. A supplemental complaint may be answered within ten (10) days from
notice of the order admitting the same, unless a different period is fixed by the court. The answer to the complaint shall
serve as the answer to the supplemental complaint if no new or supplemental answer is filed.
In affirming the RTC's denial of the admission of the Supplemental Complaint, the CA rationalized that "[i]n the
event that the lower court rules in favor of petitioner, then there is no need for her to file a petition to exercise the right of
redemption. On the other hand, should the trial court issue[ ] an adverse ruling then petitioner can still appeal the same.
The petition for certiorari is therefore not proper." This is not proper. As the petitioner correctly pointed out, even if the
trial court decides in her favor, the redemption period would have lapsed and would not form a part of the decision since
it was not prayed for, much less alleged in the original complaint. In such a case, the respondents could oppose the
exercise of the right to redeem since it would not have been included in the decision over the original complaint. And
should the trial court issue an adverse ruling, the petitioner can only appeal what is included in the ruling which is
limited to the denial of the prayer for the nullification of the partition. Naturally, such a decision would not concern any
right of redemption.
VIRATA vs SANDIGANBAYAN
FACTS: Petitioner is among the forty-four (44) co-defendants of Benjamin (Kokoy) Romualdez in a complaint filed by
the Republic of the Philippines with the respondent Sandiganbayan. The complaint was amended thrice, the last
amendment thereto is denominated as the Second Amended Complaint, as expanded per the Court-Approved
Manifestation/Motion. Petitioner moved to dismiss the said case, insofar as he is concerned, on various grounds
including the failure of the expanded Second Amended Complaint to state a cause of action. The motion was denied and
so was his bid to have such denial reconsidered. He then came to this Court via a special civil action for certiorari
imputing upon the respondent Sandiganbayan the commission of grave abuse 'of discretion in, inter alia, finding that the
complaint sufficiently states a cause of action against him. We overruled the said contention and upheld the ruling of the
Sandiganbayan. However, We stated: "No doubt is left in Our minds that the questioned expanded Second Amended
Complaint is crafted to conform to a well-planned outline that forthwith focuses one's attention to the asserted right of
the State, expressly recognized and affirmed by the 1987 Constitution (Section 15, Art XI), and its corresponding duty,
(Bataan Shipyard & Engineering Co., Inc. vs. PCGG, 150 SCRA 181, 207) to recover ill-gotten wealth from the
defendants named therein; the alleged schemes and devises used and the manipulations made by them to amass such ill-
gotten wealth, which are averred first generally and then specifically; and the extent of the reliefs demanded and prayed
for. However, as shown above, the maze of unnecessary literary embellishments may indeed raise some doubts on the
sufficiency of the statement of material operative facts to flesh out the causes of action. Be that as it may, We are,
nevertheless, convinced that the questioned pleading has sufficiently shown viable causes of action.
If petitioners perceive some ambiguity or vagueness therein, the remedy is not a motion to dismiss. An action should
not be dismissed upon a mere ambiguity, indefiniteness or uncertainty, for these are not grounds for a motion to dismiss,
but rather for a bill of particulars. Petitioner was thus compelled to go back to the Sandiganbayan. However, insisting
that he "could not prepare an intelligent and adequate pleading in view of the general and sweeping allegations against
him in the Second Amended Complaint as expanded," while at the same time remaining "steadfast in his position
maintaining his posture of innocence," petitioner filed a Motion For a Bill of Particulars. He alleges therein that on the
basis of the general and sweeping allegations in the Second Amended Complaint. The plaintiff, Republic of the
Philippines, asserts four (4) alleged "actionable wrongs" against the herein petitioner.
Petitioner claims, however, that insofar as he is concerned, the "foregoing allegations and the purported illegal acts
imputed to them as well as the alleged causes of actions are vague and ambiguous. They are not averred with sufficient
definiteness or particularity as would enable defendant Virata to properly prepare his answer or responsive pleading." He
therefore prays that "in accordance with Rule 12 of the Rules of Court, plaintiff be directed to submit a more definite
statement or a bill of particulars on the matters mentioned above which are not averred with sufficient definiteness or
particularity." In its Comment, the plaintiff Republic of the Philippines opposed the motion. The respondent
Sandiganbayan (Second Division) partially granted the Motion for a Bill of Particulars. We are of the considered opinion
that the foregoing charges in the Expanded Complaint are clear, definite and specific enough to allow defendant-movant
to prepare an intelligent responsive pleading or to prepare for trial. In short, of the four (4) actionable wrongs enumerated
in the Motion for a Bill of Particulars, the Sandiganbayan favorably acted only with respect to the fourth. Not satisfied
with the partial grant of the motion, petitioner filed the instant petition under Rule 65 of the Revised Rules of Court
contending that the Sandiganbayan acted with grave abuse of its discretion amounting to lack or excess of jurisdiction in
not totally granting his Motion for a Bill of Particulars.
ISSUE: WON the Sandiganbayan acted with grave abuse of its discretion amounting to lack or excess of jurisdiction in
not totally granting his Motion for a Bill of Particulars.
HELD: YES. As this Court enunciated in Tan vs. Sandiganbayan: "It is the office or function, as well as the object or
purpose, of a bill of particulars to amplify or limit a pleading, specify more minutely and particularly a claim or defense
set up and pleaded in general terms, give information, not contained in the pleading, to the opposite party and the court
as to the precise nature, character, scope, and extent of the cause of action or defense relied on by the pleader, and
apprise the opposite party of the case which he has to meet, to the end that the proof at the trial may be limited to the
matters specified, and in order that surprise at, and needless preparation for, the trial may be avoided, and that the
opposite party may be aided in framing his answering pleading and preparing for trial. It has also been stated that it is the
function or purpose of a bill of particulars to define, clarify, particularize, and limit or circumscribe the issues in the case,
to expedite the trial, and assist the court. A general function or purpose of a bill of particulars is to prevent injustice or do
justice in the case when that cannot be accomplished without the aid of such a bill. It is not the office of a bill of
particulars to supply material allegations necessary to the validity of a pleading, or to change a cause of action or defense
stated in the pleading, or to state a cause of action or defense other than the one stated. Also it is not the office or
function, or a proper object, of a bill of particulars to set forth the pleader's theory of his cause of action or a rule of
evidence on which he intends to rely, or to furnish evidential information whether such information consists of evidence
which the pleader proposes to introduce or of facts which constitute a defense or offset for the other party or which will
enable the opposite party to establish an affirmative defense not yet pleaded." The phrase "to enable him properly to
prepare his responsive pleading . . ." in Section 1 of Rule 12 implies not just the opportunity to properly prepare a
responsive pleading but also, and more importantly, to prepare an intelligent answer. Thus, in Tan vs. Sandiganbayan,
this Court also said: The complaint for which a bill for a more definite statement is sought, need only inform the
defendant of the essential (or ultimate) facts to enable him, the defendant to prepare an intelligent answer . . . ." The
proper preparation of an intelligent answer requires information as to the precise nature, character, scope and extent of
the cause of action in order that the pleader may be able to squarely meet the issues raised, thereby circumscribing them
within determined confines and, preventing surprises during the trial, and in order that he may set forth his defenses
which may not be so readily availed of if the allegations controverted are vague, indefinite, uncertain or are mere general
conclusions. The latter task assumes added significance because defenses not pleaded (save those excepted in Section 2,
Rule 9 of the Revised Rules of Court and, whenever appropriate, the defense of prescription) 27 in a motion to dismiss or
in the answer are deemed waived.
We have carefully, scrutinized the paragraphs of the expanded Second Amended Complaint subject of the
petitioner's motion for a bill of particulars and find the same to be couched in general terms and wanting in definiteness
or particularity. It is precisely for this reason that We indirectly suggested in the said decision that the petitioner's remedy
is to file a motion for a bill of particulars and not a motion to dismiss. Thus, the basis of the distinction made by the
respondent Sandiganbayan between the allegations in support of the first three (3) "actionable wrongs" and those in
support of the fourth is as imperceptible as it is insignificant in the light of its admission that the ruling in Tantuico
possesses "a semblance of relevance to the factual setting of the instant incident." As We see it, there exists not only a
semblance but a striking similarity in the crafting of the allegations between the causes of action against Tantuico and
those against the petitioner. And, as already stated, such allegations are general and suffer from a lack of definiteness and
particularity. As a matter of fact, paragraphs 2, 7, 9 and 17 four of the five paragraphs of the complaint in Civil Case
No. 0035 which was resolved in Tantuico are likewise involved in the instant case. Tantuico's applicability to the
instant case is thus ineluctable and the propriety of the motion for a bill of particulars under Section 1, Rule 12 of the
Revised Rules of Court is beyond dispute. We also find the Sandiganbayan's conclusion that "the matters which
defendant-movant seeks are evidentiary in nature and, being within his intimate or personal knowledge, may be denied
of admitted by him or if deemed necessary, be the subject of other forms of discovery," to be without basis as to the first
aspect and gratuitous as to the second. The above disquisition's indubitably reveal that the matters sought to be averred
with particularity are not evidentiary in nature. Since the issues have not as yet been joined and no evidence has so far
been adduced by the parties the Sandiganbayan was in no position to conclude that the matters which the. petitioner
seeks are "within his intimate or personal knowledge."
SAW vs CA
FACTS: A collection suit with preliminary attachment was filed by Equitable Banking Corporation against Freeman, Inc.
and Saw Chiao Lian, its President and General Manager. The petitioners moved to intervene, alleging that (1) the loan
transactions between Saw Chiao Lian and Equitable Banking Corp. were not approved by the stockholders representing
at least 2/3 of corporate capital; (2) Saw Chiao Lian had no authority to contract such loans; and (3) there was collusion
between the officials of Freeman, Inc. and Equitable Banking Corp. in securing the loans. The motion to intervene was
denied, and the petitioners appealed to the Court of Appeals.
Meanwhile, Equitable and Saw Chiao Lian entered into a compromise agreement which they submitted to and was
approved by the lower court. But because it was not complied with, Equitable secured a writ of execution, and two lots
owned by Freeman, Inc. were levied upon and sold at public auction to Freeman Management and Development Corp.
The Court of Appeals sustained the denial of the petitioners' motion for intervention, holding that "the compromise
agreement between Freeman, Inc., through its President, and Equitable Banking Corp. will not necessarily prejudice
petitioners whose rights to corporate assets are at most inchoate, prior to the dissolution of Freeman, Inc.And
intervention under Sec. 2, Rule 12 of the Revised Rules of Court is proper only when one's right is actual, material, direct
and immediate and not simply contingent or expectant." It also ruled against the petitioners' argument that because they
had already filed a notice of appeal, the trial judge had lost jurisdiction over the case and could no longer issue the writ
of execution.
ISSUE: WON the CA erred in holding that the petitioners cannot intervene because their rights as stockholders of
Freeman are merely inchoate and not actual, material, direct and immediate prior to the dissolution of the corporation.
HELD: NO. To allow intervention, [a] it must be shown that the movant has legal interest in the matter in litigation, or
otherwise qualified; and [b] consideration must be given as to whether the adjudication of the rights of the original
parties may be delayed or prejudiced, or whether the intervenor's rights may be protected in a separate proceeding or not.
Both requirements must concur as the first is not more important than the second. The interest which entitles a person to
intervene in a suit between other parties must be in the matter in litigation and of such direct and immediate character
that the intervenor will either gain or lose by the direct legal operation and effect of the judgment. Otherwise, if persons
not parties of the action could be allowed to intervene, proceedings will become unnecessarily complicated, expensive
and interminable. And this is not the policy of the law.
The words "an interest in the subject" mean a direct interest in the cause of action as pleaded, and which would put the
intervenor in a legal position to litigate a fact alleged in the complaint, without the establishment of which plaintiff could
not recover. Here, the interest, if it exists at all, of petitioners-movants is indirect, contingent, remote, conjectural,
consequential and collateral. At the very least, their interest is purely inchoate, or in sheer expectancy of a right in the
management of the corporation and to share in the profits thereof and in the properties and assets thereof on dissolution,
after payment of the corporate debts and obligations. While a share of stock represents a proportionate or aliquot interest
in the property of the corporation, it does not vest the owner thereof with any legal right or title to any of the property, his
interest in the corporate property being equitable or beneficial in nature. Shareholders are in no legal sense the owners of
corporate property, which is owned by the corporation as a distinct legal person.
On the second assignment of error, the respondent court correctly noted that the notice of appeal was filed by the
petitioners in 1988, upon the denial of their motion to intervene, and the writ of execution was issued by the lower court
in 1989. The petitioners' appeal could not have concerned the "whole" case (referring to the decision) because the
petitioners "did not appeal the decision as indeed they cannot because they are not parties to the case despite their being
stockholders of respondent Freeman, Inc." They could only appeal the denial of their motion for intervention as they
were never recognized by the trial court as party litigants in the main case. Intervention is "an act or proceeding by which
a third person is permitted to become a party to an action or proceeding between other persons, and which results merely
in the addition of a new party or parties to an original action, for the purpose of hearing and determining at the same time
all conflicting claims which may be made to the subject matter in litigation.
It is not an independent proceeding, but an ancillary and supplemental one which, in the nature of things, unless
otherwise provided for by the statute or Rules of Court, must be in subordination to the main proceeding.5 It may be laid
down as a general rule that an intervenor is limited to the field of litigation open to the original parties. In the case at bar,
there is no more principal action to be resolved as a writ of execution had already been issued by the lower court and the
claim of Equitable had already been satisfied. The decision of the lower court had already become final and in fact had
already been enforced. There is therefore no more principal proceeding in which the petitioners may intervene. The
Court observes that even with the denial of the petitioners' motion to intervene, nothing is really lost to them.1wphi1
The denial did not necessarily prejudice them as their rights are being litigated in the case now before the Securities and
Exchange Commission and may be fully asserted and protected in that separate proceeding.
ABERCA vs VER
FACTS: Several suspected subversives who were arrested and detained by the military filed a complaint for damages
with the RTC of Quezon City against Gen. Fabian Ver, then AFP Chief of Staff, and other subordinate officers. In their
complaint, the plaintiff-appellees alleged that they were arrested and detained by Task Force Makabansa, a composite
group of various intelligence units of the AFP, on the strength of defective search warrants; that while under detention
and investigation, they were subjected to physical and psychological harm, torture and other brutalities to extort from
them confessions and other information that would incriminate them; and that by reason thereof, they suffered actual and
moral damages. Defendants-appellants, through their counsel, the then Solicitor General Estelito Mendoza, filed a
motion to dismiss on the following grounds: (1) since the privilege of the writ of habeas corpus was then suspended, the
trial court cannot inquire into the circumstances surrounding plaintiffs-appellees arrests; (2) the defendants-appellants are
immune from liability for the reason that they were then performing their official duties; and (3) the complaint states no
cause of action.
The trial court granted defendants-appellants motion to dismiss and ordered the case dismissed. Plaintiffs-appellees
filed a motion to reconsider and set aside the order of dismissal. However, the trial court declared the order final.
Plaintiffs-appellees again filed a motion for reconsideration of the order but the trial court denied the motion for
reconsideration. Plaintiffs-appellees went to the Supreme Court on a petition for review on certiorari, seeking to annul
and set aside the orders of the trial court. While the case was pending in the Supreme Court, the so-called EDSA
revolution took place. As a result, the defendants-appellants lost their official positions and were no longer in their
respective office addresses as appearing in the record. Also, in the meantime, the case was re-raffled to Branch 107. The
Supreme Court rendered a decision annulling and setting aside the assailed orders and remanded the case to the trial
court for further proceedings. However, trial could not proceed immediately because the record of the case was destroyed
when fire razed the City Hall of Quezon City. It was only when plaintiffs-appellees sought a reconstitution of the record
of the case. The record shows that the petition for reconstitution was set for hearing. However, there is nothing in the
record to show that defendants-appellants or their counsel were notified. For lack of an opposition, the petition for
reconstitution was granted.
Plaintiffs-appellees filed a motion praying that defendants-appellants be required to file their answer. However, the
record as reconstituted did not show who are the lawyers of the defendants-appellants considering that Estelito Mendoza,
who had represented them in his capacity as Solicitor General, was no longer holding that position. Furthermore,
defendants-appellants were also no longer occupying the positions they held at the time the complaint was filed. Thus,
plaintiffs-appellees were directed to report to the trial court the addresses and whereabouts of defendants-appellants so
that they could be properly notified. Instead of complying with the order, plaintiffs-appellees filed a motion to declare
defendants-appellants in default. The trial court deferred resolution of this motion and instead, it issued an order
directing that a copy of the order be furnished to new Solicitor General Francisco Chavez to enable him to take action
pursuant to Section 18, Rule 3 of the Rules of Court, and to former Solicitor General Estelito Mendoza to enable him to
give notice as to whether he [would] continue to represent the defendants-appellants in his private capacity. As it said in
its order, the trial court took this action in view of the change in government and corresponding change in the addresses
and circumstances of the defendants-appellants who may not even be aware of the decision of the Supreme Court in case
G.R. No. L-69866 and of the reconstitution of records in this case
Former Solicitor General Mendoza filed a manifestation informing the trial court that his appearance as defendants-
appellants counsel terminated when he ceased to be Solicitor General and that he was not representing them in his
private capacity. On his part, Solicitor General Chavez finally filed a notice of withdrawal of appearance, citing Urbano
v. Go, where the Supreme Court said that the Office of the Solicitor General (OSG) is not authorized to represent a
public official at any stage of a criminal case or in a civil suit for damages arising from a felony. The record does not
show that defendants-appellants were furnished a copy of this notice of withdrawal or that they gave their conformity
thereto. The trial court denied plaintiffs-appellees motion to declare defendants-appellants in default, emphatically
pointing out that defendants-appellants were not duly notified of the decision of the Supreme Court. In the same order,
the trial court directed plaintiffs-appellees to comply with the order of August 17, 1990 within ten (10) days from notice,
with a warning that the case [would] be archived and eventually dismissed if plaintiffs-appellees failed to furnish to the
court the addresses of defendants-appellants. Plaintiffs-appellees moved to reconsider the order dated December 27,
1990 but in an order dated February 1, 1991, the trial court denied the motion, stating that without actual notice of the
judgment of the Supreme Court xxx the defendants-appellants herein would not be aware that they should file a
responsive pleading and that, therefore, to consider the defendants-appellants in default would be tantamount to lack of
due process xxx.
For failure of the plaintiffs-appellees to comply with the orders, the trial court dismissed the case without prejudice in
its order dated March 7, 1991. Subsequently, however, in an order, the trial court set aside the order of dismissal and
reinstated the case. It also approved plaintiffs-appellees request to serve the notice to file answer or responsive pleading
by publication. plaintiffs-appellees informed the trial court that the following notice was published in the Tagalog
newspaper BALITA. No answer was filed by defendants-appellants within the period stated in the notice. On motion of
plaintiffs-appellees, the trial court in its order declared defendants-appellants in default and directed plaintiffs-appellees
to present their evidence ex-parte. the RTC handed down a decision in favor of the petitioners.
Respondents Col. Fidel Singson (Col. Singson), Lt. Col. Panfilo M. Lacson (Lt. Col. Lacson), and Col. Rolando
Abadilla (Col. Abadilla) filed their Omnibus Motion praying as follows: 1) that the order of default dated December 5,
1991 be reversed and set aside; 2) that the decision be reversed and set aside; 3) that the entire proceedings be declared
null and void; and 4) that they be given fifteen (15) days from notice to file answer to the complaint and present their
evidence. Col. Gerardo B. Lantoria (Col. Lantoria) filed his own Motion for Reconsideration. On his part, respondent
Maj. Rodolfo Aguinaldo (Maj. Aguinaldo) failed to file a timely notice of appeal so he filed a Petition for Relief from
Judgment praying that the RTC set aside its decision and proceed to try the case based on the following grounds: 1) the
decision was rendered without the benefit of notice in gross violation of his right to due process; 2) the reconstitution of
the records of the case and further proceedings taken thereon were effected through fraud; and 3) his failure to move for
a new trial or to appeal was due to mistake or excusable negligence. RTC denied their motions. The respondents elevated
their case to the CA. the CA rendered a decision reversing and setting aside the RTC decision and ordering the case
remanded to the RTC for further proceedings.
The CA ruled, among others, that the RTC committed four (4) errors in declaring the respondents in default and
proceeding to hear the case. The RTC committed its first error when it abandoned the proper modes of service of notices,
orders, resolutions or judgments as the petitioners failed to comply with its order dated August 17, 1990, directing them
to report the addresses and whereabouts of the respondents so that they could be properly notified. The second error was
the failure of the RTC to avail of substituted service after failing to effect personal service or service by mail. It
perpetrated its third error when it authorized service by publication after dismissing the case for failure of the petitioners
to furnish the current addresses of the respondents. The CA reasoned out that there was nothing in the rules which would
authorize publication of a notice of hearing to file answer and for what was authorized to be published were summons
and final orders and judgments. The fourth error was committed when the respondents were declared in default because
they were not duly notified and, therefore, were denied due process. The CA stated that since the RTC failed to notify the
respondents of the proceedings undertaken, the latter were denied the chance to actively participate therein.
ISSUE: WON the constitutional right to procedural due process was properly observed or was unacceptably violated in
this case when the respondents were declared in default for failing to file their answer within the prescribed period and
when the petitioners were allowed to present their evidence ex-parte.
HELD:
The above rules, thus, prescribe the modes of service of pleadings, motions, notices, orders, judgments, and other
papers, namely: (1) personal service; (2) service by mail; and (3) substituted service, in case service cannot be effected
either personally or by mail. The Rules of Court has been laid down to insure the orderly conduct of litigation and to
protect the substantive rights of all party litigants. It is for this reason that the basic rules on the modes of service
provided under Rule 13 of the Rules of Court have been made mandatory and, hence, should be strictly followed. Section
11, Rule 13 of the Rules of Court states: SEC. 11. Priorities in modes of service and filing. Whenever practicable, the
service and filing of pleadings and other papers shall be done personally. Except with respect to papers emanating from
the court, a resort to other modes must be accompanied by a written explanation why the service or filing was not done
personally. A violation of this Rule may be cause to consider the paper as not filed. Section 11 is mandatory.
Pursuant to Section 11 of Rule 13, service and filing of pleadings and other papers must, whenever practicable, be
done personally; and if made through other modes, the party concerned must provide a written explanation as to why the
service or filing was not done personally. If only to underscore the mandatory nature of this innovation to our set of
adjective rules requiring personal service whenever practicable, Section 11 of Rule 13 then gives the court the discretion
to consider a pleading or paper as not filed if the other modes of service or filing were resorted to and no written
explanation was made as to why personal service was not done in the first place. The exercise of discretion must,
necessarily, consider the practicability of personal service, for Section 11 itself begins with the clause "whenever
practicable." We thus take this opportunity to clarify that under Section 11, Rule 13 of the 1997 Rules of Civil Procedure,
personal service and filing is the general rule, and resort to other modes of service and filing, the exception. Henceforth,
whenever personal service or filing is practicable, in light of the circumstances of time, place and person, personal
service or filing is mandatory. Only when personal service or filing is not practicable may resort to other modes be had,
which must then be accompanied by a written explanation as to why personal service or filing was not practicable to
begin with. In adjudging the plausibility of an explanation, a court shall likewise consider the importance of the subject
matter of the case or the issues involved therein, and the prima facie merit of the pleading sought to be expunged for
violation of Section 11. This Court cannot rule otherwise, lest we allow circumvention of the innovation introduced by
the 1997 Rules in order to obviate delay in the administration of justice.
In the case at bench, the respondents were completely deprived of due process when they were declared in default
based on a defective mode of service service of notice to file answer by publication. The rules on service of pleadings,
motions, notices, orders, judgments, and other papers were not strictly followed in declaring the respondents in default.
The Court agrees with the CA that the RTC committed procedural lapses in declaring the respondents in default and in
allowing the petitioners to present evidence ex-parte. Instead of complying with the RTCs directive to report the
respondents addresses and whereabouts, the petitioners filed a motion to declare the respondents in default. As correctly
observed by the CA, the RTCs Order was an attempt to serve a notice to file answer on the respondents by personal
service and/or by mail. These proper and preferred modes of service, however, were never resorted to because the OSG
abandoned them when the petitioners failed to comply with the August 17, 1990RTC order requiring them to report the
addresses and whereabouts of the respondents. Nevertheless, there was still another less preferred but proper mode of
service available substituted service - which is service made by delivering the copy to the clerk of court, with proof of
failure of both personal service and service by mail. Unfortunately, this substitute mode of service was not resorted to by
the RTC after it failed to effect personal service and service by mail. Instead, the RTC authorized an unrecognized mode
of service under the Rules, which was service of notice to file answer by publication.
In view of the peculiar circumstances surrounding the case, the RTC should have instead directed the petitioners to
exert diligent efforts to notify the respondents either personally or by registered mail. In case the preferred modes were
impractical, the Court should have required the petitioners to at least report in writing why efforts exerted towards
personal service or service by mail failed. In other words, a convincing proof of an impossibility of personal service or
service by mail to the respondents should have been shown first. The RTC, thus, erred when it ruled that the publication
of a notice to file answer to the respondents substantially cured the procedural defect equivalent to lack of due process.
The RTC cannot just abandon the basic requirement of personal service and/or service by mail. To stress, the only modes
of service of pleadings, motions, notices, orders, judgments and other papers allowed by the rules are personal service,
service by mail and substituted service if either personal service or service by mail cannot be made, as stated in Sections
6, 7 and 8 of Rule 13 of the Rules of Court. Nowhere under this rule is service of notice to file answer by publication is
mentioned, much less recognized.
Its third error was when it authorized service by publication after initially dismissing the case for failure of plaintiffs-
appellees to furnish the current address of defendants-appellants. There is, however, nothing in the Rules that authorizes
publication of a notice of hearing to file answer. What is authorized to be published are: (1) summons, and (2) final
orders and judgments.
UNITED PULP AND PAPER CO., INC vs UNITED PULP AND PAPER CHAPTER-FEDERATION OF FREE
WORKERS
FACTS: United Pulp and Paper Co., Inc., petitioner, implemented a "Promotions Policy"3 that recognizes the excellent
and meritorious work performance of deserving employees during the last twelve (12) months. Teodorico Simbulan was
promoted from Welder I to Welder II with the corresponding pay class (PC) movement from PC V to PC VIII. For and in
behalf of Simbulan, United Pulp and Paper Chapter-Federation of Free Workers, respondent, questioned the regularity or
correctness of the salary increase granted by petitioner. Invoking Section 1, Article XVII of the collective bargaining
agreement (CBA),5 respondent maintains that Simbulan is entitled to a 5% salary increase (for every pay class
movement) because such salary increase does not exceed the salary rates of other incumbents. Respondent also contends
that petitioner is guilty of discrimination against Simbulan since other employees, like Enrique Cruz and Joselito de
Castro who were previously promoted, enjoy the 5% salary increase for their pay class movements. The controversy was
submitted to the grievance machinery, but the parties failed to reach an acceptable settlement. Thus, the matter was
elevated to a panel of Voluntary Arbitrators of the National Conciliation and Mediation Board (NCMB), III at San
Fernando, Pampanga.
The Voluntary Arbitrators rendered a Decision holding that the promotional increase in the case of union employees
is 5% compounded for every pay class jump unless the effect of such increase will be such as to cause the promoted
employees salary to exceed that of the lowest paid incumbent in the same position as that to which the employee is
being promoted, in which case the promotional increase shall be limited to not less than 3%. Consequently, in the case of
the subject employee, Teodorico Simbulan, since there is no showing that, for the second and third jumps in his
promotion, his salary would have exceeded that of the lowest paid incumbent in the pertinent position if granted a 5%
promotional increase, he is entitled to a salary increase of 5%+5%+5%, compounded for each pay class, effective as of
the said date.
Petitioner filed a motion for reconsideration but was denied by the Voluntary Arbitrators. Petitioner filed with the
Court of Appeals a petition for review under Rule 43 of the 1997 Rules of Civil Procedure, as amended, assailing the
Decision and Resolution of the Voluntary Arbitrators. The Appellate Court dismissed the petition outright for being
insufficient in form because (1) the verification and certification of non-forum shopping was signed only by counsel for
the petitioner corporation, rather than by a duly-authorized officer thereof; (2) The affidavit of service is inadequate, as
the registry receipts evidencing mailing of copies of the petition to the respondent were not attached; and (3) Absence of
the mandatory written explanation required under Sec. 11, Rule 13, 1997 Rules of Civil Procedure to explain why
personal service upon the respondents of copies of the petition was not resorted to. petitioner filed a motion for
reconsideration but was denied by the Appellate Court.
ISSUE: WON the CA seriously erred in dismissing its petition for review on mere technicalities.
HELD: NO. Section 5, Rule 7 of the same Rules provides that it is the plaintiff or principal party who shall certify under
oath in the complaint or other initiatory pleading that he has not commenced any action involving the same issues in any
court, tribunal or quasi-judicial agency. Here, only petitioners counsel signed the certification against forum-shopping.
There is no showing that he was authorized by the petitioner company to represent the latter and to sign the certification.
the petition is flawed as the certificate of non-forum shopping was signed only by counsel and not by the party." The rule
requires that it should be the plaintiff or principal party who should sign the certification, otherwise, this requirement
would easily be circumvented by the signature of every counsel representing corporate parties.
Moreover, petitioners failure to attach with the petition a written explanation why the service or filing was not done
personally violates Section 11, Rule 13 of the same Rules.11 We have ruled that where no explanation is offered to
justify the service of pleadings by other modes, the discretionary power of the court to expunge the pleading becomes
mandatory. 12 Thus, the Court of Appeals correctly considered the petition as not having been filed, in view of
petitioners failure to present a written explanation why it failed to effect personal service of its petition for review.