1.
Lafarge v Continental allowed in order to avoid a multiplicity of suits and to facilitate the disposition of the whole
Lafarge on behalf of its affiliates and other qualified entities agreed to purchase the cement
business of CCC. On October 21, 1998, both parties entered into a Sale and Purchase
Agreement (SPA). At the time of the foregoing transactions, petitioners were well aware that
CCC had a case pending with the Supreme Court.
Under Clause 2 (c) of the SPA, they agreed to retain from the purchase price a portion of
the contract price in the amount of P117,020,846.84 -- the equivalent of US$2,799,140.
This amount was to be deposited in an interest-bearing account in the First National City
Bank of New York (Citibank) for payment to APT, the petitioner in GR No. 119712.
However, Lafarge allegedly refused to apply the sum to the payment to APT, despite the
subsequent finality of the Decision in GR No. 119712 in favor of the latter and the repeated
instructions of Respondent CCC. Fearful that nonpayment to APT would result in the
foreclosure, not just of its properties covered by the SPA with Lafarge but of several other
properties as well, CCC filed before the RTC of QC a "Complaint with Application for
Preliminary Attachment" against petitioners. The Complaint prayed, among others, that
petitioners be directed to pay the "APT Retained Amount" referred to in Clause 2 (c) of the
SPA.
Petitioners moved to dismiss the Complaint on the ground that it violated the prohibition on
forum-shopping. RTC denied the Motion to Dismiss. Petitioners elevated the matter before
the CA.
In the meantime, to avoid being in default and without prejudice to the outcome of their
appeal, petitioners filed their Answer and Compulsory Counterclaims ad Cautelam before
the trial court in.In their Answer, they denied the allegations in the Complaint. They prayed
-- by way of compulsory counterclaims against CCC, its majority stockholder and president
Gregory T. Lim, and its corporate secretary Anthony A. Mariano -- for the sums of (a)
P2,700,000 each as actual damages, (b) P100,000,000 each as exemplary damages, (c)
P100,000,000 each as moral damages, and (d) P5,000,000 each as attorney's fees plus
costs of suit.
Petitioners prayed that both Lim and Mariano be held "jointly and solidarily" liable with
Respondent CCC.
On behalf of Lim and Mariano who had yet to file any responsive pleading, CCC moved to
dismiss petitioners' compulsory counterclaims on grounds that essentially constituted the
very issues for resolution in the instant Petition.
RTC dismissed petitioners counterclaims for several reasons, among which were the
following: a) the counterclaims against Respondents Lim and Mariano were not
compulsory; b) the ruling in Sapugay was not applicable; and c) petitioners' Answer with
Counterclaims violated procedural rules on the proper joinder of causes of action.
Hence this Petition.
ISSUE:
1.Whether or not Respondent CCC has no personality to move to dismiss
petitioners' compulsory counterclaims on Respondents Lim and Mariano's behalf.
2.Whether or not petitioners' counterclaims against Respondents Lim and
Mariano are not compulsory
HELD:
Petitioners' counterclaim for damages fulfills the necessary requisites of a compulsory
counterclaim. They are damages claimed to have been suffered by petitioners as a
consequence of the action filed against them. They have to be pleaded in the same action;
otherwise, petitioners would be precluded by the judgment from invoking the same in an
independent action. Aside from the fact that petitioners' counterclaim for damages cannot
be the subject of an independent action, it is the same evidence that sustains petitioners'
counterclaim that will refute private respondent's own claim for damages. This is an
additional factor that characterizes petitioners' counterclaim as compulsory.
Counterclaims are defined in Section 6 of Rule 6 of the Rules of Civil Procedure as "any
claim which a defending party may have against an opposing party." They are generally
controversy in a single action, such that the defendant's demand may be adjudged by a
counterclaim rather than by an independent suit. The only limitations to this principle are (1) that
the court should have jurisdiction over the subject matter of the counterclaim, and (2) that it could
acquire jurisdiction over third parties whose presence is essential for its adjudication. 10
A counterclaim may either be permissive or compulsory. It is permissive "if it does not arise out of
or is not necessarily connected with the subject matter of the opposing party's claim." 11 A
permissive counterclaim is essentially an independent claim that may be filed separately in
another case.
A counterclaim is compulsory when its object "arises out of or is necessarily connected with the
transaction or occurrence constituting the subject matter of the opposing party's claim and does
not require for its adjudication the presence of third parties of whom the court cannot acquire
jurisdiction."12
Unlike permissive counterclaims, compulsory counterclaims should be set up in the same action;
otherwise, they would be barred forever. NAMARCO v. Federation of United Namarco
Distributors13 laid down the following criteria to determine whether a counterclaim is compulsory
or permissive: 1) Are issues of fact and law raised by the claim and by the counterclaim largely
the same? 2) Would res judicata bar a subsequent suit on defendant's claim, absent the
compulsory counterclaim rule? 3) Will substantially the same evidence support or refute plaintiff's
claim as well as defendant's counterclaim? 4) Is there any logical relation between the claim and
the counterclaim? A positive answer to all four questions would indicate that the counterclaim is
compulsory.
Adopted in Quintanilla v. CA14 and reiterated in Alday v. FGU Insurance Corporation,15 the
"compelling test of compulsoriness" characterizes a counterclaim as compulsory if there should
exist a "logical relationship" between the main claim and the counterclaim. There exists such a
relationship when conducting separate trials of the respective claims of the parties would entail
substantial duplication of time and effort by the parties and the court; when the multiple claims
involve the same factual and legal issues; or when the claims are offshoots of the same basic
controversy between the parties.
2.However, a perusal of its Motion to Dismiss the counterclaims shows that Respondent CCC
filed it on behalf of Co-respondents Lim and Mariano; it did not pray that the counterclaim against
it be dismissed. Be that as it may, Respondent CCC cannot be declared in default. Jurisprudence
teaches that if the issues raised in the compulsory counterclaim are so intertwined with the
allegations in the complaint, such issues are deemed automatically joined. 33 Counterclaims that
are only for damages and attorney's fees and that arise from the filing of the complaint shall be
considered as special defenses and need not be answered.34
While Respondent CCC can move to dismiss the counterclaims against it by raising grounds that
pertain to individual defendants Lim and Mariano, it cannot file the same Motion on their behalf
for the simple reason that it lacks the requisite authority to do so. A corporation has a legal
personality entirely separate and distinct from that of its officers and cannot act for and on their
behalf, without being so authorized. Thus, unless expressly adopted by Lim and Mariano, the
Motion to Dismiss the compulsory counterclaim filed by Respondent CCC has no force and effect
as to them.
In summary:
1. The counterclaims against Respondents CCC, Gregory T. Lim and Anthony A.
Mariano are compulsory.
2. The counterclaims may properly implead Respondents Gregory T. Lim and Anthony
A. Mariano, even if both were not parties in the original Complaint.
3. Respondent CCC or any of the three solidary debtors (CCC, Lim or Mariano) may
include, in a Motion to Dismiss, defenses available to their co-defendants;
nevertheless, the same Motion cannot be deemed to have been filed on behalf of the
said co-defendants.
4. Summons must be served on Respondents Lim and Mariano before the trial court
can obtain jurisdiction over them.

2. Alday v FGU
On 5 May 1989, respondent FGU Insurance Corporation filed a complaint with the Regional
Trial Court of Makati alleging that petitioner Evangeline K. Alday owed it P114,650.76
representing unliquidated cash advances, unremitted costs of her work as an insurance
agent for respondent. Petitioner filed her answer and by way of counterclaim, asserted her
right for the payment of P104,893.45, representing direct commissions, profit commissions,
and contingent bonuses earned from 1 July 1986 to 7 December 1986, and for
accumulated premium, reserves amounting to P500,000. In addition, petitioner prayed for
attorney's fees, litigation expenses, moral damages and exemplary damages for the
allegedly unfounded action filed by respondent. On 11 April 1990, respondent filed a motion
to dismiss petitioner's counterclaim, contending that the trial court never acquired
jurisdiction over the same because of the non-payment of docket fees by petitioner. In
response, petitioner asked the trial court to declare her counterclaim as exempt from
payment of docket fees since it is compulsory and that respondent be declared in default
for having failed to answer such counterclaim. The trial court granted respondent's motion
to dismiss petitioner's counterclaim and consequently denied petitioner's motion. The court
found petitioner's counterclaim to be merely permissive in nature and held that petitioner's
failure to pay docket fees prevented the court from acquiring jurisdiction over the same. The
Court of Appeals sustained the trial court's findings. Hence, this petition.
ISSUE:
Whether or not the counterclaim of petitioner is compulsory or permissive in nature.
HELD:
They are both compulsory and permissive. A compulsory counterclaim is one which, being
cognizable by the regular courts of justice, arises out of or is connected with the transaction
or occurrence constituting the subject matter of the opposing party's claim and does not
require for its adjudication the presence of third parties of whom the court cannot acquire
jurisdiction. In Valencia v. Court of Appeals, this Court capsulized the criteria or tests that
may be used in determining whether a counterclaim is compulsory or permissive,
summarized as follows: 1. Are the issues of fact and law raised by the claim and
counterclaim largely the same? 2. Would res judicata bar a subsequent suit on defendant's
claim absent the compulsory counterclaim rule? 3. Will substantially the same
evidence support or refute plaintiff's claim as well as defendant's counterclaim? 4. Is there
any logical relation between the claim and the counterclaim? Another test, applied in the
more recent case of Quintanilla v. Court of Appeals, is the "compelling test of
compulsoriness" which requires "a logical relationship between the claim and counterclaim,
that is, where conducting separate trials of the respective claims of the parties would entail
a substantial duplication of effort and time by the parties and the court."
Tested against the abovementioned standards, petitioner's counterclaim for commissions,
bonuses, and accumulated premium reserves is merely permissive. The evidence required
to prove petitioner's claims differs from that needed to establish respondent's demands for
the recovery of cash accountabilities from petitioner, such as cash advances and costs of
premiums. The recovery of respondent's claims is not contingent or dependent upon
establishing petitioner's counterclaim, such that conducting separate trials will not result in
the substantial duplication of the time and effort of the court and the parties. One would
search the records in vain for a logical connection between the parties' claims. This
conclusion is further reinforced by petitioner's own admissions since she declared in her
answer that respondent's cause of action, unlike her own, was not based upon the Special
Agent's Contract. However, petitioner's claims for damages, allegedly suffered as a result
of the filing by respondent of its complaint, are compulsory.
There is no need for petitioner to pay docket fees for her compulsory counterclaim. On the other
hand, in order for the trial court to acquire jurisdiction over her permissive counterclaim, petitioner
is bound to pay the prescribed docket fees.
In Suson vs Court of Appeals, the Court explained that although the payment of the prescribed
docket fees is a jurisdictional requirement, its non-payment does not result in the automatic
dismissal of the case provided the docket fees are paid within the applicable prescriptive or
reglementary period. Coming now to the case at bar, it has not been alleged by respondent and
there is nothing in the records to show that petitioner has attempted to evade the payment of the
proper docket fees for her permissive counterclaim. As a matter of fact, after respondent filed its
motion to dismiss petitioner's counterclaim based on her failure to pay docket fees, petitioner
immediately filed a motion with the trial court, asking it to declare her counterclaim as compulsory
in nature and therefore exempt from docket fees and, in addition, to declare that respondent was
in default for its failure to answer her counterclaim. However, the trial court dismissed petitioner's
counterclaim.
Petitioner asserts that the trial court should have declared respondent in default for having failed
to answer her counterclaim. Insofar as the permissive counterclaim of petitioner is concerned,
there is obviously no need to file an answer until petitioner has paid the prescribed docket fees
for only then shall the court acquire jurisdiction over such claim. Meanwhile, the compulsory
counterclaim of petitioner for damages based on the filing by respondent of an allegedly
unfounded and malicious suit need not be answered since it is inseparable from the claims of
respondent. If respondent were to answer the compulsory counterclaim of petitioner, it would
merely result in the former pleading the same facts raised in its complaint.
WHEREFORE, The compulsory counterclaim of petitioner for damages is ordered REINSTATED.
Meanwhile, the Regional Trial Court of Makati (Branch 134) is ordered to require petitioner to pay
the prescribed docket fees for her permissive counterclaim (direct commissions, profit
commissions, contingent bonuses and accumulated premium reserves), after ascertaining that
the applicable prescriptive period has not yet set in.
3. Cruz-Agam v Santiago-Lagman
ESTHERLITA CRUZ-AGANA filed a Complaint for annulment of title with prayer for preliminary
mandatory injunction against B. SERRANO ENTERPRISES, INC . Petitioner claims that as the
sole heir of one Teodorico Cruz, she is the sole owner of the lot. Petitioner further claims that the
lot was fraudulently sold to Eugenio Lopez, Jr. who later on transferred the lot to respondent.
The case was raffled to RTC Bulacan presided by Judge Aurora Santiago-Lagman.
Respondent filed its Answer with compulsory counterclaim. Petitioner moved to dismiss
respondent's counterclaim for lack of a certificate of non-forum shopping.
The trial court denied petitioner's motion to dismiss respondent's counterclaim with the reason
that that respondent's counterclaim is compulsory and therefore excluded from the coverage of
Section 5, Rule 7 of the Rules of Court.
On motion for reconsideration by Petitioner, the trial court reversed its Order and dismissed
respondent's counterclaim for lack of a certificate of non-forum shopping.
Respondent then filed a motion for reconsideration arguing that Administrative Circular No. 04-94
does not apply to compulsory counterclaims following the ruling in Santo Tomas University
Hospital v. Surla, the trial court again reversed itself and recalled its Order dismissing
respondent's counterclaim.
Issue:
Whether or not a compulsory counterclaim pleaded in an Answer should be dismissed on
the ground of a failure to accompany it with a certificate of non-forum shopping
Held:
Administrative Circular No. 04-94 does not apply to compulsory counterclaims. The circular
applies to initiatory and similar pleadings. A compulsory counterclaim set up in the answer
is not an "initiatory" or similar pleading. The initiatory pleading is the plaintiff's complaint. A
respondent has no choice but to raise a compulsory counterclaim the moment the plaintiff
files the complaint. Otherwise, respondent waives the compulsory counterclaim. In short,
the compulsory counterclaim is a reaction or response, mandatory upon pain of waiver, to
an initiatory pleading which is the complaint.
A compulsory counterclaim is any claim for money or other relief, which a defending party
may have against an opposing party, which at the time of suit arises out of, or is necessarily
connected with, the same transaction or occurrence that is the subject matter of plaintiff's
complaint. It is compulsory in the sense that it is within the jurisdiction of the court, does not
require for its adjudication the presence of third parties over whom the court cannot acquire
jurisdiction, and will be barred in the future if not set up in the answer to the complaint in the
same case. Any other counterclaim is permissive.
It is clear that the counterclaim set up by respondent arises from the filing of plaintiff's
complaint. The counterclaim is so intertwined with the main case that it is incapable of
proceeding independently. The counterclaim will require a re-litigation of the same evidence
if the counterclaim is allowed to proceed in a separate action. Even petitioner recognizes
that respondent's counterclaim is compulsory. A compulsory counterclaim does not require
a certificate of non-forum shopping because a compulsory counterclaim is not an initiatory
pleading.
4. Antonio v Sayman
Spouses Catalino Manguiob and Andrea Pansaon were the original owners of the subject
parcel of coconut land, consisting of 15,903 square meters, particularly known as Lot No. 1
covered by Original Certificate of Title No. 1020 of the Register of Deeds of Davao.
On 02 September 1962, Andrea Pansaon who survived her husband Catalino Manguiob,
together with some other heirs, sold to Macedonio Monje 7,500 square meters only of the
aforesaid property. The said deed of absolute sale was duly notarized by Notary Public
Ricardo Reyes and entered in his notarial book.
Macedonio Monje immediately took possession thereof and constructed a house worth
P30,000.00.
The heirs of spouses Catalino Manguiob and Andrea Pansaon who also died, sold the
subject property which was already sold to Macedonio Monje in 1962, in favor of Nicanor
Manguiob and Carolina V. Manguiob.
Immediately thereafter, spouses Nicanor Manguiob and Carolina V. Manguiob had
executed an absolute deed of sale in favor of the formers sister-in-law, Avelyn B. Antonio,
the entire Lot No. [1] consisting of 15,903 square meters. The sale was entered in the
notarial book of Notary Public Juanito T. Hernandez.
Macedonio Monje knew about it only when he received a letter from Avelyn B. Antonio,
informing him that she is now the registered owner of the subject property under a new
Transfer Certificate of Title.
Aggrieved, Macedonio Monje filed before the CFI of Baganga, Davao Oriental, a complaint for the
annulment of the deed of sale between the heirs of Catalino Manguiob and Carolina
Balanay/Nicanor Manguiob, as well as the subsequent deed of absolute sale by the latter in favor
of Avelyn Antonio and the cancellation of TCT No. T-9643.
The aforesaid court rendered a decision declaring the 2nd and 3rd deeds of sale of the property
as null and void, and the transfer certificate title No. 9643 likewise null and void.
Plaintiff-appellants, Spouses Antonio appealed the above-mentioned decision all the way to the
Supreme Court. The Supreme Court in G.R. No. 69696, rendered a decision finding res judicata.
Plaintiff-appellants [herein petitioners] filed a case for a sum of money, accounting of the
proceeds of the copra, damages and attorneys fees against herein defendant-appellees before
the Regional Trial Court of Baganga, Davao Oriental, Branch 7.
The Regional Trial Court (RTC) issued an Order dismissing herein petitioners' complaint on the
ground of res judicata.
The Court of Appeals affirmed the judgment of the RTC and dismissed the appeal of herein
petitioners.
ISSUE: Whether or not the CA erred in applying the principle of res judicata
CIVIL LAW: Res judicata and its tests
HELD:
Res judicata is defined as a matter adjudged; a thing judicially acted upon or decided; a thing or
matter settled by judgment. According to the doctrine of res judicata, an existing final judgment
or decree rendered on the merits, and without fraud or collusion, by a court of competent
jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the parties or their
privies, in all other actions or suits in the same or any other judicial tribunal of concurrent
jurisdiction on the points and matters in issue in the first suit.
To state simply, a final judgment or decree on the merits by a court of competent jurisdiction is
conclusive of the rights of the parties or their privies in all later suits on all points and matters
determined in the former suit.
The principle of res judicata is applicable by way of (1) bar by prior judgment and (2)
conclusiveness of judgment.
There is bar by prior judgment when, as between the first case where the judgment was
rendered and the second case that is sought to be barred, there is identity of parties, subject
matter, and causes of action. In this instance, the judgment in the first case constitutes an
absolute bar to the second action.
Whereas, conclusiveness of judgment finds application when a fact or question has been
squarely put in issue, judicially passed upon, and adjudged in a former suit by a court of
competent jurisdiction. The fact or question settled by final judgment or order binds the parties to
that action (and persons in privity with them or their successors-in-interest), and continues to bind
them while the judgment or order remains standing and unreversed by proper authority on a
timely motion or petition.
In the present case, there is no question that there is identity of parties in Civil Case No.
007-125 and Civil Case No. 506.
However, as to identity of issues, a perusal of the records and other pleadings would show
that the issue raised in Civil Case No. 007-125 is whether the sale to petitioners of the
7,500 square meter portion of Lot No. 1 being contested by respondents is valid. On the
other hand, in Civil Case No. 506, the issues are whether petitioners were deprived of
possession of the remaining 8,403 square meter portion of Lot No. 1 which was validly sold
to them and whether they are entitled to an accounting of the proceeds of the copra
harvested from their property which was supposedly appropriated by respondents. The
Court finds that there is no identity of issues as the issue raised in Civil Case No. 007-125
is different from, and does not overlap with, the issue raised in Civil Case No. 506.
The Court has previously employed various tests in determining whether or not there is
identity of causes of action as to warrant the application of the principle of res judicata. One
test of identity is the absence of inconsistency test where it is determined whether the
judgment sought will be inconsistent with the prior judgment. If no inconsistency is shown,
the prior judgment shall not constitute a bar to subsequent actions.
In the instant case, the reliefs prayed for in Civil Case No. 506 are the payment of a sum
representing the proceeds of the copra supposedly harvested from petitioners' property and
purportedly misappropriated by respondents. Petitioners also pray for the award of moral
and exemplary damages, as well as attorney's fees and litigation expenses.
The more common approach in ascertaining identity of causes of action is the same
evidence test, whereby the following question serves as a sufficient criterion: would the
same evidence support and establish both the present and former causes of action? If the
answer is in the affirmative, then the prior judgment is a bar to the subsequent action;
conversely, it is not. In the instant case, it is unmistakable that the pieces of evidence that
would back up the cause of action in Civil Case No. 007-125 are different from the set of
evidence that would prove the cause of action in Civil Case No. 506.
Aside from the absence of inconsistency test and same evidence test, we have also
ruled that a previous judgment operates as a bar to a subsequent one when it had touched
on [a] matter already decided, or if the parties are in effect litigating for the same thing. A
reading of the decisions of the lower and appellate courts in Civil Case No. 007-125 would
show that there were neither discussions nor disposition of the issues raised in Civil Case
No. 506.
5. Mactan Cebu v Heirs of Minoza
Mactan-Cebu International Airport Authority v. Heirs of Mioza
G.R. No. 186045
FACTS:
Leila M. Hermosisima filed a complaint for herself and on behalf of the other heirs of her
late great grandfather Estanislao Mioza. Leila alleged that Estanislao was the registered
owner of lots which were acquired by the National Airports Corporation (NAC) for the
expansion project of the Lahug Airport. Leila claimed that their predecessors-in-interest sold
the subject lots to the NAC with a buy-back option if the lots are no longer needed. The
expansion project did not push through. Plaintiffs informed the NAC's successor-in-interest,
the Mactan-Cebu International Airport Authority (MCIAA) that they were exercising the buy-
back option of the agreement, but the MCIAA refused. A motion for Intervention with an
attached Complainant-in-Intervention was filed by respondents who claimed to be the true,
legal, and legitimate heirs of the late Estanislao Mioza and alleged (1) that the plaintiffs in
the main case are not related to the owner of the land (2) that an Extrajudicial Settlement of the
Estate of Estanislao was fraudulently done; and (3) that the lots were fraudulently sold to the
NAC.
The trial court opined that the ownership of the subject lots was merely a collateral issue in the
action and the complaint-in-intervention was flawed, considering that it was not verified and does
not contain the requisite certification of non-forum shopping.
The CA held that the determination of the true heirs of the late Estanislao Mioza is the focal
issue of the case, for if the intervenors can prove that they are indeed the true heirs of Estanislao
Mioza, there would be no more need to determine whether the right to buy back the subject lots
exists or not as the MCIAA would not have acquired rights to the subject lots in the first place. As
to the lack of verification and certification on non-forum shopping, the CA opined that the filing of
the motion for reconsideration with an appended complaint-in-intervention containing the required
verification and certificate of non-forum shopping amounted to substantial compliance.
ISSUE: (1) Whether or not the requisite verification and certification requirement has been
complied with
(2) Whether or not the respondents should be allowed to intervene
HELD:
(1) Yes. The initial lack of the complaint-in-intervention of the requisite verification and certification
on non-forum shopping was cured when the intervenors, in their motion for reconsideration
appended a complaint-in-intervention containing the required verification and certificate of non-
forum shopping.
(2) No. The Court has ruled that the interest contemplated by law must be actual, substantial,
material, direct and immediate, and not simply contingent or expectant. It must be of such direct
and immediate character that the intervenor will either gain or lose by the direct legal operation
and effect of the judgment. The allegation of fraud and deceit is an independent controversy
between the original parties and the intervenors. In general, an independent controversy cannot
be injected into a suit by intervention, hence, such intervention will not be allowed where it would
enlarge the issues in the action and expand the scope of the remedies.
Furthermore, the allowance or disallowance of a motion for intervention rests on the sound
discretion of the court after consideration of the appropriate circumstances. 23 It is not an
absolute right. The statutory rules or conditions for the right of intervention must be shown.
The court must take into consideration WON the intervention will unduly delay or prejudice the
adjudication of the rights of the original parties, and WON the intervenor's right or interest can be
adequately pursued in a separate proceeding.
6. Vallacar Transit v Catubog
Respondents husband, Catubig, was on his way home riding in tandem on a motorcycle with his
employee, Emperado. Catubig was the driver. While approaching a curve he tried to overtake a
slow moving 10-wheeler cargo truck by crossing-over to the opposite lane, which was then being
traversed by the Ceres Bulilit bus driven by Cabanilla, headed for the opposite direction. When
the two vehicles collided, Catubig and Emperado were thrown from the motorcycle. Catubig died
on the spot where he was thrown, while Emperado died while being rushed to the hospital.
Cabanilla was charged with reckless imprudence resulting in double homicide in before MCTC of
Manjuyod-Bindoy-Ayungon of the Province of Negros Oriental. MCTC dismissed the case and
found that Cabanilla was not criminally liable for the deaths of Catubig and Emperado, because
there was no negligence, not even contributory.
Respondent filed before the RTC a Complaint for Damages against petitioner, seeking
actual, moral, and exemplary damages, in the total amount of P484,000.00 and alleged that
petitioner is civilly liable because Cabanilla, was reckless and negligent in driving the bus
which collided with Catubigs motorcycle. Petitioner, in its Answer with Counterclaim,
contended that the proximate cause of the vehicular collision, which resulted in the deaths
of Catubig and Emperado, was the sole negligence of Catubig when he imprudently
overtook another vehicle at a curve and traversed the opposite lane of the road. As a
special and affirmative defense, petitioner asked for the dismissal of respondents complaint
for not being verified and/or for failure to state a cause of action, as there was no allegation
that petitioner was negligent in the selection or supervision of its employee driver.
RTC favored petitioner and ruled that the proximate cause of the collision of the bus and
motorcycle was the negligence of the driver of the motorcycle, Catubig. The RTC,
moreover, was convinced through the testimony of the Administrative and Personnel
Manager of the Dumaguete branch of petitioner, that petitioner had exercised due diligence
in the selection and supervision of its employee drivers, including Cabanilla. The
counterclaim of petitioner was dismissed.
CA held that both Catubig and Cabanilla were negligent in driving their respective vehicles.
Catubig, on one hand, failed to use reasonable care for his own safety and ignored the
hazard when he tried to overtake a truck at a curve. Cabanilla, on the other hand, was
running his vehicle at a high speed of 100 kilometers per hour. It brushed aside the ruling
that there was due diligence in the selection and supervision of employee drivers on the
part of petitioner.
ISSUE: WON THE COMPLAINT FOR DAMAGES SHOULD BE OUTRIGHTLY DISMISSED
FOR FAILURE TO VERIFY
Petitioners arguments:
Complaint for damages should be dismissed for the latter's failure to verify the
same.
o The certification against forum shopping attached to the complaint,
signed by respondent, is not a valid substitute for respondent's
verification that she "has read the pleading and that the allegations
therein are true and correct of her personal knowledge or based on
authentic records."
o Petitioner cited jurisprudence in which the Court ruled that a pleading
lacking proper verification is treated as an unsigned pleading, which
produces no legal effect under Section 3, Rule 7 of the Rules of
Court.
HELD: NO
The Rules of Court clearly provides that a pleading lacking proper verification is to be
treated as an unsigned pleading which produces no legal effect. However, it also just as
clearly states that "[e]xcept when otherwise specifically required by law or rule, pleadings
need not be under oath, verified or accompanied by affidavit." No such law or rule
specifically requires that respondent's complaint for damages should have been verified.
The requirement on verification of a pleading is a formal and not a jurisdictional requisite. It
is intended simply to secure an assurance that what are alleged in the pleading are true
and correct and not the product of the imagination or a matter of speculation, and that the
pleading is filed in good faith. The party need not sign the verification. A party's
representative, lawyer or any person who personally knows the truth of the facts alleged in
the pleading may sign the verification.
However, petition is granted.
The presumption that employers are negligent under Article 2180 of the Civil Code
flows from the negligence of their employees.
Having adjudged that the immediate and proximate cause of the collision resulting in
Catubig's death was his own negligence, and there was no fault or negligence on
Cabanilla's part, then such presumption of fault or negligence on the part of petitioner,
as Cabanilla's employer, does not even arise. Thus, it is not even necessary to delve
into the defense of petitioner that it exercised due diligence in the selection and
supervision of Cabanilla as its employee driver.
7. Altres v Empleo
Mayor Quijano sent notices of numerous vacant career positions in the city government to
the CSC. The city government and the CSC thereupon proceeded to publicly announce the
existence of the vacant positions. Petitioners and other applicants submitted their
applications for the different positions where they felt qualified.
Towards the end of his term, Mayor Quijano issued appointments to petitioners.
In the meantime, the Sangguniang Panglungsod issued Resolution No. 04-242 addressed
to the CSC Iligan City Field Office requesting a suspension of action on the processing of
appointments to all vacant positions in the plantilla of the city government as of March 19,
2004 until the enactment of a new budget.
The Sangguniang Panglungsod subsequently issued Resolution No. 04-266 which, in
view of its stated policy against "midnight appointments," directed the officers of the City
Human Resource Management Office to hold in abeyance the transmission of all
appointments signed or to be signed by the incumbent mayor in order to ascertain whether
these had been hurriedly prepared or carefully considered and whether the matters of
promotion and/or qualifications had been properly addressed.
Respondent city accountant Empleo did not thus issue a certification as to availability of
funds for the payment of salaries and wages of petitioners, as required
The CSC Field Office for Lanao del Norte and Iligan City disapproved the appointments
issued to petitioners invariably due to lack of certification of availability of funds.
On appeal by Mayor Quijano, CSC Regional Office No. XII in Cotabato City dismissed the
appeal, it explaining that its function in approving appointments is only ministerial, hence, if
an appointment lacks a requirementprescribed by the civil service law, rules and regulations,
it would disapprove it without delving into the reasons why the requirement was not
complied with.
Petitioners thus filed with the RTC of Iligan City a petition for mandamus against
respondent Empleo or his successor in office for him to issue a certification of availability of
funds for the payment of the salaries and wages of petitioners, and for his co-respondents or
their successors in office to sign the position description forms.
The Iligan RTC denied petitioners petition for mandamus. It held that while it is the
ministerial duty of the city accountant to certify as to the availability of budgetary allotment to
which expenses and obligations may properly be charged the city accountant cannot be
compelled to issue a certification as to availability of funds for the payment of salaries and
wages of petitioners as this ministerial function pertains to the city treasurer.
Petitioners filed a motion for reconsideration in which they maintained only their prayer for
a writ of mandamus for respondent Empleo or his successor in office to issue a certification
of availability of funds for the payment of their salaries and wages. The trial court denied the
motion
Respondents assail as defective the verification and certification against forum shopping
attached to the petition as it bears the signature of only 11 out of the 59 petitioners, and no
competent evidence of identity was presented by the signing petitioners.
 Petitioners, on the other hand, argue that they have a justifiable cause for their
inability to obtain the signatures of the other petitioners as they could no longer be accountant has obligated
contacted or are no longer interested in pursuing the case said appropriation

ISSUE: Whether It Is Section 474(B)(4) Or Section 344 Of The Local Government

Code Of 1991 Which Applies To The Requirement Of Certification Of Availability Of Section 474(b)(4), there is no actual Section 344, the certification is for the
Funds Under Section 1(E)(Ii), Rule V Of Csc Memorandum Circular Number 40, payment involved purpose of payment
Series Of 1998. because the certification is for the after the local accountant had
HELD: purpose of obligating a obligated a portion of the
SECTION 474 portion of the appropriation appropriation
Section 344 of the Local Government Code of 1991 thus applies only when
there is already an obligation to
pay on the part of the local government unit, precisely because vouchers are
issued only when services have been performed or expenses incurred. Section 474(b)(4), the certification is Section 344, the certification is issued
The requirement of certification of availability of funds from the city treasurer under issued if there is an if there is an
Section 344 of the Local appropriation, let us say, for the appropriation and the same is
Government Code of 1991 is for the purpose of facilitating the approval of vouchers salaries of appointees obligated, let us say, for the
issued for the payment of services payment of salaries of employees
already rendered to, and expenses incurred by, the local government unit.
The trial court thus erred in relying on Section 344 of the Local Government Code of
1991 in ruling that the ministerial
For the guidance of the bench and bar, the Court restates in capsule form the
function to issue a certification as to availability of funds for the payment of the wages
jurisprudential pronouncements already
and salaries of petitioners
reflected above respecting non-compliance with the requirements on, or submission of
pertains to the city treasurer. For at the time material to the required issuance of the
defective, verification and
certification, the appointments
certification against forum shopping:
issued to petitioners were not yet approved by the CSC, hence, there were yet no
A distinction must be made between non-compliance with the requirement on or
services performed to speak of. In
submission of
other words, there was yet no due and demandable obligation of the local government
defective verification, and non-compliance with the requirement on or submission of
to petitioners.
defective certification against forum shopping.
Section 474, subparagraph (b)(4) of the Local Government Code of 1991, on the
As to verification, non-compliance therewith or a defect therein does not
other hand, requires the city
necessarily render the pleading fatally defective. The court may order its submission
accountant to "certify to the availability of budgetary allotment to which expenditures
or correction or act on
and obligations may be properly
the pleading if the attending circumstances are such that strict compliance with the
charged."
Rule
By necessary implication, it includes the duty to certify to the availability of funds for
may be dispensed with in order that the ends of justice may be served thereby.
the payment of salaries and wages
of appointees to positions in the plantilla of the local government unit Verification is deemed substantially complied with when one who has ample
Whenever a certification as to availability of funds is required for purposes other knowledge to swear to the truth of the allegations in the complaint or petition signs
than actual payment of an obligation the verification, and when matters alleged in the petition have been made in good faith or
which requires disbursement of money, Section 474(b)(4) of the Local Government are true
Code of 1991 applies, and it is the and correct.
ministerial duty of the city accountant to issue the certification. As to certification against forum shopping, non-compliance therewith or a defect therein,
unlike in
Section 474(b)(4) speaks of Section 344 speaks of certification of verification, is generally not curable by its subsequent submission or correction thereof,
certification of availability of availability of funds for unless
budgetary allotment disbursement there is a need to relax the Rule on the ground of substantial compliance or presence of
special
circumstances or compelling reasons.
The certification against forum shopping must be signed by all the plaintiffs or petitioners
Under Section 474(b)(4), before a Section 344, before a certification is
in a case;
certification is issued, there issued, two requisites
otherwise, those who did not sign will be dropped as parties to the case. Under reasonable
must be an appropriation must concur: (a) there must be an
or
appropriation legally made
justifiable circumstances, however, as when all the plaintiffs or petitioners share a common
for the purpose, and (b) the local
interest
 and invoke a common cause of action or defense, the signature of only one of them in
the
certification against forum shopping substantially complies with the Rule.
Finally, the certification against forum shopping must be executed by the party-
pleader, not by his
counsel. If, however, for reasonable or justifiable reasons, the party-pleader is unable
to sign, he
must execute a Special Power of Attorney designating his counsel of record to sign on
his behalf.
IN CASE OF CORPORATIONS there should be a Board Resolution or a
secretarys certificate confirming authority
to sign for the corporation. Where the petitioner is a corporation, the certification
against forum shopping should be
signed by its duly authorized director or representative.
HOWEVER, THIS CASE HAS BECOME MOOT AND ACADEMIC BY THE FINAL
DISAPPROVAL OF PETITIONERS APPOINTMENTS BY THE CSC.
8. Sps De Guzman v Ochoa
De Guzman v. Ochoa
648 SCRA 677 Facts:
Respondent spouses Cesar and Sylvia Ochoa , through respondent Araceli
Azones,ostensibly acting as attorney-in-fact, filed an action in the RTC seeking the
annulment ofcontract of mortgage, foreclosure sale, certificate of sale and damages.The
petitioners as defendants in the civil case, filed a motion to dismiss, alleging thesole ground
that the complaint did not state a cause of action.RTC denied the petition and at the same
time set the civil case for pre-trial, directing theparties to submit their briefs.Petitioner filed a
second motion to dismiss, alleging that the certification against forumshopping was not
executed by the parties themselves.Respondents opposed the second motion to dismiss,
RTC agreed with respondents.Petitioners filed MR but RTC denied. Petitioner went to CA
via a petition for certiorari.CA denied for lack of merit, in its decision, it agreed with the RTC
that following theomnibus motion rule, the defects of the complaint pointed out by the
petitioners weredeemed waived when they failed to raise it in their first motion to dismiss.
Issue: Whether the omnibus motion rule will apply.
Held: Yes.An order denying a motion to dismiss is an interlocutory order which
neitherterminates the case nor finally disposes of it as it leaves something to be done by
thecourt before the case is finally decided on the merits. An order denying such may onlybe
reviewed in the ordinary course of law by an appeal from the judgment after trial.Only in
exceptional cases where the denial of the motion to dismiss is tainted withgrave abuse of
discretion that the court allows the extraordinary remedy of certiorari.A motion to dismiss is
an omnibus motion because it attacks a pleading, that is, thecomplaint. For this reason, a
motion to dismiss, like any other omnibus motion must raise and include all objections
available at the time of the filing of the motion because
under Section 8, all objections not so included shall be deemed waived.
9. UST v Suria
FACTS:
On 26 December 1995, respondent spouses filed a complaint for damages against
petitioner Santo Tomas University Hospital with the Regional Trial Court of Quezon City
predicated on an allegation by the spouses that their son, Emmanuel Cesar Surla, while
confined at the said hospital for having been born prematurely, had accidentally fallen from
his incubator on 16 April 1995 possibly causing serious harm on the child.
On 28 February 1996, petitioner hospital filed its Answer with "Compulsory Counterclaim"
asserting that respondents still owed to it the amount of P82,632.10 representing hospital bills for
Emmanuel's confinement at the hospital and making a claim for moral and exemplary damages,
plus attorney's fees, by reason of the supposed unfounded and malicious suit filed against it.
Respondents' Reply to Counterclaim, which seeks the dismissal of petitioner's counterclaim for
its non-compliance with Supreme Court Administrative Circular No. 04-94 requiring that a
complaint and other initiatory pleadings, such as a counterclaim, cross-claim, third
(fourth, etc.) party complaint, be accompanied with a certificate of non-forum shopping.
Petitioner contended that the subject circular should be held to refer only to a permissive
counterclaim, an initiatory pleading not arising out of, nor necessarily connected with, the
subject matter of the plaintiffs claim but not to a compulsory counterclaim for issues are
intertwined therewith and logically related that it could not stand for independent adjudication.
TRIAL COURT: dismiss petitioner's counterclaim stating: counterclaim does not distinguish
whether the same should be permissive or compulsory, hence this Court finds that the
counterclaim referred to in said Circular covers both kinds.
Petitioner filed before the same court an Omnibus Motion seeking a clarification of the court's
Order denying respondents' Reply to Counterclaim and a reconsideration of the Order dismissing
the compulsory counterclaim.
TRIAL COURT: morion for reconsideration DENIED, pre-trial conference will go as scheduled
TO CA: special civil action for certiorari under Rule 65, Revised Rules of Court, asseverating
grave abuse of discretion by public respondent in dismissing the compulsory counterclaim and in
espousing the view that Administrative Circular No. 04-94 should apply even to compulsory
counterclaims.
CA: DISMISS petition for certiorari - original civil complaint, counterclaim, crossclaim, third
(fourth, etc.) party complaint, or complaint-in-intervention, petition, or application wherein a party
asserts his claim for relief to be filed in all courts and agencies other than the Supreme Court and
the Court of Appeals must be annexed and simultaneously filed therewith the required
certification under oath to avoid forum shopping or multiple filing of petitions and complaints. Non-
compliance therewith is a cause for the dismissal of the complaint, petition, application or other
initiatory pleading.
A counterclaim partakes of the nature of a complaint and/or a cause of action against the plaintiff
in a case, only this time it is the original defendant who becomes the plaintiff. It stands on the
same footing and is tested by the same rules as if it were an independent action.
ISSUE:
WON a compulsory counterclaim pleaded in an Answer be dismissed on the ground of a failure to
accompany it with a certificate of non-forum shopping.
HELD:
NO, Certificate of non from shopping is NOT REQUIRED in a compulsory counter claim for it is
not considered as an initiatory pleading.
The pertinent provisions of Administrative Circular No. 04-94 provide:
1. The plaintiff, petitioner, applicant or principal party seeking relief in the complaint, petition,
application or other initiatory pleading shall certify under oath in such original pleading, or in a
sworn certification annexed thereto and simultaneously filed therewith, to the truth of the
following facts and undertakings:
(a) he has not theretofore commenced any other action or proceeding involving the same issues
in the Supreme Court, the Court of Appeals, or any other tribunal or agency;
(b) to the best of his knowledge, no such action or proceeding is pending in the Supreme
Court, the Court of Appeals, or any other tribunal or agency;
(c) if there is any such action or proceeding which is either pending or may have been
terminated, he must state the status thereof; and
(d) if he should thereafter learn that a similar action or proceeding has been filed or is
pending before the Supreme Court, the Court of Appeals or any other tribunal or agency,
he undertakes to report that fact within five (5) days therefrom to the court or agency
wherein the original pleading and sworn certification contemplated here have been filed.
The complaint and other initiatory pleadings referred to and subject of this Circular are the
original civil complaint, counterclaim, cross-claim third (fourth, etc.) party complaint or
complaint-in-intervention, petition, or application wherein a party asserts his claim for relief.
The Circular was made effective on 01 April 1994, its purpose is to curb the malpractice
commonly referred to also as forum-shopping. It is an act of a party against whom an
adverse judgment has been rendered in one forum of seeking and possibly getting a
favorable opinion in another forum, other than by appeal or the special civil action of
certiorari, or the institution of two or more actions or proceedings grounded on the same
cause on the supposition that one or the other court would make a favorable disposition.
The language of the circular distinctly suggests that it is primarily intended to cover
an initiatory pleading or an incipient application of a party asserting a claim for
relief.
It should not be too difficult to sustain the view that the circular in question has not, in fact,
been contemplated to include a kind of claim which, by its very nature as being auxiliary to
the proceedings in the suit and as deriving its substantive and jurisdictional support
therefrom, can only be appropriately pleaded in the answer and not remain outstanding for
independent resolution except by the court where the main case pends. Section 5, Rule 8,
of the 1997 Rules of Civil Procedure, i.e., that the violation of the anti-forum
shopping rule "shall not be curable by mere amendment . . . but shall be cause for
the dismissal of the case without prejudice," being predicated on the applicability of the
need for a certification against forum shopping, obviously does not include a claim
which cannot be independently set up.
The so-called "counterclaim" of petitioner really consists of two segregative parts: (1) for
unpaid hospital bills of respondents' son, Emmanuel Surla, in the total amount of
P82,032.10; and (2) for damages, moral and exemplary, plus attorney's fees by reason of
the alleged malicious and unfounded suit filed against it. It is the second, not the first, claim
that the Court here refers to as not being initiatory in character and thereby not covered by
the provisions of Administrative Circular No. 04-94.
10. Manotoc v CA
FACTS: Based on two of the Complaint, the trial court issued a Summon addressed to
petitioner at Alexandra Condominium Corporation or Alexandra Homes, E2 Room 104, at
No. 29 Meralco Avenue, Pasig City.
The Summons and a copy of the Complaint were allegedly served upon (Mr.) Macky de la
Cruz, an alleged caretaker of petitioner at the condominium unit. When petitioner failed to
file her Answer, the trial court declared her in default through an Order.
Petitioner, by special appearance of counsel, filed a Motion to Dismiss on the ground of
lack of jurisdiction of the trial court over her person due to an invalid substitute of service of
summons.
During the hearing on the Motion to Dismiss, petitioner Manotoc presented Carlos Gonzales, who
testified that he saw defendant Manotoc as a visitor in Alexandra Homes only two times. He also
identified the Certification of Renato A. de Leon, which stated that Unit E-2104 was owned by
Queens Park Realty, Inc.; and at the time the Certification was issued, the unit was not being
leased by anyone.
Petitioner also presented her Philippine passport and the Disembarkation/Embarkation Card
issued by the Immigration Service of Singapore to show that she was a resident of Singapore.
She claimed that the person referred to as "Mrs. Manotoc" may not even be her, but the mother
of Tommy Manotoc.
On the other hand, Robert Swift, lead counsel for plaintiff testified that he confirmed that Mr.
Marcos, Jr. testified that petitioners residence was at the Alexandra Apartment, Greenhills. In
addition, the entries in the logbook of Alexandra Homes listing the name of petitioner Manotoc
and the Sheriffs Return, were adduced in evidence
The trial court rejected Manotocs Motion to Dismiss. The trial court relied on the presumption that
the sheriffs substituted service was made in the regular performance of official duty, and such
presumption stood in the absence of proof to the contrary. The trial court discarded Manotocs
plea for reconsideration for lack of merit. Manotoc filed a Petition for Certiorari and Prohibition
before the Court of Appeals seeking the annulment of the decision of the trial court.
The CA rendered the assailed Decision, dismissing the Petition for Certiorari and Prohibition.
Petitioner filed a Motion for Reconsideration which was denied by the CA.
ISSUE: Whether or not the the Substituted service was valid.
HELD: NO. Requirements for Substituted Service, Section 8 of Rule 14 of the old Revised Rules
of Court (now Section 7, Rule 14 of the 1997 Rules of Civil Procedure) which applies to this case
can be broken down to the following requirements:
(1)Impossibility of Prompt Personal Service
The party relying on substituted service or the sheriff must show that defendant cannot be served
promptly or there is impossibility of prompt service.
(2)Specific Details in the Return
The sheriff must describe in the Return of Summons the facts and circumstances surrounding the
attempted personal service.
(3)A Person of Suitable Age and Discretion
If the substituted service will be effected at defendants house or residence, it should be left with
a person of "suitable age and discretion then residing therein."
(4)A Competent Person in Charge.
If the substituted service will be done at defendants office or regular place of business, then it
should be served on a competent person in charge of the place.
A meticulous scrutiny of the aforementioned Return readily reveals the absence of material data
on the serious efforts to serve the Summons on petitioner Manotoc in person.
There is no clear valid reason cited in the Return why those efforts proved inadequate, to reach
the conclusion that personal service has become impossible or unattainable outside the generally
couched phrases of on many occasions several attempts were made to serve the summons . . .
personally, at reasonable hours during the day, and to no avail for the reason that the said
defendant is usually out of her place and/or residence or premises.
Before resorting to substituted service, a plaintiff must demonstrate an effort in good faith to
locate the defendant through more direct means. Respondent Trajano failed to demonstrate that
there was strict compliance with the requirements of the then Section 8, Rule 14 (now Section 7,
Rule 14 of the 1997 Rules of Civil Procedure), the proceedings held before the trial court
perforce must be annulled.
11. Tan et al v Dela Vega
Assailed in this Petition for Review is the February 3, 2005 Decision1 of the Court of
Appeals in CA-G.R. CV No. 79957, which affirmed the March 21, 2003 Order2 of the
Regional Trial Court of Pasig City, Branch 264, granting the motion for judgment on the
pleadings filed by respondents in Civil Case No. 62269. Likewise questioned is the
appellate court's July 6, 2005 Resolution3 which denied petitioners' motion for
reconsideration.
The undisputed facts show that on August 3, 1992, respondents filed a complaint for
quieting of title and for declaration of nullity of Free Patent No. 495269, Original Certificate
of Title (OCT) No. 711 and Transfer Certificate of Title (TCT) No. 186516, against the heirs
of Macario Mencias (defendant heirs), namely, Aquilina Mencias, Aurora M. Gabat, Merlyn
M. Cadete, Myrna M. Quirante; and the Secretary of the Department of Environment and
Natural Resources, the Director of the Land Management Bureau and the Register of
Deeds of Marikina. The complaint was later amended to implead herein petitioner
purchasers of the disputed lot and to nullify TCT No. 272191 issued in their name.
The Amended Complaint averred that respondents are the co-owners of a 159,576 square
meter parcel of land located in Marikina, Rizal, Metro Manila and covered by TCT No.
257152, issued on June 20, 1969. Said title was a transfer from TCT No. 22395 in the
name of J. Antonio Araneta as trustee of the children of Angela I. Tuason. Among the lots
covered by TCT No. 257152 is the controverted Lot 89 containing an area of 54,197 square
meters.4
Sometime in April 1992, respondents learned that the defendant heirs are causing the
ejectment of the occupants of a 29,945 square meter portion of Lot 89; and that Macario
Mencias was able to obtain Free Patent No. 495269 on July 31, 1971, and OCT No. 711 on
August 11, 1971, over said portion. Upon Macario's death, OCT No. 711 was canceled and
TCT No. 186516 was issued to the defendant heirs on July 5, 1990.5 By virtue of a Deed of
Sale inscribed on November 14, 1994, TCT No. 186516 was further cancelled and TCT No.
271604 was issued on the same date in favor of New Atlantis Real Estate & Development,
Inc., (Corporation) represented by its President, Victor C. Salvador, Jr. The questioned lot
was thereafter sold by the Corporation to petitioners. TCT No. 271604 was thus cancelled
and in lieu thereof, TCT No. 272191 was issued to petitioners on November 17, 1994.6
Respondents contended that Macario's OCT No. 711 and its derivative titles-TCT No.
186516, in the name of defendant heirs and petitioners' TCT NO. 272191, are void because
the area they cover is entirely within their (respondents) land, specifically, Lot 89, as shown
by the notation in the said titles, i.e., "This survey is covered by F.P.A. No. (III-1) 4496; and
"This survey is entirely inside No. 89, II-4755."7 Respondents further averred that since the
controverted lot is already a private land, the Director of Lands and the Secretary of
Agriculture and Natural Resources, had no jurisdiction to approve Macario's application and
to issue Free Patent No. 495269. The pendency of this action was allegedly inscribed in the
defendant heirs' title (TCT No. 186516) on August 4, 1992 and carried over to the
petitioners' TCT No. 272191.8
In their Answer,9 the defendant heirs contended that Lot 89 was never part of respondents'
TCT No. 257152 which originated from OCT No. 730. Respondents' own exhibits, i.e., the
documents purportedly issued by the Bureau of Lands (Exhibits "E" and "F"), show that Lot
89 was covered by OCT No. 734 and not OCT No. 730. Defendant heirs further stated that
respondents' TCT No. 257152 was issued in lieu of TCT No. 22395 which is a mere
reconstitution of TCT No. 45046. Upon verification with the Register of Deeds of Rizal, TCT No.
45046, covers a different parcel of land situated in San Juan, Rizal, and measuring about 356
square meters only. The defendant heirs also raised the defenses of laches and prescription.
On the other hand, petitioners asserted, inter alia, that they are purchasers in good faith and for
value and that they have no knowledge of any defect in the title of the Corporation from whom
they purchased the controverted lot. The notice of lis pendens alleged to have been inscribed in
TCT No. 186516 on August 4, 1992 does not appear in the Corporation's title, TCT No. 271604
nor in their title, TCT No. 272191. Absent said notice, petitioners claim that they cannot be
charged with knowledge of any defect in the Corporation's title. Neither does the note "This
survey is covered by F.P.A. No. (III-1) 4496;" and "This survey is entirely inside No. 89, II-4755,"
serve as sufficient warning to third persons because said notes do not indicate that the property
is covered by another title.10
For failure to file their Answer, defendant Aurora M. Gabat,11 public defendants Secretary of the
Department of Environment and Natural Resources, Director of Land Management Bureau and
the Register of Deeds of Marikina,12 were declared in default.
On March 4, 2003, respondents filed a motion for judgment on the pleadings which was granted
by the trial court. It was held that the disputed lot is within Lot 89 covered by respondents' TCT
No. 257152, issued on June 20, 1969. Said lot therefore became a private land long before the
Free Patent was issued to Macario on July 31, 1971. Hence, the titles derived or issued on the
basis of said Free Patent are void because Public Land Act applies only to public lands and not
private lands. On the theory that the spring cannot rise higher than its source, the trial court
concluded that petitioners cannot be purchasers in good faith considering that their title was
derived from Macario who acquired the property by virtue of a void title. It further ruled that
petitioners' defense of good faith must fail because they were forewarned of the notice indicating
that the questioned lot is inside Lot 89. The dispositive portion of the March 21, 2003 order,
reads:
WHEREFORE, premises considered, Plaintiffs' [respondents herein] Motion is hereby Granted
and judgment rendered as follows:
1. Plaintiffs' Transfer Certificate of Title (TCT) No. 257152 is declared valid and superior to
defendants' [petitioners] TCT No. 272191;
2. Free Patent No. 495269 issued by then Secretary of Environment and Natural Resources to
Macario Mencias on July 21, 1971 is declared null and void;
3. Original Certificate of Title (OCT) No. 711, Transfer Certificate of Title (TCT) No. 271604/T-
1358 and Transfer Certificate of Title (TCT) No. 272191, TCT No. 186516 and TCT No. 272191,
all derivatives [sic] title of Free Patent 495269 issued by Registry of Deeds of Marikina, are also
declared null and void;
4. The Bureau of Lands and Land Registration Administration are directed to enter into their
technical files the findings in this order;
5. The Registry of Deeds of Marikina is directed to cancel Transfer Certificate of Title (TCT)
NO. 272191 in the names of Edward and Edwin Roco Tan.
SO ORDERED.13
Petitioners appealed to the Court of Appeals which affirmed the assailed order of the trial court.
They filed a motion for reconsideration but was denied in a resolution dated July 6, 2005.
Hence, this petition.
The sole issue for resolution is whether a judgment on the pleadings is proper in the instant
case.
Section 1, Rule 34 of the Rules of Court, states:
SECTION 1. Judgment on the pleadings. - Where an answer fails to tender an issue, or
otherwise admits the material allegations of the adverse party's pleading, the court may, on
motion of that party, direct judgment on such pleading. x x x.
Where a motion for judgment on the pleadings is filed, the essential question is whether
there are issues generated by the pleadings. In a proper case for judgment on the
pleadings, there is no ostensible issue at all because of the failure of the defending party's
answer to raise an issue.14 The answer would fail to tender an issue, of course, if it does
not deny the material allegations in the complaint or admits said material allegations of the
adverse party's pleadings by confessing the truthfulness thereof and/or omitting to deal with
them at all. Now, if an answer does in fact specifically deny the material averments of the
complaint and/or asserts affirmative defenses (allegations of new matter which, while
admitting the material allegations of the complaint expressly or impliedly, would
nevertheless prevent or bar recovery by the plaintiff), a judgment on the pleadings would
naturally be improper.15
In this case, we find that the trial court erred in rendering judgment on the pleadings
because the pleadings filed by the parties generated ostensible issues that necessitate the
presentation of evidence. Respondents' action for declaration of nullity of Free Patent No.
495269 and the titles derived therefrom is based on their claim that the lot titled in the name
of petitioners, is a portion of a bigger tract of land previously titled in the name of their
(respondents) predecessors-in-interest. The documents presented in support thereof were
the photocopy of respondents' TCT No. 257152 which shows that the land it covers,
including lot 89, originated from OCT No. 730; and photocopies of the documents alleged to
have been issued by the Bureau of Lands and confirming that the disputed lot is a portion
of respondents' Lot 89. Pertinent portions of the Amended Complaint, state:
5. Sometime in early April, 1992, plaintiff de la Vega was informed by one of the occupants
of the above-described lot No. 89 that the heirs of Macario Mencias, the defendants herein,
were causing the ejectment of said occupants and claiming to be the owners of an area of
29,945 sq. ms. (sic) which is within, or part of, Lot No. 89 covered by plaintiffs' T.C.T. No.
257152. It was only then that the plaintiffs heard of Macario Mencias and of his encroaching
into plaintiffs' Lot 89.
6. The plaintiffs later learned that, unknown to them, Macario Mencias had applied with the
then Bureau of Lands for, and obtained on 31 July 1971, Free Patent No. 495269 which
was granted under the signature of the then Secretary of Agriculture and Natural Resources
and covering an area of 29,945 sq. ms. (sic) as described in Plan F (III-1) 4496-D. On 11
August 1971, Original Certificate of Title No. 711 (Rizal) was issued to him based on the
said Free Patent, and upon his death, said OCT No. 711 was cancelled and transferred to
his heirs, the defendants herein, to whom T.C.T. No. 186516 (Marikina) was issued on 5
July 1990. The plaintiffs were never notified of said application of Mencias for free patent
nor of the issuance of Free Patent No. 495269 and OCT No. 711 to him and T.C.T. No.
186515 to his heirs, the defendants herein. Photocopies of OCT No. 711, which
incorporated Free Patent No. 495269, and T.C.T. No. 186516 are hereto appended as
Annexes "B" and "C", respectively.
xxxx
8. A letter dated 29 October 1971 of Mr. Amando A. Salvador as Chief of the Survey Division of
the then Bureau of Lands and addressed to Macario Mencias, 1st Indorsement, dated 15
February 1974, signed by Mr. Daniel C. Florida as Acting Chief of the Legal Division of the
Bureau of Lands, a report dated 17 December 1976 by Mr. Jose B. Isidro as Hearing Officer
addressed to the Director of Lands, and the 1st Indorsement, dated 3 January 1977, also
addressed to the Director of Lands by Mr. Claudio C. Batiles as the District Land Officer,
photocopies of which are appended hereto as Annexes "D", "E", "F" and "G", respectively,
unequivocally confirmed that the area of 29,945 sq. ms. (sic) covered by the Free Patent based
on Plan F (III-1) 4496-D and issued to Macario Mencias was entirely inside Lot 89 of Plan II-4755,
which was covered by T.C.T. No. 22395 in the name of "J Antonio Araneta, Trustee of the children
Angela I. Tauson", and since 20 June 1969, by T.C.T. No. 257152 in the plaintiffs' names.
9. There can be no doubt that the area of 29,945 sq. ms. (sic) covered by Free Patent No.
495269, which was incorporated in OCT No. 711 issued to Macario Mencias, was within Lot 89 of
Plan II-4755 covered by T.C.T. No. 22395 and, since 20 June 1969, by T.C.T. No. 2597152 (sic) in
the plaintiffs' names, because the technical description of said area embodied in the said Free
Patent itself and in OCT No. 711 disclosed the following information:
"NOTE: This survey is covered by F.P.A. No. (III-1) 4496.
This survey is entirely inside No. 89, II-4755" (See Annex "B" hereof). (See Annex "B" hereof).
10. In fact the very same notes were carried over in T.C.T. No. 186516 issued to the heirs of
Mencias, the defendants herein, thus forewarning all those who dealt or may have dealt with the
private defendants regarding the area therein described that there was something anomalous in
said title (See Annex "C" hereof).
xxxx
14. The records of the Registry of Deeds of Marikina, Metro Manila, disclosed that TCT No.
186516, Annex "C", was cancelled and T.C.T. No. 271604, covering the same parcel of land
covered by T.C.T. No. 186516, was issued on November 14, 1994 by the Register of Deeds of
Marikina, Mr. Artemio B. Caa, to the New Atlantis Real Eastate & Dev., Inc. represented by its
President, Victor C. Salvador, Jr., based on a sale in its favor inscribed on the same date; and
that T.C.T. No. 271604 was thereupon cancelled and in lieu thereof T.C.T. No. 272191 was issued
by the said Register of Deeds to private defendants Edward and Edwin Roco Tan on November
17, 1994 based on a sale in their favor inscribed on the same date. A photocopy of T.C.T. No.
272191 is hereto attached as Annex "H".
xxxx
16. Neither New Atlantis Real Estate & Dev. Inc., nor Edward Roco Tan and Edwin Roco Tan
could claim to be purchasers in good faith not only because their titles are void and inexistent and
could not possibly have any legal effect whatsoever but also because the "NOTE" cited in
paragraphs 9 and 10 above, which likewise appears on T.C.T. No. 272191 itself, discloses the
very basis for its nullity.
17. The notice of the pendency of this action (Notice of Lis Pendens) was duly inscribed on T.C.T.
No. 186516 on August 4, 1992 under Entry No. 274711, which notice has been carried over to
T.C.T. No. 272191, a photocopy of which is hereto appended as Annex "H".
x x x x.16
The foregoing averments were specifically denied by defendant heirs who raised, among
others, the affirmative defense that respondents' TCT No. 22395 is void and that lot 89 is
not found inside respondents' land. Thus'
11. Lot 89 was never a part of the Mariquina Estate as shown in subdivision plan PSD
29965 as surveyed in December, 1950 up to June, 1951. This fact is also certified by the
Office of the Register of Deeds of Rizal as early as 1967, a photo copy of said certification
is hereto attached as Annex "1";
12. Plaintiffs' own exhibits (Annexes "E", "F", in relation to Annex "A") show that lot 89 was
never part of Original Certificate of Title (O.C.T.) No. 730 from which plaintiffs' alleged title
was derived (T.C.T. No. 257152, Annex "A"). In Annexes "E" and "F", Lot No. 89 of II-4755
is covered by O.C.T. No. 734 and not 730;
13. T.C. T. No. 257152 is spurious, falsified, hence, null and void. This certificate of title was
issued in lieu of T.C.T. No. 22395/T 389 as per Annex "A" of the Complaint. T.C.T. No.
22395/T 389 was in turn issued in lieu of T.C.T. No. 45046 as shown in a document (T.C.T.
No. 22395) hereto attached as Annex "2";
14. It also appears that T.C.T. No. 22395 is a mere reconstitution of a lost/destroyed T.C.T.
No. 45046 as shown on page 3 of T.C.T. No. 257152;
15. Upon verification with the Office of the Register of Deeds of Rizal, T.C.T. No. 45046
covered a different parcel of land situated in San Juan, Rizal and measuring about 356
square meters only, photo copy of which is hereto attached as Annex "3" hereof;
x x x x.17
Petitioners asserted, inter alia, the affirmative defense of good faith and denied the material
allegations of the complaint relating to the origin of the title of respondents; and the latter's
claim that Lot 89 is covered by TCT No. 257152. Pertinent portions of the Answer state:
In further support of the Specific Denials and Affirmative Allegations herein set forth, and by
way of Affirmative Defenses, defendants allege:
xxxx
4.2 Defendants are innocent purchasers for value of the subject property. They had no
knowledge, actual or constructive, of the alleged defect in their title, Transfer Certificate of
Title No. 272191, or of the title of their predecessor-in-interest, the Corporation.
4.2.1 Plaintiff's (sic) notice of lis pendens alleged to have been duly inscribed on TCT No.
186516 on August 4, 1992 under Entry No, 274711 did not appear or was not annotated on
the corporation's title, TCT No. 271604, which was issued on November 14, 1994 or long
after the alleged inscription was made on the said title. Attached and made integral part
hereof as Annex "A" is a copy of Corporation's title, TCT No. 271604.
4.2.2 Neither did said inscription appear or annotated on defendants' title, TCT No.
272191, which was issued on 17 November 1994. Attached and made integral part hereof
as Annex "B" is a copy of TCT No. 272191.
4.2.3 It bears stressing that if the said inscription was duly made on 4 August 1992 as plaintiffs
alleged, the same would have been annotated on TCT Nos. 271604 and 272191 which were
issued long after the said entry was allegedly made. Obviously, if said entry does appear today
on TCT No. 272191, it was made only recently or at the earliest, after the latter title was issued on
17 November 1994. But certainly said entry could not have been possibly made on 4 August
1992.
4.2.4 With the absence of the notice of lis pendens, defendants could not be charged with
notice of any defect in their title No. 272191 nor their status as innocent purchasers for value be
adversely affected by the same.
4.2.5 Neither does the note, "this survey is covered by F.P.A. No. (III-1) 4496; This survey is
entirely inside No. 89 II-4755." serve as sufficient notice to defendants of any defect in their title.
Said note does not indicate or disclose that the subject property is covered by another title.
4.2.6 Moreover, the fact that the subject property was covered by TCT No. 271604 duly issued
by the Registry of Deeds in the name of the corporation without any encumbrance, liens or
adverse claims annotated thereon negates any possibility that the subject property belongs to
any person other than the corporation.18
It is clear from the foregoing that the pleadings filed in the instant case generated the following
issues: (1) whether respondents' TCT No. 257152 is valid; (2) whether Lot 89 is covered by TCT
No. 257152; and (3) whether petitioners are purchasers in good faith. This is clearly not a proper
case for judgment on the pleadings considering that the Answers tendered factual issues. The
trial court rendered a summary judgment on March 21, 2003 and not a judgment on the
pleadings.
In Narra Integrated Corporation v. Court of Appeals,19 the Court explained the distinction
between a proper case of summary judgment and judgment on the pleadings, in this wise:
The existence or appearance of ostensible issues in the pleadings, on the one hand, and their
sham or fictitious character, on the other, are what distinguish a proper case for summary
judgment from one for a judgment on the pleadings. In a proper case for judgment on the
pleadings, there is no ostensible issue at all because of the failure of the defending party's
answer to raise an issue. On the other hand, in the case of a summary judgment, issues
apparently exist i.e. facts are asserted in the complaint regarding which there is as yet no
admission, disavowal or qualification; or specific denials or affirmative defenses are in truth set
out in the answerbut the issues thus arising from the pleadings are sham, fictitious or not
genuine, as shown by affidavits, depositions, or admissions. x x x.
In any case, a summary judgment is likewise not warranted in this case as there are genuine
issues which call for a full blown trial. A "genuine issue" is an issue of fact which requires the
presentation of evidence as distinguished from a sham, fictitious, contrived or false claim. When
the facts as pleaded appear uncontested or undisputed, then there is no real or genuine issue or
question as to the facts, and summary judgment is called for. The party who moves for summary
judgment has the burden of demonstrating clearly the absence of any genuine issue of fact, or
that the issue posed in the complaint is patently unsubstantial so as not to constitute a genuine
issue for trial. Trial courts have limited authority to render summary judgments and may do so
only when there is clearly no genuine issue as to any material fact. When the facts as pleaded by
the parties are disputed or contested, proceedings for summary judgment cannot take the place
of trial.20
In the instant case, presentation of evidence is necessary to determine the validity of TCT No.
22395 from which respondents' title (TCT No. 257152) was derived. As alleged by defendant
heirs, TCT No. 22395 was a mere reconstitution of TCT No. 45046, which per verification
from the Register of Deeds of Rizal pertain to a different piece of land measuring only about
356 square meters and located in San Juan, Rizal. These allegations were never refuted by
respondents, hence, they cannot be simply brushed aside by the trial court.
Moreover, even assuming that the title of respondents' predecessors-in-interest (TCT No.
22395) is valid, the evidence at this stage is still insufficient to sustain the conclusion of the
trial court that Lot 89 is inside respondents' land now covered by TCT No. 257152. The title
appended by respondents in their complaint is a mere photocopy. Likewise, the document
allegedly issued by the Bureau of Lands and presented by respondents to prove that Lot 89
is inside their land are also mere photocopies and not authenticated by said office.
Furthermore, the title referred in the said documents as the origin of TCT No. 257152, is a
different title, that is OCT No. 734 and not OCT No. 730. There is thus a need to present
evidence to settle the issues in a full blown trial.
If the evidence show that the Free Patent and the OCT issued to petitioners' predecessors-
in-interest is valid and or Lot 89 is not inside TCT No. 257152, then judgment should be
rendered in favor of petitioners; and whether the latter acted in good or bad faith will no
longer be a decisive issue in this case. On the other hand, if the title of petitioners'
predecessors-in-interest is declared void, the defense of good faith maystill be available to
petitioners who claim to be purchasers in good faith and for value. The rule is that a void
title may be the source of a valid title in the hands of an innocent purchaser for value.21 An
innocent purchaser for value is one who buys the property of another, without notice that
some other person has a right to, or interest in, such property and pays a full and fair price
for the same at the time of such purchase, or before he has notice of the claims or interest
of some other person in the property.22
Since good faith is always presumed,23 it was premature for the trial court to conclude that
petitioners are not purchasers in good faith. Note that the complaint did not state that the
notice of the pendency of this action was inscribed in the title of the Corporation from whom
petitioners purchased the property. Petitioners even denied the presence of said inscription
in their own title and in the title of the Corporation.24 Neither the presence of the notation
"This survey is covered by F.P.A. No. (III-1) 4496; and This survey is entirely inside No. 89,
II-4755," in the title of the Corporation automatically make petitioners purchasers in bad
faith. In the absence of other evidence to explain said notation, bad faith, which is never
presumed, cannot be charged against petitioners. The notation that the disputed lot is
covered by Free Patent Application No. (III-1) 4496, will not place the title in dubious light
because the same is the number of the application for Free Patent of Macario Mencias,25
petitioners' predecessor-in-interest. The same is true with respect to the notation in the title
that the questioned lot is inside Lot 89. Considering that the title presented is a mere
photocopy and that the notes appearing thereon do not indicate that the subject property is
covered by any title, the trial court should have directed the parties to substantiate their
respective allegations instead of rendering judgment. Indeed, in determining the propriety of
rendering a motion for summary judgment, the lower court should take that view of the
evidence most favorable to the party against whom it is directed, giving such party the
benefit of all favorable inferences.26
In sum, we find that respondents failed to prove that presentation of evidence may be
dispensed with in the present controversy. The instant case is neither a proper case for
rendition of judgment on the pleadings nor of summary judgment. A full blown trial should
therefore be conducted to resolve the issues raised by the parties.
WHEREFORE, in view of all the foregoing, the petition is GRANTED and the February 3,
2005 Decision and the July 6, 2005 Resolution of the Court of Appeals in CA-G.R. CV No.
79957 are REVERSED and SET ASIDE. Let the records of this case be remanded to the
Regional Trial Court of Pasig City, Branch 264 for further proceedings.
12. Heirs of Valeriano v SPos Loumocso
Facts:
Petitioners, heirs of spouses Dorotea and Valeriano Concha, Sr., claim to be the rightful
owners of two, one-hectare portion lots, all situated in Cogon, Dipolog City, lands falling
under the Public Land Act. Respondent siblings Gregorio, Jacinto and Cristina
Lumocso are the patent holders and registered owners of the subject lots.
Valeriano Sr. and his children, the petitioners, filed a complaint for Reconveyance
and/or Annulment of Title with damages. They sought to annul the free patent and
original certificate of title issued in the name of Gregorio Lumocso. Two years later,
they filed two separate complaints for Reconveyance with Damages, this time against
Cristina Lumocso.
The three complaints commonly alleged that on May 1958, petitioners' parents
acquired by homestead the 24-hectare parcel of land and that since 1931, the spouses
Concha "painstakingly preserved" the forest, and even the untitled forest lands. They
allege that they possessed this excess 4 hectares of land continuously, publicly,
notoriously, adversely, peacefully, in good faith and in concept of an owner since 1931;
and until the death of Valeriano Sr., in 1999.
They claim, that the respondents forcibly entered the premises illegally cut, collected,
and disposed of 21 trees and sold the same to a Timber dealer.
That the land is private land or that even assuming it was part of the public domain,
plaintiffs had already acquired imperfect title thereto; and that respondents
"surreptitiously" filed free patent applications over the lots despite their full knowledge
that petitioners owned the lots removing them from the category of innocent purchasers
for value.
The respondents moved for dismissal of the respective cases against them for lack of
jurisdiction, failure to state cause of action for reconveyance, prescription, laches,
estoppel, abandonment and waiver. The trial court subsequently denied the motion.
The CA reversed the judgment, and held that the case should be dismissed, but on the
ground of prescription.
Issue: W/N the RTC had jurisdiction over the case.
Held:
No, the RTC did not have jurisdiction over the case.
Jurisdiction over the subject matter is the power to hear and determine cases of the
general class to which the proceedings in question belong. It is conferred by law and
an objection based on this ground cannot be waived by the parties. To determine
whether a court has jurisdiction over the subject matter of a case, it is important to
determine the nature of the cause of action and of the relief sought.
The trial court correctly held that the instant cases involve actions for reconveyance. An
action for reconveyance respects the decree of registration as incontrovertible but
seeks the transfer of property, which has been wrongfully or erroneously registered in
other persons' names, to its rightful and legal owners, or to those who claim to have a
better right.
These cases may also be considered as actions to remove cloud on one's title as they
are intended to procure the cancellation of an instrument constituting a claim on
petitioners' alleged title which was used to injure or vex them in the enjoyment of their
alleged title
 BP 129 provides that in all civil actions which involve the title to, or possession of,
real property, or any interest therein, where the assessed value of the property
involved DOES NOT exceed P20,000.00 or for civil actions in Metro Manila,
where such value DOES NOT exceeds P50,000.00, the MTC (MCTC, MetC,
MTCC) shall exercise exclusive original jurisdiction. The assessed value, as
shown by their tax declarations, being below P20,000.00, the MTC clearly has
jurisdiction over the case.
13. MBTC v Alejo
Facts: Spouses Raul and Cristina Acampado obtained loans from Metrobank, as security
for which they mortgaged their land covered by TCT No. V-41319. Petitioner extra judicially
foreclosed the mortgage when the spouses Acampado defaulted in the payment of their
loans and, at the foreclosure sale, the mortgaged property was sold to petitioner as the
highest bidder. When the spouses failed to redeem the property within the reglementary
period, title to the property was consolidated to the petitioner. When petitioner presented
the Affidavit of Consolidation of Ownership before the Register of Deeds, it was informed of
the existence of an RTC decision in Civil Case No. 4930-V-96, which annulled TCT No.
41319. Said case, a complaint for declaration of nullity of TCT No V-41319, was filed by
private respondent Sy Tan Se against the spouses Acampado.
RTC Ruling: judgment is hereby rendered declaring as null and void Transfer Certificate of
Title No V-41319 in the name of defendant Raul Acampado for having proceeded from an
illegitimate source.
Petitioner was not, however, made a party to the said case nor was it notified of its
existence despite being the registered mortgagee of the real property covered by the title
sought to be annulled.
Thus, filed a case to CA
CA Ruling: insufficient in form and substance, the Petition for Annulment was out rightly
dismissed by the CA.
Hence, This case
Issues:
1. Whether or not a petition for annulment of judgment under Rule 47 of the 1997 Rules of
Civil Procedure is the proper remedy available to petitioner under the circumstances
2. Whether or not the judgment of the trial court in Civil Case No. 4930-V96 should be
annulled.
Held:
1. Yes, petition for Annulment of judgement was the proper remedy available to the
bank. It precisely alleged that Sy Tan Se purposely concealed the case by
excluding petitioner as a defendant to the civil case even if he was an
indispensable party. This deprived the bank of its duly registered property right
without due process of the law. The allegation of extrinsic fraud may be the basis
for annulling a judgment. Petition for relief (what the CA recommended) was not
available to the bank since it was never a party to the civil case. Hence, Bank
cant also intervene to a case that he has no knowledge of.
Note: An action for quieting of the title was also not available to the bank. An action for
quieting of title is filed only when there is a cloud on title to real property or any interest
therein. A cloud on a title is defined as a semblance of title which appears in some legal
form but which is in fact unfounded. The subject judgment cannot be considered as a cloud
on petitioners title or interest over the real property covered by TCT, which does not even
have a semblance of being a title.
2. The judgment of the trial court should also be declared null and void because the
bank, which is an indispensable party, was not impleaded in the civil case. The
absence of an indispensable party renders all subsequent actuations of the court
null and void, for want of authority to act, not only as to the absent parties but even as
to those present
Note: "An indispensable party is a party who has such an interest in the controversy or subject
matter that a final adjudication cannot be made, in his absence, without injuring or affecting that
interest[;] a party who has not only an interest in the subject matter of the controversy, but also
has an interest of such nature that a final decree cannot be made without affecting his interest or
leaving the controversy in such a condition that its final determination may be wholly inconsistent
with equity and good conscience. It has also been considered that an indispensable party is a
person in whose absence there cannot be a determination between the parties already before the
court which is effective, complete, or equitable. Further, an indispensable party is one who must
be included in an action before it may properly go forward.
14. Ancheta v Ancheta
The petitioner and the respondent resided in Muntinlupa, Metro Manila. They had eight children
during their marriage. On Dec. 2, 1992The respondent left the conjugal home and abandoned the
petitioner and their children. On January 25, 1994, petitioner Marietta Ancheta filed a petition with
the Regional Trial Court of Makati against the respondent for the dissolution of their conjugal
partnership and judicial separation of property with a plea for support and support pendente lite.
The petitioner was renting a house in BF homes, Las Pinas.
On April 20, 1994, the parties executed a Compromise Agreement where some of the conjugal
properties were adjudicated to the petitioner and her eight children including a parcel of land in
Carmona, Cavite and Biofood corporation along with the resort Munting Paraiso. The respondent
vacated, on June 1, 1994, the resort Munting Paraiso and all the buildings and improvements
thereon. The petitioner, with the knowledge of the respondent, resided in the said property.
In the meantime, the respondent intended to marry again. On June 5, 1995, he filed a petition
with the Regional Trial Court of Naic, Cavite, Branch 15, for the declaration of nullity of his
marriage with the petitioner on the ground of psychological incapacity.
Although the respondent knew that the petitioner was already residing at the resort Munting
Paraiso in Bancal, Carmona, Cavite, he, nevertheless, alleged in his petition that the petitioner
was residing in BF Homes, Almanza, Las Pias, Metro Manila, "where she may be served with
summons."
The clerk of court issued summons to the petitioner at the address stated in the petition. The
sheriff served the summons and a copy of the petition by substituted service on June 6, 1995 on
the petitioners son, Venancio Mariano B. Ancheta III, at his residence in Bancal, Carmona,
Cavite. The sheriff then submitted a Return of Service to the court stating that the summons and
a copy of the petition were served to the petitioner through her son.
The petitioner filed to fail an answer to the petition. Respondent filed an Ex parte motion to
declare the defendant in default. During the hearing there was no appearance for the petitioner
and therefore no objection was made. Trial court issued an order declaring their marriage void ab
initio.
On February 14, 1998, Valentines Day, the respondent and Teresita H. Rodil were married in
civil rights before the municipal mayor of Indang, Cavite.
Procedure: On July 7, 2000, the petitioner filed a verified petition against the respondent with the
Court of Appeals under Rule 47 of the Rules of Court. The petitioner alleged, that the respondent
committed gross misrepresentations by making it appear in his petition that she lived in BF
Homes when she actually lived in Carmona, Cavite. This fact was known to respondent.
According to the petitioner, the respondent did so to deprive her of her right to be heard in the
said case, and ultimately secure a favorable judgment without any opposition. Venancio M.B.
Ancheta III failed to deliver to her the copy of the petition and summons. Thus, according to the
petitioner, the order of the trial court in favor of the respondent was null and void (1) for lack of
jurisdiction over her person; and (2) due to the extrinsic fraud perpetrated by the respondent.
CA held: We cannot give due course to the present petition in default or in the absence of any
clear and specific averment by petitioner that the ordinary remedies of new trial, appeal, petition
for relief or other appropriate remedies are no longer available through no fault of petitioner.
The petitioner filed a motion for the reconsideration of the said resolution, appending
thereto an amended petition in which she alleged that the petition is based on the grounds
of extrinsic fraud and lack of jurisdiction (among others).
ISSUE:
Whether or not the Court of Appeals erred in dismissing the original petition and denying
the amended petition.
HELD:
YES. The SC held: that the Court of Appeals erred in dismissing the original petition and
denying admission of the amended petition. This is so because apparently, the Court of
Appeals failed to take note from the material allegations of the petition, that the petition was
based not only on extrinsic fraud but also on lack of jurisdiction over the person of the
petitioner, on her claim that the summons and the copy of the complaint were not served on
her.
Summons and complaint may be served on the defendant either by handing a copy thereof
to him in person, or, if he refuses to receive and sign for it, by tendering it to her.27
However, if there is impossibility of prompt service of the summons personally on the
defendant despite diligent efforts to find him, service of the summons may be effected by
substituted service as provided in Section 7, Rule 14 of the said Rules:
SEC. 7. Substituted service. If, for justifiable causes, the defendant cannot be served
within a reasonable time as provided in the preceding section, service may be effected (a)
by leaving copies of the summons at the defendants residence with some person of
suitable age and discretion then residing therein, or (b) by leaving the copies of defendants
office or regular place of business with some competent person in charge thereof
15. Alamayo v Pabale
Cesnando Fernando, representing S.M. Fernando Realty Corp filed an action for Specific
Performance with Damages (Civil Case) against Nelly Nave who owns a parcel of land
which the former alleged was the subject of a 'Kasunduan ng Pagbibilihan'. However, Nave
allegedly reneged on their agreement when she refused to accept the partial payment of
Fernando as previously agreed because she did not want to sell her property to him
anymore.. [Fernando] prayed that after trial on the merits, [Nave] be ordered to execute the
corresponding Deed of Sale in his favor, and to pay attorneys fees, litigation expenses and
damages. The said lot was instead sold to the Pabale siblings. Nave filed a Motion to
Dismiss averring that she could not be ordered to execute the corresponding Deed of Sale
in favor of Fernando based o grounds that: (1) she was not fully apprised of the nature of
the piece of paper Fernando handed to her for her signature on January 3, 1984. When she
was informed that it was for the sale of her property in Calamba, Laguna, she immediately
returned to Fernando the said piece of paper and at the same time repudiating the same.
Her repudiation was further bolstered by the fact that when Fernando tendered the partial
down payment to her, she refused to receive the same; and (2) she already sold the
property in good faith to Rommel, Elmer, Erwin, Roller and Amanda, all surnamed Pabale,
the complaint was filed against her but before she received a copy thereof. Moreover, she
alleged that Fernando has no cause of action against her as he is suing for and in behalf of
S.M. Fernando Realty Corporation who is not a party to the alleged Contract to Sell. Even
assuming that said entity is the real party in interest, still, Fernando cannot sue in
representation of the corporation there being no evidence to show that he was duly
authorized to do so. Subsequently, the civil proceedings were suspended by virtue of a
guardianship proceedings docketed as SP. PROC. No. 146-86-C.In June 1988, The court
hereby finds Nelly S. Nave an incompetent within the purview of Rule 92 of the Revised
Rules of Court, a person who, by reason of age, disease, weak mind and deteriorating
mental processes cannot without outside aid take care of herself and manage her
properties, becoming thereby an easy prey for deceit and exploitation, said condition having
become severe since the year 1980. The lower court declared the nullity of the two sale
agreements on the ground that Nave was found incompetent since 1980. The Pabale siblings
intervened. The Court of Appeals granted the appeals of both Fernando and the Pabale siblings
and upheld the validity of the Deed of Sale executed by Nelly Nave dated February 20, 1984.
Hence this petition.
Whether or not the declaration of incompetency constitutes res judicata?
This Court is not persuaded.
Res judicata literally means "a matter adjudged; a thing judicially acted upon or decided; a thing
or matter settled by judgment." Res judicata lays the rule that an existing final judgment or decree
rendered on the merits, and without fraud or collusion, by a court of competent jurisdiction, upon
any matter within its jurisdiction, is conclusive of the rights of the parties or their privies, in all
other actions or suits in the same or any other judicial tribunal of concurrent jurisdiction on the
points and matters in issue in the first suit.10
The doctrine of res judicata thus lays down two main rules which may be stated as follows: (1)
The judgment or decree of a court of competent jurisdiction on the merits concludes the parties
and their privies to the litigation and constitutes a bar to a new action or suit involving the same
cause of action either before the same or any other tribunal; and (2) Any right, fact, or matter in
issue directly adjudicated or necessarily involved in the determination of an action before a
competent court in which a judgment or decree is rendered on the merits is conclusively settled
by the judgment therein and cannot again be litigated between the parties and their privies
whether or not the claims or demands, purposes, or subject matters of the two suits are the
same.
Contrary to Alamayris assertion, conclusiveness of judgment has no application to the instant
Petition since there is no identity of parties and issues between SP. PROC. No. 146-86-C and
Civil Case No. 675-84-C.
SP. PROC. No. 146-86-C was a petition filed with the RTC by Atty. Gesmundo for the
appointment of a guardian over the person and estate of his late wife Nave alleging her
incompetence.
A guardian may be appointed by the RTC over the person and estate of a minor or an
incompetent, the latter being described as a person "suffering the penalty of civil interdiction or
who are hospitalized lepers, prodigals, deaf and dumb who are unable to read and write, those
who are of unsound mind, even though they have lucid intervals, and persons not being of
unsound mind, but by reason of age, disease, weak mind, and other similar causes, cannot,
without outside aid, take care of themselves and manage their property, becoming thereby an
easy prey for deceit and exploitation."
Neither is there identity of issues between SP. PROC. No. 146-86-C and Civil Case No. 675-84-C
that may bar the latter, by conclusiveness of judgment, from ruling on Naves competency in
1984, when she executed the Deed of Sale over the subject property in favor the Pabale siblings.
In SP. PROC. No. 146-86-C, the main issue was whether Nave was incompetent at the time of
filing of the petition with the RTC in 1986, thus, requiring the appointment of a guardian over her
person and estate.
In the cross-claim of Nave and Atty. Gesmundo against the Pabale siblings in Civil Case No. 675-
84-C, the issue was whether Nave was an incompetent when she executed a Deed of Sale of the
subject property in favor of the Pabale siblings on 20 February 1984, hence, rendering the said
sale void.
While both cases involve a determination of Naves incompetency, it must be established at two
separate times, one in 1984 and the other in 1986. A finding that she was incompetent in 1986
does not automatically mean that she was so in 1984. In Carillo v. Jaojoco,22 the Court ruled that
despite the fact that the seller was declared mentally incapacitated by the trial court only nine
days after the execution of the contract of sale, it does not prove that she was so when she
executed the contract. Hence, the significance of the two-year gap herein cannot be gainsaid
since Naves mental condition in 1986 may vastly differ from that of 1984 given the
intervening period.
All told, there being no identity of parties and issues between SP. PROC. No. 146-86-C and
Civil Case No. 675-84-C, the 22 June 1988 Decision in the former on Naves incompetency
by the year 1986 should not bar, by conclusiveness of judgment, a finding in the latter case
that Nave still had capacity and was competent when she executed on 20 February 1984
the Deed of Sale over the subject property in favor of the Pabale siblings. Therefore, the
Court of Appeals did not commit any error when it upheld the validity of the 20 February
1984 Deed of Sale.
16. Santos v PNOC
Facts: PNOC Exploration Corporation, respondent, filed a complaint for a sum of money
against petitioner Pedro Santos Jr. in the RTC of Pasig. The amount sought to be collected
was the petitioners unpaid balance of the car loan advanced to him by respondent when
he was still a member of its board of directors.
Personal service of summons were made to petitioner but failed because the latter cannot
be located in his last known address despite earnest efforts to do so. Subsequently, on
respondents motion, the trial court allowed service of summons by publication. Respondent
caused the publication of the summons in Remate, a newspaper of general circulation in
the Philippines. Thereafter, respondent submitted the affidavit of publication and the
affidavit of service of respondents employee to the effect that he sent a copy of the
summons by registered mail to petitioners last known address.
Petitioner still failed to answer within the prescribed period despite the publication of
summons. Hence, respondent filed a motion for the reception of its evidence ex parte. Trial
court granted said motion and proceeded with the ex parte presentation and formal offer of
its evidence.
Petitioner filed an Omnibus Motion for Reconsideration and to Admit Attached Answer,
alleging that the affidavit of service submitted by respondent failed to comply with Section
19, Rule 14 of the Rules of Court as it was not executed by the clerk of court. Trial court
denied the said motion and held that the rules did not require such execution with the clerk
of court. It also denied the motion to admit petitioners answer because the same was filed
way beyond the reglementary period.
Petitioner appeals to the CA via a petition for certiorari but failed and even sustained the
trial courts decision and ordered the former to pay the amount plus legal interest and cost
of suit. Hence, this petition.
Issues:
(1) Whether or not there is lack of jurisdiction over the petitioner due to improper service of
summons.
(2) Whether or not the rule on service by publication under Section 14, Rule 14 of the Rules
of Court applies only to actions in rem, not actions in personam.
(3) Whether or not the affidavit of service of the copy of the summons should have been
prepared by the clerk of court and not respondents messenger.
Held:
(1) Section 14, Rule 14 provides that in any action where the defendant is designated as an
unknown owner or the like or when his whereabouts are unknown and cannot be
ascertained by diligent inquiry, service may, by leave of court, be effected upon him by
publication in a newspaper of general circulation and in such places and for such times as the
court may order. Since petitioner could not be personally served with summons despite diligent
efforts to locate his whereabouts, respondent sought and was granted leave of court to effect the
service of summons upon him by publication in a newspaper of general circulation. Thus,
petitioner was proper served with summons by publication and that there is jurisdiction over his
person.
(2) The in rem/in personam distinction was significant under the old rule because it was silent as
to the kind of action to which the rule was applicable but this has been changed, it now applies to
any action. The present rule expressly states that it applies in any action where the defendant is
designated as an unknown owner, or the like, or whenever his whereabouts are unknown and
cannot be ascertained by diligent inquiry. Hence, the petitioners contention that the complaint
filed against him is not covered by the said rule because the action for recovery of sum of money
is an action in personam is not applicable anymore.
(3) The service of summons by publication is complemented by service of summons by
registered mail to defendants last known address. This complementary service is evidenced by
an affidavit showing the deposit of a copy of the summons and order for publication in the post
office, postage for prepaid, directed to the defendant by registered mail to his last known
address. The rules, however, do not require that the affidavit of complementary service be
executed by the clerk of court. While the trial court ordinarily does the mailing of copies of its
orders and processes, the duty to make the complementary service by registered mail is imposed
on the party who resorts to service by publication.
17. Evangelista v Santiago
In this Petition for Review under Rule 45 of the Rules of Court, petitioners pray for the reversal of
the Decision of the Court of Appeals in CA-G.R. CV No. 64957,[1] affirming the Order of the
Regional Trial Court (RTC) of San Mateo, Rizal, Branch 77, in Civil Case No. 1220, [2] dismissing
petitioners Complaint for declaration of nullity of Original Certificate of Title (OCT) No. 670 and all
other titles emanating therefrom.
In their Complaint, petitioners alleged that they occupied and possessed parcels of land, located
in Sitio Panayawan, Barangay San Rafael, Montalban (now Rodriquez), Province of Rizal
(Subject Property), by virtue of several Deeds of Assignment, dated 15 April 1994 and 02 June
1994, executed by a certain Ismael Favila y Rodriguez.[3]
According to the Deeds of Assignment, the Subject Property was part of a vast tract of land called
Hacienda Quibiga, which extended to Paraaque, Las Pias, Muntinlupa, Cavite, Batangas, Pasay,
Taguig, Makati, Pasig, Mandaluyong, Quezon City, Caloocan, Bulacan, and Rizal; awarded to
Don Hermogenes Rodriguez by the Queen of Spain and evidenced by a Spanish title. Ismael
Favila claimed to be one of the heirs and successors-in-interest of Don Hermogenes Rodriguez.
Acting as Attorney-in-Fact pursuant to a Special Power of Attorney executed by his mga kapatid
on 25 February 1965, Ismael Favila signed the aforementioned Deeds of Assignment, assigning
portions of the Subject Property to the petitioners, each portion measuring around 500 to 1,000
square meters, in exchange for the labor and work done on the Subject Property by the
petitioners and their predecessors.[4]
Petitioners came by information that respondent was planning to evict them from the Subject
Property. Two of the petitioners had actually received notices to vacate. Their investigations
revealed that the Subject Property was included in Transfer Certificates of Titles (TCTs) No.
53028, No. 281660, No. N-39258 and No. 205270, all originating from OCT No. 670, and now in
the name of respondent.[5]
OCT No. 670 was issued in the name of respondents mother, Isabel Manahan y Francisco, and
three other individuals, pursuant to Decree No. 10248, dated 13 February 1913, in Case No.
8502 of the Court of Land Registration of the Philippine Islands. The whole property covered by
OCT No. 670 was subsequently adjudicated in favor of Isabel Manahan Santiago (formerly Isabel
Manahan y Francisco). Consequently, OCT No. 670 was cancelled and TCT No. T-53028 was
issued exclusively in the name of Isabel Manahan Santiago. On 28 December 1968, Isabel
Manahan Santiago executed a Deed of Donation transferring the property to her son,
respondent herein, who subsequently secured TCTs No. 281660, No. N-39258 and No.
205270 in his own name.[6]
Petitioners filed with the trial court, on 29 April 1996, an action for declaration of nullity of
respondents certificates of title on the basis that OCT No. 670 was fake and spurious.
Among the defects of OCT No. 670 pointed out by petitioners were that: (1) OCT No. 670
was not signed by a duly authorized officer; (2) Material data therein were merely
handwritten and in different penmanships; (3) OCT No. 670 was not printed on the Official
Form used in 1913, the year it was issued; (4) It failed to indicate the Survey Plan which
was the basis of the Technical Description of the property covered by the title; (5) Decree
No. 10248 referred to in OCT No. 670 was issued only on 11 April 1913, while OCT No. 670
was issued earlier, on 13 February 1913; and (6) Decree No. 10248 was issued over a
property other than the one described in OCT No. 670, although also located in the
Province of Rizal.[7]
Respondent filed his Answer with Prayer for Preliminary Hearing on the Affirmative
Defenses on 03 July 1996. According to respondent, [t]he allegations in the Complaint
would readily and patently show that the same are flimsy, fabricated, malicious, without
basis in law and in fact[8]
As an affirmative defense, respondent claimed that the petitioners had no legal capacity to
file the Complaint, and thus, the Complaint stated no cause of action. Since OCT No. 670
was genuine and authentic on its face, then OCT No. 670 and all of respondents land titles
derived therefrom, are incontrovertible, indefeasible and conclusive against the petitioners
and the whole world.[9]
Citing the consolidated cases of Director of Forestry, et al. v. Hon. Emmanuel M. Muoz, et
al. and Pinagcamaligan Indo-Agro Development Corporation v. Hon. Macario Peralta, Jr., et
al.,[10] respondent argued that the Spanish title, on which petitioners based their claim,
was neither indefeasible nor imprescriptible. Moreover, Presidential Decree (P.D.) No. 892,
which took effect on 16 February 1976, required all holders of Spanish titles or grants to
apply for registration of their lands under Republic Act No. 496, otherwise known as the
Land Registration Act,[11] within six months from effectivity of the decree. After the given
period, Spanish titles could no longer be used as evidence of land ownership in any
registration proceedings under the Torrens System. [12]
Respondent also raised the affirmative defense of prescription. He pointed out that any
action against his certificates of title already prescribed, especially with regard to OCT No.
670, which was issued in 1913 or more than 83 years prior to the filing of the Complaint by
the petitioners. At the very least, respondent contended, it must be presumed that the
questioned land titles were issued by the public officials concerned in the performance of
their regular duties and functions pursuant to the law.[13]
Even assuming arguendo that the petitioners entered and occupied the Subject Property,
they did so as mere intruders, squatters and illegal occupants, bereft of any right or interest,
since the Subject Property was already covered by Torrens certificates of title in the name
of respondent and his predecessors-in-interest.[14]
Lastly, respondent denied knowing the petitioners, much less, threatening to evict them. In
fact, petitioners were not included as defendants in Civil Case No. 783 entitled, Carmelino
M. Santiago v. Remigio San Pascual, et al., which respondent instituted before the same
trial court against squatters occupying the Subject Property. In its decision, dated 01 July
1992, the trial court held that there is no doubt that the plaintiff (respondent herein) is the
owner of the land involved in this case on which the defendants have built their houses and
shanties Although the decision in Civil Case No. 783 was appealed to the Court of Appeals,
it had become final and executory for failure of the defendants-appellants therein to file their
appellants brief.[15]
In the instant case, the trial court held a preliminary hearing on the affirmative defenses as
prayed for by the respondent. During said hearing, petitioners presented their lone witness,
Engineer Placido Naval, a supposed expert on land registration laws. In response to questions
from Honorable Judge Francisco C. Rodriguez of the trial court, Engineer Naval answered that a
parcel of land titled illegally would revert to the State if the Torrens title was cancelled, and that it
was the State, through the Office of the Solicitor General, that should file for the annulment or
cancellation of the title. Respondent, on the other hand, did not present any evidence but relied
on all the pleadings and documents he had so far submitted to the trial court.[16]
After the preliminary hearing, the trial court issued the questioned Order, dated 05 February
1999, dismissing petitioners Complaint. Pertinent portions of the Order of the trial court read:
After considering the testimonial and documentary evidence presented, this Court is inclined not
to grant plaintiffs (sic) prayer. Finding credence and giving weight to plaintiffs (sic) lone but expert
witness, it is crystal clear that, to quote:
1. a parcel of land titled illegally will revert to the State
2. it is the State who must file the corresponding case of annulment of title through the Office of
the Solicitor General, and
3. a land illegally titled in the name of private individual, the State through the Office of the
Solicitor General should file the corresponding case for cancellation of title. (TSN August 26,
1997).
The above quoted testimony is straight from horse (sic) mouth so to speak as this was the
testimony of the plaintiffs (sic) expert witness. And judging from the said testimony alone
aforecited, plaintiffs (sic) cause [of action] is bound to fail. Plaintiffs (sic) own testimony wrote finis
to their case. From the record, this case was initiated and filed by private individuals, Nemencio
Evangelista, et. al., contradicting their witness (sic) testimony. To reiterate, this Court finds
credence to the testimony of the plaintiffs (sic) witness, i.e., is (sic) the State through the Office of
the Solicitor General who must initiate and file a case of this nature when title to a land is being
claimed to be obtained through fraud and allegedly spurious.
The opinion of this Court anent the testimony of the witness is not without basis. Explicit is the
pronouncement of the Supreme Court in the recent case of Heirs of Marciano Nagano v. Court of
Appeals, to wit:
An action for reversion has to be instituted by the Solicitor General pursuant to Section 101,
Commonwealth Act No. 141. (282 SCRA 43).
As to the documentary evidence, having gone through with the Deed of Assignment/s purportedly
executed by and between a certain Ismael Favila y Rodriguez and the plaintiffs, which is the
principal if not the only basis of plaintiffs claim ownership and possession of the subject parcel of
land, the same does not hold water in a manner of speaking, for being self-serving. Assignor
Ismael Favila y Rodriguez claimed in said Deed that he is the Attorney-in-Fact by virtue of an
alleged Special Power of Attorney executed in his favor by his mga kapatid on February 23, 1965,
but said Special Power of Attorney was not presented before this Court, thus there arises a doubt
as to its existence and execution not to mention doubt on the existence of his mga kapatid who
as alleged executed said Special Power Attorney (sic) in his favor.
Even if this Court granting arguendo would admit the authenticity of said Deeds of Assignment/s,
that will not alter the outcome of the pending incident/s before this Court. Why? Because the said
Deed of Assignment/s which were based on Spanish title have lost their evidentiary value
pursuant to the Presidential Decree No. 892 i.e. DISCONTINUANCE OF THE SPANISH
MORTGAGE SYSTEM OF REGISTRATION AND OF THE USE OF SPANISH TITLES AS
EVIDENCE IN LAND REGISTRATION PROCEEDINGS.
There is no need to elaborate on the above-cited provisions of PD 892 as they are self-
explanatory. Suffice it to say that there is no showing, that plaintiffs complied with the said law i.e.
to apply for registration of their lands under Act No. 496, otherwise known as the Land
Registration Act, within six (6) months from the effectivity of this decree (February 16, 1976).
Thereafter, Spanish titles cannot be used as evidence of land ownership in any registration
proceedings under the Torrens System.
This being the case and likewise being clear that plaintiffs were not the lawful owners of the land
subject of this case, for they did not comply with PD 892, the said plaintiffs do not have the legal
standing to bring before this Court the instant complaint
Moreover, the principal issue in this case is for the declaration of nullity of defendants title,
which has nothing to do with plaintiffs (sic) claim of ownership and possession even if we
set aside, albeit momentarily, the truth that plaintiffs (sic) claim were based on barred
Spanish Title/s, and thus plaintiffs were never the owners of the parcel of land subject of
this case.
Further, defendants (sic) title especially so with the mother title OCT 670 was entered and
issued in 1913 or more than Eighty Three (83) years ago, the same not having been
questioned by any party. Only now that it is being questioned, but sad to say, plaintiffs who
are on the offensive and relying on their lone expert witness, instead of bolstering their
case, unwittingly sealed their fate [17]
After the trial court denied petitioners Motion for Reconsideration in its Order, dated 20 July
1999,[18] petitioners appealed both Orders of the trial court to the Court of Appeals.
The Court of Appeals, in its Decision, dated 29 July 2002,[19] affirmed the Order of the trial
court, dated 05 February 1999, dismissing petitioners Complaint. The Court of Appeals
denied petitioners Motion for Reconsideration in its Resolution, dated 14 February 2003.
[20]
Thus, petitioners filed this Petition for Review [21] under Rule 45 of the Rules of Court,
raising the following issues and praying for the reversal of the aforementioned Decision of
the Court of Appeals affirming the Order of dismissal of the trial court:
I. Whether the lower courts dismissal of the petitioners complaint should be proscribed by
the rules of evidence it being based inter alia on Engr. Navals testimony, which was
indisputably not based on facts but conclusion of law.
II. Whether the lower courts dismissal of petitioners complaint should be proscribed by the
rules of evidence it being done sans ample evidence except bare allegations of respondent.
III. Whether the provision of P.D. 892, i.e., Spanish titles cannot be used as evidence of
land ownership in any registration proceedings under the Torrens system, holds of an
exception.
IV. Whether an action for quieting of title, specifically where petitioners are in possession of
subject land, can be subject of prescription.
In his Comment,[22] the respondent, for the most part, reiterated the findings of the trial
court and the Court of Appeals.
The Court believes that the trial court rightfully dismissed petitioners Complaint, but for
reasons different from those relied upon by the trial court and the Court of Appeals.
According to the respondent, petitioners had no legal capacity to file the Complaint, and
thus, the Complaint filed before the trial court stated no cause of action.
Before anything else, it should be clarified that the plaintiff has no legal capacity to sue[23]
and the pleading asserting the claim states no cause of action[24] are two different grounds
for a motion to dismiss or are two different affirmative defenses. Failure to distinguish
between the lack of legal capacity to sue from the lack of personality to sue is a fairly
common mistake. The difference between the two is explained by this Court in Columbia
Pictures, Inc. v. Court of Appeals:[25]
Among the grounds for a motion to dismiss under the Rules of Court are lack of legal
capacity to sue and that the complaint states no cause of action. Lack of legal capacity to
sue means that the plaintiff is not in the exercise of his civil rights, or does not have the
necessary qualification to appear in the case, or does not have the character or
representation he claims. On the other hand, a case is dismissible for lack of personality to
sue upon proof that the plaintiff is not the real party-in-interest, hence grounded on failure to
state a cause of action. The term "lack of capacity to sue" should not be confused with the
term "lack of personality to sue." While the former refers to a plaintiffs general disability to
sue, such as on account of minority, insanity, incompetence, lack of juridical personality or
any other general disqualifications of a party, the latter refers to the fact that the plaintiff is
not the real party- in-interest. Correspondingly, the first can be a ground for a motion to
dismiss based on the ground of lack of legal capacity to sue; whereas the second can be
used as a ground for a motion to dismiss based on the fact that the complaint, on the face
thereof, evidently states no cause of action.
In the present case, this Court may assume that the respondent is raising the affirmative defense
that the Complaint filed by the petitioners before the trial court stated no cause of action because
the petitioners lacked the personality to sue, not being the real party-in-interest. It is the
respondents contention that only the State can file an action for annulment of his certificates of
title, since such an action will result in the reversion of the ownership of the Subject Property to
the State.
The affirmative defense that the Complaint stated no cause of action, similar to a motion to
dismiss based on the same ground, requires a hypothetical admission of the facts alleged in
the Complaint. In the case of Garcon v. Redemptorist Fathers,[26] this Court laid down the rules
as far as this ground for dismissal of an action or affirmative defense is concerned:
It is already well-settled by now that, in a motion to dismiss a complaint based on lack of cause of
action, the question submitted to the court for determination is the sufficiency of the allegations of
fact made in the complaint to constitute a cause of action, and not on whether these allegations
of fact are true, for said motion must hypothetically admit the truth of the facts alleged in the
complaint; that the test of the sufficiency of the facts alleged in the complaint is whether or not,
admitting the facts alleged, the court could render a valid judgment upon the same in accordance
with the prayer of said complaint. Stated otherwise, the insufficiency of the cause of action must
appear in the face of the complaint in order to sustain a dismissal on this ground, for in the
determination of whether or not a complaint states a cause of action, only the facts alleged
therein and no other matter may be considered, and the court may not inquire into the truth of the
allegations, and find them to be false before a hearing is had on the merits of the case; and it is
improper to inject in the allegations of the complaint facts not alleged or proved, and use these as
basis for said motion.
In resolving whether or not the Complaint in the present case stated a cause of action, the trial
court should have limited itself to examining the sufficiency of the allegations in the Complaint. It
was proscribed from inquiring into the truth of the allegations in the Complaint or the authenticity
of any of the documents referred or attached to the Complaint, since these are deemed
hypothetically admitted by the respondent. The trial court evidently erred in making findings as to
the authenticity of the Deeds of Assignment executed by Ismael Favila in favor of petitioners on
15 April 1994 and 02 June 1994; and questioning the existence and execution of the Special
Power of Attorney in favor of said Ismael Favila by his siblings on 25 February 1965. These
matters may only be resolved after a proper trial on the merits.
Petitioners alleged in their Complaint, and respondent hypothetically admitted that: (1) Petitioners
predecessors-in-interest, in the concept of owners, had been in actual, physical, open,
continuous and adverse possession of the Subject Property against the whole world since time
immemorial; (2) The Subject Property was part of the vast tract of land called Hacienda Quibiga
awarded to Don Hermogenes Rodriguez by the Queen of Spain by virtue of a Spanish title; (3)
Ismael Favila, an heir and successor-in-interest of Don Hermogenes Rodriguez, acting as
Attorney-in-Fact pursuant to a Special Power of Attorney executed by his mga kapatid on 25
February 1965, executed Deeds of Assignment covering the Subject Property in favor of
petitioners; (4) Petitioners still occupied and possessed the Subject Property, on which their
houses were erected, when they discovered that the Subject Property was already covered by
Torrens certificates of title in the name of respondent; and (5) That petitioners filed the Complaint
to prevent their eviction by the respondent. To determine whether these allegations are sufficient
to constitute a cause of action, it is important for this Court to establish first the nature of
petitioners action.
Indeed, petitioners Complaint filed before the trial court was captioned as an action for
declaration of nullity of respondents certificates of title. However, the caption of the pleading
should not be the governing factor, but rather the allegations therein should determine the nature
of the action, because even without the prayer for a specific remedy, the courts may nevertheless
grant the proper relief as may be warranted by the facts alleged in the Complaint and the
evidence introduced.[27]
The trial court believed that petitioners action was ultimately one for reversion of the
Subject Property to the public domain. Based on the testimony of Engineer Naval and the
case of Nagao v. Court of Appeals,[28] it declared that the State, represented by the Office
of the Solicitor General, is the party-in-interest in an action for cancellation of a certificate of
title illegally issued in the name of a private individual, because the eventual effect of such
cancellation is the reversion of the property to the State.
The Court disagrees in this pronouncement of the trial court, and calls for a far closer
review of its decision in Nagao v. Court of Appeals,[29] wherein the Court held that
It is then clear from the allegations in the complaint that private respondents claim
ownership of the 2,250 square meter portion for having possessed it in the concept of an
owner, openly, peacefully, publicly, continuously and adversely since 1920. This claim is an
assertion that the lot is private land, or that even assuming it was part of the public domain,
private respondents had already acquired imperfect title thereto under Section 48(b) of C.A.
No. 141, otherwise known as the Public Land Act, as amended by R.A. No. 1942
Under Section 48, a subject lot is, for all legal intents and purposes, segregated from the
public domain, because the beneficiary is conclusively presumed to have performed all the
conditions essential to a Government grant and shall be entitled to a certificate of title under
the provisions of this chapter.
Consequently, merely on the basis of the allegations in the complaint, the lot in question is
apparently beyond the jurisdiction of the Director of the Bureau of Lands and could not be
the subject of a Free Patent. Hence, dismissal of private respondents complaint was
premature and trial on the merits should have been conducted to thresh out evidentiary
matters.
It would have been entirely different if the action were clearly for reversion, in which case, it
would have to be instituted by the Solicitor General pursuant to Section 101 of C.A. No.
141, which provides:
Sec. 101. All actions for the reversion to the Government of lands of the public domain or
improvements thereon shall be instituted by the Solicitor General or the officer acting in his
stead, in the proper courts, in the name of the [Republic] of the Philippines.
In the more recent case of Heirs of Ambrocio Kionisala v. Heirs of Honorio Dacut,[30] the
difference between an action for declaration of nullity of land titles from an action for
reversion was more thoroughly discussed as follows:
An ordinary civil action for declaration of nullity of free patents and certificates of title is not
the same as an action for reversion. The difference between them lies in the allegations as
to the character of ownership of the realty whose title is sought to be nullified. In an action
for reversion, the pertinent allegations in the complaint would admit State ownership of the
disputed land. Hence, in Gabila vs. Barriga [41 SCRA 131], where the plaintiff in his
complaint admits that he has no right to demand the cancellation or amendment of the
defendants title because even if the title were canceled or amended the ownership of the
land embraced therein or of the portion affected by the amendment would revert to the
public domain, we ruled that the action was for reversion and that the only person or entity
entitled to relief would be the Director of Lands.
On the other hand, a cause of action for declaration of nullity of free patent and certificate
of title would require allegations of the plaintiffs ownership of the contested lot prior to the
issuance of such free patent and certificate of title as well as the defendants fraud or
mistake, as the case may be, in successfully obtaining these documents of title over the
parcel of land claimed by plaintiff. In such a case, the nullity arises strictly not from the fraud
or deceit but from the fact that the land is beyond the jurisdiction of the Bureau of Lands to
bestow and whatever patent or certificate of title obtained therefore is consequently void ab
initio. The real party-in-interest is not the State but the plaintiff who alleges a pre-existing
right of ownership over the parcel of land in question even before the grant of title to the
defendant
In their Complaint, petitioners never alleged that the Subject Property was part of the public
domain. On the contrary, petitioners asserted title over the Subject Property by virtue of
their actual, physical, open, continuous and adverse possession thereof, in the concept of
owners, by themselves and through their predecessors-in-interest, since time immemorial. The
Deeds of Assignment executed in their favor and attached to their Complaint referred to a
Spanish title granted by the Queen of Spain to their predecessor-in-interest, Don Hermogenes
Rodriguez. Clearly, petitioners are asserting private title over the Subject Property, and
consequently, their action could not be one for reversion.
In their instant Petition, petitioners further averred that rather than an action for nullity of
respondents certificates of title, theirs was more appropriately an action to remove a cloud on or
to quiet their title over the Subject Property.
Article 476 of the Civil Code, on removal of a cloud on or quieting of title, provides that:
Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of
any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective
but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to
said title, an action may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real property or
any interest therein.
Respondents certificates of title over the Subject Property appeared valid or effective; but
according to the petitioners, they were fake, spurious and/or fraudulent, and a cloud on their title
to the same property that needed to be removed. A cloud on title has been defined as follows:
Cloud on Title. A cloud on title is an outstanding instrument, record, claim, encumbrance or
proceeding which is actually invalid or inoperative, but which may nevertheless impair or affect
injuriously the title to property. The matter complained of must have a prima facie appearance of
validity or legal efficacy. The cloud on title is a semblance of title which appears in some legal
form but which is in fact unfounded. The invalidity or inoperativeness of the instrument is not
apparent on the face of such instrument, and it has to be proved by extrinsic evidence[31]
Even as this Court agrees with the petitioners that their action was one for removal of a cloud on
or quieting of title, it does arrive at the same conclusion as the trial court and the Court of Appeals
that petitioners had no personality to file the said action, not being the parties-in-interest, and
their Complaint should be dismissed for not stating a cause of action.
According to Article 477 of the Civil Code, the plaintiff, in an action to remove a cloud on or to
quiet title, must have legal or equitable title to, or interest in, the real property which is the subject
matter of the action.[32] Petitioners failed to establish in their Complaint that they had any legal or
equitable title to, or legitimate interest in, the Subject Property so as to justify their right to file an
action to remove a cloud on or to quiet title.
Title to real property refers to that upon which ownership is based. It is the evidence of the right of
the owner or the extent of his interest, by which means he can maintain control and, as a rule,
assert right to exclusive possession and enjoyment of the property.[33]
In their Complaint, petitioners claimed title to the Subject Property by virtue of their actual and
continuous possession of the same since time immemorial, by themselves and through their
predecessors-in-interest. Yet, the Deeds of Assignment executed by Ismael Favila in their favor,
attached to and an integral part of their Complaint, revealed that petitioners predecessors-in-
interest based their right to the Subject Property on the Spanish title awarded to Don
Hermogenes Rodriguez.
There existed a contradiction when petitioners based their claim of title to the Subject Property on
their possession thereof since time immemorial, and at the same time, on the Spanish title
granted to Don Hermogenes Rodriguez. Possession since time immemorial carried the
presumption that the land had never been part of the public domain or that it had been
private property even before the Spanish conquest. [34] If the Subject Property was already
private property before the Spanish conquest, then it would have been beyond the power of the
Queen of Spain to award or grant to anyone.
The title to and possession of the Subject Property by petitioners predecessors-in-interest could
be traced only as far back as the Spanish title of Don Hermogenes Rodriguez. Petitioners, having
acquired portions of the Subject Property by assignment, could acquire no better title to the said
portions than their predecessors-in-interest, and hence, their title can only be based on the
same Spanish title.
Respondent maintained that P.D. No. 892 prevents petitioners from invoking the Spanish
title as basis of their ownership of the Subject Property. P.D. No. 892 strengthens the
Torrens system by discontinuing the system of registration under the Spanish Mortgage
Law, and by categorically declaring all lands recorded under the latter system, not yet
covered by Torrens title, unregistered lands. It further provides that within six months from
its effectivity, all holders of Spanish titles or grants should apply for registration of their land
under what is now P.D. No. 1529, otherwise known as the Land Registration Decree.
Thereafter, Spanish titles can no longer be used as evidence of land ownership in any
registration proceedings under the Torrens system. [35] Indubitably, P.D. No. 892 divests
the Spanish titles of any legal force and effect in establishing ownership over real property.
P.D. No. 892 became effective on 16 February 1976. The successors of Don Hermogenes
Rodriguez had only until 14 August 1976 to apply for a Torrens title in their name covering
the Subject Property. In the absence of an allegation in petitioners Complaint that
petitioners predecessors-in-interest complied with P.D. No. 892, then it could be assumed
that they failed to do so. Since they failed to comply with P.D. No. 892, then the successors
of Don Hermogenes Rodriguez were already enjoined from presenting the Spanish title as
proof of their ownership of the Subject Property in registration proceedings.
Registration proceedings under the Torrens system do not create or vest title, but only
confirm and record title already created and vested.[36] By virtue of P.D. No. 892, the
courts, in registration proceedings under the Torrens system, are precluded from accepting,
confirming and recording a Spanish title. Reason therefore dictates that courts, likewise,
are prevented from accepting and indirectly confirming such Spanish title in some other
form of action brought before them (i.e., removal of cloud on or quieting of title), only short
of ordering its recording or registration. To rule otherwise would open the doors to the
circumvention of P.D. No. 892, and give rise to the existence of land titles, recognized and
affirmed by the courts, but would never be recorded under the Torrens system of
registration. This would definitely undermine the Torrens system and cause confusion and
instability in property ownership that P.D. No. 892 intended to eliminate.
Petitioners argued that the Spanish title may still be presented as proof of ownership on the
basis of the exception provided in the fourth whereas clause of P.D. No. 892, which reads:
WHEREAS, Spanish titles to lands which have not yet been brought under the operation of
the Torrens system, being subject to prescription, are now ineffective to prove ownership
unless accompanied by proof of actual possession; . . .
Since Petitioners alleged that they were in actual possession of the Subject Property, then
they could still present the Spanish title as evidence of their ownership of the Subject
Property. [37]
This Court cannot sustain petitioners argument. Actual proof of possession only becomes
necessary because, as the same whereas clause points out, Spanish titles are subject to
prescription. A holder of a Spanish title may still lose his ownership of the real property to
the occupant who actually possesses the same for the required prescriptive period.[38]
Because of this inherent weakness of a Spanish title, the applicant for registration of his
Spanish title under the Torrens system must also submit proof that he is in actual
possession of the real property, so as to discount the possibility that someone else has
acquired a better title to the same property by virtue of prescription.
Moreover, legislative intent must be ascertained from a consideration of the statute as a
whole, and not just a particular provision alone. A word or phrase taken in the abstract may
easily convey a meaning quite different from the one actually intended and evident when
the word or phrase is considered with those with which it is associated. An apparently
general provision may have a limited application if read together with other provisions of the
statute.[39]
The fourth whereas clause of P.D. No. 892 should be interpreted and harmonized with the
other provisions of the whole statute.[40] Note that the tenor of the whole presidential
decree is to discontinue the use of Spanish titles and to strip them of any probative value as
evidence of ownership. It had clearly set a deadline for the filing of applications for registration of
all Spanish titles under the Torrens system (i.e., six months from its effectivity or on 14 August
1976), after which, the Spanish titles may no longer be presented to prove ownership.
All holders of Spanish titles should have filed applications for registration of their title on or before
14 August 1976. In a land registration proceeding, the applicant should present to the court his
Spanish title plus proof of actual possession of the real property. However, if such land
registration proceeding was filed and initiated after 14 August 1976, the applicant could no longer
present his Spanish title to the court to evidence his ownership of the real property, regardless of
whether the real property was in his actual possession.
Therefore, the fact that petitioners were in actual possession of the Subject Property when they
filed the Complaint with the trial court on 29 April 1996 does not exclude them from the
application of P.D. No. 892, and their Spanish title remain inadmissible as evidence of their
ownership of the Subject Property, whether in a land registration proceeding or in an action to
remove a cloud on or to quiet title.
The preceding discussion does not bar holders of Spanish titles from claiming ownership of the
real property on some other basis, such as those provided in either the Land Registration
Decree[41] or the Public Land Act.[42] Petitioners though failed to allege any other basis for their
titles in their Complaint aside from possession of the Subject Property from time immemorial,
which this Court has already controverted; and the Spanish title, which is already ineffective to
prove ownership over the Subject Property.
Therefore, without legal or equitable title to the Subject Property, the petitioners lacked the
personality to file an action for removal of a cloud on, or quieting of, title and their Complaint was
properly dismissed for failing to state a cause of action. In view of the dismissal of the case on
this ground, it is already unnecessary for this Court to address the issue of prescription of the
action.
Wherefore, this Court DENIES the instant petition and AFFIRMS the Decision of the Court of
Appeals, dated 29 July 2002, and the Order of the Regional Trial Court of San Mateo, Rizal,
Branch 77, dated 05 February 1999, dismissing petitioners Complaint for failure to state a cause
of action.
18. Villalus v Ligon
FACTS:
Petitioner Villaluz and respondent Ligon were engaged in several businesses. Villaluz borrowed
sums of money from Ligon secured by postdated checks amounting to P1,543,586.00 which later
bounced for the reasons Drawn Against Insufficient Funds/Account Closed. Demands were
made on Villaluz but she failed to pay her debt prompting Ligon to institute criminal proceedings
for violation of BP 22 before the RTC Manila. During the hearing of said cases, Villaluz asked for
the settlement of their controversy, :igon as the First Party and Villaluz as the Second Party,
executed a Memorandum of Agreement (MOA).
In accordance therewith Villaluz issued a check in the amount of P1,900,000.00 which again
bounced upon presentment for the reason that it was drawn against a closed account. Ligon
made several demands on Villaluz but to no avail.
Ligon instituted a complaint against Villaluz with the RTC of Makati. Upon failure of Villaluz and
her counsel to appear at the pre-trial conference, the RTC declared Villaluz as in default and
received Ligons evidence ex-parte. The RTC ordered Villaluz to pay the amount prayed for.
Villaluz through counsel, filed a Motion for New Trial and a Motion to Admit Answer which were
both granted by the court.
RTC of Makati rendered a decision in favor of Ligon. Villaluz went to the CA and claimed that the
trial court erred: in not dismissing the case on the ground of forum shopping. CA denied the
petition ruling that the motion to dismiss on the ground of forum shopping should have been dismiss or in an answer are deemed waived" except the failure to state a cause of action or that
filed within the time for but before filing of an answer to the complaint or pleading asserting the court has no jurisdiction. Herein case does not fall within said exceptions.
a claim, pursuant to Section 1(e), Rule 16 of the Rules of Court.

ISSUE: Whether or not herein respondent committed forum shopping in this case

HELD:
We agree with petitioner that the CA and respondent were mistaken in stating that there
could be no forum shopping in this case since the case was filed prior to the effectivity of
Admin. Circular No. 04-94 which required a certification of non-forum shopping; that the
Court has condemned forum shopping even before the issuance of said Admin. Circular.
However, we find that, in the present case, respondent did not commit forum shopping.

There is forum shopping when, as a result of an adverse opinion in one forum, a party
seeks a favorable opinion, other than by appeal or certiorari in another. There can also be
forum shopping when a party institutes two or more suits in different courts, either
simultaneously or successively, in order to ask the courts to rule on the same or related
causes and/or to grant the same or substantially the same reliefs on the supposition that
one or the other court would make a favorable disposition or increase a party's chances of
obtaining a favorable decision or action. It is an act of malpractice because it trifles with the
courts, abuses their processes, degrades the administration of justice and adds to the
already congested court dockets.

To determine whether a party violated the rule against forum shopping, the most important
question to ask is whether the elements of litis pendentia are present or whether a final
judgment in one case will result to res judicata in another. Otherwise stated, to determine
forum shopping, the test is to see whether in the two or more cases pending, there is
identity of parties, rights or causes of action, and reliefs sought.

Here, the two cases involved are the instant civil case for collection of sum of money where
petitioner is the defendant, and the B.P. Blg. 22 cases where petitioner is the accused.
Clearly, there is no identity of parties for in the criminal case, the plaintiff is the State with
Ligon only as a complaining witness. In the case at bar, Ligon himself is the plaintiff. There
is also a difference in the causes of action. In the instant case, the cause of action is
petitioner's breach of contract as embodied in the Memorandum of Agreement, while in the
criminal case, it is the violation of B.P. Blg. 22. There is also a difference in reliefs sought
because in the civil case, what is sought is the enforcement of the terms in their
Memorandum of Agreement, while in the criminal case, it is the punishment of the offense
committed against a public law.

Civil liability differs from criminal liability. What is punished in the latter is not the failure to
pay an obligation but the issuance of checks that subsequently bounced or were
dishonored for insufficiency or lack of funds. The issuance of worthless checks is prohibited
because of its deleterious effects on public interest and its effects transcend the private
interest of the parties directly involved in the transaction and touches the interest of the
community at large. In the present civil case, no such transcendental public interest exists.

Finally, petitioner's argument on forum shopping must fail since she did not raise it at the
first opportunity in the trial court. As noted by the respondent, petitioner only raised the
issue of forum shopping two years after the institution of the civil case. If only for her failure
to invoke such ground at the first opportunity in her motion to dismiss in the trial court, her
appeal should have been given short shrift and denied outright. Petitioner's claim that her
failure to raise it in her motion to dismiss was a matter of trial strategy has no persuasive
effect for it is well ensconced that "defenses and objections not pleaded in a motion to