G.R. No.

74854 April 2, 1991

JESUS DACOYCOY, petitioner,

vs.
HON. INTERMEDIATE APPELLATE COURT, HON. ANTONIO V. BENEDICTO, Executive Judge, Regional Trial Court,
Branch LXXI, Antipolo, Rizal, and RUFINO DE GUZMAN, respondents.

Ramon V. Sison for petitioner.

Public Attorney's Office for private respondent.

FERNAN, C.J.:

May the trial court motu proprio dismiss a complaint on the ground of improper venue? This is the issue confronting the Court in the
case at bar.

On March 22, 1983, petitioner Jesus Dacoycoy, a resident of Balanti, Cainta, Rizal, filed before the Regional Trial Court, Branch
LXXI, Antipolo, Rizal, a complaint against private respondent Rufino de Guzman praying for the annulment of two (2) deeds of sale
involving a parcel of riceland situated in Barrio Estanza, Lingayen, Pangasinan, the surrender of the produce thereof and damages for
private respondent's refusal to have said deeds of sale set aside upon petitioner's demand.

On May 25, 1983, before summons could be served on private respondent as defendant therein, the RTC Executive Judge issued an
order requiring counsel for petitioner to confer with respondent trial judge on the matter of venue. After said conference, the trial court
dismissed the complaint on the ground of improper venue. It found, based on the allegations of the complaint, that petitioner's action is
a real action as it sought not only the annulment of the aforestated deeds of sale but also the recovery of ownership of the subject
parcel of riceland located in Estanza, Lingayen, Pangasinan, which is outside the territorial jurisdiction of the trial court.

Petitioner appealed to the Intermediate Appellate Court, now Court of Appeals, which in its decision of April 11, 1986, 1 affirmed the
order of dismissal of his complaint.

In this petition for review, petitioner faults the appellate court in affirming what he calls an equally erroneous finding of the trial court
that the venue was improperly laid when the defendant, now private respondent, has not even answered the complaint nor waived the
venue.2

Petitioner claims that the right to question the venue of an action belongs solely to the defendant and that the court or its magistrate
does not possess the authority to confront the plaintiff and tell him that the venue was improperly laid, as venue is waivable. In other
words, petitioner asserts, without the defendant objecting that the venue was improperly laid, the trial court is powerless to dismiss the
case motu proprio.

Private respondent, on the other hand, maintains that the dismissal of petitioner's complaint is proper because the same can "readily be
assessed as (a) real action." He asserts that "every court of justice before whom a civil case is lodged is not even obliged to wait for the
defendant to raise that venue was improperly laid. The court can take judicial notice and motu proprio dismiss a suit clearly
denominated as real action and improperly filed before it. . . . the location of the subject parcel of land is controlling pursuant to Sec.
2, par. (a), Rule 4 of the New Rules of Court . . . 3

We grant the petition.

The motu proprio dismissal of petitioner's complaint by respondent trial court on the ground of improper venue is plain error,
obviously attributable to its inability to distinguish between jurisdiction and venue.

Questions or issues relating to venue of actions are basically governed by Rule 4 of the Revised Rules of Court. It is said that the
laying of venue is procedural rather than substantive. It relates to the jurisdiction of the court over the person rather than the subject
matter. Provisions relating to venue establish a relation between the plaintiff and the defendant and not between the court and the
subject matter. Venue relates to trial not to jurisdiction, touches more of the convenience of the parties rather than the substance of the
case.4

Jurisdiction treats of the power of the court to decide a case on the merits; while venue deals on the locality, the place where the suit
may be had.5

In Luna vs. Carandang,6 involving an action instituted before the then Court of First Instance of Batangas for rescission of a lease
contract over a parcel of agricultural land located in Calapan, Oriental Mindoro, which complaint said trial court dismissed for lack of
jurisdiction over the leased land, we emphasized:

(1) A Court of First Instance has jurisdiction over suits involving title to, or possession of, real estate wherever situated in the
Philippines, subject to the rules on venue of actions (Manila Railroad Company vs. Attorney General, etc., et al., 20 Phil.
523; Central Azucarera de Tarlac vs. De Leon, et al., 56 Phil. 169; Navarro vs. Aguila, et al., 66 Phil. 604; Lim Cay, et al. vs.
Del Rosario, etc., et al., 55 Phil. 692);
1
 (2) Rule 4, Section 2, of the Rules of Court requiring that an action involving real property shall be brought in the Court of
First Instance of the province where the land lies is a rule on venue of actions, which may be waived expressly or by
implication.

In the instant case, even granting for a moment that the action of petitioner is a real action, respondent trial court would still have
jurisdiction over the case, it being a regional trial court vested with the exclusive original jurisdiction over "all civil actions which
involve the title to, or possession of, real property, or any interest therein . . ." in accordance with Section 19 (2) of Batas Pambansa
Blg. 129. With respect to the parties, there is no dispute that it acquired jurisdiction over the plaintiff Jesus Dacoycoy, now petitioner,
the moment he filed his complaint for annulment and damages. Respondent trial court could have acquired jurisdiction over the
defendant, now private respondent, either by his voluntary appearance in court and his submission to its authority, or by the coercive
power of legal process exercised over his person. 7

Although petitioner contends that on April 28, 1963, he requested the City Sheriff of Olongapo City or his deputy to serve the
summons on defendant Rufino de Guzman at his residence at 117 Irving St., Tapinac, Olongapo City, 8 it does not appear that said
service had been properly effected or that private respondent had appeared voluntarily in court 9 or filed his answer to the
complaint.10 At this stage, respondent trial court should have required petitioner to exhaust the various alternative modes of service of
summons under Rule 14 of the Rules of Court, i.e., personal service under Section 7, substituted service under Section 8, or service by
publication under Section 16 when the address of the defendant is unknown and cannot be ascertained by diligent inquiry.

Dismissing the complaint on the ground of improper venue is certainly not the appropriate course of action at this stage of the
proceeding, particularly as venue, in inferior courts as well as in the courts of first instance (now RTC), may be waived expressly or
impliedly. Where defendant fails to challenge timely the venue in a motion to dismiss as provided by Section 4 of Rule 4 of the Rules
of Court, and allows the trial to be held and a decision to be rendered, he cannot on appeal or in a special action be permitted to
challenge belatedly the wrong venue, which is deemed waived.11

Thus, unless and until the defendant objects to the venue in a motion to dismiss, the venue cannot be truly said to have been
improperly laid, as for all practical intents and purposes, the venue, though technically wrong, may be acceptable to the parties for
whose convenience the rules on venue had been devised. The trial court cannot pre-empt the defendant's prerogative to object to the
improper laying of the venue by motu proprio dismissing the case.

Indeed, it was grossly erroneous for the trial court to have taken a procedural short-cut by dismissing motu propriothe complaint on
the ground of improper venue without first allowing the procedure outlined in the Rules of Court to take its proper course. Although
we are for the speedy and expeditious resolution of cases, justice and fairness take primary importance. The ends of justice require that
respondent trial court faithfully adhere to the rules of procedure to afford not only the defendant, but the plaintiff as well, the right to
be heard on his cause.

WHEREFORE, in view of the foregoing, the decision of the Intermediate Appellate Court, now Court of Appeals, dated April 11,
1986, is hereby nullified and set aside. The complaint filed by petitioner before the Regional Trial Court of Antipolo, Branch LXXI is
revived and reinstated. Respondent court is enjoined to proceed therein in accordance with law.

SO ORDERED.

2
G.R. No. 106847. March 5, 1993.

PATRICIO P. DIAZ, petitioner, vs. JUDGE SANTOS B. ADIONG, RTC, Br. 8, Marawi City, SULTAN MACORRO L.
MACUMBAL, SULTAN LINOG M. INDOL, MACABANGKIT LANTO and MOHAMADALI ABEDIN, respondents.

Rex J.M.A. Fernandez for petitioner.

Mangurun B. Batuampar for respondents.

SYLLABUS

1. REMEDIAL LAW; ACTIONS; VENUE OF LIBEL CASE WHERE OFFENDED PARTY IS AN PUBLIC OFFICIAL. — From
the provision of Article 360, third paragraph of the Revised Penal Code as amended by R.A. 4363, it is clear that an offended party
who is at the same time a public official can only institute an action arising from libel in two (2) venues: the place where he holds
office, and the place where the alleged libelous articles were printed and first published.

2. ID.; ID.; IMPROPER VENUE; MUST BE RAISED IN A NOTION TO DISMISS PRIOR TO A RESPONSIVE PLEADING. —
Unless and until the defendant objects to the venue in a motion to dismiss prior to a responsive pleading, the venue cannot truly be
said to have been improperly laid since, for all practical intents and purposes, the venue though technically wrong may yet be
considered acceptable to the parties for whose convenience the rules on venue had been devised.

3. ID.; ID.; ID.; WAIVED IN CASE AT BAR BY FILING ANSWER. — Petitioner Diaz then, as defendant in the court below,
should have timely challenged the venue laid in Marawi City in a motion to dismiss, pursuant to Sec. 4, Rule 4, of the Rules of Court.
Unfortunately, petitioner had already submitted himself to the jurisdiction of the trial court when he filed his Answer to the Complaint
with Counterclaim. His motion to dismiss was therefore belatedly filed and could no longer deprive the trial court of jurisdiction to
hear and decide the instant civil action for damages. Well-settled is the rule that improper venue may be waived and such waiver may
occur by laches. Sec. 1 of Rule 16 provides that objections to improper venue must be made in a motion to dismiss before any
responsive pleading is filed. Responsive pleadings are those which seek affirmative relief and set up defenses. Consequently, having
already submitted his person to the jurisdiction of the trial court, petitioner may no longer object to the venue which, although
mandatory in the instant case, is nevertheless waivable. As such, improper venue must be seasonably raised, otherwise, it may be
deemed waived.

4. ID.; ID.; ID.; RELATES TO TRIAL AND NOT TO JURISDICTION. — Indeed, the laying of venue is procedural rather than
substantive, relating as it does to jurisdiction of the court over the person rather than the subject matter. Venue relates to trial and not
to jurisdiction.

DECISION

BELLOSILLO, J p:

VENUE in the instant civil action for damages arising from libel was improperly laid; nonetheless, the trial court refused to dismiss
the complaint. Hence, this Petition for Certiorari, with prayer for the issuance of a temporary restraining order, assailing that order of
denial 1 as well as the order denying reconsideration. 2

The facts: On 16 July 1991, the Mindanao Kris, a newspaper of general circulation in Cotabato City, published in its front page the
news article captioned "6-Point Complaint Filed vs. Macumbal," and in its Publisher's Notes the editorial, "Toll of Corruption," which
exposed alleged anomalies by key officials in the Regional Office of the Department of Environment and Natural Resources. 3

On 22 July 1991, the public officers alluded to, namely, private respondents Sultan Macorro L. Macumbal, Sultan Linog M. Indol,
Atty. Macabangkit M. Lanto and Atty. Mohamadali Abedin, instituted separate criminal and civil complaints arising from the libel
before the City Prosecutor's Office and the Regional Trial Court in Marawi City. The publisher-editor of the Mindanao Kris, petitioner
Patricio P. Diaz, and Mamala B. Pagandaman, who executed a sworn statement attesting to the alleged corruption, were named
respondents in both complaints. 4

On 2 September 1991, the City Prosecutor's Office dismissed the criminal case thus 5 —

"WHEREFORE . . . this investigation in the light of Agbayani vs. Sayo case finds that it has no jurisdiction to handle this case and
that the same be filed or instituted in Cotabato City where complainant is officially holding office at the time respondents caused the
publication of the complained news item in the Mindanao Kris in Cotabato City, for which reason it is recommended that this charge
be dropped for lack of jurisdiction."

In the interim, the civil complaint for damages, docketed as Civil Case No. 385-91 and raffled to Branch 10 of the Regional Trial
Court in Marawi City, was set for Pre-Trial Conference. The defendants therein had already filed their respective Answers with
Counterclaim.

On 18 November 1991, petitioner Diaz moved for the dismissal of the action for damages on the ground that the trial court did not
have jurisdiction over the subject matter. He vehemently argued that the complaint should have been filed in Cotabato City and not in
Marawi City. 6

3
Pending action on the motion, the presiding judge of Branch 10 inhibited himself from the case which was thereafter reraffled to the
sala of respondent judge.

On 15 June 1991, respondent judge denied petitioner's Motion to Dismiss for lack of merit. Diaz thereafter moved for reconsideration
of the order of denial. The motion was also denied in the Order of 27 August 1991, prompting petitioner to seek relief therefrom.

Petitioner Diaz contends that the civil action for damages could not be rightfully filed in Marawi City as none of the private
respondents, who are all public officers, held office in Marawi City; neither were the alleged libelous news items published in that
city. Consequently, it is petitioner's view that the Regional Trial Court in Marawi City has no jurisdiction to entertain the civil action
for damages.

The petitioner is correct. Not one of the respondents then held office in Marawi City: respondent Macumbal was the Regional Director
for Region XII of the DENR and held office in Cotabato City; respondent Indol was the Provincial Environment and Natural
Resources Officer of Lanao del Norte and held office in that province; respondent Lanto was a consultant of the Secretary of the
DENR and, as averred in the complaint, was temporarily residing in Quezon City; and, respondent Abedin was the Chief of the Legal
Division of the DENR Regional Office in Cotabato City. 7 Indeed, private respondents do not deny that their main place of work was
not in Marawi City, although they had sub-offices therein.

Apparently, the claim of private respondents that they maintained sub-offices in Marawi City is a mere afterthought, considering that
it was made following the dismissal of their criminal complaint by the City Prosecutor of Marawi City. Significantly, in their
complaint in civil Case No. 385-91 respondents simply alleged that they were residents of Marawi City, except for respondent Lanto
who was then temporarily residing in Quezon City, and that they were public officers, nothing more. This averment is not enough to
vest jurisdiction upon the Regional Trial Court of Marawi City and may be properly assailed in a motion to dismiss.

The Comment of private respondents that Lanto was at the time of the commission of the offense actually holding office in Marawi
City as consultant of LASURECO can neither be given credence because this is inconsistent with their allegation in their complaint
that respondent Lanto, as consultant of the Secretary of the DENR, was temporarily residing in Quezon City.

Moreover, it is admitted that the libelous articles were published and printed in Cotabato City. Thus, respondents were limited in their
choice of venue for their action for damages only to Cotabato City where Macumbal, Lanto and Abedin had their office and Lanao del
Norte where Indol worked. Marawi City is not among those where venue can be laid.

The third paragraph of Art. 360 of the Revised Penal Code, as amended by R.A. No. 4363, specifically requires that —

"The criminal and civil action for damages in cases of written defamations as provided for in this chapter, shall be filed
simultaneously or separately with the Court of First Instance (now Regional Trial Court) of the province or city where the libelous
article is printed and first published or where any of the offended parties actually resides at the time of the commission of the offense:
Provided, however, that where one of the offended parties is a public officer . . . (who) does not hold office in the City of Manila, the
action shall be filed in the Court of First Instance (Regional Trial Court) of the province or city where he held office at the time of the
commission of the offense or where the libelous article is printed and first published and in case one of the the offended parties is a
private individual, the action shall be filed in the Court of First Instance of the province or city where he actually resides at the time of
the commission of the offense or where the libelous matter is printed and first published . . . . " (emphasis supplied)

From the foregoing provision, it is clear that an offended party who is at the same time a public official can only institute an action
arising from libel in two (2) venues: the place where he holds office, and the place where the alleged libelous articles were printed and
first published.

Private respondents thus appear to have misread the provisions of Art. 360 of the Revised Penal Code, as amended, when they filed
their criminal and civil complaints in Marawi City. They deemed as sufficient to vest jurisdiction upon the Regional Trial Court of
Marawi City the allegation that "plaintiffs are all of legal age, all married, Government officials by occupation and residents of
Marawi City." 8 But they are wrong.

Consequently, it is indubitable that venue was improperly laid. However, unless and until the defendant objects to the venue in a
motion to dismiss prior to a responsive pleading, the venue cannot truly be said to have been improperly laid since, for all practical
intents and purposes, the venue though technically wrong may yet be considered acceptable to the parties for whose convenience the
rules on venue had been devised. 9

Petitioner Diaz then, as defendant in the court below, should have timely challenged the venue laid in Marawi City in a motion to
dismiss, pursuant to Sec. 4, Rule 4, of the Rules of Court. Unfortunately, petitioner had already submitted himself to the jurisdiction of
the trial court when he filed his Answer to the Complaint with Counterclaim. 10

His motion to dismiss was therefore belatedly filed and could no longer deprive the trial court of jurisdiction to hear and decide the
instant civil action for damages. Well-settled is the rule that improper venue may be waived and such waiver may occur by laches. 11

Petitioner was obviously aware of this rule when he anchored his motion to dismiss on lack of cause of action over the subject matter,
relying on this Court's ruling in Time, Inc. v. Reyes. 12 Therein, We declared that the Court of First Instance of Rizal was without
jurisdiction to take cognizance of Civil Case No. 10403 because the complainants held office in Manila, not in Rizal, while the alleged
libelous articles were published abroad.

4
It may be noted that in Time, Inc. v. Reyes, the defendant therein moved to dismiss the case without first submitting to the jurisdiction
of the lower court, which is not the case before Us. More, venue in an action arising from libel is only mandatory if it is not waived by
defendant. Thus —

"The rule is that where a statute creates a right and provides a remedy for its enforcement, the remedy is exclusive; and where it
confers jurisdiction upon a particular court, that jurisdiction is likewise exclusive, unless otherwise provided. Hence, the venue
provisions of Republic Act No. 4363 should be deemed mandatory for the party bringing the action, unless the question of venue
should be waived by the defendant . . . . " 13

Withal, objections to venue in civil actions arising from libel may be waived; it does not, after all, involve a question of jurisdiction.
Indeed, the laying of venue is procedural rather than substantive, relating as it does to jurisdiction of the court over the person rather
than the subject matter. 14 Venue relates to trial and not to jurisdiction.

Finally, Sec. 1 of Rule 16 provides that objections to improper venue must be made in a motion to dismiss before any responsive
pleading is filed. Responsive pleadings are those which seek affirmative relief and set up defenses. Consequently, having already
submitted his person to the jurisdiction of the trial court, petitioner may no longer object to the venue which, although mandatory in
the instant case, is nevertheless waivable. As such, improper venue must be seasonably raised, otherwise, it may be deemed waived.

WHEREFORE, for lack of merit, the Petition for Certiorari is DISMISSED and the Temporary Restraining Order heretofore issued is
LIFTED.

This case is remanded to the court of origin for further proceedings.

SO ORDERED.

5
G.R. No. 106920 December 10, 1993

PHILIPPINE BANKING CORPORATION, petitioner,

vs.
HON. SALVADOR S. TENSUAN, Judge of Regional Trial Court of Makati, National Capital Judicial Region, Branch 146;
CIRCLE FINANCIAL CORPORATION, AVELINO E. DEATO, JR., MIGUEL F. VIOLAGO, BENJAMIN F. SANTIAGO,
SOCORRO R. GOMEZ, NERISSA T. GLORIA, FILEMON C. MARQUEZ, DOMINGO SANTIAGO AND HILARIO P.
LOPEZ, respondents.

Tomargo, Luzano & Associates for petitioner.

Edgardo V. Cruz for private respondents.

FELICIANO, J.:

In this Petition for Review on Certiorari, petitioner asks us to review and set aside the Order of Judge Salvador A. Tensuan dated 3
August 1992, dismissing petitioner's complaint in Civil Case No. 91-2220 entitled "Philippine Banking Corporation vs. Circle
Financial Corporation, et al."

Petitioner Philippine Banking Corporation (hereafter "Bank") is a commercial banking corporation with principal office at Makati,
Metro Manila. Petitioner Bank instituted a complaint for collection of a sum of money, with a prayer for preliminary attachment, at the
Regional Trial Court of Makati. It appears from the allegations of the Bank's complaint that respondent Circle Financial Co. (hereafter
"Circle"), sometime in 1983 and 1984, through its representatives, obtained several loans aggregating P1,000,000.00 from petitioner.
Respondent Circle, for value received, delivered to petitioner Bank four (4) promissory notes, each of which contained the stipulation
that:

I/We hereby expressly submit to the jurisdiction of the courts of Valenzuela any legal action which may arise out of
this promissory note.

As security for the re-payment by respondent Circle of the sums loaned by petitioner Bank, eight (8) individuals, who were impleaded
as defendants in the complaint — namely, Avelino Deato, Miguel Violago, Benjamin Santiago, Socorro Gomez, Nerissa Gloria,
Filemon Marquez, Domingo Santiago and Hilario Lopez — executed a Continuing Surety Agreement and undertook to
pay jointly and severally respondent Circle's obligations. Only five (5) out of eight (8) individual obligors are respondents in present
case, namely: Domingo Santiago, Hilario Lopez, Avelino Deato, Benjamin P. Santiago and Socorro Gomez.

On their due dates, Circle failed to pay its obligations under the promissory notes. Thereupon, petitioner Bank demanded payment
from the eight (8) individual sureties conformably with their promises contained in the Continuing Surety Agreement; the individual
obligors, however, also failed to pay.

Petitioner moved for issuance of a writ of preliminary attachment, alleging that respondent Circle had become insolvent and had been
placed under receivership by the Central Bank. The trial judge granted the motion and issued a writ of preliminary attachment. The
sheriff's return indicated, however, that no properties belonging to the respondent Circle and the individual obligors could be found.
Per sheriff's return, summons was served upon Domingo Santiago, 1 Hilario P. Lopez, 2 Avelino Deato, 3 Benjamin P. Santiago, 4 and
Socorro Gomez. 5 The sheriff failed to serve summons on (a) Miguel Violago, who had died; (b) Nerissa T. Gloria 6 and Filemon
Marquez, 7 whose whereabouts were unknown; and (c) Circle, which had ceased to engage in business at the address given by
petitioner and could not be located.

A motion to dismiss was filed by the respondents (Circle and the five [5] individual sureties served with summons) and averred that
the venue of the action was improperly laid since an agreement had fixed the venue of actions arising from the promissory notes in
Valenzuela, Metro Manila, only. Respondents called the trial court's attention to the stipulation contained in the promissory note,
quoted in limine.

Acting upon respondent's motion, respondent Judge Tensuan issued the challenged Order which read as follows:

Acting on defendant's motion to dismiss on grounds of improper venue in relation with actionable promissory notes
which stipulate that the parties "expressly submit to the jurisdiction of the Courts of Valenzuela, Metro Manila any
legal action which may arise", and,

Finding said motion to be impressed with merit consistent with

Sec. 13, Rule 14 of the Rules of Court as well as in line with the doctrinal rule in Bautista vs. Hon. Juan de Borja, et
al. (18 SCRA 474) that the proper venue for an action is that stipulated in a document "in case of any litigation
herefrom or in connection herewith" upon a rationale that had the parties intended to reserve the right to choose
venue under Section 2 (b), Rule 4 of the Rules of Court, such reservation should have been reflected in the
document as against the rationale in Polytrade Corporation vs. Blanco (30 SCRA 187) which should allow choice of
venue where an actionable document does not set forth qualifying or restrictive words in point, and

6
 In order to more clearly define the parameters of the rule on proper venue vis-a-vis a clear perception that a
stipulation to "expressly submit to the jurisdiction of the Courts of Valenzuela, Metro Manila" amount to
unequivocal agreement to sue and be sued in Valenzuela, Metro Manila.

WHEREFORE, premises considered and finding the motion to be meritorious, same is hereby granted and the
above-entitled case is accordingly dismissed. Without pronouncement as to costs.

SO ORDERED.8

Petitioner moved for reconsideration of the above Order of the trial court, without success.

Hence, this Petition.

We consider that the Petition is meritorious.

It is settled in this jurisdiction that the parties, by written agreement, may change or transfer the venue of an action from one province
to another. 9 We have many times sustained the validity and enforceability of contractual stipulations concerning venue, it is, of
course, the tenor of their agreement which is of critical relevance. The relevant task, in other words, is determining the intent of the
parties as manifested in the words employed by them and, where such words are less than clear, in other recognized indicators of the
will of the contracting parties.

Petitioner Bank contends that the stipulation contained in the promissory notes is merely an agreement to add the courts of Valenzuela
to the tribunals to which the parties may resort. Petitioner thus insists that the venue stipulation set out in the notes did not restrict or
limit the permissible venue of actions arising out of those notes to the courts of Valenzuela, to the exclusion of all the other courts
recourse to any one of which is authorized or permitted under the Rules of Court. Thus, venue was properly laid by petitioner Bank in
the place where its principal offices are located: i.e., Makati, Metropolitan Manila.

Private respondents, in opposition, aver that the words used in the stipulation here involved are clear and unambiguous. A promise to
submit to the jurisdiction of a specific court, without an express reservation of the right to resort to one or more of the tribunals
otherwise accessible under the Rules of Court, is an agreement definitely fixing the permissible venue in only one place, i.e.,
Valenzuela, to the exclusion of other competent courts.

A careful reading of the terms of the stipulation — "I/We hereby expressly submit to the jurisdiction of the courts of Valenzuela any
legal action which may arise out of this promissory note" — shows that the stipulation does not require the laying of venue in
Valenzuela exclusively or mandatorily. The plain or ordinary import of the stipulation is the authorizing of, or permission to bring, suit
in Valenzuela; there is not the slightest indication of an intent to bar suit in other competent courts.

Permissive stipulations like the one here considered have invariably received judicial approval and we have declared that either of the
parties is authorized to lay venue of an action in the court named in the stipulation. The stipulation her does not purport to deprive
either party of it right to elect, or option to have resort to, another competent court as expressly permitted by Section 2(b) of Rule 4 of
the Rules of Court, should such party choose to initiate a suit. The stipulation here merely operated to confer or confirm a right upon a
party to elect recourse to the courts of Valenzuela or, alternatively, to go before any of the tribunals envisaged by the rules on
venue, i.e., the courts of Makati, Quezon City and Bulacan. 10

In principle, the stipulation on venue here involved must be distinguished from stipulations which purport to require or compel the
parties to lay venue of an action in a specified place, and in that particular place only. The latter
type of venue stipulation must clearly indicate, through qualifying and restrictive words, that the parties deliberately intended to
exclude causes or actions from the operation of the ordinary permissive rules on venue, 11 and that they intended contractually to
designate a specific venue to the exclusion of any other court also competent and accessible to the parties under the ordinary rules on
the venue of actions. Stipulations of this exclusionary nature may, under certain circumstances, be characterized as unreasonable or as
contrary to public policy 12 and, accordingly, not judicially enforceable.

In practice, the task, as noted earlier, of this Court when confronted with issues of this kind is always basically that of contract
interpretation. In the case at bar, neither qualifying nor restrictive words (e.g., "must," "only" or "exclusively") were employed which
could yield an intent on the part of the parties mandatorily to restrict the venue of actions arising out of the promissory notes to the
courts of Valenzuela only. Private respondents suggest that the use of words "any legal action" expressed a supposed agreement to bar
actions before any court other than a Valenzuela court. We do not agree, for we see no necessary or customary connection between the
words "any legal action" and an intent strictly to limit permissible venue to the Valenzuela courts. Intent so to establish an inflexible
restriction of otherwise permissible venue to one single place is not lightly to be presumed or inferred from stipulations which, like
that here before us, include no qualifying or exclusionary terms. Express reservation of the right to elect venue under the ordinary
rules was, accordingly, unnecessary in the case at bar.

Such is the thrust of the great bulk of the caselaw of this Court where this issue was directly raised and discussed.

In Polytrade Corporation v. Blanco, 13 the stipulation on venue there involved read:

The parties agree to sue and be sued in the courts of Manila

7
The Court, in upholding that stipulation and ruling that venue had been properly laid in the then Court of First Instance of Bulacan (the
place of defendant's residence), speaking through Mr. Justice Sanchez, said:

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

In Nicolas v. Reparations Commission, 15 the stipulation on venue provided that:

All legal actions arising out of this contract . . . may be brought in and submitted to the jurisdiction of the proper courts in the City of
Manila. 16

This Court read the above stipulation as merely permissive, relying upon and reinforcing Polytrade:

. . . the venue in personal actions is fixed for the convenience of the plaintiff and his witnesses and to promote the
ends of justice. We cannot conceive how the interests of justice may be served by confining the situs of the action to
Manila, considering that the residences or offices of all the parties, including the situs of the acts sought to be
restrained or required to be done, are all within the territorial jurisdiction of Rizal.

While the parties have agreed to submit their dispute to the jurisdiction of the Manila courts, there is nothing in the
language used . . . which clearly shows that the intention of the parties was to limit the venue of the action to the
City of Manila only. Such agreements should be construed reasonably and should not be applied in such a manner
that it would work more to the inconvenience of the parties without promoting the ends of justice. 17 (Emphasis
supplied)

In Lamis Enterprises v. Lagamon, 18 the promissory note sued on had the following stipulation:

In case of litigation, jurisdiction shall be vested in the courts of Davao City. 19

The collection suit was instituted in the then Court of First Instance of Tagum, Davao. The Supreme Court rejected the defense of
improper venue and held:

. . . it is alleged that the proper venue for Civil Case No. 1395 should be Davao City where the plaintiff resides and
as stipulated in the promissory note dated February 26, 1979 and in the chattel mortgage dated February 27, 1979.
However, the respondent judge found that Maningo has not only legal residence but also physical and actual
residence in Busaon, Tagum, Davao and we are not inclined to disturb this finding. Anent the claim that Davao City
had been stipulated as the venue, suffice it to say that a stipulation as to venue does not preclude the filing of suits in
the residence of plaintiff or defendant under Section 2(b), Rule 4, Rules of Court, in the absence of qualifying or
restrictive words in the agreement which would indicate that the place named is the only venue agreed upon by the
parties. The stipulation did not deprive Maningo of his right to pursue remedy in the court specifically mentioned in
Section 2(b) of Rule 4, Rules of Courts, Renuntiatio non praesumitir. . . . 20 (Emphasis supplied)

In Western Minolco v. Court of Appeals, 21 the clause on venue read:

The parties stipulate that the venue of the actions referred to in Section 12.01 [Article XII of the Agreement] shall be
in the City of Manila.

The initial action was commenced in the Court of First Instance of Baguio and Benguet. This Court took the occasion to reiterate once
more the Polytrade doctrine:

. . . In any event, it is not entirely amiss to restate the doctrine that stipulations in a contract, which specify a definite
place for the institution of an action arising in connection therewith, do not, as a rule, supersede the general rules
on the matter set out in Rule 4 of the Rules of Court, but should be construed merely as an agreement on an
additional forum, not as limiting venue to the specified place. 22 (Emphasis supplied)

It is not necessary top pretend that the decisions of the Supreme Court have been absolutely consistent in this regard. There have been
a few decisions — notably Bautista v. de Borja 23 and Hoechst Philippines v. Torres 24 — which are not easy to reconcile with the line
of cases beginning with Polytrade discussed above. It is useful therefore to make clear that to the extent Bautista and Hoechst
Philippines are inconsistent with Polytrade (an en banc decision later in time than Bautista) and subsequent cases
reiterating Polytrade, Bautista and Hoechst Philippines have been rendered obsolete by the Polytrade line of cases.

We note, finally, that no one of the private respondents has claimed to have been put to undue hardship or inconvenience as a result of
the institution of the action in Makati. Venue relates to the trial and touches more upon the convenience of the parties rather than upon

8
the substance or merits of the
case. 25

WHEREFORE, the Petition for Review on Certiorari is hereby GRANTED DUE COURSE and the Orders dated 3 August 1992 and
28 August 1992 of public respondent Judge Salvador S. Tensuan are hereby REVERSED and SET ASIDE. The case is hereby
REMANDED to the court of origin for resolution on the merits, with all deliberate dispatch. No pronouncements as to costs.

SO ORDERED.

9
 [G.R. No. 119657. February 7, 1997]

UNIMASTERS CONGLOMERATION, INC., petitioner, vs. COURT OF APPEALS and KUBOTA AGRI-MACHINERY
PHILIPPINES, INC., respondents.

DECISION
NARVASA, C.J.:

The appellate proceeding at bar turns upon the interpretation of a stipulation in a contract governing venue of actions thereunder
arising.
On October 28, 1988 Kubota Agri-Machinery Philippines, Inc. (hereafter, simply KUBOTA) and Unimasters Conglomeration,
Inc. (hereafter, simply UNIMASTERS) entered into a "Dealership Agreement for Sales and Services" of the former's products in Samar
and Leyte Provinces.[1] The contract contained, among others:

1) a stipulation reading: "** All suits arising out of this Agreement shall be filed with / in the proper Courts of Quezon City," and

2) a provision binding UNIMASTERS to obtain (as it did in fact obtain) a credit line with Metropolitan Bank and Trust Co.-Tacloban
Branch in the amount of P2,000,000.00 to answer for its obligations to KUBOTA.

Some five years later, or more precisely on December 24, 1993, UNIMASTERS filed an action in the Regional Trial Court of
Tacloban City against KUBOTA, a certain Reynaldo Go, and Metropolitan Bank and Trust Company-Tacloban Branch (hereafter,
simply METROBANK) for damages for breach of contract, and injunction with prayer for temporary restraining order. The action was
docketed as Civil Case No. 93-12-241 and assigned to Branch 6.
On the same day the Trial Court issued a restraining order enjoining METROBANK from "authorizing or effecting payment of
any alleged obligation of ** (UNIMASTERS) to defendant ** KUBOTA arising out of or in connection with purchases made by
defendant Go against the credit line caused to be established by ** (UNIMASTERS) for and in the amount of P2 million covered by
defendant METROBANK ** or by way of charging ** (UNIMASTERS) for any amount paid and released to defendant ** (KUBOTA)
by the Head Office of METROBANK in Makati, Metro-Manila **." The Court also set the application for preliminary injunction for
hearing on January 10, 1994 at 8:30 o'clock in the morning.
On January 4, 1994 KUBOTA filed two motions. One prayed for dismissal of the case on the ground of improper venue (said
motion being set for hearing on January 11, 1994). The other prayed for the transfer of the injunction hearing to January 11, 1994
because its counsel was not available on January 10 due to a prior commitment before another court.
KUBOTA claims that notwithstanding that its motion to transfer hearing had been granted, the Trial Court went ahead with the
hearing on the injunction incident on January 10, 1994 during which it received the direct testimony of UNIMASTERS' general manager,
Wilford Chan; that KUBOTA's counsel was "shocked" when he learned of this on the morning of the 11th, but was nonetheless instructed
to proceed to cross-examine the witness; that when said counsel remonstrated that this was unfair, the Court reset the hearing to the
afternoon of that same day, at which time Wilford Chan was recalled to the stand to repeat his direct testimony. It appears that cross-
examination of Chan was then undertaken by KUBOTA's lawyer with the "express reservation that ** (KUBOTA was) not (thereby)
waiving and/or abandoning its motion to dismiss;" and that in the course of the cross-examination, exhibits (numbered from 1 to 20)
were presented by said attorney who afterwards submitted a memorandum in lieu of testimonial evidence. [2]
On January 13, 1994, the Trial Court handed down an Order authorizing the issuance of the preliminary injunction prayed for,
upon a bond of P2,000,000.00.[3] And on February 3, 1994, the same Court promulgated an Order denying KUBOTA's motion to
dismiss. Said the Court:
"The plaintiff UNIMASTERS Conglomeration is holding its principal place of business in the City of Tacloban while the
defendant ** (KUBOTA) is holding its principal place of business in Quezon City. The proper venue therefore pursuant to
Rules of Court would either be Quezon City or Tacloban City at the election of the plaintiff. Quezon City and Manila (sic),
as agreed upon by the parties in the Dealership Agreement, are additional places other than the place stated in the Rules of
Court. The filing, therefore, of this complaint in the Regional Trial Court in Tacloban City is proper."
Both orders were challenged as having been issued with grave abuse of discretion by KUBOTA in a special civil action
of certiorari and prohibition filed with the Court of Appeals, docketed as CA-G.R. SP No. 33234. It contended, more particularly, that
(1) the RTC had "no jurisdiction to take cognizance of ** (UNIMASTERS') action considering that venue was improperly laid," (2)
UNIMASTERS had in truth "failed to prove that it is entitled to the ** writ of preliminary injunction;" and (3) the RTC gravely erred
"in denying the motion to dismiss." [4]
The Appellate Court agreed with KUBOTA that -- in line with the Rules of Court[5] and this Court's relevant rulings[6] -- the
stipulation respecting venue in its Dealership Agreement with UNIMASTERS did in truth limit the venue of all suits arising thereunder
only and exclusively to "the proper courts of Quezon City." [7] The Court also held that the participation of KUBOTA's counsel at the
hearing on the injunction incident did not in the premises operate as a waiver or abandonment of its objection to venue; that assuming
that KUBOTA's standard printed invoices provided that the venue of actions thereunder should be laid at the Court of the City of Manila,
this was inconsequential since such provision would govern "suits or legal actions between petitioner and its buyers" but not actions
under the Dealership Agreement between KUBOTA and UNIMASTERS, the venue of which was controlled by paragraph No. 7 thereof;
and that no impediment precludes issuance of a TRO or injunctive writ by the Quezon City RTC against METROBANK-Tacloban since
the same "may be served on the principal office of METROBANK in Makati and would be binding on and enforceable against,
METROBANK branch in Tacloban."

10
 After its motion for reconsideration of that decision was turned down by the Court of Appeals, UNIMASTERS appealed to this
Court. Here, it ascribes to the Court of Appeals several errors which it believes warrant reversal of the verdict, namely: [8]

1) "in concluding, contrary to decisions of this ** Court, that the agreement on venue between petitioner (UNIMASTERS) and private
respondent (KUBOTA) limited to the proper courts of Quezon City the venue of any complaint filed arising from the dealership
agreement between ** (them);"

2) "in ignoring the rule settled in Philippine Banking Corporation vs. Tensuan,[9] that 'in the absence of qualifying or restrictive words,
venue stipulations in a contract should be considered merely as agreement on additional forum, not as limiting venue to the specified
place;" and in concluding, contrariwise, that the agreement in the case at bar "was the same as the agreement on venue in
the Gesmundocase," and therefore, the Gesmundo case was controlling; and

3) "in concluding, based solely on the self-serving narration of ** (KUBOTA that its) participation in the hearing for the issuance of a
** preliminary injunction did not constitute waiver of its objection to venue."

The issue last mentioned, of whether or not the participation by the lawyer of KUBOTA at the injunction hearing operated as a
waiver of its objection to venue, need not occupy the Court too long. The record shows that when KUBOTA's counsel appeared before
the Trial Court in the morning of January 11, 1994 and was then informed that he should cross-examine UNIMASTERS' witness, who
had testified the day before, said counsel drew attention to the motion to dismiss on the ground of improper venue and insistently
attempted to argue the matter and have it ruled upon at the time; and when the Court made known its intention (a) "to (resolve first the)
issue (of) the injunction then rule on the motion to dismiss," and (b) consequently its desire to forthwith conclude the examination of
the witness on the injunction incident, and for that purpose reset the hearing in the afternoon of that day, the 11th, so that the matter
might be resolved before the lapse of the temporary restraining order on the 13th, KUBOTA's lawyer told the Court: "Your Honor, we
are not waiving our right to submit the Motion to Dismiss." [10] It is plain that under these circumstances, no waiver or abandonment can
be imputed to KUBOTA.
The essential question really is that posed in the first and second assigned errors, i.e., what construction should be placed on the
stipulation in the Dealership Agreement that "(a)ll suits arising out of this Agreement shall be filed with/in the proper Courts of Quezon
City."
Rule 4 of the Rules of Court sets forth the principles generally governing the venue of actions, whether real or personal, or involving
persons who neither reside nor are found in the Philippines or otherwise. Agreements on venue are explicitly allowed. "By written
agreement of the parties the venue of an action may be changed or transferred from one province to another." [11] Parties may by
stipulation waive the legal venue and such waiver is valid and effective being merely a personal privilege, which is not contrary to public
policy or prejudicial to third persons. It is a general principle that a person may renounce any right which the law gives unless such
renunciation would be against public policy.[12]
Written stipulations as to venue may be restrictive in the sense that the suit may be filed only in the place agreed upon, or merely
permissive in that the parties may file their suit not only in the place agreed upon but also in the places fixed by law (Rule 4,
specifically). As in any other agreement, what is essential is the ascertainment of the intention of the parties respecting the matter.
Since convenience is the raison d'etre of the rules of venue,[13] it is easy to accept the proposition that normally, venue stipulations
should be deemed permissive merely, and that interpretation should be adopted which most serves the parties' convenience. In other
words, stipulations designating venues other than those assigned by Rule 4 should be interpreted as designed to make it more convenient
for the parties to institute actions arising from or in relation to their agreements; that is to say, as simply adding to or expanding the
venues indicated in said Rule 4.
On the other hand, because restrictive stipulations are in derogation of this general policy, the language of the parties must be so
clear and categorical as to leave no doubt of their intention to limit the place or places, or to fix places other than those indicated in Rule
4, for their actions. This is easier said than done, however, as an examination of precedents involving venue covenants will immediately
disclose.
In at least thirteen (13) cases, this Court construed the venue stipulations involved as merely permissive. These are:

1. Polytrade Corporation v. Blanco, decided in 1969.[14] In this case, the venue stipulation was as follows:

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

This Court ruled that such a provision "does not preclude the filing of suits in the residence of the plaintiff or the defendant. The plain
meaning is that the parties merely consented to be sued in Manila.Qualifying or restrictive words which would indicate that Manila
and Manila alone is the venue are totally absent therefrom. It simply is permissive. The parties solely agreed to add the courts of
Manila as tribunals to which they may resort. They did not waive their right to pursue remedy in the courts specifically mentioned in
Section 2(b) of Rule 4."

The Polytrade doctrine was reiterated expressly or implicitly in subsequent cases, numbering at least ten (10).

2. Nicolas v. Reparations Commission, decided in 1975.[15] In this case, the stipulation on venue read:

"** (A)ll legal actions arising out of this contract ** may be brought in and submitted to the jurisdiction of the proper courts in the
City of Manila."

11
This Court declared that the stipulation does not clearly show the intention of the parties to limit the venue of the action to the City of
Manila only. "It must be noted that the venue in personal actions is fixed for the convenience of the plaintiff and his witnesses and to
promote the ends of justice. We cannot conceive how the interest of justice may be served by confining the situs of the action to
Manila, considering that the residences or offices of all the parties, including the situs of the acts sought to be restrained or required to
be done, are all within the territorial jurisdiction of Rizal. ** Such agreements should be construed reasonably and should not be
applied in such a manner that it would work more to the inconvenience of the parties without promoting the ends of justice."

3. Lamis Ents. v. Lagamon, decided in 1981.[16] Here, the stipulation in the promissory note and the chattel mortgage specifed Davao
City as the venue.

The Court, again citing Polytrade, stated that the provision "does not preclude the filing of suits in the residence of plaintiff or
defendant under Section 2(b), Rule 4, Rules of Court, in the absence of qualifying or restrictive words in the agreement which would
indicate that the place named is the only venue agreed upon by the parties. The stipulation did not deprive ** (the affected party) of
his right to pursue remedy in the court specifically mentioned in Section 2(b) of Rule 4, Rules of Court. Renuntiato non praesumitur."

4. Capati v. Ocampo, decided in 1982.[17] In this case, the provision of the contract relative to venue was as follows:

" ** (A)ll actions arising out, or relating to this contract may be instituted in the Court of First Instance of the City of Naga."

The Court ruled that the parties "did not agree to file their suits solely and exclusively with the Court of First Instance of Naga;" they
"merely agreed to submit their disputes to the said court without waiving their right to seek recourse in the court specifically indicated
in Section 2 (b), Rule 4 of the Rules of Court."

5. Western Minolco v. Court of Appeals, decided in 1988.[18] Here, the provision governing venue read:

"The parties stipulate that the venue of the actions referred to in Section 12.01 shall be in the City of Manila."

The court restated the doctrine that a stipulation in a contract fixing a definite place for the institution of an action arising in
connection therewith, does not ordinarily supersede the general rules set out in Rule 4, and should be construed merely as an
agreement on an additional forum, not as limiting venue to the specified place.

6. Moles v. Intermediate Appellate Court, decided in 1989.[19] In this proceeding, the Sales Invoice of a linotype machine stated that
the proper venue should be Iloilo.

This Court held that such an invoice was not the contract of sale of the linotype machine in question; consequently the printed
provisions of the invoice could not have been intended by the parties to govern the sale of the machine, especially since said invoice
was used for other types of transactions. This Court said: "It is obvious that a venue stipulation, in order to bind the parties, must have
been intelligently and deliberately intended by them to exclude their case from the reglementary rules on venue. Yet, even such
intended variance may not necessarily be given judicial approval, as, for instance, where there are no restrictive or qualifying words in
the agreement indicating that venue cannot be laid in any place other than that agreed upon by the parties, and in contracts of
adhesion."

7. Hongkong and Shanghai Banking Corp. v. Sherman, decided in 1989.[20] Here the stipulation on venue read:

" ** (T)his guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be
enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts in Singapore shall have
jurisdiction over all disputes arising under this guarantee **."

This Court held that due process dictates that the stipulation be liberally construed. The parties did not thereby stipulate that only the
courts of Singapore, to the exclusion of all the others, had jurisdiction. The clause in question did not operate to divest Philippine
courts of jurisdiction.

8. Nasser v. Court of Appeals, decided in 1990,[21] in which the venue stipulation in the promissory notes in question read:

" ** (A)ny action involving the enforcement of this contract shall be brought within the City of Manila, Philippines."

The Court's verdict was that such a provision does not as a rule supersede the general rule set out in Rule 4 of the Rules of Court, and
should be construed merely as an agreement on an additional forum, not as limiting venue to the specified place.

9. Surigao Century Sawmill Co., Inc. v. Court of Appeals, decided in 1993:[22] In this case, the provision concerning venue was
contained in a contract of lease of a barge, and read as follows:

" ** (A)ny disagreement or dispute arising out of the lease shall be settled by the parties in the proper court in the province of Surigao
del Norte."

The venue provision was invoked in an action filed in the Regional Trial Court of Manila to recover damages arising out of marine
subrogation based on a bill of lading. This Court declared that since the action did not refer to any disagreement or dispute arising out
of the contract of lease of the barge, the venue stipulation in the latter did not apply; but that even assuming the contract of lease to be

12
applicable, a statement in a contract as to venue does not preclude the filing of suits at the election of the plaintiff where no qualifying
or restrictive words indicate that the agreed place alone was the chosen venue.

10. Philippine Banking Corporation v. Hon. Salvador Tensuan, etc., Circle Financial Corporation, et al., decided in 1993.[23] Here,
the stipulation on venue was contained in promissory notes and read as follows:

"I/We hereby expressly submit to the jurisdiction of the courts of Valenzuela any legal action which may arise out of this promissory
note."

This Court held the stipulation to be merely permissive since it did not lay the venue in Valenzuela exclusively or mandatorily. The
plain or ordinary import of the stipulation is the grant of authority or permission to bring suit in Valenzuela; but there is not the
slightest indication of an intent to bar suit in other competent courts. The Court stated that there is no necessary or customary
connection between the words "any legal action" and an intent strictly to limit permissible venue to the Valenzuela courts. Moreover,
since the venue stipulations include no qualifying or exclusionary terms, express reservation of the right to elect venue under the
ordinary rules was unnecessary in the case at bar. The Court made clear that "to the extent Bautista and Hoechst Philippines are
inconsistent with Polytrade (an en banc decision later in time than Bautista) and subsequent cases
reiterating Polytrade, Bautista and Hoechst Philippines have been rendered obsolete by the Polytrade line of cases."

11. Philippine Banking Corporation v. Hon. Salvador Tensuan, etc., Brinell Metal Works Corp., et al., decided in 1994:[24] In this case
the subject promissory notes commonly contained a stipulation reading:

"I/we expressly submit to the jurisdiction of the courts of Manila, any legal action which may arise out of this promissory note."

the Court restated the rule in Polytrade that venue stipulations in a contract, absent any qualifying or restrictive words, should be
considered merely as an agreement on additional forum, not limiting venue to the specified place. They are not exclusive, but rather,
permissive. For to restrict venue only to that place stipulated in the agreement is a construction purely based on technicality; on the
contrary, the stipulation should be liberally construed. The Court stated: "The later cases of Lamis Ents v. Lagamon [108 SCRA
1981], Capati v. Ocampo [113 SCRA 794 [1982], Western Minolco v. Court of Appeals [167 SCRA 592 [1988], Moles v. Intermediate
Appellate Court [169 SCRA 777 [1989], Hongkong and Shanghai Banking Corporation v. Sherman [176 SCRA 331], Nasser v. Court
of Appeals [191 SCRA 783 [1990] and just recently, Surigao Century Sawmill Co. v. Court of Appeals [218 SCRA 619 [1993], all
treaded the path blazed by Polytrade. The conclusion to be drawn from all these is that the more recent jurisprudence shall properly be
deemed modificatory of the old ones."

The lone dissent observed: "There is hardly any question that a stipulation of contracts of adhesion, fixing venue to a specified place
only, is void for, in such cases, there would appear to be no valid and free waiver of the venue fixed by the Rules of Courts. However,
in cases where both parties freely and voluntarily agree on a specified place to be the venue of actions, if any, between them, then the
only considerations should be whether the waiver (of the venue fixed by the Rules of Court) is against public policy and whether the
parties would suffer, by reason of such waiver, undue hardship and inconvenience; otherwise, such waiver of venue should be upheld
as binding on the parties. The waiver of venue in such cases is sanctioned by the rules on jurisdiction."

Still other precedents adhered to the same principle.

12. Tantoco v. Court of Appeals, decided in 1977.[25] Here, the parties agreed in their sales contracts that the courts of Manila shall
have jurisdiction over any legal action arising out of their transaction. This Court held that the parties agreed merely to add the courts
of Manila as tribunals to which they may resort in the event of suit, to those indicated by the law: the courts either of Rizal, of which
private respondent was a resident, or of Bulacan, where petitioner resided.

13. Sweet Lines, Inc. v. Teves, promulgated in 1987.[26] In this case, a similar stipulation on venue, contained in the shipping ticket
issued by Sweet Lines, Inc. (as Condition 14) --

" ** that any and all actions arising out or the condition and provisions of this ticket, irrespective of where it is issued, shall be filed in
the competent courts in the City of Cebu"

-- was declared unenforceable, being subversive of public policy. The Court explained that the philosophy on transfer of venue of
actions is the convenience of the plaintiffs as well as his witnesses and to promote the ends of justice; and considering the expense and
trouble a passenger residing outside of Cebu City would incur to prosecute a claim in the City of Cebu, he would most probably
decide not to file the action at all.

On the other hand, in the cases hereunder mentioned, stipulations on venue were held to be restrictive, or mandatory.

1. Bautista vs. De Borja, decided in 1966.[27] In this case, the contract provided that in case of any litigation arising therefrom or in
connection therewith, the venue of the action shall be in the City of Manila.This Court held that without either party reserving the right
to choose the venue of action as fixed by law, it can reasonably be inferred that the parties intended to definitely fix the venue of the
action, in connection with the contract sued upon in the proper courts of the City of Manila only, notwithstanding that neither party is
a resident of Manila.

2. Gesmundo v. JRB Realty Corporation, decided in 1994.[28] Here the lease contract declared that

13
" ** (V)enue for all suits, whether for breach hereof or damages or any cause between the LESSOR and LESSEE, and persons
claiming under each, ** (shall be) the courts of appropriate jurisdiction in Pasay City. . ."

This Court held that: "(t)he language used leaves no room for interpretation. It clearly evinces the parties' intent to limit to the 'courts
of appropriate jurisdiction of Pasay City' the venue for all suits between the lessor and the lessee and those between parties claiming
under them. This means a waiver of their right to institute action in the courts provided for in Rule 4, sec. 2(b)."

3. Hoechst Philippines, Inc. v. Torres,[29] decided much earlier, in 1978, involved a strikingly similar stipulation, which read:

" ** (I)n case of any litigation arising out of this agreement, the venue of any action shall be in the competent courts of the Province of
Rizal."

This Court held: "No further stipulations are necessary to elicit the thought that both parties agreed that any action by either of them
would be filed only in the competent courts of Rizal province exclusively."

4. Villanueva v. Mosqueda, decided in 1982.[30] In this case, it was stipulated that if the lessor violated the contract of lease he could be
sued in Manila, while if it was the lessee who violated the contract, the lessee could be sued in Masantol, Pampanga. This Court held
that there was an agreement concerning venue of action and the parties were bound by their agreement. "The agreement as to venue
was not permissive but mandatory."

5. Arquero v. Flojo, decided in 1988.[31] The condition respecting venue -- that any action against RCPI relative to the transmittal of a
telegram must be brought in the courts of Quezon City alone -- was printed clearly in the upper front portion of the form to be filled in
by the sender. This Court held that since neither party reserved the right to choose the venue of action as fixed by Section 2 [b], Rule
4, as is usually done if the parties mean to retain the right of election so granted by Rule 4, it can reasonably be inferred that the parties
intended to definitely fix the venue of action, in connection with the written contract sued upon, in the courts of Quezon City only.

An analysis of these precedents reaffirms and emphasizes the soundness of the Polytrade principle. Of the essence is the ascertainment
of the parties' intention in their agreement governing the venue of actions between them. That ascertainment must be done keeping in
mind that convenience is the foundation of venue regulations, and that that construction should be adopted which most conduces
thereto.Hence, the invariable construction placed on venue stipulations is that they do not negate but merely complement or add to the
codal standards of Rule 4 of the Rules of Court. In other words, unless the parties make very clear, by employing categorical and
suitably limiting language, that they wish the venue of actions between them to be laid only and exclusively at a definite place, and to
disregard the prescriptions of Rule 4, agreements on venue are not to be regarded as mandatory or restrictive, but merely permissive,
or complementary of said rule. The fact that in their agreement the parties specify only one of the venues mentioned in Rule 4, or fix a
place for their actions different from those specified by said rule, does not, without more, suffice to characterize the agreement as a
restrictive one. There must, to repeat, be accompanying language clearly and categorically expressing their purpose and design that
actions between them be litigated only at the place named by them,[32] regardless of the general precepts of Rule 4; and any doubt or
uncertainty as to the parties' intentions must be resolved against giving their agreement a restrictive or mandatory aspect. Any other
rule would permit of individual, subjective judicial interpretations without stable standards, which could well result in precedents in
hopeless inconsistency.

The record of the case at bar discloses that UNIMASTERS has its principal place of business in Tacloban City, and KUBOTA, in
Quezon City. Under Rule 4, the venue of any personal action between them is "where the defendant or any of the defendants resides or
may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff." [33] In other words, Rule 4 gives
UNIMASTERS the option to sue KUBOTA for breach of contract in the Regional Trial Court of either Tacloban City or Quezon City.

But the contract between them provides that " ** All suits arising out of this Agreement shall be filed with/in the proper Courts of
Quezon City," without mention of Tacloban City. The question is whether this stipulation had the effect of effectively eliminating the
latter as an optional venue and limiting litigation between UNIMASTERS and KUBOTA only and exclusively to Quezon City.

In light of all the cases above surveyed, and the general postulates distilled therefrom, the question should receive a negative
answer. Absent additional words and expressions definitely and unmistakably denoting the parties' desire and intention that actions
between them should be ventilated only at the place selected by them, Quezon City -- or other contractual provisions clearly evincing
the same desire and intention -- the stipulation should be construed, not as confining suits between the parties only to that one place,
Quezon City, but as allowing suits either in Quezon City or Tacloban City, at the option of the plaintiff (UNIMASTERS in this case).

One last word, respecting KUBOTA's theory that the Regional Trial Court had "no jurisdiction to take cognizance of **
(UNIMASTERS') action considering that venue was improperly laid." This is not an accurate statement of legal principle. It equates
venue with jurisdiction; but venue has nothing to do with jurisdiction, except in criminal actions. This is fundamental.[34] The action at
bar, for the recovery of damages in an amount considerably in excess of P20,000.00, is assuredly within the jurisdiction of a Regional
Trial Court.[35] Assuming that venue were improperly laid in the Court where the action was instituted, the Tacloban City RTC, that
would be a procedural, not a jurisdictional impediment -- precluding ventilation of the case before that Court of wrong
venue notwithstanding that the subject matter is within its jurisdiction. However, if the objection to venue is waived by the failure to
set it up in a motion to dismiss,[36] the RTC would proceed in perfectly regular fashion if it then tried and decided the action.

This is true also of real actions. Thus, even if a case "affecting title to, or for recovery of possession, or for partition or condemnation
of, or foreclosure of mortgage on, real property" [37] were commenced in a province or city other than that "where the property or any
part thereof lies,"[38] if no objection is seasonably made in a motion to dismiss, the objection is deemed waived, and the Regional Trial
Court would be acting entirely within its competence and authority in proceeding to try and decide the suit. [39]

14
 WHEREFORE, the appealed judgment of the Court of Appeals is REVERSED, the Order of the Regional Trial Court of Tacloban
City, Branch 6, dated February 3, 1994, is REINSTATED and AFFIRMED, and said Court is DIRECTED to forthwith proceed with
Civil Case No. 93-12-241 in due course.
SO ORDERED.

15
 [G.R. No. 125027. August 12, 2002]

ANITA MANGILA, petitioner, vs. COURT OF APPEALS and LORETA GUINA, respondents.

DECISION
CARPIO, J.:

The Case

This is a petition fore review on certiorari under Rule 45 of the Rules of Court, seeking to set aside the Decision[1] of the Court of
Appeals affirming the Decision[2] of the Regional Trial Court, Branch 108, Pasay City. The trial court upheld the writ of attachment and
the declaration of default on petitioner while ordering her to pay private respondent P109,376.95 plus 18 percent interest per annum, 25
percent attorneys fees and costs of suit.

The Facts

Petitioner Anita Mangila (petitioner for brevity) is an exporter of sea foods and doing business under the name and style of Seafoods
Products. Private respondent Loreta Guina (private respondent for brevity) is the President and General Manager of Air Swift
International, a single registered proprietorship engaged in the freight forwarding business.
Sometime in January 1988, petitioner contracted the freight forwarding services of private respondent for shipment of petitioners
products, such as crabs, prawns and assorted fishes, to Guam (USA) where petitioner maintains an outlet. Petitioner agreed to pay private
respondent cash on delivery. Private respondents invoice stipulates a charge of 18 percent interest per annum on all overdue accounts.
In case of suit, the same invoice stipulates attorneys fees equivalent to 25 percent of the amount due plus costs of suit. [3]
On the first shipment, petitioner requested for seven days within which to pay private respondent. However, for the next three
shipments, March 17, 24 and 31, 1988, petitioner failed to pay private respondent shipping charges amounting to P109, 376.95. [4]
Despite several demands, petitioner never paid private respondent. Thus, on June 10, 1988, private respondent filed Civil Case No.
5875 before the Regional Trial Court of Pasay City for collection of sum of money.
On August 1, 1988, the sheriff filed his Sheriffs Return showing that summons was not served on petitioner. A woman found at
petitioners house informed the sheriff that petitioner transferred her residence to Sto. Nio, Guagua, Pampanga. The sheriff found out
further that petitioner had left the Philippines for Guam. [5]
Thus, on September 13, 1988, construing petitioners departure from the Philippines as done with intent to defraud her creditors,
private respondent filed a Motion for Preliminary Attachment. On September 26, 1988, the trial court issued an Order of Preliminary
Attachment[6] against petitioner. The following day, the trial court issued a Writ of Preliminary Attachment.
The trial court granted the request of its sheriff for assistance from their counterparts in RTC, Pampanga. Thus, on October 28,
1988, Sheriff Alfredo San Miguel of RTC Pampanga served on petitioners household help in San Fernando, Pampanga, the Notice of
Levy with the Order, Affidavit and Bond.[7]
On November 7, 1988, petitioner filed an Urgent Motion to Discharge Attachment [8] without submitting herself to the jurisdiction
of the trial court. She pointed out that up to then, she had not been served a copy of the Complaint and the summons. Hence, petitioner
claimed the court had not acquired jurisdiction over her person. [9]
In the hearing of the Urgent Motion to Discharge Attachment on November 11, 1988, private respondent sought and was granted
a re-setting to December 9, 1988. On that date, private respondents counsel did not appear, so the Urgent Motion to Discharge
Attachment was deemed submitted for resolution.[10]
The trial court granted the Motion to Discharge Attachment on January 13, 1989 upon filing of petitioners counter-bond. The trial
court, however, did not rule on the question of jurisdiction and on the validity of the writ of preliminary attachment.
On December 26, 1988, private respondent applied for an alias summons, which the trial court issued on January 19, 1989.[11] It
was only on January 26, 1989 that summons was finally served on petitioner. [12]
On February 9, 1989, petitioner filed a Motion to Dismiss the Complaint on the ground of improper venue. Private respondents
invoice for the freight forwarding service stipulates that if court litigation becomes necessary to enforce collection xxx the agreed venue
for such action is Makati, Metro Manila.[13] Private respondent filed an Opposition asserting that although Makati appears as the
stipulated venue, the same was merely an inadvertence by the printing press whose general manager executed an affidavit [14] admitting
such inadvertence. Moreover, private respondent claimed that petitioner knew that private respondent was holding office in Pasay City
and not in Makati.[15] The lower court, finding credence in private respondents assertion, denied the Motion to Dismiss and gave
petitioner five days to file her Answer. Petitioner filed a Motion for Reconsideration but this too was denied.
Petitioner filed her Answer[16] on June 16, 1989, maintaining her contention that the venue was improperly laid.

16
 On June 26, 1989, the trial court issued an Order setting the pre-trial for July 18, 1989 at 8:30 a.m. and requiring the parties to
submit their pre-trial briefs. Meanwhile, private respondent filed a Motion to Sell Attached Properties but the trial court denied the
motion.
On motion of petitioner, the trial court issued an Order resetting the pre-trial from July 18, 1989 to August 24, 1989 at 8:30 a.m..
On August 24, 1989, the day of the pre-trial, the trial court issued an Order[17] terminating the pre-trial and allowing the private
respondent to present evidence ex-parte on September 12, 1989 at 8:30 a.m.. The Order stated that when the case was called for pre-
trial at 8:31 a.m., only the counsel for private respondent appeared. Upon the trial courts second call 20 minutes later, petitioners counsel
was still nowhere to be found. Thus, upon motion of private respondent, the pre-trial was considered terminated.
On September 12, 1989, petitioner filed her Motion for Reconsideration of the Order terminating the pre-trial. Petitioner explained
that her counsel arrived 5 minutes after the second call, as shown by the transcript of stenographic notes, and was late because of heavy
traffic. Petitioner claims that the lower court erred in allowing private respondent to present evidence ex-parte since there was no Order
considering the petitioner as in default. Petitioner contends that the Order of August 24, 1989 did not state that petitioner was declared
as in default but still the court allowed private respondent to present evidence ex-parte.[18]
On October 6, 1989, the trial court denied the Motion for Reconsideration and scheduled the presentation of private respondents
evidence ex-parte on October 10, 1989.
On October 10, 1989, petitioner filed an Omnibus Motion stating that the presentation of evidence ex-parte should be suspended
because there was no declaration of petitioner as in default and petitioners counsel was not absent, but merely late.
On October 18, 1989, the trial court denied the Omnibus Motion. [19]
On November 20, 1989, the petitioner received a copy of the Decision of November 10, 1989, ordering petitioner to pay respondent
P109,376.95 plus 18 percent interest per annum, 25 percent attorneys fees and costs of suit. Private respondent filed a Motion for
Execution Pending Appeal but the trial court denied the same.

The Ruling of the Court of Appeals

On December 15, 1995, the Court of Appeals rendered a decision affirming the decision of the trial court. The Court of Appeals
upheld the validity of the issuance of the writ of attachment and sustained the filing of the action in the RTC of Pasay. The Court of
Appeals also affirmed the declaration of default on petitioner and concluded that the trial court did not commit any reversible error.
Petitioner filed a Motion for Reconsideration on January 5, 1996 but the Court of Appeals denied the same in a Resolution dated
May 20, 1996.
Hence, this petition.

The Issues

The issues raised by petitioner may be re-stated as follows:

I.

WHETHER RESPONDENT COURT ERRED IN NOT HOLDING THAT THE WRIT OF ATTACHMENT WAS IMPROPERLY
ISSUED AND SERVED;

II.

WHETHER THERE WAS A VALID DECLARATION OF DEFAULT;

III.

WHETHER THERE WAS IMPROPER VENUE.

IV.

WHETHER RESPONDENT COURT ERRED IN DECLARING THAT PETITIONER IS OBLIGED TO PAY P109, 376.95, PLUS
ATTORNEYS FEES.[20]

The Ruling of the Court

Improper Issuance and Service of Writ of Attachment

17
 Petitioner ascribes several errors to the issuance and implementation of the writ of attachment. Among petitioners arguments are:
first, there was no ground for the issuance of the writ since the intent to defraud her creditors had not been established; second, the value
of the properties levied exceeded the value of private respondents claim. However, the crux of petitioners arguments rests on the question
of the validity of the writ of attachment. Because of failure to serve summons on her before or simultaneously with the writs
implementation, petitioner claims that the trial court had not acquired jurisdiction over her person and thus the service of the writ is
void.
As a preliminary note, a distinction should be made between issuance and implementation of the writ of attachment. It is necessary
to distinguish between the two to determine when jurisdiction over the person of the defendant should be acquired to validly implement
the writ. This distinction is crucial in resolving whether there is merit in petitioners argument.
This Court has long settled the issue of when jurisdiction over the person of the defendant should be acquired in cases where a
party resorts to provisional remedies. A party to a suit may, at any time after filing the complaint, avail of the provisional remedies under
the Rules of Court. Specifically, Rule 57 on preliminary attachment speaks of the grant of the remedy at the commencement of the
action or at any time thereafter.[21] This phrase refers to the date of filing of the complaint which is the moment that marks the
commencement of the action. The reference plainly is to a time before summons is served on the defendant, or even before summons
issues.
In Davao Light & Power Co., Inc. v. Court of Appeals,[22] this Court clarified the actual time when jurisdiction should be had:

It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of defendant -
issuance of summons, order of attachment and writ of attachment - these do not and cannot bind and affect the defendant until
and unless jurisdiction over his person is eventually obtained by the court, either by service on him of summons or other coercive
process or his voluntary submission to the courts authority. Hence, when the sheriff or other proper officer
commences implementation of the writ of attachment, it is essential that he serve on the defendant not only a copy of the applicants
affidavit and attachment bond, and of the order of attachment, as explicitly required by Section 5 of Rule 57, but also
the summons addressed to said defendant as well as a copy of the complaint xxx. (Emphasis supplied.)

Furthermore, we have held that the grant of the provisional remedy of attachment involves three stages: first, the court issues the order
granting the application; second, the writ of attachment issues pursuant to the order granting the writ; and third, the writ is
implemented. For the initial two stages, it is not necessary that jurisdiction over the person of the defendant be first
obtained. However, once the implementation of the writ commences, the court must have acquired jurisdiction over the defendant for
without such jurisdiction, the court has no power and authority to act in any manner against the defendant. Any order issuing from the
Court will not bind the defendant.[23]
In the instant case, the Writ of Preliminary Attachment was issued on September 27, 1988 and implemented on October 28,
1988. However, the alias summons was served only on January 26, 1989 or almost three months after the implementation of the writ
of attachment.
The trial court had the authority to issue the Writ of Attachment on September 27 since a motion for its issuance can be filed at the
commencement of the action. However, on the day the writ was implemented, the trial court should have, previously or simultaneously
with the implementation of the writ, acquired jurisdiction over the petitioner. Yet, as was shown in the records of the case, the summons
was actually served on petitioner several months after the writ had been implemented.
Private respondent, nevertheless, claims that the prior or contemporaneous service of summons contemplated in Section 5 of Rule
57 provides for exceptions. Among such exceptions are where the summons could not be served personally or by substituted service
despite diligent efforts or where the defendant is a resident temporarily absent therefrom x x x. Private respondent asserts that when she
commenced this action, she tried to serve summons on petitioner but the latter could not be located at her customary address in
Kamuning, Quezon City or at her new address in Guagua, Pampanga.[24] Furthermore, respondent claims that petitioner was not even in
Pampanga; rather, she was in Guam purportedly on a business trip.
Private respondent never showed that she effected substituted service on petitioner after her personal service failed. Likewise, if it
were true that private respondent could not ascertain the whereabouts of petitioner after a diligent inquiry, still she had some other
recourse under the Rules of Civil Procedure.
The rules provide for certain remedies in cases where personal service could not be effected on a party. Section 14, Rule 14 of the
Rules of Court provides that whenever the defendants 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 x x x. Thus, if petitioners whereabouts
could not be ascertained after the sheriff had served the summons at her given address, then respondent could have immediately asked
the court for service of summons by publication on petitioner. [25]
Moreover, as private respondent also claims that petitioner was abroad at the time of the service of summons, this made petitioner
a resident who is temporarily out of the country. This is the exact situation contemplated in Section 16, [26] Rule 14 of the Rules of Civil
Procedure, providing for service of summons by publication.
In conclusion, we hold that the alias summons belatedly served on petitioner cannot be deemed to have cured the fatal defect in
the enforcement of the writ. The trial court cannot enforce such a coercive process on petitioner without first obtaining jurisdiction over
her person. The preliminary writ of attachment must be served after or simultaneous with the service of summons on the defendant
whether by personal service, substituted service or by publication as warranted by the circumstances of the case. [27] The subsequent
service of summons does not confer a retroactive acquisition of jurisdiction over her person because the law does not allow for
retroactivity of a belated service.

Improper Venue

18
 Petitioner assails the filing of this case in the RTC of Pasay and points to a provision in private respondents invoice which contains
the following:

3. If court litigation becomes necessary to enforce collection, an additional equivalent (sic) to 25% of the principal amount will be
charged. The agreed venue for such action is Makati, Metro Manila, Philippines.[28]

Based on this provision, petitioner contends that the action should have been instituted in the RTC of Makati and to do otherwise
would be a ground for the dismissal of the case.
We resolve to dismiss the case on the ground of improper venue but not for the reason stated by petitioner.
The Rules of Court provide that parties to an action may agree in writing on the venue on which an action should be
brought.[29] However, a mere stipulation on the venue of an action is not enough to preclude parties from bringing a case in other
venues.[30] The parties must be able to show that such stipulation is exclusive. Thus, absent words that show the parties intention to
restrict the filing of a suit in a particular place, courts will allow the filing of a case in any venue, as long as jurisdictional requirements
are followed. Venue stipulations in a contract, while considered valid and enforceable, do not as a rule supersede the general rule set
forth in Rule 4 of the Revised Rules of Court.[31] In the absence of qualifying or restrictive words, they should be considered merely as
an agreement on additional forum, not as limiting venue to the specified place. [32]
In the instant case, the stipulation does not limit the venue exclusively to Makati. There are no qualifying or restrictive words in
the invoice that would evince the intention of the parties that Makati is the only or exclusive venue where the action could be instituted.
We therefore agree with private respondent that Makati is not the only venue where this case could be filed.
Nevertheless, we hold that Pasay is not the proper venue for this case.
Under the 1997 Rules of Civil Procedure, the general rule is venue in personal actions is where the defendant or any of the
defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. [33] The exception
to this rule is when the parties agree on an exclusive venue other than the places mentioned in the rules. But, as we have discussed, this
exception is not applicable in this case. Hence, following the general rule, the instant case may be brought in the place of residence of
the plaintiff or defendant, at the election of the plaintiff (private respondent herein).
In the instant case, the residence of private respondent (plaintiff in the lower court) was not alleged in the complaint. Rather, what
was alleged was the postal address of her sole proprietorship, Air Swift International. It was only when private respondent testified in
court, after petitioner was declared in default, that she mentioned her residence to be in Better Living Subdivision, Paraaque City.
In the earlier case of Sy v. Tyson Enterprises, Inc.,[34] the reverse happened. The plaintiff in that case was Tyson Enterprises, Inc.,
a corporation owned and managed by Dominador Ti. The complaint, however, did not allege the office or place of business of the
corporation, which was in Binondo, Manila. What was alleged was the residence of Dominador Ti, who lived in San Juan, Rizal. The
case was filed in the Court of First Instance of Rizal, Pasig. The Court there held that the evident purpose of alleging the address of the
corporations president and manager was to justify the filing of the suit in Rizal, Pasig instead of in Manila. Thus, the Court ruled that
there was no question that venue was improperly laid in that case and held that the place of business of Tyson Enterpises, Inc. is
considered as its residence for purposes of venue. Furthermore, the Court held that the residence of its president is not the residence of
the corporation because a corporation has a personality separate and distinct from that of its officers and stockholders.
In the instant case, it was established in the lower court that petitioner resides in San Fernando, Pampanga [35] while private
respondent resides in Paraaque City.[36] However, this case was brought in Pasay City, where the business of private respondent is found.
This would have been permissible had private respondents business been a corporation, just like the case in Sy v. Tyson Enterprises,
Inc. However, as admitted by private respondent in her Complaint [37] in the lower court, her business is a sole proprietorship, and as
such, does not have a separate juridical personality that could enable it to file a suit in court. [38] In fact, there is no law authorizing sole
proprietorships to file a suit in court.[39]
A sole proprietorship does not possess a juridical personality separate and distinct from the personality of the owner of the
enterprise.[40] The law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit
by a single individual and requires its proprietor or owner to secure licenses and permits, register its business name, and pay taxes to the
national government.[41] The law does not vest a separate legal personality on the sole proprietorship or empower it to file or defend an
action in court.[42]
Thus, not being vested with legal personality to file this case, the sole proprietorship is not the plaintiff in this case but rather Loreta
Guina in her personal capacity. In fact, the complaint in the lower court acknowledges in its caption that the plaintiff and defendant are
Loreta Guina and Anita Mangila, respectively. The title of the petition before us does not state, and rightly so, Anita Mangila v. Air
Swift International, but rather Anita Mangila v. Loreta Guina. Logically then, it is the residence of private respondent Guina,
the proprietor with the juridical personality, which should be considered as one of the proper venues for this case.
All these considered, private respondent should have filed this case either in San Fernando, Pampanga (petitioners residence) or
Paraaque (private respondents residence). Since private respondent (complainant below) filed this case in Pasay, we hold that the case
should be dismissed on the ground of improper venue.
Although petitioner filed an Urgent Motion to Discharge Attachment in the lower court, petitioner expressly stated that she was
filing the motion without submitting to the jurisdiction of the court. At that time, petitioner had not been served the summons and a copy
of the complaint.[43] Thereafter, petitioner timely filed a Motion to Dismiss[44] on the ground of improper venue. Rule 16, Section 1 of
the Rules of Court provides that a motion to dismiss may be filed [W]ithin the time for but before filing the answer to the complaint or
pleading asserting a claim. Petitioner even raised the issue of improper venue in his Answer [45] as a special and affirmative defense.
Petitioner also continued to raise the issue of improper venue in her Petition for Review [46] before this Court. We thus hold that the
dismissal of this case on the ground of improper venue is warranted.

19
 The rules on venue, like other procedural rules, are designed to insure a just and orderly administration of justice or the impartial
and evenhanded determination of every action and proceeding. Obviously, this objective will not be attained if the plaintiff is given
unrestricted freedom to choose where to file the complaint or petition. [47]
We find no reason to rule on the other issues raised by petitioner.
WHEREFORE, the petition is GRANTED on the grounds of improper venue and invalidity of the service of the writ of
attachment. The decision of the Court of Appeals and the order of respondent judge denying the motion to dismiss are REVERSED and
SET ASIDE. Civil Case No. 5875 is hereby dismissed without prejudice to refiling it in the proper venue. The attached properties of
petitioner are ordered returned to her immediately.
SO ORDERED.

20
HYATT ELEVATORS AND G.R. No. 161026
ESCALATORS CORPORATION,
Petitioner, Present:
Panganiban, J.,
Chairman,
Sandoval-Gutierrez,
- versus - Corona,
Carpio Morales, and
Garcia, JJ
GOLDSTAR ELEVATORS, Promulgated:
PHILS., INC.,*
Respondent. October 24, 2005
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- x

DECISION

PANGANIBAN, J.:

W ell established in our jurisprudence is the rule that the residence of a corporation is the place where its principal office is
located, as stated in its Articles of Incorporation.

The Case

Before us is a Petition for Review[1] on Certiorari, under Rule 45 of the Rules of Court, assailing the June 26, 2003
Decision[2] and the November 27, 2003 Resolution[3] of the Court of Appeals (CA) in CA-GR SP No. 74319. The decretal portion of the
Decision reads as follows:

WHEREFORE, in view of the foregoing, the assailed Orders dated May 27, 2002 and October 1, 2002 of
the RTC, Branch 213, Mandaluyong City in Civil Case No. 99-600, are hereby SET ASIDE. The said case is hereby
ordered DISMISSED on the ground of improper venue.[4]

The assailed Resolution denied petitioners Motion for Reconsideration.

The Facts

The relevant facts of the case are summarized by the CA in this wise:

Petitioner [herein Respondent] Goldstar Elevator Philippines, Inc. (GOLDSTAR for brevity) is a domestic
corporation primarily engaged in the business of marketing, distributing, selling, importing, installing, and maintaining
elevators and escalators, with address at 6th Floor, Jacinta II Building, 64 EDSA, Guadalupe, Makati City.

On the other hand, private respondent [herein petitioner] Hyatt Elevators and Escalators Company (HYATT
for brevity) is a domestic corporation similarly engaged in the business of selling, installing and maintaining/servicing
elevators, escalators and parking equipment, with address at the 6 th Floor, Dao I Condominium, Salcedo St., Legaspi
Village, Makati, as stated in its Articles of Incorporation.

On February 23, 1999, HYATT filed a Complaint for unfair trade practices and damages under Articles 19,
20 and 21 of the Civil Code of the Philippines against LG Industrial Systems Co. Ltd. (LGISC) and LG International
Corporation (LGIC), alleging among others, that: in 1988, it was appointed by LGIC and LGISC as the exclusive
distributor of LG elevators and escalators in the Philippines under a Distributorship Agreement; x x x LGISC, in the
latter part of 1996, made a proposal to change the exclusive distributorship agency to that of a joint venture partnership;
while it looked forward to a healthy and fruitful negotiation for a joint venture, however, the various meetings it had
with LGISC and LGIC, through the latters representatives, were conducted in utmost bad faith and with malevolent
intentions; in the middle of the negotiations, in order to put pressures upon it, LGISC and LGIC terminated the
Exclusive Distributorship Agreement; x x x [A]s a consequence, [HYATT] suffered P120,000,000.00 as actual
damages, representing loss of earnings and business opportunities, P20,000,000.00 as damages for its reputation and
goodwill, P1,000,000.00 as and by way of exemplary damages, and P500,000.00 as and by way of attorneys fees.

On March 17, 1999, LGISC and LGIC filed a Motion to Dismiss raising the following grounds: (1) lack of
jurisdiction over the persons of defendants, summons not having been served on its resident agent; (2) improper venue;
and (3) failure to state a cause of action. The [trial] court denied the said motion in an Order dated January 7, 2000.

On March 6, 2000, LGISC and LGIC filed an Answer with Compulsory Counterclaim ex abundante cautela.
Thereafter, they filed a Motion for Reconsideration and to Expunge Complaint which was denied.

On December 4, 2000, HYATT filed a motion for leave of court to amend the complaint, alleging that
subsequent to the filing of the complaint, it learned that LGISC transferred all its organization, assets and goodwill,

21
 as a consequence of a joint venture agreement with Otis Elevator Company of the USA, to LG Otis Elevator Company
(LG OTIS, for brevity). Thus, LGISC was to be substituted or changed to LG OTIS, its successor-in-interest. Likewise,
the motion averred that x x x GOLDSTAR was being utilized by LG OTIS and LGIC in perpetrating their unlawful
and unjustified acts against HYATT. Consequently, in order to afford complete relief, GOLDSTAR was to be
additionally impleaded as a party-defendant. Hence, in the Amended Complaint, HYATT impleaded x x x
GOLDSTAR as a party-defendant, and all references to LGISC were correspondingly replaced with LG OTIS.

On December 18, 2000, LG OTIS (LGISC) and LGIC filed their opposition to HYATTs motion to amend
the complaint. It argued that: (1) the inclusion of GOLDSTAR as party-defendant would lead to a change in the theory
of the case since the latter took no part in the negotiations which led to the alleged unfair trade practices subject of the
case; and (b) HYATTs move to amend the complaint at that time was dilatory, considering that HYATT was aware
of the existence of GOLDSTAR for almost two years before it sought its inclusion as party-defendant.

On January 8, 2001, the [trial] court admitted the Amended Complaint. LG OTIS (LGISC) and LGIC filed a
motion for reconsideration thereto but was similarly rebuffed on October 4, 2001.

On April 12, 2002, x x x GOLDSTAR filed a Motion to Dismiss the amended complaint, raising the following
grounds: (1) the venue was improperly laid, as neither HYATT nor defendants reside in Mandaluyong City, where the
original case was filed; and (2) failure to state a cause of action against [respondent], since the amended complaint
fails to allege with certainty what specific ultimate acts x x x Goldstar performed in violation of x x x Hyatts rights.
In the Order dated May 27, 2002, which is the main subject of the present petition, the [trial] court denied the motion
to dismiss, ratiocinating as follows:

Upon perusal of the factual and legal arguments raised by the movants-defendants, the court finds
that these are substantially the same issues posed by the then defendant LG Industrial System Co.
particularly the matter dealing [with] the issues of improper venue, failure to state cause of action
as well as this courts lack of jurisdiction. Under the circumstances obtaining, the court resolves to
rule that the complaint sufficiently states a cause of action and that the venue is properly laid. It is
significant to note that in the amended complaint, the same allegations are adopted as in the original
complaint with respect to the Goldstar Philippines to enable this court to adjudicate a complete
determination or settlement of the claim subject of the action it appearing preliminarily as
sufficiently alleged in the plaintiffs pleading that said Goldstar Elevator Philippines Inc., is being
managed and operated by the same Korean officers of defendants LG-OTIS Elevator Company and
LG International Corporation.

On June 11, 2002, [Respondent] GOLDSTAR filed a motion for reconsideration thereto. On June 18, 2002,
without waiving the grounds it raised in its motion to dismiss, [it] also filed an Answer Ad Cautelam. On October 1,
2002, [its] motion for reconsideration was denied.

From the aforesaid Order denying x x x Goldstars motion for reconsideration, it filed the x x x petition for
certiorari [before the CA] alleging grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
the [trial] court in issuing the assailed Orders dated May 27, 2002 and October 1, 2002. [5]

Ruling of the Court of Appeals

The CA ruled that the trial court had committed palpable error amounting to grave abuse of discretion when the latter denied
respondents Motion to Dismiss. The appellate court held that the venue was clearly improper, because none of the litigants resided in
Mandaluyong City, where the case was filed.

According to the appellate court, since Makati was the principal place of business of both respondent and petitioner, as stated
in the latters Articles of Incorporation, that place was controlling for purposes of determining the proper venue. The fact that petitioner
had abandoned its principal office in Makati years prior to the filing of the original case did not affect the venue where personal actions
could be commenced and tried.

Hence, this Petition.[6]

The Issue

In its Memorandum, petitioner submits this sole issue for our consideration:

Whether or not the Court of Appeals, in reversing the ruling of the Regional Trial Court, erred as a matter of
law and jurisprudence, as well as committed grave abuse of discretion, in holding that in the light of the peculiar facts
of this case, venue was improper[.][7]

22
 This Courts Ruling

The Petition has no merit.

Sole Issue:
Venue

The resolution of this case rests upon a proper understanding of Section 2 of Rule 4 of the 1997 Revised Rules of Court:

Sec. 2. Venue of personal actions. All other actions may be commenced and tried where the plaintiff or any
of the principal plaintiff resides, or where the defendant or any of the principal defendant resides, or in the case of a
non-resident defendant where he may be found, at the election of the plaintiff.

Since both parties to this case are corporations, there is a need to clarify the meaning of residence. The law recognizes two
types of persons: (1) natural and (2) juridical. Corporations come under the latter in accordance with Article 44(3) of the Civil Code.[8]

Residence is the permanent home -- the place to which, whenever absent for business or pleasure, one intends to
return.[9] Residence is vital when dealing with venue.[10] A corporation, however, has no residence in the same sense in which this term
is applied to a natural person. This is precisely the reason why the Court in Young Auto Supply Company v. Court of Appeals[11] ruled
that for practical purposes, a corporation is in a metaphysical sense a resident of the place where its principal office is located as stated
in the articles of incorporation.[12] Even before this ruling, it has already been established that the residence of a corporation is the place
where its principal office is established.[13]

This Court has also definitively ruled that for purposes of venue, the term residence is synonymous with
domicile.[14] Correspondingly, the Civil Code provides:

Art. 51. When the law creating or recognizing them, or any other provision does not fix the domicile of
juridical persons, the same shall be understood to be the place where their legal representation is established or where
they exercise their principal functions.[15]

It now becomes apparent that the residence or domicile of a juridical person is fixed by the law creating or recognizing it. Under
Section 14(3) of the Corporation Code, the place where the principal office of the corporation is to be located is one of the required
contents of the articles of incorporation, which shall be filed with the Securities and Exchange Commission (SEC).

In the present case, there is no question as to the residence of respondent. What needs to be examined is that of petitioner.
Admittedly,[16] the latters principal place of business is Makati, as indicated in its Articles of Incorporation. Since the principal place of
business of a corporation determines its residence or domicile, then the place indicated in petitioners articles of incorporation becomes
controlling in determining the venue for this case.

Petitioner argues that the Rules of Court do not provide that when the plaintiff is a corporation, the complaint should be filed
in the location of its principal office as indicated in its articles of incorporation. [17] Jurisprudence has, however, settled that the place
where the principal office of a corporation is located, as stated in the articles, indeed establishes its residence.[18] This ruling is important
in determining the venue of an action by or against a corporation, [19] as in the present case.

Without merit is the argument of petitioner that the locality stated in its Articles of Incorporation does not conclusively indicate
that its principal office is still in the same place. We agree with the appellate court in its observation that the requirement to state in the
articles the place where the principal office of the corporation is to be located is not a meaningless requirement. That proviso would be
rendered nugatory if corporations were to be allowed to simply disregard what is expressly stated in their Articles of Incorporation. [20]

Inconclusive are the bare allegations of petitioner that it had closed its Makati office and relocated to Mandaluyong City, and
that respondent was well aware of those circumstances. Assuming arguendo that they transacted business with each other in the
Mandaluyong office of petitioner, the fact remains that, in law, the latters residence was still the place indicated in its Articles of
Incorporation. Further unacceptable is its faulty reasoning that the ground for the CAs dismissal of its Complaint was its failure to amend
its Articles of Incorporation so as to reflect its actual and present principal office. The appellate court was clear enough in its ruling that
the Complaint was dismissed because the venue had been improperly laid, not because of the failure of petitioner to amend the latters
Articles of Incorporation.

Indeed, it is a legal truism that the rules on the venue of personal actions are fixed for the convenience of the plaintiffs and their
witnesses. Equally settled, however, is the principle that choosing the venue of an action is not left to a plaintiffs caprice; the matter is
regulated by the Rules of Court.[21] Allowing petitioners arguments may lead precisely to what this Court was trying to avoid in Young
Auto Supply Company v. CA:[22] the creation of confusion and untold inconveniences to party litigants. Thus enunciated the CA:

23
 x x x. To insist that the proper venue is the actual principal office and not that stated in its Articles of
Incorporation would indeed create confusion and work untold inconvenience. Enterprising litigants may, out of some
ulterior motives, easily circumvent the rules on venue by the simple expedient of closing old offices and opening new
ones in another place that they may find well to suit their needs. [23]

We find it necessary to remind party litigants, especially corporations, as follows:

The rules on venue, like the other procedural rules, are designed to insure a just and orderly administration
of justice or the impartial and evenhanded determination of every action and proceeding. Obviously, this objective
will not be attained if the plaintiff is given unrestricted freedom to choose the court where he may file his complaint
or petition.

The choice of venue should not be left to the plaintiffs whim or caprice. He may be impelled by some ulterior
motivation in choosing to file a case in a particular court even if not allowed by the rules on venue. [24]

WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and Resolution AFFIRMED. Costs against
petitioner.
SO ORDERED.

24
 ARMAND NOCUM and THE G.R. No. 145022
PHILIPPINE DAILY INQUIRER, INC.,
P e t i t i o n e r s, Present:

PUNO,
Chairman,
AUSTRIA-MARTINEZ,
- versus - CALLEJO, SR.
TINGA, and
CHICO-NAZARIO, JJ.

LUCIO TAN, Promulgated:

R e s p o n d e n t.
September 23, 2005
X--------------------------------------------------X

DECISION

CHICO-NAZARIO, J.:

Assailed in a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure are the decision [1] of the Court of
Appeals dated 19 April 2000 that affirmed the order of the Regional Trial Court (RTC) of Makati City, Branch 56, in Civil Case No.
98-2288, dated 19 April 1999, admitting respondent Lucio Tans Amended Complaint for Damages for the alleged malicious and
defamatory imputations against him in two (2) articles of the Philippine Daily Inquirer, and its Resolution [2] dated 15 September 2000
denying petitioners Armand Nocum and The Philippine Daily Inquirer, Inc.s motion for reconsideration.

The antecedents are summarized by the Court of Appeals.

On September 27, 1998, Lucio Tan filed a complaint against reporter Armand Nocum, Capt. Florendo Umali,
ALPAP and Inquirer with the Regional Trial Court of Makati, docketed as Civil Case No. 98-2288, seeking moral and
exemplary damages for the alleged malicious and defamatory imputations contained in a news article.

INQUIRER and NOCUM filed their joint answer, dated October 27, 1998, wherein they alleged that: (1) the complaint
failed to state a cause of action; (2) the defamatory statements alleged in the complaint were general conclusions
without factual premises; (3) the questioned news report constituted fair and true report on the matters of public
interest concerning a public figure and therefore, was privileged in nature; and (4) malice on their part was negated
by the publication in the same article of plaintiffs or PALs side of the dispute with the pilots union.

ALPAP and UMALI likewise filed their joint answer, dated October 31, 1998, and alleged therein that: (1) the
complaint stated no cause of action; (2) venue was improperly laid; and (3) plaintiff Lucio Tan was not a real party
in interest. It appeared that the complaint failed to state the residence of the complainant at the time of the alleged
commission of the offense and the place where the libelous article was printed and first published.

Thus, the Regional Trial Court of Makati issued an Order dated February 10, 1999, dismissing the complaint
without prejudice on the ground of improper venue.

Aggrieved by the dismissal of the complaint, respondent Lucio Tan filed an Omnibus Motion dated February
24, 1999, seeking reconsideration of the dismissal and admission of the amended complaint. In par. 2.01.1 of the
amended complaint, it is alleged that This article was printed and first published in the City of Makati (p. 53,
Rollo,CA-G.R. SP No. 55192), and in par. 2.04.1, that This caricature was printed and first published in the City
of Makati (p. 55, id.).

The lower court, after having the case dismissed for improper venue, admitted the amended complaint and
deemed set aside the previous order of dismissal, supra, stating, inter alia, that:

The mistake or deficiency in the original complaint appears now to have been cured in the
Amended Complaint which can still be properly admitted, pursuant to Rule 10 of the 1997 Rules of
Civil Procedure, inasmuch as the Order of dismissal is not yet final. Besides, there is no substantial
amendment in the Amended Complaint which would affect the defendants defenses and their
Answers. The Amendment is merely formal, contrary to the contention of the defendants that it is
substantial.

Dissatisfied, petitioners, together with defendants Capt. Florendo Umali and the Airline Pilots Association of the Philippines, Inc.
(ALPAP), appealed the RTC decision to the Court of Appeals. Two petitions for certiorari were filed, one filed by petitioners which

25
was docketed as CA-G.R. SP No. 55192, and the other by defendants Umali and ALPAP which was docketed as CA-G.R. SP No. 54894.
The two petitions were consolidated.

On 19 April 2000, the Court of Appeals rendered its decision the dispositive portion of which reads:

WHEREFORE, premises considered, the petition is hereby DENIED DUE COURSE and DISMISSED for
lack of merit. The Order of the court a quo is hereby AFFIRMED.

The motions for reconsideration filed by petitioners and by defendants Umali and ALPAP were likewise denied in a resolution dated 15
September 2000.

Both petitioners and defendants Umali and ALPAP appealed to this Court. Under consideration is the petition for review filed
by petitioners.

On 11 December 2000, the Court required respondent Tan to comment on the petition filed by petitioners. [3]

Respondent filed his comment on 22 January 2001[4] to which petitioners filed a reply on 26 April 2001.[5]

In a Manifestation filed on 19 February 2001, respondent stated that the petition[6] filed by defendants Umali and ALPAP has
already been denied by the Court in a resolution dated 17 January 2001.[7]

On 20 August 2003, the Court resolved to give due course to the petition and required the parties to submit their respective
memoranda within thirty (30) days from notice. [8] Both petitioners and respondent complied.[9]

Petitioners assigned the following as errors:

A. THE COURT OF APPEALS ERRED IN RULING (1) THAT THE LOWER COURT HAD JURISDICTION
OVER THE CASE (ON THE BASIS OF THE ORIGINAL COMPLAINT) NOTWITHSTANDING THE FACT
THAT THE LOWER COURT HAD EARLIER DISMISSED THE ORIGINAL COMPLAINT FOR ITS
FAILURE TO CONFER JURISDICTION UPON THJE COURT; AND (2) THAT THE AMENDED
COMPLAINT WAS PROPERLY ALLOWED OR ADMITTED BECAUSE THE LOWER COURT WAS
NEVER DIVESTED OF JURISDICTION OVER THE CASE;

B. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE ORIGINAL COMPLAINT OF
RESPONDENT WAS AMENDED PURPOSELY TO CONFER UPON THE LOWER
COURT JURISDICTION OVER THE CASE.[10]

Petitioners state that Article 360 of the Revised Penal Code vests jurisdiction over all civil and criminal complaints for libel on
the RTC of the place: (1) where the libelous article was printed and first published; or (2) where the complainant, if a private person,
resides; or (3) where the complainant, if a public official, holds office. They argue that since the original complaint only contained the
office address of respondent and not the latters actual residence or the place where the allegedly offending news reports were printed
and first published, the original complaint, by reason of the deficiencies in its allegations, failed to confer jurisdiction on the lower court.

The question to be resolved is: Did the lower court acquire jurisdiction over the civil case upon the filing of the original
complaint for damages?

We rule in the affirmative.

It is settled that jurisdiction is conferred by law based on the facts alleged in the complaint since the latter comprises a concise
statement of the ultimate facts constituting the plaintiff's causes of action. [11] In the case at bar, after examining the original complaint,
we find that the RTC acquired jurisdiction over the case when the case was filed before it. From the allegations thereof, respondents
cause of action is for damages arising from libel, the jurisdiction of which is vested with the RTC. Article 360 of the Revised Penal
Code provides that it is a Court of First Instance[12] that is specifically designated to try a libel case.[13]

Petitioners are confusing jurisdiction with venue. A former colleague, the Hon. Florenz D. Regalado, [14] differentiated
jurisdiction and venue as follows: (a) Jurisdiction is the authority to hear and determine a case; venue is the place where the case is to
be heard or tried; (b) Jurisdiction is a matter of substantive law; venue, of procedural law; (c) Jurisdiction establishes a relation between
the court and the subject matter; venue, a relation between plaintiff and defendant, or petitioner and respondent; and, (d) Jurisdiction is
fixed by law and cannot be conferred by the parties; venue may be conferred by the act or agreement of the parties.

In the case at bar, the additional allegations in the Amended Complaint that the article and the caricature were printed and first published
in the City of Makati referred only to the question of venue and not jurisdiction. These additional allegations would neither confer
jurisdiction on the RTC nor would respondents failure to include the same in the original complaint divest the lower court of its
jurisdiction over the case. Respondents failure to allege these allegations gave the lower court the power, upon motion by a party, to
dismiss the complaint on the ground that venue was not properly laid.

26
 In Laquian v. Baltazar,[15] this Court construed the term jurisdiction in Article 360 of the Revised Penal Code as referring to
the place where actions for libel shall be filed or venue.

In Escribano v. Avila,[16] pursuant to Republic Act No. 4363,[17] we laid down the following rules on the venue of the criminal
and civil actions in written defamations.

1. General rule: The action may be filed in the Court of First Instance of the province or city where the libelous article
is printed and first published or where any of the offended parties actually resides at the time of the commission of the
offense.

2. If the offended party is a public officer with office in Manila at the time the offense was committed, the venue
is Manila or the city or province where the libelous article is printed and first published.

3. Where an offended party is a public official with office outside of Manila, the venue is the province or the city
where he held office at the time of the commission of the offense or where the libelous article is printed and first
published.

4. If an offended party is a private person, the venue is his place of residence at the time of the commission of the
offense or where the libelous article is printed and first published.

The common feature of the foregoing rules is that whether the offended party is a public officer or a private person,
he has always the option to file the action in the Court of First Instance of the province or city where the libelous
article is printed or first published.

We further restated[18] the rules on venue in Article 360 as follows:

1. Whether the offended party is a public official or a private person, the criminal action may be filed in the
Court of First Instance of the province or city where the libelous article is printed and first published.

2. If the offended party is a private individual, the criminal action may also be filed in the Court of First
Instance of the province where he actually resided at the time of the commission of the offense.

3. If the offended party is a public officer whose office is in Manila at the time of the commission of the
offense, the action may be filed in the Court of First Instance of Manila.

4. If the offended party is a public officer holding office outside of Manila, the action may be filed in the
Court of First Instance of the province or city where he held office at the time of the commission of the offense.

We fully agree with the Court of Appeals when it ruled:

We note that the amended complaint or amendment to the complaint was not intended to vest jurisdiction to
the lower court, where originally it had none. The amendment was merely to establish the proper venue for the action.
It is a well-established rule that venue has nothing to do with jurisdiction, except in criminal actions. Assuming that
venue were properly laid in the court where the action was instituted, that would be procedural, not a jurisdictional
impediment. In fact, in civil cases, venue may be waived.

Consequently, by dismissing the case on the ground of improper venue, the lower court had jurisdiction over
the case. Apparently, the herein petitioners recognized this jurisdiction by filing their answers to the
complaint, albeit, questioning the propriety of venue, instead of a motion to dismiss.

...

We so hold that dismissal of the complaint by the lower court was proper considering that the complaint,
indeed, on its face, failed to allege neither the residence of the complainant nor the place where the libelous article
was printed and first published. Nevertheless, before the finality of the dismissal, the same may still be amended as in
fact the amended complaint was admitted, in view of the court a quos jurisdiction, of which it was never divested. In
so doing, the court acted properly and without any grave abuse of discretion. [19]

It is elementary that objections to venue in CIVIL ACTIONS arising from libel may be waived since they do not involve a
question of jurisdiction. The laying of venue is procedural rather than substantive, relating as it does to jurisdiction of the court over the
person rather than the subject matter. Venue relates to trial and not to jurisdiction. [20] It is a procedural, not a jurisdictional, matter. It
relates to the place of trial or geographical location in which an action or proceeding should be brought and not to the jurisdiction of the
court.[21] It is meant to provide convenience to the parties, rather than restrict their access to the courts as it relates to the place of
trial.[22] In contrast, in CRIMINAL ACTIONS, it is fundamental that venue is jurisdictional it being an essential element of
jurisdiction.[23]

27
 Petitioners argument that the lower court has no jurisdiction over the case because respondent failed to allege the place where
the libelous articles were printed and first published would have been tenable if the case filed were a criminal case. The failure of the
original complaint to contain such information would be fatal because this fact involves the issue of venue which goes into the territorial
jurisdiction of the court. This is not to be because the case before us is a civil action where venue is not jurisdictional.

The cases[24] cited by petitioners are not applicable here. These cases involve amendments on complaints that confer jurisdiction
on courts over which they originally had none. This is not true in the case at bar. As discussed above, the RTC acquired jurisdiction over
the subject matter upon the filing of the original complaint. It did not lose jurisdiction over the same when it dismissed it on the ground
of improper venue. The amendment merely laid down the proper venue of the case.

WHEREFORE, the foregoing considered, the decision of the Court of Appeals dated 19 April 2000 is AFFIRMED in toto. No
costs.

SO ORDERED.

28
 SPS. RENATO & ANGELINA LANTIN, G.R. No. 160053
Petitioners,

- versus - Present:

QUISUMBING, J., Chairperson,

CARPIO,
HON. JANE AURORA C. CARPIO MORALES,
LANTION, PRESIDING JUDGE OF THE TINGA, and
REGIONAL TRIAL COURT OF LIPA VELASCO, JR., JJ.
CITY, FOURTH JUDICIAL REGION,
BRANCH 13, PLANTERS
DEVELOPMENT BANK, ELIZABETH C.
UMALI, ALICE PERCE, JELEN MOSCA,
REGISTER OF DEEDS FOR LIPA CITY, Promulgated:
BATANGAS, THE CLERK OF COURT and
EX-OFFICIO SHERIFF OF THE August 28, 2006
REGIONAL TRIAL COURT OF
BATANGAS,
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION
QUISUMBING, J.:

This is a petition for certiorari assailing the orders dated May 15, 2003 [1] and September 15, 2003[2] in Civil Case No. 2002-
0555 issued by public respondent, Presiding Judge Jane Aurora C. Lantion, of the Regional Trial Court (RTC) of Lipa City, Batangas.

The facts of the case are as follows:

Petitioners Renato and Angelina Lantin took several peso and dollar loans from respondent Planters Development Bank and
executed several real estate mortgages and promissory notes to cover the loans. They defaulted on the payments so respondent bank
foreclosed the mortgaged lots. The foreclosed properties, in partial satisfaction of petitioners debt, were sold at a public auction where
the respondent bank was the winning bidder. On November 8, 2003, petitioners filed against Planters Development Bank and its officers
Elizabeth Umali, Alice Perce and Jelen Mosca (private respondents), a Complaint for Declaration of Nullity and/or Annulment of Sale
and/or Mortgage, Reconveyance, Discharge of Mortgage, Accounting, Permanent Injunction, and Damages with the RTC of Lipa City,
Batangas. Petitioners alleged that only their peso loans were covered by the mortgages and that these had already been fully paid, hence,
the mortgages should have been discharged. They challenged the validity of the foreclosure on the alleged non-payment of their dollar
loans as the mortgages did not cover those loans.

Private respondents moved to dismiss the complaint on the ground of improper venue since the loan agreements restricted the
venue of any suit in Metro Manila.

On May 15, 2003, the respondent judge dismissed the case for improper venue.

Petitioners sought reconsideration. They argued that the trial court in effect prejudged the validity of the loan documents
because the trial court based its dismissal on a venue stipulation provided in the agreement. The motion for reconsideration was denied
and the lower court held that the previous order did not touch upon the validity of the loan documents but merely ruled on the procedural
issue of venue.

Petitioners now come before us alleging that:

I
THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN HOLDING THAT THE VENUE STIPULATIONS IN THE REAL ESTATE
MORTGAGE AND PROMISSORY NOTES FALL WITHIN THE PURVIEW OF SECTION 4(B) OF RULE 4 OF
THE 1997 RULES OF CIVIL PROCEDURE IN THAT IT LIMITED THE VENUE OF ACTIONS TO A DEFINITE
PLACE.

II
THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN NOT FINDING THAT THE MERE USE OF THE WORD EXCLUSIVELY
DOES NOT, BY ITSELF, MEAN THAT SUCH STIPULATIONS AUTOMATICALLY PROVIDE FOR AN
EXCLUSIVE VENUE, AS CONTEMPLATED BY SECTION 4(B) OF RULE 4 OF THE 1997 RULES OF CIVIL
PROCEDURE, SPECIALLY WHEN THE TENOR OR LANGUAGE OF THE ENTIRE VENUE STIPULATION
CLEARLY PROVIDES OTHERWISE.

III

29
 THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN DISREGARDING THE FACT THAT HEREIN PETITIONERS COMPLAINT
INVOLVES SEVERAL CAUSES OF ACTION WHICH DO NOT ARISE SOLELY FROM THE REAL ESTATE
MORTGAGE AND PROMISSORY NOTES AND WHICH OTHER CAUSES OF ACTION MAY BE FILED IN
OTHER VENUES UNDER SECTIONS 1 AND 2 OF RULE 4 OF THE 1997 RULES OF CIVIL PROCEDURE.

IV
THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN DISREGARDING THE PRINCIPLE THAT THE RULE ON VENUE OF
ACTIONS IS ESTABLISHED FOR THE CONVENIENCE OF THE PLAINTIFFS. [3]

The main issue in the present petition is whether respondent judge committed grave abuse of discretion when she
dismissed the case for improper venue.

Petitioners contend that, since the validity of the loan documents were squarely put in issue, necessarily this meant also
that the validity of the venue stipulation also was at issue. Moreover, according to the
petitioners, the venue stipulation in the loan documents is not an exclusive venue stipulation under Section 4(b) of Rule 4
of the 1997 Rules of Civil Procedure.[4] The venue in the loan agreement was not specified with particularity. Besides, petitioners posit,
the rule on venue of action was established for the convenience of the plaintiff, herein petitioners. Further, petitioners also contend that
since the complaint involves several causes of action which did not arise solely from or connected with the loan documents, the cited
venue stipulation should not be made to apply.

Private respondents counter that, in their complaint, petitioners did not assail the loan documents, and the issue of validity was merely
petitioners afterthought to avoid being bound by the venue stipulation. They also aver that the venue stipulation was not contrary to the
doctrine in Unimasters,[5] which requires that a venue stipulation employ categorical and suitably limiting language to the effect that the
parties agree that the venue of actions between them should be laid only and exclusively at a definite place.According to private
respondents, the language of the stipulation is clearly exclusive.

At the outset, we must make clear that under Section 4 (b) of Rule 4 of the 1997 Rules of Civil Procedure, the general rules on venue of
actions shall not apply where the parties, before the filing of the action, have validly agreed in writing on an exclusive venue. The mere
stipulation on the venue of an action, however, is not enough to preclude parties from bringing a case in other venues. The parties must
be able to show that such stipulation is exclusive.[6] In the absence of qualifying or restrictive words, the stipulation should be deemed
as merely an agreement on an additional forum, not as limiting venue to the specified place.[7]

The pertinent provisions of the several real estate mortgages and promissory notes executed by the petitioner respectively read as follows:

18. In the event of suit arising out of or in connection with this mortgage and/or the promissory note/s secured by this
mortgage, the parties hereto agree to bring their causes of auction (sic) exclusively in the proper court of Makati,
Metro Manila or at such other venue chosen by the Mortgagee, the Mortgagor waiving for this purpose any other
venue.[8] (Emphasis supplied.)
I/We further submit that the venue of any legal action arising out of this note shall exclusively be at the proper court
of Metropolitan Manila, Philippines or any other venue chosen by the BANK, waiving for this purpose any other
venue provided by the Rules of Court.[9] (Emphasis supplied.)

Clearly, the words exclusively and waiving for this purpose any other venue are restrictive and used advisedly to meet the requirements.

Petitioners claim that effecting the exclusive venue stipulation would be tantamount to a prejudgment on the validity of the
loan documents. We note however that in their complaint, petitioners never assailed the validity of the mortgage contracts securing their
peso loans. They only assailed the terms and coverage of the mortgage contracts. What petitioners claimed is that their peso loans had
already been paid thus the mortgages should be discharged, and that the mortgage contracts did not include their dollar loans. In our
view, since the issues of whether the mortgages should be properly discharged and whether these also cover the dollar loans, arose out
of the said loan documents, the stipulation on venue is also applicable thereto.

Considering all the circumstances in this controversy, we find that the respondent judge did not commit grave abuse of discretion, as
the questioned orders were evidently in accord with law and jurisprudence.

WHEREFORE, the petition is DISMISSED. The assailed orders dated May 15, 2003 and September 15, 2003 of
the Regional Trial Court of Lipa City, Batangas, in Civil Case No. 2002-0555 are AFFIRMED.

Costs against petitioners.

SO ORDERED.

30
 [G.R. No. 133119. August 17, 2000]

FINANCIAL BUILDING CORPORATION, petitioner, vs. FORBES PARK ASSOCIATION, INC., respondent.

DECISION
DE LEON, JR., J.:

Before us is petition for review on certiorari of the Decision[1] dated March 20, 1998 of the Court of Appeals[2] in CA-GR CV No.
48194 entitled Forbes Park Association, Inc. vs. Financial Building Corporation, finding Financial Building Corporation (hereafter,
Financial Building) liable for damages in favor of Forbes Park Association, Inc. (hereafter, Forbes Park), for violating the latters deed
of restrictions on the construction of buildings within the Forbes Park Village, Makati.
The pertinent facts are as follows:
The then Union of Soviet Socialist Republic (hereafter, USSR) was the owner of a 4,223 square meter residential lot located at No.
10, Narra Place, Forbes Park Village in Makati City.On December 2, 1985, the USSR engaged the services of Financial Building for
the construction of a multi-level office and staff apartment building at the said lot, which would be used by the Trade Representative of
the USSR.[3] Due to the USSRs representation that it would be building a residence for its Trade Representative, Forbes Park authorized
its construction and work began shortly thereafter.
On June 30, 1986, Forbes Park reminded the USSR of existing regulations [4] authorizing only the construction of a single-family
residential building in each lot within the village. It also elicited a reassurance from the USSR that such restriction has been complied
with.[5] Promptly, the USSR gave its assurance that it has been complying with all regulations of Forbes Park. [6] Despite this, Financial
Building submitted to the Makati City Government a second building plan for the construction of a multi-level apartment building,
which was different from the first plan for the construction of a residential building submitted to Forbes Park.
Forbes Park discovered the second plan and subsequent ocular inspection of the USSRs subject lot confirmed the violation of the
deed of restrictions. Thus, it enjoined further construction work. On March 27, 1987, Forbes Park suspended all permits of entry for the
personnel and materials of Financial Building in the said construction site. The parties attempted to meet to settle their differences but
it did not push through.
Instead, on April 9, 1987, Financial Building filed in the Regional Trial Court of Makati, Metro Manila, a Complaint [7] for
Injunction and Damages with a prayer for Preliminary Injunction against Forbes Park docketed as Civil Case No. 16540. The latter, in
turn, filed a Motion to Dismiss on the ground that Financial Building had no cause of action because it was not the real party-in-interest.
On April 28, 1987, the trial court issued a writ of preliminary injunction against Forbes Park but the Court of Appeals nullified it
and dismissed the complaint in Civil Case No. 16540 altogether. We affirmed the said dismissal in our Resolution,[8] promulgated on
April 6, 1988, in G.R. No. 79319 entitled Financial Building Corporation, et al. vs. Forbes Park Association, et al.
After Financial Buildings case, G.R. No. 79319, was terminated with finality, Forbes Park sought to vindicate its rights by filing
on October 27, 1989 with the Regional Trial Court of Makati a Complaint[9] for Damages, against Financial Building, docketed as Civil
Case No. 89-5522, arising from the violation of its rules and regulations. The damages claimed are in the following amounts: (a)
P3,000,000.00 as actual damages; (b) P1,000,000.00 as moral damages; (c) P1,000,000.00 as exemplary damages; and (d) P1,000,000.00
as attorneys fees.[10] On September 26, 1994, the trial court rendered its Decision [11] in Civil Case No. 89-5522 in favor of Forbes Park
and against Financial Building, the dispositive portion of which reads, to wit:

WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of the plaintiff and against the defendant:

(1) Ordering the defendant to remove/demolish the illegal structures within three (3) months from the time this judgment
becomes final and executory, and in case of failure of the defendant to do so, the plaintiff is authorized to demolish/remove
the structures at the expense of the defendant;
(2) Ordering the defendant to pay damages, to wit:
(a) P3,000,000.00 as actual damages by way of demolition expenses;
(b) P1,000,000.00 as exemplary damages;
(c) P500,000.00 as attorneys fees;
(d) the costs of suit.

SO ORDERED.

Financial Building appealed the said Decision of the trial court in Civil Case No. 89-5522 by way of a petition for review
on certiorari[12] entitled Financial Building Corporation vs. Forbes Park Association, Inc. to the Court of Appeals and docketed therein
as CA-GR CV No. 48194. However, the Court of Appeals affirmed it in its Decision [13] dated March 20, 1998, the dispositive portion
of which reads:

WHEREFORE, the Decision dated September 26, 1994 of the Regional Trial Court of Makati is AFFIRMED with the modification
that the award of exemplary damages, as well as attorneys fees, is reduced to fifty thousand pesos (P50,000.00) each.

31
 Hence, this petition, wherein Financial Building assigns the following errors:
I. THE COURT OF APPEALS GRAVELY ERRED IN NOT DISMISSING THE COMPLAINT FILED BY RESPONDENT
FPA DESPITE THE FACT THAT ITS ALLEGED CLAIMS AND CAUSES OF ACTION THEREIN ARE BARRED
BY PRIOR JUDGMENT AND/OR ARE DEEMED WAIVED FOR ITS FAILURE TO INTERPOSE THE SAME AS
COMPULSORY COUNTERCLAIMS IN CIVIL CASE NO. 16540;
II. THE COURT OF APPEALS GRAVELY ERRED IN NOT DISMISSING THE COMPLAINT FILED BY
RESPONDENT FPA AGAINST PETITIONER FBC SINCE RESPONDENT FPA HAS NO CAUSE OF ACTION
AGAINST PETITIONER FBC;
III. THE COURT OF APPEALS GRAVELY ERRED IN AWARDING DAMAGES IN FAVOR OF RESPONDENT FPA
DESPITE THE FACT THAT ON THE BASIS OF THE EVIDENCE ON RECORD, RESPONDENT FPA IS NOT
ENTITLED THERETO AND PETITIONER FBC IS NOT LIABLE THEREFOR;
IV. THE COURT OF APPEALS ERRED IN ORDERING THE DEMOLITION OF THE ILLEGAL STRUCTURES
LOCATED AT NO. 10 NARRA PLACE, FORBES PARK, MAKATI CITY, CONSIDERING THAT THE SAME ARE
LOCATED ON DIPLOMATIC PREMISES[14]
We grant the petition.
First. The instant case is barred due to Forbes Parks failure to set it up as a compulsory counterclaim in Civil Case No. 16540, the
prior injunction suit initiated by Financial Building against Forbes Park.
A compulsory counterclaim is one which arises out of or is necessarily connected with the transaction or occurrence that is the
subject matter of the opposing partys claim.[15] If it is within the jurisdiction of the court and it does not require for its adjudication the
presence of third parties over whom the court cannot acquire jurisdiction, such compulsory counterclaim is barred if it is not set up in
the action filed by the opposing party.[16]
Thus, a compulsory counterclaim cannot be the subject of a separate action but it should instead be asserted in the same suit
involving the same transaction or occurrence, which gave rise to it. [17] To determine whether a counterclaim is compulsory or not, we
have devised the following tests: (1) Are the issues of fact or law raised by the claim and the counterclaim largely the same? (2)
Would res judicata bar a subsequent suit on defendants claim absent the compulsory counterclaim rule? (3) Will substantially the same
evidence support or refute plaintiffs claim as well as the defendants counterclaim? and (4) Is there any logical relation between the claim
and the counterclaim? Affirmative answers to the above queries indicate the existence of a compulsory counterclaim.[18]
Undoubtedly, the prior Civil Case No. 16540 and the instant case arose from the same occurrence the construction work done by
Financial Building on the USSRs lot in Forbes Park Village. The issues of fact and law in both cases are identical. The factual issue is
whether the structures erected by Financial Building violate Forbes Parks rules and regulations, whereas the legal issue is whether
Financial Building, as an independent contractor working for the USSR, could be enjoined from continuing with the construction and
be held liable for damages if it is found to have violated Forbes Parks rules.
As a result of the controversy, Financial Building seized the initiative by filing the prior injunction case, which was anchored on
the contention that Forbes Parks prohibition on the construction work in the subject premises was improper. The instant case on the
other hand was initiated by Forbes Park to compel Financial Building to remove the same structures it has erected in the same premises
involved in the prior case and to claim damages for undertaking the said construction. Thus, the logical relation between the two cases
is patent and it is obvious that substantially the same evidence is involved in the said cases.
Moreover, the two cases involve the same parties. The aggregate amount of the claims in the instant case is within the jurisdiction
of the regional trial court, had it been set up as a counterclaim in Civil Case No. 16540. Therefore, Forbes Parks claims in the instant
case should have been filed as a counterclaim in Civil Case No. 16540.
Second. Since Forbes Park filed a motion to dismiss in Civil Case No. 16540, its existing compulsory counterclaim at that time is
now barred.
A compulsory counterclaim is auxiliary to the proceeding in the original suit and derives its jurisdictional support therefrom.[19] A
counterclaim presupposes the existence of a claim against the party filing the counterclaim. Hence, where there is no claim against the
counterclaimant, the counterclaim is improper and it must dismissed, more so where the complaint is dismissed at the instance of the
counterclaimant.[20] In other words, if the dismissal of the main action results in the dismissal of the counterclaim already filed, it stands
to reason that the filing of a motion to dismiss the complaint is an implied waiver of the compulsory counterclaim because the grant of
the motion ultimately results in the dismissal of the counterclaim.
Thus, the filing of a motion to dismiss and the setting up of a compulsory counterclaim are incompatible remedies. In the event
that a defending party has a ground for dismissal and a compulsory counterclaim at the same time, he must choose only one remedy. If
he decides to file a motion to dismiss, he will lose his compulsory counterclaim. But if he opts to set up his compulsory counterclaim,
he may still plead his ground for dismissal as an affirmative defense in his answer.[21] The latter option is obviously more favorable to
the defendant although such fact was lost on Forbes Park.
The ground for dismissal invoked by Forbes Park in Civil Case No. 16540 was lack of cause of action. There was no need to plead
such ground in a motion to dismiss or in the answer since the same was not deemed waived if it was not pleaded. [22] Nonetheless, Forbes
Park still filed a motion to dismiss and thus exercised bad judgment in its choice of remedies. Thus, it has no one to blame but itself for
the consequent loss of its counterclaim as a result of such choice.
Inasmuch as the action for damages filed by Forbes Park should be as it is hereby dismissed for being barred by the prior judgment
in G.R. No. 79319 (supra) and/or deemed waived by Forbes Park to interpose the same under the rule on compulsory counterclaims,
there is no need to discuss the other issues raised by the herein petitioner.
WHEREFORE, the instant petition is hereby GRANTED and the Decision dated March 20, 1998 of the Court of Appeals in CA-
G.R. CV No. 48194 is hereby REVERSED and SET ASIDE.
32
Costs against respondent Forbes Park Association, Inc. .
SO ORDERED.

33
G.R. No. 204528 February 19, 2013

SECRETARY LEILA M. DE LIMA, DIRECTOR NONNATUS R. ROJAS and DEPUTY DIRECTOR REYNALDO 0.
ESMERALDA, Petitioners,
vs.
MAGTANGGOL B. GATDULA, Respondent.

RESOLUTION

LEONEN, J.:

Submitted for our resolution is a prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction to
enjoin "the Regional Trial Court, Branch 26, in Manila from implementing its Decision x x x in Civil Case No. 12-127405 granting
respondent's application for the issuance of inspection and production orders x x x." 1 This is raised through a Petition for Review on
Certiorari under Rule 45 from the "Decision" rendered by the Regional Trial Court dated 20 March 2012.

From the records, it appears that on 27 February 2012, respondent Magtanggol B. Gatdula filed a Petition for the Issuance of a Writ of
Amparo in the Regional Trial Court of Manila.2 This case was docketed as In the Matter of the Petition for Issuance of Writ of Amparo
of Atty. Magtanggol B. Gatdula, SP No. 12-127405. It was raffled to the sala of Judge Silvino T. Pampilo, Jr. on the same day.

The Amparo was directed against petitioners Justice Secretary Leila M. De Lima, Director Nonnatus R. Rojas and Deputy Director
Reynaldo O. Esmeralda of the National Bureau of Investigation (DE LIMA, ET AL. for brevity). Gatdula wanted De Lima, et al. "to
cease and desist from framing up Petitioner [Gatdula] for the fake ambush incident by filing bogus charges of Frustrated Murder
against Petitioner [Gatdula] in relation to the alleged ambush incident." 3

Instead of deciding on whether to issue a Writ of Amparo, the judge issued summons and ordered De Lima, et al. to file an
Answer.4 He also set the case for hearing on 1 March 2012. The hearing was held allegedly for determining whether a temporary
protection order may be issued. During that hearing, counsel for De Lima, et al. manifested that a Return, not an Answer, is
appropriate for Amparo cases.5

In an Order dated 2 March 2012,6 Judge Pampilo insisted that "[s]ince no writ has been issued, return is not the required pleading but
answer".7 The judge noted that the Rules of Court apply suppletorily in Amparo cases.8 He opined that the Revised Rules of Summary
Procedure applied and thus required an Answer.9

Judge Pampilo proceeded to conduct a hearing on the main case on 7 March 2012. 10 Even without a Return nor an Answer, he ordered
the parties to file their respective memoranda within five (5) working days after that hearing. Since the period to file an Answer had
not yet lapsed by then, the judge also decided that the memorandum of De Lima, et al. would be filed in lieu of their Answer. 11

On 20 March 2012, the RTC rendered a "Decision" granting the issuance of the Writ of Amparo. The RTC also granted the interim
reliefs prayed for, namely: temporary protection, production and inspection orders. The production and inspection orders were in
relation to the evidence and reports involving an on-going investigation of the attempted assassination of Deputy Director Esmeralda.
It is not clear from the records how these pieces of evidence may be related to the alleged threat to the life, liberty or security of the
respondent Gatdula.

In an Order dated 8 October 2012, the RTC denied the Motion for Reconsideration dated 23 March 2012 filed by De Lima, et al.

Petitioners Sec. De Lima, et al. thus came to this Court assailing the RTC "Decision" dated 20 March 2012 through a Petition for
Review on Certiorari (With Very Urgent Application for the Issuance of a Temporary Restraining Order/Writ of Preliminary
Injunction) via Rule 45, as enunciated in Section 19 of the Rule on the Writ of Amparo (A.M. No. 07-9- 12-SC, 25 September 2007),
viz:

SEC. 19. Appeal. – Any party may appeal from the final judgment or order to the Supreme Court under Rule 45. The appeal may
raise questions of fact or law or both. x x x (Emphasis supplied).

It is the Court’s view that the "Decision" dated 20 March 2012 granting the writ of Amparo is not the judgment or final order
contemplated under this rule. Hence, a Petition for Review under Rule 45 may not yet be the proper remedy at this time.

The RTC and the Parties must understand the nature of the remedy of Amparo to put its procedures in the proper context.

The remedy of the Writ of Amparo is an equitable and extraordinary remedy to safeguard the right of the people to life, liberty 12 and
security13 as enshrined in the 1987 Constitution.14 The Rule on the Writ of Amparo was issued as an exercise of the Supreme Court's
power to promulgate rules concerning the protection and enforcement of constitutional rights. 15 It aims to address concerns such as,
among others, extrajudicial killings and enforced disappearances. 16

Due to the delicate and urgent nature of these controversies, the procedure was devised to afford swift but decisive relief. 17 It is
initiated through a petition18 to be filed in a Regional Trial Court, Sandiganbayan, the Court of Appeals, or the Supreme Court. 19 The
judge or justice then makes an "immediate" evaluation20 of the facts as alleged in the petition and the affidavits submitted "with the
attendant circumstances detailed".21 After evaluation, the judge has the option to issue the Writ of Amparo22 or immediately dismiss
the case. Dismissal is proper if the petition and the supporting affidavits do not show that the petitioner's right to life, liberty or
34
security is under threat or the acts complained of are not unlawful. On the other hand, the issuance of the writ itself sets in motion
presumptive judicial protection for the petitioner. The court compels the respondents to appear before a court of law to show whether
the grounds for more permanent protection and interim reliefs are necessary.

The respondents are required to file a Return23 after the issuance of the writ through the clerk of court. The Return serves as the
responsive pleading to the petition.24 Unlike an Answer, the Return has other purposes aside from identifying the issues in the case.
Respondents are also required to detail the actions they had taken to determine the fate or whereabouts of the aggrieved party.

If the respondents are public officials or employees, they are also required to state the actions they had taken to: (i) verify the identity
of the aggrieved party; (ii) recover and preserve evidence related to the death or disappearance of the person identified in the petition;
(iii) identify witnesses and obtain statements concerning the death or disappearance; (iv) determine the cause, manner, location, and
time of death or disappearance as well as any pattern or practice that may have brought about the death or disappearance; and (vi)
bring the suspected offenders before a competent court. 25 Clearly these matters are important to the judge so that s/he can calibrate the
means and methods that will be required to further the protections, if any, that will be due to the petitioner.

There will be a summary hearing26 only after the Return is filed to determine the merits of the petition and whether interim reliefs are
warranted. If the Return is not filed, the hearing will be done ex parte.27 After the hearing, the court will render the judgment within
ten (10) days from the time the petition is submitted for decision. 28

If the allegations are proven with substantial evidence, the court shall grant the privilege of the writ and such reliefs as may be proper
and appropriate.29 The judgment should contain measures which the judge views as essential for the continued protection of the
petitioner in the Amparo case. These measures must be detailed enough so that the judge may be able to verify and monitor the actions
taken by the respondents. It is this judgment that could be subject to appeal to the Supreme Court via Rule 45.30 After the measures
have served their purpose, the judgment will be satisfied. In Amparo cases, this is when the threats to the petitioner’s life, liberty and
security cease to exist as evaluated by the court that renders the judgment. Parenthetically, the case may also be terminated through
consolidation should a subsequent case be filed – either criminal or civil.31 Until the full satisfaction of the judgment, the extraordinary
remedy of Amparo allows vigilant judicial monitoring to ensure the protection of constitutional rights.

The "Decision" dated 20 March 2012 assailed by the petitioners could not be the judgment or final order that is appealable under
Section 19 of the Rule on the Writ of Amparo. This is clear from the tenor of the dispositive portion of the "Decision", to wit:

The Branch Clerk of Court of Court [sic] is hereby DIRECTED to issue the Writ of Amparo.

Likewise, the Branch Clerk of Court is hereby DIRECTED to effect the service of the Writ of Amparo in an expeditious manner upon
all concerned, and for this purpose may call upon the assistance of any military or civilian agency of the government.

This "Decision" pertained to the issuance of the writ under Section 6 of the Rule on the Writ of Amparo, not the judgment under
Section 18. The "Decision" is thus an interlocutory order, as suggested by the fact that temporary protection, production and
inspection orders were given together with the decision. The temporary protection, production and inspection orders are interim
reliefs that may be granted by the court upon filing of the petition but before final judgment is rendered.32

The confusion of the parties arose due to the procedural irregularities in the RTC.

First, the insistence on filing of an Answer was inappropriate. It is the Return that serves as the responsive pleading for petitions for
the issuance of Writs of Amparo. The requirement to file an Answer is contrary to the intention of the Court to provide a speedy
remedy to those whose right to life, liberty and security are violated or are threatened to be violated. In utter disregard of the Rule on
the Writ of Amparo, Judge Pampilo insisted on issuing summons and requiring an Answer.

Judge Pampilo’s basis for requiring an Answer was mentioned in his Order dated 2 March 2012:

Under Section 25 of the same rule [on the Writ of Amparo], the Rules of Court shall apply suppletorily insofar as it is not inconsistent
with the said rule.

Considering the summary nature of the petition, Section 5 of the Revised Rules of Summary Procedure shall apply.

Section 5. Answer – Within ten (10) days from service of summons, the defendant shall file his Answer to the complaint and serve a
copy thereof on the plaintiff. x x x

WHEREFORE, based on the foregoing, the respondents are required to file their Answer ten (days) from receipt of this Order. 33

The 1991 Revised Rules of Summary Procedure is a special rule that the Court has devised for the following circumstances:

SECTION 1. Scope. – This rule shall govern the summary procedure in the Metropolitan Trial Courts, the Municipal Trial Courts in
Cities, the Municipal Trial Courts, and the Municipal Circuit Trial Courts in the following cases falling within their jurisdiction:

A. Civil Cases:

(1) All cases of forcible entry and unlawful detainer, x x x.

35
 (2) All other cases, except probate proceedings, where the total amount of the plaintiff’s claim does not exceed x x
x.

B. Criminal Cases:

(1) Violations of traffic laws, rules and regulations;

(2) Violations of the rental law;

(3) Violations of municipal or city ordinances;

(4) All other criminal cases where the penalty prescribed by law for the offense charged is imprisonment not
exceeding six months, or a fine not exceeding one thousand pesos (P1,000.00), or both, x x x.

xxxx

It is clear from this rule that this type of summary procedure only applies to MTC/MTCC/MCTCs. It is mind-boggling how this rule
could possibly apply to proceedings in an RTC. Aside from that, this Court limited the application of summary procedure to
certain civil and criminal cases. A writ of Amparo is a special proceeding. It is a remedy by which a party seeks to establish a status,
a right or particular fact.34 It is not a civil nor a criminal action, hence, the application of the Revised Rule on Summary Procedure is
seriously misplaced.

The second irregularity was the holding of a hearing on the main case prior to the issuance of the writ and the filing of a Return.
Without a Return, the issues could not have been properly joined.

Worse, is the trial court’s third irregularity: it required a memorandum in lieu of a responsive pleading (Answer) of De Lima, et al.

The Return in Amparo cases allows the respondents to frame the issues subject to a hearing. Hence, it should be done prior to the
hearing, not after. A memorandum, on the other hand, is a synthesis of the claims of the party litigants and is a final pleading usually
required before the case is submitted for decision. One cannot substitute for the other since these submissions have different functions
in facilitating the suit.

More importantly, a memorandum is a prohibited pleading under the Rule on the Writ of Amparo.35

The fourth irregularity was in the "Decision" dated 20 March 2012 itself. In the body of its decision, the RTC stated:

"Accordingly this court GRANTS the privilege of the writ and the interim reliefs prayed for by the petitioner." (Emphasis
supplied).

This gives the impression that the decision was the judgment since the phraseology is similar to Section 18 of the Rule on the Writ
of Amparo:

"SEC. 18. Judgment. — The court shall render judgment within ten (10) days from the time the petition is submitted for decision. If
the allegations in the petition are proven by substantial evidence, the court shall grant the privilege of the writ and such reliefs as
may be proper and appropriate; otherwise, the privilege shall be denied." (Emphasis supplied).

The privilege of the Writ of Amparo should be distinguished from the actual order called the Writ of Amparo. The privilege
includes availment of the entire procedure outlined in A.M. No. 07-9-12-SC, the Rule on the Writ of Amparo. After examining the
petition and its attached affidavits, the Return and the evidence presented in the summary hearing, the judgment should detail the
required acts from the respondents that will mitigate, if not totally eradicate, the violation of or the threat to the petitioner's life, liberty
or security.

A judgment which simply grants "the privilege of the writ" cannot be executed.1âwphi1 It is tantamount to a failure of the judge to
intervene and grant judicial succor to the petitioner. Petitions filed to avail of the privilege of the Writ of Amparo arise out of very real
and concrete circumstances. Judicial responses cannot be as tragically symbolic or ritualistic as "granting the privilege of the Writ
of Amparo."

The procedural irregularities in the RTC affected the mode of appeal that petitioners used in elevating the matter to this Court.

It is the responsibility of counsels for the parties to raise issues using the proper procedure at the right time. Procedural rules are meant
to assist the parties and courts efficiently deal with the substantive issues pertaining to a case. When it is the judge himself who
disregards the rules of procedure, delay and confusion result.

The Petition for Review is not the proper remedy to assail the interlocutory order denominated as "Decision" dated 20 March 2012. A
Petition for Certiorari, on the other hand, is prohibited. 36 Simply dismissing the present petition, however, will cause grave injustice to
the parties involved. It undermines the salutary purposes for which the Rule on the Writ of Amparo were promulgated.

36
In many instances, the Court adopted a policy of liberally construing its rules in order to promote a just, speedy and inexpensive
disposition of every action and proceeding.37 The rules can be suspended on the following grounds: (1) matters of life, liberty, honor
or property, (2) the existence of special or compelling circumstances, (3) the merits of the case, (4) a cause not entirely attributable to
the fault or negligence of the party favored by the suspension of the rules, (5) a lack of any showing that the review sought is merely
frivolous and dilatory, and (6) the other party will not be unjustly prejudiced thereby. 38

WHEREFORE, in the interest of justice, as a prophylactic to the irregularities committed by the trial court judge, and by virtue of its
powers under Article VIII, Section 5 (5) of the Constitution, the Court RESOLVES to:

(1) NULLIFY all orders that are subject of this Resolution issued by Judge Silvino T. Pampilo, Jr. after respondent Gatdula
filed the Petition for the Issuance of a Writ of Amparo;

(2) DIRECT Judge Pampilo to determine within forty-eight (48) hours from his receipt of this Resolution whether the
issuance of the Writ of Amparo is proper on the basis of the petition and its attached affidavits.

The Clerk of Court is DIRECTED to cause the personal service of this Resolution on Judge Silvino T. Pampilo, Jr. of Branch 26 of the
Regional Trial Court of Manila for his proper guidance together with a WARNING that further deviation or improvisation from the
procedure set in A.M. No. 07-9-12-SC shall be meted with severe consequences.

SO ORDERED.

37
G.R. No. 189532 June 11, 2014

VIRGINIA S. DIO and H.S. EQUITIES, LTD., Petitioners,

vs.
SUBIC BAY MARINE EXPLORATORIUM, INC., represented by its Chairman and Chief Executive Officer, TIMOTHY
DESMOND, Respondents.

DECISION

PEREZ, J.:

This is a Petition for Review on Certiorari1 pursuant to Rule 45 of the Revised Rules of Court, assailing the 3 April 2009 Order 2 of the
Regional Trial Court (RTC) of Balanga City, Bataan, on pure question of law. In its assailed Order, the RTC denied the motion filed
by petitioners to set their counterclaims for hearing on the ground that the main case was already dismissed with finality by the Court
of Appeals in CA-G.R. CV No. 87117.

In an Order3 dated 26 August 2009, the RTC refused to reconsider its earlier disposition.

The Facts

Petitioner H.S. Equities, Ltd., (HSE) is a foreign corporation duly organized and existing under the laws of the British Virgin Islands,
with registered address at Akara Building, 24 De Castro Street, Wickhams Cay I, Road Town, Tortola, British Virgin Islands. It
entered into an isolated transaction subject of the instant case. It is represented in this action by petitioner Virginia S. Dio (Dio).

Respondent Subic Bay Marine Exploratorium, Inc. (SBME) is a domestic corporation, duly organized and existing under the
Philippine laws and is represented in this action by its Chief Executive Officer, respondent Timothy Desmond (Desmond).

In 2002, SBME decided to expand its business by operating a beach resort inside the property administered by the Subic Bay
Metropolitan Authority (SBMA). For the business venture to take off, SBME needed to solicit investors who are willing to infuse
funds for the construction and operation of the beach resort project. HSE (formerly known as Westdale Assets Limited) thru its
authorized director, Dio, agreed to invest the amount of US$2,500,000.00 with SBME by purchasing 750,000 common shares with a
par value of ₱100 per share from the increase in its authorized capital stock. The agreement was reduced into writing wherein HSE, in
order to protect its interest in the company, was afforded minority protection rights such as the right to appoint a member of the board
of directors and the right to veto certain board resolutions. After HSE initially paid US$200,000.00 for its subscription, it refused to
further lay out money for the expansion project of the SBME due to the alleged mismanagement in the handling of corporate funds.

Consequently, SBME initiated an intra-corporate dispute before the RTC of Balanga City, Bataan against petitioners HSE and
Dio.4 Before petitioners could file their answer to the complaint, respondents impleaded its Corporate Secretary, Atty. Winston Ginez,
as additional defendant. In their Amended Complaint 5 docketed as Civil Case No. 7572, SBME essentially alleged that HSE unjustly
refused to pay the balance of its unpaid subscription effectively jeopardizing the company’s expansion project. Apart from their
refusal to honor their obligation under the subscription contract, it was further alleged by SBME that Dio tried to dissuade local
investors and financial institutions from putting in capital to SBME by imputing defamatory acts against Desmond. To protect the
interest of the corporation and its stockholders, SBME sought that petitioners be enjoined from committing acts inimical to the interest
of the company.

To refute the claims of respondents, petitioners maintained in their Answer with Compulsory Counterclaim6 that it would be highly
preposterous for them to dissuade investors and banks from putting in money to SBME considering that HSE and Dio are stakeholders
of the company with substantial investments therein. In turn, petitioners countered that their reputation and good name in the business
community were tarnished as a result of the filing of the instant complaint, and thus prayed that they be indemnified in the amount of
US$2,000,000.00 as moral damages. Constrained to litigate to protect their rights, petitioners asked that they be indemnified in the
amount of₱1,000,000.00 in litigation expenses. Petitioners likewise sought to recover their investment of US$1,500,000.00 since they
were purportedly inveigled by Desmond into putting in money to SBME under the pretext that they will be accorded with minority
protection rights. It was alleged that after the filing of the instant complaint, Desmond, in collusion with other Board of Directors of
SBME, managed to unjustly deny HSE and Dio their rights under the Subscription Agreement. To curb similar socially abhorrent
actions, petitioners prayed that SBME and its Board of Directors, namely, Desmond, John Corcoran, Gaile Laule and Gregorio
Magdaraog, be jointly and severally held liable to pay exemplary damages in the amount of US$2,000,000.00.

After petitioners filed their Answer with Compulsory Counterclaim, the RTC, instead of setting the case for pre-trial, issued an
Order7 dated 15 August 2005 motu proprio dismissing Civil Case No. 7572. The dismissal was grounded on the defective certificate of
non-forum shopping which was signed by Desmond without specific authority from the Board of Directors of SBME.

Armed with a board resolution specifically authorizing Desmond to sign the certificate of non-forum shopping on behalf of SBME,
respondents moved that Civil Case No. 7572 be reinstated and further proceedings thereon be conducted. A copy of such authority
was attached by respondents to their Motion for Reconsideration.

For lack of merit, RTC denied respondents’ motion and affirmed the dismissal in an Order8 dated 22 September 2005. In refusing to
reinstate respondents’ complaint, the court a quo ruled that the belated submission of a board resolution evidencing Desmond’s
authority to bind the corporation did not cure the initial defect in the complaint and declared that strict compliance with procedural
rules is enjoined for the orderly administration of justice.

38
Aggrieved by the lower court’s refusal to reinstate their complaint, respondents elevated the matter before the Court of Appeals
assailing the propriety of the 15 August 2005 and 22 September 2005 RTC Orders via Petition for Review which was docketed as CA-
G.R. CV No. 87117.

For failure of the respondents to file their appellants’ brief, the appellate court proceeded to dismiss CA-G.R.CV No. 87117 and
considered the case closed and terminated in its Resolution9 dated 2 January 2007.

After respondents failed to seasonably move for the reconsideration of the aforementioned Resolution, the dismissal of CA-G.R. CV
No. 87117 became final and executory, as shown in the Entry of Judgment 10 dated 3 May 2007.

The procedural incidents before the appellate court having been resolved with finality, petitioners went back to the RTC to file a
motion to set their counterclaims for hearing11 which was opposed by the respondents on the ground that the filing of the compulsory
counterclaims was not accompanied by payment of the required docket fees precluding the court from acquiring jurisdiction over the
case.12

Acting on the motions filed by the opposing parties, the RTC, in an Order 13 dated 3 April 2009 granted the motion of the respondents,
thereby directing the dismissal of petitioners’ counterclaims but not on the ground of non-payment of docket fees. In disallowing
petitioners’ counterclaims to proceed independently of respondents’ complaint, the lower court pointed out that in view of the
dismissal of the main case, which has already been affirmed with finality by the appellate court, it has already lost its jurisdiction to
act on petitioners’ counterclaim, the compulsory counterclaim being merely ancillary to the principal controversy.

In an Order14 dated 26 August 2009, the RTC refused to reconsider its earlier disposition. Petitioners filed this instant Petition for
Review on Certiorari15 on pure question of law seeking the reversal of the 3 April 2009 and 26 August 2009 RTC Orders on the
ground that:

THE TRIAL COURT COMMITTED AN ERROR OF LAW WHEN IT REFUSED TO SET [PETITIONERS’] COUNTERCLAIMS
FOR HEARING ON THE GROUND THATTHE CASE WAS DEEMED "CLOSED AND TERMINATED" BYTHE COURT OF
APPEALS AFTER THE LATTER DISMISSED RESPONDENTS’ APPEAL BECAUSE OF THEIR FAILURE TOFILE THEIR
APPELLANTS’ BRIEF.16

The Court’s Ruling

Petitioners argue that despite the dismissal of the main case, the counterclaim may still remain for independent adjudication under
Section 6, Rule 16 of the Revised Rules of Court.17 Petitioners pointed out that while the dismissal of respondents’ complaint is a
confirmation of Desmonds’ lack of legal personality to file the case, this does not, however, mean that they also do not have the
qualification to pursue their counterclaim. To fault petitioners for the fatal infirmity in the respondents’ complaint would not only
work injustice to the former but would result to an absurd situation where the fate of their counterclaims is placed entirely in the hands
of the respondents.

For their part, respondents posit that, in directly assailing the adverse RTC Orders before the Court, petitioners erroneously availed
themselves of an erroneous remedy arguing that this petition should have been initially filed with the appellate court. By seeking relief
directly from the Court, petitioners ignored the judicial hierarchy warranting the peremptory dismissal of their petition. Unless special
and important reasons were clearly and specifically set out in the petition, and in this case it was not, a direct invocation of this Court’s
original jurisdiction may not be allowed.

The established policy of strict observance of the judicial hierarchy of courts, as a rule, requires that recourse must first be made to the
lower ranked court exercising concurrent jurisdiction with a higher court. A regard for judicial hierarchy clearly indicates that
petitions for the issuance of extraordinary writs against first level courts should be filed in the RTC and those against the latter should
be filed in the Court of Appeals. The rule is not iron-clad, however, as it admits of certain exceptions.18

Thus, a strict application of the rule is unnecessary when cases brought before the appellate courts do not involve factual but purely
legal questions.19 In fact, Rule 41, Section 2(c)20 of the Revised Rules of Court provides that a decision or order of the RTC may as it
was done in the instant case, be appealed to the Supreme Court by petition for review on certiorari under Rule 45, provided that such
petition raises only questions of law.

A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of
facts; or when the issue does not call for the examination of the probative value of the evidence presented, the truth or falsehood of
facts being admitted. A question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the
query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of
specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the whole
situation.21 Thus, the test of whether a question is one of law or of fact is not the appellation given to such question by the party raising
the same; rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in
which case, it is a question of law; otherwise it is a question of fact. 22

Petitioners here raise the solitary issue of the propriety of the dismissal of their counterclaim on the basis of the reasoning of the lower
court that the counterclaim derives its jurisdictional support from the complaint which has already been dismissed. Petitioners
maintain that the court a quo erred in arriving at the legal conclusion that the counterclaim can no longer stand for independent
adjudication after the main case was already dismissed with finality. In order to resolve this issue, the Court need only to look into the
pleadings, depositions, admissions, and affidavits submitted by the respective parties without going into the truth or falsity of such

39
documents. Consequently, the petitioners’ remedy for assailing the correctness of the dismissal of their counterclaims, involving as it
does a pure question of law, indeed lies with this Court. Now to the issue of the propriety of the dismissal of the counterclaim.

The dismissal of the complaint resulted from respondents’ failure to append to the complaint a copy of the board resolution
authorizing Desmond to sign the certificate of non-forum shopping on behalf of SBME. The subsequent dismissal of the counterclaim,
in turn, erroneously proceeded from the ratio that since the main action has already been dismissed with finality by the appellate court,
the lower court has lost its jurisdiction to grant any relief under the counterclaim.

In the significant case of Pinga v. Heirs of German Santiago, 23 this Court speaking through Justice Dante Tinga, resolved the nagging
question as to whether or not the dismissal of the complaint carries with it the dismissal of the counterclaim. Putting to rest the
remaining confusion occasioned by Metals Engineering Resources Corp. v. Court of Appeals 24 and BA Finance Corporation v.
Co,25 the Court articulated that, in light of the effectivity of the 1997 Rules of Civil Procedure, the correct and prevailing doctrine is as
follows:

To be certain, when the Court promulgated the 1997 Rules of Civil Procedure, including the amended Rule17, those previous jural
doctrines that were inconsistent with the new rules incorporated in the 1997 Rules of Civil Procedure were implicitly abandoned
insofar as incidents arising after the effectivity of the new procedural rules on 1 July 1997. BA Finance, or even the doctrine that a
counterclaim may be necessarily dismissed along with the complaint, clearly conflicts with the 1997 Rules of Civil Procedure. The
abandonment of BA Finance as doctrine extends as far back as 1997, when the Court adopted the new Rules of Civil Procedure. If,
since then, such abandonment has not been affirmed in jurisprudence, it is only because no proper case has arisen that would warrant
express confirmation of the new rule. That opportunity is here and now, and we thus rule that the dismissal of a complaint due to fault
of the plaintiff is without prejudice to the right of the defendant to prosecute any pending counterclaims of whatever nature in the
same or separate action. We confirm that BA Finance and all previous rulings of the Court that are inconsistent with this present
holding are now abandoned.

xxxx

Thus, the present rule embodied in Sections 2 and 3 of Rule 17 ordains a more equitable disposition of the counterclaims by ensuring
that any judgment thereon is based on the merit of the counterclaim itself and not on the survival of the main complaint. Certainly, if
the counterclaim is palpably without merit or suffers jurisdictional flaws which stand independent of the complaint, the trial court is
not precluded from dismissing it under the amended rules, provided that the judgment or order dismissing the counterclaim is
premised on those defects. At the same time, if the counterclaim is justified, the amended rules now unequivocally protect such
counterclaim from peremptory dismissal by reason of the dismissal of the complaint. 26 Reviewing the vacated position, in Metals
Engineering Resources Corp., severance of causes of action was not be permitted in order to prevent circuity of suits and to avert the
possibility of inconsistent rulings based on the same set of facts, viz:

For all intents and purposes, such proposition runs counter to the nature of a compulsory counterclaim in that it cannot remain pending
for independent adjudication by the court. This is because a compulsory counterclaim is auxiliary to the proceeding in the original suit
and derives its jurisdictional support therefrom, inasmuch as it arises out of or is necessarily connected with the transaction or
occurrence that is the subject matter of the complaint. It follows that if the court does not have jurisdiction to entertain the main action
of the case and dismisses the same, then the compulsory counterclaim, being ancillary to the principal controversy, must likewise be
dismissed since no jurisdiction remained for any grant of relief under the counterclaim.

The aforementioned doctrine is in consonance with the primary objective of a counterclaim which is to avoid and prevent circuity of
action by allowing the entire controversy between the parties to be litigated and finally determined in one action, wherever this can be
done with entire justice to all parties before the court. The philosophy of the rule is to discourage multiplicity of suits.1âwphi1 It will
be observed that the order of the trial court allowing herein private respondent to proceed with the presentation of his evidence in
support of the latter's counterclaim is repugnant to the very purpose and intent of the rule on counterclaims. 27

In BA Finance Corporation, we likewise refused to entertain the compulsory counterclaim after the trial court lost its jurisdiction in
the main case, thus:

The rule is that a compulsory counterclaim cannot "remain pending for independent adjudication by the court." This is because a
compulsory counterclaim is auxiliary to the proceeding in the original suit and merely derives its jurisdictional support therefrom.

Thus, it necessarily follows that if the trial court no longer possesses jurisdiction to entertain the main action of the case, as when it
dismisses the same, then the compulsory counterclaim being ancillary to the principal controversy, must likewise be similarly
dismissed since no jurisdiction remains for the grant of any relief under the counterclaim. 28

As the rule now stands, the nature of the counterclaim notwithstanding, the dismissal of the complaint does not ipso jure result in the
dismissal of the counterclaim, and the latter may remain for independent adjudication of the court, provided that such counterclaim,
states a sufficient cause of action and does not labor under any infirmity that may warrant its outright dismissal. Stated differently, the
jurisdiction of the court over the counterclaim that appears to be valid on its face, including the grant of any relief thereunder, is not
abated by the dismissal of the main action. The court’s authority to proceed with the disposition of the counterclaim independent of
the main action is premised on the fact that the counterclaim, on its own, raises a novel question which may be aptly adjudicated by
the court based on its own merits and evidentiary support.

In Perkin Elmer Singapore Pte Ltd. v. Dakila Trading Corporartion, 29 a case on all fours with the present one, we expounded our
ruling in Pinga and pointed out that the dismissal of the counterclaim due to the fault of the plaintiff is without prejudice to the right of
the defendant to prosecute any pending counterclaims of whatever nature in the same or separate action, thus: Based on the
40
aforequoted ruling of the Court, if the dismissal of the complaint somehow eliminates the cause of the counterclaim, then the
counterclaim cannot survive. Conversely, if the counterclaim itself states sufficient cause of action then it should stand independently
of and survive the dismissal of the complaint. Now, having been directly confronted with the problem of whether the compulsory
counterclaim by reason of the unfounded suit may prosper even if the main complaint had been dismissed, we rule in the affirmative.

It bears to emphasize that petitioner's counterclaim against respondent is for damages and attorney's fees arising from the unfounded
suit. While respondent's Complaint against petitioner is already dismissed, petitioner may have very well already incurred damages
and litigation expenses such as attorney's fees since it was forced to engage legal representation in the Philippines to protect its rights
and to assert lack of jurisdiction of the courts over its person by virtue of the improper service of summons upon it. Hence, the cause
of action of petitioner's counterclaim is not eliminated by the mere dismissal of respondent's complaint.30 (Emphasis theirs).

Once more, we allow the counterclaim of the petitioners to proceed independently of the complaint of the respondents.

WHEREFORE, premises considered, the petition is GRANTED. The assailed R TC Orders dated 3 April 2009 and 26 August 2009
are hereby REVERSED and SET ASIDE. The case is REMANDED to the Regional Trial Court of Balanga City, Bataan for further
proceedings, on the matter of petitioners Virginia S. Dio and H.S. Equities, Ltd. 's counterclaims. No pronouncement as to costs.

SO ORDERED.

41
G.R. No. 207376 August 6, 2014

AIDA PADILLA, Petitioner,

vs.
GLOBE ASIATIQUE REALTY HOLDINGS CORPORATION, FILMAL REALTY CORPORATION, DELFIN S. LEE and
DEXTER L. LEE, Respondents.

DECISION

VILLARAMA, JR., J.:

Assailed in this petition for review under Rule 45 are the Orders 1 dated November 12, 2012 denying the motion to set the
counterclaim for pre-trial and May 8, 2013 denying petitioner's motion for reconsideration, issued by the Regional Trial Court (RTC)
of Pasig City, Branch 155 in Civil Case No. 73132.

Factual Antecedents

From the years 2005 to 2008, Philippine National Bank (PNB) entered into several Contracts to Sell (CTS) Facility Agreements 2 with
respondents Globe Asiatique Realty Holdings Corporation (Globe Asiatique) and Filmal Realty Corporation (Filmal) represented by
Delfin S. Lee and Dexter L. Lee, President and Vice-President, respectively, of the two corporations. PNB thereby agreed to make
available toGlobe Asiatique and Filmal CTS Facility in the amount not exceeding Two Hundred Million Pesos (₱200,000,000.00) to
finance the purchase of certain Accounts Receivables or the in-house installment receivables of respondents arising from the sale of
subdivision houses in their real estate/housing projects as evidenced by contracts to sell. These availments werelater increased to a
total amount of One Billion Two Hundred Million Pesos (₱1,200,000,000.00). 3

Pursuant to and as a condition for the CTS Facility availments, respondents executed in favor of PNB several Deeds of
Assignment4 covering accounts receivables in the aggregate amount of One Billion One Hundred Ninety-Five Million Nine Hundred
Twenty-Six Thousand Three Hundred Ninety Pesos and Seventy-two centavos (₱1,195,926,390.72). In the said instruments,
respondents acknowledged the total amount of One Billion Three Hundred Ninety FiveMillion Six Hundred Sixty-Five Thousand Five
Hundred Sixty-FourPesos and Sixty-nine centavos (₱1,395,665,564.69) released to themby PNB in consideration of the aforesaid
accounts receivables.5

Sometime in the first quarter of 2010, respondents defaulted in the payment of their outstanding balance and delivery to PNB of
transfer certificates of title corresponding to the assigned accounts receivables, for which PNB declared them in default under the CTS
Facility Agreements. Subsequently, respondents made partial payments and made proposals for paying in full its obligation to PNB as
shown in the exchange of correspondence between respondents and PNB.

In a letter dated August 5, 2010,6 PNB made a formal and final demand upon respondents to pay/settle the total amount of
₱974,377,159.10 representing their outstanding obligation.In the course of credit monitoring and verification, PNB claimed it
discovered 231 out of 240 Contracts to Sell to have either inexistent addresses ofbuyers or the names of the buyers are non-existent or
both.

Thereafter, PNB instituted Civil Case No. R-PSY-10-04228-CV (Philippine National Bank v. Globe Asiatique Realty Holdings
Corporation, Filmal Realty Corporation, Delfin S. Lee and Dexter L. Lee) for recovery of sum of money and damages with prayerfor
writ of preliminary attachment before the RTC of Pasay City.

In their complaint, PNB alleged in detail the fraudulent acts and misrepresentations committed by respondents in obtaining PNB’s
conformity to the CTS Facility Agreements and the release of various sums to respondents in the total amountof ₱974,377,159.10.
PNB accused respondents of falsely representing that they have valid and subsisting contracts to sell, which evidently showed they
had no intention to pay their loan obligations. The Verification and Certification of Non-Forum Shopping attached to the complaint
was signed byPNB’s Senior Vice-president of the Remedial Management Group, Aida Padilla, who likewise executed an "Affidavit in
Support of the Application for the Issuance of the Writ of Preliminary Attachment."

Proceedings in the Pasay

City RTC (Civil Case No.
R-PSY-10-04228-CV)

On August 25, 2010, the Pasay City RTC issued an Order 7 granting PNB’s application for issuance of preliminary attachment after
finding that defendants Globe Asiatique and Filmal "through the active participation or connivance/conspiracy of defendants Delfin
and Dexter Lee from the revealing evidence presented by plaintiff are guilty of fraud in contracting their outstanding loan applications
to plaintiff Philippine National Bank (PNB)." 8 The writ of preliminary attachment was accordingly issued on August 27, 2010 after
PNB complied withthe posting of attachment bond as ordered by the court. 9

Defendants Delfin Lee and DexterLee filed their Answer with Counterclaim with motion to dismiss,arguing that PNB has no cause of
action against them as there is nothing in the CTS Facility Agreements that suggest they are personally liable or serve as guarantors
for Globe Asiatique and Filmal, and that they were just sued as signatories of the CTS Facility Agreements. They likewise filed a
motion to discharge preliminary attachment.10

42
Defendants Globe Asiatique and Filmalalso filed their Answer with Counterclaim denying PNB’s allegationsof fraud and
misrepresentation particularly after PNB had accepted payments from the corporations. In their motion to discharge preliminary
attachment, Globe Asiatique and Filmal asserted that the allegations of fraud in the complaint are without basis and no proof was
presented by plaintiff on the existence of preconceived fraud and lack of intention to pay their obligations, citing their timely
payments made to PNB. They further assailed the affidavit executed by Aida Padilla who they claimed has no personal knowledge of
the subject transactions and there being no allegation of threat or possibility that defendant corporations will dispose oftheir properties
in fraud of their creditors.11

In its Order12 dated April 29, 2011, the Pasay City RTC denied defendants’ motion to dismiss, motions to discharge preliminary
attachment and to expunge or suspend proceedings, as well as PNB’s motion to expunge.

In succession, the parties in Civil Case No. R-PSY-10-04228-CV filed the following motions:

1) Defendants’ Motion for Reconsideration of the Order dated April 29, 2011 filed on May 27, 2011;

2) Plaintiff’s Motion to Set Case for Pre-trial Conference filed on June 8, 2011;

3) Plaintiff’s Motion for Summary Judgment filed on June 28, 2011;

4) Defendants’ Motion for Leave to Admit Attached Amended Answer with Compulsory Counterclaim filed on July 12,
2011;

5) Defendants’ Omnibus Motion (a) to discharge the writ of attachment on the ground of newly discovered evidence; (b) set
preliminary hearing on affirmative defenses pleaded in the amended answer; (c) issue preliminary attachment against plaintiff
on account of fraud in incurring the obligation as alleged in the amended answer; and (d) render partial summary judgment
on the compulsory counterclaim, filed on July 26, 2011;

6) Defendants’ Motion for Reconsideration of the Order dated July 29, 2011, with Motion to Continue with the Proceedings
Involving Defendants’ Omnibus Motion, filed on August 31, 2011; 7) Defendants’ Motion to Set for Hearing their earlier
motion to discharge the writ of attachment filed on January 24, 2012; and

8) Plaintiff’s Motion to Expunge defendants’ Reply (on defendants’ motion to set hearing) filed on April 30, 2012.

Meanwhile, and before the Pasay City RTC could act upon the foregoing motions, defendants Globe Asiatique, Filmal, Delfin S. Lee
and Dexter L. Lee filed on August 10, 2011 a complaint13 for Damages in the RTC of Pasig City, Branch 155 docketed as Civil Case
No. 73132.

On May 18, 2012, the Pasay City RTC issued an Order 14 resolving the pending motions, as follows:

WHEREFORE, the motion for reconsideration of the Order dated 27 May 2011 is denied insofar as the prayer to reconsider denial of
the motion to dismiss. However, the prayer to expunge the Manifestation filed on 26 November 2010 is granted thus, the
Manifestation is expunged.

The motion for leave and to admit amended answer is denied. The motion for reconsideration of the Order dated 29 July 2011 is
likewise denied. The other prayers in the omnibus motion to set preliminary hearing of affirmative defenses in the amended answer,
issuance of preliminary attachment based thereon and for partial summary judgment on the compulsory counterclaims in the amended
answer are denied. Plaintiff’s motion to expunge defendants’ reply is likewise denied.

Hearing on plaintiff’s motion for summary judgment is set on 19 June 2012 at 8:30 a.m., while hearing on defendants’ motion to
discharge the writ of preliminary attachmentis set on 26 June 2012 at 8:30 a.m.

Action on plaintiff’s motion to set the case for pre-trial is deferred until after resolution of the motion for summary judgment.

SO ORDERED.15

Pasig City RTC Case

(Civil Case No. 73132)

In their Complaint against Judge Pedro De Leon Gutierrez and Aida Padilla (both sued in their personal capacity), respondents
claimed that Globe Asiatique and Filmal are well-known and successful real estate developers whose projects were "being
continuously supported by various banks and other financial institutions prior to the malicious and devastating unfounded civil action"
filed by AidaPadilla (petitioner) which wrought havoc to their businesses and lives. As to the CTS Facility Agreements with PNB,
respondents alleged that these were already novated by the parties who agreed upon a term loan starting May 31, 2010 and to expire
on April 30, 2012. But despite her knowledge of such novation and that the obligation was not yet due and demandable, petitioner
with malice and evident bad faith still executed a "perjured" Affidavit in support of the application for writ of preliminary attachment
before the Pasay City RTC. Respondents likewise sought to hold Judge Gutierrez personally liable for issuing the writ of preliminary
attachment in favor of PNB notwithstanding that the obligation subject of PNB’s complaint was sufficiently secured by the value of
realproperties sold to it by virtue of the CTS Facility Agreements and deeds ofassignment of accounts receivables.

43
They further contended that Judge Gutierrez blindly approved the attachment bond offered by PNB’s sister company, PNB General
Insurers Company, Inc. despite the fact that from its submitted documents, said insurer’s authorized capital stock isonly ₱400 million
while its paid-up capital is only ₱312.6 million, which is way below the ₱974,377,159.10 attachment bond it issued.

Respondents thus prayed for a judgment ordering petitioner and Judge Gutierrez to pay moral damages, exemplary damages, litigation
expenses, attorney’s fees and cost of suit.

Judge Gutierrez moved to dismiss16 the complaint against him on the following grounds: (1) respondents haveno cause of action
against him; and (2) the Pasig City court has no jurisdiction over the case and his person, movant being of co-equal and concurrent
jurisdiction.

Petitioner filed her Answer With Compulsory Counterclaims, 17 praying for the dismissal of respondents’ complaint on the following
grounds: (1) submission of a false certification of non-forum shopping by respondents and their blatant commission of willful,
deliberate and contumacious forum shopping (respondents failed to disclose a criminal complaint entitled "Tbram Cuyugan v. Aida
Padilla and Members of the Board of Directors of PNB", docketed as I.S. No. XV-13-INV-11-H-01208 pending before the office of
the CityProsecutor of Pasay City); (2) litis pendentia; (3) respondents’ failure to attach the alleged actionable document, i.e.the
supposed "new term loan", inviolation of Section 7, Rule 8 of the Rules of Court; (4) failure to state a cause of action against
petitioner; and (5) petitioner cannot be held personally liable for her official acts done for and in behalf of PNB.

On January 5, 2012, petitioner filed a motion for preliminary hearing on affirmative defenses, contending that respondents are
parroting the very same arguments raised and relying on the same evidence they presented before the Pasay City RTC to establish the
alleged novation and purported insufficiency of the attachment bond,which issues are still pending in the said court. It was thus
stressed that respondents are evidently guilty of forum shopping. 18

Respondents filed their Comment/Opposition,19 arguing that there is nothing in their complaint that would slightly suggest they are
asking the Pasig City RTC to issue any injunction or otherwise issue an order setting aside the writ of preliminary attachmentissued by
the Pasay City RTC, and neither did they ask for a ruling on whether said writ is illegal or whether Judge Gutierrez committed a grave
abuse of discretion.They asserted that what they seek from the Pasig City RTC is to allow them to recover damages from Judge De
Leon for his tortious action in approving PNB’s attachment bond. They also insisted that forum shopping and litis pendentiaare absent
in this case, contrary to petitioner’s claims. Respondents likewise opposed 20 the motion to dismiss filed by Judge Gutierrez, citing this
Court’s ruling in J. King & Sons Company, Inc. v. JudgeAgapito L. Hontanosas, Jr. 21 in support of their position that the separate
complaint before another forum against the judge for his actionable wrong in a pending case before him can proceed independently
without necessarily interfering with the court’s jurisdiction, as what happened in the said case where the judge was merely penalized
for gross misconduct and gross ignorance of the law without actually invalidating the judge’s order approving the counter-bond
without reviewing the documents presented.

In her Reply,22 petitioner reiterated her previous arguments and additionally contended that in any event, there is no basis for
respondents’ claim for damages arising from the issuance of the writ of preliminary attachment before the Pasay City RTC
considering that PNBGEN Bond No. SU-JC14-HO-10-0000001-00 is valid and sufficient to secure and answer for whatever damages
respondents may have suffered by reason of such issuance should it be finally decided that PNB was not entitled to the said bond.

On April 2, 2012, the RTC of Pasig City issued an Order 23 dismissing Civil Case No. 73132 for lack of jurisdiction.

On May 7, 2012, petitioner filed a Motion to Set Counterclaims for Pre-Trial Conference.24

On October 22, 2012, the Pasig CityRTC denied respondents’ motion for reconsideration of the April 2, 2012 Order dismissing their
complaint.25 Respondents filed a Notice of Appeal26 under Section 1(a), Rule 41 of the Rules of Court.

On November 12, 2012, the Pasig City RTC issued the first questioned Order, which reads:

xxxx

Records show that this Court, through then Acting Presiding Judge Amorfina Cerrado-Cezar, issued an Order dated April 2, 2012,
dismissing the case on the ground that issues involved in this case already impinge upon the validity of the Order dated August 25,
2010 and Writ of Attachment dated August 27, 2010 issued by the Regional Trial Court, Branch 119, Pasay City, a court of concurrent
and coordinate jurisdiction, in Civil Case No. R-PSY-10-04228 entitled "Philippine National Bank vs. Globe Asiatique Realty
Holdings Corp. et al." The ruling in said Order dated April 2, 2012, was affirmed by this Court per its Order dated October 22, 2012,
whereby it reiterated that acting on the plaintiffs’ Complaint is a brazen violation of the principle of judicial stability, which
essentially states that the judgment or order of a court of competent jurisdiction may not be interfered with by any court of concurrent
jurisdiction for the simple reason that the power to open, modify or vacate the said order is not only possessed but is restricted to the
court in which the judgment or order is rendered or issued. (Cojuangco vs. Villegas, 184 SCRA 374)

The foregoing principles are equally applicable to the counterclaims of Aida Padilla. Indeed, to hear the counterclaims of defendant
Aida Padilla will open the door, so to speak, for the plaintiffs to interpose as ostensibledefenses its claims regarding the alleged
illegality of the aforesaid orders and writ of attachment issued by the RTC of Pasay City. In effect this Court will be forced to dwell
upon issues involving the pending civil case in the RTC Branch 199, Pasay City, thereby interfering, albeit indirectly, with said
issues.This is precisely the very evil which the Court sought to avoid when it dismissed the plaintiffs’ complaint. Therefore, upholding
once more the principle of judicial stability, this Court is impelled to refuse to hear the counterclaims of defendant Padilla.

44
WHEREFORE, premises considered, the instant Motion filed by defendant Aida Padilla is DENIED without prejudice to the re-filing
of defendant Aida Padilla’s causes of action against herein plaintiffs after final resolution of Civil Case No. R-PSY-10-04228 entitled
"Philippine National Bank vs. Globe Asiatique Realty Holdings Corp, et al."

SO ORDERED. (Emphasis supplied.)

Petitioner’s motion for reconsideration was likewise denied under the second assailed Order 27 dated May 8, 2013, as follows:

xxxx

Defendant Padilla argues that this Court has jurisdictional competence and authority to resolve her counterclaims notwithstanding the
dismissal of the Complaint dated August 10, 2011 for violation of the principle of judicial stability. The resolution of her compulsory
counterclaims will not require this Court to look into or pass upon the validity of the acts of the Regional Trial Court of Pasay City,
Branch 119 in issuing the Writ of Attachment dated August 27, 2010. Defendant Padilla’s counterclaims arose directly from the
malicious filing by the plaintiffs of the Complaint and are compulsory counterclaims which must be raised and resolved in the same
action as the Complaint.

The Court remains unpersuaded of the propriety of proceeding to hear defendant Padilla’s counterclaims.

As movant herself stated, the grant of her counterclaim calls for the determination of the issue of whether or not herein plaintiffs had
maliciously filed the above-entitled Complaint against defendants. Necessarily, the Court in threshing out such issue would be
constrained to rule on whether the plaintiffs filed their complaint with a sinister design knowing fully wellthat their cause of action
was baseless. Thus, the Court would have to pass upon the veracity or genuineness of plaintiffs’ claims thatthey were unjustly injured
by the orders and processes issued by RTC Branch 119, Pasay City, in Civil Case No. R-PSY-10-04228entitled "Philippine National
Bank vs. Globe Asiatique Realty Holdings Corp. et al." Hence, whatever ruling this Court may arrive at on said issues would
inevitably impinge upon matters already pending before the RTC Branch 119, Pasay City.

Once more, under the principle of juridical stability, the Court is constrained to refuse to hear defendant Padilla’s counterclaims.
Verily, this Court cannot allow itself to interfere – either directly, as desired by plaintiff, or indirectly, as defendant Padilla would have
it – with the acts of a co-equal court.

WHEREFORE, premises considered, the instant Motion for Reconsideration filed by defendant Aida Padilla is hereby DENIED
without prejudice to the re-filing of defendant Aida Padilla’s causes of action against herein plaintiffs after resolution of Civil Case
No. R-PSY-10-04228 entitled "Philippine National Bank vs. Globe Asiatique Realty Holdings Corp. et al."

SO ORDERED. (Emphasis supplied.)

The Petition

Petitioner came directly to this Court raising the primordial legal issue of whether or not a court can take cognizance of a compulsory
counterclaim despite the fact that the corresponding complaint was dismissed for lack of jurisdiction.

The present petition was de-consolidated from seven other petitions involving respondents and their transactions with Home
Development Mutual Fund, as well as the pending criminal complaints arising therefrom. 28

The Court’s Ruling

Before we resolve the legal question presented, we first address the issue of propriety of petitioner’s resort to Rule 45.

Respondents are incorrect in arguing that petitioner adopted the wrong mode of appeal, stating that the remedy from the dismissal of
her counterclaims without prejudice is a petition for certiorari under Rule 65 and not an appeal under Rule 45.

There is no dispute with respect to the fact that when an appeal raises only pure questions of law, this Court has jurisdiction to
entertain the same.29 Section 1, Rule 45 of the 1997 Rules of Civil Procedure, as amended, provides:

SECTION 1. Filing of petition with Supreme Court. – A party desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals,the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file
with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be
distinctly set forth.

In Republic v. Sunvar Realty Development Corporation, 30 this Court held:

Respondent Sunvar argued that petitioners’ resort to a Rule 45 Petition for Review on Certioraribefore this Court is an improper mode
of review of the assailed RTC Decision. Allegedly, petitioners should have availed themselves of a Rule 65 Petition instead, since the
RTC Decision was an order of dismissal of the Complaint, from which no appeal can be taken except by a certiorari petition.

The Court is unconvinced of the arguments of respondent Sunvar and holds that the resortby petitioners to the present Rule 45 Petition
is perfectly within the bounds of our procedural rules.
45
As respondent Sunvar explained, noappeal may be taken from an order of the RTC dismissing an action without prejudice, but the
aggrieved party may file a certiorari petition under Rule 65. Nevertheless, the Rules do not prohibit any of the parties fromfiling a
Rule 45 Petition with this Court, in case only questions of law are raised or involved. This latter situation was one that petitioners
found themselves in when they filed the instant Petition to raise only questions of law. In Republic v. Malabanan, the Court clarified
the three modes of appeal from decisions of the RTC, to wit: (1) by ordinary appeal or appeal by writ of error under Rule 41, whereby
judgment was rendered in a civil or criminal action by the RTC in the exercise of its original jurisdiction; (2) by a petition for review
under Rule 42, whereby judgment was rendered by the RTC in the exercise of its appellate jurisdiction; and (3) by a petition for
review on certioraribefore the Supreme Court under Rule 45. "The first mode of appeal istaken to the [Court of Appeals] on questions
of fact or mixed questions of fact and law. The second mode of appeal is brought to the CA on questions of fact, of law, or mixed
questions of fact and law. The third mode of appeal is elevated to the Supreme Court only on questions of law." (Emphasis supplied.)

There is a question of law when the issue does not call for an examination of the probative value of the evidence presented or of the
truth or falsehood of the facts being admitted, and the doubt concerns the correct application of law and jurisprudence on the matter.
The resolution of the issue must rest solely on what the law provides on the given set of circumstances.

In the instant case, petitioners raise only questions of law with respect to the jurisdiction of the RTC to entertain a certioraripetition
filed against the interlocutory order of the MeTC in an unlawful detainer suit. At issue in the present case is the correct application of
the Rules on Summary Procedure; or, more specifically, whether the RTC violated the Rules when it took cognizance and granted the
certioraripetition against the denial by the MeTC of the Motion to Dismiss filed by respondent Sunvar. This is clearly a question of
law that involves the proper interpretation of the Rules on Summary Procedure. Therefore, the instant Rule 45 Petition has been
properly lodged with this Court.

In this case, petitioner raises the lone issue of whether the Pasig City RTC was correct in refusing to hear her counterclaims after the
dismissal of respondents’ complaint for lack of jurisdiction. Said issue involves the proper interpretation of the 1997 Rules of Civil
Procedure, as amended, specifically on whether the dismissal of the complaint automatically results in the dismissal of counterclaims
pleaded by the defendant. Since this is clearly a question of law, petitioner appropriately filed in thisCourt a Rule 45 petition.

On the lone issue raised in the petition, we rule for the petitioner.

A counterclaim is any claim which a defending party may have against an opposing party. 31 It is in the nature of a cross-complaint; a
distinct and independent cause of action which, though alleged in the answer, is not part of the answer. 32

Counterclaims may be either compulsory or permissive. Section 7, Rule 6 of the 1997 Rules of Civil Procedure provides:

SEC. 7. Compulsory counterclaim.– 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. Such a counterclaim must be
within the jurisdiction of the court both as to the amount and the nature thereof, except that in an original action before the Regional
Trial Court, the counterclaim may be considered compulsory regardless of the amount.

In this case, petitioner’s counterclaim for damages raised in her answer before the Pasig City RTC iscompulsory, alleging suffering
and injury caused to her as a consequence of the unwarranted filing of the baseless complaint filed byrespondents. Said court,
however, dismissed her counterclaim upon the same ground of lackof jurisdiction as its resolution supposedly would entail passing
upon the validity of orders and processes still pending before the Pasay City RTC. In Metals Engineering Resources Corp. v. Court of
Appeals,33 we reversed the trial court’s order allowing private respondent to proceed with the presentation of his evidence in support
of his counterclaim after the complaint was dismissed for not paying the correct docket fee and hence the trial court did not acquire
jurisdiction over the case. We held that if the court does not have jurisdiction to entertain the main action of the case and dismisses the
same, then the compulsorycounterclaim, being ancillary to the principal controversy, must likewise be dismissed since no jurisdiction
remained for any grant of relief under the counterclaim. 34

Under the 1997 Rules of Civil Procedure, it is now explicitly provided that the dismissal of the complaint due tofailure of the plaintiff
to prosecute his case is "without prejudice to the rightof the defendant to prosecute his counterclaim in the same or in a separate
action."35 The effect of this amendment on previous rulings on whether the dismissal of a complaint carries with it the dismissal of the
counterclaims as well, was discussed in the case of Pinga v. The Heirs of German Santiago,36 thus:

Similarly, Justice Feria notes that "the present rule reaffirms the right of the defendant to move for the dismissal of the complaint and
to prosecute his counterclaim, as stated in the separate opinion [of Justice Regalado in BA Finance.] Retired Court of Appeals Justice
Herrera pronounces that the amendment to Section 3, Rule 17 settles that "nagging question" whether the dismissal of the complaint
carries with it the dismissal of the counterclaim, and opines that by reason of the amendments, the rulings in Metals Engineering,
International Container, and BA Finance"may be deemed abandoned." On the effect of amendment to Section 3, Rule 17, the
commentators are in general agreement, although there is less unanimity of views insofar as Section 2, Rule 17 is concerned.

To be certain, when the Court promulgated the 1997 Rules of Civil Procedure, including the amended Rule 17, those previous jural
doctrines that were inconsistent with the new rules incorporated in the 1997 Rules of Civil Procedure were implicitly abandoned
insofar as incidents arising after the effectivity of the new procedural rules on 1 July 1997. BA Finance, or even the doctrine that a
counterclaim may be necessarily dismissed along with the complaint, clearly conflicts with the 1997 Rules of Civil Procedure. The
abandonment of BA Financeas doctrine extends as far back as 1997, when the Court adopted the new Rules of Civil Procedure. … we
thus rule that the dismissal of a complaint due to fault of the plaintiff is without prejudice to the right of the defendant to prosecute any
pending counterclaims ofwhatever nature in the same or separate action. We confirm that BA Financeand all previous rulings of the
Court that are inconsistent with this present holding are now abandoned. (Emphasis supplied.)
46
Subsequently, in Perkin Elmer Singapore Pte Ltd. v. Dakila Trading Corporation 37 this Court held that while the declaration in Pinga
refers to instances covered by Section 3, Rule 17 on dismissal of complaints due to the fault of plaintiff, it does not preclude the
application of the same rule when the dismissal was upon the instance of defendant who correctly argued lack of jurisdiction over its
person.Further, in stark departure from Metals Engineering, we declared that the court’s jurisdiction over respondent’s complaint is
not to be confusedwith jurisdiction over petitioner’s counterclaim, viz:

….Petitioner seeks to recover damages and attorney’s fees as a consequence of the unfounded suitfiled by respondent against it. Thus,
petitioner’s compulsory counterclaim isonly consistent with its position that the respondent wrongfully filed a case against it and the
RTC erroneously exercised jurisdiction over its person.

Distinction must be made in Civil Case No. MC99-605 as to the jurisdiction of the RTC over respondent’s complaint and over
petitioner’s counterclaim – while it may have no jurisdiction over the former, it may exercise jurisdiction over the latter. The
compulsory counterclaim attached to petitioner’s Answer ad cautelamcan be treated as a separate action, wherein petitioner is the
plaintiff while respondent is the defendant. Petitioner could have instituted a separate action for the very same claims but, for the sake
of expediency and to avoid multiplicity of suits, it chose to demand the samein Civil Case No. MC99-605. Jurisdiction of the RTC
over the subject matter and the parties in the counterclaim must thus be determined separately and independently from the jurisdiction
of the samecourt in the same case over the subject matter and the parties in respondent’s complaint. 38 (Emphasis supplied.)

Still anchored on the pronouncement in Pinga, we then categorically ruled that a counterclaim arising from the unfounded suit may
proceed despite the dismissal of the complaint for lack of jurisdiction over the person of defendant-counterclaimant, thus:

Also in the case of Pinga v. Heirs of German Santiago, the Court discussed the situation wherein the very filing of the complaint by
the plaintiff against the defendant caused the violation of the latter’s rights. As to whether the dismissal of such a complaint should
also include the dismissal of the counterclaim, the Court acknowledged that said matter is still debatable, viz:

Whatever the nature of the counterclaim, it bears the same integral characteristics as a complaint; namely a cause (or causes) of action
constituting an act or omission by which a party violates the right of another. The main difference lies in that the cause of action in the
counterclaim is maintained bythe defendant against the plaintiff, while the converse holds true with the complaint. Yet, as with a
complaint, a counterclaim without a cause of action cannot survive.

x x x if the dismissal of the complaint somehow eliminates the cause(s) of the counterclaim, then the counterclaim cannot survive. Yet
that hardly is the case, especially as a general rule. More often than not, the allegations that form the counterclaim are rooted in an act
or omission of the plaintiff other than the plaintiff’s very act of filing the complaint. Moreover, such acts or omissions imputed to the
plaintiff are often claimed to have occurred prior to the filing of the complaint itself.The only apparent exception to thiscircumstance
is if it is alleged in the counterclaim that the very act of the plaintiff in filing the complaint precisely causes the violation of the
defendant’s rights. Yet even in such an instance, it remains debatable whether the dismissal or withdrawal of the complaint is
sufficient to obviate the pending cause of action maintained by the defendant against the plaintiff.

Based on the aforequoted ruling of the Court, if the dismissal of the complaint somehow eliminates the cause of the counterclaim, then
the counterclaim cannot survive. Conversely, if the counterclaim itself states sufficient cause of action then it should stand
independently of and survive the dismissal of the complaint. Now, having been directly confronted with the problem of whether the
compulsory counterclaim by reason of the unfounded suit may prosper even if the maincomplaint had been dismissed, we rule in the
affirmative.

It bears to emphasize that petitioner’s counterclaim against respondent is for damages and attorney’s fees arising from the unfounded
suit. While respondent’s Complaint against petitioner is already dismissed, petitioner may have very well already incurred damages
and litigation expenses such as attorney’s fees since it was forced to engage legal representation in the Philippines to protect its rights
and to assert lack of jurisdiction of the courts over its person by virtue of the improper service of summons upon it. Hence, the cause
of action of petitioner’s counterclaim is not eliminated by the mere dismissal of respondent’s complaint.

It may also do well to rememberthat it is this Court which mandated that claims for damages and attorney’s fees based on unfounded
suit constitute compulsory counterclaim which must be pleaded in the same action or, otherwise, it shall be barred. It will then be
iniquitous and the height of injustice to require the petitioner to make the counterclaim in the present action, under threat of losing his
right to claim the same ever again in any other court, yet make his right totally dependent on the fate of the respondent’s complaint.

If indeed the Court dismisses petitioner’s counterclaim solely on the basis of the dismissal of respondent’s Complaint, then what
remedy is left for the petitioner? It can be said that he can still file a separate action to recover the damages and attorney’s fees based
on the unfounded suit for he cannot be barred from doing so since he did file the compulsory counterclaim in the present action, only
that it was dismissed when respondent’s Complaint was dismissed. However, this reasoning is highly flawed and irrational
considering that petitioner, already burdened by the damages and attorney’s fees itmay have incurred in the present case, must again
incur more damages and attorney’s fees in pursuing a separate action, when, in the first place, it should not have been involved in any
case at all.

Since petitioner’s counterclaim iscompulsory in nature and its cause of action survives that of the dismissal of respondent’s complaint,
then it should be resolved based on its own merits and evidentiary support.39 (Additional emphasis supplied.)

The above ruling was applied in Rizal Commercial Banking Corporation v. Royal Cargo Corporation 40 where we granted petitioner’s
prayer for attorney’s fees under its Compulsory Counterclaim notwithstanding the dismissal of the complaint.

47
In the present case, the RTC of Pasig City should have allowed petitioner’s counterclaim to proceed notwithstanding the dismissal of
respondents’ complaint, the same being compulsory in nature and with its cause not eliminated by such dismissal.It bears stressing
that petitioner was hailed to a separate court (Pasig City RTC) even while the dispute between PNB and respondents was still being
litigated, and she already incurred expenses defending herself, having beensued by respondents in her personal capacity. The
accusations hurled against her were serious (perjury and misrepresentation in executing the affidavit in support of the application for
writ of attachment before the Pasay City RTC) – with hints at possible criminal prosecution apart from that criminal complaint already
lodged in the Pasig City Prosecutor’s Office. The Pasig City RTC clearly erred in refusing to hear the counterclaims upon the same
ground for dismissal of the complaint, i.e.,lack of jurisdiction in strictobservance of the policy against interference with the
proceedings of a co-equal court.

Respondents contend that if petitioner is allowed to prove her counterclaims before the Pasay City RTC, they have no choice but to
justify their action in filing their case beforethe Pasig City RTC by going back to the allegations in their complaint that they are
merely vindicating themselves against the perjured affidavit executed by petitioner which led to the issuance of the illegal orders of
the Pasay City RTC that resulted to the damage and injury sustained by respondents. Obviously, respondents are invoking the same
principle of judicialstability which we find inapplicable insofar as petitioner’s counterclaim arising from respondents’ unfounded suit.
As petitioner set forth in her Compulsory Counterclaim, there is actually no necessity for the Pasig City RTC, in ruling on the merits
of the counterclaim, to pass upon the validity ofthe writ of attachment and related orders issued by the Pasay City RTC. Precisely,
petitioner faulted the respondents in prematurely, and in a contumacious act of forum shopping, filing a separate damage suit when
there is no final judicial determination yet of any irregularity in the attachment proceedings before the Pasay City RTC.

5.95. In this regard, it must be noted that in filing the present suit, plaintiffs’ goal is to have the Honorable Court reexamine and
review the pronouncements made by defendant JudgeGutierrez in the Pasay case.

With all due respect, the Honorable Court certainly has no such power over the Pasay Court which is a co-equal court. While the
power to determine whether or not a judgment or order is unjust is a judicial function, the hierarchy of courts should be respected:

"To belabor the obvious, the determination of whether or not a judgment or order is unjust – or was (or was not) rendered within the
scope of the issuing judge’s authority, or that the judge had exceeded his jurisdiction and powers or maliciously delayed the
disposition of a case – is an essentially judicial function, lodged by existing law and immemorial practice in a hierarchy of courts and
ultimately in the highest court of the land. To repeat, no other entity or official of the Government, not the prosecution or investigation
service or any other branch, nor any functionary thereof, has competence to review a judicial order or decision – whether final and
executory or not – and pronounce it erroneous soas to lay the basis for a criminal or administrative complaint for rendering an unjust
judgment or order. That prerogative belongs to the courts alone." [Emphasis supplied]

5.96. Accordingly, since there is no "final judicial pronouncement" yet on whether the filing of the PNB Complaintand the issuance of
the writ of preliminary attachment violate any law, neither is there any basis for defendant Padilla to be held liable for damages on
account of her official acts as Head of the Remedial Management Group of PNB.1âwphi1

5.97. Clearly, the filing of this baseless, if not contemptuous, suit is nothing but a continuation of plaintiffs’ fraudulent attempt to
evade the payment of undeniably due and demandable obligations. Accordingly, the complaint against defendant Padilla should be
dismissed for utter lack of merit.41 (Emphasis supplied.)

Ironically, while it is the respondents who erroneously and maliciously asked the Pasig City RTC to pass upon these issues still
pending in a co-equal court, for which reason the said court dismissed their complaint, petitioner was notallowed to prove her
counterclaim by reason of the unfounded suit in the same case aspurportedly it will entail verifying respondents’ claim that they were
prejudiced by the orders and processes in the Pasay City RTC. This situation exemplifies the rationale in Perkin Elmer Singapore Pte
Ltd.42 on requiring the petitioner to make the counterclaim in the present action, under threat of losing such right to claim the same
ever again any other court, yet make such right of the petitioner totally dependent on the fate of the respondents’ complaint.

As fittingly expressed by petitioner in her Reply:

Pertinently, it is relevant to note that respondents never denied in their Commentthat the institution of the case a quowas premature
and violated the principle of judicial stability. Stated otherwise, respondents admit that they are the ones who have invited the court a
quo to interfere with the rulings of the Pasay Court, which fortunately, the former refused to do so. To allow the respondents to cite
their own unlawful actions as a shield against the harm that they have inflicted upon petitioner Padilla would indubitably allow the
respondents to profit from their own misdeeds. With due respect, this cannot be countenanced by the Honorable
Court.43 WHEREFORE, the petition is GRANTED. The Orders dated November 12, 2012 and May 8, 2013 of the Regional Trial
Court of Pasig City, Branch 155 in Civil Case No. 73132 are hereby REVERSED and SET ASIDE. Said court is hereby directed to
proceed with the presentation of evidence in support of the compulsory counterclaim of petitioner Aida Padilla.

SO ORDERED

48
G.R. No. 197380 October 8, 2014

ELIZA ZUNIGA-SANTOS,* represented by her Attorney-in Fact, NYMPHA Z. SALES, Petitioners,

vs.
MARIA DIVINA GRACIA SANTOS-GRAN** and REGISTER OF DEEDS OF MARIKINA CITY, Respondents.

DECISION

PERLAS-BERNABE, J.:

Before the Court is a petition for review on certiorari1 assailing the Decision2 dated January 10, 2011 and the Resolution3 dated June
22, 2011 of the Court of Appeals (CA) in CA-G.R. CV No. 87849 which affirmed the Order4dated July 6, 2006 of the Regional Trial
Court of San Mateo, Rizal, Branch 76 (RTC) in Civil Case No. 2018-06, dismissing the Amended Complaint for annulment of sale
and revocation of title on the ground of insufficiency of factual basis.

The Facts

On January 9, 2006, petitioner Eliza Zuñiga-Santos (petitioner), through her authorized representative, Nympha Z. Sales,5 filed a
Complaint6 for annulment of sale and revocation of title against respondents Maria Divina Gracia Santos-Gran (Gran) and the Register
of Deeds of Marikina City before the RTC, docketed asCivil Case No. 2018-06. The said complaint was later amended7 on March 10,
2006 (Amended Complaint).

In her Amended Complaint,8 petitioner alleged, among others, that: (a) she was the registered owner of three (3) parcels of land
located in the Municipality of Montalban, Province of Rizal, covered by Transfer Certificate of Title (TCT) Nos. N-
5500,9 224174,10 and N-423411 (subject properties) prior to their transfer in the name of private respondent Gran; (b) she has a second
husband by the name ofLamberto C. Santos (Lamberto), with whom she did not have any children; (c) she was forced to take care of
Lamberto’s alleged daughter, Gran, whose birth certificate was forged to make it appear that the latter was petitioner’s daughter; (d)
pursuant to void and voidable documents, i.e., a Deed of Sale, Lamberto succeeded in transferring the subject properties in favor of
and in the name of Gran; (e) despite diligent efforts, said Deed of Sale could not be located; and (f) she discovered that the subject
properties were transferred to Gran sometime in November 2005. Accordingly, petitioner prayed, inter alia, that Gran surrender to her
the subject properties and pay damages, including costs of suit. 12

For her part, Gran filed a Motion to Dismiss,13 contending, inter alia, that (a) the action filed by petitioner had prescribed since an
action upon a written contract must be brought within ten (10) years from the time the cause of action accrues, or in this case, from the
time of registration of the questioned documents before the Registry of Deeds; 14 and (b) the Amended Complaint failed to state a
cause of action as the void and voidable documents sought to be nullified were not properly identified nor the substance thereof set
forth, thus, precluding the RTC from rendering a valid judgment in accordance withthe prayer to surrender the subject properties.15

The RTC Ruling

In an Order16 dated July 6, 2006, the RTC granted Gran’s motion and dismissed the Amended Complaint for its failure to state a cause
of action, considering that the deed of sale sought to be nullified – an "essential and indispensable part of [petitioner’s] cause of
action"17 – was not attached. It likewise held that the certificates oftitle covering the subject properties cannot be collaterally attacked
and that since the action was based on a written contract, the same had already prescribed under Article 1144 of the Civil Code. 18

Dissatisfied, petitioner elevated the matter to the CA.

The CA Ruling

In a Decision19 dated January 10, 2011, the CA sustained the dismissal of petitioner’s Amended Complaint buton the ground of
insufficiency of factual basis. It disagreed with the RTC’s findingthat the said pleading failed to state a cause of action since it had
averred that: (a) petitioner has a right over the subject properties being the registered owner thereof prior to their transfer in the name
of Gran; (b) Lamberto succeeded in transferring the subject properties to his daughter, Gran, through void and voidable documents;
and (c) the latter’s refusal and failure to surrender to her the subject properties despite demands violated petitioner’s rights over
them.20 The CA likewise ruled that the action has not yet prescribed since an action for nullity of void deeds of conveyance is
imprescriptible.21 Nonetheless, it held that since the Deed of Sale sought to be annulled was not attached to the Amended Complaint, it
was impossible for the court to determine whether petitioner’s signature therein was a forgery and thus, would have no basis to order
the surrender or reconveyance of the subject properties. 22

Aggrieved, petitioner moved for reconsideration23 and attached, for the first time, a copy of the questioned Deed of Sale 24 which she
claimed to have recently recovered, praying that the order of dismissal be set aside and the case be remanded to the RTC for further
proceedings.

In a Resolution25 dated June 22, 2011, the CA denied petitioner’s motion and held that the admission of the contested Deed of Sale at
this late stage would be contrary to Gran’s right to due process.

Hence, the instant petition.

The Issue Before the Court

49
The primordial issue for the Court’s resolution is whether or not the dismissal of petitioner’s Amended Complaint should be sustained.

The Court’s Ruling

Failure to state a cause of action and lack of cause of action are distinct grounds to dismiss a particularaction. The former refers to the
insufficiency of the allegations in the pleading, while the latter to the insufficiency of the factual basis for the action. Dismissal for
failure to state a cause of action may be raised at the earliest stages of the proceedings through a motion to dismiss under Rule16 of
the Rules of Court, while dismissal for lack of cause of action may be raised any time after the questions of fact have been resolved on
the basis of stipulations, admissions or evidence presented by the plaintiff.26 In Macaslang v. Zamora,27 the Court, citing the
commentary of Justice Florenz D. Regalado, explained:

Justice Regalado, a recognized commentator on remedial law, has explained the distinction:

x x x What is contemplated, therefore, is a failure to statea cause of action which is provided in Sec. 1(g) of Rule 16. This is a matter
of insufficiency of the pleading. Sec. 5 of Rule 10, which was also included as the last mode for raising the issue to the court, refers to
the situation where the evidence does not provea cause of action. This is, therefore, a matter of insufficiency of evidence. Failure to
state a cause of action is different from failure to prove a cause of action. The remedy in the first is to move for dismissal of the
pleading, whilethe remedy in the second is to demur to the evidence, hence reference to Sec. 5 of Rule 10 has been eliminated in this
section. The procedure would consequently be to require the pleading to state a cause of action, by timely objection to its deficiency;
or, at the trial, to file a demurrer to evidence, if such motion is warranted.28

In the case at bar, both the RTC and the CA were one in dismissing petitioner’s Amended Complaint, but varied on the grounds
thereof – that is, the RTC held that there was failure tostate a cause of action while the CA ruled that there was insufficiency of factual
basis.

At once, it is apparent that the CA based its dismissal on an incorrect ground. From the preceding discussion, it is clear that
"insufficiency of factual basis" is not a ground for a motion to dismiss. Rather, it is a ground which becomes available only after the
questions of fact have been resolved on the basis of stipulations, admissions or evidence presented by the plaintiff. The procedural
recourse to raise such ground is a demurrer to evidence taken only after the plaintiff’s presentation of evidence. This parameter is clear
under Rule 33 of the Rules of Court: RULE 33

Demurrer to Evidence

Section 1. Demurrer to evidence. — After the plaintiff has completed the presentation of his evidence, the defendant may move for
dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. If his motion isdenied he shall have
the right to present evidence. If the motion is granted but on appeal the order of dismissal is reversed he shall be deemed to have
waived the right to present evidence.

At the preliminary stages of the proceedings, without any presentation of evidence even conducted, it is perceptibly impossible to
assess the insufficiency of the factual basis on which the plaintiff asserts his cause of action, as in this case. Therefore, that ground
could not be the basis for the dismissal of the action.

However, the Amended Complaint is still dismissible but on the ground of failure to state a cause of action, as correctly held by the
RTC. Said ground was properly raised by Granin a motion to dismiss pursuant to Section 1, Rule 16 of the Rules of Court:

RULE 16
Motion to Dismiss

Section 1. Grounds. — Within the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to
dismiss may be made on any of the following grounds:

xxxx

(g) That the pleading asserting the claim states no cause of action;

xxxx

A complaint states a cause of action if it sufficiently avers the existence of the three (3) essential elements of a cause of action,
namely: (a) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (b) an obligation on the
part of the named defendant to respect or not to violate such right; and (c) an act or omission on the part of the named defendant
violative of the right of the plaintiff or constituting a breach of the obligation of defendant tothe plaintiff for which the latter may
maintain an action for recovery of damages.29 If the allegations of the complaint do not state the concurrence of these elements, the
complaint becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of action. 30

It is well to point out that the plaintiff’s cause of action should not merely be "stated" but, importantly, the statement thereof should be
"sufficient." This is why the elementarytest in a motion to dismiss on such ground is whether or not the complaint alleges facts which
if true would justify the relief demanded.31 As a corollary, it has been held that only ultimate facts and not legal conclusions or
evidentiary facts are considered for purposes of applying the test.32 This is consistent with Section 1, Rule 8 of the Rules of Court
which states that the complaint need only allege the ultimate facts or the essential facts constituting the plaintiff’s cause of action. A
50
fact is essential if they cannot be stricken out without leaving the statement of the cause of action inadequate. 33 Since the inquiry is
into the sufficiency, not the veracity, of the material allegations, it follows that the analysis should be confined to the four corners of
the complaint, and no other.34

A judicious examination of petitioner’s Amended Complaint readily shows its failure to sufficiently state a cause of action. Contrary
to the findings of the CA, the allegations therein do not proffer ultimate facts which would warrant an action for nullification of the
sale and recovery of the properties in controversy, hence,rendering the same dismissible.

While the Amended Complaint does allege that petitioner was the registered owner of the subject properties in dispute, nothing in the
said pleading or its annexes would show the basis of that assertion, either through statements/documents tracing the rootof petitioner’s
title or copies of previous certificates of title registeredin her name. Instead, the certificates of title covering the said properties that
were attached to the Amended Complaint are in the name of Gran. At best, the attached copies of TCT Nos. N-5500 and N-4234 only
mention petitioner as the representative of Gran at the time of the covered property’s registration when she was a minor. Nothing in
the pleading, however, indicates that the former had become any of the properties’ owner. This leads to the logical conclusion that her
right to the properties in question – at least through the manner in which it was alleged in the Amended Complaint – remains
ostensibly unfounded. Indeed, while the facts alleged in the complaint are hypothetically admitted for purposes of the motion, it must,
nevertheless, be remembered that the hypothetical admission extends only to the relevant and material facts well pleaded in the
complaint as well as toinferences fairly deductible therefrom. 35 Verily, the filing of the motion to dismiss assailing the sufficiency of
the complaint does not hypothetically admit allegations of which the court will take judicial notice ofto be not true, nor does the rule
of hypothetical admission apply to legallyimpossible facts, or to facts inadmissible in evidence, or to facts that appear to be unfounded
by record or document included in the pleadings. 36

Aside from the insufficiency of petitioner’s allegations with respect to her right to the subject properties sought to be recovered, the
ultimate facts supposedly justifying the "annulment of sale," by which the reconveyance of the subject properties is sought, were also
insufficiently pleaded. The following averments in the Amended Complaint betray no more than an insufficient narration of facts:

6. That pursuant to a voidable [sic] and void documents, the second husband of the plaintiff succeed [sic] in transferring the above
TITLES in the name of MARIA DIVINAGRACIA SANTOS, who is (sic) alleged daughter of LAMBERTO C. SANTOS in violation
of Article 1409, Par. 2 of the Civil Code;

7. That the said properties [were] transferred to the said defendant by a Deed of Sale (DOS) to the said MARIA DIVINA GRACIA
SANTOS through a void documents [sic] considering that the seller is the alleged mother of defendant is also the buyer of the said
properties in favor of defendant;

8. x x x.

9. That the alleged sale and transfer of the said properties in favor of defendant was only discovered by [plaintiff’s] daughter
CYNTHIA BELTRAN-LASMARIAS when [plaintiff] has been requesting for financial assistance, considering that the said mother of
plaintiff [sic] has so many properties which is now the subject of this complaint;

10. That plaintiff then return on [to] the Philippines sometime [in] November, 2005 and discovered that all [plaintiff’s] properties
[had] been transferred to defendant MARIA DIVINA GRACIA SANTOS who is not a daughter either by consanguinity or affinity to
the plaintiff mother [sic];

11. That the titles that [were] issued in the name of MARIA DIVINAGRACIA SANTOS by virtue of the said alleged voidable and
void documents, should be annulled and cancelled as the basis of the transfer is through void and voidable documents;

x x x x37

Clearly, the claim that the sale was effected through "voidable and void documents" partakes merely of a conclusion of law that is not
supported by any averment of circumstances that will show why or how such conclusion was arrived at. In fact, what these "voidable
and void documents" are were not properly stated and/or identified. In Abad v. Court of First Instance of Pangasinan,38 the Court
pronounced that:

A pleading should state the ultimate facts essential to the rights of action or defense asserted, as distinguished from mere conclusions
of fact, or conclusions of law. General allegations thata contract is valid or legal, or is just, fair, and reasonable, are mere conclusions
of law. Likewise, allegations that a contract is void, voidable, invalid, illegal, ultra vires, or against public policy, without stating facts
showing its invalidity, are mere conclusions of law.39 (Emphases supplied)

Hence, by merely stating a legal conclusion, the Amended Complaint presented no sufficient allegation upon which the Court could
grant the relief petitioner prayed for. Thus, said pleading should be dismissed on the ground of failure to state cause of action, as
correctly held by the RTC.

That a copy of the Deed of Saleadverted to in the Amended Complaint was subsequently submitted by petitioner does not warrant a
different course of action.1âwphi1 The submission of that document was made, as it was purportedly "recently recovered," only on
reconsideration before the CA which, nonetheless, ruled against the remand of the case. An examination of the present petition,
however, reveals no counter-argument against the foregoing actions; hence, the Court considers any objection thereto as waived.

51
In any event, the Court finds the Amended Complaint’s dismissal to be in order considering that petitioner’s cause of action had
already prescribed.

It is evident that petitioner ultimately seeks for the reconveyance to her of the subject properties through the nullification of their
supposed sale to Gran. An action for reconveyance is one that seeks to transfer property, wrongfully registered by another, to its
rightful and legal owner.40 Having alleged the commission of fraud by Gran in the transfer and registration of the subject properties in
her name, there was, in effect, an implied trust created by operation of law pursuant to Article 1456 of the Civil Code which provides:

Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property comes.1âwphi1

To determine when the prescriptive period commenced in an action for reconveyance, the plaintiff’s possession of the disputed
property is material. If there is an actual need to reconvey the property as when the plaintiff is not in possession, the action for
reconveyance based on implied trust prescribes in ten (10) years, the reference point being the date of registration of the deed or the
issuance of the title. On the other hand, if the real owner of the property remains in possession of the property, the prescriptive period
to recover titleand possession of the property does not run against him and in such case,the action for reconveyance would be in the
nature of a suit for quieting of title which is imprescriptible. 41

In the case at bar, a reading ofthe allegations of the Amended Complaint failed to show that petitioner remained in possession of the
subject properties in dispute. On the contrary, it can be reasonably deduced that it was Gran who was in possession ofthe subject
properties, there being an admission by the petitioner that the property covered by TCT No. 224174 was being used by Gran’s mother-
in-law.42 In fact, petitioner’s relief in the Amended Complaint for the "surrender" of three (3) properties to her bolsters such
stance.43 And since the new titles tothe subject properties in the name of Gran were issued by the Registry of Deeds of Marikina on the
following dates: TCT No. 224174 on July 27, 1992, 44 TCT No. N-5500 on January 29, 1976,45 and TCT No. N-4234 on November 26,
1975,46 the filing of the petitioner’s complaint beforethe RTC on January 9, 2006 was obviously beyond the ten-year prescriptive
period, warranting the Amended Complaint’s dismissal all the same.

WHEREFORE, the petition is DENIED. The Decision dated January 10, 2011 and the Resolution dated June 22, 2011 of the Court of
Appeals in CA-G.R. CV No. 87849 are hereby AFFIRMEDwith MODIFICATION in that the Amended Complaint be dismissed on
the grounds of (a) failure to state a cause of action, and (b) prescription as herein discussed.

SO ORDERED.

52