Rule 1-3 Compilation

7/27/2019 Rule 1-3 Compilation

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Rule 1: General Provisions

1. G.R. No. L-51767 June 29, 1982

LETICIA CO, assisted by her husband MUI YUK KONG, in substitution of CITADELINSURANCE & SURETY CO., INC., plaintiff-appellee, vs. PHILIPPINE NATIONAL BANK,defendant-appellant.

Facts:

Standard executed a real estate mortgage in favor of PNB over titles of land as collateraland a chattel mortgage to its personal properties for a consideration which totals to P4,296,803.56. When Standard failed to pay its obligation, both the real estate as well as the chattelwas foreclosed. Meantime, Citadel wrote a letter to PNB stating its desire to redeem the propertycovered by TCT No. 54474, it being the alleged assignee of the right of redemption of Standardwith respect only to said property but the bank refused since the offer of Citadel was much lowerthan what the bank acquired from the foreclosure. Citadel then filed for an instant petition for theredemption of the said property and that PNB to accept it payment.

Issue: WON PNB is bound to accept payment which is considerably lower than what it acquiredfrom the foreclosure.

Held: No. The liberal posture adopted by the Supreme Court in permitting a tender of redemptionfor less than the full claims of the creditor (PNB) and allowing the redemptioner time to pay up thebalance of the claim is made in exercise of the Supreme Courts equity jurisdiction which can beexercised to prevent injustice from a technical adherence to the letter of the law.-When a bank grants a loan, secured by any collateral, what is of uppermost consideration tosuch lender is the borrowers capacity to pay according to the terms stipulated, and not really theacquisition of the collateral, if only to maintain the banks liquidity position as conveniently aspossible. Acquired assets generally add to liquidity problems of banks. The foreclosure of thesecurity is a measure of last resort, hence when by the exercise of the right of redemption, thebank can recover the money it has loaned, nothing could be more proper than to allow the

borrower to retain his property. Of course, peculiar instances are naturally excepted. That is whythis decision cannot be invoked as a precedent for other parties not exactly similarly situated asthe appellee in this case. Should there be any thought that Our resolution of this case is notstrictly according to legal principles, let everyone be reminded that this Court has inherent equityjurisdiction it can always exercise in settings attended by unusual circumstances to preventmanifest injustice that could result from bare technical adherence to the letter of the law andimprecise jurisprudence under it.

Consequently, it is but just and proper that PNB should be paid the full amount of P3,366,546.42without any interest as of March 11, 1976, when it refused a redemption legally and validlytendered. On the other hand, the amount of P1,621,970.00 tendered by CITADEL on March 5,1976 and which was deposited in a savings account, drawing interest apparently less than 12%p. a., in the name of PNB by order of the trial court should be computed to have earned legal in

terest or 12% p. a., compounded annually, since March 11, 1976, provided however that shouldsuch amount including the compounded interest at 12% p. a., so earned be less thanP3,366,546.42, petitioner herein should pay PNB such difference, and provided, on the otherhand, that with this arrangement, PNB does not have to account to CITADEL/LETICIA CO for anyof the rentals it had earned from the time it took possession of the property. In the final analysis,instead of PNB losing P1,744,576.42, under strict technical legal reasoning, as explained above,applying hereto the principle of unjust enrichment, which We deem in the peculiar circumstancesat this instant case to be the fairest way of resolving this controversy, it would still be paid bypetitioner a certain amount, not to mention what must be quite substantial and considerable, therentals the said bank it has earned, which it does not have to account for.
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While a redemptioner may be considered to have made a valid tender of payment by less thanthe creditors total claims, it will be inequitable that the PNB shall not get a full satisfaction of itscredit.-However, We are persuaded that all such considerations would render the result of this caseshort of what appears to be substantial justice in the light of the situation on hand. It strikes Us asrather unconscionable that by a literal application of the law and perphaps due to a mistake in theamount of the bid made by PNB, the bank would not get full satisfaction of its credit. Indeed, therewould be unjust enrichment on the part of the debtor-mortgagor in such an eventuality. Our senseof justice cannot permit such iniquitous advantage.

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

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

FACTS:

On April 1, 1993, mortgagee BAID decided to extrajudicially foreclose the Real EstateMortgage[1] executed by mortgagor PQL in the former's favor.Maningas, the Clerk of Court andEx-Officio Sheriff of Manila, issued a Notice of Extrajudicial Sale, scheduling the public auctionsale on May 26, 1993 at 10:00 o'clock a.m. in front of the City Hall Building, Manila. Supena,President of Mortgagee BPI Agricultural Development Bank charges respondent de la Rosa withgross ignorance of the law for issuing an unlawful Order, in Foreclosure Case. The Order ineffect held in abeyance the public auction sale, on the basis of a mere Ex-Parte Motion to HoldAuction Sale in Abeyance filed by Mortgagor, PQL Realty Incorporated. Complainant avers that itwas issued without the proper case being filed and without the benefit of notice and hearing, oreven an injunction bond from which the mortgagee may seek compensation and restitution for thedamages it may suffer by reason of the improper cancellation of the auction sale.

The only ground relied upon is that the parties have agreed to hold the foreclosureproceedings in Makati and not in Manila and so the complainant submits that the actuations of

respondent judge in granting the ex-parte motion of mortgagor were without basis and highlysuspicious.

ISSUE:

WON respondent judge is liable of gross ignorance of the law for using as reference the Act No.3135, as opposed to Rule 4 of the Revised Rules of Court.

HELD:

YES. We find the respondent judge culpable as charged. Any judge, worthy of the robe hedons, ought to know that different laws apply to different kinds of sales under ourjurisdiction.Since the real property subject of the sale is situated in Felix Huertas Street, Sta.Cruz, Manila. Thus, by express provision of Section 2, the sale cannot be made outside ofManila.Respondent judge, however, refers to the venue stipulation in the Loan Agreement signed

by the parties to the effect that, "Any action or suit brought under this Agreement or any otherdocuments related hereto shall be instituted in the proper courts of Makati x x x. The failure ofrespondent to recognize this is an utter display of ignorance of the law to which he swore tomaintain professional competence. Written stipulations as to venue are either mandatory orpermissive. In interpreting stipulations, inquiry must be made as to whether or not the agreementis restrictive in the sense that the suit may be filed only in the place agreed upon or merelypermissive in that the parties may file their suits not only in the place agreed upon but also in theplaces fixed by the rules. In the absence of qualifying or restrictive words, they should beconsidered merely as an agreement on additional forum, not as limiting venue to the specifiedplace. They are not exclusive but, rather permissive.
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It has been said that when the law transgressed is elementary, the failure to know or observe itconstitutes gross ignorance of the law. In this case, a mere reference by respondent judge to ActNo. 3135, as opposed to Rule 4 of the Revised Rules of Court, as well as the Deed of the RealEstate Mortgage itself, would dictate that there is no justification whatsoever for him to hold inabeyance the extrajudicial foreclosure sale scheduled on May 26, 1993 in front of the City Hall ofManila.A judge owes it to the public and to the legal profession to know the very law he issupposed to apply to a given controversy as mandated by the Code of Judicial Conduct.Unfortunately, respondent judge, instead of inspiring faith and confidence in the administration ofjustice, committed a rank disservice to its cause when he issued the Order based on theinapplicable provisions of the Rules of Court.

3. MANCHESTER DEVELOPMENT CORPORATION, ET AL., petitioners,vs.COURT OF APPEALS, CITY LAND DEVELOPMENT CORPORATION, STEPHEN ROXAS,ANDREW LUISON, GRACE LUISON and JOSE DE MAISIP, respondents.

FACTS:

Petitioners contends that the Court of Appeals erred in that the filing fee should be levied byconsidering the amount of damages sought in the original complaint. The present case is anaction for torts and damages and specific performance with prayer for temporary restrainingorder. The prayer is for the issuance of a writ of preliminary prohibitory injunction during thependency of the action against the defendants' announced forfeiture of the sum of P3 Million paidby the plaintiffs for the property in question, to attach such property of defendants, to orderdefendants to execute a contract of purchase and sale of the subject property and annuldefendants' illegal forfeiture of, ordering defendants to pay plaintiff's damages as well as thetender of payment. The amount of damages sought is not specified in the prayer although thebody of the complaint alleges the total amount of over P78 Million as damages suffered byplaintiff.

The complaint was considered as primarily an action for recovery of ownership and

possession of a parcel of land. The damages stated were treated as merely to the main cause ofaction.After this Court issued an order on October 15, 1985 ordering the re- assessment of the docketfee in the present case and other cases that were investigated, on November 12, 1985 the trialcourt directed plaintiffs to rectify the amended complaint by stating the amounts which they areasking for. It was only then that plaintiffs specified the amount of damages in the body of thecomplaint in the reduced amount of P10,000,000.00. 7 Still no amount of damages were specifiedin the prayer. Said amended complaint was admitted.ISSUE:WON the court acquires jurisdiction over the case.HELD:NO. As reiterated in the Magaspi case the rule is well-settled "that a case is deemed filed onlyupon payment of the docket fee regardless of the actual date of filing in court .Thus, in thepresent case the trial court did not acquire jurisdiction over the case by the payment of onlyP410.00 as docket fee. Neither can the amendment of the complaint thereby vest jurisdictionupon the Court. For an legal purposes there is no such original complaint that was duly filed

which could be amended. Consequently, the order admitting the amended complaint and allsubsequent proceedings and actions taken by the trial court are null and void. The basis ofassessment of the docket fee should be the amount of damages sought in the original complaintand not in the amended complaint. The Court frowns at the practice of counsel who filed theoriginal complaint in this case of omitting any specification of the amount of damages in theprayer although the amount of over P78 million is alleged in the body of the complaint. This isclearly intended for no other purpose than to evade the payment of the correct filing fees if not tomislead the docket clerk in the assessment of the filing fee.The Court acquires jurisdiction over any case only upon the payment of the prescribed docket


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fee. An amendment of the complaint or similar pleading will not thereby vest jurisdiction in theCourt, much less the payment of the docket fee based on the amounts sought in the amendedpleading. The ruling in the Magaspi case in so far as it is inconsistent with this pronouncement isoverturned and reversed.

4. G.R. Nos. 79937-38 February 13, 1989

SUN INSURANCE OFFICE, LTD., (SIOL), E.B. PHILIPPS and D.J. WARBY, petitioners,vs.HON. MAXIMIANO C. ASUNCION, Presiding Judge, Branch 104, Regional Trial Court,Quezon City and MANUEL CHUA UY PO TIONG, respondents.

FACTS:

Private respondent filed a complaint in the Regional Trial Court of Quezon City for the refund ofpremiums and the issuance of a writ of preliminary attachment against petitioner SIOL. In thebody of the original complaint, the total amount of damages sought amounted to about P50

Million. In the prayer, the amount of damages asked for was not stated. The amount of onlyP210.00 was paid for the docket fee. On January 23, 1986, private respondent filed an amendedcomplaint wherein in the prayer it is asked that he be awarded no less than P10,000,000.00 asactual and exemplary damages but in the body of the complaint the amount of his pecuniaryclaim is approximately P44,601,623.70. Said amended complaint was admitted and the privaterespondent was reassessed the additional docket fee of P39,786.00 based on his prayer of notless than P10,000,000.00 in damages, which he paid.

On April 24, 1986, private respondent filed a supplemental complaint alleging an additional claimof P20,000,000.00 in damages so that his total claim is approximately P64,601,620.70. OnOctober 16, 1986, private respondent paid an additional docket fee of P80,396.00. After thepromulgation of the decision of the respondent court on August 31, 1987 wherein privaterespondent was ordered to be reassessed for additional docket fee, and during the pendency of

this petition, on April 28, 1988, private respondent paid an additional docket fee of P62,132.92.Although private respondent appears to have paid a total amount of P182,824.90 for the docketfee considering the total amount of his claim in the amended and supplemental complaintamounting to about P64,601,620.70, petitioner insists that private respondent must pay a docketfee of P257,810.49.

ISSUE: WON the court acquires jurisdiction over a case when the correct and proper docket feeshas not been paid.

Ruling: NO.

It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the

prescribed docket fee, that vests a trial court with jurisdiction over the subject-matter or nature ofthe action. Where the filing of the initiatory pleading is not accompanied by payment of the docketfee, the court may allow payment of the fee within a reasonable time but in no case beyond theapplicable prescriptive or reglementary period.

The same rule applies to permissive counterclaims, third party-claims and similar pleadings,which shall not be considered filed until and unless the filing fee prescribed therefor is paid. Thecourt may also allow payment of said fee within a reasonable time but also in no case beyond itsapplicable prescriptive or reglementary period.


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In the present case, a more liberal interpretation of the rules is called for considering that, unlikeManchester, private respondent demonstrated his willingness to abide by the rules by paying theadditional docket fees as required. The promulgation of the decision in Manchester must havehad that sobering influence on private respondent who thus paid the additional docket fee asordered by the respondent court. It triggered his change of stance by manifesting his willingnessto pay such additional docket fee as may be ordered.

Nevertheless, petitioners contend that the docket fee that was paid is still insufficient consideringthe total amount of the claim. This is a matter which the clerk of court of the lower court and/or hisduly authorized docket clerk or clerk in-charge should determine and, thereafter, if any amount isfound due, he must require the private respondent to pay the same.

5. G.R. Nos. 88075-77 December 20, 1989

MAXIMO TACAY, PONCIANO PANES and ANTONIA NOEL, petitioners, vs. REGIONALTRIAL COURT OF TAGUM Davao del Norte, Branches 1 and 2, Presided by Hon. MarcialFernandez and Hon. Jesus Matas, respectively, PATSITA GAMUTAN, Clerk of Court, andGODOFREDO PINEDA, respondents.

Facts:Respondent Pineda instituted an action for recovery of possession against Tacay, Panes

and Noel at the RTC of Tagum Davao del Norte.

Facts show that Pineda is the owner of the land measuring 790sq meters and that theprevious owner allowed the defendants to occupy such by mere tolerance. When Pineda came inneed for the use of the land, he demanded them to vacate the land and to pay rentals but thelatter refused. Pineda then instituted a complaint praying that he be declared the owner of theland and that the defendants pay monthly rentals since February 1987 as well as nominal, actualand moral damages and attorneys fees and that Pineda be granted further reliefs and remedies.The defendants then filed for dismissal alleging that the Trial court did not acquire jurisdictionover the case for the reason that the complaint failed to specify the amounts of damages and for

failure to allege the basic requirement as to the assessed value of the subject lot in dispute.

The motion to dismiss was later on denied by Judge Matas. The motions to dismiss inCivil Cases 2211 and 2209 were also denied declaring that since the "action at bar is forReivindicatoria, Damages and Attorney's fees ... (d)efinitely this Court has the exclusivejurisdiction," (b) that the claims for actual, moral and nominal damages "are only one aspect ofthe cause of action," and (c) because of absence of specification of the amounts claimed asmoral, nominal and actual damages, they should be "expunged from the records." Thedefendants later on filed a joint petition for certiorari, prohibition and mandamus with prayer forTRO praying that the orders be annulled on the ground of grave abuse of discretion and re-asserts that the court did not acquire jurisdiction.

Issue: WON the court acquired jurisdiction.

Held: Yes. The petition of the defendants should be therefore dismissed. The motion for dismissalfails to demonstrate any grave abuse of discretion on the part of the respondent Judges inrendering the Orders complained of or, for that matter, the existence of any proper cause for theissuance of the writ of mandamus. On the contrary, the orders appear to have correctly appliedthe law to the admitted facts.

The actions are not basically for the recovery of sums of money. They are principally forrecovery of possession of real property, in the nature of an accion publiciana. Determinative ofthe court's jurisdiction in this type of actions is the nature thereof, not the amount of the damages


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allegedly arising from or connected with the issue of title or possession, and regardless of thevalue of the property. A real action-may be commenced and prosecuted without anaccompanying claim for actual, moral, nominal or exemplary damages; and such an action wouldfall within the exclusive, original jurisdiction of the Regional Trial Court.

Batas Pambansa Bilang 129 provides that Regional Trial Courts shall exercise exclusiveoriginal jurisdiction inter alia over "all civil actions which involve the title to, or possession of, realproperty, or any interest therein, except actions for forcible entry into and unlawful detainer oflands or buildings, original jurisdiction over which is conferred upon Metropolitan Trial Courts,Municipal Trial Courts, and Municipal Circuit Trial Courts."

14The rule applies regardless of the

value of the real property involved, whether it be worth more than P20,000.00 or not, infra. Therule also applies even where the complaint involving realty also prays for an award of damages;the amount of those damages would be immaterial to the question of the Court's jurisdiction.

6. G.R. No. 88421 January 30, 1990

AYALA CORPORATION, LAS PIAS VENTURES, INC., and FILIPINAS LIFE ASSURANCECOMPANY, INC., petitionersvs.

THE HONORABLE JOB B. MADAYAG, PRESIDING JUDGE, REGIONAL TRIAL COURT,NATIONAL CAPITAL JUDICIAL REGION, BRANCH 145 and THE SPOUSES CAMILO ANDMA. MARLENE SABIO, respondents.

FACTS:

Private respondents paid only the amount of P l,616 as docket fees instead of P13,061based on the assessed value of the real properties and that he failed to specify the amount ofexemplary damages sought. Private respondent then filed against petitioners an action forspecific performance with damages in the Regional Trial Court of Makati. Petitioners filed amotion to dismiss on the ground that the lower court has not acquired jurisdiction over the caseas private respondents failed to pay the prescribed docket fee and to specify the amount ofexemplary damages both in the body and prayer of the amended and supplemental complaint.The trial court denied the motion as well as the motion for reconsideration of petitioner. However,

the contention of petitioners is that since the action concerns real estate, the assessed valuethereof should be considered in computing the fees pursuant to Section 5, Rule 141 of the Rulesof Court. Such rule cannot apply to this case which is an action for specific performance withdamages although it is in relation to a transaction involving real estate. Pursuant to Manchester,the amount of the docket fees to be paid should be computed on the basis of the amount ofdamages stated in the complaint.

The trial court denied the motion stating that the determination of the exemplary damagesis within the sound discretion of the court and that it would be unwarrantedly presumptuous onthe part of the private respondents to fix the amount of exemplary damages being prayed for.Hence this petition.

ISSUE:

WON the payment of filing fees in an action for specific performance with damages must be

specified to acquire jurisdiction.

HELD:

YES. The amount of any claim for damages, therefore, arising on or before the filing of thecomplaint or any pleading, should be specified. While it is true that the determination of certaindamages as exemplary or corrective damages is left to the sound discretion of the court, it is theduty of the parties claiming such damages to specify the amount sought on the basis of which thecourt may make a proper determination, and for the proper assessment of the appropriate docketfees. The exception contemplated as to claims not specified or to claims although specified are


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left for determination of the court is limited only to any damages that may arise after the filing ofthe complaint or similar pleading for then it will not be possible for the claimant to specify norspeculate as to the amount thereof. The amended and supplemental complaint in the presentcase, therefore, suffers from the material defect in failing to state the amount of exemplarydamages prayed for.

As ruled in Tacay the trial court may either order said claim to be expunged from the record

as it did not acquire jurisdiction over the same or on motion, it may allow, within a reasonabletime, the amendment of the amended and supplemental complaint so as to state the preciseamount of the exemplary damages sought and require the payment of the requisite fees thereforwithin the relevant prescriptive period.

7. G.R. No. 125683 March 2, 1999

EDEN BALLATAN and SPS. BETTY MARTINEZ and CHONG CHY LING, petitioners, vs. COURT OF APPEALS, GONZALO GO, WINSTON GO, LI CHING YAO, ARANETAINSTITUTE OF AGRICULTURE and JOSE N. QUEDDING, respondents.

Facts:

This is a petition for review on certiorari of the decision of the Court of Appeals datedMarch 25, 1996 in CA-G.R. CV No. 32472 entitled "Eden Ballatan., et. al., plaintiffs-appellees v.Gonzalo Go and Winston Go, appellants and third-party plaintiffs-appellants v. Li Ching Yao, et.al., third-party defendants."

The case arose from a dispute over a 42 sq meters land owned by the petitioners. Whenpetitioner constructed her house, she found out that the adjoining house of Winston Goencroached a part of her lot. Respondent Go, however, claimed that his house, including its fenceand pathway, were built within the parameters of his father's lot. A relocation survey was thenmade by AIA and found out that the property of petitioner was indeed encroached by Gos house.Eden demanded that the latter dismantle its improvements but he refused. Petitioner then filed anaction for recovery and defendant Go countered and filed a third party-complaint against AIA and

Li Ching Yao but the court decided in favor of the petitioner and ordered Go to demolish theimprovements. Aggrieved, Go filed for appeal but the decision of the lower court was affirmed andthe third-party complaint against AIA was dismissed but the case against Li Ching Yao wasreinstated.

Issue: WON the court erred in not dismissing the third party complaint due to non-payment offiling fees.

Held:

No. the rule in this jurisdiction is that when an action is filed in court, the complaint mustbe accompanied by the payment of the requisite docket and filing fees .-The third-party complaint in the instant case arose from the complaint of petitioners against

respondents Go. The complaint filed was for accion publiciana, i.e., the recovery of possession ofreal property which is a real action. The rule in this jurisdiction is that when an action is filed incourt, the complaint must be accompanied by the payment of the requisite docket and filing fees.In real actions, the docket and filing fees are based on the value of the property and the amountof damages claimed, if any. If the complaint is filed but the fees are not paid at the time of filing,the court acquires jurisdiction upon full payment of the fees within a reasonable time as the courtmay grant, barring prescription.Rule 2: Cause of Action
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Rule 2: Cause of Action

1. UNION GLASS & CONTAINER CORPORATION and CARLOS PALANCA, JR., in hiscapacity as President of Union Glass & Container Corporation, petitioners,vs.THE SECURITIES AND EXCHANGE COMMISSION and CAROLINA HOFILEA, respondents.

FACTS:

Private respondent Carolina Hofilea is a stockholder of Pioneer Glass ManufacturingCorporation

Pioneer Glass had obtained various loan accommodations from the Development Bank of thePhilippines [DBP], and also from other local and foreign sources which DBP guaranteed.

As security for said loan accommodations, Pioneer Glass mortgaged and/or assigned its assets,real and personal, to the DBP, in addition to the mortgages executed by some of its corporateofficers over their personal assets

Pioneer Glass suffered serious liquidity problems such that it could no longer meet its financialobligations with DBP, it entered into a dacion en pago agreement with the latter.

Hofilea filed a complaint before the respondent Securities and Exchange Commission based onthe alleged illegality of the aforesaid dacion en pago.

petitioners moved for dismissal of the case on the ground that the SEC had no jurisdiction overthe subject matter or nature of the suit. SEC granted the motion to dismiss for lack of jurisdiction.However, it was reversed

ISSUE: WON the SEC has jurisdiction.

RULING:

No.

Since petitioner Union Glass has no intra-corporate relation with either the complainant or theDBP, its joinder as party-defendant in SEC Case No. 2035 brings the cause of action assertedagainst it outside the jurisdiction of the respondent SEC.

As heretofore pointed out, petitioner Union Glass is involved only in the first cause of action ofHofileas complaint in SEC Case No, 2035. While the Rules of Court, which applies suppletorilyto proceedings before the SEC, allows thejoinder of causes of action in one complaint, suchprocedure however is subject to the rules regarding jurisdiction, venue and joinder ofparties. 9Since petitioner has no intra-corporate relationship with the complainant, it cannot bejoined as party-defendant in said case as to do so would violate the rule or jurisdiction. Hofileascomplaint against petitioner for cancellation of the sale of the glass plant should therefore bebrought separately before the regular court But such action, if instituted, shall be suspended toawait the final outcome of SEC Case No. 2035, for the issue of the validity of the dacion enpago posed in the last mentioned case is a prejudicial question, the resolution of which is alogical antecedent of the issue involved in the action against petitioner Union Glass. Thus,Hofileas complaint against the latter can only prosper if final judgment is rendered in SEC CaseNo. 2035, annulling the dacion en pago executed in favor of the DBP.


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2. G.R. No. 123555 January 22, 1999

PROGRESSIVE DEVELOPMENT CORPORATION, INC., petitioner, vs. COURT OFAPPEALS and WESTIN SEAFOOD MARKET, INC. respondents

Facts:

Petitioner leased to private, respondent Westin Seafood Market, Inc., a parcel of landwith a commercial building thereon located at Aranet Center, Cubao, Quezon City, for aperiod of nine (9) years and three (3) months

The contract contained, among others, the following pertinent terms and conditions:1. Effect of violations: 1. Contract shall be terminated without resorting to court actions if

the lessee violates conditions.2. Termination of lease: LESSEE shall immediately vacate and redeliver physical

possession of the leased premises if he fails to comply with the provisions.

Private respondent failed to pay rentals despite several demands by petitioner.

Non-payment of rentals constituted breach of their contract; petitioner on 31 October1992 repossessed the leased premises, inventoried the movable properties andscheduled auction for the sale of the movables.

Respondent then filed a complaint for forcible entry and prayer for TRO and preliminaryinjunction.

Private respondent did not comply with its undertaking to deposit with the bank therentals. Instead, with the forcible entry case still pending with the MeTC, privaterespondent instituted another action for damages against petitioner with the RTC.

Petitioner filed a motion, to dismiss the damage suit on the ground oflitis pendencia andforum shopping.

Judge then denied petitioners motion to dismiss and granted TRO

Petitioner filed with the CA certiorari and prohibition on the ground of grave abuse ofdiscretion in allowing forum shopping.

The CA dismissed on the ground of failure by the petitioner to file for MR on the Judgesorder which it said to be a prerequisite to the institution of certiorari and prohibition.

It also found that the elements of litis pendencia were lacking to justify the dismissal of

the action for damages with the RTC because despite the pendency of the forcible entrycase with the MeTC the only damages recoverable thereat were those caused by theloss of the use and occupation of the property and not the kind of damages being claimedbefore the RTC which had no direct relation to loss of material possession. It clarified thatsince the damages prayed for in the amended complaint with the RTC were thosecaused by the alleged high-handed manner with which petitioner reacquired possessionof the leased premises and the sale of private respondent's movables found therein, theRTC and not the MeTC had jurisdiction over the action of damages. movables foundtherein, the RTC and not the MeTC had jurisdiction over the action of damages.

Issue: WON the judge committed grave abuse of discretion when it took cognizance of the actionfor damages and injunction despite the pendency of forcible entry case in MetC.

Held: Yes.

All cases for forcible entry or unlawful detainer shall be filed before the Municipal Trial Courtwhich shall include not only the plea for restoration of possession but also all claims for damagesand costs arising therefrom.

This is consistent with the principle laid down in Sec. 1, par. (e), of Rule 16 of the Rules of Courtwhich states that the pendency of another action between the same parties for the same cause isa ground for dismissal of an action. Res adjudicata requires that there must be between the


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action sought to be dismissed and the other action the following elements: (a) identity of partiesor at least such as representing the same interest in both actions; (b) identity of rights assertedand relief prayed for, the relief being founded on the same facts; and, (c) the identity in the two (2)preceding particulars should be such that any judgment which may be rendered on the otheraction will, regardless of which party is successful, amount to res adjudicata in the actionunder consideration.I t is l ikewise basic u nder Sec. 3 of Rule 2 of the Revised Rules of Court, as amend ed, that

a party may not ins ti tute mo re than one suit for a single cause of action. Under Sec. 4 of

the same Rule, i f two or m ore sui ts are inst i tu ted on the basis of the same cause of act ion,

the f i l ing of one or a judgment up on the m er its in any on e is avai lab le as a ground for the

dism issal of the other or oth ers. "Cause of action" is defined by Sec. 2 of Rule 2 as the act

of om ission by w hich a party vio la tes a r ight of another .These premises obtaining, there isno question at all that private respondent's cause of action in the forcible entry case and in thesuit for damages is the alleged illegal retaking of possession of the leased premises by the lessor,petitioner herein, from which all legal reliefs arise. Simply stated, the restoration of possessionand demand for actual damages in the case before the MeTC and the demand for damages withthe RTC both arise from the same cause of action, i.e., the forcible entry by petitioner into theleast premises.

3. G.R. No. 138497 January 16, 2002

IMELDA RELUCIO, petitioner, vs. ANGELINA MEJIA LOPEZ, respondent.

Facts:

Herein private respondent Angelina Mejia Lopez (plaintiff below) filed a petition for"APPOINTMENT AS SOLE ADMINISTRATIX OF CONJUGAL PARTNERSHIP OFPROPERTIES, FORFEITURE, against defendant Alberto Lopez and petitioner ImeldaRelucio. In the petition, respondent averred that she was the lawful wife of hereindefendant, Alberto Lopez, and that the latter abandoned her and their children deprivingthem support and arrogated to himself alone the exclusive controal and administration oftheir properties together with his concubine, herein petitioner, Imelda Relucio.

However, petitioner filed a motion to dismiss on the ground that the respondent has nocause of action agaisnt her.

The RTC denied said motion. When the case was elevated in the CA, the case waslikiwise dismiss. Hence, this appeal.

Issue:

Whether or not cause of action exists against the petitioner and the same was alleged inthe complaint

Held:

No. A cause of action is an act or omission of one party the defendant in violation of thelegal right of the other."The elements of a cause of action are:

(1) a right in favor of the plaintiff by whatever means and under whatever law it arises oris created;

(2) an obligation on the part of the named defendant to respect or not to violate suchright; and

(3) an act or omission on the part of such defendant in violation of the right of the plaintiff


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or constituting a breach of the obligation of the defendant to the plaintiff for which thelatter may maintain an action for recovery of damages.

In order to sustain a motion to dismiss for lack of cause of action, the complaint must show thatthe claim for relief does not exist, rather than that a claim has been merely defectively stated or isambiguous, indefinite or uncertain. Hence, to determine the sufficiency of the cause of action isshould be determined by the allegation in the complaint.

In Part Two on the "Nature of [the] Complaint," respondent Angelina Mejia Lopez summarized thecauses of action alleged in the complaint below. The complaint is by an aggrieved wife againsther husband.

Nowhere in the allegations does it appear that relief is sought against petitioner. Respondent'scauses of action were all against her husband.

The first cause of action is forjudicial appointment of respondent as administratrix of theconjugal partnership. Petitioner is a complete stranger to this cause of action.

The second cause of action is for an accounting "by respondent husband." The accounting ofconjugal partnership arises from or is an incident of marriage.

Petitioner has nothing to do with the marriage between respondent Alberto J. Lopez. Hence, nocause of action can exist against petitioner on this ground.


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Rule 3: Parties to Civil Action

1. G.R. No. L-53856 August 21, 1980

OSCAR VENTANILLA ENTERPRISES CORPORATION, petitioner, vs.HON. ALFREDO M. LAZARO, Presiding Judge of the Court of First Instance of Manila,Branch XXXV; CLERK OF COURT and DEPUTY SHERIFF of the Court of First Instance ofManila, Branch XXXV; EMPEROR FILMS INT'L. (PHILS.), INC. and RICARDO C.VENTANILLA, respondents.

FACTS:Petitioner Oscar Ventanilla Enterprises Corporation seeks to restrain the enforcement of thejudgment of the Court of First Instance of Manila in "Emperor Films Int'l. (Phils.), Inc. vs.Broadway Theater".Similar petition was again filed in the Court of Appeals by petitioner but was dismissed becauseit cannot issue the writs of certiorari and prohibition. Moreover, petitioner, not being a party inthe case, cannot ask for a review of any order issued in that case.In a compromise agreement, Ventanilla promised to pay in installment the debt and agreedthat, in case of default execution shall immediately issue.

ISSUE:WON the action can be brought against a juridical person.

HELD:No. Under Section 1 of Rule 3 of the Rules of Court, only natural or juridical persons, or entitiesauthorized by law may be parties in a civil action. Hence, a complaint is defective wheredefendant is not a natural or juridical person. It is at once obvious that the complaint in the saidcase is defective because the defendant is not a natural or juridical person. However, that defectwas cured by the answer of Ventanilla, the lessee of the Broadway Theater, who admitted havingissued three postdated checks and by the compromise agreement executed between the plaintiffand him, who, in effect, substituted himself for defendant "Broadway theater".

Thus the lower court rendered judgment in accordance with the compromise agreement. The

court holds that Ventanilla Corporation is entitled to the writ of prohibition.

2. G.R. No. 108015. May 20, 1998CRISTINA DE KNECHT and RENE KNECHT, peti t ioners, vs. HON. COURT OF APPEALS

FACTS:

-Petitioners De Knecht was the owner of a parcel of land where 8 houses were built

-The State sought to expropriate the property.

- The SC held that the choice of area is arbitrary and annulled the expropriation case.

- The City Treasurer of Pasay discovered that the Knechts failed to pay real estate taxes on theproperty. The City Treasurer sold the property at public auction.

- Petitioners failed to redeem the property within one year from the date of sale.

- The Register of Deeds issued TCT No. 86670 in the names of Sangalang and Babiera. TheKnechts, who were in possession of the property, allegedly learned of the auction sale only by thetime they received the orders of the land registration courts.


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- BP Blg. 340 authorizing the national government to expropriate certain properties in Pasay Cityfor the EDSA Extension was passed. The property of the Knechts was part of those expropriatedunder B.P. Blg. 340.

-The de Knechts filed a case before the Regional Trial Court praying for reconveyance,annulment of the tax sale and the titles of the Babieras and Sangalangs. The Knechts based theiraction on lack of the required notices to the tax sale. It was dismissed

-The State instituted a case for determination of just compensation

-The Knechts filed a "Motion for Intervention and to Implead Additional Parties"

-The trial court issued an order denying the Knechts' "Motion for Intervention and to ImpleadAdditional Parties."

Issue: WON Petitioner should be included in expropriation case.Ruling: NO.The term owner when employed to statutes relating to eminent domain refers to those who havelawful interest in the property to be condemnedWhen the expropriation case was filed, the case for reconveyance was dismissed with finality.The petitioners lost whatever right or colourable title they had to the property.The Knetchts had no legal interest in the property by the time the expropriation proceedings wereinstituted.

3. G.R. No. 106194 January 28, 1997

SANTIAGO LAND DEVELOPMENT CORPORATION, petitioner, vs. The HONORABLECOURT OF APPEALS and the HEIRS OF NORBERTO J. QUISUMBING, respondents

Facts:

Norberto J. Quisumbing brought an action against the Philippine National Bank to enforce

an alleged right to redeem certain real properties foreclosed by the Philippine NationalBank. Quisumbing brought the suit as assignee of the mortgagor, Komatsu Industries(Phils.), Incorporated.

With notice of pending civil action, Santiago Land Devt Corp purchased from PNB one ofthe properties subject to litigation for 90 million.

Petitioner SLDC filed a motion to intervene, with its answer in intervention attached,alleging that it was the transferee pendente lite of the property and that any adverseruling or decision, which might be rendered against PNB, would necessarily affect it(petitioner). In its attached answer, SLDC, aside from adopting the answer filed by PNB,raised as affirmative defenses the trial court's lack of jurisdiction based on the allegedfailure of plaintiff Quisumbing to pay the docket fee and Quisumbing's alleged lack ofcause of action against the PNB due to the invalidity of the deed of assignment to him.

Quisumbing opposed SLDC's motion for intervention. He argued that SLDC's interest in

the subject property was a mere contingency or expectancy, which was dependent onany judgment which might be rendered for or against PNB as transferor.

The court then granted petitioners motion for intervention and directed the substitution ofheirs in view of Norberto Quisumbings demise and submitted for resolution PNBs motionto dismiss.

SLDC then served interrogatories upon respondents and moved for the production,inspection and copying of certain documents.

Private respondents filed a motion to quash or disallow the interrogatories but it wasdenied by the court.


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Issue: WON petitioner, as transferee pendente lite of the property in litigation has a right tointervene.

Held: No.

Rule 12, 2 of the Rules of Court provides:

Sec. 2. Intervention. A person may, before or during a trial be permitted by the court, in itsdiscretion, to intervene in an action, if he has legal interest in the matter in litigation, or in thesuccess of either of the parties, or an interest against both, or when he is so situated as to beadversely affected by a distribution or other disposition of property in the custody of the court or ofan officer thereof.

The question is whether this provision applies to petitioner in view of Rule 3, 20 governingtransfers of interestpendente lite such as was alleged in the trial court by petitioner. Thisprovision reads:

Sec. 20. Transfer of interest. In case of any transfer of interest, the action may becontinued by or against the original party, unless the court upon motion directs the

person to whom the interest is transferred to be substituted in the action or joined with theoriginal party.

In applying the rule on transfer of interest pendente lite (Rule 3, 20) rather than the rule onintervention (Rule 12, 2), the Court of Appeals stated:

While it may be that respondent SLDC has a legal interest in the subject matter of the litigation,its interest as transferee pendente lite is different from that of an intervenor. Section 2 of Rule 12refers to all other persons or entities whose legal interests stand to be affected by a litigation, butit does not cover a transferee pendente lite because such transferee is already specificallygoverned by Section 20 of Rule 3. Otherwise, Section 20 of Rule 3 on transferees pendente litewould be rendered ineffectual and useless. Since it specifically covers transferees pendente lite,any such transferee cannot just disregard said provision and instead, opt to participate as anintervenor when it is more convenient for it to do so. Indeed, there has never been a rule,authority or decision holding that a transferee pendente lite has the option to avail of either Rule3, Section 20 or Rule 12, Section 2.

It has been consistently held that a transferee pendente lite stands in exactly the same positionas its predecessor-in-interest, that is, the original defendant. . . . However, should the transferee pendente lite choose to participate in the proceedings, it can only do so as a substituteddefendant or as a joint party-defendant. The transferee pendente lite is a proper but not anindispensable party as it would in any event be bound by the judgment against his predecessor-in-interest. This would be true even if respondent SLDC is not formally included as a party-defendant through an amendment of the complaint. As such, the transferee pendente lite isbound by the proceedings already had in the case before the property was transferred to it

The purpose of Rule 12, 2 on intervention is to enable a stranger to an action to become aparty to protect his interest and the court incidentally to settle all conflicting claims. Onthe other hand, the purpose of Rule 3, 20 is to provide for the substitution of thetransferee pendente l i teprecisely because he is not a stranger but a successor-in-interestof the transferor, who is a party to the action. As such, a transferee's title to the property issubject to the incidents and results of the pending litigation and is in no better positionthan the vendor in whose shoes he now stands.


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4. G.R. No. 102900 October 2, 1997

MARCELINO ARCELONA, TOMASA ARCELONA-CHIANG and RUTH ARCELONA,represented by their attorney-in-fact, ERLINDA PILE, petitioners,

vs.COURT OF APPEALS, REGIONAL TRIAL COURT OF DAGUPAN CITY, Branch XL, andMOISES FARNACIO, respondents.

Facts:

Herein petitioners are co owners of the fish pond subject of this case, while the privaterespondent was the care taker of said property placed by the lessor. The controversyarose when the contract of lease entered into by the petitioners and their lessor expired.When the property was turned over to the petitioners, private respondent instituted CivilCase D-7240 for "peaceful possession, maintenance of security of tenure plus damages,with motion for the issuance of an interlocutory order" against the petitioners.

However, not all co-owners named in the title were impleaded in the complaint.

Thereafter, the trial court rendred a decision in favor of the respondent ordering thepetitioners to give back the possession of the property and all rights pertaining to him.

Subsequently, when said judgement became final and executory, herein petitioners filedan appeal with the Court of Appeals asking said court to annul the jugdement on theground that not all co owners were impleaded and consequesently said jugdment isvoid.

Issue:

Whether or not co-ownerspro indiviso of a real property are indispensable parties and therefore,should be impleaded in the complaint.

Held:

Yes. Rule 3, Section 7 of the Rules of Court, defines indispensable parties as parties-in-interestwithout whom there can be no final determination of an action. As such, they must be joinedeither as plaintiffs or as defendants. The general rule with reference to the making of parties in acivil action requires, of course, the joinder of all necessary parties where possible, and the joinderof all indispensable parties under any and all conditions, their presence being a sine qua non for

the exercise of judicial power.31 It is precisely "when an indispensable party is not before the

court (that) the action should be dismissed."32 The absence of an indispensable party rendersall subsequent actions of the court null and void for want of authority to act, not only as to theabsent parties but even as to those present.

Petitioners are co-owners of a fishpond. Private respondent does not deny this fact, and the Court

of Appeals did not make any contrary finding. The fishpond is undivided; it is impossible topinpoint which specific portion of the property is owned by Olanday, et al. and which portion

belongs to petitioners. Thus, it is not possible to show over which portion the tenancy relation of

private respondent has been established and ruled upon in Civil Case D-7240. Indeed, petitioners

should have been properly impleaded as indispensable parties.


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5. GR 126000. October 7, 1998

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM (MWSS), petitioner,vs.COURT OF APPEALS, HON. PERCIVAL LOPEZ, AYALA CORPORATION and AYALA LAND,INC., respondents.

FACTS:On 1965, petitioner MWSS leased 128 hectares of its land to CHGCCI for 25 years with astipulation allowing the latter to exercise a right of first refusal should the subject property bemade open for sale. The terms and conditions of CHGCCIs purchase was nonetheless subjectto presidential approval where the President expressed his approval of the sale. He then directed MWSS to negotiate the cancellation of this lease agreement between MWSSand CHGCCI. However, MWSS general manager, Ilustre, informed CHGCCI that the propertywas up for sale, and that as per their contract, CHGCCI had the preferential right to buy saidproperty. Hence, the property was purchased, and Pres. Marcos later on approved thissale. Then, BoT of MWSS also approved the sale by passing a resolution. CHGCCI sold theland to Ayala. AYALA then developed the land into a prime residential area 10 years later, MWSS filed an action against CHGCCI and Ayala in RTC praying for thedeclaration of nullity of the MWSS-CHGCCI sales agreement. RTC dismissed the petition while

CA affirmed. Hence, this petition for certiorari with SC. Respondent court denies the petitionsfor writ of certiorari and affirms the order of the lower court dismissing the complaint againstAyala. This prompted MWSS to file another petition for review where it holds that Ilustre wasnever given the authority by the BoT to enter into the initial agreement, and therefore, the saleof the property was null and void.

ISSUE:Whether or not the suit shall prosper without the indispensable parties.

HELD:No. There is no denying that petitioner MWSS' action against herein respondents for the recoveryof the subject property now converted into a prime residential subdivision would ultimately affectthe proprietary rights of the many lot owners to whom the land has already been parceled

out. They should have been included in the suit as parties-defendants, for. "it is well establishedthat owners of property over which reconveyance is asserted are indispensable parties withoutwhom no relief is available and without whom the court can render no valid judgment." Beingindispensable parties, the absence of these lot-owners in the suit renders all subsequent actionsof the trial court null and void for want of authority to act, not only as to the absent parties buteven as to those present. Thus, when indispensable parties are not before the court, the actionshould be dismissed.Assuming that Ilustre was not given the ample authority to enter into the agreement, this infirmitywas cured by ratification. So settled is the precept that ratification can be made by the corporateboard either expressly or impliedly. Assuming their truth, show that MWSS consented to the sale,only that such consent was purportedly vitiated by undue influence or fraud. Therefore, the ruleson prescription will operate. Even if petitioner MWSS asked for the declaration of nullity of thesecontracts, the prayers will not be controlling as only the factual allegations in the complaint

determine relief. The assumption that the allegations in the complaint establish the absolutenullity of the assailed contracts an hence imprescriptible, the complaint can still be dismissed onthe ground of laches which is different from prescription.

6. ALLIED AGRI-BUSINESS DEVELOPMENT CO., INC., petitioner,vs.COURT OF APPEALS and CHERRY VALLEY FARMS LIMITED, respondents.


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FACTS:

-respondent Cherry Valley Farms Limited (CHERRY VALLEY), a foreign company based inEngland, filed against petitioner Allied Agri-Business Development Co. Inc. (ALLIED) a complaintwith the Regional Trial Court of Makati City for the collection of sum of money alleging thatpetitioner purchased in ten (10) separate orders and received from respondent CHERRY

VALLEY several duck hatching eggs and ducklings and ALLIED did not pay the total purchaseprice of 51,245.12 despite repeated demands

ALLIED filed an answer and contended that: (a) private respondent CHERRY VALLEY lacked thecapacity to sue

The trial court rendered a decision against the petitioners. CA affirmed the lower courts decision.

ISSUE: Won Private respondent has capacity to sue.

Ruling: yes. We cannot sustain the allegation that the respondent Cherry Valley, being anunlicensed foreign corporation lacked the legal capacity to institute the suit in the trial court forrecovery of money claims. In fact, petitioner is estopped from challenging or questioning the

personality of a corporation after having acknowledge the same by entering a contract with it

7. G.R. No. 127833 January 22, 1999

TEODORO URQUIAGA and MARIA AGUIRRE, petitioners, vs. THE COURT OF APPEALS,VICENTE CASES and ANITA CRISOSTOMO, respondents

Facts:

Spouses Cases and Crisostomo are registered owners of a 26,152 square meterssituated in Sicayab, Dipolog City, covered by Original Certificate of Title No. P-16635which was subdivided into 2 lots

Workers of the petitioners entered the lot and gathered nipa palms therefrom and claimedthat the petitioners owned the property and that its parents owned it since timeimmemorial.

During Barangay conciliation, petitioner Urquiaga questioned the validity of privaterespondents' title by ascribing actual fraud in its acquisition.

Respondents then filed for TRO because petitioner built a dike on the property. The courtthen enjoined Uriquaga to undertake any activity that would alter the status of the lot.

The court then ruled in favor of Cases and Crisostomo declaring them as true owners ofthe lot.

The petitioners then appealed to the SC alleging that respondents acquired the lotsthrough fraud and misrepresentation. They further contend that their possession ripenedinto ownership since their predecessor-in-interest possessed such since World War II.

Issue:

1. WON petitioners are the true owners of the land for having possession for a long period oftime.

2. WON the court may institute reversion proceeding on the ground of fraud andmisrepresentation.

Held:


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1. No. Petitioners' claim of ownership over Lot No. 6532-B stands on quicksand and its allegedroots do not actually exist. The parents of petitioner Maria Aguirre could not have possessed thesubject lot for a long duration because as early as January 1923 when the cadastral survey wasstarted they did not claim any right much less interest thereto. Neither were they claimants in thecadastral case. On the other hand, respondents' avowal of ownership is supported by a certificateof title issued on account of a sales patent duly awarded by the Director of Lands.

2. No. It is only the State which may institute reversion proceedings under Sec. 101 of the PublicLand Act

16considering the finding that the subject lot was public land at the time of the sales

application. This law provides -

Sec. 101. All actions for reversion to the Government of lands of the public domain orimprovements thereon shall be instituted by the Solicitor General or the officer acting in his stead,in the proper courts, in the name of the Republic of the Philippines.

8. Benavidez vs CA

9. G.R. No. 162788. July 28, 2005

Spouses JULITA DE LA CRUZ and FELIPE DE LA CRUZ, petitioners, vs. PEDRO JOAQUIN,respondent.

FACTS:Respondent Joaquin filed a complaint against petitioners for the recovery of possession andownership, the cancellation of title, and damages. He alleged that he had obtained a loan ofP9,000, payable after (5) years where he supposedly executed a Deed of Sale for parcel ofland. The parties also executed another document entitled Kasunduan.Where respondent claimed that the Kasunduan showed the Deed of Sale to be actually anequitable mortgage. Spouses De la Cruz contended that it was merely an accommodation toallow the repurchase of the property, which he failed to exercise.

RTC issued a Decision in his favor. The trial court declared that it was a sale with a right ofrepurchase and that respondent had made a valid tender of payment to exercise his right ofrepurchase. Accordingly, petitioners were required to reconvey the property upon his payment.CA sustained the trial court's ruling. While on it's 2004 Resolution, CA denied reconsiderationand ordered a substitution by legal representatives, in view of respondents death on December24, 1988. Hence, this Petition.

ISSUE:WON the trial court lost jurisdiction over the case upon the death of the respondent.

HELD:No. When a party to a pending action dies and the claim is not extinguished, the Rules of Courtrequire a substitution of the deceased. The procedure is specifically governed by Section 16 of

Rule 3, which reads thus:Death of a party; duty of counsel. Whenever a party to a pending action dies, and the claim isnot thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30)days after such death of the fact thereof, and to give the name and address of his legalrepresentative or representatives. Failure of counsel to comply with this duty shall be a groundfor disciplinary action. The heirs of the deceased may be allowed to be substituted for thedeceased, without requiring the appointment of an executor or administrator and the court mayappoint a guardian ad litem for the minor heirs.The Rules require the legal representatives of a dead litigant to be substituted as parties to alitigation. This requirement is necessitated by due process. Thus, when the rights of the legal


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representatives of a decedent are actually recognized and protected, noncompliance or belatedformal compliance with the Rules cannot affect the validity of the promulgated decision. After all,due process had thereby been satisfied.The general rule notwithstanding, a formal substitution by heirs is not necessary when theythemselves voluntarily appear, participate in the case, and present evidence in defense of thedeceased. Thus there being no violation of due process, the issue of substitution cannot beupheld as a ground to nullify the trial courts Decision.

10. G.R. No. 166302. July 28, 2005LOTTE PHIL. CO., INC., peti t ioner, vs. ERLINDA DELA CRUZ, LEONOR MAMAUAG,LOURDES CAUBA, JOSEPHINE DOMANAIS, ARLENE CAGAYAT, AMELITA YAM, VIVIANDOMARAIS, MARILYN ANTALAN, CHRISTOPHER RAMIREZ, ARNOLD SAN PEDRO,MARISSA SAN PEDRO, LORELI JIMENEZ, JEFFREY BUENO, CHRISTOPHER CAGAYAT,GERARD CABILES, JOAN ENRIQUEZ, JOSEPH DE LA CRUZ, NELLY CLERIGO, DULCENAVARETTE, ROWENA BELLO, DANIEL RAMIREZ, AILEEN BAUTISTA and BALTAZARFERRERA, respondents.

FACTS:

7J Maintenance and Janitorial Services (7J) entered into a contract with Petitioner LOTTE toprovide manpower for needed maintenance, utility, janitorial and other services to the latter.

Petitoner dispensed with their services allegedly due to the expiration/termination of the servicecontract by petitioner with 7J

respondents filed a labor complaint against both Lotte and 7J, for illegal dismissal, regularization,payment of corresponding backwages and related employment benefits, 13

thmonth pay, service

incentive leave, moral and exemplary damages and attorneys fees based on total judgmentaward.

Labor Arbiter rendered judgment declaring 7J as employer of respondents. The arbiter also found7J guilty of illegal dismissal.

Respondents appealed to the National Labor Relations Commission (NLRC) praying that Lotte bedeclared as their direct employer because 7J is merely a labor-only contractor. It was denied.

They filed a petition forcertiorariin the Court of Appeals against the NLRC and Lotte, insistingthat their employer is Lotte and not 7J.

the Court of Appeals reversed and set aside the rulings of the Labor Arbiter and the NLRC. TheCourt of Appeals declared Lotte as the real employer of respondents and that 7J who engaged inlabor-only contracting was merely the agent of Lotte.

Lottes motion for reconsideration was denied

ISSUE: WON 7j should be impleaded

RULING:

Yes,


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An indispensable party is a party in interest without whom no final determination can be hadof an action, and who shall be joined either as plaintiffs or defendants. The joinder ofindispensable parties is mandatory. The presence of indispensable parties is necessary to vestthe court with jurisdiction, which is the authority to hear and determine a cause, the right to act ina case. Thus, without the presence of indispensable parties to a suit or proceeding, judgment ofa court cannot attain real finality.

[19]The absence of an indispensable party renders all

subsequent actions of the court null and void for want of authority to act, not only as to the absentparties but even as to those present.[20]

In the case at bar, 7J is an indispensable party. It is a party in interest because it will beaffected by the outcome of the case. The Labor Arbiter and the NLRC found 7J to be solely liableas the employer of respondents. The Court of Appeals however rendered Lotte jointly andseverally liable with 7J who was not impleaded by holding that the former is the real employer ofrespondents. Plainly, its decision directly affected 7J.

11. G.R. No. 110318 August 28, 1996

COLUMBIA PICTURES, INC., ORION PICTURES CORPORATION, PARAMOUNT PICTURESCORPORATION, TWENTIETH CENTURY FOX FILM CORPORATION, UNITED ARTISTSCORPORATION, UNIVERSAL CITY STUDIOS, INC., THE WALT DISNEY COMPANY, andWARNER BROTHERS, INC., petitioners, vs. COURT OF APPEALS, SUNSHINE HOMEVIDEO, INC. and DANILO A. PELINDARIO, respondents.

Facts:

Complainants filed a complaint with the NBI for violation of PD 49 (anti- piracy) againstSunshine Home Video.

A search warrant was then served against respondent and the agents found and seizedvarious tapes of duly copyrighted motion pictures belonging to complainants.

The respondents then averred that that being foreign corporations, petitioners shouldhave such license to be able to maintain an action in Philippine courts. They allege thatas foreign corporations doing business in the Philippines, Section 133 of BatasPambansa Blg. 68, or the Corporation Code of the Philippines, denies them the right to

maintain a suit in Philippine courts in the absence of a license to do business.Consequently, they have no right to ask for the issuance of a search warrant.

Issue: WON the complainants have the right to maintain suit in Philippine courts.

Held:No. Sec. 133. Doing business without a license. No foreign corporation transacting

business in the Philippines without a license, or its successors or assigns, shall be permitted tomaintain or intervene in any action, suit or proceeding in any court or administrative agency of thePhilippines; but such corporation may be sued or proceeded against before Philippine courts oradministrative tribunals on any valid cause of action recognized under Philippine laws.

The obtainment of a license prescribed by Section 125 of the Corporation Code is not a condition

precedent to the maintenance of any kind of action in Philippine courts by a foreign corporation.However, under the aforequoted provision, no foreign corporation shall be permitted to transactbusiness in the Philippines, as this phrase is understood under the Corporation Code, unless itshall have the license required by law, and until it complies with the law intransacting businesshere, it shall not be permitted to maintain any suit in local courts.

Among the grounds for a motion to dismiss under the Rules of Court are lack of legalcapacity to sue and that the complaint states no cause of action. Lack of legal capacity tosue means that the plaintiff is not in the exercise of his civil rights, or does not have the
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necessary qualification to appear in the case, or does not have the character orrepresentation he claims. On the other hand, a case is dismissible for lack of personalityto sue upon proof that the plaintiff is not the real party in interest, hence grounded onfailure to state a cause of action.

The term lack of capacity to sue should not be confused with the term lack ofpersonality to sue. While the former refers to a plaintiffs general disability to sue, suchas on account of minority, insanity, incompetence, lack of juridical personality or anyother general disqualifications of a party, the latter refers to the fact that the plaintiff is notthe real party in interest. Correspondingly, the first can be a ground for a motion todismiss based on the ground of lack of legal capacity to sue; whereas the second can beused as a ground for a motion to dismiss based on the fact that the complaint, on the facethereof, evidently states no cause of action.

Documents

Rule 1-3 Compilation