REMEDIAL LAW REVIEW 1Assignment No. 6.1Emile Justin Cebrian

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SPOUSES ALGURA vs. THE LOCAL GOVERNMENT UNIT OF THE CITY OF NAGA, G.R. No. 150135

October 30, 2006Velasco, Jr., J.

FACTS: Spouses Antonio F. Algura and Lorencita S.J. Algura filed with the Naga RTC a Verified Complaint for damages against the Naga City Government and its officers, arising from the alleged illegal demolition of their residence and boarding house and for payment of lost income derived from fees paid by their boarders. Simultaneously, petitioners filed an Ex-Parte Motion to Litigate as Indigent Litigants, to which petitioner Antonio Algura's Pay Slip was appended, showing a gross monthly income of P10,474.00 and a net pay of P3,616.99 for July 1999. Also attached was a Certification issued by the Office of the City Assessor of Naga City, which stated that petitioners had no property declared in their name for taxation purposes.

Finding that petitioners' motion to litigate as indigent litigants was meritorious, the RTC granted petitioners' plea for exemption from filing fees.

Respondents filed an Answer with Counterclaim, arguing that the defenses of the petitioners in the complaint had no cause of action, the spouses' boarding house blocked the road right of way, and said structure was a nuisance per se. Respondents also filed a Motion to Disqualify the Plaintiffs for Non-Payment of Filing Fees. Petitioners subsequently interposed their Opposition to the Motion. The RTC issued an Order disqualifying petitioners as indigent litigants on the ground that they failed to substantiate their claim for exemption from payment of legal fees and to comply with the third paragraph of Rule 141, Section 18 of the Revised Rules of Court—directing them to pay the requisite filing fees.

Petitioners filed a Motion for Reconsideration; respondents then filed their Comment/Objections to petitioner's Motion for Reconsideration. The trial court issued an Order giving petitioners the opportunity to comply with the requisites laid down in Section 18, Rule 141, for them to qualify as indigent litigants. Petitioners submitted their Compliance attaching the affidavits of petitioner Lorencita Algura and Erlinda Bangate, to comply with the requirements of then Rule 141, Section 18 of the Rules of Court and in support of their claim to be declared as indigent litigants.

The RTC denied the petitioners' Motion for Reconsideration, ratiocinating that the pay slip of Antonio F. Algura showed that the "GROSS INCOME or TOTAL EARNINGS of plaintiff Algura [was] P10,474.00 which amount [was] over and above the amount mentioned in the first paragraph of Rule 141, Section 18 for pauper litigants residing outside Metro Manila." Said rule provides that the gross income of the litigant should not exceed P3,000.00 a month.

ISSUE: Should petitioners be considered as indigent litigants exempt from paying filing fees?

RULING: YES.

[The] rule on pauper litigants was inserted in Rule 141 without revoking or amending Section 21 of Rule 3, which provides for the exemption of pauper litigants from payment of filing fees.

Amendments to Rule 141 (including the amendment to Rule 141, Section 18) were made to implement RA 9227 which brought about new increases in filing fees. […] Even if there was an amendment to Rule 141 on August 16, 2004, there was still no amendment or recall of Rule 3, Section 21 on indigent litigants.

It is undisputed that the Complaint (Civil Case No. 99-4403) was filed on September 1, 1999. However, the Naga City RTC, in its April 14, 2000 and July 17, 2000 Orders, incorrectly applied Rule 141, Section 18 on Legal Fees when the applicable rules at that time were Rule 3, Section 21 on Indigent Party which took effect on July 1, 1997 and Rule 141, Section 16 on Pauper Litigants […]

The Court opts to reconcile Rule 3, Section 21 and Rule 141, Section 19 because it is a settled principle that when conflicts are seen between two provisions, all efforts must be made to harmonize them. Hence, "every statute [or rule] must be so construed and harmonized with other statutes [or rules] as to form a uniform system of jurisprudence."

The Court concedes that Rule 141, Section 19 provides specific standards while Rule 3, Section 21 does not clearly draw the limits of the entitlement to the exemption. Knowing that the litigants may abuse the grant of authority, the trial court must use sound discretion and scrutinize evidence strictly in granting exemptions, aware that the applicant has not hurdled the precise standards under Rule 141. The trial court must also guard against abuse and misuse of the privilege to litigate as an indigent litigant to prevent the filing of exorbitant claims which would otherwise be regulated by a legal fee requirement.

Thus, the trial court should have applied Rule 3, Section 21 to the application of the Alguras after their affidavits and supporting documents showed that petitioners did not satisfy the twin requirements on gross monthly income and ownership of real property under Rule 141. Instead of disqualifying the Alguras as indigent litigants, the trial court should have called a hearing as required by Rule 3, Section 21 to enable the petitioners to adduce evidence to show that they didn't have property and money sufficient and available for food, shelter, and basic necessities for them and their family. In that hearing, the respondents would have had the right to also present evidence to refute the allegations and evidence in support of the application of the petitioners to litigate as indigent litigants. Since this Court is not a trier of facts, it will have to remand the case to the trial court to determine whether petitioners can be considered as indigent litigants using the standards set in Rule 3, Section 21.

Recapitulating the rules on indigent litigants, therefore, if the applicant for exemption meets the salary and property requirements under Section 19 of Rule 141, then the grant of the application is mandatory. On the other hand, when the application does not satisfy one or both requirements, then the application should not be denied outright; instead, the court should apply the "indigency test" under Section 21 of Rule 3 and use its sound discretion in determining the merits of the prayer for exemption.

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DEVELOPMENT BANK OF THE PHILIPPINES vs. GUARIÑA AGRICULTURAL AND REALTY DEVELOPMENT CORPORATION

G.R. No. 160758January 15, 2014

Bersamin, J.

FACTS: Guariña Corporation (Guariña) applied for a loan from DBP to finance the development of its resort complex. Guariña executed a promissory note and a real estate mortgage over several real properties in favor of DBP as security for the repayment of the loan. Guariña likewise executed a chattel mortgage over the personal properties existing at the resort complex and those yet to be acquired out of the proceeds of the loan, also to secure the performance of the obligation.  Prior to the release of the loan, DBP required Guariña to put up a cash equity for the construction of the buildings and other improvements on the resort complex. The loan was released in several installments, and Guariña used the proceeds to defray the cost of additional improvements in the resort complex. Guariña demanded the release of the balance of the loan, but DBP refused. Instead, DBP directly paid some suppliers of Guariña Corporation over the latter's objection. Later, DBP found upon inspection of the resort project, its developments, and improvements, that Guariña had not completed the construction works. DBP thus demanded that Guariña expedite the completion of the project, and warned that it would initiate foreclosure proceedings should Guariña not do so. Unsatisfied with Guariña’s non-action and objection, DBP initiated extrajudicial foreclosure proceedings. A notice of foreclosure sale was sent to Guariña. The notice was eventually published, leading the clients and patrons of Guariña to think that its business operation had slowed down, and that its resort had already closed.

Guariña sued DBP in the RTC to demand specific performance of the latter's obligations under the loan agreement, and to stop the foreclosure of the mortgages. However, DBP moved for the dismissal of the complaint, stating that the mortgaged properties had already been sold to satisfy the obligation of Guariña at a public auction. Due to this, Guariña Corporation amended the complaint to seek the nullification of the foreclosure proceedings and the cancellation of the certificate of sale. In the meantime, DBP applied for the issuance of a writ of possession by the RTC. At first, the RTC denied the application but later granted it upon DBP's motion for reconsideration. Aggrieved, Guariña assailed the granting of the application before the CA on certiorari, with the petition docketed as C.A.-G.R. No. 12670-SP. After the CA dismissed this petition for certiorari, DBP sought the implementation of the order for the issuance of the writ of possession. Over Guariña's opposition, the RTC issued the writ of possession. The RTC rendered its judgment in the specific performance case, ruling that the extra-judicial sales of the mortgaged properties are null and void. On appeal, DBP challenged the judgment of the RTC. However, the CA, in C.A.-G.R. CV No. 59491, sustained the RTC's judgment. DBP timely filed a motion for reconsideration, but the CA denied its motion – hence, this appeal by DBP.

DBP insisted that the decision of the CA in C.A.-G.R. No. 12670-SP already constituted the law of the case, and therefore, the CA could not decide the appeal in C.A.-G.R. CV No. 59491 differently. Guariña countered that the ruling in C.A.-G.R. No. 12670-SP did not constitute the law of the case because C.A.-G.R. No. 12670-SP concerned the issue of possession by DBP as the winning bidder in the foreclosure sale, and had no bearing whatsoever to the legal issues presented in C.A.-G.R. CV No. 59491.

ISSUE: Did the CA fail to adhere to the law-of-the-case doctrine?

RULING: NO.

The doctrine of [the] law of the case simply means […] that when an appellate court has once declared the law in a case, its declaration continues to be the law of that case even on a subsequent appeal, notwithstanding that the rule thus laid down may have been reversed in other cases. For practical considerations, indeed, once the appellate court has issued a pronouncement on a point that was presented to it with full opportunity to be heard having been accorded to the parties, the pronouncement should be regarded as the law of the case and should not be reopened on remand of the case to determine other issues of the case, like damages. But the law of the case, as the name implies, concerns only legal questions or issues thereby adjudicated in the former appeal.

The foregoing understanding of the concept of the law of the case exposes DBP's insistence to be unwarranted. […] To start with, the ex parte proceeding on DBP's application for the issuance of the writ of possession was entirely independent from the judicial demand for specific performance herein. In fact, C.A.-G.R. No. 12670-SP, being the interlocutory appeal concerning the issuance of the writ of possession while the main case was pending, was not at all intertwined with any legal issue properly raised and litigated in C.A.-G.R. CV No. 59491, which was the appeal to determine whether or not DBP's foreclosure was valid and effectual. And, secondly, the ruling in C.A.-G.R. No. 12670-SP did not settle any question of law involved herein because this case for specific performance was not a continuation of C.A.-G.R. No. 12670-SP (which was limited to the propriety of the issuance of the writ of possession in favor of DBP), and vice versa.

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ROBERTO R. DAVID vs. EDUARDO C. DAVIDG.R. No. 162365

January 15, 2014Bersamin, J.

FACTS: Respondent Eduardo C. David (Eduardo) initiated a replevin suit against Roberto R. David (Roberto), his first cousin and former business partner, to recover the possession of one unit of International CO 9670 Truck Tractor and Mi-Bed Trailer.

The case’s origins can be traced to when Eduardo and his brother Edwin C. David (Edwin), acting on their own and in behalf of their co-heirs, sold their inherited properties to Roberto, specifically: (a) a parcel of land in Baguio City; and (b) two units International CO 9670 Truck Tractor with two Mi-Bed Trailers. A deed of sale with assumption of mortgage embodied the terms of their agreement, which provided, inter alia, that Eduardo and Edwin have the right to repurchase the properties within a period of three years from the execution of the deed of sale based on the purchase price agreed upon, plus 12% interest per annum.

Later, Roberto and Edwin executed a memorandum of agreement (MOA) with the Spouses Marquez and Soledad Go (Spouses Go), by which they agreed to sell the Baguio City lot to the latter. The MOA stipulated that "in order to save payment of high and multiple taxes considering that the […] subject matter of this sale is mortgaged with DBP, Baguio City, and sold [to Roberto], Edwin will execute the necessary Deed of Absolute Sale in favor of [the Spouses Go], in lieu of [Roberto]." The Spouses Go then deposited the amount of P10,000,000.00 to Roberto’s account. After the execution of the MOA,

Roberto gave Eduardo P2,800,000.00 and returned to him one of the truck tractors and trailers subject of the deed of sale. Eduardo demanded for the return of the other truck tractor and trailer, but Roberto refused to heed the demand.

This led to the filing of the replevin suit, with Eduardo alleging that he was exercising the right to repurchase under the deed of sale; and that he was entitled to the possession of the other motor vehicle and trailer. Roberto, however, denied that Eduardo could repurchase the properties in question, and insisted that the MOA had extinguished their deed of sale by novation. The RTC rendered judgment in favor of Eduardo, holding that the stipulation giving Eduardo the right to repurchase had made the deed of sale a conditional sale; that Eduardo had fulfilled the conditions for the exercise of the right to repurchase; that the ownership of the properties in question had reverted to Eduardo; that Roberto’s defense of novation had no merit; and that due to Roberto’s bad faith in refusing to satisfy Eduardo’s claim, Eduardo should be awarded litigation expenses and attorney’s fees.

Roberto appealed to the CA, which affirmed the RTC decision. The CA likewise denied Roberto’s motion for reconsideration – hence, this petition for review on certiorari.

ISSUE: Did the CA err in holding that respondent has exercised their right to repurchase and that there was no novation of the deed of sale when the parties executed a memorandum of agreement for the sale of the subject house and lot and, thereafter sold the said property to third persons?

RULING: NO.

[To begin, the] CA and the RTC both found and held that Eduardo had complied with the conditions stipulated in the deed of sale and prescribed by Article 1616 of the Civil Code.

Considering that the factual findings of the trial court, when affirmed by the CA, are binding on the Court, [the Supreme Court] affirms the judgment of the CA upholding Eduardo’s exercise of the right of repurchase. Roberto could no longer assail the factual findings because his petition for review on certiorari was limited to the review and determination of questions of law only. A question of law exists when the doubt centers on what the law is on a certain set of undisputed facts, while a question of fact exists when the doubt centers on the truth or falsity of the alleged facts. Whether the conditions for the right to repurchase were complied with, or whether there was a tender of payment, is a question of fact. With both the RTC and the CA finding and holding that Eduardo had fulfilled the conditions for the exercise of the right to repurchase, therefore, we conclude that Eduardo had effectively repurchased the properties subject of the deed of sale.

On the other hand, [the Supreme Court] dismisses as devoid of merit Roberto’s insistence that the MOA had extinguished the obligations established under the deed of sale by novation.

The issue of novation involves a question of fact, as it necessarily requires the factual determination of the existence of the various requisites of novation, namely: (a) there must be a previous valid obligation; (b) the parties concerned must agree to a new contract; (c) the old contract must be extinguished; and (d) there must be a valid new contract. With both the RTC and the CA concluding that the MOA was consistent with the deed of sale, novation whereby the deed of sale was extinguished did not occur. In that regard, it is worth repeating that the factual findings of the lower courts are binding on the Court.

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LAND BANK OF THE PHILIPPINES vs. YATCO AGRICULTURAL ENTERPRISESG.R. No.172551

January 15, 2014Brion, J.

FACTS: Respondent Yatco Agricultural Enterprises (Yatco) was the registered owner of a parcel of agricultural land (property) in Calamba, Laguna. The government later placed the property under the coverage of its Comprehensive Agrarian Reform Program (CARP). Pursuant to E.O. No. 405, petitioner Land Bank of the Philippines (LBP) valued the property at P1,126,132.89. Yatco did not find this valuation acceptable and thus elevated the matter to the Department of Agrarian Reform (DAR) Provincial Agrarian Reform Adjudicator (PARAD) of San Pablo City, which then conducted summary administrative proceedings for the determination of just compensation.

The PARAD computed the value of the property at P16,543,800.00; it used the property’s current market value (as shown in the tax declaration that Yatco submitted) and applied the formula "MV x 2." The PARAD noted that the LBP did not present any verified or authentic document to back up its computation; hence, it brushed aside the LBP’s valuation. The LBP did not move to reconsider the PARAD’s ruling. Instead, it filed with the RTC-SAC a petition for the judicial determination of just compensation.

The RTC-SAC fixed the just compensation for the property at P200.00 per square meter. The RTC-SAC’s relied on the valuation made by Branches 35 and 36 in the civil cases and opted not to give weight to the LBP’s evidence in justifying its valuation, pointing out that the LBP failed to prove that it complied with the prescribed procedure and likewise failed to consider the valuation factors provided in Section 17 of the Comprehensive Agrarian Reform Law of 1988 (CARL). The RTC-SAC subsequently denied the LBP’s motion for reconsideration. The LBP appealed to the CA.

The CA dismissed the LBP’s appeal. Significantly, it did not find the LBP’s assigned errors – as to the RTC-SAC’s basis for its valuation – to be persuasive. First, according to the CA, the parcels of land in the civil cases were the very same properties in the appealed agrarian case. Second, Branch 36’s valuation was based on the report of the duly appointed commissioners and was arrived at after proper land inspection. As the determination of just compensation is essentially a judicial function, the CA thus affirmed the RTC-SAC’s valuation which was founded on factual and legal bases. The CA denied its motion for reconsideration – hence, this petition. Yatco claims, inter alia, that the present petition’s issues and arguments are purely factual and they are not allowed in a petition for review on certiorari and that the LBP did not point to any specific error that the CA committed when it affirmed the RTC-SAC’s decision.

ISSUE: Was the issue raised by the LBP a question of law as required for a Rule 45 petition?

RULING: YES.

As a general rule, the Court’s jurisdiction in a Rule 45 petition is limited to the review of pure questions of law. A question of law arises when the doubt or difference exists as to what the law is on a certain state of facts. Negatively put, Rule 45 does not allow the review of questions of fact. A question of fact exists when the doubt or difference arises as to the truth or falsity of the alleged facts.

The test in determining whether a question is one of law or of fact 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." Any question that invites calibration of the whole evidence, as well as their relation to each other and to the whole, is a question of fact and thus proscribed in a Rule 45 petition.

The LBP essentially questions in the present petition the RTC-SAC’s adoption of the valuation made by Branch 36 in fixing the just compensation for the property. The LBP asks the question: was the just compensation fixed by the RTC-SAC for the property, which was based solely on Branch 36’s valuation, determined in accordance with law?

[The Supreme Court finds] the presented issue clearly one of law. Resolution of this question can be made by mere inquiry into the law and jurisprudence on the matter, and does not require a review of the parties’ evidence. [The Supreme Court], therefore, [disagrees] with Yatco on this point as […] the present petition [is found to be] compliant with the Rule 45 requirement.

The determination of just compensation is essentially a judicial function that the Judiciary exercises within the parameters of the law. […] Section 57 of R.A. No. 6657 explicitly vests the RTC-SAC the original and exclusive power to determine just compensation for lands under CARP coverage.

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INC. SHIPMANAGEMENT, INC., CAPTAIN SIGFREDO E. MONTERROYO AND/OR INTERORIENT NAVIGATION, LTD. vs. ALEXANDER L. MORADAS

G.R. No. 178564January 15, 2014Perlas-Bernabe, J.

FACTS: Respondent was employed as wiper for the vessel MV Commander (vessel) by petitioner INC Shipmanagement, Inc. for its principal, petitioner Interorient Navigation, Ltd. (petitioners), for a period of 10 months, with a basic monthly salary of US 360.00, plus benefits. Respondent later claimed that while he was disposing of the garbage in the incinerator room of the vessel, certain chemicals splashed all over his body because of an explosion. He was sent to the Burns Unit of the Prince of Wales Hospital on the same day wherein he was found to have suffered deep burns. Eventually, upon his own request, respondent was sent home, and later admitted to the St. Luke’s Medical Center where he was diagnosed to have sustained thermal burns at his upper and lower extremities and abdomen. The attending physician reported that the respondent’s thermal burns were healing well and that they were estimated to fully heal within a period of 3 to 4 months. Claiming that the burns rendered him permanently incapable of working again as a seaman, respondent demanded for the payment of his full disability benefits under Section 20 (B) in relation to Sections 30 and 30-A of the Philippine Overseas Employment Agency (POEA) Standard Employment Contract (POEA-SEC), in the amount of US$60,000.00, which petitioners refused to heed. Thus, respondent filed a complaint against petitioners for the same, seeking as well moral and exemplary damages, including attorney’s fees. Petitioners denied respondent’s claims, contending that his injury was self-inflicted and, hence, not compensable under Section 20 (D) of the POEA-SEC. They denied that the vessel’s incinerator exploded and claimed that respondent burned himself by

pouring paint thinner on his overalls and thereafter set himself on fire. They averred that he was led to commit such act after he was caught stealing the vessel’s supplies during a routine security inspection where respondent was informed that he was to be dismissed. They also stated that just before they discovered respondent to be burning, the vessel’s engine room became flooded; it was respondent’s fault as well, they said. Respondent denied burning himself, contending that such act was contrary to human nature and logic and that there was no showing that he was mentally unfit.

The Labor Arbiter (LA) ruled in favor of petitioners, dismissing respondent’s complaint for lack of merit. On appeal, the National Labor Relations Commission (NLRC) sustained the findings of the LA. Respondent filed a motion for reconsideration but the same was denied. Dissatisfied, he filed a petition for certiorari before the CA.

The CA rendered the assailed Decision, holding that grave abuse of discretion tainted the NLRC ruling. It found no logical and causal connection between the act of pilferage as well as the act of causing the flooding in the engine room and the conclusion that respondent’s injury was self-inflicted. It added that it was contrary to human nature and experience for respondent to burn himself. Aggrieved, petitioners moved for reconsideration which was, however, denied – hence, this petition.

ISSUE: Did the CA err in finding that the NLRC gravely abused its discretion when it denied respondent’s claim for disability benefits?

RULING: YES.

The [Supreme] Court’s jurisdiction in cases brought before it from the CA via Rule 45 of the Rules of Court is generally limited to reviewing errors of law. The Court is not the proper venue to consider a factual issue as it is not a trier of facts. This rule, however, is not ironclad and a departure therefrom may be warranted where the findings of fact of the CA are contrary to the findings and conclusions of the NLRC and LA, as in this case. In this regard, there is therefore a need to review the records to determine which of them should be preferred as more conformable to evidentiary facts. With respect to the applicable rules, it is doctrinal that the entitlement of seamen on overseas work to disability benefits is a matter governed, not only by medical findings, but by law and by contract. […] In the foregoing light, the Court observes that respondent executed his contract of employment […] incorporating therein the terms and conditions of the 2000 POEA-SEC [but] since the implementation of the provisions of the foregoing 2000 POEA-SEC was temporarily suspended by the Court […] and was lifted only through POEA Memorandum Circular No. 2, series of 2002, the determination of respondent’s entitlement to the disability benefits should be resolved under the provisions of the 1996 POEA-SEC as it was, effectively, the governing circular at the time respondent’s employment contract was executed.

The prevailing rule under Section 20 (B) of the 1996 POEA-SEC on compensation and benefits for injury or illness was that an employer shall be liable for the injury or illness suffered by a seafarer during the term of his contract. There was no need to show that such injury was work-related except that it must be proven to have been contracted during the term of the contract. The rule, however, is not absolute and the employer may be exempt from liability if he can successfully prove that the cause of the seaman’s injury was directly attributable to his deliberate or willful act […] [h]ence, the onus probandi falls on the petitioners herein to establish or substantiate their claim that the respondent’s injury was caused by his willful act with the requisite quantum of evidence. In

labor cases, as in other administrative proceedings, only substantial evidence or such relevant evidence as a reasonable mind might accept as sufficient to support a conclusion is required.50 To note, considering that substantial evidence is an evidentiary threshold, the Court, on exceptional cases, may assess the factual determinations made by the NLRC in a particular case.

The evident conflict between the NLRC’s and CA’s factual findings as shown in the records of this case prompts the Court to sift through their respective factual determinations if only to determine if the NLRC committed grave abuse of discretion in reaching its disposition, keeping in mind that the latter’s assessment should only meet the threshold of substantial evidence.

In view of the above-discussed considerations and after a judicious scrutiny of the facts on record, the Court holds that the CA erred in attributing grave abuse of discretion on the part of the NLRC in affirming the LA’s dismissal of respondent’s complaint. This is based on the Court’s observation that the NLRC had cogent legal bases to conclude that petitioners have successfully discharged the burden of proving by substantial evidence that respondent’s injury was directly attributable to himself.

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HEIRS OF DR. MARIANO FAVIS SR. vs. JUANA GONZALES, et al.G.R. No. 185922

January 15, 2014Perez, J.

FACTS: Dr. Mariano Favis, Sr. (Dr. Favis) was married to Capitolina Aguilar (Capitolina) with whom he had seven children named Purita A. Favis, Reynaldo Favis, Consolacion Favis-Queliza, Mariano A. Favis, Jr., Esther F. Filart, Mercedes A. Favis, and Nelly Favis-Villafuerte. When Capitolina died in March 1944, Dr. Favis took Juana Gonzales (Juana) as his common-law wife with whom he sired one child, Mariano G. Favis (Mariano). When Dr. Favis and Juana got married in 1974, Dr. Favis executed an affidavit acknowledging Mariano as one of his legitimate children. Mariano is married to Larcelita D. Favis (Larcelita), with whom he has four children, named Ma. Theresa Joana D. Favis, Ma. Cristina D. Favis, James Mark D. Favis and Ma. Thea D. Favis. Dr. Favis died intestate, leaving a number of properties.

Before his death, Dr. Favis allegedly executed a Deed of Donation transferring and conveying properties described in (1) and (2) in favor of his grandchildren with Juana. Claiming that said donation prejudiced their legitime, Dr. Favis’ children with Capitolina, petitioners herein, filed an action for annulment of the Deed of Donation, inventory, liquidation and partition of property before the Regional Trial Court (RTC) of Vigan, Ilocos Sur, Branch 20 against Juana, Spouses Mariano and Larcelita and their grandchildren as respondents.

In their Answer with Counterclaim, respondents assert that the properties donated do not form part of the estate of the late Dr. Favis because said donation was made inter vivos, hence petitioners have no stake over said properties.

The RTC nullified the Deed of Donation. The trial court found that Dr. Favis, at the age of 92 and plagued with illnesses, could not have had full control of his mental capacities to execute a valid

Deed of Donation. Holding that the subsequent marriage of Dr. Favis and Juana legitimated the status of Mariano, the trial court also declared Juana and Mariano as compulsory heirs of Dr. Favis.

Respondents interposed an appeal before the Court of Appeals challenging the trial court’s nullification, on the ground of vitiated consent, of the Deed of Donation in favor of herein respondents. The Court of Appeals ordered the dismissal of the petitioners’ nullification case. However, it did so not on the grounds invoked by herein respondents as appellant.

The Court of Appeals motu proprio ordered the dismissal of the complaint for failure of petitioners to make an averment that earnest efforts toward a compromise have been made, as mandated by Article 151 of the Family Code. The appellate court justified its order of dismissal by invoking its authority to review rulings of the trial court even if they are not assigned as errors in the appeal. Petitioners filed a motion for reconsideration contending that the case is not subject to compromise as it involves future legitime. The Court of Appeals rejected petitioners’ contention when it ruled that the prohibited compromise is that which is entered between the decedent while alive and compulsory heirs. In the instant case, the appellate court observed that while the present action is between members of the same family it does not involve a testator and a compulsory heir. Moreover, the appellate court pointed out that the subject properties cannot be considered as "future legitime" but are in fact, legitime, as the instant complaint was filed after the death of the decedent. Undaunted by this legal setback, petitioners filed the instant petition.

ISSUE: Can the appellate court dismiss the order of dismissal of the complaint for failure to allege therein that earnest efforts towards a compromise have been made?

RULING: NO.

The appellate court committed egregious error in dismissing the complaint. The appellate courts’ decision hinged on Article 151 of the Family Code […] correlated […] with Section 1, par. (j), Rule 16 of the 1997 Rules of Civil Procedure […] The appellate court’s reliance on this provision is misplaced. Rule 16 treats of the grounds for a motion to dismiss the complaint. It must be distinguished from the grounds provided under Section 1, Rule 9 which specifically deals with dismissal of the claim by the court motu proprio.

Section 1, Rule 9 provides for only four instances when the court may motu proprio dismiss the claim, namely: (a) lack of jurisdiction over the subject matter; (b) litis pendentia; (c) res judicata; and (d) prescription of action. […]

The error of the Court of Appeals is evident even if the consideration of the issue is kept within the confines of the language of Section 1(j) of Rule 16 and Section 1 of Rule 9. That a condition precedent for filing the claim has not been complied with, a ground for a motion to dismiss emanating from the law that no suit between members from the same family shall prosper unless it should appear from the verified complaint that earnest efforts toward a compromise have been made but had failed, is, as the Rule so words, a ground for a motion to dismiss. Significantly, the Rule requires that such a motion should be filed "within the time for but before filing the answer to the complaint or pleading asserting a claim." The time frame indicates that thereafter, the motion to dismiss based on the absence of the condition precedent is barred. It is so inferable from the opening sentence of Section 1 of Rule 9 stating that defense and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. There are, as just noted, only four exceptions to this Rule […] Failure to allege in the complaint that earnest efforts at a compromise

has been made but had failed is not one of the exceptions. Upon such failure, the defense is deemed waived. […]

The Court of Appeals ignored the facts of the case that clearly demonstrated the refusal by the respondents to compromise. Instead it ordered the dismissal of petitioner’s complaint on the ground that it did not allege what in fact was shown during the trial. The error of the Court of Appeals is patent. […] The trial court's factual finding, therefore, stands unreversed; and respondents did not provide us with any argument to have it reversed.

The issue of the validity of donation was fully litigated and discussed by the trial court. Indeed, the trial court's findings were placed at issue before the Court of Appeals but the appellate court chose to confine its review to the procedural aspect. The judgment of the Court of Appeals, even if it dealt only with procedure, is deemed to have covered all issues including the correctness of the factual findings of the trial court. Moreover, remanding the case to the Court of Appeals would only constitute unwarranted delay in the final disposition of the case.

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PHILIPPINE NATIONAL BANK vs. SAN MIGUEL CORPORATIONG.R. No. 186063

January 15, 2014Peralta, J.

FACTS: Respondent San Miguel Corporation (SMC) entered into an Exclusive Dealership Agreement with a certain Rodolfo R. Goroza (Goroza), wherein the latter was given by SMC the right to trade, deal, market or otherwise sell its various beer products. Goroza applied for a credit line with SMC, but one of the requirements for the credit line was a letter of credit. Thus, Goroza applied for and was granted a letter of credit by the PNB in the amount of two million pesos (P2,000,000.00). Under the credit agreement, the PNB has the obligation to release the proceeds of Goroza's credit line to SMC upon presentation of the invoices and official receipts of Goroza's purchases of SMC beer products to the PNB, Butuan Branch. Goroza availed of his credit line with PNB and started selling SMC's beer products. Goroza later applied for an additional credit line with the PNB. The latter granted the same. Initially, Goroza was able to pay his credit purchases with SMC; however, Goroza started to become delinquent with his accounts.

Demands to pay the amount were made by SMC against Goroza and PNB, but neither of them paid. Aggrieved, SMC filed a Complaint for collection of sum of money against PNB and Goroza with the Butuan City RTC. After summons, herein petitioner filed its Answer, while Goroza did not. Upon respondent's Motion to Declare Defendant in Default, Goroza was declared in default. Trial ensued insofar as Goroza was concerned and respondent presented its evidence ex parte against the former.

The RTC rendered a Decision in favor of SMC. Goroza filed a Notice of Appeal, while SMC filed a Motion for Reconsideration. The RTC granted SMC's motion for reconsideration. The trial court amended its Decision by increasing the award of litigation expenses. Thereafter, the RTC issued an Order giving the appeal due course.

In the meantime, trial continued with respect to PNB. Later on, PNB filed an Urgent Motion to Terminate Proceedings on the ground that a decision was already rendered finding Goroza solely liable. The RTC denied PNB's motion.

The RTC issued a Supplemental Judgment inserting the phrase "without prejudice to the decision made against the other defendant PNB which was not declared in default" in the dispositive portion of its decision in favor of SMC. On even date, the RTC also issued an Amended Order including the phrase "this appeal applies only to defendant Rolando Goroza and without prejudice to the continuance of the hearing on the other defendant Philippine National Bank" to the Order giving due course to Goroza’s appeal. PNB then filed a Motion for Reconsideration for both issuances, but the RTC denied said motion.

Aggrieved, PNB filed a special civil action for certiorari with the CA imputing grave abuse of discretion on the part of the RTC. The CA denied the petition and affirmed the RTC. PNB filed a Motion for Reconsideration, but the CA denied it – hence, the instant petition.

ISSUES:

(1) Did the CA err in holding that the court a quo ruled properly in rendering a supplemental judgment and amended order against the bank despite the perfection of appeal of one of the defendants?

(2) Did the CA err in holding that proceedings may continue against PNB despite the complete adjudication of relief in favor of SMC?

RULING: NO.

The petition lacks merit.

It is clear from the proceedings held before and the orders issued by the RTC that the intention of the trial court is to conduct separate proceedings to determine the respective liabilities of Goroza and PNB, and thereafter, to render several and separate judgments for or against them. While ideally, it would have been more prudent for the trial court to render a single decision with respect to Goroza and PNB, the procedure adopted the RTC is, nonetheless, allowed under Section 4, Rule 36 of the Rules of Court, which provides that "in an action against several defendants, the court may, when a several judgment is proper, render judgment against one or more of them, leaving the action to proceed against the others." In addition, Section 5 of the same Rule states that "when more than one claim for relief is presented in an action, the court at any stage, upon a determination of the issues material to a particular claim and all counterclaims arising out of the transaction or occurrence which is the subject matter of the claim may render a separate judgment disposing of such claim." Further, the same provision provides that "the judgment shall terminate the action with respect to the claim so disposed of and the action shall proceed as to the remaining claims." Thus, the appeal of Goroza, assailing the judgment of the RTC finding him liable, will not prevent the continuation of the ongoing trial between SMC and PNB. The RTC retains jurisdiction insofar as PNB is concerned, because the appeal made by Goroza was only with respect to his own liability. In fact, PNB itself, in its Reply to respondent's Comment, admitted that the May 10, 2005 judgment of the RTC was "decided solely against defendant Rodolfo Goroza."

The propriety of a several judgment is borne by the fact that SMC's cause of action against PNB stems from the latter's alleged liability under the letters of credit which it issued. On the other hand,

SMC's cause of action against Goroza is the latter's failure to pay his obligation to the former. As to the separate judgment, PNB has a counterclaim against SMC which is yet to be resolved by the RTC.

[…] PNB cannot evade responsibility on the sole ground that the RTC judgment found Goroza liable and ordered him to pay the amount sought to be recovered by SMC. PNB's liability, if any, under the letter of credit is yet to be determined.

#8

UNIVERSAL ROBINA SUGAR MILLING CORPORATION, et al. vs. FERDINAND ACIBO, et al.G.R. No. 186439

January 15, 2014Brion, J.

FACTS: URSUMCO is a domestic corporation engaged in the sugar cane milling business; Cabati is URSUMCO’s Business Unit General Manager. The complainants were employees of URSUMCO. At the start of their respective engagements, the complainants signed contracts of employment for a period of one (1) month or for a given season. URSUMCO repeatedly hired the complainants to perform the same duties and, for every engagement, required the latter to sign new employment contracts for the same duration of one month or a given season.

The complainants filed before the LA complaints for regularization, entitlement to the benefits under the existing Collective Bargaining Agreement (CBA),and attorney’s fees. The LA dismissed the complaint for lack of merit. The LA held that the complainants were seasonal or project workers and not regular employees of URSUMCO. Accordingly, the complainants were not entitled to the benefits granted under the CBA that, as provided, covered only the regular employees of URSUMCO. Of the twenty-two original complainants before the LA, seven appealed the LA’s ruling before the NLRC.

The NLRC reversed the LA’s ruling; it declared the complainants as regular, for having performed activities which were usually necessary and desirable in the usual trade or business of URSUMCO, and had been repeatedly hired for the same undertaking every season. The petitioners moved to reconsider this NLRC ruling which the NLRC denied. The petitioners elevated the case to the CA via a petition for certiorari.

The CA affirmed the NLRC’s ruling finding the complainants to be regular employees. The petitioners filed the present petition after the CA denied their motion for partial reconsideration.

ISSUE: Did the CA commit grave abuse of discretion? RULING: YES.

[In] this jurisdiction, only questions of law are allowed in a petition for review on certiorari. This Court’s power of review in a Rule 45 petition is limited to resolving matters pertaining to any perceived legal errors, which the CA may have committed in issuing the assailed decision. In reviewing the legal correctness of the CA’s Rule 65 decision in a labor case, [the Supreme Court examines] the CA decision in the context that it determined, i.e., the presence or absence of grave abuse of discretion in the NLRC decision before it and not on the basis of whether the NLRC

decision on the merits of the case was correct. In other words, [the Supreme Court has] to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged before it.

[…] To recall, the NLRC declared the respondents as regular employees of URSUMCO. With such a declaration, the NLRC in effect granted the respondents’ prayer for regularization and, concomitantly, their prayer for the grant of monetary benefits under the CBA for URSUMCO’s regular employees. In its challenged ruling, the CA concurred with the NLRC finding, but with the respondents characterized as regular seasonal employees of URSUMCO.

The CA misappreciated the real import of the NLRC ruling. The labor agency did not declare the respondents as regular seasonal employees, but as regular employees. This is the only conclusion that can be drawn from the NLRC decision’s dispositive portion […] Citing jurisprudential standards, [the CA explained] that the respondents cannot be lumped with the regular employees due to the differences in the nature of their duties and the duration of their work vis-a-vis the operations of the company. The NLRC was well aware of these distinctions as it acknowledged that the respondents worked only during the milling season, yet it ignored the distinctions and declared them [as] regular employees, a marked departure from existing jurisprudence. This, to us, is grave abuse of discretion, as it gave no reason for disturbing the system of regular seasonal employment already in place in the sugar industry and other industries with similar seasonal operations. For upholding the NLRC’s flawed decision on the respondents’ employment status, the CA committed a reversible error of judgment.

In sum, […] the complaint [is] devoid of merit. The issue of granting affirmative relief to the complainants who did not appeal the CA ruling has become academic.

#9

RIVELISA REALTY, INC. vs. FIRST STA. CLARA BUILDERS CORPORATIONG.R. No. 189618

January 15, 2014Perlas-Bernabe, J.

FACTS: Rivelisa Realty entered into a Joint Venture Agreement (JVA) with First Sta. Clara for the construction and development of a residential subdivision located in Cabanatuan City (project). In the course of events, First Sta. Clara filed a complaint for rescission of the JVA against Rivelisa Realty before the RTC, claiming the payment of damages for breach of contract and delay in the performance of an obligation.

The RTC dismissed the complaint and ordered First Sta. Clara to pay Rivelisa Realty on its counterclaims for actual expenses and damages. Dissatisfied, First Sta. Clara elevated the matter on appeal. The CA found Rivelisa Realty still liable for First Sta. Clara’s actual accomplishments in the project after deducting certain costs it advanced.

Rivelisa Realty received a copy of the CA Decision and moved for a fifteen (15) day extension within which to file its motion for reconsideration. Thereafter, Rivelisa Realty filed its Motion for Reconsideration by registered mail. However, the CA denied Rivelisa Realty’s motion for extension as the 15-day period for filing a motion for reconsideration cannot be extended, and merely noted

without action the subsequently filed motion for reconsideration. The CA eventually denied Rivelisa Realty’s motion for reconsideration on the ground that the same was filed out of time – hence, the instant petition.

ISSUE: Is the 15-day reglementary period for the filing of a motion for reconsideration non-extendable?

RULING: YES.

The CA Decision subject of the instant petition for review had already attained finality in view of Rivelisa Realty’s failure to file a motion for reconsideration within the 15-day reglementary period allowed under the CA’s internal rules […]

While a motion for additional time is expressly permitted in the filing of a petition for review before the Court under Section 2, Rule 45 of the Rules of Court, a similar motion seeking to extend the period for filing a motion for reconsideration is prohibited in all other courts […] the Court emphasized that the 15-day period for filing a motion for new trial or reconsideration is non-extendible. Hence, the filing of a motion for extension of time to file a motion for reconsideration did not toll the 15-day period before a judgment becomes final and executory.

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MAGDALENA T. VILLASI vs. FILOMENO GARCIA, et al.G.R. No. 190106

January 15, 2014Perez, J.

FACTS: Sometime in 1990, petitioner Magdalena T Villasi (Villasi) engaged the services of respondent Fil-Garcia Construction, Inc. (FGCI) to construct a seven-storey condominium building located at Aurora Boulevard corner N. Domingo Street, Cubao, Quezon City. For failure of Villasi to fully pay the contract price despite several demands, FGCI initiated a suit for collection of sum of money before the RTC of Quezon City, Branch 77. In its action docketed as Civil Case No. Q-91-8187, FGCI prayed, among others, for the payment of the amount ofP2,865,000.00, representing the unpaid accomplishment billings. Served with summons, Villasi filed an answer specifically denying the material allegations of the complaint. Contending that FGCI has no cause of action against her, Villasi averred that she delivered the total amount of P7,490,325.10 to FGCI but the latter accomplished only 28% of the project. After the pre-trial conference was terminated without the parties having reached an amicable settlement, trial on the merits ensued.

ISSUE: Did the CA grievously err in upholding the decision of the trial court to suspend and hold in abeyance the sale on execution of the buildings levied upon on the basis of respondents’ affidavit of third-party claim?

RULING: NO.

It is a basic principle of law that money judgments are enforceable only against the property incontrovertibly belonging to the judgment debtor, and if the property belonging to any third person is mistakenly levied upon to answer for another man’s indebtedness, such person has all the

right to challenge the levy through any of the remedies provided for under the Rules of Court. Section 16, Rule 39 specifically provides that a third person may avail himself of the remedies of either terceria, to determine whether the sheriff has rightly or wrongly taken hold of the property not belonging to the judgment debtor or obligor, or an independent "separate action" to vindicate his claim of ownership and/or possession over the foreclosed property. However, the person other than the judgment debtor who claims ownership or right over levied properties is not precluded from taking other legal remedies to prosecute his claim.

Our perusal of the record shows that, as the party asserting their title, the Spouses Garcia failed to prove that they have a bona fide title to the building in question. Aside from their postulation that as title holders of the land, the law presumes them to be owners of the improvements built thereon, the Spouses Garcia were unable to adduce credible evidence to prove their ownership of the property. In contrast, Villasi was able to satisfactorily establish the ownership of FGCI thru the pieces of evidence she appended to her opposition. Worthy to note is the fact that the building in litigation was declared for taxation purposes in the name of FGCI and not in the Spouses Garcias’. While it is true that tax receipts and tax declarations are not incontrovertible evidence of ownership, they constitute credible proof of claim of title over the property.

#11

LAND BANK OF THE PHILIPPINES vs. ONATEG.R. No. 192371

January 15, 2014Del Castillo, J.

FACTS: Land Bank is a government financial institution created under Republic Act No. 3844.7 From 1978 to 1980, Oñate opened and maintained seven trust accounts with Land Bank. Each trust account was covered by an Investment Management Account (IMA) with Full Discretion and has a corresponding passbook where deposits and withdrawals were recorded. Pertinent portions common to the IMAs provide that Land Bank will be Onate’s agent with full powers and discretion subject to some limitation. In a letter, Land Bank demanded from Oñate the return ofP4 million it claimed to have been inadvertently deposited to Trust Account No. 01-125 as his additional funds but actually represents the total amount of the checks issued to Land Bank by its corporate borrowers as payment for their pre-terminated loans. Oñate refused. To settle the matter, a meeting was held, but the parties failed to reach an agreement. Since then, the issue of "miscrediting" remained unsettled. Then on June 21, 1991, Land Bank unilaterally applied the outstanding balance in all of Oñate’s trust accounts against his resulting indebtedness by reason of the "miscrediting" of funds. Although it exhausted the funds in all of Oñate’s trust accounts, Land Bank was able to debit the amount of P1,528,583.48 only.

To recoup the remaining balance of Oñate’s indebtedness, Land Bank filed a Complaint for Sum of Money seeking to recover the amount of P8,222,687.8920 plus interest at the legal rate of 12% per annum computed from May 15, 1992 until fully paid.

The RTC ruled against Land Bank. The Court of Appeals affirmed the lower court’s ruling.

ISSUE: Was Onate entitled to claim the amount of P1,471,416.52 which is not pleaded as counterclaim in his answer?

RULING: YES.

Land Bank failed to prove that the miscredit funds came from proceeds of the pre-terminated loans of its corporate borrowers. As a consequence of its failure to prove the source of the claimed miscredited funds, Land Bank had no right to debit the said amount and therefore, must restore the same. Land Bank never prayed for the recovery of the negative balances in its Complaint. It is settled that courts cannot grant a relief not prayed for in the pleadings or in excess of what is being sought by the party. Due process considerations require that judgments must conform to and be supported by the pleadings and evidence presented in court. During the pre-trial conference, the issue of the validity of undocumented withdrawals was properly put into issue. The parties also agreed, as a collateral issue, that should it appear that the bank was not authorized to make the undocumented withdrawals, the next issue for consideration would be whether the amount subject thereof should be credited back to Oñate’s accounts. The case of negative balances as alluded to by Land Bank, however, is different. It was never put into issue during the pre-trial conference. The determination of issues at a pre-trial conference bars the consideration of other questions on appeal." Land Bank interposed its claim to the negative balances for the first time only when it filed its Memorandum with the RTC.

#12

EASTERN SHIPPING LINES, INC. vs. BPI/MS INSURANCE CORP.G.R. No. 193986

January 15, 2014Villarama, Jr., J.

FACTS: On separate dates, Sumitomo Corporation shipped through MV Eastern Challenger, a vessel owned by petitioner herein, various steel sheets in coil from Yokohama, Japan for delivery in favor of the consignee Calamba Steel. It was insured against all risk with Mitsui Sumitomo Insurance Co. When the shipment arrived in Manila, upon unloading from the vessel, some of the coils were observed to be in bad condition as evidenced by the Turn Over Survey of Bad Order. The cargo was then turned over to Asian Terminals, Inc. (ATI) for stevedoring, storage and safekeeping pending Calamba Steel’s withdrawal of the goods. When ATI delivered the cargo to Calamba Steel, the latter rejected its damaged portion.

Calamba Steel filed an insurance claim with Mitsui through the latter’s settling agent, respondent BPI/MS Insurance Corporation (BPI/MS), and the former was paid the the total amount of US$30,210.32. Correlatively, as insurer and subrogee of Calamba Steel, Mitsui and BPI/MS filed a Complaint for Damages against petitioner and ATI. The RTC ruled that Eastern Shipping Lines and Asian Terminals Inc. be jointly and severally liable. The Court of Appeals affirmed the decision of the lower court.

On appeal, it was raised that the survey reports clearly show that the cause of the damage was the rough handling of the goods by ATI during the discharging operations. Petitioner attests that it had no participation whatsoever in the discharging operations and that petitioner did not have a choice in selecting the stevedore since ATI is the only arrastre operator mandated to conduct discharging operations in the South Harbor.

ISSUE: Were Eastern Shipping Lines and ATI solidarily liable?

RULING: YES.

Well-entrenched in this jurisdiction is the rule that factual questions may not be raised before this Court in a petition for review on certiorari as this Court is not a trier of facts. This is clearly stated in Section 1, Rule 45 of the 1997 Rules of Civil Procedure, as amended, which 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 this petition, the resolution of the question as to who between petitioner and ATI should be liable for the damage to the goods is indubitably factual, and would clearly impose upon this Court the task of reviewing, examining and evaluating or weighing all over again the probative value of the evidence presented – something which is not, as a rule, within the functions of this Court and within the office of a petition for review on certiorari.

LEPANTO CONSOLIDATED MINING vs. ICAOG.R. No. 196047

January 15, 2014Sereno, CJ.

FACTS: The instant petition stemmed from a complaint for illegal dismissal and damages filed by private respondent Belio C. Icao against petitioners Lepanto Consolidated Mining Company (LCMC) and its Chief Executive Officer Felipe U. Yap before the Arbitration Branch of the NLRC. Private respondent claimed that his dismissal from work was without just or authorized cause since petitioners failed to prove by ample and sufficient evidence that he stole gold bearing high grade ores from the company premises. As such, private respondent prayed that petitioners be held liable for illegal dismissal, to reinstate him to his former position without loss of seniority rights and benefits, and to pay his full backwages, damages and attorney’s fees.

The Labor Arbiter held that LCMC is liable for illegal dismissal. The NLRC dismissed the appeal of LCMC for failure to post the appeal bond. The Court of Appeals affirmed the ruling of NLRC.

ISSUE: Was the petitioner compliant with the appeal bond requirement in his filing a consolidated motion to release the cash bond posted in another case?

RULING: YES.

The petitioner substantially complied with the appeal bond requirements. First, there is no question that the appeal was filed within the 10-day reglementary period. Except for the alleged failure to post an appeal bond, the appeal to the NLRC was therefore in order. Second, it is also undisputed that petitioner has an unencumbered amount of money in the form of cash in the custody of the NLRC. To reiterate, petitioner had posted a cash bond of P401,610.84 in the separate case Dangiw Siggaao, which was earlier decided in its favor. Under the Rule VI, Section 6 of the

2005 NLRC Rules, "[a] cash or surety bond shall be valid and effective from the date of deposit or posting, until the case is finally decided, resolved or terminated, or the award satisfied." Hence, it is clear that a bond is encumbered and bound to a case only for as long as 1) the case has not been finally decided, resolved or terminated; or 2) the award has not been satisfied. Therefore, once the appeal is finally decided and no award needs to be satisfied, the bond is automatically released. Since the money is now unencumbered, the employer who posted it should now have unrestricted access to the cash which he may now use as he pleases – as appeal bond in another case, for instance. This is what petitioner simply did. Third, the cash bond in the amount of P401,610.84 posted in Dangiw Siggaao is more than enough to cover the appeal bond in the amount of P345,879.45 required in the present case. Fourth, this ruling remains faithful to the spirit behind the appeal bond requirement which is to ensure that workers will receive the money awarded in their favor when the employer’s appeal eventually fails. There was no showing at all of any attempt on the part of petitioner to evade the posting of the appeal bond. On the contrary, petitioner’s move showed a willingness to comply with the requirement. Hence, the welfare of Icao is adequately protected.

#14

LZK HOLDINGS and DEVELOPMENT CORPORATION vs. PLANTERS DEVELOPMENT BANK.G.R. No. 187973

January 20, 2014Reyes, J.

FACTS: LZK Holdings obtained a loan from Planters Bank and secured the same with a Real Estate Mortgage over its lot located in La Union. On September 21, 1998, the lot was sold at a public auction after Planters Bank extrajudicially foreclosed the real estate mortgage thereon due to LZK Holdings' failure to pay its loan. Planters Bank emerged as the highest bidder during the auction sale and its certificate of sale was registered on March 16, 1999.

On April 5, 1999, LZK Holdings filed before the RTC of Makati City, Branch 150, a complaint for annulment of extra judicial foreclosure, mortgage contract, promissory note and damages. LZK Holdings also prayed for the issuance of a temporary restraining order (TRO) or writ of preliminary injunction to enjoin the consolidation of title over the lot by Planters Bank.

Planters Bank filed an ex-parte motion for the issuance of a writ of possession with the RTC-San Fernando.

Three (3) days before the expiration of LZK Holdings' redemption period, the RTC-Makati issued a TRO effective for 20 days enjoining Planters Bank from consolidating its title over the property. Then, the RTC-Makati ordered the issuance of a writ of preliminary injunction for the same purpose but the writ was issued only on June 20, 2000 upon LZK Holdings' posting of a P40,000.00 bond.

In the meantime, Planters Bank succeeded in consolidating its ownership over the property on April 24, 2000. However, the proceedings for its ex-parte motion for the issuance of a writ of possession was suspended by the RTC-San Fernando in an Order in view of the TRO and writ of preliminary injunction issued by the RTC-Makati. Planters Bank moved for reconsideration but its motion was denied by the RTC-San Fernando in an Order dated September 1, 2000.

Meanwhile, upon motion of LZK Holdings, the RTC-Makati declared as null and void the consolidated title of Planters Bank in an Order dated June 2, 2000. Such ruling was affirmed by the CA in a Decision dated February 26, 2004 in CA-G.R. SP No. 59327. When the matter reached the Court via G.R. No. 164563, we sustained the CA's judgment in our Resolution7 dated September 13, 2004.

Planters Bank also appealed the May 11, 2000 Order of the RTC-San Fernando which held in abeyance the resolution of its ex parte motion for the issuance of a writ of possession. This time, Planters Bank was victorious. The CA granted the appeal and annulled the assailed order of the RTC-San Fernando. Aggrieved, LZK Holdings sought recourse with the Court in a petition for review docketed as G.R. No. 167998. In Our Decision dated April 27, 2007, we affirmed the CA's ruling and decreed that Planters Bank may apply for and is entitled to a writ of possession as the purchaser of the property in the foreclosure sale,

Armed with the above ruling, Planters Bank filed before the RTC-San Fernando a motion to set ex-parte hearing for the issuance of a writ of possession. LZK Holdings opposed the motion. In an Order dated April 2, 2008, the RTC-San Fernando denied the opposition and set the hearing on April 14, 2008. On April 8, 2008, the RTC-San Fernando issued another Order declaring the scheduled hearing moot and academic and granting Planter Bank's ex-parte motion for the issuance of a writ of possession which was filed as early as December 27, 1999. The decretal portion of the order reads:

ISSUE: Whether or not the principle of conclusiveness of judgment, the right of Planter's Bank to a writ of possession as adjudged in their previous case is binding and conclusive on the parties

RULING: YES.

The doctrine of res judicata by conclusiveness of judgment postulates that "when a right or fact has been judicially tried and determined by a court of competent jurisdiction, or when an opportunity for such trial has been given, the judgment of the court, as long as it remains unreversed, should be conclusive upon the parties and those in privity with them."

All the elements of the doctrine are present in this case. The final judgment in G.R. No. 167998 was rendered by the Court pursuant to its jurisdiction over the review of decisions and rulings of the CA. It was a judgment on the merits of Planters Banks's right to apply for and be issued a writ of possession. Lastly, the parties in G.R. No. 167998 are the same parties involved in the present case

Hence, LZK Holdings can no longer question Planter Bank's right to a writ of possession over the subject property because the doctrine of conclusiveness of judgment bars the relitigation of such particular issue

#15

PEBLIA ALFARO AND THE HEIRS OF PROSPEROUS ALFARO, NAMELY: MARY ANN PEARL ALFARO & ROUSLIA ALFARO vs. SPOUSES EDITHO AND HERA DUMALAGAN, SPOUSES

CRISPIN AND EDITHA DALOGDOG, ET AL.G.R. No. 186622

January 22, 2014Perez, J.

FACTS: Olegario Bagano sold a lot covered by a TCT and registered in his name to petitioner Spouses Alfaro through a deed of absolute sale. The spouses then caused the immediate transfer of the title in their names. They also paid the real property tax and constructed a perimeter fence around the property.

The respondent Spouses Dumalagan, on the other hand, alleged that they are the real owners of a portion of the subject property based on a notarized deed of absolute sale. To prove their ownership and possession, they offered in evidence a Certificate of Completion and a Certificate of Occupancy and electric bills. Right after they bought the land, the Spouses immediately took possession of the property and built a nipa hut on it. They leased the nipa hut to one Ramil Quiñineza. After Ramil’s lease ended, several other tenants have occupied and paid monthly rentals to the Spouses Dumalagan.

The Spouses Bagano filed a complaint for Declaration of Nullity of Sale with Damages and Preliminary Injunction against the Spouses Alfaro. The RTC sustained the validity of the Deed of Absolute Sale.

The Spouses Dumalagan then filed an action for the Annulment of Title, Preliminary Injunction with Temporary Restraining Order and Damages against the Spouses Alfaro. The RTC dismissed the complaint for lack of cause of action. According to the trial court, the spouses Dumalagan failed to establish that the defendants were in bad faith when they bought the subject property.

On appeal to the Court of Appeals, the decision of the trial court was reversed and set aside. According to the appellate court, the Spouses Alfaro cannot claim good faith because the annotations written on the back of Bagano’s title have the effect of charging the petitioners as subsequent buyers with constructive notice of the defect of the seller’s title.

ISSUE: Whether an adverse claim continues to be effective after the lapse of the thirty-day period provided in PD 1529

RULING: YES.

Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this decree for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, a reference to the number of certificates of title of the registered owner, the name of the registered owner, and a description of the land in which the right or interest is claimed.

The statement shall be signed and sworn to, and shall state the adverse claimant’s residence, and a place at which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim on the certificate of title. The adverse claim shall be effective for a period of thirty days from the date of registration. After the lapse of the said period, the annotation of adverse claim may be cancelled upon filing of a verified petition therefore by the party in interest: Provided, however, that after cancellation, no second adverse claim based on the same ground shall be registered by the same claimant. x x x x

The above ruling would seem to restrict the effectivity of adverse claims to 30 days. However, the same should not be read separately, but should be read in relation to the subsequent sentence, which reads:

After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a verified petition therefore by the party in interest.

The law, taken together, simply means that the cancellation of the adverse claim is still necessary to render it ineffective, otherwise, the inscription will remain annotated and shall continue as a lien upon the property; for if the adverse claim already ceased to be effective upon the lapse of the said period, its cancellation is no longer necessary and the process of cancellation would be a useless ceremony.

Therefore, petitioners cannot claim good faith on the basis of the supposed ineffectivity of the annotated adverse claims as the same have not been cancelled at the time of purchase. Assuming arguendo that the annotated adverse claims expired on 23 March 1995, petitioners still cannot claim good faith as they were fully aware that there were occupants in the subject property other than the seller. Worse, they were also fully aware that an occupant in the subject property bought the same; that aside from the nipa hut, there were also other structures in the subject property, one of which was built by Epifanio Pesarillo.

#16

INTERNATIONAL SCHOOL MANILA AND/OR BRIAN McCAULEY, vs.INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE)

G.R. No. 167286February 5, 2014

Leonardo-De Castro, J.

FACTS: Santos was first hired by the School in 1978 as a full-time Spanish language teacher. In April 1992, Santos filed for and was granted a leave of absence for the school year 1992-1993. She came back from her leave of absence sometime in August 1993. Upon Santos’s return to the School, only one class of Spanish was available for her to teach. Thus, for the school year 1993-1994, Santos agreed to teach one class of Spanish and four other classes of Filipino that were left behind by a retired teacher.

Since it was Santos’s first time to teach Filipino, the School’s high school administrators observed the way she conducted her classes. The results of the observations on her classes were summarized in Classroom Standards Evaluation Forms accomplished by the designated observers. In accordance with said forms, Santos was evaluated in the areas of Planning, the Teaching Act, Climate, Management and Communication.

Santos was eventually fired by the school. An action was filed a case against the latter for illegal dismissal, entitlement of separation pay and back wages. The NLRC ruled in favor of the school which prompted Santos to elevate the case to the appellate court.

ISSUE: Whether or not the appellate court can reverse the decision of an administrative body such as the NLRC.

RULING: YES.

Generally, on appeal, the findings of fact of an administrative agency like the NLRC are accorded not only respect but also finality if the findings are supported by substantial evidence. Such rule, however, is by no means absolute. As held in San Miguel Corporation v. Aballa, "when the findings of fact of the labor arbiter and the NLRC are not supported by substantial evidence or their judgment was based on a misapprehension of facts, the appellate court may make an independent evaluation of the facts of the case." The Court finds the said exceptions extant in this case.

#17

RODOLFO GUEVARRA and JOEY GUEVARRA vs. PEOPLE OF THE PHILIPPINESG.R. No. 170462

February 5, 2014Brion, J.

FACTS: Rodolfo and his son, Joey, were charged with the crimes of frustrated homicide and homicide against one Erwin Ordonez and David Ordonez, respectively.

Although the informations stated that the crimes were committed on January 8, 2000, the true date of their commission is November 8, 2000, as confirmed by the CA through the records. The parties failed to raise any objection to the discrepancy. Petitioners pleaded not guilty to both charges. The cases were jointly tried with the conformity of the prosecution and the defense. At the pre-trial, the petitioners interposed self-defense, which prompted the RTC to conduct a reverse trial of the case.

The defense presented the testimonies of Rodolfo, Joey, and the petitioners' neighbor, Balbino Agustin. On the other hand, prosecution presented the sole testimony of Erwin who survived the hacking. He narrated that he, his brother David and Philip went to a birthday party and passed in front of the petitioners' compound. He was 20 meters ahead of his companions when, suddenly, Philip ran up to him saying that David was being stabbed by Joey with a bolo. While approaching the scene of the stabbing, which was three (3) meters away from where his brother David was, Erwin was met by Rodolfo who then hacked him, hitting his arm and back. Thereafter, Rodolfo and Joey dragged Erwin inside the petitioners' compound and kept on hacking him. He was hacked and stabbed thirteen (13) times. Erwin denied that he and David threw stones at the petitioners' house and damaged Rodolfo's tricycle.1âwphi1 they did not likewise destroy the petitioners' gate, which was only damaged when his brother David clung on to it while he was being pulled by Rodolfo and Erwin into their compound. While they were being hacked and stabbed by Rodolfo and Erwin, stones actually rained on them and people outside the petitioners' gate were saying, "Do not kill the brothers. Allow them to come out."

RTC gave credence to the prosecution's version of the incident and found the petitioners guilty beyond reasonable doubt of the crimes of frustrated homicide and homicide. It disbelieved the defense's version of the events due to material inconsistencies in the testimonies of the defense witnesses. It denied the petitioners' claim of self-defense for lack of clear, convincing and satisfactory supporting evidence.On appeal, the CA affirmed the RTC's judgment and convicted the petitioners of the crimes charged.

The CA further held that the petitioners' plea of self-defense was belied by the nature and number of wounds inflicted on Erwin, who sustained thirteen (13) stab wounds on his arm and back, and David, who suffered around ten (10) stab wounds on his back and stomach causing his death. These wounds logically indicated that the assault was no longer an act of self-defense but a determined homicidal aggression on the part of the petitioners.

ISSUE: Are questions of fact reviewable under Rule 45?

RULING: NO.

At the outset, the Court's review of the case is via a petition for review under Rule 45, which generally bars any question pertaining to the factual issues raised. The well-settled rule is that questions of fact are not reviewable in petitions for review under Rule 45, subject only to certain exceptions, among them, the lack of sufficient support in evidence of the trial court's judgment or the appellate court's misapprehension of the adduced facts.

The petitioners fail to convince us that we should review the findings of fact in this case. Factual findings of the RTC, when affirmed by the CA, are entitled to great weight and respect by this Court and are deemed final and conclusive when supported by the evidence on record. We find that both the RTC and the CA fully considered the evidence presented by the prosecution and the defense, and they have adequately explained the legal and evidentiary reasons in concluding that the petitioners are guilty of the crimes of frustrated homicide and homicide.

In the absence of any showing that the trial and appellate courts overlooked certain facts and circumstances that could substantially affect the outcome of the present case, we uphold the rulings of the RTC and the CA which found the elements of these crimes fully established during the trial.

#18

PASIG PRINTING CORPORATION vs. ROCKLAND CONSTRUCTION CO., INC.G.R. No. 193592

February 5, 2014Mendoza, J.

FACTS: Mid-Pasig Land Development Corporation (MPLDC) leased the subject property to ECRM Enterprises (ECRM). Subsequently, ECRM assigned all its rights in the contract of lease including the option to renew to Rockland. Later, Rockland erected a building on the area and subleased certain portions to MC Home Depot. In December of 2000, MPLDC demanded that Rockland vacate the property.

To pre-empt any action by MPLDC, Rockland filed a civil case for specific performance docketed as Civil Case No. 68213, asking MPLDC to execute a 3-year extended contract of lease in its favor. It also filed an unlawful detainer case docketed as Civil Case No. 8788.

The first case for specific performance reached its way to the Court when MPLDC filed a petition questioning the CA affirmation of the RTC’s denial of its motion to dismiss on account of the subsequent filing of the unlawful detainer case with the MeTC. Before the Court could rule on the merits of the petition with regard to the specific performance case, the separate unlawful detainer

case was dismissed by the MeTC on April 29, 2002, reasoning out that the issue sought to be resolved was not one of possession, but an exercise of the option to renew a contract cognizable by the RTC.

The Court granted MPLDC’s petition stating that the issues in the specific performance case should be addressed in the unlawful detainer proceedings before the MeTC, thus, the specific performance case was dismissed.

At this point, the CA decision in the unlawful detainer case was elevated to the Court as G.R No. 162924, entitled Mid-Pasig Land Development Corporation v. Mario Tablante (Tablante).

On February 4, 2010, in Tablante, the Court declared that a remand to the MeTC for the unlawful detainer case would have been proper if not for the circumstances which rendered the issue of possession moot and academic. Hence, the Court declared the case as closed and terminated.

Despite its mootness as held in Tablante, the issue of possession again surfaced in the third case, an indirect contempt case pending before the RTC docketed as SCA Case No. 2673. This was filed against MPLDC for its refusal to reconnect the electric supply in the subject property. On September 17, 2004, this case was dismissed. The RTC, however, awarded the possession to MPLDC with Rockland being ordered to refrain from exercising any possessory rights over the same..

On November 12, 2004, the RTC issued the Omnibus Order denying Rockland’s motion for reconsideration on the dismissal of the indirect contempt case, granting PPC’s motion to intervene, and ordering the immediate implementation of the September 17, 2004 Resolution

On November 16, 2004, the above resolution was implemented by the Sheriff, thus, possession of the subject property was turned over to PPC on the basis of the option to lease agreement with MPLDC.

On appeal, the CA affirmed the dismissal of the indirect contempt case, but annulled the award of possession to MPLDC.

Again, the above decision of the CA reached the Court but was only affirmed. In its resolution on the petition, believing that the affirmation awarded the possession of the property to it, Rockland sought restoration in the possession of the subject. In the course of the execution proceedings, the trial court issued flip-flopping orders, the last (August 10, 2007 RTC) Order of which awarded the possession to PPC.

In its May 11, 2010 Decision involving a petition questioning the RTC order, the CA ruled that the order directing movants to restore Rockland in the possession of the property be reinstated. Motion for reconsideration was denied by the CA.

ISSUE: Did the CA err in declaring that Rockland still has the right to possess the subject property following the ruling in Tablante?

RULING: YES.

It is a rule of universal application, almost, that courts of justice constituted to pass upon substantial rights will not consider questions in which no actual interests are involved; they decline jurisdiction of moot cases. And where the issue has become moot and academic, there is no

justiciable controversy, so that a declaration thereon would be of no practical use or value. There is no actual substantial relief to which petitioners would be entitled and which would be negated by the dismissal of the petition.

At the time the CA issued its assailed May 11, 2010 decision, the Court had already pronounced in Tab/ante the end of Rockland's claim over the subject prope1iy because of the expiration of its lease. By that very fact, Rockland has no more possessory right over it.

Granting that the CA was not aware of Tablante, nonetheless, it had no factual or legal basis in ordering the restoration of the possession of the subject prope1iy to Rockland. It was very clear in the records that the original lease contract entered into by and between MPLDC and ECRM, the predecessor in interest of Rockland, had long expired in 2003.

#19

INTEL TECHNOLOGY PHILIPPINES, INC., vs. NATIONAL LABOR RELATIONS COMMISSION and JEREMIAS CABILES

G.R. No. 200575February 5, 2014

Mendoza, J.

FACTS: Jeremias Cabiles was initially hired by Intel Phil. on April 16, 1997 as an Inventory Analyst. He was subsequently promoted several times over the years and was also assigned at Intel Arizona and Intel Chengdu. He later applied for a position at Intel Semiconductor Limited Hong Kong (Intel HK).

In a letter, dated December 12, 2006, Cabiles was offered the position of Finance Manager by Intel HK. Before accepting the offer, he inquired from Intel Phil., through an email, the consequences of accepting the newly presented opportunity in Hong Kong. Intel Phil replied that he will not be eligible to receive the retirement benefit because he have not reached 10 years of service at the time he moved to Hong Kong. However, despite such knowledge Cabiles signed the job offer. Intel Phil. issued Cabiles his "Intel Final Pay Separation Voucher". As a result, Cabiles executed a Release, Waiver and Quitclaim (Waiver) in favor of Intel Phil. After 7 months of employment, Cabiles resigned from Intel HK.

About two years thereafter, Cabiles filed a complaint for non-payment of retirement benefits and for moral and exemplary damages with the NLRC Regional Arbitration Branch-IV. He insisted that he was employed by Intel for 10 years and 5 months from April 1997 to September 2007 – a period which included his seven (7) month stint with Intel HK. Thus, he believed he was qualified to avail of the benefits under the company’s retirement policy allowing an employee who served for 10 years or more to receive retirement benefits.

The LA ordered Intel Phil to pay Cabiles retirement benefits with legal interest and attorney’s fees. The LA held that Cabiles did not sever his employment with Intel Phil. when he moved to Intel HK, similar to the instances when he was assigned at Intel Arizona and Intel Chengdu. Despite the clarification made by Intel Phil. regarding his ineligibility to receive retirement benefits, the LA stated that Cabiles could not be faulted if he was made to believe his non-entitlement to retirement benefits. Thus, it should not prevent him from asserting his right to receive them. Finally, the

Waiver executed by Cabiles when he left Intel Phil., was treated by the LA as no bar for claiming his retirement pay because it merely covered the last salary and commutation of sick leaves and vacation leaves to the exclusion of retirement benefits.

On appeal, the NLRC affirmed with modification the LA decision. Intel Phil. moved for reconsideration but its motion was denied in the NLRC Resolution.ISSUE: Did the Court of Appeals commit serious error in dismissing the Petition for Certiorari without expressing clearly and distinctly the facts and the law on which its decision was based?

RULING: YES.

As a general rule, this Court is not a trier of facts and a petition for review on certiorari under Rule 45 of the Rules of Court must exclusively raise questions of law. Nevertheless, the Court will not hesitate to deviate from what are clearly procedural guidelines and disturb and strike down the findings of the CA and those of the labor tribunals if there is a showing that they are unsupported by the evidence on record or there was a patent misappreciation of facts. Indeed, that the impugned decision of the CA is consistent with the findings of the labor tribunals does not per se conclusively demonstrate its correctness. By way of exception to the general rule, this Court will scrutinize the facts if only to rectify the prejudice and injustice resulting from an incorrect assessment of the evidence presented. It is in this wise that the Court agrees with Intel Phil. that the CA seriously erred in affirming the findings of the NLRC on the face of substantial evidence showing Cabiles’ disqualification to receive the retirement benefits. The Court, therefore, reverses the ruling of the CA for the reasons hereinafter discussed.

#20

UNITED TOURIST PROMOTIONS vs. KEMPLING.R. No. 205453

February 5, 2014Reyes, J.

FACTS: Ariel Jersey, with the help of two American expatriates, Kemplin and the late Mike Dunne, formed UTP. UTP employed Kemplin to be its president from 2002-2007, “renewable for the same period, subject to new terms and conditions.” Kemplin continued to render his services to UTP even after his fixed term contract of employment expired. Records show that in 2009, Kemplin, signing as President of UTP, entered into advertisement agreements with Pizza Hut and M. Lhuillier. Thereafter, UTP’s legal counsel sent Kemplin a letter telling him that he can no longer enter the company premises because of his “inhuman treatment of the rank and file employees.” Kemplin filed before the Regional Arbitration Branch of the NLRC a Complaint against UTP and its officers for illegal dismissal, among others. In his Position Paper, he claimed that he was sent the letter after noticing some accounting discrepancies which he e-mailed to the other officers.

The LA held that Kemplin was illegally dismissed and ordered UTP to reinstate him to his former position with backwages. The NLRC affirmed the LA’s Decision. However, Lorena Lindo and Larry Jersey were expressly excluded from assuming liability for lack of proof of their involvement in Kemplin’s dismissal. On appeal, the CA affirmed the decisions of the LA and the NLRC. Thus, UTP filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court.

ISSUE: Can the SC resolve the issues of whether Kemplin was illegally dismissed and whether the dismissal was invalid because of UTP’s failure to afford him due process of law in this petition?

RULING: NO.

The first two issues raised are factual in nature, hence, beyond the ambit of a petition filed under Rule 45 of the Rules of Court. It is settled that Rule 45 limits the Court merely to the review of questions of law raised against the assailed CA decision. The Court is generally bound by the CA’s factual findings, except only in some instances, among which is, when the said findings are contrary to those of the trial court or administrative body exercising quasi-judicial functions from which the action originated. In the case at bar, the LA, NLRC, and CA uniformly ruled that Kemplin was dismissed sans substantive and procedural due process. While the Court need not belabor the first two factual issues presented therein, it bears stressing that the Court finds the rulings of the appellate court and the labor tribunals as amply supported by substantial evidence.

#21

REPUBLIC vs. OLAYBARG.R. No. 189538

February 10, 2014Peralta, J.

FACTS: Respondent requested from the NSO a Certificate of No Marriage (CENOMAR) as one of the requirements for her marriage with her boyfriend of five years. Upon receipt thereof, she discovered that she was already married to a certain Ye Son Sune, a Korean national, at the MTCC Palace of Justice. She denied having contracted the marriage and claimed that she did not know the alleged husband, and that the signature appearing in the marriage certificate is not hers. She, thus, filed a Petition for Cancellation of Entries in the Marriage Contract, especially the entries in the wife portion thereof. The RTC rendered a decision granting the petition of respondent. Petitioner moved for reconsideration, contesting, that there was no clerical spelling, typographical and other innocuous errors in the marriage contract for it to fall within the provisions of Rule 108 of the Rules of Court. The RTC denied the motion, holding that it had jurisdiction to take cognizance of cases for correction of entries even on substantial errors under Rule 108 of the Rules of Court being the appropriate adversary proceeding required. Petitioner then filed a Petition for Review on Certiorari under Rule 45.

ISSUES:

(1) Was a recourse to the Supreme Court under Rule 45 proper in the case at bar(2) May the cancellation of entries in a marriage contract which, in effect, nullifies the marriage

be undertaken in a Rule 108 proceeding?

RULING:

(1) At the outset, it is necessary to stress that a direct recourse to the Court from the decisions and final orders of the RTC may be taken where only questions of law are raised or involved. There is a question of law when the doubt arises as to what the law is on a certain state of facts, which did not call for the examination of the probative value of the evidence of

the parties. Here, the issue raised by petitioner is whether or not the cancellation of entries in the marriage contract which, in effect, nullifies the marriage may be undertaken in a Rule 108 proceeding. Verily, petitioner raised a pure question of law.

(2) To be sure, a petition for correction or cancellation of an entry in the civil registry cannot substitute for an action to invalidate a marriage. A direct action for declaration of nullity or annulment of marriage is also necessary to prevent circumvention of the jurisdiction of the Family Courts, as a petition for cancellation or correction of entries in the civil registry may be filed in the RTC where the corresponding civil registry is located. In other words, a Filipino citizen cannot dissolve his marriage by the mere expedient of changing his entry of marriage in the civil registry.

Aside from the certificate of marriage, no such evidence was presented to show the existence of marriage. Rather, respondent showed by overwhelming evidence that no marriage was entered into and that she was not even aware of such existence. The testimonial and documentary evidence clearly established that the only “evidence” of marriage which is the marriage certificate was a forgery. While the Court maintains that Rule 108 cannot be availed of to determine the validity of marriage, the Court cannot nullify the proceedings before the trial court where all the parties had been given the opportunity to contest the allegations of respondent; the procedures were followed, and all the evidence of the parties had already been admitted and examined. Respondent indeed sought, not the nullification of marriage as there was no marriage to speak of, but the correction of the record of such marriage to reflect the truth as set forth by the evidence. Otherwise stated, in allowing the correction of the subject certificate of marriage by cancelling the wife portion thereof, the trial court did not, in any way, declare the marriage void as there was no marriage to speak of.

#22

AGUSTIN vs. CRUZ-HERRERAG.R. No. 174564

February 12, 2014Reyes, J.

FACTS: Respondent was the President of Podden International Philippines Inc., while complainants were assemblers and/or line leader assigned at the production department. Complainants were terminated from employment due to financial reverses. Upon verification of the DOLE, however, no such report of financial reverses or even retrenchment was filed. This prompted the complainants to file a complaint for illegal dismissal, monetary claims, and damages against Podden and Herrera. The LA ruled in favor of complainants. No appeal was taken from the judgment, hence, a motion for execution was subsequently filed. The motion was set for a hearing but was reset twice upon the parties’ request for the purpose of exploring the possibility of settlement. Herrera filed a Manifestation and Motion to deny issuance of the writ stating, among others, that Podden ceased operations almost four years before judgment was rendered by the LA on the illegal dismissal complaint and that nine of the eleven employees have executed Waivers and Quitclaims rendering any execution of judgment inequitable. Atty. Agustin opposed Herrera’s motion and argued that the issuance of a writ of execution is ministerial because the LA decision has long been final and executory there being no appeal taken therefrom. He further claimed that the alleged Waivers and

Quitclaims were part of a scheme adopted by Podden to evade its liability and defraud the complainants.

Resolving the conflict, the LA issued its Order denying the motion for the issuance of a writ of execution. The LA sustained as valid the Waivers and Quitclaims signed by all and not just nine of the complainants. On appeal, the NLRC reversed the LA Order for the reason that it unlawfully amended, altered and modified the final and executory LA Decision. The quitclaims were also held invalid based on the unconscionably low amount received by each of the complainants thereunder. Herrera filed a petition for certiorari before the CA assailing the issuances of the NLRC. During the pendency of the petition or on August 30, 2005, a joint compromise agreement was submitted to the CA. The CA found the joint compromise agreement consistent with law, public order and public policy, and consequently stamped its approval thereon and entered judgment in accordance therewith.

ISSUE: Whether or not the resolutions of the CA violated the principle of res judicata because they amended and altered the final and executory LA Decision and NLRC Resolution on the basis of an unconscionable compromise agreement that was executed without the knowledge and consent of Atty. Agustin

RULING: The petition is dismissible outright for being accompanied by a defective certification of non-forum shopping having been signed by Atty. Agustin instead of the complainants as the principal parties. It has been repeatedly emphasized that in the case of natural persons, the certification against forum shopping must be signed by the principal parties themselves and not by the attorney. The purpose of the rule rests mainly on practical sensibility. The Court has espoused leniency and overlooked such procedural misstep in cases bearing substantial merit complemented by the written authority or general power of attorney granted by the parties to the actual signatory. However, no analogous justifiable reasons exist in the case at bar neither do the claims of Atty. Agustin merit substantial consideration to justify a relaxation of the rule. It is apparent that the complainants did not seek the instant review because they have already settled their dispute with Herrera before the CA. It is Atty. Agustin’s personal resolve to pursue this recourse premised on his unwavering stance that the joint compromise agreement signed by the complainants was inequitable and devious as they were denied the bigger monetary award adjudged by a final and executory judgment.

In the present case, the allegations of vitiated consent proffered by Atty. Agustin are all presumptions and suppositions that have no bearing as evidence. There is no proof that the complainants were forced, intimidated or defrauded into executing the quitclaims. Furthermore, it is the complainants themselves who can impugn the consideration of the compromise as being unconscionable but no such repudiation was manifested before the Court or the courts a quo. It must be noted that the complainants were laborers who desired to contest their dismissal for being illegal. With no clear means to pay for costly legal services, they hired Atty. Agustin whose remuneration was subject to the success of the illegal dismissal suit. Before a judgment was rendered in their favor, however, the company closed down and settlement of the suit for an amount lesser than their monetary claims, instead of execution of the favorable judgment, guaranteed the atonement for their illegal termination. To make the complainants liable for the P335,844.18 attorney’s fees adjudged in the LA Decision of September 27, 1998 would be allowing Atty. Agustin to get a lion’s share of the P385,000.00 received by the former from the compromise agreement that terminated the suit; to allow that to happen will contravene the raison d'être for contingent fee arrangements.

It cannot be said that Herrera negotiated for the compromise agreement in bad faith. It remains undisputed that Podden has ceased operations almost four years before the LA Decision dated September 27, 1998 was rendered. In view thereof, the implementation of the award became unfeasible and a compromise settlement was more beneficial to the complainants as it assured them of reparation, albeit at a reduced amount. This was the same situation prevailing at the time when Herrera manifested and reiterated before the CA that a concession has been reached by the parties. Thus, the motivating force behind the settlement was not to deprive or prejudice Atty. Agustin of his fees, but rather the inability of a dissolved corporation to fully abide by its adjudged liabilities and the certainty of payment on the part of the complainants.

#23

HEIRS OF MARCELO SOTTO vs. PALICTEG.R. No. 159691

February 17, 2014Bersamin, J.

FACTS: This case is the fifth suit to reach the Court dividing the several heirs of the late Don Filemon Y. Sotto (Filemon) respecting four real properties that had belonged to Filemon’s estate (Estate of Sotto).

The first case held that herein respondent Matilde S. Palicte (Matilde), one of four declared heirs of Filemon, had validly redeemed the four properties pursuant to the assailed deed of redemption, and was entitled to have the title over the four properties transferred to her name, subject to the right of the three other declared heirs to join her in the redemption of the four properties within a period of six months. The second was the civil case filed by Pascuala against Matilde to annul the former’s waiver of rights, and to restore her as a co-redemptioner of Matilde with respect to the four properties. The third was an incident (that is, the suit brought by the heirs of Carmen Rallos against the Estate of Sotto) wherein the heirs of Miguel belatedly filed in a motion for reconsideration praying that the order be set aside, and that they be still included as Matilde’s co-redemptioners. After the trial court denied their motion for reconsideration for its lack of merit, the heirs of Miguel elevated the denial to the CA on certiorari and prohibition, but the CA dismissed their petition and upheld the order. Thence, the heirs of Miguel came to the Court on certiorari, but the Court dismissed their petition for being filed out of time and for lack of merit. The fourth was The Estate of Don Filemon Y. Sotto, represented by its duly designated Administrator, Sixto Sotto Pahang, Jr. v. Matilde S. Palicte, et al., whereby the Court expressly affirmed the ruling rendered by the probate court in Cebu City entitled Intestate Estate of the Deceased Don Filemon Sotto denying the administrator’s motion to require Matilde to turn over the four real properties to the Estate of Sotto. The fifth is this case. It seems that the disposition by the Court of the previous cases did not yet satisfy herein petitioners despite their being the successors-in-interest of two of the declared heirs of Filemon who had been parties in the previous cases either directly or in privity. They now pray that the Court undo the decision promulgated on November 29, 2002, whereby the Court of Appeals (CA) declared their action for the partition of the four properties as already barred by the judgments previously rendered, and the resolution denying their motion for reconsideration

At the order of the Court, Atty. Mahinay submitted a so-called Compliance (With Humble Motion for Reconsideration) containing his explanations, praying that he not be sanctioned for violating the rule against forum shopping, as follows:

(1) The first three cases did not resolve the issues raised in Civil Case No. CEB-24393;(2) Marcelo Sotto’s cause of action arose only when respondent Palicte violated her

"hypothetically admitted" agreement with Marcelo Sotto;(3) He (Atty. Mahinay) was not the one who had prepared and signed the complaint in Civil

Case No. CEB-24393, although he assumed the responsibility as to its filing;(4) He (Atty. Mahinay) had filed a motion for referral or consolidation of Civil Case No. CEB-

24293 with the intestate proceedings of the Estate of Filemon Y. Sotto, and(5) He (Atty. Mahinay) had acted in good faith in assisting the administrator of the Estate of

Filemon Y. Sotto in filing the Motion to Require Matilde Palicte To Turn Over And/or Account Properties Owned by the Estate in Her Possession.

ISSUE: Was counsel guilty of forum shopping?

RULING: YES.

What we have seen here is a clear demonstration of unmitigated forum shopping on the part of petitioners and their counsel. It should not be enough for us to just express our alarm at petitioners’ disregard of the doctrine of res judicata. The acts of a party or his counsel clearly constituting willful and deliberate forum shopping shall be ground for the summary dismissal of the case with prejudice, and shall constitute direct contempt, as well as be a cause for administrative sanctions against the lawyer. Forum shopping can be committed in either of three ways, namely: (1) filing multiple cases based on the same cause of action and with the same prayer, the previous case not having been resolved yet (litis pendentia); (2) filing multiple cases based on the same cause of action and the same prayer, the previous case having been finally resolved (res judicata); or (3) filing multiple cases based on the same cause of action but with different prayers (splitting of causes of action, where the ground for dismissal is also either litis pendentia or res judicata). If the forum shopping is not willful and deliberate, the subsequent cases shall be dismissed without prejudice on one of the two grounds mentioned above. But if the forum shopping is willful and deliberate, both (or all, if there are more than two) actions shall be dismissed with prejudice.

#24

PRYCE CORPORATION vs. CHINA BANKING CORPORATIONG.R. No. 172302

February 18, 2014Leonen, J.

FACTS: The present case originated from a petition for corporate rehabilitation filed by petitioner Pryce Corporation. The rehabilitation court found the petition sufficient in form and substance and issued a stay order on July 13, 2004 appointing Gener T. Mendoza as rehabilitation receiver. In its disposition, the court found petitioner Pryce Corporation "eligible to be placed in a state of corporate rehabilitation."5 The disposition likewise identified the assets to be held and disposed of by petitioner Pryce Corporation and the manner by which its liabilities shall be paid and liquidated.6

On February 23, 2005, respondent China Banking Corporation elevated the case to the Court of Appeals. Its petition questioned the January 17, 2005 order that included the following terms:

1. The indebtedness to China Banking Corporation and Bank of the Philippine Islands as well as the long term commercial papers will be paid through a dacion en pago of developed real estate assets of the petitioner.

x x x x4. All accrued penalties are waived[.]5. Interests shall accrue only up to July 13, 2004, the date of issuance of the stay order[.]6. No interest will accrue during the pendency of petitioner’s corporate rehabilitation[.]7. Dollar-denominated loans will be converted to Philippine Pesos on the date of the

issuance of this Order using the reference rate of the Philippine Dealing System as of this date.

Respondent China Banking Corporation contended that the rehabilitation plan’s approval impaired the obligations of contracts. The Bank of the Philippine Islands (BPI), another creditor of petitioner Pryce Corporation, filed a separate petition with the Court of Appeals assailing the same order by the rehabilitation court. BPI called the attention of the court "to the non-impairment clause and the mutuality of contracts purportedly ran roughshod by the [approved rehabilitation plan].

The Court of Appeals granted respondent China Banking Corporation's petition, and reversed and set aside the rehabilitation court’s: (1) July 13, 2004 stay order that also appointed Gener T. Mendoza as rehabilitation receiver; (2) September 13, 2004 order giving due course to the petition and directing the rehabilitation receiver to evaluate and give recommendations on petitioner Pryce Corporation’s proposed rehabilitation plan; and (3) January 17, 2005 order finding petitioner Pryce Corporation eligible to be placed in a state of corporate rehabilitation, identifying assets to be disposed of, and determining the manner of liquidation to pay the liabilities.

With respect to BPI’s separate appeal, the Court of Appeals First granted its petition initially and set aside the January 17, 2005 order of the rehabilitation court in its decision dated May 3, 2006. On reconsideration, the court issued a resolution dated May 23, 2007 setting aside its original decision and dismissing the petition.

The First (1st) Division of the Supreme Court affirmed the decision of the Court of Appeals and ordered the remand of the case to the Regional Trial Court.

Petitioner Pryce Corporation filed an omnibus motion for (1) reconsideration or (2) partial reconsideration and (3) referral to the court En Banc dated February 29, 2008. Respondent China Banking Corporation also filed a motion for reconsideration on even date, praying that the February 4, 2008 decision be set aside and reconsidered only insofar as it ordered the remand of the case for further proceedings "to determine whether petitioner's financial condition is serious and whether there is clear and imminent danger that it will lose its corporate assets."

ISSUE: Was the validity of the rehabilitation order constitutive of res judicata?

RULING:

This judgment in BPI v. Pryce Corporation covers necessarily the rehabilitation court’s September 13, 2004 order giving due course to the petition. The general rule precluding relitigation of issues extends to questions implied necessarily in the final judgment, viz:

The general rule precluding the relitigation of material facts or questions which were in issue and adjudicated in former action are commonly applied to all matters essentially connected with the subject matter of the litigation. Thus, it extends to questions necessarily implied in the final judgment, although no specific finding may have been made in reference thereto and although such matters were directly referred to in the pleadings and were not actually or formally presented. x x x.

In the present case, the dispositive portion of the Court of Appeals’ decision in BPI v. Pryce Corporation, reversed on reconsideration, only mentioned the January 17, 2005 order of the rehabilitation court approving the amended rehabilitation plan. Nevertheless, the affirmation of its validity necessarily included the September 13, 2004 order as this earlier order gave due course to the petition and directed the rehabilitation receiver to evaluate and give recommendations on the rehabilitation plan proposed by petitioner.

In res judicata, the primacy given to the first case is related to the principle of immutability of final judgments essential to an effective and efficient administration of justice, viz:

x x x [W]ell-settled is the principle that a decision that has acquired finality becomes immutable and unalterable and may no longer be modified in any respect even if the modification is meant to correct erroneous conclusions of fact or law and whether it will be made by the court that rendered it or by the highest court of the land.

The reason for this is that litigation must end and terminate sometime and somewhere, and it is essential to an effective and efficient administration of justice that, once a judgment has become final, the winning party be not deprived of the fruits of the verdict. Courts must guard against any scheme calculated to bring about that result and must frown upon any attempt to prolong the controversies.

The only exceptions to the general rule are the correction of clerical errors, the so-called nunc pro tunc entries which cause no prejudice to any party, void judgments, and whenever circumstances transpire after the finality of the decision rendering its execution unjust and inequitable. […]

Generally, the later case is the one abated applying the maxim qui prior est tempore, potior est jure (he who is before in time is the better in right; priority in time gives preference in law).  However, there are limitations to this rule as discussed in Victronics Computers, Inc. v. Regional Trial Court, Branch 63, Makati:

As a final note, this is not the first time this court was made to review two separate petitions appealed from two conflicting decisions, rendered by two divisions of the Court of Appeals, and originating from the same case. In Serrano v. Ambassador Hotel, Inc., we ordered the Court of Appeals to adopt immediately a more efficient system in its Internal Rules to avoid situations as this.

In this instance, it is fortunate that this court had the opportunity to correct the situation and prevent conflicting judgments from reaching impending finality with the referral to the En Banc.

We reiterate the need for our courts to be "constantly vigilant in extending their judicial gaze to cases related to the matters submitted for their resolution"89 as to "ensure against judicial confusion and [any] seeming conflict in the judiciary’s decisions."

#25

REPUBLIC OF THE PHILIPPINES vs. REMMAN ENTERPRISES, INC.G.R. No. 199310

February 19, 2014Reyes, J.

FACTS: Remman Enterprises, Inc. (respondent), filed an application4 with the RTC for judicial confirmation of title over two parcels of land situated in Barangay Napindan, Taguig, Metro Manila. The RTC issued the Order5 finding the respondent’s application for registration sufficient in form and substance and setting it for initial hearing. When the RTC called the case for initial hearing, only the Laguna Lake Development Authority (LLDA) appeared as oppositor. Hence, the RTC issued an order of general default except LLDA, which was given 15 days to submit its comment/opposition to the respondent’s application for registration. Trial on the merits of the respondent’s application ensued thereafter.

The respondent presented four witnesses: Teresita Villaroya, the respondent’s corporate secretary; Ronnie Inocencio, an employee of the respondent and the one authorized by it to file the application for registration with the RTC; Cenon Cerquena (Cerquena), the caretaker of the subject properties since 1957; and Engineer Mariano Flotildes (Engr. Flotildes), a geodetic engineer hired by the respondent to conduct a topographic survey of the subject properties.

For its part, the LLDA presented the testimonies of Engineers Ramon Magalonga (Engr. Magalonga) and Christopher A. Pedrezuela (Engr. Pedrezuela), who are both geodetic engineers employed by the LLDA.

Essentially, the testimonies of the respondent’s witnesses showed that the respondent and its predecessors-in-interest have been in open, continuous, exclusive, and notorious possession of the said parcels of land long before June 12, 1945. The respondent likewise alleged that the subject properties are within the alienable and disposable lands of the public domain, as evidenced by the certifications issued by the Department of Environment and Natural Resources (DENR).

In support of its application, the respondent, inter alia, presented the following documents: (1) Deed of Absolute Sale dated August 28, 1989 executed by Salvador and Mijares in favor of the respondent; (2) survey plans of the subject properties; (3) technical descriptions of the subject properties; (4) Geodetic Engineer’s Certificate; (5) tax declarations of Lot Nos. 3068 and 3077 for 2002; and (6) certifications dated December 17, 2002, issued by Corazon D. Calamno (Calamno), Senior Forest Management Specialist of the DENR, attesting that Lot Nos. 3068 and 3077 form part of the alienable and disposable lands of the public domain. On the other hand, the LLDA alleged that the respondent’s application for registration should be denied since the subject parcels of land are not part of the alienable and disposable lands of the public domain; it pointed out that pursuant to Section 41(11) of Republic Act No. 4850 (R.A. No. 4850), lands, surrounding the Laguna de Bay, located at and below the reglementary elevation of 12.50 meters are public lands which form part of the bed of the said lake. Engr. Magalonga, testifying for the oppositor LLDA, claimed that, upon preliminary evaluation of the subject properties, based on the topographic map of Taguig, which was prepared using an aerial survey

conducted by the then Department of National Defense-Bureau of Coast in April 1966, he found out that the elevations of Lot Nos. 3068 and 3077 are below 12.50 m. That upon actual area verification of the subject properties on September 25, 2002, Engr. Magalonga confirmed that the elevations of the subject properties range from 11.33 m to 11.77 m.

The RTC granted the application for registration. The Court of Appeals affirmed. Hence, this petition.

ISSUE: Did the CA err in granting the application for application filed by the respondent?

RULING: YES.

The petitioner maintains that the lower courts erred in granting the respondent’s application for registration since the subject properties do not form part of the alienable and disposable lands of the public domain. The petitioner insists that the elevations of the subject properties are below the reglementary level of 12.50 m and, pursuant to Section 41(11) of R.A. No. 4850, are considered part of the bed of Laguna Lake.

That the elevations of the subject properties are above the reglementary level of 12.50 m is a finding of fact by the lower courts, which this Court, generally may not disregard. It is a long-standing policy of this Court that the findings of facts of the RTC which were adopted and affirmed by the CA are generally deemed conclusive and binding. This Court is not a trier of facts and will not disturb the factual findings of the lower courts unless there are substantial reasons for doing so.

The certifications presented by the respondent are insufficient to prove that the subject properties are alienable and disposable. In Republic of the Philippines v. T.A.N. Properties, Inc., the Court clarified that, in addition to the certification issued by the proper government agency that a parcel of land is alienable and disposable, applicants for land registration must prove that the DENR Secretary had approved the land classification and released the land of public domain as alienable and disposable. They must present a copy of the original classification approved by the DENR Secretary and certified as true copy by the legal custodian of the records. Thus:

Further, it is not enough for the PENRO or CENRO to certify that a land is alienable and disposable. The applicant for land registration must prove that the DENR Secretary had approved the land classification and released the land of the public domain as alienable and disposable, and that the land subject of the application for registration falls within the approved area per verification through survey by the PENRO or CENRO. In addition, the applicant for land registration must present a copy of the original classification approved by the DENR Secretary and certified as a true copy by the legal custodian of the official records. These facts must be established to prove that the land is alienable and disposable. Respondent failed to do so because the certifications presented by respondent do not, by themselves, prove that the land is alienable and disposable.

Having failed to prove that the subject properties form part of the alienable and disposable lands of the public domain and that it and its predecessors-in-interest have been in open, continuous, exclusive, and notorious possession and occupation of the same since June 12, 1945, or earlier, the respondent's application for registration should be denied.

#26

PROCTER AND GAMBLE ASIA PTE LTD., vs. COMMISSIONER OF INTERNAL REVENUEG.R. No. 202071

February 19, 2014Sereno, CJ.

FACTS: On 3 June 2013, we required Respondent to submit its Comment, which it filed on 4 December 2013. Citing the recent case CIR v. San Roque Power Corporation, respondent counters that the 120-day period to file judicial claims for a refund or tax credit is mandatory and jurisdictional. Failure to comply with the waiting period violates the doctrine of exhaustion of administrative remedies, rendering the judicial claim premature. Thus, the CTA does not acquire jurisdiction over the judicial claim.

ISSUE: Was the 120-day waiting period mandatory and jurisdictional?

RULING: YES.

Respondent is correct on this score. However, it fails to mention that San Roque also recognized the validity of BIR Ruling No. DA-489-03. The ruling expressly states that the “taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief with the CTA by way of Petition for Review. The Court, in San Roque, ruled that equitable estoppel had set in when respondent issued BIR Ruling No. DA-489-03. This was a general interpretative rule, which effectively misled all taxpayers into filing premature judicial claims with the CTA. Thus, taxpayers could rely on the ruling from its issuance on 10 December 2003 up to its reversal on 6 October 2010, when CIR v. Aichi Forging Company of Asia, Inc., was promulgated.”

#27

PHILIPPINE NATIONAL BANK vs. SPOUSES ENRIQUE MANALO & ROSALINDA JACINTO, ARNOLD J. MANALO, ARNEL J. MANALO, and ARMA J. MANALO

G.R. No. 174433February 24, 2014

Bersamin, J.

FACTS: Spouses Manalo applied for an All-Purpose Credit Facility in the amount of P1m with PNB to finance the construction of their house. After PNB granted their application, they executed a REM in favor of PNB over their property as security for the loan. The credit facility was renewed and increased several times over the years. The credit facility was again renewed for P7M. As a consequence, the parties executed a Supplement to and Amendment of Existing REM. The additional security was registered in the names of respondents who were their children. It was agreed upon that the Spouses Manalo would make monthly payments on the interest. After the Spouses Manalo still failed to settle their unpaid account despite the two demand letters, PNB foreclose the mortgage. During the foreclosure sale, PNB was the highest bidder of the mortgaged properties of the Spouses Manalo. After the Certificate of Sale had been issued to PNB, the Spouses Manalo instituted this action for the nullification of the foreclosure proceedings and damages. They

alleged that they had obtained a loan from a certain Benito Tan upon arrangements made by Antoninus Yuvienco, then the General Manager of PNB’s Bangkal Branch where they had transacted; that they had been made to understand and had been assured that the P1M would be used to update their account, and that their loan would be restructured and converted into a long-term loan; that they had been surprised to learn, therefore, that had been declared in default of their obligations, and that the mortgage on their property had been foreclosed and their property had been sold; and that PNB did not comply with Section 3 of Act No. 3135, as amended. PNB and Yuvienco countered that the loan obtained by the Spouses Manalo from Benito Tan had been credited to their account; that they did not make any assurances to make the loan a long-term; that PNB’s right to foreclose the mortgage had been clear especially because the Spouses Manalo had not assailed the validity of the loans and of the mortgage. RTC ruled in favor of PNB stating that not having raised the matters as issues during the pre-trial, plaintiff-spouses are presumably estopped from allowing these matters to serve as part of their evidence, because at the pre-trial they expressly recognized the defendant bank’s right to foreclose upon the subject property and that the Spouses Manalo were now estopped from questioning the interest rates unilaterally imposed by PNB because they had paid at those rates for three years without protest; and that their allegation about PNB violating the notice and publication requirements during the foreclosure proceedings was untenable because personal notice to the mortgagee was not required under Act No. 3135. CA affirmed the decision of the RTC insofar as it upheld the validity of the foreclosure proceedings initiated by PNB and it found that PNB did not adduce proof showing that the Spouses Manalo had been notified before the increased interest rates were imposed. The CA deemed to be untenable the Spouses Manalo’s allegation that PNB had failed to comply with the requirements for notice and posting under Section 3 of Act 3135. The CA stated that Sheriff Norberto Magsajo’s testimony was sufficient proof of his posting of the required Notice of Sheriff’s Sale in three public places; that the notarized Affidavit of Publication presented by Sheriff Magsajo was prima facie proof of the publication of the noticeISSUE: WON the court erred in nullifying the interest rates imposed despite the fact that the same was raised first time on appeal and it was never part of their complaint?

RULING: NO.

Contrary to PNB’s argument, the validity of the interest rates and of the increases, and on the lack of mutuality between the parties were not raised by the Spouses Manalo’s for the first time on appeal. Rather, the issues were impliedly raised during the trial itself, and PNB’s lack of vigilance in voicing out a timely objection made that possible. It appears that Enrique Manalo’s Judicial Affidavit introduced the issues of the validity of the interest rates and the increases, and the lack of mutuality between the parties. PNB cross-examined Enrique Manalo upon his Judicial Affidavit. There is no showing that PNB raised any objection in the course of the cross examination. The RTC rightly passed upon such issues in deciding the case, and its having done so was in total accord with Section 5, Rule 10 of the Rules of Court. The RTC did not need to direct the amendment of the complaint by the Spouses Manalo. Section 5, Rule 10 of the Rules of Court specifically declares that the "failure to amend does not affect the result of the trial of these issues." Section 5, Rule 10 of the Rules of Court is applicable in two situations. The first is when evidence is introduced on an issue not alleged in the pleadings and no objection is interposed by the adverse party. The second is when evidence is offered on an issue not alleged in the pleadings but an objection is raised against the offer.  This case comes under the first situation. Enrique Manalo’s Judicial Affidavit would introduce the very issues that PNB is now assailing. The question of whether the evidence on such issues was admissible to prove the nullity of the interest rates is an entirely different matter. The RTC accorded credence to PNB’s evidence showing that the Spouses Manalo had been paying the

interest imposed upon them without protest. The CA’s nullification of the interest rates was based on the credit agreements that the Spouses Manalo and PNB had themselves submitted. The validity of the interest rates and their increases, and the lack of mutuality between the parties were issues validly raised in the RTC, giving the Spouses Manalo every right to raise them in their appeal to the CA. PNB’s contention was based on its wrong appreciation of what transpired during the trial. PNB did not itself assail the RTC’s ruling on the issues obviously because the RTC had decided in its favor. In fact, PNB did not even submit its appellee’s brief despite notice from the CA.

#28

CORAZON MACAPAGAL vs. PEOPLE OF THE PHILIPPINESG.R. No. 193217

February 26, 2014Peralta, J.

FACTS: RTC rendered a decision finding petitioner guilty of the crime of Estafa for misappropriating, for her own benefit, the total amount of P800K, which is the value of the unreturned and unsold pieces of jewelry. Petitioner received the decision then she timely moved for reconsideration, but was likewise denied in an Order dated May 20, 2009 which the petitioner allegedly received on July 31, 2009. She supposedly filed a Notice of Appeal on but the same was denied for having been filed out of time.

Petitioner filed a petition for review to the SC citing that the court erred in denying her notice of appeal and convicting her of estafa.

ISSUE: WON the court erred in denying petitioners petition?

RULING: NO.

The instant case suffers from various procedural infirmities which this Court cannot ignore and are fatal to petitioner’s cause because of petitioner’s complete disregard of the procedural rules and the orders of the Court. First, petitioner availed of the wrong mode of assailing the trial court’s denial of her notice of appeal. Sections 2 and 3, Rule 122 of the Revised Rules of Criminal Procedure lay down the rules on where, how and when appeal is taken. The disallowance of the notice of appeal signifies the disallowance of the appeal itself. A petition for review under Rule 45 of the ROC is a mode of appeal of a lower court’s decision or final order direct to the SC. However, the questioned Order denying her notice of appeal is not a decision or final order from which an appeal may be taken. The ROC specifically provides that no appeal shall be taken from an order disallowing or dismissing an appeal. Rather, the aggrieved party can elevate the matter through a special civil action under Rule 65. In availing of the wrong mode of appeal in this petition under Rule 45 instead of the appropriate remedy of Rule 65, the petition merits an outright dismissal. Second, even if the court treats the petition as one for certiorari under Rule 65, it is still dismissible for violation of the hierarchy of courts. Although the Supreme Court has concurrent jurisdiction with the RTC and the CA to issue writs of certiorari, this should not be taken as granting parties the absolute and unrestrained freedom of choice of the court to which an application will be directed. Direct resort to this Court is allowed only if there are special, important and compelling reasons clearly and specifically spelled out in the petition, which are not present in this case. Third, even if the court ignores the above non-compliance and consider the petition as an appeal of the trial court’s

decision convicting her of estafa, again, the court cannot do so for yet another fatal procedural shortcoming committed by petitioner. Petitioner elevated to this Court not only the Order denying her notice of appeal but also the Decision convicting her of estafa and the Order denying her motion for reconsideration. In utter disregard of the rules of procedure, petitioner attached to the petition only the RTC Order denying her notice of appeal but she failed to attach a clearly legible duplicate original or a certified true copy of the assailed decision convicting her of estafa and the order denying her motion for reconsideration. A petition for review on certiorari under Rule 45 of the Rules of Court must contain a certified true copy or duplicate original of the assailed decision, final order or judgment. Failure to comply with such requirement shall be sufficient ground for the dismissal of the petition. Lastly, the petition is bound to fail because of petitioner’s repeated disregard of the Rules and the Court’s lawful orders. In a Resolution the Court required petitioner to fully comply with the Rules of Court but failed to do so despite the opportunity given to him to comply to such order.

#29

PAGLAUM MANAGEMENT & DEVELOPMENT CORP. and HEALTH MARKETING TECHNOLOGIES, INC. vs. UNION BANK OF THE PHILIPPINES, NOTARY PUBLIC JOHN DOE, and

REGISTER OF DEEDS of CEBU CITY AND CEBU PROVINCEG.R. No. 179018

June 18, 2012Sereno, J.

FACTS: PAGLAUM is the registered owner of three parcels of land located in the Province of Cebu. These lots are co-owned by Benjamin B. Dy, the president of HealthTech, and his mother and sibling. Respondent Union Bank extended HealthTech a credit line in the amount of P 10M. To secure this obligation, PAGLAUM executed three REM on behalf of HealthTech and in favor of Union Bank. The REM, on the provision regarding the venue of all suits and actions arising out of or in connection therewith, originally stipulates: Section 9. Venue. – The venue of all suits and actions arising out of or in connection with this Mortgage shall be in Makati, Metro Manila or in the place where any of the Mortgaged Properties is located, at the absolute option of the Mortgagee, the parties hereto waiving any other venue. However, under the two Real Estate Mortgages the venue for the 2nd

states that it shall be in Cebu City, Metro Manila while in the 3rd the place of venue was left blank. HealthTech and Union Bank agreed to subsequent renewals and increases in the credit line, with the total amount of debt reaching P 36.5M. Unfortunately, according to HealthTech, the 1997 Asian financial crisis adversely affected its business and caused it difficulty in meeting its obligations with Union Bank. Both parties then entered into a Restructuring Agreement, which states that any action or proceeding arising out of or in connection therewith shall be commenced in Makati City, with both parties waiving any other venue. Despite the Agreement, HealthTech failed to pay its obligation which prompted Union Bank to extra-judicially foreclosed the mortgaged properties. The bank, as the sole bidder in the auction sale, was then issued a Certificate of Sale. Thereafter, it filed a Petition for Consolidation of Title. HealthTech filed a Complaint for Annulment of Sale and Titles with Damages and Application for TRO and Writ of Injunction. Union Bank filed a Motion to Dismiss on the following grounds: (a) lack of jurisdiction over the issuance of the injunctive relief; (b) improper venue; and (c) lack of authority of the person who signed the Complaint. RTC Br. 134 granted this Motion resulting in the dismissal of the case, as well as the dissolution of the WPI. CA affirmed RTC’s decision. PAGLAUM and HealthTech argue that: (a) the Restructuring Agreement governs the choice of venue between the parties, and (b) the agreement on the choice of venue

must be interpreted with the convenience of the parties in mind and the view that any obscurity therein was caused by Union Bank. Union Bank contends that: (a) the Restructuring Agreement is applicable only to the contract of loan, and not to the Real Estate Mortgage, and (b) the mortgage contracts explicitly state that the choice of venue exclusively belongs to it. Intervenor J. King & Sons Company, Inc. adopts the position of Union Bank and reiterates the position that Cebu City is the proper venue.

ISSUE: WON the Makati City is the proper venue to assail the foreclosure of the subject real estate mortgage?

RULING: YES.

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. 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. According to the Rules, real actions shall be commenced and tried in the court that has jurisdiction over the area where the property is situated. In this case, all the mortgaged properties are located in the Province of Cebu. Thus, following the general rule, PAGLAUM and HealthTech should have filed their case in Cebu, and not in Makati. However, the Rules provide an exception, in that real actions can be commenced and tried in a court other than where the property is situated in instances where the parties have previously and validly agreed in writing on the exclusive venue thereof. In the case at bar, the parties claim that such an agreement exists. The only dispute is whether the venue that should be followed is that contained in the REM, as contended by Union Bank, or that in the Restructuring Agreement, as posited by PAGLAUM and HealthTech. This Court rules that the venue stipulation in the Restructuring Agreement should be controlling. The REM were executed by PAGLAUM in favor of Union Bank to secure the credit line extended by the latter to HealthTech. All three mortgage contracts contain a dragnet clause, which secures succeeding obligations, including renewals, extensions, amendments or novations thereof, incurred by HealthTech from Union Bank. Meanwhile, Section 20 of the Restructuring Agreement as regards the venue of actions state: 20. Venue – Venue of any action or proceeding arising out of or connected with this Restructuring Agreement, the Note, the Collateral and any and all related documents shall be in Makati City, [HealthTech] and [Union Bank] hereby waiving any other venue. These quoted provisions of the Real Estate Mortgages and the later Restructuring Agreement clearly reveal the intention of the parties to implement a restrictive venue stipulation, which applies not only to the principal obligation, but also to the mortgages. The phrase "waiving any other venue" plainly shows that the choice of Makati City as the venue for actions arising out of or in connection with the Restructuring Agreement and the Collateral, with the REM being explicitly defined as such, is exclusive. Considering that Makati City was agreed upon by the parties to be the venue for all actions arising out of or in connection with the loan obligation incurred by HealthTech, as well as the REM executed by PAGLAUM, the CA committed reversible error in affirming the dismissal by RTC Br. 134 on the ground of improper venue.

#30

REMEDIO V. FLORES vs. HON. JUDGE HEILIA S. MALLARE-PHILLIPPS, IGNACIO BINONGCAL & FERNANDO CALION

G.R. No. L-66620September 24, 1986

Feria, J.

FACTS: Petitioner has appealed by certiorari from the order of Judge Phillipps of the RTC of Baguio City and Benguet Province which dismissed his complaint for lack of jurisdiction. Petitioner did not attach to his petition a copy of his complaint in the belief that the entire original record of the case shall be transmitted to the Court pursuant to Section 39 of BP129. The order appealed from states that the first cause of action alleged in the complaint was against respondent Ignacio Binongcal for refusing to pay the amount of P11,643.00 representing cost of truck tires which he purchased on credit from petitioner on various occasions from August to October, 1981; and the second was with respondent Fernando Calion for P10,212.00 for the same reason purchased from March, 1981 to January, 1982. Counsel for respondent Binongcal filed a Motion to Dismiss on the ground of lack of jurisdiction since the amount involved was below the jurisdictional amount of the exclusive jurisdiction of the RTC. It was further averred Calion’s obligation was separate and distinct from that of the other respondent. Counsel for respondent Calion joined in moving for the dismissal of the complaint on the ground of lack of jurisdiction. Counsel for petitioner opposed the Motion to Dismiss. The trial court dismissed the complaint for lack of jurisdiction. Petitioner maintains that the lower court has jurisdiction over the case following the totality rule introduced in Section 33(l) of BP129 and Section 11 of the Interim Rules. Petitioner compares the provisions with the pertinent portion of the former rule under Section 88 of the Judiciary Act of 1948 separate claim shall furnish the jurisdictional test and argues that with the deletion of the proviso in the former rule, the totality rule was reduced to clarity and brevity and the jurisdictional test is the totality of the claims in all, not in each, of the causes of action, irrespective of whether the causes of action arose out of the same or different transactions.

ISSUE: WON the totality rule shall apply to this case?

RULING: NO.

The Court rules that the application of the totality rule under Section 33(l) of BP Blg. 129 and Section 11 of the Interim Rules is subject to the requirements for the permissive joinder of parties under Section 6 of Rule 3. If the causes of action are separate and independent, their joinder in one complaint is permissive and not mandatory, and any cause of action where the amount of the demand is twenty thousand pesos or less may be the subject of a separate complaint filed with a metropolitan or municipal trial court. Under the present law, the totality rule is applied also to cases where two or more plaintiffs having separate causes of action against a defendant join in a single complaint, as well as to cases where a plaintiff has separate causes of action against two or more defendants joined in a single complaint. However, the causes of action in favor of the two or more plaintiffs or against the two or more defendants should arise out of the same transaction or series of transactions and there should be a common question of law or fact, as provided in S6R3. In the case at bar, the lower court correctly held that the jurisdictional test is subject to the rules on joinder of parties pursuant to Section 5 of Rule 2 and Section 6 of Rule 3 of the Rules of Court and that, after a careful scrutiny of the complaint, it appears that there is a misjoinder of parties for the reason that the claims against respondents Binongcal and Calion are separate and distinct and neither of which falls within its jurisdiction.

#31

PLANTERS DEVELOPMENT BANK vs. JULIE CHANDUMALG.R. No. 195619

September 5, 2012Reyes, J.

FACTS: A contract to sell a parcel of land together with improvements between BF Homes and respondent Chandumal is the subject of this case. BF Homes sold to PDB all its rights, participations and interests over the contract.

Chandumal defaulted in her payments. A Notice of Delinquency and Rescission of Contract with Demand to Vacate dated July 14, 1998 was sent by PDB, giving respondent thirty days from receipt within which to settle her installment arrearages together with all its increments; otherwise, all her rights under the contract shall be deemed extinguished and terminated and the contract declared as rescinded. Despite demand, Chandumal still failed to settle her obligation.

On June 18, 1999, an action for judicial confirmation of notarial rescission and delivery of possession was filed by PDB against Chandumal .

Consequently, summons was issued and served by the deputy sheriff. According to his return, he attempted to personally serve the summons upon Chandumal on July 15, 19 and 22, 1999 but it was unavailing as she was always out of the house on said dates. Hence, the sheriff cause substituted service of summons to Chandumal’s mother who acknowledged receipt thereof.

Chandumal was declared in default upon motion of PDB. Chandumal filed an Urgent Motion to Set Aside Order of Default and to Admit Attached Answer stating that she did not receive the summons and was not notified of the same.

ISSUE:

(1) Whether there was valid substituted service of summons(2) Whether the court acquired jurisdiction over her person

RULING:

(1) NO.

There was no valid substituted service of summons due to his failure to serve it personally. In Manotoc v CA, the requisites for a valid substituted service of summons are as follows: (1) impossibility of prompt personal service – the party relying on substituted service or the sheriff must show that the defendant cannot be served promptly or there is impossibility of prompt service; (2) specific details in the return – the sheriff must describe in the Return of Summons the facts and Circumstances surrounding the attempted personal service; (3) a person of suitable age and discretion – the sheriff must determine if the person found in the alleged dwelling or residence of defendant is legal age, what the recipient’s relationship with the defendant is, and whether said person comprehends the significance of the receipt of summons, which matters must be clearly and specifically described in the Return of Summons; and (4) a competent person in charge, who must have sufficient knowledge to

understand the obligation of the defendant in the summons, its importance, and the prejudicial effects arising from inaction on the summons.

The sheriff’s return failed to justify a resort to substituted service of summons for failure to specifically show or indicate in detail the actual exertion of efforts or any positive steps taken by the officer or process server in attempting to serve the summons personally to the defendant.

(2) YES.

Despite that there was no valid substituted service of summons, the Court, nevertheless, finds that Chandumal voluntarily submitted to the jurisdiction of the trial court.

When Chandrumal filed an affirmative motion, she effectively submitted her person to the jurisdiction of the court.

#32

JUANA COMPLEX I HOMEOWNERS ASSOCIATION, INC ET AL., vs. FIL-ESTATE LAND, INC. ET AL.

G.R. Nos. 152272 & 152397March 5, 2012

Mendoza, J.

FACTS: Juana Complex I Homeowners Association, Inc. (JCHA) together with individual residents of Juana Complex I and other neighboring subdivisions instituted a complaint for damages in its own behalf and a class suit representing the regular commuters and motorists of Juana Complex I and neighboring subdivisions who were deprived of the use of La Paz Road against Fil-Estate Land, Inc et.al (Fil-Estate).

The complaint alleged that they were regular commuters and motorists who constantly travelled towards the direction of Manila and Calamba; that they used the entry and exit toll gate of SLEX by passing through right-of-way public road known as La Paz Road; that they have been using the said road for more than ten year; that in August 1998, Fil-Estate excavated, broke and deliberately ruined La Paz Road that led to SLEX so JCHA would not be able to pass through said road; that they restored the road but Fil-Estate excavated the road again causing damage, prejudice, inconvenience, annoyance, loss of precious hours due to re-routing of traffic.

ISSUES:

(1) Whether the complaint states a cause of action(2) Whether the case is properly filed as a class suit

RULING:

(1) YES.

The question of whether the complaint states a cause of action is determined by its averments regarding the acts committed by the defendant.

Section 2, Rule 2 of the Rules of Court defines a cause of action as an act or omission by which a party violates the right of another. A complaint states a cause of action when it contains the three essential elements of a case of action namely: (1) the legal right of the plaintiff; (2) the correlative obligation of the defendant, and (3) the act or omission of the defendant in violation of said legal right.

The JCHA complaint sufficiently shows a demandable right over La Paz Road. These are: (1) their right to use the road on the basis of their allegation that they had been using the road for more than 10 years; and (2) an easement of a right of way has been constituted over the said roads.

(2) YES.

The suit is clearly one that benefits all commuters and motorists who use La Paz Road.

Section 12, Rule 3 of the Rules of Court defines class suit as follows:

Section 12 Class Suit – When the subject matter of the controversy is one of common or general interest to many persons so numerous that it is impracticable to join all as parties, a number of them which the court finds to be sufficiently numerous and representative as to fully protect the interest of all concerned may sue or defend for the benefit of all. Any party in interest shall have the right to intervene to protect his individual interest.

#33

GOODLAND COMPANY, INC., vs. ASIA UNITED BANKG.R. Nos. 195546 and 195561

March 14, 2012Villarama, Jr., J.

FACTS: Sometime in July 1999, petitioner Goodland Company, Inc. (petitioner) mortgaged its two parcels of land situated in Sta. Rosa, Laguna (Laguna Properties). The Third Party Real Estate Mortgage (REM) secured the loans extended by respondent Asia United Bank (AUB) to Radio Marine Network ((Smartnet), Inc. (RMNSI).

In addition to the said collaterals, petiioner executed a Third Party REM over its property located at Pasong Tamo St., Makati city (Makati Property). The REMs, both signed by Gilbert Guy, President of Goodland Company Inc., were duly registered by AUB with the Registry of Deeds for Calamba, Laguna and Registry of Deeds for Makati city, and annotated on the said titles.

Laguna Property

On January 16, 2003, petitioner filed a complaint for annulment of mortgage before the RTC of Biñan, Laguna on the ground that said REM was falsified and in contravention of the parties'

agreement that the blank mortgage form would merely serve as "comfort document" and not to be registered by AUB. While said case was pending, RMNSI defaulted on its loan obligation, which promptedd AUB to exercise its right under the REM by filing an application for extrajudicial foreclosure of real estate mortgage. In the public auction sale, AUB emerged as the highest bidder and was issued a Certificate of Sale which was registered. Prior to the consolidaion of title in the foreclosing mortgagee (AUB), petitioner commenced a second suit, seeking to annul the foreclosure sale and enjoin the consolidation of title in favor of AUB, on the ground of alleged falsification of the REM.

Respondents AUB moved to dismiss calling the attention of the RTC to petitioner's forum shopping. They argued that the two cases were anchored on the alleged falsification of the REM as basis for the reliefs sought. The RTC granted the said motion. Upon Appeal to the CA, it reversed the RTC's order.

Makati Property

Petitioner filed the first suit assailing the REM over its property alleging that its president merely signed such by way of accommodation as security for the loan of Smartnet Philippines, Inc. (SPI) with the understanding that the document shall not be completed and not to be registered with the Register of Deeds as it would serve as comfort document to prove petitioner's willingness to execute a REM in the future if so demanded by AUB and agreed upon by Smartnet.

Petitioner filed the second suit which sought the annulment of the REM based on alleged irregulariies in its execution. Respondents moved to dismiss with prejudice to the cases on the grounds of forum shopping and for failure to pay the proper docket and other legal fees. The RTC dismissed with prejudice the complaints in both cases. The CA also agreed with the RTC on the ground of forum shopping.

ISSUE: Was there forum shopping?

RULING: YES.

There is forum shopping when the following elements are present: (1) identity of parties, or at least such parties as represent the same interests in both actions; (2) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) the identity of the two preceding particulars suh that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration; said requisites are also constitutive of the requisites for auter action pendant or lis pendens.

All the foregoing elements are present in this case.

#34

SPOUSES ANTONIO ALGURA AND LORENCITA ALGURA vs. LGU ET. ALG.R. No. 150135

October 30, 2006Velasco, Jr., J.:

FACTS: Spouses Algura filed a Verified Complaint dated August 30, 1999 for damages against the Naga city Government and its offices, arising from the alleged illegal demolition of their r3sidence and boarding house and for payment of lost income derived from fees paid by their boarders.

Simultaneously, petitioners filed an Ex-Parte Motion to Litigate as Indigent Litigants, which was granted by the court.

Respondents filed a motion to disqualify petitioners as indigent litigants which the court granted on the ground that they failed to substantiate their claim for exemption from payment of legal fees and to comply with the third paragraph of Rule 141, Section 18 of the Revised Rules of Court - directing them to pay the requisite filing fees.

Consequently, the court issued an Order disqualifying petitioners as indigent litigants.

ISSUE: Were the spouses Algura indigent litigants?

RULING: THE NAGA CITY RTC WAS ORDERED TO SET THE "EX-PARTE MOTION TO LITIGATE AS INDIGENT LITIGANTS" FOR HEARING AND APPLY THE RULES OF CIVIL PROCEDURE TO DETERMINE WHETHER PETITIONERS CAN QUALIFY AS INDIGENT LITIGANTS.

Rule 3, Section 21 and Rule 141, Section 19 are the rules governing the grant of indigent litigants exemption. Section 19 Rule 141 provides specific standards while Section 21 Rule 3 does not clearly draw the limits of the entitlement to the exemption.

If the applicant for exemption meets the salary and property requirements under Section 19 of Rule 141, then the grant of the application is mandatory. On the other hand, when the application does not satisfy one or both of the requirements, then the application should not be denied outright; instead, the court should apply the "indigency test" under Section 21 of Rule 3 and use its sound discretion in determining the merits of the prayer for exemption.

#35

THEODORE and NANCY ANG, represented by ELDRIGE MARVIN B. ACERON vs. SPOUSES ALAN and EM ANG

G.R. No. 186993August 22, 2012

Reyes, J.

FACTS: Respondents spouses Alan and Em Ang obtained a loan from petitioners Theodore and Nancy Ang. Respondents executed a promissory note in favor of petitioners wherein they promised to pay the latter the said amount, with interest, upon demand. However, despite repeated demands, the respondents failed to pay the petitioners.

Petitioners, who were then residing in Los Angeles, California, executed their respective Special Powers of Attorney (SPA) in favor of Attorney Eldrige Marvin B. Aceron (Atty. Aceron) for the purpose of filing an action in court against the respondents, which Atty. Aceron promptly did -- a collection case against respondents filed with the Quezon City RTC.

Respondents moved for the dismissal of the complaint filed by the petitioners on, inter alia, the ground of improper venue; they asserted that the complaint against them may only be filed in the court of the place where either they or the petitioners reside. They averred that they reside in Bacolod City while the petitioners reside in Los Angeles, California, USA. Thus, the respondents maintain, the filing of the complaint against them in the Quezon City RTC was improper. The RTC issued an Order denying the respondents’ motion to dismiss.

Reconsideration was sought but denied, leading to the respondents filing with the Court of Appeals a petition for certiorari. The respondents contended that the petitioners’ SPA in favor of Atty. Aceron notwithstanding, the complaint may not be filed in the court of the place where Atty. Aceron resides, i.e., the Quezon City RTC; Atty. Aceron, being merely a representative of the petitioners, is not the real party in interest in the case, and therefore, his residence should not be considered in determining the proper venue of the said complaint. The CA annulled and set aside the Orders of the RTC. Petitioners sought a reconsideration, but in vain -- hence, this petition.

ISSUES:

(1) Did the Quezon City RTC have jurisdiction over the case?(2) Was Atty. Aceron a real party in interest to the case?

RULING:

(1) NO.

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 plaintiff’s caprice; the matter is regulated by the Rules of Court.

The petitioners’ complaint for collection of sum of money against the respondents is a personal action as it primarily seeks the enforcement of a contract. The Rules give the plaintiff the option of choosing where to file his complaint. He can file it in the place (1) where he himself or any of them resides, or (2) where the defendant or any of the defendants resides or may be found. The plaintiff or the defendant must be residents of the place where the action has been instituted at the time the action is commenced.

However, if the plaintiff does not reside in the Philippines, the complaint in such case may only be filed in the court of the place where the defendant resides. [The] situs for bringing real and personal civil actions is fixed by the Rules of Court to attain the greatest convenience possible to the litigants and their witnesses by affording them maximum accessibility to the courts.

(2) NO.

[Atty. Aceron] does not stand to be benefited or injured by any judgment [in the case at bench]. He was merely appointed by the petitioners as their attorney-in-fact for the limited purpose of filing and prosecuting the complaint against the respondents. Such appointment, however, does not mean that he is subrogated into the rights of petitioners and ought to be considered as a real party in interest. Being merely a representative of the petitioners, Atty. Aceron in his personal capacity does not have the right to file the complaint below against

the respondents. He may only do so, as what he did, in behalf of the petitioners – the real parties in interest.

[To] construe the express requirement of residence under the rules on venue as applicable to the attorney-in-fact of the plaintiff would abrogate the meaning of a “real party in interest”, as defined in Section 2 of Rule 3 of the 1997 Rules of Court vis-à-vis Section 3 of the same Rule.

#36

LIVING @ SENSE, INC., vs. MALAYAN INSURANCE COMPANY, INC. G.R. No. 193753

September 26, 2012Perlas-Bernabe, J.

FACTS: Petitioner Living @ Sense, Inc. was the main contractor of the FOC Network Project of Globe Telecom in Mindanao. In connection with the project, petitioner entered into a Sub-Contract Agreement (Agreement) with Dou Mac, Inc. (DMI), under which the latter was tasked to undertake an underground open-trench work. Petitioner required DMI to give a bond, in the event that DMI fails to perform its obligations under the Agreement. Thus, DMI secured surety and performance bonds from respondent Malayan Insurance Company, Inc. (respondent) to answer: (1) for the unliquidated portion of the downpayment, and (2) for the loss and damage that petitioner may suffer, respectively, should DMI fail to perform its obligations under the Agreement. Under the bonds, respondent bound itself jointly and severally liable with DMI. During the course of excavation and restoration works, the Department of Public Works and Highways (DPWH) issued a work-stoppage order against DMI after finding the latter’s work unsatisfactory. Notwithstanding the said order, however, DMI still failed to adopt corrective measures, prompting petitioner to terminate the Agreement and seek indemnification from respondent. However, respondent effectively denied petitioner’s claim on the ground that the liability of its principal, DMI, should first be ascertained before its own liability as a surety attaches. This led to the filing of a complaint with the Parañaque City RTC, premised on respondent’s liability under the surety and performance bonds secured by DMI.

Seeking the dismissal of the complaint, respondent claimed that DMI is an indispensable party that should be impleaded and whose liability should first be determined before respondent can be held liable. On the other hand, petitioner asserted that respondent is a surety who is directly and primarily liable to indemnify petitioner, and that the bond is "callable on demand" in the event DMI fails to perform its obligations under the Agreement.

The RTC dismissed the complaint (without prejudice) for failure to implead DMI as a party defendant. It ruled that before respondent could be held liable on the surety and performance bonds, it must first be established that DMI, with whom petitioner had originally contracted, had indeed violated the Agreement. DMI, therefore, is an indispensable party that must be impleaded in the instant suit. The RTC later denied petitioner’s motion for reconsideration for failure to set the same for hearing as required under the rules – hence this petition for review on certiorari.

ISSUE: Was DMI an indispensable party in this case?

RULING: NO.

Records show that when DMI secured the surety and performance bonds from respondent in compliance with petitioners requirement, respondent bound itself "jointly and severally" with DMI for the damages and actual loss that petitioner may suffer should DMI fail to perform its obligations under the Agreement […] The term "jointly and severally" expresses a solidary obligation granting petitioner, as creditor, the right to proceed against its debtors, i.e., respondent or DMI.

The nature of the solidary obligation under the surety does not make one an indispensable party. An indispensable party is a party-in-interest without whom no final determination can be had of an action, and who shall be joined mandatorily either as plaintiffs or defendants. The presence of indispensable parties is necessary to vest the court with jurisdiction, thus, without their presence to a suit or proceeding, the judgment of a court cannot attain real finality. 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 absent parties but even as to those present.

In this case, DMI is not an indispensable party because petitioner can claim indemnity directly from respondent, having made itself jointly and severally liable with DMI for the obligation under the bonds. Therefore, the failure to implead DMI is not a ground to dismiss the case, even if the same was without prejudice.

Moreover, even on the assumption that DMI was, indeed, an indispensable party, the RTC committed reversible error in dismissing the complaint. Failure to implead an indispensable party is not a ground for the dismissal of an action, as the remedy in such case is to implead the party claimed to be indispensable, considering that parties may be added by order of the court, on motion of the party or on its own initiative at any stage of the action.

#37

SIMNY G. GUY, et al., vs. GILBERT G. GUYG.R. Nos. 189486, 189699

September 5, 2012Perez, J.

FACTS: Respondent Gilbert G. Guy (Gilbert) practically owned almost 80 percent of the 650,000 subscribed capital stock of GoodGold Realty & Development Corporation (GoodGold), one of the multi-million corporations which Gilbert claimed to have established in his 30s. GoodGold’s remaining shares were divided among his parents, Francisco Guy (Francisco) and petitioner Simny Guy (Simny), and Benjamin Lim and Paulino Delfin Pe.

However, Simny alleged that it was she and her husband who established GoodGold, putting the bulk of its shares under Gilbert’s name. Simny further claimed that upon the advice of their lawyers, upon the incorporation of GoodGold, they issued stock certificates reflecting the shares held by each stockholder duly signed by Francisco as President and Atty. Emmanuel Paras as Corporate Secretary, with corresponding blank endorsements at the back of each certificate under Gilbert’s name. These certificates were all with Gilbert’s irrevocable endorsement and power of attorney to

have these stocks transferred in the books of corporation. All of these certificates were always in the undisturbed possession of the spouses Francisco and Simny.

Years later, the aging Francisco instructed Benjamin Lim, a nominal shareholder of GoodGold and his trusted employee, to collaborate with Atty. Emmanuel Paras, to redistribute GoodGold’s shareholdings evenly among his children, namely, Gilbert, Grace Guy-Cheu (Grace), Geraldine Guy (Geraldine), and Gladys Guy (Gladys), while maintaining a proportionate share for himself and Simny. Accordingly, some of GoodGold’s certificates were cancelled and new ones were issued to represent the redistribution of GoodGold’s shares of stock.

Five years after the redistribution of GoodGold’s shares of stock, Gilbert filed with the Manila RTC a complaint for the “Declaration of Nullity of Transfers of Shares in GoodGold and of General Information Sheets and Minutes of Meeting, and for Damages with Application for a Preliminary Injunctive Relief,” against Simny and his sisters, Geraldine, Grace, and Gladys. Gilbert alleged, among others, that no stock certificate ever existed; that his signature at the back of the spurious stock certificates which purportedly endorsed the same was forged, and, hence, should be nullified. Gilbert, however, withdrew the complaint, after the National Bureau of Investigation (NBI) submitted a report to the RTC of Manila authenticating Gilbert’s signature in the endorsed certificates.

Three years after the complaint with the RTC of Manila was withdrawn, Gilbert again filed a complaint, this time, with the Mandaluyong RTC, captioned as “Intra Corporate Controversy: For the Declaration of Nullity of Fraudulent Transfers of Shares of Stock Certificates, Fabricated Stock Certificates, Falsified General Information Sheets, Minutes of Meetings, and Damages with Application for the Issuance of a Writ of Preliminary and Mandatory Injunction,” against his mother, Simny, his sisters, Geraldine and Gladys, and the heirs of his late sister Grace.

Gilbert alleged that he never signed any document which would justify and support the transfer of his shares to his siblings and that he has in no way, disposed, alienated, encumbered, assigned or sold any or part of his shares in GoodGold. He also denied the existence of the certificates of stocks. Meanwhile, Gilbert’s siblings filed a manifestation claiming that the complaint is a nuisance and harassment suit under Section 1(b), Rule 1 of the Interim Rules of Procedure on Intra-Corporate Controversies. The RTC denied the motion for inhibition. The RTC dismissed the case, declaring it a nuisance and harassment suit.

This constrained Gilbert to assail the above Order before the Court of Appeals (CA). The CA found merit on Gilbert’s contention that the complaint should be heard on the merits.

ISSUE: Was the decision of the CA on the case below not being a nuisance and harassment suit proper?

RULING: NO.

It bears emphasis that this controversy started with Gilbert’s complaint filed with the RTC of Mandaluyong City in his capacity as stockholder, director and Vice-President of GoodGold.

Gilbert’s complaint essentially prayed for the return of his original 519,997 shares in GoodGold, by praying that the court declare that “there were no valid transfers [of the contested shares] to defendants and Francisco.” It baffles this Court, however, that Gilbert omitted Francisco as defendant in his complaint. While Gilbert could have opted to waive his shares in the name of

Francisco to justify the latter’s non-inclusion in the complaint, Gilbert did not do so, but instead, wanted everything back and even wanted the whole transfer of shares declared fraudulent. This cannot be done, without including Francisco as defendant in the original case. The transfer of the shares cannot be, as Gilbert wanted, declared entirely fraudulent without including those of Francisco who owns almost a third of the total number.

The definition in the Rules of Court, Section 7, Rule 3 thereof, of indispensable parties as “parties in interest without whom no final determination can be had of an action” has been jurisprudentially amplified.

Settled is the rule that joinder of indispensable parties is compulsory being a sine qua non for the exercise of judicial power, and, it is precisely “when an indispensable party is not before the court that the action should be dismissed” for such absence renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even as to those present.

It bears emphasis that Gilbert, while suing as a stockholder against his co-stockholders, should have also impleaded GoodGold as defendant [...] GoodGold is a separate juridical entity distinct from its stockholders and from its directors and officers. The trial court, acting as a special commercial court, cannot settle the issues with finality without impleading GoodGold as defendant. Like Francisco, and for the same reasons, GoodGold is an indispensable party which Gilbert should have impleaded as defendant in his complaint.

#38

PHILIP L. GO, et al. vs. DISTINCTION PROPERTIES DEVELOPMENT AND CONSTRUCTION, INC.G.R. No. 194024April 25, 2012

Mendoza, J. FACTS: Philip L. Go, Pacifico Q. Lim and Andrew Q. Lim (petitioners) are registered individual owners of condominium units in Phoenix Heights Condominium in Pasig. Respondent Distinction Properties Development and Construction, Inc. (DPDCI) is a corporation existing under the laws of the Philippines, incorporated as a real estate developer, engaged in the development of condominium projects, among which was the Phoenix Heights Condominium. Pacifico Lim, one of the incorporators and the then president of DPDCI, executed a Master Deed and Declaration of Restrictions (MDDR) of Phoenix Heights Condominium, which was filed with the Registry of Deeds.  As the developer, DPDCI undertook, among others, the marketing aspect of the project, the sale of the units and the release of flyers and brochures.

Thereafter, Phoenix Heights Condominium Corporation (PHCC) was formally organized and incorporated.  Sometime in 2000, DPDCI turned over to PHCC the ownership and possession of the condominium units, except for two saleable commercial units/spaces. Through its Board, PHCC approved a settlement offer from DPDCI for the set-off of the latter’s association dues arrears with the assignment of title over the above-mentioned saleable commercial units and their conversion into common areas.  Thus, CCTs were issued by the Registrar of Deeds of Pasig City in favor of PHCC in lieu of the old titles.  The said settlement between the two corporations likewise included the reversion of the 22 storage spaces into common areas. With the conformity of PHCC, DPDCI’s

application for alteration (conversion of unconstructed 22 storage units and units GF4-A and BAS from saleable to common areas) was granted by the Housing and Land Use Regulatory Board (HLURB).

 Soon after, petitioners, as condominium unit-owners, filed a complaint before the HLURB against DPDCI for unsound business practices and violation of the MDDR.  They alleged that DPDCI committed misrepresentation in their circulated flyers and brochures as to the facilities or amenities that would be available in the condominium and failed to perform its obligation to comply with the MDDR. In defense, DPDCI denied that it had breached its promises and representations to the public concerning the facilities in the condominium. It alleged that the brochure attached to the complaint was “a mere preparatory draft” and not the official one actually distributed to the public, and that the said brochure contained a disclaimer as to the binding effect of the supposed offers therein.  Also, DPDCI questioned the petitioners’ personality to sue as the action was a derivative suit.

 After due hearing, the HLURB rendered its decision in favor of petitioners. Aggrieved, DPDCI filed with the CA its Petition for Certiorari and Prohibition. The CA held that jurisdiction over PHCC, an indispensable party, was neither acquired nor waived by estoppel.  Finally, the CA held that the rule on exhaustion of administrative remedies could be relaxed.  Appeal was not a speedy and adequate remedy as jurisdictional questions were continuously raised but ignored by the HLURB.  In the present case, however, “[t]he bottom line is that the challenged decision is one that had been rendered in excess of jurisdiction, if not with grave abuse of discretion amounting to lack or excess of jurisdiction.” Petitioners filed a motion for reconsideration; the motion, however, was denied – hence, this petition. ISSUES:

(1) Did the HLURB have jurisdiction over the complaint filed by the petitioners? (2) Was the PHCC an indispensable party? (3) Did the rule on exhaustion of administrative remedies apply in this case?

 RULING:

(1) NO. 

[Jurisdiction] over the subject matter of a case is conferred by law and determined by the allegations in the complaint which comprise a concise statement of the ultimate facts constituting the plaintiff's cause of action. The nature of an action, as well as which court or body has jurisdiction over it, is determined based on the allegations contained in the complaint of the plaintiff, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. The averments in the complaint and the character of the relief sought are the ones to be consulted. Once vested by the allegations in the complaint, jurisdiction also remains vested irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. Thus, it was ruled that the jurisdiction of the HLURB to hear and decide cases is determined by the nature of the cause of action, the subject matter or property involved and the parties.

 Generally, the extent to which an administrative agency may exercise its powers depends largely, if not wholly, on the provisions of the statute creating or empowering such agency. With respect to the HLURB, to determine if said agency has jurisdiction over

petitioners’ cause of action, an examination of the laws defining the HLURB’s jurisdiction and authority becomes imperative.  P.D. No. 957, specifically Section 3, granted the National Housing Authority (NHA) the "exclusive jurisdiction to regulate the real estate trade and business." Then came P.D. No. 1344, expanding the jurisdiction of the NHA (now HLURB) [to cover unsound] real estate business practices [(cf. Sec. 1, PD 1344)]. P.D. No. 957, as amended, aims to protect innocent subdivision lot and condominium unit buyers against fraudulent real estate practices.

The HLURB is given […] wide latitude in characterizing or categorizing acts which may constitute unsound business practice or breach of contractual obligations in the real estate trade.  This grant of expansive jurisdiction to the HLURB does not mean, however, that all cases involving subdivision lots or condominium units automatically fall under its jurisdiction.  The CA aptly quoted the case of Christian General Assembly, Inc. vs. Ignacio, wherein the Court held that […] mere relationship between the parties, i.e., that of being subdivision owner/developer and subdivision lot buyer, does not automatically vest jurisdiction in the HLURB. For an action to fall within the exclusive jurisdiction of the HLURB, the decisive element is the nature of the action as enumerated in Section 1 of P.D. 1344 [and in] this case, the complaint filed by petitioners alleged causes of action that apparently are not cognizable by the HLURB considering the nature of the action and the reliefs sought.  A perusal of the complaint discloses that petitioners are actually seeking to nullify and invalidate the duly constituted acts of PHCC – the […] Agreement entered into by PHCC with DPDCI and its Board Resolution which authorized the acceptance of the proposed offsetting/settlement of DPDCI’s indebtedness and approval of the conversion of certain units from saleable to common areas.  All these were approved by the HLURB.  

(2) YES.

As it is clear that the acts being assailed are those of PHHC, this case cannot prosper for failure to implead the proper party, PHCC. […] An indispensable party is defined as one who has such an interest in the controversy or subject matter that a final adjudication cannot be made, in his absence, without injuring or affecting that interest [and] a final decree would necessarily affect the rights of indispensable parties so that the Court could not proceed without their presence. 

From all indications, PHCC is an indispensable party and should have been impleaded, either as a plaintiff or as a defendant, in the complaint filed before the HLURB as it would be directly and adversely affected by any determination therein.   Evidently, the cause of action rightfully pertains to PHCC. Petitioners cannot exercise the same except through a derivative suit.  In the complaint, however, there was no allegation that the action was a derivative suit. In fact, in the petition, petitioners claim that their complaint is not a derivative suit. […] Without PHCC as a party, there can be no final adjudication of the HLURB’s judgment.  The CA was, thus, correct in ordering the dismissal of the case for failure to implead an indispensable party. […]  Moreover, considering that petitioners, who are members of PHCC, are ultimately challenging the agreement entered into by PHCC with DPDCI, they are assailing, in effect, PHCC’s acts as a body corporate.  This action, therefore, partakes [of] the nature of an “intra-corporate controversy,” the jurisdiction over which used to belong to the Securities and Exchange Commission (SEC), but transferred to the courts of general jurisdiction or the

appropriate Regional Trial Court (RTC), pursuant to Section 5b of P.D. No.  902-A, as amended by Section 5.2 of Republic Act (R.A.) No. 8799 […] for being between a condominium corporation and its members-unit owners.  

(3) NO. The doctrine of exhaustion of administrative remedies is a cornerstone of our judicial system. The thrust of the rule is that courts must allow administrative agencies to carry out their functions and discharge their responsibilities within the specialized areas of their respective competence. It has been held, however, that the doctrine of exhaustion of administrative remedies and the doctrine of primary jurisdiction are not ironclad rules.  In the case of Republic of the Philippines vs. Lacap, the Court enumerated the numerous exceptions to these rules, namely: (a) where there is estoppel on the part of the party invoking the doctrine; (b) where the challenged administrative act is patently illegal, amounting to lack of jurisdiction; (c) where there is unreasonable delay or official inaction that will irretrievably prejudice the complainant; (d) where the amount involved is relatively so small as to make the rule impractical and oppressive; (e) where the question involved is purely legal and will ultimately have to be decided by the courts of justice;  (f) where judicial intervention is urgent; (g) where the application of the doctrine may cause great and irreparable damage; (h) where the controverted acts violate due process; (i) where the issue of non-exhaustion of administrative remedies has been rendered moot; (j) where there is no other plain, speedy and adequate remedy; (k) where strong public interest is involved; and (l) in quo warranto proceedings. (Underscoring supplied.)

The situations (b) and (e) in the foregoing enumeration obtain in this case. 

#39

POLYTRADE CORPORATION vs. VICTORIANO BLANCOG.R. No. L-27033October 31, 1969

Sanchez, J.

FACTS: The instant case began as a suit before the Court of First Instance of Bulacan on four causes of action to recover the purchase price of rawhide delivered by plaintiff to defendant. Plaintiff corporation has its principal office and place of business in Makati, Rizal. Defendant is a resident of Meycauayan, Bulacan. Defendant moved to dismiss upon the ground of improper venue. He claims that by contract suit may only be lodged in the courts of Manila. The Bulacan court overruled him. He did not answer the complaint. In consequence, a default judgment was rendered against.

Defendant appealed.

ISSUE: Was venue properly laid in the province of Bulacan?

RULING: YES.

Section 2 (b), Rule 4 of the Rules of Court on venue of personal actions triable by courts of first instance — and this is one — provides that such "actions may be commenced and tried 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." Qualifying this provision in Section 3 of the same Rule which states that venue may be stipulated by written agreement — "By written agreement of the parties the venue of an action may be changed or transferred from one province to another." […]

Defendant places his case upon Section 3 of Rule 4 just quoted. According to defendant, plaintiff and defendant, by written contracts covering the four causes of action, stipulated that: "The parties agree to sue and be sued in the Courts of Manila." This agreement is valid.  Defendant says that because of such covenant he can only be sued in the courts of Manila. [However, no] such stipulation appears in the contracts covering the first two causes of action. The general rule set forth in Section 2 (b), Rule 4, governs, and as to said two causes of action, venue was properly laid in Bulacan, the province of defendant's residence.

The stipulation adverted to is only found in the agreements covering the third and fourth causes of action. 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 praesumitur.

Venue here was properly laid.

#40

SWEET LINES, INC. vs. HON. BERNARDO TEVES, et al.G.R. No. L-37750

May 19, 1978Santos, J.

FACTS: Private respondents Atty. Leovigildo Tandog and Rogelio Tiro, contractors by profession, bought tickets at the branch office of petitioner Sweet Lines, Inc., a shipping company transporting inter-island passengers and cargoes, at Cagayan de Oro City. Respondents were to board petitioner's vessel, M/S "Sweet Hope" bound for Tagbilaran City via the port of Cebu. Upon learning that the vessel was not proceeding to Bohol, since many passengers were bound for Surigao, private respondents went to the branch office for proper relocation to M/S "Sweet Town". Because the said vessel was already filled to capacity, they were forced to agree "to hide at the cargo section to avoid inspection of the officers of the Philippine Coastguard." Private respondents alleged that they were, during the trip, "exposed to the scorching heat of the sun and the dust coming from the ship's cargo of corn grits," and that the tickets they bought at Cagayan de Oro City for Tagbilaran were not honored and they were constrained to pay for other tickets. In view thereof, private respondents sued petitioner for damages and for breach of contract of carriage before respondent Court of First Instance of Misamis Oriental.

Petitioner moved to dismiss the complaint on the ground of improper venue. This motion was premised on the condition printed at the back of the tickets stating that ”any and all actions arising out of the conditions and provisions of this ticket, irrespective of where it is issued, shall be filed in the competent courts in the City of Cebu.” The motion was denied by the trial court. Petitioner moved to reconsider the order of denial, but no avail – hence, this instant petition for prohibition for preliminary injunction, 'alleging that the respondent judge has departed from the accepted and usual course of judicial proceeding" and "had acted without or in excess or in error of his jurisdiction or in gross abuse of discretion.”

ISSUE: Was the condition printed at the back of the petitioner's passage tickets purchased by private respondents, which limits the venue of actions arising from the contract of carriage to the Cebu CIF, valid and enforceable?

RULING: NO.

[The condition] is subversive of public policy on transfers of venue of actions. For, although venue may be changed or transferred from one province to another by agreement of the parties in writing t to Rule 4, Section 3, of the Rules of Court, such an agreement will not be held valid where it practically negates the action of the claimants, such as the private respondents herein. The philosophy underlying the provisions on transfer of venue of actions is the convenience of the plaintiffs as well as his witnesses and to promote the ends of justice. 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. The condition will thus defeat, instead of enhance, the ends of justice. Upon the other hand, petitioner has branches or offices in the respective ports of call of its vessels and can afford to litigate in any of these places. Hence, the filing of the suit in the CFI of Misamis Oriental, as was done in the instant case, will not cause inconvenience to, much less prejudice, petitioner.

Public policy is “... that principle of the law which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the public or against the public good...  [u]nder this principle, ... freedom of contract or private dealing is restricted by law for the good of the public.” Clearly, [the condition], if enforced, will be subversive of the public good or interest, since it will frustrate in meritorious cases, actions of passenger cants outside of Cebu City, thus placing petitioner company at a decided advantage over said persons, who may have perfectly legitimate claims against it. The said condition should, therefore, be declared void and unenforceable, as contrary to public policy – to make the courts accessible to all who may have need of their services.