Republic of the Philippines

SUPREME COURT
Baguio City
THIRD DIVISION
G.R. No. 194024 April 25, 2012
PHILIP L. GO, PACIFICO Q. LIM Petitioners,
s!
ISTINCTION PROPERTIES E!ELOPMENT AN CONSTRUCTION, INC. Respon"ent!
D # C I S I O N
MENO"A, J.:
Before the Court is a p#$i$io% &or r#'i#( o% )#r$ior*ri +%,#r R+l# 45 assailing CA Decision
FACTS$
Li- p#$i$io%#r. are r#/i.$#r#, i%,i'i,+*l o(%#r. o& )o%,o-i%i+- +%i$. i% P0o#%i1 H#i/0$.
Con"o%iniu% in Pasig City, &etro &anila!
R#.po%,#%$ i.$i%)$io% Prop#r$i#. #'#lop-#%$ *%, Co%.$r+)$io%, I%). 2PCI3 i. *
)orpor*$io% e'isting un"er the la(s of the Philippines (ith principal office at No! )*+* Soler Street,
Binon"o, &anila! It (as i%)orpor*$#, *. * r#*l #.$*$# ,#'#lop#r, #%/*/#, i% $0# ,#'#lop-#%$ o&
)o%,o-i%i+- pro4#)$., *-o%/ (0i)0 (*. $0# P0o#%i1 H#i/0$. Co%,o-i%i+-!
P#$i$io%#r P*)i&i)o Li-, o%# o& $0# i%)orpor*$or. *%, $0# $0#% pr#.i,#%$ o& PCI, e'ecute" a
Master Deed and Declaration of Restrictions (MDDR)
,
of Phoeni' Heights Con"o%iniu%, (hich (as
file" (ith the Registry of Dee"s!
-s the "eeloper, DPDCI un"ertoo., a%ong others, the %ar.eting aspect of the pro/ect, the sale of
the units an" the release of flyers an" brochures!
Thereafter, Phoeni' Heights Con"o%iniu% Corporation 0PHCC1 (as for%ally organi2e" an"
incorporate"! So-#$i-# i% 2000, PCI $+r%#, o'#r $o PHCC $0# o(%#r.0ip *%, po..#..io% o&
$0# )o%,o-i%i+- +%i$., #1)#p$ &or $0# $(o .*l#*5l# )o--#r)i*l +%i$.6.p*)#.$
)! 345 6eel B-S coere" by Con"o%iniu% Certificate of Title 0CCT1 No! +)*,* utili2e" as
the PHCC7s a"%inistration office, an"
+! 345 6eel 89- coere" by CCT No! PT9+:,;<4C9),<9II use" as liing =uarters by the
buil"ing a"%inistrator!
Al$0o+/0 +.#, 57 PHCC, PCI (*. *..#..#, *..o)i*$io% ,+#. &or $0#.# $(o +%i$..
M#*%(0il#, i% M*r)0 1999, p#$i$io%#r P*)i&i)o Li-, *. pr#.i,#%$ o& PCI, &il#, *% Application
for Alteration of Plan
4
pertaining to the construction of ++ storage units in the spaces a"/unct to the
par.ing area of the buil"ing! The application, ho(eer, (as "isapproe" as the propose" alteration
(oul" obstruct light an" entilation!
T0ro+/0 i$. 8o*r,,
5
PHCC *ppro'#, * .#$$l#-#%$ o&&#r &ro- PCI &or $0# .#$9o&& o& $0#
l*$$#r:. *..o)i*$io% ,+#. arrears (ith the assign%ent of title o& $0# $(o .*l#*5l# )o--#r)i*l
+%i$. *%, $0#ir )o%'#r.io% i%$o )o--o% *r#*..
The sai" settle%ent bet(een the t(o corporations li.e(ise inclu"e" the reersion of the ++ storage
spaces into co%%on areas! >ith the confor%ity of PHCC, PCI:. *ppli)*$io% &or *l$#r*$io%
2)o%'#r.io% o& +%)o%.$r+)$#, 22 .$or*/# +%i$. *%, +%i$. GF49A *%, 8AS &ro- .*l#*5l# $o
)o--o% *r#*.3 (*. /r*%$#, 57 $0# Ho+.i%/ *%, L*%, U.# R#/+l*$or7 8o*r, 2HLUR81!
<
P#$i$io%#r Li-., *. )o%,o-i%i+- +%i$9o(%#r., &il#, * )o-pl*i%$ 5#&or# $0# HLUR8 */*i%.$
PCI &or +%.o+%, 5+.i%#.. pr*)$i)#. *%, 'iol*$io% o& $0# MR! The case (as "oc.ete" as
R#&9 *?*@*?9),;*<!
T0#7 *ll#/#, $0*$ PCI )o--i$$#, -i.r#pr#.#%$*$io% i% $0#ir )ir)+l*$#, &l7#r. *%,
5ro)0+r#. *. $o $0# &*)ili$i#. or *-#%i$i#. $0*$ (o+l, 5# *'*il*5l# i% $0# )o%,o-i%i+- *%,
&*il#, $o p#r&or- i$. o5li/*$io% $o )o-pl7 (i$0 $0# MR.
In "efense, DPDCI "enie" that it ha" breache" its pro%ises an" representations to the public
concerning the facilities in the con"o%iniu%! It allege" that the brochure attache" to the co%plaint
(as Aa %ere preparatory "raftA an" not the official one actually "istribute" to the public, an" that the
sai" brochure containe" a "isclai%er as to the bin"ing effect of the suppose" offers therein! -lso,
DPDCI =uestione" the petitioners7 personality to sue as the action (as a "eriatie suit!
A&$#r ,+# 0#*ri%/, $0# HLUR8 r#%,#r#, i$. ,#)i.io% i% &*'or o& p#$i$io%#r Li-.!
A//ri#'#,, PCI &il#, (i$0 $0# CA i$. P#$i$io% &or C#r$ior*ri *%, Pro0i5i$io%
10
, on the groun"
that the H6BRB "ecision (as a patent nullity constituting an act (ithout or beyon" its /uris"iction an"
that it ha" no other plain, spee"y an" a"e=uate re%e"y in the course of la(!
CA /r*%$#, PCI:. p#$i$io%.
T0# CA r+l#, $0*$ $0# HLUR8 0*, %o 4+ri.,i)$io% o'#r $0# )o-pl*i%$ &il#, 57 p#$i$io%#r. *.
$0# )o%$ro'#r.7 ,i, %o$ &*ll (i$0i% $0# .)op# o& $0# *,-i%i.$r*$i'# */#%)7:. *+$0ori$7 +%,#r
P.. No. 95;.
T0# CA 0#l, $0*$ 4+ri.,i)$io% o'#r PHCC, *% i%,i.p#%.*5l# p*r$7, (as neither ac=uire" nor
(aie" by estoppel! Citing Carandang v. Heirs of De Guzman,
)+
it hel" that, in any eent, the action
shoul" be "is%isse" because the absence of PHCC, an in"ispensable party, ren"ere" all
subse=uent actuations of the court oi", for (ant of authority to act, not only as to the absent parties
but een as to those present!
CA ,#%i#, MR o& P#$i$io%#r Li-..
H#%)#, Li-. (#%$ +p $o $0# SC +%,#r R45.
ISSUES<
213 (0#$0#r $0# HLUR8 0*. 4+ri.,i)$io% o'#r $0# )o-pl*i%$ &il#, 57 $0# p#$i$io%#r.=
223 (0#$0#r PHCC i. *% i%,i.p#%.*5l# p*r$7= *%,
2>3 (0#$0#r $0# r+l# o% #10*+.$io% o& *,-i%i.$r*$i'# r#-#,i#. *ppli#. i% $0i. )*.#.
Petitioners conten" that the H6BRB has /uris"iction oer the sub/ect %atter of this case! Their
co%plaint (ith the H6BRB clearly allege" an" "e%an"e" specific perfor%ance upon DPDCI of the
latter7s contractual obligation un"er their in"ii"ual contracts to proi"e a 5*)?9+p (*$#r .7.$#- *.
p*r$ o& $0# *-#%i$i#. pro'i,#, &or i% $0# 5ro)0+r#, $o/#$0#r (i$0 *% *,-i%i.$r*$io% o&&i)#,
prop#r /7- &*)ili$i#., r#.$or*$io% o& * 0*ll(*7, *-o%/ o$0#r.! T0#7 poi%$ o+$ $0*$ $0# 'iol*$io%
57 PCI o& i$. o5li/*$io%. #%+-#r*$#, i% $0# .*i, )o-pl*i%$ .@+*r#l7 p+$ $0#ir )*.# (i$0i%
$0# *-5i$ o& S#)$io% 1, P.. No. 95;, *. *-#%,#,, #%+-#r*$i%/ $0# )*.#. $0*$ *r# (i$0i% $0#
#1)l+.i'# 4+ri.,i)$io% o& $0# HLUR8.
Li?#(i.#, p#$i$io%#r. *r/+# $0*$ $0# )*.# (*. %o$ * ,#ri'*$i'# .+i$ *. $0#7 (#r# %o$ .+i%/ &or
*%, i% 5#0*l& o& PHCC. They (ere suing, in their in"ii"ual capacities as con"o%iniu% unit buyers,
their "eeloper for breach of contract. I% .+ppor$ o& $0#ir 'i#( $0*$ PHCC (*. %o$ *%
i%,i.p#%.*5l# p*r$7, petitioners een =uote" the "ispositie portion of the H6BRB "ecision to sho(
that co%plete relief bet(een or a%ong the e'isting parties %ay be obtaine" (ithout the presence of
PHCC as a party to this case!
Petitioners further argue that DPDCI7s petition before the C- shoul" hae been "is%isse" outright
for failure to co%ply (ith Section ), Rule CVI of the +**8 Rules of Proce"ure of the H6BRB
pro'i,i%/ &or *% *pp#*l $o $0# 8o*r, o& Co--i..io%#r. 57 * p*r$7 *//ri#'#, 57 * ,#)i.io% o&
* r#/io%*l o&&i)#r!
SC RULING<
3enerally, the e'tent to (hich an a"%inistratie agency %ay e'ercise its po(ers "epen"s largely, if
not (holly, on the proisions of the statute creating or e%po(ering such agency!
);
>ith respect to the
H6BRB, to "eter%ine if sai" agency has /uris"iction oer petitioners7 cause of action, an e'a%ination
of the la(s "efining the H6BRB7s /uris"iction an" authority beco%es i%peratie! P!D! No!
;@:,
+*
specifically Section ,, grante" the National Housing -uthority 0NH-1 the Ae'clusie /uris"iction
to regulate the real estate tra"e an" business!A Then ca%e P!D! No! ),88
+)
e'pan"ing the /uris"iction
of the NH- 0no( H6BRB1, as follo(s$
S#CTION )! In the e'ercise of its functions to regulate the real estate tra"e an" business an" in
a""ition to its po(ers proi"e" for in Presi"ential Decree No! ;@:, the National Housing -uthority
shall hae e'clusie /uris"iction to hear an" "eci"e cases of the follo(ing nature$
0a1 Bnsoun" real estate business practicesD
0b1 Clai%s inoling refun" an" any other clai%s file" by sub"iision lot or con"o%iniu% unit
buyer against the pro/ect o(ner, "eeloper, "ealer, bro.er or sales%anD an"
0c1 Cases inoling specific perfor%ance of contractual an" statutory obligations file" by
buyers of sub"iision lot or con"o%iniu% unit against the o(ner, "eeloper, "ealer, bro.er or
sales%an!
This proision %ust be rea" in light of the la(7s prea%ble, (hich e'plains the reasons for enact%ent
of the la( or the conte'tual basis for its interpretation!
22
A .$*$+$# ,#ri'#. i$. 'i$*li$7 &ro- $0#
p+rpo.# &or (0i)0 i$ i. #%*)$#,, *%, $o )o%.$r+# i$ i% * -*%%#r $0*$ ,i.r#/*r,. or ,#&#*$.
.+)0 p+rpo.# i. $o %+lli&7 or ,#.$ro7 $0# l*(.
2>
P.. No. 95;, *. *-#%,#,, *i-. $o pro$#)$
i%%o)#%$ .+5,i'i.io% lo$ *%, )o%,o-i%i+- +%i$ 5+7#r. */*i%.$ &r*+,+l#%$ r#*l #.$*$#
pr*)$i)#..
24
The H6BRB is gien a (i"e latitu"e in characteri2ing or categori2ing acts (hich %ay constitute
unsoun" business practice or breach of contractual obligations in the real estate tra"e! T0i. /r*%$ o&
#1p*%.i'# 4+ri.,i)$io% $o $0# HLUR8 ,o#. %o$ -#*%, 0o(#'#r, $0*$ *ll )*.#. i%'ol'i%/
.+5,i'i.io% lo$. or )o%,o-i%i+- +%i$. *+$o-*$i)*ll7 &*ll +%,#r i$. 4+ri.,i)$io%. The C- aptly
=uote" the case of Christian General Assembly !nc. v. !gnacio,
+@
(herein the Court hel" that$
"he mere relationshi# bet$een the #arties i.e. that of being subdivision o$ner%develo#er
and subdivision lot buyer does not automatically vest &urisdiction in the H'(R). *or an
action to fall $ithin the e+clusive &urisdiction of the H'(R) the decisive element is the
nature of the action as enumerated in Section 1 of P.D. 1344. ,n this matter $e have
consistently held that the concerned administrative agency the -ational Housing Authority
(-HA) before and no$ the H'(R) has &urisdiction over complaints aimed at compelling
the subdivision developer to comply ith its contractual and statutory
obligations.
./
01m#hases su##lied2
In this case, the co%plaint file" by petitioners allege" causes of action that apparently are not
cogni2able by the H6BRB consi"ering the nature of the action an" the reliefs sought! A p#r+.*l o&
$0# )o-pl*i%$ ,i.)lo.#. $0*$ p#$i$io%#r. *r# *)$+*ll7 .##?i%/ $o %+lli&7 *%, i%'*li,*$# $0# ,+l7
)o%.$i$+$#, *)$. o& PHCC 9 the -pril +;, +**@ -gree%ent
+:
entere" into by PHCC (ith DPDCI an"
its Boar" Resolution
+?
(hich authori2e" the acceptance of the propose" offsetting4settle%ent of
DPDCI7s in"ebte"ness an" approal of the conersion of certain units fro% saleable to co%%on
areas! -ll these (ere approe" by the H6BRB! Specifically, the reliefs sought or prayers are the
follo(ing$
)! Or"ering the respon"ent to restore the gy% to its original locationD
+! Or"ering the respon"ent to restore the hall(ay at the secon" floorD
,! Declaring the conersion4alteration of ++ storage units an" Bnits 3589- an" B-S as
illegal, an" conse=uently, or"ering respon"ent to continue paying the con"o%iniu% "ues for
these units, (ith interest an" surchargeD
8! Or"ering the respon"ent to pay the su% of PHP;;?,);*!:*, plus interest an" surcharges,
as con"o%iniu% "ues in arrears an" turnoer the a"%inistration office to PHCC (ithout any
charges pursuant to the representation of the respon"ent in the brochures it circulate" to the
publicD
@! Or"ering the respon"ent to refun" to the PHCC the a%ount of PHP),+::,@**!**,
representing the cost of the "eep (ell, (ith interests an" surchargesD
<! Or"ering the respon"ent to pay the co%plainants %oral4e'e%plary "a%ages in the
a%ount of PHP)**,***!**D an"
:! Or"ering the respon"ent to pay the co%plainant attorney7s fees in the a%ount of
PHP)**,***!**, an" PHP,,***!** for eery hearing sche"ule" by the Honorable Office!
+;
A!ERB IMPORTANT< A. i$ i. )l#*r $0*$ $0# *)$. 5#i%/ *..*il#, *r# $0o.# o& PHHC, $0i. )*.#
)*%%o$ pro.p#r &or &*il+r# $o i-pl#*, $0# prop#r p*r$7, PHCC. C
A% i%,i.p#%.*5l# p*r$7 i. ,#&i%#, *. o%# (0o 0*. .+)0 *% i%$#r#.$ i% $0# )o%$ro'#r.7 or
.+54#)$ -*$$#r $0*$ * &i%*l *,4+,i)*$io% )*%%o$ 5# -*,#, i% 0i. *5.#%)#, (i$0o+$ i%4+ri%/ or
*&&#)$i%/ $0*$ i%$#r#.$.
,*
In the recent case of-ag3a3aisang 'a3as ng Manggaga$a sa 4eihin
(-'M45,'A'!A54M() v. 4eihin 6hili##ines Cor#oration,
,)
the Court ha" the occasion to state that$
Bn"er Section :, Rule , of the Rules of Court, Aparties in interest (ithout (ho% no final
"eter%ination can be ha" of an action shall be /oine" as plaintiffs or "efen"ants!A If there is a failure
to i%plea" an in"ispensable party, any /u"g%ent ren"ere" (oul" hae no effectieness! I$ i.
Dpr#)i.#l7 E(0#% *% i%,i.p#%.*5l# p*r$7 i. %o$ 5#&or# $0# )o+r$ 2$0*$3 *% *)$io% .0o+l, 5#
,i.-i..#,.7 The absence of an in"ispensable party ren"ers all subse=uent actions of the court null
an" oi" for (ant of authority to act, not only as to the absent parties but een to those present!A The
purpose of the rules on /oin"er of in"ispensable parties is a co%plete "eter%ination of all issues not
only bet(een the parties the%seles, but also as regar"s other persons (ho %ay be affecte" by the
/u"g%ent. A ,#)i.io% '*li, o% i$. &*)# )*%%o$ *$$*i% r#*l &i%*li$7 (0#r# $0#r# i. (*%$ o&
i%,i.p#%.*5l# p*r$i#..
>2
0Bn"erscoring supplie"1
Si%ilarly, in the case of Plasabas ! Court of -ppeals,
,,
the Court hel" that a final "ecree (oul"
necessarily affect the rights of in"ispensable parties so that the Court coul" not procee" (ithout their
presence! In support thereof, the Court in Plasabas cite" the follo(ing authorities, thus$
AThe general rule (ith reference to the %a.ing of parties in a ciil action re=uires the /oin"er of all
in"ispensable parties un"er any an" all con"itions, their presence being a sine =ua non of the
e'ercise of /u"icial po(er! 0Borlasa ! Polistico, 8: Phil! ,8@, ,8?1 5or this reason, our Supre%e
Court has hel" that (hen it appears of recor" that there are other persons intereste" in the sub/ect
%atter of the litigation, (ho are not %a"e parties to the action, it is the "uty of the court to suspen"
the trial until such parties are %a"e either plaintiffs or "efen"ants! 0Pobre, et al! ! Blanco, ): Phil!
)@<1! ' ' ' F0#r# $0# p#$i$io% &*il#, $o 4oi% *. p*r$7 ,#&#%,*%$ $0# p#r.o% i%$#r#.$#, i%
.+.$*i%i%/ $0# pro)##,i%/ i% $0# )o+r$, $0# .*-# .0o+l, 5# ,i.-i..#,. ' ' ' >hen an
in"ispensable party is not before the court, the action shoul" be "is%isse"! 0People, et al! !
Ro"rigue2, et al!, 3!R! Nos! 69)8*@;9<+, Septe%ber ,*, );@;1 0sic1
AParties in interest (ithout (ho% no final "eter%ination can be ha" of an action shall be /oine" either
as plaintiffs or "efen"ants! 0Sec! :, Rule ,, Rules of Court1! T0# 5+r,#% o& pro)+ri%/ $0# pr#.#%)#
o& *ll i%,i.p#%.*5l# p*r$i#. i. o% $0# pl*i%$i&&. 0,; -%/ur EsicF ??@1! The ei"ent purpose of the
rule is to preent the %ultiplicity of suits by re=uiring the person arresting a right against the
"efen"ant to inclu"e (ith hi%, either as co9plaintiffs or as co9"efen"ants, all persons stan"ing in the
sa%e position, so that the (hole %atter in "ispute %ay be "eter%ine" once an" for all in one
litigation! 0Palarca ! Baginsi, ,? Phil! )::, ):?1!
Fro- *ll i%,i)*$io%., PHCC i. *% i%,i.p#%.*5l# p*r$7 *%, .0o+l, 0*'# 5##% i-pl#*,#,, #i$0#r
*. * pl*i%$i&& or *. * ,#&#%,*%$,
,8
in the co%plaint file" before the H6BRB as it (oul" be "irectly
an" a"ersely affecte" by any "eter%ination therein! To 5#l*5or $0# poi%$, $0# )*+.#. o& *)$io%,
or $0# *)$. )o-pl*i%#, o&, (#r# $0# *)$. o& PHCC *. * )orpor*$# 5o,7.
E'i,#%$l7, $0# )*+.# o& *)$io% ri/0$&+ll7 p#r$*i%. $o PHCC. P#$i$io%#r. )*%%o$ #1#r)i.# $0#
.*-# #1)#p$ $0ro+/0 * ,#ri'*$i'# .+i$.
In the co%plaint, ho(eer, there (as no allegation that the action (as a "eriatie suit! I% &*)$, i%
$0# p#$i$io%, p#$i$io%#r. )l*i- $0*$ $0#ir )o-pl*i%$ i. %o$ * ,#ri'*$i'# .+i$.
,@
In the cite" case
of Chua v. Court of A##eals,
,<
the Court rule"$
5or a "eriatie suit to prosper, it is re=uire" that the %inority stoc.hol"er suing for an" on behalf of
the corporation %ust allege in his co%plaint that he is suing on a "eriatie cause of action on behalf
of the corporation an" all other stoc.hol"ers si%ilarly situate" (ho %ay (ish to /oin hi% in the suit! It
is a con"ition sine =ua non that the corporation be i%plea"e" as a party because not only is the
corporation an in"ispensable party, but it is also the present rule that it %ust be sere" (ith process!
The /u"g%ent %ust be %a"e bin"ing upon the corporation in or"er that the corporation %ay get the
benefit of the suit an" %ay not bring subse=uent suit against the sa%e "efen"ants for the sa%e
cause of action! In other (or"s, the corporation %ust be /oine" as party because it is its cause of
action that is being litigate" an" because /u"g%ent %ust be a res a"/u"icata against it!
0Bn"erscoring supplie"1
Fi$0o+$ PHCC *. * p*r$7, $0#r# )*% 5# %o &i%*l *,4+,i)*$io% o& $0# HLUR8:. 4+,/-#%$. T0# CA
(*., $0+., )orr#)$ i% or,#ri%/ $0# ,i.-i..*l o& $0# )*.# &or &*il+r# $o i-pl#*, *%
i%,i.p#%.*5l# p*r$7.
To /ustify its fin"ing of contractual iolation, the H6BRB cite" a proision in the &DDR, to (it$
Section ),! -%en"%ent! -fter the corporation shall hae been create", organi2e" an" operating, this
&DDR %ay be a%en"e", in (hole or in part, by the affir%atie ote of Bnit o(ners constituting at
least fifty one 0@)G1 percent of the Bnit shares in the Pro/ect at a %eeting "uly calle" pursuant to the
Corporation By 6a(s an" sub/ect to the proisions of the Con"o%iniu% -ct!
This citation, ho(eer, is %isplace" as the aboe9=uote" proision pertains to the a%en"%ent of the
&DDR! It shoul" be stresse" that petitioners are not as.ing for any change or %o"ification in the
ter%s of the &DDR! >hat they are really praying for is a "eclaration that the agree%ent regar"ing
the alteration4conersion is illegal! Thus, the Court sustains the C-7s fin"ing that$
There (as nothing in the recor"s to suggest that DPDCI sought the a%en"%ent of a part or the
(hole of such &DDR! The cite" section is so%e(hat consistent only (ith the principle that an
a%en"%ent of a corporation7sArticles of !ncor#oration %ust be assente" to by the stoc.hol"ers
hol"ing %ore than @*G of the shares! The &DDR "oes not conte%plate, by such proision, that all
corporate acts ought to be (ith the concurrence of a %a/ority of the unit o(ners!
,:
&oreoer, consi"ering that petitioners, (ho are %e%bers of PHCC, are ulti%ately challenging the
agree%ent entere" into by PHCC (ith DPDCI, they are assailing, in effect, PHCC7s acts as a bo"y
corporate! This action, therefore, parta.es the nature of an Aintra9corporate controersy,A the
/uris"iction oer (hich use" to belong to the Securities an" #'change Co%%ission (71C), but
transferre" to the courts of general /uris"iction or the appropriate Regional Trial
Court (R"C) pursuant to Section @b of P!D! No! ;*+9-,
,?
as a%en"e" by Section @!+ of Republic
-ct (R.A.) No! ?:;;!
,;
-n intra9corporate controersy is one (hich Apertains to any of the follo(ing relationships$ 0)1
bet(een the corporation, partnership or association an" the publicD 0+1 bet(een the corporation,
partnership or association an" the State in so far as its franchise, per%it or license to operate is
concerne"D 0,1 bet(een the corporation, partnership or association an" its stoc.hol"ers, partners,
%e%bers or officersD an" 081 a%ong the stoc.hol"ers, partners or associates the%seles!A
8*
Base" on the foregoing "efinition, there is no "oubt that the controersy in this case is essentially
intra9corporate in character, for being bet(een a con"o%iniu% corporation an" its %e%bers9unit
o(ners! In the recent case ofChateau De )aie Condominium Cor#oration v. 7#s. Moreno,
8)
an action
inoling the legality of assess%ent "ues against the con"o%iniu% o(ner4"eeloper, the Court hel"
that, the %atter being an intra9corporate "ispute, the RTC ha" /uris"iction to hear the sa%e pursuant
to R!-! No! ?:;;!
A. $o $0# *ll#/#, &*il+r# $o )o-pl7 (i$0 $0# r+l# o% #10*+.$io% o& *,-i%i.$r*$i'# r#-#,i#., $0#
Co+r$ */*i% */r##. (i$0 $0# po.i$io% o& $0# CA $0*$ $0# )ir)+-.$*%)#. pr#'*ili%/ i% $0i. )*.#
(*rr*%$#, * r#l*1*$io% o& $0# r+l#.
The "octrine of e'haustion of a"%inistratie re%e"ies is a cornerstone of our /u"icial syste%!89$#hi 8 The
thrust of the rule is that courts %ust allo( a"%inistratie agencies to carry out their functions an"
"ischarge their responsibilities (ithin the speciali2e" areas of their respectie co%petence!
8+
It has
been hel", ho(eer, that the "octrine of e'haustion of a"%inistratie re%e"ies an" the "octrine of
pri%ary /uris"iction are not ironcla" rules! In the case of Re#ublic of the 6hili##ines v. 'aca#,
8,
the
Court enu%erate" the nu%erous e'ceptions to these rules, na%ely$ 0a1 (here there is estoppel on
the part of the party ino.ing the "octrineD 0b1 (here the challenge" a"%inistratie act is patently
illegal, a%ounting to lac. of /uris"ictionD 0c1 (here there is unreasonable "elay or official inaction that
(ill irretrieably pre/u"ice the co%plainantD 0"1 (here the a%ount inole" is relatiely so s%all as to
%a.e the rule i%practical an" oppressieD 0e1 (here the =uestion inole" is purely legal an" (ill
ulti%ately hae to be "eci"e" by the courts of /usticeD 0f1 (here /u"icial interention is urgentD 0g1
(here the application of the "octrine %ay cause great an" irreparable "a%ageD 0h1 (here the
controerte" acts iolate "ue processD 0i1 (here the issue of non9e'haustion of a"%inistratie
re%e"ies has been ren"ere" %ootD 0/1 (here there is no other plain, spee"y an" a"e=uate re%e"yD
0.1 (here strong public interest is inole"D an" 0l1 in =uo (arranto procee"ings!
88
EBn"erscoring
supplie"F
The situations 0b1 an" 0e1 in the foregoing enu%eration obtain in this case!
The challenge" "ecision of the H6BRB is patently illegal haing been ren"ere" in e'cess of
/uris"iction, if not (ith grae abuse of "iscretion a%ounting to lac. or e'cess of /uris"iction! -lso, the
issue on /uris"iction is purely legal (hich (ill hae to be "eci"e" ulti%ately by a regular court of la(!
-s the Court (rote in :igilar v. A;uino$
8@
It "oes not inole an e'a%ination of the probatie alue of the ei"ence presente" by the parties!
There is a =uestion of la( (hen the "oubt or "ifference arises as to (hat the la( is on a certain state
of facts, an" not as to the truth or the falsehoo" of allege" facts! Sai" =uestion at best coul" be
resole" only tentatively by the a"%inistratie authorities! The final "ecision on the %atter rests not
(ith the% but (ith the courts of /ustice! #'haustion of a"%inistratie re%e"ies "oes not apply,
because nothing of an a"%inistratie nature is to be or can be "one! The issue "oes not re=uire
technical .no(le"ge an" e'perience but one that (oul" inole the interpretation an" application of
la(!
5inally, petitioners faulte" the C- in not giing respect an" een finality to the fin"ings of fact of the
H6BRB! Their reliance on the case of Dangan v. -'RC
8<
reiterating the (ell9settle" principles
inoling "ecisions of a"%inistratie agencies, "eseres scant consi"eration as the "ecision of the
H6BRB in this case is %anifestly not supporte" by la( an" /urispru"ence!
Petitioners, therefore, cannot ali"ly ino.e DPDCI7s failure to fulfill its obligation on the basis of a
plain "raft leaflet (hich petitioners (ere able to obtain, specifically Pacifico 6i%, haing been a
presi"ent of DPDCI! To accor" petitioners the right to "e%an" co%pliance (ith the co%%it%ent
un"er the sai" brochure is to allo( the% to profit by their o(n act! This, the Court cannot tolerate!
In su%, inas%uch as the H6BRB has no /uris"iction oer petitioners7 co%plaint, the Court sustains
the sub/ect "ecision of the C- that the H6BRB "ecision is null an" oi" ab initio. This "isposition,
ho(eer, is (ithout pre/u"ice to any action that the parties %ay rightfully file in the proper foru%!
FHEREFORE, the petition is ENIE!
SO ORD#R#D!
Republic of the Philippines
SUPREME COURT
&anila
THIRD DIVISION
G.R. No. 1GHH10 I+l7 29, 201>
POLICE SENIOR SUPERINTENENT IMAPINTO MACAFAI8, Petitioner,
s!
THE PHILIPPINE NATIONAL POLICE IRECTORATE FOR PERSONNEL AN RECORS
MANAGEMENT,Respon"ent!
D # C I S I O N
PERALTA, J.:
Rule to nullify an" set asi"e the Decision of the C- (hich nullifie" the RTC of &ara(i City7s "ecision!
FACTS<
Petitioner (as a police officer (ith the ran. of Poli)# S#%ior S+p#ri%$#%,#%$!
Pursuant to the proisions of S#)$io% >9 o& R#p+5li) A)$ H9;5, other(ise .no(n as the
ADepart%ent of the Interior an" 6ocal 3oern%ent -ct of );;*,A the Chief of Directorial Staff of the
Philippine National Police 0PNP1 issue" 3eneral Or"er No! ))<?, enu%erating the na%es of
co%%issione" officers (ho (ere .+54#)$ $o )o-p+l.or7 r#$ir#-#%$ on arious "ates in the %onth
of Hanuary +**+ 57 'ir$+# o& $0#ir *$$*i%-#%$ o& $0# )o-p+l.or7 r#$ir#-#%$ */# o& 5H!
P#$i$io%#r (*. i%)l+,#, i% $0# li.$.
P#$i$io%#r &il#, *% *ppli)*$io% &or l*$# r#/i.$r*$io% o& 0i. 5ir$0 (ith the &unicipal Ciil RegistrarIs
Office of &ulon"o, 6anao "el Sur! In the sai" application, petitioner s(ore un"er oath that he (as
born on Hanuary )), );@<! The application (as, subse=uently, approe"!
Petitioner file" (ith the RTC of &ara(i City, Branch ?, a P#$i$io% &or Corr#)$io% o& E%$r7 i% $0#
P+5li) S#r'i)# R#)or,. R#/*r,i%/ $0# 8ir$0 *$#! Pertinent portions of his allegations are as
follo(s$
' ' ' '
)! That herein petitioner is 8@ years ol", %arrie", 5ilipino citi2en, PNP 0Police
Superinten"ent1 by occupation an" resi"ent of Ca%p Bagong -%ai, Pa.pa., &ara(i City! ' '
'D
+! That on Hanuary )), );@<, herein petitioner (as born in &ulon"o, 6anao "el Sur, ' ' ',
copy of his lie birth certificate is attache" an" %ar.e" as -nne' A-A, for rea"y referenceD
,! That (hen petitioner herein /oine" (ith 0sic1 the goern%ent serice, particularly the local
police force an" later on the Integrate" National Police, he honestly entere" his birth "ate as
Hanuary )), );8<, (hile in his 0sic1 3oern%ent Serice Insurance Syste% 03SIS, in short1
an" National Police Co%%ission, he erroneously entere" his birth "ate as Hanuary )), );8<,
(hich entry are honestly base" on esti%ation, as &usli% 0sic1 in the south "o not register
their %arriages an" births beforeD
8! That herein petitioner has correctly entere" his true an" correct birth "ate, Hanuary )),
);@<, in his Serice Recor" at the National Hea"=uarters, Philippine National Police,
Directorate for Personnel an" Recor"s &anage%ent, Ca%p Cra%e, Jue2on City, copy of
(hich is attache" an" %ar.e" as -nne' ABA, ' ' 'D
@! That herein petitioner is sub%itting Hoint -ffi"ait of t(o 0+1 "isintereste" person 0sic1 ' ' 'D
<! That this petition is not inten"e" to "efrau" anybo"y but to establish the true an" correct
birth "ate of herein petitioner!
' ' ' '
8
RTC r#%,#r#, i$. #)i.io% r#%,#r#, i% &*'or o& p#$i$io%#r IMAPINTO 8A8AI MACAFAI8,
RTC issue" an #ntry of 5inal Hu"g%ent
<
R#.po%,#%$ PNP &il#, * P#$i$io% &or A%%+l-#%$ o& I+,/-#%$ (i$0 Pr*7#r &or $0# I..+*%)# o& *
T#-por*r7 R#.$r*i%i%/ Or,#r *%,6or Fri$ o& Pr#li-i%*r7 I%4+%)$io% (i$0 $0# CA, see.ing to
nullify the aboe9%entione" Decision of the RTC on the groun" that the trial court faile" to ac=uire
/uris"iction oer the PNP, Aan uni%plea"e" in"ispensable party!A
:
CA /r*%$#, PNP:. p#$i$io% *%, *%%+ll#, $0# RTC ,#)i.io%.
P#$i$io%#r M*)*(*,i5 &il#, *% MR. #%i#, 57 CA.
M*(*,i5 (#%$ $o $0# SC +%,#r R45
ISSUES<
i, $0# CA ERR IN HOLING THAT PNP9PRM IS AN INISPENSA8LE PARTB IN -ND
TH-T TH# RTC H-V# 0sic1 NOT -CJBIR#D HBRISDICTION OV#R TH# P#RSON O5 TH#
PNPDPR&K
SC RULING< NO, CA (*. )orr#)$.
The Court agrees (ith the ruling of the C- $0*$ i$ i. $0# i%$#/ri$7 *%, )orr#)$%#.. o& $0# p+5li)
r#)or,. i% $0# )+.$o,7 o& $0# PNP, N*$io%*l Poli)# Co--i..io% 2NAPOLCOM3 *%, Ci'il
S#r'i)# Co--i..io% 2CSC3 (0i)0 *r# i%'ol'#, *%, (0i)0 (o+l, 5# *&&#)$#, 57 *%7 ,#)i.io%
r#%,#r#, in the petition for correction file" by herein petitioner!
T0# *&or#-#%$io%#, /o'#r%-#%$ */#%)i#. *r#, $0+., r#@+ir#, $o 5# -*,# p*r$i#. $o $0#
pro)##,i%/. They are in"ispensable parties, (ithout (ho% no final "eter%ination of the case can be
ha"! A% i%,i.p#%.*5l# p*r$7 i. ,#&i%#, *. o%# (0o 0*. .+)0 *% i%$#r#.$ i% $0# )o%$ro'#r.7 or
.+54#)$ -*$$#r $0*$ * &i%*l *,4+,i)*$io% )*%%o$ 5# -*,#, i% 0i. *5.#%)#, (i$0o+$ i%4+ri%/ or
*&&#)$i%/ $0*$ i%$#r#.$.
12
I
In the fairly recent case of 3o ! Distinction Properties Deelop%ent an" Construction, Inc!,
),
the
Court ha" the occasion to reiterate the principle that$
(nder 7ection < Rule = of the Rules of Court >#arties in interest $ithout $hom no final
determination can be had of an action shall be &oined as #laintiffs or defendants.> !f there is a
failure to im#lead an indis#ensable #arty any &udgment rendered $ould have no
effectiveness.
!t is "precisely #hen an indispensable party is not before the court $that% an action
should be dismissed.& "he absence of an indis#ensable #arty renders all subse;uent
actions of the court null and void for $ant of authority to act not only as to the absent
parties but even to those present.> "he #ur#ose of the rules on &oinder of indis#ensable
#arties is a com#lete determination of all issues not only bet$een the #arties themselves
but also as regards other #ersons $ho may be affected by the &udgment. A decision valid
on its face cannot attain real finality here there is ant of indispensable parties.
14
Citing preious authorities, the Court also hel" in the 3o case that$
"he general rule $ith reference to the ma3ing of #arties in a civil action re;uires the &oinder of all
indis#ensable #arties under any and all conditions their #resence being a sine 'ua non of the
e(ercise of )udicial poer. ()orlasa v. 6olistico ?< 6hil. =?@ =?A)
T0# 5+r,#% o& pro)+ri%/ $0# pr#.#%)# o& *ll i%,i.p#%.*5l# p*r$i#. i. o% $0# pl*i%$i&&.
1H
A!ERB IMPORTANT< I% $0# i%.$*%$ )*.#, $0#r# i. * %#)#..i$7 $o i-pl#*, $0# PNP, NAPOLCOM
*%, CSC 5#)*+.# $0#7 .$*%, $o 5# *,'#r.#l7 *&&#)$#, 57 p#$i$io%#rJ. p#$i$io% (0i)0 i%'ol'#.
.+5.$*%$i*l *%, )o%$ro'#r.i*l *l$#r*$io%. i% p#$i$io%#rJ. .#r'i)# r#)or,.! &oreoer, as correctly
pointe" out by the
Office of the Solicitor 3eneral 0OS31, i& p#$i$io%#rJ. .#r'i)# i. #1$#%,#, 57 $#% 7#*r., $0#
/o'#r%-#%$, $0ro+/0 $0# PNP, .0*ll 5# 5+r,#%#, 57 $0# *,,i$io%*l .*l*r7 *%, 5#%#&i$. $0*$
(o+l, 0*'# $o 5# /i'#% $o p#$i$io%#r ,+ri%/ .+)0 #1$#%.io%! Thus, asi"e fro% the OS3, all other
agencies (hich %ay be affecte" by the change shoul" be notifie" or represente" as the truth is best
ascertaine" un"er an a"ersary syste% of /ustice!F
-s the aboe9%entione" agencies (ere not i%plea"e" in this case %uch less gien notice of the
procee"ings, the "ecision of the trial court granting petitionerIs prayer for the correction of entries in
his serice recor"s, is 'oi,. -s %entione" aboe, the absence of an in"ispensable party ren"ers all
subse=uent actions of the court null an" oi" for (ant of authority to act, not only as to the absent
parties but een as to those present!
):
On the =uestion of (hether or not respon"ent is estoppe" fro% assailing the "ecision of the RTC for
failure of the OS3, as goern%ent representatie, to participate in the procee"ings before the trial
court or to file an opposition to petitionerIs petition for correction of entries in his serice recor"s, this
Court rules that .+)0 *% *pp*r#%$ o'#r.i/0$ 0*. %o 5#*ri%/ o% $0# '*li,i$7 o& $0# *pp#*l (0i)0
$0# p#$i$io%#r &il#, 5#&or# $0# CA.
N#i$0#r )*% $0# S$*$#, *. r#pr#.#%$#, 57 $0# /o'#r%-#%$, 5# )o%.i,#r#, i% #.$opp#l ,+# $o
$0# p#$i$io%#rJ. .##-i%/ *)@+i#.)#%)# $o $0# 4+,/-#%$ o& $0# RTC (0#% i$ i%i$i*ll7 -*,#
)orr#)$io%. $o .o-# o& p#$i$io%#rJ. r#)or,. (i$0 $0# PNP. This Court has reiterate" ti%e an"
again that the absence of opposition fro% goern%ent agencies is of no controlling significance,
because the S$*$# )*%%o$ 5# #.$opp#, 57 $0# o-i..io% , %ista.e or error of its officials or
agents!
)?
Nor is the Republic barre" fro% assailing the "ecision granting the petition for correction of
entries if, on the basis of the la( an" the ei"ence on recor", such petition has no %erit!
);
-s to the secon" an" last assigne" errors, suffice it to say that consi"ering that the assaile" "ecision
of the RTC is null an" oi", the sa%e coul" not hae attaine" finality! Settle" is the rule that a oi"
/u"g%ent cannot attain finality an" its e'ecution has no basis in la(!
+*
Republic of the Philippines
SUPREME COURT
&anila
#N B-NC
G.R. No. 1;1101 I+l7 5, 2011
HACIENA LUISITA, INCORPORATE, Petitioner,
LUISITA INUSTRIAL PARK CORPORATION *%, RI"AL COMMERCIAL 8ANKING
CORPORATION, Petitioners9in9Interention,
s!
PRESIENTIAL AGRARIAN REFORM COUNCIL= SECRETARB NASSER PANGANAMAN OF
THE EPARTMENT OF AGRARIAN REFORM= ALBANSA NG MGA MANGGAGAFANG 8UKI
NG HACIENA LUISITA, RENE GALANG, NOEL MALLARI, *%, IULIO SUNIGA
)
*%, 0i.
SUPER!ISORB GROUP OF THE HACIENA LUISITA, INC. *%, FINSOR
ANABA, Respon"ents!
D # C I S I O N
!ELASCO, IR., J.:
THE CASE<
P#$i$io% &or C#r$ior*ri *%, Pro0i5i$io% +%,#r R+l# H5 (i$0 pr*7#r &or pr#li-i%*r7 i%4+%)$i'#
r#li#&
P#$i$io%#r H*)i#%,* L+i.i$*, I%). 2HLI3 assails an" see.s to set asi"e P-RC Resolution
THE FACTS<
In );@?, the Sp*%i.0 o(%#r. o& Co-p*Li* G#%#r*l ,# T*5*)o. ,# Filipi%*. 2T*5*)*l#r*3 .ol,
Hacien"a 6uisita an" the Central -2ucarera "e Tarlac, the sugar %ill of the hacien"a, $o $0# T*rl*)
#'#lop-#%$ Corpor*$io% 2T*,#)o3
The Central Ban. of the Philippines assiste" Ta"eco in obtaining a "ollar loan fro% a BS ban.! -lso,
the 3SIS e'ten"e" a PhP@!;)) %illion loan in faor of Ta"eco to pay the peso price co%ponent of
the sale, (i$0 $0# )o%,i$io% $0*$ *the lots comprising the +acienda ,uisita be subdivided by
the applicant-corporation and sold at cost to the tenants. should there be any and $henever
conditions should e+ist $arranting such action under the #rovisions of the 'and "enure Act.B
T*,#)o 0o(#'#r ,i, %o$ )o-pl7 (i$0 $0i. )o%,i$io%.
On &ay :, );?*, $0# -*r$i*l l*( *,-i%i.$r*$io% &il#, * .+i$ 5#&or# $0# M*%il* RTC */*i%.$
T*,#)o, #$ *l., &or $0#- $o .+rr#%,#r H*)i#%,* L+i.i$* $o $0# $0#% Mi%i.$r7 o& A/r*ri*% R#&or-
2MAR3 so that the lan" can be "istribute" to far%ers at cost!
T0# M*%il* RTC r#%,#r#, 4+,/-#%$ or,#ri%/ T*,#)o $o .+rr#%,#r H*)i#%,* L+i.i$* to the
&-R!
T*,#)o *pp#*l#, $o $0# CA.
+ri%/ $0# *,-i%i.$r*$io% o& Pr#.i,#%$ Cor*Mo% Co4+*%/)o A@+i%o, $0# O&&i)# o& $0# Soli)i$or
G#%#r*l -o'#, $o (i$0,r*( $0# /o'#r%-#%$:. )*.# */*i%.$ T*,#)o, #$ *l.
T0# CA ,i.-i..#, $0# )*.#, .+54#)$ $o $0# PARC:. *ppro'*l o& T*,#)o:. propo.#, .$o)?
,i.$ri5+$io% pl*% 2SP3 in faor of its far%(or.ers!
0(nder 1, ..C (7ec8D) and later RA //@<(7ec=8) "adeco had the o#tion of availing stoc3
distribution as an alternative modality to actual land transfer to the farm$or3ers.2
T*,#)o #'#%$+*ll7 or/*%iM#, * .pi%9o&& )orpor*$io%, 0#r#i% p#$i$io%#r HLI, *. '#0i)l# $o
&*)ili$*$# .$o)? *)@+i.i$io% 57 $0# &*r-(or?#r.! 5or this purpose, Ta"eco coneye" to H6I the
agricultural lan" portion 08,;)@!:@ hectares1 an" other far%9relate" properties of Hacien"a 6uisita in
e'change for H6I shares of stoc.!
In );?;, so%e 9>N o& $0# $0#% &*r-(or?#r95#%#&i)i*ri#. 2FF8.3 co%ple%ent of Hacien"a 6uisita
.i/%i&i#, i% * r#&#r#%,+- $0#ir *))#p$*%)# o& $0# propo.#, HLI:. S$o)? i.$ri5+$io% Op$io%
Pl*% 0SODP1!
On &ay )), );?;, the SDO- (as for%ally entere" into by Ta"eco, H6I, an" the @,?8? =ualifie"
5>Bs!
Prior $o *ppro'*l, AR S#)r#$*r7 Miri*- #&#%.or9S*%$i*/o propo.#, $0*$ $0# SP 5#
r#'i.#,, *lo%/ $0# &ollo(i%/ li%#.<
)! That oer the i%ple%entation perio" of the ESDPF, ETa"ecoF4H6I shall ensure that there (ill be no
"ilution in the shares of stoc.s of in"ii"ual E5>BsFD
+! That a safeguar" shall be proi"e" by ETa"ecoF4H6I against the "ilution of the percentage
sharehol"ings of the E5>BsF, i!e!, that the ,,G sharehol"ings of the E5>BsF (ill be %aintaine" at
any gien ti%e
Noe%ber +), );?; 9 the P-RC, un"er then Sec! Defensor9Santiago, issue" R#.ol+$io% No. G99129
2, *ppro'i%/ the SDP of Ta"eco4H6I!
5ro% );?; to +**@, H6I clai%e" to hae e'ten"e" the follo(ing benefits to the 5>Bs$
0a1 , billion pesos 0P,,***,***,***1 (orth of salaries, (ages an" fringe benefits
0b1 @; %illion shares of stoc. "istribute" for free to the 5>BsD
0c1 )@* %illion pesos 0P)@*,***,***1 representing ,G of the gross pro"uceD
0"1 ,:!@ %illion pesos 0P,:,@**,***1 representing ,G fro% the sale of @** hectares of conerte"
agricultural lan" of Hacien"a 6uisitaD
0e1 +8*9s=uare %eter ho%elots "istribute" for freeD
0f1 +!8 %illion pesos 0P+,8**,***1 representing ,G fro% the sale of ?* hectares at ?* %illion pesos
0P?*,***,***1 for the SCT#CD
0g1 Social serice benefits, such as but not li%ite" to free hospitali2ation4%e"ical4%aternity serices,
ol" age4"eath benefits an" no interest bearing salary4e"ucational loans an" rice sugar accounts!
T(o separate groups subse=uently conteste" this clai% of H6I! 0the #etitions%#rotets)
CON!ERSION PROPER
On -ugust )@, );;@, HLI *ppli#, &or $0# )o%'#r.io% o& 500 0#)$*r#. o& l*%, o& $0# 0*)i#%,*
&ro- */ri)+l$+r*l $o i%,+.$ri*l +.#, pursuant to Sec! <@ of R- <<@:!
The D-R approe" the application on -ugust )8, );;<, sub/ect to pay%ent of three percent 0,G1 of
the gross selling price to the 5>Bs an" to H6I7s continue" co%pliance (ith its un"erta.ings un"er
the SDP, a%ong other con"itions!
T0# )o%'#r$#, l*%, (#r# .ol, $o C#%$#%%*r7 Hol,i%/., I%), L+i.i$* I%,+.$ri*l P*r? Corp,
L+i.i$* R#*l$7 Corp 2LRC3 *%, $o $0# /o'#r%-#%$ &or $0# SCTEO )o-pl#1 !
T(o .#p*r*$# p#$i$io%. r#*)0#, $0# AR i% $0# l*$$#r p*r$ o& 200>!
The first (as file" by the S+p#r'i.or7 Gro+p o& HLI 2S+p#r'i.or7 Gro+p3, pr*7i%/ &or *
r#%#/o$i*$io% o& $0# SOA, or, i% $0# *l$#r%*$i'#, i$. r#'o)*$io%.
The secon" petition, pr*7i%/ &or $0# r#'o)*$io% *%, %+lli&i)*$io% o& $0# SOA *%, $0#
,i.$ri5+$io% o& $0# l*%,. i% $0# 0*)i#%,*, (*. &il#, 57 Alyansa ng mga /anggagaang 0u1id
ng +acienda ,uisita 2AM8ALA3.
T0# AR $0#% )o%.$i$+$#, * Sp#)i*l T*.? For)# 2STF3 to atten" to issues relating to the SDP of
H6I!
-fter inestigation an" ealuation, the ST5 foun" that H6I 0*. %o$ )o-pli#, (ith its obligations
un"er R- <<@:
PARC i..+#, $0# *..*il#, R#.ol+$io% r#)*lli%/6r#'o?i%/ $0# SO pl*% o& T*,#)o6HLI. I$ &+r$0#r
r#.ol'#, $0*$ $0# .+54#)$ l*%,. 5# &or$0(i$0 pl*)#, +%,#r $0# )o-p+l.or7 )o'#r*/# or
-*%,*$#, l*%, *)@+i.i$io% .)0#-# o& $0# CARP.
HLI .o+/0$ r#)o%.i,#r*$io%! Its %otion not(ithstan"ing, HLI *l.o &il#, * p#$i$io% 5#&or# $0#
S+pr#-# Co+r$ in light of (hat it consi"ers as the D-R7s hasty placing of Hacien"a 6uisita un"er
C-RP een before P-RC coul" rule or een rea" the %otion for reconsi"eration!
P-RC (oul" eentually "eny H6I7s %otion for reconsi"eration ia Resolution
THE MAIN ISSUE <
I. $0# S+p#r'i.or7 Gro+p, AM8ALA *%, $0#ir r#.p#)$i'# l#*,#r. *r# r#*l p*r$i#.9i%9
i%$#r#.$P
OTHER ISSUES<
(8) Does the P-RC possess /uris"iction to recall or reo.e H6I7s SDPK
(.) 0!ssue raised by intervenor *ARM (grou# of farm$or3ers)2 Is Sec! ,) of R- <<@:, (hich
allo(s stoc. transfer in lieu of outright lan" transfer, unconstitutionalK
(=) Is the reocation of the H6I7s SDP ali"K 0Did 6ARC gravely abuse its discretion in
revo3ing the sub&ect 7D6 and #lacing the hacienda under CAR6Es com#ulsory
ac;uisition and distribution schemeF2
(?) 081 Shoul" those portions of the conerte" lan" (ithin Hacien"a 6uisita that RCBC an"
6IPCO ac=uire" by purchase be e'clu"e" fro% the coerage of the assaile" P-RC
resolutionK 0Did the 6ARC gravely abuse its discretion $hen it included '!6C,Es and
RC)CEs res#ective #ro#erties that once formed #art of Hacienda 'uisita under the CAR6
com#ulsory ac;uisition scheme via the assailed -otice of CoverageF2
SC RULING< BES. T0# S+p#r'i.or7 Gro+p, AM8ALA *%, $0#ir r#.p#)$i'# l#*,#r. *r# r#*l
p*r$i#.9i%9i%$#r#.$
H6I (oul" "eny real party9in9interest status to the purporte" lea"ers of the Superisory 3roup an"
-&B-6-, i!e!, Hulio Suniga, >in"sor -n"aya, an" Rene 3alang, (ho file" the reocatory petitions
before the D-R! A. HLI (o+l, 0*'# i$, G*l*%/, $0# .#l&9.$7l#, 0#*, o& AM8ALA, /*i%#, HLI
#-plo7-#%$ i% I+%# 1990 *%,, $0+., )o+l, %o$ 0*'# 5##% * p*r$7 $o $0# SOA #1#)+$#, *
7#*r #*rli#r.
A. r#/*r,. $0# S+p#r'i.or7 Gro+p, HLI *ll#/#. $0*$ .+p#r'i.or. *r# %o$ r#/+l*r &*r-(or?#r.,
but the co%pany nonetheless consi"ere" the% 5>Bs un"er the SDO- as a %ere concession to
enable the% to en/oy the sa%e benefits gien =ualifie" regular far%(or.ers! Ho(eer, if the SDO-
(oul" be cancele" an" lan" "istribution effecte", so H6I clai%s, citing 5ortich ! Corona, the
superisors (oul" be e'clu"e" fro% receiing lan"s as far%(or.ers other than the regular
far%(or.ers (ho are %erely entitle" to the Afruits of the lan"!A
T0# SOA %o l#.. i,#%$i&i#. D$0# SP @+*li&i#, 5#%#&i)i*ri#.D *. D$0# &*r-(or?#r. (0o
*pp#*r i% $0# *%%+*l p*7roll, i%)l+.i'# o& $0# p#r-*%#%$ *%, .#*.o%*l #-plo7##., (0o *r#
r#/+l*rl7 or p#rio,i)*ll7 #-plo7#, 57 AHLIC.D
3alang, per H6I7s o(n a"%ission, is e%ploye" by H6I, an" is, thus, a =ualifie" beneficiary of the
SDPD he co%es (ithin the "efinition of a real party9in9interest un"er Sec! +, Rule , of the Rules of
Court, %eaning, one (ho stan"s to be benefite" or in/ure" by the /u"g%ent in the suit or is the party
entitle" to the aails of the suit!
T0# .*-# 0ol,. $r+# (i$0 r#.p#)$ $o $0# S+p#r'i.or7 Gro+p (0o.# -#-5#r. (#r# *,-i$$#,l7
#-plo7#, 57 HLI *%, (0o.# %*-#. *%, .i/%*$+r#. #'#% *pp#*r#, i% $0# *%%#1 o& $0# SOA.
Being =ualifie" beneficiaries of the SDP, Suniga an" the other <) superisors are certainly parties
(ho (oul" benefit or be pre/u"ice" by the /u"g%ent recalling the SDP or replacing it (ith so%e other
%o"ality to co%ply (ith R- <<@:!
#en assu%ing that %e%bers of the Superisory 3roup are not regular far%(or.ers, but are in the
category of Aother far%(or.ersA %entione" in Sec! 8, -rticle CIII of the Constitution, thus only
entitle" to a share of the fruits of the lan", as in"ee" 5ortich teaches, $0i. ,o#. %o$ ,#$r*)$ &ro-
$0# &*)$ $0*$ $0#7 *r# .$ill i,#%$i&i#, *. 5#i%/ *-o%/ $0# DSP @+*li&i#, 5#%#&i)i*ri#..D -s such,
they are, thus, entitle" to bring an action upon the SDP!
T0#r# (*. *l.o *% *,-i..io% -*,# 57 A$$7. G#%#r A.+%)io%, )o+%.#l o& HLI, ,+ri%/ $0# or*l
*r/+-#%$. (hich shoul" put to rest any lingering "oubt as to the status of protesters 3alang,
Suniga, an" -n"aya
F+r$0#r, +%,#r S#). 50, p*r*/r*p0 4 o& RA HH5;, &*r-#r9l#*,#r. *r# #1pr#..l7 *llo(#, $o
r#pr#.#%$ $0#-.#l'#., $0#ir &#llo( &*r-#r. or $0#ir or/*%iM*$io%. i% *%7 pro)##,i%/. 5#&or#
$0# AR. Sp#)i&i)*ll7<
Cl#*rl7, $0# r#.p#)$i'# l#*,#r. o& $0# S+p#r'i.or7 Gro+p *%, AM8ALA *r# )o%$#1$+*ll7 r#*l
p*r$i#.9i%9i%$#r#.$ *llo(#, 57 l*( $o &il# * p#$i$io% 5#&or# $0# AR or PARC.
This is not necessarily to say, ho(eer, that 3alang represents -&B-6-, for as recor"s sho( an" as
H6I aptly note", his ApetisyonA file" (ith D-R "i" not carry the usual authori2ation of the in"ii"uals
in (hose behalf it (as suppose" to hae been institute"! To "ate, such authori2ation "ocu%ent,
(hich (oul" logically inclu"e a list of the na%es of the authori2ing 5>Bs, has yet to be sub%itte" to
be part of the recor"s!
23+45 !SS64S
$1% 74S. the PA58 has )urisdiction to revo1e +,!&s SDP under the doctrine of necessary
implication.
Bn"er Sec! ,) of R- <<@:, as i%ple%ente" by D-O )*, the authority to approe the plan for stoc.
"istribution of the corporate lan"o(ner belongs to P-RC! Contrary to petitioner H6I7s posture, P-RC
also has the po(er to reo.e the SDP (hich it preiously approe"! It %ay be, as urge", that R-
<<@: or other e'ecutie issuances on agrarian refor% "o not e'plicitly est the P-RC (ith the po(er
to reo.e4recall an approe" SDP! Such po(er or authority, ho(eer, is "ee%e" possesse" by
P-RC un"er the principle of necessary i%plication, a basic postulate that (hat is i%plie" in a statute
is as %uch a part of it as that (hich is e'presse"!
5ollo(ing the "octrine of necessary i%plication, it %ay be state" that the confer%ent of e'press
po(er to approe a plan for stoc. "istribution of the agricultural lan" of corporate o(ners necessarily
inclu"es the po(er to reo.e or recall the approal of the plan! To "eny P-RC such reocatory
po(er (oul" re"uce it into a toothless agency of C-RP, because the ery sa%e agency tas.e" to
ensure co%pliance by the corporate lan"o(ner (ith the approe" SDP (oul" be (ithout authority to
i%pose sanctions for non9co%pliance (ith it!
H6I$ the parties to the SDO- shoul" no( loo. to the Corporation Co"e, instea" of to R- <<@:, in
"eter%ining their rights, obligations an" re%e"ies! The Co"e shoul" be the applicable la( on the
"isposition of the agricultural lan" of H6I!
SC$ NOL the rights, obligations an" re%e"ies of the parties to the SDO- e%bo"ying the SDP are
pri%arily goerne" by R- <<@:! It shoul" abun"antly be %a"e clear that H6I (as precisely create" in
or"er to co%ply (ith R- <<@:, (hich the OS3 aptly "escribe" as the A%other la(A of the SDO- an"
the SDP! It is, thus, para"o'ical for H6I to shiel" itself fro% the coerage of C-RP by ino.ing
e'clusie applicability of the Corporation Co"e un"er the guise of being a corporate entity!
$9% :2. Sec. 31 of 5A ;;<= is not unconstitutional. 0"he Court actually refused to #ass
u#on the constitutional ;uestion because it $as not raised at the earliest opportunity and
because the resolution thereof is not the lis mota of the case. Moreover the issue has been
rendered moot and academic since 7D, is no longer one of the modes of ac;uisition under RA
C<DD.2
>hile there is in"ee" an actual case or controersy, interenor 5-R&, co%pose" of a s%all %inority
of +: far%ers, has yet to e'plain its failure to challenge the constitutionality of Sec! ,) of R- <<@: as
early as Noe%ber +), );?; (hen P-RC approe" the SDP of Hacien"a 6uisita or at least (ithin a
reasonable ti%e thereafter, an" (hy its %e%bers receie" benefits fro% the SDP (ithout so %uch of
a protest! It (as only on Dece%ber 8, +**, or )8 years after approal of the SDP that sai" plan an"
approing resolution (ere sought to be reo.e", but not, to stress, by 5-R& or any of its %e%bers,
but by petitioner -&B-6-! 5urther%ore, the -&B-6- petition "i" NOT =uestion the constitutionality
of Sec! ,) of R- <<@:, but concentrate" on the purporte" fla(s an" gaps in the subse=uent
i%ple%entation of the SDP! #en the public respon"ents, as represente" by the Solicitor 3eneral,
"i" not =uestion the constitutionality of the proision! On the other han", 5-R&, (hose +: %e%bers
for%erly belonge" to -&B-6-, raise" the constitutionality of Sec! ,) only on &ay ,, +**: (hen it
file" its Supple%ental Co%%ent (ith the Court! Thus, it too. 5-R& so%e eighteen 0)?1 years fro%
Noe%ber +), );?; before it challenge" the constitutionality of Sec! ,) of R- <<@: (hich is =uite too
late in the "ay! The 5-R& %e%bers slept on their rights an" een accepte" benefits fro% the SDP
(ith nary a co%plaint on the allege" unconstitutionality of Sec! ,) upon (hich the benefits (ere
"erie"! The Court cannot no( be goa"e" into resoling a constitutional issue that 5-R& faile" to
assail after the lapse of a long perio" of ti%e an" the occurrence of nu%erous eents an" actiities
(hich resulte" fro% the application of an allege" unconstitutional legal proision!
The last but the %ost i%portant re=uisite that the constitutional issue %ust be the ery lis mota of the
case "oes not li.e(ise obtain! The lis mota aspect is not present, the constitutional issue ten"ere"
not being critical to the resolution of the case! If so%e other groun"s e'ist by (hich /u"g%ent can be
%a"e (ithout touching the constitutionality of a la(, such recourse is faore"!
The lis mota in this case, procee"ing fro% the basic positions originally ta.en by -&B-6- 0to (hich
the 5-R& %e%bers preiously belonge"1 an" the Superisory 3roup, is the allege" non9co%pliance
by H6I (ith the con"itions of the SDP to support a plea for its reocation! -n" before the Court,
the lis mota is (hether or not P-RC acte" in grae abuse of "iscretion (hen it or"ere" the recall of
the SDP for such non9co%pliance an" the fact that the SDP, as couche" an" i%ple%ente", offen"s
certain constitutional an" statutory proisions! To be sure, any of these .ey issues %ay be resole"
(ithout plunging into the constitutionality of Sec! ,) of R- <<@:! &oreoer, loo.ing "eeply into the
un"erlying petitions of -&B-6-, et al!, it is not the sai" section per se that is inali", but rather it is
the allege" application of the sai" proision in the SDP that is fla(e"!
It %ay be (ell to note at this /uncture that Sec! @ of R- ;:**, a%en"ing Sec! : of R- <<@:, has all
but superse"e" Sec! ,) of R- <<@: is9M9is the stoc. "istribution co%ponent of sai" Sec! ,)! In its
pertinent part, Sec! @ of R- ;:** proi"es$ NATC0*$ *&$#r I+%# >0, 2009, $0# -o,#. o& *)@+i.i$io%
.0*ll 5# li-i$#, $o 'ol+%$*r7 o&&#r $o .#ll *%, )o-p+l.or7 *)@+i.i$io%!O Thus, for all intents an"
purposes, the stoc. "istribution sche%e un"er Sec! ,) of R- <<@: is no longer an aailable option
un"er e'isting la(! The =uestion of (hether or not it is unconstitutional shoul" be a %oot issue!
$3% 74S. the revocation of the +,!&s SDP valid. >:2. the PA58 did :23 gravely abuse its
discretion in revo1ing the sub)ect SDP and placing the hacienda under 8A5P&s compulsory
ac'uisition and distribution scheme.?
The reocation of the approal of the SDP is ali"$ 0)1 the %echanics an" ti%elines of H6I7s stoc.
"istribution iolate D-O )* because the %ini%u% in"ii"ual allocation of each original 5>B of
)?,?*8!,+ shares (as "ilute" as a result of the use of N%an "aysO an" the hiring of a""itional
far%(or.ersD 0+1 the ,*9year ti%efra%e for H6I9to95>Bs stoc. transfer is contrary to (hat Sec! )) of
D-O )* prescribes!
In our reie( an" analysis of par! , of the SDO- on the %echanics an" ti%elines of stoc.
"istribution, >e fin" that it 'iol*$#. t(o 0+1 proisions of D-O )*! Par! , of the SDO- states$
,! -t the en" of each fiscal year, for a perio" of ,* years, the S#COND P-RTP EH6IF shall arrange
(ith the 5IRST P-RTP ETDCF the ac=uisition an" "istribution to the THIRD P-RTP E5>BsF on the
basis of nu%ber of "ays (or.e" an" at no cost to the% of one9thirtieth 0)4,*1 of ))?,,;),;:<!?@
shares of the capital stoc. of the S#COND P-RTP that are presently o(ne" an" hel" by the 5IRST
P-RTP, until such ti%e as the entire bloc. of ))?,,;),;:<!?@ shares shall hae been co%pletely
ac=uire" an" "istribute" to the THIRD P-RTP!
EIFt is clear as "ay that the original <,+;< 5>Bs, (ho (ere =ualifie" beneficiaries at the ti%e of the
approal of the SDP, suffere" fro% (atering "o(n of shares! -s "eter%ine" earlier, each original
5>B is entitle" to )?,?*8!,+ H6I shares! The original 5>Bs got less than the guarantee" )?,?*8!,+
H6I shares per beneficiary, because the ac=uisition an" "istribution of the H6I shares (ere base" on
N%an "aysO or Nnu%ber of "ays (or.e"O by the 5>B in a year7s ti%e! -s e'plaine" by H6I, a
beneficiary nee"s to (or. for at least ,: "ays in a fiscal year before he or she beco%es entitle" to
H6I shares! If it falls belo( ,: "ays, the 5>B, unfortunately, "oes not get any share at year
en"! The nu%ber of H6I shares "istribute" aries "epen"ing on the nu%ber of "ays the 5>Bs (ere
allo(e" to (or. in one year! >orse, H6I hire" far%(or.ers in a""ition to the original <,+;< 5>Bs,
such that, as in"icate" in the Co%pliance "ate" -ugust +, +*)* sub%itte" by H6I to the Court, the
total nu%ber of far%(or.ers of H6I as of sai" "ate stoo" at )*,@*+! -ll these far%(or.ers, (hich
inclu"e the original <,+;< 5>Bs, (ere gien shares out of the ))?,;,),;:<!?@ H6I shares
representing the ,,!+;<G of the total outstan"ing capital stoc. of H6I! Clearly, the %ini%u%
in"ii"ual allocation of each original 5>B of )?,?*8!,+ shares (as "ilute" as a result of the use of
N%an "aysO an" the hiring of a""itional far%(or.ers!
3oing into another but relate" %atter, par! , of the SDO- e'pressly proi"ing for a ,*9year
ti%efra%e for H6I9to95>Bs stoc. transfer is an arrange%ent contrary to (hat Sec! )) of D-O )*
prescribes! Sai" Sec! )) proi"es for the i%ple%entation of the approe" stoc. "istribution plan
(ithin three 0,1 %onths fro% receipt by the corporate lan"o(ner of the approal of the plan by
P-RC! In fact, base" on the sai" proision, the transfer of the shares of stoc. in the na%es of the
=ualifie" 5>Bs shoul" be recor"e" in the stoc. an" transfer boo.s an" %ust be sub%itte" to the
S#C (ithin si'ty 0<*1 "ays fro% i%ple%entation!
To the Court, there is a purpose, (hich is at once "iscernible as it is practical, for the three9%onth
threshol"! Re%oe this ti%eline an" the corporate lan"o(ner can eritably ea"e co%pliance (ith
agrarian refor% by si%ply "eferring to absur" li%its the i%ple%entation of the stoc. "istribution
sche%e! the reason un"erpinning the ,*9year acco%%o"ation "oes not apply to corporate
lan"o(ners in "istributing shares of stoc. to the =ualifie" beneficiaries, as the shares %ay be issue"
in a %uch shorter perio" of ti%e!
Ta.ing into account the aboe "iscussion, the reocation of the SDP by P-RC shoul" be uphel"
Ebecause of iolations ofF D-O )*! It bears stressing that un"er Sec! 8; of R- <<@:, the P-RC an"
the D-R hae the po(er to issue rules an" regulations, substantie or proce"ural! Being a pro"uct
of such rule9%a.ing po(er, D-O )* has the force an" effect of la( an" %ust be "uly co%plie" (ith!
The P-RC is, therefore, correct in reo.ing the SDP! Conse=uently, the P-RC Resolution No! ?;9)+9
+ "ate" Noe%ber +), l;?; approing the H6I7s SDP is nullifie" an" oi"e"!
$4% 74S. those portions of the converted land ithin +acienda ,uisita that 5808 and ,!P82
ac'uired by purchase should be e(cluded from the coverage of the assailed PA58
resolution.
ETFhere are t(o 0+1 re=uire%ents before one %ay be consi"ere" a purchaser in goo" faith, na%ely$
0)1 that the purchaser buys the property of another (ithout notice that so%e other person has a right
to or interest in such propertyD an" 0+1 that the purchaser pays a full an" fair price for the property at
the ti%e of such purchase or before he or she has notice of the clai% of another!
It can rightfully be sai" that both 6IPCO an" RCBC are purchasers in goo" faith for alue entitle" to
the benefits arising fro% such status!
*irst, at the ti%e 6IPCO purchase" the entire three hun"re" 0,**1 hectares of in"ustrial lan", there
(as no notice of any suppose" "efect in the title of its transferor, Centennary, or that any other
person has a right to or interest in such property! In fact, at the ti%e 6IPCO ac=uire" sai" parcels of
lan", only the follo(ing annotations appeare" on the TCT in the na%e of Centennary$ the
Secretary7s Certificate in faor of Teresita 6opa, the Secretary7s Certificate in faor of Shintaro &urai,
an" the conersion of the property fro% agricultural to in"ustrial an" resi"ential use!
The sa%e is true (ith respect to RCBC! -t the ti%e it ac=uire" portions of Hacien"a 6uisita, only the
follo(ing general annotations appeare" on the TCTs of 6IPCO$ the Dee" of Restrictions, li%iting its
use solely as an in"ustrial estateD the Secretary7s Certificate in faor of Qo/i Qo%ai an" Qyosu.e
HoriD an" the Real #state &ortgage in faor of RCBC to guarantee the pay%ent of PhP ,** %illion!
To be sure, interenor RCBC an" 6IPCO .ne( that the lots they bought (ere sub/ecte" to C-RP
coerage by %eans of a stoc. "istribution plan, as the D-R conersion or"er (as annotate" at the
bac. of the titles of the lots they ac=uire"! Ho(eer, they are of the honest belief that the sub/ect
lots (ere ali"ly conerte" to co%%ercial or in"ustrial purposes an" for (hich sai" lots (ere ta.en
out of the C-RP coerage sub/ect of P-RC Resolution No! ?;9)+9+ an", hence, can be legally an"
ali"ly ac=uire" by the%! -fter all, Sec! <@ of R- <<@: e'plicitly allo(s conersion an" "isposition of
agricultural lan"s preiously coere" by C-RP lan" ac=uisition Nafter the lapse of fie 0@1 years fro%
its a(ar" (hen the lan" ceases to be econo%ically feasible an" soun" for agricultural purposes or
the locality has beco%e urbani2e" an" the lan" (ill hae a greater econo%ic alue for resi"ential,
co%%ercial or in"ustrial purposes!O &oreoer, D-R notifie" all the affecte" parties, %ore particularly
the 5>Bs, an" gae the% the opportunity to co%%ent or oppose the propose" conersion! D-R,
after going through the necessary processes, grante" the conersion of @** hectares of Hacien"a
6uisita pursuant to its pri%ary /uris"iction un"er Sec! @* of R- <<@: to "eter%ine an" a"/u"icate
agrarian refor% %atters an" its original e'clusie /uris"iction oer all %atters inoling the
i%ple%entation of agrarian refor%! The D-R conersion or"er beca%e final an" e'ecutory after
none of the 5>Bs interpose" an appeal to the C-! In this factual setting, RCBC an" 6IPCO
purchase" the lots in =uestion on their honest an" (ell9foun"e" belief that the preious registere"
o(ners coul" legally sell an" coney the lots though these (ere preiously sub/ect of C-RP
coerage! #rgo, RCBC an" 6IPCO acte" in goo" faith in ac=uiring the sub/ect lots!
-n" second, both 6IPCO an" RCBC purchase" portions of Hacien"a 6uisita for alue! Bn"eniably,
6IPCO ac=uire" ,** hectares of lan" fro% Centennary for the a%ount of PhP:@* %illion pursuant to
a Dee" of Sale "ate" Huly ,*, );;?! On the other han", in a Dee" of -bsolute -ssign%ent "ate"
Noe%ber +@, +**8, 6IPCO coneye" portions of Hacien"a 6uisita in faor of RCBC by (ay
of dacion en #ago to pay for a loan of PhP8,),<;@,:,+!)*!
In relying upon the aboe9%entione" approals, procla%ation an" conersion or"er, both RCBC an"
6IPCO cannot be consi"ere" at fault for belieing that certain portions of Hacien"a 6uisita are
in"ustrial4co%%ercial lan"s an" are, thus, outsi"e the a%bit of C-RP! T0# PARC, *%,
)o%.#@+#%$l7 AR, /r*'#l7 *5+.#, i$. ,i.)r#$io% (0#% i$ pl*)#, LIPCO:. *%, RC8C:.
prop#r$7 (0i)0 o%)# &or-#, p*r$ o& H*)i#%,* L+i.i$* +%,#r $0# CARP )o-p+l.or7 *)@+i.i$io%
.)0#-# 'i* $0# *..*il#, No$i)# o& Co'#r*/#.
0"he Court $ent on to a##ly the o#erative fact doctrine to determine $hat should be done in the
aftermath of its dis#osition of the above5enumerated issuesG
Hhile He affirm the revocation of the 7D6 on Hacienda 'uisita sub&ect of 6ARC Resolution -os.
.DD@5=.5D8 and .DD/5=?5D8 the Court cannot close its eyes to certain Io#erative factsB that had
occurred in the interim. 6ertinently the Io#erative factB doctrine realizes that in declaring
a la or e(ecutive action null and void or by e+tension no longer $ithout force and effect undue
harshness and resulting unfairness must be avoided. "his is as it should realistically be since rights
might have accrued in favor of natural or &uridical #ersons and obligations &ustly incurred in the
meantime. "he actual e+istence of a statute or e+ecutive act is #rior to such a determination an
o#erative fact and may have conse;uences $hich cannot &ustly be ignoredJ the #ast cannot al$ays
be erased by a ne$ &udicial declaration.
Hhile the assailed 6ARC resolutions effectively nullifying the Hacienda 'uisita 7D6 are u#held the
revocation must. by application of the operative fact principle. give ay to the right of the
original ;.9@; 'ualified AB0s to choose hether they ant to remain as +,! stoc1holders or
not. "he Court cannot turn a blind eye to the fact that in 8CAC C=K of the *H)s agreed to the
7D,A (or the M,A) $hich became the basis of the 7D6 a##roved by 6ARC #er its Resolution -o.
AC58.5. dated -ovember .8 8CAC. *rom 8CAC to .DD@ the *H)s $ere said to have received from
H'! salaries and cash benefits hos#ital and medical benefits .?D5s;uare meter homelots =K of the
gross #roduce from agricultural lands and =K of the #roceeds of the sale of the @DD5hectare
converted land and the AD.@85hectare lot sold to 7C"1L. H'! shares totaling 88A=C8C</.A@ $ere
distributed as of A#ril .. .DD@. ,n August / .DlD H'! and #rivate res#ondents submitted a
Com#romise Agreement in $hich H'! gave the *H)s the o#tion of ac;uiring a #iece of agricultural
land or remain as H'! stoc3holders and as a matter of fact most *H)s indicated their choice of
remaining as stoc3holders. "hese facts and circumstances tend to indicate that some if not all of
the *H)s may actually desire to continue as H'! shareholders. A matter best left to their o$n
discretion.2
Republic of the Philippines
SUPREME COURT
&anila
THIRD DIVISION
G.R. No. 15909; I+l7 5, 2010
METROPOLITAN 8ANK AN TRUST COMPANB, Petitioner,
s!
RURAL 8ANK OF GERONA, INC. Respon"ent!
D # C I S I O N
8RION, J.:
P#$i$io%#r M#$ro5*%? &il#, $0i. P#$i$io% &or R#'i#( o% C#r$ior*ri
1
+%,#r R+l# 45!The C-
"ecision set asi"e the RTC of Tarlac, Branch <@, in a collection case file" by &etroban. against
respon"ent Rural Ban. of 3erona, Inc! ERB3F1, an" or,#r#, $0# r#-*%, o& $0# )*.# $o i%)l+,#
$0# C#%$r*l 8*%? o& $0# P0ilippi%#.
5
2C#%$r*l 8*%?3 *. * %#)#..*r7 p*r$7.
THE FACTS<
RB3 is a rural ban.ing corporation organi2e" un"er Philippine la(s!
I% $0# 19;0., $0# C#%$r*l 8*%? *%, $0# R8G #%$#r#, i%$o *% */r##-#%$ proi"ing that RB3 shall
facilitate the loan applications of far%ers9borro(ers un"er the Central Ban.9International Ban. for
Reconstruction an" Deelop%ent7s 0IBRD7s1 8th Rural Cre"it Pro/ect! T0# */r##-#%$ r#@+ir#,
R8G $o op#% * .#p*r*$# 5*%? *))o+%$ (0#r# $0# I8R lo*% pro)##,. .0*ll 5# ,#po.i$#,! The
RB3 accor"ingly opene" a special saings account (ith &etroban.7s Tarlac Branch!
A. $0# ,#po.i$or7 5*%? o& R8G, M#$ro5*%? (*. ,#.i/%*$#, $o r#)#i'# $0# )r#,i$ *,'i)#
r#l#*.#, 57 $0# C#%$r*l 8*%? r#pr#.#%$i%/ $0# pro)##,. o& $0# I8R lo*% o& $0# &*r-#r.9
5orro(#r.= M#$ro5*%?, i% $+r%, )r#,i$#, $0# pro)##,. $o R8G:. .p#)i*l .*'i%/. *))o+%$ &or
$0# l*$$#r:. r#l#*.# $o $0# &*r-#r.95orro(#r.!
In );:?, the Central Ban. release" a cre"it a"ice in &etroban.7s faor an" accor"ingly cre"ite"
&etroban.7s "e%an" "eposit account in the a%ount of P):?,<@+!**, for the account of RB3!
T0# *-o+%$, (0i)0 (*. )r#,i$#, $o R8G:. .p#)i*l .*'i%/. *))o+%$ r#pr#.#%$#, $0# *ppro'#,
lo*% *ppli)*$io% o& &*r-#r95orro(#r o-i%*,or ,# I#.+.! RB3 (ith"re( the P):?,<@+!** fro%
its account!
O% $0# .*-# ,*$#, $0# C#%$r*l 8*%? *ppro'#, $0# lo*% *ppli)*$io% o& *%o$0#r &*r-#r9
5orro(#r, 8*.ilio P*%opio, &or P 1G9,052.00,!
On October ,, );:?, the C#%$r*l 8*%? *ppro'#, Po%)i*%o L*/-*%:. lo*% *ppli)*$io%
&or P220,000.00!!
A!ERB IMPORTANT< &ore than a %onth after RB3 ha" %a"e the aboe (ith"ra(als fro% its
account (ith &etroban., $0# C#%$r*l 8*%? i..+#, ,#5i$ *,'i)#., r#'#r.i%/ *ll $0# *ppro'#,
I8R lo*%..C
T0# C#%$r*l 8*%? i-pl#-#%$#, $0# r#'#r.*l 57 ,#5i$i%/ &ro- M#$ro5*%?:. ,#-*%, ,#po.i$
*))o+%$ $0# *-o+%$ )orr#.po%,i%/ $o *ll $0r## I8R lo*%.!
&etroban., ho(eer, clai%e" that these a%ounts (ere insufficient to coer all the cre"it a"ices that
(ere reerse" by the Central Ban.! It "e%an"e" pay%ent fro% RB3 (hich coul" %a.e partial
pay%ents!
A. o& O)$o5#r 1;, 19;9, M#$ro5*%? )l*i-#, $0*$ R8G 0*, *% o+$.$*%,i%/ 5*l*%)#
o& P>>4,220.00. To )oll#)$ $0i. *-o+%$, i$ &il#, * )o-pl*i%$ &or )oll#)$io% o& .+- o& -o%#7
*/*i%.$ R8G!
RTC r+l#, &or M#$ro5*%?, &i%,i%/ $0*$ l#/*l .+5ro/*$io% 0*, #%.+#, It thus or"ere" RB3 to pay
&etroban. the su% of P,,8,+**!**, plus interest at )8G per annu% until the a%ount is fully pai"!
O% *pp#*l, $0# CA %o$#, $0*$ $0i. (*. %o$ * )*.# o& l#/*l .+5ro/*$io% +%,#r Ar$i)l# 1>02 o&
$0# Ci'il Co,#. Neertheless, the C- recogni2e" that &etroban. ha" a right to be rei%burse" of the
a%ount it ha" pai" an" faile" to recoer, as it suffere" loss in an agree%ent that inole" only the
Central Ban. an" the RB3!
It clarifie", ho(eer, that a "eter%ination still ha" to be %a"e on (ho shoul" rei%burse &etroban.!
Noting that no ei"ence e'ists (hy the Central Ban. reerse" the cre"it a"ices it ha" preiously
confir%e", $0# CA ,#)l*r#, $0*$ $0# C#%$r*l 8*%? .0o+l, 5# i-pl#*,#, *. * %#)#..*r7 p*r$7
.o i$ )o+l, .0#, li/0$ o% $0# I8R lo*% r#'#r.*l..
Thus, the C- set asi"e the RTC "ecision, an" re%an"e" the case to the trial court for further
procee"ings after the Central Ban. is i%plea"e" as a necessary party! MR ENIE.
ISSUE<
I. $0# CENTRAL 8ANK * NECESSARB PARTBP
SC RULING < NO , 5#)*+.# l#/*l .+5ro/*$io% 0*. *lr#*,7 $*?#% pl*)#.
The petition is i%presse" (ith %erit!
- basic first step in resoling this case is to "eter%ine (ho the liable parties are on the IBRD loans
that the Central Ban. e'ten"e"! The Ter%s an" Con"itions of the IBRD 8th Rural Cre"it
Pro/ect
)+
0Pro/ect Ter%s an" Con"itions1 e'ecute" by the Central Ban. an" the RB3 sho(s that the
&*r-#r.95orro(#r. $o (0o- )r#,i$. 0*'# 5##% #1$#%,#,, *r# pri-*ril7 li*5l# &or $0# p*7-#%$
o& $0# 5orro(#, *-o+%$.! The loans (ere e'ten"e" through the RB3 (hich also too. care of the
collection an" of the re%ittance of the collection to the Central Ban.! R8G, 0o(#'#r, (*. %o$ *
-#r# )o%,+i$ *%, )oll#)$or.1avvphil F0il# $0# &*r-#r.95orro(#r. (#r# $0# pri%)ip*l ,#5$or., R8G
*..+-#, li*5ili$7 +%,#r $0# Pro4#)$ T#r-. *%, Co%,i$io%. 57 .oli,*ril7 5i%,i%/ i$.#l& (i$0 $0#
pri%)ip*l ,#5$or. $o &+l&ill $0# o5li/*$io%.1aphi1
8*.#, o% $0#.# *rr*%/#-#%$., $0# C#%$r*l 8*%?:. i--#,i*$# r#)o+r.#, $0#r#&or# .0o+l, 0*'#
5##% */*i%.$ $0# &*r-#r.95orro(#r. *%, $0# R8GD thus, it erre" (hen it "e"ucte" the a%ounts
coere" by the "ebit a"ices fro% &etroban.7s "e%an" "eposit account!
Bn"er the Pro/ect Ter%s an" Con"itions, &etroban. ha" no responsibility oer the procee"s of the
IBRD loans other than sering as a con"uit for their transfer fro% the Central Ban. to the RB3 once
cre"it a"ice has been issue"! T0+., (# */r## (i$0 $0# CA:. )o%)l+.io% $0*$ $0# */r##-#%$
/o'#r%#, o%l7 $0# p*r$i#. i%'ol'#, Q $0# C#%$r*l 8*%? *%, $0# R8G! M#$ro5*%? (*. .i-pl7
*% o+$.i,#r $o $0# */r##-#%$.
O+r ,i.*/r##-#%$ (i$0 $0# *pp#ll*$# )o+r$ i. i% i$. )o%)l+.io% $0*$ %o l#/*l .+5ro/*$io% $oo?
pl*)#= $0# pr#.#%$ )*.#, in fact, e'e%plifies the circu%stance conte%plate" un"er paragraph +, of
-rticle ),*+ of the Ciil Co"e (hich proi"es$
-rt! ),*+! It is presu%e" that there is legal subrogation$
0)1 >hen a cre"itor pays another cre"itor (ho is preferre", een (ithout the "ebtor7s
.no(le"geD
0+1 >hen a thir" person, not intereste" in the obligation, pays (ith the e'press or tacit
approal of the "ebtorD
0,1 >hen, een (ithout the .no(le"ge of the "ebtor, a person intereste" in the fulfill%ent of
the obligation pays, (ithout pre/u"ice to the effects of confusion as to the latter7s share!
E#%phasis supplie"!F
-s "iscusse", &etroban. (as a thir" party to the Central Ban.9RB3 agree%ent, ha" no interest
e'cept as a con"uit, an" (as not legally ans(erable for the IBRD loans! Despite this, it (as
&etroban.7s "e%an" "eposit account, instea" of RB37s, (hich the Central Ban. procee"e" against,
on the assu%ption perhaps that this (as the %ost conenient %eans of recoering the cancelle"
loans! That &etroban.7s pay%ent (as inoluntarily %a"e "oes not change the reality that it (as
&etroban. (hich effectiely ans(ere" for RB37s obligations!
>as there e'press or tacit approal by RB3 of the pay%ent enforce" against &etroban.K -fter
&etroban. receie" the Central Ban.7s "ebit a"ices in Noe%ber );:?, it 0&etroban.1 accor"ingly
"ebite" the a%ounts it coul" fro% RB37s special saings account (ithout any ob/ection fro%
RB3!
)8
RB37s Presi"ent an" &anager, Dr! -=uiles -bellar, een (rote &etroban., on -ugust )8,
);:;, (ith proposals regar"ing possible %eans of settling the a%ounts "ebite" by Central Ban. fro%
&etroban.7s "e%an" "eposit account!
)@
These instances are all in"icatie of RB37s approal of
&etroban.7s pay%ent of the IBRD loans! That RB37s tacit approal ca%e after pay%ent ha" been
%a"e "oes not co%pletely negate the legal subrogation that ha" ta.en place!
-rticle ),*, of the Ciil Co"e states that subrogation transfers to the person subrogate" the cre"it
(ith all the rights thereto appertaining, either against the "ebtor or against thir" persons! -s the
entity against (hich the collection (as enforce", &etroban. (as subrogate" to the rights of Central
Ban. an" has a cause of action to recoer fro% RB3 the a%ounts it pai" to the Central Ban., plus
)8G per annu% interest!
U%,#r $0i. .i$+*$io%, i-pl#*,i%/ $0# C#%$r*l 8*%? *. * p*r$7 i. )o-pl#$#l7 +%%#)#..*r7! >e
note that the C- erroneously beliee" that the Central Ban.7s presence is necessary Ain or"er ' ' '
to she" light on the %atter of reersals %a"e by it concerning the loan applications of the en" users
an" to hae a co%plete "eter%ination or settle%ent of the clai%!A
)<
I
n so far as &etroban. is concerne", ho(eer, $0# C#%$r*l 8*%?:. pr#.#%)# *%, $0# r#*.o%. &or
i$. r#'#r.*l. o& $0# I8R lo*%. *r# i--*$#ri*l *&$#r .+5ro/*$io% 0*. $*?#% pl*)#= M#$ro5*%?:.
i%$#r#.$ i. .i-pl7 $o )oll#)$ $0# *-o+%$. i$ p*i, $0# C#%$r*l 8*%?! >hateer cause of action
RB3 %ay hae against the Central Ban. for the une'plaine" reersals an" any un"ue "e"uctions is
&or R8G $o '#%$il*$# *. * $0ir,9p*r$7 )l*i-= if it has not "one so at this point, then the %atter
shoul" be "ealt (ith in a separate case that shoul" not in any (ay further "elay the "isposition of the
present case that ha" been pen"ing before the courts since );?*!
>hile (e (oul" li.e to fully an" finally resole this case, certain factual %atters preent us fro%
"oing so! &etroban. conten"s in its petition that it cre"ite" RB37s special saings account (ith three
a%ounts correspon"ing to the three cre"it a"ices issue" by the Central Ban.$ the P):?,<@+!** for
Do%ina"or "e HesusD the P)?;,*@+!** for Basilio PanopioD an" the P++*,***!** for Ponciano
6ag%an! &etroban. clai%s that all of the three cre"it a"ices (ere subse=uently reerse" by the
Central Ban., ei"ence" by three "ebit a"ices! The recor"s, ho(eer, containe" only the cre"it an"
"ebit a"ices for the a%ounts set asi"e for "e Hesus an" 6ag%anD
):
nothing in the fin"ings of fact by
the RTC an" the C- referre" to the a%ount set asi"e for Panopio!
Thus, (hat (ere sufficiently proen as cre"ite" an" later on "ebite" fro% &etroban.7s "e%an"
"eposit account (ere only the a%ounts of P):?,<@+!** an" P)?;,*@+!**! >ith these a%ounts
co%bine", RB37s liability (oul" a%ount to P,;?,<@+!** R the sa%e a%ount RB3 ac.no(le"ge" as
"ue to &etroban. in its -ugust )8, );:; letter!
)?
Significantly, &etroban. li.e(ise =uote" this a%ount
in its Huly )), );:;
);
an" Huly +<, );:;
+*
"e%an" letters to RB3 an" its State%ent of -ccount "ate"
Dece%ber +,, );?+!
+)
RB3 asserts that it %a"e partial pay%ents a%ounting to P)8@,);:!8*,
++
but neither the RTC nor the
C- %a"e a conclusie fin"ing as to the accuracy of this clai%! -lthough &etroban. a"%itte" that
RB3 in"ee" %a"e partial pay%ents, it neer %entione" the actual a%ount pai"D neither "i" it state
that the P)8@,);:!8* (as part of theP,)+,*@+!8) that, it a"%itte", it "ebite" fro% RB37s special
saings account!
De"ucting P,)+,*@+!8) 0representing the a%ounts "ebite" fro% RB37s special saings account, as
a"%itte" by &etroban.1 fro% P,;?,<@+!** a%ount "ue to &etroban. fro% RB3, the "ifference
(oul" only be P?<,@;;!@;! >e are, therefore, at a loss on ho( &etroban. co%pute" the a%ount
of P,,8,++*!** it clai%s as the balance of RB37s loan! -s this Court is not a trier of facts, (e "ee% it
proper to re%an" this factual issue to the RTC for "eter%ination an" co%putation of the actual
a%ount RB3 o(es to &etroban., plus the correspon"ing interest an" penalties!
FHEREFORE, (e 3R-NT the petition for reie( on certiorari, an" R#V#RS# the "ecision an" the
resolution of the Court of -ppeals, in C-93!R! CV No! 8<:::, pro%ulgate" on Dece%ber ):, +**+
an" Huly )8, +**,, respectiely! >e -55IR& the "ecision of the Regional Trial Court, Branch <@,
Tarlac, pro%ulgate" on Huly :, );;8, insofar as it foun" respon"ent liable to the petitioner
&etropolitan Ban. an" Trust Co%pany, but or"er the R#&-ND of the case to the trial court to
"eter%ine the actual a%ounts "ue to the petitioner! Costs against respon"ent Rural Ban. of 3erona,
Inc!
Republic of the Philippines
SUPREME COURT
&anila
S#COND DIVISION
G.R. No. 1G150G O)$o5#r 2, 201>
OSCAR CONSTANTINO, MAOIMA CONSTANTINO *%, CASIMIRA MATURINGAN, Petitioners,
s!
HEIRS OF PERO CONSTANTINO, IR., r#pr#.#%$#, 57 ASUNCION
LAQUINANUM, Respon"ents!
D # C I S I O N
PERE", J.:
A P#$i$io% &or R#'i#( o% C#r$ior*ri +%,#r R+l# 45.
THE FACTS<
This inoles a controersy oer a parcel of lan" clai%e" to be part of an estate (hich nee"e" to be
proportionally sub"ii"e" a%ong heirs!
Pe"ro Constantino, Sr!, 0Pe"ro Sr!1 ancestors of the petitioners an" respon"ents, o(ne" seeral
parcels of lan", o%# o& (0i)0 i. *% +%r#/i.$#r#, p*r)#l o& l*%, consisting of +8* s=uare %eters
situate" at Bulacan!
Pe"ro, Sr!, upon his "eath, (as .+r'i'#, 57 0i. .i1 2H3 )0il,r#%, na%ely$ )1 P#DRO
CONST-NTINO, HR! 0Pe"ro Hr!1, the gran"father of the respon"entsD +1 -NTONI- CONST-NTINO,
(ho later "ie" (ithout issueD ,1 C6-R- CONST-NTINO, (ho also later "ie" (ithout issueD 81
BRBNOCONST-NTINO, (ho (as surie" by his < chil"ren inclu"ing petitioner Casi%ira
Constantino9&aturinganD @1 #DB-RDO CONST-NTINO, (ho is surie" by his "aughter &auraD
an" <1 S-NTI-3O CONST-NTINO, (ho (as surie" by his fie 0@1 chil"ren (hich inclu"es
petitioner Oscar Constantino!
8
In);;;, respon"ents -suncion 6a=uin"anu% 0-suncion1an" Hosefina Cailipan 0Hosefina1, /r#*$
/r*%,)0il,r#% o& P#,ro Sr., i% r#pr#.#%$*$io% o& P#,ro, Ir. &il#, * )o-pl*i%$
5
against petitioners
Oscar Constantino, &a'i%a Constantino an" Casi%ira &aturingan, gran"chil"ren of Pe"ro Sr!, &or
$0# %+lli&i)*$io% o& * ,o)+-#%$ ,#%o-i%*$#, *. DP*/-*-*%* .* L*5*. %/ H+?+-*%D4
The gran"chil"ren allege" that so%eti%e in October );;?, petitioners asserte" their clai% of
o(nership oer the (hole parcel of lan" 0+8* s= %1 o(ne" by the late Pe"ro Sr!, to the e'clusion of
respon"ents (ho are occupying a portion thereof! Bpon erification, respon"ents learne" that a Ta'
Declaration No! *+*)*9+):*9,,+,@ in the na%e of petitioner Oscar Constantino an" his cousin
&a'i%a Constantino (as unla(fully issue", (hich in effect cancele" Ta' Declaration No! +*?)8 in
the na%e of their ancestor Pe"ro Sr! T0# i..+*%)# o& $0# %#( $*1 ,#)l*r*$io% (*. *ll#/#,l7 ,+#
$o $0# #1#)+$io% o& * .i-+l*$#,, &*5ri)*$#, *%, &i)$i$io+. ,o)+-#%$ ,#%o-i%*$#, *.
DP*/-*-*%* .* L*5*. %/ H+?+-*%,D (herein the petitioners %isrepresente" the%seles as the
sole an" only heirs of Pe"ro Sr!
T0+., r#.po%,#%$. .o+/0$ $o *%%+l $0# DP*/-*-*%* .* L*5*. %/ H+?+-*%D *. (#ll *. $0#
T*1 #)l*r*$io%. $0*$ (#r# i..+#, o% $0# 5*.i. o& .+)0 ,o)+-#%$.
The petitioners, on the other han", aerre" in their -ns(er >ith Counterclai%
),
that Pe"ro Sr!, upon
his "eath, left seeral parcels of lan", na%ely$ )1 a lot (ith an area of +8* s= % coere" by Ta'
Declaration No!+*?)8D +1 a lot (ith an area of );+ s= % also situate" at Sta! &onica,Hagonoy,
Bulacan, preiously coere" by Ta' Declaration No! ;@,8D an" ,1an agricultural lan" (ith an area of
5our 081 hectares, %ore or less! The petitioners clai%e" that the "ocu%ent APag%a%ana sa 6abas
ng Hu.u%anA pertaining to the +8* s= % lot (as perfectly ali" an" legal, as it (as a pro"uct of
%utual an" oluntary agree%ent bet(een an" a%ong the "escen"ants of the "ecease" Pe"ro Sr!
5urther, petitioners allege" that the respon"ents hae no cause of action against the% consi"ering
that the respon"ents7 la(ful share oer the estate of Pe"ro Sr!, ha" alrea"y been transferre" to the%
as ei"ence" by the Dee" of #'tra/u"icial Settle%ent (ith >aier
)8
"ate" @ Dece%ber
);<?,e'ecute" by -ngelo Constantino, &aria Constantino 0%other of respon"ent -suncion1, -rca"io
Constantino an" &erce"es Constantino, all heirs of Pe"ro Hr! In the sai" "ee", respon"ents
a"/u"icate" unto the%seles to the e'clusion of other heirs, the parcel of lan" (ith an area of );+ s=
% by %isrepresenting that they (ere Athe only legiti%ate heirs of Pe"ro Sr! Thus, petitioners clai%e"
that in the %anner si%ilar to the assaile" APag%a%ana sa 6abas ng Hu.u%an,A they asserte" their
rights an" o(nership oer the sub/ect +8* s= % lot (ithout "a%age to the respon"ents!
I% #..#%)#, p#$i$io%#r. po.i$io% (*. $0*$ $0# ##, o& E1$r*4+,i)i*l S#$$l#-#%$ (i$0 F*i'#r
(0i)0 l#, $o $0# i..+*%)# o& T*1 #)l*r*$io% No.95>4 (*. *)@+i#.)#, i% 57 $0# o$0#r 0#ir. o&
P#,ro Sr., inclu"ing the petitioners, on the un"erstan"ing that the respon"ent heirs of Pe"ro Hr!
(oul" no longer share an" participate in the settle%ent an" partition of the re%aining lot coere" by
the APag%a%ana sa 6abas ng Hu.u%an!A
RTC r#%,#r#, * #)i.io%
1H
i% &*'or o& $0# p#$i$io%#r., 0ol,i%/ $0*$ $0# ##, o& E1$r*4+,i)i*l
S#$$l#-#%$ i. !ALI.
Not conince", the respon"ents appeale" the afore =uote" "ecision to the Court of -ppeals 0C-1
raising, a%ong others, the erroneous application by the trial court of the "octrine of Ain pari "elictoA in
"eclaring the ali"ity of the "ocu%ent APag%a%ana sa 6abas ng Hu.u%an!A
CA r+l#, i% &*'or o& $0# r#.po%,#%$. 0#ir. o& P#,ro, Ir., nullifying the "ee"!
Republic of the Philippines
SUPREME COURT
&anila
S#COND DIVISION
G.R. No. 1G150G O)$o5#r 2, 201>
OSCAR CONSTANTINO, MAOIMA CONSTANTINO *%, CASIMIRA MATURINGAN, Petitioners,
s!
HEIRS OF PERO CONSTANTINO, IR., r#pr#.#%$#, 57 ASUNCION
LAQUINANUM, Respon"ents!
D # C I S I O N
PERE", J.:
Before the Court is a Petition for Reie( on Certiorari un"er Rule 8@ assailing the C- Decision (hich
reerse" the RTC "ecision!
FACTS<
This inoles a controersy oer a parcel of lan" clai%e" to be part of an estate (hich nee"e" to be
proportionally sub"ii"e" a%ong heirs!
P#,ro Co%.$*%$i%o, Sr., 2P#,ro Sr.3, *%)#.$or. o& $0# p#$i$io%#r. *%, r#.po%,#%$., o(%#,
.#'#r*l p*r)#l. o& l*%,, one of (hich is an unregistere" parcel of lan" "eclare" for ta'ation
purposes un"er Ta' Declaration +*?)8
,
consisting of +8* s=uare %eters situate" at Sta! &onica,
Hagonoy, Bulacan! Pe"ro, Sr!, upon his "eath, (as surie" by his si' 0<1 chil"ren, na%ely$ )1
P#DRO CONST-NTINO, HR! 0Pe"ro Hr!1, the gran"father of the respon"entsD +1 -NTONI-
CONST-NTINO, (ho later "ie" (ithout issueD ,1 C6-R- CONST-NTINO, (ho also later "ie"
(ithout issueD 81 BRBNOCONST-NTINO, (ho (as surie" by his < chil"ren inclu"ing petitioner
Casi%ira Constantino9&aturinganD @1 #DB-RDO CONST-NTINO, (ho is surie" by his "aughter
&auraD an" <1 S-NTI-3O CONST-NTINO, (ho (as surie" by his fie 0@1 chil"ren (hich inclu"es
petitioner Oscar Constantino!
8
Respon"ents -suncion 6a=uin"anu% 0-suncion1an" Hosefina Cailipan 0Hosefina1, /r#*$
/r*%,)0il,r#% o& P#,ro Sr!, in representation of Pe"ro, Hr! &il#, * )o-pl*i%$
5
against petitioners Oscar Constantino, &a'i%a Constantino an" Casi%ira &aturingan, gran"chil"ren
of Pe"ro Sr!, for the nullification of a "ocu%ent "eno%inate" as APag%a%ana sa 6abas ng
Hu.u%anA "ate" )* -ugust );;+,
<
Ta' Declaration Nos! ;<9)**++ 0*+<@,1
:
an" ;<9)**++
0*+<@@1
?
an" reinstate%ent of Ta' Declaration No! +*?)8
;
in the na%e of Pe"ro Sr!
I% $0# .*i, )o-pl*i%$, r#.po%,#%$. *ll#/#, $0*$ .o-#$i-# i% O)$o5#r 199G, p#$i$io%#r.
*..#r$#, $0#ir )l*i- o& o(%#r.0ip o'#r $0# (0ol# p*r)#l o& l*%, 2240 .@ -3 o(%#, 57 $0# l*$#
P#,ro Sr., $o $0# #1)l+.io% o& r#.po%,#%$. (0o *r# o))+p7i%/ * por$io% $0#r#o&. Bpon
erification, respon"ents learne" that a Ta' Declaration No! *+*)*9+):*9,,+,@ in the na%e of
petitioner Oscar Constantino an" his cousin &a'i%a Constantino (as unla(fully issue", (hich in
effect cancele" Ta' Declaration No! +*?)8 in the na%e of their ancestor Pe"ro Sr! The issuance of
the ne( ta' "eclaration (as allege"ly "ue to the e'ecution of a si%ulate", fabricate" an" fictitious
"ocu%ent "eno%inate" as APag%a%ana sa 6abas ng Hu.u%an,A (herein the petitioners
%isrepresente" the%seles as the sole an" only heirs of Pe"ro Sr! It (as further allege" that
subse=uently, the sub/ect lan" (as "ii"e" e=ually bet(een petitioners Oscar an" &a'i%a resulting
in the issuance of Ta' Declaration No! ;<9)**++9*+<@,
)*
in the na%e of Oscar, (ith an area of )+*s=
% an" the other half in the na%e of &a'i%a coere" by Ta' Declaration No! ;<9)**++9*+<@+!
))
The
share of &a'i%a (as eentually coneye" to her sister, petitioner Casi%ira in (hose na%e a ne(
Ta' Declaration No! ;<9)**++9*+<@@
)+
(as issue"!
R#.po%,#%$. .o+/0$ $o *%%+l $0# DP*/-*-*%* .* L*5*. %/ H+?+-*%D *. (#ll *. $0# T*1
#)l*r*$io%. $0*$ (#r# i..+#, o% $0# 5*.i. o& .+)0 ,o)+-#%$.
The petitioners, on the other han", aerre" in their -ns(er >ith Counterclai%
),
that Pe"ro Sr!, upon
his "eath, left seeral parcels of lan", na%ely$ )1 a lot (ith an area of +8* s= % coere" by Ta'
Declaration No!+*?)8D +1 a lot (ith an area of );+ s= % also situate" at Sta! &onica,Hagonoy,
Bulacan, preiously coere" by Ta' Declaration No! ;@,8D an" ,1an agricultural lan" (ith an area of
5our 081 hectares, %ore or less! The petitioners clai%e" that the "ocu%ent APag%a%ana sa 6abas
ng Hu.u%anA pertaining to the +8* s= % lot (as perfectly ali" an" legal, as it (as a pro"uct of
%utual an" oluntary agree%ent bet(een an" a%ong the "escen"ants of the "ecease" Pe"ro Sr!
F+r$0#r, p#$i$io%#r. *ll#/#, $0*$ $0# r#.po%,#%$. 0*'# %o )*+.# o& *)$io% */*i%.$ $0#-
)o%.i,#ri%/ $0*$ $0# r#.po%,#%$.: l*(&+l .0*r# o'#r $0# #.$*$# o& P#,ro Sr., 0*, *lr#*,7 5##%
$r*%.&#rr#, $o $0#- *. #'i,#%)#, 57 $0# ##, o& E1$r*4+,i)i*l S#$$l#-#%$ (i$0 F*i'#r
14
"ate" @
Dece%ber );<?,e'ecute" by -ngelo Constantino, &aria Constantino 0%other of respon"ent
-suncion1, -rca"io Constantino an" &erce"es Constantino, all heirs of Pe"ro Hr!
In the sai" "ee", respon"ents a"/u"icate" unto the%seles to the e'clusion of other heirs, the parcel
of lan" (ith an area of );+ s= % by %isrepresenting that they (ere Athe only legiti%ate heirs of
Pe"ro Sr! Thus, petitioners clai%e" that in the %anner si%ilar to the assaile" APag%a%ana sa 6abas
ng Hu.u%an,A they asserte" their rights an" o(nership oer the sub/ect +8* s= % lot (ithout
"a%age to the respon"ents!
In essence, petitioners position (as that the Dee" of #'tra/u"icial Settle%ent (ith >aier (hich le"
to the issuance of Ta' Declaration No!;@,8 (*. *)@+i#.)#, i% 57 $0# o$0#r 0#ir. o& P#,ro Sr.,
i%)l+,i%/ $0# p#$i$io%#r., on the un"erstan"ing that the respon"ent heirs of Pe"ro Hr! (oul" no
longer share an" participate in the settle%ent an" partition of the re%aining lot coere" by the
Pag%a%ana sa 6abas ng Hu.u%an!A
RTC r#%,#r#, * #)i.io%
1H
i% &*'or o& $0# PETITIONERS &i%,i%/ $0*$ $0# p*r$i#. (#r# i% p*ri
,#li)$o *%, $0+. $0# ##, -+.$ r#-*i% .$*%,i%/ 5#)*+.# $0# r#.po%,#%$. *r# #.$opp#, &ro-
*..*ili%/ i$. '*li,i$7. RTC ,i.-i..#, $0# )*.#.
R#.po%,#%$. *pp#*l#, $o $0# Co+r$ o& App#*l. 2CA3. CA R#'#r.#, $0# RTC The C- hel" that
the respon"ents, heirs of Pe"ro Hr!, "i" not a"/u"icate the );+ s= % lot unto the%seles to the
e'clusion of all the other heirs of Pe"ro Sr! Rather, the a"/u"ication in the "ocu%ent entitle"
A#'tra/u"icial Settle%ent (ith >aier "ate" @ Dece%ber );<? pertains to a "ifferent property an" is
ali" absent any ei"ence to the contrary! Hence, it is erroneous for the trial court to "eclare the
parties in pari "elicto!
ISSUE r#/*r,i%/ PARTIES<
13 -re the respon"ents (ithout fault or are they free fro% the effects of iolation of any la(s
arising fro% the suppose" unla(ful agree%ent entere" into bet(een &aria
6a=uin"anu%, their pre"ecessor9in9interest, an" the other heirs, inclu"ing petitioners
herein, 5*.#, o% $0# &*)$ $0*$ $0#7 *r# %o$ .i/%*$ori#. $o .*i, */r##-#%$P
State" other(ise, *r# $0# *)$io%. o& M*ri* L*@+i%,*%+- 5i%,i%/ o% $0#-P BES
23 I& i% $0# *&&ir-*$i'#, i. M*ri* L*@+i%,*%+- *% INISPENSA8LE PARTBP NO, T0#
pr#,#)#..or9i%9i%$#r#.$ i. * prop#r, 5+$ NOT AN INISPENSA8LE, p*r$7 *. 0#
(o+l,, i% *%7 #'#%$, 0*'# 5##% 5o+%, 57 $0# 4+,/-#%$ */*i%.$ 0i. pr#,#)#..or.
>4
SC RULING<
13 BES! It is not "ispute", that respon"ents are successors9in9interest of &aria
6a=uin"anu%, one of the signatories in the #'tra/u"icial Settle%ent (ith >aier (ho (as
also allege"ly in agree%ent (ith the petitioners!
A!ERB IMPORTANT< F# */r## (i$0 $0# $ri*l )o+r$ $0*$ r#.po%,#%$. *r# Dpri'i#.D $o M*ri*
L*@+i%,*%+-.C
Dpri'i#.D S $0o.# 5#$(##% (0o- *% *)$io% i. ,##-#, 5i%,i%/ *l$0o+/0 $0#7 *r# %o$ li$#r*ll7
p*r$i#. $o $0# .*i, *)$io%.
This Court, in Correa ! Pascual,
,)
ha" occasion to e'plain that Apriity in estate "enotes the priity
bet(een assignor an" assignee, "onor an" "onee, grantor an" grantee, /oint tenant for life an"
re%ain"er%an or reersioner an" their respectie assignees, en"or by "ee" of (arranty an" a
re%ote en"ee or assignee! - priy in estate is one, it has been sai", (ho "eries his title to the
property in =uestion by purchaseD one (ho ta.es by coneyance.D I% &i%#, r#.po%,#%$., *.
.+))#..or.9i%9i%$#r#.$, ,#ri'# $0#ir ri/0$ &ro- *%, *r# i% $0# .*-# po.i$io% *. $0#ir
pr#,#)#..or i% (0o.# .0o#. $0#7 %o( .$*%,. -s such successors, respon"ents7 situation is
analogous to that of a transferee pen"ente lite illustrate" in Santiago 6an" Deelop%ent Corporation
! Court of -ppeals,
,+
reiterating 5etalino ! San2
,,
(here this Court hel"$
23 NO. A!ERB IMPORTANT< -s such, he stan"s e'actly in the shoes of his pre"ecessor in
interest, the original "efen"ant, an" is boun" by the procee"ings ha" in the case before the property
(as transferre" to hi%! T0# pr#,#)#..or9i%9i%$#r#.$ i. * prop#r, 5+$ NOT AN INISPENSA8LE,
p*r$7 *. 0# (o+l,, i% *%7 #'#%$, 0*'# 5##% 5o+%, 57 $0# 4+,/-#%$ */*i%.$ 0i. pr#,#)#..or.
>4
C
Thus, any con"ition attache" to the property or any agree%ent precipitating the e'ecution of the
Dee" of #'tra/u"icial Settle%ent (ith >aier (hich (as bin"ing upon &aria 6a=uin"anu% is
applicable to respon"ents (ho %erely succee"e" &aria!
ISPOSITION<
CA ,#)i.io% i. RE!ERSE. T0# P*/-*-*%* .* L*5*. %/ H+?+-*% *%, E1$r*4+,i)i*l
S#$$l#-#%$ (i$0 F*i'#r *r# 0#r#57 ,#)l*r#, 'oi, (i$0o+$ pr#4+,i)# $o $0# p*r$i$io% o& $0#
#.$*$# o& P#,ro Co%.$*%$i%o Sr. (i$0 $0# &+ll p*r$i)ip*$io% o& *ll $0# l*$$#rJ. 0#ir..
ISSUE o% RULES ON E!IENCE<
This not(ithstan"ing, it %ust ho(eer be sho(n that the Dee" of #'tra/u"icial Settle%ent (ith
>aier, referre" to a property o(ne" by Pe"ro Sr! There is such basis fro% the facts of this case!
T0# r#)or,. .0o( $0*$ *p*r$ &ro- r#.po%,#%$ A.+%)io% L*@+i%,*%+-.:. .$*$#-#%$ $0*$ $0#
p*r)#l o& l*%, .+54#)$ -*$$#r o& $0# ##, o& E1$r*4+,i)i*l S#$$l#-#%$ (i$0 F*i'#r i. %o$ p*r$ o&
$0# #.$*$# o& P#,ro Sr., $0#ir )o--o% *%)#.$or, %o o$0#r #'i,#%)# (*. o&&#r#, $o .+ppor$ i$.
The C- in giing cre"ence to the respon"ents7 clai%, %erely relie" on the allege" typographical error
in the Dee"! The basis for the C-7s conclusion (as the inclusion of the (ife of Pe"ro Hr! an" that of
their chil"ren, (hich the C- consi"ere" as proof that the property (as o(ne" by Pe"ro Hr! an" not
part of the estate of Pe"ro Sr! A. poi%$#, o+$ 57 $0# p#$i$io%#r., $0# -#%$io% o& $0# %*-#. o&
$0# )0il,r#% o& P#,ro Ir. i% $0# E1$r*4+,i)i*l S#$$l#-#%$ i. %o$ proo& $0*$ $0# .+54#)$ o& $0#
,##, i. $0# prop#r$7 o& P#,ro Ir. M#*%$ $o #1)l+,# *ll $0# o$0#r 0#ir. o& P#,ro Sr., o%l7 $0#
)0il,r#% o& P#,ro Ir. *pp#*r#, i% $0# E1$r*4+,i)i*l S#$$l#-#%$ *. 0#ir..
- portion of the a"%ission an" stipulations %a"e by both parties "uring the pre9trial is hereun"er
=uote", thus$
R#.po%,#%$.: *,-i..io%.<
D1. T0*$ $0# l*%, )o'#r#, 57 T*1 #)l*r*$io% No. 95>4 pr#'io+.l7 o(%#, 57 P#,ro
Co%.$*%$i%o, Sr. (*. $r*%.&#rr#, $o M*ri* Co%.$*%$i%o +%,#r T*1 #)l*r*$io% No. 95>5=
20i/0li/0$i%/ o+r.3
1. T0# #1i.$#%)# o& E1$r*4+,i)i*l S#$$l#-#%$ (i$0 F*i'#r p#r o). No.>19, P*/# No. 44, 8oo?
No. 11, S#ri#. o& 19HG 57 No$*r7 P+5li) Ro-#ri)o Flor#., Ir.D
Cl#*rl7, $0# *5o'# .$ip+l*$io% i. *% *,-i..io% */*i%.$ r#.po%,#%$.: i%$#r#.$ o& $0# &*)$ o&
o(%#r.0ip 57 P#,ro Sr. o& $0# 192 .@ - lo$ )o'#r#, 57 T*1 #)l*r*$io% No. 95>4, (0i)0 (*.
$r*%.&#rr#, $o r#.po%,#%$.: -o$0#r, $0# ,*+/0$#r o& P#,ro Ir. Such that, in one of the issues
sub%itte" to be resole" by the trial court, this (as inclu"e"$ A>hether or not the ADee" of
#'tra/u"icial Settle%ent (ith >aierA is enforceable against the plaintiffs, thus curing the legal
infir%ities, if any, of the APag%a%ana sa 6abas ng Hu.u%anA
,<
R an issue earlier %entione"!
I+,i)i*l *,-i..io%. *r# l#/*ll7 5i%,i%/ o% $0# p*r$7 -*?i%/ $0# *,-i..io%.. Pr#9$ri*l
*,-i..io% i% )i'il )*.#. i. o%# o& $0# i%.$*%)#. o& 4+,i)i*l *,-i..io%. #1pli)i$l7 pro'i,#, &or
+%,#r S#)$io% ;, R+l# 1G o& $0# R+l#. o& Co+r$, (0i)0 -*%,*$#. $0*$ $0# )o%$#%$. o& $0# pr#9
$ri*l or,#r .0*ll )o%$rol $0# .+5.#@+#%$ )o+r.# o& $0# *)$io%, $0#r#57, ,#&i%i%/ *%, li-i$i%/ $0#
i..+#. $o 5# $ri#,. I% 8*7*., #$. *l. '. S*%,i/*%5*7*%, #$. *l.,
>;
$0i. Co+r$ #-p0*.iM#, $0*$$
Once the stipulations are re"uce" into (riting an" signe" by the parties an" their counsels, they
beco%e bin"ing on the parties (ho %a"e the%! They beco%e /u"icial a"%issions of the fact or facts
stipulate"!
,?
#en if place" at a "isa"antageous position, a party %ay not be allo(e" to rescin"
the% unilaterally, it %ust assu%e the conse=uences of the "isa"antage!
,;
0Highlighting ours1
&oreoer, in -lfelor ! Halasan,
8*
this Court "eclare" that$
A p*r$7 (0o 4+,i)i*ll7 *,-i$. * &*)$ )*%%o$ l*$#r )0*ll#%/# $0# &*)$ *. 4+,i)i*l *,-i..io%. *r#
* (*i'#r o& proo&= pro,+)$io% o& #'i,#%)# i. ,i.p#%.#, (i$0! - /u"icial a"%ission also re%oes
an a"%itte" fact fro% the fiel" of controersy! Conse=uently, an a"%ission %a"e in the plea"ings
cannot be controerte" by the party %a.ing such a"%ission an" are conclusie as to such party, an"
all proofs to the contrary or inconsistent there(ith shoul" be ignore", (hether ob/ection is interpose"
by the party or not! The allegations, state%ents or a"%issions containe" in a plea"ing are conclusie
as against the plea"er! - party cannot subse=uently ta.e a position contrary of or inconsistent (ith
(hat (as plea"e"!
8)
0Citations o%itte"1
>e are a(are that the last paragraph of Section :, Rule )? of the Rules of Court seres as a caeat
for the rule of conclusieness of /u"icial a"%issions R for, in the interest of /ustice, issues that %ay
arise in the course of the procee"ings but (hich %ay not hae been ta.en up in the pre9trial can still
be ta.en up!
Section :, Rule )? of the Rules of Court rea"s$
Section :! Recor" of pre9trial! R The procee"ings in the pre9trial shall be recor"e"!8a$#MMi8 Bpon the
ter%ination thereof, the court shall issue an or"er (hich shall recite in "etail the %atters ta.en up in
the conference, the action ta.en thereon, the a%en"%ents allo(e" to the plea"ings, an" the
agree%ents or a"%issions %a"e by the parties as to any of the %atters consi"ere"! Shoul" the
action procee" to trial, the or"er shall, e'plicitly "efine an" li%it the issues to be trie"! The contents
of the or"er shall control the subse=uent course of the action, unless %o"ifie" before trial to preent
in/ustice!
In a""ition, Section 8 of Rule )+; of the Rules of Court, proi"es that$
A% *,-i..io%, '#r5*l or (ri$$#%, -*,# 57 * p*r$7 i% $0# )o+r.# o& $0# pro)##,i%/. i% $0#
.*-# )*.#, ,o#. %o$ r#@+ir# proo&. T0# *,-i..io% -*7 5# )o%$r*,i)$#, o%l7 57 .0o(i%/ $0*$
i$ (*. -*,# $0ro+/0 p*lp*5l# -i.$*?# or $0*$ %o .+)0 *,-i..io% (*. -*,#.
A. )o%$#-pl*$#, i% $0# *&or#-#%$io%#, pro'i.io% o& $0# R+l#. o& Co+r$, $0# /#%#r*l r+l#
r#/*r,i%/ )o%)l+.i'#%#.. o& 4+,i)i*l *,-i..io% +po% $0# p*r$7 -*?i%/ i$ *%, $0#
,i.p#%.*$io% o& proo& *,-i$. o& $(o #1)#p$io%.< 13 (0#% i$ i. .0o(% $0*$ $0# *,-i..io% (*.
-*,# $0ro+/0 p*lp*5l# -i.$*?#, *%, 23 (0#% i$ i. .0o(% $0*$ %o .+)0 *,-i..io% (*. i% &*)$
-*,#. T0# l*$$#r #1)#p$io% *llo(. o%# $o )o%$r*,i)$ *% *,-i..io% 57 ,#%7i%/ $0*$ 0# -*,#
.+)0 *% *,-i..io%.
42
Ho(#'#r, r#.po%,#%$. &*il#, $o r#&+$# $0# #*rli#r *,-i..io%6.$ip+l*$io% 5#&or# *%, ,+ri%/ $0#
$ri*l. >hile "enying o(nership by Pe"ro Sr! of the );+ s= % lot, respon"ent -suncion 6a=uin"anu%,
(hen place" on the stan", offere" a ague e'planation as to ho( such parcel of lan" (as ac=uire"
by Pe"ro Hr! - portion of her testi%ony
8,
is hereto repro"uce" as follo(s$
A-TTP! DO&IN3O$
J$ Do you .no( if as part of the estate of the late Pe"ro Constantino, Sr! is another parcel of lan"
also situate" at Sta! &aria, Hagonoy, Bulacan (ith an area of );+ s=uare %etersK
-$ It is not o(ne" by Pe"ro Constantino, Sr!, sir! It is our property o(ne" by Pe"ro Constantino, Hr!
that (as inherite" by %y %other &aria Constantino!
J$ -n" "o you .no( ho( Pe"ro Constantino, Hr! ac=uire" that parcel of lan", the one that you
%entione" a (hile agoK
-$ Qinagisnan .o na po yong lupang yon pag.abata pa na yon e a%in!A 0Highlighting ours1
The aboe assertion of "enial is si%ply a self9sering "eclarationunsupporte" by ei"ence! This
ren"ers conclusie the stipulations %a"e "uring the pre9trial conference! Conse=uently, respon"ents
are boun" by the infir%ities of the contract on (hich they base" their right oer the property sub/ect
%atter thereof! Consi"ering that the infir%ities in the t(o "ee"s relate to e'clusion of heirs, a
circu%ention of an heir7s right to his or her legiti%e, it is apt to reiterate our ruling in Neri ! Heirs of
Ha"/i Pusop By,
88
"isposing that$
Hence, in the e'ecution of the #'tra9Hu"icial Settle%ent of the #state (ith -bsolute Dee" of Sale in
faour of spouses By, all the heirs of -nnunciation shoul" hae participate"! Consi"ering that
#utropia an" Victoria (ere a"%itte"ly e'clu"e" an" that then %inors Rosa an" Douglas (ere not
properly represente" therein, the settle%ent (as not ali" an" bin"ing upon the% an" conse=uently,
a total nullity! 0Highlighting ours1
5urther highlighting the effect of e'clu"ing the heirs in the settle%ent of estate, the case of Segura !
Segura,
8@
eluci"ate" thus$
It is clear that Section ) of Rule :8 "oes not apply to the partition in =uestion (hich (as null an" oi"
as far as the plaintiffs (ere concerne"! The rule coers only partition! The partition in the present
case (as inali" because it e'clu"e" si' of the nine heirs (ho (ere entitle" to e=ual shares in the
partitione" property! Bn"er the rule Ano e'tra/u"icial settle%ent shall be bin"ing upon any person
(ho has not participate" therein or ha" no notice thereof!A -s the partition (as a total nullity an" "i"
not affect the e'clu"e" heirs, it (as not correct for the trial court to hol" that their right to challenge
the partition ha" prescribe" after t(o years fro% its e'ecution ' ' '!
In light of the foregoing, (hile both parties acte" in iolation of the la( on legiti%es, the pari "elicto
rule, e'presse" in the %a'i%s A#' "olo %alo non oritur actionA an" Ain pari "elicto potior est
con"ition "efen"entis,A (hich refuses re%e"y to either party to an illegal agree%ent an" leaes the%
(here they are, "oes not apply in this case! 0Bn"erline supplie"1
8<
-s hel" in De 6eon ! C-$
8:
In the ulti%ate analysis, therefore, both acte" in iolation of la(s! Ho(eer, the pari "elicto rule
e'presse" in the %a'i%s A#' "olo %alo non oritur actionA an" AIn pari "elicto potior est con"ition
"efen"entis,A (hich refuses re%e"y to either party to an illegal agree%ent an" leaes the% (here
they are "oes not apply in this case!
' ' ' ' ' ' ' ' '
Since the 6etter9-gree%ent (as repu"iate" before the purpose has been acco%plishe" an" to
a"here to the pari "elicto rule in this case is to put a pre%iu% to the circu%ention or the la(s,
positie relief shoul" be grante" to &acaria! Hustice (oul" be sere" by allo(ing her to be place" in
the position in (hich she (as before the transaction (as entere" into!
-ccor"ingly, in or"er not to put a pre%iu% to the circu%ention or the la(s as conte%plate" by the
parties in the instant case, (e %ust "eclare both contracts as oi"! In"ee", any circu%ention of the
la( cannot be
8?
countenance"!
RULE ON !: PA5! D4,!832:
6atin for Ain e=ual fault,A in pari "elicto connotes that t(o or %ore people are at fault or are guilty of a
cri%e! N#i$0#r )o+r$. o& l*( %or #@+i$7 (ill i%$#rpo.# $o /r*%$ r#li#& $o $0# p*r$i#., (0#% *%
ill#/*l */r##-#%$ 0*. 5##% -*,#, *%, 5o$0 p*r$i#. .$*%, i% p*ri ,#li)$o!
+)
Bn"er the pari "elicto
"octrine, the parties to a controersy are e=ually culpable or guilty, they shall hae no action against
each other, an" it shall leae the parties (here it fin"s the%! This "octrine fin"s e'pression in the
%a'i%s Ae' "olo %alo nonoritur actioA an" Ain pari "elicto potior est con"itio "efen"entis!A
++
-s a "octrine in ciil la(, the rule on pari "elicto is principally goerne" by -rticles )8)) an" )8)+ of
the Ciil Co"e, (hich state that$
-rticle )8))! >hen the nullity procee"s fro% the illegality of the cause or ob/ect of the contract, an"
the act constitutes a cri%inal offense, both parties being in pari "elicto, they shall hae no action
against each other, an" both shall be prosecute"!
''' '''
-rticle )8)+! If the act in (hich the unla(ful or forbi""en cause consists "oes not constitute a
cri%inal offense, the follo(ing rules shall be obsere"$
''' '''
)! >hen the fault is on the part of both contracting parties, neither %ay recoer (hat he has gien by
irtue of the contract, or "e%an" the perfor%ance of the other7s un"erta.ingD
''' '''!
A!ERB IMPORTANT< T0# p#$i$io% *$ 5#%)0 ,o#. %o$ .p#*? o& *% ill#/*l )*+.# o& )o%$r*)$
)o%.$i$+$i%/ * )ri-i%*l o&&#%.# +%,#r Ar$i)l# 1411. Neither can it be sai" that -rticle )8)+ fin"s
application although such proision (hich is part of Title II, Boo. IV of the Ciil Co"e spea.s of
contracts in general, as (ell as contracts (hich are null an" oi" ab initio pursuant to -rticle )8*; of
the Ciil Co"e R such as the sub/ect contracts, (hich as clai%e", are iolatie of the %an"atory
proision of the la( on legiti%es!
F# ,o %o$ ,i.p+$# $0*$ 0#r#i% p*r$i#., $0ro+/0 $0# ##,. $0#7 .#p*r*$#l7 #1#)+$#, ,#pri'#,
#*)0 o$0#r o& ri/0$&+l .0*r#. i% $0# $(o lo$. .+54#)$ o& $0# .#p*r*$# )o%$r*)$. Q $0*$ i., i& $0#
$(o 223 p*r)#l. o& l*%, .+54#)$ -*$$#r $0#r#o&, &or- p*r$ o& $0# #.$*$# o& $0# l*$# P#,ro Sr.
It is asserte" by the petitioners that their e'ecution in );;+ of the contract "eno%inate" as
APag%a%ana sa 6abas ng Hu.u%anA (hich e'clu"e" other heirs of Pe"ro Sr!, (as (ith an
un"erlying agree%ent (ith the other heirs inclu"ing &aria Constantino, "aughter of Pe"ro Hr! an"
gran"%other of respon"ents!
+@

The agree%ent (as for the other heirs to recogni2e the );+ s=uare %eters lot sub/ect %atter of the
A#'tra/u"icial Settle%ent (ith >aierA e'ecute" in );<? as the share of the heirs of Pe"ro Sr! in the
estate of Pe"ro Sr!, Petitioners respecte" such agree%ent, as in fact, &aria 6a=uin"anu% an" that
of her heirs, herein respon"ents, (ere not "isturbe" in their possession or o(nership oer the sai"
parcel of lan"D thus, the heirs of Pe"ro Hr! (ere sai" to hae ac=uiesce"
+<
to the APag%a%ana sa
6abas ng Hu.u%anA an" the un"erlying agree%ent an" therefore they hae no recourse or reason
to =uestion it ta.ing cue fro% the "octrine of in pari"elicto! This (as the basis of the trial court7s
fin"ings that respon"ents are no( estoppe" fro% clai%ing other(ise!
+:
>e fin" that the trial court erroneously applie" the "octrine!
T0i. i. %o$ $o .*7, 0o(#'#r, $0*$ $0# CA (*. )orr#)$ i% +p0ol,i%/ $0# '*li,i$7 o& $0# )o%$r*)$
,#%o-i%*$#, *. DP*/-*-*%* .* L*5*. %/ H+?+-*%.D T0# CA ,#)i.io% 5#i%/, li?#(i.#,
5*.#, o% p*ri ,#li)$o, i. *l.o i%)orr#)$.
Fi%,i%/ $0# i%*ppli)*5ili$7 o& $0# i% p*ri ,#li)$o ,o)$ri%#, F# &i%, o))*.io% $o .$r#.. $0*$
Ar$i)l# 1412 o& $0# Ci'il Co,# $0*$ 5r#*$0#. li&# $o $0# ,o)$ri%# .p#*?. o& $0# ri/0$. *%,
o5li/*$io%. o& $0# p*r$i#. $o $0# )o%$r*)$ (i$0 *% ill#/*l )*+.# or o54#)$ (0i)0 ,o#. %o$
)o%.$i$+$# * )ri-i%*l o&&#%.#. I$ *ppli#. $o )o%$r*)$. (0i)0 *r# 'oi, &or ill#/*li$7 o& .+54#)$
-*$$#r *%, %o$ $o )o%$r*)$. r#%,#r#, 'oi, &or 5#i%/ .i-+l*$#,,
2G
or $0o.# i% (0i)0 $0# p*r$i#.
,o %o$ r#*ll7 i%$#%, $o 5# 5o+%, $0#r#57. Sp#)i&i)*ll7, i% p*ri ,#li)$o .i$+*$io%. i%'ol'# $0#
p*r$i#. i% o%# )o%$r*)$ (0o *r# 5o$0 *$ &*+l$, .+)0 $0*$ %#i$0#r )*% r#)o'#r %or 0*'# *%7
*)$io% */*i%.$ #*)0 o$0#r!
I% $0i. )*.#, $0#r# *r# $(o ##,. o& #1$r*4+,i)i*l *..i/%-#%$. unto the signatories of the
portions of the estate of an ancestor co%%on to the% an" another set of signatories li.e(ise
assigning unto the%seles portions of the sa%e estate! The separate Dee"s ca%e into being out of
an i"entical intention of the signatories in both to e'clu"e their co9heirs of their rightful share in the
entire estate of Pe"ro Sr! It (as, in reality, an assign%ent of specific portions of the estate of Pe"ro
Sr!, (ithout resorting to a la(ful partition of estate as both sets of heirs inten"e" to e'clu"e the other
heirs!
Cl#*rl7, $0# pri%)ipl# o& i% p*ri ,#li)$o )*%%o$ 5# *ppli#,. T0# i%*ppli)*5ili$7 i. ,i)$*$#, %o$
o%l7 57 $0# &*)$ $0*$ $(o ,##,., %o$ o%# )o%$r*)$, *r# i%'ol'#,, 5+$ 5#)*+.# o& $0# -or#
i-por$*%$ r#*.o% $0*$ .+)0 *% *ppli)*$io% (o+l, r#.+l$ i% $0# '*li,*$io% o& 5o$0 ,##,.
i%.$#*, o& $0#ir %+lli&i)*$io% *. %#)#..i$*$#, 57 $0#ir ill#/*li$7. I$ -+.$ 5# #-p0*.iM#, $0*$ $0#
+%,#rl7i%/ */r##-#%$ r#.+l$i%/ i% $0# #1#)+$io% o& $0# ,##,. i. %o$0i%/ 5+$ * 'oi,
*/r##-#%$. Ar$i)l# 1409 o& $0# Ci'il Co,# pro'i,#. $0*$<
-RT! )8*;! The follo(ing contracts are in e'istent an" oi" fro% the beginning$
0)1 Those (hose cause, ob/ect or purpose is contrary to la(D %orals, goo" custo%s, public or"er or
public policyD
' ' ' ' ' ' ' ' '
Coroll*ril7, /i'#% $0# )0*r*)$#r *%, %*$+r# o& $0# ,##,. *. 5#i%/ 'oi, *%, i% #1i.$#%$, i$ 0*.,
*. * )o%.#@+#%)#, o& %o &or)# *%, #&&#)$ &ro- $0# 5#/i%%i%/, *. i& i$ 0*, %#'#r 5##% #%$#r#,
i%$o *%, (0i)0 )*%%o$ 5# '*li,*$#, #i$0#r 57 $i-# or r*$i&i)*$io%.
29
Republic of the Philippines
SUPREME COURT
&anila
THIRD DIVISION
G.R. No. 1;4004 O)$o5#r 9, 201>
!IRGILIO G. CAGATAO, Petitioner,
s!
GUILLERMO ALMONTE, ARTHUR AGUILAR, SPS. ERNESTO FERNANE" AN A!ELINA
FERNANE", MAR!IN IOHN FERNANE", MARSON FERNANE", *%, MARIUN
FERNANE", Respon"ents!
D # C I S I O N
MENO"A, J.:
R8@ petition assailing the C- "ecision (hich %o"ifie" the RTC Decision!
FACTS<
P#$i$io%#r C*/*$*o &il#, *% *)$io% &or *%%+l-#%$ o& ,##,. o& .*l#, )*%)#ll*$io% o& $i$l# *%,
,*-*/#. against respon"ents 0-l%onte1, 0-guilar1, 0Spouses 5ernan"e21,0collectiely the
5ernan"e2 Siblings1!
8
In );8;, a 0o-#.$#*, p*$#%$ oer the property sub/ect of this controersy (as i..+#, i% &*'or o&
I+*% G*$)0*li*%!
@

C*/*$*o )l*i-#, $0*$ .o-#$i-# i% 1940, G*$)0*li*% .ol, $0# lo$ $o #l&i% M*%M+li% 2M*%M+li%3
in e'change for one carabao, as e%bo"ie" ina barter agree%ent (hich (as unfortunately "estroye"
or lost "uring the Secon" >orl" >ar!
<
In );;*, &an2ulin allege"ly e'ecute" a priate (ritten
"ocu%ent in the Ilocano "ialect, transferring o(nership oer the property to his son9in9la(,
Cagatao!
:
The latter then occupie" an" cultiate" the lan" until the 5ernan"e2 Siblings atte%pte" to
ta.e possession of the lot, thereby pro%pting hi% to file the sub/ect co%plaint before the RTC!
?
The respon"ents, on the other han", conten"e" that the Spo+.#. F#r%*%,#M p+r)0*.#, $0#
prop#r$7 &ro- Al-o%$# *%, A/+il*r (0o 0*, i% $0#ir po..#..io% * $*1 ,#)l*r*$io% )o'#ri%/
$0# .*i, l*%,!
;

To pro$#)$ $0#ir i%$#r#.$, Spo+.#. F#r%*%,#M o%)# */*i% 5o+/0$ $0# .*-# prop#r$7 &or
P220,000.00 &ro- E--*)+l*,* C*rlo. 2C*rlo.3.
In his &e%oran"u% before the RTC, Cagatao =uestione" the sale to Spouses 5ernan"e2 by Carlos
because, at that ti%e, &an2ulin (as alrea"y the o(ner of the sub/ect property! H# *l.o poi%$#, o+$
$0*$ i$ (*. 0i/0l7 irr#/+l*r $0*$ Spo+.#. F#r%*%,#M (o+l, 5+7 $0# .*-# prop#r$7 &ro- $(o
,i&&#r#%$ '#%,or. o% $(o ,i&&#r#%$ o))*.io%..
-part fro% these ano%alous transactions, Cagatao insiste" that TCT No! T9+8;8,: in the na%e of
the 5ernan"e2 Siblings (as a nullity because the sale fro% the Spouses 5ernan"e2 (as .i-+l*$#,,
as testifie" to by -elina 5ernan"e2 05ernan"e2!
The respon"ents clai%e" that Cagatao (as unable to present proof of title or any public "ocu%ent
e%bo"ying the sale of the property fro% 3atchalian to &an2ulin an" fro% the latter to Cagatao!
T0#7 *l.o *r/+#, $0*$ #'#% i& * 0o-#.$#*, p*$#%$ (*. i%,##, i..+#, $o G*$)0*li*%, $0# .*-#
5#)*-# 'oi, (0#% 0# 2G*$)0*li*%3 ,i, %o$ o))+p7 $0# l*%, 0i-.#l&, i% 'iol*$io% o&
Co--o%(#*l$0 A)$ No. 141 2P+5li) L*%, A)$ o& 19>H3.
1>
RTC r+l#, $0*$ C*/*$*o:. #'i,#%)# (*. i%.+&&i)i#%$ $o pro'# 0i. o(%#r.0ip o'#r $0# l*%, i%
@+#.$io% 5#)*+.# M*%M+li% %#'#r *)@+ir#, * l*(&+l $i$l# $o $0# prop#r$7 &ro- 0i. pr#,#)#..or,
G*$)0*li*%. The court e'plaine" that the transfer to &an2ulin (as null an" oi" because it faile" to
co%ply (ith Section +*
)@
of Co%%on(ealth -ct No! )8)! -s to the suppose" coneyance of the lot
fro% &an2ulin to Cagatao, it coul" not hae been ali" because the "ocu%ent allege" to be a "ee"
of sale (as a priate "ocu%ent (hich "i" not conclusiely establish his 0Cagatao7s1 right to the
property because of the re=uire%ent in contract la( that the trans%ission of rights oer an
i%%oable property %ust be containe" in a public "ocu%ent!
RTC ,i.-i..#, $0# )o-pl*i%$ &or *%%+l-#%$ o& ,##,. o& .*l#.
C*/*$*o *pp#*l#, $o $0# CA!
CA p*r$l7 /r*%$#, 0i. p#$i$io% *%, -o,i&i#, $0# ,#)i.io% o& $0# RTC, leaing the parties (here it
foun" the%!
-lthough the C- "eclare" that Cagatao7s clai% of o(nership coul" not be recogni2e", it neertheless
rule" that his possession coul" not be "isturbe" because only the true o(ner coul" challenge hi% for
possession of the sub/ect property! 6eaing the parties (here it foun" the%
Respon"ents file" an &R! CA r#'#r.#, i$.#l& (hen it rule" that the "ee" of sale bet(een Carlos
an" Spouses 5ernan"e2 )o+l, %o$ 5# ,#)l*r#, %+ll *%, 'oi,, #.p#)i*ll7 5#)*+.# C*rlo. (*.
%o$ i-pl#*,#, *. * p*r$7 i% $0# )*.#.
C*/*$*o:. $+r% $o &il# *% MR. MR ENIE.
R45 $o SC.
ISSUE r#l*$#, $o PARTIES<
C*% $0# '*li,i$7 o& $0# TCT 5# *$$*)?#, )oll*$#r*ll7 (i$0o+$ i-pl#*,i%/ C*rlo.P
SC RULING< NO. T0# '*li,i$7 o& TCT No. 121599A )*%%o$ 5# *$$*)?#, )oll*$#r*ll7= C*rlo. i. *%
i%,i.p#%.*5l# p*r$7
5ro% the argu%ents of Cagatao, it is clear that he is assailing the ali"ity of the title of Carlos oer
the lan" in =uestion! S#)$io% 4G o& P.. No. 1529 )l#*rl7 .$*$#. $0*$ D* )#r$i&i)*$# o& $i$l# .0*ll
%o$ 5# .+54#)$ $o )oll*$#r*l *$$*)?. It cannot be altere", %o"ifie", or cancelle" e'cept in a "irect
procee"ing in accor"ance (ith la(!A A% *$$*)? o% $0# '*li,i$7 o& $0# $i$l# i. )o%.i,#r#, $o 5# *
)oll*$#r*l *$$*)? (0#%, i% *% *)$io% $o o5$*i% * ,i&&#r#%$ r#li#& *%, *. *% i%)i,#%$ o& $0# .*i,
*)$io%, *% *$$*)? i. -*,# */*i%.$ $0# 4+,/-#%$ /r*%$i%/ $0# $i$l#.
+,

Cagatao7s original co%plaint before the RTC (as for the cancellation of TCT No! T9+8;8,: in the
na%e of the 5ernan"e2 Siblings an" the nullification of the "ee"s of sale bet(een the 5ernan"e2
Siblings an" Spouses 5ernan"e2, an" the earlier one bet(een the latter an" -l%onte an" -guilar!
No(0#r# i% 0i. )o-pl*i%$ ,i, C*/*$*o -#%$io% $0*$ 0# .o+/0$ $o i%'*li,*$# TCT No. 121599
A.1Cphi1
I$ (*. o%l7 ,+ri%/ $0# )o+r.# o& $0# pro)##,i%/., (0#% Spo+.#. F#r%*%,#M ,i.)lo.#, $0*$
$0#7 0*, p+r)0*.#, $0# prop#r$7 &ro- C*rlo., $0*$ C*/*$*o $0o+/0$ o& @+#.$io%i%/ $0#
'*li,i$7 o& TCT No. 121599A !
-lthough the C- correctly rule" that the transfer fro% 3atchalian to &an2ulin (as inali", the
e'istence of a ali" Torrens title in the na%e of Carlos (hich has re%aine" unchallenge" before the
proper courts has %a"e irreleant the issue of (hether 3atchalian an" his successors9in9interest
shoul" hae retaine" o(nership oer the property! T0i. i. p+r.+*%$ $o $0# pri%)ipl# $0*$ * Torr#%.
$i$l# i. irr#'o)*5l# *%, i$. '*li,i$7 )*% o%l7 5# )0*ll#%/#, i% * ,ir#)$ pro)##,i%/. The purpose
of a"opting a Torrens Syste% in our /uris"iction is to guarantee the integrity of lan" titles an" to
protect their in"efeasibility once the clai% of o(nership is establishe" an" recogni2e"! This is to
aoi" any possible conflicts of title that %ay arise by giing the public the right to rely upon the face
of the Torrens title an" "ispense (ith the nee" of in=uiring further as to the o(nership of the
property!
+8
Hence, a Torrens certificate of title is in"efeasible an" bin"ing upon the (hole (orl"
unless it is nullifie" by a court of co%petent /uris"iction in a "irect procee"ing for cancellation of
title!
+@
A!ERB IMPORTANT< Mor#o'#r, C*rlo., *. $0# r#/i.$#r#, o(%#r o& $0# lo$ (0o.# $i$l# C*/*$*o
.##?. $o %+lli&7, .0o+l, 0*'# 5##% i-pl#*,#, *. *% i%,i.p#%.*5l# p*r$7. Section :, Rule , of
the );;: Rules of Ciil Proce"ure "efines in"ispensable parties to be Aparties in interest (ithout
(ho% no final "eter%ination can be ha" of an action!A
It is clear in this case that Cagatao faile" to inclu"e Carlos in his action for the annul%ent of TCT No!
)+)@;9-!Basic is the rule in proce"ural la( that no %an can be affecte" by any procee"ing to (hich
he is a stranger an" strangers to a case cannot be boun" by a /u"g%ent ren"ere" by the court!
+<
I$
(o+l, 5# $0# 0#i/0$ o& i%4+.$i)# $o #%$#r$*i% *% *)$io% &or $0# *%%+l-#%$ o& C*rlo.: $i$l#
(i$0o+$ /i'i%/ 0#r $0# oppor$+%i$7 $o pr#.#%$ #'i,#%)# $o .+ppor$ 0#r )l*i- o& o(%#r.0ip
$0ro+/0 $i$l#. I% *,,i$io%, i$ i. (i$0o+$ @+#.$io% * 'iol*$io% o& $0# )o%.$i$+$io%*l /+*r*%$## $0*$
%o p#r.o% .0*ll 5# ,#pri'#, o& prop#r$7 (i$0o+$ ,+# pro)#.. o& l*(.
2;
Thus, shoul" Cagatao (ish to =uestion the o(nership of the sub/ect lot of Carlos an" Spouses
5ernan"e2, he shoul" institute a "irect action before the proper courts for the cancellation or
%o"ification of the titles in the na%e of the latter t(o! He cannot "o so no( because it is tanta%ount
to a collateral attac. on Carlos7 title, (hich is e'pressly prohibite" by la( an" /urispru"ence!
Republic of the Philippines
SUPREME COURT
&anila
THIRD DIVISION
G.R. No. 1;0;G> I+%# 1G, 2012
LEGASPI TOFERS >00, INC., LILIA MARQUINE" PALANCA, ROSANNA . IMAI, GLORIA
OMINGO *%, RAB !INCENT, Petitioners,
s!
AMELIA P. MUER, SAMUEL M. TANCHOCO, ROMEO TANKIANG, RUEL PANGANI8AN,
OLORES AG8ABANI, ARLENEAL A. BASUMA, GOOFREO M. CAGUIOA *%, EGARO
M. SALANANAN,Respon"ents!
D # C I S I O N
PERALTA, J.:
This is a petition for reie( on certiorari of the Court of -ppeals7 Decision
)
"ate" Huly ++, +**@ in C-9
3!R! CV No! ?:<?8, an" its Resolution
+
"ate" Noe%ber +8, +**@, "enying petitioners7 %otion for
reconsi"eration!
The Court of -ppeals hel" that Hu"ge -ntonio I! De Castro of the Regional Trial Court 0RTC1 of
&anila, Branch ,, "i" not co%%it grae abuse of "iscretion in issuing the Or"ers "ate" Huly +), +**8
an" Septe%ber +8, +**8 in Ciil Case No! *89)*;<@@, "enying petitioners7 &otion to -"%it Secon"
-%en"e" Co%plaint!
FACTS<
Pursuant to the by9la(s of 6egaspi To(ers ,**, Inc!, petitioners set the annual %eeting of the
%e%bers of the con"o%iniu% corporation an" the election of the ne( Boar" of Directors! -t the "ate
of the election, the petitioners "eclare" that no =uoru% (as obtaine"!
The group of respon"ents challenge" the a"/ourn%ent of the %eeting! Despite petitionersI insistence
that %o @+or+- (as obtaine" "uring the annual %eeting, respon"ents pushe" through (ith the
sche"ule" election an" (ere electe" as the ne( Boar" of Directors
P#$i$io%#r. &il#, * 8omplaint for the Declaration of :ullity of 4lections ith Prayers for the
lssuance of 3emporary 5estraining 2rders and Brit of Preliminary !n)unction and
Damages */*i%.$ r#.po%,#%$. (i$0 $0# RTC o& M*%il*.
Before respon"ents coul" file an -ns(er to the original Co%plaint, petitioners file" anAmended
Com#laint, (hich (as a"%itte" by the RTC in an Or"er "ate" -pril )8, +**8!
On -pril +*, +**8, before respon"ents coul" sub%it an -ns(er to the -%en"e"
Co%plaint petitioners again file" an (rgent 1+56arte Motion to Admit 7econd Amended Com#laint
and for the lssuance of 1+56arte "em#orary Restraining ,rder 1ffective only for 7eventy5"$o (<.)
Hours. It (as state" in the sai" plea"ing that the case (as raffle" to Branch +8, but Presi"ing Hu"ge
-ntonio #ugenio, Hr! inhibite" hi%self fro% han"ling the caseD an" (hen the case (as assigne" to
Branch 8<, Presi"ing Hu"ge -rte%io S! Tipon also inhibite" hi%self fro% the case!
Precisely this co%plaint see.s to annul the election of the Boar" "ue to allege" =uestionable pro'y
otes (hich coul" not hae pro"uce" a =uoru%! -s such, there is nothing to en/oin an" so in/unction
shall fail! -s an ans(er has been file", the case is ripe for pre9trial an" the parties are "irecte" to file
their pre9trial briefs by &ay ,, +**8!
-s plaintiffs7 secon" a%en"e" co%plaint is a"%itte" by the Court, "efen"ants are gien up to &ay ,,
+**8 to file a co%%ent thereto! In the %eanti%e, the ban.s an" other persons T entities are a"ise"
to recogni2e the Boar" hea"e" by its presi"ent, -%elia &uer! -ll transactions %a"e by the Boar"
an" its officers for the corporation are consi"ere" legal for all intents an" purposes!
<
On &ay ,, +**8, respon"ents file" a Co%%ent on the &otion to -%en" Co%plaint, praying that the
na%e of 6egaspi To(ers ,**, Inc!, as party9plaintiff in the Secon" -%en"e" Co%plaint, be "elete"
as the sai" inclusion by petitioners (as %a"e (ithout the authority of the current Boar"of Directors,
(hich ha" been recogni2e" by the trial court in its Or"er "ate" -pril +<, +**8!
Plaintiffs7 file" a -o$io% $o *,-i$ *-#%,#, )o-pl*i%$ 2$o i%)l+,# L#/*.pi To(#r. >00, I%). *.
pl*i%$i&&3.
RTC ENIE -o$io%. MR #%i#,.
This resoles plaintiffs7 %otion to a%en" co%plaint to inclu"e 6egaspi To(ers ,**, Inc! as party9
plaintiff an" "efen"ants7 co%%ent thereto! 5in"ing no %erit therein an" for the reasons state" in the
co%%ent, the %otion is hereby D#NI#D!
P#$i$io%#r. &il#, * p#$i$io% &or )#r$ior*ri (i$0 $0# Co+r$ o& App#*l. alleging that the trial court
graely abuse" its "iscretion a%ounting to lac. or e'cess of /uris"iction!
CA ,i.-i..#, p#$i$io% &or l*)? o& -#ri$. The Court of -ppeals state" that petitioners7 co%plaint
sought to nullify the election of the Boar" of Directors hel" on -pril +, +**8, an" to protect an"
enforce their in"ii"ual right to ote! The appellate court hel" that as the right to ote is a personal
right of a stoc.hol"er of a corporation, such right can only be enforce" through a "irect actionD
hence, 6egaspi To(ers ,**, Inc! cannot be i%plea"e" as plaintiff in this case!
CA ,#%i#, MR.
ISSUE<
Di" the Court of -ppeals err in not fin"ing that RTC Hu"ge -ntonio I! De Castro co%%itte"
grae abuse of "iscretion a%ounting to lac. or e'cess of /uris"iction in "enying the
a"%ission of the Secon" -%en"e" Co%plaint!
I. L#/*.pi To(#r. >00, I%). * r#*l p*r$7 i% i%$#r#.$P NO
SC RULING< NO. #ri'*$i'# .+i$ i. %o$ prop#r i% $0i. )*.#.
A!ERB IMPORTANT< P#$i$io%#r. *r# $0# i%4+r#, p*r$7, (0o.# ri/0$. $o 'o$# *%, $o 5# 'o$#,
+po% (#r# ,ir#)$l7 *&&#)$#, 57 $0# #l#)$io% o& $0# %#( .#$ o& 5o*r, o& ,ir#)$or.. T0# p*r$79i%9
i%$#r#.$ *r# $0# p#$i$io%#r. *. .$o)?0ol,#r., (0o (i#l, .+)0 ri/0$ $o 'o$#. T0# )*+.# o& *)$io%
,#'ol'#. o% p#$i$io%#r., %o$ $0# )o%,o-i%i+- )orpor*$io%, (0i)0 ,i, %o$ 0*'# $0# ri/0$ $o
'o$#. Hence, the co%plaint for nullification of the election is a "irect action by petitioners, (ho (ere
the %e%bers of the Boar" of Directors of the corporation before the election, against respon"ents,
(ho are the ne(ly9electe" Boar" of Directors! Bn"er the circu%stances, the "eriatie suit file" by
petitioners in behalf of the con"o%iniu% corporation in the Secon" -%en"e" Co%plaint is i%proper!C
P#$i$io%#r. )o%$#%, $0*$ L#/*.pi To(#r. >00, I%). i. * r#*l p*r$79i%9 i%$#r#.$ *. i$ .$*%,. $o 5#
*&&#)$#, $0# -o.$ 57 $0# )o%$ro'#r.7, 5#)*+.# i$ i%'ol'#. $0# ,#$#r-i%*$io% o& (0#$0#r or %o$
$0# )orpor*$io%:. 579l*(. (*. prop#rl7 )*rri#, o+$ i% $0# -##$i%/ 0#l, o% April 2, 2004, (0#%
,#.pi$# $0# *,4o+r%-#%$ o& $0# -##$i%/ &or l*)? o& @+or+-, $0# #l#)$io%. (#r# .$ill
)o%,+)$#,. -lthough petitioners a"%it that the action inoles their right to ote, they argue that it
also inoles the right of the con"o%iniu% corporation to be %anage" an" run by the "uly9electe"
Boar" of Directors, an" to see. re"ress against those (ho (rongfully occupy positions of the
corporation an" (ho %ay %is%anage the corporation!
T0# Co+r$ %o$#. $0*$ i% $0# A-#%,#, Co-pl*i%$, p#$i$io%#r. *. pl*i%$i&&. .$*$#, $0*$ $0#7 *r#
$0# i%)+-5#%$ r#)o%.$i$+$#, 8o*r, o& ir#)$or. o& L#/*.pi To(#r. >00, I%)., *%, $0*$
,#&#%,*%$., 0#r#i% r#.po%,#%$., *r# $0# %#(l79#l#)$#, -#-5#r. o& $0# 8o*r, o& ir#)$or.=
(0il# i% $0# S#)o%, A-#%,#, Co-pl*i%$, $0# pl*i%$i&& i. L#/*.pi To(#r. >00, I%).,
r#pr#.#%$#, 57 p#$i$io%#r. *. $0# *ll#/#,l7 i%)+-5#%$ r#)o%.$i$+$#, 8o*r, o& ir#)$or. o&
L#/*.pi To(#r. >00, I%).
T0# Co+r$ */r##. (i$0 $0# Co+r$ o& App#*l. $0*$ $0# S#)o%, A-#%,#, Co-pl*i%$ i. -#*%$ $o
5# * ,#ri'*$i'# .+i$ &il#, 57 p#$i$io%#r. i% 5#0*l& o& $0# )orpor*$io%. The Court of -ppeals state"
in its Decision that petitioners /ustifie" the inclusion of 6egaspi To(ers ,**, Inc! as plaintiff in Ciil
Case No! *8)*<@@ by ino.ing the "octrine of "eriatie suit,
In short, the a%en"%ent of the co%plaint Eto inclu"eF 6egaspi To(ers ,**, Inc! (as "one in or"er to
protect the interest an" enforce the right of the 6egaspi ETo(ers ,**,F Inc! to be a"%inistere" an"
%anage" Eby petitionersF as the "uly constitute" Boar" of Directors! T0i. i. %o ,i&&#r#%$ &ro- *%,
-*7 i% &*)$ 5# )o%.i,#r#, *. * ERI!ATI!E SUIT i%.$i$+$#, 57 *% i%,i'i,+*l .$o)?0ol,#r
*/*i%.$ $0o.# )o%$rolli%/ $0# )orpor*$io% 5+$ i. 5#i%/ i%.$i$+$#, i% $0# %*-# o& *%, &or $0#
5#%#&i$ o& $0# )orpor*$io% (0o.# ri/0$6. *r# 5#i%/ 'iol*$#,.
1H
I. * ,#ri'*$i'# .+i$ prop#r i% $0i. )*.#P
Cua, Hr! ! Tan
):
"ifferentiates a "eriatie suit an" an in"ii"ual4class suit as follo(s$
A ,#ri'*$i'# .+i$ -+.$ 5# ,i&&#r#%$i*$#, &ro- i%,i'i,+*l *%, r#pr#.#%$*$i'# or )l*.. .+i$.,
$0+.<
Suits by stoc.hol"ers or %e%bers of a corporation base" on (rongful or frau"ulent acts of
"irectors or other persons %ay be classifie" into in"ii"ual suits, class suits, an" "eriatie
suits! >here a stoc.hol"er or %e%ber is "enie" the right of inspection, his suit (oul"
be i%,i'i,+*l because the (rong is "one to hi% personally an" not to the other stoc.hol"ers
or the corporation! F0#r# $0# (ro%/ i. ,o%# $o * /ro+p o& .$o)?0ol,#r., *. (0#r#
pr#&#rr#, .$o)?0ol,#r.J ri/0$. *r# 'iol*$#,, * )l*.. or r#pr#.#%$*$i'# .+i$ (ill 5#
prop#r &or $0# pro$#)$io% o& *ll .$o)?0ol,#r. 5#lo%/i%/ $o $0# .*-# /ro+p. But (here
the acts co%plaine" of constitute a (rong to the corporation itself, the cause of action
belongs to the corporation an" not to the in"ii"ual stoc.hol"er or %e%ber! -lthough in %ost
eery case of (rong to the corporation, each stoc.hol"er is necessarily affecte" because the
alue of his interest therein (oul" be i%paire", this fact of itself is not sufficient to gie hi%
an in"ii"ual cause of action since the corporation is a person "istinct an" separate fro%
hi%, an" can an" shoul" itself sue the (rong"oer! Other(ise, not only (oul" the theory of
separate entity be iolate", but there (oul" be %ultiplicity of suits as (ell as a iolation of the
priority rights of cre"itors! 5urther%ore, there is the "ifficulty of "eter%ining the a%ount of
"a%ages that shoul" be pai" to each in"ii"ual stoc.hol"er!
Ho(eer, in cases of %is%anage%ent (here the (rongful acts are co%%itte" by the "irectors or
trustees the%seles, a stoc.hol"er or %e%ber %ay fin" that he has no re"ress because the for%er
are este" by la( (ith the right to "eci"e (hether or not the corporation shoul" sue, an" they (ill
neer be (illing to sue the%seles! The corporation (oul" thus be helpless to see. re%e"y!
Because of the fre=uent occurrence of such a situation, the co%%on la( gra"ually recogni2e" the
right of a stoc.hol"er to sue on behalf of a corporation in (hat eentually beca%e .no(n as a
A"eriatie suit!A It has been proen to be an effectie re%e"y of the %inority against the abuses of
%anage%ent! Thus, an in"ii"ual stoc.hol"er is per%itte" to institute a "eriatie suit on behalf of
the corporation (herein he hol"s stoc. in or"er to protect or in"icate corporate rights, (heneer
officials of the corporation refuse to sue or are the ones to be sue" or hol" the control of the
corporation! In such actions, the suing stoc.hol"er is regar"e" as the no%inal party, (ith the
corporation as the party9in9 interest!
)?
Since it is the corporation that is the real party9in9interest in a "eriatie suit, then the reliefs praye"
for %ust be for the benefit or interest of the corporation!
);
>hen the reliefs praye" for "o not pertain
to the corporation, then it is an i%proper "eriatie suit!
+*
T0# r#@+i.i$#. &or * ,#ri'*$i'# .+i$ *r# *. &ollo(.<
*3 $0# p*r$7 5ri%/i%/ .+i$ .0o+l, 5# * .0*r#0ol,#r *. o& $0# $i-# o& $0# *)$ or
$r*%.*)$io% )o-pl*i%#, o&, $0# %+-5#r o& 0i. .0*r#. %o$ 5#i%/ -*$#ri*l=
53 0# 0*. $ri#, $o #10*+.$ i%$r*9)orpor*$# r#-#,i#., i.#., 0*. -*,# * ,#-*%, o% $0#
5o*r, o& ,ir#)$or. &or $0# *ppropri*$# r#li#& 5+$ $0# l*$$#r 0*. &*il#, or r#&+.#, $o 0##,
0i. pl#*= *%,
)3 $0# )*+.# o& *)$io% *)$+*ll7 ,#'ol'#. o% $0# )orpor*$io%, $0# (ro%/,oi%/ or 0*r-
0*'i%/ 5##%, or 5#i%/ )*+.#, $o $0# )orpor*$io% *%, %o$ $o $0# p*r$i)+l*r .$o)?0ol,#r
5ri%/i%/ $0# .+i$.
21
In this case, petitioners, as %e%bers of the Boar" of Directors of the con"o%iniu% corporation
before the election in =uestion, file" a co%plaint against the ne(ly9electe" %e%bers of the Boar" of
Directors for the years +**89+**@, =uestioning the ali"ity of the election hel" on -pril +, +**8, as it
(as allege"ly %arre" by lac. of =uoru%, an" praying for the nullification of the sai" election!
A!ERB IMPORTANT< -s state" by the Court of -ppeals, petitioners7 co%plaint see. to nullify the sai"
election, an" to protect an" enforce their in"ii"ual right to ote! Petitioners see. the nullification of
the election of the Boar" of Directors for the years +**89+**@, co%pose" of herein respon"ents,
(ho pushe" through (ith the election een if petitioners ha" a"/ourne" the %eeting allege"ly "ue to
lac. of =uoru%! P#$i$io%#r. *r# $0# i%4+r#, p*r$7, (0o.# ri/0$. $o 'o$# *%, $o 5# 'o$#, +po%
(#r# ,ir#)$l7 *&&#)$#, 57 $0# #l#)$io% o& $0# %#( .#$ o& 5o*r, o& ,ir#)$or.. T0# p*r$79i%9
i%$#r#.$ *r# $0# p#$i$io%#r. *. .$o)?0ol,#r., (0o (i#l, .+)0 ri/0$ $o 'o$#. T0# )*+.# o& *)$io%
,#'ol'#. o% p#$i$io%#r., %o$ $0# )o%,o-i%i+- )orpor*$io%, (0i)0 ,i, %o$ 0*'# $0# ri/0$ $o
'o$#. Hence, the co%plaint for nullification of the election is a "irect action by petitioners, (ho (ere
the %e%bers of the Boar" of Directors of the corporation before the election, against respon"ents,
(ho are the ne(ly9electe" Boar" of Directors! Bn"er the circu%stances, the "eriatie suit file" by
petitioners in behalf of the con"o%iniu% corporation in the Secon" -%en"e" Co%plaint is i%proper!C
The stoc.hol"er7s right to file a "eriatie suit is not base" on any e'press proision of The
Corporation Co"e, but is i%plie"ly recogni2e" (hen the la( %a.es corporate "irectors or officers
liable for "a%ages suffere" by the corporation an" its stoc.hol"ers for iolation of their fi"uciary
"uties,
++
(hich is %o$ $0# i..+# i% $0i. )*.#.
Republic of the Philippines
SUPREME COURT
&anila
THIRD DIVISION
G.R. No. 155>94 F#5r+*r7 1;, 2005
REPU8LIC OF THE PHILIPPINES, petitioner,
s!
GREGORIO AGUNOB, SR., #$ *l., SPOUSES EUARO *%, ARCELITA MARQUE" *%, RURAL
8ANK OF GAPAN, NUE!A ECIIA, respon"ents!
D # C I S I O N
GARCIA, J.:
Interplaying in this case are t(o 0+1 counter9balancing "octrines in the la( of lan" titles$ one, the
"octrine of fraus et )us nun'uam cohabitant (hich basically %eans that no one %ay en/oy the
fruits of frau",
)
an" the other, the "octrine that a frau"ulent title %ay be the root of ali" title in the
na%e of an innocent buyer for alue an" in goo" faith!
+
Ino.ing the first, petitioner Republic of the Philippines in this R45 p#$i$io% &or r#'i#( o% )#r$ior*ri,
see.s to nullify an" set asi"e the ,#)i.io% ,*$#, S#p$#-5#r 2H, 2002
,
of the C- (hich reerse" an
earlier "ecision of the RTC in the *)$io% &or )*%)#ll*$io% o& &r## p*$#%$, ori/i%*l )#r$i&i)*$# o& $i$l#
*%, ,#ri'*$i'# $r*%.&#r )#r$i&i)*$#. o& $i$l#, thereat file" by the petitioner against, a%ong others,
the herein respon"ents!
The facts are (ell lai" out in the "ecision un"er reie($
Gr#/orio A/+%o7, Sr. &il#, 0i. *ppli)*$io% &or Fr## P*$#%$ coering t(o parcels of lan" in Nuea
#ci/a! He (as issue" the free patent by the Director of 6an"s!
The Register of Dee"s of Nuea #ci/a registere" the 5ree Patent an" issue" the
correspon"ing OCT in the na%e of 3regorio -gunoy, Sr!
T0# 0#ir. o& E+.#5io P#r#M, r#pr#.#%$#, 57 Fr*%)i.)* P#r#M, )*+.#, $0# *%%o$*$io% o% $0#
.*i, OCT o& *% *,'#r.# )l*i- in their faor oer a portion of )@!)@;, hectares of the property!
The sai" heirs of #usebio Pere2 file" a for%al protest "oc.ete" as B!6! Clai% No! :<* 0n1 (ith the
Bureau of 6an"s alleging that the lots coere" by the OCT is i"entical to 6ots ) an" + of Plan Psu9
8:+** (hich ha" been *,4+,i)*$#, *. pri'*$# prop#r$7 of sai" protestant pursuant to a "ecision
pro%ulgate" on October +8, );<* by the Court of 5irst Instance of Nuea #ci/a!
The 6egal Diision of the Bureau of 6an"s ascertaine" that the free patent an" its correspon"ing
OCT (ere i-prop#rl7 *%, &r*+,+l#%$l7 i..+#, 0Recor"s, p!:?1
Upo% $0# ,#*$0 o& $0# (i&# o& Gr#/orio A/+%o7, Sr. $0# l*%, (*. .+54#)$ o& * ##, o&
E1$r*4+,i)i*l P*r$i$io% *-o%/ $0# 0#ir.. Corr#.po%,i%/ TCT. (#r# i..+#, 5+$ .+5.#@+#%$l7
)*%)#ll#, 57 r#*.o% o& $0# )o%)+rr#%$ .*l# $o Io*@+i% S*%/*5ol i% (0o.# &*'or * TCT (*.
i..+#,.
+ri%/ $0# &ollo(i%/ 7#*r. +p $o $0# &ili%/ o& $0# .+ppl#-#%$*l pro$#.$ i% 19GG, $0# o(%#r.0ip
o& $0# prop#r$7 (*. $r*%.&#rr#, 57 *%, 5#$(##% %+-#ro+. i%,i'i,+*l. -+l$ipl# $i-#.. TCT.
(#r# i..+#,.
Io*@+i% S*%/*5ol .ol, *% +%,i'i,#, por$io% o& $0r## 2>3 0#)$*r#. o& $0# prop#r$7 $o For$+%*$o
P*r* for an" in consi"eration of the su% of Three Thousan" 5ie Hun"re" Pesos 0,,@**!**1
T0# &ollo(i%/ ,*7, 0# .ol, $0# prop#r$7 $o !ir/i%i* P. Ii-#%#M!
T0# *,'#r.# )l*i- o& Fr*%)i.)* P#r#M, #$ *l. *%%o$*$#, *$ $0# 5*)? o& $0# OCT (*. )*%)#ll#,
57 $0# R#/i.$#r o& ##,. o& N+#'* E)i4*.
Virginia P! Hi%ene2 sol" the property n faor of spouses Blan"ino an" Hosefina -! Sala Cru2
O% No'#-5#r 2, 19G2, For$+%*$o P*r*, $0ro+/0 0i. *$$or%#79i%9&*)$ Glori* 8#r/o%i*,
-or$/*/#, $0# prop#r$7
T0# -or$/*/# (*. &or#)lo.#, *%, $0# prop#r$7 (*. .ol, *$ p+5li) *+)$io%. Thereafter, the
correspon"ing certificate of sale (as e'ecute" in faor of Perpetual 5inance an" Cre"it, Inc!
e %ortgage" (ith the Rural Ban. of 3apan! %ortgage (as li.e(ise foreclose" an" the properties
(ere sol" at public auction in faor of the sai" ban.!
Hoa=uin Sangabol sol" the property to #"uar"o R! Dee for an" in
I% 19GG, $0# 0#ir. o& R+p#r$o P#r#M 2ol,#.$ .o% o& E+.#5io3, %o( r#pr#.#%$#, 57 S*5i%* P.
H#r%*%,#M, &il#, * .+ppl#-#%$*l pro$#.$4
T0# 8+r#*+ o& L*%,. )o%,+)$#, *%#( *% i%'#.$i/*$io% *%, o)+l*r i%.p#)$io%
A!ERB IMPORTANT< T0# C0i#& o& $0# L#/*l i'i.io% r#)o--#%,#, $o $0# ir#)$or o& L*%,.
$0*$ )o+r$ *)$io% 5# i%.$i$+$#, &or $0# )*%)#ll*$io% o& Fr## *%, i$. )orr#.po%,i%/ Ori/i%*l
C#r$i&i)*$# o& Ti$l# i% $0# %*-# Gr#/orio A/+%o7, Sr., *. (#ll *. o$0#r .+5.#@+#%$ $r*%.&#r
)#r$i&i)*$#. o& $i$l# i..+#, $0#r#&ro- 5*.#, o% $0# &or#/oi%/ &i%,i%/. C
A!ERB IMPORTANT< R#p+5li) o& $0# P0ilippi%#., $0r+ $0# O&&i)# o& $0# Soli)i$or G#%#r*l, &il#,
$0# )o-pl*i%$
4
i% $0i. )*.# */*i%.$ .#'#r*l ,#&#%,*%$.. I$ (*. *% *)$io% &or )*%)#ll*$io% o&
&r## p*$#%$, ori/i%*l )#r$i&i)*$# o& $i$l# *%, ,#ri'*$i'# $r*%.&#r )#r$i&i)*$#. o& $i$l#C
RTC r+l#, i% &*'or o& $0# R#p+5li) *%, )*%)#ll#, $0# OCT *%, TCT..
T0#r#&ro-, $0# .po+.#. E,+*r,o ## *%, Ar)#li$* M*r@+#M9## *%, $0# R+r*l 8*%? o& G*p*%,
N+#'* E)i4* (ent to the Court of -ppeals
CA r#'#r.#, $0# RTC.
R#p+5li) (#%$ $o $0# SC +%,#r R45.
ISSUE< i, $0# CA #rr i% 0ol,i%/ $0*$ $0# p#$i$io%#r R#p+5li) i. %o$ $0# r#*l p*r$79i%9i%$#r#.$ i%
$0i. )*.#P
SC RULING< NO. CA (*. )orr#)$.
Basic it is in the la( of proce"ure that eery action %ust be prosecute" or "efen"e" in the na%e of
the real party9in9interest, %eaning Athe party (ho stan"s to be benefite" or in/ure" by the /u"g%ent
in the suit, or the party entitle" to the aails of the suitA,
?
a proce"ural rule reechoe" in a long line of
cases "eci"e" by this Court! 5or sure, not too long ago, in 7hi#side !nc. vs. Court of A##eals,
;
citing
earlier cases, (e (rote$
+++. Conse;uently the Re#ublic is not a real #arty in interest and it may not institute the
instant action. -or may it raise the defense of im#rescri#tibility the same being a##licable
only in cases $here the government is a #arty in interest. (nder 7ection . of Rule = of the
8CC< Rules of Civil 6rocedure >every action must be #rosecuted or defended in the name of
the real #arty in interest.> "o ;ualify a #erson to be a real #arty in interest in $hose name an
action must be #rosecuted he must a##ear to be the #resent real o$ner of the right sought
to enforced (6ioneer !nsurance v. CA 8<@ 7CRA //A 08CAC2). A real #arty in interest is the
#arty $ho stands to be benefited or in&ured by the &udgment in the suit or the #arty entitled
to the avails of the suit. And by real interest is meant a #resent substantial interest as
distinguished from a mere e+#ectancy or a future contingent subordinate or conse;uential
interest.
The ery co%plaint in this case, su#ra, file" by petitioner Republic before the trial court un%ista.ably
alleges that at the ti%e 5ree Patent No! ,)88@ an" its correspon"ing Original Certificate of (ere
i..+#, $o Gr#/orio A/+%o7, Sr!, Athe #ro#erty in ;uestion ('ots 8=?8 and 8=?.) +++ $as already
ad&udicated as private property of the heirs of 1usebio 6erez and :aleriano 1s#irituA, an" that at
that ti%e, Athe property in 'uestion as no longer a disposable public landA!
A!ERB IMPORTANT< Fi$0 $0# '#r7 *,-i..io%. 57 $0# p#$i$io%#r itself in its basic plea"ing that
6ots No! ),8) an" ),8+ *r# *lr#*,7 pri'*$# prop#r$i#. o& $0# 0#ir. o& E+.#5io P#r#M *%,
!*l#ri*%o E.piri$+, an" are, $0#r#&or#, D%o lo%/#r ,i.po.*5l# p+5li) l*%,D o'#r (0i)0 $0# $0#%
8+r#*+ o& L*%,., %o( L*%,. M*%*/#-#%$ 8+r#*+, D%o lo%/#r 0*, *%7 4+ri.,i)$io% *%,
)o%$rolA, (e are si%ply at a loss to un"erstan" ho( petitioner Republic can still profess to be the
real party9in9interest in this case, an" insists that the "ispute" properties are still part of the public
"o%ain! I& #'#r, $0# r#*l p*r$79i%9i%$#r#.$ )o+l, 5# %o%# o$0#r $0*% $0# 0#ir. o& E+.#5io P#r#M
*%, !*l#ri*%o E.piri$+, 5+$ )#r$*i%l7 %o$ $0# p#$i$io%#r.
T0#%, $oo, i$ i. .$ri?i%/ $o %o$# $0*$ #'#% *. $0# )o-pl*i%$ i. 5*.i)*ll7 o%# &or r#'#r.io% o&
pri'*$# prop#r$7 $o $0# -*.. o& p+5li) ,o-*i%, p#$i$io%#r ,i, %o$ i-pl#*, #i$0#r $0# 0#ir. o&
E+.#5io P#r#M or $0*$ o& !*l#ri*%o E.piri$+. >ithout "oubt, if our "ecision hereon (ere to be in
faor of petitioner, the real beneficiary thereof is not the State! -n" because, as no less a"%itte" by
the petitioner, the lan"s sub/ect of this case are no longer part of the public "o%ain, the nullification
of -gunoy7s 5ree Patent P9,)88@* an" OCT No! P98@++ (oul" not result in the reersion of the
lan"s sub/ect thereof to the %ass of public lan"! -n" the goern%ent, not being the real party9in9
interest, is (ithout personality to institute reersion procee"ings! So it is that in an earlier case,
)*
(e
ha" an occasion to say$
T0#r# i. %o -#ri$ i% p#$i$io%#r.J )o%$#%$io% $0*$ o%l7 $0# S$*$# -*7 5ri%/ *% *)$io% &or
r#)o%'#7*%)# o& $0# lo$. i% ,i.p+$#. To r#i$#r*$#, Lo$ 2>44 i. * pri'*$# prop#r$7 i% op#%,
)o%$i%+o+., #1)l+.i'# *%, %o$orio+. po..#..io% o& $0# S*%$i*/o &*-il7. T0# %+lli&i)*$io% o&
i$. &r## p*$#%$ *%, $i$l# (o+l, %o$ $0#r#&or# r#.+l$ i% i$. r#'#r.io% $o $0# p+5li) ,o-*i%.
H#%)#, $0# S$*$#, r#pr#.#%$#, 57 $0# Soli)i$or G#%#r*l, i. %o$ $0# r#*l p*r$7 i% i%$#r#.$.C
E#Fen on the supposition that the sale (as oi", the general rule that the "irect result of a preious
illegal contract cannot be ali" 0on the theory that the spring cannot rise higher than its source1
cannot apply here for >e are confronte" (ith the functionings of the Torrens Syste% of Registration!
The "octrine to follo( is si%ple enough$ a frau"ulent or forge" "ocu%ent of sale %ay beco%e the
ROOT of a ali" title if the certificate of title has alrea"y been transferre" fro% the na%e of the true
o(ner to the na%e of the forger or the na%e in"icate" by the forger!
It is een (orse in this case because here, there is no forger to spea. of! The re%ar. of 6an"
Inspector Hose &en"igoria about the aban"on%ent by #usebio Pere2 an" Valenciano #spiritu
cannot, by itself, be frau"ulent! -n", for all (e .no(, that re%ar. %ay een turn out to be the truth!
>hat petitioner perceies as frau" %ay be nothing %ore than the "ifferences of professional
opinions bet(een 6an" Inspector Hose &en"igoria an" 3eo"etic #ngineer &elencio &angahas! But
regar"less of (ho bet(een the t(o is correct, the har" reality is that the properties in =uestion are no
longer floating ob/ects on a s#ring that cannot rise higher than its source, as they are no( ery %uch
ashore an" fir%ly stan"ing on the high soli" groun" of the Torrens syste% of lan" registration!8a$#hi8.nNt
FHEREFORE, the assaile" "ecision of the Court of -ppeals is hereby -55IR&#D an" this petition
D#NI#D!
SO ORD#R#D!
R#p+5li) o& $0# P0ilippi%#.
Supre%e Court
&anila
THIR I!ISION


IUANA COMPLEO I HOMEOFNERS
ASSOCIATION, INC Petitioners,
9 ersus 9
FIL9ESTATE LAN,
INC., Respon"ents!

G.R. No. 1522;2



&arch @, +*)+
C 999999999999999999999999999999999999999999999999999999999999999999999999999999999999 C
ECISION

MENO"A, J.<

Before the Court are $(o 223 )o%.oli,*$#, p#$i$io%. assailing the C- "ecision (hich reerse" the
RTC "ecision!

FACTS<
On Hanuary +*, );;;, Huana Co%ple' I Ho%eo(ners -ssociation, Inc! (OCHA), together (ith
in"ii"ual resi"ents of Huana Co%ple' I an" other neighboring sub"iisions (collectively referred as
OCHA et. al.%. i%.$i$+$#, * )o-pl*i%$ &or ,*-*/#., in its o(n behalf an" as a class suit
representing the regular co%%uters an" %otorists of Huana Co%ple' I an" neighboring sub"iisions
(0o (#r# ,#pri'#, o& $0# +.# o& L* P*M Ro*,, against 5il9#state 6an", Inc! (*il51state) , 5il9estate
#cocentru% Corporation(*11C), 6a Pa2 Housing T Deelop%ent Corporation ('a 6az), an" >arbir"
Security -gency an" their respectie officers

T0# )o-pl*i%$ *ll#/#, $0*$ ICHA, #$ *l. (#r# r#/+l*r )o--+$#r. *%, -o$ori.$. (0o
)o%.$*%$l7 $r*'#ll#, $o(*r,. $0# ,ir#)$io% o& M*%il* *%, C*l*-5*= $0*$ $0#7 +.#, $0# #%$r7
*%, #1i$ $oll /*$#. o& So+$0 L+Mo% E1pr#..(*7 $S,4D% 57 p*..i%/ $0ro+/0 ri/0$9o&9(*7 p+5li)
ro*, ?%o(% *. L* P*M Ro*,= that they ha" been using 6a Pa2 Roa" for %ore than ten 0)*1 yearsD
that in -ugust );;?, Fil9#.$*$# #1)*'*$#,, 5ro?# *%, ,#li5#r*$#l7 r+i%#, L* P*M Ro*, that le" to
S6#C so HCH-, et al! (oul" not be able to pass through the sai" roa"D that 6a Pa2 Roa" (as
restore" by the resi"ents to %a.e it passable but 5il9estate e'caate" the roa" againD that HCH-
reporte" the %atter to the &unicipal 3oern%ent an" the Office of the &unicipal #ngineer but the
latter faile" to repair the roa" to %a.e it passable an" safe to %otorists an" pe"estriansD that the act
of 5il9estate in e'caating 6a Pa2 Roa" cause" "a%age, pre/u"ice, inconenience, annoyance, an"
loss of precious hours to the%, to the co%%uters an" %otorists because traffic (as re9route" to
narro( streets that cause" terrible traffic congestion an" ha2ar"D an" that its per%anent closure
(oul" not only pre/u"ice their right to free an" unha%pere" use of the property but (oul" also cause
great "a%age an" irreparable in/ury!


A!ERB IMPORTANT< Fil9E.$*$#, #$ *l. &il#, * -o$io% $o ,i.-i.. arguing that the co%plaint faile" to
state a cause of action *%, $0*$ i$ (*. i-prop#rl7 &il#, *. * )l*.. .+i$! On &arch @, );;;, HCH-,
et al! file" their co%%ent
E?F
on the %otion to "is%iss to (hich respon"ents file" a reply!
E;F


RTC i..+#, *% Or,#r

/r*%$i%/ $0# Fri$ o& Pr#li-i%*r7 I%4+%)$io% *%, r#@+ir#, ICHA, #$ *l. $o
po.$ * 5o%,.


RTC then issue" Or"er, ,#%7i%/ 5o$0 $0# -o$io% $o ,i.-i.. *%, $0# -o$io% &or r#)o%.i,#r*$io%
&il#, 57 Fil9E.$*$#, #$ *l.

Fil9E.$*$#, #$ *l. &il#, * p#$i$io% &or )#r$ior*ri *%, pro0i5i$io% 5#&or# $0# CA to annul 0)1 the
Or"er "ate" &arch ,, );;; an" 0+1 the O%nibus Or"er "ate" Hune )<, +***! They conten"e" that
the co%plaint faile" to state a cause of action an" that it (as i%properly file" as a class suit! >ith
regar" to the issuance of the >PI, the "efen"ants aerre" that HCH-, et al! faile" to sho( that they
ha" a clear an" un%ista.able right to the use of 6a Pa2 Roa"D an" further clai%e" that 6a Pa2 Roa"
(as a torrens registere" priate roa" an" there (as neither a oluntary nor legal ease%ent
constitute" oer it!
E),F

CA p*r$i*ll7 /r*%$#, $0# p#$i$io% *%%+lli%/ $0# (ri$ o& pr#li-i%*r7 i%4+%)$io% 5+$ $0# por$io% o&
$0# O-%i5+. Or,#r ,*$#, I+%# 1H, 2000,#%7i%/ $0# -o$io% $o ,i.-i.. i. +p0#l,.


T0# CA r+l#, $0*$ $0# )o-pl*i%$ .+&&i)i#%$l7 .$*$#, * )*+.# o& *)$io% (0#% ICHA, #$ *l.
*ll#/#, i% $0#ir )o-pl*i%$ $0*$ $0#7 0*, 5##% +.i%/ L* P*M Ro*, &or -or# $0*% $#% 2103 7#*r.
*%, $0*$ $0#ir ri/0$ (*. 'iol*$#, (0#% Fil9E.$*$# )lo.#, *%, #1)*'*$#, $0# ro*,.
A!ERB IMPORTANT< CA .+.$*i%#, $0# RTC r+li%/ $0*$ $0# )o-pl*i%$ (*. prop#rl7 &il#, *. *
)l*.. .+i$ *. i$ (*. .0o(% $0*$ $0# )*.# (*. o& )o--o% i%$#r#.$ *%, $0*$ $0# i%,i'i,+*l.
sought to be represente" (ere so nu%erous that it (as i%practical to inclu"e all of the% as parties!
The C-, ho(eer, annulle" the >PI for failure of HCH-, et al! to proe their clear an" present right
oer 6a Pa2 Roa"! The C- or"ere" the re%an" of the case to the RTC for a full9blo(n trial on the
%erits!C

R45 $o $0# SC.

ISSUES<
0)1 (hether or not the co%plaint states a cause of actionD
223 (0#$0#r $0# )o-pl*i%$ 0*. 5##% prop#rl7 &il#, *. * )l*.. .+i$= an"
0,1 (hether or not a >PI is (arrante"!
SC RULING<
13 BES. I% $0# pr#.#%$ )*.#, $0# Co+r$ &i%,. $0# *ll#/*$io%. i% $0# )o-pl*i%$ .+&&i)i#%$ $o
#.$*5li.0 * )*+.# o& *)$io%. *irst HCH-, et al!7s aer%ents in the co%plaint sho( a "e%an"able
right oer 6a Pa2 Roa"! These are$ 0)1 their right to use the roa" on the basis of their allegation that
they ha" been using the roa" for %ore than )* yearsD an" 0+1 an ease%ent of a right of (ay has
been constitute" oer the sai" roa"s! There is no other roa" as (i"e as 6a Pa2 Roa" e'isting in the
icinity an" it is the shortest, conenient an" safe route to(ar"s S6#C Halang that the co%%uters
an" %otorists %ay use! 7econd, there is an allege" iolation of such right co%%itte" by 5il9#state, et
al! (hen they e'caate" the roa" an" preente" the co%%uters an" %otorists fro% using the
sa%e! "hird HCH-, et al! conse=uently suffere" in/ury an" that a ali" /u"g%ent coul" hae been
ren"ere" in accor"ance (ith the relief sought therein!

23 BES. Cl*.. .+i$ i. PROPER. >ith respect to the issue that the case (as i%properly institute" as
a class suit, the Court fin"s the opposition (ithout %erit!
Section )+, Rule , of the Rules of Court "efines a class suit, as follo(s$
Sec! )+! Class suit! R >hen the sub/ect %atter of the controersy is one of co%%on or general
interest to %any persons so nu%erous that it is i%practicable to /oin all as parties, a nu%ber of the%
(hich the court fin"s to be sufficiently nu%erous an" representatie as to fully protect the interests of
all concerne" %ay sue or "efen" for the benefit of all! -ny party in interest shall hae the right to
interene to protect his in"ii"ual interest!

T0# %#)#..*r7 #l#-#%$. &or $0# -*i%$#%*%)# o& * )l*.. .+i$ *r#<
13 $0# .+54#)$ -*$$#r o& )o%$ro'#r.7 i. o%# o& )o--o% or /#%#r*l i%$#r#.$ $o -*%7 p#r.o%.=
23 $0# p*r$i#. *&&#)$#, *r# .o %+-#ro+. $0*$ i$ i. i-pr*)$i)*5l# $o 5ri%/ $0#- *ll $o )o+r$= *%,
>3 $0# p*r$i#. 5ri%/i%/ $0# )l*.. .+i$ *r# .+&&i)i#%$l7 %+-#ro+. or r#pr#.#%$*$i'# o& $0# )l*..
*%, )*% &+ll7 pro$#)$ $0# i%$#r#.$. o& *ll )o%)#r%#,.
A24C


A!ERB IMPORTANT< I% $0i. )*.#, $0# .+i$ i. )l#*rl7 o%# $0*$ 5#%#&i$. *ll )o--+$#r. *%,
-o$ori.$. (0o +.# L* P*M Ro*,. -s succinctly state" by the C-$

T0# .+54#)$ -*$$#r o& $0# i%.$*%$ )*.#, i.#., $0# )lo.+r# *%, #1)*'*$io% o& $0# L* P*M Ro*,, i.
i%i$i*ll7 .0o(% $o 5# o& )o--o% or /#%#r*l i%$#r#.$ $o -*%7 p#r.o%.! The recor"s reeal that
nu%erous in"ii"uals hae file" %anifestations (ith the lo(er court, coneying their intention to /oin
priate respon"ents in the suit an" clai%ing that they are si%ilarly situate" (ith priate respon"ents
for they (ere also pre/u"ice" by the acts of petitioners in closing an" e'caating the 6a Pa2 Roa"!
&oreoer, the in"ii"uals sought to be represente" by priate respon"ents in the suit are so
nu%erous that it is i%practicable to /oin the% all as parties an" be na%e" in"ii"ually as plaintiffs in
the co%plaint! These in"ii"uals clai% to be resi"ents of arious barangays in BiUan, 6aguna an"
other barangays in San Pe"ro, 6aguna!

-nent the issue on the propriety of the >PI, Section ,, Rule @? of the Rules of Court lays "o(n the
rules for the issuance thereof! Thus$

0a1 That the applicant is entitle" to the relief "e%an"e", an" the (hole or part of such relief
consists in restraining the co%%ission or continuance of the acts co%plaine" of, or in the
perfor%ance of an act or acts, either for a li%ite" perio" or perpetuallyD

0b1 That the co%%ission, continuance or non9perfor%ance of the act or acts co%plaine" of
"uring the litigation (oul" probably (or. in/ustice to the applicantD or


0c1 That a party, court, or agency or a person is "oing, threatening, or atte%pting to "o, or is
procuring or suffering to be "one, so%e act or acts probably in iolation of the rights of the applicant
respecting the sub/ect of the action or procee"ing, an" ten"ing to ren"er the /u"g%ent ineffectual!

- (rit of preli%inary in/unction is aailable to preent a threatene" or continuous irre%e"iable in/ury
to parties before their clai%s can be thoroughly stu"ie" an" a"/u"icate"!
E+@F
The re=uisites for its
issuance are$ 0)1 the e'istence of a clear an" un%ista.able right that %ust be protecte"D an" 0+1 an
urgent an" para%ount necessity for the (rit to preent serious "a%age!
E+<F
5or the (rit to issue, the
right sought to be protecte" %ust be a present right, a legal right (hich %ust be sho(n to be clear
an" positie!
E+:F
This %eans that the persons applying for the (rit %ust sho( that they hae an
ostensible right to the final relief praye" for in their co%plaint!
E+?F

In the case at bench, HCH-, et al! faile" to establish a #rima facie proof of iolation of their right to
/ustify the issuance of a >PI! Their right to the use of 6a Pa2 Roa" is "isputable since they hae no
clear legal right therein! -s correctly rule" by the C-$

Here, contrary to the ruling of respon"ent Hu"ge, priate respon"ents faile" to proe as yet that they
hae a clear an" un%ista.able right oer the 6a Pa2 Roa" R (hich (as sought to be protecte" by
the in/unctie (rit! They %erely anchor their purporte" right oer the 6a Pa2 Roa" on the bare
allegation that they hae been using the sa%e as public roa" right9of9(ay for %ore than ten years! -
%ere allegation "oes not %eet the stan"ar" of proof that (oul" (arrant the issuance of the in/unctie
(rit! 5ailure to establish the e'istence of a clear right (hich shoul" be /u"icially protecte" through
the (rit of in/unction is a sufficient groun" for "enying the in/unction!

Conse=uently, the case shoul" be further hear" by the RTC so that the parties can fully proe their
respectie positions on the issues!
Due process consi"erations "ictate that the assaile" in/unctie (rit is not a /u"g%ent on the %erits
but %erely an or"er for the grant of a proisional an" ancillary re%e"y to presere the status =uo
until the %erits of the case can be hear"! The hearing on the application for issuance of a (rit of
preli%inary in/unction is separate an" "istinct fro% the trial on the %erits of the %ain case!
E+;F
The
ei"ence sub%itte" "uring the hearing of the inci"ent is not conclusie or co%plete for only a
Asa%plingA is nee"e" to gie the trial court an i"ea of the /ustification for the preli%inary in/unction
pen"ing the "ecision of the case on the %erits!
E,*F
There are ital facts that hae yet to be presente"
"uring the trial (hich %ay not be obtaine" or presente" "uring the hearing on the application for the
in/unctie (rit!
E,)F
&oreoer, the =uantu% of ei"ence re=uire" for one is "ifferent fro% that for the
other!
E,+F
FHEREFORE, the petitions are ENIE! -ccor"ingly, the Huly ,), +**) Decision an" 5ebruary +),
+**+ Resolution of the Court of -ppeals in C-93!R! SP No! <*@8, are AFFIRME!

Republic of the Philippines
SUPREME COURT
Baguio City
#N B-NC
G.R. No. 1HHH20 April 20, 2010
ATTB. SBL!IA 8ANA, #$ *l.,Petitioners,
s!
EUARO R. ERMITA, i% 0i. )*p*)i$7 *. E1#)+$i'# S#)r#$*r7, T0# ir#)$or G#%#r*l o& $0#
P0ilippi%# I%&or-*$io% A/#%)7 *%, T0# N*$io%*l Tr#*.+r#r, Respon"ents!
D # C I S I O N
LEONARO9E CASTRO, J.:
Ori/i%*l A)$io% &il#, (i$0 $0# SC &or P#$i$io% &or 8ertiorari *%, pro0i5i$io% )0*ll#%/i%/ $0#
)o%.$i$+$io%*li$7 o& E1#)+$i'# Or,#r No. >;G i..+#, 57 Pr#.i,#%$ Glori* M*)*p*/*l Arro7o
2Pr#.i,#%$ Arro7o3. Petitioners characteri2e their action as * )l*.. .+i$ file" on their o(n behalf
an" on behalf of all their co9e%ployees at the National Printing Office 0NPO1!
The NPO (as for%e" on Huly +@, );?:, "uring the ter% of for%er Presi"ent Cora2on C! -=uino
0Presi"ent -=uino1, by irtue of #'ecutie Or"er No! +?@
)
(hich proi"e", a%ong others, the
creation of the NPO fro% the %erger of the 3oern%ent Printing Office an" the releant printing
units of the Philippine Infor%ation -gency 0PI-1! Section < of #'ecutie Or"er No! +?@ rea"s$
S#CTION <! Creation of the National Printing Office! R There is hereby create" a National Printing
Office out of the %erger of the 3oern%ent Printing Office an" the releant printing units of the
Philippine Infor%ation -gency! The Office shall hae e'clusie printing /uris"iction oer the follo(ing$
*. Pri%$i%/, 5i%,i%/ *%, ,i.$ri5+$io% o& *ll .$*%,*r, *%, *))o+%$*5l# &or-. o& %*$io%*l,
pro'i%)i*l, )i$7 *%, -+%i)ip*l /o'#r%-#%$., i%)l+,i%/ /o'#r%-#%$ )orpor*$io%.=
5. Pri%$i%/ o& o&&i)i*l. 5*llo$.=
). Pri%$i%/ o& p+5li) ,o)+-#%$. .+)0 *. $0# O&&i)i*l G*M#$$#, G#%#r*l Appropri*$io%.
A)$, P0ilippi%# R#por$., *%, ,#'#lop-#%$ i%&or-*$io% -*$#ri*l. o& $0# P0ilippi%#
I%&or-*$io% A/#%)7.
The Office %ay also accept other goern%ent printing /obs, inclu"ing goern%ent publications, asi"e
fro% those enu%erate" aboe, but not in an e'clusie basis!
The "etails of the organi2ation, po(ers, functions, authorities, an" relate" %anage%ent aspects of
the Office shall be proi"e" in the i%ple%enting "etails (hich shall be prepare" an" pro%ulgate" in
accor"ance (ith Section II of this #'ecutie Or"er!
The Office shall be attache" to the Philippine Infor%ation -gency!
A!ERB IMPORTANT< Presi"ent -rroyo issue" the herein assaile" #'ecutie Or"er No! ,:?,
a%en"ing Section < of #'ecutie Or"er No! +?@ by, inter alia, r#-o'i%/ $0# #1)l+.i'# 4+ri.,i)$io%
o& $0# NPO o'#r $0# pri%$i%/ .#r'i)#. r#@+ir#-#%$. o& /o'#r%-#%$ */#%)i#. *%,
i%.$r+-#%$*li$i#..C The pertinent portions of #'ecutie Or"er No! ,:?, in turn, proi"e$
S#CTION )! The NPO shall continue to proi"e printing serices to goern%ent agencies an"
instru%entalities as %an"ate" by la(! Ho(#'#r, i$ .0*ll %o lo%/#r #%4o7 #1)l+.i'# 4+ri.,i)$io%
o'#r $0# pri%$i%/ .#r'i)#. r#@+ir#-#%$. o& $0# /o'#r%-#%$ oer stan"ar" an" accountable
for%s! It shall hae to co%pete (ith the priate sector, e'cept in the printing of election
paraphernalia (hich coul" be share" (ith the Bang.o Sentral ng Pilipinas, upon the "iscretion of the
Co%%ission on #lections consistent (ith the proisions of the #lection Co"e of );?:!
S#CTION +! Go'#r%-#%$ */#%)i#.6i%.$r+-#%$*li$i#. -*7 .o+r)# pri%$i%/ .#r'i)#. o+$.i,#
NPO proi"e" that$
+!) The printing serices to be proi"e" by the priate sector is superior in =uality an" at a
lo(er cost than (hat is offere" by the NPOD an"
+!+ The priate printing proi"er is fle'ible in ter%s of %eeting the target co%pletion ti%e of
the goern%ent agency!
Pursuant to #'ecutie Or"er No! ,:?, goern%ent agencies an" instru%entalities are allo(e" to
source their printing serices fro% the priate sector through co%petitie bi""ing, sub/ect to the
con"ition that the serices offere" by the priate supplier 5# o& .+p#rior @+*li$7 *%, lo(#r i% )o.$
co%pare" to (hat (as offere" by the NPO! #'ecutie Or"er No! ,:? also li%ite" NPO7s
appropriation in the 3eneral -ppropriations -ct to its inco%e!
A!ERB IMPORTANT< P#r)#i'i%/ E1#)+$i'# Or,#r No. >;G *. * $0r#*$ $o $0#ir .#)+ri$7 o& $#%+r#
*. #-plo7##. o& $0# NPO, p#$i$io%#r. %o( )0*ll#%/# i$. )o%.$i$+$io%*li$7, conten"ing that$ 0)1 it
is beyon" the e'ecutie po(ers of Presi"ent -rroyo to a%en" or repeal #'ecutie Or"er No! +?@
issue" by for%er Presi"ent -=uino (hen the latter still e'ercise" legislatie po(ersD an" 0+1
#'ecutie Or"er No! ,:? iolates petitioners7 security of tenure, because it paes the (ay for the
gra"ual abolition of the NPO!
ISSUE< I. $0i. $0# prop#r .+54#)$ o& * )l*.. .+i$P
SC RULING< No. T0# SC ,i.-i..#, $0# p#$i$io%.
Before procee"ing to resole the substantie issues, the Court %ust first "ele into a proce"ural
%atter! Since petitioners institute" this case as a class suit, the Court, thus, %ust first "eter%ine if
the petition in"ee" =ualifies as one!
Section )+, Rule , of the Rules of Court "efines a class suit!Fro- $0# &or#/oi%/ ,#&i%i$io%, $0#
r#@+i.i$#. o& * )l*.. .+i$ *r#< 1
3 $0# .+54#)$ -*$$#r o& )o%$ro'#r.7 i. o%# o& )o--o% or /#%#r*l i%$#r#.$ $o -*%7 p#r.o%.=
23 $0# p*r$i#. *&&#)$#, *r# .o %+-#ro+. $0*$ i$ i. i-pr*)$i)*5l# $o 5ri%/ $0#- *ll $o )o+r$= *%,
>3 $0# p*r$i#. 5ri%/i%/ $0# )l*.. .+i$ *r# .+&&i)i#%$l7 %+-#ro+. or r#pr#.#%$*$i'# o& $0# )l*..
*%, )*% &+ll7 pro$#)$ $0# i%$#r#.$. o& *ll )o%)#r%#,.
In &athay ! The Consoli"ate" Ban. an" Trust Co%pany,
,
the Court hel" that$
A!ERB IMPORTANT< H#r#, $0# p#$i$io% &*il#, $o .$*$# $0# %+-5#r o& NPO #-plo7##. (0o
(o+l, 5# *&&#)$#, 57 $0# *..*il#, E1#)+$i'# Or,#r *%, (0o (#r# *ll#/#,l7 r#pr#.#%$#, 57
p#$i$io%#r.. It (as the Solicitor 3eneral, as counsel for respon"ents, (ho pointe" out that there
(ere about @8; e%ployees in the NPO!
8
The <: petitioners un"eniably co%prise" a s%all fraction of
the NPO e%ployees (ho% they clai%e" to represent! S+5.#@+#%$l7, >2 o& $0# ori/i%*l p#$i$io%#r.
#1#)+$#, *% A&&i,*'i$ o& #.i.$*%)#, (0il# o%# .i/%#, * l#$$#r ,#%7i%/ #'#r .i/%i%/ $0#
p#$i$io%,
5
o.$#%.i5l7 r#,+)i%/ $0# %+-5#r o& p#$i$io%#r. $o >4. >e note that counsel for the
petitioners challenge" the ali"ity of the "esistance or (ith"ra(al of so%e of the petitioners an"
insinuate" that such "esistance (as "ue to pressure fro% people Aclose to the seat of po(er!A
<
Still,
een if (e (ere to "isregar" the affi"ait of "esistance file" by so%e of the petitioners, it is highly
"oubtful that a sufficient, representatie nu%ber of NPO e%ployees hae institute" this purporte"
class suit! - perusal of the petition itself (oul" sho( that of the <: petitioners (ho signe" the
Verification4Certification of Non95oru% Shopping, only +* petitioners (ere in fact %entione" in the
/urat as haing "uly subscribe" the petition before the notary public! I% o$0#r (or,., o%l7 20
p#$i$io%#r. #&&#)$i'#l7 i%.$i$+$#, $0# pr#.#%$ )*.#.
I%,##,, i% M!RS P+5li)*$io%., I%). '. I.l*-i) *:(*0 Co+%)il o& $0# P0ilippi%#., I%).,
;
(#
o5.#r'#, $0*$ *% #l#-#%$ o& * )l*.. .+i$ or r#pr#.#%$*$i'# .+i$ i. $0# *,#@+*)7 o&
r#pr#.#%$*$io%.
I% ,#$#r-i%i%/ $0# @+#.$io% o& &*ir *%, *,#@+*$# r#pr#.#%$*$io% o& -#-5#r. o& * )l*.., $0#
)o+r$ -+.$ )o%.i,#r
2*3 (0#$0#r $0# i%$#r#.$ o& $0# %*-#, p*r$7 i. )o#1$#%.i'# (i$0 $0# i%$#r#.$ o& $0# o$0#r
-#-5#r. o& $0# )l*..=
253 $0# propor$io% o& $0o.# -*,# * p*r$7, *. i$ .o 5#*r., $o $0# $o$*l -#-5#r.0ip o& $0# )l*..=
*%,
2)3 *%7 o$0#r &*)$or 5#*ri%/ o% $0# *5ili$7 o& $0# %*-#, p*r$7 $o .p#*? &or $0# r#.$ o& $0# )l*...
Preiously, (e hel" in IbaUes ! Ro%an Catholic Church
?
that (here the interests of the plaintiffs an"
the other %e%bers of the class they see. to represent are "ia%etrically oppose", the class suit (ill
not prosper!
It is (orth %entioning that a &anifestation of Desistance,
;
to (hich the preiously %entione" -ffi"ait
of Desistance
)*
(as attache", (as file" by the Presi"ent of the National Printing Office >or.ers
-ssociation 0N-PO>-1! The sai" %anifestation e'presse" N-PO>-7s opposition to the filing of the
instant petition in any court! E'#% i& (# $*?# i%$o *))o+%$ $0# )o%$#%$io% o& p#$i$io%#r.: )o+%.#l
$0*$ $0# NAPOFA Pr#.i,#%$ 0*, %o l#/*l .$*%,i%/ $o &il# .+)0 -*%i&#.$*$io%, $0# .*i,
pl#*,i%/ i. * )l#*r i%,i)*$io% $0*$ $0#r# i. * ,i'#r/#%)# o& opi%io%. *%, 'i#(. *-o%/ $0#
-#-5#r. o& $0# )l*.. .o+/0$ $o 5# r#pr#.#%$#,, *%, %o$ *ll *r# i% &*'or o& &ili%/ $0# pr#.#%$
.+i$. There is here an apparent conflict bet(een petitioners7 interests an" those of the persons
(ho% they clai% to represent! Since it cannot be sai" that petitioners sufficiently represent the
interests of the entire class, the instant case cannot be properly treate" as a class suit!
Republic of the Philippines
SUPREME COURT
&anila
THIR I!ISION
G.R. No. 1H042H I*%+*r7 >1, 200G
CAPITOLINA !I!ERO NAPERE, petitioner,
s!
AMANO 8AR8ARONA *%, GER!ACIA MONIAS 8AR8ARONA, respon"ents!
R E S O L U T I O N
NACHURA, J.<
Petitioner Capitolina Viero Napere files this R8@ petition to assail the C- Decision(hich uphel" the
ali"ity of the RTC "ecision "espite failure to for%ally or"er the substitution of the heirs of the
"ecease" "efen"ant, petitioner7s husban"!
FACTS<
Respon"ent -%an"o Barbarona is the registere" o(ner of 6ot No! ,)::, situate" in )arangay San
Sotero 0for%erly Ta%bis1, Haier, 6eyte an" coere" by Original Certificate of Title 0OCT1 No! P9
:,@*! 6ot No! ,):<, coere" by OCT No! )))* in the na%e of -nacleto Napere, a"/oins sai" lot on
the northeastern si"e! -fter -nacleto "ie", his son, Huan Napere, an" the latter7s (ife, herein
petitioner, plante" coconut trees on certain portions of the property (ith the consent of his co9heirs!
In their co%plaint, respon"ents Barbarona allege" that in -pril );?*, the spouses Napere, their
relaties an" hire" laborers, 57 -#*%. o& .$#*l$0 *%, .$r*$#/7, #%)ro*)0#, +po% *%, o))+pi#,
$0# %or$0#*.$#r% por$io% o& $0# Lo$D $0*$ $0# N*p#r#. 0*r'#.$#, $0# )o)o%+$ &r+i$. $0#r#o%,
appropriate" the procee"s thereof, an", "espite "e%an"s, refuse" to turn oer possession of the
areaD that in -pril );;+, a relocation surey (as con"ucte" (hich confir%e" that the respon"ents7
property (as encroache" upon by the NaperesD that on the basis of the relocation surey, the
respon"ents too. possession of this encroache" portion of the lot an" hareste" the fruits thereon
fro% -pril );;, to Dece%ber );;,D but that in Hanuary );;8, the Naperes repeate" their acts by
encroaching again on the respon"ents7 property, haresting the coconuts an" appropriating the
procee"s thereof, an" refusing to acate the property on "e%an"!
F0il# $0# )*.# (*. p#%,i%/, I+*% N*p#r# ,i#,. T0#ir )o+%.#l i%&or-#, $0# )o+r$ o& I+*%
N*p#r#:. ,#*$0, *%, .+5-i$$#, $0# %*-#. *%, *,,r#..#. o& N*p#r#:. 0#ir..
-t the pre9trial, the RTC note" that the Naperes (ere not contesting the respon"ents7 right of
possession oer the "ispute" portion of the property but (ere "e%an"ing the rights of a planter in
goo" faith un"er -rticles 88@ an" 8@@ of the Ciil Co"e!
RTC r#%,#r#, * #)i.io% */*i%.$ $0# #.$*$# o& I+*% N*p#r#, thus$
>H#R#5OR#, this Court fin"s in faor of the plaintiff an" against the "efen"ant, hereby
"eclaring the follo(ing$
a1 The estate of Huan Napere is liable to pay the a%ount of ON# HBNDR#D S#V#NTP9
NIN# THOBS-ND T>O HBNDR#D 0P):;,+**!**1 P#SOS in actual "a%agesD
b1 The estate of Huan Napere shall be liable to pay 5IV# THOBS-ND 0P@,***!**1 P#SOS in
litigation e'penses, an" the
c1 CostEsF of suit!
SO ORD#R#D!
+
P#$i$io%#r *pp#*l#, $0# )*.# $o $0# CA, *r/+i%/, i%$#r *li*, $0*$ $0# 4+,/-#%$ o& $0# $ri*l )o+r$
(*. 'oi, &or l*)? o& 4+ri.,i)$io% o'#r $0# 0#ir. (0o (#r# %o$ or,#r#, .+5.$i$+$#, *. p*r$79
,#&#%,*%$. &or $0# ,#)#*.#,.
CA *&&ir-#, $0# RTC #)i.io%.
,
The appellate court hel" that failure to substitute the heirs for the
"ecease" "efen"ant (ill not inali"ate the procee"ings an" the /u"g%ent in a case (hich suries
the "eath of such party!
N*p#r#.#. &il#, R45 p#$i$io% &or r#'i#( (i$0 $0# SC.
ISSUE< F*. $0# RTC ,#)i.io% 'oi, &or l*)? o& 4+ri.,i)$io% o& $0# 0#ir. o& I+*% N*p#r#P
Petitioner alleges that the trial court "i" not ac=uire /uris"iction oer the persons of the heirs because
of its failure to or"er their substitution pursuant to Section ):,
8
Rule , of the Rule of CourtD hence,
the procee"ings con"ucte" an" the "ecision ren"ere" by the trial court are null an" oi"!
SC RULING< T0# p#$i$io% -+.$ &*il.
>hen a party to a pen"ing case "ies an" the clai% is not e'tinguishe" by such "eath, the Rules
re=uire the substitution of the "ecease" party by his legal representatie or heirs! In such case,
counsel is oblige" to infor% the court of the "eath of his client an" gie the na%e an" a""ress of the
latter7s legal representatie!
The co%plaint for recoery of possession, =uieting of title an" "a%ages is an action that suries the
"eath of the "efen"ant! Notably, the counsel of Huan Napere co%plie" (ith his "uty to infor% the
court of his client7s "eath an" the na%es an" a""resses of the heirs! T0# $ri*l )o+r$, 0o(#'#r,
&*il#, $o or,#r $0# .+5.$i$+$io% o& $0# 0#ir.. No%#$0#l#.., ,#.pi$# $0i. o'#r.i/0$, (# 0ol, $0*$
$0# pro)##,i%/. )o%,+)$#, *%, $0# 4+,/-#%$ r#%,#r#, 57 $0# $ri*l )o+r$ *r# '*li,.
A!ERB IMPORTANT< The Court has repeate"ly "eclare" that failure of the counsel to co%ply (ith
his "uty to infor% the court of the "eath of his client, such that no substitution is effecte", (ill %o$
i%'*li,*$# $0# pro)##,i%/. *%, $0# 4+,/-#%$ r#%,#r#, $0#r#o% i& $0# *)$io% .+r'i'#. $0#
,#*$0 o& .+)0 p*r$7!
@
T0# $ri*l )o+r$:. 4+ri.,i)$io% o'#r $0# )*.# .+5.i.$. ,#.pi$# $0# ,#*$0 o&
$0# p*r$7.C
A!ERB IMPORANT< M#r# &*il+r# $o .+5.$i$+$# * ,#)#*.#, p*r$7 i. %o$ .+&&i)i#%$ /ro+%, $o
%+lli&7 * $ri*l )o+r$:. ,#)i.io%. T0# p*r$7 *ll#/i%/ %+lli$7 -+.$ pro'# $0*$ $0#r# (*. *%
+%,#%i*5l# 'iol*$io% o& ,+# pro)#..,C
A!ERB IMPORTANT< S$ri)$l7 .p#*?i%/, $0# r+l# o% .+5.$i$+$io% 57 0#ir. i. NOT * -*$$#r o&
4+ri.,i)$io%, 5+$ * r#@+ir#-#%$ o& ,+# pro)#...
The rule on substitution (as crafte" to protect eery party7s right to "ue process!
?
It (as "esigne" to
ensure that the "ecease" party (oul" continue to be properly represente" in the suit through his
heirs or the "uly appointe" legal representatie of his estate!
;
&oreoer, non9co%pliance (ith the
Rules results in the "enial of the right to "ue process for the heirs (ho, though not "uly notifie" of
the procee"ings, (oul" be substantially affecte" by the "ecision ren"ere" therein!
)*
Thus, it is only
(hen there is a "enial of "ue process, as (hen the "ecease" is not represente" by any legal
representatie or heir, that the court nullifies the trial procee"ings an" the resulting /u"g%ent
therein!
))
For-*l .+5.$i$+$io% 57 0#ir. i. %o$ %#)#..*r7 (0#% $0#7 $0#-.#l'#. 'ol+%$*ril7 *pp#*r,
p*r$i)ip*$# i% $0# )*.#, *%, pr#.#%$ #'i,#%)# i% ,#&#%.# o& $0# ,#)#*.#,!
)+
In such case, there
is really no iolation of the right to "ue process! T0# #..#%)# o& ,+# pro)#.. i. $0# r#*.o%*5l#
oppor$+%i$7 $o 5# 0#*r, *%, $o .+5-i$ *%7 #'i,#%)# *'*il*5l# i% .+ppor$ o& o%#:.
,#&#%.#!
),
>hen "ue process is not iolate", as (hen the right of the representatie or heir is
recogni2e" an" protecte", nonco%pliance or belate" for%al co%pliance (ith the Rules cannot affect
the ali"ity of a pro%ulgate" "ecision!
)8
In light of these pronounce%ents, (e cannot nullify the procee"ings before the trial court an" the
/u"g%ent ren"ere" therein 5#)*+.# $0# p#$i$io%#r, (0o (*., i% &*)$, * )o9,#&#%,*%$ o& $0#
,#)#*.#,, *)$i'#l7 p*r$i)ip*$#, i% $0# )*.#! The recor"s sho( that the counsel of Huan Napere
an" petitioner continue" to represent the% een after Huan7s "eath! Hence, through counsel,
petitioner (as able to a"e=uately "efen" herself an" the "ecease" in the procee"ings belo(! Due
process si%ply "e%an"s an opportunity to be hear" an" this opportunity (as not "enie" petitioner!
5inally, the allege" "enial of "ue process as (oul" nullify the procee"ings an" the /u"g%ent thereon
can be ino.e" only by the heirs (hose rights hae been iolate"! Violation of "ue process is a
personal "efense that can only be asserte" by the persons (hose rights hae been allege"ly
iolate"!
)@
Petitioner, (ho ha" eery opportunity an" (ho too. a"antage of such opportunity,
through counsel, to participate in the trial court procee"ings, cannot clai% "enial of "ue process!
FHEREFORE, pre%ises consi"ere", the petition is ENIE UE COURSE! The Decision of the
Court of -ppeals, "ate" October ;, +**,, in C-93!R! CV No! @<8@:, is AFFIRME!
SO ORERE!
Republic of the Philippines
SUPREME COURT
&anila
SECON I!ISION
G.R. No. 149;G; I+%# 1G, 200G
IUGE ANTONIO C. SUMALIAG, petitioner,
s!
SPOUSES IOSIIT *%, MENENE" M. LITERATO= *%, MICHAELES MAGLASANG
RORIGO, respon"ents!
E C I S I O N
CARPIO MORALES, J.<
R+l# 45 *..*ili%/ $0# #)i.io%
1
o& $0# CA The assaile" Decision "is%isse" the petition
for certiorari file" by petitioner Hu"ge -ntonio C! Su%al/ag 0the ApetitionerA1 in the interlocutory %atter
outline" belo( in Ci'il C*.#. 8912>9 *%, 8912G1 before the trial court! The challenge" Resolution
"enie" the petitionerIs %otion for reconsi"eration!
ANTECEENT FACTS
Io.#&* . M*/l*.*%/ 2DJosefaD3 file" (ith the RTC 6eyte a co%plaint for the %+lli$7 o& $0# ,##, o&
.*l# o& r#*l prop#r$7 p+rpor$#,l7 #1#)+$#, 5#$(##% 0#r *. '#%,or *%, $0# .po+.#. io.,i,i$
*%, M#%#%,#M Li$#r*$o 2$0# Drespondent spousesD3 *. '#%,##.! The co%plaint allege" that this
"ee" of sale is spurious! Hosefa (as the sister of &enen"e2 &aglasang 6iterato 0AMenendezA1! They
(ere t(o 0+1 of the si' 0<1 heirs (ho inherite" e=ual parts of a <!,;*<9hectare property 06ot )++*1
passe" on to the% by their parents Cristito an" Inecita Diano &aglasang!
8
6ot )++*9D (as
partitione" to Hosefa, (hile 6ot )++*9# (as gien to &enen"e2!
T0# r#.po%,#%$ .po+.#.J r#.po%.# $o $0# )o-pl*i%$ (*. *% *-#%,#, *%.(#r (i$0
)o+%$#r)l*i- ,#%7i%/ $0*$ $0# ,##, o& .*l# (*. &*l.i&i#,. They i%plea"e" the petitioner (ith
Hosefa as counterclai% "efen"ant on the allegation that the petitioner, at the instance of Hosefa,
occupie" 6ot )++*9D an" 6ot )++*9# (ithout their 0the respon"ent spousesI1 authorityD 6ot )++*9# is
theirs by inheritance (hile )++*9D ha" been sol" to the% by Hosefa! They also allege" that the
petitioner acte" in ba" faith in ac=uiring the t(o 0+1 lots because he prepare" an" notari2e" on
Septe%ber +<, );?< the contract of lease oer the (hole of 6ot )++* bet(een all the &aglasang
heirs 0but e'clu"ing Hosefa1 an" Vicente Tolo, (ith the lease running fro% );?< to );;)D thus, the
petitioner then .ne( that Hosefa no longer o(ne" 6ot )++*9D!
M#%#%,#M &il#, (i$0 $0# RTC &or $0# ,#)l*r*$io% o& $0# i%#1i.$#%)# o& l#*.# )o%$r*)$, r#)o'#r7
o& po..#..io% o& l*%,, *%, ,*-*/#. */*i%.$ $0# p#$i$io%#r *%, Io.#&* *&$#r $0# RTC
,i.-i..#, $0# r#.po%,#%$ .po+.#.J )o+%$#r)l*i-! The co%plaint allege" that Hosefa, (ho ha"
preiously sol" 6ot )++*9D to &enen"e2, lease" it, together (ith 6ot )++*9#, to the petitioner!
&enen"e2 further aerre" that the petitioner an" Hosefa (ere in ba" faith in entering their contract of
lease as they both .ne( that Hosefa "i" not o(n the lease" lots! &enen"e2 praye", a%ong others,
that this lease contract bet(een Hosefa an" the petitioner be "eclare" null an" oi"!
Io.#&* ,i#, o% M*7 >, 1999 ,+ri%/ $0# p#%,#%)7 o& Ci'il C*.#
On -ugust ),, );;;, -tty! Venen -! Puray 0AAtty. 6urayA1 9 the p#$i$io%#rJ. *%, Io.#&*J. )o--o%
)o+%.#l 9 *.?#, $0# RTC $0*$ 0# 5# /i'#% *% #1$#%,#, p#rio, (i$0i% (0i)0 $o &il# * &or-*l
%o$i)# o& ,#*$0 *%, .+5.$i$+$io% o& p*r$7. GRANTE
A$$7. P+r*7 &il#, (i$0 $0# RTC * %o$i)# o& ,#*$0 *%, .+5.$i$+$io% o& p*r$7, pr*7i%/ $0*$ Io.#&* 9
i% 0i. )*p*)i$7 *. pl*i%$i&& *%, $0ir, p*r$7 )o+%$#r)l*i- ,#&#%,*%$ 9 5# .+5.$i$+$#, 57 $0#
p#$i$io%#r! The sub%ission allege" that prior to HosefaIs "eath, she e'ecute" a Puitclaim
Deed
;
oer 6ot )++*9D in faor of Re%is%un"o D! &aglasang
)*
(ho in turn sol" this property to the
petitioner!
A!ERB IMPORTANT$ &enen"e2, through counsel, o54#)$#, $o $0# propo.#, .+5.$i$+$io%,
*ll#/i%/ $0*$ A$$7. P+r*7 &il#, $0# %o$i)# o& ,#*$0 *%, .+5.$i$+$io% o& p*r$7 5#7o%, $0# $0ir$79
,*7 p#rio, proi"e" un"er Section )<, Rule , of the );;: Rules of Ciil Proce"ure, as a%en"e"!
She reco%%en"e" instea" that Hosefa be substitute" by the latterIs full9bloo" sister, &ichaeles
&aglasang Ro"rigo 0AMichaelesA1!
T0# RTC ,#%i#, A$$7. P+r*7J. -o$io% &or .+5.$i$+$io% an" instea" or"ere" the appearance of
&ichaeles as representatie of the "ecease" Hosefa! MR ENIE!
T0# p#$i$io%#r (#%$ $o $0# CA o% * p#$i$io% &or certiorari. CA ,i.-i..#, $0# p#$i$io% &or l*)? o&
-#ri$. MR ENIE.
R45 $o SC.
The present petition essentially clai%s that the C- erre" in "is%issing C-93!R! No! SP @;:)+ since$
0a1 the property un"er litigation (as no longer part of HosefaIs estate since she (as no longer its
o(ner at the ti%e of her "eathD 0b1 the petitioner ha" effectiely been subrogate" to the rights of
Hosefa oer the property un"er litigation at the ti%e she "ie"D 0c1 (ithout an estate, the heir (ho (as
appointe" by the lo(er court no longer ha" any interest to representD 2,3 $0# %o$i)# o& ,#*$0 (*.
.#*.o%*5l7 .+5-i$$#, 57 $0# )o+%.#l o& Io.#&* $o $0# RTC (i$0i% $0# #1$#%,#, p#rio,
/r*%$#,= an" 0e1 the petitioner is a transferee pen"ente lite (ho the courts shoul" recogni2e
pursuant to Rule ,, Section +* of the Rules of Court!
THE COURTJS RULING
F# r#.ol'# $o ,#%7 $0# p#$i$io% &or l*)? o& -#ri$.
T0# Go'#r%i%/ R+l#.
The rule on substitution in case of "eath of a party is goerne" by Section )<, Rule , of the );;:
Rules of Ciil Proce"ure, as a%en"e", (hich proi"es$
Section )<! Death of a partyD "uty of counsel! 9>heneer a party to a pen"ing action "ies,
an" the clai% is not thereby e'tinguishe", it shall be the "uty of his counsel to infor% the
court (ithin thirty 0,*1 "ays after such "eath of the fact thereof, an" to gie the na%e an"
a""ress of his legal representatie or representaties! 5ailure of counsel to co%ply (ith this
"uty shall be a groun" for "isciplinary action!
T0# 0#ir. o& $0# ,#)#*.#, -*7 5# *llo(#, $o 5# .+5.$i$+$#, &or $0# ,#)#*.#,, (i$0o+$
r#@+iri%/ $0# *ppoi%$-#%$ o& *% #1#)+$or or *,-i%i.$r*$or an" the court %ay appoint a
guar"ian a" lite% for the %inor heirs!
The court shall forth(ith or"er sai" legal representatie or representaties to appear an" be
substitute" (ithin a perio" of thirty 0,*1 "ays fro% notice!
If no legal representatie is na%e" by the counsel for the "ecease" party, or if the one so
na%e" shall fail to appear (ithin the specifie" perio", the court %ay or"er the opposing
party, (ithin a specifie" ti%e, to procure the appoint%ent of an e'ecutor or a"%inistrator for
the estate of the "ecease", an" the latter shall i%%e"iately appear for an" on behalf of the
"ecease"! The court charges in procuring such appoint%ent, if "efraye" by the opposing
party, %ay be recoere" as costs! 0#%phasis ours1
T0# p+rpo.# 5#0i%, $0i. r+l# i. $0# pro$#)$io% o& $0# ri/0$ $o ,+# pro)#.. o& #'#r7 p*r$7 $o $0#
li$i/*$io% (0o -*7 5# *&&#)$#, 57 $0# i%$#r'#%i%/ ,#*$0. T0# ,#)#*.#, li$i/*%$ i. 0#r.#l& or
0i-.#l& pro$#)$#, *. 0#6.0# )o%$i%+#. $o 5# prop#rl7 r#pr#.#%$#, i% $0# .+i$ $0ro+/0 $0# ,+l7
*ppoi%$#, l#/*l r#pr#.#%$*$i'# o& 0i. #.$*$#.
15
Appli)*$io% o& $0# Go'#r%i%/ R+l#.
*. S+r'i'*l o& $0# p#%,i%/ *)$io%
- =uestion preli%inary to the application of the aboe proision is (hether Ciil Case Nos! B9)+,;
an" B9)+?) are actions that surie the "eath of Hosefa! >e sai" in Gonzalez v. 6agcor$
)<
AThe criteria for "eter%ining (hether an action suries the "eath of a plaintiff or petitioner
(as eluci"ate" upon in )onilla v. )arcena 0:) SCR- 8;) 0);:<1! as follo(s$
! ! ! The =uestion as to (hether an action suries or not "epen"s on the nature of
the action an" the "a%age sue" for! In the causes of action (hich surie, the (rong
co%plaine" EofF affects pri%arily an" principally property an" property rights, the
in/uries to the person being %erely inci"ental, (hile in the causes of action (hich "o
not surie, the in/ury co%plaine" of is to the person, the property an" rights of
property affecte" being inci"ental! ! ! !
Si%)# $0# @+#.$io% i%'ol'#, i% $0#.# )*.#. r#l*$# $o prop#r$7 *%, prop#r$7 ri/0$., $0#% (# *r#
,#*li%/ (i$0 *)$io%. $0*$ .+r'i'# so that Section )<, Rule , %ust necessarily apply!
5. +$7 o& Co+%.#l +%,#r $0# R+l#.
The "uty of counsel un"er the aforecite" proision is to infor% the court (ithin thirty 0,*1 "ays after
the "eath of his client of the fact of "eath, an" to gie the na%e an" a""ress of the "ecease"Is legal
representatie or representaties! Inci"entally, this is the only representation that counsel can
un"erta.e after the "eath of a client as the fact of "eath ter%inate" any further la(yer9client
relationship!
):
I% $0# pr#.#%$ )*.#, i$ i. +%,i.p+$#, $0*$ $0# )o+%.#l &or Io.#&* ,i, i% &*)$ %o$i&7 $0# lo(#r
)o+r$, *l$0o+/0 5#l*$#,l7, o& $0# &*)$ o& 0#r ,#*$0.
)?
Ho(eer, he "i" as (ell infor% the lo(er
court that 9
A+! That before she "ie" she e'ecute" a JBITC6-I& D##D in faor of R#&IS&BNDO D!
&-36-S-N3 oer the lan" in =uestion 06ot No! )++*9D of Benolho, -lbuera, 6eyte1,
ei"ence" by a JBITC6-I& D##D, copy of (hich is hereto attache" as -nne' ABA (ho in
turn sol" it in faor of HBD3# -NTONIO SB&-6H-3, ei"ence" by a D##D O5 -BSO6BT#
S-6#, copy of (hich is hereto attache" as -nne' ACA!A
5urther, counsel as.e" that Athe deceased Oosefa Maglasang in her ca#acity as #laintiff and as "hird
6arty Counterclaim Defendant be substituted in the case at bar by O(DG1 A-",-!, 7(MA'OAG
$hose address is =A ,smena 7treet ,rmoc City> #ursuant to >7ection 8/ Rule = of the 8CC< Rules
of Civil 6rocedureA!
T0i. %o$i&i)*$io%, *l$0o+/0 &il#, l*$#, #&&#)$i'#l7 i%&or-#, $0# lo(#r )o+r$ o& $0# ,#*$0 o&
li$i/*%$ Io.#&* M*/l*.*%/ .o *. $o &r## 0#r )o+%.#l o& *%7 li*5ili$7 &or &*il+r# $o -*?# * r#por$
o& ,#*$0 +%,#r S#)$io% 1H, R+l# > o& $0# R+l#. o& Co+r$. In our ie(, counsel satisfactorily
e'plaine" to the lo(er court the circu%stances of the late reporting, an" the latter in fact grante"
counsel an e'ten"e" perio"! T0# $i-#li%#.. o& $0# r#por$ i. $0#r#&or# * %o%9i..+#!
ISSUE< F0#$0#r or %o$ )o+%.#l prop#rl7 /*'# $0# )o+r$ $0# %*-# *%, *,,r#.. o& $0# l#/*l
r#pr#.#%$*$i'# o& $0# ,#)#*.#, $0*$ S#)$io% 1H, R+l# > .p#)i&i#..P
SC RULING< The reporting issue that goes into the core of this case is (hether counsel properly
gae the court the na%e an" a""ress of the legal representatie of the "ecease" that Section )<,
Rule , specifies! F# r+l# $0*$ 0# ,i, %o$! The Alegal representatiesA that the proision spea.s of,
refer to those authori2e" by la( 9 the a"%inistrator, e'ecutor or guar"ian
);
(ho, un"er the rule on
settle%ent of estate of "ecease" persons,
+*
is constitute" to ta.e oer the estate of the "ecease"!
Section )<, Rule , li.e(ise e'pressly proi"es that A the heirs of the deceased may be allo$ed to be
substituted for the deceased $ithout re;uiring the a##ointment of an e+ecutor or administrator . . .A!
Si/%i&i)*%$l7, $0# p#r.o% 9 %o( $0# pr#.#%$ p#$i$io%#r 9 $0*$ )o+%.#l /*'# *. .+5.$i$+$# (*.
%o$ o%# o& $0o.# -#%$io%#, +%,#r S#)$io% 1H, R+l# >. R*$0#r, 0# i. * )o+%$#r)l*i- )o9
,#&#%,*%$ o& $0# ,#)#*.#, (0o.# pro&#rr#, 4+.$i&i)*$io% &or $0# r#@+#.$#, .+5.$i$+$io% i. $0#
$r*%.&#r $o 0i- o& $0# i%$#r#.$. o& $0# ,#)#*.#, i% $0# li$i/*$io% prior $o 0#r ,#*$0.
Bn"er the circu%stances, both the lo(er court an" the C- (ere legally correct in not giing effect to
counselIs suggeste" substitute!
Airst, $0# p#$i$io%#r i. %o$ o%# o& $0o.# *llo(#, 57 $0# R+l#. $o 5# * .+5.$i$+$#. S#)$io% 1H,
R+l# > .p#*?. &or i$.#l& i% $0i. r#.p#)$.
7econd, as alrea"y %entione" aboe, the reason for the Rule is to protect all concerne" (ho %ay
be affecte" by the interening "eath, particularly the "ecease" an" her estate! >e note in this
respect that the Notice that counsel file" in fact reflects a claim against the interest of the
deceased through the transfer of her re%aining interest in the litigation to another party! Interestingly,
the transfer is in faor of the ery sa%e person (ho is suggeste" to the court as the substitute! To
.$*$# $0# o5'io+., $0# .+//#.$#, .+5.$i$+$io% #&&#)$i'#l7 5ri%/. $o %*+/0$ $0# pro$#)$io% $0*$
$0# R+l#. i%$#%,= pl*i% )o--o% .#%.# $#ll. +. $0*$ $0# $r*%.&#r## (0o 0*. 0i. o(% i%$#r#.$ $o
pro$#)$, )*%%o$ *$ $0# .*-# $i-# r#pr#.#%$ *%, &+ll7 pro$#)$ $0# i%$#r#.$ o& $0# ,#)#*.#,
$r*%.&#ror.
"hird, counsel has eery authority to %anifest to the court changes in interest that transpire in the
course of litigation! Thus, counsel coul" hae ali"ly %anifeste" to the court the transfer of HosefaIs
interests in the sub/ect %atter of litigation pursuant to Section );, Rule ,!
+)
But this can happen
only $hile the client5transferor $as alive an" $hile the manifesting counsel $as still the effective and
authorized counsel for the client5transferor, not after the "eath of the client (hen the la(yer9client
relationship has ter%inate"! The fact that the allege" transfer %ay hae actually ta.en place is
i%%aterial to this conclusion, if only for the reason that it is not for counsel, after the "eath of his
client, to %a.e such %anifestation because he then has lost the authority to spea. for an" bin" his
client! T0+., *$ -o.$, $0# p#$i$io%#r )*% 5# .*i, $o 5# * $r*%.&#r## pendente lite (0o.# .$*$+.
i. p#%,i%/ (i$0 $0# lo(#r )o+r$.
'astly, a close e'a%ination of the "ocu%ents attache" to the recor"s "isclose that the sub/ect %atter
of the Juitclai% allege"ly e'ecute" by Hosefa in faor of Re%is%un"o is 6ot )++*9#, (hile the
sub/ect %atter of the "ee" of sale e'ecute" by Re%is%un"o in the petitionerIs faor is 6ot )++*9D!
This circu%stance alone raises the possibility that there is %ore than %eets the eye in the
transactions relate" to this case!
). T0# H#ir. *. L#/*l R#pr#.#%$*$i'#..
The C- correctly har.e" bac. to the plain ter%s of Section )<, Rule , in "eter%ining (ho the
appropriate legal representatie4s shoul" be in the absence of an e'ecutor or a"%inistrator! The
secon" paragraph of the Section )<, Rule , of the );;: Rules of Court, as a%en"e", is clear 9 $0#
0#ir. o& $0# ,#)#*.#, -*7 5# *llo(#, $o 5# .+5.$i$+$#, &or $0# ,#)#*.#,, (i$0o+$ r#@+iri%/
$0# *ppoi%$-#%$ o& *% #1#)+$or or *,-i%i.$r*$or! Our "ecisions on this %atter hae been clear
an" une=uiocal! In 7an Ouan Or. v. Cruz, this Court hel"$
The pronounce%ent of this Court in 6a(as ! Court of -ppeals ' ' ' that priority is gien to
the legal representatie of the "ecease" 0the e'ecutor or a"%inistrator1 an" that it is only in
case of unreasonable "elay in the appoint%ent of an e'ecutor or a"%inistrator, or in cases
(here the heirs resort to an e'tra9/u"icial settle%ent of the estate that the court %ay a"opt
the alternatie of allo(ing the heirs of the "ecease" to be substitute" for the "ecease", is %o
lo%/#r $r+#!
++
0#%phasis ours1
>e li.e(ise sai" in Gochan v. Qoung$
+,
5or the protection of the interests of the "ece"ent, this Court has in preious instances recogni2e"
the heirs as proper representaties of the "ece"ent, een (hen there is alrea"y an a"%inistrator
appointe" by the court! >hen no a"%inistrator has been appointe", as in this case, there is all the
%ore reason to recogni2e the heirs as the proper representaties of the "ecease"!
Io.#&*J. ,#*$0 )#r$i&i)*$#
24
.0o(. $0*$ .0# (*. .i%/l# *$ $0# $i-# o& 0#r ,#*$0. T0# r#)or,. ,o
%o$ .0o( $0*$ .0# l#&$ * (ill. T0#r#&or#, *. )orr#)$l7 0#l, 57 $0# CA, i% *ppl7i%/ S#)$io% 1H,
R+l# >, 0#r 0#ir. *r# 0#r .+r'i'i%/ .i.$#r. 2Mi)0*#li., M*ri*, "o.i-*, *%, Co%.ol*)io%3 *%,
$0# )0il,r#% o& 0#r ,#)#*.#, .i.$#r, Lo+r,#. 2M*%+#l, C#.*r, H+ro. *%, R#/+lo3 (0o .0o+l,
5# 0#r l#/*l r#pr#.#%$*$i'#.. M#%#%,#M, *l$0o+/0 *l.o * .i.$#r, .0o+l, 5# #1)l+,#, &or 5#i%/
o%# o& $0# *,'#r.# p*r$i#. i% $0# )*.#. 5#&or# $0# RTC.
FHEREFORE, pre%ises consi"ere", (e ENB the petition for lac. of %erit! >e AFFIRM the Court
of -ppeals "ecision that the suriing heirs of the "ecease" Hosefa 9 na%ely &ichaelis &! Ro"rigoD
&aria &! CecilioD Vosi%a D! &aglasangD Consolacion &! Bag9a(D an" the chil"ren of 6our"es &!
6u%apas, na%ely &anuel 6u%apas, Cesar 6u%apas, Huros 6u%apas an" Regulo &a=uilan 9
shoul" be her substitutes an" are hereby so or"ere" to be substitute" for her in Ciil Case Nos! B9
)+,; an" B9)+?)!
Costs against the petitioner!
SO ORERE!
Republic of the Philippines
SUPREME COURT
&anila
S#COND DIVISION
G.R. No. 1;>292 S#p$#-5#r 1, 2010
MEMORACION ". CRU", r#pr#.#%$#, 57 EGARO ". CRU", Petitioner,
s!
OSFALO ". CRU", Respon"ent!
D # C I S I O N
CARPIO, J.:
T0# C*.#
R8@ petition to annul "ecision of C- (hich affir%e" (ith %o"ification the Or"er of the &anila RTC!
FACTS<
&e%oracion V! Cru2 file" (ith the &anila RTC a Co%plaint */*i%.$ 0#r .o%, ,#&#%,*%$9*pp#ll##
O.(*l,o ". Cr+M, &or DA%%+l-#%$ o& S*l#, R#)o%'#7*%)# *%, *-*/#..D
&e%oracion clai%e" that "uring her union (ith her co%%on9la( husban" 0"ecease"1 -rchitect
3ui"o &! Cru2, she ac=uire" a parcel of lan" locate" at Tabora corner 6i%ay Streets, Bo! Obrero,
Ton"o &anilaD that the sai" lot (as registere" in her na%e un"er TCT No! <,8<: at the Register of
Dee"s of &anilaD that so%eti%e in Huly );;+, .0# ,i.)o'#r#, $0*$ $0# $i$l# $o $0# .*i, prop#r$7
(*. $r*%.&#rr#, 57 *pp#ll## *%, $0# l*$$#r:. (i&# i% $0#ir %*-#. in -ugust );;) un"er TCT No!
*9);;,:: by irtue of a Dee" of Sale "ate" 5ebruary )+, );:,D $0*$ $0# .*i, ,##, (*. #1#)+$#,
$0ro+/0 &r*+,, &or/#r7, -i.r#pr#.#%$*$io% *%, .i-+l*$io%, 0#%)#, %+ll *%, 'oi,= $0*$ .0#, (i$0
$0# 0#lp o& 0#r 0+.5*%,:. r#l*$i'#., *.?#, *pp#ll## $o .#$$l# $0# pro5l#-D that "espite repeate"
pleas an" "e%an"s, appellee refuse" to reconey to her the sai" propertyD that she file" a co%plaint
against appellee before the office of the Barangay haing /uris"iction oer the sub/ect propertyD an"
that since the %atter (as unsettle", the barangay ' ' ' issue" ' ' ' a certification to file EanF action in
court, no( the sub/ect of controersy!
-fter &e%oracion ' ' ' finishe" presenting her ei"ence in chief, .0# ,i#, on October ,*, );;<!
T0ro+/0 * M*%i&#.$*$io%, M#-or*)io%:. )o+%.#l, A$$7. Ro5#r$o T. N#ri, %o$i&i#, $0# $ri*l )o+r$
o% I*%+*r7 1>, 199; o& $0# &*)$ o& .+)0 ,#*$0, #'i,#%)#, 57 * )#r$i&i)*$# $0#r#o&.
A!ERB IMPORTANT< For 0i. p*r$, *pp#ll## &il#, * Mo$io% $o i.-i.. o% $0# /ro+%,. $0*$ 213
$0# pl*i%$i&&:. r#)o%'#7*%)# *)$io% i. * p#r.o%*l *)$io% (0i)0 ,o#. %o$ .+r'i'# * p*r$7:.
,#*$0, pursuant to Section +), Rule , of the Reise" Rules of Court, an" 0+1 to allo( the case to
continue (oul" result in legal absur"ity (hereby one heir is representing the "efen"ant Ean" is aF co9
plaintiff in this case!C
RTC or,#r#, $0# )*.# ,i.-i..#, (ithout pre/u"ice to the prosecution thereof in the proper estate
procee"ings!A
M#-or*)io%:. .o%90#ir, E,/*r,o ". Cr+M, %anifeste" to the trial court that he is retaining the
serices of -tty! Neri for the plaintiff! Si%ultaneously, -tty! Neri file" a &otion for Reconsi"eration of
the Hune +, );;: Or"er! MR ENIE!
Thereafter, #"gar"o Cru2, as an heir of &e%oracion Cru2, &il#, * %o$i)# o& *pp#*l i% 5#0*l& o& $0#
,#)#*.#, pl*i%$i&&, .i/%#, 57 A$$7. N#ri, but the *pp#*l (*. ,i.-i..#, by Hu"ge &in"aro93rulla,
A.$*$i%/ $0*$C $0# prop#r r#-#,7 5#i%/ )#r$ior*ri +%,#r R+l# H5 o& $0# R+l#. o& Co+r$.
On appellant7s %otion for reconsi"eration, Hu"ge 6ucia Pena Purugganan grante" the sa%e, stating
that the re%e"y un"er the circu%stances is or"inary appeal!
8
CA R+li%/
Petitioner &e%oracion V! Cru2, represente" by #"gar"o V! Cru2, file" (ith the Court of -ppeals a
P#$i$io% &or R#'i#( +%,#r R+l# 45 of the );;: Reise" Rules of Ciil Proce"ure! CA r#%,#r#,
4+,/-#%$ *&&ir-i%/ (i$0 -o,i&i)*$io% $0# RTC ,#)i.io%! >e =uote the "ispositie portion of the
C-7s "ecision belo(!
>H#R#5OR#, the appeale" Or"er is AFFIRME, (ith MOIFICATION! The trial court7s "irectie
as to the prosecution of the action in the proper estate procee"ings is ELETE!
SO ORD#R#D!
@
P#$i$io%#r:. MR (*. ,#%i#, 57 $0# CA
Hence, this appeal!
ISSUES<
The issues for resolution in this case are$
i, $0# Co+r$ o& App#*l. #rr i% r+li%/ $0*$ M#-or*)io% ". Cr+M:. P#$i$io% &or
A%%+l-#%$ o& ##, o& S*l#, R#)o%'#7*%)# *%, *-*/#. i. * p+r#l7 p#r.o%*l *)$io%
(0i)0 ,i, %o$ .+r'i'# 0#r ,#*$0P
SC RULING< BES
>e fin" the appeal %eritorious!
The Petition for -nnul%ent of Sale, Reconeyance
an" Da%ages surie" the "eath of petitioner
The criterion for "eter%ining (hether an action suries the "eath of a petitioner (as eluci"ate" in
Bonilla ! Barcena,
:
to (it$
The =uestion as to (hether an action suries or not "epen"s on the nature of the action an" the
"a%age sue" for! I% $0# )*+.#. o& *)$io% (0i)0 .+r'i'#, $0# (ro%/ )o-pl*i%#, Ao&C *&&#)$.
pri-*ril7 *%, pri%)ip*ll7 prop#r$7 *%, prop#r$7 ri/0$., $0# i%4+ri#. $o $0# p#r.o% 5#i%/ -#r#l7
i%)i,#%$*l.
O% $0# o$0#r 0*%,, i% $0# )*+.#. o& *)$io% (0i)0 ,o %o$ .+r'i'#, $0# i%4+r7 )o-pl*i%#, o& i.
$o $0# p#r.o%, $0# prop#r$7 *%, ri/0$. o& prop#r$7 *&&#)$#, 5#i%/ i%)i,#%$*l.
G
I& $0# )*.# *&&#)$. pri-*ril7 *%, pri%)ip*ll7 prop#r$7 *%, prop#r$7 ri/0$., $0#% i$ .+r'i'#. $0#
,#*$0 o& $0# pl*i%$i&& or p#$i$io%#r!
The instant case for annul%ent of sale of real property %erits surial "espite the "eath of petitioner
&e%oracion V! Cru2!
The C- erre" in affir%ing RTC7s "is%issal of the
Petition for -nnul%ent of Dee" of Sale,
Reconeyance an" Da%ages
F0#% * p*r$7 ,i#. ,+ri%/ $0# p#%,#%)7 o& * )*.#, S#)$io% 1H, R+l# > o& $0# 199; R#'i.#,
R+l#. o& Ci'il Pro)#,+r# %#)#..*ril7 *ppli#., viz$
Sec! )<! Death of partyD "uty of counsel! 9 >heneer a party to a pen"ing action "ies, an"
the clai% is not thereby e'tinguishe", it shall be the "uty of his counsel to infor% the court
(ithin thirty 0,*1 "ays after such "eath of the fact thereof, an" to gie the na%e an" a""ress
of his legal representatie or representaties! 5ailure of counsel to co%ply (ith this "uty shall
be a groun" for "isciplinary action!
The heirs of the "ecease" %ay be allo(e" to be substitute" for the "ecease", (ithout
re=uiring the appoint%ent of an e'ecutor or a"%inistrator an" the court %ay appoint a
guar"ian a" lite% for the %inor heirs!
The court shall forth(ith or"er sai" legal representatie or representaties to appear an" be
substitute" (ithin a perio" of thirty 0,*1 "ays fro% notice!
If no legal representatie is na%e" by the counsel for the "ecease" party, or if the one so
na%e" shall fail to appear (ithin the specifie" perio", the court %ay or"er the opposing
party, (ithin a specifie" ti%e, to procure the appoint%ent of an e'ecutor or a"%inistrator for
the estate of the "ecease" an" the latter shall i%%e"iately appear for an" on behalf of the
"ecease"! The court charges in procuring such appoint%ent, if "efraye" by the opposing
party, %ay be recoere" as costs!
In the instant case, petitioner 0plaintiff1 &e%oracion V! Cru2 "ie" on ,* October );;<! Her counsel,
-tty! Roberto T! Neri, notifie" the trial court of such "eath on ), Hanuary );;:, through a
&anifestation stating thus$
On +8 Hanuary );;:, respon"ent 0"efen"ant1 Os(al"o V! Cru2 %oe" to "is%iss the case alleging
that it "i" not surie &e%oracion7s "eath! The RTC grante" the %otion to "is%iss in the assaile"
Or"er "ate" + Hune );;:!
F# r+l# $0*$ i$ (*. #rror &or $0# RTC $o ,i.-i.. $0# )*.#. -s %entione" earlier, the petition for
annul%ent of "ee" of sale inoles property an" property rights, an" hence, suries the "eath of
petitioner &e%oracion! T0# RTC (*. i%&or-#,, *l5#i$ 5#l*$#,l7,
1>
o& $0# ,#*$0 o& M#-or*)io%,
*%, (*. .+ppli#, (i$0 $0# %*-# *%, *,,r#.. o& 0#r l#/*l r#pr#.#%$*$i'#, E,/*r,o Cr+M!
F0*$ $0# RTC )o+l, 0*'# ,o%# (*. $o r#@+ir# E,/*r,o Cr+M $o *pp#*r i% )o+r$ *%, .+5.$i$+$#
M#-or*)io% *. p*r$7 $o $0# p#%,i%/ )*.#, p+r.+*%$ $o S#)$io% 1H, R+l# > o& $0# 199; R#'i.#,
R+l#. o& Ci'il Pro)#,+r#, *%, #.$*5li.0#, 4+ri.pr+,#%)#.
>e note that on ): October );;:, #"gar"o Cru2 file" (ith the RTC a &anifestation, stating that he is
retaining the serices of -tty! Roberto T! Neri! >e =uote$
)8
Consistent (ith our ruling in Heirs of Haberer v. Court of A##eals,
)@
(e consi"er such &anifestation,
signe" by &e%oracion7s heir, #"gar"o Cru2, an" retaining -tty! Neri7s serices as counsel, * formal
substitution o& ,#)#*.#, M#-or*)io% 57 0#r 0#ir, E,/*r,o Cr+M. I$ *l.o %##,. -#%$io% $0*$
O.(*l,o Cr+M, *l$0o+/0 *l.o *% 0#ir o& M#-or*)io%, .0o+l, 5# #1)l+,#, *. * l#/*l
r#pr#.#%$*$i'# i% $0# )*.# &or 5#i%/ *% *,'#r.# p*r$7 $0#r#i%.
1H
Republic of the Philippines
SUPREME COURT
&anila
SECON I!ISION
G.R. No. 14G1>> O)$o5#r G, 200G
HERITAGE PARK MANAGEMENT CORPORATION, petitioners,
s!
CONSTRUCTION INUSTRB AR8ITRATION COMMISSION *%, ELPIIO UB, ,oi%/ 5+.i%#..
+%,#r %*-# *%, .$7l# o& EISON E!ELOPMENT AN CONSTRUCTION, respon"ents!
E C I S I O N
!ELASCO, IR., J.<
T0# C*.#
R45 p#$i$io% &or r#'i#( o% )#r$ior*ri. see.s the reersal of the Noe%ber +;, +*** Decision
)
an"
&ay :, +**) Resolution
+
of the Court of -ppeals 0C-1 in C-93!R! SP No! @?)+8, entitle" Heritage
6ar3 Management Cor#oration v. Construction !ndustry Arbitration Commission and 1l#idio Dy doing
business under the name and style of 1dison Develo#ment and Construction. The appeale"
"ecision, as effectiely reiterate" in the e=ually appeale" resolution, "enie" the petition "ate" -pril 8,
+*** for the C- to "eclare that the Construction In"ustry -rbitration Co%%ission 0CI-C1 has no
/uris"iction oer the case "oc.ete" (ith it as CI-C Case No! *+9+*** entitle" 1l#idio 7. (y doing
business under the name and style of 1dison Develo#ment and Construction v. 6ublic 1states
Authority and%or Carlos 6. Doble an" that the CI-C an" #"ison Deelop%ent an" Construction
0#DC1 be per%anently en/oine" fro% further procee"ing (ith the case!
FACTS<
P#$i$io%#r, P+5li) E.$*$#. A+$0ori$7 2PEA3, (as "esignate" by the Bases Conersion
Deelop%ent -uthority $o ,#'#lop $0# &ir.$ )l*.. -#-ori*l p*r? ?%o(% *. $0# H#ri$*/# P*r?,
locate" in 5ort Bonifacio, Taguig, &etro &anila!
PEA #%/*/#, $0# .#r'i)#. o& 0#r#i% pri'*$# r#.po%,#%$ Elpi,io S. U7, ,oi%/ 5+.i%#.. +%,#r
$0# %*-# *%, .$7l# o& EC, +%,#r * L*%,.)*pi%/ *%, Co%.$r+)$io% A/r##-#%$. In the
-gree%ent, #DC un"ertoo. to perfor% all lan"scaping (or.s on the )*@9hectare Heritage Par., to
be co%plete" (ithin 8@* "ays, co%%encing (ithin )8 "ays fro% #DC7s receipt fro% P#- of a (ritten
notice to procee"! Due to "elays, the contract perio" (as e'ten"e" to <;, "ays! -%ong the causes
of "elay (as P#-7s inability to "elier to #DC 8@ hectares of the property lan"scaping "ue to the
e'istence of s=uatters an" a public ce%etery!
T0+., EC i%.$i$+$#, * (i$0 $0# CIAC, .##?i%/ $o )oll#)$ &ro- PEA ,*-*/#. *ri.i%/ &ro- i$.
,#l*7 i% $0# ,#li'#r7 o& $0# #%$ir# prop#r$7 &or l*%,.)*pi%/. #DC allege" that it incurre"
a""itional rental costs for e=uip%ent (hich (ere .ept on stan"by an" labor costs for i"le %anpo(er!
6i.e(ise, the "elay incurre" by P#- cause" the topsoil of the original supplier to be "eplete",
thereby incurring a""e" costs! #DC also clai%e" incurring a""itional costs to %obili2e (ater truc.s
for the plants an" trees (hich ha" alrea"y been "eliere" at the site! 5inally, #DC clai%e" that it
(as necessary to construct a nursery sha"e to protect an" presere the young plants an" trees prior
to actual transplanting at the lan"scape" area!
PEA #1#)+$#, * ##, o& A..i/%-#%$ i% &*'or o& 0#r#i% p#$i$io%#r H#ri$*/# P*r? M*%*/#-#%$
Corpor*$io% 2H#ri$*/#3, (hereby P#- an" Heritage agree" as follo(s$
8. "hat the A77!G-,R hereby transfers cedes and assigns the develo#ment contracts
hereinbefore enumerated in favor of the A77!G-11 including all rights interests causes of
action and its corres#onding obligations under said contracts.
.. "hat the A77!G-11 hereby acce#ts the assignment of all contracts herein before listed
$hich $ere entered into and e+ecuted by A77!G-,R as 6ro&ect Manager of the Heritage
6ar3 6ro&ect a##roved and confirmed by the H66 1+ecom and shall assume A77!G-,REs
rights interests and res#onsibilities obligations underta3ings and liabilities arising from the
said contracts including &udgment a$ards costs or e+#enses relative to the said contracts
#articularly the terrasoleum 8) R ? and the 'andsca#ing contract $hich are no$ sub&ect of
litigation #ending before various courts in 6araSa;ue and the Construction !ndustry
Arbitration Commission.
H#ri$*/# &il#, * p#$i$io% ,*$#, April 4, 2000
4
(i$0 $0# CA &or pro0i5i$io%6i%4+%)$io% (i$0 pr*7#r
&or pr#li-i%*r7 i%4+%)$io% *%, $#-por*r7 r#.$r*i%i%/ or,#r 2TRO3 */*i%.$ $0# CIAC *%, EC,
In the petition, Heritage praye" that a TRO an" then a preli%inary in/unction issue, en/oining
respon"ents fro% further procee"ing (ith, resoling, an" ren"ering an a(ar" in CI-C Case No! *+9
+***! Heritage further praye" that a per%anent in/unction be finally issue"!
H#ri$*/# *ll#/#, i% $0# p#$i$io% $0*$ $0# CIAC 0*. %o 4+ri.,i)$io% o'#r $0# .+54#)$ &+%,.
*/*i%.$ (0i)0 *%7 *(*r, */*i%.$ PEA, * p*r$79,#&#%,*%$ i% $0# CIAC )*.#, (o+l, 5#
#%&or)#,. All#/#,l7, H#ri$*/# 0*. )o-pl#$# )o%$rol, )+.$o,7, *%, *+$0ori$7 o'#r $0# H#ri$*/#
P*r? Pro4#)$ &+%,. *%, 0*. %#'#r .+5-i$$#, i$.#l& *%, $0# &+%,. $o $0# CIAC:. *r5i$r*l
4+ri.,i)$io%!
CA i..+#, $0# TRO Heritage praye" for! The CI-C receie" a copy of the Resolution on the sa%e
"ay!
Preiously, ho(eer, the CI-C alrea"y finishe" the hearing of the case an" the sa%e (as alrea"y
sub%itte" for "ecision as of -pril 8, +*** or one "ay before the filing of the petition in C-93!R! SP
No! @?)+8 (ith the C-!
#)i.io% i% CIAC C*.# (*. pro-+l/*$#,! PEA *%, EC 5o$0 *pp#*l#, $o $0# CA! The cases
(ere consoli"ate"! T0# CA $0#% i..+#, * Ioi%$ #)i.io% ,#%7i%/ ,+# )o+r.# $o $0# p#$i$io%..
PEA &il#, *% *pp#*l (i$0 $0i. Co+r$.T0# Co+r$ *&&ir-#, $0# CA:. Ioi%$ #)i.io% *%,
R#.ol+$io%, ,i.-i..i%/ PEA:. *pp#*l.
On Hune :, +***, the C- issue" a Certification, upon the re=uest of priate respon"ent, .$*$i%/ $0*$
%o Fri$ o& Pr#li-i%*r7 I%4+%)$io% 0*, 5##% i..+#, 57 $0# Co+r$ as of Hune :, +*** an" that the
TRO issue" in a Resolution "ate" -pril :, +*** 0*, *lr#*,7 l*p.#,!
<
T0+., pri'*$# r#.po%,#%$ &il#, (i$0 $0# CIAC * Mo$io% 4(-Parte $o Pro-+l/*$# #)i.io%,
*r/+i%/ $0*$ $0# H09,*7 p#rio, o& #&&#)$i'i$7 o& $0# TRO 0*, *lr#*,7 l*p.#,.
A)$i%/ o% $0# Mo$io%, $0# CIAC i..+#, * No$i)# o& A(*r, ,*$#, I+%# G, 2000 *$$*)0i%/ $0#r#$o
* )op7 o& $0# #)i.io% pro%ulgate" on &ay )<, +***!
:
I$ i. */*i%.$ $0# &or#/oi%/ &*)$+*l 5*)?,rop $0*$ $0# CA i..+#, $0# *..*il#, ,#)i.io% ,#%7i%/
*%, *))or,i%/l7 ,i.-i..i%/ $0# p#$i$io% o& pro0i5i$io% o& H#ri$*/#.
In sai" "ecision, the C- reasone" that consi"ering the petition praye" that the CI-C be prohibite"
fro% further acting on the case an" that the CI-C ha" ren"ere" a Decision thereon, the petition ha"
beco%e %oot an" aca"e%ic, there being nothing %ore to prohibit or en/oin!
The C- further rule" that the CI-C cannot be hel" in conte%pt inas%uch as (hen the Decision of
the CI-C (as issue" on Hune ?, +***, the TRO ha" alrea"y lapse"!
;
H#ri$*/# &il#, * Mo$io% &or R#)o%.i,#r*$io%! MR ENIE.
R45 $o SC 57 H#ri$*/#.
ISSUES<
0)1 Di" the Apro%ulgationA of the CI-C Decision on &ay )<, +*** iolate the TRO issue" by the C-K
0+1 Di" the issuance of the CI-C Decision ren"er the petition file" before the C- %oot an"
aca"e%icK
0,1 Can the petition before the C- be consi"ere" as a petition for certiorariK
243 I. H#ri$*/# *% i%,i.p#%.*5l# p*r$7 $o $0# CIAC )*.#P i, $0# %o%9i%)l+.io% o& H#ri$*/# i%
$0# pro)##,i%/. 5#&or# $0# CIAC 'iol*$# i$. ri/0$ $o ,+# pro)#..P an"
0@1 Is #DC guilty of foru%9shoppingK
SC RULING<
The petition %ust be "enie"!
T0# P#$i$io% H*. 8#)o-# Moo$ *%, A)*,#-i)
Thus, (hile the issuance of the CI-C Decision "i" not ren"er C-93!R! SP No! @;,*? %oot an"
aca"e%ic, the Decision of this Court in 3!R! Nos! )8:;,,9,8 "i"! The Court passe" upon the %erits
of CI-C Case No! *+9+*** an" uphel" the Decision of the CI-C!
The Decision of this Court also bin"s Heritage "espite the fact that it (as not inclu"e" therein as a
transferee of the interests of P#- in the Pro/ect #endente lite.
Petitioner clai%s that it is an in"ispensable party to the procee"ings before the CI-C as the
assignee of the P#- of the latter7s rights, interests, an" obligations in the Heritage Par. Pro/ect!
Thus, its non9inclusion in the procee"ings before the CI-C "eprie" the latter of /uris"iction oer the
case! Heritage argues that it is in possession an" control oer the fun"s of the Heritage Par. Pro/ect
(hich #DC is targeting (ith its co%plaint before the CI-C!
S+)0 )o%$#%$io% i. 5#r#&$ o& -#ri$.
I$ -+.$ 5# r#-#-5#r#, $0*$ (0#% $0# )*.# (*. ori/i%*ll7 &il#, 57 EC 5#&or# $0# CIAC on
Hanuary )+, +***, PEA 0*, %o$ 7#$ $r*%.&#rr#, i$. ri/0$. *%, o5li/*$io%. o'#r $0# Pro4#)$ $o
H#ri$*/#, as ei"ence" by the Dee" of -ssign%ent "ate" &arch +***. T0+., 57 i-pl#*,i%/ PEA
*. r#.po%,#%$, $0# CIAC 0*, 4+ri.,i)$io% o'#r $0# )*.# *$ $0*$ $i-#.
Heritage, ho(eer, clai%s that (hen P#- transferre" its rights an" obligations oer the Pro/ect to
Heritage, the CI-C lost its /uris"iction! In other (or"s, Heritage alleges that a court %ay lose
/uris"iction oer a case base" on the subse=uent actions of the parties! This is unacceptable!
T0# .#$$l#, r+l# i. $0*$ 4+ri.,i)$io% o%)# *)@+ir#, i. %o$ lo.$ +po% $0# i%.$*%)# o& $0# p*r$i#.
5+$ )o%$i%+#. +%$il $0# )*.# i. $#r-i%*$#,. Certainly, it (oul" be the height of in/ustice to allo(
parties that "isagree (ith the "ecision of a /u"icial tribunal to annul the sa%e through the e'pe"ient
of transferring their interests or rights inole" in the case!
A!ERB IMPORTANT< &oreoer, Heritage is %ista.en (hen it clai%s that it is an in"ispensible party
to the case an" that it (as not inclu"e" in the case before the CI-C! 8#i%/ * $r*%.&#r## o& $0#
i%$#r#.$. o& PEA o'#r $0# Pro4#)$ ,+ri%/ $0# p#%,#%)7 o& $0# )*.# 5#&or# $0# CIAC, i$ i.
5o+%, 57 $0# pro)##,i%/. i% li?# -*%%#r *. PEA.C In Oocson v. Court of A##eals this Court held
the )an3 of the 6hili##ine !slands is boun" by the "ecision of the trial court being the
transferee #endente lite of the original "efen"ant therein, "espite the fact that it ha" not been
substitute" for the original "efen"ant an" ha" not been notifie" of the procee"ings against it! >e
rule" that$
F# 0ol, $0*$ $0# r#.po%,#%$ )o+r$ #rr#, (0#% i$ ,#)l*r#, $0*$ $0# ,#)i.io% r#%,#r#, 57 $0#
$ri*l )o+r$ (*. %o$ 5i%,i%/ o% 8PI 5#)*+.# i$ 0*, %o$ 5##% .+5.$i$+$#, &or $0# ori/i%*l
,#&#%,*%$ *%, 0*, %o$ 5##% %o$i&i#, o& $0# pro)##,i%/. */*i%.$ $0#-.
Rule , of Section +* 2%o( S#)$io% 19, R+l# >3 of the Rules of Court proi"es$
SEC. 20. Tr*%.&#r o& I%$#r#.$. Q I% )*.# o& *%7 $r*%.&#r o& i%$#r#.$, $0# *)$io% -*7 5# )o%$i%+#,
57 or */*i%.$ $0# ori/i%*l p*r$7 +%l#.. $0# )o+r$ +po% -o$io% ,ir#)$. $0# p#r.o% $o (0o- $0#
i%$#r#.$ i. $r*%.&#rr#, $o 5# .+5.$i$+$#, i% $0# *)$io% or 4oi%#, (i$0 $0# ori/i%*l p*r$7.
A!ERB IMPORTANT< This Court has "eclare" in a nu%ber of "ecisions that a transferee #endente
lite stan"s in e'actly the sa%e position as its pre"ecessor9in9interest, the original "efen"ant, an" is
boun" by the procee"ings ha" in the case before the property (as transferre" to it! I$ i. * prop#r
5+$ %o$ *% i%,i.p#%.i5l# p*r$7 *. i$ (o+l, i% *%7 #'#%$ 5# 5o+%, 57 $0# 4+,/-#%$ */*i%.$ 0i.
pr#,#)#..or. T0i. (o+l, &ollo( #'#% i& i$ i. %o$ &or-*ll7 i%)l+,#, *. * ,#&#%,*%$ $0ro+/0 *%
*-#%,-#%$ o& $0# )o-pl*i%$.C
!#ril7, $0# %o%9i%)l+.io% o& H#ri$*/# i% $0# pro)##,i%/. 5#&or# $0# CIAC i. o& %o -o-#%$ *.
$0# R+l#. o& Co+r$ .p#)i&i)*ll7 *llo(. $0# pro)##,i%/. $o pro)##, (i$0 $0# ori/i%*l p*r$i#.
(0il# 5i%,i%/ $0# $r*%.&#r##.
The petition haing beco%e %oot an" aca"e%ic, the other issues raise" therein nee" no longer be
"iscusse"! If only to properly gui"e the CI-C in future situations si%ilar herein, ho(eer, the issue of
the allege" iolation of the TRO issue" by the C- shall be "iscusse"!
Republic of the Philippines
SUPREME COURT
&anila
5IRST DIVISION
G.R. No. 1;10>5 A+/+.$ 24, 2009
FILLIAM ONG GENATO, Petitioner,
s!
8ENIAMIN 8ABHON, #$. *l, Respon"ents!
D # C I S I O N
PUNO, 8J.:
R45 P#$i$io% &or R#'i#( o% C#r$ior*ri assailing the C- Decision "enying the petitioner7s %otion for
reconsi"eration!
This is a consoli"ate" case ste%%ing fro% t(o ciil cases file" before the Regional Trial Court!
FACTS<
Fir.$ C*.#<
R#.po%,#%$. 8#%4*-i% M. 8*70o%, #$ *l., &il#, *% *)$io% 5#&or# $0# RTC, Q+#Mo% Ci$7! In their
Co%plaint, respon"ents .o+/0$ $0# ,#)l*r*$io% o& %+lli$7 o& * dacion en pago allege"ly e'ecute"
by respon"ent Ben/a%in Bayhon in faor of petitioner >illia% Ong 3enato!
+
R#.po%,#%$ 8#%4*-i% 8*70o% *ll#/#, $0*$ 0# o5$*i%#, &ro- $0# p#$i$io%#r * lo*% *-o+%$i%/
$o P0P 1,000,000.00=
>
$0*$ $o )o'#r $0# lo*%, 0# #1#)+$#, * ##, o& R#*l E.$*$# Mor$/*/# o'#r
$0# prop#r$7
The e'ecution of the Dee" of Real #state &ortgage (as con"itione" upon the personal assurance of
the petitioner that the sai" instru%ent is only a priate %e%oran"u% of in"ebte"ness an" that it
(oul" neither be notari2e" nor enforce" accor"ing to its tenor!
8
Respon"ent further allege" that he file" a separate procee"ing for the reconstitution of TCT No!
,?*@+ before the RTC, Jue2on City, Branch ?:!
@
Petitioner >illia% Ong 3enato file" an -ns(er in
Interention in the sai" procee"ing an" attache" a copy of an allege" dacion en #ago coering sai"
lot!
<
R#.po%,#%$ *..*il#, $0# dacion en pago *. * &or/#r7 *ll#/i%/ $0*$ %#i$0#r 0# %or 0i. (i&#,
(0o 0*, ,i#, > 7#*r. #*rli#r, 0*, #1#)+$#, i$.
;
In his -ns(er, petitioner 3enato "enie" the clai% of the respon"ent regar"ing the "eath of the
latter7s (ife!
?
He allege" that on the "ate that the real estate %ortgage (as to be signe", respon"ent
intro"uce" to hi% a (o%an as his (ife!
;
He allege" that the respon"ent signe" the dacion en
#ago an" that the e'ecution of the instru%ent (as aboe9boar"!
)*
S#)o%, C*.#<
P#$i$io%#r Filli*- O%/ G#%*$o &il#, *% *)$io% &or .p#)i&i) p#r&or-*%)#, before the RTC,
Jue2on City, Branch :;! In his Co%plaint, petitioner allege" that respon"ent obtaine" a loan fro%
hi% in the a%ount of PhP ),***,***!**! Petitioner allege" further that respon"ent faile" to pay the
loan an" e'ecute" on October +), );?; a dacion en #ago in faor of the petitioner! The dacion en
#ag (as inscribe" an" recor"e" (ith the Registry of Dee"s of Jue2on City!
))
Petitioner further aerre" that "espite "e%an"s, respon"ent refuse" to e'ecute the re=uisite
"ocu%ents to transfer to hi% the o(nership of the lot sub/ect of the dacion en #ago! P#$i$io%#r
pr*7#,, inter alia, &or $0# )o+r$ $o or,#r $0# r#.po%,#%$ $o #1#)+$# $0# &i%*l ,##, o& .*l# *%,
$r*%.&#r o& po..#..io% o& $0# .*i, lo$.
12
#)i.io% o& $0# Co%.oli,*$#, C*.#.<
The t(o cases (ere consoli"ate"
RTC foun" that respon"ent obtaine" a loan in the a%ount of PhP ),***,***!** fro% the petitioner
on Huly ,, );?;! The ter%s of the loan (ere interest pay%ent at @G per %onth (ith an a""itional ,G
penalty in case of nonpay%ent!
),
Fi$0 r#.p#)$ $o $0# dacion en pago, $0# $ri*l )o+r$ 0#l, $0*$ $0# p*r$i#. 0*'# %o'*$#, $0#
*/r##-#%$.
)8
It "e"uce" the noation fro% the subse=uent pay%ents %a"e by the respon"ent to the
petitioner! Of the principal a%ount, the su% of PhP )*+,?:*!** ha" been pai"$ PhP +:,?:*!** on
&arch +,, );;*, PhP @@,***!** on +< &arch );;* an" PhP +*,***!** on )< Noe%ber );;*!
)@
-ll
pay%ents (ere %a"e after the purporte" e'ecution of the dacion en #ago!
The trial court li.e(ise foun" that at the ti%e of the e'ecution of the real estate %ortgage, the (ife of
respon"ent, -%paro &erca"o, (as alrea"y "ea"! It hel" that the property coere" by TCT No!
,?*@+ (as o(ne" in co%%on by the respon"ents an" not by respon"ent Ben/a%in Bayhon alone! I$
)o%)l+,#, $0*$ $0# .*i, lo$ )o+l, %o$ 0*'# 5##% '*li,l7 -or$/*/#, 57 $0# r#.po%,#%$ *lo%#=
$0# ,##, o& -or$/*/# (*. %o$ #%&or)#*5l# *%, o%l7 .#r'#, *. #'i,#%)# o& $0# o5li/*$io% o&
$0# r#.po%,#%$!
)<
In su%, the trial court uphel" the respon"ent7s liability to the petitioner an" or"ere" the latter to pay
the su% of Php @,<8:,),*!**!
):
This a%ount inclu"e" the principal, the stipulate" interest of @G per
%onth, an" the penaltyD an", (as calculate" fro% the "ate of "e%an" until the "ate the RTC
ren"ere" its /u"g%ent!
R#.po%,#%$. *pp#*l#, 5#&or# $0# Co+r$ o& App#*l..
CA RULING<
Respon"ent Ben/a%in Bayhon "ie" (hile the case (as still pen"ing "ecision!
)?

CA r#'#r.#, RTC. I$ 0#l, $0*$ $0# r#*l #.$*$# -or$/*/# *%, $0# dacion en pago (#r# 5o$0
'oi,. The appellate court rule" that at the ti%e the real estate %ortgage an" the dacion en
#ago (ere e'ecute", or on Huly ,, );?; an" October +), );?;, respectiely, the (ife of respon"ent
Ben/a%in Bayhon (as alrea"y "ea"!
);
Thus, she coul" not hae participate" in the e'ecution of the
t(o "ocu%ents! The appellate court struc. "o(n both thedacion en #ago an" the real estate
%ortgage as being si%ulate" or fictitious contracts pursuant to -rticle )8*; of the Ciil Co"e!
+*
The Court of -ppeals hel" further that (hile the principal obligation is ali", the "eath of respon"ent
Ben/a%in Bayhon e'tinguishe" it!
+)
The heirs coul" not be or"ere" to pay the "ebts left by the
"ecease"!
++
Base" on the foregoing, the Court of -ppeals "is%isse" petitioner7s appeal!
P#$i$io%#r G#%*$o &il#, MR. ENIE.
G#%*$o (#%$ $o $0# SC +%,#r R45.
P#$i$io% &or R#'i#(
>hether or not Ben/a%in Bayhon is liable to &r! 3enato in the a%ount of Php @,<8:,),*!** in
principal an" interest as of October ,, );;: an" @G %onthly interest thereafter until the account
shall hae been fully pai"!
+8
The Court of -ppeals erre" in "eclaring the Real #state &ortgage "ate" Huly ,, );?; an" the Dacion
en Pago "ate" October +), );?;, null an" oi"!
+@
>e shall first tac.le the nullity of the dacion en #ago!
F# *&&ir- $0# r+li%/ o& $0# *pp#ll*$# )o+r$ $0*$ $0# .+54#)$ dacion en pago i. * .i-+l*$#, or
&i)$i$io+. )o%$r*)$, *%, 0#%)# 'oi,. The ei"ence sho(s that at the ti%e it (as allege"ly signe" by
the (ife of the respon"ent, his (ife (as alrea"y "ea"! This fin"ing of fact cannot be reerse"!
>e no( go to the ruling of the appellate court e'tinguishing the obligation of respon"ent! -s a
general rule, obligations "erie" fro% a contract are trans%issible! -rticle ),)), par!) of the Ciil
Co"e proi"es$
Contracts ta.e effect only bet(een the parties, their assigns an" heirs, e'cept in case (here the
rights an" obligations arising fro% the contract are not trans%issible by their nature, or by stipulation
or by proision of la(! The heir is not liable beyon" the alue of the property he receie" fro% the
"ece"ent!8avv#hi8
T0# lo*% i% $0i. )*.# (*. )o%$r*)$#, 57 r#.po%,#%$. H# ,i#, (0il# $0# )*.# (*. p#%,i%/
5#&or# $0# Co+r$ o& App#*l.. F0il# 0# -*7 %o lo%/#r 5# )o-p#ll#, $o p*7 $0# lo*%, $0# ,#5$
.+5.i.$. */*i%.$ 0i. #.$*$#. No prop#r$7 or por$io% o& $0# i%0#ri$*%)# -*7 5# $r*%.-i$$#, $o
0i. 0#ir. +%l#.. $0# ,#5$ 0*. &ir.$ 5##% .*$i.&i#,. Notably, throughout the appellate stage of this
case, the estate has been a%ply represente" by the heirs of the "ecease", (ho are also his co9
parties in Ciil Case No! J9;*9:*)+!
A!ERB IMPORTANT< T0# pro)#,+r# i% 'i%,i)*$i%/ -o%#$*r7 )l*i-. i%'ol'i%/ * ,#&#%,*%$ (0o
,i#. 5#&or# &i%*l 4+,/-#%$ i. /o'#r%#, 57 R+l# >, S#)$io% 20 o& $0# R+l#. o& Ci'il Pro)#,+r#,
$o (i$<
Bhen the action is for recovery of money arising from contract. e(press or implied.
and the defendant dies before entry of final )udgment in the court in hich the action
as pending at the time of such death. it shall not be dismissed but shall instead be
alloed to continue until entry of final )udgment. A favorable )udgment obtained by
the plaintiff therein shall be enforced in the manner especially provided in these 5ules
for prosecuting claims against the estate of a deceased person.
P+r.+*%$ $o $0i. pro'i.io%, p#$i$io%#r:. r#-#,7 li#. i% &ili%/ * )l*i- */*i%.$ $0# #.$*$# o& $0#
,#)#*.#, r#.po%,#%$.
>e no( go to the interest a(ar"e" by the trial court! >e note that the interest has been pegge" at
@G per %onth, or <*G per annu%! This is unconscionable, hence cannot be enforce"!
+;
In light of
this, the rate of interest for this .in" of loan transaction has been fi'e" in the case of #astern
Shipping 6ines ! Court of -ppeals,
,*
at )+G per annu%, calculate" fro% October ,, );?;, the "ate of
e'tra/u"icial "e%an"!
,)
5ollo(ing this for%ula, the total a%ount of the obligation of the estate of Ben/a%in Bayhon is as
follo(s$
Plus$ Interest
Principal Php ),***,***!**
6ess$ Partial Pay%ents +:,?:*!**
@@,***!**
+*,***!**
?;:,),*!**
0)+G per annu% ' +* years1 +,)@,,@@+!**
TOT-6$ Php ,,*@*,<?+!**
IN VI#> >H#R#O5, the "ecision of the Court of -ppeals "ate" Septe%ber )<, +**@ is -55IR&#D
(ith the &ODI5IC-TION that the obligation to pay the principal loan an" interest contracte" by the
"ecease" Ben/a%in Bayhon subsists against his estate an" is co%pute" at PhP ,,*@*,<?+!**!
No costs!
SO ORD#R#D!
Republic of the Philippines
SUPREME COURT
&anila
THIRD DIVISION
G.R. No. 1501>5 O)$o5#r >0, 200H
SPOUSES ANTONIO F. ALGURA *%, LORENCITA S.I. ALGURA, petitioners,
s!
THE LOCAL GO!ERNMENT UNIT OF THE CITB OF NAGA, ATTB. MANUEL TEOOON, ENGR.
LEON PALMIANO, NATHAN SERGIO *%, 8ENIAMIN NA!ARRO, SR., respon"ents!
D # C I S I O N
!ELASCO, IR., J.<
Anyone $ho has ever struggled $ith #overty
3no$s ho$ e+tremely e+#ensive it is to be #oor!
RR Ha%es Bal"(in
The Constitution affor"s litigantsW%oneye" or poorWe=ual access to the courtsD %oreoer, it
specifically proi"es that poerty shall not bar any person fro% haing access to the
courts!
)
-ccor"ingly, la(s an" rules %ust be for%ulate", interprete", an" i%ple%ente" pursuant to
the intent an" spirit of this constitutional proision! -s such, filing fees, though one of the essential
ele%ents in court proce"ures, shoul" not be an obstacle to poor litigantsI opportunity to see. re"ress
for their grieances before the courts!
T0# C*.#
R45 P#$i$io% &or R#'i#( o% C#r$ior*ri .##?. $0# *%%+l-#%$ o& $0# Or,#r o& RTC N*/* Ci$7,
Branch +:, in Ciil Case No! ;;988*, entitle" 7#ouses Antonio *. Algura and 'orencita 7.O. Algura v.
"he 'ocal Government (nit of the City of -aga et al., "is%issing the case for failure of petitioners
-lgura spouses to pay the re=uire" filing fees!
+
Since the instant petition inoles only a =uestion of
la( base" on facts establishe" fro% the plea"ings an" "ocu%ents sub%itte" by the parties,
,
the
Court gies "ue course to the instant petition sanctione" un"er Section +0c1 of Rule 8) on -ppeal
fro% the RTCs, an" goerne" by Rule 8@ of the );;: Rules of Ciil Proce"ure!
T0# F*)$.
Spouses -lgura file" a !#ri&i#, Co-pl*i%$ &or ,*-*/#. */*i%.$ $0# N*/* Ci$7 Go'#r%-#%$ *%,
i$. o&&i)#r., arising fro% the allege" illegal "e%olition of their resi"ence an" boar"ing house an" for
pay%ent of lost inco%e "erie" fro% fees pai" by their boar"ers a%ounting to PhP :,***!**
%onthly!
Si-+l$*%#o+.l7, p#$i$io%#r. &il#, *% 4(-Parte Mo$io% $o Li$i/*$# *. I%,i/#%$ Li$i/*%$.,
@
to (hich
petitioner -ntonio -lguraIs Pay Slip No! +8@:,<* 0-nne' A-A of %otion1 (as appen"e", sho(ing a
gross %onthly inco%e of Ten Thousan" 5our Hun"re" Seenty 5our Pesos 0PhP )*,8:8!**1 an" a
net pay of Three Thousan" Si' Hun"re" Si'teen Pesos an" Ninety Nine Centaos 0PhP ,,<)<!;;1
for Ethe %onth ofF Huly );;;!
<
-lso attache" as -nne' ABA to the %otion (as a Huly )8, );;;
C#r$i&i)*$io%
;
i..+#, 57 $0# O&&i)# o& $0# Ci$7 A..#..or o& N*/* Ci$7, (0i)0 .$*$#, $0*$
p#$i$io%#r. 0*, %o prop#r$7 ,#)l*r#, i% $0#ir %*-# &or $*1*$io% p+rpo.#..
5in"ing that petitionersI %otion to litigate as in"igent litigants (as %eritorious, E1#)+$i'# I+,/#
Io.# T. A$i#%M* o& $0# N*/* Ci$7 RTC, i% $0# S#p$#-5#r 1, 1999 Or,#r,
G
/r*%$#, p#$i$io%#r.J
pl#* &or #1#-p$io% &ro- &ili%/ &##..
&ean(hile, as a result of respon"ent Naga City 3oern%entIs "e%olition of a portion of petitionersI
house, the -lguras allege"ly lost a %onthly inco%e of PhP :,***!** fro% their boar"ersI rentals!
>ith the loss of the rentals, the %eager inco%e fro% 6orencita -lguraIs sari5sari store an" -ntonio
-lguraIs s%all ta.e ho%e pay beca%e insufficient for the e'penses of the -lgura spouses an" their
si' 0<1 chil"ren for their basic nee"s inclu"ing foo", bills, clothes, an" schooling, a%ong others!
R#.po%,#%$. &il#, *% A%.(#r (i$0 Co+%$#r)l*i- *r/+i%/ $0*$ $0# ,#&#%.#. o& $0# p#$i$io%#r.
i% $0# )o-pl*i%$ 0*, %o )*+.# o& *)$io%, $0# .po+.#.J 5o*r,i%/ 0o+.# 5lo)?#, $0# ro*, ri/0$
o& (*7, *%, .*i, .$r+)$+r# (*. * %+i.*%)# per se.
Praying that the counterclai% of "efen"ants 0respon"ents1 be "is%isse", petitioners then file" their
Reply (ith 1+56arte Re=uest for a Pre9Trial Setting
)*
before the Naga City RTC on October );, );;;!
On 5ebruary ,, +***, a pre9trial (as hel" (herein respon"ents as.e" for fie 0@1 "ays (ithin (hich
to file a &otion to Dis=ualify Petitioners as In"igent 6itigants!
R#.po%,#%$. &il#, * Mo$io% $o i.@+*li&7 $0# Pl*i%$i&&. &or No%9P*7-#%$ o& Fili%/ F##.! They
asserte" that in a""ition to the %ore than PhP ,,***!** net inco%e of petitioner -ntonio -lgura, (ho
is a %e%ber of the Philippine National Police, spouse 6orencita -lgura also ha" a %ini9store an" a
co%puter shop on the groun" floor of their resi"ence along Baya(as St!, Sta! Cru2, Naga City! -lso,
respon"ents clai%e" that petitionersI secon" floor (as use" as their resi"ence an" as a boar"ing
house, fro% (hich they earne" %ore than PhP ,,***!** a %onth! In a""ition, it (as clai%e" that
petitioners "erie" a""itional inco%e fro% their co%puter shop patroni2e" by stu"ents an" fro%
seeral boar"ers (ho pai" rentals to the%! Hence, respon"ents conclu"e" that petitioners (ere not
in"igent litigants!
Petitioners subse=uently interpose" their Opposition to the &otion
)+
to respon"entsI %otion to
"is=ualify the% for non9pay%ent of filing fees!
N*/* Ci$7 RTC i..+#, *% Or,#r ,i.@+*li&7i%/ p#$i$io%#r. *. i%,i/#%$ li$i/*%$. o% $0# /ro+%,
$0*$ $0#7 &*il#, $o .+5.$*%$i*$# $0#ir )l*i- &or #1#-p$io% &ro- p*7-#%$ o& l#/*l &##. *%, $o
)o-pl7 (i$0 $0# $0ir, p*r*/r*p0 o& R+l# 141, S#)$io% 1G o& $0# R#'i.#, R+l#. o& Co+r$R
,ir#)$i%/ $0#- $o p*7 $0# r#@+i.i$# &ili%/ &##..
1>
P#$i$io%#r. &il#, *% MR. RTC i..+#, *% Or,#r /i'i%/ p#$i$io%#r. $0# oppor$+%i$7 $o )o-pl7
(i$0 $0# r#@+i.i$#. l*i, ,o(% i% S#)$io% 1G, R+l# 141, &or $0#- $o @+*li&7 *. i%,i/#%$ li$i/*%$..
On &ay ),, +***, petitioners sub%itte" their Co%pliance
)@
attaching the affi"aits of petitioner
6orencita -lgura
)<
an" #rlin"a Bangate,
):
to co%ply (ith the re=uire%ents of then Rule )8), Section
)? of the Rules of Court an" in support of their clai% to be "eclare" as in"igent litigants!
In her -ffi"ait, petitioner 6orencita -lgura clai%e" that the "e%olition of their s%all "(elling
"eprie" her of a %onthly inco%e a%ounting to PhP :,***!**! She, her husban", an" their si' 0<1
%inor chil"ren ha" to rely %ainly on her husban"Is salary as a police%an (hich proi"e" the% a
%onthly a%ount of PhP ,,@**!**, %ore or less! -lso, they "i" not o(n any real property as certifie"
by the assessorIs office of Naga City! &ore so, accor"ing to her, the %eager net inco%e fro% her
s%all sari9sari store an" the rentals of so%e boar"ers, plus the salary of her husban", (ere not
enough to pay the fa%ilyIs basic necessities!
To buttress their position as =ualifie" in"igent litigants, petitioners also sub%itte" the affi"ait of
#rlin"a Bangate, (ho atteste" un"er oath, that she personally .ne( spouses -ntonio -lgura an"
6orencita -lgura, (ho (ere her neighborsD that they "erie" substantial inco%e fro% their boar"ersD
that they lost sai" inco%e fro% their boar"ersI rentals (hen the 6ocal 3oern%ent Bnit of the City of
Naga, through its officers, "e%olishe" part of their house because fro% that ti%e, only a fe(
boar"ers coul" be acco%%o"ate"D that the inco%e fro% the s%all store, the boar"ers, an" the
%eager salary of -ntonio -lgura (ere insufficient for their basic necessities li.e foo" an" clothing,
consi"ering that the -lgura spouses ha" si' 0<1 chil"renD an" that she .ne( that petitioners "i" not
o(n any real property!
N*/* Ci$7 RTC ,#%i#, $0# p#$i$io%#r.J Mo$io% &or R#)o%.i,#r*$io%.
Hu"ge Barsaga ratiocinate" that the pay slip of -ntonio 5! -lgura sho(e" that the A3ROSS INCO&#
or TOT-6 #-RNIN3S of plaintiff -lgura E(asF X)*,8:8!** (hich a%ount E(asF oer an" aboe the
a%ount %entione" in the first paragraph of Rule )8), Section )? for pauper litigants resi"ing outsi"e
&etro &anila!A
);
Sai" rule proi"es that the gross inco%e of the litigant shoul" not e'cee" PhP
,,***!** a %onth an" shall not o(n real estate (ith an assesse" alue of PhP @*,***!**! The trial
court foun" that, in 6orencita S!H! -lguraIs &ay ),, +*** -ffi"ait, no(here (as it state" that she
an" her i%%e"iate fa%ily "i" not earn a gross inco%e of PhP ,,***!**!
R45 p#$i$io% $o SC o% p+r# @+#.$io%. o& l*(.
ISSUE<
Shoul" the petitioners be consi"ere" as in"igent litigants (ho =ualify for e'e%ption fro% paying filing
feesK
SC RULING< BES.
The petition is %eritorious!
- reie( of the history of the Rules of Court on suits in forma #au#eris 0pauper litigant1 is necessary
before the Court rules on the issue of the -lgura spousesI clai% to e'e%ption fro% paying filing fees!
>hen the Rules of Court too. effect on Hanuary ), );<8, the rule on pauper litigants (as foun" in
Rule ,, Section ++ (hich proi"e" that$
S#)$io% 22! 6au#er litigant!W-ny court %ay authori2e a litigant to prosecute his action or
"efense as a pauper upon a proper sho(ing that he has no %eans to that effect by affi"aits,
certificate of the correspon"ing proincial, city or %unicipal treasurer, or other(ise! Such
authorityE,F once gienE,F shall inclu"e an e'e%ption fro% pay%ent of legal fees an" fro%
filing appeal bon", printe" recor" an" printe" brief! The legal fees shall be a lien to any
/u"g%ent ren"ere" in the case EfaorableF to the pauper, unless the court other(ise proi"es!
5ro% the sa%e Rules of Court, Rule )8) on 6egal 5ees, on the other han", "i" not contain any
proision on pauper litigants!
On Huly );, );?8, the Court, in -"%inistratie &atter No! ?,9<9,?;9* 0for%erly 3!R! No! <8+:81,
approe" the reco%%en"ation of the Co%%ittee on the Reision of Rates an" Charges of Court
5ees, through its Chair%an, then Hustice 5eli' V! &a.asiar, to reise the fees in Rule )8) of the
Rules of Court to generate fun"s to effectiely coer a"%inistratie costs for serices ren"ere" by
the courts!
+*
- proision on pauper litigants (as inserte" (hich rea"s$
S#)$io% 1H! 6au#er5litigants e+em#t from #ayment of court fees!WPauper9litigants inclu"e
(age earners (hose gross inco%e "o not e'cee" P+,***!** a %onth or P+8,***!** a year
for those resi"ing in &etro &anila, an" P),@**!** a %onth or P)?,***!** a year for those
resi"ing outsi"e &etro &anila, or those (ho "o not o(n real property (ith an assesse" alue
of not %ore than P+8,***!**, or not %ore than P)?,***!** as the case %ay be!
Such e'e%ption shall inclu"e e'e%ption fro% pay%ent of fees for filing appeal bon", printe"
recor" an" printe" brief!
The legal fees shall be a lien on the %onetary or property /u"g%ent ren"ere" in faor of the
pauper9litigant!
To be entitle" to the e'e%ption herein proi"e", the pauper9litigant shall e'ecute an affi"ait
that he "oes not earn the gross inco%e aboe%entione", nor o(n any real property (ith the
assesse" alue afore9%entione" EsicF, supporte" by a certification to that effect by the
proincial, city or to(n assessor or treasurer!
>hen the Rules of Court on Ciil Proce"ure (ere a%en"e" by the );;: Rules of Ciil Proce"ure
0inclusie of Rules ) to :)1 in Supre%e Court Resolution in Bar &atter No! ?*, "ate" -pril ?, );;:,
(hich beca%e effectie on Huly ), );;:, Rule ,, Section ++ of the Reise" Rules of Court (as
superse"e" by Rule ,, Section +) of sai" );;: Rules of Ciil Proce"ure, as follo(s$
S#)$io% 21! !ndigent #arty!W- party %ay be authori2e" to litigate his action, clai% or
"efense as an in"igent if the court, upon an e' parte application an" hearing, is satisfie" that
the party is one (ho has no %oney or property sufficient an" aailable for foo", shelter an"
basic necessities for hi%self an" his fa%ily!
Such authority shall inclu"e an e'e%ption fro% pay%ent of "oc.et an" other la(ful fees, an"
of transcripts of stenographic notes (hich the court %ay or"er to be furnishe" hi%! The
a%ount of the "oc.et an" other la(ful fees (hich the in"igent (as e'e%pte" fro% paying
shall be a lien on any /u"g%ent ren"ere" in the case faorable to the in"igent, unless the
court other(ise proi"es!
-ny a"erse party %ay contest the grant of such authority at any ti%e before /u"g%ent is
ren"ere" by the trial court! If the court shoul" "eter%ine after hearing that the party "eclare"
as an in"igent is in fact a person (ith sufficient inco%e or property, the proper "oc.et an"
other la(ful fees shall be assesse" an" collecte" by the cler. of court! If pay%ent is not
%a"e (ithin the ti%e fi'e" by the court, e'ecution shall issue for the pay%ent thereof,
(ithout pre/u"ice to such other sanctions as the court %ay i%pose!
-t the ti%e the Rules on Ciil Proce"ure (ere a%en"e" by the Court in Bar &atter No! ?*,,
ho(eer, there (as no a%en"%ent %a"e on Rule )8), Section )< on pauper litigants!
On &arch ), +***, Rule )8) on 6egal 5ees (as a%en"e" by the Court in -!&! No! **9+9*)9SC,
(hereby certain fees (ere increase" or a"/uste"! In this Resolution, the Court a%en"e" Section )<
of Rule )8), %a.ing it Section )?, (hich no( rea"s$
S#)$io% 1G! 6au#er5litigants e+em#t from #ayment of legal fees!WPauper litigants 0a1 (hose
gross inco%e an" that of their i%%e"iate fa%ily "o not e'cee" four thousan" 0P8,***!**1
pesos a %onth if resi"ing in &etro &anila, an" three thousan" 0P,,***!**1 pesos a %onth if
resi"ing outsi"e &etro &anila, an" 0b1 (ho "o not o(n real property (ith an assesse" alue
of %ore than fifty thousan" 0P@*,***!**1 pesos shall be e'e%pt fro% the pay%ent of legal
fees!
The legal fees shall be a lien on any /u"g%ent ren"ere" in the case faorably to the pauper
litigant, unless the court other(ise proi"es!
To be entitle" to the e'e%ption herein proi"e", the litigant shall e'ecute an affi"ait that he
an" his i%%e"iate fa%ily "o not earn the gross inco%e aboe%entione", nor "o they o(n
any real property (ith the assesse" alue afore%entione", supporte" by an affi"ait of a
"isintereste" person attesting to the truth of the litigantIs affi"ait!
-ny falsity in the affi"ait of a litigant or "isintereste" person shall be sufficient cause to
stri.e out the plea"ing of that party, (ithout pre/u"ice to (hateer cri%inal liability %ay hae
been incurre"!
A!ERB IMPORTANT< It can be rea"ily seen that the rule on pauper litigants (as inserte" in Rule
)8) (i$0o+$ r#'o?i%/ or *-#%,i%/Section +) of Rule ,, (hich proi"es for the e'e%ption of
pauper litigants fro% pay%ent of filing fees! Thus, on &arch ), +***, there (ere t(o e'isting r+l#.
o% p*+p#r li$i/*%$.D na%ely, R+l# >, S#)$io% 21 an" R+l# 141, S#)$io% 1G!
On -ugust )<, +**8, Section )? of Rule )8) (as further a%en"e" in -"%inistratie &atter No! *89+9
*89SC, (hich beca%e effectie on the sa%e "ate! It then beca%e Section ); of Rule )8), to (it$
S#). 19! !ndigent litigants e(empt from payment of legal fees!R INDI3#NT 6ITI3-NTS
0-1 FHOSE GROSS INCOME AN THAT OF THEIR IMMEIATE FAMILB O NOT
EOCEE AN AMOUNT OU8LE THE MONTHLB MINIMUM FAGE OF AN
EMPLOBEE -ND 0B1 >HO DO NOT O>N R#-6 PROP#RTP >ITH - 5-IR &-RQ#T
V-6B# -S ST-T#D IN TH# CBRR#NT T-C D#C6-R-TION O5 &OR# TH-N THR##
HBNDR#D THOBS-ND 0P,**,***!**1 P#SOS SHALL 8E EOEMPT FROM PABMENT OF
LEGAL FEES!
The legal fees shall be a lien on any /u"g%ent ren"ere" in the case faorable to the in"igent
litigant unless the court other(ise proi"es!
To 5# #%$i$l#, $o $0# #1#-p$io% 0#r#i% pro'i,#,, $0# li$i/*%$ .0*ll #1#)+$# *% *&&i,*'i$
$0*$ 0# *%, 0i. i--#,i*$# &*-il7 ,o %o$ #*r% * /ro.. i%)o-# *5o'#-#%$io%#,, *%,
$0#7 ,o %o$ o(% *%7 r#*l prop#r$7 (i$0 $0# &*ir '*l+# *&or#-#%$io%#,, .+ppor$#, 57 *%
*&&i,*'i$ o& * ,i.i%$#r#.$#, p#r.o% *$$#.$i%/ $o $0# $r+$0 o& $0# li$i/*%$J. *&&i,*'i$! The
current ta' "eclaration, if any, shall be attache" to the litigantIs affi"ait!
-ny falsity in the affi"ait of litigant or "isintereste" person shall be sufficient cause to
"is%iss the co%plaint or action or to stri.e out the plea"ing of that party, (ithout pre/u"ice to
(hateer cri%inal liability %ay hae been incurre"! 0#%phasis supplie"!1
-%en"%ents to Rule )8) 0inclu"ing the a%en"%ent to Rule )8), Section )?1 (ere %a"e to
i%ple%ent R- ;++: (hich brought about ne( increases in filing fees! Specifically, in the -ugust )<,
+**8 a%en"%ent, the ceiling for the gross inco%e of litigants applying for e'e%ption an" that of their
i%%e"iate fa%ily (as increase" fro% PhP 8,***!** a %onth in &etro &anila an" PhP ,,***!** a
%onth outsi"e &etro &anila, to "ouble the %onthly %ini%u% (age of an e%ployeeD an" the
%a'i%u% alue of the property o(ne" by the applicant (as increase" fro% an assesse" alue of
PhP @*,***!** to a %a'i%u% %ar.et alue of PhP ,**,***!**, to be able to acco%%o"ate %ore
in"igent litigants an" pro%ote easier access to /ustice by the poor an" the %arginali2e" in the (a.e
of these ne( increases in filing fees!
E'#% i& $0#r# (*. *% *-#%,-#%$ $o R+l# 141 o% A+/+.$ 1H, 2004, $0#r# (*. .$ill %o
*-#%,-#%$ or r#)*ll o& R+l# >, S#)$io% 21 o% i%,i/#%$ li$i/*%$..
Fi$0 $0i. 0i.$ori)*l 5*)?,rop, l#$ +. %o( -o'# o% $o $0# .ol# i..+#R(0#$0#r p#$i$io%#r. *r#
#1#-p$ &ro- $0# p*7-#%$ o& &ili%/ &##..
It is un"ispute" that the Co%plaint 0Ciil Case No! ;;988*,1 (as file" on Septe%ber ), );;;!
Ho(eer, the Naga City RTC, in its -pril )8, +*** an" Huly ):, +*** Or"ers, i%)orr#)$l7 *ppli#,
R+l# 141, S#)$io% 1G o% L#/*l F##. $hen the a##licable rules at that time $ere R+l# >, S#)$io%
21 o% I%,i/#%$ P*r$7 (hich too. effect on Huly ), );;: an" R+l# 141, S#)$io% 1H o% P*+p#r
Li$i/*%$. (hich beca%e effectie on Huly );, );?8 up to 5ebruary +?, +***!
The ol" Section )<, Rule )8) re=uires applicants to file an e+5#arte %otion to litigate as a pauper
litigant by sub%itting an affi"ait that they "o not hae a gross inco%e of PhP +,***!** a %onth or
PhP +8,***!** a year for those resi"ing in &etro &anila an" PhP ),@**!** a %onth or PhP
)?,***!** a year for those resi"ing outsi"e &etro &anila or those (ho "o not o(n real property (ith
an assesse" alue of not %ore than PhP +8,***!** or not %ore than PhP )?,***!** as the case
%ay be! Thus, there are t(o re=uire%ents$ a1 inco%e re=uire%entWthe applicants shoul" not hae a
gross %onthly inco%e of %ore than PhP ),@**!**, an" b1 property re=uire%entRRthey shoul" not
o(n property (ith an assesse" alue of not %ore than PhP )?,***!**!
In the case at bar, petitioners -lguras sub%itte" the -ffi"aits of petitioner 6orencita -lgura an"
neighbor #rlin"a Bangate, the pay slip of petitioner -ntonio 5! -lgura sho(ing a gross %onthly
inco%e of PhP )*,8:8!**,
+)
an" a Certification of the Naga City assessor stating that petitioners "o
not hae property "eclare" in their na%es for ta'ation!
++
Bn"oubte"ly, petitioners "o not o(n real
property as sho(n by the Certification of the Naga City assessor an" so the property re=uire%ent is
%et! Ho(eer (ith respect to the inco%e re=uire%ent, it is clear that the gross %onthly inco%e of
PhP )*,8:8!** of petitioner -ntonio 5! -lgura an" the PhP ,,***!** inco%e of 6orencita -lgura
(hen co%bine", (ere aboe the PhP ),@**!** %onthly inco%e threshol" prescribe" by then Rule
)8), Section )< an" therefore, the inco%e re=uire%ent (as not satisfie"! The trial court (as
therefore correct in "is=ualifying petitioners -lguras as in"igent litigants although the court shoul"
hae applie" Rule )8), Section )< (hich (as in effect at the ti%e of the filing of the application on
Septe%ber ), );;;! #en if Rule )8), Section )? 0(hich superse"e" Rule )8), Section )< on &arch
), +***1 (ere applie", still the application coul" not hae been grante" as the co%bine" PhP
),,8:8!** inco%e of petitioners (as beyon" the PhP ,,***!** %onthly inco%e threshol"!
Bnrelenting, petitioners ho(eer argue in their &otion for Reconsi"eration of the -pril )8, +***
Or"er "is=ualifying the% as in"igent litigants
+,
that the rules hae been rela'e" by relying on Rule ,,
Section +) of the );;: Rules of Ciil proce"ure (hich authori2es parties to litigate their action as
in"igents if the court is satisfie" that the party is Aone (ho has no %oney or property sufficient an"
aailable for foo", shelter an" basic necessities for hi%self an" his fa%ily!A The trial court "i" not
gie cre"ence to this ie( of petitioners an" si%ply applie" Rule )8) but ignore" Rule ,, Section +)
on In"igent Party!
T0# po.i$io% o& p#$i$io%#r. o% $0# %##, $o +.# R+l# >, S#)$io% 21 o% $0#ir *ppli)*$io% $o
li$i/*$# *. i%,i/#%$ li$i/*%$. 5ri%/. $o $0# &or# $0# i..+# o% (0#$0#r * $ri*l )o+r$ 0*. $o *ppl7
5o$0 R+l# 141, S#)$io% 1H *%, R+l# >, S#)$io% 21 o% .+)0 *ppli)*$io%. or .0o+l, $0# )o+r$
*ppl7 o%l7 R+l# 141, S#)$io% 1H *%, ,i.)*r, R+l# >, S#)$io% 21 *. 0*'i%/ 5##% .+p#r.#,#, 57
R+l# 141, S#)$io% 1H o% L#/*l F##..
The Court rules that Rule ,, Section +) an" Rule )8), Section )< 0later a%en"e" as Rule )8),
Section )? on &arch ), +*** an" subse=uently a%en"e" by Rule )8), Section ); on -ugust )<,
+**,, (hich is no( the present rule1 *r# .$ill '*li, *%, #%&or)#*5l# r+l#. o% i%,i/#%$ li$i/*%$..
5or one, the history of the t(o see%ingly conflicting rules rea"ily reeals that i$ (*. %o$ $0# i%$#%$
o& $0# Co+r$ $o )o%.i,#r $0# ol, S#)$io% 22 o& R+l# >, (hich too. effect on Hanuary ), );;8 $o
0*'# 5##% *-#%,#, *%, .+p#r.#,#, 57 R+l# 141, S#)$io% )<, (hich too. effect on Huly );, );?8
through -!&! No! ?,9<9,?;9*!
I& $0*$ i. $0# )*.#, $0#% $0# S+pr#-# Co+r$, +po% $0# r#)o--#%,*$io% o& $0# Co--i$$## o%
$0# R#'i.io% o% R+l#., )o+l, 0*'# *lr#*,7 ,#l#$#, S#)$io% 22 &ro- R+l# > (0#% i$ *-#%,#,
R+l#. 1 $o ;1 *%, *ppro'#, $0# 199; R+l#. o& Ci'il Pro)#,+r#, (hich too. effect on Huly ), );;:!
The fact that Section ++ (hich beca%e Rule ,, Section +) on in"igent litigant (as retaine" in the
rules of proce"ure, een elaborating on the %eaning of an in"igent party, an" (as also strengthene"
by the a""ition of a thir" paragraph on the right to contest the grant of authority to litigate only goes
to sho( that there (as no intent at all to consi"er sai" rule as e'punge" fro% the );;: Rules of Ciil
Proce"ure!
5urther%ore, Rule )8) on in"igent litigants (as a%en"e" t(ice$ &ir.$ on &arch ), +*** an" the
secon" on -ugust )<, +**8D an" yet, "espite these t(o a%en"%ents, there (as no atte%pt to "elete
Section +) fro% sai" Rule ,! This clearly einces the "esire of the Court to %aintain the t(o 0+1 rules
on in"igent litigants to coer applications to litigate as an in"igent litigant!
It %ay be argue" that Rule ,, Section +) has been i%plie"ly repeale" by the recent +*** an" +**8
a%en"%ents to Rule )8) on legal fees! T0i. po.i$io% i. 5#r#&$ o& -#ri$. I-pli#, r#p#*l. *r#
&ro(%#, +po% +%l#.. $0# i%$#%$ o& $0# &r*-#r. o& $0# r+l#. i. +%#@+i'o)*l! It has been
consistently rule" that$
0r1epeals by i%plication are not faore", an" (ill not be "ecree", unless it is %anifest that the
legislature so inten"e"! -s la(s are presu%e" to be passe" (ith "eliberation an" (ith full
.no(le"ge of all e'isting ones on the sub/ect, it is but reasonable to conclu"e that in passing
a statuteE,F it (as not inten"e" to interfere (ith or abrogate any for%er la( relating to sa%e
%atter, unless the repugnancy bet(een the t(o is not only irreconcilable, but also clear an"
conincing, an" flo(ing necessarily fro% the language use", unless the later act fully
e%braces the sub/ect %atter of the earlier, or unless the reason for the earlier act is beyon"
pera"enture re%oe"! Hence, eery effort %ust be use" to %a.e all acts stan" an" if,
by any reasonableconstruction they can be reconcile", the later act (ill not operate as a
repeal of the earlier!
+8
0#%phasis supplie"1!
A!ERB IMPORTANT$ Instea" of "eclaring that Rule ,, Section +) has been superse"e" an"
i%plie"ly a%en"e" by Section )? an" later Section ); of Rule )8), $0# Co+r$ &i%,. $0*$ $0# $(o
r+l#. )*% *%, .0o+l, 5# 0*r-o%iM#,.C
The Court opts to reconcile Rule ,, Section +) an" Rule )8), Section ); because it is a settle"
principle that (hen conflicts are seen bet(een t(o proisions, all efforts %ust be %a"e to har%oni2e
the%! Hence, Aeery statute Eor ruleF %ust be so construe" an" har%oni2e" (ith other statutes Eor
rulesF as to for% a unifor% syste% of /urispru"ence!A
+@
In Manila Ooc3ey Club !nc. v. Court of A##eals, this Court enunciate" that in the interpretation of
see%ingly conflicting la(s, efforts %ust be %a"e to first har%oni2e the%! This Court thus rule"$
Conse=uently, eery statute shoul" be construe" in such a (ay that (ill har%oni2e it (ith
e'isting la(s! This principle is e'presse" in the legal %a'i% Iinter#retare et concordare leges
legibus est o#timus inter#retandi,I that is, to interpret an" to "o it in such a (ay as to
har%oni2e la(s (ith la(s is the best %etho" of interpretation!
+<
A!ERB IMPORTANT< I% $0# li/0$ o& $0# &or#/oi%/ )o%.i,#r*$io%., $0#r#&or#, $0# $(o 223 r+l#.
)*% .$*%, $o/#$0#r *%, *r# )o-p*$i5l# (i$0 #*)0 o$0#r.
F0#% *% *ppli)*$io% $o li$i/*$# *. *% i%,i/#%$ li$i/*%$ i. &il#,, $0# )o+r$ .0*ll .)r+$i%iM# $0#
*&&i,*'i$. *%, .+ppor$i%/ ,o)+-#%$. .+5-i$$#, 57 $0# *ppli)*%$ $o ,#$#r-i%# i& $0# *ppli)*%$
)o-pli#. (i$0 $0# i%)o-# *%, prop#r$7 .$*%,*r,. pr#.)ri5#, i% $0# pr#.#%$ S#)$io% 19 o&
R+l# 141R$0*$ i., $0# *ppli)*%$J. /ro.. i%)o-# *%, $0*$ o& $0# *ppli)*%$J. i--#,i*$# &*-il7
,o %o$ #1)##, *% *-o+%$ ,o+5l# $0# -o%$0l7 -i%i-+- (*/# o& *% #-plo7##= *%, $0#
*ppli)*%$ ,o#. %o$ o(% r#*l prop#r$7 (i$0 * &*ir -*r?#$ '*l+# o& -or# $0*% T0r## H+%,r#,
T0o+.*%, P#.o. 2P0P >00,000.003. I& $0# $ri*l )o+r$ &i%,. $0*$ $0# *ppli)*%$ -##$. $0# i%)o-#
*%, prop#r$7 r#@+ir#-#%$., $0# *+$0ori$7 $o li$i/*$# *. i%,i/#%$ li$i/*%$ i. *+$o-*$i)*ll7
/r*%$#, *%, $0# /r*%$ i. * -*$$#r o& ri/0$.C
Ho(#'#r, i& $0# $ri*l )o+r$ &i%,. $0*$ o%# or 5o$0 r#@+ir#-#%$. 0*'# %o$ 5##% -#$, $0#% i$
(o+l, .#$ * 0#*ri%/ $o #%*5l# $0# *ppli)*%$ $o pro'# $0*$ $0# *ppli)*%$ 0*. D%o -o%#7 or
prop#r$7 .+&&i)i#%$ *%, *'*il*5l# &or &oo,, .0#l$#r *%, 5*.i) %#)#..i$i#. &or 0i-.#l& *%, 0i.
&*-il7.D In that hearing, the a"erse party %ay a""uce counterailing ei"ence to "isproe the
ei"ence presente" by the applicantD after (hich the trial court (ill rule on the application "epen"ing
on the ei"ence a""uce"! In a""ition, Section +) of Rule , also proi"es that the a"erse party %ay
later still contest the grant of such authority at any ti%e before /u"g%ent is ren"ere" by the trial
court, possibly base" on ne(ly "iscoere" ei"ence not obtaine" at the ti%e the application (as
hear"! If the court "eter%ines after hearing, that the party "eclare" as an in"igent is in fact a person
(ith sufficient inco%e or property, the proper "oc.et an" other la(ful fees shall be assesse" an"
collecte" by the cler. of court! If pay%ent is not %a"e (ithin the ti%e fi'e" by the court, e'ecution
shall issue or the pay%ent of prescribe" fees shall be %a"e, (ithout pre/u"ice to such other
sanctions as the court %ay i%pose!
The Court conce"es that Rule )8), Section ); proi"es specific stan"ar"s (hile Rule ,, Section +)
"oes not clearly "ra( the li%its of the entitle%ent to the e'e%ption! Qno(ing that the litigants %ay
abuse the grant of authority, the trial court %ust use soun" "iscretion an" scrutini2e ei"ence strictly
in granting e'e%ptions, a(are that the applicant has not hur"le" the precise stan"ar"s un"er Rule
)8)! The trial court %ust also guar" against abuse an" %isuse of the priilege to litigate as an
in"igent litigant to preent the filing of e'orbitant clai%s (hich (oul" other(ise be regulate" by a
legal fee re=uire%ent!
T0+., $0# $ri*l )o+r$ .0o+l, 0*'# *ppli#, R+l# >, S#)$io% 21 $o $0# *ppli)*$io% o& $0# Al/+r*.
*&$#r $0#ir *&&i,*'i$. *%, .+ppor$i%/ ,o)+-#%$. .0o(#, $0*$ p#$i$io%#r. ,i, %o$ .*$i.&7 $0#
$(i% r#@+ir#-#%$. o% /ro.. -o%$0l7 i%)o-# *%, o(%#r.0ip o& r#*l prop#r$7 +%,#r R+l# 141.
Instea" of "is=ualifying the -lguras as in"igent litigants, the trial court shoul" hae calle" a hearing
as re=uire" by Rule ,, Section +) to enable the petitioners to a""uce ei"ence to sho( that they
"i"nIt hae property an" %oney sufficient an" aailable for foo", shelter, an" basic necessities for
the% an" their fa%ily!
+:
In that hearing, the respon"ents (oul" hae ha" the right to also present
ei"ence to refute the allegations an" ei"ence in support of the application of the petitioners to
litigate as in"igent litigants! Since this Court is not a trier of facts, it (ill hae to re%an" the case to
the trial court to "eter%ine (hether petitioners can be consi"ere" as in"igent litigants using the
stan"ar"s set in Rule ,, Section +)!
AOCTRINE< R#)*pi$+l*$i%/ $0# r+l#. o% i%,i/#%$ li$i/*%$., $0#r#&or#, i& $0# *ppli)*%$ &or
#1#-p$io% -##$. $0# .*l*r7 *%, prop#r$7 r#@+ir#-#%$. +%,#r S#)$io% 19 o& R+l# 141, $0#% $0#
/r*%$ o& $0# *ppli)*$io% i. -*%,*$or7.
O% $0# o$0#r 0*%,, (0#% $0# *ppli)*$io% ,o#. %o$ .*$i.&7 o%# or 5o$0 r#@+ir#-#%$., $0#% $0#
*ppli)*$io% .0o+l, %o$ 5# ,#%i#, o+$ri/0$= i%.$#*,, $0# )o+r$ .0o+l, *ppl7 $0# Di%,i/#%)7
$#.$D +%,#r S#)$io% 21 o& R+l# > *%, +.# i$. .o+%, ,i.)r#$io% 2,i.)r#$io%*r73 i% ,#$#r-i%i%/
$0# -#ri$. o& $0# pr*7#r &or #1#-p$io%.C
-ccess to /ustice by the i%poerishe" is hel" sacrosanct un"er -rticle III, Section )) of the );?:
Constitution! The -ction Progra% for Hu"icial Refor%s 0-PHR1 itself, initiate" by for%er Chief Hustice
Hilario 3! Dai"e, Hr!, place" pri%e i%portance on Ieasy access to /ustice by the poorI as one of its
si' %a/or co%ponents! 6i.e(ise, the /u"icial philosophy of 'iberty and 6ros#erity of Chief Hustice
-rte%io V! Panganiban %a.es it i%peratie that the courts shall not only safeguar" but also enhance
the rights of in"ii"ualsW(hich are consi"ere" sacre" un"er the );?: Constitution! >ithout "oubt,
one of the %ost precious rights (hich %ust be shiel"e" an" secure" is the unha%pere" access to
the /ustice syste% by the poor, the un"erpriilege", an" the %arginali2e"!
FHEREFORE, the petition is GRANTE an" the -pril )8, +*** Or"er granting the "is=ualification of
petitioners, the Huly ):, +*** Or"er "enying petitionersI &otion for Reconsi"eration, an" the
Septe%ber )), +**) Or"er "is%issing the case in Ciil Case No! RTC9;;988*, before the Naga City
RTC, Branch +: are ANNULLE an"SET ASIE! 5urther%ore, the Naga City RTC is or"ere" to set
the A1+56arte &otion to 6itigate as In"igent 6itigantsA for hearing an" apply Rule ,, Section +) of the
);;: Rules of Ciil Proce"ure to "eter%ine (hether petitioners can =ualify as in"igent litigants!
No costs!
SO ORERE.