Leticia Naguit Aquino vs Cesar B.

Quiason
G.R. No. 201248, March 11, 2015

A complaint for Annulment and Quieting of Title was filed before the RTC by the petitioners. They alleged that they were
the heirs of the late Epifanio Makam and Severina Bautista, who acquired a house and lot consisting of 557 square
meters, by virtue of a Deed of Sale, dated April 20, 1894; that since then, they and their predecessors-in-interest had
been in open, continuous, adverse, and notorious possession for more than a hundred years, constructing houses and
paying real estate taxes on the property; that sometime in June 2005, they received various demand letters from the
respondents.

The respondents claiming ownership over the subject property and demanding that they vacate the same; that upon
inquiry with the Register of Deeds of San Fernando, Pampanga, they confirmed that the property had been titled in the
name of respondents under Transfer Certificate of Title (TCT) No. 213777-R; that the said title was invalid, ineffective,
voidable or unenforceable; and that they were the true owners of the property. Respondents asserted that they were the
absolute owners of the subject land as per TCT No. 213777-R; that they had inherited the same from their predecessor-
in-interest, Fausta Baluyut, one of the registered owners under Original Certificate of Title (OCT) No. RO-1138 (11376),
as per the Project of Partition and Deed of Agreement and those petitioners had been occupying the property by mere
tolerance. They denied the allegations in the complaint and proffered affirmative defenses with counterclaims.

They argued that: First, the petitioners "have no valid, legal and sufficient cause of action "against them, because their
deed of sale was spurious and could not prevail over Land Registration Decree No. 122511 issued on June 28, 1919 in
Land Registration Case No. 5, LRC Records No. 128, by the Court of First Instance of Pampanga, in favor of their
predecessor-in-interest. The predecessors-in-interest of petitioners were among the oppositors in the land registration
proceeding but, nevertheless, after the trial, the subject lot was awarded, decreed and titled in favor of respondents'
predecessor-in-interest, as per OCT No. RO-1138 (11376) of the Registry of Deeds of Pampanga. Second, the action was
barred by prescription and that petitioners were guilty of laches in asserting their interest over the subject lot, consideri ng
that Land Registration Decree No. 122511 was issued on June 28, 1919 and OCT No. RO-1138 (11376) was issued on
May 12, 1922. Hence, it was much too late for petitioners to institute the action after more than 80 years. They also raised
the settled rule that a title registered under the Torrens system could not be defeated by adverse, open and notorious
possession, or by prescription. Third, the action was also barred by res judicata and violated the prohibition against forum
shopping, considering that petitioners had earlier filed a similar case for quieting of title against respondents, docketed as
Civil Case No. 5487, which the RTC-Br. 56 dismissed.

As regards the allegation of prescription, the petitioners countered that an action to quiet title did not prescribe if the
plaintiffs were in possession of the property in question. They argued that they were neither guilty of laches nor were they
in possession of the property by mere tolerance, their possession being in the concept of owner for more than a hundred
years.

Lastly, regarding the argument on res judicata, petitioners explained that they were not the same plaintiffs in Civil Case
No. 5487 and that the case was dismissed without prejudice. Petitioners argue that the CA gravely erred in considering
external factors beyond the allegations in the petition. They aver that it is a settled rule that to determine the sufficiency of
a cause of action, only facts alleged in the complaint shall be considered, and it is error for the court to take cognizance of
external facts or hold a preliminary hearing to determine their existence.

Respondents, on the other hand, echo the ruling of the CA that it was within the discretion of the trial court to conduct a
preliminary hearing on the affirmative defense of lack of cause of action or failure to state a cause of action, where both
parties were given the chance to submit arguments and evidence for or against the dismissal of the complaint.
Furthermore, they argue that the Court has previously upheld cases where the court took into account external factors in
the dismissal of the complaint on the ground of lack of cause of action. They assert that since petitioners were given
reasonable opportunity to present evidence to prove their cause of action, they are now estopped from invoking the rule
that only allegations in the complaint should be considered.

Issue: Whether the CA erred in affirming the dismissal of petitioners' complaint on the ground of lack of cause of
action or failure to state a cause of action.

Held:
The Court notes that respondents raised the affirmative defense in their Answer that petitioners "have no valid, legal and
sufficient cause of action," raising factual matters, which is effectively the ground of "lack of cause of action."

The distinction between the grounds of "failure to state a cause of action" and "lack of cause of action" was aptly
discussed in Dabuco vs. Court of Appeals, to wit:
As a preliminary matter, we wish to stress the distinction between the two grounds for dismissal of an action: failure to state
a cause of action, on the one hand, and lack of cause of action, on the other hand. The former refers to the insufficiency of
allegation in the pleading, the latter to the insufficiency of factual basis for the action. Failure to state a cause may be raised
in a Motion to Dismiss under Rule 16, while lack of cause may be raised any time. Dismissal for failure to state a cause can
be made at the earliest stages of an action. Dismissal for lack of cause is usually made after questions of fact have been
resolved on the basis of stipulations, admissions or evidence presented.

Although the two grounds were used interchangeably, it can be gleaned from the decisions of both the trial court and the
CA that respondents' defense of "lack of cause of action" was actually treated as a "failure to state a cause of action,"
which is a ground for a motion to dismiss under Rule 16. This is apparent from their reliance on Section 6 of Rule 16,
which pertains to grounds of a motion to dismiss raised as affirmative defenses; as well as the doctrines cited in resolving
the case. The CA even referred to both as one and the same ground for a motion to dismiss when it stated that:
"Indubitably, lack of cause of action or failure to state a cause of action, being one of the grounds for a motion to dismiss,
is included thereby."

The trial court held a preliminary hearing resolving the ground of "lack of cause of action" pursuant to Section 6 of Rule
16, which allows the court to hold a preliminary hearing on grounds for dismissal provided in the same rule that have been
raised as an affirmative defense in the answer. The ground of "lack of cause of action," as already explained, however, is
not one of the grounds for a motion to dismiss under Rule 16, and hence, not proper for resolution during a preliminary
hearing held pursuant to Section 6. On this point alone, the trial court clearly erred in receiving evidence on the ground of
"lack of cause of action" during the preliminary hearing. The factual matters raised by respondents in their affirmative
defense arguing the non-existence of a cause of action, should have been duly resolved during a trial on the merits of the
case. Rule 16 of the Rules of Court enumerates the grounds for a motion to dismiss. The pertinent ground is found under
Section 1(g), which reads as follows:

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

The test for determining the existence of a cause of action was amply discussed in Insular Investment and Trust
Corporation v. Capital One Equities Corporation, citing Perpetual Savings Bank v. Fajardo, to wit:

The familiar test for determining whether a complaint did or did not state a cause of action against the defendants
is whether or not, admitting hypothetically the truth of the allegations of fact made in the complaint, a judge may
validly grant the relief demanded in the complaint. In Rava Development Corporation v. Court of Appeals, the Court
elaborated on this established standard in the following manner:

"The rule is that a defendant moving to dismiss a complaint on the ground of lack of cause of action is regarded as having
hypothetically admitted all the averments thereof. The test of the sufficiency of the facts found in a petition as constituting
a cause of action is whether or not, admitting the facts alleged, the court can render a valid judgment upon the same in
accordance with the prayer thereof (Consolidated Bank and Trust Corp. v. Court of Appeals, 197 SCRA 663 [1991]).

In determining the existence of a cause of action, only the statements in the complaint may properly be
considered. It is error for the court to take cognizance of external facts or hold preliminary hearings to determine their
existence. If the allegation in a complaint furnish sufficient basis by which the complaint may be maintained, the same
should not be dismissed regardless of the defenses that may be assessed by the defendants.

In the case at bench, petitioners' cause of action relates to an action to quiet title under Article 476 of the Civil Code,
which provides:

Article 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record,
claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective,
voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet
title.

An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein.

In order that an action for quieting of title may prosper, two requisites must concur: (1) the plaintiff or complainant has a
legal or equitable title or interest in the real property subject of the action; and (2) the deed, claim, encumbrance, or
proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima
facie appearance of validity or legal efficacy.
Evangelista v. Santiago elucidates:

The affirmative defense that the Complaint stated no cause of action, similar to a motion to dismiss based on the same
ground, requires a hypothetical admission of the facts alleged in the Complaint. In the case of Garcon v. Redemptorist
Fathers, this Court laid down the rules as far as this ground for dismissal of an action or affirmative defense is concerned:

It is already well-settled that in a motion to dismiss a complaint based on lack of cause of action, the question submitted to
the court for determination is the sufficiency of the allegations of fact made in the complaint to constitute a cause of action,
and not on whether these allegations of fact are true, for said motion must hypothetically admit the truth of the facts alleged
in the complaint; that the test of the sufficiency of the facts alleged in the complaint is whether or not, admitti ng the facts
alleged, the court could render a valid judgment upon the same in accordance with the prayer of said complaint. Stated
otherwise, the insufficiency of the cause of action must appear in the face of the complaint in order to sustain a dismissal
on this ground, for in the determination of whether or not a complaint states a cause of action, only the facts alleged therein
and no other matter may be considered, and the court may not inquire into the truth of the allegations, and find them to be
false before a hearing is had on the merits of the case; and it is improper to inject in the allegations of the complaint facts
not alleged or proved, and use these as basis for said motion.

Exceptions and Section 6 of Rule 16 not applicable

The Court does not discount, however, that there are exceptions to the general rule that allegations are hypothetically
admitted as true and inquiry is confined to the face of the complaint. First, there is no hypothetical admission of (a) the
veracity of allegations if their falsity is subject to judicial notice; (b) allegations that are legally impossible; (c) facts
inadmissible in evidence; and (d) facts which appear, by record or document included in the pleadings, to be unfounded.,
inquiry is not confined to the complaint if culled (a) from annexes and other pleadings submitted by the parties; (b) from
documentary evidence admitted by stipulation which disclose facts sufficient to defeat the claim; or (c) from evidence
admitted in the course of hearings related to the case.

Pointing to the exception that inquiry was not confined to the complaint if evidence had been presented in the course of
hearings related to the case, the CA ruled that it was within the trial court's discretion to receive and consider other
evidence aside from the allegations in the complaint in resolving a party's affirmative defense. It held that this discretion
was recognized under Section 6 of Rule 16 of the Rules of Court, which allowed the court to conduct a preliminary
hearing, motu proprio, on the defendant's affirmative defense if no corresponding motion to dismiss was filed. This section
reads in part:

Section 6. Pleading grounds as affirmative defenses. - If no motion to dismiss has been filed, any of the grounds for
dismissal provided for in this Rule may be pleaded as an affirmative defense in the answer and, in the discretion of the
court, a preliminary hearing may be had thereon as if a motion to dismiss had been filed.

A review of the first ground under paragraph 6 of the answer reveals that respondents alleged that "plaintiffs have no
valid, legal and sufficient cause of action against the defendants." It is at this point that it must again be emphasized
that it is not "lack or absence of cause of action" that is a ground for dismissal of the complaint under Rule 16, but rather,
that "the complaint states no cause of action." The issue submitted to the court was, therefore, the determination of the
sufficiency of the allegations in the complaint to constitute a cause of action and not whether those allegations of fact were
true, as there was a hypothetical admission of facts alleged in the complaint. An affirmative defense, raising the ground
that there is no cause of action as against the defendants poses a question of fact that should be resolved after the
conduct of the trial on the merits. A reading of respondents' arguments in support of this ground readily reveals that the
arguments relate not to the failure to state a cause of action, but to the existence of the cause of action, which goes into
the very crux of the controversy and is a matter of evidence for resolution after a full-blown hearing.

It is of note that although the trial court might not have erred in holding a preliminary hearing on the affirmative defenses
of prescription and res judicata, it is readily apparent from the decisions of the lower courts that no disquisition whatsoever
was made on these grounds. It cannot be denied that evidence in support of the ground of "lack of cause of action" was
received and given great weight by the trial court. In fact, all the evidence given credence by the trial court were only in
support of the ground of "lack of cause of action." This all the more highlight that the trial court erred in receiving evidence
to determine whether the complaint failed to state a cause of action.

Although neither the RTC nor the CA ruled on the affirmative defenses of prescription and res judicata, it appears that this
case could not have been dismissed on these grounds. First, an action to quiet title is imprescriptible if the plaintiffs are in
possession of the property, which is the situation prevailing in the present case. Second, there appears to be no res
judicata nor a violation of the prohibition against forum shopping considering that Civil Case No. 5487 had been
dismissed, without prejudice, years before petitioners initiated their complaint for quieting of title.
Swagman Hotel, Inc. vs Court of Appeals
GR 161135 Apr 8 2005
→ Full Text ←
Facts:
Swagman Hotel, Inc., through its representatives, obtained from Neal a loan which is payable after 3 years and with
interest per annum payable every 3 months. After a year, Swagman suffered business reverses prompting it to
renegotiate the terms of the loan with Neal. It was agreed that Neal waives the payment of interests and that the
principal loan shall be paid every month instead of quarterly. After the renegotiation, the cash vouchers or receipts
acknowledged by the parties state that the payments therein represent “Capital Investment” and “Capital
Repayment”.

Barely 2 years after however, Neal sent a letter informing the corporation that he is terminating the loans and
demanding that the total amount of the loan and unpaid interests be paid. Subsequently, Neal filed a complaint for
sum of money and damages. Swagman answered that the complaint is dismissible for lack of cause of action since
the loan is not yet due and demandable and that there was novation in the contract. But the RTC held in favor of
Neal, rationating that although there was no cause of action at the filing of the complaint, the debt has already
matured during the days the hearings were held, thus making it due as of date.

Issue 1: W/N a complaint that lacks a cause of action at the time it was filed be cured by the accrual of a cause of
action during the pendency of the case
No. Jurisprudence states that unless the plaintiff has a valid and subsisting cause of action at the time his action is
commenced, the defect cannot be cured or remedied by the acquisition or accrual of one while the action is
pending, and a supplemental complaint or an amendment setting up such after-accrued cause of action is not
permissible. (Surigao Mines vs Harris, 1935)

Issue 2: W/N there was novation in the terms of the promissory notes
Yes. Under Article 1253 of the Civil Code, it is presumed that if the debt produces interest, payments were applied
first to the interest before the principal. But in this case, the receipts describing the payments as capital
repayment show that obligation to pay the interest was no longer subsisting. The receipts prove that the payments
were for the principal loans and that the interests were waived by Neal. There was therefore a novation of the terms
of the loan.

The resulting novation in this case was of the modificatory type, not the extinctive type, since the obligation to pay a
sum of money remains in force. Thus, since Swagman did not renege on its obligation to pay the monthly
installments conformably with their new agreement and even continued paying during the pendency of the case,
Neal had no cause of action to file the complaint. It is only upon debtor’s default in the payment of the monthly
amortizations that a cause of action would arise and give the creditor a right to maintain an action against the
petitioner. ##

SPS. PEREZ V HERMANO

[GR NO. 147417] | [July 8,2005] | [Chico-Nazario]

CASE SUMMARY Must be recit ready. Important facts and ruling of the court plus basis

Petitioners filed a case for the enforcement of contract and damages against respondent. Respondent filed a motion to
dismiss the complaint arguing there was a misjoinder of causes of action, which the RTC granted. The RTC dismissed the
MR which was denied, and on appeal through a Rule 65 petition for certiorari, the CA dismissed for having been filed
beyond the reglementary period. The Supreme Court ruled first that the case was not filed beyond the reglementary
period, as Section 4 on Rule 65 was amended by AM No. 00-23-SC, which clarified the 60 day rule that such 60-day
period starts to run from receipt of notice of the denial of the MR, if one is filed.. They also said that there was no
misjoinder of causes of action, as there were various questions of fact and law common to both Zescon Land, Inc., and
respondent Hermano arising from a series of transactions over the same properties. The RTC found that there was no
joinder on the parties, hence the misjoinder, but the Supreme Court found that if the joinder involves different parties, as
in this case, there must be a question of fact or of law common to both parties joined, arising out of the same
transaction or series of transactions. Such questions were sufficiently alleged in the complaint by Petitioners in their
complaint.

DOCTRINE copy SCRA syllabus related to the topic if possible

It is well to remember that the joinder of causes of action may involve the same parties or different parties. If the
joinder involves different parties, as in this case, there must be a question of fact or of law common to both parties
joined, arising out of the same transaction or series of transactions.

FACTS bullet points

 April 27, 1998 - Petitioners filed a civil case for enforcement of contract and damages with prayer for the
issuance of a TRO and/or preliminary injunction against respondent before QC RTC.
 Jan 17, 2000 – Respondent filed a “motion with leave to dismiss the complaint or ordered severed for
separate trial” arguing there was a misjoinder of causes of action under Sec 6 Rule 2 which was granted in
an order dated Feb 28, 2000
 March 21, 2000 – petitioners received the order
 March 23, 2000 – petitioners moved for motion for reconsideration, which was denied by the trial court on
May 25, 2000, and received by petitioners on June 18, 2000.
 August 17, 2000 – petitioners filed original action for certiorari before the CA imputing grave abuse of
discretion on the part of the RTC in dismissing the complaint against respondent
 CA dismissed the petition for having been filed beyond the reglementary period pursuant to Sec 4 Rule 65
of the 1997 Rules on Civil Procedure amended by A.M. No. 00-2-03-50

PROCEDURE SUMMARY
 Action (Petition for review, appeal of CA decision Decision (RTC: petition denied)
etc.)
Civil Case for Enforcement of contract and damages
w/ prayer for TRO w/ RTC by PET
Motion w/ leave to dismiss the complaint due to RTC: Motion Granted
misjoinder of causes of action by RESP
MR by PET RTC: MR Denied
Original Action for Certiorari alleging GAD by RTC CA: Petition Dismissed; filed beyond period
Rule 45 to the SC SC: Reversed CA Decision

ISSUE state all issues first. Bold the one related to the subject

1. WON PETS FILED WITHIN REGLEMENTARY PERIOD  YES

2. WON RTC JUDGE GRAVELY ABUSED HIS DISCRETION IN DROPPING THE CASE DUE TO MISJOINDER OF
CAUSES OF ACTION?  YES

RATIO Bold important words or phrases

1. WON  YES. Sec 4 was amended by A.M. No. 00-2-03-SC, and amendment should be applied
retroactively because it is considered curative in nature, as it remedied the confusion caused by the
original Circular No. 39-98
a. At the time petitioners filed their petition for certiorari (August 17, 2000) the rule then
prevailing was Sec 4 Rule 65 as amended by Circular No. 39-98. However, on September 1,
2000, Sec 4 was amended by A.M. No. 00-2-03- SC to read:

“Sec 4 – The petition shall be filed not later than 60 days from notice of the judgment or order resolution. In case of
a motion for reconsideration or new trial is timely filed, whether such motion is required or not, the 60-day period
shall be counted from notice of the denial of said motion.”
i. Under the amendment, the 60-day period starts to run from receipt of notice of the
denial of the MR, if one is filed.
b. The amendment should be applied retroactively because it is considered curative in nature, as
it remedied the confusion caused by Circular No. 39-98 (because prior to the amendment, a
party had a fresh period from receipt of the order denying the MR to file a petition for
certiorari)
c. Curative statutes, enacted to cure defects in a prior law or to validate legal proceedings, by
their very essence, are retroactive. And being a procedural rule, such are construed to be
applicable to actions pending and undetermined at the time of their passage, and are deemed
retroactive.
d. Petitioners had a fresh period of 60 days from June 18. When they filed on Aug. 17, exactly 60
days had lapsed.
2. YES. There was no Misjoinder on Causes of action in the current case.
a. The rule on misjoinder of causes of action is found in Sec 6 Rule 2. There is misjoinder of causes
of action when the conditions for joinder under Sec 5 Rule 2 are not met. It is the first condition
- on joinder of parties - that the trial court deemed to be lacking. It is well to remember that the
joinder of causes of action may involve the same parties or different parties. If the joinder
involves different parties, as in this case, there must be a question of fact or of law common to
both parties joined, arising out of the same transaction or series of transactions.
b. In herein case, petitioners have adequately alleged in their complaint that after they had
already agreed to enter into a contract to sell with Zescon Land, Inc., through Sales-Contreras,
the latter also gave them other documents to sign, to wit: A Deed of Absolute Sale over the
same properties but for a lower consideration, two mortgage deeds over the same properties
 in favor of respondent Hermano with accompanying notes and acknowledgment receipts for
Ten Million pesos (P10,000,000) each. Petitioners claim that Zescon Land, Inc., through Sales-
Contreras, misled them to mortgage their properties which they had already agreed to sell to
the latter
c. Reasonably apparent that there are questions of fact and law common to both Zescon Land,
Inc., and respondent Hermano arising from a series of transactions over the same properties.
i. Question of fact, of whether or not Zescon Land, Inc., indeed misled petitioners to sign
the mortgage deeds in favor of respondent Hermano.
ii. Question of which of the four contracts were validly entered into by the parties.
iii. Question of whether or not Zescon Land, Inc., as represented by Sales-Contreras, and
respondent Hermano committed fraud against petitioners as to make them liable for
damages.
d. Thus, respondent Hermano will definitely be affected if it is subsequently declared that what
was entered into by petitioners and Zescon Land, Inc., was a Contract of Sale.
e. Prescinding from the foregoing, and bearing in mind that the joinder of causes of action should
be liberally construed as to effect in one action a complete determination of all matters in
controversy involving one subject matter, we hold that the trial court committed grave abuse of
discretion in severing from the complaint petitioners cause of action against respondent
Hermano.

DECISION bullet points. Don’t copy and paste

 Petition GRANTED
 CA Decision REVERSED
 RTC ordered to reinstate Hermano as a defendant

SAN ILDEFONSO LINES, INC., and EDUARDO JAVIER vs. COURT OF APPEALS
SAN ILDEFONSO LINES, INC., and EDUARDO JAVIER vs. COURT OF APPEALS (Thirteenth Division)
and PIONEER INSURANCE and SURETY CORPORATION
G.R. No.119771. 24 Apr 1998.

FACTS: At around 3:30 in the afternoon of June 24, 1991, a Toyota Lite Ace Van being driven by its owner Annie U. Jao
and a passenger bus of herein petitioner San Ildefonso Lines, Inc. (hereafter, SILI) figured in a vehicular mishap at the
intersection of Julia Vargas Avenue and Rodriguez Lanuza Avenue in Pasig, Metro Manila, totally wrecking the Toyota van
and injuring Ms. Jao and her two (2) passengers in the process.
A criminal case was thereafter filed with the Regional Trial Court of Pasig on September 18, 1991 charging the driver of the
bus, herein petitioner Eduardo Javier, with reckless imprudence resulting in damage to property with multiple physical
injuries.
About four (4) months later, or on January 13, 1992, herein private respondent Pioneer Insurance and Surety Corporation
(PISC), as insurer of the van and subrogee, filed a case for damages against petitioner SILI with the Regional Trial Court of
Manila, seeking to recover the sums it paid the assured under a motor vehicle insurance policy as well as other damages,
totaling P564,500.00 (P454,000.00 as actual/compensatory damages; P50,000.00 as exemplary damages; P50,000.00
as attorney's fees; P10,000.00 as litigation expenses; and P500.00 as appearance fees.)
ISSUEs: 1) If a criminal case was filed, can an independent civil action based on quasi-delict under Article 2176 of the Civil
Code be filed if no reservation was made in the said criminal case?
2) Can a subrogee of an offended party maintain an independent civil action during the pendency of a criminal action
when no reservation of the right to file an independent civil action was made in the criminal action and despite the fact
that the private complainant is actively participating through a private prosecutor in the aforementioned criminal case?

RULING: WHEREFORE, premises considered, the assailed decision of the Court of Appeals dated February 24, 1995 and
the Resolution dated April 3, 1995 denying the motion for reconsideration thereof are hereby REVERSED and SET ASIDE.
The "MANIFESTATION AND MOTION TO SUSPEND CIVIL PROCEEDINGS" filed by petitioners is GRANTED.

RATIO: Now that the necessity of a prior reservation is the standing rule that shall govern the institution of the
independent civil actions referred to in Rule 111 of the Rules of Court, past pronouncements that view the reservation
requirement as an "unauthorized amendment" to substantive law - i.e., the Civil Code, should no longer be controlling.
There must be a renewed adherence to the time-honored dictum that procedural rules are designed, not to defeat, but to
safeguard the ends of substantial justice. And for this noble reason, no less than the Constitution itself has mandated this
Court to promulgate rules concerning the enforcement of rights with the end in view of providing a simplified and
inexpensive procedure for the speedy disposition of cases which should not diminish, increase or modify substantive
rights. Far from altering substantive rights, the primary purpose of the reservation is, to borrow the words of the Court in
"Caños v. Peralta"
Clearly then, private respondent PISC, as subrogee under Article 2207 of the Civil Code, is not exempt from the
reservation requirement with respect to its damages suit based on quasi-delict arising from the same act or omission of
petitioner Javier complained of in the criminal case. As private respondent PISC merely stepped into the shoes of Ms. Jao
(as owner of the insured Toyota van), then it is bound to observe the procedural requirements which Ms. Jao ought to
follow had she herself instituted the civil case.

Facts:
Petitioner George (Culhi) Hambon filed herein filed a complaint for damages against
respondent for the injuries and expenses he sustained sustained after the truck driven by
the respondent bumped him on the night of December 9, 1985.

However, the criminal case (Serious Physical Injuries thru Reckless Imprudence) filed
previously against the respondent was dismissed by the court for petitioner’s lack of interest
and that the dismissal was with respect to both criminal and civil liabilities of respondent.

After trial, the Regional Trial Court rendered a decision, dated December 18, 1991, ruling
that the civil case was not barred by the dismissal of the criminal case, and that petitioner
is entitled to damages.
Respondent alleges that the dismissal of criminal case includes that of the civil action.

The Court of Appeals, in its decision promulgated on March 8, 1995, reversed and set aside
the decision of the trial court, and dismissed petitioner’s complaint for damages on the
grounds that the Hambon failed to file the civil case. Hence, it is impliedly instituted with the
Criminal case. The dismissal of the criminal case also includes the dismissal of the civil
case.

According to the appellate court, since the petitioner did not make any reservation to institute
a separate civil action for damages, it was impliedly instituted with the criminal case, and
the dismissal of the criminal case carried with it the dismissal of the suit for damages,
notwithstanding the fact that the dismissal was provisional as it amounted to an acquittal
and had the effect of an adjudication on the merits.

Issue:
Whether or not a civil case for damages based on an independent civil action falling under
articles 32, 33, 34 and 2176 of the new civil code be duly dismissed for failure to make
reservation to file a separate civil action in a criminal case filed arising from the same act or
omission of the accused pursuant to Rule 111, Section 1 of the Rules of Court, the failure
to make reservation being due to the fact that the criminal case was dismissed before the
prosecution started to present evidence for failure of the private complainant to appear
despite notice.

Held:
Civil actions to recover liability arising from crime (ex delicto) and under Articles 32, 33, 34
and 2176 of the Civil Code (quasi-delict) are deemed impliedly instituted with the criminal
action unless waived, reserved or previously instituted.
The Court expounded that it clearly requires that a reservation must be made to institute
separately all civil actions for the recovery of civil liability, otherwise they will be deemed to
have been instituted with the criminal case. In other words, the right of the injured party to
sue separately for the recovery of the civil liability whether arising from crimes (ex delicto) or
from quasi-delict under Art. 2176 of the Civil Code must be reserved otherwise they will be
deemed instituted with the criminal action.
Contrary to private respondent’s contention, the requirement that before a separate civil
action may be brought it must be reserved does not impair, diminish or defeat substantive
rights, but only regulates their exercise in the general interest of procedure. The requirement
is merely procedural in nature. For that matter the Revised Penal Code, by providing in Art.
100 that any person criminally liable is also civilly liable, gives the offended party the right
to bring a separate civil action, yet no one has ever questioned the rule that such action
must be reserved before it may be brought separately.

Thus, herein petitioner Hambon should have reserved his right to separately institute the
civil action for damages in Criminal Case No. 2049. Having failed to do so, Civil Case No.
1761-R for damages subsequently filed by him without prior reservation should be
 dismissed. With the dismissal of Criminal Case No. 2049, whatever civil action for the
recovery of civil liability that was impliedly instituted therein was likewise dismissed.

WHEREFORE, the instant petition for review on certiorari is hereby DENIED for lack of
merit, and the decision of the Court of Appeals dated March 8, 1995, is AFFIRMED in toto.

Central Bank Liquidators vs. Banco Filipino G.R. No. 173399, February 21, 2017
Facts:
Monetary Board of the then Central Bank (CB) allowed Banco Filipino under MB Resolution No.223 to
operate as a savings bank. However the CB issued MB Resolution No. 955 placing Banco Filipino under
conservatorship after granting the latter’s loan applications worth billions of pesos. Respondent bank filed
with the RTC Makati a Complaint against the CB for the annulment of MB Resolution No. 955. Thereafter,
on 25 January 1985, the CB issued MB Resolution No. 75 ordering the closure of Banco Filipino and
placing the latter under receivership. The Resolution stated that since respondent had been found to be
insolvent, the latter was forbidden to continue doing business to prevent further losses to its depositors
and creditors.
Pursuant to the recent development, Banco Filipino filed a Motion to Admit Attached
Amended/Supplemental Complaint in the three consolidated cases — Civil Case Nos. 8108, 9675, and
10183 —before the RTC. In its Amended/Supplemental Complaint, respondent bank sought to
substitute the CB-BOL (Central Bank Board of Liquidators) for the defunct CB and its MB.
Respondent also aimed to recover at least P18 billion in actual damages, litigation expenses,
attorney’s fees, interests, and costs of suit against petitioner and individuals who had allegedly
acted with malice and evident bad faith m placing the bank under conservatorship and eventually
closing it down in 1985.
The trial court, through an Order granted the Motion to Admit filed by Banco Filipino and accordingly
admitted the latter’s Amended/Supplemental Complaint. Consequently, the CB-BOL was substituted
for the defunct CB in respondent’s civil cases, which are still pending with the RTC.
More than 10 years from the enactment of R.A. 7653, Banco Filipino again filed a Motion to Admit
Second Amended/Supplemental Complaint in the consolidated civil cases before the RTC.
Banco Filipino’s Motion to Admit its Second Amended/Supplemental Complaint was opposed by
the CB-BOL based on the following grounds:
1. Banco Filipino’s Second Amended/Supplemental Complaint was not supported by a board resolution that
authorized it to file the amended or supplemental complaint.
2. The second supplemental complaint raised new and independent causes of action against a new
party – the BSP – which was not an original party.
3. The second supplemental complaint was violative of the rule on the joinder of causes of action, because it
alleged those that did not arise from the same contract, transaction or relation between the parties – as
opposed to those alleged in the complaint sought to be amended or supplemented – and differed from the
causes of action cited in the original Complaint.
4. The admission of the second supplemental complaint would expand the scope of the dispute in the
consolidated civil cases to include new causes of action against new parties like the BSP, resulting in a
delay in the resolution of the cases.
RTC granted the Motion to Admit Complaint
PC-BOL filed with the CA a Petition for Certiorari under Rule 65, docketed as CA-G.R. SP No. 86697. It
questioned the propriety of the RTC’s Order admitting Banco Filipino’s Second Amended/Supplemental
Complaint and committing grave abuse of discretion in the process. Reiterating the grounds stated in its
Opposition to the Motion to Admit the Second Amended/Supplemental Complaint, petitioner contended
that the complaint consisted of, among others, an improper joinder of parties and other issues that were
entirely different from those raised in the original complaint.41
CA affirmed in toto the trial Court’s Order. The appellate court ruled that the old CB continued to exist
and remained a defendant in the consolidated civil cases, albeit under a new name: CB-BOL.
It also ruled that, pursuant to R.A. 7653, the BSP was the successor in-interest of the old CB. Further,
with the transfer of assets from the CB to the BSP during the pendency of the subject civil cases, the latter
now became a transferee pendente lite. Therefore, the CA concluded that there were no new parties
impleaded in the civil cases when the Second Amended/Supplemental Complaint was admitted by
the trial court.
Issue
Whether the RTC erred in admitting Banco Filipino’s Second Amended/Supplemental Complaint in the
consolidated civil cases before it.
Ruling
Yes. 1.) The second amendment of the
Complaint and second supplemental pleading were improper; 2.) The amendment/supplement
violates the rules on joinder of parties and causes of action.
Rule 10 of the 1997 Revised Rules of Court allows the parties to amend their pleadings (a) by adding or
striking out an allegation or a party’s name; or (b) by correcting a mistake in the name of a party or
rectifying a mistaken or an inadequate allegation or description in the pleadings for the purpose of
determining the actual merits of the controversy in the most inexpensive and expeditious manner.
The prevailing rule on the amendment of pleadings is one of liberality, with the end of obtaining
substantial justice for the parties. However, the option of a party-litigant to amend a pleading is
not without limitation. If the purpose is to set up a cause of action not existing at the time of the
filing of the complaint, amendment is not allowed. If no right existed at the time the action was
commenced, the suit cannot be maintained, even if the right of action may have accrued
thereafter.
In the instant case, the causes of action subject of the Second Amended/Supplemental Complaint only
arose in 1994 well after those subject of the original Complaint. The original Complaint was based on the
alleged illegal closure of Banco Filipino effected in 1985 by the defunct CB and its MB.
On the other hand, the Second Amended/Supplemental Complaint stemmed from the alleged oppressive
and arbitrary acts committed by the BSP and its MB against Banco Filipino after respondent bank was
reopened in 1994. Since the acts or omissions allegedly committed in violation of respondent’s rights are
different, they constitute separate causes of action.
In its Comment on the present Petition, Banco Filipino contends, as the RTC and the CA similarly ruled,
that the Second Amended/Supplemental Complaint does not alter the substance of the original demand,
change the cause of action against the original defendants, or seek additional or new reliefs.
This contention is, however, belied by a closer examination of the Second Amended/Supplemental
Complaint, in which respondent asks the Court to order the defendants to pay, among others, actual
damages of at least P18.8 billion “as a consequence of the acts herein complained of.
The “acts complained of”‘ cover not just the conservatorship, receivership, closure, and liquidation of
Banco Filipino in 1984 and 1985, but also the alleged acts of harassment committed by the BSP and its
MB after respondent bank was reopened in 1994. These acts constituted a whole new cause of action. In
effect, respondent raised new causes of action and asserted a new relief in the Second
Amended/Supplemental Complaint. If it is admitted, the RTC would need to look into the propriety of two
entirely different causes of action. This is not countenanced by law, as explained in the preceding
paragraphs.
The second supplemental pleading
was improper
Rule 10 of the 1997 Revised Rules of Court allows the parties to supplement their pleadings by
setting forth transactions, occurrences, or events that happened since the date of the pleading
sought to be supplemented.
However, the option of a party-litigant to supplement a pleading is not without limitation. A supplemental
pleading only serves to bolster or add something to the primary pleading. Its usual function is to set up
new facts that justify, enlarge, or change the kind of relief sought with respect to the same subject matter
as that of the original complaint.
In Leobrera v. CA that a supplemental complaint must be founded on the same cause of action as that
raised in the original complaint. Although in Planters Development Bank v. LZK Holdings & Development
Corporation, the Court clarified that the fact that a supplemental pleading technically states a new cause
of action should not be a bar to its allowance, still, the matter stated in the supplemental complaint must
have a relation to the cause of action set forth in the original pleading. That is, the matter must be
germane and intertwined with the cause of action stated in the original complaint so that the principal and
core issues raised by the parties in their original pleadings remain the same.
In the instant case, Banco Filipino, through the Second Amended/Supplemental Complaint, attempted to
raise new and different causes of action that arose only in 1994. These causes of action had no relation
whatsoever to the causes of action in the original Complaint, as they involved different acts or omissions,
transactions, and parties. If the Court admits the Second Amended/Supplemental Complaint under these
circumstances, there will be no end to the process of amending the Complaint.
For these reasons, whether viewed as an amendment or a supplement to the original Complaint, the
Second Amended/Supplemental Complaint should not have been admitted.
The amendment/supplement violates
the rules on joinder of parties and
causes of action.
Moreover, the admission of the Second Amended/Supplemental Complaint is inappropriate
because it violates the rule on joinder of parties and causes of action. If its admission is upheld, the
causes of action set forth therein would be joined with those in the original Complaint. The joinder of
causes of action is indeed allowed under Section 5, Rule 2 of the 1997 Rules of Court; but if there are
multiple parties, the joinder is made subject to the rules on joinder of parties under Section 6, Rule
3. Specifically, before causes of action and parties can be joined in a complaint involving multiple
parties, (1) the right to relief must arise out of the same transaction or series of transactions and (2) there
must be a question of law or fact common to all the parties.
In the instant case, Banco Filipino is seeking to join the BSP and its MB as parties to the complaint.
However, they have different legal personalities from those of the defunct CB and its MB: firstly, because
the CB was abolished by R.A. 7653, and the BSP created in its stead; and secondly, because the
members of each MB are natural persons. These factors make the BSP and its MB different from the CB
and its MB. Since there are multiple parties involved, the two requirements mentioned in the previous
paragraph must be present before the causes of action and parties can be joined. Neither of the two
requirements for the joinder of causes of action and parties was met.
First, the reliefs for damages prayed for by respondent did not arise from the same transaction or series of
transactions. While the damages prayed for in the first Amended/Supplemental Complaint arose from the
closure of Banco Filipino by the defunct CB and its MB, the damages prayed for in the Second
Amended/Supplemental Complaint arose from the alleged acts of oppression committed by the BSP and
its MB against respondent.
Second, there is no common question of fact or law between the parties involved. The acts attributed by
Banco Filipino to the BSP and its MB pertain to events that transpired after this Court ordered the
respondent bank’s reopening in 1994. These acts bear no relation to those alleged in the original
Complaint, which related to the propriety of the closure and liquidation of respondent as a banking
institution way back in 1985.
The only common factor in all these allegations is respondent bank itself as the alleged aggrieved party.
Since the BSP and its MB cannot be joined as parties, then neither can the causes of action against them
be joined.
WHEREFORE, the Petition of the CB-BOL is GRANTED, and the Decision of the Court of Appeals dated
27 January 2006 and Resolution dated 27 June 2006 in CA-G.R. SP No. 86697 are
hereby REVERSED and SET ASIDE.
SO ORDERED.

Flores vs Mallare-Phillips
FACTS
Flores sued the resps for the collection of sum of money with the RTC
The first cause of action alleged in the complaint was against Ignacio Binongcal for refusing to pay the amount
of P11,643representing cost of truck tires which he purchased on credit from Flores on various occasions from
August to October, 1981;
The second cause of action was against resp Fernando Calion for allegedly refusing to pay the amount
of P10,212 representing cost of truck tires which he purchased on credit from pet on several occasions from
March, 1981 to January, 1982.
Binongcal filed a MTD on the ground of lack of jurisdiction since the amount of the demand against said resp was
only P11,643.00, and under Section 19(8) of BP129 the RTC shall exercise exclusive original jurisdiction if the
amount of the demand is more than P20K.
Although another person, Fernando Calion, was allegedly indebted to pet in the amount of P10,212.00, his
obligation was separate and distinct from that of the other resp. Calion joined in moving for the dismissal of the
complaint.
RTC dismissed the complaint.
ISSUE
WON the trial court correctly ruled on the application of the permissive joinder of parties
ruling
The lower court has jurisdiction over the case following the "novel" totality rule introduced in Section 33(l) of
BP129 and Section 11 of the Interim Rules.
Section 33(l) of BP129
That where there are several claims or causes of action between the same or different parties, embodied in the
same complaint, the amount of the demand shall be the totality of the claims in all the causes of
action, irrespective of whether the causes of action arose out of the same or different transactions. ...
Section 11 of the Interim Rules
Application of the totality rule. In actions where the jurisdiction of the court is dependent on the
amount involved, the test of jurisdiction shall be the aggregate sum of all the money demands, exclusive only of
interest and costs, irrespective of WON the separate claims are owned by or due to different parties. If any
demand is for damages in a civil action, the amount thereof must be specifically alleged.
former rule under Section 88 of the Judiciary Act of 1948
Where there are several claims or causes of action between the same parties embodied in the same complaint,
the amount of the demand shall be the totality of the demand in all the causes of action, irrespective of whether
the causes of action arose out of the same or different transactions; but where the claims or causes of action
joined in a single complaint are separately owned by or due to different parties, each separate claim shall furnish
the jurisdictional test. ...
comparison of former and present rules
Present Rules Former Rules

Where a Totality of the claims in all the Totality of the claims in all the
plaintiff sues a causes of action irrespective of causes of action irrespective of
defendant on whether the COA arose out of the whether the COA arose out of the
two or more same or diff transactions. If the total same or diff transactions. If the total
separate demand exceeds P20K – RTC has demand exceeds P20K – RTC has
causes of action jurisdiction jurisdiction
 If the causes of action are separate
and independent, their joinder in
one complaint is permissive and not
mandatory, and any cause of action
where the amount of the demand is
20K or less may be the subject of a
separate complaint filed with a
metropolitan or MTC.
If the causes of action are separate
and independent, their joinder in
one complaint is permissive and not
mandatory, and any cause of action
where the amount of the demand is
20K or less may be the subject of a
separate complaint filed with a
metropolitan or MTC.

Two or more Where the claims or causes of
plaintiffs having action joined in a single complaint
a separate are separately owned by or due to
causes of action different parties, each separate
against a claim shall furnish the jurisdictional
defendant join test
in a single
complaint The former rule applied only to
cases of permissive joinder of
parties plaintiff. However, it was
also applicable to cases of
permissive joinder of parties
defendant.
The causes of action in favor of the
two or more plaintiffs or against
the two or more defendants should
arise out of the same transaction or
series of transactions and there
should be a common question of
law or fact, as provided in Section 6
of Rule 3.

Brillo vs. Buklatan (former rule):

Separate claims against several defendants of different amounts each of which is not more than P2,000 and falls
under the jurisdiction of the justice of the peace court. The several claims do not arise from the same
transaction or series of transactions and there seem to be no questions of law or of fact common to all the
defendants as may warrant their joinder under Rule 3, section 6.

The difference between the former and present rules in cases of permissive joinder of parties may be illustrated
by the two cases which were cited in the case of Vda. de Rosario vs. Justice of the Peace as exceptions to the
totality rule.
 Soriano y Cia vs. Jose 29 dismissed employees joined in a complaint against the defendant to collect their
respective claims, each of which was within the jurisdiction of the municipal court although the total exceeded
the jurisdictional amount, this Court held that under the law then the municipal court had jurisdiction. Although
the plaintiffs' demands were separate, distinct and independent of one another, their joint suit was authorized
under Section 6 of Rule 3 and each separate claim furnished the jurisdictional test.
 International Colleges, Inc. vs. Argonza, 25 dismissed teachers jointly sued for unpaid salaries, the MC had
jurisdiction because the amount of each claim was within, although the total exceeded, its jurisdiction and it was
a case of permissive joinder of parties plaintiff under Section 6 of Rule 3.

Under the present law, the two cases would be under the jurisdiction of the RTC. Similarly, Brillo vs. Buklatan
and Gacula vs. Martinez, if the separate claims against the several defendants arose out of the same transaction
or series of transactions and there is a common question of law or fact, they would now be under the
jurisdiction of the RTC.
In cases of permissive joinder of parties, whether as plaintiffs or as defendants, under Section 6 of Rule 3, the
total of all the claims shall now furnish the jurisdictional test. Needless to state also, if instead of joining or being
joined in one complaint separate actions are filed by or against the parties, the amount demanded in each
complaint shall furnish the jurisdictional test.
The lower court correctly held that the jurisdictional test is subject to the rules on joinder of parties pursuant to
Section 5 of Rule 2 and Section 6 of Rule 3 of the Rules of Court and that, after a careful scrutiny of the
complaint, it appears that there is a misjoinder of parties for the reason that the claims against resps Binongcal
and Calion are separate and distinct and neither of which falls within its jurisdiction.

1. Rebecca Pacaña vs. Rovila Water Supply (GR No. 168979)

Facts:

The petitioners claimed that their family has long been known in the community to be engaged in water
supply business; they operated the “Rovila Water Supply”. The petitioners alleged that Lilia was a former trusted
employee in the family business who hid business records and ransacked the family files. She allegedly barred the
members of the Pacaña family from operating their business and she claims ownership over it. The respondents
allegedly used the name of Lourdes as one of the incorporators and made it appear in the SEC documents that the
family business was operated in a place other than the Pacaña residence. They also fraudulently appropriated the
collections and payments.

The petitioners filed the complaint in their own names although Rosalie was authorized by Lourdes through
a sworn declaration and SPA. On September 26, 2000, Lourdes died and the petitioners amended their complaint
and on the following month Luciano also died. Since Lourdes and Luciano died the respondents filed a motion to
dismiss on the ground that the petitioners are not the real parties in interest to institute and prosecute the case
however it was denied, hence, the respondents filed a petition for certiorari under Rule 65 invoking grave abuse of
discretion in the denial of their motion to dismiss.

Issues:

Whether or not Rule 65 of the Rules of Court is a proper remedy for denial of a motion to dismiss.

Ruling:

Yes, Rule 65 is a proper remedy for a denial of a motion to dismiss attended with grave abuse of discretion.

In Barrazona vs. RTC, the Court held that while an order denying a motion to dismiss is interlocutory and
non-appealable, certiorari and prohibition are proper remedies to address an order of denial made without or in
excess of jurisdiction. The writ of certiorari is granted to keep an inferior court within bounds of its jurisdiction or
to prevent it from committing grave abuse of dicretion amounting to lack or excess of jurisdiction.