RULE 1- General Provisions

LEONARDO L. VILLALON, petitioner, vs. RENATO E. LIRIO, respondent.

[G.R. No. 183869. August 3, 2015.]

FACTS: Respondent Renato Lirio and Semicon Integrated Electronics

Corporation (of which Leonardo Villalon is president and its representative)
entered into a contract of lease covering Lirio’s properties in Pasig city.

Prior to the lease’s expiration, Semicon terminated the contract with Lirio. The
latter demanded payment, however, Semicon and Villalon failed to do so, which
led to Lirio filing a complaint for sum of money with the RTC against Semicon
and Villalon.

RTC RULING: Ruled in favour of Villalon. The RTC concluded that the
allegations clearly showed that the collection of unpaid rentals and damages arose
from the alleged breach of the lease contract executed and entered into by Lirio
and Semicon, and that the conflict was between Lirio and Semicon only and did
not include Villalon.

CA RULING: The CA nullified the RTC's dismissal order and ruled that the
RTC gravely abused its discretion. It held that the RTC completely ignored the
fact that the case "might possibly" and properly call for the application of the
doctrine of piercing the veil of corporate entity. Further, the CA found that Villalon
"played an active role in removing and transferring Semicon's merchandise,
chattels and equipment from the leased premises. This deprived Lirio of his
preferred lien over the said merchandise, chattels, and equipment for the
satisfaction of Semicon's obligation under the lease contract."

PETITIONER’S CONTENTION: Villalon argued that he is not a real party-in-

interest in the action as he is merely an officer of Semicon. Villalon further
contended that there was no competent allegation in the complaint about any
supposed wrongdoing on his part to warrant his inclusion as a party defendant.
Villalon likewise alleges that the CA erred when, in order to apply the doctrine of
piercing the veil of corporate entity, it had to add allegations not found in the
complaint.
RESPONDENT’S CONTENTION: Lirio alleged that Semicon and Villalon
unjustly pre-terminated the lease and failed to pay the unpaid rentals despite
demand. Lirio insists that Villalon had a role in the surreptitious and fraudulent
removal of Semicon's merchandise, effects, and various equipment from the leased
premises and their transfer to another location, which deprived him of his preferred
lien over the said merchandise, effects, and equipment. Thus, there is a sufficient
cause of action to hold Villalon personally liable for Semicon's liability because
the allegations of fraud and evasion of contractual obligations were clearly spelled
out in the complaint.

ISSUE: Whether the complaint failed to state a cause of action against Villalon?

RULING: YES, the complaint failed to state a cause of action against Villalon.
Rule 8, Section 5 of the Rules of Court requires that in all averments of fraud
or mistake, the circumstances constituting fraud or mistake must be stated
with particularity, unlike in cases of malice, knowledge, or other conditions of
the mind which may be averred generally.

In the present case, the only allegation of fraud in the complaint reads: "With intent
to defraud the plaintiff and to prevent the plaintiff from exercising his right [to be
constituted or appointed as attorney-in-fact of the defendant with power and
authority to cause the premises to be opened, to take inventories of all the
defendants' merchandise, effects, furniture, fixtures and/or equipment therein and
transfer the same to the plaintiff's bodega], the defendants surreptitiously and
fraudulently removed their merchandise, effects, and equipment from the lease
premises and transferred them to another location."

Lirio's mere invocation of the words "surreptitiously and fraudulently" does not
make the allegation particular without specifying the circumstances of Villalon's
commission and employment of fraud, and without delineating why it was
fraudulent for him to remove Semicon's properties in the first place.

The allegation of fraud would have been averred with particularity had Lirio
alleged, for example, that Villalon removed the equipment under the false pretense
that they needed repair and refurbishing but the equipment were never returned; or
that Villalon removed the merchandise because Semicon needed to sell them in
exchange for new supplies but no new supplies were bought. No such allegation
was ever made.

Thus, the RTC could not have properly ruled on whether there was a need to pierce
the veil of corporate entity precisely because the complaint failed to state with
particularity how Villalon committed and employed fraud.

Even if we are to relax the rules of procedure and allow certiorari to substitute for
the lost appeal, we still grant Villalon's appeal and reverse the CA's decision.
Finally, even if we grant that the allegations of fraud were averred with
particularity, the RTC's finding that the complaint failed to state a cause of action
against Villalon was only an error of judgment and did not constitute grave abuse
of discretion. An error of judgment, which is properly reviewed through an appeal,
is not necessarily equivalent to grave abuse of discretion.

RULE 2 – Cause of Action

BUTUAN DEVELOPMENT CORP. V. COURT OF APPEALS (21ST

DIVISION), G.R. NO. 197358, [APRIL 5, 2017]

FACTS: On March 31, 1966, Butuan Development Corporation (BDC), which

was then still in the process of incorporation, through its then President Edmundo
Satorre (Satorre), purchased from the Spouses Jose and Socorro Sering (Spouses
Sering) a 7.6923-hectare parcel of land situated in Butuan City (subject property).
Thus, on January 28, 1969, the Registry of Deeds for Butuan City issued Transfer
Certificate of Title (TCT) No. RT-4724 in the name of BDC. On May 5, 1998,
Max L. Arriola, Jr. (Max Jr.), representing himself as the Chairman of BDC and
armed with a duly notarized Resolution of the BDC Board of Directors therefor,
mortgaged the subject property to De Oro Resources, Inc. (DORI) and its President
Louie A. Libarios (Libarios).

On May 13, 2002, Satorre, together with Ma. Laurisse Satorre-Gabor, Liza Therese
Satorre-Balansag, Edmundo C. Satorre II, and Leslie Mae Satorre-King, executed
the Articles of Incorporation of BDC. The Securities and Exchange Commission
approved the Articles of Incorporation and issued the Certificate of Incorporation
of BDC on May 23, 2002.
On August 23, 2005, BDC filed a complaint for declaration of nullity of real estate
mortgage (REM) with the Regional Trial Court (RTC) of Agusan del Norte and
Butuan City against Max Jr., Libarios, and DORI (collectively, the respondents),
and Casilda L. Arriola, Rebecca J. Arriola, and Joseph L. Arriola. It alleged that,
sometime in 2004, it discovered that the owner’s duplicate copy of TCT No. RT-
4724 was missing and efforts to locate the same proved futile. However, it
subsequently discovered that the owner’s duplicate copy of TCT No. RT-4724 was
already in Libario’s possession, pursuant to the REM executed by the Arriolas who
misrepresented themselves as the owners and directors of BDC. Accordingly,
claiming that the said REM was a nullity, BDC prayed that the same be nullified.

In their answer, Libarios and DORI denied that the Arriolas misrepresented
themselves as the directors of BDC since, at the time of the execution of the REM,
the Arriolas had possession of the subject property and the owner’s duplicate copy
of TCT No. RT-4724. Further, the tax declaration over the subject property filed
with the Butuan City Assessor’s Office indicated that Max Arriola, Sr. (Max Sr.)
was the administrator of the subject property.

As special and affirmative defense, Libarios and DORI claimed that the complaint
filed by BDC should be dismissed outright for failing to state a cause of action
since at the time of the execution of the REM on May 5, 1998, BDC did not yet
exist, having been incorporated only on May 23, 2002, and, hence, could not have
claimed ownership of the subject property.

Max Jr., in his Answer, echoed the foregoing contentions set forth by Libarios and
DORI and, additionally, claimed that the owner’s duplicate copy of TCT No. RT-
4724, from the time it was issued on January 28, 1969, had been in the possession
of their family since it was his father Max Sr. who actually paid for the acquisition
of the subject property.

The RTC heard the respondents' special and affirmative defense and, thereafter,
directed the parties to submit their respective memoranda. The RTC opined that,
taking into account BDC's allegation that it purchased the subject property while it
was still in the process of incorporation and, thus, obtained title to the same in its
name, any act which amounts to alienation of the subject property done by any
person other than the corporation itself, through its Board of Directors, shall give
rise to violation of BDC's rights. The respondents filed their respective motions for
reconsideration of the Order but it was denied by the RTC for lack of merit.

The respondents then filed a petition for certiorari with the CA, claiming that the
RTC gravely abused its discretion in brushing aside their special and affirmative
defense. The respondents likewise prayed for the issuance of a temporary
restraining order and/or a writ of preliminary injunction. The respondents
maintained that BDC, at the time of the execution of the REM, was not yet
incorporated and, hence, had no right to hold a property in its own name.

CA granted the petition. The assailed Orders are SET ASIDE and a new one issued
DISMISSING the Complaint for failure to state a cause of action.

The CA opined that corporate existence begins only from the moment a certificate
of incorporation is issued, and, thus, BDC had no corporate existence and juridical
personality when it purchased the subject property. Thus, the CA held that, having
no right over the subject property, no cause of action could have accrued in favor
of BDC when the subject property was mortgaged to Libarios and DORI.

ISSUE:

A. WON THE USE OF RULE 65 AS ITS REMEDY IS PROPER.

B. WON THERE WAS CAUSE OF ACTION THUS THE DISMISSAL OF

THE CASE FOR FAILURE TO STATE CAUSE OF ACTION GIVE RISE
TO GRAVE ABUSE OF DISCRETION.

HELD:

A. NO. The CA’s disposition is a final judgment, as distinguished from an

interlocutory order, as the same finally disposed of the petition for certiorari filed
by the respondents and left nothing more to be done by the CA in respect thereto.
Sections 1 and 2 of Rule 45 essentially states that a party desiring to appeal by
certiorari from a judgment or a final order of the CA may file with this Court a
verified petition for review on certiorari within 15 days from notice of the
judgment or final order.

BDC’s counsel received a copy of the CA’s Resolution dated May 24, 2011,
denying reconsideration of the Decision dated January 14, 2011, on May 31, 2011.
Thus, BDC only had until June 15, 2011 within which to file with this Court a
petition for review on certiorari assailing the CA’s Decision dated January 14,
2011 and Resolution dated May 24, 2011.

However, BDC failed to file a petition for review on certiorari within the period to
do so and, instead, opted to file a petition for certiorari under Rule 65 with this
Court on July 4, 2011. Evidently, this petition for certiorari is merely being used by
BDC as a substitute for the lost remedy of appeal under Rule 45.

A party cannot substitute the special civil action of certiorari under Rule 65 of the
Rules of Court for the remedy of appeal. The existence and availability of the right
of appeal are antithetical to the availability of the special civil action of certiorari.
Remedies of appeal (including petitions for review) and certiorari are mutually
exclusive, not alternative or successive. Hence, certiorari is not and cannot be a
substitute for an appeal, especially if one’s own negligence or error in one’s choice
of remedy occasioned such loss or lapse. One of the requisites of certiorari is that
there be no available appeal or any plain, speedy and adequate remedy. Where an
appeal is available, certiorari will not prosper, even if the ground therefor is grave
abuse of discretion.

B. YES. One of the grounds for the dismissal of a complaint is the failure of the
pleading asserting the claim to state a cause of action. The elements of a cause of
action are: (1) a right in favor of the plaintiff by whatever means and under
whatever law it arises or is created; (2) an obligation on the part of the named
defendant to respect or not to violate such right; and (3) act or omission on the part
of such defendant in violation of the right of the plaintiff or constituting a breach of
the obligation of the defendant to the plaintiff for which the latter may maintain an
action for recovery of damages or other appropriate relief.
In resolving whether the complaint states a cause of action or not, only the facts
alleged in the complaint are considered. The test is whether the court can render a
valid judgment on the complaint based on the facts alleged and the prayer asked
for. Only ultimate facts, not legal conclusions or evidentiary facts, are considered
for purposes of applying the test.

Based on the foregoing allegations, BDC’s complaint sufficiently stated a cause of

action for declaration of nullity of the REM. Basically, BDC alleged in its
complaint that it is the owner of the subject property as evidenced by TCT No. RT-
4724, which was issued in its name after it purchased the subject property, through
Satorre, from the Spouses Sering on March 31, 1966. It bears stressing that a
certificate of title issued is an absolute and indefeasible evidence of ownership of
the property in favor of the person whose name appears therein. BDC further
alleged that the subject property was mortgaged to DORI and Libarios without
their knowledge or consent and that the Arriolas were not in any way connected
with BDC.

What is clear is that the issues of whether the REM constituted over the subject
property is void and whether BDC has a right to the subject property at the time of
the execution of the REM would have been best resolved during the trial.

The respondents’ affirmative defense that BDC, at the time of the execution of the
REM, had no right to hold the subject property in its name being merely an
unincorporated association, if at all, amounts to an allegation that BDC has no
cause of action against the respondents. However, failure to state a cause of action
is different from lack of cause of action. Failure to state a cause of action refers
to the insufficiency of the pleading, and is a ground for dismissal under Rule
16 of the Rules of Court. On the other hand, lack of cause of action refers to a
situation where the evidence does not prove the cause of action alleged in the
pleading. The remedy in the first is to move for the dismissal of the pleading,
while the remedy in the second is to demur to the evidence.

RULE 3 – Parties to Civil Actions

G.R. No. 206540 April 20, 2015

ALICE G. AFRICA, Petitioner, vs. INSURANCE SAVINGS AND
INVESTMENT AGENCY, INC. (ISIA) represented by its President, DELIA DE
BORJA; acting Register Of Deeds, Las Piñas City, ATTY. ABRAHAM N.
VERMUDEZ, Respondents.

Principle:

Remedial Law (Civil Procedure): An agent, as party, may sue without joining
the principal except when the contract involves things belonging to the
principal.

Facts:

This case involves a parcel of land covered by TCT No. 38910-A registered in the
name of Spouses Orfinada. Such property was the subject of 4 cases related to its
ownership and titling. The cases resulted in conflicting rulings.

Respondent ISIA filed a Special Civil Action for Mandamus under Rule 65 of the
Rules of Court against the Register of Deeds of Las Piñas City seeking the
cancellation of TCT No. 38910A and the issuance of a new title in favour of the
ISIA. ISIA alleged that it purchased from Spouses Orfinada the subject property as
evidenced by a Deed of Sale executed 18 May 1981; paid the taxes and fees for the
transfer; and completed the requirements for the transfer of title. However, the
Registrar of Deeds denied the registration of the sale on the ground that another
owner’s duplicate of the subject title is in possession of Alice Africa.

In turn, Africa filed a Vehement Opposition on the instant petition contending that
the sale between ISIA and Spouses Orfinada is tainted with fraud hence not valid.
Nevertheless, the RTC granted ISIA’s Petition for Mandamus. Both Africa and
RoD filed separate MRs. Both were denied.

Hence, Africa filed this Petition for Certiorari on behalf of the Spouses Orfinada.
She alleged that her contract of agency with the Spouses Orfinada is coupled with
interest without explicitly stating her interest therein.

Issue: Whether or not Africa has legal capacity to file the Petition for Certiorari in
her own name. –NO
Ruling:

The Court denied the Petition on the ground that Africa is not a proper party under
Rule 3, Section 3 of the Rules of Court which reads:

Sec. 3. Representatives as parties.—Where the action is allowed to be prosecuted

or defended by a representative or someone acting in a fiduciary capacity, the
beneficiary shall be included in the title of the case and shall be deemed to be the
real party in interest. A representative may be a trustee of an express trust, a
guardian, an executor or administrator, or a party authorized by law or these Rules.
An agent acting in his own name and for the benefit of an undisclosed principal
may sue or be sued without joining the principal except when the contract involves
things belonging to the principal.

Section 3 of Rule 3 of the Rules of Court is explicit on the requirement that an

agent as party may sue without joining the principal except when the contract
involves things belonging to the principal. The herein subject property is ostensibly
owned by the Spouses Orfinada covered by TCT No. 38910-A registered in their
names. This TCT No. 38910-A is one of the titles ISIA seeks to annul as part of its
claim of ownership over vast tracts of land bounded by the Pasig River in the
North, by the Tunisan River in the South, by Laguna de Bay in the East, and by the
Manila de Bay in the West. xx Africa’s belated claim of ownership via purchase
cannot make her a proper party to this case and circumvent the requirements for
establishing ownership over the subject property.

[Pursuant to] Tamondong v. Court of Appeals, xx [it was] ruled that the lack of
authority of the representative from the real party-in-interest, results in the
complaint deemed as not filed. It does not make the representative as the actual
plaintiff in the case.

RULE 4 – Venue of Actions

RUDY L. RACPAN v. SHARON BARROGA-HAIGH

G.R. No. G.R. No. 234499| June 06, 2018

Subtopic: F. Jurisdiction vs. venue

DOCTRINE: Well-settled is the rule that an action to annul a contract of loan and
its accessory real estate mortgage is a personal action. In a personal action, the
plaintiff seeks the recovery of personal property, the enforcement of a contract or
the recovery of damages. In contrast, in a real action, the plaintiff seeks the
recovery of real property, or, as indicated in Section 2 (a), Rule 4 of the then Rules
of Court, a real action is an action affecting title to real property or for the recovery
of possession, or for partition or condemnation of or foreclosure of mortgage on,
real property.

FACTS:

• Petitioner Rudy Racpan filed a Complaint "For Declaration For Nullity of

Deed of Sale with Right to Repurchase & Attorney's Fees" before the Regional
Trial Court of Davao City, Branch 11 (RTC-Davao). In his Complaint, which was
docketed as Civil Case No. 34, 742-2012, petitioner alleged that after his wife's
death on November 12, 2011, he instructed their daughter to arrange his wife's
important documents.

• In so doing, their daughter discovered a Deed of Sale with Right to Purchase

dated March 29, 2011. The Deed of Sale was purportedly signed by him and his
late wife and appeared to convey to respondent Sharon Barroga-Haigh a real
property registered in his name under TCT No. T-142-2011009374 and located in
Bo. Tuganay, Municipality of Carmen, Province of Davao del Norte. Petitioner
maintained that the Deed of Sale was falsified and fictitious as he never signed any
contract, not even any special power of attorney, for the sale or conveyance of the
property which is still in his possession. Thus, he prayed for the declaration of the
Deed of Sale's nullity.

• RTC dismissed the case for failure to comply with a condition precedent
prior to its filing.

• CA affirmed the RTC ruling.

• The CA explained that petitioner's Complaint is a real action as it wants the

court to abrogate and nullify -whatever right or claim the respondent might have on
the property subject of the Deed of Sale. Hence, for the appellate court, Section 1,
Rule 4 of the Rules of Court is applicable. Under this Rule, real actions shall be
commenced and tried in the proper court which has jurisdiction over the area
wherein the real property involved is situated. As the property involved is located
in Bo.Tuganay, Municipality of Carmen, Province of Davao del Norte, the
appellate court held that the Complaint should have been lodged with the RTC of
Davao del Norte and not the RTC-Davao.

ISSUE: Whether the venue was improperly laid?

HELD: NO, the venue was properly laid as the complaint was a personal action.

RATIO

VENUE OF ACTION

Section 1. Venue of real actions. - Actions affecting title to or possession of real

property, or interest therein, shall be commenced and tried in the proper court
which has jurisdiction over the area wherein the real property involved, or a
portion thereof, is situated.

Forcible entry and detainer actions shall be commenced and tried in the municipal
trial court of the municipality or city wherein the real property involved, or a
portion thereof, is situated.

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

The basic distinction between a real and a personal action and their respective
venues in Bank of the Philippine Islands v. Hontanosas, Jr.

[ real action ] A real action is one that affects title to or possession of real property,
or an interest therein. Such action is to be commenced and tried in the proper court
having jurisdiction over the area wherein the real property involved, or a portion
thereof, is situated, which explains why the action is also referred to as a local
action
[personal action] In contrast, the Rules of Court declares all other actions as
personal actions. Such actions may include those brought for the recovery of
personal property, or for the enforcement of some contract or recovery of damages
for its breach, or for the recovery of damages for the commission of an injury to
the person or property. The venue of a personal action is the place where the
plaintiff or any of the principal plaintiffs resides, or where the defendant or any of
the principal defendants resides, or in the case of a non-resident defendant where
he may be found, at the election of the plaintiff, for which reason the action is
considered a transitory one.

[ AS APPLIED IN THIS CASE ] In the Complaint filed with the court a quo,
petitioner sought the nullification of the Deed of Sale with Right to Repurchase on
the strength of this claim: he did not sign the same nor did he execute any special
power of attorney in favor of his late wife to do so in his behalf. But, as there was
no allegation that the possession and title to the property have been transferred to
respondent, nowhere in the Complaint did petitioner allege or pray for the recovery
or reconveyance of the real property

Evidently, as the Complaint was not concerned with the title to or recovery of the
real property, it was a personal action. Thus, Davao City, where both the petitioner
and the respondent reside is the proper venue for the complaint. The appellate
court therefore committed a reversible error in affirming the trial court's dismissal
of the case for improper venue

G.R. No. 204444, 14 January 2015

VIRGILIO C. BRIONES v. COURT OF APPEALS and CASH ASIA
CREDIT CORPORATION
J. Perlas-Bernabe
PRINCIPLE: VENUE

This case arose from a complaint filed by Briones for nullity of Mortgage Contract,
Promissory Note, Loan Agreement, Foreclosure of Mortgage, Cancellation of
TCT, and damages against Cash Asia before the RTC. Briones alleged that he is
the owner of a property covered by TCT 160689 and that on 25 July 2010, he was
informed that his property had been foreclosed and a writ of possession had
already been issued in favor of Cash Asia.
Briones discovered that on 6 December 2007, he purportedly executed a PN, loan
agreement, and deed of real estate mortgage covering the subject property in favor
of Cash Asia in order to obtain a loan in the amount of Php 3.5 million. Since the
loan was left unpaid, Cash Asia proceeded to foreclose his property. Claiming
that he never contracted any loans as he has been living and working in
Vietnam since 31 October 2007, and only went back to the Philippines on 28
December 2012 until 3 January 2008 to spend the holidays, and that during
his brief stay nobody informed him of any loan agreement. Therefore,
assailing the validity of the foregoing contracts claiming his signature to be forged.

Cash Asia prayed for the outright dismissal of Brione’s complaint on the ground of
improper venue, pointing out that the venue stipulation in the subject contracts
stating that all legal actions arising out of this notice in connection with the
Real Estate Mortgage shall only be brought in or submitted to the jurisdiction
of the proper court of Makati City. As his defense, Briones contended that he
should not be covered by the venue stipulation as he was never a party in the
contract and that his signatures on the said contracts were forgeries.

The RTC dismiss Cash Asia’s motion to dismiss for lack of merit and opined that
the parties must be afforded the right to be heard in view of the substance of
Brione’s cause of action. Upon appeal, the CA reversed the decision of the RTC as
well as the complaint of Briones without prejudice. It held that the RTC gravely
abused its discretion in denying Cash Asia’s motion considering that the subject
contracts clearly provides the actions arising there from should be exclusively filed
before the courts of Makati City only, and that Brione’s complaint should have
been dismissed outright on the ground of improper venue notwithstanding the
claim of forgery.

ISSUE: W/N CA’s outright dismissal of Brione’s complaint on the ground of

improper venue is proper.

Ratio: The petition is meritorious. The Court finds that the CA gravely abused
its discretion in ordering the outright dismissal of Brione’s complaint against Cash
Asia, without prejudice to its re-filing before the proper court in Makati.
Rule 4 of the ROC governs the rules on venue of civil actions, to wit:

Rule 4
VENUE OF ACTIONS

SECTION 1. Venue of real actions. — Actions affecting title to or possession of

real property, or interest therein, shall be commenced and tried in the proper court
which has jurisdiction over the area wherein the real property involved, or a
portion thereof, is situated.

Forcible entry and detainer actions shall be commenced and tried in the municipal
trial court of the municipality or city wherein the real property involved, or a
portion thereof, is situated.

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

SEC. 3. Venue of actions against nonresidents. — If any of the defendants does not
reside and is not found in the Philippines, and the action affects the personal status
of the plaintiff, or any property of said defendant located in the Philippines, the
action may be commenced and tried in the court of the place where the plaintiff
resides, or where the property or any portion thereof is situated or found.

SEC. 4. When Rule not applicable. — This Rule shall not apply –

(a) In those cases where a specific rule or law provides otherwise; or

(b) Where the parties have validly agreed in writing before the filing of the
action on the exclusive venue thereof.

The general rules is that the venue of real actions is the court which has jurisdiction
over the areas wherein the real property involved, or a portion thereof, is situated,
while the venue of personal actions is the court which has jurisdiction where the
parties through a written instrument, may either introduce another venue where
actions arising from such instrument may be filed, or restrict the filing of said
actions in a certain exclusive venue.

The parties, however, are not precluded from agreeing in writing on an

exclusive venue, as qualified by Section 4. Written stipulations as to venue
may be restrictive in the sense that the suit may be filed only in the place
agreed upon, or merely permissive in that the parties may file their suit not
only in the place agreed upon but also in the places fixed by law. As in any
other agreement, what is essential is the ascertainment of the intention of the
parties respecting the matter.

As regards restrictive stipulations on venue, jurisprudence instructs that it must be

shown that such stipulation is exclusive. In its absence of qualifying or restrictive
words (such as exclusively, waiving for this purpose any other venue, shall only, to
the exclusion of the other courts, or words of similar import), the stipulation
should be deemed as merely an agreement on an additional forum, not as
limiting venue to the specified place.

In this relation, case law likewise provides that in cases where the complaint
assails only the terms, conditions, and/or coverage of a written instrument and not
its validity, the exclusive venue stipulation contained therein shall still be binding
on the parties, and thus the complaint may be properly dismissed on the
ground of improper venue. Conversely, therefore, a complain directly
assailing the validity of the written instrument itself should not be bound by
the exclusive venue stipulation contained therein and should be filed in
accordance with the general rules on venue.

In this case, the venue stipulation found in the subject contracts is indeed
restrictive in nature, considering that it effectively limits the venue of the actions
arising therefrom to the courts of Makati City. However, it must be emphasized
that Brione’s complaint directly assails the validity of the subject contracts,
claiming forgery in their execution. Given this circumstance, Briones cannot be
expected to comply with the aforesaid venue stipulation, as his compliance
therewith would mean an implicit recognition of their validity. Hence, pursuant
to the general rules on venue, Briones properly filed his complaint before the
a court in the City of Manila where the subject property is located.

CA patently erred and hence committed grave abuse of discretion in dismissing

Brione’s complaint on the ground of improper venue.

Dispositive portion: Petition is granted. CA decision is annulled and set aside

and RTC decision is reinstated.

RULE 5 – Uniform Procedure in Trial Court

FLORAIDA TERAÑA v. ANTONIO DE SAGUN, GR No. 152131, 2009-04-29

Facts:
The respondent Antonio Simuangco (respondent) owned a house and lot at 138 J.P.
Laurel St., Nasugbu, Batangas, which he leased to the petitioner. Sometime in
1996, the petitioner demolished the leased house and erected a new one in its...
place. The respondent alleged that this was done without his consent.
The petitioner allegedly also gave the materials from the demolished house to her
sister, who built a house adjacent to the respondent's property. When the
respondent discovered what the petitioner did, he immediately confronted her and
advised her to... vacate the premises. She refused. On February 3, 1997, the
respondent sent a letter demanding the petitioner to vacate the leased property.
Despite this letter of demand, which the petitioner received on February 10, she
still refused to vacate the said property.
The respondent thus filed a complaint for unlawful detainer... on the ground of the
petitioner's violation of the terms of the Contract of Lease.
The presiding judge of the Municipal Trial Court... inhibited from the case on the
ground that she is related to the respondent.
petitioner denied allegations of the complaint
She claimed that she demolished the old building and built a new one with the
knowledge and consent of the respondent; that the original house was old and was
on the verge of... collapsing; that without the timely repairs made by the petitioner,
the house's collapse would have caused the death of the petitioner and her family.
The trial court called for a preliminary conference under Section 7 of the Revised
Rules of Summary Procedure (RSP) and Section 8 of Rule 70 of the Rules of
Court, and required the parties to file their position papers and affidavits of their
witnesses after they failed... to reach an amicable settlement.
both parties moved for an extension of time to file the necessary pleadings.  The
trial court denied both motions on the ground that the RSP and the Rules of
Court,... particularly Rule 70, Section 13(5), prohibit the filing of a motion for
extension of time.
IN VIEW OF THE FOREGOING, judgment is hereby rendered in favor of the
plaintiff Antonio B. Simuangco and against the defendant Aida Terana as follows:
Ordering the defendant Aida Terana and all persons claiming right under her to
vacate and surrender possession of the subject house to the plaintiff;
Ordering the said defendant to pay the amount of Five Thousand Pesos (P5,000.00)
as Attorney's fees; and
To pay the costs of suit.
Petitioner then filed a Notice of Appeal on November 12, 1997. The records of the
case were ordered elevated to the Regional Trial Court (RTC)
The RTC rendered judgment affirming the decision of the MTC on February 26,
1998.
The petitioner filed a Motion for Reconsideration and/or for New Trial
The petitioner argued that the appealed MTC decision was not supported by any
evidence, and that the respondent failed to substantiate the allegations of his...
complaint and to discharge the burden of proving these allegations after the
petitioner denied them in her Sagot.
In her motion for a new trial, the petitioner argued that her failure to submit her
position paper and the affidavits of her witnesses within the 10-day period was due
to excusable negligence. She explained that she incurred delay because of the
distance of some of her... witnesses' residence. The petitioner alleged that she had a
good and meritorious claim against the respondent, and that aside from her position
paper and the affidavits of her witnesses, she would adduce receipts and other
pieces of documentary evidence to establish the costs... incurred in the demolition
of the old house and the construction of the new one... the RTC granted the motion
for reconsideration, and thus reversed its February 26, 1998 judgment, as well as
the November 5, 1997 decision of the MTC.
petitioner challenged the order of remand through another motion for
reconsideration.
The CA affirmed the RTC in a decision promulgated on September 7, 2001. The
CA noted that the RTC's order of remand was not just based on equity and
substantial justice, but was also based on law, specifically Section 6 of Rule 135.
Thus, the CA ruled... that the RTC did not err in remanding the case to the MTC
and ordering the conduct of further proceedings after giving the respondent an
opportunity to present his position paper and the affidavits of his witnesses.  This
ruling did not satisfy petitioner, giving way to the... present petition.
Issues:
[W]hether under the Rules of Summary Procedure, the Regional Trial Court, as
well as the Court of Appeals, may order the case remanded to the MTC after the
plaintiff, herein respondent, failed to submit evidence in support of his complaint
because his Position Paper, affidavit... of witnesses and evidence, were not
submitted on time and the extension of time to file the same was denied because it
is prohibited under the Rules on Summary Procedure.

1. whether a remand is proper; 2) whether the Court should appreciate the

petitioner's position paper and the affidavits of her witnesses; and 3) whether
the complaint for unlawful detainer should be dismissed.

Ruling:
Remand Not Necessary
We find that a remand of the case to the lower courts is no longer necessary, given
the pleadings and submissions filed, and the records of the proceedings below. A
remand would delay the overdue resolution of this case (originally filed with the
MTC on April 16, 1997), and... would run counter to the spirit and intent of the
RSP.
That a position paper is not indispensable to the court's authority to render
judgment is further evident from what the RSP provides regarding a preliminary
conference: "on the basis of the pleadings and the stipulations and admissions
made by the parties, judgment may be... rendered without the need for further
proceedings, in which event the judgment shall be rendered within 30 days from
the issuance of the order.” Thus, the proceedings may stop at that point, without
need for the submission of position papers. In... such a case, what would be extant
in the record and the bases for the judgment would be the complaint, answer, and
the record of the preliminary conference.

RULE 6 – Kinds of Pleadings (with Amendments)

G.R. No. 222821, August 09, 2017

NORTH GREENHILLS ASSOCIATION, INC. v. ATTY. NARCISO

MORALES,

FACTS: Atty. Morales is a resident of North Greenhills Subdivision in San Juan

City. His house is located alongside Club Filipino Avenue and adjacent to
McKinley Park, an open space/playground area owned and operated by NGA. He
also has a personal access door, which he built through a wall separating his house
from the park. This access door, when unlocked, opens directly into the park.

On the other hand, NGA, an association composed of members of the subdivision,

organized to promote and advance the best interests, general welfare, prosperity,
and safeguard the well-being of the owners, lessees and occupants of North
Greenhills, is the undisputed owner of the park. It has acquired ownership thereof
through a donation made by the original owner, Ortigas &. Co. Ltd.

In June 2003, NGA started constructing a pavilion or kiosk occupying the side
of the park adjacent to the residence of Atty. Morales. Part of the design was a
public restroom intended to serve the needs of park guests and members of
NGA. Said restroom was constructed alongside the concrete wall separating
the house of Atty. Morales from the park.

Objecting to the construction of the restroom, Atty. Morales filed on July 23,
2003 a complaint before the HLURB, docketed as HLURB Case No. NCRHOA-
072303-309. On August 13, 2013, he amended his complaint and additionally
sought the demolition of the pavilion which was then being built.

NGA, in its Answer with Compulsory Counterclaim, rejected the assertions of

Atty. Morales. It contended that as the absolute owner of the park, it had the
absolute right to fence the property and impose reasonable conditions for the
use thereof by both its members and third parties; that the construction of the
restroom was for the use and benefit of all NGA members, including Atty.
Morales; and that Atty. Morales' use of a side entrance to the park for 33 years
could not have ripened into any right because easement of right of way could not
be acquired by prescription. NGA likewise sought the payment of P878,778.40
corresponding to the annual membership dues which Atty. Morales had not been
paying since 1980.

On April 13, 2003, the HLURB Arbiter conducted an ocular inspection of the park
and noted that the construction started by NGA blocked Atty. Morales' side access
to the park.

On February 16, 2005, the HLURB Arbiter rendered a Decision, rendered ordering
respondents of the removal of the pavilion and the relocation of the common toilet
in a place where it will not be a nuisance to any resident. Respondents are further
directed to remove the obstruction to the side door of the complainant. All other
claims and counterclaims are hereby dismissed for lack of merit.

NGA appealed to the HLURB Board of Commissioners (HLURB Board). In its

November 22, 2007 Decision,the HLURB Board modified the ruling of the
HLURB Arbiter, thus:

Further, the complaint against respondent Alviar should be dropped as no acts have
been particularly attributed to him in his personal capacity.
NGA appealed to the Office of the President (OP).

On February 17, 2010, the OP rendered its decision, affirming in toto the ruling of
the HLURB Board.

NGA moved for reconsideration, but its motion was denied by the OP in its August
8, 2013 Resolution.

Aggrieved, NGA filed a petition for review under Rule 43 of the Rules of Court
before the CA, arguing that the OP erred in its findings.

Ruling of the CA

In its March 13, 2015 Decision, the CA affirmed the ruling of the OP. It found no
error on the part of the OP in affirming the characterization of the restrooms built
as nuisance per accidens considering that the structure posed sanitary issues which
could adversely affect not only Atty. Morales, but also his entire household; that
even if there existed a perimeter wall between the park and Atty. Morales' home,
the odor emanating from the restroom could easily find its way to the dining area,
and the foul and noxious smell would make it very difficult and annoying for the
residents of the house to eat; and that the proximity of the restroom to Atty.
Morales' house placed the people residing therein at a greater risk of contracting
diseases both from improperly disposed waste and human excrements, as well as
from flies, mosquitoes and other insects, should NGA fail to maintain the
cleanliness of the structures.

Hence, this petition.

ISSUES:

1. WHETHER THE CA CORRECTLY RULED THAT THE HLURB HAD

JURISDICTION OVER THE COMPLAINT FILED BY ATTY. MORALES;
2. WHETHER THE CA CORRECTLY RULED THAT THE COUNTERCLAIM
OF NGA AGAINST ATTY. MORALES FOR UNPAID ASSOCIATION DUES
WAS A PERMISSIVE COUNTERCLAIM.

HELD AND RATIO DECIDENDI:

The Court partly grants the petition.

On Jurisdiction

Basic is the rule that jurisdiction over the subject matter of a case is conferred
by law and determined by the allegations in the complaint which comprise a
concise statement of the ultimate facts constituting the plaintiff's cause of
action. The nature of an action, as well as which court or body has jurisdiction
over it, is determined from the allegations contained in the complaint, irrespective
of whether or not the plaintiff is entitled to recover upon all or some of the claims
asserted therein. Once vested by the allegations in the complaint, jurisdiction
remains vested irrespective of whether or not the plaintiff is entitled to recover
upon all or some of the claims asserted therein.

Relative thereto is the rule that lack of jurisdiction over the subject matter may be
raised at any stage of the proceedings. Jurisdiction over the subject matter is
conferred only by the Constitution or the law.It cannot be acquired through a
waiver or enlarged by the omission of the parties or conferred by the acquiescence
of the court. Consequently, questions of jurisdiction may be cognizable even if
raised for the first time on appeal.

In this case, it appears that Atty. Morales, by filing his complaint as a member
whose rights have been allegedly violated, has satisfied such requirement. His
status as a member has not been questioned. It is worthy to note that NGA, in its
counterclaim, demanded the payment of association dues from Atty. Morales as he
has been refusing to pay his dues for more than three decades. In sum, there is no
dispute that Atty. Morales is a member of NGA, albeit a delinquent member. In
Tumpag v. Tumpag, the Court said:
Counterclaim for unpaid dues was a permissive one and, therefore, the affirmation
of its dismissal was proper

A compulsory counterclaim is any claim for money or any relief, which a

defending party may have against an opposing party, which at the time of suit
arises out of, or is necessarily connected with, the same transaction or
occurrence that is the subject matter of the plaintiffs complaint. It is
compulsory in the sense that it is within the jurisdiction of the court, does not
require for its adjudication the presence of third parties over whom the court
cannot acquire jurisdiction, and will be barred in the future if not set up in the
answer to the complaint in the same case. Any other counterclaim is permissive.

The Court has held that the compelling test of compulsoriness characterizes a
counterclaim as compulsory if there should exist a logical relationship between the
main claim and the counterclaim. The Court further ruled that there exists such a
relationship when conducting separate trials of the respective claims of the parties
would entail substantial duplication of time and effort by the parties and the court;
when the multiple claims involve the same factual and legal issues; or when the
claims are offshoots of the same basic controversy between the parties.

The criteria to determine whether the counterclaim is compulsory or permissive are

as follows:

(a) Are issues of fact and law raised by the claim and by the counterclaim largely
the same?

(b) Would res judicata bar a subsequent suit on defendants claim absent the
compulsory rule?

(c) Will substantially the same evidence support or refute plaintiffs claim as well as
defendant's counterclaim?

(d) Is there any logical relations between the claim and the counterclaim?

A positive answer to all four questions would indicate that the counterclaim is
compulsory. Otherwise, the same is permissive.
Here, the main issues in the complaint are limited only to the propriety of barring
Atty. Morales from accessing the park through the side door and whether the
restroom constructed by NGA is a nuisance per se. On the other hand, the
counterclaim is simply concerned with collecting from Atty. Morales his unpaid
association dues for the past thirty (30) years. Suffice it to state that payment or
non-payment of association dues are distinct matters that do not relate to whether
the main cause of Atty. Morales against NGA was proper. Whether there was
payment or otherwise is irrelevant to the main issues considering that the pleadings
filed by the parties essentially reflected an admission of membership of Atty.
Morales in the association. The failure to raise the issue of unpaid association dues
in this case or its dismissal if properly raised will not be a bar to the filing of the
appropriate separate action to collect it.

RULE 7 – Parts and Contents of a Pleading (with Amendments)

LARA'S GIFT v. PNB GENERAL INSURERS CO., GR Nos. 230429-30,
2018-01-24
Facts:
a petition for review
Lara's Gifts and Decors, Inc. (LGDI) is engaged in the business of
manufacturing, selling, and exporting various handicraft items and decorative
products.
It leased buildings/warehouses... from J.Y. & Sons Realty Co., Inc.
2008, approximately four hours before the policy was about to expire, a fire broke
out
Petitioner immediately claimed from the respondents for the loss and damage of its
insured properties.
Taking into consideration the findings of the independent adjusters and the report
of its forensic specialists, respondents denied petitioner's claim... petitioner filed a
Complaint for Specific Performance and Damages against respondents
In its Notice of Pre-Trial Conference,... RTC directed the parties to submit their
respective pre-trial briefs, accompanied by the documents or exhibits intended to
be presented, at least three days before the scheduled Pre-Trial Conference.
It also contained a stern warning that "no evidence shall be allowed to be
presented and offered during the trial in support of a party's evidence-in-chief
other than those that had been earlier identified and pre-marked during the
pre-trial, except if allowed by the Court for good cause shown."
During the Pre-Trial Conference, both parties made admissions and proposed
stipulations of facts and issues to simplify the course of the trial. On account of the
voluminous documentary exhibits to be presented, identified, and marked, the
parties allotted six meetings/conferences just for the pre-marking of exhibits.
After the termination of the Pre-Trial Conference, the RTC issued a Pre-Trial
Order dated September 12, 2013, in which the parties were given the opportunity
to amend or correct any errors found therein within five days from receipt thereof.
In the same Order, all the parties made a reservation for the presentation of
additional documentary exhibits in the course of the trial.
The parties filed their respective Motions to Amend/Correct Pre-Trial Order.
[5] None of the parties, however, sought to amend the Pre-Trial Order for the
purpose of submitting additional judicial affidavits of witnesses or the
admission of additional documentary exhibits not presented and pre marked
during the Pre-Trial Conference.
petitioner furnished respondents with a copy of the 2nd Supplemental Judicial
Affidavit[
PNB Gen, through a Motion to Expunge,[9] sought to strike from the records the
said 2nd Supplemental Judicial Affidavit
They argued that since these documents were not presented, identified, marked,
and even compared with the originals during the Pre-Trial Conference, they should
be excluded pursuant to the Guidelines on Pre-Trial and JA Rule.
The RTC issued an Order12 overruling the objections of respondents and allowing
petitioner to propound questions relating to the Questioned Documents, without
prejudice to the hearing on the motions to expunge the 2nd Supplemental Judicial
Affidavit of Mrs. Villafuerte
Respondents separately moved for the reconsideration of the denial of their
motions to expunge, but the trial court denied the same in an Omnibus Order
The RTC allowed Mr. Villafuerte to testify on the contested documentary exhibits,
on the ground that both the trial court and the parties are bound by the
reservations made for the presentation of additional evidence, and in keeping
with the interest of justice that evidence should be liberally allowed to be
heard than to be suppressed, subject to the final appreciation of its weight and
credence. The Omnibus Order likewise denied UCPB's Motion seeking to expunge
from the records the 2nd Supplemental Judicial Affidavit of Mrs. Villafuerte and
its accompanying exhibits.
Aggrieved, respondents filed a petition for certiorari under Rule 65 b4 CA

In dismissing the petitions, the CA held that the RTC has the discretion, pursuant
to Section 7,16 Rule 132 of the Rules of Court, to allow the Questioned Documents
to be presented and admitted in support of Mr. Villafuerte's answers during his
cross-examination. Anent the admission of the 2nd Supplemental Judicial Affidavit
of Mrs. Villafuerte, the CA noted that the records show that "all the parties made
reservations" to present "additional documentary exhibits" in the course of the trial,
as embodied in the Pre-Trial Order.

Dissatisfied, respondents moved for reconsideration of the CA Decision.

Finding merit in the respondents' contentions, the CA ruled that the RTC erred
in allowing the introduction of the 2nd Supplemental Judicial Affidavit in
evidence, including the attached Questioned Documents, since petitioner
failed to comply with Sections 2 and 10 of the JA Rule which prohibit the
presentation, marking and identification of additional exhibits during trial
that were not promptly submitted during pre-trial. In addition, the CA declared
Mr. Villafuerte as incompetent to testify on the Questioned Documents since he
was neither involved in the preparation nor execution thereof; thus, his testimony
respecting the documents is hearsay. Accordingly, the CA annulled and set aside
the October 1, 2014 and November 26, 2014 RTC Orders.

Hence, the instant petition.

Petitioner, in the main, argues that the introduction of additional documentary
evidence during re-direct examination of a witness is not absolutely proscribed by
A.M. No. 03-1-09-SC... respondents argued that the parties' respective reservations
to allow them to introduce additional evidence do not constitute a waiver of the
parties' rights and obligations under the Pre-Trial Order and the Rules. They further
maintained that the introduction of additional evidence must be predicated on
necessity, and within the bounds of the issues that have been defined, limited, and
identified in the Pre-Trial Order
Issues:
whether or not the CA erred in disallowing the introduction of additional
documentary exhibits during trial and the filing of the 2nd Supplemental Judicial
Affidavit
Ruling:
The JA Rule and the Guidelines on Pre-Trial do not totally proscribe the
submission of additional evidence even after trial had already commenced... the
submission of evidence beyond the mandated period in the JA Rule is strictly
subject to the conditions that: a) the court may allow the late submission of
evidence only once; b) the party presenting the evidence proffers a valid
reason for the delay; and c) the opposing party will not be prejudiced thereby.
following the Guidelines on Pre-Trial,[34] the parties are bound by the contents of
the Pre-Trial Order. Records do not disclose that the respondents endeavored to
amend the Pre-Trial Order to withdraw their assent to their reservation.
Consequently, they cannot now dispute the contents of the Pre-Trial Order. The
evidence sought to be presented are likewise undeniably relevant to the issues
raised during the pre-trial, which mainly question petitioner's entitlement to claim
the amount of its insurance policy from the respondents and if it has proved the
amount of its loss by substantial evidence.
Finally, no less than UCPB, in its Motion to Correct/Amend Pre-Trial Order,
moved that the Pre-Trial Order be amended to explicitly include the trial court's
ruling that it will allow additional direct testimony of the parties' witnesses to be
given in open court so long as they have already submitted their Judicial Affidavits
within the reglementary period required by the JA Rule. It appears that the motion
was made in connection with UCPB's motion to allow its own witness to give
additional direct testimony in open court. Herein, respondents do not dispute that
petitioner was able to submit the Judicial Affidavit and 1st Supplemental
Judicial Affidavit of Mrs. Villafuerte within the period prescribed by the JA
Rule. Respondents, therefore, cannot be made to selectively apply the
provisions of the rules to the petitioner and then request to be exempted
therefrom.
SC ruled

In dismissing the petitions, the CA held that the RTC has the discretion, pursuant
to Section 7,16 Rule 132 of the Rules of Court, to allow the Questioned Documents
to be presented and admitted in support of Mr. Villafuerte's answers during his
cross-examination. Anent the admission of the 2nd Supplemental Judicial Affidavit
of Mrs. Villafuerte, the CA noted that the records show that "all the parties made
reservations" to present "additional documentary exhibits" in the course of the trial,
as embodied in the Pre-Trial Order.

Rule 7. Non-Forum Shopping

EVERSLEY vs. SPOUSES ANASTACIO

GR NO. 195814
APRIL 4, 2018

Facts:

Eversley is a public health facility operated by the Department of Health to

administer care and treatment to patients suffering from Hansen's disease,
commonly known as leprosy, and to provide basic health services to non-Hansen's
cases. Since 1930, it has occupied a portion of a parcel of land denominated as Lot
No. 1936 in Jagobiao, Mandaue City, Cebu. Spouses Anastacio and Perla
Barbarona (the Spouses Barbarona) allege that they are the owners of Lot No. 1936
by virtue of Transfer Certificate of Title (TCT) No. 53698. They claim that they
have acquired the property from the Spouses Tarcelo B. Gonzales and Cirila Alba.

On May 6, 2005, the Spouses Barbarona filed a Complaint for Ejectment

(Complaint) before the Municipal Trial Court in Cities of Mandaue City against
the occupants of Lot No. 1936, namely, Eversley, Jagobiao National High School,
the
Bureau of Food and Drugs, and some residents (collectively, the occupants). The
Spouses Barbarona alleged that they had sent demand letters and that the occupants
were given until April 15, 2005 to vacate the premises. They further claimed that
despite the lapse of the period, the occupants refused to vacate; hence, they were
constrained to file the Complaint.

In their Answer, the occupants alleged that since they had been in possession of the
property for more than 70 years, the case was effectively one for recovery of
possession, which was beyond the jurisdiction of the Municipal Trial Court. They
likewise claimed that the Spouses Barbarona were guilty of laches since it took
more than 60 years for them to seek the issuance of a Torrens title over the
property. They also averred that the Spouses Barbarona's certificate of title was
void since they, the actual inhabitants of the property, were never notified of its
issuance.

Procedural History:

MTC in Cities- order occupants to vacate property, finding that action was for
unlawful detainer, claiming jurisdiction therewith.
Held that titled property could not be acquired through laches.

Occupants appealed to RTC

RTC: November 24, 2006 affirmed in toto the lower court’s decision.

Eversley (occupant) filed motion for consideration

Motion for reconsideration pending

CA: February 19, 2007 rendered decision cancelling OCT for lack of notice to
owners

April 23, 2007 RTC denied Eversley’s Motion for reconsideration

Eversley filed petition for review with CA, arguing MTC had no jurisdiction

CA: February 17, 2011 CA denied petition of Eversley. According to CA since

allegations were for recovery of physical possession and not determination of
property’s ownership, the action was for unlawful detainer, so MTC had
jurisdiction
 Eversley, represented by OSG filed petition for review to SC, and prayed for
TRO and or Writ of Preliminary Injunction to restrain immediate execution
of judgment.

SC: May 13, 2011 court issued TRO, respondents directed to comment on petition.

In its Petition before this Court, petitioner argues that the nullification of TCT No.
53698 should have been prejudicial to respondents' right to recover possession over
the property. Petitioner claims that since the Metropolitan Trial Court relied on
respondents' title to determine their right of possession over the property, the
subsequent nullification of their title should have invalidated their right of
possession. Petitioner maintains that even if Decree No. 699021 was valid, the
effect of its validity does not extend to respondents since there is no evidence to
prove that they have acquired the property from Tarcelo B. Gonzales, the owner
named in the decree.

Petitioner points out that respondents' Complaint before the trial court was a case
for accion publiciana, not one for unlawful detainer, since respondents have not
proven petitioner's initial possession to be one of mere tolerance. It claims that
respondents' bare allegation that they merely tolerated petitioner's possession is
insufficient in a case for unlawful detainer, especially with petitioner's possession
of the property since 1930, which pre-dates the decree that was reconstituted in
1939.29 It argues that its long occupancy should have been the subject of judicial
notice since it is a government hospital serving the city for decades and is even
considered as a landmark of the city.

While the Petition was pending before this Court, respondents raised a few
procedural concerns before submitting their Comment. In their Motion for Leave
to File Comment/ Manifestation, respondents informed this Court that petitioner
still had a pending and unresolved Motion for Reconsideration before the Court of
Appeals, in violation of the rule against forum shopping. Respondents,
nonetheless, filed their Comment/Manifestation, to which this Court ordered
petitioner to reply.

In their Comment on Petitioner's Manifestation, respondents assert that while

petitioner submitted a Manifestation and Motion to Withdraw its Motion for
Reconsideration, the Court of Appeals did not issue any order considering
petitioner's Motion for Reconsideration to have been abandoned. The Court of
Appeals instead proceeded to resolve it in its August 31, 2011 Resolution; hence,
respondents submit that petitioner violated the rule on non-forum shopping.

Issue: Whether or not Eversley Childs Sanitarium violated the rule on

non-forum shopping.

Ruling: No. Eversley did not violate forum shopping.

Section 5. Certification against forum shopping. — The plaintiff or principal

party shall certify under oath in the complaint or other initiatory pleading
asserting a claim for relief, or in a sworn certification annexed thereto and
simultaneously filed therewith: (a) that he has not theretofore commenced any
action or filed any claim involving the same issues in any court, tribunal or
quasi-judicial agency and, to the best of his knowledge, no such other action
or claim is pending therein; (b) if there is such other pending action or claim, a
complete statement of the present status thereof; and (c) if he should thereafter
learn that the same or similar action or claim has been filed or is pending, he
shall report that fact within five (5) days therefrom to the court wherein his
aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by
mere amendment of the complaint or other initiatory pleading but shall be
cause for the dismissal of the case without prejudice, unless otherwise
provided, upon motion and after hearing.

Application/Analysis:

Petitioner, through the Office of the Solicitor General, is alleged to have

committed
forum shopping when it filed its Petition for Review on Certiorari with this Court,
despite a pending Motion for Reconsideration with the Court of Appeals.

According to the Solicitor General, it filed a Motion for Extension of Time to File
a
Petition for Review on Certiorari with this Court on March 10, 2011 but that
another set of solicitors erroneously filed a Motion for Reconsideration with the
Court of Appeals on March 11, 2011.47 Thus, it was constrained to file a
Manifestation and Motion to Withdraw its Motion for Reconsideration on April 14,
2011,48 the same date as its Petition for Review on Certiorari with this Court.
Indeed, its Certification of Non-Forum Shopping, as certified by State Solicitor
Joan V. Ramos-Fabella, provides:
. . . .
5. I certify that there is a pending Motion for Reconsideration erroneously
filed in the Court of Appeals, Special Eighteenth Division which we have
asked to be withdrawn. Aside from said pending motion, I have not
commenced any action or filed any claim involving the same issues in any
court, tribunal or quasi-judicial agency and, to the best of my knowledge, no
such other action or claim is pending therein; and should I thereafter learn
that
the same or similar action or claim is pending before any other court, tribunal
or quasi-judicial agency, I shall report such fact within five (5) days therefrom
from the court wherein this petition has been filed.

The Office of the Solicitor General's basis is its reading of Rule VI, Section 15 of
the 2002 Internal Rules of the Court of Appeals:

Section 15. Effect of Filing an Appeal in the Supreme Court. – No motion for
reconsideration or rehearing shall be acted upon if the movant has previously
filed in the Supreme Court a petition for review on certiorari or a motion for
extension of time to file such petition. If such petition or motion is
subsequently filed, the motion for reconsideration pending in this Court shall
be deemed abandoned.

The Internal Rules of the Court of Appeals clearly provide that a subsequent
motion for reconsideration shall be deemed abandoned if the movant filed a
petition for review or motion for extension of time to file a petition for review
before this Court. While the Office of the Solicitor General can be faulted for filing
a motion instead of a mere manifestation, it cannot be faulted for presuming that
the Court of Appeals would follow its Internal Rules as a matter of course.

Had the Court of Appeals applied its own Internal Rules, petitioner's Motion for
Reconsideration would have been deemed abandoned.

Petitioner's Motion for Reconsideration having been deemed abandoned with its
filing of a Motion for Extension of Time before this Court, the Court of Appeals'
August 31, 2011 Resolution denying the Motion for Reconsideration, thus, has no
legal effect. It is as if no motion for reconsideration was filed at all. Considering
that petitioner counted the running of the period to file its Petition with this Court
from its receipt of the Court of Appeals February 17, 2011 Decision, and not of the
Court of Appeals August 31, 2011 Resolution, it does not appear that petitioner
"wanton[ly] disregard[ed] the rules or cause[d] needless delay in the administration
of justice." In this particular instance, petitioner did not commit a fatal procedural
error.

Conclusion:

WHEREFORE, the Petition is GRANTED. The February 17, 2011 Decision and
August 31, 2011 Resolution of the Court of Appeals in CA G.R. SP No. 02762
are REVERSED and SET ASIDE. The Temporary Restraining Order dated May
13, 2011 is made PERMANENT. SO ORDERED.

Rule 8
Manner of making allegations in pleading (with amendment)

GO TONG ELECTRICAL SUPPLY CO., INC. vs. BPI FAMILY SAVINGS

BANK, INC G.R. No. 187487

Action in the Pleadings; Actionable Documents; Specific Denial (Rule 8)

Facts:

BPI Family Savings filed a complaint against petitioners Go Tong Electrical

Supply Co., Inc. (Go Tong Electrical) and it’s President, George C. Go (Go;
collectively petitioners), seeking that the latter be held jointly and severally liable
to it for the payment of their loan obligation in the aggregate amount, inclusive of
the principal sum, interests, and penalties, attorney’s fees, litigation expenses, and
costs of suit.

As alleged by respondent as early as 1996, Go Tong Electrical had applied for and
was granted financial assistance by the then Bank of South East Asia (BSA).
Subsequently, DBS Bank of the Philippines, Inc. (DBS) became the successor in
interest of BSA.
The application for financial assistance was renewed through a Credit Agreement.
On even date, Go Tong Electrical, represented by Go, among others, obtained a
loan from DBS for which Go Tong Electrical executed Promissory Note for the
same amount in favor of DBS, maturing on February 5, 2000.

Under the PN’s terms, Go Tong Electrical bound itself to pay a default penalty
interest at the rate of one percent (1%) per month in addition to the current interest
rate, as well as attorney’s fees equivalent to twenty-five percent (25%) of the
amount sought to be recovered.

As additional security, Go executed a Comprehensive Surety Agreement (CSA)

covering any and all obligations undertaken by Go Tong Electrical, including the
aforesaid loan. Upon default of petitioners, DBS – and later, its successor-in-
interest, herein respondent – demanded payment from petitioners, but to no avail.
Hence the respondent filed a complaint.

In their Answer with Counterclaim (Answer), petitioners merely stated that they
"specifically deny" the allegations under the complaint.

Of particular note is their denial of the execution of the loan agreement, the PN,
and the CSA "for being self-serving and pure conclusions intended to suit
[respondent's] purposes." By way of special and affirmative defenses, petitioners
argued, among others, that: (a) the real party-in-interest should be DBS and not
respondent; (b) no demand was made upon them; and (c) Go cannot be held liable
under the CSA since there was supposedly no solidarity of debtors.

Petitioners further interposed counterclaims for the payment of moral and

exemplary damages, as well as litigation and attorney's fees

History of Procedure:

RTC ruled in favor of respondent BPI, thereby ordering petitioners to jointly and
severally pay the former: (a) the principal sum with legal interest to be reckoned
from the filing of the Complaint; ( b) penalty interest of one percent (1 %) per
month until the obligation is fully paid; and (c) attorney's

Unconvinced, petitioners appealed to the CA.

In a Decision, the CA sustained the RTC's ruling in toto, it discredited petitioners'
argument that respondent's sole witness, Sufiio, was incompetent to testify on the
documentary evidence presented as he had no personal knowledge of the loan
documents' execution, given that petitioners, in their Answer, did not deny under
oath the genuineness and due execution of the PN and CSA and, hence, are
deemed admitted under Section 8, Rule 8 of the Rules of Court (Rules). Besides,
the CA observed that, despite the aforesaid admission, respondent still presented
the testimony of Suñio who, having informed the court that the loan documents
were in his legal custody as the designated Account Officer when DBS merged
with herein respondent, had personal knowledge of the existence of the loan
documents. It added that, although he was not privy to the execution of the same, it
does not significantly matter as their genuineness and due execution were already
admitted.

Petitioners filed a motion for reconsideration, which was, however, denied

Issue:

Whether or not the CA erred in upholding the RTC's ruling.

Ruling:

NO. The petition lacks merit.

The Court concurs with the CA Decision holding that the genuineness and due
execution of the loan documents in this case were deemed admitted by petitioners
under the parameters of Section 8, Rule 8 of the Rules which provides:

SEC. 8. How to contest such documents. - When an action or defense is founded

upon a written instrument, copied in or attached to the corresponding pleading as
provided in the preceding Section, the genuineness and due execution of the
instrument shall be deemed admitted unless the adverse party, under oath,
specifically denies them, and sets forth what he claims to be the facts; but the
requirement of an oath does not apply when the adverse party does not appear to be
a party to the instrument or when compliance with an order for an inspection of the
original instrument is refused.
A reading of the Answer shows that petitioners failed to specifically deny the
execution of the Credit Agreement, PN, and CSA under the auspices of the above-
quoted rule.

The mere statement in paragraph 4 of their Answer, i.e., that they "specifically
deny" the pertinent allegations of the Complaint "for being self-serving and pure
conclusions intended to suit plaintiffs purposes," does not constitute an effective
specific denial as contemplated by law.

Verily, a denial is not specific simply because it is so qualified by the

defendant. Stated otherwise, a general denial does not become specific by the
use of the word "specifically." Neither does it become so by the simple
expedient of coupling the same with a broad conclusion of law that the
allegations contested are "self-serving" or are intended "to suit plaintiff’s
purposes."

In Permanent Savings & Loan Bank v. Velarde (Permanent Savings & Loan
Bank), citing the earlier case of Songco v. Sellner, the Court expounded on how to
deny the genuineness and due execution of an actionable document, viz.:

This means that the defendant must declare under oath that he did not
sign the document or that it is otherwise false or fabricated. Neither does the
statement of the answer to the effect that the instrument was procured by
fraudulent representation raise any issue as to its genuineness or due
execution. On the contrary such a plea is an- admission both of the
genuineness and due execution thereof, since it seeks to avoid the instrument
upon a ground not affecting either.

To add, Section 8, Rule 8 of the Rules further requires that the defendant "sets
forth what he claims to be the facts," which requirement, likewise, remains absent
from the Answer in this case.

Thus, with said pleading failing to comply with the "specific denial under oath"
requirement under Section 8, Rule 8 of the Rules, the proper conclusion, as arrived
at by the CA, is that petitioners had impliedly admitted the due execution and
genuineness of the documents evidencing their loan obligation to respondent.
To this, case law enlightens that "[t]he admission of the genuineness and due
execution of a document means that the party whose signature it bears admits that
he voluntarily signed the document or it was signed by another for him and with
his authority; that at the time it was signed it was in words and figures exactly as
set out in the pleading of the party relying upon it; that the document was
delivered; and that any formalities required by law, such as a seal, an
acknowledgment, or revenue stamp, which it lacks, are waived by him. Also, it
effectively eliminated any defense relating to the authenticity and due execution of
the document, e.g., that the document was spurious, counterfeit, or of different
import on its face as the one executed by the parties; or that the signatures
appearing thereon were forgeries; or that the signatures were unauthorized."

Conclusion:

WHEREFORE, the petition is DENIED. The Decision dated February 17, 2009
and the Resolution dated April 13, 2009 of the Court of Appeals in CA-G.R. CV
No. 86749 are hereby AFFIRMED with the above-stated MODIFICATIONS.
RULE 9
EFFECT OF FAILURE TO PLEAD

MOMARCO IMPORT COMPANY, INC., Petitioner, v. FELICIDAD

VILLAMENA, Respondent.

‘A default judgment is frowned upon because of the policy of the law to hear every
litigated case on the merits. But the default judgment will not be vacated unless the
defendant satisfactorily explains the failure to file the answer, and shows that it
has a meritorious defense.’

FACTS

Respondent Villemena initiated against the petitioner for the nullification of a deed
of absolute sale involving registered real property and its improvements situation
in Caloocan City as well as of the transfer certificate of title issued in favor of the
latter by virtue of said deed of absolute sale on the ground of falsification.

The following factual and procedural antecedents are summarized by the CA in its
assailed decision, to wit:
 On September 23, 1997, plaintiff Villamena filed against defendant
Momarco a complaint for "Nullification of Deed of Sale and of the
Title Issued" pursuant thereto alleging that she is the owner of a parcel
of land with improvements located in Caloocan City and covered by
Transfer Certificate of Title No. 204755. A letter from defendant
Momarco corporation dated June 12, 1997, informed plaintiff that
TCT No. 204755 over aforesaid property had been cancelled and TCT
No. C-319464 was issued in lieu thereof in favor of defendant
corporation on the strength of a purported Special Power of Attorney
executed by Dominador Villamena, her late husband, appointing her,
plaintiff Felicidad Villamena, as his attorney-in-fact and a deed of
absolute sale purportedly executed by her in favor of defendant
corporation on May 21, 1997, the same date as the Special Power of
Attorney. The Special Power of Attorney dated May 21, 1997 is a
forgery. Her husband Dominador died on June 22, 1991. The deed of
sale in favor of defendant corporation was falsified. What plaintiff
executed in favor of Momarco was a deed of real estate mortgage to
secure a loan of P100,000.00 and not a deed of transfer/conveyance.

x x x x

On August 19, 1998, plaintiff Villamena filed a motion to declare

defendant corporation in default for failure of aforesaid defendant to
file its answer as of said date despite the filing of an Entry of
Appearance by its counsel dated May 4, 1998.

On September 10, 1998 defendant corporation filed its Answer with

Counterclaim which denied the allegations in the complaint; alleged
that plaintiff and her daughter Lolita accompanied by a real estate
agent approached the President of Momarco for a loan of
P100,000.00; offered their house and lot as collateral; and presented a
Special Power of Attorney from her husband. She was granted said
loan. Aforesaid loan was not repaid. Interests accumulated and were
added to the principal. Plaintiff offered to execute a deed of sale over
the property on account of her inability to pay. Plaintiff presented to
defendant corporation a deed of sale and her husband's Special of
Power Attorney already signed and notarized.
y
PROCEDURAL HISTORY
OCTOBER 15, 1998

the petitioner Momarco was declared in default, and its answer was ordered
stricken from the records. Thereafter, the RTC allowed the respondent
Villamena to present her evidence ex-parte.

 RTC

August 23, 1999

RTC rendered the default judgment nullifying the assailed deed of absolute
sale and the transfer certificate of title issued pursuant thereto; and ordering
the Register of Deeds of Caloocan, City to cancel the petitioner's Transfer
Certificate of Title No. C-319464, and to reinstate the respondent's Transfer
Certificate of Title No. 204755.5

It concluded that the act of the petitioner's counsel of formally entering an

appearance in the case had mooted the issue of defective service of summons; and
that the respondent had duly established by preponderance of evidence that the
purported special power of attorney was a forgery.

 COURT OF APPEALS

CA promulgated the assailed decision affirming the default judgment upon finding
that the RTC did not commit any error in declaring the petitioner in default and in
rendering judgment in favor of the respondent who had successfully established
her claim of forgery by preponderance of evidence.

ISSUE

Whether or not the CA gravely erred in upholding the default judgment of the
RTC; in ordering its answer stricken off the records; in allowing the respondent to
adduce her evidence exparte; and in rendering the default judgment based on such
evidence.

RULE

Under Section 3, Rule 9 of the Rules of Court, the three requirements to be

complied with by the claiming party before the defending party can be declared in
default are:
(1) that the claiming party must file a motion praying that the court declare the
defending party in default;
(2) the defending party must be notified of the motion to declare it in default;
(3) the claiming party must prove that the defending party failed to answer the
complaint within the period provided by the rule.

It is plain, therefore, that the default of the defending party cannot be

declared motu proprio.law

APPLICATION/ ANALYSIS

I. The appeal lacks merit.

The petitioner claims denial of its right to due process, insisting that the service of
summons and copy of the complaint was defective, as, in fact, there was no
sheriff's return filed; that the service of the alias summons on January 20, 1998 was
also defective; and that, accordingly, its reglementary period to file the answer did
not start to run.

The claim of the petitioner is unfounded.

- The filing of the formal entry of appearance on May 5, 1998 indicated that it
already became aware of the complaint filed against it on September 23, 1997.
Such act of counsel, because it was not for the purpose of objecting to the
jurisdiction of the trial court, constituted the petitioner's voluntary appearance in
the action, which was the equivalent of the service of summons. Jurisdiction over
the person of the petitioner as the defendant became thereby vested in the RTC,
and cured any defect in the service of summons.eslaw

Although the respondent filed her motion to declare the petitioner in default
with notice to the petitioner only on August 19, 1998, all the requisites for
properly declaring the latter in default then existed.

On October 15, 1998, therefore, the RTC appropriately directed the answer filed to
be stricken from the records and declared the petitioner in default. It also
received ex parte the respondent's evidence, pursuant to the relevant
rule.hanrobleslaw

The petitioner's logical remedy was to have moved for the lifting of the
declaration of its default but despite notice it did not do the same before the
RTC rendered the default judgment on August 23, 1999.

Its motion for that purpose should have been under the oath of one who had
knowledge of the facts, and should show that it had a meritorious defense, and that
its failure to file the answer had been due to fraud, accident, mistake or excusable
negligence. Its urgent purpose to move in the RTC is to avert the rendition of the
default judgment.

Instead, it was content to insist in its comment/opposition vis-a-vis the motion to

declare it in default that: (1) it had already filed its answer; (2) the order of default
was generally frowned upon by the courts; (3) technicalities should not be resorted
to; and (4) it had a meritorious defense. It is notable that it tendered no
substantiation of what was its meritorious defense, and did not specify the
circumstances of fraud, accident, mistake, or excusable negligence that prevented
the filing of the answer before the order of default issued - the crucial elements in
asking the court to consider vacating its own order.

The policy of the law has been to have every litigated case tried on the merits. As a
consequence, the courts have generally looked upon a default judgment with
disfavor because it is in violation of the right of a defending party to be heard.

As the Court has said in Coombs v. Santos:17

A default judgment does not pretend to be based upon the merits of
the controversy. Its existence is justified on the ground that it is the
one final expedient to induce defendant to join issue upon the
allegations tendered by the plaintiff, and to do so without unnecessary
delay. A judgment by default may amount to a positive and
considerable injustice to the defendant; and the possibility of such
serious consequences necessitates a careful examination of the
grounds upon which the defendant asks that it be set aside.

II. Considering that the petitioner was not yet declared in default when it filed
the answer on September 10, 1998, should not its answer have been admitted?

The petitioner raised this query in its motion for reconsideration in the CA,
pointing out that the RTC could no longer declare it in default and order its
answer stricken from the records after it had filed its answer before such
declaration of default.
- CA, in denying the motion for reconsideration, negated the query, stating as
follows:

Unfortunately, we find the foregoing arguments insufficient to reverse

our earlier ruling. These points do little to detract from the fact that
Defendant-Appellant filed its Answer only after a period of more than
four months from when it entered its voluntary appearance in the
case a quo, and only after almost a month from when Plaintiff-
Appellee moved to have it declared in default.

Verily, Defendant-Appellant's temerity for delay is also betrayed (sic)

by the fact that it had waited for a judgment to be rendered by the
court a quo before it challenged the order declaring it in default. If it
truly believed that it had a "meritorious defense[,] which if properly
ventilated could have yielded a different conclusion [by the trial
court]," then it could very well have moved to set aside the Order of
Default immediately after notice thereof or anytime before judgment.
Under the circumstances, that would have been the most expeditious
remedy. Inauspiciously, Defendant-Appellant instead elected to wager
on a favorable judgment. Defeated, Defendant-Appellant would now
have us set aside the Order of Default on Appeal and remand the case
for further proceedings. These we cannot do.

While we are aware that we are vested with some discretion to

condone Defendant-Appellant's procedural errors, we do not find that
doing so will serve the best interests of justice. To remand this case to
the court a quo on the invocation that we must be liberal in setting
aside orders of default, would be to reward Defendant-Appellant with
more delay. It bears stating that the Rules of Procedure are liberally
construed not to suit the convenience of a party, but "in order to
promote their objective of securing a just, speedy and inexpensive
disposition of every action and proceeding."

To this end, it has been rightly written:

Procedural rules are not to be disregarded as mere

technicalities that may be ignored at will to suit the
convenience of a party. x x x.

It cannot be overemphasized that procedural rules have

 their own wholesome rationale in the orderly
administration of justice. Justice has to be administered
according to the rules in order to obviate arbitrariness,
caprice and whimsicality.

We concur with the CA's justification.

The RTC and the CA acted in accordance with the Rules of Court and the pertinent
jurisprudence.

The petitioner was insincere in assailing the default judgment, and its insincerity
became manifest from its failure to move for the lifting of the order of default prior
to the rendition of the default judgment.
The CA rightly observed that the petitioner had apparently forsaken its
"expeditious remedy" of moving soonest for the lifting of the order of default in
favor of "wager[ing]" on obtaining a favorable judgment. The petitioner would not
do so unless it intended to unduly cause delay to the detriment and prejudice of the
respondent.

THE DOCTRINE OF DEFAULT

On the other hand, if he did have good defenses, it would be

unnatural for him not to set them up properly and timely, and if
he did not in fact set them up, it must be presumed that some
insuperable cause prevented him from doing so: fraud, accident,
mistake, excusable negligence. In this event, the law will grant
him relief; and the law is in truth quite liberal in the reliefs made
available to him: a motion to set aside the order of default prior to
judgment, a motion for new trial to set aside the default
judgment; an appeal from the judgment by default even if no
motion to set aside the order of default or motion for new trial
had been previously presented; a special civil action
for certiorari impugning the court's jurisdiction.

It is true that the RTC had the discretion to permit the filing of the answer even
beyond the reglementary period, or to refuse to set aside the default order where it
finds no justification for the delay in the filing of the answer. Conformably with
the judicious exercise of such discretion, the RTC could then have admitted the
belated answer of the petitioner and lifted the order of default instead of striking
the answer from the records.
However, the RTC opted not to condone the inordinate delay taken by the
petitioner, and went on to render the default judgment on August 23, 1999. Such
actions were fully within its discretion. We uphold the default. While the courts
should avoid orders of default, and should be, as a rule, liberal in setting aside
orders of default they could not ignore the abuse of procedural rules by litigants
like the petitioner, who only had themselves to blame.

CONCLUSION

WHEREFORE, the Court DENIES the petition for review

on certiorari; AFFIRMS the decision of the Court of Appeals promulgated on
January 14, 2010; and ORDERS the petitioner to pay the costs of suit.

RULE 10 – AMENDED AND SUPPLEMENTAL PLEADINGS (with

Amendments)

Marcos-Araneta v CA
[G.R. 154096 August 22, 2008]

FACTS:

- Ambassador Roberto S. Benedicto (Benedicto group) organized Far East

Managers and Investors, Inc. (FEMII) and Universal Equity Corporation
(UEC).
- Irene Marcos-Araneta alleged that both corporations were organized
pursuant to a contract or arrangement whereby Benedicto placed in his
names and of his associates the shares of the corporation with the
obligation to hold those shares in trust for the benefit of Irene to the
extent of 65%.
- Gregorio Ma. Araneta III(husband of Irene) demanded the reconveyance
of said 65% but the Benedicto Group refused.

PROCEDURE:
- Irene instituted two similar complaints before the RTC: conveyance of
shares of stocks, and accounting and receivership with prayer for
 issuance of TRO against Benedicto, his daughter and 20 other
defendants.
- First case covered UEC shares while the second pertained to the FEMII
shares.
- Francisca (daughter) filed a Motion to Dismiss on the 1st case followed
later by an Amended Motion to Dismiss [UEC case]
- Benedicto oved to dismiss [FEMII case] adopting in toto the 5 grounds
raised by Francisca (among these were 1. intra corporate dispute , 2.
Venue was improperly laid and 3. Failure to state Cause of Action)
- Irene filed a Consolidated Opposition which respondents countered with
a Joint Reply to Opposition. Cases were consolidated.
- Respondents presented a Joint Affidavit of the household staff the
Marcos Mansion in Batac, Ilocos Norte attesting that Irene did not
maintain residence in said place, as she only visited the mansion twice
and that she is staying with her husband in Makati City.
- Irene countered by present her Community Tax Certificate issued in
Curimao, Ilocos Norte.
- Benedicto died and was substituted by his wife and Francisca.
- RTC dismissed both complaints: Real action, Irene did not reside in
Ilocos therefore venue was improperly laid. The court also declared "all
the other issues raised in the different Motions to Dismiss x x x moot and
academic."
- Irene interposed a MR, pending the resolution of the MR, she filed a
Motion to Admit Amended Complaint.
- The amended complaint included additional plaintiffs who were said to
be from Ilocos Norte and the new trustees of Irene. (same cause of action
but concerns FEMII shares only)
- RTC denied the MR and later on entertained the amended complaint on
the ground that Rules of Court allows Irene to file an amended complaint
and that the inclusion of the additional plaintiffs cured the defect of
improper venue.
- Respondents moved to dismiss the amended complaint but it was denied.
RTC held that the First order of dismissal at the time of the filing of the
amended complaint had not yet become final. Consequently they filed an
answer. And on the same day went to the CA via petition for certiorari
seeking to nullify the following RTC orders: the first, admitting the
amended complaint; the second, denying their motion to dismiss the
amended complaint; and the third, denying their motion for
reconsideration of the second issuance.
 - The certification on non-forum shopping bore only Francisca's signature,
the CA required the joint petitioners "to submit x x x either the written
authority of Julita C. Benedicto to Francisca B. Paulino authorizing the
latter to represent her in these proceedings, or a supplemental verification
and certification duly signed by x x x Julita C. Benedicto." Records show
the submission of the corresponding authorizing Affidavit executed by
Julita in favor of Francisca.
- CA issued TRO enjoining RTC from further proceedings and set aside
RTC’s orders and dismissed the case.

ISSUE/S:
- Allowing the submission of an affidavit by Julita as sufficient compliance
with the requirement on verification and certification of non-forum
shopping
- Ruling on the merits of the trust issue which involves factual and
evidentiary determination, processes not proper in a petition for certiorari
under Rule 65 of the Rules of Court
- WoN the amended complaints should be dismissed.
- WoN CA erred in holding that respondents did not waive improper
venue.
- WoN Batac, Ilocos Norte was a proper venue.

RULING:
- 1st issue Verification is, under the Rules, not a jurisdictional but merely a
formal requirement which the court may motu proprio direct a party to
comply with or correct, as the case may be. As the Court articulated in
Kimberly Independent Labor Union for Solidarity, Activism and
Nationalism (KILUSAN)-Organized Labor Associations in Line
Industries and Agriculture (OLALIA) v. Court of Appeals:
o Verification is a formal, not a jurisdictional requisite, as it is
mainly intended to secure an assurance that the allegations therein
made are done in good faith or are true and correct and not mere
speculation. The Court may order the correction of the pleading, if
not verified, or act on the unverified pleading if the attending
circumstances are such that a strict compliance with the rule may
be dispensed with in order that the ends of justice may be served.
- Given this consideration, the CA acted within its sound discretion in
ordering the submission of proof of Francisca's authority to sign on
Julita's behalf and represent her in the proceedings before the appellate
court.
- 2nd Issue Petitioners' posture on the second issue is correct. As they aptly
pointed out, the CA, in the exercise of its certiorari jurisdiction under
Rule 65, is limited to reviewing and correcting errors of jurisdiction only.
It cannot validly delve into the issue of trust which, under the premises,
cannot be judiciously resolved without first establishing certain facts
based on evidence.
- Whether a determinative question is one of law or of fact depends on the
nature of the dispute. A question of law exists when the doubt or
controversy concerns the correct application of law or jurisprudence to a
certain given set of facts; or when the issue does not call for an
examination of the probative value of the evidence presented, the truth or
falsehood of facts being admitted. A question of fact obtains when the
doubt or difference arises as to the truth or falsehood of facts or when the
query invites the calibration of the whole evidence considering mainly
the credibility of the witnesses, the existence and relevancy of specific
surrounding circumstances, as well as their relation to each other and to
the whole, and the probability of the situation.
- Clearly then, the CA overstepped its boundaries when, in disposing of
private respondents' petition for certiorari, it did not confine itself to
determining whether or not lack of jurisdiction or grave abuse of
discretion tainted the issuance of the assailed RTC orders, but proceeded
to pass on the factual issue of the existence and enforceability of the
asserted trust.
- To stress, the nature of the trust allegedly constituted in Irene's favor and
its enforceability, being evidentiary in nature, are best determined by the
trial court. The original complaints and the amended complaint certainly
do not even clearly indicate whether the asserted trust is implied or
express. To be sure, an express trust differs from the implied variety in
terms of the manner of proving its existence.
- 3rd Issue Sec 2, Rule 10 provides that a party may amend his pleading at
any time before a responsive pleading is served or in any case at any time
within ten (10) days after it is served. RTC did not err in admitting
petitioners’ amended complaint, Julita and Francisca not having yet
 answered the original complaints (MTD is not a responsive pleading)
when the amended complaint was filed.
- Irene by force of Sec 2, Rule 10 had as a matter of right the option;
motion to admit amended complaint was not even necessary.
- RTC dismissed June 29, 2000 however the finality of such dismissal had
not set in when petitioner filed the amended complaint on July 17,2000
because Irene’s motion for reconsideration was only resolved on Aug
25,2000.
- 4th Issue Where the defendant failed to file a MTD on the ground of
improper venue or include the same as an affirmative defense, he is
deemed to have waived his right to object on that ground. In this case,
respondents raised the ground at the earliest time hence they did not
abandon this objection.
- 5th Issue Respondents points that the action of Irene is a real action hence
the venue is where the property but the court ruled that this is a Personal
action because the petitioners are basically asking only that the
respondents recognize the trust arrangement hence venue is to be
considered based on the plaintiffs’ residences.
- Court held that the real party interest plaintiff is Irene and that the co-
plaintiffs added in the amended complaint were designated as trustees
hence they are mere representatives. Sec 2, Rule 4 clearly provides that
when there is more than one plaintiff, the residence of the principal
plaintiff should be the basis in determining venue.
- It was clearly established in the RTC that Irene is not a resident of Batac,
that she holds a CTC is of no moment as it can be easily obtained. Irene
being the principal plaintiff, the civil cases ought to be commenced and
prosecuted at the place where she resides. (resident of Forbes Park,
Makati)

FALLO

WHEREFORE, the instant petition is hereby DISMISSED. The Decision

and Resolution dated October 17, 2001 and June 20, 2002, respectively, of the CA
in CA-G.R. SP No. 64246, insofar as they nullified the assailed orders of the RTC,
Branch 17 in Batac, Ilocos Norte in Civil Case Nos. 3341-17 and 3342-17 on the
ground of lack of jurisdiction due to improper venue, are
hereby AFFIRMED. The Orders dated October 9, 2000, December 18, 2000,
and March 15, 2001 of the RTC in Civil Case Nos. 3341-17 and 3342-17 are
accordingly ANNULLED and SET ASIDE and said civil cases are DISMISSED.
 
RULE 13 – FILINGS AND SERVICE OF PLEADINGS, JUDGMENTS AND
OTHER PAPERS (with Amendments)

G.R. No. 205428

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF

PUBLIC WORKS AND HIGHWAYS (DPWH), Petitioners Vs SPOUSES
SENANDO F. SALVADOR and JOSEFINA R. SALVADOR, Respondents

FACTS:

Spouses Salvador the Respondents are the registered owners of a parcel of land
with a total land area of 229 square meters, located in Kaingin Street, Barangay
Parada, Valenzuela City, and covered by Transfer Certificate of Title No.V-77660.
3

On November 9, 2011, the Republic, represented by the Department of - Public

Works and Highways (DPWH), filed a verified Complaint 4 before the RTC

for the expropriation of 83 square meters of said parcel of land (subject property),
as well as the improvements thereon, for the construction of the C-5 Northern Link
Road Project Phase 2 (Segment 9) from the North Luzon Expressway (NLEX) to
McArthur Highway.

On February 10, 2012, respondents received two checks from the DPWH
representing 100% of the zonal value of the subject property and the cost of the
one-storey semi-concrete residential house erected on the property amounting to
₱l61,850.00 6 and ₱523,449.22,7 respectively. The RTC thereafter issued the
corresponding Writ of Possession in favor of the Republic.

On the same day, respondents signified in open court that they recognized the
purpose for which their property is being expropriated and interposed no objection
thereto. They also manifested that they have already received the total sum of
₱685,349.22 from the DPWH and are therefore no longer intending to claim any
just compensation.

PROCEDURAL HISTORY
August 23, 2012, the RTC rendered judgment in favor of the Republic condemning
t1Je subject property for the purpose of implementing the construction of the C-5
Northern Link Road Project Phase 2 (Segment 9) from NLEX to McArthur
Highway, Valenzuela City.

The RTC likewise directed the Republic to pay respondents consequential damages
equivalent to the value of the capital gains tax and other taxes necessary for the
transfer of the subject property in the Republic's name.

The Republic moved for partial reconsideration, specifically on the issue relating
to the payment of the capital gains tax, but the RTC denied the motion in its Order
dated January 10, 2013 for having been belatedly filed. The RTC also found no
justifiable basis to reconsider its award of Consequential damages in favor of
respondents, as the payment of capital gains tax and other transfer taxes is but a
consequence of the expropriation proceedings.17

As a result, the Republic filed the present Petition for Review on Certiorari
assailing the RTC's August 23, 2012 Decision and January 10, 2013 Order.

ISSUE/S:

1. whether the RTC correctly denied the Republic's Motion for Partial
Reconsideration for having been filed out of time;

2. whether the capital gains tax on the transfer of the expropriated property can
be considered as consequential damages that may be awarded to
respondents.

RULES

"Section 3, Rule 13 of the Rules of Court provides that if a pleading is filed by

registered mail, x x x the date of mailing shall be considered as the date of filing. It
does not matter when the court actually receives the mailed pleading."

"Just compensation [is defined as] the full and fair equivalent of the property
sought to be expropriated.x x x The measure is not the taker's gain but the owner's
loss. [The compensation, to be just,] must be fair not only to the owner but also to
the taker."

In order to determine just compensation, the trial court should first ascertain the
market value of the property by considering the cost of acquisition, the current
value of like properties, its actual or potential uses, and in the particular case of
lands, their size, shape, location, and the tax declarations thereon. if as a result of
the expropriation, the remaining lot suffers from an impairment or decrease in
value, consequential damages may be awarded by the trial court, provided that the
consequential benefits which may arise from the expropriation do not exceed said
damages suffered by the owner of the property.

While it is true that "the determination of the amount of just compensation is

within the court's discretion, it should not be done arbitrarily or capriciously.
[Rather,] it must [always] be based on all established rules, upon correct legal
principles and competent evidence." The court cannot base its judgment on mere
speculations and surmises.

APPLICATION

In this case, the records show that the Republic filed its Motion for Partial
Reconsideration before the RTC via registered mail on September 28,
2012.Although the trial court received the Republic's motion only on October 5,
2012, it should have considered the pleading to have been filed on September 28,
2012, the date of its mailing, which is clearly within the reglementary period of 15
days to file said motion, counted from September 13, 2012, or the date of the
Republic's receipt of the assailed Decision.

Given these circumstances, we hold that the RTC erred in denying the Republic's
Motion for Partial Reconsideration for having been filed out of time.

In the present case, the RTC deemed it "fair and just that x x x whatever is the
value of the capital gains tax and all other taxes necessary for the transfer of the
subject property to the [Republic] are but consequential damages that should be
paid by the latter." The RTC further explained in its assailed Order that said award
in favor of respondents is but equitable, just, and fair, viz.:
 As aptly pointed out by [respondents], they were merely forced by
circumstances to be dispossessed of [the] subject property owing to the
exercise of the State of its sovereign power to expropriate. The payment of
capital gains tax and other transfer taxes is a consequence of the
expropriation proceedings. It is in the sense of equity, justness and fairness,
and as upheld by the Supreme Court in the case of Capitol Subdivision, Inc.
vs. Province of Negros Occidental, G.R. No. L-16257, January 31, 1963 that
the assailed consequential damages was awarded by the court.

This is clearly an error. It is settled that the transfer of property through

expropriation proceedings is a sale or· exchange within the meaning of Sections
24(D) and 56(A) (3) of the National Internal Revenue Code, and profit from the
transaction constitutes capital gain. Since capital gains tax is a tax on passive
income, it is the seller, or respondents in this case, who are liable to shoulder the
tax.

In fact, the Bureau of Internal Revenue (BIR), in BIR Ruling No. 476-2013 dated
December 18, 2013, has constituted the DPWH as a withholding agent tasked to
withhold the 6% final withholding tax in the expropriation of real property for
infrastructure projects. 11ms, as far as the government is concerned, the capital
gains tax in expropriation proceedings remains a liability of the seller, as it is a tax
on the seller's gain from the sale of real property.

Besides, as previously explained, consequential damages are only awarded if as a

result of the expropriation, the remaining property of the owner suffers from an
impairment or decrease in value. In this case, no evidence was submitted to prove
any impairment or decrease in value of the subject property as a result of the
expropriation. More significantly, given that the payment of capital gains tax on
the transfer· of the subject property has no effect on the increase or decrease in
value of the remaining property, it can hardly be considered as consequential
damages that may be awarded to respondents.

RTC committed a serious error when it directed the Republic to pay respondents
consequential damages equivalent to the value of the capital gains tax and other
taxes necessary for the transfer of the subject property.
CONCLUSION

GRANTED the Petition for Review on Certiorari. The Decision dated August 23,
2012 and the Order dated January 10, 2013 of the Regional Trial Court, Branch
270, Valenzuela City, in Civil Case No. 175-V-11, are hereby MODIFIED, in that
the award of consequential damages is DELETED. In addition, spouses Senando F.
Salvador and Josefina R. Salvador are hereby ORDERED to pay for the capital
gains tax due on the transfer of the expropriated property.

RULE 14 – SUMMONS (with Amendments)

G.R. No. 225024

CECILIA QUE YABUT, EUMIR CARLO QUE CAMARA and MA.

CORAZON QUE GARCIA, Petitioners,
vs.
CAROLINA QUE VILLONGCO, ANA MARIA QUE TAN, ANGELICA QUE
GONZALES, ELAINE VICTORIA QUE TAN and EDISON WILLIAMS
QUE TAN, Respondents.

FACTS:

Phil-Ville Development and Housing Corporation (Phil-Ville) is a family

corporation founded by Geronima Gallego Que (Geronima) that is engaged
in the real estate business. The authorized capital stock of PhilVille is
Twenty Million Pesos (₱20,000,000) divided into Two Hundred Thousand
(200,000) shares with a par value of One Hundred Pesos (₱l00.00) per
share. During her lifetime, Geronima owned 3,140 shares of stock while the
remaining 196,860 shares were equally distributed among Geronima's six
children.

(a) Carolina Que Villongco- 32,810 shares;

(b) Ana Maria Que Tan- out of her 32,810 shares, she retained
17,710 shares and transferred the rest to her six children, thus:
Edmund Williams Que Tan- 2,600 shares; Edward Williams Que Tan-
2,500 [shares]; Edison Williams Que Tan- 2,500 shares; Elaine
 Victoria Que Tan[-] 2,500 shares; Eloisa Victoria- 2,500 shares; and
Elinor Victoria- 2,500 shares;

(c) Angelica Que Gonzales- 32,810;

(d) Cecilia Que Yabut- out of her 32,810 shares, she retained 22,810
shares and transferred the rest to her four children, thus: Geminiano
Que Yabut III- 2,500 shares; Carlos Que Yabut- 2,500 shares;
Geronimo Que Yabut- 2,500 shares; and Jose Elston Que Yabut-
2,500 shares;

(e) Ma. Corazon Que Garcia- out of her 32,810 shares, she retained
21,460 shares and transferred the rest to her four children, thus:
Anthony Que Garcia- 2,500 shares; Geronima Que Garcia- 2,950
shares; Michelle Que Garcia-2,950 shares; and Ma. Christina Que
Garcia- 2,950 shares;

(F) Maria Luisa Que Camara- upon her death, her shares were
divided among her children: Eumir Que Camara- 10,936.67 shares;
Pablo Que Camara- 10,936.67 shares; and Abimar Que Camara-
10,936.66 shares.

Geronima died on August 31, 2007. By virtue of the Sale of Shares of

Stocks dated June 11, 2005 purportedly executed by Cecilia as the
attorney-in-fact of Geronima, Cecilia allegedly effected an inequitable
distribution of the 3,140 shares that belonged to Geronima, to wit:

(a) Carolina's children were given a total of 523 shares distributed

as follows: Francis Villongco- 131 shares; Carlo Villongco- 131
shares; Michael Villongco- 131 shares; and Marcelia Villongco- 130
shares;

(b) Ana Maria's daughter Elaine Victoria Que Tan was given 523
shares;

(c) Angelica- 523 shares;

(d) Cecilia's children were given a total of 524 shares distributed as

follows: Geminiano Yabut- 131 shares; Carlos Yabut- 131 shares;
Geronimo Yabut- 131 shares; and John Elston Yabut- 131 shares;
 (e) Ma. Corazon's son Anthony Garcia was given 523 shares;

(f) Maria Luisa's children were given a total of 524 shares

distributed as follows: Eumir Carlo Camara- 174 shares; Paolo
Camara- 175 shares; Abimar Camara-175 shares[.]

Accordingly, the distribution of Geronima's shares in accordance with

the Sale of Shares of Stocks was reflected in the General Information
Sheets filed by Phil-Ville in 2010 and 2011, x x x

On January 18, 2013, Cecilia, Eumir Carlo Que Camara and Ma.
Corazon [Cecilia Que, et. al.] wrote a letter to Ana Maria, Corporate
Secretary of Phil-Ville, to send out notices for the holding of the annual
stockholders' meeting. However, before Ana Maria could reply thereto, on
January 21, 2013, several letters were sent to Phil-Ville's stockholders
containing a document captioned "Notice of Annual Stockholders' Meeting"
signed by Cecilia and Ma. Corazon as directors, x x x

xx xx

Thereafter, Carolina, Ana Maria, and Angelica, comprising the majority

of the Board of Directors of Phil-Ville held an emergency meeting and
made a decision, by concensus, to postpone the annual stockholders'
meeting of Phil-Ville until the issue of the distribution of the 3,140
shares of stocks in the name of certain stockholders is settled. All the
stockholders were apprised of the decision to postpone the meeting in a
letter dated January 21, 2013. Ana Maria, in her capacity as Corporate
Secretary and Director of Phil-Ville likewise gave notice to the Securities
and Exchange Commission (SEC) with regard to the postponement of the
meeting.

Meantime, two days prior to the stockholders' meeting, Carolina, Ana

Maria, and Angelica, together with several others, had already filed
a Complaint for Annulment of Sale/Distribution or Settlement of
Shares of Stock/Injunction against Cecilia, Eumir Carlo and Ma.
Corazon. They subsequently filed an Amended and Supplemental
Complaint for Annulment of Sale/Distribution or Settlement of Shares of
Stock/Annulment of Meeting/Injunction (with Prayer for the Issuance of
Temporary Restraining Order and Writ of Preliminary Prohibitory and
Mandatory Injunction). x x x
xx xx

While Civil Case No. CV-940-MN was still pending, on January 15, 2014,
Eumir Carlo sent a Notice of Annual Stockholders' Meeting to all the
stockholders of Phil-Ville, notifying them of the setting of the annual
stockholders' meeting. During the meeting, Cecilia, Ma. Corazon and
Eumir Carlo were elected as directors and later elected themselves to
the following positions: Cecilia as Chairperson/Vice
President/Treasurer; Ma. Corazon as Vice-Chairperson/
President/General Manager; and Eumir Carlo as Corporate
Secretary/Secretary.

xx xx

Consequently, on February 10, 2014, Carolina, Ana Maria, Angelica,

Elaine and Edison Williams [Carolina, et al.] filed the instant election
case against [Cecilia Que, et al.] before the RTC of Malabon City
docketed as SEC Case No. 14-001-MN. The Complaint prayed that the
election of Cecilia, Ma. Corazon and Eumir Carlo as directors be
declared void considering the invalidity of the holding of the meeting at
Max's Restaurant for lack of quorum therein, the questionable manner by
which it was conducted, including the invalid inclusion in the voting of the
shares of the late Geronima, the questionable validation of proxies, the
representation and exercise of voting rights by the alleged proxies
representing those who were not personally present at the said meeting,
and the invalidity of the proclamation of the winners. [Carolina, et al.] also
questioned the election of Cecilia, Ma. Corazon and Eumir Carlo as
officers of the corporation. They likewise prayed that all the actions
taken by the petitioners in relation to their election as directors and
officers of the corporation be declared void, including but not limited to
the filing of the General Information Sheet with the Securities and
Exchange Commission on January 27, 2014.4

Cecilia Que, et al., filed a Motion for Additional Time to file Answer on
March 7, 2014 arguing that the summons was not properly served on
them. The RTC however denied said motion since it should have been filed
within ten (10) days or on March 2, 2014, in accordance with Section 5;
Rule 65 of the Interim Rules of Procedure for Intra-Corporate
Controversies.6
PROCEDURAL HISTORY:

The RTC rendered a Decision declaring the election of Cecilia Que, et

al. as void and of no effect considering the lack of quorum during the
annual stockholders' meeting conducted by the latter, thus:

a. On the First Cause of Action, declaring as null and void and of no

effect whatsoever the election of defendants Cecilia Que Yabut, Ma.
Corazon Que Garcia and Eumir Que Camara as Directors of Phil-Ville
considering the lack of quorum during the alleged annual meeting of the
stockholders on 25 January 2014 at Max's Restaurant, Gov. Pascual cor.
M.H. Del Pilar, Tugatog, Malabon City at 5:00 o'clock in the afternoon;

b. On the Second Cause of Action, declaring as null and void and of

no effect whatsoever the election of defendants Cecilia Que Yabut, Ma.
Corazon Que Garcia and Eumir Que Camara to the positions of
Chairperson, Vice-Chairperson and Corporate Secretary, respectively in
the Board of Directors of Phil-Ville, as well as their election as
VicePresident/ Treasurer, President/General Manager and Secretary,
respective[ly], of Phil-Ville, considering the invalidity of the
proclamation of the winners in the election supposedly conducted on
that date, the alleged "Annual Meeting of the Board of Directors of Phil-
Ville held at Max's Restaurant, Gov. Pascual cor. M.H. Del Pilar, Tugatog,
Malabon City on 25 January 2014 at 6:30 o'clock in the evening being null
and void; and

c. On the Third Cause of Action, declaring as null and void and of no

effect whatsoever any and all actions taken by defendants Cecilia Que
Yabut, Ma. Corazon Que Garcia and Eumir Que Camara in relation to
their alleged election as Directors, their alleged election to certain
positions in the Board of Directors, and their alleged election as
officers of Phil-Ville including but not limited to the filing of the
General Information Sheet with the Securities and Exchange
Commission on 27 January 2014.

On appeal to the CA, the latter in its Decision dated September 4, 2015,
while it declared the RTC decision void for violating Section 14, Article VIII
of the Constitution9 , the CA however declared the annual stockholders
meeting conducted by Cecilia Que, et al. void for lack of quorum. The
dispositive portion reads:
On the parties' separate Motions for Partial Reconsideration, the CA
issued an Amended Decision dated June 8, 2016 ruling as follows:

WHEREFORE, the instant Petition for Review is DENIED for lack of merit.
The Decision dated March 14, 2014 Decision[ sic] of the Regional Trial
Court of the City of Malabon, Branch 74, in SEC Case No. SEC14-001-MN
is declared VOID for failure to comply with the constitutional requirement of
a valid judgment and a new one is ENTERED declaring as invalid for
lack of quorum the Phil-Ville Development and Housing Corporation's
stockholders annual meeting conducted by petitioners Cecilia Que
Yabut, Eumir Carlo Que Camara and Ma. Corazon Que Garcia on January
25, 2014. The election of the members of the board of directors and
officers of PhilVille that emanated from the said invalid meetings is
likewise struck as void. All acts performed by petitioners by reason of
said election, including but not limited to the filing of the General
Information Sheet with the SEC on January 27, 2014, were ultra
vires as they were not legally clothed with corporate authority to do
so.

ISSUE:

Whether Cecilia et al., were barred from filing an answer.

RULES:

It is well-settled that jurisdiction over the person of the

defendant in a civil case is obtained through a valid service of
summons. When there is no service of summons upon the defendant,
the court acquires no jurisdiction over his person, and a judgment
rendered against him is null and void.15

However, the invalidity of the service of summons is cured by

the voluntary appearance of the defendant in court and their
submission to the court's authority. As held in the case of Carson
Realty & Management Corporation v. Red Robin Security Agency, et
al.,16 this Court has repeatedly held that the filing of a motion of time to
file answer is considered voluntary appearance on the part of the
defendant, such that the trial court nevertheless acquired jurisdiction
over his person despite the defectiveness of the service of summons,
to wit:
 We have, time and again, held that the filing of a motion for
additional time to file answer is considered voluntary submission to
the jurisdiction of the court. If the defendant knowingly does an act
inconsistent with the right to object to the lack of personal jurisdiction
as to him, like voluntarily appearing in the action, he is deemed to
have submitted himself to the jurisdiction of the court. Seeking an
affirmative relief is inconsistent with the position that no voluntary
appearance had been made, and to ask for such relief, without the
proper objection, necessitates submission to the Court's jurisdiction.

In the case of De Leon v. People;20 this Court held that:

Under Section 14, Article VIII of the Constitution, no decision shall be

rendered by any court without expressing therein clearly and distinctly the
facts and the law on which it is based. Section 1 of Rule 36 of the Rules of
Court provides that a judgment or final order determining the merits of the
case shall be in writing personally and directly prepared by the judge,
stating clearly and distinctly the facts and the law on which it is based,
signed by him and filed with the clerk of the court.

Faithful adherence to the requirements of Section 14, Article VIII of

the Constitution is indisputably a paramount component of due process and
fair play. A decision that does not clearly and distinctly state the facts
and the law on which it is based leaves the parties in the dark as to
how it was reached and is precisely prejudicial to the losing party,
who is unable to pinpoint the possible errors of the court for review
by a higher tribunal. More than that, the requirement is an assurance
to the parties that, in arriving at a judgment, the judge did so through
the processes of legal reasoning. It is, thus, a safeguard against the
impetuosity of the judge, preventing him from deciding ipse dixit.

The standard "expected of the judiciary" is that the decision

rendered makes clear why either party prevailed under the applicable
Jaw to the facts as established. Nor is there any rigid formula as to
the language to be employed to satisfy the requirement of clarity and
distinctness. The discretion of the particular judge in this respect,
while not unlimited, is necessarily broad. There is no sacramental
form of words which he must use upon pain of being considered as
having failed to abide by what the Constitution directs.
For the quorum concerns:

Section 52 of the Corporation Code states that:

Section 52. Quorum in meetings. - Unless otherwise provided for in

this Code or in the by-laws, a quorum shall consist of the stockholders
representing a majority of the outstanding capital stock or a majority of the
members in the case of non-stock corporations.

While Section 13 7 of the same Code defines "outstanding capital

stock", thus:

Section 137. Outstanding capital stock defined. - The term

"outstanding capital stock", as used in this Code, means the total shares of
stock issued under binding subscription agreements to subscribers or
stockholders, whether or not fully or partially paid, except treasury shares.

Section 6325 of the Corporation Code states that "No transfer,

however, shall be valid, except as between the parties, until the transfer is
recorded in the books of the corporation showing the names of the parties
to the transaction, the date of the transfer, the number of the certificate or
certificates and the number of shares transferred."

As held in the case of Interport Resources Corporation v. Securities

Specialist, Inc.,26 held that:

A transfer of shares of stock not recorded in the stock and

transfer book of the corporation is non-existent as far as the
corporation is concerned. As between the corporation on the one
hand, and its shareholders and third persons on the other, the
corporation looks only to its books for the purpose of determining who
its shareholders are. It is only when the transfer has been recorded in
the stock and transfer book that a corporation may rightfully regard
the transferee as one of its stockholders. From this time, the
consequent obligation on the part of the corporation to recognize
such rights as it is mandated by law to recognize arises.27

APPLICATION/ANALYSIS:
 In the instant case, Cecilia Que, et al., filed a motion for
extension to file an answer. Thus, is deemed to be a voluntary
submission to the authority of the trial court over their persons.

Section 14, Article VIII of the Constitution mandates Us to craft Our

decisions stating clearly and distinctly the facts and the law on which We
based Our decisions. It should be emphasized that the mere fact that the
defendant was not able to file an answer does not automatically mean that
the trial court will render a judgment in favor of the plaintiff. The trial court
must still determine whether the plaintiff is entitled to the reliefs prayed for.
Thus, it is incumbent upon the RTC to clearly and distinctly state the
facts and the legal basis on which it based its decision. This is sadly
not followed by the RTC in its Decision dated March 14, 2014. The
RTC merely adopted the allegations of Carolina et al. without any
rhyme or reason. The decision merely stated that quorum was not
established during the annual stockholders meeting conducted by
Cecilia Que, et al. and that only 98,428 shares were present during the
said meeting without any explanation or justification as to why the
trial court ruled that way. Therefore, We agree with the CA that the RTC
decision is null and void for violating the constitutional provision.

The right to vote is inherent in and incidental to the ownership of

corporate stocks.1âшphi1 It is settled that unissued stocks may not be
voted or considered in determining whether a quorum is present in a
stockholders' meeting. Only stocks actually issued and outstanding may be
voted.23 Thus, for stock corporations, the quorum is based on the number
of outstanding voting stocks.24 The distinction of undisputed or disputed
shares of stocks is not provided for in the law or the jurisprudence. Ubi lex
non distinguit nee nos distinguere debemus -when the law does not
distinguish we should not distinguish. Thus, the 200,000 outstanding capital
stocks of Phil-Ville should be the basis for determining the presence of a
quorum, without any distinction.

Therefore, to constitute a quorum, the presence of 100,001 shares of

stocks in Phil-Ville is necessary. Only 98,430 shares of stocks were present
during the January 25, 2014 stockholders meeting at Max's Restaurant,
therefore, no quorum had been established.

There is no evidence that the 3,140 shares which allegedly had

been transferred to 1) Carolina's children, namely: Francis Villongco,
Carlo Villongco, Michael Villongco and Marcelia Villongco; 2) Ana Maria's
daughter, namely: Elaine Victoria Que Tan; 3) Angelica Que; 4) Cecilia's
children, namely: Geminiano, Carlos, Geronimo and John Elston; 5) Ma.
Corazon's son, Anthony; and, 6) Maria Luisa's children, namely: Eumir
Carlo Camara, Paolo Camara, and Abimar Camara; where transferred and
recorded in the stocks and transfer book of Phil-Ville.

The contention of Cecilia Que, et al., that they should not be

faulted for their failure to present the stock and transfer book because
the same is in the possession of the corporate secretary, Ana Maria
Que Tan, who has an interest adverse from them, is devoid of merit. It is
basic that a stockholder has the right to inspect the books of the
corporation,28 and if the stockholder is refused by an officer of the
corporation to inspect or examine the books of the corporation, the
stockholder is not without any remedy. The Corporation Code grants
the stockholder a remedy- to file a case in accordance with Section 144.29

In this case, there is no evidence that the 3,140 shares of the late
Geronima were recorded in the stocks and transfer book of Phil-
Ville.1âшphi1 Thus, insofar as Phil-Ville is concerned, the 3,140 shares of
the late Geronima allegedly transferred to several persons is non-
existent. Therefore, the transferees of the said shares cannot exercise
the rights granted unto stockholders of a corporation, including the
right to vote and to be voted upon.

CONCLUSION:

Regional Trial Court of the City of Malabon, is declared VOID for failure to
comply with the constitutional requirement of a valid judgment and a new
one is ENTERED declaring as invalid for lack of quorum the Phil-Ville
Development and Housing Corporation's stockholders annual
meeting conducted by petitioners Cecilia Que et al The election of the
members of the board of directors and officers of PhilVille that
emanated from the said invalid meetings is likewise struck as void. All
acts performed by petitioners by reason of said election, including
but not limited to the filing of the General Information Sheet with the
SEC on January 27, 2014, were ultra vires as they were not legally
clothed with corporate authority to do so.
G.R. No. 156759               June 5, 2013

ALLEN A. MACASAET, NICOLAS V. QUIJANO, JR., ISAIAS ALBANO,

LILY REYES, JANET BAY, JESUS R. GALANG, AND RANDY
HAGOS, Petitioners,
vs.
FRANCISCO R. CO, JR., Respondent.

FACTS:

On July 3, 2000, respondent Co, a retired police officer assigned at the Western
Police District in Manila, sued Abante Tonite, a daily tabloid of general
circulation; its Publisher Allen A. Macasaet; its Managing Director Nicolas V.
Quijano; its Circulation Manager Isaias Albano; its Editors Janet Bay, Jesus R.
Galang and Randy Hagos; and its Columnist/Reporter Lily Reyes (the petitioners),
claiming damages because of an allegedly libelous article petitioners published in
the June 6, 2000 issue of Abante Tonite. The suit, docketed as Civil Case No. 00-
97907, was raffled to Branch 51 of the RTC, which in due course issued summons
to be served on each defendant, including Abante Tonite, at their business address
at Monica Publishing Corporation, 301-305 3rd Floor, BF Condominium Building,
Solana Street corner A. Soriano Street, Intramuros, Manila.

In the morning of September 18, 2000, RTC Sheriff Raul Medina proceeded to the
stated address to effect the personal service of the summons on the defendants. But
his efforts to personally serve each defendant in the address were futile because the
defendants were then out of the office and unavailable. He returned in the
afternoon of that day to make a second attempt at serving the summons, but he was
informed that petitioners were still out of the office. He decided to resort to
substituted service of the summons, and explained why in his sheriff’s return dated
September 22, 2005, that defendants are always out, gathering news and not
available, thus, substituted service was applied.

On October 3, 2000, petitioners moved for the dismissal of the complaint

through counsel’s special appearance in their behalf, alleging lack of jurisdiction
over their persons because of the invalid and ineffectual substituted service of
summons. They contended that the sheriff had made no prior attempt to serve the
summons personally on each of them in accordance with Section 6 and Section 7,
Rule 14 of the Rules of Court. They further moved to drop Abante Tonite as a
defendant by virtue of its being neither a natural nor a juridical person that could
be impleaded as a party in a civil action.
At the hearing of petitioners’ motion to dismiss, Medina testified that he had gone
to the office address of petitioners in the morning of September 18, 2000 to
personally serve the summons on each defendant; that petitioners were out of the
office at the time; that he had returned in the afternoon of the same day to again
attempt to serve on each defendant personally but his attempt had still proved futile
because all of petitioners were still out of the office; that some competent persons
working in petitioners’ office had informed him that Macasaet and Quijano were
always out and unavailable, and that Albano, Bay, Galang, Hagos and Reyes were
always out roving to gather news; and that he had then resorted to substituted
service upon realizing the impossibility of his finding petitioners in person within a
reasonable time.

PROCEDURAL HISTORY:

RTC denied the motion to dismiss, and directed petitioners to file their answers to
the complaint within the remaining period allowed by the Rules of Court.

Petitioners filed a motion for reconsideration, asserting that the sheriff had
immediately resorted to substituted service of the summons upon being informed
that they were not around to personally receive the summons, and that Abante
Tonite, being neither a natural nor a juridical person, could not be made a party in
the action.

On June 29, 2001, the RTC denied petitioners’ motion for reconsideration. It stated
in respect of the service of summons.

Because of that information and because of the nature of the work of the
defendants that they are always on field, so the sheriff resorted to substituted
service of summons. There was substantial compliance with the rules, considering
the difficulty to serve the summons personally to them because of the nature of
their job which compels them to be always out and unavailable. Additional matters
regarding the service of summons upon defendants were sufficiently discussed in
the Order of this Court dated March 12, 2001

"Abante Tonite" is a daily tabloid of general circulation. People all over the
country could buy a copy of "Abante Tonite" and read it, hence, it is for public
consumption. The persons who organized said publication obviously derived profit
from it. The information written on the said newspaper will affect the person,
natural as well as juridical, who was stated or implicated in the news. All of these
facts imply that "Abante Tonite" falls within the provision of Art. 44 (2 or 3), New
Civil Code. Assuming arguendo that "Abante Tonite" is not registered with the
Securities and Exchange Commission, it is deemed a corporation by estoppels
considering that it possesses attributes of a juridical person, otherwise it cannot be
held liable for damages and injuries it may inflict to other persons.

Undaunted, petitioners brought a petition for certiorari, prohibition, mandamus in

the CA to nullify the orders of the RTC.

The CA promulgated its questioned decision, dismissing the petition for certiorari,
prohibition, mandamus

We find petitioners’ argument without merit. The rule is that certiorari will prosper
only if there is a showing of grave abuse of discretion or an act without or in
excess of jurisdiction committed by the respondent Judge. A judicious reading of
the questioned orders of respondent Judge would show that the same were not
issued in a capricious or whimsical exercise of judgment. There are factual bases
and legal justification for the assailed orders. From the Return, the sheriff certified
that "effort to serve the summons personally xxx were made, but the same were
ineffectual and unavailing xxx.

and upholding the trial court’s finding that there was a substantial compliance with
the rules that allowed the substituted service.

Furthermore, the CA ruled

Anent the issue raised by petitioners that "Abante Tonite is neither a natural or
juridical person who may be a party in a civil case," and therefore the case against
it must be dismissed and/or dropped, is untenable.

The respondent Judge, in denying petitioners’ motion for reconsideration, held

that:

xxxx

Abante Tonite’s newspapers are circulated nationwide, showing ostensibly its

being a corporate entity, thus the doctrine of corporation by estoppel may
appropriately apply.
An unincorporated association, which represents itself to be a corporation, will be
estopped from denying its corporate capacity in a suit against it by a third person
who relies in good faith on such representation.

There being no grave abuse of discretion committed by the respondent Judge in the
exercise of his jurisdiction, the relief of prohibition is also unavailable. The CA
denied petitioners’ motion for reconsideration

ISSUE:

1. THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN

HOLDING THAT THE TRIAL COURT ACQUIRED JURISDICTION OVER
HEREIN PETITIONERS.

2. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR BY

SUSTAINING THE INCLUSION OF ABANTE TONITE AS PARTY IN
THE INSTANT CASE.

RULES:

Jurisdiction over the person, or jurisdiction in personam –the power of the court to
render a personal judgment or to subject the parties in a particular action to the
judgment and other rulings rendered in the action – is an element of due process
that is essential in all actions, civil as well as criminal, except in actions in rem or
quasi in rem. Jurisdiction over the defendant in an action in rem or quasi in rem is
not required, and the court acquires jurisdiction over an action as long as it
acquires jurisdiction over the res that is the subject matter of the action. The
purpose of summons in such action is not the acquisition of jurisdiction over the
defendant but mainly to satisfy the constitutional requirement of due process.

The distinctions that need to be perceived between an action in personam, on the

one hand, and an action inrem or quasi in rem, on the other hand, are aptly
delineated in Domagas v. Jensen,13 thusly:

The settled rule is that the aim and object of an action determine its character.
Whether a proceeding is in rem, or in personam, or quasi in rem for that matter, is
determined by its nature and purpose, and by these only. A proceeding in
personam is a proceeding to enforce personal rights and obligations brought
against the person and is based on the jurisdiction of the person, although it may
involve his right to, or the exercise of ownership of, specific property, or seek to
compel him to control or dispose of it in accordance with the mandate of the court.
The purpose of a proceeding in personam is to impose, through the judgment of a
court, some responsibility or liability directly upon the person of the defendant. Of
this character are suits to compel a defendant to specifically perform some act or
actions to fasten a pecuniary liability on him. An action in personam is said to be
one which has for its object a judgment against the person, as distinguished from a
judgment against the property to determine its state. It has been held that an action
in personam is a proceeding to enforce personal rights or obligations; such action is
brought against the person. As far as suits for injunctive relief are concerned, it is
well-settled that it is an injunctive act in personam. In Combs v. Combs, the
appellate court held that proceedings to enforce personal rights and obligations and
in which personal judgments are rendered adjusting the rights and obligations
between the affected parties is in personam. Actions for recovery of real property
are in personam.

On the other hand, a proceeding quasi in rem is one brought against persons
seeking to subject the property of such persons to the discharge of the claims
assailed. In an action quasi in rem, an individual is named as defendant and the
purpose of the proceeding is to subject his interests therein to the obligation or loan
burdening the property. Actions quasi in rem deal with the status, ownership or
liability of a particular property but which are intended to operate on these
questions only as between the particular parties to the proceedings and not to
ascertain or cut off the rights or interests of all possible claimants. The judgments
therein are binding only upon the parties who joined in the action.

As a rule, Philippine courts cannot try any case against a defendant who does not
reside and is not found in the Philippines because of the impossibility of acquiring
jurisdiction over his person unless he voluntarily appears in court; but when the
case is an action in rem or quasi in rem enumerated in Section 15, Rule 14 of the
Rules of Court, Philippine courts have jurisdiction to hear and decide the case
because they have jurisdiction over the res, and jurisdiction over the person of the
non-resident defendant is not essential. In the latter instance, extraterritorial service
of summons can be made upon the defendant, and such extraterritorial service of
summons is not for the purpose of vesting the court with jurisdiction, but for the
purpose of complying with the requirements of fair play or due process, so that the
defendant will be informed of the pendency of the action against him and the
possibility that property in the Philippines belonging to him or in which he has an
interest may be subjected to a judgment in favor of the plaintiff, and he can thereby
take steps to protect his interest if he is so minded. On the other hand, when the
defendant in an action in personam does not reside and is not found in the
Philippines, our courts cannot try the case against him because of the impossibility
of acquiring jurisdiction over his person unless he voluntarily appears in court.

As the initiating party, the plaintiff in a civil action voluntarily submits himself to
the jurisdiction of the court by the act of filing the initiatory pleading. As to the
defendant, the court acquires jurisdiction over his person either by the proper
service of the summons, or by a voluntary appearance in the action.

Upon the filing of the complaint and the payment of the requisite legal fees, the
clerk of court forthwith issues the corresponding summons to the defendant. The
summons is directed to the defendant and signed by the clerk of court under seal. It
contains the name of the court and the names of the parties to the action; a
direction that the defendant answers within the time fixed by the Rules of Court;
and a notice that unless the defendant so answers, the plaintiff will take judgment
by default and may be granted the relief applied for. To be attached to the original
copy of the summons and all copies thereof is a copy of the complaint (and its
attachments, if any) and the order, if any, for the appointment of a guardian ad
litem.

The significance of the proper service of the summons on the defendant in an

action in personam cannot be overemphasized. The service of the summons
fulfills two fundamental objectives, namely: (a) to vest in the court jurisdiction
over the person of the defendant; and (b) to afford to the defendant the opportunity
to be heard on the claim brought against him. As to the former, when jurisdiction
in personam is not acquired in a civil action through the proper service of the
summons or upon a valid waiver of such proper service, the ensuing trial and
judgment are void. If the defendant knowingly does an act inconsistent with the
right to object to the lack of personal jurisdiction as to him, like voluntarily
appearing in the action, he is deemed to have submitted himself to the jurisdiction
of the court. As to the latter, the essence of due process lies in the reasonable
opportunity to be heard and to submit any evidence the defendant may have in
support of his defense. With the proper service of the summons being intended to
afford to him the opportunity to be heard on the claim against him, he may also
waive the process. In other words, compliance with the rules regarding the service
of the summons is as much an issue of due process as it is of jurisdiction.

Under the Rules of Court, the service of the summons should firstly be effected on
the defendant himself whenever practicable. Such personal service consists either
in handing a copy of the summons to the defendant in person, or, if the defendant
refuses to receive and sign for it, in tendering it to him. The rule on personal
service is to be rigidly enforced in order to ensure the realization of the two
fundamental objectives earlier mentioned. If, for justifiable reasons, the defendant
cannot be served in person within a reasonable time, the service of the
summons may then be effected either (a) by leaving a copy of the summons at
his residence with some person of suitable age and discretion then residing therein,
or (b) by leaving the copy at his office or regular place of business with some
competent person in charge thereof. The latter mode of service is known as
substituted service because the service of the summons on the defendant is made
through his substitute.

It is no longer debatable that the statutory requirements of substituted service must

be followed strictly, faithfully and fully, and any substituted service other than that
authorized by statute is considered ineffective. This is because substituted service,
being in derogation of the usual method of service, is extraordinary in character
and may be used only as prescribed and in the circumstances authorized by statute.
Only when the defendant cannot be served personally within a reasonable time
may substituted service be resorted to. Hence, the impossibility of prompt personal
service should be shown by stating the efforts made to find the defendant himself
and the fact that such efforts failed, which statement should be found in the proof
of service or sheriff’s return. Nonetheless, the requisite showing of the
impossibility of prompt personal service as basis for resorting to substituted service
may be waived by the defendant either expressly or impliedly.
APPLICATION:

There is no question that Sheriff Medina twice attempted to serve the summons
upon each of petitioners in person at their office address, the first in the morning of
September 18, 2000 and the second in the afternoon of the same date. Each attempt
failed because Macasaet and Quijano were "always out and not available" and the
other petitioners were "always roving outside and gathering news." After Medina
learned from those present in the office address on his second attempt that there
was no likelihood of any of petitioners going to the office during the business
hours of that or any other day, he concluded that further attempts to serve them in
person within a reasonable time would be futile. The circumstances fully warranted
his conclusion. He was not expected or required as the serving officer to effect
personal service by all means and at all times, considering that he was expressly
authorized to resort to substituted service should he be unable to effect the personal
service within a reasonable time. In that regard, what was a reasonable time was
dependent on the circumstances obtaining. While we are strict in insisting on
personal service on the defendant, we do not cling to such strictness should the
circumstances already justify substituted service instead. It is the spirit of the
procedural rules, not their letter, that governs.

In reality, petitioners’ insistence on personal service by the serving officer was

demonstrably superfluous. They had actually received the summonses served
through their substitutes, as borne out by their filing of several pleadings in the
RTC, including an answer with compulsory counterclaim ad cautelam and a pre-
trial brief ad cautelam. They had also availed themselves of the modes of discovery
available under the Rules of Court. Such acts evinced their voluntary appearance in
the action.

Nor can we sustain petitioners’ contention that Abante Tonite could not be sued as
a defendant due to its not being either a natural or a juridical person. In rejecting
their contention, the CA categorized Abante Tonite as a corporation by estoppel as
the result of its having represented itself to the reading public as a corporation
despite its not being incorporated. Thereby, the CA concluded that the RTC did not
gravely abuse its discretion in holding that the non-incorporation of Abante Tonite
with the Securities and Exchange Commission was of no consequence, for,
otherwise, whoever of the public who would suffer any damage from the
publication of articles in the pages of its tabloids would be left without recourse.
We cannot disagree with the CA, considering that the editorial box of the daily
tabloid disclosed that basis, nothing in the box indicated that Monica Publishing
Corporation had owned Abante Tonite.

CONCLUSION:

The Supreme Court AFFIRMS the CA decision promulgated on March 8, 2002;

and ORDERS petitioners to pay the costs of suit.

G.R. No. 183370, August 17, 2015

NATION PETROLEUM GAS, INCORPORATED, NENA ANG,

MARIO ANG, ALISON A. SY, GUILLERMO G. SY, NELSON
ANG, LUISA ANG, RENATO C. ANG, PAULINE T. ANG, RICKY
C. ANG,1 AND MELINDA ANG, Petitioners, v. RIZAL
COMMERCIAL BANKING CORPORATION, SUBSTITUTED BY
PHILIPPINE ASSET GROWTH ONE, INC., Respondent.

FACTS:

On October 16, 2006, respondent Rizal Commercial Banking

Corporation filed against petitioner corporation and its
directors/officers a Complaint5 for civil damages arising from
estafa in relation to violations of the Trust Receipts Law. On
October 26, 2006, after an ex parte hearing was conducted,
RCBC's prayer for a writ of preliminary attachment was granted
and the corresponding writ was issued.6 Thereafter, Sheriff Leodel
N. Roxas served upon Nation Petroleum gas (NPG) a copy of the
summons, complaint, application for attachment, respondent's
affidavit and bond, and the order and writ of attachment. The
Sheriffs Report dated November 13, 2006

NPG filed through counsel a Special Appearance with Motion to

Dismiss8 on November 15, 2006. They asserted that the trial
court did not acquire jurisdiction over the corporation since the
summons was improperly served upon Claudia Abante
(Abante), who is a mere liaison officer and not one of the
corporate officers specifically enumerated in Section 11, Rule 14
of the Rules. Likewise, the individual petitioners argued that the
sheriff and/or process server did not personally approach them at
their respective address as stated in the Complaint. Neither did
he resort to substituted service of summons, and that, even if he
did, there was no strict compliance with Section 7, Rule 14 of the
Rules. The Court's pronouncements in Spouses Mason v. Court of
Appeals,9E. B. Villarosa & Partner Co., Ltd. v. Judge Benito,10Laus
v. Court of Appeals,11 and Samartino v. Raon12 were invoked in
praying for the dismissal of the complaint and the discharge of
the writ of attachment.

RCBC countered in its Opposition with Motion to Declare

Defendants in Default13 that there was valid service of summons
upon petitioners. With respect to the corporation, Abante
received the summons upon the express authority and instruction
of the corporate secretary, petitioner Melinda Ang (Ang). As
regards the individual petitioners, the Sheriffs Report reflects that
they were served "at their given addresses, but they refused to
acknowledge receipt thereof." RCBC stressed that said Report
is prima facie evidence of the facts stated therein and that the
sheriff enjoys the presumption of regularity in the performance of
his official functions. In any case, it averred that, according
to Oaminal v. Castillo,14 petitioners already voluntarily submitted
to the court's jurisdiction when they prayed for the discharge of
the writ of attachment, which is an affirmative relief apart from
the dismissal of the case.

A Reply with Comment/Opposition (to the motion to declare

defendants in default)15 was then filed by petitioners NPG. In
support of their contention that the court lacks jurisdiction over
their persons, they submitted their Joint Affidavit16 and the
Affidavit17 of Abante, claiming, among others, that they neither
personally met the sheriff and/or the process server nor were
handed a copy of the court documents; that Ang did not give
Abante telephone instructions to receive the same; and that
Abante did not receive any instruction from Ang. Petitioners
further held that Oaminal finds no application in the instant case
since they only filed one motion and that the additional relief
prayed for, which is the discharge of the writ, is complementary
to and a necessary consequence of a finding that the court has no
jurisdiction over their persons. Instead, Our ruling in Avon
Insurance PLC v. Court of Appeals18 was relied upon.

In its Rejoinder with Motion to Strike,19 respondent RCBC stood

firm in defending the court's jurisdiction. The denials of Ang and
Abante were viewed as self-serving and could not prevail over the
presumption of regularity which the sheriff enjoys as an officer of
the court. Even assuming that the Sheriffs Return does not state
in detail the fact that the summons was served upon the
individual petitioners through substituted service, respondent
asserted that this does not conclusively prove that such service is
invalid because it may still be shown through extraneous
evidence similar to the case of BPI v. Spouses Evangelista.20

PROCEDURAL HISTORY:
On March 29, 2007, the RTC denied petitioners' motion to dismiss
and respondent's motion to declare them in default. In upholding
the jurisdiction of the court over the persons of petitioners and
requiring them to file an Answer, the Order
ratiocinated:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
The very essence of service of summons is for the defendants to
be aware of an existing suit against them and for them to file an
answer or responsive pleading thereto. When corporate and
individual defendants were served with summons through the
[liaison] officer who received the same for and in their behalf as
per instruction of defendant Melinda Ang, and when defendants
filed a responsive pleading in the form of a Motion to Dismiss, the
essence of service of summons was met and defendants are
deemed to have ultimately received the summons despite their
protestations. There is no reason for the Court to doubt the
regularity of the Sheriffs service of summons as in fact its
regularity is presumed. It bears stressing that defendants did
not per se deny having received summonses. Perforce, they are
challenging the manner of service of the same. Having ultimately
received the summonses upon them and considering the rules on
service of the same was substantially complied with, the Court
finds no reason to deny the instant Motion to Dismiss.21

Petitioners elevated the jurisdictional issue to the CA via petition

for certiorari and prohibition.22 As afore-stated, the appellate
court later dismissed the petition and denied the motion for
reconsideration; hence, this petition raising the following issues
for resolution

ISSUE/S:
WHETHER OR NOT THE TRIAL COURT ACQUIRED JURISDICTION
OVER THE PERSON OF THE DEFENDANT CORPORATION BY
SERVICE OF SUMMONS UPON ITS MERE EMPLOYEE.

II.
WHETHER OR NOT THE TRIAL COURT ACQUIRED JURISDICTION
OVER THE PERSONS OF THE INDIVIDUAL DEFENDANTS BY
RESORTING TO SUBSTITUTED SERVICE OF SUMMONS DESPITE
ABSENCE OF EARNEST EFFORTS ON THE PART OF THE SERVING
OFFICER TO SERVE SUMMONS PERSONALLY.23

RULES:
Summons is a writ by which the defendant is notified of the
action brought against him or her.24 Its purpose is two-fold: to
acquire jurisdiction over the person of the defendant and to notify
the defendant that an action has been commenced so that he
may be given an opportunity to be heard on the claim against
him.25 "[C]ompliance with the rules regarding the service of
summons is as much an issue of due process as of jurisdiction.
The essence of due process is to be found in the reasonable
opportunity to be heard and submit any evidence one may have
in support of his defense. It is elementary that before a person
can be deprived of his property, he should first be informed of the
claim against him and the theory on which such claim is
premised."26redarclaw

Service of summons on domestic corporation, partnership or

other juridical entity is governed by Section 11, Rule 14 of
the Rules, which states:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
SECTION 11. Service upon domestic private juridical entity. -
When the defendant is a corporation, partnership or association
organized under the laws of the Philippines with a juridical
personality, service may be made on the president, managing
partner, general manager, corporate secretary, treasurer, or in-
house counsel.
When the defendant is a domestic corporation like herein
petitioner, service of summons may be made only upon the
persons enumerated in Section 11, Rule 14 of the Rules.27 The
enumeration of persons to whom summons may be served is
restricted, limited and exclusive following the rule on statutory
construction expressio unios est exclusio alterius.28 Substantial
compliance cannot be invoked.29 Service of summons upon
persons other than those officers specifically mentioned in Section
11, Rule 14 is void, defective and not binding to said
corporation.30
ChanRoblesVirtualawlibrary
Basic is the rule that a strict compliance with the mode of service
is necessary to confer jurisdiction of the court over a corporation.
The officer upon whom service is made must be one who is
named in the statute; otherwise, the service is insufficient. The
purpose is to render it reasonably certain that the corporation will
receive prompt and proper notice in an action against it or to
insure that the summons be served on a representative so
integrated with the corporation that such person will know what
to do with the legal papers served on him.31
As correctly argued by petitioners, Sps. Mason already resolved
that substantial compliance on service of summons upon a
domestic corporation is no longer an excuse.
Thus:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary

At this juncture, it is worth emphasizing that notice to enable the

other party to be heard and to present evidence is not a mere
technicality or a trivial matter in any administrative or judicial
proceedings. The service of summons is a vital and indispensable
ingredient of due process. x x x32

It is well to note that the certificate of service of the process

server is prima facie evidence of the facts as set out therein. This
is fortified by the presumption of the regularity of performance of
official duty. To overcome the presumption of regularity of official
functions in favor of such sheriffs return, the evidence against it
must be clear and convincing. Sans the requisite quantum of
proof to the contrary, the presumption stands deserving of faith
and credit.36redarclaw

The same conclusion, however, could not be said with respect to

the service of summons upon the individual petitioners.

Section 7, in relation to Section 6, Rule 14 of the Rules, provides

for substituted service of summons:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
Section 6. Service in person on defendant. - Whenever
practicable, the summons shall be served by handling a copy
thereof to the defendant in person, or, if he refuses to receive
and sign for it, by tendering it to him.

Section 7. Substituted service. - If, for justifiable causes, the

defendant cannot be served within a reasonable time as provided
in the preceding section, service may be effected (a) by leaving
copies of the summons at the defendant's residence with some
person of suitable age and discretion then residing therein, or (b)
by leaving the copies at defendant's office or regular place of
business with some competent person in charge thereof.
Sections 6 and 7 of the Rules cannot be construed to apply
simultaneously and do not provide for alternative modes of
service of summons which can either be resorted to on the mere
basis of convenience to the parties for, under our procedural
rules, service of summons in the persons of the defendants is
generally preferred over substituted service.37 Resort to the latter
is permitted when the summons cannot be promptly served on
the defendant in person and after stringent formal and
substantive requirements have been complied with.38 The failure
to comply faithfully, strictly and fully with all the requirements of
substituted service renders the service of summons
ineffective.39redarclaw

Manotoc v. Court of Appeals40 painstakingly elucidated the

requirements of the Rules as follows:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
We can break down this section into the following requirements
to effect a valid substituted service:

1. Impossibility of Prompt Personal Service

2. Specific Details in Return
3. A person suitable age and discretion
4. A competent person in-charge

APPLICATION:

Petitioner corporation cannot conveniently rely on the sworn

statements of the individual petitioners and Abante. Upon
examination, Ang's denial of having spoken with any process
server to give instruction to serve the summons and other
pertinent papers to Abante34 is not incompatible with the Sheriffs
Report stating that "[s]aid summons and all pertinent papers,
upon telephone instruction of defendant Melinda Ang, were
received by Claudia Abante, [defendants'] [Liaison] Officer, as
evidenced by her signature at the original copy of Summons and
Writ." While it may be true that Ang had not talked to the sheriff
or process server, it still does not rule out the possibility that she
in fact spoke to Abante and instructed the latter to receive the
documents in her behalf. As to the Affidavit of Abante, her
disavowal of having spoken to Ang or receiving telephone
instructions from her is truly self-serving. Evidence as simple as a
telephone billing statement or an affidavit of a disinterested third
person, among others, could have been presented to refute the
sheriffs claim, but there was none. Likewise, no substantial proofs
were credibly shown to support Abante's allegation that the
sheriff insisted on having the court processes received and that
she was "intimidated by the presence of a court personnel who
was quite earnest in accomplishing his task."35redarclaw
In resorting to the substituted service, the sheriff in this case
pithily declared in his Report that he "also served copies to other
defendants at their given addresses, but they refused to
acknowledge receipt thereof." Obviously, the Sheriffs Report
dated November 13, 2006 does not particularize why substituted
service was resorted to and the precise manner by which the
summons was served upon the individual petitioners. The
disputable presumption that an official duty has been regularly
performed will not apply where it is patent from the sheriffs or
server's return that it is defective.42redarclaw

To avail themselves of substituted service of summons, courts

must rely on a detailed enumeration of the sheriffs actions and a
showing that the defendant cannot be served despite diligent and
reasonable efforts.43 The Court requires that the Sheriffs Return
clearly and convincingly show the impracticability or hopelessness
of personal service.44 The impossibility of personal service
justifying availment of substituted service should be explained in
the proof of service; why efforts exerted towards personal service
failed. The pertinent facts and circumstances attendant to the
service of summons must be stated in the proof of service or
Officer's Return; otherwise, the substituted service cannot be
upheld.45redarclaw

Under exceptional terms, the circumstances warranting

substituted service of summons may be proved by
evidence aliunde.46 Substituted service will still be considered as
regular if other evidence of the efforts to serve summons was
presented.47BPI v. Spouses Evangelista48 teaches Us that a defect
in the service of summons, which is apparent on the face of the
return, does not necessarily constitute conclusive proof that the
actual service has in fact been improperly made. In the interest
of speedy justice, the trial court has to immediately ascertain
whether the patent defect is real and, if so, to fully determine
whether prior attempts at personal service have in fact been done
and resort to the substituted service was justified. Should the
returns not show compliance with the Rules on substituted
service, actual and correct service may still be proven by
evidence extraneous to it. If substituted service is indeed
improper, the trial court must issue new summons and serve it in
accordance with the Rules.

In the present case, while no actual hearing was conducted to

verify the validity of the grounds for substituted service of
summons, the parties exchanged pleadings in support of their
respective positions. 
According to respondent's version, copies of the complaint,
summons and writ of attachment, among others, were served to
petitioner corporation at its offices in Candelaria, Quezon and
RCBC Plaza. In the Quezon office, the sheriff was informed that
the individual petitioners were all not around to receive the
summons for the corporation considering that they do not hold
office at said address. Likewise, a staff from the RCBC Plaza office
stated that all them were not around and were probably at home.
Thereafter, summons was served on the individual petitioners at
their respective addresses in Makati City, Quezon City, and
Candelaria, Quezon. Their house helpers told that they were not
at home but were in the RCBC Plaza office. Considering that the
sheriff already went there and its personnel said that they were
not at said office, it became apparent on the sheriff that the
individual petitioners were trying to evade service of summons.
Thus, given this predicament, it was futile for him to go back to
the RCBC Plaza office.

It is argued that the summons was properly served to the

individual petitioners through substituted service because there
were justifiable causes existing which prevented personal service
within a reasonable period of time. Respondent asserts that
requiring the sheriff to return several times at the residences of
the ten (10) individual petitioners despite their intention to evade
service of summons and the considerable distances of their
residences would clearly be unreasonable.

Respondent's explanations do not suffice.

In the instant case, it appears that the sheriff hastily and

capriciously resorted to substituted service of summons without
actually exerting any genuine effort to locate the individual
petitioners. The "reasonable time" within which to personally
serve the summons - 7 days for the plaintiff or 15-30 days for the
sheriff as stated in Manotoc - has not yet elapsed at the time the
substituted service was opted to. Remarkably, based on the
Sheriffs Report and the narration of petitioners, the personal
service of summons upon the corporation and the individual
petitioners as well as the levy of their personal and real
properties were all done in just one day. Manotoc stresses that
for substituted service of summons to be available, there must be
several attempts by the sheriff to personally serve the summons
within a reasonable period which eventually resulted in failure in
order to prove impossibility of prompt service. To reiterate,
"several attempts" means at least three (3) tries, preferrably on
at least two different dates.

Further, except for the Quezon Province, there is, in fact, no

considerable distance between the residences of the individual
petitioners since the cities of Makati and Quezon are part of the
National Capital Region; hence, accessible either by private or
public modes of transportation. Assuming that there is, the
distance would not have been insurmountable had respondent
took its time and not unnecessarily rushed to accomplish personal
service in just a single day.

Finally, respondent alleges that the summons was served to the

individual petitioners through substituted service by entrusting
the same to their house helpers, all of whom are of suitable age
and discretion. It did not, however, elaborate that these persons
know how to read and understand English to comprehend the
import of the summons, and fully realize the need to deliver the
summons and complaint to the individual petitioners at the
earliest possible time for them to take appropriate action. There
is no way for Us to conclusively ascertain that the sheriff ensured,
among others, that the persons found in the alleged dwelling or
residence comprehend the significance of the receipt of the
summons and the duty to immediately deliver it to the individual
petitioners or at least notify them of said receipt of summons.

The foregoing considered, it can be deduced that since there were

no actual efforts exerted and no positive steps undertaken to
earnestly locate the individual petitioners, there is no basis to
convincingly say that they evaded the personal service of
summons and merely gave the sheriff a run-around, thus,
justifying substituted service upon them.

Despite improper service of summons upon their persons, the

individual petitioners are deemed to have submitted to the
jurisdiction of the court through their voluntary appearance. The
second sentence of Section 20,50 Rule 14 of the Rules that "[t]he
inclusion in a motion to dismiss of other grounds aside from lack
of jurisdiction over the person of the defendant shall not be
deemed a voluntary appearance" clearly refers to affirmative
defenses, not affirmative reliefs.51redarclaw

In the present case, the individual petitioners prayed, among

others, for the following: (1) discharge of the writ of attachment
on their properties; (2) denial of the motion to declare them in
default; (3) admission of the Comment/Opposition (to the motion
to declare them in default) filed on December 19, 2006; and (4)
denial of respondent's motion to strike off from the records (their
opposition to the motion to declare them in default). By seeking
affirmative reliefs from the trial court, the individual petitioners
are deemed to have voluntarily submitted to the jurisdiction of
said court. A party cannot invoke the jurisdiction of a court to
secure affirmative relief against his opponent and after obtaining
or failing to obtain such relief, repudiate or question that same
jurisdiction.52 Therefore, the CA cannot be considered to have
erred in affirming the trial court's denial of the Special
Appearance with Motion to Dismiss for alleged improper service of
summons.

CONCLUSION:

Petition is DISMISSED and CA’s decision was affirmed.

Supreme Court agree with the CA that there was a valid and
effective service of summons upon petitioner corporation through
its liaison officer who acted as the agent of the corporate
secretary.