G.R. No.

192450               July 23, 2012 and Natural Resources (CENRO) of Cagayan de Oro City to obtain a title
over the disputed property.
SANTIAGO V. SOQUILLO, Petitioner,
vs. On July 15, 1994, a survey of the disputed property was conducted. The
JORGE P. TORTOLA, Respondent. land investigator reported that the heirs of Coloso, Jr. were in possession
and were cultivating the disputed property, hence, he recommended to the
DECISION CENRO the issuance of a free patent in their favor.

REYES, J.: On December 14, 1994, Original Certificate of Title (OCT) No. P-20825
covering the disputed property was issued in favor of the Heirs of Coloso,
Jr.
Antecedent Facts

On October 11, 2000, Coloso and the other heirs of Coloso, Jr. executed a
On March 28, 1966, Lorenzo Coloso, Jr. (Coloso, Jr.) sold to Ramon Jamis
notarized deed of absolute sale conveying the disputed property to herein
(Jamis) a 1,192 square meter parcel of land (disputed property) situated
petitioner Santiago V. Soquillo (Soquillo).
in Alubijid, Misamis OrientaL A notarized deed of conditional sale of an
unregistered land was thus executed. As indicated in a notarized deed of
definite sale dated March 29, 1966, Jamis thereafter sold the disputed In 2001, Soquillo filed before the Municipal Trial Court (MTC) of Alubijid a
property to herein respondent Jorge P. Tortola (Tortola). complaint for illegal detainer against Villaflores and his wife. The complaint
was docketed as Civil Case No. 245. Villaflores failed to file an answer
thereto, hence, the case was decided in favor of Soquillo.
Tortola took possession of the disputed property, planted it with fruit-
bearing trees, and built a residential lot thereon. He also paid the realty
taxes due from the said property corresponding to the years 1975 to 2002. Villaflores and his wife were ejected from the disputed property.
However, the receipts for the payments still stated Coloso, Jr.’s name, with
the exception of Tax Declaration Nos. 942443, indicating "Lorenzo Coloso, Tortola discovered Villaflores’ ejectment from the disputed property. On
Jr. c/o Mr. Tortola" and 026083, bearing the name of "Jorge Tortola". 1 September 16, 2002, Tortola filed before the Regional Trial Court (RTC),
Branch 44, Initao, Misamis Oriental a complaint against Coloso, the Heirs
In 1977, Tortola and his family moved to Bukidnon. He left Godofredo of Coloso, Jr., Soquillo, and the MTC of Alubijid, Misamis Oriental for
Villaflores (Villaflores) as his agent and caretaker of the disputed property. annulment of title/sale/judgment with prayers for the issuance of
injunctive reliefs and award of damages. The complaint, origin of the
instant petition, was docketed as Civil Case No. 2002-393.
Tortola received from Atty. Rene Artemio Pacana (Atty. Pacana) a letter
dated March 1, 1988 informing the former that Arthur Coloso (Coloso) and
the other heirs of Coloso, Jr. had sought his legal services to recover the The RTC Decision
disputed property. Atty. Pacana requested from Tortola an explanation as
to how the latter acquired the disputed property. In a reply letter dated On September 18, 2007, the RTC rendered a Decision2 disposing of the
March 14, 1988 sent to Atty. Pacana, Tortola attached a copy of the complaint as follows:
notarized deed of definite sale executed between the latter and Jamis.
(a) Tortola was declared as the owner and legal possessor of the
In 1992, Atty. Pacana once again sent a letter reiterating his prior inquiries disputed property.
and demanding for documents to prove that Coloso, Jr. disposed the
disputed property in Tortola’s favor. Tortola reminded Atty. Pacana of his (b) The deed of sale executed on October 11, 2000 between
reply letter in 1988 and again enclosed copies of the notarized deeds of Coloso and Soquillo was ordered annulled.
conditional and definite sale executed in 1966.
(c) The Register of Deeds (RD) of Misamis Oriental was ordered to
On September 21, 1993, Coloso and the other heirs of Coloso, Jr. filed an annul and cancel OCT No. P-20825 in the names of the heirs of
application for free patent with the Office of the Community Environment Coloso, Jr. and to issue a transfer certificate of title in Tortola’s
favor.
 (d) The decision of the MTC in Civil Case No. 245 was annulled and The principle of indefeasibillity of title does not apply where fraud attended
set aside. the issuance of title, as in this case. The settled rule is that a free patent
issued over a private land, which in this case the subject litigated land
(e) The defendants in the complaint, among whom was herein belonged to plaintiff-Tortola, is null and void, and produces no legal effects
petitioner Soquillo, were ordered to pay Tortola P50,000.00 as whatsoever (Heirs of Simplicio Santiago vs. Heirs of Mariano E. Santiago,
moral damages, P10,000.00 as exemplary damages and 404 SCRA 193).
P20,000.00 as attorney’s fees.3
Tortola was compelled to litigate to protect his interests and vindicate his
The RTC ratiocinated that: rights.

It can be established that Tortola acquired a right over the subject parcel The issuance of Original Certificate of Title No. P-20825 lacks the required
of land under a Deed of Definite Sale dated March 29, 1966, which was publication, notice, survey, certification and other mandatory
registered on September 5, 2002 in the Registry of Deeds, and by the requirements, under the law, which legally allows such title to be cancelled
cancellation of Tax Declaration No. 023086 by Tax Declaration No. 026083 and transferred to the legal owner, Tortola, because there could have been
in the name of Jorge Tortola. no notice of the application that can be issued or posted on September 20,
1993 because the application was filed and received by the CENRO only on
September 21, 1993.
Registration of the instrument in the Office of the Register of Deeds
constitutes constructive notice to the parties of the transfer of ownership
over the subject property. Tortola occupied the said property and Defendant Soquillo purchased the land from the Heirs of Coloso, Jr. in
constructed his house and resided thereon until he left for Maramag, spite of his knowledge that the land is owned by Tortola and that the Heirs
Bukidnon sometime in the late 1960’s, leaving the occupation of the said of Coloso, Jr. were not in actual possession of the subject land, which land
property to Spouses Villaflores, with his permission, continuously until was actually occupied, at that time, by the Spouses Villaflores, the lessees
2002. of Tortola. Such knowledge of an unregistered sale is equivalent to
registration. Further, the deed of sale in favor of Soquillo was not
registered with the Register of Deeds of Misamis Oriental until today.
The ownership and possession of the land was admitted and acknowledged
by the herein defendants Heirs of Coloso, Jr. in their letters to Tortola.
Likewise, defendant Soquillo, admitted the actual occupation of the land by xxx
Spouses Villaflores by the fact of his filing a civil action against them in
court. x x x Such proof of ownership and possession of Tortola is corroborated by
the testimony and certification of the former Barangay Captain of Lourdes,
x x x Under the law, if the property has not yet passed to an innocent Alubijid, Misamis Oriental, attesting to the truth that Tortola is the actual
purchaser for value, an action for reconveyance is still available. Defendant occupant of the litigated land and such occupancy was never questioned,
Soquillo cannot be considered as an innocent purchaser for value or that disturbed, contested or molested until October 18, 2001, where his agents
he acquired the subject property through mistake and fraud. Spouses Villaflores was (sic) summoned and later on, made the
defendants in an illegal detainer case before the court. 4 (Citations omitted)
He can only be considered a trustee by implication, for the benefit of
Tortola, who is the true and lawful owner of the litigated land, pursuant to Soquillo filed before the Court of Appeals (CA) an appeal to the foregoing.
Article 1456 of the New Civil Code. He argued that the RTC erred in not finding that Tortola’s complaint stated
no cause of action. He alleged that since Tortola sought the cancellation of
a free patent, not him but the State, was the real party-in-interest.
Defendants assert laches as a defense. Laches cannot prejudice the lawful
Soquillo likewise averred that he was a purchaser in good faith and for
right of Tortola in its ownership and possession of the subject litigated
value, thus, the RTC’s order to reconvey the disputed property and award
property. There was no failure or neglect on the part of Tortola in asserting
damages in Tortola’s favor was improper.
his rights after knowing defendant’s (sic) conduct, evidenced by all the
letters sent to the defendants resulting to their knowledge of the actual
ownership and occupation of the subject land. Tortola is not negligent and The CA Decision
has not omitted to assert his right and/or abandoned or declined to assert
his rights, proof of such is the filing of the instant complaint.
On April 23, 2010, the CA rendered a Decision5 denying Soquillo’s appeal. Consequently, contrary to Soquillo’s contention, the principle of
The CA declared: indefeasibility of title cannot be invoked in this case. Public policy demands
that one who obtains title to a public land through fraud should not be
The defense that the Complaint below failed to state a cause of action allowed to benefit therefrom.
must be raised at the earliest possible time. In fact, it can be raised as a
ground for Motion to Dismiss under Rule 16 of the Revised Rules of Civil xxxx
Procedure. Here, Soquillo, as shown by the records of the case, neither
raised such issue in their Answer nor filed a Motion to Dismiss raising such Furthermore, defendant-appellant Santiago Soquillo cannot be considered
issue. as purchaser in good faith and for value. The fact that defendants Heirs of
Lorenzo Boy Coloso, Jr. were not in possession of the disputed land should
xxxx have impelled him to go beyond the title, as is in harmony with the
Supreme Court’s pronouncement in Eagle Realty Corporation vs. Republic
x x x Soquillo cannot be considered a purchaser in good faith and for value of the Philippines, et al., which reads:
because defendant Arthur Coloso as Attorney-in-fact of the heirs of
Lorenzo Boy Coloso did not have the right to sell the disputed land to the "Indeed, the general rule is that a purchaser may rely on what appears on
former. the face of a certificate of title. x x x An exception to this rule is when
there exist important facts that would create suspicion in an otherwise
xxxx reasonable man (and spur him) to go beyond the present title and to
investigate those that preceded it. x x x One who falls within the exception
can neither be denominated an innocent purchaser for value nor a
x x x Defendant Arthur Coloso had prior knowledge that the disputed land
purchaser in good faith, hence, does not merit the protection of the law."
was already occupied by Mr. Villaflores, as agent of Tortola. However,
despite such knowledge, defendant Arthur Coloso as representative of the
heirs of Lorenzo Boy Coloso, Jr., filed an Application for Free Patent, and Besides, defendants, Heirs of Lorenzo Coloso, Jr., had not transferred any
falsely declared therein that they occupied and cultivated the disputed land rights over the disputed land to Soquillo, because the former were not
since 1985. By reason of such application and false declarations, the owners of the same at the time they sold the land to Soquillo. x x x No one
defendants were issued an Original Certificate of Title No. P-20825. can give what he does not have–x x x.

Such false declarations in the Application, however, constituted Moreover, since defendant Arthur Coloso as representative of the Heirs of
concealment of material facts, which amounted to fraud. This, therefore, Lorenzo Boy Coloso, Jr. acquired OCT No. P-20825 over the disputed land
inevitably resulted to the cancellation of title, as is pursuant to Heirs of through fraud, We sustain [the] lower court’s award of moral and
Carlos Alcaraz vs. Republic of the Philippines, et al., where the Supreme exemplary damages pursuant to Articles 21, 2219(10), and 2229 of the
Court stated: New Civil Code. The award of Attorney’s fees is likewise sustained
considering that Tortola was compelled to litigate in order to protect his
interest pursuant to Article 2208 (1 and 2) of the New Civil
"x x x x
Code.6 (Citations omitted and emphasis supplied)

Doubtless, petitioner’s (sic) failure to state in their free patent application

Hence, the instant petition for review7 raising the following issues:
that private respondents, as representatives of the heirs of Timotea and
Igmedio, are also in possession of the land subject thereof clearly
constitutes a concealment of a material fact amounting to fraud and WHETHER OR NOT THE CA ERRED IN:
misrepresentation within the context of the aforequoted provision,
sufficient enough to cause ipso facto the cancellation of their patent and (1) NOT FINDING THAT THE COMPLAINT STATES NO CAUSE OF
title. For sure, had only petitioners made such a disclosure, the Director of ACTION;
Lands would have had second thoughts in directing the issuance of
petitioners’ patent and title. (2) NOT FINDING THAT THE PETITIONER IS A PURCHASER IN
GOOD FAITH AND FOR VALUE; and
x x x x"
 (3) AWARDING MORAL AND EXEMPLARY DAMAGES AND Banguilan v. Court of Appeals12 was emphatic that:
ATTORNEY’S FEES.8
Heirs of Ambrocio Kionisala v. Heirs of Honorio Dacut distinguishes an
In the instant petition, Soquillo reiterates the arguments he had proferred action for reversion from an action for declaration of nullity of free patents
in the proceedings below. On the other hand, no comment was filed by and certificates of title as follows:
Tortola as the copy of the resolution requiring him to file the same had
been returned to the court with the notation "RTS, unknown, insufficient "An ordinary civil action for declaration of nullity of free patents and
address."9 certificates of title is not the same as an action for reversion. The
difference between them lies in the allegations as to the character of
Our Disquisition ownership of the realty whose title is sought to be nullified. In an action
for reversion, the pertinent allegations in the complaint would admit State
The instant petition is bereft of merit. ownership of the disputed land. Hence in Gabila v. Barriga where the
plaintiff in his complaint admits that he has no right to demand the
cancellation or amendment of the defendant’s title because even if the title
Questions of law and not of facts are the proper subjects of a petition for
were cancelled or amended the ownership of the land embraced therein or
review on certiorari under Rule 45.
of the portion affected by the amendment would revert to the public
domain, we ruled that the action was for reversion and that the only
In Cirtek Employees Labor Union-Federation of Free Workers v. Cirtek person or entity entitled to relief would be the Director of Lands.1âwphi1
Electronics, Inc.,10 we declared:
On the other hand, a cause of action for declaration of nullity of free
"This rule [Rule 45 of the Rules of Court through which Soquillo filed the patent and certificate of title would require allegations of the plaintiff ’s
instant petition] provides that the parties may raise only questions of law, ownership of the contested lot prior to the issuance of such free patent
because the Supreme Court is not a trier of facts. Generally, we are not and certificate of title as well as the defendant’s fraud or mistake, as the
duty-bound to analyze again and weigh the evidence introduced in and case may be, in successfully obtaining these documents of title over the
considered by the tribunals below. When supported by substantial parcel of land claimed by plaintiff. In such a case, the nullity arises strictly
evidence, the findings of fact of the CA are conclusive and binding on the not from the fraud or deceit but from the fact that the land is beyond the
parties and are not reviewable by this Court, unless the case falls under jurisdiction of the Bureau of Lands to bestow and whatever patent or
any of the following recognized exceptions." 11 (Emphasis supplied) certificate of title obtained therefor is consequently void ab initio. The real
party in interest is not the State but the plaintiff who alleges a pre-existing
In the case at bar, Soquillo raises factual questions which were already right of ownership over the parcel of land in question even before the
resolved in the proceedings below. Further, the factual findings of the RTC grant of title to the defendant. x x x."13 (Citations omitted and emphasis
and the CA were in accord with each other and were supported by supplied)
substantial evidence.
In Tortola’s complaint, he alleged prior ownership of the disputed property
Even if we were to resolve the first issue raised by Soquillo relative to the and fraud exercised upon him by the heirs of Coloso, Jr. to obtain a free
alleged lack of standing of Tortola as the real party-in-interest, there is still patent and certificate of title covering the same. The complaint was not for
no ground to dismiss the latter’s complaint. The action filed by Tortola was reversion but for the declaration of nullity of the free patent and title.
not for reversion, but for the declaration of nullity of a free patent and a Hence, Tortola was the real party-in-interest and the complaint was
certificate of title. properly filed in his name.

In Soquillo’s appeal filed with the CA, he raised for the first time the issue The second and third issues raised by Soquillo had already been
of Tortola’s complaint allegedly not stating a cause of action for having exhaustively discussed by the RTC and the CA. The disquisitions relative
been filed in the latter’s name when the State was the real party-in- thereto made by the courts a quo were supported by substantial evidence,
interest. hence, they need not be disturbed.

If in the interest of sheer liberality, we were to resolve the issue, there is The second and third issues raised by Soquillo were exhaustively discussed
still no ample ground to dismiss Tortola’s complaint. by the RTC and the CA. Soquillo was not a purchaser in good faith. He and
the heirs of Coloso, Jr. who were his predecessors-in-interest, knew about
the sale made to Tortola and the possession of the disputed property by
Villaflores. Besides, Tortola registered the sale, albeit with much delay, in
2002. As of the time Tortola's complaint was tiled, no registration was
effected by Soquillo.

WHEREFORE, IN VIEW OF THE FOREGOING, the instant petition is

DENIED. The Decision dated April 23, 2010 of the Court of Appeals in CA-
G.R. CV No. 01476 is AFFIRMED.

SO ORDERED.

BIENVENIDO L. REYES
G.R. No. 180771               April 21, 2015 "Until one has loved an animal,
a part of one 's soul remains unawakened."
RESIDENT MARINE MAMMALS OF THE PROTECTED SEASCAPE
TAÑON STRAIT, e.g., TOOTHED WHALES, DOLPHINS, PORPOISES, Anatole France
AND OTHER CETACEAN SPECIES, Joined in and Represented herein
by Human Beings Gloria Estenzo Ramos and Rose-Liza Eisma- LEONEN, J.:
Osorio, In Their Capacity as Legal Guardians of the Lesser Life-
Forms and as Responsible Stewards of God's Creations, Petitioners,
I concur in the result, with the following additional reasons.
vs.
SECRETARY ANGELO REYES, in his capacity as Secretary of the
Department of Energy (DOE), SECRETARY JOSE L. ATIENZA, in his I
capacity as Secretary of the Department of Environment and
Natural Resources (DENR), LEONARDO R. SIBBALUCA, DENR In G.R. No. 180771, petitioners Resident Marine Mammals allegedly bring
Regional Director-Region VII and in his capacity as Chairperson of their case in their personal capacity, alleging that they stand to benefit or
the Tañon Strait Protected Seascape Management Board, Bureau of be injured from the judgment on the issues. The human petitioners
Fisheries and Aquatic Resources (BFAR), DIRECTOR MALCOLM J. implead themselves in a representative capacity "as legal guardians of the
SARMIENTO, JR., BFAR Regional Director for Region VII ANDRES M. lesser life-forms and as responsible stewards of God's Creations." 1 They
BOJOS, JAPAN PETROLEUM EXPLORATION CO., LTD. (JAPEX), as use Oposa v. Factoran, Jr.2 as basis for their claim, asserting their right to
represented by its Philippine Agent, SUPPLY OILFIELD SERVICES, enforce international and domestic environmental laws enacted for their
INC. Respondents. benefit under the concept of stipulation pour autrui. 3 As the
representatives of Resident Marine Mammals, the human petitioners assert
x-----------------------x that they have the obligation to build awareness among the affected
residents of Tañon Strait as well as to protect the environment, especially
in light of the government's failure, as primary steward, to do its duty
G.R. No. 181527
under the doctrine of public trust. 4

CENTRAL VISAYAS FISHERFOLK DEVELOPMENT CENTER (FIDEC),

Resident Marine Mammals and the human petitioners also assert that
CERILO D. ENGARCIAL, RAMON YANONG, FRANCISCO LABID, in
through this case, this court will have the opportunity to lower the
their personal capacity and as representatives of the SUBSISTENCE
threshold for locus standi as an exercise of "epistolary jurisdiction." 5
FISHERFOLKS OF THE MUNICIPALITIES OF ALOGUINSAN AND
PINAMUNGAJAN, CEBU, AND THEIR FAMILIES, AND THE PRESENT
AND FUTURE GENERATIONS OF FILIPINOS WHOSE RIGHTS ARE The zeal of the human petitioners to pursue their desire to protect the
SIMILARLY AFFECTED, Petitioners, environment and to continue to define environmental rights in the context
vs. of actual cases is commendable. However, the space for legal creativity
SECRETARY ANGELO REYES, in his capacity as Secretary of the usually required for advocacy of issues of the public interest is not so
Department of Energy (DOE), JOSE L. ATIENZA, in his capacity as unlimited that it should be allowed to undermine the other values
Secretary of the Department of Environment and Natural protected by current substantive and procedural laws. Even rules of
Resources (DENR), LEONARDO R. SIBBALUCA, in his capacity as procedure as currently formulated set the balance between competing
DENR Regional Director-Region VII and as Chairperson of the interests. We cannot abandon these rules when the necessity is not clearly
Tañon Strait Protected Seascape Management Board, ALAN and convincingly presented.
ARRANGUEZ, in his capacity as Director - Environmental
Management Bureau-Region VII, DOE Regional Director for Region The human petitioners, in G.R. No. 180771, want us to create substantive
VIII1 ANTONIO LABIOS, JAPAN PETROLEUM EXPLORATION CO., and procedural rights for animals through their allegation that they can
LTD. (JAPEX), as represented by its Philippine Agent, SUPPLY speak for them. Obviously, we are asked to accept the premises that (a)
OILFIELD SERVICES, INC., Respondents. they were chosen by the Resident Marine Mammals of Tañon Strait; (b)
they were chosen by a representative group of all the species of the
CONCURRING OPINION Resident Marine Mammals; (c) they were able to communicate with them;
and (d) they received clear consent from their animal principals that they Article 44, on the other hand, enumerates the concept of a juridical
would wish to use human legal institutions to pursue their interests. person:
Alternatively, they ask us to acknowledge through judicial notice that the
interests that they, the human petitioners, assert are identical to what the ARTICLE 44. The following are juridical persons:
Resident Marine Mammals would assert had they been humans and the
legal strategies that they invoked are the strategies that they agree with.
(1) The State and its political subdivisions;

In the alternative, they want us to accept through judicial notice that there
(2) Other corporations, institutions and entities for public interest
is a relationship of guardianship between them and all the resident
or purpose, created by law; their personality begins as soon as
mammals in the affected ecology.
they have been constituted according to law;

Fundamental judicial doctrines that may significantly change substantive

(3) Corporations, partnerships and associations for private interest
and procedural law cannot be founded on feigned representation.
or purpose to which the law grants a juridical personality, separate
and distinct from that of each shareholder, partner or member.
Instead, I agree that the human petitioners should only speak for
themselves and already have legal standing to sue with respect to the
Petitioners in G.R. No. 180771 implicitly suggest that we amend, rather
issue raised in their pleading. The rules on standing have already been
than simply construe, the provisions of the Rules of Court as well as
liberalized to take into consideration the difficulties in the assertion of
substantive law to accommodate Resident Marine Mammals or animals.
environmental rights. When standing becomes too liberal, this can be the
This we cannot do.
occasion for abuse.

Rule 3, Section 2 of the 1997 Rules of Civil Procedure further defines real
II
party in interest:

Rule 3, Section 1 of the 1997 Rules of Civil Procedure, in part, provides:

SEC. 2. Parties in interest.-A real party in interest is the party who stands
to be benefited or injured by the judgment in the suit, or the party entitled
SECTION 1. Who may be parties; plaintiff and defendant. - Only natural or to the avails of the suit. Unless otherwise authorized by law or these
juridical persons, or entities authorized by law may be parties in a civil Rules, every action must be prosecuted or defended in the name of the
action. real party in interest. (2a)6

The Rules provide that parties may only be natural or juridical persons or A litigant who stands to benefit or sustain an injury from the judgment of a
entities that may be authorized by statute to be parties in a civil action. case is a real party in interest.7 When a case is brought to the courts, the
real party in interest must show that another party's act or omission has
Basic is the concept of natural and juridical persons in our Civil Code: caused a direct injury, making his or her interest both material and based
on an enforceable legal right.8
ARTICLE 37. Juridical capacity, which is the fitness to be the subject of
legal relations, is inherent in every natural person and is lost only through Representatives as parties, on the other hand, are parties acting in
death. Capacity to act, which is the power to do acts with legal effect, is representation of the real party in interest, as defined in Rule 3, Section 3
acquired and may be lost. of the 1997 Rules of Civil Procedure:

Article 40 further defines natural persons in the following manner: SEC. 3. Representatives as parties. - Where the action is allowed to be
prosecuted or defended by a representative or someone acting in a
ARTICLE 40. Birth determines personality; but the conceived child shall be fiduciary capacity, the beneficiary shall be included in the title of the case
considered born for all purposes that are favorable to it, provided it be and shall be deemed to be the real party in interest. A representative may
born later with the conditions specified 'in the following article. be a trustee of an express rust, 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 little reason to fear abuses under this regime as procedures for removal
belonging to the principal.(3a)9 and substitution, avoiding conflicts of interest, and termination of a
guardianship are well established.
The rule is two-pronged. First, it defines .a representative as a party who
is not bound to directly or actually benefit or suffer from the judgment, but In fact, the opinion in Animal Lovers suggests that such an arrangement is
instead brings a case in favor of an identified real party in interest. 10 The indeed possible. The court indicated that AL VA might have obtained
representative is an outsider to the cause of action. Second, the rule standing in its own right if it had an established history of dedication to the
provides a list of who may be considered as "representatives." It is not an cause of the humane treatment of animals. It noted that the Fund for
exhaustive list, but the rule limits the coverage only to those authorized by Animals had standing and indicated that another more well-known
law or the Rules of Court. 11 advocacy organization might have had standing as well. The court further
concluded that an organization's standing is more than a derivative of its
These requirements should apply even in cases involving the environment, history, but history is a relevant consideration where organizations are not
which means that for the Petition of the human petitioners to prosper, they well-established prior to commencing legal action. ALVA was not the
must show that (a) the Resident Marine Mammals are real parties in proper plaintiff because it could not identify previous activities
interest; and (b) that the human petitioners are authorized by law or the demonstrating its recognized activism for and commitment to the dispute
Rules to act in a representative capacity. independent of its desire to pursue legal action. The court's analysis
suggests that a qualified organization with a demonstrated commitment to
a cause could indeed bring suit on behalf of the speechless in the form of a
The Resident Marine Mammals are comprised of "toothed whales, dolphins,
court-sanctioned guardianship.
porpoises, and other cetacean species inhabiting Tañon Strait." 12 While
relatively new in Philippine jurisdiction, the issue of whether animals have
legal standing before courts has been the subject of academic discourse in This Comment advocates a shift in contemporary standing doctrine to
light of the emergence of animal and environmental rights. empower non-profit organizations with an established history of dedication
to the cause and relevant expertise to serve as official guardians ad !item
on behalf of nonhuman animals interests. The American legal system has
In the United States, anim4l rights advocates have managed to establish a
numerous mechanisms for representing the rights and interests of
system which Hogan explains as the "guardianship model for nonhuman
nonhumans; any challenges inherent in extending these pre-existing
animals":13
mechanisms to nonhuman animals are minimal compared to an interest in
the proper administration of justice. To adequately protect the statutory
Despite Animal Lovers, there exists a well-established system by which rights of nonhuman animals, the legal system must recognize those
nonhuman animals may obtain judicial review to enforce their statutory statutory rights independent of humans and provide a viable means of
rights and protections: guardianships. With court approval, animal enforcement. Moreover, the idea of a guardianship for speechless plaintiffs
advocacy organizations may bring suit on behalf of nonhuman animals in is not new and has been urged on behalf of the natural environment. 'Such
the same way court-appointed guardians bring suit on behalf of mentally- a model is even more compelling as applied to nonhuman animals,
challenged humans who possess an enforceable right but lack the ability to because they are sentient beings with the ability to feel pain and exercise
enforce it themselves. rational thought. Thus, animals are qualitatively different from other
legally protected nonhumans and therefore have interests deserving direct
In the controversial but pivotal Should Trees Have Standing?-Toward Legal legal protection.
Rights for Natural Objects, Christopher D. Stone asserts that the
environment should possess the right to seek judicial redress even though Furthermore, the difficulty of enforcing the statutory rights of nonhuman
it is incapable of representing itself. While asserting the rights of animals threatens the integrity of the federal statutes designed to protect
them, essentially rendering them meaningless. Sensing that laws
speechless entities such as the environment or nonhuman animals protecting nonhuman animals would be difficult to enforce, Congress
certainly poses legitimate challenges - such as identifying the proper provided for citizen suit provisions: the most well-known example is found
spokesman -the American legal system is already well-equipped with a in the Endangered Species Act (ESA). Such provisions are evidence of
reliable mechanism by which nonhumans may obtain standing via a legislative intent to encourage civic participation on behalf of nonhuman
judicially established guardianship. Stone notes that other speechless - animals. Our law of standing should reflect this intent and its implication
and nonhuman - entities such as corporations, states, estates, and that humans are suitable representatives of the natural environment,
municipalities have standing to bring suit on their own behalf. There is which includes nonhuman animals.14 (Emphasis supplied, citation omitted)
When a court allows guardianship as a basis of representation, animals are proper plaintiff because it could not identify previous activities
considered as similarly situated as individuals who have enforceable rights demonstrating its recognized activism for and commitment to the dispute
but, for a legitimate reason (e.g., cognitive disability), are unable to bring independent of its desire to pursue legal action. The court's analysis
suit for themselves. They are also similar to entities that by their very suggests that a qualified organization with a demonstrated commitment to
nature are incapable of speaking for themselves (e.g., corporations, a cause could indeed bring suit on behalf of the speechless in the form of a
states, and others). court-sanctioned guardianship.18 (Emphasis supplied, citation omitted)

In our jurisdiction, persons and entities are recognized both in law and the What may be argued as being parallel to this concept of guardianship is
Rules of Court as having standing to sue and, therefore, may be properly the principle of human stewardship over the environment in a citizen suit
represented as real parties in interest. The same cannot be said about under the Rules of Procedure for Environmental Cases. A citizen suit allows
animals. any Filipino to act as a representative of a party who has enforceable
rights under environmental laws before Philippine courts, and is defined in
Animals play an important role in households, communities, and the Section 5: .
environment. While we, as humans, may feel the need to nurture and
protect them, we cannot go as far as saying we represent their best SEC. 5. Citizen suit. - Any Filipino citizen in representation of others,
interests and can, therefore, speak for them before the courts. As humans, including minors or generations yet unborn, may file an action to enforce
we cannot be so arrogant as to argue that we know the suffering of rights or obligations under environmental laws. Upon the filing of a citizen
animals and that we know what remedy they need in the face of an injury. suit, the court shall issue an order which shall contain a brief description of
the cause of action and the reliefs prayed for, requiring all interested
Even in Hogan's discussion, she points out that in a case before the United parties to manifest their interest to intervene in the case within fifteen
States District Court for the Central District of California, Animal Lovers (15) days from notice thereof. The plaintiff may publish the order once in a
Volunteer Ass'n v. Weinberger,15 the court held that an emotional response newspaper of a general circulation in the Philippines or furnish all affected
to what humans perceive to be an injury inflicted on an animal is not barangays copies of said order.
within the "zone-of-interest" protected by law.16 Such sympathy cannot
stand independent of or as a substitute for an actual injury suffered by the There is no valid reason in law or the practical requirements of this case to
claimant.17 The ability to represent animals was further limited in that case implead and feign representation on behalf of animals. To have done so
by the need to prove "genuine dedication" to asserting and protecting betrays a very anthropocentric view of environmental advocacy. There is
animal rights: no way that we, humans, can claim to speak for animals let alone present
that they would wish to use our court system, which is designed to ensure
What ultimately proved fatal to ALVA 's claim, however, was the court's that humans seriously carry their responsibility including ensuring a viable
assertion that standing doctrine further required ALVA to differentiate its ecology for themselves, which of course includes compassion for all living
genuine dedication to the humane treatment of animals from the general things.
disdain for animal cruelty shared by the public at large. In doing so, the
court found ALVA 's asserted organizational injury to be abstract and thus Our rules on standing are sufficient and need not be further relaxed.
relegated ALVA to the ranks of the "concerned bystander. "
In Arigo v. Swift,19 I posed the possibility of further reviewing the broad
.... interpretation we have given to the rule on standing. While representatives
are not required to establish direct injury on their part, they should only be
In fact, the opinion in Animal Lovers suggests that such an arrangement is allowed to represent after complying with the following: [I]t is imperative
indeed possible. The court indicated that ALVA might have obtained for them to indicate with certainty the injured parties on whose behalf they
standing in its own right if it had an established history of dedication to the bring the suit. Furthermore, the interest of those they represent must be
cause of the humane treatment of animals. It noted that the Fund for based upon concrete legal rights. It is not sufficient to draw out a
Animals had standing and indicated that another more well-known perceived interest from a general, nebulous idea of a potential "injury." 20
advocacy organization might have had standing as well. The court further
concluded that an organization's standing is more than a derivative of its I reiterate my position in Arigo v. Swift and in Paje v. Casiño 21 regarding
history, but history is a relevant consideration where organizations are not this rule alongside the appreciation of legal standing in Oposa v.
well-established prior to commencing legal action. ALVA was not the Factoran22 for environmental cases. In Arigo, I opined that procedural
liberality, especially in cases brought by representatives, should be used deemed the real party in interest. The representative remains to be a third
with great caution: party to the action instituted on behalf of another.

Perhaps it is time to revisit the ruling in Oposa v. Factoran. ....

That case was significant in that, at that time, there was need to call To sue under this rule, two elements must be present: "(a) the suit is
attention to environmental concerns in light of emerging international legal brought on behalf of an identified party whose right has been violated,
principles. While "intergenerational responsibility" is a noble principle, it resulting in some form of damage, and (b) the representative authorized
should not be used to obtain judgments that would preclude future by law or the Rules of Court to represent the victim."
generations from making their own assessment based on their actual
concerns. The present generation must restrain itself from assuming that it The Rules of Procedure for Environmental Cases allows filing of a citizen's
can speak best for those who will exist at a different time, under a suit. A citizen's suit under this rule allows any Filipino citizen to file an
different set of circumstances. In essence, the unbridled resort to action for the enforcement of environmental law on behalf of minors or
representative suit will inevitably result in preventing future generations generations yet unborn. It is essentially a representative suit that allows
from protecting their own rights and pursuing their own interests and persons who are not real parties in interest to institute actions on behalf of
decisions. It reduces the autonomy of our children and our children 's the real party in interest.
children. Even before they are born, we again restricted their ability to
make their own arguments.
The expansion of what constitutes "real party in interest" to include minors
and generations yet unborn is a recognition of this court's ruling in Oposa
It is my opinion that, at best, the use of the Oposa doctrine in v. Factoran. This court recognized the capacity of minors (represented by
environmental cases should be allowed only when a) there is a clear legal their parents) to file a class suit on behalf of succeeding generations based
basis for the representative suit; b) there are actual concerns based on the concept of intergenerational responsibility to ensure the future
squarely upon an existing legal right; c) there is no possibility of any generation's access to and enjoyment of [the] country's natural resources.
countervailing interests existing within the population represented or those
that are yet to be born; and d) there is an absolute necessity for such
To allow citizen's suits to enforce environmental rights of others, including
standing because there is a threat of catastrophe so imminent that an
future generations, is dangerous for three reasons:
immediate protective measure is necessary. Better still, in the light of its
costs and risks, we abandon the precedent all together. 23 (Emphasis in the
original) First, they run the risk of foreclosing arguments of others who are unable
to take part in the suit, putting into. question its representativeness.
Second, varying interests may potentially result in arguments that are
Similarly, in Paje:
bordering on political issues, the resolutions of which do not fall upon this
court. Third, automatically allowing a class or citizen's suit on behalf of
A person cannot invoke the court's jurisdiction if he or she has no right or minors and generations yet unborn may result in the oversimplification of
interest to protect. He or she who invokes the court's jurisdiction must be what may be a complex issue, especially in light of the impossibility of
the "owner of the right sought to be enforced." In other words, he or she determining future generation's true interests on the matter.
must have a cause of action. An action may be dismissed on the ground of
lack of cause of action if the person who instituted it is not the real party
In citizen's suits, persons who may have no interest in the case may file
in interest.24 The term "interest" under the Rules of Court must refer to a
suits for others. Uninterested persons will argue for the persons they
material interest that is not merely a curiosity about or an "interest in the
represent, and the court will decide based on their evidence and
question involved." The interest must be present and substantial. It is not
arguments. Any decision by the court will be binding upon the
a mere expectancy or a future, contingent interest.
beneficiaries, which in this case are the minors and the future generations.
The court's decision will be res judicata upon them and conclusive upon
A person who is not a real party in interest may institute an action if he or the issues presented.25
she is suing as representative of a .real party in interest. When an action is
prosecuted or defended by a representative, that representative is not and
The danger in invoking Oposa v. Factoran to justify all kinds of
does not become the real party in interest. The person represented is
environmental claims lies in its potential to diminish the value of legitimate
environmental rights. Extending the application of "real party in interest"
to the Resident Marine Mammals, or animals in general, through a judicial SEC. 9. Non-joinder of necessary parties to be pleaded. -Whenever in any
pronouncement will potentially result in allowing petitions based on mere pleading in which a claim is asserted a necessary party is not joined, the
concern rather than an actual enforcement of a right. It is impossible for pleader shall set forth his name, if known, and shall state why he is
animals to tell humans what their concerns are. At best, humans can only omitted. Should the court find the reason for the omission unmeritorious,
surmise the extent of injury inflicted, if there be any. Petitions invoking a it may order the inclusion of the omitted necessary party if jurisdiction
right and seeking legal redress before this court cannot be a product of over his person may be obtained.
guesswork, and representatives have the responsibility to ensure that they
bring "reasonably cogent, rational, scientific, well-founded arguments" 26 on The failure to comply with the order for his inclusion, without justifiable
behalf of those they represent. cause, shall be deemed a waiver of the claim against such party.

Creative approaches to fundamental problems should be welcome. The non-inclusion of a necessary party does not prevent the court from
However, they should be considered carefully so that no unintended or proceeding in the action, and the judgment rendered therein shall be
unwarranted consequences should follow. I concur with the approach of without prejudice to the rights of such necessary party. 29
Madame Justice Teresita J. Leonardo-De Castro in her brilliant ponencia as
it carefully narrows down the doctrine in terms of standing. Resident
A party who should have been a plaintiff or petitioner but whose consent
Marine Mammals and the human petitioners have no legal standing to file
cannot be obtained should be impleaded as a defendant in the nature of an
any kind of petition.
unwilling co-plaintiff under Rule 3, Section 10 of the 1997 Rules of Civil
Procedure:
However, I agree that petitioners in G.R. No. 181527, namely, Central
Visayas Fisherfolk Development Center,. Engarcial, Yanong, and Labid,
SEC. 10. Unwilling co-plaintiff. - If the consent of any party who should be
have standing both as real parties in interest and as representatives of
joined as plaintiff can not be obtained, he may be made a defendant and
subsistence fisherfolks of the Municipalities of Aloguinsan and
the reason therefor shall be stated in the complaint. 30
Pinamungahan, Cebu, and their families, and the present and future
generations of Filipinos whose rights are similarly affected. The activities
undertaken under Service Contract 46 (SC-46) directly affected their The reason for this rule is plain: Indispensable party plaintiffs who should
source of livelihood, primarily felt through the significant reduction of their be part of the action but who do not consent should be put within the
fish harvest.27 The actual, direct, and material damage they suffered, jurisdiction of the court through summons or other court processes.
which has potential long-term effects transcending generations, is a proper Petitioners. should not take it upon themselves to simply imp lead any
subject of a legal suit. party who does not consent as a petitioner. This places the unwilling co-
petitioner at the risk of being denied due process.
III
Besides, Former President Gloria Macapagal-Arroyo cannot be a party to
this suit. As a co-equal constitutional department, we cannot assume that
In our jurisdiction, there is neither reason nor any legal basis for the
the President needs to enforce policy directions by suing his or her alter-
concept of implied petitioners, most especially when the implied petitioner
egos. The procedural situation caused by petitioners may have gained
was a sitting President of the Republic of the Philippines. In G.R. No.
public attention, but its legal absurdity borders on the contemptuous. The
180771, apart from adjudicating unto themselves the status of "legal
Former President's name should be stricken out of the title of this case.
guardians" of whales, dolphins, porpoises, and other cetacean species,
human petitioners also impleaded Former President Gloria Macapagal-
Arroyo as "unwilling co-petitioner" for "her express declaration and IV
undertaking in the ASEAN Charter to protect Tañon Strait." 28
I also concur with the conclusion that SC-46 is both. illegal and
No person may implead any other person as a co-plaintiff or co-petitioner unconstitutional.
without his or her consent. In our jurisdiction, only when there is a party
that should have been a necessary party but was unwilling to join would SC-46 is illegal because it violates Republic Act No. ·7586 or the National
there be an allegation as to why that party has been omitted. In Rule 3, Integrated Protected Areas System Act of 1992, and Presidential Decree
Section 9 of the 1997 Rules of Civil Procedure: No. 1234,31 which declared Tañon Strait as a protected seascape. It is
unconstitutional because it violates the fourth paragraph of Article XII, The President may enter into agreements with foreign-owned corporations
Section 2 of the Constitution. involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral oils
V according to the general terms and conditions provided by law, based on
real contributions to the economic growth and general welfare of the
country. In such agreements, the State shall promote the development
Petitioner Central Visayas Fisherfolk Development Center asserts that SC-
and use of local scientific and technical resources.
46 violated Article XII, Section 2, paragraph 1 of the .1987 Constitution
because Japan Petroleum Exploration Co., Ltd. (JAPEX) is 100% Japanese-
owned.32 It further asserts that SC-46 cannot be validly classified as a The President shall notify the Congress of every contract entered into in
technical and financial assistance agreement executed under Article XII, accordance with this provision, within thirty days from its execution.
Section 2, paragraph 4 of the 1987 Constitution. 33 Public respondents (Emphasis supplied)
counter that SC-46 does not fall under the coverage of paragraph 1, but is
a validly executed contract under paragraph 4.34· Public respondents I agree that fully foreign-owned corporations may participate in the
further aver that SC-46 neither granted exclusive fishing rights to JAPEX exploration, development, and use of natural resources, but only through
nor violated Central Visayas Fisherfolk Development Center's right to either financial agreements or technical ones. This is the clear import of
preferential use of communal marine and fishing resources. 35 the words "either financial or technical assistance agreements." This is also

VI the clear result if we compare the 1987 constitutional provision with the
versions in the 1973 and 1935 Constitution:
Article XII, Section 2 of the 1987 Constitution states:
1973 CONSTITUTION
Section 2. All lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy, fisheries, ARTICLE XIV
forests or timber, wildlife, flora and fauna, and other natural resources are THE NATIONAL ECONOMY AND THE PATRIMONY OF THE NATION
owned by the State. With the exception. of agricultural lands, all other
natural resources shall not be alienated. The exploration, development, SEC. 9. The disposition, exploration, development, of exploitation, or
and utilization of natural resources shall be under the full control and utilization of any of the natural resources of the Philippines shall be limited
supervision of the State. The State may directly undertake such activities, to citizens of the Philippines, or to corporations or association at least sixty
or it may enter into co-production, joint venture, or production-sharing per centum of the capital of which is owned by such citizens. The Batasang
agreements with Filipino citizens, or corporations or associations at least Pambansa, in the national interest, may allow such citizens, corporations,
sixty per centum of whose capital is owned by such citizens. Such or associations to enter into service contracts for financial, technical,
agreements may be for a period not exceeding twenty-five years, management, or other forms of assistance with any foreign person or
renewable for not more than twenty-five years, and under such terms and entity for the exploitation, development, exploitation, or utilization of any
conditions as may be provided by law. In cases of water rights for of the natural resources. Existing valid and binding service contracts for
irrigation, water supply fisheries, or industrial uses other than the financial, the technical, management, or other forms of assistance are
development of water power, beneficial use may be the measure and limit hereby recognized as such. (Emphasis supplied)
of the grant.
1935 CONSTITUTION
The State shall protect the nation's marine wealth in its archipelagic
waters, territorial sea, and exclusive economic zone, and reserve its use
ARTICLE XIII
and enjoyment exclusively to Filipino citizens.
CONSERVATION AND UTILIZATION OF NATURAL RESOURCES

The Congress may, by law, allow small-scale utilization of natural

SECTION 1. All agricultural timber, and mineral. lands of the public
resources by Filipino citizens, as well as cooperative fish farming, with
domain, waters, minerals, coal, petroleum, and other mineral oils, all
priority to subsistence fishermen and fish-workers in rivers, lakes, bays,
forces of potential energy, and other natural resources of the Philippines
and lagoons.
belong to the State, and their disposition, exploitation, development, or
utilization shall be limited to citizens of the Philippines, or to corporations at different levels to ensure that it conforms to law and can
or associations at least sixty per centum of the capital of which is owned withstand public scrutiny.
by such citizens, subject to any existing right, grant, lease, or concession
at the time of the inauguration of the Government established under this (3) Within thirty days of the executed agreement, the President
Constitution. Natural resources, with the exception of public agricultural shall report it to Congress to give that branch of government an
land, shall not be alienated, and no license, concession, or lease for the opportunity to look over the agreement and interpose timely
exploitation, development, or utilization of any of the natural resources objections, if any.37 (Emphasis in the original, citation omitted)
shall be granted for a period exceeding twenty-five years, renewable for
another twenty-five years, except as to water rights for irrigation, water
Based on the standards pronounced in La Bugal, SC-46' S validity must be
supply, fisheries, or industrial uses other than the development of water
tested against three important points: (a) whether SC-46 was crafted in
power, in which cases beneficial use may be the measure and the limit of
accordance with a general law that provides standards, terms, and
the grant.
conditions; (b) whether SC-46 was signed by the President for and on
behalf of the government; and (c) whether it was reported by the
The clear text of the Constitution in light of its history prevails over any President to Congress within 30 days of execution.
attempt to infer interpretation from the Constitutional Commission
deliberations. The constitutional texts are the product of a full sovereign
VII
act: deliberations in a constituent assembly and ratification. Reliance on
recorded discussion of Constitutional Commissions, on the other hand,
may result in dependence on incomplete authorship; Besides, it opens The general law referred to as a possible basis for SC-46's validity is
judicial review to further subjectivity from those who spoke during the Presidential Decree No. 87 or the Oil Exploration and Development Act of
Constitutional Commission deliberations who may not have predicted how 1972.1âwphi1 It is my opinion that this law is unconstitutional in that it
their words will be used. It is safer that we use the words already in the allows service contracts, contrary to Article XII, Section 2 of the 1987
Constitution. The Constitution was their product. Its words were read by Constitution:
those who ratified it. The Constitution is what society relies upon even at
present. The President may enter into agreements with foreign-owned corporations
involving either technical or financial assistance for large-scale exploration,
SC-46 is neither a financial assistance nor a technical assistance development, and utilization of minerals, petroleum, and other mineral oils
agreement. according to the general terms and conditions provided by law, based on
real contributions to the economic growth and general welfare of the
country. In such agreements, the State shall promote the development
Even supposing for the sake of argument that it is, it could not be declared
and use of local scientific and technical resources. (Emphasis supplied)
valid in light of the standards set forth in La Bugal-B'laan Tribal
Association, Inc. v. Ramos:36
The deletion of service contracts from the enumeration of the kind of
agreements the President may enter into with foreign-owned corporations
Such service contracts may be entered into only with respect to minerals,
for exploration and utilization of resources means that service contracts
petroleum and other mineral oils. The grant thereof is subject to several
are no longer allowed by the Constitution. Pursuant to Article XVIII,
safeguards, among which are these requirements:
Section 3 of the 1987 Constitution,38 this inconsistency renders the law
invalid and ineffective.
(1) The service contract shall be crafted m accordance with a
general law that will set standard or uniform terms, conditions and
SC-46 suffers from the lack of a special law allowing its activities. The Main
requirements, presumably to attain a certain uniformity in
Opinion emphasizes an important point, which is that SC-46 did not merely
provisions and avoid the possible insertion of terms
involve exploratory activities, but also provided the rights and obligations
disadvantageous to the country.
of the parties should it be discovered that there is oil in commercial
quantities in the area. The Tañon Strait being a protected seascape under
(2) The President shall be the signatory for the government Presidential Decree No. 123439 requires that the exploitation and utilization
because, supposedly before an agreement is presented to the of energy resources from that area are explicitly covered by a law passed
President for signature, it will have been vetted several times over by Congress specifically for that purpose, pursuant to Section 14 of
Republic Act No. 7586 or the National Integrated Protected Areas System • Instead, they were plainly crafting provisions to. put in place
Act of 1992: safeguards that would eliminate or m minimize the abuses
prevalent during the marital law regime.42 (Emphasis in the
SEC. 14. Survey for Energy R6'sources. - Consistent with the policies original)
declared in Section 2, hereof, protected areas, except strict nature
reserves and natural parks, may be subjected to exploration only for the Public respondents failed to show that. Former President Gloria Macapagal-
purpose of gathering information on energy resources and only if such Arroyo was involved in the signing or execution of SC-46. The failure to
activity is carried out with the least damage to surrounding areas. Surveys comply with this constitutional requirement renders SC-46 null and void.
shall be conducted only in accordance with a program approved by the
DENR, and the result of such surveys shall be made available to the public IX
and submitted to the President for recommendation to Congress. Any
exploitation and utilization of energy resources found within NIP AS areas
Public respondents also failed to show that Congress was subsequently
shall be allowed only through a law passed by Congress. 40 (Emphasis
informed of the execution and existence of SC-46. The reporting
supplied)
requirement is an equally important requisite to the validity of any service
contract involving the exploration, development, and utilization of
No law was passed by Congress specifically providing the standards, Philippine petroleum. Public respondents' failure to report to Congress
terms, and conditions of an oil exploration, extraction, and/or utilization about SC-46 effectively took away any opportunity for the legislative
for Tañon Strait and, therefore, no such activities could have been validly branch to scrutinize its terms and conditions.
undertaken under SC-46. The National Integrated Protected Areas System
Act of 1992 is clear that exploitation and utilization of energy resources in
In sum, SC-46 was executed and implemented absent all the requirements
a protected seascape such as Tañon Strait shall only be allowed through a
provided under paragraph 4 of Article XII, Section 2. It is, therefore, null
specific law.
and void.

VIII
X

Former President Gloria Macapagal-Arroyo was not the signatory to SC-46,

I am of the view that SC-46, aside from not having complied with the 1987
contrary to the requirement set by paragraph 4 of Article XII, Section 2 for
Constitution, is also null and void for being violative of environmental laws
service contracts involving the exploration of petroleum. SC-46 was
protecting Tañon Strait. In particular, SC-46 was implemented despite
entered into by then Department of Energy Secretary Vicente S. Perez, Jr.,
falling short of the requirements of the National Integrated Protected Areas
on behalf of the government. I agree with the Main Opinion that in cases
System Act of 1992.
where the Constitution or law requires the President to act personally on
the matter, the duty cannot be delegated to another public official. 41 La
Bugal highlights the importance of the President's involvement, being one As a protected seascape under Presidential Decree No. 1234, 43 Tañon
of the constitutional safeguards against abuse and corruption, as not mere Strait is covered by the National Integrated Protected Areas System Act of
formality: 1992. This law declares as a matter of policy:

At this point, we sum up the matters established, based on a careful SEC. 2. Declaration of Policy. Cognizant of the profound impact of man's
reading of the ConCom deliberations, as follows: activities on all components of the natural environment particularly the
effect of increasing population, resource exploitation and industrial
advancement and recognizing the critical importance of protecting and
• In their deliberations on what was to become paragraph 4, the
maintaining the natural biological and physical diversities of the
framers used the term service contracts in referring to agreements
environment notably on areas with biologically unique features to sustain
x x x involving either technical or financial assistance. • They
human life and development, as well as plant and animal life, it is hereby
spoke of service contracts as the concept was understood in the
declared the policy of the State to secure for the Filipino people of present
1973 Constitution.
and future generations the perpetual existence of all native plants and
animals through the establishment of a comprehensive system of
• It was obvious from their discussions that they were not about to integrated protected areas within the classification of national park as
ban or eradicate service contracts. provided for in the Constitution.
It is hereby recognized that these areas, although distinct in features, SEC. 14. Survey for Energy Resources. - Consistent with the policies
possess common ecological values that may be incorporated into a holistic declared in Section 2, hereof, protected areas, except strict nature
plan representative of our natural heritage; that effective administration of reserves and natural parks, may be subjected to exploration only for the
these areas is possible only through cooperation among national purpose of gathering information on energy resources and only if such
government, local and concerned private organizations; that the use and activity is carried out with the least damage to surrounding areas. Surveys
enjoyment of these protected areas must be consistent with the principles shall be conducted only in accordance with a program approved by the
of biological diversity and sustainable development. DENR, and the result of such surveys shall be made available to the public
and submitted to the President for recommendation to Congress. Any
To this end, there is hereby established a National Integrated Protected exploitation and utilization of energy resources found within NIPAS areas
Areas System (NIPAS), which shall encompass outstanding remarkable shall be allowed only through a taw passed by Congress. 47 (Emphasis
areas and biologically important public lands that are habitats of rare and supplied)
endangered species of plants and animals, biogeographic zones and
related ecosystems, whether terrestrial, wetland or marine, all of which Public respondents argue that SC-46 complied with the procedural
shall be designated as "protected areas." 44 (Emphasis supplied) requirements of obtaining an Environmental Compliance Certificate. 48 At
any rate, they assert that the activities covered by SC-46 fell under
Pursuant to this law, any proposed activity in Tañon Strait must undergo Section 14 of the National Integrated Protected Areas System Act of 1992,
an Environmental Impact Assessment: which they interpret to be an exception to Section 12. They argue that the
Environmental Compliance Certificate is not a strict requirement for the
validity of SC-46 since (a) the Tañon Strait is not a nature' reserve or
SEC. 12. Environmental Impact Assessment. - Proposals for activities
natural park; (b) the exploration was merely for gathering information;
which are outside the scope of the management plan for protected areas
and ( c) measures were in place to ensure that the exploration caused the
shall be subject to an environmental impact assessment as required by law
least possible damage to the area.49
before they are adopted, and the results thereof shall be taken into
consideration in the decision-making process. 45 (Emphasis supplied)
Section 14 is not an exception to Section 12, but instead provides
additional requirements for cases involving Philippine energy resources.
The same provision further requires that an Environmental Compliance
The National Integrated Protected Areas System Act of 1992 was enacted
Certificate be secured under the Philippine Environmental Impact
to recognize the importance of protecting the environment in light of
Assessment System before arty project is implemented:
resource exploitation, among others.50 Systems are put in place to secure
for Filipinos local resources under the most favorable conditions. With the
No actual implementation of such activities shall be allowed without the status of Tañon Strait as a protected seascape, the institution of additional
required Environmental Compliance Certificate (ECC) under the Philippine legal safeguards is even more significant.
Environment Impact Assessment (EIA) system. In instances where such
activities are allowed to be undertaken, the proponent shall plan and carry
Public respondents did not validly obtain an Environmental Compliance
them out in such manner as will minimize any adverse effects and take
Certificate for SC-46. Based on the records, JAPEX commissioned an
preventive and remedial action when appropriate. The proponent shall be
environmental impact evaluation only in the second subphase of its
liable for any damage due to lack of caution or indiscretion. 46 (Emphasis
project, with the Environmental Management .Bureau of Region
supplied)

VII granting the project an Environmental Compliance Certificate on March

In projects involving the exploration or utilization of energy resources, the
6, 2007.51
National Integrated Protected Areas System Act of 1992 additionally
requires that a program be approved by the Department of Environment
and Natural Resources, which shall be publicly accessible. The program Despite its scale, the seismic surveys from May 9 to 18, 2005 were
shall also be submitted to the President, who in turn will recommend the conducted without any environmental assessment contrary to Section 12
program to Congress. Furthermore, Congress must enact a law specifically of the National Integrated Protected Areas System Act of 1992.
allowing the exploitation of energy resources found within a protected area
such as Tañon Strait: XI
Finally, we honor every living creature when we take care of our
environment. As sentient species, we do not lack in the wisdom or
sensitivity to realize that we only borrow the resources that we use to
survive and to thrive. We are not incapable of mitigating the greed that is
slowly causing the demise of our planet. Thus, there is no need for us to
feign representation of any other species or some imagined unborn
generation in filing any action in our courts of law to claim any of our
fundamental rights to a healthful ecology. In this way and with candor and
courage, we fully shoulder the responsibility deserving of the grace and
power endowed on our species.

ACCORDINGLY, I vote:

(a) to DISMISS G.R. No. 180771 for lack of standing and STRIKE
OUT the name of Former President Gloria Macapagal-Arroyo from
the title of this case;

(b) to GRANT G.R. No. 181527; and

(c) to DECLARE SERVICE CONTRACT 46 NULL AND VOID for

violating the 1987 Constitution, Republic Act No. 7586, and
Presidential Decree No. 1234.

MARVIC M.V.F. LEONEN

Associate Justice
G.R. No. 186993               August 22, 2012 (Atty. Aceron) for the purpose of filing an action in court against the
respondents. On September 15, 2006, Atty. Aceron, in behalf of the
THEODORE and NANCY ANG, represented by ELDRIGE MARVIN B. petitioners, filed a Complaint7 for collection of sum of money with the RTC
ACERON, Petitioners, of Quezon City against the respondents.
vs.
SPOUSES ALAN and EM ANG, Respondents. On November 21, 2006, the respondents moved for the dismissal of the
complaint filed by the petitioners on the grounds of improper venue and
VELASCO, JR.,* prescription.8 Insisting that the venue of the petitioners’ action was
improperly laid, the respondents asserted that the complaint against them
may only be filed in the court of the place where either they or the
LEONARDO-DE CASTRO, **
petitioners reside. They averred that they reside in Bacolod City while the
petitioners reside in Los Angeles, California, USA. Thus, the respondents
DECISION maintain, the filing of the complaint against them in the RTC of Quezon
City was improper.
REYES, J.:
The RTC Orders
Before this Court is a petition for review on certiorari under Rule 45 of the
Rules of Court seeking to annul and set aside the Decision 1 dated August On April 12, 2007, the RTC of Quezon City issued an Order 9 which, inter
28, 2008 and the Resolution2 dated February 20, 2009 rendered by the alia, denied the respondents’ motion to dismiss. In ruling against the
Court of Appeals (CA) in CA-G.R. SP No. 101159. The assailed decision respondents’ claim of improper venue, the court explained that:
annulled and set aside the Orders dated April 12, 2007 3 and August 27,
20074 issued by the Regional Trial Court (RTC) of Quezon City, Branch 81
Attached to the complaint is the Special Power of Attorney x x x which
in Civil Case No. Q-06-58834.
clearly states that plaintiff Nancy Ang constituted Atty. Eldrige Marvin
Aceron as her duly appointed attorney-in-fact to prosecute her claim
The Antecedent Facts against herein defendants. Considering that the address given by Atty.
Aceron is in Quezon City, hence, being the plaintiff, venue of the action
On September 2, 1992, spouses Alan and Em Ang (respondents) obtained may lie where he resides as provided in Section 2, Rule 4 of the 1997
a loan in the amount of Three Hundred Thousand U.S. Dollars Rules of Civil Procedure.10
(US$300,000.00) from Theodore and Nancy Ang (petitioners). On even
date, the respondents executed a promissory note 5 in favor of the The respondents sought reconsideration of the RTC Order dated April 12,
petitioners wherein they promised to pay the latter the said amount, with 2007, asserting that there is no law which allows the filing of a complaint
interest at the rate of ten percent (10%) per annum, upon demand. in the court of the place where the representative, who was appointed as
However, despite repeated demands, the respondents failed to pay the such by the plaintiffs through a Special Power of Attorney, resides. 11
petitioners.
The respondents’ motion for reconsideration was denied by the RTC of
Thus, on August 28, 2006, the petitioners sent the respondents a demand Quezon City in its Order12 dated August 27, 2007.
letter asking them to pay their outstanding debt which, at that time,
already amounted to Seven Hundred Nineteen Thousand, Six Hundred
The respondents then filed with the CA a petition for certiorari 13 alleging in
Seventy-One U.S. Dollars and Twenty-Three Cents (US$719,671.23),
the main that, pursuant to Section 2, Rule 4 of the Rules of Court, the
inclusive of the ten percent (10%) annual interest that had accumulated
petitioners’ complaint may only be filed in the court of the place where
over the years. Notwithstanding the receipt of the said demand letter, the
they or the petitioners reside. Considering that the petitioners reside in Los
respondents still failed to settle their loan obligation.
Angeles, California, USA, the respondents assert that the complaint below
may only be filed in the RTC of Bacolod City, the court of the place where
On August 6, 2006, the petitioners, who were then residing in Los Angeles, they reside in the Philippines.
California, United States of America (USA), executed their respective
Special Powers of Attorney6 in favor of Attorney Eldrige Marvin B. Aceron
The respondents further claimed that, the petitioners’ grant of Special The Court’s Ruling
Power of Attorney in favor of Atty. Aceron notwithstanding, the said
complaint may not be filed in the court of the place where Atty. Aceron The petition is denied.
resides, i.e., RTC of Quezon City. They explained that Atty. Aceron, being
merely a representative of the petitioners, is not the real party in interest
Contrary to the CA’s disposition, the petitioners maintain that their
in the case below; accordingly, his residence should not be considered in
complaint for collection of sum of money against the respondents may be
determining the proper venue of the said complaint.
filed in the RTC of Quezon City. Invoking Section 3, Rule 3 of the Rules of
Court, they insist that Atty. Aceron, being their attorney-in-fact, is deemed
The CA Decision a real party in interest in the case below and can prosecute the same
before the RTC. Such being the case, the petitioners assert, the said
On August 28, 2008, the CA rendered the herein Decision, 14 which annulled complaint for collection of sum of money may be filed in the court of the
and set aside the Orders dated April 12, 2007 and August 27, 2007 of the place where Atty. Aceron resides, which is the RTC of Quezon City.
RTC of Quezon City and, accordingly, directed the dismissal of the
complaint filed by the petitioners. The CA held that the complaint below On the other hand, the respondents in their Comment 18 assert that the
should have been filed in Bacolod City and not in Quezon City. Thus: petitioners are proscribed from filing their complaint in the RTC of Quezon
City. They assert that the residence of Atty. Aceron, being merely a
As maybe clearly gleaned from the foregoing, the place of residence of the representative, is immaterial to the determination of the venue of the
plaintiff’s attorney-in-fact is of no moment when it comes to ascertaining petitioners’ complaint.
the venue of cases filed in behalf of the principal since what should be
considered is the residence of the real parties in interest, i.e., the plaintiff The petitioners’ complaint should
or the defendant, as the case may be. Residence is the permanent home – have been filed in the RTC of
the place to which, whenever absent for business or pleasure, one intends Bacolod City, the court of the place
to return. Residence is vital when dealing with venue. Plaintiffs, herein where the respondents reside, and
private respondents, being residents of Los Angeles, California, U.S.A., not in RTC of Quezon City.
which is beyond the territorial jurisdiction of Philippine courts, the case
should have been filed in Bacolod City where the defendants, herein
It is a legal truism that the rules on the venue of personal actions are fixed
petitioners, reside. Since the case was filed in Quezon City, where the
for the convenience of the plaintiffs and their witnesses. Equally settled,
representative of the plaintiffs resides, contrary to Sec. 2 of Rule 4 of the
however, is the principle that choosing the venue of an action is not left to
1997 Rules of Court, the trial court should have dismissed the case for
a plaintiff’s caprice; the matter is regulated by the Rules of Court. 19
improper venue.15

The petitioners’ complaint for collection of sum of money against the

The petitioners sought a reconsideration of the Decision dated August 28,
respondents is a personal action as it primarily seeks the enforcement of a
2008, but it was denied by the CA in its Resolution dated February 20,
contract. The Rules give the plaintiff the option of choosing where to file
2009.16
his complaint. He can file it in the place (1) where he himself or any of
them resides, or (2) where the defendant or any of the defendants resides
Hence, the instant petition. or may be found. The plaintiff or the defendant must be residents of the
place where the action has been instituted at the time the action is
Issue commenced.20

In the instant petition, the petitioners submit this lone issue for this However, if the plaintiff does not reside in the Philippines, the complaint in
Court’s resolution: such case may only be filed in the court of the place where the defendant
resides. In Cohen and Cohen v. Benguet Commercial Co., Ltd., 21 this Court
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE held that there can be no election as to the venue of the filing of a
ERROR OF LAW WHEN IT RULED THAT THE COMPLAINT MUST BE complaint when the plaintiff has no residence in the Philippines. In such
DISMISSED ON THE GROUND THAT VENUE WAS NOT PROPERLY LAID. 17 case, the complaint may only be filed in the court of the place where the
defendant resides. Thus:
Section 377 provides that actions of this character "may be brought in any case, as distinguished from mere curiosity about the question involved. 25 A
province where the defendant or any necessary party defendant may real party in interest is the party who, by the substantive law, has the
reside or be found, or in any province where the plaintiff or one of the right sought to be enforced.26
plaintiffs resides, at the election of the plaintiff." The plaintiff in this action
has no residence in the Philippine Islands. Only one of the parties to the Applying the foregoing rule, it is clear that Atty. Aceron is not a real party
action resides here. There can be, therefore, no election by plaintiff as to in interest in the case below as he does not stand to be benefited or
the place of trial. It must be in the province where the defendant resides. injured by any judgment therein. He was merely appointed by the
x x x.22 (Emphasis ours) petitioners as their attorney-in-fact for the limited purpose of filing and
prosecuting the complaint against the respondents. Such appointment,
Here, the petitioners are residents of Los Angeles, California, USA while however, does not mean that he is subrogated into the rights of petitioners
the respondents reside in Bacolod City. Applying the foregoing principles, and ought to be considered as a real party in interest.
the petitioners’ complaint against the respondents may only be filed in the
RTC of Bacolod City – the court of the place where the respondents reside. Being merely a representative of the petitioners, Atty. Aceron in his
The petitioners, being residents of Los Angeles, California, USA, are not personal capacity does not have the right to file the complaint below
given the choice as to the venue of the filing of their complaint. against the respondents. He may only do so, as what he did, in behalf of
the petitioners – the real parties in interest. To stress, the right sought to
Thus, the CA did not commit any reversible error when it annulled and set be enforced in the case below belongs to the petitioners and not to Atty.
aside the orders of the RTC of Quezon City and consequently dismissed the Aceron. Clearly, an attorney-in-fact is not a real party in interest. 27
petitioners’ complaint against the respondents on the ground of improper
venue. The petitioner’s reliance on Section 3, Rule 3 of the Rules of Court to
support their conclusion that Atty. Aceron is likewise a party in interest in
In this regard, it bears stressing that the situs for bringing real and the case below is misplaced. Section 3, Rule 3 of the Rules of Court
personal civil actions is fixed by the Rules of Court to attain the greatest provides that:
convenience possible to the litigants and their witnesses by affording them
maximum accessibility to the courts.23 And even as the regulation of venue Sec. 3. Representatives as parties. – Where the action is allowed to be
is primarily for the convenience of the plaintiff, as attested by the fact that prosecuted and defended by a representative or someone acting in a
the choice of venue is given to him, it should not be construed to unduly fiduciary capacity, the beneficiary shall be included in the title of the case
deprive a resident defendant of the rights conferred upon him by the Rules and shall be deemed to be the real property in interest. A representative
of Court.24 may be a trustee of an expert trust, a guardian, an executor or
administrator, or a party authorized by law or these Rules. An agent acting
Atty. Aceron is not a real party in in his own name and for the benefit of an undisclosed principal may sue or
interest in the case below; thus, his be sued without joining the principal except when the contract involves
residence is immaterial to the venue things belonging to the principal. (Emphasis ours)
of the filing of the complaint.
Nowhere in the rule cited above is it stated or, at the very least implied,
Contrary to the petitioners’ claim, Atty. Aceron, despite being the that the representative is likewise deemed as the real party in interest.
attorney-in-fact of the petitioners, is not a real party in interest in the case The said rule simply states that, in actions which are allowed to be
below. Section 2, Rule 3 of the Rules of Court reads: prosecuted or defended by a representative, the beneficiary shall be
deemed the real party in interest and, hence, should be included in the
Sec. 2. Parties in interest. – A real party in interest is the party who stands title of the case.
to be benefited or injured by the judgment in the suit, or the party entitled
to the avails of the suit. Unless otherwise authorized by law or these Indeed, to construe the express requirement of residence under the rules
Rules, every action must be prosecuted or defended in the name of the on venue as applicable to the attorney-in-fact of the plaintiff would
real party in interest. (Emphasis ours) abrogate the meaning of a "real party in interest", as defined in Section 2
of Rule 3 of the 1997 Rules of Court vis-à-vis Section 3 of the same Rule. 28
Interest within the meaning of the Rules of Court means material interest
or an interest in issue to be affected by the decree or judgment of the On this score, the CA aptly observed that:
As may be unerringly gleaned from the foregoing provisions, there is
nothing therein that expressly allows, much less implies that an action
may be filed in the city or municipality where either a representative or an
attorney-in-fact of a real party in interest resides. Sec. 3 of Rule 3 merely
provides that the name or names of the person or persons being
represented must be included in the title of the case and such person or
persons shall be considered the real party in interest. In other words, the
principal remains the true party to the case and not the representative.
Under the plain meaning rule, or verba legis, if a statute is clear, plain and
free from ambiguity, it must be given its literal meaning and applied
without interpretation. xxx29 (Citation omitted)

At this juncture, it bears stressing that the rules on venue, like the other
procedural rules, are designed to insure a just and orderly administration
of justice or the impartial and even-handed determination of every action
and proceeding. Obviously, this objective will not be attained if the plaintiff
is given unrestricted freedom to choose the court where he may file his
complaint or petition. The choice of venue should not be left to the
plaintiff's whim or caprice. He may be impelled by some ulterior motivation
in choosing to file a case in a particular court even if not allowed by the
rules on venue.30

WHEREFORE, in consideration of the foregoing disquisitions, the petition

is DENIED. The Decision dated August 28, 2008 and Resolution dated
February 20, 2009 rendered by the Court of Appeals in CA-G.R. SP No.
101159 are AFFIRMED.

SO ORDERED.
 G.R. No. 187869, September 13, 2017 proposal "for the redevelopment of Agora Complex into a Modern
Integrated Terminal, Public Market, and Vegetable Landing Area." 7 The
TEODULFO E. LAO, JR., ROGER A. ABADAY, ZALDY O. OCON, AND redevelopment would be under a build-operate-transfer scheme. At the
ENRICO D. SALCEDO, Petitioners, v. LGU OF CAGAYAN DE ORO CITY, time, the City Mayor was Vicente Y. Emano (Mayor Emano). 8
MAYOR CONSTANTINO JARAULA, VICE MAYOR VICENTE T. EMANO,
CITY COUNCILOR RAMON TABOR, CITY COUNCILOR REYNALDO See's unsolicited proposal was the basis of a draft Build-Operate-Transfer
ADVINCULA, CITY COUNCILOR IAN MARK NACAYA, CITY (BOT) Contract,9 in which the project proponent was Mega Farm. 10 The City
COUNCILOR PRESIDENT ELIPE, CITY COUNCILOR EMMANUEL Council resolved not to object to the draft contract in its Resolution No.
ABEJUELA, CITY COUNCILOR ALFONSO GOKING, CITY COUNCILOR 8651-2007 dated June 25, 2007.11 However, the City Council deferred
ALDEN DACAL, CITY COUNCILOR ALEXANDER DACER, CITY consideration on the proposed Ordinance No. 2007-210, which authorized
COUNCILOR MARYCOR CALIZO, CITY COUNCILOR AARON NERI, the mayor to enter into the contract, and referred it to the Committee on
CITY COUNCILOR ADRIAN BARBA, CITY COUNCILOR IAN CAESAR Economic Enterprises.12
ACENAS, CITY COUNCILOR SIMEON LICAYAN, CITY COUNCILOR
KAREN VI POQUITA, CITY COUNCILOR DANTE PAJO, IN THEIR The Cagayan De Oro City Government caused the publication of an
PRIVATE AND/OR OFFICIAL CAPACITIES AND MEGA INTEGRATED Invitation to Qualify and to Bid for Comparative Proposal for the Agora
AGRO-LIVESTOCK FARM CORPORATION PRESIDENT ERWIN BRYAN Complex redevelopment in the Manila Standard Today on July 2, 2007,
SEE*, Respondents. July 9, 2007, and July 16, 2007. This Invitation was signed by Mayor
Emano13 and was supposedly based on Resolution No. 8651-2007. 14
DECISION
On October 24, 2007, the city Bids and Awards Committee issued
Resolution No. 41-2007, declaring that no bid was submitted to compete
LEONEN, J.: with Mega Farm's proposal.15

Republic Act No. 7160, otherwise known as the Local Government Code, On January 27, 2009, Mega Farm, through See, and the then newly
requires prior authorization from the sangguniang panlungsod, law, or elected Mayor Jaraula executed the Build-Operate-Transfer Contract for
ordinance, before a city mayor may sign a contract in behalf of the city. If the Redevelopment of Agora Cornplex (Agora Complex BOT
the city mayor has no authority from the sangguniang panlungsod to sign Contract).16 The terms and conditions of this Contract were allegedly
a contract, members of the sangguniang panlungsod have standing to file different from those in the draft contract in Resolution No. 8651-2007.
a case to have this contract declared null and void.
On March 19, 2009, petitioners filed their Complaint for Declaration of
This is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Nullity of the Re-Development of Agora Market and Terminal Contract
Court questioning the March 30, 2009 Resolution 2 and May 11, 2009 Under Build-Operate-Transfer (BOT) Scheme and All Ordinances,
Order3 of Branch 17, Regional Trial Court, Cagayan De Oro City.  This Resolutions and Motions of the City Council Relative Thereto with Prayer
petition is filed by Barangay Captain Enrico D. Salcedo (Salcedo) of Gusa, for Temporary Restraining Order (TRO) & Preliminary Prohibitory
Cagayan De Oro City and Cagayan De Oro City Councilors Teodulfo E. Lao, Injunction with Damages with the Regional Trial Court of Misamis
Jr. (Lao), Roger A. Abaday (Abaday), and Zaldy O. Ocon (Ocon) Oriental.17
(collectively, petitioners).4
This complaint was filed against City Government of Cagayan De Oro and
The Regional Trial Court denied petitioners' prayer for the issuance of a the incumbent Cagayan De Oro City officials, in their personal and official
temporary restraining order. It likewise dismissed their complaint for capacities: Mayor Jaraula; Vice Mayor Vicente Y. Emano; Councilors
declaration of nullity of the contract for the redevelopment of Agora Market Ramon Tabor, Reynaldo Advincula, Ian Mark Nacaya, President Elipe,
and Terminal entered into by Cagayan De Oro City Mayor Constantino Emmanuel Abejuela, Alfonso Goking, Alden Bacal, Alexander Dacer,
Jaraula (Mayor Jaraula) and MEGA Integrated Agro-Livestock Farm Marycor Calizo, Aaron Neri, Adrian Barba, Ian Caesar Acenas, Simeon
Corporation (Mega Farm) through its President Erwin Bryan See (See). 5 Licayan, Karen Vi Poquita, Dante Pajo; and Mega Farm and See. 18

On March 19, 2007, the City Council of Cagayan De Oro (City Council) In their complaint, petitioners, as public officers and in their personal
passed City Ordinance No. 10557-2007, 6 which approved See's unsolicited capacity, questioned the execution and the contents of the Agora Complex
BOT Contract. They alleged that it was issued in bad faith and with
fraudulent maneuvers between Mega Farm and the City Government of involving a constitutional issue.28
Cagayan De Oro.19
Public respondents also claimed that petitioners have no cause of action.
Petitioners further alleged that Mega Farm was unqualified to undertake They argued that while they were impleaded as the incumbent members of
the redevelopment of the Agora Complex as the construction and the City Council in their personal and official capacities, the ultimate facts,
remodeling of structures were not the primary purposes of the corporation. as alleged by petitioners, show that at the time the Ordinances were
They added that Mega Farm had no financial capacity to undertake the enacted in 2007, respondent city councilors had not yet been elected. 29
P250,000,000.00 project when it only had a paid-up capital of
P625,000.00.20 They also claimed that the provisions of the Agora Complex On their alternative prayer for a bill of particulars, public respondents
BOT Contract were infirm for being disadvantageous to the City requested for petitioners to specify the irreparable damage that would
Government of Cagayan De Oro.21 happen to the City Government of Cagayan De Oro City and its taxpayers,
and to quantify and define in monetary terms their ambiguous claim for
They prayed that the Agora Complex BOT Contract be declared null and moral and exemplary damages.30
void. They also prayed for moral and exemplary damages due to the other
city councilors' insulting behavior toward them during the deliberations for On March 25, 2009, the hearing on the prayer for temporary restraining
the initial draft of the build-operate-transfer contract and the Agora order commenced. A continuation of the hearing was scheduled on March
Complex BOT Contract, and for attorney's tees.22 Finally, they prayed for 30, 2009.31
the issuance of a temporary restraining order, alleging that the Agora
Complex BOT Contract would "result to irreparable damage to the [local Petitioners objected32 to the Motion to Dismiss, claiming that it was not
government unit] of Cagayan de Oro City and its constituent tax payers." 23 procedurally sound. They pointed out that the March 25, 2009 hearing,
which was supposedly on the issuance of the temporary restraining order,
The City Government and the public officials of Cagayan De Oro became a hearing on the issues raised in the motion to dismiss. 33
(collectively, public respondents) filed an Urgent Omnibus Motion: a) To
Dismiss; orb) For a Bill of Particulars.24 In their Motion, they alleged that Petitioners alleged that Section 3 of Republic Act No. 8975 did not apply to
the complaint should be dismissed since the Regional Trial Court had not the Agora Complex BOT Contract as it was not a national government
acquired jurisdiction over the complaint, as petitioners did not pay the contract but a local government contract. Further, even if it was not a local
required docket.fees for the damages they had allegedly suffered. 25 government contract, it is within the exception contemplated in the law, as
it involved constitutional violations.34 Moreover, it was an urgent issue
Further, they claimed that the Regional Trial Court did not have jurisdiction considering that the Agora Complex BOT Contract had not ripened into a
over the issue of the complaint. They reasoned that Republic Act No. contract because of Mayor Jaraula's lack of authority to enter into it and
897526 does not allow the Regional Trial Court to issue temporary because of Mega Farm's lack of financial capacity to undertake the
restraining orders against the government or any entity, acting under the project.35
government's direction to stop the following acts:
On March 30, 2009, the Regional Trial Court issued a Resolution 36 denying
the issuance of a temporary restraining order and dismissing the
(a) Acquisition, clearance and development of the right-of-way and/or complaint.
site or location of any national government project;

(b) Bidding or awarding of contract/project of the national government The Regional Trial Court held that the Agora Complex BOT Contract, which
as defined under Section 2 hereof; was covered by Republic Act No. 6975, as amended by Republic Act No.
7718, was considered a national government project under Section 2 37 of
(c) Commencement, prosecution, execution, implementation, Republic Act No. 8975. Due to this classification of the project and
operation of any such contract or project; petitioners' failure to prove that the exceptions applied, the trial court was
prohibited from issuing temporary restraining orders or preliminary
(d) Termination or rescission of any such contract/project; and injunctions over the project.38
(e) The undertaking or authorization of any other lawful activity
necessary for such contract/project. 27 It found that petitioners' basis in requesting for the issuance of a
temporary restraining order-that the Agora Complex BOT Contract was
Furthermore, the issue did not fall within the exception under Section 3 of entered into through gross, wanton, and fraudulent maneuvers-was not a
Republic Act No. 8975, as it did not involve a matter of extreme urgency constitutional issue. There was no showing that petitioners' rights had
been violated and that there was a "possibility of irreparable damage or have been detetmined in the pre-qualification stage, but this was not
injury."39 Furthermore, it held that since petitioners were not parties to the done.52
contract, they could not file the complaint, not even as taxpayers because
the Agora Complex BOT Contract did not involve any appropriation of Finally, petitioners argue that they have legal standing to file the
public funds.40 complaint. They claim that "the principle of lack of personality presupposes
existence of a valid or voidable contract and the subject matter of the
Petitioners filed their Motion for Reconsideration, 41 in which they contract is private in nature."53 Since the Agora Complex BOT Contract is
maintained that even if Republic Act No. 8975 prohibited Regional Trial null and void from the beginning, then the principle of locus standi is
Courts from ruling on temporary restraining orders, "the power to try the inapplicable. Petitioners argue that they can file the case not merely as
main case and render judgment remains with the [Regional Trial taxpayers but as elected officers who look out for the funds of the city.
Courts]."42 Petitioners also insisted that the Agora Complex BOT Contract Additionally, they allege that while there is no actual disbursement of
was unconstitutional and that they had locus standi because as elected city P250,000,000.00 for the project, the money represents the profit that
councilors, they were the voice of the people and the "watch-dog" against would be generated from the public once the redeveloped Agora Complex
possible abuses. Finally, they argued that they could file the complaint as is operational.54
taxpayers since the Agora Complex BOT Contract involved public funds
amounting to P250,000,000.00.43 This Court issued a Resolution55 dated June 10, 2009, requiring
respondents to comment on the Petition for Review within 10 days from its
Petitioners' Motion for Reconsideration was denied by the Regional Trial notice.
Court, which ruled that the validity of the Agora Complex BOT Contract
was not a constitutional issue and that petitioners were "not parties to the On August 6, 2009, private respondents Mega Farm and See filed their
contract where they may suffer actual or threatened injury." 44 Comment.56

On June 3, 2009, petitioners filed their Petition for Review 45 on Certiorari They argue that it was improper for petitioners to directly file this petition
under Rule 45 of the Rules of Court directly with this Court. with this Court, as it involves both questions of fact and law. 57 Moreover,
the Verification and Certification of Non-Forum Shopping attached to this
In their Petition for Review, petitioners claim that the Regional Trial Court petition is improperly subscribed.58 They further argue that there was no
erroneously dismissed their ease on the ground of lack of error on the part of the Regional Trial Court when it denied the temporary
jurisdiction.46 They argue that what is prohibited by Republic Act No. 8975 restraining order and dismissed the entire case. Private respondents Mega
is only the issuance of temporary restraining orders or writs of preliminary Farm and See allege that in dismissing the case for the trial court's lack of
injunction by the Regional Trial Court. Thus, the Regional Trial Court still jurisdiction and petitioners' lack of legal standing, the Regional Trial Court
has jurisdiction over the main cause of action, namely, the declaration of in effect dismissed the complaint based on lack of, or failure to state, a
nullity of the Agora Complex BOT Contract. 47 cause of action.59

Further, petitioners allege that the Agora Complex BOT Contract is Furthermore, the constitutionality of the law or the City Ordinance
unconstitutional as its terms are monopolistic and is in violation of Article connected to the Agora Complex BOT Contract is not actually the lis
III, Section 1 of the Constitution48 and the principle of free enterprise. In mota of the case but the validity of the contract itself. 60 In addition, they
particular, the provision in the Agora Complex BOT Contract regarding "the point out that the prayer for temporary restraining order has already
exclusivity of Fruits and Vegetables Landing and the Bus Terminal" 49 is become moot, since ordinances have been issued, the contract has been
contrary to the rulit1g of this Court in Lucena Grand Central Terminal, Inc. signed, and the construction has begun. 61
v. JAC Liner, Inc.50
Private respondents Mega Farm and See claim that petitioners have
Petitioners further aver that the Regional Trial Court failed to find that the no locus standi, as they are not businessmen, fruit or vegetable vendors,
Agora Complex BOT Contract is null and void from the beginning, or jeepney operators who will be  directly affected by their alleged
considering that Mayor Emano and Mayor Jaraula had no authority to enter unconstitutional part of the contract the exclusive use of the Eastbound
into this contract because the City Council had not issued any ordinance Terminal and the exclusive disposition and drop-off of vegetables in
allowing them to do so.51 Agora.62

Moreover, they claim that Mega Farm lacks financial capability to undergo Neither can they sue as taxpayers, as there is no appropriation of public
the project. The determination of Mega Farm's financial capability should funds. Instead, what is apparent in their complaint and in the present
petition is that they are filing based on their positions as city councilors file rejoinder.
and as barangay captain of Gusa, Cagayan De Oro City. Private
respondents Mega Farm and See allege that petitioners cannot sue as The issues for this Court's resolution are:
public officers because they failed to show that they have material interest
in the project.63 First, whether or not it was proper for Teodulfo E. Lao, Jr., Roger A.
Abaday, Zaldy O. Ocon, and Enrico D. Salcedo to file a Petition for Review
Meanwhile, public respondents filed a Motion for Extension of Time, under Rule 45 directly with this Court;
praying for an additional 20 days to file their comment to the Petition for
Review.64 Second, whether or not Teodulfo E. Lao, Jr., Roger A. Abaday, Zaldy O.
Ocon, and Enrico D. Salcedo's Verification and Certification of Non-Forum
This Court issued a Resolution65 dated August 26, 2009, noting Mega Farm Shopping is fatally defective as to warrant the dismissal of the Petition for
and See's Comment and granting public respondents' motion. Review;

On August 24, 2009, public respondents filed their Comment 66 to the Third, whether or not the Regional Trial Court correctly denied the
petition. issuance of the temporary restraining order against the Agora Complex
Build-Operate-Transfer Contract; and
Public respondents allege that Republic Act No. 8975 prohibits the Regional
Trial Court from issuing temporary restraining orders unless an urgent Finally, whether or not Teodulfo E. Lao, Jr., Roger A. Abaday, Zaldy O.
constitutional issue is involved, which petitioners failed to show. 67 They Ocon, and Enrico D. Salcedo have locus standi to file a complaint to have
also claim that petitioners' complaint was dismissed not exclusively on lack the Agora Complex Build-Operate-Transfer Contract declared null and void.
of jurisdiction but on the premise that they failed to show that they were
the proper parties to question the Agora Complex BOT Contract. 68 Because I
of this, it is misleading for petitioners to claim that the dismissal of the
case was based only on Republic Act No. 8975. 69 Under Rule 41, Section 2 of the Rules of Court, there are three (3) modes
of appeal from a judgment or final order of the Regional Trial Court:
They further argue that petitioners failed to show that the execution of the Section 2. Modes of appeal. -
Agora Complex BOT Contract caused them direct, personal, and
substantial injury. They were not parties to the contract, or fruit or
(a) Ordinary appeal. - The appeal to the Court of Appeals in cases
vegetable vendors, or public utility operators who would be directly
decided by the Regional Trial Court in the exercise of its original
affected by the exclusivity of the Eastbound Terminal and of the drop-off
jurisdiction shall be taken by filing a notice of appeal with the court
of vegetables in Agora. Neither could they complain as taxpayers, as there
which rendered the judgment or final order appealed from and
was no disbursement of public funds required for the project. 70
serving a copy thereof upon the adverse party. No record on
appeal shall be required except in special proceedings and other
On September 2, 2009, petitioners filed their Reply 71 to public
cases of multiple or separate appeals where the law or these Rules
respondents' Comment. On September 18, 2009, they filed their Reply to
so require. In such cases, the record on appeal shall be filed and
private respondent's Comment.72 Petitioners claim that their petition
served in like manner.
involves only questions of law and is, thus, cognizable by this Court. 73 They
also claimed that the Verification and Certification of Non-Forum Shopping (b) Petition for review. - The appeal to the Court of Appeals in cases
is sufficient, having been duly subscribed and sworn to before a notary decided by the Regional Trial Court in the exercise of its appellate
public.74 They reiterate that the Agora Complex BOT Contract is void, there jurisdiction shall be by petition for review in accordance with Rule
being no ordinance issued by the City Council of Cagayan De Oro 42.
authorizing Mayor Jaraula to sign it. The contract being void, the principle
of standing is inapplicable. Thus, they may question its validity, even if (c) Appeal by certiorari. - In all cases where only questions of law are
they are not parties to the contract. 75 raised or involved, the appeal shall be to the Supreme Court by
petition for review on certiorari in accordance with Rule 45.
This Court issued a Resolution dated October 14, 2009 76 noting public Direct resort to this Court by way of petition for review on certiorari is
respondents' Comment and petitioners' Replies to public and private permitted when only questions of law are involved. 77
respondents' Comments. This Court also expunged from the records the
rejoinder filed by public respondents since it lacked a motion for leave to There is a question of law when there is doubt as to which law should be
applied to a particular set of facts. 78 Questions of law do not require that instrument, document or transaction who is personally known to
the truth or falsehood of facts be determined or evidence be received and the notary public and who personally knows the individual, or of
examined.79 Matters of evidence more properly pertain to the trial courts two credible witnesses neither of whom is privy to the instrument,
as the trier of facts and the appellate courts as the reviewer of facts. 80 document or transaction who each personally knows the individual
and shows to the notary public documentary identification.
As correctly pointed out by public respondents, among the four (4) errors
that petitioners assign to the Regional Trial Court, two (2) are questions of Here, neither the petition's Verification and Compliance with Non Forum
fact. The nullity of the Agora Complex BOT Contract due to the mayor's Shopping Law83 nor its Affidavit of Proof of Service84 contains any
alleged lack of authority to sign it and the local government's alleged statement that their respective affiants were personally known to the
failure to determine the project proponent's financial capacity require the notary public or have presented competent evidence of identity pursuant
reception and examination of evidence. These issues are questions of fact to Rule II, Section 12 of the 2004 Rules on Notarial Practice. The omission
not cognizable in a petition for review under Rule 45. is also evident in the Affidavit of Proof of Service 85 attached to petitioners'
Reply. In all these instances, the notary public was Atty. Manolo Z.
Nonetheless, whether or not the Regional Trial Court correctly denied the Tagarda, Sr. (Atty. Tagarda), who also serves as counsel for petitioners.
issuance of the temporary restraining order and dismissed the complaint
due to its lack of jurisdiction and petitioners' standing is a question of law Notaries public must observe "the highest degree of care" in ensuring
which may be resolved by this Court. compliance with the basic requirements of the Notarial Rules. 86 Notaries
public who fail to indicate in notarized documents that the affiants are
personally known to them or have presented competent evidence of their
II
identities violate not only the Notarial Rules, but also Canon 1, Rule 1.01
of the Code of Professional Responsibility:
As pointed out by private respondents, 81 the petition's Verification and
A notary public exercises duties calling for carefulness and faithfulness.
Certification of Non-Forum Shopping is improperly notarized, there being
Notaries must inform themselves of the facts they certify to; most
no statement that the affiants were either personally known to the notary
importantly, they should not take part or allow themselves to be part of
public or that competent evidence of their identities was presented.
illegal transactions. In line with this mandate, a notary public should not
notarize a document unless the person who signed the same is the very
Under the 2004 Rules on Notarial Practice (Notarial Rules), an individual
person who executed and personally appeared before him to attest to the
who appears before a notary public to take an oath or affirmation of a
contents and the truth of what are stated therein. By failing in this regard,
document must, among others, be personally known to or be identified by
the notary public permits a falsehood which does not only transgress the
the notary public through competent evidence of identity. 82 Rule II, Section
Notarial Rules but also Rule 1.01, Canon 1 of the Code of Professional
12 of the Notarial Rules defines "competent evidence of identity" as:
Responsibility, which provides that "[a] lawyer shall not engage in
Section 12. Competent Evidence of Identity. - The phrase "competent
unlawful, dishonest, immoral or deceitful conduct." Verily, a notarized
evidence of identity" refers to the identification of an individual based on:
document is, by law, entitled to full faith and credit upon its face; and it is
for this reason that a notary public must observe with utmost care the
(a) at least one current identification document issued by an official basic requirements in the performance of his duties; otherwise, the
agency bearing the photograph and signature of the individual, public's confidence in the integrity of a notarized  document would be
such as but not limited to, passport, driver's license, Professional undermined.87 (Citations omitted)
Regulations Commission ID, National Bureau of Investigation
clearance, police clearance, postal ID, voter's ID, Barangay Atty. Tagarda should show cause why he should not be made
certification, Government Service and Insurance System (GSIS) e- administratively liable for failure to comply with the Notarial Rules and the
card, Social Security System (SSS) card, Philhealth card, senior Code of Professional Responsibility.
citizen card, Overseas Workers Welfare Administration (OWWA) ID,
OFW ID, seaman's book, alien certificate of registration/immigrant As for the petition itself, the defect of the failure to show that competent
certificate of registration government office ID, certification from evidence of identity was presented may be overlooked in view of the
the National Council for the Welfare of Disabled Persons (NCWDP), merits of the case.88
Department of Social Welfare and Development (DSWD)
certification; or III

(b) the oath or a:ffinnation of one credible witness not privy to the The Regional Trial Court correctly denied the issuance of a temporary
restraining order against the Agora Complex BOT Contract.
 same, without prejudice to any liability that the guilty party may incur
Contrary to the claim of petitioners, the Regional Trial Court did not under existing laws.
dismiss the complaint on the basis of lack of jurisdiction pursuant to
Among the "national government projects" covered by the prohibition in
Republic Act No. 8975. It only denied the issuance of a temporary
Section 3 of Republic Act No. 8975 are projects covered by Republic Act
restraining order on this basis. It is well settled that despite the provisions
No. 6957, as amended, othe1wise known as the Build-Operate-Transfer
of Republic Act No. 8975, trial courts still retain jurisdiction over the main
Law:
cause of action to nullify or implement a national government contract. 89
Section 2. Definition of Terms. -   
 
Republic Act No. 8975 expressly prohibits the issuance by all courts, other
than this Court, of any temporaryrestraining orders, preliminary (a) "National government projects" shall refer to all current and future
injunctions, or preliminary mandatory injunctions against national national government infrastructure, engineering works and service
government projects: contracts, including projects undertaken by government-owned and
Section 3. Prohibition on the Issuance of Temporary Restraining Orders, -controlled corporations, all projects covered by Republic Act No.
Preliminary Injunctions and Preliminary Mandatory Injunctions. - No court, 6957, as amended by Republic Act No. 7718, otherwise known as
except the Supreme Court, shall issue any temporary restraining order, the Build Operate-and-Transfer Law, and other related and
preliminary injunction or preliminary mandatory injunction against the necessary activities, such as site acquisition, supply and/or
government, or any of its subdivisions, officials or any person or entity, installation of equipment and materials, implementation,
whether public or private, acting under the government's direction, to construction, completion, operation, maintenance, improvement,
restrain, prohibit or compel the following acts: repair and rehabilitation, regardless of the source of funding.
(Emphasis supplied)
(a) Acquisition, clearance and development of the right-of-way and/or That Build-Operate-Transfer projects of local government units are covered
site or location of any national government project; by Republic Act No. 8975 was affirmed in GV Diversified International, Inc.
v. Court of Appeals.90 The issuance of a temporary restraining order
(b) Bidding or awarding of contract/project of the national government
against the opening of sealed bids for a "Build and Transfer Contract" with
as defined under Section 2 hereof;
Cagayan De Oro City was found to be in violation of Republic Act No.
(c) Commencement, prosecution, execution, implementation, 8975:
operation of any such contract or project; Based on [Sections 2, 3 and 4 of Republic Act No. 8975], a preliminary
injunction issued by any court, other than the Supreme Court, for the
(d) Termination or rescission of any such contract/project; and purpose of restraining the bidding or awarding of a national government
projectis void.
(e) The undertaking or authorization of any other lawful activity
necessary for such contract/project.
In this case, the preliminary injunction issued by the RTC sought to
restrain the City of Cagayan de Oro from opening the sealed bids for the
This prohibition shall apply in all cases, disputes or controversies instituted South Diversion Road and PCDG Cargo Bridge Project. The said venture,
by a private party, including but not limited, to cases filed by bidders or which is covered by the Build-Operate-and-Transfer Law, is clearly a
those claiming to have rights through such bidders involving such national government project within the meaning of Rep. Act No. 8975.
contract/project. This prohibition shall not apply when the matter is of Therefore, the subject writ of preliminary injunction is, by operation of law,
extreme urgency involving a constitutional issue, such that unless a void and of no force and effect.
temporary restraining order is issued, grave injustice and irreparable
injury will arise. The applicant shall file a bond, in an amount to be fixed Consequently, the Court of Appeals, in lifting the preliminary injunction
by the court, which bond shall accrue in favor of the government if the issued by the RTC, did not commit grave abuse of discretion. On the
court should finally decide that the applicant was not entitled to the relief contrary, the Court of Appeals in fact served the purpose of Rep. Act No.
sought. 8975. The lifting of the subject preliminary injunction paved the way for
the opening of the sealed bids pursuant to the City's invitation to qualified
If after due hearing the court finds that the award of the contract is null bidders. As a result, the implementation of the aforesaid infrastructure
and void, the court may, if appropriate under the circumstances, award project continued without any undue and costly delay, as expressly
the contract to the qualified and winning bidder or order a rebidding of the mandated by Rep. Act No. 8975.91
Here, as found by the Regional Trial Court, the Agora Complex BOT
Contract falls within the prohibition in Republic Act No. 8975: Thus, to be entitled to the writ of preliminary injunction, the private
The Jaraula-See BOT Contract must be read in the light of RA 8975 and RA respondent needs only to show that it has the ostensible right to the
7718. The subject project - the redevelopment of the Agora market was final relief prayed for in its complaint[.]95 (Emphasis in the original)
admitted by plaintiff to be a BUILD-OPERATE-TRANSFER scheme between
Here, the alleged breach of petitioners' ostensible rights was neither clear
the City Government and that of the project proponent, hence, the
nor compelling as to warrant an exception from Republic Act No. 8975.
definition of "national government projects" under SEC. 2 of RA 8975 is
Petitioners' claim that the Agora Complex BOT Contract would require that
not limited to current and future national government infrastructure,
the Agora Complex be made an exclusive terminal for public utility vehicles
engineering works and service contracts including projects undertaken by
in violation of the "constitutional right of citizens to free enterprise" 96 does
government-owned or [-]controlled corporations, but ALL PROJECT
not entitle them to a temporary restraining order. Apart from mere
COVERED by Republic Act No. 6975 as amended by Republic Act No. 7718
allegations, they have not pointed to any grave injustice or irreparable
otherwise known as Build-Operate-Transfer Law[.] 92 (Emphasis the
injury to constitutional rights that would be sustained if no injunctive
original)
reliefs are issued against the execution of the Agora Complex BOT
The only exception when a. court other than this Cmni may grant Contract. The trial court correctly denied the prayer for a temporary
injunctive relief is if it involves a matter of extreme urgency, involving a restraining order.
constitutional issue, such that unless a ternporarestraining order is issued,
grave injustice and irreparable injury will arise.93 IV

The party seeking a writ of preliminary injunction or temporary restraining The dismissal by the trial court of the complaint due to petitioners' lack of
order as an exception to Republic Act No. 8975 must discharge the burden personality to file suit is erroneous. Petitioners, as members of the City
of proving a clear and compelling breach of a constitutional provision: Council of Cagayan De Oro, may file a case to question a contract entered
Mere allegation or invocation that constitutionally protected rights were into by the city mayor allegedly without the City Council's authority.
violated will not automatically result in the issuance of injunctive relief.
The plaintiff or the petitioner should discharge the burden to show a clear Rule 3. Section 2 of the Rules of Court defines the real party in interest
and compelling breach of a constitutional provision. Violations of that may institute a case:
constitutional provisions are easily alleged, but trial courts should Section 2. Parties in interest. - A real party in interest is the party who
scrutinize diligently and deliberately the evidence showing the existence of stands to be benefited or injured by the judgment in the suit, or the party
facts that should support the conclusion that a constitutional provision is entitled to the avails of the suit. Unless otherwise authorized by law or
clearly and convincingly breached. In case of doubtno injunctive relief these Rules, every action must be prosecuted or defended in the name of
should issue. In the proper cases, the aggrieved party may then avail itself the real party in interest.
of special civil actions and elevate the matter. 94
The real party in interest which may file a case, questioning the validity of
While conclusive proof of the right to be protected is not necessary, there a contract entered into by the city mayor, who is alleged to have no
must still be a clear presentation of the existing basis of facts which shows authority to do so, is the city itself. It is the local government unit which
the right being threatened: stands to be injured or benefited by any judgment that may be made in
Conclusive proof of the existence of the right to be protected is not this case. The city councilors merely represent the city in the suit. As
demanded, however, for, as the Court has held in Saulog v. Court of explained in City Council of Cebu v. Cuizon:97
Appeals, it is enough that: It seems clearly self-evident from the foregoing recitation of the
. . . for the court to act, there must be an existing basis of facts undisputed antecedents and factual background that the lower court
affording a present right which is directly threatened by an act gravely erred in issuing its dismissal order on the ground of plaintiffs'
sought to be enjoined. And while a clear showing of the right alleged lack of interest or legal standing as city councilors or as taxpayers
claimed is necessary, its existence need not be conclusively to maintain the case at bar. The lower court founded its erroneous
established. In fact, the evidence to be submitted to justify preliminary conclusion on the equally erroneous premise of citing and applying Article
injunction at the hearing thereon need not be conclusive or complete but 1397 of the Civil Code that "the action for the annulment of contracts may
need only be a "sampling" intended merely to give the court an idea of the be instituted (only) by all who are thereby obliged principally or
justification for the preliminary injunction pending the decision of the case subsidiarily."
on the merits. This should really be so since our concern here
involves only the propriety of the preliminary injunction and not The lower court's fundamental error was in treating plaintiffs' complaint as
the merits of the case still pending wjth the trial court. a personal suit on their own behalf and applying the test in such cases that
plaintiffs should show personal interest as parties who would be benefited nominal party plaintiff for the benefit of the corporation which is the real
or injured by the judgment sought. Plaintiffs' suit is patently not a personal party in interest, more so may plaintiffs as city councilors exclusively
suit. Plaintiffs clearly and by the express terms of their complaint filed the empowered by the city charter to "make all appropriations for the
suit as a representative suit on behalf and for the benefit of the city of expenses of the government of the city" and who were the very source of
Cebu.98 (Citation omitted) the authority granted to the city mayor to enter into the questioned
transactions which authority was later revoked by them, as per the
City councilors may file a suit for the declaration of nullity of a contract on
allegations of the complaint at bar, be deemed to possess the necessary
the basis that the city mayor had no authority to do so because the city
authority, and interest, if not duty, to file the present suit on behalf of the
mayor's authority to bind the city to obligations must emanate from the
City and to prevent the disbursement of city funds under contracts
City Council. Under Title III, Chapter III, Article I, Section 455(b)(l)(vi) of
impugned by them to have been entered into by the city mayor without
Republic Act No. 7160, otherwise known as the Local Government Code,
lawful authority and in violation of law.100 (Citations omitted)
the city mayor may sign all bonds, contracts, and obligations on behalf of
a city only upon authority of the sanggumang panlungsod or pursuant to Here, it is undisputed that petitioners are members of the City Council of
law or ordinance: Cagayan De Oro. They have alleged that public respondent Mayor Jaraula
Section 455. Chief Executive: Powers, Duties and Compensation. - entered into the Agora Complex BOT Contract without being authorized by
the City Cquncil of Cagayan De Oro, in violation of the requirement in Title
.... III, Chapter III, Article I, Section 455(b)(l)(vi) of the Local Government
Code. Clearly, as they are part of the very body in which authority is
(b) For efficient, effective and economical governance the purpose of allegedly being undermined by the city mayor, they have the right and
which is the general welfare of the city and its inhabitants pursuant to duty to question the basis of the mayor's authority to sign a contract which
Section 16 of this Code, the city mayor shall: binds the city.

(1) Exercise general supervision and control over all programs, projects, WHEREFORE, the petition is PARTIALLY GRANTED. On the dismissal of
services, and activities of the city government, and in this connection, the Complaint for the Declaration of Nullity of the Redevelopment of Agora
shall: Market and Terminal Contract Under Build-Operate-Transfer Scheme and
     All Ordinances, Resolutions and Motions of the City Council Relative
.... Thereto with Prayer for Temporary Restraining Order and Preliminary
Prohibitory Injunction with Damages, the March 30, 2009 Resolution and
(vi) Represent the city in all its business transactions and sign in its behalf May 11, 2009 Order of the Regional Trial Court in Civil Case No. 20090-
all bonds, contracts, and obligations, and such other documents upon 076 are REVERSED. The denial of the jssuance of a Temporary
authority of the sangguniang panlungsod or pursuant to law or Restraining Order and/or Writ of Preliminary Prohibitory Injunction
ordinance[.] is AFFIRMED. Let this case be REMANDED to the Regional Trial Court of
origin for further proceedings.
The requirement of the sangguniang panlungsod's prior authority is a
measure of check and balance on the powers of the city mayor:
Let a copy of this Decision be FURNISHED the Office of the Bar Confidant
Yet, this is obviously not the effect Congress had in mind when it required,
for the filing of the appropriate action against Atty. Manalo Z. Tagarda, Sr.
as a condition to the local chief executive's representation of the local
for possible violation of the 2004 Rules of Notarial Practice and the Code of
government unit in business transactions, the prior authorization of
Professional Responsibility, to be repdocketed as a separate administrative
the sanggunian concerned. The requirement was deliberately added as a
action.
measure of check and balance, to temper the authority of the local chief
executive, and in recognition of the fact that the corporate powers of the
SO ORDERED.
local government unit are wielded as much by its chief executive as by its
council.99
As the City Council is the source of the mayor's power to execute contracts
for the city, its members have the authority, interest, and even duty to file
cases in behalf of the cityto restrain the execution of contracts entered into
in violation of the Local Government Code:
Under such circumstances. in the same manner that a stockholder of a
corporation is permitted to institute derivative or representative suits as
 G.R. No. 196020, April 18, 2018 November 29, 1985, and disconnected Marvex's electric service when it
did not pay.7
MANILA ELECTRIC COMPANY, VICENTE MONTERO, MR. BONDOC,
AND MR. BAYONA, Petitioners, v. NORDEC PHILIPPINES AND/OR On December 23, 1986, Nordec, the new owner of Marvex, 8 sued Meralco
MARVEX INDUSTRIAL CORP. REPRESENTED BY ITS PRESIDENT, for damages with prayer for preliminary mandatory injunction with Branch
DR. POTENCIANO R. MALVAR, Respondents. 85, Regional Trial Court, Quezon City.9 Likewise, impleaded as defendants
were Meralco's legal officer, Vicente Montero, and two (2) Meralco
G.R. No. 196116, April 18, 2018 employees, Mr. Bondoc and Mr. Bayona.10 It alleged that Meralco's service
inspectors conducted the 1985 inspections without its consent or approval.
NORDEC PHILIPPINES REPRESENTED BY ITS PRESIDENT, DR. Following the inspections, Meralco's inspectors gave an unnamed Nordec
POTENCIANO R. MALVAR, Petitioner, v. MANILA ELECTRIC employee a Power Field Order that did not mention the alleged defects in
COMPANY, VICENTE MONTERO, MR. BONDOC, AND MR. the metering devices. Nordec further claimed that the parties exchanged
BAYONA, Respondents. letters on the alleged unregistered electric bill, and that it requested a
recomputation, which Meralco denied in its April 25, 1986 letter. However,
in May 1986, Meralco asked Nordec to show the basis for its recomputation
DECISION
request, to which Nordec complied in its June 10, 1986 letter. On August
14, 1986, Meralco required Nordec to pay P371,919.58 for the
LEONEN, J.: unregistered electricity bill. Nordec then informed Meralco of the pending
resolution of the recomputation. Nordec claimed that Meralco then
A distribution utility is mandated to strictly comply with the legal requisites disconnected its service without prior notice on December 18, 1986,
before disconnecting an electric supply due to the serious consequences resulting to loss of income and cancellation of other business
this disconnection may have on the consumer. opportunities.11

These are two (2) Petitions for Review on Certiorari 1 under Rule 45 of the In its defense, Meralco claimed that the 1985 inspections had been
Rules of Court, both assailing the January 21, 2011 Decision 2 and March 9, conducted in the presence of Nordec's representatives. Further, Meralco
2011 Resolution3 of Court of Appeals in CA-G.R. CV No. 85564. The Court had repeatedly warned Nordec of service disconnection in case of failure to
of Appeals reversed and set aside the June 15, 2005 Decision 4 of Branch pay the differential bill. Finally, it averred that there was no contractual
85, Regional Trial Court, Quezon City in Civil Case No. Q-49651. It ordered relation between Nordec and Marvex, and that Nordec and its president,
Manila Electric Company (Meralco) to pay Nordec Philippines (Nordec) the Dr. Potenciano Malvar (Dr. Malvar), failed to show proof that they were
amounts of P5,625.00, representing overbilling for November 23, 1987; authorized to sue on Marvex's behalf.12
P200,000.00 as exemplary damages; P100,000.00 as attorney's fees; and
costs of suit. On January 22, 1987, the Regional Trial Court issued a writ of preliminary
injunction directing Meralco to restore Nordec's electric supply. 13
Meralco was contracted to supply electricity to Marvex Industrial
Corporation (Marvex) under an Agreement for Sale of Electric Energy, with On November 23, 1987, Meralco conducted another inspection of Nordec's
Service Account No. 9396-3422-15.5 It installed metering devices at premises in the presence of Nordec's president, Dr. Malvar. The inspecting
Marvex's premises on January 18, 1985. Marvex was billed according to group observed that there were irregularities in Nordec's metering devices,
the monthly electric consumption recorded in its meter. 6 as they continued to register power consumption even though its entire
power supply equipment was turned off. Meralco offered to reimburse
On May 29, 1985, Meralco service inspectors inspected Marvex's electric Nordec's excess bill of P5,625.10, but Nordec rejected this offer. 14
metering facilities and found that the main meter terminal and cover seals
had been tampered with. During a second inspection on September 18, Nordec filed a second supplemental complaint on January 4, 1991, praying
1985, Meralco found that the metering devices were tampered with again. that Meralco be declared guilty of tampering, and be made to refund its
Subsequently, Meralco assessed Marvex a differential billing of excess bill of not less than P5,625.10. 15
P371,919.58 for January 18, 1985 to May 29, 1985, and P124,466.71 for
June 17, 1985 to September 18, 1985, in the total amount of In its June 15, 2005 Decision,16 the Regional Trial Court dismissed Nordec's
P496,386.29. Meralco sent demand letters dated August 7, 1985 and original complaint and second supplemental complaint. The trial court
found that there was sufficient evidence to prove that the electric meter
and metering installation at Marvex premises had been tampered with. 17 It rights and obligations as its assignee or successor-in-interest. As Marvex's
found that Nordec did not dispute that the inspections of its premises were right to receive electricity is not intransmissible, it was deemed to have
conducted with the consent and in the presence of its representatives. been transmitted to Nordec. Moreover, Meralco's continued supply of
Moreover, Nordec failed to prove that Meralco's inspectors had ill motives electricity to Nordec and Nordec's payment for this supply indicate that
to falsify their findings regarding the tampered meter, or that the there was an implied contract existing between these two (2) parties. 24
inspectors were responsible for the tampering. 18
Second, the Court of Appeals found that Meralco was negligent in
The trial court further found that Ridjo Tape & Chemical Corporation v. discovering the alleged tampering only on May 29, 1985, or four (4)
Court of Appeals was inapplicable to this case, since that case did not months after it first found irregularities in the metering devices, despite
involve tampering of meters. It held Nordec liable for violating its Terms the monthly meter readings. There was no evidence that Nordec was
and Conditions of Service with Meralco, such that Meralco was justified in responsible for tampering with its own metering devices. The Court of
disconnecting its electric service.19 Because it was Nordec which committed Appeals found that it was unlikely that a company previously charged with
the tampering, it was not entitled to the reliefs prayed for because it did tampering and had been demanded payment for differential billing would
not come to court with clean hands.20 again tamper with a newly installed meter. On the other hand, there was
proof that the new metering devices were defective, since they continued
There was also no contractual relationship between Nordec and Meralco, to run despite a complete power shutdown. Meralco even offered to refund
since the service contract was between Meralco and Marvex. Thus, Nordec P5,625.10 due to the defect in the new meter.25
had no cause of action against Meralco. 21
Third, Meralco did not deny that there was a pending communication on
The dispositive portion of the Regional Trial Court June 15, 2005 Decision Nordec's request for recomputation. Citing Spouses Quisumbing v. Manila
stated: Electric Company, the Court of Appeals found that Meralco failed to give
the' required 48-hour written notice of disconnection before disconnecting
WHEREFORE, the original complaint as well as the second supplemental Nordec's power supply.26
complaint are hereby DISMISSED.
Finally, the Court of Appeals awarded Nordec exemplary damages and
Anent the second supplemental complaint, the same is found to be without attorney's fees, but not actual damages. As to actual damages, Nordec
merit, for failure of plaintiff to substantiate with clear and convincing failed to prove that it actually sustained pecuniary losses due to Meralco's
evidence. disconnection. But Nordec was entitled to exemplary damages as an
example or correction for the public good, and to attorney's fees since
And, finding defendant's counterclaim to be with merit, the same is Nordec was forced to litigate to protect its rights. 27 The Court of Appeals
GRANTED. Accordingly, plaintiffs are hereby ordered to pay, jointly and granted only the P5,625.00 refund since there was no proof presented
severally, defendants the total amount of FOUR HUNDRED NINETY[]SIX beyond this amount.28
THOUSAND THREE HUNDRED EIGHTY-SIX PESOS & 29/100 (Php
496,386.29), representing the value of used but unregistered electric The dispositive portion of the Court of Appeals January 21, 2011 Decision
current; the sum of TEN THOUSAND PESOS (Php 10,000.00) as exemplary stated:
damages; and the sum of TWENTY THOUSAND PESOS (Php 20,000.00) as Accordingly, the appeal is GRANTED. The Decision dated June 15, 2005 of
and for attorney's fees plus costs. the Regional Trial Court (RTC), Quezon City, Branch 85 is REVERSED and
SET ASIDE and a new one rendered ordering [Meralco] to pay [Nordec]:
SO ORDERED.22 1.) P5,625.00, representing overbilling for November 23, 1987[;]

Nordec appealed to the Court of Appeals, which docketed the case as CA- 2.) P200,000.00 as exemplary damages;
G.R. CV No. 85564. On January 21, 2011, the Court of Appeals issued its
Decision,23 reversing and setting aside the Regional Trial Court June 15, 3.) P100,000.00 as attorney's fees; and
2005 Decision.
4.) Costs of suit.
First, it held that there was a contractual relationship between Nordec and
Meralco. It found that after the service contract between Meralco and SO ORDERED.29
Marvex, Nordec bought Marvex from the Development Bank of the The Court of Appeals denied Meralco's Motion for Reconsideration 30 and
Philippines. Thus, Nordec stepped into Marvex's shoes and assumed its Nordec's Motion for Partial Reconsideration31 in its March 9, 2011
Resolution.32 beyond what Commonwealth Act No. 349 provided. 43 Meralco asserts that
the imposition of .a degree of diligence beyond what the law provides its
On March 29, 2011, Meralco filed a motion for extension of time, praying judicial legislation.44
for additional 30 days within which to file its petition for review. 33
Moreover, Meralco holds that the demand letter on the assessed value of
This was docketed as G.R. No. 196020. On April 4, 2011, Nordec filed its the differential billing contained a notice that Marvex's electric service
motion for extension of time, likewise praying for additional 30 days within would be disconnected if the billing was not paid, and that this was
which to file its petition for review, which was docketed as G.R. No. sufficient notice. Thus, Marvex, as the registered customer, was aware
196116.34 that the non-payment of the differential billing would result in the
disconnection of the electric service.45
This Court consolidated G.R. Nos. 196020 and 196116 in its April 11, 2011
Resolution.35 Meralco argues that Nordec was not Marvex's assignee or successor-in-
interest. It maintains that the service contract was never transferred in
On May 3, 2011, Meralco filed its Petition for Review in G.R. No. 196020, Nordec's name. As such, at the time Nordec filed its complaint against
assailing the Court of Appeals January 21, 2011 Decision and March 9, Meralco, it had no authority to act on Marvex's behalf. Meralco pointed out
2011 Resolution.36 that the Deed of Absolute Sale between Nordec and the Development Bank
of the Philippines was executed only three (3) years after the 1985
Meralco argues that the Court of Appeals erred in making its findings, inspections, or on August 16, 1988. There was also no implied contract
which were contrary to the findings of the Regional Trial Court. It claims between Meralco and Nordec, since there was no act or conduct on
that the Court of Appeals relied on Nordec's unsubstantiated arguments; Meralco's part to be bound to this contract. 46
first, in finding that Nordec was Marvex's assignee or successor-in-interest,
and second, that Meralco was inexcusably negligent in the late discovery of Finally, Meralco contests the awards of refund, exemplary damages, and
the tampered metering devices.37 attorney's fees to Nordec. It claims that Nordec was not entitled to the
refund since it already refused without just cause to accept it, and thus,
Meralco claims that at the time of the inspections, the applicable law was had waived its right to accept the payment.47 It argues that since the Court
Commonwealth Act No. 349, which provided that distribution utilities were of Appeals itself found that Nordec was not entitled to actual damages, it
required to discover tampered meters during the prescribed inspections, could not award exemplary damages or attorney's fees to Nordec. 48
which were only once every two (2) years. In contrast, the four (4)-month
period as found by the Court of Appeals was unreasonable, and even In its Comment,49 Nordec argues that Meralco's reliance on Commonwealth
contrary to the rules laid down by the Energy Regulatory Commission on Act No. 349 was misplaced, since the two (2)-year period stated in it
the conduct of meter testing.38 Meralco argues that distribution utilities' referred to testing conducted by the Standardizing Meter Laboratory, and
meter readers are not required to discover any defect or tampering in the nut by the distribution utilities themselves. 50 Further, Nordec claims that
meters installed in their customers' premises, and are only required to test what Meralco failed to comply with was the 48-hour written notice of
their customers' meters only once every two (2) years, unless the disconnection rule, and its previous demand letters did not constitute this
customer requests otherwise. It avers that cases of meter tampering notice.51
should not be equated with cases involving defective meters, since the
former prejudices public utilities like Meralco, due to consumers' unlawful In its Reply,52 Meralco reiterated its claims that Ridjo Tape v. Court of
acts.39 Appeals was inapplicable53 and that it gave Nordec due notice of the
disconnection.54
Further, Meralco claims that the inspections conducted on Marvex's
metering facilities were valid and in accordance with Presidential Decree On May 5, 2011, Nordec filed its Petition for Review in G.R. No. 196116,
No. 401, as amended.40 It argues that this law did not require the assailing the Court of Appeals March 9, 2011 Resolution, denying its
presence of the customer during inspections. Nonetheless, the two (2) Motion for Partial Reconsideration and praying for the modification of the
inspections in 1985 were conducted with the consent and in the presence Court of Appeals January 21, 2011 Decision. 55
of Nordec's representatives. 41
Nordec claims that it should be awarded at least P500,000.00 in temperate
Meralco also claims that it exercised due diligence in maintaining its damages, P150,000.00 in moral damages, and legal interest by the Court
electric meters, which was the standard set by law. By applying Ridjo Tape of Appeals. It argues that temperate damages are warranted since
v. Court of Appeals,42 the Court of Appeals imposed a degree of diligence Meralco's unceremonious and unreasonable disconnection led to Nordec's
inability to fulfill its contractual obligations and was even forced to cancel findings were based on mere conjecture, and not evidence. Thus, Meralco
its clients' purchase orders.56 claims that this Court must review the facts and evidence of this case

Further, Nordec claims that the Court of Appeals erred in finding that it Meralco is mistaken in arguing that this Court is duty-bound to review the
was entitled to only P5,625.00 as a refund. It argues that it proved factual findings in this case due to the contrary findings of the Regional
overbilling in excess of P5,625.00, through a letter showing that Nordec Trial Court and of the Court of Appeals. The Court of Appeals has the
had been charged P103,412.48 by Meralco, when a past billing was only jurisdiction to review, and even reverse, the factual findings of the trial
for P78,860.58, which Meralco did not refute. While Nordec admits that it court. For the Court of Appeals' factual findings to be reviewed by this
failed to adduce proof of the accurate amount of damages that it Court, it must be shown that it gravely abused its discretion in
sustained, it holds that it estimates Meralco's acts to cause at least appreciating the parties' respective evidence. In Pascual v. Burgos:67
P1,000,000.00 worth of damage due to Meralco's electricity disconnection, The Court of Appeals must have gravely abused its discretion in its
fraud in downgrading the overbilling, and installation of defective meters. 57 appreciation of the evidence presented by the parties and in its factual
findings to warrant a review of factual issues by this court. Grave abuse of
It its Comment,58 Meralco argues that Nordec's petition should be denied discretion is defined, thus:
outright for failing to raise questions of law, but merely prayed for a By grave abuse of discretion is meant such capricious and whimsical
modification of the Court of Appeals January 21, 2011 Decision. 59 It claims exercise of judgment as is equivalent to lack of jurisdiction. The abuse of
that the Court of Appeals correctly denied the award of actual and discretion must be grave as where the power is exercised in an arbitrary or
temperate or moderate damages.60 Further, it asserts that Nordec, as a despotic manner by reason of passion or personal hostility and must be so
corporation, was not entitled to moral damages. 61 Finally, it reiterates that patent and gross as to amount to an evasion of positive duty or to a virtual
Nordec was not entitled to any award, since Meralco acted in accordance refusal to perform the duty enjoined by or to act at all in contemplation of
with the standard set by law.62 law.

In its Reply,63 Nordec claims that this Court may take cognizance of its Grave abuse of discretion refers not merely to palpable errors of
petition since there was no longer any need to examine the probative jurisdiction; or to violations of the Constitution, the law and jurisprudence.
value of the evidence presented.64 It argues that corporations may be It refers also to cases which, for various reasons, there has been a gross
entitled to damages if their reputations have been besmirched, such as in misapprehension of facts. (Citations omitted)
this case.65 Nordec reiterates its entitlement to the damages it prayed
This exception was first laid down in Buyco v. People, et al.:
for.66
In the case at bar, the Tenth Amnesty Commission, the court of first
instance and the Court of Appeals found, in effect, that the evidence did
The issues for this Court's resolution are:
not suffice to show that appellant had acted in the manner contemplated
in the amnesty proclamation. Moreover, unlike the Barrioquinto cases,
First, whether or not the Court of Appeals erred in making findings of fact
which were appealed directly to this Court, which, accordingly, had
contrary to those of the Regional Trial Court;
authority to pass upon the validity of the findings of fact of the court of
first instance and of its conclusions on the veracity of the witnesses, the
Second, whether or not Nordec Philippines has a cause of action against
case at bar is before us on appeal by certiorari from a decision of the Court
Manila Electric Company;
of Appeals, the findings and conclusions of which, on the aforementioned
subjects, are not subject to our review, except in cases of grave abuse of
Third, whether or not Manila Electric Company was inexcusably negligent
discretion, which has not been shown to exist. 68 (Citations omitted)
when it disconnected Nordec Philippines' electric supply; and
Meralco has failed to show how the Court of Appeals acted with grave
Finally, whether or not Nordec Philippines is entitled to actual, temperate, abuse of discretion in arriving at its factual findings and conclusions, or
moral or exemplary damages, attorney's fees, and legal interest. how it grossly misapprehended the evidence presented as to warrant a
finding that its review and reversal of the trial court's findings of fact had
I been in error.

In its petition for review, Meralco faults the Court of Appeals for making II
findings of fact contrary to those of the Regional Trial Court. It claims that
the trial court's findings of fact should be accorded the highest degree of A cause of action "is the act or omission by which a party violates a right
respect and that the Court of Appeals failed to find that the trial court's of another."69 For a cause of action to exist, there must be, first, a
plaintiff's legal right; second, defendant's correlative obligation; and third, to discover and repair defects therein. Failure to perform such duties
an injury to the plaintiff as a result of the defendant's violation of plaintiff's constitutes negligence.
right.70 Here, the Regional Trial Court found that Nordec had no cause of
action against Meralco since they had no contractual relationship, as A review of the records, however, discloses that the unpaid charges
Meralco's service contract was with Marvex. covered the periods from November 7, 1990 to February 13, 1991 for Civil
Case No. Q-92-13045 and from July 15, 1991 to April 13, 1992 for Civil
The beneficial users of an electric service have a cause of action against Case No. 13879, approximately three months and nine months,
this distribution utility. In Manila Electric Company v. Spouses Chua,71 it respectively. On such basis, we take judicial notice that during those
was the beneficial users who were awarded damages due to the unjust periods, personnel representing MERALCO inspected and examined the
disconnection of the electric supply, even though the service contract with electric meters of petitioners regularly for the purpose of determining the
Meralco was registered in the name of another person. monthly dues payable. So, why were these defects not detected and
reported on time?
Further, Meralco is deemed to have knowledge of the fact that Nordec was
the beneficial user of Marvex's service contract with Meralco. It admits that It has been held that notice of a defect need not be direct and express; it
the inspections of the metering devices were conducted in the presence of is enough that the same had existed for such a length of time that it is
Nordec's maintenance personnel and with the consent of its manager. 72 It reasonable to presume that it had been detected, and the presence of a
further admits that it corresponded with Nordec regarding the differential conspicuous defect which has existed for a considerable length of time will
billing, and entertained Nordec's demand for an explanation on the finding create a presumption of constructive notice thereof. Hence, MERALCO's
of tampering and the recomputation of the amount to be paid by failure to discover the defect, if any, considering the length of time,
Nordec.73 Clearly, Meralco knew that it was dealing with Nordec as the amounts to inexcusable negligence. Furthermore, we need not belabor the
beneficial user of the electricity supply. point that as a public utility, MERALCO has the obligation to discharge its
functions with utmost care and diligence.75 (Citations omitted)
III Moreover, the duty of inspecting for defects is not limited to inherent
mechanical defects of the distribution utilities' devices, but extends to
It is well-settled that electricity distribution utilities, which rely on intentional and unintentional ones, such as those, which are due to
mechanical devices and equipment for the orderly undertaking of their tampering and mistakes in computation.76 In Manila Electric Co. v. Wilcon
business, are duty-bound to make reasonable and proper periodic Builders Supply, Inc.:77
inspections of their equipment. If they are remiss in carrying out this duty The Ridjo doctrine simply states that the public utility has the imperative
due to their own negligence, they risk forfeiting the amounts owed by the duty to make a reasonable and proper inspection of its apparatus and
customers affected. equipment to ensure that they do not malfunction. Its failure to discover
the defect, if any, considering the length of time, amounts to inexcusable
In Ridjo Tape & Chemical Corporation v. Court of Appeals:74 negligence; its failure to make the necessary repairs and replace the
At this juncture, we hasten to point out that the production and defective electric meter installed within the consumer's premises limits the
distribution of electricity is a highly technical business undertaking, and in latter's liability. The use of the words "defect" and "defective" in the
conducting its operation, it is only logical for public utilities, such as above-cited case does not restrict the application of the doctrine to cases
MERALCO, to employ mechanical devices and equipment for the orderly of "mechanical defects" in the installed electric meters. A more plausible
pursuit of its business. interpretation is to apply the rule on negligence whether the defect is
inherent, intentional or unintentional, which therefore covers tampering,
It is to be expected that the parties were consciously aware that these mechanical defects and mistakes in the computation of the consumers'
devices or equipment are susceptible to defects and mechanical failure. billing.78 (Citation omitted)
Hence, we are not prepared to believe that petitioners were ignorant of the
fact that stoppages in electric meters can also result from inherent defects Meralco argues that the degree of diligence imposed upon it was beyond
or flaws and not only from tampering or intentional mishandling.... the prevailing law at the time, namely, Commonwealth Act No. 349. It
claims that under this law, it is only required to test metering devices once
.... every two (2) years. Thus, for it to be penalized for taking four (4) months
to rectify and repair the defective meter, was tantamount to judicial
Corollarily, it must be underscored that MERALCO has the imperative duty legislation.
to make a reasonable and proper inspection of its apparatus and
equipment to ensure that they do not malfunction, and the due diligence However, as pointed out by Nordec, the two (2)-year period prescribed
under Commonwealth Act No. 34979 is for the testing required of meters Meralco was negligent for failing to repair the defects in respondent's
and appliances for measurements used by all public services by a meters after the first inspection:
standardized meter laboratory under the control of the then Public Service Petitioner likewise claimed that when the subject meters were again
Commission. It does not pertain to distribution utilities inspections of the inspected on June 7, 1988, they were found to have been tampered anew.
metering devices installed in their consumers' premises. The Court notes that prior to the inspection, [T.E.A.M. Electronics
Corporation] was informed about it; and months before the inspection,
Further, contrary to Meralco's claim, the duty imposed upon it pursuant there was an unsettled controversy between [T.E.A.M. Electronics
to Ridjo is not beyond the standard of care imposed by law. Distribution Corporation] and petitioner, brought about by the disconnection of electric
utilities are public utilities vested with public interest, and thus, are held to power and the non-payment of differential billing. We are more disposed
a higher degree of diligence. In Ridjo: to accept the trial court's conclusion that it is hard to believe that a
The rationale behind this ruling is that public utilities should be put on customer previously apprehended for tampered meters and assessed P7
notice, as a deterrent, that if they completely disregard their duty of million would further jeopardize itself in the eyes of petitioner. If it is true
keeping their electric meters in serviceable condition, they run the risk of that there was evidence of tampering found on September 28, 1987 and
forfeiting, by reason of their negligence, amounts originally due from their again on June 7, 1988, the better view would be that the defective meters
customers. Certainly, we cannot sanction a situation wherein the defects in were not actually corrected after the first inspection. If so, then Manila
the electric meter are allowed to continue indefinitely until suddenly the Electric Company v. Macro Textile Mills Corporation would apply, where we
public utilities concerned demand payment for the unrecorded electricity said that we cannot sanction a situation wherein the defects in the electric
utilized when, in the first place, they should have remedied the situation meter are allowed to continue indefinitely until suddenly, the public utilities
immediately. If we turn a blind eye on MERALCO's omission, it may demand payment for the unrecorded electricity utilized when they could
encourage negligence on the part of public utilities, to the detriment of the have remedied the situation immediately. Petitioner's failure to do so may
consuming public. encourage neglect of public utilities to the detriment of the consuming
public. Corollarily, it must he underscored that petitioner has the
.... imperative duty to make a reasonable and proper inspection of its
apparatus and equipment to ensure that they do not malfunction, and the
To summarize, it is worth emphasizing that it is not our intention to due diligence to discover and repair defects therein. Failure to perform
impede or diminish the business viability of MERALCO, or any public utility such duties constitutes negligence. By reason of said negligence, public
company for that matter. On the contrary, we would like to stress that, utilities run the risk of forfeiting amounts originally due from their
being a public utility vested with vital public interest, MERALCO is customers.82 (Citations omitted)
impressed with certain obligations towards its customers and any omission
Here, as observed by the Court of Appeals, Meralco itself claimed that the
on its part to perform such duties would be prejudicial to its interest. For in
irregularities in the electricity consumption recorded in Nordec's metering
the final analysis, the bottom line is that those who do not exercise such
devices started on January 18, 1985, as evidenced by their August 7, 1985
prudence in the discharge of their duties shall be made to bear the
demand letter, covering January 18, 1985 to May 29, 1985. However, the
consequences of such oversight. 80
alleged tampering was only discovered during the May 29, 1985
Should a distribution utility not exercise the standard of care required of it inspection. Considering that Nordec's meters were read monthly, Meralco's
due to its negligence in the inspection and repair of its apparatus, then it belated discovery of the cause of the alleged irregularities, or four (4)
can no longer recover the amounts of allegedly used but uncharged months after they purportedly started, can only lead to a conclusion of
electricity. negligence. Notice of a defect may be constructive when it has
conspicuously existed for a considerable length of time. 83 It is also worth
The distribution utility's negligence is all the more apparent when it had noting that during a third inspection on November 23, 1987, further
made prior findings of tampering, and yet still failed to correct these irregularities in Nordec's metering devices were observed, showing
defects. In Manila Electric Company v. T.E.A.M. Electronics electricity consumption even when Nordec's entire power supply
Corp.,81 Meralco conducted an inspection on September 28, 1987 and equipment was switched off. Clearly, Meralco had been remiss in its duty
found that the meters therein were tampered, and then conducted a as required by law and jurisprudence of a public utility.
second inspection on June 7, 1988, which yielded similar evidence of
tampering. Likewise, the respondent in that case was in the midst of a Meralco is also duty-bound to explain the basis for its billings, especially
differential billing dispute with Meralco, and had previously been assessed when these are for unregistered consumption, to prevent consumers from
P7,000,000.00 due to alleged tampering. There, this Court found that being solely at its mercy.84 Here, the Power Field Orders given to Nordec
following the inspections did not mention the alleged defects that were
discovered. Nordec's request for recomputation of the alleged unregistered be entitled to moral, temperate or compensatory damages were it not for
electric bill was still pending when its electric supply was disconnected on the stipulation for liquidated damages.
December 18, 1986.
Exemplary damages, which cannot be recovered as a matter of right, may
not be awarded if no moral, temperate, or compensatory damages have
Finally, as found by the Court of Appeals, Meralco failed to comply with the
been granted.91 Since exemplary damages cannot be awarded, the award
48-hour disconnection notice rule. Meralco claims that the statements in
of attorney's fees should likewise be deleted.
its demand letters, that failure to pay would result in disconnection, were
sufficient notice. However, pursuant to Section 97 of Revised General
Moral damages are also not proper, in line with Manila Electric Company v.
Order No. 1, the governing rule when the disconnection occurred,
TE.A.M Electronics Corporation:92
disconnection due to non-payment of bills requires that a 48-hour written
We, however, deem it proper to delete the award of moral damages.
notice be given to the customer.85
[T.E.A.M. Electronics Corporation] claim was premised allegedly on the
damage to its goodwill and reputation. As a rule, a corporation is not
It must be emphasized that electricity is "a basic necessity whose
entitled to moral damages because, not being a natural person, it cannot
generation and distribution is imbued with public interest, and its provider
experience physical suffering or sentiments like wounded feelings, serious
is a public utility subject to strict regulation by the State in the exercise of
anxiety, mental anguish and moral shock. The only exception to this rule is
police power."86 The serious consequences on a consumer, whose electric
when the corporation has a reputation that is debased, resulting in its
supply has been cut off, behoove a distribution utility to strictly comply
humiliation in the business realm. But in such a case, it is imperative for
with the legal requisites before disconnection may be done. 87 This is all the
the claimant to present proof to justify the award. It is essential to prove
more true considering Meralco's dominant position in the market compared
the existence of the factual basis of the damage and its causal relation to
to its customers' weak bargaining position.88
petitioner's acts. In the present case, the records are bereft of any
evidence that the name or reputation of [T.E.A.M. Electronics
IV Corporation/Technology Electronics Assembly and Management Pacific
Corporation] has been debased as a result of petitioner's acts. Besides, the
At the outset, a party's entitlement to damages is a question of fact not trial court simply awarded moral damages in the dispositive portion of its
generally cognizable in a petition for review.89 However, in this case, the decision without stating the basis thereof. 93 (Citations omitted)
Court of Appeals' failure to apply the applicable law and jurisprudence by
awarding damages to Nordec prompts this Court's review. Here, the records are bereft of evidence that would show that Nordec's
name or reputation suffered due to the disconnection of its electric supply.
The Court of Appeals declined to award actual damages to Nordec as it
failed to prove its pecuniary losses due to Meralco's disconnection: Moreover, contrary to Nordec's claim, it cannot be awarded temperate or
We concede that MERALCO's service disconnection bore a domino effect on moderate damages. Under Article 2224 of the Civil Code:
NORDEC's business but in the absence of actual proof of losses, We cannot Article 2224. Temperate or moderate damages, which are more than
award actual damages to NORDEC. For one is only entitled to adequate nominal but less than compensatory damages, may be recovered when the
compensation for pecuniary loss that he has duly proven. 90 court finds that some pecuniary loss has been suffered but its amount can
not, from the nature of the case, be proved with certainty.
The Court of Appeals then proceeded to award exemplary damages to
Nordec by way of example or correction for the public good. This is When the court finds that a party fails to prove the fact of pecuniary loss,
contrary to the requirement in Article 2234 of the Civil Code, which and not just the amount of this loss, then Article 2224 does not apply.
requires proof of entitlement to moral, temperate or compensatory In Seven Brothers Shipping Corporation v. DMC-Construction Resources,
damages before exemplary damages may be awarded: Inc.:94
Article 2234. While the amount of the exemplary damages need not be In contrast, under Article 2224, temperate or moderate damages may be
proved, the plaintiff must show that he is entitled to moral, temperate or recovered when the court finds that some pecuniary loss has been suffered
compensatory damages before the court may consider the question of but its amount cannot, from the nature of the case, be provided with
whether or not exemplary damages should be awarded. In case liquidated certainty. This principle was thoroughly explained in Araneta v. Bank of
damages have been agreed upon, although no proof of loss is necessary in America, which cited the Code Commission, to wit:
order that such liquidated damages may be recovered, nevertheless, The Code Commission, in explaining the concept of temperate damages
before the court may consider the question of granting exemplary in under Article 2224, makes the following comment:
addition to the liquidated damages, the plaintiff must show that he would In some States of the American Union, temperate damages are
allowed. There are cases where from the nature of the case, definite
proof of pecuniary loss cannot be offered, although the court is which has been violated or invaded by the defendant, may be vindicated or
convinced that there has been such loss. For instance, injury to one's recognized and not for the purpose of indemnifying the plaintiff for any
commercial credit or to the goodwill of a business firm is often hard to loss suffered by him. The court may award nominal damages in every
show with certainty in terms of money. Should damages be denied for that obligation arising from any source enumerated in article 1157 of the Civil
reason? The judge should be empowered to calculate moderate damages Code or, generally, in every case where property right is
in such cases, rather than that the plaintiff should suffer, without redress invaded.100 (Citations omitted)
from the defendant's wrongful act. (Emphasis ours)
Nominal damages are awarded to vindicate the violation of a right suffered
Thus, in Tan v. OMC Carriers, Inc., temperate damages were rightly by a party, in an amount considered by the courts reasonable under the
awarded because plaintiff suffered a loss, although definitive proof of its circumstances.101 Meralco's negligence in not providing Nordec sufficient
amount cannot be presented as the photographs produced as evidence notice of disconnection of its electric supply, especially when there was an
were deemed insufficient. Established in that case, however, was the fact ongoing dispute between them concerning the recomputation of the
that respondent's truck was responsible for the damage to petitioner's electricity bill to be paid, violated Nordec's rights. Because of this, Nordec
property and that petitioner suffered some form of pecuniary loss. is entitled to nominal damages in the amount of P30,000.00.
In Canada v. All Commodities Marketing Corporation, temperate damages
were also awarded wherein respondent's goods did not reach the Pepsi WHEREFORE, the Petitions for Review on Certiorari in G.R. Nos. 196020
Cola Plant at Muntinlupa City as a result of the negligence of petitioner in and 196116 are DENIED. The Court of Appeals January 21, 2011 Decision
conducting its trucking and hauling services, even if the amount of the and March 9, 2011 Resolution in CA-G.R. CV No. 85564
pecuniary loss had not been proven. In Philtranco Services Enterprises, are AFFIRMED with MODIFICATION. Manila Electric Company is ordered
Inc. v. Paras, the respondent was likewise awarded temperate damages in to pay Nordec Philippines P5,625.00, representing overbilling for
an action for breach of contract of carriage, even if his medical expenses November 23, 1987; P30,000.00 in nominal damages; and costs of suit.
had not been established with certainty. In People v. Briones, in which the The awards for exemplary damages and attorney's fees are deleted.
accused was found guilty of murder, temperate damages were given even
if the funeral expenses for the victim had not been sufficiently proven. SO ORDERED.

Given these findings, we are of the belief that temperate and not nominal
damages should have been awarded, considering that it has been
established that respondent herein suffered a loss, even if the amount
thereof cannot be proven with certainty. 95 (Citations omitted)
Here, the Court of Appeals found that Meralco's disconnection had a
"domino effect"96 on Nordec's business, but that Nordec did not offer actual
proof of its losses. Nordec even admitted in its petition for review that
there was an "oversight" on its part in "adducing proof of the accurate
amount of damages it sustained" due to Meralco's acts. 97 No pecuniary loss
has been established in this case, apart from the claim in Nordec's
complaint that the "serious anxiety" of the disconnection had caused
Nordec's president to cancel business appointments, purchase orders, and
fail to fulfill contractual obligations, among others. 98

In this instance, nominal damages may be awarded. In Philippine

Telegraph & Telephone Corporation v. Court of Appeals:99
Temperate or moderate damages may only be given if the "court finds that
some pecuniary loss has been suffered but that its amount cannot, from
the nature of the case, be proved with certainty." The factual findings of
the appellate court that respondent has failed to establish such pecuniary
loss or, if proved, cannot from their nature be precisely quantified
precludes the application of the rule on temperate or moderate damages.
The result comes down to only a possible award of nominal damages.
Nominal damages are adjudicated in order that a right of the plaintiff,
G.R. No. 191128               September 12, 2012 that Lucia inherited the land from her parents. Before buying the subject
property, Reynaldo’s father, Dr. Veneracion, hired a geodetic engineer to
CARMENCITA GUIZANO, substituted by her heirs, namely: segregate the land being purchased from the land registered to
EUGENIO M. GUIZANO, JR., EMMANUEL M. GUIZANO, EDMUND M. Emmanuel.
GUIZANO, ERWIN M. GUIZANO, CARMINA M. GUIZANO,
represented by their co-heir and attorney-in-fact ELMER GUIZANO, Domingo Santos (son of the Santos spouses), Nicasio and Carmencita
and ELMER M. GUIZANO, Petitioners, were all present during the survey when Nicasio pointed out the
vs. boundaries of his former lot, as well as Lucia’s share. Carmencita also
REYNALDO S. VENERACION, Respondent. pointed out the boundaries of her property, which were marked by
bamboo trees, a madre de cacao tree and a pilapil.6 The geodetic engineer
DECISION drew up a sketch plan based on the survey and had all those present,
including Carmencita, affix their signatures thereon. 7
BRION, J.:
As an additional precautionary measure, when the Santoses and Reynaldo
executed the deed of sale (Bilihan ng Tuluyan) in September 1995, the
We resolve the petition for review on certiorari 1 filed by Carmencita
parties had Carmencita affix her signature to the deed of sale under the
Guizano (now deceased), substituted by her heirs, namely Eugenio) M.
heading "Walang Tutol," signifying that she did not object to the sale. 8
Guizano, Jr., Emmanuel M. Guizano, Edmund M. Guizano, Erwin M.
Guizano, and Carmina M. Guizano, represented by their co-heir and
attorney-in-fact Elmer Guizano, and Elmer M. Guizano to reverse and set Thereafter, Carmencita discovered that the property sold to Reynaldo was
aside the decision2 dated July 31, 2007 of the Court of Appeals ( CA) inCA- actually part of the property that had already been registered in
G.R. CV No. 77248, as well as its resolution dated January 27, Emmanuel’s name under TCT No. RT-18578 on February 22, 1985. She
2010.3 These assailed CA issuances essentially ordered petitioner thus placed the word "HOLD" on the subdivision plan signed by the
Carmencita Guizano to reconvey the subject property to respondent geodetic engineer.9
Reynaldo Veneracion.
On June 14, 1999, Reynaldo filed a complaint against Carmencita and the
THE FACTS Santos spouses, praying that Carmencita, as owner or as the lawful
attorney-in-fact of her son Emmanuel, be ordered to reconvey the 656
sqm. parcel of land in his (Reynaldo’s) favor.10 The complaint was docketed
The facts of the case, as gathered from the decisions of the CA and the
as Civil Case No. 623-M-99 and raffled to Branch 81 of the RTC of Malolos,
Regional Trial Court (RTC), are summarized below.
Bulacan.

This case involves two parcels of land in Barangay Kapihan, San Rafael,
In her Answer, Carmencita claimed that the complaint was without merit
Bulacan that Lucia Santos (married to David Santos) and her brother,
since the property subject of the sale between Reynaldo and the Santos
Nicasio Bernardino, inherited from their mother.
spouses is part of the property owned and registered in the name of her
son Emmanuel, under TCT No. RT-18578. 11 Reynaldo, thus, had no cause
Nicasio sold his share of the property, Lot No. 431 consisting of 6,445 of action against her.
square meters, to Dr. Eugenio and his wife Carmencita. The property was
registered on February 22, 1985 under Transfer Certificate of Title (TCT)
On July 24, 2002, the RTC dismissed Reynaldo’s complaint for lack of
No. RT-18578,4 in the name of Emmanuel Guizano, the son of the Guizano
merit. The RTC observed that while the sale between the Santoses and
spouses.
Reynaldo was established, there was no evidence that the Santoses had
the legal right to sell the lot. To begin with, the property sold to Reynaldo
Lucia and her husband, for their part, sold a 656 sqm. portion of their land was already covered by TCT No. RT-18578, registered in the name of
(subject property) in September 1995 to Reynaldo. 5 Emmanuel. In contrast, the Santoses had no evidence to support their
alleged ownership of the subject property – they never had the property
Since the Santoses did not have any documentary proof of ownership over surveyed, they never paid real estate taxes on the land, and they never
the subject property, Reynaldo had to rely on the Santoses’ representation declared the property for tax.12
The RTC also found that Emmanuel’s title had already attained the status 4. In the alternative, if the above remedies are no longer possible,
of indefeasibility at the time Reynaldo filed his action. Furthermore, even if ordering Carmencita Guizano and her principal, Emmanuel
an action for reconveyance had not yet prescribed as Reynaldo remained Guizano, to pay the fair market value of the 656 square meter
in possession of the property, he is guilty of laches for filing the action 14 land.
years after Emmanuel’s title had been issued.
5. Ordering defendant-appellee Carmencita Guizano to pay
THE DECISION OF THE CA plaintiff-appellant ₱ 50,000.00 attorney’s fees and cost of suit.

In resolving Reynaldo’s appeal, the CA, in a decision dated July 31, Costs against defendant-appellee Carmencita Guizano. 14 (emphases
2007,13 reversed the RTC decision and ordered Carmencita to convey the supplied)
subject property to Reynaldo.
THE PETITION
The CA observed that Carmencita told Dr. Veneracion that the small
portion of land immediately adjacent to his property did not belong to her In their petition, Carmencita’s heirs argue that since Emmanuel’s
but to Lucia. In the absence of any document showing the technical certificate of title had attained the status of indefeasibility, it was no longer
description of the respective shares of Nicasio and Lucia, Lucia and her son open to review on the ground of actual fraud. Neither is the legal remedy
Domingo built an earthen dike and planted trees to show the demarcation of reconveyance available against Carmencita as laches had already set in
line between the properties. This boundary was respected even by when the Santoses, Reynaldo’s predecessors-in-interest, slept on their
Carmencita when her family bought the property from Nicasio. Carmencita right to assert their ownership over the subject property. Lastly, the action
also participated in the survey conducted by the geodetic engineer by should be dismissed as it was directed against Carmencita, who was not
pointing out the boundaries of her lot, and signed the deed of sale the real party-in-interest as she was not the registered owner of the
between the Santoses and Reynaldo to signify her conformity to the sale. property from where the 656 sqm. lot was taken. Emmanuel, the
From Carmencita’s acts and representations, it is clear that she believed registered owner, was not even impleaded in the case.
that the subject property belonged to the Santoses and she was estopped
from claiming ownership over the subject property.
In his Comment, Reynaldo avers that the petition should be denied for
raising a question of fact, i.e., who is the owner of the subject property.
The dispositive portion of this decision reads: He also insists that the petitioners are bound by their predecessor-in-
interest Carmencita’s acts in relation to the subject property and, thus,
WHEREFORE, the foregoing considered, the instant appeal is hereby they are estopped from questioning his right to the property.
GRANTED and the assailed decision is REVERSED AND SET ASIDE.
Accordingly, a new one is entered as follows: THE RULING

1. Ordering defendant-appellee Carmencita Guizano as attorney- The Court GRANTS the petition.
in-fact of her son Emmanuel Guizano to reconvey and execute a
"Deed of Acknowledgement/Reconveyance" over the 656 square
Complaint was not filed against the real party-in-interest
meter subject property in favor of plaintiff-appellant Reynaldo
Veneracion, Jr.
The records from both the RTC and the CA reveal that the courts a quo
arrived at the same factual considerations. Undoubtedly, the subject
2. Declaring as valid and legal the "Bilihan Tuluyan" executed by
property that Reynaldo purchased from the Santos spouses is part of the
vendors/defendant-appellee spouses over the subject property in
land registered in the name of Emmanuel under TCT No. RT-18578. The
favor of plaintiff-appellant.
conflict arises when we take into consideration the acts and
representations of Carmencita regarding the subject property, which show
3. Ordering the Registrar of Deeds of Bulacan to register the her recognition that the subject property is not part of her son’s property,
"BILIHAN TULUYAN" as encumbrance in favor of plaintiff-appellant but was actually owned by the Santoses and was later purchased by
on TCT No. 18578. Reynaldo.
In determining entitlement to the subject property, the RTC emphasized name of their son, Emmanuel Guisano, under TCT No. RT-18578 of
that the Santoses never assailed the registration of their property in the Registry of Deeds of Bulacan only for tax purposes;
Emmanuel’s name. The trial court thus ruled in favor of Emmanuel after
determining that the Santoses had been guilty of laches. In contrast, the 6. That said defendant GUISANO also refuses to execute the
CA highlighted the fact that the Santoses had been in open, peaceful, necessary DEED OF ACKNOWLEDGEMENT/RECONVEYANCE to
public, and adverse possession of the subject property in the concept of plaintiff, or cause the same to be executed by the nominal owner,
owners, and Carmencita never questioned this possession until after the her son, EMMANUEL, in order to set the record straight and quiet
sale to Reynaldo, when she discovered that this land was actually part of title to the aforesaid portion of land.21
the land registered in her son’s name.
In the prayer portion of his complaint, Reynaldo further asserted that he
After examining the records, we find that both the RTC and the CA filed the present action against Carmencita as either the owner of the
grievously erred when they overlooked a basic but fundamental issue that subject property or the lawful attorney-in-fact of Emmanuel. We quote the
Carmencita timely raised in her Answer – that the complaint states no pertinent portion of the complaint:
cause of action against her.15
WHEREFORE, it is respectfully prayed that judgment be rendered:
An action for reconveyance is an action available to a person whose
property has been wrongfully registered under the Torrens system in
1. Ordering defendant CARMENCITA GUISANO, as the alleged owner of the
another’s name.16 While it is a real action, it is an action in personam, for it
property and/or as the lawful attorney-in-fact of her son Emmanuel
binds a particular individual only, although it concerns the right to an
Guisano, to execute the necessary DEED OF
intangible thing. Any judgment in this action is binding only upon the
ACKNOWLEDGEMENT/RECONVEYANCE over the parcel of land described in
parties properly impleaded.17 This is in keeping with the principle that
par. 3 of this Complaint, in favor of plaintiff; and/or in the alternative,
every action must be prosecuted or defended in the name of the real
ordering defendant GUISANO to pay plaintiff the sum of ₱ 330,000.00,
party-in-interest, i.e., the party who stands to be benefited or injured by
equivalent to the present value of the land, as actual damages. 22
the judgment in the suit, or the party entitled to the avails of the suit, 18 as
embodied in Section 2, Rule 3 of the Rules of Court:
As Reynaldo himself recognized in his complaint, the subject property is
registered under TCT No. RT-18578 in Emmanuel’s name alone;
Section 2. Parties in interest. – A real party in interest is the party who
stands to be benefited or injured by the judgment in the suit, or the party
entitled to the avails of the suit. Unless otherwise authorized by law or Carmencita’s name does not appear anywhere on the title. While Reynaldo
these Rules, every action must be prosecuted or defended in the name of alleged that Carmencita was the owner of the property subject of dispute,
the real party in interest. [italics supplied] with Emmanuel acting as a mere nominal owner, a Torrens certificate is
the best evidence of ownership over registered land, 23 and serves as
evidence of an indefeasible title to the property in favor of the person
Any decision rendered against a person who is not a real party-in-interest
whose name appears on the title.24 Absent any evidence to the contrary,
in the case cannot be executed. Hence, a complaint filed against such a
Emmanuel is the real party-in-interest in any action that seeks to
person should be dismissed for failure to state a cause of action. 19
challenge ownership of the registered property.1âwphi1 Reynaldo should
thus have filed his complaint for reconveyance against him.
Reynaldo filed the present complaint to compel Carmencita to execute a
Deed of Acknowledgement/Reconveyance over the subject property in his
What makes Reynaldo’s error all the more inexcusable is the fact that
favor. Notably, he filed the present action only against Carmencita, despite
Carmencita repeatedly raised this defect before the lower court in her
his knowledge that the subject property is registered in Emmanuel’s name.
Answer25 and Pre-Trial Brief.26 Given Reynaldo’s awareness of the defect of
As he stated in his complaint:
his complaint, and the opportunities afforded him to address the defect,
his failure to implead Emmanuel in the action is untenable.
5. That defendant, GUISANO,20 now refuses to recognize the sale
made by defendants SANTOS to plaintiff, with her consent and
While the lower courts considered Carmencita to be Emmanuel’s attorney-
connivance, and now claims the said parcel of land as HERS;
in-fact, we find no evidence on record that Emmanuel ever authorized his
having been registered by her, or her deceased husband in the
mother to represent him in this action. Even assuming that Carmencita did
act as Emmanuel’s attorney-in-fact, it is well-established in our jurisdiction
that an attorney-in-fact is not the real party-in-interest. Even if so
authorized in the power of attorney, she cannot bring an action in her own
name for an undisclosed principal.27 Since Reynaldo was obviously aware of
the fact that the subject property was registered in Emmanuel’s name, he
should still have included Emmanuel as a defendant in the aware of the
fact that the subject property was registered in Emmanuel's name, he
should still have included Emmanuel as a defendant in the reconveyance
case pursuant to Section 3, Rule 3 of the Rules of Civil Procedure, which
reads:

Section 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. [emphasis ours]

WHEREFORE, the petition is GRANTED. The Decision of the CA dated July

31, 2007 in CA-G.R. CV No. 77248 is REVERSED and SET ASIDE, and the
complaint in Civil Case No. 623-M-99 is DISMISSED for lack of merit,
without pronouncement as to costs.

SO ORDERED.
 G.R. No. 186305, July 22, 2015 Nevertheless, it still dismissed the complaint because V-Gent failed to
prove its claim by a preponderance of evidence.
V-GENT, INC., Petitioner, v. MORNING STAR TRAVEL AND TOURS,
INC., Respondent. V-Gent appealed to the Regional Trial Court (RTC) and the case was
docketed as Civil Case No. 06-115050.
DECISION
On September 25, 2006, the RTC granted the appeal after finding that V-
Gent had established its claim by a preponderance of evidence. It set aside
BRION, J.: the MeTC's judgment and ordered Morning Star to pay V-Gent the value of
the nine (9) unrefunded tickets plus attorney's fees.
We resolve the petition for review on certiorari filed to challenge the
November 11, 2008 Decision and February 5, 2009 Resolution of the Court Morning Star filed a petition for review with the CA; the case was docketed
of Appeals (CA) in CA-G.R. SP No. 97032.1chanrobleslaw as CA-G.R. SP No. 97032. Morning Star questioned the RTC's
appreciation of the evidence and factual conclusions. It also reiterated its
ANTECEDENTS question about V-Gent's legal standing, submitting once again that V-Gent
is not the real party-in-interest.
Sometime in June and in September 1998, the petitioner V-Gent, Inc. (V-
Gent) bought twenty-six (26)2 two-way plane tickets (Manila-Europe- On November 11, 2008, the CA granted the petition for review and
Manila) from the respondent Morning Star Travel and Tours, Inc. (Morning dismissed V-Gent's complaint. The CA held that V-Gent is not a real party-
Star). in-interest because it merely acted as an agent of the passengers who
bought the tickets from Morning Star with their own money.
On June 24, 1998 and September 28, 1998, V-Gent returned a total of
fifteen (15) unused tickets worth $8,747.50 to the defendant. Of the 15, V-Gent moved for reconsideration, which motion the CA denied on
Morning Star refunded only six (6) tickets worth $3,445.62, Morning Star February 5, 2009, thus clearing the way for the present petition for review
refused to refund the remaining nine (9) unused tickets despite repeated on certiorari.
demands.
THE PETITION
On December 15, 2000, petitioner V-Gent filed a money claim against
Morning Star for payment of the unrefunded $5,301.88 plus attorney's V-Gent argues that the CA erred in ruling that it is not the real party-in-
fees. The complaint was raffled to Branch 2 of the Metropolitan Trial Court interest. It asserts: (1) that the issue of its legal standing to file the
(MeTC) of Manila and docketed as Civil Case No. 169296-CV. complaint has already become final because Morning Star did not appeal
the MeTC's ruling on the issue; (2) that it is a real party-in-interest in filing
Morning Star countered that V-Gent was not entitled to a refund because the complaint; and (3) that Morning Star is already estopped from
the tickets were bought on the airline company's "buy one, take one" questioning V-Gent's legal standing to file the complaint.
promo. It alleged that there were only fourteen (14) unused tickets and
only seven (7) of these were refundable; considering that it had already In its Comment, Morning Star counters: (1) that it had no obligation to
refunded six (6) tickets (which is more or less 50% of 14), then there was appeal the MeTC judgment dismissing the complaint in its favor; (2) that
nothing else to refund. the MeTC did not specifically state that V-Gent is the real party-in-interest;
(3) that the real parties-in-interest are the passengers named on the
Morning Star also questioned V-Gent's personality to file the suit. It tickets; and (4) that it made no admissions that would estop it from
asserted that the passengers, in whose names the tickets were issued, are denying the refund.
the real parties-in-interest.
OUR RULING
On January 27, 2006, after due proceedings, the MeTC dismissed the
complaint for lack of a cause of action. Citing Rule 3, Section 3 of the V-Gent maintains that the MeTC determined that it was the real party-in-
Rules of Court,3 the MeTC declared that, as agent of the passengers who interest. It argues that since Morning Star did not appeal this specific
paid for the tickets, V-Gent stood as the real party-in-interest. finding with the RTC, then the MeTC's ruling on this point had already
become final and conclusive; therefore, Morning Star can no longer revive Section 3. Representatives as parties. - Where the action is allowed to be
the issue before the CA. prosecuted and defended by a representative or someone acting in a
fiduciary capacity, the beneficiary shall be included in the title of the case
We disagree with V-Gent. 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,
The MeTC dismissed V-Gent's complaint against Morning Starrer for failure or a party authorized by law or these Rules. An agent acting in his own
to prove its claim. This dismissal meant that the plaintiff did not prove a name and for the benefit of an undisclosed principal may sue or be
violation of its right for which the defendant should be held liable. This sued without joining the principal except when the contract involves
ruling was plainly a judgment in Morning Star's favor and one that it had things belonging to the principal. (Emphasis supplied.)
no cause to question. Indeed, it would be legally illogical for Morning Star
Thus an agent may sue or be sued solely in its own name and without
to file an appeal to question a ruling of dismissal in its favor.
joining the principal when the following elements concur: (1) the agent
acted in his own name during the transaction; (2) the agent acted for the
V-Gent also argues that it is a real party-in-interest with legal standing to
benefit of an undisclosed principal; and (3) the transaction did not involve
institute the complaint against Morning Star. In the present petition, it
the property of the principal.
states:chanRoblesvirtualLawlibrary
36. The Court of Appeals chose to ignore the fact that while the plane
When these elements are present, the agent becomes bound as if the
tickets bore the names of the individual passengers, the respondent
transaction were its own. This rule is consistent with Article 1883 of the
admitted that it was the petitioner that transacted business with it
Civil Code which says:chanRoblesvirtualLawlibrary
concerning the purchase of these plane tickets. Both the purchase order
Art. 1883. If an agent acts in his own name, the principal has no right of
and receipt of payments were under the name of the petitioner.
action against the persons with whom the agent has contracted; neither
Thus, since it was the petitioner who purchased these plane tickets
have such persons against the principal.
on behalf of the passengers, the respondent voluntarily refunded to the
former the value of six (6) unused return tickets in the total amount of
In such case, the agent is the one directly bound in favor of the person
US$3,445.62. Though, for reasons it did not reveal to petitioner, it refused
with whom he has contracted, as if the transaction were his own, except
to refund the rest.4 (Emphasis supplied.)
when the contract involves things belonging to the principal.
V-Gent admits that it purchased the plane tickets on behalf of the
passengers as the latter's agent.5 The tickets were issued in the name of The provisions of this article shall be understood to be without prejudice to
the passengers and paid for with the passengers' money. No dispute or the actions between the principal and agent.chanroblesvirtuallawlibrary
conclusion in the lower courts' minds on this point; hence, both the
In the present case, only the first element is present; the purchase order
MeTC6 and the CA7 commonly found that V-Gent acted as an agent of the
and the receipt were in the name of V-Gent. However, the remaining
passengers when it purchased the passengers' plane tickets.
elements are absent because: (1) V-Gent disclosed the names of the
passengers to Morning Star — in fact the tickets were in their names; and
However, while the MeTC held that V-Gent could sue as an agent acting in
(2) the transaction was paid using the passengers' money. Therefore, Rule
his own name on behalf of an undisclosed principal, the CA held that it
3, Section 3 of the Rules of Court cannot apply.
could not because the requirements for such a suit by the agent had not
been satisfied.
To define the actual factual situation, V-Gent, the agent, is suing to
recover the money of its principals — the passengers — who are the real
We agree with the Court of Appeals.
parties-in-interest because they stand to be injured or benefited in case
Morning Star refuses or agrees to grant the refund because the money
Every action must be prosecuted or defended in the name of the real
belongs to them. From this perspective, V-Gent evidently does not have a
party-in-interest - the party who stands to be benefited or injured by the
legal standing to file the complaint.
judgment in the suit.8 In suits where an agent represents a party, the
principal is the real party-in-interest; an agent cannot file a suit in his own
Finally, V-Gent argues that by making a partial refund, Morning Star was
name on behalf of the principal.
already estopped from refusing to make a full refund on the ground that V-
Gent is not the real party-in-interest to demand
Rule 3, Section 3 of the Rules of Court provides the exception when an
reimbursement.9chanrobleslaw
agent may sue or be sued without joining the principal.
We find no merit in this argument.
The power to collect and receive payments on behalf of the principal is an
ordinary act of administration covered by the general powers of an
agent.10 On the other hand, the filing of suits is an act of strict dominion.

Under Article 1878 (15) of the Civil Code, a duly appointed agent has no
power to exercise any act of strict dominion on behalf of the principal
unless authorized by a special power of attorney. An agent's authority to
file suit cannot be inferred from his authority to collect or receive
payments; the grant of special powers cannot be presumed from the grant
of general powers. Moreover, the authority to exercise special powers
must be duly established by evidence, even though it need not be in
writing.11chanrobleslaw

By granting the initial refund, Morning Star recognized V-Gent's authority

to buy the tickets and collect refunds on behalf of the passengers.
However, Morning Star's recognition of V-Gent's authority to collect a
refund for the passengers is not equivalent to recognition of V-Gent's
authority to initiate a suit on behalf of the passengers. Morning Star
therefore, is not estopped from questioning V-Gent's legal standing to
initiate the suit.

WHEREFORE, premises considered, we DENY the petition for lack of

merit.

SO ORDERED.cralawlawlibrary
G.R. No. 208928               July 8, 2015 In his Answer,12 petitioner denied respondents' allegations and countered
that: (a) at first, he bought the subject land from a person representing
ANDY ANG, Petitioner, herself as Udiaan who showed a community tax certificate as proof of
vs. identity, has in her possession OCT No. T-3593, knew the location of the
SEVERINO PACUNIO, TERESITA P. TORRALBA, SUSANA subject land, and was not afraid to face the notary public when they
LOBERANES, CHRISTOPHER N. PACUNIO, and PEDRITO P. executed the Questioned Deed of Absolute Sale; ( b) he was initially
AZARCON, represented by their attorney-in-fact, GALILEO P. prevented from entering the subject land since it was being occupied by
TORRALBA, Respondents. the Heirs of Alfredo Gaccion (Heirs of Gaccion); (c) in order to buy peace,
he had to "buy" the subject land anew from the Heirs of Gaccion; (d) he
was a buyer in good faith, for value, and was without any knowledge or
DECISION
participation in the alleged defects of the title thereof; and ( e)
respondents were never in possession of the subject land and they never
PERLAS-BERNABE, J.: paid real property taxes over the same. Ultimately, petitioner claimed that
he was duped and swindled into buying the subject land twice. 13
Assailed in this petition for review on certiorari 1 under Rule 45 of the Rules
of Court are the Decision2 dated September 28, 2012 and the After the pre-trial conference, the parties submitted the case for summary
Resolution3 dated August 13, 2013 of the Court of Appeals (CA) in CA-G.R. judgment on the basis of the documents and pleadings already
CV No. 00992-MIN, which affirmed the Summary Judgment4 dated filed.1awp++i1 The RTC then ordered the parties to simultaneously submit
September 12, 2006 of the Regional Trial Court of Cagayan de Oro City, their memoranda in support of their respective positions. 14
Branch 38 (RTC) in Civil Case No. 2003-115 with modification declaring,
inter alia, the Deed of Absolute Sale between petitioner Andy Ang
The RTC Ruling
(petitioner) and Felicisima Udiaan (Udiaan) null and void.

In a Summary Judgment15 dated September 12, 2006, the RTC ruled in

The Facts
petitioner's favor and accordingly, dismissed the case for lack of merit. 16 It
found that while respondents claimed to be Udiaan's successors-in-interest
The instant case arose from a Complaint5 dated March I 9, 2003 for over the subject land, there is dearth of evidence proving their
Declaration of Nullity of Sale, Reconveyance, and Damages filed by Pedrito successional rights to Udiaan's estate, specifically, over the subject land.
N. PaGunio, Editha P. Yaba, and herein respondents Severino Pacunio, As such, the RTC concluded that respondents are not the real parties in
Teresita P. Torralba, Susana Loberanes, Christopher N. Pacunio, and interest to institute an action against petitioner, warranting the dismissal
Pedrito P. Azaron (respondents) against petitioner before the RTC involving of their complaint.17
a 98,851 square meter (sq. m.) parcel of land originally registered in
Udiaan's name as evidenced by Original Certificate of Title (OCT) No. T-
Dissatisfied, respondents appealed18 to the CA.
35936 (subject land). In their Complaint, respondents alleged that they are
the grandchildren and successors-in-interest of Udiaan who died 7 on
December 15, 1972 in Cagayan de Oro City and left the subject land as The CA Ruling
inheritance to her heirs. However, on July 12, 1993, an impostor falsely
representing herself as Udiaan sold the subject land to petitioner, as In a Decision19 dated September 28, 2012, the CA affirmed with
evidenced by a Deed of Absolute Sale8 of even date (Questioned Deed of modification the RTC ruling in that: (a) it nullified the Questioned Deed of
Absolute Sale). Consequently, OCT No. T-3593 was cancelled and Transfer Absolute Sale; (b) declared valid the deed of absolute sale between
Certificate of Title (TCT) No. T-790519 was issued in the latter's name. In petitioner and the Heirs of Gaccion over a 3,502-sq. m. portion of the
1997, petitioner entered the subject land and used the same in his subject land; and ( c) distributed portions of the subject land to the Heirs
livestock business. Respondents then informed petitioner that he did not of Gaccion and to the children of Udiaan.20
validly acquire the subject land, and thereafter, demanded for its return,
but to no avail.10 Hence, they filed the aforesaid complaint, essentially It agreed with the RTC's finding that respondents are not real parties in
contending that Udiaan could not have validly sold the subject land to interest to the instant case, considering that, as mere grandchildren of
petitioner considering that she was already dead for more than 20 years Udiaan, they have no successional rights to Udiaan's estate. In this regard,
when the sale occurred.11 the CA ratiocinated that respondents could only succeed from said estate
by right of representation if their mother, who is one of Udiaan's purpose of this rule, to wit: Necessarily, the purposes of this provision are
children,21 predeceased Udiaan. However, such fact was not established. 22 1) to prevent the prosecution of actions by persons without any right, title
or interest in the case; 2) to require that the actual party entitled to legal
This notwithstanding, the CA nullified the Questioned Deed of Absolute relief be the one to prosecute the action; 3) to avoid multiplicity of suits;
Sale because it was clearly executed by a person other than Udiaan, who and 4) discourage litigation and keep it within certain bounds, pursuant to
died more than 20 years before such sale occurred. 23 Considering, public policy.29
however, that some of Udiaan's heirs had already sold a 9,900-sq. m.
portion of the subject land to the Heirs of Gaccion, who in turn, sold a In the instant case, respondents claim to be the successors-in-interest of
3,502-sq. m. portion to petitioner, the CA apportioned the subject land as the subject land just because they are Udiaan's
follows: (a) 3,502 sq. m. to petitioner; (b) 6,398 sq. m. to the Heirs of grandchildren.1âwphi1 Under the law, however, respondents will only be
Gaccion; and (c) the remainder of the subject land to Udiaan's children. 24 deemed to have a material interest over the subject land - and the rest of
Udiaan' s estate for that matter - if the right of representation provided
Aggrieved, petitioner moved for reconsideration, 25 but was denied in a under Article 970,30 in relation to Article 982,31 of the Civil Code is available
Resolution26 dated August 13, 2013; hence, this petition. to them. In this situation, representatives will be called to the succession
by the law and not by the person represented; and the representative
does not succeed the person represented but the one whom the person
The Issue Before the Court
represented would have succeeded.32

The core issue for the Court's resolution is whether or not the CA correctly
For such right to be available to respondents, they would have to show
declared the nullity of the Questioned Deed of Absolute Sale and
first that their mother: (a) predeceased Udiaan; (b) is incapacitated to
distributed portions of the subject land to different parties, among others,
inherit; or (c) was disinherited, if Udiaan died testate. 33 However, as
despite ruling that respondents are not real parties in interest to the
correctly pointed out by the CA, nothing in the records would show that
instant case.
the right of representation is available to respondents. Hence, the RTC and
the CA correctly found that respondents are not real parties in interest to
The Court's Ruling the instant case. It is well-settled that factual findings of the RTC, when
affirmed by the CA, are entitled to great weight and respect by the Court
The petition is meritorious. and are deemed final and conclusive when supported by the evidence on
record,34 as in this case.
Section 2, Rule 3 of the Rules of Court lays down the definition of a real
party in interest as follows: Having established that respondents are not the real parties in interest to
the instant suit, the proper course of action was for the CA to merely
SEC. 2. Parties in interest. - A real party in interest is the party who stands affirm the RTC's dismissal of their complaint. It therefore erred in
to be benefited or injured by the judgment in the suit, or the party entitled proceeding to resolve the other substantive issues of the case and granting
to the avails of the suit. Unless otherwise provided by law or these Rules, one of the principal reliefs sought by respondents, which is the declaration
every action must be prosecuted or defended in the name of the real party of the nullity of the Questioned Deed of Absolute Sale. 35 In the same vein,
in interest. the CA erred in awarding portions of the subject land to various non-
parties to the case, such as the Heirs of Gaccion and Udiaan's children.
Basic is the rule that no relief can be extended in a judgment to a stranger
The rule on real parties in interest has two (2) requirements, namely: (a) or one who is not a party to a case.36
to institute an action, the plaintiff must be the real party in interest; and
(b) the action must be prosecuted in the name of the real party in interest.
Interest within the meaning of the Rules of Court means material interest In sum, the CA transgressed prevailing law and jurisprudence in resolving
or an interest in issue to be affected by the decree or judgment of the the substantive issues of the instant case despite the fact that respondents
case, as distinguished from mere curiosity about the question involved. are not real parties in interest to the same. Necessarily, a reinstatement of
One having no material interest cannot invoke the jurisdiction of the court the R TC ruling is in order.
as the plaintiff in an action. When the plaintiff is not the real party in
interest, the case is dismissible on the ground of lack of cause of WHEREFORE, the petition is GRANTED. Accordingly, the Decision dated
action.27 In Spouses Oco v. Limbaring,28 the Court expounded on the September 28, 2012 and the Resolution dated August 13, 2013 of the
Court of Appeals in CA-G.R. CV No. 00992-MIN are hereby REVERSED and Complaint11 dated August 20, 2010 for ejectment or unlawful detainer
SET ASIDE. Accordingly, the Summary Judgment dated September 12, against respondents before the Municipal Trial Court in Cities of Antipolo
2006 of the Regional Trial Court of Cagayan de Oro City, Branch 38 in Civil City, Branch 1 (MTCC), docketed as SCA Case No. 093-10. 12
Case No. 2003-115 is REINSTATED.SO ORDERED.
In their defense,13 respondents argued that petitioner is not the real party
G.R. No. 224204, August 30, 2017 in interest to institute such complaint, since ownership over the subject
property remained with HTPMI. They expounded that under the Deed of
Assignment, only the rights and interests pertaining to the receivables
PHILIPPINE VETERANS BANK, Petitioner, v. SPOUSES RAMON AND
under the Contract to Sell were assigned/transferred to petitioner and not
ANNABELLE SABADO, Respondents.
the ownership or the right to the possession of the subject property. 14

DECISION The MTCC Ruling

PERLAS-BERNABE, J.: In a Decision15 dated April 3, 2013, the MTCC ruled in favor of petitioner

and, accordingly, ordered respondents to vacate the subject property, and
Before the Court is a petition for review on certiorari1 filed by petitioner pay petitioner the amounts of P661,919.47 as rent arrears from July 31,
Philippine Veterans Bank (petitioner) assailing the Decision 2 dated October 2008 up to July 31, 2010, P10,000.00 as attorney's fees, including costs of
29, 2015 and the Resolution3 dated April 20, 2016 of the Court of Appeals suit.16
(CA) in CA-G.R. SP No. 135922, which reversed and set-aside the
Decision4 dated November 28, 2013 and the Order5 dated April 28, 2014 of The MTCC held that by virtue of the Deed of Assignment, petitioner was
the Regional Trial Court of Antipolo City, Branch 98 (RTC) in SCA Case No. subrogated to the rights of HTPMI under the Contract to Sell and, hence, is
13-1290 and ordered that Haus Talk Project Managers, Inc. (HTPMI) be a real party in interest entitled to institute the instant suit against
impleaded as an indispensable party to the unlawful detainer case against respondents for the purpose of enforcing the provisions of the Contract to
respondents spouses Ramon and Annabelle Sabado (respondents). Sell. Further, the MTCC found petitioner's claim for compensation in the
form of rental just and equitable, pointing out that the same is necessary
The Facts to prevent respondents from unjustly enriching themselves at petitioner's
expense. Finally, the MTCC awarded petitioner attorney's fees and costs of
On May 3, 2007, HTPMI and respondents entered into a Contract to suit since it was compelled to litigate the instant complaint. 17
Sell6 whereby HTPMI agreed to sell a real property located at Lot 26, Block
1, Eastview Homes, Barangay Balimbing, Antipolo City (subject property) Aggrieved, respondents appealed18 to the RTC.
to respondents. In consideration therefor, respondents paid HTPMI the
total amount of P869,400.00, consisting of a P174,400.00 downpayment The RTC Ruling
and the balance of P695,000.00 payable in 120 equal monthly instalments.
The parties further agreed that respondents' failure to pay any amount In a Decision19 dated November 28, 2013, the RTC affirmed the MTCC's
within the stipulated period of time shall mean the forfeiture of the ruling in toto.20 It ruled that by virtue of the Deed of Assignment executed
downpayment and any other payments made in connection thereto, as by HTPMI in petitioner's favor, the latter acquired not only the right to
well as the cancellation and rescission of the Contract to Sell in accordance collect the balance of the purchase price of the subject property, but also
with law.7 Shortly thereafter, or on August 16, 2007, HTPMI executed a all the rights of the assignor, including the right to sue in its own name as
Deed of Assignment8 in favor of petitioner assigning, among others, its the legal assignee.21
rights and interests as seller in the aforesaid Contract to Sell with
respondents, including the right to collect payments and execute any act Respondents moved for reconsideration,22 which was, however, denied in
or deed necessary to enforce compliance therewith. 9 an Order23 dated April 28, 2014. Undaunted, they elevated the case to the
CA.24
On October 14, 2009, petitioner, through a Notice of Cancellation by
Notarial Act,10 cancelled or rescinded respondents' Contract to Sell due to The CA Ruling
the latter's failure to pay their outstanding obligations thereunder.
Consequently, petitioner demanded that respondents vacate the subject In a Decision25 dated October 29, 2015, the CA reversed and set aside the
property, but to no avail. Thus, petitioner was constrained to file the RTC's ruling, and accordingly: (a) remanded the case to the MTCC for
HTPMI to be impleaded therein; and (b) directed the MTCC to proceed with
the trial of the case with dispatch.26 Initially, it upheld petitioner's right as there cannot be a determination between the parties already before the
real party in interest to file the instant suit as HTPMI's assignee. However, court which is effective, complete, or equitable. Further, an indispensable
since legal title to the subject property was retained by HTPMI pursuant to party is one who must be included in an action before it may properly go
the provisions of the Deed of Assignment, the latter is not only a real party forward.
in interest, but also an indispensible party which should have been
impleaded as a plaintiff thereon and without which no final determination A person is not an indispensable party, however, if his interest in the
can be had in the present case.27 controversy or subject matter is separable from the interest of the
other parties, so that it will not necessarily be directly or
Dissatisfied, petitioners moved for reconsideration, 28 which was, however, injuriously affected by a decree which does complete justice
denied in a Resolution29 dated April 20, 2016; hence, this petition. between them. Also, a person is not an indispensable party if his
presence would merely permit complete relief between him and those
The Issue Before the Court already parties to the action, or if he has no interest in the subject matter
of the action. It is not a sufficient reason to declare a person to be an
The primordial issue is whether or not the CA correctly ruled that HTPMI is indispensable party that his presence will avoid multiple
an indispensable party to petitioner's ejectment suit against respondents litigation.33 (Emphases and underscoring supplied)
and, thus, must be impleaded therein. Guided by the foregoing parameters and as will be explained hereunder,
the CA erred in holding that HTPMI is an indispensable party to the
The Court's Ruling ejectment suit filed by petitioner against respondents.

The petition is meritorious. Under the Deed of Assignment, HTPMI assigned its rights - save for the
right of ownership - to petitioner under the Contract to
Section 7, Rule 3 of the Rules of Court mandates that all indispensable Sell:chanRoblesvirtualLawlibrary
parties should be joined in a suit, viz.:chanRoblesvirtualLawlibrary 2. RIGHTS UNDER THE CONTRACTS TO SELL. By this assignment,
SEC. 7. Compulsory joinder of indispensable parties. - Parties in interest the ASSIGNEE hereby acquires all rights of the ASSIGNOR under
without whom no final determination can be had of an action shall be the Contracts to Sell and under the law, including the right to
joined either as plaintiffs or defendants. endorse any and all terms and conditions of the Contracts to Sell
Case law defines an indispensable party as "one whose interest will be and the right to collect the amounts due thereunder from the
affected by the court's action in the litigation, and without whom no final purchaser of the Property. The ASSIGNOR for this purpose hereby
determination of the case can be had. The party's interest in the subject names, constitutes and appoints the ASSIGNEE [as its] attorney-
matter of the suit and in the relief sought are so inextricably intertwined in-fact to execute any act and deed necessary in the exercise of all
with the other parties' that his legal presence as a party to the proceeding these rights. Notwithstanding the assignment of the Contracts to Sell and
is an absolute necessity. In his absence, there cannot be a resolution of the Receivables thereunder to the ASSIGNEE, the legal title to the Property
the dispute of the parties before the court which is effective, complete, or and obligations of the ASSIGNOR under the Contracts to Sell, including the
equitable."30 "Thus, the absence of an indispensable party renders all obligation to complete the development of the property and the warranties
subsequent actions of the court null and void, for want of authority to act, of a builder under the law, shall remain the ASSIGNOR'S. x x
not only as to the absent parties but even as to those x.34 (Emphasis and underscoring supplied)
present."31 In Regner v. Logarta,32 the Court laid down the parameters in Verily, HTPMI's assignment of rights to petitioner must be deemed to
determining whether or not one is an indispensable include the rights to collect payments from respondents, and in the event
party, viz.:chanRoblesvirtualLawlibrary of the latter's default, to cancel or rescind the Contract to Sell, and
An indispensable party is a party who has x x x an interest in the resultantly, recover actual possession over the subject property, as
controversy or subject matter that a final adjudication cannot be follows:chanRoblesvirtualLawlibrary
made, in his absence, without injuring or affecting that interest, a TERMS AND CONDITIONS
party who has not only an interest in the subject matter of the
controversy, but also has an interest of such nature that a final b) the [respondents] herein agree to perform and undertake the [HTPMI]
decree cannot be made without affecting his interest or leaving the Payment Plan with the following terms:
controversy in such a condition that its final determination may be
wholly inconsistent with equity and good conscience. It has also i) Downpayment x x x of ONE HUNDRED SEVENTY FOUR THOUSAND FOUR
been considered that an indispensable party is a person in whose absence HUNDRED PESOS ONLY (P174,400.00) to be paid within twelve (12)
months after payments [sic] of the reservation. Failure to pay two (2)
consecutive monthly installments will mean cancellation of this
contract and forfeiture of all payments. Discount terms shall be based
on [HTPMI] Agreed Payment Plan.
 
xxxx

iii) Failure to pay any amount within the stimulated [sic] period of

time shall mean forfeiture of the down payment and any other
payments made and the Contract to Sell shall be cancelled and
rescinded in accordance with law.35 (Emphases and underscoring
supplied)
In view of the foregoing, the Court agrees with the findings of the courts a
quo that petitioner had the right to institute the instant suit against
respondents.

However, the Court cannot subscribe to the CA's conclusion that since
HTPMI retained ownership over the subject property pursuant to the Deed
of Assignment, it is an indispensable party to the case. As adverted to
earlier, an indispensable party is one who has an interest in the subject
matter of the controversy which is inseparable from the interest of the
other parties, and that a final adjudication cannot be made without
affecting such interest. Here, the only issue in the instant unlawful
detainer suit is who between the litigating parties has the better right to
possess de facto the subject property.36 Thus, HTPMI's interest in the
subject property, as one holding legal title thereto, is completely separable
from petitioner's rights under the Contract to Sell, which include the
cancellation or rescission of such contract and resultantly, the recovery of
actual possession of the subject property by virtue of this case. Hence, the
courts can certainly proceed to determine who between petitioner and
respondents have a better right to the possession of the subject property
and complete relief can be had even without HTPMI's participation.

In sum, both the MTCC and the RTC are correct in ruling on the merits of
the instant unlawful detainer case even without the participation of HTPMI.

WHEREFORE, the petition is hereby GRANTED. The Decision dated

October 29, 2015 and the Resolution dated April 20, 2016 of the Court of
Appeals in CA-G.R. SP No. 135922 are hereby REVERSED and SET-
ASIDE. The Decision dated November 28, 2013 and the Order dated April
28, 2014 of the Regional Trial Court of Antipolo City, Branch 98 in SCA
Case No. 13-1290, affirming in toto the Decision dated April 3, 2013 of the
Municipal Trial Court in Cities of Antipolo City, Branch 1 in SCA Case No.
093-10, are REINSTATED.

SO ORDERED.
G.R. No. 196894               March 3, 2014 A year thereafter, Spouses Crisologo prevailed in the separate collection
case filed before RTC-Br. 15 against Robert Lim So and So Keng Koc
JESUS G. CRISOLOGO and NANETTE B. CRISOLOGO, Petitioners, (defendants). Thus, on July 1, 1999, the said defendants were ordered to
vs. solidarily pay the Spouses Crisologo. When this decision attained finality,
JEWM AGRO-INDUSTRIAL CORPORATION, Respondent. they moved for execution. On June 15, 2010, a writ was eventually issued.
Acting on the same, the Branch Sheriff issued a notice of sale scheduling
an auction on August 26, 2010. The notice of sale included, among others,
DECISION
the subject properties covered by TCT Nos. 325675 and 325676, now, in
the name of JEWM.
MENDOZA, J.:
In the same proceedings, JEWM immediately filed its Affidavit of Third
This is a petition for review on certiorari under Rule 45 of the Rules of Party Claim and the Urgent Motion Ad Cautelam. It prayed for the
Court challenging the May 6, 2011 Decision1 of the Court of Appeals (CA), exclusion of the subject properties from the notice of sale. In an order,
in CA-G.R. SP No. 03896-MIN, which affirmed the September 27, dated August 26, 2010, however, the motion was denied. In turn, the
2010,2 October 7, 20103 and November 9, 20104 Orders of the Regional Spouses Crisologo posted a bond in order to proceed with the execution.
Trial Court, Davao City, Branch 14 (RTC-Br. 14), in Civil Case No. 33,551-
2010, an action for Cancellation of Lien. It is entitled "JEWM Agro-
To protect its interest, JEWM filed a separate action for cancellation of lien
Industrial Corporation v. The Registry of Deeds for the City of Davao.
with prayer for the issuance of a preliminary injunction before RTC-Br. 14,
Sheriff Robert Medialdea. John & Jane Does. and all persons acting under
docketed as Civil Case No. 33,551-2010. It prayed for the issuance of a
their directions.
writ of preliminary injunction to prevent the public sale of the subject
properties covered in the writ of execution issued pursuant to the ruling of
This controversy stemmed from various cases of collection for sum of RTC-Br. 15; the cancellation of all the annotations on the back of the
money filed against So Keng Kok, the owner of various properties including pertinent TCTs; and the issuance of a permanent injunction order after
two (2) parcels of land covered by TCT Nos. 292597 and 292600 (subject trial on the merits. "The Register of Deeds of Davao City, Sheriff Robert
properties), which were attached by various creditors including the Medialdea, John and Jane Does and all persons acting under their
petitioners in this case. As a result, the levies were annotated on the back direction" were impleaded as defendants.
of the said titles.
At the scheduled hearing before RTC-Br. 14 on September 22, 2010,
Petitioners Jesus G. Crisologo and Nannette B. Crisologo (Spouses Spouses Crisologo’s counsel appeared and filed in open court their Very
Crisologo) were the plaintiffs in two (2) collection cases before RTC, Urgent Manifestation questioning the authority of the said court to restrain
Branch 15, Davao City (RTC-Br. 15), docketed as Civil Case Nos. 26,810- the execution proceedings in RTC-Br. 15. JEWM opposed it on the ground
98 and 26,811-98, against Robert Limso, So Keng Koc, et al. Respondent that Spouses Crisologo were not parties in the case.
JEWM Agro-Industrial Corporation (JEWM) was the successor-in-interest of
one Sy Sen Ben, the plaintiff in another collection case before RTC, Branch
On September 24, 2010, Spouses Crisologo filed an Omnibus Motion
8, Davao City (RTC-Br. 8), docketed as Civil Case No. 26,513-98, against
praying for the denial of the application for writ or preliminary injuction
the same defendants.
filed by JEWM and asking for their recognition as parties. No motion to
intervene was, however, filed as the Spouses Crisologo believed that it was
On October 19, 1998, RTC-Br. 8 rendered its decision based on a unnecessary since they were already the John and Jane Does named in the
compromise agreement, dated October 15, 1998, between the parties complaint.
wherein the defendants in said case were directed to transfer the subject
properties in favor of Sy Sen Ben. The latter subsequently sold the subject
In the Order, dated September 27, 2010, RTC-Br. 14 denied Spouses
properties to one Nilda Lam who, in turn, sold the same to JEWM on June
Crisologo’s Omnibus Motion and granted JEWM’s application for a writ of
1, 2000. Thereafter, TCT Nos. 325675 and 325676 were eventually issued
preliminary injunction.
in the name of JEWM, both of which still bearing the same annotations as
well as the notice of lis pendens in connection with the other pending
cases filed against So Keng Kok. On October 1, 2010, Spouses Crisologo filed a Very Urgent Omnibus
Motion before RTC-Br. 14 praying for reconsideration and the setting aside
of its September 27, 2010 Order. This was denied in the RTC Br.-14’s 2. directing herein defendant Registry of Deeds of Davao City
October 7, 2010 Order for lack of legal standing in court considering that where the subject lands are located, to cancel all existing liens and
their counsel failed to make the written formal notice of appearance. The encumbrances on TCT No. T-325675 and T-325676 registered in
copy of this order was received by Spouses Crisologo on October 22, 2010. the name of the plaintiff, and pay the
It must be noted, however, that on October 27, 2010, they received
another order, likewise dated October 7, 2010, giving JEWM time to 3. cost of suit.
comment on their Very Urgent Omnibus Motion filed on October 1, 2010.
In its Order, dated November 9, 2010, however, RTC-Br. 14 again denied
SO ORDERED.8
the Very Urgent Motion previously filed by Spouses Crisologo.

Spouses Crisologo then filed their Omnibus Motion Ex Abudanti ad

On November 12, 2010, JEWM moved to declare the "defendants" in
Cautelam, asking RTC- Br. 14 to reconsider the above decision. Because
default which was granted in an order given in open court on November
no motion for intervention was filed prior to the rendition of the judgment,
19, 2010.
a certificate, dated March 17, 2011, was issued declaring the January 10,
2011 decision final and executory.
Spouses Crisologo then filed their Very Urgent Manifestation, dated
November 30, 2010, arguing that they could not be deemed as defaulting
On May 6, 2011, the CA eventually denied the Amended Petition filed by
parties because they were not referred to in the pertinent motion and
Spouses Crisologo for lack of merit. It ruled that the writ of preliminary
order of default.
injunction subject of the petition was already fait accompli and, as such,
the issue of grave abuse of discretion attributed to RTC-Br. 14 in granting
On November 19, 2010, Spouses Crisologo filed with the CA a petition for the relief had become moot and academic. It further held that the failure
certiorari5 under Rule 65 of the Rules of Court assailing the RTC-Br. 14 of Spouses Crisologo to file their motion to intervene under Rule 19
orders, dated September 27, 2010, October 7, 2010 and November 9, rendered Rule 65 inapplicable as a vehicle to ventilate their supposed right
2010, all of which denied their motion to be recognized as parties. They in the case.9
also prayed for the issuance of a Temporary Restraining Order (TRO)
and/or a Writ of Preliminary Injunction.
Hence, this petition.

In its Resolution, dated January 6, 2011, the CA denied the application for
ISSUES
a TRO, but directed Spouses Crisologo to amend their petition. On January
19, 2011, the Spouses Crisologo filed their Amended Petition 6 with prayers
for the issuance of a TRO and/or writ of preliminary injunction, the I. The Court of Appeals erred in holding that the action for
annulment of the aforementioned orders of RTC Br. 14, and the issuance Cancellation of Annotations may proceed even without notice to
of an order dissolving the writ of preliminary injunction issued in favor of and impleading the party/ies who caused the annotations, in clear
JEWM. contravention of the rule on joinder of parties and basic due
process.
Pending disposition of the Amended Petition by the CA, JEWM filed a
motion on December 6, 2010 before RTC-Br. 14 asking for the resolution II. The Court of Appeals erred in applying a very constrictive
of the case on the merits. interpretation of the rules in holding that a motion to intervene is
the only way an otherwise real party in interest could participate.
On January 10, 2011, RTC-Br. 14 ruled in favor of JEWM, with the
dispositive portion of its Decision7 stating as follows: III. The Court of Appeals erred in denying our application for the
issuance of a temporary restraining order and/or a writ of
preliminary injunction.
WHEREFORE, in view of all the foregoing, judgment is hereby rendered in
favor of the plaintiff as follows:
IV. The Court of Appeals erred in holding that the issues raised by
petitioners before it [had] been mooted by the January 10, 2011
1. the preliminary writ of injunction issued on October 5, 2010 is
decision of RTC Branch 14. 10
hereby made permanent;
Spouses Crisologo submit as error the CA affirmation of the RTC- Br. 14 failure to properly intervene pursuant to Rule 19; and, lastly, that the case
ruling that the action for cancellation may proceed without them being before RTC-Br. 14 became final and executory because Spouses Crisologos
impleaded. They allege deprivation of their right to due process when they did not perfect an appeal therefrom, thus, rendering the issues in the CA
were not impleaded in the case before RTC-Br. 14 despite the claim that petition moot and academic.
they stand, as indispensable parties, to be benefited or injured by the
judgment in the action for the cancellation of annotations covering the In their Reply,13 Spouses Crisologo restate the applicability of Section 108
subject properties. They cite Gonzales v. Judge Bersamin, 11 among others, of P.D. No. 1529 to the effect that any cancellation of annotation of
as authority. In that case, the Court ruled that pursuant to Section 108 of certificates of title must be carried out by giving notice to all parties-in-
Presidential Decree (P.D.) No. 1529, notice must be given to all parties in interest. This they forward despite their recognition of the mootness of
interest before the court may hear and determine the petition for the their assertion over the subject properties, to wit:
cancellation of annotations on the certificates of title.
Again, we respect JAIC’s position that "the claims of subsequent attaching
The Spouses Crisologo also question the statement of the CA that their creditors (including petitioners’) have been rendered moot and academic,
failure to file the motion to intervene under Rule 19 before RTC-Br. 14 and hence the entries in favor of said creditors have no more legal basis
barred their participation in the cancellation proceedings. They put and therefore must be cancelled." But we likewise at least ask a modicum
emphasis on the court’s duty to, at the very least, suspend the of respect by at least being notified and heard.14
proceedings before it and have such indispensable parties impleaded.
The Ruling of the Court
As to the ruling on the denial of their application for the issuance of a TRO
or writ of preliminary injunction, Spouses Crisologo claim that their
The crux of this controversy is whether the CA correctly ruled that RTC-Br.
adverse interest, evinced by the annotations at the back of the certificates
14 acted without grave abuse of discretion in failing to recognize Spouses
of title, warranted the issuance of a TRO or writ of preliminary injunction
Crisologo as indispensable parties in the case for cancellation of lien.
against JEWM’s attempt to cancel the said annotations in violation of their
fundamental right to due process.
In this respect, the Court agrees with Spouses Crisologo.
Lastly, Spouses Crisologo cast doubt on the CA ruling that the issues
presented in their petition were mooted by the RTC-Br. 14 Decision, dated In an action for the cancellation of memorandum annotated at the back of
January 10, 2011. Having been rendered without impleading indispensable a certificate of title, the persons considered as indispensable include those
parties, the said decision was void and could not have mooted their whose liens appear as annotations pursuant to Section 108 of P.D. No.
petition. 1529,15 to wit:

In their Comment,12 JEWM asserts that Spouses Crisologo’s failure to file a Section 108. Amendment and alteration of certificates. -No erasure,
motion to intervene, pleadings-in-intervention, appeal or annulment of alteration or amendment shall be made upon the registration book after
judgment, which were plain, speedy and adequate remedies then available the entry of a certificate of title or of a memorandum thereon and the
to them, rendered recourse to Rule 65 as improper; that Spouses attestation of the same by the Register of Deeds, except by order of the
Crisologo lacked the legal standing to file a Rule 65 petition since they proper Court of First Instance. A registered owner or other person having
were not impleaded in the proceedings before RTC-Br. 14; and that an interest in registered property, or, in proper cases, the Register of
Spouses Crisologo were not indispensable parties since their rights over Deeds with the approval of the Commissioner of Land Registration, may
the properties had been rendered ineffective by the final and executory apply by petition to the court upon the ground that the registered interests
October 19, 1998 Decision of RTC-Br. 8 which disposed unconditionally of any description, whether vested, contingent, expectant inchoate
and absolutely the subject properties in favor of its predecessor-in- appearing on the certificate, have terminated and ceased; or that new
interest. interest not appearing upon the certificates have arisen or been created;
or that an omission or error was made in entering a certificate or
memorandum thereon, or on any duplicate certificate; x x x or upon any
JEWM further argues that, on the assumption that Section 108 of P.D. No.
other reasonable ground; and the court may hear and determine the
1529 applies, no notice to Spouses Crisologo was required because they
petition after notice to all parties in interest, and may order the entry or
were not real parties-in-interest in the case before RTC-Br. 14, or even if
cancellation of a new certificate, the entry or cancellation of a
they were, their non-participation in the proceedings was because of their
memorandum upon a certificate, or grant any other relief upon such terms
and conditions, requiring security or bond if necessary, as it may consider appearance and ordered the striking out of Sps. Crisologos' pleadings. For
proper. this reason, the Investigating Justice recommended admonishing Judge
Omelio for failing to recognize the Sps.Crisologo as indispensable parties in
In Southwestern University v. Laurente,16 the Court held that the that case.
cancellation of the annotation of an encumbrance cannot be ordered
without giving notice to the parties annotated in the certificate of title x x x           x x x          x x x
itself. It would, thus, be an error for a judge to contend that no notice is
required to be given to all the persons whose liens were annotated at the Clearly, the cancellation of the annotation of the sale without notifying the
back of a certificate of title. buyers, Sps. Crisologo, is a violation of the latter’s right to due process.
Since this is the second time that Judge Omelio has issued an order which
Here, undisputed is the fact that Spouses Crisologo’s liens were indeed fails to notify or summon the indispensable parties, we find Judge Omelio
annotated at the back of TCT Nos. 325675 and 325676. Thus, as persons guilty of gross ignorance of the law, with a warning that repetition of the
with their liens annotated, they stand to be benefited or injured by any same or similar act will merit a stiffer penalty in the future.
order relative to the cancellation of annotations in the pertinent TCTs. In
other words, they are as indispensable as JEWM itself in the final xxx
disposition of the case for cancellation, being one of the many lien holders.
WHEREFORE, … We find Judge George E. Omelio GUILTY of four counts of
As indispensable parties, Spouses Crisologo should have been joined as the serious charge of gross ignorance of the law for the following acts: (a)
defendants in the case pursuant to Section 7, Rule 3 of the Rules of Court, refusing to recognize Spouses Jesus G. Crisologo and Nannette B.
to wit: Crisologo as indispensable parties; … in violation of the latter's right to due
process. Accordingly, we impose upon Judge George E. Omelio the penalty
SEC. 7. Compulsory joinder of indispensable parties. – Parties in interest of fine of Forty Thousand Pesos (₱40,000.00), with a warning that
without whom no final determination can be had of an action shall be repetition of the same or similar acts will be dealt with more severely.
joined either as plaintiffs or defendants.17
SO ORDERED.20
The reason behind this compulsory joinder of indispensable parties is the
complete determination of all possible issues, not only between the parties The trial court should have exercised prudence in denying Spouses
themselves but also as regards other persons who may be affected by the Crisologo’s pleas to be recognized as indispensable parties. In the words of
judgment.18 the Court, "Judge Omelio should be penalized for failing to recognize Sps.
Crisologo as indispensable parties and for requiring them to file a motion
In this case, RTC-Br. 14, despite repeated pleas by Spouses Crisologo to to intervene, considering that a simple perusal of the certificates of title
be recognized as indispensable parties, failed to implement the mandatory would show Sps. Crisologo’s adverse rights because their liens are
import of the aforecited rule. annotated at the back of the titles."21

In fact, in Sps. Crisologo v. Judge George E. Omelio, 19 a related This manifest disregard of the basic rules and procedures constitutes a
administrative case, the Court found the trial judge guilty of gross grave abuse of discretion.
ignorance of the law when it disregarded the claims of Spouses Crisologo
to participate. In part, the Court stated: In State Prosecutors II Comilang and Lagman v. Judge Medel Belen, 22 the
Court held as inexcusable abuse of authority the trial judge’s "obstinate
This is not the first time Judge Omelio has rendered a decision affecting disregard of basic and established rule of law or procedure." Such level of
third parties’ interests, without even notifying the indispensable parties. In ignorance is not a mere error of judgment. It amounts to "evasion of a
the first disputed case, JEWM Agro-Industrial Corporation v. Register of positive duty or to a virtual refusal to perform a duty enjoined by law, or
Deeds, Sheriff Medialdea, John & Jane Does and all persons acting under to act at all in contemplation of law,"23 or in essence, grave abuse of
their directions, Judge Omelio failed to cause the service of proper discretion amounting to lack of jurisdiction.
summons upon the John and Jane Does impleaded in the complaint. Even
when Sps. Crisologo voluntarily appeared in court to be recognized as the
John and Jane Does, Judge Omelio refused to acknowledge their
Needless to say, judges are expected to exhibit more than just a cursory The same is also true if recourse to Annulment of Judgment under Rule 47
acquaintance with statutes and procedural laws. They must know the laws is made since this remedy presupposes a final judgment already rendered
and apply them properly in good faith as judicial competence requires no by a trial court.
less.24
At any rate, the remedy against an interlocutory order, not subject of an
Despite the clear existence of grave abuse of discretion on the part of appeal, is an appropriate special civil action under Rule 65, provided that
RTC-Br. 14, JEWM asserts technical grounds on why the CA did not err in the interlocutory order is rendered without or in excess of jurisdiction or
dismissing the petition via Rule 65. It states that: with grave abuse of discretion. Only then is certiorari under Rule 65
allowed to be resorted to.26
a) The Crisologos could have used other available remedies such
as intervention under Rule 19, an appeal of the judgment, or even This takes particular relevance in this case where, as previously discussed,
an annulment of judgment, which are, by all means, plain, speedy RTC-Br. 14 acted with grave abuse of discretion in not recognizing Spouses
and adequate remedies in the ordinary course of law; Crisologo as indispensable parties to the pertinent action.

b) The Crisologos lack legal standing to file the Rule 65 petition Based on the above, recourse to the CA via Rule 65 would have already
since they were not impleaded in the Branch 14 case. been proper, except for one last issue, that is, Spouses Crisologo’s legal
standing to file the same. JEWM cites DBP v. COA 27 where the Court held:
The rule is that a petition for certiorari under Rule 65 is proper only if
there is no appeal, or any plain speedy, and adequate remedy in the The petition for certiorari under Rule 65, however, is not available to any
ordinary course of law. person who feels injured by the decision of a tribunal, board or officer
exercising judicial or quasi judicial functions. The ‘person aggrieved’ under
In this case, no adequate recourse, at that time, was available to Spouses Section 1 of Rule 65 who can avail of the special civil action of certiorari
Crisologo, except resorting to Rule 65. pertains only to one who was a party in the proceedings before the court a
quo, or in this case before the COA. To hold otherwise would open the
courts to numerous and endless litigations.
Although Intervention under Rule 19 could have been availed of, failing to
use this remedy should not prejudice Spouses Crisologo. It is the duty of
RTC-Br. 14, following the rule on joinder of indispensable parties, to simply Under normal circumstances, JEWM would be correct in their averment
recognize them, with or without any motion to intervene. Through a that the lack of legal standing on the part of Spouses Crisologo in the case
cursory reading of the titles, the Court would have noticed the adverse before RTC-Br. 14 prevents the latter’s recourse via Rule 65.
rights of Spouses Crisologo over the cancellation of any annotations in the
subject TCTs. This case, however, is an exception. In many instances, the Court has
ruled that technical rules of procedures should be used to promote, not
Neither will appeal prove adequate as a remedy since only the original frustrate the cause of justice. Rules of procedure are tools designed not to
parties to an action can appeal.25 Here, Spouses Crisologo were never thwart but to facilitate the attainment of justice; thus, their strict and rigid
impleaded. Hence, they could not have utilized appeal as they never application may, for good and deserving reasons, have to give way to, and
possessed the required legal standing in the first place. be subordinated by, the need to aptly dispense substantial justice in the
normal cause.28
And even if the Court assumes the existence of the legal standing to
appeal, it must be remembered that the questioned orders were Be it noted that the effect of their non-participation as indispensable
interlocutory in character and, as such, Spouses Crisologo would have to parties is to preclude the judgment, orders and the proceedings from
wait, for the review by appeal, until the rendition of the judgment on the attaining finality. Time and again, the Court has ruled that the absence of
merits, which at that time may not be coming as speedy as practicable. an indispensable party renders all subsequent actions of the court null and
While waiting, Spouses Crisologo would have to endure the denial of their void for want of authority to act, not only as to the absent parties but even
right, as indispensable parties, to participate in a proceeding in which their to those present. Consequently, the proceedings before RTC-Br. 14 were
indispensability was obvious. Indeed, appeal cannot constitute an null and void including the assailed orders, which may be "ignored
adequate, speedy and plain remedy. wherever and whenever it exhibits its head."29
To turn a blind eye to the said nullity and, in turn, rule as improper the
recourse to Rule 65 by the lack of legal standing is to prolong the denial of
due process to the persons whose interests are indispensible to the final
disposition of the case. It will only result in a protracted litigation as
Spouses Crisologo will be forced to rely on a petition for the annulment of
judgment before the CA (as the last remaining remedy), which may again
reach this Court.1âwphi1 To prevent multiplicity of suits and to expedite
the swift administration of justice, the CA should have applied liberality by
striking down the assailed orders despite the lack of legal standing on the
part of Spouses Crisologo to file the Rule 65 petition before it. Besides, this
lacking requirement, of which Spouses Crisologo were not even at fault, is
precisely the reason why this controversy arose.

All told, the CA erred in dismissing the amended petition filed before it and
in not finding grave abuse of discretion on the part of RTC-Br. 14.

WHEREFORE, the petition is GRANTED. The May 6, 2011 Decision of the

Court of Appeals is NULLIFIED and SET ASIDE. The September 27, 2010,
October 7, 2010 and November 9, 2010 Orders of the Regional Trial Court,
Branch 14, Davao City, are likewise NULLIFIED and SET ASIDE. Civil Case
No. 33,551-2010 is hereby REMANDED to the trial court for further
proceedings. The respondent is ordered to implead all parties whose
annotations appear at the back of Transfer Certificate of Title Nos. 325675
and 325676.

SO ORDERED.
 G.R. No. 191667, April 22, 2015 and will result to wanton desecration of the [Public Plaza]." 12 Further,
Cacayuran requested the municipal officers to furnish him with the various
LAND BANK OF THE PHILIPPINES, Petitioner, v. EDUARDO M. documents relating to the Public Plaza's redevelopment, which, however,
CACAYURAN, Respondent, went unheeded.13 Thus, Cacayuran, invoking his right as a taxpayer, filed a
complaint14 against LBP and various officers of the Municipality, including
MUNICIPALITY OF AGOO, LA UNION, Intervenor. Mayor Eriguel (but excluding the Municipality itself as party-defendant),
assailing the validity of the aforesaid loan agreements and praying that the
A M E N D E D    D E C I S I O N commercialization of the Public Plaza be enjoined. 15

Initially, the municipal officers moved for the outright dismissal of the
PERLAS-BERNABE, J.:
complaint, which was denied, thus constraining them to file their
respective answers. For its part, LBP asserted, inter alia, that Cacayuran
Before the Court are the following motions: (a) the Motion for did not have any cause of action since he was not privy to the loan
Reconsideration1 dated May 22, 2013, filed by petitioner Land Bank of the agreements entered into by LBP and the Municipality. 16
Philippines (LBP) assailing the Decision2 dated April 17, 2013 of the Court
(April 17, 2013 Decision), which upheld the Decision 3 dated March 26, During the pendency of the proceedings, the construction of the Agoo
2010 of the Court of Appeals (CA) in CA-G.R. CV. No. 89732 affirming with People's Center was completed. Later on, the Sangguniang Bayan passed
modification the Decision4 dated April 10, 2007 of the Regional Trial Court Municipal Ordinance No. 02-200717 declaring the area where such building
of Agoo, La Union, Branch 31 in Civil Case No. A-2473; (b) the Motion for stood as patrimonial property of the Municipality. 18
Leave to Intervene with Pleading-in-Intervention Attached 5 dated July 8,
2013, filed by the Municipality of Agoo, La Union (Municipality) praying The RTC Ruling
that it be allowed to intervene in this case; and (c) the Motion for
Reconsideration-in-Intervention6 dated July 8, 2013, filed by the In a Decision19 dated April 10, 2007, the RTC declared the Subject Loans
Municipality seeking that the Court set aside its April 17, 2013 Decision null and void, finding that the resolutions approving the procurement of
and promulgate a new one in its stead dismissing the case (subject the same were passed in a highly irregular manner and thus, ultra vires.
motions). As such, it pronounced that the Municipality was not bound by the Subject
Loans and that the municipal officers should, instead, be held personally
The Facts liable for the same. Further, it ruled that since the Plaza Lot is a property
for public use, it cannot be used as collateral for the Subject Loans. 20
The instant case arose from two (2) loans (Subject Loans) entered into by
the Municipality with LBP in order to finance the Redevelopment Plan of Aggrieved, LBP and the municipal officers appealed21 to the CA. However,
the Agoo Public Plaza (Public Plaza). Through Resolution Nos. 68- the appeal of the municipal officers was deemed abandoned and dismissed
20057 and 139-2005,8 the Sangguniang Bayan  of the Municipality for their failure to file an appellants' brief despite due notice. 22 Thus, only
(Sangguniang Bayan) authorized its then-Mayor Eufranio Eriguel (Mayor LBP's appeal was given due course by the CA.23
Eriguel) to enter into a P4,000,000.00-loan with LBP, the proceeds of
which were used to construct ten (10) kiosks at the Public Plaza. Around a The CA Ruling
year later, the SB issued Resolution Nos. 58-2006 9 and 128-2006,10 this
time authorizing Mayor Eriguel to obtain a P28,000,000.00-loan from LBP In a Decision24 dated March 26, 2010, the CA affirmed the ruling of the
for the construction of a commercial center named "Agoo People's Center" RTC, with modification excluding then-Vice Mayor Antonio Eslao from
within the premises of the Public Plaza. In order to secure the Subject personal liability arising from the Subject Loans. It held that: (a)
Loans, the Municipality used as collateral, among others, a 2,323.75- Cacayuran had locus standi to file the instant complaint, considering that
square meter lot situated at the south eastern portion of the Public Plaza he is a resident of the Municipality and the issue at hand involved public
(Plaza Lot).11 interest of transcendental importance; (b) Resolution Nos. 68-2005, 138-
2005, 58-2006, 126-2006 were invalidly passed due to non-compliance
However, a group of residents, led by respondent Eduardo M. Cacayuran with certain provisions of Republic Act No. 7160, 25 otherwise known as the
(Cacayuran), opposed the redevelopment of the Public Plaza, as well as Local Government Code of 1991 (LGC); (c) the Plaza Lot is property of
the funding therefor thru the Subject Loans, claiming that these were public dominion, and thus, cannot be used as collateral; and (d) the
"highly irregular, violative of the law, and detrimental to public interests,
procurement of the Subject Loans were ultra vires acts for having been The Court's Ruling
entered into without proper authority and that the collaterals used therefor
constituted improper disbursement of public funds. 26 The Court rules in the affirmative.

Dissatisfied, LBP filed a petition for review on certiorari27 before this Court. Section 7, Rule 3 of the Rules of Court mandates that all indispensable
parties should be joined in a suit, viz.:
Proceedings Before the Court
SEC. 7. Compulsory joinder of indispensable parties. - Parties-in-interest
In a Decision28 dated April 17, 2013 the Court denied LBP's petition, and without whom no final determination can be had of an action shall be
accordingly, affirmed the ruling of the CA. Agreeing with the CA, the Court joined either as plaintiffs or defendants.
held that: (a) Cacayuran had legal standing to institute a taxpayer's
suit;29 (b) Resolution Nos. 68-2005, 139-2005, 58-2006, 126-2006 cannot
"An indispensable party is one whose interest will be affected by the
be relied upon to validate the Subject Loans, as the LGC requires the
court's action in the litigation, and without whom no final determination of
passing of an ordinance in order for any loan agreement to be valid; 30 and
the case can be had. The party's interest in the subject matter of the suit
(c) the procurement of the Subject Loans are ultra vires  acts of the
and in the relief sought are so inextricably intertwined with the other
municipal officers who approved the same, and thus, liability therefor shall
parties' that his legal presence as a party to the proceeding is an absolute
devolve upon them.31
necessity. In his absence, there cannot be a resolution of the dispute of
the parties before the court which is effective, complete, or
Undaunted, LBP moved for reconsideration, basically reiterating its earlier
equitable."37 Thus, the absence of an indispensable party renders all
position that Cacayuran had no legal standing to sue, and that Resolution
subsequent actions of the court null and void, for want of authority to act,
Nos. 68-2005, 139-2005, 58-2006, and 126-2006 may be relied upon in
not only as to the absent parties but even as to those present. 38
validating the Subject Loans.32
Nevertheless, it must be stressed that the failure to implead any
Meanwhile, the Municipality filed a Motion for Leave to Intervene with
indispensable party to a suit does not necessarily result in the outright
Pleading-In-Intervention Attached33 dated July 8, 2013 and a Motion for
dismissal of the complaint. In Heirs of Mesina v. Heirs of Fian, Sr.39 the
Reconsideration in-Intervention34 of even date, praying that it be included
Court definitively explained that in instances of non-joinder of
as a party-litigant to the instant case. It contends that as a contracting
indispensable parties, the proper remedy is to implead them and not to
party to the Subject Loans, it is an indispensable party to the action filed
dismiss the case:
by Cacayuran. As such, there cannot be any "real disposition" of the
instant suit by reason of its exclusion from the same.
The non-joinder of indispensable parties is not a ground for the
dismissal of an action. At any stage of a judicial proceeding and/or at
In opposition,  Cacayuran maintains that LBP did not raise any new
35
such times as are just, parties may be added on the motion of a party or
matter to warrant reconsideration of the April 17, 2013 Decision. Anent
on the initiative of the tribunal concerned. If the plaintiff refuses to
the Municipality's motion to intervene, Cacayuran insists that the
implead an indispensable party despite the order of the court, that court
Municipality is not a real party-in-interest to the instant case as his
may dismiss the complaint for the plaintiffs failure to comply with the
complaint is against the municipal officers in their personal capacity for
order. The remedy is to implead the non-party claimed to be
their  ultra vires acts which are not binding on the Municipality.
indispensable.40 (Emphases and underscoring supplied)
Finally, in its Comment on the Motion for Leave to Intervene and Motion
for Reconsideration-in-Intervention36 dated May 6, 2014, LBP agrees with In this case, a judicious review of the records reveals that Cacayuran's
the Municipality that the latter is an indispensable party to the instant case complaint against LBP and the municipal officers primarily prays that the
and as such, should be included herein. commercialization of the Public Plaza be enjoined and also, that the
Subject Loans be declared null and void for having been unlawfully entered
The Issue Before the Court into by the said officers. However, Cacayuran failed to implead in his
complaint the Municipality, a real party-in-interest 41 and an indispensable
The core issue for the Court's resolution is whether or not the Municipality party that stands to be directly affected by any judicial resolution on the
should be deemed as an indispensable party to the instant case, and thus, case, considering that: (a) the contracting parties to the Subject Loans are
be ordered impleaded herein. LBP and the Municipality; and (b) the Municipality owns the Public Plaza as
well as the improvements constructed thereon, including the Agoo People's Loans. To the mind of the Court, the municipal officers would have been in
Center. As the Municipality aptly points out: 42 the best position to raise this issue; however, they were unable to do so
because their appeal before the CA was deemed abandoned for their
3. To recapitulate: The case had its beginnings in the two (2) Loans failure to file an appellants' brief on time.
obtained by [the Municipality] from [LBP] and by the Board
Resolutions passed and adopted by the Sangguniang Bayan of Agoo, La Be that as it may, the Court is not precluded from taking cognizance of the
Union, together with the Mayor and Vice-Mayor of the Municipality. Municipality's status as an indispensable party even at this stage of the
proceedings. Indeed, the presence of indispensable parties is necessary to
xxxx vest the court with jurisdiction44 and, corollarily, the issue on jurisdiction
may be raised at any stage of the proceedings.45 Thus, as it has now come
3d. The two (2) Loans were covered and evidenced by separate Loan to the fore that any resolution of this case would not be possible and,
Agreements and Mortgage/Assignment Documents. The parties which hence, not attain any real finality due to the non-joinder of the
entered into and executed the covering documents were [LBP] as Municipality, the Court is constrained to set aside all subsequent
lender and [the Municipality] as borrower. actuations of the courts a quo in this case, including that of the Court's,
and remand the case all the way back to the RTC for the inclusion of all
3e. When the construction was about 40% complete, [Cacayuran] as a indispensable parties to the case and its immediate disposition on the
taxpayer filed the case against the: (i) Mayor; (ii) Vice-Mayor; and (iii) Ten merits.46 With this, the propriety of the Municipality's present intervention
(10) Members [of] the Sangguniang Bayan [of] Agoo, La Union, as is now mooted.
defendants. [The Municipality] was excluded, and was not impleaded as a
defendant in the case. WHEREFORE, the subject motions are PARTLY GRANTED. The Decision
dated April 17, 2013 of the Court, which upheld the Decision dated March
xxxx 26, 2010 of the Court of Appeals in CA-G.R. CV. No. 89732 affirming with
modification the Decision dated April 10, 2007 of the Regional Trial Court
Indeed, [the Municipality! Ion whose lands stands and is found the of Agoo, La Union, Branch 31 in Civil Case No. A-2473 is hereby SET
Agoo Public Plaza, where the Kiosks and Commercial Building were ASIDE. Accordingly, the instant case is REMANDED to the court a quo,
under construction and which constructions were sought to be which is hereby DIRECTED to order respondent Eduardo M. Cacayuran to
restrained] stands to be benefited or injured by the judgment in implead all indispensable parties and thereafter, PROCEED with the
the case so filed or the party entitled to the avails of the case and resolution of the case on the merits WITH DISPATCH.
is, therefore, the real party-in-interest.
SO ORDERED.
xxxx

3k. Without having to say so, the RTC dispositions as affirmed with

modification by the CA Decision which, in turn was affirmed by the
SC Decision must not be binding upon [the Municipality], the real
party-in-interest, the indispensable party in fact, not impleaded as
defendant in this case.43 (Emphases and underscoring supplied).

The Court observes that it is only now that the issue of the Municipality's
exclusion from the instant case, despite its status as an indispensable
party, became apparent. This recent finding may be credited to the fact
that the initial parties before the Court, i.e., LBP and Cacayuran, have
dissimilar interests from that of the Municipality, and, hence, had no
incentive to raise the issue of the latter's status as an indispensable party.
On the one hand, Cacayuran's interest to the case is centered on the
declaration of nullity of the Subject Loans, as well as the enjoinment of the
commercialization of the Public Plaza; and on the other hand, LBP's
interest to the case is anchored on its capacity as creditor to the Subject
 G.R. No. 225309, March 06, 2018
Thereafter, Spouses Zulueta were succeeded by Antonio Zulueta
ROSARIO ENRIQUEZ VDA. DE SANTIAGO, Petitioner, v. ANTONIO T. (Antonio), who transferred all his rights and interests in the excluded lots
VILAR, Respondent. to Eduardo Santiago (Eduardo). Claiming his rights and interests over the
excluded lots, Eduardo, through his counsel, sent a letter to GSIS for the
G.R. No. 225546, , March 06, 2018 return of the same.9

GOVERNMENT SERVICE INSURANCE SYSTEM In May 1990, Antonio, as represented by Eduardo, filed an Action for
(GSIS), Petitioner, v. ANTONIO T. VILAR, Respondent. Reconveyance of the excluded lots against the GSIS. Subsequently,
Antonio was substituted by Eduardo. Upon Eduardo's demise, however, he
was substituted by his widow, herein petitioner Rosario. 10
DECISION
In a Decision11 dated December 17, 1997, the Regional Trial Court (RTC)
TIJAM, J.: of Pasig City, Branch 71, ordered GSIS to reconvey to Rosario the
excluded lots or to pay the market value of said lots in case reconveyance
Before this Court is a consolidated Petition for Review on Certiorari1 under is not possible. The Registry of Deeds of Pasig City was likewise ordered to
Rule 45 of the Rules of Court, assailing the Decision 2 dated February 10, cancel the titles covering the excluded lots issued in the name of GSIS.
2014 and Amended Decision3 dated June 17, 2016 of the Court of Appeals The dispositive portion thereof reads:
(CA) in CA-G.R. SP No. 117439, filed by petitioner Rosario Enriquez Vda. WHEREFORE, judgment is hereby rendered in favor of [Rosario] and
de Santiago (Rosario) and petitioner Government Service Insurance against [GSIS]:
System (GSIS).
1. Ordering defendant to reconvey to [Rosario] the seventy-eight (78) lots
Facts of the Case released and excluded from the foreclosure sale including the additional
exclusion from the public sale, namely:
Spouses Jose C. Zulueta and Soledad Ramos (Spouses Zulueta), registered
owners of several parcels of land covered by Transfer Certificate of Title a. Lot Nos. 1, 6, 7, 8, 9, 10 and 13, Block I (Old Plan).
(TCT) Nos. 26105, 37177 and 50356 (mother titles), obtained various b. Lot Nos. 1, 3, 4, 5, 7, 8, 10, Block II (Old Plan).
loans secured by the mother titles from the GSIS. The amount of loans, c. Lot Nos. 3, 10, 12 and 13, Block I (New Plan), Block III
with the accumulated value of P3,117,000.00 were obtained from (Old Plan).
September 1956 to October 1957. 4 d. Lot Nos. 7, 14 and 20, Block III (New Plan), Block V (Old
Plan).
From the records, the lot covered by Transfer Certificate of Title (TCT) No. e. Lot Nos. 13 and 20, Block IV (New Plan), Block VI (Old
26105 was divided into 199 lots. Under the first mortgage contract, 78 of Plan).
these lots were excluded from the mortgage. 5 f. Lot Nos. 1, 2, 3 and 10, Block V (New Plan), Block VII (Old
Plan).
When Spouses Zulueta defaulted in their payment, GSIS extra-judicially g. Lot Nos. 1, 5, 8, 15, 26 and 27, Block VI (New Plan), Block
foreclosed the mortgages in August 1974 wherein the latter emerged as VIII (Old Plan).
the highest bidder. A certificate of sale was then issued. GSIS, however, h. Lot Nos. 7 and 12, Block VII (New Plan), Block II (Old
consolidated its title on all of the three mother titles, including the 78 lots Plan),
which were expressly excluded from the mortgage contract. 6 i. Lot Nos. 1, 4 and 6, Block VIII (New Plan), Block X (Old
Plan).
Later, GSIS sold the foreclosed properties to Yorkstown Development j. Lot 5, Block X (New Plan), Block XIII (Old Plan).
Corporation (YDC). The same, however, was disapproved by the Office of k. Lot 6, Block XI (New Plan), Block XII (Old Plan).
the President. Accordingly, the TCTs issued in favor of YDC were canceled. 7 l. Lots 2, 5, 12 and 15, Block I.
m. Lots 6, 9 and 11, Block 2.
When GSIS reacquired the properties sold to YDC, it began to dispose the n. Lots 1, 5, 6, 7, 16 and 23, Block 3.
foreclosed lots, including those not covered by the foreclosure sale. 8 o. Lot 6, Block 4.
 p. Lots 5, 12, 13 and 24, Block 5. Funds.20
q. Lots 10 and 16, Block 6.
r. Lots 6 and 15, Block 7. In an Order21 dated September 12, 2006, the RTC ordered the release of
s. Lots 13, 24, 28 and 29, Block 8. said deposits and the enforcement of the writ of execution earlier issued,
t. Lots 1, 11, 17 and 22, Block 9. up to extent allowed per the CA decision. The 90% of the proceeds of the
u. Lots 1, 2, 3 and 4, Block 10. execution was ordered to be turned over immediately to Rosario.
v. Lots 1,2,3 and 5 (New), Block 11.
The CA, however, in CA-G.R. SP No. 84079, rendered a Decision 22 dated
2. Ordering [GSIS] to pay [Rosario], if the seventy- eight (78) excluded August 3, 2006, wherein it partially granted the petition of GSIS. The CA
lots could not be reconveyed; the fair market value of each of said lots. modified the ruling of the RTC in that the extent of the value of the
excluded lots shall be P399,828,000 and that the execution of the same
3. Ordering the Registry of Deeds of Pasig City, to cancel the land titles may immediately proceed while the writ of preliminary injunction against
covering the excluded lots in the name of [GSIS] or any of its successors- the execution of the judgment award is made permanent. 23
in-interest including all derivative titles therefrom and to issue new titles in
[Rosario's] name. In the meantime, while resolving several motions filed before the RTC
following the CA decision dated August 3, 2006, the RTC, in an
4. Ordering the Register of Deeds of Pasig City, to cancel the Notices of Lis Order24 dated November 20, 2006 limited the attorney's fees of Rosario's
Pendens inscribed in TCT No. PT-80342 under Entry No. PT-12267/T- counsels to the 10% of the P399,828,000 based on quantum meruit,
23554; TCT No. 81812 under Entry No. PT-12267/T-23554; and TCT No. among others. Likewise, in the same order, the RTC denied GSIS' motion
PT-84913 under Entry No. PT-12267/T-23554. for reconsideration on the RTC s September 12, 2006 Order. 25

5. Costs of suit. Atty. Jose A. Suing (Atty. Suing), counsel in the reconveyance case for
Rosario, questioned the said Order dated November 20, 2006 by the RTC
Counterclaims filed by [GSIS], intervenors Urbano and intervenors as it allegedly reduced his attorney's fee to 6% of the judgment award
Gonzales are DISMISSED. instead of 35% as stated in the Memorandum of Understanding between
him and Rosario.26 The same, however, was already resolved by this Court
SO ORDERED.12 in a Decision27 dated October 21, 2015 in G.R. Nos. 194814 (Rosario
Enriquez Vda. De Santiago v. Atty. Jose A. Suing) & 194825 (Jaime C.
On appeal, the CA affirmed the trial court's rulings in a Decision dated Vistar v. Atty. Jose A. Suing) wherein the Court affirmed the RTC's ruling
February 22, 2002.13 The same was affirmed by this Court in a that attorney's fees in the amount of 6% of the partially executed
Decision14 dated October 28, 2003 in G.R. No. 155206. Accordingly, an judgment is considered fair partial compensation for his legal services.
entry of judgment was issued.15 When the decision became final and
executory, Rosario filed a motion for execution. 16 GSIS, for its part, filed a Petition for Certiorari and Prohibition before this
Court to annul the Orders dated September 12, 2006 and November 20,
In an Order17 dated April 27, 2004, the RTC granted the motion for 2006 of the RTC. Also, GSIS filed a Petition for Review on Certiorari under
execution. The RTC fixed the current fair market value of the lots at Rule 45 to reverse and set aside the CA Decision dated August 3, 2006.
P35,000 per square meter or a total of P1,166,165,000. Thereafter, in an These two petitions were subsequently consolidated upon motion of
Order18 dated May 13, 2004, the RTC denied the motion filed by the GSIS GSIS.28 The same, however, were later dismissed by this Court in a
for the quashal of the writ of execution. Decision29 dated December 18, 2009 in G.R. Nos. 175393 (Government
Service Insurance System v. Regional Trial Court of Pasig City, Branch 71)
On May 21, 2004, GS1S filed a Petition for Certiorari and Prohibition before and 177731 (Government Service Insurance System v. Laviña).
the CA, docketed as CA-G.R. SP No. 84079, ascribing grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the In the interim, Rosario and a certain Jaime Vistar (Jaime) filed a Joint
RTC in denying GSIS' motion to quash.19 Manifestation for Judicial Confirmation and Approval of an Agreement
dated January 2, 2009 before the RTC. In said Agreement, it was alleged
Meanwhile, to effect the implementation of the writ of execution, Rosario, that Rosario assigned to Jaime her share, right, participation and interest
through counsel, filed a Motion to Direct the Sheriff to Proceed with the in the reconveyance case equivalent to 50% of whatever Rosario is
Garnished Funds of GSIS with DBP and PNB with Motion for Immediate entitled to receive from the same. Similarly, Eastern Petroleum
Execution of Undersigned Counsel's Attorney's Lien Against such Garnished Corporation (EPC) and Albert Espiritu (Albert) filed a Motion to Intervene,
which was supported by the copies of Deed of Assignment entered into by 5. The balance on the remaining 30% shall also remain in
Rosario and EPC, as well as copies of Memorandum of Agreement and custodia legis subject to any settlement or compromise the
Special Power of Attorney. In said Deed of Assignment, it was averred that claimants may enter with [Rosario]."
Rosario transferred to EPC 40% of the proceeds of the judgment award in
the reconveyance case while in said Memorandum of Agreement, EPC Let an alias writ immediately issue.
ceded to Albert half of the amount ceded by Rosario. 30
SO ORDERED.33
On the other hand, herein respondent Antonio Vilar (Vilar) filed a Verified
Omnibus Motion (for Substitution of Party-Plaintiff With Authority to Hence, Vilar filed a Petition for Certiorari before the CA, docketed as CA-
Implement Writ of Execution Until Full Satisfaction of the Final Judgment of G.R. SP No. 117439, ascribing grave abuse of discretion on the part of the
the Court) before the RTC. In his motion, Vilar alleged that after Antonio RTC in merely noting and not granting Vilar's motion. 34 In a
transferred his rights and interests to Eduardo, the latter assigned to Vilar Decision35 dated February 10, 2014, the CA granted Vilar's petition. The
90% of his interest in the judgment proceeds of the reconveyance case. dispositive portion thereof reads:
Further, Vilar averred that he and Eduardo agreed that the Deed of WHEREFORE, the instant Petition is GRANTED. The Order dated
Assignment shall still take effect despite the fact of substitution. 31 December 8, 2010 of the [RTC], Branch 71, Pasig City is
hereby MODIFIED as follows:
In resolving Vilar's motion, the RTC merely noted the same without action
in its Order32 dated December 8, 2010. The dispositive portion thereof 1. The Verified Omnibus Motion (for Substitution of Party
reads: Plaintiff with Authority to Implement Writ of Execution
WHEREFORE, premises considered, the dispositive portion of the Order Until Full Satisfaction of the Final Judgment of the Court)
dated 17 September 2010 is hereby AMENDED to read as follows: filed by [Vilar] through counsel is GRANTED;

"x x x x 2. Accordingly, [Vilar] is 1MPLEADED as party-plaintiff in

substitution of [Rosario];
1. To issue an alias writ of execution on the partial execution
of Php399,828,000.00; 3. And upon satisfaction/payment by [GSIS] of the amount of
P399,828,000.00, the Branch Sheriff of the trial court is
2. Upon satisfaction/payment by [GSIS] of the aforesaid directed to give 90% of the 35% of the share of [Rosario]
amount the Branch Sheriff of this Court is directed to to [Vilar]. The remaining 10% of said 35% shall be
immediately deposit 35% of the said amount to the deposited to the account of [Rosario].
account of [Rosario];
The Order dated December 8, 2010 is AFFIRMED in all other respects.
3. The other 35% shall remain in custodia legis subject to the
final disposition of Atty. Suing's claim for attorney's fees SO ORDERED.36
now pending before the [CA] or any settlement he may
On June 17, 2016, the CA issued its assailed Amended Decision, 37 which in
enter into with [Rosario]; provided, however, that the sum
essence, denied the motion for intervention filed by Atty. Gilberto Alfafara
of Php23,989,680.00 shall be immediately satisfied and
(Atty. Alfafara), former counsel of Vilar and denied GSIS1 partial motion
released to Atty. Suing to be taken from said 35%
for reconsideration and Rosario's motion to intervene and to admit motion
attorney's fees;
for reconsideration. The fallo thereof reads:
WHEREFORE, the Court resolves as follows:
4. The award of attorney's fees to Atty. Benjamin Santos
(Php13,993,980.00), Atty. Sherwin S. Gatdula
(Php1,599,312.00) and Atty. Wellington B. Lachica 1. [Atty. Alfafara's] Motion for Intervention to Protect
(Php399,828.00) shall be satisfied immediately from the Attorney's Rights is DENIED.
remaining 30% of the partial executed amount; and
2. [Vilar's] Manifestation and Motion dated October 27,
2014 is likewise DENIED.
 3. [Vilar's] Manifestation dated March 14, 2014 is NOTED The Court finds the same to be with merit.
with APPROVAL only insofar as it seeks to correct the
statement of Facts and Antecedent Proceedings as found The case stemmed from the action for reconveyance filed by Eduardo,
on Page 7, paragraph 2 of the Court's Decision dated husband of Rosario. To recall, Eduardo was the successor-in-interest of
February 10, 2014. Accordingly, page 7, paragraph 2 of Antonio, who is actually the successor-in-interest of Spouses Zulueta.
the Decision dated February 10, 2014 is MODIFIED as Spouses Zulueta are the original owners of the subject parcels of land.
follows: Upon the death of the party-plaintiff Eduardo, Rosario was substituted in
his stead. The case was subsequently decided on December 17, 1997 and
"Meanwhile, it appears that Vilar executed on affirmed by this Court in October 28, 2003. An Entry of Judgment was
February 15, 2011 a Deed of Confirmation of issued in 2004. In all these incidents, Rosario was considered as the party-
Assignment of Rights whereby he assigned in favor plaintiff.
of Harold Cuevas (Harold) 112% participation in
the reconveyance case. By virtue of said Deed of By definition, an indispensable party is a party-in-interest without whom
Confirmation of Assignment of Rights, Harold filed no final determination can be had of an action, and who shall be joined
a complaint for breach of contract, specific either as plaintiffs or defendants. 39 It is a party whose interest will be
performance, injunction and damages ("breach of affected by the court's action in the litigation.40
contract case") against Rosario and GSIS seeking
that the 90% share of Vilar and his 112% share In the Matter of the Heirship (Intestate Estates) of the Late Hermogenes
therein be recognized and paid." Rodriguez, et al. v. Robles,41 the Court held that:
The joinder of indispensable parties is mandatory. The presence of
indispensable parties is necessary to vest the court with jurisdiction, which
4. GSIS's Motion for Partial Reconsideration (of the Honorable
is the authority to hear and determine a cause, the right to act in a case.
Court's Decision dated February 10, 2014) is DENIED.
Thus, without the presence of indispensable parties to a suit or
proceeding, judgment of a court cannot attain real finality. 42
5. [Rosario's] Ex Abudanti Motion to Intervene and to Admit
the Attached Motion for Reconsideration (Re: Decision Verily, Rosario is an indispensable party in the petition before the CA as
dated 10 February 2014) are DENIED. she is the widow of the original party-plaintiff Eduardo. The determination
of the propriety of the action of the trial court in merely noting and not
6. [Rosario's] Motion to Expunge [Vilar's] granting his motion would necessarily affect her interest in the subject
Comment/Opposition with Motion to Admit Reply (To: matter of litigation as the party-plaintiff.
[Vilar's] Comment/Opposition dated 16 June
2014) are EXPUNGED from the records. Accordingly, the Court differs with the CA in ruling that the petition
for certiorari filed before it merely delves into the issue of grave abuse of
discretion committed by the lower court. Guilty of repetition, the final
SO ORDERED.38
determination of the case would pry into the right of Rosario as party-
Hence, this petition. plaintiff before the lower court who is entitled to the proceeds of the
judgment award. As it is, the CA did not actually rule on the issue of grave
Issue abuse of discretion alone as its corollary ruling inquired into the right of
Rosario. In ruling for Vilar's substitution, the right of Rosario as to the
In sum, the issue in this case is whether or not the CA erred in impleading proceeds of the judgment award was thwarted as the CA effectively
Vilar as party-plaintiff in substitution of Rosario. ordered that the proceeds pertaining to Rosario be awarded instead to
Vilar.
Ruling of the Court
Likewise, the Court finds merit in Rosario's contention that her failure to
Both Rosario and GSIS claim that Rosario is an indispensable party in the participate in the proceedings before the CA constitutes a denial of her
petition because the same seeks to assail the order of the RTC which constitutional right to due process.43
involves its action on Vilar's motion to be substituted in Rosario's stead as
regards the implementation of the writ of execution. Hence, failure to implead Rosario as an indispensable party rendered all
the proceedings before the CA null and void for want of authority to act. 44
Moreover, even the basis for the substitution of Vilar as pronounced by the
CA was unfounded. In ruling so, the CA merely relied on the purported
Deeds of Assignment of Rights executed between Eduardo and Vilar in
considering that the latter is a transferee pendente lite, who can rightfully
and legally substitute Rosario as party-plaintiff in the implementation of a
writ of execution.45

Yet, it is significant to note that the Court already brushed aside said
Deeds of Assignment for being belatedly filed in its Decision dated October
21, 2015 in G.R. Nos. 194814 and 194825. The Court did not discuss any
further the validity and due execution of said Deeds as the same were
brought to the attention of the trial court more than 20 years after the
same were allegedly executed.46

Considering the foregoing, the Court need not belabor on the other issues
raised by petitioners.

As a final note, it must be considered that this case was extant since 1990.
The decision of the trial court in 1997 which ruled that Spouses Zulueta,
who were substituted by Rosario as party-plaintiff are entitled to the
excluded lots or its amount equivalent, has become final and executory
when this Court affirmed the same in 2003 in G.R. No. 155206.
Subsequently, an Entry of Judgment was issued by this Court in 2004.
However, despite the issuance of a writ of execution in 2004, the case had
several pending incidents which prohibit Rosario, to recover what is
rightfully hers. To warrant the unjustified delay of these proceedings would
tantamount to denial of the fruits of the judgment in her favor.

WHEREFORE, the petition is GRANTED. The Decision dated February 10,

2014 and Amended Decision dated June 17, 2016 in CA-G.R. S.P. No.
117439 are REVERSED and SET ASIDE in that the Verified Omnibus
Motion (for Substitution of Party-Plaintiff With Authority to Implement Writ
of Execution Until Full Satisfaction of the Final Judgment of the Court) filed
by Antonio Vilar is DENIED. Accordingly, the impleading of Antonio Vilar
as party-plaintiff in substitution of Rosario Enriquez Vda. De Santiago
is NULLIFIED. The Order dated December 8, 2010 is
hereby REINSTATED in toto.

SO ORDERED.
 G.R. No. 200009, January 23, 2017 Spouses Tablada, who only received a photocopy of said title.

SPRING HOMES SUBDIVISION CO., INC., SPOUSES PEDRO L. Subsequently, the Spouses Tablada discovered that the subject property
LUMBRES AND REBECCA T. ROARING, Petitioners, v.  SPOUSES was mortgaged as a security for a loan in the amount of over
PEDRO TABLADA, JR. AND ZENAIDA TABLADA, Respondent. P4,000,000.00 with Premiere Development Bank as mortgagee and Spring
Homes as mortgagor. In fact, since the loan remained unpaid, extrajudicial
proceedings were instituted. 7 Meanwhile, without waiting for trial on the 
DECISION
specific performance and sum of money complaint, the Spouses Lumbres
and Spring Homes entered into a Compromise Agreement, approved by
PERALTA, J.: the Calamba RTC on October 28, 1999, wherein Spring Homes conveyed
the subject property, as well as several others, to the Spouses
Before the Court is a petition for review on certiorari under Rule 45 of the Lumbres.8 By virtue of said agreement, the Spouses Lumbres were
Rules of Court seeking to reverse and set aside the Decision 1 dated May authorized to collect Spring Homes' account receivables arising from the
31, 2011 and Resolution2 dated January 4, 2012 of the Court of Appeals conditional sales of several properties, as well as to cancel said sales, in
(CA) in CA-G.R. CV No. 94352 which reversed and set aside the the event of default in the payment by the subdivision lot buyers. In its
Decision3 dated September 1, 2009, of the Regional Trial capacity as mortgagee, Premiere Development Bank was included as a
Court (RTC), Branch 92, Calamba City. party in the Compromise Agreement.9

The factual antecedents are as follows. In the exercise of the power granted to them, the Spouses Lumbres
started collecting deficiency payments from the subdivision lot buyers.
On October 12, 1992, petitioners, Spouses Pedro L. Lumbres and Rebecca Specifically, they sent demand letters to the Spouses Tablada for the
T. Roaring, (Spouses Lumbres)  entered into a Joint Venture Agreement payment of an alleged outstanding balance of the purchase price of the
with Spring Homes Subdivision Co., Inc., through its chairman, the late subject property in the amount of P230,000.00. When no payment was
Mr. Rolando B. Pasic, for the development of several parcels of land received, the Spouses Lumbres caused the cancellation of the Contract to
consisting of an area of 28,378 square meters. For reasons of convenience Sell previously executed by Spring Homes in favor of the Spouses Tablada.
and in order to facilitate the acquisition of permits and licenses in On December 22, 2000, the Spouses Lumbres and Spring Homes executed
connection with the project, the Spouses Lumbres transferred the titles to a Deed of Absolute Sale over the subject property, and as a result, a new
the parcels of land in the name of Spring Homes. 4 title, TCT No. T-473055, was issued in the name of the Spouses
Lumbres.10
On January 9, 1995, Spring Homes entered into a Contract to Sell with
respondents, Spouses Pedro Tablada, Jr. and Zenaida Tablada, (Spouses On June 20, 2001, the Spouses Tablada filed a complaint for Nullification
Tablada) for the sale of a parcel of land located at Lot No. 8, Block 3, of Title, Reconveyance and Damages against Spring Homes and the
Spring Homes Subdivision, Barangay Bucal, Calamba, Laguna, covered by Spouses Lumbres praying for the nullification of the second Deed of
Transfer Certificate of Title (TCT) No. T-284037. On March 20, 1995, the Absolute Sale executed in favor of the Spouses Lumbres, as well as the
Spouses Lumbres filed with the RTC of Calamba City a complaint for title issued as a consequence thereof, the declaration of the validity of the
Collection of Sum of Money, Specific Performance and Damages with first Deed of Absolute Sale executed in their favor, and the issuance of a
prayer for the issuance of a Writ of Preliminary Attachment against Spring new title in their name.11 The Sheriffs Return dated August 1, 2001
Homes for its alleged failure to comply with the terms of the Joint Venture indicated that while the original copy of the complaint and the summons
Agreement.5 Unaware of the pending action, the Spouses Tablada began were duly served upon the Spouses Lumbres, summons was not properly
constructing their house on the subject lot and thereafter occupied the served upon Spring Homes because it was reportedly no longer existing as
same. They were then issued a Certificate of Occupancy by the Office a corporate entity.12
Building Official. Thereafter, on January 16, 1996, Spring Homes executed
a Deed of Absolute Sale in favor of the Spouses Tablada, who paid Spring On August 14, 2001, the Spouses Lumbres filed a Motion to Dismiss the
Homes a total of P179,500.00, more than the P157,500.00 purchase price case against them raising as grounds the non-compliance with a condition
as indicated in the Deed of Absolute Sale.6 The title over the subject precedent and lack of jurisdiction of the RTC over the subject matter. They
property, however, remained with Spring Homes for its failure to cause the alleged that the Spouses Tablada failed to avail of conciliatory proceedings,
cancellation of the TCT and the issuance of a new one in favor of the and that the RTC has no jurisdiction since the parties, as well as property
in question, are all located at Calamba City, and that the action instituted
by the Spouses Tablada praying for the nullification of the Compromise that time, the certificate of registration of Spring Homes had not yet been
Agreement actually corresponds to a nullification of a judgement issued by cancelled or revoked by the Securities and Exchange
a co-equal trial court. The Spouses Tablada opposed by alleging that Commission (SEC). In fact, the assumption that it was already dissolved
Spring Homes holds office at Paraiiaque City, falling under the exception when the suit was filed does not cure the defect, because the dissolution of
from the requirement of barangay conciliatory proceedings and that the a corporation does not render it beyond the reach of courts considering the
action they filed was for nullification of title issued to the Spouses Lumbres fact that it continues as a body corporate for the winding up of its affairs. 22
as a result of a double sale, which is rightly under the jurisdiction of the
trial court. They also emphasized that as non-parties to the Compromise In its Decision dated May 31, 2011, however, the CA reversed and set
Agreement, the same is not binding upon them. The Motion to Dismiss was aside the RTC Decision finding that Spring Homes is not an indispensable
eventually denied by the trial court on October 2, 2001. 13 party. It held that Spring Homes may be the vendor of the subject
property but the title over the same had already been issued in the name
Interestingly, on even date, the Spouses Lumbres filed an ejectment suit of the Spouses Lumbres. So any action for nullification of the said title
of their own before the Municipal Trial Court in Cities (MTCC) of Calamba causes prejudice and involves only said spouses, the registered owners
City demanding that the Spouses Tablada vacate the subject property and thereof. Thus, the trial court may very well grant the relief prayed for by
pay rentals due thereon. The MTCC, however, dismissed the suit ruling the Spouses Lumbres.23 In support thereof, the appellate court cited the
that the Spouses Lumbres registered their title over the subject property in ruling in Seno, et. al. v. Mangubat, et. al.24 wherein it was held that in the
bad faith. Such ruling was reversed by the RTC which found that there was annulment of sale, where the action was dismissed against defendants
no valid deed of absolute sale between the Spouses Tablada and Spring who, before the filing of said action, had sold their interests in the subject
Homes. Nevertheless, the CA, on appeal, agreed with the MTCC and land to their co-defendant, the said dismissal against the former, who are
reinstated the decision thereof. This was affirmed by the Court in Spouses only necessary parties, will not bar the action from proceeding against the
Lumbres v. Spouses Tablada  14 on February 23, 2007. latter as the remaining defendant, having been vested with absolute title
over the subject property.25 Thus, the CA maintained that the RTC's
Meanwhile, on the nullification and reconveyance of title suit filed by the reliance on Uy v. CA is misplaced for in said case, it was imperative that an
Spouses Tablada, the RTC noted that Spring Homes has not yet been assignee of interests in certain contracts be impleaded, and not the
summoned. This caused the Spouses Tablada to move for the discharge of assignor, as the RTC interpreted the ruling to mean. Thus, the doctrine
Spring Homes as a party on the ground that the corporation had already in Uy  actually bolsters the finding that it is the Spouses Lumbres, as
ceased to exist. The Spouses Lumbres, however, opposed said motion assignee of the subject property, and not Spring Homes, as assignor, who
claiming that Spring Homes is an indispensable party. 15 The RTC ordered are the indispensable parties.26
the motion to be held in abeyance until the submission of proof on Spring
Homes' corporate status. In the meantime, trial ensued. Eventually, it was Moreover, considering that the RTC had already concluded its trial on the
shown that Spring Homes' certificate of registration was revoked on case and the presentation of evidence by both parties, the CA deemed it
September 29, 2003.16 proper to proceed to rule on the merits of the case. At the outset, the
appellate court noted that the ruling of the Court in Spouses Lumbres v.
On September 1, 2009, the RTC rendered its Decision dismissing the Spouses Tablada  back in 2007 cannot automatically be applied herein for
Spouses Tablada's action for lack of jurisdiction over the person of Spring said ruling involves an ejectment case that is effective only with respect to
Homes, an indispensable party. 17 According to the trial court, their failure the issue of possession and cannot be binding as to the title of the subject
to cause the service of summons upon Spring Homes was fatal for Spring property.
Homes was an indispensable party without whom no complete
determination of the case may be reached.18 In support thereof, the RTC This notwithstanding, the CA ruled that based on the records, the first sale
cited the pronouncement in Uy v. CA, et. al.19 that the absence of an between Spring Homes and the Spouses Tablada must still be upheld as
indispensable party renders all subsequent actuations of the court null and valid, contrary to the contention of the Spouses Lumbres that the same
void for want of authority to act not only as to the absent parties but even was not validly consummated due to the Spouses Tablada's failure to pay
as to those present.20 In the instant case, the Spouses Tablada prayed that the full purchase price of P409,500.00. According to the appellate court,
the Deed of Absolute Sale executed by Spring Homes in favor of the the first Deed of Absolute Sale clearly indicated that the consideration for
Spouses Lumbres be declared null and void and that Spring Homes be the subject property was P157,500.00. 27 The Spouses Lumbres' argument
ordered to deliver the owner's duplicate certificate of title covering the that such Deed of Absolute Sale was executed only for the purpose of
subject lot. Thus, without jurisdiction over Spring Homes, the case could securing a loan from PAG-IBIG in favor of the Spouses Tablada was
not properly proceed.21 The RTC added that the Spouses Tablada's unsubstantiated. In fact, even the second Deed of Absolute Sale executed
subsequent filing of the motion to discharge does serve as an excuse for at by Spring Homes in favor of the Spouses Lumbres, as well as several
receipts presented, indicated the same amount of P157,500.00 as lest, that any improvements existed thereto. It was only through
purchase price. As for the amount of P409,500.00 indicated in the Contract the plaintiffs-appellants (spouses Tablada] own efforts that a
to Sell executed between Spring Homes and the Spouses Tablada, the CA house was constructed on the subject property. 28
adopted the findings of the Court in Spouses Lumbres v. Spouses
Tablada in 2007 and held that the amount of P409,500.00 is actually
composed not only of the subject parcel of land but also the house to be
The appellate court further stressed that at the time when the Spouses
constructed thereon. But since it was proven that it was through the
Tablada entered into a contract of sale with Spring Homes, the title over
Spouses Tablada's own hard-earned money that the house was
the subject property was already registered in the name of Spring Homes.
constructed, there existed no balance of the purchase price in the amount
Thus, the Deed of Absolute Sale between Spring Homes and the Spouses
of P230,000.00 as the Spouses Lumbres vehemently insist, viz.:
Tablada was valid and with sufficient consideration for every person
dealing with a registered land may safely rely on the correctness of the
Further, the spouses Lumbres alleged that what was legal and binding certificate of title issued therefor and the law will, in no way, oblige him to
between Spring Homes and plaintiffs-appellants [spouses Tablada] go beyond the certificate to determine the condition of the property. 29
was the Contract to Sell which, in
part, reads:chanRoblesvirtualLawlibrary In the end, the CA upheld the ruling of the Court in Spouses Lumbres v.
Spouses Tablada that notwithstanding the fact that the Spouses Lumbres,
3. That the SELLER, for and in consideration of the payments and other as the second buyer, registered their Deed of Absolute Sale, in contrast to
terms and conditions hereinafter to be designated, has offered to sell and the Spouses Tablada who were not able to register their Deed of Absolute
the BUYER has agreed to buy certain parcel of land more particularly Sale precisely because of Spring Home's failure to deliver the owner's copy
described as follows:chanRoblesvirtualLawlibrary of the TCT, the Spouses Tablada's right could not be deemed defeated as
the Spouses Lumbres were in bad faith for even before their registration of
Blk. No. P- Area Sq. Price Per sq. Total Selling their title, they were already informed that the subject property was
Lot No. already previously sold to the Spouses Tablada, who had already
111 Meter Meter Price
constructed their house thereon.30 Thus, the CA disposed the case as
3 8 105 P1,500   follows:chanRoblesvirtualLawlibrary
42 6,000  
WHEREFORE, in view of the foregoing premises, the instant appeal is
P409,500 hereby GRANTED. The assailed Decision dated September 1, 2009 in Civil
Case No. 3117-2001-C is hereby ANNULLED AND SET ASIDE. Accordingly,
the Register of Deeds of Calamba, Laguna, is hereby directed to cancel
Transfer Certificate of Title No. T-473055 registered in the name of the
Similar to the ruling of the Supreme Court in Spouses Lumbres v. Spouses
defendants-appellees spouses Pedro L. Lurnbres and Rebecca T. Roaring
Tablada, despite there being no question that the total land area of the
Lurnbres and, in lieu thereof, issue a new one in the name of plaintiffs-
subject property was One Hundred Five (105) square meters, there
appellants.
appears in the said contract to sell a numerical value of Forty Two (42)
square meters computed at the rate of Six Thousand Pesos (6,000.00) per
SO ORDERED. 31
square meter. We agree with the findings of the Supreme Court in
this regard that the Forty Two (42) square meters referred only to
the land area of the house to be constructed in the subject
property. Since the spouses Lumbres failed to disprove the When their Motion for Reconsideration was denied by the CA in its
plaintiffs-appellants [spouses Tablada] claim that it was through Resolution dated January 4, 2012, the Spouses Lumbres filed the instant
their own hard earned money that enabled them to fund the petition invoking the following arguments:chanRoblesvirtualLawlibrary
construction and completion of their house and not Spring Homes,
there existed no balance of the purchase price to begin with. It is I.
important to note that what the plaintiffs-appellants [spouses THE COURT OF APPEALS ERRED IN NOT DISMISSING THE APPEAL FOR
Tablada] bought from Spring Homes was a vacant lot. Nowhere in LACK OF JURISDICTION OF THE TRIAL COURT OVER THE PERSON OF
the Deed of Absolute Sale executed between plaintiffs-appellants SPRING HOMES AS AN INDISPENSABLE PARTY.
[spouses Tablada] and Spring Homes was it indicated that the
improvements found thereon form part of the subject property, II.
THE COURT OF APPEALS ERRED IN ORDERING THAT RESPONDENTS, NOT contending parties.41 Conversely, a party is not indispensable to the suit if
PETITIONERS, WERE PURCHASERS OF THE PROPERTY IN GOOD FAITH, his interest in the controversy or subject matter is distinct and divisible
WHICH IS NOT IN ACCORD WITH ESTABLISHED FACTS, LAW, AND from the interest of the other parties and will not necessarily be prejudiced
JURISPRUDENCE. by a judgment which does complete justice to the parties in court. 42 If his
presence would merely permit complete relief between him and those
already parties to the action or will simply avoid multiple litigation, he is
not indispensable.
In the instant petition, the Spouses Lumbres insist that the Spouses
Tablada have not yet paid the balance of the purchase price of the subject
In dismissing the complaint for lack of jurisdiction, the trial court relied
property in the amount of P230,000.00 despite repeated demands. 32 They
on Uy v. CA, et. al.43 and held that since Spring Homes, an indispensable
also insist that since Spring Homes, an indispensable party, was not duly
party, was not summoned, it had no authority to proceed. But as aptly
summoned, the CA should have affirmed the RTC's dismissal of the instant
observed by the CA, the doctrine in Uy hardly serves as basis for the trial
complaint filed by the Spouses Tablada for lack of jurisdiction. 33 Citing the
court's conclusions and actually even bolsters the finding that it is the
RTC's Decision, the Spouses Lumbres reiterated that even assuming that
Spouses Lumbres, as assignee of the subject property, and not Spring
Spring Homes had been dissolved at the time of the filing of the complaint,
Homes, as assignor, who are the indispensable parties. In said case, the
the same does not excuse the failure to implead it for it still continues as a
Public Estates Authority (PEA), tasked to complete engineering works on
body corporate for three (3) years after revocation of its certificate of
the Heritage Memorial Park project, assigned all of its interests therein to
incorporation.34
Heritage Park Management Corporation (HPMC). When a complaint was
filed against the PEA in connection with the project, the Court affirmed the
Moreover, the Spouses Lumbres faulted the CA in upholding the findings of
dismissal thereof holding that HPMC, as assignee of PEA's interest, should
the Court in ·the 2007 case entitled Spouses Lumbres v. Spouses
have been impleaded, being the indispensable party therein. The pertinent
Tablada for the issue therein only involves physical possession and not
portion of the Decision states:chanRoblesvirtualLawlibrary
ownership. Contrary to the findings of the CA, the Spouses Lumbres claim
that the Spouses Tablada were not purchasers in good faith for their
failure to react to their repeated demands for the payment of the Based on the Constmction Agreement, PEA entered into it in its capacity as
P230,000.00.35 In fact, the Spouses Tablada even admitted that they Project Manager, pursuant to the PFTA. According to the provisions of
would pay the P230,000.00 upon the release of the PAG-IBIG loan. 36 Thus, the PFTA, upon the formation of the HPMC, the PEA would turn
the purported Deed of Absolute Sale between Spring Homes and the over to the HPMC all the contracts relating to the Heritage Park. At
Spouses Tablada is void for having no valuable consideration, especially the time of the filing of the CIAC Case on May 31, 2001, PEA ceased
since it was issued merely for purposes of the loan application from PAG- to be the Project Manager of the Heritage Park Project, pursuant to
IBIG. On the other hand, the Spouses Lumbres claim that they were in Section 11 of the PFTA. Through a Deed of Assignment, PEA
good faith since the First Deed of Absolute Sale between Spring Homes assigned its interests in all the existing contracts it entered into as
and the Spouses Tablada was not annotated at the back of the subject the Project Manager for Heritage Park to HPMC. As early as March
property's title.37 17, 2000, PEA officially turned over to HPMC all the documents and
equipment in its possession related to the Heritage Park Project. Petitioner
The petition is bereft of merit. was duly informed of these incidents through a letter dated March 13,
2000. Apparently, as of the date of the filing of the CIAC Case, PEA
At the outset, it must be noted that Spring Homes is not an indispensable is no longer a party-in-interest. Instead, it is now CIAC Case, PEA
party. Section 7,38 Rule 3 of the Revised Rules of Court defines is no longer a party-in-interest. Instead, it is now private
indispensable parties as parties-in-interest without whom there can be no respondent HPMC, as the assignee, who stands to be benefited or
final determination of an action and who, for this reason, must be joined injured by the judgment in the suit. In its absence, there cannot be
either as plaintiffs or as defendants.39 Time and again, the Court has held a resolution of the dispute of the parties before the court which is
that a party is indispensable, not only if he has an interest in the subject effective, complete or equitable. We thus reiterate that HPMC is an
matter of the controversy, but also if his interest is such that a final decree indispensable party.44
cannot be made without affecting this interest or without placing the
controversy in a situation where the final determination may be wholly
inconsistent with equity and good conscience. 40 He is a person whose Moreover, as held by the CA, the pronouncement in Seno, et. al. v.
absence disallows the court from making an effective, complete, or Mangubat, et. al.45 is instructive. In said case, the petitioner therein
equitable determination of the controversy between or among the entered into an agreement with certain respondents over a parcel of land,
which agreement petitioner believed to be merely an equitable mortgage affecting it.48 This is because when Spring Homes sold the property in
but respondents insisted to be a sale. The agreement, however, was question to the Spouses Lumbres, it practically transferred all its interests
embodied in a document entitled "Deed of Absolute Sale." Consequently, therein to the said Spouses. In fact, a new title was already issued in the
respondents were able to obtain title over the property in their names. names of the Spouses Lumbres. As such, Spring Homes no longer stands
When two of the three respondents sold their shares to the third to be directly benefited or injured by the judgment in the instant suit
respondent, the third respondent registered the subject property solely in regardless of whether the new title registered in the names of the Spouses
his name. Thereafter, the third respondent further sold said property to Lumbres is cancelled in favor of the Spouses Tablada or not. Thus,
another set of persons. Confronted with the issue of whether the two contrary to the ruling of the RTC, the failure to summon Spring Homes
respondents who sold their shares to the third respondent should be does not deprive it of jurisdiction over the instant case for Spring Homes is
impleaded as indispensable parties in an action filed by petitioner to not an indispensable party.
reform the agreement and to annul the subsequent sale, the Court ruled in
the negative, viz.: On the merits of the case, the Court likewise affirms the findings of the
CA. The issue here involves what appears to be a double sale. First, the
The first issue We need to resolve is whether or not defendants Spouses Tablada entered into a Contract to Sell with Spring Homes in
Andres Evangelista and Bienvenido Mangubat are indispensable 1995 which was followed by a Deed of Absolute Sale in 1996. Second, in
parties. Plaintiffs contend that said defendants being more dummies of 2000, the Spouses Lumbres and Spring Homes executed a Deed of
defendant Marcos Mangubat and therefore not real parties in interest, Absolute Sale over the same property. The Spouses Lumbres persistently
there is no room for the application of Sec. 7, Rule 3 of the Revised Rules insist that the first Deed of Sale executed by the Spouses Tablada is void
of Court. for having no valuable consideration. They argue that out of the
P409,500.00 purchase price under the Contract to Sell, the Spouses
xxxx Tablada merely paid P179,500.00, failing to pay the rest in the amount of
P230,000.00 despite demands.
In the present case, there are no rights of defendants Andres
Evangelista and Bienvenido Mangubat to be safeguarded if the sale There is no merit in the contention.
should be held to be in fact an absolute sale nor if the sale is held
to be an equitable mortgage. Defendant Marcos Mangubat became As the CA held, it is clear from the first Deed of Absolute Sale that the
the absolute owner of the subject property by virtue of the sale to consideration for the subject property is P157,500.00. In fact, the same
him of the shares of the aforementioned defendants in the amount was indicated as the purchase price in the second Deed of
property. Said defendants no longer have any interest in the Absolute Sale between Spring Homes and the Spouses Lumbres. As for the
subject property. However, being parties to the instrument sought to be varying amounts contained in the Contract to Sell, the Court notes that the
reformed, their presence is necessary in order to settle all the possible same has already been duly addressed by the Court in the 2007 Spouses
issues of tile controversy. Whether the disputed sale be declared an Lumbres v. Spouses Tablada49 case, the pertinent portions of which
absolute sale or an equitable mortgage, the rights of all the defendants will states:chanRoblesvirtualLawlibrary
have been amply protected. Defendants-spouses Luzame in any event may
enforce their rights against defendant Marcos Mangubat. 46 In claiming their right of possession over the subject lot, petitioners made
much of the judicially approved Compromise Agreement in Civil Case No.
2194-95-C, wherein Spring Homes' rights and interests over the said lot
under its Contract to Sell with the respondents were effectively assigned to
Similarly, by virtue of the second Deed of Absolute Sale between Spring
them. Petitioners argue that out of the whole P409,500.00
Homes and the Spouses Lumbres, the Spouses Lumbres became the
purchase price under the respondents Contract to Sell with Spring
absolute and registered owner of the subject property herein. As such,
Homes, the respondents were able to pay only P179,500.00,
they possess that certain interest in the property without which, the courts
leaving a balance of P230,000.00.
cannot proceed for settled is the doctrine that registered owners of parcels
of land whose title is sought to be nullified should be impleaded as an
Upon scrutiny, however, the CA astutely observed that despite there being
indispensable party.47 Spring Homes, however, which has already sold its
no question that the total land area of the subject lot is 105 square
interests in the subject land, is no longer regarded as an indispensable
meters, the Contract to Sell executed and entered into by Spring Homes
party, but is, at best, considered to be a necessary party whose presence
and the respondent spouses states:chanRoblesvirtualLawlibrary
is necessary to adjudicate the whole controversy, but whose interests are
so far separable that a final decree can be made in- its absence without
3. That the SELLER, for and in consideration of the payments and other because of the following restrictions in the Contract to
terms and conditions hereinafter to be designated, has offered to sell and Sell:chanRoblesvirtualLawlibrary
the BUYER has agreed to buy certain parcel of land more particularly
described as follows:chanRoblesvirtualLawlibrary 9. The lot(s) subject matter of this contract are subject to the following
restrictions:chanRoblesvirtualLawlibrary
Blk. No. P- Area Sq. Price Per sq. Total Selling
Lot No. a) Any building which may be constructed at anytime in said lot(s) must
111 Meter Meter Price
be strong x x x. Said building must not be constructed at a distance of less
3 8 105 P1,500   than (2) meters from any boundaries of the lot(s).

42 6,000   b) The total area to be voted to buildings or structures shall not exceed
eighty percent (80%) of the total area of the lot(s). 50
P409,500

The two deeds of absolute sale as well as the respondents' Tax Thus, while the Spouses Lumbres would like Us to believe that based on
Declaration No. 019-1342 uniformly show that the land area of the the Contract to Sell, the total selling price of the subject property is
property covered by TCT No. T-284037 is 105 square meters.The P409,500.00, the contract itself, as well as the surrounding circumstances
parties never contested its actual land area. following its execution, negate their argument. As appropriately found by
the Court, said amount actually pertains to the sum of: (1) the cost of the
However, while there is only one parcel of land being sold, which is land area of the lot at 105 square meters priced at P1,500 per square
Lot 8, Blk. 3, paragraph "1" above of the Contract to Sell speaks of meter; and (2) the cost of the house to be constructed on the land at 42
two (2) land areas, namely, "105" and "42," and two (2) prices per square meters priced at P6,000 per square meter. But it would be a grave
square meter, to wit: "P1,500" and "P6,000."As correctly observed by injustice to hold the Spouses Tablada liable for more than the cost of the
the CA:chanRoblesvirtualLawlibrary land area when it was duly proven that they used their own funds in the
construction of the house. As shown by the records, the Spouses Tablada
was forced to use their own money since their PAG-IBIG loan application
It does not require much imagination to understand why figures "3," "8,"
did not materialize, not through their own fault, but because Spring Homes
"105" and "P1,500" appear in the paragraph "1" of the Contract to Sell.
failed, despite repeated demands, to deliver to them the owner's duplicate
Certainly "3" stands for "Blk. No.," "8" stands for "Lot No.," "105" stands
copy of the subject property's title required by the loan application. In
for the land area and "P1,500" stands for the price per square meter.
reality, therefore, what Spring Homes really sold to the Spouses Tablada
However, this Court is perplexed as regards figures "42" and "6,000" as
was only the lot in the amount of P157,500.00, since the house was
they are not accompanied by any "Blk. No." and/or "Lot No." In other
constructed thereon using the Spouses Tablada's own money. In fact,
words, while there is only one parcel of land being sold, paragraph "1" of
nowhere in the Contract to Sell was it stated that the subject property
the Contract to Sell contains two land areas and two prices per square
includes any improvement thereon or that the same even exists.
meter. There is no reason for the inclusion of land area in the computation
Moreover, as previously mentioned, in both the first and second Deeds of
when it was established beyond cavil that the total area being sold is only
Absolute Sale, it was indicated that the amount of the property subject of
105 square meters. Likewise, there is no explanation why there is another
the sale is only P157,500.00. Accordingly, the Court held further
rate for the additional 42 square meters, which was pegged at P6,000 per
in Spouses Lumbres v. Spouses Tablada:
square meter, while that of 105 square meters was only P1,500.00.
Looking at the above-quoted portion of the Contract to Sell, the CA
found merit in the respondents' contention that the total selling
The CA could only think of one possible explanation: the Contract to Sell price of P409,500 includes not only the price of the lot but also the
refers only to a single lot with a total land area of 105 square cost of the house that would be constructed thereon. We are incline
meters. The 42 square meters mentioned in the same contract and to agree. The CA went on to say:chanRoblesvirtualLawlibrary
therein computed at the rate of 116,000 per square meter refer to
the cost of the house which would be constructed by the It could be argued that the contract to sell never mentions the
respondents on the subject lot through a Pag-Ibig loan. The land construction of any house or building on the subject property. Had
area of the house to be constructed was pegged at 42 square meters it been the intention of the parties that the total selling price
would include the amount of the house that would be taken from a
loan to be obtained from Pag Ibig, they could have specified so.
However, one should not lose sight of the fact that the contract to There is, therefore, no factual or legal basis for the Spouses Lumbres to
sell is an accomplished form. [Respondents,] trusting Spring Homes, claim that since the Spouses Tablada still had an outstanding balance of
could not be expected to demand that another contract duly reflective of P230,000.00 from the total purchase price, the sale between Spring
their agreements be utilized instead of the accomplished form. The terms Homes and the Spouses Tablada was void, and consequently, they were
and conditions of the contract may not contemplate the inclusion of the authorized to unilaterally cancel such sale, and thereafter execute another
cost of the house in the total selling price, but the entries typewritten one transferring the subject property in their names. As correctly held by
thereon sufficiently reveal the intentions of the parties. the Court in Spouses Lumbres v. Spouses Tablada,52 the first Deed of Sale
executed in favor of the Spouses Tablada is valid and with sufficient
The position of the [respondents] finds support in the documents consideration. Thus, in view of this validity of the sale subject of the first
and subsequent actuations of Bertha Pasic, the representative of Deed of Absolute Sale between Spring Homes and the Spouses Tablada,
Spring Homes. [Respondents] undeniably proved that they spent the Court shall now determine who, as between the two spouses herein,
their own hard earned money to construct a house thereon after properly acquired ownership over the subject property. In this regard,
their Pag-Ibig loan did not materialize. It is highly unjust for the Article 1544 of the Civil Code reads:chanRoblesvirtualLawlibrary
[respondents] to pay for the amount of the house when the loan
did not materialize due to the failure of Spring Homes to deliver Art. 1544. If the same thing should have been sold to different vendees,
the owner's duplicate copy of TCT No. T 284037. the ownership shall be transferred to the person who may have first taken
possession thereof in good faith, if it should be movable property.
xxxx
Should it be immovable property, the ownership shall belong to the
If the total selling price was indeed P409,500.00, as [petitioners] person acquiring it who in good faith  first recorded it in the
would like to poster, said amount should have appeared as the Registry of Property.
consideration in the deed of absolute sale dated January 15, 1996.
However, only P157,500.00 was stated. The amount stated in the Should there be no inscription, the ownership shall pertain to the person
Deed of Absolute Sale dated January 15, 1996 was not only a portion of who in good faith was first in the possession, and, in the absence thereof,
the selling price, because the Deed of Sale dated December 22, 2000 also to the person who presents the oldest title, provided there is good faith.
reflected P157,500.00 as consideration. It is not shown that [petitioners] (Emphasis supplied)
likewise applied for a loan with Pag-Ibig. The reasonable inference is
that the consistent amount stated in the two Deeds of Absolute
Sale was the true selling price as it perfectly jibed with the
The principle of primus tempore, potior jure (first in time, stronger in
computation in the Contract to Sell.
right) gains greater significance in case of a double sale of immovable
property.53 Thus, the Court has consistently ruled that ownership of an
immovable property which is the subject of a double sale shall be
We find the CA's reasoning to be sound. At any rate, the execution of the transferred: (1) to the person acquiring it who in good faith first recorded
January 16, 1996 Deed of Absolute Sale in favor of the respondents it in the Registry of Property; (2) in default thereof, to the person who in
effectively rendered the previous Contract to Sell ineffective and canceled. good faith was first in possession; and (3) in default thereof, to the person
Furthermore, we find no merit in petitioners' contention that the first sale who presents the oldest title, provided there is good faith. 54 The
to the respondents was void for want of consideration. As the CA pointed requirement of the law then is two-fold: acquisition in good faith and
out in its assailed decision:chanRoblesvirtualLawlibrary registration in good faith. Good faith must concur with the registration that
is, the registrant must have no knowledge of the defect or lack of title of
Other than the [petitioners'] self-serving assertion that the Deeds his vendor or must not have been aware of facts which should have put
of Absolute Sale was executed solely for the purpose of obtaining a him upon such inquiry and investigation as might be necessary to acquaint
Pag-Ibig loan, no other concrete evidence was tendered to justify him with the defects in the title of his vendor. If it is shown that a buyer
the execution of the deed of absolute sale. They failed to overcome was in bad faith, the alleged registration they have made amounted to no
the clear and convincing evidence of the [respondents] that as early as registration at all.55
July 5, 1995 the latter had already paid the total amount of P179,500.00,
much bigger than the actual purchase price for the subject land. 51 Here, the first buyers of the subject property, the Spouses Tablada, were
able to take said property into possession but failed to register the same
because of Spring Homes' unjustified failure to deliver the owner's copy of
the title whereas the second buyers, the Spouses Lumbres, were able to
register the property in their names. But while said the Spouses Lumbres
successfully caused the transfer of the title in their names, the same was
done in bad faith. As correctly observed by the Court in Spouses Lumbres
v. Spouses Tablada,56 the Spouses Lumbres cannot claim good faith since
at the time of the execution of their Compromise Agreement with Spring
Homes, they were indisputably and reasonably informed that the subject
lot was previously sold to the Spouses Tablada. They were also already
aware that the Spouses Tablada had constructed a house thereon and
were in physical possession thereof. They cannot, therefore, be permitted
to freely claim good faith on their part for the simple reason that the First
Deed of Absolute Sale between Spring Homes and the Spouses Tablada
was not annotated at the back of the subject property's title. It is beyond
the Court's imagination how spouses Lumbres can feign ignorance to the
first sale when the records clearly reveal that they even made numerous
demands on the Spouses Tablada to pay, albeit erroneously, an alleged
balance of the purchase price.

Indeed, knowledge gained by the first buyer of the second sale cannot
defeat the first buyer's rights except only as provided by law, as in cases
where the second buyer first registers in good faith the second sale ahead
of the first.57 Such knowledge of the first buyer does bar her from availing
of her rights under the law, among them, first her purchase as against the
second buyer. But conversely, knowledge gained by the second buyer of
the first sale defeats his rights even if he is first to register the second
sale, since such knowledge taints his prior registration with bad faith. 58

Accordingly, in order for the Spouses Lumbres to obtain priority over the
Spouses Tablada, the law requires a continuing good faith and innocence
or lack of knowledge of the first sale that would enable their contract to
ripen into full ownership through prior registration. 59 But from the very
beginning, the Spouses Lumbres had already known of the fact that the
subject property had previously been sold to the Spouses Tablada, by
virtue of a valid Deed of Absolute Sale. In fact, the Spouses Tablada were
already in possession of said property and had even constructed a house
thereon. Clearly then, the Spouses Lumbres were in bad faith the moment
they entered into the second Deed of Absolute Sale and thereafter
registered the subject property in their names. For this reason, the Court
cannot, therefore, consider them as the true and valid owners of the
disputed property and permit them to retain title thereto.

WHEREFORE, premises considered, the instant petition is DENIED. The

assailed Decision dated May 31, 2011 and Resolution dated January 4,
2012 of the Court of Appeals in CA-G.R. CV No. 94352 are
hereby AFFIRMED.

SO ORDERED.chanroblesvirtuallawlibrary
 G.R. No. 221047, September 14, 2016 The RTC Ruling and Subsequent Proceedings

MICHAEL A. ONSTOTT, Petitioner, v. UPPER TAGPOS In a Decision15 dated March 30, 2009, the RTC found that UTNAI was able
NEIGHBORHOOD ASSOCIATION, INC., Respondent. to prove, by a preponderance of evidence, that it is the owner of the
subject property after having legally redeemed the same from De Serra,
the highest bidder at a public auction. Accordingly, it directed Cas to: (1)
DECISION
annotate its Decision on OCT No. (-2645-) M-556; (2) cancel the same;
and (3) issue a new title in the name of UTNAI. 16chanrobleslaw
PERLAS-BERNABE, J.:
In an Order17 dated June 16, 2009, the RTC clarified that its March 30,
Assailed in this petition for review on certiorari  are the Decision  dated
1 2
2009 Decision directing the cancellation of OCT No. (-2645-) M-556 and
May 7, 2015 and the Resolution3 dated October 8, 2015 rendered by the the issuance of a new one in its stead in the name of UTNAI necessarily
Court of Appeals (CA) in CA-G.R. CV No. 98383, which reversed and set includes a declaration that the owner's duplicate copy of OCT No. (-2645-)
aside the Order4 dated January 3, 2012 of the Regional Trial Court of M-556 is void and of no effect.
Binangonan, Rizal, Branch 67 (RTC), insofar as it ordered the Register of
Deeds of Binangonan, Rizal to cancel Transfer Certificate of Title (TCT) No. The RTC Decision lapsed into finality. As a consequence, TCT No. B-9655
B-9655 in the name of respondent Upper Tagpos Neighborhood was issued in favor of UTNAI.18chanrobleslaw
Association, Inc. (UTNAI) and to reinstate Original Certificate of Title (OCT)
No. (-2645-) M-556 in the name of Albert W. Onstott (Albert). On August 26, 2009, herein petitioner Michael Onstott (Michael), claiming
to be the legitimate son19 of Albert with a certain Josephine Arrastia
The Facts Onstott (Josephine) filed a Petition for Relief from Judgment (Petition for
Relief),20 alleging that UTNAI, in its complaint, impleaded only Albert,
Albert, an American citizen, was the registered owner of a parcel of land notwithstanding knowledge of the latter's death.21 He averred that, as
with an approximate area of 18,589 square meters, covered by OCT No. (- parties to the case, UTNAI fraudulently and intentionally failed to implead
2645-) M-5565 situated in the Province of Rizal (subject property). Due to him and Josephine in order to prevent them from participating in the
non-payment of realty taxes, the Provincial Government of Rizal sold the proceedings and to ensure a favorable judgment.22 He contended that his
subject property at public auction to one Amelita A. De Serra (De Serra), mother Josephine was an indispensable party to the present case, being
the highest bidder, as evidenced by the Certificate of Sale 6 dated June 29, the owner of half of the subject property, which he claimed to be conjugal
2004.7 Respondent UTNAI, an association representing the actual in nature.23 Moreover, he argued that UTNAI had no legal personality to
occupants of the subject property, subsequently redeemed 8 the same from redeem the subject property as provided for in Section 261 24 of Republic
De Sena.9chanrobleslaw Act No. (RA) 7160, otherwise known as the "Local Government Code of
1991."25cralawredchanrobleslaw
Thereafter, or on March 31, 2008, UTNAI filed a complaint 10 for
cancellation of OCT No. (-2645-) M-556 and for the issuance of a new title Later, Michael filed an Omnibus Motion:26 (1) to recall and/or set aside the
in its name before the RTC against Albert and Federico M. Cas (Cas), the Certification of Finality of Judgment; (2) to set aside the Order dated June
Register of Deeds for the Province of Rizal. 11 It alleged, among others, that 16, 2009; and (3) to cancel TCT No. B-9655 and reinstate OCT No. (-
it became the owner of the subject property upon redemption thereof from 2645-) M-556. He maintained that, based on the records, the Decision
De Sena and that, consequently, it must be issued a new title. Moreover, dated March 30, 2009 of the RTC was not served upon the defendant,
Albert was an American citizen who, under Philippine law, is not allowed to Albert, by publication, as required under Section 9, 27 Rule 13 of the Rules
own a parcel of land in the Philippines.12chanrobleslaw of Court; hence, the same has not yet attained finality. 28 Accordingly, the
Certification of Finality of the said Decision was prematurely issued and
Efforts to serve summons upon Albert proved futile as he was not a must therefore be set aside.29 In addition, TCT No. B-9655 in favor of
resident of the Philippines. Thus, summons was served through UTNAI must be cancelled and OCT No. (-2645-) M-556 in the name of
publication.13 Nonetheless, Albert still failed to file his answer. Hence, upon Albert should be reinstated.
the motion of UTNAI, Albert was declared in default and UTNAI was
allowed to present evidence ex parte.14chanrobleslaw Treating the Petition for Relief as a motion for reconsideration 30 of its
Decision, the RTC, in an Order31 dated January 3, 2012, denied the same
and ruled that UTNAI, having legal interest in the subject property and
having redeemed the same from the highest bidder in a tax auction, must and does not show that Josephine co-owned the subject property. Hence,
be issued a new title in its name. It added that the matters raised by contrary to Michael's stance, the subject property was not conjugal in
Michael are best ventilated in a separate case for reconveyance. However, nature and it cannot be presumed to be conjugal in the absence of
while the RTC denied the petition, it found that its March 30, 2009 evidence showing that it was acquired during their
Decision never attained finality for not having been served upon Albert by marriage.38chanrobleslaw
publication in accordance with Section 9, Rule 13 of the Rules of Court.
Thus, the issuance of the certificate of finality was erroneous. Furthermore, the CA pointed out that if Michael were indeed Albert's
Consequently, the cancellation of OCT No. (-2645-) M-556 in Albert's compulsory heir, he could have transferred the subject property in his
name and the issuance of TCT No. B-9655 in UTNAI's name were name by right of succession upon his father's death, or redeemed the
premature; hence, it directed the Register of Deeds to cancel TCT No. B- same in 2005 after it was sold at public auction in 2004, or intervened in
9655 and to reinstate OCT No. (-2645-) M-556. 32chanrobleslaw the proceedings before the RTC. Having failed to avail of any of the said
legal remedies, he can no longer claim ownership of the subject property
Dissatisfied, both parties separately appealed33 to the CA. In its appeal, by the simple expedient of filing a petition for relief. Parenthetically,
UTNAI ascribed error to the RTC in finding that its March 30, 2009 Decision considering that the March 30, 2009 Decision of the RTC had not yet
never attained finality for failure to publish the same and that it also erred attained finality as of the filing of said petition for relief, the same was
in declaring that the cancellation of OCT No. (-2645-) M-556 in Albert's without legal basis.39chanrobleslaw
name and the issuance of TCT No. B-9655 in its name were
premature.34chanrobleslaw Meanwhile, it appears that UTNAI published a copy of the March 30, 2009
Decision of the RTC for two (2) consecutive weeks in a newspaper of
On the other hand, Michael insisted that at the time of the filing of the general circulation.40chanrobleslaw
instant case in 2008, Albert was already dead, which means that the
ownership of the subject property had already devolved to his compulsory In view of its findings, the CA reversed and set aside the Order dated
heirs. Consequently, the latter should have been impleaded as defendants, January 3, 2012 rendered by the RTC, insofar as it directed the Register of
failing which, the Decision rendered by the RTC was null and void for lack Deeds to cancel TCT No. B-9655 issued in UTNAI's name and reinstate
of jurisdiction. Moreover, he asserted that his mother Josephine was an OCT No. (-2645-) M-556 in the name of Albert. It likewise declared the
indispensable party to this case, being a compulsory heir and the owner of March 30, 2009 Decision of the RTC final and executory. 41chanrobleslaw
the half portion of the subject property, which he claimed was conjugal in
nature. He reiterated that UTNAI had no legal interest to redeem the Michael's motion for reconsideration42 was denied in a Resolution43 dated
subject property.35chanrobleslaw October 8, 2015; hence, this petition.

The CA Ruling The Issue Before the Court

In a Decision36 dated May 7, 2015, the CA found UTNAI's appeal The issue to be resolved by the Court is whether or not the CA erred in
meritorious. Although it found that the March 30, 2009 Decision of the RTC directing the issuance of a title in favor of UTNAI notwithstanding (a) the
did not attain finality, not having been served upon Albert by publication, lack of jurisdiction over the person of Albert, the registered owner of the
the CA also held that UTNAI was entitled to the issuance of a new title in subject property who has been dead prior to the institution of UTNAI'S
its name as a matter of right. It concurred with UTNAI's contention that complaint; (b) the failure to implead his mother, Josephine, as an
the cancellation of Albert's OCT No. (-2645-) M-556 is the direct legal indispensable party, since the subject property was allegedly conjugal in
consequence of UTNAI's redemption of the subject property from the nature; and (c) the lack of legal interest on the part of UTNAI to redeem
highest bidder at the public auction sale. Thus, as the absolute owner of the subject property.
the subject property, UTNAI has the right to be placed in possession
thereof following the consolidation of ownership in its name and the The Court's Ruling
issuance of the corresponding title.37chanrobleslaw
The petition is partly meritorious.
On the other hand, the CA dismissed Michael's appeal and rejected his
theory that his mother Josephine was an indispensable party to the Courts acquire jurisdiction over the plaintiffs upon the filing of the
complaint filed by UTNAI against Albert. It found that the subject property complaint. On the other hand, jurisdiction over the defendants in a civil
was registered in the name of "Albert Onstott, American citizen, married to case is acquired either through the service of summons upon them or
Josephine Arrastia" which is merely descriptive of the civil status of Albert through their voluntary appearance in court and their submission to its
authority.44chanrobleslaw squarely challenged the RTC's March 30, 2009 Decision as aforementioned.
Having sought positive relief from an unfavorable judgment, the RTC,
In Philippine Commercial International Bank v. Spouses Dy Hong Pi,45 it therefore, acquired jurisdiction over his person, and the due process
was ruled that "[a]s a general proposition, one who seeks an affirmative requirements of the law have been satisfied.
relief is deemed to have submitted to the jurisdiction of the court. It is by
reason of this rule that we have had occasion to declare that the filing of That the RTC Decision was null and void for failure to implead an
motions to admit answer, for additional time to file answer, for indispensable party, Josephine, on the premise that the subject property is
reconsideration of a default judgment, and to lift order of default with conjugal in nature, is likewise specious. Michael posits that Josephine,
motion for reconsideration, is considered voluntary submission to the being Albert's wife, was entitled to half of the portion of the subject
court's jurisdiction. This, however, is tempered by the concept of property, which was registered as "Albert Onstott, American citizen,
conditional appearance, such that a p who makes a special appearance to married to Josephine Arrastia."
challenge, among others, the court's jurisdiction over his person cannot be
considered to have submitted to its authority. Prescinding from the The Court is not convinced.
foregoing, it is thus clear that:
Article 160 of the New Civil Code50 provides that all property of the
chanRoblesvirtualLawlibrary marriage is presumed to belong to the conjugal partnership, unless it is
(1) Special appearance operates as an exception to the general rule on proved that it pertains exclusively to the husband or to the wife. However,
voluntary appearance; the p who invokes this presumption must first prove that the property in
controversy was acquired during the marriage. Proof of
(2) Accordingly, objections to the jurisdiction of the court over the person acquisition during the coverture is a condition sine qua non for the
of the defendant must be explicitly made, i.e., set forth in an unequivocal operation of the presumption in favor of the conjugal partnership. The
manner; and cralawlawlibrary party who asserts this presumption must first prove the said time element.
Needless to say, the presumption refers only to the property
(3) Failure to do so constitutes voluntary submission to the jurisdiction of acquired during the marriage and does not operate when there is
the court, especially in instances where a pleading or motion seeking no showing as to when the property alleged to be conjugal was
affirmative relief is filed and submitted to the court for resolution." 46 acquired. Moreover, this presumption in favor of conjugality is rebuttable,
but only with strong, clear and convincing evidence; there must be a strict
In this case, records show that Albert, the defendant in UTNAI's complaint, proof of exclusive ownership of one of the spouses. 51chanrobleslaw
died in the United States of America in 2004. 47 Thus, on the strength of his
right as Albert's compulsory heir who has an interest in the subject As Michael invokes the presumption of conjugality, he must first establish
property, Michael filed the Petition for Relief before the RTC, assailed the that the subject property was acquired during the marriage of Albert and
proceedings therein for failure to implead him and his mother, Josephine, Josephine, failing in which, the presumption cannot stand. Indeed, records
as an indispensable party, and sought affirmative relief, i.e., the reversal are bereft of any evidence from which the actual date of acquisition of the
of the RTC's March 30, 2009 Decision and the reinstatement of OCT No. (- subject property can be ascertained. Considering that the presumption of
2645-) M-556.48 The RTC, holding that its own Decision never attained conjugality does not operate if there is no showing when the property
finality for failure to publish the same, treated the Petition for Relief as a alleged to be conjugal was acquired,52 the subject property is therefore
motion for reconsideration and after due proceedings, ruled upon its considered to be Albert's exclusive property. Consequently, Michael's
merits. insistence that Josephine who, the Court notes, has never personally
appeared in these proceedings to directly challenge the disposition of the
Based on the foregoing factual milieu, the Court finds that although it may subject property sans her participation is a co-owner thereof and
be true that jurisdiction was not initially acquired over the person of the necessarily, an indispensable party to the instant case, must therefore fail.
defendant,49i.e., Albert in this case whose death, notably, was never
brought to the attention of the RTC until after it rendered judgment the With respect, however, to the question of whether UTNAI has legal
defect in the lack of jurisdiction over his person was effectively cured by interest to redeem the subject property from the highest bidder at the tax
the voluntary appearance of his successor-in-interest/compulsory heir, delinquency public auction sale, the Court finds that the CA erred in its
Michael, who sought affirmative relief before the RTC through the filing of disquisition. Section 261 of RA 7160 provides:ChanRoblesVirtualawlibrary
the Petition for Relief which the RTC treated as a motion for Section 261. Redemption of Property Sold. - Within one (1) year from
reconsideration of its judgment. Michael voluntarily submitted to the the date of sale, the owner of the delinquent real property or
jurisdiction of the RTC when, without any qualification, he directly and person having legal interest therein, or his representative, shall
have right to redeem the property upon payment to the local the redemption of the property subject of the public auction in the
treasurer of the amount of the delinquent tax, including the interest appropriate proceeding therefor. In the same vein, De Sena and the
due thereon, and the expenses of sale from the date of delinquency to the Provincial Government of Rizal, who have not been impleaded as parties in
date of sale, plus interest of not more than two percent (2%) per month this case, may commence the appropriate proceedings to assert their
on the purchase price from the date of the sale to the date of redemption. rights under the law consequent to this disposition.
Such payment shall invalidate the certificate of sale issued to the
purchaser and the owner of the delinquent real property or person having WHEREFORE, the petition is PARTLY GRANTED. The Certificate of
legal interest therein shall be entitled to a certificate of redemption which Redemption issued by the Provincial Treasurer of the Provincial
shall be issued by the local treasurer or his deputy. Government of Rizal in favor of respondent Upper Tagpos Neighborhood
Association, Inc. is hereby declared VOID and of no legal effect, and
From the date of sale until expiration of the period of redemption, the Transfer Certificate of Title No. B-9655 issued in the latter's name shall be
delinquent real property shall remain in the possession of the owner or permanently CANCELLED.
person having legal interest therein who shall be entitled to the income
and other fruits thereof. SO ORDERED.chanRoblesvirtualLawlibrary

The local treasurer or his deputy, upon receipt from the purchaser of the
certificate of sale, shall forthwith return to the latter the entire amount
paid by him plus interest of not more than two percent (2%) per month.
Thereafter, the property shall be free from the lien of such delinquent tax,
interest due thereon and expenses of sale. (Emphasis supplied)
"Legal interest" is defined as interest in property or a claim cognizable at
law, equivalent to that of a legal owner who has legal title to the
property.53 It must be one that is actual and material, direct and
immediate, not simply contingent or expectant. 54 Moreover, although the
taxable person who has actual and beneficial use and possession of a
property may be charged with the payment of unpaid realty tax due
thereon, such assumption of liability does not clothe the said person with
the legal title or interest over the property. 55chanrobleslaw

In this case and based on the above-given definition, UTNAI, whose

members are the occupants of the subject property, has no legal
interest to redeem the same. Mere use or possession of the subject
property alone does not vest them with legal interest therein sufficient to
clothe them with the legal personality to redeem it, in accordance with
Section 261 above-quoted. To rule otherwise would be to defeat the true
owner's rights by allowing lessees or other occupants of a property to
assert ownership by the simple expedient of redeeming the same at a tax
delinquency sale. Consequently, UTNAI's redemption of the subject
property as well as the issuance of a Certificate of Redemption 56 in its
favor was erroneous. Since the redemption is of no legal effect, the said
Certificate of Redemption must therefore be cancelled, without prejudice to
the right of UTNAI to recover the full amount of the redemption price paid
by it in the appropriate proceeding therefor.

As things stand, UTNAI's redemption should be deemed void for being

contrary to law. As a result, all proceedings springing from the redemption
ought to be nullified57 and the status quo prior thereto should revert. Thus,
as previously stated, UTNAI may recover the full amount it had paid for
 G.R. No. 222740, September 28, 2016 bought was an alcoholic beverage called The Bar, which consisted of either
vodka or gin. He also admitted that only he and Cecille drank the alcoholic
ST. LUKE'S COLLEGE OF MEDICINE-WILLIAM H. QUASHA beverage which they mixed with the soda and that they did not consume
MEMORIAL FOUNDATION, DR. BRIGIDO L. CARANDANG, AND DR. the whole bottle.
ALEJANDRO P. ORTIGAS Petitioners, v. SPOUSES MANUEL AND
ESMERALDA PEREZ AND SPOUSES ERIC AND JURISITA Ramos was awakened sometime between 3 o'clock and 3:30 in the
QUINTOS, Respondents. morning of February 9, 2010 when he heard Murillo shouting from the
other side of the room that there was a fire. Ramos immediately ran to the
door which led to the living room and when he opened the same, he saw
DECISION
thick smoke coming from the left portion of the living room where there
was a glow. He also felt extreme heat, prompting him to run to the
PEREZ, J.: bathroom to get a pail of water with which he tried to extinguish the fire.
The girls, who had followed him to the bathroom, stayed behind. When
Assailed in the present petition for review on certiorari is the Ramos' attempt to put out the fire proved to be futile, he went back to the
Decision1 dated September 30, 2015 and the Resolution2 dated February 2, bathroom and poured water on the girls in an attempt to alleviate the
2016 of the Court of Appeals (CA) in CA-G.R. CV No. 103529, which extreme heat coming from the fire.
rulings reversed the Decision dated July 7, 2014 3 of the Regional Trial
Court (RTC), Branch 84, Malolos City, Bulacan in Civil Case No. 145-M- According to Ramos, the smoke started to seep through the bathroom
2012 and remanded the case to the trial court for reception of evidence on door and the group had started shouting for help. After a considerable
the amount of damages to be awarded. amount of time, he heard somebody outside instructing him to get back
from the window. When he did so, somebody broke the window and
As a backgrounder, in 2006, the Commission on Higher Education issued started to dismantle the iron grills barring the same. By that time, Ramos
Memorandum Order No. 10, series of 2006 which required medical had started losing consciousness due to smoke inhalation and only
students to undergo rotating clinical clerkship in their fourth year. As such, remembered that he was being pulled out of the building through the
petitioner St. Luke's College of Medicine (St. Luke's) entered into a window.
Memorandum of Intent with the Municipality of Cabiao, Nueva Ecija for the
construction of a community clinic. The said facility consisted of a six-bed Unfortunately, the fire resulted in the deaths of the female medical
medical facility in the ground floor, and a residential space for the medical students, including the daughters of plaintiffs-appellants due to smoke
staff in the second floor. inhalation resulting" to asphyxia.

The undisputed facts, as amply summarized by the CA, are as As a result of the deaths, defendant-appellee St. Luke's compensated the
follows:ChanRoblesVirtualawlibrary parents of the three deceased students in the amount of PhP300,000.00
each from insurance proceeds. (Citations omitted)
In February 2010, St. Luke's sent four (4) of its 4 th year medical students The Bureau of Fire Protection (BFP) conducted an investigation on the
to the clinic, namely: plaintiffs-appellants Spouses Perez's daughter Jessa, incident, and in a Certification dated April 18, 2011, it certified that the fire
plaintiffs-appellants Spouses Quintos' daughter Cecille, Jerillie Ann Murillo was "purely accidental in nature due to unattended cooking," to wit: 4
(Murillo) and Miguel Rafael Ramos (Ramos). They were tasked to complete THIS IS TO CERTIFY THAT as appearing on The Blotter Book No. 0304-
a four-week clerkship rotation at the clinic and like the previous batches, 0287, pages 17 and 18, the two storey Institutional building owned by
they were housed in the second floor of the clinic. Local Government Unit (LGU) Cabiao, Nueva Ecija was partially razed by
fire including all the contents of the second floor that transpired on or
According to Ramos, he and his groupmates reported for duty at the about 090245H February 2010. The estimated cost of damage is two
Cabiao clinic at approximately 10 o'clock in the morning of February 8, Million pesos (P2,000,000.00) more or less.
2010. When their shift ended at 5 o'clock that afternoon, the group went
for a jog and returned to the clinic at around 7 o'clock in the evening. They Result of investigation conducted by the Investigator on Case of this
again went out at 9 o'clock in the evening to buy beverages, cooking oil station, Bureau of Fire Protection, Cabiao, Nueva Ecija, disclosed that the
and other items needed for their breakfast the next day and went to sleep fire was purely ACCIDENTAL IN NATURE due to UNATTENDED COOKING
sometime after midnight. Ramos admitted that one of the beverages they
that occurred at the kitchen of said floor and no evidence were gathered to separated from each other by wood panels made of plywood including the
show that the fire was intentionally, deliberately or maliciously set. wall in which the gas stove was located. All the windows at the second
floor are also covered by permanent iron grills. There are no fire
Respondents had their doubts. Thus:5
exits, fire alarms, fire extinguishers, sprinklers, emergency lights.
xxx. xxx, plaintiffs-appellants, requested for a meeting with defendant-
appellee Dr. Alejandro Ortigas, Associate Dean for Faculty and Student
The community center is a virtual fire/death trap. During night
Affairs of St. Luke's. During the meeting, plaintiffs-appellants were
time, medical students were left alone inside the 2nd floor with the
surprised by the presence of defendants-appellees Dr. Brigido Carandang,
main gate locked from the outside and with no apparent signs of
St. Luke's Dean of Medicine, the Municipal Health Officer of Cabiao Dr. De
fire alarms, fire sprinklers, fire exit plan, emergency lights,
Leon, as well as Municipal Fire Marshall of Cabiao Baby Boy Esquivel, a
provisions of confining the fire to its source, among others, for the
Cabiao police officer and its barangay captain.
occupants fire safety and protection system. They were on their own
at the second floor, without anyone (maid or security guard) to attend to
The officials informed plaintiffs-appellants that the fire was caused by the
their needs while the ground floors and the adjoining building were
gas burner left open by the victims which greatly disturbed plaintiffs-
uninhabited.
appellants. In a subsequent meeting, they were informed that there was
also evidence that the victims were drinking alcoholic beverages on the
3. The electrical system of Cabiao Community Clinic;
night of the fire which plaintiffs-appellants refused to accept.
Engr. DAVID R. AOANAN, Chief Electrical Section of the (sic) and member
Convinced that there was a cover-up, plaintiffs-appellants continued to
of the NBI investigating team observed that the facility has a main circuit
question individual defendants-appellees. Exasperated, defendant-appellee
breaker and the two distribution panels, located at the ground floor, just
Dr. Carandang allegedly asked "Ano pa bang gusto ninyo sa amin?
above the comfort room of the 2nd floor. The main breaker has a 500 amp
Nakiramay na kami."
capacity while the two distribution panels serving the 1 st floor and the
Offended and still unconvinced, respondent Spouses Manuel and 2nd floor has 200 amp capacity, each, as against the main electrical service
Esmeralda Perez, the parents of Jessa, and respondent Spouses Eric and wire with the size 14 mm.
Jurisita Quintos, the parents of Cecille, sought the help of the National
Bureau of Investigation (NBI). In its Resolution dated August 3, 2010, the The ratio between the capacity of the circuit breaker and the
existence of which is expressly admitted by petitioners, having quoted the electrical service wire is out of proportion and became electrically
contents6 and having attached a copy thereof to the present petition, 7 the insensitive to overload and wire short circuits; thereby negating
NBI declared that the construction of the Cabiao Community Clinic building the very purpose the circuit breaker was designed.
was in violation of the provisions of Republic Act No. 9514 (R.A. No. 9514)
or the Revised Fire Code of the Philippines, that the cause of the fire was The size of service wire is Small, suitable only for lighting purposes and
due to faulty electrical wiring, and that St. Luke's negligence is criminal in not to supply two buildings, dedicated for public use. Six years of use in
nature. The pertinent parts of the said Resolution reads: 8 overload capacity would have worn out the wire and its strength
xxxx and vitality, hence it will readily overheat, notwithstanding at the
time short circuits, only few bulbs were in use.
2. The building structure of Cabiao Community Center
The electrical meter used is appropriate only to residential units and not to
The Cabiao Community Clinic/Center is a two-storey concrete building. The service the two buildings intended for public which are [equipped] with
ground floor is used as the municipality's lie-in clinic or hospital during day modern medical equipment; the old NFA and the [Cabiao] Community
time. The students and in particular the victims use this facility together Clinic.
with the. medical complement of the municipality for their community
medical service. Both live service wire and secondary electrical wires were bundled together
inside the same tube. At the 2nd floor, visible signs of cut wires were
On the 2nd floor was the office of Dr. LEON DE LEON, Cabiao Municipal found inside a tube, including the service wire as it pass through
Health Officer, adjacent was a storage room for office and medical supplies going down to the main panel board and several cut wires of the
and documents, the bedrooms for the medical students rendering secondary breaker going to the second floor for power distribution.
community service, a dining area, a kitchen, and the living-room. The
second floor, it may be said, is virtually dedicated for the board and The main and secondary panel boards were wrongly situated at the
lodging of the students while on mission. These rooms and areas are ground floor, above which is the location of a comfort room, where
water could easily slip to the panel boards. It is worthy to note that despite the long period of time from the
occurrence of the fire until the termination of this investigation, the Cabiao
The installation of the secondary panel board at the ground floor BFP headed by FO3 ESQUIVEL has yet to submit its report and
distributing power to the 2nd floor defeats its purpose, considering findings. However, inasmuch as FO3 ESQUIVEL has bungled the
that if electrical trouble happens at the 2nd floor one has to go to investigation of the fire by removing items from the scene of the
the 1st floor to shut off the power. fire and his failure to explain the disappearance of other electrical
debris, the opening and enlargement of the iron grill where the
4. The construction of the Cabiao Community Center building was in sole survivor passed, the back door broken, and the non-recording
violation of the provision of Republic Act No. 9514 (Revised Fire Code of of the investigations, FO3 Esquivel's action and behaviors are
the Philippines) highly suspect of a massive cover up of the real cause of the fire.

Owners, occupants or administrator of buildings or structures are required xxxx

to incorporate and provide fire safety construction, protective and warning
systems. Investigation shows that a) there were no fire protection features 7. St. Luke's negligence is criminal in nature.
such as sprinkler systems, hose boxes, hose reels or standpipe systems
and other firefighting equipment; fire alarm systems; b) no fire exit, fire St. Luke's College of Medicine - William H. Quasha Memorial, Inc., being
exit plan for each floor of the building showing the routes from each other the owner and operator of the Cabiao Community Clinic is not without
[sic] room to appropriate exits, displayed prominently on the door of such liability for the fate of the fire victims. As a learning institution, which
room; c) no properly marked and lighted exits with provision for sends out its students to rural areas to comply with its curriculum
emergency light to adequately illuminate exit ways in case of power requirement, St. Luke's has the duty and responsibility to see to it
failure, and d) no provisions for confining the fire at its source such as fire that the premises to where it sends its students are safe. It is
resistive floors and walls. significant to stress that the Cabiao Community Clinic was established by
the Municipality of Cabiao and the St. Luke's College of Medicine in line
5. The Cabiao Bureau of Fire Protection failed to perform its with the latter's expansion of its Community Medicine undertaking to the
mandate pursuant to RA 9514. rural areas in order to train its students in health promotion and disease
prevention as well as to provide medical service to deserving population
Under the Fire Code, the Bureau of Fire Protection is required to conduct and to undertake clinical research on various health practices.
fire safety inspections as pre-requisite to the grant of licenses and permits
for the use and occupancy of buildings, structures, facilities and their The victims were sent there as part of their community medicine module in
premises including the installation of fire protections and fire safety the curriculum and their assignments were determined by the officials of
equipment and electrical systems in any building structure or facility; and the College of Medicine.
the storage of explosives or combustible, flammable, toxic and other
hazardous materials. 8. The origin of fire.

The BFP is likewise responsible for designating fire inspectors who shall The Cabiao BFP has manifested its prejudice and bias and thus,
inspect every building at least once a year, and every time the owner, cannot be an independent, reliable and credible investigator of this
administrator or occupant [renews] its business permit or permit to fire incident. They could not even entertain any theory, other than the
occupy; to issue a business permit or permit to operate only after securing gas burner, because in doing so would place themselves in jeopardy. They
a Fire Safety Inspection Certification (FSIC); require the building owner even resorted to tampering of premises by removing all electrical
occupant to submit plans and specifications and other pertinent documents wire debris, thinking that in its absence, fire caused by short
of building/structure in order to ensure compliance of applicable codes and circuits cannot be proven.
standards and issue a written notice to the owner and/or contractor to
stop work on portion of any work due to absence or in violation of It is highly probable that the origin of fire is electrical based on the
approved plans and specifications; to inspect at reasonable time, any Electrical Report No. 04-10-001 submitted by Engr. DAVID R. AOANAN,
building, structure or premises and order the owner/occupant to remove Chief, Electrical Section, NBI because of the following.
hazardous materials and/or stop operation if the standards are not met; to
declare and summarily abate hazardous conditions of the buildings or i. Presence of thick black smoke that indicates heat
structures and/or declare the same as fire hazards. caused by short-circuit
 ii. Explosion or tripping off of the transformer, then a moral and exemplary damages; and cralawlawlibrary
black out - showing therefore that the circuit
breaker did not trip off 3. Ordering defendants to pay the cost of suits and attorney's fees.
Plaintiffs further pray for such other reliefs as the Honorable Court may
iii. Inspection of the main circuit breaker and the deem just and equitable under the premises.
secondary breakers show that these did not trip off
The RTC dismissed the complaint for lack of merit. 11 It held that the Cabiao
iv. Presence of short circuited wires located at the Community Clinic was not a fire trap as there were two (2) fire exits, and
2nd floor, where buddle wires were found that respondents failed to present any report or finding by a competent
authority that the said Clinic was not a safe and secure place for the
v. Presence of numerous spliced wires or jumped conduct of St. Luke's clerkship program. The RTC did not take into
wires in three different convenient outlets consideration the NBI Report as it was allegedly not
presented.12chanrobleslaw
vi. Mainboard panel is mismatched with the service
The RTC further held that the Clinic is owned by the Municipality of Cabiao,
wire
and that the latter and/or its responsible officials should have been
impleaded as indispensable parties.13chanrobleslaw
vii. Other defective wirings
The RTC summarized its findings in this manner: 14
It is a well done theory that the cause of the fire was due to faulty Albeit the Court is saddened by what happened with the untimely death of
electrical wiring with two reasons to support it, first is the physical Perez and Quintos who are both very bright with promising future in the
manifestation as mentioned by Engr. DAVE AOANAN who field of medicine, it cannot however close its eyes on the evidence
conducted evaluation/investigation on what is left on the building submitted before it by placing the blame on the cause of their death[s] to
of the Cabiao Community Clinic; second is the personal experience the defendants just to put the fault on anybody in order to appease their
of MIGUEL RAFAEL RAMOS y DAVID the lone survivor of the grieving love[d] ones. For in the mind of the Court, the omission of the
incident [who] narrated what he perceived during last hour before defendants to secure a copy of the fire safety license of the Clinic or verify
he was rescued. MIGUEL['s] narration contradict the theories laid down if it has one prior to its construction before allowing their senior medical
by Fire Marshall BABY BOY ESQUIVEL that the fire was by the negligence students to occupy and reside therein is not per se a negligent act. Neither
of the victims [whom] he suspect[s] to have left [burning a] gas stove. is the failure of the defendants to orient their senior medical students, who
MIGUEL'S narration specifically pointed out that the fire was primarily obviously are of legal ages already such as the deceased, on how to take
coming from the living room and not at the kitchen which is directly in the necessary measures for their safety and security before retiring to
front of their door way. (Emphasis supplied.) sleep in the night considered negligent. Likewise, the failure of the
Respondents then filed a Complaint for damages against petitioners St. dialogue between the parties is not a legitimate ground to declare the
Luke's College of Medicine-William H. Quasha Memorial Foundation, Dean defendants negligent. Put differently, the Court is not persuaded that there
of Medicine Brigido L. Carandang, and Associate Dean for Faculty and is basis or justification to adjudge the defendants negligent for the
Student Affairs Alejandro P. Ortigas, claiming that their negligence caused accidental death of Perez and Quintos.
the deaths of respondents' daughters. Respondents maintained that, as a Upon appeal, the CA reversed the RTC Decision and remanded the case to
learning institution which sends out its medical students to rural areas to the RTC for reception of evidence on the amount of damages to be
comply with its curriculum requirement, St. Luke's has the contractual awarded.15 Addressing the .preliminary issues, the CA held that the
duty and legal responsibility to see to it that the premises to where it Municipality of Cabiao was not an indispensable party as the Complaint
sends its students are safe and that, in the case at bar, St. Luke's refused was one for damages based on the allegations in the enrollment contract.
to recognize its obligations/liabilities.9 Respondents thus prayed as It explained that:16
follows:10 While there was indeed an allegation of St. Luke's ownership of the clinic,
WHEREFORE, premises considered, it is respectfully prayed that judgment bulk of the arguments in the complaint were based on St. Luke's duty to
be rendered in favor of plaintiffs - ensure its students' safety based on its obligation as a school. Not being
1. Finding the defendants negligent and liable under their contractual and contractually obligated to keep plaintiffs-appellants' children safe from any
legal obligations to Jessa and Cecille; risk as a result of school-sanctioned activities, the Municipality of Cabiao

2. Directing defendants to pay plaintiffs, jointly and severally, actual,

cannot be considered an indispensable party to the action as it was not a which it has independently determined to be unsafe.
participant in the contract of enrollment.
xxxx
Moreover, the CA held that although schools cannot be insurers of its
students against all risks, in the case at bar, the safety of the victims was
In relation, defendants-appellees defend their judgment to send plaintiffs-
within the reach of petitioners and the hazard of a fire was not
appellants' daughters to the community clinic by contending that there has
unforeseeable.17 Also, while the fire was beyond the control of petitioners,
been no untoward incident since the program began in 2004. xxx.
their decision to house their students in a place where there are no means
of escape in case of such an emergency shows a blatant disregard for the
xxxx
students' welfare.18chanrobleslaw
The same argument also runs contrary to defendants-appellees'
The CA elucidated as follows:19
acceptance of the construction of iron grills on the second floor windows of
The testimonies of Dr. Ortigas, Dr. Carandang and Dr. Macabulos all show
the clinic. According to Dr. Ortigas, the same were constructed in order to
a lack of effort on their part to thoroughly inspect the conditions of the
prevent people from using the same to enter the building and not designed
building in relation to the safety of their enrolled medical student-clerks.
to prevent egress therefrom. Dr. Ortigas was specificallly questioned if
there were prior incidents of intrusion into the clinic to which he replied in
According to Dr. Ortigas and Dr. Macabulos,20 they considered the doors
the negative. If defendants-appellees' logic of "no untoward incident has
leading out from the pantry and the bedrooms as fire exits. However, as
happened" is to be applied then, the presence of the grills was
doctors who presumably have a wider degree of foresight than most, they
unnecessary in the same way that they found the inspection of fire safety
failed to consider that a fire might break out in areas which would block
permits to be unnecessary. It baffles the Court, therefore, that
these doors that are merely ordinary exits. Further, Dr. Ortigas himself
defendants-appellees would accept the precaution against an admittedly
testified that permits are not part of their consideration for safety and that
unlikely intrusion but ignore any safety measures against a fire which was
they do not specifically look for the same [xxx.]
a great possibility given that the clinic had flammable equipment such as a
gas burner for cooking. (Citations omitted)
xxxx
Hence, the present petition for review on certiorari alleging that the CA
Dr. Ortigas admitted that, as a doctor, he was not concerned with the committed reversible error when it: (a) held that the Municipality of Cabiao
permits issued regarding the construction and safety of the building. was not an indispensable party, 21 (b) disregarded the findings of the BFP
However, at the time he conducted the inspections of the clinic, he was that the fire was purely accidental and caused by unattended
also the Associate Dean of St. Luke's College of Medicine with the duty to cooking,22 and (c) ruled that petitioners were negligent. 23chanrobleslaw
ensure that the building was safe for the security of the enrolled students
of St. Luke's College of Medicine who would be assigned to the clinic We deny the petition.
during their clerkship and he admittedly did not consider the same.
A perusal of the Complaint readily shows that respondents base their
As Associate Dean for Student Affairs, it would be reasonable to expect cause of action on petitioners' breach of the contractual obligation, as an
Dr. Ortigas to show concern for the safety and security of the students educational institution, of ensuring that their students, in the performance
enrolled in the institution thus, ensure that the premises they were to of a required school activity, would be safe and secure. The Municipality of
reside in would be properly equipped in case of fires and other calamities. Cabiao, not being a party to said enrollment contract, is not an
He himself stated that his position as such put him "in charge of student indispensable party to the case.
and student affairs, xxx and in general, the non-academic matters
involving students and the faculty." Consequently, it is safe to conclude An indispensable party is defined by the Rules of Court as a party-in-
that his task included the safety and welfare of the students enrolled at St. interest without whom no final determination can be had of an action. 24 In
Luke's College of Medicine, one which he miserably failed to discharge. the present case, respondents premise petitioners' liability on their
contractual obligation to their students and, certainly, complete relief and
Defendants-appellees also made a big deal out of the procedure of asking a final judgment can be arrived at by weighing the claims and defenses of
feedback from students which led to the assumption that the clinic was petitioners and respondents, without need of evaluating the claims and
safe and habitable. However, it must be remembered that the students defenses of the Municipality of Cabiao. If at all, the Municipality of Cabiao
that gave the feedback were more concerned with passing their course and is a necessary party25cralawred whose non-inclusion in the case at bar
presumably trusted that the school would not send them to a location shall not prevent the court from proceeding with the action.
 the nature of the obligation and corresponding to the circumstances of
Indeed, the present case is one between a school and its students, with persons, time and place."28chanrobleslaw
their relationship being based on the enrollment contracts. In the
illuminating case of PSBA, et al. v. CA, et al.,26 the Court had the Our next query, then, is, in relation to the fire incident, did petitioners
opportunity to lay down the principle that:ChanRoblesVirtualawlibrary commit a breach of contract through negligence?
When an academic institution accepts students for enrollment, there is
established a contract between them, resulting in bilateral obligations A review of the records compels the Court to answer in the affirmative.
which both parties are bound to comply with. For its part, the school
undertakes to provide the student with an education that would In Mendoza, et al. v. Sps. Gomez,29 we defined negligence as "the failure
presumably suffice to equip him with the necessary tools and skills to to observe for the protection of the interests of another person, that
pursue higher education or a profession. On the other hand, the student degree of care, precaution and vigilance which the circumstances justly
covenants to abide by the school's academic requirements and observe its demand, whereby such other person suffers injury."
rules and regulations.
In Gaid v. People,30 we enumerated the elements of simple negligence as
Institutions of learning must also meet the implicit or "built-in" obligation follows: (1) that there is lack of precaution on the part of the offender, and
of providing their students with an atmosphere that promotes or assists in (2) that the damage impending to be caused is not immediate or the
attaining its primary undertaking of imparting knowledge. Certainly, no danger is not clearly manifest. We explained
student can absorb the intricacies of physics or higher mathematics or that:ChanRoblesVirtualawlibrary
explore the realm of the arts and other sciences when bullets are flying or The standard test in determining whether a person is negligent in doing an
grenades exploding in the air or where there looms around the school act whereby injury or damage results to the person or property of another
premises a constant threat to life and limb. Necessarily, the school must is this: could a prudent man, in the position of the person to whom
ensure that adequate steps are taken to maintain peace and order within negligence is attributed, foresee harm to the person injured as a
the campus premises and to prevent the breakdown thereof. reasonable consequence of the course actually pursued? If so, the law
imposes a duty on the actor to refrain from that course or to take
Indubitably, institutions of learning have the "built-in" obligation of
precautions to guard against its mischievous results, and the failure to do
providing a conducive atmosphere for learning, an atmosphere where
so constitutes negligence. Reasonable foresight of harm, followed by the
there are no constant threats to life and limb, and one where peace and
ignoring of the admonition born of this provision, is always necessary
order are maintained.
before negligence can be held to exist.31chanroblesvirtuallawlibrary
In the case at bar, the Cabiao Community Clinic is to be considered as part In the case at bar, it is well to remember that the victims were in the
of the campus premises of St. Luke's. In the course description of the Cabiao Community Clinic because it was a requirement of petitioners. The
clerkship program in preventive and community medicine, it is stated that students were complying with an obligation under the enrollment contract
the Cabiao Community Clinic serves as the base operation of the clerkship — they were rendering medical services in a community center as required
program.27 As such, petitioner had the same obligation to their students, by petitioners. It was thus incumbent upon petitioners to comply with their
even though they were stationed in the Cabiao Community Clinic, and it own obligations under the enrollment contract - to ensure that the
was incumbent upon petitioners to ensure that said Clinic was conducive community center where they would designate their students is safe and
for learning, that it had no constant threats to life and limb, and that secure, among others.
peace and order was maintained thereat. After all, although away from the
main campus of St. Luke's, the students were still under the same Petitioners failed to take the necessary precautions to guard their students
protective and supervisory custody of petitioners as the ones detailed in against foreseeable harm. As correctly found by the CA, petitioners were
the main campus. remiss in inspecting the premises of the Cabiao Community Clinic and in
ensuring that the necessary permits were in order. These precautions
In the performance of its contractual and inherent obligations, the Court is could have minimized the risk to the safety of the victims. Indeed, the CA
mindful of the attendant difficulties on the part of institutions of learning, had basis in making the following pronouncement: 32
and the Court recognizes that the latter cannot be an insurer of its In the instant case, as previously emphasized, defendants-appellees were
students against all risks. Thus, as also laid out in the PSBA case, "the aware that its medical students were residing at the second floor of the
school may still avoid liability by proving that the breach of its contractual clinic. At the very least, during inspection, they should have thoroughly
obligation to the students was not due to its negligence, here statutorily inspected the building's physical appearance and the documents pertinent
defined to be the 'omission of that degree of diligence which is required by to the premises to make sure that the same minimized the risk to the
safety of the students. There is no record that any inquiry on the condition shows petitioners' propensity of relying on third parties in carrying out its
of the premises was even made by defendants-appellees prior to the obligations to its students.
implementation of the program. In addition to such failure, defendants-
appellees would have this Court believe that their participation in the clinic It is settled that in culpa contractual, the mere proof of the existence of
was limited to providing the same with medical personnel without the contract and the failure, of its compliance justify, prima facie, a
considering that such personnel also included its students which St. Luke's corresponding right of relief.37 In Gilat Satellite Networks, Ltd. v. UCPB
was obliged to protect from unnecessary danger. General Insurance Co., Inc.,38 the Court
expounded:ChanRoblesVirtualawlibrary
The petitioners were obviously negligent in detailing their students to a
xxx. The law, recognizing the obligatory force of contracts, will not permit
virtual fire trap. As found by the NBI, the Clinic was unsafe and was
a party to be set free from liability for any kind of misperformance of the
constructed in violation of numerous provisions of the Revised Fire Code of
contractual undertaking or a contravention of the tenor thereof. A breach
the Philippines. It had no emergency facilities, no fire exits, and had no
upon the contract confers upon the injured party a valid cause for
permits or clearances from the appropriate government offices.
recovering that which may have been lost or suffered. The remedy serves
to preserve the interests of the promissee that may include his
Petitioners additionally aver that the Clinic was built under the direction,
"expectation interest," which is his interest in having the benefit of his
supervision, management and control of the Municipality of Cabiao, 33 and
bargain by being put in as good a position as he would have been in had
that it ensured that there was an agreement for the Municipality of Cabiao
the contract been performed, or his "reliance interest," which is his
to provide 24-hour security to the Clinic. 34chanrobleslaw
interest in being reimbursed for loss caused by reliance on the contract by
being put in as good a position as he would have been in had the contract
Petitioners, however, cannot escape liability based on these arguments. As
not been made; or his "restitution interest," which is his interest in having
held in Saludaga v. FEU, et al.,35 a learning institution should not be
restored to him any benefit that he has conferred on the other party.
allowed to completely relinquish or abdicate matters of safety and security
Indeed, agreements can accomplish little, either for their makers or for
to a third party as to do so would result to contracting away its inherent
society, unless they are made the basis for action. The effect of every
obligation of ensuring a safe learning environment for its students.
infraction is to create a new duty, that is, to make RECOMPENSE to the
one who has been injured by the failure of another to observe his
In Saludaga, the Court chastised therein respondent Far Eastern University
contractual obligation unless he can show extenuating circumstances, like
(FEU) for its total reliance on a security agency as to the qualifications of
proof of his exercise of due diligence x x x or of the attendance of
its security guards, viz:36
fortuitous event, to excuse him from his ensuing liability. xxx. (Emphasis
Respondents also failed to show that they undertook steps to ascertain
omitted)
and confirm that the security guards assigned to them actually possess the
qualifications required in the Security Service Agreement. It was not In the case at bar, it was amply shown that petitioners and the victims
proven that they examined the clearances, psychiatric test results, 201 were bound by the enrollment contracts, and that petitioners were
files, and other vital documents enumerated in its contract with Galaxy. negligent in complying with their obligation under the said contracts to
Total reliance on the security agency about these matters or failure to ensure the safety and security of their students. For this contractual
check the papers stating the qualifications of the guards is negligence on breach, petitioners should be held liable.
the part of respondents. A learning institution should not be allowed to
completely relinquish or abdicate security matters in its premises to the WHEREFORE, in view of the foregoing, the Court resolves to DENY the
security agency it hired. To do so would result to contracting away its petition for review on certiorari and AFFIRM the Court of Appeals'
inherent obligation to ensure a safe learning environment for its students. Decision and Resolution.
Similarly, we cannot turn; a blind eye on petitioners' total reliance on the
SO ORDERED.chanRoblesvirtualLawlibrary
Municipality of Cabiao in ensuring the safety and security of their students.
The enrollment contract is between petitioners and the victims, and
petitioners cannot abdicate' on their contractual obligation to provide their
students a safe learning environment, nor can it pass or contract away
such obligation to a third party.

Moreover, as to the stipulation of 24-hour security in the Clinic, petitioners

failed to present evidence that this stipulation was actually enforced or
that they took measures to ensure that it was enforced. This, once more,
G.R. No. 208450 On July 31, 1973, Mariano executed a Deed of Absolute Sale in favor of his
son, Ciriaco Seno (Ciriaco), over a 1.0120-hectare land in Cebu covered by
SPS. ROBERTO ABOITIZ AND MARIA CRISTINA Tax Declaration No. 43358. 13 This property included two (2)
CABARRUS, Petitioners
vs. lots: Lot No. 2807 and the land subject of this case, Lot No. 2835. 14
SPS. PETER L. PO AND VICTORIA L. PO, Respondents
On May 5, 1978, Ciriaco sold the two (2) lots to Victoria Po
x-----------------------x (Victoria).15 The parties executed a Deed of Absolute Sale. 16

G.R. No. 208497 On July 15, 1982, Mariano died and was survived by his five (5) children
(Mariano Heirs): Esperanza Seno V da. De Kuizon, Ramon Seno, 17 Benita
SPS. PETER L. PO AND VICTORIA L. PO, Petitioners, Seno Vda. De Lim, Simeon Seno,18 and Ciriaco.19
vs.
SPS. ROBERTO ABOITIZ AND MARIA CRISTINA CABARRUS, JOSE In 1990, Peter Po (Peter) discovered that Ciriaco "had executed a
MARIA MORAZA, AND ERNESTO ABOITIZ AND ISABEL [q]uitclaim dated August 7, 1989 renouncing [his] interest over Lot [No.]
ABOITIZ, Respondents 2807 in favor of [petitioner] Roberto."20 In the quitclaim, Ciriaco stated
that he was "the declared owner of Lot [Nos.] 2835 and 2807." 21
DECISION
The Spouses Po confronted Ciriaco.22 By way of remedy, Ciriaco and the
LEONEN, J.: Spouses Po executed a Memorandum of Agreement dated June 28, 1990 in
which Ciriaco agreed to pay Peter the difference between the amount paid
by the Spouses Po as consideration for the entire property and the value of
This resolves two (2) Petitions for Review on Certiorari 1 assailing the
the land the Spouses Po were left with after the quitclaim. 23
Court of Appeals' October 31, 2012 Decision2 and its June 17, 2013
Resolution3 in CA-G.R. CV No. 03803. The assailed decision affirmed the
Regional Trial Court's Decision,4 which declared the spouses Peter Po and However, also in 1990, Lot No. 2835 was also sold to Roberto. 24 The
Victoria Po (Spouses Po) as the rightful owners of the parcel of land. Mariano Heirs, including Ciriaco, executed separate deeds of absolute sale
However, the Court of Appeals ruled that respondents Jose Maria Moraza in favor of Roberto.25 Thereafter, Roberto immediately developed the lot as
(Jose), spouses Ernesto Aboitiz (Ernesto), and Isabel Aboitiz (Isabel) were part of a subdivision called North Town Homes. 26
innocent buyers in good faith whose titles were entitled to protection. 5 The
assailed resolution denied the Motion for Partial Reconsideration of the In 1991, the Spouses Po declared Lot No. 2835 for taxation purposes and
spouses Roberto Aboitiz and Maria Cristina Cabarrus (Spouses Aboitiz). 6 was issued Tax Declaration No. 0634-A.27

The Spouses Aboitiz filed the Petition7 docketed as G.R. No. 208450. The In 1992, Roberto also declared Lot No. 2835 for taxation purposes and
Spouses Po filed the Petition8 docketed as G.R. No. 208497. These cases was issued Tax Declaration No. 1100, annotated with: "This tax
are consolidated in the case at bar. declaration is also declared in the name of Mrs. VICTORIA LEE PO married
to PETER PO under [T]ax [Declaration] [N]o. 0634-A so that one may be
This case involves a parcel of land located in Cabancalan, Mandaue considered a duplicate to the other. "28
City,9 initially registered as Original Certificate of Title No. 0-887, and titled
under the name of Roberto Aboitiz (Roberto). 10 The land is referred to as On April 19, 1993, Roberto filed an application for original registration of
Lot No. 2835. 11 Lot No. 2835 with the Mandaue City Regional Trial Court, acting as land
registration court. 29 The case was raffled to Branch 28 and docketed as
This parcel of land originally belonged to the late Mariano Seno LRC Case No. N-208.30
(Mariano). 12
In its Decision dated October 28, 1993, the trial court granted the issuance It held that the action of the Spouses Po had not yet prescribed because
of Original Certificate of Title No. 0-887 in the name of Roberto. 31 The lot their complaint in 1996 was within the 10-year prescriptive period as the
was immediately subdivided with portions sold to Ernesto and Jose. 32 title in favor of the Spouses Aboitiz was issued in 1994. 43

On November 19, 1996, the Spouses Po filed a complaint to recover the However, the Court of Appeals ruled that the certificates of title of Jose,
land and to declare nullity of title with damages.33 Ernesto, and Isabel were valid as they were innocent buyers in good
faith.44
The complaint was docketed in Branch 55, Regional Trial Court of Mandaue
City. 34 The Spouses Aboitiz thus filed their Petition for Review, which was
docketed as G.R. No. 208450.1âwphi1
The trial court ruled in favor of the Spouses Po in its Decision dated
November 23, 2009: 45
 They argue that the Decision of Branch 55, Regional Trial Court of
Mandaue City granting the complaint of the Spouses Po is void for lack of
WHEREFORE, premises considered, judgment is rendered in favor of jurisdiction over the matter. 46 They claim that a branch of the Regional
plaintiffs, and against defendants, declaring the plaintiffs as owner of Trial Court has no jurisdiction to nullify a final and executory decision of a
subject land and ordering the defendants reconvey and/or return to co-equal branch;47 it is the Court of Appeals that has this jurisdiction. 48
plaintiffs Lot No. 2835; declaring as absolute nullity all the documents of
sale involving Lot 283 5 executed by the Heirs of Mariano Seno in favor of They likewise assert that the Spouses Po's cause of action has
defendant Roberto Aboitiz and such other documents used in the prescribed 49 and allegedly accrued when the Deed of Absolute Sale
improvident issuance of titles in the name of defendants, and to cancel the between the Spouses Po and Ciriaco was executed on May 5, 1978. 50 They
said titles.35 maintain that more than 10 years had elapsed when the complaint was
filed on November 12, 1996, thus barring the action through prescription. 51
The Spouses Aboitiz appealed to the Court of Appeals. The Court of
Appeals, in its Decision dated October 31, 2012, partially affirmed the trial The Spouses Aboitiz further insist that "estoppel and laches have already
court decision, declaring the Spouses Po as the rightful owner of the land. set in."52 They claim that they have been "in open, public, continuous,
However, it ruled that the titles issued to respondents Jose, Ernesto, and uninterrupted, peaceful[,] and adverse possession" in the concept of
Isabel should be respected.36 owners over the property for "46 years as of 1993," without the Spouses
Po acting on the Deed of Absolute Sale.53 They attest that the development
The Court of Appeals discussed the inapplicability of the rules on double of North Town Homes Subdivision "was covered by utmost publicity," but
sale and the doctrine of buyer in good faith since the land was not yet the Spouses Po did not immediately question the development or interpose
registered when it was sold to the Spouses Po. 37 However, it ruled in favor any objection during the registration proceedings. 54
of the Spouses Po on the premise that registered property may be
reconveyed to the "rightful or legal owner or to the one with a better right They posit that the Deed of Absolute Sale between Ciriaco and the
if the title [was] wrongfully or erroneously registered in another person's Spouses Po is "clearly fake and fraudulent" 55 as evidenced by certifications
name."38 The Court of Appeals held that the Mariano Heirs were no longer of its non-existence in the notarial books and the Spouses Po's failure to
the owners of the lot at the time they sold it to Roberto in 1990 because enforce their rights over the property until 18 years later. 56 They also
Mariano, during his lifetime, already sold this to Ciriaco in 1973. 39 affirm that the Deed of Absolute Sale between Ciriaco and the Spouses Po
is inadmissible as no documentary stamp was paid and affixed. 57
It found that the Deed of Absolute Sale between Ciriaco and the Spouses
Po was duly notarized and was thus presumed regular on its face. 40 Their Lastly, they contend that the Mariano Heirs should have been impleaded in
Memorandum of Agreement did not cancel or rescind the Deed of Absolute the action as they are indispensable parties. 58
Sale but rather strengthened their claim that they "entered into a contract
of [s]ale. "41 The Spouses Po filed a Comment59 where they argued that the Regional
Trial Court had jurisdiction when it granted their complaint because the
It likewise ruled that, contrary to the assertion of the Spouses Aboitiz, case filed by the Spouses Aboitiz was for the registration of the land, while
there was no showing that Ciriaco merely held the property in trust for the the case they filed was for reconveyance.60 They insisted that their action
Mariano Heirs. 42 had not prescribed because an action for reconveyance prescribes in 10
years from the "date of issuance of the certificate of title over the Finally, whether the respondents Jose Maria Moraza, Ernesto Aboitiz, and
property."61 They argued that "laches ha[d] not set in." 62 They claimed that Isabel Aboitiz are innocent purchasers in good faith.
the notarized Deed of Absolute Sale between them and Ciriaco was not
fake or fraudulent and was admissible in evidence 63 whereas the Spouses I
Aboitiz failed "to overcome [its] presumption of regularity and due
execution."64 They asserted that "the documentary stamps tax ha[d] been
The Spouses Aboitiz argue that Branch 55, Regional Trial Court did not
paid"65 and that the Mariano Heirs were not indispensable parties. 66
have jurisdiction to nullify the final and executory Decision of Branch 28,
Regional Trial Court in LRC Case No. N-208. 73 They claim that that it is the
Spouses Aboitiz filed a Reply67 reiterating their arguments in the Petition. Court of Appeals that has jurisdiction to annul judgments of the Regional
Trial Court.74
The Spouses Po also filed a Petition for Review, which was docketed as
G.R. No. 208497. They claim that respondents Jose, Ernesto, and Isabel However, the instant action is not for the annulment of judgment of a
are not "innocent purchasers for value."68 They allegedly knew of the Regional Trial Court. It is a complaint for reconveyance, cancellation of
defective title of Roberto because his tax declaration had the following title, and damages.75
annotation: "This tax declaration is also declared in the name of Mrs.
VICTORIA LEE PO, married to PETER PO under tax dec. No. 0634-A so that
A complaint for reconveyance is an action which admits the registration of
one may be considered a duplicate to the other. (Section 89 Paragraph H
title of another party but claims that such registration was erroneous or
PD 464)."69
wrongful. 76 It seeks the transfer of the title to the rightful and legal owner,
or to the party who has a superior right over it, without prejudice to
Spouses Aboitiz filed a Comment. 70 Aside from reiterating their assertions innocent purchasers in good faith. 77 It seeks the transfer of a title issued
in their Petition for Review in G.R No. 208450, they argued that there was in a valid proceeding. The relief prayed for may be granted on the basis of
no evidence that they acted in bad faith as "subdivision lot buyers [were] intrinsic fraud-fraud committed on the true owner instead of fraud
not obliged to go beyond the [T]orrens title."71 committed on the procedure amounting to lack of jurisdiction.

Spouses Po filed a Reply. 72 An action for annulment of title questions the validity of the title because
of lack of due process of law. There is an allegation of nullity in the
For resolution are the following issues: procedure and thus the invalidity of the title that is issued.

First,  whether the Regional Trial Court has jurisdiction over the Spouses The complaint of the Spouses Po asserted that they were the true owners
Peter and Victoria Po's complaint; of the parcel of land which was registered in the name of the

Second, whether the action is barred by prescription, Spouses Aboitiz.78 They alleged that they acquired the property from
Ciriaco, who acquired it from Mariano. 79 They claimed that the Spouses
Third, whether the doctrines of estoppel and laches apply; Aboitiz had the property registered without their knowledge and through
fraud. 80 Thus, they sought to recover the property and to cancel the title
of the Spouses Aboitiz.81 Thus the prayer in their Complaint stated:
Fourth,  whether the land registration court's finding that Ciriaco Seno only
held the property in trust for the Mariano Heirs is binding as res judicata in
this case; WHEREFORE, premises considered, this Honorable Court is respectfully
prayed to render judgment in favor of plaintiffs and against defendants,
ordering the latter as follows:
Fifth, whether the Deed of Absolute Sale between Ciriaco Seno and the
Spouses Peter and Victoria Po should be considered as evidence of their
entitlement to the property; 1. To reconvey and/or return to plaintiffs Lot No. 2835
which is the subject matter of this complaint;
Sixth, whether the Mariano Heirs, as sellers in a deed of conveyance of
realty, are indispensable parties; and 2. To declare as absolute nullity all the documents of sale
involving Lot 2835 in favor of defendants and such other
 documents used in the improvident issuance of the Title in a judgment  of a Regional Trial Court. It is for reconveyance and the
the name of defendants, and to cancel said Title; annulment of title.

3. To pay jointly and severally the amount of ₱ The difference between these two (2) actions was discussed in Toledo
1,000,000.00 as moral damages; ₱500,000.00 as actual l  86 v. Court of Appeals:
damages; ₱ 100,000.00 as attorneys fees and ₱ 20,000.00
as litigation expenses. An action for annulment of judgment is a remedy in equity so exceptional
in nature that it may be availed of only when other remedies are wanting,
Plaintiffs further pray for such other reliefs and remedies just and and only if the judgment, final order or final resolution sought to be
equitable in the premises. 82 annulled was rendered by a court lacking jurisdiction or through extrinsic
fraud. An action for reconveyance, on the other hand, is a legal and
Except for actions falling within the jurisdiction of the Municipal Trial equitable remedy granted to the rightful owner of land which has been
Courts, the Regional Trial Courts have exclusive original jurisdiction over wrongfully or erroneously registered in the name of another for the
actions involving "title to, or possession of, real property." 83 Section 19 of purpose of compelling the latter to transfer or reconvey the land to him.
Batas Pambansa Blg. 129 provides: The Court of Appeals has exclusive original jurisdiction over actions for
annulment of judgments of Regional Trial Courts whereas actions for
reconveyance of real property may be filed before the Regional Trial Courts
Section 19. Jurisdiction in Civil Cases.  - Regional Trial Courts shall exercise
or the Municipal Trial Courts, depending on the assessed value of the
exclusive original jurisdiction:
property involved.

(2) In all civil actions which involve the title to, or possession of, real
Petitioners allege that: first, they are the owners of the land by virtue of a
property, or any interest therein, except actions for forcible entry into and
sale between their and respondents' predecessors-in-interest; and second,
unlawful detainer of lands or buildings, original jurisdiction over which is
that respondents Ramoses and ARC Marketing illegally dispossessed them
conferred upon Metropolitan Trial Courts, Municipal Trial Courts, and
by having the same property registered in respondents' names. Thus, far
Municipal Circuit Trial Courts[.]
from establishing a case for annulment of judgment, the foregoing
allegations clearly show a case for reconveyance. 87 (Citations omitted)
An action for reconveyance and annulment of title is an action involving
the title to real property. 84
As stated, a complaint for reconveyance is a remedy where the plaintiff
argues for an order for the defendant to transfer its title issued in a
The complaint of the Spouses Po is clearly an action for reconveyance and proceeding not otherwise invalid. The relief prayed for may be granted on
annulment of title. Thus, the Regional Trial Court has jurisdiction to hear the basis of intrinsic rather than extrinsic fraud; that is, fraud committed
the case. on the real owner rather than fraud committed on the procedure
amounting to lack of jurisdiction.
The Spouses Aboitiz claim that it is the Court of Appeals that has
jurisdiction over the annulment of Regional Trial Court judgments. 85 An action for annulment of title, on the other hand, questions the validity
of the grant of title on grounds which amount to lack of due process of
The jurisdiction of the Court of Appeals is provided in Section 9 of Batas law. The remedy is premised in the nullity of the procedure and thus the
Pambansa Blg. 129: invalidity of the title that is issued. Title that is invalidated as a result of a
successful action for annulment against the decision of a Regional Trial
Section 9. Jurisdiction.  - The Intermediate Appellate Court shall exercise: Court acting as a land registration court may still however be granted on
the merits in another proceeding not infected by lack of jurisdiction or
extrinsic fraud if its legal basis on the merits is properly alleged and
(2) Exclusive original jurisdiction over actions for annulment of judgments proven.
of Regional Trial Courts[.]
Considering the Spouses Aboitiz's fraudulent registration without the
While the Court of Appeals has jurisdiction to annul judgments of the Spouses Po's knowledge and the latter's assertion of their ownership of the
Regional Trial Courts, the case at bar is not for the annulment of land, their right to recover the property and to cancel the Spouses Aboitiz'
s88 title, the action is for reconveyance and annulment of title and not for Art. 1456 of the Civil Code provides:
annulment of judgment.
Art. 1456. If property is acquired through mistake or fraud, the person
Thus, the Regional Trial Court has jurisdiction to hear this case. obtaining it is, by force of law, considered a trustee of an implied trust for
the benefit of the person from whom the property comes.
II
Thus, it was held that when a party uses fraud or concealment to obtain a
The Spouses Aboitiz argue that the Spouses Po's cause of action has certificate of title of property, a constructive trust is created in favor of the
prescribed.89 They claim that prescription has set in because the original defrauded party.
complaint was filed only on November 12, 1996, after more than 10 years
after the Deed of Absolute Sale between Ciriaco and Spouses Po was Constructive trusts are "created by the construction of equity in order to
executed on May 5, 1978. 90 satisfy the demands of justice and prevent unjust enrichment. They arise
contrary to intention against one who, by fraud, duress or abuse of
The Spouses Po's action has not prescribed. confidence, obtains or holds the legal right to property which he ought not,
in equity and good conscience, to hold."
"[A]n action for reconveyance ... prescribes in [10] years from the
issuance of the Torrens title over the property." 91 The basis for this is When property is registered in another's name, an implied or constructive
Section 53, Paragraph 392 of Presidential Decree No. 152993 in relation to trust is created by law in favor of the true owner. The action for
Articles 145694 and 1144(2)95 of the Civil Code.96 reconveyance of the title to the rightful owner prescribes in 10 years from
the issuance of the title. 105 (Citations omitted)
Under Presidential Decree No. 1529 (Property Registration Decree), the
owner of a property may avail of legal remedies against a registration Thus, the law creates a trust in favor of the property's true owner.
procured by fraud:
The prescriptive period to enforce this trust is 10 years from the time the
SECTION 53. Presentation of Owner's Duplicate Upon Entry of New right of action accrues. Article 1144 of the Civil Code provides:
Certificate.  - ...
Article 1144. The following actions must be brought within ten years from
In all cases of registration procured by fraud, the owner may pursue all his the time the right of action accrues:
legal and equitable remedies against the parties to such fraud without
prejudice, however, to the rights of any innocent holder for value of a (1) Upon a written contract;
certificate of title ...
(2) Upon an obligation created by law;
Article 1456 of the Civil Code provides that a person acquiring a property
through fraud becomes an implied trustee of the property's true and lawful (3) Upon a judgment.
owner.97
In an action for reconveyance, the right of action accrues from the time
An implied trust is based on equity and is either (i) a constructive trust, or the property is registered . 106
(ii) a resulting trust.98 A resulting trust is created by implication of law and
is presumed as intended by the parties.99 A constructive trust is created by
In Crisostomo,  107 the petitioners were able to transfer the property under
force of law 100 such as when a title is registered in favor of a person other
their names without knowledge of the respondent. 108 The respondent filed
than the true owner. 101
an action for reconveyance. 109 In arguing that the action for reconveyance
had prescribed, the petitioners claimed that the cause of action of the
The implied trustee only acquires the right "to the beneficial enjoyment of respondent should be based on the latter's Deed of Sale and thus the
[the] property." 102 The legal title remains with the true respondent's right of action should have accrued from its execution. 110 This
owner. 103 In Crisostomo v. Garcia, J,r., .:  104 Court, however, ruled that the right of action accrued from the time the
property was registered because registration is the act that signifies that Thus, an action for reconveyance and cancellation of title prescribes in 10
the adverse party repudiates the implied trust: years from the time of the issuance of the Torrens title over the
property. 123
In the case at bar, respondent's action which is for Reconveyance and
Cancellation of Title is based on an implied trust under Art. 1456 of the Considering that the Spouses Po's complaint was filed on November 19,
Civil Code since he averred in his complaint that through fraud petitioners 1996, less than three (3) years from the issuance of the Torrens title over
were able to obtain a Certificate of Title over the property. He does not the property on April 6, 1994, it is well within the 10-year prescriptive
seek the annulment of a voidable contract whereby Articles 1390 and 1391 period imposed on an action for reconveyance.
of the Civil Code would find application such that the cause of action would
prescribe in four years. III

An action for reconveyance based on implied or constructive trust The Spouses Aboitiz insist that estoppel and laches have already set
prescribes in ten years from the alleged fraudulent registration or date of in. 124 They claim that they have been in "open, continuous, public,
issuance of the certificate of title over the property. peaceful, [and] adverse" possession in the concept of owners over the
property for "46 years as of 1993," without the Spouses Po acting on their
It is now well-settled that the prescriptive period to recover property Deed of Absolute Sale. 125 Moreover, the development of North Town
obtained by fraud or mistake, giving rise to an implied trust under Art. Homes Subdivision "was covered by utmost publicity" but the Spouses Po
1456 of the Civil Code, is 10 years pursuant to Art. 1144. This tenyear did not promptly question the development. 126 In fact, they did not
prescriptive period begins to run from the date the adverse party interpose any objection during the registration proceedings. 127
repudiates the implied trust, which repudiation takes place when the
adverse party registers the land.  111 (Citations omitted, emphasis supplied) There is laches when a party was negligent or has failed "to assert a right
within a reasonable time," thus giving rise to the presumption that he or
Likewise, in Duque v. Domingo:  112 she has abandoned it. 128 Laches has set in when it is already inequitable
or unfair to allow the party to assert the right. 129 The elements of laches
The registration of an instrument in the Office of the Register of Deeds were enumerated in Ignacio v. Basilio:
constitutes constructive notice to the whole world, and, therefore,
discovery of the fraud is deemed to have taken place at the time of There is laches when: (1) the conduct of the defendant or one under
registration. Such registration is deemed to be a constructive notice that whom he claims, gave rise to the situation complained of; (2) there was
the alleged fiduciary or trust relationship has been repudiated. It is now delay in asserting a right after knowledge of the defendant's conduct and
settled that an action on an implied or constructive trust prescribes in ten after an opportunity to sue; (3) defendant had no knowledge or notice that
(10) years from the date the right of action accrued. The issuance of the complainant would assert his right; (4) there is injury or prejudice to
Transfer Certificate of Title No. 7501 in 1931 to Mariano Duque the defendant in the event relief is accorded to the
commenced the effective assertion of adverse title for the purpose of the complainant. 130 (Citation omitted)
statute of limitations. 113 (Citations omitted)
"Laches is different from prescription."131 Prescription deals with delay itself
Registration of the property is a "constructive notice to the whole and thus is an issue of how much time has passed. 132 The time period
world."114 Thus, in registering the property, the adverse party repudiates when prescription is deemed to have set in is fixed by law. 133 Laches, on
the implied trust. 115 Necessarily, the cause of action accrues upon the other hand, concerns itself with the effect of delay and not the period
registration. 116 of time that has lapsed.134 It asks the question whether the delay has
changed "the condition of the property or the relation of the parties" such
An action for reconveyance and annulment of title does not seek to that it is no longer equitable to insist on the original right. 135 In Nielson &
question the contract which allowed the adverse party to obtain the title to Co., Inc. v. Lepanto Consolidated Mining  Co.: 136
the property. 117 What is put on issue in an action for reconveyance an d
cancellation of title is the ownership of the property and its Appellee is correct in its contention that the defense of laches applies
registration. 118 It does not question any fraudulent contract. 119 Should independently of prescription. Laches is different from the statute of
that be the case, the applicable provisions are Articles 1390 120 and limitations. Prescription is concerned with the fact of delay. Whereas
1391 121 of the Civil Code. 122 laches is concerned with the effect of delay. Prescription is a matter of
time; laches is principally a question of inequity of permitting a claim to be 8. Par. 11 is denied as regards the all[e]gation that Lot 2835 was
enforced, this inequity being founded on some change in the condition of feloniously and un[l]awfully acquired by defendants, for being false. The
the property or the relation of the parties. Prescription is statutory; laches truth is that defendants were in good faith in acquiring same property.
is not. Laches applies in equity, whereas prescription applies at law. Defendants refused to meet the demands of settlement by plaintiffs
Prescription is based on fixed time, Laches is not. 137 because they are strangers to the property in question. 148

The defense of laches is based on equity. 138 It is not based on the title of When they discovered that the property was registered in the name of the
the party invoking it, but on the right holder's "long inaction or inexcusable Spouses Aboitiz in 1993, the Spouses Po then filed the instant complaint to
neglect" to assert his claim. 139 recover the property sold to them by Ciriaco, alleging that it was done
without their knowledge, through evident bad faith and fraud. 149 The
This Court rules that the Spouses Po is not barred by laches. There is no Spouses Po filed this case in less than three (3) years from the time of
showing that they abandoned their right to the property. The factual registration.
findings reveal that the Spouses Po had their rights over the property
registered in the assessor's office. 140 They testified that they introduced Based on these circumstances, the elements of laches are clearly lacking in
improvements by cultivating fruit trees after they purchased the this case. There was no delay in asserting their right over the property,
lots.141 When the Spouses Po discovered that Ciriaco executed a quitclaim and the Spouses Aboitiz had knowledge that the Spouses Po would assert
renouncing his interest over Lot No. 2807 in favor of Roberto, the Spouses their right.
Po executed a Memorandum of Agreement with Ciriaco to protect their
interest in Lot No. 2835.142 Thus, it cannot be said that they are barred by laches.

The Spouses Po also had the property declared for taxation purposes in IV
their names and Tax Declaration No. 0634-A was issued. 143 Thus, when
the Spouses Aboitiz also had the property declared for taxation purposes,
The Spouses Aboitiz insist that there is already a finding by the Regional
it had the annotation: "This tax declaration is also declared in the name of
Trial Court in LRC Case No. N-208 that Ciriaco merely held the property "in
Mrs. Victoria Lee Po, married to Peter Po under tax dee. no. 0634-A so
trust for the [Mariano Heirs]." 150 Thus, Ciriaco could not have validly sold
that one may be considered a duplicate to the other." 144
the property to the Spouses Po. 151 They claim that these findings are
binding on the whole world because land registration proceedings are
The Spouses Aboitiz only acquired their alleged rights over the property in actions in rem. 152
1990, when the Mariano Heirs executed the Deeds of Sale in their
favor. 145 Assuming the Spouses Aboitiz immediately took possession and
In the Decision in LRC Case No. N-208, no one opposed the application for
began construction in 1990, it cannot be said that the Spouses Po were in
registration.153 Moreover, the Spouses Aboitiz presented only one (I)
delay in asserting their right. In the Spouses Po's complaint, they asserted
witness, Gregorio Espina (Espina), an employee of
that they made demands upon the Spouses Aboitiz to reconvey to them
Roberto, 154 whotestified:
the property. 146 They also referred the matter to the barangay for
conciliation:
That this parcel of land is covered by tax declarations, to wit: 1) Tax Dec.
No. 43174 in the name of Ciriaco Seno for the year 1953 (Exh. "T");
11) That demands were made upon the defendants to reconvey to
plaintiffs Lot 2835 unlawfully and feloniously acquired by defendants, but
to no avail, thereby compelling the plaintiffs to elevate the matter for 11) Tax Dec. No. 2835 in the name of applicant, Roberto Aboitiz for the
barangay conciliation, and for failure of the parties to effect a settlement, year 1991 (Exh. "DD").
the proper Certification to file action was then issued, a copy of which is
hereto attached as Annex "L." 147 That the tax declarations covering Lot No. 2835 are in the name of Ciriaco
Seno because the heirs of Mariano Seno have agreed that Lot No. 2835 be
In their Answer with Counterclaim, the Spouses Aboitiz did not deny that held in trust by Ciriaco Seno in favor of the heirs. 155
demands were made upon them and that the matter was elevated for
barangay conciliation: This Court rules that this cannot be binding in this action for reconveyance.
Res judicata  embraces two (2) concepts: (i) bar by prior judgment and (ii) particular point or question, a former judgment between the same parties
conclusiveness of judgment, respectively covered under Rule 39, Section or their privies will be final and conclusive in the second if that same point
47 of the Rules of Court, paragraphs (b) and (c): 156 or question was in issue and adjudicated in the first suit (Nabus vs. Court
of Appeals, 193 SCRA 732 [1991]). Identity of cause of action is not
Section 47. Effect of judgments or final orders.  - The effect of a judgment required but merely identity of issues. 162
or final order rendered by a court of the Philippines, having jurisdiction to
pronounce the judgment or final order, may be as follows: However, in Racoma v. Fortich,  163 this Court held that res judicata could
not be a defense in an action for reconveyance based on fraud where the
(b) In other cases, the judgment or final order is, with respect to the complainant had no knowledge of the application for registration:
matter directly adjudged or as to any other matter that could have been
raised in relation thereto, conclusive between the parties and their The other ground upon which the lower court dismissed the complaint
successors in interest by title subsequent to the commencement of the is res judicata. It is stated in the order of dismissal that the plaintiff had
action or special proceeding, litigating for the same thing and under the admitted that the property in controversy was applied for by defendant
same title and in the same capacity; and Maximina Fortich in a cadastral proceeding and under Act 496; that the
proceedings were in rem  and, therefore, the whole world, including the
(c) In any other litigation between the same parties or their successors in plaintiff, were parties thereto and bound by the judgment thereon ... [I]t is
interest, that only is deemed to have been adjudged in a former judgment obvious that the lower court was referring to the legal effect of the
or final order which appears upon its face to have been so adjudged, or conclusiveness against all persons of the in rem  decision in the cadastral
which was actually and necessarily included therein or necessary thereto. case rather than the actual fact that the plaintiff was a claimant who
appeared in the said case, for he alleged in his complaint that he "has no
knowledge whatsoever of the application for registration filed by defendant
Res judicata  in the concept of bar by prior judgment proscribes the filing
Maximina Fortich and the order of decree of registration issued in favor of
of another action based on "the same claim, demand, or cause of
the defendant Maximina Fortich by this Honorable Court until on February
action."157 It applies when the following are present: (a) there is a final
25, 1967 ... " (Record on Appeal, page 30). Such being the case, then an
judgment or order; (b) it is a judgment or order on the merits; (c) it was
action for reconveyance is available to the plaintiff, the decree of
"rendered by a court having jurisdiction over the subject matter and
registration notwithstanding, for ...
parties"; and (d) there is "identity of parties, of subject matter, and of
causes of action" between the first and second actions. 158
" ... , it is now a well-settled doctrine in this jurisdiction that the existence
of a decree of registration in favor of one party is no bar to an action to
Res judicata  in the concept of conclusiveness of judgment applies when
compel reconveyance of the property to the true owner, which is an
there is an identity of issues in two (2) cases between the same parties
action in personam,  even if such action be instituted after the year fixed
involving different causes of action.159 Its effect is to bar "the relitigation of
by Section 38 of the Land Registration Act as a limit to the review of the
particular facts or issues" which have already been adjudicated in the
registration decree, provided it is shown that the registration is wrongful
other case. 160 In Calalang v. Register of Deeds of Quezon City: 161
and the property sought to be reconveyed has not passed to an innocent
third party holder for value.["] 164 (Emphasis supplied)
The second concept - conclusiveness of judgment - states that a fact or
question which was in issue in a former suit and was there judicially
The reason for this rule is to prevent the unjust deprivation of rights over
passed upon and determined by a court of competent jurisdiction, is
real property. As discussed in People v. Cainglet: 165
conclusively settled by the judgment therein as far as the parties to that
action and persons in privity with them are concerned and cannot be again
litigated in any future action between such parties or their privies, in the It is fundamental and well-settled that a final judgment in a cadastral
same court or any other court of concurrent jurisdiction on either the same proceeding - a proceeding in rem - is binding and conclusive upon the
or different cause of action, while the judgment remains unreversed by whole world.1âwphi1 Reason is that public policy and public order demand
proper authority. It has been held that in order that a judgment in one not only that litigations must terminate at some definite point but also that
action can be conclusive as to a particular matter in another action titles over lands under the Torrens system should be given stability for on
between the same parties or their privies, it is essential that the issue[s] it greatly depends the stability of the country's economy. Interest
be identical. If a particular point or question is in issue in the second republicae ut sit finis litium. However, this conclusiveness of judgment in
action, and the judgment will depend on the determination of that the registration of lands is not absolute. It admits of exception. Public
policy also dictates that those unjustly deprived of their rights over real owner to the rightful owner. Reconveyance is always available as long as
property by reason of the operation of our registration laws be afforded the property has not passed to an innocent third person for value.
remedies. Thus, the aggrieved party may file a suit for reconveyance of
property  or a personal action for recovery of damages against the party There is no quibble that a certificate of title, like in the case at bench, can
who registered his property through fraud, or in case of insolvency of the only be questioned through a direct proceeding. The MCTC and the CA,
party who procured the registration through fraud, an action against the however, failed to take into account that in a complaint for reconveyance,
Treasurer of the Philippines for recovery of damages from the Assurance the decree of registration is respected as incontrovertible and is not being
Fund. Through these remedial proceedings, the law, while holding questioned. What is being sought is the transfer of the property wrongfully
registered titles indefeasible, allows redress calculated to prevent one from or erroneously registered in another's name to its rightful owner or to the
enriching himself at the expense of other. Necessarily, without setting one with a better right. If the registration of the land is fraudulent, the
aside the decree of title, the issues raised in the previous registration case person in whose name the land is registered holds it as a mere trustee,
are relit1ated, for purposes of reconveyance of said title or recovery of and the real owner is entitled to file an action for reconveyance of the
damages.  166  (Citations omitted, emphasis supplied) property. 171 (Citations omitted, emphasis supplied)

In this case, the Spouses Po allege that the registration was done through Likewise in Naval v. Court of Appeals:172
fraud. They contend that they were unaware and were thus unable to
contest the registration and prove their claim over the property. Aside
Ownership is different from a certificate of title. The fact that petitioner
from several tax receipts, the Spouses Po formally offered as evidence,
was able to secure a title in her name did not operate to vest ownership
among others, the Deed of Sale executed by Mariano in Ciriaco's favor, the
upon her of the subject land. Registration of a piece of land under the
Deed of Absolute Sale executed by Ciriaco in their favor, and the Tax
Torrens System does not create or vest title, because it is not a mode of
Declaration under Victoria's name. Additionally, they also submitted their
acquiring ownership. A certificate of title is merely an evidence of
Memorandum of Agreement with Ciriaco and the Quitclaim executed by
ownership or title over the particular property described therein. It cannot
Ciriaco in favor of the Spouses Aboitiz.167 These documents were not
be used to protect a usurper from the true owner; nor can it be used as a
considered by the land registration court when it issued the title in favor of
shield for the commission of fraud; neither does it permit one to enrich
the Spouses Aboitiz. The Spouses Po also offered the Application of
himself at the expense of others. Its issuance in favor of a particular
Original Registration of Title of the Spouses Aboitiz to prove that the
person does not foreclose the possibility that the real property may be
Spouses Aboitiz only submitted to the land registration court the cancelled
coowned with persons not named in the certificate, or that it may be held
tax declarations of Ciriaco, instead of the tax declaration of the Spouses
in trust for another person by the registered owner.
Po. 168

As correctly held by the Court of Appeals, notwithstanding the

Thus, the ruling of the land registration court cannot be so conclusive as to
indefeasibility of the Torrens title, the registered owner may still be
deny the Spouses Po the remedy afforded to them by law. The action for
compelled to reconvey the registered property to its true owners. The
reconveyance allows them to prove their ownership over the property.
rationale for the rule is that reconveyance does not set aside or re-subject
Hence, they are not precluded from presenting evidence that is contrary to
to review the findings of fact of the Bureau of Lands. In an action for
the findings in the land registration case.
reconveyance, the decree of registration is respected as
incontrovertible.  What is sought instead is the transfer of the property or
The factual findings of the land registration court are not being questioned. its title which has been wrongfully or erroneously registered in another
An action for reconveyance based on an implied trust seeks to compel the person's name, to its rightful or legal owner, or to the one with a better
registered owner to transfer the property to its true right. 173 (Citations omitted, emphasis supplied)
owner. 169 In Hortizuela v. Tagufa:  170
The rationale for allowing reconveyance despite the finality of the
[A]n action for reconveyance is a recognized remedy, an action in registration is that the issuance of a certificate of title does not create or
personam,  available to a person whose property has been wrongfully vest ownership to a person over the property. 174 Registration under the
registered under the Torrens system in another's name. In an action for Torrens system "is not a mode of acquiring ownership." 175 A certificate is
reconveyance, the decree is not sought to be set aside. It does not seek to only a proof of ownership. 176 Thus, its issuance does not foreclose the
set aside the decree but, respecting it as incontrovertible and no longer possibility of having a different owner, and it cannot be used against the
open to review, seeks to transfer or reconvey the land from the registered true owner as a shield for fraud. 177
In an action for reconveyance, the parties are obliged to prove their filed a complaint in the barangay when the Spouses Aboitiz started cutting
ownership over the property. Necessarily, the parties may present down their improvements and that they subsequently discovered that
evidence to support their claims. The court must weigh these pieces of Ciriaco was forced by the Mariano Heirs to sell the property to the Spouses
evidence and decide who between the parties the true owner is. Therefore, Aboitiz. 191
it cannot be bound simply by the factual findings of the land registration
court alone. The Spouses Aboitiz presented as their first witness Armando Avenido,
who testified according to the records only. 192 He claimed that he was
An exception to this rule is if the party claiming ownership has already had familiar with the land which was being developed by Aboitiz Land. He
the opportunity to prove his or her claim in the land registration testified that Roberto acquired the land through separate Deeds of Sale
case. 178 In such a case, res judicata will then apply. 179 When an issue of from the Mariano Heirs, had the tax declaration transferred in his name,
ownership has been raised in the land registration proceedings where the paid the taxes on the property, applied for the property's registration, and
adverse party was given full opportunity to present his or her claim, the developed the property into a subdivision.193 During cross-examination it
findings in the land registration case will constitute a bar from any other was revealed that the tax declaration of the Spouses Po was issued before
claim of the adverse party on the property. 180 the tax declaration of the Spouses Aboitiz and that the Spouses Po
acquired from Ciriaco the entire land, while the Spouses Aboitiz purchased
However, this is not the circumstance in the case at bar. The Spouses Po only one-fifth (1/5) of the property. 194
were not able to prove their claim in the registration proceedings.
Thus, res judicata cannot apply to their action for reconveyance. The Spouses Aboitiz's second witness, Bienvenido Escoton, testified that
he was a mason working in the subdivision on the road lot and that he
V knew no person claiming ownership of the land since 1989. 195

The Spouses Aboitiz posit that the Deed of Absolute Sale between Ciriaco The Regional Trial Court thus held:
and the Spouses Po is fake and fraudulent. 181 They argue that this is
evidenced by certifications of the document's non-existence in the notarial Analyzing the adduced and admitted evidence of both parties, Art. 1544 of
books and the Spouses Po's failure to enforce their rights over the the Civil Code cannot be aptly applied in the case at bar, for reason that
property until 18 years later. 182 They also claim that the Deed of Absolute only the sale of Ciriaco Seno (Exh. "A" Exh. All" Exh. 2"/ A, A-1 and A-2)
Sale is inadmissible as no documentary stamp was paid and affixed. 183 has the validating elements of sale, whereas the rest of the Deeds of Sale
(Exhs 1 to 5) executed by the Heirs of Mariano Seno in favor of the
This Court notes that the Spouses Aboitiz are raising questions of fact Defendants are void, for containing untruthful statements as pleaded and
which are not within the scope of a review on certiorari under Rule 45 of proven. They are no longer the owners of the subject property when they
the Rules of Court. 184 An appeal under Rule 45 must raise only questions executed the several Deeds of Conveyance to defendant Roberto Aboitiz.
of law, unless the factual findings are not supported by evidence or the
judgment is based on a misapprehension of facts. 185 Absent these On the first issue on the identity and location of the land, the sale of
exceptions, the factual findings of the lower courts are accorded respect Ciriaco Seno to Plaintiffs (Exh. "A") reflected in the Tax Declarations that
and are beyond the review of this Court. 186 the Defendants used in their titling proceeding is the very same lot as
certified by the Barangay Captain dated July 28, 1999 under Plaintiff's
The Spouses Aboitiz failed to prove that these exceptions exist in the case Request for Admission. Concerning the second formulated issue, only the
at bar. The Regional Trial Court lent credence to documents presented by Deed of Sale executed by Ciriaco Seno was valid with all the attending
the Spouses Po, Peter's testimony about Mariano's sale of the property to requisites of sale. It was sold by the legitimate owner of the land, Ciriaco
Ciriaco,187 Ciriaco's sale of the property to the Spouses Po, and the Seno to the Plaintiffs. The sale (Exh. A, Exhibit "X") enjoyed preferential
issuance of a Tax Declaration in the name of Victoria. 188 date of execution, being dated or executed in 1978 by the lawful owner
Ciriaco Seno who was first to register the sale in the Registry of Property
office, and due to such registration, the Tax Declaration of Ciriaco Seno,
During trial, Peter also testified that after they bought the land, they had a
was cancelled and a new Tax Declaration was issued in the name of
caretaker who cultivated the property by planting fruit trees. 189 He
Victoria Po for as shown in Exh. E the said tax declaration succeeded in
claimed that when they subsequently discovered the quitclaim executed by
canceling the Tax Declaration of Mariano Seno (Exh. C) and was issued
Ciriaco in favor of the Spouses Aboitiz, they executed a Memorandum of
thereafter a Tax Declaration in the name of C[i]riaco Seno (Exh. D). So,
Agreement to protect their interests in the property. 190 He stated that they
when the latter sold the subject land to plaintiffs in 1978, the same was Furthermore, this Court finds that the Spouses Aboitiz failed to prove their
already owned by C[i]riaco Seno. claim of fraud. The Spouses Aboitiz attempted to prove that the Deed of
Absolute Sale between Ciriaco and the Spouses Po was fake and fraudulent
When Mariano Seno died in 1982, the subject land owned by C[i]riaco by presenting certifications of its non-existence in the notarial books of the
Seno, naturally, is not part of the estate of Mariano Seno, for at that point notary public who notarized the document. 197
in time, the subject land is now owned by plaintiffs Sps. Po, and the same
was declared in their names (Exh. "D" "E" & "E-1 "). However, a review of the certifications does not even state that the
document does not exist in the notarial books.
As to the issue whether defendant Roberto Aboitiz was a purchaser in good
faith and for value, the Court holds that defendant Roberto Aboitiz was not The Certification dated April 1, 1997 of the Records Management and
a purchaser in good faith and for value for he was already informed of the Archives Office of the Department of Education, Culture and Sports states:
ownership of plaintiffs over the subject land during the conciliation
proceedings before the barangay official when plaintiffs filed a barangay This is to certify that per records of this Office, Deed of Sale executed by
case against him. and between Ciriaco Seno and Victoria Lee known as Doc. No. 66; Page
No. 14; Book No. I; Series of 1978 entered in the Notarial Register of
In this case, the Court believes that defendant Roberto Aboitiz is aware of Notary Public Jesus Pono is not among the documents transferred by the
the proprietary rights of the plaintiffs considering the land was already Regional Trial Court of Cebu for safekeeping. 198
declared for taxation purposes in plaintiffs' names after the tax declaration
of said land, first in the name of Mariano Seno was cancelled and another Likewise, the Certification dated April 4, 1997 of the Office of the Clerk of
one issued in the name of C[i]riaco Seno when the latter bought the said Court of the Regional Trial Court of Cebu, 7th Judicial Region, Cebu City
land from his father Mariano Seno, and after the said tax declaration in the provides:
name of C[i]riaco Seno was cancelled and another one issued in the name
of plaintiffs herein.
This is to certify that as per notarial records on file with this office,
available and found as of this date, Atty. Jesus M. Pono had been issued a
So, defendant Roberto Aboitiz purchased the subject land from the Heirs of Notarial Commission for the term 1978-1979.
Mariano Seno who are no longer the owners thereof and the tax
declaration of subject land was no longer in the name of Mariano Seno nor
It is further certifie[d] that said Notary Public has not submitted his
in the name of Heirs of Mariano Seno.
notarial reports for the year 1978-1979 in this office wherein the Deed of
Sale as stated on the letter dated March 31, 1997 designated as Doc. no.
The City Assessor of Mandaue City even issued a Certification (Exh. X) to 66; Page no. 14; Book no. I and Series of 1978 is allegedly
the effect that Tax Declaration No. 0634-A in the name of Mrs. Victoria Lee included. 199 (Emphasis supplied)
Po married to Peter Po was issued prior to the issuance of T.D. No. 1100 in
the name of Roberto Aboitiz married to Maria Cristina Cabarruz.
These Certifications do not declare that the Deed of Absolute Sale does not
exist. They only state that at the time of their issuance, the Notary Public
Buyers of any untitled parcel of land for that matter, to protect their had not submitted his notarial reports or that the document had not been
interest, will first verify from the Assessor's Office that status of said land transferred to the archives for safekeeping. It cannot logically be
whether it has clean title or not. 196 concluded from these certifications that the document is inexistent, false,
or fraudulent. In any case, the Notary Public's failure to submit his or her
With the exception of its ruling regarding respondents Jose, Ernesto, and notarial report does not affect the act of notarization. 200
Isabel being purchasers in good faith, these factual findings were affirmed
by the Court of Appeals. Rule 132, Section 30 of the Rules of Court provides that:

Thus, there is no showing that the factual findings are not supported by Section 30. Proof of notarial documents. - Every instrument duly
evidence or that the judgment seems to be based on a misapprehension of acknowledged or proved and certified as provided by law, may be
facts. Therefore, the factual findings of the lower courts are binding. presented in evidence without further proof, the certificate of
acknowledgment being prima facie evidence of the execution of the The property owners against whom the action for reconveyance is filed are
instrument or document involved. indispensable parties.207 No relief can be had, and the court cannot render
a valid judgment, without them. 208 The property has been sold to
When a private document is notarized, the document is converted to a respondents Jose, Ernesto, and Isabel.209 Thus, they are indispensable
public document which is presumed regular, admissible in evidence parties.
without need for proof of its authenticity and due execution, and entitled
to full faith and credit upon its face. 201 However, the seller of the property is not an indispensable
party.210 In Spring Homes Subdivision Co., Inc. v. Spouses Tablada, Jr.: 211
To overturn the presumption in favor of a notarized document, the party
questioning it must present "clear, convincing, and more than merely Similarly, by virtue of the second Deed of Absolute Sale between Spring
preponderant evidence."202 Homes and the Spouses Lumbres, the Spouses Lumbres became the
absolute and registered owner of the subject property herein. As such,
Thus, parties who appear before a Notary Public should not be prejudiced they possess that certain interest in the property without which, the courts
by the failure of the Notary Public to follow rules imposed by the Notarial cannot proceed for settled is the doctrine that registered owners of parcels
Law.203 They are not obliged to ensure that the Notary Public submits his of land whose title is sought to be nullified should be impleaded as an
or her notarial reports. 204 indispensable party. Spring Homes, however, which has already sold its
interests in the subject land, is no longer regarded as an
indispensableparty, but is, at best, considered to be a necessary party
The Spouses Aboitiz failed to present clear and convincing evidence to
whose presence is necessary to adjudicate the whole controversy, but
overturn the presumption. The notarized Deed of Absolute Sale between
whose interests are so far separable that a final decree can be made in its
Ciriaco and the Spouses Po is, thus, presumed regular and authentic.
absence without affecting it. This is because when Spring Homes sold the
property in question to the Spouses Lumbres, it practically transferred all
Consequently, this Court can affirm the finding that the property was sold its interests therein to the said Spouses.  In fact, a new title was already
to Ciriaco in 1973, and that Ciriaco, as the owner of the property, had the issued in the names of the Spouses Lumbres. As such, Spring Homes no
right to sell it to the Spouses Po. Hence, the lot did not form part of the longer stands to be directly benefited or injured by the judgment in the
estate of Mariano, and the Mariano Heirs did not have the capacity to sell instant suit regardless of whether the new title registered in the names of
the property to the Spouses Aboitiz later on. the Spouses Lumbres is cancelled in favor of the Spouses Tablada or not.
Thus, contrary to the ruling of the RTC, the failure to summon Spring
VI Homes does not deprive it of jurisdiction over the instant case for Spring
Homes is not an indispensable party.  212 (Citations omitted, emphasis
The Spouses Aboitiz argue that the Mariano Heirs are indispensable parties supplied).
who should have been impleaded in this case. 205
The Mariano Heirs, as the alleged sellers of the property, are not
The Mariano Heirs are not indispensable parties. indispensable parties. They are at best necessary parties, which are
covered by Rule 3, Section 8 of the Rules of Court:

Rule 3, Section 7 of the Revised Rules of Court provides:

Section 8. Necessary Party. - A necessary party is one who is not
indispensable but who ought to be joined as a party if complete relief is to
Section 7. Compulsory Joinder of Indispensable Parties. - Parties in be accorded as to those already parties, or for a complete determination or
interest without whom no final determination can be had of an action shall settlement of the claim subject of the action.
be joined either as plaintiffs or defendants.
Necessary parties may be joined in the case "to adjudicate the whole
An indispensable party is the party whose legal presence in the proceeding controversy," but the case may go on without them because a judgment
is so necessary that "the action cannot be finally determined" without him may be rendered without any effect on their rights and interests. 213
or her because his or her interests in the matter and in the relief "are so
bound up with that of the other parties."206
The Mariano Heirs may likewise be considered material witnesses to the
action. A material matter to which a witness can testify on can be a "main
fact which was the subject of the inquiry" or any circumstance or fact Section 44. Statutory liens affecting title. - Every registered owner
"which tends to prove" the fact subject of the inquiry, "which tends to receiving a certificate of title in pursuance of a decree of registration,
corroborate or strengthen the testimony relative to such inquiry," and and every subsequent purchaser of registered land taking a certificate of
"which legitimately affects the credit of any witness who testifies." 214 title for value and in good faith, shall hold the same free from all
encumbrances except those noted in said certificate  and any of the
The validity of the Deeds of Sale allegedly executed by the parties in this following encumbrances which may be subsisting, namely:
case is a material matter in determining who the true owner of the
property is. Thus, the Mariano Heirs, including Ciriaco, may testify as to First. Liens, claims or rights arising or existing under the laws and
the Deeds of Sale they executed to prove which sale is the valid one. Constitution of the Philippines which are not by law required to appear
ofrecord in the Registry of Deeds in order to be valid against subsequent
However, it is clear that the Mariano Heirs are not indispensable parties. purchasers or encumbrancers of record.
They have already sold all their interests in the property to the Spouses
Aboitiz. They will no longer be affected, benefited, or injured byany ruling Second. Unpaid real estate taxes levied and assessed within two years
of this Court on the matter, whether it grants or denies the complaint for immediately preceding the acquisition of any right over the land by an
reconveyance. The ruling of this Court as to whether the Spouses Po are innocent purchaser for value, without prejudice to the right of the
entitled to reconveyance will not affect their rights. Their interest has, government to collect taxes payable before that period from the delinquent
thus, become separable from that of Jose, Ernesto, and Isabel. taxpayer alone.

Thus, the Court of Appeals correctly ruled that the Mariano Heirs are not Third. Any public highway or private way established or recognized by law,
indispensable parties. or any government irrigation canal or lateral thereof, if the certificate of
title does not state that the boundaries of such highway or irrigation canal
VII or lateral thereof have been determined.

Despite these findings, the Spouses Po cannot recover the property. Fourth. Any disposition of the property or limitation on the use thereof by
Respondents Jose, Ernesto, and Isabel are innocent purchasers for value. virtue of, or pursuant to, Presidential Decree No. 27 or any other law or
regulations on agrarian reform. (Emphasis supplied)
An innocent purchaser for value refers to the buyer of the property who
pays for its full and fair price without or before notice of another person's In Cruz v. Court of Appeals:219
right or interest in it.215 He or she buys the property believing that "the
[seller] [i]s the owner and could [transfer] the title to the property." 216 The real purpose of the Torrens system of registration is to quiet title to
land and to put a stop to any question of legality of the title except claims
The Spouses Po argue that respondents Jose, Ernesto, and Isabel are not which have been recorded in the certificate of title at the time of
innocent purchasers for value because the tax declaration over the registration or which may arise subsequent thereto. Every registered
property has the following annotation: owner and every subsequent purchaser for value in good faith holds the
title to the property free from all encumbrances except those noted in the
certificate. Hence, a purchaser is not required to explore further what the
This tax declaration is also declared in the name of Mrs. Victoria Lee Po,
Torrens title on its face indicates in quest for any hidden defect or inchoate
married to Peter Po under tax dee. no. 0634-A so that one may be
right that may subsequently defeat his right thereto.
considered a duplicate to the other.

Where innocent third persons, relying on the correctness of the certificate

However, if a property is registered, the buyer of a parcel of land is not
of title thus issued, acquire rights over the property the court cannot
obliged to look beyond the transfer certificate of title to be considered a
disregard such rights and order the total cancellation of the certificate. The
purchaser in good faith for value.217
effect of such an outright cancellation would be to impair public confidence
in the certificate of title, for everyone dealing with property registered
Section 44 of Presidential Decree No. 1529 218 states: under the Torrens system would have to inquire in every instance whether
the title has been regularly or irregularly issued. This is contrary to the
evident purpose of the law. Every person dealing with registered land may
safely rely on the correctness of the certificate of title issued therefor and
the law will in no way oblige him to go behind the certificate to determine
the condition of the property. Even if a decree in a registration proceeding
is infected with nullity, still an innocent purchaser for value relying on a
Torrens title issued in pursuance thereof is protected. 220

The rationale for this rule is the public's interest in sustaining "the
indefeasibility of a certificate of title, as evidence of the lawful ownership
of the land or of any encumbrance" on it.221 In Leong v. See:222

One need not inquire beyond the four comers of the certificate of title
when dealing with registered property ...

The protection of innocent purchasers in good faith for value grounds on

the social interest embedded in the legal concept granting indefeasibility of
titles.1âwphi1 Between the third party and the owner, the latter would be
more familiar with the history and status of the titled property.
Consequently, an owner would incur less costs to discover alleged
invalidities relating to the property compared to a third party. Such costs
are, thus, better borne by the owner to mitigate costs for the economy,
lessen delays in transactions, and achieve a less optimal welfare level for
the entire society.223 (Citations omitted)

Thus, respondents were not obliged to look beyond the title before they
purchased the property. They may rely solely on the face of the title.

The only exception to the rule is when the purchaser has actual knowledge
of any defect or other circumstance that would cause "a reasonably
cautious man" to inquire into the title of the seller. 224 If there is anything
which arouses suspicion, the vendee is obliged to investigate beyond the
face of the title. 225 Otherwise, the vendee cannot be deemed a purchaser
in good faith entitled to protection under the law. 226

In this case, there is no showing that respondents Jose, Ernesto, and

Isabel had any knowledge of the defect in the title. Considering that the
annotation that the Spouses Po are invoking is found in the tax declaration
and not in the title of the property, respondents Jose, Ernesto, and Isabel
cannot be deemed purchasers in bad faith.

WHEREFORE, the Court of Appeals' October 31, 2012 Decision227 and its

June 17, 2013 Resolution228 in CA-G.R. CV No. 03803 is AFFIRMED.

SO ORDERED.
 G.R. No. 224204, August 30, 2017 In their defense,13 respondents argued that petitioner is not the real party
in interest to institute such complaint, since ownership over the subject
PHILIPPINE VETERANS BANK, Petitioner, v. SPOUSES RAMON AND property remained with HTPMI. They expounded that under the Deed of
ANNABELLE SABADO, Respondents. Assignment, only the rights and interests pertaining to the receivables
under the Contract to Sell were assigned/transferred to petitioner and not
the ownership or the right to the possession of the subject property. 14
DECISION
The MTCC Ruling
PERLAS-BERNABE, J.:
In a Decision15 dated April 3, 2013, the MTCC ruled in favor of petitioner
Before the Court is a petition for review on certiorari  filed by petitioner
1
and, accordingly, ordered respondents to vacate the subject property, and
Philippine Veterans Bank (petitioner) assailing the Decision 2 dated October pay petitioner the amounts of P661,919.47 as rent arrears from July 31,
29, 2015 and the Resolution3 dated April 20, 2016 of the Court of Appeals 2008 up to July 31, 2010, P10,000.00 as attorney's fees, including costs of
(CA) in CA-G.R. SP No. 135922, which reversed and set-aside the suit.16
Decision4 dated November 28, 2013 and the Order5 dated April 28, 2014 of
the Regional Trial Court of Antipolo City, Branch 98 (RTC) in SCA Case No. The MTCC held that by virtue of the Deed of Assignment, petitioner was
13-1290 and ordered that Haus Talk Project Managers, Inc. (HTPMI) be subrogated to the rights of HTPMI under the Contract to Sell and, hence, is
impleaded as an indispensable party to the unlawful detainer case against a real party in interest entitled to institute the instant suit against
respondents spouses Ramon and Annabelle Sabado (respondents). respondents for the purpose of enforcing the provisions of the Contract to
Sell. Further, the MTCC found petitioner's claim for compensation in the
The Facts form of rental just and equitable, pointing out that the same is necessary
to prevent respondents from unjustly enriching themselves at petitioner's
On May 3, 2007, HTPMI and respondents entered into a Contract to expense. Finally, the MTCC awarded petitioner attorney's fees and costs of
Sell6 whereby HTPMI agreed to sell a real property located at Lot 26, Block suit since it was compelled to litigate the instant complaint. 17
1, Eastview Homes, Barangay Balimbing, Antipolo City (subject property)
to respondents. In consideration therefor, respondents paid HTPMI the Aggrieved, respondents appealed18 to the RTC.
total amount of P869,400.00, consisting of a P174,400.00 downpayment
and the balance of P695,000.00 payable in 120 equal monthly instalments. The RTC Ruling
The parties further agreed that respondents' failure to pay any amount
within the stipulated period of time shall mean the forfeiture of the In a Decision19 dated November 28, 2013, the RTC affirmed the MTCC's
downpayment and any other payments made in connection thereto, as ruling in toto.20 It ruled that by virtue of the Deed of Assignment executed
well as the cancellation and rescission of the Contract to Sell in accordance by HTPMI in petitioner's favor, the latter acquired not only the right to
with law.7 Shortly thereafter, or on August 16, 2007, HTPMI executed a collect the balance of the purchase price of the subject property, but also
Deed of Assignment8 in favor of petitioner assigning, among others, its all the rights of the assignor, including the right to sue in its own name as
rights and interests as seller in the aforesaid Contract to Sell with the legal assignee.21
respondents, including the right to collect payments and execute any act
or deed necessary to enforce compliance therewith. 9 Respondents moved for reconsideration,22 which was, however, denied in
an Order23 dated April 28, 2014. Undaunted, they elevated the case to the
On October 14, 2009, petitioner, through a Notice of Cancellation by CA.24
Notarial Act,10 cancelled or rescinded respondents' Contract to Sell due to
the latter's failure to pay their outstanding obligations thereunder. The CA Ruling
Consequently, petitioner demanded that respondents vacate the subject
property, but to no avail. Thus, petitioner was constrained to file the In a Decision25 dated October 29, 2015, the CA reversed and set aside the
Complaint11 dated August 20, 2010 for ejectment or unlawful detainer RTC's ruling, and accordingly: (a) remanded the case to the MTCC for
against respondents before the Municipal Trial Court in Cities of Antipolo HTPMI to be impleaded therein; and (b) directed the MTCC to proceed with
City, Branch 1 (MTCC), docketed as SCA Case No. 093-10. 12 the trial of the case with dispatch.26 Initially, it upheld petitioner's right as
real party in interest to file the instant suit as HTPMI's assignee. However,
since legal title to the subject property was retained by HTPMI pursuant to party is one who must be included in an action before it may properly go
the provisions of the Deed of Assignment, the latter is not only a real party forward.
in interest, but also an indispensible party which should have been
impleaded as a plaintiff thereon and without which no final determination A person is not an indispensable party, however, if his interest in the
can be had in the present case.27 controversy or subject matter is separable from the interest of the
other parties, so that it will not necessarily be directly or
Dissatisfied, petitioners moved for reconsideration, 28 which was, however, injuriously affected by a decree which does complete justice
denied in a Resolution29 dated April 20, 2016; hence, this petition. between them. Also, a person is not an indispensable party if his
presence would merely permit complete relief between him and those
The Issue Before the Court already parties to the action, or if he has no interest in the subject matter
of the action. It is not a sufficient reason to declare a person to be an
The primordial issue is whether or not the CA correctly ruled that HTPMI is indispensable party that his presence will avoid multiple
an indispensable party to petitioner's ejectment suit against respondents litigation.33 (Emphases and underscoring supplied)
and, thus, must be impleaded therein. Guided by the foregoing parameters and as will be explained hereunder,
the CA erred in holding that HTPMI is an indispensable party to the
The Court's Ruling ejectment suit filed by petitioner against respondents.

The petition is meritorious. Under the Deed of Assignment, HTPMI assigned its rights - save for the
right of ownership - to petitioner under the Contract to
Section 7, Rule 3 of the Rules of Court mandates that all indispensable Sell:chanRoblesvirtualLawlibrary
parties should be joined in a suit, viz.:chanRoblesvirtualLawlibrary 2. RIGHTS UNDER THE CONTRACTS TO SELL. By this assignment,
SEC. 7. Compulsory joinder of indispensable parties. - Parties in interest the ASSIGNEE hereby acquires all rights of the ASSIGNOR under
without whom no final determination can be had of an action shall be the Contracts to Sell and under the law, including the right to
joined either as plaintiffs or defendants. endorse any and all terms and conditions of the Contracts to Sell
Case law defines an indispensable party as "one whose interest will be and the right to collect the amounts due thereunder from the
affected by the court's action in the litigation, and without whom no final purchaser of the Property. The ASSIGNOR for this purpose hereby
determination of the case can be had. The party's interest in the subject names, constitutes and appoints the ASSIGNEE [as its] attorney-
matter of the suit and in the relief sought are so inextricably intertwined in-fact to execute any act and deed necessary in the exercise of all
with the other parties' that his legal presence as a party to the proceeding these rights. Notwithstanding the assignment of the Contracts to Sell and
is an absolute necessity. In his absence, there cannot be a resolution of the Receivables thereunder to the ASSIGNEE, the legal title to the Property
the dispute of the parties before the court which is effective, complete, or and obligations of the ASSIGNOR under the Contracts to Sell, including the
equitable."30 "Thus, the absence of an indispensable party renders all obligation to complete the development of the property and the warranties
subsequent actions of the court null and void, for want of authority to act, of a builder under the law, shall remain the ASSIGNOR'S. x x
not only as to the absent parties but even as to those x.34 (Emphasis and underscoring supplied)
present."31 In Regner v. Logarta,32 the Court laid down the parameters in Verily, HTPMI's assignment of rights to petitioner must be deemed to
determining whether or not one is an indispensable include the rights to collect payments from respondents, and in the event
party, viz.:chanRoblesvirtualLawlibrary of the latter's default, to cancel or rescind the Contract to Sell, and
An indispensable party is a party who has x x x an interest in the resultantly, recover actual possession over the subject property, as
controversy or subject matter that a final adjudication cannot be follows:chanRoblesvirtualLawlibrary
made, in his absence, without injuring or affecting that interest, a TERMS AND CONDITIONS
party who has not only an interest in the subject matter of the
controversy, but also has an interest of such nature that a final b) the [respondents] herein agree to perform and undertake the [HTPMI]
decree cannot be made without affecting his interest or leaving the Payment Plan with the following terms:
controversy in such a condition that its final determination may be
wholly inconsistent with equity and good conscience. It has also i) Downpayment x x x of ONE HUNDRED SEVENTY FOUR THOUSAND FOUR
been considered that an indispensable party is a person in whose absence HUNDRED PESOS ONLY (P174,400.00) to be paid within twelve (12)
there cannot be a determination between the parties already before the months after payments [sic] of the reservation. Failure to pay two (2)
court which is effective, complete, or equitable. Further, an indispensable consecutive monthly installments will mean cancellation of this
contract and forfeiture of all payments. Discount terms shall be based
on [HTPMI] Agreed Payment Plan.
 
xxxx

iii) Failure to pay any amount within the stimulated [sic] period of

time shall mean forfeiture of the down payment and any other
payments made and the Contract to Sell shall be cancelled and
rescinded in accordance with law.35 (Emphases and underscoring
supplied)
In view of the foregoing, the Court agrees with the findings of the courts a
quo that petitioner had the right to institute the instant suit against
respondents.

However, the Court cannot subscribe to the CA's conclusion that since
HTPMI retained ownership over the subject property pursuant to the Deed
of Assignment, it is an indispensable party to the case. As adverted to
earlier, an indispensable party is one who has an interest in the subject
matter of the controversy which is inseparable from the interest of the
other parties, and that a final adjudication cannot be made without
affecting such interest. Here, the only issue in the instant unlawful
detainer suit is who between the litigating parties has the better right to
possess de facto the subject property.36 Thus, HTPMI's interest in the
subject property, as one holding legal title thereto, is completely separable
from petitioner's rights under the Contract to Sell, which include the
cancellation or rescission of such contract and resultantly, the recovery of
actual possession of the subject property by virtue of this case. Hence, the
courts can certainly proceed to determine who between petitioner and
respondents have a better right to the possession of the subject property
and complete relief can be had even without HTPMI's participation.

In sum, both the MTCC and the RTC are correct in ruling on the merits of
the instant unlawful detainer case even without the participation of HTPMI.

WHEREFORE, the petition is hereby GRANTED. The Decision dated

October 29, 2015 and the Resolution dated April 20, 2016 of the Court of
Appeals in CA-G.R. SP No. 135922 are hereby REVERSED and SET-
ASIDE. The Decision dated November 28, 2013 and the Order dated April
28, 2014 of the Regional Trial Court of Antipolo City, Branch 98 in SCA
Case No. 13-1290, affirming in toto the Decision dated April 3, 2013 of the
Municipal Trial Court in Cities of Antipolo City, Branch 1 in SCA Case No.
093-10, are REINSTATED.

SO ORDERED.
 G.R. No. 214934, April 12, 2016 counsel filed a Manifestation and Notice of Death14 informing the RTC that
Bautista had died on February 14, 2009. Thus, in an Order 15 dated May 19,
PACIFIC REHOUSE CORPORATION, Petitioner, v. JOVEN L. NGO, AS 2009, the RTC directed Bautista's counsel to substitute the latter's heirs
REPRESENTED BY OSCAR J. GARCIA, Respondent. and/or representatives in the action pursuant to Section 16, Rule 3 of the
Rules of Court. Unfortunately, said counsel failed to comply due to lack of
personal knowledge of the identities of the heirs of Bautista and their
DECISION
respective residences.16ChanRoblesVirtualawlibrary

PERLAS-BERNABE, J.: On the other hand, petitioner manifested that it had located Bautista's
surviving spouse, Rosita Bautista, and as a result, was directed to amend
Assailed in this petition for review on certiorari1 are the Decision2 dated the complaint to implead her as such.17 For failure of petitioner to comply
March 20, 2014 and the Resolution3 dated October 8, 2014 of the Court of with the foregoing directive, however, the RTC issued an Order18dated
Appeals (CA) in CA-G.R. SP. No. 122222, which set aside the Omnibus February 23, 2010 dismissing Civil Case No. 2031-08 pursuant to
Order4 dated April 7, 2011 and the Order5 dated September 30, 2011 of Section 3, Rule 17 of the Rules of Court.
the Regional Trial Court of Imus, Cavite, Branch 20 (RTC), in
consolidated Civil Case No. 2031-08 and LRC Case No. 1117-09 and Upon petitioner's motion for reconsideration, 19 the RTC issued
consequently dismissed the complaint for specific performance and an Order20dated September 20, 2010 setting aside its earlier Order
damages docketed as Civil Case No. 2031-08. dismissing Civil Case No. 2031-08. However, it held in abeyance the
proceedings in said case until petitioner procures the appointment of an
The Facts executor or administrator for the estate of Bautista pursuant to Section 16,
Rule 3 of the Rules of Court.21ChanRoblesVirtualawlibrary
On February 17, 1994, petitioner Pacific Rehouse Corporation (petitioner)
entered into a Deed of Conditional Sale6 with Benjamin G. Bautista Meanwhile, on May 6, 2009, respondent Joven L. Ngo, represented 22 by
(Bautista) for the purchase of a 52,341-square meter parcel of land Oscar J. Garcia (respondent), filed a Verified Petition for Cancellation of
located in Imus, Cavite and covered by Transfer Certificate of Title (TCT) Notice of Lis Pendens23 against petitioner and the Register of Deeds of the
No. T-800 issued by the Registry of Deeds of the Province of Cavite Province of Cavite before the RTC, docketed as LRC Case No. 1117-09.
(subject property), for a total consideration of P7,327,740.00. Under the Respondent alleged, inter alia, that on July 23, 2007, Bautista obtained a
contract, petitioner was to make a down payment of P2,198,322.00 upon loan from him in the amount of P8,000,000.00 secured by a real estate
its execution, with the balance to be paid upon completion by Bautista of mortgage over the subject property, and that the mortgage was registered
the pertinent documents necessary for the transfer of the said with the Registry of Deeds of Cavite and annotated on TCT No. T-800 on
property.7ChanRoblesVirtualawlibrary July 24, 2007.24 Upon Bautista's default, the mortgage was foreclosed and
the subject property was sold at a public auction, with respondent
However, despite receipt of payment in the total amount of P6,598,322.00 emerging as the highest bidder. Accordingly, a Certificate of Sale 25 was
and repeated offers to pay the balance in full, Bautista failed and refused issued in his favor, which was likewise registered and annotated 26 on TCT
to comply with his obligation to execute the corresponding deed of No. T-800 on January 27, 2009. According to respondent, it was only on
absolute sale and deliver the certificate of title of the subject property, and May 9, 2008 that he discovered petitioner's claimed interest over the
even sold the property to another buyer.8 Hence, on April 30, 2008, subject property when he saw the latter's Notice of Lis Pendens in TCT No.
petitioner filed a complaint9 for specific performance and damages against T-800 under Entry No. 9405.27 In view of the said averments, respondent
Bautista, docketed as Civil Case No. 2031-08, praying for the delivery of contended that Entry No. 9405 should be removed. He maintained that
a deed of transfer and other documents necessary to transfer the title in petitioner was aware of the real estate mortgage that was annotated on
its favor, as well as the Owner's Copy of TCT No. T-800. 10 Further, on May TCT No. T-800 in his favor as early as July 24, 2007 and that petitioner
9, 2008, petitioner caused the annotation of a Notice of Lis Pendens on may no longer recover the subject property, considering that Bautista had
TCT No. T-800 under Entry No. 9405 11 in order to protect its rights over lost ownership thereof when it was sold at a public auction and a certificate
the subject property pending litigation.12ChanRoblesVirtualawlibrary of sale was issued in respondent's favor. 28 On February 11, 2010, TCT No.
T-132274829 was issued in his name with Entry No. 9405 carried over as
After the parties had filed their respective responsive pleadings, 13 the case an annotation.
was set for pre-trial. However, before the same could proceed, Bautista's
In its opposition to LRC Case No. 1117-09,30 petitioner countered that
respondent was not a mortgagee in good faith, having knowledge of the 2011, setting the case for initial hearing on November 14,
sale of the subject property to petitioner as early as November 2007 or 2011.45ChanRoblesVirtualawlibrary
even prior to the foreclosure proceedings. 31 Likewise, asserting that the
petition for cancellation of the notice lis pendens should have been filed On November 8, 2011, respondent filed an Omnibus Motion to
instead in Civil Case No. 2031-08 and not in a land registration case Dismiss46Sp. Proc. Case No. 1075-11 on the grounds that: (a) the RTC
where the RTC exercised limited jurisdiction, petitioner moved for the has no jurisdiction over the subject matter of the case, over the person of
consolidation of Civil Case No. 2031-08 and LRC Case No. 1117- Bautista's surviving spouse, and over his person; 47 (b) the petition failed to
09.32ChanRoblesVirtualawlibrary state a proper cause of action;48 (c) petitioner failed to comply with Rule
78 of the Rules of Court;49 and (d) the petition violated the rule on forum
In an Order33 dated February 24, 2010, the RTC denied petitioner's motion shopping and litis pendentia.50ChanRoblesVirtualawlibrary
to consolidate Civil Case No. 2031-08 and LRC Case No. 1117-09,
holding that while both cases involved the same property and, as such, Thereafter, respondent also filed on December 2, 2011 a petition
would adversely affect their respective claims, the former case had already for certiorari51 before the CA, docketed as CA-G.R. SP No. 122222,
been dismissed in an Order dated February 23, claiming that the following orders of the RTC were issued without or in
2010.34ChanRoblesVirtualawlibrary excess of its jurisdiction, or with grave abuse of discretion amounting to
lack or excess of jurisdiction: (a) Order dated February 24, 2010 initially
Thereafter, on November 3, 2010, respondent filed an Urgent Motion for denying the consolidation of Civil Case No. 2031-08 and LRC Case No.
Cancellation of Notice of Lis Pendens35 praying for the cancellation of Entry 1117-09; (b) Order dated September 20, 2010 reinstating Civil Case No.
No. 9405 carried over to TCT No. T-1322748. Petitioner opposed the said 2031-08; (c) April 7, 2011 Omnibus Order consolidating Civil Case No.
urgent motion36 and reiterated its prayer for the consolidation of Civil 2031-08 and LRC Case No. 1117-09 and ordering the petitioner to
Case No. 2031-08 and LRC Case No. 1117- procure the appointment of an executor or administrator for the estate of
09.37ChanRoblesVirtualawlibrary Bautista; (d) Order dated September 30, 2011 upholding the April 7, 2011
Omnibus Order upon motion for reconsideration, and (e) the Notice of
In an Omnibus Order38dated April 7, 2011 (April 7, 2011 Omnibus Hearing dated September 12, 2011 in Sp. Proc. Case No. 1075-11.
Order), the RTC denied respondent's motion for being premature and for
lack of legal basis, and instead, ordered the consolidation of Civil Case The CA Ruling
No. 2031-08 and LRC Case No. 1117-09. The RTC ruled that while it
had initially denied the consolidation, it was premised on an order of In a Decision52 dated March 20, 2014, the CA gave due course to the
dismissal that was subsequently set aside. 39 In this regard, the RTC opined petition only with respect to the assailed April 7, 2011 Omnibus Order
that the consolidation was necessary in order to fully adjudicate the issues which ordered the consolidation of Civil Case No. 2031-08 and LRC
of the two cases, noting that the outcome in Civil Case No. 2031- Case No. 1117-09 and dismissed the petition as to the four (4) other
08 would adversely affect LRC Case No. 1117-09 which involved the assailed orders of the RTC due to procedural lapses. 53 Nevertheless, the CA
same subject property; conversely, a decision in the latter case would pre- ruled in favor of respondent and accordingly, set aside the April 7, 2011
empt the outcome of the former case. Further, the RTC ruled that Civil Omnibus Order of the RTC and ordered the dismissal of Civil Case No.
Case No. 2031-08 would survive Bautista's death since it primarily 2031-08.54ChanRoblesVirtualawlibrary
involved property and property rights. Thus, the RTC directed petitioner to
comply with its previous Order dated September 20, 2010 to procure the The CA held that the complaint for specific performance and damages
appointment of an administrator pursuant to Section 16, Rule 3 of the in Civil Case No. 2031-08 was an action in personam since its object was
Rules of Court within a period of thirty (30) to compel Bautista to perform his obligations under the Deed of
days.40ChanRoblesVirtualawlibrary Conditional Sale and hence, rendered him pecuniarily liable. As such, the
obligations in the contract attached to him alone and did not burden the
Respondent's motion for reconsideration41 therefrom was denied in subject property. Since the action was founded on a personal obligation, it
an Order42dated September 30, 2011. did not survive Bautista's death. Hence, the CA concluded that the
dismissal of the complaint by reason thereof, and not a resort to Section
Accordingly, in compliance with the April 7, 2011 Omnibus Order, 16, Rule 3 of the Rules of Court, was the proper course of action.
petitioner filed on July 20, 2011 a petition43 for the appointment of an Consequently, the CA opined that the issue involving the propriety of the
administrator over the estate of Bautista before the RTC, docketed as Sp. consolidation of the two cases had become moot and
Proc. Case No. 1075-11. Finding the petition to be sufficient in form and academic.55ChanRoblesVirtualawlibrary
substance, the RTC issued a Notice of Hearing44 dated September 12,
Petitioner moved for reconsideration56 but was denied in a principally property and property rights, the injuries to the person
Resolution57 dated October 8, 2014; hence, this petition. being merely incidental, while in the causes of action which do not
survive the injury complained of is to the person, the property and rights
The Issue Before the Court of property affected being incidental. x x x.59 (Emphasis and underscoring
supplied)cralawred
The primordial issue for the Court's resolution is whether or not the CA In the instant case, although the CA correctly pointed out that Civil Case
correctly dismissed Civil Case No. 2031-08 in view of Bautista's death. No. 2031-08 involves a complaint for specific performance and damages,
a closer perusal of petitioner's complaint reveals that it actually prays
The Court's Ruling for, inter alia, the delivery of ownership of the subject land through
Bautista's execution of a deed of sale and the turnover of TCT No. T-800 in
The petition is meritorious. its favor. This shows that the primary objective and nature of Civil Case
No. 2031-08 is to recover the subject property itself and thus, is deemed
Section 16, Rule 3 of the Rules of Court governs the rule on substitution in to be a real action.60ChanRoblesVirtualawlibrary
case of death of any of the parties to a pending suit. It reads in full:
In Gochan v. Gochan,61 the Court explained that complaints like this are in
SEC. 16. Death of party; duty of counsel. - Whenever a party to a pending the nature of real actions, or actions affecting title to or recovery of
action dies, and the claim is not thereby extinguished, it shall be the duty possession of real property, to wit:chanRoblesvirtualLawlibrary
of his counsel to inform the court within thirty (30) days after such death In this jurisdiction, the dictum adhered to is that the nature of an action is
of the fact thereof, and to give the name and address of his legal determined by the allegations in the body of the pleading or complaint
representative or representatives. Failure of counsel to comply with this itself, rather than by its title or heading. The caption of the complaint
duty shall be a ground for disciplinary action. below was denominated as one for "specific performance and
damages." The relief sought, however, is the conveyance or
The heirs of the deceased may be allowed to be substituted for the transfer of real property, or ultimately, the execution of deeds of
deceased, without requiring the appointment of an executor or conveyance in their favor of the real properties enumerated in the
administrator and the court may appoint a guardian ad litem for the minor provisional memorandum of agreement. Under these
heirs. circumstances, the case below was actually a real action, affecting
as it does title to or possession of real property.
The court shall forthwith order said legal representative or representatives
to appear and be substituted within a period of thirty (30) days from In the case of Hernandez v. Rural Bank of Lucena, this Court held that a
notice. real action is one where the plaintiff seeks the recovery of real property or,
as indicated in Section 2(a) of Rule 4 (now Section 1, Rule 4 of the 1997
If no legal representative is named by the counsel for the deceased party, Rules of Civil Procedure), a real action is an action affecting title to or
or if the one so named shall fail to appear within the specified period, the recovery of possession of real property.
court may order the opposing party, within a specified time, to procure the
appointment of an executor or administrator for the estate of the deceased It has also been held that where a complaint is entitled as one for
and the latter shall immediately appear for and on behalf of the deceased. specific performance but nonetheless prays for the issuance of a
The court charges in procuring such appointment, if defrayed by the deed of sale for a parcel of land, its primary objective and nature is
opposing party, may be recovered as costs. (Emphasis and underscoring one to recover the parcel of land itself and, thus, is deemed a real
supplied)cralawred action. x x x.
Section 16, Rule 3 of the Rules of Court allows the substitution of a party-
litigant who dies during the pendency of a case by his heirs, provided xxxx
that the claim subject of said case is not extinguished by his death.
As early as in Bonilla v. Barcena,58 the Court has settled that if the claim in In the case at bar, therefore, the complaint filed with the trial court was in
an action affects property and property rights, then the action survives the the nature of a real action, although ostensibly denominated as one for
death of a party-litigant, viz.: specific performance.62 (Emphases and underscoring supplied)
The question as to whether an action survives or not depends on the Evidently, Civil Case No. 2031-08 is a real action affecting property and
nature of the action and the damage sued for. In the causes of action property rights over the subject land. Therefore, the death of a party-
which survive the wrong complained affects primarily and litigant, i.e., Bautista, did not render the case dismissible on such ground,
but rather, calls for the proper application of Section 16, Rule 3 of the
Rules of Court on substitution of party-litigants. Similarly, in Carabeo v.
Spouses Dingco,63 the Court held that an action for specific performance
based on the "Kasunduan sa Bilihan ng Karapatan sa Lupa" was in pursuit
of a property right and, as such, survives the death of a party thereto.

In sum, the CA erred in dismissing Civil Case No. 2031-08 based solely

on Bautista's death. As such, it should be reinstated and consolidated
with LRC Case No. 1117-09, considering that the two cases involve the
same property and, as correctly opined by the court a quo, any
adjudication in either case would necessarily affect the other. 64 In this
relation, case law states that consolidation of cases, when proper, results
in the simplification of proceedings, which saves time, the resources of the
parties and the courts, and a possible major abbreviation of trial. It is a
desirable end to be achieved, within the context of the present state of
affairs where court dockets are full and individual and state finances are
limited. It contributes to the swift dispensation of justice, and is in accord
with the aim of affording the parties a just, speedy, and inexpensive
determination of their cases before the courts. Likewise, it avoids the
possibility of conflicting decisions being rendered by the courts in two or
more cases which would otherwise require a single
judgment.65ChanRoblesVirtualawlibrary

WHEREFORE, the petition is GRANTED. The Decision dated March 20,

2014 and the Resolution dated October 8, 2014 of the Court of Appeals in
CA-G.R. SP No. 122222, dismissing Civil Case No. 2031-08 are
hereby REVERSED and SET ASIDE. Accordingly, the Omnibus Order
dated April 7, 2011 and the Order dated September 30, 2011 of the
Regional Trial Court of Imus, Cavite, Branch 20, in consolidated cases
docketed as Civil Case No. 2031-08 and LRC Case No. 1117-09
are REINSTATED.

SO ORDERED.