Civ Pro 30

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-16797
February 27, 1963
RODRIGO ENRIQUEZ, ET AL., plaintiffs-appellees,

vs.
SOCORRO A. RAMOS, ET AL., defendants-appellants.
Gelasio L. Dimaano for plaintiffs-appellees.
Vicente K. Aranda for defendants-appellants.
REYES, J.B.L., J.:
Direct appeal on points of law from a decision of the Court of
First Instance of Rizal in its Civil Case No. Q-4232.
We find no merit in the appeal.

Wherefore, the parties respectfully pray that the foregoing
stipulation of facts be admitted and approved by this Honorable
Court, without prejudice to the parties adducing other evidence
to prove their case not covered by this stipulation of facts.
1wph1.t
An examination of the first complaint filed against appellant in
the Court of First Instance of Manila shows that it was based
on appellants' having unlawfully stopped payment of the check
for P2,500.00 she had issued in favor of appellees; while the
complaint in the present action was for non-payment of the
balance of P96,000.00 guaranteed by the mortgage. The claim
for P2,500.00 was, therefore, a distinct debt not covered by the
security; and since the mortgage was constituted on lands
situated in Quezon City, the appellees could not ask for its
foreclosure in the Manila courts. The two causes of action
being different, section 4 of Rule 2 does not apply.
The record is to the effect that on 24 November 1958, Rodrigo

Enriquez and the spouses Urbano Dizon and Aurea Soriano de
Dizon sold to Socorro A. Ramos, by a notarial deed of even
date, eleven (11) parcels of land situated in Bago Bantay,
Quezon City, and covered by their corresponding certificates of
title, for the stipulated price of P101,000.00. The vendee paid
P5,000.00 down, P2,500.00 in cash, and P2,500.00 by a check
drawn against the Philippine National Bank, and agreed to
satisfy the balance of P96,000.00 within ninety (90) days. To
secure the said balance, the vendee Socorro A. Ramos, in the
same deed of sale, mortgaged the eleven parcels in favor of
the vendors. By way of additional security, Socorro A. Ramos,
as attorney-in-fact of her children, Enrique, Antonio, Milagros,
and Lourdes, and as judicial guardian of her minor child
Angelita Ramos, executed another mortgage on Lot No. 409 of
the Malinta Estate.
On the second assignment of error: the stipulation in the

mortgage contract that the obligation for P96,000.00 was to be
Because of the vendee-mortgagor's failure to comply with

some conditions of the mortgage, this action for foreclosure of
the mortgage was filed by the vendors-mortgagees in the court
below, on 29 April 1959. Defendant Socorro Ramos moved to
dismiss, alleging that the plaintiffs previously had filed action
against her in the Court of First Instance of Manila on 24
February 1959 for the recovery of P2,500.00 paid by check as
part of the down payment on the price of the mortgaged lands;
that at the time this first suit was filed, the mortgage debt was
already accrued and demandable; that plaintiffs were,
therefore, guilty of splitting a single cause of action, and under
section 4 of Rule 2 of the Rules of Court, the filing of the first
action for P2,500.00 was a defense that could be pleaded in
abatement of the second suit. Upon opposition by the plaintiffs,
the Court of First Instance of Quezon City denied the motion to
dismiss; but defendant Ramos repleaded the averments as a
special defense in her answer. After trial, on 16 December
1959, the Court of First Instance of Quezon City rendered
judgment against defendant Ramos; ordered her to pay
P96,000.00, with 12% interest from 24 February 1959 until
payment, 10% of the amount due as attorney's fees, and the
costs of the suit; and further decreed the foreclosure sale of
the mortgaged properties in case of non-payment within ninety
(90) days.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion,

Barrera, Paredes, Dizon, Regala and Makalintal,
Socorro Ramos appealed directly to this Court, and here

insists that the action should be dismissed on account of the
alleged splitting of appellee's cause of action, and that the
obligation not having fixed a period, although one was
intended, the court below should have set first a date of
maturity before ordering payment or foreclosure.
without interest, payable within ninety (90) days from this date,
provided that in case of default it shall bear interest at the rate
of 12% per annum,
clearly fixes a date of maturity, the stipulated twelve per cent in
case of default being nothing more than a penalty, designed to
induce the debtor to pay on or before the expiration of the
ninety (90) days. Hence, there was no call upon the court to
set another due date.
Finding no error in the judgment appealed from, the same is
affirmed, with costs against appellants.

SUPREME COURT
Manila
EN BANC
G.R. No. L-64013 November 28, 1983
UNION GLASS & CONTAINER CORPORATION and CARLOS
PALANCA, JR., in his capacity as President of Union Glass &
Container Corporation, petitioners,
vs.
THE SECURITIES AND EXCHANGE COMMISSION and
CAROLINA HOFILEA, respondents.
Eduardo R. Ceniza for petitioners.
The Solicitor General for respondent SEC.
Remedios C. Balbin for respondent Carolina Y. Hofilea.
ESCOLIN, J.:+.wph!1
This petition for certiorari and prohibition seeks to annul and
set aside the Order of the Securities and Exchange
Commission, dated September 25, 1981, upholding its
jurisdiction in SEC Case No. 2035, entitled "Carolina Hofilea,
Complainant, versus Development Bank of the Philippines, et

al., Respondents."
Private respondent Carolina Hofilea, complainant in SEC
Case No. 2035, is a stockholder of Pioneer Glass
Manufacturing Corporation, Pioneer Glass for short, a
domestic corporation engaged in the operation of silica mines
and the manufacture of glass and glassware. Since 1967,
Pioneer Glass had obtained various loan accommodations
from the Development Bank of the Philippines [DBP], and also
from other local and foreign sources which DBP guaranteed.
As security for said loan accommodations, Pioneer Glass
mortgaged and/or assigned its assets, real and personal, to the
DBP, in addition to the mortgages executed by some of its
corporate officers over their personal assets. The proceeds of
said financial exposure of the DBP were used in the
construction of a glass plant in Rosario, Cavite, and the
operation of seven silica mining claims owned by the
corporation.
It appears that through the conversion into equity of the
accumulated unpaid interests on the various loans amounting
to P5.4 million as of January 1975, and subsequently
increased by another P2.2 million in 1976, the DBP was able to
gain control of the outstanding shares of common stocks of
Pioneer Glass, and to get two, later three, regular seats in the
corporation's board of directors.
Sometime in March, 1978, when Pioneer Glass suffered
serious liquidity problems such that it could no longer meet its
financial obligations with DBP, it entered into a dacion en pago
agreement with the latter, whereby all its assets mortgaged to
DBP were ceded to the latter in full satisfaction of the
corporation's obligations in the total amount of P59,000,000.00.
Part of the assets transferred to the DBP was the glass plant in
Rosario, Cavite, which DBP leased and subsequently sold to
herein petitioner Union Glass and Container Corporation,
hereinafter referred to as Union Glass.
On April 1, 1981, Carolina Hofilea filed a complaint before the
respondent Securities and Exchange Commission against the
DBP, Union Glass and Pioneer Glass, docketed as SEC Case
No. 2035. Of the five causes of action pleaded therein, only the
first cause of action concerned petitioner Union Glass as
transferee and possessor of the glass plant. Said first cause of
action was based on the alleged illegality of the aforesaid
dacion en pago resulting from: [1] the supposed unilateral and
unsupported undervaluation of the assets of Pioneer Glass
covered by the agreement; [2] the self-dealing indulged in by
DBP, having acted both as stockholder/director and secured
creditor of Pioneer Glass; and [3] the wrongful inclusion by
DBP in its statement of account of P26M as due from Pioneer
Glass when the same had already been converted into equity.
Thus, with respect to said first cause of action, respondent
Hofilea prayed that the SEC issue an order:t.hqw
1.
Holding that the so called dacion en pago conveying
all the assets of Pioneer Glass and the Hofilea personal
properties to Union Glass be declared null and void on the
ground that the said conveyance was tainted with.t.hqw
A.
Self-dealing on the part of DBP which was acting both
as a controlling stockholder/director and as secured creditor of
the Pioneer Glass, all to its advantage and to that of Union
Glass, and to the gross prejudice of the Pioneer Glass,
B.
That the dacion en pago is void because there was
gross undervaluation of the assets included in the so-called
dacion en pago by more than 100% to the prejudice of Pioneer
Glass and to the undue advantage of DBP and Union Glass;
C.
That the DBP unduly favored Union Glass over
another buyer, San Miguel Corporation, notwithstanding the
clearly advantageous terms offered by the latter to the
prejudice of Pioneer Glass, its other creditors and so-called
'Minority stockholders.'
2.
Holding that the assets of the Pioneer Glass taken
over by DBP and part of which was delivered to Union Glass
particularly the glass plant to be returned accordingly.
3.
That the DBP be ordered to accept and recognize the
appraisal conducted by the Asian Appraisal Inc. in 1975 and
again in t978 of the asset of Pioneer Glass. 1
In her common prayer, Hofilea asked that DBP be sentenced
to pay Pioneer Glass actual, consequential, moral and
exemplary damages, for its alleged illegal acts and gross bad
faith; and for DBP and Union Glass to pay her a reasonable
amount as attorney's fees. 2
On April 21, 1981, Pioneer Glass filed its answer. On May 8,
1981, petitioners moved for dismissal of the case on the
ground that the SEC had no jurisdiction over the subject matter
or nature of the suit. Respondent Hofilea filed her opposition
to said motion, to which herein petitioners filed a rejoinder.
On July 23, 1981, SEC Hearing Officer Eugenio E. Reyes, to
whom the case was assigned, granted the motion to dismiss
for lack of jurisdiction. However, on September 25, 1981, upon
motion for reconsideration filed by respondent Hofilea,
Hearing Officer Reyes reversed his original order by upholding
the SEC's jurisdiction over the subject matter and over the
persons of petitioners. Unable to secure a reconsideration of
the Order as well as to have the same reviewed by the
Commission En Banc, petitioners filed the instant petition for
certiorari and prohibition to set aside the order of September
25, 1981, and to prevent respondent SEC from taking
cognizance of SEC Case No. 2035.
The issue raised in the petition may be propounded thus: Is it
the regular court or the SEC that has jurisdiction over the
case?
In upholding the SEC's jurisdiction over the case Hearing
Officer Reyes rationalized his conclusion thus:t.hqw
As correctly pointed out by the complainant, the present action
is in the form of a derivative suit instituted by a stockholder for
the benefit of the corporation, respondent Pioneer Glass and
Manufacturing Corporation, principally against another
stockholder, respondent Development Bank of the Philippines,
for alleged illegal acts and gross bad faith which resulted in the
dacion en pago arrangement now being questioned by
complainant. These alleged illegal acts and gross bad faith
came about precisely by virtue of respondent Development
Bank of the Philippine's status as a stockholder of corespondent Pioneer Glass Manufacturing Corporation although
its status as such stockholder, was gained as a result of its
being a creditor of the latter. The derivative nature of this
instant action can also be gleaned from the common prayer of
the complainant which seeks for an order directing respondent
Development Bank of the Philippines to pay co-respondent
Pioneer Glass Manufacturing Corporation damages for the
alleged illegal acts and gross bad faith as above-mentioned.
As far as respondent Union Glass and Container Corporation

is concerned, its inclusion as a party-respondent by virtue of its
being an indispensable party to the present action, it being in
possession of the assets subject of the dacion en pago and,
therefore, situated in such a way that it will be affected by any
judgment thereon, 3
In the ordinary course of things, petitioner Union Glass, as
transferee and possessor of the glass plant covered by the
dacion en pago agreement, should be joined as partydefendant under the general rule which requires the joinder of
every party who has an interest in or lien on the property
subject matter of the dispute. 4 Such joinder of parties avoids
multiplicity of suits as well as ensures the convenient, speedy
and orderly administration of justice.
But since petitioner Union Glass has no intra-corporate relation
with either the complainant or the DBP, its joinder as partydefendant in SEC Case No. 2035 brings the cause of action
asserted against it outside the jurisdiction of the respondent
SEC.
The jurisdiction of the SEC is delineated by Section 5 of PD
No. 902-A as follows:t.hqw
Sec. 5. In addition to the regulatory and adjudicative function of
the Securities and Exchange Commission over corporations,
partnerships and other forms of associations registered with it
as expressly granted under existing laws and devices, it shall
have original and exclusive jurisdiction to hear and decide
cases involving:
a]
Devices and schemes employed by or any acts, of the
board of directors, business associates, its officers or partners,
amounting to fraud and misrepresentation which may be
detrimental to the interest of the public and/or the stockholders,
partners, members of associations or organizations registered
with the Commission
b]
Controversies arising out of intra-corporate or
partnership relations, between and among stockholders,
members or associates; between any or all of them and the
corporation, partnership, or association of which they are
stockholders, members or associates, respectively; and
between such corporation, partnership or association and the
state insofar as it concerns their individual franchise or right to
exist as such entity;
c]
Controversies in the election or appointments of
directors, trustees, officers or managers of such corporations,
partnerships or associations.
This grant of jurisdiction must be viewed in the light of the
nature and function of the SEC under the law. Section 3 of PD
No. 902-A confers upon the latter "absolute jurisdiction,
supervision, and control over all corporations, partnerships or
associations, who are grantees of primary franchise and/or
license or permit issued by the government to operate in the
Philippines ... " The principal function of the SEC is the
supervision and control over corporations, partnerships and
associations with the end in view that investment in these
entities may be encouraged and protected, and their activities
pursued for the promotion of economic development. 5
It is in aid of this office that the adjudicative power of the SEC
must be exercised. Thus the law explicitly specified and
delimited its jurisdiction to matters intrinsically connected with
the regulation of corporations, partnerships and associations
and those dealing with the internal affairs of such corporations,

partnerships or associations.
Otherwise stated, in order that the SEC can take cognizance of
a case, the controversy must pertain to any of the following
relationships: [a] between the corporation, partnership or
association and the public; [b] between the corporation,
partnership or association and its stockholders, partners,
members, or officers; [c] between the corporation, partnership
or association and the state in so far as its franchise, permit or
license to operate is concerned; and [d] among the
stockholders, partners or associates themselves.
The fact that the controversy at bar involves the rights of
petitioner Union Glass who has no intra-corporate relation
either with complainant or the DBP, places the suit beyond the
jurisdiction of the respondent SEC. The case should be tried
and decided by the court of general jurisdiction, the Regional
Trial Court. This view is in accord with the rudimentary principle
that administrative agencies, like the SEC, are tribunals of
limited jurisdiction 6 and, as such, could wield only such
powers as are specifically granted to them by their enabling
statutes. 7 As We held in Sunset View Condominium Corp. vs.
Campos, Jr.: 8t.hqw
Inasmuch as the private respondents are not shareholders of
the petitioner condominium corporation, the instant cases for
collection cannot be a 'controversy arising out of intracorporate or partnership relations between and among
stockholders, members or associates; between any or all of
them and the corporation, partnership or association of which
they are stockholders, members or associates, respectively,'
which controversies are under the original and exclusive
jurisdiction of the Securities & Exchange Commission,
pursuant to Section 5 [b] of P.D. No. 902-A. ...
As heretofore pointed out, petitioner Union Glass is involved
only in the first cause of action of Hofileas complaint in SEC
Case No, 2035. While the Rules of Court, which applies
suppletorily to proceedings before the SEC, allows the joinder
of causes of action in one complaint, such procedure however
is subject to the rules regarding jurisdiction, venue and joinder
of parties. 9 Since petitioner has no intra-corporate relationship
with the complainant, it cannot be joined as party-defendant in
said case as to do so would violate the rule or jurisdiction.
Hofileas complaint against petitioner for cancellation of the
sale of the glass plant should therefore be brought separately
before the regular court But such action, if instituted, shall be
suspended to await the final outcome of SEC Case No. 2035,
for the issue of the validity of the dacion en pago posed in the
last mentioned case is a prejudicial question, the resolution of
which is a logical antecedent of the issue involved in the action
against petitioner Union Glass. Thus, Hofileas complaint
against the latter can only prosper if final judgment is rendered
in SEC Case No. 2035, annulling the dacion en pago executed
in favor of the DBP.
WHEREFORE, the instant petition is hereby granted, and the
questioned Orders of respondent SEC, dated September 25,
1981, March 25, 1982 and May 28, 1982, are hereby set aside.
Respondent Commission is ordered to drop petitioner Union
Glass from SEC Case No. 2035, without prejudice to the filing
of a separate suit before the regular court of justice. No
pronouncement as to costs.
SO ORDERED.1wph1.t
Concepcion, Jr., Guerrero, Abad Santos, De Castro, MelencioHerrera, Plana, Relova and Gutierrez, Jr., JJ., concur.
Court "in accordance with the pertinent provisions of the Rules

of Court."
Separate Opinions
Rule 43 of the Rules of Court used to allow review by this

Court of the SEC order, ruling or decision. Republic Act 5434
(1968) substituted the Court of Appeals for this Court in line
with the policy of lightening our heavy jurisdictional burden. But
this Court seems to have been restored as the reviewing
authority by Presidential Decree No. 902-A.
TEEHANKEE, J., concurring:

I concur in the Court's judgment penned by Mr. Justice Escolin
setting aside the questioned orders of respondent SEC and
ordering that petitioner Union Glass be dropped from SEC
Case No. 2035 for lack of SEC jurisdiction over it as a third
party purchaser of the glass plant acquired by the DBP by
dacion en pago from Pioneer Glass, without prejudice to
Hofilea filing a separate suit in the regular courts of justice
against Union Glass for recovery and cancellation of the said
sale of the glass plant in favor of Union Glass.
I concur also with the statement in the Court's opinion that the
final outcome of SEC Case No. 2035 with regard to the validity
of the dacion en pago is a prejudicial case. If Hofilea's
complaint against said dacion en pago fails in the SEC, then it
clearly has no cause of action against Union Glass for
cancellation of DBP's sale of the plant to Union Glass.
The purpose of this brief concurrence is with reference to the
statement in the Court's opinion that "Thus, Hofileas
complaint against the latter can only prosper if final judgment is
rendered in SEC Case No. 2035, annulling the dacion en pago
executed in favor of the DBP," to erase any impression that a
favorable judgment secured by Hofilea in SEC Case No. 2035
against the DBP and Pioneer Glass would necessarily mean
that its action against Union Glass in the regular courts of
justice for recovery and cancellation of the DBP sale of the
glass plant to Union Glass would necessarily prosper. It must
be borne in mind that as already indicated, the SEC has no
jurisdiction over Union Glass as an outsider. The suit in the
regular courts of justice that Hofilea might bring against Union
Glass is of course subject to all defenses as to the validity of
the sale of the glass plant in its favor as a buyer in good faith
and should it successfully substantiate such defenses, then
Hofileas action against it for cancellation of the sale might fail
as a consequence.
AQUINO, J., dissenting:

I dissent with due deference to Justice Escolin's opinion. What
are belatedly assailed in this certiorari and prohibition case
filed on May 17, 1983 are the order of September 25, 1981 of
Eugenio E. Reyes, a SEC hearing officer, and the orders of
March 25 and May 28, 1982 of Antonio R. Manabat, another
SEC hearing officer.
Although a jurisdictional issue is raised and jurisdiction over
the subject matter may be raised at any stage of the case,
nevertheless, the petitioners are guilty of laches and
nonexhaustion of the remedy of appeal with the Securities and
Exchange Commission en banc.
The petitioners resorted to the special civil actions of certiorari
and prohibition because they assail the orders of mere SEC
hearing officers. This is not a review of the order, decision or
ruling of the SEC sitting en banc which, according to section 6
of Presidential Decree No. 902-A (1976), may be made by this
However, section 9 of the Judiciary Reorganization Law

returned to the Intermediate Appellate Court the exclusive
jurisdiction to review the ruling, order or decision of the SEC as
a quasi-judicial agency. The same section 9 granted to the
Appellate Court jurisdiction in certiorari and prohibition cases
over the SEC although not exclusive.t.hqw
In this case, the SEC seems to have adopted the orders of the
two hearing officers as its own orders as shown by the stand
taken by the Solicitor General in defending the SEC. If that
were so, that is, if the orders of the hearing officers should be
treated as the orders of the SEC itself en banc, this Court
would have no jurisdiction over this case. It should be the
Appellate Court that should exercise the power of review.
Carolina Hofilea has been a stockholder since 1958 of the
Pioneer Glass Manufacturing Corporation. Her personal assets
valued at P6,804,810 were apparently or supposedly
mortgaged to the DBP to secure the obligations of Pioneer
Glass (p. 32, Rollo).
Pioneer Glass became indebted to the Development Bank of
the Philippines in the total sum of P59,000,000. Part of the loan
was used by Pioneer Glass to establish its glass plant in
Rosario, Cavite. The unpaid interest on the loan amounting to
around seven million pesos became the DBP's equity in
Pioneer Glass. The DBP became a substantial stockholder of
Pioneer Glass. Three members of the Pioneer Glass' board of
directors were from the DBP.
The glass plant commenced operations in 1977. At that time,
Pioneer Glass was heavily indebted to the DBP. Instead of
foreclosing its mortgage, DBP maneuvered to have the
mortgaged assets of Pioneer Glass, including the glass plant,
transferred to the DBP by way of dacion en pago. This
transaction was alleged to be an "auto contract" or a case of
the DBP contracting with itself since the DBP had a dominant
position in Pioneer Glass.
Hofilea alleged that although the debt to the DBP of Pioneer
Glass amounted to P59,000,000, the glass plant in 1977 had a
"sound value" of P77,329,000 and a "reproduction cost" of
P90,403,000. She further alleged that San Miguel Corporation
was willing to buy the glass plant for P40,000,000 cash,
whereas it was actually sold to Union Glass & Container
Corporation for the same amount under a 25-year term of
payment (pp. 32-34, Rollo).
On March 31, 1981; Carmen Hofilea filed with the SEC a
complaint against the DBP, Union Glass, Pioneer Glass and
Rafael Sison as chairman of the DBP and Pioneer Glass
boards of directors. Union Glass filed a motion to dismiss on
the ground that jurisdiction over the case is lodged in the Court
of First Instance. Hofilea opposed the motion. Hearing Officer
Reyes in his order of July 23, 1981 dismissed the complaint on
the ground that the case is beyond the jurisdiction of the SEC.
Hofilea filed a motion for reconsideration which was opposed
by Union Glass. Hearing Officer Reyes in his order of
September 25, 1981 reconsidered his dismissal order and

ruled that Union Glass is an indispensable party because it is
the transferee of the controverted assets given by way of
dacion en pago to the DBP. He ruled that the SEC has
jurisdiction over the case.
Union Glass filed a motion for reconsideration. Hearing Officer
Antonio R. Manabat denied the motion on the ground "that the
present action is an intra-corporate dispute involving
stockholders of the same corporation (p. 26, Rollo).
Union Glass filed a second motion for reconsideration with the
prayer that the SEC should decide the motion en banc. The
hearing officer ruled that the remedy of Union Glass was to file
a timely appeal. Hence, its second motion for reconsideration
was denied by the hearing officer. (This ruling is a technicality
which hinders substantial justice.)
It is clear that Union Glass has no cause of action for certiorari
and prohibition. Its recourse was to appeal to the SEC en banc
the denial of its first motion for reconsideration.
There is no question that the SEC has jurisdiction over the
intra-corporate dispute between Hofilea and the DBP, both
stockholders of Pioneer Glass, over the dacion en pago.
as a consequence.
Now, does the SEC lose jurisdiction because of the joinder of

Union Glass which has privity with the DBP since it was the
transferee of the assets involved in the dacion en pago?
Certainly, the joinder of Union Glass does not divest the SEC
of jurisdiction over the case. The joinder of Union Glass is
necessary because the DBP, its transfer or, is being sued
regarding the dacion en pago. The defenses of Union Glass
are tied up with the defenses of the DBP in the intra-corporate
dispute. Hofileas cause of action should not be split.
It would not be judicious and expedient to require Hofilea to
sue the DBP and Union Glass in the Regional Trial Court. The
SEC is more competent than the said court to decide the intracorporate dispute.
The SEC, as the agency enforcing Presidential Decree No.
902-A, is in the best position to know the extent of its
jurisdiction. Its determination that it has jurisdiction in this case
has persuasive weight.
Concepcion, Jr., Guerro, Abad Santos, De Castro, MelencioHerrera, Plana, Relova and Gutierrez, Jr., JJ., concur.
Separate Opinions

of Court."



Fernando, C.J. and Makasiar, J., join Aquino, J., dissent.
Separate Opinions

as a consequence.



of Court."


Fernando, C.J. and Makasiar, J., join Aquino, J., dissent.
G.R. No. L-19596
October 30, 1964
LAVERN R. DILWEG, plaintiff-appellant,

vs.
ROBERT O. PHILLIPS, INOCENTES DINEROS and ISAAC S.
ECETA, defendants-appellees.
Antonio C. Amor, Enrique D. Tayag and Alonzo Q. Ancheta for
plaintiff-appellant.
Lopez-De Joya, Dimaguila, Hermoso & Divino and Melotindos
and Dictado for defendants-appellees.
REYES, J.B.L., J.:
Direct appeal on pure question of law from an order rendered
by the Court of First Instance of Rizal, Branch II, in its Civil
Case No. 4850, dismissing plaintiff's complaint as well as from
the order denying a motion to reconsider said order of
dismissal.
The record disclosed that on 7 February 1958 plaintiff Lavern
R. Dilweg a nonresident American, through counsel, instituted
the complaint at bar consisting of six causes of action against
defendants. Robert O. Phillips, Inocentes G. Dineros, and
Isaac S. Esceta, claiming civil damages arising out of alleged
libelous and defamatory statements uttered and published in
the Philippines by the latter. On 24 February 1958 the first two
named defendants presented a motion to dismiss the
complaint. Plaintiff interposed an opposition thereto on 7 March
1958.
On 13 May 1958 the trial court, acting on this motion, denied
the same; consequently, on 17 May 1958 the two defendants
filed their joint answer with six causes of action as
counterclaims for damages against the plaintiff. On 24 May
1958, plaintiff answered the defendant's counterclaims.
On 11 June 1958, defendant Isaac S. Eceta, who was
represented by a different counsel, filed his answer adopting in
toto as his own the answer as well as the counterclaims of his
co-defendants. On 26 June 1958, plaintiff answered defendant
Eceta's counterclaims.
The trial court, in its order dated 17 September 1958,
scheduled the hearing of the case for 10 and 11 December,
1958.
On 8 March 1961, in the course of the trial on the merits,
defendants Robert O. Phillips and Inocentes G. Dineros
presented a written motion for reconsideration of the order
dated 13 May 1958 denying their motion to dismiss the
plaintiff's complaint. An opposition thereto was interposed by
plaintiff on 7 April 1961.
On 11 May 1961 the trial court issued an order, which is the
subject of the present appeal, the pertinent portion of which is
as follows:
This action is one for damages by reason of alleged libelous
statements uttered in the Philippines by the defendants against
the plaintiff. In otherwords, it is an action based on a tort or act,
which under the law of the Philippines, is defined as a criminal
offense. At the time the said libelous statements were uttered,
the plaintiff was in Washington D.C. where he was and has

always been a resident. There is no allegation in the complaint
that plaintiff has ever been in the Philippines or has resided at
anytime therein.
The general rule in this jurisdiction is that a court acquires
jurisdiction over the person of the plaintiff by the filing of his
complaint. (Manila Railroad Co. vs. Attorney General, 20 Phil.
523). In King Mau Wu vs. Sycip, 50 O.G. page 5366, April 23,
1954 it was contended that as the plaintiff therein has never
been a resident of the Philippines, the courts of this country
have not acquired jurisdiction to take cognizance of his action
based on a contract which was executed in the State of New
York, U.S.A. The Supreme Court held that a non-resident may
sue a resident in the courts of his country for the collection of
money arising from a contract notwithstanding the fact that
said contract was executed outside the country. In Western
Equipment and Supply Co. vs. Reyes, 51 Phil. 116, it was held
that a foreign corporation which has never done any business
in the Philippines and which is unlicensed and unregistered to
do business here, may sue in the courts of the Philippines for
the purpose of restraining certain residents and inhabitants of
the Philippines from organizing a corporation in this country
bearing the same name as that of the plaintiff because the
action involves the use of a tradename and hence, it is one in
rem.
The instant case is however different because it is a personal
action based on an act defined as a crime under Philippine
Law. It is therefore of first impression. Defendants contend that
if a counterclaim is filed against the plaintiff for damages, it
cannot be enforced because the Court has not acquired
jurisdiction over his person as he has never been and is not
now present in this country. It may be stated in addition, that in
such a case, if a judgment is rendered against him by this
Court since he has no property in the Philippines, the decision
cannot be enforced because the decision of a court of this
country is not enforceable outside of Philippine jurisdiction.
In some European countries, it is a requirement that before a
non-resident alien may file an action, he must file a bond, the
so-called "Judicatum Solvi", in order to protect the interest of
residents from unwarranted actions. There is no law of this
kind in this jurisdiction.
As there are no doctrines in this jurisdiction covering the issue
raised by the defendants, this Court is bound to rely on
American doctrines for the reason that our rules on jurisdiction
have been copied and patterned upon American laws and
statutes. The following are some of the doctrines which have
some bearing on the case, aside from those cited by the
movants:
A difficulty may sometimes arise, in determining whether a
particular law applies to the citizen of a foreign country, and (is)
intended to subject him to its provision. But if the law applies to
him, and embraces his case, it is unquestionably binding upon
him when he is within the jurisdiction of the United States.
(Brown vs. Duchesne, Mass. 19. How., U.S. 183, 194, 51 L.
Ed. 595. (Ibid).
While the presence of the res or property within the territorial
limits of the sovereignty under which the court acts may confer
jurisdiction in rem on the court, in personal actions jurisdiction
both of the subject matter and of the person or party whose
right are to be affected are essential, and a state court can
acquire no jurisdiction where neither the person nor any
property of can be found within the state. (Emmanuel vs. Ferris
41 S.E. 20, 63 S.C. 104). If a court having jurisdiction of the
subject matter acquires jurisdiction of the person it has the

right and power to hear and determine the particular case; and
unless jurisdiction of the subject matter and of the person
exists it is the duty of the court to decline to do more than
ascertain and declare that it has no power to examine or to
decide the merits of the case ... . While a court may have
general jurisdiction of the subject matter of a class of actions, it
does not necessarily follow that it may hear and determine a
particular case submitted for its consideration (21 C.J.S. 43-44)
In El Banco Espaol Filipino v. Palanca, 37 Phil. 921, and
Perkins v. Dizon 69 Phil. 189, it has been also held that in
order that the court may validly try a case, it must have
jurisdiction over the subject matter and over the persons of the
parties. Jurisdiction over the persons of the parties is acquired
by their voluntary appearance in court and their submission to
its authority, or by the coercive power of legal process exerted
over their persons.
Applying the principles laid down in the above-quoted doctrines
and those cited in the motion for reconsideration of the
defendants, the Court has come to the conclusion that in order
that the court may validly try a case, it must have jurisdiction
not only over the persons of the parties and over the subject
matter and that plaintiff must be a resident within the territorial
jurisdiction of this Court in order that jurisdiction over his
person can be acquired, otherwise the Court will not be able to
render a valid judgment against him.
IN VIEW OF THE FOREGOING CONSIDERATIONS and of
the fact that the question of jurisdiction, may be raised at any
time, the Court hereby grants the motion for reconsideration;
sets aside the former order deriving defendants' motion to
dismiss and hereby dismisses this case, without costs.
SO ORDERED. (Rec. on Appeal, pp. 99-103)
On 28 June 1961, a motion to have the above-quoted order
reconsidered was presented by the plaintiff and an opposition
thereto was filed by the defendants on 10 July 1961. Plaintiff,
in return, submitted a reply to said opposition on 22 July 1961.
On 7 November 1961, the trial court, acting on said motion,
denied it; hence, the present appeal.
The sole issue posed in the present appeal is whether or not
our Philippine courts can rightfully refuse to assume jurisdiction
over a personal action instituted by a nonresident alien who is
not within the territorial jurisdiction of our courts.
In refusing to assume jurisdiction over this case, the court
below upheld defendants' contention that in a personal action it
can only acquire jurisdiction over the person of the plaintiff if he
resides within our territorial jurisdiction. We believe and hold
that the trial court is in error in this point. In fact, this Court only
recently has upheld the right of non-residents to maintain
personal actions against our residents in Philippine courts
Sharruf v. Bubla, G.R. No. L-17029, September 30, 1964).
Secs. 478, 707, 743; Gardner vs. Thomas, 14 Johns, 134, 7

Am. Dec. 445; De Witt v. Buchanan 54 Barb. 31. (Crashley v.
Press Pub. Co., 71 N. E. 258, 259).
This position is supported by practically unanimous American
authority (3 Am. Jur. 2d, Aliens, Sec. 43, p. 895; 21 C.J.S.
(Courts), sec. 75 pp. 112-113).
It is thus evident that, contrary to the conclusion reached by
the court below, it is not indispensable for a foreigner to
establish residence, nor need he be physically present in a
state of which he is not a resident or citizen in order that he
may initiate or maintain a personal action against a resident or
citizen of that other state for rights of action arising in, or for
violations of laws committed within, the territorial jurisdiction of
that other state. In this jurisdiction, no general law has come to
our knowledge or notice which restricts the right of nonresident aliens to sue in our courts. It is not disputed that
plaintiff's causes of action arose in, and that the defendants are
within, our territorial jurisdiction. It is conceded by both parties
that the law under which the instant case falls is silent on the
matter of the right of an alien to sue in our courts. On the other
hand, the particular law evidently availed of by the plaintiff in
filing his complaint is article 33 of the Civil Code of the
Philippines, which provides:
In cases of defamation, fraud, and physical injuries, a civil
action for damages entirely separate and distinct from the
criminal action may be brought by the injured party. Such civil
action shall proceed independently of the criminal prosecution
and shall require only preponderance of evidence.
The above-quoted provision of law does not make any
distinction as to whether the "injured party", who may maintain
an action for damages based on defamation, is a Filipino
citizen or a resident or an alien.
The American decisions cited in the order of 11 May 1961 are
not applicable to the case at bar because there the defendants
invoked the issue of lack of jurisdiction over their own persons
and not against the person of the plaintiff.
The fact that there are counterclaims against the non-resident
plaintiff does not alter the case. The Rules of Court provide for
remedies against nonresident defendants.
WHEREFORE, the order appealed from is set aside, and the
case is ordered remanded to the court below for further
proceedings consonant with this opinion. Costs against
respondents Phillips, Dineros and Eceta.
G.R. No. L-12902, Marcelo v. De Leon, 105 Phil. 1175, 56 Off.
Gaz. [No. 37] 5738
SUPREME COURT
Manila
EN BANC
In an American case with facts similar to those obtaining in the

case at bar, and in which the same identical issue was raised,
the Court of Appeals of New York held:
There is no objection to the maintenance of the action in our
courts in the fact that the plaintiff was an English subject, or
that he was a non-resident. As a personal action, sounding in
tort, it was transitory in its nature, following the person of the
defendant. Our courts were open to the plaintiff for redress of
any personal injury suffered by reason of defendant' acts
Story's Conflict of Laws, Sec. 625; Wharton's Conflict of Laws,
July 29, 1959

G.R. No. L-12902
CEFERINO MARCELO, plaintiff-appellant,
vs.
NAZARIO DE LEON, defendant-appellee.
Pedro D. Maldia and San Vicente and Jardiel for appellant.
Inciong and Bacalso for appellee.
BENGZON, J.:
The plaintiff has appealed from the order of judge Jose N.
Leuterio of the Nueva Ecija court of first instance, dismissing
his complaint whereby he had asked that defendant be
required to vacate a parcel of land and to pay damages. The
dismissal rested on two grounds, (a) the case pertained to the
Court of Agrarian Relations; and (b) as attorney-in-fact of the
true owner of the land, the plaintiff had no right to bring the
action.
The record disclose that on February 4, 1957, Ceferino
Marcelo, filed in the justice of the peace court of San Antonio,
Nueva Ecija, a complaint to recover possession of a lot of
2,000 square meters belonging to Severino P. Marcelo (who
had given him a full power-of-attorney) which was held by
defendant "on the understanding that one-half of all the
products raised in the occupied area, would be given" to the
landowner. The complaint alleged that after plaintiff had
assumed the administration of Severino Marcelo's properties,
defendant delivered the products corresponding to the owner;
but when in September 1956, plaintiff notified defendant that in
addition to giving half of the produce, he would have to pay a
rental of two pesos per month, the latter refused, and
continued refusing to pay such additional charges. Wherefore,
complainant prayed for judgment ordering defendant to leave
the premises and to pay damages and costs.
The defendant questioned the court's jurisdiction, arguing that
the matter involved tenancy relations falling within the authority
of the Agrarian Court; he also challenged the capacity of
plaintiff to sue. He lost in the justice of the peace court;
however, on appeal to the court of first instance, he raised the
same issues on a motion to dismiss, and then his views
prevailed.
In this appeal, plaintiff insists he merely filed ejectment or
detainer proceedings, which fall within the justice of the peace
court's jurisdiction. He claims the lot to be residential, and not
agricultural. On this point, His Honor noted that "the land
covered by the title of plaintiff's principal covers an area of
59,646 square meters situated in the barrio of San Mariano,
San Antonio, Nueva Ecija. This land obviously is agricultural,
and it is too much to presume that barrio folks would occupy an
area of 2,000 square meters more or less of land for a
residence. The cultivation of the land by the defendant and the
sharing of the products thereof with the owner of the land
characterize the relationship between the defendant and the
plaintiff's principal as one of the landlord and tenant.
Indeed, from the allegations of the complaint, one could
conclude that defendant had physical possession of the land
for the purpose of cultivating it and giving the owner a share in
the crop. This was agricultural tenancy of the kind called "share
tenancy". In judging this relationship, the 2-pesos-a-monthrental alleged in the complaint may be disregarded, because
defendant never having agreed to such imposition, it may not
be held a part of the compensation payable for holding the
land. The circumstance that defendant built a dwelling on the
agricultural lot does not ipso facto make it residential
considering specially that the dwelling photograph submitted
with brief does not occupy more than 80 square meters
occupied by him. In this connection, plaintiff argues as follows:
The defendant does not till or cultivate the land in order to grow
the fruit bearing trees because they are already full grown. He
does not even do the actual gathering, and after deducting the
expenses, he gives one-half of the fruits to the plaintiff all in
consideration of his stay in the land. He is not, therefore, a
tenant within the meaning of that term as used in Republic Act.

No. 1199 for "A tenant shall mean a person who, himself and
with the aid available from within his immediate farm
household, cultivate the land for purposes of production . . ."
Anyone who had fruit trees in his yard, will disagree with the
above description of the relationship. He knows the caretaker
must water the trees, even fertilize them for better production,
uproot weeds and turn the soil, sometimes fumigate to
eliminate plants pests, etc. Those chores obviously mean
"working or cultivating" the land. Besides, it seems that
defendant planted other crops, (i.e. cultivated the lot) giving the
landowner his corresponding share.
Now, the statutes provide that "All cases involving
dispossession of a tenant by the landholder . . . shall be under
the original and exclusive jurisdiction of such court as may now
or hereafter be authorized by law to take cognizance of
tenancy relations and disputes". Sec. 2, Republic Act 1199);
and the court (Agrarian Relations) "shall have original and
exclusive jurisdiction to consider, investigate, decide and settle
all questions and matters involving all those relationships
established by law which determine the varying rights of
persons in cultivation and use of agricultural land where one of
the parties works the land". (Sec. 7, Republic Act 1267 as
amended by Republic Act 1409.)
In Tumbagan vs. Vasquez, L-8719, July 17, 1956, we impliedly
held that where a farmland occupies agricultural land and
erects a house thereon, the tenancy relationship continues
subject to tenancy laws not to those governing leases.
In fact, the Agricultural Tenancy Law (Republic Act 1199)
requires the landholder to give his tenant an area wherein the
latter may construct his dwelling (sec. 26), of course without
thereby changing the nature of their relationship, from
landowner and tenant to lessor and lessee.
At any rate, this action must fail upon the second ground of
defendant's motion to dismiss: the plaintiff is a mere apoderado
of the owner, Severino P. Marcelo.[[1]] The rule is that every
action must be prosecuted in the name of the real party in
interest, (sec 2, Rule 3).
However, plaintiff quotes that part of sec. 1 of Rule 72,
permitting "the legal representative" of any landlord to bring an
action of ejectment, and insists in his right now to litigate.
Supposing that "legal representative" as used in sec. 1,
includes attorneys-in-fact, we find that plaintiff's power
attached to the complaint, authorizes him to sue for and in the
name of Severino Marcelo, to "pursue any and all kinds of suits
and actions for me and in my name in the courts of the land".
This action is not in the name of plaintiff's principal.
For all the foregoing, the appealed order is affirmed with costs
chargeable against appellant.
Paras, C.J., Padilla, Montemayor, Bautista Angelo,
Concepcion, Endencia and Barrera, JJ., concur.
G.R. No. L-31061 August 17, 1976
SULO NG BAYAN INC., plaintiff-appellant,
vs.
GREGORIO ARANETA, INC., PARADISE FARMS, INC.,
NATIONAL WATERWORKS & SEWERAGE AUTHORITY,
HACIENDA CARETAS, INC, and REGISTER OF DEEDS OF
BULACAN, defendants-appellees.
Hill & Associates Law Offices for appellant.

Araneta, Mendoza & Papa for appellee Gregorio Araneta, Inc.
Carlos, Madarang, Carballo & Valdez for Paradise Farms, Inc.
Leopoldo M. Abellera, Arsenio J. Magpale & Raul G. Bernardo,
Office of the Government Corporate Counsel for appellee
National Waterworks & Sewerage Authority.
Candido G. del Rosario for appellee Hacienda Caretas, Inc.
ANTONIO, J.:
The issue posed in this appeal is whether or not plaintiff
corporation (non- stock may institute an action in behalf of its
individual members for the recovery of certain parcels of land
allegedly owned by said members; for the nullification of the
transfer certificates of title issued in favor of defendants
appellees covering the aforesaid parcels of land; for a
declaration of "plaintiff's members as absolute owners of the
property" and the issuance of the corresponding certificate of
title; and for damages.
On April 26, 1966, plaintiff-appellant Sulo ng Bayan, Inc. filed
an accion de revindicacion with the Court of First Instance of
Bulacan, Fifth Judicial District, Valenzuela, Bulacan, against
defendants-appellees to recover the ownership and
possession of a large tract of land in San Jose del Monte,
Bulacan, containing an area of 27,982,250 square meters,
more or less, registered under the Torrens System in the name
of defendants-appellees' predecessors-in-interest. 1 The
complaint, as amended on June 13, 1966, specifically alleged
that plaintiff is a corporation organized and existing under the
laws of the Philippines, with its principal office and place of
business at San Jose del Monte, Bulacan; that its membership
is composed of natural persons residing at San Jose del
Monte, Bulacan; that the members of the plaintiff corporation,
through themselves and their predecessors-in-interest, had
pioneered in the clearing of the fore-mentioned tract of land,
cultivated the same since the Spanish regime and continuously
possessed the said property openly and public under concept
of ownership adverse against the whole world; that defendantappellee Gregorio Araneta, Inc., sometime in the year 1958,
through force and intimidation, ejected the members of the
plaintiff corporation fro their possession of the aforementioned
vast tract of land; that upon investigation conducted by the
members and officers of plaintiff corporation, they found out for
the first time in the year 1961 that the land in question "had
been either fraudelently or erroneously included, by direct or
constructive fraud, in Original Certificate of Title No. 466 of the
Land of Records of the province of Bulacan", issued on May
11, 1916, which title is fictitious, non-existent and devoid of
legal efficacy due to the fact that "no original survey nor plan
whatsoever" appears to have been submitted as a basis
thereof and that the Court of First Instance of Bulacan which
issued the decree of registration did not acquire jurisdiction
over the land registration case because no notice of such
proceeding was given to the members of the plaintiff
corporation who were then in actual possession of said
properties; that as a consequence of the nullity of the original
title, all subsequent titles derived therefrom, such as Transfer
Certificate of Title No. 4903 issued in favor of Gregorio Araneta
and Carmen Zaragoza, which was subsequently cancelled by
Transfer Certificate of Title No. 7573 in the name of Gregorio
Araneta, Inc., Transfer Certificate of Title No. 4988 issued in
the name of, the National Waterworks & Sewerage Authority
(NWSA), Transfer Certificate of Title No. 4986 issued in the

name of Hacienda Caretas, Inc., and another transfer
certificate of title in the name of Paradise Farms, Inc., are
therefore void. Plaintiff-appellant consequently prayed (1) that
Original Certificate of Title No. 466, as well as all transfer
certificates of title issued and derived therefrom, be nullified;
(2) that "plaintiff's members" be declared as absolute owners in
common of said property and that the corresponding certificate
of title be issued to plaintiff; and (3) that defendant-appellee
Gregorio Araneta, Inc. be ordered to pay to plaintiff the
damages therein specified.
On September 2, 1966, defendant-appellee Gregorio Araneta,
Inc. filed a motion to dismiss the amended complaint on the
grounds that (1) the complaint states no cause of action; and
(2) the cause of action, if any, is barred by prescription and
laches. Paradise Farms, Inc. and Hacienda Caretas, Inc. filed
motions to dismiss based on the same grounds. Appellee
National Waterworks & Sewerage Authority did not file any
motion to dismiss. However, it pleaded in its answer as special
and affirmative defenses lack of cause of action by the plaintiffappellant and the barring of such action by prescription and
laches.
During the pendency of the motion to dismiss, plaintiffappellant filed a motion, dated October 7, 1966, praying that
the case be transferred to another branch of the Court of First
Instance sitting at Malolos, Bulacan, According to defendantsappellees, they were not furnished a copy of said motion,
hence, on October 14, 1966, the lower court issued an Order
requiring plaintiff-appellant to furnish the appellees copy of said
motion, hence, on October 14, 1966, defendant-appellant's
motion dated October 7, 1966 and, consequently, prayed that
the said motion be denied for lack of notice and for failure of
the plaintiff-appellant to comply with the Order of October 14,
1966. Similarly, defendant-appellee paradise Farms, Inc. filed,
on December 2, 1966, a manifestation information the court
that it also did not receive a copy of the afore-mentioned of
appellant. On January 24, 1967, the trial court issued an Order
dismissing the amended complaint.
On February 14, 1967, appellant filed a motion to reconsider
the Order of dismissal on the grounds that the court had no
jurisdiction to issue the Order of dismissal, because its request
for the transfer of the case from the Valenzuela Branch of the
Court of First Instance to the Malolos Branch of the said court
has been approved by the Department of Justice; that the
complaint states a sufficient cause of action because the
subject matter of the controversy in one of common interest to
the members of the corporation who are so numerous that the
present complaint should be treated as a class suit; and that
the action is not barred by the statute of limitations because (a)
an action for the reconveyance of property registered through
fraud does not prescribe, and (b) an action to impugn a void
judgment may be brought any time. This motion was denied by
the trial court in its Order dated February 22, 1967. From the
afore-mentioned Order of dismissal and the Order denying its
motion for reconsideration, plaintiff-appellant appealed to the
Court of Appeals.
On September 3, 1969, the Court of Appeals, upon finding that
no question of fact was involved in the appeal but only
questions of law and jurisdiction, certified this case to this
Court for resolution of the legal issues involved in the
controversy.
I
Appellant contends, as a first assignment of error, that the trial

court acted without authority and jurisdiction in dismissing the
amended complaint when the Secretary of Justice had already
approved the transfer of the case to any one of the two
branches of the Court of First Instance of Malolos, Bulacan.
Appellant confuses the jurisdiction of a court and the venue of
cases with the assignment of cases in the different branches of
the same Court of First Instance. Jurisdiction implies the power
of the court to decide a case, while venue the place of action.
There is no question that respondent court has jurisdiction over
the case. The venue of actions in the Court of First Instance is
prescribed in Section 2, Rule 4 of the Revised Rules of Court.
The laying of venue is not left to the caprice of plaintiff, but
must be in accordance with the aforesaid provision of the rules.
2 The mere fact that a request for the transfer of a case to
another branch of the same court has been approved by the
Secretary of Justice does not divest the court originally taking
cognizance thereof of its jurisdiction, much less does it change
the venue of the action. As correctly observed by the trial court,
the indorsement of the Undersecretary of Justice did not order
the transfer of the case to the Malolos Branch of the Bulacan
Court of First Instance, but only "authorized" it for the reason
given by plaintiff's counsel that the transfer would be
convenient for the parties. The trial court is not without power
to either grant or deny the motion, especially in the light of a
strong opposition thereto filed by the defendant. We hold that
the court a quo acted within its authority in denying the motion
for the transfer the case to Malolos notwithstanding the
authorization" of the same by the Secretary of Justice.
II
Let us now consider the substantive aspect of the Order of
dismissal.
In dismissing the amended complaint, the court a quo said:
The issue of lack of cause of action raised in the motions to
dismiss refer to the lack of personality of plaintiff to file the
instant action. Essentially, the term 'cause of action' is
composed of two elements: (1) the right of the plaintiff and (2)
the violation of such right by the defendant. (Moran, Vol. 1, p.
111). For these reasons, the rules require that every action
must be prosecuted and defended in the name of the real party
in interest and that all persons having an interest in the subject
of the action and in obtaining the relief demanded shall be
joined as plaintiffs (Sec. 2, Rule 3). In the amended complaint,
the people whose rights were alleged to have been violated by
being deprived and dispossessed of their land are the
members of the corporation and not the corporation itself. The
corporation has a separate. and distinct personality from its
members, and this is not a mere technicality but a matter of
substantive law. There is no allegation that the members have
assigned their rights to the corporation or any showing that the
corporation has in any way or manner succeeded to such
rights. The corporation evidently did not have any rights
violated by the defendants for which it could seek redress.
Even if the Court should find against the defendants, therefore,
the plaintiff corporation would not be entitled to the reliefs
prayed for, which are recoveries of ownership and possession
of the land, issuance of the corresponding title in its name, and
payment of damages. Neither can such reliefs be awarded to
the members allegedly deprived of their land, since they are
not parties to the suit. It appearing clearly that the action has
not been filed in the names of the real parties in interest, the
complaint must be dismissed on the ground of lack of cause of
action. 3
Viewed in the light of existing law and jurisprudence, We find

that the trial court correctly dismissed the amended complaint.
It is a doctrine well-established and obtains both at law and in
equity that a corporation is a distinct legal entity to be
considered as separate and apart from the individual
stockholders or members who compose it, and is not affected
by the personal rights, obligations and transactions of its
stockholders or members. 4 The property of the corporation is
its property and not that of the stockholders, as owners,
although they have equities in it. Properties registered in the
name of the corporation are owned by it as an entity separate
and distinct from its members. 5 Conversely, a corporation
ordinarily has no interest in the individual property of its
stockholders unless transferred to the corporation, "even in the
case of a one-man corporation. 6 The mere fact that one is
president of a corporation does not render the property which
he owns or possesses the property of the corporation, since
the president, as individual, and the corporation are separate
similarities. 7 Similarly, stockholders in a corporation engaged
in buying and dealing in real estate whose certificates of stock
entitled the holder thereof to an allotment in the distribution of
the land of the corporation upon surrender of their stock
certificates were considered not to have such legal or equitable
title or interest in the land, as would support a suit for title,
especially against parties other than the corporation. 8
It must be noted, however, that the juridical personality of the
corporation, as separate and distinct from the persons
composing it, is but a legal fiction introduced for the purpose of
convenience and to subserve the ends of justice. 9 This
separate personality of the corporation may be disregarded, or
the veil of corporate fiction pierced, in cases where it is used
as a cloak or cover for fraud or illegality, or to work -an
injustice, or where necessary to achieve equity. 10
Thus, when "the notion of legal entity is used to defeat public
convenience, justify wrong, protect fraud, or defend crime, ...
the law will regard the corporation as an association of
persons, or in the case of two corporations, merge them into
one, the one being merely regarded as part or instrumentality
of the other. 11 The same is true where a corporation is a
dummy and serves no business purpose and is intended only
as a blind, or an alter ego or business conduit for the sole
benefit of the stockholders. 12 This doctrine of disregarding the
distinct personality of the corporation has been applied by the
courts in those cases when the corporate entity is used for the
evasion of taxes 13 or when the veil of corporate fiction is used
to confuse legitimate issue of employer-employee relationship,
14 or when necessary for the protection of creditors, in which
case the veil of corporate fiction may be pierced and the funds
of the corporation may be garnished to satisfy the debts of a
principal stockholder. 15 The aforecited principle is resorted to
by the courts as a measure protection for third parties to
prevent fraud, illegality or injustice. 16
It has not been claimed that the members have assigned or
transferred whatever rights they may have on the land in
question to the plaintiff corporation. Absent any showing of
interest, therefore, a corporation, like plaintiff-appellant herein,
has no personality to bring an action for and in behalf of its
stockholders or members for the purpose of recovering
property which belongs to said stockholders or members in
their personal capacities.
It is fundamental that there cannot be a cause of action 'without
an antecedent primary legal right conferred' by law upon a
person. 17 Evidently, there can be no wrong without a
corresponding right, and no breach of duty by one person
without a corresponding right belonging to some other person.

18 Thus, the essential elements of a cause of action are legal
right of the plaintiff, correlative obligation of the defendant, an
act or omission of the defendant in violation of the aforesaid
legal right. 19 Clearly, no right of action exists in favor of
plaintiff corporation, for as shown heretofore it does not have
any interest in the subject matter of the case which is material
and, direct so as to entitle it to file the suit as a real party in
interest.
property based upon constructive or implied trust had already

prescribed.
ACCORDINGLY, the instant appeal is hereby DISMISSED with
costs against the plaintiff-appellant.
Fernando, C.J., Barredo, Aquino and Concepcion, Jr., JJ.,
concur.
III
Appellant maintains, however, that the amended complaint
may be treated as a class suit, pursuant to Section 12 of Rule
3 of the Revised Rules of Court.
In order that a class suit may prosper, the following requisites
must be present: (1) that the subject matter of the controversy
is one of common or general interest to many persons; and (2)
that the parties are so numerous that it is impracticable to bring
them all before the court. 20
Under the first requisite, the person who sues must have an
interest in the controversy, common with those for whom he
sues, and there must be that unity of interest between him and
all such other persons which would entitle them to maintain the
action if suit was brought by them jointly. 21
As to what constitutes common interest in the subject matter of
the controversy, it has been explained in Scott v. Donald 22
thus:
The interest that will allow parties to join in a bill of complaint,
or that will enable the court to dispense with the presence of all
the parties, when numerous, except a determinate number, is
not only an interest in the question, but one in common in the
subject Matter of the suit; ... a community of interest growing
out of the nature and condition of the right in dispute; for,
although there may not be any privity between the numerous
parties, there is a common title out of which the question
arises, and which lies at the foundation of the proceedings ...
[here] the only matter in common among the plaintiffs, or
between them and the defendants, is an interest in the
Question involved which alone cannot lay a foundation for the
joinder of parties. There is scarcely a suit at law, or in equity
which settles a Principle or applies a principle to a given state
of facts, or in which a general statute is interpreted, that does
not involved a Question in which other parties are interested. ...
(Emphasis supplied )
Here, there is only one party plaintiff, and the plaintiff
corporation does not even have an interest in the subject
matter of the controversy, and cannot, therefore, represent its
members or stockholders who claim to own in their individual
capacities ownership of the said property. Moreover, as
correctly stated by the appellees, a class suit does not lie in
actions for the recovery of property where several persons
claim Partnership of their respective portions of the property,
as each one could alleged and prove his respective right in a
different way for each portion of the land, so that they cannot
all be held to have Identical title through acquisition
prescription. 23
Having shown that no cause of action in favor of the plaintiff
exists and that the action in the lower court cannot be
considered as a class suit, it would be unnecessary and an Idle
exercise for this Court to resolve the remaining issue of
whether or not the plaintiffs action for reconveyance of real
Footnotes
1
Civil Case No. 233-V, entitled Sulo ng Bayan, Inc.,
Plaintiff, versus Gregorio Araneta, Inc., Paradise Farms, Inc.,
National Waterworks & Sewerage Authority (NWSA) Hacienda
Caretas, Inc., and Register of Deeds of Bulacan, Defendants.
2
Evangelista v. Santos, 86 Phil. 387.
Record on Appeal, pp. 101-103.
4
I Fletcher Cyclopedia Corporations, 1974 Ed., sec.
25, pp. 99-100; Borja v. Vasquez, 74 Phil. 560, 566-567' VillaRey Transit, Inc. v. Ferrer, 25 SCRA 845, 857.
5
Stockholder of F. Guanzon and Sons, Inc. v. Register
of Deeds of Manila, 6 SCRA 373. A share of stock only typifies
an aliquot part of the corporation's property, or the right to
share in its proceeds to that extent when distributed according
to law and equity (Hall & Faley v. Alabama Terminal, 173 Ala.,
398, 56 So., 235), but its holder is not the owner of any definite
portion of its property or assets (Gottfried v. Miller, 104 U.S.,
521; Jones v. Davis 35 Ohio St. 474). The stockholder is not a
co-owner or tenant in common of the corporate property
(Harton v. Hohnston, 166 Ala., 317, 51 So., 992). (Ibid., pp.
375-376.)
19 SCRA 962. The doctrine of alter ego is based upon the
misuse of a corporation by an individual for wrongful or
inequitable purposes, and in such case the court merely
disregards the corporate entity and holds the individual
responsible for acts knowingly and intentionally done in the
name of the corporation." (Ivy v. Plyler, 246 Cal. App. 2d. 678,
54 Cal. Reptr. 894.) The doctrine of alter ego imposes upon the
individual who uses a corporation merely as an instrumentality
to conduct his own business liability as a consequence of fraud
or injustice perpetuated not on the corporation, but on third
persons dealing with the corporation.
[G.R. No. L-7020. June 30, 1954.]
ALICIA GO, ET AL., Plaintiffs-Appellees, v. ALBERTO GO, ET
AL., Defendants-Appellants.
Enrique V. Filamor and Nicolas Belmonte for Appellants.
Emmanuel T. Jacinto for Appellees.
SYLLABUS
1. PLEADING AND PRACTICE; JOINDER OF PARTIES,
APPLICABLE TO BOTH COMPLAINT AND COUNTERCLAIM.
The rule permitting the joinder of parties applies with equal
force to a counterclaim in view of the similarity of rules
applicable to both complaint and counterclaim.
2. ID.; COUNTERCLAIMS; TEST TO DETERMINE
JURISDICTION OF JUSTICE OF THE PEACE COURT. If
the claim is composed of several accounts each distinct from

the other or arising from different transactions, they may joined
in a single action even if the total exceeds the jurisdiction of the
justices of the peace court. Each account furnishes the test.
But if the claim is composed of several accounts which arise
out of the same transaction and can not be divided, the same
should be stated in one cause of action and van not be divided
for the purpose of bringing the case within the jurisdiction of
the justice of the peace court.
3. ID.; ID.; CLAIM COMPOSED OF SEVERAL ACCOUNTING
EACH DISTINCT FROM THE OTHER CAN NOT BE JOINED
IN ONE SINGLE CLAIM. Where the first claim refers to the
recovery of an amount arising from the alleged unlawful taking
by the plaintiffs of certain furniture and equipment belonging to
the defendants, while the second and third causes of action
arose, not from the illegal taking of the property, but from the
alleged unlawful institution by the plaintiffs of the action of
ejectment in the Municipal Court, the claims can not be joined
in one single claim because they arise from different sets of
facts.
4. ID.; ID.; COMPULSORY COUNTERCLAIM TO BE SET UP
REGARDLESS OF AMOUNT CLAIMED BARRED IF NOT SET
UP. If a counterclaim arises from, or is necessarily
connected with, the facts alleged in the complaint, then that
counterclaim should be set up regardless of its amount. Failure
to do so would render it barred under the rules.
5. ID.; ID.; ID.; COMPULSORY COUNTERCLAIM SET UP,
COGNIZABLE BY COURT OF FIRST INSTANCE. The
second and third claims of defendant being compulsory, and
the respective amounts, considered separately, are within the
jurisdiction of the municipal court, the Court of First Instance
can act on them in the exercise of its appellate jurisdiction.
DECISION
BAUTISTA ANGELO, J.:
On December 18, 1951, plaintiffs brought an action in the
Municipal Court of Manila to recover from defendants the
possession of a house situated at 921 Dagupan St., Manila,
and the sum of P2,000 as damages and P200.00 as attorneys
fees.
Defendants in their answer set up several special defenses
and a counterclaim. The counterclaim was divided into three
causes of action as follows: the first is for P2,000 representing
the value of certain furniture and equipment belonging to
defendants and which are claimed to have been taken away by
plaintiffs from the house in litigation; the second is for P1,000
representing expenses incurred by defendants arising from the
falsity of the facts alleged in the complaint; and the third is for
P500 as attorneys fees arising from the institution of the
present action.
The court found for the plaintiffs, after due hearing, ordering
defendants to vacate the house in litigation and to pay the
costs, but denied the claim for damages both of plaintiffs and
defendants on the ground that their amounts are beyond its
jurisdiction. The defendants, in due time, perfected their appeal
to the Court of First Instance, and after the latter had filed their
answer as required by the rules, plaintiffs filed an amended
complaint wherein they reiterated their original allegations with
some slight modifications. To his amended complaint,
defendants filed an amended answer reiterating the

counterclaim they had alleged in their original answer which,
as previously stated, has been divided into three causes of
action involving an aggregate amount of P3,500.
Claiming that the amount involved in the counterclaim is
beyond the jurisdiction of the Municipal Court, and, therefore,
the Court of First Instance cannot act on it in the exercise of its
appellate jurisdiction, plaintiffs filed a motion to dismiss under
Rule 8, section 1 (a), of the Rules of Court. This motion was
resisted by defendants, but the court, in its order issued on
March 30, 1953, over ruled the opposition and granted the
motion to dismiss. Hence, this appeal.
Appellants, in their brief, present the question for determination
in this appeal in the following wise:jgc:chanrobles.com.ph
"The issue involved in this appeal is purely a question of law:
whether or not the counterclaim was within the jurisdiction of
the Municipal Court, and, hence, whether or not the Court of
First Instance has appellate jurisdiction thereon. We
respectfully submit that the legal points involved are of
paramount importance, as a definition is sought of the rule
which should control, not only in the case at bar, but also in
other cases, in the determination of the jurisdictional amount in
case there are several causes of action: whether the
jurisdiction is determined by the amount of each cause of
action, or by the aggregate amount of the several causes of
action; and whether in compulsory counterclaims the amount
thereof is immaterial in the question of jurisdiction." (Emphasis
supplied).
A case that may throw light on the issue before us is A. Soriano
& Co. v. Gonzalo M. Jose, Et Al., 86 Phil. 523, decided on May
30, 1950, where various employees brought a joint complaint
against their employer in the municipal court to collect a month
salary each in lieu of 30 days notice. The question there
decided was whether the jurisdiction of the municipal court is
governed by the amount of each claim or by the aggregate
sum of all the claims when there are several plaintiffs suing
jointly but have independent causes of action. In that case, we
held that "where several claimants have separate and distinct
demands against a defendant or defendants, which may be
properly joined in a single suit, the claims cannot be added
together to make up the required jurisdictional amount; each
separate claim furnishes the jurisdictional test." The purpose of
the rule permitting the joining of parties is to save unnecessary
work, trouble, and expense, consistent with the liberal spirit of
the new rules. This ruling, no doubt, applies with equal force to
a counter claim in view of the similarity of rules applicable to
both complaint and counterclaim.
The question that now rises is: Can this ruling be applied when
there is only one plaintiff or one defendant, or several plaintiffs
or defendants but with a common claim, divided into several
causes of action involving transactions different one from the
other? Stated in another way, does this ruling apply to a
counterclaim set up by several defendants which have a
common claim against the plaintiff divided into several causes
of action for the reason that they arise from transactions one
different from the other?
A case which may be considered on all fours with the present
case is that of Villaseor v. Erlanger & Galinger, 19 Phil., 574,
wherein this Court, in discussing the test to be considered in
determining the jurisdiction of a justice of the peace, laid down
the following rule: "When a separate debt is due, it is
demandable in a separate action. Therefore, neither a debtor
nor a third party may plead lack of jurisdiction because the sum
of two separate debts exceeds the amount for which action

may be brought in a court of a justice of the peace. On the
other hand, if a debt is single a creditor may not divide it for the
purpose of bringing the case within the jurisdiction of a justice
of the peace." This case is authority for the statement that if a
claim is composed of several accounts each distinct from the
other or arising from different transactions they may be joined
in a single action even if the total exceeds the jurisdiction of a
justice of the peace. Each account furnishes the test. But if the
claim is composed of several accounts which arise out of the
same transaction and cannot be divided, the same should be
stated in one cause of action and cannot be divided for the
purpose of bringing the case within the jurisdiction of the
justice of the peace.
The same rule obtains in the American jurisdiction. Thus, it has
been generally held that "In order that two or more claims may
be united to make the jurisdictional amount, they must belong
to a class that under the statute will permit them to be properly
joined in one suit, and not such as should be made the subject
of independent suits; and where two or more causes of action
are improperly united in one suit the amounts involved in the
different causes cannot be added together so as to make an
amount in controversy sufficient to confer jurisdiction on the
court in which the suit is brought . . . But, "in so far as causes
of action which may be properly joined are concerned, and
which concern all the parties litigants, there is, however, a lack
of harmony on the question of whether or not their various
amounts should be aggregated in order to determine the
amount in controversy for jurisdictional purposes." (21 C. J.,
pp. 76-78.)
In the last analysis, therefore, the question to be determined is
whether the three causes of action into which the counterclaim
of the defendants has been divided refer to transactions which
should be stated separately, or transactions which have a
common origin and should be joined in one cause of action for
jurisdictional purposes. An analysis of the facts reveals that the
three causes of action of the counterclaim are different one
from the other, or at least the first is completely different and
arises from a set of facts different from those which gave rise
to the other two. The first refers to the recovery of the amount
of P2,000 arising from the alleged unlawful taking by the
plaintiffs of certain furniture and equipment belonging to the
defendants; while the second and third causes of action arose,
not from the illegal taking of property, but from the alleged
unlawful institution by the plaintiffs of the action of ejectment in
the Municipal Court. From this it can be seen that the first
cause of action cannot be joined with the other two in one
single claim because they arise from different sets of facts.
Another consideration that should be borne in mind is whether
the counterclaim is compulsory or not. If it is, such as if it arises
from, or is necessarily connected with, the facts alleged in the
complaint, then that counterclaim should be set up regardless
of its amount. Failure to do so would render it barred under the
rules. In this particular case, while the first cause of action
cannot be considered compulsory because it refers to a
transaction completely unrelated with the main claim, the
second and the third belong to this class because they
necessarily arise from the institution of the main action. Viewed
in this light, it can be said that the counterclaim of the
defendants should be deemed as coming within the jurisdiction
of the municipal court, because the respective amounts,
considered separately, do not exceed its jurisdiction. From all
angles we view the order appealed from it would appear that it
is unwarranted and has no legal basis.
Wherefore, the order appealed from is hereby set aside,

without pronouncement as to costs.
Paras, C.J., Bengzon, Reyes, Jugo and Concepcion, JJ.,
concur.
Separate Opinions
PADILLA, J., dissenting:chanrob1es virtual 1aw library
This is an action of forcible entry and for recovery of P2,000 as
damages, and P200 as attorneys fees. In their answer the
defendants sought to recover a counterclaim of P2,000, the
value of the furniture and equipment allegedly belonging to
them and claimed to have been taken by the plaintiffs from the
apartment (accesoria), the possession of which is sought to be
recovered in the action; the sum of P1,000, the expense
allegedly incurred by the defendants as a result of the action
brought against them; and P500 for attorneys fees.
The municipal court of Manila rendered judgment ordering the
defendants to vacate the apartment but did not award the
sums sought to be recovered by both parties on the ground
that the same were beyond its jurisdiction. The defendants
appealed to the Court of First Instance setting up the same
counterclaim they had sought to recover in the municipal court.
Plaintiffs moved for the dismissal of the counterclaim on the
ground that the Court of First Instance has no jurisdiction to try
and decide on appeal a counterclaim involving P3,500 set up
by the defendants in the municipal court and repeated on
appeal in the Court of First Instance which the municipal court
had refused to try and decide for lack of jurisdiction. The
motion was granted and from the order dismissing the
counterclaim the defendants have appealed.
In the first place, the defendants should not have been allowed
to appeal from the order of dismissal of their counterclaim but
should have waited until after final judgment shall have been
rendered by the Court of First Instance in the forcible entry
action. 1 By allowing this appeal the case may be submitted
twice to an appellate court when all issues joined and
questions incident thereto raised by the parties should be
passed upon and decided in one appeal. Granting,
nevertheless, that the defendants may appeal from an order of
dismissal of a counterclaim, I disagree with the majority that
the amount of each claim arising from different transactions
and not the aggregate amount of the counterclaim is
determinative of the jurisdiction of the Court.
Section 86, Republic Act No. 296, as amended by Republic Act
No. 644, provides:chanrob1es virtual 1aw library
The jurisdiction of justices of the peace and judges of
municipal courts of chartered cities shall consist of:chanrob1es
virtual 1aw library
x
(b)
Original jurisdiction in civil actions arising in their
respective municipalities and cities, and not exclusively
cognizable by the Courts of First Instance; and
x
Section 88, Republic Act No. 296, as amended by Republic Act

No. 644, provides:chanrob1es virtual 1aw library
Labrador, J., concurs.

In all civil actions . . . arising in his municipality or city, and not
exclusively cognizable by the Court of First Instance, the
justice of the peace and the judge of a municipal court shall
have exclusive original jurisdiction where the value of the
subject-matter or amount of the demand does not exceed two
thousand pesos, exclusive of interest and costs. . . .
The first claim for P2,000, which represents the value of certain
furniture and equipment allegedly belonging to the defendants
and claimed to have been taken by the plaintiffs from the
apartment (accesoria), the possession of which is sought to be
recovered from the defendants who, plaintiffs claim, forcibly
entered upon the same and deprived them of the possession
thereof, is not an independent transaction or claim because it
arose from the alleged unlawful entry upon the premises by the
defendants. Hence, the three items of the counterclaim arose
from the alleged unlawful entry by the defendants upon the
premises, the possession of which the plaintiffs seek to
recover. The aggregate amount being beyond the jurisdiction
of the municipal court to hear, try and decide, the order of the
Court of First Instance of Manila to which the case was
appealed is in accordance with law.
The jurisdiction of the municipal court is limited whereas that of
the Court of First Instance is general. The limited jurisdiction of
the former should not be enlarged or stretched at the expense
of that of the latter. Enlarging the jurisdiction of the municipal
court would be illegal.
The case of A. Soriano y Cia. v. Jose, 47 Off. Gaz., Supp. No.
12, 156, cited by the majority is not in point. There several
employees having each a cause of action against the employer
were allowed to join in one suit brought in the municipal court
of Manila, although the aggregate amount of the several
causes of action constituting the demand was beyond the
jurisdiction of the municipal court, because the amount of each
cause of action which is less than P2,000 determines the
jurisdiction of the court and the joinder of such parties is
permitted by section 6, Rule 3. In other words, if the several
employees having a claim against the employer were not
permitted to join in one suit by the above mentioned rule, each
would have to bring a separate action and the action of each
would be within the jurisdiction of the municipal court because
the amount claimed by each plaintiff would not exceed P2,000
exclusive of interest and costs.
The rule in the case of Villaseor v. Erlanger & Galinger, 19
Phil., 574, invoked by the majority does not support its opinion.
There the action was one of interpleading brought by the
sheriff of Tayabas for determination as to who among the
defendants were entitled to the funds he had in his possession.
The question of jurisdiction of the justice of the peace court of
Manila was not the lis mota but rather the question of
preference of credits. There were two actions brought by Ruiz
y Rementeria against Manuel Abraham and two judgments
rendered by the justice of the peace court of Manila in favor of
Ruiz y Rementeria one for P572.91 and the other for
P304.73 both amounts being within the concurrent
jurisdiction of the justice of the peace court and the Court of
First Instance of Manila. This Court in reversing the judgment
of the trial court, which disallowed the two credits of Ruiz y
Rementeria ordered by the justice of the peace court of Manila
in two judgments to be paid to Ruiz y Rementeria correctly
ruled that such credits were allowable.
For these reasons, the order appealed from should be
affirmed, with costs against the appellants.
G.R. No. L-22909 January 28, 1925

VICTORIANO BORLASA, ET AL., Plaintiffs-Appellants, vs.
VICENTE POLISTICO, ET AL., Defendants-Appellees.
Sumulong and Lavides for appellants.
Ramon Diokno for appellees.
STREET, J.:
This action was instituted in the Court of First Instance of
Laguna on July 25, 1917, by Victoriano Borlasa and others
against Vicente Polistico and others, chiefly for the purpose of
securing the dissolution of a voluntary association named
Turuhan Polistico & Co., and to compel the defendants to
account for and surrender the money and property of the
association in order that its affairs may be liquidated and its
assets applied according to law. The trial judge having
sustained a demurrer for defect of parties and the plaintiffs
electing not to amend, the cause was dismissed, and from this
order an appeal was taken by the plaintiffs to this
court.chanroblesvirtualawlibrary chanrobles virtual law library
The material allegations of the complaint, so far as affects the
present appeal, are to the following effect: In the month of
April, 1911, the plaintiffs and defendants, together with several
hundred other persons, formed an association under the name
of Turuhan Polistico & Co. Vicente Polistico, the principal
defendant herein, was elected president and treasurer of the
association, and his house in Lilio, Laguna, was made its
principal place of business. The life of the association was
fixed at fifteen years, and under the by-laws each member
obligated himself to pay to Vicente Polistico, as presidenttreasurer, before 3 o'clock in the afternoon of every Sunday the
sum of 50 centavos, except that on every fifth Sunday the
amount was P1, if the president elected to call this amount, as
he always did. It is alleged that from April, 1911, until April,
1917, the sums of money mentioned above were paid weekly
by all of the members of the society with few irregularities. The
inducement to these weekly contributions was found in
provisions of the by-laws to the effect that a lottery should be
conducted weekly among the members of the association and
that the successful member should be paid the amount
collected each week, from which, however, the presidenttreasurer of the society was to receive the sum of P200, to be
held by him as funds of the society.chanroblesvirtualawlibrary
chanrobles virtual law library
It is further alleged that by virtue of these weekly lotteries
Vicente Polistico, as president-treasurer of the association,
received sums of money amounting to P74,000, more or less,
in the period stated, which he still retains in his power or has
applied to the purchase of real property largely in his own
name and partly in the names of others. The defendants in the
complaint are the members of the board of directors of the
association, including Vicente Polistico, as president-treasurer,
Alfonso Noble, secretary, Felix Garcia and Vivencio Zulaybar,
as promoter (propagandistas), and Afroniano de la Pea and
Tomas Orencia, as members ( vocales) of the
board.chanroblesvirtualawlibrary chanrobles virtual law library
In an amended answer the defendants raised the question of
lack of parties and set out a list of some hundreds of persons
whom they alleged should be brought in as parties defendant
on the ground, among others, that they were in default in the
payment of their dues to the association. On November 28,
1922, the court made an order requiring the plaintiffs to amend
their complaint within a stated period so as to include all of the

members of the Turnuhan Polistico & Co. either as plaintiffs or
defendants. The plaintiffs excepted to this order, but
acquiesced to the extent of amending their complaint by
adding as additional parties plaintiff some hundreds of
persons, residents of Lilio, said to be members of the
association and desirous of being joined as plaintiffs. Some of
these new plaintiffs had not been named in the list submitted
by the defendants with their amended answer; and on the
other hand many names in said list were here omitted, it being
claimed by the plaintiffs that the persons omitted were not
residents of Lilio but residents of other places and that their
relation to the society, so far as the plaintiffs could discover,
was fictitious. The defendants demurred to the amended
complaint on the ground that it showed on its face a lack of
necessary parties and this demurrer was sustained, with the
ultimate result of the dismissal of the action, as stated in the
first paragraph of this opinion.chanroblesvirtualawlibrary
The trial judge appears to have supposed that all the members
of the Turnuhan Polistico & Co. should be brought in either
plaintiffs or defendants. This notion is entirely mistaken. The
situation involved is precisely the one contemplated in section
118 of the Code of Civil Procedure, where one or more may
sue for the benefit of all. It is evident from the showing made in
the complaint, and from the proceedings in the court below,
that it would be impossible to make all of the persons in
interest parties to the cases and to require all of the members
of the association to be joined as parties would be tantamount
to a denial of justice.chanroblesvirtualawlibrary chanrobles
virtual law library
The general rule with reference to the making of parties in a
civil action requires, of course, the joinder of all necessary
parties wherever possible, and the joinder of all indispensable
parties under any and all conditions, the presence of those
latter being a sine qua non of the exercise of judicial power.
The class suit contemplates an exceptional situation where
there are numerous persons all in the same plight and all
together constituting a constituency whose presence in the
litigation is absolutely indispensable to the administration of
justice. Here the strict application of the rule as to
indispensable parties would require that each and every
individual in the class should be present. But at this point the
practice is so far relaxed as to permit the suit to proceed, when
the class is sufficient represented to enable the court to deal
properly and justly with that interest and with all other interest
involved in the suit. In the class suit, then, representation of a
class interest which will be affected by the judgment is
indispensable; but it is not indispensable to make each
member of the class an actual party.chanroblesvirtualawlibrary
His Honor, the trial judge, in sustaining this demurrer was

possibly influenced to some extent by the case of Rallonza vs.
Evangelista (15 Phil., 531); but we do not consider that case
controlling, inasmuch as that was an action for the recovery of
real property and the different parties in interest had
determinable, though undivided interests, in the property there
in question. In the present case, the controversy involves an
indivisible right affecting many individuals whose particular
interest is of indeterminate extent and is incapable of
separation.chanroblesvirtualawlibrary chanrobles virtual law
library
The addition of some hundreds of persons to the number of the
plaintiffs, made in the amendment to the complaint of
December 13, 1922, was unnecessary, and as the presence of
so many parties is bound to prove embarrassing to the
litigation from death or removal, it is suggested that upon the
return of this record to the lower court for further proceedings,
the plaintiff shall again amend their complaint by dismissing as
to unnecessary parties plaintiffs, but retaining a sufficient
number of responsible persons to secure liability for costs and
fairly to present all the members of the
association.chanroblesvirtualawlibrary chanrobles virtual law
library
There is another feature of the complaint which makes a slight
amendment desirable, which is, that the complaint should be
made to show on its face that the action is intended to be
litigated as a class suit. We accordingly recommend that the
plaintiffs further amend by adding after the names of the
parties plaintiffs the words, "in their own behalf and in behalf of
other members of Turuhan Polistico & Co."chanrobles virtual
law library
The order appealed from is reversed, the demurrer of the
defendants based upon supposed lack of parties is overruled,
and the defendants are required to answer to the amended
complaint within the time allowed by law and the rules of the
court. The costs of this appeal will be paid by the defendants.
So ordered.
Johnson, Malcolm, Villamor, Ostrand, Johns, and Romualdez,
JJ., concur
EN BANC
[G.R. No. L-20844. August 14, 1965.]
ANGELITA F. RIVERA, Plaintiff-Appellant, v. LORETO
LUCIANO, Defendant-Appellee.
Benedicto J. Gonzales, for Plaintiff-Appellant.
Rafael S. Consengco, for Defendant-Appellee.
A common illustration in American procedure of the situation

justifying a class suit is that presented by the creditors' bill,
which is filed by one party interested in the estate of an
insolvent, to secure the distribution of the assets distributable
among all the creditors. In such cases the common practice is
for one creditor to sue as plaintiff in behalf of himself and other
creditors. (Johnson vs. Waters, 111 U.S., 640; 28 Law. ed.,
547.) Another illustration is found in the case of Smith vs.
Swormstedt (16 How., 288; 14 Law. ed., 942), where a limited
number of individuals interested in a trust for the benefit of
superannuated preachers were permitted to maintain an action
in their own names and as representatives of all other persons
in the same right.chanroblesvirtualawlibrary chanrobles virtual
law library
SYLLABUS
1. JUDGMENTS; DISMISSAL FOR NON-JOINDER OF PARTY
CONSIDERED ADJUDICATION ON THE MERITS. The
dismissal of a civil case for non-joinder of a party constitutes
an adjudication on the merits, unless otherwise ordered by the
court.
DECISION
BENGZON, J.P., J.:

On May 16, 1962 Angelita F. Rivera instituted Civil Case No.
50408 against Loreto Luciano in the Court of First Instance of
Manila for the collection of the sum of P5,862.60. However, on
June 9, 1962, upon motion of defendant, the case was
dismissed on the ground that her husband was not joined as
defendant. Plaintiff did not appeal from the order of dismissal.
On August 14, 1962 Angelita F. Rivera filed another action
against the same defendant, Loreto Luciano, in the Court of
First Instance of Manila for the recovery of the sum of
P5,897.60. The case was docketed as Civil Case No. 51262. It
involved the same subject matter, the same cause of action
and the same parties as in Civil Case No. 50408. Again, Loreto
Lucianos husband was not joined as defendant, but the
complaint alleged as reason for this that defendant was
engaged in business. Before filing an answer defendant moved
for the dismissal of the case on the ground that the same was
barred by the dismissal of the previous Civil Case No. 50408.
The trial court granted the motion and dismissed the case.
1. ACTION; REALTY; POSSESSION; RECOVERY BY ONE

WRONGFULLY DISPOSSESSED. One who has been in
possession of land quietly and peaceably, occupying the same
as the owner, who has been forcibly dispossessed by fraud or
intimidation, may be repossessed in an action brought for that
purpose. (Espiritu v. Deseo, 1 Phil. Rep., 225; Simpao v. Dizon,
1 Phil. Rep., 261; Alonso v. The Municipality of Placer, 5 Phil.
Rep., 71.)
2. ID.; ID.; ID. Every possessor of property is entitled to be
respected in his possession and to be protected therein or
restored thereto by the means established by law, when he is
by force of intimidation deprived of his possession. (Endencia
v. Loalhati, 9 Phil. Rep., 177.) In this action for possession the
question of ownership is not involved. (Ty Laco Cioco v. Muro,
9 Phil. Rep., 100; Barlin v. Ramirez, 7 Phil. Rep., 41; Bishop of
Cebu v. Mangaron, 6 Phil. Rep., 286.)
DECISION
JOHNSON, J. :
Plaintiff appealed to this Court.

The only issue is whether or not the dismissal of Civil Case No.
50408 for non-joinder of a party was an adjudication on the
merits which would bar the institution of Civil Case No. 51262.
Section 4 of Rule 30 of the old Rules of Court, applicable
herein, states:jgc:chanrobles.com.ph
"SEC. 4. Effect of dismissal on other grounds. Unless
otherwise ordered by the court, any dismissal not provided for
in this rule, other than a dismissal for lack of jurisdiction,
operates as an adjudication upon the merits."cralaw virtua1aw
library
Accordingly, the dismissal of an action in the Court of First
Instance on grounds not provided for in Sections 1, 2 and 3 of
Rule 30 is, unless otherwise ordered, an adjudication on the
merits, except, of course, dismissal for lack of jurisdiction
which is always without prejudice. 1
In the instant case the dismissal of Civil Case No. 50408 was
not in pursuance of Sections 1, 2 and 3 of Rule 30. Neither
was it for lack of jurisdiction. And, inasmuch as the court did
not order the dismissal to be without prejudice, it follows that it
was an adjudication on the merits. Having become final it bars
the filing of another action on the same subject matter between
the same parties and for the same cause of action.
WHEREFORE, the order appealed from is hereby affirmed. No
costs. So ordered.
FIRST DIVISION
[G.R. No. 4694. September 18, 1909. ]
THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, PlaintiffAppellant, v. THE MUNICIPALITY OF ROSARIO, Province of
Batangas, Defendant-Appellee.
Hartigan & Rohde, and Roman Lacson for Appellant.
Attorney-General Villamor for Appellee.
SYLLABUS
On the 26th of November, 1907, the plaintiff commenced an

action against the defendant in the Court of First Instance of
the Province of Batangas, by filing the following
complaint:jgc:chanrobles.com.ph
"I. That the Catholic Archbishop of Manila is a corporation sole,
legally existing and residing in the city of Manila, P. I.
"II. The defendant is likewise another corporation organized
under the laws in force in these Islands.
"III. The plaintiff, as such corporation sole, is the administrator
of the temporalities of the Roman Catholic Apostolic Church in
the Archdiocese of Manila.
"IV. The municipality of Rosario, Province of Batangas, is
comprised within the said Archdiocese of Manila.
"V. The Roman Catholic Apostolic Church is the owner of a
rural estate devoted to the cultivation of rice and described as
follows: Bounded on the N. by the land of Leonida Suno and
Eugenio Maguita; on the S. by that of Sixto Rojas and Mariano
Goyena; on the E. by that of Juan Gatchalian and Norberto
Inandan and the Bantoc River; and on the W. by that of the
said Mariano Goyena and the Tumbol River; with a capacity of
approximately 25 cavanes of seed.
"VI. The defendant entity appropriated to itself nearly seven
years ago the above-described land, and is in possession
thereof and alleges to have title to and interest in the said rural
estate.
"VII. The church has been deprived ever since from receiving
the fruits of the said land which were destined for the
maintenance of the parish curate of said municipality, and
which amounts approximately to the sum of P1,500, Philippine
currency.
"Therefore, the plaintiff prays the court to enter judgment
against the defendant municipality, or to hold that the land
described in this complaint is the property of the Roman
Catholic Apostolic Church, and that the defendant has no title
or interest therein whatsoever; and at the same time that the
latter be ordered to make restitution of the possession of the
said land to the plaintiff, and to pay him the sum of P1,500 for
fruits received, with the costs against the said defendant, or to
grant to the plaintiff any other remedy which the court may
deem to be in accordance with the law."cralaw virtua1aw
library
On 27th day of December, 1907, the defendant filed the
following answer:jgc:chanrobles.com.ph
"I. That it denies that the Roman Catholic Apostolic Church is
the owner of the rural property described in Paragraph V of the
complaint, inasmuch as it is the property of the defendant.
"II. That as the defendant is the owner of the land in question
he can hardly have appropriated it as alleged in Paragraph VI
of the complaint.
"III. That the defendant municipality has granted the usufruct of
the land in question to the parish curate of the same for his
maintenance; but as for the last seven years no parish curate
has been stationed in said municipality, the said right, mistaken
for that of ownership, has lapsed.
"IV. That in view thereof the defendant prays the court to
absolve him of the complaint with costs."cralaw virtua1aw
library
After hearing the evidence adduced during the trial of the
cause, the lower court rendered the following decision, after
having made a resume of the proof:jgc:chanrobles.com.ph
"Before the plaintiff could recover absolutely these lands, they
must show title and possession. They show none. Their only
witness to show occupation says that the laymen were
administering the land while he was on it, claiming to be the
tenant of the plaintiff or its authorized agent. It is much more
plainly shown that the laymen have administered the lands in
dispute for a long period of years, except four or five years,
when one of the curates refused to allow the laymen to have
anything to do with them. It is certain that the laymen, after this
curates time, again took up the administration of the lands, for
they returned them to the municipality, being no longer able, by
reason of the unsettled condition of affairs in this country, to
administer them. The one witness for the plaintiff says he left
the land about 1896, about two years after the justice of the
peace said one of the curates took out a possessory
information, and even while this witness, Melecio, was on the
lands as a tenant, he says, of the curate, these laymen, he
says, were the administrators of the land also. The plaintiff has
failed to show any right of title or possession to the lands in
dispute, and the defendant should not be disturbed in its
possession. Therefore I find for the defendant, with the costs of
the suit."cralaw virtua1aw library
From this decision of the lower court, the plaintiff, after having
excepted thereto, and after having made a motion for a new
trial based upon the grounds that the judgment was contrary to
the weight of the evidence, appealed to this court and made
the following assignments of error:jgc:chanrobles.com.ph
"1. Because the evidence shows that the Roman Catholic
Apostolic Church, by means of its representatives, had been in
possession of the land in question from time immemorial until
insurrection;
"2. Because the defense interposed by the defendant in his
answer to the complaint is not substantiated by the evidence;
and
"3. Because the evidence shows that the defendant had no

right or interest therein whatsoever before he seized the land in
question."cralaw virtua1aw library
At the time the cause was called for trial in the Court of First
Instance, the attorney for the plaintiff made the following
statement, supposedly for the purpose of laying a foundation
for proof of the contents of certain documents, in accordance
with the provisions of section 321 of the Code of Procedure in
Civil Actions:jgc:chanrobles.com.ph
"Before preparing this case I went to Rosario to hunt evidence.
I inquired of several curates if they still had titles to these
lands, and was told that during the revolution the church at
Rosario was burned down and all the record lost. I found no
one who knew where the title was. I searched in the archives
of the Archbishopric of Manila for documents and found some
about Rosario, but none about the title to the lands in Rosario.
He then said that no title could be found, but was lost."cralaw
virtua1aw library
With reference to the first assignment of error, to wit, that the
proof shows that the plaintiff, by means of its representatives,
had been in possession of the land in question from time
immemorial up to the time of the revolution, the proof seems to
show, beyond question, that this is true. The evidence adduced
during the trial on this particular question is as
follows:chanrob1es virtual 1aw library
Juan Magtibay, a witness called for the plaintiff, said that he
was 51 years of age and a farmer; that he had been a justice
of the peace of the pueblo of Rosario for a period from 1892 to
1895; that he knew the priest of Rosario; that the priest
obtained a possessory information for the lands in question;
that the possessory information had been taken in the name of
the priest Mariano Pea; that the possessory information had
been taken in the name of the priest Mariano Pea for the
reason that the land belonged to the parish.
Upon cross-examination the same witness testified that
Mariano Pea had been the priest of the said pueblo for about
eight years; that the priest, Mariano, administered the said
land; that he saw the fruits of the land in the convent of the
church; that the municipality of Rosario was now in possession
of the land.
Melecio Delgado, a witness called for the plaintiff, testified that
he was 56 years of age and had cultivated the land in question
for sixteen years; that he got permission to cultivate the land
from the priest Pedro Catalan; that he gave one-half of the
products of the land to the priest while he cultivated the same
and that he did not remember when the priest Pedro Catalan
left the pueblo; that he had always heard that the land
belonged to the Church; that he had seen the members of the
cofradia working the land; that the members of the cofradia
were the ones sent by the priest to the land at the time the
harvest was to be divided; that he had been acquainted with
the land before the time of the pries Pedro Catalan, during the
time of the priest Pedro Leybas; that he carried the products of
the land to the convent; that he understood that any priest who
was in charge of the church administered the land and took the
products; that the priest had administered the lands since the
witness was a boy; that the land in question is now in the
possession of the municipality of Rosario.
Pedro Launcing, a witness called for the defendant, testified
that he was 59 years of age; that he knew the land which was
claimed by the Catholic Church; that he had known the land
since the time he had use of his reason, because it bounded
the land of his father; that on the second Sunday in October of

each year there was a fiesta of the cofradia and the products of
the land were used there; that those who administrated the
property were the twelve members (of the cofradia); that the
product was carried to the convent, because it was used as a
depot or storehouse for the product; that these members
(Hermano Mayor) always administered and cared for these
products; that they administered the land for thirty years, and
when the revolution came the lands were delivered to some of
the revolutions; that he knew the priest Pedro Catalan and the
priest Mariano Pea, who succeeded him; that the only thing
he knew was that these twelve members administered the land
and carried the products to the convent; that the products of
the land, according to his understanding and according to what
everybody in the town said, were used for the cofradia and for
the vestments of the Holy Virgin and the wagon floats used in
processions; that in the time of the priest Leybas the products
were also used for those who worked about the church; that
the twelve members were a kind of helpers to the priest to get
the fiesta ready; that they could not dispose of the products
without the consent of the priest; that in the time of the priest
Leybas the members administered the land, but when the
priest Catalan came he refused to let the members have
anything to do with it; that the priest Leybas took the products
from the members or they were carried to the convent by them
and in this way he became connected with the administration;
that the products were used for the fiesta.
Florencio Velasco, a witness for the defendant, was called and
testified that he was 44 years of age and that he had known
the land in question as long as he could remember; that the
members (Hermano Mayor) had possession of the land when
he first knew it; that the members (Hermano Mayor) were then
all dead; that they made use of the land to sustain the fiestas
and for the food of the people at the fiesta of the cofradia; that
the priests administered the land; that the products from the
land were taken to the convent to be disposed of by the twelve
members.
Anastasio Recto was called as the witness for the defendant
and testified that he was 55 years of age and a farmer; that he
had known the land in dispute since he was 12 or 13 years of
age; that when he was 12 years old he was studying with the
priest of the church; that he saw in the warehouse of the
convent some rice which had been harvested upon the land in
question; that in those times the authorities supported twelve of
the oldest and most honest men to administer the land; that the
priest Leybas was the priest at that time; that he left the town
of Rosario in 1870 for fifteen years; that he began to study with
the priest Cipriano Tomas in 1866; he returned to Rosario in
1885 and Pedro Catalan was priest then.
It would seem clear that from this testimony the church had
been in possession of the land in question through its priests,
its representatives in the municipality, for a period as long back
as any of the witnesses could remember, covering a period
certainly from forty to fifty years. There was no proof to show
that any other person or entity had been in possession of the
land before that time, excepting the plaintiff.
With reference to the second assignment of error, to wit, that
the defense interposed by the defendant in its answer was not
sustained by the proof, it will be remembered that the
defendant alleged that it was the owner of the land in question
and the only proof introduced by the defendant during the trial
to sustain that allegation was proof to the effect that it had
been in possession of the land in question only from the time of
the insurrection (some time between 1896 and 1898).
The defendant introduced no documents to support its claim of

ownership. The proof shows that the defendant obtained
possession of the land in question, after the priest in charge of
the church had left the municipality by reason of the
insurrection, from the tenant of the land, and the tenant who
delivered the land to the defendant was, and had been for
several years prior thereto, the tenant representing the priest of
the parish in the management and cultivation of the said land.
At the time the tenant turned the land over to the defendant he
said that by reason of the insurrection then existing in the
country, he could not remain upon the land longer, evidently
believing that the municipality or the president of the
municipality would be able to protect the property, thereby
saving to the church its vested rights.
The result of the proof then seems to us to be clear that
First. The plaintiff, by its representatives, the parish priest of
the pueblo of Rosario, had been in possession and control of
the land in question for a time immemorial. No person seems
to have been found in the pueblo who could remember when
the land in question had been in the possession of any other
person or entity;
Second. That the parish priest had been obliged to leave the
municipality of Rosario by reason of the existence of an
insurrection and thereby were obliged to give up the actual
possession and control of their lands and property; and
Third. That under these circumstances and during the enforced
absence of the real possessor of the property, the defendant
obtained possession.
The question presented by these facts is, Can the defendant,
having obtained possession of the land under these
circumstances, continue to keep the plaintiff out of the
possession of the property, the period of prescription not
having run? Did the plaintiff, by reason of being driven out of
the municipality, lose its right to its property or to the
possession of the same? Suppose, for example, that the
defendant, the municipality, had driven the plaintiff out of the
possession of the property in question, and without any further
right than the mere possession of the property, could it
maintain its possession against the plaintiff in an action
properly brought in the courts? It is not believed that the court
or the Government will permit one person to forcibly take
possession of the property of another by intimidation and then
retain the possession as against the person driven out, if the
latter seeks to enforce his right within the period prescribed by
law. The right to be repossessed of the property, under these
conditions, does not depend upon whether one of the other is
the owner of the property. The action is one to recover a right
which had been temporarily lost by force and intimidation. If the
action had been brought within a period of one year, then it
should have been brought in the court of the justice of the
peace. If it is not brought until after the expiration of one year,
then it must be brought in the Court of First Instance. (Espiritu
v. Deseo, 1 Phil. Rep., 225; Simpao v. Dizon, 1 Phil. Rep., 261;
Alonso v. The Municipality of Placer, 5 Phil. Rep., 71.)
Every possessor of property is entitled to be respected in his
possession and to be protected therein or restored thereto by
the means established by law when he is by force or
intimidation deprived of his possession. (Endencia v. Loalhati,
9 Phil. Rep., 177.)
In an action to obtain the possession of property lost under the
circumstances in the present case, the question of ownership
is not one of importance. (Ty Laco Cioco v. Muro, 9 Phil. Rep.,

100.)
One who has been improperly and by force and intimidation
deprived of the possession of real property, can recover such
possession if the action is brought within the period prescribed
by law, and before some other person or persons have
acquired title thereto by prescription. (Barlin v. Ramirez, 7 Phil.
Rep., 41.)
A question very analogous to the question presented in the
present case was presented to this court in the case of The
Bishop of Cebu v. Mangaron (6 Phil. Rep., 286.) In that case
this court discussed at length the form of an action existing
prior to the present Code of Procedure in Civil Actions and
held, in effect, the one who had been in possession of real
property for a period of twenty years, more or less, and who
had been illegally deprived of such possession, could properly
maintain, under the provisions of the present Code of
Procedure, an action for the possession of such property. We
deem it unnecessary here to repeat the discussions with
reference to the former practice found in that case. It is
sufficient to say that the doctrine established in the case of The
Bishop of Cebu v. Mangaron, with reference to the right of one
who has been deprived of the possession of this property by
force and intimidation, may maintain an action for the
possession of such property as against any one who may be
found possessing the same.
We believe by virtue of our conclusions with reference to the
first and second assignment of error, that it is unnecessary to
discuss the third assignment of error made by the Appellant.
Our conclusion is, therefore, that in view of the facts and
circumstances of the present case, and in view of the fact that
the plaintiff had been in possession of the land in question for
an immemorial period, and in view of the fact that it had been
driven out by forces over which it had no control, and in view of
the fact that the defendant went into possession after the
plaintiff had been so driven out, and without discussing the
question whether the plaintiff or the defendant is the real owner
of the property in question, that the plaintiff is entitled to the
possession of the property described in the fifth paragraph of
the complaint, above quoted, and that, therefore, the judgment
of the lower court is hereby reversed, and without any finding
as to costs, it so ordered.
G.R. No. L-21897
October 22, 1963
respondents herein1 for the implementation of said proposed

importation. Thereupon, or September 25, 1963, herein
petitioner, Ramon A. Gonzales a rice planter, and president
of the Iloilo Palay and Corn Planters Association, whose
members are, likewise, engaged in the production of rice and
corn filed the petition herein, averring that, in making or
attempting to make said importation of foreign rice, the
aforementioned respondents "are acting without jurisdiction or
in excess of jurisdiction", because Republic Act No. 3452 which
allegedly repeals or amends Republic Act No. 220 explicitly
prohibits the importation of rice and corn "the Rice and Corn
Administration or any other government agency;" that petitioner
has no other plain, speedy and adequate remedy in the
ordinary course of law; and that a preliminary injunction is
necessary for the preservation of the rights of the parties
during the pendency this case and to prevent the judgment
therein from coming ineffectual. Petitioner prayed, therefore,
that said petition be given due course; that a writ of preliminary
injunction be forthwith issued restraining respondent their
agents or representatives from implementing the decision of
the Executive Secretary to import the aforementioned foreign
rice; and that, after due hearing, judgment be rendered making
said injunction permanent.
Forthwith, respondents were required to file their answer to the
petition which they did, and petitioner's pray for a writ of
preliminary injunction was set for hearing at which both parties
appeared and argued orally. Moreover, a memorandum was
filed, shortly thereafter, by the respondents. Considering, later
on, that the resolution said incident may require some
pronouncements that would be more appropriate in a decision
on the merits of the case, the same was set for hearing on the
merits thereafter. The parties, however, waived the right to
argue orally, although counsel for respondents filed their
memoranda.
I.
Sufficiency of petitioner's interest.
Ramon A. Gonzales in his own behalf as petitioner.

Office of the Solicitor General and Estanislao Fernandez for
respondents.
Respondents maintain that the status of petitioner as a rice

planter does not give him sufficient interest to file the petition
herein and secure the relief therein prayed for. We find no
merit in this pretense. Apart from prohibiting the importation of
rice and corn "by the Rice and Corn Administration or any other
government agency". Republic Act No. 3452 declares, in
Section 1 thereof, that "the policy of the Government" is to
"engage in the purchase of these basic foods directly from
those tenants, farmers, growers, producers and landowners in
the Philippines who wish to dispose of their products at a price
that will afford them a fair and just return for their labor and
capital investment. ... ." Pursuant to this provision, petitioner,
as a planter with a rice land of substantial proportion,2 is
entitled to a chance to sell to the Government the rice it now
seeks to buy abroad. Moreover, since the purchase of said
commodity will have to be effected with public funds mainly
raised by taxation, and as a rice producer and landowner
petitioner must necessarily be a taxpayer, it follows that he has
sufficient personality and interest to seek judicial assistance
with a view to restraining what he believes to be an attempt to
unlawfully disburse said funds.
CONCEPCION, J.:
II.
This is an original action for prohibition with preliminary

injunction.
Respondents assail petitioner's right to the reliefs prayed for

because he "has not exhausted all administrative remedies
available to him before coming to court". We have already
held, however, that the principle requiring the previous
exhaustion of administrative remedies is not applicable where
the question in dispute is purely a legal one",3 or where the
controverted act is "patently illegal" or was performed without
RAMON A. GONZALES, petitioner,

vs.
RUFINO G. HECHANOVA, as Executive Secretary, MACARIO
PERALTA, JR., as Secretary of Defense, PEDRO GIMENEZ,
as Auditor General, CORNELIO BALMACEDA, as Secretary of
Commerce and Industry, and SALVADOR MARINO, Secretary
of Justice, respondents.
It is not disputed that on September 22, 1963, respondent

Executive Secretary authorized the importation of 67,000 tons
of foreign rice to be purchased from private sources, and
created a rice procurement committee composed of the other
Exhaustion of administrative remedies.
jurisdiction or in excess of jurisdiction,4 or where the

respondent is a department secretary, whose acts as an alterego of the President bear the implied or assumed approval of
the latter,5 unless actually disapproved by him,6 or where
there are circumstances indicating the urgency of judicial
intervention.7 The case at bar fails under each one of the
foregoing exceptions to the general rule. Respondents'
contention is, therefore, untenable.
III.
Merits of petitioner's cause of action.
Respondents question the sufficiency of petitioner's cause of

action upon the theory that the proposed importation in
question is not governed by Republic Acts Nos. 2207 and
3452, but was authorized by the President as Commander-inChief "for military stock pile purposes" in the exercise of his
alleged authority under Section 2 of Commonwealth Act No.
1;8 that in cases of necessity, the President "or his
subordinates may take such preventive measure for the
restoration of good order and maintenance of peace"; and that,
as Commander-in-Chief of our armed forces, "the President ...
is duty-bound to prepare for the challenge of threats of war or
emergency without waiting for any special authority".
Regardless of whether Republic Act No. 3452 repeals Republic
Act No. 2207, as contended by petitioner herein - on which our
view need not be expressed we are unanimously of the
opinion - assuming that said Republic Act No. 2207 is still in
force that the two Acts are applicable to the proposed
importation in question because the language of said laws is
such as to include within the purview thereof all importations of
rice and corn into the Philippines". Pursuant to Republic Act
No. 2207, "it shall be unlawful for any person, association,
corporation or government agency to import rice and corn into
any point in the Philippines", although, by way of exception, it
adds, that "the President of the Philippines may authorize the
importation of these commodities through any government
agency that he may designate", is the conditions prescribed in
Section 2 of said Act are present. Similarly, Republic Act No.
3452 explicitly enjoins "the Rice and Corn Administration or
any government agency" from importing rice and corn.
Respondents allege, however, that said provisions of Republic
Act Nos. 2207 and 3452, prohibiting the importation of rice and
corn by any "government agency", do not apply to importations
"made by the Government itself", because the latter is not a
"government agency". This theory is devoid of merit. The
Department of National Defense and the Armed Forces of the
Philippines, as well as respondents herein, and each and every
officer and employee of our Government, our government
agencies and/or agents. The applicability of said laws even to
importations by the Government as such, becomes more
apparent when we consider that:
1.
The importation permitted in Republic Act No. 2207 is
to be authorized by the "President of the Philippines" and,
hence, by or on behalf of the Government of the Philippines;
2.
Immediately after enjoining the Rice and Corn
administration and any other government agency from
importing rice and corn, Section 10 of Republic Act No. 3452
adds "that the importation of rice and corn is left to private
parties upon payment of the corresponding taxes", thus
indicating that only "private parties" may import rice under its
provisions; and
3.
Aside from prescribing a fine not exceeding
P10,000.00 and imprisonment of not more than five (5) years
for those who shall violate any provision of Republic Act No.
3452 or any rule and regulation promulgated pursuant thereto,

Section 15 of said Act provides that "if the offender is a public
official and/or employees", he shall be subject to the additional
penalty specified therein. A public official is an officer of the
Government itself, as distinguished from officers or employees
of instrumentalities of the Government. Hence, the duly
authorized acts of the former are those of the Government,
unlike those of a government instrumentality which may have a
personality of its own, distinct and separate from that of the
Government, as such. The provisions of Republic Act No. 2207
are, in this respect, even more explicit. Section 3 thereof
provides a similar additional penalty for any "officer or
employee of the Government" who "violates, abets or tolerates
the violation of any provision" of said Act. Hence, the intent to
apply the same to transactions made by the very government
is patent.
Indeed, the restrictions imposed in said Republic Acts are
merely additional to those prescribed in Commonwealth Act
No. 138, entitled "An Act to give native products and domestic
entities the preference in the purchase of articles for the
Government." Pursuant to Section 1 thereof:
The Purchase and Equipment Division of the Government of
the Philippines and other officers and employees of the
municipal and provincial governments and the Government of
the Philippines and of chartered cities, boards, commissions,
bureaus, departments, offices, agencies, branches, and bodies
of any description, including government-owned companies,
authorized to requisition, purchase, or contract or make
disbursements for articles, materials, and supplies for public
use, public buildings, or public works shall give preference to
materials ... produced ... in the Philippines or in the United
States, and to domestic entities, subject to the conditions
hereinbelow specified. (Emphasis supplied.)
Under this provision, in all purchases by the Government,
including those made by and/or for the armed forces,
preference shall be given to materials produced in the
Philippines. The importation involved in the case at bar violates
this general policy of our Government, aside from the
provisions of Republic Acts Nos. 2207 and 3452.
The attempt to justify the proposed importation by invoking
reasons of national security predicated upon the "worsening
situation in Laos and Vietnam", and "the recent tension created
by the Malaysia problem" - and the alleged powers of the
President as Commander-in-Chief of all armed forces in the
Philippines, under Section 2 of the National Defense Act
(Commonwealth Act No. 1), overlooks the fact that the
protection of local planters of rice and corn in a manner that
would foster and accelerate self-sufficiency in the local
production of said commodities constitutes a factor that is vital
to our ability to meet possible national emergency. Even if the
intent in importing goods in anticipation of such emergency
were to bolster up that ability, the latter would, instead, be
impaired if the importation were so made as to discourage our
farmers from engaging in the production of rice.
Besides, the stockpiling of rice and corn for purpose of national
security and/or national emergency is within the purview of
Republic Act No. 3452. Section 3 thereof expressly authorizes
the Rice and Corn Administration "to accumulate stocks as a
national reserve in such quantities as it may deem proper and
necessary to meet any contingencies". Moreover, it ordains
that "the buffer stocks held as a national reserve ... be
deposited by the administration throughout the country under
the proper dispersal plans ... and may be released only upon
the occurrence of calamities or emergencies ...". (Emphasis

applied.)
Again, the provisions of Section 2 of Commonwealth Act No. 1,
upon which respondents rely so much, are not self-executory.
They merely outline the general objectives of said legislation.
The means for the attainment of those objectives are subject to
congressional legislation. Thus, the conditions under which the
services of citizens, as indicated in said Section 2, may be
availed of, are provided for in Sections 3, 4 and 51 to 88 of
said Commonwealth Act No. 1. Similarly, Section 5 thereof
specifies the manner in which resources necessary for our
national defense may be secured by the Government of the
Philippines, but only "during a national mobilization",9 which
does not exist. Inferentially, therefore, in the absence of a
national mobilization, said resources shall be produced in such
manner as Congress may by other laws provide from time to
time. Insofar as rice and corn are concerned, Republic Acts
Nos. 2207 and 3452, and Commonwealth Act No. 138 are
such laws.
Respondents cite Corwin in support of their pretense, but in
vain. An examination of the work cited10 shows that Corwin
referred to the powers of the President during "war time"11 or
when he has placed the country or a part thereof under "martial
law".12 Since neither condition obtains in the case at bar, said
work merely proves that respondents' theory, if accepted,
would, in effect, place the Philippines under martial law, without
a declaration of the Executive to that effect. What is worse, it
would keep us perpetually under martial law.
It has been suggested that even if the proposed importation
violated Republic Acts Nos. 2207 and 3452, it should,
nevertheless, be permitted because "it redounds to the benefit
of the people". Salus populi est suprema lex, it is said.
If there were a local shortage of rice, the argument might have
some value. But the respondents, as officials of this
Government, have expressly affirmed again and again that
there is no rice shortage. And the importation is avowedly for
stockpile of the Army not the civilian population.
But let us follow the respondents' trend of thought. It has a
more serious implication that appears on the surface. It implies
that if an executive officer believes that compliance with a
certain statute will not benefit the people, he is at liberty to
disregard it. That idea must be rejected - we still live under a
rule of law.
And then, "the people" are either producers or consumers.
Now as respondents explicitly admit Republic Acts Nos.
2207 and 3452 were approved by the Legislature for the
benefit of producers and consumers, i.e., the people, it must
follow that the welfare of the people lies precisely in the
compliance with said Acts.
It is not for respondent executive officers now to set their own
opinions against that of the Legislature, and adopt means or
ways to set those Acts at naught. Anyway, those laws permit
importation but under certain conditions, which have not
been, and should be complied with.
IV.
The contracts with Vietnam and Burma
It is lastly contended that the Government of the Philippines

has already entered into two (2) contracts for the Purchase of
rice, one with the Republic of Vietnam, and another with the
Government of Burma; that these contracts constitute valid
executive agreements under international law; that such
agreements became binding effective upon the signing thereof

by representatives the parties thereto; that in case of conflict
between Republic Acts Nos. 2207 and 3452 on the one hand,
and aforementioned contracts, on the other, the latter should
prevail, because, if a treaty and a statute are inconsistent with
each other, the conflict must be resolved under the
American jurisprudence in favor of the one which is latest in
point of time; that petitioner herein assails the validity of acts of
the Executive relative to foreign relations in the conduct of
which the Supreme Court cannot interfere; and the
aforementioned contracts have already been consummated,
the Government of the Philippines having already paid the
price of the rice involved therein through irrevocable letters of
credit in favor of the sell of the said commodity. We find no
merit in this pretense.
The Court is not satisfied that the status of said tracts as
alleged executive agreements has been sufficiently
established. The parties to said contracts do not pear to have
regarded the same as executive agreements. But, even
assuming that said contracts may properly considered as
executive agreements, the same are unlawful, as well as null
and void, from a constitutional viewpoint, said agreements
being inconsistent with the provisions of Republic Acts Nos.
2207 and 3452. Although the President may, under the
American constitutional system enter into executive
agreements without previous legislative authority, he may not,
by executive agreement, enter into a transaction which is
prohibited by statutes enacted prior thereto. Under the
Constitution, the main function of the Executive is to enforce
laws enacted by Congress. The former may not interfere in the
performance of the legislative powers of the latter, except in
the exercise of his veto power. He may not defeat legislative
enactments that have acquired the status of law, by indirectly
repealing the same through an executive agreement providing
for the performance of the very act prohibited by said laws.
The American theory to the effect that, in the event of conflict
between a treaty and a statute, the one which is latest in point
of time shall prevail, is not applicable to the case at bar, for
respondents not only admit, but, also insist that the contracts
adverted to are not treaties. Said theory may be justified upon
the ground that treaties to which the United States is signatory
require the advice and consent of its Senate, and, hence, of a
branch of the legislative department. No such justification can
be given as regards executive agreements not authorized by
previous legislation, without completely upsetting the principle
of separation of powers and the system of checks and
balances which are fundamental in our constitutional set up
and that of the United States.
As regards the question whether an international agreement
may be invalidated by our courts, suffice it to say that the
Constitution of the Philippines has clearly settled it in the
affirmative, by providing, in Section 2 of Article VIII thereof, that
the Supreme Court may not be deprived "of its jurisdiction to
review, revise, reverse, modify, or affirm on appeal, certiorari,
or writ of error as the law or the rules of court may provide,
final judgments and decrees of inferior courts in (1) All
cases in which the constitutionality or validity of any treaty, law,
ordinance, or executive order or regulation is in question". In
other words, our Constitution authorizes the nullification of a
treaty, not only when it conflicts with the fundamental law, but,
also, when it runs counter to an act of Congress.
The alleged consummation of the aforementioned contracts
with Vietnam and Burma does not render this case academic,
Republic Act No. 2207 enjoins our Government not from
entering into contracts for the purchase of rice, but from
importing rice, except under the conditions Prescribed in said

Act. Upon the other hand, Republic Act No. 3452 has two (2)
main features, namely: (a) it requires the Government to
purchase rice and corn directly from our local planters, growers
or landowners; and (b) it prohibits importations of rice by the
Government, and leaves such importations to private parties.
The pivotal issue in this case is whether the proposed
importation which has not been consummated as yet is
legally feasible.
Administration, or any other government agency, may therefore

still import rice and corn into the Philippines as provided in
Republic Act 2207 if there is a declared national emergency.
Lastly, a judicial declaration of illegality of the proposed

importation would not compel our Government to default in the
performance of such obligations as it may have contracted with
the sellers of the rice in question, because, aside from the fact
that said obligations may be complied with without importing
the commodity into the Philippines, the proposed importation
may still be legalized by complying with the provisions of the
aforementioned laws.
Respondents answer this question in the affirmative. They

advance the argument that it is the President's duty to see to it
that the Armed Forces of the Philippines are geared to the
defenses of the country as well as to the fulfillment of our
international commitments in Southeast Asia in the event the
peace and security of the area are in danger. The stockpiling of
rice, they aver, is an essential requirement of defense
preparation in view of the limited local supply and the probable
disruption of trade and commerce with outside countries in the
event of armed hostilities, and this military precautionary
measure is necessary because of the unsettled conditions in
the Southeast Asia bordering on actual threats of armed
conflicts as evaluated by the Intelligence Service of the Military
Department of our Government. This advocacy, they contend,
finds support in the national defense policy embodied in
Section 2 of our National Defense Act (Commonwealth Act No.
1), which provides:
V.
The writ of preliminary injunction.
The members of the Court have divergent opinions on the

question whether or not respondents herein should be enjoined
from implementing the aforementioned proposed importation.
However, the majority favors the negative view, for which
reason the injunction prayed for cannot be granted.
WHEREFORE, judgment is hereby rendered declaring that
respondent Executive Secretary had and has no power to
authorize the importation in question; that he exceeded his
jurisdiction in granting said authority; said importation is not
sanctioned by law and is contrary to its provisions; and that, for
lack of the requisite majority, the injunction prayed for must be
and is, accordingly denied. It is so ordered.
Bengzon, CJ, Padilla, Labrador, Reyes, J.B.L., Dizon and
Makalintal, JJ., concur.
Paredes and Regala, JJ., concur in the result.
Separate Opinions
BAUTISTA ANGELO, J., concurring:
Under Republic Act No. 2207, which took effect on May 15,
1959, it is unlawful for any person, association, corporation or
government agency to import rice and corn into any point in the
Philippines. The exception is if there is an existing or imminent
shortage of such commodity of much gravity as to constitute
national emergency in which case an importation may be
authorized by the President when so certified by the National
Economic Council.
However, on June 14, 1962, Republic Act 3452 was enacted
providing that the importation of rice and corn can only be
made by private parties thereby prohibiting from doing so the
Rice and Corn Administration or any other government agency.
Republic Act 3452 does not expressly repeal Republic Act
2207, but only repeals or modified those parts thereof that are
inconsistent with its provisions. The question that now arises
is: Has the enactment of Republic Act 3452 the effect of
prohibiting completely the government from importing rice and
corn into the Philippines?
My answer is in the negative. Since this Act does not in any
manner provide for the importation of rice and corn in case of
national emergency, the provision of the former law on that
matter should stand, for that is not inconsistent with any
provision embodied in Republic Act 3452. The Rice and Corn
The next question that arises is: Can the government authorize
the importation of rice and corn regardless of Republic Act
2207 if that is authorized by the President as Commander-inChief of the Philippine Army as a military precautionary
measure for military stockpile?
(a)
The preservation of the State is the obligation of every
citizen. The security of the Philippines and the freedom,
independence and perpetual neutrality of the Philippine
Republic shall be guaranteed by the employment of all citizens,
without distinction of sex or age, and all resources.
(b)
The employment of the nation's citizens and
resources for national defense shall be effected by a national
mobilization.
(c)
The national mobilization shall include the execution
of all measures necessary to pass from a peace to a war
footing.
(d)
The civil authority shall always be supreme. The
President of the Philippines as the Commander-in-Chief of all
military forces, shall be responsible that mobilization measures
are prepared at all times.(Emphasis supplied)
Indeed, I find in that declaration of policy that the security of
the Philippines and its freedom constitutes the core of the
preservation of our State which is the basic duty of every
citizen and that to secure which it is enjoined that the President
employ all the resources at his command. But over and above
all that power and duty, fundamental as they may seem, there
is the injunction that the civil authority shall always be
supreme. This injunction can only mean that while all
precautions should be taken to insure the security and
preservation of the State and to this effect the employment of
all resources may be resorted to, the action must always be
taken within the framework of the civil authority. Military
authority should be harmonized and coordinated with civil
authority, the only exception being when the law clearly ordains
otherwise. Neither Republic Act 2207, nor Republic Act 3452,
contains any exception in favor of military action concerning
importation of rice and corn. An exception must be strictly
construed.
A distinction is made between the government and government
agency in an attempt to take the former out of the operation of
Republic Act 2207. I disagree. The Government of the
Republic of the Philippines under the Revised Administrative

Code refers to that entity through which the functions of
government are exercised, including the various arms through
which political authority is made effective whether they be
provincial, municipal or other form of local government,
whereas a government instrumentality refers to corporations
owned or controlled by the government to promote certain
aspects of the economic life of our people. A government
agency, therefore, must necessarily refer to the government
itself of the Republic, as distinguished from any government
instrumentality which has a personality distinct and separate
from it (Section 2).
The important point to determine, however, is whether we
should enjoin respondents from carrying out the importation of
the rice which according to the record has been authorized to
be imported on government to government level, it appearing
that the arrangement to this effect has already been
concluded, the only thing lacking being its implementation. This
is evident from the manifestation submitted by the Solicitor
General wherein it appears that the contract for the purchase
of 47,000 tons of rice from had been sign on October 5, 1963,
and for the purchase of 20,000 tons from Burma on October 8,
1963, by the authorized representatives of both our
government and the governments of Vietnam and Burma,
respectively. If it is true that, our government has already made
a formal commitment with the selling countries there arises the
question as to whether the act can still be impeded at this
stage of the negotiations. Though on this score there is a
divergence of opinion, it is gratifying to note that the majority
has expressed itself against it. This is a plausible attitude for,
had the writ been issued, our government would have been
placed in a predicament where, as a necessary consequence,
it would have to repudiate a duly formalized agreement to its
great embarrassment and loss of face. This was avoided by
the judicial statesmanship evinced by the Court.
BARRERA, J., concurring:
Because of possible complications that might be aggravated by
misrepresentation of the true nature and scope of the case
before this Court, it is well to restate as clearly as possible, the
real and only issue presented by the respondents representing
the government.
From the answer filed by the Solicitor General, in behalf of
respondents, we quote:
The importation of the rice in question by the Armed Forces of
the Philippines is for military stockpiling authorized by the
President pursuant to his inherent power as commander-inchief and as a military precautionary measure in view the
worsening situation in Laos and Vietnam and, it may added,
the recent, tension created by the Malaysia problem (Answer,
p. 2; emphasis supplied.)
During the oral argument, Senator Fernandez, appealing in
behalf of the respondents, likewise reiterated the imported rice
was for military stockpiling, and which he admitted that some of
it went to the Rice and Corn Administration, he emphasized
again and again that rice was not intended for the RCA for
distribution to people, as there was no shortage of rice for that
purpose but it was only exchanged for palay because this
could better preserved.
From the memorandum filed thereafter by the Solicits General,
again the claim was made:
We respectfully reiterate the arguments in our answer dated

October 4, 1963 that the importation of rice sought be enjoined
in this petition is in the exercise of the authority vested in the
President of the Philippines as Commander-in-Chief of the
Armed Forces, as a measure of military preparedness
demanded by a real and actual threat of emergency in the
South East Asian countries. (p. 1, Emphasis supplied.)
xxx
xxx
xxx
It (the stressing of the unsettled conditions in Southeast Asia)

is merely our intention to show the necessity for the stockpiling
of rice for army purposes, which is the very reason for the
importation.
xxx
xxx
xxx
As it is, the importation in question is being made by the

Republic of the Philippines for its own use, and the rice is not
supposed to be poured into the open market as to affect the
price to be paid by the public. (p. 4, Emphasis supplied.)
xxx
xxx
xxx
What we do contend is that the law, for want of express and

clear provision to that effect, does not include in its prohibition
importation by the Government of rice for its own use and not
for the consuming public, regardless of whether there is or
there is no emergency. (p. 5, Emphasis supplied.)
From the above, it not only appears but is evident that the
respondents were not concerned with the present rice situation
confronting the consuming public, but were solely and
exclusively after the stockpiling of rice for the future use of the
army. The issue, therefore, in which the Government was
interested is not whether rice is imported to give the people a
bigger or greater supply to maintain the price at P.80 per ganta
for, to quote again their contention: "the rice is not supposed
to be poured into the open market to affect the price to be paid
by the public, as it is not for the consuming public, regardless
of whether there is or there is no emergency", but whether
rice can legally be imported by the Armed Forces of the
Philippines avowedly for its future use, notwithstanding the
prohibitory provisions of Republic Acts Nos. 2207 and 3452.
The majority opinion ably sets forth the reasons why this Court
can not accept the contention of the respondents that this
importation is beyond and outside the operation of these
statutes. I can only emphasize that I see in the theory
advanced by the Solicitor General a dangerous trend that
because the policies enunciated in the cited laws are for the
protection of the producers and the consumers, the army is
removed from their application. To adopt this theory is to
proclaim the existence in the Philippines of three economic
groups or classes: the producers, the consumers, and the
Armed Forces of the Philippines. What is more portentous is
the effect to equate the army with the Government itself.
Then again, the importation of this rice for military stockpiling is
sought to be justified by the alleged threat of emergency in the
Southeast Asian countries. But the existence of this supposed
threat was unilaterally determined by the Department of
National Defense alone. We recall that there exists a body
called the National Security Council in which are represented
the Executive as well as the Legislative department. In it sit not
only members of the party in power but of the opposition as
well. To our knowledge, this is the highest consultative body
which deliberates precisely in times of emergency threatening
to affect the security of the state. The democratic composition
of this council is to guarantee that its deliberations would be
non-partisan and only the best interests of the nation will be

considered. Being a deliberative body, it insures against
precipitate action. This is as it should be. Otherwise, in these
days of ever present cold war, any change or development in
the political climate in any region of the world is apt to be taken
as an excuse for the military to conjure up a crisis or
emergency and thereupon attempt to override our laws and
legal processes, and imperceptibly institute some kind of
martial law on the pretext of precautionary mobilization
measure avowedly in the interest of the security of the state.
One need not, be too imaginative to perceive a hint of this in
the present case.
The Supreme Court, in arriving at the conclusion unanimously
reached, is fully aware of the difficult and delicate task it had to
discharge. Its position is liable to be exploited by some for their
own purposes by claiming and making it appear that the Court
is unmindful of the plight of our people during these days of
hardship; that it preferred to give substance to the "niceties of
the law than heed the needs of the people. Our answer is that
the Court was left no alternative. It had, in compliance with its
duty, to decide the case upon the facts presented to it. The
respondents, representing the administration, steadfastly
maintained and insisted that there is no rice shortage; that the
imported rice is not for the consuming public and is not
supposed to be placed in the open market to affect the price to
be paid by the public; that it is solely for stockpiling of the army
for future use as a measure of mobilization in the face of what
the Department of National Defense unilaterally deemed a
threatened armed conflict in Southeast Asia. Confronted with
these facts upon, which the Government has built and rested
its case, we have searched in vain for legal authority or cogent
reasons to justify this importation made admittedly contrary to
the provisions of Republic Acts Nos. 2207 and 3452. I say
admittedly, because respondents never as much as pretended
that the importation fulfills the conditions specified in these
laws, but limited themselves to the contention, which is their
sole defense that this importation does not fall within the scope
of said laws. In our view, however, the laws are clear. The laws
are comprehensive and their application does not admit of any
exception. The laws are adequate. Compliance therewith is not
difficult, much less impossible. The avowed emergency, if at
all, is not urgently immediate.
In this connection, it is pertinent to bear in mind that the
Supreme Court has a duty to perform under the Constitution. It
has to decide, when called upon to do so in an appropriate
proceeding, all cases in which the constitutionality or validity of
any treaty, law, ordinance, executive order or regulation is in
question. We can not elude this duty. To do so would be
culpable dereliction on our part. While we sympathize with the
public that might be adversely affected as a result of this
decision yet our sympathy does not authorize us to sanction an
act contrary to applicable laws. The fault lies with those who
stubbornly contended and represented before this Court that
there is no rice shortage, that the imported rice is not intended
for the consuming public, but for stockpiling of the army. And, if
as now claimed before the public, contrary to the Government's
stand in this case, that there is need for imported rice to stave
off hunger, our legislature has provided for such a situation. As
already stated, the laws are adequate. The importation of rice
under the conditions set forth in the laws may be authorized
not only where there is an existing shortage, but also when the
shortage is imminent. In other words, lawful remedy to solve
the situation is available, if only those who have the duty to
execute the laws perform their duty. If there is really need for
the importation of rice, who adopt some dubious means which
necessitates resort to doubtful exercise of the power of the
President as Commander-in-Chief of the Army? Why not
comply with the mandate of the law? Ours is supposed to be a

regime under the rule of law. Adoption as a government policy
of the theory of the end justifies the means brushing aside
constitutional and legal restraints, must be rejected, lest we
end up with the end of freedom.
For these reasons, I concur in the decision of the Court.
G.R. Nos. L-42699 to L-42709
May 26, 1981
THE HEIRS OF THE LATE FLORENTINA NUGUID VDA. DE

HABERER, petitioner,
vs.
COURT OF APPEALS, ** FEDERICO MARTINEZ,
BALDOMERO MANALO, FAUSTINO BAGALAWIS,
FEDERICO STA. TERESA, ANGELITO KING, GREGORIO
DEL ROSARIO, LEODOVICO TORRES, LEON SORIANO,
SANTIAGO TUMANG, LUIS PASTOR and CRISTINO
LIBRAMANTE, respondents.
TEEHANKEE, J.:1wph1.t
The Court grants the petition for review by way of appeal from
the Resolutions of respondent Court of Appeals dated
November 24, 1975 and January 15, 1976 dismissing the
appeal of the late Florentino Nuguid Vda. de Haberer in CA-G.
R. No. 5368090-R and ordering all pleadings filed in said
cases after the death of said appellant stricken off the records,
for having been issued with grave error of law if not with grave
abuse of discretion and remands the case for proper
proceedings and determination of the appeal on the merits.
This case originated from the Court of First Instance of Rizal
where the late Florentina Nuguid Vda. de Haberer as the duly
registered owner filed in 1964 and 1965 (11) complaints for
recovery of possession of the parcel of land evidenced by
Transfer Certificate of Title No. 15043 of the Register of Deeds
of Rizal issued in her name, situated at Mandaluyong, Rizal,
alleging that private respondents had surreptitiously entered
the land and built their houses thereon.
The lower court, after trial on the merits, rendered a
consolidated decision, dated May 26, 197 l, dismissing all the
complaints. On motion of the late Florentina Nuguid Vda. de
Haberer the cases were reopened and retried on grounds of
newly discovered evidence. On September 15, 1972, the lower
court issued an order reviving its decision of May 26, 1971.
The decision was thus appealed to the Court of Appeals.
In the Court of Appeals, the cases were erroneously dismissed
once before, on the ground that the appeal was allegedly filed
out of time. The issue was brought to this Court in Cases Nos.
L-39366 and L-39620-29, entitled "Florentina Nuguid Vda. de
Haberer vs. Federico Martinez, et al., 1 On January 29, 1975,
this Court rendered its judgment setting aside the appellate
court's dismissal of the appeal and ordering the reinstatement
of the same for proper disposition on the merits, having found
"that contrary to respondent court's erroneous premises and
computation, petitioner duly and timely perfected her appeal
within the reglementary period and in compliance with the
material data rule requiring that the Record on Appeal state
such data as will show that the appeal was perfected on time. "
The cases were remanded to the Court of Appeals where
appellant was required to file printed brief within forty-five days
from her receipt of notice. Three days before the period was to
expire, or on June 18, 1975, appellant's counsel requested for
an extension of time within which to file appellant's brief.

Respondent court in a resolution dated June 23, 1975 granted
the request and gave appellant a 90-day extension (with
warning of no further extension) from receipt on June 27, 1975
or up to September 25, 1975 within which to file the appellant's
printed brief. On June 23, 1975, private respondent opposed
the extension by filing a "Motion to Set Aside Order Granting
Extension of Time to File Brief." Appellant was directed by
respondent court to comment on the said opposition and
appellant's counsel complied by submitting its comments on
July 15, 1975.
In the meantime, appellant Florentina Nuguid Vda. de Haberer
had died on May 26, 1975. Appellant's counsel Attorneys
Bausa, Ampil and Suarez accordingly gave respondent court
notice of the death of their client in their motion of June 28,
1975 and asked for the suspension of the running of the period
within which to file the appellant's brief pending the
appointment of an executor of the estate left by their client in
the Court of First Instance of Quezon City (Sp. Proc. No. Q2026) where a petition for the probate of the alleged will of the
deceased had been filed by another lawyer, Atty. Sergio
Amante. Respondents in turn contended that the lawyers of he
deceased had "no longer any legal standing and her atorneys
could no longer act for and in her behalf for the reason that
their client-attorney relationship had been automatically
erminated or severed" and asked that the appeal be dismissed
for failure to prosecute." 2
Since their motion of June 28, 1975 remained unacted upon
and the original extension granted by the respondent court for
the deceased appellant to file her printed brief was about to
expire, her counsel filed on September 18, 1975 a
manifestation and/or motion asking either for an extension of
sixty (60) days and/or resolution suspending the running of the
period within which to submit appellant's printed brief. Still,
respondent, court remained silent.
executor of the deceased's estate and presented therewith, for

admission, the printed "brief for the appellant" the printing of
which they had deferred "for professional ethical
considerations," pending respondent court's action on their
request for suspension of the period. They further submitted
therewith copies of 2 separate orders of September 3, 1975
and August 26, 1975 issued by the Court of Agrarian Relations
and the Court of First Instance both at Guimba, Nueva Ecija,
respectively, wherein the deceased Florentina Nuguid Vda. de
Haberer was party-defendant, granting the deceased's
counsel's prayer to hold in abeyance further proceedings
therein pending the appointment of an administrator for the
estate of the deceased.
Respondent court, however, denied reconsideration, per its
Resolution of January 15, 1976 citing the general principle that
"litigants have no right to assume that such extensions will be
granted as a matter of course." But respondent court erred in
applying this general principle and summarily denying
reconsideration and denying admission of the appellant's brief
conditioned upon the administrator of the deceased's estate
making his appearance upon his appointment and being
granted leave to file his supplemental brief/memorandum, 3 in
view of the intervening event of appellant's death and the
interposition of the equally established principle that the
relation of attorney and client is terminated by the death of the
client, as acknowledged by respondent court itself as well as
respondents. ln the absence of a retainer from the heirs or
authorized representatives of his deceased client, the attorney
would thereafter have no further power or authority to appear
or take any further action in the case, save to inform the court
of the client's death and take the necessary steps to safeguard
the deceased's rights in the case.
Upon consideration of the manifestation and/or for another

extension to file appellant's brief dated November 14, 1975,
filed by counsel for the appellant on the grounds therein stated,
and considering that appellant has already been given a total
of one hundred ninety-five (195) days within which to file brief,
the Court Resolved to deny the motion for another extension to
file brief and to dismiss the appeal.
This is what the deceased's counsel did in the case at bar.

They properly informed respondent court of the death of the
appellant and sought suspension of the proceedings and of the
period for filing appeliant's brief pending the appointment of the
executor of the deceased's estate in the proper probate
proceedings filed with the Court of First Instance of Quezon
City. Section 17, Rule 3 of the Rules of Court 4 sets the rule on
substitution of parties in case of death of any of the parties.
Under the Rule, it is the court that is called upon, after notice of
a party's death and the claim is not thereby extinguished, to
order upon proper notice the legal representative of the
deceased to appear within a period of 30 days or such tlnie as
it may grant. Since no administrator of the estate of the
deceased appellant had yet been appointed as the same was
still pending determination in the Court of First Instance of
Quezon City, the motion of the deceased's counsel for the
suspension of the running of the period within which to file
appellant's brief was well-taken. More, under the Rule, it
should have set a period for the substitution of the deceased
party with her legal representative or heirs, failing which, the
court is called upon to order the opposing party to procure the
appointment of a legal representative of the deceased at the
cost of the deceased's estate, and such representative shall
then "immediately appear for and on behalf of the interest of
the deceased."
Counsel for the deceased appellant forthwith filed their urgent

motion for reconsideration of December 8, 1975 explaining
their predicament that the requests for extension/suspension of
period to file brief was due to the uncertainty that their services
may no longer be retained by the heirs or legal representatives
of their deceased client but they felt obligated to preserve the
right of such heirs/successors to continue the appeal pursuant
to Rule 3, Section 17 of the Rules of Court, pending the
settlement of the question of who among them should be the
Respondent court gravely erred in not following the Rule and

requiring the appearance of the legal representative of the
deceased and instead dismissing the appeal of the deceased
who yet had to be substituted in the pending appeal. Thus, it
has been held that when a party dies in an action that survives,
and no order is issued by the court for the appearance of the
legal representative or of the heirs of the deceased in
substitution of the deceased, and as a matter of fact no such
substitution has ever been effected, the trial held by the court
Not certain whether their services would still be retained by the

heirs of the deceased, counsel for the late Florentina Nuguid
Vda. de Haberer reiterated their request in a motion dated
November 14, 1975 either for an extension of time to file
appellant's brief or for the issuance of a resolution suspending
the running of the period for filing the same, pending the
appointment of an administrator or executor of the estate of the
deceased appellant.
Finally, acting on counsel's motion of November 14, 1975,
respondent court denied the request for extension and at the
same time dismissed the appeal, ruling in its resolution dated
November 24, 1975 as follows:1wph1.t
without such legal representatives or heirs and the judgment

rendered after such trial are null and void because the court
acquired no jurisdiction over the persons of the legal
representatives or of the heirs upon whom the trial and the
judgment would be binding. 5
Respondent court therefore erred in ruling that since upon the
demise of the party-appellant, the attorney-client relationship
between her and her counsels "was automatically severed and
terminated," whatever pleadings filed by said counsel with it
after the death of said appellant "are mere scraps of paper." 6
If at all, due to said death on May 25, 1975 and severance of
the attorney-client relationship, further proceedings and
specifically the running of the original 45-day period for filing
the appellnt's brief should be legally deemed as having been
automatically suspended, until the proper substitution of the
deceased appellant by her executor or administrator or her
heirs shall have been effected within the time set by
respondent court pursuant to the cited Rule.
Respondent court likewise gravely erred in dismissing the
appeal on "(its) belief that the supervening death of the
appellant Florentina Nuguid Vda. de Haberer rendered the
continuance of the appeal unnecessary" on the basis of a
totally inapplicable citation of a ruling in Velasco vs.
Rosenberg, 29 Phil. 212, 214 that "If pending appeal, an event
occurs which renders it impossible for the appellate court to
grant any relief, the appeal will be dismissed." Manifestly, the
appenant's death in no way impedes that the deceased's
appeal to recover the parcel of land registered in her name be
continued and determined for the benefit of her estate and
heirs.
Prescinding from the foregoing, justice and equity dictate under
the circumstances of the case at bar that the rules, while
necessary for the speedy and orderly administration of justice,
should not be applied with the rigidity and inflexibility of
respondent court's resolutions. 7 What should guide judicial
action is the principle that a party litigant is to be given the
fullest opportunity to establish the merits of his complaint or
defense rather than for him to lose life, liberty, honor or
property on technicalities. 8 A liberal, rather than a strict and
inflexible adherence to the Rules, is justified not only because
appellant (in this case, her estate and/or heirs) should be given
every opportunity to be heard but also because no substantial
injury or prejudice can well be caused to the adverse parties
principally, since they are in actual possession of the disputed
land. 9 The better and certainly the more prudent course of
action in every judicial proceeding is to hear both sides and
decide on the merits rather than dispose of a case on
technicalities, 10 especially where no substantial prejudice is
caused to the adverse party. 11
The dismissal of an appeal based on the appellant's failure to
file brief is based on a power granted to respondent Court of
Appeals and not on a specific and mandatory duty imposed
upon it by the Rules. 12 Since the power or authority is not
mandatory but merely directory, the exercise thereof requires a
great deal of circumspection, considering all the attendant
circumstances. 13 The failure of an appellant to file his brief
within the time prescribed does not have the effect of
dismissing the appeal automatically. 14 Rather, the Court of
Appeals has the discretion to dismiss or not to dismiss
appellant's appeal, which discretion must be a sound one to be
exercised in accordance with the tenets of justice and fair play
having in mind the circumstances obtaining in each case. l5
Paraphrasing what the Court stressed in the leading case of
Berkenkotter vs. Court of Appeals, 16 a reading of the
appellant's brief discloses that petitioners-appellants have a

prima facie meritorious case which should be properly
determined on the merits and "the element of rigidity should
not be affixed to procedural concepts and made to cover the
matter," 17 for to dismiss the appeal would not serve the ends
of justice.
A final note: On March 19, 1976, counsels submitted with their
Manifestation the written authority dated January 20, 1976
individually signed by instituted heirs and/or legal
representatives of the testate estate of the deceased
Florentina Nuguid Vda. de Haberer granting said counsels full
authority to file and prosecute the case and any other
incidental cases for and in their behalf, 18 which was duly
noted in the Court's Resolution of March 26, 1976. Such
manifestation and authority may be deemed the formal
substitution of the deceased by her heirs, as in fact they
appear as petitioners in the title of the case at bar. Hence, the
proper determination of the pending appeal may now proceed,
as herein directed.
ACCORDINGLY, the petition is granted and respondent court's
resolutions of November 24, 1975 and January 15, 1976 are
set aside. The appellant's brief filed with respondent court in
the pending appeal in CA-G.R. Nos. 53680-90-R is ordered
admitted and the cases are remanded to respondent, Court of
Appeals for further proceedings and proper determination of
the appeal on the merits. With costs against private
respondents.
The Court has noted that upon recommendation of the Solicitor
General in Adm. Case No. 2148 entitled "Francisco Ortigas, Jr.,
et al. vs. Atty. Felipe C. Navarro" that counsel for respondents
Felipe C. Navarro be disbarred for "gross misconduct and/or
malpractice," he has been suspended from the practice of law
during the pendency of said proceedings. The Court, however,
directs that copy of this decision be served on said counsel for
the sole purpose of apprising private respondents through him
of the promulgation of this judgment and to require
respondents (1) to inform the Court of their new counsel, if any,
and to direct him to enter his appearance or (2) if they have no
new or other counsel, to inform the Court of their respective
addresses for purposes of service of the Court's processes,
within ten (10) days from notice hereof.
Makasiar, Guerrero, De Castro **and Melencio-Herrera, JJ.,
concur.1wph1.t
Death of party.After a party dies and the claim is not thereby
extinguished, the court shall order, upon proper notice, the
legal representative of the deceased to appear and to be
substituted for the deceased, within a period of thirty (30) days,
or within such time as may be granted. If the legal
representative fails to appear within such said time, the court
may order the opposing party to procure the appointment of a
legal representative of the deceased within a time to be
specified by the court, and the representative shall immediately
appear for and on behalf of the interest of the deceased. The
court charges involved in procuring such appointment, if
defrayed by the opposing party, may be recovered as costs.
The heirs of the deceased may be allowed to be substituted for
the deceased, without requiring the appointment of an executor
or administrator and the court may appoint guardian ad litem
for the minor heirs.

Civ Pro 30

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Civ Pro 30

Încărcat de

Drepturi de autor:

Formate disponibile

Republic of the Philippines

February 27, 1963

RODRIGO ENRIQUEZ, ET AL., plaintiffs-appellees,

We find no merit in the appeal.

The record is to the effect that on 24 November 1958, Rodrigo

On the second assignment of error: the stipulation in the

Because of the vendee-mortgagor's failure to comply with

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion,

Socorro Ramos appealed directly to this Court, and here

Republic of the Philippines

Complainant, versus Development Bank of the Philippines, et

As far as respondent Union Glass and Container Corporation

and those dealing with the internal affairs of such corporations,

Court "in accordance with the pertinent provisions of the Rules

Rule 43 of the Rules of Court used to allow review by this

TEEHANKEE, J., concurring:

AQUINO, J., dissenting:

However, section 9 of the Judiciary Reorganization Law

September 25, 1981 reconsidered his dismissal order and

Now, does the SEC lose jurisdiction because of the joinder of

I dissent with due deference to Justice Escolin's opinion. What

TEEHANKEE, J., concurring:

However, section 9 of the Judiciary Reorganization Law

It is clear that Union Glass has no cause of action for certiorari

Hofileas action against it for cancellation of the sale might fail

transferred to the DBP by way of dacion en pago. This

AQUINO, J., dissenting:

Hofilea alleged that although the debt to the DBP of Pioneer

I dissent with due deference to Justice Escolin's opinion. What

On March 31, 1981; Carmen Hofilea filed with the SEC a

jurisdiction. Its determination that it has jurisdiction in this case

October 30, 1964

LAVERN R. DILWEG, plaintiff-appellant,

the plaintiff was in Washington D.C. where he was and has

subject matter acquires jurisdiction of the person it has the

Secs. 478, 707, 743; Gardner vs. Thomas, 14 Johns, 134, 7

In an American case with facts similar to those obtaining in the

July 29, 1959

tenant within the meaning of that term as used in Republic Act.

Hill & Associates Law Offices for appellant.

(NWSA), Transfer Certificate of Title No. 4986 issued in the

Appellant contends, as a first assignment of error, that the trial

Viewed in the light of existing law and jurisprudence, We find

without a corresponding right belonging to some other person.

property based upon constructive or implied trust had already

Evangelista v. Santos, 86 Phil. 387.

Record on Appeal, pp. 101-103.

the claim is composed of several accounts each distinct from

defendants filed an amended answer reiterating the

of two separate debts exceeds the amount for which action

Wherefore, the order appealed from is hereby set aside,

Section 88, Republic Act No. 296, as amended by Republic Act

Labrador, J., concurs.

G.R. No. L-22909 January 28, 1925

their complaint within a stated period so as to include all of the

His Honor, the trial judge, in sustaining this demurrer was

A common illustration in American procedure of the situation

BENGZON, J.P., J.:

1. ACTION; REALTY; POSSESSION; RECOVERY BY ONE

Plaintiff appealed to this Court.

On the 26th of November, 1907, the plaintiff commenced an

"3. Because the evidence shows that the defendant had no

the land of his father; that on the second Sunday in October of