CIVPRO – CAUSE OF ACTION – SPLITTING A CAUSE OF ACTION Respondent PCSO moved to dismiss the petition for damages on the
CSO moved to dismiss the petition for damages on the following grounds: (1) the CIR
G.R. No. 147593 July 31, 2006
GERONIMO Q. QUADRA, petitioner,
vs.
THE COURT OF APPEALS and the PHILIPPINE CHARITY SWEEPSTAKES OFFICE, respondents.
DECISION
PUNO, J.:
This is a petition for review of the decision of the Court of Appeals in CA-G.R. SP No. 55634 dated
December 29, 2000 and its resolution dated March 26, 2001. The Court of Appeals reversed and set
aside the decision of the National Labor Relations Commission (NLRC) in NLRC NCR Case No. 4312-
ULP which affirmed the decision of the Labor Arbiter granting moral and exemplary damages to
petitioner Geronimo Q. Quadra in connection with his dismissal from the service.
Petitioner Geronimo Q. Quadra was the Chief Legal Officer of respondent Philippine Charity
Sweepstakes Office (PCSO) when he organized and actively participated in the activities of Philippine
Charity Sweepstakes Employees Association (CUGCO), an organization composed of the rank and
file employees of PCSO, and then later, the Association of Sweepstakes Staff Personnel and
Supervisors (CUGCO) (ASSPS [CUGCO]). In April 1964, he was administratively charged before the
Civil Service Commission with violation of Civil Service Law and Rules for neglect of duty and
misconduct and/or conduct prejudicial to the interest of the service. On July 14, 1965, the Civil
Service Commission rendered a decision finding petitioner guilty of the charges and recommending
the penalty of dismissal. The following day, on July 15, 1965, the General Manager of PCSO, Ignacio
Santos Diaz, sent petitioner a letter of dismissal, in accordance with the decision of the Civil Service
Commission. Petitioner filed a motion for reconsideration of the decision of the Civil Service
Commission on August 10, 1965. At the same time, petitioner, together with ASSPS (CUGCO), filed
with the Court of Industrial Relations (CIR) a complaint for unfair labor practice against respondent
PCSO and its officers. The case was docketed as Case No. 4312-ULP.
On November 19, 1966, the CIR issued its decision finding respondent PCSO guilty of unfair labor
practice for having committed discrimination against the union and for having dismissed petitioner
due to his union activities. It ordered the reinstatement of petitioner to his former position with full
backwages and with all the rights and privileges pertaining to said position.1
Respondent PCSO complied with the decision of the CIR. But while it reinstated petitioner to his
former position and paid his backwages, it also filed with the Supreme Court a petition for review
on certiorari entitled "Philippine Charity Sweepstakes Office, et al. v. The Association of
Sweepstakes Staff Personnel, et al." assailing the decision of the CIR in Case No. 4312-ULP. The
petition was docketed as G.R. No. L-27546.2
On March 16, 1967, during the pendency of the case in the Supreme Court, petitioner filed with the
CIR a "Petition for Damages." He prayed for moral and exemplary damages in connection with Case
No. 4312-ULP. He cited the decision of the Supreme Court in Rheem of the Philippines, Inc., et al.
v. Ferrer, et al.3 where it upheld the jurisdiction of the CIR over claims for damages incidental to an
employee's dismissal.
has no jurisdiction to award moral and exemplary damages; (2) the cause of action is barred by prior
judgment, it appearing that two complaints are brought for different parts of a single cause of
action; and (3) the petition states no valid cause of action.
Petitioner resigned from PCSO on August 18, 1967.
The petition for damages and the motion to dismiss, however, remained pending with the CIR until
it was abolished and the NLRC was created. On April 25, 1980, the Labor Arbiter rendered a decision
awarding moral and exemplary damages to petitioner in the amount of P1.6 million. The dispositive
portion of the decision stated:
WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered awarding
to complainant Geronimo Q. Quadra moral damages consisting of the following sum: Three
Hundred Fifty Thousand Pesos (P350,000.00) for besmirched reputation; Three Hundred Fifty
Thousand Pesos (P350,000.00) for social humiliation; One Hundred Thousand Pesos
(P100,000.00) for mental anguish; One Hundred Thousand Pesos (P100,000.00) for serious
anxiety; One Hundred Thousand Pesos (P100,000.00) for wounded feelings; One Hundred
Thousand Pesos (P100,000.00) for moral shock; and the further sum of P500,000.00 as exemplary
damages, on account of the arbitrary and unlawful dismissal effected by respondents.
Consequently, respondents are therefore ordered to pay complainant Quadra the total sum of
One Million Six Hundred Thousand Pesos (P1,600,000.00) within ten (10) days after this Decision
becomes final.
SO ORDERED.4
The NLRC affirmed the decision of the Labor Arbiter,5 prompting respondent PCSO to file a petition
for certiorari with the Court of Appeals.
The Court of Appeals reversed the decision of the NLRC. It held that there was no basis for the grant
of moral and exemplary damages to petitioner as his dismissal was not tainted with bad faith. It was
the Civil Service Commission that recommended petitioner's dismissal after conducting an
investigation. It also held that the petition claiming moral and exemplary damages filed by petitioner
after respondent PCSO had complied with the CIR decision of reinstatement and backwages
amounted to splitting of cause of action.6
Petitioner filed a motion for reconsideration of the decision of the Court of Appeals, but the same
was denied for lack for merit.7
Petitioner now seeks the Court to review the ruling of the Court of Appeals. He basically argues:
First: The ruling of the Court of Appeals that the PCSO did not act in bad faith when it dismissed
the petitioner is contrary to the already final and executory decision of the CIR dated November
1[9], 1966 finding the PCSO guilty of bad faith and unfair labor practice in dismissing the
petitioner. The decision of the CIR was affirmed by the High Court in the case of PCSO, et al. v.
Geronimo Q. Quadra, et al., 115 SCRA 34. The Court of Appeals has no jurisdiction to amend the
final and executory decision of November 1[9], 1966 of the CIR which was affirmed by the High
Court. Once a decision has become final [and] executory, it could no longer be amended or
altered.
 Second: The ruling of the Court of Appeals that the claims for moral and exemplary damages of more parts, and bringing suit for one of such parts only, intending to reserve the rest for another
the petitioner is allegedly "tantamount to splitting of cause of action under Sec. 4, Rule 2 of the separate action. The purpose of the rule is to avoid harassment and vexation to the defendant and
1997 Rules of Civil Procedure" is contrary to law. When petitioner filed with the CIR his complaint avoid multiplicity of suits.12
for illegal dismissal and unfair labor practice, the prevailing law and jurisprudence was that the
CIR did not have jurisdiction to grant moral and exemplary damages. Petitioner's claim for moral The prevailing rule at the time that the action for unfair labor practice and illegal dismissal was filed
damages was filed with the CIR in the same case by virtue of the ruling of the High Court in Rheem and tried before the CIR was that said court had no jurisdiction over claims for damages. Hence,
v. Ferrer, 19 SCRA 130 holding that the CIR has jurisdiction to award moral and exemplary petitioner, at that time, could not raise the issue of damages in the proceedings. However, on
damages arising out of illegal dismissal and unfair labor practice.8 January 27, 1967, the Supreme Court rendered its ruling in Rheem of the Philippines, Inc., et al. v.
Ferrer, et al.13 upholding the jurisdiction of the CIR over claims for damages incidental to an
The petition is impressed with merit. employee's illegal dismissal. Petitioner properly filed his claim for damages after the declaration by
the Court and before the ruling on their case became final. Such filing could not be considered as
A dismissed employee is entitled to moral damages when the dismissal is attended by bad faith or splitting of cause of action.
fraud or constitutes an act oppressive to labor, or is done in a manner contrary to good morals,
good customs or public policy. Exemplary damages may be awarded if the dismissal is effected in a IN VIEW WHEREOF, the assailed decision and resolution of the Court of Appeals are REVERSED and
wanton, oppressive or malevolent manner.9 It appears from the facts that petitioner was SET ASIDE. The decision of the NLRC in NLRC NCR Case No. 4312-ULP is REINSTATED.
deliberately dismissed from the service by reason of his active involvement in the activities of the
union groups of both the rank and file and the supervisory employees of PCSO, which unions he SO ORDERED.
himself organized and headed. Respondent PCSO first charged petitioner before the Civil Service
Commission for alleged neglect of duty and conduct prejudicial to the service because of his union
activities. The Civil Service Commission recommended the dismissal of petitioner. Respondent PCSO
immediately served on petitioner a letter of dismissal even before the latter could move for a
reconsideration of the decision of the Civil Service Commission. Respondent PCSO may not impute
to the Civil Service Commission the responsibility for petitioner's illegal dismissal as it was
respondent PCSO that first filed the administrative charge against him. As found by the CIR,
petitioner's dismissal constituted unfair labor practice. It was done to interfere with, restrain or
coerce employees in the exercise of their right to self-organization. It stated:

Upon the entire evidence as a whole (sic), the [c]ourt feels and believes that complainant Quadra
was discriminatorily dismissed by reason of his militant union activities, not only as President of
PCSEA, but also as President of the ASSPS.10

In Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees Association, et al. v. NLRC, et al.,11
we found it proper to award moral and exemplary damages to illegally dismissed employees as their
dismissal was tainted with unfair labor practice. The Court said:

Unfair labor practices violate the constitutional rights of workers and employees to self-
organization, are inimical to the legitimate interests of both labor and management, including
their right to bargain collectively and otherwise deal with each other in an atmosphere of
freedom and mutual respect; and disrupt industrial peace and hinder the promotion of healthy
and stable labor-management relations. As the conscience of the government, it is the Court's
sworn duty to ensure that none trifles with labor rights.

For this reason, we find it proper in this case to impose moral and exemplary damages on private
respondent. x x x

On the second issue, we agree with petitioner that the filing of a petition for damages before the
CIR did not constitute splitting of cause of action under the Revised Rules of Court. The Revised
Rules of Court prohibits parties from instituting more than one suit for a single cause of action.
Splitting a cause of action is the act of dividing a single cause of action, claim or demand into two or
CIVPRO – CAUSE OF ACTION – SPLITTING A CAUSE OF ACTION
G.R. No. 150134 October 31, 2007
ERNESTO C. DEL ROSARIO and DAVAO TIMBER CORPORATION, petitioners,
vs.
FAR EAST BANK & TRUST COMPANY1 and PRIVATE DEVELOPMENT CORPORATION OF THE
PHILIPPINES, respondents.
DECISION
CARPIO MORALES, J.:
The Regional Trial Court (RTC) of Makati City, Branch "65" (sic)2 having, by Decision3 of July 10, 2001,
dismissed petitioners' complaint in Civil Case No. 00-540 on the ground of res judicata and splitting
of a cause of action, and by Order of September 24, 20014 denied their motion for reconsideration
thereof, petitioners filed the present petition for review on certiorari.
From the rather lengthy history of the present controversy, a recital of the following material facts
culled from the records is in order.
On May 21, 1974, petitioner Davao Timber Corporation (DATICOR) and respondent Private
Development Corporation of the Philippines (PDCP) entered into a loan agreement under which
PDCP extended to DATICOR a foreign currency loan of US $265,000 and a peso loan of P2.5 million
or a total amount of approximately P4.4 million, computed at the then prevailing rate of exchange
of the dollar with the peso.
The loan agreement provided, among other things, that DATICOR shall pay: (1) a service fee of one
percent (1%) per annum (later increased to six percent [6%] per annum) on the outstanding balance
of the peso loan; (2) 12 percent (12%) per annum interest on the peso loan; and (3) penalty charges
of two percent (2%) per month in case of default.
The loans were secured by real estate mortgages over six parcels of land – one situated in Manila
(the Otis property) which was registered in the name of petitioner Ernesto C. Del Rosario, and five
in Mati, Davao Oriental – and chattel mortgages over pieces of machinery and equipment.
Petitioners paid a total of P3 million to PDCP, which the latter applied to interest, service fees and
penalty charges. This left petitioners, by PDCP's computation, with an outstanding balance on the
principal of more than P10 million as of May 15, 1983.
By March 31, 1982, petitioners had filed a complaint against PDCP before the then Court of First
Instance (CFI) of Manila for violation of the Usury Law, annulment of contract and damages. The
case, docketed as Civil Case No. 82-8088, was dismissed by the CFI.
On appeal, the then Intermediate Appellate Court (IAC) set aside the CFI's dismissal of the complaint
and declared void and of no effect the stipulation of interest in the loan agreement between
DATICOR and PDCP.
PDCP appealed the IAC's decision to this Court where it was docketed as G.R. No. 73198.
In the interim, PDCP assigned a portion of its receivables from petitioners (the receivables) to its co-
respondent Far East Bank and Trust Company (FEBTC) under a Deed of Assignment dated April 10,
19875 for a consideration of P5,435,000. The Deed of Assignment was later amended by two
Supplements.6
FEBTC, as assignee of the receivables, and petitioners later executed a Memorandum of Agreement
(MOA) dated December 8, 1988 whereby petitioners agreed to, as they did pay FEBTC7 the amount
of P6.4 million as full settlement of the receivables.
On September 2, 1992, this Court promulgated its Decision in G.R. No. 731988 affirming in toto the
decision of the IAC. It determined that after deducting the P3 million earlier paid by petitioners to
PDCP, their remaining balance on the principal loan was only P1.4 million.
Petitioners thus filed on April 25, 1994 a Complaint 9 for sum of money against PDCP and FEBTC
before the RTC of Makati, mainly to recover the excess payment which they computed to be P5.3
million10 – P4.335 million from PDCP, and P965,000 from FEBTC. The case, Civil Case No. 94-1610,
was raffled to Branch 132 of the Makati RTC.
On May 31, 1995, Branch 132 of the Makati RTC rendered a decision11 in Civil Case No. 94-1610
ordering PDCP to pay petitioners the sum of P4.035 million,12 to bear interest at 12% per annum
from April 25, 1994 until fully paid; to execute a release or cancellation of the mortgages on the five
parcels of land in Mati, Davao Oriental and on the pieces of machinery and equipment and to return
the corresponding titles to petitioners; and to pay the costs of the suit.
As for the complaint of petitioners against respondent FEBTC, the trial court dismissed it for lack of
cause of action, ratiocinating that the MOA between petitioners and FEBTC was not subject to this
Court's Decision in G.R. No. 73198, FEBTC not being a party thereto.
From the trial court's decision, petitioners and respondent PDCP appealed to the Court of Appeals
(CA). The appeal was docketed as CA-G.R. CV No. 50591.
On May 22, 1998, the CA rendered a decision13 in CA-G.R. CV No. 50591, holding that petitioners'
outstanding obligation, which this Court had determined in G.R. No. 73198 to be P1.4 million, could
not be increased or decreased by any act of the creditor PDCP.
The CA held that when PDCP assigned its receivables, the amount payable to it by DATICOR was the
same amount payable to assignee FEBTC, irrespective of any stipulation that PDCP and FEBTC might
have provided in the Deed of Assignment, DATICOR not having been a party thereto, hence, not
bound by its terms.
Citing Articles 215414 and 216315 of the Civil Code which embody the principle of solutio indebiti,
the CA held that the party bound to refund the excess payment of P5 million16 was FEBTC as it
received the overpayment; and that FEBTC could recover from PDCP the amount of P4.035 million
representing its overpayment for the assigned receivables based on the terms of the Deed of
Assignment or on the general principle of equity.
Noting, however, that DATICOR claimed in its complaint only the amount of P965,000 from FEBTC, By Order of March 5, 2001, the trial court denied the motion for summary judgment for lack of
the CA held that it could not grant a relief different from or in excess of that prayed for. merit.25

Finally, the CA held that the claim of PDCP against DATICOR for the payment of P1.4 million had no
basis, DATICOR's obligation having already been paid in full, overpaid in fact, when it paid assignee
FEBTC the amount of P6.4 million.
Accordingly, the CA ordered PDCP to execute a release or cancellation of the mortgages it was
holding over the Mati real properties and the machinery and equipment, and to return the
corresponding certificates of title to petitioners. And it ordered FEBTC to pay petitioners the amount
of P965,000 with legal interest from the date of the promulgation of its judgment.
FEBTC's motion for reconsideration of the CA Decision was denied, and so was its subsequent appeal
to this Court.
On April 25, 2000, petitioners filed before the RTC of Makati a Complaint17 against FEBTC to recover
the balance of the excess payment of P4.335 million.18 The case was docketed as Civil Case No. 00-
540, the precursor of the present case and raffled to Branch 143 of the RTC.
In its Answer,19 FEBTC denied responsibility, it submitting that nowhere in the dispositive portion of
the CA Decision in CA-G.R. CV No. 50591 was it held liable to return the whole amount of P5.435
million representing the consideration for the assignment to it of the receivables, and since
petitioners failed to claim the said whole amount in their original complaint in Civil Case No. 94-
1610 as they were merely claiming the amount of P965,000 from it, they were barred from claiming
it.
On July 10, 2001, the trial court issued the assailed Decision dismissing petitioners' complaint on
the ground of res judicata and splitting of cause of action. It recalled that petitioners had filed Civil
Case No. 94-1610 to recover the alleged overpayment both from PDCP and FEBTC and to secure the
cancellation and release of their mortgages on real properties, machinery and equipment; that
when said case was appealed, the CA, in its Decision, ordered PDCP to release and cancel the
mortgages and FEBTC to pay P965,000 with interest, which Decision became final and executory on
November 23, 1999; and that a Notice of Satisfaction of Judgment between petitioners and FEBTC
was in fact submitted on August 8, 2000, hence, the issue between them was finally settled under
the doctrine of res judicata.
The trial court moreover noted that the MOA between petitioners and FEBTC clearly stated that the
"pending litigation before the Supreme Court of the Philippines with respect to the Loan exclusive
of the Receivables assigned to FEBTC shall prevail up to the extent not covered by this Agreement."
That statement in the MOA, the trial court ruled, categorically made only the loan subject to this
Court's Decision in G.R. No. 73198, hence, it was with the parties' full knowledge and consent that
petitioners agreed to pay P6.4 million to FEBTC as consideration for the settlement. The parties
cannot thus be allowed to welsh on their contractual obligations, the trial court concluded.
Respecting the third party claim of FEBTC, the trial court held that FEBTC's payment of the amount
of P1,224,906.67 (P965,000 plus interest) to petitioners was in compliance with the final judgment
of the CA, hence, it could not entertain such claim because the Complaint filed by petitioners merely
sought to recover from FEBTC the alleged overpayment of P4.335 million and attorney's fees of
P200,000.

FEBTC later filed a Third Party Complaint20 against PDCP praying that the latter be made to pay the
Petitioners' motion for reconsideration26 of the July 10, 2001 decision of the trial court was denied
P965,000 and the interests adjudged by the CA in favor of petitioners, as well as the P4.335 million
by Order of September 24, 2001.
and interests that petitioners were claiming from it. It posited that PDCP should be held liable
because it received a consideration of P5.435 million when it assigned the receivables.
Hence, the present petition.
Answering21 the Third Party Complaint, PDCP contended that since petitioners were not seeking the
recovery of the amount of P965,000, the same cannot be recovered via the third party complaint. In their Memorandum,27 petitioners proffer that, aside from the issue of whether their complaint is
dismissible on the ground of res judicata and splitting of cause of action, the issues of 1) whether
FEBTC can be held liable for the balance of the overpayment of P4.335 million plus interest which
PDCP went on to contend that since the final and executory decision in CA-G.R. CV No. 50591 had
petitioners previously claimed against PDCP in Civil Case No. 94-1610, and 2) whether PDCP can
held that DATICOR has no cause of action against it for the refund of any part of the excess payment,
interpose as defense the provision in the Deed of Assignment and the MOA that the assignment of
FEBTC can no longer re-litigate the same issue.
the receivables shall not be affected by this Court's Decision in G.R. No. 73198, be considered.

Moreover, PDCP contended that it was not privy to the MOA which explicitly excluded the
Stripped of the verbiage, the only issue for this Court's consideration is the propriety of the dismissal
receivables from the effect of the Supreme Court decision, and that the amount of P6.4 million paid
of Civil Case No. 00-540 upon the grounds stated by the trial court. This should be so because a Rule
by petitioners to FEBTC was clearly intended as consideration for the release and cancellation of the
45 petition, like the one at bar, can raise only questions of law (and that justifies petitioners'
lien on the Otis property.
elevation of the case from the trial court directly to this Court) which must be distinctly set forth.28

Replying,22 FEBTC pointed out that PDCP cannot deny that it benefited from the assignment of its
The petition is bereft of merit.
rights over the receivables from petitioners. It added that the third party claim being founded on a
valid and justified cause, PDCP's counterclaims lacked factual and legal basis.
Section 47 of Rule 39 of the Rules of Court, on the doctrine of res judicata, reads:
Petitioners thereafter filed a Motion for Summary Judgment23 to which FEBTC filed its opposition.24
 Sec. 47. Effect of judgments or final orders. — The effect of a judgment or final order rendered
by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may
be as follows:
xxxx
(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or
as to any other matter that could have been raised in relation thereto, conclusive between the
parties and their successors in interest by title subsequent to the commencement of the action
or special proceeding, litigating for the same thing and under the same title and in the same
capacity; and
(c) In any other litigation between the same parties or their successors in interest, that only is
deemed to have been adjudged in a former judgment or final order which appears upon its face
to have been so adjudged, or which was actually and necessarily included therein or necessary
thereto. (Underscoring supplied)
The above-quoted provision lays down two main rules. Section 49(b) enunciates the first rule of res
judicata known as "bar by prior judgment" or "estoppel by judgment," which states that the
judgment or decree of a court of competent jurisdiction on the merits concludes the parties and
their privies to the litigation and constitutes a bar to a new action or suit involving the same cause
of action either before the same or any other tribunal.29
Stated otherwise, "bar by former judgment" makes the judgment rendered in the first case an
absolute bar to the subsequent action since that judgment is conclusive not only as to the matters
offered and received to sustain it but also as to any other matter which might have been offered for
that purpose and which could have been adjudged therein. 30 It is in this concept that the term res
judicata is more commonly and generally used as a ground for a motion to dismiss in civil cases.31
The second rule of res judicata embodied in Section 47(c), Rule 39 is "conclusiveness of judgment."
This rule provides that any right, fact, or matter in issue directly adjudicated or necessarily involved
in the determination of an action before a competent court in which a judgment or decree is
rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated
between the parties and their privies whether or not the claim or demand, purpose, or subject
matter of the two suits is the same.32 It refers to a situation where the judgment in the prior action
operates as an estoppel only as to the matters actually determined or which were necessarily
included therein.33
The case at bar satisfies the four essential requisites of "bar by prior judgment," viz:
(a) finality of the former judgment;
(b) the court which rendered it had jurisdiction over the subject matter and the parties;
(c) it must be a judgment on the merits; and
(d) there must be, between the first and second actions, identity of parties, subject matter and
causes of action.34
There is no doubt that the judgment on appeal relative to Civil Case No. 94-1610 (that rendered in
CA-G.R. CV No. 50591) was a final judgment. Not only did it dispose of the case on the merits; it also
became executory as a consequence of the denial of FEBTC's motion for reconsideration and
appeal.35
Neither is there room to doubt that the judgment in Civil Case No. 94-1610 was on the merits for it
determined the rights and liabilities of the parties.36 To recall, it was ruled that: (1) DATICOR
overpaid by P5.3 million; (2) FEBTC was bound to refund the excess payment but because DATICOR's
claim against FEBTC was only P965,000, the court could only grant so much as the relief prayed for;
and (3) PDCP has no further claim against DATICOR because its obligation had already been paid in
full.
Right or wrong, that judgment bars another case based upon the same cause of action.37
As to the requisite of identity of parties, subject matter and causes of action, it cannot be gainsaid
that the first case, Civil Case No. 94-1610, was brought by petitioners to recover an alleged
overpayment of P5.3 million –P965,000 from FEBTC and P4.335 million from PDCP.
On the other hand, Civil Case No. 00-540, filed by the same petitioners, was for the recovery of
P4.335 million which is admittedly part of the P5.3 million earlier sought to be recovered in Civil
Case No. 94-1610. This time, the action was brought solely against FEBTC which in turn impleaded
PDCP as a third party defendant.
In determining whether causes of action are identical to warrant the application of the rule of res
judicata, the test is to ascertain whether the same evidence which is necessary to sustain the second
action would suffice to authorize a recovery in the first even in cases in which the forms or nature
of the two actions are different.38 Simply stated, if the same facts or evidence would sustain both,
the two actions are considered the same within the rule that the judgment in the former is a bar to
the subsequent action.
It bears remembering that a cause of action is the delict or the wrongful act or omission committed
by the defendant in violation of the primary rights of the plaintiff.39
In the two cases, petitioners imputed to FEBTC the same alleged wrongful act of mistakenly
receiving and refusing to return an amount in excess of what was due it in violation of their right to
a refund. The same facts and evidence presented in the first case, Civil Case No. 94-1610, were the
very same facts and evidence that petitioners presented in Civil Case No. 00-540.
Thus, the same Deed of Assignment between PDCP and FEBTC, the first and second supplements to
the Deed, the MOA between petitioners and FEBTC, and this Court's Decision in G.R. No. 73198
were submitted in Civil Case No. 00-540.
Notably, the same facts were also pleaded by the parties in support of their allegations for, and
defenses against, the recovery of the P4.335 million. Petitioners, of course, plead the CA Decision
as basis for their subsequent claim for the remainder of their overpayment. It is well established,
however, that a party cannot, by varying the form of action or adopting a different method of
presenting his case, or by pleading justifiable circumstances as herein petitioners are doing, escape
the operation of the principle that one and the same cause of action shall not be twice litigated. 40
In fact, authorities tend to widen rather than restrict the doctrine of res judicata on the ground that
public as well as private interest demands the ending of suits by requiring the parties to sue once
and for all in the same case all the special proceedings and remedies to which they are entitled.41
This Court finds well-taken then the pronouncement of the court a quo that to allow the re-litigation
of an issue that was finally settled as between petitioners and FEBTC in the prior case is to allow the
splitting of a cause of action, a ground for dismissal under Section 4 of Rule 2 of the Rules of Court
reading:

SEC. 4. Splitting of a single cause of action; effect of. – If two or more suits are instituted on the
basis of the same cause of action, the filing of one or a judgment upon the merits in any one is
available as a ground for the dismissal of the others. (Emphasis and underscoring supplied)

This rule proscribes a party from dividing a single or indivisible cause of action into several parts or
claims and instituting two or more actions based on it.42 Because the plaintiff cannot divide the
grounds for recovery, he is mandated to set forth in his first action every ground for relief which he
claims to exist and upon which he relies; he cannot be permitted to rely upon them by piecemeal in
successive actions to recover for the same wrong or injury.43

Clearly then, the judgment in Civil Case No. 94-1610 operated as a bar to Civil Case No. 00-540,
following the above-quoted Section 4, Rule 2 of the Rules of Court.

A final word. Petitioners are sternly reminded that both the rules on res judicata and splitting of
causes of action are based on the salutary public policy against unnecessary multiplicity of suits –
interest reipublicae ut sit finis litium.44 Re-litigation of matters already settled by a court's final
judgment merely burdens the courts and the taxpayers, creates uneasiness and confusion, and
wastes valuable time and energy that could be devoted to worthier cases.45

WHEREFORE, the Petition is DENIED. The assailed Decision of the RTC, Branch 143, Makati
dismissing petitioners' complaint in Civil Case No. 00-540 is AFFIRMED.

Costs against petitioners.

SO ORDERED.
CIVPRO – CAUSE OF ACTION – SPLITTING A CAUSE OF ACTION
G.R. No. 123555 January 22, 1999
PROGRESSIVE DEVELOPMENT CORPORATION, INC., petitioner,
vs.
COURT OF APPEALS and WESTIN SEAFOOD MARKET, INC. respondents.
BELLOSILLO, J.:
May the lessee which instituted before the Metropolitan Trial Court an action for forcible entry with
damages against its lessor file a separate suit with the Regional Trial Court against the same lessor
for moral and exemplary damages plus actual and compensatory damages based on the same
forcible entry?
On grounds of litis pendencia and forum-shopping petitioner invokes established jurisprudence that
a party cannot by varying the form of action or adopting a different method of presenting his case
evade the principle that the same cause of action shall not be litigated twice between the same
parties or their privies. 1 Petitioner therefore prays for reversal of the decision of the Court of
Appeals dated 27 May 1995, as well as its Resolution dated 17 January 1996 denying
reconsideration, which upheld the denial by the Regional Trial Court of petitioner's motion to
dismiss private respondent's damage suit.
The antecedents: On 27 May 1991 petitioner leased to private, respondent Westin Seafood Market,
Inc., a parcel of land with a commercial building thereon located at Aranet Center, Cubao, Quezon
City, for a period of nine (9) years and three (3) months, i.e., from 2 January 1989 to 30 April 1998,
with a monhtly rental of approximately P600,000.00. The contract contained, among others, the
following pertinent terms and conditions:
EFFECT OF VIOLATIONS
25. LESSEE hereby agrees that all the provisions contained in this Contract shall be deemed as
conditions, as-well as covenants, and that this Contract shall be automatically terminated and
cancelled without resorting to court action should LESSEE violate any or all said conditions,
including the payment of Rent, CUSA and other charges indicated in the FLP when due within the
time herein stipulated and in any such cases, LESSEE hereby irrevocably appoints LESSOR, its
authorized agents, employees and/or representatives as his duly authorized attorney-in-fact,
even after the termination, expiration or cancellation of this Contract, with full power and
authority to open, enter, repossess, secure, enclose, fence and otherwise take full and complete
physical possession and control of the leased premises and its contents without resorting to court
action and/or to summarily disconnect electrical and/or water services thereof, and that LESSEE
hereby irrevocably empowers LESSOR, his authorized agents, employees and/or representatives
to take inventory and possession of whatever equipment, furniture, articles, merchandise,
appliances, etc., found therein belonging to LESSEE, consignors and/or to any other persons and
to place the same in LESSOR's warehouse or any other place at LESSOR's discretion for
safekeeping; charging LESSEE the corresponding storage fees therefor; that in case LESSEE fails
to claim-said equipment, furniture, articles, merchandise, appliances, etc. from storage and
simultaneously liquidate any liability with LESSOR within seven (7) days from date of said transfer
to LESSOR's warehouse, LESSOR is likewise hereby expressly authorized and empowered by
LESSEE to dispose of said property/properties in a public sale through a Notary Public of LESSOR's
choice and to apply the proceeds thereof to whatever liability and/or indebtedness LESSEE may
have to LESSOR plus reasonable expenses for the same, including storage fees, and the balance,
if any, shall be turned over to LESSEE; that LESSEE hereby expressly agrees that any or all acts
performed by LESSOR, his authorized agents, employees and/or representatives under the
provisions of this Section may not be the subject of any petition for a Writ of Preliminary
Injunction or Mandatory Injunction in court, and that LESSOR and/or his authorized agents,
employees, and/or representatives shall be free from any civil and/or criminal liability or
responsibility whatsoever therefor.
TERMINATION OF LEASE
26. Upon-the automatic termination of this lease contract, as the case may be, LESSEE shall
immediately vacate and redeliver physical possession of the leased premises, including the keys
appertaining thereto, to LESSOR in good, clean and sanitary condition, reasonable wear and tear
excepted, devoid of all occupants,. equipment, furnitures articles, merchandise, etc., belonging
to LESSEE or to any other person except those belonging to LESSOR; that should LESSEE fail to
comply with this provision, LESSOR is hereby given the same rights and power to proceed against
LESSEE as expressly granted in the immediately; preceding section.
Private respondent failed to pay rentals despite several demands by petitioner. As of 19 October
1992 the arrearages amounted to P8,608,284.66. Admittedly, non-payment of rentals constituted
breach of their contract; thus, pursuant to the express authority granted petitioner under the
above-quoted Secs. 25 and 26 of the lease agreement, petitioner on 31 October 1992 repossessed
the leased premises, inventoried the movable properties found within and owned by private
respondent and scheduled public auction for the sale of the movables on 19 August 1993 with notice
to private respondent.
On 26 November 1992 private respondent filed with the Metropolitan Trial Court of Quezon City a
complaint against petitioner for forcible entry with damages and a prayer for a temporary
restraining order and/or writ of preliminary injunction. 2 The case was raffled to Branch 40 presided
over by Judge Guillermo L. Loja Jr. who issued a temporary restraining order enjoining petitioner
from selling private respondent's properties at a public auction.
On 9 December 1992 Judge Loja inhibited himself from trying the case and directed its transfer to
Branch 34 presided over by Judge Joselito SD Generoso. Soon after, petitioner filed an urgent
motion for the inhibition of Judge Generoso and the immediate reraffle of the case arguing that the
summary transfer of the case to Judge Generoso was irregular as it was not done by raffle.
The motion was granted and the case went to Branch 36 presided over by Judge Francisco D.
Villanueva. Thereafter, on 22 December 1992, at the continuation of the hearing on the issuance of
a writ preliminary mandatory injunction, the parties agreed, among others, on the following: (a)
private respondent would deposit with the Philippine Commercial and Industrial Bank in the name
of the Metropolitan Trial Court, Branch 36, the amount of P8,000,000.00 to guarantee the payment
of its back rentals; (b) petitioner would defer the sale of the personal properties of the Westin
Seafood Market, Inc., until a final settlement of the case had been arrived, at; (c) petitioner shall
allow private respondent to retrieve all the perishable goods from inside the leased premises like
frozen meat, vegetables and fish, all properly receipted for; (d) petitioner shall allow three (3)
maintenance personnel of private respondent to enter the premises at reasonable working hours
to maintain the restaurant equipment; and (e) the parties shall negotiate for the restoration of the
premises to private respondent, and if no settlement be arrived at on or before January 8, 1993, the
hearing on the merits of the case shall proceed and the disposition of the amount deposited
representing the rental arrearages shall be left to the. discretion of the court.
This agreement was incorporated in the order of the court dated 22 December 1992 3 which in effect
terminated for all intents and purposes the incident on the issuance of a preliminary writ of
injunction.
Private respondent did not comply with its undertaking to deposit with the designated bank the
amount representing its back rentals. Instead, with the forcible entry case still pending with the
MeTC, private respondent instituted on 9 June 1993 another action for damages against petitioner
with the Regional Trial Court of Quezon City. The case was raffled to Branch 101 presided over by
Judge Pedro T. Santiago. 4
Petitioner filed a motion, to dismiss the damage suit on the ground of litis pendencia and forum
shopping. On 2 July 1993, instead of ruling on the motion, Judge Santiago issued an order archiving
the case pending the outcome of the forcible entry case being heard at the MeTC for the reason that
"the damages is (sic) principally anchored on whether or not the defendants (petitioner herein) have
committed forcible entry." 5 On 2 August 1993 petitioner moved for reconsideration of the order
and reiterated its motion to dismiss the suit for damages.
Before petitioner's motion to dismiss could be resolved, private respondent filed with the RTC on
18 August 1993 an amended complaint for damages. On 14 September 1993 it also filed an Urgent
Ex-Parte Motion for the Issuance of a Temporary Restraining Order and Motion for the Grant of a
Preliminary Prohibitory and Preliminary Mandatory Injunction. On the very same day, Judge
Santiago issued an order (a) denying petitioner's motion to dismiss, (b) admitting private
respondent's amended complaint, and (c) granting private respondent's application for a temporary
restraining order against petitioner.
Thus, petitioner filed with the Court of Appeals a special civil action for certiorari and prohibition on
the ground that Judge Santjago acted in excess of his jurisdiction and/or committed grave abuse of
discretion amounting to lack of jurisdiction in admitting, the amended complaint of private
respondent and issuing a restraining order against petitioner; in allowing private respondent to
engage in forum shopping; and, taking cognizance of the action; for damages despite lack of
jurisdiction. 6
But the Court of Appeals dismissed the petition due to the failure of petitioner to file a motion for
reconsideration of Judge Santiago's order of 14 September 1993 which, it explained, was a
prerequisite to the institution of a petition for certiorari and prohibition. It also found that the
elements of litis pendencia were lacking to justify the dismissal of the action for damages with the
RTC because despite the pendency of the forcible entry case with the MeTC the only damages
recoverable thereat were those caused by the loss of the use and occupation of the property and
not the kind of damages being claimed before the RTC which had no direct relation to loss of
material possession. It clarified that since the damages prayed for in the amended complaint with
the RTC were those caused by the alleged high-handed manner with which petitioner reacquired
possession of the leased premises and the sale of private respondent's movables found therein, the
RTC and not the MeTC had jurisdiction over the action of damages. 7
Petitioner, aggrieved by the decision of the appellate court, filed the instant petition for review on
certiorari under Rule 45 of the Rules of Court alleging that it erred in (a) finding that petitioner failed
to avail of its plain, speedy and adequate remedy of a prior motion for reconsideration with the
RTC; (b) ruling that, the trial judge did not act with grave abuse of discretion in taking cognizance of
the action for damages and injunction despite the pendency of the forcible entry case with the
MeTC; and, (c) ruling that private respondent did not commit forum shopping since the causes of
action before the RTC and MeTC were not identical with each other.
There is merit in the petition. While generally a motion for reconsideration must first be filed before
resorting to certiorari in order to give the lower court an opportunity to correct the errors imputed
to it 8 this rule admits of exceptions and is not intended to be applied without considering the
circumstances of the case. 9 The filing of the motion for reconsideration before availing of the
remedy of certiorari is not sine qua non when the issue raised is one purely of law, 10 or where the
error is patent or the disputed order is void, 11 or the questions raised on certiorari are the same as
those already squarely presented to and passed upon by the lower court
In its motion for dismissal of the action for damages with the RTC petitioner raised the ground that
another action for forcible entry was pending at the MeTC between the same parties involving the
same matter and cause of action. Outrightly rejected by the RTC, the same issue was elevated by
petitioner on certiorari before the Court of Appeals. Clearly, under the prevailing circumstance, any
motion for reconsideration of the trial court would have been a pointless exercise. 12
We now turn to the issue of whether an action for damages filed with the Regional Trial Court by
the lessee against the lessor should be dismissed on the ground of pendency of another action for
forcible entry and damages earlier filed by the same lessee against the same lessor before the
Metropolitan Trial Court.
Sec. 1 of Rule 70 of the Rules of Court provides that any person deprived of the possession of any
land or building by force, indimidation, threat, strategy or stealth, or against whom thepossession
of any land or building is unlawfully withheld, may bring an action in the proper Municipal Trial
Court against the person or persons unlawfully withholding or depriving of possession, together
with damages and costs. The mandate under this rule is categorical: that all cases for forcible entry
or unlawful detainer shall be filed before the Municipal Trial Court which shall include not only the
plea for restoration of possession but also all claims for damages and costs arising therefrom.
Otherwise expressed, no claim for damages arising out of forcible entry or unlawful detainer may
be filed separately and independently of the claim for restoration of possession.
This is consistent with the principle laid down in Sec. 1, par. (e), of Rule 16 of the Rules of Court
which states that the pendency of another action between the same parties for the same cause is a
ground for dismissal of an action. Res adjudicata requires that there must be between the action
sought to be dismissed and the other action the following elements: (a) identity of parties or at least
such as representing the same interest in both actions; (b) identity of rights asserted and relief
prayed for, the relief being founded on the same facts; and, (c) the identity in the two (2) preceding
particulars should be such that any judgment which may be rendered on the other action will,
regardless of which party is successful, amount to res adjudicata in the action under
consideration. 13
It is likewise basic under Sec. 3 of Rule 2 of the Revised Rules of Court, as amended, that a party
may not institute more than one suit for a single cause of action. Under Sec. 4 of the same Rule, if
two or more suits are instituted on the basis of the same cause of action, the filing of one or a
judgment upon the merits in any one is available as a ground for the dismissal of the other or others.
"Cause of action" is defined by Sec. 2 of Rule 2 as the act of omission by which a party violates a
right of another. 14 These premises obtaining, there is no question at all that private respondent's
cause of action in the forcible entry case and in the suit for damages is the alleged illegal retaking
of possession of the leased premises by the lessor, petitioner herein, from which all legal reliefs
arise. Simply stated, the restoration of possession and demand for actual damages in the case
before the MeTC and the demand for damages with the RTC both arise from the same cause of
action, i.e., the forcible entry by petitioner into the least premises.
A comparative study of the two (2) complaints filed by private respondent against petitioner before
the two (2) trial courts shows that not only are the elements of res adjudicata present, at least
insofar as the claim for actual and compensatory damages is concerned, but also that the claim for
damages — moral and exemplary in addition to actual and compensatory — constitutes splitting a
single cause of action. Since this runs counter to the rule against multiplicity of suits, the dismissal
of the second action becomes imperative.
The complaint for forcible entry contains the following pertinent allegations —
2.01 On 02 January 1989, plaintiff entered, into a contract of lease with defendant PDC over a
property designated as Ground Floor, Seafood Market (hereinafter "Subject Premises") situated
at the corner of EDSA, corner MacArthur Street, Araneta Center, Cubao, Quezon City, for a period
of ten (10) years from 02 January 1989 to 30 April 1998.
2.02 Immediately after having acquired actual physical possession of the Subject Premises,
plaintiff established and now operates thereon the now famous Seafood Market Restaurant.
Since then, plaintiff had been in actual, continuous, and peaceful physical possession of the
Subject Premises until 31 October 1992.
xxx xxx xxx
3.02 Plaintiff, being the lessee of the Subject Premises, is entitled to the peaceful occupation and
enjoyment of the Subject Premises to the exclusion of all others, including defendants herein.
3.03 Defendants' resort to strong arms tactics to forcibly wrest possession of the Subject Premises
from plaintiff and maintain possession thereof through the use of force, threat, strategy and
intimidation by the use of superior number of men and arms amounts to the taking of the law
into their own hands.
3.04 Thus, defendants' act of unlawfully evicting out plaintiff from the Subject Premises it is
leasing from defendant PDC and depriving it of possession thereof through the use of force,
threat, strategy and intimidation should be condemned and declared illegal for being contrary;
to public order and policy.
3.05 Consequently, defendants should be enjoined from continuing with their illegal acts and be
ordered to vacate the Subject Premises and restore possession thereof, together with its
contents, to plaintiff.
xxx xxx xxx
4.07 Considering that defendants' act of forcibly grabbing possession of the Subject Premises
from plaintiff is illegal and null and void, defendant should be adjudged liable to plaintiff for all
the aforedescribed damages which plaintiff incurred as a result thereof.
The amended complaint for damages filed by private respondent alleges basically the same factual
circumstances and issues as bases for the relief prayed for, to wit:
4. On May 28, 1991, plaintiff and defendant PDC entered into a Contract of Lease for a period of
ten years or from January 2, 1989 up to April 30, 1998 over a property designated as Ground
Floor, Seafood Market (hereinafter referred to as Subject Premises) situated at the corner of
EDSA corner McArthur Street, Araneta Center, Cubao, Quezon City. A copy of the lease contract
is attached hereto as Annex "A".
5. Immediately thereafter, plaintiff took over actual physical possession of Subject Premises, and
established thereon the now famous "Seafood Market Restaurant."
xxx xxx xxx
7 On October 31, 1992 at around 8:30 p.m., defendant PDC, without the benefit of any writ of
possession or any lawful court order and with the aid of approximately forty (40) armed security
guards and policemen under the supervision of defendant Tejam, forcibly entered the subject
premises through force, intimidation, threats and stealth and relying on brute force and in a
thunderboltish manner and against plaintiff's will, unceremoniously drew away all of plaintiff's
men out of the subject premises, thereby depriving herein plaintiff of its actual, physical and
natural possession of the subject premises. The illegal, high-handed manner and gestapo like
take-over by defendants of subject premises is more particularly described as follows: . . .
8. To date, defendants continue to illegally possess and hold the Subject Premises, including all
the multi-million improvements, fixtures and equipment therein owned by plaintiff, all to the
damage and prejudice of plaintiff. The actuations of defendants constitute an unlawful
appropriation, seizure and taking of property against the will and consent of plaintiff. Worse,
defendants are threatening to sell at public auction and without the consent of plaintiff and
without lawful authority, the multi-million fixtures and equipment of plaintiff and at prices way
below the market value thereof. Plaintiff hereby attaches as Annex "B" the letter from defendants
dated August 6, 1993 addressed to plaintiff, informing the latter that the former intends to sell
at an auction on August 19, 1993 at 2:00 p.m. properties of the plaintiff presently in defendants'
possession.
xxx xxx xxx
12. Defendants' unlawful takeover of the premises constitutes a violation of its obligation under
Art. 1654 of the New Civil Code requiring the lessor to maintain the lessee in peaceful and
adequate enjoyment of the lease for the entire duration of the contract. Hence, plaintiff has filed
the present suit for the recovery of damages under Art. 1659 of the New Civil Code. . . .
Restated in its bare essentials, the forcible entry case has one cause of action, namely, the alleged
unlawful entry by petitioner into the leased premises out of which three (3) reliefs (denominated
by private respondent as is causes of action) arose: (a) the restoration by the lessor (petitioner
herein) of the possession of the leased premises to the lessee; (b) the claim for actual damages due
to the losses suffered by private respondent such as the deterioration of perishable foodstuff stored
inside the premises and the deprivation of the use of the premises causing loss of expected profits;
and, (c) the claim for attoney's fees and cost of suit.
On the other hand, the complaint for damages prays for a monetary award consisting of (a) moral
damages of P500,000.00 and exemplary damages of another P500,000.00; (b) actual damages of
P20,000,000.00 and compensatory damages of P1,000,000.00 representing unrealized profits; and,
(c) P200,000.00 for attorney's fees and costs, all based on the alleged forcible takeover of the leased
premises by petitioner. Since actual and compensatory damages were already prayed for in the
forcible entry case before the MeTC, it is obvious that this cannot be relitigated in the damage suit
before the RTC by reason of res adjudicata.
The other claims for moral and exemplary damages cannot also succeed considering that these
sprung from the main incident being heard before the MeTC. Jurisprudence is unequivocal that
when a single delict or wrong is committed — like the unlawful taking or detention of the property
of the another — there is but one single cause of action regardless of the number of rights that may
have been violated, and all such rights should be alleged in a single complaint as constituting one
single cause of action. 15 In a forcible entry case, the real issue is the physical possession of the real
property. The question of damages is merely secondary or incidental, so much so that the amount
thereof does not affect the jurisdiction of the court. In other words, the unlawful act of a deforciant
in taking possession of a piece of land by means of force and intimidation against the rights of the
party actually in possession thereof is a delict or wrong, or a cause of action that gives rise to two
(2) remedies, namely, the recovery of possession and recovery of damages arising from the loss of
possession, but only to one action. For obvious reasons, both remedies cannot be the subject of
two (2) separate and independent actions, one for recovery of posssession only, and the other, for
the recovery of damages. That would inevitably lead to what is termed in law as splitting up a cause
of action. 16 In David v. de la Cruz 17 we observed —
Herein tenants have but one cause of action against their landlord, their illegal ejectment or
removal from their landholdings, which cause of action however entitles them to two (2) claims
or remedies — for reinstatement of damages. As both claims arise from the same cause of action,
they should be alleged in a single complaint.
A claim cannot be divided in such a way that a part of the amount of damages may be recovered in
one case and the rest, in another. 18 In Bacharach v. Icarangal 19 we explained that the rule was
aimed at preventing repeated litigations betweent the same parties in regard to the same subject
of the controversy and to protect the defendant from unnecessary vexation. Nemo debet bis vexari
pro una et eadem causa.
What then is the effect of the dismissal of the other action? Since the rule is that all such rights
should be alleged in a single complaint, it goes without saying that those not therein included cannot
be the subject of subsequent complaints for they are barred forever. 20 If a suit is brought for a part
of a claim, a judgment obtained in that action precludes the plaintiff from bringing a second action
for the residue of the claim, notwithstanding that the second form of action is not identical with the
first or different grounds for relief are set for the second suit. This principle not only embraces what
was actually determined, but also extends to every matter which the parties might have litigated in
the case. 21 This is why the legal basis upon which private respondent anchored its second claim for
damages, i.e., Art. 1659 in relation to Art. 1654 of the Civil Code, 22 not otherwise raised and cited
by private respondent in the forcible entry case, cannot be used as justification for the second suit
for damages. We note, not without some degree of displeasure, that by filing a second suit for
damages, private respondent was not only able to press a claim for moral and exemplary damages
which by its failure to allege the same in its suit before the MeTC foreclosed its right to sue on it,
but it was also able to obtain from the RTC, by way of another temporary restraining order, a second
reprieve from an impending public auction sale of its movables which could not anymore secure
from the MeTC before which the matter of the issuance of a preliminary writ of injunction was
already closed.
The foregoing discussions provide sufficient basis to petitioner's charge that private respondent and
its counsel in the trial courts committed forum shopping. In Crisostomo v. Securities and Exchange
Commission 23 we ruled —
There is forum-shopping whenever, as a result of an adverse opinion in one forum, party seeks a
favorable opinion (other than by appeal or certiorari) in another. The principle applies . . . with
respect to suits filed in the courts . . . in connection with litigations commenced in the court . . .
in anticipation of an unfavorable . . . ruling and a favorable case where the court in which the
second suit was brought, has no jurisdiction.
This Court likewise elucidated in New Pangasinan Review, Inc. v. National Labor Relations
Commission 24 that there is forum-shopping when the actions involve the same transactions, the
same essential facts and circumstances. The reason behind the proscription of forum shopping is
obvious. This unnecessarily burdens our courts with heavy caseloads, unduly taxes the manpower
and financial resources of the judiciary and trifles with and mocks our judicial processes, thereby
adversely affecting the efficient administration of justice. This condemnable conduct has prompted
the Court to issue circulars 25 ordering among others that a violation thereof shall be cause for the
dismissal of the case or cases without prejudice to the taking of appropriate action against the
counsel or party concerned.
The records ineluctably show that the complaint lodged, by private respondent with the Regional
Trial Court of Quezon City contained no certification of non-forum shopping. When petitioner filed
a motion to dismiss the case raising among others the ground of forum shopping it pointed out the
absence of the required certification. The amended complaint, as well as the second and third
amended complaints, attempted to rectify the error by invariably stating that there was no other
action pending between the parties involving the same causes of action although there was actually
a forcible entry case pending before the MTC of Quezon City. By its admission of a pending forcible
entry case, it is obvious that private respondent was indulging in forum shopping. While private
respondent conveniently failed to inform the RTC that it had likewise sought damages in the MTC
on the basis of the same forcible entry, the fact remains that it precisely did so, which stratagem
was being duplicated in the second case. This is a compelling reason to dismiss the second case.
WHEREFORE, the Petition is GRANTED. The questioned Decision of the Court of Appeals dated 27
September 1995 and the Order of the Regional Trial Court of Quezon City dated 24 September 1993
are REVERSED and SET ASIDE. The Regional Trial Court of Quezon City is directed to dismiss Civil
Case No. Q-93-16409, "Westin Seafood Market, Inc. v. Progressive Development Corporation, et
al.," and the Metropolitan Trial Court of Quezon City to proceed with the proper disposition of Civil
Case No. 6589, "Westin Seafood Market, Inc. v. Progressive Development Corporation, et al.," with
dispacth considering the summary nature of the case. Treble costs against private respondent.
SO ORDERED.
CIVPRO – CAUSE OF ACTION – SPLITTING A CAUSE OF ACTION
G.R. No. 170916 April 27, 2007
CGR CORPORATION herein represented by its President ALBERTO RAMOS, III, HERMAN M.
BENEDICTO and ALBERTO R. BENEDICTO, Petitioners,
vs.
ERNESTO L. TREYES, JR., Respondent
DECISION
CARPIO MORALES, J.:
Assailed via petition for review are issuances of the Regional Trial Court (RTC), Branch 43, Bacolod
City, in Civil Case No. 04-12284, to wit: Order1 dated August 26, 2005 which dismissed petitioners’
complaint for damages on the ground of prematurity, and Order2 dated January 2, 2006 which
denied petitioners’ motion for reconsideration.
In issue is one of law – whether a complainant in a forcible entry case can file an independent action
for damages arising after the act of dispossession had occurred.
CGR Corporation, Herman M. Benedicto and Alberto R. Benedicto (petitioners) claimed to have
occupied 37.3033 hectares of public land in Barangay Bulanon, Sagay City, Negros Occidental even
before the notarized separate Fishpond Lease Agreement Nos. 5674, 3 56944 and 56955 in their
respective favor were approved in October 2000 by the Secretary of Agriculture for a period of
twenty-five (25) years or until December 31, 2024.
On November 18, 2000, Ernesto L. Treyes, Jr. (respondent) allegedly forcibly and unlawfully entered
the leased properties and once inside barricaded the entrance to the fishponds, set up a barbed
wire fence along the road going to petitioners’ fishponds, and harvested several tons of milkfish, fry
and fingerlings owned by petitioners.
On November 22, 2000, petitioners promptly filed with the Municipal Trial Court (MTC) in Sagay
City separate complaints for Forcible Entry With Temporary Restraining Order And/Or Preliminary
Injunction And Damages, docketed as Civil Case Nos. 1331,6 13327 and 1333,8 against Ernesto M.
Treyes, Sr. and respondent.
In a separate move, petitioners filed in March 2004 with the Bacolod RTC a complaint for damages
against respondent, docketed as Civil Case No, 04-12284, alleging, inter alia,
xxxx
V
That prior to the issuance of the fishpond lease agreement in favor of the plaintiffs, they had
already been in open and continuous possession of the same parcel of land;
VI
As lessee and in possession of the above[-]described fishpond, plaintiffs have continuously
occupied, cultivated and developed the said fishpond and since then, had been regularly
harvesting milkfish, shrimps, mud crabs and other produce of the fishponds;1a\^/phi1.net
VII
That the yearly income of the fishpond of the plaintiff corporation is at least ₱300,000.00 more
or less, while the yearly income of the fishpond of plaintiff Herman Benedicto, Sr. is at least
₱100,000.00 more or less, and the yearly income of the fishpond of plaintiff Alberto Benedicto is
at least ₱100,000.00 more or less;
VIII
That sometime last November 18, 2000 or thereabout, defendant Ernesto L. Treyes, Jr. and his
armed men and with the help of the blue guards from the Negros Veterans Security Agency
forcibly and unlawfully entered the fishponds of the plaintiffs and once inside barricaded the
entrance of the fishpond and set up barb wire fence along the road going to plaintiffs fishpond
and harvested the milkfish and carted away several tons of milkfish owned by the plaintiffs;
IX
That on succeeding days, defendant’s men continued their forage on the fishponds of the
plaintiffs by carting and taking away the remaining full grown milkfish, fry and fingerlings and
other marine products in the fishponds. NOT ONLY THAT, even the chapel built by plaintiff CGR
Corporation was ransacked and destroyed and the materials taken away by defendant’s men.
Religious icons were also stolen and as an extreme act of sacrilege, even decapitated the heads
of some of these icons;
xxxx
XIII
That the unlawful, forcible and illegal intrusion/destruction of defendant Ernesto Treyes, Jr. and
his men on the fishpond leased and possessed by the plaintiffs is without any authority of law
and in violation of Article 539 of the New Civil Code which states:
"Art. 539. Every possessor has a right to be respected in his possession; and should he be disturbed
therein he shall be protected in or restored to said possession by the means established by the laws
and rules of the Court."9 (Underscoring supplied) and praying for the following reliefs:
1) Ordering the defendant to pay plaintiff CGR Corporation the sum of at least ₱900,000.00 and
to plaintiffs Herman and Alberto Benedicto, the sum of at least ₱300,000.00 each by way of actual
damages and such other amounts as proved during the trial;
2) Ordering the defendant to pay the plaintiffs the sum of ₱100,000.00 each as moral damages;
3) Ordering the defendant to pay the plaintiffs the sum of ₱100,000.00 each as exemplary
damages;
4) Ordering the defendant to pay the plaintiffs the sum of ₱200,000.00 as attorney’s fees, and to
reimburse plaintiffs with all such sums paid to their counsel by way of appearance fees.10
(Underscoring supplied)
Respondent filed a Motion to Dismiss11 petitioners’ complaint for damages on three grounds – litis
pendentia, res judicata and forum shopping.
By the assailed Order12 of August 26, 2005, Branch 43 of the Bacolod RTC dismissed petitioners’
complaint on the ground of prematurity, it holding that a complaint for damages may only be
maintained "after a final determination on the forcible entry cases has been made."
Hence, the present petition for review.
The only issue is whether, during the pendency of their separate complaints for forcible entry,
petitioners can independently institute and maintain an action for damages which they claim arose
from incidents occurring after the dispossession by respondent of the premises.
Petitioners meet the issue in the affirmative. Respondents assert otherwise.
The petition is impressed with merit.
Section 17, Rule 70 of the Rules of Court provides:
SEC. 17. Judgment. – If after trial the court finds that the allegations of the complaint are true, it
shall render judgment in favor of the plaintiff for the restitution of the premises, the sum justly due
as arrears of rent or as reasonable compensation for the use and occupation of the premises,
attorney’s fees and costs. If it finds that said allegations are not true, it shall render judgment for
the defendant to recover his costs. If a counterclaim is established, the court shall render judgment
for the sum found in arrears from either party and award costs as justice requires. (Emphasis
supplied)
The recoverable damages in forcible entry and detainer cases thus refer to "rents" or "the
reasonable compensation for the use and occupation of the premises" or "fair rental value of the
property" and attorney’s fees and costs.13
The 2006 case of Dumo v. Espinas14 reiterates the long-established rule that the only form of
damages that may be recovered in an action for forcible entry is the fair rental value or the
reasonable compensation for the use and occupation of the property:
Lastly, we agree with the CA and the RTC that there is no basis for the MTC to award actual, moral,
and exemplary damages in view of the settled rule that in ejectment cases, the only damage that
can be recovered is the fair rental value or the reasonable compensation for the use and occupation
of the property. Considering that the only issue raised in ejectment is that of rightful possession,
damages which could be recovered are those which the plaintiff could have sustained as a mere
possessor, or those caused by the loss of the use and occupation of the property, and not the
damages which he may have suffered but which have no direct relation to his loss of material
possession. x x x15 (Emphasis, underscoring and italics supplied; citations omitted)
Other damages must thus be claimed in an ordinary action.16
In asserting the negative of the issue, respondent cites the 1999 case of Progressive Development
Corporation, Inc. v. Court of Appeals.17 In this case, Progressive Development Corporation, Inc.
(Progressive), as lessor, repossessed the leased premises from the lessee allegedly pursuant to their
contract of lease whereby it was authorized to do so if the lessee failed to pay monthly rentals. The
lessee filed a case for forcible entry with damages against Progressive before the Metropolitan Trial
Court (MeTC) of Quezon City. During the pendency of the case, the lessee filed an action for
damages before the RTC, drawing Progressive to file a motion to dismiss based on litis pendentia.
The RTC denied the motion.
On appeal by Progressive, the Court of Appeals sustained the RTC order denying the motion to
dismiss.
Progressive brought the case to this Court. Citing Section 1, Rule 70 of the Rules of Court, this Court
reversed the lower courts’ ruling, it holding that "all cases for forcible entry or unlawful detainer
shall be filed before the Municipal Trial Court which shall include not only the plea for restoration
of possession but also all claims for damages and costs therefrom." In other words, this Court held
that "no claim for damages arising out of forcible entry or unlawful detainer may be filed separately
and independently of the claim for restoration of possession."18 (Underscoring supplied)
In thus ruling, this Court in Progressive made a comparative study of the therein two complaints,
thus:
A comparative study of the two (2) complaints filed by private respondent against petitioner before
the two (2) trial courts shows that not only are the elements of res adjudicata present, at least
insofar as the claim for actual and compensatory damages is concerned, but also that the claim for
damages–moral and exemplary in addition to actual and compensatory–constitutes splitting a
single cause of action. Since this runs counter to the rule against multiplicity of suits, the dismissal
of the second action becomes imperative.
The complaint for forcible entry contains the following pertinent allegations –
2.01 On 02 January 1989, plaintiff entered into a contract of lease with defendant PDC over a
property designated as Ground Floor, Seafood Market (hereinafter "Subject Premises") situated at
the corner of EDSA corner MacArthur Street, Araneta Center, Cubao, Quezon City, for a period of
ten (10) years from 02 January 1989 to 30 April 1998.
2.02 Immediately after having acquired actual physical possession of the Subject Premises, plaintiff
established and now operates thereon the now famous Seafood Market Restaurant. Since then,
plaintiff had been in actual, continuous, and peaceful physical possession of the Subject Premises
until 31 October 1992.
xxxx
3.02 Plaintiff, being the lessee of the Subject Premises, is entitled to the peaceful occupation and
enjoyment of the Subject Premises to the exclusion of all others, including defendants herein.
3.03 Defendants’ resort to strong arms tactics to forcibly wrest possession of the Subject Premises
from plaintiff and maintain possession thereof through the use of force, threat, strategy and
intimidation by the use of superior number of men and arms amounts to the taking of the law into
their own hands.
3.04 Thus, defendants’ act of unlawfully evicting out plaintiff from the Subject Premises it is leasing
from defendant PDC and depriving it of possession thereof through the use of force, threat, strategy
and intimidation should be condemned and declared illegal for being contrary to public order and
policy.
3.05 Consequently, defendants should be enjoined from continuing with their illegal acts and be
ordered to vacate the Subject Premises and restore possession thereof, together with its contents
to plaintiff.
xxxx
4.07 Considering that defendants’ act of forcibly grabbing possession of the Subject Premises from
plaintiff is illegal and null and void, defendant should be adjudged liable to plaintiff for all the
aforedescribed damages which plaintiff incurred as a result thereof.
The amended complaint for damages filed by private respondent alleges basically the same factual
circumstances and issues as bases for the relief prayed for, to wit:
4. On May 28, 1991, plaintiff and defendant PDC entered into a Contract of Lease for a period of ten
years or from January 2, 1989 up to April 30, 1998 over a property designated as Ground Floor,
Seafood Market (hereinafter referred to as Subject Premises) situated at the corner of EDSA corner
McArthur Street, Araneta Center, Cubao, Quezon City. A copy of the lease contract is attached
hereto as Annex "A."
5. Immediately thereafter, plaintiff took over actual physical possession of Subject Premises, and
established thereon the now famous "Seafood Market Restaurant."
xxxx
7. On October 31, 1992 at around 8:30 p.m., defendant PDC, without the benefit of any writ of
possession or any lawful court order and with the aid of approximately forty (40) armed security
guards and policemen under the supervision of defendant Tejam, forcibly entered the subject
premises through force, intimidation, threats and stealth and relying on brute force and in a
thunderboltish manner and against plaintiff’s will, unceremoniously drew away all of plaintiffs men
out of the subject premises, thereby depriving herein plaintiff of its actual, physical and natural
possession of the subject premises. The illegal high-handed manner of gestapo like take-over by
defendants of subject premises is more particularly described as follows: x x x x
8. To date, defendants continue to illegally possess and hold the Subject Premises, including all the
multi-million improvements, fixtures and equipment therein owned by plaintiff, all to the damage
and prejudice of plaintiff. The actuations of defendants constitute an unlawful appropriation,
seizure and taking of property against the will and consent of plaintiff. Worse, defendants are
threatening to sell at public auction and without the consent, of plaintiff and without lawful
authority, the multi-million fixtures and equipment of plaintiff and at prices way below the market
value thereof. Plaintiff hereby attaches as Annex "B" the letter from defendants dated August 6,
1993 addressed to plaintiff, informing the latter that the former intends to sell at an auction on
August 19, 1993 at 2:00 p.m. properties of the plaintiff presently in defendants’ possession.
xxxx
12. Defendant’s unlawful takeover of the premises constitutes a violation of its obligation under Art.
1654 of the New Civil Code requiring the lessor to maintain the lessee in peaceful and adequate
enjoyment of the lease for the entire duration of the contract. Hence, plaintiff has filed the present
suit for the recovery of damages under Art. 1659 of the New Civil Code x x x x 19 (Emphasis in the
original; underscoring supplied)
Analyzing the two complaints, this Court, still in Progressive, observed:
Restated in its bare essentials, the forcible entry case has one cause of action, namely, the alleged
unlawful entry by petitioner into the leased premises out of which three (3) reliefs (denominated
by private respondent as its causes of action) arose: (a) the restoration by the lessor (petitioner
herein) of the possession of the leased premises to the lessee, (b) the claim for actual damages due
to the losses suffered by private respondent such as the deterioration of perishable foodstuffs
stored inside the premises and the deprivation of the use of the premises causing loss of expected
profits; and, (c) the claim for attorney’s fees and costs of suit.
On the other hand, the complaint for damages prays for a monetary award consisting of (a) moral
damages of P500,000.00 and exemplary damages of another P500,000.00; (b) actual damages of
P20,000.00 and compensatory damages of P1,000,000.00 representing unrealized profits; and, (c)
P200,000.00 for attorney’s fees and costs, all based on the alleged forcible takeover of the leased
premises by petitioner. Since actual and compensatory damages were already prayed for in the
forcible entry case before the MeTC, it is obvious that this cannot be relitigated in the damage suit
before the RTC by reason of res adjudicata.
The other claims for moral and exemplary damages cannot also succeed considering that these
sprung from the main incident being heard before the MeTC. x x x20 (Italics in the original; Emphasis
and underscoring supplied)
It bears noting, however, that as reflected in the earlier-quoted allegations in the complaint for
damages of herein petitioners, their claim for damages have no direct relation to their loss of
possession of the premises. It had to do with respondent’s alleged harvesting and carting away
several tons of milkfish and other marine products in their fishponds, ransacking and destroying of
a chapel built by petitioner CGR Corporation, and stealing religious icons and even decapitating the
heads of some of them, after the act of dispossession had occurred.
Surely, one of the elements of litis pendentia - that the identity between the pending actions, with
respect to the parties, rights asserted and reliefs prayed for, is such that any judgment rendered on
one action will, regardless of which is successful, amount to res judicata in the action under
consideration - is not present, hence, it may not be invoked to dismiss petitioners’ complaint for
damages.21
Res judicata may not apply because the court in a forcible entry case has no jurisdiction over claims
for damages other than the use and occupation of the premises and attorney’s fees.22
Neither may forum-shopping justify a dismissal of the complaint for damages, the elements of litis
pendentia not being present, or where a final judgment in the forcible entry case will not amount
to res judicata in the former.23
Petitioners’ filing of an independent action for damages other than those sustained as a result of
their dispossession or those caused by the loss of their use and occupation of their properties could
not thus be considered as splitting of a cause of action.
WHEREFORE, the Orders dated August 26, 2005 and January 2, 2006 issued by the Regional Trial
Court, Branch 43, Bacolod City, in Civil Case No. 04-12284 are REVERSED and SET ASIDE.
The Regional Trial Court, Branch 43, Bacolod City, is directed to REINSTATE Civil Case No. 04-12284
to its docket and to conduct proceedings thereon with dispatch.
SO ORDERED.
CIVPRO – CAUSE OF ACTION – JOINDER OF CAUSES OF ACTION
G.R. No. L-66620 September 24, 1986
REMEDIO V. FLORES, petitioner,
vs.
HON. JUDGE HEILIA S. MALLARE-PHILLIPPS, IGNACIO BINONGCAL & FERNANDO CALION,
respondents.
FERIA, J.:
The Court rules that the application of the totality rule under Section 33(l) of Batas Pambansa Blg.
129 and Section 11 of the Interim Rules is subject to the requirements for the permissive joinder of
parties under Section 6 of Rule 3 which provides as follows:
Permissive joinder of parties.-All persons in whom or against whom any right to relief in respect
to or arising out of the same transaction or series of transactions is alleged to exist, whether
jointly, severally, or in the alternative, may, except as otherwise provided in these rules, join as
plaintiffs or be joined as defendants in one complaint, where any question of law or fact common
to all such plaintiffs or to all such defendants may arise in the action; but the court may make
such orders as may be just to prevent any plaintiff or defendant from being embarrassed or put
to expense in connection with any proceedings in which he may have no interest.
Petitioner has appealed by certiorari from the order of Judge Heilia S. Mallare-Phillipps of the
Regional Trial Court of Baguio City and Benguet Province which dismissed his complaint for lack of
jurisdiction. Petitioner did not attach to his petition a copy of his complaint in the erroneous belief
that the entire original record of the case shall be transmitted to this Court pursuant to the second
paragraph of Section 39 of BP129. This provision applies only to ordinary appeals from the regional
trial court to the Court of Appeals (Section 20 of the Interim Rules). Appeals to this Court by petition
for review on certiorari are governed by Rule 45 of the Rules of Court (Section 25 of the Interim
Rules).
However, the order appealed from states that the first cause of action alleged in the complaint was
against respondent Ignacio Binongcal for refusing to pay the amount of P11,643.00 representing
cost of truck tires which he purchased on credit from petitioner on various occasions from August
to October, 1981; and the second cause of action was against respondent Fernando Calion for
allegedly refusing to pay the amount of P10,212.00 representing cost of truck tires which he
purchased on credit from petitioner on several occasions from March, 1981 to January, 1982.
On December 15, 1983, counsel for respondent Binongcal filed a Motion to Dismiss on the ground
of lack of jurisdiction since the amount of the demand against said respondent was only P11,643.00,
and under Section 19(8) of BP129 the regional trial court shall exercise exclusive original jurisdiction
if the amount of the demand is more than twenty thousand pesos (P20,000.00). It was further
averred in said motion that although another person, Fernando Calion, was allegedly indebted to
petitioner in the amount of P10,212.00, his obligation was separate and distinct from that of the
other respondent. At the hearing of said Motion to Dismiss, counsel for respondent Calion joined in
moving for the dismissal of the complaint on the ground of lack of jurisdiction. Counsel for petitioner
opposed the Motion to Dismiss. As above stated, the trial court dismissed the complaint for lack of
jurisdiction.
Petitioner maintains that the lower court has jurisdiction over the case following the "novel" totality
rule introduced in Section 33(l) of BP129 and Section 11 of the Interim Rules.
The pertinent portion of Section 33(l) of BP129 reads as follows:
... Provided,That where there are several claims or causes of action between the same or different
parties, embodied in the same complaint, the amount of the demand shall be the totality of the
claims in all the causes of action, irrespective of whether the causes of action arose out of the
same or different transactions. ...
Section 11 of the Interim Rules provides thus:
Application of the totality rule.-In actions where the jurisdiction of the court is dependent on the
amount involved, the test of jurisdiction shall be the aggregate sum of all the money demands,
exclusive only of interest and costs, irrespective of whether or not the separate claims are owned
by or due to different parties. If any demand is for damages in a civil action, the amount thereof
must be specifically alleged.
Petitioner compares the above-quoted provisions with the pertinent portion of the former rule
under Section 88 of the Judiciary Act of 1948 as amended which reads as follows:
... Where there are several claims or causes of action between the same parties embodied in the
same complaint, the amount of the demand shall be the totality of the demand in all the causes
of action, irrespective of whether the causes of action arose out of the same or different
transactions; but where the claims or causes of action joined in a single complaint are separately
owned by or due to different parties, each separate claim shall furnish the jurisdictional test. ...
and argues that with the deletion of the proviso in the former rule, the totality rule was reduced to
clarity and brevity and the jurisdictional test is the totality of the claims in all, not in each, of the
causes of action, irrespective of whether the causes of action arose out of the same or different
transactions.
This argument is partly correct. There is no difference between the former and present rules in cases
where a plaintiff sues a defendant on two or more separate causes of action. In such cases, the
amount of the demand shall be the totality of the claims in all the causes of action irrespective of
whether the causes of action arose out of the same or different transactions. If the total demand
exceeds twenty thousand pesos, then the regional trial court has jurisdiction. Needless to state, if
the causes of action are separate and independent, their joinder in one complaint is permissive and
not mandatory, and any cause of action where the amount of the demand is twenty thousand pesos
or less may be the subject of a separate complaint filed with a metropolitan or municipal trial court.
On the other hand, there is a difference between the former and present rules in cases where two
or more plaintiffs having separate causes of action against a defendant join in a single complaint.
Under the former rule, "where the claims or causes of action joined in a single complaint are
separately owned by or due to different parties, each separate claim shall furnish the jurisdictional
test" (Section 88 of the Judiciary Act of 1948 as amended, supra). This was based on the ruling in
the case of Vda. de Rosario vs. Justice of the Peace, 99 Phil. 693. As worded, the former rule applied
only to cases of permissive joinder of parties plaintiff. However, it was also applicable to cases of
permissive joinder of parties defendant, as may be deduced from the ruling in the case of Brillo vs. WHEREFORE, the order appealed from is affirmed, without pronouncement as to costs.
Buklatan, thus:
SO ORDERED.
Furthermore, the first cause of action is composed of separate claims against several defendants
of different amounts each of which is not more than P2,000 and falls under the jurisdiction of the
justice of the peace court under section 88 of Republic Act No, 296. The several claims do not
seem to arise from the same transaction or series of transactions and there seem to be no
questions of law or of fact common to all the defendants as may warrant their joinder under Rule
3, section 6. Therefore, if new complaints are to be filed in the name of the real party in interest
they should be filed in the justice of the peace court. (87 Phil. 519, 520, reiterated in Gacula vs.
Martinez, 88 Phil. 142, 146)

Under the present law, the totality rule is applied also to cases where two or more plaintiffs having
separate causes of action against a defendant join in a single complaint, as well as to cases where a
plaintiff has separate causes of action against two or more defendants joined in a single complaint.
However, the causes of action in favor of the two or more plaintiffs or against the two or more
defendants should arise out of the same transaction or series of transactions and there should be a
common question of law or fact, as provided in Section 6 of Rule 3.

The difference between the former and present rules in cases of permissive joinder of parties may
be illustrated by the two cases which were cited in the case of Vda. de Rosario vs. Justice of the
Peace (supra) as exceptions to the totality rule. In the case of Soriano y Cia vs. Jose (86 Phil. 523),
where twenty-nine dismissed employees joined in a complaint against the defendant to collect their
respective claims, each of which was within the jurisdiction of the municipal court although the total
exceeded the jurisdictional amount, this Court held that under the law then the municipal court had
jurisdiction. In said case, although the plaintiffs' demands were separate, distinct and independent
of one another, their joint suit was authorized under Section 6 of Rule 3 and each separate claim
furnished the jurisdictional test. In the case of International Colleges, Inc. vs. Argonza (90 Phil. 470),
where twenty-five dismissed teachers jointly sued the defendant for unpaid salaries, this Court also
held that the municipal court had jurisdiction because the amount of each claim was within,
although the total exceeded, its jurisdiction and it was a case of permissive joinder of parties plaintiff
under Section 6 of Rule 3.

Under the present law, the two cases above cited (assuming they do not fall under the Labor Code)
would be under the jurisdiction of the regional trial court. Similarly, in the abovecited cases of Brillo
vs. Buklatan and Gacula vs. Martinez (supra), if the separate claims against the several defendants
arose out of the same transaction or series of transactions and there is a common question of law
or fact, they would now be under the jurisdiction of the regional trial court.

In other words, in cases of permissive joinder of parties, whether as plaintiffs or as defendants,

under Section 6 of Rule 3, the total of all the claims shall now furnish the jurisdictional test. Needless
to state also, if instead of joining or being joined in one complaint separate actions are filed by or
against the parties, the amount demanded in each complaint shall furnish the jurisdictional test.

In the case at bar, the lower court correctly held that the jurisdictional test is subject to the rules on
joinder of parties pursuant to Section 5 of Rule 2 and Section 6 of Rule 3 of the Rules of Court and
that, after a careful scrutiny of the complaint, it appears that there is a misjoinder of parties for the
reason that the claims against respondents Binongcal and Calion are separate and distinct and
neither of which falls within its jurisdiction.
CIVPRO – PARTIES TO CIVIL ACTIONS – LACK OF PERSONALITY TO SUE
G.R. No. 157447. April 29, 2005
NEMENCIO C. EVANGELISTA, PASCUAL G. QUINTO, LUIS B. BUENA, EUSEBIA V. TABLADA,
CANUTO G. TISBE, DAVID R. CARULLO, SOFONIAS E. COLEGADO, FELIX B. BUENA, TORIBIO C.
EVANGELISTA, LEBRADA A. NICOLAS, ALECIA J. RAMOS, MILA G. DE LOS REYES, SALVADOR I. DE
LA TORRE, MOISES CRUZ, RUFINO INFANTE, ALICIA ASTROLOGO, TRINIDAD LUMIQUED,
LUZMINIDA QUINIQUINI, & TEODORA C. TEMERAS, Petitioners,
vs.
CARMELINO M. SANTIAGO, Respondents.
DECISION
CHICO-NAZARIO, J.:
In this Petition for Review under Rule 45 of the Rules of Court, petitioners pray for the reversal of
the Decision of the Court of Appeals in CA-G.R. CV No. 64957,1 affirming the Order of the Regional
Trial Court (RTC) of San Mateo, Rizal, Branch 77, in Civil Case No. 1220, 2 dismissing petitioners’
Complaint for declaration of nullity of Original Certificate of Title (OCT) No. 670 and all other titles
emanating therefrom.
In their Complaint, petitioners alleged that they occupied and possessed parcels of land, located in
Sitio Panayawan, Barangay San Rafael, Montalban (now Rodriquez), Province of Rizal (Subject
Property), by virtue of several Deeds of Assignment, dated 15 April 1994 and 02 June 1994, executed
by a certain Ismael Favila y Rodriguez.3
According to the Deeds of Assignment, the Subject Property was part of a vast tract of land called
"Hacienda Quibiga," which extended to Parañaque, Las Piñas, Muntinlupa, Cavite, Batangas, Pasay,
Taguig, Makati, Pasig, Mandaluyong, Quezon City, Caloocan, Bulacan, and Rizal; awarded to Don
Hermogenes Rodriguez by the Queen of Spain and evidenced by a Spanish title. Ismael Favila
claimed to be one of the heirs and successors-in-interest of Don Hermogenes Rodriguez. Acting as
Attorney-in-Fact pursuant to a Special Power of Attorney executed by his "mga kapatid" on 25
February 1965, Ismael Favila signed the aforementioned Deeds of Assignment, assigning portions
of the Subject Property to the petitioners, each portion measuring around 500 to 1,000 square
meters, in exchange for the labor and work done on the Subject Property by the petitioners and
their predecessors.4
Petitioners came by information that respondent was planning to evict them from the Subject
Property. Two of the petitioners had actually received notices to vacate. Their investigations
revealed that the Subject Property was included in Transfer Certificates of Titles (TCTs) No. 53028,
No. 281660, No. N-39258 and No. 205270, all originating from OCT No. 670, and now in the name
of respondent.5
OCT No. 670 was issued in the name of respondent’s mother, Isabel Manahan y Francisco, and three
other individuals, pursuant to Decree No. 10248, dated 13 February 1913, in Case No. 8502 of the
Court of Land Registration of the Philippine Islands. The whole property covered by OCT No. 670
was subsequently adjudicated in favor of Isabel Manahan Santiago (formerly Isabel Manahan y
Francisco). Consequently, OCT No. 670 was cancelled and TCT No. T-53028 was issued exclusively in
the name of Isabel Manahan Santiago. On 28 December 1968, Isabel Manahan Santiago executed a
Deed of Donation transferring the property to her son, respondent herein, who subsequently
secured TCTs No. 281660, No. N-39258 and No. 205270 in his own name.6
Petitioners filed with the trial court, on 29 April 1996, an action for declaration of nullity of
respondent’s certificates of title on the basis that OCT No. 670 was fake and spurious. Among the
defects of OCT No. 670 pointed out by petitioners were that: (1) OCT No. 670 was not signed by a
duly authorized officer; (2) Material data therein were merely handwritten and in different
penmanships; (3) OCT No. 670 was not printed on the Official Form used in 1913, the year it was
issued; (4) It failed to indicate the Survey Plan which was the basis of the Technical Description of
the property covered by the title; (5) Decree No. 10248 referred to in OCT No. 670 was issued only
on 11 April 1913, while OCT No. 670 was issued earlier, on 13 February 1913; and (6) Decree No.
10248 was issued over a property other than the one described in OCT No. 670, although also
located in the Province of Rizal.7
Respondent filed his Answer with Prayer for Preliminary Hearing on the Affirmative Defenses on 03
July 1996. According to respondent, "[t]he allegations in the Complaint would readily and patently
show that the same are flimsy, fabricated, malicious, without basis in law and in fact…"8
As an affirmative defense, respondent claimed that the petitioners had no legal capacity to file the
Complaint, and thus, the Complaint stated no cause of action. Since OCT No. 670 was genuine and
authentic on its face, then OCT No. 670 and all of respondent’s land titles derived therefrom, are
incontrovertible, indefeasible and conclusive against the petitioners and the whole world.9
Citing the consolidated cases of Director of Forestry, et al. v. Hon. Emmanuel M. Muñoz, et al. and
Pinagcamaligan Indo-Agro Development Corporation v. Hon. Macario Peralta, Jr., et al.,10
respondent argued that the Spanish title, on which petitioners based their claim, was neither
indefeasible nor imprescriptible. Moreover, Presidential Decree (P.D.) No. 892, which took effect on
16 February 1976, required all holders of Spanish titles or grants to apply for registration of their
lands under Republic Act No. 496, otherwise known as the Land Registration Act,11 within six months
from effectivity of the decree. After the given period, Spanish titles could no longer be used as
evidence of land ownership in any registration proceedings under the Torrens System. 12
Respondent also raised the affirmative defense of prescription. He pointed out that any action
against his certificates of title already prescribed, especially with regard to OCT No. 670, which was
issued in 1913 or more than 83 years prior to the filing of the Complaint by the petitioners. At the
very least, respondent contended, "it must be presumed that the questioned land titles were issued
by the public officials concerned in the performance of their regular duties and functions pursuant
to the law."13
Even assuming arguendo that the petitioners entered and occupied the Subject Property, they did
so as mere intruders, squatters and illegal occupants, bereft of any right or interest, since the
Subject Property was already covered by Torrens certificates of title in the name of respondent and
his predecessors-in-interest.14
Lastly, respondent denied knowing the petitioners, much less, threatening to evict them. In fact,
petitioners were not included as defendants in Civil Case No. 783 entitled, "Carmelino M. Santiago
v. Remigio San Pascual, et al.," which respondent instituted before the same trial court against
squatters occupying the Subject Property. In its decision, dated 01 July 1992, the trial court held
that "there is no doubt that the plaintiff (respondent herein) is the owner of the land involved in
this case on which the defendants have built their houses and shanties…" Although the decision in
Civil Case No. 783 was appealed to the Court of Appeals, it had become final and executory for
failure of the defendants-appellants therein to file their appellants’ brief.15
In the instant case, the trial court held a preliminary hearing on the affirmative defenses as prayed
for by the respondent. During said hearing, petitioners presented their lone witness, Engineer
Placido Naval, a supposed expert on land registration laws. In response to questions from Honorable
Judge Francisco C. Rodriguez of the trial court, Engineer Naval answered that a parcel of land titled
illegally would revert to the State if the Torrens title was cancelled, and that it was the State, through
the Office of the Solicitor General, that should file for the annulment or cancellation of the title.
Respondent, on the other hand, did not present any evidence but relied on all the pleadings and
documents he had so far submitted to the trial court.16
After the preliminary hearing, the trial court issued the questioned Order, dated 05 February 1999,
dismissing petitioners’ Complaint. Pertinent portions of the Order of the trial court read:
After considering the testimonial and documentary evidence presented, this Court is inclined not to
grant plaintiffs (sic) prayer. Finding credence and giving weight to plaintiffs (sic) lone but "expert
witness", it is crystal clear that, to quote:
1. "a parcel of land titled illegally will revert to the State
2. it is the State who must file the corresponding case of annulment of title through the Office of
the Solicitor General, and
3. a land illegally titled in the name of private individual, the State through the Office of the Solicitor
General should file the corresponding case for cancellation of title." (TSN August 26, 1997).
The above quoted testimony is straight from horse (sic) mouth so to speak as this was the testimony
of the plaintiffs (sic) expert witness. And judging from the said testimony alone aforecited, plaintiffs
(sic) cause [of action] is bound to fail. "Plaintiffs (sic) own testimony" wrote "finis" to their case.
From the record, this case was initiated and filed by private individuals, Nemencio Evangelista, et.
al., contradicting their witness (sic) testimony. To reiterate, this Court finds credence to the
testimony of the plaintiffs (sic) witness, i.e., is (sic) the State through the Office of the Solicitor
General who must initiate and file a case of this nature when title to a land is being claimed to be
obtained through fraud and allegedly spurious.
The opinion of this Court anent the testimony of the witness is not without basis. Explicit is the
pronouncement of the Supreme Court in the recent case of Heirs of Marciano Nagano v. Court of
Appeals, to wit:
An action for reversion has to be instituted by the Solicitor General pursuant to Section 101,
Commonwealth Act No. 141. (282 SCRA 43).
As to the documentary evidence, having gone through with the "Deed of Assignment/s" purportedly
executed by and between a certain Ismael Favila y Rodriguez and the plaintiffs, which is the principal
if not the only basis of plaintiffs claim ownership and possession of the subject parcel of land, the
same does not hold water in a manner of speaking, for being self-serving. "Assignor Ismael Favila y
Rodriguez" claimed in said Deed that he is the Attorney-in-Fact by virtue of an alleged Special Power
of Attorney executed in his favor by his "mga kapatid" on February 23, 1965, but said Special Power
of Attorney was not presented before this Court, thus there arises a doubt as to its existence and
execution not to mention doubt on the existence of his "mga kapatid" who as alleged executed said
Special Power Attorney (sic) in his favor.
Even if this Court granting arguendo would admit the authenticity of said "Deeds of Assignment/s",
that will not alter the outcome of the pending incident/s before this Court. Why? Because the said
"Deed of Assignment/s" which were based on Spanish title have lost their evidentiary value
pursuant to the Presidential Decree No. 892 i.e. "DISCONTINUANCE OF THE SPANISH MORTGAGE
SYSTEM OF REGISTRATION AND OF THE USE OF SPANISH TITLES AS EVIDENCE IN LAND
REGISTRATION PROCEEDINGS."
…
There is no need to elaborate on the above-cited provisions of PD 892 as they are self-explanatory.
Suffice it to say that there is no showing, that plaintiffs complied with the said law i.e. to "apply for
registration of their lands under Act No. 496, otherwise known as the Land Registration Act, within
six (6) months from the effectivity of this decree (February 16, 1976). Thereafter, Spanish titles
cannot be used as evidence of land ownership in any registration proceedings under the Torrens
System."
This being the case and likewise being clear that plaintiffs were not the lawful owners of the land
subject of this case, for they did not comply with PD 892, the said plaintiffs do not have the legal
standing to bring before this Court the instant complaint…
Moreover, the principal issue in this case is for the declaration of nullity of defendant’s title, which
has nothing to do with plaintiffs (sic) claim of ownership and possession even if we set aside, albeit
momentarily, the truth that plaintiffs (sic) claim were based on barred Spanish Title/s, and thus
plaintiffs were never the owners of the parcel of land subject of this case.
Further, defendants (sic) title especially so with the mother title OCT 670 was entered and issued in
1913 or more than Eighty Three (83) years ago, the same not having been questioned by any party.
Only now that it is being questioned, but sad to say, plaintiffs who are on the offensive and relying
on their lone expert witness, instead of bolstering their case, unwittingly sealed their fate… 17
After the trial court denied petitioners’ Motion for Reconsideration in its Order, dated 20 July
1999,18 petitioners appealed both Orders of the trial court to the Court of Appeals.
The Court of Appeals, in its Decision, dated 29 July 2002,19 affirmed the Order of the trial court,
dated 05 February 1999, dismissing petitioners’ Complaint. The Court of Appeals denied petitioners’
Motion for Reconsideration in its Resolution, dated 14 February 2003.20
Thus, petitioners filed this Petition for Review 21 under Rule 45 of the Rules of Court, raising the
following issues and praying for the reversal of the aforementioned Decision of the Court of Appeals
affirming the Order of dismissal of the trial court:
I. Whether the lower court’s dismissal of the petitioners’ complaint should be proscribed by the
rules of evidence it being based inter alia on Engr. Naval’s testimony, which was indisputably not
based on facts but conclusion of law.
II. Whether the lower court’s dismissal of petitioners’ complaint should be proscribed by the rules
of evidence it being done sans ample evidence except bare allegations of respondent.
III. Whether the provision of P.D. 892, i.e., Spanish titles cannot be used as evidence of land
ownership in any registration proceedings under the Torrens system, holds of an exception.
IV. Whether an action for quieting of title, specifically where petitioners are in possession of subject
land, can be subject of prescription.
In his Comment,22 the respondent, for the most part, reiterated the findings of the trial court and
the Court of Appeals.
The Court believes that the trial court rightfully dismissed petitioners’ Complaint, but for reasons
different from those relied upon by the trial court and the Court of Appeals.
According to the respondent, petitioners had no legal capacity to file the Complaint, and thus, the
Complaint filed before the trial court stated no cause of action.
Before anything else, it should be clarified that "the plaintiff has no legal capacity to sue"23 and "the
pleading asserting the claim states no cause of action"24 are two different grounds for a motion to
dismiss or are two different affirmative defenses. Failure to distinguish between "the lack of legal
capacity to sue" from "the lack of personality to sue" is a fairly common mistake. The difference
between the two is explained by this Court in Columbia Pictures, Inc. v. Court of Appeals:25
Among the grounds for a motion to dismiss under the Rules of Court are lack of legal capacity to sue
and that the complaint states no cause of action. Lack of legal capacity to sue means that the
plaintiff is not in the exercise of his civil rights, or does not have the necessary qualification to appear
in the case, or does not have the character or representation he claims. On the other hand, a case
is dismissible for lack of personality to sue upon proof that the plaintiff is not the real party-in-
interest, hence grounded on failure to state a cause of action. The term "lack of capacity to sue"
should not be confused with the term "lack of personality to sue." While the former refers to a
plaintiff’s general disability to sue, such as on account of minority, insanity, incompetence, lack of
juridical personality or any other general disqualifications of a party, the latter refers to the fact that
the plaintiff is not the real party- in-interest. Correspondingly, the first can be a ground for a motion
to dismiss based on the ground of lack of legal capacity to sue; whereas the second can be used as
a ground for a motion to dismiss based on the fact that the complaint, on the face thereof, evidently
states no cause of action.
In the present case, this Court may assume that the respondent is raising the affirmative defense
that the Complaint filed by the petitioners before the trial court stated no cause of action because
the petitioners lacked the personality to sue, not being the real party-in-interest. It is the
respondent’s contention that only the State can file an action for annulment of his certificates of
title, since such an action will result in the reversion of the ownership of the Subject Property to the
State.
The affirmative defense that the Complaint stated no cause of action, similar to a motion to dismiss
based on the same ground, requires a hypothetical admission of the facts alleged in the Complaint.
In the case of Garcon v. Redemptorist Fathers,26 this Court laid down the rules as far as this ground
for dismissal of an action or affirmative defense is concerned:
It is already well-settled by now that, in a motion to dismiss a complaint based on lack of cause of
action, the question submitted to the court for determination is the sufficiency of the allegations of
fact made in the complaint to constitute a cause of action, and not on whether these allegations of
fact are true, for said motion must hypothetically admit the truth of the facts alleged in the
complaint; that the test of the sufficiency of the facts alleged in the complaint is whether or not,
admitting the facts alleged, the court could render a valid judgment upon the same in accordance
with the prayer of said complaint. Stated otherwise, the insufficiency of the cause of action must
appear in the face of the complaint in order to sustain a dismissal on this ground, for in the
determination of whether or not a complaint states a cause of action, only the facts alleged therein
and no other matter may be considered, and the court may not inquire into the truth of the
allegations, and find them to be false before a hearing is had on the merits of the case; and it is
improper to inject in the allegations of the complaint facts not alleged or proved, and use these as
basis for said motion.
In resolving whether or not the Complaint in the present case stated a cause of action, the trial court
should have limited itself to examining the sufficiency of the allegations in the Complaint. It was
proscribed from inquiring into the truth of the allegations in the Complaint or the authenticity of
any of the documents referred or attached to the Complaint, since these are deemed hypothetically
admitted by the respondent. The trial court evidently erred in making findings as to the authenticity
of the Deeds of Assignment executed by Ismael Favila in favor of petitioners on 15 April 1994 and
02 June 1994; and questioning the existence and execution of the Special Power of Attorney in favor
of said Ismael Favila by his siblings on 25 February 1965. These matters may only be resolved after
a proper trial on the merits.
Petitioners alleged in their Complaint, and respondent hypothetically admitted that: (1) Petitioners’
predecessors-in-interest, in the concept of owners, had been in actual, physical, open, continuous
and adverse possession of the Subject Property against the whole world since time immemorial; (2)
The Subject Property was part of the vast tract of land called "Hacienda Quibiga" awarded to Don
Hermogenes Rodriguez by the Queen of Spain by virtue of a Spanish title; (3) Ismael Favila, an heir
and successor-in-interest of Don Hermogenes Rodriguez, acting as Attorney-in-Fact pursuant to a
Special Power of Attorney executed by his "mga kapatid" on 25 February 1965, executed Deeds of
Assignment covering the Subject Property in favor of petitioners; (4) Petitioners still occupied and
possessed the Subject Property, on which their houses were erected, when they discovered that
the Subject Property was already covered by Torrens certificates of title in the name of respondent;
and (5) That petitioners filed the Complaint to prevent their eviction by the respondent. To
determine whether these allegations are sufficient to constitute a cause of action, it is important
for this Court to establish first the nature of petitioners’ action.
Indeed, petitioners’ Complaint filed before the trial court was captioned as an action for declaration
of nullity of respondent’s certificates of title. However, the caption of the pleading should not be
the governing factor, but rather the allegations therein should determine the nature of the action,
because even without the prayer for a specific remedy, the courts may nevertheless grant the
proper relief as may be warranted by the facts alleged in the Complaint and the evidence
introduced.27
The trial court believed that petitioners’ action was ultimately one for reversion of the Subject
Property to the public domain. Based on the testimony of Engineer Naval and the case of Nagaño
v. Court of Appeals,28 it declared that the State, represented by the Office of the Solicitor General,
is the party-in-interest in an action for cancellation of a certificate of title illegally issued in the name
of a private individual, because the eventual effect of such cancellation is the reversion of the
property to the State.
The Court disagrees in this pronouncement of the trial court, and calls for a far closer review of its
decision in Nagaño v. Court of Appeals,29 wherein the Court held that –
It is then clear from the allegations in the complaint that private respondents claim ownership of
the 2,250 square meter portion for having possessed it in the concept of an owner, openly,
peacefully, publicly, continuously and adversely since 1920. This claim is an assertion that the lot is
private land, or that even assuming it was part of the public domain, private respondents had
already acquired imperfect title thereto under Section 48(b) of C.A. No. 141, otherwise known as
the Public Land Act, as amended by R.A. No. 1942…
Under Section 48, a subject lot is, for all legal intents and purposes, segregated from the public
domain, because the beneficiary is "conclusively presumed to have performed all the conditions
essential to a Government grant and shall be entitled to a certificate of title under the provisions of
this chapter."
Consequently, merely on the basis of the allegations in the complaint, the lot in question is
apparently beyond the jurisdiction of the Director of the Bureau of Lands and could not be the
subject of a Free Patent. Hence, dismissal of private respondents’ complaint was premature and
trial on the merits should have been conducted to thresh out evidentiary matters.
It would have been entirely different if the action were clearly for reversion, in which case, it would
have to be instituted by the Solicitor General pursuant to Section 101 of C.A. No. 141, which
provides:
Sec. 101. All actions for the reversion to the Government of lands of the public domain or
improvements thereon shall be instituted by the Solicitor General or the officer acting in his stead,
in the proper courts, in the name of the [Republic] of the Philippines.
In the more recent case of Heirs of Ambrocio Kionisala v. Heirs of Honorio Dacut,30 the difference
between an action for declaration of nullity of land titles from an action for reversion was more
thoroughly discussed as follows:
An ordinary civil action for declaration of nullity of free patents and certificates of title is not the
same as an action for reversion. The difference between them lies in the allegations as to the
character of ownership of the realty whose title is sought to be nullified. In an action for reversion,
the pertinent allegations in the complaint would admit State ownership of the disputed land. Hence,
in Gabila vs. Barriga [41 SCRA 131], where the plaintiff in his complaint admits that he has no right
to demand the cancellation or amendment of the defendant’s title because even if the title were
canceled or amended the ownership of the land embraced therein or of the portion affected by the
amendment would revert to the public domain, we ruled that the action was for reversion and that
the only person or entity entitled to relief would be the Director of Lands.
On the other hand, a cause of action for declaration of nullity of free patent and certificate of title
would require allegations of the plaintiff’s ownership of the contested lot prior to the issuance of
such free patent and certificate of title as well as the defendant’s fraud or mistake, as the case may
be, in successfully obtaining these documents of title over the parcel of land claimed by plaintiff. In
such a case, the nullity arises strictly not from the fraud or deceit but from the fact that the land is
beyond the jurisdiction of the Bureau of Lands to bestow and whatever patent or certificate of title
obtained therefore is consequently void ab initio. The real party-in-interest is not the State but the
plaintiff who alleges a pre-existing right of ownership over the parcel of land in question even before
the grant of title to the defendant…
In their Complaint, petitioners never alleged that the Subject Property was part of the public
domain. On the contrary, petitioners asserted title over the Subject Property by virtue of their
actual, physical, open, continuous and adverse possession thereof, in the concept of owners, by
themselves and through their predecessors-in-interest, since time immemorial. The Deeds of
Assignment executed in their favor and attached to their Complaint referred to a Spanish title
granted by the Queen of Spain to their predecessor-in-interest, Don Hermogenes Rodriguez. Clearly,
petitioners are asserting private title over the Subject Property, and consequently, their action could
not be one for reversion.
In their instant Petition, petitioners further averred that rather than an action for nullity of
respondent’s certificates of title, theirs was more appropriately an action to remove a cloud on or
to quiet their title over the Subject Property.
Article 476 of the Civil Code, on removal of a cloud on or quieting of title, provides that:
Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of
any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but
is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said
title, an action may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real property or any
interest therein.
Respondent’s certificates of title over the Subject Property appeared valid or effective; but
according to the petitioners, they were fake, spurious and/or fraudulent, and a cloud on their title
to the same property that needed to be removed. A cloud on title has been defined as follows:
Cloud on Title. – A cloud on title is an outstanding instrument, record, claim, encumbrance or
proceeding which is actually invalid or inoperative, but which may nevertheless impair or affect
injuriously the title to property. The matter complained of must have a prima facie appearance of
validity or legal efficacy. The cloud on title is a semblance of title which appears in some legal form
but which is in fact unfounded. The invalidity or inoperativeness of the instrument is not apparent
on the face of such instrument, and it has to be proved by extrinsic evidence…31
Even as this Court agrees with the petitioners that their action was one for removal of a cloud on or
quieting of title, it does arrive at the same conclusion as the trial court and the Court of Appeals
that petitioners had no personality to file the said action, not being the parties-in-interest, and their
Complaint should be dismissed for not stating a cause of action.
According to Article 477 of the Civil Code, the plaintiff, in an action to remove a cloud on or to quiet
title, must have legal or equitable title to, or interest in, the real property which is the subject matter
of the action.32 Petitioners failed to establish in their Complaint that they had any legal or equitable
title to, or legitimate interest in, the Subject Property so as to justify their right to file an action to
remove a cloud on or to quiet title.
Title to real property refers to that upon which ownership is based. It is the evidence of the right of
the owner or the extent of his interest, by which means he can maintain control and, as a rule, assert
right to exclusive possession and enjoyment of the property.33
In their Complaint, petitioners claimed title to the Subject Property by virtue of their actual and
continuous possession of the same since time immemorial, by themselves and through their
predecessors-in-interest. Yet, the Deeds of Assignment executed by Ismael Favila in their favor,
attached to and an integral part of their Complaint, revealed that petitioners’ predecessors-in-
interest based their right to the Subject Property on the Spanish title awarded to Don Hermogenes
Rodriguez.
There existed a contradiction when petitioners based their claim of title to the Subject Property on
their possession thereof since time immemorial, and at the same time, on the Spanish title granted
to Don Hermogenes Rodriguez. Possession since time immemorial carried the presumption that the
land had never been part of the public domain or that it had been private property even before
the Spanish conquest.34 If the Subject Property was already private property before the Spanish
conquest, then it would have been beyond the power of the Queen of Spain to award or grant to
anyone.
The title to and possession of the Subject Property by petitioners’ predecessors-in-interest could be
traced only as far back as the Spanish title of Don Hermogenes Rodriguez. Petitioners, having
acquired portions of the Subject Property by assignment, could acquire no better title to the said
portions than their predecessors-in-interest, and hence, their title can only be based on the same
Spanish title.
Respondent maintained that P.D. No. 892 prevents petitioners from invoking the Spanish title as
basis of their ownership of the Subject Property. P.D. No. 892 strengthens the Torrens system by
discontinuing the system of registration under the Spanish Mortgage Law, and by categorically
declaring all lands recorded under the latter system, not yet covered by Torrens title, unregistered
lands. It further provides that within six months from its effectivity, all holders of Spanish titles or
grants should apply for registration of their land under what is now P.D. No. 1529, otherwise known
as the Land Registration Decree. Thereafter, Spanish titles can no longer be used as evidence of land
ownership in any registration proceedings under the Torrens system. 35 Indubitably, P.D. No. 892
divests the Spanish titles of any legal force and effect in establishing ownership over real property.
P.D. No. 892 became effective on 16 February 1976. The successors of Don Hermogenes Rodriguez
had only until 14 August 1976 to apply for a Torrens title in their name covering the Subject
Property. In the absence of an allegation in petitioners’ Complaint that petitioners’ predecessors-
in-interest complied with P.D. No. 892, then it could be assumed that they failed to do so. Since they
failed to comply with P.D. No. 892, then the successors of Don Hermogenes Rodriguez were already
enjoined from presenting the Spanish title as proof of their ownership of the Subject Property in
registration proceedings.
Registration proceedings under the Torrens system do not create or vest title, but only confirm and
record title already created and vested.36 By virtue of P.D. No. 892, the courts, in registration
proceedings under the Torrens system, are precluded from accepting, confirming and recording a
Spanish title. Reason therefore dictates that courts, likewise, are prevented from accepting and
indirectly confirming such Spanish title in some other form of action brought before them (i.e.,
removal of cloud on or quieting of title), only short of ordering its recording or registration. To rule
otherwise would open the doors to the circumvention of P.D. No. 892, and give rise to the existence
of land titles, recognized and affirmed by the courts, but would never be recorded under the Torrens
system of registration. This would definitely undermine the Torrens system and cause confusion
and instability in property ownership that P.D. No. 892 intended to eliminate.
Petitioners argued that the Spanish title may still be presented as proof of ownership on the basis
of the exception provided in the fourth whereas clause of P.D. No. 892, which reads:
WHEREAS, Spanish titles to lands which have not yet been brought under the operation of the
Torrens system, being subject to prescription, are now ineffective to prove ownership unless
accompanied by proof of actual possession; . . .
Since Petitioners alleged that they were in actual possession of the Subject Property, then they
could still present the Spanish title as evidence of their ownership of the Subject Property. 37
This Court cannot sustain petitioners’ argument. Actual proof of possession only becomes necessary
because, as the same whereas clause points out, Spanish titles are subject to prescription. A holder
of a Spanish title may still lose his ownership of the real property to the occupant who actually
possesses the same for the required prescriptive period.38 Because of this inherent weakness of a
Spanish title, the applicant for registration of his Spanish title under the Torrens system must also
submit proof that he is in actual possession of the real property, so as to discount the possibility
that someone else has acquired a better title to the same property by virtue of prescription.
Moreover, legislative intent must be ascertained from a consideration of the statute as a whole,
and not just a particular provision alone. A word or phrase taken in the abstract may easily convey
a meaning quite different from the one actually intended and evident when the word or phrase is
considered with those with which it is associated. An apparently general provision may have a
limited application if read together with other provisions of the statute.39
The fourth whereas clause of P.D. No. 892 should be interpreted and harmonized with the other
provisions of the whole statute.40 Note that the tenor of the whole presidential decree is to
discontinue the use of Spanish titles and to strip them of any probative value as evidence of
ownership. It had clearly set a deadline for the filing of applications for registration of all Spanish
titles under the Torrens system (i.e., six months from its effectivity or on 14 August 1976), after
which, the Spanish titles may no longer be presented to prove ownership.
All holders of Spanish titles should have filed applications for registration of their title on or before
14 August 1976. In a land registration proceeding, the applicant should present to the court his
Spanish title plus proof of actual possession of the real property. However, if such land registration
proceeding was filed and initiated after 14 August 1976, the applicant could no longer present his
Spanish title to the court to evidence his ownership of the real property, regardless of whether the
real property was in his actual possession.
Therefore, the fact that petitioners were in actual possession of the Subject Property when they
filed the Complaint with the trial court on 29 April 1996 does not exclude them from the application
of P.D. No. 892, and their Spanish title remain inadmissible as evidence of their ownership of the
Subject Property, whether in a land registration proceeding or in an action to remove a cloud on or
to quiet title.

The preceding discussion does not bar holders of Spanish titles from claiming ownership of the real
property on some other basis, such as those provided in either the Land Registration Decree 41 or
the Public Land Act.42 Petitioners though failed to allege any other basis for their titles in their
Complaint aside from possession of the Subject Property from time immemorial, which this Court
has already controverted; and the Spanish title, which is already ineffective to prove ownership over
the Subject Property.

Therefore, without legal or equitable title to the Subject Property, the petitioners lacked the
personality to file an action for removal of a cloud on, or quieting of, title and their Complaint was
properly dismissed for failing to state a cause of action. In view of the dismissal of the case on this
ground, it is already unnecessary for this Court to address the issue of prescription of the action.

Wherefore, this Court DENIES the instant petition and AFFIRMS the Decision of the Court of Appeals,
dated 29 July 2002, and the Order of the Regional Trial Court of San Mateo, Rizal, Branch 77, dated
05 February 1999, dismissing petitioners’ Complaint for failure to state a cause of action.

SO ORDERED.
CIVPRO – PARTIES TO CIVIL ACTIONS – LACK OF PERSONALITY TO SUE
G.R. No. 136433 December 6, 2006
ANTONIO B. BALTAZAR, petitioner,
vs.
HONORABLE OMBUDSMAN, EULOGIO M. MARIANO, JOSE D. JIMENEZ, JR., TORIBIO E. ILAO, JR.
and ERNESTO R. SALENGA, respondents.
DECISION
VELASCO, JR., J.:
The Case
Ascribing grave abuse of discretion to respondent Ombudsman, this Petition for Review on
Certiorari,1 under Rule 45 pursuant to Section 27 of RA 6770,2 seeks to reverse and set aside the
November 26, 1997 Order3 of the Office of the Special Prosecutor (OSP) in OMB-1-94-3425 duly
approved by then Ombudsman Aniano Desierto on August 21, 1998, which recommended the
dismissal of the Information4 in Criminal Case No. 23661 filed before the Sandiganbayan against
respondents Pampanga Provincial Adjudicator Toribio E. Ilao, Jr., Chief Legal Officer Eulogio M.
Mariano and Legal Officer Jose D. Jimenez, Jr. (both of the DAR Legal Division in San Fernando,
Pampanga), and Ernesto R. Salenga. The petition likewise seeks to set aside the October 30, 1998
Memorandum5 of the OSP duly approved by the Ombudsman on November 27, 1998 which denied
petitioner's Motion for Reconsideration.6 Previously, the filing of the Information against said
respondents was authorized by the May 10, 1996 Resolution7 and October 3, 1996 Order8 of the
Ombudsman which found probable cause that they granted unwarranted benefits, advantage, and
preference to respondent Salenga in violation of Section 3 (e) of RA 3019.9
The Facts
Paciencia Regala owns a seven (7)-hectare fishpond located at Sasmuan, Pampanga. Her Attorney-
in-Fact Faustino R. Mercado leased the fishpond for PhP 230,000.00 to Eduardo Lapid for a three
(3)-year period, that is, from August 7, 1990 to August 7, 1993. 10 Lessee Eduardo Lapid in turn sub-
leased the fishpond to Rafael Lopez for PhP 50,000.00 during the last seven (7) months of the
original lease, that is, from January 10, 1993 to August 7, 1993.11 Respondent Ernesto Salenga was
hired by Eduardo Lapid as fishpond watchman (bante-encargado). In the sub-lease, Rafael Lopez
rehired respondent Salenga.
Meanwhile, on March 11, 1993, respondent Salenga, through a certain Francis Lagman, sent his
January 28, 1993 demand letter12 to Rafael Lopez and Lourdes Lapid for unpaid salaries and non-
payment of the 10% share in the harvest.
On June 5, 1993, sub-lessee Rafael Lopez wrote a letter to respondent Salenga informing the latter
that for the last two (2) months of the sub-lease, he had given the rights over the fishpond to Mario
Palad and Ambit Perez for PhP 20,000.00.13 This prompted respondent Salenga to file a Complaint14
before the Provincial Agrarian Reform Adjudication Board (PARAB), Region III, San Fernando,
Pampanga docketed as DARAB Case No. 552-P’93 entitled Ernesto R. Salenga v. Rafael L. Lopez and
Lourdes L. Lapid for Maintenance of Peaceful Possession, Collection of Sum of Money and
Supervision of Harvest. The Complaint was signed by respondent Jose D. Jimenez, Jr., Legal Officer
of the Department of Agrarian Reform (DAR) Region III Office in San Fernando, Pampanga, as
counsel for respondent Salenga; whereas respondent Eulogio M. Mariano was the Chief Legal
Officer of DAR Region III. The case was assigned to respondent Toribio E. Ilao, Jr., Provincial
Adjudicator of DARAB, Pampanga.
On May 10, 1993, respondent Salenga amended his complaint.15 The amendments included a prayer
for the issuance of a temporary restraining order (TRO) and preliminary injunction. However, before
the prayer for the issuance of a TRO could be acted upon, on June 16, 1993, respondent Salenga
filed a Motion to Maintain Status Quo and to Issue Restraining Order16 which was set for hearing on
June 22, 1993. In the hearing, however, only respondent Salenga with his counsel appeared despite
notice to the other parties. Consequently, the ex-parte presentation of respondent Salenga’s
evidence in support of the prayer for the issuance of a restraining order was allowed, since the
motion was unopposed, and on July 21, 1993, respondent Ilao, Jr. issued a TRO.17
Thereafter, respondent Salenga asked for supervision of the harvest, which the board sheriff did.
Accordingly, defendants Lopez and Lapid received their respective shares while respondent Salenga
was given his share under protest. In the subsequent hearing for the issuance of a preliminary
injunction, again, only respondent Salenga appeared and presented his evidence for the issuance of
the writ.
Pending resolution of the case, Faustino Mercado, as Attorney-in-Fact of the fishpond owner
Paciencia Regala, filed a motion to intervene which was granted by respondent Ilao, Jr. through the
November 15, 1993 Order. After the trial, respondent Ilao, Jr. rendered a Decision on May 29, 1995
dismissing the Complaint for lack of merit; but losing plaintiff, respondent Salenga, appealed the
decision before the DARAB Appellate Board.
Complaint Before the Ombudsman
On November 24, 1994, pending resolution of the agrarian case, the instant case was instituted by
petitioner Antonio Baltazar, an alleged nephew of Faustino Mercado, through a Complaint-
Affidavit18 against private respondents before the Office of the Ombudsman which was docketed as
OMB-1-94-3425 entitled Antonio B. Baltazar v. Eulogio Mariano, Jose Jimenez, Jr., Toribio Ilao, Jr.
and Ernesto Salenga for violation of RA 3019. Petitioner charged private respondents of conspiracy
through the issuance of the TRO in allowing respondent Salenga to retain possession of the
fishpond, operate it, harvest the produce, and keep the sales under the safekeeping of other private
respondents. Moreover, petitioner maintains that respondent Ilao, Jr. had no jurisdiction to hear
and act on DARAB Case No. 552-P’93 filed by respondent Salenga as there was no tenancy relation
between respondent Salenga and Rafael L. Lopez, and thus, the complaint was dismissible on its
face.
Through the December 14, 1994 Order,19 the Ombudsman required private respondents to file their
counter-affidavits, affidavits of their witnesses, and other controverting evidence. While the other
respondents submitted their counter-affidavits, respondent Ilao, Jr. instead filed his February 9,
1995 motion to dismiss, February 21, 1995 Reply, and March 24, 1995 Rejoinder.
Ombudsman’s Determination of Probable Cause
On May 10, 1996, the Ombudsman issued a Resolution20 finding cause to bring respondents to
court, denying the motion to dismiss of respondent Ilao, Jr., and recommending the filing of an
Information for violation of Section 3 (e) of RA 3019. Subsequently, respondent Ilao, Jr. filed his
September 16, 1996 Motion for Reconsideration and/or Re-investigation21 which was denied
through the October 3, 1996 Order.22 Consequently, the March 17, 1997 Information23 was filed
against all the private respondents before the Sandiganbayan which was docketed as Criminal Case
No. 23661.
Before the graft court, respondent Ilao, Jr. filed his May 19, 1997 Motion for Reconsideration and/or
Re-investigation which was granted through the August 29, 1997 Order.24 On September 8, 1997,
respondent Ilao, Jr. subsequently filed his Counter-Affidavit25 with attachments while petitioner did
not file any reply-affidavit despite notice to him. The OSP of the Ombudsman conducted the re-
investigation; and the result of the re-investigation was embodied in the assailed November 26,
1997 Order26 which recommended the dismissal of the complaint in OMB-1-94-3425 against all
private respondents. Upon review, the Ombudsman approved the OSP’s recommendation on
August 21, 1998.
Petitioner’s Motion for Reconsideration27 was likewise denied by the OSP through the October 30,
1998 Memorandum28 which was approved by the Ombudsman on November 27, 1998.
Consequently, the trial prosecutor moved orally before the Sandiganbayan for the dismissal of
Criminal Case No. 23661 which was granted through the December 11, 1998 Order.29
Thus, the instant petition is before us.
The Issues
Petitioner raises two assignments of errors, to wit:
THE HONORABLE OMBUDSMAN ERRED IN GIVING DUE COURSE A MISPLACED COUNTER-
AFFIDAVIT FILED AFTER THE TERMINATION OF THE PRELIMINARY INVESTIGATION AND/OR THE
CASE WAS ALREADY FILED BEFORE THE SANDIGANBAYAN.
ASSUMING OTHERWISE, THE HONORABLE OMBUDSMAN LIKEWISE ERRED IN REVERSING HIS
OWN RESOLUTION WHERE IT WAS RESOLVED THAT ACCUSED AS PROVINCIAL AGRARIAN
ADJUDICATOR HAS NO JURISDICTION OVER A COMPLAINT WHERE THERE EXIST [sic] NO TENANCY
RELATIONSHIP CONSIDERING [sic] COMPLAINANT IS NOT A TENANT BUT A "BANTE-ENCARGADO"
OR WATCHMAN-OVERSEER HIRED FOR A SALARY OF P3,000.00 PER MONTH AS ALLEGED IN HIS
OWN COMPLAINT.30
Before delving into the errors raised by petitioner, we first address the preliminary procedural issue
of the authority and locus standi of petitioner to pursue the instant petition.
Preliminary Issue: Legal Standing
Locus standi is defined as "a right of appearance in a court of justice x x x on a given question."31 In
private suits, standing is governed by the "real-parties-in interest" rule found in Section 2, Rule 3 of
the 1997 Rules of Civil Procedure which provides that "every action must be prosecuted or defended
in the name of the real party in interest." Accordingly, the "real-party-in interest" is "the party who
stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of
the suit."32 Succinctly put, the plaintiffs’ standing is based on their own right to the relief sought.
The records show that petitioner is a non-lawyer appearing for himself and conducting litigation in
person. Petitioner instituted the instant case before the Ombudsman in his own name. In so far as
the Complaint-Affidavit filed before the Office of the Ombudsman is concerned, there is no question
on his authority and legal standing. Indeed, the Office of the Ombudsman is mandated to
"investigate and prosecute on its own or on complaint by any person, any act or omission of any
public officer or employee, office or agency, when such act or omission appears to be illegal, unjust,
improper or inefficient (emphasis supplied)."33 The Ombudsman can act on anonymous complaints
and motu proprio inquire into alleged improper official acts or omissions from whatever source,
e.g., a newspaper.34 Thus, any complainant may be entertained by the Ombudsman for the latter
to initiate an inquiry and investigation for alleged irregularities.
However, filing the petition in person before this Court is another matter. The Rules allow a non-
lawyer to conduct litigation in person and appear for oneself only when he is a party to a legal
controversy. Section 34 of Rule 138 pertinently provides, thus:
SEC. 34. By whom litigation conducted. – In the court of a justice of the peace a party may conduct
his litigation in person, with the aid of an agent or friend appointed by him for that purpose, or
with the aid of an attorney. In any other court, a party may conduct his litigation personally or by
aid of an attorney, and his appearance must be either personal or by a duly authorized member
of the bar (emphases supplied).
Petitioner has no legal standing
Is petitioner a party or a real party in interest to have the locus standi to pursue the instant petition?
We answer in the negative.
While petitioner may be the complainant in OMB-1-94-3425, he is not a real party in interest.
Section 2, Rule 3 of the 1997 Rules of Civil Procedure stipulates, thus:
SEC. 2. Parties in interest. – A real party in interest is the party who stands to be benefited or
injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise
authorized by law or these Rules, every action must be prosecuted or defended in the name of
the real party in interest.
The same concept is applied in criminal and administrative cases.
In the case at bar which involves a criminal proceeding stemming from a civil (agrarian) case, it is
clear that petitioner is not a real party in interest. Except being the complainant, the records show
that petitioner is a stranger to the agrarian case. It must be recalled that the undisputed owner of
the fishpond is Paciencia Regala, who intervened in DARAB Case No. 552-P’93 through her Attorney-
in-Fact Faustino Mercado in order to protect her interest. The motion for intervention filed by
Faustino Mercado, as agent of Paciencia Regala, was granted by respondent Provincial Adjudicator
Ilao, Jr. through the November 15, 1993 Order in DARAB Case No. 552-P’93.
Agency cannot be further delegated
Petitioner asserts that he is duly authorized by Faustino Mercado to institute the suit and presented
a Special Power of Attorney35 (SPA) from Faustino Mercado. However, such SPA is unavailing for
petitioner. For one, petitioner’s principal, Faustino Mercado, is an agent himself and as such cannot
further delegate his agency to another. Otherwise put, an agent cannot delegate to another the
same agency. The legal maxim potestas delegata non delegare potest; a power once delegated
cannot be re-delegated, while applied primarily in political law to the exercise of legislative power,
is a principle of agency.36 For another, a re-delegation of the agency would be detrimental to the
principal as the second agent has no privity of contract with the former. In the instant case,
petitioner has no privity of contract with Paciencia Regala, owner of the fishpond and principal of
Faustino Mercado.
Moreover, while the Civil Code under Article 189237 allows the agent to appoint a substitute, such
is not the situation in the instant case. The SPA clearly delegates the agency to petitioner to pursue
the case and not merely as a substitute. Besides, it is clear in the aforecited Article that what is
allowed is a substitute and not a delegation of the agency.
Clearly, petitioner is neither a real party in interest with regard to the agrarian case, nor is he a real
party in interest in the criminal proceedings conducted by the Ombudsman as elevated to the
Sandiganbayan. He is not a party who will be benefited or injured by the results of both cases.
Petitioner: a stranger and not an injured private complainant
Petitioner only surfaced in November 1994 as complainant before the Ombudsman. Aside from
that, not being an agent of the parties in the agrarian case, he has no locus standi to pursue this
petition. He cannot be likened to an injured private complainant in a criminal complaint who has
direct interest in the outcome of the criminal case.
More so, we note that the petition is not pursued as a public suit with petitioner asserting a "public
right" in assailing an allegedly illegal official action, and doing so as a representative of the general
public. He is pursuing the instant case as an agent of an ineffective agency.
Petitioner has not shown entitlement to judicial protection
Even if we consider the instant petition as a public suit, where we may consider petitioner suing as
a "stranger," or in the category of a "citizen," or "taxpayer," still petitioner has not adequately
shown that he is entitled to seek judicial protection. In other words, petitioner has not made out a
sufficient interest in the vindication of the public order and the securing of relief as a "citizen" or
"taxpayer"; more so when there is no showing that he was injured by the dismissal of the criminal
complaint before the Sandiganbayan.
Based on the foregoing discussion, petitioner indubitably does not have locus standi to pursue this
action and the instant petition must be forthwith dismissed on that score. Even granting arguendo
that he has locus standi, nonetheless, petitioner fails to show grave abuse of discretion of
respondent Ombudsman to warrant a reversal of the assailed November 26, 1997 Order and the
October 30, 1998 Memorandum.
First Issue: Submission of Counter-Affidavit
The Sandiganbayan, not the Ombudsman, ordered re-investigation
On the substantive aspect, in the first assignment of error, petitioner imputes grave abuse of
discretion on public respondent Ombudsman for allowing respondent Ilao, Jr. to submit his Counter-
Affidavit when the preliminary investigation was already concluded and an Information filed with
the Sandiganbayan which assumed jurisdiction over the criminal case. This contention is utterly
erroneous.
The facts clearly show that it was not the Ombudsman through the OSP who allowed respondent
Ilao, Jr. to submit his Counter-Affidavit. It was the Sandiganbayan who granted the prayed for re-
investigation and ordered the OSP to conduct the re-investigation through its August 29, 1997
Order, as follows:
Considering the manifestation of Prosecutor Cicero Jurado, Jr. that accused Toribio E. Ilao, Jr. was
not able to file his counter-affidavit in the preliminary investigation, there appears to be some
basis for granting the motion of said accused for reinvestigation.
WHEREFORE, accused Toribio E. Ilao, Jr. may file his counter-affidavit, with documentary
evidence attached, if any, with the Office of the Special Prosecutor within then (10) days from
today. The prosecution is ordered to conduct a reinvestigation within a period of thirty (30)
days.38 (Emphases supplied.)
As it is, public respondent Ombudsman through the OSP did not exercise any discretion in allowing
respondent Ilao, Jr. to submit his Counter-Affidavit. The OSP simply followed the graft court’s
directive to conduct the re-investigation after the Counter-Affidavit of respondent Ilao, Jr. was filed.
Indeed, petitioner did not contest nor question the August 29, 1997 Order of the graft court.
Moreover, petitioner did not file any reply-affidavit in the re-investigation despite notice.
Re-investigation upon sound discretion of graft court
Furthermore, neither can we fault the graft court in granting the prayed for re-investigation as it
can readily be seen from the antecedent facts that respondent Ilao, Jr. was not given the
opportunity to file his Counter-Affidavit. Respondent Ilao, Jr. filed a motion to dismiss with the
Ombudsman but such was not resolved before the Resolution—finding cause to bring respondents
to trial—was issued. In fact, respondent Ilao, Jr.’s motion to dismiss was resolved only through the
May 10, 1996 Resolution which recommended the filing of an Information. Respondent Ilao, Jr.’s
Motion for Reconsideration and/or Re-investigation was denied and the Information was filed with
the graft court.
Verily, courts are given wide latitude to accord the accused ample opportunity to present
controverting evidence even before trial as demanded by due process. Thus, we held in Villaflor v.
Vivar that "[a] component part of due process in criminal justice, preliminary investigation is a
statutory and substantive right accorded to the accused before trial. To deny their claim to a
preliminary investigation would be to deprive them of the full measure of their right to due
process."39
Second Issue: Agrarian Dispute
Anent the second assignment of error, petitioner contends that DARAB Case No. 552-P’93 is not an
agrarian dispute and therefore outside the jurisdiction of the DARAB. He maintains that respondent
Salenga is not an agricultural tenant but a mere watchman of the fishpond owned by Paciencia
Regala. Moreover, petitioner further argues that Rafael Lopez and Lourdes Lapid, the respondents WHEREFORE, the instant petition is DENIED for lack of merit, and the November 26, 1997 Order and
in the DARAB case, are not the owners of the fishpond. the October 30, 1998 Memorandum of the Office of the Special Prosecutor in Criminal Case No.
23661 (OMB-1-94-3425) are hereby AFFIRMED IN TOTO, with costs against petitioner.
Nature of the case determined by allegations in the complaint
SO ORDERED.
This argument is likewise bereft of merit. Indeed, as aptly pointed out by respondents and as borne
out by the antecedent facts, respondent Ilao, Jr. could not have acted otherwise. It is a settled rule
that jurisdiction over the subject matter is determined by the allegations of the complaint.40 The
nature of an action is determined by the material averments in the complaint and the character of
the relief sought,41 not by the defenses asserted in the answer or motion to dismiss.42 Given that
respondent Salenga’s complaint and its attachment clearly spells out the jurisdictional allegations
that he is an agricultural tenant in possession of the fishpond and is about to be ejected from it,
clearly, respondent Ilao, Jr. could not be faulted in assuming jurisdiction as said allegations
characterize an agricultural dispute. Besides, whatever defense asserted in an answer or motion to
dismiss is not to be considered in resolving the issue on jurisdiction as it cannot be made dependent
upon the allegations of the defendant.

Issuance of TRO upon the sound discretion of hearing officer

As regards the issuance of the TRO, considering the proper assumption of jurisdiction by respondent
Ilao, Jr., it can be readily culled from the antecedent facts that his issuance of the TRO was a proper
exercise of discretion. Firstly, the averments with evidence as to the existence of the need for the
issuance of the restraining order were manifest in respondent Salenga’s Motion to Maintain Status
Quo and to Issue Restraining Order,43 the attached Police Investigation Report,44 and Medical
Certificate.45 Secondly, only respondent Salenga attended the June 22, 1993 hearing despite notice
to parties. Hence, Salenga’s motion was not only unopposed but his evidence adduced ex-parte also
adequately supported the issuance of the restraining order.

Premises considered, respondent Ilao, Jr. has correctly assumed jurisdiction and properly exercised
his discretion in issuing the TRO—as respondent Ilao, Jr. aptly maintained that giving due course to
the complaint and issuing the TRO do not reflect the final determination of the merits of the case.
Indeed, after hearing the case, respondent Ilao, Jr. rendered a Decision on May 29, 1995 dismissing
DARAB Case No. 552-P’93 for lack of merit.

Court will not review prosecutor’s determination of probable cause

Finally, we will not delve into the merits of the Ombudsman’s reversal of its initial finding of
probable cause or cause to bring respondents to trial. Firstly, petitioner has not shown that the
Ombudsman committed grave abuse of discretion in rendering such reversal. Secondly, it is clear
from the records that the initial finding embodied in the May 10, 1996 Resolution was arrived at
before the filing of respondent Ilao, Jr.’s Counter-Affidavit. Thirdly, it is the responsibility of the
public prosecutor, in this case the Ombudsman, to uphold the law, to prosecute the guilty, and to
protect the innocent. Lastly, the function of determining the existence of probable cause is proper
for the Ombudsman in this case and we will not tread on the realm of this executive function to
examine and assess evidence supplied by the parties, which is supposed to be exercised at the start
of criminal proceedings. In Perez v. Hagonoy Rural Bank, Inc.,46 as cited in Longos Rural Waterworks
and Sanitation Association, Inc. v. Hon. Desierto,47 we had occasion to rule that we cannot pass upon
the sufficiency or insufficiency of evidence to determine the existence of probable cause.48
CIVPRO – PARTIES TO CIVIL ACTIONS – STANDING TO SUE
G.R. No. 161065. April 15, 2005
EUFEMIO C. DOMINGO, CELSO D. GANGAN, PACASIO S. BANARIA, SOFRONIO B. URSAL, ALBERTO
P. CRUZ, MARIA L. MATIB, RACHEL U. PACPACO, ANGELO G. SANCHEZ, and SHERWIN A. SIP-AN,
Petitioners,
vs.
HON. GUILLERMO N. CARAGUE, in his capacity as Chairman, Commission on Audit, HON.
EMMANUEL M. DALMAN and HON. RAUL C. FLORES, in their capacities as Commissioners,
Commission on Audit, Respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Judicial power is the power to hear and decide cases pending between parties who have the right
to sue in courts of law and equity.1 Corollary to this dictum is the principle of locus standi of a litigant.
He who is directly affected and whose interest is immediate and substantial has the standing to sue.
Thus, a party must show a personal stake in the outcome of the case or an injury to himself that can
be redressed by a favorable decision in order to warrant an invocation of the court’s jurisdiction
and justify the exercise of judicial power on his behalf.
Assailed in this petition for certiorari is the legality of Resolution No. 2002-05 of the Commission on
Audit (COA) providing for Organizational Restructuring Plan. The above-named petitioners basically
alleged therein that this Plan is intrinsically void for want of an enabling law authorizing COA to
undertake the same and providing for the necessary standards, conditions, restrictions, limitations,
guidelines, and parameters. Petitioners further alleged that in initiating such Organizational
Restructuring Plan without legal authority, COA committed grave abuse of discretion amounting to
lack or excess of jurisdiction.
At this point, it is pertinent to state that the COA is a quasi-judicial body and that its decision, order
or ruling may be brought to the Supreme Court on certiorari by the aggrieved party.2
Petitioners Eufemio C. Domingo, Celso C. Gangan, Pascasio S. Banaria are retired Chairmen, while
Sofronio B. Ursal, and Alberto P. Cruz are retired Commissioners of COA. All claim "to maintain a
deep-seated abiding interest in the affairs of COA,"3 especially in its Organizational Restructuring
Plan, as concerned taxpayers.
The other petitioners are incumbent officers or employees of COA. Maria L. Matib and Angelo G.
Sanchez are State Auditor III and State Auditor II, respectively, assigned to the Cordillera
Administrative Region (CAR). Prior to the implementation of the questioned COA Organizational
Restructuring Plan, they were Resident Auditors and later Audit Team Leaders. Petitioner Rachel U.
Pacpaco is a State Auditor III assigned to CAR and a Team Supervisor, while petitioner Sherwin A.
Sipi-an is a State Auditor I also assigned at the CAR. These petitioners claim that they were
unceremoniously divested of their designations/ranks as Unit Head, Team Supervisor, and Team
Leader upon implementation of the COA Organizational Restructuring Plan without just cause and
without due process, in violation of Civil Service Law. Moreover, they were deprived of their
respective Representation and Transportation Allowances (RATA), thus causing them undue
financial prejudice.
Petitioners now invoke this Court’s judicial power to strike down the COA Organizational
Restructuring Plan for being unconstitutional or illegal.
Initially, for our resolution is the issue of whether petitioners have the legal standing to institute the
instant petition.
Petitioners invoke our ruling in Chavez v. Public Estates Authority,4 Agan, Jr. v. Philippine
International Air Terminals Co., Inc.,5 and Information Technology Foundation of the Philippines v.
Commission on Elections6 that where the subject matter of a case is a matter of public concern and
imbued with public interest, then this fact alone gives them legal standing to institute the instant
petition. Petitioners contend that the COA Organizational Restructuring Plan is not just a mere
reorganization but a revamp or overhaul of the COA, with a "spillover effect" upon its audit
performance. This will have an impact upon the rest of the government bodies subject to its audit
supervision, thus, should be treated as a matter of transcendental importance. Consequently,
petitioners’ legal standing should be recognized and upheld.
Respondents, through the Office of the Solicitor General (OSG), counter that petitioners have no
legal standing to file the present petition since following our ruling in Kilusang Mayo Uno Labor
Center v. Garcia, Jr.,7 they have not shown "a personal stake in the outcome of the case" or an actual
or potential injury that can be redressed by our favorable decision. Petitioners themselves admitted
that "they do not seek any affirmative relief nor impute any improper or improvident act against
the said respondents" and "are not motivated by any desire to seek affirmative relief from COA or
from respondents that would redound to their personal benefit or gain." It is clear then that
petitioners failed to show any "present substantial interest" in the outcome of this case, citing
Kilosbayan v. Morato.8 Nor may petitioners claim that as taxpayers, they have legal standing since
nowhere in their petition do they claim that public funds are being spent in violation of law or that
there is a misapplication of the taxpayers’ money, as we ruled in Dumlao v. Comelec.9
Petitioners’ reliance upon our rulings in Chavez,10 Agan, Jr.,11 and Information Technology
Foundation12 is flawed.
In Chavez, we ruled that the petitioner has legal standing since he is a taxpayer and his purpose in
filing the petition is to compel the Public Estate Authority (PEA) to perform its constitutional duties
with respect to: (a) the right of the citizens to information on matters of public concern; and (b) the
application of a constitutional provision intended to insure the equitable distribution of alienable
lands of the public domain among Filipino citizens. The thrust of the first is to compel PEA to disclose
publicly information on the sale of Government lands worth billions of pesos, as mandated by the
Constitution and statutory law. The thrust of the second is to prevent PEA from alienating hundreds
of hectares of alienable lands of the public domain, thereby compelling it to comply with a
constitutional duty to the nation. We held that these matters are of transcendental public
importance.13
In Agan, Jr., we held that petitioners have legal standing as they have a direct and substantial
interest to protect. By the implementation of the PIATCO contracts, they stand to lose their source
of livelihood, a property right zealously protected by the Constitution. Such financial prejudice on
their part is sufficient to confer upon them the requisite locus standi.14
In Information Technology Foundation, there were two reasons why petitioners’ standing was 1. All holders of State Auditor IV position shall be entitled to fixed commutable RATA wherever they
recognized. First, the nation’s political and economic future virtually hangs in the balance, pending are assigned.
the outcome of the 2004 elections. Accordingly, the award for the automation of the electoral
process was a matter of public concern, imbued with public interest. Second, the individual 2. Henceforth, only State Auditors IV shall be assigned as new Unit Heads or Team Leaders.
petitioners, as taxpayers, asserted a material interest in seeing to it that public funds are properly
used.
3. State Auditors below State Auditor IV assigned as Unit Heads or Team Leaders who have been
receiving fixed RATA shall continue to be designated as such and to receive the RATA until relieved
Here, petitioners have not shown any direct and personal interest in the COA Organizational of the designation for incompetence, inefficiency, or misconduct.
Restructuring Plan. There is no indication that they have sustained or are in imminent danger of
sustaining some direct injury as a result of its implementation. In fact, they admitted that "they do
All others who collect RATA on reimbursable basis, including those paid on a daily basis under COA
not seek any affirmative relief nor impute any improper or improvident act against the respondents"
Resolution No. 99-007 dated June 7, 1999, are likewise entitled thereto.
and "are not motivated by any desire to seek affirmative relief from COA or from respondents that
would redound to their personal benefit or gain." Clearly, they do not have any legal standing to file
the instant suit. Matib, Pacpaco, Sanchez, and Sipi-An are not qualified to be Audit Team Leaders or to receive fixed
monthly RATA since none of them holds the rank or position of State Auditor IV. But this does not
mean that they are not entitled to receive reimbursable RATA if they are designated as Audit Team
We are well aware of the averments of petitioners Matib, Pacpaco, Sanchez, and Sipi-An that they
Leaders. It is clear from the text of the said COA Memorandum that the principle of non-diminution
were demoted and unceremoniously divested of their previous designations as Unit Head, Team
of benefits has been upheld.
Supervisor, or Team Leader; that they were deprived of their RATA; that they were relegated to
being mere Team Members, entitled to only a reimbursable transportation allowance; and that they
were denied due process. Thus, in the implementation of the COA Organizational Restructuring Plan, we fail to see how
petitioners could have sustained personal injury as they have not shown to have a personal stake
therein. Accordingly, they are wanting in legal standing to institute the instant petition. Corollarily,
Such averments lack merit. Actually, they were not demoted. Under Section 11, Rule VII of the
we find no reason to delve into the constitutionality or legality of the COA Organizational
Omnibus Rules Implementing Book V of the Administrative Code of 1987, a demotion is the
Restructuring Plan.
movement from one position to another involving the issuance of an appointment with diminution
in duties, responsibilities, status, or rank which may or may not involve reduction in salary.15 A
demotion by assigning an employee to a lower position in the same service which has a lower rate WHEREFORE, the petition is DISMISSED. No pronouncement as to costs.
of compensation is tantamount to removal, if no cause is shown for it.16
SO ORDERED.
Here, there have been no new appointments issued to Matib, Pacpaco, Sanchez, and Sipi-An under
the COA Organizational Restructuring Plan. Thus, their contention that they have been demoted is
baseless.

Moreover, the change in their status from COA auditors (receiving monthly RATA) to COA auditors
(receiving only reimbursable RATA) cannot be attributed to the COA Organizational Restructuring
Plan but to the implementation of the Audit Team Approach (ATAP), pursuant to COA Resolution
No. 96-305 dated April 16, 1996.

Under the ATAP, an audit team, not a resident auditor, is deployed to conduct an audit. An audit
team may be composed of two (2) or more members under an Audit Team Leader. Whenever
practicable, an Audit Team Supervisor supervises at least three (3) audit teams. The composition of
an audit team is not permanent. Hence, an Audit Team Member may be designated or assigned as
an Audit Team Leader for one assignment and subsequently as a Team Member in another
engagement. The designation depends upon the position or rank of the one who is designated as
an Audit Team Leader. Thus, a State Auditor III who may have been assigned as an Audit Team
Leader in one engagement may find himself relegated to being an Audit Team Member in another
engagement, if a State Auditor IV or State Auditor V is designated as the Audit Team Leader.

Pursuant to the COA Organizational Restructuring Plan, the COA issued Memorandum No. 2002-
03417 providing for the guidelines regarding the payment of RATA, thus:
CIVPRO – PARTIES TO CIVIL ACTIONS – REPRESENTATIVE PARTIES
G.R. No. 101083 July 30, 1993
JUAN ANTONIO, ANNA ROSARIO and JOSE ALFONSO, all surnamed OPOSA, minors, and
represented by their parents ANTONIO and RIZALINA OPOSA, ROBERTA NICOLE SADIUA, minor,
represented by her parents CALVIN and ROBERTA SADIUA, CARLO, AMANDA SALUD and
PATRISHA, all surnamed FLORES, minors and represented by their parents ENRICO and NIDA
FLORES, GIANINA DITA R. FORTUN, minor, represented by her parents SIGRID and DOLORES
FORTUN, GEORGE II and MA. CONCEPCION, all surnamed MISA, minors and represented by their
parents GEORGE and MYRA MISA, BENJAMIN ALAN V. PESIGAN, minor, represented by his
parents ANTONIO and ALICE PESIGAN, JOVIE MARIE ALFARO, minor, represented by her parents
JOSE and MARIA VIOLETA ALFARO, MARIA CONCEPCION T. CASTRO, minor, represented by her
parents FREDENIL and JANE CASTRO, JOHANNA DESAMPARADO,
minor, represented by her parents JOSE and ANGELA DESAMPRADO, CARLO JOAQUIN T.
NARVASA, minor, represented by his parents GREGORIO II and CRISTINE CHARITY NARVASA,
MA. MARGARITA, JESUS IGNACIO, MA. ANGELA and MARIE GABRIELLE, all surnamed SAENZ,
minors, represented by their parents ROBERTO and AURORA SAENZ, KRISTINE, MARY ELLEN,
MAY, GOLDA MARTHE and DAVID IAN, all surnamed KING, minors, represented by their parents
MARIO and HAYDEE KING, DAVID, FRANCISCO and THERESE VICTORIA, all surnamed ENDRIGA,
minors, represented by their parents BALTAZAR and TERESITA ENDRIGA, JOSE MA. and REGINA
MA., all surnamed ABAYA, minors, represented by their parents ANTONIO and MARICA ABAYA,
MARILIN, MARIO, JR. and MARIETTE, all surnamed CARDAMA, minors, represented by their
parents MARIO and LINA CARDAMA, CLARISSA, ANN MARIE, NAGEL, and IMEE LYN, all
surnamed OPOSA, minors and represented by their parents RICARDO and MARISSA OPOSA,
PHILIP JOSEPH, STEPHEN JOHN and ISAIAH JAMES, all surnamed QUIPIT, minors, represented by
their parents JOSE MAX and VILMI QUIPIT, BUGHAW CIELO, CRISANTO, ANNA, DANIEL and
FRANCISCO, all surnamed BIBAL, minors, represented by their parents FRANCISCO, JR. and
MILAGROS BIBAL, and THE PHILIPPINE ECOLOGICAL NETWORK, INC., petitioners,
vs.
THE HONORABLE FULGENCIO S. FACTORAN, JR., in his capacity as the Secretary of the
Department of Environment and Natural Resources, and THE HONORABLE ERIBERTO U.
ROSARIO, Presiding Judge of the RTC, Makati, Branch 66, respondents.
DAVIDE, JR., J.:
In a broader sense, this petition bears upon the right of Filipinos to a balanced and healthful ecology
which the petitioners dramatically associate with the twin concepts of "inter-generational
responsibility" and "inter-generational justice." Specifically, it touches on the issue of whether the
said petitioners have a cause of action to "prevent the misappropriation or impairment" of
Philippine rainforests and "arrest the unabated hemorrhage of the country's vital life support
systems and continued rape of Mother Earth."
The controversy has its genesis in Civil Case No. 90-77 which was filed before Branch 66 (Makati,
Metro Manila) of the Regional Trial Court (RTC), National Capital Judicial Region. The principal
plaintiffs therein, now the principal petitioners, are all minors duly represented and joined by their
respective parents. Impleaded as an additional plaintiff is the Philippine Ecological Network, Inc.
(PENI), a domestic, non-stock and non-profit corporation organized for the purpose of, inter alia,
engaging in concerted action geared for the protection of our environment and natural resources.
The original defendant was the Honorable Fulgencio S. Factoran, Jr., then Secretary of the
Department of Environment and Natural Resources (DENR). His substitution in this petition by the
new Secretary, the Honorable Angel C. Alcala, was subsequently ordered upon proper motion by
the petitioners.1 The complaint2 was instituted as a taxpayers' class suit3 and alleges that the
plaintiffs "are all citizens of the Republic of the Philippines, taxpayers, and entitled to the full benefit,
use and enjoyment of the natural resource treasure that is the country's virgin tropical forests." The
same was filed for themselves and others who are equally concerned about the preservation of said
resource but are "so numerous that it is impracticable to bring them all before the Court." The
minors further asseverate that they "represent their generation as well as generations yet unborn."4
Consequently, it is prayed for that judgment be rendered:
. . . ordering defendant, his agents, representatives and other persons acting in his behalf to —
(1) Cancel all existing timber license agreements in the country;
(2) Cease and desist from receiving, accepting, processing, renewing or approving new timber
license agreements.
and granting the plaintiffs ". . . such other reliefs just and equitable under the premises."5
The complaint starts off with the general averments that the Philippine archipelago of 7,100 islands
has a land area of thirty million (30,000,000) hectares and is endowed with rich, lush and verdant
rainforests in which varied, rare and unique species of flora and fauna may be found; these
rainforests contain a genetic, biological and chemical pool which is irreplaceable; they are also the
habitat of indigenous Philippine cultures which have existed, endured and flourished since time
immemorial; scientific evidence reveals that in order to maintain a balanced and healthful ecology,
the country's land area should be utilized on the basis of a ratio of fifty-four per cent (54%) for forest
cover and forty-six per cent (46%) for agricultural, residential, industrial, commercial and other uses;
the distortion and disturbance of this balance as a consequence of deforestation have resulted in a
host of environmental tragedies, such as (a) water shortages resulting from drying up of the water
table, otherwise known as the "aquifer," as well as of rivers, brooks and streams, (b) salinization of
the water table as a result of the intrusion therein of salt water, incontrovertible examples of which
may be found in the island of Cebu and the Municipality of Bacoor, Cavite, (c) massive erosion and
the consequential loss of soil fertility and agricultural productivity, with the volume of soil eroded
estimated at one billion (1,000,000,000) cubic meters per annum — approximately the size of the
entire island of Catanduanes, (d) the endangering and extinction of the country's unique, rare and
varied flora and fauna, (e) the disturbance and dislocation of cultural communities, including the
disappearance of the Filipino's indigenous cultures, (f) the siltation of rivers and seabeds and
consequential destruction of corals and other aquatic life leading to a critical reduction in marine
resource productivity, (g) recurrent spells of drought as is presently experienced by the entire
country, (h) increasing velocity of typhoon winds which result from the absence of windbreakers, (i)
the floodings of lowlands and agricultural plains arising from the absence of the absorbent
mechanism of forests, (j) the siltation and shortening of the lifespan of multi-billion peso dams
constructed and operated for the purpose of supplying water for domestic uses, irrigation and the
generation of electric power, and (k) the reduction of the earth's capacity to process carbon dioxide
gases which has led to perplexing and catastrophic climatic changes such as the phenomenon of
global warming, otherwise known as the "greenhouse effect."
Plaintiffs further assert that the adverse and detrimental consequences of continued and
deforestation are so capable of unquestionable demonstration that the same may be submitted as
a matter of judicial notice. This notwithstanding, they expressed their intention to present expert
witnesses as well as documentary, photographic and film evidence in the course of the trial.
As their cause of action, they specifically allege that:
CAUSE OF ACTION
7. Plaintiffs replead by reference the foregoing allegations.
8. Twenty-five (25) years ago, the Philippines had some sixteen (16) million hectares of rainforests
constituting roughly 53% of the country's land mass.
9. Satellite images taken in 1987 reveal that there remained no more than 1.2 million hectares of
said rainforests or four per cent (4.0%) of the country's land area.
10. More recent surveys reveal that a mere 850,000 hectares of virgin old-growth rainforests are
left, barely 2.8% of the entire land mass of the Philippine archipelago and about 3.0 million
hectares of immature and uneconomical secondary growth forests.
11. Public records reveal that the defendant's, predecessors have granted timber license
agreements ('TLA's') to various corporations to cut the aggregate area of 3.89 million hectares for
commercial logging purposes.
A copy of the TLA holders and the corresponding areas covered is hereto attached as Annex "A".
12. At the present rate of deforestation, i.e. about 200,000 hectares per annum or 25 hectares
per hour — nighttime, Saturdays, Sundays and holidays included — the Philippines will be bereft
of forest resources after the end of this ensuing decade, if not earlier.
13. The adverse effects, disastrous consequences, serious injury and irreparable damage of this
continued trend of deforestation to the plaintiff minor's generation and to generations yet
unborn are evident and incontrovertible. As a matter of fact, the environmental damages
enumerated in paragraph 6 hereof are already being felt, experienced and suffered by the
generation of plaintiff adults.
14. The continued allowance by defendant of TLA holders to cut and deforest the remaining forest
stands will work great damage and irreparable injury to plaintiffs — especially plaintiff minors
and their successors — who may never see, use, benefit from and enjoy this rare and unique
natural resource treasure.
This act of defendant constitutes a misappropriation and/or impairment of the natural resource
property he holds in trust for the benefit of plaintiff minors and succeeding generations.
15. Plaintiffs have a clear and constitutional right to a balanced and healthful ecology and are
entitled to protection by the State in its capacity as the parens patriae.
16. Plaintiff have exhausted all administrative remedies with the defendant's office. On March 2,
1990, plaintiffs served upon defendant a final demand to cancel all logging permits in the country.
A copy of the plaintiffs' letter dated March 1, 1990 is hereto attached as Annex "B".
17. Defendant, however, fails and refuses to cancel the existing TLA's to the continuing serious
damage and extreme prejudice of plaintiffs.
18. The continued failure and refusal by defendant to cancel the TLA's is an act violative of the
rights of plaintiffs, especially plaintiff minors who may be left with a country that is desertified
(sic), bare, barren and devoid of the wonderful flora, fauna and indigenous cultures which the
Philippines had been abundantly blessed with.
19. Defendant's refusal to cancel the aforementioned TLA's is manifestly contrary to the public
policy enunciated in the Philippine Environmental Policy which, in pertinent part, states that it is
the policy of the State —
(a) to create, develop, maintain and improve conditions under which man and nature can thrive
in productive and enjoyable harmony with each other;
(b) to fulfill the social, economic and other requirements of present and future generations of
Filipinos and;
(c) to ensure the attainment of an environmental quality that is conductive to a life of dignity and
well-being. (P.D. 1151, 6 June 1977)
20. Furthermore, defendant's continued refusal to cancel the aforementioned TLA's is
contradictory to the Constitutional policy of the State to —
a. effect "a more equitable distribution of opportunities, income and wealth" and "make full and
efficient use of natural resources (sic)." (Section 1, Article XII of the Constitution);
b. "protect the nation's marine wealth." (Section 2, ibid);
c. "conserve and promote the nation's cultural heritage and resources (sic)" (Section 14, Article
XIV, id.);
d. "protect and advance the right of the people to a balanced and healthful ecology in accord
with the rhythm and harmony of nature." (Section 16, Article II, id.)
21. Finally, defendant's act is contrary to the highest law of humankind — the natural law — and
violative of plaintiffs' right to self-preservation and perpetuation.
22. There is no other plain, speedy and adequate remedy in law other than the instant action to
arrest the unabated hemorrhage of the country's vital life support systems and continued rape
of Mother Earth. 6
On 22 June 1990, the original defendant, Secretary Factoran, Jr., filed a Motion to Dismiss the
complaint based on two (2) grounds, namely: (1) the plaintiffs have no cause of action against him
and (2) the issue raised by the plaintiffs is a political question which properly pertains to the
legislative or executive branches of Government. In their 12 July 1990 Opposition to the Motion,
the petitioners maintain that (1) the complaint shows a clear and unmistakable cause of action, (2)
the motion is dilatory and (3) the action presents a justiciable question as it involves the defendant's
abuse of discretion.
On 18 July 1991, respondent Judge issued an order granting the aforementioned motion to dismiss.7
In the said order, not only was the defendant's claim — that the complaint states no cause of action
against him and that it raises a political question — sustained, the respondent Judge further ruled
that the granting of the relief prayed for would result in the impairment of contracts which is
prohibited by the fundamental law of the land.
Plaintiffs thus filed the instant special civil action for certiorari under Rule 65 of the Revised Rules
of Court and ask this Court to rescind and set aside the dismissal order on the ground that the
respondent Judge gravely abused his discretion in dismissing the action. Again, the parents of the
plaintiffs-minors not only represent their children, but have also joined the latter in this case.8
On 14 May 1992, We resolved to give due course to the petition and required the parties to submit
their respective Memoranda after the Office of the Solicitor General (OSG) filed a Comment in
behalf of the respondents and the petitioners filed a reply thereto.
Petitioners contend that the complaint clearly and unmistakably states a cause of action as it
contains sufficient allegations concerning their right to a sound environment based on Articles 19,
20 and 21 of the Civil Code (Human Relations), Section 4 of Executive Order (E.O.) No. 192 creating
the DENR, Section 3 of Presidential Decree (P.D.) No. 1151 (Philippine Environmental Policy), Section
16, Article II of the 1987 Constitution recognizing the right of the people to a balanced and healthful
ecology, the concept of generational genocide in Criminal Law and the concept of man's inalienable
right to self-preservation and self-perpetuation embodied in natural law. Petitioners likewise rely
on the respondent's correlative obligation per Section 4 of E.O. No. 192, to safeguard the people's
right to a healthful environment.
It is further claimed that the issue of the respondent Secretary's alleged grave abuse of discretion
in granting Timber License Agreements (TLAs) to cover more areas for logging than what is available
involves a judicial question.
Anent the invocation by the respondent Judge of the Constitution's non-impairment clause,
petitioners maintain that the same does not apply in this case because TLAs are not contracts. They
likewise submit that even if TLAs may be considered protected by the said clause, it is well settled
that they may still be revoked by the State when the public interest so requires.
On the other hand, the respondents aver that the petitioners failed to allege in their complaint a
specific legal right violated by the respondent Secretary for which any relief is provided by law. They
see nothing in the complaint but vague and nebulous allegations concerning an "environmental
right" which supposedly entitles the petitioners to the "protection by the state in its capacity as
parens patriae." Such allegations, according to them, do not reveal a valid cause of action. They
then reiterate the theory that the question of whether logging should be permitted in the country
is a political question which should be properly addressed to the executive or legislative branches
of Government. They therefore assert that the petitioners' resources is not to file an action to court,
but to lobby before Congress for the passage of a bill that would ban logging totally.
As to the matter of the cancellation of the TLAs, respondents submit that the same cannot be done
by the State without due process of law. Once issued, a TLA remains effective for a certain period
of time — usually for twenty-five (25) years. During its effectivity, the same can neither be revised
nor cancelled unless the holder has been found, after due notice and hearing, to have violated the
terms of the agreement or other forestry laws and regulations. Petitioners' proposition to have all
the TLAs indiscriminately cancelled without the requisite hearing would be violative of the
requirements of due process.
Before going any further, We must first focus on some procedural matters. Petitioners instituted
Civil Case No. 90-777 as a class suit. The original defendant and the present respondents did not
take issue with this matter. Nevertheless, We hereby rule that the said civil case is indeed a class
suit. The subject matter of the complaint is of common and general interest not just to several, but
to all citizens of the Philippines. Consequently, since the parties are so numerous, it, becomes
impracticable, if not totally impossible, to bring all of them before the court. We likewise declare
that the plaintiffs therein are numerous and representative enough to ensure the full protection of
all concerned interests. Hence, all the requisites for the filing of a valid class suit under Section 12,
Rule 3 of the Revised Rules of Court are present both in the said civil case and in the instant petition,
the latter being but an incident to the former.
This case, however, has a special and novel element. Petitioners minors assert that they represent
their generation as well as generations yet unborn. We find no difficulty in ruling that they can, for
themselves, for others of their generation and for the succeeding generations, file a class suit. Their
personality to sue in behalf of the succeeding generations can only be based on the concept of
intergenerational responsibility insofar as the right to a balanced and healthful ecology is
concerned. Such a right, as hereinafter expounded, considers
the "rhythm and harmony of nature." Nature means the created world in its entirety.9 Such rhythm
and harmony indispensably include, inter alia, the judicious disposition, utilization, management,
renewal and conservation of the country's forest, mineral, land, waters, fisheries, wildlife, off-shore
areas and other natural resources to the end that their exploration, development and utilization be
equitably accessible to the present as well as future generations. 10 Needless to say, every
generation has a responsibility to the next to preserve that rhythm and harmony for the full
enjoyment of a balanced and healthful ecology. Put a little differently, the minors' assertion of their
right to a sound environment constitutes, at the same time, the performance of their obligation to
ensure the protection of that right for the generations to come.
The locus standi of the petitioners having thus been addressed, We shall now proceed to the merits
of the petition.
After a careful perusal of the complaint in question and a meticulous consideration and evaluation
of the issues raised and arguments adduced by the parties, We do not hesitate to find for the
petitioners and rule against the respondent Judge's challenged order for having been issued with
grave abuse of discretion amounting to lack of jurisdiction. The pertinent portions of the said order
reads as follows:
xxx xxx xxx
After a careful and circumspect evaluation of the Complaint, the Court cannot help but agree with
the defendant. For although we believe that plaintiffs have but the noblest of all intentions, it
(sic) fell short of alleging, with sufficient definiteness, a specific legal right they are seeking to
enforce and protect, or a specific legal wrong they are seeking to prevent and redress (Sec. 1,
Rule 2, RRC). Furthermore, the Court notes that the Complaint is replete with vague assumptions
and vague conclusions based on unverified data. In fine, plaintiffs fail to state a cause of action in
its Complaint against the herein defendant.
Furthermore, the Court firmly believes that the matter before it, being impressed with political
color and involving a matter of public policy, may not be taken cognizance of by this Court without
doing violence to the sacred principle of "Separation of Powers" of the three (3) co-equal
branches of the Government.
 The Court is likewise of the impression that it cannot, no matter how we stretch our jurisdiction,
grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing timber license agreements
in the country and to cease and desist from receiving, accepting, processing, renewing or
approving new timber license agreements. For to do otherwise would amount to "impairment of
contracts" abhored (sic) by the fundamental law. 11
We do not agree with the trial court's conclusions that the plaintiffs failed to allege with sufficient
definiteness a specific legal right involved or a specific legal wrong committed, and that the
complaint is replete with vague assumptions and conclusions based on unverified data. A reading
of the complaint itself belies these conclusions.
The complaint focuses on one specific fundamental legal right — the right to a balanced and
healthful ecology which, for the first time in our nation's constitutional history, is solemnly
incorporated in the fundamental law. Section 16, Article II of the 1987 Constitution explicitly
provides:
Sec. 16. The State shall protect and advance the right of the people to a balanced and healthful
ecology in accord with the rhythm and harmony of nature.
This right unites with the right to health which is provided for in the preceding section of the
same article:
Sec. 15. The State shall protect and promote the right to health of the people and instill health
consciousness among them.
While the right to a balanced and healthful ecology is to be found under the Declaration of Principles
and State Policies and not under the Bill of Rights, it does not follow that it is less important than
any of the civil and political rights enumerated in the latter. Such a right belongs to a different
category of rights altogether for it concerns nothing less than self-preservation and self-
perpetuation — aptly and fittingly stressed by the petitioners — the advancement of which may
even be said to predate all governments and constitutions. As a matter of fact, these basic rights
need not even be written in the Constitution for they are assumed to exist from the inception of
humankind. If they are now explicitly mentioned in the fundamental charter, it is because of the
well-founded fear of its framers that unless the rights to a balanced and healthful ecology and to
health are mandated as state policies by the Constitution itself, thereby highlighting their continuing
importance and imposing upon the state a solemn obligation to preserve the first and protect and
advance the second, the day would not be too far when all else would be lost not only for the
present generation, but also for those to come — generations which stand to inherit nothing but
parched earth incapable of sustaining life.
The right to a balanced and healthful ecology carries with it the correlative duty to refrain from
impairing the environment. During the debates on this right in one of the plenary sessions of the
1986 Constitutional Commission, the following exchange transpired between Commissioner
Wilfrido Villacorta and Commissioner Adolfo Azcuna who sponsored the section in question:
MR. VILLACORTA:
Does this section mandate the State to provide sanctions against all forms of pollution — air,
water and noise pollution?
MR. AZCUNA:
Yes, Madam President. The right to healthful (sic) environment necessarily carries with it the
correlative duty of not impairing the same and, therefore, sanctions may be provided for
impairment of environmental balance. 12
The said right implies, among many other things, the judicious management and conservation of
the country's forests.
Without such forests, the ecological or environmental balance would be irreversiby disrupted.
Conformably with the enunciated right to a balanced and healthful ecology and the right to health,
as well as the other related provisions of the Constitution concerning the conservation,
development and utilization of the country's natural resources, 13 then President Corazon C. Aquino
promulgated on 10 June 1987 E.O. No. 192, 14 Section 4 of which expressly mandates that the
Department of Environment and Natural Resources "shall be the primary government agency
responsible for the conservation, management, development and proper use of the country's
environment and natural resources, specifically forest and grazing lands, mineral, resources,
including those in reservation and watershed areas, and lands of the public domain, as well as the
licensing and regulation of all natural resources as may be provided for by law in order to ensure
equitable sharing of the benefits derived therefrom for the welfare of the present and future
generations of Filipinos." Section 3 thereof makes the following statement of policy:
Sec. 3. Declaration of Policy. — It is hereby declared the policy of the State to ensure the
sustainable use, development, management, renewal, and conservation of the country's forest,
mineral, land, off-shore areas and other natural resources, including the protection and
enhancement of the quality of the environment, and equitable access of the different segments
of the population to the development and the use of the country's natural resources, not only for
the present generation but for future generations as well. It is also the policy of the state to
recognize and apply a true value system including social and environmental cost implications
relative to their utilization, development and conservation of our natural resources.
This policy declaration is substantially re-stated it Title XIV, Book IV of the Administrative Code of
1987,15 specifically in Section 1 thereof which reads:
Sec. 1. Declaration of Policy. — (1) The State shall ensure, for the benefit of the Filipino people,
the full exploration and development as well as the judicious disposition, utilization,
management, renewal and conservation of the country's forest, mineral, land, waters, fisheries,
wildlife, off-shore areas and other natural resources, consistent with the necessity of maintaining
a sound ecological balance and protecting and enhancing the quality of the environment and the
objective of making the exploration, development and utilization of such natural resources
equitably accessible to the different segments of the present as well as future generations.
(2) The State shall likewise recognize and apply a true value system that takes into account social
and environmental cost implications relative to the utilization, development and conservation of
our natural resources.
The above provision stresses "the necessity of maintaining a sound ecological balance and
protecting and enhancing the quality of the environment." Section 2 of the same Title, on the other
hand, specifically speaks of the mandate of the DENR; however, it makes particular reference to the
fact of the agency's being subject to law and higher authority. Said section provides:
Sec. 2. Mandate. — (1) The Department of Environment and Natural Resources shall be primarily
responsible for the implementation of the foregoing policy.
(2) It shall, subject to law and higher authority, be in charge of carrying out the State's
constitutional mandate to control and supervise the exploration, development, utilization, and
conservation of the country's natural resources.
Both E.O. NO. 192 and the Administrative Code of 1987 have set the objectives which will serve as
the bases for policy formulation, and have defined the powers and functions of the DENR.
It may, however, be recalled that even before the ratification of the 1987 Constitution, specific
statutes already paid special attention to the "environmental right" of the present and future
generations. On 6 June 1977, P.D. No. 1151 (Philippine Environmental Policy) and P.D. No. 1152
(Philippine Environment Code) were issued. The former "declared a continuing policy of the State
(a) to create, develop, maintain and improve conditions under which man and nature can thrive in
productive and enjoyable harmony with each other, (b) to fulfill the social, economic and other
requirements of present and future generations of Filipinos, and (c) to insure the attainment of an
environmental quality that is conducive to a life of dignity and well-being." 16 As its goal, it speaks
of the "responsibilities of each generation as trustee and guardian of the environment for
succeeding generations." 17 The latter statute, on the other hand, gave flesh to the said policy.
Thus, the right of the petitioners (and all those they represent) to a balanced and healthful ecology
is as clear as the DENR's duty — under its mandate and by virtue of its powers and functions under
E.O. No. 192 and the Administrative Code of 1987 — to protect and advance the said right.
A denial or violation of that right by the other who has the corelative duty or obligation to respect
or protect the same gives rise to a cause of action. Petitioners maintain that the granting of the
TLAs, which they claim was done with grave abuse of discretion, violated their right to a balanced
and healthful ecology; hence, the full protection thereof requires that no further TLAs should be
renewed or granted.
A cause of action is defined as:
. . . an act or omission of one party in violation of the legal right or rights of the
other; and its essential elements are legal right of the plaintiff, correlative
obligation of the defendant, and act or omission of the defendant in violation of
said legal right. 18
It is settled in this jurisdiction that in a motion to dismiss based on the ground that the complaint
fails to state a cause of action, 19 the question submitted to the court for resolution involves the
sufficiency of the facts alleged in the complaint itself. No other matter should be considered;
furthermore, the truth of falsity of the said allegations is beside the point for the truth thereof is
deemed hypothetically admitted. The only issue to be resolved in such a case is: admitting such
alleged facts to be true, may the court render a valid judgment in accordance with the prayer in the
complaint? 20 In Militante vs. Edrosolano, 21 this Court laid down the rule that the judiciary should
"exercise the utmost care and circumspection in passing upon a motion to dismiss on the ground of
the absence thereof [cause of action] lest, by its failure to manifest a correct appreciation of the
facts alleged and deemed hypothetically admitted, what the law grants or recognizes is effectively
nullified. If that happens, there is a blot on the legal order. The law itself stands in disrepute."
After careful examination of the petitioners' complaint, We find the statements under the
introductory affirmative allegations, as well as the specific averments under the sub-heading CAUSE
OF ACTION, to be adequate enough to show, prima facie, the claimed violation of their rights. On
the basis thereof, they may thus be granted, wholly or partly, the reliefs prayed for. It bears
stressing, however, that insofar as the cancellation of the TLAs is concerned, there is the need to
implead, as party defendants, the grantees thereof for they are indispensable parties.
The foregoing considered, Civil Case No. 90-777 be said to raise a political question. Policy
formulation or determination by the executive or legislative branches of Government is not squarely
put in issue. What is principally involved is the enforcement of a right vis-a-vis policies already
formulated and expressed in legislation. It must, nonetheless, be emphasized that the political
question doctrine is no longer, the insurmountable obstacle to the exercise of judicial power or the
impenetrable shield that protects executive and legislative actions from judicial inquiry or review.
The second paragraph of section 1, Article VIII of the Constitution states that:
Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government.
Commenting on this provision in his book, Philippine Political Law, 22 Mr. Justice Isagani A. Cruz, a
distinguished member of this Court, says:
The first part of the authority represents the traditional concept of judicial power, involving the
settlement of conflicting rights as conferred as law. The second part of the authority represents
a broadening of judicial power to enable the courts of justice to review what was before
forbidden territory, to wit, the discretion of the political departments of the government.
As worded, the new provision vests in the judiciary, and particularly the Supreme Court, the
power to rule upon even the wisdom of the decisions of the executive and the legislature and to
declare their acts invalid for lack or excess of jurisdiction because tainted with grave abuse of
discretion. The catch, of course, is the meaning of "grave abuse of discretion," which is a very
elastic phrase that can expand or contract according to the disposition of the judiciary.
In Daza vs. Singson, 23 Mr. Justice Cruz, now speaking for this Court, noted:
In the case now before us, the jurisdictional objection becomes even less tenable and decisive.
The reason is that, even if we were to assume that the issue presented before us was political in
nature, we would still not be precluded from revolving it under the expanded jurisdiction
conferred upon us that now covers, in proper cases, even the political question. Article VII,
Section 1, of the Constitution clearly provides: . . .
The last ground invoked by the trial court in dismissing the complaint is the non-impairment of
contracts clause found in the Constitution. The court a quo declared that:
 The Court is likewise of the impression that it cannot, no matter how we stretch our jurisdiction,
grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing timber license agreements
in the country and to cease and desist from receiving, accepting, processing, renewing or
approving new timber license agreements. For to do otherwise would amount to "impairment of
contracts" abhored (sic) by the fundamental law. 24
We are not persuaded at all; on the contrary, We are amazed, if not shocked, by such a sweeping
pronouncement. In the first place, the respondent Secretary did not, for obvious reasons, even
invoke in his motion to dismiss the non-impairment clause. If he had done so, he would have acted
with utmost infidelity to the Government by providing undue and unwarranted benefits and
advantages to the timber license holders because he would have forever bound the Government to
strictly respect the said licenses according to their terms and conditions regardless of changes in
policy and the demands of public interest and welfare. He was aware that as correctly pointed out
by the petitioners, into every timber license must be read Section 20 of the Forestry Reform Code
(P.D. No. 705) which provides:
. . . Provided, That when the national interest so requires, the President may amend, modify,
replace or rescind any contract, concession, permit, licenses or any other form of privilege
granted herein . . .
Needless to say, all licenses may thus be revoked or rescinded by executive action. It is not a
contract, property or a property right protested by the due process clause of the Constitution. In
Tan vs. Director of Forestry, 25 this Court held:
. . . A timber license is an instrument by which the State regulates the utilization and disposition
of forest resources to the end that public welfare is promoted. A timber license is not a contract
within the purview of the due process clause; it is only a license or privilege, which can be
validly withdrawn whenever dictated by public interest or public welfare as in this case.
A license is merely a permit or privilege to do what otherwise would be unlawful, and is not a
contract between the authority, federal, state, or municipal, granting it and the person to
whom it is granted; neither is it property or a property right, nor does it create a vested right;
nor is it taxation (37 C.J. 168). Thus, this Court held that the granting of license does not create
irrevocable rights, neither is it property or property rights (People vs. Ong Tin, 54 O.G. 7576).
We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive Secretary: 26
. . . Timber licenses, permits and license agreements are the principal instruments by which the
State regulates the utilization and disposition of forest resources to the end that public welfare
is promoted. And it can hardly be gainsaid that they merely evidence a privilege granted by the
State to qualified entities, and do not vest in the latter a permanent or irrevocable right to the
particular concession area and the forest products therein. They may be validly amended,
modified, replaced or rescinded by the Chief Executive when national interests so require.
Thus, they are not deemed contracts within the purview of the due process of law clause [See
Sections 3(ee) and 20 of Pres. Decree No. 705, as amended. Also, Tan v. Director of Forestry,
G.R. No. L-24548, October 27, 1983, 125 SCRA 302].
Since timber licenses are not contracts, the non-impairment clause, which reads:
Sec. 10. No law impairing, the obligation of contracts shall be passed. 27
cannot be invoked.
In the second place, even if it is to be assumed that the same are contracts, the instant case does
not involve a law or even an executive issuance declaring the cancellation or modification of existing
timber licenses. Hence, the non-impairment clause cannot as yet be invoked. Nevertheless, granting
further that a law has actually been passed mandating cancellations or modifications, the same
cannot still be stigmatized as a violation of the non-impairment clause. This is because by its very
nature and purpose, such as law could have only been passed in the exercise of the police power of
the state for the purpose of advancing the right of the people to a balanced and healthful ecology,
promoting their health and enhancing the general welfare. In Abe vs. Foster Wheeler
Corp. 28 this Court stated:
The freedom of contract, under our system of government, is not meant to be absolute. The same
is understood to be subject to reasonable legislative regulation aimed at the promotion of public
health, moral, safety and welfare. In other words, the constitutional guaranty of non-impairment
of obligations of contract is limited by the exercise of the police power of the State, in the interest
of public health, safety, moral and general welfare.
The reason for this is emphatically set forth in Nebia vs. New York, 29 quoted in Philippine American
Life Insurance Co. vs. Auditor General,30 to wit:
Under our form of government the use of property and the making of contracts are normally
matters of private and not of public concern. The general rule is that both shall be free of
governmental interference. But neither property rights nor contract rights are absolute; for
government cannot exist if the citizen may at will use his property to the detriment of his fellows,
or exercise his freedom of contract to work them harm. Equally fundamental with the private
right is that of the public to regulate it in the common interest.
In short, the non-impairment clause must yield to the police power of the state. 31
Finally, it is difficult to imagine, as the trial court did, how the non-impairment clause could apply
with respect to the prayer to enjoin the respondent Secretary from receiving, accepting, processing,
renewing or approving new timber licenses for, save in cases of renewal, no contract would have as
of yet existed in the other instances. Moreover, with respect to renewal, the holder is not entitled
to it as a matter of right.
WHEREFORE, being impressed with merit, the instant Petition is hereby GRANTED, and the
challenged Order of respondent Judge of 18 July 1991 dismissing Civil Case No. 90-777 is hereby set
aside. The petitioners may therefore amend their complaint to implead as defendants the holders
or grantees of the questioned timber license agreements.
No pronouncement as to costs.
SO ORDERED.
CIVPRO – PARTIES TO CIVIL ACTIONS – REPRESENTATIVE PARTIES
G.R. No. 154745 January 29, 2004
COMMISSIONER ANDREA D. DOMINGO, BUREAU OF IMMIGRATION, Petitioner,
vs.
HERBERT MARKUS EMIL SCHEER, Respondent.
DECISION
CALLEJO, SR., J.:
This is a petition for review under Rule 45 of the Rules of Court, as amended, of the Decision1 of the
Court of Appeals in CA-G.R. SP No. 71094 granting the respondent’s petition for certiorari and
prohibition annulling the order of arrest issued by the petitioner, and permanently enjoining her
from deporting the respondent from the Philippines. Through its decision, the CA virtually reversed
the Summary Deportation Order2 of the Board of Commissioners (BOC) and its Omnibus Resolution3
denying the respondent’s Urgent Motion for Reconsideration of said Order, and enjoining the
petitioner from deporting the respondent.
The facts as culled from the records are as follows:
Respondent Herbert Markus Emil Scheer, a native of Ochsenfurt, Germany, was a frequent visitor
of the Philippines. On July 18, 1986, his application for permanent resident status was granted.4 The
Bureau of Immigration and Deportation (BID) issued in favor of the respondent Alien Certificate of
Registration No. B-396907 dated September 16, 19875 and Immigration Certificate of Residence No.
256789 dated February 24, 1988.6 The Commissioner stated that the granting of the petition would
redound to the benefit of the Filipino people.7 During his sojourn in the Philippines, the respondent
married widowed Edith delos Reyes8 with whom he had two daughters. They had a son, Herbert
Scheer, Jr., but he passed away on November 13, 1995.9 They resided in Puerto Princesa City,
Palawan, where the respondent established and managed the Bavaria Restaurant. On May 21, 1991,
he was appointed Confidential Agent by then NBI Director Alfredo S. Lim.10
In a Letter dated June 29, 1995, Vice Consul Jutta Hippelein informed the Philippine Ambassador to
Bonn, Germany, that the respondent had police records and financial liabilities in Germany. 11
The Department of Foreign Affairs received from the German Embassy in Manila Note Verbale No.
369/95 dated July 26, 1995, informing it that the respondent was wanted by the German Federal
Police; that a warrant of arrest had been issued against him; and that the respondent will be served
with an official document requesting him to turn over his German passport to the Embassy which
was invalidated on July 2, 1995.12 The Embassy requested the Department of Foreign Affairs to
inform the competent Philippine authorities of the matter. The BOC thereafter issued a Summary
Deportation Order dated September 27, 1997. The penultimate paragraph of the Order reads:
WHEREFORE, the foregoing considered, the Board of Commissioners hereby orders the following:
1. Cancellation of respondent’s permanent residence visa;
2. Respondent’s summary deportation and permanent exclusion from the Philippines; and
3. Inclusion of his name on the Bureau’s Blacklist.
PROVIDED, however that said summary deportation should be held in abeyance in case said alien
has a pending final and executory criminal conviction where the imposed penalty is imprisonment,
in which case, he has to serve first such imposed penalty, and/or has a pending criminal, civil or
administrative action and a Hold Departure Order has been issued or that his presence in said action
is indispensable. In such instances, the alien should remain in the custody of the Bureau until his
turnover to the proper authorities in case he has to serve imprisonment or in case of pendency of
civil or criminal administrative action, he shall remain in the custody of the Bureau until such time
that his pending cases shall have been decided, terminated or settled, as the case may be, unless
circumstances demand the immediate implementation of this summary deportation.
...
SO ORDERED.13
In issuing the said order, the BOC relied on the correspondence from the German Vice Consul on its
speculation that it was unlikely that the German Embassy will issue a new passport to the
respondent; on the warrant of arrest issued by the District Court of Germany against the respondent
for insurance fraud; and on the alleged illegal activities of the respondent in Palawan. 14 The BOC
concluded that the respondent was not only an undocumented but an undesirable alien as well.
When the respondent was apprised of the deportation order, he forthwith aired his side to then BID
Commissioner Leandro T. Verceles. The Commissioner allowed the respondent to remain in the
Philippines, giving the latter time to secure a clearance and a new passport from the German
Embassy.15 Then Presidential Assistant Teodorico K. Imperial wrote a Testimonial dated November
24, 1995, in behalf of the respondent addressed to Commissioner Verceles. Nonetheless, the
respondent, through counsel, filed on December 5, 1995 an Urgent Motion for Reconsideration of
the Summary Deportation Order of the BOC.16 In his motion, the respondent alleged, inter alia, that:
1. The elementary rules of due process require notice and opportunity to be heard before a
person can be lawfully deprived of his right (Ute Paterok vs. Bureau of Customs, 193 SCRA 132).
In the instant case, although it is acknowledged that the Honorable Office may conduct summary
deportation proceedings, respondent was not given notice and opportunity to be heard before
said Summary Deportation Order was issued. Respondent’s right to procedural due process was
therefore violated. Consequently, the Summary Deportation Order is invalid.
2. In issuing, the Summary Deportation Order, this Honorable Office relied on Note Verbal No.
369/95 issued by the Embassy of the Federal Republic of Germany, Manila, notifying the
Department of Foreign Affairs and this Honorable Office about the warrant of arrest against
respondent for alleged illegal insurance fraud and illegal activities. However, a close scrutiny of
said note verbal shows that nowhere therein does it state that respondent was involved in
insurance fraud or in any kind of illegal activities in Germany or anywhere else in the world, such
as in Palawan. Therefore, the main basis of the Summary Deportation Order is incompetent as
evidence against respondent who is, like every Filipino, presumed to be innocent until his guilt is
proven beyond reasonable doubt.
 3. The power to deport alien is a police power measure necessary against undesirable alien whose
presence in the country is injurious to the public good and domestic tranquility of the country
(Board of Commissioner Commission on Immigration vs. De la Rosa, 197 SCRA 853). It is
respectfully submitted that respondent is not an undesirable alien. He has stayed in the
Philippines for more or less than (10) years. He has married a Filipina and has three (3) minor
children. He has established his business in Palawan and he has no police record whatsoever.
Respondent has considered the Philippines his second home and he has nowhere else to go back
to in Germany. Under the circumstances and for humanitarian considerations, respondent is not
an undesirable alien whose deportation is warranted. Likewise, the mere fact that his passport
was not renewed by the German Embassy does not also automatically justify the deportation of
respondent.17
However, the BOC did not resolve the respondent’s motion. The respondent was neither arrested
nor deported.
Meanwhile, on February 15, 1996, the District Court of Straubing rendered a Decision dismissing
the criminal case against the respondent for physical injuries.18 The German Embassy in Manila,
thereafter, issued a temporary passport to the respondent.
In a Letter dated March 1, 1996, the respondent informed Commissioner Verceles that his passport
had been renewed following the dismissal of the said criminal case. He reiterated his request for
the cancellation of the Summary Deportation Order dated September 27, 1995 and the restoration
of his permanent resident status.19 Subsequently, on March 12, 1996, the German Embassy issued
to the respondent a regular passport, to expire on March 11, 2006.
The BOC still failed to resolve the respondent’s Urgent Motion for Reconsideration. Commissioner
Verceles did not respond to the respondent’s March 1, 1996 Letter. The respondent remained in
the Philippines and maintained his business in Palawan. On March 20, 1997, the Department of
Labor and Employment approved his application for Alien Employment Registration Certificate as
manager of the Bavaria Restaurant in Puerto Princesa City.
In the meantime, petitioner Immigration Commissioner Andrea T. Domingo assumed office. She
wrote the German Embassy and inquired if the respondent was wanted by the German police. On
April 12, 2002, the German Embassy replied that the respondent was not so wanted. 20 At about
midnight on June 6, 2002, Marine operatives and BID agents apprehended the respondent in his
residence on orders of the petitioner. He was whisked to the BID Manila Office and there held in
custody while awaiting his deportation. Despite entreaties from the respondent’s wife21 and his
employees, the petitioner refused to release the respondent.22
Shocked at the sudden turn of events, the respondent promptly communicated with his lawyer. The
latter filed with the BID a motion for bail to secure the respondent’s temporary liberty. On June 11,
2002, the respondent’s counsel filed with the Court of Appeals a petition for certiorari, prohibition
and mandamus with a prayer for temporary restraining order and writ of preliminary injunction, to
enjoin the petitioner from proceeding with the respondent’s deportation.23 The respondent
(petitioner therein) alleged, inter alia, that his arrest and detention were premature, unjust,
wrongful, illegal and unconstitutional, effected without sufficient cause and without jurisdiction or
with grave abuse of discretion. He asserted that there was no speedy remedy open to him in the
ordinary course of law24 and that his Urgent Motion for Reconsideration of the Summary
Deportation Order of the BOC had not yet been resolved despite the lapse of more than six years.
The respondent averred that he was a fully documented alien, a permanent resident and a law-
abiding citizen. He, thus, prayed as follows:
PRAYER
WHEREFORE, it is most respectfully prayed of this Honorable Court that:
1. Upon the filing of this Petition, this Honorable Court issue a Temporary Restraining Order to
enjoin respondent Commissioner from enforcing any order to deport petitioner;
2. After due hearing, a writ of preliminary and mandatory injunction be correspondingly issued
to maintain the status quo pending resolution of the Petition on the merits.
3. After hearing, judgment be rendered:
a) Directing and mandating respondent Commissioner and the body she heads to resolve the
Motion for Reconsideration filed in 1995, in his favor, and nullifying or suspending the
implementation of any order, oral or written, she may have issued or issue to deport petitioner;
and
b) Making the injunction in petitioner’s favor permanent.
Petitioner likewise prays for such other and further relief as may be deemed just and equitable in
the premises, such as directing respondent, if Herbert Scheer is deported before the matter is heard
on notice, to authorize his return.25
The BOC ruled that its September 27, 1995 Order had become final and executory after the lapse of
one year, citing our rulings in Sy vs. Vivo,26 and Lou vs. Vivo.27 The BOC also held that it was not
competent to reverse the September 27, 1995 Order, citing our ruling in Immigration Commissioner
vs. Fernandez.28 It declared that the respondent may seek the waiver of his exclusion via deportation
proceedings through the exceptions provided by Commonwealth Act No. 613, 29 Section 29 (a)(15),
but that his application for the waiver presupposes his prior removal from the Philippines.
In a parallel development, the respondent procured a letter from the National Bureau of
Investigation (NBI) in Puerto Princesa City certifying that he had no pending criminal record. 30 The
Puerto Princesa City Philippine National Police (PNP) also issued a certification that the respondent
had no pending criminal or derogatory records in the said office.31
Meanwhile, on June 26, 2002, the Court of Appeals issued a status quo order restraining the
petitioner from deporting the respondent on a bond of ₱100,000.00. 32 On July 18, 2002, the BOC
issued an Omnibus Resolution dated June 14, 2002, pendente lite denying the respondent’s Urgent
Motion for Reconsideration, Motion for Bail/Recognizance, and the Letter dated June 11, 2002. The
decretal portion of the resolution reads:
Wherefore, in view of the foregoing circumstances, we deny the prayers of the Urgent Motion for
Reconsideration of 5 December 1995, the Motion for Bail/Recognizance dated 7 June 2002 and the
Letter of 11 June 2002. Further, we hereby order the following:
 1. Subject to the submission of appropriate clearances, the summary deportation order the
respondent Herbert Scheer, German, under BI Office Memorandum Order No. 34 (series of 1989)
and the BOC Summary Deportation Order of 27 September 1995;
2. Permanent exclusion of Herbert Scheer from the Philippines under C.A. No. 613, Section 40
(a)(15).
3. Inclusion of the name of Herbert Scheer in the Immigration Black List; and
4. Forfeiture of the bail bond, if any, of Herbert Scheer under C.A. No. 613, Section 40 (a)(15).
...
IT IS SO ORDERED.33
During the hearing of the respondent’s plea for a writ of preliminary mandatory injunction before
the CA on July 22, 2002, the Office of the Solicitor General (OSG) manifested that the State had no
opposition to the respondent’s re-entry and stay in the Philippines, provided that he leave the
country first and re-apply for admission and residency status with the assurance that he would be
re-admitted.34 The respondent’s counsel manifested to the appellate court that he had just been
informed by the OSG of the Omnibus Resolution of the BOC dated June 14, 2002.
In her Comment on the Petition, the petitioner (the respondent therein) alleged, inter alia, the
following:
1) that the BOC was an indispensable party to the petition;
2) the petitioner’s failure to implead the BOC warranted the denial of the petition;
3) the allowance by then Immigration Commissioner Leandro Verceles for the petitioner therein
to renew his passport and secure clearances, even if proved, was not binding on the BOC;
4) the September 27, 1995 Order of the BOC was already executory when the respondent filed
her petition in the CA;
5) the German Embassy’s issuance of a new passport did not legalize the respondent’s stay in this
country, which became illegal on July 2, 1995 when his passport expired;
6) the respondent therein did not act with abuse of discretion in causing the arrest and detention
of the respondent based on the BOC’s Summary Deportation Order; and
7) the BOC did not act with grave abuse of discretion in issuing its Summary Deportation Order
and Omnibus Resolution and such order and resolution were not mooted by the German
Embassy’s issuance of a new passport in favor of the respondent.
In view of the Omnibus Resolution of the BOC, the respondent (petitioner therein) in his
Memorandum prayed for the nullification of the BOC’s Order, as well as its Omnibus Resolution
denying his Urgent Motion for Reconsideration considering that with the issuance of a new
passport, there was no more basis for his deportation, thus:
RELIEF
WHEREFORE, it is most respectfully prayed of this Honorable Court that:
1. Upon the filing of this Memorandum, this Honorable Court forthwith direct and authorize the
immediate release of petitioner, even on undersigned’s recognizance, until further orders from
this Honorable Court;
2. The Summary Deportation Order of September 27, 19[9]5, affirmed by respondent allegedly
on June 14, 2002 and made known only yesterday, be nullified to the extent that it directs the
deportation of petitioner, who has removed the very basis of said Order of not having a valid
passport, and that the Resolution of June 14, 2002 be nullified in toto; and,
3. The Temporary Restraining Order of June 26, 2002 be converted into a permanent injunction
or writ of prohibition.
Petitioner likewise prays for such other and further relief as may be deemed just and equitable in
the premises.35
Surprisingly, the respondent’s counsel received on July 24, 2003 a Letter from the petitioner dated
July 16, 2002 stating that, "the BOC was in the course of reviewing the deportation case against Mr.
Scheer, and that its findings would be given in due time."36
On August 20, 2002, the Court of Appeals rendered a Decision in favor of the respondent granting
his petition for certiorari and prohibition and permanently enjoining the petitioner from deporting
the respondent. The decretal portion of the Decision reads:
WHEREFORE, premises considered, the petitions for certiorari and prohibition are hereby GRANTED.
Accordingly, any order, oral or written, issued by respondent Commissioner Domingo against
petitioner, in relation to his deportation, is hereby ANNULLED, and respondent Commissioner
Domingo is hereby permanently enjoined/prohibited from deporting petitioner, in so far as this case
is concerned.
It is likewise ordered that petitioner be released from his confinement/detention in the Bureau of
Immigration UNLESS there is/are fresh new grounds/cases that will warrant his continued
detention.
SO ORDERED.37
The Court of Appeals ruled that the German Embassy’s subsequent issuance of passport to the
respondent before the BOC’s issuance of its Omnibus Resolution had mooted the September 27,
1995 Summary Deportation Order, as well as the arrest and detention of the respondent. According
to the court, it made no sense to require the respondent to leave the country and thereafter re-
apply for admission with the BOC. Furthermore, since the grounds cited by the BOC in its Summary
Deportation Order no longer existed, there was no factual and legal basis to disqualify the
respondent from staying in the country.
On the issue of whether the members of the BOC were indispensable parties, the CA ruled as
follows:
 a) There are quite a number of cases in relevant jurisprudence wherein only the Immigration
Commissioner was impleaded to decide whether an alien may stay or be deported, such as in the
case of Vivo vs. Arca (19 SCRA 878) and Vivo vs. Cloribel (22 SCRA 159).
b) In the case of Caruncho III vs. COMELEC (315 SCRA 693), it was pronounced that: "Ordinarily,
the nonjoinder of an indispensable party or the real party interest is not by itself a ground for the
dismissal of the petition. The court before which the petition is filed must first require the joinder
of such party. It is the noncompliance with said order that would be a ground for the dismissal of
the petition."
thus, c) respondent may be estopped for not raising such issue earlier.38
Aggrieved, the respondent therein, now the petitioner, through the Office of the Solicitor General,
appealed to us for relief. The petitioner contends that the Court of Appeals erred on a question of
law in granting the respondent’s petition in CA-G.R. SP No. 71094.39
In support of his contention, the Solicitor General has submitted the following arguments:
I. THE WRIT OF MANDAMUS DOES NOT LIE AGAINST THE COMMISSIONER OF THE BUREAU OF
IMMIGRATION TO RESOLVE RESPONDENT’S URGENT MOTION FOR RECONSIDERATION OF THE
SUMMARY DEPORTATION ORDER, CONSIDERING THAT IT IS THE BOARD OF COMMISSIONERS,
AND NOT THE COMMISSIONER ALONE, WHICH HAS AUTHORITY TO MAKE SAID RESOLUTION.
II. THE WRIT OF CERTIORARI DOES NOT LIE AGAINST THE COMMISSIONER OF THE BUREAU OF
IMMIGRATION, CONSIDERING THAT IT IS THE BOARD OF COMMISSIONERS, AND NOT THE
COMMISSIONER ALONE, WHICH ISSUED THE SUMMARY DEPORTATION ORDER AND THE
OMNIBUS RESOLUTION.
III. THE WRIT OF PROHIBITION DOES NOT LIE AGAINST THE COMMISSIONER OF THE BUREAU OF
IMMIGRATION, PROHIBITING THE IMPLEMENTATION OF THE SUMMARY DEPORTATION ORDER
AND THE OMNIBUS RESOLUTION, CONSIDERING THAT THE BOARD OF COMMISSIONERS WAS
NOT IMPLEADED AS PARTY-RESPONDENT IN THE PETITION IN CA-G.R. SP NO. 71094.
IV. ASSUMING BUT WITHOUT ADMITTING THAT THE BOARD OF COMMISSIONERS WAS PROPERLY
IMPLEADED AS PARTY-RESPONDENT IN THE PETITION IN CA-G.R. SP NO. 71094, NEVERTHELESS,
THE SUMMARY DEPORTATION ORDER AND THE OMNIBUS RESOLUTION WERE NOT ISSUED
WITHOUT OR IN EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OF (SIC) EXCESS OF JURISDICTION.
V. FURTHER ASSUMING BUT WITHOUT ADMITTING THAT THE BOARD OF COMMISSIONERS WAS
PROPERLY IMPLEADED AS PARTY-RESPONDENT IN THE PETITION IN CA-G.R. SP NO. 71094, THE
COMMISSIONER OF THE BUREAU OF IMMIGRATION DID NOT ACT WITHOUT OR IN EXCESS OF
JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN IMPLEMENTING THE SUMMARY DEPORTATION ORDER AND THE OMNIBUS
RESOLUTION.40
Elucidating on his first three arguments, the petitioner maintains that the respondent’s petition for
certiorari, prohibition and mandamus before the Court of Appeals should have been dismissed
because he failed to implead the real party-in-interest as mandated by Rule 3, Section 7 of the Rules
of Court, as amended; in this case, the BOC. According to the Solicitor General, this was a fatal
procedural error. The inclusion of the BOC as respondent in the case was necessary in order that its
actions could be directly attacked and for the court to acquire jurisdiction over it. The fact that
Immigration Commissioner Andrea T. Domingo was impleaded as the sole respondent was not
enough, as she is only one of the four Commissioners. Furthermore, the assailed Orders were issued
by the Board, and not by the Immigration Commissioner alone.
The respondent counters that the petitioner is already estopped from raising this issue. He argues
that -
In quite a number of jurisprudence, only the Immigration Commissioner is impleaded to decide
whether an alien may stay here or not. The bottom line is petitioner, head of the Bureau of
Immigration, was more than fully heard on its institutional position, a Bureau which speaks with a
single voice in this case. She is in estoppel for not raising the issue earlier, either in a timely
Comment or during the oral argument…41
In Caruncho III v. Comelec, it was held that-
[O]rdinarily, the nonjoinder of an indispensable party or real party in interest is not by itself a ground
for the dismissal of the petition. The court before which the petition is filed must first require the
joinder of such party. It is the noncompliance with said order that would be a ground for the
dismissal of the petition.
But even as the Court of Appeals did not require respondent of such joinder of parties, the
respondent, in fact, begged leave, ad cautelam, in its Reply Memorandum dated July 31, 2002 to
implead the Board which speaks with a single voice anyway in this case, and therefore, no claim can
be made that a valid point of view has not been heard…42
Moreover, according to the respondent, the petitioner is clearly the BID’s chosen instrumentality
for the relevant purpose. What the respondent ultimately questioned are the acts or orders of the
petitioner for the arrest and immediate deportation of the respondent by way of implementing the
BOC’s Summary Deportation Order.
By way of reply, the Office of the Solicitor General asserted that the Summary Deportation Order
and Omnibus Resolution were collegial actions of the BOC and not of the petitioner alone. Although
its Chairperson, the petitioner, is merely a member thereof, her decisions and actions are still
subject to the collective will of the majority.43
The Ruling of the Court
The BOC is an
Indispensable
Party
We agree with the petitioner’s contention that the BOC was an indispensable party to the
respondent’s petition for certiorari, prohibition and mandamus in the Court of Appeals. The
respondent was arrested and detained on the basis of the Summary Deportation Order of the BOC.
The petitioner caused the arrest of the respondent in obedience to the said Deportation Order. The
respondent, in his Memorandum, prayed that the CA annul not only the Summary Deportation
Order of the BOC but also the latter’s Omnibus Resolution, and, thus, order the respondent’s
immediate release. The respondent also prayed that the CA issue a writ of mandamus for the
immediate resolution of his Urgent Motion for Reconsideration. The said motion had to be resolved
by the BOC as the order sought to be resolved and reconsidered was issued by it and not by the
petitioner alone. The powers and duties of the BOC may not be exercised by the individual members
of the Commission.44
Section 7, Rule 3 of the Rules of Court, as amended, requires indispensable parties to be joined as
plaintiffs or defendants. The joinder of indispensable parties is mandatory. Without the presence of
indispensable parties to the suit, the judgment of the court cannot attain real finality.45 Strangers to
a case are not bound by the judgment rendered by the court.46 The absence of an indispensable
party renders all subsequent actions of the court null and void. Lack of authority to act not only of
the absent party but also as to those present.47 The responsibility of impleading all the indispensable
parties rests on the petitioner/plaintiff.48
However, the non-joinder of indispensable parties is not a ground for the dismissal of an action.
Parties may be added by order of the court on motion of the party or on its own initiative at any
stage of the action and/or such times as are just.49 If the petitioner/plaintiff refuses to implead an
indispensable party despite the order of the court, the latter may dismiss the complaint/petition for
the petitioner/plaintiff’s failure to comply therefor.50 The remedy is to implead the non-party
claimed to be indispensable.51 In this case, the CA did not require the respondent (petitioner
therein) to implead the BOC as respondent, but merely relied on the rulings of the Court in Vivo v.
Arca,52 and Vivo v. Cloribel.53 The CA’s reliance on the said rulings is, however, misplaced. The acts
subject of the petition in the two cases were those of the Immigration Commissioner and not those
of the BOC; hence, the BOC was not a necessary nor even an indispensable party in the aforecited
cases.
The Non-joinder of an
Indispensable Party is not
a Ground for the Dismissal
of the Petition
The Court may be curing the defect in this case by adding the BOC as party-petitioner. The petition
should not be dismissed because the second action would only be a repetition of the first. 54 In
Salvador, et al., v. Court of Appeals, et al.,55 we held that this Court has full powers, apart from that
power and authority which is inherent, to amend the processes, pleadings, proceedings and
decisions by substituting as party-plaintiff the real party-in-interest. The Court has the power to
avoid delay in the disposition of this case, to order its amendment as to implead the BOC as party-
respondent. Indeed, it may no longer be necessary to do so taking into account the unique backdrop
in this case, involving as it does an issue of public interest. 56 After all, the Office of the Solicitor
General has represented the petitioner in the instant proceedings, as well as in the appellate court,
and maintained the validity of the deportation order and of the BOC’s Omnibus Resolution. It
cannot, thus, be claimed by the State that the BOC was not afforded its day in court, simply because
only the petitioner, the Chairperson of the BOC,57 was the respondent in the CA, and the petitioner
in the instant recourse. In Alonso v. Villamor,58 we had the occasion to state:
There is nothing sacred about processes or pleadings, their forms or contents.1âwphi1 Their sole
purpose is to facilitate the application of justice to the rival claims of contending parties. They were
created, not to hinder and delay, but to facilitate and promote, the administration of justice. They
do not constitute the thing itself, which courts are always striving to secure to litigants. They are
designed as the means best adapted to obtain that thing. In other words, they are a means to an
end. When they lose the character of the one and become the other, the administration of justice
is at fault and courts are correspondingly remiss in the performance of their obvious duty.
The CA had Jurisdiction
Over the Petition for
Certiorari, Prohibition
and Mandamus
We do not agree with the petitioner’s contention that the issue before the CA, as to the power of
the President to determine whether an alien may remain or be deported from the Philippines, is
beyond the appellate court’s competence to delve into and resolve. The contention of the petitioner
is based on a wrong premise.
The settled rule is that the authority to exclude or expel aliens by a power affecting international
relation is vested in the political department of the government, and is to be regulated by treaty or
by an act of Congress, and to be executed by the executive authority according to the regulations
so established, except in so far as the judicial department has been authorized by treaty or by
statute, or is required by the Constitution to intervene.59 The judicial department cannot properly
express an opinion upon the wisdom or the justice of the measures executed by Congress in the
exercise of the power conferred on it,60 by statute or as required by the Constitution. Congress may,
by statute, allow the decision or order of the Immigration Commissioner or the BOC to be reviewed
by the President of the Philippines or by the courts, on the grounds and in the manner prescribed
by law.
Article VIII, Section 1 of the Constitution has vested judicial power in the Supreme Court and the
lower courts such as the Court of Appeals, as established by law. Although the courts are without
power to directly decide matters over which full discretionary authority has been delegated to the
legislative or executive branch of the government and are not empowered to execute absolutely
their own judgment from that of Congress or of the President,61 the Court may look into and resolve
questions of whether or not such judgment has been made with grave abuse of discretion, when
the act of the legislative or executive department violates the law or the Constitution. In Harvy
Bridges v. I.F. Wixon,62 the United States Federal Supreme Court reversed an Order of Deportation
made by the Attorney General for insufficiency of evidence and for "improper admission of
evidence." In Nging v. Nagh,63 the United States Court of Appeals (9th Circuit Court) held that
conclusions of administrative offices on the issues of facts are invulnerable in courts unless when
they are not rendered by fair-minded men; hence, are arbitrary. In Toon v. Stump,64 the Court ruled
that courts may supervise the actions of the administrative offices authorized to deport aliens and
reverse their rulings when there is no evidence to sustain them. When acts or omissions of a quasi-
judicial agency are involved, a petition for certiorari or prohibition may be filed in the Court of
Appeals as provided by law or by the Rules of Court, as amended.65
In this case, the respondent alleges that the petitioner acted arbitrarily, contrary to law and with
grave abuse of discretion in causing his arrest and detention at a time when his Urgent Motion for
Reconsideration of the BOC’s Summary Deportation Order had yet to be resolved. There was no
factual or legal basis for his deportation considering that he was a documented alien and a law-
abiding citizen; the respondent, thus, prayed for a writ of mandamus to compel the petitioner, the
Chairperson of the BOC, to resolve the said motion. The petition before the CA did not involve the
act or power of the President of the Philippines to deport or exclude an alien from the country. This
being so, the petition necessarily did not call for a substitution of the President’s discretion on the
matter of the deportation of the respondent with that of the judgment of the CA.
Irrefragably, the CA had jurisdiction over the petition of the respondent.
The BOC Committed a Grave
Abuse of Discretion Amounting
To Lack or Excess of Jurisdiction
In Issuing its Summary Deportation
Order and Omnibus Resolution; The
Petitioner Committed a Grave Abuse
Of Her Discretion Amounting to
Lack or Excess of Jurisdiction in
Causing the Arrest and Detention
Of The Private Respondent
On the Solicitor General’s fourth and fifth arguments, we are convinced that the BOC committed a
grave abuse of discretion amounting to excess or lack of jurisdiction in issuing its Summary
Deportation Order and Omnibus Resolution, and that the petitioner committed grave abuse of
discretion amounting to excess or lack of jurisdiction in causing the arrest and detention of the
private respondent.
The settled rule is that the entry or stay of aliens in the Philippines is merely a privilege and a matter
of grace; such privilege is not absolute nor permanent and may be revoked. However, aliens may
be expelled or deported from the Philippines only on grounds and in the manner provided for by
the Constitution, the Immigration Act of 1940, as amended, and administrative issuances pursuant
thereto. In Mejoff v. Director of Prisons,66 we held, thus:
Moreover, by its Constitution (Art. II, Sec. 3) the Philippines "adopts the generally accepted
principles of international law a part of the law of Nation." And in a resolution entitled "Universal
Declaration of Human Rights" and approved by the General Assembly of the United Nations of which
the Philippines is a member, at its plenary meeting on December 10, 1948, the right to life and
liberty and all other fundamental rights as applied to all human beings were proclaimed. It was there
resolved that "All human beings are born free and equal in degree and rights" (Art. 1); that
"Everyone is entitled to all the rights and freedom set forth in this Declaration, without distinction
of any kind, such as race, color, sex, language, religion, political or other opinion, nationality or social
origin, property, birth, or other status" (Art. 2); that "Every one has the right to an effective remedy
by the competent national tribunals for acts violating the fundamental rights granted him by the
Constitution or by law" (Art. 8); that "No one shall be subjected to arbitrary arrest, detention or
exile" (Art. 9); etc.
In this case, the BOC ordered the private respondent’s deportation on September 27, 1995 without
even conducting summary deportation proceedings. The BOC merely relied on the June 29, 1995
Letter of the German Vice Consul and of the German Embassy’s Note Verbale No. 369/95 dated July
26, 1995. It issued the Summary Deportation Order on September 27, 1995 allegedly under
paragraph 3 of Office Memorandum Order No. 34 dated August 21, 1989 which reads:
3. If a foreign embassy cancels the passport of the alien or does not reissue a valid passport to him,
the alien loses the privilege to remain in the country, under the Immigration Act, Sections 10 and
15 (Schonemann vs. Santiago, et al., G.R. No. 81461, 30 May 1989). The automatic loss of the
privilege obviates deportation proceedings. In such instance, the Board of Commissioners may issue
summary judgment of deportation which shall be immediately executory.
However, as gleaned from the Summary Deportation Order, the respondent was ordered deported
not only because his passport had already expired; the BOC speculated that the respondent
committed insurance fraud and illegal activities in the Philippines and would not, thus, be issued a
new passport. This, in turn, caused the BOC to conclude that the respondent was an undesirable
alien. Section 37(c) of Commonwealth Act No. 613, as amended, provides that:
No alien shall be deported without being informed of the specific grounds for deportation or
without being given a hearing under rules of procedure to be prescribed by the Commissioner of
Immigration.
Under paragraphs 4 and 5 of Office Memorandum Order No. 34, an alien cannot be deported unless
he is given a chance to be heard in a full deportation hearing, with the right to adduce evidence in
his behalf, thus:
4. All other cases shall be tried in full deportation hearing, with due observance of the pertinent
provisions of Law Instruction No. 39.
5. In all cases, the right of the alien to be informed of the charges against him, to be notified of the
time and place of hearing, when necessary, to examine the evidence against him, and to present
evidence in his own behalf, where appropriate, shall be observed.
The respondent was not afforded any hearing at all. The BOC simply concluded that the respondent
committed insurance fraud and illegal activities in Palawan without any evidence. The respondent
was not afforded a chance to refute the charges. He cannot, thus, be arrested and deported without
due process of law as required by the Bill of Rights of the Constitution. In Lao Gi v. Court of Appeals, 67
we held that:
Although a deportation proceeding does not partake of the nature of a criminal action, however,
considering that it is a harsh and extraordinary administrative proceeding affecting the freedom and
liberty of a person, the constitutional right of such person to due process should not be denied.
Thus, the provisions of the Rules of Court of the Philippines particularly on criminal procedure are
applicable to deportation proceedings.
It must be noted that the respondent was a permanent resident before his passport expired on July
2, 1995. In Chew v. Colding,68 the United States Federal Supreme Court ruled:
It is well established that if an alien is a lawful permanent resident of the United States and remains
physically present there, he is a person within the protection of the Fifth Amendment. He may not
be deprived of his life, liberty or property without due process of law. Although it later may be
established, as respondents contend, that petitioner can be expelled and deported, yet before his
expulsion, he is entitled to notice of the nature of the charge and a hearing at least before an
executive or administrative tribunal. Although Congress may prescribe conditions for his expulsion
and deportation, not even Congress may expel him without allowing him a fair opportunity to be
heard.
As Mr. Justice Murphy said in his concurring opinion in Bridges v. Wixon:69
The Bill of Rights belongs to them as well as to all citizens. It protects them as long as they reside
within the boundaries of our land. It protects them in the exercise of the great individual rights
necessary to a sound political and economic democracy.
According to Vattal,70 an alien who is a permanent resident in a country is a member of the new
society, at least as a permanent inhabitant, and is a kind of citizen of inferior order from the native
citizens; but is, nevertheless, limited and subject to the society, without participating in all its
advantages. Sir Robert Philconse called them "de facto," though not de jure citizens of the country
of their domicile.71
Such permanent resident72 may be classified as a "denizen," a kind of middle state between alien
and a natural-born subject and partakes of both. Paraphrasing Justice Brewer in his dissenting
opinion in Fong Yue Ting v. United States,73 when the right to liberty and residence is involved, some
other protection than the mere discretion of the petitioner or the BOC is required. We recall the
warning of the United States Supreme Court in Boyd v. United States:74
Illegitimate and unconstitutional practices get their first footing in that way, namely, by silent
approaches and slight deviations from legal modes of procedure. This can only be obviated by
adhering to the rule that constitutional provisions for the security of person and property should be
liberally construed. A close and literal construction deprives them of half their efficacy, and leads to
a gradual depreciation of the right, as if it consisted more in sound than in substance. It is the duty
of the courts to be watchful for the constitutional rights of the citizen, and against any stealthy
encroachments thereon. Their motto should be obsta principiis.
In sum, the arrest and detention of the respondent and his deportation under the Summary
Deportation Order of the BOC for insurance fraud and illegal activities in Palawan violated his
constitutional and statutory rights to due process.
The Respondent’s Arrest and
Detention was Premature,
Unwarranted and Arbitrary
We agree that the Immigration Commissioner is mandated to implement a legal and valid Summary
Deportation Order within a reasonable time. But in this case, the arrest of the respondent in his
house, at near midnight, and his subsequent detention was premature, unwarranted and arbitrary.
Like a thunderbolt in the sky, the BID agents and marines arrested the respondent on June 6, 2002,
on orders of the petitioner based on the September 27, 1995 Summary Deportation Order. Under
the basic rudiments of fair play and due process, the petitioner was required to first resolve the
respondent’s Urgent Motion for Reconsideration of the said Order, which was filed more than six
years before or on December 5, 1995.
It may be argued that respondent’s filing of an Urgent Motion for Reconsideration did not ipso facto
suspend the efficacy of the BOC’s deportation order. However, such an argument cannot be
sustained in this case because of the extant and peculiar factual milieu. It bears stressing that more
than six years had elapsed, from the time the Summary Deportation Order was issued, until the
respondent was finally arrested. Supervening facts and circumstances rendered the respondent’s
arrest and detention unjust, unreasonable, barren of factual and legal basis. The BOC should have
set the respondent’s motion for hearing to afford him a chance to be heard and adduce evidence in
support thereon. It was bad enough that the BOC issued its Summary Deportation Order without a
hearing; the BOC dealt the respondent a more severe blow when it refused to resolve his motion
for reconsideration before causing his arrest on June 6, 2002.
As aforestated, the BOC ordered the deportation of the respondent after a summary proceeding
without prior notice on the following grounds: (a) the respondent’s German passport had expired;
(b) there was a pending criminal case for physical injuries against him in Germany; (c) the
respondent indulged in illegal activities in Palawan; (d) that in all likelihood, the respondent’s
passport will not be renewed by the German Embassy as he was wanted for insurance fraud in
Germany; and, (e) he was an undesirable alien. But then, in response to the written query of no less
than the petitioner herself, the German Embassy declared that the respondent was not wanted by
the German police for any crime, including insurance fraud. This could only mean that the warrant
of arrest issued by the German Federal police mentioned in Note Verbale No. 369/95 had been
lifted, and that the respondent was not involved in any illegal activities in Germany. The criminal
case against the respondent for physical injuries, which does not involve moral turpitude, was
dismissed by the German District Court. Furthermore, there was no evidence of insurance fraud
against the respondent.
The BOC issued its Summary Deportation Order without affording the respondent the right to be
heard on his motion and adduce evidence thereon. It merely concluded that the respondent was
involved in "illegal activities in Palawan." What made matters worse was that the BOC indulged in
sheer speculation, that the German Embassy is unlikely to issue a new passport to the respondent.
The deportation of aliens should not be based on mere speculation or a mere product of
procrastinations as in this case. As it turned out, the German Embassy re-issued the respondent’s
passport; he was issued a temporary passport, and, thereafter, a regular passport, yet to expire on
March 12, 2006. The petitioner cannot feign ignorance of this matter because the respondent
himself, six years before he was arrested, informed then Immigration Commissioner Verceles in a
Letter dated March 1, 1996. The respondent’s letter forms part of the records of the BOC. There is
no evidence on record that the respondent committed any illegal activities in Palawan. He was even
designated as special agent of the NBI, and was, in fact, issued clearances by the PNP and the NBI
no less. Despite all the foregoing, the petitioner ordered and caused the arrest and detention of the
respondent.
What is most nettlesome is the apparent antedating of the BOC Omnibus Resolution. The records
show that the petitioner sought to assuage the respondent’s concern on the belated resolution of
his pending urgent motion for reconsideration in a Letter to the latter’s counsel dated July 18, 2002
in which the petitioner assured the respondent that the BOC will provide him of its action on the
said motion:
Dear Atty. Sagisag,
We respond to your letter of 17 June 2002 by informing you that the case of Mr. Herbert Scheer
is being evaluated by the Board of Commissioners (BOC). The BOC will provide you of the results
of its collegial action in due time.
Very truly yours,
(Sgd.) ANDREA D. DOMINGO
Commissioner75
However, the Omnibus Resolution of the BOC was dated June 14, 2002, although on its face it was
filed with the Records Division of the BID only on July 18, 2002.
The foregoing gave reason for the CA to suspect that the Omnibus Resolution of the BOC was
antedated.76 The petition of the respondent in the CA must have jolted the petitioner and the BOC
from its stupor because it came out with its Omnibus Resolution on July 18, 2002, which was,
however, dated as early as June 14, 2002. The respondent had to wait in anxiety for the BOC to
quench his quest for justice. The BOC’s wanton acts amounted to an abdication of its duty to act
and/or resolve cases/incidents with reasonable dispatch. To recall our ruling in Board of
Commissioners v. De la Rosa,77 citing Sheor v. Bengson,78 thus:
This inaction or oversight on the part of the immigration officials has created an anomalous situation
which, for reasons of equity, should be resolved in favor of the minor herein involved.
The petitioner and the BOC should have taken to heart the following pronouncement in
Commissioner of Immigration v. Fernandez:79
In the face of the disclosure that Teban Caoili had been all along working in the Avenue Electrical
Supply Co. (Avesco), located at No. 653 Rizal Avenue, Manila, until his arrest, and the documentary
evidence showing that he had been issued a Philippine Passport; had regularly paid his Residence
Tax Certificates (A & B), and filed Income Tax Returns, a finding of fact is necessary whether the
Commissioner really had intended to notify Teban Caoili of the exclusion proceedings the Board had
conducted in his absence. While it may be true that the proceedings is purely administrative in
nature, such a circumstance did not excuse the serving of notice. There are cardinal primary rights
which must be respected even in proceedings of administrative character, the first of which is the
right of the party interested or affected to present his own case and submit evidence in support
thereof.80
...
Since the proceedings affected Caoili’s status and liberty, notice should have been given. And in the
light of the actuations of the new Board of Commissioners, there is a necessity of determining
whether the findings of the Board of Special Inquiry and the old Board of Commissioners are correct
or not. This calls for an examination of the evidence, and, the law on the matter. 81
Apparently, the BOC did not bother to review its own records in resolving the respondent’s Urgent
Motion for Reconsideration. It anchored its Omnibus Resolution only on the following: the
membership of the BOC had changed when it issued its September 27, 1995 Summary Deportation
Order and under Commonwealth Act No. 613, Section 27(b); the BOC is precluded from reversing a
previous order issued by it;82 and, the September 27, 1995 Order of the BOC had become final and
could no longer be reviewed and reversed by it after the lapse of one year. 83 However, the rulings
cited by the petitioner are not applicable in the instant case, as the said cases cited involve appeals
to the BOC from the decisions of the Board of Special Inquiry (BSI). In Sy v. Vivo84 and Lou v. Vivo,85
we ruled that under Section 27(b) of Commonwealth Act No. 613, as amended, the Decision of the
BOC on appeal from the decision of the BSI becomes final and executory after one year:
(b) A board of special inquiry shall have authority (1) to determine whether an alien seeking to enter
or land in the Philippines shall be allowed to enter or land or shall be excluded, and (2) to make its
findings and recommendations in all the cases provided for in section twenty-nine of this Act
wherein the Commissioner of Immigration may admit an alien who is otherwise inadmissible. For
this purpose, the board or any member thereof, may administer oaths and take evidence and in
case of necessity may issue subpoena and/or subpoena duces tecum. The hearing of all cases
brought before a board of special inquiry shall be conducted under rules of procedure to be
prescribed by the Commissioner of Immigration. The decision of any two members of the board
shall prevail and shall be final unless reversed on appeal by the Board of Commissioners as hereafter
stated, or in the absence of an appeal, unless reversed by the Board of Commissioners after a review
by it, motu propio, of the entire proceedings within one year from the promulgation of the decision.
In Commissioner of Immigration v. Fernandez,86 we held that the BOC composed of new members
is precluded from reversing, motu proprio, the decision of the BOC on appeal from a BSI decision.
But not to be ignored was our ruling that "at any rate, the issue of authority should be made in
accordance with the procedure established by law, with a view to protecting the rights of
individuals."87
In this case, the Summary Deportation Order was issued by the BOC in the exercise of its authority
under Office Memorandum Order No. 34, and not in the exercise of its appellate jurisdiction of BSI
decisions. There is no law nor rule which provides that a Summary Deportation Order issued by the
BOC in the exercise of its authority becomes final after one year from its issuance, 88 or that the
aggrieved party is barred from filing a motion for a reconsideration of any order or decision of the
BOC. The Rules of Court may be applied in a suppletory manner to deportation proceedings 89 and
under Rule 37, a motion for reconsideration of a decision or final order may be filed by the aggrieved
party.
Neither is there any law nor rule providing that the BOC, composed of new members, cannot revise
a Summary Deportation Order previously issued by a different body of Commissioners. The BOC
that issued the Summary Deportation Order and the BOC which resolved the respondent’s Urgent
Motion for Reconsideration are one and the same government entity, with the same powers and
duties regardless of its membership. Similarly, an RTC judge who replaces another judge who
presided over a case may review the judgment or order of his predecessor as long as the said
judgment or order has not as yet become final or executory. The act subject of review is not the act
of the judge but the act of the court.
The petitioner’s contention that it failed to resolve the respondent’s motion for reconsideration
because of the change of administration in the BOC was branded by the CA as flimsy, if not bordering
on the absurd:
Firstly, it was issued three days (June 14, 2002) after petitioner filed this instant petition on June 11,
2002 or almost seven years from the time the motion for reconsideration was filed;
Secondly, respondent’s counsel’s excuse that it took such time to resolve it because it was only later
that the motion for reconsideration was discovered because of change of administration, is flimsy,
if not bordering on the absurd;90
The Issuance of a New and Regular
Passport to the Respondent
Rendered the Summary
Deportation Order Moot and
Academic, and the Omnibus
Resolution of the BOC Lacking
in Legal Basis
We agree with the petitioner that a foreign embassy’s cancellation of the passport it had issued to
its citizens, or its refusal to issue a new one in lieu of a passport that has expired, will result in the
loss of the alien’s privilege to stay in this country and his subsequent deportation therefrom. But
even the BOC asserted in its Summary Deportation Order that an embassy’s issuance of a new
passport to any of its citizens may bar the latter’s deportation, citing the resolution of this Court in
Schonemann v. Commissioner Santiago.91
Irrefragably, Commissioner Verceles was mandated to cause the arrest of the respondent
preparatory to his deportation from the Philippines. However, there was no fixed period in the
Order within which to comply with the same. The Commissioner is not mandated to deport an alien
immediately upon receipt of the BOC’s deportation order. It is enough that the Commissioner
complies with the Order within a "reasonable time," which, in Mejoff v. Director of Prisons,92 we
held to connote as follows:
The meaning of "reasonable time" depends upon the circumstances, specially the difficulties of
obtaining a passport, the availability of transportation, the diplomatic arrangements with the
governments concerned and the efforts displayed to send the deportee away; but the Court warned
that "under established precedents, too long a detention may justify the issuance of a writ of habeas
corpus.
In this case, the BOC had yet to act on the respondent’s Urgent Motion for Reconsideration. The
respondent was also given a chance to secure a clearance and a new passport with the German
Embassy. After all, the possibility that the German Embassy would renew the respondent’s passport
could not be ruled out. This was exactly what happened: the German Embassy issued a new passport
to the respondent on March 12, 1996 after the German District Court dismissed the case for physical
injuries. Thus, the respondent was no longer an undocumented alien; nor was he an undesirable
one for that matter.
The petitioner even admits that there is no longer a legal or factual basis to disqualify the
respondent from remaining in the country as a permanent resident. Yet, the OSG insists that he has
to be deported first so that the BOC’s Summary Deportation Order could be implemented. This
contention was rejected by the CA, thus:
During the hearing of petitioner’s prayer for issuance of a writ of preliminary injunction before Us,
respondent’s counsel from the Office of the Solicitor General had the occasion to manifest in open
court that the State has no opposition to petitioner’s stay in the country provided he first leave and
re-enter and re-apply for residency if only to comply with the Summary Deportation Order of 1995.
That, to Our mind, seems preposterous, if not ridiculous. An individual’s human rights and rights to
freedom, liberty and self-determination recognize no boundaries in the democratic, free and
civilized world. Such rights follow him wherever he may be. If presently, there is no factual or legal
impediment to disqualify petitioner in his stay in the country, other than allegedly those relied upon
in the Summary Deportation Order of 1995 (as hereinbefore discussed, had ceased to exist),
requiring petitioner to leave the country and re-enter and re-apply for residency makes little sense
or no sense at all, more so, in the case of petitioner who, for many years past, had lived herein and
nurtured a family that is Filipino.
Thus, opined, We, therefore, believe and hereby rule, that there is presently every reason to
enjoin/prohibit the Bureau of Immigration, respondent Commissioner Domingo in particular, from
presently deporting petitioner.93
We agree with the Court of Appeals. The Summary Deportation Order had been rendered moot and
academic upon the German Embassy’s issuance of a new passport to the respondent. The
respondent had been in the Philippines as a permanent resident since July 18, 1986, and had
married a Filipino citizen, with whom he has two children. He is not a burden to the country nor to
the people of Palawan. He put up, and has been managing, the Bavaria Restaurant with about 30
employees. He has no pending criminal case; nor does he have any derogatory record. The
respondent was allowed by then Immigration Commissioner Verceles to renew his passport and
was given time to secure a clearance from the German Embassy. The respondent was able to do so.
The case against him for physical injuries was dismissed by the German District Court. Thus, the
inceptual basis for the respondent’s deportation had ceased to exist.
The power to deport is a police matter against undesirable aliens, whose presence in the country is
found to be injurious to the public good. We believe that the deportation of the respondent late in
the day did not achieve the said purpose. The petitioner admitted that there is no longer a factual
and legal basis to disqualify the respondent from staying in the country. He is not an undesirable
alien; nor is his presence in the country injurious to public good. He is even an entrepreneur and a
productive member of society.
Arrest, detention and deportation orders of aliens should not be enforced blindly and
indiscriminately, without regard to facts and circumstances that will render the same unjust, unfair
or illegal.94 To direct the respondent to leave the country first before allowing him re-entry is
downright iniquitous.95 If the respondent does leave the country, he would thereby be accepting
the force and effect of the BOC’s Summary Deportation Order with its attendant infirmities. He will
thereby lose his permanent resident status and admit the efficacy of the cancellation of his
permanent resident visa. Moreover, his entry into the country will be subject to such conditions as
the petitioner may impose.
The deportation of an alien is not intended as a punishment or penalty.1âwphi1 But in a real sense,
it is. In Bridges v. Wixon,96 Mr. Justice Murphy declared that the impact of deportation upon the life
of an alien is often as great if not greater than the imposition of a criminal sentence. In dealing with
deportation, there is no justifiable reason for disregarding the democratic and human tenets of our
legal system and descending to the practices of despotism. As Justice Brewer opined in Fong Yue
Ting v. United States,97 deportation is a punishment because it requires first, an arrest, a deprivation
of liberty and second, a removal from home, from family, from business, from property. To be
forcibly taken away from home, family, business and property and sent across the ocean to a distant
land is punishment; and that oftentimes is most severe and cruel. It would be putting salt on the
respondent’s woes occasioned by the BOC’s ineptitude. Considering the peculiar backdrop and the
equities in this case, the respondent’s deportation and the cancellation of his permanent resident
visa as a precondition to his re-entry into this country is severe and cruel; it is a form of punishment.
Our ruling in Vivo v. Cloribel,98 has no application in this case, precisely because the factual milieu
here is entirely different. In that case, the Commissioner of Immigration required the respondents
to leave the country on or before September 12, 1962, because their stay in the country as approved
by the Secretary of Justice had been cancelled. Our ruling in Bing v. Commission on Immigration,99
even buttresses the case for the respondent since we ruled therein that an alien entitled to a
permanent stay cannot be deported without being accorded due notice and hearing.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Decision of the Court of Appeals is
AFFIRMED.
SO ORDERED.
CIVPRO – PARTIES TO CIVIL ACTIONS – REPRESENTATIVE PARTIES
G.R. No. 115838 July 18, 2002
CONSTANTE AMOR DE CASTRO and CORAZON AMOR DE CASTRO, petitioners,
vs.
COURT OF APPEALS and FRANCISCO ARTIGO, respondents.
CARPIO, J.:
The Case
Before us is a Petition for Review on Certiorari1 seeking to annul the Decision of the Court of
Appeals2 dated May 4, 1994 in CA-G.R. CV No. 37996, which affirmed in toto the decision3 of the
Regional Trial Court of Quezon City, Branch 80, in Civil Case No. Q-89-2631. The trial court disposed
as follows:
"WHEREFORE, the Court finds defendants Constante and Corazon Amor de Castro jointly and
solidarily liable to plaintiff the sum of:
a) P303,606.24 representing unpaid commission;
b) P25,000.00 for and by way of moral damages;
c) P45,000.00 for and by way of attorney's fees;
d) To pay the cost of this suit.
Quezon City, Metro Manila, December 20, 1991."
The Antecedent Facts
On May 29, 1989, private respondent Francisco Artigo ("Artigo" for brevity) sued petitioners
Constante A. De Castro ("Constante" for brevity) and Corazon A. De Castro ("Corazon" for brevity)
to collect the unpaid balance of his broker's commission from the De Castros.4 The Court of Appeals
summarized the facts in this wise:
"x x x. Appellants5 were co-owners of four (4) lots located at EDSA corner New York and Denver
Streets in Cubao, Quezon City. In a letter dated January 24, 1984 (Exhibit "A-1, p. 144, Records),
appellee6 was authorized by appellants to act as real estate broker in the sale of these properties
for the amount of P23,000,000.00, five percent (5%) of which will be given to the agent as
commission. It was appellee who first found Times Transit Corporation, represented by its
president Mr. Rondaris, as prospective buyer which desired to buy two (2) lots only, specifically
lots 14 and 15. Eventually, sometime in May of 1985, the sale of lots 14 and 15 was consummated.
Appellee received from appellants P48,893.76 as commission.
It was then that the rift between the contending parties soon emerged. Appellee apparently felt
short changed because according to him, his total commission should be P352,500.00 which is five
percent (5%) of the agreed price of P7,050,000.00 paid by Times Transit Corporation to appellants
for the two (2) lots, and that it was he who introduced the buyer to appellants and unceasingly
facilitated the negotiation which ultimately led to the consummation of the sale. Hence, he sued
below to collect the balance of P303,606.24 after having received P48,893.76 in
advance.1âwphi1.nêt
On the other hand, appellants completely traverse appellee's claims and essentially argue that
appellee is selfishly asking for more than what he truly deserved as commission to the prejudice
of other agents who were more instrumental in the consummation of the sale. Although appellants
readily concede that it was appellee who first introduced Times Transit Corp. to them, appellee
was not designated by them as their exclusive real estate agent but that in fact there were more
or less eighteen (18) others whose collective efforts in the long run dwarfed those of appellee's,
considering that the first negotiation for the sale where appellee took active participation failed
and it was these other agents who successfully brokered in the second negotiation. But despite
this and out of appellants' "pure liberality, beneficence and magnanimity", appellee nevertheless
was given the largest cut in the commission (P48,893.76), although on the principle of quantum
meruit he would have certainly been entitled to less. So appellee should not have been heard to
complain of getting only a pittance when he actually got the lion's share of the commission and
worse, he should not have been allowed to get the entire commission. Furthermore, the purchase
price for the two lots was only P3.6 million as appearing in the deed of sale and not P7.05 million
as alleged by appellee. Thus, even assuming that appellee is entitled to the entire commission, he
would only be getting 5% of the P3.6 million, or P180,000.00."
Ruling of the Court of Appeals
The Court of Appeals affirmed in toto the decision of the trial court.
First. The Court of Appeals found that Constante authorized Artigo to act as agent in the sale of two
lots in Cubao, Quezon City. The handwritten authorization letter signed by Constante clearly
established a contract of agency between Constante and Artigo. Thus, Artigo sought prospective
buyers and found Times Transit Corporation ("Times Transit" for brevity). Artigo facilitated the
negotiations which eventually led to the sale of the two lots. Therefore, the Court of Appeals
decided that Artigo is entitled to the 5% commission on the purchase price as provided in the
contract of agency.
Second. The Court of Appeals ruled that Artigo's complaint is not dismissible for failure to implead
as indispensable parties the other co-owners of the two lots. The Court of Appeals explained that it
is not necessary to implead the other co-owners since the action is exclusively based on a contract
of agency between Artigo and Constante.
Third. The Court of Appeals likewise declared that the trial court did not err in admitting parol
evidence to prove the true amount paid by Times Transit to the De Castros for the two lots. The
Court of Appeals ruled that evidence aliunde could be presented to prove that the actual purchase
price was P7.05 million and not P3.6 million as appearing in the deed of sale. Evidence aliunde is
admissible considering that Artigo is not a party, but a mere witness in the deed of sale between
the De Castros and Times Transit. The Court of Appeals explained that, "the rule that oral evidence
is inadmissible to vary the terms of written instruments is generally applied only in suits between
parties to the instrument and strangers to the contract are not bound by it." Besides, Artigo was not
suing under the deed of sale, but solely under the contract of agency. Thus, the Court of Appeals
upheld the trial court's finding that the purchase price was P7.05 million and not P3.6 million.
Hence, the instant petition.
The Issues
According to petitioners, the Court of Appeals erred in -
I. NOT ORDERING THE DISMISSAL OF THE COMPLAINT FOR FAILURE TO IMPLEAD
INDISPENSABLE PARTIES-IN-INTEREST;
II. NOT ORDERING THE DISMISSAL OF THE COMPLAINT ON THE GROUND THAT ARTIGO'S CLAIM
HAS BEEN EXTINGUISHED BY FULL PAYMENT, WAIVER, OR ABANDONMENT;
III. CONSIDERING INCOMPETENT EVIDENCE;
IV. GIVING CREDENCE TO PATENTLY PERJURED TESTIMONY;
V. SANCTIONING AN AWARD OF MORAL DAMAGES AND ATTORNEY'S FEES;
VI. NOT AWARDING THE DE CASTRO'S MORAL AND EXEMPLARY DAMAGES, AND ATTORNEY'S
FEES.
The Court's Ruling
The petition is bereft of merit.
First Issue: whether the complaint merits dismissal for failure to implead other co-owners as
indispensable parties
The De Castros argue that Artigo's complaint should have been dismissed for failure to implead all
the co-owners of the two lots. The De Castros claim that Artigo always knew that the two lots were
co-owned by Constante and Corazon with their other siblings Jose and Carmela whom Constante
merely represented. The De Castros contend that failure to implead such indispensable parties is
fatal to the complaint since Artigo, as agent of all the four co-owners, would be paid with funds co-
owned by the four co-owners.
The De Castros' contentions are devoid of legal basis.
An indispensable party is one whose interest will be affected by the court's action in the litigation,
and without whom no final determination of the case can be had.7 The joinder of indispensable
parties is mandatory and courts cannot proceed without their presence. 8 Whenever it appears to
the court in the course of a proceeding that an indispensable party has not been joined, it is the
duty of the court to stop the trial and order the inclusion of such party.9
However, the rule on mandatory joinder of indispensable parties is not applicable to the instant
case.
There is no dispute that Constante appointed Artigo in a handwritten note dated January 24, 1984
to sell the properties of the De Castros for P23 million at a 5 percent commission. The authority was
on a first come, first serve basis. The authority reads in full:
"24 Jan. 84
To Whom It May Concern:
This is to state that Mr. Francisco Artigo is authorized as our real estate broker in connection with
the sale of our property located at Edsa Corner New York & Denver, Cubao, Quezon City.
Asking price P 23,000,000.00 with 5% commission as agent's fee.
C.C. de Castro
owner & representing
co-owners
This authority is on a first-come
First serve basis –CAC"
Constante signed the note as owner and as representative of the other co-owners. Under this note,
a contract of agency was clearly constituted between Constante and Artigo. Whether Constante
appointed Artigo as agent, in Constante's individual or representative capacity, or both, the De
Castros cannot seek the dismissal of the case for failure to implead the other co-owners as
indispensable parties. The De Castros admit that the other co-owners are solidarily liable under
the contract of agency,10 citing Article 1915 of the Civil Code, which reads:
Art. 1915. If two or more persons have appointed an agent for a common transaction or
undertaking, they shall be solidarily liable to the agent for all the consequences of the agency.
The solidary liability of the four co-owners, however, militates against the De Castros' theory that
the other co-owners should be impleaded as indispensable parties. A noted commentator explained
Article 1915 thus –
"The rule in this article applies even when the appointments were made by the principals in
separate acts, provided that they are for the same transaction. The solidarity arises from the
common interest of the principals, and not from the act of constituting the agency. By virtue
of this solidarity, the agent can recover from any principal the whole compensation and
indemnity owing to him by the others. The parties, however, may, by express agreement,
negate this solidary responsibility. The solidarity does not disappear by the mere partition
effected by the principals after the accomplishment of the agency.
If the undertaking is one in which several are interested, but only some create the agency, only
the latter are solidarily liable, without prejudice to the effects of negotiorum gestio with respect
to the others. And if the power granted includes various transactions some of which are
common and others are not, only those interested in each transaction shall be liable for it."11
When the law expressly provides for solidarity of the obligation, as in the liability of co-principals in
a contract of agency, each obligor may be compelled to pay the entire obligation. 12 The agent may
recover the whole compensation from any one of the co-principals, as in this case.
Indeed, Article 1216 of the Civil Code provides that a creditor may sue any of the solidary debtors.
This article reads:
 Art. 1216. The creditor may proceed against any one of the solidary debtors or some or all of
them simultaneously. The demand made against one of them shall not be an obstacle to those
which may subsequently be directed against the others, so long as the debt has not been fully
collected.
Thus, the Court has ruled in Operators Incorporated vs. American Biscuit Co., Inc.13 that –
"x x x solidarity does not make a solidary obligor an indispensable party in a suit filed by the
creditor. Article 1216 of the Civil Code says that the creditor `may proceed against anyone of
the solidary debtors or some or all of them simultaneously'." (Emphasis supplied)
Second Issue: whether Artigo's claim has been extinguished by full payment, waiver or
abandonment
The De Castros claim that Artigo was fully paid on June 14, 1985, that is, Artigo was given "his
proportionate share and no longer entitled to any balance." According to them, Artigo was just one
of the agents involved in the sale and entitled to a "proportionate share" in the commission. They
assert that Artigo did absolutely nothing during the second negotiation but to sign as a witness in
the deed of sale. He did not even prepare the documents for the transaction as an active real estate
broker usually does.
The De Castros' arguments are flimsy.
A contract of agency which is not contrary to law, public order, public policy, morals or good custom
is a valid contract, and constitutes the law between the parties.14 The contract of agency entered
into by Constante with Artigo is the law between them and both are bound to comply with its terms
and conditions in good faith.
The mere fact that "other agents" intervened in the consummation of the sale and were paid their
respective commissions cannot vary the terms of the contract of agency granting Artigo a 5 percent
commission based on the selling price. These "other agents" turned out to be employees of Times
Transit, the buyer Artigo introduced to the De Castros. This prompted the trial court to observe:
"The alleged `second group' of agents came into the picture only during the so-called `second
negotiation' and it is amusing to note that these (sic) second group, prominent among whom are
Atty. Del Castillo and Ms. Prudencio, happened to be employees of Times Transit, the buyer of
the properties. And their efforts were limited to convincing Constante to 'part away' with the
properties because the redemption period of the foreclosed properties is around the corner, so
to speak. (tsn. June 6, 1991).
xxx
To accept Constante's version of the story is to open the floodgates of fraud and deceit. A seller
could always pretend rejection of the offer and wait for sometime for others to renew it who are
much willing to accept a commission far less than the original broker. The immorality in the
instant case easily presents itself if one has to consider that the alleged `second group' are the
employees of the buyer, Times Transit and they have not bettered the offer secured by Mr.
Artigo for P7 million.
It is to be noted also that while Constante was too particular about the unrenewed real estate
broker's license of Mr. Artigo, he did not bother at all to inquire as to the licenses of Prudencio
and Castillo. (tsn, April 11, 1991, pp. 39-40)."15 (Emphasis supplied)
In any event, we find that the 5 percent real estate broker's commission is reasonable and within
the standard practice in the real estate industry for transactions of this nature.
The De Castros also contend that Artigo's inaction as well as failure to protest estops him from
recovering more than what was actually paid him. The De Castros cite Article 1235 of the Civil Code
which reads:
Art. 1235. When the obligee accepts the performance, knowing its incompleteness and
irregularity, and without expressing any protest or objection, the obligation is deemed fully
complied with.
The De Castros' reliance on Article 1235 of the Civil Code is misplaced. Artigo's acceptance of partial
payment of his commission neither amounts to a waiver of the balance nor puts him in estoppel.
This is the import of Article 1235 which was explained in this wise:
"The word accept, as used in Article 1235 of the Civil Code, means to take as satisfactory or
sufficient, or agree to an incomplete or irregular performance. Hence, the mere receipt of a
partial payment is not equivalent to the required acceptance of performance as would
extinguish the whole obligation."16 (Emphasis supplied)
There is thus a clear distinction between acceptance and mere receipt. In this case, it is evident that
Artigo merely received the partial payment without waiving the balance. Thus, there is no estoppel
to speak of.
The De Castros further argue that laches should apply because Artigo did not file his complaint in
court until May 29, 1989, or almost four years later. Hence, Artigo's claim for the balance of his
commission is barred by laches.
Laches means the failure or neglect, for an unreasonable and unexplained length of time, to do that
which by exercising due diligence could or should have been done earlier. It is negligence or
omission to assert a right within a reasonable time, warranting a presumption that the party entitled
to assert it either has abandoned it or declined to assert it.17
Artigo disputes the claim that he neglected to assert his rights. He was appointed as agent on
January 24, 1984. The two lots were finally sold in June 1985. As found by the trial court, Artigo
demanded in April and July of 1985 the payment of his commission by Constante on the basis of the
selling price of P7.05 million but there was no response from Constante.18 After it became clear that
his demands for payment have fallen on deaf ears, Artigo decided to sue on May 29, 1989.
Actions upon a written contract, such as a contract of agency, must be brought within ten years
from the time the right of action accrues.19 The right of action accrues from the moment the breach
of right or duty occurs. From this moment, the creditor can institute the action even as the ten-year
prescriptive period begins to run.20
The De Castros admit that Artigo's claim was filed within the ten-year prescriptive period. The De
Castros, however, still maintain that Artigo's cause of action is barred by laches. Laches does not
apply because only four years had lapsed from the time of the sale in June 1985. Artigo made a
demand in July 1985 and filed the action in court on May 29, 1989, well within the ten-year
prescriptive period. This does not constitute an unreasonable delay in asserting one's right. The
Court has ruled, "a delay within the prescriptive period is sanctioned by law and is not considered
to be a delay that would bar relief."21 In explaining that laches applies only in the absence of a
statutory prescriptive period, the Court has stated -
"Laches is recourse in equity. Equity, however, is applied only in the absence, never in
contravention, of statutory law. Thus, laches, cannot, as a rule, be used to abate a collection
suit filed within the prescriptive period mandated by the Civil Code." 22
Clearly, the De Castros' defense of laches finds no support in law, equity or jurisprudence.
Third issue: whether the determination of the purchase price was made in violation of the Rules
on Evidence
The De Castros want the Court to re-examine the probative value of the evidence adduced in the
trial court to determine whether the actual selling price of the two lots was P7.05 million and not
P3.6 million. The De Castros contend that it is erroneous to base the 5 percent commission on a
purchase price of P7.05 million as ordered by the trial court and the appellate court. The De Castros
insist that the purchase price is P3.6 million as expressly stated in the deed of sale, the due execution
and authenticity of which was admitted during the trial.
The De Castros believe that the trial and appellate courts committed a mistake in considering
incompetent evidence and disregarding the best evidence and parole evidence rules. They claim
that the Court of Appeals erroneously affirmed sub silentio the trial court's reliance on the various
correspondences between Constante and Times Transit which were mere photocopies that do not
satisfy the best evidence rule. Further, these letters covered only the first negotiations between
Constante and Times Transit which failed; hence, these are immaterial in determining the final
purchase price.
The De Castros further argue that if there was an undervaluation, Artigo who signed as witness
benefited therefrom, and being equally guilty, should be left where he presently stands. They
likewise claim that the Court of Appeals erred in relying on evidence which were not offered for the
purpose considered by the trial court. Specifically, Exhibits "B", "C", "D" and "E" were not offered to
prove that the purchase price was P7.05 Million. Finally, they argue that the courts a quo erred in
giving credence to the perjured testimony of Artigo. They want the entire testimony of Artigo
rejected as a falsehood because he was lying when he claimed at the outset that he was a licensed
real estate broker when he was not.
Whether the actual purchase price was P7.05 Million as found by the trial court and affirmed by the
Court of Appeals, or P3.6 Million as claimed by the De Castros, is a question of fact and not of law.
Inevitably, this calls for an inquiry into the facts and evidence on record. This we can not do.
It is not the function of this Court to re-examine the evidence submitted by the parties, or analyze
or weigh the evidence again.23 This Court is not the proper venue to consider a factual issue as it is
not a trier of facts. In petitions for review on certiorari as a mode of appeal under Rule 45, a
petitioner can only raise questions of law. Our pronouncement in the case of Cormero vs. Court of
Appeals24 bears reiteration:
"At the outset, it is evident from the errors assigned that the petition is anchored on a plea to
review the factual conclusion reached by the respondent court. Such task however is foreclosed
by the rule that in petitions for certiorari as a mode of appeal, like this one, only questions of law
distinctly set forth may be raised. These questions have been defined as those that do not call for
any examination of the probative value of the evidence presented by the parties. (Uniland
Resources vs. Development Bank of the Philippines, 200 SCRA 751 [1991] citing Goduco vs. Court
of appeals, et al., 119 Phil. 531; Hernandez vs. Court of Appeals, 149 SCRA 67). And when this
court is asked to go over the proof presented by the parties, and analyze, assess and weigh them
to ascertain if the trial court and the appellate court were correct in according superior credit to
this or that piece of evidence and eventually, to the totality of the evidence of one party or the
other, the court cannot and will not do the same. (Elayda vs. Court of Appeals, 199 SCRA 349
[1991]). Thus, in the absence of any showing that the findings complained of are totally devoid of
support in the record, or that they are so glaringly erroneous as to constitute serious abuse of
discretion, such findings must stand, for this court is not expected or required to examine or
contrast the oral and documentary evidence submitted by the parties. (Morales vs. Court of
Appeals, 197 SCRA 391 [1991] citing Santa Ana vs. Hernandez, 18 SCRA 973 [1966])."
We find no reason to depart from this principle. The trial and appellate courts are in a much better
position to evaluate properly the evidence. Hence, we find no other recourse but to affirm their
finding on the actual purchase price.1âwphi1.nêt
Fourth Issue: whether award of moral damages and attorney's fees is proper
The De Castros claim that Artigo failed to prove that he is entitled to moral damages and attorney's
fees. The De Castros, however, cite no concrete reason except to say that they are the ones entitled
to damages since the case was filed to harass and extort money from them.
Law and jurisprudence support the award of moral damages and attorney's fees in favor of Artigo.
The award of damages and attorney's fees is left to the sound discretion of the court, and if such
discretion is well exercised, as in this case, it will not be disturbed on appeal.25 Moral damages may
be awarded when in a breach of contract the defendant acted in bad faith, or in wanton disregard
of his contractual obligation.26 On the other hand, attorney's fees are awarded in instances where
"the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid,
just and demandable claim."27 There is no reason to disturb the trial court's finding that "the
defendants' lack of good faith and unkind treatment of the plaintiff in refusing to give his due
commission deserve censure." This warrants the award of P25,000.00 in moral damages and P
45,000.00 in attorney's fees. The amounts are, in our view, fair and reasonable. Having found a
buyer for the two lots, Artigo had already performed his part of the bargain under the contract of
agency. The De Castros should have exercised fairness and good judgment in dealing with Artigo by
fulfilling their own part of the bargain - paying Artigo his 5 percent broker's commission based on
the actual purchase price of the two lots.
WHEREFORE, the petition is denied for lack of merit. The Decision of the Court of Appeals dated
May 4, 1994 in CA-G.R. CV No. 37996 is AFFIRMED in toto.
SO ORDERED.
CIVPRO – PARTIES TO CIVIL ACTIONS – REPRESENTATIVE PARTIES firm, the Heritage Park Executive Committee terminated the two construction contracts namely,
the landscaping and nursery works, and the construction of the terrasoleum.
G.R. No. 157065 July 11, 2006
On March 17, 2000, pursuant to the terms of the PFTA, HPMC assumed all the functions, duties and
ELPIDIO S. UY, doing business under the name and style EDISON DEVELOPMENT & responsibilities of the PEA, including those under an assailed contract.7
CONSTRUCTION, petitioner,
vs. On May 31, 2001, petitioner filed a complaint8 against the PEA before the Construction Industry
HON. COURT OF APPEALS and the HERITAGE PARK MANAGEMENT CORPORATION (HPMC), Arbitration Commission (CIAC) where it sought to recover payment for its progress billings on the
respondents. said projects.

DECISION On December 18, 2001, CIAC promulgated its decision, holding that:

QUISUMBING, J.: On the basis of the evidence presented and the findings, judgment is hereby rendered in favor
of the Claimant Contractor ELPIDIO S. UY and Award is hereby made on its monetary claims as
This is a Petition for Review seeking to reverse and set aside the Decision 1 dated January 31, 2003 follows:
of the Court of Appeals in CA-G.R. SP. No. 69771.
P 2,354,607.40 - Progress Billing No. 09
The Heritage Memorial Park is a flagship project of the Bases Conversion Development Authority 2,949,767.71 - Progress Billing No. 10
(BCDA) in Fort Bonifacio. To implement the project, the BCDA, on September 9, 1994, entered into 8,197,396.65 - Performed Work on Change Order No. 1
an agreement denominated as the Pool Formation Trust Agreement2 (PFTA) with the Philippine 16,210,108.28 - Equipment Stand-by Costs
National Bank (PNB) and the Public Estates Authority (PEA). The BCDA was designated as the Project
Owner; PEA, the Project Manager; and PNB as the Trustee. 6,421,398.50 - Manpower Stand-by Costs
1,045,532.07 - Escalation of Contract Price
2,211,148.26 - Unpaid Balance on Materials on Site
As project owner, the BCDA was tasked to sell the Heritage Park Investment Certificates to the public
489,535.02 - Interest on Billing Nos. 9 and 10
and buyers become certificate holders. The certificate gives the PNB the absolute legal and
3,987,949.39 - Attorney's Fees
beneficial title to Heritage Park in trust for the certificate holders. The PNB, as trustee, shall protect
445,665.15 - Reimbursement of Arbitration fees
the values of the assets in the trust, receive and have custody over the proceeds from the sale of
[P 44,313,108.43]9 - Total Amount
the certificates, administer the various funds, including disbursements for project costs and related
expenses, turnover the Perpetual Care Fund to the Successor Trustee, turnover custody over
documents pertaining to the Heritage Park and the residual funds to BCDA, and turnover all the
documents and records to the Board of Trustees after completion of the project.3 Interest at the rate of 6% per annum on the total amount of P39,879,493.89 (Attorney's fees and
reimbursement of arbitration fees exclude) shall be paid from the date this Decision is
promulgated until finality of this Decision, after which interest at the rate of 12% per annum shall
PEA, as project manager, is tasked to implement and complete the various engineering works and
be paid on the total amount of P39,879,493.89 until full payment of the awarded amount shall
improvements of Heritage Park.
have been made.

On November 20, 1996, PEA and the petitioner, a single proprietorship doing business under the
SO ORDERED.10
name and style of Edison Development and Construction, executed a Landscaping and Construction
Agreement whereby the petitioner undertook to do all the landscaping, including the construction
of a terrasoleum of the Heritage Park. The Heritage Park Executive Committee4 approved the On March 14, 2002, an Alias Writ of Execution 11 was issued by CIAC and on the following day, a
agreement on May 29, 1997.5 Notice of Garnishment was served on private respondent.

Pursuant to Section 11.016 of the PFTA, in April 1999, the certificate holders of the project organized
themselves into a non-stock, non-profit corporation, the Heritage Park Management Corporation
(HPMC), now the private respondent herein.
In October 1999, alleging delay in the construction of the projects and huge discrepancy between
the Accomplishment Report and the actual physical accomplishment of petitioner's construction
Private respondent HPMC then filed a petition for Injunction/Prohibition before the Court of
Appeals on the ground that CIAC had no jurisdiction over the subject matter since HPMC was not
impleaded as a party thereby depriving it of its right to be heard.12 The appellate court ruled in favor
of respondent, as follows
 WHEREFORE, premises considered, the Petition is GRANTED and the assailed three (3) rulings of
public respondent in CIAC 21-2001 are hereby declared VOID AB INITIO and produces no legal
effect insofar as the HPMC's interests are concerned. No costs.
SO ORDERED.13
Petitioner before us ascribes the following as errors on the part of the appellate court:
I
The Court of Appeals committed gross reversible error and decided questions of substance in a
way not in accordance with law and the applicable decisions of the honorable court when it
declared void the CIAC Decision dated 18 December 2001, the Amended Writ of Execution dated
25 March 2002, and the amended notice of garnishment dated 27 March 2002, on the sole grossly
erroneous basis that respondent HPMC is allegedly a real party-in-interest and an indispensable
party in CIAC Case No. 21-2001 for which reason it should allegedly have been impleaded in said
arbitration case, considering that:
A. Under the Pool Formation Trust Agreement (PFTA) which provides for the creation of
respondent HPMC, the trusteeship rights conferred upon it insofar as the heritage funds are
concerned were expressly limited by the PFTA itself which earmarked or allocated said funds
to answer for liabilities under the construction agreements entered into by the PEA, thereby
constituting respondent HPMC as a mere custodian or escrow agent of said funds; accordingly,
respondent HPMC is not a real party-in-interest or indispensable party to CIAC Case No. 21-
2001.
B. By claiming to be the trustee of the construction/development fund, respondent HPMC is
estopped from asserting its alleged ownership of said fund.
C. The construction/development fund was expressly earmarked to pay for the costs of
development of the heritage park, including arbitral awards; and thus, CIAC acted within its
discretion when it issued a writ of execution directed against the said fund.
II
The Court of Appeals committed gross and reversible error and decided questions of substance
in a way not in accordance with law and the applicable decisions of the honorable court when it
ruled that respondent HPMC is allegedly a real party-in-interest or an indispensable party
considering that the honorable court has already conclusively ruled that there was no valid
novation of the construction agreements between petitioner UY and PEA. In fact, the court of
appeals already dismissed a similar petition filed by respondent HPMC invoking the same groundS
as in its petition a quo.
III
The Court of Appeals committed gross reversible error in granting the extraordinary remedies of
prohibition and injunction to enjoin the execution of the award in CIAC Case No. 21-2001,
considering that:
A. Respondent HPMC does not have any right, much less a clear and unmistakable right, which
would entitle it to the extraordinary remedies of prohibition and injunction.
B. Respondent HPMC miserably failed to establish that it would suffer any injury, much less
grave and irreparable injury, as a result of the execution of the said award.
C. Respondent HPMC's said petition for injunction/prohibition was fatally defective in both
form and substance; and hence, should have been dismissed.
D. Respondent HPMC was clearly guilty of forum-shopping when it filed its petition for
injunction/prohibition with the court of appeals during the pendency of a similar petition with
the honorable court (G.R. No. 148133).
IV
The court of appeals committed gross reversible error when it went beyond the issues of the case
and the allegations in respondent HPMC's petition by declaring the CIAC Decision dated 18
December 2001, the Amended Writ of Execution dated 25 March 2002, and the amended notice
of garnishment dated 27 March 2002 as allegedly void ab initio.14
Simply stated, the issues for our resolution are: (1) Is HPMC a real party-in-interest or an
indispensable party? (2) Does CIAC have jurisdiction over the dispute? and (3) Was the grant of the
writs of injunction/prohibition proper?
Petitioner's contention is that private respondent HPMC is not a party-in-interest to the case since
it is a mere trustee of the construction and development funds and would not be directly benefited
or injured by the outcome of the case.
Private respondent contends that upon its incorporation and election of its Board of Trustees, it
assumed ownership of the Heritage Park Project. Further, since it is a non-stock, non-profit
corporation, with the certificate holders as its members, any claim against the PEA is in reality a
claim against all the parties who pooled and contributed their resources for the project; hence, it is
an indispensable party.15
An indispensable party is one whose interest will be affected by the court's action in the litigation,
and without whom no final determination of the case can be had. The party's interest in the subject
matter of the suit and in the relief sought are so inextricably intertwined with the other parties' that
his legal presence as a party to the proceeding is an absolute necessity.16
Based on the Construction Agreement, PEA entered into it in its capacity as Project Manager,
pursuant to the PFTA. According to the provisions of the PFTA, 17 upon the formation of the HPMC,
the PEA would turn over to the HPMC all the contracts relating to the Heritage Park. At the time of
the filing of the CIAC Case on May 31, 2001, PEA ceased to be the Project Manager of the Heritage
Park Project, pursuant to Section 11 of the PFTA. Through a Deed of Assignment,18 PEA assigned its
interests in all the existing contracts it entered into as the Project Manager for Heritage Park to
HPMC. As early as March 17, 2000, PEA officially turned over to HPMC all the documents and
equipment in its possession related to the Heritage Park Project. Petitioner was duly informed of
these incidents through a letter dated March 13, 2000.19 Apparently, as of the date of the filing of
the CIAC Case, PEA is no longer a party-in-interest. Instead, it is now private respondent HPMC, as
the assignee, who stands to be benefited or injured by the judgment in the suit. In its absence, there
cannot be a resolution of the dispute of the parties before the court which is effective, complete or
equitable.20 We thus reiterate that HPMC is an indispensable party.
Does CIAC have jurisdiction over the dispute? Section 421 of Executive Order No. 100822 is pertinent.
It provides that the jurisdiction of the CIAC over the parties is dependent on the agreement and
consent of the parties to the construction contract, to submit their dispute for arbitration. Absent
such consent, the CIAC cannot validly proceed against a party for lack of jurisdiction.

In this instance, both parties agreed to submit the dispute for arbitration. However, the CIAC should
have dismissed the same on the ground that the private respondent was not impleaded, it being an
indispensable party to the case.

Indispensable parties must be joined either as plaintiffs or defendants.23 Whenever it appears to

the court in the course of a proceeding that an indispensable party has not been joined, it is the
duty of the court to stop the trial and to order the inclusion of such party. 24 The absence of an
indispensable party renders all subsequent actuations of the court null and void, for want of
authority to act, not only as to the absent parties, but even as to those present.25

It has come to the Court's attention that from the inception of the case, PEA informed the CIAC that
pursuant to the PFTA and the Deed of Assignment, all its rights and obligations under the contract
have already been assigned to private respondent.26

The responsibility of impleading all the indispensable parties rests on the plaintiff. The defendant
does not have the right to compel the plaintiff to prosecute the action against a party if he does not
wish to do so, but the plaintiff will have to suffer the consequences of any error he might commit
in exercising his option.27

As to the third issue -- on the propriety of the writs of injunction/prohibition -- the matter has been
mooted by our disquisitions above, and the issue has become academic.

WHEREFORE, the petition is DENIED, without prejudice to the re-filing of the case against the proper
party in interest.

Costs against petitioner.

SO ORDERED.
CIVPRO – PARTIES TO CIVIL ACTIONS – NECESSARY OR PROPER PARTY
G.R. No. 96354 June 8, 1993
LAPERAL DEVELOPMENT CORPORATION and SUNBEAMS CONVENIENCE FOOD CORPORATION,
petitioners,
vs.
HON. COURT OF APPEALS and THE HEIRS OF FILOTEO T. BANZON, respondents.
CRUZ, J.:
In Civil Case No. Q-34907 in the Court of First Instance of Rizal, Quezon City, Atty. Filoteo T. Banzon
sought recovery of attorney's fees from Oliverio Laperal, Laperal Development Corporation, and
Imperial Development Corporation for professional services rendered by him in the following cases:
1. Land Registration Case No. 20, Court of First Instance of Bataan, Branch 1.
2. Land Registration Case, Court of First Instance of Bataan, Branch 2.
3. G.R. No. L-47074, Laperal Development Corp., et al. vs. Hon. Abraham P. Vera, Ascario Tuazon,
et al.
4. Petition for Land Registration, Court of First Instance of Bataan, Branch 1.
5. Land Registration Case No. N-398, Court of First Instance of Baguio.
6. Civil Case No. 3922, Court of First Instance of Bataan, Branch 2, Oliverio Laperal vs. Mario
Francisco.
7. Civil Case No. 4062, Court of First Instance of Bataan, Republic vs. Sunbeams Convenience
Foods, Inc., et al.
8. Civil Case No. 4437, Court of First Instance of Bataan, Laperal Development Corporation et al.
vs. Spouses Ascario Tyazon and Purificacion Ampil, et al.
9. Administrative action filed by the Solicitor General against Laperal Development Corporation
for annulment of title to 400 hectares of land.
10. Civil Case No. Q-22933, Court of First Instance of Quezon City, Imperial Development Corp.
vs. P & B Taxicab Inc..
On April 8, 1983, the case was decided on the basis of a Compromise Agreement reading in part as
follows:
Atty. Filoteo Banzon by this agreement, does hereby voluntarily and freely waive, forfeit, or
consider as fully paid any and all other claims of money or otherwise that he may have against
the defendants, in all cases in the Philippines that he may have handled for the defendants in the
past, including whatever money claims he may have in the above-entitled case outside of this
agreement, inclusive of representation fees, representation expenses, appearance fees, or
retainers fees, or other forms of attorneys fees and, hereby re-affirm that he will undertake upon
his professional oath and standing, to protect the interest of the defendants in all unfinished
appealed cases that the herein plaintiff had appeared in the past in representation of the
defendants, without any further renumeration or attorneys fees, representation fees,
appearance fees and expenses in connection therewith.
On May 19, 1987, Banzon filed a complaint against Oliverio Laperal. Laperal Development
Corporation. Imperial Development Corporation, Sunbeams Convenience Foods, Inc. and Vicente
Acsay for: 1) the annulment of the aforequoted portion of the Compromise Agreement; 2) the
collection of attorney's fees for his services in the cases of: a) Imperial Development Corporation vs.
Añover, b) Republic vs. Sunbeams Convenience Foods, Inc., et al., and c) Laperal Development vs.
Ascario Tuazon and Ascario Tuazon v. Judge Maglalang, et al.; 3) the recovery of the amount of
P10,000.00 that was adjudged payable to him as attorney's fees by Ascario Tuazon in Civil Case No.
3918; and 4) the payment to him of nominal damages and attorney's fees.
Docketed as Civil Case 50823 in Branch 92 of the Regional Trial Court of Quezon City, this case was
dismissed on the ground that the trial court had no jurisdiction to annul the Compromise Agreement
as approved by an equal and coordinate court. It was held that the issue was cognizable by the Court
of Appeals. An additional ground was that the Compromise Agreement already covered the
plaintiff's professional services in the aforementioned cases.1
On appeal, the decision was affirmed on the issue of jurisdiction. The Court of Appeals held,
however, that attorney's fees were due the private respondent in the cases of Laperal Development
Corporation v. Ascario Tuazon and Ascario Tuazon v. Judge Maglalang and Republic v. Sunbeams
Convenience Foods. Inc..2
The petitioners are now before us to challenge the decision insofar as it orders them to pay Banzon
attorney's fees for his legal services in the aforementioned cases.
An examination of the list of cases for which Banzon was suing for attorney's fees in Civil Case No.
Q-34907 shows that the case of Laperal Development Corporation v. Ascario Tuazon was included
therein although it was erroneously referred to as Civil Case No. 4437. Even if it was not mentioned
in the complaint, it was nevertheless covered by the Compromise Agreement, where Atty. Banzon
waived all other claims against the defendants * "in all cases in the Philippines that he may have
handled for the defendants in the past, including whatever money claims he may have in the above-
entitled case outside of this agreement." He also undertook therein to protect the interest of the
defendants in all unfinished appealed cases where he appeared in the past in representation of
latter, without any further remuneration or attorney's fees, representation fees, appearance fees
and expenses in connection therewith.
The undertaking clearly covered the case of Laperal Development Corporation v. Ascario Tuazon,
(AC-G.R. CV No. 70186), which was still pending in the Court of Appeals at the time of the
Compromise Agreement, and the subsequent case of Ascario Tuazon v. Judge Maglalang (CA-G.R.
SP No. 07370). The respondent court erred in supposing that the said agreement covered only past
services, disregarding the clear stipulation for the continuation of the private respondent's services
in all pending appealed cases in which he had earlier appeared.
Concerning the case of Republic vs. Sunbeams Convenience Foods, Inc. (G.R. No. 50464), the Court
of Appeals said:
 At the time of the execution of the compromise agreement and rendition of the judgment based
thereon on April 8, 1983, the aforementioned case bearing G.R. No. 50464 was still pending in
the Supreme Court. It was not, however, the subject of the compromise agreement (Exhibits C
and 2; Annex 2, answer, pp. 47-55, 65-66, rec.). It could not have been so because Sunbeams
Convenience Foods, Inc. was not a party defendant in the second amended complaint, although
reference was made to it in the appellant's seventh cause of action for which he has rendered
professional services but for which attorney's fees were being claimed from the herein appellee
Oliverio Laperal (Exhibits A and 1). But nothing is mentioned in the second amended complaint
and in the compromise agreement (Exhibits A and 1; C and 2) which would indicate that
Sunbeams Convenience Foods, Inc. itself was a party plaintiff therein privy to the case. Appellee
Oliverio Laperal and Sunbeams Convenience Foods, Inc. do not appear to be one and the same.
It appearing that it was the herein appellant who filed the brief for Sunbeams Convenience Foods,
Inc. in the Supreme Court on March 14, 1980 (Exhibit D), he should be compensated for his
services.
Banzon's claim for attorney's fees in the said case was also among those enumerated in his
complaint in Civil Case No. Q-34907 against Oliverio Laperal, Laperal Development Corporation, and
Imperial Development Corporation. Notably, Sunbeams Convenience Foods, Inc. (Sunbeams, for
brevity), referred to in the complaint as "Mr. Laperal's Corporation," was not joined by name as a
party-defendant. Apparently, the private respondent believed that Oliverio Laperal, being the
president of the said company, was directly obligated to him for the attorney's fees due him for his
handling of the case for Sunbeams.
It is settled that a corporation is clothed with a personality separate and distinct from that of the
persons composing it. 3 It may not generally be held liable for the personal indebtedness of its
stockholders or those of the entities connected with it.4 Conversely, a stockholder cannot be made
to answer for any of its financial obligations even if he should be its president.5
There is no evidence that Sunbeams and Laperal are one and the same person. While it is true that
Laperal is a stockholder, director and officer of Sunbeams, that status alone does not make him
answerable for the liabilities of the said corporation. Such liabilities include Banzon's attorney's fees
for representing it in the case of Republic v. Sunbeams Convenience Foods, Inc.
Sunbeams should have been joined as a party-defendant in order that the judgment of the lower
court could legally affect it. But even if it was not impleaded, the court could still validly proceed
with the case because Sunbeams was not an indespensable party but only a proper party. A proper
party is one which ought to be a party if complete relief is to be accorded as between those already
parties.6 A party is indespensable if no final determination can be had of an action unless it is joined
either as plaintiff or defendant.7
The Compromise Agreement upon which the decision of the court was based was between plaintiff
Atty. Banzon and the defendants represented by Oliverio Laperal. To repeat, Sunbeams was not a
party to this agreement and so could not be affected by it.
It is noted, however, that in his complaint in Civil Case No. 50823 against Sunbeams et al., Banzon
stated:
1. On the 1st cause of action, to declare the portions of the compromise agreement (Annex A)
alleged in par. 4 of the 1st cause of action where plaintiff waives his attorney's fees and other
fees in all other cases he handled in the past for the defendants Oliverio Laperal and his
corporations not included in the complaint for attorney's fee . . . (emphasis supplied)
This declaration amounted to an admission that he had also waived his attorney's fees in the cases
he had handled for Laperal's corporations which were not impleaded in Civil Case Q-34907,
including Sunbeams.
Moreover, in the hearing Civil Case 50823, Banzon testified as follows.
Atty. Banzon: I am not claiming my attorney's fees from 1974 to 1981. What I was claiming was
the attorney's fees for the services I have rendered after the compromise agreement in 1983 to
1987 by virtue of the new agreement . . .. (TSN, Sept. 15, p. 7 Records, Vol. II, p. 129).
xxx xxx xxx
Court: So you are not claiming anymore your attorney's fees in those ten cases?
Atty. Banzon: I am claiming only for the services I have rendered from 1983 to 1987 by virtue of
a new agreement.
Court: These services of yours exclude the ten?
Atty. Banzon: Exclude the ten, Your Honor. (Ibid, p. 16)
xxx xxx xxx
Atty. Banzon: I admit, Your Honor that those 10 services are those services I rendered in the past
wherein I waived my attorney's fees; my services covered from 1974 to 1981 but not my services
after the compromise agreement. (ibid, p. 22).
The Sunbeams case was one of the ten cases listed in the complaint in Civil Case No. 34907. It was
pending before this Court when Civil Case No. Q-34907 and Civil Case No. 50823 were instituted.
To prove his claim for attorney's fees for his services in the Sunbeams case, Banzon submitted to
the Regional Trial Court of Quezon City, Branch 92, "Petitioner's Brief" (Exh. "D") and "Petitioner's
Reply to Respondents' Brief" (Exh. "D-1") dated March 14, 1980 and August 12, 1980, respectively,
which had earlier been filled with this Court in connection with the said case. Significantly, the
preparation and filing of those pleadings were done sometime in 1980, which means that they were
among those ten cases referred to by Atty. Banzon for which he had waived his attorney's fees.
There is no other proof of his services in the said case after 1983 to 1987.
The private respondent's claim for attorney's fees in the Sunbeam case was waived by him not by
virtue of the Compromise Agreement to which Sunbeams, not being a defendant in Civil Case No.
Q-34907, could not have been a party. What militates against his claim is his own judicial admission
that he had waived his attorney's fees for the cases he had handled from 1974 to 1981 for Oliverio
Laperal and his corporations, including those not impleaded in his complaint in Civil Case No. Q-
34907.
ACCORDINGLY, the petition is GRANTED. The decision of the respondent court dated November 21,
1990 is MODIFIED. Petitioners Laperal Development Corporation and Sunbeams Convenience
Foods, Inc. are declared no longer liable to the private respondents for attorney's fees in AC-G.R. CV
No. 70186, CA-G.R. SP No. 07370 and G.R. No. 50464. Costs against the private respondent.
SO ORDERED.