Nature

Appeal by Certiorari under Rule 45.

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

Where a plaintiff sues a Totality of the claims in all the causes of action Totality of the claims in all the causes of action
defendant on two or irrespective of whether the COA arose out of the same irrespective of whether the COA arose out of the same
more separate causes or diff transactions. If the total demand exceeds P20K or diff transactions. If the total demand exceeds P20K
of action – RTC has jurisdiction – RTC has jurisdiction

If the causes of action are separate and independent,
their joinder in one complaint is permissive and not
mandatory, and any cause of action where the
amount of the demand is 20K or less may be the
subject of a separate complaint filed with a
metropolitan or MTC.
If the causes of action are separate and independent,
their joinder in one complaint is permissive and not
mandatory, and any cause of action where the
amount of the demand is 20K or less may be the
subject of a separate complaint filed with a
metropolitan or MTC.
 Two or more plaintiffs Where the claims or causes of action joined in a The causes of action in favor of the two or more
having a separate single complaint are separately owned by or due to plaintiffs or against the two or more defendants
causes of action against different parties, each separate claim shall furnish the should arise out of the same transaction or series of
a defendant join in a jurisdictional test transactions and there should be a common question
single complaint of law or fact, as provided in Section 6 of Rule 3.
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.

ANTONIO T. CHUA v. TOTAL OFFICE PRODUCTS, GR NO. 152808, 2005-09-30

Facts:
Issues:
Pasig City... where the parties reside, is the proper venue of the action to nullify the subject
loan and real estate mortgage contracts
Ruling:
The Court of Appeals dismissed said petition in its decision dated November 28, 2001. It
held that the authorities relied upon by petitioner, namely Pascual v. Pascual[6] and Banco
Español-Filipino v. Palanca,[7] are... inapplicable in the instant case. The appellate court
instead applied Hernandez v. Rural Bank of Lucena, Inc.[8] wherein we ruled that an action
for the cancellation of a real estate mortgage is a personal action if the mortgagee has not...
foreclosed the mortgage and the mortgagor is in possession of the premises, as neither the
mortgagor's title to nor possession of the property is disputed.
Dissatisfied, petitioner filed a motion for reconsideration, which the Court of Appeals denied
for lack of merit in its resolution of April 1, 2002.
Undeterred, petitioner now comes to us on a petition for review raising the following issues:
WHETHER AN ACTION TO ANNUL A LOAN AND MORTGAGE CONTRACT DULY
ALLEGED AS 'FICTITIOUS' FOR BEING WITH ABSOLUTELY NO CONSIDERATION IS A
PERSONAL ACTION OR REAL ACTION?
WHETHER IN AN ACTION TO ANNUL A LOAN AND MORTGAGE CONTRACT DULY
ALLEGED AS 'FICTITIOUS' FOR BEING WITH ABSOLUTELY NO CONSIDERATION,
THE PERSON ALLEGED TO HAVE '[LACKED] AUTHORITY' TO ENTER INTO SAID
CONTRACTS IS AN INDISPENSABLE PARTY?[9]
Well-settled is the rule that an action to annul a contract of loan and its accessory real
estate mortgage is a personal action.
in the instant... case, ownership of the parcels of land subject of the questioned real estate
mortgage was never transferred to petitioner, but remained with TOPROS. Thus, no real
action for the recovery of real property is involved. This being the case, TOPROS' action
for annulment... of the contracts of loan and real estate mortgage remains a personal
action.
the action for annulment of a real estate mortgage in the present case must fall under
Section 2 of Rule 4
which provides that the venue of personal actions or

All other actions may be commenced and tried where the plaintiff or any of the principal
plaintiffs resides, or where the defendant or any of the principal defendants resides, or in
the case of a non-resident defendant... where he may be found, at the election of the
plaintiff.
Thus, Pasig City, where the parties reside, is the proper venue of the action to nullify the
subject loan and real estate mortgage contracts. The Court of Appeals committed no
reversible error in upholding the orders of the Regional Trial Court denying petitioner's
motion to... dismiss the case on the ground of improper venue.
Principles:
QUISUMBING, J.:

ANTONIO CHUA vs. TOPROS G.R. No. 152808 September 30, 2005

FACTS:

Total Office Products and Services, Inc., lodged a complaint for annulment of contracts of loan and real
estate mortgage against Antonio T. Chua before RTC seeking to ANNUL a loan contract allegedly
extended by Chua to TOPROS in the amount of 10.4 million and the accessory REM covering two parcels
of land as collateral. In the contract of loan, TOPROS was represented by its president John Charles
Chang, Jr. TOPROS alleged that the purported loan and REM contracts were fictitious, since it never
authorized anybody, not even its president, to enter into said transaction. Petitioner Antonio Chua filed
a motion to dismiss alleging that John Charles Ang, Jr., the president of TOPROS, who allegedly entered
into the questioned loan and REM is an indispensable party who has not been properly impleaded.

ISSUE: Whether or not John Charles Ang Jr. is an indispensable party in this case.

RULING: NO.

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

SEC. 7. Compulsory joinder of indispensable parties. – Parties in interest without whom no final
determination can be had of an action shall be joined either as plaintiffs or defendants.

The presence of indispensable parties is necessary to vest the court with jurisdiction. The absence of an
indispensable party renders all subsequent actuations of the court null and void, because of that court’s
want of authority to act, not only as to the absent parties but even as to those present.

Thus, 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.

A person is not an indispensable party, however, if his interest in the controversy or subject matter is
separable from the interest of the other parties, so that it will not necessarily be directly or injuriously
affected by a decree which does complete justice between them.
Is John Charles Chang, Jr., the president of TOPROS who allegedly entered into the disputed contracts of
loan and real estate mortgage, an indispensable party in this case?

We note that although it is Chang’s signature that appears on the assailed real estate mortgage
contract, his participation is limited to being a representative of TOPROS, allegedly without authority.
The document which constitutes as the contract of real estate mortgage clearly points to petitioner and
TOPROS as the sole parties-in-interest to the agreement as mortgagee and mortgagor therein,
respectively. Any rights or liabilities arising from the said contract would therefore bind only the
petitioner and TOPROS as principal parties. Chang, acting as mere representative of TOPROS, acquires
no rights whatsoever, nor does he incur any liabilities, arising from the said contract between petitioner
and TOPROS. Certainly, in our view, the only indispensable parties to the mortgage contract are
petitioner and TOPROS alone.

We thus hold that John Charles Chang, Jr., is not an indispensable party in Civil Case No. 67736. This is
without prejudice to any separate action TOPROS may institute against Chang, Jr., in a proper
proceeding.

Test of the sufficiency of a cause of action

MISAMIS OCCIDENTAL II COOPERATIVE, INC. vs DAVID G.R. No. 129928, August 25, 2005

Facts:

Private respondent David, a supplier of electrical hardware, filed a case for specific performance and
damages against MOELCI II, a rural electric cooperative in Misamis Occidental. The said case, which was
essentially a collection suit, pending before Judge Felixberto Olalia (hereinafter, Judge Olalia) of the RTC
Manila, was predicated on a document and that according to David is the contract pursuant to which he
sold to MOELCI II one (1) unit of 10 MVA Transformer. MOELCI II filed its Answer to Amended Complaint
which pleaded, among others, affirmative defenses which also constitute grounds for dismissal of the
complaint. These grounds were lack of cause of action, there being allegedly no enforceable contract
between David and MOELCI II under the Statute of Frauds pursuant to Section 1 (g) and (i), Rule 16 of
the Rules of Court, and improper venue. MOELCI II filed with the trial court a Motion (For Preliminary
Hearing of Affirmative Defenses and Deferment of PreTrial Conference) (hereinafter referred to as
Motion) arguing that the document attached as Annex "A" to the Amended Complaint was only a
quotation letter and not a contract as alleged by David. Thus, it contends that David’s Amended
Complaint is dismissible for failure to state a cause of action. David contended in the main that because
a motion to dismiss on the ground of failure to state a cause of action is required to be based only on
the allegations of the complaint, the "quotation letter," being merely an attachment to the complaint
and not part of its allegations, cannot be inquired into. MOELCI II filed a rejoinder to the opposition in
which it asserted that a complaint cannot be separated from its annexes; hence, the trial court in
resolving a motion to dismiss on the ground of failure to state a cause of action must consider the
complaint’s annexes. Judge Olalia issued an order denying MOELCI II’s motion for preliminary hearing of
affirmative defenses. MOELCI II’s motion for reconsideration of the said order was likewise denied in
another order. MOELCI II elevated this incident to the Court of Appeals by way of a special civil action
for certiorari, alleging grave abuse of discretion on the part of Judge Olalia in the issuance of the two
aforesaid orders. Court of Appeals dismissed MOELCI II’s petition holding that the allegations in David’s
complaint constitute a cause of action. With regard to MOELCI II’s contention that David’s Amended
Complaint is dismissible as the document, attached thereto as Annex "A," upon which David’s claim is
based is not a contract of sale but rather a quotation letter, the Court of Appeals ruled that the
interpretation of the document requires evidence aliunde which is not allowed in determining whether
or not the complaint states a cause of action. The appellate court further declared that when the trial
court is confronted with a motion to dismiss on the ground of lack of cause of action, it is mandated to
confine its examination for the resolution thereof to the allegations of the complaint and is specifically
enjoined from receiving evidence for that purpose. With the denial of its Motion for Reconsideration,
petitioner is now before this Court seeking a review of the appellate court’s pronouncements. MOELCI II
asserts that the Court of Appeals committed serious error in: (1) ruling that the resolution of its motion
to dismiss on the ground of lack of cause of action necessitated hearings by the trial court with the end
in view of determining whether or not the document attached as Annex "A" to the Amended Complaint
is a contract as alleged in the body of said pleading; and (2) not ordering the trial court to dismiss the
Amended Complaint on the ground of lack of cause of action. Anent the first ground, MOELCI II further
claims that with the denial of its Petition, the appellate court in effect exhorted the trial court to defer
the resolution of its motion to dismiss until after the hearing of the case on the merits contrary to Rule
16 of the Rules of Court and wellsettled jurisprudence.

Issue:

Whether or not the Court of Appeals erred in dismissing the petition for certiorari and in holding that
the trial court did not commit grave abuse of discretion in denying petitioner’s Motion.

Held: No. To determine the existence of a cause of action, only the statements in the complaint may
be properly considered. It is error for the court to take cognizance of external facts or hold preliminary
hearings to determine their existence. If the allegations in a complaint furnish sufficient basis by which
the complaint can be maintained, the same should not be dismissed regardless of the defenses that may
be averred by the defendants. The test of sufficiency of facts alleged in the complaint as constituting a
cause of action is whether or not admitting the facts alleged, the court could render a valid verdict in
accordance with the prayer of said complaint. It has been hypothetically admitted that the parties had
entered into a contract sale David bound himself to supply MOELCI II (1) unit 10 MVA Power
transformer with accessories for a total price of P5,200,000.00 plus 69 KV Line Accessories for a total
price of P2,169,500.00; that despite written and verbal demands, MOELCI II has failed to pay the price
thereof plus the custom duties and incidental expenses of P272,722.27; and that apart from the
previously stated contract of sale, David regularly delivered various electrical hardware to MOELCI II
which, despite demands, has an outstanding balance of P281,939.76. The court believed all the
foregoing sufficiently lay out a cause of action. Even extending our scrutiny to Annex "A," which is after
all deemed a part of the Amended Complaint, will not result to a change in our conclusion. The
interpretation of a document requires introduction of evidence which is precisely disallowed in
determining whether or not a complaint states a cause of action. The Court of Appeals therefore
correctly dismissed MOELCI II’s petition and upheld the trial court’s ruling.
Splitting a single cause of action

QUADRA vs CA G.R. No. 147593, July 31, 2006

Facts:

Petitioner 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]).
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.
Civil Service Commission rendered a decision finding petitioner guilty of the charges and recommending
the penalty of dismissal. 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. 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.

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. 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. 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.
4312ULP. Respondent PCSO moved to dismiss the petition for damages on the following grounds: (1) the
CIR 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 . The petition for
damages and the motion to dismiss, however, remained pending with the CIR until it was abolished and
the NLRC was created. Labor Arbiter rendered a decision awarding moral and exemplary damages to
petitioner . The NLRC affirmed the decision of the Labor Arbiter, 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. Petitioner filed a motion for
reconsideration of the decision of the Court of Appeals, but the same was denied for lack for merit.
Petitioner now seeks the Court to review the ruling of the Court of Appeals. He argued that: 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 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. The Court of Appeals has no jurisdiction to amend the final and executory decision
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 the petitioner is allegedly "tantamount to splitting of cause of action
under Sec. 4, Rule 2 of the 1997 Rules of Civil Procedure" is contrary to law. When petitioner filed with
the CIR his complaint 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 damages was filed with the CIR in the same case by virtue of the ruling of the High Court in Rheem
v. Ferrer, 19 SCRA 130 holding that the CIR has jurisdiction to award moral and exemplary damages
arising out of illegal dismissal and unfair labor practice.

Issue: Whether or not petitioner’s contention is correct. (2nd contention)

Held: Yes. The court ruled 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 more parts, and bringing suit for one of
such parts only, intending to reserve the rest for another separate action. The purpose of the rule is to
avoid harassment and vexation to the defendant and avoid multiplicity of suits. The prevailing rule at
the time that the action for unfair labor practice and illegal dismissal was filed and tried before the CIR
was that said court had no jurisdiction over claims for damages. Hence, petitioner, at that time, could
not raise the issue of damages in the proceedings. However, on January 27, 1967, the Supreme Court
rendered its ruling in Rheem of the Philippines, Inc., et al. v. Ferrer, et al. upholding the jurisdiction of
the CIR over claims for damages incidental to an 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 splitting of cause of action.

Joinder and mis-joinder of causes of action

ADA vs BAYLON G.R. No. 182435, August 13, 2012

Background of the case: Spouses Florentino and Maximina Baylon died in 1961 and 1974 respectively.
Children: Rita, Victoria, Dolores, Panfila, Ramon and Lilia, herein petitioner. Dolores died intestate and
without issue in 1976. Victoria died in 1981 and was survived by daughter, Luz, herein petitioner. Ramon
died intestate in 1989, and was survived by herein respondent Florante, his child from his first marriage,
and Flora his second wife, and their legitimate children, the other herein petitioners. Facts: Petitioners
filed with the RTC a complaint for partition, accounting and damages against Florante, Rita and Panfila,
alleging therein that Spouses Baylon, during their lifetime, owned 43 parcels of land all situated in
Negros Oriental. After the death of Spouses Baylon, they claimed that Rita took possession of the said
parcels of land and appropriated for herself the income from the same. Using the income produced by
the said parcels of land, Rita allegedly purchased two parcels of land. The petitioners averred that Rita
refused to effect a partition of the said parcels of land. In their Answer, Florante, Rita and Panfila
asserted that they and the petitioners co-owned 22 out of the 43 parcels of land mentioned in the
latter’s complaint, whereas Rita actually owned parcels of land, 10 out of the 43 parcels which the
petitioners sought to partition, while the remaining parcels of land are separately owned by Petra
Cafino Adanza, Florante, Meliton Adalia, Consorcia Adanza, Lilia & Santiago Mendez. Further, they
claimed that the 2 parcels of land, claimed to be brought from the income produced from the estate of
the late spouses, were acquired by Rita using her own money. They denied that Rita appropriated solely
for herself the income of the estate of Spouses Baylon, and expressed no objection to the partition of
the estate of Spouses Baylon, but only with respect to the co-owned parcels of land. During the
pendency of the case, Rita, through a Deed of Donation, conveyed the 2 above mentioned parcels of
land to Florante. On July 16, 2000, Rita died intestate and without any issue. Thereafter, learning of the
said donation inter vivos in favor of Florante, the petitioners filed a Supplemental Pleading, praying that
the said donation in favor of the respondent be rescinded in accordance with Article 1381(4) of the Civil
Code. They further alleged that Rita was already sick and very weak when the said Deed of Donation was
supposedly executed and, thus, could not have validly given her consent thereto. Florante and Panfila
opposed the rescission of the said donation, asserting that Article 1381(4) of the Civil Code applies only
when there is already a prior judicial decree on who between the contending parties actually owned the
properties under litigation.

RTC Decision: The RTC held that the death of Rita during the pendency of the case, having died intestate
and without any issue, had rendered the issue of ownership insofar as parcels of land which she claims
as her own moot since the parties below are the heirs to her estate. Thus, the RTC regarded Rita as the
owner of the said 10 parcels of land and, accordingly, directed that the same be partitioned among her
heirs. Nevertheless, the RTC rescinded the donation inter vivos in favor of Florante, holding that the
donation inter vivos was executed to prejudice the plaintiffs’ right to succeed to the estate of Rita in
case of death considering that it refers to the parcels of land in litigation.

Florante sought reconsideration insofar as to the rescission of the donation. The trial court denied the
motion.

CA Decision: On appeal, the CA rendered a decision reversing the RTC decision. The CA remanded the
case to RTC for the determination of ownership of the said 2 parcels of land. The CA held that before the
petitioners may file a rescission, they must first obtain a favorable judicial ruling that the subject 2
parcels of land belonged to the estate of Spouses Baylon and not to Rita. Until then, an action for
rescission is premature.

The petitioners moved for the reconsideration, but it was denied, hence, the instant petition.
Issue:

Whether or not an action for partition and rescission may be joined in a single cause of action.

Held:

NO. There was a misjoinder of causes of action. The action for partition filed by the petitioners could not
be joined with the action for the rescission of the said donation inter vivos in favor of Florante. Lest it be
overlooked, an action for partition is a special civil action governed by Rule 69 of the Rules of Court
while an action for rescission is an ordinary civil action governed by the ordinary rules of civil procedure.
The variance in the procedure in the special civil action of partition and in the ordinary civil action of
rescission precludes their joinder in one complaint or their being tried in a single proceeding to avoid
confusion in determining what rules shall govern the conduct of the proceedings as well as in the
determination of the presence of requisite elements of each particular cause of action. By a joinder of
actions, or more properly, a joinder of causes of action is meant the uniting of two or more demands or
rights of action in one action, the statement of more than one cause of action in a declaration. It is the
union of two or more civil causes of action, each of which could be made the basis of a separate suit, in
the same complaint, declaration or petition. A plaintiff may under certain circumstances join several
distinct demands, controversies or rights of action in one declaration, complaint or petition.[29] The
objectives of the rule or provision are to avoid a multiplicity of suits where the same parties and subject
matter are to be dealt with by effecting in one action a complete determination of all matters in
controversy and litigation between the parties involving one subject matter, and to expedite the
disposition of litigation at minimum cost. The provision should be construed so as to avoid such
multiplicity, where possible, without prejudice to the rights of the litigants. Nevertheless, while parties
to an action may assert in one pleading, in the alternative or otherwise, as many causes of action as they
may have against an opposing party, such joinder of causes of action is subject to the condition, inter
alia, that the joinder shall not include special civil actions governed by special rules. Disposition:
WHEREFORE, in consideration of the foregoing disquisitions, the petition is PARTIALLY GRANTED. The
Decision dated October 26, 2007 issued by the Court of Appeals in CA-G.R. CV No. 01746 is MODIFIED in
that the Decision dated October 20, 2005 issued by the Regional Trial Court, Tanjay City, Negros
Oriental, Branch 43 in Civil Case No. 11657, insofar as it decreed the rescission of the Deed of Donation
dated July 6, 1997 is hereby REINSTATED. The case is REMANDED to the trial court for the determination
of the ownership of Lot No. 4709 and half of Lot No. 4706 in accordance with this Decision.

NOTES: A misjoined cause of action, if not severed upon motion of a party or by the court sua sponte,
may be adjudicated by the court together with the other causes of action; not a ground for dismissal A
supplemental pleading may raise a new cause of action as long as it has some relation to the original
cause of action set forth in the original complaint

The purpose of supplemental pleading is to bring into the records new facts which will enlarge or
change the kind of relief to which the plaintiff is entitled; hence, any supplemental facts which further
develop the original right of action, or extend to vary the relief, are available by way of supplemental
complaint even though they themselves constitute a right of action.

RULE 3

Splitting a single cause of action

BACHRACH MOTOR vs ICARANGAL G.R. No. L-45350, May 29, 1939

Facts:

Icarangal with Figueroa executed a promissory note in favor of appellant Bachrach in the amount of
P1,614. As a security for its payment, Icarangal executed a real estate mortgage on a parcel of land
which was duly registered in the RD in 1931. When the promissors defaulted in the payment of the
agreed monthly installments, Bachrach instituted in the CFI an action for collection of the amount due
on the note. Judgement was rendered in favor of Bachrach, thereafter, a writ of execution was issued
and the properties of Icarangal was subsequently levied by the sheriff including the mortgaged property.

Oriental Commercial Co., Inc. (Oriental), the other defendant, interposed a third-party claim, alleging
that the mortgaged property had already been acquired by it thru public auction in 1933. By said reason,
the sheriff desisted from the sale of the property, and as a consequence, the judgement rendered in
favor of Bachrach remained unsatisfied. Bachrach instituted an action to foreclose the mortgage. The
trial court dismissed the complaint, hence, the filing of the present appeal.

Issue:

Whether or not Bachrach is barred from foreclosing the real estate mortgage after obtaining a personal
judgment against Icarangal on the promissory note.

Held:

YES. The rule against splitting a single cause of action is intended "to prevent repeated litigation
between the same parties in regard to the same subject of controversy; to protect defendant from
unnecessary vexation; and to avoid the costs and expenses incident to numerous suits." It comes from
that old maxim nemo bedet bis vexare pro una et eadem cause (no man shall be twice vexed for one
and the same cause). And it developed, certainly not as an original legal right of the defendant, but as
an interposition of courts upon principles of public policy to prevent inconvenience and hardship
incident to repeated and unnecessary litigations.

For non-payment of a note secured by mortgage, the creditor has a single cause of action against the
debtor. This single cause of action consists in the recovery of the credit with execution of the security. In
other words, the creditor in his action may make two demands, the payment of the debt and the
foreclosure of his mortgage. But both demands arise from the same cause, the non-payment of the
debt, and, for that reason, they constitute a single cause of action. Though the debt and the mortgage
constitute separate agreements, the latter is subsidiary to the former, and both refer to one and the
same obligation. Consequently, there exists only one cause of action for a single breach of that
obligation. Plaintiff, then, by applying the rule above stated, cannot split up his single cause of action by
filing a complaint for payment of the debt, and thereafter another complaint for foreclosure of the
mortgage. If he does so, the filing of the first complaint will bar the subsequent complaint. By allowing
the creditor to file two separate complaints simultaneously or successively, one to recover his credit and
another to foreclose his mortgage, we will, in effect, be authorizing him plural redress for a single
breach of contract at so much cost to the courts and with so much vexation and oppression to the
debtor. We hold, therefore, that, in the absence of express statutory provisions, a mortgage creditor
may institute against the mortgage debtor either a personal action for debt or real action to foreclose
the mortgage. In other words, he may pursue either of the two remedies, but not both. By such election,
his cause of action can by no means be impaired, for each of the two remedies is complete in itself.
Thus, an election to bring personal action will leave open to him all the properties of the debtor for
attachment and execution, even including the mortgaged property itself. And, if he waives such personal
action and pursues his remedy against the mortgaged property, an unsatisfied judgment thereon would
still give him the right to sue for a deficiency judgment, in which case, all the properties of the
defendant, other than the mortgaged property, are again open to him for the satisfaction of the
deficiency. In either case, his remedy is complete, his cause of action undiminished, and any advantages
attendant to the pursuit of one or the other remedy are purely accidental and are all under his right of
election. On the other hand, a rule that would authorize the plaintiff to bring a personal action against
the debtor and simultaneously or successively another action against the mortgaged property, would
result not only in multiplicity of suits so offensive to justice (Soriano vs. Enriquez, 24 Phil., 584) and
obnoxious to law and equity (Osorio vs. San Agustin, 25 Phil., 404), but also in subjecting the defendant
to the vexation of being sued in the place of his residence of the plaintiff, and then again in the place
where the property lies. In arriving at the foregoing conclusion, we are not unaware of the rule
prevailing in certain States of the American Union, to the effect that, in cases like the one at bar, the
creditor can pursue his remedies against the note and against the security concurrently or successively.
The reason given for the rule seems to be that the causes of action in the two instances are not the
same, one being personal and the other, real. But, as we have heretofore stated, the creditor's cause of
action is not only single but indivisible, although the agreements of the parties, evidenced by the note
and the deed of mortgage, may give rise to different remedies. (Frost vs. Witter, 132 Cal., 421.) The
cause of action should not be confused with the remedy created for its enforcement. And considering,
as we have shown, that one of the two remedies available to the creditor is as complete as the other, he
cannot be allowed to pursue both in violation of those principles of procedure intended to secure
simple, speedy and unexpensive administration of justice. Judgment is affirmed, with costs against the
appellant.
Republic of the Philippines v. Sandiganbayan GR. No. 152154, July 15, 2003, Corona, J.

FACTS: Republic (petitioner), through the Presidential Commission on Good Government (PCGG),
represented by the Office of the Solicitor General (OSG), filed a petition for forfeiture before the
Sandiganbayan pursuant to RA 1379, “An Act Declaring Forfeiture In Favor of the State Any Property To
Have Been Unlawfully Acquired By Any Public Officer or Employee and Providing For the Procedure
Therefor”. In the said case, petitioner sought the declaration of the aggregate amount of US$ 356M
deposited in escrow in the PNB, as illgotten wealth. The funds were previously held by 5 account groups,
using various foreign foundations in certain Swiss banks. In addition, the Republic sought the forfeiture
of US$25 million and US$5 million in treasury notes, which exceeded the Marcos couple's salaries, other
lawful income as well as income from legitimately acquired property. The treasury notes were frozen at
the Central Bank of the Philippines, now Bangko Sentral ng Pilipinas, by virtue of the freeze order issued
by the PCGG. Before the case was set for pre-trial, a General Agreement and the Supplemental
Agreement dated December 28, 1993 were executed by the Marcos children and then PCGG Chairman
Magtanggol Gunigundo for a global settlement of the assets of the Marcos family. The General
Agreement/Supplemental Agreements sought to identify, collate, cause the inventory of and distribute
all assets presumed to be owned by the Marcos family under the conditions contained therein. The
General Agreement specified in one of its "whereas clauses" the fact that petitioner obtained a
judgment from the Swiss Federal Tribunal on December 21, 1990, that the US$356 million belongs
deposited in the name of the aforementioned 5 account groups were of illegal provenance. The funds
were thereafter. remitted to the Philippines in escrow. Subsequently, respondent Marcos children
moved that the funds be placed incustodia legis because the deposit in escrow in the PNB was allegedly
in danger of dissipation by petitioner. The Sandiganbayan, in its resolution dated September 8, 1998,
granted the motion. Hearings were conducted by the Sandiganbayan on the motion for summary
judgment filed by petitioner. Sandiganbayan ruled in favor of the Petitioner, approving the
General/Supplemental Agreements. However, in a resolution dated 31 January 2002, the Sandiganbayan
reversed itself and denied said motion for summary judgment. It ruled that “the evidence offered for
summary judgment of the case did not prove that the money in the Swiss Banks belonged to the Marcos
spouses because no legal proof exists in the record as to the ownership by the Marcoses of the funds in
escrow from the Swiss Banks. The basis for the forfeiture in favor of the government cannot be deemed
to have been established.” The Republic filed the petition for certiorari.

ISSUE: Whether petitioner Republic was able to prove its case for forfeiture in accordance with the
requisites of Sections 2 and 3 of RA 1379. Note: Section 2. Filing of petition. – Whenever any public
officer or employee has acquired during his incumbency an amount or property which is manifestly out
of proportion to his salary as such public officer or employee and to his other lawful income and the
income from legitimately acquired property, said property shall be presumed prima facie to have been
unlawfully acquired.

RULING: YES. The Republic was able to establish a prima facie case for the forfeiture of the Swiss funds
pursuant to RA 1379. RA 1379 raises the prima facie presumption that a property is unlawfully acquired,
hence subject to forfeiture, if its amount or value is manifestly disproportionate to the official salary and
other lawful income of the public officer who owns it. The following facts must be established in order
that forfeiture or seizure of the Swiss deposits may be effected: a. ownership by the public officer of
money or property acquired during his incumbency, whether it be in his name or otherwise, and b. the
extent to which the amount of that money or property exceeds, i. e., is grossly disproportionate to, the
legitimate income of the public officer. c. that the said amount is manifestly out of proportion to his
salary as such public officer or employee and to his other lawful income and the income from
legitimately acquired property. That spouses Ferdinand and Imelda Marcos were public officials during
the time material to the instant case was never in dispute. The combined accumulated salaries of the
Marcos couple were reflected in the Certification dated May 27, 1986 issued by then Minister of Budget
and Management Alberto Romulo. The Certification showed that, from 1966 to 1985, Ferdinand E.
Marcos and Imelda R. Marcos had accumulated salaries in the amount of P1,570,000 andP718,750,
respectively, or a total of P2,288,750. In addition to their accumulated salaries from 1966 to 1985 are
the Marcos couple’s combined salaries from January to February 1986 in the amount of P30,833.33.
Hence, their total accumulated salaries amounted to P2,319,583.33. Converted to U.S. dollars on the
basis of the corresponding peso-dollar exchange rates prevailing during the applicable period when said
salaries were received, the total amount had an equivalent value of $304,372.43. The sum of
$304,372.43 should be held as the only known lawful income of respondents since they did not file any
Statement of Assets and Liabilities (SAL), as required by law, from which their net worth could be
determined. Besides, under the 1935 Constitution, Ferdinand E. Marcos as President could not receive
“any other emolument from the Government or any of its subdivisions and instrumentalities”. Likewise,
under the 1973 Constitution, Ferdinand E. Marcos as President could “not receive during his tenure any
other emolument from the Government or any other source.” In fact, his management of businesses,
like the administration of foundations to accumulate funds, was expressly prohibited under the 1973
Constitution: Article VII, Sec. 4(2) – The President and the Vice-President shall not, during their tenure,
hold any other office except when otherwise provided in this Constitution, nor may they practice any
profession, participate directly or indirectly in the management of any business, or be financially
interested directly or indirectly in any contract with, or in any franchise or special privilege granted by
the Government or any other subdivision, agency, or instrumentality thereof, including any government
owned or controlled corporation. Article VII, Sec. 11 – No Member of the National Assembly shall appear
as counsel before any court inferior to a court with appellate jurisdiction, x x x. Neither shall he, directly
or indirectly, be interested financially in any contract with, or in any franchise or special privilege
granted by the Government, or any subdivision, agency, or instrumentality thereof including any
government owned or controlled corporation during his term of office. He shall not intervene in any
matter before any office of the government for his pecuniary benefit. Article IX, Sec. 7 – The Prime
Minister and Members of the Cabinet shall be subject to the provision of Section 11, Article VIII hereof
and may not appear as counsel before any court or administrative body, or manage any business, or
practice any profession, and shall also be subject to such other disqualification as may be provided by
law. Their only known lawful income of $304,372.43 can therefore legally and fairly serve as basis for
determining the existence of a prima facie case of forfeiture of the Swiss funds.

Oposa vs Factoran
Natural and Environmental Laws; Constitutional Law: Intergenerational Responsibility
GR No. 101083; July 30 1993

FACTS:
A taxpayer’s class suit was filed by minors Juan Antonio Oposa, et al., representing their
generation and generations yet unborn, and represented by their parents against Fulgencio
Factoran Jr., Secretary of DENR. They prayed that judgment be rendered ordering the
defendant, his agents, representatives and other persons acting in his behalf to:

1. Cancel all existing Timber Licensing Agreements (TLA) in the country;

2. Cease and desist from receiving, accepting, processing, renewing, or appraising new
TLAs;

and granting the plaintiffs “such other reliefs just and equitable under the premises.” They
alleged that they have a clear and constitutional right to a balanced and healthful ecology
and are entitled to protection by the State in its capacity as parens patriae. Furthermore,
they claim that the act of the defendant in allowing TLA holders to cut and deforest the
remaining forests constitutes a misappropriation and/or impairment of the natural
resources property he holds in trust for the benefit of the plaintiff minors and succeeding
generations.
The defendant filed a motion to dismiss the complaint on the following grounds:

1. Plaintiffs have no cause of action against him;

2. The issues raised by the plaintiffs is a political question which properly pertains to
the legislative or executive branches of the government.

ISSUE:
Do the petitioner-minors have a cause of action in filing a class suit to “prevent the
misappropriation or impairment of Philippine rainforests?”

HELD:
Yes. Petitioner-minors assert that they represent their generation as well as generations to
come. The Supreme Court ruled that they can, for themselves, for others of their generation,
and for the succeeding generation, file a class suit. Their personality to sue in behalf of
succeeding generations is based on the concept of intergenerational responsibility insofar as
the right to a balanced and healthful ecology is concerned. Such a right considers the
“rhythm and harmony of nature” which indispensably include, inter alia, the judicious
disposition, utilization, management, renewal and conservation of the country’s forest,
mineral, land, waters, fisheries, wildlife, offshore areas and other natural resources to the
end that their exploration, development, and utilization be equitably accessible to the
present as well as the future generations.
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 minor’s 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.

Vda. De Salazar vs. CA, Primitivo Nepomuceno and Emerenciana Nepomunceno

Facts:

Both Nepomuceno filed separate complaints with the court of agrarian relations of malolos, bulacan, for
ejectment on the ground of personal cultivation and conversion of land for useful non-agricultural purposes
against petitioner's deceased husband, Benjamin Salazar. The case went through the agrarian court and
RTC from 1970 to 1993 and decided in favour of the nepomucenos. Which an appeal was interposed in
the name of Benjamin Salazar on the ground of that nepomucenosfailed to satisfy the requirements
pertaining to personal cultivation and conversion of the landholdings into non-agricultural uses. However
it was rejected.

A year later, petitioner assailed the decision of the trial court before the CA by way of petition for
annulment of judgement. That it did not have jurisdiction over her and the other heirs of her husband that
said husband had already died on oct 3 1991 which the trial still proceeded and rendered its decision on
aug 23 1993 w/o affecting the substitution under rule 3 sec 17 Rules of court.

CA ruled in favor of the validity of the challenged decision.

Issues: W/N there formal substitution of heirs in not necessary?

Held: Yes.theCA correctly ruled that formal substitution of heirs is not necessary when the heirs
themselves voluntarily appeared, participated in the case and presented evidence in defense of deceased
defendant.

As expounded by CA: jurisprudential rule is that failure to make the substitution is a jurisdictional defect,
purpose of this procedural rule is to comply with due process requirements. For the case to continue, the
real party in interest must be substituted for the deceased. The real party in interest is the one who would
be affected by the judgment. It could be the administrator or executor or the heirs. In the instant case, the
heirs are the proper substitutes. Substitution gives them the opportunity to continue the defense for the
deceased. Substitution is important because such opportunity to defend is a requirement to comply with
due process.

The following are the active participation of the heirs in the defence after the death of Salazar:

1. lawyer did not stop representing the deceased which lasted for about two more years, counsel
was allowed by the petitioner who was well aware of the instant litigation to continue appearing as
counsel until August 23, 1993 when the challenged decision was rendered.
2. The wife testified in court and declared that her husband is already deceased. She new therefore
that there was a litigation against her husband, which her and her childrens interest are involve.
3. The petition for judgement was filed 1 and ½ after the decision was rendered.
4. Jurisdiction by estoppel, which jurisdiction over the person may be acquired by simple
appearance of the person in court.

Consequently, it undeniably being evident that the heirs themselves sought their day in court and exercise their
right to due process.

The ejectment being an action involving recovery of real property, is a real action which is not extinguished by
death. And that a judgement in an ejectment case is conclusive between the parties and their successors in
interest by title subsequent to the commencement of the action.

Petition dismiss.

METROPOLITAN BANK & TRUST CO. V ALEJO

A cloud on a title is defined as “a semblance of title which appears in some legal form but
which is in fact unfounded.” Where a title was previously held null and void already, an
action to quiet title is not the proper remedy because the TCT (as basis of the right) is not,
on its face or otherwise, valid in the first place.

FACTS:

Spouses Raul and Cristina Acampado obtained loans from Metropolitan Bank and Trust
Company in the amounts of 5k and 2k. As security for the payment, Spouses Acampados
executed in favor of the bank a Real Estate Mortgage over a parcel of land registered in
their names. Subsequently a Complaint for Declaration of Nullity of the TCT of the spouses
was filed by Sy Tan Se in the RTC of Valenzuela.
Despite being the mortgagee of the real property, the bank was not made a party to the said
civil case(complaint for declaration of nullity of TCT.) They weren’t notified as well.

The spouses defaulted in the payment of their loan and extrajudicial foreclosure
proceedings were initiated. The bank submitted the highest and winning bid. A certificate
of sale was issued in their favor.
When they were about to get their TCT from the Register of Deeds, petitioner was informed
of the existence of the decision in the aforementioned civil case (complaint for declaration
of nullity of TCT) declaring the Spouses Acampados’s TCT null and void.

The bank filed with the CA a petition for the annulment of the RTC Decision. The CA
dismissed their petition and ruled that the bank should have filed a petition for relief from
judgment or an action for quieting of title.

ISSUES:

1. Whether or not a petition for annulment of judgment is the proper remedy available to
the bank
2. Whether or not the judgment of the trial court (declaring the Spouses Acampados TCT
null and void) should be declared null and void

HELD – Both Yes

1. Petition for annulment of judgment was the proper remedy available to the bank. It
precisely alleged that Sy Tan Se purposely concealed the case by excluding petitioner as a
defendant to the civil case even if he was an indispensable party. This deprived the bank of
its duly registered property right without due process of the law. The allegation of extrinsic
fraud may be the basis for annulling a judgment.

Petition for relief (what the CA recommended) was not available to the bank since it was
never a party to the civil case.
An action for quieting of the title was also not available to the bank. An action for quieting
of title is filed only when there is a cloud on title to real property or any interest therein. A
cloud on a title is defined as a semblance of title which appears in some legal form but
which is in fact unfounded. The subject judgment cannot be considered as a cloud on
petitioner’s title or interest over the real property covered by TCT, which does not even
have a semblance of being a title.

It would not be proper to consider the subject judgment as a cloud that would warrant the
filing of an action to quiet title because to do so would require the court hearing the action
to modife or interfere with the judgment of another co-equal court. Well-entrenched in our
jurisdiction is the doctrine that our court has no power to do so, as that action may lead to
confusion and seriously hinder the administration of justice. Clearly, an action for quieting
of title is not an appropriate remedy in this case.

Bank can’t also intervene to a case that he has no knowledge of.

2. The judgment of the trial court should also be declared null and void because the bank,
which is an indispensable party, was not impleaded in the civil case.

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.

Living @ Sense, Inc. vs. Malayan Insurance Company, Inc.

G.R. No. 193753, September 26, 2012

(Indispensable Party, Solidary Obligation)

FACTS

Petitioner Living @ Sense, Inc. sub-contracted to Dou Mac, Inc. (DMI) its underground open-
trench work for the Network Project of Globe Telecom in Mindanao. As required, DMI gave surety
and performance bonds which it secured from respondent Malayan Insurance Company, Inc.
(Malayan) which bound itself jointly and severally liable with DMI. The bonds will answer for the
loss and damage to petitioner if DMI fails to perform its obligations under the subcontract.

The excavation and restoration works by DMI was later stopped by the government after it found
DMI's work unsatisfactory. Eventually, petitioner terminated the subcontract and demanded from
respondent insurance company indemnification in the amount of P1.04 million. Respondent
Malayan denied petitioner's claim arguing that the liability of its principal, DMI, should first be
determined before Malayan can be held liable. Thus, petitioner sued Malayan for specific
performance and breach of contract.

Respondent Malayan claimed that the suit should be dismissed because petitioner failed to
implead DMI as an indispensable party. Petitioner, on the other hand, argued that respondent is
a surety who is directly and primarily liable to indemnify petitioner, and that the bond is "callable
on demand" in the event of breach of obligation. The Regional Trial Court ruled for the
respondent, and the case was elevated to the Supreme Court on a pure question of law.

ISSUE

Is DMI an indispensable party in this case?

RULING

No, DMI is not an indispensable party in this case. Article 1216 of the Civil Code on solidary
obligations allows petitioner, as creditor, to proceed against any of the solidary debtors. Since
respondent Malayan bound itself "jointly and severally" with DMI under the surety and
performance bonds, it is considered a solidary debtor and is therefore not an indispensable party.
This is because petitioner can claim indemnity directly from respondent insurance company who
has bound itself solidarily with DMI for the obligations under the bonds.

An indispensable party is defined as "a party-in-interest without whom no final determination can
be had of an action, and who shall be joined either as plaintiff or defendant." Without it, the
court cannot act on the case not only as to the absent party but also as to those present.

Even if assuming that DMI was indeed an indispensable party, the Regional Trial Court should
not have dismissed the case but should have ordered the petitioner to implead the indispensable
party, which can be done on motion of the party or on the court's own initiative at any stage of
the action.

TORRES VS CA (278 SCRA 793)

Torres vs Court of Appeals
278 SCRA 793 [GR No. 120138 September 5, 1997]

Facts: The late Manuel A. Torres Jr. was the majority stockholder of Tormil Realty & Development Corporation
while private respondents who are the children of Judge Torres’ deceased brother Antonio A. Torres, constituted the
minority stockholders. In 1984, Judge Torres, in order to make substantial savings in taxes, adopted an “estate
planning” scheme under which he had assigned to Tormil Realty & Development Corporation various real properties
he owned and his shares of stock in other corporations in exchange for 225,972 Tormil realty shares. Hence, on various
dates in July and August of 1984, 10 deeds of assignment were executed by the late Judge Torres. Consequently, the
aforelisted properties were duly recorded in the inventory of assets of Tormil realty and the revenues generated by the
said properties were correspondingly entered in the corporation’s books of account and financial records. Likewise,
all the assigned parcel of land were duly registered with the respective register of deeds in the name of Tormil realty,
except for the ones located in Makati and Pasay City. Due to the insufficient number of shares of stock issued to Judge
Torres and the alleged refusal to private respondents to approved the needed increase in the corporations authorized
capital stock, on September 11, 1986 Judge Torres revoked the two deeds of assignment covering the properties in
Makati and Pasay City. Noting the disappearance of the Makati and Pasay City properties from the corporations
inventory of assets and financial records private respondents, on March 31, 1987, were constrained to file a complaint
with the Securites and Exchange Commission (SEC) docketed as SEC Case No. 3153 to compel Judge Torres to
deliver to Tormil corporation the two deed of assignment covering the aforementioned Makati and Pasay City
properties which had unilaterally revoked and to cause the registration of the corresponding titles in the name of
Tormil. The 1987 annual stockholders meeting and election of directors of Tormil corporation was scheduled on
March 25, 1987, in compliance with the provision of its by-laws. Pursuant thereto, Judge Torres assigned from his
own shares, one share each to petitioners. These assigned shares were in the nature of “qualifying shares” for the sole
purpose of meeting the legal requirement to be able to elect them to the Board of directors as Torres nominees.

Issues: Whether or not the revocation of the deeds of assignment involving the Makati and Pasay City properties are
valid.

Whether or not the issued qualifying shares are valid.

Held: No. The general rule is that rescission of a contract will not be permitted for a slight or carnal breach, but only
for substantial and fundamental breach as would defeat the very object of the parties in making the agreement.

The shortage of 972 shares definitely is not substantial and fundamental breach as would defeat the very object of the
parties in entering into contract. Art 1355 of the civil code also provides: “Except in cases specified by law, lesion or
inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or undue influences.” There
being no fraud, mistake, or undue influence exerted on respondent Torres by Tormil and the latter having already
issued to the former its 225,000 shares, the most logical course of action is to declare as null and void the deed of
revocation on executed by respondent Torres.

No. In the absence of any provision to the contrary, the corporate secretary is the custodian of corporate records,
corollarily, he keeps the stock and transfer book and makes proper and necessary entries therein.

Contrary to the generally accepted corporate practice, the stock and transfer book of Tormil was not kept by Ms. Maria
Christina T. Carlos, the corporate secretary but by respondent Torres, the president and chairman of the board of
directors of Tormil. In contravention to the above cited provision, the stock and transfer book was not kept at the
principal office of the corporation either but at the place of respondent Torres.

These being the obtaining circumstances, any entries made in the stock and transfer book on March 8, 1987 by
respondent Torres of an alleged transfer of nominal shares to Pabalan and Company cannot therefore be given any
valid effect. Where the entries made are not valid, Pabalan and company cannot be considered stockholders of record
of Tormil. Because they are not stockholders, they cannot therefore be elected as directors of Tormil. The rule
otherwise would not only encourage violation of clear mandate of Rule 74 of the corporation code that stock and
transfer book shall be kept in the principal office of the corporation but would likewise open the flood gates of
confusion in the corporation as to who has the proper custody of the stock and transfer book and who are the real
stockholders of records of a certain corporation as any holder of the stock and transfer book, though not the corporate
secretary, at pleasure would make entries therein.

The fact that Torres holds 81.28% of the outstanding capital stock of Tormil is of no moment and is not a license for
him to arrogate unto himself a duty lodged to the corporate secretary.
Death of a Party (Rule 3, Sec. 16, RCP)

Brioso v. Reli-Mariano, G.R. No. 132765, Jan. 37, 2003

During the pendency of the case, defendant died. His lawyer filed a Notice of Death.
Plaintiff's counsel filed a Motion for Substitution of Deceased Defendant. The court
admitted the motion. Decision was rendered ordering the defendants and heirs of
deceased defendant to pay plaintiff damages and to surrender the lot in question to him.
Was there proper substitution of parties?

Held: There was no proper substitution of deceased defendant and, therefore, the heirs
of the deceased defendants are not bound by the decision. The court did not comply with
Rule 3, Sec. 16, RCP which requires that upon receipt of the Notice of Death of a party,
it should issue an order directing the deceased legal representative or heirs to appear for
the deceased. The order of the court admitting the motion for substitution of party does
not comply with the rule.

Notes:
a. If heirs of original party are also original parties over whom the court had already
acquired jurisdiction over their person, a formal order of substitution is not necessary.
b. Even if there is no formal substitution of deceased party of the heirs actively participated
on the hearing as witnesses who gave evidence in support of the deceased's cause, the
defect is cured.