IX.

DISMISSALS AND DEFAULTS

A. Dismissals
Republic Planters Bank v. Molina
Pinga v. Santiago
B. Defaults
Co v. Acosta
Lina v. Court of Appeals
Boticano v. Chu, Jr.
Denso (Phils.), Inc. v. IAC
X. PROVISIONAL REMEDIES
Spouses Po Lam v. CA
Philippine British Assurance Co., Inc. v. IAC
International Container Terminal Services, Inc. v. CA
Davao Light and Power Co. v. CA
Security Pacific Assurance v. Tria-Infante
Brocka, et al. v. Enrile, et al.
Social Justice Society, et al. v. Atienza
Philippine Ports Authority v. Pier 8 Arrastre and Stevedoring Services, Inc.
Vda. De Danao v. Ginete, A.M. No. MTJ-03-1474
Lam v. Chua
XI. DISCOVERY
Republic v. Sandiganbayan
Fortune Corporation v. CA
Northwest Airlines, Inc. v. Cruz
Briboneria v. Court of Appeals
XII. PRE-TRIAL
Tiu v. Middleton
Philippine Transmarine Carrier Inc. v. CA
Goldloop Properties, Inc. v. CA
Citibank N.A. v. Chua
----------------------------------------------IX. DISMISSALS AND DEFAULTS
A. Dismissals
Republic Planters Bank v. Molina (Mel)
September 28, 1988
REPUBLIC PLANTERS BANK
vs.
HON. CONRADO M. MOLINA, as Presiding Judge, Court of First Instance of Manila, Branch XX, SARMIENTO
EXPORT CORPORATION, SARMIENTO SECURITIES CORPORATION and FELICIANO SARMIENTO, JR.,
GANCAYCO, J p:
SUMMARY: Republic Planters Bank filed a case for collection of a sum of money against Sarmiento et al, which was
dismissed for failure to prosecute. The bank filed another civil case, which was also dismissed on motion of
Sarmiento et al who alleged that the second case was barred by res judicata because of prior judgment dismissing
the first civil case w/c it claims was already an adjudication on both cases merits. HELD: Judge on second case
acted w/ GAD in dismissing said case on the ground of res judicata. TC in the first case had no jurisdiction over the
persons of the defendants Sarmiento et al since they were not served summons. Without jurisdiction, TC cannot
dismiss the case with prejudice which, in effect, is an adjudication on the merits. Thus, the dismissal of the first civil
case cannot be the basis of res judicata and cannot be a bar to a lawful claim on the second civil case.
DOCTRINE: The order of dismissal in a civil case does not have the effect of an adjudication on the merits of the
case if the court that rendered the same did not have the requisite jurisdiction over the persons of the defendants
therein. Thus, it cannot be the basis of res judicata and it cannot be a bar to a lawful claim. If at all, such a dismissal
may be considered as one without prejudice. There is also no adjudication on the merits when the action was
precipitately dismissed by the trial court while the sheriff had not yet submitted his return of the alias summons.
FACTS:


Republic Planters Bank filed complaint against Feliciano Sarmiento et al. for the collection of a sum of
money based on a promissory note dated Jan. 26, 1970 for P100,000
o Civil Case No. 116028 (First Civil Case) under Br. 36, Manila, J. Florendo

TC Br. 36 (May 21, 1979): First Civil Case was dismissed by J. Florendo for failure of Bank "to prosecute its
case within a reasonable length of time."

MR was filed; denied on Jan. 15, 1979.

Subsequently, the Second Civil Case was filed by the Bank.

o Civil Case No. 129829 (Second Civil Case) under Br. 20, Manila, J. Molina

Sarmiento et al. filed a motion to dismiss on the ground that the cause of action is barred by a prior judgment
(res judicata) in the First Civil Case.
o Order in the First Civil Case was an adjudication upon the merits.

Bank opposed the motion to dismiss on the ground that res judicata does not apply because the summons
and complaint in the First Civil Case were never served upon Sarmiento et al. Thus, TC never acquired jurisdiction
over Sarmiento et al and, consequently, over the case.
o Order of dismissal in the First Civil Case never became final as against Sarmiento et. al.

TC Br. 20 (May 8, 1980): Second Civil Case was dismissed by J. Molina on the ground that the orders issued
by J. Florendo dismissing the First Civil Case & denying MR had become final.
o Dismissal of the First Civil Case had the effect of an adjudication upon the merits
o Dismissal was with prejudice since the order was unconditional
o The lack of jurisdiction over Sarmiento et al in the First Civil Case was of no moment.

Bank filed MR & reiterated its allegation that in the First Civil Case, TC did not acquire jurisdiction over
Sarmiento et al and that at the time the court ordered its dismissal, a motion for an alias writ of summons was
pending resolution inasmuch as the sheriff had not acted on the same.

June 26, 1980: MR denied by the TC in Second Civil Case.

Bank appealed to CA both questioned orders of TC in Second Civil Case. But then, it sought a more speedy
remedy in questioning said orders by filing this petition for certiorari before SC.
ISSUE: Whether TC committed a grave abuse of discretion when it ordered Second Civil Case dismissed on the
ground of res judicata on the ground that the First Civil Case was dismissed previously, for failure of the Bank to
prosecute within a reasonable length of time, although in the said case, TC never acquired jurisdiction over the
persons of Sarmiento et al? (YES)
RATIO:

The questioned orders of TC in the Second Civil Case supporting Sarmiento et al's motion to dismiss on the
ground of res judicata are without cogent basis.

SC sustains Banks claim that J. Molina acted without or in excess of jurisdiction when he issued said orders
because he traversed the constitutional precept that "no person shall be deprived of property without due process of
law" and that jurisdiction is vitally essential for any order or adjudication to be binding. Justice cannot be
sacrificed for technicality.

Case at Bar: Originally, the action for collection of the loan, evidenced by a PN, was only for P100k but Bank
claims that as of Mar. 5, 1981, the obligation was already P429,219.74. It is a cardinal rule that no one must be
allowed to enrich himself at the expense of another without just cause.
NO JURISDICTION: NOT RES JUDICATA, DISMISSAL w/out PREJUDICE

TC: In the very order of dismissal of First Civil Case, TC admitted that it did not acquire jurisdiction over the
persons of Sarmiento et al. and yet, it held that it was of no moment as to the dismissal of the case.

SC: We disagree. For the court to have authority to dispose of the case on the merits, it must acquire
jurisdiction over the subject matter and the parties. If it did not acquire jurisdiction over the Sarmiento et al as
parties to the First Civil Case, it cannot render any binding decision, favorable or adverse to them, or dismiss
the case with prejudice which, in effect, is an adjudication on the merits (Sec. 3, Rule 17, ROC).

The orders in the First Civil Case disregarded the fundamental principles of remedial law and the meaning and
the effect of jurisdiction. A judgment, to be considered res judicata, must be binding, and must be rendered by a court
of competent jurisdiction. Otherwise, the judgment is a nullity.

The order of dismissal in the First Civil Case does not have the effect of an adjudication on the merits of the
case because the court that rendered the same did not have the requisite jurisdiction over the persons of the
defendants therein. This being so, it cannot be the basis of res judicata and it cannot be a bar to a lawful claim. If at
all, such a dismissal may be considered as one without prejudice (Sec. 2, Rule 17, ROC).


NO FAILURE TO PROSECUTE: Trial courts have the duty to dispose of controversies after trial on the merits
whenever possible. In this case, there are no indications that Bank intentionally failed to prosecute the case.
The delay could not be attributed to its fault. Bank pursued the case with diligence, but jurisdiction could not be
acquired over Sarmiento et. al.

SUMMONS: The sheriff had not yet submitted his return of the alias summons when the action was
precipitately dismissed by TC. These are proven circumstances that negate the action of J. Molina that the dismissal
of the First Civil Case has the effect of an adjudication upon the merits and constitutes a bar to the prosecution of
Second Civil Case. The court finds that the 2 questioned orders of TC are irregular, improper, and, were issued with
grave abuse of discretion amounting to excess of jurisdiction.
Petition for Certiorari to SC: Proper
Appeal to the CA pertaining to the questioned orders of TC is not an adequate remedy, because Bank was not able to
present evidence in TC. The sole issue involved in this case is one of jurisdiction, which is appropriate for resolution
by the instant petition.
DISPOSITIVE: TC Orders REVERSED and SET ASIDE. The records of the case are ordered returned to the TC for
trial and disposition on the merits. This decision is immediately executory.
Pinga v. Santiago (Joan)
(this digest is long kasi chinannel ni J. Tinga si CJ Puno and went on to discuss the history of the rules re
dismissals of counterclaims under R17. Good read sya, actually, if you have time. The ratio only has about 1-2
paragraphs re the case at bar)
June 30, 2006
EDGARDO PINGA, petitioner, vs.
THE HEIRS OF GERMAN SANTIAGO represented by FERNANDO SANTIAGO, respondents.
TINGA, J.
SUMMARY: The heirs of Santiago filed a complaint for injunction against Pinga (and Saavedra, but I dunno why hes
not in the case title anymore) for allegedly unlawfully entering the coco lands of the Santiagos, cutting wood and
bamboos and harvesting the fruits of the coconut trees. Pinga then filed an Amended Answer with Counterclaim,
disputing the Santiagos ownership, and prayed for P2.1M damages. Because the Santiagos failed to present
evidence and their counsel also failed to appear during the hearing, Pinga moved for the dismissal of the case. RTC
granted the motion of Pinga and noted that the Santiagos had failed to prosecute the case for an unreasonable
length of time. Thus, the Santiagos complaint was dismissed. At the same time, the RTC allowed Pinga "to present
their evidence ex-parte" (re Pingas counterclaim). The Santiagos filed a MR, opting NOT to seek that their complaint
be reinstated, but praying instead that the entire action be dismissed and Pinga be disallowed from presenting
evidence ex-parte. RTC granted the Santiagos MR. SC however ruled in favor of Pinga and HELD that under Sec. 3
Rule 17 of the new rules, the dismissal of the complaint is without prejudice to the right to prosecute the counterclaim,
whether compulsory or permissive.
DOCTRINE: The constitutional faculty of the Court to promulgate rules of practice and procedure necessarily carries
the power to overturn judicial precedents on points of remedial law through the amendment of the Rules of Court.
One of the notable changes introduced in the 1997 Rules of Civil Procedure is the explicit proviso that if a
complaint is dismissed due to fault of the plaintiff, such dismissal is "without prejudice to the right of the
defendant to prosecute his counterclaim in the same or in a separate action." The innovation was instituted in
spite of previous jurisprudence holding that the fact of the dismissal of the complaint was sufficient to justify the
dismissal as well of the compulsory counterclaim.
Action: Petition for Review under Rule 45
FACTS:
May 1998: Eduardo (Edgardo sa case title) Pinga was named as one of two defendants in a
complaint for injunction filed with RTC San Miguel, Zamboanga del Sur, by the Heirs of German Santiago,
represented by Fernando Santiago. The Complaint alleged in essence that Pinga and co-defendant Vicente
Saavedra had been unlawfully entering the coco lands of the Santiagos, cutting wood and bamboos and

harvesting the fruits of the coconut trees. The Santiagos prayed that Pinga and Saavedra be enjoined from
committing "acts of depredation" on their properties, and ordered to pay damages.
Amended Answer with Counterclaim: Pinga and Saavedra disputed the Santiagos' ownership of
the properties, asserting that:
Pinga's father, Edmundo, from whom they derived their interest, had been in
possession of the properties since the 1930s.
As far back as 1968, the Santiagos had already been ordered ejected from the
properties after a complaint for forcible entry was filed by the heirs of Edmundo.
Santiagos application for free patent was rejected by OP in 1971.
PRAYER: Various types of damages in totaling P2.1M plus costs (counterclaim!)
July 2005: Trial of the case had not yet been completed. Moreover, the Santiagos, as plaintiffs,
had failed to present their evidence.
It appears that in Oct 2004, RTC already ordered the dismissal of the complaint after
Santiagos' counsel had sought the postponement of the hearing scheduled then. However, the order
of dismissal was subsequently reconsidered by the RTC, which took into account the assurance of said
counsel that he would give priority to that case.
July 05: At the hearing, Santiagos counsel on record failed to appear, sending in his stead a
representative who sought the postponement of the hearing. Counsel for Pinga and Saavedra opposed
such and moved instead for the dismissal of the case.
RTC noted that it was obvious that the Santiagos had failed to prosecute the case for an
unreasonable length of time, in fact not having presented their evidence yet. On that ground, the
complaint was dismissed. At the same time, the RTC allowed Pinga and Saavedra "to present their
evidence ex-parte."
The Santiagos filed a MR, opting however not to seek that their complaint be reinstated, but
praying instead that the entire action be dismissed and Pinga be disallowed from presenting
evidence ex-parte. They claimed that the RTC order allowing the presentation of evidence ex-parte was not
in accord with established jurisprudence. They cited cases: City of Manila v. Ruymann, Domingo v. Santos,
which noted those instances in which a counterclaim could not remain pending for independent adjudication.
RTC granted the MR of Santiagos and dismissed the counterclaim, citing as the only ground that
"there is no opposition to the MR (LOL)
Pinga filed a MR, but was denied.
Notably, the Santiagos filed an Opposition to Defendants' Urgent MR, wherein they argued that the
prevailing jurisprudential rule is that "compulsory counterclaims cannot be adjudicated independently of
plaintiff's cause of action," and "a conversu, the dismissal of the complaint carries with it the dismissal of the
compulsory counterclaims."
Case was elevated to SC directly by Petition for Review under Rule 45 on a pure question of law.
ISSUE: Whether or not the dismissal of the complaint necessarily carries the dismissal of the compulsory
counterclaim (NO)
HELD & DISPOSITIVE: Under Section 3, Rule 17, the dismissal of the complaint due to the fault of plaintiff does not
necessarily carry with it the dismissal of the counterclaim, compulsory or otherwise. In fact, the dismissal of the
complaint is without prejudice to the right of defendants to prosecute the counterclaim. Petition is GRANTED.
Counterclaim as defendant is REINSTATED. RTC is ORDERED to hear and decide the counterclaim with deliberate
dispatch.
RATIO:
SC FIRST NOTES: HOLLOW REASONING BY RTC re the dismissal
RTC, in dismissing the counterclaim, did not expressly adopt the argument that the dismissal of
complaint extended as well to the counterclaim. Instead, RTC justified the dismissal of the counterclaim on
the ground that "there is no opposition to the MR seeking the dismissal of the counterclaim."
SC: This explanation is hollow, considering that there is no mandatory rule requiring that an
opposition be filed to a motion for reconsideration without need for a court order to that effect; and,
as posited by Pinga, the "failure to file an opposition to the Plaintiff's MR is definitely not one among the
established grounds for dismissal [of the counterclaim]."
Still, the dismissal of the counterclaim by the RTC betrays at very least a tacit recognition of the
argument that the counterclaim did not survive the dismissal of the complaint. At most, the dismissal of the

counterclaim over the objection of Pinga on grounds other than the merits of the counterclaim, despite the
provisions under Rule 17, constitutes a debatable question of law, presently meriting justiciability through
the instant action.
ROC PROVISION (OLD vs. NEW)
NEW: Section 3, Rule 17 of the 1997 Rules of Civil Procedure: SEC. 3. Dismissal due to fault of
plaintiff. If, for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his
evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to
comply with these Rules or any order of the court, the complaint may be dismissed upon motion of
defendant or upon the court's own motion, without prejudice to the right of the defendant to prosecute
his counterclaim in the same or in a separate action. This dismissal shall have the effect of an
adjudication upon the merits, unless otherwise declared by the court.
The express qualification in the provision that the dismissal of the complaint
due to the plaintiff's fault, as in the case for failure to prosecute, is without prejudice to the right
of the defendant to prosecute his counterclaim in the same or separate action.
OLD: Sec 3. Rule 17 of the 1964 Rules of Court: SEC. 3.Failure to prosecute. If plaintiff fails
to appear at the time of the trial, or to prosecute his action for an unreasonable length of time, or to comply
with these rules or any order of the court, the action may be dismissed upon motion of the defendant or
upon the court's own motion. This dismissal shall have the effect of an adjudication upon the merits, unless
otherwise provided by court.
The old rule was SILENT on the effect of such dismissal due to failure to
prosecute on the pending counterclaims. As a result, there arose what one authority on
remedial law characterized as "the nagging question of whether or not the dismissal of the
complaint carries with it the dismissal of the counterclaim."
HOWEVER, Jurisprudence construing the 1964 Rules was hardly silent on the matter, (In
other words, SC in a number of case interpreted the silent 1964 rule, and the Courts interpretation was that
it was with prejudice, w/c was contrary to the new rule.)
NOTE first, however that the cases cited by the Santiagos, all of which were decided more than five
decades ago were not on all fours with the present case since none of the complaints were dismissed either
due to the fault of the plaintiff or upon the instance of the defendant.
Footnote says on cases cited by the Santiagos : City of Manila and Belleza both
involved a complaint dismissed upon the initiative of the plaintiffs. Domingo concerned a complaint
which was dismissed after a trial on the merits wherein the plaintiff failed to introduce any evidence
in his behalf. In Froilan, a complaint-in-intervention was dismissed motu proprio by the trial court
after the court was notified of a supervening event that satisfied the obligations of the defendant to
the plaintiff-in-intervention
SC: The distinction is relevant, for under the previous and current incarnations of
the Rules, it is Section 3, Rule 17 that governs the dismissals due to the failure of the plaintiff to
prosecute the complaint, as had happened in the case at bar. Otherwise, it is Section 2, Rule 17,
which then, and still is now, covered dismissals ordered by the trial court upon the instance of
the plaintiff.* Yet, as will be seen in the foregoing discussion, a discussion of Section 2 cannot be
avoided as the postulate behind that provision was eventually extended as well in cases that
should have properly been governed by Section 3.
*Footnote reminds: Unless the plaintiff initiates the dismissal of
the complaint by way of notice at any time before service of the answer or of a
motion for summary judgment, in which case it is Sec 1, Rule 17 that governs, whether
under the 1964 or 1997 Rules.
(In short, first, it depends on upon whose instance the
dismissal was sought: 1) If failure of plaintiff to prosecute or upon instance of defendant,
then Sec. 3, 2) If upon instance of plaintiff, then Sec. 2, 3) But if upon instance of plaintiff,
determine first how and when the motion was filed or if it is a motion for summary
judgment, because if its by way of notice at any time before service of the answer or of a
motion for summary judgment, then Sec. 1 applies. HAHA lalo ba gumulo? LOL)
There exists more appropriate precedents which the Santiagos could have cited:
BA Finance Corp. v. Co particularly stands out in that regard, although that ruling
is itself grounded on other precedents as well. Elucidation of these cases is in order.
On the general effect of the dismissal of a complaint, regardless of cause, on the

pending counterclaims, previous jurisprudence laid emphasis on whether the counterclaim

was compulsory or permissive in character.
[SC side-comments first, before discussing jurisprudence.]
RULES: The necessity of such distinction was provided in the 1964 Rules itself, particularly Sec
2, Rule 17: in instances wherein the plaintiff seeks the dismissal of the complaint, "if a counterclaim has
been pleaded by a defendant prior to the service upon him of the plaintiff's motion to dismiss, the action
shall not be dismissed against the defendant's objection unless the counterclaim can remain
pending for independent adjudication by the court."
COMMENTARIES: The vaunted commentaries of CJ Moran, remarking on Sec 2, Rule 17, noted
that "[t]here are instances in which a counterclaim cannot remain pending for independent adjudication, as,
where it arises out of, or is necessarily connected with, the transaction or occurrence which is the subject
matter of the opposing party's claim."
JURISPRUDENCE: The view expressed in Moran's Commentaries was adopted by the Court. (From precedents to
BA Finance.)
Lim Tanhu v. Ramolete (cited lang)
Dalman v. City Court of Dipolog City where the plaintiff in a civil case for damages moved for the
withdrawal of her own case on the ground that the dispute had not been referred to the brgy council as
required by law. Over the objection of the defendant, who feared that her own counterclaim would be
prejudiced by the dismissal, plaintiff's motion was granted, the complaint and the counterclaim accordingly
dismissed. The Court refused to reinstate the counterclaim, opining without elaboration, "[i]f the civil case
is dismissed, so also is the counterclaim filed therein." The broad nature of that statement gave rise to the
notion that the mandatory dismissal of the counterclaim upon dismissal of the complaint applied regardless
of the cause of the complaint's dismissal. Notably, the qualification concerning compulsory counterclaims
was provided in Sec 2, Rule 17 of the 1964 Rules, the provision governing dismissals by order of the court,
and not Sec 3, Rule 17. As stated earlier, Section 3, which covered dismissals for failure to prosecute upon
motion of the defendant or upon motu proprio action of the trial court, was silent on the effect on the
counterclaim of dismissals of such nature.
Sps Sta. Maria, Jr. v. CA ostensibly supplied the gap on the effect on the counterclaim of
complaints dismissed under Sec 3. While SC noted that the adjudication of the counterclaim in question
"does not depend upon the adjudication of the claims made in the complaint since they were virtually
abandoned by the non-appearance of the plaintiffs themselves," it was also added that "[t]he doctrine
invoked is not available to plaintiffs like the petitioners, who prevent or delay the hearing of their own claims
and allegations."
JBL Reyes, in said case: The doctrine that the complaint may not be dismissed if
the counterclaim cannot be independently adjudicated is not available to, and was not intended for
the benefit of, a plaintiff who prevents or delays the prosecution of his own complaint. Otherwise,
the trial of counterclaims would be made to depend upon the maneuvers of the plaintiff, and the
rule would offer a premium to vexing or delaying tactics to the prejudice of the counterclaimants. It
is in the same spirit that we have ruled that a complaint may not be withdrawn over the opposition
of the defendant where the counterclaim is one that arises from, or is necessarily connected with,
the plaintiff's action and cannot remain pending for independent adjudication.
The dismissal of a complaint due to the failure of the plaintiff to appear during
pre-trial, as what had happened in Sta. Maria, fell within the coverage of Sec 3, Rule 17. On the
other hand, Section 2 was clearly limited in scope to those dismissals sustained at the instance of
the plaintiff.
SC NARRATES LOL: Nonetheless, by the early 1990s, jurisprudence was settling on a rule that
compulsory counterclaims were necessarily terminated upon the dismissal of the complaint not only
if such dismissal was upon motion of the plaintiff, but at the instance of the defendant as well.
Two decisions from that period stand out: Metals Engineering Resources Corp. v. CA and Intl
Container Terminal Services v. CA.
Metals case: In Metals, the complaint was expunged from the record after the defendant had filed a
MR of a TC order allowing the filing of an amended complaint that corrected a jurisdictional error in the
original complaint pertaining to the specification of the amount of damages. When the defendant was
nonetheless allowed to present evidence on the counterclaim, the plaintiff assailed such allowance on the
ground that the counterclaim was compulsory and could no longer remain pending for independent

adjudication. The Court, in finding for the plaintiff, noted that the counterclaim was indeed compulsory in
nature, and as such, was auxiliary to the proceeding in the original suit and derived its jurisdictional
support therefrom. It was further explained that the doctrine was in consonance with the primary objective
of a counterclaim, which was to avoid and prevent circuitry of action by allowing the entire controversy
between the parties to be litigated and finally determined in one action, and to discourage multiplicity of
suits. Also, the Court noted that since the complaint was dismissed for lack of jurisdiction, it was as if no
claim was filed against the defendant, and there was thus no more leg for the complaint to stand on.
ICTSI case: The defendant filed a MTD which was granted. The defendant's counterclaim was
dismissed as well. The Court summarized the key question as "what is the effect of the dismissal of a
complaint ordered at the instance of the defendant upon a compulsory counterclaim duly raised in its
answer." Then it ruled that the counterclaim did not survive such dismissal. After classifying the
counterclaim therein as compulsory, "[i]t is obvious from the very nature of the counterclaim that it could not
remain pending for independent adjudication, that is, without adjudication by the court of the complaint itself
on which the counterclaim was based."
BA FINANCE!!!!: In 1993, a divided Court ruled in BA Finance that the dismissal of the
complaint for nonappearance of plaintiff at the pre-trial, upon motion of the defendants, carried with
it the dismissal of their compulsory counterclaim. SC reiterated the rule that "a compulsory counterclaim
cannot remain pending for independent adjudication by the court . . . as it is auxiliary to the proceeding in the
original suit and merely derives its jurisdictional support therefrom." Express reliance was made on Metals,
International Container, and even Dalman in support of the majority's thesis. BA Finance likewise advised
that the proper remedy for defendants desirous that their counterclaims not be dismissed along with
the main complaint was for them to move to declare the plaintiffs to be "non-suited" on their
complaint and "as in default" on their compulsory counterclaim, instead of moving for the dismissal of
the complaint.
Dissent in BA Finance by J. Regalado & CJ Narvasa: The two agreed that TC
could no longer hear the counterclaim, but only on the ground that defendant's motion to be
allowed to present evidence on the counterclaim was filed after the order dismissing the complaint
had already become final. BUT they disagreed that the compulsory counterclaim was
necessarily dismissed along with the main complaint, pointing out that a situation wherein the
dismissal of the complaint was occasioned by plaintiff's failure to appear during pre-trial
was governed under Sec 3, Rule 17, and not Sec 2 of the same rule.
Justice Regalado, who ironically penned the decision in Metals cited by the
majority: Turning back to Rule 17, it is readily apparent that Secs 2 and 3 thereof envisage
different factual and adjective situations.
SEC 2: The dismissal of the complaint under Sec 2 is at the
instance of plaintiff, for whatever reason he is minded to move for such dismissal, and, as
a matter of procedure, is without prejudice unless otherwise stated in the order of the court
or, for that matter, in plaintiff's motion to dismiss his own complaint. By reason thereof, to
curb any dubious or frivolous strategy of plaintiff for his benefit or to obviate possible
prejudice to defendant, the former may not dismiss his complaint over the defendant's
objection if the latter has a compulsory counterclaim since said counterclaim would
necessarily be divested of juridical basis and defendant would be deprived of possible
recovery thereon in that same judicial proceeding.
SEC 3: Section 3, on the other hand, contemplates a dismissal
not procured by plaintiff, albeit justified by causes imputable to him and which, in the
present case, was petitioner's failure to appear at the pre-trial. This situation is also
covered by Sec 3, as extended by judicial interpretation, and is ordered upon motion of
defendant or motu proprio by the court. Here, the issue of whether defendant has a
pending counterclaim, permissive or compulsory, is not of determinative
significance. The dismissal of plaintiff's complaint is evidently a confirmation of the failure
of evidence to prove his cause of action outlined therein, hence the dismissal is
considered, as a matter of evidence, an adjudication on the merits. This does not,
however, mean that there is likewise such absence of evidence to prove defendant's
counterclaim although the same arises out of the subject matter of the complaint which
was merely terminated for lack of proof. To hold otherwise would not only work injustice to

defendant but would be reading a further provision into Section 3 and wresting a meaning
therefrom although neither exists even by mere implication. Thus understood, the
complaint can accordingly be dismissed, but relief can nevertheless be granted as a
matter of course to defendant on his counterclaim as alleged and proved, with or without
any reservation therefor on his part, unless from his conduct, express or implied, he has
virtually consented to the concomitant dismissal of his counterclaim.
J. Regalado also adverted to Sta. Maria and noted that the objections raised and rejected by the
Court therein were the same as those now relied upon by the plaintiff. He pointed out that Dalman and
International Container, both relied upon by the majority, involved the application of Sec 2, Rule 17 and not
Sec 3, which he insisted as the applicable provision in the case at bar.
THEN CAME THE AMENDMENT OF THE 1964 RULES
The partial dissent of J. Regalado in BA Finance proved opportune, as he happened then to be a
member of the Rules of Court Revision Committee (LOL) tasked with the revision of the 1964 Rules. Just
a few months after BA Finance was decided, J. Regalado proposed before the Committee an amendment to
Sec 3, Rule 17 that would explicitly provide that the dismissal of the complaint due to the fault of the
plaintiff shall be "without prejudice to the right of the defendant to prosecute his counterclaim in the
same or in a separate action." The amendment is reflected in the minutes of the meeting of the
Committee:
J. Regalado: After the words "upon the court's own motion", the following
provision be inserted: "without prejudice to the right of the defendant to prosecute his counterclaim
in the same or in a separate action." APPROVED.
J. Herrera observed that under Secs. 1 to 3, it is not the action that is dismissed
but the complaint. He asked whether there is any distinction between "complaint" and "action."
Regalado opined that the action of the plaintiff is initiated by his complaint.
J. Feria then suggested that the dismissal be limited to the complaint. The words
"An action" will be changed to "a complaint" (in all sections). APPROVED.
CA Pao believed that there is a need to clarify the counterclaim that the
defendant will prosecute, whether it is permissive or compulsory or all kinds of counterclaims. J.
Regalado opined that there is no need of making a clarification because it is already
understood that it covers both counterclaims.
CONCLUSION from the minutes: Survival of the counterclaim despite the dismissal of the
complaint under Section 3 stood irrespective of whether the counterclaim was permissive or compulsory.
Moreover, when the Court itself approved the revisions, not only did J. Regalado's amendment to Sec 3,
Rule 17 remain intact, but the final version likewise eliminated the qualification formerly offered under Sec 2
on "counterclaims that can remain pending for independent adjudication by the court." At present, even
Sec 2, concerning dismissals on motion of the plaintiff, now recognizes the right of the defendant to
prosecute the counterclaim either in the same or separate action notwithstanding the dismissal of
the complaint, and without regard as to the permissive or compulsory nature of the counterclaim.
EFFECTS OF THE AMENDMENT, as discussed by J. Regalado in his commentaries:
Under this revised section [2], where the plaintiff moves for the dismissal of his complaint to which
a counterclaim has been interposed, the dismissal shall be limited to the complaint. Such dismissal shall
be without prejudice to the right of the defendant to either prosecute his counterclaim in a separate
action or to have the same resolved in the same action. Should he opt for the first alternative, the court
should render the corresponding order granting and reserving his right to prosecute his claim in a separate
complaint. Should he choose to have his counterclaim disposed of in the same action wherein the complaint
had been dismissed, he must manifest such preference to TC within 15 days from notice to him of plaintiff's
motion to dismiss. These alternative remedies of the defendant are available to him regardless of
whether his counterclaim is compulsory or permissive. A similar alternative procedure, with the same
underlying reason therefor, is adopted in Sec. 6, Rule 16 and Sec. 3 of this Rule, wherein the complaint is
dismissed on the motion of the defendant or, in the latter instance, also by the court motu proprio.
The second substantial amendment to [Sec 3] is with respect to the disposition of the defendant's
counterclaim in the event the plaintiff's complaint is dismissed. As already observed, he is here granted the
choice to prosecute that counterclaim in either the same or a separate action. . .
With the aforestated amendments, the controversial doctrine in BA Finance has been
abandoned, together with the apparent confusion on the proper application of said Secs. 2 and 3. Said

sections were distinguished and discussed in the author's separate opinion in that case, even before they
were clarified by the present amendments
COMMENTS from other justices:
J. FERIA: The present rule reaffirms the right of the defendant to move for the dismissal of the
complaint and to prosecute his counterclaim, as stated in the separate opinion J. Regalado in BA Finance.
Retired CA J. Herrera: The amendment to Sec 3, Rule 17 settles that "nagging question"
whether the dismissal of the complaint carries with it the dismissal of the counterclaim, and opines that by
reason of the amendments, the rulings in Metals Engineering, International Container, and BA Finance
"may be deemed abandoned."
On the effect of amendment to Sec 3, Rule 17, the commentators are in general agreement,
although there is less unanimity of views insofar as Section 2, Rule 17 is concerned.
TO SUM UP THE HISTORY:
When the Court promulgated the 1997 Rules of Civil Procedure, including the amended Rule 17,
those previous jural doctrines that were inconsistent with the new rules incorporated in the 1997 Rules of
Civil Procedure were implicitly abandoned insofar as incidents arising after the effectivity of the new
procedural rules on 1 July 1997. BA Finance, or even the doctrine that a counterclaim may be necessarily
dismissed along with the complaint, clearly conflICTSI with the 1997 Rules. The abandonment of BA
Finance as doctrine extends as far back as 1997, when the Court adopted the new Rules of Civil
Procedure. If, since then, such abandonment has not been affirmed in jurisprudence, it is only
because no proper case has arisen that would warrant express confirmation of the new rule. That
opportunity is here and now, and we thus rule that the dismissal of a complaint due to fault of the plaintiff
is without prejudice to the right of the defendant to prosecute any pending counterclaims of whatever nature
in the same or separate action. We confirm that BA Finance and all previous rulings of the Court that are
inconsistent with this present holding are now abandoned.
CASE AT BAR:
RTC clearly erred when it ordered the dismissal of the counterclaim, since Sec 3 mandates that the
dismissal of the complaint is without prejudice to the right of the defendant to prosecute the counterclaim in
the same or separate action. If the RTC were to dismiss the counterclaim, it should be on the merits of
such counterclaim. Reversal of the RTC is in order, and a remand is necessary for trial on the merits of the
counterclaim.
BUT WAIT THERES MORE HUHU. SC felt the need to explain the rationale behind the amendment.
It would be perfectly satisfactory for the Court to leave this matter at that. Still, an explanation of the
reason behind the new rule is called for, considering that the rationale behind the previous rule was
frequently elaborated upon.
ACT 190: Under Act No. 190, or the Code of Procedure in Civil Actions promulgated in 1901, it was
recognized in Sec 127(1) that the plaintiff had the right to seek the dismissal of the complaint at any time
before trial, "provided a counterclaim has not been made, or affirmative relief sought by the cross-complaint
or answer of the defendant." Note that no qualification was made then as to the nature of the counterclaim,
whether it be compulsory or permissive. The protection of the defendant's right to prosecute the
counterclaim was indeed unqualified.
City of Manila, decided in 1918: By paragraph 1 [of Sec 127], it will be seen that,
where the defendant has interposed a counterclaim, or is seeking affirmative relief by a crosscomplaint, that then, and in that case, the plaintiff cannot dismiss the action so as to affect the right
of the defendant in his counterclaim or prayer for affirmative relief. The reason for that exception is
clear. When the answer sets up an independent action against the plaintiff, it then becomes an
action by the defendant against the plaintiff, and, of course, the plaintiff has no right to ask for a
dismissal of the defendant's action.
1940 ROC: Nonetheless, a new rule was introduced when Act No. 190 was replaced by the 1940
Rules of Court. Section 2, Rule 30 of the 1940 Rules specified that if a counterclaim is pleaded by a
defendant prior to the service of the plaintiff's motion to dismiss, the action shall not be dismissed against
the defendant's objection unless the counterclaim can remain pending for independent adjudication by the
court.
1964 ROC: The qualification in the 1940 ROC remained intact when the 1964 Rules was
introduced. The rule referred only to compulsory counterclaims, or counterclaims which arise out of or are
necessarily connected with the transaction or occurrence that is the subject matter of the plaintiff's claim,

since the rights of the parties arising out of the same transaction should be settled at the same time. As was
evident in Metals, International Container and BA Finance, the rule was eventually extended to instances
wherein it was the defendant with the pending counterclaim, and not the plaintiff, that moved for the
dismissal of the complaint.
PERMISSIVE v. COMPULSORY: We should not ignore the theoretical bases of the rule
distinguishing compulsory counterclaims from permissive counterclaims insofar as the dismissal of the
action is concerned. There is a particular school of thought that informs the broad proposition in Dalman that
"if the civil case is dismissed, so also is the counterclaim filed therein," or the more nuanced discussions
offered in Metals, International Container, and BA Finance. The most potent statement of the theory may be
found in Metals, which proceeds from the following fundamental premises:
1) A compulsory counterclaim must be set up in the same proceeding or would otherwise be abated
or barred in a separate or subsequent litigation on the ground of auter action pendant, litis
pendentia or res judicata
2) A compulsory counterclaim is auxiliary to the main suit and derives its jurisdictional support
therefrom as it arises out of or is necessarily connected with the transaction or occurrence that is
the subject matter of the complaint
3) If the court dismisses the complaint on the ground of lack of jurisdiction, the compulsory
counterclaim must also be dismissed as it is merely ancilliary to the main action and no jurisdiction
remained for any grant of relief under the counterclaim.
The first point is derived from Section 4, Rule 9, of the 1964 Rules of Court, while the two latter
points are sourced from American jurisprudence. There is no disputing the theoretical viability of these three
points. In fact, the requirement that the compulsory counterclaim must be set up in the same proceeding
remains extant under the 1997 Rules of Civil Procedure. At the same time, other considerations rooted in
actual practice provide a counterbalance to the above-cited rationales.
Whatever the nature of the counterclaim, it bears the same integral characteristics as a
complaint; namely a cause (or causes) of action constituting an act or omission by which a party violates
the right of another. The main difference lies in that the cause of action in the counterclaim is maintained by
the defendant against the plaintiff, while the converse holds true with the complaint. Yet, as with a complaint,
a counterclaim without a cause of action cannot survive.
It would then seemingly follow that if the dismissal of the complaint somehow
eliminates the cause(s) of the counterclaim, then the counterclaim cannot survive. Yet that hardly is
the case, especially as a general rule. More often than not, the allegations that form the
counterclaim are rooted in an act or omission of the plaintiff other than the plaintiff's very act of filing
the complaint. Moreover, such acts or omissions imputed to the plaintiff are often claimed to have
occurred prior to the filing of the complaint itself. The only apparent exception to this circumstance
is if it is alleged in the counterclaim that the very act of the plaintiff in filing the complaint precisely
causes the violation of the defendant's rights. Yet even in such an instance, it remains debatable
whether the dismissal or withdrawal of the complaint is sufficient to obviate the pending cause of
action maintained by the defendant against the plaintiff.
These considerations persist whether the counterclaim in question is permissive
or compulsory. A compulsory counterclaim arises out of or is connected with the transaction or
occurrence constituting the subject matter of the opposing party's claim, does not require for its
adjudication the presence of third parties, and stands within the jurisdiction of the court both as to
the amount involved and the nature of the claim. The fact that the culpable acts on which the
counterclaim is based are founded within the same transaction or occurrence as the
complaint, is insufficient causation to negate the counterclaim together with the complaint.
The dismissal or withdrawal of the complaint does not traverse the boundaries of time to undo the
act or omission of the plaintiff against the defendant, or vice versa. While such dismissal or
withdrawal precludes the pursuit of litigation by the plaintiff, either through his/her own initiative or
fault, it would be iniquitous to similarly encumber the defendant who maintained no such
initiative or fault. If the defendant similarly moves for the dismissal of the counterclaim or neglects
to timely pursue such action, let the dismissal of the counterclaim be premised on those grounds
imputable to the defendant, and not on the actuations of the plaintiff.
The other considerations supplied in Metals are anchored on the premise that the jurisdictional
foundation of the counterclaim is the complaint itself. The theory is correct, but there are other facets to

this subject that should be taken into account as well. On the established premise that a counterclaim
involves separate causes of action than the complaint even if derived from the same transaction or series of
transactions, the counterclaim could have very well been lodged as a complaint had the defendant filed the
action ahead of the complainant. The terms "ancillary" or "auxiliary" may mislead in signifying that a
complaint innately possesses more credence than a counterclaim, yet there are many instances wherein
the complaint is trivial but the counterclaim is meritorious. In truth, the notion that a counterclaim is, or
better still, appears to be merely "ancillary" or "auxiliary" is chiefly the offshoot of an accident of chronology,
more than anything else.
The formalistic distinction between a complaint and a counterclaim does not detract from
the fact that both of them embody causes of action that have in their end the vindication of rights.
While the distinction is necessary as a means to facilitate order and clarity in the rules of procedure, it
should be remembered that the primordial purpose of procedural rules is to provide the means for the
vindication of rights. A party with a valid cause of action against another party cannot be denied the right to
relief simply because the opposing side had the good fortune of filing the case first. Yet this in effect was
what had happened under the previous procedural rule and correspondent doctrine, which under their final
permutation, prescribed the automatic dismissal of the compulsory counterclaim upon the dismissal of the
complaint, whether upon the initiative of the plaintiff or of the defendant.
EQUITABLE: Thus, the present rule embodied in Secs 2 and 3 ordains a more equitable
disposition of the counterclaims by ensuring that any judgment thereon is based on the merit of the
counterclaim itself and not on the survival of the main complaint. Certainly, if the counterclaim is palpably
without merit or suffers jurisdictional flaws which stand independent of the complaint, TC is not precluded
from dismissing it under the amended rules, provided that the judgment or order dismissing the counterclaim
is premised on those defects. At the same time, if the counterclaim is justified, the amended rules now
unequivocally protect such counterclaim from peremptory dismissal by reason of the dismissal of the
complaint.
B. Defaults
Co v. Acosta (Erika)
January 17, 1985
RUFINO CO
vs.
HON. EFICIO B. ACOSTA, in his Official Capacity as Presiding Judge; RTC, Branch CLV, Pasig, Metro Manila, and
THE REFRIGERATION INDUSTRIES, INC., and DELTA MOTORS CORPORATION
GUTIERREZ, JR., J.
NATURE: Petition for certiorari
SUMMARY: Pepsi ordered/purchased 12,000 refrigerators from Rufino Cos CTC appliance center. Co assigned his
rights to the purchase orders to Refrigerations Industries, Inc. (RII). RII delivered 1,000 refrigerators to Pepsi, which
the latter received but later refused to pay for because Pepsi refused to recognize the assignment to RII. RII sued
Pepsi and Co for collection of sum of money, but later dropped the suit against Pepsi after executing an instrument
called Joint Release, Waiver and/or Quitclaim. Co did not file his answer and was declared in default. Judgment
was rendered against him. He now claims that since both he and Pepsi are indispensable parties, the CFI lost its
authority to act on the case insofar as Co is concerned. SC agreed.
DOCTRINE: Lim Tanhu v. Ramolete: Since the singleness of the cause of action also inevitably implies that all the
defendants are indispensable parties, the court's power to act is integral and cannot be split such that it cannot
relieve any of them and at the same time render judgment against the rest. [see other doctrinal stuff from Tanhu in the
RATIO]
FACTS:
Nov 20, 1979: Pepsi Cola Bottling Company of the Philippines, Inc., through Mr. C.M. Aboitiz issued
three (3) purchase orders addressed to CTC Appliance Center for 12,000 units of refrigerators valued at
P35,322,900. (i.e. Pepsi bought refrigerators from CTC)
Petitioner Rufino Co is the proprietor of the Center.
Nov 21, 1979: in a formal deed of assignment, petitioner Co assigned his rights and
interests to the three purchase orders and to the money value of the deliveries made or to be made
thereunder to respondent Refrigerations Industries, Inc. (RII)
Mar 13, 1980: PEPSI wrote a letter to RII and Delta Motors Corp, informing them that on Mar 9,

1981[1980, probably], it took notice of the assignments of the purchase orders by Co and stated that it was
NOT recognizing the same.
In the course of time, 10,000 units of refrigerators were delivered and paid. No problem arose from
these 10,000 units.
Mar 18, 1981: PEPSI wrote a letter to Co requesting the delivery of 1,000 units of refrigerators not
later than Mar 31, 1981 and stating that PEPSI will be talking directly to RII through Mr. Dominador Gana on
the matter of storage fees.
Mar 23-May 21, 1981: PEPSI received 1,000 units of refrigerators directly from RII. Total
invoice price: P2,907,535
June 2, 1981: RII sent a letter of demand to PEPSI.
June 4, 1981: PEPSI wrote RII acknowledging receipt of the demand letter but stating that it
does not recognize and does not feel bound by Co's assignment of the purchase orders.
June 24, 1981: RII sent another letter of demand to PEPSI demanding payment of the P2,907,535
within five days.
June 26, 1981: PEPSI informed RII that there is no legal basis for the demand and no reason
for PEPSI to pay the 1,000 units. It added further that RII's recourse is against Co.
July 8, 1981: failing to collect from PEPSI, RII sent a letter of demand to Co demanding payment of
P2,907,535, but the latter refused and failed to pay.
Sept 10, 1981: RII and Delta Motors Corporation filed a Civil Case for a sum of money with
attachment before CFI of Rizal (Br. 10), against Pepsi and Rufino Co.
Nov 26, 1981: RII and Delta filed a formal ex-parte motion to dismiss the complaint against
PEPSI. Attached to the motion is an instrument entitled "Joint Release, Waiver and/or Quitclaim" which
covenants that Delta Motors, RII, and PEPSI mutually agreed to release and forever discharge each other
from any and all liabilities or causes of action arising out of the transaction involving the 1,000 units of
refrigerators in order to maintain harmonious business relations among the parties.
CFI (Nov 26, 1981): complaint against Pepsi DISMISSED.
Nov 19, 1982: RII and Delta filed an ex-parte motion to declare Rufino Co in default for
having failed to file his answer.
CFI (Nov 22, 1982): Co is declared in default; RII and Delta allowed to present evidence exparte on Dec 3, 1982 at 2:30 p.m.
CFI (Mar 9, 1983): decision; in favor of RII and Delta, and against Co
Co to pay P2,907,535 plus the legal rate of interest from date of demand
P200K attorney's fees; plus costs
Apr 12, 1983: petitioner Co filed a "Petition for Relief from Judgment" alleging:
That excusable negligence transpired which prevented him from availing the
usual and ordinary remedies under the law.
That he has a valid and meritorious defense and had he not been prevented from
presenting his evidence the decision could have been different.
CFI (Apr 12, 1983): pending resolution of Co's petition for relief from judgment, CFI issued a writ of
execution
Thus, virtually all of Co's real properties were levied upon on execution and advertised for sale at
public auction on July 15, 20, and 22, 1983.
Apr 27, 1983: Co filed a motion for a restraining order to restrain the writ of execution.
June 6, 1983: Co filed an urgent motion for resolution of his petition for the issuance of a restraining
order.
June 9, 1983: Co again filed an urgent supplementary motion for a restraining order pending the
resolution of his petition for relief or a motion to dismiss the case.
July 6, 1983: Co filed still another urgent motion for resolution of his petition for the issuance of a
restraining order pointing out that the CFI had not resolved his motion even as the date of sale in the
sheriff's notice for the sale on execution of his properties was only a few days away.
CFI (July 13, 1983): Cos Petition for Relief from Judgment and Petition for the Issuance of a
Restraining Order DENIED
Aug 31, 1983: SC issued a TRO enjoining the respondent RTC of Pasig from taking further action
in the Civil Case for a sum of money, more particularly from taking any further proceedings relative to the
writ of execution in said civil case, until further orders.
ISSUE: W/N the dismissal of the case against Pepsi entitles Co to the dismissal of the case against him (YES)
RATIO:
Co: he and Pepsi are indispensable parties sued under a common cause of action and that if the

complaint is dismissed insofar as Pepsi is concerned, the CFI should have ordered also the dismissal of the
case insofar as it affects Co.
it does not matter that the dismissal is upon the evidence presented by the
plaintiffs RII and Delta or upon the their mere desistance, for in both instances, a lack of sufficient
legal basis must be the cause.
RII and Delta: Co is confusing the decision of the CFI because instead of questioning the order
denying the petition for relief from judgment, Co assails the decision of the court dated Mar 9, 1983 which
has already become final and executory with the writ of execution issued already being implemented by the
Deputy Sheriff of Rizal.
Lim Tanhu v. Hon. Ramolete is not applicable because there are important facts
which differentiate the Lim Tanhu case from the instant petition.
(1) Lim Tanhu: the same cause of action was averred by
several defendants, some of whom were declared in default and some of whom filed their
answers.
CASE AT BAR: RII's cause of action against
Co is entirely different from its cause of action against PEPSI, the former being
the assignor of the purchase orders and the latter being the maker of the
purchase orders;
(2) Lim Tanhu: some of the defendants were declared in
default, hence, the defenses set up by those who answered the complaint were available
to the other defendants who were declared in default.
CASE AT BAR: both defendants Co and
PEPSI did not answer the complaint. There are no defenses which can be
interposed by Co;
(3) Lim Tanhu: a motion to lift the order of default was filed by
the defaulting defendant
CASE AT BAR: no motion to lift order of
default was filed by Co; and
(4) Lim Tanhu: all the defendants were indispensable parties
CASE AT BAR: RII and Delta may file an
action against any of the defendants (Co or Pepsi) for the simple reason that a
valid judgment can be rendered against either of the two defendants.
SC: We agree with Co.
RII and Delta's complaint for a sum of money with attachment against PEPSI and Co clearly shows
that PEPSI and Co are indispensable parties to the case.
In fact RII and Delta sued both PEPSI and Co under a common cause of action.
Par. 21 of the complaint: both defendants are guilty of conspiracy; connivance, unfair play, and foul
tactics because on the one hand, PEPSI received and accepted the 1,000 refrigerators from plaintiffs
without the intention to pay the latter but only with the intent to set off the debts of Rufino Co. On the other
hand, Rufino Co refused to pay plaintiffs the price of the 1,000 refrigerators despite due demand, and he
was happy that his debts or obligations to PEPSI were set off or were discounted by means not coming from
his pockets. In other words, both defendants acting in concert and with a view to victimize the hapless and
unsuspecting plaintiffs made simultaneous acts calculated to gain and to profit from the loss and misfortune
of plaintiffs.
The affidavit attached in support of the complaint is framed in such a way that there can be no
doubt as to the intention of RII and Delta in suing PEPSI and Co as indispensable parties.
Pars. (2) and (3) of said affidavit:
2. That, however, in spite of Pepsi's rejection and refusal to honor and to
recognize the assignment, Pepsi, as aforesaid received and accepted the delivery to it by
Refrigeration of 1,000 units of "Frigidaire" and "Sharp" electric refrigerators of various sizes and
measurements. But Pepsi refused to pay the invoice price of P2,907,535.00, because Pepsi's
intention was not to pay Refrigeration and Delta but only to set off the accountabilities and
obligations of Rufino Co to Pepsi. Upon formal demand by Refrigeration and Delta upon Pepsi and
Rufino Co to pay for the 1,000 refrigerators; both Pepsi and Rufino Co refused to pay, without just
or legal grounds:
3. That based on the Deed of Assignment issued by Rufino Co in favor of
Refrigeration and Delta, and from the surrounding acts and circumstances performed by Pepsi,

especially its acts in rejecting the assignment by Rufino Co, its receiving and accepting the delivery
of 1,000 units of refrigerators from Refrigeration, and its keen desire to just set-off the debts of
Rufino Co and not to pay a single cent to Refrigeration and Delta, it is clear that Pepsi was guilty of
a fraud, bad faith, and deceit in contracting the debt or incurring the obligation, thereby prejudicing
and damaging Refrigeration and Delta in the huge amount aforementioned.
Lim Tanhu v. Hon. Ramolete: APPLICABLE
The fact that in that case several defendants were declared in default and the defenses set up by
those who answered the complaint were available to those who were in default, while in the case at bar both
PEPSI and Co did not answer the complaint, is of no moment because our ruling in the Lim Tanhu case
was based on the fact that all the defendants therein were indispensable parties and the plaintiff
moved for the dropping of two defendants from the complaint.
Similar to this case where both PEPSI and Co were sued as indispensable parties under a
common cause of action, and on motion of the plaintiffs, PEPSI was dropped as a party defendant.
Lim Tanhu: in all instances where a common cause of action is alleged against several
defendants, some of whom answer and the others do not, the latter or those in default acquire a vested right
not only to own the defense interposed in the answer of their co-defendant or co-defendants not in default
but also to expect a result of the litigation totally common with them in kind and in amount whether favorable
or unfavorable.
The substantive unity of the plaintiff's cause against all the defendant is carried
through to its objective phase as ineluctably demanded by the homogeneity and indivisibility of
justice itself.
Since the singleness of the cause of action also inevitably implies that all
the defendants are indispensable parties, the court's power to act is integral and cannot be
split such that it cannot relieve any of them and at the same time render judgment against
the rest.
When any defendant allows himself to be in default knowing that his codefendant has already answered, he does so trusting in the assurance implicit in the rule that his
default is in essence a mere formality that deprives him of no more than the right to take part in the
trial and that the court would deem anything done by or for the answering defendant as done by or
for him.
Presumption is that otherwise he would not have seen to it that he would not
be in default.
Of course, he has to suffer the consequences of whatever the answering
defendant may do or fail to do, regardless of possible adverse consequences, but if the complaint
has to be dismissed in so far as the answering defendant is concerned it becomes his inalienable
right that the same be dismissed also as to him.
It does not matter that the dismissal is upon the evidence presented by the
plaintiff himself or upon the latter's mere desistance, for in both contingencies, the lack of
sufficient legal basis must be the cause.
The integrity of the common cause of action against all the defendants and the
indispensability of all of them in the proceedings do not permit any possibility of waiver of the
plaintiff's right only as to one or some of them, without including all of them, and so, as a rule,
withdrawal must be deemed to be a confession of weakness as to all.
This is not only elementary justice; it also precludes the concomitant hazard that
plaintiff might resort to the kind of stratagem that would result (as in this case) in totally depriving
petitioners of every opportunity to defend themselves against her claim, which the record does not
show to be invulnerable
Where all the defendants are indispensable parties, for which reason the
absence of any of them in the case would result in the court's losing its competency to act validly,
any compromise that the plaintiff might wish to make with any of them must, as a matter of correct
procedure, have to await until after the rendition of the judgment, at which state the plaintiff may
then treat the matter of its execution and the satisfaction of his claim as variably as he might
please.
CASE AT BAR
CFI erred in (1) declaring Co in default; (2) in hearing the plaintiffs (RII and Delta) evidence exparte; (3) in rendering the decision; (4) in issuing the writ of execution and in having Co's properties levied

upon in execution; (5) in having them advertised for sale, and consequently, (6) in ordering them sold to
answer for RII and Delta's claim.
After the CFI dropped PEPSI as a party defendant, it lost authority to act further in the case insofar
as Co is concerned.
Furthermore, RII and Delta's admission in their complaint that the assignments made to them by
Co are genuine, valid, and in accord with Art 1475 of the Civil Code taken together with the joint waiver,
release, or quitclaim in favor of PEPSI which received and profited from the 1,000 refrigerators virtually
absolve Co from any and all legal liability insofar as the purchase orders are concerned.
DISPOSITION: Petition granted. The proceedings in the respondent court in the Civil Case subsequent to the Nov
26, 1981 order dismissing the complaint as against Pepsi are hereby annulled and set aside, particularly the ex-parte
presentation of RII and Delta's evidence against Co and the decision dated Mar 9, 1983. CFI/RTC is ordered to
extend the effects of the dismissal of the complaint to petitioner Rufino Co. CFI/RTC is permanently enjoined from
taking any further action in said civil case except as herein indicated.
Lina v. Court of Appeals (Kat)
April 9, 1985
ALEX LINA, petitioner, vs.
THE HONORABLE COURT OF APPEALS; HONORABLE GREGORIO PINEDA, as Presiding Judge of the Court of
First Instance of Rizal, Branch XXI at Pasig; and NORTHERN MOTORS, INC., respondents.
RELOVA, J
SUMMARY: Northern Motors filed a case against Lina. When no answer was filed by Lina, Northern Motors filed a
motion to declare him in default. Lina informed the CFI that he had mailed a motion for extension of time. Despite
this, he was declared in default, without the CFI ruling on his motion for extension of time. He filed a petition for
certiorari/prohibition with the CA, which the CA denied. SC agreed with both the CFI and the CA.
DOCTRINE: Under the Rules of Court, the remedies available to a defendant in the Court of First Instance (now
Regional Trial Court) are:
a) The defendant in default may, at any time after discovery thereof and before judgment, file a motion, under oath, to
set aside the order of default on the ground that his failure to answer was due to fraud, accident, mistake or
excusable neglect, and that he has a meritorious defense; (Sec. 3, Rule 18)
b) If the judgment has already been rendered when the defendant discovered the default, but before the same has
become final and executory, he may file a motion for new trial under Section 1 (a) of Rule 37;
c) If the defendant discovered the default after the judgment has become final and executory, he may file a petition for
relief under Section 2 of Rule 38; and
d) He may also appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no
petition to set aside the order of default has been presented by him. (Sec. 2, Rule 41)
FACTS:
March 31, 1982: Northern Motors, Inc.(NMI) filed with the then CFI of Rizal (Pasig) a case for sum
of money with damages April 22, 1982: Alex Lina was served with summons together with a copy of the
complaint.
May 8, 1982: When no answer or motion to dismiss was filed by Lina, NMI filed a motion to
declare him in default.
The motion was set for hearing on May 21, 1982.
May 19, 1982: Lina filed his opposition to the aforesaid motion inviting attention to the fact that he
had filed a motion for extension of time to file responsive pleading within the reglementary period.
May 26, 1982: Judge Pineda issued an order declaring Lina in default and allowing NMI to adduce
its evidence ex parte.
May 27, 1982: Lina filed his answer to the complaint.
CFI (July 28, 1982): in favor of NMI (judgment in default)
August 11, 1982: Lina filed a motion to set aside decision dated July 28, 1982.
CFI (August 25, 1982 order): denying Linas motion to set aside decision.
October 6, 1982: Lina filed with the then CA a petition for certiorari/prohibition
CA (November 29, 1982 decision): denied petition
When NMI filed on May 8, 1982, its motion to declare Lina in default because the
last day for him to file an answer under the summons was May 7, 1982, Lina has not filed an
answer. So, there was actually a valid ground for the motion, and the CFI could have validly
declared Lina in default, especially because, at that time it was still unaware of the fact that on May
5, 1982, Lina had sent to it, by registered mail, a motion for extension of twenty days from May 7,

1982, within which to file an answer, and which motion was received by the CFI only on May 19,
1982.
But, CFI did not immediately act on the motion to declare Lina in default, so that
by May 19, 1982, the Lina was still able to file an opposition to the motion asking him to be
declared in default. The principal ground of the opposition of Lina was the fact that he had sent, by
registered mail, a motion for extension of time to file responsive pleading, and he even attached to
his opposition a copy of the motion for extension.
On May 26, 1982, CFI resolved the motion to declare Lina in default by granting
the motion. Now since on May 26, 1982, the motion for extension of time to file responsive pleading
was already before the court, as it received the same on May 19, 1982, and aside from this, a copy
thereof was attached to Lina's opposition to NMI's motion to declare defendant (Lina) in default, it is
conclusively assumed that the respondent court, in resolving the motion to declare Lina in default,
had taken into consideration the motion for extension, especially because the ground of Lina's
opposition to the motion to declare defendant (Lina) in default is the fact that he had asked for
extension of time to file responsive pleading. Now, then, when CFI declared Lina in default, it is a
clear and inevitable implication, without the need of an express statement to that effect, although it
would have been more desirable, that the motion for extension of time to file responsive pleading
was denied. In other words, the Order of May 26, 1982 had the necessary and logical implication
that Lina's opposition to the motion to declare defendant (Lina) in default, based upon the ground
that he had asked for extension of time to file responsive pleading, was disapproved or denied by
the court
Hence, petition for certiorari/prohibition

ISSUES:
1. W/N the order of default was issued in grave abuse of discretion amounting to lack of jurisdiction? NO
2. W/N certiorari is proper in a case where judgment by default was rendered without an order of default being
furnished petitioner (Lina) and where meritorious defenses exist, which are for the trial court to evaluate and which
evaluation was not done in this case? NO
HELD: Petition is DISMISSED
RATIO:
ORDER (AND JUDGMENT) OF DEFAULT IS PROPER
We are in agreement with CA's affirmance of the questioned order of the trial court.
ADDITIONAL TIME IS DISCRETIONARY W/ TC
The granting of additional time within which to file an answer to a complaint is a matter largely
addressed to the sound discretion of the trial court.
"While trial courts are persuaded, as a matter of policy, to adopt a basically flexible attitude in favor
of the defendant in this area of our adjective law, the defense should never be lulled into the belief that
whenever trial courts refuse a second request for extension to file an answer, the appellate courts will grant
relief (Naga Development Corporation vs. Court of Appeals)."
CAB: it was on May 5, 1982 or two (2) days before the expiration of the fifteen-day reglementary
period given to NMI to file his responsive pleading when Lina moved for an extension of twenty (20) days
from May 7 within which to file his answer. Upon motion of NMI and over the objection of Lina respondent
judge issued an order declaring Lina in default.
REMEDIES
Under the Rules of Court, the remedies available to a defendant in the Court of First
Instance (now Regional Trial Court) are:
a) The defendant in default may, at any time after discovery thereof and
before judgment, file a motion, under oath, to set aside the order of default on the ground
that his failure to answer was due to fraud, accident, mistake or excusable neglect, and that
he has a meritorious defense; (Sec. 3, Rule 18)
b) If the judgment has already been rendered when the defendant
discovered the default, but before the same has become final and executory, he may file a
motion for new trial under Section 1 (a) of Rule 37;
c) If the defendant discovered the default after the judgment has become
final and executory, he may file a petition for relief under Section 2 of Rule 38; and
d) He may also appeal from the judgment rendered against him as contrary

to the evidence or to the law, even if no petition to set aside the order of default has been
presented by him. (Sec. 2, Rule 41)
Lina did not avail himself of any of the above remedies. Instead, he went to the appellate court on
certiorari prohibition.
CERTIORARI v. APPEAL
CA (agreed by SC): Where the judgment rendered by the respondent court is the one sought to be
annulled, a petition for relief, under Rule 38 of the Revised Rules of Court, which is a remedy in the ordinary
course of law, could have been just as plain, adequate and speedy as certiorari. Such a remedy could have
been granted by the respondent court. And if the respondent court still denies the petition, then petitioner
can take an appeal on the order denying the petition, and in the course of such appeal petitioner can also
assail the judgment on the merits upon the ground that it is supported by the evidence, or it is contrary to law
MELENCIO-HERRERA, J., dissenting:
(1) The Order of default was issued with grave abuse of discretion
Pertinent dates:
May 7, 1982 Last day to file answer.
May 5, 1982 Lina filed Motion for Extension of 20 days from May 7, 1982 to
file answer.
May 8, 1982 NMI filed motion to declare petitioner Lina in default.
May 19, 1982 Lina filed opposition.
May 19, 1982 Court received petitioner's motion for extension to file answer.
May 26, 1982 Court declared petitioner in default.
May 27, 1982 Lina filed answer (last day of extended period)
July 28, 1982 Court rendered judgment by default.
Linas Motion for extension to file Answer was already before the Court when it declared petitioner
Lina in default. What is more, the Answer had already been filed within the extended period requested when
judgment by default was rendered.
Cases should be resolved on the merits rather than on technicalities. Every party-litigant should be
afforded the amplest opportunity for the proper and just disposition of his cause, free from the constraints of
technicalities (A-One Feeds, Inc. vs. CA (1980)).
TC should have resolved the Motion for Extension before declaring petitioner Lina in default. It
cannot be "conclusively assumed" that it had taken the same into consideration when it issued the Order of
default, although that was Lina's ground in his opposition to the default Motion.
A defendant should not presume that a Motion for extension would be favorably acted on.
However, under the circumstances of the case, it was Lina's first Motion for extension; said Motion
was filed before the expiration of the reglementary period within which to submit an Answer; and the Answer
having been filed within the extended period requested, in the interest of substantial justice, the Order of
default should not have been issued.
(2) Certiorari was a proper remedy.
Dimayacyac vs. CA (1979) : The ordinary remedy which should be availed of by a party who has
been declared in default and judgment rendered against him is that of appeal and not certiorari. This rule,
however, is not without exceptions for to insist on its application in all cases may not always serve the ends
of justice. The object of procedural law is to facilitate the adjudication of conflicting claims. Thus, although an
appeal is available, certiorari still lies when such appeal does not prove to be a more speedy and adequate
remedy
Boticano v. Chu, Jr. (Therese)
March 16, 1987
ELISEO BOTICANO, petitioner,
vs.
MANUEL CHU, JR., respondent.
PARAS, J.:
SUMMARY: Chu failed to pay Boticano for damages made on Boticanos truck, so Boticano filed a complaint against
Chu. Summons was served on Chu through his wife, in their house. Boticano eventually moved to declare Chu in
default for failure to file responsive pleadings in time. TC granted the motion and also ruled in favor of Boticano. Chu
subsequently filed several motions and pleadings. At the SC, Chu argued that the summons was not properly served,
thus the court did not acquire jurisdiction.
HELD: The Court ruled that jurisdiction was properly acquired by the TC over Chu through both service of summons

and voluntary appearance in court. He was properly declared in default for not having filed any answer. Despite Chus
failure to file a motion to set aside the declaration of default, he has the right to appeal the default judgment but in the
appeal only the evidence of Boticano may be considered, Chu not having adduced any defense evidence.
Effects of Appeal:
1. If appeal is made WITHOUT asking the RTC to set aside the declaration of default CA will review RTC judgment
but no opportunity to present evidence is given to the defense
2. If defendant first asked RTC to set aside the declaration of default and he is able to prevail, he has an opportunity
to present evidence if the motion be granted, and subsequently have this evidence considered on appeal if he still
obtains unfavorable judgment.
NATURE: Petition for review on certiorari seeking to reverse and set aside the ff:
(a) the decision of the Court of Appeals * promulgated on March 31, 1981 in CA-G.R. No. 65287-R entitled: "Eliseo
Boticano, plaintiff-appellee v. Jaime Sigua, defendant and Manuel Chu, Jr., defendant-appellant" which holds that the
defendant-appellant was not properly served with summons and
(b) the resolution denying petitioner's motion for reconsideration of said decision.
FACTS:
Petitioner Eliseo Boticano is the registered owner of a Bedford truck with plate No. QC-870, TPilipinas '77 which he was using in hauling logs for a certain fee.
11:00 o'clock in the evening of September 3, 1971: while loaded with logs, it was properly
parked by its driver Maximo Dalangin at the shoulder of the national highway in Barrio Labi, Bongabon,
Nueva Ecija when it was hit and bumped at the rear portion by another Bedford Truck owned by private
respondent Manuel Chu, Jr. and driven by Jaime Sigua, a co-defendant in this case.
Manuel Chu, Jr. agreed with Boticano to shoulder the expenses of the repair of the damaged truck.
When Manuel Chu, Jr. failed to comply with aforesaid agreement as well as to pay damages
representing lost income despite Boticano's demands, Boticano filed a complaint on November 24, 1977 at
the CFI of Nueva Ecija, againstManuel Chu, Jr. (truck owner) and Jaime Sigua (his driver) for damages.
Summons was issued on December 12, 1977 but was returned unserved for defendant Jaime
Sigua because he was no longer connected with San Pedro Saw Mill, Guagua, Pampanga, while another
copy of the summons for Manuel Chu, Jr. was returned duly served on him thru his wife Veronica Chu at his
dwelling house.
February 15, 1978: Boticano moved to dismiss the case against Jaime Sigua and to declare
Manuel Chu, Jr. in default for failure to file responsive pleadings within the reglementary period.
(GRANTED)
TC: From the evidence adduced by the Boticano found that Manuel Chu, Jr. is responsible for
the fault and negligence of his driver Sigua under Article 2180 of the Civil Code, whose negligence and
lack of due care was the immediate and proximate cause of the damage to petitioner's truck and ruled in
favor of plaintiff-petitioner.
Manuel Chu filed with the TC a Notice of Appeal and an Urgent Motion for Extension of
Time to file Record on Appeal. (GRANTED same date)
March 26, 1979: Atty. Hermenegildo D. Ocampo, counsel of record of private respondent, filed a
"Motion to Withdraw as Counsel" while the new counsel Atty. Wilfredo G. Laxamana entered his appearance
on April 18, 1979 and filed his record on appeal on the same date.
May 4, 1979: Boticano filed with the TC a Motion to Dismiss Appeal and for execution which
was set for hearing on May 14, 1979 wherein Chus counsel personally appeared and opposed Boticanos
motion.
May 14, 1979: Chu filed his reply to opposition, after which on May 16, 1979 the trial court issued
an order denying aforesaid motion.
TC, May 22 1979: Approved Chus record on appeal.
CA: Appealed judgment SET ASIDE; null and void. Remand to court of origin. Denied MR.
ISSUE/S:
W/N a defendant declared in default in the RTC may appeal the default judgment that may subsequently be
rendered even if he has not asked the RTC to set aside the declaration of default (YES)
W/N Manuel Chu was properly served with summons (YES)
W/N Chu voluntarily submitted himself to the jurisdiction of the TC by filing: notice of appeal, appeal bond,
motion for extension of time to file record on appeal, motion for withdrawal on appearance etc (YES)
HELD/RATIO:
SCS PREVIOUS RULINGS:

 One of the circumstances considered by the Court as indicative of waiver by the defendantappellant of any alleged defect of jurisdiction over his person arising from defective or even want of process,
is his failure to raise the question of jurisdiction in the CFI and at the first opportunity.
Defects in jurisdiction arising from irregularities in the commencement of the proceedings, defective
process or even absence of process may be waived by a failure to make seasonable objections.
Dalman v. City Court of Dipolog: As to the dismissal of the criminal case, the question of
jurisdiction which was never raised in said case before the trial court cannot be done at this stage and level.
CHU VOLUNTARILY SUBMITTED HIMSELF TO TC JURISDICTION
Chu could have questioned the jurisdiction of the lower court but he did not.
It can of course be argued that the failure to question the lower court's jurisdiction cannot be
accounted against Chu for his having been declared in default gave him no chance to participate in the court
deliberations and therefore no chance to raise the jurisdictional issue, but then, he could have done so, in
the subsequent pleadings he filed.
Besides, even assuming that such failure cannot be taken against him, the fact is he had
VOLUNTARILY submitted himself to the court's jurisdiction.
He filed a Notice of Appeal, Appeal Bond, Motion for Extension of Time to File Record on Appeal,
Record on Appeal, Motion for Withdrawal of Appearance, Notice of Appearance and Opposition to Plaintiff's
Motion to Dismiss Appeal and for Issuance of a Writ of Execution.
Not only did he submit pleadings and motions, but he likewise appeared in person, thru counsel in
the hearing held on May 14, 1979 at 8:30 a.m. and orally argued in open court on the pending incident.
Section 23, Rule 14 of the Rules of Court: the defendant's voluntary appearance in the action
shall be equivalent to service. Thus, under this principle, it has been consistently held by the Supreme Court
that the defect of summons is cured by the voluntary appearance of the defendant.
CA: No presumption can arise that he voluntarily submitted himself to the jurisdiction of the Court.
All of these actions taken by Chu are geared and mustered towards contesting the court's jurisdiction over
his person, or of attacking the validity of the judgment on jurisdictional grounds.
SC: NO. The Notice of Appeal unmistakably indicates the reason for the appeal, which reads:
2. That, the herein defendant is not contented with the aforesaid Decision for it is
contrary to the evidence and the law and the award of damages is so excessively unsupported by
any evidence to warrant the same; hence, he is appealing said Decision to the Hon. Court of
Appeals, Manila, both on questions of facts and law.
THUS: CA conclusion has no basis.
DEFENDANT DECLARED IN DEFAULT MAY APPEAL DEFAULT JUDGMENT EVEN IF HE DID NOT ASK THE
RTC TO SET ASIDE DEFAULT DECLARATION
HOWEVER! Distinction as to appeal:
(a) If an appeal is made without first asking the RTC to set aside the
declaration of default, and the appellate court sets aside on said declaration, all he can get is a
review of the RTC's default judgment without the opportunity of having the higher court
consider defense evidence (for the simple reason that no evidence was even adduced by him in
the RTC) (See Rule 41, sec. 2, par. 3, Rules of Court).
(b) If upon the other hand, the defendant first asks the RTC to set aside the
declaration of default (See Rule 18, secs. 2 and 3, Rules of Court), and he is able to prevail, the
declaration win be set aside, and he will now have the opportunity to present his evidence in
the RTC. Thus, even if he finally loses in the RTC's subsequent decision, his defense can be
considered, when appeal is made to the appellate tribunal. Of course, even if the default
declaration is not set aside despite his motion for the setting aside, he will be entitled to all notices
in the court proceedings, and can file any pleading he may wish to file, including the notice of
appeal. (See Rule 13, sec. 9, Rules of Court).
Aforementioned rules applicable to : Metropolitan TC, Municipal TC, Municipal Circuit TC; Not
to: Summary proceedings.
CHU WAS VALIDLY SERVED SUMMONS
CAB: Summons was timely issued and received by Chu In fact, he never denied actual receipt of
such summons but confined himself to the argument that the Sheriff should prove that personal service was
first made before resorting to substituted service,
Montalban v. Maximo: The constitutional requirement of due process exacts that the service be
such as may be reasonably expected to give the notice desired. Once the service provided by the rules

reasonably accomplishes that end, the requirement of justice is answered; the traditional notions of fair play
are satisfied; due process is served.
The burden on a plaintiff is not to be enlarged with a restrictive construction desired by the
defendant.
Finally in a last ditch effort, Chu insists that there was no valid service of summons because he is a
partner and general manager in San Pedro Sawmill.
Consequently, his wife, to whom summons and complaint were allegedly served not being
partnership, cannot receive the same under Section 13 of Rule 14 of the Rules of Court.
It has however been settled that actions must be brought by the real parties in interest and against
the persons who are bound by the judgment obtained therein.
The title of the case both in the trial court, in the Court of Appeals and in this Court shows that the
partnership is not a party. On the contrary, as previously stated private respondent himself assumed the
responsibility of the accident and is now estopped to disclaim the liabilities pertaining thereto.
CONCLUSION
Jurisdiction was properly acquired by the trial court over the person of respondent thru both service
of summons and voluntary appearance in court;
He was properly declared in default for not having filed any answer;
Despite Chus failure to file a motion to set aside the declaration of default, he has the right to
appeal the default judgment but in the appeal only the evidence of the Boticano may be considered, Chu not
having adduced any defense evidence; We agree with the findings of fact by the trial court, the same being
unrebutted.
DISPOSITION: WHEREFORE, the assailed decision and resolution of the Court of Appeals are REVERSED and
SET ASIDE, and the decision of the then Court of First Instance (now Regional Trial Court)of Nueva Ecija,
Cabanatuan City in Civil Case No. 6754 "Eliseo Boticano v. Manuel Chu, Jr. and Jaime Sigua" is hereby
REINSTATED.

Denso (Phils.), Inc. v. Intermediate Appellate Court (Chrissa)

FACTS: Kamayan sued Denso for rent and repair costs on their building that burned down. Denso filed a motion for
extension of time to file its answer, eventhough it counsel was already preparing the answer. The RTC denied the
motion for extension for allegedly not giving Kamayan a copy of the pleading and declared Denso in default. It
received Kamayans evidence and witnesses and ruled against Denso. Later, it reversed itself and let Denso present
its evidence but deprived Denso of its right to cross-examine witnesses already previously presented. Denso focused
on filing its MR on this issue which led to the court reviving it prior decision.
SC ruled that the motion for extension was arbitrarily denied. If a defendant is improperly declared in default, his time
to answer not having expired because of a timely ex parte motion for extension, he should be entitled to relief which
should consist not only in the admission of his responsive pleading, but of the right to cross-examine the witnesses
presented and to object to exhibits offered in his absence, if not indeed to have trial commence all over again.
February 27, 1987
DENSO (PHILS.), INC., petitioner, vs. THE INTERMEDIATE APPELLATE COURT AND KAYAMANAN
DEVELOPMENT CORPORATION, respondents.
NARVASA, J p:
On June 23, 1984, at about 11 o'clock in the evening, a fire broke out at the Nippondenso Building
at Pasong Tamo Ext., Makati, Metro Manila. The building was owned by the Kayamanan Development
Corporation and was then under lease to Denso (Phils), Inc.
The fire caused extensive damage. DENSO and its correspondent firm in Japan, NIPPONDENSO,
reportedly suffered losses amounting to P6,131,976.65 and P682,212.58, respectively. KAYAMANAN's loss
was placed at P1,750,000.00.
A year or so later, KAYAMANAN instituted an action against DENSO in the RTCat Makati, for
recovery of
(a) unpaid rentals from June, 1984 to March, 1985, amounting to an aggregate of P471,546.69
(b) the cost of repairing the damage caused by the fire to the leased building, it being alleged that
DENSO was bound to bear said cost under their lease agreement; and
(c) unrealized monthly rents and attorney's fees
Summons was served on DENSO on June 10, 1985 but not referred by DENSO to its counsel

until June 22, 1985.

This prompted the latter to file on June 25, 1985 a "MOTION FOR EXTENSION OF TIME TO
FILE ANSWER," pleading the late referral, the need to attend to other legal work of equal importance, as
well as the time requirement for study of the factual and legal points involved in the action, and praying, in
consequence, for an additional period of 15 days from June 25 within which to present the requisite
responsive pleading.
The motion closed with a "Notice of Hearing" addressed to the Clerk of Court, asking that the
motion be submitted to the court for consideration and approval immediately upon its receipt; and a notation
that a copy of the motion had been furnished plaintiff KAYAMANAN's counsel.
The copy of the motion was actually received by KAYAMANAN's counsel the following day, June
26, 1985.
The motion for extension was however denied by Judge Teofilo Guadiz, Jr. considering "that
there was no proof of service that plaintiff received a copy of said motion."
same day, KAYAMANAN presented an "Ex-parte Motion to Declare Defendant in Default"
asserting that the reglementary period of 15 days for DENSO to file answer had expired on June 25,
1985 without any answer having been filed, but making no reference to DENSO's motion for extension
Judge Guadiz promulgated an Order deeming the motion for default to be "well-taken," and
accordingly declaring DENSO in default and setting the reception of KAYAMANAN's evidence ex-parte on
the following day
at the appointed date , the Court did receive KAYAMANAN's evidence ex-parte, and four (4) days
later, on July 1, 1985, Judge Guadiz rendered judgment by default, sentencing DENSO to pay to
KAYAMANAN P471,546.69 as accumulated monthly rentals and cost of services from June, 1984 to
March, 1985; P2,856,000.30 as the reasonable cost of repair of the "damage building" (sic); and 10% of the
total amounts awarded, as attorney's fees.
evidently in complete ignorance thereof, DENSO's counsel drew up its answer to the complaint,
which was completed on July 5, 1985 and filed on July 8, 1985. To this pleading were appended copies of
letters from DENSO to KAYAMANAN appealing for a 30% rental rebate due to the prejudicial
consequences of the fire ; giving notice of the termination of the lease and formally turning over the leased
premises
DENSO learned of the order of default and the judgment by default. It then filed on August 2,
1985 a verified motion for reconsideration
Sept 3 ORDER: TC promulgated an Order setting aside, "in the interest of substantial justice,"
the order of default ; but hearing was rescheduled only for the presentation of defendant DENSO's
evidence, the Court explicitly stating that the evidence already presented (by KAYAMANAN) would remain
on record "without the right of cross examination on the part of the defendant." at DENSO's instance,
hearing was re-scheduled o
DENSO orally asked the Court to reconsider its Order of September 3, 1985 and accord it the
opportunity to cross-examine KAYAMANAN's witnesses, who had given their testimony ex-parte.
The Court opted to give DENSO time to move formally for reconsideration and reset the hearing
(which was again reset because the Judge was on official leave in November)
DENSO submitted its formal motion for reconsideration praying for the right to cross-examine
KAYAMANAN's witnesses
The record does not show that any opposition
DENSO received notice of the Order of the Court dated October 24, 1985 (the date of the hearing),
denying its (DENSO's) motion to be allowed to cross-examine KAYAMANAN's witnesses, and scheduling
the initial hearing for the presentation of the defense witnesses on November 21, 1985. Four days
afterwards, the Court promulgated another Order, denying DENSO's MR
"What is important is that defendant is afforded the opportunity to present its evidence and thus
enable the Court to see the other side of the coin, the defendant being offered a chance to present its
evidence in the Order
DENSO did not however receive a copy of this Order of November 12, 1985 until January 9, 1986,
the day finally set (by the Court) for the reception of its evidence. (Later received it)
DENSO then asked for deferment of the hearing so that it might elevate this adverse ruling to a
higher court. Denied
DENSO declared itself as not ready to proceed with the presentation of evidence, the Court
dictated an Order stating that "this being the third time that defendant failed to present its evidence
notwithstanding the chance given to it, the 'Decision' dated July 1, 1985 is revived." (pay blahblah)

 DENSO filed a petition for certiorari with the IAC praying for the annulment of the series of orders of
Judge Guadiz limited its review of the proceedings to the question of whether or not the petitioner was
properly denied the right of cross-examination.
IAC: the right of cross-examination is nonetheless waivable; that since petitioner received on
September 16, 1985 copy of the order of September 3, 1985 setting the judgment by default aside and
scheduling the case for hearing only for reception of defendant's evidence without right to cross-examine
plaintiff's witnesses but did not move for its reconsideration until October 24, 1985, or after a lapse of 38
days, such inaction amounted to a waiver of the claimed right to cross-examine; and, moreover, said motion
for reconsideration came too late because the order sought to be reconsidered was by then already final, the
applicable period of appeal being only fifteen (15) days from notice of said order. DENSO was guilty of
laches.
WON motion for extension was correctly denied (NO)
RATIO
The error in these pronouncements is immediately apparent. They assume that the order in
question is a final and appealable order, when it is in fact interlocutory. The distinction between final
and interlocutory orders is a well-settled one. llcd
"The concept of 'final' judgment, as distinguished from one which has 'become final' (or 'executory'
as of right [final and executory]), is definite and settled.
A 'final' judgment or order is one that finally disposes of a case, leaving nothing more to be done
by the Court in respect thereto, e.g., an adjudication on the merits which, on the basis of the evidence
presented at the trial declares categorically what the rights and obligations of the parties are and which party
is in the right; or a judgment or order that dismisses an action on the ground, for instance, of res judicata or
prescription. Once rendered, the task of the Court is ended, as far as deciding the controversy or
determining the rights and liabilities of the litigants is concerned. Nothing more remains to be done by the
Court except to await the parties' next move (which among others, may consist of the filing of a motion for
new trial or reconsideration, or the taking of an appeal) and ultimately, of course, to cause the execution of
the judgment once it becomes 'final' or, to use the established and more distinctive term, 'final and
executory.'
"Conversely, an order that does not finally dispose of the case, and does not end the Court's task of
adjudicating the parties' contentions and determining their rights and liabilities as regards each other, but
obviously indicates that other things remain to be done by the Court, is 'interlocutory,' e.g., an order
denying a motion to dismiss under Rule 16 of the Rules, or granting a motion for extension of time to file a
pleading, or authorizing amendment thereof, or granting or denying applications for postponement, or
production or inspection of documents or things, etc. Unlike a 'final' judgment or order, which is appealable,
as above pointed out, an 'interlocutory' order may not be questioned on appeal except only as part of an
appeal that may eventually be taken from the final judgment rendered in the case."
CAB: That the order of September 3, 1985 was interlocutory in character is beyond cavil. In setting
aside the order of default and the succeeding judgment by default, it left the case open for further
proceedings before the Trial Court, not the least of which was the reception of evidence for the petitioner.
Therefore, it could not become final in the sense that final judgments become "final and executory." No
appeal therefrom would lie except in the context and as part of an appeal from a subsequent final judgment
on the merits, and a motion for reconsideration thereof was not subject to the limiting fifteen-day period of
appeal prescribed for final judgments or orders.
NO LACHES
Neither will the Court consider laches as having set in by reason of petitioner's allowing thirty-eight
(38) days to pass before seeking a reconsideration of the order
such a relatively brief period cannot by any reckoning be deemed an unreasonable length of time,
while laches is a defense which operates independently of the statute of limitations and is subject
to no fixed periods, it is also founded on equity and may be invoked only if the delay in asserting a
claim has worked a change in the conditions such as would render unjust or inequitable the grant of
the relief sought.
elements must be present:
(1) conduct
on the part of defendant, or one under whom he claims, giving rise
to
the
situation complained of,
(2)
delay in asserting complainant's right after knowledge or notice of
defendant's

conduct and an opportunity to sue,

(3)
lack of knowledge or notice on the part of the defendant that complainant would assert
the right on which he bases suit, and
(4)
injury or prejudice to defendant in the event relief is accorded
unlike prescription, the defense of laches is not dependent on the existence of a statutory
period of limitation. It can be invoked without reckoning any specific or fixed period; it is sufficient that
there be an unreasonable and unexplained delay in bringing the action that its maintenance would already
constitute inequity or injustice to the party claiming it.
CAB: No perceivable prejudice would attach to the respondent if the petitioner were allowed
to cross-examine the witnesses it has presented. If said witnesses told the truth, respondent has nothing
to fear from their cross-examination, the effect of which would only be to enhance their credibility.
MOTION FOR EXTENSION OF TIME IMPROPERLY DENIED
Petitioner's motion for reconsideration of the order of September 3, 1985, therefore, hardly
deserved the short shrift that it received from the Intermediate Appellate Court because it was in no sense
untimely, and neither lapse of a statutory period nor laches could correctly be invoked to justify the summary
refusal to inquire into the antecedents of said order. What that Court considered to be moot and academic
an inquiry into the merits of Judge Guadiz's separate orders of June 26, 1985 denying the motion for
extension of time to file answer and declaring the petitioner in default lay precisely at the heart of the
matter before it and now before this Court. Both orders were premised on what the Judge perceived to be a
failure to comply with the rule that notice of motions must be served by the movant on all parties concerned
at least three (3) days prior to the hearing thereof.
What His Honor evidently overlooked was that the rule on notice is not unqualifiedly applicable
to all motions, and that there are motions which may be heard ex-parte
Among the latter class of motions are precisely those seeking is that they are noncontentiextension of time to plead, and the reason these are not strictly held to the requirement of
noticeous and do not as a rule involve the substantial rights of the other parties in the suit.
The motion for extension of time within which a party may plead is not a litigated motion
where notice to the adverse party is necessary to afford the latter an opportunity to resist the application,
but an ex-parte motion 'made to the court in behalf of one or the other of the parties to the action, in
the absence and usually without the knowledge of the other party or parties.'
As 'a general rule, notice of motion is required where a party has a right to resist the relief sought
by the motion and principles of natural justice demand that his rights be not affected without an opportunity
to be heard . . .'
"It has been said that 'ex-parte motions are frequently permissible in procedural matters, and
also in situations and under circumstances of emergency; and an exception to a rule requiring notice is
sometimes made where notice or the resulting delay might tend to defeat the objection (sic) of the motion.
Upon similar premises, this Court has consistently held, that motions for extension of time to
file record on appeal may be filed and passed upon ex-parte, and the rulings on that point are applicable
to motions for extension of time to file answer.
CAB: Petitioner's motion for extension of time to file answer was, therefore, improperly denied
for lack of proof of service on the respondent, said motion having been seasonably filed and, as already fully
shown, there being no impediment to its being heard ex-parte.
No pretense is made that the motion was denied as having been filed merely for delay, but even if
that ground were read into the otherwise clear terms of the order of denial which do not even hint thereat, it
would still be belied by the fact that what was sought was only an extension of the original reglementary
period as well as that prima facie meritorious reasons were pleaded for the desired extension.
The petitioner's answer, alleging defenses which, if established, could defeat the respondent's
claim, wholly or in part, was filed well within the period of extension prayed for.
While the order of default was in fact set aside by the Trial Judge on motion of the petitioner, he
failed to afford petitioner the complete relief that the arbitrary and improper issuance of said order and of the
earlier order denying the motion for extension clearly called for. Ideally, the slate should have been wiped
clean by setting aside also the hearing at which the respondent presented its evidence ex-parte, so that the
parties would stand on even terms with neither having the advantage of the other.
instead, the Judge prescribed that the evidence presented by the KAYAMANAN would remain in
the record without right on the part of DENSO to cross-examine the witnesses who had already testified
he should be entitled to relief which should consist not only in the admission of his responsive

pleading, but of the right to cross-examine the witnesses presented and to object to the exhibits offered in
his absence, if not indeed to have trial commence all over again.
petition is granted. The Decision of the Intermediate Appellate Court under review is reversed and set aside.
Petitioner's answer is ordered admitted.
X. PROVISIONAL REMEDIES
A. Notice of Lis Pendens
Spouses Po Lam v. CA (Mel)
December 6, 2000
SPOUSES ROY PO LAM and JOSEFA ONG PO LAM
vs.
COURT OF APPEALS and FELIX LIM now JOSE LEE
RESOLUTION; MELO, J p:
SUMMARY: Lots 1557 & 1558 were sold by Lim Chiong to LAHCO. Lims brother, Felix, filed an annulment case over
the deeds of sale & titles on the lands. He also filed w/ Register of Deeds a notice of lis pendens over the 2 lots. CFI
declared LAHCO owner of the 2 lots and ordered the cancellation of the notice lis pendens over 2 lots; however only
notice on TCT over Lot 1557 was cancelled as duplicate owners copy of TCT over Lot 1558 was w/ Continental
Bank. Subsequently, LAHCO sold the 2 lots to Sps. Po Lam who caused the cancellation of notice of lis pendens over
Lot 1557 and eventually both titles were replaced w/ their names. CA affirmed. Felix filed motion for extension of time
to file MR; then MR but was denied. Upon 2 nd MR, CA, in a Resolution, granted to Felix a right of redemption which,
however, upon execution at CFI was said to be void albeit reserving Felixs right to institute a case on w/n Sps. Po
Lams acquired lots in good faith. SC held that Sps. Po Lam are purchasers in bad faith because of the subsistence
of the notice of lis pendens inscribed over Lot 1558 at the time of purchase & since Lot 1558 was sold simultaneously
with Lot 1557, even if the notice of lis pendens on Lot 1557 had already been cancelled, they were purchasers in bad
faith even in regard to said lot. Sps. Po Lam filed MR. SC HELD: Granted MR, set aside its previous decision.
Doctrine of lis pendens rests on public policy, not notice. Thus, upon cancellation of the notice of lis pendens, Sps. Po
Lam cannot then be considered as having constructive notice of any defect in the title of LAHCO as to make them
purchasers in bad faith of the lots in dispute. To hold Sps. Po Lam still bound by the notice of lis pendens inscribed on
TCT No. 2581 despite its subsequent cancellation on May 20, 1974, would render said cancellation an empty,
unavailing, and purposeless act, which could not have been the intent of the law.
DOCTRINE: While the doctrine of lis pendens is frequently spoken of as one of implied or constructive notice, the
doctrine is not founded on any idea of constructive notice, since its true foundation rests on principles of public policy
and necessity, the purpose of which is to keep the subject matter of the litigation within the power of the court until the
judgment or decree shall have been entered; otherwise by successive alienations pending the litigation, its judgment
or decree shall be rendered abortive and impossible of execution. The purchaser pendente lite is affected, not by
notice, but because the law does not allow litigating parties to give to others, pending the litigation, rights to the
property in dispute as to prejudice the opposite party.
NATURE: MR of previous SC decision.
FACTS:
Lots No. 1557 & 1558 are prime commercial lots located in the heart of Legaspi City's commercial
district. They were sold by Lim Kok Chiong to the Legaspi Avenue Hardware Co. (LAHCO) sometime in the
early 60's.
Dec. 4, 1964: However, Felix Lim, Lim Kok Chiong's brother, filed a complaint with CFI Albay
against his brother and LAHCO to annul the deeds of sale covering said lots on the ground that the sale
included the 3/14 pro-indiviso portion of the lots which Felix Lim had inherited from his foster parents. [First
Annulment Case]
Jan. 27, 1365: Felix filed with the Register of Deeds of Albay a notice of lis pendens over the 2
lots (inscribed on TCTs No. 2580 and 2581, covering Lots No. 1557 and 1558, respectively).
Later, CFI, on motion of Felix, dropped the case against Lim Kok Chiong.
CFI (Mar. 15, 1969): Declared LAHCO to be the absolute owner of 2 above-mentioned lots.
Ordered the cancellation of the notice of lis pendens inscribed on the titles of the 2 lots.
Notice of lis pendens inscribed on TCT No. 2580 (on Lot 1557) was
cancelled.
However, the notice of lis pendens annotated on TCT No. 2581 (on Lot 1558)
remained uncancelled, allegedly because the duplicate owner's copy of said TCT was with the

Continental Bank, Lot No. 1558 having been mortgaged by LAHCO.

Felix appealed to CA.
May 28, 1970: During the pendency of the appeal, LAHCO sold the 2 lots to Pet. Sps. Po Lam
May 20, 1974: Sps. Po Lam, by virtue of previous CFI order, had the notice of lis pendens still
inscribed on TCT No. 2581 (on Lot 1558) cancelled.
Felix did not move for the reinstatement of the cancelled notices of lis pendens on TCT No. 2580
and 2581. Thereafter, said TCTs were themselves cancelled and replaced by TCT No. 8102 & 13711,
respectively, in the name of Sps. Po Lam.
CA Decision (Apr. 29, 1980): Affirmed CFI decision
May 16, 1980: Felix's counsel received a copy thereof.
May 23, 1980: Felix's counsel filed a motion for extension of time to file a MR. CA gave Felix up
to June 20, 1980 to file one.
June 17, 1980: Felix filed a MR, which was, however, denied.
July 14, 1980: Without leave of court, Felix filed a second MR.
CA Resolution (Mar. 11, 1981): Acted upon favorably. Felix, by returning P20k to LAHCO, could
exercise the right of redemption over the 2 lots sold by Lim Kok Chiong to LAHCO.
LAHCO asked SC for an extension of time to file a petition for review. However, none was ever
filed. Thus, SC remanded the case to CFI for execution.
Nov. 12, 1981: Felix Lim moved in Annulment Case at CFI to have CA Resolution (granting him
right of redemption) annotated on TCT No. 8102 and 13711.
Also moved for the issuance of a writ of execution to enforce said resolution.
Also filed a motion praying that the Clerk of Court execute a deed of conveyance
over the disputed lots in his favor.
CFI: All motions denied on the ground that Sps. Po Lam could not be bound thereby since they
were not impleaded as party-litigants in the Annulment Case or appeal to CA. However, it reserved to Felix
"the right to institute an action on W/N the acquisition of the properties by Sps. Po Lam were made in good
faith or bad faith."
Thus, Felix filed a complaint for reconveyance and annulment of the sale and titles of said lots
with RTC Legaspi. [2nd Annulment Case]
Sept. 19, 1985: Felix Lim filed with TC (previous CFI) in First Annulment Case, a motion to include
as defendants Sps. Po Lam, as well as to execute CA resolution.
TC: Both motions were denied. On appeal, CA upheld the denial (previous Mar. 11, 1981 CA
resolution null & void). Felix appealed the decision to SC. [First Appeal]
June 1970: In the meantime, 1 month after Sps. Po Lam purchased the 2 lots from LAHCO, they
leased the commercial building erected on Lot No. 1557 to Jose Lee for 1 year.
After the contract expired, Lee continued to occupy the same, paying monthly
rentals
However, after Sept. 15, 1981, Lee refused to pay rentals to Sps. Po Lam,
informing them that he would deposit the same in court since Felix had promised to sell the
property to him.
Thus, Sps. Po Lam filed an unlawful detainer case against him with the MeTC of Legaspi City.
Oct. 29, 1990: Felix assigned all his rights to and interests in the disputed lots to Lee, who then
substituted Felix as party plaintiff, now private respondent.
MeTC Legaspi (Dec. 19, 1993): Sps. Po Lam are lawful owners of Lot No. 1557.
RTC/CA: Affirmed (Mar. 11, 1981 CA resolution null & void). Thus, Lee filed an appeal with SC.
[Second appeal]
Case consolidated with first appeal. In both cases, CA ruled that previous CA resolution (Mar. 81)
was null and void on the ground that previous CA decision (Apr. 80) had already become final and
executory when CA resolution was promulgated.
Felix's counsel should not have filed a motion for extension of time to file a MR,
the same being a prohibited pleading pursuant to Habaluyas v. Japson.
Being a prohibited pleading, the extension granted to Lim did not arrest the
running of the 15-day period. Thus, when Lim filed his MR on June 17, 1980, the same was
already filed out of time, he having received a copy of the judgment of affirmance on May 16,
1980.
SC (Feb. 18, 1988): Modified CA ruling. Portions of appealed decisions dealing with CA Mar. 81
resolution Reversed & Set aside. CA 1981 resolution Reinstated. Decisions Affirmed in all other respects.
Habaluyas v. Japson (1985) must be applied prospectively so that "when

motion for extension of time to file a MR was filed thru registered mail on May 23, 1980, it was
deemed properly filed contrary to court's ruling that it was a prohibited pleading."
In the interim, 2nd Annulment Case for reconveyance and annulment of sale and titles filed by Lim
(now Lee) went on.
RTC Legaspi (Jan. 14, 1992): Declared Sps. Po Lam as transferees pendente lite and not
purchasers in good faith of Lots No. 1557 and 1558. Ordered to reconvey said lots to Lee.
Sps. Po Lam were bound by CA Mar. 81 resolution
Sps. Po Lam appealed to CA
CA (June 30, 1993): Affirmed RTC.
Sps. Po Lam thus filed a petition for certiorari with SC.
SC Division (Oct. 13, 1999): Under J. Purisima, denied petition and affirmed CA decision. Sps. Po
Lam could not be deemed buyers in good faith either in Lot 1558 or Lot 1557
As to Lot 1558: Sps. Po Lam, who purchased Lot 1558 subject of a notice of lis
pendens w/c remained uncancelled at time of sale, are not purchasers in good faith and are
consequently bound by CA Resolution dated March 11, 1981
The annotation of lis pendens on TCT No. 2581 (covers Lot
1558) served as notice to them that the said lot is involved in a pending litigation.
One who deals with property subject of a notice of lis
pendens cannot invoke the right of a purchaser in good faith. Neither can he
acquire better rights than those of his predecessor in interest.
A transferee pendente lite stands in the shoes of the
transferor and is bound by any judgment or decree which may be rendered for or
against the transferor.
As to Lot 1557 (Notice of lis pendens already cancelled at time of sale): Still not
purchasers in good faith.
A purchaser cannot close his eyes to facts which should put a
reasonable man on guard and claim that he acted in good faith in the belief that there was
no defect in the title of the vendor.
His mere refusal to believe that such a defect exist, or his
willful closing of his eyes to the possibility of the existence of a defect on his
vendor's title, will not make him innocent purchaser for value, if it develops afterwards
that the title was in fact defective, and it appears that he had notice of such defect as
would have led to its discovery had he acted with that measure of precaution which may
reasonably be required of a prudent man in like situation.
Circumstances which should have placed Sps. Po Lam on guard. Although
notice of lis pendens over Lot 1557 has been cancelled, such inscription still appears on its TCT
together with the cancellation of the notice of lis pendens.
This, coupled with the non-cancellation of the notice of lis pendens on TCT
2581 (covering Lot 1558), should have sufficiently alerted Sps. Po Lam vis-a-vis a possible
defect in the title of LAHCO, especially bec. both lots were simultaneously sold to them in a single
deed of sale.
(INSTANT CASE) Undeterred, Sps. Po Lam filed MR received on Nov. 15, 1999, alleging that it
was error to hold them as purchasers in bad faith
Lee filed opposition, as well as a separate comment, to which Sps. Po Lam submitted a reply.
However, MR remained unacted upon until the retirement of J. Purisima in Oct. 2000,
notwithstanding the fact that it was calendared or placed in SCs agenda a number of times, as well as the
urgings of both parties to have the matter resolved. With J. Purisima leaving SC & in accordance with A.M.
No. 99-8-99 promulgated by SC En Banc, the matter of MR was assigned by raffle to J. Melo
ISSUE: Whether Sps. Po Lam can be treated purchasers in good faith of Lot 1557 & Lot 1558 covered by TCTs
considering that the notice of lis pendens thereon had been already cancelled at the time of the sale? (YES)
HELD: The motion for reconsideration is impressed with merit.
RATIO:
PURCHASERS IN GOOD FAITH: CFI (Mar. 15, 79) already ordered cancellation of notice of lis pendens on
titles before sale
SC Previous Decision: Po Lams are purchasers in bad faith because of the subsistence of the

notice of lis pendens inscribed over Lot 1558 at the time of purchase. Since Lot 1558 was sold
simultaneously with Lot 1557, even if the notice of lis pendens on Lot 1557 had already been cancelled, they
were purchasers in bad faith even in regard to said lot.
SC in this Resolution: Even if a notice of lis pendens over Lot No. 1558 was still subsisting at the
time Sps. Po Lam bought the property from LAHCO, there also was a court order (Mar. 15, 79) ordering
that the annotation be cancelled, as in fact, it was cancelled on May 20, 1974.
POSSESSOR IN GOOD FAITH: "One who is unaware that there exists a flaw which invalidates his
acquisition of the thing (Art. 526).
GOOD FAITH: Possessor's belief that the person from whom he received the thing was the owner
of the same and could convey his title (Pio v. CA).
CASE AT BAR: Notice of lis pendens was already ordered cancelled when Sps. Po Lam bought
Lot 1558 even if it was not yet cancelled. Hence, they cannot be considered as being "aware of a flaw
which invalidates their acquisition of the thing" since the alleged flaw, the notice of lis pendens, was
already being ordered cancelled at the time of the purchase.
Notice of lis pendens on TCT 2581 over Lot 1558 eventually Cancelled on May 20, 1974
This cancellation was pursuant to the order of the trial court in 1 st annulment case. Lim did not
move for the reinstatement of the cancelled notices of lis pendens.
SC Decision: Cancellation of notice of lis pendens would have no effect. They are still considered
as having notice of a possible defect in the title of LAHCO, making them purchasers in bad faith.
SC in this Resolution: Hewing to such an interpretation misunderstands the nature and effect of a
notice of lis pendens.
Meaning, nature, recording, and effects of a notice of lis pendens are stated in Sec. 14, Rule 13 of
the 1997 Rules of Civil Procedure.
Sec. 14, Rule 13 of the 1997 Rules of Civil Procedure: Notice of lis pendens.
In an action affecting the title or the right of possession of real property, the plaintiff and the
defendant, when affirmative relief is claimed in his answer, may record in the office of the
registry of deeds of the province in which the property is situated a notice of the pendency of
the action. Said notice shall contain the names of the parties and the object of the action or
defense, and a description of the property in that province affected thereby. Only from the time of
filing such notice for record shall a purchaser, or encumbrances of the property affected thereby,
be deemed to have constructive notice of the pendency of the action, and only of its pendency
against the parties designated by their real names.
The notice of lis pendens hereinabove mentioned may be cancelled only upon
order of the court, are proper showing that the notice is for the purpose of molesting the adverse
party, or that it is not necessary to protect the right of the party who caused it to be recorded.
LIS PENDENDS: Literally means a pending suit or a pending litigation
DOCTRINE OF LIS PENDENS: Jurisdiction, power, or control which a court acquires over property
involved in a suit, pending the continuance of the action, and until final judgment therein (54 C.J.S. Lis
Pendens 1).
A notice of lis pendens is an announcement to the whole world that a particular real property is
in litigation, serving as a warning that one who acquires an interest over said property does so at his own
risk, or that he gambles on the result of the litigation over the said property (AFPMBAI v. CA).
FILING A NOTICE OF LP: Charges all strangers with a notice of the particular litigation referred to
therein and, therefore, any right they may thereafter acquire on the property is subject to the eventuality of
the suit (Laroza v. Guia).
PURPOSE: Availed of, to protect the real rights of the registrant while the case involving such
rights is pending resolution or decision. With the notice of lis pendens duly recorded, and while it remains
uncancelled, the registrant could rest secure that he would not lose the property or any part of it during the
litigation (People v. RTC).
FILING EFFECTS: (1) keeps the subject matter of the litigation within the power of the court until
the entry of the final judgment so as to prevent the defeat of the latter by successive alienations; and (2)
binds a purchaser of the land subject of the litigation to the judgment or decree that will be promulgated
thereon whether such a purchaser is a bona fide purchaser or not; but (3) does not create a non-existent
right or lien (Somes v. Govt).
BASIS: The doctrine of lis pendens is founded upon reason of public policy and necessity,
the purpose of which is to keep the subject matter of the litigation within the power of the court until the

judgment or decree shall have been entered; otherwise by successive alienations pending the litigation, its
judgment or decree shall be rendered abortive and impossible of execution (Laroza v. Guia).
54 C.J.S. Lis Pendens: The doctrine of lis pendens is based on considerations of public policy
and convenience, which forbid a litigant to give rights to others, pending the litigation, so as to affect the
proceedings of the court then progressing to enforce those rights, the rule being necessary to the
administration of justice in order that decisions in pending suits may be binding and may be given full
effect, by keeping the subject matter in controversy within the power of the court until final adjudication, that
there may be an end to litigation, and to preserve the property that the purpose of the pending suit may not
be defeated by successive alienations and transfers of title.
51 Am Jur 2d, Lis Pendens, 3: Once a court has taken cognizance of a controversy, it should be
impossible to interfere with consummation of the judgment by any ad interim transfer, encumbrance, or
change of possession.
CASE AT BAR: To hold that Sps. Po Lam are still bound by the results of the
litigation over the property, despite and notwithstanding the cancellation of the notices of lis
pendens prior to the termination of litigation, would consider the doctrine of lis pendens as one of
implied or constructive notice. This view is erroneous.
DOCTRINE NOT FOUNDED ON NOTICE: While the doctrine of lis pendens is frequently spoken
of as one of implied or constructive notice, according to many authorities, the doctrine is not founded on any
idea of constructive notice, since its true foundation rests on principles of public policy and necessity.
The lis pendens annotation, although considered a "general notice to all the
world, it is not correct to speak of it as part of the doctrine of notice; the purchaser pendente lite is
affected, not by notice, but because the law does not allow litigating parties to give to others,
pending the litigation, rights to the property in dispute as to prejudice the opposite party."
(Tirado v. Sevilla).
"The doctrine of lis pendens, as generally understood and applied by the courts
of this country, is not based upon presumption of notice, but upon a public policy, imperatively
demanded by a necessity which can be met and overcome in no other way. It is careless 'use of
language which has led judges to speak of it as notice, because it happens to have in some
instance similar effect with notice' (Smith v. Kimball)."
CASE AT BAR: Since the doctrine rests on public policy, not notice, upon the cancellation of the
notice of lis pendens, Sps. Po Lam cannot then be considered as having constructive notice of any
defect in the title of LAHCO as to make them transferees pendente lite and purchasers in bad faith of Lots
No. 1557 and 1558.
To hold Sps. Po Lam still bound by the notice of lis pendens inscribed on TCT No. 2581 despite
its subsequent cancellation on May 20, 1974, would render said cancellation an empty, unavailing, and
purposeless act, which could not have been the intent of the law. Lex neminem cogit ad van seu inutilia
peragenda. The law will not compel one to do useless things.
While the notice of lis pendens is duly recorded and as long as it remains uncancelled, the litigant
can rest secure that he would not lose the property or any part of it during litigation. Conversely,
cancellation of the notice of pendency terminates the effects of such notice.
CASE AT BAR: With the cancellation of the notices of lis pendens, the effects of
such notice were terminated, resulting in Sps. Po Lam not being bound thereby. They cannot be
considered transferees pendente lite and purchasers in bad faith of the property.
Moreover, since its operation is arbitrary and it may be harsh in particular instances, the doctrine of
lis pendens is to be strictly construed and applied. It should not be extended without strict necessity (54
C.J.S. Lis Pendens 1).
CASE AT BAR: To consider the Po Lam spouses still bound by the notice of lis
pendens even after the same had been cancelled would be extending the doctrine when there is
no reason therefor.
LACHES: Also, Felixs claim is barred by the equitable principle of laches.
At the time the notices of lis pendens were cancelled in 1969 & 1974, Felix did
not move to reinstate the same. Nor did he act when TCTs were replaced by new TCTs.
Instead, he waited 7 years (1981) to have his claim on the disputed pieces of
property recognized. His long inaction and passivity in asserting his rights over the disputed
property precludes him from recovering them from Sps. Po Lam.
DISPOSITIVE: MR of Sps. Po Lam GRANTED. SC decision VACATED and SET ASIDE. A new judgment Entered

declaring Sps. Po Lam to be PURCHASERS IN GOOD FAITH and TCTs 8102 & 13711 in their name valid, without
prejudice on the part of Jose Lee to file a separate action for reimbursement for the value of said property from the
Legaspi Avenue Hardware Co.
B. Preliminary Attachment
Philippine British Assurance Co., Inc. v. IAC (Joan)
International Container Terminal Services, Inc. v. CA (Erika)
October 7, 1992
INTERNATIONAL CONTAINER TERMINAL SERVICES, INC., petitioner, vs. THE HON. COURT OF APPEALS, HON.
EDILBERTO G. SANDOVAL, Presiding Judge of Branch IX, Regional Trial Court, National Capital Judicial Region,
C.F. SHARP, INC. and FIRST INTEGRATED BONDING & INSURANCE CO., INC., respondents.
CRUZ, J
SUMMARY: Sharp sued ICTSI and others in connection with the Manila Container Terminal contract negotiations.
RTC issued a writ of preliminary injunction upon posting by Sharp of a 10M-bond issued by Integrated Bonding and
Insurance Co. ICTSI filed an answer with a compulsory counterclaim against Sharp. However, when the issuance of
the injunction was brought before the SC, the SC nullified the same. Thus, PPA (ICTSIs codefendant) moved to
dismiss Sharps complaint. ICTSI adopted PPAs MTD. Complaint was dismissed by the RTC together with
compulsory counterclaim. ICTSI filed an MR insofar as its counterclaim was also dismissed. It also notified First
Integrated Bonding that it was claiming for damages against Sharps bond for the revoked injunction. MR was denied.
CA upheld RTC, holding that the application contemplated in Sec. 20, Rule 57 is distinct and separate from the
compulsory counterclaim asserted in ICTSIs answer (i.e. CA said it should have filed an application separate from its
counterclaim). SC disagreed, applying the rules in cases of wrongful preliminary attachment. However, since ICTSI
itself aborted its efforts when it joined PPA in its MTD, it can no longer recover damages.
DOCTRINE:
Raymundo vs. Carpio: the proper practice to be followed in cases where it is desired to obtain
damages by reason of the wrongful issuance of an attachment in favor of plaintiff that an issue would be
tendered on the subject by the defendant in his answer in the main case.
The rules governing the application for damages against the surety bond posted in support of the
application for a writ of preliminary attachment are also applicable by analogy to preliminary injunction.
SEE RATIO for Principles laid down by SC
FACTS:
Feb 10, 1988: private respondent Sharp, Inc. filed with RTC Manila a complaint for prohibition with
prayer for preliminary injunction against the Secretary of Transportation and Communications, the Philippine
Ports Authority (PPA), E. Razon, Inc., and petitioner International Container Terminal Services Inc. (ICTSI)
In connection with the Container Terminal at the Port of Manila contract
March 7, 1988: RTC issued a writ of preliminary injunction upon the posting by Sharp of a
10M-bond issued by the Integrated Bonding and Insurance Co.
Same day: ICTSI filed an answer with a compulsory counterclaim against Sharp for its "unfounded
and frivolous action."
claimed that as a consequence of the complaint and the writ of preliminary
injunction, it had suffered injuries which if monetized would amount to more than P100M
Mar 17, 1988: the writ of preliminary injunction was nullified by the SC
Sharp was not a proper party to stop the negotiation and awarding of the contract
for the development, management and operation of the Container Terminal at the Port of Manila.
Petition was premature because Sharp had not exhausted the administrative
remedies (PPA, the Bidding Committee, and the OP)
Mar 25, 1988: PPA filed a motion to dismiss Sharp's complaint on the above-stated grounds (not a
proper party, premature)
Apr 8, 1988: PPAs motion was adopted by ICTSI in a manifestation
RTC, Judge Edilberto Sandoval (July 13, 1988): dismissed the complaint as well as the
counterclaim
August 13, 1988: ICTSI filed MR insofar as the order dismissed its counterclaim. Meanwhile, it
gave notice to the First Integrated Bonding and Insurance Co., Inc. that it was claiming damages
against Sharp for the revoked injunction.
Nov 10, 1988: MR denied
compulsory counterclaim arises out of or is so intertwined with the transaction or

occurrence that is the subject matter of the complaint so that by the dismissal of the latter, the
same has to be discarded, specially since the complaint was dismissed without any trial.
CA: upheld RTC
(1) Compulsory counterclaims for actual damages are not the claims
recoverable against the bond.
(2) ICTSI's manifestation adopting PPA's MTD did not contain any reservation.
Hence, Sec. 2, Rule 17 will not apply. The counterclaim for damages being compulsory in nature,
for which no filing fee has been paid, was correctly dismissed.
(3) Sec. 20 of Rule 57 provides that "such damages (recoverable against
the bond) may be awarded only upon application and after proper hearing, and shall be
included in the final judgment.
The application must be filed before the trial, with due
notice to the attaching creditor and his surety or sureties, setting forth the facts
showing his right to damages and the amount thereof.
The application contemplated in Sec. 20 is distinct and
separate from the compulsory counterclaim asserted in the answer.
(4) The filing in court of claim against the injunction bond, with copy
thereof being furnished the surety, was not sufficient notice to the latter of an application
against it under this bond.

ISSUE:
1. W/N ICTSIs counterclaim was correctly dismissed (YES)
2. W/N a claim for damages for the wrongful issuance of a writ of preliminary injunction can be
made in the counterclaim (YES)
RATIO:
(1) COUNTERCLAIM WAS COMPULSORY; CORRECTLY DISMISSED
ICTSI:
Dismissal of the complaint upon defendant's motion did not necessarily entail dismissal of
defendant's compulsory counterclaim.
Sharp:
The dismissal of the complaint upon petitioner's motion necessarily entailed the dismissal of the
compulsory counterclaim.
ICTSIs counterclaim was compulsory
The counterclaim for damages alleged that the delay in the award of the MICT contract caused by
Sharp's complaint and writ of preliminary injunction jeopardized ICTSI's timetable to attain the projected
volumes in its winning bid and, as well, caused it to incur litigation expenses, including attorney's fees.
Counterclaim is compulsory where: (1) it arises out of, or is necessarily connected with, the
transaction or occurrence that is the subject matter of the opposing party's claim; (2) it does not require for
its adjudication the presence of third parties of whom the court cannot acquire jurisdiction; and (3) the court
has jurisdiction to entertain the claim.
ICTSI's counterclaim was clearly compulsory. ICTSI itself so denominated it.
There is no doubt that the same evidence needed to sustain it would also refute the cause of action
alleged in the private respondent's complaint; in other words, the counterclaim would succeed only if the
complaint did not.
It could not remain pending for independent adjudication, that is, without adjudication by the court
of the complaint itself on which the counterclaim was based.
Rule 17, Sec. 2: Dismissal by order of the court. Except as provided in the
preceding section, an action shall not be dismissed at the plaintiff's instance save upon order of the
court and upon such terms and conditions as the court may deem proper. If a counterclaim has
been pleaded by a defendant prior to the service upon him of the plaintiff's motion to
dismiss, the action shall not be dismissed against the defendant's objection unless the
counterclaim can remain pending for independent adjudication by the court. Unless
otherwise specified in the order, a dismissal under this paragraph shall be without prejudice.
To begin with, ICTSI itself joined the PPA in moving for the dismissal of the complaint; or put
passively, it did not object to the dismissal of the private respondent's complaint.
Secondly, the compulsory counterclaim was so intertwined with the complaint that it could
not remain pending for independent adjudication by the court after the dismissal of the complaint

which had provoked the counterclaim in the first place.

As a consequence, the dismissal of the complaint (on ICTSI's own motion) operated to also dismiss
the counterclaim questioning that complaint.
(2) CLAIM FOR DAMAGES MAY BE MADE IN THE COUNTERCLAIM
ICTSI:
A claim for damages arising from a wrongfully obtained injunction may be made in a counterclaim.
There is no rule requiring a particular form of notice to the surety of petitioner's claim against the
injunction bond.
Sharp:
The compulsory counterclaim raised by petitioner in its answer did not partake of the nature of a
claim for damages against the injunction bond.
The notice given by ICTSI to the surety was fatally defective and did not comply with the
requirements of the Rule of Court.
Appeal, not certiorari, was the proper remedy of petitioner.
SC: ICTSI is correct
Raymundo vs. Carpio: the proper practice to be followed in cases where it is desired to obtain
damages by reason of the wrongful issuance of an attachment in favor of plaintiff that an issue
would be tendered on the subject by the defendant in his answer in the main case.
It is not necessary that the defendant wait until it is determined by a final
decision in the main action that the plaintiff is not entitled to recover in order to present the
question of his right to damages.
All questions which are material to the main action or which are incidental thereto
but depending thereon should be presented and litigated at the same time with the main action, so
as to avoid the necessity of subsequent litigation and consequent loss of time and money.
However, there is no glossing away the fact that it was ICTSI itself that caused the dismissal
of its counterclaim when it not only did not object to, but actually moved for, the dismissal of the
complaint. ICTSI cannot undo that act.
If it wanted the counterclaim to subsist, it should have objected to the dismissal of the complaint or
at least reserved its right to prosecute it, assuming this would still be possible.
ICTSI now claims that there is no law requiring that reservation, but there is no law
presuming it either.
ICTSI cannot simply say now that it intended all the time to preserve its counterclaim when it knew
that under Rule 17, Sec. 2 "if a counterclaim has been pleaded by a defendant prior to the service upon him
of a motion to dismiss, the action shall not be dismissed against the defendant's objection unless the
counterclaim can remain pending for independent adjudication by the Court."
The counterclaim was not permissive. A counterclaim is permissive if it does not arise out of nor
is it necessarily connected with the subject matter of the opposing party's claim. It is not barred even
if not set up in the action.
ICTSI's counterclaim was within the jurisdiction of the trial court. Most importantly, it had no
independent existence, being merely ancillary to the main action.
ICTSI knew all this and did not object to the dismissal of the complaint. On the contrary, it actually
moved to dismiss that main action, and in so doing also moved, in effect, for the dismissal of its
counterclaim.
The Court can stop at this point. For clarification of certain issues raised by the parties, however, the
following reminders are made:
The rules governing the application for damages against the surety bond posted in support
of the application for a writ of preliminary attachment are also applicable by analogy to preliminary
injunction.
Sec. 20 of Rule 57: Claim for damages on account of illegal attachment. If the
judgment on the action be in favor of the party against whom attachment was issued, he may
recover, upon the bond given or deposit made by the attaching creditor, any damages resulting
from the attachment. Such damages may be awarded only upon application and after proper
hearing, and shall be included in the final judgment. The application must be filed before the
trial or before appeal is perfected or before the judgment becomes executory, with due notice
to the attaching creditor and his surety or sureties, setting forth the facts showing his right to
damages and the amount thereof.

 If the judgment of the appellate court be favorable to the party against whom the attachment was
issued, he must claim damages sustained during the pendency of the appeal by filing an application with
notice to the party in whose favor the attachment was issued or his surety or sureties, before the judgment
of the appellate court becomes executory. The appellate court may allow the application to be heard and
decided by the trial court.
Interpreting this rule, the Court has laid down the following principles:
(1) That damages resulting from preliminary attachment, preliminary injunction,
the appointment of a receiver, or the seizure of personal property, the payment of which is secured
by judicial bond, must be claimed and ascertained in the same action with due notice to the surety
(2) That if the surety is given such due notice, he is bound by the judgment that
may be entered against the principal, and writ of execution may issue against said surety to enforce
the obligation of the bond
(3) That if no notice is given to the surety of the application for damages, the
judgment that may be entered against the principal cannot be executed against the surety without
giving the latter an opportunity to be heard as to the reality or reasonableness of the alleged
damages. In such case, upon application of the prevailing party, the court must order the surety to
show cause why the bond should not respond for the judgment for damages. If the surety should
contest the reality or reasonableness of the damages claimed by the prevailing party, the court
must set the application and answer for hearing. The hearing will be summary and will be limited to
such new defense, not previously set up by the principal, as the surety may allege and offer to
prove.
These rules are mandatory and failure to observe them deprives the aggrieved party of the right to
proceed against the surety bond.
Due notice to the adverse party and its surety setting forth the facts supporting the applicant's right
to damages and the amount thereof under the bond is indispensable. No judgment for damages may be
entered and executed against the surety without giving it an opportunity to be heard as to the reality or
reasonableness of the damages resulting from the wrongful issuance of the writ.
ICTSI COULD HAVE INTRODUCED EVIDENCE IF ITS COUNTERCLAIM WAS NOT DISMISSED
ICTSI: it complied with the requirements when it served the bonding company with notice of its
claim for damages on Aug 31, 1988.
SC: It is correct. No particular form for such notice is required.
The rule also clearly says that the application for damages and the notice to the surety may be
made at any time before the judgment becomes final and executory. ICTSI served the notice on the surety
during the pendency of the MR, before the judgment dismissing the complaint and the counterclaim had
become final and executory.
Had the counterclaim not been dismissed with the dismissal of the complaint, ICTSI could
have introduced evidence to show that it was prejudiced by the filing of the complaint and the
obtention of the writ of preliminary injunction by Sharp.
But ICTSI itself aborted that effort when it joined PPA in moving for the dismissal of Sharp's
complaint, knowing that it was the basis of its own compulsory counterclaim.
For failing to object when it should have, to keep its counterclaim alive, and instead moving to
dismiss the complaint from which the counterclaim derived its life, ICTSI must now bear the consequences
of its own negligence.
DISPOSITION: Petition denied. Costs against the petitioner.
Davao Light and Power Co. v. CA (Kat)
November 29, 1991
DAVAO LIGHT & POWER CO., INC. vs.
THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or QUEENSLAND TOURIST INN, and TEODORICO
ADARNA,
NARVASA, J
SUMMARY: Davao Light filed complaint for recovery of sum of money with ex parte application for WPA. The
summons and a copy of the complaint, as well as the writ of attachment and a copy of the attachment bond, were
served on defendants; and pursuant to the writ, the sheriff seized properties belonging to the latter. SC: Writs of
attachment may properly issue ex parte.

DOCTRINE: (Ang daming diniscuss ng case na to HAHAH. Feeling lecturer si ponente)

Writs of attachment may properly issue ex parte provided that the Court is satisfied that the relevant requisites
therefore have been fulfilled by the applicant, although it may, in its discretion, require prior hearing on the application
with notice to the defendant; but that levy on property pursuant to the writ thus issued may not be validly effected
unless preceded, or contemporaneously accompanied, by service on the defendant of summons, a copy of the
complaint (and of the appointment of guardian ad litem, if any), the application for attachment (if not incorporated in
but submitted separately from the complaint), the order of attachment, and the plaintiff's attachment bond.
Modes of recourse against a preliminary attachment:
1. By posting a counterbond.
2. By a showing of its improper or irregular issuance.
FACTS:
May 2, 1989: Davao Light & Power Co., Inc. filed a verified complaint for recovery of a sum of
money and damages against Queensland Hotel, etc. and Teodorico Adarna w/c contained an ex parte
application for a writ of preliminary attachment
Judge Nartatez (RTC) (May 3, 1989 Order): granted the ex parte application and fixing the
attachment bond at P4,600,513.37
May 11, 1989: the attachment bond having been submitted by Davao Light, the writ of attachment
issued
May 12, 1989: the summons and a copy of the complaint, as well as the writ of attachment
and a copy of the attachment bond, were served on Queensland and Adarna; and pursuant to the writ,
the sheriff seized properties belonging to the latter.
September 6, 1989: Queensland and Adarna filed a motion to discharge the attachment for lack
of jurisdiction to issue the same because at the time the order of attachment was promulgated (May 3,
1989) and the attachment writ issued (May 11, 1989), the Trial Court had not yet acquired jurisdiction over
the cause and over the persons of Queensland and Adarna
September 14, 1989: Davao Light filed an opposition to the motion to discharge attachment.
RTC Davao City (September 19, 1989 Order): denied the motion to discharge.
Queensland and Adarna filed a special civil action of certiorari in the Court of Appeals.
CA (May 4, 1990 Decision): annulled RTC decision
The Orders dated May 3, 1989 granting the issuance of a writ of preliminary
attachment, dated September 19, 1989 denying the motion to discharge attachment; dated
November 7, 1989 denying petitioner's motion for reconsideration; as well as all other orders
emanating therefrom, specially the Writ of Attachment dated May 11, 1989 and Notice of Levy on
Preliminary Attachment dated May 11, 1989, are hereby declared null and void and the attachment
hereby ordered DISCHARGED
While it is true that a prayer for the issuance of a writ of preliminary attachment
may be included in the complaint, as is usually done, it is likewise true that the Court does not
acquire jurisdiction over the person of the defendant until he in duly summoned or voluntarily
appears, and adding the phrase that it be issued 'ex parte' does not confer said jurisdiction before
actual summons had been made, nor retroact jurisdiction upon summons being made.
citing Sievert v. CA: "in a proceedings in attachment," the "critical time which
must be identified is when the trial court acquires authority under law to act coercively against the
defendant or his property;" and that " critical time is the time of the vesting of jurisdiction in the court
over the person of the defendant in the main case."
Davao Light seeks in the present appellate proceedings the reversal of the CA decision
ISSUE: W/N a writ of preliminary attachment may issue ex parte against a defendant before acquisition of jurisdiction
of the latter's person by service of summons or his voluntary submission to the Court's authority? YES
HELD: Petition for Review GRANTED. CA REVERSED. Order and Writ of attachment are REINSTATED.
RATIO:
JURISDICTION
It is incorrect to theorize that after an action or proceeding has been commenced and jurisdiction
over the person of the plaintiff has been vested in the court, but before the acquisition of jurisdiction over the
person of the defendant (either by service of summons or his voluntary submission to the court's authority),
nothing can be validly done by the plaintiff or the court. It is wrong to assume that the validity of acts done
during this period should be dependent on, or held in suspension until, the actual obtention of jurisdiction
over the defendant's person.

 The obtention by the court of jurisdiction over the person of the defendant is one thing;
quite another is the acquisition of jurisdiction over the person of the plaintiff or over the subjectmatter or nature of the action, or the res or object thereof.
An action or proceeding is commenced by the filing of the complaint or other initiatory pleading. By
that act, the jurisdiction of the court over the subject matter or nature of the action or proceeding is invoked
or called into activity; and it is thus that the court acquires jurisdiction over said subject matter or nature of
the action. And it is by that self-same act of the plaintiff (or petitioner) of filing the complaint (or other
appropriate pleading) by which he signifies his submission to the court's power and authority that
jurisdiction is acquired by the court over his person.
On the other hand, jurisdiction over the person of the defendant is obtained by the service of
summons or other coercive process upon him or by his voluntary submission to the authority of the court.
The events that follow the filing of the complaint as a matter of routine are well known. After the
complaint is filed, summons issues to the defendant, the summons is then transmitted to the sheriff, and
finally, service of the summons is effected on the defendant in any of the ways authorized by the Rules of
Court. There is thus ordinarily some appreciable interval of time between the day of the filing of the
complaint and the day of service of summons of the defendant. During this period, different acts may be
done by the plaintiff or by the Court, which are of unquestionable validity and propriety. Among these, for
example, are the appointment of a guardian ad litem, the grant of authority to the plaintiff to prosecute the
suit as a pauper litigant, the amendment of the complaint by the plaintiff as a matter of right without leave of
court, authorization by the Court of service of summons by publication, the dismissal of the action by the
plaintiff on mere notice.
This, too, is true with regard to the provisional remedies of preliminary attachment,
preliminary injunction, receivership or replevin. They may be validly and properly applied for and
granted even before the defendant is summoned or is heard from.
PRELIMINARY ATTACHMENT
A preliminary attachment may be defined, paraphrasing the Rules of Court, as the provisional
remedy in virtue of which a plaintiff or other proper party may, at the commencement of the action or
at any time thereafter, have the property of the adverse party taken into the custody of the court as
security for the satisfaction of any judgment that may be recovered. It is a remedy which is purely
statutory in respect of which the law requires a strict construction of the provisions granting it .
Withal no principle, statutory or jurisprudential, prohibits its issuance by any court before
acquisition of jurisdiction over the person of the defendant.
Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action or at any
time thereafter." The phrase, "at the commencement of the action," obviously refers to the date of the filing
of the complaint which is the date that marks "the commencement of the action;" and the reference
plainly is to a time before summons is served on the defendant, or even before summons issues. What the
rule is saying quite clearly is that after an action is properly commenced by the filing of the complaint and
the payment of all requisite docket and other fees the plaintiff may apply for and obtain a writ of
preliminary attachment upon fulfillment of the pertinent requisites laid down by law, and that he may
do so at any time, either before or after service of summons on the defendant. And this indeed, has
been the immemorial practice sanctioned by the courts: for the plaintiff or other proper party to incorporate
the application for attachment in the complaint or other appropriate pleading (counterclaim, cross-claim,
third-party claim) and for the Trial Court to issue the writ ex-parte at the commencement of the action if it
finds the application otherwise sufficient in form and substance.
Toledo v. Burgos: A hearing on a motion or application for preliminary attachment is not generally
necessary unless otherwise directed by the Trial Court in its discretion.
Filinvest Credit Corporation v. Relova: Nothing in the Rules of Court makes notice and hearing
indispensable and mandatory requisites for the issuance of a writ of attachment
The only pre-requisite is that the Court be satisfied, upon consideration of "the affidavit of
the applicant or of some other person who personally knows the facts, that a sufficient cause of
action exists, that the case is one of those mentioned in Section 1 . . . (Rule 57) , that there is no other
sufficient security for the claim sought to be enforced by the action, and that the amount due to the
applicant, or the value of the property the possession of which he is entitled to recover, is as much as the
sum for which the order (of attachment) is granted above all legal counterclaims." If the court be so satisfied,
the "order of attachment shall be granted," and the writ shall issue upon the applicant's posting of a bond

executed to the adverse party in an amount to be fixed by the judge, not exceeding the plaintiff's claim,
conditioned that the latter will pay all the costs which may be adjudged to the adverse party and all damages
which he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was
not entitled thereto.
Mindanao Savings & Loan Association, Inc. v. CA [1989]No hearing is required on an application for
preliminary attachment, with notice to the defendant, for the reason that this "would defeat the objective of
the remedy . . . (since the) time which such a hearing would take, could be enough to enable the defendant
to abscond or dispose of his property before a writ of attachment issues."
=Such a procedure would warn absconding debtors-defendants of the commencement of the suit
against them and the probable seizure of their properties, and thus give them the advantage of time to hide
their assets, leaving the creditor-plaintiff holding the proverbial empty bag; it would place the creditorapplicant in danger of losing any security for a favorable judgment and thus give him only an illusory victory
Withal, ample modes of recourse against a preliminary attachment are secured by law to the
defendant. The relative ease with which a preliminary attachment may be obtained is matched and
paralleled by the relative facility with which the attachment may legitimately be prevented or frustrated.
Mindanao Savings & Loans Asso. Inc. v. C.A separate opinion There are two (2) ways of
discharging an attachment:
first, by the posting of a counterbond; and
second, by a showing of its improper or irregular issuance.
1.0. The submission of a counterbond is an efficacious mode of lifting an attachment already
enforced against property, or even of preventing its enforcement altogether.
1.1. When property has already been seized under attachment, the attachment may be discharged
upon counterbond in accordance with Section 12 of Rule 57.
SECTION 12. Discharge of attachment upon giving counterbond. At any time after an order of attachment has
been granted, the party whose property has been attached or the person appearing in his behalf, may, upon
reasonable notice to the applicant, apply to the judge who granted the order, or to the judge of the court in which the
action is pending, for an order discharging the attachment wholly or in part on the security given . . . in an amount
equal to the value of the property attached as determined by the judge to secure the 6payment of any judgment that
the attaching creditor may recover in the action . . .
1.2. But even before actual levy on property, seizure under attachment may be prevented also
upon counterbond. The defendant need not wait until his property is seized before seeking the discharge of
the attachment by a counterbond. This is made possible by Section 5 of Rule 57.
SECTION 5. Manner of attaching property. The officer executing the order shall without delay attach, to await
judgment and execution in the action, all the properties of the party against whom the order is issued in the province,
not exempt from execution, or so much thereof as may be sufficient to satisfy the applicant's demand, unless the
former makes a deposit with the clerk or judge of the court from which the order issued, or gives a counterbond executed to the applicant, in an amount sufficient to satisfy such demand besides costs, or in an
amount equal to the value of the property which is about to be attached, to secure payment to the applicant
of any judgment which he may recover in the action. . . .
2.0. Aside from the filing of a counterbond, a preliminary attachment may also be lifted or
discharged on the ground that it has been irregularly or improperly issued, in accordance with Section 13 of
Rule 57. Like the first, this second mode of lifting ar attachment may be resorted to even before any property
has beer levied on. Indeed, it may be availed of after property has been released from a levy on attachment,
as is made clear by said Section 13.
'SECTION 13.
Discharge of attachment for improper or irregular issuance. The party whose property has been
attached may also, at any time either BEFORE or AFTER the release of the attached property, or before any
attachment shall have been actually levied, upon reasonable notice to the attaching creditor, apply to the judge
who granted the order, or to the judge of the court in which the action is pending, for an order to discharge the
attachment on the ground that the same was improperly or irregularly issued. If the motion be made on affidavits on
the part of the party whose property has been attached, but not otherwise, the attaching creditor may oppose the
same by counter-affidavits or other evidence in addition to that on which the attachment was made. . . .'
Calderon v. I.A.C.(1987): The attachment debtor cannot be deemed to have waived any defect in
the issuance of the attachment writ by simply availing himself of one way of discharging the attachment writ,
instead of the other. Moreover, the filing of a counterbond is a speedier way of discharging the attachment
writ maliciously sought out by the attaching creditor instead of the other way, which, in most instances . . .

would require presentation of evidence in a fullblown trial on the merits, and cannot easily be settled in a
pending incident of the case.'"
OTHER RELATED PRINCIPLES dealt with in Mindanao Savings & Loans Asso. Inc. v. C.A.
(a) When an attachment may not be dissolved by a showing of its irregular or improper issuance:
"When the preliminary attachment is issued upon a ground which is at the same
time the applicant's cause of action e.g., 'an action for money or property embezzled or fraudulently
misapplied or converted to his own use by a public officer, or an officer of a corporation, or an
attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any other
person in a fiduciary capacity, or for a willful violation of duty.' (Sec. 1 [b], Rule 57), or 'an action
against a party who has been guilty of fraud in contracting the debt or incurring the obligation upon
which the action is brought' (Sec. 1 [d], Rule 57), the defendant is not allowed to file a motion to
dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual
averments in the plaintiffs application and affidavits on which the writ was based and
consequently that the writ based thereon had been improperly or irregularly issued (SEE Benitez v.
I.A.C.) the reason being that the hearing on such a motion for dissolution of the writ would be
tantamount to a trial of the merits of the action. In other words, the merits of the action would be
ventilated at a mere hearing of a motion, instead of at the regular trial. Therefore, when the writ of
attachment is of this nature, the only way it can be dissolved is by a counterbond (G.B. Inc. v.
Sanchez)."
(b) Effect of the dissolution of a preliminary attachment on the plaintiff's attachment bond:
The dissolution of the preliminary attachment upon security given, or a showing
of its irregular or improper issuance, does not of course operate to discharge the sureties on
plaintiff's own attachment bond. The reason is simple. That bond is 'executed to the adverse party, .
. . conditioned that the . . . (applicant) will pay all the costs which may be adjudged to the adverse
party and all damages which he may sustain by reason of the attachment, if the court shall finally
adjudge that the applicant was not entitled thereto' (SEC. 4, Rule 57). Hence, until that
determination is made, as to the applicant's entitlement to the attachment, his bond must stand and
cannot be withdrawn.
OTHER PROVISIONAL REMEDIES
With respect to the other provisional remedies, i.e., preliminary injunction (Rule 58), receivership
(Rule 59), replevin or delivery of personal property (Rule 60), the rule is the same: they may also issue ex
parte.
ACQUISITION OF JURISDICTION
Whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of the
defendant, as above indicated issuance of summons, order of attachment and writ of attachment (and/or
appointment of guardian ad litem, or grant of authority to the plaintiff to prosecute the suit as a pauper
litigant, or amendment of the complaint by the plaintiff as a matter of right without leave of court 30 and
however valid and proper they might otherwise be, these do not and cannot bind and affect the defendant
until and unless jurisdiction over his person is eventually obtained by the court, either by service on him of
summons or other coercive process or his voluntary submission to the court's authority.
Hence, when the sheriff or other proper officer commences implementation of the writ of
attachment, it is essential that he serve on the defendant not only a copy of the applicant's affidavit and
attachment bond, and of the order of attachment, as explicitly required by Section 5 of Rule 57, but also the
summons addressed to said defendant as well as a copy of the complaint and order for appointment of
guardian ad litem, if any, as also explicitly directed by Section 3, Rule 14 of the Rules of Court.
Service of all such documents is indispensable not only for the acquisition of jurisdiction over the
person of the defendant, but also upon considerations of fairness, to apprise the defendant of the complaint
against him, of the issuance of a writ of preliminary attachment and the grounds therefor and thus accord
him the opportunity to prevent attachment of his property by the posting of a counterbond in an amount
equal to the plaintiff's claim in the complaint pursuant to Section 5 (or Section 12), Rule 57, or dissolving it
by causing dismissal of the complaint itself on any of the grounds set forth in Rule 16, or demonstrating the
insufficiency of the applicant's affidavit or bond in accordance with Section 13, Rule 57.
FAILURE TO COMPLY WITH REQUIREMENT OF SERVICE OF SUMMONS
It was on account of the failure to comply with this fundamental requirement of service of summons
and the other documents above indicated that writs of attachment issued by the Trial Court ex parte were

struck down by this Court's Third Division in two (2) cases, namely: Sievert v. Court of Appeals, 31 and BAC
Manufacturing and Sales Corporation v. Court of Appeals, et al.
In contrast to the case at bar where the summons and a copy of the
complaint, as well as the order and writ of attachment and the attachment bond were served on the
defendant
in Sievert, levy on attachment was attempted notwithstanding
that only the petition for issuance of the writ of preliminary attachment was served on the
defendant, without any prior or accompanying summons and copy of the complaint; and
in BAC Manufacturing and Sales Corporation, neither the
summons nor the order granting the preliminary attachment or the writ of attachment itself
was served on the defendant "before or at the time the levy was made.
SUMMARY OF RULE:
Writs of attachment may properly issue ex parte provided that the Court is satisfied that the
relevant requisites therefor have been fulfilled by the applicant, although it may, in its discretion,
require prior hearing on the application with notice to the defendant; but that levy on property
pursuant to the writ thus issued may not be validly effected unless preceded, or contemporaneously
accompanied by service on the defendant of summons, a copy of the complaint (and of the
appointment of guardian ad litem, if any), the application for attachment (if not incorporated in but
submitted separately from the complaint), the order of attachment, and the plaintiff's attachment
bond.
Security Pacific Assurance v. Tria-Infante (Therese)
August 31, 2005
SECURITY PACIFIC ASSURANCE CORPORATION, petitioner, vs. THE HON. AMELIA TRIA-INFANTE, In her
official capacity as Presiding Judge, Regional Trial Court, Branch 9, Manila; THE PEOPLE OF THE
PHILIPPINES, represented by Spouses REYNALDO and ZENAIDA ANZURES; and REYNALDO R. BUAZON, In
his official capacity as Sheriff IV, Regional Trial Court, Branch 9, Manila, respondents.
CHICO-NAZARIO, J p:
SUMMARY: Anzures filed a complaint against Villaluz for violation of BP 22. An attachment was made on Villaluzs
property. Court ruled that Villaluz was not criminally liable but only civilly liable. Villaluz posted a counterbond issued
by Security Pacific in order to discharge the attachment. Upon execution, Villaluz could not be found so the sheriff
went after Security Pacific. Security was claiming that they were not liable since the court did not issue an order
approving the bond to release the attachment.
HELD: The SC ruled that it is the nature of a surety company to be directly bound with the principal. It is not
necessary for the court to release a specific order merely for approving the bond when it can already be incorporated
in the decision, such as in this case.
NATURE: Petition for review on certiorari assailing the Decision and Resolution of the CA declaring that there was no
grave abuse of discretion on the part of respondent Judge in issuing the assailed order dated March 31, 2000
FACTS:
The factual milieu of the instant case can be traced from this Court's decision in G.R. No. 106214
(Case 1) promulgated on 05 September 1997.
August 26, 1988: Reynaldo Anzures instituted a complaint against Teresita Villaluz (Villaluz) for
violation of BP 22. The criminal information was brought before the RTC Manila, and raffled off to Branch 9,
then presided over by Judge Edilberto G. Sandoval, docketed as Criminal Case No. 89-69257.
An Ex-Parte Motion for Preliminary Attachment dated March 6, 1989 was filed by Reynaldo
Anzures praying that pending the hearing on the merits of the case, a Writ of Preliminary Attachment be
issued ordering the sheriff to attach the properties of Villaluz in accordance with the Rules.
TC (July 3, 1989): Issued an Order for the issuance of a writ of preliminary attachment "upon
complainant's posting of a bond which is hereby fixed at P2,123,400.00 and the Court's approval of
the same under the condition prescribed by Sec. 4 of Rule 57 of the Rules of Court. . . ."
An attachment bond was thereafter posted by Reynaldo Anzures and approved by the court.
Thereafter, the sheriff attached certain properties of Villaluz, which were duly annotated on the
corresponding certificates of title.
TC (May 25, 1990): ACQUITTED Villaluz of the crime; BUT civilly liable.
CA: AFFIRMED TC in all respects.

 The case was elevated to the Supreme Court (Case 1), and during its pendency, Villaluz posted a
counter-bond in the amount of P2,500,000.00 issued by petitioner Security Pacific Assurance
Corporation.
Villaluz, on the same date 10 of the counter-bond, filed an Urgent Motion to Discharge Attachment.
SC (September 5, 1997): AFFIRMED CA.
In view of the finality of this Court's decision in Case 1, Anzures moved for execution of judgment
before the trial court.
TC (May 7, 1999): Issued Writ of Execution.
Sheriff Reynaldo R. Buazon tried to serve the writ of execution upon Villaluz, but the latter no
longer resided in her given address.
This being the case, the sheriff sent a Notice of Garnishment upon Security at its office in
Makati City, by virtue of the counter-bond posted by Villaluz with said insurance corporation in the
amount of P2,500,000.00.
As reported by the sheriff, Security refused to assume its obligation on the counter-bond it posted
for the discharge of the attachment made by Villaluz.
Reynaldo Anzures, through the private prosecutor, filed a Motion to Proceed with Garnishment,
which was opposed by Security contending that it should not be held liable on the counter-attachment bond.
TC: In its Order dated 31 March 2000, GRANTED the Motion to Proceed with Garnishment.
The sheriff issued a Follow-Up of Garnishment addressed to the President/General Manager of
petitioner dated 03 April 2000.
Security then filed a Petition for Certiorari with Preliminary Injunction and/or TRO with the CA,
seeking the nullification of the TCs order dated March 31, 2000 granting the motion to proceed with
garnishment. Villaluz was also named as petitioner.
Securitys Contention: Respondent Judge and the sheriff committed grave
abuse of discretion and grave errors of law in proceeding against the petitioner corporation on its
counter-attachment bond, despite the fact that said bond was not approved by the Supreme
Court, and that the condition by which said bond was issued did not happen.
CA: DISMISSED. MR filed, denied.
Security filed the instant petition under Rule 45, with Urgent Application for a Writ of Preliminary
Injunction and/or TRO.
December 13, 2000: SC issued a Resolution requiring the private respondents to file their
Comment to the Petition, which they did. Security was required to file its Reply thereafter.
Meanwhile, on January 17, 2001, Security and the spouses Reynaldo and Zenaida Anzures
executed a Memorandum of Understanding (MOU).
It was stipulated that as of said date, the total amount garnished from petitioner
had amounted to P1,541,063.85, and so the remaining amount still sought to be executed was
P958,936.15.
Security tendered and paid the amount of P300,000.00 upon signing of the MOU,
and the balance of P658,936.15 was to be paid in installment at P100,000.00 at the end of each
month from February 2001 up to July 2001.
At the end of August 2001, the amount of P58,936.00 would have to be paid.
This would make the aggregate amount paid to the private respondents P2,500,000.00.
There was, however, a proviso in the MOU which states that "this contract shall
not be construed as a waiver or abandonment of the appellate review pending before the
Supreme Court and that it will be subject to all such interim orders and final outcome of said
case."
ISSUE/S:
W/N the CA committed error in affirming the RTC order which allowed execution on the counter-bond issued by
Security (NO!)
W/N the CA correctly ruled that the attachment on the property of Villaluz was discharged without need of court
approval of the counterbond posted (YES!)
W/N the CA correctly ruled that the attachment on the property of Villaluz was discharged by the mere act of posting
the counterbond (YES!)
HELD/RATIO:
Security:
The writ of attachment which was earlier issued against the real properties of Villaluz was not
discharged.

 Since the writ was not discharged, then its liability did not accrue.
The alleged failure of this Court in Case 1 to approve the counter-bond and to cause the discharge
of the attachment against Villaluz prevented the happening of a condition upon which the counter-bond's
issuance was premised, such that Security should not be held liable thereon.
The agreement between it and Villaluz is not a suretyship agreement in the sense that it has
become an additional debtor in relation to private respondents.
It is merely waiving its right of excussion that would ordinarily apply to counter-bond guarantors as
originally contemplated in Section 12, Rule 57 of the 1997 Rules.
Spouses Anzuress Answer:
The filing of the counter-bond by Villaluz had already ipso facto discharged the attachment on the
properties and made Secutiy liable on the bond.
Upon acceptance of the premium, there was already an express contract for surety between
Villaluz and Security in the amount of P2,500,000.00 to answer for any adverse judgment/decision against
Villaluz.
Securitys Reply:
Admitted the binding effect of the bond as between the parties.
What it did not subscribe to was the theory that the attachment was ipso facto or automatically
discharged by the mere filing of the bond in court. (Without foundation!)
Without an order of discharge of attachment and approval of the bond, its stipulated liability on said
bond, premised on their occurrence, could not possibly arise, for to hold otherwise would be to trample upon
the statutorily guaranteed right of the parties to contractual autonomy.
SC: NO REVERSAL OF CA DECISION.
Tijam v. Sibonghanoy, as reiterated in Vanguard Assurance Corp. v. Court of Appeals:
. . . [A]fter the judgment for the plaintiff has become executory and the execution is 'returned unsatisfied,' as in this
case, the liability of the bond automatically attaches and, in failure of the surety to satisfy the judgment
against the defendant despite demand therefore, writ of execution may issue against the surety to enforce
the obligation of the bond.
In Luzon Steel Corporation v. Sia, et al.:
. . . [C]ounterbonds posted to obtain the lifting of a writ of attachment is due to these bonds being security for the
payment of any judgment that the attaching party may obtain; they are thus mere replacements of the property
formerly attached, and just as the latter may be levied upon after final judgment in the case in order to realize
the amount adjudged, so is the liability of the countersureties ascertainable after the judgment has become
final. . . .
In Imperial Insurance, Inc. v. De Los Angeles, we ruled:
. . . Section 17, Rule 57 of the Rules of Court cannot be construed that an "execution against the debtor be first
returned unsatisfied even if the bond were a solidary one, for a procedural may not amend the substantive law
expressed in the Civil Code, and further would nullify the express stipulation of the parties that the surety's obligation
should be solidary with that of the defendant.
In Philippine British Assurance Co., Inc. v. Intermediate Appellate Court: "the counterbond is
intended to secure the payment of 'any judgment' that the attaching creditor may recover in the action."
Security does not deny that the contract between it and Villaluz is one of surety.
However, it points out that the kind of surety agreement between them is one that merely waives its
right of excussion. SC: NO.
The counter-bond itself states that the parties jointly and severally bind themselves to secure the
payment of any judgment that the plaintiff may recover against the defendant in the action.
A surety is considered in law as being the same party as the debtor in relation to whatever is
adjudged touching the obligation of the latter, and their liabilities are interwoven as to be
inseparable.
CONCEPT OF SURETYSHIP
Suretyship is a contractual relation resulting from an agreement whereby one person, the surety,
engages to be answerable for the debt, default or miscarriage of another, known as the principal.
The surety's obligation is not an original and direct one for the performance of his own act, but
merely accessory or collateral to the obligation contracted by the principal.
Nevertheless, although the contract of a surety is in essence secondary only to a valid principal
obligation, his liability to the creditor or promise of the principal is said to be direct, primary and absolute; in
other words, he is directly and equally bound with the principal.

 The surety therefore becomes liable for the debt or duty of another although he possesses no
direct or personal interest over the obligations nor does he receive any benefit therefrom.
AS APPLIED IN THIS CASE
In view of the nature and purpose of a surety agreement, Security, thus, is barred from disclaiming
liability.
Its argument that the mere filing of a counter-bond in this case cannot automatically discharge the
attachment without first an order of discharge and approval of the bond, is lame.
Under the Rules, there are two (2) ways to secure the discharge of an attachment.
First, the party whose property has been attached or a person appearing on his
behalf may post a security.
Second, said party may show that the order of attachment was improperly or
irregularly issued. The first applies in the instant case. Section 12, Rule 57, 43 provides:
SEC. 12.
Discharge of attachment upon giving counter-bond. After a writ of attachment has been
enforced, the party whose property has been attached, or the person appearing on his behalf, may move for the
discharge of the attachment wholly or in part on the security given. The court shall, after due notice and hearing,
order the discharge of the attachment if the movant makes a cash deposit, or files a counter-bond executed to the
attaching party with the clerk of the court where the application is made, in an amount equal to that fixed by the court
in the order of attachment, exclusive of costs. But if the attachment is sought to be discharged with respect to a
particular property, the counter-bond shall be equal to the value of that property as determined by the court. In either
case, the cash deposit or the counter-bond shall secure the payment of any judgment that the attaching party may
recover in the action. A notice of the deposit shall forthwith be served on the attaching party. Upon the discharge of an
attachment in accordance with the provisions of this section, the property attached, or the proceeds of any sale
thereof, shall be delivered to the party making the deposit or giving the counter-bond, or to the person appearing on
his behalf, the deposit or counter-bond aforesaid standing in place of the property so released. Should such counterbond for any reason be found to be or become insufficient, and the party furnishing the same fail to file an additional
counter-bond, the attaching party may apply for a new order of attachment.
It should be noted that in Case 1, per our Resolution dated 15 January 1997, SC permitted Villaluz
to file a counter-attachment bond. On 17 February 1997, SCrequired the private respondents to comment on
the sufficiency of the counter-bond posted by Villaluz.
The necessary steps in the discharge of an attachment upon giving counter-bond have been taken.
To require a specific order for the discharge of the attachment when this Court, in our decision
in Case 1, had already declared that the petitioner is solidarily bound with Villaluz would be mere
surplusage. Thus:
During the pendency of this petition, a counter-attachment bond was filed by
petitioner Villaluz before this Court to discharge the attachment earlier issued by the trial court.
Said bond amounting to P2.5 million was furnished by Security Pacific Assurance, Corp. which
agreed to bind itself "jointly and severally" with petitioner for "any judgment" that may be recovered
by private respondent against the former.
Belisle Investment and Finance Co., Inc. v. State Investment House, Inc.:
. . . [T]he Court of Appeals correctly ruled that the mere posting of a counterbond
does not automatically discharge the writ of attachment. It is only after hearing and after the judge
has ordered the discharge of the attachment if a cash deposit is made or a counterbond is
executed to the attaching creditor is filed, that the writ of attachment is properly discharged under
Section 12, Rule 57 of the Rules of Court.
The ruling in Belisle, at first glance, would suggest an error in the assailed ruling of the CA because
there was no specific resolution discharging the attachment and approving the counter-bond.
HOWEVER! Consideration of SC decision in Case 1 in its entirety will readily show that this Court
has virtually discharged the attachment after all the parties therein have been heard on the matter.
CA, on the discharge of attachment upon giving counter-bond:
. . . The filing of the counter-attachment bond by petitioner Villaluz has
discharged the attachment on the properties and made the petitioner corporation liable on
the counter-attachment bond. This can be gleaned from the "DEFENDANT'S BOND FOR THE
DISSOLUTION OF ATTACHMENT", which states that Security Pacific Assurance Corporation, as
surety, in consideration of the dissolution of the said attachment jointly and severally, binds itself
with petitioner Villaluz for any judgment that may be recovered by private respondent Anzures
against petitioner Villaluz.

 The contract of surety is only between petitioner Villaluz and petitioner

corporation. The petitioner corporation cannot escape liability by stating that a court
approval is needed before it can be made liable.
This defense can only be availed by petitioner corporation against petitioner
Villaluz but not against third persons who are not parties to the contract of surety.
The petitioners hold themselves out as jointly and severally liable without any
conditions in the counter-attachment bond. The petitioner corporation cannot impose requisites
before it can be made liable when the law clearly does not require such requisites to be fulfilled.
A judgment must be read in its entirety, and it must be construed as a whole so as to bring all of its
parts into harmony as far as this can be done by fair and reasonable interpretation and so as to give effect to
every word and part, and to effectuate the intention and purpose of the Court, consistent with the provisions
of the organic law.
Insurance companies are prone to invent excuses to avoid their just obligation. It seems that this
statement very well fits the instant case.
DISPOSITION: WHEREFORE, in view of all the foregoing, the Decision and Resolution of the Court of Appeals dated
16 June 2000 and 22 August 2000, respectively, are both AFFIRMED. Costs against petitioner.
C. Preliminary Injunction
Brocka, et al. v. Enrile, et al. (Chrissa)
FACTS: Lino Brocka and his companions were arrested for participating in a rally and were charged with illegal
assembly. Four of them remained in detention even after they were ordered to be released on bail. They were later
charged with inciting to sedition. They filed a petition for habeas corpus and for the injunction of the criminal
proceedings on the inciting to sedition charge.
HELD: Although the general rule is that criminal proceedings may not be stayed by injunction, there are
exceptions to this general rule (see ratio for list). In the present case, the circumstances surrounding the arrest and
the secondcharge showed the militarys bad faith in filing the criminal case against Brocka et. al. and the situation fell
under the exception to the general rule. The criminal proceedings were held to be enjoined.
LINO BROCKA, BENJAMIN CERVANTES, COSME GARCIA, RODOLFO SANTOS, VALENTINO SALIPSIP,
RICARDO VEGA, ERIC MARIANO, JOSE EMMANUEL OYALES, RONNIE MATTA, ALFREDO VIAJE, RUBEN
EUGENIO, REYNALDO ORTIZ, ORLANDO ORTIZ, NOEL REYES, EDUARDO IMPERIAL, NESTOR SARMIENTO,
FRANCO PALISOC, VIRGILIO DE GUZMAN, ALBERTO REYES, JESSIE PINILI, ROMULO AUGUIS, DOMINADOR
RESURRECION III, RONNIE LAYGO, ROSAURO ROQUE, CLARENCE SORIANO, OCTAVO DEPAWA, CARLITO
LA TORRE, SEVERNO ILANO, JR., DOMINGO CAJIPE, ALAN ALEGRE, RAMON MARTINEZ, MA. GILDA
HERNANDEZ, EDNA P. VILLANUEVA, DOLLY S. CANU, MELQUIADES C. ATIENZA, ELIGIO P. VERA CRUZ,
ROGER C. BAGAN, ABUNDIO M. CALISTE, petitioners, vs. JUAN PONCE ENRILE, MAJ. GENERAL FIDEL V.
RAMOS, BRIG. GENERAL PEDRO BALBANERO, COL. ABAD, COL. DAWIS, SERGIO APOSTOL, P/LT, RODOLFO
M. GARCIA and JUDGE RICARDO TENSUAN, respondents.
MEDIALDEA, J p: December 10, 1990
This petition was originally filed on February 13, 1985 to secure the release of petitioners on
habeas corpus and to permanently enjoin the City Fiscal of Quezon City from investigating charges of
"Inciting to Sedition" against petitioners Lino Brocka, Benjamin Cervantes, Cosme Garcia and Rodolfo
Santos, (hereafter Brocka, et al.).
On learning that the corresponding informations for this offense has been filed by the City Fiscal
against them on February 11, 1985, a supplemental petition was filed to implead the Presiding Judge, 1
and to enjoin the prosecution of Criminal Cases Nos. Q-38023, Q-38024 and Q-38025 and the issuance of
warrants for their arrests, including their arraignment.
Since then President Ferdinand E. Marcos had ordered the provisional release of Brocka, et al.,
the issue on habeas corpus has become moot and academic, We shall thus focus on the question of
whether or not the prosecution of the criminal cases for Inciting to Sedition may lawfully be
enjoined.
SUPERVENING FACTS
Petitioners Brocka et al. were arrested on January 28, 1985 by elements of the Northern Police
District following the forcible and violent dispersal of a demonstration held in sympathy with the jeepney
strike called by the Alliance of Concerned Transport Organization (ACTO). Thereafter, they were charged
with Illegal Assembly in Criminal Cases Nos. 37783, 37787 and 37788 with Branch 108, RTC QC

 Except for Brocka, et al. who were charged as leaders of the offense of Illegal Assembly and for
whom no bail was recommended, the other petitioners were released on bail of P3,000.00 each.
Brocka, et al.'s provisional release was ordered only upon an urgent petition for bail
despite service of the order of release, Brocka, et al. remained in detention, respondents having
invoked a Preventive Detention Action (PDA) allegedly issued against them
Brocka, et al. were subsequently charged with Inciting to Sedition without prior notice to their
counsel. The original informations filed recommended no bail.
The circumstances surrounding the hasty filing of this second offense are cited by Brocka, et al:
6.
The sham' character of the inquest examination concocted by all respondents is starkly bizarre
when we consider that as early as 10:30 A.M., Benjamin Cervantes was able to contact undersigned
petitioner by phone informing counsel that said Benjamin Cervantes and the 4 other persons who are the
subjects of this petition will be brought before the Quezon City Fiscal at 2:30 for undisclosed reasons:
another phone call that the appearance of Benjamin Cervantes et al.
was to be at 2:00 P.M.
When petitioning counsel arrived in the office of Assistant City Fiscal,
the complainants' affidavits had not yet been received by any of the panel of three assistant city
fiscals, although the five persons under detention were already in the office of said assistant fiscal
as early as 2:00 P.M.
It was only at 3:00 when a representative of the military arrived bringing
with him alleged statements of complainants against Lino Broka (sic) et al. for alleged inciting to
sedition, whereupon undersigned counsel asked respondent Colonel Agapito Abad 'who ordered
the detained persons to be brought to the office of Assistant Fiscal Arturo Tugonon since there were
no charges on file;' and said Colonel Agapito Abad said aloud: 'I only received a telephone call from
Colonel Arzaga about 11:00 A.M. to bring the detained persons today I am only the custodian.
At 3:15, petitioning counsel inquired from the Records Custodian when
the charges against Lino Broka (sic) had been officially received and he was informed that the said
charges were never coursed through the Records Office.
"7.
Under the facts narrated above, respondents have conspired to use the strong arm of the law and
hatched the nefarious scheme to deprive Lino Broka (sic) et al. the right to bail because the utterances
allegedly constituting inciting to sedition under Article 142 of the Revised Penal Code are, except for varying
nuances, almost verbatim the same utterances which are the subject of Criminal Cases No. 37783, 37787
and 37788 and for which said detained persons are entitled to be released on bail as a matter of
constitutional right.
Among the utterances allegedly made by the accused and which the respondents claimed to be violative of
Article 142 of the Revised Penal Code are: 'Makiisa sa mga drivers, "Makiisa sa aming layunin, "Digmaang
bayan ang sagot sa kahirapan,' Itigil ang pakikialam ng imperyalismo sa Pilipinas,' 'Rollback ng presyo ng
langis sa 95 Centavos.' (See Annex B)
"8.
panel of assistant fiscals demanded that said detained persons should sign a 'waiver' of their rights
under Article 125 of the Revised Penal Code as a condition for the grant of said request to confer w client (w
counsel), which is a harassing requirement considering that Lino Broka (sic) et al. were already under the
detention. Did not enjoy the right to be waived
They were released provisionally on February 14, 1985, on orders of then President F. E. Marcos
Hence, this petition.
WON to enjoin the criminal prosecution for the 2nd offence of inciting to sedition (YES)
Brocka, et al. contend that respondents' manifest bad faith and/or harassment are sufficient bases
for enjoining their criminal prosecution, aside from the fact that the second offense of inciting to sedition is
illegal, since it is premised on one and the same act of attending and participating in the ACTO
jeepney strike. They maintain that while there may be a complex crime from a single act (Art. 48, RTC), the
law does not allow the splitting of a single act into two offenses and filing two informations therefor,
further, that they will be placed in double jeopardy.
The primary issue here is the legality of enjoining the criminal prosecution of a case, since the
two other issues raised by Brocka, et al. are matters of defense against the sedition charge.
SC: We rule in favor of Brocka, et al. and enjoin their criminal prosecution for the second offense of
inciting to sedition.
GENERAL RULE is that criminal prosecution may not be restrained or stayed by injunction,
preliminary or final. There are however exceptions, among which are:

"a.
To afford adequate protection to the constitutional rights of the accused
"b.
When necessary for the orderly administration of justice or to avoid oppression or
multiplicity of actions
"c.
When there is a pre-judicial question which is sub judice
"d.
When the acts of the officer are without or in excess of authority
"e.
Where the prosecution is under an invalid law, ordinance or regulation "f. When double
jeopardy is clearly apparent
"g.
Where the court has no jurisdiction over the
"h.
Where it is a case of persecution rather than prosecution
"i.
Where the charges are manifestly false and motivated by the lust for vengeance
"j.
When there is clearly no prima facie case against the accused and a motion to quash on
that ground has been denied
"7.
Preliminary injunction has been issued by the Supreme Court to prevent the threatened
unlawful arrest of petitioners
Brocka, et al.: cited the circumstances to show that the criminal proceedings had become a case of
persecution, having been undertaken by state officials in bad faith. cdll
Respondents, invoked a PDA in refusing Brocka, et al.'s release from detention (before their
release on orders of then Pres. Marcos). This PDA was, issued on January 28, 1985, but was invoked only
on February 9, 1985 (upon receipt of the trial court's order of release). Under the guidelines issued, PDAs
shall be invoked within 24 hours (in Metro Manila) or 48 hours (outside Metro Manila). Noteworthy also is
Brocka, et al.'s claim that, despite subpoenas for its production, the prosecution merely presented a
purported xerox copy of the invoked PDA
SC: The hasty filing of the second offense, premised on a spurious and inoperational PDA,
certainly betrays respondent's bad faith and malicious intent to pursue criminal charges against Brocka, et
al.
Ilagan case : "individuals against whom PDAs have been issued should be furnished with the
original, and the duplicate original, and a certified true copy issued by the official having official custody of
the PDA, at the time of the apprehension
We do not begrudge the zeal that may characterize a public official's prosecution of criminal
offenders. We, however, believe that this should not be a license to run roughshod over a citizen's basic
constitutional lights, such as due process, or manipulate the law to suit dictatorial tendencies.
While We agree with the Solicitor General's observation and/or manifestation that Brocka, et al.
should have filed a motion to quash the information, We, however, believe that such a course of
action would have been a futile move, considering the circumstances then prevailing.
Thus, the tenacious invocation of a spurious and inoperational PDA and the sham and hasty
preliminary investigation were clear signals that the prosecutors intended to keep Brocka, et al. in detention
until the second offense of "Inciting to Sedition" could be facilitated and justified without need of issuing a
warrant of arrest anew.
As a matter of fact the corresponding informations for this second offense were hastily filed
two days after Brocka, et al.'s release
Constitutional rights must be upheld at all costs, for this gesture is the true sign of democracy.
These may not be set aside to satisfy perceived illusory visions of national grandeur.
J. Salonga v. Cruz Pao,: "Infinitely more important than conventional adherence to general rules of
criminal procedure is respect for the citizen's right to be free not only from arbitrary arrest and punishment
but also from unwarranted and vexatious prosecution . . .".
Social Justice Society, et al. v. Atienza (Mel)
February 13, 2008
SOCIAL JUSTICE SOCIETY (SJS), VLADIMIR ALARIQUE T. CABIGAO and BONIFACIO S. TUMBOKON,
petitioners
vs. HON. JOSE L. ATIENZA, JR., in his capacity as Mayor of the City of Manila, respondent.
CHEVRON PHILIPPINES, INC., PETRON CORPORATION and PILIPINAS SHELL PETROLEUM CORPORATION,
movants-intervenors.
DEPARTMENT OF ENERGY, movant-intervenor.
RESOLUTION; CORONA, J p:

SUMMARY:This is the resolution of the MR & motion to intervene filed by the oil companies & DOE of an earlier SC
decision which held that Mayor Atienza had the ministerial duty to enforce Ordinance 8027 of Manila which would
necessitate the cessation of the companies operations at the Pandacan oil depot area. Said ordinance was allegedly
promulgated pursuant to LGUs police power to protect residents from terrorist attacks, public health etc.. In this MR,
the oil companies pointed out that earlier, in the cases they filed before the RTC assailing the validity of the
Ordinance, they were able to obtain preliminary injunctive writs & status quo order enjoining the enforcement of
Ordinance No. 8027. HELD: The issuance of a writ of injunction is only proper when the petitioner assailing the
ordinance has made out a case of unconstitutionality strong enough to overcome, in the mind of the judge, the
presumption of validity, in addition to a showing of a clear legal right to the remedy sought. However, in addition to a
showing of a clear legal right to the remedy sought, the oil companies had not made out a case of unconstitutionality
or invalidity strong enough to overcome the presumption of validity of the ordinance.
DOCTRINE: An ordinance enjoys the presumption of validity and, as such, cannot be restrained by injunction.
Nevertheless, when the validity of the ordinance is assailed, the courts are not precluded from issuing an injunctive
writ against its enforcement. However, issuance of said writ is proper only when the petitioner assailing the ordinance
has made out a case of unconstitutionality strong enough to overcome, in the mind of the judge, the presumption of
validity, in addition to a showing of a clear legal right to the remedy sought.
NATURE: After SC decision, Chevron, Petron and Shell (the oil companies) and RP, represented by DOE, filed
motions for leave to intervene and for reconsideration of the decision.
INTERVENORS:
Chevron: Engaged in the business of importing, distributing and marketing of petroleum products in
the Philippines;
Shell & Petron: Engaged in the business of manufacturing, refining and likewise importing,
distributing and marketing of petroleum products in the Philippines.
DOE: Govt agency created under RA 7638 3 and tasked to prepare, integrate, coordinate,
supervise and control all plans, programs, projects and activities of the government relative to energy
exploration, development, utilization, distribution and conservation.
FACTS:
Social Justice Society (SJS), Vladimir Cabigao & Bonifacio Tumbokon, in an original petition for
mandamus under Rule 65, sought to compel Mayor Atienza of Manila, to enforce Ordinance No. 8027.
Entitled "Ordinance Reclassifying the Land Use of Those Portions of Land
Bounded by:
the Pasig River (In The North); PNR Railroad Track (in the
East), Beata St. (in the South), Palumpong St. (in the Southwest) and Estero de
Pandacan (in the West),
PNR Railroad (in the Northwest Area), Estero of Pandacan (in
the Northeast), Pasig River (in the Southeast) and Dr. M. L. Carreon (in the Southwest);
the Area of Punta, Sta. Ana Bounded by the Pasig River,
Marcelino Obrero St., Mayo 28 St. and the F. Manalo Street from Industrial II to
Commercial I".
Ordinance No. 8027 was enacted by the Sangguniang Panlungsod of Manila on Nov. 20, 2001,
approved by Mayor Atienza on Nov. 28, 2001, and became effective on Dec. 28, 2001 after publication.
It reclassified the area described from industrial to commercial (for the
purpose of promoting sound urban planning and ensuring health, public safety, and general
welfare of the residents of Pandacan and Sta. Ana as well as its adjoining areas) [Sec. 1].
It also directed the owners and operators of businesses disallowed under the
reclassification to cease and desist from operating their businesses within 6 months from the
date of effectivity of the ordinance (June 2002) [Sec. 3]. Among the businesses situated in the area
are the so-called "Pandacan Terminals" of the oil companies.
June 26, 2002: City of Manila & DOE entered into a memorandum of understanding (MOU) with
the oil companies and agreed that "the scaling down of the Pandacan Terminals was the most viable and
practicable option."
Sangguniang Panlungsod ratified the MOU in Resolution No. 97 w/c was
effective only for a period of 6 months starting July 25, 2002.
Jan. 30, 2003: Sanggunian adopted Resolution No. 13 extending the validity of
Resolution No. 97 to Apr. 30, 2003 and authorizing the mayor of Manila to issue special business
permits to the oil companies.

 SC Decision (Mar. 7, 2007): Mayor Atienza had the ministerial duty under the Local Government
Code to "enforce all laws and ordinances relative to the governance of the city", including Ordinance No.
8027. Nothing legally hindered Mayor Atienza from enforcing Ordinance No. 8027.
No need not resolve the issue of whether the MOU entered into by Mayor Atienza
with the oil companies and the subsequent resolutions passed by the Sanggunian could amend or
repeal Ordinance No. 8027 since the resolutions which ratified the MOU and made it binding on the
City of Manila expressly gave it full force and effect only until Apr. 30, 2003.
(INSTANT CASE) The oil companies & DOE sought to intervene and filed MRs in intervention on
Mar. 12, 2007 & Mar. 21, 2007.
Apr.11, 2007: Oral arguments in Baguio City were conducted.
OIL COMPANIES ARGUMENTS
Apr. 25, 2003, Chevron had filed a complaint for the annulment of Ordinance No. 8027 with
application for writs of preliminary prohibitory injunction and preliminary mandatory injunction against Mayor
Atienza and the City of Manila in RTC Manila, Br. 39.
Same day: Shell filed a petition for prohibition and mandamus with application for writs of
preliminary prohibitory injunction and preliminary mandatory injunction likewise assailing the validity of
Ordinance No. 8027. These 2 cases were consolidated.
RTC Order (May 19, 2003): GRANTED the applications for writs of preliminary prohibitory
injunction and preliminary mandatory injunction upon the filing of a total bond of Php2M.
Writ of Preliminary Prohibitory Injunction: To issue ordering Mayor Atienza and
the City of Manila, their officers, agents, representatives, successors, and any other persons
assisting or acting in their behalf, during the pendency of the case, to REFRAIN from taking
steps to enforce Ordinance No. 8027
Writ of Preliminary Mandatory Injunction: Be issued ordering Mayor Atienza to
issue to Chevron and Shell the necessary Business Permits to operate at the Pandacan
Terminal.
Petron also filed its own petition with prayer for the issuance of a writ of preliminary injunction
and/or TRO in the RTC of Manila, Br. 42, also attacking the validity of Ordinance No. 8027. [PETRON
CASE]
RTC Order (Aug. 4, 2004): Enjoined the parties to maintain the status quo.
2006: City council of Manila enacted Ordinance No. 8119 (Manila Comprehensive Land Use Plan
and Zoning Ordinance of 2006) approved by Mayor Atienza on June 16, 2006.
Aggrieved anew, Chevron & Shell filed a complaint asking for the nullification of Ordinance No.
8119 in RTC Manila, Br. 20.
Petron tried to intervene but was denied so it filed its own complaint on the same causes of action
in the RTC Manila, Br. 41.
RTC Order: Issued a TRO in favor of Petron, enjoining the City of Manila and Mayor Atienza from
enforcing Ordinance No. 8119.
Feb. 20, 2007: Meanwhile, in the Petron Case, the parties (Petron & Mayor A) filed a joint motion
to withdraw complaint and counterclaim.
RTC Order (Apr. 23, 2007): GRANTED the joint motion and all the claims and counterclaims of the
parties were withdrawn.
ISSUES: [Original issues are 1,2,5]
1) Whether movants-intervenors (oil companies & DOE) should be allowed to intervene in this case? (YES)
2) Whether the ff. are impediments to the execution of our March 7, 2007 decision:
(a) Writs of preliminary prohibitory injunction and preliminary mandatory injunction and status quo
order issued by the RTC of Manila, Br. 39 & 42? (NO)
(b) Ordinance 8119, the enactment and existence of which were not previously brought by parties to the
attention of SC? (NO)
3) Whether mandamus lies to compel Mayor Atienza to enforce Ordinance No. 8027? (YES)
4) Whether Ordinance 8027 is unconstitional? (NO)
5) Whether implementation of Ordinance 8027 will unduly encroach upon the DOE's powers and functions involving
energy resources? (NO)
RATIO:
HISTORY OF THE PANDACAN OIL TERMINALS
Pandacan is situated along the banks of the Pasig river making it ideal for emerging industries

since the nearby river facilitated the transportation of goods and products. 1920s, it was classified as an
industrial zone & among its early industrial settlers were the oil companies. Shell (Jan. 30, 1914); Caltex
(now Chevron) followed suit in 1917. 1922: Esso (Petron's predecessor) went on to operate a state-of-theart lube oil blending plant.
Dec. 8, 1941: During WWII, US Army took control and destroyed the storage facilities to deprive the
advancing Japanese Army of a valuable logistics weapon. They burned unused petroleum, causing a
conflagration w/c destroyed the Pandacan Terminals and rendered depots and service stations inoperative.
After the war, the oil depots were reconstructed. 3 major oil companies resumed the operation of
their depots. It evolved into a bustling community and today has become a densely populated area w/
schools, informal shanties & nearby Malacanang.
Now, Pandacan Terminals house the oil companies' distribution terminals and depot facilities. The
refineries of Chevron & Shell in Batangas; Petron in Bataan, are connected to the Pandacan Terminals
through a 114-km underground pipeline system. The terminals store fuel and other petroleum products and
supply 95% of the fuel requirements of Metro Manila, 50% of Luzon's consumption and 35% nationwide.
I. INTERVENTION OF THE OIL COMPANIES AND THE DOE SHOULD BE ALLOWED IN THE INTEREST OF
JUSTICE
While the Oil Companies lack the 4 th requisite for intervention of a non-party, that is, the motion to
intervene may be filed at any time BEFORE rendition of judgment by the trial court. However, it falls
under exceptions to Sec. 2, Rule 19 in the interest of substantial justice, that is, because they have legal
interest in this case due to the fact that the ordinance implementation will directly affect their business and
property rights.
The interest which entitles a person to intervene in a suit between other parties must be in the
matter in litigation and of such direct and immediate character that the intervenor will either gain or lose by
direct legal operation and effect of the judgment.
Theyre allowed to intervene also because they raised and presented novel issues and
arguments that were not considered by SC in its previous decision. The allowance or disallowance of a
motion to intervene is addressed to the sound discretion of the court before which the case is pending.
This will not unduly delay or prejudice the adjudication of rights of the original parties & it will actually
expedite it since their intervention will enable SC to rule on the constitutionality of Ordinance No. 8027.
DOE was also allowed for the purpose of hearing all sides and considering the transcendental
importance of this case.
II A. THE INJUNCTIVE WRITS ARE NOT IMPEDIMENTS TO THE ENFORCEMENT OF ORDINANCE NO. 8027
(ONLY IMPT. PART)
Rule 65, Sec. 3 of the ROC: A petition for mandamus may be filed when any tribunal,
corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically
enjoins as a duty resulting from an office, trust or station.
Oil companies: Mayor Atienza did not unlawfully fail or neglect to enforce Ordinance No. 8027
because he was lawfully prevented from doing so by virtue of the injunctive writs and status quo
order issued by the RTC Manila, Br. 39 & 42.
SC: No merit. First. While Chevron & Shell still have in their favor the WPI & WPMI, the status quo
order in favor of Petron is no longer in effect since RTC granted the joint motion of the parties to
withdraw the complaint and counterclaim. Second. Original parties (SJS et al & Mayor) failed to inform SC
about these injunctive writs.
Mayor Atienza (impleaded as a party in the RTC cases): He informed the court of the pendency of
the civil cases and that a TRO was issued by the RTC in the consolidated cases filed by Chevron & Shell.
SC: It is true that had the oil companies only intervened much earlier, SC would not have been left
in the dark about these facts. Nevertheless, Mayor A should have updated the Court, by way of
manifestation, on such a relevant matter.
In his MEMORANDUM, Mayor Atienza mentioned the issuance of a TRO. Under
Sec. 5 of Rule 58 of ROC, a TRO issued by the RTC is effective only for a period of 20 days. This
is why, in SCs Mar. 7, 2007 decision, SC presumed with certainty that this had already lapsed.
Mayor Atienza also mentioned the grant of injunctive writs in his REJOINDER
which SC, however, expunged for being a prohibited pleading. The parties and their counsels were
clearly remiss in their duties to this Court.
In resolving controversies, courts can only consider facts and issues pleaded by
the parties. Courts, as well as magistrates presiding over them are not omniscient. They can only

act on the facts and issues presented before them in appropriate pleadings. They may not even
substitute their own personal knowledge for evidence. Nor may they take notice of matters except
those expressly provided as subjects of mandatory judicial notice.
On the issue of whether the injunctive writs are legal impediments to the enforcement of Ordinance
No. 8027: SC rules in the negative
Grounds for the issuance of a writ of preliminary injunction (Sec. 3, Rule 58 of ROC): A
preliminary injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of
such relief consists in restraining the commission or continuance of the act or acts complained of,
or in requiring the performance of an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance or nonperformance of the act or acts
complained of during the litigation would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting
to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of
the applicant respecting the subject of the action or proceeding, and tending to render the judgment
ineffectual.
HSCATc
2 Requisites for the issuance of a preliminary injunction: (1) the right to be protected exists
prima facie and (2) the acts sought to be enjoined are violative of that right. It must be proven that the
violation sought to be prevented will cause an irreparable injustice.
CASE AT BAR: The act sought to be restrained here was the enforcement of Ordinance No. 8027.
An ordinance enjoys the presumption of validity and, as such, cannot be restrained by injunction.
Nevertheless, when the validity of the ordinance is assailed, the courts are not precluded from
issuing an injunctive writ against its enforcement. However, issuance of said writ is proper only
when the petitioner assailing the ordinance has made out a case of unconstitutionality strong
enough to overcome, in the mind of the judge, the presumption of validity, in addition to a showing
of a clear legal right to the remedy sought (Filipino Metals Corp. v. Sec. of DTI).
Basis of RTC J. Ros for issuing the injunctive writs: He was guided by ff. requirements: (1) a clear
legal right of the complainant; (2) a violation of that right; and (3) a permanent and urgent necessity for the
Writ to prevent serious damage w/c he believes were present.
(1) Chevron & Shell have been legitimately operating their business in the
Pandacan Terminal for many years and they have made substantial capital investment therein. Vital
importance to the national economy. They have a right to continue their operation in the Pandacan
Terminal and the right to protect their investments.
(2) The enactment of City Ordinance No. 8027 violated their rights to continue
their legitimate business in the Pandacan Terminal and deprived them of their huge investments
they put up therein.
(3) Before RTC determines whether the Ordinance in question is valid or not, a
WPI & a WMI be issued to prevent serious and irreparable damage to Chevron & Shell.
SC: Nowhere in RTC judge's discussion did he show that in addition to a clear legal right of
Chevron & Shell to the remedy sought, he was convinced that they had made out a case of
unconstitutionality or invalidity strong enough to overcome the presumption of validity of the
ordinance.
Statutes and ordinances are presumed valid unless and until the courts declare the contrary in
clear and unequivocal terms. The mere fact that the ordinance is alleged to be unconstitutional or invalid will
not entitle a party to have its enforcement enjoined. The presumption is all in favor of validity.
REASON FOR PRESUMPTION: The action of the elected representatives of the people cannot be
lightly set aside. The councilors must be familiar with the necessities of their particular municipality and with
all the facts and circumstances which surround the subject and necessitate action. The local legislative
body, by enacting the ordinance, has in effect given notice that the regulations are essential to the well being
of the people. The Judiciary should not lightly set aside legislative action when there is not a clear invasion
of personal or property rights under the guise of police regulation.
Judiciary, in the determination of actual cases and controversies, must reflect the
wisdom and justice of the people as expressed through their representatives in the executive and
legislative departments of the government.
OIL COMPANIES: This presumption must be set aside when the invalidity or unreasonableness
appears on the face of the ordinance itself.

 SC: No reason to set aside the presumption. The ordinance, on its face, does not at all appear
to be unconstitutional. It reclassified the subject area from industrial to commercial.
Prima facie, this power is within the power of municipal corporations: The power of municipal
corporations to divide their territory into industrial, commercial and residential zones is recognized in almost
all jurisdictions inasmuch as it is derived from the police power itself and is exercised for the protection and
benefit of their inhabitants (People v. de Guzman).
City of Manila has the power to divide its territory into residential and industrial zones, and to
prescribe that offensive and unwholesome trades and occupations are to be established exclusively in the
latter zone (like manufacture of toyo) (Seng Kee & Co. v. Earnshaw and Piatt).
CASE AT BAR: Courts will not invalidate an ordinance unless it clearly appears that it is
unconstitutional. There is no such showing here. Thus, the injunctive writs issued in the Manila RTC's May
19, 2003 order had no leg to stand on.
Although the issuance of these injunctive writs is not being assailed as tainted with GAD, we are
confronted with the question of whether these writs issued by a lower court are impediments to the
enforcement of Ordinance No. 8027 (which is the subject of the mandamus petition). As already discussed,
we rule in the negative.
II B. ORDINANCE NO. 8027 WAS NOT SUPERSEDED BY ORDINANCE NO. 8119
SC decision did not take into consideration the passage of Ordinance No. 8119 because it was
never informed about this ordinance. Failure of Mayor Atienza to inform SC is inexcusable.
While courts are required to take judicial notice of the laws enacted by Congress, local ordinances
are not included in the enumeration of matters covered by mandatory judicial notice under Sec. 1, Rule 129
of ROC.
Although, Sec. 50 of RA 409 (Revised Charter of Manila) provides that All courts sitting in the city
shall take judicial notice of the ordinances passed by the [Sangguniang Panglungsod], this does not apply
to SC since a court is not required to take judicial notice of ordinances that are not before it and to which it
does not have access. The party asking the court to take judicial notice is obligated to supply the court with
the full text of the rules the party desires it to have notice of.
THE RULE ON JUDICIAL ADMISSIONS IS NOT APPLICABLE AGAINST MAYOR ATIENZA
OIL COMPANIES: Mayor Atienza judicially admitted that Ordinance No. 8027 was repealed by
Ordinance No. 8119 in Petron Case when in their joint motion they stated that "the issue has been rendered
moot and academic by virtue of the passage of Ordinance No. 8119." His answer in Chevron & Shell case
also expressly stated that Ordinance No. 8119 replaced Ordinance No. 8027.
MAYOR ATIENZA: Petron was only recognizing the validity of Ordinance 8027 and that it had
conceded the issue of said ordinance's constitutionality, opting instead to question the validity of Ordinance
No. 8119.
Rule 129, Sec. 4 of ROC: Judicial admissions. An admission, verbal or written, made by a party
in the course of the proceedings in the same case, does not require proof. The admission may be
contradicted only by showing that it was made through palpable mistake or that no such admission was
made.
While it is true that a party making a judicial admission cannot subsequently take a position
contrary to or inconsistent with what was pleaded, the rule is not applicable here. To constitute a judicial
admission, the admission must be made in the same case in which it is offered.
Cases where the statements by Mayor A. were made are not "the same" as this case before us.
Thus, hes not estopped from claiming that Ordinance 8119 did not supersede Ordinance 8027. It is the oil
companies which should actually be considered estopped since they rely on the argument that Ordinance
No. 8119 superseded Ordinance No. 8027 but, at the same time, also impugn its (Ord. 8119's) validity.
ORDINANCE NO. 8119 DID NOT IMPLIEDLY REPEAL ORDINANCE NO. 8027
Oil companies & DOE: Ordinance No. 8119 impliedly repealed Ordinance No. 8027 under the
first kind of repeal where the provisions in the two acts on the same subject matter are irreconcilably
contradictory, the latter act, to the extent of the conflict, constitutes an implied repeal of the earlier one.
Ordinance No. 8119 reclassified the area covering the Pandacan Terminals to
"High Density Residential/Mixed Use Zone (R-3/MXD)" & provides for a phase-out of 7 years. It
also designated the Pandacan oil depot area as a "Planned Unit Development/Overlay Zone (OPUD)"
Ordinance No. 8027 reclassified the same area from Industrial II to Commercial I
& compels affected entities to vacate the area within 6 months from the effectivity of the ordinance.

 MAYOR ATIENZA: In passing Ordinance No. 8119, the Sanggunian did not intend to repeal
Ordinance No. 8027 but meant instead to carry over 8027's provisions (such as definition, density) to 8119
for the purpose of making Ordinance No. 8027 applicable to the oil companies even after the passage of
Ordinance No. 8119. (quoting minutes of Sanggunians meeting)
SC: Agree with Mayor A. Implied repeals are not favored and will not be so declared unless the
intent of the legislators is manifest. If the intent to repeal is not clear, the later act should be construed as
a continuation of, and not a substitute for, the earlier act.
CASE AT BAR: In enacting Ordinance No. 8119, there was no indication of the legislative
purpose to repeal Ordinance No. 8027. While it is true that both ordinances relate to the same subject
matter, i.e., classification of the land use of the area where Pandacan oil depot is located, if there is no intent
to repeal the earlier enactment, every effort at reasonable construction must be made to reconcile the
ordinances so that both can be given effect.
No conflict between the 2 ordinances. Zone classifications in Ordinance No. 8119 are not
inconsistent with the reclassification of the Pandacan area from Industrial to Commercial in Ordinance No.
8027. Both ordinances actually have a common objective, i.e., to shift the zoning classification from
industrial to commercial (Ordinance No. 8027) or mixed residential/commercial (Ordinance No. 8119).
Moreover, a subsequent general law does not repeal a prior special law on the same subject
unless it clearly appears that the legislature has intended by the latter general act to modify or repeal the
earlier special law. Generalia specialibus non derogant.
CASE AT BAR: Ordinance No. 8027 is a special law since it deals specifically with a certain area
described therein (the Pandacan oil depot area) whereas Ordinance No. 8119 can be considered a general
law as it covers the entire city of Manila.
Oil Companies: Even if it is a special law, the existence of an all-encompassing repealing
clause in Ordinance No. 8119 evinces an intent on the part of the Sanggunian to repeal the earlier
ordinance.
SC: Minutes (an official record of the discussions in the Sanggunian) actually indicated the clear
intent to preserve the provisions of Ordinance No. 8027.
III. MANDAMUS LIES TO COMPEL MAYOR ATIENZA TO ENFORCE ORDINANCE NO. 8027
Oil companies: Mandamus does not lie against Mayor A bec. of doctrine of separation of powers.
SC: No. The function of a writ of mandamus is exactly the power to compel "the performance of an
act which the law specifically enjoins as a duty resulting from office, trust or station." Courts will not interfere
by mandamus proceedings with the legislative [or executive departments] of the government in the
legitimate exercise of its powers, except to enforce mere ministerial acts required by law to be
performed by some officer thereof.
Oil companies: SJS et al had a plain, speedy and adequate remedy to compel Mayor Atienza to
enforce Ordinance No. 8027 which was to seek relief from the President through Sec. of DILG by virtue of
the President's power of supervision over LGUs.
SC: No. A party need not go first to the DILG in order to compel the enforcement of an ordinance.
This would be unreasonably long, tedious and injurious to the interests of LGU and its constituents whose
welfare is sought to be protected. Besides, resort to an original action for mandamus before SC is allowed
by the Const.
IV. ORDINANCE NO. 8027 IS CONSTITUTIONAL AND VALID
Although there is pendency of consolidated cases in the RTC involving the issue of validity &
constitutionality of ordinance, SC resolves to decide this issue here considering its impact on public
interest and as agreed by parties in oral arguments.
For an ordinance to be valid, it must not only be within the corporate powers of the LGU to enact
and be passed according to the procedure prescribed by law, it must also conform to the ff. substantive
requirements: (1) must not contravene the Constitution or any statute; (2) must not be unfair or oppressive;
(3) must not be partial or discriminatory; (4) must not prohibit but may regulate trade; (5) must be general
and consistent with public policy and (6) must not be unreasonable.
THE CITY OF MANILA HAS THE POWER TO ENACT ORDINANCE NO. 8027
Ordinance No. 8027 was passed by the Sangguniang Panlungsod of Manila in the exercise of its
police power. Sec. 16 of the LGC, known as the general welfare clause, encapsulates the delegated police
power to local governments.
LGUs like the City of Manila exercise police power through their respective legislative bodies, in
this case, the Sangguniang Panlungsod or the city council as provided in RA 409 or the Revised Charter of

the City of Manila. It can enact ordinances for the general welfare of the city. Specifically, the Sanggunian
has the power to "reclassify land within the jurisdiction of the city."
THE ENACTMENT OF ORDINANCE NO. 8027 IS A LEGITIMATE EXERCISE OF POLICE POWER
Requisites for LGUs exercise of PP: (1) the interests of the public generally, as distinguished from
those of a particular class, require its exercise and (2) the means employed are reasonably necessary for
the accomplishment of the purpose and not unduly oppressive upon individuals. In short, there must be a
concurrence of a lawful subject and a lawful method. Ordinance No. 8027 is a valid police power measure
because there is a concurrence of lawful subject and lawful method.
LAWFUL SUBJECT: Ordinance No. 8027 was enacted "for the purpose of promoting sound urban
planning, ensuring health, public safety and general welfare" of Manila residents. The Sanggunian was
impelled to take measures to protect the residents of Manila from catastrophic devastation in case of a
terrorist attack on the Pandacan Terminals so they reclassified the area from industrial to commercial.
Report of Committee on Housing, Resettlement & Urban Devt of Manila recommending the
approval of the ordinance:
(1) the depot facilities contained 313.5 million liters of highly flammable and
highly volatile products which include petroleum gas, liquefied petroleum gas, aviation fuel, diesel,
gasoline, kerosene and fuel oil among others;
(2) the depot is open to attack through land, water or air
(3) it is situated in a densely populated place and near Malacaang Palace and
(4) in case of an explosion or conflagration in the depot, the fire could spread to
the neighboring communities.
The depot is perceived, rightly or wrongly, as a representation of western interests which means
that it is a terrorist target. It therefore became necessary to remove these terminals to dissipate the threat.
LAWFUL METHOD: In the exercise of police power, property rights of individuals may be subjected
to restraints and burdens in order to fulfill the objectives of the government. However, the interference must
be reasonable and not arbitrary so such methods or means must have a reasonable relation to the end in
view.
CASE AT BAR: Means adopted was enactment of a zoning ordinance which reclassified the area
where the depot is situated from industrial to commercial. Zoning ordinance is defined as a local legislation
which logically arranges, prescribes, defines and apportions a given political subdivision into specific land
uses as present and future projection of needs. The enactment of the ordinance is w/n the police power
of Sangguniang Panlungsod. Any resulting burden on the affected cannot be said to be unjust.
The Constitution protects the citizen in his right to engage in any lawful business, but it does not
prevent legislation intended to regulate useful occupations which, because of their nature or location, may
prove injurious or offensive to the public."
ORDINANCE NO. 8027 IS NOT UNFAIR, OPPRESSIVE OR CONFISCATORY WHICH AMOUNTS TO TAKING
WITHOUT COMPENSATION
Oil companies: Ordinance No. 8027 is unfair and oppressive as it does not only regulate but also
absolutely prohibits them from conducting operations in the City of Manila.
Mayor A: Not accurate since the ordinance merely prohibits the oil companies from operating their
businesses in the Pandacan area.
SC: Agrees w/ Mayor A. The oil companies are not forbidden to do business in the City of Manila &
Ordinance No. 8027 did not render the oil companies illegal. They may still do business, except that their oil
storage facilities are no longer allowed in the Pandacan area.
The City of Manila merely exercised its power to regulate the businesses and industries in the
zones by means of zonification.
Oil companies: Ordinance unfair and oppressive because they have invested billions of pesos in
the depot & its forced closure will result in huge losses in income and tremendous costs in constructing new
facilities.
SC: No merit. Property condemned under the exercise of police power is noxious or intended for a
noxious or forbidden purpose and, consequently, is not compensable. The restriction imposed to protect
lives, public health and safety from danger is not a compensable taking since in the regulation of the use of
the property, nobody else acquires the use or interest therein.
CASE AT BAR: Properties of the oil companies and other businesses situated in the affected area
remain theirs. Only their use is restricted although they can be applied to other profitable uses permitted in
the commercial zone.

ORDINANCE NO. 8027 IS NOT PARTIAL AND DISCRIMINATORY

Oil companies: Ordinance has discriminated against and singled out the Pandacan Terminals
despite the fact that the Pandacan area is congested with buildings and residences that do not comply with
the National Building Code, Fire Code and Health and Sanitation Code.
SC: An ordinance based on reasonable classification does not violate the constitutional guaranty of
the equal protection of the law. Reasonable classification since what the ordinance seeks to prevent is a
catastrophic devastation that will result from a terrorist attack. Unlike the depot, the surrounding community
is not a high-value terrorist target. The enactment of the ordinance provides for the cessation of the
operations & removes the threat they pose; thus it is germane.
V. ORDINANCE NO. 8027 IS NOT INCONSISTENT WITH RA 7638 AND RA 8479
Oil companies & DOE: Ordinance No. 8027 is unconstitutional because it contravenes RA 7638
(DOE Act of 1992) and RA 8479 (Downstream Oil Industry Deregulation Law of 1998) w/c give DOE
authority to "establish and administer programs for the exploration, transportation, marketing, distribution,
utilization, conservation, stockpiling, and storage of energy resources" and "shall continue to encourage
certain practices in the Industry which serve the public interest and are intended to achieve efficiency and
cost reduction, ensure continuous supply of petroleum products."
DOE has primary and exclusive jurisdiction since the administration etc. of
petroleum products are of national interest & are major and critical energy resources. Ordinance
8027 frustrates the state policy of ensuring a continuous, economic supply of energy & also thwarts
DOEs determination that terminals' operations should be merely scaled down.
Mayor Atienza: DOE's regulatory power does not preclude LGUs from exercising their police
power.
SC: Indeed, ordinances should not contravene existing statutes enacted by Congress. However,
Ordinance 8027 does not contravene RA 7638 & RA 8479. Nothing in said laws prohibits Manila from
enacting ordinances in the exercise of its police power. The principle of local autonomy is enshrined in the
Constitution (Art. II, Sec. 25).
The common dominator of all decisions where the police power measure of the LGU clashed with
national laws is that the national laws were clearly and expressly in conflict with the LGUs ordinances.
Inconsistencies were so patent that there was no room for doubt.
CASE AT BAR: No. Laws cited merely gave DOE general powers w/c can be exercised without
emasculating the LGUs of the powers granted them. When these ambiguous powers are pitted against the
unequivocal power of the LGU to enact police power and zoning ordinances for the general welfare of its
constituents, it is not difficult to rule in favor of the latter. Doubt resolved in favor of the City of Manila to
ensure genuine and meaningful local autonomy.
THE DOE CANNOT EXERCISE THE POWER OF CONTROL OVER LGUs
Sec. 4 of Article X of the Const. confines the President's power over LGUs to one of general
supervision: The President of the Philippines shall exercise general supervision over local governments.
His alter egos cannot exercise the power of control over them. They cannot interfere with the activities of
LGUs, so long as they act within the scope of their authority.
CASE AT BAR: DOE cannot substitute its own discretion for the discretion exercised by the
Sanggunian of the City of Manila. In local affairs, the wisdom of local officials must prevail as long as they
are acting within the parameters of the Constitution and the law.
ORDINANCE NO. 8027 IS NOT INVALID FOR FAILURE TO COMPLY WITH RA 7924 AND EO 72
Oil companies: Ordinance No. 8027 invalid since it did not go through review process mandated
by law. Zoning ordinances are required to be submitted to MMDA for review and subsequently endorsed to
HLURB. MMDA, pursuant to Sec. 3 (e) of RA 7924, has jurisdiction over metro-wide services including
urban renewal, zoning, and land use planning and shelter services. EO 72 also provides that zoning
ordinances of Manila are subject to review by HLURB to ensure compliance w/ natl standards & guidelines.
SC: No. RA 7942 does not give MMDA the authority to review land use plans and zoning
ordinances. This was only found in its IRR which made a reference to EO 72. EO 72 expressly refers to
comprehensive land use plans only.
Ordinance No. 8027 is not a CLUP but a very specific ordinance which reclassified the land use of
a defined area in order to prevent the massive effects of a possible terrorist attack. It is Ordinance No. 8119
which is Manila CLUP. Also, assuming they should be followed, the oil companies did not present any
evidence to show that said were not complied with.

 A FINAL WORD: Jan. 23, 2008: A defective tanker containing 2k L of gasoline and 14k L of diesel
exploded in the middle of the street a short distance from the exit gate of Pandacan Terminals, causing
death & damage. What more if it is the estimated 162 to 211M liters of petroleum products in the terminal
complex will blow up.
DISPOSITIVE: Motions for leave to intervene of Chevron, Petron & Pilipinas Shell & RP, represented by DOE
GRANTED. Respective MRs DENIED. RTC Manila, Br. 39 ORDERED to DISMISS the consolidated civil cases.
Mayor Atienza ordered to enforce Ordinance No. 8027 & to oversee the relocation and transfer of the Pandacan
Terminals out of its present site in coordination w/ other agencies. Chevron, Petron & Shell shall, within a nonextendible period of 90 days, submit to the RTC Manila, Br. 39, the comprehensive plan and relocation schedule
which have been prepared.
Philippine Ports Authority v. Pier 8 Arrastre and Stevedoring Services, Inc. (Joan)
D. Receivership
E. Replevin
Vda. De Danao v. Ginete, A.M. No. MTJ-03-1474 (Erika)
January 21, 2003
MERLITA DAPADAP Vda. DE DANAO, complainant,
vs.
Judge MANUEL V. GINETE, of the Municipal Trial Court of Masbate, Masbate, respondent.
PANGANIBAN, J.
SUMMARY: Judge Ginete, MTC Judge, issued a Writ of Seizure, upon application of one Fermin Asilum, ordering the
sheriff to take immediate possession of a truck. It turned out, however, that the truck was in custodia legis, being part
of the exhibits formally offered in evidence by the prosecution in a criminal case before the RTC where the
complainant Merlita Danao was also the private complainant. Danao filed the present administrative case. SC ruled
that the Judge is administratively liable for issuing the patently erroneous writ. He was fined.
DOCTRINE: Basic is the rule that property already placed under legal custody may not be a proper subject of
replevin. (See Sec 2, Rule 60 for other requirements in the issuance of writ of replevin.)
FACTS:
June 25, 1999: in a sworn statement, Merlita Dapadap Vda. de Danao charged Judge Manuel V.
Ginete with gross ignorance of the law, grave abuse of authority, delay in rendering judgments and serious
misconduct.
Allegations
Writ of Seizure
Judge Ginete, the presiding judge of the MTC of Masbate, Masbate, issued a Writ of Seizure
dated Aug 12, 1998, ordering the sheriff of the RTC of Masbate to take immediate possession of a 6 x
6 truck and to hold it in possession for 5 days (Pursuant to an application by one Fermin Asilum).
The judge supposedly did so despite being informed by C/Insp. Tomas Semeniano, et al.
that the truck was in custodia legis, as it was part of the exhibits formally offered in evidence by the
prosecution under a Criminal Case pending before the RTC, Branch 44, Masbate.
Danao was the private Danao in the Criminal Case
She moved to cite Judge Ginete in contempt of the RTC of Masbate, Branch 44.
Upon learning of this Motion, Judge Ginete issued an Order dated Sept 28, 1998, lifting the Writ of
Seizure.
Perjury/Wrongful Arrest
In a case for perjury entitled People v. Merlita Dapadap Vda. de Danao, he ordered her arrest
solely on the basis of the purported affidavits of witnesses.
These affidavits turned out to be non-existing, as indicated by a Certification dated Mar 22, 1999,
issued by Felixberto V. Granado Jr., Clerk of Court II of the MTC of Masbate.
there are no affidavits of Job Bartolata and Rudy Dao, the witnesses cited by Atty. Freddie Serra in
the case he filed against Danao for perjury
Judge Ginetes Comment
Writ of Seizure
Denied that the Orders were tainted with bad faith and done with grave abuse of authority.
The untimely issuance of the Writ of Seizure was brought about by the failure of Danao
and her counsel to present proof that the truck had actually been under the custody of the RTC of

Masbate
As soon as he learned that the property was indeed in custodia legis, he immediately issued
a recall order that demonstrated his good faith and honest intention
Perjury
Attributed the delay to the request for deferment by Atty. Federico Serra.
The request was grounded on the fact that the latter was awaiting the outcome of his appeal with
the regional state prosecutor relative to his involvement in a Criminal Case for murder, which formed the
basis of the complaint
Citing justice and fair play, he further argued that there was no need for affidavits of corroborating
witnesses in the perjury case, because the affidavit of Atty. Serra (the private complainant in the perjury
case) was already sufficient.
The administrative Complaint was premature, because the Motion to cite him for contempt was still
pending before the RTC.
OCA (July 25, 2002): recommended that Judge Ginete be administratively sanctioned
Grave error when he issued the Writ of Seizure inspite of the fact that the subject vehicle
was in custodia legis as evidence for the prosecution in a Criminal Case pending before RTC,
Branch 44, Masbate.
Judge Ginete himself admitted the error but he did so only when he learned that a motion for
contempt had been filed against him before the RTC where the criminal case was pending.
He ignored a basic defect in the application for replevin. He cannot justify the issuance of the
Writ by citing absence of proof pendency of the criminal case involving the vehicle. This is easily verifiable.
He needed no further proof when he made the turn-around upon learning of the motion for contempt against
him.
He cannot attribute the delay in the disposition of the perjury case to Danao in the case. To hold in
abeyance the proceedings in a criminal case for the benefit of the complainant is to go against the right of
the accused to speedy trial. Again this is a basic mistake.
Liable for making it appear that the basis for issuing the warrant of arrest against Danao was the
complaint of Atty. Serra and the corroborating affidavits of alleged witnesses, Job Bartolata and Rudy Dao,
when in reality there were no affidavits of said witnesses, attached to Serras Danao as certified by Clerk of
Court II, Felixberto V. Granado, Jr
Suggested that Judge Ginete should be fined P5K
ISSUE: W/N Judge Ginete is administratively liable:
1. For issuing the Writ of Seizure (YES)
2. For unjust delay in the disposition of a case (YES)
3. For ordering Danaos arrest based on fictitious witnesses (YES)
RATIO:
SC agrees with the OCA that Judge Ginete is administratively liable, but the penalty should be
increased pursuant to Rule 140.
(1) ISSUING A PATENTLY ERRONEOUS WRIT
As a rule, judges may not be held administratively accountable for every erroneous order or
decision they render. Otherwise, no one would be able to escape administrative liability. Such sanctions are
called for, only when their error is gross or patent, or when they act fraudulently or with gross ignorance. It is
the disregard for an established rule of law amounting to ignorance thereof that makes them liable to
disciplinary action.
CASE AT BAR: Contrary to the elementary rules on replevin, Judge Ginete improperly
ordered the seizure of a vehicle under custodia legis in another court, a higher one at that.
Sec 2 of Rule 60: clearly requires that certain facts must be alleged in the application for replevin
SEC. 2. Affidavit and bond. -- The applicant must show by his own affidavit or
that of some other person who personally knows the facts:
(c) That the property has not been distrained or taken for a tax assessment or a fine pursuant to
law, or seized under a writ of execution or preliminary attachment, or otherwise placed under
custodia legis, or if so seized, that it is exempt from such seizure or custody
The plaintiff must show, by affidavit, that the subject property has not been (1) distrained, (2) taken
for a tax assessment or a fine pursuant to law, (3) seized under a writ of execution or preliminary
attachment, or (4) placed under custodia legis.

 Fermin Asilum, the plaintiff in the replevin case, concealed from the MTC the fact that he
was involved in a pending suit and that the property he wanted to recover had been seized by
authorities earlier in relation to that criminal case.
This circumstance was, however, disclosed by the defendants in their Answer.
Notwithstanding the disclosure, Judge Ginete issued the Writ of Seizure -- a manifest and gross
error on his part.
Since they are duty-bound to administer the law and apply it to the facts, judges are expected to
know elementary principles of law and to be diligent in ascertaining the facts.
Basic is the rule that property already placed under legal custody may not be a proper
subject of replevin.
This principle applies especially when a court of coordinate or, as in this case, of superior
jurisdiction has already established its authority over the property. A contrary ruling would be tantamount to
subverting a doctrine steadfastly adhered to, the main purposes of which are to assure stability and
consistency in judicial actuations and to avoid confusion that may otherwise ensue if courts are permitted to
interfere with one anothers lawful orders.
Judge Ginete should have taken into account the information given by Danao that the
property was already under custodia legis by the RTC of Masbate. As correctly observed by the
OCA, the fact that the subject property was under legal custody was easily verifiable.
Judge Ginete: after he discovered such fact by himself, thru his own efforts and initiative, he lost
no time in recalling his Order.
SC: Prudence dictates that he should have ascertained the information first before issuing the
Order of Seizure. Section 2 of Rule 60 specifically requires this fact to be established first in an application
for a writ of replevin.
Before acting, he should not have waited for the Motion to cite him for contempt. He could
have then prevented committing a gross error and avoided compromising his judicial office.
Judge Ginetes incredible claim of good faith will not shield him from sanction. Neither will shifting
the blame to defendants counsel, Atty. Elenito Bagalihog, mitigate his liability.
Judges are obliged to be faithful to the law and to maintain professional competence. They are
duty-bound to be proficient in basic legal principles and to be aware of well-settled doctrines. Anything short
of this sworn obligation taints the judiciarys exacting standards.
(2) UNJUST DELAY IN THE DISPOSITION OF A CASE
Judge Ginete was amiss, as well, in the resolution of the Complaint for perjury against Danao.
He certified Atty. Federico Serras Complaint-affidavit filed on May 9, 1997.
For nearly two years, however, he took no further action until he precipitately issued his March 1,
1999 Order for the arrest of Danao.
Atty. Serra claimed that he was responsible for the delay in the resolution of the Complaint,
because he had requested the deferment of any action on it.
Judge Ginete: Finding nothing illegal or immoral in this alleged verbal request, Judge Ginete
justified his inaction by opining that Danao was not restrained of her liberty as the warrant of arrest was
issued only on March 1, 1999 and she has posted bail on March 16, 1999.
SC: We cannot sustain Judge Ginetes flimsy excuse. The Code of Judicial Conduct directs judges
to dispose of the courts business promptly within the periods prescribed by law and the rules. Unreasonable
delays in the disposition of a judicial matter undermine the peoples faith and confidence in the judiciary.
Rules on Criminal Procedure regarding preliminary investigation of cases falling under the
exclusive jurisdiction of the MTC provides that upon the filing of a complaint, the investigating officer, judge
or prosecutor shall decide within ten days whether to dismiss the complaint or to proceed with the
investigation. After due investigation, the officer has another ten days to determine whether or not there is
sufficient ground to hold the respondent for trial. Thereafter, the resolution on the case is submitted to the
provincial or city prosecutor for review.
Judge Ginete clearly ignored the deadline laid down by law to determine whether there was
sufficient ground to hold Merlita Danao for trial. At Atty. Serras alleged verbal request, he deferred action
indefinitely. He thereby ignored the rights of Danao, who was in jeopardy of losing her liberty should the
matter be resolved against her.
The time periods set by law are not to be treated lightly. An unreasonable delay could constitute a
serious violation of the constitutional right to the speedy disposition of cases.
(3) ARREST WAS BASED ON FICTITIOUS WITNESSES

 In his March 1, 1999 Order, he ruled that probable cause was established on the basis of
witnesses affidavits allegedly submitted together with the Complaint. However, a Certification issued by
Clerk of Court Granado Jr. attested to the fact that there were no affidavits of Job Bartolata and Rudy Dao,
the witnesses cited by Atty. Freddie Serra in the case he filed against Danao for Perjury.
While the determination of probable cause that would warrant the arrest of a person is subject to
judicial discretion, he should not have carelessly used or abused such discretion. Also, while the lone
affidavit of a complainant might have been sufficient to determine probable cause, Judge Ginete should
have nevertheless clearly indicated such fact in his Order of Arrest. Instead, he made it appear that Atty.
Serra had submitted the affidavits of the latters witnesses along with the Complaint. Further, Judge Ginete
pretended that he had personally examined these Affidavits to show that he had ample basis to order
Danaos arrest. As a member of the judiciary, he must be beyond suspicion. He must be perceived, not as a
repository of arbitrary power, but as one who dispenses justice under the sanction of the rule of law.
SANCTIONS
Issuing a patently erroneous order and undue delay in rendering a ruling constitute serious and
less serious charges under Sections 8 and 9, respectively, Rule 140.
SEC. 11. Sanctions. A. If the Judge Ginete is guilty of a serious charge, any of the following
sanctions may be imposed:
1. Dismissal from the service, forfeiture of all or part of the benefits as the Court
may determine, and disqualification from reinstatement or appointment to any public office,
including government-owned or controlled corporations. Provided, however, that the forfeiture of
benefits
shall
in
no
case
include
accrued
leave
credits;
2. Suspension from office without salary and other benefits for more than three (3) but not
exceeding
six
(6)
months;
or
3. A fine of more than P20,000.00 but not exceeding P40,000.00.
B. If the respondent is guilty of a less serious charge, any of the following sanctions shall be
imposed:
1. Suspension from office without salary and other benefits for not less than one
(1) nor more than three (3) months; or
2. A fine of more than P10,000.00 but not exceeding P20,000.00.
DISPOSITION: Judge Manuel V. Ginete is FINED P25,000 for issuing a patently and grossly erroneous Order and
for undue delay in rendering a ruling. He is WARNED that a repetition of the same or similar acts shall be dealt with
more severely in the future.
F. Support Pendente Lite
Lam v. Chua (Kat)
March 18, 2004
JOSE LAM, petitioner, vs.
ADRIANA CHUA, respondent.
AUSTRIA-MARTINEZ, J
SUMMARY: Wife filed case for Declaration of Nullity of Marriage to Husband. They have one son. RTC declared their
marriage null and void and ordered Husband to give monthly support to his son in the amount of Php20,000.
Husband argued that there was already a provision for support of the child in a previous case where the CPG of
Husband and Wife was already dissolved. SC: Husbands argument is untenable. Amount of support is by no means
permanent.
DOCTRINE: Any judgment for support is not final and res judicata; it is always subject to modification, depending
upon the needs of the child and the capabilities of the parents to give support. In determining the amount of support
to be awarded, such amount should be in proportion to the resources or means of the giver and the necessities of the
recipient, as may be proved by evidence in court.
FACTS:
March 11, 1994: Adriana Chua filed a petition for declaration of nullity of marriage against Jose
Lam in the RTC of Pasay City (Br. 109).
Adriana and Jose were married on January 13, 198
Out of said marriage, they begot one son, John Paul Chua Lam
Jose was psychologically incapacitated to comply with the essential marital obligations of marriage
but said incapacity was not then apparent
Such psychological incapacity of Jose became manifest only after the celebration of the marriage
when he frequently failed to go home, indulged in womanizing and irresponsible activities, such as,

mismanaging the conjugal partnership of gains

In order to save what was left of the conjugal properties, Adriana was forced to agree with Jose on
the dissolution of their conjugal partnership of gains and the separation of present and future properties;
said agreement was approved by the RTC of Makati City (Branch 149) in a
Decision dated February 28, 1994
Adriana and Jose had long been separated in bed and board
Adriana and Jose have agreed that the custody of their child will be with her, subject to visitation
rights of Jose
Adriana prayed that the marriage between her and Jose be declared null and void but she
failed to claim and pray for the support of their child, John Paul.
Summons was duly served on Jose Lam on March 22, 1994.
Despite the lapse of fifteen days after service of summons, no responsive pleading was filed by
Jose.
Hence, the trial court issued an Order dated April 13, 1994, directing Asst. City Prosecutor
Bonifacio Barrera to conduct an investigation for determination whether or not there was collusion between
the parties and to submit his report thereon.
April 28, 1994, Asst. City Prosecutor Barrera filed his Report stating that "there seems to be no
collusion between the parties".
The trial court then set the case for hearing.
The lone witness was Adriana herself.
Her marriage with Jose was arranged by her parents in the traditional Chinese
way
Her married life was abnormal because Jose very seldom came home, never
worked for a living and instead kept asking for money from her to buy his sports cars (BIGTIME!
Ginawa siyang sugar mommy)
She was also the one spending for all the expenses of their only child, John Paul.
After her testimony, counsel for Adriana formally offered the documentary evidence.
No evidence was presented regarding the amount of support needed by
John Paul or the capacity of Jose to give support.
June 23, 1994: Adriana filed an Urgent Motion to Re-Open on the ground that she was able to
secure additional new evidence which were significant, material and indispensable.
TC (July 6, 1994): granted the motion to re-open the case and held a hearing for the reception of
additional evidence
Pasay RTC admitted into evidence the Marriage Contract dated May 25, 1977 between Jose and
one Celia Santiago, and another Marriage Contract dated May 6, 1982 between Jose and one Evan Lock,
showing that Jose had been married twice before he married Adriana in 1984 (GRABENG CHINESE PA
MAN DIN. tsktsk)
RTC (August 4, 1994): The marriage between Adriana Chua and Jose Lam null and void for being
bigamous by nature. The Local Civil Registrar of Quezon City and the Office of the Civil Registrar General
are hereby ordered to cancel the marriage between Adriana Chua and Jose Lam celebrated on January 13,
1984 by Hon. Guillermo L. Loja of the Metropolitan Trial Court, Quezon City.
Jose Lam is hereby ordered to give a monthly support to his son John Paul
Chua Lam in the amount of P20,000.00.
November 3, 1994: Jose filed a Motion for Reconsideration thereof but only insofar as the decision
awarded monthly support to his son in the amount of P20,000.00.
Jose: There was already a provision for support of the child as embodied in the Makati RTC
decision dated February 28, 1994 wherein he and Adriana agreed to contribute P250,000 each to a common
fund for the benefit of the child
8. Nothing herein shall diminish the rights and obligations of both parties with respect to their son. In the best interest
of the child, the Second Party shall retain care and custody, subject to visitation rights by the First Party to be
exercised through mutual arrangements.
9. It is hereby agreed by the First Party and the Second Party that the First Party and the Second Party shall initially
contribute P250,000 each to a common fund, to be increased as required, to be used solely and exclusively for the
benefit of their son. Said common fund shall be managed and administered by the Second Party, subject to periodic
accounting, until the son reaches majority age.
WHEREFORE, finding the compromise agreement (No. 8 and 9. See facts) to be in order, and not being contrary to
law, morals or public policy, the same is hereby APPROVED. The conjugal partnership of gains existing between the

said spouses is dissolved and a decree of complete separation is established in accordance with the provisions of
Chapter 6 of the Family Code of the Philippines. The parties are hereby enjoined to faithfully comply with the
conditions of their Agreement as embodied in this petition and the same shall, as between the parties, be deemed to
be a decision and/or award in the matters treated in the aforesaid settlement.
Let a copy of this petition as well as the foregoing Decision be recorded in the proper local civil registries and
registries of property at the expense of the herein petitioners pursuant to Article 139 of the Family Code.
His contribution to the common fund had even amounted to P500,000.00.
Pasay RTC (August 22, 1995 Order): denied Jose Lam's MR
The compromise agreement entered into by the parties and approved by the
Makati RTC before the marriage was declared null and void ab initio by the Pasay RTC, is of no
moment and cannot limit and/or affect the support ordered by the latter court
Jose then appealed the Pasay RTC's decision to the Court of Appeals, assigning only a single error
of the trial court:
THE LOWER COURT SERIOUSLY ERRED IN ORDERING APPELLANT TO
GIVE A MONTHLY SUPPORT OF P20,000.00 TO HIS SON BECAUSE THIS WOULD, IN EFFECT,
REQUIRE APPELLANT TO PAY TWICE THE MONTHLY SUPPORT FOR HIS CHILD. BESIDES,
THE LOWER COURT HAS DULY ADMITTED THE FACT THAT THERE WAS A DECISION
ISSUED BY ANOTHER COURT REQUIRING APPELLANT TO CONTRIBUTE THE AMOUNT OF
P250,000.00 AS THE LATTER'S SHARE IN THE COMMON FUND FOR SUPPORT OF THE
CHILD, SUBJECT TO PERIODIC ACCOUNTING AND TO BE MANAGED BY APPELLEE.
CA (June 11, 1997 decision): affirming the Pasay RTC's decision in all respects.
(October 27, 1997 Resolution): MR denied
Hence, Jose filed the present petition for review on certiorari under Rule 45 of the Rules of Court,
likewise raising a single error of the appellate court
THE HONORABLE COURT OF APPEALS ERRED IN DECIDING LEGAL
QUESTIONS OF SUBSTANCE NOT IN ACCORDANCE WITH LAW AND JURISPRUDENCE IN
FINDING THAT THE TRIAL COURT'S RULING THAT THE COMPROMISE AGREEMENT
BETWEEN PETITIONER AND RESPONDENT WHERE THEY BOUND THEMSELVES TO
CONTRIBUTE THE AMOUNT OF P250,000 TO A COMMON FUND FOR THE BENEFIT OF
THEIR CHILD DOES NOT BAR THE TRIAL COURT IN ANNULMENT CASE TO AGAIN AWARD
SUPPORT IN FAVOR OF THE CHILD.
ISSUE: W/N the compromise agreement between the parties where they bound themselves to contribute P250,000
to a common fund for the benefit of their children bar the award of support in favor of the child in the annulment case?
NO
HELD: Petition for review on certiorari GRANTED. CA SET ASIDE but only insofar as the award of support in favor of
John Paul Chua Lam is concerned. RTC REVERSED and SET ASIDE for being null and void, likewise only insofar as
the matter on support is concerned.
Let the records of Civil Case (for annulment) be remanded to the RTC of Pasay City (Br. 109) which is DIRECTED to
reopen the trial of the Civil Case with respect to the claim of Adriana Chua against Jose Lam for the support of John
Paul Chua Lam and conduct hearings for further reception of evidence for the proper determination of the proper
amount of support to be awarded to the child John Paul Chua Lam.
RATIO:
AUTHORITY OF THE TRIAL COURT TO AWARD SUPPORT FOR THE CHILD IN ACTION FOR DECLARATION
OF NULLITY OF MARRIGAE OF THE CHILDS PARENTS
The Pasay RTC and the Court of Appeals are both correct insofar as they ruled that the amount of
support is by no means permanent.
Advincula vs. Advincula: Another action for support could be filed again by the same plaintiff
notwithstanding the fact that the previous case for support filed against the same defendant was dismissed.
Judgment for support does not become final. The right to support is of such nature that its allowance is
essentially provisional; for during the entire period that a needy party is entitled to support, his or
her alimony may be modified or altered, in accordance with his increased or decreased needs, and
with the means of the giver. It cannot be regarded as subject to final determination.
Thus, there is no merit to the claim of Jose that the compromise agreement between him and
Adriana, as approved by the Makati RTC and embodied in its decision dated February 28, 1994 in the case
for voluntary dissolution of conjugal partnership of gains, is a bar to any further award of support in favor of

their child John Paul.

The provision for a common fund for the benefit of their child John Paul, as embodied in the
compromise agreement between herein parties which had been approved by the Makati RTC, cannot be
considered final and res judicata since any judgment for support is always subject to modification,
depending upon the needs of the child and the capabilities of the parents to give support.
FOUR CIRCUMSTANCES THAT TAINT THE REGULARITY OF THE PROCEEDINGS AND THE DECISION OF
THE TRIAL COURT
(1) First, the only ground alleged in the petition for declaration of nullity of marriage filed by Adriana
with the Pasay RTC is the psychological incapacity of Jose without any prayer for the support of her child.
Adriana presented, formally offered her evidence in support of the petition and
submitted the case for decision as of May 12, 1994. But on a motion to re-open filed by her on June
23, 1994, the trial court set the case for reception of evidence on July 6, 1994 and subsequently
allowed Adriana to present evidence of two previous marriages contracted by Jose with other
women to prove that the marriage between Adriana and Jose was null and void for being
bigamous. It is only at the July 6, 1994 hearing that Adriana first claimed support for John Paul
when she testified in open court.
The petition of Adriana was, in effect, substantially changed by the admission of
the additional evidence. The ground relied on for nullity of the marriage was changed from the
psychological incapacity of Jose to that of existence of previous marriages of Jose with two
different women with an additional claim for support of the child. Such substantial changes were not
reflected in the petition filed with the trial court, as no formal amendment was ever made by Adriana
except the insertion of the handwritten phrase "And for Jose to support the child of Adriana in an
amount this Honorable Court may deem just and reasonable" found at the ultimate paragraph of
the petition, as allowed by the Pasay RTC.
There is nothing on record to show that r Jose was notified of the substantial
changes in the petition of Adriana.
(2) Second, the Pasay RTC did not give Jose an opportunity to be present on July 6, 1994 for the
presentation of evidence by Adriana and to refute the same.
Although copy of the motion filed on June 23, 1994 with a notice of hearing on
June 27, 1994 was sent to Jose, the record does not show that he received the notice in due time;
neither does the record show that he was notified of the subsequent hearing held on July 6, 1994
where Adriana presented the marriage certificates and claimed for the support of their child sans
the presence of Jose.
(3) Third, the records do not show that Jose was sent a copy of the Order dated July 6, 1994
wherein the trial court granted the Urgent Motion to Re-Open of Adriana and forthwith allowed her to present
her evidence to prove that petitioner herein contracted previous marriages with different women.
(4) Fourth, the evidence presented by Adriana regarding her claim for support for John Paul is
glaringly insufficient and cannot be made a valid basis upon which the Pasay RTC could have determined
the monthly amount of P20,000 for the support to be given to John Paul by Jose.
A party who has been declared in default is entitled to service of substantially amended or
supplemental pleadings. Considering that in cases of declaration of nullity of marriage or annulment of
marriage, there can be no default pursuant to Section 6, Rule 18 of the Revised Rules of Court 17 in relation
to Article 48 of the Family Code, it is with more reason that JOSE should likewise be entitled to notice of all
proceedings.
Asian Transmission Corporation vs. Canlubang Sugar Estates: A court cannot set itself in motion,
nor has it power to decide questions except as presented by the parties in their pleadings. Anything that is
decided beyond them is coram non-judice and void. Therefore where a court enters a judgment or
awards relief beyond the prayer of the complaint or the scope of its allegations the excessive relief
is not merely irregular but is void for want of jurisdiction, and is open to collateral attack.
The appellate court also ruled that a judgment of a court upon a subject within its
general jurisdiction, but which is not brought before it by any statement or claim of the parties, and
is foreign to the issues submitted for its determination, is a nullity.
It is a serious error for the trial court to have rendered judgment on issues not presented in the
pleadings as it was beyond its jurisdiction to do so.
The amendment of the petition to reflect the new issues and claims against Jose was, therefore,
indispensable so as to authorize the court to act on the issue of whether the marriage of Jose and Adriana

was bigamous and the determination of the amount that should have been awarded for the support of John
Paul.
When the trial court rendered judgment beyond the allegations contained in the copy of the petition
served upon Jose, the Pasay RTC had acted in excess of its jurisdiction and deprived Lam of due process.
DECLARATION OF NULLITY
Insofar as the declaration of nullity of the marriage between Adriana and Jose for being bigamous
is concerned, the decision rendered by the Pasay RTC could be declared as invalid for having been issued
beyond its jurisdiction.
Nonetheless, considering that Jose, did not assail the declaration of nullity of his marriage with
Adriana in his motion for reconsideration which he filed with the Pasay RTC. In the petitions he filed in the
Court of Appeals and with us, he likewise did not raise the issue of jurisdiction of the Pasay RTC to receive
evidence and render judgment on his previous marriages with other woman which were not alleged in the
petition filed by Adriana.
Jose is estopped from questioning the declaration of nullity of his marriage with Adriana and
therefore, the Court will not undo the judgment of the Pasay RTC declaring the marriage of Adriana and
Jose null and void for being bigamous.
While a jurisdictional question may be raised at any time, this, however, admits of an exception
where estoppel has supervened.
SUPPORT
Consequently, the Court will only resolve the lone issue raised by Jose in the present petition for
review on certiorari which is the award of support for his child, John Paul.
The Pasay RTC should have been aware that in determining the amount of support to be awarded,
such amount should be in proportion to the resources or means of the giver and the necessities of the
recipient, pursuant to Articles 194, 201 and 202 of the Family Code
Art. 194. Support comprises everything indispensable for sustenance, dwelling, clothing, medical attendance,
education and transportation, in keeping with the financial capacity of the family.
The education of the person entitled to be supported referred to in the preceding paragraph shall include his
schooling or training for some profession, trade or vocation, even beyond the age of majority. Transportation shall
include expenses in going to and from school, or to and from place of work.
Art. 201. The amount of support, in the cases referred to in Articles 195 21 and 196, 22 shall be in proportion to the
resources or means of the giver and to the necessities of the recipient.
Art. 202. Support in the cases referred to in the preceding article shall be reduced or increased proportionately,
according to the reduction or increase of the necessities of the recipient and the resources or means of the person
obliged to furnish the same.
It is incumbent upon the trial court to base its award of support on the evidence presented before it.
The evidence must prove the capacity or resources of both parents who are jointly obliged to support their
children as provided for under Article 195 of the Family Code; and the monthly expenses incurred for the
sustenance, dwelling, clothing, medical attendance, education and transportation of the child.
In this case, the only evidence presented by respondent Adriana regarding her claim for support of
the child is her testimony
Atty. Lorbes:
Q After discovering that your husband had contracted two valid marriages prior to your marriage, how do you feel
about it?
A I felt it is unfair to my life.
Q Considering the bigamous marriage contract by your husband with you, what do you want to request to
the Honorable Court?
A I want to request the Court that the respondent be ordered to support my little boy.
Court:
Q How much support do you want?
A P20,000.00 to P25,000.00
Q Is there a prayer for support?
Atty. Lorbes:
A None, Your Honor.
Court: Get the original copy of the complaint, add and sign it for the support of the boy.
Such testimony does not establish the amount needed by the child nor the amount that the parents

are reasonably able to give.

We take note of the Compromise Agreement, approved by and embodied in the decision of the
Makati RTC, portions of which read as follows:
The matter of support is a question that may be raised and threshed out before the Makati RTC as
it was the court that approved the Compromise Agreement, or before the Pasay RTC where the petition for
declaration of nullity or annulment of marriage is filed.
In the interest of orderly administration of justice, the Court deems it proper that the issue on
support should be resolved by the Pasay RTC where the claim for support of the child was initiated by
Adriana.
The trial court's action of merely ordering in open court during the July 6, 1994 hearing that a
prayer for support be written and inserted in the petition filed by Adriana does not constitute proper
amendment and notice upon Jose.
Jose was deprived of due process when the trial court proceeded to hear the case on a motion to
re-open and render judgment without giving Jose the requisite notice and the opportunity to refute the new
claim against him.
The manner by which the trial court arrived at the amount of support awarded to John Paul was
whimsical, arbitrary and without any basis.
Such being the case, the Court has no other recourse but to reverse the decision of the Court of
Appeals and Pasay RTC insofar as the award of support is concerned and order the remand of the case to
Pasay RTC for further proceedings as to the issue regarding support.
XI. DISCOVERY
Republic v. Sandiganbayan (Therese)
Fortune Corporation v. CA (Chrissa)
REGALADO, J p: January 19, 1994
SUMMARY: At pre-trial, Fortune wanted to take the deposition of Inter-Merchants Corps chairman Teope. The RTC
issued an order saying that his deposition wouldnt be taken as Teope already answered interrogatories that Fortune
had earlier served.
HELD: The SC said that the RTC abused its discretion in disallowing the deposition, because the RTC wasnt shown
to have good cause to do so. Modes of discovery were cumulative, not alternative
FORTUNE CORPORATION, petitioner, vs. HON. COURT OF APPEALS and INTER-MERCHANTS CORPORATION,
respondents.
FACTS:
An action for breach of contract was filed by petitioner Fortune Corporation against respondent
Inter-Merchants Corporation, before the RTC of San Pablo City, Branch 30.
After respondent corporation had filed its Answer, petitioner served the former with written
interrogatories pursuant to Rule 25 of the Rules of Court.
The interrogatories were answered by respondent corporation through its board chairman,
Juanito A. Teope.
The pre-trial conference was thereafter
however, petitioner served upon private respondent a Notice to Take Deposition Upon Oral
Examination 2 dated March 26, 1992, notifying the latter that on April 7, 1992, at San Pablo City, herein
petitioner would take the deposition of said Juanito A. Teope, in accordance with Section 15, Rule 24.
Private respondent filed an Urgent Motion Not To Take Deposition/Vehement Opposition to
Plaintiff's Notice To Take Deposition Upon Oral Examination, alleging inter alia that:
(a) herein petitioner has previously availed of one mode of discovery, that is, the written interrogatories
which practically covered all the claims, counterclaims and defenses in the case;
(b) there is absolutely no sound reason or justification advanced for the taking of the oral deposition;
(c) such taking would cause annoyance, embarrassment and oppression upon the prospective
deponent, Juanito A. Teope;
(d) Mr. Teope has no intention of leaving the country; and
(e) the intended deponent is available to testify in open court if required during the trial on the merits.
TC: order that the requested deposition shall not be taken for the following reasons:
. . . , since the proposed deponent had earlier responded to the written interrogatories of the
plaintiff and has signified his availability to testify in court. To allow the deposition will deprive the Court of
the opportunity to ask clarificatory questions, if any, on the proposed deponent who appears to be a vital

witness.
MR denied
petitioner filed an original action for certiorari before SC
this Court referred the case to the CA
CA: dismissing the petition and holding that respondent court has jurisdiction to direct, in its
discretion, that a deposition shall not be taken, if there are valid reasons for so ruling. This is provided for in
Sections 16 and 18, Rule 24 of the Rules of Court. right of a party to take depositions as means of discovery
is not absolute.
Caguiat vs. Torres:
". . . sections 16 and 18 of Rule 24, (which) are precisely
designed to protect parties and their witnesses, whenever in the opinion of the trial court,
the move to take their depositions under the guise of discovery is actually intended to only
annoy, embarrass or oppress them. In such instances, these provisions expressly
authorize the court to either prevent the taking of a deposition or stop one that is already
being taken."

(3) valid reasons for it not to order the deposition taken: First, responded to the written
Interrogatories; Second, that the proposed deponent had signified his availability to testify in court; and
Third, that to allow the deposition would deprive the trial court of the opportunity to ask clarificatory
questions
respondent court undoubtedly had jurisdiction over petitioner's case.
On the question of abuse of discretion, appeal and not certiorari is the proper remedy for the
correction of any error as to the admission or rejection of a deposition being offered as evidence since such
a situation would involve an error of law constituting a violation of the rules of evidence.
Dearing vs. Fredwilson (sic) & Co., Inc:
MR denied
instant petition was filed
ISSUES: WON the said order of CA based on the three reasons stated therein, is arbitrary or whimsical because it is
contrary to reason, logic or equity;. YES
WON mere allegation, without proof, that the examination sought by petitioner was intended merely
to annoy, embarrass or oppress the proposed deponent is, as a matter of law, "good cause" within the
purview of Rule 24, Section 16, Rules of Court; NO
WON absent the requisite element of "good cause" as mandated by Section 16 of Rule 24, Rules
of Court, a TC has unbridled discretion to forbid the taking of deposition upon oral examination as authorized
under Rule 24, Section 15, Rules of Court. NO
RATIO:
PURPOSE OF DEPOSITIONS
Rule 24 of the Rules of Court provides:
Section 1.
Depositions pending action, when may be taken. By leave of court after jurisdiction has
been obtained over any defendant or property which is the subject of the action, or without such leave after
an answer has been served, the testimony of any person, whether a party or not, may be taken, at the
instance of any party, by deposition upon oral examination or written interrogatories. The attendance of
witnesses may be compelled by the use of a subpoena as provided in Rule 23. Depositions shall be taken
only in accordance with these rules. The deposition of a person confined in prison may be taken only by
leave of court on such terms as the court prescribes.
iIt would do well to point out the finer attributes of these rules of discovery, the availment of which,
would contribute immensely to the attainment of the judiciary's primordial goal of expediting the
disposition of cases.
The rules providing for pre-trial discovery of testimony, pre-trial inspection of documentary evidence
and other tangible things, and the examination of property and person, were an important innovation in the
rules of procedure.
The promulgation of this group of rules satisfied the long-felt need for a legal machinery in the
courts to supplement the pleadings, for the purpose of disclosing the real points of dispute between
the parties and of affording an adequate factual basis in preparation for trial.
function of the pleadings extends hardly beyond notification to the opposing parties of the general
nature of a party's claim or defense. resulted only in making the pleadings increasingly complicated and
technical, without any corresponding disclosure of the issues which it will be necessary to prove at the trial.

 most effective legal machinery for reducing and clarifying the issues were a preliminary
examination, as broad in scope as the trial itself, of the evidence of both parties
the rules seek to make a trial less a game of blind man's buff and more a fair contest with the basic
issues and facts disclosed to the fullest practicable extent.
The elemental purpose of the discovery procedure was pithily explained by the Court, speaking
through now Chief Justice Narvasa, in the recent case of Republic vs. Sandiganbayan:
The resolution of controversies is, as everyone knows, the raison d'etre of courts.
This essential function is accomplished by first, the ascertainment of all the material and relevant
facts from the pleadings and from the evidence adduced by the parties, and second, after that
determination of the facts has been completed, by the application of the law thereto to the end that
the controversy may be settled authoritatively, definitely and finally.
It is for this reason that a substantial part of the adjective law in this jurisdiction is occupied with
assuring that all the facts are indeed presented to the Court;
Alonzo vs. Villamor: "A litigation is not a game of technicalities in which one, more deeply schooled
and skilled in the subtle art of movement and position, entraps and destroys the other. It is, rather a contest
in which each contending party fully and fairly lays before the court the facts in issue and then brushing
aside as wholly trivial and indecisive all imperfections of form and technicalities of procedure, asks that
justice be done on the merits. ."
Only "ultimate facts" are set forth in the pleadings; hence, only the barest outline of the factual
basis of a party's claims or defenses is limned in his pleadings. The law says that every pleading "shall
contain in a methodical and logical form, a plain, concise and direct statement of the ultimate facts on which
the party pleading relies for his claim or defense, as the case may be, omitting the statement of mere
evidentiary facts.
a bill of particulars seeking a "more definite statement" may be ordered by the court on motion of a
party. The office of a bill of particulars is, however, limited to making more particular or definite the ultimate
facts in a pleading.
"evidentiary matters" may be inquired into and learned by the parties before the trail. Indeed, it is
the purpose and policy of the law that the parties before the trial if not indeed even before the pre-trial
should discover or inform themselves of all the facts relevant to the action, not only those known to them
individually, but also those known to their adversaries;
the Rules of Court make this ideal possible through the deposition-discovery mechanism
set forth in Rules 24 to 29. The experience in other jurisdictions has been that ample discovery before trial,
under proper regulation, accomplished one of the most necessary ends of modern procedure: It not only
eliminates unessential issues from trial thereby shortening them considerably, but also requires parties to
play the game with the cards on the table so that the possibility of fair settlement before trial is measurably
increased. . . .
the deposition-discovery procedure was designed to remedy the conceded inadequacy and
cumbersomeness of the pre-trial functions of notice-giving, issue-formulation and fact revelation
theretofore performed primarily by the pleadings
The various modes or instruments of discovery are meant to serve
(1) as a device, along with the pre-trial hearing under Rule 20, to narrow and clarify the basic
issues between the parties, and
(2) as a device for ascertaining the facts relative to those issues.
the field of inquiry that may be covered by depositions or interrogatories is as broad as when the
interrogated party is called as witness to testify orally at trial. The inquiry extends to all facts which
are relevant, whether they be ultimate or evidentiary, expecting only those matters which are
privileged.

Section 2, Rule 24 (governing depositions ) which generally allows the examination of a deponent

1)
"regarding any matter, not privileged, which is relevant to the subject of the pending action, whether
relating to the claim or defense of any other party,"
2)
as well as:
(a)
"the existence, description, nature, custody, condition and location of any books, documents, or
other tangible things" and
(b)
"the identity and location of persons having knowledge of relevant facts."
The other principal benefits derivable from the availability and operation of a liberal discovery

procedure are the following:

1.
It is of great assistance in ascertaining the truth and in checking and preventing perjury.
The reasons for this are:
(a)
The witness (including a party) is examined while his memory is fresh:
(b)
The witness (including a party) is generally not coached in preparation for a pretrial oral examination with the result that his testimony is likely to be more spontaneous.
Where the examination is upon written interrogatories, however, it appears that some
lawyers furnish the witness with copies of the interrogatories and thereby enable him to
prepare his answers in advance.
(c)
A party or witness whose deposition has been taken at an early stage in the
litigation cannot, at a later date, readily manufacture testimony in contradiction to his
deposition;
(d)
Testimony is preserved, so that if a witness unexpectedly dies or becomes
unavailable at the trial, his deposition is available.
2.
It is an effective means of detecting and exposing false, fraudulent, and sham claims and
defenses.
3.
It makes available in a simple, convenient, and often inexpensive way facts which
otherwise could not have been proved, except with great difficulty and sometimes not at all. cdrep
4.
It educates the parties in advance of trial as to the real value of their claims and defenses,
thereby encouraging settlements out of court.
5.
It expedites the disposal of litigation, saves the time of the courts, and clears the docket of
many cases by settlements and dismissals which otherwise would have to be tried.
6.
It safeguards against surprise at the trial, prevents delays, and narrows and simplifies the
issues to be tried, thereby expediting the trial.
7.
It facilitates both the preparation and the trial of cases. 9
ON ISSUES
I.
CERTIORARI PROPER
Petitioner avers that the decision of respondent court dismissing its petition on the ground that
appeal and not certiorari is the proper remedy in this case, is erroneous for the reason that such ruling is
based on facts which are not obtaining in the case at bar, viz.: (a) that petitioner had already obtained a
deposition, which it had not; (b) that said deposition was offered as evidence, which was not done because
there was nothing yet to offer, and (c) that said offer was rejected, which did not happen because there was
nothing to reject as nothing was offered.
Petitioner claims that since the very purpose of Rule 24 of the Rules of Court is to authorize the
taking of a deposition in a pending action, either to make discovery in preparation for or to be used as
evidence upon the trial of such action, the taking of the deposition in the case at bar should be done and
finished before trial. Hence, it would be a grave abuse of discretion to compel petitioner to proceed with the
trial of the case without the proposed deposition being first undertaken.
SC: We agree with petitioner.
Under Section 1, Rule 65 of the Rules of Court, the writ of certiorari lies if the following requisites
concur:
(a) that it is directed against a tribunal, board or officer exercising judicial functions;
(b) that such tribunal, board or officer has acted without or in excess of jurisdiction or with grave abuse of
discretion; and
(c) that there is no appeal nor any plain, speedy and adequate remedy in the ordinary course of law.
Section 16 of Rule 24 provides that after notice is served for taking a deposition by oral examination, upon
motion seasonably made by any party or by the person to be examined and upon notice and for good cause
shown, the court in which the action is pending may, among others, make an order that the deposition shall
not be taken.
This provision explicitly vests in the court the power to order that the deposition shall not be
taken and this grant connotes the authority to exercise discretion in connection therewith.
discretion conferred by law is not unlimited: that it must be exercised, not arbitrarily,
capriciously, or oppressively, but in a reasonable manner and in consonance with the spirit of the law, to
the end that its purpose may be attained.
On Section 16 of then Rule 18 (now Rule 24) of the Rules of Court, former Chief Justice Manuel V.

Moran had these comments:

this provision is intended to be one of the safeguards for the protection of the
parties and deponents on account of the unrestricted right to discovery given by sections 1 and 2 of
this Rule. A party may take the deposition of a witness who knows nothing about the case, with the
only purpose of annoying him or wasting the time of the other parties. In such case, the court may,
on designate a distinct place for the taking of a deposition, and the motion, order that the deposition
shall not be taken. Or, a party may designate a distinct place for the taking of a deposition, and the
adverse party may not have sufficient means to reach that place
certiorari will generally not lie to review a discretionary action of any tribunal.
certiorari is available only to review final judgments or decrees, and will be refused where there has
been no final judgment or order and the proceeding for which the writ is sought is still pending
certiorari will not lie to review or correct discovery orders made prior to trial. orders made under
Section 16, Rule 24 are interlocutory and not appealable,
exception that discretionary acts will be reviewed where the lower court or tribunal has acted
without or in excess of its jurisdiction, where an interlocutory order does not conform to essential
requirements of law and may reasonably cause material injury throughout subsequent proceedings for
which the remedy of appeal will be inadequate, or where there is a clear or serious abuse of discretion
CAB: certiorari may be availed of to review the questioned order of the trial court.
II.
DENIAL OF DEPOSITION IMPROPER
Petitioner asseverates that the trial court gravely abused its discretion in ordering that the
deposition be not taken in the absence of good cause therefor. reasons advanced by the trial court cannot
be considered "good cause" within the contemplation of the law, which reasons, to repeat, are: (a) that the
proposed deponent had earlier responded to written interrogatories; (b) that the proposed deponent had
signified his availability to testify in court; and (c) that to allow the deposition would deprive the trial court of
the opportunity to ask clarificatory questions to the vital witness.
Rule 29 imposes serious sanctions on the party who refuses to comply with or respond to
the modes of discovery, such as dismissing his action or proceeding or part thereof, or rendering judgment
by default against the disobedient party; contempt of court, or arrest of the party or agent of the party;
payment of the amount of reasonable expenses incurred in obtaining a court order to compel discovery;
taking the matters inquired into as established in accordance with the claim of the party seeking discovery;
refusal to allow the disobedient party to support or oppose designated claims or defenses; striking out his
pleadings or parts thereof; or staying further proceedings.
As indicated by the Rules, limitations inevitably arise when it can be shown that the
examination is being conducted in bad faith or in such a manner as to annoy, embarrass, or oppress
the person subject to the inquiry
further limitations come into existence when the inquiry touches upon the irrelevant or
encroaches upon the recognized domains of privilege.
Section 16 of Rule 24 : only upon notice and for good cause shown that the court may order that
the deposition shall not be taken. The matter of good cause is to be determined by the court in the exercise
of judicial discretion. Good cause means a substantial reason one that affords a legal excuse. Whether or
not substantial reasons exist is for the court to determine, as there is no hard and fast rule for determining
the question as to what is meant by the term "for good cause shown."
The requirement, however, that good cause be shown for a protective order puts the burden on the
party seeking relief to show some plainly adequate reasons for the order. A particular and specific
demonstration of facts, as distinguished from conclusory statements, is required to establish good cause for
the issuance of a protective order. What constitutes good cause furthermore depends upon the kind of
protective order that is sought.
CAB: private respondent failed to sufficiently establish that there is good cause to support the
order of the trial court that the deposition shall not be taken, for several reasons.
1.
We agree with petitioner's submission that the fact that petitioner had previously availed of the mode of
discovery, which is by written interrogatories supposedly covering all claims, counterclaims and defenses in the case,
cannot be considered "good cause," because: (a) the fact that information similar to that sought had been obtained by
answers to interrogatories does not bar an examination before trial, and is not a valid objection to the taking of a
deposition where there is no duplication and the examining party is not acting in bad faith; and (b) knowledge of the
facts by the petitioner concerning which the proposed deponent is to be examined does not justify a refusal of such
examination.

 As a general rule, the scope of discovery is to be liberally construed so as to provide the litigants
with information essential to the expeditious and proper litigation of each of the facts in dispute. Moreover, it
cannot be disputed that the various methods of discovery as provided for in the Rules are clearly intended
to be cumulative, as opposed to alternative or mutually exclusive.
On the question of whether an oral deposition might be taken after service of interrogatories, the
courts took a relatively liberal view.
In Howard v. States Marine Corp.,
"Where it develops that examination by interrogatories has been inadequate, the court
unquestionably has, and in a proper case should exercise, discretion to permit an oral examination. But
In Canuso v. City of Niagara Falls, the fact that a bill of particulars had previously been served and
interrogatories answered was held no objection to an oral examination sinc no duplication was involved and
bad faith had not been shown.
Alfred Bell & Co. v. Catalda Fine Arts, Inc., oral examination was allowed, even though the
individual had previously answered interrogatories, except as to matters with respect to which he had "given
responsive and categorical testimony."
the fact that a party has resorted to a particular method of discovery will not bar subsequent
use of other discovery devices, as long as the party is not attempting to circumvent a ruling of the
court, or to harass or oppress the other party.

there are far greater advantages in obtaining the facts and circumstances involved in a confronting
examination than in a written one.
1.
Examination by interrogatories is both more cumbersome and less efficient than oral examination before trial
Where it develops that examination by interrogatories has been inadequate, the court unquestionably has, and in a
proper case should exercise, discretion to permit an oral examination. But it should be made to clearly appear that
the relevant subject matter will not involve the interrogation of the witness with respect to those particulars upon
which he was examine by interrogatories.
2.
Interrogatories give the party to whom they are addressed more time to study their effect, which furnishes a
better opportunity to frame protective answers which conceal or evade
. . . Where the facts to be elicited are relatively few and important, whether ultimate facts or
evidentiary facts, the legal machinery of interrogatories is a very useful, expeditious and inexpensive
method; but where they are very numerous, . . . they tend to become unduly burdensome, oppressive and
vexatious to the adverse party and difficult for the court to administer. . . . Furthermore, the procedure tends
to be unnecessarily wasteful of judicial time.. . . Where a more comprehensive examination of the
adverse party is desired it should ordinarily be done by taking his deposition
3.
The obvious advantage of interrogatories over a deposition is that they are much less expensive.
depositions are preferable if a searching interrogation of the other party is desired.
2.
The availability of the proposed deponent to testify in court does not constitute "good cause" to justify the
court's order that his deposition shall not be taken. That the witness is unable to attend or testify is one of the grounds
when the deposition of a witness may be used in court during the trial. But the same reason cannot be successfully
invoked to prohibit the taking of his deposition.
The right to take statements and the right to use them in court have been kept entirely distinct. The
utmost freedom is allowed in taking depositions; restrictions are imposed upon their use
Rules, the deposition serves the double function of a method of discovery with use on trial not
necessarily contemplated and a method of presenting testimony.
3.
We are also in conformity with petitioner's submission that the mere fact that the court could not thereby
observe the behavior of the deponent does not justify the denial of the right to take deposition.
4.
Finally, in the absence of proof, the allegation that petitioner merely intended to annoy, harass or oppress
the proposed deponent cannot ably support the setting aside of a notice to take deposition.
Orders to protect the party or witness from annoyance, embarrassment or oppression may
be issued if the following requirements are complied with: (a) that there is a motion made by any party
or by the person to be examined; (b) that the motion has been seasonably filed; (c) that there is good cause
shown; and (d) that notice of such motion has been served to the other party
Once a party has requested discovery, the burden is on the party objecting to show that the
discovery requested is not relevant to the issues, and to establish the existence of any claimed privilege.
CAB: private respondent has failed to do.
Furthermore, the fact that the deposition is to be taken in San Pablo City, whereas the proposed
deponent lives in Manila, is not sufficient to establish private respondent's theory that the requested

deposition was intended to annoy and harass the proposed deponent.

judgment is hereby rendered ORDERING the court a quo to allow herein petitioner to take the deposition upon oral
examination of Juanito S. Teope
Northwest Airlines, Inc. v. Cruz (Mel)
Briboneria v. Court of Appeals (Joan)
XII. PRE-TRIAL
Tiu v. Middleton (Erika)
July 19, 1999
SILVESTRE TIU
vs.
DANIEL MIDDLETON and REMEDIOS P. MIDDLETON
PANGANIBAN, J.
SUMMARY: The Middletons filed a complaint for recovery of possession of real property, accounting and damages
against Tiu before the RTC of Oroquieta City. RTC sent a notice of Pre-trial Conference stating that The parties are
warned that witnesses whose names and addresses are not submitted at the pre-trial may not be allowed to testify at
the trial. In his Pre-Trial Brief, Tiu averred that he would be presenting six witnesses, but he did not name them. RTC
then issued a Pre-Trial Order stating that Tiu would present 6 witnesses and specifying the hearing dates. Trial
ensued. The Middletons presented their witnesses. When his turn came, Tiu called Antonia Tiu as his first witness.
Citing Section 6, Rule 18, the Middletons objected, arguing that the witness could not be allowed to testify because
Tiu had failed to name her in his pre-trial brief. RTC sustained the Middletons. SC reversed. The RTCs proceeding to
trial without modifying the Pre-trial Order and the Middletons' failure to challenge the same before the trial nor invoke
the power of the RTC to compel Tiu to submit the names of his witnesses and summaries of their testimonies is fatal
to their case.
DOCTRINE: Pre-trial is an essential device for the speedy disposition of disputes. Hence, parties cannot brush it
aside as a mere technicality. Where the pre-trial brief does not contain the names of witnesses and the synopses of
their testimonies as required by the Rules of Court, the trial court, through its pre-trial order, may bar the witnesses
from testifying. However, an order allowing the presentation of unnamed witnesses may no longer be modified during
the trial, without the consent of the parties affected.
FACTS:
A complaint for recovery of ownership and possession of real property, accounting and
damages filed against Silvestre Tiu was filed before the RTC of Oroquieta City, Misamis Occidental. The
plaintiffs were respondents Daniel and Remedios Middleton.
Before the commencement of trial, the RTC sent a Notice of Pre-trial Conference, stating in part:
"The parties are WARNED that witnesses whose names and addresses are not submitted at the pre-trial
may not be allowed to testify at the trial, and documents not marked as exhibits at the pre-trial, except those
not then available or existing, may be barred admission in evidence."
Tius Pre-Trial Brief: he averred that he would be presenting 6 witnesses whose direct testimony
will be finished in an average of 1 hour each, but he did not name them. He requested four hearing days to
present his evidence
After the pre-trial conference, RTC issued a Pre-trial Order stating that the Tiu would present 6
witnesses and specifying the hearing dates for the said purpose
Trial ensued. The Middletons presented their witnesses in due course.
When his turn came, Tiu called Antonia Tiu as his first witness.
Citing Sec 6, Rule 18, the Middletons objected, arguing that the witness could not be
allowed to testify because Tiu had failed to name her in his Pre-trial Brief.
RTC (Aug 3, 1998): sustained the Middletons
the witness of defendant Tiu, Ms. Antonia Tiu, who is the aunt of the defendant,
whose name was not disclosed in the pre-trial brief is ordered excluded pursuant to the provisions
of the 1997 Rules of Civil Procedure wherein it is required that all names of witnesses must be
stated in the Pre-Trial Brief.
Sec. 6 Rule 18 is supported by corresponding jurisprudence taken by the
Middletons counsel from the book, (Effective Pre-Trial Technique, of Hon. Justice Josue N.
Bellosillo, 1990) which states that 'this requirement that if a party does not place the name of a
witness on such a list of witnesses, the court may refuse to permit him to place the witness on

the witness stand (Globe Cereal Mills v. Scrivener; Tuggart v. Vesmont Transportation Co)
Where both parties agreed to a pre-trial order requiring each to give the other the
names of witnesses to be called at the trial, and no request was made to amend that order, the trial
court did not err in refusing to allow the defendant to call on witness (King v. Partride)
MR denied
Hence, this petition on pure questions of law
On Tiu's Motion, SC issued a TRO enjoining the RTC from proceeding with the case until further

notice.
ISSUE: W/N the RTC erred in disallowing Antonia Tiu from testifying (YES)
RATIO:
PRE-TRIAL, PRE-TRIAL BRIEF, AND PRE-TRIAL ORDER
Pre-trial is an answer to the clarion (loud and clear) call for the speedy disposition of cases.
Although it was discretionary under the 1940 Rules of Court, it was made mandatory under the
1964 Rules and the subsequent amendments in 1997.
Hailed as "the most important procedural innovation in Anglo-Saxon justice in the nineteenth
century," pre-trial seeks to achieve the following:
(a) The possibility of an amicable settlement or of a submission to alternative
modes of dispute resolution;
(b) The simplification of the issues;
(c) The necessity or desirability of amendments to the pleadings;
(d) The possibility of obtaining stipulations or admissions of facts and of
documents to avoid unnecessary proof;
(e) The limitation of the number of witnesses;
(f) The advisability of a preliminary reference of issues to a commissioner;
(g)The propriety of rendering judgment on the pleadings, or summary judgment,
or of dismissing the action should a valid ground therefor be found to exist;
(h) The advisability or necessity of suspending the proceedings; and
(i) Such other matters as may aid in the prompt disposition of the action.
In light of these objectives, the parties are also required to submit a pre-trial brief, which must
contain the following:
(a) A statement of their willingness to enter into amicable settlement or
alternative modes of dispute resolution, indicating the desired terms thereof;
(b) A summary of admitted facts and proposed stipulation of facts;
(c) The issues to be tried or resolved;
(d) The documents or exhibits to be presented, stating the purpose thereof;
(e) A manifestation of their having availed or their intention to avail themselves of
discovery procedures or referral to comissioners; and
(f) The number and names of the witnesses, and the substance of their
respective testimonies.
Tiu: the Rules merely require that witnesses be named in the pre-trial brief, but it does not
authorize a judge to exclude a witness who was not identified.
neither the trial court nor the Middletons required during the pre-trial that
unnamed witnesses be barred from testifying.
urges the SC to brush aside as wholly trivial and indecisive all imperfections of
form and technicalities of procedure
Middletons: the assailed Orders were not capricious or whimsical, because the Notice of Pre-trial
Conference contained a warning that witnesses whose names were not listed might not be allowed to testify.
the rule enumerating the contents of a pre-trial brief was not a mere technicality,
but a salutary provision intended to avoid surprise and entrapment of the contending parties
SC: Pre-trial s not a mere technicality; but Tiu should be allowed to present his witnesses
At the outset, SC emphasizes that pre-trial and its governing rules are not technicalities which the
parties may ignore or trifle with. Pre-trial is essential in the simplification and the speedy disposition of
disputes. Thus, SC has observed: Everyone knows that a pre-trial in civil actions is mandatory, and has
been so since January 1, 1964. Yet to this day its place in the scheme of things is not fully appreciated, and
it receives but perfunctory treatment in many courts. Some courts consider it a mere technicality, serving no
useful purpose save perhaps, occasionally to furnish ground for non-suiting the plaintiff, or declaring a
defendant in default, or, wistfully, to bring about a compromise. The pre-trial device is not thus put to full
use. Hence it has failed in the main to accomplish the chief objective for it: the simplification, abbreviation

and expedition of the trial, if not indeed its dispensation.

ROLE OF THE JUDGE: not a passive arbiter but an active participant who constantly seeks
avenues through which trial can be expedited, simplified or even avoided by a resort to alternative modes of
dispute resolution.
DBP v. CA: it is unquestionably within the trial court's power to require the parties at the pre-trial to
(a) state the number of witnesses intended to be called to the stand, their names addresses, and a
brief summary of the evidence each of them is expected to give, as well as to (b) formally disclose the
number of the documents and things to be submitted and to furnish copies thereof or a short description of
the nature of each.
The tenor or character of the testimony of the witnesses and of the writings to be
adduced at the trial being thus made known, in addition to the particular issues of fact and law, it
becomes reasonably feasible to require the parties to state the number of trial dates that
each will need to put on his case, and maybe bring about a further agreement as to some other
controverted facts, or an amendment of the pleadings, etc.
The parties are obliged not only to make formal identification and specification of
the issues and of their proofs, as above described indeed, there is no reason why the Court may
not oblige the parties to set these matters down in the separate writings and submit them to the
Court prior to the pre-trial, and then to discuss, refine and embody the matters agreed upon in a
single document at or shortly after the pre-trial but also and equally as peremptorily, to directly
address and discuss with sincerity and candor and in entire good faith each of the other subjects
enumerated in Section 1, Rule 20, i.e., the 'possibility of an amicable settlement or of a submission
to arbitration,' the 'advisability of a preliminary reference of issues to a commissioner,' and 'such
other matters as may aid in the prompt disposition of the action,' inclusive of a resort to the modes
of discovery.
It is evident that judges have the discretion to exclude witnesses and other pieces of
evidence not listed in the pre-trial brief, provided the parties are given prior notice to this effect.
CASE AT BAR: Tiu should be allowed to present his witnesses; BASIS: Pre-Trial Order
Evidently, Tiu did not comply with the above rules and the Notice of Pre-trial Conference, because
he failed to give the names of his witnesses and the synopsis of their testimonies.
In his Pre-trial Order, however, the trial judge did not exercise his discretion to exclude the unlisted
or unnamed witnesses. Rather, it simply provided that "the defendant will present six witnesses." It made no
mention at all that they would be barred from testifying unless they were named.
It also stated that "plaintiffs will offer ten witnesses," without however naming them. Since the Order
allowed the Middletons (as plaintiffs before the trial court) to present witnesses, it necessarily follows that it
should grant the same right to Tiu.
The court and the parties must pay attention not only to the pre-trial briefs, but also to the
pre-trial order.
Sec 7, Rule 18: SECTION 7. Record of pre-trial. The proceedings in the pre-trial shall be
recorded. Upon the termination thereof, the court shall issue an order which shall recite in detail the matters
taken up in the conference, the action taken thereon, the amendments allowed to the pleadings, and the
agreements or admissions made by the parties as to any of the matters considered. Should the action
proceed to trial, the order shall explicitly define and limit the issues to be tried. The contents of the order
shall control the subsequent course of action, unless modified before trial to prevent manifest injustice.
Hence, the provision in the Pre-trial Order allowing Tiu to present six witnesses "shall control the
subsequent course of action."
RTC proceeded with the trial without modifying the Order. In the same vein, the Middletons did
not challenge it before the trial. Neither did they invoke the power of the trial court to compel the Tiu to
submit the names of his witnesses and summaries of their testimonies. By their silence, the Middletons
acquiesced to the Pre-trial Order allowing the presentation of Tiu's unnamed witnesses.
Modifying a pre-trial order during the trial or, worse, when the defendant is about to present
witnesses will indubitably result in manifest injustice. This could not have been the intention of the
Rules.
DISPOSITION: Petition granted. RTC reversed and set aside. TRO lifted. RTC ordered to proceed with hearing and
allow Tiu to present 6 witnesses. No pronouncement as to costs.
Philippine Transmarine Carrier Inc. v. CA (Kat)

Goldloop Properties, Inc. v. CA (Therese)

Citibank N.A. v. Chua (Chrissa)
FACTS: During the pre-trial of a case, JP Garcia & Associates appeared for Citibank, presenting a SPA. The
spouses Velez orally moved to declare Citibank in default on the ground that the SPA was not executed by the
Board of Directors of Citibank. Thereafter, Citibank attached another SPA made by its Vice President Ferguson. The
spouses again moved to declare Citibank in default, but this was denied by the judge. Citibank
issued a 3rd SPA by Ferguson in favor of Citibank employees to represent and bind Citibank in the pre-trial
conference of the case at bar. The RTC judge declared Citibank as in default, which the CA affirmed.
HELD: Based on the provisions of the Corporation Code, the by-laws are already a source of authority of the
officers; therefore, a board resolution is no longer necessary. Contrary to the contentions of the spouses,
the by-laws of Citibank are effective and valid because Citibank is licensed by the SEC.
CITIBANK, N.A., petitioner, vs. HON. SEGUNDINO G. CHUA, SANTIAGO M. KAPUNAN and LUIS L. VICTOR,
ASSOCIATE JUSTICES OF THE HON. COURT OF APPEALS, THIRD DIVISION, MANILA, HON. LEONARDO B.
CANARES, Judge of Regional, Trial Court of Cebu, Branch 10, and SPOUSES CRESENCIO AND ZENAIDA VELEZ,
respondents.
CAMPOS, JR., J p: March 17, 1993
Private respondents, spouses Cresencio and Zenaida Velez, were good clients of petitioner
Citibank's branch in Cebu until March 14, 1986 when they filed a complaint for specific performance and
damages against it before the RTC of Cebu, Branch 10.
Sps alleged in their complaint that the petitioner bank extended to them credit lines sufficiently
secured with real estate and chattel mortgages on equipment. They claim that petitioner offered them
special additional accommodation of 5M
Sps tried to exchange with petitioner bank (as previously done) six checks amounting to
P3,095,000.00 but petitioner bank allegedly refused to continue with the arrangement even after
repeated demands.
bank suggested that the total amount covered by the "arrangement be restructured to thirty (30)
months with prevailing interest rate on the diminishing balance".
Sps agreed to such a proposal. Then as a sign of good faith, they issued and delivered a check for
P75,000.00 which was refused by the bank demanding instead full payment of the entire amount.
For the failure of petitioner bank to comply with this restructuring agreement private respondents
sued for specific performance and damages.
Petitioner bank has a different version:
". . . starting sometime on September 4 of 1985, he (private respondent
Crescencio Velez) deposited his unfunded personal checks with his current account with the
petitioner. But prior to depositing said checks, he would present his personal checks to a bank
officer asking the latter to have his personal checks immediately credited as if it were a cash
deposit and at the same time assuring the bank officer that his personal checks were fully funded.
Having already gained the trust and confidence of the officers of the bank because of his past
transactions, the bank's officer would always accommodate his request
Velez decided to run away with petitioner's money. he deposited various
unfunded personal checks totalling P3,095,000.00 and requested a bank officer that the same be
credited as cash and after securing the approval of said bank officer, deposited his various
personal checks in the amount of P3,095,000.00 with his current account and at the same time
withdrew the sum of P3,244,000.00 in the form of petitioner's manager's check
checks deposited P3,095,000.00 bounced.
bank filed a criminal complaint against private respondents for violation of Batas Pambansa Blg. 22
(Bouncing Checks Law) and estafa (six counts) under Article 315 par. 2(d) of the Revised Penal Code.
case was set for pre-trial on March 30, 1990 and petitioner bank was directed to submit its pre-trial
brief at least 3 days before the pre-trial conference. Petitioner bank only filed its pre-trial brief on March 30,
1990.
On March 30, 1990, the date of the pre-trial conference, counsel for petitioner bank appeared,
presenting a special power of attorney executed by Citibank officer Florencia Tarriela in favor of
petitioner bank's counsel, the J.P. Garcia & Associates, to represent and bind petitioner bank at the pretrial conference of the case at bar.
counsel for Sps orally moved to declare petitioner bank as in default on the ground that the

special power of attorney was not executed by the Board of Directors of Citibank.
Petitioner bank was then required to file a written opposition to this oral motion to declare it as
in default.
In said opposition petitioner bank attached another special power of attorney made by William
W. Ferguson, Vice President and highest ranking officer of Citibank,
April 23, 1990, respondent judge denied private respondents' oral motion to declare petitioner
bank as in default and set the continuation of the pre-trial conference for May 2, 1990.
On the scheduled pre-trial conference, private respondents reiterated, by way of asking for
reconsideration, their oral motion to declare petitioner bank as in default for its failure to appear through
an authorized agent and that the documents presented are not in accordance with the requirements of the
law.
Petitioner bank again filed its opposition thereto, stating as follows:
"While it has been the practice of Citibank to appoint its counsels as its attorney-in-fact in civil
cases because it considers said counsels equivalent to a Citibank employee, yet, in order to avoid further
arguments on the matter, the defendant Citibank will secure another power of attorney from Mr. William W.
Ferguson in favor of its employee/s who will represent the defendant Citibank in the pre-trial conferences of
this case.."
bank filed a manifestation, attaching therewith a SPA executed by William W. Ferguson
judge issued an order declaring petitioner bank as in default. and its corporate powers could
only be exercised by its Board of Directors (Sec. 23, B.P. Blg. 68). The exercise by the Board of Directors of
such power could only be valid if it bears the approval of the majority of the Board (Sec. 25, par. 2,
Corporation Code). The records does not show the requisite document. The alleged authority (Special
Power of Attorney, Annex "A") executed by Mr. William W. Ferguson in favor of the alleged Citibank
employees, assuming the same to be a delegable authority, to represent the defendant in the pre-trial
conference, made no mention of J.P. Garcia & Associates as one of the employees of the defendant.
defendant-bank has no proper representation during the pre-trial conference on May 2, 1990 for
purposes of Sec. 2, Rule 20 of the Rules of Court.
Bank MR denied
CA dismissed the petition on the following grounds:
". . . In the first place, petitioner admitted that it did not and could not present a Board resolution
from the bank's Board of Directors appointing its counsel, Atty. Julius Z. Neri, as its attorney-in-fact
"By-Laws" of petitioner which on its face authorizes the appointment of an attorney-in-fact in any
litigation, has not been approved by the SEC, as required by Section 46 of the Corporation Code of the
Philippines. (was approved under the laws of the United States)
No SPA authorizing Atty. Julius Neri and/or J.P. Garcia Associates,
What petitioner exhibited to the court a quo was a general power of attorney given to one
William W. Ferguson
even assuming the validity of the power of attorney issued by petitioner in favor of Ferguson as well
as the power of attorney he issued to five (5) (sic) Citibank employees, said power of attorney has not been
shown intended not only to represent the bank at the pre-trial of the case on a certain date but also to enter
into any compromise as required in paragraph 3, Article 1878 of the Civil Code and Section 1 (a), Rule 20,
Rules of Court."
Hence, this instant petition.
Bank: contends that no board resolution was necessary because bank's by-laws grant to its
Executing Officer and Secretary Pro-Tem the power to delegate to a Citibank officer, in this case William W.
Ferguson, the authority to represent and defend the bank and its interests.
CA erred in holding that the by-laws of petitioner bank cannot be given effect
Sps: first, that the authority did not come from the Board of Directors which has the exclusive right
to exercise corporate powers; and second, that the authority granted to the Executing Officer in the by-laws
was ineffective because the same were not submitted to, nor approved by, the SEC.
WON a resolution of the board of directors of a corporation is always necessary for granting authority to an agent to
represent the corporation in court cases (NO)
WON the by-laws of the petitioner foreign corporation which has previously been granted a license to do business in
the Philippines, are effective in this jurisdiction (YES)
BOARD RESOL NOT NECESSARY
In the corporate hierarchy, there are three levels of control:
1) the board of directors, which is responsible for corporate policies and the general management

of the business affairs of the corporation;

2) the officers, who in theory execute the policies laid down by the board, but in practice often have
wide latitude in determining the course of business operations; and
3) the stockholders who have the residual power over fundamental corporate changes, like
amendments of the articles of incorporation. However, just as a natural person may authorize
another to do certain acts in his behalf, so may the board of directors of a corporation validly
delegate some of its functions to individual officers or agents appointed by it.
Section 23 of the Corporation Code of the Philippines in part provides:
"SEC. 23.
The board of directors or trustees. Unless otherwise provided in this Code, the
corporate powers of all corporations formed under this Code shall be exercised, all business
conducted and all property of such corporations controlled and held by the board of directors or
trustees to be elected from among the holders of stocks, or where there is no stock, from among
the members of the corporation, who shall hold office for one (1) year and until their successors are
elected and qualified.
Thus, although as a general rule, all corporate powers are to be exercised by the board of
directors, exceptions are made where the Code provides otherwise.
Section 25 of said Code provides that the directors of the corporation shall elect its corporate
officers, and further provides as follows:
"SEC. 25.
Corporate officers; quorum. . . . The directors or trustees and officers to be
elected shall perform the duties enjoined on them by law and by the by-laws of the corporation . . ."
Furthermore, Section 47 of the same Code enumerates what may be contained in the bylaws, among which is a provision for the "qualifications, duties and compensation of directors or
trustees, officers and employees". (Emphasis supplied.)
corporate powers may be directly conferred upon corporate officers or agents by statute,
the articles of incorporation, the by-laws or by resolution or other act of the board of directors. In
addition, an officer who is not a director may also appoint other agents when so authorized by the by-laws or
by the board of directors. Such are referred to as express powers.
There are also powers incidental to express powers conferred. It is a fundamental principle in
the law of agency that every delegation of authority, whether general or special, carries with it, unless the
contrary be expressed, implied authority to do all of those acts, naturally and ordinarily done in such cases,
which are reasonably necessary and proper to be done in order to carry into effect the main authority
conferred.
CAB: Since the by-laws are a source of authority for corporate officers and agents of the
corporation, a resolution of the Board of Directors of Citibank appointing an attorney in fact to
represent and bind it during the pre-trial conference of the case at bar is not necessary because its
by-laws allow its officers, the Executing Officer and the Secretary Pro-Tem, ** to execute a power of
attorney to a designated bank officer, William W. Ferguson in this case, clothing him with authority to direct
and manage corporate affairs.
The relevant provision in the general power of attorney granted to him are as follows:
"A.
That the Executing Officer and the Secretary Pro-Tem .. does hereby authorize and empower the
Attorney-in-fact, acting in the name or on behalf of the Bank, or any of its Branches, or any interest it or they
may have or represent, said revocation and authorization to be effective as of this date as follows:
XVII.
To represent and defend the Bank and its interest before any and all judges and courts . .
XXI.
To substitute or delegate this Power of Attorney in whole or in part in favor of such one or more
employees of the Bank, as he may deem advisable. . . "
Since paragraph XXI above specifically allows Ferguson to delegate his powers in whole or in
part, there can be no doubt that the special power of attorney in favor, first, of J.P. Garcia & Associates and
later, of the bank's employees, constitutes a valid delegation of Ferguson's express power (under paragraph
XVII above) to represent petitioner bank in the pre-trial conference in the lower court.
II BYLAWS EFFECTIVE
This brings us to the second query: whether petitioner bank's by-laws, which constitute the basis
for Ferguson's special power of attorney in favor of petitioner bank's legal counsel are effective, considering
that petitioner bank has been previously granted a license to do business in the Philippines.
CA relied on: "SEC. 46.
Adoption of by-laws. Every corporation formed under this Code must,
within one (1) month after receipt of official notice of the issuance of its certificate of incorporation by the

Securities and Exchange Commission, adopt a code of by-laws for its government not inconsistent with this
Code. For the adoption of by-laws by the corporation, the affirmative vote of the stockholders representing
at least a majority of the outstanding capital stock, or of at least a majority of the members in the case of
non-stock corporations, shall be necessary. The by-laws shall be signed by the stockholders or members
voting for them and shall be kept in the principal office of the corporation, subject to the inspection of the
stockholders or members during office hours; and a copy thereof, duly certified to by a majority of the
directors or trustees and countersigned by the secretary of the corporation, shall be filed with the Securities
and Exchange Commission which shall be attached to the original articles of incorporation.
Notwithstanding the provisions of the preceding paragraph, by-laws may be adopted and filed
prior to incorporation; in such case, such by-laws shall be approved and signed by all the
incorporators and submitted to the Securities and Exchange Commission, together with the articles of
incorporation.
In all cases, by-laws shall be effective only upon the issuance by the Securities and Exchange
Commission of a certification that the by-laws are not inconsistent with this Code."
said provision starts with the phrase "Every corporation formed under this Code", which can only
refer to corporations incorporated in the Philippines. Hence, Section 46, in so far as it refers to the effectivity
of corporate by-laws, applies only to domestic corporations
On the other hand, Section 125 of the same Code requires that a foreign corporation applying
for a license to transact business in the Philippines must submit, among other documents, to the
SEC, a copy of its articles of incorporation and by-laws, certified in accordance with law. Unless these
documents are submitted, the application cannot be acted upon by the SEC. In the following section, the
Code specifies when the SEC can grant the license applied for.
(Sec 126): Since the SEC will grant a license only when the foreign corporation has complied with
all the requirements of law, it follows that when it decides to issue such license, it is satisfied that the
applicant's by-laws, among the other documents, meet the legal requirements. This, in effect, is an approval
of the foreign corporations by-laws
Therefore, petitioner bank's by-laws, though originating from a foreign jurisdiction, are valid
and effective in the Philippines.
In pursuance of the authority granted to him by petitioner bank's by-laws, its Executing Officer
appointed William W. Ferguson, a resident of the Philippines, as its Attorney-in-Fact empowering the latter,
among other things, to represent petitioner bank in court cases. In turn, William W. Ferguson executed a
power of attorney in favor of J.P. Garcia & Associates (petitioner bank's counsel) to represent
petitioner bank in the pre-trial conference before the lower court. This act of delegation is explicity
authorized by paragraph XXI of his own appointment, which we have previously cited.
It is also error for the Court of Appeals to insist that the special power of attorney, presented by
petitioner bank authorizing its counsel, Atty. Julius Neri and/or J.P. Garcia & Associates, to appear for and in
behalf of petitioner bank during the pre-trial, is not valid. The records do not sustain this finding.
Under Rule 138, Section 23 of the Rules of Court, an attorney has authority to bind his client in any
case by an agreement in relation thereto made in writing, and this authority would include taking appeals
and all matters of ordinary judicial procedure. But he cannot, without special authority, compromise his
client's litigation or receive anything in discharge of a client's claim but the full amount in cash.
It is also error on the part of the Court of Appeals to state that the power of attorney given to the
four (4) Citibank employees is not a special power of attorney as required in paragraph 3, Article 1878 of the
Civil Code and Section 1 (a), Rule 20 of the Rules of Court.
In the case of Tropical Homes, Inc. vs. Villaluz,
"Although the power of attorney in question does not specifically mention the
authority of petitioner's counsel to appear and bind the petitioner at the pre-trial conference, the
terms of said power of attorney are comprehensive enough as to include the authority to appear for
the petitioner at the pre-trial conference."
From the outset, petitioner bank showed a willingness, if not zeal, in pursuing and defending this
case.
In fact, there was no need for the third power of attorney because we believe that the
second power of attorney was sufficient under the by-law provision authorizing Fersugon to delegate any
of his functions to any one or more employees of the petitioner bank.
We reiterate the previous admonitions of this Court against "precipitate orders of default as these
have the effect of denying the litigant the chance to be heard. While there are instances, to be sure, when a

party may be properly defaulted, these should be the exceptions rather than the rule and should be allowed
only in clear cases of an obstinate refusal or inordinate neglect to comply with the orders of the court. Absent
such a showing, the party must be given every reasonable opportunity to present his side and to refute the
evidence of the adverse party in deference to due process of law"
The order of default issued on August 15, 1990 in Civil Case CEB-4751 of the Regional Trial Court of Cebu is
ANNULLED and SET ASIDE and the case is hereby REMANDED to the court of origin for further proceedings.