Yau vs. Manila Banking

[G.R. No. 126731. July 11, 2002]
ESTEBAN YAU, petitioner, vs. THE MANILA BANKING CORPORATION, respondent.

[G.R. No. 128623. July 11, 2002]
THE MANILA BANKING CORPORATION, petitioner, vs. ESTEBAN YAU, THE COURT OF APPEALS (SEVENTEENTH DIVISION), and the HON. DELIA H. PANGANIBAN, in her capacity as the Presiding Judge of the Regional Trial Court of Makati City, Branch 64, respondents.

Esteban Yau is the judgment creditor of Ricardo C. Silverio, Sr. by virtue of a Decision of the RTC in Civil Case No. CEB-2058, entitled Esteban Yau v. Philippine Underwriters Finance Corporation, et al., which included Silverio as one of the defendants. The decision became final and executory and, accordingly, a writ of execution was issued. Silverio failed to pay said judgement and the only asset of Silverio that could satisfy of the judgment was his proprietary membership share in the Manila Golf.  The share was auctioned and Yau emerged as the highest and only bidder and the corresponding Certificate of Sale was issued in his name.

However, at the time of the execution sale, the Silverio share was already subject to a prior levy pursuant to separate writs of preliminary attachment obtained by the Manilabank before which complaints for sums of money were pending, in which Silverio is also one of the defendants.

Yau filed separate motions to intervene in both cases pending before the RTC. RTC denied the motion to intervene in Civil Case No. 90-513 on the ground that the motion was filed after the parties have rested their respective cases and the same will only unduly delay the disposition of the case. However, Yau was granted the motion to intervene in the Civil Case No. 90-271.

In G.R. No. 128623, the issue revolves on the legality of the intervention of Yau in Civil Case No. 90-271 before RTC. Manilabank argues that Yau has no legal interest to justify intervention in Civil Case No. 90-271 before RTC, nor does he have standing and legal basis to assail the Writ of Attachment. Manilabank submits that whatever rights Yau may have in the subject property can be fully protected, as in fact they are already protected, in a separate proceeding. Besides, the intervention of Yau will unduly delay and prejudice the adjudication of the rights of the original parties in Civil Case No. 90-271 before RTC. Finally, Manilabank contends that allowing intervention after trial had already been concluded is in violation of the rule that intervention may only be allowed before or during trial.

Issue: WON Yau is allowed to intervene.

Held:

The contention of Manilabank that Yau has no legal interest in the matter in litigation lacks buoyancy. Under Section 2, Rule 12 of the Revised Rules of Court, which was the governing law at the time the instant case was decided by the trial court and the appellate court, a person may, before or during trial, be permitted by the Court in its discretion to intervene in an action, if he has legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or when he is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof. Yau falls under the last instance. It is recognized that a judgment creditor who has reduced his claim to judgment may be allowed to intervene and a purchaser who acquires an interest in property upon which an attachment has been levied may intervene in the underlying action in which the writ of attachment was issued for the purpose of challenging the attachment.

Clearly, Yau, being the judgment creditor of Silverio in Civil Case No. CEB-2058 and the purchaser at the public auction sale of the Silverio share, would be adversely affected by the disposition of the Silverio share, subject of the writ of attachment issued by the RTC, should a decision be rendered in favor of Manilabank and, as such, has standing to intervene to protect his interest. Besides, no purpose will be served by not allowing Yau to protect his interests where the Silverio share is under custodia legis. If we follow the contention of Manilabank, this would result in a violation of the aforementioned principle of judicial stability or non-interference.

Lastly, on the matter of allowing the intervention after trial, suffice it to state that the rules now allow intervention before rendition of judgment by the trial court. After trial and decision in a case, intervention can no longer be permitted. The permissive tenor of the provision on intervention shows the intention of the Rules to give to the court the full measure of discretion in permitting or disallowing the same. The rule on intervention was evidently intended to expedite and economize in litigation by permitting parties interested in the subject matter, or anything related therein, to adjust the matter in one instead of several suits.

De Guia vs. Ciriaco

[G.R. No. 135384. April 4, 2001]

MARIANO DE GUIA and APOLONIA DE GUIA, petitioners, vs. CIRIACO, LEON, VICTORINA, TOMASA and PABLO, all surnamed DE GUIA, respondents.

 Plaintiffs Mariano De Guia, Apolonia De Guia, Tomasa De Guia and Irene Manuel filed with the court below a complaint for partition against defendants Ciriaco, Leon, Victorina and Pablo De Guia. They alleged that the real properties therein described were inherited by plaintiffs and defendants from their predecessors-in-interest, and that the latter unjustly refused to have the properties subdivided among them.  The lower court impleaded Tomasa De Guia as defendant for the reason that she had become an unwilling co-plaintiff.

The Clerk of Court issued a Notice setting the case for pre-trial conference and said notice were sent by registered mails to parties and their counsels. Both defendant and counsel failed to attend the pre-trial conference and was declared in default. Plaintiff were allowed to present their evidence ex-parte.

Defendants filed their Motion for Reconsideration of the Order which declared them as in default. They explained therein that they received the Notice of pre-trial only in the afternoon of June 18, 1992, giving them no chance to appear for such proceeding in the morning of that day. The Motion was opposed by plaintiffs who pointed out that per Postal Delivery Receipt, defendants counsel actually received his copy of the Notice on June 17, 1992 or one day before the date of pre-trial. Citing Section 2, Rule 13 of the Rules of Court, plaintiffs further urged that counsels receipt of the said notice on June 17, 1992 was sufficient to bind defendants who received said notice on the next day. Finally, they faulted defendants for failing to support their Motion for Reconsideration with an affidavit of merit showing among others that they had a meritorious defense.

Issue: WON there is notice of Pre-Trial.

Held:
When the present dispute arose in 1992, the applicable rule was Section 1, Rule 20 of the pre-1997 Rules of Civil Procedure, which provided as follows:

SECTION 1. Pre-trial mandatory. -- In any action after the last pleading has been filed, the court shall direct the parties and their attorneys to appear before it for a conference to consider:

This provision mandated separate service of the notice of pretrial upon the parties and their lawyers. In Taroma v. Sayo, the Court explained: For the guidance of the bench and bar, therefore, the SC  in reaffirming the ruling that notice of pre-trial must be served separately upon the party and his counsel of record, restates that while service of such notice to party may be made directly to the party, it is best that the trial courts uniformly serve such notice to party through or care of his counsel at counsels address with the express imposition upon counsel of the obligation of notifying the party of the date, time and place of the pre-trial conference and assuring that the party either appear thereat or deliver counsel a written authority to represent the party with power to compromise the case, with the warning that a party who fails to do so may be non-suited or declared in default.

Hence, before being declared non-suited or considered in default, parties and their counsel must be shown to have been served with notice of the pretrial conference. Moreover, if served only on the counsel, the notice must expressly direct him or her to inform the client of the date, the time and the place of the pretrial conference. The absence of such notice renders the proceedings void, and the judgment rendered therein cannot acquire finality and may be attacked directly or collaterally.

In this case, respondents received the notice on the afternoon of June 18, 1992, or after the pretrial scheduled on the morning of that day. Moreover, although the Notice was also sent to their counsel, it did not contain any imposition or directive that he informs his clients of the pretrial conference. The Notice merely stated: You are hereby notified that the above-entitled case will be heard before this court on the 18th day of June, 1992, at 8:30 a.m. for pre-trial.

Such belated receipt of the notice, which was not attributable to respondents, amounted to a lack of notice. Thus, the lower court erred in declaring them in default and in denying them the opportunity to fully ventilate and defend their claim in court.

Of course, this situation would not have arisen under Section 3, Rule 18 of the 1997 Rules of Civil Procedure. It specifically provides that notice of pretrial shall be served on counsel, who is charged with the duty of notifying the client. Considering the milieu of the present case, however, such amended proviso is not applicable.

Villarica Pawnshop vs. Gernale

G.R. No. 163344, March 20, 2009,  

VILLARICA PAWNSHOP, INC., represented by Atty. Henry R. Villarica, Maria Consolacion Valmadrid and Rafael Valmadrid Tan, Petitioners,
- versus -
SPOUSES ROGER G. GERNALE and CORAZON C. GERNALE, FAR EAST BANK & TRUST CO. (now Bank of the Philippine Islands) and the REGISTER OF DEEDS of Meycauayan, Bulacan, Respondents.

Respondent spouses Roger and Corazon Gernale (Gernale spouses) filed with the Regional Trial Court a Complaint for Quieting of Title and Damages against Villarica. The case was docketed as Civil Case No. 438-M-2002 in RTC.

The Gernale spouses alleged that they purchased two parcels of land from Valmadrid as evidenced by two deeds of sale of even date; subsequently, they sought to register the sale and cause the transfer of the title to their names, but they failed because the then acting Register of Deeds informed them that Transfer Certificate of Title (TCT) Nos. 90266 and 90267 covering the subject lots were among those totally burned during a conflagration that took place.  the Gernale spouses filed a petition for the reconstitution of the original copy of TCT Nos. 90266 and 90267; their petition was granted and was subsequently issued to them the reconstituted titles TCT Nos. RT-46962(90266) and RT-46963(90267). thereafter, the Gernale spouses saw representatives of Villarica fencing the said properties; upon verification with the Registry of Deeds, respondent spouses discovered that TCT Nos. T-225971(M) and T-225972(M), covering the same parcels of land which they bought, were issued in the name of Villarica in 1995; and the titles of Villarica were void, as the issuance thereof proceeded from an illegal source. The Gernales prayed that the TCTs in the name of Villarica as well as all documents and conveyances relevant thereto be declared null and void, and that Villarica be ordered to pay them moral and exemplary damages and attorney's fees.

The Gernale spouses mortgaged the subject properties to then Far East Bank & Trust Company, now Bank of the Philippine Islands (BPI). Petitioners filed with the RTC a Complaint, docketed as Civil Case No. 502-M-2002, for annulment and cancellation of titles and for damages against herein respondents.

The Gernale spouses filed a Motion to Dismiss Civil Case No. 502-M-2002, contending that petitioners' allegations in their Complaint were identical with its allegations in its Answer with Counterclaim, and that all the elements of litis pendentia were present in the said cases.

The RTC denied the Motion to Dismiss filed by the Gernale spouses and directed them to file their answer to petitioners' Complaint. Respondent spouses filed a Motion for Reconsideration, but the RTC denied it in its Order

Issue:
1. whether there is litis pendentia
2. whether the petition for certiorari filed by respondents with the CA was the proper remedy to question the orders of the RTC, which denied their motion to dismiss and their subsequent motion for reconsideration.

HeLd:

1. Litis pendentia as a ground for the dismissal of a civil action refers to that situation wherein another action is pending between the same parties for the same cause of action, such that the second action becomes unnecessary and vexatious.

The underlying principle of litis pendentia is the theory that a party is not allowed to vex another more than once regarding the same subject matter and for the same cause of action.

This theory is founded on the public policy that the same subject matter should not be the subject of controversy in courts more than once, in order that possible conflicting judgments may be avoided for the sake of the stability of the rights and status of persons.

The requisites of litis pendentia are: (a) the identity of parties, or at least such as representing the same interests in both actions; (b) the identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two cases such that judgment in one, regardless of which party is successful, would amount to res judicata in the other.

With respect to the first requisite, the Court finds no error in the ruling of the CA that there is identity of parties in Civil Case Nos. 438-M-2002 and 502-M-2002. It is true that in Civil Case No. 502-M-2002, Valmadrid and Tan were added as plaintiffs, while BPI and the Register of Deeds of Meycauayan, Bulacan were added as defendants. However, identity of parties does not mean total identity of parties in both cases. It is enough that there is substantial identity of parties. The inclusion of new parties in the second action does not remove the case from the operation of the rule of litis pendentia. What is primordial is that the primary litigants in the first case are also parties to the second action. A different rule would render illusory the principle of litis pendentia.  The fact that new parties were included in Civil Case No. 502-M-2002 does not detract from the fact that the principal litigants, Villarica and the Gernale spouses, are the same in both cases. Besides, it is clear that Valmadrid and Tan, being the previous owners from whom Villarica bought the subject properties, represent the same interests as the latter. On the other hand, the Register of Deeds of Meycauayan, Bulacan was impleaded merely as a nominal party.

With respect to the second and third requisites, the test to determine whether the causes of action are identical is to ascertain whether the same evidence will sustain both actions, or whether there is an identity in the facts essential to the maintenance of the two actions. If the same facts or evidence would sustain both, the two actions are considered the same, and a judgment in the first case is a bar to the subsequent action. Hence, a party cannot, by varying the form of action or adopting a different method of presenting his case, escape the operation of the principle that one and the same cause of action shall not be twice litigated between the same parties or their privies.

Civil Case No. 438-M-2002 is for quieting of title and damages, while Civil Case No. 502-M-2002 is for annulment and cancellation of titles and damages. The two cases are different only in the form of action, but an examination of the allegations in both cases reveals that the main issue raised, which is ownership of the land, and the principal relief sought, which is cancellation of the opposing parties' transfer certificates of title, are substantially the same. The evidence required to substantiate the parties' claims is likewise the same. The proceedings in Civil Case No. 502-M-2002 would entail the presentation of essentially the same evidence, it is clear that there is litis pendentia, and that the RTC committed grave abuse of discretion in refusing to grant respondents' motion to dismiss.

 2. While indeed, the general rule is that the denial of a motion to dismiss cannot be questioned in a special civil action for certiorari which is not intended to correct every controversial interlocutory ruling, and that the appropriate recourse is to file an answer and to interpose as defenses the objections raised in the motion, to proceed to trial, and, in case of an adverse decision, to elevate the entire case by appeal in due course, this rule is not absolute.

Even when appeal is available and is the proper remedy, the Supreme Court has allowed a writ of certiorari (1) where the appeal does not constitute a speedy and adequate remedy; (2) where the orders were also issued either in excess of or without jurisdiction or with grave abuse of discretion; (3) for certain special considerations, as public welfare or public policy; (4) where in criminal actions, the court rejects rebuttal evidence for the prosecution as, in case of acquittal, there could be no remedy; (5) where the order is a patent nullity; and (6) where the decision in the certiorari case will avoid future litigations

Calalang vs. CA

G.R. No. 103185 January 22, 1993

CONRADO CALALANG, petitioner, 
vs.
THE COURT OF APPEALS and FILIPINAS MANUFACTURERS BANK, respondents.

Respondent Filipinas Manufacturers Bank filed a complaint for collection of a sum of money1against petitioner Conrado Calalang and 3 other defendants namely, Hugo M. Arca, Rio Arturo Salceda and the Acropolis Trading Corporation with the Court of First Instance.

Petitioner, after having been served with summons on May 19, 1980, filed a Motion to Dismiss on June 2, 1980. The other summoned defendant, Hugo M. Arca, filed a Motion for Bill of Particulars on June 5, 1980. The two other defendants namely, the Acropolis Trading Corporation and Rio Arturo Salceda were also summoned but only a clerk-employee of the Acropolis Trading Corporation received the summons while Arturo R. Salceda was no longer residing at his given address.

Over a year after, the Motion for Bill of Particulars was granted. Meanwhile, the Motion to Dismiss filed by petitioner Calalang was left unresolved. The last pleading filed regarding the Motion to Dismiss was the reply of petitioner Calalang to the opposition to the motion to dismiss by respondent bank

This case has been set several times for pre-trial. Petitioner Calalang moved to dismiss the complaint on the ground that respondent bank failed to prosecute the case for an unreasonable length of time.

Issue: WON there was failure of the plaintiff to prosecute.

Held:

To be a sufficient ground for dismissal, delay must not only be lengthy but also unnecessary and dilatory resulting in the trifling of judicial processes.

In Marahay vs. Melicor, the Court set forth the test for dismissal of a case due to failure to prosecute, to wit:

While a court can dismiss a case on the ground of non prosequitur, the real test for the exercise of such power is whether, under the circumstances, plaintiff is chargeable with want of due diligence in failing to proceed with reasonable promptitude. In the absence of a pattern or scheme to delay the disposition of the case or a wanton failure to observe the mandatory requirement of the rules on the part of the plaintiff, as in the case at bar, courts should decide to dispense with rather than wield their authority to dismiss.

Dismissal of a case for failure to prosecute is a matter addressed to the sound discretion of the court. That discretion, however, must not be abused. Thus, courts may not enter a dismissal which is not warranted by the circumstances of the case. The availability of this recourse must be determined according to each case's procedural history, situation at the time of the dismissal and whether, and under the circumstances of the particular case, the plaintiff is chargeable with want of due diligence in failing to proceed with reasonable promptitude.

Delgado vs. CA

[G. R. No. 137881. December 21, 2004]

ISAAC DELGADO and FERNANDO DELGADO, petitioners, vs. COURT OF APPEALS, ZACARIAS LIMPANGOG, REMEGIO LAGUNA, SANTIAGO BALORO, CAMILO EVANGELISTA, NEMESIO AMORES and RUSTICO RUIZO, respondents.

Plaintiffs alleged that they are duly registered and recognized, as tenants, by the DAR on parcel of ricelands owned by defendant Isaac Delgado, duly administered by his son, defendant Fernando Delgado. They started plowing and tilling these ricelands sometime in 1962 upon the authorization of defendant Isaac Delgado wherein they were appointed as tenants.

From 1962 up to 1981, plaintiffs and defendant Isaac Delgado shared the produce of the ricelands through their labor and hardship on a 50-50 basis. The sharing arrangement was, later on, changed, sometime in 1982, to 1/4-3/4 basis, in favor of the plaintiffs. The new sharing agreement, however, was not accepted by the defendants in spite of the fact that it was in accordance with the provisions of RA 3844, as amended by RA 6389. Because of defendants’ refusal, plaintiffs were compelled to sell their share and deposited the proceeds with the Philippine National Bank for its safekeeping.

After the effectivity of PD 27, the subject land being devoted to the production of rice, was covered by Operation Land Transfer for distribution to qualified beneficiaries. Plaintiffs were identified by the DAR as the qualified beneficiaries on their respective portion of the land. As a consequence, Certificates of Land Transfer (CLTs), in their respective names, were generated and issued.

Defendants destroyed and razed to the grounds the newly sprouted rice plants, which they planted, to their great prejudice and embarrassment. Defendant Fernando Delgado threatened them, by pointing a gun, and warned them to stop tilling and cultivating the subject land resulting in their ejectment thereon. Because of these unlawful acts, plaintiffs were deprived of their share of the produce of the land.

Defendants raised that Defendants pointed out that plaintiffs filed before the RTC a case for Reinstatement with Damages against them involving the subject land. This case was subsequently dismissed and plaintiffs filed the same action for Reinstatement with Damages before the Lower Board.

Issue: WON the present action should be dismissed on ground of res judicata.

Held:

There is no statement in the order of dismissal of the RTC case that the dismissal was without prejudice. In accordance, therefore, with the then prevailing Section 2, Rule 17 of the Rules of Court, to wit:
Sec. 2. Dismissal by the 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 deems proper. If a counterclaim has been pleaded by a defendant prior to the service upon him of the plaintiffs 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.

Such dismissal is without prejudice. As held in Vallangca vs. Court of Appeals, a dismissal order is generally deemed to be without prejudice to the filing of another action. The only instance when dismissal of an action is with prejudice is, when the order itself so states. Stated differently, when the court issues, upon the plaintiff’s instance, a dismissal order that is silent as to whether it is with or without prejudice, such as in the case at bar, the presumption is, that it is without prejudice.
The dismissal of the agrarian case by the RTC on motion of plaintiffs-respondents did not constitute res judicata inasmuch as the dismissal order was not a decision on the merits but a dismissal without prejudice.

The principle of res judicata does not apply when the dismissal of the earlier complaint, involving the same plaintiffs, same subject matter, same theory and the same defendants, was made without prejudice to its refiling at a future date, or in a different venue, as in this case. The dismissal of the case without prejudice indicates the absence of a decision on the merits and leaves the parties free to litigate the matter in a subsequent action as though the dismissal action had not been commenced. In other words, the discontinuance of a case not on the merits does not bar another action on the same subject matter.

Neither can respondents be held guilty of abandonment. Abandonment may be said to result where there is concurrence of two (2) elements: the first being the intent to abandon a right or claim and the second being the external act by which that intention is expressed and carried into effect. There must be an actual, not merely projected, relinquishment; otherwise, the right or claim is not vacated or waived and, thus, susceptible of being appropriated by another. The intention to abandon implies a departure, with the avowed intent of never returning, resuming or claiming the right and the interest that have been abandoned. These requirements are clearly lacking in the present case. There is nothing in the record to show a deliberate intent to discontinue the suit without intention of refiling the same. This inference of abandonment is belied by the fact that respondents filed the proper case in the Provincial Adjudication Board. Abandonment is inconsistent with the filing of the same action in the appropriate forum.

Mercado vs. Espina

G.R. No. 173987               February 25, 2012

PADILLA MERCADO, ZULUETA MERCADO, BONIFACIA MERCADO, DAMIAN MERCADO and EMMANUEL MERCADO BASCUG, Petitioners, 
vs.
SPOUSES AGUEDO ESPINA and LOURDES ESPINA, Respondents.

Petitioners alleged in their Complaint that they are the heirs of the late spouses Santiago and Sofronia Mercado, who were the owners of the subject parcel of land; after the death of Santiago and Sofronia, petitioners inherited the disputed lot, possessing the same as owners; sometime in 1996, herein respondents claimed ownership over the subject parcel of land, alleging that they bought the same from one Josefa Mercado Espina (Josefa) who, in turn, previously bought the same in 1939 from a certain Genivera Mercado Kavanaugh; that Genivera supposedly purchased the same property from one Escolastico Mercado in 1937 who, in turn, allegedly bought it from Santiago Mercado. Petitioners further alleged that in 1962, Josefa, through fraudulent machinations, was able to obtain a title (Original Certificate of Title No. 35) over the subject property in her name. Asserting that the above-mentioned contracts of sale never happened, petitioners prayed for the declaration of nullity of the deeds of sale between Santiago and Escolastico, Escolastico and Genivera, and between Genivera and Josefa.

Respondents filed a Motion to Dismiss on grounds that the RTC has no jurisdiction over the case due to the failure of the complainant to state the assessed value of the property, that petitioners' cause of action is barred by prescription, laches and indefeasibility of title, and that the complaint does not state sufficient cause of action against respondents who are buyers in good faith

Respondents filed a Motion to Dismiss Amended Complaint on grounds of prescription, laches, indefeasibility of title and lack of cause of action.

Issue:
WON failure to state a cause of action is a ground for motion to dismiss

Held:

Failure to state a cause of action refers to the insufficiency of the pleading, and is a ground for dismissal under Rule 16 of the Rules of Court.

A complaint states a cause of action if it avers the existence of the three essential elements of a cause of action, namely:
(a) The legal right of the plaintiff;
(b) The correlative obligation of the defendant; and
(c) The act or omission of the defendant in violation of said legal right

If the allegations in the complaint do not aver the concurrence of these elements, the complaint becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of action. A perusal of the Amended Complaint in the present case would show that there is, indeed, no allegation of any act or omission on the part of respondents which supposedly violated the legal rights of petitioners. Thus, the CA is correct in dismissing the complaint on the ground of failure to state a cause of action.

Aneco Realty vs. Landex

G.R. No. 165952, July 28, 2008 
ANECO REALTY AND DEVELOPMENT CORPORATION, Petitioner, - versus -  LANDEX DEVELOPMENT  CORPORATION, Respondent.

Fernandez Hermanos Development, Inc. (FHDI) is the original owner of a tract of land in San Francisco Del Monte, Quezon City. FHDI subdivided the land into thirty-nine (39) lots. It later sold twenty-two (22) lots to petitioner Aneco and the remaining seventeen (17) lots to respondent Landex.

The dispute arose when Landex started the construction of a concrete wall on one of its lots. To restrain construction of the wall, Aneco filed a complaint for injunction with the RTC

The RTC rendered a Decision granting the complaint for injunction. Landex moved for reconsideration. Records reveal that Landex failed to include a notice of hearing in its motion for reconsideration as required under Section 5, Rule 15 of the 1997 Rules of Civil Procedure. Realizing the defect, Landex later filed a motion setting a hearing for its motion for reconsideration. Aneco countered with a motion for execution claiming that the RTC decision is already final and executory.

The RTC issued an order granting the motion for reconsideration of Landex and dismissing the complaint of Aneco.

Issue:
 Whether or not the requirement of notice of hearing should be strictly or liberally applied under the circumstances.

Held:
A motion without the required notice of hearing is a mere scrap of paper. It does not toll the running of the period to file an appeal or a motion for reconsideration. It is also true that procedural rules are mere tools designed to facilitate the attainment of justice. Their strict and rigid application should be relaxed when they hinder rather than promote substantial justice. Public policy dictates that court cases should, as much as possible, be resolved on the merits not on mere technicalities. Substantive justice trumps procedural rules. In Barnes v. Padilla, the SC held:

Let it be emphasized that the rules of procedure should be viewed as mere tools designed to facilitate the attainment of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be eschewed. Even the Rules of Court reflect this principle. The power to suspend or even disregard rules can be so pervasive and compelling as to alter even that which this Court itself has already declared to be final.

The emerging trend in the rulings of this Court is to afford every party litigant the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities. Time and again, SC has consistently held that rules must not be applied rigidly so as not to override substantial justice.

Here, the SC find that the RTC and the CA soundly exercised their discretion in opting for a liberal rather than a strict application of the rules on notice of hearing. It must be stressed that there is no vested right to technicalities. It is within the courts sound discretion to relax procedural rules in order to fully adjudicate the merits of a case. This Court will not interfere with the exercise of that discretion absent grave abuse or palpable error. Section 6, Rule 1 of the 1997 Rules of Civil Procedure even mandates a liberal construction of the rules to promote their objectives of securing a just, speedy, and inexpensive disposition of every action and proceeding.

To be sure, the requirement of a notice of hearing in every contested motion is part of due process of law. The notice alerts the opposing party of a pending motion in court and gives him an opportunity to oppose it. What the rule forbids is not the mere absence of a notice of hearing in a contested motion but the unfair surprise caused by the lack of notice. It is the dire consequences which flow from the procedural error which is proscribed. If the opposing party is given a sufficient opportunity to oppose a defective motion, the procedural lapse is deemed cured and the intent of the rule is substantially complied.

SC finds that the procedural lapse committed by Landex was sufficiently cured when it filed another motion setting a hearing for its defective motion for reconsideration. Records reveal that the RTC set a hearing for the motion for reconsideration but Anecos counsel failed to appear. The RTC then gave Aneco additional time to file comment on the motion for reconsideration.

Aneco was afforded procedural due process when it was given an opportunity to oppose the motion for reconsideration. It cannot argue unfair surprise because it was afforded ample time to file a comment, as it did comment, on the motion for reconsideration. There being no substantial injury or unfair prejudice, the RTC and the CA correctly ignored the procedural defect.

Traders Royal Bank vs. CA

G.R. No. 60222 April 22, 1992

TRADERS ROYAL BANK, petitioner, 
vs.
THE HONORABLE COURT OF APPEALS, THE HONORABLE COURT OF FIRST INSTANCE OF RIZAL (PASAY CITY), BRANCH XXIX, THE HONORABLE MANUEL VALENZUELA, public respondents, G.M. WOOD EXPORT INDUSTRIES, INC. and SONIA GONZALES, private respondents.

Petitioner filed with the respondent trial court a complaint for a sum of money, with an application for a writ of preliminary attachment against the private respondents. Its principal causes of action involve a promissory note and domestic letters of credit in the amounts. In connection with said letters of credit, private respondent G.M. Wood Export Industries, Inc. through its President and General Manager, private respondent Gonzales, signed and delivered to the petitioner the corresponding documents of trust.

The trial court issued a writ of preliminary attachment. However, petitioner and private respondents filed a Joint Motion containing stipulations regarding a temporary arrangement between them under which G.M. Wood was allowed to continue with its business operations without, however, prejudicing or jeopardizing petitioner's interest in the attached or garnished properties of G.M. Wood.

The trial court approved the joint motion but lifted partially the attachment levied on private respondent's properties.

Petitioner filed an omnibus motion praying, among others, for: (a) the reconsideration of the above order insofar as it mandated the partial lifting of the writ of attachment and (b) the total reinstatement of the attachment on the properties.  The hearing for this motion was postponed three (3) times at the instance of private respondents. On the third time, the hearing was again postponed but private respondents did not appear; petitioner then verbally moved for the submission of the motion for resolution. The formal motion to this effect was likewise filed. The trial court did not act thereon; instead it issued an Order granting private respondents' urgent motion for the release to private respondent Gonzales of the marginal deposit. Petitioner was not furnished with a copy of the motion, which does not even contain the required notice of hearing. Petitioner thus filed a motion for reconsideration which the trial court denied in its order.

Issue: WON there was notice of hearing in the motion

Held:

The trial court then acted without jurisdiction or with grave abuse of discretion when it ordered the petitioner to release the marginal deposit. What is more reprehensible in the conduct of the trial court is its deliberate failure to act with dispatch on petitioner's motion to reconsider both the Order insofar as it partially lifted the writ of attachment and the approval, ex parte, of the motion to release the marginal deposit. There was, of course, merit in the first motion as the trial court acted rather capriciously when it partially lifted the writ. None of the parties asked for such lifting. On the contrary, in their joint motion, they explicitly agreed a. That the writ of attachment is not hereby lifted by virtue of this temporary arrangement and the attachment/garnishment/levy on the properties of defendant shall subsists.  As to the motion for release, SC noted from the Order dated 29 January 1981 that it is denominated as urgent and was filed only on 28 January 1981. Respondents do not deny the fact that no copy thereof was furnished the petitioner; they also do not dispute the fact that no notice of its hearing was indicated in the motion. The movants then deliberately violated the requirement of notice prescribed in Sections 4 and 5, Rule 15 of the Rules of Court. This requirement is mandatory. A motion that does not contain a notice of hearing is a mere scrap of paper; it presents no question which merits the attention and consideration of the court. It is not even a motion for it does not comply with the rules and the clerk of court has no right to receive it.  Being a mere scrap of paper, the trial court had no other alternative but to disregard it. Even if the motion contained a notice, still the trial court could not have validly acted on it for, as of the date it acted thereon, no proof of service of the notice on petitioner was shown. Section 6 of the aforecited Rule provides that:

No motion shall be acted upon by the court, without proof of service of the notice thereof, except when the court is satisfied that the rights of the adverse party or parties are not affected.
In this case, the right of the petitioner was definitely affected. That petitioner subsequently filed a motion to reconsider and that it underwent a full-blown hearing did not, contrary to the postulation of the Court of Appeals, cure the fatal error.

Castillo vs. Court of First Instance

G.R. No. L-55869 February 20, 1984
SALOME M. CASTILLO, petitioner, 
vs.
COURT OF FIRST INSTANCE OF BULACAN, BRANCH IV and FELIBERTO V. CASTILLO, respondents.

Private respondent and petitioner are husband and wife. Private respondent filed a complaint against petitioner for administration of conjugal properties, alleging that petitioner took possession and administration of the assets of the conjugal partnership; that they were separated de facto.

Summons was issued by the respondent court. The address of petitioner as alleged in the complaint and indicated in the summon is 129 or 35 Lapu Lapu Street, Caloocan City, Metro Manila. Deputy Sheriff instead of serving the summons at the aforesaid address, served it at No. 8 Mango Road, Malabon, Metro Manila, but was informed by Atty. Jose M. Castillo, a son of the spouses, that petitioner is not residing in said address and is presently in the United States of America. When the Deputy Sheriff inquired the location of 129 Lapu Lapu Street, Caloocan City, Atty. Castillo accompanied him in said address where his brother is residing. In said address, the Deputy Sheriff was likewise informed that petitioner is abroad. The Castillo brothers filed a manifestation before the respondent court that petitioner is abroad.

Private respondent requested the Deputy Sheriff to serve the summons at No. 8 Mango Road, Northern Hills, Malabon, Metro Manila. The Deputy Sheriff served the summons on the said address delivering a copy thereof to a certain Chua Yok, an overseer of one Ngo Kieng, who was the lessee of the premises belonging to the conjugal partnership of petitioner and private respondent.
For failure of petitioner to file answer, private respondent filed a motion to declare the former in default which was granted by the trial court. Private respondent was allowed to present his evidence ex parte.

Issue:
WON a valid service of summon was made upon petitioner.

Held:
There was no valid service of summons upon petitioner. Courts acquire jurisdiction over the person of a party defendant and of the subject matter of the action by virtue of the service of summons in the manner required by law. In the present case, petitioner is a resident temporarily out of the Philippines. Such being the case, service of summons is governed by Section 18, Rule 14 of the Rules of Court which states:

Section 18. Resident temporarily out of the Philippines. — When an action is commenced against a defendant who ordinarily resides within the Philippines, but who is temporarily out of it, service may, by leave of court be effected out of the Philippines as under the preceding section.

Under Section 17, service of summons may, by leave of court, be effected out of the Philippines by personal service or by publication in a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the summons and order of the court shall be sent by registered mail to the last known address of the defendant. Failure to comply with the above provisions of law, as in this case, is a fatal defect in the service of summons as to annul the proceedings taken by the lower court. Chua Yok, a mere overseer of the lessee of the premises owned by the parties herein, and to whom the summons was served, is not in any way authorized to receive any pleading in behalf of petitioner. Hence, service of summons to him is not proper and legal.

Non-service of summons upon petitioner constitutes a deprivation of procedural due process. It is fair and just that she be given her day in court. It is a jurisdictional defect proper for the present recourse.

Chua vs. Torres

G.R. No. 151900, August 30, 2005,

 CHRISTINE CHUA, Petitioner

- versus -

JORGE TORRES and ANTONIO BELTRAN, Respondents. 

A complaint for damages was lodged before the Regional Trial Court. The complaint was filed by Christine Chua impleading her brother Jonathan Chua as a necessary co-plaintiff. Named as defendants in the suit were herein respondents Jorge Torres and Antonio Beltran.

Significantly, while Jonathan Chua was named as a plaintiff to the suit, it was explicitly qualified in the second paragraph of the complaint that he was being impleaded here-in as a necessary party-plaintiff. There was no allegation in the complaint of any damage or injury sustained by Jonathan, and the prayer therein expressly named petitioner as the only party to whom respondents were sought to recompense. Neither did Jonathan Chua sign any verification or certification against forum-shopping, although petitioner did sign an attestation, wherein she identified herself as the principal plaintiff.

Upon motion of respondents, the RTC ordered the dismissal of the complaint on the ground that Jonathan Chua had not executed a certification against forum-shopping stressing Section 5, Rule 7 of the Rules of Civil Procedure.

Issue: whether the absence of the signature in the required verification and certification against forum-shopping of a party misjoined as a plaintiff is a valid ground for the dismissal of the complaint.

Held:

The SC ruled that it is not so, and that the RTC erred in dismissing the instant complaint. There is no judicial precedent affirming or rejecting such a view, but we are comfortable with making such a pronouncement. A misjoined party plaintiff has no business participating in the case as a plaintiff in the first place, and it would make little sense to require the misjoined party in complying with all the requirements expected of plaintiffs.

At the same time, Section 11, Rule 3 of the 1997 Rules of Civil Procedure states:

Neither misjoinder nor non-joinder of parties is ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a misjoined party may be severed and proceeded with separately.

Clearly, misjoinder of parties is not fatal to the complaint. The rule prohibits dismissal of a suit on the ground of non-joinder or misjoinder of parties. Moreover, the dropping of misjoined parties from the complaint may be done motu proprio by the court, at any stage, without need for a motion to such effect from the adverse party. Section 11, Rule 3 indicates that the misjoinder of parties, while erroneous, may be corrected with ease through amendment, without further hindrance to the prosecution of the suit.

It should then follow that any act or omission committed by a misjoined party plaintiff should not be cause for impediment to the prosecution of the case, much less for the dismissal of the suit. After all, such party should not have been included in the first place, and no efficacy should be accorded to whatever act or omission of the party. Since the misjoined party plaintiff receives no recognition from the court as either an indispensable or necessary party-plaintiff, it then follows that whatever action or inaction the misjoined party may take on the verification or certification against forum-shopping is inconsequential. Hence, it should not have mattered to the RTC that Jonathan Chua had failed to sign the certification against forum-shopping, since he was misjoined as a plaintiff in the first place. The fact that Jonathan was misjoined is clear on the face of the complaint itself, and the error of the RTC in dismissing the complaint is not obviated by the fact that the adverse party failed to raise this point. After all, the RTC could have motu proprio dropped Jonathan as a plaintiff, for the reasons above-stated which should have been evident to it upon examination of the complaint.

Sps. Perez vs. Hermano

G.R. No. 147417, July 8, 2005,

SPS. VICTOR & MILAGROS PEREZ and CRISTINA AGRAVIADOR AVISO, Petitioners,

 - versus -

ANTONIO HERMANO, R e s p o n d e n t.

Petitioners Cristina Agraviador Aviso and spouses Victor and Milagros Perez filed a civil case for Enforcement of Contract and Damages with Prayer for the Issuance of a TRO and/or Preliminary Injunction against Zescon Land, Inc. and/or its President Zenie Sales-Contreras, Atty. Perlita Vitan-Ele and against respondent herein Antonio Hermano. Respondent (then defendant) Hermano filed his Answer with Compulsory Counterclaim simultaneously filed a Motion with Leave to Dismiss the Complaint or Ordered Severed for Separate Trial which was granted by the trial court.

Petitioners moved for reconsideration which was denied by the trial court. Petitioners assert that respondent Hermano should not have been dismissed from the complaint because: (1) He did not file a motion to dismiss under Rule 16 of the Rules of Court and, in fact, his Motion with Leave to Dismiss the Complaint or Ordered Severed for Separate Trial was filed almost two years after he filed his Answer to the complaint; (2) There was no misjoinder of causes of action in this case; and (3) There was no misjoinder of parties.

Defendant having filed a special civil action for judicial foreclosure of mortgage and now pending before RTC, he should be dropped as one of the defendants in this case and whatever claims plaintiffs may have against defendant Hermano, they can set it up by way of an answer to said judicial foreclosure.

Issue: whether or not the public respondent had plainly and manifestly acted with grave abuse of discretion, in excess of jurisdiction, tantamount to lack of jurisdiction, in dismissing the complaint as against respondent Antonio Hermano in civil case.

Held: As far as we can glean from the Orders of the trial court, respondent Hermano was dropped from the complaint on the ground of misjoinder of causes of action. Petitioners, on the other hand, insist that there was no misjoinder in this case.

 To better understand the present controversy, it is vital to revisit the rules on joinder of causes of action as exhaustively discussed in Republic v. Hernandez, thus:

By a joinder of actions, or more properly, a joinder of causes of action, is meant the uniting of two or more demands or rights of action in one action; the statement of more than one cause of action in a declaration. It is the union of two or more civil causes of action, each of which could be made the basis of a separate suit, in the same complaint, declaration or petition. A plaintiff may under certain circumstances join several distinct demands, controversies or rights of action in one declaration, complaint or petition.

As can easily be inferred from the above definitions, a party is generally not required to join in one suit several distinct causes of action. The joinder of separate causes of action, where allowable, is permissive and not mandatory in the absence of a contrary statutory provision, even though the causes of action arose from the same factual setting and might under applicable joinder rules be joined. Modern statutes and rules governing joinders are intended to avoid a multiplicity of suits and to promote the efficient administration of justice wherever this may be done without prejudice to the rights of the litigants. To achieve these ends, they are liberally construed.

While joinder of causes of action is largely left to the option of a party litigant, Section 5, Rule 2 of our present Rules allows causes of action to be joined in one complaint conditioned upon the following requisites: (a) it will not violate the rules on jurisdiction, venue and joinder of parties; and (b) the causes of action arise out of the same contract, transaction or relation between the parties, or are for demands for money or are of the same nature and character.

The objectives of the rule or provision are to avoid a multiplicity of suits where the same parties and subject matter are to be dealt with by effecting in one action a complete determination of all matters in controversy and litigation between the parties involving one subject matter, and to expedite the disposition of litigation at minimum cost. The provision should be construed so as to avoid such multiplicity, where possible, without prejudice to the rights of the litigants. Being of a remedial nature, the provision should be liberally construed, to the end that related controversies between the same parties may be adjudicated at one time; and it should be made effectual as far as practicable, with the end in view of promoting the efficient administration of justice.

The statutory intent behind the provisions on joinder of causes of action is to encourage joinder of actions which could reasonably be said to involve kindred rights and wrongs, although the courts have not succeeded in giving a standard definition of the terms used or in developing a rule of universal application. The dominant idea is to permit joinder of causes of action, legal or equitable, where there is some substantial unity between them. While the rule allows a plaintiff to join as many separate claims as he may have, there should nevertheless be some unity in the problem presented and a common question of law and fact involved, subject always to the restriction thereon regarding jurisdiction, venue and joinder of parties. Unlimited joinder is not authorized.

Our rule on permissive joinder of causes of action, with the proviso subjecting it to the correlative rules on jurisdiction, venue and joinder of parties and requiring a conceptual unity in the problems presented, effectively disallows unlimited joinder.

Section 6, Rule 2 on misjoinder of causes of action provides:

Sec. 6. Misjoinder of causes of action. - Misjoinder of causes of action is not a ground for dismissal of an action. A misjoined cause of action may, on motion of a party or on the initiative of the court, be severed and proceeded with separately.

There is misjoinder of causes of action when the conditions for joinder under Section 5, Rule 2 are not met. Section 5 provides:

Sec. 5. Joinder of causes of action. - A party may in one pleading assert, in the alternative or otherwise, as many causes of action as he may have against an opposing party, subject to the following conditions:

(a) The party joining the causes of action shall comply with the rules on joinder of parties;

(b) The joinder shall not include special civil actions or actions governed by special rules;

(c) Where the causes of action are between the same parties but pertain to different venues or jurisdictions, the joinder may be allowed in the Regional Trial Court provided one of the causes of action falls within the jurisdiction of said court and the venue lies therein; and

(d) Where the claims in all the causes of action are principally for recovery of money, the aggregate amount claimed shall be the test of jurisdiction.

As far as can be gathered from the assailed Orders, it is the first condition - on joinder of parties - that the trial court deemed to be lacking. It is well to remember that the joinder of causes of action may involve the same parties or different parties. If the joinder involves different parties, as in this case, there must be a question of fact or of law common to both parties joined, arising out of the same transaction or series of transaction.

In herein case, petitioners have adequately alleged in their complaint that after they had already agreed to enter into a contract to sell with Zescon Land, Inc., through Sales-Contreras, the latter also gave them other documents to sign, to wit: A Deed of Absolute Sale over the same properties but for a lower consideration, two mortgage deeds over the same properties in favor of respondent Hermano with accompanying notes and acknowledgment receipts for P10,000,000 each. Petitioners claim that Zescon Land, Inc., through Sales-Contreras, misled them to mortgage their properties which they had already agreed to sell to the latter.

The joinder of causes of action should be liberally construed as to effect in one action a complete determination of all matters in controversy involving one subject matter, we hold that the trial court committed grave abuse of discretion in severing from the complaint petitioners cause of action against respondent Hermano.

Spouses Algura vs Local Gov't of City of Naga

G. R. No. 150135, Oct. 30, 2006

SPOUSES ANTONIO F. ALGURA and LORENCITA S.J. ALGURA, Petitioners,

- versus - 

THE LOCAL GOVERNMENT UNIT OF THE CITY OF NAGA, ATTY. MANUEL TEOXON, ENGR. LEON PALMIANO, NATHAN SERGIO and BENJAMIN NAVARRO, SR., Respondents. 

Spouses Antonio F. Algura and Lorencita S.J. Algura filed a Verified Complaint  for damages against the Naga City Government and its officers, arising from the alleged illegal demolition of their residence and boarding house and for payment of lost income derived from fees paid by their boarders amounting to PhP 7,000.00 monthly.

Simultaneously, petitioners filed an Ex-Parte Motion to Litigate as Indigent Litigants, to which petitioner Antonio Alguras pay showing a gross monthly income of PhP 10,474.00 and a net pay PhP 3,616.99.

Finding that petitioners’ motion to litigate as indigent litigants was meritorious RTC granted petitioners plea for exemption from filing fees.

Meanwhile, as a result of respondent Naga City Governments demolition of a portion of petitioners’ house, the Alguras allegedly lost a monthly income of PhP 7,000.00 from their boarders’ rentals. With the loss of the rentals, the meager income from Lorencita Alguras sari-sari store and Antonio Alguras small take home pay became insufficient for the expenses of the Algura spouses and their six (6) children for their basic needs including food, bills, clothes, and schooling, among others.

Respondents filed an Answer with Counterclaim arguing that the defenses of the petitioners in the complaint had no cause of action, the spouses’ boarding house blocked the road right of way, and said structure was a nuisance per se.

Respondents filed a Motion to Disqualify the Plaintiffs for Non-Payment of Filing Fees. They asserted that in addition to the more than PhP 3,000.00 net income of petitioner Antonio Algura, who is a member of the Philippine National Police, spouse Lorencita Algura also had a mini-store and a computer shop on the ground floor of their residence. Also, respondents claimed that petitioners second floor was used as their residence and as a boarding house, from which they earned more than PhP 3,000.00 a month. In addition, it was claimed that petitioners derived additional income from their computer shop patronized by students and from several boarders who paid rentals to them. Hence, respondents concluded that petitioners were not indigent litigants.

 The Naga City RTC issued an Order disqualifying petitioners as indigent litigants on the ground that they failed to substantiate their claim for exemption from payment of legal fees and to comply with the third paragraph of Rule 141, Section 18 of the Revised Rules of Court directing them to pay the requisite filing fees.

Petitioners submitted their Compliance attaching the affidavits of petitioner Lorencita Algura and Erlinda Bangate, to comply with the requirements of then Rule 141, Section 18 of the Rules of Court and in support of their claim to be declared as indigent litigants. Petitioner Lorencita Algura claimed that the demolition of their small dwelling deprived her of a monthly income amounting to PhP 7,000.00.  Also, they did not own any real property as certified by the assessor’s office of Naga City. More so, according to her, the meager net income from her small sari-sari store and the rentals of some boarders, plus the salary of her husband, were not enough to pay the family’s basic necessities.

To buttress their position as qualified indigent litigants, petitioners also submitted the affidavit of Erlinda Bangate, who attested under oath, that petitioners derived substantial income from their boarders; that they lost said income from their boarders rentals when the Local Government Unit of the City of Naga, through its officers, demolished part of their house because from that time, only a few boarders could be accommodated; that the income from the small store, the boarders, and the meager salary of Antonio Algura were insufficient for their basic necessities like food and clothing, considering that the Algura spouses had six (6) children; and that she knew that petitioners did not own any real property.

Issue: Whether petitioners should be considered as indigent litigants who qualify for exemption from paying filing fees?

Held:

The position of petitioners on the need to use Rule 3, Section 21 on their application to litigate as indigent litigants brings to the fore the issue on whether a trial court has to apply both Rule 141, Section 16 and Rule 3, Section 21 on such applications or should the court apply only Rule 141, Section 16 and discard Rule 3, Section 21 as having been superseded by Rule 141, Section 16 on Legal Fees.

The Court rules that Rule 3, Section 21 and Rule 141, Section 16 (later amended as Rule 141, Section 18 on March 1, 2000 and subsequently amended by Rule 141, Section 19 on August 16, 2003, which is now the present rule) are still valid and enforceable rules on indigent litigants.

Furthermore, Rule 141 on indigent litigants was amended twice and yet, despite these two amendments, there was no attempt to delete Section 21 from said Rule 3. This clearly evinces the desire of the Court to maintain the two (2) rules on indigent litigants to cover applications to litigate as an indigent litigant.

The Court opts to reconcile Rule 3, Section 21 and Rule 141, Section 19 because it is a settled principle that when conflicts are seen between two provisions, all efforts must be made to harmonize them. Hence, every statute [or rule] must be so construed and harmonized with other statutes [or rules] as to form a uniform system of jurisprudence.

  

 In the light of the foregoing considerations, therefore, the two (2) rules can stand together and are compatible with each other. When an application to litigate as an indigent litigant is filed, the court shall scrutinize the affidavits and supporting documents submitted by the applicant to determine if the applicant complies with the income and property standards prescribed in the present Section 19 of Rule 141 that is, the applicants gross income and that of the applicants immediate family do not exceed an amount double the monthly minimum wage of an employee; and the applicant does not own real property with a fair market value of more than PhP 300,000.00. If the trial court finds that the applicant meets the income and property requirements, the authority to litigate as indigent litigant is automatically granted and the grant is a matter of right.

However, if the trial court finds that one or both requirements have not been met, then it would set a hearing to enable the applicant to prove that the applicant has no money or property sufficient and available for food, shelter and basic necessities for himself and his family. In that hearing, the adverse party may adduce countervailing evidence to disprove the evidence presented by the applicant; after which the trial court will rule on the application depending on the evidence adduced. In addition, Section 21 of Rule 3 also provides that the adverse party may later still contest the grant of such authority at any time before judgment is rendered by the trial court, possibly based on newly discovered evidence not obtained at the time the application was heard. If the court determines after hearing, that the party declared as an indigent is in fact a person with sufficient income or property, the proper docket and other lawful fees shall be assessed and collected by the clerk of court. If payment is not made within the time fixed by the court, execution shall issue or the payment of prescribed fees shall be made, without prejudice to such other sanctions as the court may impose.

The Court concedes that Rule 141, Section 19 provides specific standards while Rule 3, Section 21 does not clearly draw the limits of the entitlement to the exemption. Knowing that the litigants may abuse the grant of authority, the trial court must use sound discretion and scrutinize evidence strictly in granting exemptions, aware that the applicant has not hurdled the precise standards under Rule 141. The trial court must also guard against abuse and misuse of the privilege to litigate as an indigent litigant to prevent the filing of exorbitant claims which would otherwise be regulated by a legal fee requirement.

Thus, the trial court should have applied Rule 3, Section 21 to the application of the Alguras after their affidavits and supporting documents showed that petitioners did not satisfy the twin requirements on gross monthly income and ownership of real property under Rule 141. Instead of disqualifying the Alguras as indigent litigants, the trial court should have called a hearing as required by Rule 3, Section 21 to enable the petitioners to adduce evidence to show that they didn’t have property and money sufficient and available for food, shelter, and basic necessities for them and their family. In that hearing, the respondents would have had the right to also present evidence to refute the allegations and evidence in support of the application of the petitioners to litigate as indigent litigants. Since this Court is not a trier of facts, it will have to remand the case to the trial court to determine whether petitioners can be considered as indigent litigants using the standards set in Rule 3, Section 21.

Recapitulating the rules on indigent litigants, therefore, if the applicant for exemption meets the salary and property requirements under Section 19 of Rule 141, then the grant of the application is mandatory. On the other hand, when the application does not satisfy one or both requirements, then the application should not be denied outright; instead, the court should apply the indigency test under Section 21 of Rule 3 and use its sound discretion in determining the merits of the prayer for exemption.

Afulgencia vs Metrobank

G. R. No. 185145, Feb. 5, 2014

SPOUSES VICENTE AFULUGENCIA and LETICIA AFULUGENCIA, Petitioners,

vs.

METROPOLITAN BANK & TRUST CO. and EMMANUEL L. ORTEGA, Clerk of Court, Regional Trial Court and Ex-Officio Sheriff, Province of Bulacan, Respondents.

Petitioners, spouses Vicente and Leticia Afulugencia, filed a Complaint for nullification of mortgage, foreclosure, auction sale, certificate of sale and other documents, with damages, against respondents Metropolitan Bank & Trust Co. (Metrobank) and Emmanuel L. Ortega (Ortega) before the Regional Trial Court (RTC) of Malolos City

Metrobank is a domestic banking corporation existing under Philippine laws, while Ortega is the Clerk of Court and Ex-Officio Sheriff of the Malolos RTC.

After the filing of the parties’ pleadings and with the conclusion of pre-trial, petitioners filed a Motion for Issuance of Subpoena Duces Tecum Ad Testificandum to require Metrobank’s officers to appear and testify as the petitioners’ initial witnesses during the August 31, 2006 hearing for the presentation of their evidence-in-chief, and to bring the documents relative to their loan with Metrobank, as well as those covering the extrajudicial foreclosure and sale of petitioners’ 200-square meter land in Meycauayan, Bulacan covered by Transfer Certificate of Title No. 20411.

Metrobank filed an Opposition arguing that for lack of a proper notice of hearing, the Motion must be denied; that being a litigated motion, the failure of petitioners to set a date and time for the hearing renders the Motion ineffective and pro forma; that pursuant to Sections 1 and 611 of Rule 25 of the Rules, Metrobank’s officers – who are considered adverse parties – may not be compelled to appear and testify in court for the petitioners since they were not initially served with written interrogatories; that petitioners have not shown the materiality and relevance of the documents sought to be produced in court; and that petitioners were merely fishing for evidence.

Petitioners submitted a Reply  stating that the lack of a proper notice of hearing was cured by the filing of Metrobank’s Opposition; that applying the principle of liberality, the defect may be ignored; that leave of court is not necessary for the taking of Metrobank’s officers’ depositions; that for their case, the issuance of a subpoena is not unreasonable and oppressive, but instead favorable to Metrobank, since it will present the testimony of these officers just the same during the presentation of its own evidence; that the documents sought to be produced are relevant and will prove whether petitioners have paid their obligations to Metrobank in full, and will settle the issue relative to the validity or invalidity of the foreclosure proceedings; and that the Rules do not prohibit a party from presenting the adverse party as its own witness.

Issue:

            THE COURT OF APPEALS COMMITTED REVERSIBLE ERRORS IN REQUIRING NOTICE AND HEARING (SECS. 4 AND 5, RULE 15, RULES OF COURT) FOR A MERE MOTION FOR SUBPOENA OF RESPONDENT BANK’S OFFICERS WHEN SUCH REQUIREMENTS APPLY ONLY TO DEPOSITION UNDER SEC. 6, RULE 25, RULES OF COURT.

Held:

On the procedural issue, it is quite clear that Metrobank was notified of the Motion for Issuance of Subpoena Duces Tecum Ad Testificandum; in fact, it filed a timely Opposition thereto. The technical defect of lack of notice of hearing was thus cured by the filing of the Opposition.

As officers of the adverse party Metrobank are being compelled to testify as the calling party’s main witnesses; likewise, they are tasked to bring with them documents which shall comprise the petitioners’ principal evidence. This is not without significant consequences that affect the interests of the adverse party, as will be shown below.

As a rule, in civil cases, the procedure of calling the adverse party to the witness stand is not allowed, unless written interrogatories are first served upon the latter. This is embodied in Section 6, Rule 25 of the Rules, which provides –

Sec. 6. Effect of failure to serve written interrogatories.

Unless thereafter allowed by the court for good cause shown and to prevent a failure of justice, a party not served with written interrogatories may not be compelled by the adverse party to give testimony in open court, or to give a deposition pending appeal.

One of the purposes of the above rule is to prevent fishing expeditions and needless delays; it is there to maintain order and facilitate the conduct of trial. It will be presumed that a party who does not serve written interrogatories on the adverse party beforehand will most likely be unable to elicit facts useful to its case if it later opts to call the adverse party to the witness stand as its witness. Instead, the process could be treated as a fishing expedition or an attempt at delaying the proceedings; it produces no significant result that prior written interrogatories might bring.

Besides, since the calling party is deemed bound by the adverse party’s testimony, compelling the adverse party to take the witness stand may result in the calling party damaging its own case. Otherwise stated, if a party cannot elicit facts or information useful to its case through the facility of written interrogatories or other mode of discovery, then the calling of the adverse party to the witness stand could only serve to weaken its own case as a result of the calling party’s being bound by the adverse party’s testimony, which may only be worthless and instead detrimental to the calling party’s cause.

Another reason for the rule is that by requiring prior written interrogatories, the court may limit the inquiry to what is relevant, and thus prevent the calling party from straying or harassing the adverse party when it takes the latter to the stand.

Thus, the rule not only protects the adverse party from unwarranted surprises or harassment; it likewise prevents the calling party from conducting a fishing expedition or bungling its own case. Using its own judgment and discretion, the court can hold its own in resolving a dispute, and need not bear witness to the parties perpetrating unfair court practices such as fishing for evidence, badgering, or altogether ruining their own cases. Ultimately, such unnecessary processes can only constitute a waste of the court’s precious time, if not pointless entertainment.

In the present case, petitioners seek to call Metrobank’s officers to the witness stand as their initial and main witnesses, and to present documents in Metrobank’s possession as part of their principal documentary evidence. This is improper. Petitioners may not be allowed, at the incipient phase of the presentation of their evidence-in-chief at that, to present Metrobank’s officers – who are considered adverse parties as well, based on the principle that corporations act only through their officers and duly authorized agents – as their main witnesses; nor may they be allowed to gain access to Metrobank’s documentary evidence for the purpose of making it their own. This is tantamount to building their whole case from the evidence of their opponent. The burden of proof and evidence falls on petitioners, not on Metrobank; if petitioners cannot prove their claim using their own evidence, then the adverse party Metrobank may not be pressured to hang itself from its own defense.

It is true that under the Rules, a party may, for good cause shown and to prevent a failure of justice, be compelled to give testimony in court by the adverse party who has not served written interrogatories. But what petitioners seek goes against the very principles of justice and fair play; they would want that Metrobank provide the very evidence with which to prosecute and build their case from the start. This they may not be allowed to do.

Finally, the Court may not turn a blind eye to the possible consequences of such a move by petitioners. As one of their causes of action in their Complaint, petitioners’ claim that they were not furnished with specific documents relative to their loan agreement with Metrobank at the time they obtained the loan and while it was outstanding. If Metrobank were to willingly provide petitioners with these documents even before petitioners can present evidence to show that indeed they were never furnished the same, any inferences generated from this would certainly not be useful for Metrobank. One may be that by providing petitioners with these documents, Metrobank would be admitting that indeed, it did not furnish petitioners with these documents prior to the signing of the loan agreement, and while the loan was outstanding, in violation of the law.

Zuneca Pharmaceutical vs Natrapharm,

G. R. No. 197802, Nov. 11, 2015

ZUNECA PHARMACEUTICAL, AKRAM ARAIN AND/OR VENUS ARAIN, M.D. DBA ZUNECA PHARMACEUTICAL, Petitioners, v. NATRAPHARM, INC., Respondent.

Respondent is an all-Filipino pharmaceutical company which manufactures and sells a medicine bearing the generic name "CITICOLINE," which is indicated for heart and stroke patients. The said medicine is marketed by respondent under its registered trademark "ZYNAPSE," which respondent obtained from the Intellectual Property Office (IPO) on September 24, 2007 under Certificate of Trademark Registration No. 4-2007-005596. With its registration, the trademark "ZYNAPSE" enjoys protection for a term of 10 years from September 24, 2007.

Early 2001, petitioners have been selling a medicine imported from Lahore, Pakistan bearing the generic name "CARBAMAZEPINE," an anti-convulsant indicated for epilepsy, under the brand name "ZYNAPS," which trademark is however not registered with the IPO. "ZYNAPS" is pronounced exactly like "ZYNAPSE."

Respondent claimed that the drug CARBAMAZEPINE has one documented serious and disfiguring side-effect called "Stevens-Johnson Syndrome," and that the sale of the medicines "ZYNAPSE" and "ZYNAPS" in the same drugstores will give rise to medicine switching.

Petitioners claimed that they had prior use of the name "ZYNAPS" since year 2003, having been issued by the BFAD a Certificate of Product Registration (CPR) on April 15, 2003, which allowed them to sell CARBAMAZEPINE under the brand name "ZYNAPS."

Respondent filed a complaint against petitioners for trademark infringement for violation of Republic Act (R.A.) No. 8293, or the Intellectual Property Code of the Philippines (IPC).

In their answer, petitioners argued that they enjoyed prior use in good faith of the brand name "ZYNAPS," having submitted their application for CPR with the BFAD on October 2, 2001, with the name "ZYNAPS" expressly indicated thereon. The CPR was issued to them on April 15, 2003.Petitioners averred that under Section 159 of the IPC their right to use the said mark is protected.

 The Regional Trial Court (RTC) denied respondent's application for a TRO, ruling that even if respondent was able to first register its mark "ZYNAPSE" with the IPO in 2007, it is nevertheless defeated by the prior actual use by petitioners of "ZYNAPS" in 2003.

In this Court's objective evaluation, neither party is, at this point, entitled to any injunctive solace. Plaintiff, while admittedly the holder of a registered trademark under the IPC, may not invoke ascendancy or superiority of its CTR [certificate of trademark registration] over the CPR [certificate of product registration of the BFAD] of the defendants, as the latter certificate is, in the Court's opinion, evidence of its "prior use". Parenthetically, the plaintiff would have been entitled to an injunction as against any or all third persons in respect of its registered mark under normal conditions, that is, in the event wherein Section 159 would not be invoked by such third person. Such is the case however in this litigation. Section 159 of the IPC explicitly curtails the registrant's rights by providing for limitations on those rights as against a "prior user" under Section 159.

CA issued a Resolution denying respondent's application for TRO and/or preliminary injunction for lack of merit. The CA found no compelling reason to grant the application for TRO and/or preliminary injunction because there was no showing that respondent had a clear and existing right that will be violated by petitioners. Respondent moved for reconsideration but was denied by the CA in its July 31, 2008 Resolution.

Issue:

 Whether the CA may order a permanent injunction in deciding a petition for certiorari against the denial of an application for a preliminary injunction issued by the RTC?

Held:

Rule 58 of the Rules of Court provides for both preliminary and permanent injunction. Section 1, Rule 58 provides for the definition of preliminary injunction:

SECTION 1. Preliminary injunction defined; classes. — A preliminary injunction is an order granted at any stage of an action or proceeding prior to the judgment or final order, requiring a party or a court, agency or a person to refrain from a particular act or acts. It may also require the performance of a particular act or acts, in which case it shall be known as a preliminary mandatory injunction.

On the other hand, Section 9 of the same Rule defines a permanent injunction in this wise:

SEC. 9. When final injunction granted. — If after the trial of the action it appears that the applicant is entitled to have the act or acts complained of permanently enjoined, the court shall grant a final injunction perpetually restraining the party or person enjoined from the commission or continuance of the act or acts or confirming the preliminary mandatory injunction.

A writ of preliminary injunction is generally based solely on initial and incomplete evidence. The evidence submitted during the hearing on an application for a writ of preliminary injunction is not conclusive or complete for only a sampling is needed to give the trial court an idea of the justification for the preliminary injunction pending the decision of the case on the merits. As such, the findings of fact and opinion of a court when issuing the writ of preliminary injunction are interlocutory in nature and made even before the trial on the merits is commenced or terminated.

By contrast a permanent injunction, based on Section 9, Rule 58 of the Rules of Court, forms part of the judgment on the merits and it can only be properly ordered only on final judgment. A permanent injunction may thus be granted after a trial or hearing on the merits of the case and a decree granting or refusing an injunction should not be entered until after a hearing on the merits where a verified answer containing denials is filed or where no answer is required, or a rule to show cause is equivalent to an answer.

As such a preliminary injunction, like any preliminary writ and any interlocutory order, cannot survive the main case of which it is an incident; because an ancillary writ of preliminary injunction loses its force and effect after the decision in the main petition.

This Court is being asked to determine whether the CA erred by issuing a permanent injunction in a case which questioned the propriety of the denial of an ancillary writ. But with the RTC's December 2, 2011 Decision on the case for "Injunction, Trademark Infringement, Damages and Destruction," the issues raised in the instant petition have been rendered moot and academic. We note that the case brought to the CA on a petition for certiorari merely involved the RTC's denial of respondent's application for a writ of preliminary injunction, a mere ancillary writ. Since a decision on the merits has already been rendered and which includes in its disposition a permanent injunction, the proper remedy is an appeal from the decision in the main case.