CHAPTER XIV CASES

1. Santos III vs CA, 210 SCRA 256 (1992) x

2. Perkins vs. Dizon, 69 Phil 186 (1939)x
3. First Phil. Int. Bank vs. CA, 252 SCRA 259 (1996)x
4. K.K. Shell Sekiyu Osaka Hatsubaisho vs. CA, 188 SCRA 145
(1990)
5. Gulf Oil Corp vs. Gilbert, 330 U.S. 501, 91 L. Ed. 1056 (1947)x
6. Philsec Investment Corp. Vs. CA, 274 SCRA 102 (1997)x
7. Communication Materials and Design, Inc. Vs. CA, 260 SCRA 673
(1996)x
8. Manila Hotel Corp. Vs NLRC, 343 SCRA 1 (2000)x
9. Dacoycoy vs IAC, 195 SCRA 641 (1991)x
10. Soriano vs, IAC, 167 SCRA 222 (1988)x
11. Bulletin Publishing Corp. vs Noel, 167 SCRA 255 (1988)x
12. Diaz vs. Adiong, 219 SCRA 631 (1993)x
13. Time, Inc. Vs Reyes, 39 SCRA 303 (1971)x
14. Paderanga vs. Buisan, 39 SCRA, pp. 311-313x
15. Portillo vs. Reyes, 3 SCRA 311 (1961)
16. Evangelista vs Santos, 86 Phil. 387 (1950)x
17. Young Auto Supply Co. Vs CA, 223 SCRA 670 (1993)x
18. Sy vs. Tyson Enterprises, Inc. 119 SCRA 367 (1982)x
19. MacDonald vs National City Bank, 99 Phil. 156 (1956)x
20. Kawasaki Port Service Corp vs Amores, 199 SCRA 230 (1991)x
21. Quasha Asperilla Ancheta Valmonte and Marcos vs Juan, 118
SCRA 505 (1982)x
22. Matanguihan vs Tengco, 95 SCRA 478 (1980)
23. Ang Ping vs CA, 310 SCRA 343 (1999)x
24. Macay vs CA, 206 SCRA 244 (1992)
25. Arcena vs. CA, 299 SCRA 733 (1998)
26. Gorostiaga vs Sarte, 68 Phil 4 (1939)x
27. Lim Siok Juey vs Lapiz, 103 Phil 930 (1958)x
28. Azotes vs Blanco, 78 Phil 739 (1947)X
29. Lopez vs Filipinas Compania de Seguros, 16 SCRA 855 (1966)x
30. Felipi Leuterio, 92 Phil 482 (1952)X
31. Hernandez vs Rural Bank of Lucena, Inc., 81 SCRA 75 (1978)X
32. Bool vs. Mendoza, 92 Phil 892 (1953)X
Santos III vs. Northwest Orient Airlines G.R. No. 101538, June 23,

1992

FACTS:

Petitioner is a minor and a resident of the Philippines. Private

respondent Nortwest Orient Airlines (NOA) is a foreign

corporation with principal office in Minnesota, U.S.A. and licensed

to do business and maintain a branch office in the Philippines. The

petitioner purchased from NOA a round-trip ticket in San

Francisco, U.S.A. In December 19, 1986, the petitioner checked in

the at the NOA counter in the San Francisco airport for his

departure to Manila. Despite a previous confirmation and re-

confirmation, he was informed that he had no reservation for his

flight for Tokyo to Manila. He therefore had to be wait-listed. On

March 12, 1987, the petitioner sued NOA for damages in RTC

Makati. NOA moved to dismiss the complaint on the ground of

lack of jurisdiction.

ISSUE:
o Whether or not Article 28 (1) of the Warsaw Convention is in
accordance with the constitution so as to deprive the Philippine
Courts jurisdiction over the case

HELD:

Art. 28. (1) An action for damage must be brought at the option of
the plaintiff, in the territory of one of the High Contracting Parties,
either before the court of the domicile of the carrier or of his
principal place of business, or where he has a place of business
through which the contract has been made, or before the court at
the place of destination.
Perkins vs Dizon

Facts
Respondent Eugene Arthur Perkins instituted an action in the CFI of
Manila against the Benguet Consolidated Mining Company for
dividends on shares of stock registered in his name, payment of
which was being withheld by the company; and, for the recognition
of his right to the control and disposal of said shares, to the
exclusion of all others.
Benguet Consolidated Mining Company, in its Answer to
the Complaint averred that in connection with the shares of stock
in question, conflicting claims were being made upon it by said
Respondent Eugene Arthur Perkins, his wife Idonah Slade Perkins,
and one named George H. Engelhard, and prayed that these last
two be made parties to the action and served with Summons by
Publication, so that the three Claimants may litigate their
conflicting claims and settle their rights among themselves. The
court has NOT issued an Order compelling the Conflicting Claimants
to interplead with one another and litigate their several claims
among themselves, but instead ordered Respondent Eugene
Arthur Perkins to amend his Complaint including the other two
Claimants as Parties-Defendant. The Complaint was accordingly
amended and in addition to the relief prayed for in the Original
Complaint, Respondent Eugene Arthur Perkins prayed that
Petitioner Idonah Slade Perkins and George Engelhard be adjudged
without interest in the shares of stock in question and excluded
from any claim they assert thereon. Thereafter, Summons by
Publication were served upon the non-resident Defendants, Idonah
Slade Perkins and George H. Engelhard, pursuant to the Order of
the trial court.
Non-resident Defendant Engelhard filed his Answer to
the Amended Complaint, while Petitioner Idonah Slade Perkins,
through counsel, filed her pleading entitled objection to venue,
motion to quash, and demurrer to jurisdiction wherein she
challenged the jurisdiction of the lower court over her person.
Petitioners objection, Motion and Demurrer having been
overruled as well as her Motion for Reconsideration of the Order of
Denial, she now brought the present Petition for Certiorari, praying
that the Summons by Publication issued against her be declared
null and void, and that, with respect to her, Respondent Judge be
permanently prohibited from taking any action on the case.
ISSUE:
Whether or not the CFI of Manila has acquired jurisdiction over the
person of the Petitioner as a non-resident Defendant, or,
notwithstanding the want of such jurisdiction, whether or not said
court may validly try the case?
ARGUMENTS:
Petitioner contends that the proceeding instituted against her is
one of interpleading and is therefore an action in personam. She
contends that the lower court had not acquired jurisdiction over
her person not only because she is a non-resident, but also because
the court had no jurisdiction over the subject-matter of the action.
RULING:
Yes. Here, the service of the Summons by Publication was ordered
by the lower court by virtue of an action quasi in remagainst the
non-resident Defendant. The action being quasi in rem, the CFI of
Manila has jurisdiction over the person of the Petitioner.
Petition is DENIED with costs against the Petitioner.
RATIO DECIDENDI:
The general rule is that a suit against a non-resident cannot be
entertained by a Philippine court. Where, however, the action is in
rem or quasi in rem in connection with property located in the
Philippines, the court acquires jurisdiction over the res, and its
jurisdiction over the person of the non-resident is non-essential. In
order that the court may exercise power over the res, it is not
necessary that the court should take actual custody of the property,
potential custody thereof being sufficient. There is potential
custody when, from the nature of the action brought, the power of
the court over the property is impliedly recognized by law In an
action in rem or quasi in rem against a non-resident defendant,
jurisdiction over his person is non-essential, and if the law requires
in such case that the summons upon the defendant be served by
publication, it is merely to satisfy the constitutional requirement of
due process.
The reason for the rule that Philippine courts cannot acquire
jurisdiction over the person of a non-resident, as laid down by the
Supreme Court of the United States in Pennoyer v. Neff [1878], may
be found in a recognized principle of public law to the effect that
no State can exercise direct jurisdiction and authority over persons
or property without its territory (Story, Confl. L., ch. 2; Wheat, Int.
L., pt. 2, ch. 2). The several States are of equal dignity and authority,
and the independence of one implies the exclusion of power from
all others. And so it is laid down by jurists, as an elementary
principle, that the laws of one State have no operation outside of
its territory, EXCEPT so far as is allowed by comity; and that no
tribunal established by it can extend its process beyond that
territory so as to subject either persons or property to its decisions.
Any exertion of authority of this sort beyond this limit, says Story,
is a mere nullity, and incapable of binding such persons or
property in any other tribunals Story, Confl. L., sec. 539 (Pennoyer
v. Neff [1878], 95 U.S., 714; 24 Law. ed., 565, 568-569).
When, however, the action relates to property located in the
Philippines, the Philippine courts may validly try the case, upon the
principle that a State, through its tribunals, may subject property
situated within its limits owned by non-residents to the payment of
the demand of its own citizens against them; and the exercise of
this jurisdiction in no respect infringes upon the sovereignty of the
State where the owners are domiciled. Every State owes protection
to its citizens; and, when non-residents deal with them, it is a
legitimate and just exercise of authority to hold and appropriate
any property owned by such non-residents to satisfy the claims of
its citizens. It is in virtue of the States jurisdiction over the property
of the non-resident situated within its limits that its tribunals can
inquire into the non-residents obligations to its own citizens, and
the inquiry can then be carried only to the extent necessary to
control the disposition of the property. If the non-resident has no
property in the State, there is nothing upon which the tribunals can
adjudicate. (Pennoyer v. Neff [1878])
In the instant case, there can be no question that the action
brought by Respondent Eugene Arthur Perkins in his Amended
Complaint against Petitioner Idonah Slade Perkins seeks to exclude
her from any interest in a property located in the Philippines. That
property consists in certain shares of stocks of the Benguet
Consolidated Mining Company, a sociedad anonima, organized in
the Philippines under the provisions of the Spanish Code of
Commerce, with its principal office in the City of Manila and which
conducts its mining activities therein. The situs of the shares is in
the jurisdiction where the corporation is created, whether the
certificated evidencing the ownership of those shares are within or
without that jurisdiction. (Fletcher Cyclopedia Corporations,
Permanent ed. Vol. 11, p. 95). Under these circumstances, SC holds
that the action thus brought is quasi in rem, for while the
judgement that may be rendered therein is not strictly a
judgment in rem, it fixes and settles the title to the property in
controversy and to that extent partakes of the nature of the
judgment in rem (50 C.J., p 503). As held by the Supreme Court of
the United States in Pennoyer v. Neff [1878]:
It is true that, in a strict sense, a proceeding in rem is one taken
directly against property, and has for its object the disposition of
the property, without reference to the title of individual claimants;
but, in a large and more general sense, the terms are applied to
actions between parties, where the direct object is to reach and
dispose of property owned by them, or of some interest therein.
The action being in quasi in rem, the CFI of Manila has jurisdiction
over the person of the Petitioner. In order to satisfy the
constitutional requirement of due process, Summons has been
served upon her by publication. There is no question as to the
adequacy of publication made nor as to the mailing of the Order of
Publication to the Petitioners last known place of residence in the
United States. But, of course, the action being quasi in rem and
notice having be made by publication, the relief that may be
granted by the Philippine court must be confined to the res, it
having no jurisdiction to render a personal judgment against the
non-resident. In the Amended Complaint filed by Respondent
Eugene Arthur Perkins, no money judgment or other relief in
personam is prayed for against the Petitioner. The only relief
sought therein is that she be declared to be without any interest in
the shares in controversy and that she be excluded from any claim
thereto.
First Philippine International Bank vs CA

252 SCRA 259 Conflict of Laws Private International Law

Origin of Forum Non Conveniens
Producers Bank (now called First Philippine International Bank),
which has been under conservatorship since 1984, is the owner of
6 parcels of land. The Bank had an agreement with Demetrio
Demetria and Jose Janolo for the two to purchase the parcels of
land for a purchase price of P5.5 million pesos. The said agreement
was made by Demetria and Janolo with the Banks manager,
Mercurio Rivera. Later however, the Bank, through its conservator,
Leonida Encarnacion, sought the repudiation of the agreement as
it alleged that Rivera was not authorized to enter into such an
agreement, hence there was no valid contract of sale.
Subsequently, Demetria and Janolo sued Producers Bank. The
regional trial court ruled in favor of Demetria et al. The Bank filed
an appeal with the Court of Appeals.
Meanwhile, Henry Co, who holds 80% shares of stocks with the said
Bank, filed a motion for intervention with the trial court. The trial
court denied the motion since the trial has been concluded already
and the case is now pending appeal. Subsequently, Co, assisted by
ACCRA law office, filed a separate civil case against Carlos Ejercito
as successor-in-interest (assignee) of Demetria and Janolo seeking
to have the purported contract of sale be declared unenforceable
against the Bank. Ejercito et al argued that the second case
constitutes forum shopping.
ISSUE: Whether or not there is forum shopping.
HELD: Yes. There is forum shopping because there is identity of
interest and parties between the first case and the second case.
There is identity of interest because both cases sought to have the
agreement, which involves the same property, be declared
unenforceable as against the Bank. There is identity of parties even
though the first case is in the name of the bank as defendant, and
the second case is in the name of Henry Co as plaintiff. There is still
forum shopping here because Henry Co essentially represents the
bank. Both cases aim to have the bank escape liability from the
agreement it entered into with Demetria et al.
The Supreme Court also discussed that to combat forum shopping,
which originated as a concept in international law, the principle of
forum non conveniens was developed. The doctrine of forum non
conveniens provides that a court, in conflicts of law cases, may
refuse impositions on its jurisdiction where it is not the most
convenient or available forum and the parties are not precluded
from seeking remedies elsewhere.

**Forum Shopping: occurs when a party attempts to have his

action tried in a particular court or jurisdiction where he feels he will
receive the most favorable judgment or verdict.
Gulf Oil Corp. vs. Gilbert Digest

Forum Non-Conveniens

Facts:
1. Plaintiff Gilbert filed an action in New York against the petitioner
for negligence due to the delivery of gasoline to his tanks and
pumps. The venue statutes of the United States permit this. Gilbert
resides in Virginia, USA.

2. Petitioner Gulf Oil is a company organized under the laws of

Pennsylvania with authority to do business in both Virginia and New
York. It designated officials in each state as agents to receive the
process. Gulf Oil invoked the doctrine of 'forum non-
conveniens' and claimed that Virginia is the appropriate venue for
the trial becuase it is where the plaintiff resides, where corporation
does business, where the witness likewise resides and it is also the
place where the events took place.

3. On one hand, plaintiff contends that the action filed in New York
is justified since the action involved an amount for claim for
damages close to $400 thousand which may stagger the
imagination of the local jury, the diversity of the citizenship of the
parties and that plaintiff's counsel resides in New York.

4. The District Court of New Yorl dismissed the tort action pursuant
to FNC (forum non-conveniens) while the Appeals Court reversed
the decision.

Issue: Whether or not the action was properly dismissed from NY

court under the doctrine of FNC thought personam jurisdiction and
venue are proper

HELD:

YES. The application of the doctrine lies in the the discretion of the
court. However, tje interests of the plaintiff, the defendant and the
forum state need to be considered. Here, there is not interest for
any party to have the litigation in New York. In fact, interests weigh
against it.
Moreover, the plaintiff may not choose an inconvenient forum to
harass the petitioner. Finally, the state has an interest in avoiding
the overcrowding of its own courts and subjecting its citizens to jury
duty in a case having no ties to their state.
PHILSEC VS. CA

MARCH 28, 2013 ~ VBDIAZ

PHILSEC INVESTMENT et al vs.CA et al
G.R. No. 103493
June 19, 1997
FACTS: Private respondent Ducat obtained separate loans from
petitioners Ayala International Finance Limited (AYALA) and
Philsec Investment Corp (PHILSEC), secured by shares of stock
owned by Ducat.
In order to facilitate the payment of the loans, private respondent
1488, Inc., through its president, private respondent Daic,
assumed Ducats obligation under an Agreement, whereby 1488,
Inc. executed a Warranty Deed with Vendors Lien by which it sold
to petitioner Athona Holdings, N.V. (ATHONA) a parcel of land in
Texas, U.S.A., while PHILSEC and AYALA extended a loan to
ATHONA as initial payment of the purchase price. The balance was
to be paid by means of a promissory note executed by ATHONA in
favor of 1488, Inc. Subsequently, upon their receipt of the money
from 1488, Inc., PHILSEC and AYALA released Ducat from his
indebtedness and delivered to 1488, Inc. all the shares of stock in
their possession belonging to Ducat.

As ATHONA failed to pay the interest on the balance, the entire

amount covered by the note became due and demandable.
Accordingly, private respondent 1488, Inc. sued petitioners
PHILSEC, AYALA, and ATHONA in the United States for payment of
the balance and for damages for breach of contract and for fraud
allegedly perpetrated by petitioners in misrepresenting the
marketability of the shares of stock delivered to 1488, Inc. under
the Agreement.

While the Civil Case was pending in the United States, petitioners
filed a complaint For Sum of Money with Damages and Writ of
Preliminary Attachment against private respondents in the RTC
Makati. The complaint reiterated the allegation of petitioners in
their respective counterclaims in the Civil Action in the United
States District Court of Southern Texas that private respondents
committed fraud by selling the property at a price 400 percent
more than its true value.

Ducat moved to dismiss the Civil Case in the RTC-Makati on the

grounds of (1) litis pendentia, vis-a-vis the Civil Action in the U.S.,
(2) forum non conveniens, and (3) failure of petitioners PHILSEC
and BPI-IFL to state a cause of action.

The trial court granted Ducats MTD, stating that the evidentiary
requirements of the controversy may be more suitably tried
before the forum of the litis pendentia in the U.S., under the
principle in private international law of forum non conveniens,
even as it noted that Ducat was not a party in the U.S. case.

Petitioners appealed to the CA, arguing that the trial court erred in
applying the principle of litis pendentia and forum non
conveniens.

The CA affirmed the dismissal of Civil Case against Ducat, 1488,

Inc., and Daic on the ground of litis pendentia.

ISSUE: is the Civil Case in the RTC-Makati barred by the judgment

of the U.S. court?
HELD: CA reversed. Case remanded to RTC-Makati
NO
While this Court has given the effect of res judicata to foreign
judgments in several cases, it was after the parties opposed to the
judgment had been given ample opportunity to repel them on
grounds allowed under the law. This is because in this jurisdiction,
with respect to actions in personam, as distinguished from actions
in rem, a foreign judgment merely constitutes prima facie
evidence of the justness of the claim of a party and, as such, is
subject to proof to the contrary. Rule 39, 50 provides:

Sec. 50. Effect of foreign judgments. The effect of a judgment

of a tribunal of a foreign country, having jurisdiction to pronounce
the judgment is as follows:

(a) In case of a judgment upon a specific thing, the judgment is

conclusive upon the title to the thing;
(b) In case of a judgment against a person, the judgment is
presumptive evidence of a right as between the parties and their
successors in interest by a subsequent title; but the judgment may
be repelled by evidence of a want of jurisdiction, want of notice to
the party, collusion, fraud, or clear mistake of law or fact.

In the case at bar, it cannot be said that petitioners were given the
opportunity to challenge the judgment of the U.S. court as basis
for declaring it res judicata or conclusive of the rights of private
respondents. The proceedings in the trial court were summary.
Neither the trial court nor the appellate court was even furnished
copies of the pleadings in the U.S. court or apprised of the
evidence presented thereat, to assure a proper determination of
whether the issues then being litigated in the U.S. court were
exactly the issues raised in this case such that the judgment that
might be rendered would constitute res judicata.

Second. Nor is the trial courts refusal to take cognizance of the

case justifiable under the principle of forum non conveniens:

First, a MTD is limited to the grounds under Rule 16, sec.1, which
does not include forum non conveniens. The propriety of
dismissing a case based on this principle requires a factual
determination, hence, it is more properly considered a matter of
defense.
Second, while it is within the discretion of the trial court to abstain
from assuming jurisdiction on this ground, it should do so only
after vital facts are established, to determine whether special
circumstances require the courts desistance.
COMMUNICATION MATERIALS AND DESIGN, INC et al vs.CA et al.
G.R. No. 102223
August 22, 1996
FACTS: Petitioners COMMUNICATION MATERIALS AND DESIGN,
INC., (CMDI) and ASPAC MULTI-TRADE INC., (ASPAC) are both
domestic corporations.. Private Respondents ITEC, INC. and/or
ITEC, INTERNATIONAL, INC. (ITEC) are corporations duly organized
and existing under the laws of the State of Alabama, USA. There is
no dispute that ITEC is a foreign corporation not licensed to do
business in the Philippines.
ITEC entered into a contract with ASPAC referred to as
Representative Agreement. Pursuant to the contract, ITEC
engaged ASPAC as its exclusive representative in the Philippines
for the sale of ITECs products, in consideration of which, ASPAC
was paid a stipulated commission. Through a License Agreement
entered into by the same parties later on, ASPAC was able to
incorporate and use the name ITEC in its own name. Thus ,
ASPAC Multi-Trade, Inc. became legally and publicly known as
ASPAC-ITEC (Philippines).
One year into the second term of the parties Representative
Agreement, ITEC decided to terminate the same, because
petitioner ASPAC allegedly violated its contractual commitment as
stipulated in their agreements. ITEC charges the petitioners and
another Philippine Corporation, DIGITAL BASE
COMMUNICATIONS, INC. (DIGITAL), the President of which is
likewise petitioner Aguirre, of using knowledge and information of
ITECs products specifications to develop their own line of
equipment and product support, which are similar, if not identical
to ITECs own, and offering them to ITECs former customer.

The complaint was filed with the RTC-Makati by ITEC, INC.

Defendants filed a MTD the complaint on the following grounds:
(1) That plaintiff has no legal capacity to sue as it is a foreign
corporation doing business in the Philippines without the required
BOI authority and SEC license, and (2) that plaintiff is simply
engaged in forum shopping which justifies the application against
it of the principle of forum non conveniens. The MTD was
denied.
Petitioners elevated the case to the respondent CA on a Petition
for Certiorari and Prohibition under Rule 65 of the Revised ROC. It
was dismissed as well. MR denied, hence this Petition for Review
on Certiorari under Rule 45.

ISSUE:
1. Did the Philippine court acquire jurisdiction over the person of
the petitioner corp, despite allegations of lack of capacity to sue
because of non-registration?
2. Can the Philippine court give due course to the suit or dismiss it,
on the principle of forum non convenience?
HELD: petition dismissed.
1. YES; We are persuaded to conclude that ITEC had been
engaged in or doing business in the Philippines for some time
now. This is the inevitable result after a scrutiny of the different
contracts and agreements entered into by ITEC with its various
business contacts in the country. Its arrangements, with these
entities indicate convincingly that ITEC is actively engaging in
business in the country.

A foreign corporation doing business in the Philippines may sue in

Philippine Courts although not authorized to do business here
against a Philippine citizen or entity who had contracted with and
benefited by said corporation. To put it in another way, a party is
estopped to challenge the personality of a corporation after
having acknowledged the same by entering into a contract with it.
And the doctrine of estoppel to deny corporate existence applies
to a foreign as well as to domestic corporations. One who has
dealt with a corporation of foreign origin as a corporate entity is
estopped to deny its corporate existence and capacity.

In Antam Consolidated Inc. vs. CA et al. we expressed our chagrin

over this commonly used scheme of defaulting local companies
which are being sued by unlicensed foreign companies not
engaged in business in the Philippines to invoke the lack of
capacity to sue of such foreign companies. Obviously, the same
ploy is resorted to by ASPAC to prevent the injunctive action filed
by ITEC to enjoin petitioner from using knowledge possibly
acquired in violation of fiduciary arrangements between the
parties.
2. YES; Petitioners insistence on the dismissal of this action due to
the application, or non application, of the private international
law rule of forum non conveniens defies well-settled rules of fair
play. According to petitioner, the Philippine Court has no venue to
apply its discretion whether to give cognizance or not to the
present action, because it has not acquired jurisdiction over the
person of the plaintiff in the case, the latter allegedly having no
personality to sue before Philippine Courts. This argument is
misplaced because the court has already acquired jurisdiction over
the plaintiff in the suit, by virtue of his filing the original
complaint. And as we have already observed, petitioner is not at
liberty to question plaintiffs standing to sue, having already
acceded to the same by virtue of its entry into the Representative
Agreement referred to earlier.

Thus, having acquired jurisdiction, it is now for the Philippine

Court, based on the facts of the case, whether to give due course
to the suit or dismiss it, on the principle of forum non
convenience. Hence, the Philippine Court may refuse to assume
jurisdiction in spite of its having acquired jurisdiction. Conversely,
the court may assume jurisdiction over the case if it chooses to do
so; provided, that the following requisites are met:

1) That the Philippine Court is one to which the parties may

conveniently resort to;
2) That the Philippine Court is in a position to make an intelligent
decision as to the law and the facts; and,
3) That the Philippine Court has or is likely to have power to
enforce its decision.
The aforesaid requirements having been met, and in view of the
courts disposition to give due course to the questioned action,
the matter of the present forum not being the most convenient
as a ground for the suits dismissal, deserves scant consideration.
 Manila Hotel Corporation vs National Labor Relations Commission

343 SCRA 1 Private International Law Forum Non Conveniens

In May 1988, Marcelo Santos was an overseas worker in Oman. In
June 1988, he was recruited by Palace Hotel in Beijing, China. Due
to higher pay and benefits, Santos agreed to the hotels job offer
and so he started working there in November 1988. The
employment contract between him and Palace Hotel was however
without the intervention of the Philippine Overseas Employment
Administration (POEA). In August 1989, Palace Hotel notified
Santos that he will be laid off due to business reverses. In
September 1989, he was officially terminated.
In February 1990, Santos filed a complaint for illegal dismissal
against Manila Hotel Corporation (MHC) and Manila Hotel
International, Ltd. (MHIL). The Palace Hotel was impleaded but no
summons were served upon it. MHC is a government owned and
controlled corporation. It owns 50% of MHIL, a foreign corporation
(Hong Kong). MHIL manages the affair of the Palace Hotel. The
labor arbiter who handled the case ruled in favor of Santos. The
National Labor Relations Commission (NLRC) affirmed the labor
arbiter.
ISSUE: Whether or not the NLRC has jurisdiction over the case.
HELD: No. The NLRC is a very inconvenient forum for the following
reasons:

1. The only link that the Philippines has in this case is the fact that
Santos is a Filipino;
2. However, the Palace Hotel and MHIL are foreign corporations
MHC cannot be held liable because it merely owns 50% of MHIL, it
has no direct business in the affairs of the Palace Hotel. The veil of
corporate fiction cant be pierced because it was not shown that
MHC is directly managing the affairs of MHIL. Hence, they are
separate entities.
3. Santos contract with the Palace Hotel was not entered into in the
Philippines;
4. Santos contract was entered into without the intervention of the
POEA (had POEA intervened, NLRC still does not have jurisdiction
because it will be the POEA which will hear the case);
5. MHIL and the Palace Hotel are not doing business in the Philippines;
their agents/officers are not residents of the Philippines;

Due to the foregoing, the NLRC cannot possibly determine all the
relevant facts pertaining to the case. It is not competent to
determine the facts because the acts complained of happened
outside our jurisdiction. It cannot determine which law is
applicable. And in case a judgment is rendered, it cannot be
enforced against the Palace Hotel (in the first place, it was not
served any summons).
The Supreme Court emphasized that under the rule of forum non
conveniens, a Philippine court or agency may assume jurisdiction
over the case if it chooses to do so provided:
(1) that the Philippine court is one to which the parties may
conveniently resort to;
(2) that the Philippine court is in a position to make an intelligent
decision as to the law and the facts; and
(3) that the Philippine court has or is likely to have power to enforce
its decision.
None of the above conditions are apparent in the case at bar.
DACOYCOY V. IAC G.R. # 74854

FACTS

On March 22, 1983, Dacoycoy, a resident of Balanti, Cainta,

Rizal, filed before the Rizal RTC, a complaint against private
respondent de Guzman praying for the annulment of 2 deeds
of sale involving a parcel of riceland in Barrio Estanza,
Lingayen, Pangasinan, the surrender of the produce thereof
and damages for private respondent's refusal to have said
deeds of sale set aside upon petitioner's demand.
On May 25, 1983, before summons could be served on de
Guzman, the RTC Executive Judge issued an order requiring
counsel for petitioner to confer with respondent trial judge
on the matter of venue. After said conference, the RTC
dismissed the complaint on the ground of improper venue.
o It found, based on the allegations of the complaint, that
petitioner's action is a real action as it sought not only the
annulment of the aforestated deeds of sale but also the
recovery of ownership of the subject parcel of riceland
located in Pangasinan, outside its territorial jurisdiction.
Petitioner appealed to the IAC, which affirmed the order of
dismissal of his complaint.

ISSUE
W/N the trial court may motu proprio dismiss a complaint on
the ground of improper venue?? NO
HELD

The motu proprio dismissal of petitioner's complaint by the

RTC on the ground of improper venue is plain error,
attributable to its inability to distinguish between jurisdiction
and venue.
Questions or issues relating to venue of actions are basically
governed by Rule 4 of the Revised Rules of Court. It is said
that the laying of venue is procedural rather than
substantive. It relates to the jurisdiction of the court over
the person rather than the subject matter. Provisions
relating to venue establish a relation between the plaintiff
and the defendant and not between the court and the
 subject matter. Venue relates to trial not to jurisdiction,
touches more of the convenience of the parties rather than
the substance of the case.
Jurisdiction treats of the power of the court to decide a case
on the merits; while venue deals on the locality, the place
where the suit may be had.
In Luna vs. Carandang, we emphasized:
1. A Court of First Instance has jurisdiction over suits
involving title to, or possession of, real estate wherever
situated in the Philippines, subject to the rules on venue
of actions;
2. Rule 4, Section 2, of the Rules of Court requiring that an
action involving real property shall be brought in the
Court of First Instance of the province where the land
lies is a rule on venue of actions, which may be waived
expressly or by implication.
In the instant case, even granting for a moment that the
action of petitioner is a real action, respondent trial court
would still have jurisdiction over the case, it being a
regional trial court vested with the exclusive original
jurisdiction over "all civil actions which involve the title to,
or possession of, real property, or any interest therein . . ."
in accordance with Section 19 (2) of Batas Pambansa Blg.
129. With respect to the parties, there is no dispute that it
acquired jurisdiction over the plaintiff Dacoycoy, the
moment he filed his complaint for annulment and damages.
Respondent trial court could have acquired jurisdiction over
the defendant either by his voluntary appearance in court
and his submission to its authority, or by the coercive power
of legal process exercised over his person.
o Although petitioner contends that, he requested the City
Sheriff of Olongapo City or his deputy to serve the
summons on de Guzman at his residence, it does not
appear that said service had been properly effected or
that private respondent had appeared voluntarily in court
or filed his answer to the complaint. At this stage,
respondent trial court should have required petitioner to
exhaust the various alternative modes of service of
summons under Rule 14 of the Rules of Court, i.e.,
personal service under Section 7, substituted service
 under Section 8, or service by publication under Section
16 when the address of the defendant is unknown and
cannot be ascertained by diligent inquiry.
o Dismissing the complaint on the ground of improper
venue is certainly not the appropriate course of action at
this stage of the proceeding, particularly as venue, in
inferior courts as well as in the CFI (now RTC), may be
waived expressly or impliedly. Where defendant fails to
challenge timely the venue in a motion to dismiss as
provided by Section 4 of Rule 4 of the Rules of Court, and
allows the trial to be held and a decision to be rendered,
he cannot on appeal or in a special action be permitted
to challenge belatedly the wrong venue, which is
deemed waived.
Thus, unless and until the defendant objects to the venue in
a motion to dismiss, the venue cannot be truly said to have
been improperly laid, as for all practical intents and
purposes, the venue, though technically wrong, may be
acceptable to the parties for whose convenience the rules on
venue had been devised. The trial court cannot pre-empt
the defendant's prerogative to object to the improper
laying of the venue by motu proprio dismissing the case.

IAC decision is reversed and set aside. The complaint before the
RTC is revived and reinstated.
Soriano vs. IAC [167 SCRA 222 November 9, 1988]

Facts: Tantuico, then the Chairman of the Commission on Audit,

filed a libel case with the RTC of Leyte against Marcelo Soriano,
editor of The Guardian and six other people in connection with
press releases and articles imputing to Tantuico the tampering by
COA personnel of election returns in the May 1984 Batasan
elections, at his residence in Tacloban City and in the COA Regional
Office in Palo, Leyte. This election offense was allegedly committed
at Tantuicos behest to assure the victory of certain candidates in
the said Batasan elections.

Soriano filed a motion to quash the information on the ground of

improper venue. He contends that the Leyte RTC has no jurisdiction
over the offense charged because under Art. 360 of the RPC, the
libel case should have been filed at Quezon City where Tantuico
holds office and where the publication house of The Guardian is
located.

The trial court denied the motion. Its decision stated that
considering that the libelous article complained contained in a
press release was printed and first published in the City of Tacloban
and venue for this case has been properly laid in accordance with
Art. 360 of the RPC, the motion to quash the information herein
filed by Marcelo Soriano is hereby denied.

Soriano appealed to the IAC raising the same question but it held
that the Leyte RTC has jurisdiction over the case. Hence this
petition.

Issue: Does the Leyte RTC have jurisdiction over the case?

Held: No. The applicable law is Art. 360 of the RPC, as amended by
RA 1289 and RA 4363. It provides:

Persons responsible. Any person who shall publish, exhibit or

cause the publication or exhibition of any defamation in writing or
by similar means, shall be responsible for the same.
The author or editor of a book or pamphlet, or the editor or
business manager of a daily newspaper, magazine or serial
publication, shall be responsible for the defamations contained
therein to the same extent as if he were the author thereof.

The criminal action and civil action for damages in cases of written
defamations, as provided for in this chapter shall be filed
simultaneously or separately with the court of first instance of the
province or city where the libelous article is printed and first
published or where any of the offended parties actually resides at
the time of the commission of the offense: Provided, however, That
where one of the offended parties is a public officer whose office is
in the City of Manila at the time of the commission of the offense,
the action shall be filed in the CFI of Manila or of the city or the
province where the libelous article is printed and first published,
and in case such public officer does not hold office in the City of
Manila, the action shall be filed in the CFI of the province or city
where he held office at the time of the commission of the offense
or where the libelous article is printed and first published and in
case one of the offended parties is a private individual, the action
shall be filed in the CFI of the province or city where he actually
resides at the time of the commission of the offense or where the
libelous matter is printed and first published: xxx.

In Agbayani vs. Sayo, the SC said:

1. Whether the offended party is a public official or a private

person, the criminal action may be filed in the CFI of the province
or city where the libelous article is printed and first published.

2. If the offended party is a private individual, the criminal action

may also be filed in the CFI of the province where he actually
resided at the time of the commission of the offense.

3. If the offended party is a public officer whose office is in Manila

at the time of the commission of the offense, the action may be
filed in the CFI of Manila.
4. If the offended party is a public officer holding office outside of
Manila, the action may be filed in the CFI of the province or city
where he held office at the time of the commission of the offense.

The SC follows the multiple publication rule in the Philippines.

Each and every publication of the same libel constitutes a distinct
offense. Every time the same written matter is communicated, such
communication is considered a distinct and separate publication of
the libel.

Marcelo Soriano was included as one of the accused in the libel case
in his capacity as editor-publisher of the Guardian. Sorianos
criminal liability, as based on Art. 360 of the RPC was based on a
press release prepared in Tacloban City and mailed or delivered to
various newspapers. The press release was the basis for the article
published in the Guardian. This article, Impeach Tantuico Case
Looms prepared by accused Cesar Villegas in Tacloban was
reproduced in Sorianos newspaper, whose publishing house is in
Quezon City.

As the respondent COA Chairman held office in Quezon City and the
offending newspaper is published in Quezon City, the case should
be filed with a Quezon City court.
BULLETIN PUBLISHING CORP. v. SANCHEZ, 144 SCRA 628

FACTS: Supervisors and managers in petitioner company formed a

union separate from that of the rank-and-file union, petitioned for
certification election, and staged a strike against the petitioner,
prompting the latter to seek a permanent injunction.

ISSUE: Are supervisors or managers allowed by law to form a

union?

HELD: No. The supervisory employees of petitioner firm may not,

under the law, form a supervisors union, separate and distinct from
the existing bargaining unit (BEU), composed of the rank-and-file
employees of the Bulletin Publishing Corporation. It is evident that
most of the private respondents are considered managerial
employees. xxx The rationale for this inhibition has been stated to
be, because if these managerial employees would belong to or be
affiliated with a Union, the latter might not be assured of their
loyalty to the Union in view of evident conflict of interests. The
Union can also become company- dominated with the presence of
managerial employees in Union membership.
Diaz vs. Adiong, March 5, 1993 Facts:

1. On July 6, 1991, the Mindanao Kris, published in Cotabato

City, published a news article entitled Toll of Corruption
which exposed alleged anomalies by key officials in the
Regional Office of DENR;

2. Public officials alluded instituted a separate civil and

criminal actions arising from libel before City Prosecutor
Office and Regional Trial Court in Marawi City against
petitioner;

3. The City Prosecutors Office dismissed the criminal case

complaint for lack of ince the said complaint should be filed
in Cotabato City;

4. As for the civil complaint it was docketed in the RTC of

Marawi City, and that the defendant had filed their
respective answers w/ counterclaim;

5. Diaz moved for the dismissal of the case on the ground of

lack of jurisdiction, it was their contention that the case
should be filed in RTC of Cotabato since it is where the
private respondents who are all public officers held their
office, similarly the libelous publication was published in
that place

Issue:
WON, RTC Marawi City has jurisdiction over the said case

Held: No, not one of the respondents held office in Marawi City

1. An offended party who is at the same time a public official

can only institute an action arising from libel in 2 venues:
the place where he holds office and place where the alleged
libelous articles were published;

2. The venue is improperly laid. However, unless and until the

defendant objects to the venue in a motion to dismiss prior
 to a responsive pleading, the venue cannot be truly be said
to have been improperly laid, since the venue though
technically wrong may yet be considered acceptable to the
parties for whose convenience the rules on venue had been
devised;
3. In this case, Diaz, should have timely challenged the venue
in Marawi City in a motion to dismiss, pursuant to Sec 4,
Rule 4 of the Rules of Court. Unfortunately, petitioner had
already submitted himself to the jurisdiction of the TC when
he filed his Answer to the Complaint with Counterclaim. His
motion to dismiss was therefore belatedly filed and could
no longer deprive the trial court of jurisdiction to hear and
decide the said case;

4. While objections to venue in civil actions arisingfrom libel

can be waived; it does not after all, involve a question of
jurisdiction. Indeed, thelaying of venue is procedural rather
than substantive. Venue relates to trial and not
to jurisdiction.
Time, Inc. v. Hon. Andres Reyes (as Judge of CFI of Rizal)
G.R. No. L-28882 May 31, 1971
Time, Inc. v. Hon. Andres Reyes (as Judge of CFI of Rizal)
G.R. No. L-28882 May 31, 1971

Nature of the Case:

This is a petition for certiorari and prohibition, with

preliminary injunction, to annul certain orders of the
respondent Court of First Instance of Rizal, issued in its Civil
Case entitled "Antonio J. Villegas and Juan Ponce Enrile vs.
Time, Inc., and Time-Life International, Publisher of 'Time'
Magazine (Asia Edition)", and to prohibit the said court from
further proceeding with the said civil case.

Facts of the Case:

The petition alleges that petitioner Time, Inc., is an

American corporation with principal offices at Rocketfeller
Center, New York City, N. Y., and is the publisher of "Time",
a weekly news magazine; the petition, however, does not
allege the petitioner's legal capacity to sue in the courts of
the Philippine. In the aforesaid civil case, therein plaintiffs-
respondents Antonio J. Villegas and Juan Ponce Enrile seek
to recover from petitioner Time, Inc. damages upon an
alleged libel arising from a publication of Time (Asia Edition)
magazine, in its issue of Aug. 18, 1967, of an essay, entitled
"Corruption in Asia", which talks about the investigation of
Manila mayor Antonio Villegas due to the discovery of his
excessive and unreasonable resources. More specifically,
the plaintiffs' complaint alleges that Time magazine
published a libelous article, publicly, falsely and maliciously
imputing to plaintiffs the commission of the crimes of graft,
corruption and nepotism, that said publication particularly
referred to plaintiff Mayor Antonio J. Villegas as a case in
point in connection with graft, corruption and nepotism in
Asia; that said publication without any doubt referred to co-
plaintiff Juan Ponce Enrile as the high government official
who helped under curious circumstances plaintiff Mayor
Villegas in lending the latter approximately P30,000.00
 without interest because he was the Mayor's compadre;
that the purpose of said Publications is to cause the
dishonor, discredit and put in public contempt the plaintiffs.
At the time of the publication of the allegedly offending
essay, private respondents Antonio Villegas and Juan Ponce
Enrile were the Mayor Of the City of Manila and
Undersecretary of Finance and concurrently Acting
Commissioner of Customs, respectively, with offices in the
City of Manila. On motion of the respondents-plaintiffs, the
respondent judge of CFI-Rizal on November 25, 1967,
granted them leave to take the depositions "of Mr. Anthony
Gonzales, Time-Life international", and "Mr. Cesar B.
Enriquez, Muller & Phipps (Manila) Ltd.", in connection with
the activities and operations in the Philippines of the
petitioner, and, on November 27, 1967, issued a writ of
attachment on the real and personal estate of Time, Inc.
Petitioner received the summons and a copy of the
complaint at its offices in New York on December 13, 1967.
It filed a motion to dismiss the complaint for lack of
jurisdiction and improper venue on Dec. 27, 1967, relying
upon the provisions of Republic Act 4363. Private
respondents opposed the motion.
3. On February 26, 1968, respondent court deferred the
determination of the motion to dismiss until after trial of
the case on the merits, the court having considered that the
grounds relied upon in the motion do not appear to be
indubitable. Petitioner moved for reconsideration of the
deferment private respondents again opposed. Respondent
judge issued an order re-affirming the previous order of
deferment for the reason that "the rule laid down under
Republic Act. No. 4363, amending Article 360 of the Revised
Penal Code, is not applicable to actions against non-resident
defendants, and because questions involving harassment
and inconvenience, as well as disruption of public service do
not appear indubitable. ..." Failing in its efforts to
discontinue the taking of the depositions, previously
adverted to, and to have action taken, before trial, on its
motion to dismiss, petitioner filed the instant petition for
certiorari and prohibition.
 Issues:

1. Whether or not, under the provisions of RA 4363 the

respondent CFI of Rizal has jurisdiction to take
cognizance of the civil suit for damages arising from
an allegedly libelous publication, considering that the
action was instituted by public officers whose offices
were in the City of Manila at the time of the
publication; if it has no jurisdiction, whether or not its
erroneous assumption of jurisdiction may be
challenged by a foreign corporation by writ of
certiorari or prohibition;

2. Whether or not RA 4363 is applicable to action

against a foreign corporation or non- resident
defendant.

RULING OF THE COURT:

Issue No. 1:

The respondent Court of First Instance of Rizal is without

jurisdiction to take cognizance of its Civil Case.

Provisions of RA No. 4363 provides that Art. 360 of the of the

Revised Penal Code is further amended to read that any person
who shall publish, exhibit, or cause the publication or exhibition of
any defamation in writing or by similar means, shall be responsible
for the same. The complaint lodged in the court of Rizal by
respondents does not allege that the libelous article was printed
and first published in the province of Rizal and, since the
respondents-plaintiffs are public officers with offices in Manila at
the time of the commission of the alleged offense, it is clear that
the only place left for them wherein to file their action, is the
Court of First Instance of Manila.

The limitation of the choices of venue, as introduced into the

Penal Code through its amendments by Republic Act 4363, was
intended " to minimize or limit the filing of out-of-town libel suits"
to protect an alleged offender from "hardships, inconveniences
and harassments" and, furthermore, to protect "the interest of
the public service" where one of the offended parties is a public
officer. But since the offending publication was not printed in the
Philippines, the alternative venue was not open to respondent
Mayor Villegas of Manila and Undersecretary of Finance Enrile,
who were the offended parties.

Issue No. 2:

Time, Inc, argue that RA No. 4363 is not applicable where the
action is against non-existent defendant. They urge that, in
enacting RA No. 4363, Congress did not intend to protect non-
resident defendants because since a non-resident defendant is
not in a position to comply with the conditions imposed for the
effectivity of the statute, such defendant may not invoke its
provisions. Time Inc. also reasoned that a foreign corporation is
not inconvenienced by an out-of-town libel suit and that it would
be absurd in the absence of an extradition treaty, for the law to
give to public officers with office in Manila the second option of
filing a criminal case in the court of the place where the libelous
article is printed and first published if the defendant is a foreign
corporation and that, under the "single publication" rule which
originated in the United States and imported into the Philippines,
the rule was understood to mean that publications in another
state are not covered by venue statutes of the forum.

The Court see nothing in the text of the law that would sustain
unequal protection as invoked by Time, Inc. to some of those who
may be charged with libel. In the promulgation of RA 4364 no
terms are employed therein to indicate that the law can or will be
effective only as to some, but not all, of those that may be
charged with libeling public officers. The assertion that a foreign
corporation or a non-resident defendant is not inconvenienced by
an out-of-town suit is irrelevant and untenable, for venue and
jurisdiction are not dependent upon convenience or
inconvenience to a party. Venue was fixed under RA 4363 to
protect the interest of the public service when the offended party
is a public officer, by minimizing as much as possible any
interference with the discharge of his duties.
The contention of Time, Inc. that respondents-plaintiffs could not
file a criminal case for libel against a non-resident defendant does
not make RA No. 4363 incongruous or absurd, for such inability to
file a criminal case against a non-resident natural person equally
exists in crimes other than libel. It is a fundamental rule of
international jurisdiction that no state can by its laws, and no
court which is only a creature of the state, can by its judgments or
decrees, directly bind or affect property or persons beyond the
limits of the state. But if the accused is a corporation, no criminal
action can lie against it, whether such corporation or resident or
non-resident. At any rate, the case filed by respondents-plaintiffs
is case for damages. The rule is that where a statute creates a
right and provides a remedy for its enforcement, the remedy is
exclusive. And where it confers jurisdiction upon a particular
court, that jurisdiction is likewise exclusive, unless otherwise
provided. Hence, the venue provisions of RA No. 4363 should be
deemed mandatory for the party bringing the action, unless the
question of venue should be waived by the defendant, which was
not the case here. Only thus can the policy of the Act be upheld
and maintained.

Respondents asked for the dismissal of the present petition on the

ground that Time, Inc. as a foreign corporation failed to allege its
capacity to sue in the courts of the Philippines. Respondents rely
on Section 69 of the Corporation law, which provides that no
foreign corporation or corporations formed, organized, or existing
under any laws other than those of the Philippines shall be
permitted to maintain by itself or assignee any suit for the
recovery of any debt, claim, or demand whatever, unless it shall
have the license prescribed in the section immediately preceding.
Respondent also cited several jurisprudence stating that no
foreign corporation may be permitted to maintain any suit in the
local courts unless it shall have the license required by the law.
The Court ruled that the respondents contention is wrong since
the petitioner Time, Inc. is not "maintaining any suit" but is merely
defending one against itself; it did not file any complaint but only
a corollary defensive petition to prohibit the lower court from
further proceeding with a suit that it had no jurisdiction to
entertain. Petitioner's failure to aver its legal capacity to institute
the present petition however is not fatal, for a foreign corporation
may, by writ of prohibition, seek relief against the wrongful
assumption of jurisdiction. The writ of preliminary injunction
heretofore issued by this Supreme Court is made permanent.
 Paderanga v Buissan (Civil Procedure)
Jorge Paderanga v. Judge Buissan, CFI of Zamboanga and ELUMBA
Industries Company

Facts:
Petitioner and private respondent entered into an oral contract of
lease for the use of a commercial space within a building owned by
petitioner in Ozamiz City;
Petitioner subdivided the leased premises into 2 by constructing a
party wall in between; petitioner alleged that it is with the
acquiescence of respondent but the same is refuted by the
respondent;
Private respondent instituted an action for damages and at the
same time prayed for the fixing of the period of lease at 5 years in
the CFI of Zamboanga, Dipolog City;
Petitioner, resident of Ozamiz City, moved for its dismissal
contending that the action was a real action which should have
been filed with the CFI of Ozamiz City where the property
questioned is located;

Lower court decisions:

CFI of Dipolog City: denied the motion to dismiss as the case merely
involved the enforcement of the contract of lease, and while
affecting a portion of real property, there was no question of
ownership raised. Hence, venue was properly laid.

*When case reached the SC:

Petitioner in as much as it is a recovery of possession of a portion

of real property, the case should have been filed in the CFI of
Ozamiz City, where the said real property lies;

Respondent the action is chiefly for damages arising from an

alleged breach of lease of contract; hence, the issue of recovery of
possession is merely incidental. The action is one in personam and
not in rem. Therefore venue must be laid in the place where
plaintiff or defendant resides at the option of plaintiff.

Issue: WON venue was properly laid in the CFI of Dipolog City
Ruling: No, the venue was improperly laid.

Private respondent appears to be confused over the difference

between real action and personal action vis--vis actions in
personam and in rem.

The former determines venue; and the latter the binding effect of
a decision the court may render over the party, whether impleaded
or not;

(Reiterated the usual definitions of Real Actions and Personal

Action vis--vis action in personam and action in rem)

While it may be that the instant complaint does not explicitly pray
for recovery of possession, such is the necessary consequence
thereof.

The instant petition does not efface the fundamental and prime
objective of the nature of the case which is to recover the one-half
portion repossessed by the lessor, herein petitioner.
Evangelista & Co. et.al. v. Estrella Abad Santos
FACTS:
On October 9, 1954, a co-partnership with herein petitioners as
capitalist partners was formed under the name Evangelista & Co.
The Articles of Co-partnership was, however, amended on June
7, 1955 so as to include herein respondent, Estrella Abad Santos, as
an industrial partner.

Consequently, on December 17, 1963, Abad Santos filed suit

against the three (3) capitalist partners, alleging that the
partnership, which was also made a party-defendant, had been
paying dividends to the partners except to her. It was further
alleged that despite her requests that she be allowed to examine
partnership books, to give her information regarding the
partnership affairs and to receive her share in the dividends
declared by the partnership, the petitioners refused and continued
to refuse. She therefore prayed that the petitioners be ordered to
render an accounting of the partnership business and to pay her
the corresponding share in the dividends.

ISSUE:
Whether or not the Articles of Co-partnership shall be considered
as a conclusive evidence of respondents status as a limited
partner?

HELD:
NO. The Court held that despite the genuineness of the Articles
of Co-partnership the same did not express the true
intent and agreement of the parties, however, as the subsequent
events and testimonial evidences indicate otherwise, the Court
upheld that respondent is an industrial partner of the company.

Article 1789 provides that An industrial partner cannot engage in

business for himself, unless the partnership expressly permits him
to do so; and if he should do so, the capitalist partners may either
exclude him from the firm or avail themselves of the benefits which
he may have obtained in violation of this provision, with a right to
damages in either case. Since 1954 and until after the
promulgation of the decision of the appellate court, Abad Santos
has served as a judge of the City Court of Manila and had been paid
for services rendered allegedly contributed by her to the
partnership. Though being a judge of the City Court of Manila
cannot be characterized a business and/or may be considered an
antagonistic business to the partnership, the petitioners,
subsequent of petitioners answer to the complaint, petitioners
reached the decision that respondent be excluded from and
deprived of her alleged share in the interest or participation as an
alleged industrial partner in the net profits or income of the
partnership.

Having always known the respondent is a City Judge even before

she joined the partnership, why did it take petitioners so many
years before excluding her from said company? Furthermore, the
act of exclusion is premised on the ground that respondent has
always been a partner, an industrial partner. In addition, the Court
further held that with the consideration of Article 1767 that By a
contract of partnership two or more persons bind themselves, to
contribute money, property, or industry to a common fund, with
the intention of dividing profits among themselves, the services
rendered by respondent may legitimately be considered the
respondents contribution to the common fund.
Young Auto Supply vs CA Case Digest
Young Auto Supply vs. Court of Appeals
[GR 104175, 25 June 1993]

Facts: On 28 October 1987, Young Auto Supply Co. Inc. (YASCO)

represented by Nemesio Garcia, its president, Nelson Garcia and
Vicente Sy, sold all of their shares of stock in Consolidated
Marketing & Development Corporation (CMDC) to George C. Roxas.
The purchase price was P8,000,000.00 payable as follows: a down
payment of P4,000,000.00 and the balance of P4,000,000.00 in four
postdated checks of P1,000,000.00 each. Immediately after the
execution of the agreement, Roxas took full control of the four
markets of CMDC. However, the vendors held on to the stock
certificates of CMDC as security pending full payment of the
balance of the purchase price. The first check of P4,000,000.00,
representing the down payment, was honored by the drawee bank
but the four other checks representing the balance of
P4,000,000.00 were dishonored. In the meantime, Roxas sold one
of the markets to a third party. Out of the proceeds of the sale,
YASCO received P600,000.00, leaving a balance of P3,400,000.00.

Subsequently, Nelson Garcia and Vicente Sy assigned all their rights

and title to the proceeds of the sale of the CMDC shares to Nemesio
Garcia. On 10 June 1988, YASCO and Garcia filed a complaint
against Roxas in the Regional Trial Court, Branch 11, Cebu City,
praying that Roxas be ordered to pay them the sum of
P3,400,000.00 or that full control of the three markets be turned
over to YASCO and Garcia. The complaint also prayed for the
forfeiture of the partial payment of P4,600,000.00 and the payment
of attorney's fees and costs. Failing to submit his answer, and on 19
August 1988, the trial court declared Roxas in default. The order of
default was, however, lifted upon motion of Roxas. On 22 August
1988, Roxas filed a motion to dismiss. After a hearing, wherein
testimonial and documentary evidence were presented by both
parties, the trial court in an Order dated 8 February 1991 denied
Roxas' motion to dismiss. After receiving said order, Roxas filed
another motion for extension of time to submit his answer. He also
filed a motion for reconsideration, which the trial court denied in
its Order dated 10 April 1991 for being pro-forma. Roxas was again
declared in default, on the ground that his motion for
reconsideration did not toll the running of the period to file his
answer. On 3 May 1991, Roxas filed an unverified Motion to Lift the
Order of Default which was not accompanied with the required
affidavit of merit. But without waiting for the resolution of the
motion, he filed a petition for certiorari with the Court of Appeals.
The Court of Appeals dismissal of the complaint on the ground of
improper venue. A subsequent motion for reconsideration by
YASCO was to no avail. YASCO and Garcia filed the petition.

Issue: Whether the venue for the case against YASCO and Garcia in
Cebu City was improperly laid.

Held: A corporation has no residence in the same sense in which

this term is applied to a natural person. But for practical purposes,
a corporation is in a metaphysical sense a resident of the place
where its principal office is located as stated in the articles of
incorporation. The Corporation Code precisely requires each
corporation to specify in its articles of incorporation the "place
where the principal office of the corporation is to be located which
must be within the Philippines." The purpose of this requirement is
to fix the residence of a corporation in a definite place, instead of
allowing it to be ambulatory. Actions cannot be filed against a
corporation in any place where the corporation maintains its
branch offices. The Court ruled that to allow an action to be
instituted in any place where the corporation has branch offices,
would create confusion and work untold inconvenience to said
entity. By the same token, a corporation cannot be allowed to file
personal actions in a place other than its principal place of business
unless such a place is also the residence of a co-plaintiff or a
defendant. With the finding that the residence of YASCO for
purposes of venue is in Cebu City, where its principal place of
business is located, it becomes unnecessary to decide whether
Garcia is also a resident of Cebu City and whether Roxas was in
estoppel from questioning the choice of Cebu City as the venue.
The decision of the Court of Appeals was set aside.

John Sy vs Tyson Enterprises, Inc.

In 1979, Tyson Enterprises, Inc. filed a collection suit against
Universal Parts Supply Corporation and its president John Sy. The
suit was filed in Pasig, Rizal. John Sy filed a motion to file for a bill
of particulars which was denied. Subsequently, Sy filed a motion to
dismiss on the ground of improper venue. Sy alleged that Tyson
Enterprises should have filed the case either in Bacolod City
(business address of Universal Parts) or in Manila (business address
of Tyson Enterprises). Sy alleged that it is improper for Tyson
Enterprises to file the case in Pasig even if it is the residence of
Tysons president and general manager, Dominador Ti.
The trial court as well as the Court of Appeals denied Sys motion
on the ground that he waived the defense of improper venue when
he filed his motion to file for a bill of particulars; that the prior
motion placed Sy under the jurisdiction of the trial court.
ISSUE: Whether or not a plaintiff-corporation may file a civil case
not in its business address nor the business address/residence of
the defendant but in the place of residence of its
incorporators/officers.
HELD: No. A corporation has a separate and distinct personality
from its incorporators. Its place of business is its residence and not
the residence of its president or any other officer. Hence, venue is
improperly laid in this case. The trial court of Pasig has no
jurisdiction.
Anent the issue that there was a waiver, as a rule, the defense of
improper venue is waived if it is not alleged in a motion to dismiss.
In the case at bar, Sy was able to file his motion to dismiss in a timely
manner. It is of no moment that there was a prior motion for a bill
of particulars that was filed. There is nothing in the rule that states
that no other motion should have been filed prior to filing a motion
to dismiss before a motion to dismiss grounded on improper venue
may be allowed.
MACDONALD vs. NATIONA CITY BANK OF NEW YORK
L-7991 | may 21, 1956 | Paras | Pet for Review by Certiorari
Petitioners: Paul MacDonald et al.
Respondent: National City Bank of New York

Quick Summary:
Facts: Stasikinocey is a partnership formed by da Costa, Gorcey,
Kusik and Gavino. It was denied registration by the SEC due to a
confusion between the partnership and Cardinal Rattan. Cardinal
Rattan is the business name or style used by Stasikinocey. Da Costa
and Gorcey are the general partners of Cardinal Rattan. Moreover,
Da Costa is the managing partner of Cardinal Rattan. Stasikinocey
had an overdaft account with Nationa City Bank, which was later
converted into an ordinary loan due the partnerships failure in
paying its obligation. The ordinary loan was secured by a chattel
mortgage over 3 vehicles. During the subsistence of the loan, the
vehicles were sold to MacDonald and later on, MacDonald sold 2 of
the 3 vehicles to Gonzales. The bank brought an action for recovery
of its credit and foreclosure of the chattel mortgage upon learning
of these transactions.
Held: While an unregistered commercial partnership has no
juridical personality, nevertheless, where two or more persons
attempt to create a partnership failing to comply with all the legal
formalities, the law considers them as partners and the association
is a partnership in so far as it is a favorable to third persons, by
reason of the equitable principle of estoppel. Where a partnership
not duly organized has been recognized as such in its dealings with
certain persons, it shall be considered as partnership by estoppel
and the persons dealing with it are estopped from denying its
partnership existence.

Facts:
Stasikinocey is a partnership formed by Alan Gorcey, Louis Da
Costa Jr., William Kusik and Emma Badong Gavino.
It was denied registration in the SEC due to the confusion
between this partnership and the business Cardinal Rattan,
which is treated as a co-partnership where Gorcey and Da
Costa are the general partners. It appears that Cardinal Rattan
is merely the business name or style used by the partnership,
Stasikinocey.
 Prior to June 3, 1949 - Stasikinocey had an overdraft account
with the National City Bank of New York, a foreign banking
association duly licensed to do business in the Philippines.
June 3, 1949 - said overdraft account has a P6,134.92 balance.
Due to the failure of Stasikinocey to make the required
payment, said balance was converted into an ordinary loan for
which a promissory joint note, non-negotiable was executed
on the same day by Da Costa for and in the name of Cardinal
Rattan, himself and Gorcey.
June 7, 1949 - said promissory note was secured by a chattel
mortgage executed by Da Costa, general partner for and in the
name of Stasikinocey. Said mortgage was constituted over the
following:
1. Fargo truck with motor No. T-118-202839, Serial No.
81410206 and with plate No. T-7333 (1949)
2. Plymouth Sedan automobile motor No. T-5638876, Serial
No. 11872718 and with plate No. 10372
3. Fargo Pick-Up FKI-16, with motor No. T-112800032, Serial
No. 8869225 and with plate No. T-7222 (1949)
The mortgage deed was duly registered with the Office of the
Register of Deeds Pasig, Rizal. It has the following stipulations:
1. mortgagor shall not sell or otherwise dispose of the said
chattels without the mortgagees written consent
2. mortgagee may foreclose the mortgage at any time, after
breach of any condition thereof, the mortgagor waiving the
30- day notice of foreclosure
June 7, 1949 - Gorcey and Da Costa executed an agreement
purporting to convey and transfer all their rights, title and
participation in Stasikinocey to Shaeffer, allegedly in
consideration of the cancellation of an indebtedness of
P25,000 owed by them and Stasikinocey to the latter. Said
agreement is said to be in violation of the Bulk Sales Law.
June 24, 1949 - during the subsistence of the loan and chattel
mortgage, Stasikinocey,, through Gorcey and Da Costa
transferred to MacDonald the Fargo truck and Plymouth sedan
June 28, 1949 - Shaeffer sold the Fargo pick-up to MacDonald
July 19, 1944 [what the case stated but I guess it should be
1949] - Paul MacDonald sold the Fargo truck and Plymouth
sedan to Benjamin Gonzales
 When the National City Bank learned of these transactions, it
filed an action against Stasikinocey, Da Costa, Gorcey,
MacDonald and Gonzales to recover its credit and to foreclose
the chattel mortgage.
CFI: annulled the sale of the vehicles to Gonzales; ordered Da
Costa and Gorcey to pay the Bank jointly and severally
P6,132.92 with legal interest; ordered Gonzales to deliver the
vehicles to the Bank for sale at public auction if Da Costa and
Gorcey fails to pay; ordered Da Costa, Gorcey and MacDonald
to pay the Bank jointly and severally any deficiency that
remains unpaid should the proceeds of the auction sale be
insufficient
MacDonald and Gonzales appealed to the CA.
CA: modified the CFI decision by ruling that MacDonald is not
jointly and severally liable with Gorcey and Da Costa to pay any
deficiency
Issue:
WON the partnership, Stasikinocey is estopped from asserting that
it does not have juridical personality since it is an unregistered
commercial partnership [YES]
Ratio:
While an unregistered commercial partnership has no juridical
personality, nevertheless, where two or more persons attempt
to create a partnership failing to comply with all the legal
formalities, the law considers them as partners and the
association is a partnership in so far as it is a favorable to third
persons, by reason of the equitable principle of estoppel.
Da Costa and Gorcey cannot deny that they are partners of the
partnership Stasikinocey, because in all their transactions with
the National City Bank they represented themselves as such.
McDonald cannot disclaim knowledge of the partnership
Stasikinocey because he dealt with said entity in purchasing
two of the vehicles in question through Gorcey and Da Costa.
The sale of the vehicles to MacDonald being void, the sale to
Gonzales is also void since a buyer cannot have a better right
than the seller.
As was held in Behn Meyer & Co. vs. Rosatzin, where a
partnership not duly organized has been recognized as such in
its dealings with certain persons, it shall be considered as
 partnership by estoppel and the persons dealing with it are
estopped from denying its partnership existence.
If the law recognizes a defectively organized partnership as de
facto as far as third persons are concerned, for purposes of its
de facto existence it should have such attribute of a
partnership as domicile.
Kawasaki Port Services et. al. v. Judge Amores (1991)

Doctrine: An action purely for injunction is a personal action as

well as an action in personam. As a personal action, personal or
substituted service of summons upon the defendant, not extra
territorial service, is necessary to confer jurisdiction upon the
Court over the defendant

Facts:

C.F Sharp Kabushiki (Kabushiki) incurred several obligations

from several creditors, including petitioners herein
C.F. Sharp & Co (CF Sharp) anticipated that the creditors of
Kabushiki will run after it
Hence, C.F. Sharp prayed for injunctive relief against the
petitioners' demand for the payment of C.F. Sharp Kabushiki
Kaisha's liabilities
C.F. Sharp alleged that it is separate and distinct from
Kabushiki. That the former is organized and existing under
the laws of the Philippines while the latter is under the laws
of Japan.
o That it had no participation whatsoever or liability in
connection with the transactions between the latter
and the defendants.
CF Sharp also prayed for declaratory relief that it is separate
and independent corporation, it is not liable for the
obligations and liabilities of Kabushiki. (Note: not available
according to the court as no action in court has yet been
filed by the creditors)
As the creditor-defendants are non-residents, without
business addresses in the Philippines but in Japan, CF Sharp
asked the court to effect extraterritorial service of
summons.
Judge Amores authorized the extraterritorial service of
summons on creditors
Naturally, the creditors opposed and filed "Special
Appearance to Question Jurisdiction of This Honorable
Court Over Persons of Defendants"
o Alleged that lower court does not and cannot acquire
jurisdiction over the persons of defendants on the
 grounds that private respondent's action does not
refer to its personal status
o The action does not have for subject matter property
contemplated in Section 17 of Rule 14 of the Rules of
Court, that the action does not pray that defendants
be excluded from any interest or property in the
Philippines;
o And that no property of the defendants has been
attached
o Action is in personam; and that the action does not
fall within any of the four cases mentioned in Section
17, Rule 14 of the Rules of Court.
Defense: affects status of CF Sharp and liability for
Kabushikis indebtedness

ISSUE: WON an extraterritorial service of summons is allowed

in this case and therefore the Court obtained jurisdiction? NO

HELD:
Extraterritorial service of summons is proper only in four (4)
instances:
(1) when the action affects the personal status of the plaintiffs:
(2) when the action relates to, or the subject of which is,
property within the Philippines, in which the defendant has
or claims a lien or interest, actual or contingent;
(3) when the relief demanded in such action consists, wholly or
in part, in excluding the defendant from any interest in
property located in the Philippines; and
(4) when the defendant non-resident's property has been
attached within the Philippines
Injunction was asked to enjoin petitioners from
demanding from private respondent the payment of the
obligations of Kabushiki. It was not prayed that
petitioners be excluded from any property located in the
Philippines, nor was it alleged, much less shown, that the
properties of the defendants, if any, have been attached
Complaint does not involve the personal status of CF
Sharp, nor any property in the Philippines in which
creditors have or claim an interest, or which was
attached, but purely an action for injunction, it is a
 personal action as well as an action in personam, not an
action in rem or quasi in rem
As a personal action, personal or substituted service of
summons on the defendants, not extraterritorial service,
is necessary to confer jurisdiction on the court.
In an action for injunction, extra-territorial service of
summons and complaint upon the non-resident
defendants cannot subject them to the processes of the
regional trial courts which are powerless to reach them
outside the region over which they exercise their
authority.
QUASHA V. JUAN
Quasha Asperilla Ancheta Valmonte and Marcos vs Juan, 118 SCRA
505 (1982)

FACTS:

A sea vessel, MV San Vicente - registered in the Philippines, was

chartered by foreigners and foreign companies to deliver cargo
from Sweden to Jeddah, Saudi Arabia. The payment scheme was
supposed to be by time charter. Payment would have been in
the amount of US $ 3,200 a day. However, after two months, the
foreigners failed to pay the daily hire. It had docked in Jeddah but
did not unload its cargo due to the fact of non-payment. Filipinas
Carriers (FILCAR) exercised its lien over the goods transported as
per the Charter Party (their contract). FILCAR asked to court for
sale of the goods in the ship to satisfy the debt of the foreign
companies to them. Later, the law firm of Quasha Asperilla
Ancheta Valmonte Pea & Marcos intervened in the case on
behalf of the agent of some of the foreign companies/defendants
of the case. The agents name was Ahmed Baroom and he was
supposedly the agent of AB Charles Thorburn & Co. and some
companies in Saudi Arabia. Later, Baroom withdrew from pursuing
the case but he failed to pay his lawyers (Quasha). The law firm of
Quasha then filed a writ of preliminary attachment in a different
CFI (Pasig the original case was in the CFI of Manila) claiming that
it has a right to a portion of the goods as payment for its
attorneys fees. The goods however have already been sold by the
respondent court, the law firm now goes after the proceeds of the
sale.

ISSUE:

W/N Quasha is entitled to a portion of the goods or its proceeds?

RULING: No. The law firm should have pursued its claim to
attorneys fees in the same court as an intervention petition for
recovery of attorneys fees. The respondent CFI of Manila had
already acquired jurisdiction over the goods as the case pending
with it was already deciding upon the question of who the real
owner of the cargo was. In filing with another CFI, multiplicity of
suits occurred. The charging lien filed in Pasig was erroneous, an
intervention petition for recovery of attorneys fees in the CFI of
Manila was the proper action that should have been taken. This
negligence by the law firm entitles it to no relief, the instant
petition must be dismissed. Besides the goods have already been
sold and delivered to a foreign buyer, the court has lost
jurisdiction over it. Everything is already fait accompli (already
done and beyond alteration).
Ang Ping vs. Court of Appeals (310 SCRA 343)

This is a petition for review on certiorari assailing the Decision of

the CA dismissing Ang Ping's prayer for annulment of the
judgment of the RTC in Civil Case entitled "Unibancard
Corporation vs. Tingson and Ang Ping." Likewise under review is
the Court of Appeals' Resolution denying the petitioner's motion
for reconsideration.

Facts:

Juan Tingson applied for and was issued a Unicard credit card,
Harry Ang Ping as co-obligor (jointly and severally). Tingson
defaulted on his obligations with Unibancard prompting the latter
to file a collection suit with the RTC of Makati. The summonses for
both Tingson and Ang Ping were allegedly served on February 15,
1988 at Mandaluyong and San Juan, Metro Manila, respectively. In
both cases, the person who received the summons was a certain
Jonas Umali. On May 12, 1988, a certain Atty. Benito Salazar filed
an answer purportedly on behalf of Tingson and Ang Ping. At the
pre-trial, on the other hand, a certain Atty. Lauro Sandoval
represented Tingson and Ang Ping. Later, during trial, defendants'
counsel did not present any evidence on their behalf; hence, the
trial court deemed that the defendants had waived their right to
present evidence and submitted the case for decision on the basis
solely of the respondent Corporation's evidence. The trial court
rendered judgment holding Tingson and Ang Ping jointly and
severally liable. Thereafter, series of writ of executions were
served against Ang Ping. On 1994, Ang Ping filed with the Court of
Appeals a petition to annul the judgment of the trial court which
was the basis of the various writs of execution issued against him.
He alleged that the judgment in question was rendered without
due process of law as he was not given his day in court. He argued
that since there was no valid service of summons upon him and he
never appeared before the court by himself or by counsel, the trial
court never acquired jurisdiction over his person, thus, the
judgment cannot be enforced against him. The Court of Appeals
dismissed the petition after finding that petitioner Ang Ping was
properly placed under the jurisdiction of the trial court which
rendered the assailed judgment. Hence, this petition.
Issue:
Whether or not the RTC acquired jurisdiction over the person of
Ang Ping either by his voluntary appearance in court and his
submission to its authority or by service of summons?

Ruling:

No. As regards the alleged appearance of a lawyer in behalf of the

petitioner during the proceedings in the trial court, the same
cannot be considered as the voluntary appearance contemplated
by the rules. In the first place, the records are bereft of any
showing that petitioner Ang Ping personally appeared at any stage
in the proceedings of the trial court. Second, no document vesting
authority in the lawyer who purportedly represented him appears
on record. At the pre-trial, for instance, Atty. Sandoval who
claimed to be the counsel for the defendants did not present any
special power of attorney executed by Ang Ping. The rules require
that the party-litigant himself must appear for pre-trial but if he
chooses to be represented thereat, he should grant a special
power of attorney to his counsel or representative. Likewise, In
this case, the records show that the summons addressed to Ang
Ping was delivered by substituted service, with a certain Jonas
Umali signing as the one who received the summons. As correctly
pointed out by Ang Ping, however, there was no explanation in
the proof of service justifying the resort to substituted service. In
fact, the records are bereft of any showing that a proof of service
was even filed after such substituted service. Held: The judgment
sought to be executed against Ang Ping was indeed rendered
without jurisdiction as he was not properly served with summons
and neither did he voluntarily submit himself to the authority of
the trial court. The essence of due process is to be found in the
reasonable opportunity to be heard and submit any evidence one
may have in support of his defense. It is elementary that before a
person can be deprived of his property, he should first be
informed of the claim against him and the theory on which such
claim is premised. Not having been duly accorded his day in court,
petitioner cannot thus be bound by the judgment in the collection
suit.

The petition is GRANTED and the decision of the Court of Appeals

is REVERSED. Accordingly, the decision of the Regional Trial Court
in Civil Case No. 18843 is SET ASIDE.
JUAN GOROSTIAGA, plaintiff-appellee,
vs.
MANUELA SARTE, defendant-appellant.

Facts:

On May 27, 1936, Juan Gorostiaga, plaintiff-appellee, institutes an

action against Manuela Sarte to recover the sum of P2,285.51. An
answer was filed by Attorney Gregorio A. Sabater in the name of
the defendant, wherein a general denial was made, and several
defenses interposed, among them, that the defendant was
physically and mentally incompetent to manage her estate. At the
trial, the defendant did not appear in court and her non-
appearance had no been accounted for. On September 21, 1996,
judgment was rendered sentencing the defendant to pay the
amount claimed. On December 23, 1936, a motion under section
113 of Act No. 190 was filed by the general guardian of the
defendant, praying that all the proceedings had against the
defendant be declared null and void for lack of jurisdiction over
her person. The motion was denied; hence, this appeal.

There is no question about the facts. On May 18, 1936, that is,
nine days prior to the institution of the action against the
defendant, a petition for guardianship was filed with the lower
court in favor of the defendant, on the ground that she was
incompetent to manage her estate by reason of her physical and
mental incapacity. After hearing the petition, wherein the
depositions of alienists were presented, the court issued an order
declaring that the defendant Manuela Sarte "se halla ficica y
mentalmente incacitada para administrar sus bienes poe razon de
debelidad senil, cuya inteligencia si bien le permite sostener una
conversacion por algunos minutos de una manera satisfactoria, no
tiene la consistencia necesaria para atender a sus necesidas y
administrar sus propios bienes."

Although this order was issued on December 3, 1936, it relates to

the incapacity alleged in the petition of May 18, 1936.
Consequently, the incapacity thus declared existed at least at the
date of the filing of the petition, that is, on May 18, 1936, nine
days prior to the institution of the action in the present case. In
fact, according to the evidence relied upon by the lower court, the
defendant was incompetent to manage her affairs for about two
or three years prior to her examination by the alienists. It appears
thus clear that during all the proceedings in the case at bar, from
the time of the filing of the complaint to the rendition of the
judgment, the defendant was physically and mentally unfit to
manage her affairs, and there having been no summons and
notices of the proceedings served her and her guardian, because
no guardian was then appointed for her, the court trying the
action acquired no jurisdiction over her person (sec. 396, No. 4, of
Act No. 190).

It is argued that Attorney Gregorio A. Sabater appeared for the

defendant in the case and filed an answer in her behalf and that
the attorney's authority is presumed as well as the capacity of the
defendant giving the authority. But this presumption is disputable
and it is here entirely rebutted by no less than an order of the
same court declaring the defendant physically and mentally unfit
to manage her estate since at least May 18, 1936. If the defendant
was thus incompetent, she could not have validly authorized the
attorney to represent her. And if the authority was given by her
relatives, it was not sufficient except to show the attorney's good
faith in appearing in the case.

It is contended that the issue as to the incapacity of the defendant

was pleaded in defendant's answer and was squarely decided and
that therefore it cannot be reopened unless on the ground of
newly discovered evidence. That answer was, however, filed by an
attorney not validly authorized to appear for the defendant who
had never been in court except when her guardian filed a motion
to quash all the proceedings for lack of jurisdiction. In matters of
this kind, affecting the jurisdiction of the court and the validity of
all proceedings, the court, instead of observing a passive attitude,
should take the initiative of, and exercise utmost care in,
ascertaining the facts. And although the evidence gathered at the
trial is insufficient, if, after judgment, the lack of jurisdiction is
clearly shown, and there has been no waiver thereof, as in this
case where a waiver could not have been possible, it is the duty of
the court to set aside all the proceedings, take the necessary steps
to acquire jurisdiction, and grant a new trial. The position taken by
the lower court in this case can hardly be reconciled with its
position in the guardianship proceedings.
Appellee contends that in the motion filed by the guardian under
section 113 there is no showing of mistake, inadvertence, surprise
or excusable negligence as grounds for relief provided therein. It
is, however, more than a surprise to the defendant that she be
tried and sentenced without valid summons or notice. And as to
the affidavits of merit required to be attached to a motion under
section 113, they are not necessary, as we have already held,
where the court acted without jurisdiction over the defendant's
person. (Coombs vs. Santos, 24 Phil., 446.)

Judgment is reversed, all the proceedings had in the lower court

are hereby declared null and void, and the case is remanded to
the court below for new trial after the guardian making him a
party defendant. With costs against appellee.
 LIM SIOK HUEY ET AL. V. ALFREDO LAPIZ ET AL.,
G.R. No. L-12289 May 28, 1958

FACTS: This is an action by the spouse and the children of Chua Pua
Lun to recover damages from Alfredo Lapiz, the driver of the Jaguar
jeepney which collided with a bus, resulting to the death of Chua.
As two of the children are minors, the court, upon motion of their
counsel, appointed Chua Pua Tam, a brother of the deceased, as
guardian ad litem to represent them in this case. After trial,
however, the lower court dismissed the complaint on the theory
that plaintiffs failed to authorize anyone to file the complaint on
their behalf, which is fatal to their cause as they are all citizens and
residents of Communist China. In fact, Chua Pua Tam, the guardian
ad litem, testified that the plaintiffs had not written to him nor had
he communicated with them.

Lower Court Ruling: the lower court dismissed the complaint.

ISSUE:
1. Whether or not the plaintiffs have have authorized anyone
to file the present case against the defendants No.

RATIO: The Supreme Court found that there was no error in the
findings made by the trial court. It appears that the plaintiffs are all
citizens and residents of Communist China and notwithstanding the
fact that they have been informed of the death of the deceased,
they have not sent any communication to anyone in the Philippines
giving authority to take whatever action may be proper to obtain
an indemnity for his death.

The present action was initiated by plaintiffs represented

merely by their counsel and the question arose as to whether the
latter had the proper authority to represent the former in view of
the fact that they are all residents of a foreign country. While a
lawyer is presumed to be properly authorized to represent any
cause in which he appears, he may however be required by the
court on motion of either party to produce his authority under
which he appears and counsel for the plaintiffs failed.
 The appointment of Chua Pua Tam as guardian ad
litem would not suffice to meet the requirement of the rule which
provides that every action must be prosecuted in the name of the
real party in interest. Again, it must be shown that Chua Pua Tam
was authorized by the heirs abroad to act as such in behalf of the
minors. But when in the course of the trial, it was found that he
never had any communication with any of the heirs and, much less,
received any authority from them the trial court acted accordingly
in considering his representation ineffective.
FELIX AZOTES, Petitioner, v. MANUEL BLANCO and JULIAN
FIGURA, Respondents.

FACTS:

In the Court of First Instance of Iloilo, judgment was rendered in

civil case No. 11396 brought by respondent Julian Figura against
petitioner Felix Azotes regarding the title and possession of a
parcel of land. Such judgment against petitioner, having become
final and executory, was duly executed in 1940 and the property
was delivered to respondent Julian Figura. After liberation, the
record of the case was duly reconstituted and another writ of
execution was issued on June 3, 1946. This writ, however, was
later set aside upon motion of petitioner Felix Azotes on the
ground that the judgment had already been executed prior to the
war. On August 1, 1946, respondent Julian Figura filed a motion
for contempt against petitioner Felix Azotes alleging (a) that on
March 30, 1942, petitioner was summoned by the Court of First
Instance of Iloilo to show cause why he should not be dealt with
for contempt for having cut ninety (90) feet of bamboo from the
land already delivered to the respondent, but the proceedings for
contempt could not be continued because of the Japanese
invasion; and (b.) that the petitioner is still depriving respondent
of the possession of the property and on several occasions took
therefrom seven hundred feet of bamboo and other things in
utter disregard the judgment rendered and executed. In virtue of
this motion petitioner was ordered to appear before the court on
September 13, 1946 and show cause why he should not be
punished for contempt for having entered again into the property
formerly delivered to respondent by execution of judgment. On
said date, September 13, 1946, petitioner failed to appear before
the court and the explanations given by his attorney not being
satisfactory, petitioner was ordered arrested to answer the
charges for contempt. Hence this petition for prohibition
and certiorari against the Court of First Instance of Iloilo
predicated upon two grounds; namely, (a) that the order declaring
the record of the case duly reconstituted is void there having been
no notice upon him of the petition and hearing for reconstitution;
and (b) that the court has no jurisdiction to punish for contempt a
defendant who reentered the land delivered to to plaintiff more
than five years ago.

With respect to the first ground, it appears from the record that
notice of the motion for reconstitution and of its hearing was duly
served upon Evidente & Evidente, Attorneys for the then
defendant Felix Azotes on February 27, 1946, and that a copy of
the order declaring the record duly reconstituted was served upon
the same attorneys on Mar(h 21, 1946.

In this connection, new issues of fact are brought up by petitioner

in his memorandum which have never been raised before the
respondent court, such, for instance, as that .Attorneys Evidente
& Evidente have ceased to be his Attorneys and nave no authority
to bind him in the reconstitution proceedings. We cannot,
however, take into consideration this new issue of fact not only
because the respondent court had no opportunity to pass upon it
but because it is unsupported by evidence and it yields to the
circumstance that attorney Felix Evidente appeared be the
respondent court in behalf of the herein petitioner the
reconstitution proceedings, and by such appearance the Attorney
is presumed to have authority of the litigant whose representation
he assumed until the contrary clearly shown.

Furthermore, there seems to be no merit in the objection against

the reconstituted record, for petitioner h self, in his opposition to
the second motion for execution admitted that "the judgment
sought to be enforced already complied by the defendant long
before the war broke out as evidenced by Exhibit A," thus implying
t there was really such judgment and there was such execution. It
is true that this admission was made "without waiving our right to
challenge the validity of the order reconstitution . . ." But such
reservation cannot destroy the truth of the admission.

As regards the second ground, i. e., that the court has no authority
to punish for contempt a defendant who re-entered the land
delivered to plaintiff more than five years ago, Rule 64, section 3
(h) provides:jgc:chanrobles.com.ph

"The act of a person who, after being dispossessed or ejected

from any real property by the judgment or process of any court of
competent jurisdiction, enters or attempts to enter into or upon
such real property, for the purpose of executing acts of ownership
or possession, or in any manner disturbs the possession given to
the person adjudged to be entitled thereto.

"But nothing in this section shall be so construed as to prevent the

court from issuing process to bring the accused party in court, or
from holding him in custody pending such proceedings.

It is apparent from this provision that there is no limitation as to

the time within which reentry constitutes con tempt. The reentry
may take place more than five years after delivery by execution,
and still it is contempt. The five-year period provided in Rule 39,
section 6 is the time within which execution of judgment may be
asked for by motion: The motion for contempt is not a motion for
execution dismissed with costs against petitioner.

Paras, Feria, Pablo, Perfecto, Hilado, Bengzon, Padilla and

Tuason, JJ., concur.
Lopez vs. Filipinas Compaia de Seguros
G.R. No. L-19613 April 30, 1966

FACTS:
Plaintiff applied with the defendant company for the
insurance of his properties: Biederman truck tractor and a
Winter Weils trailer from loss or damage in the amount of
P20,000.00 and P10,000.00, respectively.
During the application, the defendant company inquired of
the plaintiff the ff:
Has any company in respect of the insurance of any car
or vehicle
(A) declined, cancelled or refused to renew your
insurance?
(B) increased your premium renewal?
Plaintiff answered in negative but the truth was that the
American International Underwriters of the Philippines (AIU)
had already declined similar application for insurance by the
plaintiff with respect of the above-mentioned vehicles.
The defendant issued to the plaintiff two Commercial Vehicle
Comprehensive Policies covering the said properties.
The vehicles mentioned figured in an accident resulting in the
total loss of the tractor and partial damage to the trailer.
Plaintiff demand upon the defendant for the payment to him
the total amt. of damages resulting from the accident.
On April 28, 1960, defendant rejected the claim on the
ground of concealment of a material fact: that the insured
property previously been declined insurance by another
company.
May 27, 1960, the plaintiff filed with the Office of the
Insurance Commissioner a complaint against the said
company.
As suggested, the plaintiff was willing to submit his claim to
arbitration but was contested by the defendant since "the
claim of the plaintiff cannot be resolved by arbitration, as
recourse to arbitration referred to in the policy contract,
envisioned only differences or disputes, 'with respect to the
amount of the company's liability,' and not to cases where
the company does not admit its liability to the insured.
 With this rejection, the plaintiff filed his complaint with the
CFI of Manila on September 19,1961.
Against the above complaint, the defendant-appellee filed
on September 29, 1961 a motion to dismiss on the ground of
prescription. The latter argued that the plaintiff's claim had
already prescribed since it was not filed within twelve
months from its rejection by the insurance company as
stipulated under paragraph 9 of the General Conditions of
Commercial Vehicle Comprehensive Policy Nos. 5598 and
5599, to wit:

If a claim be made and rejected and an action or suit be not

commenced within twelve months after such rejection or (in case
of an arbitration taking place as provided herein) within twelve
months after the arbitrator, arbitrators, or umpire shall have made
their award then the claim shall for all purposes be deemed to have
been abandoned and shall not thereafter be recovered hereunder.

ISSUE: Whether the complaint filed by the plaintiff-appellant with

the Office of the Insurance Comm. on May 27,1960 a
commencement of an "action or suit" within the meaning and
intent of general condition? No.

RATIO:
"Action" and "suit":

Rule 2, Section 1 of the Rules of Court

Section 1. Action defined.Action means an ordinary suit in a Court
of Justice by which one party prosecutes another for the
enforcement or protection of a right, or the prevention or redress
of a wrong. (Emphasis supplied.)

Jurisprudence
Suit is the prosecution or pursuit of some claim or demand in a
court of justice or any proceeding in a court of justice in which a
plaintiff pursues his remedy to recover a right or claim. (Emphasis
supplied.)
- Upon the authorities, therefore, it is settled that the terms
"action" and "suit" are synonymous. Moreover, it is clear that the
determinative or operative fact which converts a claim into an
"action or suit" is the filing of the same with a "court or justice."
Filed elsewhere, as with some other body or office not a court of
justice, the claim may not properly be categorized under either
term.

An "action or suit" is essentially "for the enforcement or

protection of a right, or the prevention or redress of a
wrong." (Rule 2, Sec. 1, Rules of Court). There is nothing in
the Insurance Law, which empowers the Insurance
Commissioner to adjudicate on disputes relating to an
insurance company's liability to an insured under a policy
issued by the former to the latter. The validity of an insured's
claim under a specific policy, its amount, and all such other
matters as might involve the interpretation and construction
of the insurance policy, are issues which only a regular court
of justice may resolve and settle. Consequently, the
complaint filed by the appellant herein with the Office of the
Insurance Commission could not have been an "action or
suit."
Ramon Felipe vs. Jose Leuterio

May 30, 1952 92 SCRA 482

Ponente: Justice Bengzon

Facts: On March 12, 1950 an inter-collegiate oratorical

competition was held in Naga City. Felipe was one of the Judges
and was the chairman. Nosce was awarded the first price and
Imperial the second price. Imperial addressed a letter to the Board
of Judges protesting the verdict and alleged that one of the judges
committed a mathematical error on computing the scores. The
Board refused to amend their award, Imperial filed a complaint in
court. She asserts that she should have ranked 3rdplace in the
vote, which makes her score 9 or the First place.

Issue: Whether the RTC reverse the decision of the board of

judges to obtain a new award?

Held: Members of the court sometimes are members of the board

of judges in an oratorical contest. But it is UNWRITTEN in the law
that in such contests the decisions of the board of judges be final
and cannot be appealed. The contestants do not have the right to
the prizes because theirs is only a privilege to compete for the
prize and did not become a demandable right. The respondent
judge erred in his reasoning that where there is a wrong there is
remedy. To quote The flaw in his reasoning lies in the assumption
that Imperial suffered some wrong at the hands of the board of
judges. If at all, there was error on the part of one judge, at most.
Error and wrong do not mean the same thing. "Wrong" as used in
the aforesaid legal principle is the deprivation or violation of a
right. As stated before, a contestant has no right to the prize
unless and until he or she is declared winner by the board of
referees or judges. Granting that Imperial suffered some loss or
injury, yet in law there are instances of "damnum absque injuria".
This is one of them. If fraud or malice had been proven, it would
be a different proposition. But then her action should be directed
against the individual judge or judges who fraudulently or
maliciously injured her. Not against the other judges.
HERNANDEZ VS RURAL BANK OF LUCENA, INC.
G.R. No. L-29791 1978 Jan 10 (81 SCRA 75)

FACTS: Spouses Hernandez obtained from the Rural Bank of

Lucena, Inc. a loan of P6,000, payable in a year. The loan was
secured by a mortgage on their two lots situated in Cubao,
Quezon City.

About three months after that loan was obtained, the Lucena
bank became a distressed bank. It then received directives from
the Central Bank which it construed as a directive to suspend
operations.
Before the expiration of the one year term of the loan, Hernandez
offered to pay the loan by means of a check which was drawn
against the bank by a depositor, the San Pablo Colleges, and which
was payable to Hernandez. The payment was never
consummated. Despite several attempts, Hernandezs check was
refused, Lucena bank being no longer in a position to honor
withdrawals.
In the meantime, the Monetary Board had decided to liquidate
the Lucena bank. A petition was filed with CFI of Manila for
assistance and supervision in the liquidation of the Lucena bank.

Hernandez made a judicial deposit of the check with the CFI of

Lipa City. He then filed with the same court an action to compel
the Rural Bank and Central Bank as liquidator to accept the check
and to execute the cancellation of the real estate mortgage.

ISSUE:WoN the venue was properly laid.

HELD: An action to foreclose a real estate mortgage is a real

action, but an action to compel the mortgagee to accept payment
of the mortgage debt and to release the mortgage is a personal
action.

Section 2(a), Rule 4 of the Rules of Court provides that "actions

affecting title to, or for recovery of possession, or for partition or
condemnation of, or foreclosure of mortgage on, real property,
shall be commenced and tried in the province where the property
or any part thereof lies"
The rule mentions an action for foreclosure of a real estate
mortgage but does not mention an action for the cancellation of a
real mortgage. In the instant case, the action is primarily to
compel the mortgagee to accept payment of the mortgage debt
and to release the mortgage.

Hence, the venue of plaintiffs' personal action is the place where

the defendant or any of the defendants resides or may be found,
or where the plaintiff or any of the plaintiffs resides, at the
election of the plaintiff (Sec. 2[b], Rule 4). The term "resides" in
section 2[b] of Rule 4 refers to the place of actual residence or the
place of abode and not necessarily to the legal residence or
domicile
San Juan, Batangas might be the place where the plaintiffs have
their domicile or legal residence but there is no question that
Chicago St., Cubao, Quezon City is their place of abode or the
place where they actually reside. So, the action in this case, which
is a personal action to compel the defendants to honor the check
in question and to cancel the mortgage, should have been filed in
Quezon City if the plaintiffs intended to use their residence as the
basis for their choice of venue.
RUPERTA BOOL, Plaintiff-Appellee, v. PERPETUO MENDOZA and
DIONISIO MENDOZA, defendants-appellees, EUGENIO
EVANGELISTA and PETRONA LIM, Intervenors-Appellants.

FACTS:

This is an appeal from an order of the Court of First Instance of

Mindoro denying the petition of Eugenio Evangelista and Petrona
Lim to intervene in this action. The action has been instituted by
Ruperta Bool against defendants Perpetuo Mendoza and Dionisio
Mendoza for the purpose of compelling them to render an
accounting of the properties of Eustaquia Hebreo (deceased) and
her surviving spouse Perpetuo Mendoza, and for the partition of
the same, plaintiff being a daughter of said Eustaquia Hebreo by
first marriage and being Hebreos only heir. The defendants
denied the supposed character of the properties as conjugal
properties, but on February 13, 1950, the parties presented an
amicable settlement, one of the conditions of which was that the
defendant Perpetuo Mendoza cedes, transfers, and conveys in
favor of plaintiff Ruperta Bool his interest, title, and participation
in a parcel of land (included in Lot No. 2443 of the cadastral survey
of Naujan) containing an area of 220,887 square meters, and
covered by Homestead Title No. 2360.

On March 27, 1950, the intervenors-appellants herein presented a

petition to be allowed to intervene, alleging that that land ceded
in the amicable settlement had already been adjudicated by the
cadastral court in part to Juan Bool and in part to the said
intervenors- appellants, and that said adjudication having become
final and a partition of the lot being under the consideration of the
cadastral court, the grant of the said land as homestead to
Perpetuo Mendoza was null and void, and any agreement in
relation thereto also void. But before this petition for intervention
was received, the Court of First Instance of Mindoro had already
approved the amicable settlement in its decision dated March 23,
1950, so the attorney for the intervenors-appellants presented a
petition for the reopening of the case in order to allow the
presentation of intervenors-appellants petition for intervention.
The trial court denied this petition on the ground that the petition
for intervention was presented after trial and after a decision had
already been rendered, and on the additional ground that the
intervenors-appellants are not in any way bound by the decision
rendered in the case. Against this judgment the intervenors-
appellants have prosecuted this appeal, claiming that they have an
interest in the subject of the litigation and amicable settlement,
and that if they do not insist on their intervention they might later
on be declared estopped by the proceedings had in this action and
bound by them, because the present proceedings for partition are
one in rem.

The intervenors-appellants do not have any material interest in

the subject of the present action between Ruperta Bool and
Perpetuo Mendoza and Dionisio Mendoza, which is the right, title,
or interest that Perpetuo Mendoza may have acquired over the
land covered by his homestead application. The subject is not the
land itself. The action is not an action in rem like a registration or
cadastral proceeding to determine title to the land; it concerns
only the right, title, and interest of the parties to the said land, not
the title of the land as against the whole world, and, therefore,
not affecting any right or interest that any other party may have
to said land. The present action is not in rem but in personam, and
would bind only the parties thereto. By the settlement one party
cedes the land subject of the action to the other, and the mere
fact that it takes place in a proceeding in court does not raise it to
the category of a proceeding in rem, binding the land and all
people claiming rights thereto. Neither are the intervenors-
appellants necessary or indispensable parties to the action or to
the settlement, nor are they in any way affected by the amicable
settlement that was entered into by the plaintiff and the
defendants in this action. As they have no interest in the subject
of the action, nor are they bound thereby, they have no right to
intervene therein.

The appeal must also be dismissed on other grounds. The petition

for intervention was filed after the Court had decided the case.
Intervention is allowed only "at any stage of the trial," the term
"trial" being used in its restricted sense, that is, the period for the
introduction of evidence by both parties. (I Moran 291, 1953 ed.)
Besides, petitions for intervention are addressed to the sound
discretion of the Judge, and as intervenors-appellants rights to
the property subject of the amicable settlement are not in any
way affected by the judgment in this action, and as their claim to
the land as against the parties to the action can be decided in
another proceeding, it was not error for the trial court to refuse to
permit the reopening of the case with a view to allowing them to
intervene.

The order appealed from is hereby affirmed, with costs against

the Intervenors-Appellants.