MERRILL LYNCH FUTURES, INC.
, petitioner, remittances of money (or crediting or debiting) made between the spouses
vs.
HON. COURT OF APPEALS, and the SPOUSES PEDRO M. LARA and
ELISA G. LARA, respondents.
FACTS:
1. On November 23, 1987, Merrill Lynch Futures, Inc. (hereafter, simply ML
FUTURES) filed a complaint with the Regional Trial Court at Quezon City
against the Spouses Pedro M. Lara and Elisa G. Lara for the recovery of a
debt and interest thereon, damages, and attorney's fees.
2. ML FUTURES alleged the following:
1) that on September 28, 1983 it entered into a Futures Customer Agreement
with the defendant spouses (Account No. 138-12161), in virtue of which it
agreed to act as the latter's broker for the purchase and sale of futures
contracts in the U.S.;
2) that pursuant to the contract, orders to buy and sell futures contracts were
transmitted to ML FUTURES by the Lara Spouses "through the facilities of
Merrill Lynch Philippines, Inc., a Philippine corporation and a company
servicing plaintiffs customers; 2
3) that from the outset, the Lara Spouses "knew and were duly advised that
Merrill Lynch Philippines, Inc. was not a broker in futures contracts," and that it
"did not have a license from the Securities and Exchange Commission to
operate as a commodity trading advisor (i.e., 'an entity which, not being a
broker, furnishes advice on commodity futures to persons who trade in futures
contracts');
4) that in line with the above mentioned agreement and through said Merrill
Lynch Philippines, Inc., the Lara Spouses actively traded in futures contracts,
including "stock index futures" for four years or so, i.e., from 1983 to October,
1987, 3 there being more or less regular accounting and corresponding
Civpro/rule 2 & 3/mpperez
and ML FUTURES;
5) that because of a loss amounting to US$160,749.69 incurred in respect of
three (3) transactions involving "index futures," and after setting this off
against an amount of US$75,913.42 then owing by ML FUTURES to the Lara
Spouses, said spouses became indebted to ML FUTURES for the ensuing
balance of US$84,836.27, which the latter asked them to pay;
6) that the Lara Spouses however refused to pay this balance, "alleging that
the transactions were null and void because Merrill Lynch Philippines, Inc., the
Philippine company servicing accounts of plaintiff, . . had no license to operate
as a 'commodity and/or financial futures broker.'"
3. On January 12, 1988, the Trial Court promulgated an Order sustaining the
motion to dismiss, directing the dismissal of the case and discharging the writ
of preliminary attachment. It later denied ML FUTURES's motion for
reconsideration, by Order dated February 29, 1988. ML FUTURES appealed
to the Court of Appeals which affirmed the TC’s decision. Hence, this petition.
ISSUE:WON the petitioner has the legal capacity to sue.
HELD:
1. The facts on record adequately establish that ML FUTURES, operating in
the United States, had indeed done business with the Lara Spouses in the
Philippines over several years, had done so at all times through Merrill Lynch
Philippines, Inc. (MLPI), a corporation organized in this country, and had
executed all these transactions without ML FUTURES being licensed to so
transact business here, and without MLPI being authorized to operate as a
commodity futures trading advisor. These are the factual findings to both the
Trial Court and the Court of Appeals. These, too, are the conclusions of the
Securities & Exchange Commission which denied MLPI's application to
operate as a commodity futures trading advisor, a denial subsequently
affirmed by the Court of Appeals. Prescinding from the proposition that factual
findings of the Court of Appeals are generally conclusive, the Supreme Court
Page 1
has been cited to no circumstance of substance to warrant reversal of said whether they were so far aware of the absence of the requisite licenses on the
Appellate Court's findings or conclusions in this case. Further, the Laras did part of ML FUTURES and its Philippine correspondent, MLPI, as to be
transact business with ML FUTURES through its agent corporation organized estopped from alleging that fact as a defense to such liability, should be
in the Philippines, it being unnecessary to determine whether this domestic ventilated and adjudicated on the merits by the proper trial court.
firm was MLPI (Merrill Lynch Philippines, Inc.) or Merrill Lynch Pierce Fenner&
Smith (MLPI's alleged predecessor). The fact is that ML FUTURES did deal
with futures contracts in exchanges in the United States in behalf and for the
account of the Lara Spouses, and that on several occasions the latter received
account documents and money in connection with those transactions. Given
these facts, if indeed the last transaction executed by ML FUTURES in the
Laras's behalf had resulted in a loss amounting to US $160,749.69; that in
relation to this loss, ML FUTURES had credited the Laras with the amount of
US $ 75,913.42 — which it (ML FUTURES) then admittedly owed the spouses
— and thereafter sought to collect the balance, US $84,836.27, but the Laras
had refused to pay (for the reasons already above stated).

2. The Laras received benefits generated by their business relations with ML

FUTURES. Those business relations, according to the Larasthemselves,
spanned a period of 7 years; and they evidently found those relations to be of
such profitability as warranted their maintaining them for that not insignificant
period of time; otherwise, it is reasonably certain that they would have
terminated their dealings with ML FUTURES much, much earlier. In fact, even
as regards their last transaction, in which the Laras allegedly suffered a loss in
the sum of US$160,749.69, the Laras nonetheless still received some
monetary advantage, for ML FUTURES credited them with the amount of US
$75,913.42 then due to them, thus reducing their debt to US $84,836.27.
Given these facts, and assuming that the Lara Spouses were aware from the
outset that ML FUTURES had no license to do business in this country and
MLPI, no authority to act as broker for it, it would appear quite inequitable for
the Laras to evade payment of an otherwise legitimate indebtedness due and
owing to ML FUTURES upon the plea that it should not have done business in
this country in the first place, or that its agent in this country, MLPI, had no
license either to operate as a "commodity and/or financial futures broker."
Considerations of equity dictate that, at the very least, the issue of whether the
Laras are in truth liable to ML FUTURES and if so in what amount, and
Civpro/rule 2 & 3/mpperez Page 2
 COMMUNICATION MATERIALS AND DESIGN, INC.
vs.
THE COURT OF APPEALS
FACTS:
1. Petitioners COMMUNICATION MATERIALS AND DESIGN, INC. and
ASPAC MULTI-TRADE INC. are both domestic corporations, while petitioner
Francisco S. Aguirre is their President and majority stockholder. Private
Respondents ITEC, INC. and/or ITEC, INTERNATIONAL, INC. are
corporations duly organized and existing under the laws of the State of
Alabama, United States of America (a foreign corporation not licensed to do
business in the Philippines).
2. On August 14, 1987, ITEC entered into a contract with ASPAC referred to
as "Representative Agreement" initially for a term of 24 months and was
renewed for another 24 months. Pursuant to the contract, ITEC engaged
ASPAC as its "exclusive representative" in the Philippines for the sale of
ITEC's products, in consideration of which, ASPAC was paid a stipulated
commission (signed by G.A. Clark and Francisco S. Aguirre, presidents of
ITEC and ASPAC).
3. Through a "License Agreement" they’ve entered into on November 10,
1988, ASPAC was able to incorporate and use the name "ITEC" in its own
name. ASPAC Multi-Trade, Inc. became legally and publicly known as
ASPAC-ITEC (Philippines) which sold electronic products, exported by ITEC,
to their sole customer, the Philippine Long Distance Telephone Company.
4. To facilitate their transactions, ASPAC and PLDT executed a document
entitled "PLDT-ASPAC/ITEC PROTOCOL" which defined the project details
for the supply of ITEC's Interface Equipment in connection with the Fifth
Expansion Program of PLDT.
Civpro/rule 2 & 3/mpperez
5. One year into the second term of the Representative Agreement, ITEC
decided to terminate the same because of the alleged violation of ASPAC in
its contractual commitment as stipulated in their agreements.
6. ITEC charged the petitioners and another Philippine Corporation, DIGITAL
BASE COMMUNICATIONS, INC. the President of which is likewise petitioner
Aguirre, of using knowledge and information of ITEC's products specifications
to develop their own line of equipment and product support, which are similar,
if not identical to ITEC's own, and offering them to ITEC's former customer.
7. On January 31, 1991, ITEC, INC. filed a complaint with the Regional Trial
Court of Makati and sought to enjoin, first, preliminarily and then, after trial,
permanently; (1) DIGITAL, CMDI, and Francisco Aguirre and their agents and
business associates, to cease and desist from selling or attempting to sell to
PLDT and to any other party, products which have been copied or
manufactured "in like manner, similar or identical to the products, wares and
equipment of plaintiff," and (2) defendant ASPAC, to cease and desist from
using in its corporate name, letter heads, envelopes, sign boards and
business dealings, plaintiff's trademark, internationally known as ITEC; and
the recovery from defendants in solidum, damages of at least P500,000.00,
attorney's fees and litigation expenses.
8. Defendants filed a motion to dismiss 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".
9. RTC denied the MTD for being devoid of legal merit with a rejection of both
grounds relied upon and directed the issuance of a writ of preliminary
injunction.
10. Petitioners elevated the case to the Court of Appeals on a Petition for
Certiorari and Prohibition under Rule 65 of the Revised Rules of Court,
Page 3
assailing and seeking the nullification and the setting aside of the Order and
the Writ of Preliminary Injunction issued by the Regional Trial Court.
11. MR was also filed which was likewise denied. Hence, this Petition for
Review on Certiorari under Rule 45.
ISSUE: Whether or not ITEC has legal capacity to sue in Phil. courts.
HELD: YES. ITEC had been “engaged in” or “doing business” in the
Philippines. 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. 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.
Petitioner’s 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 plaintiff’s standing to sue,
Civpro/rule 2 & 3/mpperez
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
court’s 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
suit’s dismissal, deserves scant consideration.
Page 4
 ALFRED HAHN, petitioner,
vs.
COURT OF APPEALS and BAYERSCHE MOTOREN WERKE
AKTIENGSELLSCHAFT (BMW), respondents.
Facts:
1. Petitioner Alfred Hahn is a Filipino citizen doing business under the
name and style "Hahn-Manila." On the other hand, private respondent
BayerischeMotorenWerkeAktiengesellschaft (BMW) is a non-
Gresident foreign corporation existing under the laws of the former
Federal Republic of Germany, with principal office at Munich,
Germany.
2. On March 7, 1967, Alfred Hahn executed in favor of BMW a "Deed of
Assignment with Special Power of Attorney. Per the agreement, they
"continued business relations as has been usual in the past without a
formal contract."
3. But on February 16, 1993, in a meeting with a BMW representative
and the president of Columbia Motors Corporation (CMC), Jose
Alvarez, petitioner was informed that BMW was arranging to grant the
exclusive dealership of BMW cars and products to CMC, which had
expressed interest in acquiring the same.
4. On February 24, 1993, petitioner received confirmation of the
information from BMW which, in a letter, expressed dissatisfaction
with various aspects of petitioner's business, mentioning among other
things, decline in sales, deteriorating services, and inadequate
showroom and warehouse facilities, and petitioner's alleged failure to
comply with the standards for an exclusive BMW dealer.
5. Nonetheless, BMW expressed willingness to continue business
relations with the petitioner on the basis of a "standard BMW importer"
contract, otherwise, it said, if this was not acceptable to petitioner,
BMW would have no alternative but to terminate petitioner's exclusive
dealership effective June 30, 1993.
6. Petitioner protested, claiming that the termination of his exclusive
dealership would be a breach of the Deed of Assignment and insisted
that as long as the assignment of its trademark and device subsisted,
Civpro/rule 2 & 3/mpperez
he remained BMW's exclusive dealer in the Philippines because the
assignment was made in consideration of the exclusive dealership.
7. Because of Hahn's insistence, BMW withdrew on March 26, 1993 its
offer of a "standard importer contract" and terminated the exclusive
dealer relationship effective June 30, 1993.
8. On April 29, 1993, BMW proposed that Hahn and CMC jointly import
and distribute BMW cars and parts.
9. Hahn found the proposal unacceptable thus, on May 14, 1993, he
filed a complaint for specific performance and damages against BMW
to compel it to continue the exclusive dealership. Later he filed an
amended complaint to include an application for temporary restraining
order and for writs of preliminary, mandatory and prohibitory injunction
to enjoin BMW from terminating his exclusive dealership.
10. The case was raffled to Branch 104 of the Quezon City Regional Trial
Court, which on June 14, 1993 issued a temporary restraining order.
Summons and copies of the complaint and amended complaint were
served on the private respondent through the Department of Trade
and Industry, pursuant to Rule 14, §14 of the Rules of Court. The
order, summons and copies of the complaint and amended complaint
were later sent by the DTI to BMW via registered mail on June 15,
1993 and received by the latter on June 24, 1993.
11. On June 30, 1993, the trial court granted the writ of preliminary
injunction upon the filing of a bond of P100, 000.00. On July 13, 1993,
following the posting of the required bond, a writ of preliminary
injunction was issued.
12. On July 1, 1993, BMW moved to dismiss the case, contending that
the trial court did not acquire jurisdiction over it through the service of
summons on the Department of Trade and Industry, because it
(BMW) was a foreign corporation and it was not doing business in the
Philippines and that the execution of the Deed of Assignment was an
isolated transaction; that Hahn was not its agent because the latter
undertook to assemble and sell BMW cars and products without the
participation of BMW and sold other products; and that Hahn was an
indentor or middleman transacting business in his own name and for
his own account.
Page 5
 13. Hahn opposed the motion and argued that BMW was doing business order by BMW. Upon confirmation in writing that the vehicles had been
in the Philippines through him as its agent, as shown by the fact that registered in the Philippines and serviced by him, he received an additional
BMW invoices and order forms were used to document his 3% of the full purchase price. Hahn performed after-sale services, including,
transactions; that he gave warranties as exclusive BMW dealer; that warranty services for which he received reimbursement from BMW and all
BMW officials periodically inspected standards of service rendered by orders were on invoices and forms of BMW.
him; and that he was described in service booklets and international
publications of BMW as a "BMW Importer" or "BMW Trading Moreover, the Court distinguished an agent from a broker. The court
Company" in the Philippines. ruled that an agent receives a commission upon the successful conclusion of
14. The trial court deferred resolution of the motion to dismiss until after a sale. On the other hand, a broker earns his pay merely by bringing the buyer
trial on the merits for the reason that the grounds advanced by BMW and the seller together, even if no sale is eventually made.
in its motion did not seem to be indubitable.
15. BMW did not file any reconsideration and instead filed a petition
for certiorari with the Court of Appeals.
16. Court of Appeals dismissed petitioner's complaint against BMW and
held that petitioner was a mere indentor or broker and not an agent
because he alone had contacts with individuals or entities interested
in acquiring BMW vehicles.
17. Hence, this appeal by Petitioner contending that the Court of Appeals
erred (1) in finding that the trial court gravely abused its discretion in
deferring action on the motion to dismiss and (2) in finding that private
respondent BMW is not doing business in the Philippines and, for this
reason, dismissing petitioners case.

ISSUE: WHETHER OR NOT petitioner Alfred Hahn is the agent or distributor

in the Philippines of private respondent BMW.

HELD: YES.The Supreme Court held that agency is shown when Hahn
claimed he took orders for BMW cars and transmits them to BMW. Then BMW
fixes the down payment and pricing charges and will notify Hahn of the
scheduled production month for the orders, and reconfirm the orders by
signing and returning to Hahn the acceptance sheets.

The payment is made by the buyer directly to BMW. Title to cars

purchased passed directly to the buyer and Hahn never paid for the purchase
price of BMW cars sold in the Philippines. Hahn was credited with a
commission equal to 14% of the purchase price upon the invoicing of a vehicle

Civpro/rule 2 & 3/mpperez Page 6

LITONJUA GROUP OF COMPANIES, EDDIE LITONJUA and DANILO
LITONJUA, petitioners,
vs.
TERESITA VIGAN, respondent.
Facts:
1. TERESITA VIGAN’s version: She was hired by the Litonjua Group of
Companies on February 2, 1979 as telex operator. Later, she was
assigned as accounting and payroll clerk under the supervision of
DaniloLitonjua. She had been performing well until 1995, when
DaniloLitonjua who was already naturally a (sic) very ill-tempered, ill-
mouthed and violent employer, became more so due to business
problems. The incidents prompted Vigan to write DaniloLitonjua letters
asking why she was treated so and what was her fault. DaniloLitonjua
charged that Vigan had been hysterical, emotional and created
scenes at the office. He even required her to secure psychiatric
assistance. But despite proof that she was not suffering from
psychosis or organic brain syndrome as certified to by a Psychiatrist
of DaniloLitonjua’s choice still she was denied by the guards entry to
her work upon instructions again of DaniloLitonjua. Left with no
alternative, Vigan filed this case for illegal dismissal, alleging she
was receiving a monthly salary of P8,000.00 at the time she was
unlawfully terminated.
2. Litonjuas version: They negate the existence of the Litonjua Group
of Companies and the connection of Eduardo Litonjua thereto. They
contended that Vigan was employed by ACT Theater, Inc., where
DaniloLitonjua is a Director. They dispute the charge of illegal
dismissal for it was Vigan who ceased to report for work despite
notices and likewise contest the P8,000.00 monthly salary alleged by
Vigan, claiming it was merely P6,850.00.
They claim that Vigan was a habitual absentee. Her performance had
been satisfactory, but then starting March 15, 1996 she had become
emotional, hysterical, uncontrollable and created disturbances at the
office with her crying and shouting for no reason at all. The incident
Civpro/rule 2 & 3/mpperez
was repeated on April 3, 1996, May 24, 1996 and on June 4, 1996.
Thus alarmed, on July 24, 1996 Vigan was required by management
to undergo medical and psychological examination at the company’s
expense and naming three doctors to attend to her. Dr.Baltazar Reyes
and Dr. Tony Perlas of the Philippine General Hospital and Dr.
Lourdes Ignacio of the Medical Center Manila. But they claim that
Vigan refused to comply.
On August 2, 1996, Vigan again had another breakdown, hysterical,
shouting and crying as usual for about an hour, and then she just left
the premises without a word. The next day, August 3, 1996, Saturday,
she came to the office and explained she was not feeling well the day
before. After that Vigan went AWOL and did not heed telegram
notices from her employer made on August 26, 1996 and on
September 9, 1996. She instead filed the instant suit for illegal
dismissal."
3. On June 10, 1997, Labor Arbiter Ernesto S. Dinopol rendered his
decision4 finding Vigan diseased and unfit for work under Article
284 of the Labor Code5 and awarded corresponding separation pay.
4. Vigan appealed the decision to the National Labor Relations
Commission which modified7 the arbiter’s decision by ruling that Art.
284 of the Labor Code is inapplicable in the instant case but affirmed
the legality of the termination of the complainant based on her having
effectively abandoned her job; the rest of the decision was affirmed.
Vigan moved for a partial reconsideration which was denied in a
resolution dated August 7, 1998.
5. Vigan filed a petition for certiorari with the Court of Appeals which
reversed the NLRC Resolution. It ordered the respondents jointly and
severally to: (a) Reinstate VIGAN if she so desires; or (b) pay her
separation compensation in the sum of P8,000.00 multiplied by her
years of service counted from February 2, 1979 up to the time this
Decision becomes final; and in either case to pay Vigan; (c) full back
wages from the time she was illegally dismissed up to the date of the
finality of this Decision; (d) moral damages in the amount of
Page 7
 P40,000.00; (e) exemplary damages in the amount of P15,000.00;
and (f) attorney’s fees of P10,000.00.
6. Litonjuas filed their motion for reconsideration which was denied.
Hence, the filing of the instant petition for review on certiorari. alleging
the following grounds:

ISSUE: WHETHER OR NOT “LITONJUA GROUP OF COMPANIES", WHICH

HAS NO JURIDICAL PERSONALITY, BUT ONLY A GENERIC NAME TO
DESCRIBE THE VARIOUS COMPANIES WHICH THE LITONJUA FAMILY
HAS INTERESTS, CAN BE LEGALLY CONSTRUED AS RESPONDENT’S
EMPLOYER.

HELD: NO . Only natural or juridical persons or entities authorized by law may

be parties to a civil action and every action must be prosecuted and defended
in the name of the real parties in interest.Petitioners’ claim that Litonjua Group
of Companies is not a legal entity with juridical personality hence cannot be a
party to this suit deserves consideration since respondent failed to prove
otherwise. In fact, respondent Vigan’s own allegation in her Memorandum
supported petitioners’ claim that Litonjua group of companies does not exist
when she stated therein that instead of naming each and every corporation of
the Litonjua family where she had rendered accounting and payroll works, she
simply referred to these corporations as the Litonjua group of companies,
thus, respondent merely used such generic name to describe collectively the
various corporations in which the Litonjua family has business interest.
Considering the non-existence of the Litonjua group of companies as a
juridical entity and petitioner Eddie Litonjua’s denial of his connection in any
capacity with the ACT Theater, the supposed company where Vigan was
employed, petitioner Eddie Litonjuas should also be excluded as a party in this
case since respondent Vigan failed to prove Eddie Litonjua’s participation in
the instant case. It is respondent Vigan, being the party asserting a fact, who
has the burden of proof as to such fact10 which however, she failed to
discharge.

Civpro/rule 2 & 3/mpperez Page 8

 IMSON vs CA
FACTS:
 This case arose from a vehicular collision involving petitioner's Toyota
Corolla and a Hino diesel truck registered under the names of private
respondents FNCB Finance Corporation and Holiday Hills Stock and
Breeding Farm Corporation. The collision seriously injured petitioner and
totally wrecked his car.
 Petitioner filed with the RTC Baguio City a Complaint for
Damages against private respondents as registered owners of the truck;
truck driver; the beneficial owners of the truck and the truck insurer,
Western Guaranty Corporation.
 The Complaint prayed that defendants be ordered to pay, jointly and
severally, however defendant’s driver and beneficial owners failed to
answer and were declared in default.
 Petitioner and defendant insurer, entered into a compromise agreement
which provided:
o Defendant Western Guaranty Corporation admits that its total
liability under the laws and the insurance contract;
o In full settlement of its liability under the laws and the said
insurance contract, defendant Western Guaranty shall pay plaintiff
(herein petitioner);
o This compromise agreement shall in no way waive nor prejudice
plaintiffs (herein petitioner's) rights to proceed against the other
defendants with respect the remainder of his claims;
o This compromise agreement shall be a full and final settlement of
the issues between plaintiff (herein petitioner) and defendant
Western Guaranty;
 Trial Court dismissed the complaint for damages, after 18 months the
private respondent moved to dismiss all the cases against the defendants
since they are all indispensable parties under a common cause of action,
the dismissal of the case against defendant insurer must result in the
dismissal of the suit against all of them. The trial court denied the motion.
 Private respondent Holiday Hills Stock and Breeding Farm Corporation
assailed the denial order through a Petition for Certiorari, Prohibition
and Mandamus With Restraining Order filed with respondent Court of
Appeals.
Civpro/rule 2 & 3/mpperez
 CA reversed the trial court – applied the doctrine laid down in Lim Tanhu
v. Hon. Ramolete, adverted to essays that in a common cause of action
where all the defendants are indispensable parties, the court's power to
act is integral and cannot be split, such that it cannot relieve any of them
and at the same time render judgment against the rest.
ISSUE: WON the defendants in Civil Case are indispensable parties.
HELD: NO
 For Lim Tanhu to apply to the case at bench, it must be established that:
o (1) petitioner has common cause of action against private
respondents and the other defendants in Civil Case No. 248-R; and
o (2) all the defendants are indispensable parties to the case.
 Cause of action has a fixed meaning in this jurisdiction. It is the delict or
wrong by which the right of the plaintiff is violated by the defendant. The
question as to whether a plaintiff has a cause of action is determined by
the averments in the pleadings pertaining to the acts of the defendant.
Whether such acts give him a right of action is determined by substantive
law.
 Lim Tanhu will not apply to the case at bench for there is no showing that
petitioner has a common cause of action against the defendants in Civil
Case No. 248-R.
 Defendants in Civil Case No. 248-R are not all indispensable parties. An
indispensable party is one whose interest will be affected by the court's
action in the litigation, and without whom no final determination of the
case can be had. The party's interest in the subject matter of the suit and
in the relief sought are so inextricably intertwined with the other parties'
that his legal presence as a party to the proceeding is an absolute
necessity. In his absence there cannot be a resolution of the dispute of
the parties before the court which is effective, complete, or equitable.
 Conversely, a party is not indispensable to the suit if his interest in the
controversy or subject matter is distinct and divisible from the interest of
the other parties and will not necessarily be prejudiced by a judgment
which does complete justice to the parties in court. He is not
indispensable if his presence would merely permit complete relief between
Page 9
 him and those already parties to the action, or will simply avoid multiple
litigation.
 It is true that all of petitioner's claims in Civil Case No. 248-R is premised
on the wrong committed by defendant truck driver. Concededly, the truck
driver is an indispensable party to the suit.
 The other defendants, however, cannot be categorized as indispensable
parties. They are merely proper parties to the case. Proper parties have
been described as parties whose presence is necessary in order to
adjudicate the whole controversy, but whose interests are so far separable
that a final decree can be made in their absence without affecting them.
 It is easy to see that if any of them had not been impleaded as defendant,
the case would still proceed without prejudicing the party not impleaded.
Thus, if petitioner did not sue Western Guaranty Corporation, the omission
would not cause the dismissal of the suit against the other defendants.
 Even without the insurer, the trial court would not lose its competency to
act completely and validly on the damage suit. The insurer, clearly, is not
an indispensable party in Civil Case No. 248-R.
 Petition is granted, CA’s ruling is set aside, remanded to trial court.

Civpro/rule 2 & 3/mpperez Page 10

 SERVICEWIDE SPECIALISTS INC. vs CA
FACTS:
 The litigation concerns a motor vehicle, a Colt Galant Sigma 1600E, 1977
model, 4-door sedan, colored Baikal White, with Serial No. A-121-UL-493
and Engine No. 2G-171-34. The decisions of both the appellate court and
the trial court rest on the following representation of the facts:
 On August 29, 1977, EleuterioBondoc executed and delivered to Carmark
Philippines a promissory note in the sum of P66,119.04, payable in
instalments and in order to secure payment, a chattel mortgage was
executed in favor of Carmark Philippines over the aforementioned motor
vehicle which was subsequently assigned in favor of Filinvest Corporation,
with the conformity of EleuterioBondoc.
 On July 27, 1979, EleuterioBondoc, as vendor, executed a deed of sale
with assumption of mortgage of the balance of the account in favor of
Cesar Dollente which, upon approval by Filinvest Corporation, Cesar
Dollente executed and delivered to Filinvest Corporation a promissory
note in the amount of P37,528.83, payable in instalments.
 On October 26, 1979, Cesar Dollente, as vendor, executed a deed of sale
with assumption of mortgage over the aforementioned vehicle for the
balance of his account in favor of Ernesto Dollente.
 On September 28, 1979, Ernesto Dollente executed and delivered to
Filinvest Corporation a promissory note for the sum of P37,528.83,
payable in monthly instalments, secured by a chattel mortgage executed
between Cesar Dollente and Ernesto Dollente.
 Filinvest Corporation assigned all its rights and interests on the
promissory note and chattel mortgage to plaintiff, with notice to Ernesto
Dollente.
 Ernesto Dollente failed to pay monthly installments, plaintiff demanded
from said defendant the payment of the entire balance, which includes
interest thereon and to return the motor vehicle in question. However he
refused to pay and to return the motor vehicle.
 This case was filed and, upon its filing, a writ of seizure was issued and
the same was implemented by the sheriff. A counter-replevin bond having
been filed, defendant Armando Custodio, Jr. had obtained possession of
the mortgaged vehicle.
Civpro/rule 2 & 3/mpperez
 Defendant’s evidence shows that, on September 8, 1978, defendant
Armando Custodio, Jr. obtained the motor vehicle in question by purchase
from Ernesto Dollente. Ernesto Dollente bought the same on April 14,
1978 from Venus Motor Sales. When defendant bought the said vehicle
from Ernesto Dollente, he was issued a clearance from the Constabulary
Highway Patrol Group.
 Since then defendant has possessed the vehicle in question which was
registered in Urdaneta, Pangasinan.
 Lower court ruled in favour of petitioner, Ernesto Dollente's breach of the
chattel mortgage should not bind him, because he is not a privy to such
contract, is hardly acceptable, for the reason that the registration of the
chattel mortgage is an effective and binding notice to him of its existence.
 The transaction of Ernesto Dollente, which led to the transfer of the
registration of this motor vehicle in favor of defendant Armando Custodio,
Jr., is doubtful and must have been conveniently arranged or manipulated
to effect this transfer.
 It is settled that once a mortgage is registered with the Register of Deeds
and in the Land Transportation Commission, it is binding against anybody,
including defendant Armando Custodio, Jr.
 On appeal to it, the Court of Appeals saw merit in the contention of private
respondent that the dismissal at the instance of petitioner himself of the
amended complaint against Ernesto Dollente after a failure of summons
on him, was "fatal to the entire action" Dollente being, in the considered
view of the appellate court, an indispensable party to the proceedings.
ISSUE: WON the plaintiff (herein petitioner) who has predicated his right on
being the mortgagee of a chattel mortgage should implead the mortgagor in
his complaint that seeks to recover possession of the encumbered property in
order to effect its foreclosure.
HELD: YES
 In a suit for replevin, a clear right of possession must be established. A
foreclosure under a chattel mortgage may properly be commenced only
once there is default on the part of the mortgagor of his obligation secured
by the mortgage.
Page 11
 The replevin in the instant case has been sought to pave the way for the
foreclosure of the object covered by the chattel mortgage. The conditions
essential for that foreclosure would be to show, firstly, the existence of the
chattel mortgage and, secondly, the default of the mortgagor.
 These requirements must be established since the validity of the plaintiffs
exercise of the right of foreclosure are inevitably dependent thereon.
 It would thus seem, considering particularly an adverse and
independent claim of ownership by private respondent, that the lower
court acted improvidently when it granted the dismissal of the complaint
against Dollente, albeit on petitioner's (then plaintiff) plea, on the ground
that the "non-service of summons upon Ernesto Dollente (would) only
delay the determination of the merits of the case, to the prejudice of the
parties."
 An indispensable party is one whose interest will be affected by the court's
action in the litigation, and without whom no final determination of the
case can be had. The party's interest in the subject matter of the suit and
in the relief sought are so inextricably intertwined with the other parties'
that his legal presence as a party to the proceeding is an absolute
necessity. In his absence there cannot be a resolution of the dispute of the
parties before the court which is effective, complete, or equitable.
 Conversely, a party is not indispensable to the suit if his interest in the
controversy or subject matter is distinct and divisible from the interest of
the other parties and will not necessarily be prejudiced by a judgment
which does complete justice to the parties in court. He is not
indispensable if his presence would merely permit complete relief between
him and those already parties to the action or will simply avoid multiple
litigation.
 Failure of summons upon Ernesto Dollente, per the Sheriffs Return dated
July 19, 1983, is said to have been due to defendant's being no longer a
resident "at the given address as per information gathered from the
present occupant of the premises."
 It appears that the remedial measures provided in Rule 14 of the Rules of
Court regrettably have not been properly availed of; for instance,
substitute service of summons under Section 8 thereof could have been
resorted to.
 CA’s decision is affirmed.

Civpro/rule 2 & 3/mpperez Page 12

PANTRANCO NORTH EXPRESS vs STANDARD INSURANCE COMPANY
FACTS:
 In the afternoon of October 28, 1984, Crispin Gicale was driving the
passenger jeepney owned by his mother Martina Gicale, respondent
herein. It was then raining.
 While driving north bound along the National Highway in Talavera, Nueva
Ecija, a passenger bus, owned by Pantranco North Express, Inc.,
petitioner, driven by Alexander Buncan, also a petitioner, was trailing
behind.
 When the two vehicles were negotiating a curve along the highway, the
passenger bus overtook the jeepney. In so doing, the passenger bus hit
the left rear side of the jeepney and sped away.
 Crispin reported the incident to the Talavera Police Station and
respondent Standard Insurance Co., Inc. (Standard), insurer of the
jeepney. The total cost of the repair was P21,415.00, but respondent
Standard paid only P8,000.00. Martina Gicale shouldered the balance
of P13,415.00.
 Standard and Martina, respondents, demanded reimbursement from
petitioners Pantranco and its driver Alexander Buncan, but they refused.
This prompted respondents to file with the Regional Trial Court (RTC),
Branch 94, Manila, a complaint for sum of money.
 Petitioners specifically denied the allegations in the complaint and averred
that it is the Metropolitan Trial Court, not the RTC, which has jurisdiction
over the case.
 Trial court favored respondents Standard and Martina, affirmed by CA -
Totality Rule provided for under Sec. 19, Batas PambansaBilang 129, it is
the sum of the two claims that determines the jurisdictional amount; total
of the two claims is definitely more than P20,000.00 which at the time of
the incident in question was the jurisdictional amount of the Regional Trial
Court.
ISSUE: a. WON the trial court has jurisdiction over the subject of the action
considering that respondents’ respective cause of action against petitioners
did not arise out of the same transaction nor are there questions of law and
facts common to both petitioners and respondents. YES
Civpro/rule 2 & 3/mpperez
b. WON there is permissive joinder in this case. YES
HELD:
A. As previously stated, respondents’ cause of action against petitioners arose
out of the same transaction. Thus, the amount of the demand shall be the
totality of the claims
Respondent Standard’s claim is P8,000.00, while that of respondent Martina
Gicale is P13,415.00, or a total ofP21,415.00. Section 19 of B.P. Blg. 129
provides that the RTC has "exclusive original jurisdiction over all other cases,
in which the demand, exclusive of interest and cost or the value of the
property in controversy, amounts to more than twenty thousand pesos
(P20,000.00)."
Clearly, it is the RTC that has jurisdiction over the instant case. It bears
emphasis that when the complaint was filed, R.A. 7691 expanding the
jurisdiction of the Metropolitan, Municipal and Municipal Circuit Trial Courts
had not yet taken effect. It became effective on April 15, 1994.
B. Permissive joinder of parties requires that:
o (a) the right to relief arises out of the same transaction or series of
transactions;
o (b) there is a question of law or fact common to all the plaintiffs or
defendants; and
o (c) such joinder is not otherwise proscribed by the provisions of the
Rules on jurisdiction and venue.
In this case, there is a single transaction common to all, that is, Pantranco’s
bus hitting the rear side of the jeepney. There is also a common question of
fact, that is, whether petitioners are negligent. There being a single transaction
common to both respondents, consequently, they have the same cause of
action against petitioners.
To determine identity of cause of action, it must be ascertained whether the
same evidence which is necessary to sustain the second cause of action
would have been sufficient to authorize a recovery in the first.
Page 13
Here, had respondents filed separate suits against petitioners, the same
evidence would have been presented to sustain the same cause of action.
Thus, the filing by both respondents of the complaint with the court below is in
order. Such joinder of parties avoids multiplicity of suit and ensures the
convenient, speedy and orderly administration of justice.

Section 5(d), Rule 2 of the same Rules provides:

"Sec. 5. Joinder of causes of action. – A party may in one pleading
assert, in the alternative or otherwise, as many causes of action as he
may have against an opposing party, subject to the following conditions:x
x x (d) Where the claims in all the causes of action are principally for
recovery of money the aggregate amount claimed shall be the test of
jurisdiction."

The above provision presupposes that the different causes of action which are
joined accrue in favor of the same plaintiff/s and against the same defendant/s
and that no misjoinder of parties is involved.

The issue of whether respondents’ claims shall be lumped together is

determined by paragraph (d) of the above provision. This paragraph embodies
the "totality rule" as exemplified by Section 33 (1) of B.P. Blg. 129 which
states, among others, that "where there are several claims or causes of action
between the same or different parties, embodied in the same complaint, the
amount of the demand shall be the totality of the claims in all the causes of
action, irrespective of whether the causes of action arose out of the same or
different transactions."

Petition is denied. CA’s decision is affirmed.

Civpro/rule 2 & 3/mpperez Page 14

 SIOK PING TANG vs SUBIC BAY DISTRIBUTION INC
FACTS:
 Petitioner is doing business under the name and style of Able Transport.
Respondent Subic Bay Distribution, Inc. (SBDI) entered in two
Distributorship Agreements with petitioner and Able Transport in April
2002.
 Under the Agreements, respondent, as seller, will sell, deliver or procure
to be delivered petroleum products, and petitioner, as distributor, will
purchase, receive and pay for its purchases from respondent. The two
Agreements had a period of one year, commencing on October 2001 to
October 2002, which shall continue on an annual basis unless terminated
by either party upon thirty days written notice to the other prior to the
expiration of the original term or any extension thereof.
 Section 6.3 of the Distributorship Agreement provides that respondent
may require petitioner to put up securities, real or personal, or to furnish
respondent a performance bond issued by a bonding company chosen by
the latter to secure and answer for petitioner's outstanding account, and or
faithful performance of her obligations as contained or arising out of the
Agreement.
 Thus, petitioner applied for and was granted a credit line by the United
Coconut Planters Bank (UCPB), International Exchange Bank (IEBank),
and Security Bank Corporation (SBC). Petitioner also applied with the
Asia United Bank (AUB) an irrevocable domestic standby letter of credit in
favor of respondent. All these banks separately executed several
undertakings setting the terms and conditions governing the drawing of
money by respondent from these banks.
 Petitioner allegedly failed to pay her obligations to respondent despite
demand, thus, respondent tried to withdraw from these bank undertakings.
 Petitioner then filed with the Regional Trial Court (RTC) of Quezon City
separate petitions against the banks for declaration of nullity of the several
bank undertakings and domestic letter of credit which they issued with the
application for the issuance of a temporary restraining order (TRO) and
writ of preliminary injunction.
 Petitioner asked for the annulment of the bank undertakings/letter of credit
which she signed on the ground that the prevailing market rate at the time
of respondent's intended drawings with which petitioner will be charged of
Civpro/rule 2 & 3/mpperez
as interests and penalties is oppressive, exorbitant, unreasonable and
unconscionable rendering it against public morals and policy; banks
merely required the submission of a mere certification from the company
(respondent) that the customer (petitioner) has not paid its account (and
its statement of account of the client) without first verifying the truthfulness
of the alleged petitioner's total liability to the drawer thereon.
 The court then issued an Ordergranting the TRO and requiring petitioner
to implead respondent as an indispensable party and for the latter to
submit its position paper on the matter of the issuance of the injunction.
Petitioner and respondent submitted their respective position papers.
 The RTC found that both respondent and petitioner have reasons for the
enforcement or non-enforcement of the bank undertakings, however, as to
whether said reasons were justifiable or not, in view of the attending
circumstances, the RTC said that these can only be determined after a full
blown trial. It ruled that the outright denial of petitioner's prayer for the
issuance of injunction, even if the evidence warranted the reasonable
probability that real injury will occur if the relief for shall not be granted in
favor of petitioner, will not serve the ends of justice.
 Respondent filed with the CA a petition for certiorari with prayer for the
issuance of a TRO and writ of preliminary injunction against respondent
Judge Pizarro and petitioner.
 CA issued a Resolution granting the TRO prayed for by respondent after
finding that it was apparent that respondent has a legal right under the
bank undertakings issued by UCPB, SBC, and IEBank; and that until
those undertakings were nullified, respondent's rights under the same
should be maintained.
 CA issued a Supplemental Resolution wherein the Domestic Standby
Letter of Credit issued by AUB was ordered included among the bank
undertakings, to which respondent has a legal right.
 CA said that the grant or denial of an injunction rests on the sound
discretion of the RTC which should not be intervened, except in clear
cases of abuse.
 Nonetheless, the CA continued that the RTC should avoid issuing a writ of
preliminary injunction which would, in effect, dispose of the main case
without trial. It found that petitioner was questioning the validity of the
Page 15
 bank undertakings and letter of credit for being oppressive, unreasonable
and unconscionable.
 However, as provided under the law, private transactions are presumed to
be fair and regular and that a person takes ordinary care of his concerns.
 The CA ruled that the RTC's issuance of the injunction, which was
premised on the abovementioned justification, would be a virtual
acceptance of petitioner's claim, thus, already a prejudgment of the main
case. It also said that contracts are presumed valid until they are voided
by a court of justice, thus, until such time that petitioner has presented
sufficient evidence to rebut such presumption, her legal right to the writ is
doubtful.
 As to petitioner's claim of respondent's non-filing of a motion for
reconsideration before resorting to a petition for certiorari, the CA said that
it is not a rigid rule, as jurisprudence had said, that when a definite
question has been properly raised, argued and submitted in the RTC and
the latter had decided the question, a motion for reconsideration is no
longer necessary before filing a petition for certiorari.
 The court found that both parties had fully presented their sides on the
issuance of the writ of preliminary injunction and that the RTC had
squarely resolved the issues presented by both parties. Thus, respondent
could not be faulted for not filing a motion for reconsideration.
ISSUE: WON the banks are indispensable parties in this case.
HELD: NO (TAKE NOTE OF PARTIES’ CONTENTIONS ON pp. 464-466 of
SCRA)
We find that the banks are not indispensable parties in the petition for
certiorari which respondent filed in the CA assailing the RTC Order dated
December 17, 2002. In fact, several circumstances would show that the banks
are not parties interested in the matter of the issuance of the writ of
preliminary injunction, whether in the RTC or in the CA.
First. During the hearing of petitioner's prayer for the issuance of a TRO, the
RTC, in open court, elicited from the lawyer-representatives of the four banks
their position in the event of the issuance of the TRO, and all these
Civpro/rule 2 & 3/mpperez
representatives invariably replied that they will abide and/or submit to the
sound judgment of the court.
Second. When the RTC issued its Order dated December 17, 2002 granting
the issuance of the writ of preliminary injunction, the banks could have
challenged the same if they believe that they were aggrieved by such
issuance. However, they did not, and such actuations were in consonance
with their earlier position that they would submit to the sound judgment of the
RTC.
Third.When respondent filed with the CA the petition for certiorari with prayer
for the issuance of a TRO and writ of preliminary injunction, and a TRO was
subsequently issued, copies of the resolution were also sent to the banks,
although not impleaded, yet the latter took no action to question their non-
inclusion in the petition. Notably, the SBC filed an Urgent Motion for
Clarification on whether or not the issuance of the TRO has the effect of
restraining the bank from complying with the writ of preliminary injunction
issued by the RTC or nullifying /rendering ineffectual the said writ. In fact, SBC
even stated that the motion was filed for no other purpose, except to seek
proper guidance on the issue at hand so that whatever action or position it
may take with respect to the CA resolution will be consistent with its term and
purposes.
Fourth. When the CA rendered its assailed Decision nullifying the injunction
issued by the RTC, and copies of the decision were furnished these banks,
not one of these banks ever filed any pleading to assail their non-inclusion in
the certiorari proceedings.
Indeed, the banks have no interest in the issuance of the injunction, but only
the petitioner. The banks' interests as defendants in the petition for declaration
of nullity of their bank undertakings filed against them by petitioner in the RTC
are separable from the interests of petitioner for the issuance of the injunctive
relief.
Clearly, in filing the petition for certiorari, respondent should join as party
defendant with the court or judge, the person interested in sustaining the
Page 16
proceedings in the court, and it shall be the duty of such person to appear and o (i) where the issue raised is one purely of law or where public interest
defend, both in his own behalf and in behalf of the court or judge affected by is involved.
the proceedings.  Petition is denied, CA’s decision is affirmed.

In this case, there is no doubt that it is only the petitioner who is the person
interested in sustaining the proceedings in court since she was the one who
sought for the issuance of the writ of preliminary injunction to enjoin the banks
from releasing funds to respondent. As earlier discussed, the banks are not
parties interested in the subject matter of the petition. Thus, it is only petitioner
who should be joined as party defendant with the judge and who should
defend the judge's issuance of injunction.

Concededly, the settled rule is that a motion for reconsideration is a condition

sine qua non for the filing of a petition for certiorari. Its purpose is to grant an
opportunity for the court to correct any actual or perceived error attributed to it
by the re-examination of the legal and factual circumstances of the case.

The rule is, however, circumscribed by well-defined exceptions, such as

o (a) where the order is a patent nullity, as where the court a quo had
no jurisdiction;
o (b) where the questions raised in the certiorari proceeding have been
duly raised and passed upon by the lower court, or are the same as
those raised and passed upon in the lower court;
o (c) where there is an urgent necessity for the resolution of the
question and any further delay would prejudice the interests of the
Government or of the petitioner or the subject matter of the action is
perishable;
o (d) where, under the circumstances, a motion for reconsideration
would be useless;
o (e) where petitioner was deprived of due process and there is extreme
urgency for relief;
o (f) where, in a criminal case, relief from an order of arrest is urgent
and the granting of such relief by the trial court is improbable;
o (g) where the proceedings in the lower court are a nullity for lack of
due process; (h) where the proceedings were ex parte, or in which the
petitioner had no opportunity to object; and

Civpro/rule 2 & 3/mpperez Page 17

 Vda. De Salazar vs. CA, PrimitivoNepomuceno and
EmerencianaNepomunceno
Facts:
Both Nepomuceno filed separate complaints with the court of agrarian
relations of Malolos, Bulacan,for ejectment on the ground of
personalcultivation and conversion of land for useful non-agricultural purposes
against petitioner's deceased husband, Benjamin Salazar. The case went
through the agrarian court and RTC from 1970 to 1993 and decided in favour
of the Nepomucenos. Which an appeal was interposed in the name of
Benjamin Salazar on the ground of that Nepomucenos failed to satisfy the
requirements pertaining to personal cultivation and conversion of the
landholdings into non-agricultural uses. However it was rejected. A year later,
petitioner assailed the decision of the trial court before the CA by way of
petition for annulment of judgement. That it did not have jurisdiction over her
and the other heirs of her husband that said husband had already died on Oct
3 1991 which the trial still proceeded and rendered its decision on Aug 23
1993 w/o affecting the substitution under rule 3 sec 17 Rules of court.CA ruled
in favor of the validity of the challenged decision.
Issue: W/N there formal substitution of heirs in not necessary?
1.lawyer did not stop representing the deceased which lasted for about two
more years,counsel was allowed by the petitioner who was well aware of the
instant litigation to continue appearing as counsel until August 23, 1993 when
the challenged decision was rendered.
2.The wife testified in court and declared that her husband is already
deceased. She new therefore that there was a litigation against her husband,
which her and her childrens interest are involve.
3.The petition for judgement was filed 1 and ½ after the decision was
rendered.
4.Jurisdiction by estoppel, which jurisdiction over the person may be acquired
by simple appearance of the person in court.
Consequently, it undeniably being evident that the heirs themselves
sought their day in court and exercise their right to due process. The
ejectment being an action involving recovery of real property, is a real action
which is not extinguished by death. And that a judgement in an ejectment case
is conclusive between the parties and their successors in interest by title
subsequent to the commencement of the action. Petition dismiss.

Held: Yes. The CA correctly ruled that formal substitution of heirs is not
necessary when the heirs themselves voluntarily appeared, participated in the
case and presented evidence in defense of deceased defendant. As
expounded by CA: jurisprudential rule is that failure to make the substitution is
a jurisdictional defect, purpose of this procedural rule is to comply with due
process requirements. For the case to continue, the real party in interest must
be substituted for the deceased. The real party in interest is the one who
would be affected by the judgment. It could be the administrator or executor or
the heirs. In the instant case, the heirs are the proper substitutes. Substitution
gives them the opportunity to continue the defense for the deceased.
Substitution is important because such opportunity to defend is a requirement
to comply with due process. The following are the active participation of the
heirs in the defence after the death of Salazar:

Civpro/rule 2 & 3/mpperez Page 18

 STATE INVESTMENT HOUSE VS. CA ISSUE:W/N the substitution of SIHI by its assignee FIL NIPPON improper?

Facts: HELD:NEGATIVE.

 Cheng Ban Yek (CBY) is a domestic corp. engaged in business of Sec 19, Rule 3: transfer of interestin case of any transfer of interest, the action
manufacturing edible oil bearing the brand “BAGUIO OIL” and in the may be continued by or against the original party, unless the court upon
conduct of its business, it incurred millions of pesos obligation tp Pet. motion directs the person to whom the interest is transferred to be substituted
SIHI and ALLIED BANKING CORP who is the creditor of SIHI. in the action or joined with the original party.
 CBY and SIHI entered into an Agreement for the restructuring of
CBY's obligations to its creditors but excluding ALLIED. It has been held that a transferee PENDENTE LITE does not hav to be
 Mortgage Indenture was executed by CBY and FOUR SEAS as included or impleaded by name in order to be bound by judgement because
mortgagors and SIHI as mortgagees involving 23 parcels of registered
the action or suit may be continued for or against the original party or to the
land and improvements.
transferor and still be binding on the transferee.
 CBY defaulted in the payment of its obligations which are due and
demandable. SIHI notified the creditor's committee of CBY that it FIL NIPPON as transferee of SIHI's interestspendentelite, is not even an
would institute proceedings for the enforcement of the remedies under
the Mortgage indenture and later on the committee authorized SIHI to indispensable party in the case.
institute the appropriate foreclosure proceedings.
 SIHI instituted with the Respondent Court an action for foreclosure of
mortgage.
 ALLIED prayed for the dismissal of the complaint.
 SIHI then entered into a DEED OF ASSIGNMENT with FIL NIPPON
transferring all rights, interests, claims and cause of action arising out
from the agreement, which the latter agreed to assume all obligations
of SIHI.
 FIL NIPPON later on filed a “Motion for Substitution of Party Plaintiff
which was opposed by ALLIED on the grounds that it has a
counterclaim against SIHI arising from irregularities, excesses,
abuses and inimical acts commited by CBY.
 The respondent court (RTC)finding no legal basis for the objection of
ALLIED, the MOTION was granted.
 ALLIED MR was denied.
 CA: granted the petition for certiorari filed by ALLIED.
 Hence this petition for review on certiorari.

Civpro/rule 2 & 3/mpperez Page 19

 RIVIERA FILIPINA, INC. vs. COURT OF APPEALS
Facts:
1. November 23, 1982, respondent Juan L. Reyes (Reyes, for brevity) executed
a Contract of Lease with Riviera. The ten-year (10) renewable lease of
Riviera, which started on August 1, 1982, involved a 1,018 square meter
parcel of land located along Edsa, Quezon City, covered and described in
Transfer Certificate of Title No. 186326 of the Registry of Deeds of Quezon
City in the name of Juan L. Reyes.
2. The said parcel of land was subject of a Real Estate Mortgage executed by
Reyes in favor of Prudential Bank. Since the loan with Prudential Bank
remained unpaid upon maturity, the mortgagee bank extrajudicially foreclosed
the mortgage thereon. At the public auction sale, the mortgagee bank
emerged as the highest bidder. The redemption period was set to expire on
March 7, 1989. Realizing that he could not possibly raise in time the money
needed to redeem the subject property, Reyes decided to sell the same.
3. Reyes offered to sell the subject property to Riviera, through its President
Vicente C. Angeles, for Five Thousand Pesos (P5,000.00) per square
meter. However, Angeles bargained for Three Thousand Five Hundred Pesos
(P3,500.00) per square meter. Since Reyes was not amenable to the said
price and insisted on Five Thousand Pesos (P5,000.00) per square meter,
Angeles requested Reyes to allow him to consult the other members of the
Board of Directors of Riviera.
4. Seven (7) months later, or sometime in October 1988, Angeles communicated
with Reyes Riviera’s offer to purchase the subject property for Four Thousand
Pesos (P4,000.00) per square meter. However, Reyes did not accept the
offer. This time he asked for Six Thousand Pesos (P6,000.00) per square
meter since the value of the property in the area had appreciated in view of
the plans of Araneta to develop the vicinity.
5. In a letter dated November 2, 1988, Atty. Irineo S. Juan, acting as counsel for
Reyes, informed Riviera that Reyes was selling the subject property for Six
Thousand Pesos (P6,000.00) per square meter, net of capital gains and
transfer taxes, registration fees, notarial fees and all other attendant charges.
Civpro/rule 2 & 3/mpperez
6. To answer the foregoing letter and confirm their telephone conversation on
the matter, Riviera sent a letter dated November 22, 1988 to Atty. Juan,
counsel for Reyes, expressing Riviera’s interest to purchase the subject
property and that Riviera is already negotiating with Reyes which will take a
couple of days to formalize. Riviera increased its offer to Five Thousand
Pesos (P5,000.00) per square meter but Reyes did not accede to said price as
it was still lower than his quoted price of Six Thousand Pesos (P6,000.00) per
square meter. Angeles asked Reyes to give him until the end of November
1988 for Riviera’s final decision.
7. In a letter dated December 2, 1988, Angeles wrote Reyes confirming Riviera’s
intent to purchase the subject property for the fixed and final price of Five
Thousand Pesos (P5,000.00) per square meter, complete payment within sixty
(60) to ninety (90) days which “offer is what we feel should be the market price
of your property.” Angeles asked that the decision of Reyes and his written
reply to the offer be given within fifteen (15) days since there are also other
properties being offered to them at the moment.
8. In response to the foregoing letter, Atty. Juan sent a letter to Riviera dated
December 5, 1988 informing Riviera that Riviera’s offer is not acceptable to
his client. He further expressed, “let it be made clear that, much as it is the
earnest desire of my client to really give you the preference to purchase the
subject property, you have unfortunately failed to take advantage of such
opportunity and thus lost your right of first refusal in sale of said property.”
9. Meanwhile, on December 4, 1988, Reyes confided to Rolando P. Traballo, a
close family friend and President of Cypress, his predicament about the
nearing expiry date of the redemption period of the foreclosed mortgaged
property with Prudential Bank, the money for which he could not raise on time
thereby offering the subject property to him for Six Thousand Pesos
(P6,000.00) per square meter. Traballo expressed interest in buying the said
property, told Reyes that he will study the matter and suggested for them to
meet the next day.
10. They met the next day, December 5, 1988, at which time Traballo bargained
for Five Thousand Three Hundred Pesos (P5,300.00) per square meter. After
considering the reasons cited by Traballo for his quoted price, Reyes accepted
the same. However, since Traballo did not have the amount with which to pay
Page 20
 Reyes, he told the latter that he will look for a partner for that purpose. Reyes
told Traballo that he had already afforded Riviera its right of first refusal but
they cannot agree because Riviera’s final offer was for Five Thousand Pesos
(P5,000.00) per square meter.
11. Sometime in January 1989, apprehensive of the impending expiration in
March 1989 of the redemption period of the foreclosed mortgaged property
with Prudential Bank and the deal between Reyes and Traballo was not yet
formally concluded, Reyes decided to approach anew Riviera. For this
purpose, he requested his nephew, Atty. EstanislaoAlinea, to approach
Angeles and find out if the latter was still interested in buying the subject
property and ask him to raise his offer for the purchase of the said property a
little higher. As instructed, Atty. Alinea met with Angeles and asked the latter
to increase his offer of Five Thousand Pesos (P5,000.00) per square meter
but Angeles said that his offer is Five Thousand Pesos (P5,000.00) per square
meter.
12. Following the meeting, Angeles sent a letter dated February 4, 1989 to Reyes,
through Atty. Alinea, that his offer is Five Thousand Pesos (P5,000.00) per
square meter payment of which would be fifty percent (50%) down within thirty
(30) days upon submission of certain documents in three (3) days, the balance
payable in five (5) years in equal monthly installments at twelve percent (12%)
interest in diminishing balance. With the terms of this second offer, Angeles
admittedly downgraded the previous offer of Riviera on December 2, 1988.
13. Atty. Alinea conveyed to Reyes Riviera’s offer of Five Thousand Pesos
(P5,000.00) per square meter but Reyes did not agree. Consequently, Atty.
Alinea contacted again Angeles and asked him if he can increase his
price. Angeles, however, said he cannot add anymore. Reyes did not
expressly offer his subject property to Riviera at the price of Five Thousand
Three Hundred Pesos (P5,300.00) per square meter.
14. Sometime in February 1989, Cypress and its partner in the venture, Cornhill
Trading Corporation, were able to come up with the amount sufficient to cover
the redemption money, with which Reyes paid to the Prudential Bank to
redeem the subject property. On May 1, 1989, a Deed of Absolute Sale
covering the subject property was executed by Reyes in favor of Cypress and
Cornhill for the consideration of Five Million Three Hundred Ninety Five
Civpro/rule 2 & 3/mpperez
Thousand Four Hundred Pesos (P5,395,400.00). On the same date, Cypress
and Cornhill mortgaged the subject property to Urban Development Bank for
Three Million Pesos (P3,000,000.00).
15. Thereafter, Riviera sought from Reyes, Cypress and Cornhill a resale of the
subject property to it claiming that its right of first refusal under the lease
contract was violated. After several unsuccessful attempts, Riviera filed the
suit to compel Reyes, Cypress, Cornhill and Urban Development Bank to
transfer the disputed title to the land in favor of Riviera upon its payment of
the price paid by Cypress and Cornhill.
16. Following trial on the merits, the trial court dismissed the complaint of Riviera
as well as the counterclaims and cross-claims of the other parties.
17. Dissatisfied with the decision of the trial court, both parties appealed to the
Court of Appeals. However, the appellate court, through its Special Seventh
Division, rendered a Decision dated June 6, 1994 which affirmed the decision
of the trial court in its entirety.
18. From this decision, Riviera filed a motion for reconsideration, but the appellate
court denied the same.
Issue:WON the CA erred on deciding the petitioner’s appeal at the time when
the principal appellee is allegedly dead and no proper substitution of the
alleged deceases party has been made.
Held: NO.
Section 16 and 17 of Rule 3 of the Revised Rules of Court, upon which Riviera
anchors its argument, has already been amended by the 1997 Rules of Civil
Procedure. Even applying the old Rules, the failure of a counsel to comply
with his duty under Section 16 of Rule 3 of the Revised Rules of Court, to
inform the court of the death of his client and no substitution of such is
effected, will not invalidate the proceedings and the judgment thereon if the
action survives the death of such party, as this case does, since the death of
Page 21
 Reyes did not extinguish his civil personality. The appellate court was well filed a suit against Reyes, Cypress and Cornhill on the ground that they
within its jurisdiction to proceed as it did with the case since the death of a violated its right of first refusal under the lease contract.
party is not subject to its judicial notice. Needless to stress, the purpose 6. RTC ruled in favor of Reyes, Cypress, and Cornhill. On appeal, CA affirmed
behind the rule on substitution of parties is the protection of the right of every the decision of the RTC.
party to due process. This purpose has been adequately met in this case 7.
since both parties argued their respective positions through their pleadings in
the trial court and the appellate court. Besides, the Court has already
acquired jurisdiction over the heirs of Reyes by voluntarily submitting
themselves to our jurisdiction.
Shorter Version po: Ito ungsa sales naten! 

Facts:

1. In 1982, Reyes executed a 10-year (renewable)Contract of Lease with Riviera

Filipina over a parcel of land in EDSA. Under such contract, the lessee is
given aright of first refusal should the lessor decide to sell the property during
the terms of the lease.
2. Such property was subject of a mortgage executed by Reyes in favor of
Prudential Bank. Since Reyes failed to pay the loan with the bank, it
foreclosed the mortgage and it emerged as the highest bidder in the auction
sale.
3. Realizing that he could not redeem the property, Reyes decided to sell it and
offered it to Riviera Filipina for P5,000/sqm. However, it bargained for
P3,500/sqm. Reyes rejected such offer. After 7 months, it again bargained for
P4,000/sqm, which again was rejected by Reyes who asked for P6,000/sqm
price. After 2 months, it again bargained for P5,000/sqm, but since Reyes
insisted on P6,000/sqm price, he rejected Riviera's offer.
4. Nearing the expiry of the redemption period, Reyes and Traballo (his friend)
agreed that the latter would buy the same for P5,300. But such deal was not
yet formally concluded and negotiations with Riviera Filipina once again
transpired but to no avail.
5. In 1989, Cypress and Cornhill Trading were able to come up with the amount
sufficient to cover the redemption money, with which Reyes paid to Prudential
Bank to redeem the property. Subsequently, a Deed of Absolute Sale was
executed in favor of Cypress and Cornhill for P5.4M. Cypress and Cornhill
mortgaged the property in favor of Urban Dev. Bank for P3M. Riviera Filipina

Civpro/rule 2 & 3/mpperez Page 22

 Ang vs.Ang
FACTS:
On September 2, 1992, spouses Alan and EmAng (respondents) obtained a
loan in the amount of US$300,000.00 from Theodore and Nancy Ang
(petitioners). On even date, the respondents executed a promissory notein
favor of the petitioners wherein they promised to pay the latter the said
amount, with interest at the rate of ten percent (10%) per annum, upon
demand. However, despite repeated demands, the respondents failed to pay
the petitioners.
Thus, on August 28, 2006, the petitioners sent the respondents a
demand letter asking them to pay their outstanding debt which, at that time,
already amounted to (US$719,671.23), inclusive of the ten percent (10%)
annual interest that had accumulated over the years. Notwithstanding the
receipt of the said demand letter, the respondents still failed to settle their loan
obligation.
On August 6, 2006, the petitioners, who were then residing in Los
Angeles, California, United States of America (USA), executed their respective
Special Powers of Attorney in favor of Attorney Eldrige Marvin B. Aceron (Atty.
Aceron) for the purpose of filing an action in court against the respondents. On
September 15, 2006, Atty. Aceron, in behalf of the petitioners, filed a
Complaint for collection of sum of money with the RTC of Quezon City against
the respondents.
Issues: WON Atty. Aceron, being merely a representative of the petitioners, is
not the real party in interest in the case.
Held:Atty. Aceron, despite being the attorney-in-fact of the petitioners, is not a
real party in interest in the case below. Section 2, Rule 3 of the Rules of Court
reads:
Civpro/rule 2 & 3/mpperez
Sec. 2.Parties in interest. – A real party in interest is the party who stands to
be benefited or injured by the judgment in the suit, or the party entitled to the
avails of the suit. Unless otherwise authorized by law or these Rules, every
action must be prosecuted or defended in the name of the real party in
interest.
Interest within the meaning of the Rules of Court means material
interest or an interest in issue to be affected by the decree or judgment of the
case, as distinguished from mere curiosity about the question involved. A real
party in interest is the party who, by the substantive law, has the right
sought to be enforced.
Applying the foregoing rule, it is clear that Atty. Aceron is not a real
party in interest in the case below as he does not stand to be benefited
or injured by any judgment therein. He was merely appointed by the
petitioners as their attorney-in-fact for the limited purpose of filing and
prosecuting the complaint against the respondents. Such appointment,
however, does not mean that he is subrogated into the rights of petitioners
and ought to be considered as a real party in interest.
Being merely a representative of the petitioners, Atty. Aceron in his
personal capacity does not have the right to file the complaint below against
the respondents. He may only do so, as what he did, in behalf of the
petitioners – the real parties in interest. To stress, the right sought to be
enforced in the case below belongs to the petitioners and not to Atty.
Aceron. Clearly, an attorney-in-fact is not a real party in interest.
Page 23
 FORTUNE MOTORS v CA
FACTS: On March 29,1982 up to January 6,1984, private respondent
Metropolitan Bank extended various loans to petitioner Fortune Motors in the
total sum of P32,500,000.00 (according to the borrower; or P34,150,000.00
according to the Bank) which loan was secured by a real estate mortgage on
the Fortune building and lot in Makati, Rizal.
Due to financial difficulties and the onslaught of economic recession, the
petitioner was not able to pay the loan which became due.
For failure of the petitioner to pay the loans, the respondent bank initiated
extrajudicial foreclosure proceedings. After notices were served, posted, and
published, the mortgaged property was sold at public auction for the price of
P47,899,264.91 to mortgagee Bank as the highest bidder.
The sheriff's certificate of sale was registered on October 24, 1984 with the
one-year redemption period to expire on October 24,1985.
On October 21, 1985, three days before the expiration of the redemption
period, petitioner Fortune Motors filed a complaint for annulment of the
extrajudicial foreclosure sale alleging that the foreclosure was premature
because its obligation to the Bank was not yet due, the publication of the
notice of sale was incomplete, there was no public auction, and the price for
which the property was sold was "shockingly low".
Before summons could be served private respondent Bank filed a motion to
dismiss the complaint on the ground that the venue of the action was
improperly laid in Manila for the realty covered by the real estate mortgage is
situated in Makati, therefore the action to annul the foreclosure sale should be
filed in the Regional Trial Court of Makati.
The motion was opposed by petitioner Fortune Motors alleging that its action
"is a personal action" and that "the issue is the validity of the extrajudicial
Civpro/rule 2 & 3/mpperez
foreclosure proceedings" so that it may have a new one year period to
redeem.
On January 8, 1986 an order was issued by the lower court reserving the
resolution of the Bank's motion to dismiss until after the trial on the merits as
the grounds relied upon by the defendant were not clear and indubitable.
The Bank filed a motion for reconsideration of the order dated January 8, 1986
but it was denied by the lower court in its order dated May 28, 1986.
The respondent Bank filed a petition for certiorari and prohibition in the Court
of Appeals and it was granted. The complaint in the Civil Case No. 85-33218
is dismissed without prejudice to its being filed in the proper venue.
A motion for reconsideration was filed on August 11, 1986 on the said decision
and on October 30, 1986 a resolution was issued denying such motion for
reconsideration.
Hence, the petition for review on certiorari.
ISSUE: Whether petitioner's action for annulment of the real estate mortgage
extrajudicial foreclosure sale of Fortune Building is a personal action or a real
action for venue purposes.
HELD: Petition Denied.Real Action.
In a real action, the plaintiff seeks the recovery of real property, or as indicated
in Sec. 2 (a) of Rule 4, a real action is an action affecting title to real property,
or for the recovery of possession, or for the partition or condemnation of, or
foreclosure of a mortgage on real property.
Real actions or actions affecting title to, or for the recovery of possession, or
for the partition or condemnation of, or foreclosure of mortgage on real
property, must be instituted in the Court of First Instance of the province where
the property or any part thereof lies.
Page 24
Personal actions upon the other hand, may be instituted in the Court of First
Instance 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.

A prayer for annulment or rescission of contract does not operate to efface the
true objectives and nature of the action which is to recover real property.

An action for the annulment or rescission of a sale of real property is a real

action. Its prime objective is to recover said real property. An action to annul a
real estate mortgage foreclosure sale is no different from an action to annul a
private sale of real property.

While it is true that petitioner does not directly seek the recovery of title or
possession of the property in question, his action for annulment of sale and his
claim for damages are closely intertwined with the issue of ownership of the
building which, under the law, is considered immovable property, the recovery
of which is petitioner's primary objective. The prevalent doctrine is that an
action for the annulment or rescission of a sale of real property does not
operate to efface the fundamental and prime objective and nature of the case,
which is to recover said real property. It is a real action. Respondent Court,
therefore, did not err in dismissing the case on the ground of improper venue
(Sec. 2, Rule 4) which was timely raised (Sec. 1, Rule 16).

Since an extrajudicial foreclosure of real property results in a conveyance of

the title of the property sold to the highest bidder at the sale, an action to annul
the foreclosure sale is necessarily an action affecting the title of the property
sold. It is therefore a real action which should be commenced and tried in the
province where the property or part thereof lies.

Civpro/rule 2 & 3/mpperez Page 25

 CLAVECILLIA RADIO SYSTEM, petitioner-appellant, New Rules of Court, governing venue of actions in inferior courts, provides in
vs. its paragraph (b) (3) that when "the action is not upon a written contract,
HON. AGUSTIN ANTILLON, as City Judge of the Municipal Court of then in the municipality where the defendant or any of the defendants resides
Cagayan de Oro City or may be served with summons."
and NEW CAGAYAN GROCERY, respondents-appellees.
Settled is the principle in corporation law that the residence of a corporation is
FACTS: the place where its principal office is established. Since it is not disputed that
the Clavecilla Radio System has its principal office in Manila, it follows that the
1. June 22, 1963- New Cagayan Grocery filed a complaint against the suit against it may properly be filed in the City of Manila.
Clavecilla Radio System alleging that on March 12, 1963,
CLAVECILLIA omitted the word NOT between the words "WASHED" As stated in Evangelista vs. Santos, et al., supra, the laying of the venue of an
and "AVAILABLE," in a letter addressed to NEW CAGAYAN action is not left to plaintiff's caprice because the matter is regulated by the
GROCERY for transmittal in the Cagayan de Oro branch office, thus Rules of Court. Applying the provision of the Rules of Court, the venue in this
changing entirely the contents and purport of the same and causing case was improperly laid.
the said addressee to suffer damages.
2. Clavecilla Radio System filed a motion to dismiss the complaint on the
grounds that it states no cause of action and that the venue is
improperly laid.
3. City Judge, on September 18, 1963, denied the motion to dismiss for
lack of merit and set the case for hearing.
4. Hence, the Clavecilla Radio System filed a petition for prohibition with
preliminary injunction with the Court of First Instance praying that the
City Judge, Honorable Agustin Antillon, be enjoined from further
proceeding with the case on the ground of improper venue.
5. CFI held that the Clavecilla Radio System may be sued either in
Manila where it has its principal office or in Cagayan de Oro City
where it may be served, as in fact it was served, with summons
through the Manager of its branch office in said city.
6. Clavecilla Radio System appealed to SC and contends that the suit
against it should be filed in Manila where it holds its principal office.

ISSUE: WON the suit against CLAVECILLIA RADIO SYSTEM it should be

filed in Manila where it holds its principal office or in CDO.

HELD: MANILA.It is clear that the case for damages filed with the city court is
based upon tort and not upon a written contract. Section 1 of Rule 4 of the

Civpro/rule 2 & 3/mpperez Page 26

 Young Auto Supply vs. Court of Appeals
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
Civpro/rule 2 & 3/mpperez
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.
Page 27