Civpro Case Digests 2C. Justice de Leon Cases (for motion): Butch Victory Liner v.

Malinias: A motion without a notice of hearing (to all parties concerned, including the date of hearing) is a mere scrap of paper that does not toll the period to appeal and upon the expiration of the 15 day period, the questioned order/decision becomes final and executory. y A bus owned by Victory Liner and a truck used by Malinias collided in La Union. This resulted into damage on both vehicles. Malinias filed a complaint for sum of money (47k) and damages against Victory Liner in the MTC of Benguet. In the trial, Victory Liner did not appear and was declared to have waived its right to present evidence. In January 13, 1998, the MTC ruled in Malinias favor and awarded him 82k. Victory Liner filed a motion for reconsideration. It stated: Please submit the foregoing Motion for Reconsideration for hearing at a schedule and time convenient to this court and the parties In February 23, 1998,iIt was denied for not conforming with the mandatory requirements and was treated as a mere scrap of paper. Thus, it was deemed to have not tolled the reglementary period to appeal. The decision of the MTC was deemed to have become final and executory. Victory Liner got desperate and filed several petitions: First, a petition for relief from judgment with the MTC. Second, a petition for certiorari (rule 65) in the RTC. Third, petition for certiorari to annul judgment (rule 47) in the CA. All were denied on the ground that the decision was already final and executory. y Sec of Finance, Sec of Justice, Auditor general and the Office of the President and all of these were denied. He went to the lower court (petition for mandamus) to have the resolution annulled and for him to be reinstated. The respondents (members of the board of Lanao) moved to dismiss on the ground of lack of cause of action and it was granted. The motion to dismiss was filed in Feb 1, 1961 and set for hearing on Feb 10. On Feb 8, Llanto moved to postpone (not acted upon) and he failed to appear on the hearing date. o However, on March 4, 1961, he filed his written opposition to the motion to dismiss. On May 15, 1961, the court dismissed Llantos petition, including therein his arguments and thereafter concluding that Llanto did NOT have a cause of action. o He filed a motion for reconsideration and this was thereafter denied Llanto contests the dismissal of his petition because the court granted the motion to dismiss without any hearing.

Issue: Was the dismissal void due to lack of hearing on the motion to dismiss? y No. The SC here stated the rationale for requiring a hearing on a motion. The court elucidated that its purpose is to enable the parties to adduce evidence in support of their opposing claims (due process, the party opposing the motion needs to be given his day in court) In this case, however, the motion to dismiss is due to lack of cause of action. Existence of a cause of action or lack thereof is determined by the allegations in the complaint and is question of law. Llanto was able to file his written opposition and the order of dismissal took into consideration his arguments against the motion to dismiss. There was no need for hearing. Furthermore, his motion for reconsideration cured the defect of lack of hearing

Issue: Was the motion of Victory Liner valid? y y No. In fact, the SC held that the motion filed in the MTC was the most crucial failure of Victory Liner. It cited Sections 5 and 6 of rule 15 which stated the requirements for a valid motion namely: o A date must be set for hearing by the applicant o The notice of hearing shall be addressed to the parties concerned and shall specify the time and date of the hearing o There must be proof of service of the notice of hearing of the motion Because of this failure, the motion failed to toll the period to appeal. It was not deemed to have been filed. A motion without a notice of hearing is a mere scrap of paper. o The rationale behind this rule is plain: Unless the movant sets the time and place of hearing, the court will be unable to determine whether the adverse party agrees or objects to the motion and if he objects, to hear him on his objection, since the rules themselves do not fix any period within which he may file his reply/opposition

Vlason Enterprises v. CA: shit case: y y Sec 4 and 5 of the RoC ideally requires a movant to address and serve on the counsel of the adverse party the notice of hearing of its motion. Service of a copy of a motion must contain a notice of the time and the place of hearing. There are, however, exceptions to the rule: o Where a rigid application will result in a manifest failure or miscarriage of justice, especially if a party successfully shows that the alleged defect in the questioned final and executory judgment is not apparent on its face or from the recitals contained therein o Where the interest of substantial justice will be served o Where the resolution of the motion is addressed solely to the sound and judicious discretion of the court o Where the injustice to the adverse party is not commensurate to the degree of his failure to comply with prescribed procedure In this case, Vlason was not informed of any cause of action against it. It was not validly summoned. Its vessels that it used for its salvaging business was levied upon and sold in execution to satisfy a supposed judgment against it. To allow this to happen 1

Lanto v. Dimaporo: No need for hearing on the motion IF the adverse party had sufficient opportunity to oppose the motion to dismiss. y y The position that was previously held by Llanto was abolished due to a resolution of the provincial board of Lanao del Norte. He appealed to the CSC, y

Civpro Case Digests 2C. Justice de Leon simply because of its failure to comply with the notice requirement would result into manifest injustice. y Cases (Motion to dismiss) Boticano v. Chu: Chu was held in default. This doesnt mean that he didnt have the chance to question the courts jurisdiction over his person. He subsequently filed pleadings and even voluntarily appeared in court. Therefore, he cannot just raise the question of jurisdiction only for the first time in his appeal to the CA. y Boticanos truck carrying logs was rear-ended by a truck driven by Sigua and owned by Chu. Chu agreed to pay for the damages but when he thereafter failed to comply. Summons was not duly served on Sigua but it was served on Chu, through his wife. It was served at their dwelling. Boticano filed a complaint with the RTC of Nueva Ecija. Chu was declared to have been in default for failure to file an answer, and Boticano was allowed to present his evidence ex-parte. Chu an was adjudged to be negligent and was ordered to pay actual damages, 73.7k as unrealized income and attorneys fees. Chu timely filed an appeal and was even granted an extension. Boticano filed a motion to dismiss the appeal and it was dismissed. The case went to the CA and the CA ordered the case to be remanded to the RTC because the RTC did not properly acquire jurisdiction over Chu. The CA agreed with Chus argument that summons was not validly served on him. y Meanwhile, the CA case held that the only remaining balance that Petitioners had to pay was only 1.4M In response, DATICOR filed a case against PDCP and FBTC to get back the excess payment they made (CIVIL CASE 1) and the RTC ordered PDCP to give back the excess payment o PDCP appealed this order (CIVIL CASE 2) and the CA ruled that indeed, the petitioners outstanding obligation was 1.4M and it cannot be increased or decreased. However, the CA ruled that it was FBTC that should return the amount of (only) 965k, the amount that DATICOR prayed for. Thereafter, DATICOR filed a complaint against FEBTC to recover the excess payment (CIVIL CASE 3). FBTC denied responsibility and only wanted to pay the 965k o FBTC then filed a complaint against PDCP, alleging that it should pay the 965k and the complete overpayment o In this case (CIVIL CASE 3), the most important one, the RTC dismissed DATICORs complaint against FBTC, because it amounted to a splitting of a cause of action and because of res judicata. 

Issue: Is DATICOR entitled to collect the full overpayment from FBTC? No y First off, the SC ruled that Civil Case 2 had the effect of res judicata. The judgment in Civil Case 2 was a final judgment: it ruled that DATICOR overpaid by 5.3M, FBTC must only pay 965k and that PDCP had no more claim against DATICOR To allow re-litigation of the issue in that was settled in CIVIL CASE 2 that was finally settled would allow the splitting of a cause of action, which a ground for dismissal under the RoC. o This rule prevents a party from dividing a single or indivisible cause of action it into several parts or claims and instituting two or more actions based on it o Clearly then, the judgment in CIVIL CASE 2 bars further recovery Basically, DATICOR cant ask FBTC to overpay because their rights were already litigated. Its cause of action was based on the same facts because the same alleged wrongful act (refusing to return the overpayment) is the one put at issue. Res Judicata Elements: 1. Finality of Former Judgment 2. Court which rendered judgment had jurisdiction 3. Judgment must be on the merits 4. There must be between the first and second actions, identity of parties, SM and causes of action

Issue: Did the RTC validly acquire jurisdiction over Chu? Can Chu validly raise the question of jurisdiction only for the first time on appeal? y y y YES the RTC had jurisdiction and NO, Chu cannot question jurisdiction over his person for the first time in appeal. The fact that Chu was declared in default is of no moment. He had a chance to question the RTCs jurisdiction in the subsequent pleadings he filed. Besides, he was deemed to have voluntarily submitted himself to the courts jurisdiction. He did this by filing a notice of appeal, appeal bond, motion for extension to file record on appeal, opposition to plaintiffs motion to dismiss appeal. He also appeared in person in a hearing. His voluntary appearance is deemed to be equivalent to service.

y Del Rosario v. Far East Bank and Trust Company: Elements of Res judicata y Petitioner DATICOR and Respondent PDCP entered into an agreement whereby PDCP extended to DATICOR a foreign loan of 4.4M (dollar loan and peso loan) with various rates of interest on both Petitioners paid a total of 3M but was still left with an outstanding balance of more than 10M. Petitioners contested this loan for being usurious and this was pending in a CA case. o Meanwhile PDCP assigned its receivables to co-respondent FBTC o FBTC and DATICOR agreed that DATICOR would pay, and they did, 6.4M as full settlement

Civpro Case Digests 2C. Justice de Leon Halimao v. Villanueva (1996 case): If ground for motion to dismiss is RJ, it does not operate as a hypothetical admission of the alleged facts. However, the general rule is that a MTD based on lack of cause of action operates as a hypothetical admission of all the facts alleged therein. y Halimao wrote the chief justice and said that the respondents Attys Villanueva and Ferrer entered the Oo Kian Tiok Compound in Cainta with guns. Halimao was the caretaker of the compound. He wishes to have them disbarred for serious misconduct. The respondents argued that the complaint was a mere duplication of an already dismissed administrative case against them filed by Danilo Hernandez (a security guard of the compound) They filed a motion to dismiss. The Investigating Commissioner of the IBP held that res judicata applied, as though the parties were different, they substantially had the same interests Halimao argues that by filing a motion to dismiss, the respondents hypothetically admitted the facts alleged in the complaint. pleadings. It can look at the records, apply relevant laws and jurisprudence to adjudge whether or not there really is a cause of action. y Tan Kiat, his complaint, argues that he bought 2 parcels of land from Tan Keh. The title couldnt be transferred to his name because Tan was not yet a citizen. Thereafter, Tan Keh sold the lands to the Remigio Tan with the understanding that they would only hold it in trust for Tan Kiat. To assure Tan Kiat, Tan leased the properties him. Tan died and his heirs never transferred the subject properties. In fact, his heirs transferred it to their names. Tan Kiat, as aforementioned, filed a case for recovery of property. The Tans filed a MTD alleging lack of cause of action, prescription, res judicata, waiver/extinguishment/laches. The RTC dismissed the case. The CA set aside the dismissal, stating that the complaint had a cause of action because by filing a motion to dismiss based on lack of cause of action, the Tans hypothetically admitted all the facts alleged therein.

y y

Issue: Did the respondents hypothetically admit the alleged facts in light of their motion to dismiss based on res judicata? y NO. A motion to dismiss is considered a hypothetical admission of the facts alleged when the ground for dismissal is the failure of the complaint to state a cause of action. When such motion is filed based on the aforesaid ground, the defendant in effects says that even assuming the facts to be as alleged by the plaintiff, he has still failed to prove that he had a right that was violated. (Fine, even if its true, but you still dont have a cause of action) This rule DOES NOT apply to a case where the defendant files a motion to dismiss based on: 1. Lack of jurisdiction over the person/SM/nature of the action 2. Improper venue 3. Lack of capacity to sue 4. Litis Pendencia 5. Res Judicata 6. Prescription 7. Unenforceability In such cases, the hypothetical admission is limited to the facts alleged in the complaint which relate to and are necessary for the resolution of these grounds as preliminary matters involving substantive or procedural laws. In this case, the investigating commissioner properly dismissed the case for res judicata, it being that the two cases were the same (Both Hernandez and Halimao were employed at the compound) The admin case brought by Hernandez was barred for want of prima facie showing of professional misconduct. The issue was settled in the FIRST admin case.

Issue: Was the CAs order improper? YES Should the dismissal be upheld? YES y There are limitations to the general rule that averments in the complaint are deemed hypothetically admitted upon the filing of a motion to dismiss based on the failure to state a cause of action. A MTD based on this does not admit: 1. The truth of mere description of fraud 2. Allegations of legal conclusions 3. An erroneous statement of law 4. Inferences from facts not stated 5. Conclusions of law 6. Allegations of fact, the falsity of which is subject to judicial notice 7. Surplusage/irrelevant matters 8. Scandalous matter 9. Legally impossible facts 10. General averments contradicted by more specific avrements A more judicious resolution of a MTD necessitates that the court should not be constrained to the consideration of facts alleged in the complaint and inferences fairly deducible therefrom. Courts may consider facts within the range of judicial notice and other relevant laws and jurisprudence. They can also examine records/documents incorporated into the complaint. The court found here the following: o Tan Kiat cannot question his landlords ownership, him being the lessee o Tan was able to mortgage the lands in question therefore he was the absolute owner o There was no trust, express or implied Clearly then, the complaint DID NOT have a cause of action. It has also prescribed, because of the lapse of the 10 year period for reconveyance and because of laches, the complaint being filed 18 years after the land was registered in the name of the Tans. 3

y Tan v. CA and Tan Kiat (1998 case): Limitation on the Halimao Doctrine: The hypothetical admission of the facts in a MTD based on lack of cause of action does not mean that the court is constrained to the facts in the

Civpro Case Digests 2C. Justice de Leon Asia Production and Wang v. Pano, Hua and Dy y y Hua and Dy claimed to have been owners of a building constructed on a lot leased from a certain San Andres. They ORALLY agreed to sell the building to petitioners for 170k, with the ORAL assurance that that they would also transfer their contract of lease to the petitioner. Petitioners constructed a factory on the lot and made several payments (reaching 50k) to Hua and Dy. However, the respondents did not execute a deed of sale nor an assignment of the lease. In response, petitioners went to court and filed a complaint for recovery of sum of money. Dy filed a MTD on the ground that the action is covered by the statute of frauds therefore it must be in writing. The RTC granted the MTD, agreeing with Dy that the agreement shouldve been in writing to be enforceable (lease agreement for a period longer than one year) Yes. The doctrine of exhaustion of admin remedies was not complied with. This calls for resort first to the appropriate admin authorities in the resolution of a controversy falling under their jurisdiction before the same may be elevated to the courts of justice. (Go to admin bodies first and have them resolve it before going to Court) o Non-observance of this doctrine results in lack of a cause of action, which is a ground for dismissal. This deficiency is NOT jurisdictional and failure to object to this in a MTD operates as a waiver. In this case however, the petitioners timely brought up the issue in their MTD. The respondents should have gone first to DENR because DENR is empowered to rule in the first instance of any controversy relating to the violations of a TLA. This comes within their expertise so they can properly evaluate evidence to resolve factual issues coming within their competence.

Issue: Was the MTD properly granted? NO y y The SoF was not designed to perpetuate fraud. Furthermore, it only makes ineffective actions for specific performance of the contracts covered by it. The SoF applies only to executory contracts and in actions for their specific performance. It does NOT apply to actions which are neither for violation of a contract nor for the performance thereof. In this case, the contract was already partially performed (due to the payment) More importantly, in this case, the complaint petitioners filed was NOT for specific performance of the agreement to sell and to assign the leasehold right. They merely seek to recover their partial payment for the building. By their motion to dismiss, private respondents hypothetically admitted the truth of the allegations in the complaint (that the petitioners are seeking to recover the 50k partial payment they made) o Logically, it was just really for collection of sum of money. To reiterate, the action is not one for specific performance so the SoF does not apply and even if it was, it still wont apply since it was already partially performed.

Municipality of Binan v. CA and Garcia: a preliminary hearing on an affirmative defense for failure to state a cause of actions is NOT necessary y The petitioner Municipality, through its mayor, filed an unlawful detainer case against Garcia in the MTC, alleging that it was not amenable to extending the lease contract that it had. Garcia, in his answer, argues that he still had a right to stay (the lease for 25 years still hasnt expired AND that he exercised his option to renew) Garcia then filed a Motion for preliminary hearing as if a motion to dismiss has been filed on the ground that the complaint had no cause of action. Petitioner opposed the motion and the MTC ordered Garcia to vacate. Garcia then filed a motion before the MTC praying that the issues raised in the motion for preliminary hearing be resolved first because it was in the nature of a motion to dismiss. His motion was not granted. Garcia appealed to the RTC and in the meantime, upon motion of the petitioner, the judge issued a writ of execution pending appeal. Garcia went to CA, arguing that he was not sent a copy of the motion (for execution pending appeal) The CA overturned the lower courts, holding that under the RoC, no motion shall be acted upon by the court w/o proof of prior notice. It also annulled the order for Garcia to vacate because the MTC did not grant the preliminary hearing.

y y y

Sunville Timber v. Abad: Non-observance of doctrine of exhaustion of admin remedies can be a ground to dismiss (lack of cause of action) y Sunville was granted a TLA authorizing it to cut forest land in Zamboanga for 10 years. The private respondents then filed a petition with the DENR for the cancellation of the TLA on the ground of serious violations of the TLA. They subsequently filed a complaint for injunction in the RTC of Pagadian City against the petitioner. Petitioner moved to dismiss the civil case for injunction on the ground that the court did not have jurisdiction and that the respondents have not yet exhausted the administrative remedies. This was denied. On appeal, the CA held that this case falls under one of the exceptions of the doctrine of exhaustion of admin remedies because of the urgency of the matter and public interest (The logging was causing flooding)

Issue: Was the CA correct in overturning the lower courts? y No. The CA was wrong. The lower court did NOT commit GADLEJ in when it failed to conduct a preliminary hearing as prayed for in Garcias motion for prelim hearing as if a motion to dismiss has been filed o This is because the said motion of Garcia is anchored on the ground that the complaint allegedly states no cause of action since the original term stipulated in the contract (25 yrs) has not yet expired. 4

Issue: Should the MTD be granted?

Civpro Case Digests 2C. Justice de Leon y This was 1993 so at this time, the rule (now Rule 16 sec 6) stated: Any of the grounds for dismissal provided for in this rule may be pleaded as an affirmative defense and a preliminary hearing may be had thereon as if a motion to dismiss had been filed This provision allows the grounds for a MTD to be set up as affirmative defenses in the answer (in case no MTD was filed) o Note: Now, the rule states At the discretion of the court x x x a preliminary hearing may be had This hearing, however, is NOT mandatory for it rests on the sound discretion of the court. Moreover, a preliminary hearing on an affirmative defense for failure to state a cause of actions is NOT necessary o This is because the courts must determine the sufficiency of the allegations in the complaint itself (w/n it states a cause of action) The sufficiency of the cause of action must appear on the face of the complaint. No extraneous matter may be considered, nor facts not alleged. this was before the Tan Kiat case, which obviously is contradictory to this. However, the law expressly powers NPC to directly service all the requirements of a BOI registered enterprise, like FINE. The CA committed GADLEJ in upholding the injunction since NPC was fully within its right to directly service FINE. Meralcos petition is dismissed.

Napocor and FINE Chemicals v. CA and Meralco (Alternative remedy if motion to dismiss is denied: Rule 65 GADLEJ) y FINE Chemicals filed an application for a direct power connection with NPC. NPC, acting on the same, asked Meralco if it would grant FINE a direct power connection too (Because NAPOCOR and Meralco agreed not to compete) Meralco told NPC not to grant FINEs request. Meralco stated that it is capable of serving FINEs power requirement. NPC ignored this and proceeded to supply electricity to FINE. Meralco went to the RTC of Pasig and filed a petition for prohibition and mandamus with injunction against NPC and FINE. FINE filed a motion to dismiss on the ground that the allegations of the petition failed to state a cause of action. The RTC, however, denied the motion to dismiss, stating that based on the facts alleged, a cause of action exists. FINE went to the CA, filed a petition for certiorari, prohibition and mandamus, which was also DENIED by the CA.

y y

Issue: Should Meralcos petition be dismissed? YES y The ordinary procedure would have been as follows: When FINEs MTD was denied, it should have just filed an answer, gone to trial and if the decision is adverse, shouldve reiterated the issue on appeal. o However, this is subject to certain exceptions. One would be if the court, in denying the MTD commits GADLEJ. This is because it would be unfair to require the defendant to undergo the ordeal and expense of the trial under such circumstances as the remedy of appeal would not be plain and adequate. In the case at bar, Meralcos claim in its petition for prohibiton and mandamus in the RTC is based on its standing as a holder of a franchise. It asserts that it has the right to be heard on any application for direct power connection. 5

Civpro Case Digests 2C. Justice de Leon Cases: (Dismissal of Actions): Sandy O.B. Jovenir Construction v. Macamir Realty, spouses Miranda y Due to misrepresentation by OB Jovenir as a legitimate contractor, owners of the Macamir Realty, the spouses Miranda, sought the termination of their agreement to erect a condominium for the spouses In doing so, the spouses filed for a TRO in behalf of Macamir Realty in RTC Makati(3 feb 1997). o However, the Macamir BoD did not approve of this o Thus, the Spouses filed a motion to withdraw the complaint (13 feb 1997) Subsequently, the spouses filed another TRO for Macamir Realty, this time with approval of the BoD (17 Feb 1997) o However, at this time, the motion to withdraw the original complaint hasnt been granted yet Petitioner now assails that since the original complaint hasnt been dismissed, the spouses are violating the non-forum shopping rule. Third Case: CASE #3: Injunction: Filed in RTC by Bunags against Bunags . Dismissed for res judicata since there is a substantial identity of parties in this case and with case #2 o Fourth Case: CASE #4: Annulment of title with damages: Filed in RTC by Bunag against Cruz In case #4, Cruzs filed a motion for dismissal, arguing res judicata, since the parties and subject matter in this case is the same as CASE #2. The RTC dismissed case #4. o In an MR, however, this was reversed and case #4 was ordered to proceed. Cruz was ordered to file an answer Aggrieved, Cruz went to the CA, still arguing res judicata. The CA denied this. o

Issue: Should Cruzs motion to dismiss prosper? YES y Review: Elements of RJ: 1. Final judgment/order: In this case, there was a final judgment in civil case #2 2. Judgment/order must be on the merits  Bunags argue that the dismissal of case #2 will not bar the filing of case #4 SINCE there was no litigious consideration of the evidence  The SC, however, stated that the dismissal of case #2 was the Bunags fault. The case was dismissed for their failure to appear on several hearings wherein they couldve presented their evidence.  Further, since the RTC ordered the dismissal without a qualification on whether the same is w/o or w/o prejudice, following Section 3 of Rule 17, it should be considered with prejudice and shall have the effect of an adjudication on the merits  A ruling based on a MTD, without any trial on the merits or formal presentation of evidence, can still be a judgment on the merits 3. Court must have jurisdiction: Jurisdiction of the court was never questioned 4. The two cases must have the same parties, SM and cause of action Pertinent Rule: Dismissal of actions through the fault of plaintiff: 1. If he fails to appear on the date for the presentation of his evidence in chief 2. If he fails to prosecute his action for an unreasonable length of time 3. If he fails to comply with the rules or any order of the court

Issue: W/N there was a valid dismissal of the original complaint - YES Ratio: y Section 1 Rule 17 : An Action may be dismissed by the plaintiff without order of court by: 1. filing a notice of dismissal at any time  This is guaranteed as a matter of right to the plaintiffs even if the motion cites the most ridiculous grounds for dismissal.  Trial court has no choice but to consider the complaint as dismissed. 2. motion for summary judgment y in the case at bar, while the motion is styled as a motion and contains prayers, there are innocuous erros and superfluities that do not detract from its being a NOTICE OF DISMISSAL made under Sec 1 Rule 17 which ipso facto dismissed the case: (considered as notice of dismissal) y It is not the caption of the pleading but the allegations thereat that determines its nature. Thus, said court order is a mere surplusage as it can be done without order of the court. Cruz v. CA (If RTC orders dismissal due to the fault of the plaintiff, this will have the effect of adjudication on the merits. This dismissal will operate as fulfilment of the SECOND element of RES JUDICATA) y There are 4 cases involved in this controversy. Bunags and Cruzs are fighting over land. o First case: CASE #1: Unlawful Detainer: Filed in MTC by Cruz against Boy Bunag. Cruz won. o Second case: CASE #2: Quieting of Title: Filed in RTC by Bunag against Cruz. Dismissed for failure to prosecute

Civpro Case Digests 2C. Justice de Leon Pinga v. Heirs of Santiago (Plaintiffs filed a case. Defendant had a counterclaim. It was dismissed due to their own fault. Defendant can still prosecute his counterclaim even after the dismissal of the main case) Facts: y The Heirs of Santiago filed an injunction against Pinga alleging that Pinga had been unlawfully entering the coco lands of the respondent cutting wood and bamboos and harvesting the fruits of the coconut trees. y As a counterclaim, Pinga contests the ownership of the lands to which Pinga was harvesting the fruits. y However, due to failures of Heirs of Santiago to attend the hearings, the court ordered the dismissal of said case. y Respondents thus filed an MR not to reinstate the case but to ask for the entire action to be dismissed and not to allow petitioner to present evidence ex parte, o RTC granted it, hence the counterclaim was dismissed. o RTC ruled that compulsory counterclaims cannot be adjudicated independently of plaintiffs cause of action vis a vis the dismissal of the complaint carries with it the dismissal of the counterclaim y Petitioner then elevates it to the SC by way of Rule 45 on pure questions of law (Santiagos motive: They just asked for the dismissal of their entire case so that their ownership wouldnt be put in controversy in the counterclaim) Issue: W/N dismissal of original complaint affects that of the compulsory counter claims? NO the counterclaims, in this case, can stand on its own Ratio: y The dismissal of the complaint does not carry with the dismissal of the counterclaim, compulsory or otherwise. In fact, the dismissal of the complaint is without prejudice to the right of defendants to prosecute his counterclaim y Section 3 contemplates a dismissal not procured by plaintiff, albeit justified by causes imputable to him and which, in the present case, was petitioner's failure to appear at the pre-trial. y This situation is also covered by Section 3, as extended by judicial interpretation, and is ordered upon motion of defendant or motu proprio by the court. y Here, the issue of whether defendant has a pending counterclaim, permissive or compulsory, is not of determinative significance. The dismissal of plaintiff's complaint is evidently a confirmation of the failure of evidence to prove his cause of action outlined therein, hence the dismissal is considered, as a matter of evidence, an adjudication on the merits. y This does not, however, mean that there is likewise such absence of evidence to prove defendant's counterclaim although the same arises out of the subject matter of the complaint which was merely terminated for lack of proof. To hold otherwise would not only work injustice to defendant but would be reading a further provision into Section 3 and wresting a meaning therefrom although neither exists even by mere implication. y Thus understood, the complaint can accordingly be dismissed, but relief can nevertheless be granted as a matter of course to defendant on his counterclaim as alleged and proved, with or without any reservation therefor on his part, unless from his conduct, express or implied, he has virtually consented to the concomitant dismissal of his counterclaim The present rule embodied in Sections 2 and 3 of Rule 17 ordains a more equitable disposition of the counterclaims by ensuring that any judgment thereon is based on the merit of the counterclaim itself and not on the survival of the main complaint. Certainly, if the counterclaim is palpably without merit or suffers jurisdictional flaws which stand independent of the complaint, the trial court is not precluded from dismissing it under the amended rules, provided that the judgment or order dismissing the counterclaim is premised on those defects. At the same time, if the counterclaim is justified, the amended rules now unequivocally protect such counterclaim from peremptory dismissal by reason of the dismissal of the complaint. Rule 17 Sec 3 provides: If for any cause, the plaintiff fails to appear on the date of his presentation of his evidence x x x the complaint may be dismissed upon motion of the defendant or upon the courts own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action Petitioner wins, the counterclaim should proceed.

Ko V PNB (Plaintiffs filed a case. It was dismissed due to their fault. This dismissal has the effect of adjudication on the merits. Their remedy is RULE 41) 1. Ko filed for the annulment of a mortgage, extra-judicial foreclosure and the annulment of a TCT and deed for sale. It was alleged that the mortgage, the foreclosure proceedings were null and void because the written consent of the petitioners (as the beneficiaries of the mortgaged property, was not secured). During the proceedings, the petitioners failed to attend trial, despite proper notice, and upon motion of PNB the complaint was dismissed. PNBs counsel pointed to an apparent lack of interest on the part of the plaintiff to prosecute the action. The case was thus dismissed. Ko filed an MR claiming that this whole time they had been actively negotiating with PNB to buy back the property and that there were positive results. But the MR was denied. Petitioners filed for review on certiorari under Rule 45 and not an appeal with the CA.

2.

3.

4.

Issue: W/N RTC dismissed the case erroneously? W/N procedure should yield in this case? Held: NO y Petitioners should have filed for an appeal with the CA . Sec 3 Rule 17 provides that if a plaintiff fails to appear on the date of the presentation of his evidence, or to prosecute the action for an unreasonable period of time, the complaint may be dismissed upon motion of the defendant or by 7

Civpro Case Digests 2C. Justice de Leon the court motu proprio, without prejudice to the defendants right to prosecute a counter claim or separate action. The dismissal is equivalent to an adjudication upon the merits, unless otherwise provided by the court The MR of the petitioners was dismissed because failure to prosecute has the effect of adjudication on the merits, the proper action is an ordinary appeal with the CA under rule 41 and not petition under rule 45. Rule 41 provides: Appeal to CA from cases decided in RTC in the exercise of its original jurisdiction shall be by filing a notice of appeal with the court that rendered the judgment and serving a copy upon the adverse party. The rule is clear, in order to perfect an appeal all that is required is a pro forma notice of appeal within the reglementary period. The rules of procedure do not exist for the convenience of the litigalnts. The rules provide order and to enhance efficiency of the judicial system, mere invocation of substantial justice will not overturn them. The plaintiff did not prosecute the case with utmost diligence and was in effect clogging the dockets of the court.

y y

Civpro Case Digests 2C. Justice de Leon Cases: Default Rule 9: PDG Gajudo v Traders Royal (A complaint is not automatically entitled to the relief prayed for just because the defendant is in default. Default operates only as a waiver of right to be heard and to present evidence in trial) 1. Gajudo filed before the RTC QC a petition for Annulment of extrajudicial foreclosure and auction sale by the sheriff of QC. She prayed for conventional redemption and damages. The foregoing is rooted in a loan availed of by petitioners from Traders Royal Bank in the Amount of 75k secured by REM over the land. Loan was not paid hence the foreclosure. Auction was set in june 1981 and moved to August 1981 on the request of one of the Petitioners Chua, but without notice to his co-petitioners. It was sold at the auction for 24k to Traders. Chua had attempted to buy back the subject property, plus interest, by making an initial payment of 4k covered by a check, but was later told to make a new offer because of a change in the market value. Petitioners complained that the sale was irregular because of the shocking or unconscionably low bid price and that they had been denied their right to redeem the property because they were not informed of the sale. Traders filed a counterclaim claiming that petitioners had slept on their rights and that it (traders) was acting within the law and legitimate banking practice and regulations. In 1988 the records in the city hall were destroyed, along with the records of the case. After reconstitution the petitioners discovered that the property had beensold to a Ceroferr Realty Corp and that the annotation of Lis Pendens on the Certificate of Title was cancelled. The complaint was refiled with these facts and summons was properly served upon the bank. A motion to declare Traders in default was filed and was granted. Petitioners were allowed present their evidence ex parte. On Appeal CA ruled for Traders. y no opportunity to present evidence. The extent of the relief that may be granted is only as much as has been alleged and proved. A complainant is not automatically entitled to the relief prayed for because a defendant is in default. Declaration of default is not a waiver of rights, only right to be heard and to present evidence in trial. Anything more would be denial of due process. In this case the petitioners were not able to establish their case under the required quantum of proof.

Vlason v CA 1. Poro Point Shipping is the local agent of Omega Transpo (of Panama). One of its Vessels, Star Ace had engine trouble and requested to unload cargo and store it at the Philippine Ports Authority in San Fernando La Union. Despite being granted permission by Customs, several of its personnel boarded the vessel on suspicion that it was the hijacked Silver Med and that its cargo would be smuggled into the country. Vessel and all cargo was seized pursuant to the tariff and customs code. During this time La Union was hit by three typhoons and the vessel ran aground and was abandoned. Cadacio entered into a salvage agreement with the respondents to secure and repair the vessel at $1M and 50$ of the cargo after all expenses, cost and taxes. Private respondent Duraproof (seeking to enforce a preferred lien as a salvor[person engaged in salvage of a ship or items lost at sea]) filed a petition with the RTC Manila, for certiorari, prohibition and mandamus. Vlason was among those who opposed. Duraproof moved to declare several of the defendants in their petition in default, but was denied by the RTC. (impt to note that it did not include any allegation against Vlason nor any prayer for relief against it) Duraproof eventually had Singkong, Comissioner Mison (PPA) and Omega in default. It was allowed to present evidence ex parte against the defaulting respondents. When only the private respondent and the parties declared in default were present at the hearing, the trial court declared the other respondents in default and allowed duraproof to present evidence against them. Vlasons was never ordered in default. However a judgment against it was entered. In fact they alleged that the RTC never acquired jurisdiction over the petitioner.

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Issue: W/N CA erred in failing to apply Section 3 Rule 9 instead of applying the rule on preponderance of evidence under Rule 133 section 1? Held: y Rule 9 Sec 3 provides: When a defending party fails to answer within the time allowed, the court shall upon motion of the claiming party with notice to the defending party and with proof of failure shall declare the defending party in default. The court shall then proceed to render judgment granting the claimant such relief as his pleading warrants, unless it shall require the claimant to submit evidence. y A party in default shall be entitled to notice of subsequent proceedings but not to take part in the trial. He may, after notice and before judgment, file under oath a motion to set aside the order of default upon showing that his failure to answer was due to FAME (fraud, accident, mistake, excusable negligence) and he has a meritorious defense. y There is no incompatibility between 133 and 9. Parties must still rely on the strength of their own evidence and not upon the weakness of the defense of their opponent. This principle is especially true when their opponent has

4.

Issue: W/n the judgment by default was defective? YES. W/n the RTC default judgment is binding on VEC? No. y RTC had declared the other respondents in default upon motion of Duraproof because after due notice to them they failed to appear. No such order was issued ordering VEC in default. Thus there being no order of default against VEC, there could not have been any valid default-judgment rendered against it. The issuance of an order of default is a condition essential In order that a judgment of default be clothed with validity. There was never any record which shows that the court allowed the presentation of evidence ex parte against VEC. Without a declaration of default, trial court has no authority to order the presentation of evidence exparte against the petitioner. The rule that when a party fails to appear despite summons waives the objection to the presentation of evidence against it, applies only if the petitioner has submitted itself to 9

Civpro Case Digests 2C. Justice de Leon jurisdiction of the court. But as earlier mentioned the default judgment was improvidently rendered. Ramnani V CA 1. Spouses Dizon filed a complaint with RTC Makati against Spouses Ramnani for the collection of a sum of money representing an alleged unremitted amount of jewelry received by Ramnani on consignment. Ramnani counterclaimed, saying that while she did receive jewels in the amount of 900k from Dizon, Dizon received 1.6m worth of jewels and cash from Ramnani plus unpaid checks in the amount of 160k. In sum, DIzon owed her 787k. 2. The Ramnanis did not show for pre-trial and they were consequently declared in default on August 14, 1990, motioned for its lifting on Sept 12 1990 and were denied Nov 20, 1990. Evidence was received ex parte from Dizon, as per the default order. Judge Guerrero rendered judgment against Ramnani, holdling that they were liable in the amount of 884k plus legal interest, and 170k in damages plust cost of the suit. 3. Ramnani Filed an MR on the ground that a personal obligation contracted by the wife without the consent of the husband was being made enforceable against the conjugal partnership despite absence of allegations, much less proof that the same redounded to the benefit of the family, pursuant to the Family Code. 4. Ramnani filed for certiorari before the CA, saying that the denial of the motion to lift order of default was erroneous because Ramnani possessed a meritorious defense and that the reason for non-appearance was excusable neglect. Issue: was the decision of the RTC to deny the motion for lifting the order of default proper? Held: y A party who fails to appear at pre-trial may be considered non-suited or in default (Rule 20 section 2) A party declared in default may, at any time after the declaration and before judgment file a motion under oath to set aside the order on the ground that the failure to answer was due to FAME and that he has a meritorious defense. (rule 18 sec 3) y If a judgment has already been rendered but before it is final and executory he may file for a new trial anuder Rule 37 Sec 1a. If it is after it has become final and executory he may file petition for relief from judgment under rule 38 sec2. If the judgment rendered is contrary to evidence or to law he may appeal from the judgment under Rule 41 Sec 2. y The first remedy was adopted in this case but was denied because the nonappearance was judged to be inexcusable by the trial court. It was claimed that Ramnani was sick but no medical certificate was presented to evidence such illness. y A satisfactory showing of the existence of fraud, accident, mistake or excusable neglect is indispensable requirement for the setting aside of a judgment of default or the order of default. Ramnani utterly failed to do so. The mere allegation, even assuming it were true, of a meritorious defense (that Dizon owed them 900k as alleged in the counterclaim) is not sufficient to justify the lifting of the order of default. The two conditions must coincide ot grant the relief sought. Martinez v. Republic: a defendant party declared in default retains the right to appeal from the judgment by default on the ground that the plaintiff failed to prove the material allegations of the complaint, or that the decision is contrary to law, even without need of the prior filing of a motion to set aside the order of default.

Remedies from judgment by default: 1. The defendant in default may, at any time after discovery thereof and before judgment, file a motion, under oath, to set aside the order of default on the ground that his failure to answer was due to fraud, accident, mistake or excusable neglect, and that he has meritorious defenses; (Sec 3, Rule 18) If the judgment has already been rendered when the defendant discovered the default, but before the same has become final and executory, he may file a motion for new trial under Section 1(a) of Rule 37; If the defendant discovered the default after the judgment has become final and executory, he may file a petition for relief under Section 2 of Rule 38; and He may also appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition to set aside the order of default has been presented by him. (Sec. 2, Rule 41)

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Jao & Co. vs. Court of appeals y Due to non-appearance of Jao & Co. during a hearing, RTC declared the petitioner in default and allowed evidence to be presented ex-parte. Thereafter, a decision was rendered ordering Jao to pay respondent Top Service P150K as agreed rentals. After receipt of the decision, Jao filed a Motion for reconsideration which was denied and the court allowed the sheriff to sell two barges previously levied on. Jao filed a petition for certiorari with the Court of appeals contesting the jurisdiction of the trial court. The CA issued an order to stop the sheriff from conduction the said auction sale, but it was too late since the two barges were already sold to third parties. Thus, Jao brought to the Supreme court the instant petition for certiorari and mandamus under Rule 65 to nullify the said auction sale for GADLEJ. On the other hand, respondent Top Service argued that the decision of the lower court had already become final and that the 2 barges have already been sold to third parties in good faith. Jao argued that the decision of the lower court cannot be final because the trial court improperly declared Jao in default since it was not given notice of the Order declaring it in default

Issue: is certiorari the proper remedy in contesting a default improperly issued? Decision: 10

Civpro Case Digests 2C. Justice de Leon Under ordinary circumstance, the proper remedy of a party wrongfully declared in default is either to appeal from the judgment by default or to file a petition for relief from judgment and not certiorari. A default judgment is an adjudication on the merits, and is thus appealable. Since appeal is the proper remedy, the extraordinary writ of certiorari will not lie. Likewise, Jaos contention that it did not receive the copy of the decision was due to its own fault since the trial court was not furnished of its forwarding address. However, exception to such are: a) when issues are purely legal; b) public interest is involved; c) extreme urgency; d) special circumstances so warrant. In the case at bar, regulation of educational institutions is invested with public interest; thus there is not need to resort first to a motion for reconsideration. Lastly, an order denying a motion to dismiss is interlocutory; the proper remedy is to appeal after a decision has been rendered. A writ of certiorari is not intended to correct every controversial interlocutory ruling, it is resorted only to correct grave abuse of discretion In the case at bar, there was no grave abuse of discretion in the lower courts denial of the Motion to Dismiss since the acts of CHED such as declaring in a newspaper that Indiana was ordered closed for illegal advertisement, undermined the public's confidence in Indiana as an educational institution. This was a clear statement of a sufficient cause of action.

y y y

y y y

Indiana Aerospace University vs. Commission on Higher Education y CHED received a letter from the Chairman of Professional Regulatroy Commission inquiring whether Indiano Aerospace already acquired university status in view of its advertisement as such in Manila Bulletin. Upon investigation, it was verified from SEC that Indiana School of Aeronautics failed to amend its articles if Incorporatio to change its name to Indiana Aerospace University. Thus, CHED ordered it to desist from using the term University. y Prior thereto, Indiana Aerospace filed a complaint for damages with a prayer for Writ of Preliminary Injunction. CHED, on the other hand filed a motion to Dismiss. The lower court dismissed the Motion to Dismiss and Granted Indianas prayer for Preliminary Injunction. y Likewise, Indiana Aerospace filed before the lower court a Motion to declare CHED in Default. CHED filed a Motion for Extension of Time to File its Answer. The lower court ruled on Indianas motion to declare CHED in Default and directed it to present evidence ex parte. y CHED filed with CA a petitioner for certiorari arguing that RTC committed grave abuse of discretion in denying its Motion to Dismiss and in declaring it in default despite its filing an Answer. CA ruled that Indiana had no cause of action against CHE since it failed to show that it had been granted university status by CHED, and ruled that CHED should not have been declared in default since its Answer had long been filed before the lower court ruled upon Indianas Motion to declare it in default. y Indiana claims that the Petition for Certiorari of CHED should have been dismissed by CA because it was filed out of time and was not preceded by a motion for reconsideration in the RTC. Issues: Was the certiorari petition properly and timely filed? Decision:

CHEDs Petition for Certiorari was seasonable filed. In computing its timeliness, what should have been considered is the date when the respondent received the Order declaring it in default. In the case at bar, CHED was able to comply with the 60-day reglamentary period to file its Petition for Certiorari. As to its contention that a motion for reconsideration should precede the petition for certiorari, the general rule is that the lower court should be given the opportunity to correct itself and thus a motion for reconsideration should precede a petitioner for certiorari. 11

Civpro Case Digests 2C. Justice de Leon Cases: Rule 18 (pre-trial) Geoc LCK Industries vs. Planters Development Bank y LCK obtained a loan from Planters Bank amounting to P3M. As security, a real estate mortgage was executed on 2 lands located in QC and in Baguio. Upon default in payment, Planters Bank caused the extrajudicial foreclosure of the Baguio property which was sold for P2.6M and the QC property sold for P2.2M. y Prior to the auction sale, LCK Industires filed with RTC an action for Annulmet of the Foreclosure of Mortgage and the Auction sale of the QC property on ground that Planters failed to comply with the requirements on posting and publication and that the foreclosure was not filed with the clerk of court. Thereafter a pre-trial was conducted. y The issues raised during the pre-trial were: whether the foreclosure was filed with wit the clerk of court, whether there was compliance with the posting and publication requirements, and whether the parties are entitled to their respective attorneys fees. y After the pre-trial, LCK, in its memorandum, claimed that there was an overpayment of the loan by P1.8M. the lower court declared the sale valid but ordered Planter Bank to return the overpayment,. CA reversed the portion of the decision regarding the payment of the overpayment since it was raised long after the pre-trial conference. Issue: whether the issue of overpayment was raised by the parties an included in the pre-trial order? y The conduct of a pre-trial is mandatory in civil action wherein parties are given the opportunity to arrive at a possible amicable settlement and to enter into stipulations or admissions of facts which must be recorded in the pre-trial order. A pre-trial order, however, is not mean to state each and every issue that may be taken up during trial. Issues that are impliedly included are an much integral parts of the pre-trial order as those expressly stipulated. The case at bar fall under that case since the parties stipulated the price each property was sold for, and applying simple math by deducting LCKs obligation, the fact of overpayment, though not expressly included in the pre-trial order can be evidently inferred from the admissions of the parties. stating that it was interested in prosecuting the complaint against defendant Acropolis and Salceda, and that Filipinas Bank will move for the issuance of Alias summons on them. Again, the pre-trial was for Jan 1988. During the scheduled pre-trial, Filipinas Banks counsel was 15 minutes late due to heavy traffic. Thus, the case was dismissed by the lower court ad affirmed by CA. Thus, Calalang filed this case alleging that CA erred in absolving Filipinas Bank for the delay; declaring the January 1988 pre-trial as premature; and holding Filipinas bank did not entirely fail to appear.

Issues: was the pre-trial scheduled on Jan 1988 premature? y y The pre-trial conference scheduled for Jan 1988 was not premature. A pretrial cannot be validly held until the last pleading has been filed. Thus, the period to file the necessary pleading having expired on the Acropolis Trading, the lower court can direct that a pre-trial be held among the answering defendants. Likewise, the fact that counsel for Filipinas Bank was late during the pre-trial, the trial court should have called the case again. Absent any negligent or irresponsible conduct by the party, the court should consider lesser sanctions than dismissing the case.

y y

Calalang vs. CA y Filipnas Manufacturers Bank filed a complaint for a collection of sum of money against Calalang, Arca, Salceda and Acropolis Trading. Clalang filed a Motion to Dismiss, Arca filed a motion for Bill of Particular, while the two other were summoned but only a clerk-employee of Acropolis Trading received he summons. During the pendency of the cases, the Judiciary Reorganization Act was passed. y The motion for Bill of Particulars was granted while the motion to dismiss was dismissed. The case has been set several times for pre-trial. For the first two scheduled meetings, the counsel for Filipinas Bank failed to appear. For the last two, Arcas counsel failed to appear. It was again rescheduled to April 1987. y The court ruled that it did not acquire jurisdiction over Acropolis and Salceda for improper service of summons. Filipinas Bank, in response, filed a manifestation 12