Motion to Dismiss Nature *MTD should be filed w.

n the period to file an ANSWER HEIRS OF MARIANO LAGUTAN V ICAO G.R. No. 58057 MELO: June 30, 1993 FACTS On May 23, 1972 Heirs of Mariano Lagutan, filed a Complaint against Severina Icao, et al. for "Specific Performance and/or Payment of Improvements" in regard to two parcels of land alleging that Felix Icao and spouses Mariano Lagutan and Francisca Icao entered into a contract wherein it was agreed that spouses Mariano Lagutan and Francisca Icao would cultivate the first lot on condition that the spouses would cultivate and plant coconuts on the land, and the improvements would be divided equally into two: one-half (1/2) would go to the spouses and the other one-half (1/2) would go to Felix Icao; That the spouses have complied with their obligations under this agreement. Also as to the second lot plaintiff Amador Lagutan and the defendants and/or their predecessor-in-interest entered into contract to the effect that PARCEL II would be cultivated and improved by said Amador Lagutan and to plant thereon coconuts on condition that as consideration thereof, Amador Lagutan would be given another parcel of land commensurate to the labor or services rendered as mentioned above; Amador Lagutan cultivated and improved Parcel II and planted thereon 300 coconut trees by himself and thru hired laborers, which coconuts are now fruit bearing. Respondents filed their Answer on May 20, 1977. Subsequently, they filed a Motion for Leave to File an Amended Answer. The trial court admitted respondents' Amended Answer . Three months thereafter, respondents filed a Motion to Dismiss which petitioners opposed, specifically questioning respondents' belated issues on laches and estoppel raised in the Amended Answer. On February 10, 1978, the trial court issued a Resolution dismissing petitioners' Amended Complaint. ISSUE:WON the MTD was filed out of time HELD: YES. The motion to dismiss was filed long after respondents' Amended Answer had been filed. Under Rule 16, the motion to dismiss must be filed within the time for pleading, that is, within the period to answer (Tuason v. Rafor, 5 SCRA 478 [1962], at p. 483). Respondents filed their motion to dismiss almost three months after they filed their Amended Answer, which is a violation of the first requirement on motions to dismiss. When the complaint was dismissed not because of any evidence presented by the parties, as a result of the trial on the merits, but merely on a motion to dismiss filed by the defendants, the sufficiency of the motion should be tested on the strength of the allegations of facts contained in the complaint and no other. (De Jesus, et al. v. Belarmino, et al., 95 Phil. 366 [1954].) and . . . the issue must be passed upon on the basis of the allegations assuming them to be true and the court cannot inquire into the truth of the allegations and declare them to be false; otherwise, it would be a procedural error and a denial of due process to the plaintiff. (Ventura v. Bernabe, 38 SCRA 587 [1971], at p. 598; Galeon vs. Galeon, 49 SCRA 516 [1973]; emphasis supplied.) DISPOSITIVE WHEREFORE, the order dismissing the complaint is SET ASIDE and the case is REMANDED to the court a quo for further proceedings. No special pronouncement is made as to costs.

GALEON V GALEON 49 SCRA 516 ANTONIO; February 28, 1973 NATURE Petition for review on by certiorari of the order of the CFI Quezon FACTS - Leonardo Galeon filed a complaint for partition (amended August 13, 1963) against private respondents Marcial Galeon, Zosima Galeon-Canda and Mateo Galeon in the Quezon CFI. Leonardo prayed that he court order the partition of the said properties of the deceased Demetrio Galeon, that the private respondents be ordered to render an accounting of the produce and that Leonardo be granted such other relief as may be just and equitable in the premises. -Leonardo alleged that he is the illegitimate son of Demetrio Galeon. During his lifetime, Demetrio had acknowledged and recognized him as such. - The respondensts are Demetrios legitimate children with lawfully wedded wife Felisa. - Demetrio Galeon died intestate on September 9, 1958, and was survived by his compulsory heirs, namely, the three private respondents, his surviving spouse Felisa Venal and Leonardo. - During Demetrios lifetime, he owned six parcels of land which upon his death were inherited in intestacy by his aforementioned heirs. - On March 1962, Felisa died intestate and her share in the estate of her husband was inherited by the private respondents as her only compulsory heirs. The private respondents took possession of all of the lands left by Demetrio and appropriated for themselves the fruits of the land to the exclusion of Leonardo. - No partition of the land has been made and there is no assurance that the private respondents will agree to an extrajudicial partition of said properties. - Private respondents moved to dismiss the amended complaint on the grounds that (1) petitioner has no legal capacity or personality to sue, (2) that the amended complaint does not state a cause of action and (3) that the petitioner's cause of action, if any, is barred by the statute of limitations. - In its order dated February 2, 1966, respondent court dismissed the amended complaint on the ground that petitioner "has no legal personality to sue", because according to said court, "nowhere in his pleading is the allegation or proof that petitioner's filiation has been duly established as required by Article 887 of the Civil Code." - The amended complaint was dismissed by the respondent court on the lack of personality of the petitioner to sue, because there is no allegation or proof that plaintiff's filiation has been established. ISSUE WON petitioner Leonardo has shown a present substantial interest in the real properties left by the deceased Demetrio Galeon, as to entitle him to file the action for partition HELD

YES Ratio It is well settled that in a motion to dismiss a complaint based on lack of cause of action, the question submitted to the court for determination is the sufficiency of the allegations of fact made in the complaint to constitute a cause of action, and not whether these allegations of fact are true, for said motion must hypothetically admit the truth of the facts alleged in the complaint. The test of the sufficiency of the facts, is whether or not, accepting the veracity of the facts alleged, the court could render a valid judgment upon the same in accordance with the prayer of the complaint. Reasoning - The questioned portion of the amended complaint states as follows: 2. That the plaintiff is an illegitimate (adulterous) son of one Demetrio Galeon, who during his lifetime, has acknowledged and recognized him as such illegitimate child, while the defendants are his only legitimate children with his lawfully wedded wife, Felisa Venal. - The dismissal of the amended complaint by the respondent court on the ground therein stated was in effect a dismissal based on the insufficiency of the averments in said amended complaint to show that petitioner has a cause of action. - The uniform ruling of this Court is that the trial court may not inquire into the truth of the allegations, and find them to be false before a hearing is had on the merits of the cause. If the court finds the allegations to be sufficient but doubts their veracity, it is incumbent upon said court to deny the motion to dismiss and require the defendant to answer. The veracity of the assertions could be ascertained at the trial on the merits. - The court invoked the case of Paulino vs. Paulino: The trial court, holding that the plaintiff's action to establish her filiation as the illegitimate (spurious) child of the deceased brought after the latter's death, when she had reached the age of 35 years, was already barred, dismissed her complaint. On appeal, the SC sustained the order of dismissal, explaining that while it is true that by their motion to dismiss the appellees therein are "deemed to have admitted that the appellant is the illegitimate spurious not natural child of the deceased Marcos Paulino," such admission was not sufficient to entitle her to inherit from her alleged putative father. It is necessary to allege that her putative father had acknowledged and recognized her as such. Such acknowledgment is essential and is the basis of her right to inherit. There being no allegation of such acknowledgment the action becomes one to compel recognition which can not be brought after the death of the putative father. - Since acknowledgment is essential and is the basis of the right of a spurious child to inherit in the estate of his deceased putative parent under Articles 287, 887 and 895 of the New Civil Code it is necessary as a basis for his claim in the estate to allege that his putative father had acknowledged and recognized him as such. It is therefore evident that the questioned averment in petitioner's amended complaint substantially complies with the aforestated requirement. - This case is not an action to compel recognition of petitioner as the illegitimate (spurious) child of the deceased Demetrio. Rather it is an action by one who alleges as a matter of fact that he is an acknowledged and recognized illegitimate child of said deceased, for the partition of his estate. - As to whether or not petitioner was actually acknowledged and recognized by Demetrio Galeon as his illegitimate child, is a question of fact, which will depend upon the evidence to be presented at the trial. Inasmuch as such alleged acknowledgment and recognition by Demetrio Galeon, of petitioner as the illegitimate child, other than natural, of the latter was deemed hypothetically admitted in private respondents' motion to dismiss based on lack of cause of action, the dismissal of the case would therefore be premature. - It is true that the allegation in question is rather vague, as it does not state the

manner or form in which such voluntary recognition of petitioner was made, whether in a record of birth, a will, statement before a court of record, or in any authentic writing. But this Court, speaking thru Chief Justice Moran, in Co Tiamco v. Diaz, explained that under "the new Rules of Court, an action cannot be dismissed upon the ground that the complaint is vague, ambiguous, or indefinite (see Rule 8, section 1), because the defendant, in such case, may ask for more particulars (Rule 16) or he may compel the plaintiff to disclose more relevant facts under the different methods of discovery provided by the Rules (Rules 18, 20, 21, 22 and 23). Disposition Order dismissed and set aside. SEPARATE OPINIONS TEEHANKEE [dissent] - I dissent from the main opinion, on the ground that the mere allegation in the amended Complaint that "plaintiff is an illegitimate (adulterous) son of one Demetrio Galeon, who during his lifetime has (sic) acknowledged and recognized him as such illegitimate child" is not sufficient to constitute a cause of action for partition against "defendants (who) are (the deceased's) only legitimate children with his lawfully wedded wife, Felisa Venal. - Such action was premised on the bare conclusion of fact that petitioner had been "acknowledged and recognized ... as (an) illegitimate child." As conceded in the main opinion, 1 "the allegation in question is rather vague, as it does not state the manner or form in which such voluntary recognition of petitioner was made, whether in a record of birth, a will, statement before a court of record, or in any authentic writing" which are the only modes recognized in Article 278 of the Civil Code for making such voluntary recognition of an illegitimate child. - Without such official, judicial or written acknowledgment of the illegitimate child, which in such cases constitutes the ultimate fact, as against a mere conclusion, which must be duly alleged in the Complaint as required by Rule 8, section 1, the Complaint does not state a sufficient cause of action. - The lower court, therefore, properly dismissed the amended complaint for partition since there was no "allegation or proof that plaintiff's filiation has been established" i.e. that due recognition of petitioner as an illegitimate child was made in the official, judicial or authentic writing required by Article 278 of the Civil Code. - As to the procedural question of whether the status of petitioner as an acknowledged illegitimate child was deemed hypothetically admitted upon private respondents' filing of their motion to dismiss petitioner's complaint on the ground of lack of cause of action, the case of Paulino thus disposed of the question, holding that "(I)t is true that by their motion to dismiss the appellees are deemed to have admitted that the appellant is the illegitimate spurious, not natural, child of the deceased Marcos Paulino. Such an admission, however, does not entitle her to inherit from her alleged putative father. It is necessary to allege that her putative father had acknowledged and recognized her as such. Such acknowledgment is essential and is the basis of her light to inherit. There being no allegation of such acknowledgment the action becomes one to compel recognition which can not be brought after the death of the putative father." - The ultimate fact of due acknowledgment and recognition of the illegitimate child may only be duly averred by alleging the mode whereby such acknowledgment was made, as circumscribed by Article 278 of the Civil Code, whether in "a record of birth, a will, a statement before a court of record or in any authentic writing." Concededly, no such averment of the mode of recognition was made by petitioner in his amended complaint and hence, no admission can be inferred as to the essential fact of due acknowledgment, which in turn is the very basis of any right to inherit. With out such essential basis, petitioner's complaint should stand dismissed for lack of cause of action.

MAKALINTAL [dissent] - The Civil Code (Art 278) does not merely speak of recognition (voluntary), but of recognition in specific ways: "in the record of birth, a will, a statement before a court of record, or in any authentic writing." The particular circumstance relied upon, among these four, constitutes an essential element of the cause of action and must therefore be alleged for the complaint to be considered sufficient. - I do not believe that a judgment declaring herein petitioner as having been voluntarily acknowledged by his supposed father during the latter's lifetime would be justified on the basis of the questioned allegation in the complaint. The mere statement that "Demetrio Galeon ... has acknowledged and recognized him (petitioner) as such illegitimate (adulterous) child," even if accepted as true, would still leave the court uncertain, and therefore unable to declare, just how such acknowledgment came about - whether in one of the modes enumerated in the Code, and if so, which one, or in some other manner not authorized for purposes of voluntary acknowledgment. BARREDO [dissent] - Under the rules, the former is what a pleading should alleged; the latter is not allowed. More importantly, there must be a difference between a conclusion of law, on the one hand, and a conclusion of fact as well as an ultimate fact, on the other. - To my mind, to say that a child has been acknowledged by his father, whether as legitimate or illegitimate, is not strictly speaking a statement of an ultimate fact, it is at the very least a conclusion of fact, if it is not a conclusion of law, both of which have no place in pleadings. - I disagree, however, with the way the trial court disposed of the incident. What should have been done, to avoid this appeal, was merely to require the plaintiff to amend his complaint. I believe that to simplify procedures and save time and effort, members of the bar or practitioners should be made to understand that it is to the better interest of a more speedy administration of justice, to which all lawyers are committed, for them to agree to more practical procedures suggested by the court, even if they have to suffer a little loss of face, rather than insist on technical positions that may turn out later on as not approvable by the Supreme Court. FOSTER PARENTS PLAN INTERNATIONAL/BICOL, DIRECTOR RICHARDSON, ATTORNEY BADILLA and WONG, v.Presiding Judge DEMETRIOU, and SANAO GR 74077 NARVASA; July 7, 1986 MINI FACTS - Private respondent Francia Zenaida Sanao was employed by petitioner Foster Parents International Plan (FPPI). FPPI directed Sanao to answer disciplinary charges filed against her for (a) dishonesty; (b) gross and habitual neglect in the performance of duty; (c) lack of respect for authority; (d) violation of the code of behavior; (e) violation on punctuality; (f) violation of the code of discipline regarding the preservation of the good image of the Plan; (g) lack of credibility as supervisor and (h) lack of professionalism on the rights of subordinates. - Pending investigation of the charges before Atty. Romulo Badilla, FPPI-designated Hearing Officer, Sanao filed a complaint for injunction with preliminary injunction and restraining order with the respondent Regional Trial Court of Camarines Sur, alleging that she was an employee of FPPI; that the charges presented against her were designed only to provide a color of legality to an otherwise illegal dismissal, and that in any case, the prosecutor, investigator and judge in the aforesaid hearing

in the person of Atty. Badilla (FPPI Legal consultant) was one and the same person, in violation of her right to an impartial judge under the due process clause. - The respondent Court issued a restraining order, "valid for ... twenty (20) days" requiring FPPI, and certain of its officials impleaded as co-defendants, to maintain the status quo and refrain from proceeding with the administrative investigation. - FPPI moved for the dismissal of the aforesaid civil case alleging among others lack of jurisdiction of the Court over the nature of the suit. Respondent Court held in abeyance resolution of the motion to dismiss until after trial on the merits stating that the grounds relied thereon did not appear to be indubitable - FPPIs Motion for Reconsideration of this order having been denied, FPPI filed the present petition for certiorari alleging that (a) the case before the lower Court is one involving a labor dispute which is within the exclusive jurisdiction of the Labor Arbiters and the National Labor Relations Commission (NLRC); and (b) corollarily, the respondent Court has no authority to issue a restraining order in the case. - Sanao contends (a) that this case does not fall under either Article 217 (Re: Jurisdiction of Labor Arbiters and the Commission) or Article 255 (Re: Injunction Prohibited) of the Labor Code; and (b) that in any case, the decisive issue here is not whether or not an employer has the right to discipline its employees, but whether it is just for an employer to set up sham and orchestrated charges against an employee, and to establish a system of administrative investigation thereon where the judge, prosecutor, and the investigator are one and the same person in disregard of employee's right to due process ISSUES WON regular courts of justice have jurisdiction over preliminary or antecedent acts or proceedings which may end up in illegal dismissals HELD NO. If private respondent is indeed ultimately dismissed from employment, as she fears, her recourse cannot but be to the Labor Arbiters and the National Labor Relations Commission. For cases of illegal dismissal are within the exclusive original jurisdiction of said arbiters and Commission, not the regular courts of justice. If regular courts of justice have no jurisdiction over cases of illegal dismissal, it follows that they have no jurisdiction over the preliminary or antecedent acts or proceedings which by design or not, may end up in illegal dismissals. So, respondent Courts restraining order was issued without jurisdiction. - Courts or labor arbiters may not perpetually inhibit administrative investigation by an employer of charges against an employee which if duly established may justify disciplinary sanctions, inclusive of dismissal from the service, upon the employee's plea that the charges are concocted or the investigator is prejudiced. This would result in a transfer from employers to courts or labor arbiters of the authority to determine in the first instance the existence or non-existence of grounds for administrative penalties against employees, since it may reasonably be anticipated that every employee will, justifiably or otherwise, deny the actuality of disciplinary grounds against him, or impugn the authority of the employer's appointed investigator and/or the bona confides of the investigator's actuations, and will therefore, not hesitate to file suit to enjoin the administrative investigation. - The right to dismiss or otherwise impose disciplinary sanctions upon an employee for just and valid cause, pertains in the first place to the employer, as well as the authority to determine the existence of said cause in accordance with the norms of due process Dispositive Petition granted. Orders of respondent court declared void and set aside. Grounds, Rule 16, Sec. 1

Section 1. Grounds. Within the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made on any of the following grounds: (a) That the court has no jurisdiction over the person of the defending party; (b) That the court has no jurisdiction over the subject matter of the claim; (c) That venue is improperly laid; (d) That the plaintiff has no legal capacity to sue; (e) That there is another action pending between the same parties for the same cause; (f) That the cause of action is barred by a prior judgment or by the statute of limitations; (g) That the pleading asserting the claim states no cause of action; (h) That the claim or demand set forth in the plaintiff's pleading has been paid, waived, abandoned, or otherwise extinguished; (i) That the claim on which the action is founded is unenforceable under the provisions of the statute of frauds; and (j) That a condition precedent for filing the claim has not been complied with. JAVIER V CA 214 SCRA 572 NOCON; October 14, 1992 NATURE Petition for review on certiorari to annul and set aside the decision of the CA dismissing Civil Case No. 88-976 for lack of jurisdiction. FACTS - Normito Javier (NORMITO), the husband of petitioner Lolita Javier (LOLITA), was employed by private respondents Jebsens Maritime, Inc. (JEBSENS) as a boatswain for its vessel M/V "General Campos". - September 23, 1987: the shipmaster, private respondents Fidel Dioso, ordered NORMITO to prepare the pilot ladder on the vessel's starboard side. While about his task, a sudden swell hit the vessel and, as a result, Javier, who did not have his life jacket on, fell into the deep sea waters off Corona, Spain. A search and rescue operation initiated by private respondents failed to yield Javier. - NORMITO was buried in La Corona, Spain on Oct. 3, 1987 without the knowledge and consent of LOLITA and her children. It was only at a later date that Lolita learned of NORMITOs death from a crewmate. - LOLITA went to JEBSENS went and the latter promised to give the corresponding death benefits for the untimely death of her husband. JEBSENS however failed to comply with its promise, prompting LOLITA to file a complaint with the Makati RTC for a sum of money. - During trial, JEBSENS changed their counsel who, instead of continuing with the trial of this case, filed on January 24, 1989, a Motion to Dismiss and/or Expunge on the ground of lack of jurisdiction by the trial court over the subject matter as said case falls within the original and exclusive jurisdiction of the POEA. Motion was dismissed by the RTC. - JEBSEN filed a Motion for Reconsideration, which was again denied by the RTC. This prompted JEBSENS to file with the CA a Petition for certiorari and prohibition with a prayer for preliminary injunction against LOLITA. This was granted by CA. - LOLITA filed a Motion for Reconsideration on July 2, 1990, which was denied. ISSUE(S)

1. 2.

WON the RTC has jurisdiction over the case even if it involved ER-EE relationship. WON JEBSENS is estopped from invoking lack of jurisdiction due to their participation in the early stages of the trial.

HELD 1. NO Ratio There is primary administrative jurisdiction lodged with the POEA. Reasoning POEA has exclusive and original jurisdiction to hear and decide all claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas employment including the disciplinary cases [Sec. 3(d) of EO 247]. - All claims, whether money claims and/or claims for contractual benefits of any nature, involving an employer-employee relationship would necessarily and properly fall within the exclusive jurisdiction of the POEA. In the instant case, petitioner's husband, who died while in the performance of his official duty, is admittedly an employee of JEBSENS and jurisdiction should therefore be vested upon the POEA since a case cannot have a civil aspect cognizable by the regular court and the same time a labor aspect cognizable by the labor tribunal. - To rule otherwise would result in a multiplicity of suits which is frowned upon by the Court. - The question demands the exercise of sound administrative discretion requiring the special knowledge, experience, and services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the purposes of the regulatory statute administered 2. NO Ratio Lack of jurisdiction may be raised at any stage of the action. Reasoning The doctrine of estoppel cannot be properly invoked by the petitioner despite the participation of the private respondents at the initial stages of the trial proceedings. - When a party commits error in filing his suit or proceeding in a court that lacks jurisdiction to take cognizance of the same, such act may not at once be deemed sufficient basis of estoppel. It could have been the result of an honest mistake, or of divergent interpretations of doubtful legal provisions. If any fault is to be imputed to a party taking such course of action, part of the blame should be placed on the court which shall entertain the suit, thereby lulling the parties into believing that they pursued their remedies in the correct forum. - Under the rules, it is the duty of the court to dismiss an action "whenever it appears that the court has no jurisdiction over the subject matter." - It is well settled that the decision of a tribunal not vested with appropriate jurisdiction is null and void. DISPOSITIVE Petition is denied.

Laus v. C.A., 219 SCRA 688 (1993) *GR: MTD shld be filed w/in the pd to file a responsive pleading (ANSWER) X: NO Valid service of summons period for filing a responsive pleading didnt run NATURE Petition for review FACTS

-Consuelo Torres filed against Loredo (sic) Alfaro-Laus and John Doe a complaint for collection of a sum of money: Loreto Alfaro-Laus executed a PN in favor of Torres underwhich Loreto undertook to pay Torres P66k after 3m from date of execution. Upon maturity, only P11k was paid and despite demands, no further payments were made -prayed for: payment of the unpaid balance of P55,000.00 "plus interest at the rate of ten per cent (10%), compounded monthly beginning February 21, 1989, and twenty-five per cent (25%) of the entire amount due for and as attorney's fees, such being in accordance with the terms and conditions set forth in the promissory note." -IMPT facts for summons: Deputy Sheriff Romero S. Cruz proceeded to the petitioners' address at 122 Molave Park Subdivision, Paraaque, Metro Manila to serve the summons and a copy of the complaint. Failing to serve the summons personally upon the petitioners after waiting for ten (10) minutes, he resorted to a substituted service through one Josephine Areola, who purportedly represented herself to be the maid of the said petitioners. On the same date, Deputy Sheriff Cruz executed and filed a return 5 which reads: "Respectfully returned to the REGIONAL TRIAL COURT Branch 82, QUEZON CITY, the attached original copy of the summons issued in connection with Civil Case No. 893327 entitled CONSUELO P. TORRES versus LOREDO (sic) LAUS & JOHN DOE with the information that duplicate copy of the same together with the complaint and its annexes was duly served upon defendant Loredo (sic) Laus of 122 Molave Park Subd. Paraaque M. M. thru JOSEPHINE AREOLA, maid of Loredo Daus (sic) of same address, received as evidenced by her signature appearing thereon." -NO ANSWER filed. Torres filed motion to declare defendants in default granted by court -ex parte presentation of evidence January 16 but Order received by Laus only on January 22 -TC: judgment by default ordering Laus "[T]o pay the plaintiff (private respondent) the amount of FIFTY-FIVE Thousand Pesos (P55,000.00) at the rate of ten per cent (10%), compounded monthly beginning February 21, 1989 up to the present; and . . . [T]o pay attorney's fees equivalent to twenty-five percent (25%) of the entire amount due" to the private respondent. -by way of special appearance, counsel of Laus filed MTD for lack of jurisdiction over their persons: service of summons was ineffective because it was not indicated in the return that the sheriff had first exerted efforts to serve the same personally before resorting to substituted service. -TC Order: Denied MTD for lack of merit: it already rendered a judgment by default, also issued WOE -Deputy Sheriff Nilo Cabang, pursuant to a writ of execution issued by the trial court, levied upon petitioners' properties consisting of a 1983 Mitsubishi Galant Sedan and a men's ring. -Laus filed MFR: reiterate that trial court did not acquire jurisdiction over their persons because of the defective service of summons + Josephine Areola was just a guest of their made and a child of about 10-11 years old who should not be expected to know what to do with the documents handed to her. -MFR heard, parties presented their evidence on the issue of service of summons. MFR DENIED: proper service of summons as it was proven that Areola was not a guest of their maid -Laus filed with CA a petition for CP and injunction w/ application for restraining order to set aside TC orders + dismiss civil case: GAD and grave error in denying MFR despite lack of jurisdiction over their persons; on MTD, erred in denying it solely on the ground that a judgment by default had already been rendered -CA: deny petition for lack of merit: (1) MTD on ground of lack of jurisdiction over the persons of the defendants is proper only when made w/n the reglementary period for filing a responsive pleading and before such responsive pleading is filed. Here

MTD filed 5m after the complaint was filed and only after default judgment already been rendered by TC; On 30 May 1991, the respondent Court of Appeals promulgated its decision 19 denying the petition for lack of merit. It made the following disqualifications; (2) even if MTD filed on time, Order denying MTD is interlocutory and cannot be subject of a petition for certiorari. Other remedies (Lina v. CA): (a) The defendant in default may, at any time after discovery thereof and before judgment, file a motion, under oath, to set aside the order of default on the ground that his failure to answer was due to fraud, accident, mistake, excusable negligence, and that he has a meritorious defense; (b) If the judgment has already been rendered when the defendant discovered the default, but before the same has become final and executory, he may file a Motion for New Trial under Section 1[a] of Rule 37; (c) If the defendant discovered the default after the judgment has become final and executory, he may file a petition for relief under Sec. 2 of Rule 38; and (d) He may also appeal from the judgment rendered against him as contrary to the evidence or to law, even if no petition to set aside the order of default has been presented by him (Sec. 2, Rule 41). (3) Laus were given their day in court to prove that service of summons was both improper and invalid but TC weighed the evidence and testimonies in favor of Torres so give weight to findings of TC: failed to rebut presumption of regularity of performance of official functions by the sheriff; could not substantiate that Josephine Areola was 10-11y.o. who would not know what to do with the court documents; failed to rebut assertion that Josephine Areola was already staying with them for at least 3 months before summons were served -Deputy Sheriff Cabang SOLD at public auction the levied mens ring and Galant car -MFR of CA decision DENIED ISSUES 1. WON the TC acquired jurisdiction over the persons of the petitioners by virtue of substituted service of summons effected by Deputy Sheriff Cruz (for summons) 2. WON MTD on the ground of lack of jurisdiction over the persons of the defendant could still be filed 3. WON MTDs dismissal could not be subject to a petition for certiorari, being an interlocutory Order HELD 1. NO (for details, see actual case under SUMMONS). Since the substituted service of summons in this case was not validly effected, the trial court did not acquire jurisdiction over the persons of the petitioners. The order of default, the judgment by default, the writ of execution issued by it, as well as the auction sale of the petitioners' properties levied on execution are, therefore, all null and void. Ratio. The general rule in this jurisdiction is that summons must be personally served; pursuant to Section 7, Rule 14 of the Revised Rules of Court, such personal service is to be accomplished by "handing a copy thereof to the defendant in person, or, if he refuses to receive it, by tendering it to him." However, if this mode of service cannot be effected within a reasonable time, substituted service may be resorted to under Section 8 of the same Rule. Changes to Substituted Service Rule: promptly in old rules changed to within reasonable time -"Within a reasonable time" contemplates a period of time longer than that demarcated by the word "prompt," and presupposes that a prior attempt at personal service, within a justifiable time frame as would be necessary to bring the defendant within the jurisdiction of the court, had failed. Since substituted service is in derogation of the common law and is extraordinary in character, it must be used only as prescribed and in the circumstances authorized by statute. Statutes

prescribing modes other than personal service of summons must be strictly complied with to give the court jurisdiction, and such compliance must appear affirmatively in the return. Imposibility of prompt service: should be shown by stating the efforts made to find the defendant personally and the fact that such efforts failed. This statement should be made in the proof of service (I Moran, Comments on the Rules of Court, 1970 Ed., p. 444). This is necessary because substituted service is in derogation of the usual method of service. It has been held that this method of service is `in derogation of the common law; it is a method extraordinary in character, and hence may be used only as prescribed and in the circumstances authorized by statute.' . . . *Rules on Service of Summons Summarized in Administrative Circular No. 59 Reasoning. A perusal of the sheriff's return in the case at bar readily reveals that it does not (a) indicate the impossibility of service of summons within a reasonable time, (b) specify the efforts exerted to locate the petitioners and (c) state that it was served on a person of sufficient age and discretion residing therein. The fact of the matter is that as disclosed in his testimony taken in connection with the motion for reconsideration, and the affidavit he prepared in conjunction with such hearing. Deputy Sheriff Cruz resorted to a substituted service on his first - and only - attempt to effect a personal service. Upon being informed that the petitioners were not around at that time, he immediately resorted to a substituted service through Josephine Areola, a person whose age he did not even know or attempt to discover. He did not even inquire about the whereabouts of the petitioners, the time they were expected to return home, the hours of the day they could be contacted at their house or the location of their offices, if any, in order that he could faithfully comply with the requirement of personal service. -It is all too obvious that no earnest efforts were exerted by Deputy Sheriff Cruz to effect the personal service of summons. His testimony thus attests to an undue, if not indecent, haste to serve the summons at the first attempt without making sure that personal service was, by then and even thereafter, an impossibility because either the petitioners had left for a foreign country or an unknown destination with not definite date of returning within a reasonable period or had gone into hiding to avoid service of any process from the courts. If he had only made the inquiries suggested above, he could have returned in the evening of 10 October 1989 or on any of the succeeding days - including the following Saturday and Sunday. Service of summons may be made at night as well as during the day, or even on a Sunday or holiday because of its ministerial character. 2. YES GR: MTD was not filed seasonably because it was filed beyond the reglementary period provided in the Revised Rules of Court (valid service of summons) X: defendant has not been properly summoned, the period to file a motion to dismiss for lack of jurisdiction over his person does not commence to run until he voluntarily submits to the jurisdiction of the court, since the court has no jurisdiction to adjudicate the controversy as to him until such time. In this case, petitioners did not voluntarily submit to the jurisdiction of the trial court. Consequently, the period to file a responsive pleading did not even commence to run. 3. NO GR: Petition for Certiorari should only be availed of in extraordinary cases and when there are no other speedy remedies X: when the trial court clearly acted outside of its jurisdiction or with grave abuse of discretion in denying the motion to dismiss. -This is exactly what happened in the case while it was pending before the trial court; the denial of the motion to dismiss was based solely on the ground that a judgment by default had already been entered. Certainly, this does not constitute a

valid ground for the denial because the motion raises a fundamental and prejudicial issue affecting the validity of the decision by default. WHEREFORE, the Decision of the respondent Court of Appeals of 30 May 1991 and the Resolution dated 30 July 1991 in CA-G.R. SP No. 22232 are hereby REVERSED and SET ASIDE. The Order of Branch 82 of the Regional Trial Court of Quezon City of 29 December 1989 (Civil Case No. Q-89-3327) declaring petitioners in default, its Decision of 24 January 1990, Orders of 5 March 1990 and 9 July 1990 and the writ of execution issued therein, as well as all proceedings had pursuant to the writ of execution, are declared NULL and VOID. The case is hereby remanded to the court of origin for further proceedings which shall include the valid service of summons. SO ORDERED. DOLORES, NICOLAS and RICARDO DELOS SANTOS VS Judge MONTESA and JUANA DELOS SANTOS G.R. No. 73531 MELO; 1993 FACTS - Juana, who supposedly own the lot in question, a portion of which Dolores et.al. (petitioners) entered and occupied, lodged the complaint for Petitioners eviction. Summons was served through the mother of petitioners when the process server was unable to locate Dolores, Nicolas, and Ricardo delos Santos in Bulacan. For failure of petitioners to submit the corresponding answer, judgment was rendered pursuant to the rules on summary procedure. - The court ordered the petitioners to vacate the lot in question and to pay P5k as rental from 1985 until possession is surrendered. Upon appeal, the RTC presided by, respondent Judge Montesa granted Juanas motion for execution pending appeal on account of petitioners failure to post supersedeas bond. To set aside the proceedings in the lower court, this petition at hand was instituted anchored on the supposition that petitioners were deprived of their day in court. Upon learning if the said decision, petitioners sought to reconsider on the principal thesis that: they were never served notice of conciliation meeting at the barangay level they were never served with summons respondent was referring to a different piece of realty Dolores husband should have been impleaded ISSUE WON these arguments are meritorious HELD No. All these arguments are to no avail. The writ of execution was ordered due to petitioners failure to post supersedeas bond. -although the proof of service of the summons upon petitioners does not indicate impossibility of personal service, a condition precedent for resorting to substituted service, still, any defect in form and in the manner of effecting service thereof were nonetheless erased when petitioners' counsel moved to re-examine the impugned decision and posed a subsequent bid on appeal to impede immediate execution. Indeed, such demeanor is tantamount to voluntary submission to the competencia of the court within the purview of Section 23, Rule 14 of the Revised Rules of Court since any mode of appearance in court by a defendant or his lawyer is equivalent to service of summons, absent any indication that the appearance of counsel for petitioner was precisely to protest the jurisdiction of the court over the person of defendant. Neither can such appearance be considered as a special

appearance founded on the sole challenge on invalid service of summons since the application therefor raised another ground on failure to state a cause of action when conciliation proceedings at the barangay level were allegedly bypassed or disregarded. -The issue as the fact that petitioners are supposedly occupying a parcel of land other than the realty claimed by Juana deserves scant consideration since a clarification on a factual query of this nature is entertained only on the lower courts. -Petitioners argue that the execution pending appeal was ordered without any prior notice to them. This notion is also devoid of substance since it erroneously suggests that the court is duty-bound to notify petitioners of the immediate enforcement of the appeal under Section 2, Rule 39 of the Revised Rules of Court who is obliged to serve a copy of such motion on the adverse party's counsel, which, on the face of the subject motion, was effected by personal delivery. -In fine, petitioners may not press the idea that they were deprived of their day in court amidst the implicit forms of waiver performed by their lawyer in submitting every conceivable defense for petitioners via the two motions for reconsideration below. DISPOSITIVE WHEREFORE, the petition is hereby DISMISSED for lack of merit *Voluntary appearance

BOTICANO V CHU G.R. No. L-58036 PARAS; March 16, 1987

NATURE Petition for review on certiorari seeking to reverse and set aside the decision of the CA which holds that defendant was not properly served with summons. FACTS - Petitioner Eliseo Boticano (BOTICANO) is the registered owner of a Bedford truck which he was using in hauling logs for a certain fee. In the evening of September 3, 1971, it was properly parked at the shoulder of the national highway in Barrio Labi, Bongabon, Nueva Ecija when it was hit and bumped at the rear portion by another Bedford truck. Bedford truck 2 was owned by private respondent Manuel Chu, Jr. (CHU) and driven by Jaime Sigua. - CHU acknowledged ownership thereof and agreed with BOTICANO to shoulder the expenses of the repair of the damaged truck of the latter. - CHU failed to comply with aforesaid agreement as well as to pay damages representing lost income despite BOTICANOs demands, prompting the latter to file a complaint on November 24, 1977 at the CFI of Nueva Ecija, against CHU and SIGUA. CFI: Summons was issued on December 12, 1977 but was returned unserved for defendant Jaime Sigua because he was no longer connected with San Pedro Saw Mill, while another copy of the summons for Manuel Chu, Jr. was returned duly served on him thru his wife Veronica Chu at his dwelling house. - BOTICANO moved to dismiss the case against SIGUA and to declare CHU in default for failure to file responsive pleadings within the reglementary period. The motion was granted by the lower court in allowing BOTICANO to adduce his evidence ex parte. - The trial court found that CHU is responsible for the fault and negligence of his driver Sigua under Article 2180 of the Civil Code, whose negligence and lack of due care was the immediate and proximate cause of the damage.

- CHU filed with the trial court a "Notice of Appeal" and an Urgent Motion for Extension of Time to file Record on Appeal which was granted by the trial court. CHU also changed counsels. - BOTICANO filed with the trial court a Motion to Dismiss Appeal and for execution which was set for hearing on May 14, 1979 wherein CHUs counsel personally appeared and opposed petitioner's motion while on the latter date petitioner filed his reply to opposition, after which on May 16, 1979 the trial court issued an order denying aforesaid motion, while on May 22, 1979, the trial court issued another order approving private respondent's Record on Appeal. CA: After parties filed their respective briefs, CA rendered a decision setting aside the appealed judgment for being null and void. CA ordered that the case be remanded to the court of origin; that appellant be properly served with summons. - CA is of the view that from all the actions and steps taken by CHU no presumption can arise that he voluntarily submitted himself to the jurisdiction of the Court. In fact according to said Court, all of these actions taken by the appellant are geared and mustered towards contesting the court's jurisdiction over his person, or of attacking the validity of the judgment on jurisdictional grounds. - BOTICANO filed with CA a Motion for Reconsideration and a Supplemental Motion for Reconsideration. CA denied the Motion for Reconsideration. SC: In compliance with the resolution of this Court, CHU filed his comment. BOTICANO then filed a reply thereto in compliance with the resolution of December 7, 1981, after which the petition was given due course in the resolution of February 8, 1982 and the parties were required to file their respective memoranda. Petitioner filed his memorandum on March 19, 1982, while private respondent filed his memorandum on April 15, 1982. Thereafter, in the resolution of April 30, 1982, the case was submitted for decision. ISSUE(S) 1. WON the question of jurisdiction over the person of the defendant can be raised for the first time on appeal (as held by the CA, summons was improperly served on CHU). HELD 1. NO Ratio Upon general principles, defects in jurisdiction arising from irregularities in the commencement of the proceedings, defective process or even absence of process may be waived by a failure to make seasonable objections. Reasoning - Chu could have questioned the jurisdiction of the lower court but he did not. - It can of course be argued that the failure to question the lower court's jurisdiction cannot be accounted against Chu for his having been declared in default gave him no chance to participate in the court deliberations and therefore no chance to raise the jurisdictional issue, but then, he could have done so, in the subsequent pleadings he filed. Even assuming that such failure cannot be taken against him, the fact is he had VOLUNTARILY submitted himself to the court's jurisdiction. - CHU voluntarily appeared thru counsel in the trial court. He filed a Notice of Appeal, Appeal Bond, Motion for Extension of Time to File Record on Appeal, Record on Appeal, Motion for Withdrawal of Appearance, Notice of Appearance and Opposition to Plaintiff's Motion to Dismiss Appeal and for Issuance of a Writ of Execution. Not only did he submit pleadings and motions, but he likewise appeared in person, thru counsel in the hearing held on May 14, 1979 at 8:30 a.m. and orally argued in open court on the pending incident. - Under Section 23, Rule 14 of the Rules of Court, the defendant's voluntary appearance in the action shall be equivalent to service. Thus,

under this principle, it has been consistently held by the Supreme Court that the defect of summons is cured by the voluntary appearance of the defendant. - If the defendant in the Regional Trial Court (RTC) has been declared in default, may he appeal the default judgment that may subsequently be rendered even if he has not asked the RTC to set aside the declaration of default? The answer is in the affirmative. However a distinction must be made as to the effects of such appeal. (a) If an appeal is made without first asking the RTC to set aside the declaration of default, and the CA sets aside on said declaration, all he can get is a review of the RTC's default judgment without the opportunity of having the higher court consider defense evidence (for the simple reason that no evidence was even adduced by him in the RTC). (b) If the defendant first asks the RTC to set aside the declaration of default (See Rule 18, secs. 2 and 3, Rules of Court), and he is able to prevail, the declaration will be set aside, and he will now have the opportunity to present his evidence in the RTC. Thus, even if he finally loses in the RTC's subsequent decision, his defense can be considered, when appeal is made to the appellate tribunal. Of course, even if the default declaration is not set aside despite his motion for the setting aside, he will be entitled to all notices in the court proceedings, and can file any pleading he may wish to file, including the notice of appeal. (See Rule 13, sec. 9, Rules of Court). - In the case at bar, there is no question that summons was timely issued and received by private respondent. In fact, he never denied actual receipt of such summons but confined himself to the argument that the Sheriff should prove that personal service was first made before resorting to substituted service. - Indeed, such construction is but fair, and in accord with substantial justice. The burden on a plaintiff is not to be enlarged with a restrictive construction desired by the defendant. (Ibid., p. 1078). - In a last ditch effort, CHU insists that there was no valid service of summons because private respondent is a partner and general manager in San Pedro Sawmill. Consequently the wife of private respondent to whom summons and complaint were allegedly served not being partnership, cannot receive the same under Section 13 of Rule 14 of the Rules of Court. - It has however been settled that actions must be brought by the real parties in interest and against the persons who are bound by the judgment obtained therein. - The title of the case both in the trial court, in the Court of Appeals and in this Court shows that the partnership is not a party. On the contrary, as previously stated private respondent himself assumed the responsibility of the accident and is now estopped to disclaim the liabilities pertaining thereto. DISPOSITIVE Decision of the CA is reversed and set aside, and the decision of the CFI is reinstated. DBP v. JUSTICE PUNDOGAR ROMERO, J p: Behind the innocuous title of the case is the unraveling of a tale of the government's dashed hopes of taking off for an industrial economy through the setting up of an integrated steel plant that it supported in the sixties through gargantuan investments therein; of how the said enterprise floundered after repeatedly defaulting in its obligations leading to the inevitable foreclosure of its assets; of how it laid low for fourteen years spanning the martial law regime only to resurface now to claim what it vigorously insists is its own; and how the government, through the highest reaches of officialdom, is now waging an equally relentless fight to

permanently keep what it considers to belong to it by just and legitimate title in order that it may resume its interrupted economic dream. In legalese, this is a special civil action for certiorari which seeks to annul and set aside the trial court's Order dated August 31, 1990 which denied petitioners' motion to dismiss and also the Order dated December 27, 1990 which likewise denied petitioners' motion for reconsideration. The historical antecedents of the present petition hark back to 1955 when Republic Act No. 1396 was enacted authorizing National Shipyards and Steel Corporation (NASSCO) to establish a pig-iron smelting plant. When NASSCO started negotiations with the United States Export-Import Bank (EXIMBANK) for a $62.3 million loan, the latter suggested that the management of the project be placed in the hands of the private sector. After a public bidding, the Jacinto Steel, Inc. (JSI) was entrusted with the implementation of the project. Later, in October 1963, Iligan Integrated Steel Mills, Inc. (IISMI) was incorporated with the Jacintos and the Government, through the GSIS, SSS and NASSCO as principal investors and about fifty other minority stockholders. 1 On January 22, 1964, an agreement was entered into by the Government, IISMI and the EXIMBANK whereby the latter would provide the funds required to launch the project into commercial operation, including provisions for overruns and other financial assistance. On the same date, IISMI and the Government entered into a collateral agreement whereby the Government committed to extend equity and nonequity funds to IISMI during the construction period, including an amount of no less than P34 million. Pursuant to a Second Collateral Agreement dated July 26, 1966, the Development Bank of the Philippines granted IISMI additional loans which were secured by real and chattel mortgages over all of IISMI's assets. In order to forestall a threatened foreclosure due to defaults in loan payments, IISMI instituted on June 1, 1971 an injunction suit against the Republic of the Philippines, Development Bank of the Philippines (DBP), Central Bank of the Philippines (CB), Board of Investments (BOI) and the Sheriff of Lanao del Norte and Iligan City. The complaint 2 which was docketed as Civil Case No. 1701 alleged that the inability of IISMI to meet its obligations was due to "(g)overnment violations of its commitments to the Integrated Steel Project" which "were all in pursuance of the concerted and single-minded plan of the defendants to foreclose the mortgaged properties of the plaintiff and/or take over the management and ownership of IISMI or its properties, plants, or mills." The preliminary injunction issued by the court 3 on August 11, 1971 was questioned by the DBP in G.R. No. L-34188 and the CB in G.R. No. L-33986. When the motion to dismiss filed by the Republic and the BOI on the grounds of improper venue and non-suability of the State was denied, the parties likewise questioned the denial order in G.R. No. L-33949. Subsequently, this Court ordered the consolidation of these petitions and set them all for a joint hearing. 4 While these cases were pending before the Court, then President Marcos issued Proclamation 1081 on September 21, 1972 declaring a state of martial law. He thereafter issued four Letters of Instructions 5 directing the Secretary of National Defense to take over and control the operation of IISMI and other Jacinto-held companies "for the duration of the present national emergency or until otherwise ordered" because the acts of management of IISMI "indicated that IISMI disposed of property by fraudulent means and that the funds or money earned was (sic) not properly accounted for, and neither were they applied for payment of obligations due the Government and the government-owned corporations."

On October 23, 1973, the Court ordered the lower court "to resume proceedings in Civil Case No. 1701 by receiving further evidence which the parties may desire to present relative to all the issues they have so far raised and, thereafter, to resolve all the incidents related to the writ of preliminary injunction said court has issued and every other incident in the said case and/or render final judgment in the main case on the merits." 6 On January 10, 1974, the lower court 7 issued an Order dissolving the writ of preliminary injunction. 8 It held that there was mismanagement of the financial affairs of IISMI by its corporate officials through the diversion of its profits to other Jacinto-controlled corporations especially to Ferro Products Inc. (FERRO), its known marketing instrumentality and biggest single buyer, which led to its failure to meet its different due and demandable obligations to DBP. More specifically, mismanagement was shown by the setting up of an unrealistic pricing scheme where, while the floating exchange rate jacked up the cost of materials by 50%, the selling price of goods sold to FERRO was increased by only 25% and FERRO resold the goods at prices higher by 30%, thus realizing in the process additional gross profits of 5%; by giving FERRO extraordinarily long credit terms of 90-180 days; by unduly postponing FERRO's payments of its matured payables through reinvoicing; by unjustifiably delaying the collecting trade and non-trade receivables from FERRO and other Jacinto-controlled corporations; by heavily loading the selling expenses of IISMI with other non-legitimate charges which created an economic imbalance between its income and expenses; by giving interest-free loans and direct advances from IISMI funds to the Jacintos and their corporations; by passing on to IISMI travel and representation expenses of the Jacintos and their own corporations thus, using IISMI funds to pay expenses of some Jacinto-controlled corporations; by making IISMI borrow at 12% interest per annum from Jacinto-controlled corporations instead of IISMI collecting receivables from its debtors especially FERRO; by appropriating IISMI's money to the Jacintos' private benefit; by debiting IISMI for goods and shipments actually received not by IISMI but by the Jacintos and their corporations; and by importing raw materials for Jacinto-controlled corporations through the use of DBP guaranties intended for IISMI. Likewise, the court found that there were attempts to hide these corporate malpractices by "window dressing" of the financial statements and records of IISMI and of the Jacinto-controlled corporations. This consisted in understating profits to create the impression that losses were not due to improper operations but rather to other factors like the floating exchange rate; painting a favorable but unreal cash position on the part of IISMI; creating an ostensibly favorable asset position by including as IISMI's assets goods returned by FERRO to the Security Bank and Trust Co.; by overstating the inventories account; and by understating the account receivables from FERRO and other Jacinto-controlled corporations by intercepting legitimate payables to IISMI. Moreover, the lower court rejected the claim of IISMI that its failure to meet its obligations was due to the floating exchange rate, holding that IISMI could only claim a loss of P51.9 million owing to the floating rate as importations before February 1970 were sold at pre-devaluation prices even after devaluation. However, no such loss could be claimed after June 1970 since price adjustments could and should have been instituted by IISMI after that time. Furthermore, despite the disposition of the processed raw materials, IISMI failed to use the proceeds to liquidate its accounts which, as of June 30, 1972 had ballooned to P407 million. Such failure compelled DBP to assume payments in its capacity as guarantor to assume payments due to IISMI's creditors.

Lastly, the court held that IISMI cannot pin the blame for the delay in payments of its obligations on the alleged delay in the release of DBP, SSS and GSIS funds. The bulk of IISMI's obligations arose from subsequent raw material importations guaranteed by DBP. These accounts were only incurred by IISMI after DBP, SSS and GSIS had released their respective funds to IISMI. Thus, the lower court concluded: "It is settled jurisprudence that an applicant for writ of preliminary injunction should be able to establish a clear case, free from doubt and dispute. Since injunction is an equitable remedy, an applicant must also come to court with clean hands. As discussed above, the evidence show that IISMI has failed to satisfy both basic requirements to entitle it to a writ of preliminary injunction." 9 On February 25, 1974, the court deemed the pre-trial conference terminated and dismissed the complaint filed by IISMI with prejudice for its failure to appear during the pre-trial despite due notice. 10 After the finality of the January 10, 1974 Order, DBP filed an application for extrajudicial foreclosure of the IISMI mortgages. On February 26, 1974, the IISMI plant and assets were thus auctioned to DBP as the highest bidder. After one year, or on March 24, 1975, DBP consolidated its ownership over the said properties. 11 On December 29, 1989 or fourteen (14) years from said consolidation of ownership, IISMI, Fernando Jacinto and Jacinto Steel, Inc. (JSI) filed a complaint 12 docketed as Civil Case No. 111-1549 before Branch 3 of the Iligan Regional Trial Court against petitioners DBP, National Development Corporation (NDC) and National Steel Corporation (NSC) praying that judgment be rendered "1. Setting aside and declaring as null and void: 1.1 The extra-judicial foreclosure conducted by the provincial sheriff of Iligan City on February 26, 1974 of the mortgage contract dated August 1, 1966, additional mortgage dated January 13, 1967, addendum to chattel mortgage dated January 13, 1967, additional mortgage dated May 20, 1968 and additional mortgage dated December 22, 1969, all executed by IISMI in favor of DBP. 1.2 The certificate of sale issued by the provincial sheriff of Iligan City in consequence of the extra-judicial foreclosure of the mortgages referred to in 1.1 of this prayer; 2. Ordering all defendants, jointly and severally, to restore and/or return to IISMI all the properties subject of the extra-judicial foreclosure of the mortgages referred to in 1.1 or 1.2 of this prayer portion; 3. Ordering the Register of Deeds, Iligan City, to cancel Transfer Certificate of Title No. P-25, 959 (a.f.) of the Registry of Deeds for Iligan City and to issue replacement transfer certificates of title in the name of IISMI." 13 Petitioners filed their respective motions to dismiss 14 on the grounds of lack of jurisdiction, failure to state cause of action, prescription and res judicata. On March 31, 1990, private respondents filed an amended complaint. 15 Petitioners adopted their earlier motions to dismiss as their motion to dismiss the amended complaint. 16 On May 4, 1990, National Steel Corporation filed a motion to cancel notice of lis pendens which was opposed by private respondents on June 22, 1990.

On August 31, 1990, the lower court 17 issued an order denying the motions to dismiss. 18 The motion for reconsideration was likewise denied on December 27, 1990. 19 Hence, the present petition for certiorari which was filed on February 5, 1991 seeking the nullification of the two aforementioned orders. On February 7, 1991, this Court issued a Temporary Restraining Order requiring respondent Judge Amir Pundogar to desist from taking any further proceeding in Civil Case No. 1111549. For a clear disposition of the issues raised, we shall consider them seriatim. I. PROCEDURAL GROUND Private respondents question the propriety of the instant petition for certiorari before the Court on the ground that the Order denying a motion to dismiss, being interlocutory, cannot be the subject of a special civil action. They aver that the proper remedy is to file in the lower court an answer interposing as defenses the objections raised in the motion to dismiss, proceed to trial and, in case of an adverse decision, elevate the same by appeal. Petitioners, on the other hand, argue that the case at bar is an exception to the general rule. Besides, there is no appeal nor any other plain, speedy and adequate remedy. They contend that the instant petition can be entertained by the Court for the purpose of correcting the questioned Orders which were issued by respondent judge with grave abuse of discretion. Private respondents correctly cited the general rule in elevating cases to this Court. The rule, however, admits of exceptions, such as when the court, in denying the motion to dismiss acts without or in excess of jurisdiction or with grave abuse of discretion. In such an instance, certiorari becomes available in order to relieve the defendant of the trouble of undergoing the ordeal and expense of a useless trial. 20 As will be seen in the subsequent discussion, petitioners are rightfully entitled to the recourse availed of as it is part of the supervisory authority of the Court to correct the error committed. 21 Furthermore, the direct invocation of this Court's original jurisdiction to issue writs of certiorari should be allowed as there are special reasons therefor clearly and specifically set out in the petition 22 as quoted hereunder: "The Respondent Judge's unlawful refusal to immediately dismiss, and the continuing pendency of Civil Case No. 111-1549 has coated the Jacinto claim with a misleading veneer of plausibility which is obstructing and causing inevitable delays in (i) the government's and NDC's plans to privatize NSC at the earliest possible time and under optional conditions generating the maximum returns for NDC, the country and the Filipino people; (ii) NSC's Integrated Steel Mill Project and (iii) the development of the nation's steel industry as well as the country's industrialization both of which have already suffered an incalculable fall due to IISMI's ruin masterminded and engineered by Jacinto and his family." 23 II. SUBSTANTIVE GROUNDS A. RES JUDICATA Petitioners contend that the final Orders of January 10, 1974 and February 25, 1974 in Civil Case No. 1701 bar IISMI from filing Civil Case No. 111-1549, which questions the same DBP foreclosure upon the very same claim that the foreclosure was fraudulent, that is, IISMI defaulted on its loans due to GSIS-SSS-DBP-CB conspiracy.

The only difference is that in Civil Case No. 1701, they asked for a prospective relief (that the threatened DBP foreclosure be enjoined) while in Civil Case No. 111-1549, they asked for a retrospective relief (that the foreclosure be annulled). Private respondents, on the other hand, argue that the present action cannot be barred by res judicata because the proceedings in Civil Case No. 1701 is not a judgment on the merits and there is no identity of causes of action between the first and the second cases. Res judicata is indeed present. Imbedded in Philippine jurisprudence are the elements constituting res judicata as a ground for the dismissal of a complaint: a) the former judgment must be final; b) the court which rendered it had jurisdiction over the subject matter and the parties; c) it must be a judgment on the merits and d) there must be, between the first and second actions, identity of parties, subject matter and causes of action. 24 The first three requisites are obviously present. The Orders of January 10, 1974 and February 25, 1974 attained finality as no motion for reconsideration or appeal had been filed. 25 The said Orders were issued by the CFI of Lanao del Norte, Branch 11 which had jurisdiction over the injunction case as the property subject of the complaint is located within its territorial jurisdiction. These Orders are judgments on the merits. In the Order of January 10, 1974 where the writ of preliminary injunction was lifted, then Judge Tutaan, after considering not only the evidence presented during the hearing of the motion for preliminary injunction but also the additional evidence presented after this Court ordered the resumption of proceedings, found that a case of mismanagement existed. On the other hand, the Order of February 25, 1974 whereby the complaint was dismissed with prejudice for failure to appear during the pre-trial despite due notice, had the effect of an adjudication upon the merits. 26 For the fourth requisite to exist, the identity required is not only of the parties and subject matter but also of the causes of action. In Civil Case No. 1701, the complaint was filed by IISMI against the Republic, BOI, CB and DBP. In Civil Case No. 111-1549, the complaint was filed by IISMI, Fernando Jacinto and Jacinto Steel, Inc. against DBP, NDC and NSC. For res judicata to apply, absolute identity of parties is not required because substantial identity is sufficient. 27 Inclusion of additional parties will not affect the application of the principle of res judicata. 28 In both cases, the subject matter involved is the Iligan Integrated Steel Mills, Inc. As regards identity of causes of action, this requisite is similarly present although the same may not be quite apparent. In Civil Case No. 170l, the caption clearly indicates that the action is one for injunction while in Civil Case No. 111-1549, the caption does not state the title of the action as required by Sec. 1, Rule 7 of the Rules of Court. This omission notwithstanding, the test of identity of causes of action lies, not in the form of the action, but on whether the same evidence would support and establish the former and the present causes of action. 29 A comparison between the allegations of the complaints in Civil Case No. 1701 and that of Civil Case No. 111-1549 reveals that there is indeed identity of causes of action. In both cases, private respondents claim that DBP has no right to foreclose because it violated its financial commitments to IISMI and that it conspired with other agencies of the government to cause the latter's financial ruin. It follows, therefore, that the evidence that private respondents used to support Civil Case No. 1701 is the same evidence that they would utilize to establish Civil Case No. 1111549.

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Private respondents claim that there is no identity of causes of action because the amended complaint added several allegations which were not present in the complaint for injunction (Civil Case No. 1701) as they could not have been alleged in that case, and therefore, the evidence necessary to sustain Civil Case No. 111-1549 could not have been the same as in the former case. On the contrary, petitioners insist that there is identity of causes of action because respondent Judge cannot resolve the issue presented in Civil Case No. 111-1549 and grant the reliefs sought without annulling the 1974 Orders. Hence, the additional allegations will not change the cause of action in the two cases. We agree with petitioners. It should be noted that said additional allegations may be categorized into three: first, those that have arisen after the filing of Civil Case No. 1701; second, those that pertain to the foreclosure; and third, developments after the EDSA Revolution. The first group of allegations supposedly affecting the validity of the foreclosure consists of the declaration of Martial Law, 30 the issuance of LOI No. 27, 31 the seizure of IISMI's records and the detention of some of its officers, 32 the cancellation of passports of the members of the Jacinto family, 33 and the withdrawal of IISMI's counsel. 34 It is significant to note that while these matters were not alleged in Civil Case No. 1701 as they developed only after its filing, said events had in fact been brought to the attention of this Court which disposed of them in this wise: ". . . the Court finds no other alternative but to terminate the present proceedings in this Court, so as to give way to further proceedings in the Court below, wherein all pertinent issues arising from the developments which have taken place since August 17, 1972 may be appropriately and fully threshed out, considering that the factual matters involved therein would require the formal and proper presentation of varied and voluminous evidence which the Court is not adequately equipped to receive." 35 underscoring supplied). Thus, the CFI of Lanao del Norte, when it resumed the hearing, was expected to settle, not only the allegations in the complaint, but even those matters that had developed during the pendency of the three petitions for certiorari before this Court. It follows perforce, that the subsequent dismissal of Civil Case No. 1701 for failure to prosecute is not limited solely to the allegations of the complaint therein. Hence, these additional allegations can no longer be raised for the second time as res judicata now operates. This is supported by Sec. 49 of Rule 39 of the Rules of Court which states: "Sec. 49 Effect of Judgments. xxx xxx xxx

shrift of these allegations by pointing out that the sheriff's act of selling the property which was then under government control is woven into the very warp and woof of the issue of the legality of the take-over. Considering that private respondents had waived their opportunity to question the take-over, they cannot raise the same belatedly. Otherwise, the effect would be to allow private respondents to evade their liabilities simply because the foreclosure happened at the time when martial law was in effect. As to the claim that the Jacintos offered in a letter to redeem IISMI through a credit line facilitated by a foreign bank, suffice it to say that this is not the redemption contemplated by the law and its inclusion will not make res judicata inoperable. 38 Lastly, private respondents alleged "facts which transpired after EDSA", viz.: the Enrile Memorandum to President Aquino, the Enrile Memorandum to former Department of Trade and Industry Secretary Jose Concepcion, the Order of Dismissal issued by the PCGG, the Legal Opinion of DBP's former Chief Legal Counsel dated December 5, 1986, the Opinion of the Deputy Government Corporate Counsel dated January 14, 1984, and the Letter of the Undersecretary of Justice dated February 13, 1987. 39 Private respondents have erroneously termed these "opinions" written after the EDSA Revolution as "facts". Truth to tell, no factor event has supervened which may justify the overturning of a finding of the court which had long become final. These are but long debunked, tired reiterations of the same Jacinto refrain, of "fraudulent, illegal and systematic deprivation of IISMI of its assets (w)as part of a general preconceived plan . . . to oppress, impoverish and destroy Jacinto and his family and their interests." 40 B. JURISDICTION Petitioners assert that the lower court has no jurisdiction because the present case seeks to annul the Orders of January 10, 1974 and February 25, 1974 of the then CFI of Lanao del Norte. As such, it is the Court of Appeals which has the exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts. 41 They observe that while private respondents concede that this case does not expressly pray for the annulment of the said decision, their prayers, if granted, will, of necessity, invalidate the foreclosure. Furthermore, petitioners assert that since the allegations raised in both cases are the same, respondent Judge cannot resolve the issues presented without annulling the questioned Orders in Civil Case No. 1701. On the other hand, private respondents believe that the lower court has jurisdiction over the instant case as it involves reconveyance of real property 42 and that the Orders are limited to the circumstances prevailing at the time of the filing of the complaint. For its part, the lower court did not consider the attack on jurisdiction well-taken because the annulment of the decision in Civil Case No. 1701 is not being sought by private respondents. 43 We agree with petitioners that the lower court committed grave abuse of discretion in taking jurisdiction over Civil Case No. 111-1549. The failure of respondents to expressly pray for the annulment of the Orders dated January 10, 1974 and February 25, 1974 does not mean lack of interest on their part in having them declared void. To be sure, the prayers are explicitly limited to seeking the nullification of the extrajudicial foreclosure on February 26, 1974 and the certificate of sale issued by the provincial sheriff of Iligan City, the restoration and/or return to IISMI of all the foreclosed properties and the cancellation of TCT No. P-25.959 (a.f.), as well as the

(b) In other cases the judgment or order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; underscoring supplied). xxx xxx xxx"

The second group of allegations pertaining to the foreclosure are specifically, that the sheriff sold IISMI at public auction when it was not in the possession of the mortgagee 36 and that the Jacintos offered to redeem the same. 37 We make short

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issuance of a replacement transfer certificate of title in the name of IISMI. A close scrutiny of the allegations in the complaint, however, would reveal that if the prayers are to be granted, the resultant effect would be to annul the findings of mismanagement made in the Order of January 10, 1974 and to re-litigate the same claims which had been earlier dismissed with prejudice in the Order of February 25, 1974. Private respondents' submission that the action is one for reconveyance of property is misleading, as reconveyance is but the inevitable consequence once these two Orders are annulled. C. PRESCRIPTION Petitioners contend that the action has prescribed since the case was filed almost sixteen (16) years after the 1974 Orders. They assert that, based on the allegations in the complaint, if tort or quasi-delict were committed, the four-year prescriptive period 44 has obviously lapsed. If constructive trust is established, the ten-year prescriptive period 45 has likewise expired. Private respondents counter that regardless of the prescriptive period (four or ten years) applicable, the same was suspended during the martial law regime which should be treated as a force majeure and hence, the prescriptive period should start to run only on February 25, 1986. 46 Involving as it does an issue of fact, they aver that the presentation of evidence must be made before the trial court. Furthermore, they allege that since the action is one to recover immovable property, the same prescribes in thirty (30) years. 47 In any case, they assert that the action is imprescriptible under Art. 1410 of the New Civil Code. 48 We can do no better than to cite the case of Tan v. Court of Appeals, 49 reiterated in National Development Co. v. Court of Appeals 50 and quote the portion of the decision which deals with the issue of whether or not martial law interrupted the running of the prescriptive periods: "We cannot accept the petitioners' contention that the period during which authoritarian rule was in force had interrupted prescription and that the same began to run only on February 25, 1986, when the Aquino government took power. It is true that under Article 1154: 'ART. 1154. The period during which the obligee was prevented by a fortuitous event from enforcing his right is not reckoned against him.' fortuitous events have the effect of tolling the period of prescription. However, we cannot say, as a universal rule, that the period from September 21, 1972 through February 25, 1986 involves a force majeure. Plainly, we cannot box 1n the `dictatorial' period within the term without distinction, and without, by necessity, suspending all liabilities, however demandable, incurred during that period, including perhaps those ordered by this Court to be paid. While this Court is cognizant of acts of the last regime, especially political acts, that might have indeed precluded the enforcement of liability against that regime and/or its minions, the Court is not inclined to make quite a sweeping pronouncement, considering especially the unsettling effects such a pronouncement is likely to bring about. It is our opinion that claims should be taken on a case-to-case basis. This selective rule is compelled, among others, by the fact that not all those imprisoned or detained by the past dictatorship were true political oppositionists, or, for that matter, innocent of any crime or wrongdoing. Indeed, not a few of them were manipulators and scoundrels." 51 underscoring supplied)

In order to prove that they were prevented from commencing the suit during the Marcos regime, private respondents narrated that the passports of the Jacinto family, who were then abroad, were cancelled; all their resources were taken over by the Government; their lawyers were constrained to withdraw their appearances because of the change in the membership of the Board of Directors of IISMI, and the incarceration of the executives of IISMI who would have been witnesses in the case. They would have the Court take judicial notice of these facts. We cannot do so. If this Court does, then it would be relieving private respondents of their bounden duty to show that during martial law they were so circumstanced that it was impossible for them to commence, continue or even resist an action. And yet a fullblown hearing is not even necessary as the so-called "special circumstances" do not convince this Court that, in this particular case, martial law should be treated as force majeure that suspends the running of prescription. Likewise, petitioners have consistently pointed out that during the hearing of the motion to dismiss, private respondents failed to adduce any proof regarding their allegations on the tolling of the prescriptive period. Private respondents have not, in any of their pleadings, rebutted this. The allegation regarding the refugee status of the Jacintos finds utterly no support in the records. Considering the voluminous pleadings they had filed before this Court, it comes as a surprise that they never offered documentary evidence to prove their possession of such status, let alone explain its legal implications. For the Court to now give evidentiary value to this unsupported allegation is to be recreant to its sworn duty to uphold and apply the law. The dissenting opinion of our respected Colleague poses as the threshold issue: "whether or not in the name of economic development, the Government can act in a manner basically unfair and arbitrary and deny to a party with a legitimate grievance, a remedy in law." To the extent that it anchors practically the whole opinion on the assumption that the Government has indeed acted "in a manner basically unfair and arbitrary" as to "deny to a party with a legitimate grievance, a remedy in law" is to mislead him who seeks to address the imponderables of the case objectively, impartially and fairly. To cast the issue in such terminology is to ensnare the unwary who, in much the same manner, is confronted with the question: "When did you stop beating your wife?" on the false assumption that the addressee is in fact guilty of the obnoxious act of wife-bashing. The dissenting opinion stands for the proposition that the private respondents were denied due process inasmuch as, being abroad when part of the trial was being conducted, they were not given their day in court. We are strongly convinced, however, upon careful scrutiny of the records that private respondents have in fact been accorded the guaranties of due process. There is no question that they were accorded the opportunity to be heard which is the touchstone for determining whether a party litigant has been granted the right to due process, but they can hardly blame anyone if they somehow failed to fully utilize this. To over now that they have been deprived of the same is not to prove said assertion. It is important to note that when martial law was declared, the Jacintos were already abroad. Their physical absence did not, however, deter them from filing Civil Case No. 1701. They had present counsel as their counsel at the time. For almost a year, these lawyers acted on their behalf and obtained appropriate judicial relief. Their lawyer-client relationship was only terminated when their counsel filed on July 30, 1973 a Manifestation and Omnibus Motion praying for

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leave to withdraw from representation in the cases before us. On this point, we made this observation in Republic v. CFI of Lanao del Norte: "From the latest pleadings of petitioners, however, supported, as they are, by official reports which are more specific and factual, the situation relative to the equities in these cases appears to Us to have changed considerably. And in the face of this circumstance, counsel for IISMI have not been able to present sufficiently documented denials and rebuttals of the new allegations of petitioners, albeit they excuse themselves by alleging that they have lost contact with their clients, the principal private investors who used to be in control of respondent corporation. It is claimed that said private investors have gone abroad to places unknown to said counsel, for which reason, precisely, the latter are even asking for leave to be allowed to withdraw their representation. Under the circumstances, and considering that to await the uncertain return of the private investors would jeopardize the efforts of the government to make the national Project herein involved, as conceived in the triangular agreement among the Republic, the Exim Bank and IISMI itself, namely, the establishment of an integrated steel complex to meet the requirements of the industry and economy of the whole country, totally operative without further loss of time, the Court is of the considered opinion that all the matters here in dispute, should be referred to the respondent court for further proceedings and appropriate resolution. Indeed, having in view the nature and volume of the evidence which the parties would have to present in connection with the factual issues raised by petitioners regarding what they claim to have discovered or unearthed after the Secretary of National Defense took over the `management, control and operation' of IISMI, may be justly and comprehensively resolved only after such evidence have been received by the trial court, rather than this Court, since it has the ready adequate machinery for the purpose. And with such additional evidence, the trial court would naturally be in a better position than before to rule on the injunctions which have given rise to these proceedings. xxx xxx xxx

found this not to be the case and even impressed upon the Jacintos that they had it in their power to remedy the situation. When their counsel's motion to withdraw was granted by this Court, their logical move should have been to engage the services of other lawyers to represent them before the CFI of Lanao del Norte. This they failed to do. However, while abroad, they managed to hire the services of one Mr. Floyd H. Shebley and Mr. Jose W. Diokno, a staunch anti-Marcos man and former senator of the Philippines. Considering this and the fact that the absence of private respondents did not actually prevent them from filing the injunction case, perforce, when they lost therein, they could have filed an appeal or a separate action to annul the same. The allegations regarding their absence, the cancellation of their passports, the seizure of their resources and the incarceration of other IISMI officials had all been raised earlier in the Republic case. Not having been convinced then, neither is this Court convinced now. Raising them for the second time to compel a relitigation will not suffice to make this Court reverse itself. Thus, we rule that, under the factual circumstances of this case, the martial law years did not have the effect of interrupting the running of the prescriptive period. The dissenting opinion would have us remand the case to the trial court to give it the opportunity to examine "if the doctrine of constructive or implied trust should be applied under the circumstances of this case." And yet, it pre-empted the lower court by concluding that certainly DBP, NDC and NSC are constructive trustees because they had full and complete knowledge of the dispossession of valuable properties. Thus, they are supposed to be the trustees who should hold the properties of IISMI for the benefit of the beneficiary or cestui que trust, the Jacintos. Under Article 1456 of the New Civil Code, a constructive trust is created if the property is acquired through mistake or fraud. But this basic requisite is utterly wanting in the instant case. Here, the assets of IISMI mortgaged to DBP were eventually foreclosed lawfully upon repeated default of the debtor IISMI to pay its debts. Subsequently, DBP sold the property to NSC under legally-sanctioned procedures. Nowhere is there an iota of evidence showing acquisition of property through mistake or fraud by DBP and later, NSC. If there be anyone guilty of fraud, it is the Jacintos, as determined and ruled upon by the Court of First Instance of Lanao del Norte. Clearly, there can be no room for the application of the concept of constructive trust in favor of the Jacintos. The dissenting opinion finds it strange that "in the 20 years which followed these executive and trial determinations, no charges - criminal or civil - were filed against the alleged saboteurs." If the petitioners did not file criminal or civil charges against the Jacintos despite findings of fraud and mismanagement by the lower court, it was merely exercising the option open to any creditor-mortgagee. From its arsenal, it may choose any legal weapon which it deems proper to accomplish its objective and which is suitable for its planned strategy. Why fault it if it merely wants to recover debts and recoup losses without having to necessarily draw blood by jailing its debtors? Obviously, too, no criminal charges can be filed against them as they were then beyond the jurisdiction of the courts. D. FAILURE TO STATE CAUSE OF ACTION A cause of action is an act or omission of one party in violation of the legal right of the other. Its essential elements are, namely: (1) the existence of a legal right in the plaintiff, (2) a correlative legal duty on the part of the defendant, and (3) an act or omission of the defendant in violation of plaintiff's right with consequential injury or

Anent the prayer of all the counsel of IISMI to be given leave to withdraw their representation of said respondent, it is important to note that said request is not accompanied by proof of their client's consent to such withdrawal. Ordinarily, under Section 26 of Rule 138, such consent is required. And even in the instances where the same section dispenses with the client's consent, it is generally the rule that the client should be notified of the petition of counsel. But it is not inconceivable that under peculiar circumstances, the court may be justified in relieving a lawyer from continuing his appearance in an action or proceeding, without hearing the client, as, for instance, when a situation develops, like in the cases at bar where the client stops having any contact with the lawyer, who 1s thereby left without the usual means which are indispensable in the successful or, at least, proper defense of the client's cause, such as, actual knowledge of relevant facts, the identity of usable witnesses, pertinent documents and other evidence, not to speak of the money needed for even the minimum of litigation expenses and the possible advances of attorney's fees. Understandably, no responsible lawyer can be expected to do justice to any cause under such conditions, and, it would be an unjust imposition to compel him to continue his services in relation thereto. While perhaps the absence of legal counsel may create an apparent denial of the party's inherent right to legal assistance, in these particular cases, it can rightly be said that in a large sense and for obvious reasons, movant counsel's clients have it in their power to remedy the situation." 52 (underscoring supplied) The foregoing shows that, contrary to the present claim of private respondents that their lawyers were constrained to withdraw their appearances, this Court had earlier

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damage to the plaintiff for which he may maintain an action for the recovery of damages or other appropriate relief. 53 Petitioners maintain that the Jacintos and JSI have no legal right to file the instant case as they were mere stockholders of IISMI which, as a corporation having a personality distinct and separate from its stockholders, is the proper party to institute the same. On the other hand, private respondents argue that they are instituting a derivative suit on behalf of IISMI. Before a derivative suit can be filed, the stockholder or member bringing the suit must first exhaust his remedies within the corporation, i.e., he must have made a demand on the directors or trustees to sue and the latter must have either failed or refused to do so. This demand, however, is not necessary where it would be futile to make it. 54 There is no allegation in the complaint that would show that a demand on the board of directors of IISMI was in fact made. But even if the Jacintos and JSI omitted to make the same, they can still file the instant case as a derivative suit. They have alleged that "at this time, IISMI is without a duly or legally constituted board of directors and no election of officers has been held." 55 It would be futile for them to make a demand on the board of directors whose very constitution is being questioned. Private respondents, having the legal right to file the instant case, we find that the complaint states a cause of action. However, a finding that a complaint states a cause of action does not imply that the complainant is assured of a ruling in his favor. While a motion to dismiss based on failure of the complainant to state a cause of action necessarily carries with it the admission, for purposes of the motion, of the truth of all material facts pleaded in the complaint, 56 what is submitted for determination therein is the sufficiency of the allegations in the complaint. 57 Corollarily, the denial of a motion to dismiss does not necessarily resolve the issues raised in the complaint in favor of the complainant inasmuch as, after the trial, the defendant might prove to have a better right to the subject matter in litigation. Moreover, a motion to dismiss may be based on only one of the grounds enumerated in Sec. 1, Rule 16 of the Rules of Court. That the petitioners were able to prove the presence of three of the four grounds they raised, viz., res judicata, lack of jurisdiction and prescription, more than warrants the reversal of the Order below denying the petitioners' motion to dismiss. III. INCIDENTAL ISSUES A. TERMINATION OF COUNSEL After having been served with summons in Civil Case No. 111-1549, DBP engaged the services of the Office of the Solicitor General (OSG) which represented it earlier in Civil Case No. 1701. 58 Then Solicitor General Francisco I. Chavez "graciously accepted" this request 59 in a letter dated February 7, 1990. Suprisingly, however, on February 8, 1992, DBP filed a Notice of Termination of Counsel. The conflict between DBP and OSG had its roots when Mr. Jose Ma. P. Jacinto sent a letter dated August 8, 1991 addressed to then Acting Secretary of Justice Silvestre H. Bello III requesting a "review of the government position on the matter of our claims, so that action can be taken - or at least a recommendation made - for a speedy settlement thereof." 60 This request was made in view of the following

opinions which, according to the said letter, "previously acknowledged the merits of out claims". a) PCGG Order dated February 19, 1987 which said that "the takeover of the assets of IISMI was effected thru Letters of Instructions Nos. 27, 35, 39 and 49" and that "due process may not have been observed when DBP foreclosed the IISMI." b) Memorandum-Letter dated December 5, 1986 by Atty. Prospero C. Nograles, DBP Chief Legal counsel, which states that the "IISMI case established a clear example of aggression by the past regime and smacks of an abuse of human rights through the use of sheer force by the military." c) Opinion No. 003, series of 1987, dated January 14, 1987 by Atty. Ariel F. Aguirre of the Office of the Government Corporate Counsel (OGCC) which concluded that LOI No. 27 "directing the then Secretary of National Defense to take over or cause the take over of the management, control and operation of IISMI was an arbitrary and unprecedented excuse of undefinable state power" and that LOI Nos. 35, 39, and 49 "likewise suffer the same infirmity" and d) Letter dated February 13, 1987 by Undersecretary Silvestre H. Bello III of the Department of Justice stating that "we find no cogent reason to disagree with both opinions (of Messrs. Nograles and Aguirre) upon the facts as presented and hereby confirm the same." Acting Secretary of Justice Silvestre H. Bello III issued 1st Indorsement dated September 19, 1991 referring the letter of Mr. Jose Ma. P. Jacinto to the Office of the Solicitor General "it appearing that there is a pending case in court being handled by the Office of the Solicitor General. 61 In response, the OSG thru the former Solicitor General Ramon S. Desuasido, Assistant Solicitor General Edgardo L. Kilayko and Solicitor Felixberto C. de la Cruz sent a Second Indorsement which said: "We share the opinion dated December 5, 1986 of the then DBP counsel (now Congressman) Prospero Nograles that the foreclosure proceedings on IISMI were legally flawed because at the time of foreclosure the mortgaged assets were in the possession of the military pursuant to Letter of Instruction No. 27 ordering the military to take over the IISMI plant." 62 and recommended: "We could have recommended that the Jacintos be given a fresh period of time to pay their loan to DBP. One big obstacle, however, is that DBP sold the foreclosed IISMI assets to the National Steel Corporation in 1981. We do not believe that the NSC would be willing to return the assets to the Jacintos after paying P983 million for them to DBP. Perhaps the Office of the President and/or the Department of Justice could summon the parties to explore avenues of an out-of-court settlement. For, really if there are incontrovertible badges of confiscation of the Jacintos' property by the Marcos dictatorship, this Government should not perpetuate that injustice." 63 Because of the above-quoted Second Indorsement carrying the signatures of the very same Solicitors representing DBP, the latter filed the Notice of Termination of Counsel alleging that the OSG without consulting DBP "advanced a conclusion prejudicial to its client" considering that it consistently maintained "that DBP's

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foreclosure of IISMI plant and assets in 1974 is legally valid, binding, conclusive and final" and that issues in the instant petition are sub judice. The OSG filed a Manifestation 64 dated February 26, 1992 stating that the "ground for the contemplated termination of services of OSG as DBP's counsel is "baseless" since the second Indorsement merely suggested an out-of-court settlement or compromise which the law encourages especially in civil cases 65 and that the Second Indorsement is a mere opinion between the OSG and the DOJ of which no copy was ever furnished to anyone, let alone the Jacintos. Although the OSG had been representing DBP, the latter wishes to terminate such relation and assign its own Legal Department created under Section 12 of E.O. 81 (Revised Charter of DBP) 66 to act as its counsel. We hold that in the circumstances of this case, we should grant the prayer. As early as January 11, 1989, then Secretary of Justice Sedfrey Ordoez issued Opinion No. 16, Series of 1989 addressed to Ms. Lilia R. Bautista of the Department of Trade and Industry regarding her query as to the legal impediment to the privatization of the NSC due to the "claims of the Fernando Jacinto family to certain properties or assets of the Iligan Integrated Steel Mills, Inc. (IISMI)." This opinion earlier reviewed the same matters raised in the August 8, 1991 letter of Mr. Jose Ma. P. Jacinto. We quote the pertinent portions: "As a matter of policy and by well-settled precedents this Department has consistently declined to render an opinion on questions that are fundamentally judicial or which might subsequently be the subject of litigation before the courts, particularly, those questions which involve the interest of private parties who may take issue with said opinion and bring the matter before the courts (see DOJ Ops. No. 125, s. 1958; No. 112, s. 1971; No. 76, s. 1977 and No. 117, s. 1985). Nonetheless, we are stating our comments and observations on the `issuances' mentioned in your request to assist DTI in resolving the controversy regarding the IISMI assets in question vis-a-vis the implementation of its program of privatization as mandated by existing policies. At the outset, it must be stressed that the Memorandum dated March 7, 1986, issued by the former head of the Ministry of National Defense (MND) for the President, which the counsel for the Jacintos claimed to have been confirmed by the subject four (4) `issuances', merely advised the President of the action taken by the said official in his capacity as sequestrator with respect to the Jacinto assets. The directive, referred to in the said Memorandum, which was to return the said assets to their `rightful owners' proceeded from the view of their sequestrator that the `continued sequestration' of said assets had become untenable due to the dismantling and abolition of the old regime. To begin with, the IISMI assets were not owned by the Jacintos but by IISMI; it appears that IISMI, in turn, was owned by public and private stockholders among whom the Jacintos were just a minority. In fact, we note from the memorandum of NSC's legal counsel that the Government, through the GSIS and the SSS, was the single biggest stockholder of IISMI. Moreover, the IISMI assets were no longer under sequestration at the time of the toppling of the Marcos regime. The said assets have long been in the possession of NSC which purchased and holds the same, not by virtue of sequestration, but as an incident of its ownership, otherwise known as `jus possidendi'. Hence, we do not see the relevance of the aforesaid memorandum of March 7, 1986, insofar as the former IISMI assets, now owned by NSC, are concerned. The NSC was a purchaser of the IISMI assets for value and in good faith.

With reference to the said assets no question of `continued sequestration' can be raised. It must also be emphasized that the NSC bought said property not from the sequestrator, but from a mortgagee, DBP, which had foreclosed the mortgage from the said assets. With reference to the four so-called issuances it suffices here to note that the DBP, through its Chairman's letter dated February 8, 1988, has clarified that the Nograles opinion contained in this memorandum of December 5, 1986 merely represent his own personal opinion that it `does not represent DBP's position with respect to the Jacinto family's claim regarding the plant and assets of . . . IISMI' and that, contrary to the conclusion of Atty. Nograles '1. DBP effected the foreclosure of the IISMI plant and assets in good faith and after obtaining judicial clearance. The foreclosure was, and remains, valid, legal, binding and final. 2. The foreclosure was a necessary, last resort measure which DBP had to take in order to protect the Government's interests and huge exposure in IISMI after IISMI continued unabatedly to default on its obligations to DBP despite numerous extensions and other relief measures granted by DBP.' The same observation can be made with respect to the letter dated February 13, 1987 of Undersecretary of Justice Silvestre H. Bello III, confirming the Nograles opinion. It is clear that the facts or circumstances surrounding the former IISMI assets have not been fully disclosed to the latter by Atty. Nograles. In fact, the aforementioned DBP Counsel secured the said letter after then Minister of Justice Neptali A. Gonzales has sent him a letter dated January 27, 1987 which declined his request for an approval of his Memorandum. The lack of full disclosure of the facts and circumstances referred to above is also evident in the case of Opinion No. 003 dated January 14, 1937 of the Deputy Government Corporate Counsel, the pertinent portion of which reads: 'Considering that we have no access to the pertinent documents relative to the transactions of proceedings affecting the IISMI and you did not also furnish us copies thereof and considering further the urgency of your request for our comments, we will endeavor to delve into the issues in the light of your factual account contained in your memorandum to the Chairman and Vice-Chairman of the DBP's Board of Governors and which was the basis of the opinion you articulated therein.' Aside from the fact that the opinion of the OGCC is merely persuasive and has no binding force, the admitted absence of a full consideration of the pertinent facts involved, and the fact that the opinion (OGCC's) was prematurely rendered and based on a personal opinion (Atty. Nograles') give us cogent reasons to conclude that the aforesaid opinion of the OGCC has no relevance or pertinency to your privatization plans for NSC. Upon the other hand, the PCGG pronouncement that due process may not have been observed in the foreclosure by the DBP of the IISMI assets was embodied in the same issuance wherein the PCGG acknowledged that it had no jurisdiction to act on the matter and dismissing the Jacinto's claim for lack of jurisdiction, as it raised judicial questions which must be addressed to the regular courts of justice. Given the absence of jurisdiction, the PCGG's opinions about due process are of the same character as an obiter dictum or a dictum not necessarily involved in the case or which was made without full consideration of the point or which a tribunal is not required to decide and therefore, lacks the force of an adjudication (Morales vs.

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Paredes, 55 Phil. 565, 567 [1931]; People vs. Macadaeg, et al., 91 Phil. 410, 413 [1952]). Worse, since PCGG ruled itself without jurisdiction over the questions raised, it follows that it had no jurisdiction to render an obiter dictum. Accordingly, the above-mentioned pronouncement of the PCGG also served no useful purpose or was a surplusage, since it would not bind the parties to the case nor any court, which the PCGG conceded as the sole authority to pass upon the questions raised in the Jacinto petition and to grant the relief therein prayed for. We took note, however, of the issue of prescription of any judicial action that the Jacintos may file, raised by the NSC Legal Counsel which is likewise an issue addressed to the court." 67 The foregoing opinion of his predecessor should have guided then Acting Secretary Silvestre H. Bello III. It should be noted that it was his First Indorsement which led to the issuance by the OSG lawyers concerned of the controversial Second Indorsement. While the same was not issued publicly as it was merely addressed to the Acting Secretary of the Department of Justice, the fact that it might be used, as in fact it was used, by private respondents in their pleading before this Court, should have cautioned the OSG to be more careful in dealing with matters which may have legal repercussions. Government agencies, including government corporations, must look to the Solicitor General, in the first instance, to represent them in legal proceedings. However, in much the same way that the Solicitor General is not absolutely required to represent a government agency, neither is the latter absolutely compelled to avail of the Solicitor General's services. A justifiable departure from the general rule is when the agency has lost confidence in the Solicitor General, as demonstrated by its past actuations exemplified in the instant case where the DBP would rather rely on its "in house" resources for legal services. In this case, therefore, we grant DBP's prayer to terminate the services of the OSG. B. TEMPORARY RESTRAINING ORDER. In a Manifestation and Motion 68 dated April 29, 1992, private respondents prayed that an order be issued commanding the petitioners NDC and NSC to cease and desist from conducting the privatization and sale of NSC during the pendency of the action. They explained that the claims of IISMI and JACINTO on the assets held by NSC and the privatization of NSC through the sale of 51% of its shares, are so inextricably intertwined," so that a decision in their favor "will greatly prejudice the buyers of these shares." They added that the sale "will further complicate the already complex issues" and might render the implementation or execution of a favorable decision "extremely difficult, if not impossible." On May 19, 1992, we resolved to issue a Temporary Restraining Order (TRO) enjoining the petitioners National Development Corporation (NDC) and National Steel Corporation (NSC), "to CEASE and DESIST from conducting the privatization and sale of National Steel Corporation (NSC) during the pendency of this action." 69 Petitioners filed an Urgent Motion to Lift TRO 70 explaining that any sale of the 51% shares does not in any way threaten the private respondents' claim over the IISMI assets which constitute only "1.1% of the total financial asset base of NSC of P24.8 billion." In the Resolution of May 28, 1992, 71 we granted petitioners' urgent motion to set the case for Oral Argument. At the hearing on June 4, 1992, the counsel for private respondents admitted that they had actually no facts to support their assertion of

ownership over the 51% shares of NSC but were merely proceeding from inference. 72 After the hearing, the Court resolved to deny the petitioners' motion to lift the temporary restraining order and to require private respondents to post a cash or surety bond in the amount of P1.5 million. 73 WHEREFORE, there being grave abuse of discretion on the part of the court a quo in denying petitioners' motion to dismiss and motion for reconsideration, the instant petition is hereby GRANTED. The Temporary Restraining Order issued on February 7, 1991 is made PERMANENT and respondent Judge Amir Pundogar is hereby ordered to DISMISS Civil Case No. 111-1549. The Temporary Restraining Order issued on May 9, 1992 is hereby DISSOLVED. SO ORDERED. Bidin, Grio-Aquino, Regalado, Davide, Jr., Nocon, Bellosillo and Melo, JJ., concur. Narvasa, (C.J.), Feliciano and Padilla, JJ., took no part. Separate Opinions CAMPOS, JR., J., concurring opinion: I agree with the majority decision that the petitioner's claim to recover the IISMI be denied. I wish to add a short remark on the issue of due process as invoked by my dissenting colleagues. Nowhere has the oft-repeated remark that the Due Process Clause has been utilized and exploited as a haven of refuge by the shrewd and cunning been more vividly demonstrated in all its subtle and manipulative forms as in this case. In a nutshell, we have in this case a reputedly wealthy family utilizing the corporate form of business organization to borrow hundreds of millions of pesos from a government bank and from foreign banks under guaranty of the Philippine government, for the ostensibly worthwhile project of establishing a national steel plant for our country, but who funneled the borrowed money to some other purpose than to develop the steel industry. Instead, the family, long before martial law was declared, ran away with the funds to a foreign country, defaulted in paying their loans and when sued by the banking institution, escaped to America and Europe. Returning to the Philippines after more than ten years of self-imposed exile, they are now claiming back their foreclosed properties on the lame excuse that, as political refugees, they were persecuted and were denied due process of law. How much fraud and misrepresentation can be perpetrated under the mantel of due process? The majority decision is not in defense of the martial law regime nor an attempt to justify the events which took place during such period. It is a conclusive denial of the right of the petitioners to recover, and I find the conclusion to be just and equitable in the light of the applicable law on the matter, and a different judgment would tend to unsettle long standing rules and principles governing similar situations. GUTIERREZ, JR., J., dissenting opinion: The issue in this petition is whether or not in the name of economic development, the Government can act in a manner basically unfair and arbitrary and deny to a party with a legitimate-grievance, a remedy in law. With all due respect to the majority of the Court, I find its recitation of the alleged facts unfair. The absorbing litany of mismanagement, diversion of profits, fixing of financial statements, and other horrifying corporate malpractices arose from a court

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trial where only one party could present its side. The owners were stripped through military action of all their properties. They could not come home as they would have been immediately arrested and tried before a military tribunal. The respondents were abandoned by their lawyers who refused to appear in a delusive trial where their clients could not take part in their own defense. The very conclusion which the majority opinion sustains is quite revealing. The trial court concluded "that an applicant for writ of preliminary injunction should be able to establish a clear case free from doubt and dispute." How could the applicant in forced exile several thousand kilometers away establish any case at all? The Government had brilliant lawyers appearing in the case; the key witnesses had every opportunity to memorize the facts they wanted to perpetuate in the records, quote their own prepared notes freely, and say anything favorable to their case with absolutely no fear of cross-examination, rebuttal, or contradiction. The trial court stated that "since injunction is an equitable remedy, an applicant must come to court with clean hands." Whether the applicant had clean hands or dirty hands was beyond ascertainment as he could not enter the country, much less appear in court. That is precisely what this dissent maintains - the respondents should be allowed to show their hands in court and to prove that those hands are not dirty. We are setting a bad precedent if we validate a strong arm government's stripping away a person's liberty and property on a feigned semblance of due process. The complaint in this case, docketed as Civil Case No. 111-1549, prays among other things that the extrajudicial foreclosure conducted by the provincial sheriff of Iligan City on February 26, 1974 of the mortgaged properties of Iligan Integrated Steel Mills, Inc. (IISMI) be set aside as null and void and for said properties to be returned to IISMI. The petitioners asked for the summary dismissal of the complaint on the grounds of (1) failure to state a cause of action and lack of capacity to sue; (2) prescription of the cause of action and its being barred by laches; (3) existence of a prior judgment on the same subject matter and issues between the same parties barring the refiling of the respondent's case; and (4) lack of jurisdiction of the trial court over the case. The respondent court denied both the motion to dismiss and a motion for reconsideration of the order to dismiss. Hence, this petition. As earlier stated, the basis for this dissent is simple - the private respondents must be given their day in court. Valuable properties whose initial values have now multiplied several times through the passage of the years should not have been arbitrarily seized and the seizure validated through a default judgment even as the original owners were denied the opportunity to defend themselves. We do not assert that the Jacinto family is correct on the merits and that the foreclosed properties

should be returned to them. The rules of orderly justice mandate that an opportunity should be given the respondents to prove their allegations. We should not accept as facts a one-sided presentation made at a time when the forces of Government were marshalled against people who refused to cooperate in the stripping away of their properties. The historical antecedents of the case go back to 1955 when Republic Act No. 1396 authorized the National Shipyards and Steel Corporation (NASSCO) to establish a pig-iron smelting plant The law prohibited the establishment of similar plants until NASSCO could make the venture operational. P50,000,000.00 was appropriated for the project. NASSCO committed itself to provide P36,000.000.00 worth of foreign supply contracts for machinery. It was later authorized to borrow $62,300,000.00 from the Export-Import Bank (EXIMBANK) in the United States. Upon the urgings of EXIMBANK, a 51% - 49% joint venture was set-up, with the government controlling the ownership but the private group exercising management. After the public bidding and pre-incorporation agreement in favor of Jacinto Steel, Inc., the Philippine Steel Corporation (PHISCOR) was set up. Various incentives were given to the new corporation. In 1962, however, the Government decided that instead of the joint venture, the steel project should be a wholly private venture but with full government support. Thus, in 1963, IISMI was incorporated. In order to forestall a threatened foreclosure due to defaults in loan payments, IISMI filed an injunction suit on June 1, 1971 against the Republic of the Philippines, Development Bank of the Philippines (DBP), Central Bank of the Philippines (CB), Board of Investments (BOI) and the Sheriff of Lanao del Norte and Iligan City. The complaint which was docketed as Civil Case No. 1701 alleged that the inability of IISMI to meet its obligations was due to "(g)overnment violations of its commitments to the Integrated Steel Project" which "were all in pursuance of the concerted and single-minded plan of the defendants to foreclose the mortgaged properties of the plaintiff and/or take over the management and ownership of IISMI or its properties, plants, or mills."The preliminary injunction issued by the court on August 11, 1971 was questioned by the DBP in G. R. No. B-34188 and the CB in G. R. No. L-33986. When the motion to dismiss filed by the Republic and the BOI on the grounds of improper venue and non-suability of the State was denied, the parties likewise questioned the denial order in G. R. No. L-33949. Subsequently, this Court ordered the consolidation of these petitions and set them all for a joint hearing. While these cases were pending before the Court, then President Marcos issued Proclamation 1081 on September 21, 1972 declaring a state of martial law. He thereafter issued four Letters of Instructions directing the Secretary of National Defense to take over and control the operation of IISMI and other Jacinto-held companies "for the duration of the present national emergency or until otherwise ordered" because the acts of management of IISMI "indicated that IISMI disposed of property by fraudulent means and that the funds or money earned was (sic) not properly accounted for. and neither were they applied for payment of obligations due the Government and the government-owned corporations." On October 23, 1973, the Court ordered the lower court "to resume proceedings in Civil Case No. 1701 by receiving further evidence which the parties may desire to present relative to all the issues they have so far raised and, thereafter, to resolve all the incidents related to the writ of preliminary injunction said court has issued and every other incident in the said case and/or render final judgment in the main case on the merits."

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On January 10, 1974, the trial court issued an order dissolving the writ of preliminary injunction. On February 25, 1974, the court deemed the pre-trial conference terminated and dismissed the complaint filed by IISMI with prejudice for its failure to appear during the pre-trial hearings despite due notice. Extrajudicial foreclosure proceedings followed. One day after the complaint was finally dismissed, DBP acquired the IISMI plant and assets as the highest bidder at a public auction. On March 24, 1975, DBP consolidated ownership over the foreclosed properties. It should be emphasized at this point that as early as October 23, 1973, this Court in Republic v. Court of First Instance of Lanao del Norte (53 SCRA 317 [1973]) saw the need to remand the case for further proceedings. However, in remanding the case, we wanted a full opportunity for all the evidence of both parties to be presented. We stated: "". . . the Court is of the considered opinion that all the matters here in dispute should be referred to the respondent court for further proceedings and appropriate resolution. Indeed, having in view the nature and volume of the evidence which the parties would have to present in connection with the factual issues raised by petitioners regarding what they claim to have discovered or unearthed after the Secretary of National Defense took over the `management, control and operation' of IISMI, may be unjustly and comprehensively resolved only after such evidence have been received by the trial court, rather than this Court, since it has the ready adequate machinery for the purpose. And with such additional evidence, the trial court would naturally be in a better position than before to rule on the injunctions which have given rise to these proceedings." (At p. 348, Underlining supplied). The lower court, indeed, proceeded with the hearing of Civil Case No. 1701, issuing the January 10, 1974 and February 25, 1974 orders. However, IISMI had no opportunity to present evidence on its behalf at that time. The basis of the January 10, 1974 order of the lower court dissolving the writ of preliminary injunction granted in favor of IISMI on August 11, 1971 was only the evidence presented by the DBP. As earlier stated, the pre-trial order dated February 25, 1974, dismissed the complaint filed by IISMI with prejudice for its failure to appear during the pre-trial despite due notice. The basic unfairness of our majority opinion lies in its unilaterally sustaining the executive determinations of former President Marcos embodied in his LOI No. 27 dated October 14, 1972 where he stated: "6. That the acts of the Management of Iligan Integrated Steel Mills. Inc. even after the submission of the case between the Government and IISMI in the Supreme Court and the Courts of Justice indicated that IISMI disposed of property by fraudulent means, and that funds or money earned were not property accounted for, and neither were they applied for payment of obligations due the government and the government-owned corporations." and LOI No. 35 dated October 287 1972 which stated: "In order to protect the interests of the Government in the Iligan Integrated Steel Mills, Inc. and in furtherance of Letter of Instruction No. 27 dated October 14, 1972,

you are hereby ordered to take over and control the assets of the following corporation . . . ." inspite of the fact that cases on exactly those issues were pending in court at that time We are also sustaining the ex-parte findings of the trial court - in absentia upholding the allegations that the Jacintos are economic saboteurs and embezzlers who siphoned IISMI funds for the benefit of their other corporations, attempted to hide these malpractices through window dressing, and lied about the reasons for the losses and other things. And yet, it is strange that in the 20 years which followed these executive and trial determinations, no charges - criminal or civil - were filed against the alleged saboteurs. On the contrary, the Government, through Secretary Juan Ponce Enrile, returned all Jacinto corporations to the Jacinto family in 1986. To this day, no one in Government has questioned the return, much less tried to annul the return of the corporations. Secretary Ponce Enrile also asked Secretary Jose Concepcion to return IISMI to the Jacintos without prejudice to accounting. On March 25, 1986, Secretary Concepcion sent a memorandum to Mr. Ponce Enrile refusing the return of IISMI as requested. One fact which a reopening of the case could possibly look into is the Jacinto allegation that Concepcion, Industries, Inc. was one of the members of the consortium which was bidding for IISMI at that time. There are allegations that the Jacintos were out of the country because they wanted to escape prosecution for their misdeeds in the management of IISMI. It is stated that they were not political refugees and could have returned to defend their side of the cases involving IISMI if they wanted to do so. There is evidence to show, however, that the Jacintos were in the United States even before the proclamation of martial law. They also assert that they were given the status of refugees by the United Nations. There were various circumstances which made the Jacintos' return during martial law extremely imprudent and unwise. They claimed that President Marcos had been demanding a majority share in IISMI and that their spurning the, demand, led to the confiscation, of the corporation's assets. While no criminal or civil charges have been filed against the Jacintos to this date. they were among the most publicly denounced economic saboteurs under martial law. And certainly, the Government's seizure of IISMI at a time when cases were pending in court deserves a full and fair hearing under an atmosphere clear of coercion and undue influence. It may be emphasized that not only IISMI but all other Jacinto assets were also seized by the Government. It is the height of naivette to say that the Jacintos could have returned at a time when all their top executives were arrested and detained although all were later released without any charges having been filed. It would have been foolhardy to return when Eugenio Lopez, Jr., Benigno Aquino, Jr., the Osmeas, Jose Diokno, Francisco Rodrigo, to name only a few were being jailed and the properties of some of them were being seized. The denial of a fair day in court is further heightened by the fact that all the lawyers who could have protected, even in a limited way. the Jacinto interests withdrew their appearances. Among them were Dominador Aytona, Manuel O. Chan, Jose P. Santillan. Norberto J. Quisumbing, Manuel V. San Jose, and Roberto V. San Jose. All records and documents essential to their case had been seized and were not available to the lawyers. There was no free communication with clients. The

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Philippine consul in the United States refused to authenticate certain documents which an American lawyer tried to send to the Philippines. I respectfully dispute the conclusion that the Jacintos, clients of the withdrawing counsel, had it in their power to remedy the situation. Regarding the credibility of the ex-parte findings of the trial court, we note that these findings are based on a report by an independent group of professors of the University of the Philippines that mismanagement and anomalies were hallmarks of the Jacinto control over IISMI. On the other hand, there exists an equally persuasive study by a group from the Asian Institute of Management which postulates the contrary - that losses ballooned after the Government takeover, all income was derived from the machinery, equipment, and programs installed by the Jacintos, that the properties were leased to NDC but the rentals were not applied to IISMI obligations, etc. Who is to be believed? In the interest of basic fairness, the trial court should be allowed to receive the other side of the picture. The issues based on prescription and prior judgment deserve a long second look and not a hasty prejudgment based on assumed or one-side facts. I will not go into the detailed and technical arguments of the respondents on why res judicata should not apply although these also deserve a hearing before the trial court. I will only stress that there can be no valid prior judgment impervious to subsequent challenges where that judgment was not rendered after strict adherence to the principles of fairness and due process. The due process considerations are, moreover, highlighted by the fact that the January 10, 1974 order should not be considered a judgment on the merits as it was a judgment for the provisional remedy of preliminary injunction. The finding made by the trial court is yet to be examined more fully when the principal action is set for trial on the merits and the parties complete their evidence in support of their respective positions. (See Olalia v. Hizon. 196 SCRA 665 [1991]; Manila Banking Corporation v. Court of Appeals, 187 SCRA 138 [1990]) It is argued that the February 25, 1974 order had the effect of an adjudication upon the merits. That is the general rule. However, this rule is not ironclad. In the light of the extraordinary circumstances alleged in the case at bar, it would be more in keeping with substantial justice if the controversy between the parties is to be resolved on the merits rather than on a procedural technicality in the light of the express mandate of the Rules that they be "liberally construed in order to promote their object and to assist the parties in obtaining just, speedy, and inexpensive determination of every action and proceeding." (Olivares v. Gonzales, 159 SCRA 33, 36 [1988]) On the issue of prescription, will justice not be served if the respondents are given due process and the parties are allowed to introduce their respective evidences and a decision on the merits is rendered? The respondents allege that prescription should not lie against them as they could not have brought an action prior to the EDSA upheaval. They state: xxx xxx xxx

"The passports of Fernando Jacinto and his children were cancelled. Their lawyers were constrained to withdraw their appearances on the IISMI cases because of the change in the membership of the Board of Directors of IISMI and the incarceration of the executives of IISMI who would have been witnesses in the case. JSI itself was sequestered. The replacement directors, who were all government appointed, could not be expected to protect the Jacinto properties in preference over the interests of government. The courts while remaining open were cowed into submission by the dictatorial regime. Fernando Jacinto could not have come back even if his passport was not cancelled because he would have been arrested and kept in prison indefinitely JACINTO and his family were even accorded `refugee status' by the international community in recognition of their persecution by the Marcos regime. All Jacinto resources were taken over by the Government. Any action attempted from the time of sequestration of the IISMI and other Jacinto interests would have been futile, if not suicidal. Indeed, IISMI, JACINTO and JSI were virtually paralyzed from commencing this suit for as long as Pres. Marcos was in power." (Comment, pp. 18-19) The majority states that we can not take judicial notice of these alleged facts. In that case, the private respondents, then. should be allowed to prove their allegations. And to do so requires a presentation of evidence in a full-blown hearing. The trial court may examine if the doctrine of constructive or implied trust should be applied under the circumstances of this case. Certainly, DBP, NDC, and NSC had full and complete knowledge of the dispossession of valuable properties which they eventually acquired. The government's own one-sided evidence establishes the military take over, the arbitrary sequestration of all properties, the jailing of key executives, and the absence of due process in the subsequent court case. The petitioners are constructive trustees to whom the ordinary defenses of prescription are not available. At the very least, the parties to whom the dispossessor turned over the properties should justify in court their alleged valid ownership of the disputed properties. We cannot arbitrarily assume prescription to the prejudice of an owner forcibly dispossessed of his properties and unable to fight his case in court because of circumstances he cannot oppose or control. Prescription is not limited to pure and abstract mathematical computations of a finite period of time. Under the circumstances of this case, it is the presentation of evidence and not the automatic counting of days, months, and years which is necessary. One other factor which weighs heavily in favor of sustaining the respondent Judge is the change of heart of the Office of the Solicitor-General. The Solicitor-General has the complete records of this case, including matters not divulged to the trial court during martial law. It is his duty to defend Government actions but not when those actions are arbitrary or contrary to law. If he is attacked by qualms of conscience and formally reveals "that the foreclosure proceedings on IISMI were legally flawed . . . ." this Court should take heed and see to it that proceedings without any blot or blemish are conducted. The dictates of due process require nothing less. IN VIEW OF THE FOREGOING, I respectfully DISSENT and vote to DISMISS the present petition.

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CRUZ, J., dissenting: I join Mr. Justice Hugo E. Gutierrez, Jr. in his excellent dissent. What bothers me most about this case is the obvious denial of due process from the Jacintos that the ponencia resolutely refuses to acknowledge. In blandly pronouncing the observance of this guaranty, the majority have closed their eyes to the realities of the deposed dictatorship and the absoluteness of Marcos's power then. We reject history in arbitrarily assuming that the people were free during that era and that the judiciary was independent and fearless. We know it was not; even the Supreme Court at that time was not free. This is an undeniable fact that we cannot just blink away. Insisting on the contrary would only make our sincerity suspect and even provoke scorn for what can only be described as our incredible credulity. In National Development Company and New Agrix, Inc. v. Philippine Veterans Bank, 192 SCRA 257, this Court en banc declared: It is not denied that the private respondent did file a claim with the AGRIX Claims Committee pursuant to this decree. It must be noted, however, that this was done in 1980, when President Marcos was the absolute ruler of this country and his decrees were the absolute law. Any judicial challenge to them would have been futile, not to say foolhardy. The private respondent, no less than the rest of the nation, was aware of that reality and knew it had no choice under the circumstances but to conform. It is true that there were a few venturesome souls who dared to question the dictator's decisions before the courts of justice then. The record will show, however, that not a single act or issuance of President Marcos was ever declared unconstitutional, not even by the highest court, as long as he was in power. To rule now that the private respondent is stopped for having abided with the decree instead of boldly assailing it is to close our eyes to a cynical fact of life during that repressive time. It is not enough to say that the Jacintos were represented by counsel, for the real question is whether their attorneys had adequate opportunity to defend them, including access to evidence secreted in unclassified government files. That these prestigious lawyers eventually withdrew one by one suggests only too clearly their frustration at the hands of an administration bent on enforcing the despot's will at all cost. On the Jacinto's failure to return to the country and prosecute their case, I need only to restate my dissent in Marcos v. Garchitorena, G.R. Nos. 90110-13, February 22, 1990, thus: There is something unfair in preventing a person from appearing in court to defend himself and then declaring him in default for his inability to do so. This much should be obvious even to the layman; to lawyers, it is an outrage crying for justice. Although they may have forfeited the respect of most of their countrymen, the petitioners have not lost the right to due process as guaranteed in every free society. I respectfully submit that we should not make any prejudgment on the merits of the Jacinto claim as long as we have heard only the side of the petitioners as endorsed in the majority opinion. That is only one-half of the picture. Fair play requires that we

also hear the other side before making an impartial judgment based on the evidence and arguments of both parties. It is truly mystifying that we should seem so eager now to defend the martial law regime when we were so opposed to it before, although some were more vocal than others. I am baffled that when what we should do is condemn and correct its misdeeds, we would instead retroactively validate them. Finally, let me say that I am not moved by the hysterical alarums of the petitioners that the government is losing hundreds of millions of pesos every day that we maintain the temporary restraining order. Is money the principal consideration in this case? I have always believed that due process is not a negotiable commodity that can be traded in the market for thirty pieces of silver.

ESPIRIDION TANPINGCO v.IAC [HORCA, SR.] G.R. No. 76225 GUTIERREZ, JR; March 31, 1992 FACTS: -May 10, 1985, a complaint for payment of disturbance compensation with damages was filed by Tanpingco against Benedicto Horca, Sr. with the RTC of Palo, Leyte. -It is alleged in the complaint that the petitioner is the tenant-lessee in the respondent's parcel of agricultural riceland situated at Brgy. Buenavista, Jaro, Leyte under a leasehold contract entered into sometime in April, 1976; that in a letter dated April 9, 1985, the Horca through his representative informed him to desist from working on the subject land, having already donated the same on February 3, 1985; that the Horca openly ordered the petitioner to vacate the landholding and is determined to oust him from the premises in violation of the law; that the petitioner is willing to accept payment of disturbance compensation in an amount computed in accordance with law and in the alternative to remain as tenant-lessee of the subject riceland. -July 5, 1985, the case was called for pre-trial following which the trial court gave the respondent until July 9, 1985 to file his answer. -Horca filed instead a MTD alleging principally that the complaint states no cause of action because the Horca is not the real party-in-interest having already donated the subject land to the Ministry of Education, Culture, and Sports, Region VIII, as a school site of the Buenavista Barangay High School; and that the donation not having in anyway benefited the respondent, no disturbance compensation is due the petitioner since under Sec36 (1) of the Agrarian Reform Code as amended, disturbance compensation holds true only in cases wherein the lessor-owner derives financial benefits from the conversion of the agricultural land into non-agricultural purposes. -RTC granted the MTD; denied Tanpingcos MR. -Upon appeal, IAC dismissed Tanpingcos appeal as well. Hence this petition ISSUE: WON the RTC erred in granting the MTD/ WON Horca is the party-in-interest against whom the suit should be brought/ WON he should pay the compensation HELD: No. RTC correctly dismissed the complaint for payment of disturbance compensation because Horca is not the real party-in-interest. The remedy then of the petitioner is to claim his disturbance compensation from the new owner or whatever agency, local or national, is in a position to pay for it.

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Reasoning: 1. On Sec. 17 of PD No. 946 which provides: Sec. 17. Pleading, Hearing, Limitation on Postponements. The defendant shall file answer to the complaint (not a motion to dismiss), within a non-extendible period of ten (10) days from service of summons . . . -Sec 2, Rule 3 RoC requires that every action must be prosecuted in the name of the real party-in-interest. A corollary proposition to this rule is that an action must be brought against the real party-in-interest, or against a party which may be bound by the judgment to be rendered therein (Salonga v. Warner Barnes and Co., Ltd). The real party-in-interest is one who stands to be benefited or be injured by the judgment, or the party entitled to the avails of the suit (Rebollido v. CA). If the suit is not brought against the real party-in-interest, a MTDmay be filed on the ground that the complaint states no cause of action (Section 1(g), Rule 16, Rules of Court). -Horca bolsters his claim that he is not the real party-in-interest on Section 10 of RA No. 3844 (Code of Agrarian Reforms of the Philippines) which provides that: . . . In the case the agricultural lessor sells, alienates or transfers the legal possession of the landholding, the purchaser or transferee thereof shall be subrogated to the rights and substituted to the obligation of the agricultural lessor -In effect, the private respondent is of the view that the Ministry of Education, Culture and Sports, as donee, became the new lessor of the agricultural lessee by operation of law and is therefore the real party-in-interest against whom the claim for disturbance compensation should be directed. 2. Tanpingco should have impleaded the Ministry of Education, Culture and Sports as the party-defendant for as stated in Roman Catholic Archbishop of Manila v. CA (198 SCRA 300 [1991]), a donation, as a mode of acquiring ownership, results in an effective transfer of title over the property from the donor to the donee and once a donation is accepted, the donee becomes the absolute owner of the property donated. -Art. 428 of the NCC, the owner has the right to dispose of a thing without other limitations than those established by law. As an incident of ownership therefore, there is nothing to prevent a landowner from donating his naked title to the land. However, the new owner must respect the rights of the tenant. Section 7 of R.A. No. 3844, as amended (Code of Agrarian Reforms of the Philippines) gives the agricultural lessee the right to work on the landholding once the leasehold relationship is established. It also entitles him to security of tenure on his landholding. He can only be ejected by the court for cause. Time and again, this Court has guaranteed the continuity and security of tenure of a tenant even in cases of a mere transfer of legal possession. As elucidated in the case of Bernardo v. Court of Appeals (168 SCRA 439 [1988]), security of tenure is a legal concession to agricultural lessees which they value as life itself and deprivation of their landholdings is tantamount to deprivation of their only means of livelihood. Also, under Section 10 of the same Act, the law explicitly provides that the leasehold relation is not extinguished by the alienation or transfer of the legal possession of the landholding. The only instances when the agricultural leasehold relationship is extinguished are found in Section 8, 28 and 36 of the Code of Agrarian Reforms of the Philippines. The donation of the land did not terminate the tenancy relationship. However, the donation itself is valid. -Considering that the tenant in the case at bar is willing to accept payment of disturbance compensation in exchange for his right to cultivate the landholding in question, the real issue is who should pay the compensation. We rule that the Ministry of Education, Culture and Sports as the new owner cannot oust the petitioner from the subject riceland and build a public high school thereon until after

there is payment of the disturbance compensation in accordance with Sec. 36 (1) of R.A. No. 3844, as amended. Dispositive: Petition is hereby DENIED. IACs decision is AFFIRMED. No pronouncement as to costs. DIAZ V ADIONG G.R. No. 106847 BELLOSILLO; March 5, 1993 FACTS -On 16 July 1991, the Mindanao Kris, a newspaper of general circulation in Cotabato City, published in its front page the news article captioned "6-Point Complaint Filed vs. Macumbal," and in its Publisher's Notes the editorial, "Toll of Corruption," which exposed alleged anomalies by key officials in the Regional Office of the Department of Environment and Natural Resources. -On 22 July 1991, the public officers alluded to, namely, private respondents Sultan Macorro L. Macumbal, Sultan Linog M. Indol, Atty. Macabangkit M. Lanto and Atty. Mohamadali Abedin, instituted separate criminal and civil complaints arising from the libel before the City Prosecutor's Office and the RTC in Marawi City. The publisher-editor of the Mindanao Kris, petitioner Patricio P. Diaz, and Mamala B. Pagandaman, who executed a sworn statement attesting to the alleged corruption, were named respondents in both complaints. -On 2 Sept 1991, the City Prosecutor's Office dismissed the criminal case: this investigation in the light of Agbayani vs. Sayo case finds that it has no jurisdiction to handle this case and that the same be filed or instituted in Cotabato City where complainant is officially holding office at the time respondents caused the publication of the complained news item in the Mindanao Kris in Cotabato City, for which reason it is recommended that this charge be dropped for lack of jurisdiction. -In the interim, the civil complaint for damages, raffled to Branch 10 of the RTC in Marawi City, was set for Pre-Trial Conference. The defendants therein had already filed their respective Answers with Counterclaim. -On 18 Nov 1991, petitioner Diaz moved for the dismissal of the action for damages on the ground that the trial court did not have jurisdiction over the subject matter. He vehemently argued that the complaint should have been filed in Cotabato City and not in Marawi City. Pending action on the motion, the presiding judge inhibited himself from the case which was re-raffled to the sala of respondent judge. -On 15 June 1991, respondent judge denied petitioner's MD for lack of merit. Diaz thereafter moved for reconsideration of the order of denial. The motion was also denied. Hence, this petition. -Petitioner Diaz contends that the civil action for damages could not be rightfully filed in Marawi City as none of the private respondents, who are all public officers, held office in Marawi City; neither were the alleged libelous news items published in that city. ISSUE 1. WON the RTC Marawi City has jurisdiction to entertain the civil action for damages 2. WON improper venue was deemed waived HELD 1. NO -It is clear that an offended party who is at the same time a public official can only institute an action arising from libel in two (2) venues: the place where he holds

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office, and the place where the alleged libelous articles were printed and first published. -The third paragraph of Art. 360 of the RPC, as amended by R.A. No. 4363, specifically requires that The criminal and civil action for damages in cases of written defamations as provided for in this chapter, shall be filed simultaneously or separately with the Court of First Instance (now Regional Trial Court) of the province or city where the libelous article is printed and first published or where any of the offended parties actually resides at the time of the commission of the offense: Provided, however, That where one of the offended parties is a public officer . . . (who) does not hold office in the City of Manila, the action shall be filed in the Court of First Instance (Regional Trial Court) of the province or city where he held office at the time of the commission of the offense or where the libelous article is printed and first published and in case one of the offended parties is a private individual, the action shall be filed in the Court of First Instance of the province or city where he actually resides at the time of the commission of the offense or where the libelous matter is printed and first published. Reasoning Not one of the respondents then held office in Marawi City: respondent Macumbal was the Regional Director for Region XII of the DENR and held office in Cotabato City; respondent Indol was the Provincial Environment and Natural Resources Officer of Lanao del Norte and held office in that province; respondent Lanto was a consultant of the Secretary of the DENR and, as averred in the complaint, was temporarily residing in Quezon City; and, respondent Abedin was the Chief of the Legal Division of the DENR Regional Office in Cotabato City. Indeed, private respondents do not deny that their main place of work was not in Marawi City, although they had sub-offices therein. -Apparently, the claim of private respondents that they maintained sub-offices in Marawi City is a mere afterthought, considering that it was made following the dismissal of their criminal complaint by the City Prosecutor of Marawi City. Significantly, in their complaint, respondents simply alleged that they were residents of Marawi City, except for respondent Lanto who was then temporarily residing in Quezon City, and that they were public officers, nothing more. This averment is not enough to vest jurisdiction upon the Regional Trial Court of Marawi City and may be properly assailed in a motion to dismiss. -Moreover, it is admitted that the libelous articles were published and printed in Cotabato City. Thus, respondents were limited in their choice of venue for their action for damages only to Cotabato City where Macumbal, Lanto and Abedin had their office and Lanao del Norte where Indol worked. Marawi City is not among those where venue can be laid. 2. YES Ratio The rule is that where a statute creates a right and provides a remedy for its enforcement, the remedy is exclusive; and where it confers jurisdiction upon a particular court, that jurisdiction is likewise exclusive, unless otherwise provided. Hence, the venue provisions of Republic Act No. 4363 should be deemed mandatory for the party bringing the action, unless the question of venue should be waived by the defendant. -Objections to venue in civil actions arising from libel may be waived; it does not, after all, involve a question of jurisdiction. Indeed, the laying of venue is procedural rather than substantive, relating as it does to jurisdiction of the court over the person rather than the subject matter. Venue relates to trial and not to jurisdiction. - Sec. 1 of Rule 16 provides that objections to improper venue must be made in a motion to dismiss before any responsive pleading is filed. Responsive pleadings are those which seek affirmative relief and set up defenses. Consequently, having already submitted his person to the jurisdiction of the trial court, petitioner may no

longer object to the venue which, although mandatory in the instant case, is nevertheless waivable. As such, improper venue must be seasonably raised, otherwise, it may be deemed waived. Reasoning Petitioner Diaz then, as defendant in the court below, should have timely challenged the venue laid in Marawi City in a motion to dismiss, pursuant to Sec. 4, Rule 4, of the Rules of Court. Unfortunately, petitioner had already submitted himself to the jurisdiction of the trial court when he filed his Answer to the Complaint with Counterclaim. His motion to dismiss was therefore belatedly filed and could no longer deprive the trial court of jurisdiction to hear and decide the instant civil action for damages. Well-settled is the rule that improper venue may be waived and such waiver may occur by laches. Petitioner was obviously aware of this rule when he anchored his motion to dismiss on lack of cause of action over the subject matter, relying on this Court's ruling in Time, Inc. v. Reyes. Therein, SC declared that the CFI Rizal was without jurisdiction to take cognizance of Civil Case No. 10403 because the complainants held office in Manila, not in Rizal, while the alleged libelous articles were published abroad. It may be noted that in Time, Inc. v. Reyes, the defendant therein moved to dismiss the case without first submitting to the jurisdiction of the lower court, which is not the case now. Disposition Petition for Certiorari is DISMISSED and the Temporary Restraining Order heretofore issued is LIFTED. This case is remanded to the court of origin for further proceedings. HSBC v. SHERMAN 176 SCRA 331 Medialdea, August 11, 1989 NATURE Petition for Review on Certiorari of CA decision FACTS -Eastern Book Supply Service PTE, Ltd (Company), a company incorporated in Singapore, was granted by HSBC Singapore an overdraft facility in 200k Singapore dollars (later increased to 375K) and as a security, Jack Sheman and the other directors of the Company executed a Joint and Several Guarantee1 in favor of HSBC whereby Jack Sherman et al agreed to pay jointly and severally, on demand, all sums owed by the Company under the forestated overdraft facility. -the Company failed to pay its obligation so HSBC demanded payment from Sherman et al in conformity with the Guarantee agreement. The directors still failed to pay so HSBC filed complaint for collection of sum of money before RTC QC vs. Sherman et. Al. -HSBC filed MTD: (1) RTC had no jurisdiction over the subject matter based on the Guarantee agreement (refer to footnote); (2) court has no jurisdiction over the persons of the defendants, it being that the defendant Sherman is not a citizen nor a resident of the Philippines -MTD opposed by Sherman et.al -RTC DENIED MTD: (1) as re: no jurisdiction over subject matter: cited stipulation did not say that Singapore courts have EXCLUSIVE JURISDICTION and jurisdiction is fixed by law, NOT BY WILL OF PARTIES; (2) re jurisdiction over defendants: Jurisdiction over the persons of defendants is acquired by service of summons and copy of the complaint on them, and such was done in this case, even admitted by defendants in their Motion for Extension to File Responsive Pleading

1 "This guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in
accordance with the laws of the Republic of Singapore. We hereby agree that the courts in Singapore shall have jurisdiction over all disputes arising under this guarantee

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-MFR DENIED, Sherman et al appealed to IAC (petition for prohibition with preliminary injunction and/or prayer for restraining order: -IAC GRANTED: Loan obtained by Company, loan granted by the HSBC Singapore. Transaction took place in Singapore. Cited provision contains the word SHALL, making it mandatory that Singapore laws apply. HSBCs MFR DENIED ISSUE WON Philippine courts have JURISDICTION OVER THE SUIT HELD YES -As re the cited provision (choice-of-forum clause):the stipulation should be liberally construed: a State does not have jurisdiction in the absence of some reasonable basis for exercising it, whether the proceedings are in rem, quasi in rem or in personam. To be reasonable, the jurisdiction must be based on some minimum contacts that will not offend traditional notions of fair play and substantial justice. (THE RESPONDENTS ARE PHILIPPINE RESIDENTS (not disputed) so its very odd that they want to litigate before a foreign tribunal and in the process incur considerable expenses and inconvenience, UNLESS their ultimate intent is to evade or at least delay payment of just obligation. -no showing that the filing of the action in the Philippines causes respondents unnecessary trouble, damage, or expense on part of Respondents, nor was there intent to harass on part of Bank -stipulation as to venue does not preclude the filing of suits-stipulation as to venue does not preclude the filing of suits in the residence of plaintiff or defendants, in the absence of qualifying or restrictive word in the agreement which would indicate that the place named is the only venue agreed upon by the parties. Nor does the stipulation in question divested the Philippine courts of jurisdiction. In International Law, jurisdiction is often defined as the right of a State to exercise authority over persons and things within its boundaries subject to certain exceptions. Thus, a State does not assume jurisdiction over traveling sovereigns, ambassadors and diplomatic representatives of other States, and foreign military units stationed in or marching through State territory with the permission of the latter's authorities. This authority, which finds its source in the concept of sovereignty, is exclusive within and throughout the domain of the State. A State is competent to take hold of any judicial matter it sees fit by making its courts and agencies assume jurisdiction over all kinds of cases brought before them -As re IMPROPER VENUE: WAIVED though their MTD could be construed to mean that they were assailing the venue, NOT THE JURISDICTION. However, the stipulation should be liberally construed, there being no qualifying or restrictive word in the agreement to indicate EXCLUSIVITY -RE WON suit should be entertained/dismissed based on principle of forum non conveniens: depends largely upon the facts of the particular case and is addressed to the, sound discretion of the trial court Disposition. ACCORDINGLY, the decision of the respondent Court is hereby REVERSED and the decision of the Regional Trial Court is REINSTATED, with costs against private respondents. This decision is immediately executory. SO ORDERED. Vitrionics Computers v. RTC, 217 SCRA 517 (1993) DOCTRINE: GR: Its the 2nd case abated in litis pendentia X: theres evidence that shows that its the 2nd wc is more appropriate, or in the interest of the justice its the 2nd case wc shld be abated

X to X: if the 2nd case is maliciously filed or done in BF *What Cts look at when litis pendentia is raised: (1) Identity of > Parties >Subject Matter >COA (2) Examine WON the other Ct where the case is pending is a competent Ct *2 tests for litis pendentia: (1) More appropriate axn test: accessibility of the evidence, accessibility of the Ct to the parties and their counsels (2) Interest of justice test: other considerations than the convenience of the parties and their witnesses VICTRONICS COMPUTERS VS RTC G.R. No. 104019 DAVIDE; January 25, 1993 NATURE Petition for review on certiorari under Rule 45 of the Rules of Court FACTS - Victronics Computers, Inc. submitted a quotation for office systems to service the networking requirements of various Victoria Court branches. Satisfied with the said quotations, Velhagen and King of Victoria Court placed an order with Victronics Computers in a Purchase Order. They ordered 6 sets of 80 DATA 386 computer system worth P767,000.00, subject to the following terms: Payment 50% down, 50% COD upon completion of delivery. - The 50% downpayment agreed upon was duly paid. Victronics delivered the orders to the different Victoria Court branches. However, the outstanding balance was not paid. - So Victronics filed a complaint for sum of money with the RTC of Makati, Civil Case No.91-2069 (Case 1) against Velhagen, the general manager and King, CEO, (who operate under the names Victoria Court, GMT Consolidated Company) and Victoria Group of Companies. - One day after, Victoria Court Group of Companies (who are the 6 corporations/branches of Victoria who banded together in the case for their mutual interest and benefit) filed a complaint with the RTC of Makati, Civil Case No. 912192, (Case 2) seeking to nullify the said Purchase order for fraud and undue influence. They claimed that the officer who they ordered to canvass the prices connived with the general manager of Victronics and overpriced the equipment in exchange for a substantial commission. - Velhagen and King filed a MTD and/or suspend Case 1 on the ff. grounds: failure to verify the complaint, failed to sue proper parties and there is a prejudicial question or a pending case. - Meanwhile, Victronics file a MTD Case 2 on the ground of improper service of summons and lack of jurisdiction over the defendant. - RTC dismissed Case 1 because of litis pendentia. Victronics, in this same case, then filed a contempt charge against Velhagen and King of Victoria Court for forum shopping claiming that after having respectively received the summons and a copy of the complaint, both did not file an answer with compulsory counterclaim but instead filed Case 2. Victronics also filed an Ex Abundante Cautela Motion To Refer Forum-Shopping Charge to Executive Judge but it was dismissed. Thereupon, it filed a motion for the consolidation of the 2 cases before Branch 63 where the prior case was filed but this was denied. It then filed in the same case a Manifestation Pro Hac

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Vice wherein it stated that "there was technically no pending action before" Branch 150 as it had not yet acquired jurisdiction over Victronics due to improper service of summons also denied. After the proper re-service of summons, Victronics then filed a motion to dismiss Case 2 on the grounds of litis pendentia and forum shopping. The court ruled that the motion to dismiss on the ground of forum shopping is negated by the move of Velhagen and King to dismiss Case 1. As to the litis pendentia, the courty reiterated that the filing of one action ahead of another is not decisive on the issue of which of the 2 identical actions should be dismissed. Hence, the instant petition. ISSUE

1.

WON the respondent Court erred in dismissing, on the ground of litis pendentia, Case 1 or Civil Case No. 91-2069 which was actually filed first

HELD 1. YES. Elements of Litis pendentia: (a) Identity of parties, or at least such as representing the same interest in both actions; (b) Identity of rights asserted and relief prayed for, the relief being founded on the same facts; and

(c)

The identity in the 2 cases should be such that the judgment in the pending case would, regardless of which party is successful, amount to res judicata in the other

- The presence of all the foregoing requisites in the 2 cases is not controverted by the parties. As a matter of fact, both invoked these identities in their respective motions to dismiss. (1)There is identity if parties. Victronics is party to both. As to the personality of Victoria Court, there was an initial confusion as to the personalities who are claimed to be natural persons doing business under the names of "Victoria Court, GMT Consolidated Company and Victoria Group of Companies" and juridical persons (the six (6) corporations), respectively. In the light of the admission by the six (6) corporations that they banded together for their mutual interest and benefit under the trade name and style of the Victoria Group of Companies; that they put up a common management team with respondents Velhagen and King as General Manager and Chief Executive Officer, respectively; that the purchase order in question is the official act of the said officers; and that the computer sets were in fact received by them for which they each paid a downpayment of fifty per cent (50%) of the purchase price thereof, there can be no doubt that the defendants in the first case and the plaintiffs in the second case represent the same interests. (2) As regards the second element, the 2 civil actions reveal that both assert rights founded on an identical set of facts which give rise to one basic issue the validity of the contract in question, the purchase order for the computer equipment. While ostensibly the cause of action in one is opposite to that in the other, in the final analysis, what is being determined is the validity of the contract. (3) Regardless of the decision that would be promulgated in Case 1, the same would constitute res judicata on Case 2 and vice-versa. But the question is, which case should be abated? Squarely put, should it be the second, which was filed 14 days after the filing of the first, or should it be the first? - Like res judicata as a doctrine, litis pendentia as a principle is a sanction of public policy against multiplicity of suits. There is no hard and fast rule that governs the determination of which of the actions should be abated. A review of relevant cases

decided by this Court discloses that generally, it is the second case which is abated. Indeed, it seems that the maxim Qui prior est tempore, potior est jure controls. But there are limitations to this rule, for example, when the second action was not brought to harass or vex the defendant, and is not in fact vexatious, it may refuse to abate the second action, allow it to stand, and order the first one to be discontinued on proper terms. The court may also permit the plaintiff to discontinue the first suit and thereby defeat the plea in abatement where the second suit is necessary in order to protect and secure the plaintiff's full rights, or where the abatement of the second suit is necessary in order to protect and secure the plaintiff's full rights, or where the abatement of the second would result impossible loss of substantial rights on the part of the plaintiff. - The criteria to determine which action should be upheld and which is to be abated is the criterion of the more appropriate action. In the case at bar, We do not hesitate to rule that the second case, Civil Case No. 91-2192, was filed not so much upon the inspiration of unadulterated good faith to seek redress for a genuine wrong committed but more to vex or harass in another forum the plaintiff in the first case, the herein petitioner. The court observed the undue, if not indecent, haste in the preparation of the complaint in the 2nd case. There was absolutely no compliance with this requisite as no copy of the purchase order was set forth in the body of the complaint or attached to the complaint itself. The non-observance of this simple yet basic rule cannot be attributed to the ignorance of the lawyers who, measured by their pleadings in this case, appear to be experienced and well-versed in the law, but to the frenzied efforts to file the complaint at the earliest possible time. Being merely vexatious, Civil Case No. 912192 is the abatable case. Under the peculiar circumstances attending the transaction in question, the first case for specific performance is the more appropriate action. In the first place, Victronics, the unpaid seller, had completely delivered the 6 computer sets. Thus, in reality, it is Victronics who has been aggrieved; in availing of the remedy of specific performance allowed under Article 1191 of the Civil Code, it was acting well within its rights. The subsequent action for the annulment of the contract on grounds of fraud and vitiated consent is nothing but a mere defense thereto. DISPOSITIVE Petition granted. Case 2 is dismissed instead of Case 1.

The Anderson Group Inc. v. Court of Appeals, 266 SCRA 423 ABALOS V CA (HEIRS OF SORIANO) 223 SCRA 551 Bidin, J.; June 22, 1993 NATURE Review on Certiorari FACTS RTC Pangasinan, Branch 37 CC No 15958 - Petitioners filed a complaint against spouses Abalos for the annulment of document and/or redemption, ownership and damages. This complaint was filed a day after the promulgation of Branch 38s decision granting the application of spouses Abalos in a land registration case as below described: RTC , Branch 38

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- Petitioners filed before the Lingayen RTC an application for the registration of title over over Lot No. 60052 and three-fourths (314) pro-indiviso of Lot No. 8459, situated in barangay Baay, Lingayen and under Cad-373-1) of the Lingayen Cadastre (docketed as Land Registration Case No. N-3405, Record No. N-49833), with the remaining one-fourth (1/4) pro-indiviso portion thereof belonging to Roman Soriano. - Soriano in his opposition alleged that the two lots in subject of the application have not yet been divided and as such he is co-owner to the extent of one-seventh proindiviso. - In the course of the hearing, it was established that : a. There was a single piece of property which was owned by their father. b. The father executed a deed of extrajudicial partition stating that the properties were inherited by seven of his nine children. b. The lot was subdivided into two lots for tax declaration purposes. The Northern portion went to three siblings and the Southern portion went to four other siblings, including private respondent. c. The spouses Abalos purchased Northern portion from the three siblings and also the shares of the three other siblings in the Southern portion. d. Respondent Soriano, at that time, did not raise any objection to the sale of the properties. As a matter of fact the Spouses Abalos wanted to buy Sorianos share but could not agree to the conditions being imposed by Soriano - RTC granted the application and affirmed by the CA and the SC - The spouses Abalos filed a motion to dismiss the complaint (CC No. 15958) on the grounds of res judicata, pendency of another action, lack of cause of action, laches, misjoinder of parties and lack of jurisdiction. The trial court (branch 37) denied the motion and instead directed the spouses to file their Answer, which they did on January 30, 1984. - A re-amended complaint was filed which the spouses Abalos moved to be dismiss on the same ground of res judicata. the same was denied by the RTC. Appeal to the CA was filed. CA: Denied. Respondent court disagreed with the petitioners and dismissed the petition. It ruled that the lower court, acting as; a land registration court, exercises limited jurisdiction. Therefore, it cannot pass upon questions regarding the validity of contracts affecting the disputed property. Accordingly, a land registration court having limited jurisdiction may not resolve an issue involving the validity of the deed of sale which is ordinarily cognizable by a court of general jurisdiction. Concluding, respondent court held that the trial court committed no error when it refused to adhere to the rule on res judicata which requires that the resolution of the issue in the prior case should have been made by a court of competent jurisdiction. - Appeal to the SC. SC: From an otherwise rigid rule outlining the jurisdiction of a land registration court being limited in character, deviations have been sanctioned under the following circumstances where. (1) the parties agreed or have acquiesced in submitting the aforesaid issues for determination by the court in the registration (2) the parties were accorded full opportunity in contested lots he registered in his name. ISSUE WON the case should be dismissed on the ground of res judicata HELD Yes. Respondent's claim of nullity of the deeds or sale executed by Elcocadio, Francisca and Librada in favor of petitioner spouses before the RTC, Branch 37 of Lingayen was already raised and passed upon by the land registration court (RTC, Branch 38). In other words, it was the same defense advanced by private respondents in their effort to defeat petitioner spouses' claim of ownership in the land registration case which, unfortunately, was belied by the records therein. The judgment on the merits in the land registration case as affirmed by this Court in G.R.

No. 70842, entitled Roman Soriano v. Intermediate Appellate Court, et al., constitutes an absolute bar to the subsequent action not only as to every matter which was offered and received to sustain or defeat the claim or demand, but also as to any other admissible matter which might have been offered for that purpose and to all matters that could have been adjudged in that case. - Consequently, respondents are barred from assailing again the validity of the conveyances in Civil Case No. 15958 filed before Regional Trial Court, Branch 37, for the simple reason that the same has already been litigated and passed upon in the previous land registration case and affirmed by us. The disputed property could not have been registered in the name of petitioner spouses were it not found by the land registration court that petitioners were the real and legitimate owners thereof. - It is well-settled that for a prior judgments to constitute a bar to a subsequent action, (1) there must be a final judgment or order, (2) the court rendering the same must have jurisdiction over the subject matter and over the parties, (3) it must be a judgment on the merits and (4) there must be between the two cases, identity of the parties, subject matter and causes of action. NABUS V CA REGALADO: February 7, 1991 DA FACTS: First Case:Albert Nabus vs Mariano Lim- action for reconveyance of a parcel of land against in CFI of Baguio and Benguet, La Trinidad, Benguet. Nabus sold to Lim a parcel of Land for P258,000.00 which was amortized. As of the 1970 Lim has still an unpaid balance of P75,000.00; On June 8, 1970 or 4 years, 11 months and 15 days from June 23, 1965); Nabus through counsel offered to repurchase the parcel of land, pursuant to Sec. 119 of the Public Land Law (C.A. No. 141, as amended). Notwithstanding written offers to repurchase the property according to law, Lim refused and denied, and still refuses and denies, the said offer; -December 11, 1971, after Nabus had rested his case, Lim moved to dismiss the complaint on the grounds of lack of cause of action, there being no tender of the repurchase price of the parcel of land in question, and of prescription. This was denied by the trial court. -Lim filed a motion for reconsideration of the order denying his motion to dismiss. - Nabus filed an opposition on the ground that tender of the repurchase price of the parcel of land in question was allegedly not a requirement under the Public Land Act, unlike the provisions of the Civil Code, the repurchase of the said lot being a substantive right coupled with public interest. -The trial court, upon motion of Lim, ordered Nabus to deposit the repurchase pace of the said lot in the amount of P183,000.00. - Lim filed a motion to dismiss Civil Case No. 2159(24) for failure of Nabus to deposit in court the required amount. - Nabus, by counsel, filed a motion for extension of time within which to file an opposition to the motion to dismiss. -no opposition having been filed to the motion to dismiss because of the death of Nabus' counsel, the trial court dismissed the action with prejudice for his failure to deposit the required amount, evincing lack of interest to repurchase the parcel of land in question. -On May 14, 1981, Nabus filed, through a new counsel, a motion for reconsideration of the order of dismissal - trial court denied Nabus' motion for reconsideration. No appeal was taken from said order of dismissal.

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Second Case: March 15, 1982, Nabus filed Civil Case No. 4293 in the same Court of First Instance of Baguio and Benguet for the annulment of the order of dismissal in Civil Case No. 2159(24), claiming that the failure of Atty. Florendo, his former counsel, to file an opposition to Lim's motion to dismiss was due to his serious illness; -Civil Case No. 4293 was subsequently amended to allege grounds for rescission and damages as additional causes of action. SECOND CAUSE OF ACTION: Rescission of contract of sale for failure to to pay the full amount of the purchase price. THIRD CAUSE OF ACTION: Damages were suffered by Nabus bec of Lims refusal to comply with his contractual obligations. -Lim filed a motion to dismiss the complaint in on the ground that it was barred by prior judgment or res judicata and that the action had already prescribed. -Nabus filed an opposition to the motion to dismiss. -A reply to the opposition and a supplement to his motion to dismiss was filed by Lim, to which Nabus filed a rejoinder. -trial court dismissed the complaint in Civil Case No. 4293 on both grounds invoked in the motion to dismiss. CA:On appeal to CA -Nabus claimed that the trial court erred in holding that all the causes of action in the case are barred by res judicata and that the action for rescission and damages has prescribed. The annulment of the dismissal order issued in Civil Case No. 2159(24) was no longer pursued or raised on appeal. CA sustained the order of dismissal on the ground of res judicata: It is within the power of the trial court to dismiss the appellant's complaint in Civil Case No. 2159(24) for failure to comply with its order to deposit the repurchase price of the parcel of land in question. And such dismissal, rightly or wrongly, has the effect of an adjudication upon the merits, it not having been provided otherwise (Section 3, Rule 17. Revised Rules of Court). Dismissal on a technicality is no different in effect and consequences from a dismissal on the merits under the cited provision of the Rules (General Offset Press, Inc. vs. Anatalio, 17 SCRA 688, 691). So too is the order of dismissal, with prejudice, res judicata upon finality under Section 49, Rule 39, of the Revised Rules of Court, . . . . Respondent court, however, found no necessity to rule on the matter of prescription. ISSUE: WON the action complaint for rescission and damages is barred by the order of dismissal of petitioner's action for reconveyance under the principle of res judicata HELD:NO Res judicata is a rule of universal law pervading every well regulated system of jurisprudence, and is put on two grounds, embodied in various maxims of the common law; the one, public policy and necessity, which makes it the interest of the state that there should be an end to litigation - interest reipublicae ut sit finis litium; the other, the hardship on the individual that he should be vexed twice for the same cause -nemo debet bis vexari pro una et eadem causa. Section 49, Rule 39 of the Rules of Court which embodies the principle of res judicata .The principle of res judicata actually embraces two different concepts: (1) bar by former judgment (2) conclusiveness of judgment BAR BY FORMER JUDGMENT No. The second case is not barred by former judgment because there is no identity of cause of action. The cause of action asserted by petitioner in the former suit was anchored upon his right to repurchase the subject lot. The cause of action sought to

be enforced in the second action is predicated upon the failure of private respondent to pay the last three installments of the purchase price A case is said to be barred by a former judgment when the following requisites concur: (1) the presence of a final former judgment; (2) the former judgment was rendered by a court having jurisdiction over the subject matter and the parties; (3) the former judgment is a judgment on the merits; and, (4) there is, between the first and the second actions, identity of parties, subject matter, and causes of action Judgment on the merits.In order that a judgment may operate as a bar to a subsequent suit on the same cause of action it must have been based on the merits of the case that is when it determines the rights and liabilities of the parties based on the disclosed facts, irrespective of formal, technical, or dilatory objections. It is not necessary, however, that there should have been a trial. If the judgment is general, and not based on any technical defect or objection, and the parties had a full legal opportunity to be heard on their respective claims and contentions, it is on the merits although there was no actual hearing or arguments on the facts of the case. Such is one of the situations contemplated in Section 3, Rule 17 of the Rules of Court, where a complaint is dismissed for failure of the plaintiff to comply with a lawful order of the court which dismissal has the effect of an adjudication upon the merits. While a judgment dismissing a suit because of a purely technical defect, irregularity, or informality is not strictly on the merits and is, therefore, no bar to subsequent actions, this is however, not applicable to the present case. Firstly, the order dismissing petitioner's complaint in Civil Case No. 2159(24) is specified to be with prejudice.Secondly, the aforesaid order of dismissal is not a dismissal on sheer technicality but actually goes into the very substance of the relief sought therein by petitioner, that is, for the reconveyance of the subject property which was denied in said case, and must thus be regarded as an adjudication on the merits. It is the dismissal premised on such technical grounds as a mis-joinder, non-joinder, misnomer or defect of parties; or that plaintiff has no sufficient title or authority to bring the suit, or want of legal capacity to sue on his part; or formal defects in the pleadings; or a dismissal of the action for failure of the complaint to state a cause of action which is not a bar to a new action on a good complaint wherein the defects and omissions in the first complaint are corrected and supplied by the second complaint. Also, a failure to allege a matter essential to the jurisdiction of the court is no bar to a second complaint wherein such defect is cured or obviated by further and sufficient allegations. Identity of Cause of Action. In determining whether causes of action are identical so as to warrant application of the rule of res judicata, the test most commonly stated is to ascertain whether the same evidence which is necessary to sustain the second action would have been sufficient to authorize a recovery in the first, even if the forms or nature of the two actions be different. If the same facts or evidence would sustain both, the two actions are considered the same within the rule that the judgment in the former is a bar to the subsequent action; otherwise it is not. It will be observed that Civil Case No. 2159(24) is based on petitioner's light to repurchase the subject property under Section 119 of the Public Land Act, while Civil Case No. 4293 involves the rescission of the contract of sale by reason of the failure of private respondent to pay in full the value of the property, pursuant to Article 1191 of the Civil Code. The former, in order to prosper, requires proof that the land was granted under a free patent, that the land was sold within five years from the grant thereof, and that the action for reconveyance was filed within five years from the execution of the deed of sale. In the second case, proof of the unpaid installments is the only evidence necessary to sustain the action for rescission. It is thus apparent that a different set of evidence is necessary to sustain and establish the variant causes of action in the two cases. In addition, causes of action which are distinct and independent, although arising out of the same contract, transaction, or state of facts, may be sued on separately,

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recovery on one being no bar to subsequent actions on others. Also, the mere fact that the same relief is sought in the subsequent action will not render the judgment in the prior action operative as res judicata, such as where the two actions are brought on different statutes, as in the case at bar. CONCLUSIVENESS OF JUDGMENT No.res judicata will still not apply even under the rule on conclusiveness of judgment because the fact that there was an unpaid balance equivalent to three installments was never put in issue in the first case. It has been held that in order that a judgment in one action can be conclusive as to a particular matter in another action between the same parties or their privies, it is essential that the issues be identical. If a particular point or question is in issue in the second action, and the judgment will depend on the determination of that particular point or question, a former judgment between the same parties will be final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit; but the adjudication of an issue in the first case is not conclusive of an entirely different and distinct issue arising in the second. In order that this rule may be applied, it must clearly and positively appear, either from the record itself or by the aid of competent extrinsic evidence that the precise point or question in issue in the second suit was involved and decided in the first. And in determining whether a given question was an issue in the prior action, it is proper to look behind the judgment to ascertain whether the evidence necessary to sustain a judgment in the second action would have authorized a judgment for the same party in the first action. -Private respondent insists that petitioner should have included and alleged rescission of contract as a second cause of action in Civil Case No. 2159(24) considering that at the time the first complaint was filed, the breach of the contract of sale was already total, hence the ground for rescission was available and in existence. -Being based on different causes of action, the action for rescission under Article 1191 of the Civil Code is distinct from the action for reconveyance under Section 119 of the Public Land Act. Action for rescission could have been brought independently of the action for reconveyance ,there is no positive provision of law or any rule of jurisprudence which compels a party to join all his causes of action and bring them at one and the same time. 2.Yes.The action for rescission has prescribed and should consequently be dismissed on said ground. There can be no dispute that actions based on written contracts prescribe after ten years from the time the right of the action accrues. It is elementary that the computation of the period of prescription of any cause of action, which is the same as saying prescription of the action, should start from the date when the cause of action accrues or from the day the right of the plaintiff is violated. This is as it should be. In the present case, petitioner's position is that the last three installments which he claims were not paid by private respondent, allegedly fell due on July 1, 1968, July 1, 1969, and July 1,1970, respectively. Indulging petitioner in his own submissions, therefore, the breach committed by private respondent occurred, at the earliest, on July 1, 1968 or, at the latest, on July 1, 1970. Now, even taking the non-payment of the last installment as the basis, an actionable breach of the contract was already committed on said date, hence, as of that time there arose and existed a cause of action for petitioner to file a case for rescission. This remedy could already have been availed of by petitioner for, as earlier discussed, there has been no legal obstacle thereto. Since the ten-year period had started to run on July 2, 1970, petitioner should have filed the action before July 2, 1980 when the prescriptive period expired. Considering that the amended complaint in Civil Case No. 4293, invoking petitioner's right to rescind the contract, was filed only on May 3, 1985, the action therefor has obviously and ineluctably prescribed.

DISPOSITIVE ACCORDINGLY, the instant petition for review on certiorari is hereby DENIED. University of the Philippines v. C.A., 218 SCRA 728 (1993) *Lack of COA isnt a ground for MTD *Res judicata reqs UNIVERSITY OF THE PHILIPPINES V CA 218 SCRA 728 ROMERO; February 9, 1993 NATURE Petition for review on by certiorari FACTS - On August 15-17, 1986, the "International Conference on the Tasaday Controversy and Other Urgent Anthropological Issues" was held at the Philippine Social Science Center in UP Diliman. Bailen, a professor of the Dept. of Anthropology in UP was the conference chairman and he presented the "Tasaday Folio," a collection of studies on Tasadays done by leading anthropologists who disputed the authenticity of the Tasaday find by Presidential Assistant on National Minorities Minister Elizade and suggested that the "discovery" in 1971 was fabricated. - In the same conference, UP History professor Salazar traced in a publication the actual genealogy of the Tasadays to T'boli and Manobo ethnic groups. He likewise presented ABC's "20/20" videotaped television documentary showing interviews with natives claiming to have been asked by Elizalde to pose as Tasadays. - In July 1988, UP allegedly sent Salazar and Bailen to a conference in Yugoslavia. There, Salazar and Bailen reiterated their claim that the Tasaday find was a hoax and their allegations were widely published, - October 1988, Elizalde and Tasaday representatives filed a complaint for damages and declaratory relief against Salazar and Bailen before the QC RTC. - As causes of action, the plaintiffs alleged that: 1) Defendants' conduct and statements that the Tasadays were nonexistent or frauds deprived them of their peace of mind and defiled the Tasadays' dignity and personality, 2) That the contention that Elizalde caused the Tasadays to pose and pretend was defamatory and pictured the plaintiffs as dishonest and publicity-seeking persons, thereby besmirching their reputation and causing them serious anxiety - November 24, 1988 - UP filed a motion to intervene with supporting memorandum asserting that, having authorized the activities of Bailen and Salazar, it had a duty to protect them as faculty members for acts and utterances made in the exercise of academic freedom. It claimed that it was itself entitled to the right of institutional academic freedom. At the hearing on the motion to intervene, the lower court required UP to submit its answer in intervention "to enable the Court to better appreciate the issue of whether or not the motion for leave to intervene should be granted. UPs motion for leave to intervene was granted and its answer-inintervention was admitted. - Salazar and Bailen filed a motion to dismiss which was denied. The motion was based on the grounds that: The complaint failed to state a cause of action; The cause of action, if any, had already prescribed; They are protected by the guarantees of free speech and academic freedom; The court had no jurisdiction to grant declaratory relief in a civil action and no justiciable controversy exists.

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- Their MFR was denied thus Bailen and Salazar filed in the SC petition for certiorari, prohibition and mandamus, charging the lower court with grave abuse of discretion in denying their motion to dismiss. The SC dismissed the petition. Bailen and Salazars MFR was also denied for having been filed late. - February 15, 1989 - UP filed a motion to dismiss the complaint but it was stricken off the record in the Order of February 16, 1989 and a subsequent motion for reconsideration was also denied. - Elizalde, et. al. filed a motion to declare Bailen and Salazar in default which the lower court granted. The defendants tried to set aside the order of default but the lower court denied it. - The lower court also resolved UP's motion for the reconsideration of the Order of February 16, 1989 striking its motion to dismiss from the record. The court explained that after it had filed the answer in intervention, UP could no longer file a separate motion to dismiss because under Section 2 (c) of Rule 12 of the Rules of Court, an intervenor may only file two kinds of pleadings: a complaint if he joins the plaintiff and an answer in intervention if he unites with the defendant. By admitting UP's proposed answer in intervention, the court deemed the same as UP's answer to the complaint because the proposed answer in intervention may not, as incorrectly claimed by UP, be considered as filed only for the purpose of enabling the court to better appreciate the issue of whether or not its motion for leave (to intervene) shall be granted and nothing more. - May 3, 1989 - UP filed a motion for a preliminary hearing on the special defenses it had raised in its answer-in-intervention, specifically lack of cause of action and lack of jurisdiction over the nature of the action. - The lower court allowed the parties to orally argue on UPs motion but later issued an order denying the intervenors special defenses in its answer-in-intervention as grounds for a motion to dismiss. - According to the lower court, UP's answer-in-intervention had not explicitly alleged lack of cause of action or that the court had no jurisdiction over the nature of the action or suit. The court added that: While it may be true that Elizalde, et. al.s complaint does not state a cause of action against the intervenor UP, what is sought to be dismissed by the intervenor is Elizalde, et. al.s complaint against Salazar and Bailen. The complaint states a cause of action against the Salazar and Bailen on the basis of the allegations in it. The alleged protective mantle of institutional academic freedom of UP over the professors and its privileged character were already alleged by the defendants in their motion to dismiss filed on December 8, 1988, and this was denied by the lower court. This order was also sustained by the Supreme Court when it denied the petition for prohibition, certiorari and mandamus. Based on the complaint, there is no allegation that the activities of the professors were sanctioned by UP. Since the motion to dismiss of intervenor UP is be predicated upon lack of cause of action of the complaint, this must be based on the allegations in the complaint. Thus the special defenses of the intervenor seeking the dismissal of the plaintiffs' complaint for lack of cause of action is without merit. - UP filed a petition for certiorari and prohibition with the SC, assailing this decision of the lower court. The petition was referred to the CA. The CA dismissed the petition. It held that the motion to dismiss may not be granted on the ground of insufficiency of cause of action predicated on matters not raised in the complaint. It ruled that the lower court had jurisdiction over the complaint for damages as the action was aimed at recovering relief arising from alleged wrongful acts of the professors. - The CA decision had the following relevant points: UP contends that the acts of the defendants having been actually sanctioned by the University, are within the "protective mantle of academic freedom guaranteed by the Constitution" for which the defendants can not be made liable for damages.

However the argument failed to consider that such allegations are not stated in the complaint and may only be properly raised in the answer and determined after trial for by filing a motion to dismiss, the allegations of the complaint are hypothetically admitted and it is not the office of the order to determine whether the allegations of facts in the complaint are true. UP also argues that the cause of action for declaratory relief is not proper in an ordinary civil action. Even if this were granted, the action would not be dismissed on that account alone because the declaratory relief is only one prayer and the principal object is to hold the defendants liable on what is claimed as the commission of a tort by the defendants which injured the plaintiffs. - UP filed a petition for review on certiorari with the SC. ISSUES 1. WON res judicata forecloses the resolution of the petition for review on certiorari 2. WON the motion to dismiss based on failure to state a cause of action can prosper HELD 1. NO Reasoning - Res judicata applies when there is, among others, identity of parties and subject matter in two cases. - While it is true that the instant petition and that the petition for certiorari, prohibition and mandamus of the professors revolve around the issue of whether or not the lower court correctly denied the motion to dismiss the complaint in the civil case for damages and declaratory, res judicata is not applicable. - The requisite of identity of parties has been complied with because the situation is akin to the adding of other parties to a case which had been finally resolved in a previous one. UP intervened and made common cause with Bailen and Salazar in alleging that the case should be dismissed. There is, therefore, a resultant substantial identity of parties, as both UP, on the one hand, and Bailen and Salazar, on the other hand, represent the same interests in the two petitions. - However, there is no identity of subject matter. The subject matter was identified as the trial judge's refusal to dismiss the complaint against Bailen and Salazar. It should be noted, however, that the two motions (first by the professors and second by UP) to dismiss the same complaint were filed in this case and they were separately resolved. The first was the one filed by Bailen and Salazar. The second motion to dismiss was filed by UP but was stricken off the record by the lower court. 2. NO Reasoning - UP contends that the allegations in the complaint regarding the acts and statements of Bailen and Salazar are "protected by the mantle of the institutional academic freedom of UP and are therefore privileged communications which cannot give rise to any cause of action for damages under Article 26 of the Civil Code in favor of the herein private respondents." This ground was correctly interpreted by the RTC and the CA as a ground for a motion to dismiss failure of the complaint to state a cause of action. - The lack of cause of action must be evident on the face of the complaint inasmuch as in a motion to dismiss based on said ground, the question submitted for determination is the sufficiency of the allegations in the complaint itself. - On its face, the complaint, however, does not allege any right or interest of UP that is affected by the complaint simply because it was not an original defendant. The complaint does not even show that UP authorized the professors to conduct a study on the Tasadays. Neither is it shown that the trip to Yugoslavia was sponsored or sanctioned by UP. By filing the motion to dismiss the complaint against Salazar and

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Bailen or by alleging defenses in its answer which amounted to invoking lack of cause of action as a ground for dismissal, UP confined itself to the allegations of the complaint. - On the other hand, a cause of action against Bailen and Salazar can be made out from the complaint: their acts and utterances allegedly besmirched the reputation of the plaintiffs as they were shown therein to have staged a fraud. - It cannot be said, however, that UPs intervention was improper. Coming to the defense of its faculty members, it had to prove that the alleged damaging acts and utterances of Bailen and Salazar were circumscribed by the constitutionallyprotected principle of academic freedom. However, it should have championed the cause of Bailen and Salazar in the course of the trial of the case. Disposition Decision affirmed.

The court shall not defer the resolution of the motion for the reason that the ground relied upon is not indubitable. In every case, the resolution shall state clearly and distinctly the reasons therefor. MUNICIPALITY OF BIAN V CA (GARCIA) 218 SCRA 638 REGALADO; February 17, 1993 NATURE Appeal via certiorari from the judgment of respondent CA. FACTS MTC: - Petitioner Municipality of Bian (BIAN) filed an action for unlawful detainer, with a prayer for a writ of preliminary mandatory injunction, against GARCIA in the MTC of Bian, Laguna alleging that it was no longer amenable to the renewal of its 25-year lease contract with GARCIA over the premises involved because of its pressing need to use the same for national and provincial offices. - Garcia filed his answer to the complaint contending that the contract of lease for the original period of 25 years had not yet expired and, assuming that it had expired, he has exercised his option to stay in the premises for another 25 years as expressly provided in the said contract. BIAN thereafter filed its reply to the answer. - GARCIA filed this time a "Motion for Preliminary Hearing as if a Motion to Dismiss Has Been Filed" on the ground that the complaint states no cause of action, reiterating its argument. - After further exchanges of pleadings, the MTC rendered judgment ordering GARCIA to vacate the subject premises. - GARCIA filed a "Manifestation/Motion" before MTC praying that the issues raised in the motion for preliminary hearing be first resolved instead of rendering judgment on the pleadings, apparently because it was in the nature of a motion to dismiss. RTC: - After receiving a copy of the decision of the MTC, GARCIA filed a notice of appeal with the Laguna RTC. - BIAN filed before said RTC a motion for execution pending appeal, and on December 14, 1989, Hon. Jose Mar. Garcia, presiding judge of said RTC granted petitioner's aforesaid motion for discretionary execution. The following day, a writ of execution was issued directing the deputy sheriff or his duly authorized representative to enforce the terms of the judgment of the court a quo. CA: GARCIA filed with the CA a petition for certiorari, with a prayer for the issuance of a writ of preliminary injunction, assailing the aforesaid order of execution pending appeal on the ground that BIAN failed to furnish GARCIA with a copy of the motion filed by it, contrary to Section 6, Rule 15 of the ROC. - CA rendered judgment setting aside the questioned order for being violative of the requirement in Section 6, Rule 15 of the Rules of Court which provides that no motion shall be acted upon by the court without proof of prior notice thereof to the adverse party. Aside from annulling the controversial order, however, the CA likewise annulled the judgment of the court a quo, which judgment is pending on appeal in Civil Case No. B-3201 of said RTC. - BIAN filed a Motion for Reconsideration on the ground that the CA should have confined itself to the questioned order of the respondent RTC and subject of GARCIAs petition for certiorari with preliminary injunction in CA-G.R. SP No. 19582. - CA denied the MfR.

Gatmaytan v. Court of Appeals, 267 SCRA 487 (1997) ADVANTAGE of filing a MTD: Ct holds a hearing b4 goig to the issues of the case DISADVANTAGE: if case dismissed, not prejudicial to re-filing of the case ADVANTAGE OF USING GROUNDS FOR MTD AS AFFIRMATIVE DEF INSTEAD: if case dismissed, it would be an adjudication on the merits

Who files How pleaded Period, Rule 16, Sec. 1: Within the time for but before filing the answer to the complaint or pleading asserting a claim As Affirmative Defense, Rule 16, Sec. 5 Sec. 6. Pleading grounds as affirmative defenses. If no motion to dismiss has been filed, any of the grounds for dismissal provided for in this Rule may be pleaded as an affirmative defense in the answer and, in the discretion of the court, a preliminary hearing may be had thereon as if a motion to dismiss had been filed. The dismissal of the complaint under this section shall be without prejudice to the prosecution in the same or separate action of a counterclaim pleaded in the answer. Hadji Ali Mamadsual, et. al. V. Moson, 190 SCRA 86 (1990) Hearing and Order, Rule 16, Sec. 3 Sec. 2. Hearing of motion. At the hearing of the motion, the parties shall submit their arguments on the questions of law and their evidence on the questions of fact involved except those not available at that time. Should the case go to trial, the evidence presented during the hearing shall automatically be part of the evidence of the party presenting the same. Sec. 3. Resolution of motion. After the hearing, the court may: dismiss the action or claim deny the motion OR order the amendment of the pleading

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ISSUE 1. WON CA has jurisdiction over an issue not raised before it. HELD NO. Ratio CA has no jurisdiction in a certiorari proceeding to rule on the merits of the main case itself which was not on appeal before it. Reasoning - The validity of the order of the RTC authorizing the issuance of a writ of execution during the pendency of the appeal therein was the sole issue raised in the petition for certiorari filed with the CA. - CAs authority was limited to ruling upon the issue of whether or not the RTC committed grave abuse of discretion in issuing the order directing the issuance of a discretionary writ of execution against GARCIA. Whether or not the MTC committed a mistake in arriving at its decision is an issue that is beyond the authority of respondent court to decide. - The allegation that the decision of the MTC was improvidently and irregularly issued was raised by GARCIA only as an additional or alternative argument to buttress his theory that the issuance of a discretionary writ of execution was not in order. - Even assuming that the said issue was squarely raised and sufficiently controverted, the same cannot be considered a proper subject of a special civil action for certiorari under Rule 65 which is limited only to challenges against errors of jurisdiction. The jurisdiction of the municipal trial court over the ejectment case filed by the petitioner against private respondent is not disputed. - The error, if any was committed by the trial court, was at most one of judgment or procedure correctible by ordinary appeal. If a judgment of the MTC is sought to be reviewed, the remedy is an appeal to the regional trial court, not the filing of a special civil action of certiorari. Appeal, whether from an interior court or a regional trial court, is antithetical to a special civil action of certiorari. When the remedy of appeal is available, the extraordinary remedy of certiorari cannot be resorted to because the availability of appeal proscribes recourse to the special civil action of certiorari. - Certiorari will issue only to correct errors of jurisdiction and that no error or mistake committed by a court will be corrected by certiorari unless said court had acted in the premises without jurisdiction or in excess thereof or with such grave abuse of discretion as would amount to lack of jurisdiction. It is available only for these purposes and not to correct errors of procedure or mistake in the judge's finding or conclusions. - Neither can it be said that the lower court committed a grave abuse of discretion or exceeded its jurisdiction when it failed to conduct a preliminary hearing, as prayed for in private respondent's "Motion for Preliminary Hearing as if a Motion to Dismiss Has Been Filed," before summarily rendering judgment on the merits of the case. GARCIAs motion is anchored on the ground that the complaint allegedly states no cause of action since the original term of 25 years stipulated in the contract of lease had not yet expired and assuming that it had expired, private respondent had made known to petitioner his exclusive option to renew it for another 25 years. Sec. 5. Pleading grounds as affirmative defenses. Any of the grounds for dismissal provides for in this Rule, except improper venue, preliminary hearing may be had thereon as if a motion to dismiss had been filed. - The cited provision allows the grounds for a motion to dismiss to be set up as affirmative defenses in the answer if no motion to dismiss has been filed. - Contrary to the claim of private respondent, the preliminary hearing permitted under the said provision is not mandatory even when the same is prayed for. It rests

largely on the sound discretion of the trial court. The use of the word "may" in said provision shows that such a hearing is not a matter of right demandable from the trial court. A preliminary hearing on an affirmative defense for failure to state a cause of action is not necessary (it is a well-settled rule that in a motion to dismiss based on the ground that the complaint fails to state a cause of action, the question submitted to the court for determination is the sufficiency of the allegations in the complaint itself. Whether those allegations are true or not is beside the point, for their truth is hypothetically admitted by the motion). DISPOSITION Petition is granted. Decision of CA is reversed and set aside. Effects Of Dismissal, Rule 16, Sec. 5 Sec. 5. Effect of dismissal. Subject to the right of appeal, an order granting a motion to dismiss based on paragraphs (f), (h) and (i) of section 1 hereof shall bar the refiling of the same action or claim. On periods for pleading, Rule 16, Sec. 4 Sec. 4. Time to plead. If the motion is denied, the movant shall file his answer within the balance of the period prescribed by Rule 11 to which he was entitled at the time of serving his motion, but not less than five (5) days in any event, computed from his receipt of the notice of the denial. If the pleading is ordered to be amended, he shall file his answer within the period prescribed by Rule 11 counted from service of the amended pleading, unless the court provides a longer period. On other grounds and omnibus motion rule Notes: MTD subject to omnibus motion rule since it attacks a complaint which is a pleading. If a MTD is filed, then the motion MUST INVOKE ALLL OBJECTIONS WHICH ARE AVAILABLE AT THE TIME OF THE FILING OF SAID MOTION. If the objection which is available at the time of filing is NOT INCLUDED in the motion, that ground is deemed waived and can no longer be invoked as an affirmative defense in the answer which the movant may file following the denial of the MTD. Rule 9, Section 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. EXCEPTIONS (when court could still dismiss the claim) : when it appears from the pleadings or the evidence on record that a. the court has no jurisdiction over the subject matter b. there is another action pending between the same parties for the same cause c. the action is barred by a prior judgment d. the action is barred by statute of limitations Rule 15, Sec. 8. Omnibus motion. Subject to the provisions of section 1 of Rule 9, a motion attacking a pleading, order, judgment, or proceeding shall include all objections then available, and all objections not so included shall be deemed waived.

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