EVANGELINE ALDAY, petitioner, vs.
FGU INSURANCE objecting to the courts jurisdiction in the event that
CORPORATION, respondent.
Facts:
FGU Insurance Corporation filed a complaint with the RTC
of Makati alleging that Alday owed it P114,650.76,
representing unliquidated cash advances, unremitted costs
of premiums and other charges incurred as an insurance
agent. Respondent also prayed for exemplary damages,
attorneys fees, and costs of suit. Petitioner filed her answer
and by way of counterclaim, asserted her right for the
payment of P104,893.45, representing direct commissions,
profit commissions and contingent bonuses and for
accumulated premium reserves amounting to P500,000.00.
In addition, petitioner prayed for attorneys fees, litigation
expenses, moral damages and exemplary damages for the
allegedly unfounded action filed by respondent.
Respondent filed a Motion to Strike Out Answer With
Compulsory Counterclaim And To Declare Defendant In
Default because petitioners answer was allegedly filed out
of time. However, the trial court denied the motion. A few
weeks later, respondent filed a motion to dismiss petitioners
counterclaim, contending that the trial court never acquired
jurisdiction over the same because of the non-payment of
docket fees by petitioner. In response, petitioner asked the
trial court to declare her counterclaim as exempt from
payment of docket fees since it is compulsory and that
respondent be declared in default for having failed to
answer such counterclaim.
The trial court granted the motion to dismiss. The court
found petitioners counterclaim to be merely permissive and
held that petitioners failure to pay docket fees prevented the
court from acquiring jurisdiction over the same. The Court of
Appeals sustained the trial court.
Issues:
1. Whether or not the respondent is estopped from
questioning her non-payment of docket fees
because it did not raise this particular issue when it
filed its first motion.
2. Whether or not the Court of Appeals had jurisdiction
to entertain the appeal of the petitioner.
3. Whether or not the counterclaim was permissive or
compulsory
Held:
1. Estoppel by laches arises from the negligence or
omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to
assert it either has abandoned or declined to assert
it. In the case at bar, respondent cannot be
considered as estopped from assailing the trial
courts jurisdiction over petitioners counterclaim
since this issue was raised by respondent with the
trial court itself the body where the action is
pending - even before the presentation of any
evidence by the parties and definitely, way before
any judgment could be rendered by the trial court.
2. This objection to the CAs jurisdiction is raised for
the first time before this Court. Although the lack of
jurisdiction of a court may be raised at any stage of
the action, a party may be estopped from raising
such questions if he has actively taken part in the
very proceedings which he questions, belatedly
that the judgment or order subsequently rendered is
adverse to him. In this case, respondent actively
took part in the proceedings before the CA by filing
its appellees brief with the same. Its participation,
when taken together with its failure to object to the
jurisdiction during the entire duration of the
proceedings before such court, demonstrates a
willingness to abide by the resolution of the case by
such tribunal and accordingly, respondent is now
most decidedly estopped.
3. BOTH. A compulsory counterclaim is one which,
being cognizable by the regular courts of justice,
arises out of or is connected with the transaction or
occurrence constituting the subject matter of the
opposing parties claim and does not require for its
adjudication the presence of third parties of whom
the court cannot acquire jurisdiction. In Valencia v.
Court of Appeals, this Court set the criteria to
determine whether a counterclaim is compulsory or
permissive,
a. Are the issues of fact and law raised by the
claim and counterclaim largely the same?
b. Would res judicata bar a subsequent suit
on defendants claim absent the
compulsory counterclaim rule?
chanroblesvirtuallawlibrary
c. Will substantially the same evidence
support or refute plaintiffs claim as well as
defendants counterclaim?
d. Is there any logical relation between the
claim and the counterclaim?
chanroblesvirtuallawlibrary
Another test, applied in Quintanilla v. Court of
Appeals, is the compelling test of
compulsoriness which requires a logical
relationship between the claim and counterclaim,
that is, where conducting separate trials of the
respective claims of the parties would entail a
substantial duplication of effort and time by the
parties and the court.
Petitioners counterclaim for commissions,
bonuses, and accumulated premium reserves is
merely permissive. The evidence required to prove
petitioners claims differs from that needed to
establish respondents demands for the recovery of
cash accountabilities from petitioner, such as cash
advances and costs of premiums. This conclusion
is further reinforced by petitioners own admissions
since she declared in her answer that respondents
cause of action, unlike her own, was not based
upon the Special Agents Contract.
However, petitioners claims for damages, allegedly
suffered as a result of the filing by respondent of its
complaint, are compulsory.
The rule on the payment of filing fees has been laid
down by the Court in the case of Sun Insurance
Office, Ltd. v. Hon. Maximiano Asuncion
a. It is not simply the filing of the complaint or
appropriate initiatory pleading, but the payment
of the prescribed docket fee, that vests a trial
 court with jurisdiction over the subject-matter or
nature of the action. Where the filing of the
initiatory pleading is not accompanied by
payment of the docket fee, the court may allow
payment of the fee within a reasonable time but
in no case beyond the applicable prescriptive or
reglementary period.chanroblesvirtuallawlibrary

b. The same rule applies to permissive

counterclaims, third-party claims and similar
pleadings, which shall not be considered filed
until and unless the filing fee prescribed
therefor is paid. The court may allow payment
of said fee within a reasonable time but also in
no case beyond its applicable prescriptive or
reglementary period.chanroblesvirtuallawlibrary

c. Where the trial court acquires jurisdiction over a

claim by the filing of the appropriate pleading
and payment of the prescribed filing fee but,
subsequently, the judgment awards a claim not
specified in the pleading, or if specified the
same has been left for determination by the
court, the additional filing fee therefor shall
constitute a lien on the judgment. It shall be the
responsibility of the Clerk of Court or his duly
authorized deputy to enforce said lien and
assess and collect the additional
fee.chanroblesvirtuallawlibrary
In Suson v. Court of Appeals, the Court explained
that although the payment of the prescribed docket
fees is a jurisdictional requirement, its non-payment
does not result in the automatic dismissal of the
case provided the docket fees are paid within the
applicable prescriptive or reglementary period.
Coming now to the case at bar, it has not been
alleged by respondent and there is nothing in the
records to show that petitioner has attempted to
evade the payment of the proper docket fees for
her permissive counterclaim. As a matter of fact,
after respondent filed its motion to dismiss
petitioners counterclaim based on her failure to pay
docket fees, petitioner immediately filed a motion
with the trial court, asking it to declare her
counterclaim as compulsory in nature and therefore
exempt from docket fees and, in addition, to declare
that respondent was in default for its failure to
answer her counterclaim. The trial court should
have instead given petitioner a reasonable time, but
in no case beyond the applicable prescriptive or
reglementary period, to pay the filing fees for her
permissive counterclaim.
MERCADO VS CA assignment. The RTC, however, denied the motion. [8]
Instead, it set the case for pre-trial. Thereafter, trial ensued.
Leonides Mercado had been distributing respondent San
Miguel Corporations (SMCs) beer products in Quiapo, During trial, Mercado acknowledged the accuracy
Manila since 1967. In 1991, SMC extended to him a P7.5 of SMCs computation of his outstanding liability as of
million credit line allowing him to withdraw goods on credit. August 15, 1991. Thus, the RTC dismissed the complaint
To secure his purchases, Mercado assigned three China and ordered Mercado and EASCO (to the extent of P2.6
Banking Corporation (CBC) certificates of deposit million or the value of its bonds) to jointly and severally pay
amounting to P5 million [1] to SMC and executed a SMC the amount of P7,468,153.75. [9]
continuing hold-out agreement stating:
Aggrieved, Mercado and EASCO appealed to the
Any demand made by [SMC] on [CBC], claiming Court of Appeals (CA) [10] insisting that Mercado did not
default on my/our part shall be conclusive on [CBC] and default in the payment of his obligations to SMC.
shall serve as absolute authority for [CBC] to encash the
[CBC certificates of deposit] in accordance with the third On December 14, 2004, the CA affirmed the RTC
paragraph of this Hold-Out Agreement, whether or not I/we decision in toto. [11] Mercado and EASCO both moved for
have in fact defaulted on any of my/our obligations with reconsideration but their respective motions were denied.
[SMC], it being understood that the issue of whether or not [12]
there was factual default must be threshed out solely
between me/us and [SMC] On October 28, 2005, EASCO filed a petition for
review on certiorari in this Court [13] but eventually agreed
He also submitted three surety bonds from Eastern to settle its liability with SMC. [14] The petition was
Assurance and Surety Corporation (EASCO) totaling P2.6 terminated on September 19, 2007. [15]
million. [2]
Meanwhile, Mercado passed away and was
On February 10, 1992, SMC notified CBC that substituted by his heirs, petitioners Racquel D. Mercado,
Mercado failed to pay for the items he withdrew on credit. Jimmy D. Mercado, Henry D. Mercado, Louricar D.
Consequently, citing the continuing hold-out agreement, it Mercado and Virgilio D. Mercado.
asked CBC to release the proceeds of the assigned
certificates of deposit. CBC approved SMBs request and Petitioners subsequently filed this petition asserting that the
informed Mercado. CA erred in affirming the RTC decision in toto. The said
decision (insofar as it ordered Mercado to pay SMC
On March 2, 1992, Mercado filed an action to annul P7,468,153.75) was void. SMCs counterclaim was
the continuing hold-out agreement and deed of assignment permissive in nature. Inasmuch as SMC did not pay docket
in the Regional Trial Court (RTC) of Manila, Branch 55. [3] fees, the RTC never acquired jurisdiction over the
He claimed that the continuing hold-out agreement allowed counterclaim.
forfeiture without the benefit of foreclosure. It was therefore
void pursuant to Article 2088 of the Civil Code. [4] We deny the petition.
Moreover, Mercado argued that he had already settled his
recent purchases on credit but SMC erroneously applied A counterclaim (or a claim which a defending party
the said payments to his old accounts not covered by the may have against any party) [16] may be compulsory [17]
continuing hold-out agreement (i.e., purchases made prior or permissive. A counterclaim that (1) arises out of (or is
to the extension of the credit line). necessarily connected with) the transaction or occurrence
that is the subject matter of the opposing partys claim; (2)
On March 18, 1992, SMC filed its answer with falls within the jurisdiction of the court and (3) does not
counterclaim against Mercado. It contended that Mercado require for its adjudication the presence of third parties over
delivered only two CBC certificates of deposit amounting to whom the court cannot acquire jurisdiction, is compulsory.
P4.5 million [5] and asserted that the execution of the [18] Otherwise, a counterclaim is merely permissive.
continuing hold-out agreement and deed of assignment was
a recognized business practice. Furthermore, because When Mercado sought to annul the continuing hold-out
Mercado admitted his outstanding liabilities, SMC sought agreement and deed of assignment (which he executed as
payment of the lees products he withdrew (or purchased on security for his credit purchases), he in effect sought to be
credit) worth P7,468,153.75. [6] freed from them. While he admitted having outstanding
obligations, he nevertheless asserted that those were not
On April 23, 1992, SMC filed a third-party complaint covered by the assailed accessory contracts. For its part,
against EASCO. [7] It sought to collect the proceeds of the aside from invoking the validity of the said agreements,
surety bonds submitted by Mercado. SMC therefore sought to collect the payment for the value
of goods Mercado purchased on credit. Thus, Mercados
On September 14, 1994, Mercado filed an urgent complaint and SMCs counterclaim both touched the issues
manifestation and motion seeking the dismissal of the of whether the continuing hold-out agreement and deed of
complaint. He claimed that he was no longer interested in assignment were valid and whether Mercado had
annulling the continuing hold-out agreement and deed of outstanding liabilities to SMC. The same evidence would
essentially support or refute Mercados claim and SMCs
counterclaim.

Based on the foregoing, had these issues been tried

separately, the efforts of the RTC and the parties would
have had to be duplicated. Clearly, SMCs counterclaim,
being logically related to Mercados claim, was compulsory
in nature. [19] Consequently, the payment of docket fees
was not necessary for the RTC to acquire jurisdiction over
the subject matter.

WHEREFORE, the petition is hereby DENIED.

Costs against petitioners.

SO ORDERED.
PROTON V. BANQUE NACIONAL DE PARIS
Facts:
Proton Pilipinas availed of credit facilities of
Banque Nacional de Paris (BNP).
Protons resulting debt of $2M was guaranteed by
Automotive Corporation Philippines, Asea One Corp., and
Autocorp Group.
BNP and Proton subsequently executed trust receipt
agreements, where Proton would receive passenger motor
vehicles in trust for BNP, with the option to sell them,
subject to the condition that Proton would deliver the
proceeds of the sale to BNP, to be applied to the formers
debt. Vehicles remaining unsold would be returned to BNP.
Proton allegedly failed to deliver.
BNP demanded from Protons corporate guarantors
$1.5M, the total outstanding obligation. The guarantors
refused. BNP filed a complaint with the Makati RTC praying
for $1.5M plus accrued interest and other related charges.
Respondent Proton filed a motion to dismiss, contending
that 1) BNP failed to pay the correct docket fees which is
supposed to include interest, based on Admin Circ. No. 11-
94, and therefore the court could not have acquired
jurisdiction over the case, 2) the clerk of court failed to
apply the correct exchange rate, and that 3) since no
demand letter was given, the complaint was premature.
The court denied the petition, stating that the petitioner
properly paid the docket fees. It stated that Section 7(a) of
Rule 141 of the Rules of Court excludes interest accruing
from the principal amount being claimed in the pleading in
the computation of the prescribed filing fees. It court further
added that assuming the correct filing fees were not paid,
the rule is that the court may allow a reasonable time for the
payment of the prescribed fees, or the balance thereof, and
upon such payment, the defect is cured and the court may
properly take cognizance of the action, unless in the
meantime prescription has set in and consequently barred
the right of action.
Regarding the correct dollar-peso rate of exchange, the
Office of the Clerk of Court of the RTC of Makati pegged it
at P 43.00 to US$1. Absent any office guide of the rate of
exchange which said court functionary was duty bound to
follow, the rate he applied is presumptively correct.
With regard to the demand letter, the court said that the
failure to make a formal demand is not among the legal
grounds for the dismissal of the case.
Issues:
1) Whether BNP failed to pay the correct docket fees
2) Whether the Clerk of court applied the wrong exchange
rate
3) Whether the amount of interest was not specified in the
prayer, rendering the complaint void.
Held:
1) Petitioner relied on a case decided in 1989 where
Rule 141 was applied, the interest and costs having been
excluded in the computation of the aggregate amount.
However, the present case was filed in 1998, when such
rule had already been amended by Administrative Circular
No. 11-94.
The amended rule includes the interest, damages of
whatever kind, attorneys fees, litigation expenses, and
other costs in the computation of the aggregate amount. In
the complaint, respondent prayed for accrued interest
subsequent to August 15, 1998 until fully paid.
The complaint having been filed on September 7,
1998, respondents claim includes the interest from
August 16, 1998 until such date of filing.
Respondent not having paid the fees for such, cannot claim
the interest within such duration, unless respondent is
allowed by motion to amend its complaint within a
reasonable time and specify the precise amount of interest
petitioners owe within the period and pay the corresponding
docket fee.
With respect to the interest accruing after the filing of the
complaint, the same can only be determined after a final
judgment has been handed down.
Respondent cannot thus be made to pay the corresponding
docket fee. Pursuant, however, to
Section 2, Rule 141, as amended by Administrative
Circular No. 11-94, respondent should be made to pay
additional fees which shall constitute a lien in the event the
trial court adjudges that it is entitled to interest accruing
after the filing of the complaint.
2) In the Clerk of Courts application of exchange rate, the
presumption of regularity is disputable, not conclusive.
Petitioners have presented rebutting evidence that the
exchange rate when the case was filed was P43.21 to
US$1, not P43.00. Thus, the docket fees were insufficient.
However, the trial court did acquire jurisdiction. Respondent
merely relied on the assessment made by the Clerk of
court. In such a case, where there exists no effort in
defrauding the government, respondent even
demonstrating his willingness to abide by the rules by
paying the additional docket fees as required, the court
acquires jurisdiction.
3) Where the trial court acquires jurisdiction over a claim by
the filing of the appropriate pleading and payment of the
prescribed filing fee but, subsequently, the judgment awards
a claim not specified in the pleading, or if specified, has
been left for determination by the court, the additional filing
fee shall constitute a lien on the judgment. It shall be the
responsibility of the Clerk of Court or his duly authorized
deputy to enforce said lien and assess and collect the
additional fee. The amount of any claim for damages,
therefore, arising on or before the filing of the complaint or
any pleading should be specified. While the determination
of certain damages is left to the discretion of the court, it is
the duty of the parties claiming such damages to specify the
amount sought on the basis of which the court may make a
proper determination, and for the proper assessment of the
appropriate docket fees. The exception to the rule is limited
only to any damages that may arise after the filing of the
complaint or similar pleading for then it will not be possible
for the claimant to specify nor speculate as to the amount
thereof. Petition is partially granted. The Clerk of Court is
ordered to reassess and determine the docket fees that
should be paid by respondent within fifteen (15) days,
provided the applicable prescriptive or reglementary period
has not yet expired.
RUBY SHELTER BUILDERS REALTY DEVT
CORPORATION V. FORMARAN
FACTS:
- Ruby Shelter obtained a loan from Tan and Obiedo
secured by a REM consisting of 5 parcels of land in the
name of the former.
- Despite an extension granted by Tan and Obiedo and
several negotiations, Ruby was not able to pay.
- Hence, Tan and Obiedo, by virtue of a MOA, executed
Deeds of Absolute sale in their favor covering the 5 parcels
of land. The MOA provided that if Ruby fails to pay the loan,
5 deeds of absolute sale would be executed in favor of Tan
and Obiedo.
- So Ruby Shelter filed complaint for declaration of nullity of
the deeds. Believing that their action was one which was
incapable of pecuniary estimation, they paid docket fees
amounting to about 13K. It said that it only wanted to annul
the deeds so no issue of title or recovery of possession is
present to classify it as a real action.
- Tan and Obiedo moved to dismiss the complaint and ask
for damages (also pursuant to the MOA there was a
provision that if Ruby Shelter brought suit against them, it
would be liable for P 10M) contending that the RTC did not
acquire jurisdiction over the case because the case
involved recovery of real property making it a real action
which requires payment of docket fees equivalent to a
percentage of the fair market value of the land (P 700K).
- RTC and CA ruled in favor of Tan and Obiedo ordering
Ruby Shelter to pay additional docket fees. Hence, this
petition.
ISSUE: W/N Ruby Shelter should pay additional docket
fees.
HELD/RATIO: YES. For the court to acquire jurisdiction,
docket fees must be paid first. Payment is mandatory and
jurisdictional.
To determine whether an action is real, it must affect title to
or recovery of possession of real property. In this case,
Ruby Shelter did not disclose certain facts which would
classify the complaint it filed as a real action (like the
execution of deeds of sale pursuant to a MOA). The action
was really one for recovery of possession of the parcels of
land. Hence, it is a real action.
The docket fees for cases involving real property depend on
the fair market value (or the stated value) of the same: the
higher the value, the higher the fees due. For those
incapable of pecuniary estimation, a fixed or flat rate is
imposed.
ST. LOUIS UNIVERSITY, INC., petitioner, compelling circumstances; (5) the merits of the case; (6) a
vs. cause not entirely attributable to the fault or negligence of
EVANGELINE C. COBARRUBIAS, respondent. the party favored by the suspension of the rules; (7) a lack
FACTS: of any showing that the review sought is merely frivolous
Respondent is an associate professor of the petitioner and and dilatory; (8) the other party will not be unjustly
an active member of the union of faculty and employees. prejudiced thereby; (9) fraud, accident, mistake or
The Collective Bargaining Agreements contained the excusable negligence without the appellants fault; (10)
following provision that for teaching employees in college peculiar, legal and equitable circumstances attendant to
who fail the yearly evaluation, who are retained for three (3) each case; (11) in the name of substantial justice and fair
cumulative years in five (5) years, shall be on forced leave play; (12) importance of the issues involved; and (13)
for one (1) regular semester during which period all benefits exercise of sound discretion by the judge, guided by all the
due them shall be suspended. Petitioner placed respondent attendant circumstances. Thus, there should be an effort,
on forced leave for failing to achieve the required rating on the part of the party invoking liberality, to advance a
points. Respondent sought recourse from the CBAs reasonable or meritorious explanation for his/her failure to
grievance machinery, but to no avail. Respondent filed a comply with the rules.
case with DOLE but circulation and mediation again failed.
The parties submitted the issues between them for
voluntary arbitration before Voluntary Arbitrator (VA).
Respondent argued that the CA already resolved the forced
leave issue in a prior case between the parties, ruling that
the forced leave for teachers who fail their evaluation for
three (3) times within a five-year period should be
coterminous with the CBA in force during the same five-
year period. Petitioner argued that said CA decision is not
yet final. The VA dismissed the complaint. Respondent filed
with the CA a petition for review under Rule 43 of the Rules
of Court but failed to pay the filing fees and to attach the
material portion of the records. Motion for reconsideration
was filed, complying with the procedural lapses, and CA
reinstated the petition.
ISSUES:
Remedial Law
(1) Whether or not the Court of Appeals erred in reinstating
respondents petition despite her failure to appeal (docket)
fee within the reglementary period.
RULINGS:
Remedial Law
(1) Yes. The CA erred in its ruling. Appeal is not a natural
right but a mere statutory privilege, thus, appeal must be
made strictly in accordance with the provision set by
law. Rule 43 of the Rules of Court provides that appeals
from the judgment of the VA shall be taken to the CA, by
filing a petition for review within fifteen (15) days from the
receipt of the notice of judgment. Furthermore, upon the
filing of the petition, the petitioner shall pay to the CA clerk
of court the docketing and other lawful fees; non-
compliance with the procedural requirements shall be a
sufficient ground for the petitions dismissal. Thus,
payment in full of docket fees within the prescribed
period is not only mandatory, but also jurisdictional. It
is an essential requirement, without which, the decision
appealed from would become final and executory as if no
appeal has been filed. Here, the docket fees were paid late,
and without payment of the full docket fees, Cobarrubias
appeal was not perfected within the reglementary period.
There are, however, there are recognized exceptions to
their strict observance, such as: (1) most persuasive and
weighty reasons; (2) to relieve a litigant from an injustice
not commensurate with his failure to comply with the
prescribed procedure; (3) good faith of the defaulting party
by immediately paying within a reasonable time from the
time of the default; (4) the existence of special or
RELUCIO VS LOPEZ (legal wife)
FACTS
1.
Private respondent Angelina Mejia Lopez (plaintiff below)
filed a petition for APPOINTMENT
AS SOLE ADMINISTRATRIX OF CONJUGAL
PARTNERSHIP OF PROPERTIES,
FORFEITURE, ETC., against defendant Alberto Lopez and
petitioner Imelda Relucio.
2. In the petition, private-respondent alleged that sometime Petitioners participation in
in 1968, defendant Lopez, who islegally married to the
private respondent, abandoned the latter and their four
legitimatechildren; that he arrogated unto himself full and
exclusive control and administration of theconjugal
properties, spending and using the same for his sole gain
and benefit to the totalexclusion of the private respondent
and their four children; that defendant Lopez, after
abandoning his family, maintained an illicit relationship and -owned by him and petitioner. Such judgment would
cohabited with herein petitioner since 1976.3. A Motion to
Dismiss the Petition was filed by herein petitioner on the
ground that privaterespondent has no cause of action
against her.4.
Respondent Judge denying petitioner Relucios Motion to
Dismiss on the ground that
she is impleaded as a necessary or indispensable party
because some of the subjectproperties are registered in her
name and defendant Lopez, or solely in her name
.5.
MR denied
. CA likewise denied. Hence this petition.
ISSUE: Whether petitioners inclusion as
party defendant is essential in the proceedings for
acomplete adjudication of the controversy.
i[9]
HELD: NOThe first cause of action is for
judicial appointment
of respondent as administratrix of the
conjugal partnership or absolute community property arising Regional Trial Court, Makati,Branch 141 as against
from her marriage to Alberto J. Lopez.Petitioner is a
complete stranger to this cause of action.
The administration of the property of themarriage is entirely
between them, to the exclusion of all other persons.
Respondent allegesthat Alberto J. Lopez is her husband.
Therefore, her first cause of action is against Alberto
J.Lopez. There is no right-duty relation between petitioner
and respondent that can possiblysupport a cause of action.
The second cause of action is for an accounting by
respondent husband.
ii[14]
The accounting of conjugal partnership arises from or is an
incident of marriage. Petitioner has nothing to do with
themarriage between respondent Alberto J. Lopez. Hence,
no cause of action can exist against petitioner onthis
ground.
The third cause of action is essentially for forfeiture of
Alberto J. Lopez share in property co
-ownedby him and petitioner. It does not involve the issue of
validity of the co-ownership between Alberto J.Lopez and
petitioner.The respondent also sought support. Support
cannot be compelled from a stranger.
Finally, as to the moral damages, respondents claim for
moral damages is against Alberto J. Lopez,
not petitioner.If petitioner is not a real party in interest, she
cannot be an indispensable party. An indispensableparty is
one without whom there can be no final determination of an
action.
iii[19]
Special Proceedings M-3630 is not indispensable. Certainly,
the trial court can issue a judgment ordering Alberto J.
Lopez to make an accounting of his conjugal partnership
with respondent, and give support to
respondent and their children, and dissolve Alberto J.
Lopez conjugal partnership with respondent, andforfeit
Alberto J. Lopez share in property co
beperfectly valid and enforceable against Alberto J. Lopez.
Nor can petitioner be a necessary party in Special
Proceedings M-3630. A necessary party asone who is not
indispensable but who ought to be joined as party if
complete relief is to beaccorded those already parties, or
for a complete determination or settlement of the claim
subjectof the action.
iv[20]
In the context of her petition in the lower court, respondent
would be accordedcomplete relief if Alberto J. Lopez were
ordered to account for his alleged conjugal
partnershipproperty with respondent, give support to
respondent and her children, turn over his share in theco-
ownership with petitioner and dissolve his conjugal
partnership or absolute communityproperty with
respondent.WHEREFORE,
the Court GRANTS the petition and REVERSES the
decision of the Court of Appeals.
v[21]
The Court DISMISSES Special Proceedings M-3630 of the
petitioner.
CONSTANTE AMOR DE CASTRO v. CA(GR 115838, July
8 2002)
FACTS:
Appellants were co-owners of four (4) lots located at EDSA
corner New York and Denver Streets in Cubao, Quezon
City. In a letter dated January 24, 1984 (Exhibit "A-1, p.
144,Records), appellee was authorized by appellants to act
as real estate broker in the sale of these properties for the
amount of P23,000,000.00, five percent (5%) of which will
be given to the agent as commission. It was appellee who
first found Times Transit Corporation, represented by its
president Mr. Rondaris, as prospective buyer which desired
to buy two(2) lots only, specifically lots 14 and 15.
Eventually, sometime in May of 1985, the sale of lots 14
and 15 was consummated. Appellee received from
appellants P48,893.76 as commission. It was then that the
rift between the contending parties soon emerged. Appellee
apparently felt short changed because according to him, his
total commission should beP352, 500.00 which is five
percent (5%) of the agreed price of P7,050,000.00 paid by
Times Transit Corporation to appellants for the two (2) lots,
and that it was he who introduced the buyer to appellants
and unceasingly facilitated the negotiation which ultimately
led to the consummation of the sale. Hence, he sued below
to collect the balance of P303,606.24 after having received
P48,893.76in advance. On the other hand, appellants
completely traverse appellee's claims and essentially argue
that appellee is selfishly asking for more than what he truly
deserved as commission to the prejudice of other agents
who were more instrumental in the consummation of the
sale. Although appellants readily concede that it was
appellee who first introduced Times Transit Corp. to them,
appellee was not designated by them as their exclusive real
estate agent but that in fact there were more or less
eighteen (18) others whose collective efforts in the long run
dwarfed those of appellee's, considering that the first
negotiation for the sale where appellee took active
participation failed and it was these other agents who
successfully brokered inthe second negotiation. But despite
this and out of appellants' "pure liberality, beneficence and
magnanimity",appellee nevertheless was given the largest
cut in thecommission (P48,893.76), although on the
principle of
quantum meruit
he would have certainly been entitled toless. So appellee
should not have been heard to complain of getting only a
pittance when he actually got the lion's shareof the
commission and worse, he should not have beenallowed to
get the entire commission. Furthermore, thepurchase price
for the two lots was only P3.6 million asappearing in the
deed of sale and not P7.05 million asalleged by appellee.
Thus, even assuming that appellee isentitled to the entire
commission, he would only be getting5% of the P3.6
million, or P180,000.00."Private respondent Francisco
Artigo ("Artigo" forbrevity) sued petitioners Constante A. De
Castro ("Constante"for brevity) and Corazon A. De Castro
("Corazon" for brevity)to collect the unpaid balance of his
broker's commission fromthe De Castros. The Trial Court
finds defendants Constanteand Corazon Amor de Castro
jointly and solidarily liable toplaintiff. The Court of Appeals
affirmed in toto the decision of the RTC. Hence, this
petition.ISSUE:Whether the complaint merits dismissal for
failure toimplead other co-owners as indispensable
partiesHELD: The De Castros argue that Artigo's complaint
shouldhave been dismissed for failure to implead all the co-
ownersof the two lots. The De Castros claim that Artigo
always knewthat the two lots were co-owned by Constante
and Corazonwith their other siblings Jose and Carmela
whom Constantemerely represented. The De Castros
contend that failure toimplead such indispensable parties is
fatal to the complaintsince Artigo, as agent of all the four co-
owners, would bepaid with funds co-owned by the four co-
owners. The De Castros' contentions are devoid of
legalbasis.An indispensable party is one whose interest will
beaffected by the court's action in the litigation, and
withoutwhom no final determination of the case can be had.
7
The joinder of indispensable parties is mandatory and
courtscannot proceed without their presence.
8
Whenever it appearsto the court in the course of a
proceeding that anindispensable party has not been joined,
it is the duty of thecourt to stop the trial and order the
inclusion of such party.
9
However, the rule on mandatory joinder of
indispensableparties is not applicable to the instant case.
There is no dispute that Constante appointed Artigo in
ahandwritten note dated January 24, 1984 to sell
theproperties of the De Castros for P23 million at a 5
percentcommission. The authority was on a first come, first
servebasis.Constante signed the note as owner and
asrepresentative of the other co-owners. Under this note,
acontract of agency was clearly constituted
betweenConstante and Artigo. Whether Constante
appointed Artigoas agent, in Constante's individual or
representativecapacity, or both, the De Castros cannot seek
the dismissalof the case for failure to implead the other co-
owners asindispensable parties.
The De Castros admit that theother co-owners are solidarily
liable under thecontract of agency
,
10
citing Article 1915 of the Civil Code,which reads:Art. 1915. If
two or more persons have appointed anagent for a common
transaction or undertaking, they
shall be solidarily liable to the agent for all
theconsequences of the agency. The solidary liability of the
four co-owners, however, militatesagainst the De Castros'
theory that the other co-ownersshould be impleaded as
indispensable parties.When the law expressly provides for
solidarity of theobligation, as in the liability of co-principals
in a contract of agency, each obligor may be compelled to
pay the entireobligation.
12
The agent may recover the whole compensationfrom any
one of the co-principals, as in this case.Indeed, Article 1216
of the Civil Code provides that acreditor may sue
any
of the solidary debtors. This article reads: Art. 1216. The
creditor may proceed against any one of the solidary
debtors or some or all of them simultaneously. The demand
made against one of them shall not be an obstacle to those
which may subsequently be directed against the others, so
long as the debt has not been fully collected. Thus, the
Court has ruled in
Operators Incorporated vs. American Biscuit Co., Inc.
that"x x x
solidarity does not make a solidary obligor an indispensable
party in a suit filed by the creditor
. Article 1216 of the Civil Code says that the creditor `may
proceed against anyone of the solidary debtors or some or
all of them simultaneously'."
LOTTE VS DELA CRUZ
Private respondent (petitioner herein) Lotte Phils., Inc.
(Lotte) is a domestic corporation. Petitioners (respondents
herein) are among those who were hired and assigned to
the confectionery facility operated by private respondent.
On December 14, 1995 and yearly thereafter until the
year 2000 7J Maintenance and Janitorial Services (7J)
entered into a contract with private respondent to provide
manpower for needed maintenance, utility, janitorial and
other services to the latter. In compliance with the terms
and conditions of the service contract, and to accommodate
the needs of private respondent for personnel/workers to do
and perform piece works, petitioners, among others, were
hired and assigned to private respondent as repackers or
sealers.
However, either in October, 1999 or on February 9, 2000,
private respondent dispensed with their services allegedly
due to the expiration/termination of the service contract by
respondent with 7J. They were either told hwag muna
kayong pumasok at tatawagan na lang kung may gawa; or
were asked to wait pag magrereport sila sa trabaho.
Unfortunately, petitioners were never called back to work
again.
Aggrieved, petitioners lodged a labor complaint against
both private respondent Lotte and 7J, for illegal dismissal,
regularization, payment of corresponding backwages and
related employment benefits, 13th month pay, service
incentive leave, moral and exemplary damages and
attorneys fees based on total judgment award.[4]
On February 28, 2001, Labor Arbiter Cresencio G. Ramos,
Jr., rendered judgment[5] declaring 7J as employer of
respondents.[6] The arbiter also found 7J guilty of illegal
dismissal[7] and ordered to reinstate respondents,[8] pay
P2,374,710.00 as backwages, P713,648.00 as 13th month
pay and P117,000.00 as service incentive leave pay.[9]
Respondents appealed to the National Labor Relations
Commission (NLRC) praying that Lotte be declared as their
direct employer because 7J is merely a labor-only
contractor. In its decision[10] dated April 24, 2002, the
NLRC found no cogent reason to disturb the findings of the
labor arbiter and affirmed its ruling that 7J is the employer
of respondents and solely liable for their claims.
Respondents motion for reconsideration was denied by the
NLRC in a resolution dated June 18, 2002.
Undaunted, they filed a petition for certiorari in the Court of
Appeals[11] against the NLRC and Lotte, insisting that their
employer is Lotte and not 7J.
Lotte, however, denied that respondents were its
employees. It prayed that the petition be dismissed for
failure to implead 7J who is a party interested in sustaining
the proceedings in court, pursuant to Section 3, Rule 46 of
the Revised Rules of Civil Procedure.
On July 9, 2004, the Court of Appeals reversed and set
aside the rulings of the Labor Arbiter and the NLRC. In its
decision, the Court of Appeals declared Lotte as the real
employer of respondents and that 7J who engaged in labor-
only contracting was merely the agent of Lotte.
Respondents who performed activities directly related to
Lottes business were its regular employees under Art. 280
of the Labor Code. As such, they must be accorded
security of tenure and their services terminated only on
just and authorized causes.
Lottes motion for reconsideration was denied, hence this
petition, on the following issues:
8. Whether or not petitioner herein had the burden of
proof to establish before the proceedings in the Court of
Appeals that 7J Maintenance and Janitorial Service was not
a labor-only contractor.
8.1. Whether or not the Petition in CA-G.R. SP No. 72732
is dismissible for failure to comply with Section 3, Rule 46 in
relation to Section 5, Rule 65 of the 1997 Rules of Civil
Procedure.[12]
We first resolve the procedural issue raised by petitioner.
Lotte asserts that 7J is an indispensable party and should
have been impleaded in respondents petition in the Court
of Appeals. It claims that the petition before the Court of
Appeals was dismissible for failure to comply with Section
3,[13] Rule 46 in relation to Section 5[14] of Rule 65 of the
Revised Rules of Civil Procedure.
Petitioners contention is tenable.
An indispensable party is a party in interest without whom
no final determination can be had of an action,[15] and who
shall be joined either as plaintiffs or defendants.[16] The
joinder of indispensable parties is mandatory.[17] The
presence of indispensable parties is necessary to vest the
court with jurisdiction, which is the authority to hear and
determine a cause, the right to act in a case.[18] Thus,
without the presence of indispensable parties to a suit or
proceeding, judgment of a court cannot attain real finality.
[19] The absence of an indispensable party renders all
subsequent actions of the court null and void for want of
authority to act, not only as to the absent parties but even
as to those present.[20]
In the case at bar, 7J is an indispensable party. It is a party
in interest because it will be affected by the outcome of the
case. The Labor Arbiter and the NLRC found 7J to be
solely liable as the employer of respondents. The Court of
Appeals however rendered Lotte jointly and severally liable
with 7J who was not impleaded by holding that the former is
the real employer of respondents. Plainly, its decision
directly affected 7J.
In Domingo v. Scheer,[21] we held that the non-joinder of
indispensable parties is not a ground for the dismissal of an
action[22] and the remedy is to implead the non-party
claimed to be indispensable.[23] Parties may be added by
order of the court on motion of the party or on its own
initiative at any stage of the action and/or such times as are
just. If the petitioner refuses to implead an indispensable
party despite the order of the court, the latter may dismiss
the complaint/petition for the petitioner/plaintiffs failure to
comply therefor.[24]
Although 7J was a co-party in the case before the Labor
Arbiter and the NLRC, respondents failed to include it in
their petition for certiorari in the Court of Appeals. Hence,
the Court of Appeals did not acquire jurisdiction over 7J.
No final ruling on this matter can be had without impleading
7J, whose inclusion is necessary for the effective and
complete resolution of the case and in order to accord all
parties with due process and fair play.
In light of the foregoing, the Court sees no need to discuss
the second issue raised by petitioner.
WHEREFORE, the July 9, 2004 decision of the Court of
Appeals in CA-G.R. SP No. 72732 and the November 26,
2004 resolution, are SET ASIDE. Let the case be
REMANDED to the Court of Appeals to include 7J
Maintenance and Janitorial Services as an indispensable
party to the case for further proceedings.
Julita de la Cruz and Felipe de la Cruz v. Pedro Joaquin case after the CA had ordered for legal representatives to
G.R. No. 162788, July 28, 2005Panganiban, J. appear and substitute for him. As such,the Motion for
Facts Substitution may be deemed to have been granted; and the
: To secure payment for an obligation, Respondent heirs, to havesubstituted for the deceased respondent. As
supposedly executed a Deed of Sale infavor of Petitioners, there was no violation of due process, the issue of
for a parcel of land in Nueva Ecija. The parties also substitution cannot be upheld as a ground to nullify the trial
executed a courts Decision
Kasunduan
which Respondent claimed showed the deed of sale to be
actually an equitable mortgage.Petitioners contend that the
document was merely an accommodation to allow
Respondent torepurchase the land, which the latter failed to
exercise.The RTC declared that the parties had entered into
a sale with right to repurchase. Itfurther held that
Respondent had made a valid tender of payment on two
separate occasions toexercise his right of repurchase.
Hence, petitioners were required to reconvey the property
uponhis payment. The CA sustained the RTC decision and
ordered a substitution by legalrepresentatives, in view of
Respondent
s death.
Petitioners now assert that the
RTCs Decision was invalid for lac
k of jurisdiction whenRespondent died during the pendency
of the case and that there was no substitution of heirs.
ISSUE
: Whether the trial court lost jurisdiction over the case upon
Respondent
s death

HELD
:
No
. When a party to a pending action dies and the claim is not
extinguished, the Rulesunder Sec.16, Rule 3 require a
substitution of the deceased. The rule on the substitution of
parties was crafted to protect every partys right to due
process. The estate of the deceased party
will continue to be properly represented in the suit through
the duly appointed legalrepresentative. Moreover, no
adjudication can be made against the successor of the
deceased if the fundamental right to a day in court is
denied. A
formal
substitution by heirs is not necessarywhen they themselves
voluntarily appear, participate in the case, and present
evidence in defenseof the deceased. These actions negate
any claim that the right to due process was violatedStrictly
speaking, the rule on the substitution by heirs is not a
matter of jurisdiction, butof due process. Thus, when due
process is not violated, as when the right of the
representative or heir is recognized and protected,
noncompliance or belated formal compliance with the
Rulescannot affect the validity of a promulgated decision.
Mere failure to substitute for a deceased
plaintiff is not a sufficient ground to nullify a trial courts
decision.
The alleging party must prove that there was an undeniable
violation of due process.Case records show that
Respondent
s heirs voluntarily appeared and participated in the
CARABEO VS DINGCO SO ORDERED.5
Petitioners counsel filed a Notice of Appeal on March 20,
On July 10, 1990, Domingo Carabeo (petitioner) entered 2001.
into a contract denominated as "Kasunduan sa Bilihan ng By the herein challenged Decision dated July 20, 2009,6
Karapatan sa Lupa"1 (kasunduan) with Spouses Norberto the Court of Appeals affirmed that of the trial court.
and Susan Dingco (respondents) whereby petitioner agreed Petitioners motion for reconsideration having been denied
to sell his rights over a 648 square meter parcel of by Resolution of January 8, 2010, the present petition for
unregistered land situated in Purok III, Tugatog, Orani, review was filed by Antonio Carabeo, petitioners son,7
Bataan to respondents for P38,000. faulting the appellate court:
Respondents tendered their initial payment of P10,000 (A)
upon signing of the contract, the remaining balance to be in holding that the element of a contract, i.e., an object
paid on September 1990. certain is present in this case.
Respondents were later to claim that when they were about (B)
to hand in the balance of the purchase price, petitioner in considering it unfair to expect respondents who are
requested them to keep it first as he was yet to settle an on- not lawyers to make judicial consignation after herein
going "squabble" over the land. petitioner allegedly refused to accept payment of the
Nevertheless, respondents gave petitioner small sums of balance of the purchase price.
money from time to time which totaled P9,100, on (C)
petitioners request according to them; due to respondents in upholding the validity of the contract, "Kasunduan sa
inability to pay the amount of the remaining balance in full, Bilihan ng Karapatan sa Lupa," despite the lack of spousal
according to petitioner. consent, (underscoring supplied)
By respondents claim, despite the alleged problem over the and proffering that
land, they insisted on petitioners acceptance of the (D)
remaining balance of P18,900 but petitioner remained firm [t]he death of herein petitioner causes the dismissal of the
in his refusal, proffering as reason therefor that he would action filed by respondents; respondents cause of action
register the land first. being an action in personam. (underscoring supplied)
Sometime in 1994, respondents learned that the alleged The petition fails.
problem over the land had been settled and that petitioner The pertinent portion of the kasunduan reads:8
had caused its registration in his name on December 21, xxxx
1993 under Transfer Certificate of Title No. 161806. They Na ako ay may isang partial na lupa na matatagpuan sa
thereupon offered to pay the balance but petitioner Purok 111, Tugatog, Orani Bataan, na may sukat na 27 x 24
declined, drawing them to file a complaint before the metro kuwadrado, ang nasabing lupa ay may sakop na
Katarungan Pambarangay. No settlement was reached, dalawang punong santol at isang punong mangga, kayat
however, hence, respondent filed a complaint for specific ako ay nakipagkasundo sa mag-asawang Norby Dingco at
performance before the Regional Trial Court (RTC) of Susan Dingco na ipagbili sa kanila ang karapatan ng
Balanga, Bataan. nasabing lupa sa halagang P38,000.00.
Petitioner countered in his Answer to the Complaint that the x x x x (underscoring supplied)
sale was void for lack of object certain, the kasunduan not That the kasunduan did not specify the technical
having specified the metes and bounds of the land. In any boundaries of the property did not render the sale a nullity.
event, petitioner alleged that if the validity of the kasunduan The requirement that a sale must have for its object a
is upheld, respondents failure to comply with their determinate thing is satisfied as long as, at the time the
reciprocal obligation to pay the balance of the purchase contract is entered into, the object of the sale is capable of
price would render the action premature. For, contrary to being made determinate without the necessity of a new or
respondents claim, petitioner maintained that they failed to further agreement between the parties.9 As the above-
pay the balance of P28,000 on September 1990 to thus quoted portion of the kasunduan shows, there is no doubt
constrain him to accept installment payments totaling that the object of the sale is determinate.
P9,100. Clutching at straws, petitioner proffers lack of spousal
After the case was submitted for decision or on January 31, consent. This was raised only on appeal, hence, will not be
2001,2 petitioner passed away. The records do not show considered, in the present case, in the interest of fair play,
that petitioners counsel informed Branch 1 of the Bataan justice and due process.10
RTC, where the complaint was lodged, of his death and that Respecting the argument that petitioners death rendered
proper substitution was effected in accordance with Section respondents complaint against him dismissible, Bonilla v.
16, Rule 3, Rules of Court.3 Barcena11 enlightens:
By Decision of February 25, 2001,4 the trial court ruled in The question as to whether an action survives or not
favor of respondents, disposing as follows: depends on the nature of the action and the damage sued
WHEREFORE, premises considered, judgment is hereby for. In the causes of action which survive, the wrong
rendered ordering: complained [of] affects primarily and principally property
1. The defendant to sell his right over 648 square meters of and property rights, the injuries to the person being merely
land pursuant to the contract dated July 10, 1990 by incidental, while in the causes of action which do not
executing a Deed of Sale thereof after the payment of survive, the injury complained of is to the person, the
P18,900 by the plaintiffs; property and rights of property affected being incidental.
2. The defendant to pay the costs of the suit. (emphasis and underscoring supplied)
In the present case, respondents are pursuing a property
right arising from the kasunduan, whereas petitioner is
invoking nullity of the kasunduan to protect his proprietary
interest. Assuming arguendo, however, that the kasunduan
is deemed void, there is a corollary obligation of petitioner
to return the money paid by respondents, and since the
action involves property rights,12 it survives.1avvphi1
It bears noting that trial on the merits was already
concluded before petitioner died. Since the trial court was
not informed of petitioners death, it may not be faulted for
proceeding to render judgment without ordering his
substitution. Its judgment is thus valid and binding upon
petitioners legal representatives or successors-in-interest,
insofar as his interest in the property subject of the action is
concerned.13
In another vein, the death of a client immediately divests
the counsel of authority.14 Thus, in filing a Notice of Appeal,
petitioners counsel of record had no personality to act on
behalf of the already deceased client who, it bears
reiteration, had not been substituted as a party after his
death. The trial courts decision had thereby become final
and executory, no appeal having been perfected.
WHEREFORE, the petition is DENIED.
ROGER V. NAVARRO vs. HON. JOSE L. ESCOBIDO
FACTS: Respondent Karen T. Go filed two complaints
before the RTC for replevin and/or sum of money with
damages against Navarro. In these complaints, Karen Go
prayed that the RTC issue writs of replevin for the seizure of
two (2) motor vehicles in Navarros possession. In his
Answers, Navarro alleged as a special affirmative defense
that the two complaints stated no cause of action, since
Karen Go was not a party to the Lease Agreements with
Option to Purchase (collectively, the lease agreements)
the actionable documents on which the complaints were
based. RTC dismissed the case but set aside the dismissal
on the presumption that Glenn Gos (husband) leasing
business is a conjugal property and thus ordered Karen Go
to file a motion for the inclusion of Glenn Go as co-plaintiff
as per Rule 4, Section 3 of the Rules of Court. Navarro filed
a petition for certiorari with the CA. According to Navarro, a
complaint which failed to state a cause of action could not
be converted into one with a cause of action by mere
amendment or supplemental pleading. CA denied petition.
ISSUE: Whether or not Karen Go is a real party in interest.
HELD: YES. Karen Go is the registered owner of the
business name Kargo Enterprises, as the registered owner
of Kargo Enterprises, Karen Go is the party who will directly
benefit from or be injured by a judgment in this case. Thus,
contrary to Navarros contention, Karen Go is the real party-
in-interest, and it is legally incorrect to say that her
Complaint does not state a cause of action because her
name did not appear in the Lease Agreement that her
husband signed in behalf of Kargo Enterprises.
Glenn and Karen Go are effectively co-owners of Kargo
Enterprises and the properties registered under this name;
hence, both have an equal right to seek possession of
these properties. Therefore, only one of the co-owners,
namely the co-owner who filed the suit for the recovery of
the co-owned property, is an indispensable party thereto.
The other co-owners are not indispensable parties. They
are not even necessary parties, for a complete relief can be
accorded in the suit even without their participation, since
the suit is presumed to have been filed for the benefit of all
co-owners.
We hold that since Glenn Go is not strictly an indispensable
party in the action to recover possession of the leased
vehicles, he only needs to be impleaded as a pro-forma
party to the suit, based on Section 4, Rule 4 of the Rules,
which states:
Section 4.Spouses as parties. Husband and wife shall
sue or be sued jointly, except as provided by law.
Even assuming that Glenn Go is an indispensable party to
the action, misjoinder or non-joinder of indispensable
parties in a complaint is not a ground for dismissal of action
as per Rule 3, Section 11 of the Rules of Court.