Professional Documents
Culture Documents
forcing her to incur litigation expenses amounting to not less than ONE
THOUSAND PESOS (P1,000.00), attorneys fees in the amount of
TWENTY THOUSAND PESOS (P20,000.00) plus ONE THOUSAND PESOS
(P1,000.00) for every court appearance.4
xxxx
Together with his answer (which was later amended), the respondent moved to
dismiss the complaint on the following grounds: failure to state a cause of
action; that the action was barred by prior judgment; and lack of jurisdiction.5
The RTC, in an order dated January 16, 1996, denied the respondents motion
to dismiss and proceeded with pre-trial and trial.6
During the pendency of the case, the petitioner died and was substituted by
her son Pablito Tumpag Belnas, Jr.7
In a decision8 dated June 3, 2002, the RTC ordered the respondent to return
possession of the subject portion of the property to the petitioner and to pay
the petitioner P10,000.00 as actual damages, P20,000.00 as moral damages,
and P10,000.00 as attorneys fees.
In his appeal to the CA, among the grounds the respondent raised was the
issue of the RTCs lack of jurisdiction over the case.9
In its assailed decision,10 the CA agreed with the respondent and nullified the
RTCs June 3, 2002 decision and all proceedings before the trial court. It held
that the petitioners failure to allege in her complaint the assessed value of the
disputed property warranted the complaints dismissal, although without
prejudice, because the courts jurisdiction over the case should be "determined
by the material allegations of the complaint" 11 and "cannot be made to depend
upon the defenses set up in court or upon a motion to dismiss for, otherwise,
the
question
defendant."
12
of
jurisdiction
would
depend
almost
entirely
on
the
in its resolution13 dated September 28, 2011. The CAs ruling and denial of the
motion for reconsideration gave rise to the present petition for review on
certiorari filed with this Court.
The petitioner now argues that the respondent, after having actively
participated in all stages of the proceedings in Civil Case No. 666, is now
estopped from assailing the RTCs jurisdiction; that the subject case had been
litigated before the RTC for more than seven (7) years and was pending before
the CA for almost eight (8) years. Further, she argues that the dismissal of her
complaint was not warranted considering that she had a meritorious case as
attached to her complaint was a copy of a Declaration of Real Property
indicating that the assessed value of the disputed property is P20,790.00.
Our Ruling
We find MERIT in the present petition. The CAs dismissal of the petitioners
complaint for recovery of possession is erroneous and unwarranted.
It is well-settled that jurisdiction over a subject matter is conferred by law, not
by the parties action or conduct, 14and is, likewise, determined from the
allegations in the complaint.15 Under Batas Pambansa Blg. 129,16 as amended
by Republic Act No. 7691,17 the jurisdiction of Regional Trial Courts over civil
actions involving title to, or possession of, real property, or any interest therein,
is limited to cases where the assessed value of the property involved exceeds
Twenty thousand pesos (P20,000.00) or, for civil actions in Metro Manila, where
such value exceeds Fifty thousand pesos (P50,000.00), except actions for
forcible entry into and unlawful detainer of lands or buildings.18
Here, the petitioner filed a complaint for recovery of possession of real property
before the RTC but failed to allege in her complaint the propertys assessed
value. Attached, however, to the petitioners complaint was a copy of a
Declaration of Real Property showing that the subject property has a market
value of P51,965.00 and assessed value of P20,790.00. The CA was fully aware
of this attachment but still proceeded to dismiss the petitioners complaint:
Record shows that the complaint was filed with the Regional Trial Court on
December 13, 1995. There is no allegation whatsoever in the complaint for
Lastly, we note that the present petitioner's situation comes close with those of
the respondents in Honorio Bernardo v. Heirs of Eusebio Villegas, 28 where the
Villegas heirs, in filing their complaint for accion publiciana before the RTC,
failed to allege the assessed value of the subject property. On the complaints
omission, the defendant questioned the RTCs jurisdiction in his answer to the
complaint and, again, in his appeal before the CA.
In Bernardo v. Heirs of Villegas,29 we affirmed the CA ruling that upheld the
RTCs jurisdiction over the case despite the complaints failure to allege the
assessed value of the property because the defendant-petitioner was found to
have actively participated in the proceedings before the trial court and was
already estopped from assailing the jurisdiction of the RTC. While we mention
this case and its result, we cannot, however, apply the principle of estoppel (on
the question of jurisdiction to the present respondent.
We rule that the respondent is not estopped from assailing the RTCs
jurisdiction over the subject civil case.1wphi1Records show that the
respondent has consistently brought the issue of the court's lack of jurisdiction
in his motions, pleadings and submissions throughout the proceedings, until
the CA dismissed the petitioner's complaint, not on the basis of a finding of
lack of jurisdiction, but due to the insufficiency of the petitioner's complaint,
i.e. failure to allege the assessed value of the subject property. Even in his
comment filed before this Court, the respondent maintains that the RTC has
no jurisdiction over the subject matter of the case.
Lack of jurisdiction over the subject matter of the case can always be raised
anytime, even for the first time on appeal,30 since jurisdictional issues, as a
rule, cannot be acquired through a waiver or enlarged by the omission of the
parties or conferred by the acquiescence of the court. 31 Thus, the respondent is
not prevented from raising the question on the court's jurisdiction in his
appeal, if any, to the June 3, 2002 decision of the RTC in Civil Case No. 666.
WHEREFORE, premised considered, we GRANT the present petition for review
on certiorari and SET ASIDE the decision dated November 30, 2010 and
resolution dated September 28, 2011 of the Court of Appeals, Cebu City in CAG.R. CV No. 78155.
Cause of action
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 178911
DECISION
DEL CASTILLO, J.:
"Filing the appropriate initiatory pleading and the payment of the prescribed
docket fees vest a trial court with jurisdiction over the subject matter." 1
Assailed in this Petition for Review on Certiorari 2 are the March 12, 2007
Decision3 of the Court of Appeals (CA) which denied the Petition for Certiorari
in CA-G.R. CEB-SP No. 01343 and its July 6, 2007 Resolution 4 denying the
herein petitioners' Motion for Reconsideration.5
Factual Antecedents
In a letter6 dated February 18, 2004, Flordelis B. Menzon, Regional Director of
the Home Development Mutual Fund (Pag-IBIG), requested the intervention of
Executive Judge Sinforiano A. Monsanto (Executive Judge Monsanto) of the
Regional Trial Court (RTC) of Catbalogan, Samar on the alleged anomalous
auction sale conducted by Sheriff IVLorenzo De Guzman (De Guzman).
According to Pag-IBIG, De Guzman previously acceded to its request to move
the date of the auction sale to January 20, 2004; however, to its surprise, the
sale proceeded as originally scheduled on January 15, 2004. Pag-IBIG also
claimed that the winning bid of Leoncio Lim (Leoncio) in the amount
of P500,000.00 was grossly disadvantageous to the government considering
that the outstanding loan obligations of the mortgagor, Eduardo Monsanto
(Eduardo), was more than the bid amount. Pag-IBIG thus manifested that
It is for this reason that we are making this protest. Sheriff de Guzman failed to
comply with our request for deferment despitehis [acquiescence]. We are
requesting for your intervention to nullify the results of the auction sale
conducted last January 15, 2004. This will give our office a chance to be able
to participate and recoup our investment.
We trust that you will give thismatter preferential attention.7
the records of the case tothe OCA; that the winning bid
Acting on the aforesaid Motion to Lift Writ of Execution and Notice to Vacate,
the OCA, in a letter12 dated May 9, 2005 directed Judge Usman to
(1) conduct an investigation on the missing records of Home Development
Mutual Fund (Pag-IBIG) vs. Eduardo Monsanto and to report thereon within
THIRTY (30) days from notice; and (2) take action on (a) Items A and B of the
Motion to Lift Writ ofExecution and Notice to Vacate and (b) the letter of Home
Development Mutual Fund dated 18 February 2004, a copy of which is
annexed to the Motion to Lift Writ of Execution and Notice to Vacate, herewith
attached.13 Pursuant to the above directive, Judge Usman notified Pag-IBIG,
Eduardo, and Leoncio of a hearing scheduled on June 14, 2005. 14 This time,
the case was captioned as "Home Development Mutual Fund (Pag-IBIG Fund),
mortgagee, v. Eduardo Monsanto, mortgagor."
In a Manifestation15 dated June 7, 2005 and filed before Branch 28, PagIBIG
informed the trial court that the loan of Eduardo had been restructured and
that Eduardo had commenced paying monthly amortizations; that as a result
of the restructuring, Pag-IBIG is withdrawing its Petition for Extra-judicial
Foreclosure; and that it is no longer interested in pursuing an administrative
action against De Guzman.
Leoncio opposed Pag-IBIGs manifestation.16
Meanwhile, the record shows that on April 11, 2005, Leoncio filed with Branch
27
Manifestation
Possession
17
with
Ex-Parte
Motion
for
Issuance
of
Writ
of
EIGHTH
JUDICIAL
REGION,
CATBALOGAN,
SAMAR
IN
ITS
IN
FINDING
THAT
THE
CERTIFICATE
OF
SALE
WAS
OF
THE
PETITIONER-MORTGAGOR,
FOR
BEING
MERE
"Filing the appropriate initiatory pleading and the payment of the prescribed
docket
fees
vest
trial
court
with
jurisdiction
over
the
subject
In fine, since no docket or filing feeswere paid, then the RTC Branch 28 did not
acquire jurisdiction over the matter/case.1wphi1 It therefore erred in taking
cognizance of the same. Consequently, all the proceedings undertaken by the
trial court are null and void,and without force and effect. In, particular, the
July 1, 2005 and August 30, 2005 Orders of the RTC are null and void.
It is settled jurisprudence that "[a]ny decision rendered without jurisdiction is
a total nullity and may be struck down at any time, even on appeal before this
Court."34 Prescinding from the foregoing, we hold that the RTC-Branch 28 did
not acquire jurisdiction over the instant matter/case there being no formal
initiatory pleading filed as well asnon-payment of docket fees. Consequently, all
proceedings had before the RTC Branch 28 were null and void for lack of
jurisdiction.
WHEREFORE, the Petition is DENIED. The assailedMarch 12, 2007 Decision
and July 6, 2007 Resolution of the Court of Appeals in CA-G.R. CEBSP No.
01343 are ANNULLED and SET ASIDE. The July 1, 2005 and August 30, 2005
Orders of the Regional Trial Court of Catbalogan, Samar, Branch 28 are
DECLARED NULL and VOID. All proceedings, processes and writs emanating
therefrom are likewise NULLIFIED and VOIDEDfor lack of jurisdiction.
SO ORDERED.
answers
with
compulsory
confirmed that on March 26, 2003, they had arrived at a compromise. 10 The
agreement clearly stated that Lobrin was acting on Olympias behalf, on the
basis of a resolution passed during the board meeting held on March 21, 2003.
The settlement reads:
COMPROMISE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This Agreement, entered into by and between:
DAVID M. DAVID, of legal age, married, Filipino and with address at 23 Pablo
Roman Street, BF Homes, Paranaque, hereinafter referred to as DMD;
-andOLYMPIA INTERNATIONAL LIMITED, a corporation organized and existing
under the laws of Hong Kong, with principal office at 13/F Li Dong Building, 711 Li Yuen Street East, Central, Hong Kong, and herein represented by its
Attorney-in-Fact, Henry G. Lobrin, and herein after referred to as Olympia;
WITNESSETH: That
WHEREAS, Olympia has passed a board resolution during the meeting of its
Board of Directors held in Hong Kong on 21 March 2003 constituting and
appointing as such its herein Attorney-in-Fact for the purposes stated in said
resolution, a copy of which is hereto attached as Annex "A"; WHEREAS, there is
a pending case before Branch 200 of the Regional Trial Court of Las Pi[]as
City docketed as Civil Case No. LP-02-0165 ("the Case") and among the
defendants in said Case are Henry G. Lobrin, Federico M. Paragas, Jr. and
Roberto S. Datoy who are presently directors of Olympia;
WHEREAS, the causes of action in the complaint in said Case against aforesaid
Lobrin, Paragas, Jr. and Datoy are in their capacity as shareholders/directors
of Olympia, and likewise concern the relationship and rights between DMD and
Olympia International Ltd., including the status of the latters operations and
financial position;
WHEREAS, another issue in said case is the respective rights of herein parties
DMD and Olympia under and pursuant to the General Agency Agreement
(GAA) with Philam Plans Inc., ("PPI") dated 10 February 1998;
OLYMPIA
INTERNATIONAL
Ltd.
By:
HENRY
G.
Attorney-in Fact
LOBRIN
HENRY
G.
In his personal capacity
LOBRIN
[Emphases supplied]11
On May 15, 2003, David and Lobrin filed the Joint Omnibus Motion to formally
inform the RTC of the compromise agreement. They asserted the following:
2. Said agreement was executed between Plaintiff and Olympia, the latter
being represented by Defendant Lobrin as Olympias Attorney-in-Fact,
pursuant to a resolution passed by a majority vote during the board
meeting held in Hong [Kong] on 21 March 2003 wherein Defendants
Lobrin, Paragas, Jr. and Datoy were all present, authorizing said
Attorney-in-Fact to negotiate a compromise settlement regarding instant
case, the payment of the accrued benefits due the planholders of Philam
Plan, Inc. under the regular and Pares-Pares program as well as the
disposition of the cash and other deposits with Rizal Commercial
Banking Corporation (RCBC) and other accounts in other banks. Said
resolution is appended to the Agreement as its Annex "A";
3. By virtue of said Agreement, Olympia no longer questions and hereby
waives whatever rights and interest it may have to the deposits
constituting the trust fund pertaining to the cash benefits of the
approximately 12,000 planholders of Philam Plans Inc., per the list
attached to the complaint in instant case in Account Nos. 1-214-252240, 07214108903-003 and 0000005292 with RCBC and Account No.
0301-01334-5 with the Equitable-PCI Bank;
4. Olympia further withdraws its objection/opposition to the payment of
the cash benefits to the planholders from said trust funds which shall
remain to be the sole responsibility/accountability of Plaintiff, subject to
the requirement that Olympia through its authorized Attorney-in-Fact
shall be furnished a copy of the Statement of Benefits pertaining to each
planholder;
5. As a consequence of the above, Defendants Severo Henry G. Lobrin,
Federico M. Paragas, Jr. and Rodelio S. Datoy shall be dropped as party
defendants in instant case, to which no objection will be interposed by
Plaintiff, and the motion to declare Defendant Datoy in default for failure
to file his Answer is similarly withdrawn for having been rendered moot
and academic by the Agreement;
6. Olympia hereby withdraw[s] its First, Second and Third Compulsory
Counterclaims against herein Plaintiff considering that the legal and
factual bases thereof are matters which are exclusively the concern of
Olympia as a corporation and have been the subject of the Agreement;
7. Olympia likewise withdraws the Fourth, Fifth, Sixth and Seventh
Compulsory Counterclaim in so far as they refer to the claims pertaining
in their
capacity as
the intrinsic and extrinsic validity of the compromise agreement, as well as its
basis, may be questioned if illicit and unlawful.
In its September 30, 2003 Order,15 the RTC denied the motion of Paragas.
Unperturbed, Paragas elevated the issue to the CA via a petition for certiorari
under Rule 65 of the Rules of Court.
In its July 31, 2006 Decision, the CA reversed the RTCs approval of the
compromise agreement. It explained that the agreement entered into by David,
Lobrin and Datoy was invalid for two reasons: First, the agreement was
between David and Olympia, which was not a party in the case; and second,
assuming that Olympia could be considered a party, there was no showing that
the signatory had the authority from Olympia or from the other parties being
sued to enter into a compromise.
David moved for reconsideration. In its February 23, 2007 Resolution, the CA
denied his motion. Hence, this petition.
GROUNDS OF THE PETITION
I.
RESPONDENT
COURT
LACKEDAND/OR
EXCEEDED
ITS
JURISDICTION WHEN IT MODIFIED THE ORDER OF THE TRIAL
COURT DATED JULY21, 2003, DESPITE THE ASSIGNMENT OF ERROR
BEINGSPECIFICALLY LIMITED TO THE ORDER OF THE TRIAL COURT
DATED SEPTEMBER 30, 2003 WHICH DENIED THE MOTION FOR
RECONSIDERATION FILED BY HEREIN PRIVATE RESPONDENT
II. OLYMPIA IS NOT A PARTY TO THE CASE BELOW, HENCE, THE
DISMISSAL OF THE COMPLAINT AND COMPULSORY COUNTERCLAIMS
ARE PERSONAL IN NATURE TO THE PARTIES AND IS WITHIN THE
PURVIEW OF SECTION 2 OF RULE 17
III. THERE IS DENIAL OF DUE PROCESS OF LAW WHEN RESPONDENT
COURT ANNULLED THE COMPROMISE AGREEMENT BASED ON
UNSUBSTANTIATED ALLEGATIONS OF FACT CONTAINED IN THE
PETITION.16
In his reply,17 David limited his "discussion to the issue that still has a practical
bearing on the case below,"18 that is, whether or not the nullification of the
The
CA
did
jurisdiction
the July 21, 2003 RTC Order
not
exceed
in
its
modifying
In his petition, David claims that the CA exceeded its jurisdiction when it
modified the July 21, 2003 Order of the RTC by admitting Davids
supplemental complaint and approving the earlier mentioned compromise
agreement even though Paragas petition for certiorari before the CA only
questioned the September 30, 2003 Order of the RTC denying his motion for
reconsideration.22
This Court is unmoved by this position advocated by David.
In countless cases, the Court has allowed the consideration of other grounds or
matters not raised or assigned as errors. In the case of Cordero vs. F.S.
Management & Development Corporation,23 the Court wrote:
While a party is required to indicate in his brief an assignment of errors and
only those assigned shall be considered by the appellate court in deciding the
case, appellate courts have ample authority to rule on matters not assigned as
errors in an appeal if these are indispensable or necessary to the just
resolution of the pleaded issues. Thus this Court has allowed the consideration
of other grounds or matters not raised or assigned as errors, to wit: 1) grounds
affecting jurisdiction over the subject matter; 2) matters which are evidently
plain or clerical errors within the contemplation of the law; 3) matters the
consideration of which is necessary in arriving at a just decision and complete
resolution of the case or to serve the interest of justice or to avoid dispensing
piecemeal justice; 4) matters of record which were raised in the trial court and
which have some bearing on the issue submitted which the parties failed to
raise or which the lower court ignored; 5) matters closely related to an error
assigned; and 6) matters upon which the determination of a question properly
assigned is dependent.[Emphases supplied]24
In this case, while it is true that Paragas petition for certiorari before the CA
only assailed the subsequent order of the RTC denying his August 15, 2003
Motion for Reconsideration, he did pray in the said motion for reconsideration
that it set aside and reverse its approval of the Joint Omnibus Motion. The
prayer reads:
WHEREFORE, it is respectfully prayed of this Honorable Court that the Order
dated 21 July 2003 be MODIFIED to SET ASIDE and REVERSE the approval of
the Joint Omnibus Motion dated 15 May 2003 and a new one be issued
DENYING said motion.25
Obviously, the resolution of his motion for reconsideration necessarily involved
the July 21, 2003 Order of the RTC as it was indispensable and inextricably
linked with the September 30, 2003 Order being assailed.
The
CA
did
compromise agreement.
not
err
in
annulling
the
At the outset, David asserts that the CA based the annulment of the
compromise agreement exclusively on the unsubstantiated allegations of
Paragas.
The Court disagrees. A careful reading of the assailed CA decision reveals that
it did not merely rely on the claims of Paragas. What the CA did was to analyze
and appreciate the circumstances behind the compromise agreement. In
revisiting and delving deep into the records, the Court indeed agrees with the
CA that the RTC gravely abused its discretion in approving the agreement for
the following reasons:
First, the subject compromise agreement could not be the basis of the
withdrawal of the respective complaint and counterclaims of the parties for it
was entered into by David with a non-party in the proceedings. Even if the
Court interprets that the RTC approved the underlying agreement to withdraw
the claims and counterclaims between the parties, the terms and conditions of
the subject compromise agreement cannot cover the interests of Olympia, being
a non-party to the suit.
Second, the RTC had no authority to approve the said compromise agreement
because Olympia was not impleaded as a party, although its participation was
indispensable to the resolution of the entire controversy.
A
compromise
the
basis
complaint
and
entered
into
suit.
agreement
could
of
dismissal/withdrawal
counterclaims
if
with
a
non-party
not
of
it
to
be
a
was
the
to a lawsuit. They adjust their difficulties in the manner they have agreed
upon, disregarding the possible gain in litigation and keeping in mind that
such gain is balanced by the danger of losing. It must not be contrary to law,
morals, good customs and public policy, and must have been freely and
intelligently executed by and between the parties. 26 A compromise agreement
may be executed in and out of court. Once a compromise agreement is given
judicial approval, however, it becomes more than a contract binding upon the
parties. Having been sanctioned by the court, it is entered as a determination
of a controversy and has the force and effect of a judgment.27
Verily, a judicially approved compromise agreement, in order to be binding
upon the litigants with the force and effect of a judgment, must have been
executed by them. In this case, the compromise agreement was signed by David
in his capacity as the complainant in the civil case, and Olympia, through
Lobrin as its agent. The agreement made plain that the terms and conditions
the "parties" were to follow were agreed upon by David and Olympia. Datoy and
Paragas never appeared to have agreed to such terms for it was Olympia,
despite not being a party to the civil case, which was a party to the agreement.
Despite this, David claims that the concessions were made by Olympia on
behalf of the non-signatory parties and such should be binding on them.
David must note that Olympia is a separate being, or at least should be treated
as one distinct from the personalities of its owners, partners or even directors.
Under the doctrine of processual presumption, this Court has to presume that
Hong Kong laws is the same as that of the Philippines particularly with respect
to the legal characterization of Olympias legal status as an artificial person.
Elementary is the rule that under Philippine corporate and partnership laws, a
corporation or a partnership possesses a personality separate from that of its
incorporators or partners. Olympia should, thus, be accorded the status of an
artificial being at least for the purpose of this controversy.
On that basis, Olympias interest should be detached from those of directors
Paragas, Lobrin, Datoy, and even David. Their (individual directors) interest are
merely indirect, contingent and inchoate. Because Olympias involvement in the
compromise was not the same as that of the other parties who were, in the first
place, never part of it, the compromise agreement could not have the force and
effect of a judgment binding upon the litigants, specifically Datoy and Paragas.
Conversely, the judicially approved withdrawal of the claims on the basis of
that compromise could not be given effect for such agreement did not concern
the parties in the civil case.
David, nevertheless, points out that the validity of the dismissal of the claims
and counterclaims must remain on the argument that the compromise
agreement was made in their personal capacities inasmuch as he filed the
complaint against Paragas, Lobrin and Datoy also in their personal capacities.
He draws support from the Answer with Compulsory Counterclaims 28 filed by
Paragas and Lobrin. The counterclaims against him did not involve Olympia,
save for the demand to render an accounting as well as to turn over the books
of account and records pertaining to the latter. David, thus, stated:
It is very clear from the order of July 21, 2003 that the agreement being
referred to as having been approved is not the Compromise Agreement but the
agreement of the parties to dismiss the claims and counterclaims against each
other. This is obvious when the order stated that it is within the right of the
parties to amicably settle the issues even if subject Compromise Agreement
had not been entered into. Clearly, it was not the Compromise Agreement that
was approved, because precisely it involved Olympia, but the underlying
agreement between the parties to withdraw their claims against each other
which are personal to them in nature. As noted by the trial court, even without
the Compromise Agreement, parties could still settle the case amicably and
withdraw the claims against one another which is precisely what the parties
did.29
His contention is devoid of merit.
While David repeatedly claims that his complaint against Paragas, Lobrin and
Datoy was personal in character, a review of the causes of action raised by him
in his complaint shows that it primarily involved Olympia. As defined, a cause
of action is an act or omission by which a party violates a right of another. It
requires the existence of a legal right on the part of the plaintiff, a correlative
obligation of the defendant to respect such right and an act or omission of such
defendant in violation of the plaintffss rights.30
In his complaint, David raised three causes of action. The first one dealt with
the alleged omission on the part of the other venture partners to respect his
right, being Olympias beneficial owner and PPIs principal agent under the
GAA, over the income generated from the sale PPIs pre-need plans. The second
dealt with his right over all amounts that the venture partners disbursed in
excess of those authorized by him, under the premise that he remained
Olympias beneficial owner. The third dealt with the acts of the venture
partners in causing undue humiliation and shame when he was prevented
is
an
indispensable
In Lotte Phil. Co., Inc. v. Dela Cruz,33 the Court reiterated that an indispensable
party is a party-in-interest without whom no final determination can be had of
an action, and who shall be joined either as plaintiffs or defendants. The
joinder of indispensable parties is mandatory. 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."34
Considering that David was asking for judicial determination of his rights in
Olympia, it is without a doubt, an indispensable party as it stands to be
injured or benefited by the outcome of the main proceeding. It has such an
interest in the controversy that a final decree would necessarily affect its
rights. Not having been impleaded, Olympia cannot be prejudiced by any
judgment where its interests and properties are adjudicated in favor of another
even if the latter is a beneficial owner. It cannot be said either to have
consented to the judicial approval of the compromise, much less waived
substantial rights, because it was never a party in the proceedings.
Moreover, Olympias absence did not confer upon the RTC the jurisdiction or
authority to hear and resolve the whole controversy.1wphi1 This lack of
authority on the part of the RTC which flows from the absence of Olympia,
being an indispensable party, necessarily negates any binding effect of the
subject judicially-approved compromise agreement.
Time and again, the Court has held that 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 to those present. The failure
to implead an indispensable party is not a mere procedural matter. Rather, it
brings to fore the right of a disregarded party to its constitutional rights to due
process. Having Olympia's interest being subjected to a judicially-approved
agreement, absent any participation in the proceeding leading to the same, is
procedurally flawed. It is unfair for being violative of its right to due process. In
fine, a holding that is based on a compromise agreement that springs from a
void proceeding for want of jurisdiction over the person of an indispensable
party can never become binding, final nor executory and it may be "ignored
wherever and whenever it exhibits its head."35
Lest it be misunderstood, after the remand of this case to the R TC, the parties
can still enter into a compromise agreement on matters which are personal to
them. That is their absolute right. They can dismiss their claims and
counterclaims against each other, but the dismissal should not be dependent
or contingent on a compromise agreement, one signatory to which is not a
party. It should not also involve or affect the rights of Olympia, the non-party,
unless it is properly impleaded as one. Needless to state, a judicial
determination of the rights of Olympia, when it is not a party, would
necessarily affect the rights of its shareholders or partners, like Paragas,
without due process of law.
WHEREFORE, the petition is DENIED. The July 31, 2006 Decision of the Court
of Appeals and its February 23, 2007 Resolution in CA-G.R. SP No. 80942 are
hereby AFFIRMED.
SO ORDERED.
Venue
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 204444
PERLAS-BERNABE, J.:
Assailed in this petition for certiorari1 are the Decision2 dated March 5, 2012
and the Resolution3 dated October 4, 2012 of the Court of Appeals (CA) in CAG.R. SP No. 117474, which annulled the Orders dated September 20,
20104 and October 22, 20105 of the Regional Trial Court of Manila, Branch 173
(RTC) in Civil Case No. 10-124040, denying private respondent Cash Asia
Credit Corporation's (Cash Asia) motion to dismiss on the ground of improper
venue.
The Facts
The instant case arose from a Complaint 6 dated August 2, 2010 filed by Virgilio
C. Briones (Briones) for Nullity of Mortgage Contract, Promissory Note, Loan
Agreement, Foreclosure of Mortgage, Cancellation of Transfer Certificate of Title
(TCT) No. 290846, and Damages against Cash Asia before the RTC. 7 In his
complaint, Briones alleged that he is the owner of a property covered by TCT
No. 160689 (subject property), and that, on July 15, 2010, his sister informed
him that his property had been foreclosed and a writ of possession had already
been issued in favor of Cash Asia.8 Upon investigation, Briones discovered that:
(a) on December 6, 2007, he purportedly executed a promissory note, 9 loan
agreement,10 and deed of real estate mortgage 11 covering the subject property
(subject contracts) in favor of Cash Asia in order to obtain a loan in the amount
of P3,500,000.00 from the latter;12 and (b) since the said loan was left unpaid,
Cash Asia proceeded to foreclose his property. 13 In this relation, Briones
claimed that he never contracted any loans from Cash Asia as he has been
living and working in Vietnam since October 31, 2007. He further claimed that
he only went back to the Philippines on December 28, 2007 until January 3,
2008 to spend the holidays with his family, and that during his brief stay in the
Philippines, nobody informed him of any loan agreement entered into with
Cash Asia. Essentially, Briones assailed the validity of the foregoing contracts
claiming his signature to be forged.14
For its part, Cash Asia filed a Motion to Dismiss 15 dated August 25, 2010,
praying for the outright dismissal of Brioness complaint on the ground of
improper venue.16 In this regard, Cash Asia pointed out the venue stipulation
in the subject contracts stating that "all legal actions arising out of this notice
in connection with the Real Estate Mortgage subject hereof shall only be
brought in or submitted tothe jurisdiction of the proper court of Makati
City."17 In view thereof, it contended that all actions arising out of the subject
contracts may only be exclusively brought in the courts of Makati City, and as
such, Brioness complaint should be dismissed for having been filed in the City
of Manila.18
In response, Briones filed an opposition, 19 asserting, inter alia, that he should
not be covered by the venue stipulation in the subject contracts as he was
never a party therein. He also reiterated that his signatures on the said
contracts were forgeries.20
The RTC Ruling
In an Order21 dated September 20, 2010, the RTC denied Cash Asias motion to
dismiss for lack of merit. In denying the motion, the RTC opined that the
parties must be afforded the right to be heard in view of the substance of
Brioness cause of action against Cash Asia as stated in the complaint. 22
Cash Asia moved for reconsideration23 which was, however, denied in an
Order24 dated
certiorari
25
October
22,
2010.
Aggrieved,
it
filed
petition
for
The CA Ruling
In a Decision26 dated March 5, 2012, the CA annulled the RTC Orders, and
accordingly, dismissed Brioness complaint without prejudice to the filing of the
same before the proper court in Makati City. 27 It held that the RTC gravely
abused its discretion in denying Cash Asias motion to dismiss, considering
that the subject contracts clearly provide that actions arising therefrom should
be exclusively filed before the courts of Makati City only. 28 As such, the CA
concluded that Brioness complaint should have been dismissed outright on
the ground of improper venue,29 this, notwithstanding Brioness claim of
forgery.
VENUE OF ACTIONS
SECTION 1. Venue of real actions. Actions affecting title to or possession of
real property, or interest therein, shall be commenced and tried in the proper
court which has jurisdiction over the area wherein the real property involved,
or a portion thereof, is situated.
Forcible entry and detainer actions shall be commenced and tried in the
municipal trial court of the municipality or city wherein the real property
involved, or a portion thereof, is situated.
SEC. 2. Venue of personal actions. All other actions may be commenced and
tried where the plaintiff or any of the principal plaintiffs resides, or where the
defendant or any of the principal defendants resides, or in the case of a nonresident defendant where he may be found, at the election of the plaintiff.
SEC. 3. Venue of actions against nonresidents. If any of the defendants does
not resideand is not found in the Philippines, and the action affects the
personal status of the plaintiff, or any property of said defendant located in the
Philippines,the action may be commenced and tried in the court of the place
where the plaintiff resides, or where the property or any portion thereof is
situated or found.
SEC. 4. When Rule not applicable. This Rule shall not apply
(a) In those cases where a specific rule or law provides otherwise; or
(b) Where the parties have validly agreed in writing before the filing of the
action on the exclusive venue thereof.
Based therefrom, the general rule is that the venue of real actions is the court
which has jurisdiction over the area wherein the real property involved, or a
portion thereof, is situated; while the venue of personal actions is the court
which has jurisdiction where the plaintiff or the defendant resides, at the
election of the plaintiff. As an exception, jurisprudence in Legaspi v. Rep. of the
Phils.33 instructs that the parties, thru a written instrument, may either
introduce another venue where actions arising from such instrument may be
filed, or restrict the filing of said actions in a certain exclusive venue, viz.:
The parties, however, are not precluded from agreeing in writing on an
exclusive venue, as qualified by Section 4 of the same rule. Written stipulations
as to venue may be restrictive in the sense that the suit may be filed only in the
place agreed upon, or merely permissive in that the parties may file their
suitnot only in the place agreed upon but also in the places fixed by law. As in
any other agreement, what is essential is the ascertainment of the intention of
the parties respecting the matter.
As regards restrictive stipulations on venue, jurisprudence instructs that it
must be shown thatsuch stipulation is exclusive.1wphi1 In the absence of
qualifying or restrictive words, such as "exclusively," "waiving for this purpose
any other venue," "shall only" preceding the designation of venue, "to the
exclusion of the other courts," or words of similar import, the stipulation
should be deemed as merely an agreement on an additional forum,not as
limiting venue to the specified place.34 (Emphases and underscoring supplied)
In this relation, case law likewise provides that in cases where the complaint
assails only the terms, conditions, and/or coverage of a written instrument and
not its validity, the exclusive venue stipulation contained therein shall still be
binding on the parties, and thus, the complaint may be properly dismissed on
the ground of improper venue. 35 Conversely, therefore, a complaint directly
assailing the validity of the written instrument itself should not be bound by
the exclusive venue stipulation contained therein and should be filed in
accordance with the general rules on venue. To be sure, it would be inherently
consistent for a complaint of this nature to recognize the exclusive venue
stipulation when it, in fact, precisely assails the validity of the instrument in
which such stipulation is contained.
In this case, the venue stipulation found in the subject contracts is indeed
restrictive in nature, considering that it effectively limits the venue of the
actions arising therefrom to the courts of Makati City. However, it must be
emphasized that Briones' s complaint directly assails the validity of the subject
contracts, claiming forgery in their execution. Given this circumstance, Briones
cannot be expected to comply with the aforesaid venue stipulation, as his
compliance therewith would mean an implicit recognition of their validity.
Hence, pursuant to the general rules on venue, Briones properly filed his
complaint before a court in the City of Manila where the subject property is
located.