Rem cases nos.

58 - 67 (second set)

58. JOSE M. ROY III v. CHAIRPERSON TERESITA HERBOSA

Facts:

Before the Court is the Motion for Reconsideration dated January 19, 2017 (the Motion) filed by petitioner
Jose M. Roy III (movant) seeking the reversal and setting aside of the Decision dated November 22, 2016 (the
Decision) which denied the movant's petition, and declared that the Securities and Exchange Commission (SEC) did
not commit grave abuse of discretion in issuing Memorandum Circular No. 8, Series of 2013 (SEC-MC No. 8) as the
same was in compliance with, and in fealty to, the decision of the Court in Gamboa v. Finance Secretary Teves
(Gamboa Decision) and the resolution denying the Motion for Reconsideration therein (Gamboa Resolution).The
Motion presents no compelling and new arguments to justify the reconsideration of the Decision.

The Decision has already exhaustively discussed and directly passed upon these grounds. Movant's petition was
dismissed based on both procedural and substantive grounds.

Issue:

Whether or not SEC committed grave abuse of discretion amounting to lack or excess of jurisdiction when
it issued SEC-MC No. 8.

Held:

No.

SEC did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when it issued SEC-
MC No. 8. The Court finds SEC-MC No. 8 to have been issued in fealty to the Gamboa Decision and Resolution.

Pursuant to the Court's constitutional duty to exercise judicial review, the Court has conclusively found no grave
abuse of discretion on the part of SEC in issuing SEC-MC No. 8.

The Decision has painstakingly explained why it considered as obiter dictum that pronouncement in the Gamboa
Resolution that the constitutional requirement on Filipino ownership should "apply uniformly and across the board
to all classes of shares, regardless of nomenclature and category, comprising the capital of a corporation." The Court
stated that:

To the Court's mind and, as exhaustively demonstrated in the Decision, the dispositive portion of the Gamboa
Decision was in no way modified by the Gamboa Resolution.

The heart of the controversy is the interpretation of Section 11, Article XII of the Constitution, which provides: "No
franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except
to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least
sixty per centum of whose capital is owned by such citizens."
The Gamboa Decision already held, in no uncertain terms, that what the Constitution requires is full and legal
beneficial ownership of 60 percent of the outstanding capital stock, coupled with 60 percent of the voting rights
must rest in the hands of Filipino nationals. And, precisely that is what SEC-MC No. 8 provides; For purposes of
determining compliance with the constitutional or statutory ownership, the required percentage of Filipino
ownership shall be applied to both the total number of outstanding shares of stock entitled to vote in the election
of directors; and (b) the total number of outstanding shares of stock, whether or not entitled to vote.

In conclusion, the basic issues raised in the Motion having been duly considered and passed upon by the Court in
the Decision and no substantial argument having been adduced to warrant the reconsideration sought, the Court
resolves to deny the Motion with finality.

59. BOSTON EQUITY RESOURCES, INC. v. COURT OF APPEALS AND LOLITA G. TOLEDO

Facts:

On 24 December 1997, petitioner filed a complaint for sum of money with a prayer for the issuance of a
writ of preliminary attachment against the spouses Manuel and Lolita Toledo.[6] Herein respondent filed an Answer
dated 19 March 1998 but on 7 May 1998, she filed a Motion for Leave to Admit Amended Answer [7] in which she
alleged, among others, that her husband and co-defendant, Manuel Toledo (Manuel), is already dead.[8] The death
certificate[9] of Manuel states "13 July 1995" as the date of death. As a result, petitioner filed a motion, dated 5
August 1999, to require respondent to disclose the heirs of Manuel. [10] In compliance with the verbal order of the
court during the 11 October 1999 hearing of the case, respondent submitted the required names and addresses of
the heirs.[11] Petitioner then filed a Motion for Substitution,[12] dated 18 January 2000, praying that Manuel be
substituted by his children as party-defendants. It appears that this motion was granted by the trial court in an Order
dated 9 October 2000.

Pre-trial thereafter ensued and on 18 July 2001, the trial court issued its pre-trial order containing, among others,
the dates of hearing of the case.[14]

The trial of the case then proceeded. Herein petitioner, as plaintiff, presented its evidence and its exhibits were
thereafter admitted.

On 26 May 2004, the reception of evidence for herein respondent was cancelled upon agreement of the parties.
On 24 September 2004, counsel for herein respondent was given a period of fifteen days within which to file a
demurrer to evidence.[15] However, on 7 October 2004, respondent instead filed a motion to dismiss the complaint,
citing the following as grounds: (1) that the complaint failed to implead an indispensable party or a real party in
interest; hence, the case must be dismissed for failure to state a cause of action; (2) that the trial court did not
acquire jurisdiction over the person of Manuel pursuant to Section 5, Rule 86 of the Revised Rules of Court; (3) that
the trial court erred in ordering the substitution of the deceased Manuel by his heirs; and (4) that the court must
also dismiss the case against Lolita Toledo in accordance with Section 6, Rule 86 of the Rules of Court.[16]

The trial court, in an Order dated 8 November 2004, denied the motion to dismiss for having been filed out of
time, citing Section 1, Rule 16 of the 1997 Rules of Court which states that: "[W]ithin the time for but before filing
the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made x x
x."[17] Respondent's motion for reconsideration of the order of denial was likewise denied on the ground that
"defendants' attack on the jurisdiction of this Court is now barred by estoppel by laches" since respondent failed to
raise the issue despite several chances to do so. Aggrieved, respondent filed a petition for certiorari with the Court
of Appeals alleging that the trial court seriously erred and gravely abused its discretion in denying her motion to
dismiss despite discovery, during the trial of the case, of evidence that would constitute a ground for dismissal of
the case.

The Court of Appeals granted the petition.

[Respondent's] motion to dismiss the complaint should have been granted by public respondent judge as the same
was in order. Considering that the obligation of Manuel S. Toledo is solidary with another debtor, the claim should
be filed against the estate of Manuel S. Toledo, in conformity with the provision of Section 6, Rule 86 of the Rules of
Court.

The Court of Appeals denied petitioner's motion for reconsideration. Hence, this petition.

Issue:

Whether the trial court is correct in denying respondent's motion to dismiss.

Held:

Yes. We find merit in the petition.

(1) Motion to dismiss filed out of time

To begin with, the Court of Appeals erred in granting the writ of certiorari in favor of respondent. Well settled is
the rule that the special civil action for certiorari is not the proper remedy to assail the denial by the trial court of a
motion to dismiss. The order of the trial court denying a motion to dismiss is merely interlocutory, as it neither
terminates nor finally disposes of a case and still leaves something to be done by the court before a case is finally
decided on the merits.[21] Therefore, "the proper remedy in such a case is to appeal after a decision has been
rendered.’’

(2)On whether or not respondent is estopped from

questioning the jurisdiction of the trial court

At the outset, it must be here stated that, as the succeeding discussions will demonstrate, jurisdiction over the
person of Manuel should not be an issue in this case. A protracted discourse on jurisdiction is, nevertheless,
demanded by the fact that jurisdiction has been raised as an issue from the lower court, to the Court of Appeals
and, finally, before this Court. For the sake of clarity, and in order to finally settle the controversy and fully dispose
of all the issues in this case, it was deemed imperative to resolve the issue of jurisdiction.

(3) On whether or not the estate of Manuel

Toledo is an indispensable party
No.

Rule 3, Section 7 of the 1997 Rules of Court states:

SEC. 7. Compulsory joinder of indispensable parties. Parties-in-interest without whom no final determination can be
had of an action shall be joined either as plaintiffs or defendants.

Applying the foregoing pronouncements to the case at bar, it is clear that the estate of Manuel is not an
indispensable party to the collection case, for the simple reason that the obligation of Manuel and his wife,
respondent herein, is solidary.

(4) On whether or not the inclusion of Manuel as

party defendant is a misjoinder of party

Yes. As correctly pointed by defendants, the Honorable Court has not acquired jurisdiction over the person of Patricio
Sereno since there was indeed no valid service of summons insofar as Patricio Sereno is concerned. Patricio Sereno
died before the summons, together with a copy of the complaint and its annexes, could be served upon him.

However, the failure to effect service of summons unto Patricio Sereno, one of the defendants herein, does not
render the action DISMISSIBLE, considering that the three (3) other defendants, x x x, were validly served with
summons and the case with respect to the answering defendants may still proceed independently. Be it recalled that
the three (3) answering defendants have previously filed a Motion to Dismiss the Complaint which was denied by
the Court.

Hence, only the case against Patricio Sereno will be DISMISSED and the same may be filed as a claim against the
estate of Patricio Sereno, but the case with respect to the three (3) other accused [sic] will proceed.

60. Land Bank of the Philippines vs Eduardo M. Cacayuran G.R. No. 191667

G.R. No. 191667, April 17, 2013

Facts:

This is a petition for Review on Certiorari of the CA affirming the RTC in declaring the nullity of the loan agreements
entered into by Land Bank and the Municipality of Agoo, La Union.

Agoo SB passed a certain resolution to implement a redevelopment plan to redevelop the Agoo Public Plaza. To
finance the plan, SB passed a resolution authorizing then Maor Eriguel to obtain a loan from Land Bank, incidental
to it, mortgaged a portion of the plaza as collateral. It has also authorized the assignment of a portion if the IRA and
monthly income in favor of Land Bank to secure the payment. 10 Kiosks were made at the plaza, then were rented
out. Later, a commercial center on the Plaza lot was built too, with a loan from Land Bank, posting the same securities
as the first loan.

The commercial loan was opposed by some residents of the municipality embodied in a manifesto launched through
a signature campaign by the residents and Cacayuran. Invoking his right as taxpayer, Cacayuran filed a complaint
against the officials and Land bank assailing the validity of the loans on the ground that the Plaza lot used as collateral
is property of public dominion and therefore beyond the commerce of man.

RTC Ruling: declared the nullity of the subject loans, saying that the loans were passed in a highly irregular manner,
as such, the Municipality is not bound by the same.

Aggrieved, Land Bank filed notice of appeal.

Ruling of CA: affirmed with modification the RTC's ruling, excluding the Vice Mayor from any personal liability arising
from the subject loans. Cacayuran has locus standi as resident and taxpayer in the municipality and the issue involves
public interest. The plaza cannot be a valid collateral to a loans for it is of public dominion.

Land Bank filed this instant petition.

Issues:

(1) whether Cacayuran has locus standi (2) whether the subject resolutions were validly passed and (3) whether the
subject loans are ultra vires. [The doctrine in the law of corporations that holds that if a corporation enters into a
contract that is beyond the scope of its corporate powers, the contract is illegal.]

SC Ruling:

(1) Taxpayer is allowed to sue if: (1) public funds derived from taxation are disbursed by a political subdivision or
instrumentality and in doing so, a law is violated or some irregularity is committed; and (2) the petitioner is directly
affected by the alleged act.

In the case, the proceeds from the Subject Loans had already been converted into public funds by the Municipality’s
receipt thereof. Funds coming from private sources become impressed with the characteristics of public funds when
they are under official custody. Public plaza belongs to public dominion, Cacayuran need not to be a privy to the
loans, as long as taxes are involved, people have a right to question the contracts entered into by the government.

(2) While ordinances are laws and possess a general and permanent character, resolutions are merely declarations
of the sentiment or opinion of a law making body on a specific matter and are temporary in nature. As opposed to
ordinances, "no rights can be conferred by and be inferred from a resolution." In this accord, it cannot be denied
that the SB violated Section 444(b)(1)(vi) of the LGC altogether. Noticeably, the passage of the Subject Resolutions
was also tainted with other irregularities, such as (1) the SB’s failure to submit the Subject Resolutions to the
Sangguniang Panlalawigan of La Union for its review contrary to Section 56 of the LGC; and (2) the lack of publication
and posting in contravention of Section 59 of the LGC.

(3) Generally, an ultra vires act is one committed outside the object for which a corporation is created as defined by
the law of its organization and therefore beyond the powers conferred upon it by law.43 There are two (2) types of
ultra vires acts. There is a distinction between an act utterly beyond the jurisdiction of a municipal corporation and
the irregular exercise of a basic power under the legislative grant in matters not in themselves jurisdictional. The
former are ultra vires in the primary sense and void; the latter, ultra vires only in a secondary sense which does not
preclude ratification or the application of the doctrine of estoppel in the interest of equity and essential justice.
Applying these principles to the case at bar, it is clear that the Subject Loans belong to the first class of ultra vires
acts deemed as void. Records disclose that the said loans were executed by the Municipality for the purpose of
funding the conversion of the Agoo Plaza into a commercial center pursuant to the Redevelopment Plan. However,
the conversion of the said plaza is beyond the Municipality’s jurisdiction considering the property’s nature as one
for public use and thereby, forming part of the public dominion. Accordingly, it cannot be the object of appropriation
either by the State or by private persons. Nor can it be the subject of lease or any other contractual undertaking.

61. Sulo ng Bayan vs. Araneta , GR L-31061, 17 August 1976

Facts:

Plaintiff-appellant Sulo ng Bayan, Inc. filed an action against defendant-appellees to recover the ownership
and possession of a large tract of land in Bulacan, registered under Torrens System in the name of the defendants-
appellees predecessors-in-interest. The plaintiff is a corporation organized and existing under the laws of the
Philippines.

Issues:

1. Whether or not Plaintiff Corporation (non-stock) may institute an action in behalf of its individual members for
the recovery of certain parcels of land allegedly owned by said members.

2. Whether the complaint filed by the corporation in behalf of its members may be treated as class suit.

Ruling:

1. No.

It is a doctrine well-established and obtains both at law and in equity that a corporation is a distinct legal entity to
be considered as separate and apart from the individual stockholders or members who compose it, and is not
affected by the personal rights, obligations and transactions of its stockholders or members. The property of the
corporation is its property and not that of the stockholders, as owners, although they have equities in it. Properties
registered in the name of the corporation owned by it as an entity separate and distinct from its members.
Conversely, a corporation ordinarily has no interest in the individual property of its stockholders unless transferred
to the corporation even in the case of a one-man corporation.

It has not been claimed that the members have assigned or transferred whatever rights they may have on
the land in question to the plaintiff-corporation. Absent of any showing of interest, therefore, a corporation, like
plaintiff-appellant herein, has no personality to bring an action for and in behalf of its stockholders or members for
the purpose of recovering property which belongs to said stockholders or members in their personal capacities.

2. No.

In order that a class suit may prosper, the following requisites must be present: (1) that the subject matter of the
controversy is one of common or general interest to many persons; and (2) that the parties are so numerous that it
is impracticable to bring them all before court.
 Here, there is only one plaintiff, and the plaintiff corporation does not even have an interest in the subject
matter of the controversy, and cannot, therefore, represent its members or stockholders who claim to own in their
individual capacities ownership of the said property..

62. ATTY. SYLVIA BANDA v. EDUARDO R. ERMITA, GR No. 166620, 2010-04-20

Facts:

the petitioners filed this action as a class suit on their own behalf and on behalf of all their co- employees
at the National Printing Office. They challenged the constitutionality of executive order no. 378 issued by President
GMA which amended sec 6 of Executive Order no. 285, removing the exclusive jurisdiction of the NPO over the
printing services requirements of government agencies and instrumentalities. They perceive it as a threat to their
security of tenure as employees of the NPO contending that it is beyond the executive powers of the President to
amend or repeal EO no. 285 issued by former President Aquino when the latter still exercised legislative powers and
that EO no. 378 violates petitioner's security of tenure because it paves the way for the gradual abolition of the NPO.

Issue: Whether or not the petition is indeed qualified as a class suit.

Held:

NO. We dismiss the petition.

Section 12 rule 3 of rules of court provides: When the subject matter of the controversy is one of common or general
interest to many persons so numerous that it is impracticable to join all as parties, a number of them which the court
finds to be sufficiently numerous and representative as to fully protect the interests of all concerned may sue or
defend for the benefit of all. Any party in interest shall have the right to intervene to protect his individual interest

Here, the petition failed to state the number of NPO employees who would be affected by the assailed Executive
Order and who were allegedly represented by petitioners. There are about 549 employees in the NPO but only 67
petitioners effectively instituted the present case. There is here an apparent conflict between petitioners' interests
and those of the persons whom they claim to represent.

Since it cannot be said that petitioners sufficiently represent the interests of the entire class, the instant case cannot
be properly treated as a class suit.

63. bonifacio v dizon

(To be followed)

64.

(Sulpico lines Inc. v sesante)

GR No. 172682, July 27, 2016

Sulpicio Lines Inc. (Petitioner) v Napoleon Sisante (Respondents)

FACTS:
 The M/V Princess of the Orient, a passenger vessel owned and operated by the petitioner, sank near Fortune
Island in Batangas. Of the 388 recorded passengers, 150 were lost. Napoleon Sesante, then a member of the Philippine
National Police (PNP) and a lawyer, was one of the passengers who survived the sinking. He sued the petitioner for
breach of contract and damages. In its defense, the petitioner insisted on the seaworthiness of the M/V Princess of the
Orient due to its having been cleared to sail from the Port of Manila by the proper authorities; that the sinking had
been due to force majeure; that it had not been negligent; and that its officers and crew had also not been negligent
because they had made preparations to abandon the vessel because they had launched life rafts and had provided the
passengers assistance in that regard. The RTC rendered judgement in favor of plaintiff Napoleon Sesante and ordered
defendant to pay temperate and moral damages. The RTC observed that the petitioner, being negligent, was liable to
Sesante pursuant to Articles 1739 and 1759 of the Civil Code. The CA reduced the award of the temperate damages
to the approximate cost of Sesante's lost personal belongings and held that petitioner remained civilly liable.

The petitioner has attributed the sinking of the vessel to the storm notwithstanding its position on the
seaworthiness of M/V Princess of the Orient. Yet, the findings of the BMI directly contradicted the petitioner's
attribution, as the BMI found that petitioner’s fault was the immediate and proximate cause of the sinking due to the
Captain's erroneous maneuvers of the M/V Princess of the Orient minutes before she sunk.

65. Cruz vs crus

Cruz v. Cruz sept. 1 2010 Gr. No 17329

FACTS Memoracion Z. Cruz filed with the RTC a Complaint against her son, Oswaldo Z. Cruz, for “Annulment of Sale,
Redconveyance and Damages.” After Memoracion finished presenting her evidence in chief, she died. The RTC was
informed, albeit belatedly, of the death of Memoracion, and was supplied with the name and address of her legal
representative, Edgardo Cruz.

ISSUE Whether or not Petition for Annulment of Deed of Sale, Reconveyance and Damages is a purely personal action
which did not survive the death of petitioner.

RULING NO. The question as to whether an action survives or not depends on the nature of the action and the damage
sued for. In the causes of action which survive, the wrong complained [of] affects primarily and principally property and
property rights, the injuries to the person being merely incidental, while in the causes of action which do not survive,
the injury complained of is to the person, the property and rights of property affected being incidental. Here, the petition
for annulment of deed of sale involves property and property rights, and hence, survives the death of petitioner
Memoracion

66.tanhueco vs aguilar

(to be followed)

67. PRUDENTIAL BANK vs. INTERMEDIATE APPELLATE COURT

G.R. No. 74886 December 8, 1992, 216 scra 257

FACTS:

Philippine Rayon Mills, Inc. entered into a contract with Nissho Co., Ltd. of Japan for the importation of
textile machineries under a five-year deferred payment plan. To effect payment for said machineries, Philippine
Rayon Mills opened a commercial letter of credit with the Prudential Bank and Trust Company in favor of
Nissho. Against this letter of credit, drafts were drawn and issued by Nissho, which were all paid by the Prudential
Bank through its correspondent in Japan. Two of these drafts were accepted by Philippine Rayon Mills while the
others were not. Petitioner instituted an action for the recovery of the sum of money it paid to Nissho as Philippine
Rayon Mills was not able to pay its obligations arising from the letter of credit. Respondent court ruled that with
regard to the ten drafts which were not presented and accepted, no valid demand for payment can be
made. Petitioner however claims that the drafts were sight drafts which did not require presentment for acceptance
to Philippine Rayon.

ISSUE:
Whether presentment for acceptance of the drafts was indispensable to make Philippine Rayon liable
thereon.

RULING:

In the case at bar, the drawee was necessarily the herein petitioner. It was to the latter that the drafts were
presented for payment. There was in fact no need for acceptance as the issued drafts are sight drafts. Presentment
for acceptance is necessary only in the cases expressly provided for in Section 143 of the Negotiable Instruments
Law (NIL). The said section provides that presentment for acceptance must be made:

(a) Where the bill is payable after sight, or in any other case, where presentment for acceptance is necessary in
order to fix the maturity of the instrument; or
(b) Where the bill expressly stipulates that it shall be presented for acceptance; or
(c) Where the bill is drawn payable elsewhere than at the residence or place of business of the drawee.

In no other case is presentment for acceptance necessary in order to render any party to the bill liable. Obviously
then, sight drafts do not require presentment for acceptance.