G.R. No. 153788 November 27, 2009 3.

That for the cause of action against defendant ROGER NAVARRO, it is

hereby stated that on August 8, 1997, the said defendant leased [from]
ROGER V. NAVARRO, Petitioner, plaintiff a certain motor vehicle which is more particularly described as
vs. follows –
HON. JOSE L. ESCOBIDO, Presiding Judge, RTC Branch 37, Cagayan de Oro
City, and KAREN T. GO, doing business under the name KARGO Make/Type FUSO WITH MOUNTED CRANE
ENTERPRISES, Respondents.
Serial No. FK416K-51680
DECISION Motor No. 6D15-338735
Plate No. GHK-378
BRION, J.:
as evidenced by a LEASE AGREEMENT WITH OPTION TO PURCHASE entered
This is a petition for review on certiorari1 that seeks to set aside the Court of into by and between KARGO ENTERPRISES, then represented by its Manager, the
Appeals (CA) Decision2 dated October 16, 2001 and Resolution 3 dated May 29, aforementioned GLENN O. GO, and defendant ROGER NAVARRO xxx; that in
4
2002 in CA-G.R. SP. No. 64701. These CA rulings affirmed the July 26, 2000 and accordance with the provisions of the above LEASE AGREEMENT WITH OPTION
5 TO PURCHASE, defendant ROGER NAVARRO delivered unto plaintiff six (6) post-
March 7, 2001 orders of the Regional Trial Court (RTC), Misamis Oriental,
Cagayan de Oro City, denying petitioner Roger V. Navarro’s (Navarro) motion to dated checks each in the amount of SIXTY-SIX THOUSAND THREE HUNDRED
dismiss. THIRTY-THREE & 33/100 PESOS (₱66,333.33) which were supposedly in
payment of the agreed rentals; that when the fifth and sixth checks, i.e. PHILIPPINE
BACKGROUND FACTS BANK OF COMMUNICATIONS – CAGAYAN DE ORO BRANCH CHECKS NOS.
017112 and 017113, respectively dated January 8, 1998 and February 8, 1998,
were presented for payment and/or credit, the same were dishonored and/or
On September 12, 1998, respondent Karen T. Go filed two complaints, docketed as returned by the drawee bank for the common reason that the current deposit
Civil Case Nos. 98-599 (first complaint)6 and 98-598 (second complaint),7 before account against which the said checks were issued did not have sufficient funds to
the RTC for replevin and/or sum of money with damages against Navarro. In these cover the amounts thereof; that the total amount of the two (2) checks, i.e. the sum
complaints, Karen Go prayed that the RTC issue writs of replevin for the seizure of of ONE HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED SIXTY-SIX &
two (2) motor vehicles in Navarro’s possession. 66/100 PESOS (₱132,666.66) therefore represents the principal liability of
defendant ROGER NAVARRO unto plaintiff on the basis of the provisions of the
The first complaint stated: above LEASE AGREEMENT WITH RIGHT TO PURCHASE; that demands, written
and oral, were made of defendant ROGER NAVARRO to pay the amount of ONE
1. That plaintiff KAREN T. GO is a Filipino, of legal age, married to GLENN HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED SIXTY-SIX & 66/100
O. GO, a resident of Cagayan de Oro City and doing business under the PESOS (₱132,666.66), or to return the subject motor vehicle as also provided for in
trade name KARGO ENTERPRISES, an entity duly registered and existing the LEASE AGREEMENT WITH RIGHT TO PURCHASE, but said demands were,
under and by virtue of the laws of the Republic of the Philippines, which has and still are, in vain to the great damage and injury of herein plaintiff; xxx
its business address at Bulua, Cagayan de Oro City; that defendant
ROGER NAVARRO is a Filipino, of legal age, a resident of 62 Dolores 4. That the aforedescribed motor vehicle has not been the subject of any tax
Street, Nazareth, Cagayan de Oro City, where he may be served with assessment and/or fine pursuant to law, or seized under an execution or an
summons and other processes of the Honorable Court; that defendant attachment as against herein plaintiff;
"JOHN DOE" whose real name and address are at present unknown to
plaintiff is hereby joined as party defendant as he may be the person in xxx
whose possession and custody the personal property subject matter of this
suit may be found if the same is not in the possession of defendant
8. That plaintiff hereby respectfully applies for an order of the Honorable Court for
ROGER NAVARRO;
the immediate delivery of the above-described motor vehicle from defendants unto
plaintiff pending the final determination of this case on the merits and, for that
2. That KARGO ENTERPRISES is in the business of, among others, purpose, there is attached hereto an affidavit duly executed and bond double the
buying and selling motor vehicles, including hauling trucks and other heavy value of the personal property subject matter hereof to answer for damages and
equipment; costs which defendants may suffer in the event that the order for replevin prayed for
may be found out to having not been properly issued.
The second complaint contained essentially the same allegations as the first THE PETITION
complaint, except that the Lease Agreement with Option to Purchase involved is
dated October 1, 1997 and the motor vehicle leased is described as follows: Navarro alleges that even if the lease agreements were in the name of Kargo
Enterprises, since it did not have the requisite juridical personality to sue, the actual
Make/Type FUSO WITH MOUNTED CRANE parties to the agreement are himself and Glenn Go. Since it was Karen Go who
Serial No. FK416K-510528 filed the complaints and not Glenn Go, she was not a real party-in-interest and the
Motor No. 6D14-423403 complaints failed to state a cause of action.

The second complaint also alleged that Navarro delivered three post-dated checks, Navarro posits that the RTC erred when it ordered the amendment of the complaint
each for the amount of ₱100,000.00, to Karen Go in payment of the agreed rentals; to include Glenn Go as a co-plaintiff, instead of dismissing the complaint outright
however, the third check was dishonored when presented for payment. 8 because a complaint which does not state a cause of action cannot be converted
into one with a cause of action by a mere amendment or a supplemental pleading.
On October 12, 19989 and October 14, 1998,10 the RTC issued writs of replevin for In effect, the lower court created a cause of action for Karen Go when there was
both cases; as a result, the Sheriff seized the two vehicles and delivered them to none at the time she filed the complaints.
the possession of Karen Go.
Even worse, according to Navarro, the inclusion of Glenn Go as co-plaintiff
In his Answers, Navarro alleged as a special affirmative defense that the two drastically changed the theory of the complaints, to his great prejudice. Navarro
complaints stated no cause of action, since Karen Go was not a party to the Lease claims that the lower court gravely abused its discretion when it assumed that the
Agreements with Option to Purchase (collectively, the lease agreements) – the leased vehicles are part of the conjugal property of Glenn and Karen Go. Since
actionable documents on which the complaints were based. Karen Go is the registered owner of Kargo Enterprises, the vehicles subject of the
complaint are her paraphernal properties and the RTC gravely erred when it
ordered the inclusion of Glenn Go as a co-plaintiff.
On Navarro’s motion, both cases were duly consolidated on December 13, 1999.

Navarro likewise faults the lower court for setting the trial of the case in the same
In its May 8, 2000 order, the RTC dismissed the case on the ground that the
order that required Karen Go to amend her complaints, claiming that by issuing this
complaints did not state a cause of action.
order, the trial court violated Rule 10 of the Rules.
In response to the motion for reconsideration Karen Go filed dated May 26,
Even assuming the complaints stated a cause of action against him, Navarro
2000,11 the RTC issued another order dated July 26, 2000 setting aside the order of
maintains that the complaints were premature because no prior demand was made
dismissal. Acting on the presumption that Glenn Go’s leasing business is a conjugal
on him to comply with the provisions of the lease agreements before the complaints
property, the RTC held that Karen Go had sufficient interest in his leasing business
for replevin were filed.
to file the action against Navarro. However, the RTC held that Karen Go should
have included her husband, Glenn Go, in the complaint based on Section 4, Rule 3
of the Rules of Court (Rules).12 Thus, the lower court ordered Karen Go to file a Lastly, Navarro posits that since the two writs of replevin were issued based on
motion for the inclusion of Glenn Go as co-plaintiff.1avvphi1 flawed complaints, the vehicles were illegally seized from his possession and
should be returned to him immediately.
When the RTC denied Navarro’s motion for reconsideration on March 7, 2001,
Navarro filed a petition for certiorari with the CA, essentially contending that the Karen Go, on the other hand, claims that it is misleading for Navarro to state that
RTC committed grave abuse of discretion when it reconsidered the dismissal of the she has no real interest in the subject of the complaint, even if the lease
case and directed Karen Go to amend her complaints by including her husband agreements were signed only by her husband, Glenn Go; she is the owner of Kargo
Glenn Go as co-plaintiff. According to Navarro, a complaint which failed to state a Enterprises and Glenn Go signed the lease agreements merely as the manager of
cause of action could not be converted into one with a cause of action by mere Kargo Enterprises. Moreover, Karen Go maintains that Navarro’s insistence that
amendment or supplemental pleading. Kargo Enterprises is Karen Go’s paraphernal property is without basis. Based on
the law and jurisprudence on the matter, all property acquired during the marriage
is presumed to be conjugal property. Finally, Karen Go insists that her complaints
On October 16, 2001, the CA denied Navarro’s petition and affirmed the RTC’s
sufficiently established a cause of action against Navarro. Thus, when the RTC
order.13 The CA also denied Navarro’s motion for reconsideration in its resolution of
ordered her to include her husband as co-plaintiff, this was merely to comply with
May 29, 2002,14 leading to the filing of the present petition.
the rule that spouses should sue jointly, and was not meant to cure the complaints’
lack of cause of action.
THE COURT’S RULING As Navarro correctly points out, Kargo Enterprises is a sole proprietorship, which is
neither a natural person, nor a juridical person, as defined by Article 44 of the Civil
We find the petition devoid of merit. Code:

Karen Go is the real party-in-interest Art. 44. The following are juridical persons:

The 1997 Rules of Civil Procedure requires that every action must be prosecuted or (1) The State and its political subdivisions;
defended in the name of the real party-in-interest, i.e., the party who stands to be
benefited or injured by the judgment in the suit, or the party entitled to the avails of (2) Other corporations, institutions and entities for public interest or
the suit.15 purpose, created by law; their personality begins as soon as they have
been constituted according to law;
Interestingly, although Navarro admits that Karen Go is the registered owner of the
business name Kargo Enterprises, he still insists that Karen Go is not a real party- (3) Corporations, partnerships and associations for private interest or
in-interest in the case. According to Navarro, while the lease contracts were in purpose to which the law grants a juridical personality, separate and distinct
Kargo Enterprises’ name, this was merely a trade name without a juridical from that of each shareholder, partner or member.
personality, so the actual parties to the lease agreements were Navarro and Glenn
Go, to the exclusion of Karen Go. Thus, pursuant to Section 1, Rule 3 of the Rules,16 Kargo Enterprises cannot be a
party to a civil action. This legal reality leads to the question: who then is the proper
As a corollary, Navarro contends that the RTC acted with grave abuse of discretion party to file an action based on a contract in the name of Kargo Enterprises?
when it ordered the inclusion of Glenn Go as co-plaintiff, since this in effect created
a cause of action for the complaints when in truth, there was none. We faced a similar question in Juasing Hardware v. Mendoza,
17
where we said:

We do not find Navarro’s arguments persuasive. Finally, there is no law authorizing sole proprietorships like petitioner to bring suit in
court. The law merely recognizes the existence of a sole proprietorship as a form of
The central factor in appreciating the issues presented in this case is the business business organization conducted for profit by a single individual, and requires the
name Kargo Enterprises. The name appears in the title of the Complaint where the proprietor or owner thereof to secure licenses and permits, register the business
plaintiff was identified as "KAREN T. GO doing business under the name KARGO name, and pay taxes to the national government. It does not vest juridical or legal
ENTERPRISES," and this identification was repeated in the first paragraph of the personality upon the sole proprietorship nor empower it to file or defend an action in
Complaint. Paragraph 2 defined the business KARGO ENTERPRISES undertakes. court.
Paragraph 3 continued with the allegation that the defendant "leased from plaintiff a
certain motor vehicle" that was thereafter described. Significantly, the Complaint Thus, the complaint in the court below should have been filed in the name of the
specifies and attaches as its integral part the Lease Agreement that underlies the owner of Juasing Hardware. The allegation in the body of the complaint would show
transaction between the plaintiff and the defendant. Again, the name KARGO that the suit is brought by such person as proprietor or owner of the business
ENTERPRISES entered the picture as this Lease Agreement provides: conducted under the name and style Juasing Hardware. The descriptive words
"doing business as Juasing Hardware" may be added to the title of the case, as is
This agreement, made and entered into by and between: customarily done.18 [Emphasis supplied.]

GLENN O. GO, of legal age, married, with post office address at xxx, herein This conclusion should be read in relation with Section 2, Rule 3 of the Rules, which
referred to as the LESSOR-SELLER; representing KARGO ENTERPRISES as its states:
Manager,
SEC. 2. Parties in interest. – A real party in interest is the party who stands to be
xxx benefited or injured by the judgment in the suit, or the party entitled to the avails of
the suit. Unless otherwise authorized by law or these Rules, every action must be
thus, expressly pointing to KARGO ENTERPRISES as the principal that Glenn O. prosecuted or defended in the name of the real party in interest.
Go represented. In other words, by the express terms of this Lease Agreement,
Glenn Go did sign the agreement only as the manager of Kargo Enterprises and the As the registered owner of Kargo Enterprises, Karen Go is the party who will
latter is clearly the real party to the lease agreements. directly benefit from or be injured by a judgment in this case. Thus, contrary to
Navarro’s 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 proper remedy, which must be availed of within five years from the date of the
not appear in the Lease Agreement that her husband signed in behalf of Kargo contract implementing such decision.
Enterprises. Whether Glenn Go can legally sign the Lease Agreement in his
capacity as a manager of Kargo Enterprises, a sole proprietorship, is a question we xxx
do not decide, as this is a matter for the trial court to consider in a trial on the
merits. This provision, by its terms, allows either Karen or Glenn Go to speak and act with
authority in managing their conjugal property, i.e., Kargo Enterprises. No need
Glenn Go’s Role in the Case exists, therefore, for one to obtain the consent of the other before performing an act
of administration or any act that does not dispose of or encumber their conjugal
We find it significant that the business name Kargo Enterprises is in the name of property.
Karen T. Go,19 who described herself in the Complaints to be "a Filipino, of legal
age, married to GLENN O. GO, a resident of Cagayan de Oro City, and doing Under Article 108 of the Family Code, the conjugal partnership is governed by the
business under the trade name KARGO ENTERPRISES." 20 That Glenn Go and rules on the contract of partnership in all that is not in conflict with what is expressly
Karen Go are married to each other is a fact never brought in issue in the case. determined in this Chapter or by the spouses in their marriage settlements. In other
Thus, the business name KARGO ENTERPRISES is registered in the name of a words, the property relations of the husband and wife shall be governed primarily by
married woman, a fact material to the side issue of whether Kargo Enterprises and Chapter 4 on Conjugal Partnership of Gains of the Family Code and, suppletorily,
its properties are paraphernal or conjugal properties. To restate the parties’ by the spouses’ marriage settlement and by the rules on partnership under the Civil
positions, Navarro alleges that Kargo Enterprises is Karen Go’s paraphernal Code. In the absence of any evidence of a marriage settlement between the
property, emphasizing the fact that the business is registered solely in Karen Go’s spouses Go, we look at the Civil Code provision on partnership for guidance.
name. On the other hand, Karen Go contends that while the business is registered
in her name, it is in fact part of their conjugal property. A rule on partnership applicable to the spouses’ circumstances is Article 1811 of the
Civil Code, which states:
The registration of the trade name in the name of one person – a woman – does not
necessarily lead to the conclusion that the trade name as a property is hers alone, Art. 1811. A partner is a co-owner with the other partners of specific partnership
particularly when the woman is married. By law, all property acquired during the property.
marriage, whether the acquisition appears to have been made, contracted or
registered in the name of one or both spouses, is presumed to be conjugal unless
the contrary is proved.21 Our examination of the records of the case does not show The incidents of this co-ownership are such that:
any proof that Kargo Enterprises and the properties or contracts in its name are
conjugal. If at all, only the bare allegation of Navarro to this effect exists in the (1) A partner, subject to the provisions of this Title and to any agreement between
records of the case. As we emphasized in Castro v. Miat:22 the partners, has an equal right with his partners to possess specific
partnership property for partnership purposes; xxx
Petitioners also overlook Article 160 of the New Civil Code. It provides that "all
property of the marriage is presumed to be conjugal partnership, unless it be Under this provision, Glenn and Karen Go are effectively co-owners of Kargo
prove[n] that it pertains exclusively to the husband or to the wife." This article does Enterprises and the properties registered under this name; hence, both have an
not require proof that the property was acquired with funds of the equal right to seek possession of these properties. Applying Article 484 of the Civil
partnership. The presumption applies even when the manner in which the property Code, which states that "in default of contracts, or special provisions, co-ownership
was acquired does not appear.23 [Emphasis supplied.] shall be governed by the provisions of this Title," we find further support in Article
487 of the Civil Code that allows any of the co-owners to bring an action in
Thus, for purposes solely of this case and of resolving the issue of whether Kargo ejectment with respect to the co-owned property.
Enterprises as a sole proprietorship is conjugal or paraphernal property, we hold
that it is conjugal property. While ejectment is normally associated with actions involving real property, we find
that this rule can be applied to the circumstances of the present case, following our
Article 124 of the Family Code, on the administration of the conjugal property, ruling in Carandang v. Heirs of De Guzman. 24 In this case, one spouse filed an
provides: action for the recovery of credit, a personal property considered conjugal property,
without including the other spouse in the action. In resolving the issue of whether
the other spouse was required to be included as a co-plaintiff in the action for the
Art. 124. The administration and enjoyment of the conjugal partnership
recovery of the credit, we said:
property shall belong to both spouses jointly. In case of disagreement, the
husband’s decision shall prevail, subject to recourse to the court by the wife for
Milagros de Guzman, being presumed to be a co-owner of the credits allegedly does the position that either spouse may act on behalf of the conjugal partnership,
extended to the spouses Carandang, seems to be either an indispensable or a so long as they do not dispose of or encumber the property in question without the
necessary party. If she is an indispensable party, dismissal would be proper. If she other spouse’s consent.
is merely a necessary party, dismissal is not warranted, whether or not there was
an order for her inclusion in the complaint pursuant to Section 9, Rule 3. On this basis, 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
Article 108 of the Family Code provides: impleaded as a pro-forma party to the suit, based on Section 4, Rule 4 of the Rules,
which states:
Art. 108. The conjugal partnership shall be governed by the rules on the contract of
partnership in all that is not in conflict with what is expressly determined in this Section 4. Spouses as parties. – Husband and wife shall sue or be sued jointly,
Chapter or by the spouses in their marriage settlements. except as provided by law.

This provision is practically the same as the Civil Code provision it superseded: Non-joinder of indispensable parties not ground to dismiss action

Art. 147. The conjugal partnership shall be governed by the rules on the contract of Even assuming that Glenn Go is an indispensable party to the action, we have held
partnership in all that is not in conflict with what is expressly determined in this in a number of cases26 that the misjoinder or non-joinder of indispensable parties in
Chapter. a complaint is not a ground for dismissal of action. As we stated in Macababbad v.
Masirag:27
In this connection, Article 1811 of the Civil Code provides that "[a] partner is a co-
owner with the other partners of specific partnership property." Taken with the Rule 3, Section 11 of the Rules of Court provides that neither misjoinder nor
presumption of the conjugal nature of the funds used to finance the four checks nonjoinder of parties is a ground for the dismissal of an action, thus:
used to pay for petitioners’ stock subscriptions, and with the presumption that the
credits themselves are part of conjugal funds, Article 1811 makes Quirino and Sec. 11. Misjoinder and non-joinder of parties. Neither misjoinder nor non-joinder of
Milagros de Guzman co-owners of the alleged credit. parties is ground for dismissal of an action. Parties may be dropped or added by
order of the court on motion of any party or on its own initiative at any stage of the
Being co-owners of the alleged credit, Quirino and Milagros de Guzman may action and on such terms as are just. Any claim against a misjoined party may be
separately bring an action for the recovery thereof. In the fairly recent cases severed and proceeded with separately.
of Baloloy v. Hular and Adlawan v. Adlawan, we held that, in a co-ownership, co-
owners may bring actions for the recovery of co-owned property without the In Domingo v. Scheer, this Court held that the proper remedy when a party is left
necessity of joining all the other co-owners as co-plaintiffs because the suit is out is to implead the indispensable party at any stage of the action. The court,
presumed to have been filed for the benefit of his co-owners. In the latter case and either motu proprio or upon the motion of a party, may order the inclusion of the
in that of De Guia v. Court of Appeals, we also held that Article 487 of the Civil indispensable party or give the plaintiff opportunity to amend his complaint in order
Code, which provides that any of the co-owners may bring an action for ejectment, to include indispensable parties. If the plaintiff to whom the order to include the
covers all kinds of action for the recovery of possession. indispensable party is directed refuses to comply with the order of the court, the
complaint may be dismissed upon motion of the defendant or upon the court's own
In sum, in suits to recover properties, all co-owners are real parties in interest. motion. Only upon unjustified failure or refusal to obey the order to include or to
However, pursuant to Article 487 of the Civil Code and relevant jurisprudence, any amend is the action dismissed.
one of them may bring an action, any kind of action, for the recovery of co-owned
properties. Therefore, only one of the co-owners, namely the co-owner who filed the In these lights, the RTC Order of July 26, 2000 requiring plaintiff Karen Go to join
suit for the recovery of the co-owned property, is an indispensable party thereto. her husband as a party plaintiff is fully in order.
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.25 [Emphasis supplied.]

Under this ruling, either of the spouses Go may bring an action against Navarro to
recover possession of the Kargo Enterprises-leased vehicles which they co-own.
This conclusion is consistent with Article 124 of the Family Code, supporting as it
Demand not required prior G.R. No. 177429 November 24, 2009
to filing of replevin action
ANICIA VALDEZ-TALLORIN, Petitioner,
In arguing that prior demand is required before an action for a writ of vs.
replevin is filed, Navarro apparently likens a replevin action to an unlawful detainer. HEIRS OF JUANITO TARONA, Represented by CARLOS TARONA, ROGELIO
TARONA and LOURDES TARONA, Respondents.
For a writ of replevin to issue, all that the applicant must do is to file an
affidavit and bond, pursuant to Section 2, Rule 60 of the Rules, which states: DECISION

Sec. 2. Affidavit and bond. ABAD, J.:

The applicant must show by his own affidavit or that of some other person This case is about a court’s annulment of a tax declaration in the names of
who personally knows the facts: three persons, two of whom had not been impleaded in the case, for the reason that
the document was illegally issued to them.
(a) That the applicant is the owner of the property claimed, particularly
describing it, or is entitled to the possession thereof; The Facts and the Case

(b) That the property is wrongfully detained by the adverse party, On February 9, 1998 respondents Carlos, Rogelio, and Lourdes Tarona (the
alleging the cause of detention thereof according to the best of his Taronas) filed an action before the Regional Trial Court (RTC) of Balanga,
knowledge, information, and belief; Bataan,1 against petitioner Anicia Valdez-Tallorin (Tallorin) for the cancellation of
her and two other women’s tax declaration over a parcel of land.
(c) That the property has not been distrained or taken for a tax assessment
or a fine pursuant to law, or seized under a writ of execution or preliminary The Taronas alleged in their complaint that, unknown to them, in 1981, the
attachment, or otherwise placed under custodia legis, or if so seized, that it Assessor’s Office of Morong in Bataan cancelled Tax Declaration 463 in the name
is exempt from such seizure or custody; and of their father, Juanito Tarona (Juanito), covering 6,186 square meters of land in
Morong, Bataan. The cancellation was said to be based on an unsigned though
(d) The actual market value of the property. notarized affidavit that Juanito allegedly executed in favor of petitioner Tallorin and
two others, namely, Margarita Pastelero Vda. de Valdez and Dolores Valdez, who
were not impleaded in the action. In place of the cancelled one, the Assessor’s
The applicant must also give a bond, executed to the adverse party in double the
Office issued Tax Declaration 6164 in the names of the latter three persons. The
value of the property as stated in the affidavit aforementioned, for the return of the
old man Tarona’s affidavit had been missing and no copy could be found among
property to the adverse party if such return be adjudged, and for the payment to the
the records of the Assessor’s Office.2
adverse party of such sum as he may recover from the applicant in the action.

The Taronas further alleged that, without their father’s affidavit on file, it followed
We see nothing in these provisions which requires the applicant to make a prior
that his tax declaration had been illegally cancelled and a new one illegally issued
demand on the possessor of the property before he can file an action for a writ of
in favor of Tallorin and the others with her. The unexplained disappearance of the
replevin. Thus, prior demand is not a condition precedent to an action for a writ of
affidavit from official files, the Taronas concluded, covered-up the falsification or
replevin.
forgery that caused the substitution.3 The Taronas asked the RTC to annul Tax
Declaration 6164, reinstate Tax Declaration 463, and issue a new one in the name
More importantly, Navarro is no longer in the position to claim that a prior demand of Juanito’s heirs.
is necessary, as he has already admitted in his Answers that he had received the
letters that Karen Go sent him, demanding that he either pay his unpaid obligations
On March 6, 1998 the Taronas filed a motion to declare petitioner Tallorin in default
or return the leased motor vehicles. Navarro’s position that a demand is necessary
for failing to answer their complaint within the allowed time.4 But, before the RTC
and has not been made is therefore totally unmeritorious.
could act on the motion, Tallorin filed a belated answer, alleging among others that
she held a copy of the supposedly missing affidavit of Juanito who was merely an
WHEREFORE, premises considered, we DENY the petition for review for lack of agricultural tenant of the land covered by Tax Declaration 463. He surrendered and
merit. Costs against petitioner Roger V. Navarro. waived in that affidavit his occupation and tenancy rights to Tallorin and the others
in consideration of ₱29,240.00. Tallorin also put up the affirmative defenses of non- Questions Presented
compliance with the requirement of conciliation proceedings and prescription.
The petition presents the following questions for resolution by this Court:
On March 12, 1998 the RTC set Tallorin’s affirmative defenses for hearing 5 but the
Taronas sought reconsideration, pointing out that the trial court should have instead 1. Whether or not the CA erred in failing to dismiss the Taronas’ complaint for not
declared Tallorin in default based on their earlier motion. 6 On June 2, 1998 the RTC impleading Margarita Pastelero Vda. de Valdez and Dolores Valdez in whose
denied the Taronas’ motion for reconsideration 7 for the reasons that it received names, like their co-owner Tallorin, the annulled tax declaration had been issued;
Tallorin’s answer before it could issue a default order and that the Taronas failed to
show proof that Tallorin was notified of the motion three days before the scheduled 2. Whether or not the CA erred in not ruling that the Taronas’ complaint was barred
hearing. Although the presiding judge inhibited himself from the case on motion of by prescription; and
the Taronas, the new judge to whom the case was re-raffled stood by his
predecessor’s previous orders.
3. Whether or not the CA erred in affirming the RTC’s finding that Juanito’s affidavit
8 had no legal effect because it was unsigned; when at the hearing of the motion to
By a special civil action for certiorari before the Court of Appeals (CA), however, declare Tallorin in default, it was shown that the affidavit bore Juanito’s thumbmark.
the Taronas succeeded in getting the latter court to annul the RTC’s March 12 and
June 2, 1998 orders.9 The CA ruled that the RTC gravely abused its discretion in
admitting Tallorin’s late answer in the absence of a motion to admit it. Even if The Court’s Rulings
petitioner Tallorin had already filed her late answer, said the CA, the RTC should
have heard the Taronas’ motion to declare Tallorin in default. The first question, whether or not the CA erred in failing to dismiss the Taronas’
complaint for not impleading Margarita Pastelero Vda. de Valdez and Dolores
Upon remand of the case, the RTC heard the Taronas’ motion to declare Tallorin in Valdez in whose names, like their co-owner Tallorin, the annulled tax declaration
default,10 granted the same, and directed the Taronas to present evidence ex had been issued, is a telling question.
parte.11
The rules mandate the joinder of indispensable parties. Thus:
On January 30, 2002 the RTC rendered judgment, a) annulling the tax declaration
in the names of Tallorin, Margarita Pastelero Vda. de Valdez, and Dolores Valdez; Sec. 7. Compulsory joinder of indispensable parties. – Parties in interest without
b) reinstating the tax declaration in the name of Juanito; and c) ordering the whom no final determination can be had of an action shall be joined either as
issuance in its place of a new tax declaration in the names of Juanito’s heirs. The plaintiffs and defendants.16
trial court also ruled that Juanito’s affidavit authorizing the transfer of the tax
declaration had no binding force since he did not sign it.1avvphi1 Indispensable parties are those with such an interest in the controversy that a final
decree would necessarily affect their rights, so that the courts cannot proceed
Tallorin appealed the above decision to the CA, 12 pointing out 1) that the land without their presence.17 Joining indispensable parties into an action is mandatory,
covered by the tax declaration in question was titled in her name and in those of her being a requirement of due process. Without their presence, the judgment of the
two co-owners; 2) that Juanito’s affidavit only dealt with the surrender of his tenancy court cannot attain real finality.
rights and did not serve as basis for canceling Tax Declaration 463 in his name; 3)
that, although Juanito did not sign the affidavit, he thumbmarked and acknowledged Judgments do not bind strangers to the suit. The absence of an indispensable party
the same before a notary public; and 4) that the trial court erred in not dismissing renders all subsequent actions of the court null and void. Indeed, it would have no
the complaint for failure to implead Margarita Pastelero Vda. de Valdez and Dolores authority to act, not only as to the absent party, but as to those present as well. And
Valdez who were indispensable parties in the action to annul Juanito’s affidavit and where does the responsibility for impleading all indispensable parties lie? It lies in
the tax declaration in their favor.13 the plaintiff.18

On May 22, 2006 the CA rendered judgment, affirming the trial court’s Here, the Taronas sought the annulment of the tax declaration in the names of
decision.14 The CA rejected all of Tallorin’s arguments. Since she did not assign as defendant Tallorin and two others, namely, Margarita Pastelero Vda. de Valdez and
error the order declaring her in default and since she took no part at the trial, the CA Dolores Valdez and, in its place, the reinstatement of the previous declaration in
pointed out that her claims were in effect mere conjectures, not based on evidence their father Juanito’s name. Further, the Taronas sought to strike down as void the
of record.15 Notably, the CA did not address the issue Tallorin raised regarding the affidavit in which Juanito renounced his tenancy right in favor of the same three
Taronas’ failure to implead Margarita Pastelero Vda. de Valdez and Dolores Valdez persons. It is inevitable that any decision granting what the Taronas wanted would
as indispensable party-defendants, their interest in the cancelled tax declarations necessarily affect the rights of such persons to the property covered by the tax
having been affected by the RTC judgment. declaration.
The Court cannot discount the importance of tax declarations to the persons in G.R. No. 140954. April 12, 2005
whose names they are issued. Their cancellation adversely affects the rights and
interests of such persons over the properties that the documents cover. The reason HEIRS OF BERTULDO1 HINOG: Bertuldo Hinog II, Bertuldo Hinog III, Bertuldo
is simple: a tax declaration is a primary evidence, if not the source, of the right to Hinog, Jr., Jocelyn Hinog, Bertoldo Hinog IV, Bertoldo Hinog V, Edgardo
claim title of ownership over real property, a right enforceable against another Hinog, Milagros H. Pabatao, Lilian H. King, Victoria H. Engracia, Terisita C.
person. The Court held in Uriarte v. People 19 that, although not conclusive, a tax Hinog, Paz H. Besana, Roberto C. Hinog, Vicente C. Hinog, Roel C. Hinog,
declaration is a telling evidence of the declarant’s possession which could ripen into Marilyn C. Hinog, Bebot C. Hinog, lordes C. Hinog, Pablo Chiong, Arlene
ownership. Lanasang (All respresented by Bertuldo Hinog III), Petitioners,
vs.
In Director of Lands v. Court of Appeals, 20 the Court said that no one in his right HON. ACHILLES MELICOR, in his capacity as Presiding Judge, RTC, Branch
mind would pay taxes for a property that he did not have in his possession. This 4, 7th Judicial Region, Tagbiliran City, Bohol, and CUSTODIO BALANE, RUFO
honest sense of obligation proves that the holder claims title over the property BALANE, HONORIO BALANE, and TOMAS BALANE, Respondents.
against the State and other persons, putting them on notice that he would
eventually seek the issuance of a certificate of title in his name. Further, the tax DECISION
declaration expresses his intent to contribute needed revenues to the Government,
a circumstance that strengthens his bona fide claim to ownership. 21 AUSTRIA-MARTINEZ, J.:

Here, the RTC and the CA annulled Tax Declaration 6164 that belonged not only to Before us is a petition for certiorari and prohibition under Rule 65 of the Rules of
defendant Tallorin but also to Margarita Pastelero Vda. de Valdez and Dolores Court which assails the Orders dated March 22, 1999, August 13, 1999 and
Valdez, which two persons had no opportunity to be heard as they were never October 15, 1999 of the Regional Trial Court, Branch 4, of Tagbilaran City, Bohol in
impleaded. The RTC and the CA had no authority to annul that tax declaration Civil Case No. 4923.
without seeing to it that all three persons were impleaded in the case.
The factual background of the case is as follows:
But the Taronas’ action cannot be dismissed outright. As the Court held in Plasabas
v. Court of Appeals,22 the non-joinder of indispensable parties is not a ground for
dismissal. Section 11, Rule 3 of the 1997 Rules of Civil Procedure prohibits the On May 21, 1991, private respondents Custodio, Rufo, Tomas and Honorio, all
dismissal of a suit on the ground of non-joinder or misjoinder of parties and allows surnamed Balane, filed a complaint for "Recovery of Ownership and Possession,
the amendment of the complaint at any stage of the proceedings, through motion or Removal of Construction and Damages" against Bertuldo Hinog (Bertuldo for
on order of the court on its own initiative. Only if plaintiff refuses to implead an brevity). They alleged that: they own a 1,399- square meter parcel of land situated
indispensable party, despite the order of the court, may it dismiss the action. in Malayo Norte, Cortes, Bohol, designated as Lot No. 1714; sometime in March
1980, they allowed Bertuldo to use a portion of the said property for a period of ten
years and construct thereon a small house of light materials at a nominal annual
There is a need, therefore, to remand the case to the RTC with an order to implead rental of ₱100.00 only, considering the close relations of the parties; after the
Margarita Pastelero Vda. de Valdez and Dolores Valdez as defendants so they expiration of the ten-year period, they demanded the return of the occupied portion
may, if they so desire, be heard. and removal of the house constructed thereon but Bertuldo refused and instead
claimed ownership of the entire property.
In view of the Court’s resolution of the first question, it would serve no purpose to
consider the other questions that the petition presents. The resolution of those Accordingly, private respondents sought to oust Bertuldo from the premises of the
questions seems to depend on the complete evidence in the case. This will not yet subject property and restore upon themselves the ownership and possession
happen until all the indispensable party-defendants are impleaded and heard on thereof, as well as the payment of moral and exemplary damages, attorney’s fees
their evidence. and litigation expenses "in amounts justified by the evidence." 2

WHEREFORE, the Court GRANTS the petition and SETS ASIDE the decision of
On July 2, 1991, Bertuldo filed his Answer. He alleged ownership of the disputed
the Regional Trial Court of Balanga, Bataan in Civil Case 6739 dated January 30, property by virtue of a Deed of Absolute Sale dated July 2, 1980, executed by one
2002 and the decision of the Court of Appeals in CA-G.R. CV 74762 dated May 22, Tomas Pahac with the knowledge and conformity of private respondents. 3
2006. The Court REMANDS the case to the Regional Trial Court of Balanga,
Bataan which is DIRECTED to have Margarita Pastelero Vda. de Valdez and
Dolores Valdez impleaded by the plaintiffs as party-defendants and, afterwards, to After the pre-trial, trial on the merits ensued. On November 18, 1997, private
hear the case in the manner prescribed by the rules. respondents rested their case. Thereupon, Bertuldo started his direct examination.
However, on June 24, 1998, Bertuldo died without completing his evidence.
On August 4, 1998, Atty. Sulpicio A. Tinampay withdrew as counsel for Bertuldo as On May 24, 1999, petitioners, upon prior leave of court, 14 filed their supplemental
his services were terminated by petitioner Bertuldo Hinog III. Atty. Veronico G. pleading, appending therein a Deed of Sale dated November 15, 1982.15 Following
Petalcorin then entered his appearance as new counsel for Bertuldo.4 the submission of private respondents’ opposition thereto, 16 the trial court, in its
Order dated July 7, 1999, denied the supplemental pleading on the ground that the
On September 22, 1998, Atty. Petalcorin filed a motion to expunge the complaint Deed of Absolute Sale is a new matter which was never mentioned in the original
from the record and nullify all court proceedings on the ground that private answer dated July 2, 1991, prepared by Bertuldo’s original counsel and which
respondents failed to specify in the complaint the amount of damages claimed so Bertuldo verified; and that such new document is deemed waived in the light of
as to pay the correct docket fees; and that under Manchester Development Section 1, Rule 917 of the Rules of Court. The trial court also noted that no formal
5
Corporation vs. Court of Appeals, non-payment of the correct docket fee is substitution of the parties was made because of the failure of defendant’s counsel
jurisdictional. 6 to give the names and addresses of the legal representatives of Bertuldo, so much
so that the supposed heirs of Bertuldo are not specified in any pleading in the
case. 18
In an amended motion, filed on October 2, 1998, Atty. Petalcorin further alleged that
the private respondents failed to pay the correct docket fee since the main subject
matter of the case cannot be estimated as it is for recovery of ownership, On July 14, 1999, petitioners manifested that the trial court having expunged the
possession and removal of construction.7 complaint and nullified all court proceedings, there is no valid case and the
complaint should not be admitted for failure to pay the correct docket fees; that
there should be no case to be reinstated and no case to proceed as there is no
Private respondents opposed the motion to expunge on the following grounds: (a)
complaint filed.19
said motion was filed more than seven years from the institution of the case; (b)
Atty. Petalcorin has not complied with Section 16, Rule 3 of the Rules of Court
which provides that the death of the original defendant requires a substitution of After the submission of private respondents’ opposition 20 and petitioners’
parties before a lawyer can have legal personality to represent a litigant and the rejoinder,21 the trial court issued the second assailed Order on August 13, 1999,
motion to expunge does not mention of any specific party whom he is representing; essentially denying petitioners’ manifestation/rejoinder. The trial court held that the
(c) collectible fees due the court can be charged as lien on the judgment; and (d) issues raised in such manifestation/rejoinder are practically the same as those
considering the lapse of time, the motion is merely a dilatory scheme employed by raised in the amended motion to expunge which had already been passed upon in
petitioners.8 the Order dated January 21, 1999. Moreover, the trial court observed that the Order
dated March 22, 1999 which reinstated the case was not objected to by petitioners
within the reglementary period or even thereafter via a motion for reconsideration
In their Rejoinder, petitioners manifested that the lapse of time does not vest the
despite receipt thereof on March 26, 1999. 22
court with jurisdiction over the case due to failure to pay the correct docket fees. As
to the contention that deficiency in payment of docket fees can be made as a lien
on the judgment, petitioners argued that the payment of filing fees cannot be made On August 25, 1999, petitioners filed a motion for reconsideration 23 but the same
dependent on the result of the action taken. 9 was denied by the trial court in its third assailed Order dated October 15, 1999. The
trial court held that the Manchester rule was relaxed in Sun Insurance Office, Ltd.
vs. Asuncion.24 Noting that there has been no substitution of parties following the
On January 21, 1999, the trial court, while ordering the complaint to be expunged
death of Bertuldo, the trial court directed Atty. Petalcorin to comply with the
from the records and the nullification of all court proceedings taken for failure to pay
provisions of Section 16, Rule 3 of the Rules of Court. The trial court also reiterated
the correct docket fees, nonetheless, held:
that the Order dated March 22, 1999 reinstating the case was not assailed by
petitioners within the reglementary period, despite receipt thereof on March 26,
The Court can acquire jurisdiction over this case only upon the payment of the 1999.25
exact prescribed docket/filing fees for the main cause of action, plus additional
docket fee for the amount of damages being prayed for in the complaint, which
On November 19, 1999, Atty. Petalcorin complied with the directive of the trial court
amount should be specified so that the same can be considered in assessing the
to submit the names and addresses of the heirs of Bertuldo. 26
amount of the filing fees. Upon the complete payment of such fees, the Court may
take appropriate action in the light of the ruling in the case of Manchester
Development Corporation vs. Court of Appeals, supra.10 On November 24, 1999, petitioners filed before us the present petition
for certiorari and prohibition.27 They allege that the public respondent committed
grave abuse of discretion in allowing the case to be reinstated after private
Accordingly, on January 28, 1999, upon payment of deficiency docket fee, private
respondents paid the docket fee deficiency since the trial court had earlier
respondents filed a manifestation with prayer to reinstate the case. 11 Petitioners
expunged the complaint from the record and nullified all proceedings of the case
opposed the reinstatement12 but on March 22, 1999, the trial court issued the first
and such ruling was not contested by the private respondents. Moreover, they
assailed Order reinstating the case.13
argue that the public respondent committed grave abuse of discretion in allowing
the case to be filed and denying the manifestation with motion to dismiss, despite exercise of its primary jurisdiction. Exceptional and compelling circumstances were
the defect in the complaint which prayed for damages without specifying the held present in the following cases: (a) Chavez vs. Romulo33 on citizens’ right to
amounts, in violation of SC Circular No. 7, dated March 24, 1988. bear arms; (b) Government of the United States of America vs. Purganan 34 on
bail in extradition proceedings; (c) Commission on Elections vs. Quijano-
In their Comment, private respondents aver that no grave abuse of discretion was Padilla35 on government contract involving modernization and computerization of
committed by the trial court in reinstating the complaint upon the payment of voters’ registration list; (d) Buklod ng Kawaning EIIB vs. Zamora36 on status and
deficiency docket fees because petitioners did not object thereto within the existence of a public office; and (e) Fortich vs. Corona37 on the so-called "Win-Win
reglementary period. Besides, Atty. Petalcorin possessed no legal personality to Resolution" of the Office of the President which modified the approval of the
appear as counsel for the heirs of Bertuldo until he complies with Section 16, Rule 3 conversion to agro-industrial area.
of the Rules of Court.28
In this case, no special and important reason or exceptional and compelling
At the outset, we note the procedural error committed by petitioners in directly filing circumstance analogous to any of the above cases has been adduced by the
the instant petition before this Court for it violates the established policy of strict petitioners so as to justify direct recourse to this Court. The present petition should
observance of the judicial hierarchy of courts. have been initially filed in the Court of Appeals in strict observance of the doctrine
on the hierarchy of courts. Failure to do so is sufficient cause for the dismissal of
the petition at bar.
Although the Supreme Court, Court of Appeals and the Regional Trial Courts have
concurrent jurisdiction to issue writs of certiorari, prohibition, mandamus, quo
warranto, habeas corpus and injunction, such concurrence does not give the In any event, even if the Court disregards such procedural flaw, the petitioners’
petitioner unrestricted freedom of choice of court forum.29 As we stated in People contentions on the substantive aspect of the case fail to invite judgment in their
vs. Cuaresma:30 favor.

This Court's original jurisdiction to issue writs of certiorari is not exclusive. It is The unavailability of the writ of certiorari and prohibition in this case is borne out of
shared by this Court with Regional Trial Courts and with the Court of Appeals. This the fact that petitioners principally assail the Order dated March 22, 1999 which
concurrence of jurisdiction is not, however, to be taken as according to parties they never sought reconsideration of, in due time, despite receipt thereof on March
seeking any of the writs an absolute, unrestrained freedom of choice of the court to 26, 1999. Instead, petitioners went through the motion of filing a supplemental
which application therefor will be directed. There is after all a hierarchy of courts. pleading and only when the latter was denied, or after more than three months have
That hierarchy is determinative of the venue of appeals, and also serves as a passed, did they raise the issue that the complaint should not have been reinstated
general determinant of the appropriate forum for petitions for the extraordinary in the first place because the trial court had no jurisdiction to do so, having already
writs. A becoming regard for that judicial hierarchy most certainly indicates that ruled that the complaint shall be expunged.
petitions for the issuance of extraordinary writs against first level ("inferior") courts
should be filed with the Regional Trial Court, and those against the latter, with the After recognizing the jurisdiction of the trial court by seeking affirmative relief in their
Court of Appeals. A direct invocation of the Supreme Court’s original jurisdiction to motion to serve supplemental pleading upon private respondents, petitioners are
issue these writs should be allowed only when there are special and important effectively barred by estoppel from challenging the trial court’s jurisdiction. 38 If a
reasons therefor, clearly and specifically set out in the petition. This is [an] party invokes the jurisdiction of a court, he cannot thereafter challenge the court’s
39
established policy. It is a policy necessary to prevent inordinate demands upon the jurisdiction in the same case. To rule otherwise would amount to speculating on
Court’s time and attention which are better devoted to those matters within its the fortune of litigation, which is against the policy of the Court. 40
exclusive jurisdiction, and to prevent further over-crowding of the Court’s docket.31
Nevertheless, there is a need to correct the erroneous impression of the trial court
The rationale for this rule is two-fold: (a) it would be an imposition upon the precious as well as the private respondents that petitioners are barred from assailing the
time of this Court; and (b) it would cause an inevitable and resultant delay, intended Order dated March 22, 1999 which reinstated the case because it was not objected
or otherwise, in the adjudication of cases, which in some instances had to be to within the reglementary period or even thereafter via a motion for reconsideration
remanded or referred to the lower court as the proper forum under the rules of despite receipt thereof on March 26, 1999.
procedure, or as better equipped to resolve the issues because this Court is not a
trier of facts.32 It must be clarified that the said order is but a resolution on an incidental matter
which does not touch on the merits of the case or put an end to the proceedings. 41 It
Thus, this Court will not entertain direct resort to it unless the redress desired is an interlocutory order since there leaves something else to be done by the trial
cannot be obtained in the appropriate courts, and exceptional and compelling court with respect to the merits of the case. 42 As such, it is not subject to a
circumstances, such as cases of national interest and of serious implications, justify reglementary period. Reglementary period refers to the period set by the rules for
the availment of the extraordinary remedy of writ of certiorari, calling for the
appeal or further review of a final judgment or order, i.e., one that ends the litigation that they could not be faulted for inadequate assessment because the clerk of court
in the trial court. made no notice of demand or reassessment. 49 They were in good faith and simply
relied on the assessment of the clerk of court.
Moreover, the remedy against an interlocutory order is generally not to resort
forthwith to certiorari, but to continue with the case in due course and, when an Furthermore, the fact that private respondents prayed for payment of damages "in
unfavorable verdict is handed down, to take an appeal in the manner authorized by amounts justified by the evidence" does not call for the dismissal of the complaint
law.43 Only when the court issued such order without or in excess of jurisdiction or for violation of SC Circular No. 7, dated March 24, 1988 which required that all
with grave abuse of discretion and when the assailed interlocutory order is patently complaints must specify the amount of damages sought not only in the body of the
erroneous and the remedy of appeal would not afford adequate and expeditious pleadings but also in the prayer in order to be accepted and admitted for filing. Sun
relief will certiorari be considered an appropriate remedy to assail an interlocutory Insurance effectively modified SC Circular No. 7 by providing that filing fees for
order.44 Such special circumstances are absolutely wanting in the present case. damages and awards that cannot be estimated constitute liens on the awards finally
granted by the trial court.50
Time and again, the Court has held that the Manchester rule has been modified
in Sun Insurance Office, Ltd. (SIOL) vs. Asuncion 45 which defined the following Thus, while the docket fees were based only on the real property valuation, the trial
guidelines involving the payment of docket fees: court acquired jurisdiction over the action, and judgment awards which were left for
determination by the court or as may be proven during trial would still be subject to
1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the additional filing fees which shall constitute a lien on the judgment. It would then be
payment of the prescribed docket fee, that vests a trial court with jurisdiction over the responsibility of the Clerk of Court of the trial court or his duly authorized deputy
the subject-matter or nature of the action. Where the filing of the initiatory pleading to enforce said lien and assess and collect the additional fees. 51
is not accompanied by payment of the docket fee, the court may allow payment of
the fees within a reasonable time but in no case beyond the applicable prescriptive It is worth noting that when Bertuldo filed his Answer on July 2, 1991, he did not
or reglementary period. raise the issue of lack of jurisdiction for non-payment of correct docket fees.
Instead, he based his defense on a claim of ownership and participated in the
2. The same rule applies to permissive counterclaims, third-party claims and similar proceedings before the trial court. It was only in September 22, 1998 or more than
pleadings, which shall not be considered filed until and unless the filing fee seven years after filing the answer, and under the auspices of a new counsel, that
prescribed therefor is paid. The court may also allow payment of said fee within a the issue of jurisdiction was raised for the first time in the motion to expunge by
reasonable time but also in no case beyond its applicable prescriptive or Bertuldo’s heirs.
reglementary period.
After Bertuldo vigorously participated in all stages of the case before the trial court
3. Where the trial court acquires jurisdiction over a claim by the filing of the and even invoked the trial court’s authority in order to ask for affirmative relief,
appropriate pleading and payment of the prescribed filing fee but, subsequently, the petitioners, considering that they merely stepped into the shoes of their
judgment awards a claim not specified in the pleading, or if specified the same has predecessor, are effectively barred by estoppel from challenging the trial court’s
been left for determination by the court, the additional filing fee therefor shall jurisdiction. Although the issue of jurisdiction may be raised at any stage of the
constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court proceedings as the same is conferred by law, it is nonetheless settled that a party
52
or his duly authorized deputy to enforce said lien and assess and collect the may be barred from raising it on ground of laches or estoppel.
additional fee.
Moreover, no formal substitution of the parties was effected within thirty days from
Plainly, while the payment of the prescribed docket fee is a jurisdictional date of death of Bertuldo, as required by Section 16, Rule 3 53 of the Rules of Court.
requirement, even its non-payment at the time of filing does not automatically cause Needless to stress, the purpose behind the rule on substitution is the protection of
the dismissal of the case, as long as the fee is paid within the applicable the right of every party to due process. It is to ensure that the deceased party would
prescriptive or reglementary period, more so when the party involved demonstrates continue to be properly represented in the suit through the duly appointed legal
a willingness to abide by the rules prescribing such payment. 46 Thus, when representative of his estate.54 Non-compliance with the rule on substitution would
insufficient filing fees were initially paid by the plaintiffs and there was no intention render the proceedings and judgment of the trial court infirm because the court
to defraud the government, the Manchester rule does not apply.47 acquires no jurisdiction over the persons of the legal representatives or of the heirs
on whom the trial and the judgment would be binding. 55 Thus, proper substitution of
heirs must be effected for the trial court to acquire jurisdiction over their persons
Under the peculiar circumstances of this case, the reinstatement of the complaint
and to obviate any future claim by any heir that he was not apprised of the litigation
was just and proper considering that the cause of action of private respondents,
against Bertuldo or that he did not authorize Atty. Petalcorin to represent him.
being a real action, prescribes in thirty years, 48 and private respondents did not
really intend to evade the payment of the prescribed docket fee but simply contend
The list of names and addresses of the heirs was submitted sixteen months after G.R. No. 150135 October 30, 2006
the death of Bertuldo and only when the trial court directed Atty. Petalcorin to
comply with the provisions of Section 16, Rule 3 of the Rules of Court. Strictly SPOUSES ANTONIO F. ALGURA and LORENCITA S.J. ALGURA, petitioners,
speaking therefore, before said compliance, Atty. Petalcorin had no standing in the vs.
court a quo when he filed his pleadings. Be that as it may, the matter has been duly THE LOCAL GOVERNMENT UNIT OF THE CITY OF NAGA, ATTY. MANUEL
corrected by the Order of the trial court dated October 15, 1999. TEOXON, ENGR. LEON PALMIANO, NATHAN SERGIO and BENJAMIN
NAVARRO, SR., respondents.
To be sure, certiorari under Rule 6556 is a remedy narrow in scope and inflexible in
57
character. It is not a general utility tool in the legal workshop. It offers only a DECISION
limited form of review. Its principal function is to keep an inferior tribunal within its
jurisdiction.58 It can be invoked only for an error of jurisdiction, that is, one where the VELASCO, JR., J.:
act complained of was issued by the court, officer or a quasi-judicial body without or
in excess of jurisdiction, or with grave abuse of discretion which is tantamount to
lack or in excess of jurisdiction,59 not to be used for any other purpose, 60 such as to Anyone who has ever struggled with poverty
cure errors in proceedings or to correct erroneous conclusions of law or fact. 61 A knows how extremely expensive it is to be poor.
contrary rule would lead to confusion, and seriously hamper the administration of –– James Baldwin
justice.
The Constitution affords litigants—moneyed or poor—equal access to the
Petitioners utterly failed to show that the trial court gravely abused its discretion in courts; moreover, it specifically provides that poverty shall not bar any person from
issuing the assailed resolutions. On the contrary, it acted prudently, in accordance having access to the courts.1 Accordingly, laws and rules must be formulated,
with law and jurisprudence. interpreted, and implemented pursuant to the intent and spirit of this constitutional
provision. As such, filing fees, though one of the essential elements in court
procedures, should not be an obstacle to poor litigants' opportunity to seek redress
WHEREFORE, the instant petition for certiorari is DISMISSED for lack of merit.
for their grievances before the courts.

No costs. The Case

SO ORDERED. This Petition for Review on Certiorari seeks the annulment of the
September 11, 2001 Order of the Regional Trial Court (RTC) of Naga City, Branch
27, in Civil Case No. 99-4403 entitled Spouses Antonio F. Algura and Lorencita S.J.
Algura v. The Local Government Unit of the City of Naga, et al., dismissing the case
for failure of petitioners Algura spouses to pay the required filing fees. 2 Since the
instant petition involves only a question of law based on facts established from the
pleadings and documents submitted by the parties, 3 the Court gives due course to
the instant petition sanctioned under Section 2(c) of Rule 41 on Appeal from the
RTCs, and governed by Rule 45 of the 1997 Rules of Civil Procedure.

The Facts

On September 1, 1999, spouses Antonio F. Algura and Lorencita S.J.

Algura filed a Verified Complaint dated August 30, 1999 4 for damages against the
Naga City Government and its officers, arising from the alleged illegal demolition of
their residence and boarding house and for payment of lost income derived from
fees paid by their boarders amounting to PhP 7,000.00 monthly.

Simultaneously, petitioners filed an Ex-Parte Motion to Litigate as Indigent

Litigants,5 to which petitioner Antonio Algura's Pay Slip No. 2457360 (Annex "A" of
motion) was appended, showing a gross monthly income of Ten Thousand Four
Hundred Seventy Four Pesos (PhP 10,474.00) and a net pay of Three Thousand
Six Hundred Sixteen Pesos and Ninety Nine Centavos (PhP 3,616.99) for [the On April 28, 2000, petitioners filed a Motion for Reconsideration of the April 14,
month of] July 1999.6 Also attached as Annex "B" to the motion was a July 14, 1999 2000 Order. On May 8, 2000, respondents then filed their Comment/Objections to
Certification7 issued by the Office of the City Assessor of Naga City, which stated petitioner's Motion for Reconsideration.
that petitioners had no property declared in their name for taxation purposes.
On May 5, 2000, the trial court issued an Order14 giving petitioners the opportunity
Finding that petitioners' motion to litigate as indigent litigants was meritorious, to comply with the requisites laid down in Section 18, Rule 141, for them to qualify
Executive Judge Jose T. Atienza of the Naga City RTC, in the September 1, 1999 as indigent litigants.
Order,8 granted petitioners' plea for exemption from filing fees.
On May 13, 2000, petitioners submitted their Compliance 15 attaching the affidavits
Meanwhile, as a result of respondent Naga City Government's demolition of a of petitioner Lorencita Algura16 and Erlinda Bangate,17 to comply with the
portion of petitioners' house, the Alguras allegedly lost a monthly income of PhP requirements of then Rule 141, Section 18 of the Rules of Court and in support of
7,000.00 from their boarders' rentals. With the loss of the rentals, the meager their claim to be declared as indigent litigants.
income from Lorencita Algura's sari-sari store and Antonio Algura's small take
home pay became insufficient for the expenses of the Algura spouses and their six In her May 13, 2000 Affidavit, petitioner Lorencita Algura claimed that the
(6) children for their basic needs including food, bills, clothes, and schooling, among demolition of their small dwelling deprived her of a monthly income amounting to
others. PhP 7,000.00. She, her husband, and their six (6) minor children had to rely mainly
on her husband's salary as a policeman which provided them a monthly amount of
On October 13, 1999, respondents filed an Answer with Counterclaim dated PhP 3,500.00, more or less. Also, they did not own any real property as certified by
October 10, 1999,9 arguing that the defenses of the petitioners in the complaint had the assessor's office of Naga City. More so, according to her, the meager net
no cause of action, the spouses' boarding house blocked the road right of way, and income from her small sari-sari store and the rentals of some boarders, plus the
said structure was a nuisance per se. salary of her husband, were not enough to pay the family's basic necessities.

Praying that the counterclaim of defendants (respondents) be dismissed, petitioners To buttress their position as qualified indigent litigants, petitioners also submitted
then filed their Reply with Ex-Parte Request for a Pre-Trial Setting10 before the the affidavit of Erlinda Bangate, who attested under oath, that she personally knew
Naga City RTC on October 19, 1999. On February 3, 2000, a pre-trial was held spouses Antonio Algura and Lorencita Algura, who were her neighbors; that they
wherein respondents asked for five (5) days within which to file a Motion to derived substantial income from their boarders; that they lost said income from their
Disqualify Petitioners as Indigent Litigants. boarders' rentals when the Local Government Unit of the City of Naga, through its
officers, demolished part of their house because from that time, only a few boarders
On March 13, 2000, respondents filed a Motion to Disqualify the Plaintiffs for Non- could be accommodated; that the income from the small store, the boarders, and
Payment of Filing Fees dated March 10, 2000. 11 They asserted that in addition to the meager salary of Antonio Algura were insufficient for their basic necessities like
the more than PhP 3,000.00 net income of petitioner Antonio Algura, who is a food and clothing, considering that the Algura spouses had six (6) children; and that
member of the Philippine National Police, spouse Lorencita Algura also had a mini- she knew that petitioners did not own any real property.
store and a computer shop on the ground floor of their residence along Bayawas
St., Sta. Cruz, Naga City. Also, respondents claimed that petitioners' second floor Thereafter, Naga City RTC Acting Presiding Judge Andres B. Barsaga, Jr. issued
was used as their residence and as a boarding house, from which they earned his July 17, 200018 Order denying the petitioners' Motion for Reconsideration.
more than PhP 3,000.00 a month. In addition, it was claimed that petitioners
derived additional income from their computer shop patronized by students and Judge Barsaga ratiocinated that the pay slip of Antonio F. Algura showed that the
from several boarders who paid rentals to them. Hence, respondents concluded "GROSS INCOME or TOTAL EARNINGS of plaintiff Algura [was] ₧10,474.00
that petitioners were not indigent litigants. which amount [was] over and above the amount mentioned in the first paragraph of
Rule 141, Section 18 for pauper litigants residing outside Metro Manila." 19 Said rule
On March 28, 2000, petitioners subsequently interposed their Opposition to the provides that the gross income of the litigant should not exceed PhP 3,000.00 a
Motion12 to respondents' motion to disqualify them for non-payment of filing fees. month and shall not own real estate with an assessed value of PhP 50,000.00. The
trial court found that, in Lorencita S.J. Algura's May 13, 2000 Affidavit, nowhere was
On April 14, 2000, the Naga City RTC issued an Order disqualifying petitioners as it stated that she and her immediate family did not earn a gross income of PhP
indigent litigants on the ground that they failed to substantiate their claim for 3,000.00.
exemption from payment of legal fees and to comply with the third paragraph of
Rule 141, Section 18 of the Revised Rules of Court—directing them to pay the
requisite filing fees.13
The Issue To be entitled to the exemption herein provided, the pauper-litigant shall execute an
affidavit that he does not earn the gross income abovementioned, nor own any real
Unconvinced of the said ruling, the Alguras instituted the instant petition raising a property with the assessed value afore-mentioned [sic], supported by a certification
solitary issue for the consideration of the Court: whether petitioners should be to that effect by the provincial, city or town assessor or treasurer.
considered as indigent litigants who qualify for exemption from paying filing
fees. When the Rules of Court on Civil Procedure were amended by the 1997 Rules of
Civil Procedure (inclusive of Rules 1 to 71) in Supreme Court Resolution in Bar
The Ruling of the Court Matter No. 803 dated April 8, 1997, which became effective on July 1, 1997, Rule 3,
Section 22 of the Revised Rules of Court was superseded by Rule 3, Section 21 of
said 1997 Rules of Civil Procedure, as follows:
The petition is meritorious.

Section 21. Indigent party.—A party may be authorized to litigate his action, claim
A review of the history of the Rules of Court on suits in forma pauperis (pauper
or defense as an indigent if the court, upon an ex parte application and hearing, is
litigant) is necessary before the Court rules on the issue of the Algura spouses'
satisfied that the party is one who has no money or property sufficient and available
claim to exemption from paying filing fees.
for food, shelter and basic necessities for himself and his family.
When the Rules of Court took effect on January 1, 1964, the rule on pauper litigants
Such authority shall include an exemption from payment of docket and other lawful
was found in Rule 3, Section 22 which provided that:
fees, and of transcripts of stenographic notes which the court may order to be
furnished him. The amount of the docket and other lawful fees which the indigent
Section 22. Pauper litigant.—Any court may authorize a litigant to prosecute his was exempted from paying shall be a lien on any judgment rendered in the case
action or defense as a pauper upon a proper showing that he has no means to that favorable to the indigent, unless the court otherwise provides.
effect by affidavits, certificate of the corresponding provincial, city or municipal
treasurer, or otherwise. Such authority[,] once given[,] shall include an exemption
Any adverse party may contest the grant of such authority at any time before
from payment of legal fees and from filing appeal bond, printed record and printed
judgment is rendered by the trial court. If the court should determine after hearing
brief. The legal fees shall be a lien to any judgment rendered in the case [favorable]
that the party declared as an indigent is in fact a person with sufficient income or
to the pauper, unless the court otherwise provides.
property, the proper docket and other lawful fees shall be assessed and collected
by the clerk of court. If payment is not made within the time fixed by the court,
From the same Rules of Court, Rule 141 on Legal Fees, on the other hand, did not execution shall issue for the payment thereof, without prejudice to such other
contain any provision on pauper litigants. sanctions as the court may impose.

On July 19, 1984, the Court, in Administrative Matter No. 83-6-389-0 (formerly G.R. At the time the Rules on Civil Procedure were amended by the Court in Bar Matter
No. 64274), approved the recommendation of the Committee on the Revision of No. 803, however, there was no amendment made on Rule 141, Section 16 on
Rates and Charges of Court Fees, through its Chairman, then Justice Felix V. pauper litigants.
Makasiar, to revise the fees in Rule 141 of the Rules of Court to generate funds to
20
effectively cover administrative costs for services rendered by the courts. A
On March 1, 2000, Rule 141 on Legal Fees was amended by the Court in A.M. No.
provision on pauper litigants was inserted which reads:
00-2-01-SC, whereby certain fees were increased or adjusted. In this Resolution,
the Court amended Section 16 of Rule 141, making it Section 18, which now reads:
Section 16. Pauper-litigants exempt from payment of court fees.—Pauper-litigants
include wage earners whose gross income do not exceed P2,000.00 a month or
Section 18. Pauper-litigants exempt from payment of legal fees.—Pauper litigants
P24,000.00 a year for those residing in Metro Manila, and P1,500.00 a month or
(a) whose gross income and that of their immediate family do not exceed four
P18,000.00 a year for those residing outside Metro Manila, or those who do not
thousand (P4,000.00) pesos a month if residing in Metro Manila, and three
own real property with an assessed value of not more than P24,000.00, or not more
thousand (P3,000.00) pesos a month if residing outside Metro Manila, and (b) who
than P18,000.00 as the case may be.
do not own real property with an assessed value of more than fifty thousand
(P50,000.00) pesos shall be exempt from the payment of legal fees.
Such exemption shall include exemption from payment of fees for filing appeal
bond, printed record and printed brief.
The legal fees shall be a lien on any judgment rendered in the case favorably to the
pauper litigant, unless the court otherwise provides.
The legal fees shall be a lien on the monetary or property judgment rendered in
favor of the pauper-litigant.
To be entitled to the exemption herein provided, the litigant shall execute an Metro Manila, to double the monthly minimum wage of an employee; and the
affidavit that he and his immediate family do not earn the gross income maximum value of the property owned by the applicant was increased from an
abovementioned, nor do they own any real property with the assessed value assessed value of PhP 50,000.00 to a maximum market value of PhP 300,000.00,
aforementioned, supported by an affidavit of a disinterested person attesting to the to be able to accommodate more indigent litigants and promote easier access to
truth of the litigant's affidavit. justice by the poor and the marginalized in the wake of these new increases in filing
fees.
Any falsity in the affidavit of a litigant or disinterested person shall be sufficient
cause to strike out the pleading of that party, without prejudice to whatever criminal Even if there was an amendment to Rule 141 on August 16, 2004, there was still no
liability may have been incurred. amendment or recall of Rule 3, Section 21 on indigent litigants.

It can be readily seen that the rule on pauper litigants was inserted in Rule With this historical backdrop, let us now move on to the sole issue—whether
141 without revoking or amending Section 21 of Rule 3, which provides for the petitioners are exempt from the payment of filing fees.
exemption of pauper litigants from payment of filing fees. Thus, on March 1, 2000,
there were two existing rules on pauper litigants; namely, Rule 3, Section It is undisputed that the Complaint (Civil Case No. 99-4403) was filed on September
21 and Rule 141, Section 18. 1, 1999. However, the Naga City RTC, in its April 14, 2000 and July 17, 2000
Orders, incorrectly applied Rule 141, Section 18 on Legal Fees when the
On August 16, 2004, Section 18 of Rule 141 was further amended in Administrative applicable rules at that time were Rule 3, Section 21 on Indigent Party which took
Matter No. 04-2-04-SC, which became effective on the same date. It then became effect on July 1, 1997 and Rule 141, Section 16 on Pauper Litigants which
Section 19 of Rule 141, to wit: became effective on July 19, 1984 up to February 28, 2000.

Sec. 19. Indigent litigants exempt from payment of legal fees.– INDIGENT The old Section 16, Rule 141 requires applicants to file an ex-parte motion to
LITIGANTS (A) WHOSE GROSS INCOME AND THAT OF THEIR IMMEDIATE litigate as a pauper litigant by submitting an affidavit that they do not have a gross
FAMILY DO NOT EXCEED AN AMOUNT DOUBLE THE MONTHLY MINIMUM income of PhP 2,000.00 a month or PhP 24,000.00 a year for those residing in
WAGE OF AN EMPLOYEE AND (B) WHO DO NOT OWN REAL PROPERTY Metro Manila and PhP 1,500.00 a month or PhP 18,000.00 a year for those residing
WITH A FAIR MARKET VALUE AS STATED IN THE CURRENT TAX outside Metro Manila or those who do not own real property with an assessed value
DECLARATION OF MORE THAN THREE HUNDRED THOUSAND (P300,000.00) of not more than PhP 24,000.00 or not more than PhP 18,000.00 as the case may
PESOS SHALL BE EXEMPT FROM PAYMENT OF LEGAL FEES. be. Thus, there are two requirements: a) income requirement—the applicants
should not have a gross monthly income of more than PhP 1,500.00, and b)
The legal fees shall be a lien on any judgment rendered in the case favorable to the property requirement––they should not own property with an assessed value of not
indigent litigant unless the court otherwise provides. more than PhP 18,000.00.

To be entitled to the exemption herein provided, the litigant shall execute an In the case at bar, petitioners Alguras submitted the Affidavits of petitioner Lorencita
affidavit that he and his immediate family do not earn a gross income Algura and neighbor Erlinda Bangate, the pay slip of petitioner Antonio F. Algura
abovementioned, and they do not own any real property with the fair value showing a gross monthly income of PhP 10,474.00, 21 and a Certification of the
aforementioned, supported by an affidavit of a disinterested person attesting Naga City assessor stating that petitioners do not have property declared in their
to the truth of the litigant's affidavit. The current tax declaration, if any, shall be names for taxation.22 Undoubtedly, petitioners do not own real property as shown
attached to the litigant's affidavit. by the Certification of the Naga City assessor and so the property requirement is
met. However with respect to the income requirement, it is clear that the gross
monthly income of PhP 10,474.00 of petitioner Antonio F. Algura and the PhP
Any falsity in the affidavit of litigant or disinterested person shall be sufficient cause
3,000.00 income of Lorencita Algura when combined, were above the PhP
to dismiss the complaint or action or to strike out the pleading of that party, without
1,500.00 monthly income threshold prescribed by then Rule 141, Section 16 and
prejudice to whatever criminal liability may have been incurred. (Emphasis
therefore, the income requirement was not satisfied. The trial court was therefore
supplied.)
correct in disqualifying petitioners Alguras as indigent litigants although the court
should have applied Rule 141, Section 16 which was in effect at the time of the
Amendments to Rule 141 (including the amendment to Rule 141, Section 18) were filing of the application on September 1, 1999. Even if Rule 141, Section 18 (which
made to implement RA 9227 which brought about new increases in filing fees. superseded Rule 141, Section 16 on March 1, 2000) were applied, still the
Specifically, in the August 16, 2004 amendment, the ceiling for the gross income of application could not have been granted as the combined PhP 13,474.00 income of
litigants applying for exemption and that of their immediate family was increased petitioners was beyond the PhP 3,000.00 monthly income threshold.
from PhP 4,000.00 a month in Metro Manila and PhP 3,000.00 a month outside
Unrelenting, petitioners however argue in their Motion for Reconsideration of the with or abrogate any former law relating to same matter, unless the repugnancy
April 14, 2000 Order disqualifying them as indigent litigants 23 that the rules have between the two is not only irreconcilable, but also clear and convincing, and
been relaxed by relying on Rule 3, Section 21 of the 1997 Rules of Civil procedure flowing necessarily from the language used, unless the later act fully embraces the
which authorizes parties to litigate their action as indigents if the court is satisfied subject matter of the earlier, or unless the reason for the earlier act is beyond
that the party is "one who has no money or property sufficient and available for peradventure removed. Hence, every effort must be used to make all acts
food, shelter and basic necessities for himself and his family." The trial court did not stand and if, by any reasonable construction they can be reconciled, the later act
give credence to this view of petitioners and simply applied Rule 141 but ignored will not operate as a repeal of the earlier.24 (Emphasis supplied).
Rule 3, Section 21 on Indigent Party.
Instead of declaring that Rule 3, Section 21 has been superseded and impliedly
The position of petitioners on the need to use Rule 3, Section 21 on their amended by Section 18 and later Section 19 of Rule 141, the Court finds that the
application to litigate as indigent litigants brings to the fore the issue on whether a two rules can and should be harmonized.
trial court has to apply both Rule 141, Section 16 and Rule 3, Section 21 on such
applications or should the court apply only Rule 141, Section 16 and discard Rule 3, The Court opts to reconcile Rule 3, Section 21 and Rule 141, Section 19 because it
Section 21 as having been superseded by Rule 141, Section 16 on Legal Fees. is a settled principle that when conflicts are seen between two provisions, all efforts
must be made to harmonize them. Hence, "every statute [or rule] must be so
The Court rules that Rule 3, Section 21 and Rule 141, Section 16 (later amended construed and harmonized with other statutes [or rules] as to form a uniform system
as Rule 141, Section 18 on March 1, 2000 and subsequently amended by Rule of jurisprudence."25
141, Section 19 on August 16, 2003, which is now the present rule) are still valid
and enforceable rules on indigent litigants. In Manila Jockey Club, Inc. v. Court of Appeals, this Court enunciated that in the
interpretation of seemingly conflicting laws, efforts must be made to first harmonize
For one, the history of the two seemingly conflicting rules readily reveals that it was them. This Court thus ruled:
not the intent of the Court to consider the old Section 22 of Rule 3, which took effect
on January 1, 1994 to have been amended and superseded by Rule 141, Section Consequently, every statute should be construed in such a way that will harmonize
16, which took effect on July 19, 1984 through A.M. No. 83-6-389-0. If that is the it with existing laws. This principle is expressed in the legal maxim 'interpretare et
case, then the Supreme Court, upon the recommendation of the Committee on the concordare leges legibus est optimus interpretandi,' that is, to interpret and to do it
Revision on Rules, could have already deleted Section 22 from Rule 3 when it in such a way as to harmonize laws with laws is the best method of interpretation. 26
amended Rules 1 to 71 and approved the 1997 Rules of Civil Procedure, which
took effect on July 1, 1997. The fact that Section 22 which became Rule 3, Section
In the light of the foregoing considerations, therefore, the two (2) rules can stand
21 on indigent litigant was retained in the rules of procedure, even elaborating on together and are compatible with each other. When an application to litigate as an
the meaning of an indigent party, and was also strengthened by the addition of a indigent litigant is filed, the court shall scrutinize the affidavits and supporting
third paragraph on the right to contest the grant of authority to litigate only goes to documents submitted by the applicant to determine if the applicant complies with
show that there was no intent at all to consider said rule as expunged from the 1997 the income and property standards prescribed in the present Section 19 of Rule
Rules of Civil Procedure. 141—that is, the applicant's gross income and that of the applicant's immediate
family do not exceed an amount double the monthly minimum wage of an
Furthermore, Rule 141 on indigent litigants was amended twice: first on March 1, employee; and the applicant does not own real property with a fair market value of
2000 and the second on August 16, 2004; and yet, despite these two amendments, more than Three Hundred Thousand Pesos (PhP 300,000.00). If the trial court finds
there was no attempt to delete Section 21 from said Rule 3. This clearly evinces the that the applicant meets the income and property requirements, the authority to
desire of the Court to maintain the two (2) rules on indigent litigants to cover litigate as indigent litigant is automatically granted and the grant is a matter of right.
applications to litigate as an indigent litigant.
However, if the trial court finds that one or both requirements have not been met,
It may be argued that Rule 3, Section 21 has been impliedly repealed by the recent then it would set a hearing to enable the applicant to prove that the applicant has
2000 and 2004 amendments to Rule 141 on legal fees. This position is bereft of "no money or property sufficient and available for food, shelter and basic
merit. Implied repeals are frowned upon unless the intent of the framers of the rules necessities for himself and his family." In that hearing, the adverse party may
is unequivocal. It has been consistently ruled that: adduce countervailing evidence to disprove the evidence presented by the
applicant; after which the trial court will rule on the application depending on the
(r)epeals by implication are not favored, and will not be decreed, unless it is evidence adduced. In addition, Section 21 of Rule 3 also provides that the adverse
manifest that the legislature so intended. As laws are presumed to be passed with party may later still contest the grant of such authority at any time before judgment
deliberation and with full knowledge of all existing ones on the subject, it is but is rendered by the trial court, possibly based on newly discovered evidence not
reasonable to conclude that in passing a statute[,] it was not intended to interfere obtained at the time the application was heard. If the court determines after hearing,
that the party declared as an indigent is in fact a person with sufficient income or WHEREFORE, the petition is GRANTED and the April 14, 2000 Order granting the
property, the proper docket and other lawful fees shall be assessed and collected disqualification of petitioners, the July 17, 2000 Order denying petitioners' Motion
by the clerk of court. If payment is not made within the time fixed by the court, for Reconsideration, and the September 11, 2001 Order dismissing the case in Civil
execution shall issue or the payment of prescribed fees shall be made, without Case No. RTC-99-4403 before the Naga City RTC, Branch 27
prejudice to such other sanctions as the court may impose. are ANNULLED and SET ASIDE. Furthermore, the Naga City RTC is ordered to
set the "Ex-Parte Motion to Litigate as Indigent Litigants" for hearing and apply Rule
The Court concedes that Rule 141, Section 19 provides specific standards while 3, Section 21 of the 1997 Rules of Civil Procedure to determine whether petitioners
Rule 3, Section 21 does not clearly draw the limits of the entitlement to the can qualify as indigent litigants.
exemption. Knowing that the litigants may abuse the grant of authority, the trial
court must use sound discretion and scrutinize evidence strictly in granting No costs.
exemptions, aware that the applicant has not hurdled the precise standards under
Rule 141. The trial court must also guard against abuse and misuse of the privilege SO ORDERED.
to litigate as an indigent litigant to prevent the filing of exorbitant claims which would
otherwise be regulated by a legal fee requirement.

Thus, the trial court should have applied Rule 3, Section 21 to the application of the
Alguras after their affidavits and supporting documents showed that petitioners did
not satisfy the twin requirements on gross monthly income and ownership of real
property under Rule 141. Instead of disqualifying the Alguras as indigent litigants,
the trial court should have called a hearing as required by Rule 3, Section 21 to
enable the petitioners to adduce evidence to show that they didn't have property
and money sufficient and available for food, shelter, and basic necessities for them
and their family.27 In that hearing, the respondents would have had the right to also
present evidence to refute the allegations and evidence in support of the application
of the petitioners to litigate as indigent litigants. Since this Court is not a trier of
facts, it will have to remand the case to the trial court to determine whether
petitioners can be considered as indigent litigants using the standards set in Rule 3,
Section 21.

Recapitulating the rules on indigent litigants, therefore, if the applicant for

exemption meets the salary and property requirements under Section 19 of Rule
141, then the grant of the application is mandatory. On the other hand, when the
application does not satisfy one or both requirements, then the application should
not be denied outright; instead, the court should apply the "indigency test" under
Section 21 of Rule 3 and use its sound discretion in determining the merits of the
prayer for exemption.

Access to justice by the impoverished is held sacrosanct under Article III, Section
11 of the 1987 Constitution. The Action Program for Judicial Reforms (APJR) itself,
initiated by former Chief Justice Hilario G. Davide, Jr., placed prime importance on
'easy access to justice by the poor' as one of its six major components. Likewise,
the judicial philosophy of Liberty and Prosperity of Chief Justice Artemio V.
Panganiban makes it imperative that the courts shall not only safeguard but also
enhance the rights of individuals—which are considered sacred under the 1987
Constitution. Without doubt, one of the most precious rights which must be shielded
and secured is the unhampered access to the justice system by the poor, the
underprivileged, and the marginalized.
G.R. No. 158138. April 12, 2005 executed by [respondents] valued at ₱1,081,600.00 leaving a deficiency balance of
₱4,014,297.23 as of August 31, 1999.
PHILIPPINE BANK OF, COMMUNICATIONS, Petitioners,
vs. "[Respondents] moved to dismiss the complaint on the ground of improper venue,
ELENA LIM, RAMON CALDERON, and TRI-ORO INTERNATIONAL TRADING & invoking the stipulation contained in the last paragraph of the promissory note with
MANUFACTURING CORPORATION, Respondents. respect to the restrictive/exclusive venue. [The trial court] denied said motion
asseverating that [petitioner] ha[d] separate causes of action arising from the
DECISION promissory note and the continuing surety agreement. Thus, [under] Rule 4,
Section 2, of the 1997 Rules of Civil Procedure, as amended, x x x venue was
PANGANIBAN, J.: properly laid in Manila. [The trial court] supported [its] order with cases where venue
was held to be merely permissive. A motion for reconsideration of said order was
likewise denied."4
A restrictive stipulation on the venue of actions contained in a promissory note
applies to the surety agreement supporting it, because the nature of the two
Ruling of the Court of Appeals
contracts and the factual circumstances surrounding their execution are intertwined
or interconnected. The surety agreement is merely an accessory to the principal
loan agreement embodied in the promissory note. Hence, the enforcement of the On appeal, the CA ruled that respondents’ alleged debt was based on the
former depends upon the latter. Promissory Note, which had provided an exclusionary stipulation on venue "to the
exclusion of all other courts."5 The parties’ Surety Agreement, though silent as to
The Case venue, was an accessory contract that should have been interpreted in consonance
with the Promissory Note.6
1
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing
Hence, this Petition.7
the April 29, 2003 Decision2 of the Court of Appeals (CA) in CA-GR SP No. 69786.
The challenged Decision disposed as follows:
The Issue
"WHEREFORE, based on the foregoing, the instant petition is hereby GRANTED.
The assailed Orders dated June 9, 2000 and January 9, 2002 are Petitioner raises the following issue for our consideration:
hereby ANNULED and SET ASIDE. Civil Case No. 99-94976 is hereby
ordered DISMISSED without prejudice to the filing thereof in the venue exclusively "Whether or not the Honorable Court of Appeals had decided the issue of venue in
stipulated by the parties."3 a way not in accord with law and applicable decisions of this Honorable Court and
had thereby departed from the accepted and usual course of judicial proceedings,
The Facts as to call for this Honorable Supreme Court’s power of supervision and appellate
review."8
The facts are related by the CA as follows:
The Court’s Ruling
"On September 3, 1999, the Philippine Bank of Communications (hereinafter
‘[petitioner’]) filed a complaint against [Respondents Elena Lim, Ramon Calderon The Petition is unmeritorious.
and Tri-Oro International Trading & Manufacturing Corporation (‘Tri-Oro’ for
brevity)] with the Regional Trial Court of Manila for the collection of a deficiency Sole Issue:
amounting to ₱4,014,297.23 exclusive of interest. [Petitioner] alleged therein that
[respondents] obtained a loan from it and executed a continuing surety agreement Venue
dated November 16, 1995 in favor of [petitioner] for all loans, credits, etc., that were
extended or may be extended in the future to [respondents]. [Petitioner] granted a At the outset, this Court observes that petitioner took liberties with the stipulated
renewal of said loan upon [respondent’s] request, the most recent being on January facts to suit its allegations in the present Petition. In its Complaint, petitioner bank
21, 1998 as evidenced by Promissory Note Renewal BD-Variable No. 8298021001 averred that respondents had entered into the Surety Agreement (SA) to guarantee
in the amount of ₱3,000,000.00. It was expressly stipulated therein that the venue existing and future credit facilities, and that they had executed the Promissory Note
for any legal action that may arise out of said promissory note shall be Makati City, (PN) to document their loan.9 Now, the bank is claiming that Tri-Oro issued the PN
‘to the exclusion of all other courts’ x x x. [Respondents allegedly] failed to pay said on which the other respondents should be made liable as sureties. 10
obligation upon maturity. Thus, [petitioner] foreclosed the real estate mortgage
This strategy is obviously intended to disconnect the SA from the PN and to support In enforcing a surety contract, the "complementary-contracts-construed-together"
the claim of petitioner that the stipulation on venue does not apply to the SA. doctrine finds application.23 According to this principle, an accessory contract must
However, as will be discussed below, the cause of action to recover on the basis of be read in its entirety and together with the principal agreement. 24 This principle is
the SA is inseparable from that which is based on the PN. used in construing contractual stipulations in order to arrive at their true meaning;
certain stipulations cannot be segregated and then made to control. 25 This no-
Rule on Venue segregation principle is based on Article 1374 of the Civil Code, which we quote:

Section 2 of Rule 4 of the Rules of Court provides that personal actions 11 must be "Art. 1374. The various stipulations of a contract shall be interpreted together,
commenced and tried (1) in the place where the plaintiff resides, or (2) where the attributing to the doubtful ones that sense which may result from all of them taken
defendant resides, or (3) in case of non-resident defendants, where they may be jointly."
found, at the choice of the plaintiff.12 This rule on venue does not apply when the
law specifically provides otherwise, or when -- before the filing of the action -- the The aforementioned doctrine is applicable to the present case. Incapable of
contracting parties agree in writing on the exclusive venue thereof. 13 Venue is not standing by itself, the SA can be enforced only in conjunction with the PN. The
jurisdictional and may be waived by the parties. 14 latter documents the debt that is sought to be collected in the action against the
sureties.
A stipulation as to venue does not preclude the filing of the action in other places,
unless qualifying or restrictive words are used in the agreement. 15 The factual milieu of the present case shows that the SA was entered into to
facilitate existing and future loan agreements. Petitioner approved the loan covered
In the instant case, the stipulation on the exclusivity of the venue as stated in the by the PN, partly because of the SA that assured the payment of the principal
PN is not at issue. What petitioner claims is that there was no restriction on the obligation. The circumstances that related to the issuance of the PN and the SA are
venue, because none was stipulated in the SA on which petitioner had allegedly so intertwined that neither one could be separated from the other. It makes no
based its suit.16 Accordingly, the action on the SA may be filed in Manila, sense to argue that the parties to the SA were not bound by the stipulations in the
petitioner’s place of residence. PN.

Petitioner adds that its Complaint filed in the trial court had two causes of action: Notably, the PN was a contract of adhesion that petitioner required the principal
the first was founded on a breach of the PN; and the second, on a violation of the debtor to execute as a condition of the approval of the loan. It was made in the form
SA.17 Consequently, it was allegedly correct to join the causes of action and to file and language prepared by the bank. By inserting the provision that Makati City
the case in Manila, per Section 5 of Rule 2 of the Rules of Court, which reads:
18 would be "the venue for any legal action [that] may arise out of [the] Promissory
Note,"26 petitioner also restricted the venue of actions against the sureties. The
legal action against the sureties arose not only from the SA, but also from the PN.
"Section 5. Joinder of Causes of Action. –A party may in one pleading assert, in the
alternative or otherwise, as many causes of action as he may have against an
opposing party, subject to the following conditions: Cause of Action

xxxxxxxxx Petitioner correctly argues that there are two causes of action contained in its
Complaint. A cause of action is a party’s act or omission that violates the rights of
the other.27 Only one suit may be commenced for a single cause of action. 28 If two
(c) Where the causes of action are between the same parties but pertain to different
or more suits are instituted on the basis of the same cause of action, only one case
venue or jurisdictions, the joinder may be allowed in the Regional Trial Court
should remain and the others must be dismissed. 29
provided one of the causes of action falls within the jurisdiction of the said court and
venue lies therein."19
As against Tri-Oro International Trading & Manufacturing Corporation, petitioner’s
cause of action is the alleged failure to pay the debt in violation of the PN; as
Surety Agreement
against Elena Lim and Ramon Calderon, in violation of the SA.
Suretyship arises upon the solidary binding of a person -- deemed the surety -- with
Because of the variance between the causes of action, petitioner could have filed
the principal debtor, for the purpose of fulfilling an obligation. 20 The prestation is not
separate actions against respondents to recover the debt, on condition that it could
an original and direct obligation for the performance of the surety’s own act, but
not recover twice from the same cause. It could have proceeded against only one
merely accessory or collateral to the obligation contracted by the
21 or all of them,30 as full payment by any one of them would have extinguished the
principal. Although the surety contract is secondary to the principal obligation, the
obligation.31 By the same token, respondents could have been joined as defendants
surety assumes liability as a regular party to the undertaking. 22
in one suit, because petitioner’s alleged right of relief arose from the same
transaction or series of transactions that had common questions of fact. 32 To avoid
a multiplicity of suits, joinder of parties is encouraged by the law.

The cause of action, however, does not affect the venue of the action. The vital
issue in the present case is whether the action against the sureties is covered by
the restriction on venue stipulated in the PN. As earlier stated, the answer is in the
affirmative. Since the cases pertaining to both causes of action are restricted to
Makati City as the proper venue, petitioner cannot rely on Section 5 of Rule 2 of the
Rules of Court.

Liberal Construction

Petitioner’s final plea for liberality in applying the rules on venue must be rejected.
As earlier discussed, the PN was a contract of adhesion. Ambiguities therein are to
be construed against the party that prepared the contract.33 On the same principle,
petitioner can no longer disavow the stipulation on venue, considering that it drafted
the Surety Agreement. Besides, this alleged technicality caused no miscarriage of
substantial justice, as petitioner may refile the case. 34 The inconveniences brought
about by its failure to observe the rules on venue sprang from its own acts. Hence,
it cannot blame the courts or anyone else for the resulting delay in the adjudication
of the merits of its cause.

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED.

Costs against petitioner.

SO ORDERED.