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November 16, 1920 G.R. No. L-15141 THE MANILA RAILROAD CO., plaintiff-appellant, vs. THE ATTORNEY-GENERAL, ET AL.

, defendant-appellees. Orense & Vera and Jose A. Santos for appellant. Rafael de la Sierra for appellees. , J.: On February 17, 1914, the plaintiff, The Manila Railroad Co., instituted this action in the Court of First Instance of Albay, for the purpose of condemning the lands described in the complaint, alleging that it was necessary for it to acquire said lands for the construction of a railway branch from Legaspi to Nueva Caceres, that it had the right to do so in accordance with the franchise granted to it by Acts Nos. 1510 and 1905 of the Philippine Legislature, and that it could not acquire said lands through extra-judicial transactions as the true owners of some of these lands were unknown to the plaintiff, while those that are known demand highly excessive prices which are not the true value of their lands. The plaintiff asked that, after trial, it be declared owner of the lands described in the complaint and that the reasonable and true value, which it should pay to those who show themselves to be the true owners of said lands, be fixed. The owners, who appeared and answered the complaint, are Eleuteria Diaz, Eugenia Pinilla, Ceferino Guanzon, Gutierrez Hermanos, and Florencia Quijano. They admitted the right of the plaintiff to expropriate the lands described in the complaint, and they merely stated the different sums which they claimed as compensation for their lands, the improvements existing thereon at the time of their occupation by the plaintiff and the damages occasioned to the unexpropriated part of their lots due to the segregation of that occupied by the railway line. With the consent of the parties, three commissioners were appointed to hear the evidence, assess the value of the lands sought to be expropriated, and submit to the court a complete and detailed report of the proceedings had, in accordance with sections 243 and 244 of the Code of Civil Procedure. After the commissioners had been appointed, Domingo Valenciano appeared and, with the courts permission, intervened in this case with the object of presenting evidence upon the value of parcel No. 334 in the plaintiffs plan, and the amount of damages caused to the remainder of the lot from which said parcel was taken. The evidence having been taken before the commissioners, two of them submitted their report to the court on November 17, 1916, stating: (1) That they assessed the value of parcel No. 280, which belonged to Gutierrez Hermanos, at P0.20 per square meter, independently of the improvements, to which they gave a total value of P18,820.10 and they granted to said commercial firm the sum of P5,000 as damages to the remaining part of their lot; (2) that they fixed the value of parcel No. 282, which belonged to Eleuterio Diaz at P1 per square meter, excluding the improvements thereon, to

which they gave the value of P433.50, and they assessed the damages to the unexpropriated part of the lot at P150; (3) that they gave the value of P2.50 per square meter to parcels Nos. 330 and 334, which belonged to Eugenia Pinilla and Domingo Valenciano, respectively, and they adjudicated to the spouses Antonio Porcalla and Eugenia Pinilla the additional sum of P400 for their house on said land, and to Domingo Valenciano, respectively, and they adjudicated to the spouses Antonio Porcalla and Eugenia Pinilla the additional sum of P400 for their house on said land, and to Domingo Valenciano the sum of P560 for the damages occasioned to him by the transfer of his house on said land; and (4) that they assessed the value of parcel No. 353, which belonged to Ceferino Guanzon at P2 per square meter, excluding the improvements thereon, which they valued at P500, and they further granted him the sum of P300 for the damages suffered by him in removing to another place one of the three houses that he had on said land and a further sum of P300 for the value of the two other houses thereon. The third commissioner, who did not sign the preceding report, presented on March 1st, a dissenting report, in which he stated: (1) That parcel No. 280, belonging to Gutierrez Hermanos, should be assessed at P0.50 per square meter, including its improvements, and that instead of P5,000, only the sum of P4,000 should be granted to it, as damages caused to the unexpropriated part of the land; (2) that parcel No. 282 belonging to Eleuterio Diaz should be assessed at P1 per square meter, including its improvements; (3) that he agrees that the value of P2 per square meter should be given to parcel No. 253 belonging to Ceferino Guanzon, but he assessed the value of the trees thereon at P300 only, and the damages occasioned to him by the removal of his house to another place at P300, and the value of the two houses that were destroyed at P200; and (4) that he completely agrees with the report of the other commissioners with respect to parcels Nos. 330 and 334 belonging to Antonio Porcalla and Domingo Valenciano. The plaintiff objected to the report of the commissioners, alleging that said commissioners have adopted wrong principles in the assessment of the lands, and the majority of them assessed the value of the lands separately from their improvements, fixing for each of them excessive and exorbitant prices. On February 26, 1918, the court rendered judgment, approving the report of the majority of the commissioners, and adjudicating to the plaintiff the ownership of the lands described in the complaint, but condemning to pay to their respective owners the sums assigned by the commissioners to each of them, with legal interest from February 17, 1914, until full payment. With respect to parcel No. 14, belonging to Florencia Quijano, but not mentioned in the report of the commissioners, the court also rendered judgment, adjudicating it to the plaintiff and condemning the latter to pay to said Florencia Quijano the sum of P559, with interest from May 20, 1908, until the date of payment. The plaintiff excepted to this judgment and at the same time moved for a new trial, on the ground that the judgment was manifestly contrary to the weight of the evidence and the law. The motion

having been overruled, the plaintiff excepted to the order overruling the motion, and appealed the case to the Supreme Court by means of a bill of exceptions. This appeal was taken by the plaintiff from the whole judgment, which deals, among others, with parcel No. 14, belonging to Florencia Quijano. But we do not find in the record before us the evidence with respect to this parcel, or the report of the commissioners thereon, and consequently there is no other course for us to take but to dismiss the appeal with respect to parcel No. 14. Furthermore, nowhere in the record does it appear that the appellant has furnished counsel for Florencia Quijano with a copy of his brief, as required by article 21 of the Rules of this Court; and therefore, it is proper to dismiss the appeal, in accordance with article 23 of said Rules, in so far as parcel No. 14, belonging to Florencia Quijano, is concerned. The errors assigned by the appellant in its brief are the following: (1) The act of the court in approving the report of the commissioners of appraisal and basing his judgment thereon; (2) the act of the court in granting legal interest to the defendants; and (3) the act of the court in denying the motion for new trial. In discussing the first error imputed to the court below, counsel for the appellant argues that the evidence of the defendants, upon which the report of the commissioners is based, is incompetent, inasmuch as it consists of mere opinions of witnesses, who are not shown to have intervened in real estate transactions, either as brokers or in any other capacity that may give them knowledge of the value of lands in said localities. The appellant also attacks the report of the commissioners on the ground that they did not consider the evidence presented by said appellant. The question is therefore raised as to whether the evidence supports the conclusions of the majority of the commissioners. To decide it, we will deal separately with the five parcels covered by the report of the commissioners. Parcel No. 280. This parcel is part of the hacienda known as Hacienda de Mapulangbato, belonging to Gutierrez Hermanos. It is land suitable to be planted to hemp and coconut. It is situated in Ligao, Albay, a small party being in the municipality of Guinobatan. Constancio Benito declared that he has been living in Ligao for about twenty-two years; that he had sold to Mariano Lim a part of the land administered by him and situated about 50 meters from the Hacienda de Mapulangbato; that said hacienda is of greater value than the land sold by him; that the price obtained by him at said sale was P0.29 per square meter, which was less than the val ue of the land, but he decided to effect the sale to avoid litigation with a third person who, claiming to be the owner thereof, had previously sold it; that the document of conveyance, to which he refer, is Exhibit 1 of the defendants. This exhibit bears date, January 31, 1913, that is, one year before the railroad took possession of parcel No. 280, which took place in February, 1914, as appears from Exhibit 1 and others of the defendants. Said Exhibit 1 proves the sale of a part of lot No. 284 of the plan of the railroad at P0.29 per square meter. The land thus sold is hemp land, according to the document itself, and is 50 meters from the Hacienda de Mapulangbato, according to the testimony of Constancia Benito, above noted.

Another witness, Roman Jaucian, gave the value of Hacienda de Mapulangbato at P0.30 per square meter. This witness has been administering lands in the vicinity of said hacienda and has been living there for more than ten years without having intervened in any voluntary sale of lands. The witness Leopoldo Teran fixed the price of the expropriated part of said hacienda at P0.40 per square meter, but his experience on the subject consists only in his having administered lands near said hacienda. Venancio Cavada Diaz, another witness for the defendants, fixed the price at P0.40 to P0.50 per square meter for parcel No. 280. His competency to testify as to the value of the land is indisputable, because he knows perfectly parcel No. 280, having possessed it, first as owner and later as caretaker of Gutierrez Hermanos, and having lived in the municipality of Ligao for twenty years. Furthermore he had bought and sold much lands situated in said municipality and had administered them, farming and dealing in merchandise having been his principal occupation; and therefore he is a business man of great experience who must have acquired special knowledge of the value of the lands in the locality. In the case of Manila Railroad Co. vs. Alano (36 Phil., 500), this court accepted the declarations of the clerk of court and of the provincial treasurer of Batangas as competent, with respect to the value of the lands in their province, for the reason that their experience as men of affairs in the Province of Batangas, whose official duties could not fail to have given them some special knowledge as to land valuations in that province, lends great weight, to their expressions of opinion as to land values in the province in which they live, and justifies us in the belief that their estimates of the true market value of the land in question are not far astray. (See page 505 of the volume cited.) On the other hand the plaintiff did not present any evidence except Exhibits 1 to 15, of which the first eleven show sales of lands situated in different sitios or barrios of the municipality of Ligao, and the last four are real-estate tax declarations of lots belonging to Gutierrez Hermanos and G. Urrutia and Co. The plaintiff has not established by means of other evidence the identity of similarity between the lands referred to in those exhibits and those that are the object of the expropriation proceedings. It attempted to do so, but the witnesses presented by it stated that said lands were situated far from parcel No. 280, while the record does not show whether the lands referred to in the other exhibits, with the exception of Exhibits 12, 13 and 14, are near or far from the expropriated lands and have some similarity or relation to each other. Venancio Cavada Diaz in rebuttal declared that the lands referred to in Exhibits 12 and 14 of the plaintiff were situated about 20 kilometers from the expropriated lands. He also states that Exhibit 13, dated November 21, 1911, is no more than a reproduction of the real-estate tax declaration which he presented in 1906, for when he sold the Hacienda de Mapulangbato to Gutierrez Hermanos, he did nothing more than to put the declaration in the name of gutierrez Hermanos, and did not change the assessed valuation of the land, such change having been made by the Government only in 1915. It thus results that the value stated in said Exhibits 12 and 14 cannot be made the basis in assessing the value of the lands in question which were expropriated in 1914, the hacienda having been greatly improved during the time that elapsed between 1906 and 1914, according to the declaration of

Venancio Cavada Diaz himself. The same thing occurred with the land described in Exhibit 15, according to the same witness. In the case of Manila Railroad Co. vs. Velasquez (32 Phil., 286), this court held that in order that sales of other lands may be admitted as evidence of the value of the expropriated lands, they must have been effected sufficiently near in point of time with the date of the condemnation proceedings to exclude general increases or decreases in property values due to changed commercial conditions in the vicinity and the lands thus, sold must be in the immediate neighborhood, that is, in the zone of commercial activity with which the condemned property is identified. Applying these rules to the case at bar, it results that the exhibits presented by the plaintiff cannot be made the basis in the assessment of the value of the lands here in question, although Exhibit 13 should be considered to determine only whether the price fixed by the commissioners for parcel No. 280 is excessive or reasonable. (Manila Railroad vs. Alano, supra.) From Exhibit 13, which seems to refer to the Hacienda de Mapulangbato, it appears that it was assessed at less than one centavo per square meter, but it should be noted that that was an assessment of the whole land which, according to the testimony of Cavada Diaz, was in part mountainous and difficult to cultivate and in part level and tillable, as it was in effect planted with hemp and coconut and other plants and trees. It should also be noted that the railroad had occupied the parts that are level and easily cultivated. Now, then, considering that the assessment was made about eight years prior to the expropriation proceedings, that during this period of time the land was cultivated with care, and that the expropriated part of the Hacienda de Mapulangbato is level and easily cultivated, and therefore, of great value, we do not believe that the value of P0.20 per square meter fixed by the commissioners is excessive. With respect to the valuation of the improvements on the expropriated part, the plaintiff has no reasonable grounds for complaint, not only because it has not presented any evidence on the point, but also because the witnesses for the defendant, who testified on the value of said improvements, have shown such experience in the lumber business, in the planting of trees, and such knowledge as to the use, enjoyment and value of the trees and plants existing on the lands, that it is impossible to question their competency in fixing the value of said improvements. More than this, the commissioners reduced the values fixed by said witnesses. We are therefore of the opinion that in assessing the value of these improvements the commissioners committed no error prejudicial to the interests of the plaintiff. The appellant, in order to support its contention that the improvement on the expropriated lands should have been assessed jointly with the lands, invokes the doctrine laid down by this court in the case of Manila Railroad Co. vs. Aguilar (35 Phil, 118), where it was said: When the land is preferably intended for the raising of a given crop or for the planting of trees of a certain kind, although these or the crop be deemed improvements of the land they should not be appraised apart from the land as they are an integral part thereof and their value is inherent or forms a part of that of the land. In the present case it has not been shown that the land is better adapted to a particular kind of plant; on the contrary, it is shown to be planted with several kinds of trees and plants, and therefore we are of the

opinion that said improvements may be valued separately from the land, inasmuch as the owners of expropriated lands have the right to be indemnified for the improvements existing thereon, as was held by this court in the case of Manila Railroad Co., vs. Velasquez (32 Phil., 286). Finally there can be no doubt that damages were occasioned to the unexpropriated part of the land, because the remaining portion was divided into two parts, with the result that it is very difficult to pass from one part to the other. The witness Cavada Diaz fixed the value of these damages at P20,000, while the commissioners fixed it at P5,000. These damages consists in the fact that now transportation to and from the hacienda is costly because there is no direct way from one side of the railroad line to the other, and these damages are not compensated by any special benefit derived form the construction of the line, for no station was established near the hacienda, for which reason the value of the unexpropriated land was necessarily reduced. According to Exhibit 13, the hacienda had a total area of 160 hectares, and an extent of about 52 hectares having been expropriated, 108 hectares remain, and the sum of P500 adjudicated by the commissioners to Gutierrez Hermanos represents the decrease in the value of the 108 hectares at the rate of less than one-half centavo per square meter, that is, 2 per cent if the price of the unexpropriated part be fixed at P0.20, or 4 per cent if it be fixed at P0.10 per square meter, which appears to be reasonable, inasmuch as the remaining or unexpropriated part is of less value than the part occupied by the railroad because its tillable portion is less. The amount granted by the commissioners as damages occasioned to the unexpropriated part is therefore not excessive. Parcel No. 282. This parcel belongs to Eleuterio Diaz, who is represented in these proceedings by Venancio Cavada Diaz, as is shown by a power of attorney duly executed in favor of the latter by the former who is now absent in Spain. It is situated in the sitio of Paolog, barrio of Tuburan, municipality of Ligao, at a distance of about 50 meters from the main road from Albay to Ligao and in the corner of the bridge of Paolog. The whole land of Eleuterio Diaz borders on said road and was rented by the International Purchasing Company, which had a camarin thereon of strong materials, which camarin contained important machinery and a press belonging to said company. Upon it there was also one building in which two ilang-ilang stills had been installed, another building used as a storehouse for copra, and another building of strong materials. There were also many tress and plants of several kinds. The land was principally suitable for construction of buildings, although plants and trees had been planted thereon in order to utilize the part not covered by the buildings. On several sides the land was enclosed with wire fencing and there were about twelve houses near it. With these facts which clearly appear in the record there can be no doubt that parcel No. 282 is a lot. The witness Cavada Diaz who knows this lot, for he is the agent of the owner, fixed its value at P1 per square meter, excluding the improvements. The plaintiff did not present any evidence in these proceedings with the exception of Exhibits 1 to 15, nor did it present any witness to establish the relation between these documents and the expropriated land. Of these fifteen documents, Exhibits 8, 13 and 15 refer to lands situated in the barrio of Tuburan

where parcel No. 282 is situated, but the first of said lands is, according to the exhibits themselves, hemp and coconut land, the second is a rustic and hemp land, and the last is hemp land; while parcel No. 282 commissioners as to the value of this parcel is in accordance with the evidence. From the declaration of Venancio Cavada Diaz it is to be inferred that the land described in assessment sheet Exhibit 15 is the same parcel No. 282, but even supposing that this is true, said exhibit is not sufficient proof that the value fixed by the commissioners for said parcel is erroneous, for said Exhibit 15 was presented in 1908 and it therefore cannot be affirmed that the value stated therein is the value of parcel No. 282 in 1914, when it was occupied by the plaintiff, inasmuch as it appears in the record that the land has increased in value due to the improvements made thereon. With respect to the improvements and the damages caused to the remainder of the lot, what has been said with respect to parcel No. 280 is applicable to No. 282, for the prices given by the witness Cavada Diaz for each three and plant, which do not appear to be exaggerated, were yet reduced by the referees; and the damages caused to the unexpropriated part are almost identical with those caused to parcel No. 280. The whole of the land of which parcel No. 282 forms part is less than 2 hectares in area, the expropriated part measuring 2,619 square meters, and the remaining part being about 1 1/2 hectares. The witness Cavada Diaz fixed the damages at P400, but the commissioners reduced them to P150, or approximately 1 cent per square meter for the unexpropriated part; and P1 per square meter being the price given to the lot, it results that the diminution in value of the unexpropriated part is only 1 per cent, which is far from being excessive. Parcel No. 330. This parcel belongs to the spouses Antonio Porcalla and Eugenia Pinilla. It is situated in the barrio of Bagumbayan about 19 meters from the new market of Ligao. At the time of its condemnation by the railroad, that is, in February 1914, there was on it a house of wood and bamboo with nipa roof and therefore it was a lot. The evidence on the value of this parcel consist of the declaration of Venancio Cavada Diaz and Calixto Verar and Exhibit 24 of the defendants. This exhibit is a notarial document executed by one Higino Cipriano in favor of the witness Calixto Verar, which evidences a sale between these two persons of a lot situated in the barrio of Bagumbayan, municipality of Ligao. In describing the land the document says that it bordered on one side by lands of the municipality, that is, by the market then under construction. The area of the lot does not appear in the document though it states that it has a circumference of sixty-six meters. According to the testimony of Venancio Cavada Diaz, the land described in said document, Exhibit 24, is identical with parcel No. 330; they are situated in the same barrio, at the same distance from the public market, and are under the same conditions. It also appears that the sale was effected under normal circumstances, for the purchaser himself declared that he was not obliged to buy the land, and that he bought it because he wanted to put up a store near the market which was intended to be constructed there; and although it does not appear whether the vendor was or was not in need of

money, nevertheless, the purchaser himself stated that the sale was effected in a free and voluntary manner. It therefore results that the price at which the land described in Exhibit 24 was sold is a reasonable basis for the valuation of parcel No. 330. (Manila Railroad Co. vs. Velasquez, 32 Phil, 286; City of Manila vs. Neal, 33 Phil., 291; and City of Manila vs. Estrada and Estrada, 25 Phil., 208.) The purchaser Calixto Verar was a caretaker of the firm Gutierrez Hermanos, and he took the money with which he paid the price of the land covered by Exhibit 24 from that firm, by reason of which Venancio Cavada Diaz learned of the transaction. Later on Calixto Verar attempted to sell the same land and then Venancio Diaz, with the intention of acquiring it, had a surveyor measure it, and the land was measured in the presence of Cavada Diaz, who not only aided in the work of locating the course of the boundaries of the land and the longitudes, but also in the calculation of the area, he having noted the data secured by him on a piece of paper. Said witness, Diaz, states that this note is what he consulted when he declared that the land had a length of 21 meters on the longest side and a width of 12 meters on the widest side, and an area of 238 square meters which, at the price of P500 mentioned in Exhibit 21, gives a price of P2.14 per square meter. But as the public market mentioned in said Exhibit 24, as the future boundary, did not yet exist when the sale was made, and market having been opened a few months before the occupation of parcel No. 330 by the railroad, according to the testimony of Venancio Cavada Diaz, it is evident that the existence of said market must have increased the value of the lot referred to in Exhibit 24 and also of parcel No. 330 which is nearby, as was the opinion of the witness Cavada Diaz; and, therefore, the value of parcel No. 330 at the time of its occupation by the railroad must be greater than the price at which the land mentioned in Exhibit 24 was sold. The witness, Cavada Diaz, fixed this price at P2.50 and the commissioners, including the dissenting one, accepted it without reducing or increasing it. On the other hand, there is no evidence in the record in favor of the contention of the plaintiff, and therefore there is no ground for declaring the conclusions of the commissioners as erroneous. It has been proved that the house located on the land was destroyed by the employees or laborers of the railroad company and that the owners did not in any way benefit from the materials thereof. The witness Cavada Diaz who knew the house, having been there several times when Antonio Porcalla lived there as mayordomo, stated that said house cost P450, but at the time of its destruction by the company, part of the kitchen was already in a fallen condition and for this reason he fixed its value at P400, which was accepted completely by the three commissioners. Parcel No. 334. What has been said with respect to No. 330 is wholly applicable to this parcel No. 334, because it is also a lot situated in the center of the town at a distance of 100 meters from the new public market of Ligao. The dissenting commissioner himself had to accept the price of P2.50 per square meter. For the damage caused to the house on the lot due to the opening of the railway line and the transfer thereof to another place, the commissioners including the dissenting one, adjudicated P560 to its

owner, their action being based on the testimony of the latter, who was the only one to testify on the subject and the only one who would know the value of said damages. Of the fifteen exhibits presented by the plaintiff, Exhibit 1 refers to the land situated in Bagumbayan, which seems to be the same barrio in which parcels Nos. 330 and 334 are situated, but according to said exhibit the land therein referred to is rice land, and therefore it cannot be made the basis in assessing the value of the lands in question, which are lots. Parcel No. 353. This parcel is a lot situated 200 meters from the public square of the town and is therefore similar to the two preceding lots. But the three commissioners fixed its value at P2 because it is at a greater distance from the zone of commercial activity than the others; and therefore the plaintiffs objection to the report of the commissioners is groundless so far as it concerns parcel No. 353. As to the improvements on this parcel, the majority of the commissioners assessed their value, basing their assessment upon the uncontradicted testimony of its owner Ceferino Guanzon and upon other evidence in the record, but reduced some of the amounts claimed by said owner. The appellant has not shown in what respect the court erred, if it committed any error, and therefore, there is no reason for rejecting or modifying the report of the commissioners which was approved by the lower court. With respect to the interest granted by the lower court to the owners of the expropriated lands, this court has held in unequivocal terms that the owners of exproriated lands are entitled to recover interest from the date that the company, exercising the right of eminent domain, takes possession of the condemned lands, and the amounts granted by the court shall cease to earn interest only from the moment they are paid to the owners or are deposited in court. (Philippine Railway Co. vs. Solon, 13 Phil., 34 and Philippine Railway Co. vs. Duran 33 Phil., 156.) For the reasons above stated it is proper to affirm, as we do affirm, the judgment appealed from, and the appeal is dismissed with respect to parcel No. 14, with the costs of this instance against the appellant. So ordered. Mapa, C.J., Johnson, Araullo, Street and Malcolm, JJ., concur.

G.R. No. L-55729 March 28, 1983 ANTONIO PUNSALAN, JR., petitioner, vs. REMEDIOS VDA. DE LACSAMANA and THE HONORABLE JUDGE RODOLFO A. ORTIZ, respondents. Benjamin S. Benito & Associates for petitioner. Expedito Yummul for private respondent.

MELENCIO-HERRERA, J.: The sole issue presented by petitioner for resolution is whether or not respondent Court erred in denying the Motion to Set Case for Pre-trial with respect to respondent Remedios Vda. de Lacsamana as the case had been dismissed on the ground of improper venue upon motion of corespondent Philippine National Bank (PNB). It appears that petitioner, Antonio Punsalan, Jr., was the former registered owner of a parcel of land consisting of 340 square meters situated in Bamban, Tarlac. In 1963, petitioner mortgaged said land to respondent PNB (Tarlac Branch) in the amount of P10,000.00, but for failure to pay said amount, the property was foreclosed on December 16, 1970. Respondent PNB (Tarlac Branch) was the highest bidder in said foreclosure proceedings. However, the bank secured title thereto only on December 14, 1977. In the meantime, in 1974, while the properly was still in the alleged possession of petitioner and with the alleged acquiescence of respondent PNB (Tarlac Branch), and upon securing a permit from the Municipal Mayor, petitioner constructed a warehouse on said property. Petitioner declared said warehouse for tax purposes for which he was issued Tax Declaration No. 5619. Petitioner then leased the warehouse to one Hermogenes Sibal for a period of 10 years starting January 1975. On July 26, 1978, a Deed of Sale was executed between respondent PNB (Tarlac Branch) and respondent Lacsamana over the property. This contract was amended on July 31, 1978, particularly to include in the sale, the building and improvement thereon. By virtue of said instruments, respondent - Lacsamana secured title over the property in her name (TCT No. 173744) as well as separate tax declarations for the land and building. 1 On November 22, 1979, petitioner commenced suit for "Annulment of Deed of Sale with Damages" against herein respondents PNB and Lacsamana before respondent Court of First Instance of Rizal, Branch XXXI, Quezon City, essentially impugning the validity of the sale of the building as embodied in the Amended Deed of Sale. In this connection, petitioner alleged: xxx xxx xxx 22. That defendant, Philippine National Bank, through its Branch Manager ... by virtue of the request of defendant ... executed a document dated July 31, 1978, entitled Amendment to Deed of Absolute Sale ... wherein said defendant bank as Vendor sold to defendant Lacsamana the building owned by the plaintiff under Tax Declaration No. 5619, notwithstanding the fact that said building is not owned by the bank either by virtue of the public auction sale conducted by the Sheriff and sold to the Philippine National Bank or by virtue of the Deed of Sale executed by the bank itself in its favor on September 21, 1977 ...; 23. That said defendant bank fraudulently mentioned ... that the sale in its favor should likewise have included the building, notwithstanding no legal basis for the same and despite full knowledge that the Certificate of Sale executed by the sheriff in its favor ... only limited the sale to the land, hence, by selling the building which never became the property of defendant, they have violated the principle against 'pactum commisorium'. Petitioner prayed that the Deed of Sale of the building in favor of respondent Lacsamana be declared null and void and that damages in the total sum of P230,000.00, more or less, be awarded to him. 2

In her Answer filed on March 4, 1980,-respondent Lacsamana averred the affirmative defense of lack of cause of action in that she was a purchaser for value and invoked the principle in Civil Law that the "accessory follows the principal". 3 On March 14, 1980, respondent PNB filed a Motion to Dismiss on the ground that venue was improperly laid considering that the building was real property under article 415 (1) of the New Civil Code and therefore section 2(a) of Rule 4 should apply. 4 Opposing said Motion to Dismiss, petitioner contended that the action for annulment of deed of sale with damages is in the nature of a personal action, which seeks to recover not the title nor possession of the property but to compel payment of damages, which is not an action affecting title to real property. On April 25, 1980, respondent Court granted respondent PNB's Motion to Dismiss as follows:
Acting upon the 'Motion to Dismiss' of the defendant Philippine National Bank dated March 13, 1980, considered against the plaintiff's opposition thereto dated April 1, 1980, including the reply therewith of said defendant, this Court resolves to DISMISS the plaintiff's complaint for improper venue considering that the plaintiff's complaint which seeks for the declaration as null and void, the amendment to Deed of Absolute Sale executed by the defendant Philippine National Bank in favor of the defendant Remedios T. Vda. de Lacsamana, on July 31, 1978, involves a warehouse allegedly owned and constructed by the plaintiff on the land of the defendant Philippine National Bank situated in the Municipality of Bamban, Province of Tarlac, which warehouse is an immovable property pursuant to Article 415, No. 1 of the New Civil Code; and, as such the action of the plaintiff is a real action affecting title to real property which, under Section 2, Rule 4 of the New Rules of Court, must be tried in the province where the property or any part thereof lies. 5

In his Motion for Reconsideration of the aforestated Order, petitioner reiterated the argument that the action to annul does not involve ownership or title to property but is limited to the validity of the deed of sale and emphasized that the case should proceed with or without respondent PNB as respondent Lacsamana had already filed her Answer to the Complaint and no issue on venue had been raised by the latter. On September 1, 1980,.respondent Court denied reconsideration for lack of merit. Petitioner then filed a Motion to Set Case for Pre-trial, in so far as respondent Lacsamana was concerned, as the issues had already been joined with the filing of respondent Lacsamana's Answer. In the Order of November 10, 1980 respondent Court denied said Motion to Set Case for Pre-trial as the case was already dismissed in the previous Orders of April 25, 1980 and September 1, 1980. Hence, this Petition for Certiorari, to which we gave due course. We affirm respondent Court's Order denying the setting for pre-trial. The warehouse claimed to be owned by petitioner is an immovable or real property as provided in article 415(l) of the Civil Code. 6 Buildings are always immovable under the Code. 7 A building treated separately from the land on which it stood is immovable property and the mere fact that the parties to a contract seem to have dealt with it separate and apart from the land on which it stood in no wise changed its character as immovable property. 8

While it is true that petitioner does not directly seek the recovery of title or possession of the property in question, his action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building which, under the law, is considered immovable property, the recovery of which is petitioner's primary objective. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the fundamental and prime objective and nature of the case, which is to recover said real property. It is a real action. 9 Respondent Court, therefore, did not err in dismissing the case on the ground of improper venue (Section 2, Rule 4) 10, which was timely raised (Section 1, Rule 16) 11. Petitioner's other contention that the case should proceed in so far as respondent Lacsamana is concerned as she had already filed an Answer, which did not allege improper venue and, therefore, issues had already been joined, is likewise untenable. Respondent PNB is an indispensable party as the validity of the Amended Contract of Sale between the former and respondent Lacsamana is in issue. It would, indeed, be futile to proceed with the case against respondent Lacsamana alone. WHEREFORE, the petition is hereby denied without prejudice to the refiling of the case by petitioner Antonio Punsalan, Jr. in the proper forum. Costs against petitioner. SO ORDERED. G.R. No. L-17699 March 30, 1962

DR. ANTONIO A. LIZARES, INC., petitioner, vs. HON. HERMOGENES CALUAG, as Judge of the Court of First Instance of Quezon City, and FLAVIANO CACNIO, respondents. Ramon C. Aquino for petitioner. Paulino Carreon for respondents. CONCEPCION, J.: Appeal by certiorari from a decision of the Court of Appeals dismissing the petition of Dr. Antonio A. Lizares & Co., Inc., for a writ of prohibition, with costs against said petitioner. On or about June 14, 1960, Flaviano Cacnio instituted Civil Case No. Q-5197 of the Court of First Instance of Rizal, Quezon City Branch, against said petitioner. In his complaint, Cacnio alleged that on April 20, 1955, he bought from petitioner, on installment, Lot 4, Block 1 of the Sinkang Subdivision in Bacolod City, making therefor a downpayment of P1,206, the balance of P10,858 to be paid in ten (10) yearly installments of P1,085.80 each, with interest thereon at the rate of 6% per annum; that on March 25, 1960, Cacnio received from petitioner a letter demanding payment of P7,324.69, representing arrears in the payment of installments up to April 20, 1960, plus "regular and overdue" interest, as well as "land taxes up to 70% of 1960"; that the sum then due from Cacnio by way of arrears amounted only to P5,824.69, he having paid P1,500 to petitioner "sometime in 1958"; that in view of the aforementioned demand of petitioner, Cacnio sent thereto a check for P5,824.69, dated May 26, 1960, drawn by one Antonino Bernardo in favor of said petitioner, in payment of the amount due from Cacnio by way of arrears; that "without legal and equitable grounds" therefor, petitioner returned said check and "refused the tender of payment"

aforementioned; that by reason of said illegal act of petitioner, Cacnio is entitled to compensatory damages in the sum of P5,000, plus P2,000 by way of attorney's fees, Cacnio having been constrained to engage the services of counsel and bring the action; and that petitioner "is doing threatens, or is about to do, or is procuring or suffering to be done some act in violation of" Cacnio's rights respecting the subject of the action, viz. the repossession of the lot bought by" the latter, who, accordingly, prayed that petitioner be ordered "to accept the payment being made" by him (Cacnio) and to pay him P5,000 as compensatory damages and P2,000 as attorney's fees, and that, upon the filing of a bond to be fixed by the court, a writ of preliminary injunction enjoining petitioner and its agents or representatives from repossessing the lot adverted to above be issued. Said writ of preliminary injunction was issued on June 16, 1960. On July 5, 1960, petitioner moved to dismiss the complaint upon the ground that "venue is improperly laid," for the action affects the title to or possession of real property located in Bacolod City, which was the subject matter of a contract, between petitioner and Cacnio, made in said City. The motion having been denied by the Court of First Instance of Rizal, Quezon City Branch, by an order of July 9, 1960, upon the ground that the action was in personam, petitioner filed with the Court of Appeals a petition, which was docketed as Civil Case CA-G.R. No. 28013-R, praying that said order be set aside and that a writ of prohibition be issued commanding respondent Hon. Hermogenes Caluag, as Judge of said Court, to desist from taking cognizance of said Civil Case No. Q-5197. In due course, the Court of Appeals rendered a decision on October 27, 1960, dismissing said petition. Hence, this appeal by certiorari taken by petitioner herein. The issue is whether or not the main case falls under section 3 of Rule 5 of the Rules of Court, reading: "Actions affecting title to, or for recovery of possession, or for partition or condemnation of, or foreclosure of mortgage on, real property, shall be commenced and tried in the province where the property or any part thereof lies." The Court of Appeals and the Court of First Instance of Rizal, Quezon City Branch, held that Civil Case No. Q-5197 of the latter court is an action in personam, and that, as such, it does not fall within the purview of said section 3, and was properly instituted in the court of first instance of the province in which Cacnio, as plaintiff in said case, resided, pursuant to section 1 of said rule 5. We are unable to share such view. Although the immediate remedy sought by Cacnio is to compel petitioner to accept the tender of payment allegedly made by the former, it is obvious that this relief is merely the first step to establish Cacnio's title to the real property adverted to above. Moreover, Cacnio's complaint is a means resorted to by him in order that he could retain the possession of said property. In short, venue in the main case was improperly laid and the Court of First Instance of Rizal, Quezon City Branch, should have granted the motion to dismiss.
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WHEREFORE, the decision appealed from is hereby reversed and another one shall be entered directing respondent Judge to desist from taking further cognizance of Civil Case No. Q-5197 of said court, with costs against respondent Flaviano Cacnio. It is so ordered.

PAULINO NAVARRO, Petitioner, vs. THE HONORABLE ANTONIO G. LUCERO, Judge of the Court of First Instance of Manila, MANUEL H. BARREDO, THE TREASURER OF THE PHILIPPINES, IGNACIO DE GUZMAN and ALFREDO EDWARD FAWCETT, Respondents.

DECISION

CONCEPCION, J.: Petitioner Paulino Navarro seeks a writ of prohibition, to enjoin the Respondent, Hon. Antonio G. Lucero, as Judge of the Court of First Instance of Manila, from hearing and deciding Civil Case No. 17061 of said court. Said case was instituted by Manuel H. Barredo against (originally) the Treasurer of the Philippines, and Ignacio de Guzman and Alfredo Edward Fawcett, all of whom areRespondents in the case at bar. In an amended complaint, dated April 30, 1955, which likewise, included Petitioner herein, as Defendant, it was alleged, that on September 16, 1944, Barredo purchased from Ana Brodeck a lot situated in the municipality of Pasay, province of Rizal, and covered by Transfer Certificate of Title No. 16372 of the Office of the Register of Deeds of Rizal, subject to redemption within two (2) years; that upon the filing of the corresponding deed of conditional sale with the Office of the Register of Deeds of the City of Manila (of which the municipality of Pasay formed part during the Japanese occupation), said TCT No. 16372 was cancelled, and, in lieu thereof, TCT No. 76578 of said office was issued, on September 18, 1944, in Barredos name, with an annotation of said option to repurchase, which was not exercised within the period aforementioned; that, claiming to be the only child and legal heir of Brodek, on January 20, 1946, Defendant Ignacio de Guzman (oneRespondents herein) filed a petition with the Court of First Instance of Rizal for the reconstitution of said TCT No. 16372, alleging that its original and the owners duplicate had been destroyed or lost and could no longer be found although he knew that this was not true and that said TCT No. 16372 had been cancelled on account of the aforementioned conditional sale to Barredo; that, on February 1, 1946, said court declared said TCT No. 16372 reconstituted, and ordered the Register of Deeds of Rizal to issue its corresponding owners duplicate; that, soon thereafter, or on July 22, 1946, De Guzman executed an affidavit adjucating said land to himself as the only child and sole heir of Ana Brodek; that, based upon said affidavit, de Guzman obtained from said court order, dated July 25, 1946, directing the Register of Deeds of Rizal to cancel the reconstituted TCT No. 16372 and to issue, in lieu thereof, another certificate of title to his name; that, accordingly, said Register of Deeds issued TCT No. 380-A 49002 in De Guzmans name, in lieu of TCT No. 16372; that, acting in connivance with Alfredo Edward Fawcett (one of the Defendants in said case and Respondentherein), who was aware of the aforementioned conditional sale by Ana Brodek (his wife), to Barredo, De Guzman executed in favor of Fawcett, a deed of conditional sale of the lot in question, which deed was filed with the office of the Register of Deeds of Rizal, and annotated on said TCT No. 380-A 49002; that, upon expiration of the period of redemption stipulated with de Guzman, November 23, 1948, said Fawcett fraudulently consolidated his ownership upon said lot and caused TCT No. 862 to be issued in his name, free from liens and encumbrances, in lieu of said TCT No. 380 A 49002; that Fawcett also, conveyed the property to Amado Acayan, and, as a consequence, said TCT No. 862, was cancelled, and another one, bearing No. 863, was issued on the date last mentioned, in favor of Acayan, free from all liens and encumbrances; that, thereafter Acayan assigned the property to hereinPetitioner, Paulino Navarro, in whose name TCT No. 1371 was issued on September 21, 1949, free from all liens and encumbrances upon cancellation of said TCT No. 863; that, owing to the fraudulent reconstitution of TCT No. 16372, and the subsequent conveyances of the lot in dispute, there are now two (2) certificates of title thereon, namely, TCT No. 76578, in Barredos name, and TCT No. 1371 in Navarros name; that TCT No. 1371 is null and void, it being derived from transfer certificate of title which are, also, null and void, for the latter were issued in consequence of the fraudulent reconstitution of another certificates of title (No. 16372), that, the existence of said TCT No. 1371 jeopardizes Barredos title to the aforementioned property, which is worth P3,000; and that, Barredo has suffered damages in the sum of P1,000.00 representing attorneys fees, in view of the action he has thus constrained to file. His prayer is:
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(a) That Transfer Certificate of Title No. 1371 issued by the Register of Deeds of Rizal City in the name of Paulino Navarro, be declared null and void, and Transfer Certificate No. 76578 in the name of Plaintiff Manuel H. Barredo, as valid certificate of title over the land in question; (b) In the event that Plaintiff is deprived of, or has lost his title or ownership of the land in question by virtue of the operation of the provisions of Act 496, that Defendant Ignacio de Guzman and Alfredo E. Fawcett be ordered to pay, joint]y and severally, to the Plaintiff the sum of P6,000.00; (c) That Defendants Ignacio de Guzman and Alfredo Fawcett be ordered to pay, jointly and severally, to the Plaintiff the sum of P1,000.00 as attorneys fees, plus costs; (d) In the alternative paragraphs (b) and (c) above, that Defendant Treasurer of the Philippines be ordered to pay to the Plaintiff the sum of P6,000.00, in case Defendants Ignacio de Guzman and Alfredo F. Fawcett are unable to pay the said amount, or such portion thereof as may remain unpaid, in the case Defendants may partially satisfy the same, plus costs, pursuant to the provisions of Act 496. Plaintiff further prays that he be granted such other relief as may be just and equitable in the premises. Paulino Navarro, as one of the Defendants in said Civil Case No. 17061, moved to dismiss Barredos amended complaint therein, upon the ground that venue is improperly laid. Upon denial of this motion, Navarro sought a reconsideration, with the same result. Hence, the present action, in which Petitioner assails the jurisdiction of the Court of First Instance of Manila to hear and decide said Civil Case No. 17061, the property in question being located in Pasay City. In his answer to the petition, the Treasurer of the Philippines expressed no interest in the subject matter thereof. Upon the other hand, Respondent Manuel H. Barredo asserted, in his answer, that said Civil Case No. 17061 was originally one for damages against de Guzman, Fawcett and the Treasurer of the Philippines; that the latter was sued under section 101 and 102 of the Act No. 496, for recovery of damages from the assurance fund; and that Navarro was later included as party-Defendant, since the determination of the validity or nullity of his title is indispensable to Barredos claim for damages. De Guzman and Fawcett have not been served with summons in the case at bar, for neither could be located. However, the main party Respondent in the present case is Respondent Manuel H. Barredo, and, accordingly, we may proceed to pass upon the issue raised by the pleadings, to wit: May the Court of First Instance of Manila entertain Civil Case No. 17061, considering that the property in dispute is located in Pasay City, or outside Manila? Respondent Barredo maintains the affirmative, relying upon the following authorities:
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Under the Land Registration Act, actions may be brought in any court of competent jurisdiction against the Treasurer of the Philippines Islands for the recovery of damages to be paid out of the assurance fund. As the indemnity here claimed is for alleged damages caused to the mortgages by the refusal of the register of deeds to note his mortgage lien, the provisions of section 377 of the Code of Civil Procedure to the effect that, in order, to obtain indemnity for damages caused to real property, the action must be brought in the province where the land is situated is not applicable; but that which says that all actions not therein otherwise provided may be brought in the province where the Defendant or the Plaintiffresides at the election of the latter. (Hodges vs. Treasurer of the Philippines, 50 Phil., 16)
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A statutes providing that the actions for the recovery of real property or for the determination of any right or interest therein must be tried in the country where the real property is situated is effective only when the real property or title thereto is the exclusive subject matter of the action . (Turlock Theatre vs. Laws, 120 ALR 786.)
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Statutes which made local action involving title to real estate do not apply to action in which the question of title is merely incidental to the main controversy. (Hewitt vs. Price, 102 S.W. 647.) These cases are not in point. The first involved exclusively a personal action, unlike the case at bar, which mainly seeks to quiet the title to an immovable property, and, hence, it is a real action. The principal relief prayed for in Barredos amended complaint is that TCT No. 1371 issued by the Register of Deeds of Rizal in the name of Paulino Navarro be declared null and void.
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The complaint in the Turlock case alleged three separate causes of action, one of which was personal and the others real. Moreover, the question of the venue raised therein hinged on the meaning of sections 392 and 395 of the Code of Civil Procedure of California. Pursuant to section 392, actions for the recovery of real property, or all for the determinations of any right or interest therein, shall be tried in the country where the real property, is situated, whereas section 395, declares that in all other cases, the action must be tried in the county in which the Defendants, or some of them, reside at the commencement of the action. Construing both provisions, the Supreme Court of California held that the first applied only when the real property or the title thereto is the exclusive subject matter of the action and that all the cases including those involving a personal action, in addition to the real action shall be governed by sections 395. Said case has no parity with the one at bar. To begin with, only one cause of action is involved in the latter. Again, Rule 5, sections 1 and 3, of our rules of Court provides:
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SECTION 1. General Rule. Civil action in Courts of First Instance may be commenced and tried where the Defendant or any of the Defendants resides or may be found, or where thePlaintiff or any of the Plaintiffs resides, at the election of the Plaintiff. SEC. 3. Real action. Actions affecting title to, or for recovery of possession, or for partition or condemnation of, foreclosure of mortgage on, real property shall be commenced and tried in the province where the property or any part thereof lies. Pursuant thereto, actions in personam are transitory. However, if besides said actions, the complaint sets up a real action, or even an action quasi in rem, such as foreclosure of a real estate mortgage (in which Plaintiff seeks principally the recovery of a sum of money, the foreclosure are to take place only in the event of failure of the Defendant to voluntarily pay said sum), the case shall be commenced and tried in the province where the property or any part thereof lies. Thus, the principle under our Rules of Court is opposite to that obtaining in California. In the languages of the editors of the American Law Reports Annotated:
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in some jurisdictions, as subsequently appears herein, the rule is that the venue of an action relating to real property must be laid in, or changed to, the county in which the property is located, although personal causes of action or personal relief are included which may be tried in another county, upon the theory that the purpose of the legislature in enacting the mandatory statute as to the venue of actions relating to land is to have the records of the county in which the land involved is situated show all matters that in any way affect the title of such land. (120 A. L. R. 791.) (Emphasis supplied)
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The Hewit case was an action to recover the balance of a promisory note, after deducting the price at which an immovable, given as security therefor, had been sold to the Plaintiff in extrajudicial foreclosure proceedings, the legality of which was assailed by the Defendant in his answer, upon the ground of inadequacy of the price, lack of notice and fraud or misrepresentation of Plaintiffs part. Although the suit was instituted in a county other than that of the situs of the immovable, and Defendants answer questioned Plaintiffs title thereto, it was held that the court had the jurisdiction to decide the case, said issue of title being merely incidental to the personal action for recovery of a sum of money. Such is not

the case before us, for the title to a real property is the main point for determination therein. In the words of Plaintiff, it is indispensable to his cause of action. The rule is set forth in the American Law Reports Annonated as follows:
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There was an ancient right to have an action brought against one in the county of residence so as to protect him from the trouble and expenses of traveling a long distance to defend the action, and in some jurisdictions, as subsequently shown herein, to safeguard this right the venue statute have prescribed the general rule as to venue that an action must be brought in the county of the Defendants residence, and have made the provisions for venue in another county an exception to such rule. In such jurisdictions, where a personal cause of action is joined, or personal relief is prayed, in a complaint in action relating to real property whose venue is laid in the county of the location of such property, the Defendant is generally entitled to have the venue changed to another county in which he resides. There appears to be, however, an exception to this rule where the cause of action as to the real property is the primary object of the action, and the personal cause of action, or the prayer for personal relief, is merely incidental to such object. There is another pertinent principle, subsequently applied herein to the question under annotation, to the effect that where two causes of action are properly joined, which require different places of trial, the venue, as against a motion for its change, may be retained of the entire action in the county in which it is laid, if that is the proper venue for one of the causes of action, under the general policy of the law to avoid multiplicity of suits. This principle appears, however, to be made dependent in some cases upon the question whether the statutory designation of the place of trial of the other cause of action in another country uses the word may or must . (120 A. L. R. 790-791.) (Emphasis supplied.) As indicated above, whenever a case involves a real action or an action quasi in rem it shall, and, therefore, must be commenced and tried in the province where the property or any part thereof lies, pursuant to Rule 5, section 3, of the Rules of Court. Independently of the foregoing, the primary object of the present case in the light of the allegations of the amended complaint is to nullify the title of Petitioner herein. The alternative relief sought in said amended complaint, to the effect. that Defendant Treasurer of the Philippines be ordered to pay to the Plaintiff the sum of P6,000.00 in case Defendants Ignacio de Guzman and Alfredo E. Fawcett are unable to pay the said amount, or such portion thereof as may be remain unpaid, in case Defendants may partially satisfy the same, plus the costs, pursuant to the provisions of Act 496.
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cannot affect the application of said section of the Rules of Court, inasmuch as Barredo could not possibly recover damages unless Navarros title is declared valid, and the venue therefor, is, according to said rules, in the Court of First Instance of Rizal. Wherefore, the petition is granted, and the Court of First Instance of Manila is hereby enjoined from hearing and deciding the aforementioned Civil Case No. 17061 thereof, with costs against Respondent Manuel H. Barredo, without prejudice to the institution by the latter of the corresponding action before the proper court. It is SO ORDERED.
G.R. No. L-29791 January 10, 1978 FRANCISCO S. HERNANDEZ and JOSEFA U. ATIENZA, plaintiffs-appellees, vs. RURAL BANK OF LUCENA, INC., CENTRAL BANK OF THE PHILIPPINES, in its capacity as Liquidator of Rural Bank of Lucena, and JOSE S. MARTINEZ in his capacity as Receiver of Rural Bank of Lucena,defendants-appellants.

Ciceron B. Angeles & Fabian S. Lombos for appellants. Tomas Yumol and Felipe Dimaculangan for appellees.

AQUINO, J.: This case is about the propriety of a separate action to compel a distress rural bank. which is under Judicial liquidation, to accept a check in payment of a mortgage debt. The fact are as follows: On March 21, 1961 the spouses Francisco S. Hernandez and Josefa U. Atienza obtained from the Rural Bank of Lucena, Inc. a loan of P6,000 which was payable on March 21, 1962. The loan was cured by a mortgage on their two lots situated in Cubao, Quezon City with a total area of 600 square meters. The interest for one year was paid in advance. About three months after that loan was obtained, the Lucena Bank became a distress bank. In a letter dated June 6, 1961 the Acting Governor of the Central Bank apprised the stockholders of the Lucena bank that the Monetary Board in its Resolution No. 928, which was approved on June 13, 1961 allegedly after hearing the Lucena bank. found that its officers, directors and employees had committed certain anomalies or had resorted to unsound and unsafe banking practices which were prejudicial to the government, its depositors and creditors. The Monetary Board advised the stockholders to reorganize the Lucena bank by electing a new board of directors and directed that bank (a) not to grant new loans or renewals; (b) not to accept deposits from new depositors; (c) to service only the existing deposit accounts and (d) not to issue drafts or make any disbursements without the prior approval of Central Bank examiners. The Monetary Board gave the warning that, if its directives were not obeyed, the Central Bank. would take over the management of the Lucena bank. The Central Bank Governor informed the Lucena bank that the chief examiner of the department of rural banks would oversee the operations of the Lucena bank. That letter of the Central Bank Governor was construed as a directive to the Lucena bank to suspend operations. The Manila times in its issue of June 21, 1961 carried a news story with the heading "Bank told to suspend operations". The story was accompanied by a picture of depositors who jammed the lobby of the bank trying to withdraw their money. Instead of bowing to the will of the Monetary Board, the Lucena bank and its board of directors filed with the Court of First Instance of Manila a complaint dated June 21, 1961 seeking to restrain the implementation of Resolution No. 928 (Civil Case No. 47345). Before the expiration of the one-year term of the loan, or on August 22, 1961, Hernandez went to the Lucena bank and offered to pay the loan by means of a check for P6,000 dated August 8, 1961 which was drawn against the bank by a depositor, the San Pablo Colleges, and which was payable to Fernandez As the bank's executive vice president was not available, the payment was not consummated. At the time that the check was issued, the San Pablo Colleges, had a deposit in the Lucena bank amounting to P11,890.16 (27 tsn April 25, 1966). Instead of withdrawing P6,000 from that deposit,

the San Pablo Colleges chose to issue a check for that amount w Hernandez. It is not clear whether in August, 1961 the San Pablo Colleges could make a withdrawal from its deposit in the Lucena bank. On the following day, August 23, Hernandez sent to the bank by registered mail a photostat of the check and a letter inquiring whether the bank would honor the check and when he should go personally to the bank for that purpose. That letter was received by the bank on August 29. On August 30, the executive vice-president wrote to Hernandez and informed him that the check could not be honored for the time being because of adverse events that had disrupted the bank's operations. What the vice-president meant was that by reason of the letter of the Central Bank Governor dated June 16. 1961 the operations of the Lucena bank were suspended (6 tsn August 15, 1966). The vice-president explained that because there was a run the bank its assets were exhausted, and so the check sent by Hernandez, which check was drawn against the Lucena bank, could not be accepted (16, 21-24 tsn August 15, 1966). The vice-president said that when Hernandez presented the check, the Lucena bank was no longer in a position to honor withdrawals and that had Hernandez paid cash, his payment would have been accepted. To honor the check would have been tantamount to allowing a depositor (San Pablo Colleges) to make a withdrawal but the Lucena bank could not entertain withdrawals without the consent of the Central Bank examiners (26-28 tsn). Payment by check was a disbursement (31 tsn). Apparently, the vice-president did not take the trouble of asking the Central Bank examiners whether the payment by check made by Hernandez could be accepted. Hernandez himself who should have known that the bank was a distressed bank which had suspended operations and which was under the supervision of Central Bank examiners, did not bother to take up his problem with the said examiners. Hernandez, in his letter of October 18, 1961, again asked the bank when he could deliver the check. The executive vice-president, in his reply of October 24, told Hernandez that the bank could not yet honor the check because it had not resumed its banking operations; that it was awaiting the outcome of a case filed by the bank against the Central Bank; that it might reopen in January, 1962, and that, anyway, the loan would not be due until March 21, 1962. Hernandez sent another letter dated February 1, 1962. Finally, he enclosed the original check (duly endorsed) with his letter to the bank dated March 7, 1962, which was sent by registered mail and special delivery. That letter of March 7, together with the check, was returned to Hernandez because the bank's manager was allegedly in Manila. Undeterred, Hernandez again mailed the check to the bank on April 25, with the request that his mortgage be cancelled. In the meantime, the Monetary Board had decided to liquidate the Lucena Bank. The Governor of the Central Bank in a letter dated February 8, 1962 enjoined the Lucena bank from transacting business and advised it to turn over its assets, documents and records to the chief bank examiner. The bank building was sealed. The following notice was posted at the entrance of the building: This bank is temporarily closed pending final decision of the courts as to its status. Payments of loans would be accepted; meanwhile, no payments of withdrawals

against deposits can be made. Please transact business with the Central Bank's representatives only. To head off the liquidation, the Lucena Bank filed with the Court of First Instance of Lucena City a complaint dated February 12, 1962, praying that the Central Bank be enjoined from liquidating the said bank. On February 14, the court issued an ex parte preliminary injunction which it dissolved ten days later (civil Case No. 6471; Rural Bank of Lucena, Inc. vs. Arca, L-21146, September 20, 1965, 15 SCRA 66). On February 14, 1962, the Manila court rendered a decision in Civil Case No. 47345, restraining the enforcement of the Monetary Board resolution, which required the Lucena bank to undertake a reorganization and to curtail its operations. The Central Bank appealed. (This Court reversed that decision and dismissed the complaint for injunction. Rural Bank of Lucena, Inc. vs. Central Bank, L19621, November 29, 1969, 30 SCRA 628). To implement the resolution of the Monetary Board for the Liquidation of the Lucena bank, the Central Bank, pursuant to section 29 of its charter and on the assumption that the Lucena bank was insolvent, filed with the Court of first Instance of Manila a petition dated March 27, 1962 for assistance and supervision in the liquidation of the Lucena bank (Civil Case No. 50019). Acting on that petition, the Court of First Instance of Manila issued an order dated march 28, 1963, directing the Lucena bank to turn over its assets to the Central Bank's authorized representative. The Monetary Board in its Resolution No. 426 dated April 2, 1963 designated the Superintendent of Banks or his duly authorized representative to take charge of the assets of the Lucena bank. The Board in its resolution of November 27, 1963 ordered the Superintendent of Banks to convert the assets of the Lucena bank to money. The Lucena bank, by means of certiorari sought to annul the liquidation proceeding . This Court denied its petition (Rural Bank of Lucena, Inc. vs. Arca, L21146, September 20, 1965, 15 SCRA 66). Among the accounts receivable of the Lucena bank inventoried by the Central Bank's representative was the account of Hernandez- In a letter dated October 29, 1963 Hernandez informed the Central Bank that he had sent to the Lucena bank on April 25, 1962 the chock for P6,000. He again requested that his mortgage be cancelled. The Associate Superintendent of Banks in his answer dated December 9, 1963 returned the chock to Hernandez and informed him that, according to the Lucena bank's executive vice-president, the check could not be applied to the payment of Hernandez' loan because the bank was already closed when he received the check. Moreover, the chock was drawn against the current deposits of the San Pablo Colleges in the Lucena bank which was in the process of liquidation. Hernandez was advised to settle his account by paying cash or by means of a chock drawn against a bank other than the Lucena bank. Disregarding that suggestion, Hernandez announced to the Associate Superintendent of Banks in his letter of December 16, 1963 that he was going to deposit the said check in the court of First Instance of Lipa City on or before December 26, 1963. Instead of filing a consignation complaint, Hernandez enclosed the check with his letter dated January 2, 1964 to the clerk of court of the Court of First Instance at Lipa City. That letter was received in court on January 6, 1964. Hernandez wrote a letter dated January 11, 1964 informing the

Associate Superintendent of Banks of the judicial deposit of the check. Copies of that letter were furnished the Lucena bank and the San Pablo Colleges. It was only on October 12, 1964 when Hernandez and his wife filed an action in the Court of First Instance at Lipa City to compel the Rural Bank of Lucena, Inc., the Central Bank as liquidator, and Jose S. Martinez as receiver, to accept the check and to execute the cancellation of the real estate mortgage. The Hernandez spouses also asked for moral damages in the amount of P10.000 and attorney's fees of P3,000 (Civil Case No. 1615). On October 20, 1964 the Central Bank filed a motion to dismiss. It contended that there was improper venue because, as the action allegedly involved title to real property, it should have been instituted in Quezon City where the encumbered lots are situated. It Mother contended that since the Lucena bank is under liquidation and is in the hands of a receiver, its properties and assets are in custodia legis and may, therefore, be reached only by motion or petition in Civil Case No. 50019 of the Court of First Instance of Manila. The motion was denied. To complete the facts, it should be stated that the counsel for the Lucena bank on January 30, 1967 offered to compromise the case by stipulating that the Central Bank would apply the check in question to the mortgage debt of Hernandez if the balance of the deposit of the San Pablo Colleges would be enough to cover the amount of the check of P6,000 and that, by virtue of that compromise, the complaint and counterclaim would be dismissed. That conditional and equivocal compromise offer fizzled out, because the lawyers of Hernandez and the Central Bank did not assent to it. After trial, the lower court rendered an amended decision dated October 31, 1967, ordering the Lucena Bank or the Central Bank, as liquidator, to accept the honor the check, to cancel the mortage, and to pay Hernandez spouses (P25,000 as moral damages (not P10,000 as prayed for the complaint) plus P1,000 as attorney's fees. The Lucena bank, the Central Bank and its employee, the receiver, appealed to this Court. The Central Bank contends that the trial court erred (1) in not holding that the venue was improperly laid; (2) in not holding that it had no jurisdiction because the Hernandez spouses should have ventilated their claim in the liquidation proceeding pending in the Court of First Instance of Manila. instead of filing a separate action in the Court of First Instance at Lipa City; (3) in not holding that there was no valid consignation, (4) in awarding moral damages and attorney's fees, and (5) in ordering execution pending appeal in spite of the tact that the assets of the Lucena bank are in custodia legis or in the custody of the liquidation court and the receiver appointed by it. On the issue of venue, defendants-appellants contend that the action of the Hernandez spouses to compel them to honor the check in question and to cancel the mortgage on their two lots is a real action affecting title to real property which should have been filed in the Court of First Instance of Rizal at Quezon City where the mortgaged lots are situated. Section 2(a), Rule 4 of the Rules of Court provides that "actions affecting title to, or for recovery of possession, or for partition or condemnation of, or foreclosure of mortgage on, real property, shall be commenced and tried in the province where the property or any part thereof lies". Note that the rule mentions an action for foreclosure of a real estate mortgage but does not mention an action for the cancellation of a real mortgage. In the instant case, the action is primarily to compel the mortgagee to accept payment of the mortgage debt and to release the mortgage.

That action, which is not expressive included in the enumeration found in section 2(a) of Rule 4, does not involve the title to the mortgage lots. It is a personal action and not a real action. The mortgagee has, not foreclosure the mortgage, Plaintiffs' title is not in question. They are in possession of the mortgaged lots. Hence, the venue of plaintiffs' personal action is the place where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff (Sec. 2[b], Rule 4). The plaintiffs in their brief confound a real action with an action in rem and a personal action with an action in personam. They argue that their action is not an action in rem and, therefore, it could be brought in a place other than the place where the mortgaged lots are located. A real action is not the same as an action in rem and a personal action is not the same as an action in personam. In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a contract or the recovery of damages. In a real action, the plaintiff seeks the recovery of real property. or, as indicated in section 2(a) of Rule 4, a real action Is an action affecting tithe to real property or for the recovery of possession. or for partition or condemnation of, or foreclosure of a mortage on, real property. An action in personam is an action against a person on the basis of his personal liability, while an action in rem is an action against the thing itself, instead of against the person (1 C. J. S. 943-4), Hence, a real action may at the same time be an action in personam and not necessary an action in rem. In this case, the plaintiffs alleged in their complaint that they were residents of San Juan, Batangas, which in their brief (They characterize as their legal residence and which appears to be their domicile of origin. On the other hand, it is indicated in the promissory note and mortgage signed by them and in the Torrens title covering the mortgaged lots that their residence is at 11 Chicago Street, Cubao, Quezon City, which apparently is the place where the said lots are located, The plaintiffs did not testify during the trial. So, they have no testimony in the records as to their actual residence. We hold that the trial court should have dismissed the action because the venue thereof was improperly laid in Batangas. The term "resides" in section 2[b] of Rule 4 refers to the place of actual residence or domicile.) San Juan, Batangas might be the place where the plaintiffs have their domicile or legal residence but there is no question that 11 Chicago Street, Cubao, Quezon City is their place of abode or the place where they actually reside. So, the action in this case, which is a personal action to compel the defendants to honor the check in question and to Cancel the mortgage, should have been filed in Quezon City if the plaintiffs intended to use their residence as the basis for their choice of venue. Thus, it was held that venue was improperly laid in a case where plaintiff Jose Coloma filed a complaint in the Court of First Instance of Ilocos Norte, because he was allegedly a resident of San Nicolas, Ilocos Norte, where he was born and reared, but his actual residence was at 57 K-6th Kamias, 486 Barangka Drive, Mandaluyong, Rizal (Koh vs. Court of Appeals, L-40428, December 17, 1975; 70 SCRA 298). In Gracia Fule vs. Court of Appeals, L-404502, November 29, 1976, 74 SCRA 189, it was held that an intestate proceedings 9 for the settlement of the estate of the deceased Amado G. Garcia was

improperly filed in the Court of First Instance of Laguna. The deceased was allegedly domiciled in Calamba, Laguna. He was a delegate of the first district of Laguna to the constitutional convention. However, at the time of his death he was actually a resident of Quezon City. Hence. the proper venue of the intestate proceeding was Quezon City. In the foregoing discussion. it is assumed that the plaintiff could bring a separate action to compel the defendants honor the check in question in spite of the fact that the Lucena bank is under liquidation in Civil Case No. 50019 of the Court of First Instance of Manila. The Central Bank contends that such a separate action was not maintainable and that the Hernandez spouse should have ventilated in the liquidation proceeding their claim that they had already paid their mortgage debt by means of the check issued by the San Pablo Colleges and that their mortgage should be cancelled. The Central Bank points out that the redemption action the Hernandez spouses would ultimately affect the funds and property of the Lucena Bank. Hence, the liquidation court is the competent tribunal to pass upon the issue as to whether the Hernandez spouses could validly pay their mortage debt by means of the check of the San Pablo Colleges. On the other hand, the Hernandez spouses argue that their action in the Court of First Instance at Lipa City "deals with a sum of money which is still not in the possession, custody, and administration" of the Central Bank and the receiver; that their action had "nothing to do with the funds and property" held by the receiver; that the Lucena bank had not lost its juridical personality after it was placed under liquidation, and that the issue as to whether the Lucena bank should have accepted the chock in question was "not in anyway connected with the causes and grounds under which the liquidation proceedings were instituted nor with the administration of the property and funds under liquidation" Those contentions of the Hernandez spouse are untenable. The trial court did not rule squarely on the Jurisdictional issue raised by the Central Bank and the receiver We hold that the liquidation court or the Manila court has exclusive jurisdiction to entertain the claim of the Hernandez spouses that their mortgage obligation had already been extinguished by means of their tender of the check issued by the San Pablo Colleges. At the time the Hernandez spouses filed in 1964 their consignation complaint the Lucena bank was already under liquidation. The Manila court in its order of March 28,1963 had ordered the officers of the Lucena bank to turn over to the Central Bank or to the receiver, the Superintendent of Banks, all of its assets, properties and papers. Among the assets turned over to the receiver was the outstanding or unpaid account of the Hernandez spouses which appears in the inventory as: "393. Hernandez, Francisco St., 11 Chicago St., Cubao, Q.C. TCT-34262 3/21/61, P6,000.00" (Exh. 4CB). And among the papers or obligations turned over to the receiver was Ledger No. 056 evidencing the deposit of the San Pablo Colleges in the Lucena bank in the sum of P11,890.16. against which the check for P6,000 was drawn. It was that check which the Hernandez spouses had issued to pay the mortgage debt to the Lucena bank. Under the section 29 of the Central Bank Act, republic Act No. 265, when the Monetary Board, upon information submitted by the Superintendent of the Bank, finds a bank to be insolvent, it shall be forbid the bank to do the business and it shall take care of its assets according to law.

In that case, if the Monetary Board finds out that the insolvent bank cannot resume business with safety to its creditors, it shall through the Solicitor General, file a petition in the Court of First Instance, praying for the assistance and supervision of the court in the liquidation of the bank's affairs. Thereafter, the Superintendent of Banks, upon order of the Monetary Board and under the supervision of the court, shall convert to money the bank's assets. "Subido es que uno de los deberes primordiales de un depositario es hacerse cargo immediatemente de todol el activo y pasivo de un banco" (Luy Lam & Co. vs. Mercantile Bank of China, 71 Phil. 573, 576). The fact the insolvent bank is forbidden to do business, that its assets are turn over to the Superintendent of Banks, as a receiver, for conversation into cash, and that its liquidation is undertaken with judicial intervention means that, as far as lawful and practicable, all claims against the insolvent bank and that the liquidation court should be filed in the liquidation proceeding. The judicial liquidation is intended to prevent multiplicity of actions against the insolvent bank. The lawmaking body contemplated that for convenience only one court, if possible, should pass upon the claims against the insolvent bank and that the liquidation court should assist the Superintended of Banks and control his operations. In the course of the liquidation, contentious cases might arise wherein a full-dress hearing would be required and legal issues would have to be resolved. Hence, it would be necessary in justice to all concerned that a Court of First Instance should assist and supervise the liquidation and should act umpire and arbitrator in the allowance and disallowance of claims. The judicial liquidation is a pragmatic arrangement designed to establish due process and orderliness in the liquidation of the bank, to obviate the proliferation of litigations and to avoid injustice and arbitrariness. Thus, in the liquidation before the war of the insolvement Mercantile Bank of china, various claims were adjudicated by the liquidation Court, which was the court of First Instance of Manila, pursuant to section 1639 of the Revised Administrative Code, from which section 29 pf the Central Bank Law was taken. (See In re Liquidation of Mercantile Bank of China: Tan Tiong Tick vs. American Apothecaries Co., 65 Phil. 414; Pacific Coast Biscuit Co. vs Chinese Grocers Association, 65 Phil. 375; Fletcher American National Bank vs. Ang cheng Lian, 65 Phil. 385; Pacific Commercial Co. vs. American Apothecaries Co., 65 Phil. 429; Gopoco Grocery vs. Pacific Coast Biscuit co., 65 Phil. 443; Chinese Grocers' Association vs. American Apothecaries Co., 65 Phil. 395; and Yu Ping Kun, 65 Phil. 410). There is a ruling that, although the taking over of a bank by state officials for liquidation does not dissolve the bank, a court has no jurisdiction (after such takeover) to entertain an action or to render a judgment against the bank (9 C.J.S. 852, note 38 citing Bushnell vs. F.W. Woolworth co., 241 Pac. 738. 112 Okl. 297; State vs. Quigley, 220 Pac. 918, 93 Okl. 296). It has been held that an insolvent bank, which was under the control of the finance commissioner for liquidation, was without power or capacity to sue or be sued, prosecute or defend or otherwise function except through the finance commissioner or liquidator (Wauer vs. Bank of Pendleton, 65 S.W. 2nd 167 228 Mo. App. 1150). Suits brought against a bank after the issuance of a notice that the finance commissioner has taken possession of the bank should be dismissed or are barred for want of jurisdiction (Rouse vs. Bank of Darlington, 41 S.W. 2nd 159; Bartlett vs. Mc Callister, 289 S.W. 814, 316 Mo. 129).

This Court has already held that after a savings bank was declared insolvent by the Monetary Board, a depositor could not bring a separate action against it for the recovery of his time deposit. His remedy is to intervene in the liquidation proceeding (Central Bank of the Philippines vs. Morfe, L38427, March 12, 1975, 63 SCRA 144). * In the instant case, the Hernandez spouses, after having become cognizant of the fact that the Lucena bank was under liquidation, chose to file a separate action against that bank for redemption and damages. Although residents of Cubao, Quezon City, where the mortgage lots are located and which was the address used by them in dealing with the Lucena bank, they chose Lipa City as the venue of their action. They ignored the liquidation court. Evidently, one of their objectives was to obtain against the Lucena bank a judgment for moral damages which they surmised would not be granted by the Manila liquidation court. They attained more than what they had originally desired because, instead of the moral damages of P10,00 indicated in their complaint, the trial court generously awarded them P25,000. Not only that. The trial court granted execution pending appeal although it was aware that eventually the claim of the Hernandez spouses would have to be submitted to the liquidation court for allowance. The sheriff could not enforce the writ of execution because the Lucena bank was under liquidation (p. 92, Rollo). Hence, the Hernandez spouses had to file a claim with the liquidation court. That court has been pending since September, 1968. Thus, much time, money and effort would have been saved if at the outset the Hernandez spouse filed their claim in the liquidation court. WHEREFORE, the trial court judgment is reversed and set aside. The case is dismissed without prejudice to the right of the Hernandez spouses to take up with the liquidation court the settlement of their mortgage obligation. Costs against the plaintiffs-appellees. SO ORDERED. G.R. No. L-22795 January 31, 1977 DANGWA TRANSPORTATION CO., INC. (DANGWA BUS COMPANY), and JAMES G. GAYOT, petitioners, vs. HON. MALCOLM G. SARMIENTO, Judge, Court of First Instance of Pampanga, and LAWRENCE HELLER,respondents. Reyes & Cabato for petitioner. Juanito O. Velasco for private respondent.

ANTONIO, J.: The sole issue in this petition for prohibition is whether or not the Court of First Instance of Pampanga, Branch I, San Fernando, in civil Case No. 2515, gravely abused its discretion in denying petitioner's motion to dismiss on the ground of improper venue.

On March 16, 1964, private respondent Lawrence Heller, as a consequence of the injuries sustained by him when his motorcycle was bumped by a bus of the Dangwa Transportation Co., Inc., filed an action with the Court of First Instance of Pampanga, 1 against petitioners James G. Gayot, the bus driver, and Dangwa Transportation Co., Inc., owner of the bus, and docketed therein as Civil Case No. 2515 2 for damages (actual and conpensatory P30,000.00, moral and exemplary P14,000.00). In his complaint, private respondent alleges, amongs others, (1) that he is of legal age, single, American citizen, an Airman First Class of the United States Air Force, and presently assigned and stationed at Clark Air Base Pampanga, Philippines; while the defendant James G. Gayot is also of legal age, Filipino, married, and a resident of Engineer's Hill, Baguio City and the other defendant Dangwa Bus Company 3 is a juridical person or corporation organized and existing in accordance with the laws of the Republic of the Philippines, with business address at Trinidad Valley, Banquet Mountain Province, where summons and other lawful processes of the court may be served; (2) that James G. Gayot is a driver and employee of said Bus Company, a common carrier and registered owner of Dangwa bus bearing Plate No. PUB-1986; (3) that on December 30, 1963, at Twin Peaks, Kennon Road, Tuba, Banquet Mountain Province, this Dangwa bus was driven by James G. Gayot with such reckless imprudence and at a greater speed than was reasonable and proper, that the bus collided with Lawrence Heller who was then riding on his motorcycle; (4) that, its a result of the collision, the latter sustained serious physical injuries, namely, a closed fracture of the left femur and a compound fracture of the left tibia, and his motorcycle was totally wrecked; (5) that, thereafter, he was confined at the USAF Hospital, Clark Air Base, Angeles, Pampanga; and (6) that as Airman First Class in the USAF assigned to the 1st Mobile Communication Group, Clark AFB, he received a monthly pay of $234.00. On March 25, 1964, the petitioners filed a motion to dismiss 4 on the ground that venue was improperly laid with the Court of First Instance of Pampanga under Section 1(c) of Rule 16 of the Revised Rules of Court, for private respondent, an American citizen, is not a resident of Clark Air Base, Pampanga, as the first paragraph of his complaint alleges that he is "presently assigned and stationed at Clark Air Base, Pampanga, Philippines", and, as such, his assignment in the Philippines is temporary since members of the United States Air Force may be assigned any time to any station under the exclusive control and decision of the Commanding Officer; and that, pursuant to Section 2(b), Rule 4, of the Revised Rules of Court, the venue of private respondent's action should not be Pampanga but the City of Baguio or Benguet, Mountain Province. On April 8, 1964, the private respondent filed an Opposition 5 to the aforesaid motion to dismiss alleging, among others, (1) that the residence required by the rule (Section 2[b], Rule 4, Revised Rules of Court) need not necessarily be permanent, it being sufficient that the plaintiff had his actual residence at the place where the action was brought 6 (2) that he has the privilege to elect which court to file his action and he had chosen the Court of First Instance of Pampanga, because he is a resident of Clark Air Base, Pampanga, not only at the time of the commencement of the present action, but also even before the accident happened; and (3) that when he alleged in his complaint that he is stationed in Clark Air Base, Pampanga, Philippines, he meant to convey that, as long as he stays in the Philippines, his residence is in Clark Air Base, Pampanga. On the same day, April 8,1964, respondent Judge Malcolm G. Sarmiento issued an Order denying petitioners' motion to dismiss, 7 and stating that private respondent's actual residence is in Clark Air Base, Pampanga, and his action, therefore, was properly instituted in said province, for "residence under this action need not be continuous, it being sufficient that a party, though a foreign subject, has his actual residence in the place when the action was brought." 8 We find the petition without merit.

There is no question that respondent Lawrence Heller has his fixed place of abode at Clark Air Base, Pampanga. There is no showing in the record that Heller has not resided consistently and with continuity in his place of abode at Clark Air Base at the time he filed this action. In Koh v. Court of Appeals, 9 We explained that the term "resides" as employed in the rule on venue on personal actions filed with courts of first instance 10 means the place of abode, whether permanent or temporary, of the plaintiff or the defendant, as distinguished from "domicile" which denotes a fixed permanent residence to which, when absent, one has the intention of returning. It is fundamental in the law governing venue of actions (Rule 4 of the Rules of Court) that the situs for bringing real and personal civil actions are fixed by the rules to attain the greatest convenience possible to the parties litigants by taking into consideration the exit in accessibility to them of the courts of justice. It is likewise undeniable that the term domicile is not exactly synonymous in legal contemplation with the term residence, for it is an established principle in Conflict of Laws thatdomicile refers to the relatively ore permanent abode of a person while residence applies to a temporary stay of a person in a given place. In fact this distinction is very well emphasized in those cases where the Domiciliary Theory must necessarily supplant the Nationality Theory in cases involving stateless persons. This Court held in case of Uytengsu vs. republic, 50 O.G. 4781 October, 1954, reversing its previous stand in Larena v. Ferrer, 61 Phil 36 and Nuval v. Guray, 52 Phil. 645, that There is a difference between domicide and residence. residence is used to indicate a place of abode, whether permanent or temporary: domicile denotes a fixed permanent residence to which when absent, one has the intention of returning. A man may have a residence in one place and a domicile in another. Residence is not domicile, but domicile is residence coupled with the intention to remain for an unlimited time. A man can have but one domicile for one and the same purpose at any time, but he may have numerous places of residence. His place of residence generally is his place of domicile, but is not any means, necessarily so since no length of residence without intention of remaining will constitute domicile. (Emphasis Supplied) We note that the law on venue in Courts of First Instance (Section 2, of Rule 4, Rules of Court) in referring to the parties utilizes the words "resides or may be found," and not "is domiciled," thus: Sec. 2(b) Personal actions All other actions may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff.' (Emphasis Supplied) Applying the foregoing observation to the present case, We are fully convinced that private respondent Coloma's protestations of domicile in San Nicolas, Ilocos Norte, based on his manifested intention to return there after the retirement of his wife from government service to justify his bringing of an action for damages against petitioner in the C.F.I. if Ilocos Norte, is entirely of no moment since what is of paramount importance is where he actually resided or where he may be found at the time he

brought the action, to comply substantially with the requirements of Sec. 2 (b) of Rule 4, Rules of court, on venue of personal actions. (Koh v. Court of Appeals, supra, pp. 304-305.) The same construction of the word "resides" as used in Section 1, Rule 73, of the Revised Rules of Court, was enunciated in Fule v. Court of Appeals, et. al. (G.R. No. L-40502) and Fule v. Hon. Ernani C. Pao, et al.(G. R. No. L-42670), decided on November 29, 1976. Thus, this Court, in the aforecited cases, stated: 2. But, the far-ranging question is this: What does the term "resides" mean? Does it refer to the actual residence or domicile of the decedent at the time of his death? We lay down the doctrinal rule that the term "resides" connotes ex vi termini "actual residence" as distinguished from "legal residence or domicile." This term "resides," like the terms "residing" and "residence" is elastic and should be interpreted in the light of the object or purposes of the statute or in which it is employed. In the application of venue statutes and rules-Section 1, Rule 73 of the Revised Rules of Court is of such nature-residence rather than domicile is the significant factor. Even where the statute uses the word "domicile" still it is construed as meaning residence and not domicile in the technical sense. Some cases make a distinction between the terms "residence" and "domicile" but generally used in statutes fixing venue, the terms are synonymous, and convey the same meaning as the term "inhabitant." In other words, "resides" should be viewed or understood in its popular sense, meaning, the personal, actual or physical habitation of a person, actual residence or place of abode at signifies physical presence in a place and actual stay thereat. In this popular sense, the term means merely residence, that is, personal residence, not legal residence or domicile. Residence simply requires bodily presence as an inhabitant in a given place, while domicile requires bodily presence in that place and also an intention to make it one's domicile. No particular length of time of residence is required though; however, the residence must be more than temporary. Respondent court having found that private respondent Lawrence Heller had his actual residence at Clark Air Base, Angeles (now a City), Pampanga, at the time he filed his personal action against the petitioners, it did not, therefore, gravely abuse its discretion in refusing to dismiss the case. WHEREFORE, the petition for prohibition is hereby DISMISSED, with costs against the petitioners.

IRENE MARCOS-ARANETA, DANIEL RUBIO, ORLANDO G. RESLIN, and JOSE G. RESLIN, Petitioners, - versus -

G.R. No. 154096 Present: QUISUMBING, J., Chairperson, CARPIO MORALES, TINGA, VELASCO, JR., and BRION, JJ. Promulgated:

COURT OF APPEALS, JULITA C. BENEDICTO, and FRANCISCA BENEDICTO-PAULINO,

Respondents.

August 22, 2008

x-----------------------------------------------------------------------------------------x DECISION VELASCO, JR., J.: The Case This Petition for Review on Certiorari under Rule 45 assails and seeks to nullify the Decision[1] dated October 17, 2001 of the Court of Appeals (CA) in CAG.R. SP No. 64246 and its Resolution[2] of June 20, 2002 denying petitioners motion for reconsideration. The assailed CA decision annulled and set aside the Orders dated October 9, 2000,December 18, 2000, and March 15, 2001 of the Regional Trial Court (RTC), Branch 17 in Batac, Ilocos Norte which admitted petitioners amended complaint in Civil Case Nos. 3341-17 and 3342-17.

The Facts Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto, now deceased, and his business associates (Benedicto Group) organized Far East Managers and Investors, Inc. (FEMII) and Universal Equity Corporation (UEC), respectively. As petitioner Irene Marcos-Araneta would later allege, both corporations were organized pursuant to a contract or arrangement whereby Benedicto, as trustor, placed in his name and in the name of his associates, as trustees, the shares of stocks of FEMII and UEC with the obligation to hold those

shares and their fruits in trust and for the benefit of Irene to the extent of 65% of such shares. Several years after, Irene, through her trustee-husband, Gregorio Ma. Araneta III, demanded the reconveyance of said 65% stockholdings, but the Benedicto Group refused to oblige. In March 2000, Irene thereupon instituted before the RTC two similar complaints for conveyance of shares of stock, accounting and receivership against the Benedicto Group with prayer for the issuance of a temporary restraining order (TRO). The first, docketed as Civil Case No. 3341-17, covered the UEC shares and named Benedicto, his daughter, and at least 20 other individuals as defendants. The second, docketed as Civil Case No. 3342-17, sought the recovery to the extent of 65% of FEMII shares held by Benedicto and the other defendants named therein. Respondent Francisca Benedicto-Paulino,[3] Benedictos daughter, filed a Motion to Dismiss Civil Case No. 3341-17, followed later by an Amended Motion to Dismiss. Benedicto, on the other hand, moved to dismiss [4] Civil Case No. 334217, adopting in toto the five (5) grounds raised by Francisca in her amended motion to dismiss. Among these were: (1) the cases involved an intra-corporate dispute over which the Securities and Exchange Commission, not the RTC, has jurisdiction; (2) venue was improperly laid; and (3) the complaint failed to state a cause of action, as there was no allegation therein that plaintiff, as beneficiary of the purported trust, has accepted the trust created in her favor. To the motions to dismiss, Irene filed a Consolidated Opposition, which Benedicto and Francisca countered with a Joint Reply to Opposition. Upon Benedictos motion, both cases were consolidated. During the preliminary proceedings on their motions to dismiss, Benedicto and Francisca, by way of bolstering their contentions on improper venue, presented the Joint Affidavit[5] of Gilmia B. Valdez, Catalino A. Bactat, and Conchita R. Rasco who all attested being employed as household staff at the Marcos Mansion in Brgy. Lacub, Batac, Ilocos Norte and that Irene did not maintain residence in said place as she in fact only visited the mansion twice in 1999; that she did not vote in Batac in the 1998 national elections; and that she was staying at her husbands house in Makati City.

Against the aforesaid unrebutted joint affidavit, Irene presented her PhP 5 community tax certificate[6] (CTC) issued on 11/07/99 in Curimao, Ilocos Norte to support her claimed residency in Batac, Ilocos Norte. In the meantime, on May 15, 2000, Benedicto died and was substituted by his wife, Julita C. Benedicto, and Francisca. On June 29, 2000, the RTC dismissed both complaints, stating that these partly constituted real action, and that Irene did not actually reside in Ilocos Norte, and, therefore, venue was improperly laid. In its dismissal order,[7] the court also declared all the other issues raised in the different Motions to Dismiss x x x moot and academic. From the above order, Irene interposed a Motion for Reconsideration[8] which Julita and Francisca duly opposed. Pending resolution of her motion for reconsideration, Irene filed on July 17, 2000 a Motion (to Admit Amended Complaint),[9] attaching therewith a copy of the Amended Complaint[10] dated July 14, 2000 in which the names of Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin appeared as additional plaintiffs. As stated in the amended complaint, the added plaintiffs, all from I locos Norte, were Irenes new trustees. Parenthetically, the amended complaint stated practically the same cause of action but, as couched, sought the reconveyance of the FEMII shares only. During the August 25, 2000 hearing, the RTC dictated in open court an order denying Irenes motion for reconsideration aforementioned, but deferred action on her motion to admit amended complaint and the opposition thereto.[11] On October 9, 2000, the RTC issued an Order[12] entertaining the amended complaint, dispositively stating:
WHEREFORE, the admission of the Amended Complaint being tenable and legal, the same is GRANTED.

Let copies of the Amended Complaint be served to the defendants who are ordered to answer within the reglementary period provided by the rules.

The RTC predicated its order on the following premises: (1) Pursuant to Section 2, Rule 10 of the Rules of Court,[13] Irene may opt to file, as a matter of right, an amended complaint. (2) The inclusion of additional plaintiffs, one of whom was a Batac, an Ilocos Norte resident, in the amended complaint setting out the same cause of action cured the defect of improper venue. (3) Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4 allow the filing of the amended complaint in question in the place of residence of any of Irenes co plaintiffs. In time, Julita and Francisca moved to dismiss the amended complaint, but the RTC, by Order[14] dated December 18, 2000, denied the motion and reiterated its directive for the two to answer the amended complaint. In said order, the RTC stood pat on its holding on the rule on amendments of pleadings. And scoffing at the argument about there being no complaint to amend in the first place as of October 9, 2000 (when the RTC granted the motion to amend) as the original complaints were dismissed with finality earlier, i.e., on August 25, 2000 when the court denied Irenes motion for reconsideration of the June 29, 2000 order dismissing the original complaints, the court stated thusly: there was actually no need to act on Irenes motion to admit, it being her right as plaintiff to amend her complaints absent any responsive pleading thereto. Pushing its point, the RTC added the observation that the filing of the amended complaint on July 17, 2000 ipso facto superseded the original complaints, the dismissal of which, per the June 29, 2000 Order, had not yet become final at the time of the filing of the amended complaint. Following the denial on March 15, 2001 of their motion for the RTC to reconsider its December 18, 2000 order aforestated, Julita and Francisca, in a bid

to evade being declared in default, filed on April 10, 2001 their Answer to the amended complaint.[15] But on the same day, they went to the CA via a petition for certiorari, docketed as CA-G.R. SP No. 64246, seeking to nullify the following RTC orders: the first, admitting the amended complaint; the second, denying their motion to dismiss the amended complaint; and the third, denying their motion for reconsideration of the second issuance. Inasmuch as the verification portion of the joint petition and the certification on non-forum shopping bore only Franciscas signature, the CA required the joint petitioners to submit x x x either the written authority of Julita C. Benedicto to Francisca B. Paulino authorizing the latter to represent her in these proceedings, or a supplemental verification and certification duly signed by x x x Julita C. Benedicto.[16] Records show the submission of the corresponding authorizing Affidavit[17] executed by Julita in favor of Francisca. Later developments saw the CA issuing a TRO[18] and then a writ of preliminary injunction[19] enjoining the RTC from conducting further proceedings on the subject civil cases. On October 17, 2001, the CA rendered a Decision, setting aside the assailed RTC orders and dismissing the amended complaints in Civil Case Nos. 3341-17 and 3342-17. The fallo of the CA decision reads:
WHEREFORE, based on the foregoing premises, the petition is hereby GRANTED. The assailed Orders admitting the amended complaints are SET ASIDE for being null and void, and the amended complaints a quo are, accordingly, DISMISSED.[20]

Irene and her new trustees motion for reconsideration of the assailed decision was denied through the equally assailed June 20, 2002 CA Resolution. Hence, this petition for review is before us. The Issues Petitioners urge the setting aside and annulment of the assailed CA decision and resolution on the following submissions that the appellate court erred in: (1)

allowing the submission of an affidavit by Julita as sufficient compliance with the requirement on verification and certification of non-forum shopping; (2) ruling on the merits of the trust issue which involves factual and evidentiary determination, processes not proper in a petition for certiorari under Rule 65 of the Rules of Court; (3) ruling that the amended complaints in the lower court should be dismissed because, at the time it was filed, there was no more original complaint to amend; (4) ruling that the respondents did not waive improper venue; and (5) ruling that petitioner Irene was not a resident of Batac, Ilocos Norte and that none of the principal parties are residents of Ilocos Norte.[21] The Courts Ruling We affirm, but not for all the reasons set out in, the CAs decision. First Issue: Substantial Compliance with the Rule on Verification and Certification of Non-Forum Shopping Petitioners tag private respondents petition in CA-G.R. SP No. 64246 as defective for non-compliance with the requirements of Secs. 4[22] and 5[23] of Rule 7 of the Rules of Court at least with regard to Julita, who failed to sign the verification and certification of non-forum shopping. Petitioners thus fault the appellate court for directing Julitas counsel to submit a written authority for Francisca to represent Julita in the certiorari proceedings. We are not persuaded. Verification not Jurisdictional; May be Corrected Verification is, under the Rules, not a jurisdictional but merely a formal requirement which the court may motu proprio direct a party to comply with or correct, as the case may be. As the Court articulated in Kimberly Independent Labor Union for Solidarity, Activism and Nationalism (KILUSAN)-Organized Labor Associations in Line Industries and Agriculture (OLALIA) v. Court of Appeals:

[V]erification is a formal, not a jurisdictional requisite, as it is mainly intended to secure an assurance that the allegations therein made are done in good faith or are true and correct and not mere speculation. The Court may order the correction of the pleading, if not verified, or act on the unverified pleading if the attending circumstances are such that a strict compliance with the rule may be dispensed with in order that the ends of justice may be served.[24]

Given this consideration, the CA acted within its sound discretion in ordering the submission of proof of Franciscas authority to sign on Julitas behalf and represent her in the proceedings before the appellate court. Signature by Any of the Principal Petitioners is Substantial Compliance Regarding the certificate of non-forum shopping, the general rule is that all the petitioners or plaintiffs in a case should sign it.[25] However, the Court has time and again stressed that the rules on forum shopping, which were designed to promote the orderly administration of justice, do not interdict substantial compliance with its provisions under justifiable circumstances.[26] As has been ruled by the Court, the signature of any of the principal petitioners[27] or principal parties,[28] as Francisca is in this case, would constitute a substantial compliance with the rule on verification and certification of non-forum shopping. It cannot be overemphasized that Francisca herself was a principal party in Civil Case No. 3341-17 before the RTC and in the certiorari proceedings before the CA. Besides being an heir of Benedicto, Francisca, with her mother, Julita, was substituted for Benedicto in the instant case after his demise. And should there exist a commonality of interest among the parties, or where the parties filed the case as a collective, raising only one common cause of action or presenting a common defense, then the signature of one of the petitioners or complainants, acting as representative, is sufficient compliance. We said so in Cavile v. Heirs of Clarita Cavile.[29] Like Thomas Cavile, Sr. and the other petitioners in Cavile, Francisca and Julita, as petitioners before the CA, had filed their petition as a collective, sharing a common interest and having a common single defense to protect their rights over the shares of stocks in question. Second Issue: Merits of the Case cannot be Resolved

on Certiorari under Rule 65 Petitioners posture on the second issue is correct. As they aptly pointed out, the CA, in the exercise of its certiorari jurisdiction under Rule 65, is limited to reviewing and correcting errors of jurisdiction only. It cannot validly delve into the issue of trust which, under the premises, cannot be judiciously resolved without first establishing certain facts based on evidence. Whether a determinative question is one of law or of fact depends on the nature of the dispute. A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain given set of facts; or when the issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood of facts being admitted. A question of fact obtains when the doubt or difference arises as to the truth or falsehood of facts or when the query invites the calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the situation.[30] Clearly then, the CA overstepped its boundaries when, in disposing of private respondents petition for certiorari, it did not confine itself to determining whether or not lack of jurisdiction or grave abuse of discretion tainted the issuance of the assailed RTC orders, but proceeded to pass on the factual issue of the existence and enforceability of the asserted trust. In the process, the CA virtually resolved petitioner Irenes case for reconveyance on its substantive merits even before evidence on the matter could be adduced. Civil Case Nos. 3341-17 and 3342-17 in fact have not even reached the pre-trial stage. To stress, the nature of the trust allegedly constituted in Irenes favor and its enforceability, being evidentiary in nature, are best determined by the trial court. The original complaints and the amended complaint certainly do not even clearly indicate whether the asserted trust is implied or express. To be sure, an express trust differs from the implied variety in terms of the manner of proving its existence.[31] Surely, the onus of factually determining whether the trust allegedly established in favor of Irene, if one was indeed established, was implied or express properly pertains, at the first instance, to the trial court and not to the appellate court in a special civil action for certiorari, as here. In the absence of evidence to

prove or disprove the constitution and necessarily the existence of the trust agreement between Irene, on one hand, and the Benedicto Group, on the other, the appellate court cannot intelligently pass upon the issue of trust. A pronouncement on said issue of trust rooted on speculation and conjecture, if properly challenged, must be struck down. So it must be here. Third Issue: Admission of Amended Complaint Proper As may be recalled, the CA veritably declared as reversibly erroneous the admission of the amended complaint. The flaw in the RTCs act of admitting the amended complaint lies, so the CA held, in the fact that the filing of the amended complaint on July 17, 2000 came after the RTC had ordered with finality the dismissal of the original complaints. According to petitioners, scoring the CA for its declaration adverted to and debunking its posture on the finality of the said RTC order, the CA failed to take stock of their motion for reconsideration of the said dismissal order. We agree with petitioners and turn to the governing Sec. 2 of Rule 10 of the Rules of Court which provides:
SEC. 2. Amendments as a matter of right. A party may amend his pleading once as a matter of right at any time before a responsive pleading is served or in the case of a reply, at any time within ten (10) days after it is served.

As the aforequoted provision makes it abundantly clear that the plaintiff may amend his complaint once as a matter of right, i.e., without leave of court, before any responsive pleading is filed or served. Responsive pleadings are those which seek affirmative relief and/or set up defenses,[32] like an answer. A motion to dismiss is not a responsive pleading for purposes of Sec. 2 of Rule 10.[33] Assayed against the foregoing perspective, the RTC did not err in admitting petitioners amended complaint, Julita and Francisca not having yet answered the original complaints when the amended complaint was filed. At that precise moment, Irene, by force of said Sec. 2 of Rule 10, had, as a matter of right, the option of amending her underlying reconveyance complaints. As aptly observed by the RTC, Irenes

motion to admit amended complaint was not even necessary. The Court notes though that the RTC has not offered an explanation why it saw fit to grant the motion to admit in the first place. In Alpine Lending Investors v. Corpuz, the Court, expounding on the propriety of admitting an amended complaint before a responsive pleading is filed, wrote:
[W]hat petitioner Alpine filed in Civil Case No. C-20124 was a motion to dismiss, not an answer. Settled is the rule that a motion to dismiss is not a responsive pleading for purposes of Section 2, Rule 10. As no responsive pleading had been filed, respondent could amend her complaint in Civil Case No. C-20124 as a matter of right. Following this Courts ruling in Breslin v. Luzon Stevedoring Co. considering that respondent has the right to amend her complaint, it is the correlative duty of the trial court to accept the amended complaint; otherwise, mandamus would lie against it. In other words, the trial courts duty to admit the amended complaint was purely ministerial. In fact, respondent should not have filed a motion to admit her amended complaint.[34]

It may be argued that the original complaints had been dismissed through the June 29, 2000 RTC order. It should be pointed out, however, that the finality of such dismissal order had not set in when Irene filed the amended complaint on July 17, 2000, she having meanwhile seasonably sought reconsideration thereof. Irenes motion for reconsideration was only resolved on August 25, 2000. Thus, when Irene filed the amended complaint on July 17, 2000, the order of dismissal was not yet final, implying that there was strictly no legal impediment to her amending her original complaints.[35] Fourth Issue: Private Respondents did not Waive Improper Venue Petitioners maintain that Julita and Francisca were effectively precluded from raising the matter of improper venue by their subsequent acts of filing numerous pleadings. To petitioners, these pleadings, taken together, signify a waiver of private respondents initial objection to improper venue.

This contention is without basis and, at best, tenuous. Venue essentially concerns a rule of procedure which, in personal actions, is fixed for the greatest convenience possible of the plaintiff and his witnesses. The ground of improperly laid venue must be raised seasonably, else it is deemed waived. Where the defendant failed to either file a motion to dismiss on the ground of improper venue or include the same as an affirmative defense, he is deemed to have waived his right to object to improper venue.[36] In the case at bench, Benedicto and Francisca raised at the earliest time possible, meaning within the time for but before filing the answer to the complaint,[37] the matter of improper venue. They would thereafter reiterate and pursue their objection on venue, first, in their answer to the amended complaints and then in their petition for certiorari before the CA. Any suggestion, therefore, that Francisca and Benedicto or his substitutes abandoned along the way improper venue as ground to defeat Irenes claim before the RTC has to be rejected. Fifth Issue: The RTC Has No Jurisdiction on the Ground of Improper Venue Subject Civil Cases are Personal Actions It is the posture of Julita and Francisca that the venue was in this case improperly laid since the suit in question partakes of a real action involving real properties located outside the territorial jurisdiction of the RTC in Batac. This contention is not well-taken. In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a contract, or the recovery of damages.[38] Real actions, on the other hand, are those affecting title to or possession of real property, or interest therein. In accordance with the wordings of Sec. 1 of Rule 4, the venue of real actions shall be the proper court which has territorial jurisdiction over the area wherein the real property involved, or a portion thereof, is situated. The venue of personal actions is the court where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff.[39]

In the instant case, petitioners are basically asking Benedicto and his Group, as defendants a quo, to acknowledge holding in trust Irenes purported 65% stockownership of UEC and FEMII, inclusive of the fruits of the trust, and to execute in Irenes favor the necessary conveying deed over the said 65% shareholdings. In other words, Irene seeks to compel recognition of the trust arrangement she has with the Benedicto Group. The fact that FEMIIs assets include real properties does not materially change the nature of the action, for the ownership interest of a stockholder over corporate assets is only inchoate as the corporation, as a juridical person, solely owns such assets. It is only upon the liquidation of the corporation that the stockholders, depending on the type and nature of their stockownership, may have a real inchoate right over the corporate assets, but then only to the extent of their stockownership.

The amended complaint is an action in personam, it being a suit against Francisca and the late Benedicto (now represented by Julita and Francisca), on the basis of their alleged personal liability to Irene upon an alleged trust constituted in 1968 and/or 1972. They are not actions in rem where the actions are against the real properties instead of against persons.[40] We particularly note that possession or title to the real properties of FEMII and UEC is not being disputed, albeit part of the assets of the corporation happens to be real properties. Given the foregoing perspective, we now tackle the determinative question of venue in the light of the inclusion of additional plaintiffs in the amended complaint. Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of Rule 4 We point out at the outset that Irene, as categorically and peremptorily found by the RTC after a hearing, is not a resident of Batac, Ilocos Norte, as she claimed. The Court perceives no compelling reason to disturb, in the confines of this case, the factual determination of the trial court and the premises holding it together. Accordingly, Irene cannot, in a personal action, contextually opt for Batac as venue of her reconveyance complaint. As to her, Batac, Ilocos Norte is not what Sec. 2, Rule 4 of the Rules of Court adverts to as the place where the plaintiff or any of the principal plaintiffs resides at the time she filed her amended

complaint. That Irene holds CTC No. 17019451[41] issued sometime in June 2000 in Batac, Ilocos Norte and in which she indicated her address as Brgy. Lacub, Batac, Ilocos is really of no moment. Let alone the fact that one can easily secure a basic residence certificate practically anytime in any Bureau of Internal Revenue or treasurers office and dictate whatever relevant data one desires entered, Irene procured CTC No. 17019451 and appended the same to her motion for reconsideration following the RTCs pronouncement against her being a resident of Batac. Petitioners, in an attempt to establish that the RTC in Batac, Ilocos Norte is the proper court venue, asseverate that Batac, Ilocos Norte is where the principal parties reside. Pivotal to the resolution of the venue issue is a determination of the status of Irenes co-plaintiffs in the context of Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4, which pertinently provide as follows:
Rule 3 PARTIES TO CIVIL ACTIONS SEC. 2. Parties in interest. A real party in interest is the party who stands to be 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 prosecuted or defended in the name of the real party in interest. SEC. 3. Representatives as parties. Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest. A representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules. An agent acting in his own name and for the benefit of an undisclosed principal may sue or be sued without joining the principal except when the contract involves things belonging to the principal. Rule 4 VENUE OF ACTIONS

SEC. 2. Venue of personal actions. All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff.

Venue is Improperly Laid There can be no serious dispute that the real party-in-interest plaintiff is Irene. As self-styled beneficiary of the disputed trust, she stands to be benefited or entitled to the avails of the present suit. It is undisputed too that petitioners Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin, all from Ilocos Norte, were included as co-plaintiffs in the amended complaint as Irenes new designated trustees. As trustees, they can only serve as mere representatives of Irene. Upon the foregoing consideration, the resolution of the crucial issue of whether or not venue had properly been laid should not be difficult. Sec. 2 of Rule 4 indicates quite clearly that when there is more than one plaintiff in a personal action case, the residences of the principal parties should be the basis for determining proper venue. According to the late Justice Jose Y. Feria, the word principal has been added [in the uniform procedure rule] in order to prevent the plaintiff from choosing the residence of a minor plaintiff or defendant as the venue.[42] Eliminate the qualifying term principal and the purpose of the Rule would, to borrow from Justice Regalado, be defeated where a nominal or formal party is impleaded in the action since the latter would not have the degree of interest in the subject of the action which would warrant and entail the desirably active participation expected of litigants in a case.[43] Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342-17, Irene stands undisputedly as the principal plaintiff, the real party-in-interest. Following Sec. 2 of Rule 4, the subject civil cases ought to be commenced and prosecuted at the place where Irene resides. Principal Plaintiff not a Resident in Venue of Action

As earlier stated, no less than the RTC in Batac declared Irene as not a resident of Batac, Ilocos Norte. Withal, that court was an improper venue for her conveyance action. The Court can concede that Irenes three co-plaintiffs are all residents of Batac, Ilocos Norte. But it ought to be stressed in this regard that not one of the three can be considered as principal party-plaintiffs in Civil Case Nos. 3341-17 and 3342-17, included as they were in the amended complaint as trustees of the principal plaintiff. As trustees, they may be accorded, by virtue of Sec. 3 of Rule 3, the right to prosecute a suit, but only on behalf of the beneficiary who must be included in the title of the case and shall be deemed to be the real party-in-interest. In the final analysis, the residences of Irenes co -plaintiffs cannot be made the basis in determining the venue of the subject suit. This conclusion becomes all the more forceful considering that Irene herself initiated and was actively prosecuting her claim against Benedicto, his heirs, assigns, or associates, virtually rendering the impleading of the trustees unnecessary. And this brings us to the final point. Irene was a resident during the period material of Forbes Park, Makati City. She was not a resident of Brgy. Lacub, Batac, Ilocos Norte, although jurisprudence[44] has it that one can have several residences, if such were the established fact. The Court will not speculate on the reason why petitioner Irene, for all the inconvenience and expenses she and her adversaries would have to endure by a Batac trial, preferred that her case be heard and decided by the RTC in Batac. On the heels of the dismissal of the original complaints on the ground of improper venue, three new personalities were added to the complaint doubtless to insure, but in vain as it turned out, that the case stays with the RTC in Batac. Litigants ought to bank on the righteousness of their causes, the superiority of their cases, and the persuasiveness of arguments to secure a favorable verdict. It is high time that courts, judges, and those who come to court for redress keep this ideal in mind.

WHEREFORE, the instant petition is hereby DISMISSED. The Decision and Resolution dated October 17, 2001 and June 20, 2002, respectively, of the CA in CA-G.R. SP No. 64246, insofar as they nullified the assailed orders of the RTC, Branch 17 in Batac, Ilocos Norte in Civil Case Nos. 3341-17 and 3342-17 on the ground of lack of jurisdiction due to improper venue, are hereby AFFIRMED. The Orders dated October 9, 2000, December 18, 2000, and March 15, 2001 of the RTC in Civil Case Nos. 3341-17 and 3342-17 are accordingly ANNULLED and SET ASIDE and said civil cases are DISMISSED. Costs against petitioners. SO ORDERED.
G.R. No. L-54452 July 20, l981 EASTERN ASSURANCE & SURETY CORPORATION, petitioner, vs. HON. EMETERIO C. CUI (in his official capacity as Judge, Court of First Instance of Manila, Branch XXV) and LORETA B. PAN, respondents.

ABAD SANTOS, J.: This is a petition to review on certiorari the order, dated October 30, 1978, of the respondent judge in Civil Case No. 115385, Court of First Instance of Manila. The facts of the case, briefly, are the following: On April 21, 1977, Transunion Corporation and Rey M. Pan doing business under the name of Pan Phil. Trading entered into a dealership agreement for the sale of merchandise. Pursuant thereto Pan Phil. Trading had to file a P 20,000 surety bond and it complied by presenting a surety bond of Eastern Assurance & Surety Corporation. On May 15, 1978, Transunion filed a complaint (Civil Case No. 115385, CFI, Manila) against Rey M. Pan, Pan Phil. Trading and Eastern Assurance & Surety Corporation for the full payment of merchandise delivered in the amount of P 10,841.54. After Eastern Assurance & Surety Corporation had filed its Answer with cross-claim, it filed a motion to file a third-party complaint against Loreta B. Pan, wife of Rey M. Pan. The reason given in the motion is that movant has a legal right against Loreta B. Pan. It appears that in consideration of the surety bond, the Pan spouses executed an Indemnity Agreement in favor of Eastern Assurance & Surety Corporation. On July 24, 1978, the respondent judge granted the motion and admitted the third- party complaint.

Subsequently, Loreta B. Pan filed a motion to dismiss the third-party complaint on the ground that venue was improperly laid. She invoked paragraph 7 of the Indemnity Agreement which reads: 7. WAIVER OF VENUE OF ACTION:We [meaning Rey M. Pan and Loreta B. Pan] hereby agree that any question whichmay arise between the Company and the undersigned by reason of this document and which has to be submitted to the court of justice, shall be brought before the court of competent jurisdiction of Quezon City, waiving for this purpose any other proper venue. Notwithstanding the opposition of Eastern Assurance & Surety Corporation, the respondent judge in his order dated October 30, 1978, peremptorily dismissed the third-party complaint on the ground that the motion to dismiss was "well-taken." The respondent judge, may his tribe vanish, did not elaborate. A motion to reconsider the order of dismissal was denied in a similar fashion. We have to grant the petition despite the comment of the respondent judge to the petition for review that in dismissing the third-party complaint he had to uphold the policy of upholding the sanctity of contracts in preference to the policy against multiplicity of suits. He even cites Roscoe Pound's Scope and Purpose of Sociological Jurisprudence in 24 Harvard Law Review 607. What the respondent judge and even petitioner's counsel failed to perceive is that paragraph 7 of the Indemnity Agreement was imposed on the Pan spouses by the petitioner surety company for its benefit and convenience and therefore the latter could waive the provision by filing its complaint, not in Quezon City, but in Manila. There is, therefore, no sanctity of contract to hold. But even if we assume that paragraph 7 of the Indemnity Agreement created a reciprocal obligation, it does not necessarily follow that it is applicable to the present situation. It has to be remembered that a third-party complaint is but ancillary to the main action and is a procedural device to avoid multiplicity of suits. Because of its nature the prescriptions on jurisdiction and venue applicable to ordinary suits may not apply. Thus a third-party complaint has to yield to the jurisdiction and venue of the main action. This view is supported by our decision in Republic vs. Central Surety & Insurance Co., G.R. L-27802, Oct. 26, 1968, 25 SCRA 641, where we said: 3. Upon the third issue, the Surety takes the position that if the trial court acquired jurisdiction over the main case, 'it follows that it should also take cognizance of the third-party complaint which derives its life from the complaint.' The Surety has a point here. It is true that the third-party complaint was filed after the effectivity date of Republic Act 3828. It is likewise true that the demand therein made does not exceed P 10,000, and, therefore, is not within the jurisdiction of the Court of First Instance if it were an independent action. But the third-party complaint is an ancillary suit which depends on the jurisdiction of the court over the main action. Since the trial court had acquired jurisdiction over the complaint, it necessarily follows that it likewise had jurisdiction over the third-party complaint which is but an incident thereof. This must be so because jurisdiction over the main case embraces all incidental matters arising therefrom and connected therewith. A contrary rule would result in 'split jurisdiction which is not favored, and in multiplicity of suits, a situation obnoxious to the orderly administration of justice. The court acquired jurisdiction over the third-party complaint, provided it had jurisdiction over the main case, for the reason that the third-party complaint is but a continuation thereof, its purpose being to seek 'contribution, indemnity, subrogation or any other relief, in respect to his opponent's claim.' (At pp. 648-649. See also Talisay-Silay Milling Co.,

Inc., and J. Amado Araneta vs. The Court of Industrial Relations and Central Azucarera del Danao, L- 21582 No. 29, 1966, 18 SCRA 894.) WHEREFORE, finding the petition to be well-taken, the same is hereby granted; the order of the respondent judge dismissing the third-party complaint is rescinded. Cost against respondents. SO ORDERED.

ADELAIDA INFANTE, Petitioner,

G.R. NO. 156596

Present:

YNARES-SANTIAGO, J., Chairperson, - versus AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, and REYES, JJ.

ARAN BUILDERS, INC., Respondent.

Promulgated: August 24, 2007

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DECISION

AUSTRIA-MARTINEZ, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking the reversal of the Decision[1] of the Court of Appeals (CA) promulgated on August 12, 2002, which upheld the Order dated September 4, 2001, issued by the Regional Trial Court of Muntinlupa City (RTC).

The undisputed facts and issues raised in the lower courts are accurately summarized by the CA as follows: Before the Regional Trial Court of Muntinlupa City (or
Muntinlupa RTC; Branch 276), presided over by Hon. Norma C. Perello (or respondent judge), was an action for revival of judgment filed on June 6, 2001 by Aran Builders, Inc. (or private respondent) against Adelaida Infante (or petitioner), docketed as Civil Case No. 01-164.

The judgment sought to be revived was rendered by the Regional Trial Court of Makati City (or Makati RTC; Branch 60) in an action for specific performance and damages, docketed as Civil Case No. 15563.

The Makati RTC

judgment,

which

became

final

and executory on November 16, 1994, decreed as follows:

26. WHEREFORE, the Court hereby renders judgment as follows:

26.1 The defendant ADELAIDA B. INFANTE is ordered to do the following within thirty (30) days from finality hereof:

26.1.1. To deliver to the plaintiff ARAN BUILDERS, INC. the following: (a) the complete plans (lot plan, location map and vicinity map); (b) Irrevocable Power of Attorney; (c ) Real Estate Tax clearance; (d) tax receipts; (e) proof of up to date payment of Subdivision Association dues referred to in the CONTRACT TO SELL dated November 10, 1986 (Exh. A or Exh. 1);

26.1.2. To execute the deed of sale of Lot No. 11, Block 9, Phase 3-A1, Ayala Alabang Subdivision covered by TCT No. 114015

for P500,000.00 in favor of the plaintiff;

26.1.3. To pay the capital gains tax, documentary stamp taxes and other taxes which the Bureau of Internal Revenue may assess in connection with the sale mentioned in the preceding paragraph and to submit to the plaintiff proof of such payment;

26.1.4. To secure the written conformity of AYALA CORPORATION to the said sale and to give such written conformity to the plaintiff;

26.1.5. To register the deed of sale with the Registry of Deeds and deliver to AYALA CORPORATION the certificate of title issued in the name of plaintiff pursuant to such registration;

26.2 Upon the compliance of the defendant with the preceding directives, the plaintiff must immediately pay to the defendant the sum of P321,918.25;

26.3 The defendant is ordered to pay plaintiff P10,000.00 as attorneys fees;

26.4 The Complaint for moral and exemplary damages is DISMISSED;

26.5 The COUNTERCLAIM is DISMISSED; and

26.6 Cost is taxed against the defendant.

Petitioner filed a motion to dismiss the action (for revival of judgment) on the grounds that the Muntinlupa RTC has no jurisdiction

over the persons of the parties and that venue was improperly laid. Private respondent opposed the motion.

On September 4, 2001, the Muntinlupa RTC issued an order which reads:

The MOTION TO DISMISS is denied.

Admittedly, the Decision was rendered by the Makati Regional Trial Court, but it must be emphasized that at that time there was still no Regional Trial Court in Muntinlupa City, then under the territorial jurisdiction of the Makati Courts, so that cases from this City were tried and heard at Makati City. With the creation of the Regional Trial Courts of Muntinlupa City, matters involving properties located in this City, and cases involving Muntinlupa City residents were all ordered to be litigated before these Courts.

The case at bar is a revival of a judgment which declared the plaintiff as the owner of a parcel of land located in Muntinlupa City. It is this judgment which is sought to be enforced thru this action which necessarily involves the interest, possession, title, and ownership of the parcel of land located in Muntinlupa city and adjudged to Plaintiff. It goes without saying that the complaint should be filed in the latter City

where the property is located, as there are now Regional Trial Courts hereat.

Defendant may answer the complaint within the remaining period, but no less than five (5) days, otherwise a default judgment might be taken against her.

It is SO ORDERED.

Her motion for reconsideration having been denied per order dated September 28, 2001, petitioner came to this Court [CA] via the instant special civil action for certiorari. She ascribes grave abuse of discretion amounting to lack or excess of jurisdiction on the part of respondent judge for erroneously holding that Civil Case No. 01-164 is a revival of judgment which declared private respondent as the owner of a parcel of land located in Muntinlupa City and (that) the judgment rendered by the (Makati RTC) in Civil Case No. 15563 sought to be enforced necessarily involves the interest, possession, title and ownership of the parcel of land located in Muntinlupa City.

Petitioner asserts that the complaint for specific performance and damages before the Makati RTC is a personal action and, therefore, the suit to revive the judgment therein is also personal in nature; and that, consequently, the venue of the action for revival of judgment is either Makati City or Paraaque City where private respondent and petitioner respectively reside, at the election of private respondent.

On the other hand, private respondent maintains that the subject action for revival judgment is quasi in rem because it involves and affects vested or adjudged right on a real property; and that, consequently, venue lies in Muntinlupa City where the property is situated.[2]

On August 12, 2002, the CA promulgated its Decision ruling in favor of herein private respondent. The CA held that since the judgment sought to be revived was rendered in an action involving title to or possession of real property, or interest therein, the action for revival of judgment is then an action in rem which should be filed with the Regional Trial Court of the place where the real property is located. Petitioner moved for reconsideration of the CA Decision but the motion was denied per Resolution dated January 7, 2003. Hence, herein petition. Petitioner claims that the CA erred in finding that the complaint for revival of judgment is an action in rem which was correctly filed with the RTC of the place where the disputed real property is located. The petition is unmeritorious.

Petitioner insists that the action for revival of judgment is an action in personam; therefore, the complaint should be filed with the RTC of the place where either petitioner or private respondent resides. Petitioner then concludes that the filing of the action for revival of judgment with the RTC of Muntinlupa City, the place where the disputed property is located, should be dismissed on the ground of improper venue. Private respondent is of the opinion that the judgment it is seeking to revive involves interest over real property. As such, the present action for revival is a real action, and venue was properly laid with the court of the place where the realty is located. Thus, the question that must be answered is: where is the proper venue of the present action for revival of judgment? Section 6, Rule 39 of the 1997 Rules of Civil Procedure provides that after the lapse of five (5) years from entry of judgment and before it is barred by the statute of limitations, a final and executory judgment or order may be enforced by action. The Rule does not specify in which court the action for revival of judgment should be filed. In Aldeguer v. Gemelo,[3] the Court held that:

x x x an action upon a judgment must be brought either in the same court where said judgment was rendered or in the place where the plaintiff or defendant resides, or in any other place designated by the statutes which treat of the venue of actions in general. (Emphasis supplied)[4]

but emphasized that other provisions in the rules of procedure which fix the venue of actions in general must be considered.[5] Under the present Rules of Court, Sections 1 and 2 of Rule 4 provide:

Section 1. Venue of real actions. - Actions affecting title to or possession of real property, or interest therein, shall be commenced and tried in the proper court which has jurisdiction over the area wherein the real property involved, or a portion thereof, is situated.

xxxx

Section 2. Venue of personal actions. - All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff.

Thus, the proper venue depends on the determination of whether the present action for revival of judgment is a real action or a personal action. Applying the afore-quoted rules on venue, if the action for revival of judgment affects title to or possession of real property, or interest therein, then it is a real action that must be filed with the court of the place where the real property is located. If such action does not fall under the category of real actions,

it is then a personal action that may be filed with the court of the place where the plaintiff or defendant resides. In support of her contention that the action for revival of judgment is a personal action and should be filed in the court of the place where either the plaintiff or defendant resides, petitioner cites the statements made by the Court in Aldeguer v. Gemelo[6] and Donnelly v. Court of First Instance of Manila[7]. Petitioner, however, seriously misunderstood the Court's rulings in said cases. In Aldeguer, what the Court stated was that *t+he action for the execution of a judgment for damages is a personal one, and under section 377 [of the Code of Civil Procedure], it should be brought in any province where the plaintiff or the defendant resides, at the election of the plaintiff[8] (Emphasis and underscoring supplied). Petitioner apparently took such statement to mean that any action for revival of judgment should be considered as a personal one. This thinking is incorrect. The Court specified that the judgment sought to be revived in said case was a judgment for damages. The judgment subject of the action for revival did not involve or affect any title to or possession of real property or any interest therein. The complaint filed in the revival case did not fall under the category of real actions and, thus, the action necessarily fell under the category of personal actions. In Donnelly, the portion of the Decision being relied upon by petitioner stated thus:

Petitioner raises before this Court two (2) issues, namely: (a) whether an action for revival of judgment is one quasi in rem and, therefore, service of summons may be effected thru publication; and (b) whether the second action for revival of judgment (Civil Case No. 76166) has already prescribed. To our mind, the first is not a proper

and justiciable issue in the present proceedings x x x. Nevertheless, let it be said that an action to revive a judgment is a personal one. (Emphasis supplied)[9]

The Court clearly pointed out that in said case, the issue on whether an action for revival of judgment is quasi in rem was not yet proper and justiciable. Therefore, the foregoing statement cannot be used as a precedent, as it was merely an obiter dictum. Moreover, as in Aldeguer, the judgment sought to be revived in Donnelly involved judgment for a certain sum of money. Again, no title or interest in real property was involved. It is then understandable that the action for revival in said case was categorized as a personal one. Clearly, the Court's classification in Aldeguer and Donnelly of the actions for revival of judgment as being personal in character does not apply to the present case. The allegations in the complaint for revival of judgment determine whether it is a real action or a personal action. The complaint for revival of judgment alleges that a final and executory judgment has ordered herein petitioner to execute a deed of sale over a parcel of land in AyalaAlabang Subdivision in favor of herein private respondent; pay all pertinent taxes in connection with said sale; register the deed of sale with the Registry of Deeds and deliver to Ayala Corporation the certificate of title issued in the name of private respondent. The same judgment ordered private respondent to pay petitioner the sum of P321,918.25 upon petitioner's compliance with the aforementioned order. It is further alleged that petitioner refused to comply with her judgment obligations despite private respondent's repeated requests and demands, and that the latter was compelled to file the action for revival of judgment. Private respondent then prayed that the judgment be revived and a writ of execution be issued to enforce said judgment.

The previous judgment has conclusively declared private respondent's right to have the title over the disputed property conveyed to it. It is, therefore, undeniable that private respondent has an established interest over the lot in question; and to protect such right or interest, private respondent brought suit to revive the previous judgment. The sole reason for the present action to revive is the enforcement of private respondent's adjudged rights over a piece of realty. Verily, the action falls under the category of a real action,for it affects private respondent's interest over real property. The present case for revival of judgment being a real action, the complaint should indeed be filed with the Regional Trial Court of the place where the realty is located. Section 18 of Batas Pambansa Bilang 129 provides:

Sec. 18. Authority to define territory appurtenant to each branch. - The Supreme Court shall define the territory over which a branch of the Regional Trial Court shall exercise its authority. The territory thus defined shall be deemed to be the territorial area of the branch concerned for purposes of determining the venue of all suits, proceedings or actions, whether civil or criminal, as well as determining the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts over which the said branch may exercise appellate jurisdiction. The power herein granted shall be exercised with a view to making the courts readily accessible to the people of the different parts

of the region and making the attendance of litigants and witnesses as inexpensive as possible. (Emphasis supplied)

From the foregoing, it is quite clear that a branch of the Regional Trial Court shall exercise its authority only over a particular territory defined by the Supreme Court. Originally, Muntinlupa City was under the territorial jurisdiction of the Makati Courts. However, Section 4 of Republic Act No. 7154, entitled An Act to Amend Section Fourteen of Batas Pambansa Bilang 129, Otherwise Known As The Judiciary Reorganization Act of 1981, took effect on September 4, 1991. Said law provided for the creation of a branch of the Regional Trial Court in Muntinlupa. Thus, it is now the Regional Trial Court in Muntinlupa City which has territorial jurisdiction or authority to validly issue orders and processes concerning real property within Muntinlupa City. Thus, there was no grave abuse of discretion committed by the Regional Trial Court of Muntinlupa City, Branch 276 when it denied petitioner's motion to dismiss; and the CA did not commit any error in affirming the same. WHEREFORE, the petition is DENIED. The Decision dated August 12, 2002 and Resolution dated January 7, 2003 of the Court of Appeals are AFFIRMED. SO ORDERED.
G.R. No. L-27033 October 31, 1969

POLYTRADE CORPORATION, plaintiff-appellee, vs. VICTORIANO BLANCO, defendant-appellant. Paredes, Poblador, Cruz and Nazareno for plaintiff-appellee. Isidro T. Almeda and Mario T. Banzuela for defendant-appellant. SANCHEZ, J.:

Suit before the Court of First Instance of Bulacan on four causes of action to recover the purchase price of rawhide delivered by plaintiff to defendant.1 Plaintiff corporation has its principal office and place of business in Makati, Rizal. Defendant is a resident of Meycauayan, Bulacan. Defendant moved to dismiss upon the ground of improper venue. He claims that by contract suit may only be lodged in the courts of Manila. The Bulacan court overruled him. He did not answer the complaint. In consequence, a default judgment was rendered against him on September 21, 1966, thus: WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant ordering defendant to pay plaintiff the following amounts: First Cause of Action Second Cause of Action Third Cause of Action Fourth Cause of Action P60,845.67, with interest thereon at 1% a month from May 9, 1965 until the full amount is paid. P51,952.55, with interest thereon at 1% a month from March 30, 1965 until the full amount is paid. P53,973.07, with interest thereon at 1% a month from July 3, 1965 until the full amount is paid. P41,075.22, with interest thereon at 1% a month2 until the full amount is paid.

In addition, defendant shall pay plaintiff attorney's fees amounting to 25% of the principal amount due in each cause of action, and the costs of the suit. The amount of P400.00 shall be deducted from the total amount due plaintiff in accordance with this judgment. Defendant appealed. 1. The forefront question is whether or not venue was properly laid in the province of Bulacan where defendant is a resident. Section 2 (b), Rule 4 of the Rules of Court on venue of personal actions triable by courts of first instance and this is one provides that such "actions may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff." Qualifying this provision in Section 3 of the same Rule which states that venue may be stipulated by written agreement "By written agreement of the parties the venue of an action may be changed or transferred from one province to another." Defendant places his case upon Section 3 of Rule 4 just quoted. According to defendant, plaintiff and defendant, by written contracts covering the four causes of action, stipulated that: "The parties agree to sue and be sued in the Courts of Manila." This agreement is valid.3 Defendant says that because of such covenant he can only be sued in the courts of Manila. We are thus called upon to shake meaning from the terms of the agreement just quoted. But first to the facts. No such stipulation appears in the contracts covering the first two causes of action. The general rule set forth in Section 2 (b), Rule 4, governs, and as to said two causes of action, venue was properly laid in Bulacan, the province of defendant's residence. The stipulation adverted to is only found in the agreements covering the third and fourth causes of action. An accurate reading, however, of the stipulation, "The parties agree to sue and be sued in the Courts of Manila," does not preclude the filing of suits in the residence of plaintiff or defendant.

The plain meaning is that the parties merely consented to be sued in Manila. Qualifying or restrictive words which would indicate that Manila and Manila alone is the venue are totally absent therefrom. We cannot read into that clause that plaintiff and defendant bound themselves to file suits with respect to the last two transactions in question only or exclusively in Manila. For, that agreement did not change or transfer venue. It simply is permissive. The parties solely agreed to add the courts of Manila as tribunals to which they may resort. They did not waive their right to pursue remedy in the courts specifically mentioned in Section 2(b) of Rule 4. Renuntiatio non praesumitur. Illuminating on this point is Engel vs. Shubert Theatrical Co., 151 N.Y.S. 593, 594. And this, became there the stipulation as to venue is along lines similar to the present. Said stipulation reads: "In case of dispute, both contracting parties agree to submit to the jurisdiction of the Vienna courts." And the ruling is: "By the clause in question the parties do not agree to submit their disputes to the jurisdiction of the Viennese court, and to those courts only. There is nothing exclusive in the language used. They do agree to submit to the Viennese jurisdiction, but they say not a word in restriction of the jurisdiction of courts elsewhere; and whatever may be said on the subject of the legality of contracts to submit controversies to courts of certain jurisdictions exclusively, it is entirely plain that such agreements should be strictly construed, and should not be extended by implication." Venue here was properly laid. 2. Defendant next challenges the lower court's grant to plaintiff of interest at the rate of one per centum per month. Defendant says that no such stipulation as to right of interest appears in the sales confirmation orders which provided: "TERMS 60 days after delivery with interest accruing on postdated cheques beyond 30 days." The flaw in this argument lies in that the interest and the rate thereof are expressly covenanted in the covering trust receipts executed by defendant in favor of plaintiff, as follows: "All obligations of the undersigned under this agreement of trust shall bear interest at the rate of one per centum (1%) per month from the date due until paid." On this score, we find no error. 3. Defendant protests the award of attorneys' fees which totals P51,961.63, i.e., 25% of the total principal indebtedness of P207,846.51 (exclusive of interest). Defendant's thesis is that the foregoing sum is "exorbitant and unconscionable." To be borne in mind is that the attorneys' fees here provided is not, strictly speaking, the attorneys' fees recoverable as between attorney and client spoken of and regulated by the Rules of Court. Rather, the attorneys' fees here are in the nature of liquidated damages and the stipulation therefor is aptly called a penal clause.4 It has been said that so long as such stipulation does not contravene law, morals, or public order, it is strictly binding upon defendant.5 The attorneys' fees so provided are awarded in favor of the litigant, not his counsel. It is the litigant, not counsel, who is the judgment creditor entitled to enforce the judgment by execution.6 The governing law then is Article 2227 of the Civil Code, viz.: "Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable." For this reason, we do not really have to strictly view the reasonableness of the attorneys' fees in the light of such factors as the amount and character of the services rendered, the nature and importance of the litigation, and the professional character and the social standing of the attorney. We do concede, however, that these factors may be an aid in the determination of the iniquity or unconscionableness of attorneys' fees as liquidated damages. May the attorneys' fees (P51,961.63) here granted be tagged as iniquitous or unconscionable? Upon the circumstances, our answer is in the negative. Plaintiff's lawyers concededly are of high standing.

More important is that this case should not have gone to court. It could have been easily avoided had defendant been faithful in complying with his obligations. It is not denied that the rawhide was converted into leather and sold by defendant. He raises no defense. In fact, he did not even answer the complaint in the lower court, and was thus declared in default. Nor does he deny the principal liability. Add to all these the fact that the writ of attachment issued below upon defendant's properties yielded no more than P400 and the picture is complete. The continued maintenance by defendant of the suit is plainly intended for delay. The attorneys' fees awarded cannot be called iniquitous or unconscionable. In the very recent case of Universal Motors Corporation vs. Dy Hian Tat (1969), 28 SCRA 161, 170, we allowed attorneys' fees in the form of liquidated damages at the rate of 25% of the total amount of the indebtedness. Here, the trial court has already reduced the attorneys' fees from the stipulated 25% "of the total amount involved, principal and interest, then unpaid" to only 25% of the principal amount due. There is no reason why such judgment should be disturbed. FOR THE REASON GIVEN, the appealed judgment is hereby affirmed, except that interest granted, in reference to the fourth cause of action, should start from March 24, 1965. Costs against defendant-appellant. So ordered. G.R. No. 173979 February 12, 2007

AUCTION IN MALINTA, INC., Petitioner, vs. WARREN EMBES LUYABEN, Respondent. DECISION YNARES-SANTIAGO, J.: Assailed in this petition for review under Rule 45 of the Rules of Court is the May 31, 2005 Decision1 of the Court of Appeals in CA-G.R. CV No. 78456, which held that venue was properly laid before the Regional Trial Court of Bulanao, Tabuk, Kalinga (Kalinga RTC), and reversed the trial courts September 3, 2002 Resolution2 dismissing the complaint of respondent Warren Embes Lubayen in Civil Case No. 511, on the ground of improper venue. The facts show that on October 24, 2001, respondent, a resident of Magsaysay, Tabuk, Kalinga, filed with the Kalinga RTC a complaint3 for damages against petitioner Auction in Malinta, Inc., a corporation with business address at Malinta, Valenzuela City, and engaged in public auction of heavy equipments, trucks, and assorted machineries. Respondent alleged that in an auction conducted by petitioner on May 29, 2001, he was declared the highest bidder for a wheel loader T.C.M. 75B, series no. 3309. On June 7, 2001, respondent tendered the payment for the said item but petitioner could no longer produce the loader. It offered a replacement but failed to deliver the same up to the filing of the complaint. Hence, respondent instituted this case to recover actual, moral, and exemplary damages plus attorneys fees. Petitioner filed a motion to dismiss on the ground of improper venue. It argued that the correct venue is the RTC of Valenzuela City pursuant to the stipulation in the Bidders Application and Registration Bidding Agreement which states that:

All Court litigation procedures shall be conducted in the appropriate Courts of Valenzuela City, Metro Manila.4 In a Resolution dated September 3, 2002, the Kalinga RTC held that the clear intention of the parties was to limit the venue to the proper court of Valenzuela City and thus dismissed respondents complaint on the ground of improper venue.5 Aggrieved, respondent appealed to the Court of Appeals which reversed the Resolution of the Kalinga RTC and reinstated the complaint. The dispositive portion thereof, reads: WHEREFORE, the Resolution appealed from is hereby REVERSED and SET ASIDE. The case is remanded to the RTC which is ordered to reinstate plaintiffs complaint for damages. SO ORDERED.6 Petitioners motion for reconsideration was denied; hence, the instant petition. The sole issue is whether the stipulation in the parties Bidders Application and Registration Bidding Agreement effectively limited the venue of the instant case exclusively to the proper court of Valenzuela City. The Court rules in the negative. The general rule on the venue of personal actions, as in the instant case for damages7 filed by respondent, is embodied in Section 2, Rule 4 of the Rules of Court. It provides: Sec. 2. Venue of personal actions. All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a nonresident defendant, where he may be found, at the election of the plaintiff. The aforequoted rule, however, finds no application where the parties, before the filing of the action, have validly agreed in writing on an exclusive venue.8 But the mere stipulation on the venue of an action is not enough to preclude parties from bringing a case in other venues. It must be shown that such stipulation is exclusive. In the absence of qualifying or restrictive words, such as "exclusively" and "waiving for this purpose any other venue,"9"shall only" preceding the designation of venue,10 "to the exclusion of the other courts,"11 or words of similar import, the stipulation should be deemed as merely an agreement on an additional forum, not as limiting venue to the specified place.12 This has been the rule since the 1969 case of Polytrade Corporation v. Blanco.13 It was held therein that the clause "[t]he parties agree to sue and be sued in the Courts of Manila," does not preclude the filing of suits in the court which has jurisdiction over the place of residence of the plaintiff or the defendant. The plain meaning of the said provision is that the parties merely consented to be sued in Manila considering that there are no qualifying or restrictive words which would indicate that Manila, and Manila alone, is the agreed venue. It simply is permissive and the parties did not waive their right to pursue remedy in the courts specifically mentioned in Section 2 of Rule 4 of the Rules of Court.14 The Polytrade doctrine was further applied in the case of Unimasters Conglomeration, Inc. v. Court of Appeals,15which analyzed the various jurisprudence rendered after the Polytrade case. In Unimasters, we held that a stipulation stating that "[a]ll suits arising out of this Agreement shall be

filed with/in the proper Courts of Quezon City,"16 is only permissive and does not limit the venue to the Quezon City courts. As explained in the said case: In other words, unless the parties make very clear, by employing categorical and suitably limiting language, that they wish the venue of actions between them to be laid only and exclusively at a definite place, and to disregard the prescriptions of Rule 4, agreements on venue are not to be regarded as mandatory or restrictive, but merely permissive, or complementary of said rule. The fact that in their agreement the parties specify only one of the venues mentioned in Rule 4, or fix a place for their actions different from those specified by said rule, does not, without more, suffice to characterize the agreement as a restrictive one. There must, to repeat, be accompanying language clearly and categorically expressing their purpose and design that actions between them be litigated only at the place named by them, regardless of the general precepts of Rule 4; and any doubt or uncertainty as to the parties intentions must be resolved against giving their agreement a restrictive or mandatory aspect. Any other rule would permit of individual, subjective judicial interpretations without stable standards, which could well result in precedents in hopeless inconsistency.17 The rule enunciated in Unimasters and Polytrade was reiterated in subsequent cases where the following agreements on venue were likewise declared to be merely permissive and do not limit the venue to the place specified therein, to wit: 1. "If court litigation becomes necessary to enforce collection, an additional equivalent (sic) to 25% of the principal amount will be charged. The agreed venue for such action is Makati, Metro Manila, Philippines."18 2. "In case of litigation hereunder, venue shall be in the City Court or Court of First Instance of Manila as the case may be for determination of any and all questions arising thereunder."19 Then too, the doctrine that absent qualifying or restrictive words, the venue shall either be that stated in the law or rule governing the action or the one agreed in the contract, was applied to an extrajudicial foreclosure sale under Act No. 3135.20 In Langkaan Realty Development, Inc. v. United Coconut Planters Bank ,21 where the provision on the venue employed the word "shall" to refer to the place where the foreclosure will be held, the Court ruled that said provision "lack(s) qualifying or restrictive words to indicate the exclusivity of the agreed forum," and therefore "the stipulated place is considered only as an additional, not a limiting venue."22 The said stipulation reads:
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It is hereby agreed that in case of foreclosure of this mortgage under Act 3135, as amended, and Presidential Decree No. 385, the auction sale shall be held at the capital of the province, if the property is within the territorial jurisdiction of the province concerned, or shall be held in the city, if the property is within the territorial jurisdiction of the city concerned.23 In the instant case, the stipulation in the parties agreement, i.e., "all Court litigation procedures shall be conducted in the appropriate Courts of Valenzuela City, Metro Manila," evidently lacks the restrictive and qualifying words that will limit venue exclusively to the RTC of Valenzuela City. Hence, the Valenzuela courts should only be considered as an additional choice of venue to those mentioned under Section 2, Rule 4 of the Rules of Court. Accordingly, the present case for damages may be filed with the (a) RTC of Valenzuela City as stipulated in the bidding agreement; (b) RTC of Bulanao, Tabuk, Kalinga which has jurisdiction over the residence of respondent (plaintiff); or with the (c) RTC of Valenzuela City which has jurisdiction over the business address of petitioner (defendant). The filing of the complaint in the RTC of Bulanao, Tabuk, Kalinga, is therefore proper, respondent being a resident of Tabuk, Kalinga.

The case of Hoechst Philippines, Inc. v. Torres,24 promulgated in 1978, and invoked by petitioner in its motion to dismiss, had already been superseded by current decisions on venue. In the said case, the Court construed the proviso: "[i]n case of any litigation arising out of this agreement, the venue of action shall be in the competent courts of the Province of Rizal,"25 as sufficient to limit the venue to the proper court of Rizal. However, in Supena v. De la Rosa,26 we ruled that Hoechst had been rendered obsolete by recent jurisprudence applying the doctrine enunciated in Polytrade. In sum, we find that the Court of Appeals correctly declared that venue in the instant case was properly laid with the RTC of Bulanao, Tabuk, Kalinga.
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WHEREFORE, the petition is DENIED. The May 31, 2005 Decision of the Court of Appeals in CAG.R. CV No. 78456 which reversed the September 3, 2002 Resolution of the Regional Trial Court of Bulanao, Tabuk, Kalinga; reinstated the complaint in Civil Case No. 511; and remanded the case to the said court, is AFFIRMED. Costs against petitioner. SO ORDERED. G.R. No. L-37750 May 19, 1978 SWEET LINES, INC., petitioner, vs. HON. BERNARDO TEVES, Presiding Judge, CFI of Misamis Oriental Branch VII, LEOVIGILDO TANDOG, JR., and ROGELIO TIRO, respondents. Filiberto Leonardo, Abelardo C. Almario & Samuel B. Abadiano for petitioner. Leovigildo Vallar for private respondents.

SANTOS, J.: This is an original action for Prohibition with Pre Injunction filed October 3, 1973 to restrain respondent Judge from proceeding further with Civil Case No. 4091, entitled Leovigildo D. Tandog, Jr. and Rogelio Tiro v. Sweet Lines, Inc." after he denied petitioner's Motion to Dismiss the complaint, and the Motion for Reconsideration of said order. 1 Briefly, the facts of record follow. Private respondents Atty. Leovigildo Tandog and Rogelio Tiro, a contractor by professions, bought tickets Nos. 0011736 and 011737 for Voyage 90 on December 31, 1971 at the branch office of petitioner, a shipping company transporting inter-island passengers and cargoes, at Cagayan de Oro City. Respondents were to board petitioner's vessel, M/S "Sweet Hope" bound for Tagbilaran City via the port of Cebu. Upon learning that the vessel was not proceeding to Bohol, since many passengers were bound for Surigao, private respondents per advice, went to the branch office for proper relocation to M/S "Sweet Town". Because the said vessel was already filled to capacity, they were forced to agree "to hide at the cargo section to avoid inspection of the officers of the Philippine Coastguard." Private respondents alleged that they were, during the trip," "exposed to the scorching heat of the sun and the dust coming from the ship's cargo of corn grits," and that the tickets they bought at Cagayan de Oro City for Tagbilaran were not honored and they were constrained to pay for other tickets. In view thereof, private respondents sued petitioner for damages

and for breach of contract of carriage in the alleged sum of P10,000.00 before respondents Court of First Instance of Misamis Oriental. 2 Petitioner moved to dismiss the complaint on the ground of improper venue. This motion was premised on the condition printed at the back of the tickets, i.e., Condition No. 14, which reads:
14. It is hereby agreed and understood that any and all actions arising out of the conditions and provisions of this ticket, irrespective of where it is issued, shall be filed in the competent courts in the City of Cebu. 3

The motion was denied by the trial court. 4 Petitioner moved to reconnsider the order of denial, but no avail. 5Hence, this instant petition for prohibition for preliminary injunction, 'alleging that the respondent judge has departed from the accepted and usual course of judicial preoceeding" and "had acted without or in excess or in error of his jurisdicton or in gross abuse of discretion. 6 In Our resolution of November 20, 1973, We restrained respondent Judge from proceeding further with the case and required respondent to comment. 7 On January 18, 1974, We gave due course to the petition and required respondent to answer. 8 Thereafter, the parties submitted their respesctive memoranda in support of their respective contentions. 9 Presented thus for Our resolution is a question is aquestion which, to all appearances, is one of first impression, to wit Is Condition No. 14 printed at the back of the petitioner's passage tickets purchased by private respondents, which limits the venue of actions arising from the contract of carriage to theCourt of First Instance of Cebu, valid and enforceable? Otherwise stated, may a common carrier engaged in inter-island shipping stipulate thru condition printed at the back of passage tickets to its vessels that any and all actions arising out of the ocntract of carriage should be filed only in a particular province or city, in this case the City of Cebu, to the exclusion of all others? Petitioner contends thaty Condition No. 14 is valid and enforceable, since private respndents acceded to tit when they purchased passage tickets at its Cagayan de Oro branch office and took its vessel M/S "Sweet Town" for passage to Tagbilaran, Bohol that the condition of the venue of actions in the City of Cebu is proper since venue may be validly waived, citing cases; 10 that is an effective waiver of venue, valid and binding as such, since it is printed in bold and capital letters and not in fine print and merely assigns the place where the action sing from the contract is institution likewise citing cases; 11 and that condition No. 14 is unequivocal and mandatory, the words and phrases "any and all", "irrespective of where it is issued," and "shag" leave no doubt that the intention of Condition No. 14 is to fix the venue in the City of Cebu, to the exclusion of other places; that the orders of the respondent Judge are an unwarranted departure from established jurisprudence governing the case; and that he acted without or in excess of his jurisdiction in is the orders complained of. 12 On the other hand, private respondents claim that Condition No. 14 is not valid, that the same is not an essential element of the contract of carriage, being in itself a different agreement which requires the mutual consent of the parties to it; that they had no say in its preparation, the existence of which they could not refuse, hence, they had no choice but to pay for the tickets and to avail of petitioner's shipping facilities out of necessity; that the carrier "has been exacting too much from the public by inserting impositions in the passage tickets too burdensome to bear," that the condition which was printed in fine letters is an imposition on the riding public and does not bind respondents, citing cases; 13 that while venue 6f actions may be transferred from one province to another, such arrangement requires the "written agreement of the parties", not to be imposed unilaterally; and that assuming that the condition is valid, it is not exclusive and does not, therefore, exclude the filing of the action in Misamis Oriental,14

There is no question that there was a valid contract of carriage entered into by petitioner and private respondents and that the passage tickets, upon which the latter based their complaint, are the best evidence thereof. All the essential elements of a valid contract, i.e., consent, cause or consideration and object, are present. As held inPeralta de Guerrero, et al. v. Madrigal Shipping Co., Inc., 15 It is a matter of common knowledge that whenever a passenger boards a ship for transportation from one place to another he is issued a ticket by the shipper which has all the elements of a written contract, Namely: (1) the consent of the contracting parties manifested by the fact that the passenger boards the ship and the shipper consents or accepts him in the ship for transportation; (2) cause or consideration which is the fare paid by the passenger as stated in the ticket; (3) object, which is the transportation of the passenger from the place of departure to the place of destination which are stated in the ticket. It should be borne in mind, however, that with respect to the fourteen (14) conditions one of which is "Condition No. 14" which is in issue in this case printed at the back of the passage tickets, these are commonly known as "contracts of adhesion," the validity and/or enforceability of which will have to be determined by the peculiar circumstances obtaining in each case and the nature of the conditions or terms sought to be enforced. For, "(W)hile generally, stipulations in a contract come about after deliberate drafting by the parties thereto, ... there are certain contracts almost all the provisions of which have been drafted only by one party, usually a corporation. Such contracts are called contracts of adhesion, because the only participation of the party is the signing of his signature or his 'adhesion' thereto. Insurance contracts, bills of lading, contracts of make of lots on the installment plan fall into this category" 16 By the peculiar circumstances under which contracts of adhesion are entered into namely, that it is drafted only by one party, usually the corporation, and is sought to be accepted or adhered to by the other party, in this instance the passengers, private respondents, who cannot change the same and who are thus made to adhere thereto on the "take it or leave it" basis certain guidelines in the determination of their validity and/or enforceability have been formulated in order to that justice and fan play characterize the relationship of the contracting parties. Thus, this Court speaking through Justice J.B.L. Reyes in Qua Chee Gan v. Law Union and Rock Insurance Co., 17 and later through Justice Fernando in Fieldman Insurance v. Vargas, 18 held The courts cannot ignore that nowadays, monopolies, cartels and concentration of capital endowed with overwhelm economic power, manage to impose upon parties d with them y prepared 'agreements' that the weaker party may not change one whit his participation in the 'agreement' being reduced to the alternative 'to take it or leave it,' labelled since Raymond Saleilles 'contracts by adherence' (contracts d' adhesion) in contrast to those entered into by parties bargaining on an equal footing. Such contracts (of which policies of insurance and international bill of lading are prime examples) obviously cap for greater strictness and vigilance on the part of the courts of justice with a view to protecting the weaker party from abuses and imposition, and prevent their becoming traps for the unwary. To the same effect and import, and, in recognition of the character of contracts of this kind, the protection of the disadvantaged is expressly enjoined by the New Civil Code
In all contractual property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance indigence, mental weakness, tender age and other handicap, the courts must be vigilant for his protection. 19

Considered in the light Of the foregoing norms and in the context Of circumstances Prevailing in the inter-island ship. ping industry in the country today, We find and hold that Condition No. 14 printed at the back of the passage tickets should be held as void and unenforceable for the following reasons first, under circumstances obligation in the inter-island ship. ping industry, it is not just and fair to bind passengers to the terms of the conditions printed at the back of the passage tickets, on which Condition No. 14 is Printed in fine letters, and second, Condition No. 14 subverts the public policy on transfer of venue of proceedings of this nature, since the same will prejudice rights and interests of innumerable passengers in different s of the country who, under Condition No. 14, will have to file suits against petitioner only in the City of Cebu. 1. It is a matter of public knowledge, of which We can take judicial notice, that there is a dearth of and acute shortage in inter- island vessels plying between the country's several islands, and the facilities they offer leave much to be desired. Thus, even under ordinary circumstances, the piers are congested with passengers and their cargo waiting to be transported. The conditions are even worse at peak and/or the rainy seasons, when Passengers literally scramble to whatever accommodations may be availed of, even through circuitous routes, and/or at the risk of their safety their immediate concern, for the moment, being to be able to board vessels with the hope of reaching their destinations. The schedules are as often as not if not more so delayed or altered. This was precisely the experience of private respondents when they were relocated to M/S "Sweet Town" from M/S "Sweet Hope" and then any to the scorching heat of the sun and the dust coming from the ship's cargo of corn grits, " because even the latter was filed to capacity. Under these circumstances, it is hardly just and proper to expect the passengers to examine their tickets received from crowded/congested counters, more often than not during rush hours, for conditions that may be printed much charge them with having consented to the conditions, so printed, especially if there are a number of such conditions m fine print, as in this case. 20 Again, it should be noted that Condition No. 14 was prepared solely at the ms of the petitioner, respondents had no say in its preparation. Neither did the latter have the opportunity to take the into account prior to the purpose chase of their tickets. For, unlike the small print provisions of contracts the common example of contracts of adherence which are entered into by the insured in his awareness of said conditions, since the insured is afforded the op to and co the same, passengers of inter-island v do not have the same chance, since their alleged adhesion is presumed only from the fact that they purpose chased the tickets. It should also be stressed that slapping companies are franchise holders of certificates of public convenience and therefore, posses a virtual monopoly over the business of transporting passengers between the ports covered by their franchise. This being so, shipping companies, like petitioner, engaged in inter-island shipping, have a virtual monopoly of the business of transporting passengers and may thus dictate their terms of passage, leaving passengers with no choice but to buy their tickets and avail of their vessels and facilities. Finally, judicial notice may be taken of the fact that the bulk of those who board these inter-island vested come from the low-income groups and are less literate, and who have little or no choice but to avail of petitioner's vessels. 2. Condition No. 14 is subversive of public policy on transfers of venue of actions. For, although venue may be changed or transferred from one province to another by agreement of the parties in writing t to Rule 4, Section 3, of the Rules of Court, such an agreement will not be held valid where it practically negates the action of the claimants, such as the private respondents herein. The philosophy underlying the provisions on transfer of venue of actions is the convenience of the plaintiffs as well as his witnesses and to promote 21 the ends of justice. Considering the expense and trouble a passenger residing outside of Cebu City would incur to prosecute a claim in the City of Cebu, he would most probably decide not to file the action at all. The condition will thus defeat,

instead of enhance, the ends of justice. Upon the other hand, petitioner has branches or offices in the respective ports of call of its vessels and can afford to litigate in any of these places. Hence, the filing of the suit in the CFI of Misamis Oriental, as was done in the instant case, will not cause inconvenience to, much less prejudice, petitioner. Public policy is ". . . that principle of the law which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the public or against the public good ... 22 Under this principle" ... freedom of contract or private dealing is restricted by law for the good of the public. 23 Clearly, Condition No. 14, if enforced, will be subversive of the public good or interest, since it will frustrate in meritorious cases, actions of passenger cants outside of Cebu City, thus placing petitioner company at a decided advantage over said persons, who may have perfectly legitimate claims against it. The said condition should, therefore, be declared void and unenforceable, as contrary to public policy to make the courts accessible to all who may have need of their services. WHEREFORE, the petition for prohibition is DISMISS. ED. The restraining order issued on November 20, 1973, is hereby LIFTED and SET ASIDE. Costs against petitioner. G. R. No. 156966 May 7, 2004

PILIPINO TELEPHONE CORPORATION, petitioner, vs. DELFINO TECSON, respondent. DECISION VITUG, J.: The facts, by and large, are undisputed. On various dates in 1996, Delfino C. Tecson applied for six (6) cellular phone subscriptions with petitioner Pilipino Telephone Corporation (PILTEL), a company engaged in the telecommunications business, which applications were each approved and covered, respectively, by six mobiline service agreements. On 05 April 2001, respondent filed with the Regional Trial Court of Iligan City, Lanao Del Norte, a complaint against petitioner for a "Sum of Money and Damages." Petitioner moved for the dismissal of the complaint on the ground of improper venue, citing a common provision in the mobiline service agreements to the effect that "Venue of all suits arising from this Agreement or any other suit directly or indirectly arising from the relationship between PILTEL and subscriber shall be in the proper courts of Makati, Metro Manila. Subscriber hereby expressly waives any other venues."1 In an order, dated 15 August 2001, the Regional Trial Court of Iligan City, Lanao del Norte, denied petitioners motion to dismiss and required it to file an answer within 15 days from receipt thereof. Petitioner PILTEL filed a motion for the reconsideration, through registered mail, of the order of the trial court. In its subsequent order, dated 08 October 2001, the trial court denied the motion for reconsideration.

Petitioner filed a petition for certiorari under Rule 65 of the Revised Rules of Civil Procedure before the Court of Appeals. The Court of Appeals, in its decision of 30 April 2002, saw no merit in the petition and affirmed the assailed orders of the trial court. Petitioner moved for a reconsideration, but the appellate court, in its order of 21 January 2003, denied the motion. There is merit in the instant petition. Section 4, Rule 4, of the Revised Rules of Civil Procedure2 allows the parties to agree and stipulate in writing, before the filing of an action, on the exclusive venue of any litigation between them. Such an agreement would be valid and binding provided that the stipulation on the chosen venue is exclusive in nature or in intent, that it is expressed in writing by the parties thereto, and that it is entered into before the filing of the suit. The provision contained in paragraph 22 of the "Mobile Service Agreement," a standard contract made out by petitioner PILTEL to its subscribers, apparently accepted and signed by respondent, states that the venue of all suits arising from the agreement, or any other suit directly or indirectly arising from the relationship between PILTEL and subscriber, "shall be in the proper courts of Makati, Metro Manila." The added stipulation that the subscriber "expressly waives any other venue"3 should indicate, clearly enough, the intent of the parties to consider the venue stipulation as being preclusive in character. The appellate court, however, would appear to anchor its decision on the thesis that the subscription agreement, being a mere contract of adhesion, does not bind respondent on the venue stipulation. Indeed, the contract herein involved is a contract of adhesion. But such an agreement is not per se inefficacious. The rule instead is that, should there be ambiguities in a contract of adhesion, such ambiguities are to be construed against the party that prepared it. If, however, the stipulations are not obscure, but are clear and leave no doubt on the intention of the parties, the literal meaning of its stipulations must be held controlling.4 A contract of adhesion is just as binding as ordinary contracts. It is true that this Court has, on occasion, struck down such contracts as being assailable when the weaker party is left with no choice by the dominant bargaining party and is thus completely deprived of an opportunity to bargain effectively. Nevertheless, contracts of adhesion are not prohibited even as the courts remain careful in scrutinizing the factual circumstances underlying each case to determine the respective claims of contending parties on their efficacy. In the case at bar, respondent secured six (6) subscription contracts for cellular phones on various dates. It would be difficult to assume that, during each of those times, respondent had no sufficient opportunity to read and go over the terms and conditions embodied in the agreements. Respondent continued, in fact, to acquire in the pursuit of his business subsequent subscriptions and remained a subscriber of petitioner for quite sometime. In Development Bank of the Philippines vs. National Merchandising Corporation,5 the contracting parties, being of age and businessmen of experience, were presumed to have acted with due care and to have signed the assailed documents with full knowledge of their import. The situation would be no less true than that which obtains in the instant suit. The circumstances in Sweet Lines, Inc. vs. Teves,6 wherein this Court invalidated the venue stipulation contained in the passage ticket, would appear to be rather peculiar to that case. There, the Court took note of an acute shortage in interisland vessels that left passengers literally scrambling to secure accommodations and tickets from crowded and congested counters. Hardly, therefore, were the passengers accorded a real opportunity to examine the fine prints contained in the tickets, let alone reject them.

A contract duly executed is the law between the parties, and they are obliged to comply fully and not selectively with its terms. A contract of adhesion is no exception.7 WHEREFORE, the instant petition is GRANTED, and the questioned decision and resolution of the Court of Appeals in CA-G.R. SP No. 68104 are REVERSED and SET ASIDE. Civil Case No. 5572 pending before the Regional Trial Court of Iligan City, Branch 4, is DISMISSED without prejudice to the filing of an appropriate complaint by respondent against petitioner with the court of proper venue. No costs. SO ORDERED. G.R. No. 171456 August 9, 2007

UNIWIDE HOLDINGS, INC., petitioner, vs. ALEXANDER M. CRUZ, respondent. DECISION CARPIO MORALES, J.: Petitioner, Uniwide Holdings, Inc. (UHI), whose principal office is located in Paraaque City, entered into a Franchise Agreement1 (the agreement) granting respondent, Alexander M. Cruz (Cruz), a fiveyear franchise to adopt and use the "Uniwide Family Store System" for the establishment and operation of a "Uniwide Family Store" along Marcos Highway, Sta. Cruz, Cogeo, Marikina City. Article 10.22 of the agreement called for Cruz as franchisee to pay UHI a monthly service fee of P50,000 or three percent of gross monthly purchases, whichever is higher, payable within five days after the end of each month without need of formal billing or demand from UHI. In case of any delay in the payment of the monthly service fee, Cruz would, under Article 10.33 of the agreement, be liable to pay an interest charge of three percent per month. It appears that Cruz had purchased goods from UHIs affiliated companies First Paragon Corporation (FPC) and Uniwide Sales Warehouse Club, Inc. (USWCI). In August 2002, FPC and USWCI executed Deeds of Assignment4 in favor of UHI assigning all their rights and interests over Cruzs accounts payable to them. As of August 13, 2002, Cruz had outstanding obligations with UHI, FPC, and USWCI in the total amount ofP1,358,531.89, drawing UHI to send him a letter of even date for the settlement thereof in five days. His receipt of the letter notwithstanding, Cruzs accounts remained unsettled. Thus UHI filed a complaint5 for collection of sum of money before the Regional Trial Court (RTC) of Paraaque docketed as Civil Case No. 04-0278 against Cruz on the following causes of action: First Cause of Action 10. Being entitled to the payment of monthly service fee pursuant to the FA, which defendant failed to pay despite demand, plaintiff suffered actual damages in the amount of Phil. Peso: One Million Three Hundred Twenty Seven Thousand Six Hundred Sixty Nine & 83/100 (P1,327,669.83), computed as of 05 April 2004, for which defendant

should be held liable together with legal interest thereon from the date of filing of this Complaint, until fully paid. Second Cause of Action 11. Being the assignee of the receivable of FPC, which receivable defendant failed to pay despite demand, plaintiff suffered actual damages in the amount of Phil. Peso: Sixty Four Thousand One Hundred Sixty Five & 96/100 (P64,165.96) for which defendant should be held liable together with the legal interest thereon computed from date of receipt of plaintiffs demand letter, or on August 16, 2002 to be exact, until fully paid. Third Cause of Action 12. Being the assignee of the receivable of USWCI, which receivable defendant failed to pay despite demand, plaintiff suffered actual damages in the total amount of Phil. Peso: One Million Five Hundred Seventy Nine Thousand Sixty One & 36/100 (P1,579,061.36), computed as of 05 April 2004, inclusive of the two and a half percent (2.5%) monthly interest, as and by way of penalty, and the three (3%) annual interest on the unpaid amount, for which defendant should be held liable, with legal interest thereon from the date of filing of this Complaint, until fully paid. Fourth Cause of Action 13. By reason of defendants obstinate refusal or failure to pay his indebtedness, plaintiff was constrained to file this Complaint and in the process incur expenses by way of attorneys fees, which could be reasonably estimated to reach at least Phil. Peso: Two Hundred Fifty Thousand (P250,000.00) and for which defendant should be held answerable for.6 (Emphasis and underscoring supplied) To the complaint Cruz filed a motion to dismiss7 on the ground of improper venue, he invoking Article 27.5 of the agreement which reads: 27.5 Venue Stipulation The Franchisee consents to the exclusive jurisdiction of the courts of Quezon City, the Franchisee waiving any other venue.8 (Emphasis supplied) Branch 258 of the Paraaque RTC, by Order9 of December 12, 2005, granted Cruzs motion to dismiss. Hence, the present petition before this Court, raising the sole legal issue of: WHETHER A CASE BASED ON SEVERAL CAUSES OF ACTION IS DISMISSIBLE ON THE GROUND OF IMPROPER VENUE WHERE ONLY ONE OF THE CAUSES OF ACTION ARISES FROM A CONTRACT WITH EXCLUSIVE VENUE STIPULATION.10 (Underscoring supplied) Petitioner contends that nowhere in the agreement is there a mention of FPC and USWCI, and neither are the two parties thereto, hence, they cannot be bound to the stipulation on "exclusive venue." The petition is impressed with merit.

The general rule on venue of personal actions, as in petitioners complaint for collection of sum of money, is embodied in Section 2, Rule 4 of the Rules of Court which provides: Sec. 2. Venue of personal actions. All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a nonresident defendant, where he may be found, at the election of the plaintiff. (Emphasis and underscoring supplied) The afore-quoted provision is, however, qualified by Section 4 of the same rule which allows parties, before the filing of the action, to validly agree in writing on an exclusive venue.11 The forging of a written agreement on an exclusive venue of an action does not, however, preclude parties from bringing a case to other venues. Where there is a joinder of causes of action between the same parties one of which does not arise out of the contract where the exclusive venue was stipulated upon, the complaint, as in the one at bar, may be brought before other venues provided that such other cause of action falls within the jurisdiction of the court and the venue lies therein.12 Based on the allegations in petitioners complaint, the second and third causes of action are based on the deeds of assignment executed in its favor by FPC and USWCI. The deeds bear no exclusive venue stipulation with respect to the causes of action thereunder. Hence, the general rule on venue applies that the complaint may be filed in the place where the plaintiff or defendant resides.13 It bears emphasis that the causes of action on the assigned accounts are not based on a breach of the agreement between UHI and Cruz. They are based on separate, distinct and independent contracts-deeds of assignment in which UHI is the assignee of Cruzs obligations to the assignors FPC and USWCI. Thus, any action arising from the deeds of assignment cannot be subjected to the exclusive venue stipulation embodied in the agreement. So San Miguel Corporation v. Monasterio14 enlightens: Exclusive venue stipulation embodied in a contract restricts or confines parties thereto when the suit relates to breach of said contract. But where the exclusivity clause does not make it necessarily encompassing, such that even those not related to the enforcement of the contract should be subject to the exclusive venue, the stipulation designating exclusive venues should be strictly confined to the specific undertaking or agreement. Otherwise, the basic principles of freedom to contract might work to the great disadvantage of a weak party-suitor who ought to be allowed free access to courts of justice.15 (Emphasis and underscoring supplied) In fine, since the other causes of action in petitioners complaint do not relate to a breach of the agreement it forged with Cruz embodying the exclusive venue stipulation, they should not be subjected thereto. As San Miguel further enlightens: Restrictive stipulations are in derogation of the general policy of making it more convenient for the parties to institute actions arising from or in relation to their agreements. Thus, the restriction should be strictly construed as relating solely to the agreement for which the exclusive venue stipulation is embodied. Expanding the scope of such limitation on a contracting party will create unwarranted restrictions which the parties might find unintended or worse, arbitrary and oppressive.16 (Underscoring supplied)

WHEREFORE, the petition is GRANTED. The December 12, 2005 Order of Regional Trial Court of Paraaque City, Branch 258 in Civil Case No. 04-0278 is SET ASIDE. The case is REMANDED to said court which is directed to reinstate the case to its docket and conduct further proceedings thereon with dispatch. SO ORDERED.