VICTORIANO M. ENCARNACION vs.

NIEVES AMIGO (September 15, 2006) DOCTRINE: If an appeal is taken from an order of the lower court dismissing the case without a trial on the merits, the RTC may affirm or reverse it. In case of affirmance and the ground of dismissal is lack of jurisdiction over the subject matter, the RTC, if it has jurisdiction thereover, shall try the case on the merits as if the case was originally filed with it. In case of reversal, the case shall be remanded for further proceedings. If the case was tried on the merits by the lower court without jurisdiction over the subject matter, the RTC on appeal shall not dismiss the case if it has original jurisdiction thereof, but shall decide the case. NATURE: Petition for review assailing the CA decision ordering a remand to the RTC of Cauayan, Isabela PONENTE: Ynares-Santiago FACTS: Petitioner Encarnacion was the registered owner of the property on April 11, 1995 by virtue of the waiver of rights executed by his mother-in-law. Respondent Amigo allegedly entered the premises and took possession of a portion of property sometime in 1985 without the permission of the then owner. Hence, a letter demanding the respondent to vacate the property was sent by the petitioner on February 1, 2001, and it was received by the respondent on February 12, 2001. The demand remained unheeded hence the petitioner filed a complaint for ejectment. The Municipal Trial Court rendered decision in favor of the petitioner. On appeal, Regional Trial Court dismissed the case on the ground that as the MTC had no jurisdiction over the case, it had no appellate jurisdiction. Aggrieved, petitioner filed a petitioner for review under Rule 42 before the Court of Appeals which remanded the case to the RTC for further proceedings. CA held that the proper action is accion publiciana and not unlawful detainer based on the allegations in the complaint filed by the petitioner. ISSUES: WON the case is accion publiciana? WON the RTC should have taken cognizance of the case?

HELD: Yes, it is a case of accion publiciana. RTC acquired jurisdiction. RATIO: Accion interdictal, or an ejectment proceeding which may be either that for forcible entry (detentacion) or unlawful detainer (desahucio), which is a summary action for recovery of physical possession where the dispossession has not lasted for more than one year, and should be brought in the proper inferior court (e.g. MTC). On the other hand, if the dispossession lasted for more than one year, the proper action to be filed is an accion publiciana which should be brought to the proper RTC. While it is true that the demand letter was received by the respondent on February 12, 2001, thereby making the filing of the complaint for ejectment fall within the requisite one year from last demand for complaints for unlawful detainer, it is also equally true that petitioner became the owner of the lot in 1995 and has been since that time deprived possession of a portion thereof. Almost 6 years have elapsed from the date of the petitioner's dispossession in 1995 up to his filing of his complaint for ejectment in 2001. The length of time that the petitioner was dispossessed of his property made his cause of action beyond the ambit of an accion interdictal and effectively made it one for accion publiciana. After the lapse of the one-year period, the suit must be commenced in the RTC. The respondent's actual entry on the land of the petitioner was in 1985 but it was only on March 2, 2001 or sixteen years after, when petitioner filed his ejectment case. The respondent should have filed an accion publiciana case which is under the jurisdiction of the RTC. However, the RTC should have not dismissed the case; it should have taken cognizance of the case. According to Section 8, Rule 40 of ROC, if the case is tried on the merits by the Municipal Court without jurisdiction over the subject matter, the RTC on appeal may no longer dismiss the case if it has original jurisdiction thereof. Moreover, the RTC shall no longer try the case on the merits, but shall decide the case on the basis of the evidence presented in the lower court, without prejudice to the admission of the amended pleadings and additional evidence in the interest of justice. DISPOSITION: CA decision ordering the remand to RTC of Cauayan, Isabela is affirmed.

VOTE: 1st Division. Panganiban, Austria-Martinez, Callejo, Sr., Chico-Nazario, concur.

Uniwide Holdings Inc. v. Alexander M. Cruz (August 9, 2007) DOCTRINE: The restriction on venue 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. NATURE: Petition for review on certiorari PONENTE: Carpio-Morales FACTS: Uniwide, whose principal office is located in Paranaque City, entered into a Franchise Agreement with Cruz for a 5year franchise of Uniwide Family Store along Marcos Highway in Marikina City. Art. 10.2 of the agreement provides for payment of monthly service fee of P50,000 or 3% of gross monthly purchases (whichever is higher). Art. 10.3 made Cruz liable to pay for interest charge of 3% per month. Cruz purchased goods from Uniwide's affiliated companies: First Paragon Corporation (FPC) and Uniwide Sales Warehouse Club, Inc. (USWCI). FPC and USWCI executed Deed of Assignment in favor of UHI assigning all their rights and interests over Cruz's accounts payable to Uniwide. Cruz had an outstanding obligation of P1,358,531.89. Uniwide send him a letter but despite receipt of such, accounts were not settled. UHI filed complaint for collection of sum of money with RTC OF PARANAQUE. Causes of Action: 1. monthly service fee = P1,327,669.83

Note: this is the only cause of action which arises from the agreement with exclusive venue stipulation 2. assigned A/P from FPC = P64,165.96 3. assigned A/P from USWCI = P1,579,061.36 4. attorney's fees = P250,000 Cruz filed Motion to dismiss on the ground of improper venue. He cited Art. 27.5 of the agreement: 27.5 Venue Stipulation The Franchisee consents to the exclusive jurisdiction of the courts of Quezon City, the Franchisee waiving any other venue. RTC: granted Motion to dismiss ISSUES: WON a case based on several cause of action is dismissible on the ground of improper venue where only one of the causes of action arises from contract with exclusive venue stipulation. HELD: No RATIO/RULING: General Rule: Section 2, Rule 4 of the Rules of Court 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. Qualification: Section 4 which allows parties, before the filing of the action, to validly agree in writing on an exclusive venue 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. The 2nd and 3rd cause of action are based on the deed of assignments by FPC and USWCI which have no no exclusive venue stipulations. Thus, the general rule applies and complaint may be filed in place where plaintiff or defendant resides.

They are based on a breach of the agreement between UHI and Cruz but are separate, distinct and independent contracts. San Miguel Corporation v. Monasterio: 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. -

The trial court's ruling operates as res judicata against another suit involving the same parties and same cause of action. This is rightly so because the trial court found that Rodriguez was not a party to the sale of the excavator. On the other hand, petitioner Seaoil's liability has been successfully established by respondent. NATURE: Petition for review PONENTE: Nachura FACTS: Petitioner Seaoil Petroleum Corporation purchased one unit of ROBEX 200 LC Excavator, Model 1994 from respondent Autocorp Group. The sales agreement was embodied in the Vehicle Sales Invoice No. A-0209 and Vehicle Sales Confirmation No. 258. Seaoil issued 12 checks as payment therefor; however 10 checks were not honored by the bank since Seaoil requested that payment be stopped. Autocorp filed a complaint for recovery of personal property with damages and replevin in the Regional Trial Court. Seaoil claims that the claim of Autocorp was not true, that the agreement between them was not as simple as Autocorp described and that Seaoil and Autocorp were only utilized as conduits to settle the obligation of one foreign entity named Uniline Asia, in favor of another foreign entity, Focus Point International, Incorporated. The real transaction is that Uniline, through Rodriguez, owed money to Focus. In lieu of payment, Uniline instead agreed to convey the excavator to Focus. This was to be paid by checks issued by Seaoil but which in turn were to be funded by checks issued by Uniline. RTC: ruled the transaction was a simple contract of sale payable in instalments and ordered Seaoil to pay Autocorp. It also held that the obligation to pay Autocorp the remainder of the purchase price of the excavator solely devolves on Seaoil. The third-party complaint filed by Seaoil against third-party defendant Paul Rodriguez was dismissed for lack of merit. Seaoil filed a petition for review with the CA. CA: affirmed in toto decision of RTC. It held that the transaction between Yu and Rodriguez was merely verbal. This cannot alter the sales contract between Seaoil and Autocorp as this will run counter to the parol evidence rule which prohibits the introduction of oral and parol evidence to modify the terms of the contract. The

DISPOSITION: Petition granted. Case is remanded to RTC of Paranaque. VOTE: 2nd Division. Quisumbing, Carpio, Tinga and Velasco concurs.

Seaoil Petroleum Corp. v. Autocorp Group (October 17, 2008) DOCTRINE: Rule 6, Section 11 of the Revised Rules on Civil Procedure defines a third-party complaint as a claim that a defending party may, with leave of court, file against a person not a party to the action, called the third-party defendant, for contribution, indemnity, subrogation or any other relief, in respect of his opponent's claim. The purpose of the rule is to permit a defendant to assert an independent claim against a third party which he, otherwise, would assert in another action, thus preventing multiplicity of suits. Had it not been for the rule, the claim could have been filed separately from the original complaint. Petitioner's claim against Rodriguez was fully ventilated in the proceedings before the trial court, tried and decided on its merits.

claim that it falls under the exceptions to the parol evidence rule has not been sufficiently proven. Moreover, it held that Autocorp's separate corporate personality cannot be disregarded and the veil of corporate fiction pierced. Seaoil was not able to show that Autocorp was merely an alter ego of Uniline or that both corporations were utilized to perpetrate a fraud. Lastly, it held that the RTC was correct in dismissing the third-party complaint since it did not arise out of the same transaction on which the plaintiff's claim is based, or that the third party's claim, although arising out of another transaction, is connected to the plaintiff's claim. Besides, the CA said, such claim may be enforced in a separate action. ISSUE: (only the relevant one) Whether or not the dismissal of the third-party complaint would have the legal effect of res judicata as would unjustly preclude petitioner from enforcing its claim against respondent Rodriguez (third-party defendant) in a separate action. HELD: The trial court's ruling operates as res judicata against another suit involving the same parties and same cause of action RATIO/RULING: The transaction under the Vehicle Sales Invoice is separate and distinct from that under the Lease Purchase Agreement. In the former, it is Seaoil that owes Autocorp, while in the latter, Uniline incurred obligations to Focus. There was never any allegation, much less any evidence, that Autocorp was merely an alter ego of Uniline, or that the two corporations' separate personalities were being used as a means to perpetrate fraud or wrongdoing. Moreover, Rodriguez, as stockholder and director of Uniline, cannot be held personally liable for the debts of the corporation, which has a separate legal personality of its own. While Section 31 of the Corporation Code lays down the exceptions to the rule, the same does not apply in this case. Section 31 makes a director personally liable for corporate debts if he willfully and knowingly votes for or assents to patently unlawful acts of the corporation. Section 31 also makes a director personally liable if he is guilty of gross negligence or bad faith in directing the affairs of the corporation. The bad faith or wrongdoing of the director must be established clearly and convincingly. Bad faith is never presumed.

The burden of proving bad faith or wrongdoing on the part of Rodriguez was, on petitioner, a burden which it failed to discharge. Thus, it was proper for the trial court to have dismissed the thirdparty complaint against Rodriguez on the ground that he was not a party to the sale of the excavator. Rule 6, Section 11 of the Revised Rules on Civil Procedure defines a third-party complaint as a claim that a defending party may, with leave of court, file against a person not a party to the action, called the third-party defendant, for contribution, indemnity, subrogation or any other relief, in respect of his opponent's claim. The purpose of the rule is to permit a defendant to assert an independent claim against a third party which he, otherwise, would assert in another action, thus preventing multiplicity of suits. Had it not been for the rule, the claim could have been filed separately from the original complaint. Petitioner's claim against Rodriguez was fully ventilated in the proceedings before the trial court, tried and decided on its merits. The trial court's ruling operates as res judicata against another suit involving the same parties and same cause of action. This is rightly so because the trial court found that Rodriguez was not a party to the sale of the excavator. On the other hand, petitioner Seaoil's liability has been successfully established by respondent. DISPOSITION: Decision of CA Affirmed. VOTE: 3rd Division. Ynares-Santiago, Austria-Martinez, Azcuna and Chico-Nazario concur.