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[G.R. No. 119657. February 7, 1997]

The appellate proceeding at bar turns upon the interpretation of a stipulation in a
contract governing venue of actions thereunder arising.
On October 28, 1988 Kubota Agri-Machinery Philippines, Inc. (hereafter, simply
KUBOTA) and Unimasters Conglomeration, Inc. (hereafter, simply UNIMASTERS)
entered into a "Dealership Agreement for Sales and Services" of the former's products
in Samar and Leyte Provinces.[1] The contract contained, among others:
1) a stipulation reading: "** All suits arising out of this Agreement shall be filed with / in
the proper Courts of Quezon City," and
2) a provision binding UNIMASTERS to obtain (as it did in fact obtain) a credit line with
Metropolitan Bank and Trust Co.-Tacloban Branch in the amount of P2,000,000.00 to
answer for its obligations to KUBOTA.
Some five years later, or more precisely on December 24, 1993, UNIMASTERS
filed an action in the Regional Trial Court of Tacloban City against KUBOTA, a certain
Reynaldo Go, and Metropolitan Bank and Trust Company-Tacloban Branch (hereafter,
simply METROBANK) for damages for breach of contract, and injunction with prayer
for temporary restraining order. The action was docketed as Civil Case No. 93-12-241
and assigned to Branch 6.
On the same day the Trial Court issued a restraining order enjoining METROBANK
from "authorizing or effecting payment of any alleged obligation of ** (UNIMASTERS)
to defendant ** KUBOTA arising out of or in connection with purchases made by
defendant Go against the credit line caused to be established by ** (UNIMASTERS) for
and in the amount of P2 million covered by defendant METROBANK ** or by way of
charging ** (UNIMASTERS) for any amount paid and released to defendant **
(KUBOTA) by the Head Office of METROBANK in Makati, Metro-Manila **." The Court
also set the application for preliminary injunction for hearing on January 10, 1994 at
8:30 o'clock in the morning.

On January 4, 1994 KUBOTA filed two motions. One prayed for dismissal of the
case on the ground of improper venue (said motion being set for hearing on January
11, 1994). The other prayed for the transfer of the injunction hearing to January 11,
1994 because its counsel was not available on January 10 due to a prior commitment
before another court.
KUBOTA claims that notwithstanding that its motion to transfer hearing had been
granted, the Trial Court went ahead with the hearing on the injunction incident on
January 10, 1994 during which it received the direct testimony of UNIMASTERS'
general manager, Wilford Chan; that KUBOTA's counsel was "shocked" when he
learned of this on the morning of the 11th, but was nonetheless instructed to proceed to
cross-examine the witness; that when said counsel remonstrated that this was unfair,
the Court reset the hearing to the afternoon of that same day, at which time Wilford
Chan was recalled to the stand to repeat his direct testimony. It appears that crossexamination of Chan was then undertaken by KUBOTA's lawyer with the "express
reservation that ** (KUBOTA was) not (thereby) waiving and/or abandoning its motion
to dismiss;" and that in the course of the cross-examination, exhibits (numbered from 1
to 20) were presented by said attorney who afterwards submitted a memorandum in
lieu of testimonial evidence.[2]
On January 13, 1994, the Trial Court handed down an Order authorizing the
issuance of the preliminary injunction prayed for, upon a bond of P2,000,000.00.[3] And
on February 3, 1994, the same Court promulgated an Order denying KUBOTA's motion
to dismiss. Said the Court:
"The plaintiff UNIMASTERS Conglomeration is holding its principal place of
business in the City of Tacloban while the defendant ** (KUBOTA) is holding its
principal place of business in Quezon City. The proper venue therefore pursuant
to Rules of Court would either be Quezon City or Tacloban City at the election of
the plaintiff. Quezon City and Manila (sic), as agreed upon by the parties in the
Dealership Agreement, are additional places other than the place stated in the
Rules of Court. The filing, therefore, of this complaint in the Regional Trial Court
in Tacloban City is proper."
Both orders were challenged as having been issued with grave abuse of discretion
by KUBOTA in a special civil action of certiorari and prohibition filed with the Court of
Appeals, docketed as CA-G.R. SP No. 33234. It contended, more particularly, that (1)
the RTC had "no jurisdiction to take cognizance of ** (UNIMASTERS') action
considering that venue was improperly laid," (2) UNIMASTERS had in truth "failed to
prove that it is entitled to the ** writ of preliminary injunction;" and (3) the RTC gravely
erred "in denying the motion to dismiss."[4]

The Appellate Court agreed with KUBOTA that -- in line with the Rules of
Court[5] and this Court's relevant rulings[6] -- the stipulation respecting venue in its
Dealership Agreement with UNIMASTERS did in truth limit the venue of all suits arising
thereunder only and exclusively to "the proper courts of Quezon City." [7] The Court also
held that the participation of KUBOTA's counsel at the hearing on the injunction
incident did not in the premises operate as a waiver or abandonment of its objection to
venue; that assuming that KUBOTA's standard printed invoices provided that the
venue of actions thereunder should be laid at the Court of the City of Manila, this was
inconsequential since such provision would govern "suits or legal actions between
petitioner and its buyers" but not actions under the Dealership Agreement between
KUBOTA and UNIMASTERS, the venue of which was controlled by paragraph No. 7
thereof; and that no impediment precludes issuance of a TRO or injunctive writ by the
Quezon City RTC against METROBANK-Tacloban since the same "may be served on
the principal office of METROBANK in Makati and would be binding on and
enforceable against, METROBANK branch in Tacloban."
After its motion for reconsideration of that decision was turned down by the Court of
Appeals, UNIMASTERS appealed to this Court. Here, it ascribes to the Court of
Appeals several errors which it believes warrant reversal of the verdict, namely: [8]
1) "in concluding, contrary to decisions of this ** Court, that the agreement on venue
between petitioner (UNIMASTERS) and private respondent (KUBOTA) limited to the
proper courts of Quezon City the venue of any complaint filed arising from the
dealership agreement between ** (them);"
2) "in ignoring the rule settled in Philippine Banking Corporation vs. Tensuan,[9] that 'in
the absence of qualifying or restrictive words, venue stipulations in a contract should
be considered merely as agreement on additional forum, not as limiting venue to the
specified place;" and in concluding, contrariwise, that the agreement in the case at bar
"was the same as the agreement on venue in the Gesmundocase," and therefore,
the Gesmundo case was controlling; and
3) "in concluding, based solely on the self-serving narration of ** (KUBOTA that its)
participation in the hearing for the issuance of a ** preliminary injunction did not
constitute waiver of its objection to venue."
The issue last mentioned, of whether or not the participation by the lawyer of
KUBOTA at the injunction hearing operated as a waiver of its objection to venue, need
not occupy the Court too long. The record shows that when KUBOTA's counsel
appeared before the Trial Court in the morning of January 11, 1994 and was then
informed that he should cross-examine UNIMASTERS' witness, who had testified the
day before, said counsel drew attention to the motion to dismiss on the ground of

improper venue and insistently attempted to argue the matter and have it ruled upon at
the time; and when the Court made known its intention (a) "to (resolve first the) issue
(of) the injunction then rule on the motion to dismiss," and (b) consequently its desire to
forthwith conclude the examination of the witness on the injunction incident, and for
that purpose reset the hearing in the afternoon of that day, the 11th, so that the matter
might be resolved before the lapse of the temporary restraining order on the 13th,
KUBOTA's lawyer told the Court: "Your Honor, we are not waiving our right to submit
the Motion to Dismiss."[10] It is plain that under these circumstances, no waiver or
abandonment can be imputed to KUBOTA.
The essential question really is that posed in the first and second assigned errors,
i.e., what construction should be placed on the stipulation in the Dealership Agreement
that "(a)ll suits arising out of this Agreement shall be filed with/in the proper Courts of
Quezon City."
Rule 4 of the Rules of Court sets forth the principles generally governing the venue
of actions, whether real or personal, or involving persons who neither reside nor are
found in the Philippines or otherwise. Agreements on venue are explicitly allowed. "By
written agreement of the parties the venue of an action may be changed or transferred
from one province to another." [11] Parties may by stipulation waive the legal venue and
such waiver is valid and effective being merely a personal privilege, which is not
contrary to public policy or prejudicial to third persons. It is a general principle that a
person may renounce any right which the law gives unless such renunciation would be
against public policy.[12]
Written stipulations as to venue may be restrictive in the sense that the suit may be
filed only in the place agreed upon, or merely permissive in that the parties may file
their suit not only in the place agreed upon but also in the places fixed by law (Rule 4,
specifically). As in any other agreement, what is essential is the ascertainment of the
intention of the parties respecting the matter.
Since convenience is the raison d'etre of the rules of venue,[13] it is easy to accept
the proposition that normally, venue stipulations should be deemed permissive merely,
and that interpretation should be adopted which most serves the parties'
convenience. In other words, stipulations designating venues other than those
assigned by Rule 4 should be interpreted as designed to make it more convenient for
the parties to institute actions arising from or in relation to their agreements; that is to
say, as simply adding to or expanding the venues indicated in said Rule 4.
On the other hand, because restrictive stipulations are in derogation of this general
policy, the language of the parties must be so clear and categorical as to leave no
doubt of their intention to limit the place or places, or to fix places other than those

indicated in Rule 4, for their actions. This is easier said than done, however, as an
examination of precedents involving venue covenants will immediately disclose.
In at least thirteen (13) cases, this Court construed the venue stipulations involved
as merely permissive. These are:
1. Polytrade Corporation v. Blanco, decided in 1969.[14] In this case, the venue
stipulation was as follows:
"The parties agree to sue and be sued in the Courts of Manila."
This Court ruled that such a provision "does not preclude the filing of suits in the
residence of the plaintiff or the 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. 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."
The Polytrade doctrine was reiterated expressly or implicitly in subsequent cases,
numbering at least ten (10).
2. Nicolas v. Reparations Commission, decided in 1975.[15] In this case, the stipulation
on venue read:
"** (A)ll legal actions arising out of this contract ** may be brought in and submitted to
the jurisdiction of the proper courts in the City of Manila."
This Court declared that the stipulation does not clearly show the intention of the
parties to limit the venue of the action to the City of Manila only. "It must be noted that
the venue in personal actions is fixed for the convenience of the plaintiff and his
witnesses and to promote the ends of justice. We cannot conceive how the interest of
justice may be served by confining the situs of the action to Manila, considering that
the residences or offices of all the parties, including the situs of the acts sought to be
restrained or required to be done, are all within the territorial jurisdiction of Rizal. **
Such agreements should be construed reasonably and should not be applied in such a
manner that it would work more to the inconvenience of the parties without promoting
the ends of justice."
3. Lamis Ents. v. Lagamon, decided in 1981.[16] Here, the stipulation in the promissory
note and the chattel mortgage specifed Davao City as the venue.

The Court, again citing Polytrade, stated that the provision "does not preclude the filing
of suits in the residence of plaintiff or defendant under Section 2(b), Rule 4, Rules of
Court, in the absence of qualifying or restrictive words in the agreement which would
indicate that the place named is the only venue agreed upon by the parties. The
stipulation did not deprive ** (the affected party) of his right to pursue remedy in the
court specifically mentioned in Section 2(b) of Rule 4, Rules of Court. Renuntiato non
4. Capati v. Ocampo, decided in 1982.[17] In this case, the provision of the contract
relative to venue was as follows:
" ** (A)ll actions arising out, or relating to this contract may be instituted in the Court of
First Instance of the City of Naga."
The Court ruled that the parties "did not agree to file their suits solely and exclusively
with the Court of First Instance of Naga;" they "merely agreed to submit their disputes
to the said court without waiving their right to seek recourse in the court specifically
indicated in Section 2 (b), Rule 4 of the Rules of Court."
5. Western Minolco v. Court of Appeals, decided in 1988.[18] Here, the provision
governing venue read:
"The parties stipulate that the venue of the actions referred to in Section 12.01 shall be
in the City of Manila."
The court restated the doctrine that a stipulation in a contract fixing a definite place for
the institution of an action arising in connection therewith, does not ordinarily
supersede the general rules set out in Rule 4, and should be construed merely as an
agreement on an additional forum, not as limiting venue to the specified place.
6. Moles v. Intermediate Appellate Court, decided in 1989.[19] In this proceeding, the
Sales Invoice of a linotype machine stated that the proper venue should be Iloilo.
This Court held that such an invoice was not the contract of sale of the linotype
machine in question; consequently the printed provisions of the invoice could not have
been intended by the parties to govern the sale of the machine, especially since said
invoice was used for other types of transactions. This Court said: "It is obvious that a
venue stipulation, in order to bind the parties, must have been intelligently and
deliberately intended by them to exclude their case from the reglementary rules on
venue. Yet, even such intended variance may not necessarily be given judicial
approval, as, for instance, where there are no restrictive or qualifying words in the
agreement indicating that venue cannot be laid in any place other than that agreed
upon by the parties, and in contracts of adhesion."

7. Hongkong and Shanghai Banking Corp. v. Sherman, decided in 1989.[20] Here the
stipulation on venue read:
" ** (T)his guarantee and all rights, obligations and liabilities arising hereunder shall be
construed and determined under and may be enforced in accordance with the laws of
the Republic of Singapore. We hereby agree that the Courts in Singapore shall have
jurisdiction over all disputes arising under this guarantee **."
This Court held that due process dictates that the stipulation be liberally
construed. The parties did not thereby stipulate that only the courts of Singapore, to
the exclusion of all the others, had jurisdiction. The clause in question did not operate
to divest Philippine courts of jurisdiction.
8. Nasser v. Court of Appeals, decided in 1990,[21] in which the venue stipulation in the
promissory notes in question read:
" ** (A)ny action involving the enforcement of this contract shall be brought within the
City of Manila, Philippines."
The Court's verdict was that such a provision does not as a rule supersede the general
rule set out in Rule 4 of the Rules of Court, and should be construed merely as an
agreement on an additional forum, not as limiting venue to the specified place.
9. Surigao Century Sawmill Co., Inc. v. Court of Appeals, decided in 1993:[22] In this
case, the provision concerning venue was contained in a contract of lease of a barge,
and read as follows:
" ** (A)ny disagreement or dispute arising out of the lease shall be settled by the
parties in the proper court in the province of Surigao del Norte."
The venue provision was invoked in an action filed in the Regional Trial Court of Manila
to recover damages arising out of marine subrogation based on a bill of lading. This
Court declared that since the action did not refer to any disagreement or dispute arising
out of the contract of lease of the barge, the venue stipulation in the latter did not
apply; but that even assuming the contract of lease to be applicable, a statement in a
contract as to venue does not preclude the filing of suits at the election of the plaintiff
where no qualifying or restrictive words indicate that the agreed place alone was the
chosen venue.
10. Philippine Banking Corporation v. Hon. Salvador Tensuan, etc., Circle Financial
Corporation, et al., decided in 1993.[23] Here, the stipulation on venue was contained in
promissory notes and read as follows:

"I/We hereby expressly submit to the jurisdiction of the courts of Valenzuela any legal
action which may arise out of this promissory note."
This Court held the stipulation to be merely permissive since it did not lay the venue in
Valenzuela exclusively or mandatorily. The plain or ordinary import of the stipulation is
the grant of authority or permission to bring suit in Valenzuela; but there is not the
slightest indication of an intent to bar suit in other competent courts. The Court stated
that there is no necessary or customary connection between the words "any legal
action" and an intent strictly to limit permissible venue to the Valenzuela
courts. Moreover, since the venue stipulations include no qualifying or exclusionary
terms, express reservation of the right to elect venue under the ordinary rules was
unnecessary in the case at bar. The Court made clear that "to the
extent Bautista and Hoechst Philippines are inconsistent with Polytrade (an en
banc decision
than Bautista)
reiterating Polytrade, Bautista and Hoechst Philippines have been rendered obsolete
by the Polytrade line of cases."
11. Philippine Banking Corporation v. Hon. Salvador Tensuan, etc., Brinell Metal Works
Corp., et al., decided in 1994:[24] In this case the subject promissory notes commonly
contained a stipulation reading:
"I/we expressly submit to the jurisdiction of the courts of Manila, any legal action which
may arise out of this promissory note."
the Court restated the rule in Polytrade that venue stipulations in a contract, absent
any qualifying or restrictive words, should be considered merely as an agreement on
additional forum, not limiting venue to the specified place. They are not exclusive, but
rather, permissive. For to restrict venue only to that place stipulated in the agreement is
a construction purely based on technicality; on the contrary, the stipulation should be
liberally construed. The Court stated: "The later cases of Lamis Ents v. Lagamon [108
SCRA 1981], Capati v. Ocampo [113 SCRA 794 [1982], Western Minolco v. Court of
Appeals [167 SCRA 592 [1988], Moles v. Intermediate Appellate Court [169 SCRA 777
[1989], Hongkong and Shanghai Banking Corporation v. Sherman [176 SCRA
331], Nasser v. Court of Appeals [191 SCRA 783 [1990] and just recently, Surigao
Century Sawmill Co. v. Court of Appeals [218 SCRA 619 [1993], all treaded the path
blazed by Polytrade. The conclusion to be drawn from all these is that the more recent
jurisprudence shall properly be deemed modificatory of the old ones."
The lone dissent observed: "There is hardly any question that a stipulation of contracts
of adhesion, fixing venue to a specified place only, is void for, in such cases, there
would appear to be no valid and free waiver of the venue fixed by the Rules of
Courts. However, in cases where both parties freely and voluntarily agree on a

specified place to be the venue of actions, if any, between them, then the only
considerations should be whether the waiver (of the venue fixed by the Rules of Court)
is against public policy and whether the parties would suffer, by reason of such waiver,
undue hardship and inconvenience; otherwise, such waiver of venue should be upheld
as binding on the parties. The waiver of venue in such cases is sanctioned by the rules
on jurisdiction."
Still other precedents adhered to the same principle.
12. Tantoco v. Court of Appeals, decided in 1977.[25] Here, the parties agreed in
their sales contracts that the courts of Manila shall have jurisdiction over any legal
action arising out of their transaction. This Court held that the parties agreed merely to
add the courts of Manila as tribunals to which they may resort in the event of suit, to
those indicated by the law: the courts either of Rizal, of which private respondent was a
resident, or of Bulacan, where petitioner resided.
13. Sweet Lines, Inc. v. Teves, promulgated in 1987.[26] In this case, a similar stipulation
on venue, contained in the shipping ticket issued by Sweet Lines, Inc. (as Condition
14) -" ** that any and all actions arising out or the condition and provisions of this ticket,
irrespective of where it is issued, shall be filed in the competent courts in the City of
-- was declared unenforceable, being subversive of public policy. The Court explained
that the philosophy on transfer of venue of actions is the convenience of the plaintiffs
as well as his witnesses and to promote the ends of justice; and 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.
On the other hand, in the cases hereunder mentioned, stipulations on venue were
held to be restrictive, or mandatory.
1. Bautista vs. De Borja, decided in 1966.[27] In this case, the contract provided that in
case of any litigation arising therefrom or in connection therewith, the venue of the
action shall be in the City of Manila.This Court held that without either party reserving
the right to choose the venue of action as fixed by law, it can reasonably be inferred
that the parties intended to definitely fix the venue of the action, in connection with the
contract sued upon in the proper courts of the City of Manila only, notwithstanding that
neither party is a resident of Manila.

2. Gesmundo v. JRB Realty Corporation, decided in 1994.[28] Here the lease contract
declared that
" ** (V)enue for all suits, whether for breach hereof or damages or any cause between
the LESSOR and LESSEE, and persons claiming under each, ** (shall be) the courts
of appropriate jurisdiction in Pasay City. . ."
This Court held that: "(t)he language used leaves no room for interpretation. It clearly
evinces the parties' intent to limit to the 'courts of appropriate jurisdiction of Pasay City'
the venue for all suits between the lessor and the lessee and those between parties
claiming under them. This means a waiver of their right to institute action in the courts
provided for in Rule 4, sec. 2(b)."
3. Hoechst Philippines, Inc. v. Torres,[29] decided much earlier, in 1978, involved a
strikingly similar stipulation, which read:
" ** (I)n case of any litigation arising out of this agreement, the venue of any action
shall be in the competent courts of the Province of Rizal."
This Court held: "No further stipulations are necessary to elicit the thought that both
parties agreed that any action by either of them would be filed only in the competent
courts of Rizal province exclusively."
4. Villanueva v. Mosqueda, decided in 1982.[30] In this case, it was stipulated that if the
lessor violated the contract of lease he could be sued in Manila, while if it was the
lessee who violated the contract, the lessee could be sued in Masantol,
Pampanga. This Court held that there was an agreement concerning venue of action
and the parties were bound by their agreement. "The agreement as to venue was not
permissive but mandatory."
5. Arquero v. Flojo, decided in 1988.[31] The condition respecting venue -- that any
action against RCPI relative to the transmittal of a telegram must be brought in the
courts of Quezon City alone -- was printed clearly in the upper front portion of the form
to be filled in by the sender. This Court held that since neither party reserved the right
to choose the venue of action as fixed by Section 2 [b], Rule 4, as is usually done if the
parties mean to retain the right of election so granted by Rule 4, it can reasonably be
inferred that the parties intended to definitely fix the venue of action, in connection with
the written contract sued upon, in the courts of Quezon City only.
An analysis of these precedents reaffirms and emphasizes the soundness of
the Polytrade principle. Of the essence is the ascertainment of the parties' intention in
their agreement governing the venue of actions between them. That ascertainment
must be done keeping in mind that convenience is the foundation of venue regulations,

and that that construction should be adopted which most conduces thereto.Hence, the
invariable construction placed on venue stipulations is that they do not negate but
merely complement or add to the codal standards of Rule 4 of the Rules of Court. 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, [32] 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.
The record of the case at bar discloses that UNIMASTERS has its principal place of
business in Tacloban City, and KUBOTA, in Quezon City. Under Rule 4, the venue of
any personal action between them is "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."[33] In other words, Rule 4 gives UNIMASTERS the option to sue
KUBOTA for breach of contract in the Regional Trial Court of either Tacloban City or
Quezon City.
But the contract between them provides that " ** All suits arising out of this Agreement
shall be filed with/in the proper Courts of Quezon City," without mention of Tacloban
City. The question is whether this stipulation had the effect of effectively eliminating the
latter as an optional venue and limiting litigation between UNIMASTERS and KUBOTA
only and exclusively to Quezon City.
In light of all the cases above surveyed, and the general postulates distilled therefrom,
the question should receive a negative answer. Absent additional words and
expressions definitely and unmistakably denoting the parties' desire and intention that
actions between them should be ventilated only at the place selected by them, Quezon
City -- or other contractual provisions clearly evincing the same desire and intention -the stipulation should be construed, not as confining suits between the parties only to
that one place, Quezon City, but as allowing suits either in Quezon City or Tacloban
City, at the option of the plaintiff (UNIMASTERS in this case).

One last word, respecting KUBOTA's theory that the Regional Trial Court had "no
jurisdiction to take cognizance of ** (UNIMASTERS') action considering that venue was
improperly laid." This is not an accurate statement of legal principle. It equates venue
with jurisdiction; but venue has nothing to do with jurisdiction, except in criminal
actions. This is fundamental.[34] The action at bar, for the recovery of damages in an
amount considerably in excess of P20,000.00, is assuredly within the jurisdiction of a
Regional Trial Court.[35] Assuming that venue were improperly laid in the Court where
the action was instituted, the Tacloban City RTC, that would be a procedural, not a
jurisdictional impediment -- precluding ventilation of the case before that Court of
wrong venue notwithstanding that the subject matter is within its jurisdiction. However,
if the objection to venue is waived by the failure to set it up in a motion to dismiss,
the RTC would proceed in perfectly regular fashion if it then tried and decided the
This is true also of real actions. Thus, even if a case "affecting title to, or for recovery of
possession, or for partition or condemnation of, or foreclosure of mortgage on, real
property"[37] were commenced in a province or city other than that "where the property
or any part thereof lies," [38] if no objection is seasonably made in a motion to dismiss,
the objection is deemed waived, and the Regional Trial Court would be acting entirely
within its competence and authority in proceeding to try and decide the suit. [39]
WHEREFORE, the appealed judgment of the Court of Appeals is REVERSED, the
Order of the Regional Trial Court of Tacloban City, Branch 6, dated February 3, 1994, is
REINSTATED and AFFIRMED, and said Court is DIRECTED to forthwith proceed with
Civil Case No. 93-12-241 in due course.


Petitioner, Present:
PUNO, J., Chairperson,
P. MENDEZ and CESARIO[1] F. Promulgated:
Respondents. August 4, 2006
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
Assailed and sought to be set aside in this petition for review under Rule 45 of the Rules of
Court is the Decision[2] dated July 24, 2001 of the Court of Appeals (CA), as reiterated in its
Resolution[3] of November 7, 2001, dismissing the petition for certiorari with prayer for a
temporary restraining order and preliminary injunction thereat filed by the herein petitioner in
CA-G.R. SP No. 44450, entitled United Paragon Mining Corporation, represented by Feliciano
M. Daniel v. Atty. Murly P. Mendez, in his capacity as Accredited Voluntary Arbitrator, Region
V, and Cesario F. Ermita.
The facts:
Prior to the instant controversy, private respondent Cesario F. Ermita (Cesario, for brevity) was
a regular employee working as a foreman of petitioner United Paragon Mining Corporation
(UPMC, hereafter).
On January 18, 1996, Cesario received a termination letter bearing date January 16,
1996 and signed by UPMCs Personnel Superintendent, Feliciano M. Daniel,
informingCesario that his employment as foreman is terminated effective thirty days after his
receipt of the letter. As stated in the letter, the termination was on account of Cesarios violation
of company rules against infliction of bodily injuries on a co-employee, it being alleged therein
that Cesario inflicted bodily injuries on a co-employee, a certain Jerry Romero, as well as for
unlawfully possessing a deadly weapon, a bolo, again in violation of company rules.

As a result of the termination, the matter was brought to the grievance machinery as mandated
under the Collective Bargaining Agreement existing at that time between UPMC and the United
Paragon Supervisors Union. Having failed to reach a settlement thereat, the parties agreed to
submit the dispute to voluntary arbitration. Accordingly, the complaint for illegal dismissal was
referred to Voluntary Arbitrator Atty. Murly P. Mendez of the National Conciliation and
Mediation Board, Regional Branch No. V, LegaspiCity, whereat the same was docketed as VA
Case No. RB5-657-04-002-96.
On February 28, 1997, Voluntary Arbitrator Mendez rendered a decision [4] in Cesarios favor,
stating that although the procedural requirements in the termination of an employee had been
complied with, the termination of Cesario was unjustified because it was arrived at through
gross misapprehension of facts. Explains the Voluntary Arbitrator:
An analysis of the tenor of the termination letter would seem to indicate that Ceasario
Ermita was separated from service simply because his explanation was not acceptable
to the company.Stated more bluntly, Ermita was terminated not because there was a
definite finding of fact relative to his supposed culpability, but because his answer did
not find favor with management.
xxx xxx xxx
The evidence on record partakes of the uncorroborated statement of Jerry Romero
claiming that he was assaulted by [Cesario]. This claim has been disputed and is
denied by [Cesario] in the statement executed by him on January 2, 1996 as well as in
his written explanation (Annex 6, Respondent's Position Paper).
On this point, it can be argued that since this is a case of one's word against another,
the best that could be said of management's evidence is that it has achieved a level at
an equi-poise with that of the Constitution. The spirit of prevailing jurisprudence as
well as a liberal interpretation of the new Constitutional provision on labor, would
mandate that where a doubt exists, the same should be resolved in favor of labor. The
position of [Cesario] appears to have been strengthened by the document jointly
signed by [him] and Jerry Romero, the supposed victim of the assault charged.
This amicable settlement would serve to negate the charge of physical injury against
[Cesario] as a basis for termination, it appearing that even [his] supposed victim, Jerry
Romero, who has been made to appear as a complainant in the proceedings which
resulted in the termination letter, has admitted in this amicable settlement (Annex A,
Complainant's Position Paper) that "hindi naming sinasadya yon at itong ginawa
naming sulat na ito ay siya ang magpapatunay na ayos kaming dalawa at walang
problema sa isa't isa."
This admission, that comes no less from the supposed accuser of [Cesario], clearly
establishes the fact that whatever may have happened between them on New Year's
eve was something that neither of them willfully and voluntarily did. Since it has been
established that the supposed scuffle between [Cesario] and Romero was "hindi
sinasadya," then it would necessarily follow that there could not have been a willful
and voluntary assault by [Cesario] upon Romero. This situation is further rendered

more puzzling by the fact that the suspected assailant was himself the bearer of the
tell-tale marks of injury.
xxx xxx xxx
It has been established to the satisfaction of this Arbitrator that the bolo seen that night
was used to chop wood to be burnt in the bonfire. This statement by people who
happened to be unbiased and disinterested remains uncontested and undisputed.
Further, the preponderance of evidence shows that it was not [Cesario] who used said
bolo, but his son.
xxx xxx xxx
On these points, it is the finding of this Arbitrator, and it is so ruled, that Ceasario
Ermita was unjustifiably terminated.[5] (Words in brackets supplied).

On the basis of the above, the Voluntary Arbitrator, in his aforementioned decision
of February 28, 1997, ordered Cesarios reinstatement, to wit:
WHEREFORE, judgment is hereby issued ordering respondent United Paragon
Mining Corporation to immediately reinstate Ceasario F. Ermita to his former position
prior to the termination without loss of seniority nor interruption of service, and to pay
said Ceasario F. Ermita his back wages, including such other fringe benefits as he
would have been entitled to, from the date of his termination effective February 17,
1996 up to the time of actual reinstatement. Attorney's fees are hereby granted
equivalent to 10 per cent of such monetary award as the complainant is entitled to.
For lack of merit, all other claims for damages are hereby dismissed.

In time, UPMC moved for a reconsideration of the decision insofar as it ordered Cesarios
reinstatement which UPMC sought to avert by offering separation pay instead. UPMC cites the
following against the decreed reinstatement: 1) Cesarios position has already been filled up; and
2) reinstatement is no longer appropriate in view of the supposed strained relations between
Cesario and UPMC.
In his Order[6] of April 22, 1997, the Voluntary Arbitrator denied the desired reconsideration
stressing that UPMCs management misapprehended the facts when it caused Cesarios
termination, which cannot support the claim of the existence of strained relations between him
and the corporation.
Unsatisfied, UPMC, thru its Personnel Superintendent Feliciano M. Daniel, elevated the case to
the CA on a Petition for Certiorari with Prayer for Temporary Restraining Order and Injunction,
thereat docketed as CA-G.R. SP No. 44450, asserting that the Voluntary Arbitrator committed
grave abuse of discretion, erroneous interpretation of the law and denial of substantial justice.

In the herein assailed Decision[7] dated July 24, 2001, the CA, without going into the merits of
the petition, dismissed the same on the following grounds:
1) The petition for certiorari was not the proper remedy in order to seek review or
nullify decisions or final orders issued by the Labor Arbiter;
2) The verification in the petition is ineffective and insufficient because it was merely
signed by the company's Personnel Superintendent without alleging or showing
that he is authorized for the said purpose and that the verification was based on
knowledge and information;
3) The petitioner's ground of grave abuse of discretion, erroneous interpretation of the
law and denial of justice are actually dwelling on the appreciation of facts,
which cannot be entertained in a petition for certiorari.

With its motion for reconsideration having been denied by the CA in its Resolution
of November 7, 2001,[8] petitioner UPMC is now with this Court via the present recourse,
submitting for our consideration the following questions:

The recourse must have to be DENIED, no reversible error having been committed by the CA
in its challenged decision.
We start with the basic concept that a corporation, like petitioner UPMC, has no power except
those expressly conferred on it by the Corporation Code and those that are implied or incidental
to its existence. In turn, a corporation exercises said powers through its board of directors
and/or its duly authorized officers and agents. It has thus been observed that the power of a
corporation to sue and be sued in any court is lodged with its board of directors that exercises its

corporate powers. In turn, physical acts of the corporation, like the signing of documents, can
be performed only by natural persons duly authorized for the purpose by the corporate by-laws
or by a specific act of the board of directors.[9]
It is petitioners posture that there is no necessity for a board resolution authorizing its Personnel
Superintendent to file in its behalf the certiorari petition in CA-G.R. SP No. 44450 because said
petition arose out of the labor dispute filed against it and its Personnel Superintendent, Feliciano
M. Daniel. It is argued that in Cesarios complaint for illegal dismissal, Daniel was made a corespondent of the corporation. Upon this premise, UPMC argues that Daniel has all the right to
answer the complaint and to appeal an unfavorable judgment therein, which he actually did, in
his capacity as the corporations Personnel Superintendent and as its representative. Plodding on,
petitioner contends that were the CA to insist that Daniel could not represent the corporation, it
follows that the proceedings before the Voluntary Arbitrator could only be binding as against
Daniel because the company then could not have been duly represented in said proceedings.
Throughout the proceedings before the Voluntary Arbitrator, that is, from the filing of the
position papers up to the filing of the motion for reconsideration, UPMC was duly represented
by its counsel, Atty. Archimedes O. Yanto. True it is that Cesarios complaint for illegal
dismissal was filed against the corporation and Daniel. It appears obvious to us, however, that
Daniel was merely a nominal party in that proceedings, as in fact he was impleaded thereat in
his capacity as UPMCs Personnel Superintendent who signed the termination letter. For sure,
Cesarios complaint contains no allegation whatsoever for specific claim or charge against
Daniel in whatever capacity. As it is, Daniel was not in anyway affected by the outcome of the
illegal dismissal case because only the corporation was made liable therein to Cesario. Being
not a real party-in-interest, Daniel has no right to file the petition in CA-G.R. SP No. 44450 in
behalf of the corporation without any authority from its board of directors. It is basic in law that
a corporation has a legal personality entirely separate and distinct from that of its officers and
the latter cannot act for and on its behalf without being so authorized by its governing board.
In Premium Marble Resources, Inc. v. Court of Appeals,[10] we made it clear that in the absence
of an authority from the board of directors, no person, not even the officers of the corporation,
can validly bind the latter:
We agree with the finding of public respondent Court of Appeals, that in the absence
of any board resolution from its board of directors the [sic] authority to act for and in
behalf of the corporation, the present action must necessary fail. The power of the
corporation to sue and be sued in any court is lodged with the board of directors that
exercises its corporate powers. Thus, the issue of authority and the invalidity of
plaintiff-appellants subscription which is still pending, is a matter that is also
addressed, considering the premises, to the sound judgment of the Securities and
Exchange Commission.

Given the reality that the petition in CA-G.R. SP No. 44450 was filed by Daniel in behalf of and
in representation of petitioner UPMC without an enabling resolution of the latters board of
directors, that petition was fatally defective, inclusive of the verification and the certification of
non-forum shopping executed by Daniel himself.
True, ample jurisprudence exists to the effect that subsequent and substantial compliance of a
petitioner may call for the relaxation of the rules of procedure in the interest of justice. [11] But to
merit the Court's liberal consideration, petitioner must show reasonable cause justifying noncompliance with the rules and must convince the Court that the outright dismissal of the petition
would defeat the administration of justice. [12] Here, petitioner has not adequately explained its
failure to have the certification against forum shopping signed by its duly authorized officer.
Instead, it merely persisted in its thesis that it was not necessary to show proof that its Personnel
Superintendent was duly authorized to file that petition and to sign the verification thereof and
the certification against forumshopping despite the absence of the necessary board
authorization, thereby repeating in the process its basic submission that CA-G.R. SP No. 44450
is merely a continuation of the proceedings before the Voluntary Arbitrator and that its
Personnel Superintendent was impleaded as one of the respondents in Cesarios complaint for
illegal dismissal.
With the view we take of this case, we deem it unnecessary to address petitioners other
WHEREFORE, the instant petition is DENIED and the assailed CA decision and
resolution are AFFIRMED.

Costs against petitioner.


[G.R. No. 157195. April 22, 2005]



Once more, the Court stresses that procedural rules must be used to promote, not
obstruct, substantial justice. The failure to attach the Resolution authorizing herein
individual petitioner to represent herein corporate petitioner is, under the circumstances,
excusable. The immediate correction of the defect should have been deemed sufficient
compliance with the rules.
The Case
Before us is a Petition for Review on Certiorari[1] pursuant to Rule 45 of the Rules of
Court, seeking to reverse and set aside two Resolutions [2] of the Court of Appeals (CA)
dated October 23, 2002[3] and February 7, 2003,[4] in CA-GR SP No. 73117. The earlier
Resolution reads:
The instant petition for certiorari is hereby DISMISSED for lack of proper verification and
certification against forum shopping as the same was executed by Carmelita V. Lim, one of the
petitioners, without showing any authority from petitioner corporation to sign for and on its behalf.

The second assailed Resolution denied petitioners Omnibus

Reconsideration and for Admission of the Attached Secretarys Certificate.



The Facts
This controversy originated from a Complaint[6] for unjust enrichment and damages,
filed in the Regional Trial Court of Makati by herein petitioner, Vicar International
Construction, Inc. (Vicar), against Respondent FEB Leasing and Finance Corporation
(now BPI Leasing Corporation) and the Far East Bank and Trust Company. In turn, FEB
Leasing and Finance Corporation filed a Complaint[7] against Vicar, Carmelita Chaneco
Lim and one John Doe, for a sum of money, damages and replevin.
These Complaints stemmed from loans obtained from FEB by Vicar, a corporation
engaged in the construction business, for the purchase of certain heavy equipment. In
obtaining the loans, Deeds of Absolute Sale with a lease-back provision were executed by
the parties. In those Deeds, Vicar appears to have sold to FEB the equipment purchased
with the loan proceeds and, at the same time, leased them back. [8] For the total loan
of P30,315,494, Vicar claims to have paid FEB an aggregate amount of P19,042,908 in
monthly amortizations.

Nevertheless, FEB maintains that Vicar still had an outstanding balance of

about P22,000,000, despite the extrajudicial foreclosure of sixty-three (63) subdivision
lots. These lots, comprising an aggregate area of 20,300 square meters in Calamba,
Laguna, were used by the corporation as additional collateral. As a consequence, the
auction sale producedP17,000,000 which, Vicar claims, should have been applied to its
In the course of the second (replevin) case, the trial court issued several Orders
pertaining to the possession/custody of eight (8) units of the subject equipment. In an
Order dated August 2, 2002, the regional trial court (RTC) quashed the property
counterbond filed by Vicar and denied the latters Motion to Dismiss the Complaint, which
was grounded on forum shopping. In an Order dated September 30, 2002, the RTC
denied the corporations Motion for Reconsideration and Motion for Voluntary Inhibition of
the trial judge.
On October 3, 2002, Vicar filed a Petition for Certiorari before the Court of Appeals, to
stop the implementation of the Writ of Replevin issued against the subject equipment.
Ruling of the Court of Appeals
The Petition was, however, instantly dismissed by the CA in its herein assailed
Resolution dated October 23, 2002, because the Verification and the Certification against
forum shopping had been executed by Petitioner Carmelita V. Lim without any showing
that she had the authority to sign for and on behalf of petitioner-corporation.
On November 23, 2003, the day after receiving its copy of the Resolution, Vicar filed
an Omnibus Motion for Reconsideration and for Admission of the Attached Secretarys
Certificate. Nevertheless, the CA denied the Omnibus Motion in this wise:
The belated filing by the petitioners of the Certification of their Corporate Secretary, to the effect
that petitioner Carmelita Lim has been duly authorized by petitioner corporation to file the subject
petition forcertiorari, did not cure the defect of said petition. Absent any compelling reason for
petitioners failure to comply at the first instance with the required certification, we cannot,
therefore, accept their subsequent compliance. [9]
Hence, this Petition.[10]
The Issues
Petitioners raise the following issues for our consideration:

Whether compelling reasons exist which warrant the liberal construction of the Petition
for Certiorari.
Whether petitioners subsequent submission of the secretarys certificate is a sufficient compliance
with the requirement of the law.
Whether the policy of the law is to afford a party the fullest opportunity to establish the merits of
his case.[11]
In short, the principal issue is whether the Court of Appeals erred in summarily
dismissing the Petition for Certiorari.
The Courts Ruling
The present Petition for Review is meritorious.
Main Issue:
Propriety of Summary Dismissal
Petitioners assert that Carmelita V. Lim was duly authorized to execute, for and on
behalf of Vicar, the Verification and Certification against forum shopping. Attached to the
Petition and signed by Petitioner Lim was the Verification/Certification, in which was
explicitly stated the authorization and affirmation, as follows:
x x x. I am likewise duly authorized to execute this Verification/Certification in behalf of petitioner
Vicar International Construction, Inc. x x x.
This statement was supported by Vicars board of directors, who unanimously
approved a Resolution dated October 2, 2002, which reads thus:
NOW THEREFORE, BE IT RESOLVED, as it is hereby resolved, that the Corporation be
authorized to file a Petition for Certiorari before the Court of Appeals for the purpose of annulling
or setting aside the Orders dated 2 August 2002 and 30 September 2002 rendered by Branch 150 of
the Regional Trial Court of Makati in connection with Civil Case No. 02-357 entitled FEB Leasing
& Finance Corporation, Plaintiff vs. Vicar International Construction, Inc. et al., Defendants.
RESOLVED further, that the President/General Manager Carmelita V. Lim is hereby authorized to
execute and sign any and all documents necessary for filing of the Petition for Certiorari, including
the verification and certification against forum shopping. [12]

Petitioners candidly admit that they inadvertently failed to attach the above Resolution
to their CA Petition. In preparing the Petition, their counsel supposedly worked overnight
without sleep. She wanted to file it immediately to avoid the trial courts quashal of their
counterbond and, thus, the immediate seizure of their equipment -- their only means of
Their counsel allegedly believed in good faith that the secretarys Certificate was
attached to the Petition. When they received a copy of the October 23, 2002 CA
Resolution on November 11, 2002, they lost no time in filing the following day their
Omnibus Motion for Reconsideration and for Admission of the Attached Secretarys
Petitioners submit that the foregoing circumstances constitute compelling reasons to
justify setting aside the procedural defect, pursuant to Ramos v. Court of Appeals.[13]
Further, citing Yap v. Baldado,[14] they contend that their posthaste submission of the
secretarys Certificate, albeit after the filing of their Petition, constitutes substantial
compliance with the requirements of the law. Finally, they aver that pursuant to the policy
of the law to afford parties the fullest opportunity to establish the merits of their case, the
CA should have given due course to their Petition.
On the other hand, Respondent FEB asserts that the CAs dismissal of the Petition -arising from petitioners failure to attach a duly executed verification and certification
against forum shopping -- is well within the appellate courts authority, pursuant to Sections
3 and 5 of Rule 46 of the Revised Rules of Civil Procedure. [15] Respondent also claims that
petitioners present action before this Court seeks to correct a perceived erroneous
application by the CA of a procedural rule that is not correctible by certiorari.
Finally, respondent alleges that the instant Petition, being based on the ground of
excusable negligence, is actually a motion for new trial. As such, the Petition must
allegedly fail, because petitioners did not execute and attach an affidavit of merits.
The issue before us is not novel; neither are the factual circumstances that gave rise
to it.
In Shipside Incorporated v. Court of Appeals,[16] the petitioner had not attached any
proof that its resident manager was authorized to sign the Verification and the non-forum
shopping Certification, as a consequence of which the Petition was dismissed by the
Court of Appeals. Subsequent to the dismissal, however, the petitioner filed a motion for
reconsideration, to which was already attached a Certificate issued by its board secretary
who stated that, prior to the filing of the Petition, the resident manager had been
authorized by the board of directors to file the Petition.

Citing several cases[17] excusing noncompliance with the requirement of a certificate of

non-forum shopping, the Court held that with more reason should x x x the instant petition
[be allowed,] since petitioner herein did submit a certification on non-forum shopping,
failing only to show proof that the signatory was authorized to do so. The Court further
said that the subsequent submission of the Secretarys Certificate, attesting that the
signatory to the certification was authorized to file the action on behalf of
petitioner, mitigated the oversight.
Similarly, in General Milling Corporation v. NLRC,[18] the Court of Appeals dismissed the
Petition, which was not accompanied by any board resolution or certification by the
corporate secretary showing that the person who had signed the Certification of NonForum Shopping was duly authorized to represent the petitioner-corporation in the case.
In the Motion for Reconsideration, however, the petitioner attached a board Resolution
stating that the signatory of the Certification had been duly authorized to do so.
Under those circumstances, the Court held that there was at least substantial
compliance with, and that there was no attempt to ignore, the prescribed procedural
requirements, except that the petition was not accompanied by a board resolution or a
secretarys certificate that the person who signed it was duly authorized by petitioner to
represent it in the case.[19]
Also, in BA Savings Bank v. Sia,[20] the Court of Appeals denied due course to a
Petition for certiorari filed by BA Savings Bank. The CAs action was grounded on the fact
that the Certification on anti-forum shopping incorporated in the Petition had been signed
merely by the banks counsel, not by a duly authorized representative, as required under
Supreme Court Circular No. 28-91. Subsequently filed by the petitioner was a Motion for
Reconsideration, to which was attached a Certificate issued by the corporate secretary.
The Certificate showed that the Resolution promulgated by the board of directors had
authorized the lawyers of petitioner to represent it in any action or proceeding before any
court, tribunal or agency; and to sign, execute and deliver the certificate of non-forum
shopping, among others. Nevertheless, the Court of Appeals denied the Motion on the
ground that Supreme Court Revised Circular No. 28-91 requires that it is the petitioner, not
the counsel, who must certify under oath to all of the facts and undertakings required
The Court again reversed the appellate court and ruled thus:
Circular 28-91 was prescribed by the Supreme Court to prohibit and penalize the evils of forum
shopping. We see no circumvention of this rationale if the certificate was signed by the corporations
specifically authorized counsel, who had personal knowledge of the matters required in the
Circular. In Bernardo v. NLRC,[21] we explained that a literal interpretation of the Circular should be
avoided if doing so would subvert its very rationale. Said the Court:

x x x. Indeed, while the requirement as to certificate of non-forum shopping is mandatory,

nonetheless the requirements must not be interpreted too literally and thus defeat the objective of
preventing the undesirable practice of forum-shopping. [22]
Guided by the above pronouncements, the Court deems it proper and justifiable to
grant the present Petition. Clearly, petitioners did not deliberately ignore SC Circular 2891. In fact, a Verification/Certification, stating the information required under the Circular,
was attached to the Petition for Certiorari filed before the CA. In that
Verification/Certification signed by Petitioner Lim, she attested as follows:
1. x x x I am likewise duly authorized to execute this Verification/Certification in behalf of
petitioner Vicar International Construction, Inc.
2. In my personal capacity and as a duly authorized representative of Vicar International
Construction, Inc., I caused the preparation of the foregoing Petition for Certiorari.
Petitioners merely missed attaching to their Petition a concrete proof of Lims authority
from Vicar to execute the said Verification/Certification on its behalf. The latter, however,
lost no time in submitting its corporate secretarys Certificate attesting to the fact that,
indeed, Petitioner Vicars board of directors had unanimously approved a Resolution on
October 2, 2002, authorizing its president and general manager, Carmelita V. Lim, to file
the Petition and to execute and sign x x x the verification and certification against forum
The Certificate was submitted to the CA on the day right after it had denied the
Petition. Such swiftness of action indicates that the Resolution -- authorizing Petitioner Lim
to file the Petition and execute the Verification and the Certification against forum
shopping on behalf of Petitioner Vicar -- did exist at the time the Petition was filed. Such
fact also lends credence to the assertion of petitioners that it was only due to inadvertence
and oversight that they failed to attach the Secretarys Certificate to their Petition
for Certiorari.
In closing, the Court stresses once more that technical rules of procedure should be
used to promote, not frustrate, justice. While the swift unclogging of court dockets is a
laudable objective, the granting of substantial justice is an even more urgent ideal. [23] Rules
of procedure are but tools designed to facilitate, not obstruct, the attainment of justice.
WHEREFORE, the Petition is GRANTED, and the appealed Resolutions
are REVERSED and SET ASIDE. The case is REMANDED to the Court of Appeals, which
is directed to continue the proceedings in CA-GR SP No. 73117 with deliberate speed. No


Republic of the Philippines

G.R. No. 75349 October 13, 1986
MORALES, LIZA OCAMPO, Quiapo Church Vendors, for themselves and all
others similarly situated as themselves, petitioners,
MANILA, respondent.

On August 5, 1986 petitioners instituted in this Court a special civil action for prohibition
to the end that respondent Gemiliano C. Lopez, Jr., acting as Mayor of the City of
Manila, be "perpetually prohibited from arbitrarily, whimsically and capriciously revoking
or cancelling ... their licenses or permits (as hawkers or street vendors) and threatening
the physical demolition of their respective business stalls in the places specified in
such licenses or permits. 1 They also sought a temporary restraining order in view of
Mayor Lopez' actual threats of physical demolition of their respective small business
establishment at 12:00 noon today." This the Court granted on the same day. 2

Petitioners claim to be five of about 130 "licensed and duly authorized vendors of ...
religious articles, medicine herbs and plants around the Quiapo Church, ... Manila,"
bringing suit 'for themselves and all others similarly situated as themselves." 3 They
allege that their licenses "were revoked or cancelled (by respondent Mayor) for
reasons unknown to them which is tantamount to deprivation of property without due
process of laws," written notice of such cancellation having been served on them on or
about May 30 (actually May 3), 1986; that the revocation of their licenses was beyond
respondent Mayor's competence, since Section 171 (n) of the Local Government Code
(B.P. Blg. 337) authorizes the same only "for violation of the law or ordinances or
conditions upon which they have been granted " and no such violation had been
committed by them; 4 but this notwithstanding, respondent Mayor "had given (them) an
ultimatum of 7:00 up to 12:00 o'clock in the afternoon" (of August 5, 1986) to vacate the
premises where their respective stalls are situated or suffer physical demolition
thereof. 5
In the light of the facts disclosed by the pleadings 6 and at the hearing of the case on
August 13, 1986, the petition must be given short shrift.
The action must in the first place be abated on the ground of lis pendens, or more
correctly, auter action pendant pendency Of another action between the same parties
for the same cause. 7
It appears that on July 7, 1986 there was filed in the Regional Trial Court of Manila,
docketed as Civil Case No. 8636563, a special civil action of "prohibition with
preliminary injunction" against Acting Manila City Mayor Gemiliano Lopez, Jr. 8 It was
filed by Samahang Kapatiran Sa Hanapbuhay Ng Bagong Lipunan, Inc." (hereafter,
simply "Samahan") composed, according to the petition, of "some 300 individual
owners and operators of separate business stalls ... mostly at the periphery
immediately 0beyond the fence of the Quiapo Church." The president of the Samahan
is Rosalina Buan and its Press Relations Officer, Liza Ocampo. 9 Rosalina Buan and
Liza Ocampo are two of the five petitioners in the case at bar, 10 described in the
petition before this Court as suing "for themselves and all others similarly situated as
themselves": i.e., vendors "around the Quiapo Church." 11 The three other petitioners
also appear to be Samahan members. 12
The petition in Case No. 86-36563 is grounded on the same facts as those in the case
at bar: the members of theSamahan had been legitimately engaged "in their respective
business of selling sundry merchandise, more particularly religious articles, flowers and
ornamental plants, and medicinal herbs;" they had been religiously paying "the
corresponding license and permit fees imposed by prevailing ordinances of the City of
Manila," but this notwithstanding they had been given written notice dated May 3, 1986
emanating from the Mayor's Office, advising of the cancellation of their permits and

their possible relocation to another site; and these acts "are unjust, illegal arbitrary,
oppressive and constitute grave abuse of discretion on the part of the respondent.
There thus exists between the action before this Court and RTC Case No. 86-36563
Identity of parties, or at least such parties as represent the same interests in both
actions, as well as Identity of rights asserted and relief prayed for, the relief being
founded on the same facts, and the Identity on the two preceding particulars is such
that any judgment rendered in the other action, will regardless of which party is
successful, amount to res adjudicata in the action under consideration: all the
requisites, in fine, of auter action pendant. 13
Indeed, the petitioners in both actions, described in their petitions as vendors of
religious articles, herbs and plants, and sundry merchandise around the Quiapo
Church or its "periphery," have incurred not only the sanction of dismissal of their case
before this Court in accordance with Rule 16 of the Rules of Court, but also the punitive
measure of dismissal of both their actions, that in this Court and that in the Regional
Trial Court as well Quite recently, upon substantially Identical factual premises, the
Court en banc had occasion to condemn and penalize the act of litigants of hearing the
same suit in different courts, aptly described as "forum-shopping," viz:
The acts of petitioners constitute a clear case of forum shopping, an act of
malpractice that is proscribed and condemned as trifling with the courts and
abusing their processes. It is improperconduct that tends to degrade the
administration of justice. The rule has been formalized in Section 17 of the
Interim Rules and Guidelines issued by this Court on January 11, 1983 in
connection with the implementation of the Judiciary Reorganization Act,
specifically with the grant in Section 9 of B.P. Blg. 129 of equal original
jurisdiction to the Intermediate Appellate Court to issue writs of mandamus,
prohibition, etc., and auxiliary writs or processes, whether or not in aid Of
its appellate jurisdiction. Thus, the cited Rule provides that no such petition
may be filed in the Intermediate Appellate Court 'if another similar petition
has been filed or is still pending in the Supreme Court' and vice-versa. The
Rule orders that "A violation of the rule shall constitute contempt of court
and shall be a cause for the summary dismissal of both petitions, without
prejudice to the taking of appropriate action against the counsel or party
concerned." The rule applies with equal force where the party having filed
an action in the Supreme Court shops for the same remedy of prohibition
and a restraining order or injunction in the regional trial court (or viceversa). ... 14
As already observed, there is between the action at bar and RTC Case No. 86-36563,
an Identity as regards parties, or interests represented, rights asserted and relief

sought, as well as basis thereof, to a degree sufficient to give rise to the ground for
dismissal known as auter action pendant or lis pendens 15 That same Identity puts into
operation the sanction Of twin dismissals just mentioned. The application of this
sanction will prevent any further delay in the settlement of the controversy which might
ensue from attempts to seek reconsideration of or to appeal from the Order of the
Regional Trial Court in Civil Case No. 86-36563 promulgated on July 15, 1986, which
dismissed the petition upon grounds which appear persuasive. 16
It would seem that after the filing by Rosalina Buan and Liza Ocampo (president and
press relations officer, respectively, of the Quiapo Church vendors' association known
as the Samahan) of the petition in this case, "for themselves and all others similarly
situated as themselves" (i.e., the members of the Samahan; who are vendors in the
area of Quiapo Church) they came to the belated that in view of the pendency of the
Identical action filed by them in the Regional Trial Court (Case No. 86-36563), they
were vulnerable to the accusation of "forum shopping," and thus amenable to its dire
consequences. This explains the filing in this Court by their lawyers of a
1986, 17 another "MANIFESTATION AND MOTION" on August 29, 1986, and an
BUAN AND LIZA OCAMPO" on September 13, 1986. In these manifestations the case
is made that the five (5) petitioners in the action before this Court who are members of
the Samahan"were forcibly brainwashed and guarded by ... (Atty. Reynaldo Aralar) and
his associates to accede to the invitation of the said counsel ... to appear for them and
file the case before the Honorable Court knowingly (sic) that he was furnished
the status quo-order of the same case pending before the Regional Trial Court Branch
45 of Manila," and/or said Atty. Aralar and his associates had perpetrated "piracy" of
clients and "should be condemned and suspended for committing act of shopping for
courts." The claim does not inspire belief. It is so out of the ordinary as to require clear
and convincing evidence of its actuality, which is lacking in this case. It is also belied by
the fact that Rosalina Buan and Liza Ocampo themselves were among those who
verified the petition at bar before a notary public. 18 And the claim is undermined by the
misrepresentation in Buan's and Ocampo's "Joint Affidavit of Withdrawal" that
the status quo order in RTC Case No. 8636563 was still subsisting and the case still
pending trial 19 when in truth, the case had already been dismissed and the restraining
order lifted by Order of July 27, 1986.
Yet another reason exists for the denial of the petition. Not one of the petitioners or the
"others similarly situated as themselves" had a valid and subsisting license or permit as
of the date of the filing of their petition in this Court, August 5, 1986, all licenses and
permits having expired prior thereto. 20 This is confirmed by the few receipts submitted
by petitioners 21 which all set out expiry dates before August 5, 1986. The petitioners

thus have no basis whatever to postulate a right to ply their trade in the Quiapo area or
elsewhere. The argument that the non-renewal by the municipal authorities of their
licenses was in effect a cancellation or revocation thereof without cause is puerile.
Finally, the action for prohibition has become moot and academic by the occurrence of
the acts sought to be inhibited. The petitioners' permits and licenses have all expired;
hence, there can be no occasion whatsoever to speak of the inhibition of any
revocation or cancellation thereof. And the "physical demolition of their respective
business stalls" has already been consummated.
WHEREFORE, the petition is denied for lack of merit, and the Regional Trial Court is
commanded to dismiss Civil Case No. 86-36563 and to conduct no further proceedings
in connection therewith save in accordance with and in implementation of this Decision.
Costs against petitioners.