Rule 9.pdf

Table of Contents RULE 9- EFFECT OF FAILURE TO PLEAD ................................................................................................................................... 2 Sec. 1. Defenses and objections not pleaded ......................................................................................................................... 2 Boston Equity v. Court of Appeals, G.R. No. 173946, June 19, 2013 (Supra.) ..................................................................... 2 GSIS v. Villaviza, G.R. No. 180291, July 27, 2010 (Supra.) ................................................................................................... 2 Litis Pendentia ......................................................................................................................................................................... 4 Spouses Marasigan v. Chevron, G.R. No. 184015, February 8, 2012 .................................................................................. 4 Quito v. Stop & Save Corp., G.R. No. 186657, June 11, 2014 .............................................................................................. 8 Benavidez v. Salvador, G.R. No. 173331, December 11, 2013 ............................................................................................ 9 Res Judicata........................................................................................................................................................................... 10 Heirs of Sotto v. Palicte, G.R. No. 159691, June 13, 2013 ................................................................................................. 10 Spouses Antonio v. Sayman, G.R. No. 149624, September 29, 2010................................................................................ 10 Sec. 2. Compulsory counterclaim, cross-claim, not set up barred ....................................................................................... 10 Sec. 3. Default; declaration of ............................................................................................................................................... 10 See: Sec. 1, Rule 11 ............................................................................................................................................................... 10 Mediserv v. Chinabank, G.R. No. 140755, April 17, 2001 ................................................................................................. 11 Spouses de los Santos v. Hon. Carpio, G.R. No. 153696, September 11, 2006 ................................................................. 12 Martinez v. Republic, G.R. No. 160895, October 30, 2006 ............................................................................................... 12 Heirs of Medrano v. De Vera, G.R. No. 165770, August 9, 2010 ....................................................................................... 15

1

RULE 9- EFFECT OF FAILURE TO PLEAD Sec. 1. Defenses and objections not pleaded Boston Equity v. Court of Appeals, G.R. No. 173946, June 19, 2013 (Supra.) GSIS v. Villaviza, G.R. No. 180291, July 27, 2010 (Supra.) FACTS: Petitioner Winston Garcia (PGM Garcia), as President and General Manager of the GSIS, filed separate formal charges against respondents, 20 employees of the GSIS main office, for Grave Misconduct and/or Conduct Prejudicial to the Best Interest of the Service pursuant to the Rules of Procedure in Administrative Investigation (RPAI) of GSIS Employees and Officials, III, D, (1, c, f) in relation to Section 52A (3), (20), Rule IV, of the Uniform Rules on Administrative Cases in the Civil Service (URACCS), in accordance with Book V of the Administrative Code of 1987. The respondents wore red shirts when they attended a public hearing on 27 May 2005 in support for Mario Molina and Albert Velasco, union officers who were facing separate administrative charges. On June 29, 2005, PGM Garcia issued separate but similarly worded decisions finding all seven (7) respondents guilty of the charges and meting out the penalty of one (1) year suspension plus the accessory penalties appurtenant thereto. On appeal, the Civil Service Commission (CSC) found the respondents guilty of the lesser offense of Violation of Reasonable Office Rules and Regulations and reduced the penalty to reprimand. The CSC ruled that there was no substantial evidence to hold them guilty of Conduct Prejudicial to the Best Interest of the Service. Instead, the CSC found that the respondent’s assembly was an exercise of their freedom of expression, a constitutionally guaranteed right. PGM Garcia sought reconsideration but was denied. Thus, PGM Garcia went to the Court of Appeals via a Petition for Review under Rule 43 of the Rules on Civil Procedure.[7] The CA upheld the CSC ruling that Garcia “failed to prove that the supposed concerted activity of the respondents resulted in work stoppage and caused prejudice to the public service. Petitioners are aware at the outset that the only apparent intention of the respondents in going to the IU was to show support to Atty. Mario Molina and Albert Velasco, their union officers. The belated assertion that the intention of the respondents in going to the IU was to disrupt the operation and pressure the GSIS administration to be lenient with Atty. Mario Molina and Albert Velasco, is only an afterthought. Hence the instant case. Petitioners primarily question the probative value accorded to respondents’ letters of explanation in response to the memorandum of the GSIS-IU Manager. The respondents never filed their answers to the formal charges. The petitioners argue that there being no answers, the allegations in the formal charges that they filed should have been deemed admitted pursuant to Section 11, Rule 8 of the Rules of Court which provides: 2

SECTION 11. Allegations not specifically denied deemed admitted.— Material averment in the complaint, other than those as to the amount of liquidated damages, shall be deemed admitted when not specifically denied. Allegations of usury in a complaint to recover usurious interest are deemed admitted if not denied specifically and under oath. According to the petitioners, this rule is applicable to the case at bench pursuant to Rule 1, Section 4 of the Rules of Court which reads: SECTION 4. In what cases not applicable. – These Rules shall not apply to election cases, land registration, cadastral, naturalization and insolvency proceedings, and other cases not herein provided for, except by analogy or in a suppletory character and whenever practicable and convenient. (underscoring supplied) ISSUE: WHETHER AN ADMINISTRATIVE TRIBUNAL MAY APPLY SUPPLETORILY THE PROVISIONS OF THE RULES OF COURT ON THE EFFECT OF FAILURE TO DENY THE ALLEGATIONS IN THE COMPLAINT AND FAILURE TO FILE ANSWER, WHERE THE RESPONDENTS IN THE ADMINISTRATIVE PROCEEDINGS DID NOT FILE ANY RESPONSIVE PLEADING TO THE FORMAL CHARGES AGAINST THEM. HELD: The Court does not subscribe to the argument of the petitioners. Petitioners’ own rules, Rule XI, Section 4 of the GSIS’ Amended Policy and Procedural Guidelines No. 178-04, specifically provides: If the respondent fails to file his Answer within five (5) working days from receipt of the Formal Charge for the supporting evidence, when requested, he shall be considered to have waived his right to file an answer and the PGM or the Board of Trustees, in proper cases, shall render judgment, as may be warranted by the facts and evidence submitted by the prosecution. A perusal of said section readily discloses that the failure of a respondent to file an answer merely translates to a waiver of “his right to file an answer.” There is nothing in the rule that says that the charges are deemed admitted. It has not done away with the burden of the complainant to prove the charges with clear and convincing evidence. It is true that Section 4 of the Rules of Court provides that the rules can be applied in a “suppletory character.” Suppletory is defined as “supplying deficiencies.” It means that the provisions in the Rules of Court will be made to apply only where there is an insufficiency in the applicable rule. There is, however, no such deficiency as the rules of the GSIS are explicit in case of failure to file the required answer. What is clearly stated there is that GSIS may “render judgment as may be warranted by the facts and evidence submitted by the prosecution.” Even granting that Rule 8, Section 11 of the Rules of Court finds application in this case, petitioners must remember that there remain averments that are not deemed admitted by the failure to deny the same. Among them are immaterial allegations and incorrect conclusions drawn from facts set out in the complaint.[11] Thus, even if respondents failed to file their answer, it does not mean that all averments found in the complaint will be considered as true and correct in their entirety, and that the forthcoming decision will be rendered in favor of the petitioners. We must not forget that even in administrative proceedings, it is still the complainant, or in this case the petitioners, who have the burden of proving, with substantial evidence, the allegations in the complaint or in the formal charges. A perusal of the decisions of the CA and of the CSC will reveal that the case was resolved against petitioners based, not on the absence of respondents’ evidence, but on the weakness of that of the petitioners.

3

Litis Pendentia Spouses Marasigan v. Chevron, G.R. No. 184015, February 8, 2012 FACTS Spouses Marasigan were operators of a gasoline station in Montalban, Rizal, while Chevron is a corporation engaged in the business of refining, manufacturing, storing, distributing, and marketing of fuels, lubricants and other petroleum products. Spouses Marasigan and Chevron entered into a dealership and distributorship agreement wherein the former can purchase petroleum products from the latter on credit. To complete said agreement, Spouses Marasigan executed deeds of real estate mortgage over their properties, as collateral, in favor of Chevron. Records further show that by September 30, 1993, Spouses Marasigan exceeded their credit line and owed Chevron the amount of ₱12,075,261.02. Spouses Marasigan failed to pay the obligation despite oral and written demands from Chevron. Thus, Chevron through its counsel, the Angara Abello Concepcion Regala and Cruz (ACCRALAW), initiated foreclosure proceedings by filing a petition for extrajudicial foreclosure against the real estate mortgages executed by Spouses Marasigan in favor of Chevron. Chevron, through ACCRALAW, was able to foreclose all the real estate mortgages on Spouses Marasigans subject properties. Chevron, however, was only able to recover the total amount of ₱4,925,000.00 from the public auction sales of the mortgaged properties including the sale of the 167.1597 hectare coconut farm property located in Mulanay, Quezon, which was sold for ₱130,000.00 to the only bidder, ACCRA Investments,Corp. (ACCRAIN). Subsequently, Chevron filed a complaint for Sum of Money against Spouses Marasigan before the RTC, Branch 136, Makati City (RTCMakati) to recover the deficiency in the amount of ₱7,667,188.10. Chevron basically alleged therein that Spouses Marasigans outstanding obligation as of October 15, 1995 was ₱7,667,188.10 and that said obligation remained unpaid. In their Answer, Spouses Marasigan mainly alleged that they were greatly prejudiced because the foreclosure sales on the subject mortgaged properties were illegal and that the bid price of the Mulanay property in particular was shockingly low. Spouses Marasigan filed a complaint for Declaration of Nullity and/or Annulment of Foreclosure with Damages entitled against Chevron, ACCRAIN and ACCRALAW and Sheriff Romeo Villafranca before the RTC-Gumaca. Spouses Marasigan principally alleged therein that the bid price was grossly inadequate and shockingly low which rendered the foreclosure sale fatally defective and the foreclosure proceedings invalid and illegal. Chevron, ACCRAIN and ACCRALAW filed a motion to dismiss citing as ground Spouses Marasigans failure to disclose in their certification against forum shopping the pending case filed before the RTC-Makati and the consequent violation of the rule on litis pendentia. On August 21, 1996, the RTC issued an order denying the motion to dismiss, and ruling that there was no forum shopping because there was no decision yet in the RTC-Makati case when the RTC-Gumaca case was filed and that there were parties in the former who were not parties in the latter. Chevron, ACCRAIN and ACCRALAW then filed their Answer with Compulsory Counterclaim alleging, among others, that the foreclosure sale was conducted in accordance with law and that the complaint in Civil Case No. 2448-G violated the rule on forum shopping and litis pendentia. On January 4, 2005, the RTC-Gumaca rendered a decision in favor of Spouses Marasigan Declaring the foreclosure sale of Mulanay property conducted by Provincial Sheriff of Gumaca on September 12, 1995 as well as the 4

certificate of sale dated September 18, 1995 issued thereto as null and void and hereby ordered the same cancelled and set aside and Ordering defendants jointly and severally to pay plaintiffs the amount of Php25,000.00 as moral damages, and the amount of Php50,000.00 as attorneys fees and costs of the suit. Chevron, ACCRAIN and ACCRALAW appealed to the CA. On January 31, 2008, the CA rendered a decision reversing and setting aside the RTC decision. The CA ruled that Spouses Marasigan committed forum shopping and that all the elements of litis pendentia are present. Accordingly, Civil Case No. 2448-G, filed by Spouses Marasigan in the RTC-Gumaca was dismissible on the grounds of forum shopping and litis pendentia. Aggrieved by the CA decision, Spouses Marasigan filed this petition praying for its reversal and setting aside anchored on the following grounds: I. II.

III.

IV. V.

VI.

THE CA ERRED IN RULING THAT THE RTC-GUMACA ERRED WHEN IT DENIED RESPONDENTS MOTION TO DISMISS ON THE GROUND OF FORUM SHOPPING AND LITIS PENDENTIA. THE CA ERRED IN RULING THAT THE MAKATI CASE (CIVIL CASE NO. 95-1619) SHOULD SUBSIST BECAUSE IT WAS FILED AHEAD AND IS AN APPROPRIATE VEHICLE FOR LITIGATING ALL THE ISSUES IN THE CONTROVERSY. THE COURT OF APPEALS GROSSLY ERRED IN NOT APPRECIATING THE DECISION OF ITS FIFTEENTH DIVISION DATED MAY 21, 1999 FINDING ANOMALY IN THE CONDUCT OF FORECLOSURE BY RESPONDENTS. RESPONDENTS DELIBERATELY OMITTED THE DECISION OF THE FIFTEENTH DIVISION IN ITS APPELLANTS BRIEF IN CA G.R. NO. C.V. NO. 85223. RESPONDENTS CHEVRON, ACCRALAW AND ACCRAIN DID NOT INCLUDE RESPONDENT SHERIFF OF GUMACA (QUEZON) IN THEIR APPEAL BEFORE THE COURT OF APPEALS. SHERIFF IS INDISPENSABLE PARTY TO THE GUMACA CASE (CIVIL CASE NO. 2448-G). RESPONDENTS ACCRALAW AND ACCRAIN VIOLATED ARTICLE 1461 OF THE CIVIL CODE.

Spouses Marasigan argue that the RTC-Gumaca properly denied the respondents motion to dismiss on the ground of forum shopping and litis pendentia.. They further claim that in the Makati RTC case, Chevron endeavored to collect the deficiency arising from the foreclosure of mortgage on the properties of Spouses Marasigan, including their Gumaca property, while in the RTC-Gumaca case, they sought a court declaration that the foreclosure sale, specially the Mulanay property, was a nullity. Spouses Marasigan also insist that there is no forum shopping because of the diversity of parties in the RTCMakati case and the RTC-Gumaca case. They argue that in the RTC-Gumaca case, only the Spouses Marasigan stand as plaintiffs while Chevron, ACCRAIN and ACCRALAW are the defendants. They likewise aver that Mareal Co., Inc. is not a party plaintiff in the RTC-Gumaca case and ACCRAIN, ACCRALAW and Romeo Villafranca are not parties in the RTCMakati case. The petitioners state that ACCRAIN, ACCRALAW and Villafranca did not join Chevron in the RTC-Makati case. Neither did they participate in, nor claim responsibility for, the acts complained of against Chevron. Said defendants had nothing to do with the deficiency claim and the application, issuance and implementation of the writ of attachment which pertain solely to Chevron. Hence, any judgment that may be rendered in the RTC-Makati case cannot be legally enforced against said defendants because they cannot be held responsible for the acts of Chevron. Further, according to Spouses Marasigan, the rights alleged to have been violated in the two (2) cases arose out of separate sources. They claim that in the RTC-Makati case, the legal basis for the claim of damages was the application, issuance and implementation of a writ of attachment which resulted in damage to said defendants consisting of 5

damaged reputation, credit standing before the banks and their creditors and the business community; that, in effect, the issues in the RTC-Makati case were basically anchored on the applicability of the legal provisions on damages defined in Articles 2195 to 2232 of the Civil Code and the pertinent provisions of the Rules of Court; that, on the other hand, the issues in the RTC-Gumaca case were based on the application of Article 1491 of the Civil Code which relates to the validity of the acquisition of real property at public or judicial action by officers of the court; and that since the issues in the two (2) civil actions were distinct, they did not engage in forum shopping. Thus, Spouses Marasigan are adamant that litis pendentia is not a valid ground for the dismissal of the RTCGumaca case because a judgment in the RTC-Makati case or vice versa, will not be res judicata on the other. Spouses Marasigan further argue that the CA violated the rule on venue and jurisdiction when it ruled that the RTC-Makati was the appropriate vehicle for litigating the annulment of foreclosure of the Mulanay property. They add that the RTC-Gumaca is the appropriate vehicle for it because the subject property is located there. On the other hand, the respondents counter, among others, that the petition should have been dismissed outright considering that the petitioners failed to comply with the most basic and express requirements of the Rules of Court; that despite being given the opportunity to do so, the petitioners failed to submit a Verification and Certification and an Affidavit of Service that complies with the 2004 Rules on Notarial Practice; that the petitioners failed to attach material portions of the record, such as their Amended Answer to the complaint in the RTC-Makati case; that the petitioners repeated non-compliance with procedural rules, absent special and compelling circumstances to justify the same, is undeserving of a liberal application of the rules; that the petition raises questions of facts; that the petitioners committed forum-shopping in instituting the RTC-Gumaca Case notwithstanding the pendency of the RTC-Makati Case; that the petitioners prayed for the same relief in their complaint in the RTC-Gumaca Case and in their Answer in the Makati Case; that the petitioners are estopped from questioning the jurisdiction of the court in the RTC-Makati case considering that they were the ones who submitted the issues before said court, and prayed for relief from said court; that the petitioners failed to appeal the decision of the Makati RTC rejecting their claim that the foreclosure sale violated Article 1491 of the Civil Code, thus, they are bound by such ruling and that, in any case, there was no violation of Article 1491 by ACCRALAW and ACCRAIN and that the petitioners have no personality to question the foreclosure sale on the ground of Article 1491; and that the foreclosure sale was valid and complied strictly with the requirements of Act No. 3135 and that inadequacy of the bid price is not a ground to annul the foreclosure sale. ISSUE: Whether or not, elements of Litis Pendentia are present. HELD: The essence of forum shopping is the filing by a party against whom an adverse judgment has been rendered in one forum, seeking another and possibly favorable opinion in another suit other than by appeal or special civil action for certiorari. It is the act of filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively for the purpose of obtaining a favorable judgment. Forum shopping exists where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in the action under consideration. Litis pendentia is a Latin term, which literally means "a pending suit" and is variously referred to in some decisions as lis pendens and auter action pendant. As a ground for the dismissal of a civil action, it refers to the situation where two actions are pending between the same parties for the same cause of action, so that one of them becomes unnecessary and vexatious. It is based on the policy against multiplicity of suits. Litis pendentia requires the concurrence of the following requisites: (1) identity of parties, or at least such parties as those representing the same interests in both actions; (2) identity of rights asserted and reliefs prayed for, the 6

reliefs being founded on the same facts; and (3) identity with respect to the two preceding particulars in the two cases, such that any judgment that may be rendered in the pending case, regardless of which party is successful, would amount to res judicata in the other case. In the case at bench, all the requisites of litis pendentia are present. The first element, identity of parties, or at least representing the same interest in both actions, exists. The Court agrees with the ruling of the CA that Chevron and Spouses Marasigan are the same parties in the RTC-Makati Case and the RTC-Gumaca Case. Unquestionably, the plaintiff and the defendants in the RTC-Makati Case are Chevron and Spouses Marasigan as well as Mareal Co., Inc., respectively. On the other hand, the plaintiffs in the RTC-Gumaca Case are the Spouses Marasigan and the defendants therein are Chevron, ACCRAIN and ACCRALAW. The absence of ACCRAIN and ACCRALAW as party plaintiffs in the RTC-Makati case and their additional presence as party defendants in the RTC-Gumaca case would not unfavorably affect the respondents because the rule does not require absolute identity of parties. A substantial identity of parties is enough to qualify under the first requisite. What is important here is that the principal parties Chevron and Spouses Marasigan are the same in both cases. The second element, identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts, likewise subsists here. It cannot be denied that the complaint filed in the RTC-Makati was for a Sum of Money while that filed in the RTC-Gumaca was for Declaration of Nullity and/or Annulment of Foreclosure with Damages. Although both cases differ in form or nature, the same facts would be alleged and the same evidence would be presented considering that the resolution of both cases would be based on the validity and enforceability of the same credit lines, real estate mortgages and foreclosure proceedings. Indeed, the true test in determining the identity of causes of action lies not in the form or nature of the actions but rather in the evidence that would be presented. Finally, the presence of the third element, that the identity of the two cases should be such that the judgment that may be rendered in one would, regardless of which party is successful, amount to res judicata in the other, cannot be disputed either. Spouses Marasigan do not deny the fact that the affirmative defense that they raised in the RTC-Makati case was the illegality of the foreclosure sale of the Mulanay property.1[10] They raised the same issue in the RTC-Gumaca case.2[11] As correctly ruled by the CA, the judgment in the RTC-Makati with regard to the validity of the foreclosure sale of the Mulanay property will constitute res judicata in the case, and vice versa. The Court also agrees with its ruling that the RTC-Makati case should be the priority case because it was filed earlier and, therefore, the appropriate vehicle for litigating all issues in this case. The Court having ruled that the CA properly dismissed the petitioners complaint due to the presence of litis pendentia and the violation of the rule on forum shopping, there is no need to rule further on the other issues raised by the petitioners and the respondents in this case. WHEREFORE, the petition is DENIED.

7

Quito v. Stop & Save Corp., G.R. No. 186657, June 11, 2014 Facts: On March 11, 2005, Quito filed before the MCTC a complaint for unlawful detainer against Stop & Save alleging that it failed to pay the agreed monthly rentals since June 2003 and, despite demands, in violation of their April 4, 2002 Lease Agreement. Stop & Save, in its answer, denied that it committed a violation of the contract, but instead it contends that it merely suspended its payment, in accordance with Article 1658 of the NCC, because of Dominga’s failure to comply with their subsequent agreement that she must repair the 2nd floor of the leased building. MCTC ruled to allow Stop & Save in continuing the possession of the premises, however, it ordered that it should pay the arrears as of January 31, 2006. On appeal, the RTC set aside the complaint due to a pending case for annulment of lease contract filed by Stop & Save with the same RTC. It appears that Stop & Save had earlier filed, on January 13, 2005, a case to annul its April 4, 2002 lease agreement allegedly due to Dominga’s misrepresentations. Issue: WON Dominga’s complaint must be dismissed due to litis pendentia. Ruling: No. Litis pendentia as a ground for the dismissal of a civil action does not apply in the present case. Litis pendentia refers to a situation where another action is pending between the same parties for the same cause of action so that one of these actions is unnecessary and vexatious. The requisites are: 1) identity of the parties in the two actions; 2) substantial identity in the causes of action and in the reliefs sought by the parties; 3) and the identity between the two actions should be such that any judgment that may be rendered in one case, regardless of which party is successful, would amount to res judicata in the other. "The test to determine whether the causes of action are identical is to ascertain whether the same evidence will sustain both actions, or whether there is an identity in the facts essential to the maintenance of the two actions. If the same facts or evidence would sustain both, the two actions are considered the same, and a judgment in the first case is a bar to the subsequent action". In the present case, while there is an identity in the facts between the two actions, involving as they do the same lease contract, the issues and the relief prayed for are different so that the causes of action remain entirely distinct from each other. In the unlawful detainer suit, the issue is who between the parties has a better right to physical possession over the property or possession de facto and the principal relief prayed for is for Stop and Save to vacate the property for failure to pay the rent. In contrast, in the annulment of lease contract, the issue is the validity of the lease contract, where Stop and Save puts in issue Dominga's ownership. In other words, the issue of physical possession in the action for unlawful detainer cannot be identical with the issues of ownership and validity of contract in the action for annulment. From these essential differences, the lack of required identity in the causes of action for litis pendentia to exist cannot be denied. Since the causes of action in the subject case for unlawful detainer and annulment of lease contract are entirely different, a judgment in one case would not amount to res judicata in the other. "[F]or res judicata to bar the institution of a subsequent action[,] the following requisites must concur: (1) the former judgment must be final; (2) it must have been rendered by a court having jurisdiction of the subject matter and the parties; (3) it must be a judgment on the merits; and (4) there must be[,] between the first and second actions[,] (a) identity of parties; (b) identity of subject matter; and (c) identity of cause of action". 8

Doctrine: The fact that there is identity between two actions, such as involving the same lease contract, the issues and relief prayed for must be considered. In other words, there must be identity of cause of action. In unlawful detainer, the issue is who between the parties has a better right to physical possession. In contrast, in the annulment of lease contract, the issue is the validity of the lease contract, and some instances such as this case, the issue is ownership.

Benavidez v. Salvador, G.R. No. 173331, December 11, 2013 Facts: Benavidez approached and asked respondent Salvador for a loan that she would use to repurchase her property which was foreclosed by the Farmers Savings Bank. Salvador issued a manager's check in favor of Benavidez in the amount of One Million Pesos (P1,000,000.00) and released Five Hundred Thousand Pesos (P500,000.00) in cash. Benavidez defaulted in her obligation. This development prompted Salvador to send a demand letter with a corresponding statement of account, dated January 11, 2000. Unfortunately, the demand fell on deaf ears which constrained Salvador to le a complaint for sum of money with damages with prayer for issuance of preliminary attachment. Benavidez filed a motion to dismiss on the ground of litis pendentia. She averred that prior to the filing of the case before the RTC-Antipolo, she had filed a Complaint for Collection for Sum of Money, Annulment of Contract and Checks wit Prayer for Preliminary Injunction and Temporary Restraining Order against Salvador; his counsel, Atty. Nepthalie Segarra; Almar Danguilan; and Cris Marcelino, before the Regional Trial Court, Branch 80, Morong, Rizal (RTCMorong). Issue: 1.) In fine, the core issue is whether or not the present case should have been dismissed on the ground of litis pendentia; and if so, 2.) which of the two cases should be dismissed. Ruling: Yes. In the present controversy, the Court is of the view that litis pendentia exists. All the elements are present: first, both Benavidez and Salvador are parties in both cases; second, both complaints are concerned with the same promissory note; and third, the judgment in either case would be determinative of the other. Litis pendentia exists when the following requisites are present: identity of the parties in the two actions; substantial identity in the causes of action and in the reliefs sought by the parties; and the identity between the two actions should be such that any judgment that may be rendered in one case, regardless of which party is successful, would amount to res judicata As to the second issue, considering the nature of the transaction between the parties, the Court believes that the case for collection of sum of money filed before RTC-Antipolo should be upheld as the more appropriate case because the judgment therein would eventually settle the issue in the controversy — whether or not Benavidez should be made accountable for the subject loan. It would seem that Civil Case No. 00-5660 or the complaint filed with RTC-Antipolo should have been dismissed applying the "priority-in-time rule." This rule, however, is not ironclad. The rule is not applied if the first case was merely to preempt the later action or to anticipate its filing and lay the basis for its dismissal. A crucial consideration is the good faith of the parties. In recent rulings, the more appropriate case is preferred and survives. In Spouses Abines v. BPI, it was written: As a rule, preference is given to the first action filed to be retained. This is in accordance with the maxim Qui prior est tempore, potior est jure. There are, however, limitations to this rule. Hence, 9

the first action may be abated if it was filed merely to pre-empt the later action or to anticipate its filing and lay the basis for its dismissal. Another exception to the priority in time rule is the criterion of the more appropriate action Thus, an action, although filed later, shall not be dismissed if it is the more appropriate vehicle for litigating the issues between the parties. In the relatively recent case of Dotmatrix Trading v. Legaspi , the Court had the occasion to extensively discuss the various rules and consideration in determining which case to dismiss in such situations. It included its analysis of Abines. Thus: In the 1956 case of Teodoro v. Mirasol, we deviated from the "priority-in time rule" and applied the "more appropriate action test" and the "anticipatory test”. The "more appropriate action test" considers the real issue raised by the pleadings and the ultimate objective of the parties; the more appropriate action is the one where the real issues raised can be fully and completely settled. In the "anticipatory test," the bona fides or good faith of the parties is the critical element. If the first suit is filed merely to preempt the later action or to anticipate its filing and lay the basis for its dismissal, then the first suit should be dismissed. Doctrine: Under this established jurisprudence on litis pendentia, the following considerations predominate in the ascending order of importance in determining which action should prevail: (1) the date of filing, with preference generally given to the first action filed to be retained; (2) whether the action sought to be dismissed was filed merely to preempt the later action or to anticipate its filing and lay the basis for its dismissal; and (3) whether the action is the appropriate vehicle for litigating the issues between the parties.

Res Judicata

Heirs of Sotto v. Palicte, G.R. No. 159691, June 13, 2013 Spouses Antonio v. Sayman, G.R. No. 149624, September 29, 2010

Sec. 2. Compulsory counterclaim, cross-claim, not set up barred

Sec. 3. Default; declaration of

See: Sec. 1, Rule 11 10

Mediserv v. Chinabank, G.R. No. 140755, April 17, 2001 FACTS: On January 13, 1998, China Banking Corporation filed a complaint for a sum of money to recover deficiency judgment in foreclosure proceedings against Mediserv, Hernando Delizo and Marissa Delizo (defendants therein). It was alleged that the defendants executed promissory notes and secured by a real estate mortgage. However, they failed to pay their obligations. Upon foreclosure of the mortgage, the bank was only able to realize less than the actual debt of the defendants. On April 15, 1998, the defendants filed a Motion for Extension of Time to File Motion to Dismiss and/or Answer, praying that they be given an additional period of 15 days from April 16, 1998 or up to May 1, 1998, within which to file their "appropriate pleading or motion.” On April 17, 1998 the law firm of Guerrero, Alambra, Viernes and Margarejo withdrew its appearance as counsel for defendants. On April 24, 1998 the respondent judge granted the Motion for Extension of Time to File Motion to Dismiss and/or Answer. On April 30, 1998, the defendants filed another motion for extension for an additional 15 days, from May 1, 1998 or up to May 16, 1998, within which to file their pleading or motion, averring that they were shopping for a new counsel, with defendant Hernando Delizo himself signing the same. On May 7, 1998, the judge granted the motion, with the warning this time that no further extension would be entertained. Despite such warning, on May 15, 1998, defendants filed yet another motion for a last extension of time to file their motion to dismiss and/or Answer, seeking yet another ten days from May 16, 1998, or up to May 26, 1998 to do so, claiming anew that they were still looking for a new counsel, with the defendant Hernando Delizo once more signing the motion. This last motion for extension was denied by the respondent judge. On May 26, 1998, or some 10 days from May 16, 1998, the last day granted by His Honor for defendants to file their responsive pleading and/or motion to dismiss, the defendats filed a motion to dismiss the complaint on the ground of litis pendentia, lack of cause of action and payment of claim. They alleged that they had earlier filed a case against Chinabank. On June 4, 1998, Chinabank filed a Motion to Declare Defendants Mediserv, Incorporated, and Hernando Delizo and Marissa Delizo in default. This was granted by the respondent judge. On August 20, 1998, the defendants filed an Omnibus Motion to lift the order of default. This was denied by the judge. On appeal, the Court of Appeals sustained the order of the trial court. It ruled that the Omnibus Motion to Lift Order of Default filed by now petitioners (defendants then) was "fatally flawed," as it was filed beyond the extended periods to file answer granted by the court, was not under oath, and was not accompanied by a proper affidavit of merit.

ISSUE: Whether or not petitioners (then defendants) was correctly declared in default.

RULING: Yes. 11

A party declared in default is deprived of the right to take part in the trial and forfeits his rights as a party litigant except the right to receive notice of subsequent proceedings. To obtain relief from an order of default, the said party may at any time after notice thereof and before judgment file a motion under oath to set aside order of default upon proper showing that his failure to answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense. If not accompanied by an affidavit of merit, the trial court has no authority to consider the same. In this case, petitioners (then defendants) filed on May 26, 1998 their Motion to Dismiss the Complaint against them on the grounds of litis pendentia, lack of cause of action, and payment of claim. This motion was filed ten (10) days late, as the last day for filing answer/motion to dismiss was May 16, 1998 after two (2) extensions of fifteen (15) days each were granted by the court on motion of petitioners. This is so even though petitioner’s Motion to Dismiss was filed ahead of respondent bank's Motion to Declare Defendants in Default. Petitioners' period to file responsive pleading had expired, and was overtaken by respondent's motion to declare them in default, which was filed eight (8) days later (or on June 4, 1998). There is no rule or jurisprudence that mandates that both incidents cannot be resolved together. In fact, an order of default can be made only upon motion of the claiming party and the motion herein was precisely based on the defendants' failure to file his responsive pleading/motion to dismiss on time. The second motion to dismiss contained in the August 20, 1998 Omnibus Motion and the Motion to Cite for Contempt cannot be entertained until the default order is lifted and the petitioners' standing as party litigant is restored. In fine, petitioners failed to set aside the order of default before filing their Motion to Dismiss.

Spouses de los Santos v. Hon. Carpio, G.R. No. 153696, September 11, 2006 Martinez v. Republic, G.R. No. 160895, October 30, 2006 Facts: Petitioner Jose R. Martinez (Martinez) filed a petition for the registration in his name of three (3) parcels of land. Martinez alleged that he had purchased lots in 1952 from his uncle, whose predecessors-in-interest were traceable up to the 1870s. The OSG, in behalf of the Republic of the Philippines, opposed the petition on the grounds that appellee’s possession was not in accordance with Section 48(b) of Commonwealth Act No. 141; that his muniments of title were insufficient to prove bona-fide acquisition and possession of the subject parcels; and that the properties formed part of the public domain and thus not susceptible to private appropriation. Despite the opposition filed by the OSG, the RTC issued an order of general default, even against the Republic of the Philippines. This ensued when during the hearing of even date, no party appeared before the Court to oppose Martinez’s petition. Afterwards, the trial court proceeded to receive Martinez’s oral and documentary evidence in support of his petition. The RTC rendered a Decision concluding that Martinez and his predecessors-in-interest had been for over 100 years in possession characterized as continuous, open, public, and in the concept of an owner. The RTC thus decreed the registration of the three (3) lots in the name of Martinez. From this Decision, the OSG filed a Notice of Appeal which was approved by the RTC. However, after the records had been transmitted to the Court of Appeals, the RTC received a letter from the Land Registration Authority (LRA) stating that only Lot Nos. 464-A and 464-B were referred to in the Notice of Hearing published in the Official Gazette; and that 12

Lot No. 370, Cad No. 597 had been deliberately omitted due to the lack of an approved survey plan for that property. Accordingly, the LRA manifested that this lot should not have been adjudicated to Martinez for lack of jurisdiction. This letter was referred by the RTC to the Court of Appeals for appropriate action. The Court of Appeals promulgated the assailed Decision reversing the RTC and instead ordering the dismissal of the petition for registration. In light of the opposition filed by the OSG, the appellate court found the evidence presented by Martinez as insufficient to support the registration of the subject lots. No motion for reconsideration appears to have been filed with the Court of Appeals by Martinez, who instead directly assailed its Decision before this Court through the present petition. Issue: Whether an order of general default issued by a trial court in a land registration case bars the Republic of the Philippines, through the Office of the Solicitor General, from interposing an appeal from the trial court’s subsequent decision in favor of the applicant?

Ruling: NO. OSG can still file an appeal. Section 3 of Rule 9 of the 1997 Rules incorporated the particular effects on the parties of an order of default: Sec. 3. Default; declaration of. If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court. (a) Effect of order of default. A party in default shall be entitled to notice of subsequent proceedings but shall not take part in the trial. (b) Relief from order of default. A party declared in default may any time after notice thereof and before judgment file a motion under oath to set aside the order of default upon proper showing that his failure to answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense. In such case, the order of default may be set aside on such terms and conditions as the judge may impose in the interest of justice. (c) Effect of partial default. When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented. (d) Extent of relief to be awarded. A judgment rendered against a party in default shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages. xxx It cannot be escaped that the old provision expressly guaranteeing the right of a defendant declared in default to appeal the adverse decision was not replicated in the 1997 Rules of Civil Procedure.

13

Lim Toco vs Go Fray ruling (1948) “ where a divided Court pronounced that a defendant in default had no right to appeal the judgment rendered by the trial court, except where a motion to set aside the order of default had been filed” However, Sec. 2, Rule 41 of the 1964 Rules of Court made the Lim Toco ruling as moot. "[a] party who has been declared in default may likewise appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition for relief to set aside the order of default has been presented by him in accordance with Rule 38." In the present rule, the prior warrant that a defaulted defendant had the right to appeal was removed from Section 2, Rule 41 of the 1997 Rules of Civil Procedure. However, in Lina v. Court of Appeals (1997), it provides remedies for a party who has been declared in default. a) The defendant in default may, at any time after discovery thereof and before judgment, file a motion, under oath, to set aside the order of default on the ground that his failure to answer was due to fraud, accident, mistake or excusable neglect, and that he has meritorious defenses; (Sec 3, Rule 18) b) If the judgment has already been rendered when the defendant discovered the default, but before the same has become final and executory, he may file a motion for new trial under Section 1(a) of Rule 37; c) If the defendant discovered the default after the judgment has become final and executory, he may file a petition for relief under Section 2 of Rule 38; andcralawlibrary d) He may also appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition to set aside the order of default has been presented by him. (Sec. 2, Rule 41)31 The fourth remedy, that of appeal, is anchored on Section 2, Rule 41 of the 1964 Rules. Yet even after that provision's deletion under the 1997 Rules, the Court did not hesitate to expressly rely again on the Lina doctrine, including the pronouncement that a defaulted defendant may appeal from the judgment rendered against him. Former Court of Appeals Justice Herrerra likewise reiterates the Lina doctrine, though with the caveat that an appeal from an order denying a petition for relief from judgment was no longer appealable under Section 1, Rule 41 of the 1997 Rules.37 Herrera further adds: Section 2, paragraph [2] of the former Rule 41, which allows an appeal from a denial of a petition for relief, was deleted from the present Rule, and confined appeals to cases from a final judgment or final order that completely disposes of the case, or of a particular matter therein, when declared by these rules to be appealable. A judgment by default may be considered as one that completely disposes of the case.38 Yet even if it were to assume the doubtful proposition that this contested right of appeal finds no anchor in the 1997 Rules, the doctrine still exists, applying the principle of stare decisis. jurisprudence applying the 1997 Rules has continued to acknowledge the Lina doctrine which embodies this right to appeal as among the remedies of a defendant, and no argument in this petition persuades the Court to rule otherwise.

14

In Rural Bank of Sta. Catalina v. Land Bank of the Philippines,39 the Court, through Justice Callejo, Sr., again provided a comprehensive restatement of the remedies of the defending party declared in default, which we adopt for purposes of this decision: It bears stressing that a defending party declared in default loses his standing in court and his right to adduce evidence and to present his defense. He, however, has the right to appeal from the judgment by default and assail said judgment on the ground, inter alia, that the amount of the judgment is excessive or is different in kind from that prayed for, or that the plaintiff failed to prove the material allegations of his complaint, or that the decision is contrary to law. Such party declared in default is proscribed from seeking a modification or reversal of the assailed decision on the basis of the evidence submitted by him in the Court of Appeals, for if it were otherwise, he would thereby be allowed to regain his right to adduce evidence, a right which he lost in the trial court when he was declared in default, and which he failed to have vacated. In this case, the petitioner sought the modification of the decision of the trial court based on the evidence submitted by it only in the Court of Appeals.40 If it cannot be made any clearer, we hold that a defendant party declared in default retains the right to appeal from the judgment by default on the ground that the plaintiff failed to prove the material allegations of the complaint, or that the decision is contrary to law, even without need of the prior filing of a motion to set aside the order of default. We reaffirm that the Lim Toco doctrine, denying such right to appeal unless the order of default has been set aside, was no longer controlling in this jurisdiction upon the effectivity of the 1964 Rules of Court, and up to this day.

Heirs of Medrano v. De Vera, G.R. No. 165770, August 9, 2010 Facts: Flaviana De Gracia owns a 463-sq m of land. When Flaviana died intestate in 1980, leaving her half-sisters Hilaria Martin-Paguyo and Elena Martin-Alvarado as her compulsory heirs. Hilaria and Elena, by virtue of a private document, waived all their hereditary rights to Flaviana’s land in favor of Francisco Medrano in consideration of the expenses that she incurred for Flaviana’s medication, hospitalization, wake and burial. Some of their children affirmed the contents of the private document executed by their deceased mothers. To that end, they executed separate Deeds of Confirmation of Private Document and Renunciation of rights in favor of Medrano. Due to the refusal of the other children to sign a similar renunciation, Medrano filed a complaint in 2001 for quieting of title, reconveyance, reformation of instrument, and/or partition with damages against Pelagia, Faustina, Jesus, Veranda, and Estrellita before the RTC of Urdaneta, Pangasinan. On April 2, 2002, respondent De Vera filed an answer with counterclaim presented himself as a real party in interest. He maintained that the private document in favor of Medrano was null and void for want of consideration. Thus, while some children affirmed the renunciation of their deceased mothers rights’ of the lot in favor of Medrano, the other children renounced their rights in favor of de Vera. The RTC ruled in favor of the petitioners, allowing an ex parte presentation of evidence. The RTC explained it would have allowed de Vera to present his evidence in the case had he complied with the courts’ order to file a pleading-inintervention. Upon appeal to the CA, the appellate court agreed with de Vera. The CA pointed out that the trial court 15

should have exercised its authority to order the substitution of the original defendants instead of requiring de Vera to file a pleading-in-intervention. This is allowed under Rule 3, Section 19 of the Rules of Court. Since a transferee pendent lite is a proper party to the case, the court can order its outright substitution for the original defendants. The petitioners filed a motion for reconsideration, which was denied by the appellate court, hence this petition. ISSUE: Whether De Vera could participate in the Civil Case without filing a motion to intervene; Whether De Vera is bound by the judgment against his transferors RULING: The trial court’s approach is seriously flawed because De Vera’s interest is not independent of or severable from the interest of the named defendants. De Vera is a transferee pendente lite of the named defendants (by virtue of the Deed of Renunciation of Rights that was executed in his favor during the pendency of Civil Case No. U-7316). His rights were derived from the named defendants and, as transfereependente lite, he would be bound by any judgment against his transferors under the rules of res judicata. It was therefore wrong for the trial court to have tried Medrano’s case against the named defendants (by allowing Medrano to present evidence ex parte against them) after it had already admitted De Vera’s answer. What the trial court should have done is to treat De Vera as having been joined as a party-defendant, and to try the case on the basis of the answer De Vera had filed and with De Vera’s participation. As transferee pendente lite, De Vera may be allowed to join the original defendants under Rule 3, Section 19. As there was a transferee pendente lite whose answer had already been admitted, the trial court should have tried the case on the basis of that answer, based on Rule 9, Section 3(c): Effect of partial default. – When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented. To proceed with the ex parte presentation of evidence against the named defendants after De Vera’s answer had been admitted would not only be a violation of Rule 9, Section 3(c), but would also be a gross disregard of De Vera’s right to due process. This is because the ex parte presentation of evidence would result in a default judgment which would bind not just the defaulting defendants, but also De Vera, precisely because he is a transferee pendente lite. This would result in an anomaly wherein De Vera would be bound by a default judgment even if he had filed an answer and expressed a desire to participate in the case. Given the Court’s finding that the ex parte presentation of evidence constituted a violation of due process rights, the trial court’s judgment by default cannot bind De Vera. A void judgment cannot attain finality and its execution has no basis in law. The case should be remanded to the trial court for trial based on De Vera’s answer and with his participation.

16