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G.R. No. 162788. July 28, 2005.

Spouses JULITA DE LA CRUZ and FELIPE DE LA CRUZ,

petitioners, vs. PEDRO JOAQUIN, respondent.

George Erwin M. Garcia for petitioners.

Nicolas P. Lapena, Jr. for respondent.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; PARTIES TO CIVIL

ACTIONS; WHEN A PARTY TO A PENDING ACTION DIES AND THE

CLAIM IS NOT EXTINGUISHED, SUBSTITUTION OF THE DECEASED IS

REQUIRED; PURPOSE. When a party to a pending action dies and

the claim is not extinguished, the Rules of Court require a substitution

of the deceased. The procedure is specifically governed by Section 16

of Rule 3, . . . . The rule on the substitution of parties was crafted to

protect every party's right to due process. The estate of the deceased

party will continue to be properly represented in the suit through theduly appointed legal representative. Moreover, no adjudication can

be made against the successor of the deceased if the fundamental

right to a day in court is denied.

2. ID.; ID.; ID.; ID.; A FORMAL SUBSTITUTION BY HEIRS IS NOT

NECESSARY WHEN THEY THEMSELVES VOLUNTARILY APPEAR,

PARTICIPATE IN THE CASE, AND PRESENT EVIDENCE IN DEFENSE OF

THE DECEASED. The Court has nullified not only trial proceedings

conducted without the appearance of the legal representatives of the

deceased, but also the resulting judgments. In those instances, the

courts acquired no jurisdiction over the persons of the legal

representatives or the heirs upon whom no judgment was binding.

This general rule notwithstanding, a formal substitution by heirs is not

necessary when they themselves voluntarily appear, participate in

the case, and present evidence in defense of the deceased. These

actions negate any claim that the right to due process was violated.

CDcHSa

3. ID.; ID.; ID.; ID.; RULE ON SUBSTITUTION BY HEIRS IS NOT A

MATTER OF JURISDICTION BUT A REQUIREMENT OF DUE PROCESS.

Strictly speaking, the rule on the substitution by heirs is not a matter

of jurisdiction, but a requirement of due process. Thus, when due

process is not violated, as when the right of the representative or heir

is recognized and protected, noncompliance or belated formal

compliance with the Rules cannot affect the validity of a promulgated

decision. Mere failure to substitute for a deceased plaintiff is not a

sufficient ground to nullify a trial court's decision. The alleging party

must prove that there was an undeniable violation of due process.

4. ID.; ID.; ACTIONS; FORUM SHOPPING; DEFINED. Forum

shopping is the institution of two or more actions or proceedings

involving the same parties for the same cause of action, either

simultaneously or successively, on the supposition that one or the

other court would make a favorable disposition. Forum shopping may

be resorted to by a party against whom an adverse judgment or order

has been issued in one forum, in an attempt to seek a favorable

opinion in another, other than by an appeal or a special civil action

for certiorari.

5. ID.; ID.; ID.; ID.; WILLFUL AND DELIBERATE VIOLATION OF THE

RULE ON FORUM SHOPPING IS A GROUND FOR THE SUMMARY

DISMISSAL OF CASE AND CONSTITUTES DIRECT CONTEMPT OF

COURT. Forum shopping trifles with the courts, abuses their

processes, degrades the administration of justice, and congests court

dockets. Willful and deliberate violation of the rule against it is a

ground for the summary dismissal of the case; it may also constitute

direct contempt of court.

6. ID.; ID.; ID.; ID.; TEST TO DETERMINE ITS EXISTENCE. The

test for determining the existence of forum shopping is whether the

elements of litis pendentia are present, or whether a final judgment

in one case amounts to res judicata in another.

7. ID.; ID.; JUDGMENTS; RES JUDICATA; BARS A SUBSEQUENT

SUIT INVOLVING THE SAME PARTIES, SUBJECT MATTER, AND CAUSE

OF ACTION. Under res judicata, a final judgment or decree on the

merits by a court of competent jurisdiction is conclusive of the rights

of the parties or their privies, in all later suits and on all points and

matters determined in the previous suit. The term literally means a

"matter adjudged, judicially acted upon, or settled by judgment." The

principle bars a subsequent suit involving the same parties, subject

matter, and cause of action. Public policy requires that controversies

must be settled with finality at a given point in time.

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8. ID.; ID.; ID.; ID.; ELEMENTS OF RES JUDICATA. The

elements of res judicata are as follows: (1) the former judgment or

order must be final; (2) it must have been rendered on the merits of

the controversy; (3) the court that rendered it must have had

jurisdiction over the subject matter and the parties; and (4) there

must have been between the first and the second actions an

identity of parties, subject matter and cause of action. cTaDHS

D E C I S I O N

PANGANIBAN, J p:

The Rules require the legal representatives of a dead litigant to be

substituted as parties to a litigation. This requirement is necessitated

by due process. Thus, when the rights of the legal representatives of

a decedent are actually recognized and protected, noncompliance or

belated formal compliance with the Rules cannot affect the validity of

the promulgated decision. After all, due process had thereby been

satisfied. cCESaH

The Case

Before us is a Petition for Review 1 under Rule 45 of the Rules of

Court, assailing the August 26, 2003 Decision 2 and the March 9,

2004 Resolution 3 of the Court of Appeals (CA) in CA-GR CV No.

34702. The challenged Decision disposed as follows:

"WHEREFORE, the foregoing considered, the appeal is DISMISSED and

the assailed decision accordingly AFFIRMED in toto. No costs." 4

On the other hand, the trial court's affirmed Decision disposed as

follows:

"WHEREFORE, judgment is hereby rendered:

"a) declaring the Deed of Absolute Sale (Exh. 'D') and

'Kasunduan' (Exhibit B), to be a sale with right of repurchase;

IaAScD

"b) ordering the plaintiff to pay the defendants the sum of

P9,000.00 by way of repurchasing the land in question;

"c) ordering the defendants to execute a deed of reconveyance of

said land in favor of the plaintiff after the latter has paid them the

amount of P9,000.00 to repurchase the land in question;

"d) ordering the defendants to yield possession of the subject

land to the plaintiff after the latter has paid them the amount of

P9,000.00 to repurchase the property from them; and

"e) ordering the defendants to pay the plaintiff the amount of

P10,000.00 as actual and compensatory damages; the amount of

P5,000[.00] as exemplary damages; the amount of P5,000.00 as

expenses of litigation and the amount of P5,000.00 by way of

attorney's fees." 5

The Facts

The case originated from a Complaint for the recovery of possession

and ownership, the cancellation of title, and damages, filed by Pedro

Joaquin against petitioners in the Regional Trial Court of Baloc, Sto.

Domingo, Nueva Ecija. 6 Respondent alleged that he had obtained aloan from them in the amount of P9,000 on June 29, 1974, payable

after five (5) years; that is, on June 29, 1979. To secure the payment

of the obligation, he supposedly executed a Deed of Sale in favor of

petitioners. The Deed was for a parcel of land in Pinagpanaan,

Talavera, Nueva Ecija, covered by TCT No. T-111802. The parties also

executed another document entitled "Kasunduan." 7

Respondent claimed that the Kasunduan showed the Deed of Sale to

be actually an equitable mortgage. 8 Spouses De la Cruz contended

that this document was merely an accommodation to allow the

repurchase of the property until June 29, 1979, a right that he failedto exercise. 9

On April 23, 1990, the RTC issued a Decision in his favor. The trial

court declared that the parties had entered into a sale with a right of

repurchase. 10 It further held that respondent had made a valid

tender of payment on two separate occasions to exercise his right of

repurchase. 11 Accordingly, petitioners were required to reconvey

the property upon his payment. 12

Ruling of the Court of Appeals

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Sustaining the trial court, the CA noted that petitioners had given

respondent the right to repurchase the property within five (5) years

from the date of the sale or until June 29, 1979. Accordingly, the

parties executed the Kasunduan to express the terms and conditions

of their actual agreement. 13 The appellate court also found no

reason to overturn the finding that respondent had validly exercised

his right to repurchase the land. 14

In the March 9, 2004 Resolution, the CA denied reconsideration and

ordered a substitution by legal representatives, in view of

respondent's death on December 24, 1988. 15

Hence, this Petition. 16

The Issues

Petitioners assign the following errors for our consideration:

"I. Public Respondent Twelfth Division of the Honorable Court of

Appeals seriously erred in dismissing the appeal and affirming in totothe Decision of the trial court in Civil Case No. SD-838; CHDAEc

"II. Public Respondent Twelfth Division of the Honorable Court of

Appeals likewise erred in denying [petitioners'] Motion for

Reconsideration given the facts and the law therein presented." 17

Succinctly, the issues are whether the trial court lost jurisdiction over

the case upon the death of Pedro Joaquin, and whether respondent

was guilty of forum shopping. 18

The Court's Ruling

The Petition has no merit.

First Issue:

Jurisdiction

Petitioners assert that the RTC's Decision was invalid for lack of

jurisdiction. 19 They claim that respondent died during the pendency

of the case. There being no substitution by the heirs, the trial court

allegedly lacked jurisdiction over the litigation. 20

Rule on Substitution

When a party to a pending action dies and the claim is not

extinguished, 21 the Rules of Court require a substitution of the

deceased. The procedure is specifically governed by Section 16 of

Rule 3, which reads thus:

"Section 16. Death of a party; duty of counsel. Whenever a party

to a pending action dies, and the claim is not thereby extinguished, it

shall be the duty of his counsel to inform the court within thirty (30)

days after such death of the fact thereof, and to give the name and

address of his legal representative or representatives. Failure of

counsel to comply with this duty shall be a ground for disciplinary

action.

"The heirs of the deceased may be allowed to be substituted for the

deceased, without requiring the appointment of an executor or

administrator and the court may appoint a guardian ad litem for the

minor heirs.

"The court shall forthwith order said legal representative or

representatives to appear and be substituted within a period of thirty

(30) days from notice.

"If no legal representative is named by the counsel for the deceased

party, or if the one so named shall fail to appear within the specified

period, the court may order the opposing party, within a specified

time, to procure the appointment of an executor or administrator for

the estate of the deceased, and the latter shall immediately appear

for and on behalf of the deceased. The court charges in procuring

such appointment, if defrayed by the opposing party, may berecovered as costs."

The rule on the substitution of parties was crafted to protect every

party's right to due process. The estate of the deceased party will

continue to be properly represented in the suit through the duly

appointed legal representative. Moreover, no adjudication can be

made against the successor of the deceased if the fundamental right

to a day in court is denied.

The Court has nullified not only trial proceedings conducted without

the appearance of the legal representatives of the deceased, but also

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the resulting judgments. In those instances, the courts acquired no

jurisdiction over the persons of the legal representatives or the heirs

upon whom no judgment was binding.

This general rule notwithstanding, a formal substitution by heirs

is not necessary when they themselves voluntarily appear,

participate in the case, and present evidence in defense of

the deceased. These actions negate any claim that the right

to due process was violated.

The Court is not unaware of Chittick v. Court of Appeals, 28 in which

the failure of the heirs to substitute for the original plaintiff upon her

death led to the nullification of the trial court's Decision. The latter

had sought to recover support in arrears and her share in the

conjugal partnership. The children who allegedly substituted for her

refused to continue the case against their father and vehemently

objected to their inclusion as parties. Moreover, because he died

during the pendency of the case, they were bound to substitute for

the defendant also. The substitution effectively merged the persons

of the plaintiff and the defendant and thus extinguished the

obligation being sued upon. 30

Clearly, the present case is not similar, much less identical, to the

factual milieu of Chittick.

Strictly speaking, the rule on the substitution by heirs is not a

matter of jurisdiction, but a requirement of due process.

Thus, when due process is not violated, as when the right of

the representative or heir is recognized and protected,

noncompliance or belated formal compliance with the Rules

cannot affect the validity of a promulgated decision. 31 Merefailure to substitute for a deceased plaintiff is not a sufficient

ground to nullify a trial court's decision. The alleging party

must prove that there was an undeniable violation of due

process.

Substitution in the Instant Case

The records of the present case contain a "Motion for Substitution of

Party Plaintiff" dated February 15, 2002, filed before the CA. The

prayer states as follows:

"WHEREFORE, it is respectfully prayed that the Heirs of the deceased

plaintiff-appellee as represented by his daughter Lourdes dela Cruz

be substituted as party-plaintiff for the said Pedro Joaquin.

"It is further prayed that henceforth the undersigned counsel 32 for

the heirs of Pedro Joaquin be furnished with copies of notices, orders,

resolutions and other pleadings at its address below."

Evidently, the heirs of Pedro Joaquin voluntary appeared andparticipated in the case. We stress that the appellate court had

ordered 33 his legal representatives to appear and substitute for him.

The substitution even on appeal had been ordered correctly. In all

proceedings, the legal representatives must appear to protect the

interests of the deceased. 34 After the rendition of judgment, further

proceedings may be held, such as a motion for reconsideration or a

new trial, an appeal, or an execution. 35

Considering the foregoing circumstances, the Motion for Substitution

may be deemed to have been granted; and the heirs, to have

substituted for the deceased, Pedro Joaquin. There being no violationof due process, the issue of substitution cannot be upheld as a

ground to nullify the trial court's Decision.

Second Issue:

Forum Shopping

Petitioners also claim that respondents were guilty of forum

shopping, a fact that should have compelled the trial court to dismiss

the Complaint. 36 They claim that prior to the commencement of the

present suit on July 7, 1981, respondent had filed a civil case against

petitioners on June 25, 1979. Docketed as Civil Case No. SD-742 for

the recovery of possession and for damages, it was allegedly

dismissed by the Court of First Instance of Nueva Ecija for lack of

interest to prosecute.

Forum Shopping Defined

Forum shopping is the institution of two or more actions or

proceedings involving the same parties for the same cause of action,

either simultaneously or successively, on the supposition that one or

the other court would make a favorable disposition. 37 Forum

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shopping may be resorted to by a party against whom an adverse

judgment or order has been issued in one forum, in an attempt to

seek a favorable opinion in another, other than by an appeal or a

special civil action for certiorari. 38

Forum shopping trifles with the courts, abuses their processes,

degrades the administration of justice, and congests court dockets.

39 Willful and deliberate violation of the rule against it is a ground for

the summary dismissal of the case; it may also constitute direct

contempt of court. 40

The test for determining the existence of forum shopping is

whether the elements of litis pendentia are present, or

whether a final judgment in one case amounts to res judicata

in another. We note, however, petitioners' claim that the subject

matter of the present case has already been litigated and decided.

Therefore, the applicable doctrine is res judicata.

Applicability of Res Judicata

Under res judicata, a final judgment or decree on the merits

by a court of competent jurisdiction is conclusive of the rights

of the parties or their privies, in all later suits and on all

points and matters determined in the previous suit. The term

literally means a "matter adjudged, judicially acted upon, or settled

by judgment." 44 The principle bars a subsequent suit involving the

same parties, subject matter, and cause of action. Public policy

requires that controversies must be settled with finality at a given

point in time. IDcHCS

The elements of res judicata are as follows: (1) the formerjudgment or order must be final; (2) it must have been

rendered on the merits of the controversy; (3) the court that

rendered it must have had jurisdiction over the subject

matter and the parties; and (4) there must have been

between the first and the second actions an identity of

parties, subject matter and cause of action.

Failure to Support Allegation

The onus of proving allegations rests upon the party raising them. 46

As to the matter of forum shopping and res judicata, petitioners have

failed to provide this Court with relevant and clear specifications that

would show the presence of an identity of parties, subject matter, and

cause of action between the present and the earlier suits. They have

also failed to show whether the other case was decided on the merits.

Instead, they have made only bare assertions involving its existence

without reference to its facts. In other words, they have alleged

conclusions of law without stating any factual or legal basis. Mere

mention of other civil cases without showing the identity of rightsasserted and reliefs sought is not enough basis to claim that

respondent is guilty of forum shopping, or that res judicata exists. 47

WHEREFORE, the Petition is DENIED and the assailed Decision and

Resolution are AFFIRMED. Costs against petitioners. ASETHC

SO ORDERED.

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[G.R. No. 190823. April 4, 2011.]

DOMINGO CARABEO, petitioner, vs. SPOUSES NORBERTO and

SUSAN DINGCO, respondents.

DECISION

CARPIO MORALES, J p:

On July 10, 1990, Domingo Carabeo (petitioner) entered into a

contract denominated as "Kasunduan sa Bilihan ng Karapatan sa

Lupa" 1 (kasunduan) with Spouses Norberto and Susan Dingco

(respondents) whereby petitioner agreed to sell his rights over a 648

square meter parcel of unregistered land situated in Purok III,

Tugatog, Orani, Bataan to respondents for P38,000. TDCAIS

Respondents tendered their initial payment of P10,000 upon signing

of the contract, the remaining balance to be paid on September 1990.

Respondents were later to claim that when they were about to hand

in the balance of the purchase price, petitioner requested them to

keep it first as he was yet to settle an on-going "squabble" over the

land.

Nevertheless, respondents gave petitioner small sums of money from

time to time which totaled P9,100, on petitioner's request according

to them; due to respondents' inability to pay the amount of the

remaining balance in full, according to petitioner.

By respondents' claim, despite the alleged problem over the land,they insisted on petitioner's acceptance of the remaining balance of

P18,900 but petitioner remained firm in his refusal, proffering as

reason therefor that he would register the land first.

Sometime in 1994, respondents learned that the alleged problem

over the land had been settled and that petitioner had caused its

registration in his name on December 21, 1993 under Transfer

Certificate of Title No. 161806. They thereupon offered to pay the

balance but petitioner declined, drawing them to file a complaint

before the Katarungan Pambarangay. No settlement was reached,

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performance before the Regional Trial Court (RTC) of Balanga,

Bataan. AEIHCS

Petitioner countered in his Answer to the Complaint that the sale was

void for lack of object certain, the kasunduan not having specified the

metes and bounds of the land. In any event, petitioner alleged that if

the validity of the kasunduan is upheld, respondents' failure to

comply with their reciprocal obligation to pay the balance of the

purchase price would render the action premature. For, contrary to

respondents' claim, petitioner maintained that they failed to pay the

balance of P28,000 on September 1990 to thus constrain him to

accept installment payments totaling P9,100.

After the case was submitted for decision or on January 31, 2001, 2

petitioner passed away. The records do not show that petitioner's

counsel informed Branch 1 of the Bataan RTC, where the complaint

was lodged, of his death and that proper substitution was effected in

accordance with Section 16, Rule 3, Rules of Court. 3

By Decision of February 25, 2001, 4 the trial court ruled in favor ofrespondents, disposing as follows:

WHEREFORE, premises considered, judgment is hereby rendered

ordering:

1. The defendant to sell his right over 648 square meters of land

pursuant to the contract dated July 10, 1990 by executing a Deed of

Sale thereof after the payment of P18,900 by the plaintiffs; ISAaTH

2. The defendant to pay the costs of the suit.

SO ORDERED. 5

Petitioner's counsel filed a Notice of Appeal on March 20, 2001.

By the herein challenged Decision dated July 20, 2009, 6 the Court of

Appeals affirmed that of the trial court.

Petitioner's motion for reconsideration having been denied by

Resolution of January 8, 2010, the present petition for review was

filed by Antonio Carabeo, petitioner's son, 7 faulting the appellate

court:

(A)

. . . in holding that the element of a contract, i.e., an object certain is

present in this case.

(B)

. . . in considering it unfair to expect respondents who are not lawyers

to make judicial consignation after herein petitioner allegedly refusedto accept payment of the balance of the purchase price.

(C)

. . . in upholding the validity of the contract, "Kasunduan sa Bilihan ng

Karapatan sa Lupa," despite the lack of spousal consent,

(underscoring supplied) TCaEIc

and proffering that

(D)

[t]he death of herein petitioner causes the dismissal of the action

filed by respondents; respondents' cause of action being an action in

personam. (underscoring supplied)

The petition fails.

The pertinent portion of the kasunduan reads: 8

xxx xxx xxx

Na ako ay may isang partial na lupa na matatagpuan sa Purok 111,

Tugatog, Orani Bataan, na may sukat na 27 x 24 metro kuwadrado,ang nasabing lupa ay may sakop na dalawang punong santol at isang

punong mangga, kaya't ako ay nakipagkasundo sa mag-asawang

Norby Dingco at Susan Dingco na ipagbili sa kanila ang karapatan ng

nasabing lupa sa halagang P38,000.00.

xxx xxx xxx (underscoring supplied)

That the kasunduan did not specify the technical boundaries of the

property did not render the sale a nullity. The requirement that a sale

must have for its object a determinate thing is satisfied as long as, at

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the time the contract is entered into, the object of the sale is capable

of being made determinate without the necessity of a new or further

agreement between the parties. 9 As the above-quoted portion of the

kasunduan shows, there is no doubt that the object of the sale is

determinate. ACETID

Clutching at straws, petitioner proffers lack of spousal consent. This

was raised only on appeal, hence, will not be considered, in the

present case, in the interest of fair play, justice and due process. 10

Respecting the argument that petitioner's death rendered

respondents' complaint against him dismissible, Bonilla v. Barcena 11

enlightens:

The question as to whether an action survives or not depends

on the nature of the action and the damage sued for. In the

causes of action which survive, the wrong complained [of]

affects primarily and principally property and property rights,

the injuries to the person being merely incidental, while in

the causes of action which do not survive, the injurycomplained of is to the person, the property and rights of

property affected being incidental. (emphasis and underscoring

supplied)

In the present case, respondents are pursuing a property right arising

from the kasunduan, whereas petitioner is invoking nullity of the

kasunduan to protect his proprietary interest. Assuming arguendo,

however, that the kasunduan is deemed void, there is a corollary

obligation of petitioner to return the money paid by respondents, and

since the action involves property rights, 12 it survives.

It bears noting that trial on the merits was already concluded before

petitioner died. Since the trial court was not informed of petitioner's

death, it may not be faulted for proceeding to render judgment

without ordering his substitution. Its judgment is thus valid and

binding upon petitioner's legal representatives or successors-in-

interest, insofar as his interest in the property subject of the action is

concerned. 13 SAaTHc

In another vein, the death of a client immediately divests the counsel

of authority. 14 Thus, in filing a Notice of Appeal, petitioner's counsel

of record had no personality to act on behalf of the already deceased

client who, it bears reiteration, had not been substituted as a party

after his death. The trial court's decision had thereby become final

and executory, no appeal having been perfected.

WHEREFORE, the petition is DENIED.

SO ORDERED.

[G.R. No. 153788. November 27, 2009.]

ROGER V. NAVARRO, petitioner, vs. HON. JOSE L. ESCOBIDO,

Presiding Judge, RTC Branch 37, Cagayan de Oro City, and

KAREN T. GO, doing business under the name KARGO

ENTERPRISES, respondents.

DECISION

BRION, J p:

This is a petition for review on certiorari 1 that seeks to set aside the

Court of Appeals (CA) Decision 2 dated October 16, 2001 and

Resolution 3 dated May 29, 2002 in CA-G.R. SP. No. 64701. These CA

rulings affirmed the July 26, 2000 4 and March 7, 2001 5 orders of the

Regional Trial Court (RTC), Misamis Oriental, Cagayan de Oro City,

denying petitioner Roger V. Navarro's (Navarro) motion to dismiss.

TDcEaH

BACKGROUND FACTS

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On September 12, 1998, respondent Karen T. Go filed two

complaints, docketed as Civil Case Nos. 98-599 (first complaint) 6 and

98-598 (second complaint), 7 before the RTC for replevin and/or sum

of money with damages against Navarro. In these complaints, Karen

Go prayed that the RTC issue writs of replevin for the seizure of two

(2) motor vehicles in Navarro's possession.

The first complaint stated:

1. That plaintiff KAREN T. GO is a Filipino, of legal age, married

to GLENN O. GO, a resident of Cagayan de Oro City and doing

business under the trade name KARGO ENTERPRISES, an entity duly

registered and existing under and by virtue of the laws of the

Republic of the Philippines, which has its business address at Bulua,

Cagayan de Oro City; that defendant ROGER NAVARRO is a Filipino, of

legal age, a resident of 62 Dolores Street, Nazareth, Cagayan de Oro

City, where he may be served with summons and other processes of

the Honorable Court; that defendant "JOHN DOE" whose real name

and address are at present unknown to plaintiff is hereby joined as

party defendant as he may be the person in whose possession andcustody the personal property subject matter of this suit may be

found if the same is not in the possession of defendant ROGER

NAVARRO;

2. That KARGO ENTERPRISES is in the business of, among others,

buying and selling motor vehicles, including hauling trucks and other

heavy equipment; SEHACI

3. That for the cause of action against defendant ROGER

NAVARRO, it is hereby stated that on August 8, 1997, the said

defendant leased [from] plaintiff a certain motor vehicle which ismore particularly described as follows

Make/Type FUSO WITH MOUNTED CRANE

Serial No. FK416K-51680

Motor No. 6D15-338735

Plate No. GHK-378

as evidenced by a LEASE AGREEMENT WITH OPTION TO PURCHASE

entered into by and between KARGO ENTERPRISES, then represented

by its Manager, the aforementioned GLENN O. GO, and defendant

ROGER NAVARRO . . .; that in accordance with the provisions of the

above LEASE AGREEMENT WITH OPTION TO PURCHASE, defendant

ROGER NAVARRO delivered unto plaintiff six (6) post-dated checks

each in the amount of SIXTY-SIX THOUSAND THREE HUNDRED

THIRTY-THREE & 33/100 PESOS (P66,333.33) which were supposedly

in payment of the agreed rentals; that when the fifth and sixth

checks, i.e., PHILIPPINE BANK OF COMMUNICATIONS-CAGAYAN DE

ORO BRANCH CHECKS NOS. 017112 and 017113, respectively dated

January 8, 1998 and February 8, 1998, were presented for payment

and/or credit, the same were dishonored and/or returned by the

drawee bank for the common reason that the current deposit account

against which the said checks were issued did not have sufficient

funds to cover the amounts thereof; that the total amount of the two

(2) checks, i.e., the sum of ONE HUNDRED THIRTY-TWO THOUSAND

SIX HUNDRED SIXTY-SIX & 66/100 PESOS (P132,666.66) therefore

represents the principal liability of defendant ROGER NAVARRO untoplaintiff on the basis of the provisions of the above LEASE

AGREEMENT WITH RIGHT TO PURCHASE; that demands, written and

oral, were made of defendant ROGER NAVARRO to pay the amount of

ONE HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED SIXTY-SIX &

66/100 PESOS (P132,666.66), or to return the subject motor vehicle

as also provided for in the LEASE AGREEMENT WITH RIGHT TO

PURCHASE, but said demands were, and still are, in vain to the great

damage and injury of herein plaintiff; . . . cSaATC

4. That the aforedescribed motor vehicle has not been the

subject of any tax assessment and/or fine pursuant to law, or seized

under an execution or an attachment as against herein plaintiff;

xxx xxx xxx

8. That plaintiff hereby respectfully applies for an order of the

Honorable Court for the immediate delivery of the above-described

motor vehicle from defendants unto plaintiff pending the final

determination of this case on the merits and, for that purpose, there

is attached hereto an affidavit duly executed and bond double the

value of the personal property subject matter hereof to answer for

damages and costs which defendants may suffer in the event that the

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order for replevin prayed for may be found out to having not been

properly issued.

The second complaint contained essentially the same allegations as

the first complaint, except that the Lease Agreement with Option to

Purchase involved is dated October 1, 1997 and the motor vehicle

leased is described as follows:

Make/Type FUSO WITH MOUNTED CRANE

Serial No. FK416K-510528

Motor No. 6D14-423403

The second complaint also alleged that Navarro delivered three post-

dated checks, each for the amount of P100,000.00, to Karen Go in

payment of the agreed rentals; however, the third check was

dishonored when presented for payment. 8 SAHIDc

On October 12, 1998 9 and October 14, 1998, 10 the RTC issued writs

of replevin for both cases; as a result, the Sheriff seized the two

vehicles and delivered them to the possession of Karen Go.

In his Answers, Navarro alleged as a special affirmative defense that

the two complaints stated no cause of action, since Karen Go was not

a party to the Lease Agreements with Option to Purchase

(collectively, the lease agreements) the actionable documents on

which the complaints were based.

On Navarro's motion, both cases were duly consolidated on

December 13, 1999.

In its May 8, 2000 order, the RTC dismissed the case on the ground

that the complaints did not state a cause of action.

In response to the motion for reconsideration Karen Go filed dated

May 26, 2000, 11 the RTC issued another order dated July 26, 2000

setting aside the order of dismissal. Acting on the presumption that

Glenn Go's leasing business is a conjugal property, the RTC held that

Karen Go had sufficient interest in his leasing business to file the

action against Navarro. However, the RTC held that Karen Go should

have included her husband, Glenn Go, in the complaint based on

Section 4, Rule 3 of the Rules of Court (Rules). 12 Thus, the lower

court ordered Karen Go to file a motion for the inclusion of Glenn Go

as co-plaintiff.

When the RTC denied Navarro's motion for reconsideration on March

7, 2001, Navarro filed a petition for certiorari with the CA, essentially

contending that the RTC committed grave abuse of discretion when it

reconsidered the dismissal of the case and directed Karen Go to

amend her complaints by including her husband Glenn Go as co-

plaintiff. According to Navarro, a complaint which failed to state a

cause of action could not be converted into one with a cause of action

by mere amendment or supplemental pleading. CIScaA

On October 16, 2001, the CA denied Navarro's petition and affirmed

the RTC's order. 13 The CA also denied Navarro's motion for

reconsideration in its resolution of May 29, 2002, 14 leading to the

filing of the present petition.

THE PETITION

Navarro alleges that even if the lease agreements were in the nameof Kargo Enterprises, since it did not have the requisite juridical

personality to sue, the actual parties to the agreement are himself

and Glenn Go. Since it was Karen Go who filed the complaints and not

Glenn Go, she was not a real party-in-interest and the complaints

failed to state a cause of action.

Navarro posits that the RTC erred when it ordered the amendment of

the complaint to include Glenn Go as a co-plaintiff, instead of

dismissing the complaint outright because a complaint which does

not state a cause of action cannot be converted into one with a cause

of action by a mere amendment or a supplemental pleading. Ineffect, the lower court created a cause of action for Karen Go when

there was none at the time she filed the complaints.

Even worse, according to Navarro, the inclusion of Glenn Go as co-

plaintiff drastically changed the theory of the complaints, to his great

prejudice. Navarro claims that the lower court gravely abused its

discretion when it assumed that the leased vehicles are part of the

conjugal property of Glenn and Karen Go. Since Karen Go is the

registered owner of Kargo Enterprises, the vehicles subject of the

complaint are her paraphernal properties and the RTC gravely erred

when it ordered the inclusion of Glenn Go as a co-plaintiff. SATDEI

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Navarro likewise faults the lower court for setting the trial of the case

in the same order that required Karen Go to amend her complaints,

claiming that by issuing this order, the trial court violated Rule 10 of

the Rules.

Even assuming the complaints stated a cause of action against him,

Navarro maintains that the complaints were premature because no

prior demand was made on him to comply with the provisions of the

lease agreements before the complaints for replevin were filed.

Lastly, Navarro posits that since the two writs of replevin were issued

based on flawed complaints, the vehicles were illegally seized from

his possession and should be returned to him immediately.

Karen Go, on the other hand, claims that it is misleading for Navarro

to state that she has no real interest in the subject of the complaint,

even if the lease agreements were signed only by her husband, Glenn

Go; she is the owner of Kargo Enterprises and Glenn Go signed the

lease agreements merely as the manager of Kargo Enterprises.

Moreover, Karen Go maintains that Navarro's insistence that KargoEnterprises is Karen Go's paraphernal property is without basis.

Based on the law and jurisprudence on the matter, all property

acquired during the marriage is presumed to be conjugal property.

Finally, Karen Go insists that her complaints sufficiently established a

cause of action against Navarro. Thus, when the RTC ordered her to

include her husband as co-plaintiff, this was merely to comply with

the rule that spouses should sue jointly, and was not meant to cure

the complaints' lack of cause of action.

THE COURT'S RULING

We find the petition devoid of merit.

Karen Go is the real party-in-interest

The 1997 Rules of Civil Procedure requires that every action must

be prosecuted or defended in the name of the real party-in-

interest, i.e., the party who stands to be benefited or injured

by the judgment in the suit, or the party entitled to the avails

of the suit. 15 TcHCIS

Interestingly, although Navarro admits that Karen Go is the registered

owner of the business name Kargo Enterprises, he still insists that

Karen Go is not a real party-in-interest in the case. According to

Navarro, while the lease contracts were in Kargo Enterprises' name,

this was merely a trade name without a juridical personality, so the

actual parties to the lease agreements were Navarro and Glenn Go,

to the exclusion of Karen Go.

As a corollary, Navarro contends that the RTC acted with grave abuse

of discretion when it ordered the inclusion of Glenn Go as co-plaintiff,

since this in effect created a cause of action for the complaints when

in truth, there was none.

We do not find Navarro's arguments persuasive.

The central factor in appreciating the issues presented in this case is

the business name Kargo Enterprises. The name appears in the title

of the Complaint where the plaintiff was identified as "KAREN T. GO

doing business under the name KARGO ENTERPRISES", and this

identification was repeated in the first paragraph of the Complaint.Paragraph 2 defined the business KARGO ENTERPRISES undertakes.

Paragraph 3 continued with the allegation that the defendant "leased

from plaintiff a certain motor vehicle" that was thereafter described.

Significantly, the Complaint specifies and attaches as its integral part

the Lease Agreement that underlies the transaction between the

plaintiff and the defendant. Again, the name KARGO ENTERPRISES

entered the picture as this Lease Agreement provides:

This agreement, made and entered into by and between: AHDaET

GLENN O. GO, of legal age, married, with post office address at . . .,herein referred to as the LESSOR-SELLER; representing KARGO

ENTERPRISES as its Manager,

xxx xxx xxx

thus, expressly pointing to KARGO ENTERPRISES as the principal that

Glenn O. Go represented. In other words, by the express terms of this

Lease Agreement, Glenn Go did sign the agreement only as the

manager of Kargo Enterprises and the latter is clearly the real party

to the lease agreements.

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As Navarro correctly points out, Kargo Enterprises is a sole

proprietorship, which is neither a natural person, nor a juridical

person, as defined by Article 44 of the Civil Code:

Art. 44.The following are juridical persons:

(1) The State and its political subdivisions;

(2) Other corporations, institutions and entities for public interestor purpose, created by law; their personality begins as soon as they

have been constituted according to law;

(3) Corporations, partnerships and associations for private

interest or purpose to which the law grants a juridical personality,

separate and distinct from that of each shareholder, partner or

member. AICTcE

Thus, pursuant to Section 1, Rule 3 of the Rules, 16 Kargo Enterprises

cannot be a party to a civil action. This legal reality leads to the

question: who then is the proper party to file an action based on a

contract in the name of Kargo Enterprises?

We faced a similar question in Juasing Hardware v. Mendoza, 17

where we said:

Finally, there is no law authorizing sole proprietorships like petitioner

to bring suit in court. The law merely recognizes the existence of a

sole proprietorship as a form of business organization conducted for

profit by a single individual, and requires the proprietor or owner

thereof to secure licenses and permits, register the business name,

and pay taxes to the national government. It does not vest juridical or

legal personality upon the sole proprietorship nor empower it to fileor defend an action in court.

Thus, the complaint in the court below should have been filed in the

name of the owner of Juasing Hardware. The allegation in the body of

the complaint would show that the suit is brought by such person as

proprietor or owner of the business conducted under the name and

style Juasing Hardware. The descriptive words "doing business as

Juasing Hardware" may be added to the title of the case, as is

customarily done. 18 [Emphasis supplied.]

This conclusion should be read in relation with Section 2, Rule 3 of

the Rules, which states: DECSIT

SEC. 2.Parties in interest. A real party in interest is the party who

stands to be benefited or injured by the judgment in the suit, or the

party entitled to the avails of the suit. Unless otherwise authorized by

law or these Rules, every action must be prosecuted or defended in

the name of the real party in interest.

As the registered owner of Kargo Enterprises, Karen Go is the party

who will directly benefit from or be injured by a judgment in this case.

Thus, contrary to Navarro's contention, Karen Go is the real party-in-

interest, and it is legally incorrect to say that her Complaint does not

state a cause of action because her name did not appear in the Lease

Agreement that her husband signed in behalf of Kargo Enterprises.

Whether Glenn Go can legally sign the Lease Agreement in his

capacity as a manager of Kargo Enterprises, a sole proprietorship, is a

question we do not decide, as this is a matter for the trial court to

consider in a trial on the merits.

Glenn Go's Role in the Case

We find it significant that the business name Kargo Enterprises is in

the name of Karen T. Go, 19 who described herself in the Complaints

to be "a Filipino, of legal age, married to GLENN O. GO, a resident of

Cagayan de Oro City, and doing business under the trade name

KARGO ENTERPRISES". 20 That Glenn Go and Karen Go are married

to each other is a fact never brought in issue in the case. Thus, the

business name KARGO ENTERPRISES is registered in the name of a

married woman, a fact material to the side issue of whether Kargo

Enterprises and its properties are paraphernal or conjugal properties.To restate the parties' positions, Navarro alleges that Kargo

Enterprises is Karen Go's paraphernal property, emphasizing the fact

that the business is registered solely in Karen Go's name. On the

other hand, Karen Go contends that while the business is registered

in her name, it is in fact part of their conjugal property. cda

The registration of the trade name in the name of one person a

woman does not necessarily lead to the conclusion that the trade

name as a property is hers alone, particularly when the woman is

married. By law, all property acquired during the marriage, whether

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the acquisition appears to have been made, contracted or registered

in the name of one or both spouses, is presumed to be conjugal

unless the contrary is proved. 21 Our examination of the records of

the case does not show any proof that Kargo Enterprises and the

properties or contracts in its name are conjugal. If at all, only the bare

allegation of Navarro to this effect exists in the records of the case.

As we emphasized in Castro v. Miat: 22

Petitioners also overlook Article 160 of the New Civil Code. It provides

that "all property of the marriage is presumed to be conjugal

partnership, unless it be prove[n] that it pertains exclusively to the

husband or to the wife". This article does not require proof that the

property was acquired with funds of the partnership. The presumption

applies even when the manner in which the property was acquired

does not appear. 23 [Emphasis supplied.]

Thus, for purposes solely of this case and of resolving the issue of

whether Kargo Enterprises as a sole proprietorship is conjugal or

paraphernal property, we hold that it is conjugal property.

Article 124 of the Family Code, on the administration of the conjugal

property, provides:

Art. 124. The administration and enjoyment of the conjugal

partnership property shall belong to both spouses jointly. In case of

disagreement, the husband's decision shall prevail, subject to

recourse to the court by the wife for proper remedy, which must be

availed of within five years from the date of the contract

implementing such decision. ESTDcC

xxx xxx xxx

This provision, by its terms, allows either Karen or Glenn Go to speak

and act with authority in managing their conjugal property, i.e., Kargo

Enterprises. No need exists, therefore, for one to obtain the consent

of the other before performing an act of administration or any act

that does not dispose of or encumber their conjugal property.

Under Article 108 of the Family Code, the conjugal partnership is

governed by the rules on the contract of partnership in all that is not

in conflict with what is expressly determined in this Chapter or by the

spouses in their marriage settlements. In other words, the property

relations of the husband and wife shall be governed primarily by

Chapter 4 on Conjugal Partnership of Gains of the Family Code and,

suppletorily, by the spouses' marriage settlement and by the rules on

partnership under the Civil Code. In the absence of any evidence of a

marriage settlement between the spouses Go, we look at the Civil

Code provision on partnership for guidance.

A rule on partnership applicable to the spouses' circumstances is

Article 1811 of the Civil Code, which states:

Art. 1811. A partner is a co-owner with the other partners of

specific partnership property.

The incidents of this co-ownership are such that:

(1) A partner, subject to the provisions of this Title and to any

agreement between the partners, has an equal right with his partners

to possess specific partnership property for partnership purposes; . . .

Under this provision, Glenn and Karen Go are effectively co-owners of

Kargo Enterprises and the properties registered under this name;

hence, both have an equal right to seek possession of these

properties. Applying Article 484 of the Civil Code, which states that

"in default of contracts, or special provisions, co-ownership shall be

governed by the provisions of this Title", we find further support in

Article 487 of the Civil Code that allows any of the co-owners to bring

an action in ejectment with respect to the co-owned property.

While ejectment is normally associated with actions involving real

property, we find that this rule can be applied to the circumstances of

the present case, following our ruling in Carandang v. Heirs of De

Guzman. 24 In this case, one spouse filed an action for the recovery

of credit, a personal property considered conjugal property, without

including the other spouse in the action. In resolving the issue of

whether the other spouse was required to be included as a co-plaintiff

in the action for the recovery of the credit, we said:

Milagros de Guzman, being presumed to be a co-owner of the credits

allegedly extended to the spouses Carandang, seems to be either an

indispensable or a necessary party. If she is an indispensable party,

dismissal would be proper. If she is merely a necessary party,

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dismissal is not warranted, whether or not there was an order for her

inclusion in the complaint pursuant to Section 9, Rule 3.

Article 108 of the Family Code provides:

Art. 108. The conjugal partnership shall be governed by the

rules on the contract of partnership in all that is not in conflict with

what is expressly determined in this Chapter or by the spouses in

their marriage settlements.

This provision is practically the same as the Civil Code provision it

superseded:

Art. 147. The conjugal partnership shall be governed by the

rules on the contract of partnership in all that is not in conflict with

what is expressly determined in this Chapter.

In this connection, Article 1811 of the Civil Code provides that "[a]

partner is a co-owner with the other partners of specific partnership

property". Taken with the presumption of the conjugal nature of the

funds used to finance the four checks used to pay for petitioners'

stock subscriptions, and with the presumption that the credits

themselves are part of conjugal funds, Article 1811 makes Quirino

and Milagros de Guzman co-owners of the alleged credit.

Being co-owners of the alleged credit, Quirino and Milagros de

Guzman may separately bring an action for the recovery thereof. In

the fairly recent cases of Baloloy v. Hular and Adlawan v. Adlawan,

we held that, in a co-ownership, co-owners may bring actions for the

recovery of co-owned property without the necessity of joining all the

other co-owners as co-plaintiffs because the suit is presumed to have

been filed for the benefit of his co-owners. In the latter case and in

that of De Guia v. Court of Appeals, we also held that Article 487 of

the Civil Code, which provides that any of the co-owners may bring

an action for ejectment, covers all kinds of action for the recovery of

possession.

In sum, in suits to recover properties, all co-owners are real parties in

interest. However, pursuant to Article 487 of the Civil Code and

relevant jurisprudence, any one of them may bring an action, any

kind of action, for the recovery of co-owned properties. Therefore,

only one of the co-owners, namely the co-owner who filed the suit for

the recovery of the co-owned property, is an indispensable party

thereto. The other co-owners are not indispensable parties. They are

not even necessary parties, for a complete relief can be accorded in

the suit even without their participation, since the suit is presumed to

have been filed for the benefit of all co-owners. 25 [Emphasis

supplied.]

Under this ruling, either of the spouses Go may bring an action

against Navarro to recover possession of the Kargo Enterprises-

leased vehicles which they co-own. This conclusion is consistent with

Article 124 of the Family Code, supporting as it does the position that

either spouse may act on behalf of the conjugal partnership, so long

as they do not dispose of or encumber the property in question

without the other spouse's consent.

On this basis, we hold that since Glenn Go is not strictly an

indispensable party in the action to recover possession of the leased

vehicles, he only needs to be impleaded as a pro-forma party to the

suit, based on Section 4, Rule 4 of the Rules, which states:

Section 4. Spouses as parties. Husband and wife shall sue or

be sued jointly, except as provided by law.

Non-joinder of indispensable parties

not ground to dismiss action

Even assuming that Glenn Go is an indispensable party to the action,

we have held in a number of cases 26 that the misjoinder or non-

joinder of indispensable parties in a complaint is not a ground for

dismissal of action. As we stated in Macababbad v. Masirag: 27

Rule 3, Section 11 of the Rules of Court provides that neither

misjoinder nor nonjoinder of parties is a ground for the dismissal of

an action, thus:

Sec. 11. Misjoinder and non-joinder of parties. Neither

misjoinder nor non-joinder of parties is ground for dismissal of an

action. Parties may be dropped or added by order of the court on

motion of any party or on its own initiative at any stage of the action

and on such terms as are just. Any claim against a misjoined party

may be severed and proceeded with separately. TAHIED

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In Domingo v. Scheer, this Court held that the proper remedy when

a party is left out is to implead the indispensable party at any

stage of the action. The court, either motu proprio or upon

the motion of a party, may order the inclusion of the

indispensable party or give the plaintiff opportunity to amend

his complaint in order to include indispensable parties. If the

plaintiff to whom the order to include the indispensable party

is directed refuses to comply with the order of the court, the

complaint may be dismissed upon motion of the defendant or

upon the court's own motion. Only upon unjustified failure or

refusal to obey the order to include or to amend is the action

dismissed.

In these lights, the RTC Order of July 26, 2000 requiring plaintiff Karen

Go to join her husband as a party plaintiff is fully in order.

Demand not required prior to filing of replevin action

In arguing that prior demand is required before an action for a writ of

replevin is filed, Navarro apparently likens a replevin action to anunlawful detainer.

For a writ of replevin to issue, all that the applicant must do is to file

an affidavit and bond, pursuant to Section 2, Rule 60 of the Rules,

which states:

Sec. 2. Affidavit and bond.

The applicant must show by his own affidavit or that of some other

person who personally knows the facts:

(a) That the applicant is the owner of the property claimed,particularly describing it, or is entitled to the possession thereof;

IaEScC

(b) That the property is wrongfully detained by the adverse party,

alleging the cause of detention thereof according to the best of his

knowledge, information, and belief;

(c) That the property has not been distrained or taken for a tax

assessment or a fine pursuant to law, or seized under a writ of

execution or preliminary attachment, or otherwise placed under

custodia legis, or if so seized, that it is exempt from such seizure or

custody; and

(d) The actual market value of the property.

The applicant must also give a bond, executed to the adverse party in

double the value of the property as stated in the affidavit

aforementioned, for the return of the property to the adverse party if

such return be adjudged, and for the payment to the adverse party ofsuch sum as he may recover from the applicant in the action.

We see nothing in these provisions which requires the applicant to

make a prior demand on the possessor of the property before he can

file an action for a writ of replevin. Thus, prior demand is not a

condition precedent to an action for a writ of replevin.

More importantly, Navarro is no longer in the position to claim that a

prior demand is necessary, as he has already admitted in his Answers

that he had received the letters that Karen Go sent him, demanding

that he either pay his unpaid obligations or return the leased motorvehicles. Navarro's position that a demand is necessary and has not

been made is therefore totally unmeritorious.

WHEREFORE, premises considered, we DENY the petition for review

for lack of merit. Costs against petitioner Roger V. Navarro.

SO ORDERED.

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[G.R. No. 138497. January 16, 2002.]

IMELDA RELUCIO, petitioner, vs. ANGELINA MEJIA LOPEZ,

respondent.

SYNOPSIS

Respondent Angelina Lopez filed a petition for Appointment as Sole

Administratrix of Conjugal Partnership of Properties, Forfeiture, etc.

against Alberto Lopez and petitioner Imelda Relucio. Allegedly, when

Alberto abandoned his legal wife Angelina and their children, Albertomaintained an illicit relationship with Imelda and used the conjugal

property of Angelina and Alberto in amassing properties. Angelina

and her children, however, never benefited from the same. caTESD

The issue is whether Angelina has a cause of action against Imelda.

The Court ruled in the negative. The causes of the action here are for

the judicial appointment of Angelina as administratrix of the conjugal

partnership arising from her marriage to Alberto; for the accounting

of the conjugal partnership; for the forfeiture of Alberto's share in the

co-owned property acquired during his illicit relationship with Imelda;

for support and moral damages. To all these, Imelda is a completestranger. The administration of the property of the marriage is

entirely between the spouses, to the exclusion of all other persons.

Hence, the cause of action pertains only to Alberto. Imelda is not a

real party in interest, neither can she be an indispensable party, nor a

necessary party in the petition filed by Angelina.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; CAUSE OF ACTION;

ELUCIDATED. First issue: whether a cause of action exists against

petitioner in the proceedings below. "A cause of action is an act or

omission of one party the defendant in violation of the legal right of

the other." The elements of a cause of action are: 1) a right in favor

of the plaintiff by whatever means and under whatever law it arises

or is created; 2) an obligation on the part of the named defendant to

respect or not to violate such right; and (3) an act or omission on the

part of such defendant in violation of the right of the plaintiff or

constituting a breach of the obligation of the defendant to the plaintiff

for which the latter may maintain an action for recovery of damages.

A cause of action is sufficient if a valid judgment may be rendered

thereon if the alleged facts were admitted or proved. In order to

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sustain a motion to dismiss for lack of cause of action, the complaint

must show that the claim for relief does not exist, rather than that a

claim has been merely defectively stated or is ambiguous, indefinite

or uncertain.

2. ID.; ID.; ID.; NOT PRESENT AGAINST A COMPLETE STRANGER

IN AN ACTION FOR JUDICIAL APPOINTMENT OF ABANDONED WIFE AS

ADMINISTRATRIX OF THE CONJUGAL PARTNERSHIP. The first cause

of action is for judicial appointment of respondent as administratrix of

the conjugal partnership or absolute community property arising from

her marriage to Alberto J. Lopez. Petitioner is a complete stranger to

this cause of action. Article 128 of the Family Code refers only to

spouses, to wit: "If a spouse without just cause abandons the other or

fails to comply with his or her obligations to the family, the aggrieved

spouse may petition the court for receivership, for judicial separation

of property, or for authority to be the sole administrator of the

conjugal partnership property . . ." The administration of the property

of the marriage is entirely between them, to the exclusion of all other

persons. Respondent alleges that Alberto J. Lopez is her husband.

Therefore, her first cause of action is against Alberto J. Lopez. There is

no right-duty relation between petitioner and respondent that can

possibly support a cause of action. In fact, none of the three elements

of a cause of action exists. cDAEIH

3. ID.; ID.; ID.; NOT PRESENT AGAINST A COMPLETE STRANGER

IN AN ACTION FOR ACCOUNTING OF CONJUGAL PARTNERSHIP. The

second cause of action is for an accounting "by respondent husband."

The accounting of conjugal partnership arises from or is an incident of

marriage. Petitioner has nothing to do with the marriage between

respondent Alberto J. Lopez. Hence, no cause of action can exist

against petitioner on this ground.

4. ID.; ID.; ID.; NOT PRESENT AGAINST A COMPLETE STRANGER

IN AN ACTION FOR FORFEITURE OF HUSBAND'S SHARE IN PROPERTY

CO-OWNED WITH THE STRANGER. Respondent's alternative cause

of action is for forfeiture of Alberto J. Lopez' share in the co-owned

property "acquired during his illicit relationship and cohabitation with

[petitioner]" and for the "dissolution of the conjugal partnership of

gains between him [Alberto J. Lopez] and the [respondent]." The third

cause of action is essentially for forfeiture of Alberto J. Lopez' share in

property co-owned by him and petitioner. It does not involve the

issue of validity of the co-ownership between Alberto J. Lopez and

petitioner. The issue is whether there is basis in law to forfeit Alberto

J. Lopez' share, if any there be, in property co-owned by him with

petitioner. Respondent's asserted right to forfeit extends to Alberto J.

Lopez' share alone. Failure of Alberto J. Lopez to surrender such

share, assuming the trial court finds in respondent's favor, results in a

breach of an obligation to respondent and gives rise to a cause of

action. Such cause of action, however, pertains to Alberto J. Lopez,

not petitioner.

5. ID.; ID.; ID.; NOT PRESENT AGAINST A COMPLETE STRANGER

IN AN ACTION FOR SUPPORT, MORAL DAMAGES. The respondent

also sought support. Support cannot be compelled from a stranger.

As to the moral damages, respondent's claim for moral damages is

against Alberto J. Lopez, not petitioner. To sustain a cause of action

for moral damages, the complaint must have the character of an

action for interference with marital or family relations under the Civil

Code.

6. ID.; ID.; PARTIES; ONE WHO IS NOT A REAL PARTY ININTEREST CANNOT BE AN INDISPENSABLE PARTY, NOR BE A

NECESSARY PARTY. A real party in interest is one who stands "to

be benefited or injured by the judgment of the suit." In this case,

petitioner would not be affected by any judgment in Special

Proceedings No. M-3630. If petitioner is not a real party in interest,

she cannot be an indispensable party. An indispensable party is one

without whom there can be no final determination of an action.

Petitioner's participation in Special Proceedings M-3630 is not

indispensable. Nor can petitioner be a necessary party in Special

Proceedings M-3630. A necessary party as one who is not

indispensable but who ought to be joined as party if complete relief isto be accorded those already parties, or for a complete determination

or settlement of the claim subject of the action. EDHTAI

D E C I S I O N

PARDO, J p:

The Case

The case is a petition for review on certiorari 1 seeking to set aside

the decision 2 of the Court of Appeals that denied a petition for

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certiorari assailing the trial court's order denying petitioner's motion

to dismiss the case against her inclusion as party defendant therein.

DCcTHa

The Facts

The facts, as found by the Court of Appeals, are as follows:

"On September 15, 1993, herein private respondent Angelina MejiaLopez (plaintiff below) filed a petition for "APPOINTMENT AS SOLE

ADMINISTRATRIX OF CONJUGAL PARTNERSHIP OF PROPERTIES,

FORFEITURE, ETC.," against defendant Alberto Lopez and petitioner

Imelda Relucio, docketed as Spec. Proc. M-3630, in the Regional Trial

Court of Makati, Branch 141. In the petition, private-respondent

alleged that sometime in 1968, defendant Lopez, who is legally

married to the private respondent, abandoned the latter and their

four legitimate children; that he arrogated unto himself full and

exclusive control and administration of the conjugal properties,

spending and using the same for his sole gain and benefit to the total

exclusion of the private respondent and their four children; thatdefendant Lopez, after abandoning his family, maintained an illicit

relationship and cohabited with herein petitioner since 1976.

"It was further alleged that defendant Lopez and petitioner Relucio,

during their period of cohabitation since 1976, have amassed a

fortune consisting mainly of stockholdings in Lopez-owned or

controlled corporations, residential, agricultural, commercial lots,

houses, apartments and buildings, cars and other motor vehicles,

bank accounts and jewelry. These properties, which are in the names

of defendant Lopez and petitioner Relucio singly or jointly or their

dummies and proxies, have been acquired principally if not solelythrough the actual contribution of money, property and industry of

defendant Lopez with minimal, if not nil, actual contribution from

petitioner Relucio.

"In order to avoid defendant Lopez obligations as a father and

husband, he excluded the private respondent and their four children

from sharing or benefiting from the conjugal properties and the

income or fruits there from. As such, defendant Lopez either did not

place them in his name or otherwise removed, transferred, stashed

away or concealed them from the private-respondent. He placed

substantial portions of these conjugal properties in the name of

petitioner Relucio.

"It was also averred that in the past twenty five years since

defendant Lopez abandoned the private-respondent, he has sold,

disposed of, alienated, transferred, assigned, canceled, removed or

stashed away properties, assets and income belonging to the

conjugal partnership with the private-respondent and either spent the

proceeds thereof for his sole benefit and that of petitioner Relucio

and their two illegitimate children or permanently and fraudulently

placed them beyond the reach of the private-respondent and their

four children.

"On December 8, 1993, a Motion to Dismiss the Petition was filed by

herein petitioner on the ground that private respondent has no cause

of action against her.

"An Order dated February 10, 1994 was issued by herein respondent

Judge denying petitioner Relucio's Motion to Dismiss on the ground

the she is impleaded as a necessary or indispensable party becausesome of the subject properties are registered in her name and

defendant Lopez, or solely in her name.

"Subsequently thereafter, petitioner Relucio filed a Motion for

Reconsideration to the Order of the respondent Judge dated February

10, 1994 but the same was likewise denied in the Order dated May

31, 1994." 3

On June 21, 1994, petitioner filed with the Court of Appeals a petition

for certiorari assailing the trial court's denial of her motion to dismiss.

4

On May 31, 1996, the Court of Appeals promulgated a decision

denying the petition. 5 On June 26, 1996, petitioner filed a motion for

reconsideration. 6 However, on April 6, 1999, the Court of Appeals

denied petitioner's motion for reconsideration. 7

Hence, this appeal. 8

The Issues

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1. Whether respondent's petition for appointment as sole

administratrix of the conjugal property, accounting, etc. against her

husband Alberto J. Lopez established a cause of action against

petitioner.

2. Whether petitioner's inclusion as party defendant is essential

in the proceedings for a complete adjudication of the controversy. 9

The Court's Ruling

We grant the petition. We resolve the issues in seriatim.

First issue: whether a cause of action exists against petitioner in the

proceedings below. "A cause of action is an act or omission of one

party the defendant in violation of the legal right of the other." 10

The elements of a cause of action are:

(1) a right in favor of the plaintiff by whatever means and under

whatever law it arises or is created;

(2) an obligation on the part of the named defendant to respector not to violate such right; and

(3) an act or omission on the part of such defendant in violation

of the right of the plaintiff or constituting a breach of the obligation of

the defendant to the plaintiff for which the latter may maintain an

action for recovery of damages. 11

A cause of action is sufficient if a valid judgment may be rendered

thereon if the alleged facts were admitted or approved. 12

In order to sustain a motion to dismiss for lack of cause ofaction, the complaint must show that the claim for relief does

not exist, rather than that a claim has been merely

defectively stated or is ambiguous, indefinite or uncertain. 13

Hence, to determine the sufficiency of the cause of action alleged in

Special Proceedings M-3630, we assay its allegations.

In Part Two on the "Nature of [the] Complaint," respondent Angelina

Mejia Lopez summarized the causes of action alleged in the complaint

below.

The complaint is by an aggrieved wife against her husband.

Nowhere in the allegations does it appear that relief is sought against

petitioner. Respondent's causes of action were all against her

husband.

The first cause of action is for judicial appointment of respondent as

administratrix of the conjugal partnership or absolute community

property arising from her marriage to Alberto J. Lopez. Petitioner is acomplete stranger to this cause of action. Article 128 of the Family

Code refers only to spouses, to wit: cSTHAC

"If a spouse without just cause abandons the other or fails to comply

with his or her obligations to the family, the aggrieved spouse may

petition the court for receivership, for judicial separation of property,

or for authority to be the sole administrator of the conjugal

partnership property . . ."

The administration of the property of the marriage is entirely

between them, to the exclusion of all other persons. Respondentalleges that Alberto J. Lopez is her husband. Therefore, her first cause

of action is against Alberto J. Lopez. There is no right-duty relation

between petitioner and respondent that can possibly support a cause

of action. In fact, none of the three elements of a cause of action

exists.

The second cause of action is for an accounting "by respondent

husband." 14 The accounting of conjugal partnership arises from or is

an incident of marriage.

Petitioner has nothing to do with the marriage between respondent

Alberto J. Lopez. Hence, no cause of action can exist against

petitioner on this ground.

Respondent's alternative cause of action is for forfeiture of Alberto J.

Lopez' share in the co-owned property "acquired during his illicit

relationship and cohabitation with [petitioner]" 15 and for the

"dissolution of the conjugal partnership of gains between him [Alberto

J. Lopez] and the [respondent]."

The third cause of action is essentially for forfeiture of Alberto J.

Lopez' share in property co-owned by him and petitioner. It does not

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involve the issue of validity of the co-ownership between Alberto J.

Lopez and petitioner. The issue is whether there is basis in law to

forfeit Alberto J. Lopez' share, if any there be, in property co-owned

by him with petitioner.

Respondent's asserted right to forfeit extends to Alberto J. Lopez'

share alone. Failure of Alberto J. Lopez to surrender such share,

assuming the trial court finds in respondent's favor, results in a

breach of an obligation to respondent and gives rise to a cause ofaction. 16 Such cause of action, however, pertains to Alberto J. Lopez,

not petitioner.

The respondent also sought support. Support cannot be compelled

from a stranger.

The action in Special Proceedings M-3630 is, to use respondent

Angelina M. Lopez' own words, one by "an aggrieved wife against her

husband." 17 References to petitioner in the common and specific

allegations of the fact in the complaint are merely incidental, to set

forth facts and circumstances that prove the causes of action allegedagainst Alberto J. Lopez. DCTSEA

Finally, as to the moral damages, respondent's claim for moral

damages is against Alberto J. Lopez, not petitioner.

To sustain a cause of action for moral damages, the complaint must

have the character of an action for interference with marital or family

relations under the Civil Code.

A real party in interest is one who stands "to be benefited or

injured by the judgment of the suit." 18 In this case, petitioner

would not be affected by any judgment in Special Proceedings M-

3630.

If petitioner is not a real party in interest, she cannot be an

indispensable party. An indispensable party is one without

whom there can be no final determination of an action. 19

Petitioner's participation in Special Proceedings M-3630 is not

indispensable. Certainly, the trial court can issue a judgment ordering

Alberto J. Lopez to make an accounting of his conjugal partnership

with respondent, and give support to respondent and their children,

and dissolve Alberto J. Lopez' conjugal partnership with respondent,

and forfeit Alberto J. Lopez' share in property co-owned by him and

petitioner. Such judgment would be perfectly valid and enforceable

against Alberto J. Lopez.

Nor can petitioner be a necessary party in Special Proceedings M-

3630. A necessary party is one who is not indispensable but who

ought to be joined as party if complete relief is to be accorded those

already parties, or for a complete determination or settlement of the

claim subject of the action. 20 In the context of her petition in thelower court, respondent would be accorded complete relief if Alberto

J. Lopez were ordered to account for his alleged conjugal partnership

property with respondent, give support to respondent and her

children, turn over his share in the co-ownership with petitioner and

dissolve his conjugal partnership or absolute community property

with respondent.

The Judgment

WHEREFORE, the Court GRANTS the petition and REVERSES the

decision of the Court of Appeals. 21 The Court DISMISSES SpecialProceedings M-3630 of the Regional Trial Court, Makati Branch 141 as

against petitioner. cHDAIS

No costs.

SO ORDERED.

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[G.R. No. 166302. July 28, 2005.]

LOTTE PHIL. CO., INC., petitioner, vs. ERLINDA DELA CRUZ,

LEONOR MAMAUAG, LOURDES CAUBA, JOSEPHINE DOMANAIS,

ARLENE CAGAYAT, AMELITA YAM, VIVIAN DOMARAIS,

MARILYN ANTALAN, CHRISTOPHER RAMIREZ, ARNOLD SAN

PEDRO, MARISSA SAN PEDRO, LORELI JIMENEZ, JEFFREY

BUENO, CHRISTOPHER CAGAYAT, GERARD CABILES, JOAN

ENRIQUEZ, JOSEPH DE LA CRUZ, NELLY CLERIGO, DULCE

NAVARETTE, ROWENA BELLO, DANIEL RAMIREZ, AILEEN

BAUTISTA and BALTAZAR FERRERA, respondents.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; PARTIES TO CIVIL

ACTIONS; INDISPENSABLE PARTIES; THE PRESENCE OF

INDISPENSABLE PARTIES IS NECESSARY TO VEST THE COURT WITH

JURISDICTION; CASE AT BAR. An indispensable party is a party in

interest without whom no final determination can be had of an action,

and who shall be joined either as plaintiffs or defendants. The joinder

of indispensable parties is mandatory. The presence of indispensable

parties is necessary to vest the court with jurisdiction, which is "the

authority to hear and determine a cause, the right to act in a case".

Thus, without the presence of indispensable parties to a suit orproceeding, judgment of a court cannot attain real finality. The

absence of an indispensable party renders all subsequent actions of

the court null and void for want of authority to act, not only as to the

absent parties but even as to those present. In the case at bar, 7J is

an indispensable party. It is a party in interest because it will be

affected by the outcome of the case. The Labor Arbiter and the NLRC

found 7J to be solely liable as the employer of respondents. The Court

of Appeals however rendered Lotte jointly and severally liable with 7J

who was not impleaded by holding that the former is the real

employer of respondents. Plainly, its decision directly affected 7J.

2. ID.; ID.; ID.; ID.; COMPULSORY JOINDER OF INDISPENSABLE

PARTIES; NON-JOINDER OF INDISPENSABLE PARTIES IS NOT A

GROUND FOR THE DISMISSAL OF THE ACTION. In Domingo v.

Scheer, we held that the non-joinder of indispensable parties is not a

ground for the dismissal of an action and the remedy is to implead

the non-party claimed to be indispensable. Parties may be added by

order of the court on motion of the party or on its own initiative at

any stage of the action and/or such times as are just. If the petitioner

refuses to implead an indispensable party despite the order of the

court, the latter may dismiss the complaint/petition for the

petitioner/plaintiff's failure to comply therefor.

3. ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. Although 7J was a

co-party in the case before the Labor Arbiter and the NLRC,

respondents failed to include it in their petition for certiorari in the

Court of Appeals. Hence, the Court of Appeals did not acquire

jurisdiction over 7J. No final ruling on this matter can be had without

impleading 7J, whose inclusion is necessary for the effective and

complete resolution of the case and in order to accord all parties with

due process and fair play. HcDSaT

D E C I S I O N

YNARES-SANTIAGO, J p:

This petition for review on certiorari 1 assails the July 9, 2004 decision

2 of the Court of Appeals in CA-G.R. SP No. 72732 and its November

26, 2004 resolution 3 denying reconsideration thereof.

The established facts of this case are as follows:

Private respondent (petitioner herein) Lotte Phils., Inc. (Lotte) is a

domestic corporation. Petitioners (respondents herein) are among

those who were hired and assigned to the confectionery facility

operated by private respondent. TcAECH

On December 14, 1995 and yearly thereafter until the year 2000

7J Maintenance and Janitorial Services ("7J") entered into a contract

with private respondent to provide manpower for needed

maintenance, utility, janitorial and other services to the latter. In

compliance with the terms and conditions of the service contract, and

to accommodate the needs of private respondent for

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personnel/workers to do and perform "piece works," petitioners,

among others, were hired and assigned to private respondent as

repackers or sealers.

However, either in October, 1999 or on February 9, 2000, private

respondent dispensed with their services allegedly due to the

expiration/termination of the service contract by respondent with 7J.

They were either told "hwag muna kayong pumasok at tatawagan na

lang kung may gawa"; or were asked to wait "pag magrereport sila satrabaho." Unfortunately, petitioners were never called back to work

again.

Aggrieved, petitioners lodged a labor complaint against both private

respondent Lotte and 7J, for illegal dismissal, regularization, payment

of corresponding backwages and related employment benefits, 13th

month pay, service incentive leave, moral and exemplary damages

and attorney's fees based on total judgment award. 4

On February 28, 2001, Labor Arbiter Cresencio G. Ramos, Jr.,

rendered judgment 5 declaring 7J as employer of respondents. 6 Thearbiter also found 7J guilty of illegal dismissal 7 and ordered to

reinstate respondents, 8 pay P2,374,710.00 as backwages,

P713,648.00 as 13th month pay and P117,000.00 as service incentive

leave pay. 9

Respondents appealed to the National Labor Relations Commission

(NLRC) praying that Lotte be declared as their direct employer

because 7J is merely a labor-only contractor. In its decision 10 dated

April 24, 2002, the NLRC found no cogent reason to disturb the

findings of the labor arbiter and affirmed its ruling that 7J is the

employer of respondents and solely liable for their claims. aDSAEI

Respondents' motion for reconsideration was denied by the NLRC in a

resolution dated June 18, 2002.

Undaunted, they filed a petition for certiorari in the Court of Appeals

11 against the NLRC and Lotte, insisting that their employer is Lotte

and not 7J.

Lotte, however, denied that respondents were its employees. It

prayed that the petition be dismissed for failure to implead 7J who is

a party interested in sustaining the proceedings in court, pursuant to

Section 3, Rule 46 of the Revised Rules of Civil Procedure.

On July 9, 2004, the Court of Appeals reversed and set aside the

rulings of the Labor Arbiter and the NLRC. In its decision, the Court of

Appeals declared Lotte as the real employer of respondents and that

7J who engaged in labor-only contracting was merely the agent of

Lotte. Respondents who performed activities directly related to

Lotte's business were its regular employees under Art. 280 of theLabor Code. As such, they must be accorded security of tenure and

their services terminated only on "just" and "authorized" causes.

DSHcTC

Lotte's motion for reconsideration was denied, hence this petition, on

the following issues:

8. Whether or not petitioner herein had the burden of proof to

establish before the proceedings in the Court of Appeals that 7J

Maintenance and Janitorial Service was not a labor-only contractor.

8.1. Whether or not the Petition in CA-G.R. SP No. 72732 is

dismissible for failure to comply with Section 3, Rule 46 in relation to

Section 5, Rule 65 of the 1997 Rules of Civil Procedure. 12

We first resolve the procedural issue raised by petitioner. Lotte

asserts that 7J is an indispensable party and should have been

impleaded in respondents' petition in the Court of Appeals. It claims

that the petition before the Court of Appeals was dismissible for

failure to comply with Section 3, 13 Rule 46 in relation to Section 5 14

of Rule 65 of the Revised Rules of Civil Procedure. cITCAa

Petitioner's contention is tenable.

An indispensable party is a party in interest without whom no

final determination can be had of an action, 15 and who shall

be joined either as plaintiffs or defendants. 16 The joinder of

indispensable parties is mandatory. 17 The pr