MONS. ALFREDO VERZOSA, ROMAN CATHOLIC APOSTOLIC BISHOP OF LIPA, in which they raised a fund of P1,128.

n which they raised a fund of P1,128.86, for the purpose of promoting the purposes
CONSTITUTED AS A UNIPERSONAL RELIGIOUS CORPORATION VS. ZOSIMO expressed in the minutes of the meeting and of which more specific mention will
FERNANDEZ, ET AL. presently be made. The administration of this fund was confided to the love, zeal and
prudence of the directorate of the brotherhood ( cuyo manejo y administracion hemos
G.R. NO. L-25254, NOVEMBER 22, 1926 depositado en amor, celo y prudencia del Hermano mayor y demas hermanos de mesa de la
Archicofradia del Santisimo Sacramento). By this arrangement "the Elder Brother and other
DOCTRINE:
Brothers of the Executive Board" — an expression for which we may perhaps substitute the
 A Roman Catholic Bishop having the right of supervision and inspection over religious briefer collective term "Directorate" — became trustee for the administration of the fund. From
brotherhoods established in his bishopric may maintain a civil action to compel the this it will be seen that, instead of being the particular property of the brotherhood, the
persons comprising the directorate of such a brotherhood to comply with the terms of fund was intended to be merely held and administered by the Directorate in trust for
the trust governing a fund in their custody, it being alleged that they are using it in the purposes specified by the founders. With respect to the administration of the
contravention of the spirit and purposes of the trust. (From Philippine Reports) fund it was, among other things, provided that the money should be lent from year
to year upon interest at the rate of 5 per centum per annum, preferably to the
FACTS: founders or their descendants other than the actual administrators of the fund. A
number of other provisions, not necessary to be here specified, were made with a view to the
This action was instituted in the Court of First Instance of Laguna by Monseñor Alfredo Verzosa, conservation of the fund and the accumulation of the interest with the capital until amount of
as Roman Catholic Apostolic Bishop for the diocese of Lipa, constituted as a unipersonal religious the fund should reach at least P6,000. That the provision with respect to the careful lending and
corporation, for the purpose of compelling the defendants, Zosimo Fernandez, Salvador Unson, conservation of the money has been followed with fidelity seems to be indicated in the fact that
Tomas Cabreza, Ramon Fabella, Pedro F. Caballes, and Pedro Lavadia, to account for a fund the amount of the trust fund now in the hands of the defendants is alleged to be approximately
held by them as trustees pertaining to the Brotherhood (Archicofradia) of the Most P29,921, as of the date of March, 1922.
Holy Sacrament of the town of Pagsanjan, and for other purposes.
With respect to the uses to which the income might be applied, it was declared that, in
The complaint as originally filed on June 22, 1925, was amended on October 16, 1925, for the consideration of the management of the fund by the Directorate of the brotherhood, the
purpose of adding to the allegations of the complaint certain facts relative to a litigation founders ceded to the brotherhood, in its own particular right, so much of the income as might
heretofore conducted by the Roman Catholic Apostolic Archbishop of Manila against the be necessary to supplement other available funds for the celebration of the fiestas to the
predecessors of the same defendants. The defendants demurred both to the original and maintenance of which the brotherhood had obligated itself, as well as the amount necessary to
amended complaint. As stated in the demurrer to the amended complaint, the grounds of pay the salary of the school teacher of the guild and the further amount needed for the
exception to the complaint are three: First, that the plaintiff has no right to maintain the celebration of two masses for any member of the Directorate who might die. Then follows a
action; secondly, that the facts alleged in the complaint do not constitute a cause of action; provision to the effect that, when the fund reaches the amount of P6,000, there should be
and, thirdly, that the court lacks jurisdiction to entertain the suit. Upon hearing the cause the applied from the income an amount necessary to pay a teacher of grammar for the instruction
trial court sustained the demurrer and, upon election of the plaintiff do not amend further, the of the children of mestizos who desired to follow the literary career. Among other provisions we
court dismissed the action, with costs against the plaintiff. From this judgment the plaintiff note the requirement that members of the Directorate shall respond personally for any part of
appealed. the fund lost by their remissness or malice, and to this end it is declared that they shall account
to the Gobernadorcillo, for the time being, of the place.
It appears that on February 20, 1807, a number of individuals constituting or representing the
guild of sangley mestizos of the pueblo of Pagsanjan, in the Province of Laguna, united ISSUE: WON the Bishop of Lipa is a real party in interest to compel the brotherhood to render
themselves into a religious association or brotherhood for the purpose of raising and accounting of the funds.
supplying, from year to year, the means necessary to meet the expenses of the
annual fiestas in honor of the most Holy Sacrament and of their patroness the Virgen RULING: YES.
Lady of Guadalupe, as well as for the further purpose of procuring the celebration of
an annual requiem mass for the repose of the souls of the deceased members. It was stated on the complaint that the plaintiff, Bishop of Lipa, is the administrator of the
temporalities of the Catholic Church in the diocese of Lipa and that he exercises the right of
The step met the approval of their superior, the Archbishop of Manila, who was at the time supervision and inspection over all the brotherhoods established therein, of which the
upon a pastoral visit in Pagsanjan, and the brotherhood was formally organized under the name Brotherhood in question is one; and it is further alleged that the individual defendants constitute
of La Archicofradia del Santisimo Sacramento. Under the law as it then existed royal approval a majority of its Board of Directors and that they have employed, and are employing, its
was essential to the legality of an association of this character; and it was not until July 23, properties and funds in contravention of the spirit and purposes of the trust.
1819, that a royal cedula was issued by the king of Spain, placing the brotherhood upon a lawful
basis and defining the manner in which it should be organized and conducted. Meanwhile, It can be observed that in the allegations in the complaint, especially the statement that the
however, under the approval of the Archbishop, the association had begun exercising its defendants are employing the properties of the Brotherhood in contravention of the
functions and had maintained a de facto existence from the time of its first organization. spirit and purpose of the trust, to enable one to realize that the complaint is not
demurable. In the exercise of their equitable power our courts have undoubted
On August 10, 1807, or within less than six months from the inception of the project, the jurisdiction to compel a trustee properly to perform his trust and, if necessary, to
members of the guild who were cooperating in the creation of the brotherhood held a meeting remove him from office. The Court noted that it was prayed in the complaint that the
defendants be required to render account to the plaintiff; but it is to the court that the approving the cedula, the king was entirely free to fix such conditions as he then saw fit, it is a
defendants should be required to account. necessary conclusion that the original conditions of the trust must be considered as having been
incorporated in the royal cedula, and the trust, as we now have it, is effectually defined and
In view of the allegations of the complaint, there can be no sort of doubt as to the determine by said cedula. It results, therefore, in our opinion, that since July 23, 1819, when the
right of the plaintiff, as Bishop of the diocese of Lipa, to maintain this action. As royal cedula took effect, the administration of the trust fund has pertained to the Board of
ecclesiastical superior of the parish priest (who is ex oficio Rector of the Brotherhood), the Directors of the Brotherhood as one of its inherent functions; and it is no longer appropriate to
Bishop necessarily has an interest in the enforcement of the trust, even apart from the duty conceive of the trust as a mere institution administered by the Brotherhood for the founders of
imposed upon his predecessor, the Archbishop of Manila, in the closing paragraph of the royal the fund and their successors, In this connection we do not overlook the provision in the
cedula, to enforce exact and punctual performance of the trust. closing paragraph of the royal cedula declaring that the property and funds of the
Brotherhood must not be understood as having been "spiritualized" at any time. But
INCIDENTAL ISSUE: ISSUE ABOUT PROVISIONS IN THE ROYAL CEDULA(optional)
the idea expressed in that provision is fulfilled by the continued application of the
Proceeding now to examine the provisions contained in the royal cedula of July 23, 1819, fund to the lawful pious and civil uses for which it was intended.
relative to the constitution of the Board of Directors of the brotherhood (called Junta in the royal
cedula), the election of its members, and the supervision over the acts of the body, we find that
the Board has, for Recto, the parish priest ex oficio, or in case of the absence or illness of this
dignitary, his senior coadjutor. The other members of the Board are elective, being seven in
number, namely, the Elder Brother, the Steward, the Treasurer, the Secretary, and three
Deputies exercising the function of vicars in divine worship.

The provisions governing the election of the seven elective members of the incoming Board are
a little complicated, since said members are chosen by an electoral college of twelve, consisting
of the seven elective members of the existing Board, assisted by five electors, who must
themselves be first chosen in the manner prescribed in the cedula. The election for members of
the Board is to be held on December 12 of each year; and the meetings held for this purpose
are presided over by the Alcalde Mayor of the province, as representative of royal authority, or
in case of his absence or illness, by the official succeeding to the command of the province, with
the assistance of the Rector. The duty of canvassing the votes cast for the members of the
Board is confided to the Chairman ( Alcalde Mayor) and the Rector. In case of a tie the Rector is
given the deciding vote. It is enjoined upon the Rector to attend all meetings of the Board, and
he is given authority to propose matters for discussion relative to the welfare of the Brotherhood
and its funds, but in an advisory capacity only, without vote. To the Rector is also confided one
of the three several keys to the safe, or safes, in which the money and valuables of the
Brotherhood are kept.

In article 20 of Chapter 5 of the royal cedula attention is given to the sources from which will be
derived the means necessary to meet the obligations of the Brotherhood, and reference is here
made to the duty of the guild of mestizos, as founders, to supply whatever may be lacking for
the pious purposes of the Brotherhood. In article 21 of the same chapter it is declared that as
soon as the funds of the Brotherhood reach the amount of P5,000, the guild of mestizos shall be
free from the aforesaid obligation; and it is directed that the money shall be put out at interest
under substantially the same conditions as had been prescribed in the resolution of August 10,
1807, establishing the funds already mentioned. In article 22 of the same chapter the pious uses
are defined to which the income shall be applied when the fund reaches the amount of P5,000,
and an additional pious use when it reaches P10,000. Upon this follows a provisions to the effect
that, in this state of the fund, a primary teacher shall be employed for the guild of mestizos with
an appropriate salary at the discretion of the board, and, upon a further considerable increase of
said fund, a foundation for a teacher in Latin grammar shall be endowed with a salary
determined by the same Board.lawphil.net

Upon comparing the original resolution of August 10, 1807, establishing the fund, with articles
21 and 22 of the royal cedula of July 23, 1819, and bearing in mind the fact that the association
was wholly devoid of legality until royal approval was obtained and the further fact that, in
GLORIA SANTOS DUEÑAS VS. SANTOS SUBDIVISION HOMEOWNERS ASSOCIATION b) that this suit was filed by an unauthorized entity against a non-existent
person, as SSHA and Santos Subdivision are not juridical entities,
G.R. NO. 149417, 2004-06-04 authorized by law to institute or defend against actions;

c) that P.D. No. 957 cannot be given retroactive effect to make it applicable to Santos
DOCTRINE: Subdivision as the law does not expressly provide for its retroactive applicability; and
(d) that the present petition is barred by laches.

FACTS:
Petitioner’s Contention:
 Petitioner Gloria Santos Dueas is the daughter of the late Cecilio J. Santos who, during
his lifetime, owned a parcel of land with a total area of 2.2 hectares located at  Respondent SSHA failed to present any evidence showing that it is a legally organized
General T. De Leon, Valenzuela City, Metro Manila.  juridical entity, authorized by law to sue or be sued in its own name.  Thus, pursuant
to Section 1, Rule 3 of the 1997 Rules of Civil Procedure, it has no legal capacity to file
 In 1966, Cecilio had the realty subdivided into smaller lots, the whole
this suit before the HLURB and the Court of Appeals.
forming the Cecilio J. Santos Subdivision (for brevity, Santos Subdivision). The
then Land Registration Commission (LRC) approved the project and the National Respondent’s Contention:
Housing Authority (NHA) issued the required Certificate of Registration and License to
Sell. At the time of Cecilios death in 1988, there were already several residents and  SSHA counters that it has the capacity to sue as an association, since it is a member
homeowners in Santos Subdivision. of the Federation of Valenzuela Homeowners Association, Inc., which is registered
with the Securities and Exchange Commission. In the alternative, the individual
 Sometime in 1997, the members of the SSHA submitted to the petitioner a resolution members of SSHA who signed both the resolution and the complaint in this case may,
asking her to provide within the subdivision an open space for recreational and as natural persons, pursue the action.
other community activities, in accordance with the provisions of P.D. No.
957 as amended by P.D. No. 121. Petitioner, however, rejected the request, thus,
prompting the members of SSHA to seek redress from the NHA.
ISSUE: WON SSHA has the authority by law to sue or to be sued.
 On April 25, 1997, the NHA General Manager forwarded the SSHA resolution to
Romulo Q. Fabul, Commissioner and Chief Executive Officer of the HLURB in Quezon
City.
RULING: NO.
 In a letter dated May 29, 1997, the Regional Director of the Expanded NCR Field
Under Section 1, Rule 3 of the Revised Rules of Court, only natural or juridical persons, or
Office, HLURB, opined that the open space requirement of P.D. No. 957, as
entities authorized by law may be parties in a civil action. 
amended by P.D. No. 1216, was not applicable to Santos Subdivision.

 SSHA then filed a petition/motion for reconsideration, docketed as HLURB Case No.

REM-070297-9821, which averred among others that:

a) P.D. No. 957 should apply retroactively to Santos Subdivision, notwithstanding that
the subdivision plans were approved in 1966 and

b) Gloria Santos Dueas should be bound by the verbal promise made by her late father
during his lifetime that an open space would be provided for in Phase III of Santos
Subdivision, the lots of which were at that time already for sale.

 Petitioner denied any knowledge of the allegations of SSHA. She stressed that she
was not a party to the alleged transactions, and had neither participation nor
involvement in the development of Santos Subdivision and the sale of the subdivisions
lots. As affirmative defenses, she raised the following: 

a) It was her late father, Cecilio J. Santos, who owned and developed the subdivision,
and she was neither its owner nor developer;
Article 44 of the Civil Code enumerates the various classes of juridical persons. Under said Respondent demanded P30,000 for the estimated expenses for documentation, capital gains,
Article, an association is considered a juridical person if the law grants it a personality separate and documentary stamp taxes; registration fees for the Register of Deeds; and other incidental
and distinct from that of its members. The records of the present case are bare of any showing expenses for clearances from the Department of Agrarian Reform (DAR). Percita succeeded in
by SSHA that it is an association duly organized under Philippine law. It was thus an error for lowering the amount to P25,000, for which she executed an undertaking worded as follows:
the HLURB-NCR Office to give due course to the complaint in HLURB Case No. REM-070297-
9821, given the SSHAs lack of capacity to sue in its own name.  Nor was it proper for said "I, Percita Oco, of legal age, and residing at Puerto Princesa, do hereby undertake to give the
agency to treat the complaint as a suit by all the parties who signed and verified the full amount of Twenty Five Thousand (P25,000.00) Pesos to my uncle Victor Limbaring after
complaint. The members cannot represent their association in any suit without valid and legal document No. 230, series of 1996; Transfer Certificate of Title No. T-21920 and Transfer
authority. Neither can their signatures confer on the association any legal capacity to sue. Nor Certificate of Title No. T-21921 shall have been cancelled and revoked.
will the fact that SSHA belongs to the Federation of Valenzuela Homeowners Association, Inc.,
"Ozamis City, Philippines, July 1, 1996."
suffice to endow SSHA with the personality and capacity to sue. Mere allegations of membership
in a federation are insufficient and inconsequential. The federation itself has a separate juridical Pursuant to their agreement, respondent facilitated the transfer of the titles to her from the
personality and was not impleaded as a party in HLURB Case No. REM-070297-9821 nor in this names of his daughters. After the transfer had been effected on July 12, 1996, Percita left for
case. Neither was it shown that the federation was authorized to represent SSHA. Facts showing Puerta Princesa on July 17, 1996, without paying the P25,000. Several demands were made, but
the capacity of a party to sue or be sued or the authority of a party to sue or be sued in a she refused to pay.
representative capacity or the legal existence of an organized association of persons that is
made a party, must be averred. Hence, for failing to show that it is a juridical entity, endowed On April 6, 1999, respondent filed against Spouses Anthony and Percita Oco a Complaint for the
by law with capacity to bring suits in its own name, SSHA is devoid of any legal capacity, rescission of the sales contracts, with recovery of possession and ownership of the two parcels
whatsoever, to institute any action. of land. Among others, he claimed 1) that he was the actual buyer of the lots, but the vendees
whose names appeared on the Deeds were his daughters; 2) that he initially refused to
SPOUSES ANTHONY AND PERCITA OCO VS. VICTOR LIMBARING reconvey the properties because he had paid for them with his hard-earned money, which was
partly used by Sabas Limbaring for medical expenses; 3) that Percita had prepared the two
G.R. NO. 161298, JANUARY 31, 2006
Deeds of Sale, which his daughters signed despite receiving no consideration as stated in the
DOCTRINE: Deeds; 4) that because she refused to pay the P25,000, the Limbaring clan held a meeting on
October 26, 1996, during which it was agreed that P1,000 per month would be given to
 Basic in procedural law is the rule that every action must be prosecuted or defended respondent from the rentals of Sabas Limbaring’s house; and 5) that the agreement was not
in the name of the real party in interest. In the present case, the respondent, who implemented, because Percita had failed to cooperate.
was not a party to the contracts being sued upon, was not able to prove material
interest in the litigation. For his failure to do so, the trial court cannot be faulted for On May 27, 1999, Spouses Oco filed a Motion to Dismiss on the ground that the plaintiff (herein
dismissing the action to rescind the contracts. His status as trustor remained a bare respondent) was not the real party in interest. In his Opposition to the Motion to Dismiss,
allegation, as he had failed to rebut the legal presumption: that there is absence of a respondent contended that he was a trustor, whose property was being held in trust by his
trust when the purchase price in a deed of sale is paid by a parent in favor of a child. daughters.He also averred that, on the assumption that he was not the real party in interest, he
Here, the prima facie presumption is "that there is a gift in favor of the child." Any was entitled to an amendment of the pleadings.
allegation to the contrary must be proven by clear and satisfactory evidence, a burden
On August 30, 1999, the RTC issued an Order denying the Motion to Dismiss. It ruled that
that was not discharged by the plaintiff.
evidence was required to resolve the parties’ respective allegations. 16
FACTS:
On October 4, 1999, Spouses Oco filed an Answer with Counterclaim, alleging in the main: 1)
Sometime in 1996, Sabas Limbaring subdivided his Lot 2325-D, covered by Transfer Certificate that respondent had tried to secure a DAR clearance and to have a certificate of title issued in
of Title (TCT) No. 5268, into two lots denominated as Lot Nos. 2325-D-1 and 2325-D-2. He then his name, but failed because Republic Act (RA) 6657 prohibited the acquisition of more than five
executed in favor of Jennifer Limbaring a Deed of Sale for Lot 2325-D-2 for P60,000; and, in hectares of agricultural land; 2) that through deceit and manipulation, respondent was able to
favor of Sarah Jane Limbaring, another Deed for Lot 2325-D-1 for P14,440. Accordingly, TCT convince Sabas Limbaring to execute the two Deeds of Sale, notwithstanding the lack of any
No. 5268 was cancelled and TCT Nos. T-21921 and T-21920 were issued in the names of consideration; 3) that Sabas informed Percita that the agricultural land had never been sold; 4)
Jennifer and Sarah Jane, respectively. that she refused to pay the P25,000, because the suspensive conditions stated in the Promissory
Note had not been complied with; 5) that she paid for all the expenses incurred in their
Sensing some irregularities in the transaction, Percita Oco, the daughter of Sabas Limbaring, left transaction; 6) that for her alleged failure to pay the P25,000 and for "other deceits,"
Puerto Princesa City and went to Ozamis City. She then filed a case of perjury and falsification of respondent filed a criminal Complaint docketed as Criminal Case No. 2985; 7) that respondent
documents against respondent, her uncle who was the father of Jennifer and Sarah Jane. During was guilty of forum shopping for filing that case despite the institution of the civil aspect in the
the pre-litigation conference called by City Prosecutor Luzminda Uy on July 1, 1996, the parties criminal case; 8) that respondent was not the real party in interest and had no legal standing to
agreed that the two parcels of land should be reconveyed to Percita, who was to pay sue; 9) that the lots, which were acquired by Jennifer and Sarah Jane without paying any
respondent all the expenses that had been and would be incurred to transfer the titles to her consideration, should be returned to Percita without any consideration; and 10) that the Deeds
name. of Sale reconveying the lots acknowledged receipt of consideration. 17
Respondent testified on his behalf. He then formally offered his exhibits. 18 After filing their The parties to a contract are the real parties in interest in an action upon it, as consistently held
Comments to Plaintiff’s Formal Offer of Exhibits, Spouses Oco filed a Demurrer to Evidence, to by the Court. Only the contracting parties are bound by the stipulations in the contract; they are
which he filed his Opposition.19 the ones who would benefit from and could violate it. Thus, one who is not a party to a
contract, and for whose benefit it was not expressly made, cannot maintain an action on it. One
RTC: Granted the demurrer and dismissed the Complaint and Counterclaim, on the ground that cannot do so, even if the contract performed by the contracting parties would incidentally inure
respondent was not the real party in interest. to one’s benefit.

CA: The CA held that a trust relationship was created when respondent purchased the lots As an exception, parties who have not taken part in a contract may show that they have a real
in favor of his daughters. Thus, he was a real party in interest. interest affected by its performance or annulment. 38 In other words, those who are not
principally or subsidiarily obligated in a contract, in which they had no intervention, may show
Petitioner’s Contention before the SC: Respondent was not a trustor, and therefore not the
their detriment that could result from it. Contracts pour autrui are covered by this exception.  In
real party in interest and had no legal right to institute the suit. The real parties in interest were
this latter instance, the law requires that the "contracting parties must have clearly and
Jennifer and Sarah Jane, to whom the subject properties had been given as gifts.
deliberately conferred a favor upon a third person." A "mere incidental benefit is not enough."

Action on the Contracts Presently Involved

ISSUE: WON Respondent is a real party in interest.
Respondent’s Complaint, entitled "Rescission of Contract & Recovery of Possession & Ownership
RULING: NO. of Two Parcels of Land," is clearly an action on a contract. The agreements sought to be
rescinded clearly show that the parties to the Deeds of Absolute Sale were Jennifer and Sarah
The controversy centers on Rule 3 of the Rules of Court, specifically an elementary rule in Jane Limbaring as vendors and Percita Oco as vendee. Clearly then, the action upon the
remedial law, which is quoted as follows: contracts may -- as a rule -- be instituted only by Jennifer and Sarah Jane against Percita.

"Sec. 2. Parties in interest. – A real party in interest is the party who stands to be benefited or Respondent is not a real party in interest. He was not a party to the contracts and
injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless has not demonstrated any material interest in their fulfillment. Evidently, the
otherwise authorized by law or these Rules, every action must be prosecuted or defended in the allegations in the Complaint do not show that the properties would be conveyed to
name of the real party in interest." him, even if Percita were to be proven to have committed a breach of the subject
agreements.
As applied to the present case, this provision has two requirements:
Trust Relationship
1) to institute an action, the plaintiff must be the real party in interest; and
To show material interest, respondent argues that a trust was created when he purchased the
2) the action must be prosecuted in the name of the real party in interest. properties from Sabas Limbaring in favor of his daughters. As trustor, he allegedly stands to be
benefited or injured by any decision in the case.
Necessarily, the purposes of this provision are:
Trust is the legal relationship between one person who has equitable ownership of a property
1) to prevent the prosecution of actions by persons without any right, title or and another who owns the legal title to the property. 44 The trustor is the one who establishes
interest in the case; the trust; the beneficiary, the person for whose benefit the trust was created; and the trustee,
the one in whom, by conferment of a legal title, confidence has been reposed as regards the
2) to require that the actual party entitled to legal relief be the one to prosecute the
property of the beneficiary.
action;
Trusts may be either express or implied. Express trusts are those created by direct and positive
3) to avoid a multiplicity of suits; and
acts of the parties, such as by some writing, deed or will; or by words either expressly or
4) to discourage litigation and keep it within certain bounds, pursuant to sound impliedly evidencing an intention to create a trust. Implied trusts are those that, without being
public policy. expressed, are deducible from the nature of the transaction as matters of intent; or that are
super-induced in the transaction by operation of law as a matter of equity, independently of the
Interest within the meaning of the Rules means material interest or an interest in issue to be particular intention of the parties.
affected by the decree or judgment of the case, as distinguished from mere curiosity about the
question involved. One having no material interest to protect cannot invoke the jurisdiction of Respondent has presented only bare assertions that a trust was created. Noting the
the court as the plaintiff in an action. When the plaintiff is not the real party in interest, the case need to prove the existence of a trust, this Court has held thus:
is dismissible on the ground of lack of cause of action.
"As a rule, the burden of proving the existence of a trust is on the party asserting its existence,
Action on Contracts and such proof must be clear and satisfactorily show the existence of the trust and its elements.
While implied trusts may be proved by oral evidence, the evidence must be trustworthy and
received by the courts with extreme caution, and should not be made to rest on loose, equivocal
or indefinite declarations. Trustworthy evidence is required because oral evidence can easily be
fabricated."

On this point, the Civil Code states as follows:

"ART. 1448. There is an implied trust when property is sold, and the legal estate is granted to
one party but the price is paid by another for the purpose of having the beneficial interest of the
property. The former is the trustee, while the latter is the beneficiary. However, if the person to
whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the
sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the
child."

Under the last sentence of Article 1448, respondent’s alleged acts -- paying the price of
the subject properties and, in the titles, naming his children as owners -- raise the
presumption that a gift was effected in their favor. Respondent failed to rebut this
presumption. Absent any clear proof that a trust was created, he cannot be deemed a real party
in interest. That he should be deemed a trustor on the basis merely of having paid the purchase
price is plainly contradicted by the presumption based on Article 1448 of the Civil Code "that
there is a gift in favor of the child," not a trust in favor of the parent.
WILLIAM UY and RODEL ROXAS, petitioners, vs. COURT OF APPEALS, HON. ROBERT bar from those involving agents or apoderados instituting actions in their own name but in
BALAO and NATIONAL HOUSING AUTHORITY, respondents. behalf of their principals. Petitioners in this case purportedly brought the action for damages in
their own name and in their own behalf.
DOCTRINE:
Section 2, Rule 3 of the Rules of Court requires that every action must be prosecuted MAIN ISSUE:
and defended in the name of the real party-in-interest. The real party-in-interest is WHETHER OR NOT THE PETITIONERS IN THIS CASE ARE CONSIDERED REAL PARTIES-IN-
the party who stands to be benefited or injured by the judgment or the party INTEREST? NO
entitled to the avails of the suit.

HELD:
FACTS: Section 2, Rule 3 of the Rules of Court requires that every action must be prosecuted
Petitioners William Uy and Rodel Roxas are agents who offered to sell the lands to respondent and defended in the name of the real party-in-interest. The real party-in-interest is
National Housing Authority (NHA) to be utilized and developed as a housing project. the party who stands to be benefited or injured by the judgment or the party
entitled to the avails of the suit. Interest, within the meaning of the rule, means
On February 14, 1989, the NHA Board passed Resolution No. 1632 approving the acquisition of material interest, an interest in the issue and to be affected by the decree, as
said lands, with an area of 31.8231 hectares, at the cost of P23.867 million, pursuant to which distinguished from mere interest in the question involved, or a mere incidental
the parties executed a series of Deeds of Absolute Sale covering the subject lands. Of the eight interest. Cases construing the real party-in-interest provision can be more easily
parcels of land, however, only five were paid for by the NHA because of the report it received understood if it is borne in mind that the true meaning of real party-in-interest may
from the Land Geosciences Bureau of the Department of Environment and Natural Resources be summarized as follows: An action shall be prosecuted in the name of the party
(DENR) that the remaining area is located at an active landslide area and therefore, not suitable who, by the substantive law, has the right sought to be enforced.
for development into a housing project.
Do petitioners, under substantive law, possess the right they seek to enforce? We rule in the
On 22 November 1991, the NHA issued Resolution No. 2352 cancelling the sale over the three negative.
parcels of land. The NHA, through Resolution No. 2394, subsequently offered the amount of
P1.225 million to the landowners as daos perjuicios. The applicable substantive law in this case is Article 1311 of the Civil Code, which
states:
On 9 March 1992, petitioners filed before the Regional Trial Court (RTC) of Quezon City a
Complaint for Damages against NHA and its General Manager Robert Balao. Contracts take effect only between the parties, their assigns, and heirs, except in case where
the rights and obligations arising from the contract are not transmissible by their nature, or by
After trial, the RTC rendered a decision declaring the cancellation of the contract to be justified. stipulation, or by provision of law. x x x.

Upon appeal by petitioners, the Court of Appeals reversed the decision of the trial court and
If a contract should contain some stipulation in favor of a third person, he may demand its
entered a new one dismissing the complaint. It held that since there was sufficient justifiable
fulfillment provided he communicated his acceptance to the obligor before its revocation. A
basis in cancelling the sale, it saw no reason for the award of damages. The Court of Appeals
mere incidental benefit or interest of a person is not sufficient. The contracting parties must
also noted that petitioners were mere attorneys-in-fact and, therefore, not the real parties-in-
have clearly and deliberately conferred a favor upon a third person.
interest in the action before the trial court.

When plaintiffs Uy and Roxas sought payment of damages in their favor in view of the partial Petitioners are not parties to the contract of sale between their principals and NHA.
rescission of Resolution No. 1632 and the Deed of Absolute Sale covering TCT Nos. 10998, They are mere agents of the owners of the land subject of the sale. As agents, they
10999 and 11292 (Prayer complaint, page 5, RTC records), it becomes obviously indispensable only render some service or do something in representation or on behalf of their
that the lot owners be included, mentioned and named as party-plaintiffs, being the real party- principals. The rendering of such service did not make them parties to the contracts
in-interest. Uy and Roxas, as attorneys-in-fact or apoderados, cannot by themselves lawfully of sale executed in behalf of the latter. Since a contract may be violated only by the
commence this action, more so, when the supposed special power of attorney, in their favor, parties thereto as against each other, the real parties-in-interest, either as plaintiff
was never presented as an evidence in this case. Besides, even if herein plaintiffs Uy and Roxas or defendant, in an action upon that contract must, generally, either be parties to
were authorized by the lot owners to commence this action, the same must still be filed in the said contract.
name of the pricipal, (Filipino Industrial Corporation vs. San Diego, 23 SCRA 706 [1968]). As
such indispensable party, their joinder in the action is mandatory and the complaint may be Neither has there been any allegation, much less proof, that petitioners are the heirs
dismissed if not so impleaded (NDC vs. CA, 211 SCRA 422 [1992]). of their principals.

PETITIONERS’ CONTENTION: Are petitioners assignees to the rights under the contracts of sale? In McMicking vs. Banco
Petitioners claim that they lodged the complaint not in behalf of their principles but in their own Espaol-Filipino, we held that the rule requiring every action to be prosecuted in the name of
name as agents directly damaged by the termination of the contract. The damages prayed for the real party-in-interest
were intended not for the benefit of their principals but to indemnify petitioners for the losses
they themselves allegedly incurred as a result of such termination. These damages consist x x x recognizes the assignments of rights of action and also recognizes that when one has a
mainly of unearned income and advances. Petitioners, thus, attempt to distinguish the case at right of action assigned to him he is then the real party in interest and may maintain an action
upon such claim or right. The purpose of [this rule] is to require the plaintiff to be the real party
in interest, or, in other words, he must be the person to whom the proceeds of the action shall
belong, and to prevent actions by persons who have no interest in the result of the same. xxx Thus, in Hopkins vs. Ives, the Supreme Court of Arkansas, citing Section 372 (2) above,
denied the claim of a real estate broker to recover his alleged commission against the purchaser
Thus, an agent, in his own behalf, may bring an action founded on a contract made in an agreement to purchase property.
for his principal, as an assignee of such contract.
In Goduco vs. Court of Appeals, this Court held that:
Petitioners, however, have not shown that they are assignees of their principals to
the subject contracts. While they alleged that they made advances and that they x x x granting that appellant had the authority to sell the property, the same did not make the
suffered loss of commissions, they have not established any agreement granting buyer liable for the commission she claimed. At most, the owner of the property and the one
them the right to receive payment and out of the proceeds to reimburse who promised to give her a commission should be the one liable to pay the same and to whom
[themselves] for advances and commissions before turning the balance over to the the claim should have been directed. xxx
principal[s].

Finally, it does not appear that petitioners are beneficiaries of a stipulation pour As petitioners are not parties, heirs, assignees, or beneficiaries of a stipulation pour
autrui under the second paragraph of Article 1311 of the Civil Code. Indeed, there is autrui under the contracts of sale, they do not, under substantive law, possess the
no stipulation in any of the Deeds of Absolute Sale clearly and deliberately right they seek to enforce. Therefore, they are not the real parties-in-interest in this
conferring a favor to any third person. case.

That petitioners did not obtain their commissions or recoup their advances because of the non- Petitioners not being the real parties-in-interest, any decision rendered herein would
performance of the contract did not entitle them to file the action below against respondent be pointless since the same would not bind the real parties-in-interest.
NHA.
WESTMONT BANK, petitioner, vs. SHUGO NODA & CO. LTD., SHUYA NODA,
HABALUYAS ENTERPRISES, INC., ESTATE OF PEDRO J. HABALUYAS, and COURT OF On January 6, 1995, the trial court rendered judgment in Civil Case No. 82-3305. All the parties
APPEALS, respondents. appealed.

DOCTRINE: While the case was on appeal, Shugo Noda and Co., Ltd., Shuya Noda, Habaluyas Enterprises
It is well-settled that a party is not entitled to enforce a compromise agreement to Inc. (HEI), the Estate Of Pedro J. Habaluyas (the Estate) and Sally B. Habaluyas entered into a
which he is not a party, and that as to its effect and scope, its effectivity is limited to compromise agreement to amicably settle the disputes between them in Civil Case No. R-82-
the parties thereto. 3305 and Special Proceedings No. Q-91-8535.

FACTS: A Motion for Approval of Compromise Agreement dated July 24, 1995 was filed by Shugo Noda
On February 12, 1976, a civil complaint was instituted by Shugo Noda and Co. Ltd. and Shuya and Co., Ltd. and Shuya Noda before the appellate court. In their comment dated March 21,
Noda against Habaluyas Enterprises, Inc. and its Chairman-President, Atty. Pedro J. Habaluyas 1996, HEI and the Estate presented no objection to the said motion. Westmont Bank filed an
(now deceased and represented by Sally B. Habaluyas, administratrix of his estate). The third opposition thereto. In the challenged resolution dated May 16, 1996, the appellate court
defendant in the complaint was the Associated Citizens Bank (now Westmont Bank). The approved the agreement. Accordingly, the motion is granted without prejudice to the resolution
complaint, which was filed with the Regional Trial Court of Manila (Branch 36) and docketed as of the case on appeal.
Civil Case No. 82-3305, was for sum of money and damages arising from breach of contract.
Westmont Bank sought the reconsideration of the said resolution alleging deprivation of its right
The complaint stems from the following transactions entered into by the parties: Shuya Noda over the amount deposited with the bank subject matter of the appeal. The appellate court
deposited US$400,000.00 at Associated Citizens Bank for which the latter issued Certificates of denied the same. Hence, the instant petition.
Deposit Nos. 1611, 1612 and 1613 in the sums of US$300,000.00, US$50,000.00 and
US$50,000.00, respectively. Shuya Noda executed an Assignment of Bank Deposit whereby he ISSUE:
assigned to the bank P2,680,000.00 out of his US$400,000.00 deposit as partial collateral for a
credit accommodation in the principal sum of P5 Million which the bank had agreed to extend to WHETHER OR NOT THE PETITIONER IN THIS CASE, NOT A PARTY IN A COMPROMISE
Habaluyas Enterprises, Inc. The credit facility was to be availed of by Habaluyas Enterprises, AGREEMENT, CAN ENFORCE THE SAID AGREEMENT? NO
Inc. in the establishment of a sawmill. Due to the alleged contravention by the defendants of
their respective obligations stemming from the aforesaid transactions, litigation ensued. HELD:
It is well-settled that a party is not entitled to enforce a compromise agreement to
On December 25, 1989, Pedro J. Habaluyas died intestate. On April 1, 1991, Shuya Noda filed a which he is not a party, and that as to its effect and scope, its effectivity is limited to
petition for administration of the estate docketed as Special Proceedings No. Q-91-8535 in the the parties thereto. Thus, the judicially approved compromise agreement of which
Regional Trial Court of Quezon City, Branch 88. The estate court issued an order on December petitioner bank is not a party could not, contrary to its apprehensions, bind and
17, 1991 appointing Sally B. Habaluyas, the lawful wife of Pedro J. Habaluyas as special affect the rights and interests of the latter. To paraphrase Jag & Haggar Jeans and
administratrix of the estate. Shuya Noda filed in the estate court its claim against the estate in Sportswear Corporation vs. NLRC, a compromise agreement does not apply to
accordance with Rule 86 of the Rules of Court in the amount of US$609,047.61 with 8% interest parties who did not sign the same nor avail of its benefits.
per annum after March 31, 1984 on the principal amount of US$420,000.00.
DR. FERNANDO PERIQUET, JR., petitioner, vs. On May 8, 1976 the trial court rendered judgment declaring valid and binding the assignment of
HONORABLE FOURTH CIVIL CASES DIVISION OF THE INTERMEDIATE APPELLATE hereditary rights executed by plaintiff in favor of defendant.
COURT and the HEIRS OF THE LATE FELIX R. FRANCISCO, respondents.
On appeal to the then Intermediate Appellate Court, the said judgment was "modified" and
DOCTRINE: declaring (a)that the "Assignment of Hereditary Rights" is hereby annulled or rescinded and
Well-settled is the rule that a compromise agreement, once approved by the court, appellant completely relieved from the legal effects thereof, (b) declaring and holding appellant
cannot and should not be disturbed except for vices of consent or forgery, it being FELIX R. FRANCISCO the owner of one-fourth (1/4) of all the estate of Petra Francisco Vda. de
the obvious purpose of such compromise agreement to settle, once and for all, the Periquet, made up of the residue of the combined estates of the deceased spouses Fernando
claims of the parties, and bar all future disputes and controversies thereon. Periquet and Petra Francisco Vda. de Periquet, which residue must be deemed to include the
Similarly, a person who is not a party to an agreement, as in this case, cannot seek amounts paid to various others heirs and claimants and to appellee Dr. Fernando Periquet's
the amendment or modification of the same. Neither can a court of law rule that the counsel as well as the remainder of the estate adjudicated to appellee Dr. Fernando Periquet
compromise agreement be amended and modified pursuant only to the wishes of a himself in special Proceedings Nos. Q-10004 and
person not party to the said agreement. Q-11074 of the Court of First Instance of Rizal, Branch IV sitting in Quezon City xxxxxxxxx.

FACTS: A motion for reconsideration of the above-quoted decision was filed by petitioner Periquet but
Spouses Fernando Periquet and Petra Francisco adopted, though not legally,Fernando Periquet, the same was denied for lack of merit on February 1, 1985, 11 hence, the instant petition for
Jr. He is the petitioner in the instant case. review.

When Fernando Periquet died, he left a will dated March 28, 1940 wherein he named his wife MAIN ISSUE:
Petra as his universal heir. Accordingly, Petra instituted Special Proceedings No. Q-10004 Can A Court Of Law Rule That The Compromise Agreement Be Amended And Modified Pursuant
entitled "In the matter of the Petition to Approve the Will of Fernando Periquet" for probate of Only To The Wishes Of A Person Not Party To The Said Agreement? NO
his will.

When Petra died, a Special Proceedings No. Q-11074 entitled "In the Matter of the Intestate HELD:
Estate of Deceased Petra Francisco Vda. de Periquet" was instituted by her nephew, Florentino We agree with the petitioner that respondent court erred in disturbing the
Zaragoza. proceedings conducted in Special Proceedings Nos. Q-10004 and Q-11074, and the
decrees and orders issued pursuant thereto. It cannot be denied that a compromise
Petra Francisco Vda. de Periquet was survived by the following heirs, namely: Felix Francisco, agreement was entered into by the parties in that case in order to end the suit
her brother; Marta Francisco-Reyes, her sister; Josefa and Felix Francisco, children of her already filed in court. The same was approved by the trial court in the order dated
deceased brother, Mariano Francisco; and Florentino Zaragoza, Zacarias Zaragoza, Alberta December 20, 1969.26 Well-settled is the rule that a compromise agreement, once
(Betty) Zaragoza-Morgan and Gloria Zaragoza-Nuñez, children of her deceased sister, Josefa approved by the court, cannot and should not be disturbed except for vices of
Francisco de Zaragoza. consent or forgery, it being the obvious purpose of such compromise agreement to
settle, once and for all, the claims of the parties, and bar all future disputes and
On August 3, 1966, Felix Francisco, Marta Francisco-Reyes, Zacarias Zaragoza, Gloria Zaragoza- controversies thereon. A compromise agreement cannot bind persons who are not
Nuñez, Josefa Francisco and Felix Francisco executed Deeds of Assignment of Hereditary Rights parties thereto. Neither would a person not party to a compromise agreement be
in favor of Fernando Periquet, Jr. Florentino Zaragoza and Alberta "Betty" Zaragoza-Morgan, entitled to enforce the same. Similarly, a person who is not a party to an agreement,
however, refused to execute deeds of assignment in favor of petitioner. as in this case, cannot seek the amendment or modification of the same. Neither can
a court of law rule that the compromise agreement be amended and modified
On December 13, 1969, petitioner entered into a compromise agreement with the Zaragozas pursuant only to the wishes of a person not party to the said agreement.
and the intervenors, the Periquets, in special Proceedings Nos. Q-10004 and Q-11074.
Signatories to the compromise agreement were the petitioner, the Zaragozas (Florentino, In the case at bench, no such fraud was employed by herein petitioner. Resultantly, the
Zacarias, Alberta and Gloria), the Periquets (Aurelio, Alfonso, Consuelo, Natividad, Marcelina, assignment of hereditary rights executed by Felix Francisco in favor of herein petitioner is valid
Francisco, Dolores, Belen and Milagros) and their respective counsels. and effective.

On December 20, 1969, the same agreement was approved by the trial court. Another order of
even date was issued ordering the adjudication and transfer of the residue of the estate to
herein petitioner. HON. DOMINADOR CARILLO VS HON. COURT OF APPEALS, MARIA PAZ DABON AND
ROSAUNA DABON
On May 16, 1970, Felix R. Francisco, brother of Petra Francisco Vda. de Periquet, filed the
instant action to annul the Assignment of Hereditary Rights he executed in favor of Fernando FACTS:
Periquet, Jr. and to recover his one-fourth (1/4) share in the estate of the late Petra Francisco
Vda. de Periquet. The action for annulment was based on "gross misrepresentation and fraud," On April 2, 1990, petitioner Maria Gonzales filed a complaint against the spouses Priscilla and
"grave abuse of confidence," "mistake and undue influence," and "lack of cause and/or Jose Manio with the RTC of Digos, Davao del Sur, Br. 19. Gonzales sought the execution of the
consideration" in the execution of the challenged deed of assignment. deed of sale in her favor for the property she bought from Priscilla Manio. Gonzales alleged that
on April 26, 1988, she paid P10,000 to Priscilla as downpayment on the P400,000 purchase price
of the lot with improvements, since Priscilla had a special power of attorney from her son, Petitioner Gonzales concludes that respondents not being the owners and are not real parties
Aristotle, the owner of the land. They also agreed that the balance would be paid within 3 in interest in the complaint for specific performance have no right to bring the action for
months after the execution of the deed of sale. Yet, after the lapse of the period and despite annulment of the judgment. They further alleged that respondents have no right that could be
repeated demands, Priscilla did not execute the deed of sale. Thus, Gonzales filed an action for adversely affected by the judgment because they are not the owners of the property. Petitioner
specific performance against the spouses Priscilla and Jose Manio. claims that the CA should have applied the doctrine of double sale to settle the issue of
ownership and declare her the true owner of the property.  According to petitioner
For failure to file an Answer, the Manios were declared in default and Gonzales was allowed to Gonzales, she did not implead Aristotle as defendant in Civil Case No. 2647 since a decision
present evidence ex parte. After trial, the court rendered judgment in favor of Gonzales. against Priscilla, Aristotles attorney-in-fact, would bind Aristotle also.

Gonzales deposited with the Clerk of Court the P390,000 balance of the price and filed a motion Respondents (Maria Paz and Rosalina Dabon) now insist that they are parties in interest
for execution.[3] She later withdrew the motion because the trial courts decision was not as buyers, owners and possessors of the contested land and that they had been fraudulently
properly served on the defendants. After numerous delays, the sheriff finally personally served a deprived of their day in court during the proceedings in the trial court in Civil Case No.
copy of the decision on Priscilla on August 4, 1990, at the ungodly hour of 12:00 midnight at 2647. They have no remedy in law other than to file a case for the annulment of judgment of
Sitio Wilderness, Barangay Mount Carmel, Bayugan, Agusan del Sur. [4] the trial court in said case.

Since there was no appeal, the trial courts decision became final and executory.  But the writ of ISSUE: Are the Dabons proper parties to file the petition for annulment of judgment? -YES
execution was not served upon the defendants, since according to the Sheriffs Return, the
defendants could not be located.  HELD:

Gonzales filed a petition for the nullification of the Owners Duplicate Certificate of Title No. Petitioner Gonzales should be reminded of Section 3 of Rule 3 of the Rules on Civil Procedure
16658 and asked that a new certificate be issued in her name to give effect to the deed of which explicitly states that an action should be brought against the real party in interest, [12] and
conveyance since Priscilla refused to relinquish the owners duplicate copy. in case the action is brought against the agent, the action must be brought against an agent
acting in his own name and for the benefit of an undisclosed principal without joining the
Consequently, the trial court declared the owners duplicate copy of TCT No. 16658 void, and principal, except when the contract involves things belonging to the principal. [13] The real party
directed the City Civil Registrar to issue a new certificate of title in favor of Gonzales.  The orders in interest is the party who would be benefited or injured by the judgment or is the party
were reiterated in subsequent orders and TCT No. T-23690 was issued under the name of entitled to the avails of the suit. We have held that in such a situation, an attorney-in-fact is not
Gonzales. a real party in interest and that there is no law permitting an action to be brought by and
against an attorney-in-fact.[14]
On December 14, 1990, herein respondents Maria Paz Dabon and Rosalina Dabon, claiming to
have bought the aforementioned lot from Aristotle Manio filed before the CA a petition for Worth stressing, the action filed by Gonzales before the RTC is for specific performance to
annulment of judgment and orders of the RTC in Civil Case No. 2647. compel Priscilla to execute a deed of sale, involving real property which, however, does not
belong to Priscilla but to Aristotle Manio, the son of Priscilla. The complaint only named as
Gonzales filed before the trial court a motion for the issuance of a writ of possession. 
defendant Priscilla, joined by her spouse, yet Priscilla had no interest on the lot and can have no
Dabons: alleged therein that the judgment of the trial court was void  ab initio because of lack interest whatever in any judgment rendered. She was not acting in her own name, nor was she
of jurisdiction over their persons, as the real parties in interest, and that they were fraudulently acting for the benefit of an undisclosed principal. The joinder of all indispensable parties is a
deprived of their right to due process. They also prayed for a Temporary Restraining Order and condition sine qua non of the exercise of judicial powers, and the absence of indispensable party
for Preliminary Prohibitory Injunction against Gonzales. They gave the trial court a notice of their renders all subsequent actions of the court null and void for want of authority to act, not only as
action for the annulment of the judgment and subsequent orders in Civil Case No. 2647. They to the absent parties but even as to those present. [15] Accordingly, the failure to implead
filed an opposition on the following grounds: (1) The writ of possession cannot be enforced Aristotle Manio as defendant renders all proceedings in the Civil Case No. 2647, including the
because the defendants named in the writ, the Manios, were no longer in possession of the order granting the cancellation of TCT No. 16658 and issuance of a new title, null and void.
property; (2) They had bought the lot with the improvements therein and had taken possession,
It is settled that a person need not be a party to the judgment sought to be annulled. [16] What is
although they had not yet registered their ownership with the Register of Deeds; and (3) The
essential is that he can prove his allegation that the judgment was obtained by fraud or
court did not acquire jurisdiction over them as the real parties in interest.
collusion and he would be adversely affected thereby, [17] because if fully substantiated by
CA: issued a resolution restraining the trial court from implementing its Decision dated June 19, preponderance of evidence, those allegations could be the basis for annulment of the assailed
1990[7] and its subsequent orders thereto in Civil Case No. 264.Following the Commissioners judgment.
report, the Court of Appeals found that (1) the contract of sale between Gonzales and Priscilla
In the present case, even if respondents were not parties to the specific performance case, any
was unenforceable because the sale was evidenced by a handwritten note which was vague as
finding that there was extrinsic fraud in the institution of the complaint, i.e.exclusion of the real
to the amount and which was not notarized; (2) the trial court did not acquire jurisdiction over
party in interest, and collusion between petitioner and Sheriff Senoy, would adversely affect the
the indispensable parties; and (3) the proceedings were attended with fraud. CA nullified the
respondents ownership and thus, could be their basis for annulment of the judgment.
judgment of the RTC in Civil Case No. 2647 and cancelled TCT No. T-23690. 

CONTENTIONS:
Pertinently, Section 2 of Rule 47 of the Rules on Civil Procedure explicitly provides the two
grounds for annulment of judgment, namely: extrinsic fraud and lack of jurisdiction. [18]

There is extrinsic fraud when a party has been prevented by fraud or deception from presenting
his case. Fraud is extrinsic where it prevents a party from having a trial or from presenting his
entire case to the court, or where it operates upon matters pertaining not to the judgment itself
but to the manner in which it is procured. The overriding consideration when extrinsic fraud is
alleged is that the fraudulent scheme of the prevailing litigant prevented a party from having his
day in court.[19] It must be distinguished from intrinsic fraud which refers to acts of a party at a
trial which prevented a fair and just determination of the case, and which could have been
litigated and determined at the trial or adjudication of the case. [20]

In its Decision dated February 22, 1995, the Court of Appeals found that indices of fraud
attended the case before the trial court: First,  the plaintiff deliberately excluded the Dabons as
party to the case despite knowledge that the Dabons had alleged that they had bought the land
from Aristotle. Second,  the Sheriffs Return was suspiciously served on a Saturday, at midnight,
on August 4, 1990. Third,  the trial court ordered the plaintiff to deposit the full payment of
property, but subsequently ordered its withdrawal. Lastly,there was no notice given to the
person named in the certificate of title which Gonzales wanted to be annulled.

Of the indices of fraud cited by the CA, the failure to comply with the notification requirement in
the petition for the cancellation of title amounts to extrinsic fraud. Under the Property
Registration Decree, all parties in interest shall be given notice.[21] There is nothing in the
records that show Gonzales notified the actual occupants or lessees of the property. Further, the
records show that Gonzales had known of the sale of the land by Aristotle to the Dabons and
despite her knowledge, the former did not include the Dabons in her petition for the annulment
of title. Deliberately failing to notify a party entitled to notice also constitutes extrinsic fraud.
[22]
 This fact is sufficient ground to annul the order allowing the cancellation of title in the name
of Gonzales.

Likewise, under Rule 47, a judgment is void for lack of jurisdiction over the persons of the real
parties in interest, i.e., Aristotle Manio and the Dabons.
ASSET PRIVATIZATION VS COURT OF APPEALS, JESUS CABARRUS, SR. JESUS S. may duly and seasonably interpose. Such loans shall, however, be reduced by the amount which
CABARRUS, JR., JAIME T. CABARRUS, JOSE MIGUEL CABARRUS, ALEJANDRO S. APT may have realized from the sale of the seized assets of MMIC which by agreement should
PASTOR, JR., ANTONIO U. MIRANDA, and MIGUEL M. ANTONIO, as Minority Stock no longer be returned even if the foreclosure were found to be null and void. The documentary
Holders of Marinduque Mining and Industrial Corporation evidence submitted and adopted by both parties as their exhibits would show that the total
outstanding obligation due to DBP and PNB as of the date of foreclosure is P22,668,537,770.05,
FACTS: more or less. Therefore, defendant APT can, and is still entitled to, collect the outstanding
obligations of MMIC to PNB and DBP amounting to P22,668.537,770.05, more or less, with
By virtue of laws, a Memorandum of Agreement was drawn between Republic of the Philippines
interest thereon as stipulated in the loan documents from the date of foreclosure up to the time
thru the Surigao Mineral Reservation Board, granted MMIC the exclusive right to explore,
they are fully paid less the proportionate liability of DBP as owner of 87% of the total
develop and exploit nickel, cobalt and other minerals in the Surigao mineral reservation. [1] MMIC
capitalization of MMIC under the FRP. Simply put, DBP shall share in the award of damages to,
is a domestic corporation engaged in mining with respondents Jesus S. Cabarrus, Sr. as
and in obligations of MMIC in proportion to its 87% equity in the total capital stock of MMIC.
President and among its original stockholders.
DISPOSITION OF ARBITER:
MMIC, PNB and DBP executed a Mortgage Trust Agreement [3] whereby MMIC, as mortgagor,
agreed to constitute a mortgage in favor of PNB and DBP as mortgagees, over all MMICs assets, WHEREFORE, premises considered, judgment is hereby rendered:
subject of real estate and chattel mortgage executed by the mortgagor, and additional assets
described and identified, including assets of whatever kind, nature or description, which the 1. Ordering the defendant to pay to the Marinduque Mining and Industrial Corporation, except
mortgagor may acquire whether in substitution of, in replenishment, or in addition thereto. the DBP, the sum of P2,531,635,425.02 with interest thereon at the legal rate of six per cent
(6%) per annumreckoned from August 3, 9, and 24, 1984, pari passu, as and for actual
In August and September 1984, as the various loans and advances made by DBP and PNB to damages. Payment of these actual damages shall be offset by APT from the outstanding and
MMIC had become overdue and since any restructuring program relative to the loans was no unpaid loans of the MMIC with DBP and PNB, which have not been converted into
longer feasible, and in compliance with the directive of PD No. 385, DBP and PNB as mortgagees equity. Should there be any balance due to the MMIC after the offsetting, the same shall be
of MMIC assets, decided to exercise their right to extrajudicially foreclose the mortgages in satisfied from the funds representing the purchase price of the sale of the shares of Island
accordance with the Mortgage Trust Agreement. [10] The foreclosed assets were sold to PNB as Cement Corporation in the amount of P503,000,000.00 held under escrow pursuant to the
the lone bidder and were assigned to 3 newly formed corporations. Escrow Agreement dated April 22, 1988 or to such subsequent escrow agreement that would
supercede [sic] it pursuant to paragraph (9) of the Compromise and Arbitration Agreement;
On February 28, 1985, Jesus S. Cabarrus, Sr., together with the other stockholders of MMIC,
filed a derivative suit against DBP and PNB before the RTC of Makati,for Annulment of 2. Ordering the defendant to pay to the MMIC, except the DBP, the sum of   P13,000,000.00 as
Foreclosures, Specific Performance and Damages. [12] They prayed that the court: (1) annul the and for moral and exemplary damages. Payment of these moral and exemplary damages shall
foreclosure, restore the foreclosed assets to MMIC, and require the banks to account for their be offset by APT from the outstanding and unpaid loans of MMIC with DBP and PNB, which
use and operation in the interim; (2) direct the banks to honor and perform their commitments have not been converted into equity. Should there be any balance due to MMIC after the
under the alleged FRP; and (3) pay moral and exemplary damages, attorneys fees, litigation offsetting, the same shall be satisfied from the funds representing the purchase price of the sale
expenses and costs. of the shares of Island Cement Corporation in the of P503,000,000.00 held under escrow
pursuant to the Escrow Agreement dated April 22, 1988 or to such subsequent escrow
In the course of the trial, private respondents and petitioner APT, as successor of the DBP and
agreement that would supercede [sic] it pursuant to paragraph (9) of the Compromise and
PNBs interest in MMIC, mutually agreed to submit the case to arbitration by entering into a
Arbitration Agreement;
Compromise and Arbitration Agreement. The issues to be submitted for the Committees
resolution shall be: (a) Whether PLAINTIFFS have the capacity or the personality to institute this 3. Ordering the defendant to pay to the plaintiff, Jesus Cabarrus, Sr., the sum
derivative suit in behalf of the MMIC or its directors; (b) Whether or not the actions leading to, of P10,000,000.00, to be satisfied likewise from the funds held under escrow pursuant to the
and including, the PNB-DBP foreclosure of the MMIC assets were proper, valid and in good faith. Escrow Agreement dated April 22, 1988 or to such subsequent escrow agreement that would
[14]
supercede it, pursuant to paragraph (9) of the Compromise and Arbitration Agreement, as and
for moral damages;
This agreement was presented for approval to the trial court and ordered: 1. Substituting PNB
and DBP with the Asset Privatization Trust as party defendant. 2. Approving the Compromise Motions for reconsiderations were filed by both parties, but the same were denied.
and Arbitration Agreement; 3. Approving the Transformation of the reliefs prayed for [by] the
plaintiffs in this case into pure money claims; and 4. The Complaint is hereby DISMISSED. [15] Petitioner countered with an Opposition and Motion to Vacate Judgment. They argue that the
issues submitted for arbitration have been limited to two: (1) propriety of the plaintiffs filing the
Committee finds there is no foreclosure at all was not legally and validly done, the Committee derivative suit and (2) the regularity of the foreclosure proceedings. The arbitration award
holds and so declares that the loans of PNB and DBP to MMIC, for the payment and recovery of sought to be confirmed herein far exceeded the issues submitted and even granted moral
which the void foreclosure sales were undertaken, continue to remain outstanding and damages to one of the herein plaintiffs;
unpaid. Defendant APT as the successor-in-interest of PNB and DBP to the said loans is
therefore entitled and retains the right, to collect the same from MMIC pursuant to and based The trial court confirmed the award of the Arbitration Committee. It handed down its order
on the loan documents signed by MMIC, subject to the legal and valid defenses that the latter denying APTs motion for reconsideration for lack of merit and for having been filed out of
time. The trial court declared that considering that the defendant APT through counsel, officially (2) x x x that the prior rights of the creditors may be prejudiced. Thus, our Supreme Court held
and actually received a copy of the Order of this Court dated November 28, 1994 on December in the case of Evangelista v. Santos, that the stockholders may not directly claim those damages
6, 1994, the Motion for Reconsideration thereof filed by the defendant APT on December 27, for themselves for that would result in the appropriation by, and the distribution among them of
1994, or after the lapse of 21 days, was clearly filed beyond the 15-day reglementary period part of the corporate assets before the dissolution of the corporation and the liquidation of its
prescribed or provided for by law for the filing of an appeal from final orders, resolutions, debts and liabilities, something which cannot be legally done in view of section 16 of the
awards, judgments or decisions of any court in all cases, and by necessary implication for the Corporation Law xxx;
filling of a motion for reconsideration thereof.
(3) the filing of such suits would conflict with the duty of the management to sue for the
Petitioner thereafter filed with the CA a special civil action for certiorari with temporary protection of all concerned;
restraining order and/or preliminary injunction dated February 13, 1996 to annul and declare as
void the Orders of the RTC-Makati dated November 28, 1994 and January 18, 1995 for having (4) it would produce wasteful multiplicity of suits; and
been issued without or in excess of jurisdiction and/or with grave abuse of discretion. [19]
(5) it would involve confusion in a ascertaining the effect of partial recovery by an individual on
Court of Appeals denied due course and dismissed the petition for certiorari. the damages recoverable by the corporation for the same act.[58]

ISSUE: WON award of damages to MMIC is proper. -NOT PROPER. If at all an award was due MMIC, which it was not, the same should have been
given sans deduction, regardless of whether or not the party liable had equity in the
WON award of damages to Jesus Cabarus, SR. is proper. –NOT PROPER. corporation, in view of the doctrine that a corporation has a personality separate and distinct
from its individual stockholders or members. DBPs alleged equity, even if it were indeed 87%,
HELD: did not give it ownership over any corporate property, including the monetary award, its right
over said corporate property being a mere expectancy or inchoate right. [59]Notably, the
1. The arbiters exceeded their authority in awarding damages to MMIC, which is not
stipulation even had the effect of prejudicing the other creditors of MMIC.
impleaded as a party to the derivative suit.
2. The arbiters, likewise, exceeded their authority in awarding moral damages to Jesus
Civil Code No. 9900 filed before the RTC being a derivative suit, MMIC should have been
Cabarrus, Sr.
impleaded as a party. It was not joined as a party plaintiff or party defendant at any stage of
the proceedings. As it is, the award of damages to MMIC, which was not a party before the It is perplexing how the Arbitration Committee can in one breath rule that the case before it is a
Arbitration Committee, is a complete nullity. derivative suit, in which the aggrieved party or the real party in interest is supposedly the MMIC,
and at the same time award moral damages to an individual stockholder.
Settled is the doctrine that in a derivative suit, the corporation is the real party in interest while
the stockholder filing suit for the corporations behalf is only nominal party. The corporation The majority decision of the Arbitration Committee sought to justify its award of moral damages
should be included as a party in the suit. to Jesus S. Cabarrus, Sr. by pointing to the fact that among the assets seized by the
government were assets belonging to Industrial Enterprise Inc. (IEI), of which Cabarrus is the
An individual stockholder is permitted to institute a derivative suit on behalf of the corporation
majority stockholder. It then acknowledge that Cabarrus had already recovered said assets in
wherein he holds stock in order to protect or vindicate corporate rights, whenever the officials of
the RTC, but that he won no more than actual damages. While the Committee cannot possibly
the corporation refuse to sue, or are the ones to be sued or hold the control of the
speak for the RTC, there is no doubt that Jesus S. Cabarrus, Sr., suffered moral damages on
corporation. In such actions, the suing stockholder is regarded as a nominal party, with the
account of that specific foreclosure, damages the Committee believes and so holds, he Jesus S.
corporation as the real party in interest. x x x.[56]
Cabarrus, Sr., may be awarded in this proceeding.[61]
It is a condition sine qua non that the corporation be impleaded as a party because-
Cabarrus cause of action for the seizure of the assets belonging to IEI, of which he is the
x x x. Not only is the corporation an indispensible party, but it is also the present rule that it majority stockholder, having been ventilated in a complaint he previously filed with the RTC,
must be served with process. The reason given is that the judgment must be made binding from which he obtained actual damages, he was barred res judicata from filing a similar case in
upon the corporation and in order that the corporation may get the benefit of the suit and may another court, this time asking for moral damages which he failed to get from the earlier case.
[62]
not bring a subsequent suit against the same defendants for the same cause of action. In other  Worse, private respondents violated the rule against non-forum shopping.
words the corporations must be joined as party because it is its cause of action that is being
It is a basic postulate that is corporation has a personality separate and distinct from its
litigated and because judgment must be a res ajudicata against it.[57]
stockholders.[63] The properties foreclosed belonged to MMIC, not to its stockholders. Hence, if
The reasons given for not allowing direct individual suit are: wrong was committed in the foreclosure, it was done against the corporation. Another reason is
that Jesus S. Cabarrus, Sr. cannot directly claim those damages for himself that would result in
(1) x x x the universally recognized doctrine that a stockholder in a corporation has no title legal the appropriation by, and the distribution to, him part of the corporations assets before the
or equitable to the corporate property; that both of these are in the corporation itself for the dissolution of the corporation and the liquidation of its debts and liabilities. The Arbitration
benefit of the stockholders. In other words, to allow shareholders to sue separately would Committee, therefore, passed upon matters not submitted to it. Moreover, said cause of action
conflict with the separate corporate entity principle; had already been decided in a separate case. It is thus quite patent that the arbitration
committee exceeded the authority granted to it by the parties Compromise and Arbitration
Agreement by awarding moral damages to Jesus S. Cabarrus, Sr.

Atty. Sison, in his separate opinion, likewise expressed befuddlement to the award of moral
damages to Jesus S. Cabarrus, Sr.:

It is clear and it cannot be disputed therefore that based on these stipulated issues,
the parties themselves have agreed that the basic ingredient of the causes of action in this case
is the wrong committed on the corporation  (MMIC) for the alleged illegal foreclosure of its
assets. By agreeing to this stipulation, PLAINTIFFS themselves (Cabarrus, et al.) admit that the
cause of action pertains only to the corporation  (MMIC) and that they are filing this for and in
behalf of MMIC.

Perforce this has to be so because it is the basic rule in Corporation Law that the shareholders
have no title, legal or equitable to the property which is owned by the corporation (13 Am. Jur.
165; Pascual vs. Oresco, 14 Phil. 83). In Ganzon & Sons vs. Register of Deeds, 6 SCRA 373, the
rule has been reiterated that a stockholder is not the co-owner of corporate property. Since the
property or assets foreclosed belongs [sic] to MMIC, the wrong committed, if any, is done
against the corporation. There is therefore no direct injury or direct violation of the rights of
Cabarrus et al. There is no way, legal or equitable, by which Cabarrus et al. could recover
damages in their personal capacities even assuming or just because the foreclosure is improper
or invalid. The Compromise and Arbitration Agreement itself and the elementary principles of
Corporation Law say so. Therefore, I am constrained to dissent from the award of moral
damages to Cabarrus.[64]

From the foregoing discussions, it is evident that, not only did the arbitration committee exceed
its powers or so imperfectly execute them, but also, its findings and conclusions are palpably
devoid of any factual basis and in manifest disregard of the law.

We do not find it necessary to remand this case to the RTC for appropriate action. The pleadings
and memoranda filed with this Court, as well as in the Court of Appeals, raised and extensively
discussed the issues on the merits. Such being the case, there is sufficient basis for us to resolve
the controversy between the parties anchored on the records and the pleadings before us. [65]
JULIAN SIMAN VS SATURNINO LEUS AND SIMEON LEUS ALFREDO N. AGUILA, JR, petitioner, vs. HONORABLE COURT OF APPEALS and
FELICIDAD S. VDA. DE ABROGAR, respondents.
FACTS:
[G.R. No. 127347. November 25, 1999]
Julian Siman, plaintiff, brings action against Saturnino and Simeon Leus, father and son,
defendants, to have the marriage between plaintiff's daughter, Simeona Siman, 18 years of age, DOCTRINE:
and Simeon Leus annulled, and to recover damages. The grounds set forth in the complaint are
"fraud, force, threats, and intimidation." (yan lang talaga yung nakalagay na facts sa full text )  REAL PARTY IN INTEREST is one who would be benefited or injured by the
judgment, or who is entitled to the avails of the suit. This ruling is now embodied in
ISSUE: WON the plaintiff has a right to maintain an action of annulment of marriage of his
Rule 3, 2 of the 1997 Revised Rules of Civil Procedure. Any decision rendered against
daughter. –NO. a person who is not a real party in interest in the case cannot be executed. Hence, a
complaint filed against such a person should be dismissed for failure to state a cause
HELD:
of action.
The father is not the legal representative of the child before the courts.
 Under Art. 1768 of the Civil Code, a partnership has a juridical personality
The right of a parent to maintain an action for the annulment of the marriage of an infant son or separate and distinct from that of each of the partners. The partners cannot
daughter is permitted only when the party in whose behalf it is sought was under the age of be held liable for the obligations of the partnership unless it is shown that the legal
legal consent and such marriage was contracted without the consent of his or her parents. fiction of a different juridical personality is being used for fraudulent, unfair, or illegal
(Marriage Law, sec. 10 [1]; 11 [1].) The consent of the parents to the marriage was not purposes.
necessary since the girl was not under the age of 18 years. (Marriage Law, sec. 7 [3].) In other
words, it is not enough for the plaintiff to allege a cause of action in favor of someone; he must FACTS:
show that it exists in favor of himself. It would certainly be a starting proposition to announce
that a judgment can be procured dissolving a marriage contract without it being disclosed in the Petitioner is the manager of A.C. Aguila & Sons, Co., a partnership engaged in lending
complaint that the alleged injured party is desirous of being released from the bonds of activities. Private respondent and her late husband, Ruben M. Abrogar, were the registered
matrimony. Such a rule would permit a parent to invalidate a marriage without the consent or owners of a house and lot.
knowledge of a party thereto. If it were to obtain, it would prove subversive to social order,
sound policy, and good morals On April 18, 1991, private respondent, with the consent of her late husband, and A.C. Aguila &
Sons, Co., represented by petitioner, entered into a Memorandum of Agreement, which
In the succeeding section of the same law, it is provided that the action to obtain a decree of provided:
nullity of marriage for either of these two causes must be brought "by the injured party." But
here the supposed injured party, the girl, does not institute action nor is it instituted in her (1) That (Second Party) A.C. Aguila & Sons, Co. shall buy the above-described property from
behalf by the father. Yet, the real party in interest is the girl. She must be regarded as a married the Felicidad S. Vda. de Abrogar (First Party) and in consideration of the sum of 200k,
woman until nullity is ascertained and declared by a competent court. By marriage, although
(2) That the first party was given an option to repurchase the said property within a period of
under the age of majority, she has become emancipated.
90 days from the execution of MOA effective April 18, 1991, for the amount P230,000.00;
Nor does the girl need a guardian ad litem  in order to bring suit. (Code of Civil Procedure sec.
(3) That if the first party fail to exercise her option to repurchase the said property within a
115; Marriage Law, sec. 11.) It is only the infant wife who may maintain an action to annul her
period of 90 days, she is obliged to deliver peacefully the possession to the SECOND PARTY
marriage on the grounds alleged in the complaint. It is for her to elect as to whether or not she
within 15 days after the expiration of the said 90 day grace period;
desires the marriage to be declares void.
XXXXX
Considering, therefore, the purpose of the law and construing together the appropriate
provisions of the Civil Code, the Code of Civil Procedure, and the Marriage Law, in order to give (8) Should the FIRST PARTY fail to exercise her option to repurchase the property
effect to them, it results that, where one of the parties to a marriage is over the age of consent within ninety (90) days period above-mentioned, this memorandum of agreement
but yet an infant, the father of this minor, emancipated by marriage, has no right of action, in shall be deemed cancelled and the Deed of Absolute Sale, executed by the parties
himself, to sue for the nullity of such marriage, and the minor daughter does not need his aid in shall be the final contract considered as entered between the parties and the
bringing the suit. Nor does the minor daughter emancipated by marriage need a guardian ad SECOND PARTY shall proceed to transfer ownership of the property above described
litem in order to bring action. (Delpit vs. Young [1899], 51 La. Ann., 923.) to its name free from lines and encumbrances.

On the same day, April 18, 1991, the parties likewise executed a deed of absolute sale, wherein
private respondent, with the consent of her late husband, sold the subject property to A.C.
Aguila & Sons, Co., represented by petitioner, for P200,000.00. In a SPA dated the same day,
private respondent authorized petitioner to cause the cancellation of TCT and the issuance of a
new certificate of title in the name of A.C. Aguila and Sons, Co., in the event she failed to Rule 3, 2 of the Rules of Court of 1964, under which the complaint in this case was filed,
redeem the subject property as provided in the MOA. provided that every action must be prosecuted and defended in the name of the real party in
interest.
Private respondent failed to redeem the property within the 90-day period as provided in the
MOA. Hence, pursuant to the special power of attorney mentioned above, petitioner caused the A real party in interest is one who would be benefited or injured by the judgment, or
cancellation of TCT and the issuance of a new certificate of title in the name of A.C. Aguila and who is entitled to the avails of the suit. [7] This ruling is now emodied in Rule 3, 2 of
Sons, Co. the 1997 Revised Rules of Civil Procedure.  Any decsion rendered against a person
who is not a real party in interest in the case cannot be executed. [8] Hence, a
Private respondent then received a letter from the counsel for A.C. Aguila & Sons, Co., complaint filed against such a person should be dismissed for failure to state a cause
demanding that she vacate the premises . Upon the refusal of private respondent to vacate the of action.[9]
subject premises, A.C. Aguila & Sons, Co. filed an ejectment case against her in the
Metropolitan Trial Court, Branch 76, Marikina. Under Art. 1768 of the Civil Code, a partnership has a juridical personality separate
and distinct from that of each of the partners. The partners cannot be held liable for the
MeTC Ruling: obligations of the partnership unless it is shown that the legal fiction of a different juridical
personality is being used for fraudulent, unfair, or illegal purposes.[10]
 MeTC ruled in favour of A.C. Aguila & Sons, Co. Private respondent appealed first to the RTC,
Branch 163, Pasig, then to the CA, and later to this Court, but she lost in all the cases.  In this case, private respondent has not shown that A.C. Aguila & Sons, Co., as a separate
juridical entity, is being used for fraudulent, unfair, or illegal purposes. Moreover, the title to the
Private respondent then filed a petition for declaration of nullity of a deed of sale with
subject property is in the name of A.C. Aguila & Sons, Co. and the Memorandum of Agreement
RTC, Branch 273, Marikina. She alleged that the signature of her husband on the deed of sale
was executed between private respondent, with the consent of her late husband, and A. C.
was a forgery because he was already dead when the deed was supposed to have been
Aguila & Sons, Co., represented by petitioner. Hence, it is the partnership, not its officers
executed.
or agents, which should be impleaded in any litigation involving property registered
It appears, however, that private respondent had filed a criminal complaint for falsification in its name. A violation of this rule will result in the dismissal of the complaint. [11] We
against petitioner with the Office of the Prosecutor of Quezon City which was dismissed. cannot understand why both the Regional Trial Court and the Court of Appeals
sidestepped this issue when it was squarely raised before them by petitioner.
RTC Ruling:
Our conclusion that petitioner is not the real party in interest against whom this action should be
Ruled in favour of petitioner. prosecuted makes it unnecessary to discuss the other issues raised by him in this appeal.

CA Ruling:

On appeal, the Court of Appeals reversed. It held:

The facts and evidence show that the transaction between plaintiff-appellant and defendant-
appellee is indubitably an equitable mortgage. The real intention of the party is to secure the
payment of debt, now deemed to be repurchase price: the transaction shall then be considered
to be an equitable mortgage.

Being a mortgage, the transaction entered into by the parties is in the nature of a pactum
commissorium which is clearly prohibited by Article 2088 of the New Civil Code. Therefore, the
deed of sale should be declared void as we hereby so declare to be invalid, for being violative of
law.

Petitioner Contention:

Petitioner now contends that: (1) he is not the real party in interest but A.C. Aguila &
Co., against which this case should have been brought; (2) the judgment in the
ejectment case is a bar to the filing of the complaint for declaration of nullity of a deed of sale in
this case; and (3) the contract between A.C. Aguila & Sons, Co. and private respondent is
a pacto de retro  sale and not an equitable mortgage as held by the appellate court.

ISSUE: W/N the petitioner is not the real party in interest but AC Aguila and Co? YES

HELD:
  for the annulment of a) Resolutions No. 330 and No. 2345, b) the January 24, 1992 deed of sale
in favor of Isagani Figuracion, and c) TCT No. 122309, and the payment of damages.
 
 
NATIVIDAD FIGURACION, FILMA F. RABOR and CATHERINE MANALASTAS,
Petitioners. Vs. SPOUSES CRESENCIANO and AMELITA LIBI, Respondents.

G.R. NO. 155688 November 28, 2007  Petitioners filed their own Answer, pointing out that the complaint in Civil Case No. CEB-21193 is
barred by the June 26, 1995 MTC decision in Civil Case No. R-34287, as affirmed by the RTC
DOCTRINE: and CA. They also challenged respondents legal standing to question
the Sangguniang Panlungsod resolutions.
Under Rule 3, Section 2 of the Revised Rules of Court, a real party in interest is defined as 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. Interest within the meaning of the rule means material interest,
an interest in issue and to be affected by the decree, as distinguished from mere RTC Ruling:
interest in the question involved, or a mere incidental interest . The interest of the
party must also be personal and not one based on a desire to vindicate the RTC declared the Resolution Nos. 330 and 2345 of the Sangguniang Panlungsod ng Cebu, Deed
constitutional right of some third and unrelated party . Real interest, on the other hand, of Sale, Amended Deed of Sale, and TCT No. 122309 as null and void.
means a present substantial interest, as distinguished from a mere expectancy or a future,
  
contingent, subordinate, or consequential interest. 
CA Ruling: 
FACTS:
The CA also denied petitioners motion for reconsideration.
Galileo Figuracion was the owner of Lot No. 899-D-2 situated in Cebu City. Sometime in 1948,
the Cebu City government (Cebu City) expropriated Lot No. 899-D-2, consisting of 474 sq. m.
and turned the same into a portion of N. Escario Street, connecting
the Capitol Building to Gorordo Avenue and U.P. Junior College. Cebu City paid P23,700.00 for ISSUE:
Lot No. 899-D-2  and was issued TCT No. 49454.

In Resolution No. 330, the Cebu City Sangguniang Panlungsod approved 1. W/N respondents have the legal capacity to sue?
the reconveyance to Isagani Figuracion, successor-in-interest of Galileo Figuracion, of an unused
portion of Lot No. 899-D-2, designated as Lot No. 899-D-2-A  (subject lot), consisting of 84  
sq. m. On the basis thereof, Cebu City Mayor Osmena  executed in favor of Isagani Figuracion a
deed of sale over the subject lot for the price of P40,000.00.  Petitioner’s Contention: 

Upon resurvey over two years later, it was ascertained that the subject lot actually measures Petitioner claim that as private citizens and as ordinary taxpayers, the respondents have no legal
130 sq. m. Accordingly, the Sangguniang Panlungsod of Cebu City amended Resolution No. 330 capacity to question the reconveyance of Lot No. 899-D-2 by defendants City of Cebu to the
by issuing Resolution No. 2345, approving the reconveyance of 130 sq. m. of Lot No. 899-D-2, private defendants.
and Mayor Osmena executed in favor of IsaganiFiguracion an amended deed of sale
HELD: 
It appearing that herein respondents had been using the subject lot, and refused to vacate it
Both courts are mistaken. They approached the issue from the wrong perspective, in the
despite demand, petitioners, as successors-in-interest of Isagani Figuracion, filed against
process losing sight of three important facts: 
respondents a complaint for unlawful detainer, in the Municipal Trial Court (MTC), Branch
2, Cebu City. First, based on their second amended complaint, what respondents seek is the annulment of
TCT No. 122309, Resolutions No. 330 and 2345, as well as the deed of sale and amended deed
The MTC declared that petitioners are entitled to possession of the subject lot and ordering
of sale of the subject lot between Cebu City and petitioners.
respondents to remove the fence they had constructed.
Second, while respondents are seeking the cancellation of TCT No. 122309, they are not
The MTC decision was affirmed by the RTC (Branch 19), Cebu City and upheld by the CA.
themselves claiming title to or right of possession of the subject lot. It must be emphasized that
Undaunted, respondents filed against petitioners a complaint for easement, praying that they in their second amended complaint, they even abandoned their demand for a right of way over
(respondents) be granted a right of way over the subject lot. However, respondents twice the property.
amended their complaint to implead Cebu City, and shifted to a different cause of action -- that
Finally, the subject lot was part of Lot No. 899-D-2 which Cebu City expropriated for the
is, from one for the establishment of an easement of right of way over the subject lot to one
construction of a city street. 
From the foregoing facts, it is readily apparent that respondents were not the real- the avails of the suit. Interest within the meaning of the rule means material interest,
parties-in-interest to institute Civil Case No. CEB-21193 for  annulment of TCT No. an interest in issue and to be affected by the decree, as distinguished from mere
122309. interest in the question involved, or a mere incidental interest . The interest of the
party must also be personal and not one based on a desire to vindicate the
  constitutional right of some third and unrelated party . Real interest, on the other hand,
means a present substantial interest, as distinguished from a mere expectancy or a future,
In a case for annulment of title, the plaintiff must allege two essential facts: (1) that plaintiff
contingent, subordinate, or consequential interest. 
was the owner of the land, and (2) that the defendant illegally dispossessed the plaintiff of the
property. Absent either of these allegations, the plaintiff is considered not the proper party to The Court stressed in VSC  that real interest means a substantial interest; as distinguished from
cause the cancellation of the title of the defendant.[29]  mere expectancy, or a future, contingent, subordinate, or consequential interest. [37]

In their second amended complaint, respondents as plaintiffs unequivocally alleged:  Applied to the present case, herein respondents are not even lessees of the subject lot; they do
not claim to have been occupying the property in any capacity.  Their sole interest is
5. That when the plaintiff [respondents herein] bought lot no. 899-D-1, they did so in the belief
in the use of the property as access to  Escario Street. Such interest is merely
that they had an outlet to Escario Street through lot no. 899-D-2  owned by defendant City
tangential to any issue regarding the ownership and possession of the property;
of  Cebu  and covered by T.C.T. No. 49454 which is a road lot as shown by the following
hence, it is not sufficient to vest in respondents legal standing to sue for reversion of
annotation on said title xxx. 
the property. If at all, their cause of action is only for an easement of right of way
6. Lot No. 899-D-2 being a road lot, cannot be the subject of sale, as it is outside the commerce over it. This was what they initially sought when they filed their original complaint.
of man xxx.[30] Unfortunately, they abandoned such cause of action when they failed to allege the
same in their Second Amended Complaint.  Under Section 8, Rule 10, Rules of Court,
In their prayer, respondents sought neither ownership nor possession of the subject lot but only an amended complaint supersedes an original one.  The original complaint is deemed
cancellation of the private title of petitioners over the property on the ground that this is part of withdrawn and no longer considered part of the record. [38]
a public road.[31]
Respondents having no real interest in the subject lot under their Second Amended
Clearly, respondents have no interest in the title or possession of Lot No. 899-D-2-A. Complaint, they have no legal personality to file the action for reversion of public
The situation would have been different had respondents maintained their demand land.[39] It is not merely a rule of procedure but a  requirement of law that reversion
for a right of way over the property. But as the records disclose, they abandoned this be instituted in the name of the Republic of the  Philippines. Section 101 of the Public
demand. Respondents, therefore, are not at all the proper parties to file for Land Act is categorical:
annulment of petitioners' title.

 
Section 101. All actions for the reversion to the government of lands of the public domain or
Moreover, in essence and effect, Civil Case No. CEB-21193 is actually for reversion of the improvements thereon shall be instituted by the Solicitor General or the officer acting in his
subject lot, as a portion of Lot No. 899-D-2, to the public domain.  stead, in the proper courts, in the name of the Commonwealth [now Republic] of
the Philippines. 
Reversion is a proceeding by which the State seeks the return of  lands of the public domain or
the improvements thereon through the cancellation of private title erroneously or fraudulently
issued over it.[32] The one crucial element which sets it apart from all other actions involving
possession or title to property is the positive averment in the complaint of state ownership of In fine, the RTC acted without jurisdiction when it entertained the Second Amended Complaint
the property in dispute.[33] of respondents even when the latter was not a real party-in-interest. The February 23, 2000
Decision rendered by the RTC was an utter nullity, without legal effect or binding force
   whatsoever, even upon defendant Cebu City which does not appear on record to have appealed
from it.[40]
The cause of action involved in Civil Case No. CEB-21193 being, in reality, one for
reversion of public land, respondents cannot be considered the proper parties  
therein

In VSC Commercial Enterprises, Inc. v. Court of Appeals ,[35] the Court had occasion to identify
the real party in interest in an action for reversion:

Under Rule 3, Section 2 of the Revised Rules of Court, a real party in interest is defined as the
party who stands to be benefited or injured by the judgment in the suit, or the party entitled to
 The PNP warned that it would take over any media organization that would not follow
“standards set by the government during the state of national emergency.”

On March 3, 2006, exactly one week from the declaration of a state of national emergency and
RANDOLF DAVID, et al. v. GLORIA MACAPAGAL-ARROYO, et al. after all the present petitions had been filed, President Arroyo issued Presidential Proclamation
No. 1021 (PP 1021), declaring that the state of national emergency has ceased to exist and
G.R. Nos. 171396, 171409, 171485, 171483, 171400, 171489 and 171424, 3 May lifting PP 1017. These consolidated petitions for certiorari and prohibition allege that in issuing
2006 PP 1017 and G.O. No. 5, President Arroyo committed grave abuse of discretion. It is contended
that respondent officials of the Government, in their professed efforts to defend and preserve
democratic institutions, are actually trampling upon the very freedom guaranteed and protected
DOCTRINE: by the Constitution. Hence, such issuances are void for being unconstitutional.

Taxpayers, voters, concerned citizens, and legislators may be accorded standing to ISSUE: W/n All the petitioners have legal standing in view of the transcendental importance of
sue, provided that the following requirements are met: (a)the cases involve the issue involved? YES
constitutional issues; (b)for taxpayers, there must be a claim of illegal disbursement
of public funds or that the tax measure is unconstitutional; (c)for voters, there must
be a showing of obvious interest in the validity of the election law in question; (d)for HELD:
concerned citizens, there must be a showing that the issues raised are of
transcendental importance which must be settled early; and (e)for legislators, there All the petitioners have legal standing in view of the transcendental importance of the issue
must be a claim that the official action complained of infringes upon their involved. It has been held that the person who impugns the validity of a statute must have a
prerogatives as legislators. personal and substantial interest in the case such that he has sustained, or will sustain direct
injury as a result. Taxpayers, voters, concerned citizens, and legislators may be accorded
FACTS: standing to sue, provided that the following requirements are met: (a)the cases involve
constitutional issues; (b)for taxpayers, there must be a claim of illegal disbursement of public
funds or that the tax measure is unconstitutional; (c)for voters, there must be a showing of
On February 24, 2006, as the nation celebrated the 20th Anniversary of the EDSA People Power obvious interest in the validity of the election law in question; (d)for concerned citizens, there
I, President Gloria Macapagal-Arroyo, in a move to suppress alleged plans to overthrow the must be a showing that the issues raised are of transcendental importance which must be
government, issued Presidential Proclamation No. 1017 (PP 1017), declaring a state of national settled early; and (e)for legislators, there must be a claim that the official action complained of
emergency. She cited as factual bases for the said issuance the escape of the Magdalo Group infringes upon their prerogatives as legislators.
and their audacious threat of the Magdalo D-Day; the defections in the military, particularly in
the Philippine Marines; and the reproving statements from the communist leaders. On the same
day, she issued General Order No. 5 (G.O. No. 5) setting the standards which the Armed Forces Being a mere procedural technicality, however, the requirement of locus standi may be waived
of the Philippines (AFP) and the Philippine National Police (PNP) should follow in the suppression by the Court in the exercise of its discretion. The question of locus standi is but corollary to the
and prevention of acts of lawless violence. The following were considered as additional factual bigger question of proper exercise of judicial power. Undoubtedly, the validity of PP No. 1017
bases for the issuance of PP 1017 and G.O. No. 5: the bombing of telecommunication towers and G.O. No. 5 is a judicial question which is of paramount importance to the Filipino people. In
and cell sites in Bulacan and Bataan; the raid of an army outpost in Benguet resulting in the view of the transcendental importance of this issue, all the petitioners are declared to have locus
death of three soldiers; and the directive of the Communist Party of the Philippines ordering its standi.
front organizations to join 5,000 Metro Manila radicals and 25,000 more from the provinces in
mass protests. from Kiong Notes:

 G.R. No. 171396, particularly David and Llamas – alleged "direct injury" resulting
Immediately, the Office of the President announced the cancellation of all programs and from "illegal arrest" and "unlawful search" committed by police operatives pursuant to
activities related to the 20th People Power I anniversary celebration. It revoked permits to hold PP 1017, with locus standi
rallies. Members of the Kilusang Mayo Uno (KMU) and the National Federation of Labor Unions-
Kilusang Mayo Uno (NAFLU-KMU), who marched from various parts of Metro Manila to converge  G.R. No. 171485, the opposition Congressmen alleged there was usurpation of
at the EDSA Shrine, were violently dispersed by anti-riot police. Professor Randolf David, legislative powers. They also raised the issue of whether or not the concurrence of
Akbayan partylist president Ronald Llamas, and members of the KMU and NAFLU-KMU were Congress is necessary whenever the alarming powers incident to Martial Law are
arrested without a warrant. In the early morning of February 25, 2006, operatives of the used, with locus standi. Moreover, it is in the interest of justice that those affected
Criminal Investigation and Detection Group (CIDG) raided the Daily Tribune offices in Manila and by PP 1017 can be represented by their Congressmen in bringing to the attention of
confiscated news stories, documents, pictures, and mock-ups of the Saturday issue. Policemen the Court the alleged violations of their basic rights.
were stationed inside the editorial and business offices, as well as outside the building. A few
minutes after the search and seizure at the Daily Tribune offices, the police surrounded the  G.R. No. 171400, that when the issue concerns a public right, it is sufficient that the
premises of another pro-opposition paper, Malaya, and its sister publication, the tabloid Abante. petitioner is a citizen and has an interest in the execution of the laws.
 G.R. No. 171483, KMU‘s assertion that PP 1017 and G.O. No. 5 violated its right to
peaceful assembly may be deemed sufficient to give it legal standing, with locus
standi.

 G.R. No. 171489, petitioners, Cadiz et al., who are national officers of the
Integrated Bar of the Philippines (IBP) have no legal standing, having failed to
allege any direct or potential injury which the IBP as an institution or its members may
suffer as a consequence of the issuance of PP No. 1017 and G.O. No. 5. The mere
invocation by the IBP of its duty to preserve the rule of law and nothing more, while
undoubtedly true, is not sufficient to clothe it with standing in this case. This is too
general an interest which is shared by other groups and the whole citizenry. However,
in view of the transcendental importance of the issue, this Court declares that
petitioner have locus standi.
 G.R. No. 171424, Loren Legarda has no personality as a taxpayer to file the
instant petition as there are no allegations of illegal disbursement of public funds. The
fact that she is a former Senator is of no consequence. She can no longer sue as a
legislator on the allegation that her prerogatives as a lawmaker have been impaired
by PP 1017 and G.O. No. 5. Her claim that she is a media personality will not likewise
aid her because there was no showing that the enforcement of these issuances
prevented her from pursuing her occupation. But considering once more the
transcendental importance of the issue involved, this Court may relax the standing
rules, with locus standi.