ILAYA TEXTILE MARKET, INC., PLAINTIFF-APPELLANT, VS. FELIX OCAMPO, INC., MARIA YAP, HON. JOSE B. HERRERA, THE REGISTER OF DEEDS OF MANILA AND THE SHERIFF OF MANILA AND HIS DEPUT…

Appeal from an order of dismissal of the Court of First Instance
of Manila.  The factual background is
this:

The defendants are Felix Ocampo, Inc. –
hereinafter referred to as Ocampo – Maria Yap – later
referred to as Mrs. Yap – the Honorable Jose B. Herrera, as Judge of the
Municipal Court of Manila, the Register of Deeds of Manila, the Sheriff thereof
and his deputies.

On February 16, 1967,
plaintiff, Ilaya Textile Market, Inc., commenced this
action, in the Court of First Instance of Manila, in which it was docketed as
Civil Case No. 68488 and assigned to Branch XI of said Court.  In its complaint herein, plaintiff has set up
three (3) causes of action.

Plaintiff’s allegations under its first cause of action are,
substantially, as follows:  Ocampo is the registered owner of two (2) parcels of land
situated at Ilaya street,
Tondo, Manila
and covered by Transfer Certificate of Title No. 36389 of Manila.  Sometime in November, plaintiff and Ocampo entered into a contract, whereby Ocampo
leased said land, for ten (10) years, beginning from December 1, 1962, to the plaintiff, who, aside
from the payment of rentals, bound itself to construct, on the leased premises,
a 3-storey semi-concrete building worth not less than P150,000.00.  To conceal the true nature of said agreement,
Ocampo required, however, that the deed of lease be
placed in the name of Mrs. Yap as lessee – although the contract therein set
forth is purely simulated – and that the agreement between Ocampo
and the plaintiff be made to appear as a contract of sublease between Mrs. Yap
and the plaintiff.  In consideration of
this, Ocampo, moreover, collected the sum of
P75,000.00 from the plaintiff.  In fact,
on December 1, 1952, Ocampo gave its written
conformity to the so-called contract of sublease between Mrs. Yap and the
plaintiff, which provided that all rights and obligations of Mrs. Yap, as
lessee under her simulated contract with Ocampo –
particularly those referring to the construction of the building and the
payment of monthly rentals for the use of Ocampo’s
land – were transferred to and assumed by the plaintiff.  Accordingly, plaintiff constructed the
building known as Ilaya Textile Market Building on
said land of Ocampo, with the latter’s full
knowledge, consent, conformity, approval and active participation, as well as
under its direct supervision, in accordance with plans, details and
specifications which showed that plaintiff is the owner of the Building and
were sub­mitted to and approved by Ocampo.  Plaintiff faithfully complied, also, with all
other terms and conditions of the so-called sublease contract and plaintiff’s
agreement with Ocampo, one of which is that plaintiff
would pay the corresponding monthly rentals to Mrs. Yap, who would, in turn,
deliver the same to Ocampo.

Acting in conspiracy with each other, Ocampo
and Mrs. Yap caused a memorandum of the “lease” contract between
them, including the obligation to construct the building aforementioned, to be
annotated on the back of TCT No. 36387. 
Then Mrs. Yap purportedly failed to deliver to Ocampo
the rentals from July 1, to December, 1965, amounting to P30,000.00, which
plaintiff had given to her, for delivery to Ocampo,
and, invoking this supposed default of Mrs. Yap, on November 26, 1965, Ocampo asked the Court of First Instance of Manila, to
order that said building be recorded and inscribed, in TCT No. 36387, as its
property.  Although aware that the same
belongs to the plaintiff, Ocampo did not cause the
latter to be notified of said petition, in violation of section 112 of Act No.
496, requiring notice to all parties in interest.  Neither did Mrs. Yap oppose said petition,
which was accordingly granted in an order, on December 7, 1965 and registered on the same date. Said
order is null and void, because of lack of previous notice to the plaintiff and
because there is a serious dispute on the ownership of the Market
Building, which renders section 112
of Act No. 496 inapplicable.

On December 29, 1965,
Ocampo, likewise, filed Civil Case No. 14425 of the
City Court, for ejectment against Mrs. Yap, as well
as to recover back rentals, apart from taxes, damages and attorney’s fees
aggregating P14,976.86, which is beyond the jurisdiction of the City
Court.  Subsequently, the latter ordered
that summons be made by publication, upon the ground that, according to Ocampo, the whereabouts of Mrs. Yap could not be
ascertained, but that summons is null and void, an ejectment
case being an action in persona, for which personal service of
summons, within the state of the forum, is essential to the acquisition of
jurisdiction over the person of the defendant. 
Hence, the proceedings had in said case No. 14425, including the
decision therein rendered are null and void. 
In furtherance, evidently, of the conspiracy between Ocampo
and Mrs. Yap, the latter waived, in effect, her right to assail the validity of
said proceedings upon the ground of lack of jurisdiction over her person, by
filing, on March 10, 1966, a motion to dismiss the ejectment
case, upon a ground other than said lack of jurisdiction over her person and
the subject-matter of the case, which was denied, on July 8, 1966.

Having been granted leave to intervene in said case No. 14425,
plaintiff filed therein, on June 6,
1966, its complaint in intervention, against Ocampo
and Mrs. Yap.  On November 14, 1966, the City Court rendered a
decision against Mrs. Yap by default sentencing her inter alia to vacate the entire premises of the building
in question.  On November 19, 1966, Ocampo moved for the execution of this decision, but, on
subsequent motion of Ocampo, and before said writ was
signed, or on November 29, 1966, the City Court amended the dispositive
part of said decision so as to be directed, not only against Mrs. Yap, but,
also, against “her assigns and successors in interest and all persons
claiming under her.” On January 6, 1967, plaintiff filed a motion to
dismiss said case No. 14425, upon the ground that the court has no jurisdiction
over its subject-matter, because a determination of the ownership over the
Market Building is essential to the disposition of the case and because Ocampo seeks to recover almost P15,000.00, apart from
the rentals or compensation for the use and occupation of its land. This motion
was denied in an order of February 10, 1967, which, moreover, dismissed
plaintiff’s complaint in intervention and reiterated the decision of November
14, 1966, aside from making a finding to the effect that the decision ag­ainst
Mrs. Yap is applicable to and enforceable against the plaintiff, the latter
being merely her sublessee.  For reasons already adverted to, that order
is null and void.

Besides, the ten-year period of the lease contract bet­ween Ocampo and the plaintiff has not expired, as yet, and still
has six (6), years to go, plaintiff not having violated any of the terms and
conditions of said contract.  However, Ocampo and Mrs. Yap have conspired and continue to conspire
to de­prive the plaintiff of its lawful ownership over the Market Build­ing and
its interest, as lessee of Ocampo’s land, by maliciously
and intentionally making it appear that Mrs. Yap had not turned over to Ocampo the sum of P30,000.00, given and delivered to her by
plaintiff, as rentals from July 1st to December, 1965, in order to have a
ground for rescinding the simulated sublease contract between Mrs. Yap and
plaintiff and paving the way for plaintiff’s ejectment
from said land.  Unless a writ of in­junction
be issued, restraining respondent Judge from granting Ocampo’s
motion for execution, dated February 15, 1967, a writ of execution of the
decision rendered against Mrs. Yap will be issued and enforced against the
plaintiff herein, to the latter’s irreparable injury.  Plaintiff is entitled to the relief prayed
for, which consists, in part, in restraining the defendants from committing or
procuring the commission of the acts already mentioned, and is ready and
willing to file the requisite bond.

Plaintiff alleged, also, by way of second alternative cause of
action, that, granting arguendo that the
contract of lease between Ocampo and Mrs. Yap is
valid, still their aforementioned acts constitute a clear violation of
plaintiff’s rights, as owner of the Market Building and lessee of Ocampo’s land, by cession or assignment, to the plaintiff,
of the rights of Mrs. Yap, and that plaintiff had, time and again, tendered
payment of the amount of the rentals allegedly not satisfied by Mrs. Yap, but Ocampo has unjustifiably and unreasonably refused to accept
said payment. Plaintiff further averred, as third cause of action, that the
acts of Ocampo and Mrs. Yap constitute a clear
attempt to circumvent the provisions of Art. 1678 of the Civil Code of the
Philippines; that Ocampo and Mrs. Yap had conspired
and confabulated to deprive the plaintiff of the Market Building, as well as
deliberately deceived the Court of First Instance of Manila and the City Court
thereof “into believing, not only that the plaintiff is, not the
owner” of the Market Building, but, also, that it is not the lessee of the
land on which it stands; and that Ocampo and Mrs. Yap
should, accordingly, be sentenced to pay to the plaintiff, not only actual
damages and attorney’s fees, but, also, exemplary damages.

Based upon the foregoing allegations, plaintiff prayed, under its
first cause of action, that said writ of preliminary injunction be issued,
restraining respondent Judge from hearing and granting Ocampo’s
motion for execution of February 15, 1967, or, in the event that a writ of
execution be issued, from enforcing the same against the plaintiff; that, after
due hearing, said injunction be made permanent; that the order of the Court of
First Instance of Manila, of December 7, 1965, in the land registration
proceedings, declaring that Ocampo is the owner of
the Market Building, and the decision of the City Court in the ejectment case, dated November 14, 1965, as well as its
order of February 10, 1966; denying plaintiff’s motion to dismiss, be declared
null and void because of denial of due process and lack of jurisdiction; that Ocampo and Mrs. Yap be ordered, jointly and severally, to
return to the plaintiff the sum of P75,000.00, with interest thereon; that Ocampo be ordered to comply with its Obligations, in
accordance with its agreement with the plaintiff, as embodied in the so-called
sublease contract between plaintiff and Mrs. Yap; that the Register of Deeds of
Manila be ordered to annotate, or cause the annota­tion, on TCT No. 36387 of
plaintiff’s title as owner of the Market Building in question; and that the
so-called lease contract between Ocampo and Mrs. Yap
be declared null and void.

Under its second cause of action, it was prayed that plaintiff be
held to be the lessee of the land in question, by cession or assignment thereto
of the corresponding rights, and that Ocampo be
ordered and compelled to accept the ren­tals for the period beginning from January 1, 1966.  Under the third cause of action, plaintiff
prayed that the provisions of Art. 1678 of the Civil Code be enforced and that Ocampo, as well as Mrs. Yap, be sentenced to pay damages.

Upon the filing of plaintiff’s complaint, the Court of First
Instance of Manila issued the writ of preliminary injunc­tion therein prayed
for.  Soon thereafter, Ocampo moved for the dissolution of said writ and the
dismissal of the complaint, upon the ground that the same is insufficient in
form and in substance; that the continuance of the injunction would cause great
damage to the movant; that the plaintiff’s bond is
grossly insufficient; that the court has no jurisdiction over the nature of the
action; and that there is another action pending between the same parties and
for the same cause.  Despite plaintiff’s
opposition thereto, this motion was, on April
8, 1967, granted, the writ of preliminary injunction dissolved and
the case dis­missed.  A reconsideration
of the order to this effect having been denied on May 26, 1967, plaintiff interposed the present appeal.

The orders appealed from do not state the reasons relied upon in
support thereof.  Upon the other hand, Ocampo’s motion to dissolve the writ of preliminary
injunction and to dismiss the complaint is predicated upon the theory: (1) that
the complaint is insufficient in form and in substance, because true copies of
the judgment and orders therein assailed have not been attached to said
pleading and Branch XI of the Court of First Instance of Manila – to which the
present case had been assigned – has no jurisdiction to annul the order,
issued, by Branch IV thereof, on December 7, 1965, in the land registration
case, apart from the circumstance that plaintiff had appealed, to the same
court, from the decision of the City Court in the ejectment
case; (2) that plaintiff’s individual stockholders – who, according to Ocampo, are indispensable parties – have not been impleaded in the case at bar; (3) that the continuance of
the injunction would cause grave damage to the movant,
because plaintiff is bound to pay a monthly rental of P6,500.00, which was not
satisfied since January 1, 1966, and aggregated P97,500.00, at the time of the
filing of the motion to dismiss, to which sum the rentals accru­ing thereafter
should be added; (4) that plaintiff’s injunction bond of P10,000.00 is grossly
insufficient to fully indemnify the movant; (5) that
said Branch XI of the Court of First Instance of Manila has no jurisdiction over
the subject-matter of the present case, insofar as the same seeks to annul an
order issued by another branch of the same court; and (6) that the issues in
this case are identical to those litigated in the ejectment
case, which has been appealed to the same court, and may have been assigned to
another branch thereof.

None of these grounds justifies the orders appealed from.  The issue in the ejectment
case, insofar as plaintiff herein is concerned, is a procedural one – whether
the City Court could decide it without passing upon the question whether
plaintiff had ceased to be the owner of its Market Building, which is beyond
the jurisdiction of said court – whereas the case at bar involves the merits
of that question, namely, whether plaintiff is still the owner of such
building.  Similarly, the issue in
the land registration case is, likewise, one of procedure or jurisdiction –
whether the court may, under the provisions of section 112 of Act No. 496, pass
upon the question of ownership over said building, which is claimed, on the one
hand, by Ocampo and, on the other, by plaintiff
herein.

Needless to say, the alleged simulation of the lease contract
between Ocampo and Mrs. Yap, the question whether
there had been a direct contract of lease between Ocampo
and plaintiff herein, whether Ocampo and Mrs. Yap had
illegally and fraudulently conspired to deprive the plaintiff of his title to
the Market Building, and, for this purpose, made it appear falsely that Mrs.
Yap had not turned over to Ocampo the rentals paid to
her by the plaintiff, in order to clear the way for the inscription, in TCT No.
36387 of Manila, of Ocampo’s alleged title to said
building, and for plaintiff’s ejectment therefrom, are obviously not susceptible of determination,
either in the ejectment case or in the land registration
case, pursuant to section 112 of Act 496.

As regards the great damage caused to Ocampo
by the issuance of the writ of preliminary injunction and the alleged
inadequacy of plaintiff’s bond therefor, it is
obvious that the lower court should have merely required the plaintiff to
increase the amount of said bond to such sum as may be deemed proper to protect
sufficiently the rights of Ocampo.  Then, too, it is manifest that plaintiff’s
stockholders are not indispensable parties in the case at bar, their interests
being amply repre­sented by plaintiff herein. 
Again, if Branch XI of the court can­not annul an order of Branch IV or
other branches of the same court, what the trial court should have done was,
not to dis­miss this case, but to order that the same be assigned to the branch
handling the land registration case and/or the appeal in the ejectment case. 
After all, plaintiff herein had nothing to do with the assignment of
cases among the different branches of the Court of First Instance of Manila,
and it is unfair to de­prive him of the right to the relief prayed for in its
complaint, in consequence, merely, of the assignment thereof, made by somebody
else, to a branch other than that handling the land registration case or the
appeal in the ejectment case.

Lastly, plaintiff’s failure to attach to its complaint in this
case certified copies of the judgment and orders assailed therein constituted,
at most, an insubstantial defect of form, insofar as the motion to dismiss is
concerned, the same hav­ing hypothetically admitted the truth of the
allegations of said complaint. Considering that the Rules of Court should be
con­strued liberally in order to promote the ends of justice, the lower court
should have merely ordered the plaintiff to submit the requisite copies,
instead of dismissing the case.^[1]

WHEREFORE, the orders appealed from, dated April 8, and May 26, 1967, are hereby set aside
and this case is re­manded to the lower court for further proceedings, with the
costs of this instance against private defendant-appellee,
Felix Ocampo, Inc.

IT IS SO ORDERED.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro,
Fernando, Teehankee, Barredo,
and Villamor,
JJ., concur.

^[1] Lazatin v. Kapunan,
L-29894, Mar. 28, 1969; Heirs of Castro v. Bustos,
L-25913, Feb. 28, 1969; Clorox Co. v. Dir. of Patents, L-19531, Aug. 10,
1967; Arches v. Bellosillo, L-23534, May 16,
1967; Torres v. Caluag, L-20906, July 30,1966;
Luzon Stevedoring Corp. v. CIR, L-17411, 18681,18683, Dec. 31,1965; Quibuyen v. Court of Appeals, L-16854, Dec. 26,1963;
Urbayan v. Caltex
(Phil.), L-15379, Aug. 31, 1962; Ronquillo v. Marasigan, L-11621, May 31, 1962; Perez v. Evite, L-16003, Mar. 29, 1961; McEntee
v. Manotok, L-14968, Oct. 27, 1961; Castro v.
De los Reyes, L-14970, July 30, 1960; Blanco v.
Bernabe, 63 Phil. 124.