SECTION 14 RULE 3

PHILIPPINE CHARTER INSURANCE CORPORATION - versus - EXPLORER

MARITIME CO., LTD.,

On March 22, 1995, petitioner Philippine Charter Insurance Corporation (PCIC), as

insurer-subrogee, filed with the RTC of Manila a Complaint against respondents, to wit: the
unknown owner of the vessel M/V Explorer (common carrier), Wallem Philippines
Shipping, Inc. (ship agent), Asian Terminals, Inc. (arrastre), and Foremost International
Port Services, Inc. (broker). PCIC sought to recover from the respondents the sum
of P342,605.50, allegedly representing the value of lost or damaged shipment paid to the
insured, interest and attorneys fees. 
 
On December 5, 2000, respondent common carrier, the Unknown Owner of the
vessel M/V Explorer, and Wallem Philippines Shipping, Inc. filed a Motion to Dismiss on
the ground that PCIC failed to prosecute its action for an unreasonable length of
time. PCIC allegedly filed its Opposition, claiming that the trial court has not yet acted on
its Motion to Disclose which it purportedly filed on November 19, 1997. In said motion,
PCIC supposedly prayed for the trial court to order respondent Wallem Philippines
Shipping, Inc. to disclose the true identity and whereabouts of defendant Unknown Owner
of the Vessel M/V Explorer.
 
On February 14, 2001, the trial court issued an Order dismissing Civil Case No. 95-
73340 for failure of petitioner to prosecute for an unreasonable length of time.  

Thus, PCIC filed a Motion for Reconsideration

On May 21, 2003, PCIC, through new counsel, appealed to the Court of Appeals. On
July 20, 2006, the Court of Appeals issued its Resolution [3] denying PCICs Motion for
Reconsideration.
 
Hence, this Petition for Review on Certiorari.

RULING: We disagree. Respondent Explorer Maritime Co., Ltd., which was then

referred to as the Unknown Owner of the vessel M/V Explorer, had already been properly
impleaded pursuant to Section 14, Rule 3 of the Rules of Court, which provides:
 
Section 14. Unknown identity or name of defendant Whenever the
identity or name of a defendant is unknown, he may be sued as the unknown
owner, heir, devisee, or by such other designation as the case may require;
when his identity or true name is discovered, the pleading must be amended
accordingly.
SECTION 15 RULE 3
LAPANDAY AGRICULTURAL & DEVELOPMENT CORPORATION vs. MAXIMO
ESTITA

The instant petition involves a vast tract of an agricultural land with an area of 716 hectares
located at Malalag, Davao del Sur. On July 28, 1924, this land was leased by the Government to
Orval Hughes for a period of twenty-five (25) years. The lease actually expired on May 25,
1952, it having been extended for three (3) years. Orval Hughes died and was survived by his
five (5) heirs who then filed their Sales Application with the Bureau of Lands. Teodulo Tocao, et
al., filed a protest against the sales application.

On August 20, 1957, the Office of the President gave due course to the applications to cover only
317 hectares at 63 hectares per heir as per OCT No. P-4712 but awarded 399 hectares to 133
protesters [led by Teodulo Tocao] at three (3) hectares each.

On September 17, 1981, the Ministry of Natural Resources issued an Order implementing said
decision (Annex N, Rollo, pp. 160-164). However, the 133 petitioners listed in the said Order
were not in possession of the land allotted to them. So, they formed the Malalag Land Petitioners
Association, Inc. (The Association) headed by one Cecilio R. Mangubat Sr.

On December 12, 1991, the association, through its president Mr. Mangubat, sent a letter to the
management of Lapanday Group of Companies, Inc. manifesting that they were no longer
interested in the government grant under the Order of the Ministry of Natural Resources and
offered to transfer and waive whatever interest they have over the subject land for a monetary
consideration (Annex O, Rollo, p. 165).

Mr. Mangubat was the first to relinquish his right

It therefore came as a surprise when, on January 17, 1995, the individual respondents filed
[against Lapanday and/or L.S. Ventures, Inc., the Heirs of Orval Hughes, the DENR/COSLAP
and Cecilio Mangubat, Sr.] the following cases: forcible entry, reinstatement, nullification of
affidavits of quitclaims, relinquishment, waiver and any other documents on disposition of lands
before the Provincial Agrarian Reform Adjudication Board (PARAD) of Digos, Davao, del Sur.

Petitioner [Lapanday Agricultural & Development Corporation] opposed said actions for being
factually and legally baseless, there being no entity by the name of Lapanday and L.S.
Ventures Inc. which has agricultural operation in Davao del Sur. The fact is that said
company had already merged with Lapanday Agricultural and Development Corporation.

RULING: Petitioners filing of an Answer has thereby cured whatever jurisdictional defect it
now raises. As we have said time and again, the active participation of a party in a case pending
against him before a court or a quasi judicial body, is tantamount to a recognition of that courts
or bodys jurisdiction and a willingness to abide by the resolution of the case and will bar said
party from later on impugning the courts or bodys jurisdiction.[16]
But even assuming, in gratia argumenti, that Lapanday does not have a juridical personality,
it may nonetheless be sued under such a name considering that respondents commonly know
petitioner by the name Lapanday Group of Companies, as shown in their alleged letter of intent
to relinquish their rights over the subject land. [17] This brings to mind Section 15, Rule 3, of the
1997 Rules of Civil Procedure, which reads:

SEC. 15. Entity without juridical personality as defendant. - When two or more persons
not organized as an entity with juridical personality enter into a transaction, they may be
sued under the name by which they are generally or commonly known (Emphasis added).

Aware of the hopelessness of its cause, petitioner invariably posits that the herein
respondents are not real parties-in-interest and are bereft of any legal personality to file and
initiate the complaint for forcible entry, etc. before the office of the Provincial Agrarian Reform
Adjudicator of Digos, Davao del Sur because they are not tenant-tillers of the land in dispute.
Consequently, so petitioner argues, respondents are not entitled to be restored thereto.
Petitioners posture cannot hold water.
SECTION 16 RULE 3
PACIFIC REHOUSE CORPORATION v. JOVEN L. NGO
On February 17, 1994, petitioner Pacific Rehouse Corporation (petitioner) entered into a
Deed of Conditional Sale6 with Benjamin G. Bautista (Bautista) for the purchase of a 52,341-
square meter parcel of land located in Imus, Cavite
for a total consideration of P7,327,740.00.
petitioner was to make a down payment of P2,198,322.00 upon its execution,
despite receipt of payment in the total amount of P6,598,322.00 and repeated offers to pay
the balance in full, Bautista failed and refused to comply with his obligation to execute the
corresponding deed of absolute sale and deliver the certificate of title
petitioner filed a complaint9 for specific performance and damages against Bautista,
docketed as Civil Case No. 2031-08,
Bautista's counsel filed a Manifestation and Notice of Death 14informing the RTC that
Bautista had died
Thus, in an Order15 dated May 19, 2009, the RTC directed Bautista's counsel to substitute
the latter's heirs and/or representatives in the action pursuant to Section 16, Rule 3 of the Rules
of Court. Unfortunately, said counsel failed to comply due to lack of personal knowledge of the
identities of the heirs of Bautista and their respective residences.16
On the other hand, petitioner manifested that it had located Bautista's surviving spouse,
Rosita Bautista
Thereafter, respondent also filed on December 2, 2011 a petition for certiorari51 before the
CA, claiming that the following orders of the RTC were issued without or in excess of its
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction: (a)
Order dated February 24, 2010 initially denying the consolidation of Civil Case No. 2031-
08 and LRC Case No. 1117-09; (b) Order dated September 20, 2010 reinstating Civil Case No.
2031-08; (c) April 7, 2011 Omnibus Order consolidating Civil Case No. 2031-08 and LRC
Case No. 1117-09 and ordering the petitioner to procure the appointment of an executor or
administrator for the estate of Bautista; (d) Order dated September 30, 2011 upholding the April
7, 2011 Omnibus Order upon motion for reconsideration, and (e) the Notice of Hearing dated
September 12, 2011 in Sp. Proc. Case No. 1075-11.

RULING: The petition is meritorious.

Section 16, Rule 3 of the Rules of Court governs the rule on substitution in case of death of
any of the parties to a pending suit.

SEC. 16. Death of party; duty of counsel. - Whenever a party to a pending action dies, and
the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court
within thirty (30) days after such death of the fact thereof, and to give the name and
address of his legal representative or representatives. Failure of counsel to comply with this
duty shall be a ground for disciplinary action.
The heirs of the deceased may be allowed to be substituted for the deceased, without requiring
the appointment of an executor or administrator and the court may appoint a guardian ad litem
for the minor heirs.

The court shall forthwith order said legal representative or representatives to appear and be
substituted within a period of thirty (30) days from notice.

If no legal representative is named by the counsel for the deceased party, or if the one so named
shall fail to appear within the specified period, the court may order the opposing party, within a
specified time, to procure the appointment of an executor or administrator for the estate of the
deceased and the latter shall immediately appear for and on behalf of the deceased. The court
charges in procuring such appointment, if defrayed by the opposing party, may be recovered as
costs. (Emphasis and underscoring supplied)cralawred
Section 16, Rule 3 of the Rules of Court allows the substitution of a party-litigant who dies
during the pendency of a case by his heirs, provided that the claim subject of said case is not
extinguished by his death. As early as in Bonilla v. Barcena,58 the Court has settled that if the
claim in an action affects property and property rights, then the action survives the death of a
party-litigant, viz:

The question as to whether an action survives or not depends on the nature of the action and the
damage sued for. In the causes of action which survive the wrong complained affects
primarily and principally property and property rights, the injuries to the person being
merely incidental, while in the causes of action which do not survive the injury complained of is
to the person, the property and rights of property affected being incidental. x x x.59 

In the instant case, although the CA correctly pointed out that Civil Case No. 2031-08 involves a
complaint for specific performance and damages, a closer perusal of petitioner's complaint
reveals that it actually prays for, inter alia, the delivery of ownership of the subject land through
Bautista's execution of a deed of sale and the turnover of TCT No. T-800 in its favor. This shows
that the primary objective and nature of Civil Case No. 2031-08 is to recover the subject
property itself and thus, is deemed to be a real action.60
SECTION 16 RULE 3
SPOUSES AMADO O. IBAÑEZ and ESTHER R. IBAÑEZ, vs. JAMES HARPER 

Sometime in October 1996, spouses Amado and Esther Ibañez (spouses Ibañez) borrowed from
Francisco E. Muñoz, Sr. (Francisco), Consuelo Estrada (Consuelo) and Ma. Consuelo E. Muñoz
(Ma. Consuelo) the amount of ₱1,300,000, payable in three months, with interest at the rate of
3% a month.7

On October 14, 1996, the spouses Ibanez issued a Promissory Note 8 binding themselves jointly
and severally to pay Ma. Consuelo and Consuelo the loan amount with interest

Upon default of three (3) monthly installments when due, all the other installments shall become
due and payable. Interest not paid when due shall be added to, and become part of the principal
and shall likewise bear interest at the same rate, compounded monthly.9

As security, on October 1 7, 1996, the spouses Ibañez executed a Deed of Real Estate
Mortgage10 in favor of Ma. Consuelo and Consuelo over a parcel of land and its improvements
covered by Transfer of Certificate Title (TCT) No. 202978. The mortgage contained the same
terms as the promissory note. It further stipulated that Ma. Consuelo and Consuelo shall have the
right to immediately foreclose the mortgage upon the happening of the following events: (1)
filing by the mortgagor of any petition for insolvency or suspension of payment; and/or (2)
failure of the mortgagor to perform or comply with any covenant, agreement, term or condition
of the mortgage.11

On September 23, 1997, alleging that the conditions of the mortgage have been violated since
November 17, 1996 and that all check payments were dishonored by the drawee, Ma. Consuelo
and Consuelo applied for foreclosure of the real estate mortgage.12

On December 8, 1997, the spouses Ibañez filed in the RTC of Manila a Complaint 13 for
injunction and damages with prayers for writ of preliminary injunction and temporary restraining
order against Francisco, Ma. Consuelo, Consuelo, the Clerk of Court and Ex-Officio Sheriff,
Sheriff-in-Charge and Register of Deeds of the City of Manila. Docketed as Civil Case No. 97-
86454, the Complaint alleged that there is no reason to proceed with the foreclosure because the
real estate mortgage was novated.14 They prayed that the public auction of the property be
enjoined and that Francisco, Ma. Consuelo and Consuelo be held liable for actual and
compensatory, moral and exemplary damages, as well as attorney's fees and costs of suit.15

On December 12, 1997, the spouses Ibañez filed an Amended Complaint. 16 They alleged that the
public auction was conducted, with Francisco, Ma. Consuelo and Consuelo as the highest
bidders17 and prayed that the Ex-Officio Sheriff and the Sheriff-in-Charge be enjoined from
executing the certificate of sale in favor of Francisco, Ma. Consuelo and Consuelo. In the event
the certificate of sale is already issued, they alternatively prayed for that the Register of Deeds of
Manila be enjoined from registering the certificate of sale.18

On December 16, 1997, the RTC issued a status quo order

RULING: We now resolve whether Francisco's heirs have validly substituted him as parties
in the case.

Section 16, Rule 3 of the Revised Rules of Court provides:

Sec. 16. Death of party; duty of counsel. - Whenever a party to a pending action dies, and the
claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within
thirty (30) days after such death of the fact thereof, and to give the name and address of his legal
representative or representatives. Failure of counsel to comply with this duty shall be a ground
for disciplinary action.

The heirs of the deceased may be allowed to be substituted for the deceased, without requiring
the appointment of an executor or administrator and the court may appoint a guardian ad
litem for the minor heirs.

The court shall forthwith order said legal representative or representatives to appear and be
substituted within a period of thirty (30) days from notice.1âwphi1

If no legal representative is named by the counsel for the deceased party, or if the one so named
shall fail to appear within the specified period, the court may order the opposing party, within a
specified time, to procure the appointment of an executor or administrator for the estate of the
deceased and the latter shall immediately appear for and on behalf of the deceased. The court
charges in procuring such appointment, if defrayed by the opposing party, may be recovered as
costs.

The rationale behind the rule on substitution is to apprise the heir or the substitute that he is
being brought to the jurisdiction of the court in lieu of the deceased party by operation of law.71 It
serves to protect the right of every party to due process. It is to ensure that the deceased party
would continue to be properly represented in the suit through the duly appointed legal
representative of his estate. Non-compliance with the rule on substitution would render the
proceedings and the judgment of the trial court infirm because the court acquires no jurisdiction
over the persons of the legal representatives or of the heirs on whom the trial and the judgment
would be binding.72