ADORABLE VS CA Petitioners were not tenants of the land in question in this case.

Nor has the land

been acquired by the government for their benefit.
SUBSIDIARY REMEDIES OF CREDITOR
SYLLABUS
[G.R. No. 119466. November 25, 1999.]
1.REMEDIAL LAW; CIVIL PROCEDURE; PERSONAL RIGHT AND REAL
SALVADOR ADORABLE and LIGAYA ADORABLE, petitioners, vs. RIGHT; DISTINGUISHED. — A personal right is the power of one person to
COURT OF APPEALS, HON. JOSE O. RAMOS, FRANCISCO BARENG and demand of another, as a definite passive subject, the fulfillment of a prestation to
SATURNINO BARENG, respondents. give, to do, or not to do. On the

Lopez Law Office for petitioners.Ariel C. Vallejo for Francisco and Saturnino CD Technologies Asia, Inc. © 2016 cdasiaonline.com
Bareng. Virgilio T. Velasco for Judge J.O. Ramos
other hand, a real right is the power; belonging to a person over a specific thing,
SYNOPSIS without a passive subject individually determined, against whom, such right may be
personally exercised.
Petitioners were lessees of 200 sq. meters of land, owned by Saturnino Bareng. On
April 29 1985 Saturnino Bareng and his son Francisco Bareng obtained a loan from 2.CIVIL LAW; OBLIGATIONS AND CONTRACTS; MEASURES TO BE
the petitioners in the amount of P26,000.00. Later, Saturnino sold 18,500 sq. meters TAKEN BY A CREDITOR BEFORE HE CAN BRING AN ACTION FOR
of the said lot to his son, Francisco. In turn, Francisco sold 3,000 square meters of RESCISSION OF AN ALLEGEDLY FRAUDULENT SALE. — Thus, the
the said lot to Jose Ramos which included the portion being rented by the following successive measures must be taken by a creditor before he may bring an
petitioners. When the maturity date of the loan arrived, Francisco Bareng failed to action for rescission of an allegedly fraudulent sale: (1) exhaust the properties of the
pay. Petitioners, upon learning of the sale made by Francisco Bareng to Jose Ramos debtor through levying by attachment and execution upon all the property of the
filed a complaint with the Regional Trial Court, Branch 24 of Echague, Isabela for debtor, except such as are exempt by law from execution; (2) exercise all the rights
the annulment or rescission of the sale anchoring their right as creditors of Francisco and actions of the debtor, save those personal to him (accion subrogatoria); and (3)
Bareng, as well as their claim of preference as lessees to the sale of the contested lot. seek rescission of the contracts executed by the debtor in fraud of their rights (accion
After trial, the court a quo rendered judgment dismissing the complaint for lack of pauliana).
cause of action. On appeal, the Court of Appeals affirmed the said decision.
3.ID.; ID.; ID.; ACTION FOR RESCISSION IS A SUBSIDIARY REMEDY. —
In this petition, the Court ruled that as creditors, petitioners did not have such Indeed, an action for rescission is a subsidiary remedy; it cannot be instituted except
material interest as to allow them to sue for rescission of the contract of sale. At the when the party suffering damage has no other legal means to obtain reparation for
outset, petitioners' right against private respondents is only a personal right to the same. Thus, Art. 1380 of the Civil Code provides: The following contracts are
receive payment for the loan; it is not a real right over the lot subject of the deed of rescissible: . . . (3) Those undertaken in fraud of creditors when the latter cannot in
sale. any other manner collect the claims due them.

Nor did petitioners enjoy any preference to buy the questioned property. Petitioners 4.ID.; ID.; ID.; ID.; NOT PROPER IN CASE AT BAR. — Petitioners have not
attempted to establish such legal injury through a claim of preference created under shown that they have no other means of enforcing their credit. As the Court of
C.A. No. 539. This statute was passed to implement Art. XIII, §4 of the 1935 Appeals pointed out in its decision: In this case, plaintiffs-appellants had not even
Constitution which provided that "The Congress may authorize, upon payment of commenced an action against defendants-appellees Bareng for the collection of the
just compensation, the expropriation of lands to be subdivided into small lots and alleged indebtedness. Plaintiffs- appellants had not even tried to exhaust the property
conveyed at cost to individuals." It was obvious that neither under this provision of of defendants-appellees Bareng. Plaintiffs-appellants, in seeking for the rescission of
the former Constitution nor that of C.A. No. 539 can petitioners claim any right the contracts of sale entered into between defendants-appellees, failed to show and
since the grant of preference therein applies only to bona fide tenants, after the prove that defendants-appellees Bareng had no other property, either at the time of
expropriation or purchase by the government of the land they are occupying. the sale or at the time this action was filed, out of which they could have collected
this (sic) debts.
5.ID., ID.; ID.; ID.; MAY BE FILED BY PERSON NOT PRIVY TO CONTRACT hearing is that he "comes from Makati" This excuse might hold water if counsel was
WHO SHOWS THAT INJURY WOULD POSITIVELY RESULT TO HIM. — In simply late in arriving in the courtroom. But this was not the case. He did not appear
Aldecoa v. Hongkong and Shanghai Banking Corporation, it was held that in order at all.
that one who is not obligated in a contract either principally or subsidiarily may
maintain an action for nullifying the same, his complaint must show the injury that DECISION
would positively result to him from the contract in which he has not intervened, with
regard at least to one of the contracting parties. MENDOZA, J p:

6.POLITICAL LAW; CONSTITUTIONAL LAW; EMINENT DOMAIN;

COMMONWEALTH ACT NO. 539; GRANT OF PREFERENCE APPLIES This is a petition for review under Rule 45 of the decision 1 of the Court of Appeals,
ONLY TO BONA FIDE TENANTS; NOT APPLICABLE IN CASE AT BAR. — dated January 6, 1995, sustaining the dismissal by Branch 24 of the Regional Trial
Petitioners attempt to establish such legal injury through a claim of preference Court, Echague, Isabela, of the complaint filed by petitioners, spouses Salvador and
created under C.A. No. 539, the pertinent provision of which provides: SEC. 1. The Ligaya Adorable, for lack of cause of action. cdphil
President of the Philippines is authorized to acquire private lands or any interest
therein, through purchase or expropriation, and to subdivide the same into horse lots The facts are as follows:
or small farms for resale at reasonable prices and under such conditions as he may
fix to their bona fide tenants or occupants or to private individuals who will work Private respondent Saturnino Bareng was the registered owner of two parcels of
the lands themselves and who are qualified to acquire and own lands in the land, one identified as Lot No. 661-D-5-A, with an area of 20,000 sq. m., covered by
Philippines. This statute was passed to implement Art. XIII, §4 of the 1935 TCT No. T- 162837, and the other known as Lot No. 661-E, with an area of 4.0628
Constitution which provided that "The Congress may authorize, upon payment of hectares, covered by TCT No. T-60814, both of which are in San Fabian, Echague,
just compensation, the expropriation of lands to be subdivided into small lots and Isabela. Petitioners were lessees of a 200 sq.m. portion of Lot No. 661-D-5-A.
conveyed at cost to individuals." It is obvious that neither under this provision of the
former Constitution nor that of C.A. No. 539 can petitioners claim any right since On April 29, 1985, Saturnino Bareng and his son, private respondent Francisco
the grant of preference therein applies only to bona fide tenants, after the Bareng, obtained a loan from petitioners amounting to twenty six thousand pesos
expropriation or purchase by the government of the land they are (P26,000), in consideration of which they promised to transfer the possession and
enjoyment of the fruits of Lot No. 661-E.
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On August 3, 1986, Saturnino sold to his son Francisco 18,500 sq.m. of Lot No.
occupying. Petitioners are not tenants of the land in question in this case. Nor has 661-D-5-A. The conveyance was annotated on the back of TCT No. T-162873. In
the land been acquired by the government for their benefit. turn, Francisco sold on August 27, 1986 to private respondent Jose Ramos 3,000
sq.m. of the lot. The portion of land being rented to petitioners was included in the
7.REMEDIAL LAW; SPECIAL CIVIL ACTION; CERTIORARI; GRAVE portion sold to Jose Ramos. The deeds of sale evidencing the conveyances were not
ABUSE OF DISCRETION; NOT COMMITTED BY COURT THAT DECIDES registered in the office of the register of deeds. LexLib
TO PROCEED WITH TRIAL OF CASE RATHER THAN POSTPONE THE
HEARING TO ANOTHER DAY BECAUSE OF THE ABSENCE OF PARTY. — As the Barengs failed to pay their loan, petitioners complained to Police Captain
We cannot find grave abuse of discretion simply because a court decides to proceed Rodolfo Saet of the Integrated National Police (INP) of Echague through whose
with the trial of a case rather than postpone the hearing to another day, because of mediation a Compromise Agreement was executed between Francisco Bareng and
the absence of a party. That the absence of a party during trial constitutes waiver of the Adorables whereby the former acknowledged his indebtedness of P56,385.00
his right to present evidence and cross-examine the opponent's witnesses is firmly which he promised to
supported by jurisprudence. To constitute grave abuse of discretion amounting to
lack or excess of jurisdiction, the refusal of the court to postpone the hearing must CD Technologies Asia, Inc. © 2016 cdasiaonline.com
be characterized by arbitrariness or capriciousness. Here, as correctly noted by the
Court of Appeals, petitioners' counsel was duly notified through registered mail of pay on or before July 15, 1987. When the maturity date arrived, however, Francisco
the scheduled trials. His only excuse for his failure to appear at the scheduled Bareng failed to pay. A demand letter was sent to Francisco Bareng, but he refused
to pay. Petitioners anchor their interest on their right as creditors of Francisco Bareng, as
well as on their claim of preference over the sale of the contested lot. 4 They
Petitioners, learning of the sale made by Francisco Bareng to Jose Ramos, then filed contend that the sale between Francisco Bareng and Jose Ramos prejudiced their
a complaint with the Regional Trial Court, Branch 24, Echague, Isabela for the interests over the property as creditors of Francisco Bareng. Moreover, they claim
annulment or rescission of the sale on the ground that the sale was fraudulently that, under Commonwealth Act No. 539, they have a preferential right, as tenants or
prepared and executed. lessees, to purchase the land in question.

During trial, petitioners presented as witness Jose Ramos. After his testimony, the The petition has no merit.
next hearing was set on August 4 and 5, 1990. On said hearing dates, however,
petitioners were absent. The trial court therefore ordered the presentation of First. We hold that, as creditors, petitioners do not have such material interest as to
evidence for petitioners terminated and allowed private respondents to present their allow them to sue for rescission of the contract of sale. At the outset, petitioners'
evidence ex parte. On February 15, 1991, the trial court rendered judgment right against
dismissing the complaint for lack of cause of action, declaring the contract of sale
between Francisco Bareng and Jose Ramos valid and ordering Francisco Bareng to CD Technologies Asia, Inc. © 2016 cdasiaonline.com
pay the amount he owed petitioners.
private respondents is only a personal right to receive payment for the loan; it is not
On appeal, the Court of Appeals affirmed the decision of the Regional Trial Court, a real right over the lot subject of the deed of sale.
with modification as to the amount of Francisco Bareng's debt to petitioners.
A personal right is the power of one person to demand of another, as a definite
Hence, this petition for review, raising the following issues: (1) whether the Court of passive subject, the fulfillment of a prestation to give, to do, or not to do. On the
Appeals erred in dismissing the complaint for lack of cause of action; (2) whether other hand, a real right is the power belonging to a person over a specific thing,
petitioners enjoyed legal preference to purchase the lots they lease; and (3) whether without a passive subject individually determined, against whom such right may be
the Court of Appeals erred in sustaining the lower court's order terminating
petitioners' presentation of evidence and allowing private respondents to present personally exercised. 5 In this case, while petitioners have an interest in securing
their evidence ex parte. payment of the loan they extended, their right to seek payment does not in any
manner attach to a particular portion of the patrimony of their debtor, Francisco
Bareng. prLL
In sustaining the decision of the trial court dismissing the complaint for lack of
cause of action, the Court of Appeals premised its decision on Rule 3, §2 of the
former Rules of Court which provided: Cdpr Nor can we sustain petitioners' claim that the sale was made in fraud of creditors.
Art. 1177 of the Civil Code provides:
Parties in interest. — Every action must be prosecuted and defended in the name of
the real party in interest. All persons having an interest in the subject of the action The creditors, after having pursued the property in possession of the debtor to satisfy
and in obtaining the relief demanded shall be joined as plaintiffs. All persons who their claims, may exercise all the rights and bring all the actions of the latter for the
claim an interest in the controversy or who are necessary to a complete same purpose, save those which are inherent in his person; they may also impugn
determination or settlement of the questions involved therein shall be joined as the actions which the debtor may have done to defraud them. (Emphasis added)
defendants.
Thus, the following successive measures must be taken by a creditor before he may
A real party in interest is one who would be benefited or injured by the judgment, or bring an action for rescission of an allegedly fraudulent sale: (1) exhaust the
who is entitled to the avails of the suit. "Interest," within the meaning of this rule, properties of the debtor through levying by attachment and execution upon all the
should be material, directly in issue and to be affected by the decree, as property of the debtor, except such as are exempt by law from execution; (2)
exercise all the rights and actions of the debtor, save those personal to him (accion
distinguished from a mere incidental interest or in the question involved. 2 subrogatoria); and (3) seek rescission of the contracts executed by the debtor in
Otherwise put, an action shall be prosecuted in the name of the party who, by the fraud of their rights (accion pauliana). Without availing of the first and second
substantive law, has the right sought to be enforced. 3 remedies, i.e., exhausting the properties of the debtor or subrogating themselves in
Francisco Bareng's transmissible rights and actions, petitioners simply undertook the home lots or small farms for resale at reasonable prices and under such conditions as
third measure and filed an action for annulment of the sale. This cannot be done. he may fix to their bona fide tenants or occupants or to private individuals who will
work the lands themselves and who are qualified to acquire and own lands in the
Indeed, an action for rescission is a subsidiary remedy; it cannot be instituted except Philippines.
when the party suffering damage has no other legal means to obtain reparation for
the same. 6 Thus, Art. 1380 of the Civil Code provides: This statute was passed to implement Art. XIII, §4 of the 1935 Constitution which
provided that "The Congress may authorize, upon payment of just compensation, the
The following contracts are rescissible:xxx xxx xxx expropriation of lands to be subdivided into small lots and conveyed at cost to
individuals." It is obvious that neither under this provision of the former
Constitution nor that of C.A. No. 539 can petitioners claim any right since the grant
(3)Those undertaken in fraud of creditors when the latter cannot in any other manner of preference therein applies only to bona fide tenants, after the expropriation or
collect the claims due them;
purchase by the government of the land they are occupying. 8 Petitioners are not
tenants of the land in question in this case. Nor has the land been acquired by the
Petitioners have not shown that they have no other means of enforcing their credit.
government for their benefit.
As the Court of Appeals pointed out in its decision:
Third. Finally, we hold that no error was committed by the Court of Appeals in
In this case, plaintiffs-appellants had not even commenced an action against
affirming the order of the trial court terminating the presentation of petitioners'
defendants-appellees Bareng for the collection of the alleged indebtedness.
evidence and allowing private respondents to proceed with theirs because of
Plaintiffs-appellants had not even tried to exhaust the property of defendants-
petitioners' failure to present further evidence at the scheduled dates of trial. Cdpr
appellees Bareng. Plaintiffs-appellants, in seeking for the rescission of the contracts
of sale entered into between defendants-appellees, failed to show and prove that
defendants-appellees Bareng had no other property, either at the time of the sale or Petitioners contend that since their counsel holds office in Makati, the latter's failure
at the time this action was filed, out of which they could have collected this (sic) to appear at the trial in Isabela at the scheduled date of hearing should have been
debts. cdtai treated by the court with a "sense of fairness." 9

This is more a plea for compassion rather than explanation based on reason. We
cannot find grave abuse of discretion simply because a court decides to proceed with
the trial of a case rather than postpone the hearing to another day, because of the
absence of a party. That the absence of a party during trial constitutes waiver of his
Second. Nor do petitioners enjoy any preference to buy the questioned property. In right to present evidence and cross-examine the opponent's witnesses is firmly
supported by jurisprudence. 10 To constitute grave abuse of discretion amounting to
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
lack or excess of jurisdiction, the refusal of the court to postpone the hearing must
be characterized by arbitrariness or capriciousness. Here, as correctly noted by the
Aldecoa v. Hongkong and Shanghai Banking Corporation, 7 it was held that in order Court of Appeals, petitioners' counsel was duly notified through registered mail of
that one who is not obligated in a contract either principally or subsidiarily may the scheduled trials. 11 His only excuse for his failure to appear at the scheduled
maintain an action for nullifying the same, his complaint must show the injury that hearings is that he "comes from Makati." This excuse might hold water if counsel
would positively result to him from the contract in which he has not intervened, with was simply late in arriving in the courtroom. But this was not the case. He did not
regard at least to one of the contracting parties. appear at all.

Petitioners attempt to establish such legal injury through a claim of preference WHEREFORE, the petition for review is DENIED, and the decision of the Court of
created under C.A. No. 539, the pertinent provision of which provides: Appeals is AFFIRMED.

SEC. 1.The President of the Philippines is authorized to acquire private lands or any SO ORDERED. prcd
interest therein, through purchase or expropriation, and to subdivide the same into