Go vs Distinction Properties

FACTS:
• Philip L. Go, Pacifico Q. Lim and Andrew Q. Lim (petitioners) are registered individual
owners of condominium units in Phoenix Heights Condominium located at H. Javier/Canley
Road, Bo. Bagong Ilog, Pasig City, Metro Manila.
• March 1999, petitioner Pacifico Lim, as president of DPDCI, filed an Application for
Alteration of Plan4 pertaining to the construction of 22 storage units in the spaces adjunct to the
parking area of the building. The application, however, was disapproved as the proposed
alteration would obstruct light and ventilation.
• In August 2004, through its Board,5 PHCC approved a settlement offer from DPDCI for
the set-off of the latter’s association dues arrears with the assignment of title over CCT Nos.
21030 and PT-27396/C-136-II and their conversion into common areas. Thus, CCT Nos. PT-
43400 and PT-43399 were issued by the Registrar of Deeds of Pasig City in favor of PHCC in
lieu of the old titles. The said settlement between the two corporations likewise included the
reversion of the 22 storage spaces into common areas. With the conformity of PHCC, DPDCI’s
application for alteration (conversion of unconstructed 22 storage units and units GF4-A and
BAS from saleable to common areas) was granted by the Housing and Land Use Regulatory
Board (HLURB).
• In August 2008, petitioners, as condominium unit-owners, filed a complaint7 before the
HLURB against DPDCI for unsound business practices and violation of the MDDR. The case
was docketed as REM- 080508-13906. They alleged that DPDCI committed misrepresentation in
their circulated flyers and brochures as to the facilities or amenities that would be available in the
condominium and failed to perform its obligation to comply with the MDDR.
• In defense, DPDCI denied that it had breached its promises and representations to the
public concerning the facilities in the condominium. It alleged that the brochure attached to the
complaint was “a mere preparatory draft” and not the official one actually distributed to the
public, and that the said brochure contained a disclaimer as to the binding effect of the supposed
offers therein. Also, DPDCI questioned the petitioners’ personality to sue as the action was a
derivative suit. After due hearing, the HLURB rendered its decision8 in favor of petitioners.
• The CA ruled that the HLURB had no jurisdiction over the complaint filed by petitioners
as the controversy did not fall within the scope of the administrative agency’s authority under
P.D. No. 957. The HLURB not only relied heavily on the brochures which, according to the CA,
did not set out an enforceable obligation on the part of DPDCI, but also erroneously cited
Section 13 of the MDDR to support its finding of contractual violation.

ISSUE: Whether or not the HLURB has jurisdiction over the complaint filed by petitioners.
RULING:
The petition fails.
Basic as a hornbook principle is that jurisdiction over the subject matter of a case is conferred by
law and determined by the allegations in the complaint which comprise a concise statement of
the ultimate facts constituting the plaintiff’s cause of action. The nature of an action, as well as
which court or body has jurisdiction over it, is determined based on the allegations contained in
the complaint of the plaintiff, irrespective of whether or not the plaintiff is entitled to recover
upon all or some of the claims asserted therein. The averments in the complaint and the character
of the relief sought are the ones to be consulted. Once vested by the allegations in the complaint,
jurisdiction also remains vested irrespective of whether or not the plaintiff is entitled to recover
upon all or some of the claims asserted therein. Thus, it was ruled that the jurisdiction of the
HLURB to hear and decide cases is determined by the nature of the cause of action, the subject
matter or property involved and the parties.
In this case, the complaint filed by petitioners alleged causes of action that apparently are not
cognizable by the HLURB considering the nature of the action and the reliefs sought. A perusal
of the complaint discloses that petitioners are actually seeking to nullify and invalidate the duly
constituted acts of PHCC – the April 29, 2005 Agreement27 entered into by PHCC with DPDCI
and its Board Resolution28 which authorized the acceptance of the proposed
offsetting/settlement of DPDCI’s indebtedness and approval of the conversion of certain units
from saleable to common areas. All these were approved by the HLURB.
*whether PHCC is an indispensable party
From all indications, PHCC is an indispensable party and should have been impleaded, either as
a plaintiff or as a defendant,34 in the complaint filed before the HLURB as it would be directly
and adversely affected by any determination therein. To belabor the point, the causes of action,
or the acts complained of, were the acts of PHCC as a corporate body. Note that in the judgment
rendered by the HLURB, the dispositive portion in particular, DPDCI was ordered (1) to pay ₱
998,190.70, plus interests and surcharges, as condominium dues in arrears and turnover the
administration office to PHCC; and (2) to refund to PHCC ₱ 1,277,500.00, representing the cost
of the deep well, with interests and surcharges. Also, the HLURB declared as illegal the
agreement regarding the conversion of the 22 storage units and Units GF4-A and BAS, to which
agreement PHCC was a party.
Evidently, the cause of action rightfully pertains to PHCC. Petitioners cannot exercise the same
except through a derivative suit. In the complaint, however, there was no allegation that the
action was a derivative suit. In fact, in the petition, petitioners claim that their complaint is not a
derivative suit.35 In the cited case of Chua v. Court of Appeals,36 the Court ruled:
For a derivative suit to prosper, it is required that the minority stockholder suing for and on
behalf of the corporation must allege in his complaint that he is suing on a derivative cause of
action on behalf of the corporation and all other stockholders similarly situated who may wish to
join him in the suit. It is a condition sine qua non that the corporation be impleaded as a party
because not only is the corporation an indispensable party, but it is also the present rule that it
must be served with process. The judgment must be made binding upon the corporation in order
that the corporation may get the benefit of the suit and may not bring subsequent suit against the
same defendants for the same cause of action. In other words, the corporation must be joined as
party because it is its cause of action that is being litigated and because judgment must be a res
adjudicata against it. (Underscoring supplied)
 Republic v. Sandiganbayan

(PLEADINGS: Answer [Negative defenses, Affirmative defenses, negative pregnant])

FACTS:

Republic, through the PCGG, filed a petition for forfeiture before the Sandiganbayan, pursuant to
RA 1379. The petition sought the declaration of the amount of US$356 million (now estimated
to be more than US$658 million inclusive of interest) deposited in escrow in the PNB, as ill-
gotten wealth of the Marcos family. The funds were previously deposited in Swiss banks under
the name of various foreign foundations.

Before case was set for pre-trial, Marcos children and PCGG Chairman Magtanggol Gunigundo
executed a “General Agreement and the Supplemental Agreements” for a global settlement of
the assets of the Marcos family. The Agreement specified in its whereas clause that the
Philippine government had "obtained a judgment from the Swiss Federal Tribunal that the
US$356 million belongs in principle to the Republic of the Philippines provided certain
conditionalities are met.”

Subsequently, the Marcos children filed a motion for the approval of said Agreements. While
hearings were being conducted on the said motion, the Republic filed a motion for summary
judgment and/or judgment on the pleadings.

Sandiganbayan initially granted Republic's motion for summary judgment on the ground that
“there is no issue of fact which calls for the presentation of evidence.” However, it reversed itself
and denied the motion for summary judgment on the ground that the original copies of the
authenticated Swiss decisions and their "authenticated translations" have not been submitted.

ISSUE:

WON respondents raised genuine issue of fact which would justify or negate summary judgment

HELD: NO. Respondent Marcoses failed to raise any genuine issue of fact in their pleadings.
Thus, on motion of petitioner Republic, summary judgment should take place as a matter of
right.

In Auman vs. Estenzo, summary judgment was described as a judgment which a court may
render before trial but after both parties have pleaded. It is ordered by the court upon application
by one party, supported by affidavits, depositions or other documents, with notice upon the
adverse party who may in turn file an opposition supported also by affidavits, depositions or
other documents. This is after the court summarily hears both parties with their respective proofs
and finds that there is no genuine issue between them.
Summary judgment is proper when there is clearly no genuine issue as to any material fact in the
action. The theory of summary judgment is that, although an answer may on its face appear to
tender issues requiring trial, if it is demonstrated by affidavits, depositions or admissions that
those issues are not genuine but sham or fictitious, the Court is justified in dispensing with the
trial and rendering summary judgment for petitioner Republic.

Court finds that respondent Mrs. Marcos and the Marcos children indubitably failed to tender
genuine issues in their answer to the petition for forfeiture. A genuine issue is an issue of fact
which calls for the presentation of evidence as distinguished from an issue which is fictitious and
contrived, set up in bad faith or patently lacking in substance so as not to constitute a genuine
issue for trial. Respondents' defenses of "lack of knowledge for lack of privity" or "(inability to)
recall because it happened a long time ago" or, on the part of Mrs. Marcos, that "the funds were
lawfully acquired" are fully insufficient to tender genuine issues. Respondent Marcoses' defenses
were a sham and evidently calibrated to compound and confuse the issues.

In their answer, respondents failed to specifically deny every allegation contained in the petition
for forfeiture in the manner required by the rules. All they gave were stock answers like "they
have no sufficient knowledge" or "they could not recall because it happened a long time ago,"
and, as to Mrs. Marcos, "the funds were lawfully acquired," without stating the basis of such
assertions. The purpose of requiring respondents to make a specific denial is to make them
disclose facts which will disprove the allegations of petitioner at the trial, together with the
matters they rely upon in support of such denial. Our jurisdiction adheres to this rule to avoid and
prevent unnecessary expenses and waste of time by compelling both parties to lay their cards on
the table, thus reducing the controversy to its true terms.

Here, despite the serious and specific allegations against them, the Marcoses responded by
simply saying that they had no knowledge or information sufficient to form a belief as to the
truth of such allegations. Such a general, self-serving claim of ignorance of the facts alleged in
the petition for forfeiture was insufficient to raise an issue. Respondent Marcoses should have
positively stated how it was that they were supposedly ignorant of the facts alleged.

This denial is what is called in the law on pleadings as a negative pregnant, that is, a denial
pregnant with the admission of the substantial facts in the pleading responded to which are not
squarely denied. It was in effect an admission of the averments it was directed at. Stated
otherwise, a negative pregnant is a form of negative expression which carries with it an
affirmation or at least an implication of some kind favorable to the adverse party. It is a denial
pregnant with an admission of the substantial facts alleged in the pleading. Where a fact is
alleged with qualifying or modifying language and the words of the allegation as so qualified or
modified are literally denied, has been held that the qualifying circumstances alone are denied
while the fact itself is admitted.

A profession of ignorance about a fact which is patently and necessarily within the pleader's
knowledge or means of knowing is as ineffective as no denial at all. Respondents' ineffective
denial failed to properly tender an issue and the averments contained in the petition for forfeiture
were deemed judicially admitted by them. General denial of respondents cannot rightfully be
accepted as a defense because they are the legal heirs and successors-in-interest of Ferdinand E.
Marcos and are therefore bound by the acts of their father vis-a-vis the Swiss funds.

MANUEL C. BUNGCAYAO, SR., represented in this case by his Attorney-in-fact ROMEL R.

BUNGCAYAO, Petitioner, v. FORT ILOCANDIA PROPERTY HOLDINGS, AND
DEVELOPMENT CORPORATION, Respondent.
FACTS:
• Manuel C. Bungcayao, Sr. (petitioner) claimed to be one of the two entrepreneurs who
introduced improvements on the foreshore area of Calayab Beach in 1978 when Fort Ilocandia
Hotel started its construction in the area. Thereafter, other entrepreneurs began setting up their
own stalls in the foreshore area. They later formed themselves into the D'Sierto Beach Resort
Owner's Association, Inc. (D'Sierto).
• In July 1980, six parcels of land in Barrio Balacad (now Calayad) were transferred,
ceded, and conveyed to the Philippine Tourism Authority (PTA) pursuant to Presidential Decree
No. 1704. Fort Ilocandia Resort Hotel was erected on the area. Petitioner and other D’Sierto
members applied for a foreshore lease and was granted a provisional permit.
• Fort Ilocandia Property Holdings and Development Corporation (respondent) filed a
foreshore application over a 14-hectare area abutting the Fort Ilocandia Property, including the 5-
hectare portion applied for by D’Sierto members. The foreshore applications became the subject
matter of a conflict case. DENR Regional Executive Director Victor J. Ancheta denied the
foreshore lease applications of the D’Sierto members, including petitioner, on the ground that the
subject area applied for fell either within the titled property or within the foreshore areas applied
for by respondent.
• Respondent, through its Public Relations Manager Arlene de Guzman, invited the
D’Sierto members to a luncheon meeting to discuss common details beneficial to all parties
concerned. Petitioner alleged that his son, Manuel Bungcayao, Jr., who attended the meeting,
manifested that he still had to consult his parents about the offer but upon the undue pressure
exerted by Atty. Marcos, he accepted the payment and signed the Deed of Assignment, Release,
Waiver and Quitclaim in favor of respondent.
• Petitioner then filed an action for declaration of nullity of contract before the Regional
Trial Court of Laoag. The trial court ruled that the alleged pressure on petitioner’s sons could not
constitute force, violence or intimidation that could vitiate consent. As regards respondent’s
counterclaim, the trial court ruled that based on the pleadings and admissions made, it was
established that the property occupied by petitioner was within the titled property of respondent.
• The CA affirmed the decision in toto. The Court of Appeals ruled that the counterclaims
raised by respondent were compulsory in nature, as they arose out of or were connected with the
transaction or occurrence constituting the subject matter of the opposing party’s claim and did
not require for its adjudication the presence of third parties of whom the court could not acquire
jurisdiction. The Court of Appeals ruled that respondent was the rightful owner of the subject
property and as such, it had the right to recover its possession from any other person to whom the
owner has not transmitted the property, including petitioner.
ISSUE: Whether respondent’s counterclaim is compulsory.
RULING: YES. A compulsory counterclaim is any claim for money or any relief, which a
defending party may have against an opposing party, which at the time of suit arises out of, or is
necessarily connected with, the same transaction or occurrence that is the subject matter of the
plaintiff's complaint. It is compulsory in the sense that it is within the jurisdiction of the court,
does not require for its adjudication the presence of third parties over whom the court cannot
acquire jurisdiction, and will be barred in the future if not set up in the answer to the complaint in
the same case. Any other counterclaim is permissive.
The Court has ruled that the compelling test of compulsoriness characterizes a counterclaim as
compulsory if there should exist a logical relationship between the main claim and the
counterclaim. The Court further ruled that there exists such a relationship when conducting
separate trials of the respective claims of the parties would entail substantial duplication of time
and effort by the parties and the court; when the multiple claims involve the same factual and
legal issues; or when the claims are offshoots of the same basic controversy between the parties.
The criteria to determine whether the counterclaim is compulsory or permissive are as follows:
(a) Are issues of fact and law raised by the claim and by the counterclaim largely the same?
(b) Would res judicata bar a subsequent suit on defendant's claim, absent the compulsory rule?
(c) Will substantially the same evidence support or refute plaintiff's claim as well as defendant's
counterclaim?
(d) Is there any logical relations between the claim and the counterclaim?
A positive answer to all four questions would indicate that the counterclaim is compulsory.1
In this case, the only issue in the complaint is whether Manuel, Jr. is authorized to sign the Deed
of Assignment, Release, Waiver and Quitclaim in favor of respondent without petitioner's
express approval and authority. In an Order dated 6 November 2003, the trial court confirmed
the agreement of the parties to cancel the Deed of Assignment, Release, Waiver and Quitclaim
and the return of P400,000 to respondent. The only claim that remained was the claim for
damages against respondent. The trial court resolved this issue by holding that any damage
suffered by Manuel, Jr. was personal to him. The trial court ruled that petitioner could not have
suffered any damage even if Manuel, Jr. entered into an agreement with respondent since the
agreement was null and void.
Respondent filed three counterclaims. The first was for recovery of the P400,000 given to
Manuel, Jr.; the second was for recovery of possession of the subject property; and the third was
for damages. The first counterclaim was rendered moot with the issuance of the 6 November
2003 Order confirming the agreement of the parties to cancel the Deed of Assignment, Release,
Waiver and Quitclaim and to return the P400,000 to respondent. Respondent waived and
renounced the third counterclaim for damages. The only counterclaim that remained was for the
recovery of possession of the subject property. While this counterclaim was an offshoot of the
same basic controversy between the parties, it is very clear that it will not be barred if not set up
in the answer to the complaint in the same case. Respondent's second counterclaim, contrary to
the findings of the trial court and the Court of Appeals, is only a permissive counterclaim. It is
not a compulsory counterclaim. It is capable of proceeding independently of the main case.
The rule in permissive counterclaim is that for the trial court to acquire jurisdiction, the
counterclaimant is bound to pay the prescribed docket fees. Any decision rendered without
jurisdiction is a total nullity and may be struck down at any time, even on appeal before this
Court. In this case, respondent did not dispute the non-payment of docket fees. Respondent only
insisted that its claims were all compulsory counterclaims. As such, the judgment by the trial
court in relation to the second counterclaim is considered null and void a without prejudice to a
separate action which respondent may file against petitioner.
PHILTRANCO SERVICE ENTERPRISES, INC., PETITIONER, VS. FELIX PARAS AND
INLAND TRAILWAYS, INC., AND HON. COURT OF APPEALS, RESPONDENTS.
In an action for breach of contract of carriage commenced by a passenger against his common
carrier, the plaintiff can recover damages from a third-party defendant brought into the suit by
the common carrier upon a claim based on tort or quasi-delict. The liability of the third-party
defendant is independent from the liability of the common carrier to the passenger.
FACTS:
• Felix Paras is engaged in the buy and sell of fish products. Sometime on his way home to
Manila from Bicol Region, he boarded a bus owned and operated by Inland Trailways, Inc. and
driven by its driver Calvin Coner.
• While it was travelling along Maharlika Highway, Tiaong, Quezon, it was bumped at the
rear by a Philtranco bus driven by Apolinar Miralles which caused the Inland bus to smash to a
parked cargo truck.
• Paras was not spared from the effects of the accident. He was taken for an emergency
treatment in the nearby hospital and thereafter taken to the National Orthopedic Hospital in
which underwent several operations.
• In view of financial constraints, Paras filed a complaint for damages based on breach of
contract of carriage against Inland to which it denied responsibility, by alleging, among others,
that its driver Coner had observed an utmost and extraordinary care and diligence to ensure the
safety of its passengers. In support of it, Inland invoked the Police Investigation Report which
established the fact that the Philtranco bus driver, Apolinar Miralles was the one which violently
bumped the rear portion of the Inland bus, and therefore, the direct and proximate cause of Paras’
injuries.
• Inland filed a third-party complaint against Philtranco and Apolinar Miralles.
• RTC ruled that Philtranco and Apolinar Miralles are liable. The CA affirmed the decision
and denied the subsequent motion for reconsideration.
• Petitioner argues that Paras could not recover moral damages directly from it
(Philtranco), considering that it was only being subrogated for Inland.
ISSUE: WoN Philtranco, a third-party defendant, is liable to Paras.
RULING: YES.
There is no question that Inland filed its third-party complaint against Philtranco and its driver in
order to establish in this action that they, instead of Inland, should he directly liable to Paras for
the physical injuries he had sustained because of their negligence.
The apparent objective of Inland was not to merely subrogate the third-party defendants for
itself, as Philtranco appears to suggest, but, rather, to obtain a different relief whereby the third-
party defendants would be held directly, fully and solely liable to Paras and inland for whatever
damages each had suffered from the negligence committed by Philtranco and its driver. In other
words, Philtranco and its driver were charged here as joint tortfeasors who would be jointly and
severally be liable to Paras and Inland. Impleading Philtranco and its driver through the third-
party complaint filed on March 2, 1990 was correct. Paras' cause of action against Inland (breach
of contract of carriage) did not need to be the same as the cause of action of Inland against
Philtranco and its driver (tort or quasi-delict) in the impleader. It is settled that a defendant in a
contract action may join as third-party defendants those who may be liable to him in tort for the
plaintiffs claim against him, or even directly to the plaintiff.
Accordingly, the requisites for a third-party action are, firstly, that the party to be impleaded
must not yet be a party to the action; secondly, that the claim against the third-party defendant
must belong to the original defendant; thirdly, the claim of the original defendant against the
third-party defendant must be based upon the plaintiffs claim against the original defendant; and,
fourthly, the defendant is attempting to transfer to the third-party defendant the liability asserted
against him by the original plaintiff.
G.R. No. 179488 : April 23, 2012
COSCO PHILIPPINES SHIPPING, INC., petitioner, VS. KEMPER INSURANCE COMPANY,
respondent
Facts:
• This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
reverse and set aside the Decision[1] and Resolution[2] of the Court of Appeals (CA), in CA-
G.R. CV No. 75895, entitled Kemper Insurance Company v. Cosco Philippines Shipping, Inc.
• Respondent Kemper Insurance Company is a foreign insurance company based in
Illinois, United States of America (USA) with no license to engage in business in the Philippines,
as it is not doing business in the Philippines, except in isolated transactions; while petitioner is a
domestic shipping company organized in accordance with Philippine laws.
• Respondent insured the shipment of imported frozen boneless beef (owned by Genosi,
Inc.), which was loaded at a port in Brisbane for shipment to Genosi, Inc. (the importer-
consignee) in the Philippines. However, upon arrival at the Manila port, a portion of the
shipment was rejected by Genosi, Inc. by reason of spoilage arising from the alleged temperature
fluctuations of petitioner's reefer containers.
• Genosi, Inc. filed a claim against both petitioner shipping company and respondent
Kemper Insurance Company. The claim was referred to McLarens Chartered for investigation,
evaluation, and adjustment of the claim. After processing the claim documents, McLarens
Chartered recommended a settlement of the claim in the amount of $64,492.58, which Genosi,
Inc. (the consignee-insured) accepted.
• Respondent paid the claim of Genosi, Inc. Consequently, Genosi, Inc. executed a Loss
and Subrogation Receipt stating that Genosi, Inc. received from respondent the full and final
satisfaction compromise, and discharges respondent of all claims for losses and expenses
sustained by the property insured, under various policy numbers, due to spoilage brought about
by machinery breakdown and, in consideration thereof, subrogates respondent to the claims of
Genosi, Inc. to the extent of the said amount.
• Respondent filed a Complaint for Insurance Loss and Damages against petitioner before
the trial court. Respondent alleged that despite repeated demands to pay and settle the total
amount of $64,492.58, representing the value of the loss, petitioner failed and refused to pay the
same, thereby causing damage and prejudice to respondent.
• Respondent prayed that after due hearing, judgment be rendered in its favor and that
petitioner be ordered to pay the amount of US$64,492.58, or its equivalent in Philippine currency
at the prevailing foreign exchange rate, or a total of P2,594,513.00, with interest thereon at the
legal rate from date of demand, 25% of the whole amount due as attorney's fees, and costs.
• Petitioner insisted, among others, that respondent had no capacity to sue since it was
doing business in the Philippines without the required license.
• The RTC dismissed the case ruling that it is mandatory that the certification must be
executed by the petitioner himself, and not by counsel. Since respondent's counsel did not have a
Special Power of Attorney (SPA) to act on its behalf, hence, the certification against forum
shopping executed by said counsel was fatally defective and constituted a valid cause for
dismissal of the complaint but the CA reversed and set aside the said decision.
• The CA ruled that the required certificate of non-forum shopping is mandatory and that
the same must be signed by the plaintiff or principal party concerned and not by counsel; and in
case of corporations, the physical act of signing may be performed in behalf of the corporate
entity by specifically authorized individuals. However, the CA pointed out that the factual
circumstances of the case warranted the liberal application of the rules and, as such, ordered the
remand of the case to the trial court for further proceedings.
• Petitioner alleged that respondent failed to submit any board resolution or secretary's
certificate authorizing Atty. Lat to institute the complaint and sign the certificate of non-forum
shopping on its behalf. Petitioner submits that since respondent is a juridical entity, the signatory
in the complaint must show proof of his or her authority to sign on behalf of the corporation.
Further, the SPA submitted by Atty. Lat, which was notarized before the Consulate General of
Chicago, Illinois, USA, allegedly authorizing him to represent respondent in the pre-trial and
other stages of the proceedings was signed by one Brent Healy (respondent's underwriter), who
lacks authorization from its board of directors.
• Respondent admitted that it failed to attach in the complaint a concrete proof of Atty.
Lat's authority to execute the certificate of non-forum shopping on its behalf. However, there was
subsequent compliance as respondent submitted an authenticated SPA empowering Atty. Lat to
represent it in the pre-trial and all stages of the proceedings.
Issue:
Whether Atty. Lat was properly authorized by respondent to sign the certification against forum
shopping on its behalf.
Ruling:
The Court ruled that the petition is meritorious, Atty. Lat was not properly authorized.
We have consistently held that the certification against forum shopping must be signed by the
principal parties. If, for any reason, the principal party cannot sign the petition, the one signing
on his behalf must have been duly authorized. With respect to a corporation, the certification
against forum shopping may be signed for and on its behalf, by a specifically authorized lawyer
who has personal knowledge of the facts required to be disclosed in such document. A
corporation has no power, except those expressly conferred on it by the Corporation Code and
those that are implied or incidental to its existence. In turn, a corporation exercises said powers
through its board of directors and/or its duly authorized officers and agents. Thus, it has been
observed that the power of a corporation to sue and be sued in any court is lodged with the board
of directors that exercises its corporate powers. In turn, physical acts of the corporation, like the
signing of documents, can be performed only by natural persons duly authorized for the purpose
by corporate by-laws or by a specific act of the board of directors.
Only individuals vested with authority by a valid board resolution may sign the certificate of
non-forum shopping on behalf of a corporation. We also required proof of such authority to be
presented. The petition is subject to dismissal if a certification was submitted unaccompanied by
proof of the signatory's authority.
In the present case, since respondent is a corporation, the certification must be executed by an
officer or member of the board of directors or by one who is duly authorized by a resolution of
the board of directors; otherwise, the complaint will have to be dismissed. The lack of
certification against forum shopping is generally not curable by mere amendment of the
complaint, but shall be a cause for the dismissal of the case without prejudice. The same rule
applies to certifications against forum shopping signed by a person on behalf of a corporation
which are unaccompanied by proof that said signatory is authorized to file the complaint on
behalf of the corporation.

There is no proof that respondent, a private corporation, authorized Atty. Lat, through a board
resolution, to sign the verification and certification against forum shopping on its behalf.
Accordingly, the certification against forum shopping appended to the complaint is fatally
defective, and warrants the dismissal of respondent's complaint for Insurance Loss and Damages
against petitioner.
Contrary to the CA's finding, the Court finds that the circumstances of this case do not
necessitate the relaxation of the rules. There was no proof of authority submitted, even
belatedly, to show subsequent compliance with the requirement of the law. Neither was there a
copy of the board resolution or secretary's certificate subsequently submitted to the trial court
that would attest to the fact that Atty. Lat was indeed authorized to file said complaint and sign
the verification and certification against forum shopping, nor did respondent satisfactorily
explain why it failed to comply with the rules. Thus, there exists no cogent reason for the
relaxation of the rule on this matter. Obedience to the requirements of procedural rules is needed
if we are to expect fair results therefrom, and utter disregard of the rules cannot justly be
rationalized by harking on the policy of liberal construction.

Moreover, the SPA dated May 11, 2000, submitted by respondent allegedly authorizing Atty. Lat
to appear on behalf of the corporation, in the pre-trial and all stages of the proceedings, signed by
Brent Healy, was fatally defective and had no evidentiary value. It failed to establish Healy's
authority to act in behalf of respondent, in view of the absence of a resolution from respondent's
board of directors or secretary's certificate proving the same. Like any other corporate act, the
power of Healy to name, constitute, and appoint Atty. Lat as respondent's attorney-in-fact, with
full powers to represent respondent in the proceedings, should have been evidenced by a board
resolution or secretary's certificate.
Respondent's allegation that petitioner is estopped by laches from raising the defect in
respondent's certificate of non-forum shopping does not hold water.
Jurisdiction is the power with which courts are invested for administering justice; that is, for
hearing and deciding cases. In order for the court to have authority to dispose of the case on the
merits, it must acquire jurisdiction over the subject matter and the parties. Courts acquire
jurisdiction over the plaintiffs upon the filing of the complaint, and to be bound by a decision, a
party should first be subjected to the court's jurisdiction. Clearly, since no valid complaint was
ever filed with the RTC, Branch 8, Manila, the same did not acquire jurisdiction over the person
of respondent.

Since the court has no jurisdiction over the complaint and respondent, petitioner is not estopped
from challenging the trial court's jurisdiction, even at the pre-trial stage of the proceedings. This
is so because the issue of jurisdiction may be raised at any stage of the proceedings, even on
appeal, and is not lost by waiver or by estoppel.
FELIX MARTOS, et. al Petitioners, vs. NEW SAN JOSE BUILDERS, INC., Respondent.
G.R. No. 192650, October 24, 2012, THIRD DIVISION, MENDOZA, J.

FACTS:
• Questioned in this petition for review is the July 31, 2009 Decision of the Court of
Appeals (CA) and its June 17, 2010 Resolutions
• New San Jose Builders, Inc. is a domestic corporation duly organized and existing under
the laws of the Philippines and is engaged in the construction of road, bridges, buildings, and low
cost houses primarily for the government. One of the projects of petitioner is the San Jose Plains
Project, which is also known as the "Erap City" calls for the construction of low cost housing,
which are being turned over to the National Housing Authority to be awarded to deserving poor
families.
• Private respondents alleged that, on various dates, petitioner hired them on different
positions. Sometime in 2000, petitioner was constrained to slow down and suspend most of the
works on the
• SJPP project due to lack of funds of the National Housing Authority. Thus, the
workers were informed that many of them [would] be laid off and the rest would be reassigned
to other projects. Juan Villaber, et al, were among those who were retained and were issued new
appointment papers to their respective assignments, indicating therein that they are project
employees. However, they refused to sign the appointment papers as project employees and
subsequently refused to continue to work.
• Three Complaints for Illegal Dismissal and for money claims were filed before the
NLRC against petitioner and Jose Acuzar, by private respondents who claimed to be the former’s
employees.
• Petitioner denies that private respondents were illegally dismissed, and alleged that they
were project employees, whose employments were automatically terminated upon completion of
the project for which they were hired. Private respondents claim that petitioner hired them as
regular employees, continuously and without interruption, until their dismissal on February 28,
2002.
• Subsequently, the three Complaints were consolidated and assigned to Labor Arbiter
Facundo Leda. On May 23, 2003, the LA handed down a decision declaring, among others, that
petitioner Felix Martos was illegally dismissed and entitled to separation pay, backwages and
other monetary benefits; and dismissing, without prejudice, the complaints/claims of the other
complainants.
• Both parties appealed the LA decision to the NLRC. Petitioners appealed that part which
dismissed all the complaints, without prejudice, except that of Martos. New San Jose Builders,
Inc. appealed that part which held that Martos was its regular employee and that he was illegally
dismissed.
• The NLRC dismissed the appeal filed by respondent and partially granting that of the
other petitioners.
• After the denial of its motion for reconsideration, respondent filed before the CA a
petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.
• CA rendered a decision reversing and setting aside Decision and the Resolution of the
NLRC and reinstating the Decision of the LA.

• The CA explained that the NLRC committed grave abuse of discretion in reviving the
complaints of petitioners despite their failure to verify the same. The CA also held that the
NLRC gravely abused its discretion when it took cognizance of petitioners’ appeal because Rule
41, Section 1(h) of the 1997 Rules of Civil Procedure, as amended, which is suppletory, provides
that no appeal may be taken from an order dismissing an action without prejudice.
• With respect to Martos, the CA ruled that he was a regular employee of respondent and
his termination was illegal.
• Not in conformity with the CA decision, petitioners filed this petition.
ISSUE:
Whether or not the CA was correct in dismissing the complaints filed by those petitioners who
failed to verify their position papers. (YES)
RULING:
• SEC. 4. Verification. – Except when otherwise specifically required by law or rule,
pleadings need not be under oath, verified or accompanied by affidavit.
• A pleading is verified by an affidavit that the affiant has read the pleadings and that the
allegations therein are true and correct of his personal knowledge or based on authentic records.
• A pleading required to be verified which contains a verification based on "information
and belief" or upon "knowledge, information and belief" or lacks a proper verification, shall be
treated as an unsigned pleading.
• SEC. 5. Certification against forum shopping. – The plaintiff or principal party shall
certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a
sworn certification annexed thereto and simultaneously filed therewith:
• that he has not theretofore commenced any action or filed any claim involving the same
issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such
other action or claim is pending therein; (b) if there is such other pending action or claim, a
complete statement of the present status thereof; and (c) if he should thereafter learn that the
same or similar action or claim has been filed or is pending, he shall report that fact within five
(5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been
filed.
• Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of
the case without prejudice, unless otherwise provided, upon motion and after hearing. The
submission of a false certification or non-compliance with any of the undertakings therein shall
constitute indirect contempt of court, without prejudice to the corresponding administrative and
criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate
forum shopping, the same shall be ground for summary dismissal with prejudice and shall
constitute direct contempt, as well as a cause for administrative sanctions.
• The verification requirement is significant, as it is intended to secure an assurance that
the allegations in the pleading are true and correct and not the product of the imagination or a
matter of speculation, and that the pleading is filed in good faith. Verification is deemed
substantially complied with when, as in this case, one who has ample knowledge to swear to the
truth of the allegations in the complaint or petition signs the verification, and when matters
alleged in the petition have been made in good faith or are true and correct.
• The absence of a proper verification is cause to treat the pleading as unsigned and
dismissible.
• The lone signature of Martos would have been sufficient if he was authorized by his co-
petitioners to sign for them. Unfortunately, petitioners failed to adduce proof that he was so
authorized.
• The liberal construction of the rules may be invoked in situations where there may be
some excusable formal deficiency or error in a pleading, provided that the same does not subvert
the essence of the proceeding and it at least connotes a reasonable attempt at compliance with the
rules. Besides, fundamental is the precept that rules of procedure are meant not to thwart but to
facilitate the attainment of justice; hence, their rigid application may, for deserving reasons, be
subordinated by the need for an apt dispensation of substantial justice in the normal course. They
ought to be relaxed when there is subsequent or even substantial compliance, consistent with the
policy of liberality espoused by Rule 1, Section 6.14 Not being inflexible, the rule on verification
allows for such liberality.
• Considering that the dismissal of the other complaints by the LA was without prejudice,
the other complainants should have taken the necessary steps to rectify their procedural mistake
after the decision of the LA was rendered. They should have corrected this procedural flaw by
immediately filing another complaint with the correct verification this time. Surprisingly, they
did not even attempt to correct this technical blunder. Worse, they committed the same
procedural error when they filed their appeal with the NLRC.
GEORGIA T. ESTEL, Petitioner, vs. RECAREDO P. DIEGO, SR. and RECAREDO R.
DIEGO, JR., Respondents.
G.R. No. 174082 | 2012-01-16

FACTS:
• Respondents filed a Complaint for Forcible Entry, Damages and Injunction with the
MTCC of Gingoog City, Misamis Oriental. Respondents alleged that on April 1991, they entered
a contract of sale of a parcel of land with petitioner and had been in actual, adverse, and
uninterrupted possession of the subject lot since then.
• That in the morning of July 20, 1995, the petitioner, together with her two grown-up sons
and five other persons, uprooted the fence surrounding the disputed lot, after which they entered
its premises and then cut and destroyed the trees and plants found therein.
• MTCC – in favor of respondents; ordered the plaintiffs to vacate the premises and return
the same to the plaintiffs.
• RTC – affirmed MTCC
• CA – affirmed RTC. Hence, this petition.
• Petitioner avers that the complaint states no cause of action because the verification and
certificate of non-forum shopping accompanying the complaint are defective and, as such, the
complaint should be treated as an unsigned pleading. As to the verification, petitioner contends
that it should be based on respondent's personal knowledge or on authentic record and not simply
upon "knowledge, information and belief."

ISSUE: W/N the complaint should be treated as an unsigned pleading.

HELD: NO.
• Anent respondents' alleged defective verification, the Court again notes that this issue
was not raised before the MTCC. Even granting that this matter was properly raised before the
court a quo, the Court finds that there is no procedural defect that would have warranted the
outright dismissal of respondents' complaint as there is compliance with the requirement
regarding verification.
• Section 4, Rule 7 of the Rules of Court, as amended by A.M. No. 00-2-10-SC provides:
Sec. 4. Verification. Except when otherwise specifically required by law or rule, pleadings need
not be under oath, verified or accompanied by affidavit. A pleading is verified by an affidavit
that the affiant has read the pleading and that the allegations therein are true and correct of his
personal knowledge or based on authentic records. A pleading required to be verified which
contains a verification based on "information and belief" or upon "knowledge, information and
belief" or lacks a proper verification, shall be treated as an unsigned pleading.
• A reading of respondents' verification reveals that they complied with the above quoted
procedural rule. Respondents confirmed that they had read the allegations in the Complaint
which were true and correct based on their personal knowledge. The addition of the words "to
the best" before the phrase "of our own personal knowledge" did not violate the requirement
under Section 4, Rule 7, it being sufficient that the respondents declared that the allegations in
the complaint are true and correct based on their personal knowledge. Verification is deemed
substantially complied with when, as in the instant case, one who has ample knowledge to swear
to the truth of the allegations in the complaint or petition signs the verification, and when matters
alleged in the petition have been made in good faith or are true and correct.

OTHER ISSUES:
• Petitioner contends that since respondents failed to allege the location of the disputed
parcel of land in their complaint, the MTCC did not acquire jurisdiction over the subject matter
of the said complaint.
 A review of the records shows that petitioner did not raise the issue of jurisdiction or
venue in her Answer filed with the MTCC. The CA correctly held that even if the geographical
location of the subject property was not alleged in the Complaint, petitioner failed to seasonably
object to the same in her Affirmative Defense, and even actively participated in the proceedings
before the MTCC. In fact, petitioner did not even raise this issue in her appeal filed with the
RTC. Thus, she is already estopped from raising the said issue in the CA or before this Court.
• Petitioner also avers that the MTCC did not acquire jurisdiction over the case for failure
of respondents to specifically allege facts constitutive of forcible entry.
 In the present case, it is clear that respondents sufficiently alleged in their Complaint the
material facts constituting forcible entry, as they explicitly claimed that they had prior physical
possession of the subject property since its purchase from petitioner, who voluntarily delivered
the same to them. They also particularly described in their complaint how petitioner, together
with her two sons and five other persons, encroached upon the subject property and dispossessed
them of the same. Unlawfully entering the subject property and excluding therefrom the prior
possessor would necessarily imply the use of force and this is all that is necessary. In the instant
case, it is, thus, irrefutable that respondents sufficiently alleged that the possession of the subject
property was wrested from them through violence and force.
• With respect to the certificate of non-forum shopping, petitioner claims that its defect
consists in respondents' failure to make an undertaking therein that “if they should learn that a
similar action or proceeding has been filed or is pending before the Supreme Court, the Court of
Appeals or any other tribunal or agency, they shall report that fact within five (5) days therefrom
to the court or agency wherein the original pleading and sworn certification have been filed.”
 It is settled that with respect to the contents of the certification against forum shopping,
the rule of substantial compliance may be availed of.22 This is because the requirement of strict
compliance with the provisions regarding the certification of non-forum shopping merely
underscores its mandatory nature in that the certification cannot be altogether dispensed with or
its requirements completely disregarded.23 It does not thereby interdict substantial compliance
with its provisions under justifiable circumstances, as the Court finds in the instant case.
Agustin v Cruz-Herrera
FACTS:
• Respondent Herrera was the President of Podden while complainants were assemblers
and/or line leader assigned at the production department.3 In 1993, the complainants were
terminated from employment due to financial reverses. Upon verification, however, with the
Department of Labor and Employment, no such report of financial reverses or even retrenchment
was filed. This prompted the complainants to file a complaint for illegal dismissal, monetary
claims and damages against Podden and Herrera.4 They engaged the services of Atty. Emmanuel
D. Agustin (Atty. Agustin) to handle the case5 upon the verbal agreement that he will be paid on
a contingency basis at the rate of ten percent (10%) of the final monetary award or such amount
of attorney’s fees that will be finally determined.
• The complainants, thru Atty. Agustin, obtained a favorable ruling before the Labor
Arbiter (LA). [Podden and Herrera] are hereby directed/ordered to immediately reinstate the
complainants to their former positions without loss of seniority rights and other privileges with
full backwages from date of dismissal up to actual date of reinstatement.
• March 20, 1999, Herrera filed a Manifestation and Motion to deny issuance of the writ
stating, among others, that Podden ceased operations on December 1, 1994 or almost four years
before judgment was rendered by the LA on the illegal dismissal complaint and that nine of the
eleven employees have executed Waivers and Quitclaims rendering any execution of the
judgment inequitable.
• Atty. Agustin opposed Herrera’s motion and argued that the issuance of a writ of
execution is ministerial because the LA decision has long been final and executory there being
no appeal taken therefrom. He further claimed that the alleged Waivers and Quitclaims were part
of a scheme adopted by Podden to evade its liability and defraud the complainants
• NLRC reversed the LA Order dated May 15, 2000 for the reason that it unlawfully
amended, altered and modified the final and executory LA Decision dated September 27, 1998.
The quitclaims were also held invalid based on the unconscionably low amount received by each
of the complainants thereunder which ranged between ₱10,000.000 and ₱20,000.00 as against
the judgment award of ₱238,680.00 for each individual complainant. This factor was found by
the NLRC to be a clear proof that the quitclaims were indeed wangled from the unsuspecting
complainants.
• On August 6, 2004, Herrera filed a petition for certiorari before the CA assailing the
issuances of the NLRC. During the pendency of the petition or on August 30, 2005, a joint
compromise agreement was submitted to the CA. CA found the joint compromise agreement
consistent with law, public order and public policy, and consequently stamped its approval
thereon and entered judgment in accordance therewith.
• Atty. Agustin, with the complainants named as his co-petitioners, interposed the present
recourse contending that the resolutions of the CA violated the principle of res judicata because
they amended and altered the final and executory LA Decision dated September 27, 1998 and
NLRC Resolution dated May 7, 2003 on the basis of an unconscionable compromise agreement
that was executed without his knowledge and consent. Atty. Agustin prays that the joint
compromise agreement be set aside, the LA Decision dated September 27, 1998 executed and
Herrera ordered to pay him ₱335,844.18 as attorney’s fees pursuant to the final and executory
monetary award originally obtained by the complainants before the LA.
ISSUE: Did the CA err in approving the joint compromise agreement executed by respondent
Herrera and the former employees of Podden?
RULING:
Atty. Agustin ought to be reminded that his professional relation with his clients is one of agency
under the rules thereof "[t]he acts of an agent are deemed the acts of the principal only if the
agent acts within the scope of his authority." J-Phil Marine Inc. v. NLRC, 583 Phil 671.It is clear
that under the circumstances of this case, Atty. Agustin is acting beyond the scope of his
authority in questioning the compromise agreement between the complainants, Podden and
Herrera.
It is settled that parties may enter into a compromise agreement without the intervention of their
lawyer. This precedes from the equally settled rule that a client has an undoubted right to settle a
suit without the intervention of his lawyer for he is generally conceded to have the exclusive
control over the subject-matter of the litigation and may, at any time before judgment, if acting in
good faith, compromise, settle, and adjust his cause of action out of court without his attorney’s
intervention, knowledge, or consent, even though he has agreed with his attorney not to do so.
Hence, the absence of a counsel’s knowledge or consent does not invalidate a compromise
agreement.
Neither can a final judgment preclude a client from entering into a compromise. Rights may be waived
through a compromise agreement, notwithstanding a final judgment that has already settled the rights of
the contracting parties provided the compromise is shown to have been voluntarily, freely and
intelligently executed by the parties, who had full knowledge of the judgment. Additionally, it must not
be contrary to law, morals, good customs and public policy.
In the present case, the allegations of vitiated consent proffered by Atty. Agustin are all presumptions and
suppositions that have no bearing as evidence. There is no proof that the complainants were forced,
intimidated or defrauded into executing the quitclaims.
It must be noted that the complainants were laborers who desired to contest their dismissal for being
illegal. With no clear means to pay for costly legal services, they hired Atty. Agustin whose remuneration
was subject to the success of the illegal dismissal suit. Before a judgment was rendered in their favor,
however, the company closed down and settlement of the suit for an amount lesser than their monetary
claims, instead of execution of the favorable judgment, guaranteed the atonement for their illegal
termination. To make the complainants liable for theP335,844.18 attorney’s fees adjudged in the LA
Decision would be allowing Atty. Agustin to get a lion’s share of theP385,000.00 received by the former
from the compromise agreement that terminated the suit; to allow that to happen will contravene the
raison d're for contingent fee arrangements.
More importantly, Atty. Agustin was not totally deprived of his fees. Under the joint settlement
agreement, he is entitled to receive ten percent (10%) of the total settlement.
 Pascual and Santos, Inc. v. The Members of the Tramo Wakas Neighborhood Association

(PLEADINGS: Certificate Against Forum Shopping)

FACTS:

Members of Tramo Wakas Neighborhood Association (respondents) lodged at the Presidential

Action Center a petition praying that ownership over 3 parcels of land situated in Barangay San
Dionisio, Parañaque, with an aggregate area of 35,195 sqm. be awarded to them. They alleged
that petitioner claims ownership of the subject lots which they have occupied since 1957.

Land Management Bureau (LMB) ruled against the respondents. Their MR is also denied. They
lodged an appeal before the DENR, which dismissed the appeal for lack of merit and affirmed in
toto the decision of the Director of the LMB. They filed an MR to the OP, which was likewise
dismissed their petition for lack of merit and affirmed in toto the decision of the DENR. They
now filed a Petition for Review before the CA, which dismissed the appeal due to infirm
Verification and Certification of non-forum shopping and belated filing. They filed an MR but
was still denied.

CA ruled by stating that “any person who claims authority to sign, on behalf of another, the
Certificate of Non-Forum Shopping, as required by the rules, must show sufficient proof thereof.
Bare allegations are not proof, and the representation of one who acts on behalf of another
cannot, by itself, serve as proof of his authority to act as agent or of the extent of his authority as
agent. Thus, absent such clear proof, the Court cannot accept at face value, such authority to sign
on behalf of the corporation”.

ISSUE:

WON THE PERSONS WHO EXECUTED THE VERIFICATION AND CERTIFICATION OF

NON-FORUM SHOPPING ATTACHED TO PSI'S MANIFESTATION/PETITION FOR
REVIEW FILED WITH THE COURT OF APPEALS WERE AUTHORIZED TO DO SO

HELD: YES

Rules of Court mandates that a petition for review shall contain a sworn certification against
forum shopping in which the petitioner shall attest that he has not commenced any other action
involving the same issues in this Court, CA or different divisions thereof, or any other tribunal or
agency; if there is such other action or proceeding, he must state the status of the same; and if he
should thereafter learn that a similar action or proceeding has been filed or is pending before this
Court, CA, or different divisions thereof, or any other tribunal or agency, he undertakes to
promptly inform the aforesaid courts and other tribunal or agency thereof within five days
therefrom. For failure to comply with this mandate, shall be sufficient ground for the dismissal
thereof.

The requirement that the petitioner should sign the certificate of non-forum shopping applies
even to corporations, considering that the mandatory directives of the Rules of Court make no
distinction between natural and juridical persons.

In the case at bar, CA dismissed the petition before it on the ground that Lombos and Pascual,
the signatories to the verification and certification on non-forum shopping, failed to show proof
that they were authorized by petitioner's board of directors to file such a petition.

Except for the powers which are expressly conferred on it by the Corporation Code and those
that are implied by or are incidental to its existence, a corporation has no powers. It exercises its
powers through its board of directors and/or its duly authorized officers and agents. Thus, its
power to sue and be sued in any court is lodged with the board of directors that exercises its
corporate powers. Physical acts, like the signing of documents, can be performed only by natural
persons duly authorized for the purpose by corporate by-laws or by a specific act of the board of
directors.

It is undisputed that when the petition for certiorari was filed with the CA, there was no proof
attached thereto that Lombos and Pascual were authorized to sign the verification and non-forum
shopping certification. Subsequent to CA's dismissal of the petition, however, petitioner filed a
motion for reconsideration to which it attached a certificate issued by its board secretary stating
that prior to the filing of the petition, Lombos and Pascual had been authorized by petitioner's
board of directors to file the petition before the CA.

This Court has ruled that the subsequent submission of proof of authority to act on behalf of a
petitioner corporation justifies the relaxation of the Rules for the purpose of allowing its petition
to be given due course.

It must also be kept in mind that while the requirement of the certificate of non-forum shopping
is mandatory, nonetheless the requirements must not be interpreted too literally and thus defeat
the objective of preventing the undesirable practice of forum shopping.

WHEREFORE, petition is GRANTED. Resolutions of CA are SET ASIDE. Case is

REMANDED to CA which is hereby directed to give due course to the appeal of petitioner.
MALAYAN INSURANCE CO., INC., YVONNE S. YUCHENGCO, ATTY. EMMANUEL
G. VILLANUEVA, SONNY RUBIN,1 ENGR. FRANCISCO MONDELO, and MICHAEL
REQUIJO,2 Petitioners.

vs.

EMMA CONCEPCION L. LIN,3 Respondent.

FACTS:

• Respondent, Emma Lin is a client of both RCBC and Malayan Insurance Co., Inc.
Acquired through various loans from RCBC, she had insured five of the properties which were
six clustered warehouses located at Plaridel, Bulacan to Malayan Insurance Co. The insurance
was purposed specifically against occurrence of fire for P 56 million and P2 million for the
remaining warehouse.

• On February 24, 2008 five warehouses were gutted by fire and 2 months after on April 8,
2008, the Bureau of Fire Protection (BFP) issued a Fire Clearance Certification to respondent
after having determined that the cause of fire was accidental.

• Despite the foregoing, her demand for payment of her insurance claim was denied since
the forensic investigators hired by Malayan claimed that the cause was arson instead of accident.
Respondent then sought assistance from the Insurance Commission (IC) which, after a
reinvestigation into the cause of fire, recommended that Malayan should pay Lin’s insurance
claim to accord with BFP’s findings. Nevertheless, Malayan still refused to do so. As against
RCBC, Lin averred that notwithstanding of the loss of mortgaged properties, the bank refused to
go after Malayan and instead insisted that she herself must pay the loans to the RCBC. The latter
also added that foreclosure proceedings would ensue if the former would not comply; to add
insult to injury, RCBC has been compounding the interest on her loans, despite the former’s
refusal to after Malayan.

• Following the aforementioned, respondent then filed a petition to order the petitioners to
pay her insurance claim plus interest on the amounts owing her; that the loans and mortgage to
RCBC be enjoined from foreclosing the mortgage on the properties put up as collaterals.

• Later on June 17, 2010, while the case was being filed, Lin filed an administrative case
before the Insurance Commission (IC) against the Malayan represented by Yvonne, thus
docketed as Administrative Case No. 431. The purpose is to put Malayan under liability for
unfair claim settlement practice under Section 241 in relation to Section 247 of the Insurance
Code. Thus, alleging that Malayan’s license to operate as a non-life insurance company should
be revoked or suspended until it fully complies with the IC Resolution.

• On August 17, 2010, Malayan filed a motion to dismiss Civil Case No. 10-122738 based
on forum shopping arguing that the administrative case’s purpose is to prompt IC into ordering
the former to pay her claim and that the elements of forum shopping are present; specifically the
identity of parties shared the same interests and were represented in both civil and administrative
cases.

• Motion to dismiss the Civil Case was denied by the RTC for lack of merit. Petitioners
then sued out a petition for Certiorari and Prohibition before the CA, whereas it upheld the
decision of the RTC. Petitioner moved for a motion for reconsideration which was also denied by
CA.

• Hence, this petition.

ISSUE: Whether or not Lin committed forum shopping.

RULING: NO. The SC held that the case at bar is to be governed by the case law rulings in the
Go and Almendras cases where it was stressed that an administrative case for unfair claim
settlement practice may proceed simultaneously with the civil case for collection of the
insurance proceeds filed by at the same claimant since a judgment in one will not amount to res
judicata to the other, and vice versa, due to the variance or differences in the issues, in the
quantum of evidence, and in the procedure to be followed in prosecuting the cases.

In the present case, petitioners basically insist that Lin committed willful and deliberate forum
shopping which warrants the dismissal of her civil case because it is not much different from the
administrative case in terms of the parties involved, the causes of action pleaded, and the reliefs
prayed for. Petitioners also posit that another ground warranting the dismissal of the civil case
was Lin’s failure to notify the RTC about the pendency of the administrative case within five
days from the filing thereof.

These above-mentioned arguments will not avail. The proscription against forum
shopping is found in Section 5, Rule 7 of the Rules of Court which cover the very essence of
forum shopping itself. It is the filing of multiple suits involving the same parties for the same
cause of action, either simultaneously, for the purpose of obtaining a favorable judgment. It
exists where the elements of litis pendentia are present or where a final judgment in one case will
amount to res judicata in another. The settled rule is that criminal and civil cases are altogether
different from administrative matters as postulated in Almendras Mining Corporation v. Office
of the Insurance Commission.

The Office of the Ombudsman further reiterated and enunciated in the decision that a
civil case before the trial court involving recovery of payment of the insured’s insurance claim
plus damages, can proceed simultaneously with an administrative case before the I.C. As the
afore cited cases are analogous in many aspects to the present case, both in respect to their
factual backdrop and in their jurisprudential teachings, the case law ruling in the Almendras and
in the Go cases must apply with implacable force to the present case. Consistency alone
demands----because of justice cannot be inconsistent, that the final authoritative mandate in the
cited cases must produce and end result not much different from the present case.

The essence of forum shopping is the filing of multiple suits involving the same parties for the
same cause of action, either simultaneously or successively, for the purpose of obtaining a
favorable judgment. It exists where the elements of litis pendentia are present or where a final
judgment in one case will amount to res judicata in another. On the other hand, for litis pendentia
to be a ground for the dismissal of an action, the following requisites must concur: (a) identity of
parties, or at least such parties who represent the same interests in both actions; (b) identity of
rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the
identity with respect to the two preceding particulars in the two cases is such that any judgment
that may be rendered in the pending case, regardless of which party is successful, would amount
to res judicata in the other case.

Asian Construction & Development Corp. v. Lourdes K. Mendoza

(Manner of Making Allegations in a Pleading; Pleading an actionable document)

FACTS:

Respondent, sole proprietor of Highett Steel Fabricators, filed before the RTC of Caloocan City,
a Complaint for a sum of money, against petitioner, a duly registered domestic corporation.

Respondent alleged that petitioner purchased from Highett various fabricated steel materials
and supplies; that despite demand, petitioner failed and/or refused to pay; and that due to the
failure and/or refusal of petitioner, respondent was compelled to engage the services of counsel.

Petitioner moved for a bill of particulars on the ground that no copies of the purchase orders and
invoices were attached to the complaint to enable petitioner to prepare a responsive pleading to
the complaint. The RTC, however, denied the motion. Petitioner filed its Answer with
Counterclaim denying liability for the claims and interposing the defense of lack of cause of
action.

Respondent presented testimonies of (1) Artemio Tejero, the salesman of Highett who
confirmed the delivery of the supplies and materials to petitioner, and (2) Arvin Cheng, GM of
Highett. The presentation of evidence for petitioner, however, was deemed waived and
terminated due to the repeated non-appearance of petitioner and its counsel.

PROCEDURAL HISTORY:

RTC - rendered a Decision in favor of respondent; ordering petitioner to pay

respondent.

CA - affirmed but modifying on the point for computation of the 1% monthly interest.

Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing CA’s decision.
ISSUE: WON the Charge Invoices are actionable documents / WON the delivery was proven

ARGUMENTS:

Petitioner - a charge or sales invoice is not an actionable document; thus, petitioner’s

failure to deny under oath its genuineness and due execution does not constitute
an admission thereof.

- respondent was not able to prove her claim as the invoices offered as evidence
were not properly authenticated by her witnesses.

Respondent - charge invoices are actionable documents, and that these were properly
identified and authenticated by witness Tejero, who testified that upon delivery of
the supplies and materials, the invoices were stamped received by petitioner’s
employee.

HELD: NO. / YES.

Section 7 of Rule 8 of the Rules of Court states:

SEC. 7. Action or defense based on document. – Whenever an action or defense is based upon
a written instrument or document, the substance of such instrument or document shall be set
forth in the pleading, and the original or a copy thereof shall be attached to the pleading as an
exhibit, which shall be deemed to be a part of the pleading or said copy may with like effect be
set forth in the pleading.

Based on the foregoing provision, a document is actionable when an action or defense is

grounded upon such written instrument or document. In the instant case, the Charge Invoices
are not actionable documents per se as these "only provide details on the alleged transactions."
These documents need not be attached to or stated in the complaint as these are evidentiary in
nature. In fact, respondent’s cause of action is not based on these documents but on the
contract of sale between the parties.

---------------------------------------------------------------------------------------------------------------------

But although the Charge Invoices are not actionable documents, we find that these, along with
the Purchase Orders, are sufficient to prove that petitioner indeed ordered supplies and
materials from Highett and that these were delivered to petitioner.

Moreover, contrary to the claim of petitioner, the Charge Invoices were properly identified and
authenticated by witness Tejero who was present when the supplies and materials were
delivered to petitioner and when the invoices were stamped received by petitioner’s employee,
Roel Barandon.
It bears stressing that in civil cases, only a preponderance of evidence or "greater weight of the
evidence" is required. In this case, except for a bare denial, no other evidence was presented
by petitioner to refute respondent’s claim. Thus, we agree with the CA that the evidence
preponderates in favor of respondent.

Spouses Fernando & Ma. Elena Santos v. Lolita Alcazar

(Manner of Making Allegations in a Pleading)

FACTS:

Respondent, proprietor of Legazpi Color Center, instituted through her A-I-F Delfin Chua a
Complaint for sum of money in Legazpi City RTC against the petitioners, to collect the value of
paint and construction materials obtained by the latter from LCC amounting to ₱1,456,000.00,
which remained unpaid despite written demand. Respondent’s cause of action is based on a
document entitled "Acknowledgment" apparently executed by hand by petitioner Fernando.

Pre-trial was conducted. Respondent presented her evidence and testified in court as the lone
witness. She made a formal offer of her evidence and rested her case. Petitioners filed a
Demurrer to Evidence, which the respondent opposed. Petitioners argued that the
Acknowledgment was not an original copy and thus inadmissible; petitioners’ receipt of the
written demand was not proved; the alleged deliveries of paint and construction materials were
not covered by delivery receipts; and respondent’s testimony was merely hearsay and
uncorroborated.

RTC denied petitioners’ demurrer for lack of merit. On the day of the scheduled hearing,
petitioners’ counsel failed to appear, prompting the trial court to issue an Order: 1) denying
petitioners’ motion to reset for lack of merit and for violating Section 4, Rule 15 of the 1997
Rules of Civil Procedure; 2) declaring that petitioners have waived their right to present
evidence; and 3) declaring that Case is deemed submitted for decision. Their MR was denied.

PROCEDURAL HISTORY

RTC - counterclaim in the Answer is Dismissed; ordered defendants to pay the plaintiff.

- petitioners admitted that they entered into transactions with respondent for delivery of
paint and construction materials, which remained unpaid; that from the
Acknowledgment, petitioners admitted that their unpaid obligation – including interest –
amounted to ₱1,456,000.00; and that petitioners’ plea for reformation has no basis.

CA - sustained both the denial of demurrer and the order to defendants to pay the plaintiff.
 - in their Answer, petitioners admitted tat they owed respondent, this judicial admission
of liability required no further proof. And with this admission of liability, the
Acknowledgment was sufficient to establish their liability, and no further proof in the form
of receipts and statements of account was required.

- Fernando’s categorical admission of liability as contained in the Acknowledgment as well

as petitioners’ admissions in their Answer sufficed. Respondent was competent to testify
on the Acknowledgment as she was a signatory therein.

- Since they failed to oppose the Acknowledgment in the court below as a result of their
having waived their right to present evidence, petitioners cannot now belatedly question
the document. Moreover, their claim of a lesser liability in the amount of ₱600,000.00
remained to be plain unsubstantiated allegations as a result of their failure to refute
respondent’s evidence and present their own.

ISSUE:

WON RTC erred in denying petitioner’s demurrer to evidence

ARGUMENTS:

Petitioner - during the proceedings, only a photocopy of the Acknowledgment was

presented and identified by respondent even as the original was not lost, the same
having been made part of the record of the case when respondent’s evidence was first
presented ex parte. For this reason, the photocopy presented and offered in
evidence is inadmissible and could not be the basis for arriving at a finding of
liability on their part, pursuant to the best evidence rule.

Respondent - with the finality of the Decision of the CA, petitioners may no longer raise any
issue pertaining to the Acknowledgment, the genuineness and due
execution of which they are considered to have admitted.

HELD: NO.

Respondent’s failure to present the original copy of the Acknowledgment during the taking of
her testimony for the second time, and the presentation of a mere photocopy thereof at said
hearing, does not materially affect the outcome of the case. It was a mere procedural
inadvertence that could have been cured and did not affect petitioners’ cause in any manner. As
conceded by them and as held by the CA, the original exists and was made part of the records
of the case when respondent’s evidence was first taken. Though respondent now claims that
she had lost the original, the CA proclaimed that the document resides in the record. This would
explain then why respondent cannot find it in her possession; it is with the court as an exhibit.
Besides, it evidently appears that there is no question raised on the authenticity and contents of
the photocopy that was presented and identified in court; petitioners merely insist that the
photocopy is inadmissible as a result of respondent’s failure to present the original, which they
nevertheless admit existing and is found and included in the record of the case.

While it is a basic rule of evidence that the original copy prevails over a mere photocopy, there
is no harm if in a case, both the original and a photocopy thereof are authenticated, identified
and formally offered in evidence by the party proponent. Petitioners failed to deny specifically
under oath the genuineness and due execution of the Acknowledgment in their Answer. The
effect of this is that the genuineness and due execution of the Acknowledgment is deemed
admitted.

"There is no need for proof of execution and authenticity with respect to documents the
genuineness and due execution of which are admitted by the adverse party." With the
consequent admission engendered by petitioners’ failure to properly deny the Acknowledgment
in their Answer, coupled with its proper authentication, identification and offer by the
respondent, not to mention petitioners’ admissions in paragraphs 4 to 6 of their Answer that they
are indeed indebted to respondent, the Court believes that judgment may be had solely on the
document, and there is no need to present receipts and other documents to prove the claimed
indebtedness. The Acknowledgment, just as an ordinary acknowledgment receipt, is "valid and
binding between the parties who executed it, as a document evidencing the loan agreement
they had entered into." The absence of rebutting evidence occasioned by petitioners’ waiver of
their right to present evidence renders the Acknowledgment as the best evidence of the
transactions between the parties and the consequential indebtedness incurred. Indeed, the
effect of the admission is such that "a prima facie case is made for the plaintiff which dispenses
with the necessity of evidence on his part and entitles him to a judgment on the pleadings
unless a special defense of new matter, such as payment, is interposed by the defendant."

The admission of liability resulting from petitioners’ admission of indebtedness in their Answer
and other pleadings, their failure to specifically deny under oath the genuineness and due
execution of the Acknowledgment, as well as their waiver of their right to present evidence – all
these did away with the necessity of producing receipts and statements of account which would
otherwise be required under normal circumstances.
G.R. No. 189496               February 1, 2012

D.M. FERRER & ASSOCIATES CORPORATION, Petitioner,

vs.
UNIVERSITY OF SANTO TOMAS, Respondent.

FACTS:
Petitioner and University of Santo Tomas Hospital, Inc. entered into a Project Management
Contract for the renovation of the 4th and 5thfloors of the Clinical Division Building, Nurse Call
Room and Medical Records, Medical Arts Tower, Diagnostic Treatment Building and Pay
Division Building.
On various dates, petitioner demanded from USTHI the payment of the construction costs
amounting to P17,558,479.39. However, UST, through its rector, Fr. Rolando V. Dela Rosa,
wrote a letter informing petitioner that its claim for payment had been denied, because the
Project Management Contract was without the required prior approval of the board of trustees.
Thus, petitioner filed a Complaint for sum of money, breach of contract and damages against
herein respondent UST and USTHI when the latter failed to pay petitioner despite repeated
demands.
In impleading respondent UST, petitioner alleged that the former took complete control over the
business and operation of USTHI, as well as the completion of the construction project. It also
pointed out that the Articles of Incorporation of USTHI provided that, upon dissolution, all of the
latter’s assets shall be transferred without any consideration and shall inure to the benefit of
UST. It appears that USTHI passed a Resolution dissolving the corporation by shortening its
corporate term of existence.
Finally, petitioner alleged that respondent, through its rector, Fr. Dela Rosa, O.P., verbally
assured the former of the payment of USTHIs outstanding obligations.
Thus, petitioner posited in part that UST may be impleaded in the case under the doctrine of
piercing the corporate veil, wherein respondent UST and USTHI would be considered to be
acting as one corporate entity, and UST may be held liable for the alleged obligations due to
petitioner.
Subsequently, respondent filed its Motion to Dismiss. It alleged that the Complaint failed to state
a cause of action, and that the claim was unenforceable under the provisions of the Statute of
Frauds.
RTC Quezon City granted the motion and dismissed the Complaint insofar as respondent UST
was concerned, on the ground that respondent was not a real partyin-interest, and that it was
not privy to the contract executed between USTHI and petitioner. Second, the court pointed out
that the alleged verbal assurances of Fr. Dela Rosa should have been in writing to make these
assurances binding and demandable.
Petitioner sought a reconsideration of the RTC Order and asserted that only allegations of the
Complaint, and not the attached documents, should have been the basis of the trial court’s
ruling, consistent with the rule that the cause of action can be determined only from the facts
alleged in the Complaint. It also insisted that the Statute of Frauds was inapplicable, since
USTHI’s obligation had already been partially executed.
The Motion for Reconsideration filed by petitioner was dismissed, upholding the initial findings
that respondent UST was not a real party-in-interest, and that Fr. Dela Rosas alleged
assurances of payment were unenforceable.
Subsequently, petitioner filed a Petition for Certiorari under Rule 65 with the CA, alleging that
the trial court committed grave abuse of discretion when it granted respondents Motion to
Dismiss on the basis of the documents submitted in support of the Complaint, and not solely on
the allegations stated therein. It pointed out that the allegations raised questions of fact and law,
which should have been threshed out during trial, when both parties would have been given the
chance to present evidence supporting their respective allegations.
CA issued the assailed Resolution and dismissed the Petition on the ground that a petition
under Rule 65 is the wrong remedy to question the RTCs Order that completely disposes of the
case. Instead, petitioner should have availed itself of an appeal under Rule 41 of the Rules of
Court.
Petitioner moved for a reconsideration of the Resolution, pointing out that the present case falls
under the enumerated exceptions of Rule 41, in particular, while the main case is still pending,
no appeal may be made from a judgment or final order for or against one or more of several
parties or in separate claims, counterclaims, cross-claims and third-party complaints. CA denied
the Motion for Reconsideration through its second assailed Resolution, holding that the motion
raised no new issues or substantial grounds that would merit the reconsideration of the court.
ISSUE:
Whether or not the trial court committed grave abuse of discretion when it held that the
Complaint stated no cause of action
RULING: YES
In Abacan v. Northwestern University, Inc., we said:
It is settled that the existence of a cause of action is determined by the
allegations in the complaint. In resolving a motion to dismiss based on the failure to state
a cause of action, only the facts alleged in the complaint must be considered. The test is
whether the court can render a valid judgment on the complaint based on the facts
alleged and the prayer asked for. Indeed, the elementary test for failure to state a cause
of action is whether the complaint alleges facts which if true would justify the relief
demanded. Only ultimate facts and not legal conclusions or evidentiary facts, which
should not be alleged in the complaint in the first place, are considered for purposes of
applying the test.
While it is admitted that respondent UST was not a party to the contract, petitioner posits that
the former is nevertheless liable for the construction costs. In support of its position, petitioner
alleged that (1) UST and USTHI are one and the same corporation; (2) UST stands to benefit
from the assets of USTHI by virtue of the latter’s Articles of Incorporation; (3) respondent
controls the business of USTHI; and (4) UST’s officials have performed acts that may be
construed as an acknowledgement of respondent’s liability to petitioner. Obviously, these issues
would have been best resolved during trial.
The RTC therefore committed grave abuse of discretion when it dismissed the case against
respondent for lack of cause of action. The trial court relied on the contract executed between
petitioner and USTHI, when the court should have instead considered merely the allegations
stated in the Complaint.
 ANITA A. LEDDA A. LEDDA vs. BANK OF THE PHILIPPINE ISLANDS
G.R. No. 200868 // November 21, 2012
FACTS:  
This case arose from a collection suit filed by respondent Bank of by respondent Bank of the
Philippine Islands (BPI) against Ledda for the latter’s for the latter’s unpaid credit card
obligation.
BPI, through its credit card system, extends credit accommodations to its clientele for the
purchase of goods and availment of various services from accredited merchants, as well as to
secure cash advances from authorized bank branches or through automated teller machines.
As one of BPI’s valued clients, Ledda was issued a pre-approved BPI credit card under
Customer Account Number 020100-9-00-3041167. The BPI Credit Card Package, which
included the Terms and Conditions governing the use of the credit card, was delivered at
Ledda’s residence on 1 July 2005. Thereafter, Ledda used the credit card for the credit card for
various purchases of goods and services and cash advances.
Ledda defaulted in the payment of her credit card obligation, which BPI claimed in their
complaint amounted to P548,143.73 . Consequently, BPI sent letters 6 to Ledda demanding the
payment of such amount, representing the principal obligation with 3.25% finance charge and
6% late payment charge per month.
Despite BPI’s repeated demands, Ledda failed to pay her credit card obligation constraining BPI
to file an action for collection of sum of money with the Regional Trial Court. The trial court
declared Ledda in default for failing to file Answer within the prescribed period, despite receipt of
the complaint and summons. Upon Ledda’s motion for reconsideration, the trial court lifted the
default order and admitted Ledda’s Answer Ad Cautelam.
While she filed a Pre-Trial Brief, Ledda and her counsel failed to appear during the continuation
of the Pre-Trial. Hence, the trial court allowed BPI to present its evidence ex-parte. The trial
court ruled in favor of BPI.
On appeal, the Court of Appeals rejected Ledda’s argument that the document containing the
Terms and Conditions governing the use of the BPI credit card is an actionable document
contemplated in Section 7, Rule 8 of the 1997 Rules of Civil Procedure. The Court of Appeals
held that BPI’s cause of action is based on "Ledda’s availment of the bank’s credit facilities
through the use of her credit/plastic cards, coupled with her refusal to pay BPI’s outstanding
credit for the cost of the goods, services and cash advances despite lawful demands."
ISSUE: Whether or not the document containing the Terms and Conditions is an actionable
document
RULING: NO. Section 7, Rule 8 of the 1997 Rules of Civil Procedure provides:
SEC. 7. Action or defense based on document. — Whenever an action or defense is based
upon a written instrument or document, the substance of such instrument or document shall be
set forth in the pleading, and the original or a copy thereof shall be attached to the pleading as
an exhibit, which shall be deemed to be a part of the pleading, or said copy may with like effect
be set forth in the pleading.
Clearly, the above provision applies when the action is based on a written instrument or
document. In this case, the complaint is an action for collection of sum of money arising from
Ledda’s default in her credit card obligation with BPI. BPI’s cause of action is primarily based on
Ledda’s (1) acceptance of the BPI credit card, (2) usage of the BPI credit card to purchase
goods, avail services and secure cash advances, and (3) non-payment of the amount due for
such credit card transactions, despite demands. In other words, BPI’s cause of action is not
based only on the document containing the Terms and Conditions accompanying the
issuance of the BPI credit card in favor of Ledda. Therefore, the document containing the
Terms and Conditions governing the use of the BPI credit card is not an actionable
document contemplated in Section 7, Rule 8 of the 1997 Rules of Civil Procedure. As
such, it is not required by the Rules to be set forth in and attached to the complaint.
At any rate, BPI has sufficiently established a cause of action against Ledda, who admits having
received the BPI credit card, subsequently used the credit card, and failed to pay her obligation
arising from the use of such credit card.
Ramones vs. Spouses Guimoc (2018)
FACTS:

 This case stemmed from an Information filed on June 30, 2006 before the Municipal Trial
Court of Mariveles, Bataan (MTC), docketed as Criminal Case No. 06-8539, charging
respondents with the crime of Other Forms of Swindling under Article 316 (2) of the Revised
Penal Code (RPC).
 After filing of the information, Clerk of Court wrote a letter to petitioner requiring her to pay
the amount of P500.00 as docket fees. The petitioner did and was issued a certification for
the same.
 The case proceeded and the MTC acquitted Teodorico but convicted Elenita of the crime
charged. In addition, Elenita was ordered to pay the amount of P507,000.00, and despite his
acquittal, Teodorico was also directed to pay the amount of P60,000.00, which amounts
reflect their respective civil liabilities, both with legal interest from December 13, 2006 until
fully paid.
 Respondents appealed to RTC arguing that MTC did not acquire jurisdiction to award
damages in favor of petitioner for failure of the latter to pay the correct amount of docket
fees pursuant to Supreme Court Administrative Circular No. 35-2004 (SC Circular No. 35-
2004).
 Respondents claimed that due to petitioner's failure to make an express reservation to
separately institute a civil action, her payment of filing fees in the amount of P500.00 was
deficient. The damages sought was worth P663,000.00; thus, the correct filing fees should
have allegedly been around P9,960.00.
 RTC acquitted Elenita but maintained the civil liability of the respondents.
 They appealed to CA and prayed for the civil liability to be deleted. CA affirmed the RTC.

ISSUE: WoN the award of damages is proper.

RULING: YES.
In the Manchester case, laid down the general rule that "[a court] acquires jurisdiction over any
case only upon the payment of the prescribed docket fee."
This however was clarified in the case of Sun Insurance the rule in Manchester only applies
when the non-payment or insufficiency of payment of docket fee was clearly intended for no
other purpose than to evade the payment of the correct filing fees if not to mislead the docket
clerk in the assessment of the filing fee. "When insufficient filing fees are initially paid by the
plaintiffs and there is no intention to defraud the government, the Manchester rule does not
apply."
Case law demonstrates that "the non-payment of the prescribed filing fees at the time of the
filing of the complaint or other initiatory pleading fails to vest jurisdiction over the case in the trial
court. Yet, where the plaintiff has paid the amount of filing fees assessed by the clerk of court,
and the amount paid turns out to be deficient, the trial court still acquires jurisdiction over the
case, subject to the payment by the plaintiff of the deficiency assessment."
In this case, it is undisputed that the amount of P500.00 paid by petitioner was
insufficient to cover the required filing fees for her estafa case under the premises of
Section 21, Rule 141 of the Rules of Court, as amended by A.M. No. 04-2-04-SC.
Nonetheless, it is equally undisputed that she paid the full amount of docket fees as
assessed by the Clerk of Court of the MTC, which is evidenced by a certification dated
April 11, 2016 issued therefor.
In her petition, she claims that she is "very much willing to pay the correct docket fees
which is the reason why she immediately went to the clerks of court and records show
that she paid the MTC of the amount assessed from her." Indeed, the foregoing
actuations negate any bad faith on petitioner's part, much more belie any intent to
defraud the government. As such, applying the principles above-discussed, the Court
holds that the courta quo properly acquired jurisdiction over the case. However,
petitioner should pay the deficiency that shall be considered as a lien on the monetary
awards in her favor pursuant to Section 2, Rule 141 of the Rules of Court.

RICARDO RIZAL, POTENCIANA RIZAL, SATURNINA RIZAL, ELENA RIZAL, and BENJAMIN
RIZAL vs. LEONCIA NAREDO, ANASTACIO LIRIO, EDILBERTO CANTAVIEJA, GLORIA
CANTAVIEJA, CELSO CANTAVIEJA, and the HEIRS of MELANIE CANTAVIEJA,
G.R. No. 151898
FACTS:

 Petitioners commenced an action involving accretion against the respondents. The CFI
awarded the ownership of the two-hectare accretion to the petitioners and ordered the
 defendants therein to vacate the said land and to pay P500.00 a year from 1943 as
reasonable rent for their occupancy thereof. Both the CA and the SC upheld the decision.
 The sheriff levied upon the two lots of the respondents. Later on, the respondents question
the validity of the execution sale of the said lots. They claimed that these properties were
exempt from execution.
 Petitioners filed a civil case for recovery of possession of the mentioned lot. Then, 10 years
later, they filed another case assailing the compromise agreement on the ground of forgery.
The latter was dismissed without prejudice to the plaintiff’s failure prosecute.
 The petitioners filed a complaint before the RTC for immediate segregation, partition, and
recovery of shares and ownership over the lot. However, the court dismissed the case on
the ground of res judicata.
 They appealed to the CA and the CA found out that appellants’ brief neither contained the
required page references to the records, as provided in Section 13 of Rule 44 of the Rules
of Court; nor was it specified, both in the prayer and in the body of the complaint, the
specific amounts of the petitioners’ claim for actual, moral, exemplary and compensatory
damages.

ISSUE: WoN the ruling in Manchester case should be applied for failure to pay docket fees.
RULING: YES.
The petitioners failed to pay the correct docket fees; in which case, jurisdiction did not vest in
the trial court. In Siapno v. Manalo, this Court has made it abundantly clear that any complaint,
petition, answer and other similar pleading, which does not specify both in its body and prayer
the amount of damages being claimed, should not be accepted or admitted, or should be
expunged from the records, as may be the case.
The SC held that complaints which allege in its body a certain amount of claim but the prayer
portion did not mention such claims, nor did it even pray for damages should be dismissed
outright; or if already admitted, should be expunged from the records. The Court explained that
the rule—requiring the amount of damages claimed to be specified not only in the body of the
pleading but also in its prayer portion—was intended to put an end to the then prevailing
practice of lawyers where the damages prayed for were recited only in the body of the
complaint, but not in the prayer, in order to evade payment of the correct filing fees.
“To put a stop to this irregularity, henceforth all complaints, petitions, answers and other similar
pleadings should specify the amount of damages being prayed for not only in the body of the
pleading but also in the prayer, and said damages shall be considered in the assessment of the
filing fees in any case. Any pleading that fails to comply with this requirement shall not be
accepted nor admitted, or shall otherwise be expunged from the record.”
G.R. No. 116121               July 18, 2011

THE HEIRS OF THE LATE RUBEN REINOSO, SR., represented by Ruben Reinoso Jr.,  vs.
COURT OF APPEALS, PONCIANO TAPALES, JOSE GUBALLA, and FILWRITERS
GUARANTY ASSURANCE CORPORATION

Fact:
  The complaint for damages arose from the collision of a passenger jeepney and a truck
along E. Rodriguez Avenue, Quezon City. As a result, a passenger of the jeepney,
Ruben Reinoso, Sr.  was killed. The passenger jeepney was owned by Ponciano
Tapales and driven by Alejandro Santos, while the truck was owned by Jose
Guballa and driven by Mariano Geronimo.
 The heirs of Reinoso filed a complaint for damages against Tapales and Guballa. In turn,
Guballa filed a third party complaint against Filwriters Guaranty Assurance Corporation
(FGAC).
 The RTC rendered the following decisions:
o In favor of herein plaintiffs and against defendant Jose Guballa
o In favor of defendant Ponciano Tapales and against defendant Jose Guballa (for
damage to property)
o Under the 3rd party complaint against 3rd party defendant Filwriters Guaranty
Assurance Corporation, the Court hereby renders judgment in favor of said 3rd
party plaintiff by way of 3rd party liability under policy No. OV-09527 in the
amount of ₱ 50,000.00 undertaking plus ₱ 10,000.00 as and for attorney’s fees.
 On appeal, the CA set aside and reversed the RTC decision and dismissed the
complaint on the ground of non-payment of docket fees pursuant to the doctrine laid
down in Manchester v. CA. In addition, the CA ruled that since prescription had set in,
petitioners could no longer pay the required docket fees.
 Hence, this petition for review filed by the petitioner.

Issue: Whether the CA misapplied the rules of Manchester doctrine to the herein case.
Ruling:
The Court finds merit in the petition.

The rule is that payment in full of the docket fees within the prescribed period is
mandatory. In Manchester v. Court of Appeals, it was held that a court acquires jurisdiction over
any case only upon the payment of the prescribed docket fee. The strict application of this rule
was, however, relaxed two (2) years after in the case of Sun Insurance Office, Ltd. v. Asuncion,
wherein the Court decreed that where the initiatory pleading is not accompanied by the payment
of the docket fee, the court may allow payment of the fee within a reasonable period of time, but
in no case beyond the applicable prescriptive or reglementary period. This ruling was made on
the premise that the plaintiff had demonstrated his willingness to abide by the rules by paying
the additional docket fees required. Thus, in the more recent case of United Overseas Bank v.
Ros, the Court explained that where the party does not deliberately intend to defraud the court
in payment of docket fees, and manifests its willingness to abide by the rules by paying
additional docket fees when required by the court, the liberal doctrine enunciated in Sun
Insurance Office, Ltd., and not the strict regulations set in Manchester, will apply. It has been on
record that the Court, in several instances, allowed the relaxation of the rule on non-payment of
docket fees in order to afford the parties the opportunity to fully ventilate their cases on the
merits. In the case of La Salette College v. Pilotin, the Court stated:

Notwithstanding the mandatory nature of the requirement of payment of appellate docket fees,
we also recognize that its strict application is qualified by the following: first, failure to pay those
fees within the reglementary period allows only discretionary, not automatic,
dismissal; second, such power should be used by the court in conjunction with its exercise of
sound discretion in accordance with the tenets of justice and fair play, as well as with a great
deal of circumspection in consideration of all attendant circumstances.

While there is a crying need to unclog court dockets on the one hand, there is, on the other, a
greater demand for resolving genuine disputes fairly and equitably, for it is far better to dispose
of a case on the merit which is a primordial end, rather than on a technicality that may result in
injustice.

In this case, it cannot be denied that the case was litigated before the RTC and said trial court
had already rendered a decision. While it was at that level, the matter of non-payment of docket
fees was never an issue. It was only the CA which motu propio dismissed the case for said
reason.

Considering the foregoing, there is a need to suspend the strict application of the rules so that
the petitioners would be able to fully and finally prosecute their claim on the merits at the
appellate level rather than fail to secure justice on a technicality, for, indeed, the general
objective of procedure is to facilitate the application of justice to the rival claims of contending
parties, bearing always in mind that procedure is not to hinder but to promote the administration
of justice.

The Court also takes into account the fact that the case was filed before the Manchester ruling
came out. Even if said ruling could be applied retroactively, liberality should be accorded to the
petitioners in view of the recency then of the ruling. Leniency because of recency was applied to
the cases of Far Eastern Shipping Company v. Court of Appeals and Spouses Jimmy and Patri
Chan v. RTC of Zamboanga.

We held in another case:

x x x It bears stressing that the rules of procedure are merely tools designed to facilitate the
attainment of justice. They were conceived and promulgated to effectively aid the court in the
dispensation of justice. Courts are not slaves to or robots of technical rules, shorn of judicial
discretion. In rendering justice, courts have always been, as they ought to be, conscientiously
guided by the norm that, on the balance, technicalities take a backseat against substantive
rights, and not the other way around. Thus, if the application of the Rules would tend to frustrate
rather than promote justice, it is always within the power of the Court to suspend the Rules, or
except a particular case from its operation.

The petitioners, however, are liable for the difference between the actual fees paid and the
correct payable docket fees to be assessed by the clerk of court which shall constitute a lien on
the judgment pursuant to Section 2 of Rule 141 which provides:

SEC. 2. Fees in lien. – Where the court in its final judgment awards a claim not alleged, or a
relief different from, or more than that claimed in the pleading, the party concerned shall pay the
additional fees which shall constitute a lien on the judgment in satisfaction of said lien. The clerk
of court shall assess and collect the corresponding fees.

(SC also ruled on the substantive part of the case, wherein it sustained the ruling of the RTC)
G.R. No. 173946               June 19, 2013

BOSTON EQUITY RESOURCES, INC., Petitioner, vs.

COURT OF APPEALS AND LOLITA G. TOLEDO, Respondents.

Facts:

 Petitioner filed a complaint for sum of money with a prayer for the issuance of a writ of
preliminary attachment against the spouses Manuel and Lolita Toledo.

 Lolita Toledo filed a Motion for Leave to Admit Amended Answer in which she alleged,
among others, that her husband and co-defendant, Manuel Toledo, is already dead. As
a result, petitioner filed a motion to require respondent to disclose the heirs of Manuel.

 In compliance with the verbal order of the court during a hearing of the case, respondent
submitted the required names and addresses of the heirs. Petitioner then filed a Motion
for Substitution praying that Manuel be substituted by his children as party-defendants
which was granted by the RTC.

 On the reception of evidence for herein respondent was cancelled upon agreement of
the parties. Counsel for herein respondent was given a period of fifteen days within
which to file a demurrer to evidence. However, respondent instead filed a motion to
dismiss the complaint, citing the following as grounds: (1) that the complaint failed to
implead an indispensable party or a real party in interest; hence, the case must be
dismissed for failure to state a cause of action; (2) that the trial court did not acquire
jurisdiction over the person of Manuel pursuant to Section 5, Rule 86 of the Revised
Rules of Court; (3) that the trial court erred in ordering the substitution of the deceased
Manuel by his heirs; and (4) that the court must also dismiss the case against Lolita
Toledo in accordance with Section 6, Rule 86 of the Rules of Court.

 The RTC denied the motion to dismiss for having been filed out of time. Aggrieved,
respondent filed a petition for certiorari with the Court of Appeals alleging that the trial
court seriously erred and gravely abused its discretion in denying her motion to dismiss
despite discovery, during the trial of the case, of evidence that would constitute a ground
for dismissal of the case which was granted by the latter.

 The CA argued that:

x x x it is well-settled that issue on jurisdiction may be raised at any stage of the proceeding,
even for the first time on appeal. By timely raising the issue on jurisdiction in her motion to
dismiss x x x respondent is not estopped from raising the question on jurisdiction.

Moreover, when issue on jurisdiction was raised by respondent, the court a quo had not yet
decided the case, hence, there is no basis for the court a quo to invoke estoppel to justify its
denial of the motion for reconsideration;
It should be stressed that when the complaint was filed, defendant Manuel S. Toledo was
already dead. The complaint should have impleaded the estate of Manuel S. Toledo as
defendant, not only the wife, considering that the estate of Manuel S. Toledo is an indispensable
party, which stands to be benefited or be injured in the outcome of the case. x x x

Issue: Whether the complaint against Lolita Toledo should be dismissed on the basis of RTC
not having jurisdiction over Manuel Toledo.

Ruling:

The SC ruled that there is no basis for dismissing the complaint against respondent herein.

At the outset, it must be here stated that, as the succeeding discussions will demonstrate,
jurisdiction over the person of Manuel should not be an issue in this case. A protracted
discourse on jurisdiction is, nevertheless, demanded by the fact that jurisdiction has been raised
as an issue from the lower court, to the Court of Appeals and, finally, before this Court. For the
sake of clarity, and in order to finally settle the controversy and fully dispose of all the issues in
this case, it was deemed imperative to resolve the issue of jurisdiction.

1. Aspects of Jurisdiction

Petitioner calls attention to the fact that respondent’s motion to dismiss questioning the trial
court’s jurisdiction was filed more than six years after her amended answer was filed. According
to petitioner, respondent had several opportunities, at various stages of the proceedings, to
assail the trial court’s jurisdiction but never did so for six straight years. Citing the doctrine laid
down in the case of Tijam, petitioner claimed that respondent’s failure to raise the question of
jurisdiction at an earlier stage bars her from later questioning it, especially since she actively
participated in the proceedings conducted by the trial court.

Petitioner’s argument is misplaced, in that, it failed to consider that the concept of jurisdiction
has several aspects, namely: (1) jurisdiction over the subject matter; (2) jurisdiction over the
parties; (3) jurisdiction over the issues of the case; and (4) in cases involving property,
jurisdiction over the res or the thing which is the subject of the litigation.

The aspect of jurisdiction which may be barred from being assailed as a result of estoppel by
laches is jurisdiction over the subject matter. Thus, in Tijam, the case relied upon by petitioner,
the issue involved was the authority of the then Court of First Instance to hear a case for the
collection of a sum of money in the amount of ₱1,908.00 which amount was, at that time, within
the exclusive original jurisdiction of the municipal courts

The Supreme Court barred the attack on the jurisdiction of the respective courts concerned over
the subject matter of the case based on estoppel by laches, declaring that parties cannot be
allowed to belatedly adopt an inconsistent posture by attacking the jurisdiction of a court to
which they submitted their cause voluntarily.

Here, what respondent was questioning in her motion to dismiss before the trial court was that
court’s jurisdiction over the person of defendant Manuel. Thus, the principle of estoppel by
laches finds no application in this case. Instead, the principles relating to jurisdiction over the
person of the parties are pertinent herein.
The Rules of Court provide:

RULE 9
EFFECT OF FAILURE TO PLEAD

Section 1. Defences and objections not pleaded. – Defences and objections not pleaded either
in a motion to dismiss or in the answer are deemed waived. However, when it appears from the
pleadings or the evidence on record that the court has no jurisdiction over the subject matter,
that there is another action pending between the same parties for the same cause, or that the
action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.

RULE 15
MOTIONS

Sec. 8. Omnibus motion. – Subject to the provisions of Section 1 of Rule 9, a motion attacking a
pleading, order, judgment, or proceeding shall include all objections then available, and all
objections not so included shall be deemed waived.

Based on the foregoing provisions, the "objection on jurisdictional grounds which is not waived
even if not alleged in a motion to dismiss or the answer is lack of jurisdiction over the subject
matter. x x x Lack of jurisdiction over the subject matter can always be raised anytime, even for
the first time on appeal, since jurisdictional issues cannot be waived x x x subject, however, to
the principle of estoppel by laches."

Since the defence of lack of jurisdiction over the person of a party to a case is not one of those
defences which are not deemed waived under Section 1 of Rule 9, such defence must be
invoked when an answer or a motion to dismiss is filed in order to prevent a waiver of the
defence. If the objection is not raised either in a motion to dismiss or in the answer, the
objection to the jurisdiction over the person of the plaintiff or the defendant is deemed waived by
virtue of the first sentence of the above-quoted Section 1 of Rule 9 of the Rules of Court.

The Court of Appeals, therefore, erred when it made a sweeping pronouncement in its
questioned decision, stating that "issue on jurisdiction may be raised at any stage of the
proceeding, even for the first time on appeal" and that, therefore, respondent timely raised the
issue in her motion to dismiss and is, consequently, not estopped from raising the question of
jurisdiction. As the question of jurisdiction involved here is that over the person of the defendant
Manuel, the same is deemed waived if not raised in the answer or a motion to dismiss. In any
case, respondent cannot claim the defence since "lack of jurisdiction over the person, being
subject to waiver, is a personal defence which can only be asserted by the party who can
thereby waive it by silence."39

2. Jurisdiction over the person of a defendant is acquired through a valid service of summons;
trial court did not acquire jurisdiction over the person of Manuel Toledo

In the first place, jurisdiction over the person of Manuel was never acquired by the trial court. A
defendant is informed of a case against him when he receives summons. "Summons is a writ by
which the defendant is notified of the action brought against him. Service of such writ is the
means by which the court acquires jurisdiction over his person."

In the case at bar, the trial court did not acquire jurisdiction over the person of Manuel since
there was no valid service of summons upon him, precisely because he was already dead even
before the complaint against him and his wife was filed in the trial court.

The Court, in the Sarsaba Case, resolved the issue in this wise:

x x x We cannot countenance petitioner’s argument that the complaint against the other
defendants should have been dismissed, considering that the RTC never acquired jurisdiction
over the person of Sereno. The court’s failure to acquire jurisdiction over one’s person is a
defence which is personal to the person claiming it. Obviously, it is now impossible for Sereno to
invoke the same in view of his death. Neither can petitioner invoke such ground, on behalf of
Sereno, so as to reap the benefit of having the case dismissed against all of the defendants.
Failure to serve summons on Sereno’s person will not be a cause for the dismissal of the
complaint against the other defendants, considering that they have been served with copies of
the summons and complaints and have long submitted their respective responsive pleadings. In
fact, the other defendants in the complaint were given the chance to raise all possible defences
and objections personal to them in their respective motions to dismiss and their subsequent
answers. Hence, the Supreme Court affirmed the dismissal by the trial court of the complaint
against Sereno only.

FINANCIAL BUILDING CORPORATION, petitioner, vs. FORBES PARK ASSOCIATION,

INC., respondent.
G.R. No. 133119 | 2000-08-17
DE LEON, JR., J.:

 The then Union of Soviet Socialist Republic (hereafter, USSR) was the owner of
a 4,223 square meter residential lot located at No. 10, Narra Place, Forbes Park Village
in Makati City. USSR engaged the services of Financial Building for the construction of
a multi-level office and staff apartment building at the said lot, which would be used by
the Trade Representative of the USSR.
 Forbes Park reminded the USSR of existing regulations[Forbes Park Association,
Inc. Rules and Regulations, 1984 edition, authorizing only the construction of a single-
family residential building in each lot within the village. It also elicited a reassurance from
the USSR that such restriction has been complied with. Promptly, the USSR gave its
assurance that it has been complying with all regulations of Forbes Park. Despite this,
Financial Building submitted to the Makati City Government a second building plan for
the construction of a multi-level apartment building, which was different from the first
plan for the construction of a residential building submitted to Forbes Park.
 Forbes Park discovered the second plan and subsequent ocular inspection of the
USSR's subject lot confirmed the violation of the deed of restrictions. Thus, it enjoined
further construction work. On March 27, 1987, Forbes Park suspended all permits of
entry for the personnel and materials of Financial Building in the said construction site.
The parties attempted to meet to settle their differences but it did not push through.
  Instead, on April 9, 1987, Financial Building filed in the Regional Trial Court of
Makati, Metro Manila, a Complaint for Injunction and Damages with a prayer for
Preliminary Injunction against Forbes Park.
 The latter, in turn, filed a Motion to Dismiss on the ground that Financial Building
had no cause of action because it was not the real party-in-interest.
 The trial court issued a writ of preliminary injunction against Forbes Park but the
Court of Appeals nullified it and dismissed the complaint.
 After Financial Building's case, G.R. No. 79319, was terminated with finality,
Forbes Park sought to vindicate its rights by filing RTC of Makati a Complaint for
Damages, against Financial Building, arising from the violation of its rules and
regulations. The RTC on the second case renders judgment in favor of the plaintiff and
against the defendant
 Financial Building appealed the said Decision of the trial court. The Court of
Appeals affirmed the RTC Decision.
Issue: Whether or not the alleged claims and causes of action therein are barred by prior
judgment and/or are deemed waived for its failure to interpose the same as compulsory
counterclaims in the earlier case. (YES)

Ruling:

 The instant case is barred due to Forbes Park’s failure to set it up as a

compulsory counterclaim in the earlier case.
 A compulsory counterclaim is one which arises out of or is necessarily
connected with the transaction or occurrence that is the subject matter of the
opposing party’s claim. If it is within the jurisdiction of the court and it does not require
for its adjudication the presence of third parties over whom the court cannot acquire
jurisdiction, such compulsory counterclaim is barred if it is not set up in the action filed by
the opposing party.
 Thus, a compulsory counterclaim cannot be the subject of a separate action but it
should instead be asserted in the same suit involving the same transaction or
occurrence, which gave rise to it To determine whether a counterclaim is compulsory or
not, we have devised the following tests: Affirmative answers to the queries indicate the
existence of a compulsory counterclaim
 (1) Are the issues of fact or law raised by the claim and the counterclaim
largely the same?
o the prior Civil Case No. 16540 and the instant case arose from the same
occurrence - the construction work done by Financial Building on the USSR's lot in
Forbes Park Village. The issues of fact and law in both cases are identical.
o the two cases involve the same parties.
 (2) Would res judicata bar a subsequent suit on defendant’s claim absent
the compulsory counterclaim rule?
o Since Forbes Park filed a motion to dismiss in the first case its existing
compulsory counterclaim at that time is now barred. A compulsory counterclaim is
auxiliary to the proceeding in the original suit and derives its jurisdictional support
therefrom
 (3) Will substantially the same evidence support or refute plaintiff’s claim
as well as the defendant’s counterclaim? And
o it is obvious that substantially the same evidence is involved in the said cases
  (4) Is there any logical relation between the claim and the counterclaim?
o the logical relation between the two cases is patent and

 if the dismissal of the main action results in the dismissal of the counterclaim
already filed, it stands to reason that the filing of a motion to dismiss the complaint is an
implied waiver of the compulsory counterclaim because the grant of the motion
ultimately results in the dismissal of the counterclaim.
 Thus, the filing of a motion to dismiss and the setting up of a compulsory
counterclaim are incompatible remedies. In the event that a defending party has a
ground for dismissal and a compulsory counterclaim at the same time, he must
choose only one remedy. If he decides to file a motion to dismiss, he will lose his
compulsory counterclaim. But if he opts to set up his compulsory counterclaim, he may
still plead his ground for dismissal as an affirmative defense in his answer.21 [Sec. 5,
Rule 16, 1964 Rules of Court, which was then in effect; under Sec. 6, Rule 16 of the
1997 Rules on Civil Procedure, if the action is dismissed as a result of the affirmative
defense pleaded in the answer, the counterclaim pleaded in the answer may continue in
the same action.
 Inasmuch as the action for damages filed by Forbes Park should be as it is
hereby dismissed for being barred by the prior judgment in G.R. No. 79319 (supra)
and/or deemed waived by Forbes Park to interpose the same under the rule on
compulsory counterclaims, there is no need to discuss the other issues raised by the
herein petitioner.

LISAM ENTERPRISES, INC. represented by LOLITA A. SORIANO, and LOLITA A.

SORIANO, Petitioners,vs.BANCO DE ORO UNIBANK, INC.
G.R. No. 143264 | 2012-04-23
THIRD DIVISION, PERALTA, J.:

Facts:

 Sometime in 1993, petitioner Lisam Enterprises, Inc. (LEI), in the course of its business
operation, acquired by purchase a parcel of residential land with improvement situated at
Legaspi City.
 On or about 28 March 1996, defendant Lilian S. Soriano and the late Leandro A.
Soriano, Jr., (Spouses Soriano), in their personal capacity and for their own use and
benefit, obtained a loan from defendant PCIB (now BDO) the amount of P20 Million. As
security for the payment of the aforesaid credit accommodation, Spouses Soriano, as president
and treasurer, respectively of plaintiff LEI, without authority and consent of the board of said
plaintiff and with the use of a falsified board resolution, executed a real estate mortgage
over the above-described property of plaintiff LEI in favor of defendant PCIB, and had the same
registered with the Office of the Registry of Deeds, Legaspi City.
 Plaintiff Lolita A. Soriano as Corporate Secretary of plaintiff LEI, had never signed a
board resolution nor issued a Secretary’s Certificate to the effect that a resolution was
passed and approved by plaintiff LEI, LEI authorizing the Spouses Soriano as president and
treasurer, respectively, to mortgage the above-described property of plaintiff LEI neither did she
appear personally before a notary public to acknowledge or attest to the issuance of a supposed
board resolution issued by plaintiff LEI. That immediately upon discovery, said plaintiff, for
herself and on behalf and for the benefit of plaintiff LEI, made demands upon defendants
by paying in full their personal indebtedness to defendant However, said defendants
continued to ignore said demands, to the damage and prejudice of plaintiffs.
 Plaintiffs commenced a derivative suit against defendants Lilian S. Soriano and the
Estate of Leandro A. Soriano, Jr., before the Securities and Exchange Commission, for
“Fraudulent Scheme and Unlawful Machination with Damages”
 The RTC issued a temporary restraining order on August 25, 1990 and, after hearing,
went on to issue a writ of preliminary injunction enjoining respondent PCIB (now known as
Banco de Oro Unibank, Inc.) from proceeding with the auction sale of the subject property. 
 Respondents  filed an Answer dated September 25, 1999, stating that the Spouses
Lilian and Leandro Soriano, Jr. were duly authorized by LEI to mortgage the subject property;
 respondent PCIB filed a Motion to Dismiss the Complaint on grounds of lack of
legal capacity to sue, failure to state cause of action, and litis pendencia.  Petitioners filed
an Opposition thereto, while PCIB's co-defendants filed a Motion to Suspend Action. 
 On November 11, 1999, the RTC issued the first assailed Resolution dismissing
petitioners' Complaint. Petitioners then filed a Motion for Reconsideration of said
Resolution.  While awaiting resolution of the motion for reconsideration, petitioners also
filed, on  January 4, 2000, a Motion to Admit Amended Complaint, amending paragraph
13 of the original complaint.
  the trial court issued the questioned Order denying both the Motion for Reconsideration
and the Motion to Admit Amended Complaint. The trial court further ruled that the Amended
Complaint can no longer be admitted, because the same absolutely changed petitioners'
cause of action. Hence, this petition.
Issue: Whether LEI’s amended complaint should be admitted. (YES)
Ruling:
 Rule 10 of the Rules of Court provide as follows:  Sec. 2.  Amendments as a matter of
right. ? A party may amend his pleadings once as a matter of right at any time before a
responsive pleading is served   x   x   x.  Sec. 3.  Amendments by leave of court. ? Except as
provided in the next preceding section, substantial amendments may be made only upon leave
of court.  But such leave may be refused if it appears to the court that the motion was made with
intent to delay. x x x 
 It should be noted that respondents Lilian S. Soriano and the Estate of Leandro A.
Soriano, Jr. already filed their Answer, to petitioners' complaint, and the claims being asserted
were made against said parties.  A responsive pleading having been filed, amendments to
the complaint may, therefore, be made only by leave of court and no longer as a matter of
right.
 The granting of leave to file amended pleading is a matter particularly addressed to the
sound discretion of the trial court; and that discretion is broad, subject only to the limitations that
the amendments should not substantially change the cause of action or alter the theory of the
case, or that it was not made to delay the action. Nevertheless, as enunciated in Valenzuela,
even if the amendment substantially alters the cause of action or defense, such amendment
could still be allowed when it is sought to serve the higher interest of substantial justice, prevent
delay, and secure a just, speedy and inexpensive disposition of actions and proceedings.
 The courts should be liberal in allowing amendments to pleadings to avoid a multiplicity
of suits and in order that the real controversies between the parties are presented, their rights
determined, and the case decided on the merits without unnecessary delay. This liberality is
greatest in the early stages of a lawsuit, especially in this case where the amendment
was made before the trial of the case, thereby giving the petitioners all the time allowed
by law to answer and to prepare for trial.
 Respondent PCIB should not complain that admitting the amended complaint after they
pointed out a defect in the original complaint would be unfair to them. They should have been
well aware that due to the changes made by the 1997 Rules of Civil Procedure, amendments
may now substantially alter the cause of action or defense. It should not have been a surprise to
them that petitioners would redress the defect in the original complaint by substantially
amending the same, which course of action is now allowed under the new rules.
  the Court enumerated the requisites for filing a derivative suit, as follows: a) the party
bringing the suit should be a shareholder as of the time of the act or transaction complained of,
the number of his shares not being material; b) he has tried to exhaust intra-corporate
remedies, i.e., has made a demand on the board of directors for the appropriate relief but the
latter has failed or refused to heed his plea; and c) the cause of action actually devolves on the
corporation, the wrongdoing or harm having been, or being caused to the corporation and not to
the particular stockholder bringing the suit. A reading of the amended complaint will reveal that
all the foregoing requisites had been alleged therein. Hence, the amended complaint remedied
the defect in the original complaint and now sufficiently states a cause of action.
 Amendments are generally favored, it would have been more fitting for the trial court to
extend such liberality towards petitioners by admitting the amended complaint which was filed
before the order dismissing the original complaint became final and executory. It is quite
apparent that since trial proper had not yet even begun, allowing the amendment would not
have caused any delay. Moreover, doing so would have served the higher interest of justice as
this would provide the best opportunity for the issues among all parties to be thoroughly
threshed out and the rights of all parties finally determined. Hence, the Court overrules the trial
court’s denial of the motion to admit the amended complaint, and orders the admission of the
same.
SWAGMAN HOTELS AND TRAVEL, INC., Petitioner, versus HON. COURT OF APPEALS,
and NEAL B. CHRISTIAN, Respondents.
G.R. No. 161135 | 2005-04-08

FACTS:
 On 2 February 1999, private respondent Christian filed with the Regional Trial Court of
Baguio City, Branch 59, a complaint for a sum of money and damages against the
petitioner corporation. The complaint alleged as follows: On 7 August 1996, 14 March
1997, and 14 July 1997, Swagman Hotels and Travel, Inc. (the petitioner), as well as its
president and vice-president obtained loans from him in the total amount of US$150,000
payable after three years, with an interest of 15% per annum payable quarterly or every
three months. For a while, they paid an interest of 15% per annum every three months in
accordance with the three promissory notes. However, starting January 1998 until
December 1998, they paid him only an interest of 6% per annum, instead of 15% per
annum, in violation of the terms of the three promissory notes. Thus, Christian prayed
that the trial court order them to pay him jointly and solidarily the amount of US$150,000
representing the total amount of the three loans; US$13,500 representing unpaid
interests from January 1998 until December 1998; P100,000 for moral damages;
P50,000 for attorney's fees; and the cost of the suit.
 The petitioner corporation, together with its president and vice-president, filed an Answer
raising as defenses lack of cause of action and novation of the principal obligations.
 According to them, Christian had no cause of action because the three promissory notes
were not yet due and demandable.
 RTC - When the instant case was filed on February 2, 1999, none of the promissory
notes was due and demandable. As of this date however, the first and the second
promissory notes have already matured. Hence, payment is already due. Under Section
5 of Rule 10 of the 1997 Rules of Civil Procedure, a complaint which states no cause of
action may be cured by evidence presented without objection. Thus, even if the plaintiff
had no cause of action at the time he filed the instant complaint, as defendants'
obligation are not yet due and demandable then, he may nevertheless recover on the
first two promissory notes in view of the introduction of evidence showing that the
obligations covered by the two promissory notes are now due and demandable.
 CA – affirmed RTC in toto. Hence, this petition.

ISSUE: W/N the defect of lack of cause of action at the commencement of the suit can be cured
by the accrual of a cause of action during the pendency of the case.

HELD: NO.
 Both the Court of Appeals and the trial court found that a renegotiation of the three
promissory notes indeed happened in December 1997 between the private respondent
and the petitioner resulting in the reduction - not waiver - of the interest from 15% to 6%
per annum, which from then on was payable monthly, instead of quarterly. The term of
the principal loans remained unchanged in that they were still due three years from the
respective dates of the promissory notes. When the complaint for a sum of money and
damages was filed with the trial court on 2 February 1999, no cause of action has as yet
existed because the petitioner had not committed any act in violation of the terms of the
three promissory notes as modified by the renegotiation in December 1997. Without a
cause of action, the private respondent had no right to maintain an action in court, and
the trial court should have therefore dismissed his complaint. 
 According to the trial court, and sustained by the Court of Appeals, Section 5, Rule 10
allows a complaint that does not state a cause of action to be cured by evidence
presented without objection during the trial. Thus, it ruled that even if the private
respondent had no cause of action when he filed the complaint for a sum of money and
damages because none of the three promissory notes was due yet, he could
nevertheless recover on the first two promissory notes dated 7 August 1996 and 14
March 1997, which became due during the pendency of the case in view of the
introduction of evidence of their maturity during the trial. Such interpretation of Section 5,
Rule 10 of the 1997 Rules of Civil Procedure is erroneous. 
 Amendments of pleadings are allowed under Rule 10 of the 1997 Rules of Civil
Procedure in order that the actual merits of a case may be determined in the most
expeditious and inexpensive manner without regard to technicalities, and that all other
matters included in the case may be determined in a single proceeding, thereby avoiding
multiplicity of suits.[12] Section 5 thereof applies to situations wherein evidence not
within the issues raised in the pleadings is presented by the parties during the trial, and
to conform to such evidence the pleadings are subsequently amended on motion of a
party. Thus, a complaint which fails to state a cause of action may be cured by evidence
presented during the trial. 
 However, the curing effect under Section 5 is applicable only if a cause of action in fact
exists at the time the complaint is filed, but the complaint is defective for failure to allege
the essential facts. For example, if a complaint failed to allege the fulfillment of a
condition precedent upon which the cause of action depends, evidence showing that
 such condition had already been fulfilled when the complaint was filed may be presented
during the trial, and the complaint may accordingly be amended thereafter.
 It thus follows that a complaint whose cause of action has not yet accrued cannot be
cured or remedied by an amended or supplemental pleading alleging the existence or
accrual of a cause of action while the case is pending. Such an action is prematurely
brought and is, therefore, a groundless suit, which should be dismissed by the court
upon proper motion seasonably filed by the defendant. The underlying reason for this
rule is that a person should not be summoned before the public tribunals to answer for
complaints which are immature.
 [PLEADINGS] It is true that an amended complaint and the answer thereto take the
place of the originals which are thereby regarded as abandoned. But none of these
cases or in any other case have we held that if a right of action did not exist when the
original complaint was filed, one could be created by filing an amended complaint.
However, no cause of action whatsoever can, by amendment or supplemental
pleading, be converted into a cause of action: Nihil de re accrescit ei qui nihil in re
quando jus accresceret habet. 
 Hence, contrary to the holding of the trial court and the Court of Appeals, the defect of
lack of cause of action at the commencement of this suit cannot be cured by the accrual
of a cause of action during the pendency of this case arising from the alleged maturity of
two of the promissory notes on 7 August 1999 and 14 March 2000. 

CAMPOS RUEDA CORPORATION, petitioner, vs. HON. JOSE S. BAUTISTA, as Presiding

Judge, HON. BALTAZAR M. VILLANUEVA, HON. ARSENIO I. MARTINEZ, HON. AMANDO
C. BUGAYONG, as Associate Judges, COURT OF INDUSTRIAL RELATIONS, and
MANUEL MUYOT, respondents.
G.R. No. L-18453 | 1962-09-29

FACTS:
 Respondent Muyot was employed by petitioner at its gasoline station located at 1012
Azcarraga St. (now Recto Avenue), Manila, at a monthly salary of P200.00 from May 21,
1949 to May 31, 1953, and at P230.00 from June 1 to December 31, 1953. On
November 26, 1958 he filed a complaint against petitioner with the Court of Industrial
Relations (Case No. 1140-V) to recover compensation for alleged overtime, Sunday and
holiday services rendered during said period. 
 On December 8, 1958 petitioner moved to dismiss the complaint on the ground of res
judicata (there were already decisions by the DOLE Regional and CFI)
 Respondent Muyot opposed said motion to dismiss alleging that, as the decisions relied
upon therein were rendered by courts that had no jurisdiction over the subject-matter,
the same did not constitute res judicata.
 Petitioner filed a supplementary motion to dismiss alleging that the Court had no
jurisdiction over the subject- matter because the complaint did not seek the
reinstatement of Muyot who, according to the complaint, ceased to be an employee of
petitioner since December 31, 1953. In other words, the claim merely involved collection
of pay for overtime, Sunday and holiday work, which is not within the jurisdiction of the
Court of Industrial Relations.
 During the trial, upon motion of respondent Muyot, respondent court issued a subpoena
duces tecum requiring the petitioner "to bring the Daily Time Records of employees
working at the Super Service Station for the years 1952-1953." Petitioner filed a motion
 to quash the subpoena, which was denied by the respondent court. MR denied. Hence,
this present petition.

ISSUE: W/N the respondent court has jurisdiction over the case at bar.

HELD: NONE.
 In the present case, it is apparent that the petition below is simply for the collection of
unpaid salaries and wages alleged to be due for services rendered years ago. No labor
dispute appears to be presently involved since the petition itself indicates that the
employment has long terminated, and petitioners are not asking that they be reinstated.
Clearly, the petition does not fall under any of the cases enumerated in the law as
coming within the jurisdiction of the Industrial Court, so that it was error for that court not
to have ordered its dismissal. (Roman Catholic Archbishop etc. vs. Jimenez Yanson,
applied squarely by SC in this case.)
 [ADDITIONAL FACTS] Respondent Muyot must have finally realized that the Court of
Industrial Relations had no jurisdiction over his claims for, according to his answer filed
in the present case, he had filed on July 14, 1961- more than two years after the filing of
his action - a motion for leave to amend his complaint and to admit the amended
complaint attached to his motion, the amendment consisting precisely in the addition of a
third cause of action where, inter alia, he alleged that on May 31, 1953, he was illegally
dismissed by herein petitioner and that, as a consequence, he was entitled to
reinstatement, with back wages from the date of his illegal dismissal up to his actual
reinstatement. Obviously, the purpose of the amendment was to make his case fall
within the jurisdiction of the respondent court. This attempt is, in our opinion, of no avail.
 It is settled in this jurisdiction that the jurisdiction of a court is determined by the
allegations made in the complaint or petition. On the other hand, we have also held
heretofore that this principle applies to proceedings in the Court of Industrial Relations.
 [PLEADINGS] The insufficiency of the allegations of Muyot's complaint to place
his action within the jurisdiction of the respondent court could not be cured by
amendment, as we clearly held that "a complaint cannot be amended so as to
confer jurisdiction on the court in which it is filed, if the cause of action originally
set forth was not within the court's jurisdiction."

BARBA vs LICEO CAGAYAN

Facts:

Petitioner Dr. Ma. Mercedes L. Barba (Barba) was the Dean of the College of Physical Therapy
of respondent Liceo de Cagayan University, Inc. (Liceo).

In the school year 2003 to 2004, the College of Physical Therapy suffered a dramatic decline in
the number of enrollees from a total of 1,121 students in the school year 1995 to 1996 to only
29 students in the first semester of school year 2003 to 2004. Due to the low number of
enrollees, Liceo decided to freeze the operation of the College of Physical Therapy indefinitely.
Thereafter, the College of Physical Therapy ceased operations and Barba went on leave without
pay starting. Subsequently, Liceo sent Barba a letter dated April 27, 2005 instructing Barba to
return to work on and report to Ma. Chona Palomares, the Acting Dean of the College of
Nursing, to receive her teaching load and assignment as a full-time faculty member in that
department. Barba did not report to Palomares and requested for the processing of her
separation benefits in view of the closure of the College of Physical Therapy.

Another letter was sent to Barba but the latter still refused to return to work. Hence, Liceo sent
Barba a notice terminating her services on the ground of abandonment.
Barba filed a complaint before the Labor Arbiter for illegal dismissal, payment of separation pay
and retirement benefits against Liceo. She alleged that her transfer to the College of Nursing as
a faculty member is a demotion amounting to constructive dismissal.

The LA ruled that Barba was not constructively dismissed. The NLRC reversed the LA. Liceo
went to the CA and filed a Supplemental Petition raising for the first time the issue of lack of
jurisdiction of the Labor Arbiter and the NLRC over the case. Liceo claimed that a College Dean
is a corporate officer under its by-laws and Barba was a corporate officer of Liceo since her
appointment was approved by the board of directors. Thus, Liceo maintained that the
jurisdiction over the case is with the regular courts and not with the labor tribunals.

In its original Decision, the CA reversed the NLRC resolutions. The CA did not find merit in
Liceos assertion in its Supplemental Petition that the position of Barba as College Dean was a
corporate office. The CA further found that no constructive dismissal occurred nor has Barba
abandoned her work.

Unsatisfied, both Barba and Liceo sought reconsideration of the CA decision. Thereafter, the
CA reversed its earlier ruling. Hence, Barba filed the present petition.

Issues:

I. WHETHER OR NOT THE COURT OF APPEALS COMMITED A GRAVE AND

REVERSIBLE ERROR IN AFFIRMING THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION (NLRC).

II. WHETHER OR NOT THE COURT OF APPEALS COMMITED GRAVE AND

REVERSIBLE ERROR IN DENYING THE MOTION TO ADMIT MOTION FOR
RECONSIDERATION FILED BY THE PETITIONERS.

Held:

This petition is devoid of merit.

The Court will initially resolve the procedural issue of whether the Motion to Admit Motion for
Reconsideration filed by Gonzales and Barba on 3 June 2005, or 18 days after the expiration of
the reglementary period, may be given due course.

Section 1, Rule 52 of the 1997 Rules of Court prescribes a period of fifteen days from the
receipt of the decision within which to file a motion for reconsideration. In the case of Habaluyas
Enterprises, Inc. v. Judge Japson,29 as reiterated in Amatorio v. People,30 the Court declared
that there is a prohibition against the filing of a motion for extension of time to file a motion for
new trial or motion for reconsideration in all courts, except the Supreme Court. The same
doctrine was applied in Heirs of Andrea Cristobal v. Court of Appeals, 31 wherein this Court
advocated the strict adherence to this fifteen-day period and disregarded the Motion for
Extension of Time to File the Motion for Reconsideration filed by the petitioners therein.
Although the petitioners in the aforecited case attached a medical certificate showing that their
counsel had been sick, the Court found that the illness of their counsel did not justify their failure
to comply with the fifteen-day reglementary period.

It was only after the case had become final and executory that Barba and Gonzales renewed
any interest in the case. Given the foregoing circumstances, this Court will not allow parties, in
the guise of equity, to benefit from their own negligence. 36 Nor should they be allowed unlimited
time to vacillate as to whether or not they would file the appropriate motions or petitions, without
regard for the periods which have already been set by the law. Thus, the 5 September 2005
Decision of the Court of Appeals denying the Motion to Admit Motion for Reconsideration is in
accordance with law and jurisprudence.

Even granting that this Court may still take cognizance of this petition and resolve the
substantive issue of whether a three-year suspension, instead of outright dismissal, should be
imposed on Barba and Gonzales, this petition would still be dismissed.

The findings of the Labor Arbiter, the NLRC and the Court of Appeals are unanimous: Barba is
guilty of incorrectly recording 55 kilograms of baggage as 18 kilograms, while Gonzales was
guilty of soliciting US$100 from a passenger in exchange for allowing her to check-in US$200
worth of excess baggage. The only issue for resolution is whether these offenses would merit
their dismissal.

Gonzales was found guilty of soliciting US$100 from a passenger in exchange for allowing her
to check-in US$200 worth of excess baggage. Beth Wright, the passenger in question, filed a
written statement to that effect, which was corroborated by Gonzales’s co-employee, Dominique
dela Rosa, in her incident report.

In the "Complainants’ Consolidated Position Paper," Barba himself admits that he knowingly
recorded the incorrect weight of the baggage. He alleged that the passenger was a friend of a
certain LCD Dycoco, who ordered him to record the weight as 18 kilograms. Thus, he admits to
complying with the order, knowing the correct weight to be 55 kilograms. 42 The mistake was
clearly not out of negligence, as supposed by the Labor Arbiter. Moreover, the inconsistent
statements made by Barba shows him to be untruthful. In an earlier statement made during the
investigation conducted by PAL, Barba insisted that he reweighed the baggage and found its
correct weight to be 18 kilograms.43 Like Gonzales’ offense, Barba’s act in incorrectly recording
the baggage weight, was clearly an act inimical to the interests of their employer, and of
manifest dishonesty and disregard of his duties, which deserves the supreme penalty of
dismissal. Section 282(c) of the Labor Code, sanctions the dismissal of employees for fraud or
the willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative.

Lastly, the offenses of both Barba and Gonzales, in compromising the integrity of company
records for their personal reasons, are made more reprehensible because of the danger their
acts pose on the safety of the passengers and the crew. The proper recording of the weight of
cargo is crucial in determining how the cargo would be distributed in each aircraft. A resulting
error could imperil valuable equipment, even the lives of the passengers and crews.
Furthermore, the blatant dishonesty of their acts has tainted the reputations of the countless
honest employees working in our flagship airlines.

CBBL v. BFSMB
FACTS
On 14 February 1963, the MB of the then CB issued MB Resolution No. 223 allowing
respondent Banco Filipino to operate as a savings bank. Respondent began formal operations
on 9 July 1964. However, on 27 July 1984, the CB issued MB Resolution No. 955 placing Banco
Filipino under conservatorship after granting the latter's loan applications worth billions of pesos.
Respondent bank filed with the RTC Makati a Complaint against the CB for the annulment of
MB Resolution No. 955. The case was docketed as Civil Case No. 8108 and raffled to Judge
Ricardo Francisco of Branch 136.
Thereafter, on 25 January 1985, the CB issued MB Resolution No. 75 ordering the closure of
Banco Filipino and placing the latter under receivership. The Resolution stated that since
respondent had been found to be insolvent, the latter was forbidden to continue doing business
to prevent further losses to its depositors and creditors. The Resolution further provided for the
takeover of the assets and liabilities of Banco Filipino for the benefit of its depositors and
creditors, as well as for the termination of its conservatorship. On 2 February 1985, Banco
Filipino filed a Complaint with the RTC Makati against the MB, assailing the latter's act of
placing the bank under receivership. The case was docketed as Civil Case No. 9675 and raffled
to Judge Zoilo Aguinaldo of Branch 143. Because of its impending closure,14 Banco Filipino
filed with the CA a Petition for Certiorari and Mandamus on 28 February 1985, seeking the
annulment of MB Resolution No. 75 on the ground of grave abuse of discretion in the issuance
of the Resolution.15 The Petition eventually reached the Supreme Court, where it was docketed
as G.R. No. 70054.
On 22 March 1985, the CB issued another Resolution placing Banco Filipino under liquidation.
Respondent then filed another Complaint with the RTC Makati to question the propriety of the
liquidation.16 The case was docketed as Civil Case No. 10183 and raffled to Judge Fernando
Agdamag of Branch 138. Meanwhile, this Court in G.R. No. 70054 promulgated on 29 August
1985 a Resolution directing, among others, the consolidation in Branch 136 of the RTC Makati
of the following cases: (1) Civil Case No. 8108, the case for the annulment of the
conservatorship order; (2) Civil Case No. 9675, the case seeking to annul the receivership
order; and (3) Civil Case No. 10183, the case seeking to annul the order for the liquidation of
the bank. On 11 December 1991, this Court, in an En Banc Decision penned by Associate
Justice Leo D. Medialdea, nullified MB Resolution No. 75 and ordered the CB and its MB to
reorganize the bank and allow it to resume business.
On 6 July 1993, during the pendency of the three consolidated cases, Republic Act (R.A.) No.
7653, or the New Central Bank Act of 1993, took effect. Under the new law, the CB was
abolished and, in its stead, the BSP was created. The new law also created the CB-BOL for the
purpose of administering and liquidating the CB's assets and liabilities, not all of which had been
transferred to the BSP. Pursuant to the Decision of this Court in G.R. No. 70054, the BSP
reopened Banco Filipino and allowed it to resume business on 1 July 1994.22
On 29 May 1995, pursuant to the recent development, Banco Filipino filed a Motion to Admit
Attached Amended/Supplemental Complaint in the three consolidated cases — Civil Case Nos.
8108, 9675, and 10183 —before the RTC. In its Amended/Supplemental Complaint, respondent
bank sought to substitute the CB-BOL for the defunct CB and its MB. Respondent also aimed to
recover at least P18 billion in actual damages, litigation expenses, attorney's fees, interests, and
costs of suit against petitioner and individuals who had allegedly acted with malice and evident
bad faith m placing the bank under conservatorship and eventually closing it down in 1985.
The trial court, through an Order dated 29 March 1996, granted the Motion to Admit filed by
Banco Filipino and accordingly admitted the latter's Amended/Supplemental Complaint.
Consequently, the CB-BOL was substituted for the defunct CB in respondent's civil cases, which
are still pending with the RTC. On 25 September 2003, or more than 10 years from the
enactment of R.A. 7653, Banco Filipino again filed a Motion to Admit Second
Amended/Supplemental Complaint in the consolidated civil cases before the RTC. In that
Second Amended/Supplemental Comp1aint, respondent sought to include the BSP and its MB
— "the purported successor-in-interest of the old CB" — as additional defendants based on the
latter's alleged acts or omission.
Banco Filipino claimed that the BSP employed "coercive measures" that forced respondent to
enter into a Memorandum of Agreement (MOA) regarding the collection of advances extended
to the latter by the defunct CB. In addition, respondent also alleged that its present dealings with
the BSP and the MB have become increasingly difficult, especially in obtaining favorable actions
on its requests and other official dealings. Banco Filipino's Motion to Admit its Second
Amended/Supplemental Complaint was opposed by the CB-BOL based on the following
grounds:
Banco Filipino's Second Amended/Supplemental Complaint was not supported by a board
resolution that authorized it to file the amended or supplemental complaint.
The second supplemental complaint raised new and independent causes of action against a
new party - the BSP - which was not an original party.
The second supplemental complaint was violative of the rule on the joinder of causes of action,
because it alleged those that did not arise from the same contract, transaction or relation
between the parties - as opposed to those alleged in the complaint sought to be amended or
supplemented - and differed from the causes of action cited in the original Complaint.
The admission of the second supplemental complaint would expand the scope of the dispute in
the consolidated civil cases to include new causes of action against new parties like the BSP,
resulting in a delay in the resolution of the cases.
On 27 January 2004, the RTC, through an Order penned by Presiding Judge Rebecca R.
Mariano, granted the Motion to Admit Banco Filipino's Second Amended/Supplemental
Complaint.  CA further sustained the RTC's ruling that respondent Banco Filipino did not raise
new issues against petitioner CB-BOL or seek new reliefs or claim new damages from the latter.
ISSUE
The crucial issue to be resolved here is whether the RTC erred in admitting Banco Filipino's
Second Amended/Supplemental Complaint in the consolidated civil cases before it.
HELD:
It must be noted at this point that the BSP and its MB are not yet required to answer the RTC
Complaint, as the issue of their addition as parties is yet to be settled. Nevertheless, whether or
not the BSP and its MB are transferees or successors-in-interest of the CB and its MB, the
former's addition or substitution as parties to this case must comply with the correct procedure
and form prescribed by law.

Rule 10 of the 1997 Revised Rules of Court allows the parties to amend their pleadings (a) by
adding or striking out an allegation or a party's name; or (b) by correcting a mistake in the name
of a party or rectifying a mistaken or an inadequate allegation or description in the pleadings for
the purpose of determining the actual merits of the controversy in the most inexpensive and
expeditious manner.49

The prevailing rule on the amendment of pleadings is one of liberality, 50 with the end of
obtaining substantial justice for the parties. However, the option of a party-litigant to amend a
pleading is not without limitation. If the purpose is to set up a cause of action not existing at the
time of the filing of the complaint, amendment is not allowed. If no right existed at the time the
action was commenced, the suit cannot be maintained, even if the right of action may have
accrued thereafter.51

In the instant case, the causes of action subject of the Second Amended/Supplemental
Complaint only arose in 1994 well after those subject of the original Complaint. The original
Complaint was based on the alleged illegal closure of Banco Filipino effected in 1985 by the
defunct CB and its MB.

On the other hand, the Second Amended/Supplemental Complaint stemmed from the alleged
oppressive and arbitrary acts committed by the BSP and its MB against Banco Filipino after
respondent bank was reopened in 1994. Since the acts or omissions allegedly committed in
violation of respondent's rights are different, they constitute separate causes of action.52

Moreover, the admission of the Second Amended/Supplemental Complaint is inappropriate

because it violates the rule on joinder of parties and causes of action. If its admission is upheld,
the causes of action set forth therein would be joined with those in the original Complaint. The
joinder of causes of action is indeed allowed under Section 5, Rule 2 of the 1997 Rules of
Court;62 but if there are multiple parties, the joinder is made subject to the rules on joinder of
parties under Section 6, Rule 3.63 Specifically, before causes of action and parties can be joined
in a complaint involving multiple parties, (1) the right to relief must arise out of the same
transaction or series of transactions and (2) there must be a question of law or fact common to
all the parties.64

In the instant case, Banco Filipino is seeking to join the BSP and its MB as parties to the
complaint. However, they have different legal personalities from those of the defunct CB and its
MB: firstly, because the CB was abolished by R.A. 7653, and the BSP created in its stead; and
secondly, because the members of each MB are natural persons. These factors make the BSP
and its MB different from the CB and its MB. Since there are multiple parties involved, the two
requirements mentioned in the previous paragraph must be present before the causes of action
and parties can be joined. Neither of the two requirements for the joinder of causes of action
and parties was met.

WHEREFORE, the Petition of the CB-BOL is GRANTED, and the Decision of the Court of
Appeals dated 27 January 2006 and Resolution dated 27 June 2006 in CA-G.R. SP No. 86697
are hereby REVERSED and SET ASIDE.
SPOUSES RAMON VILLUGA and MERCEDITA VILLUGA vs. KELLY HARDWARE AND
CONSTRUCTION SUPPLY INC.
G.R. No. 176570
FACTS:

 Respondent filed with the RTC of Bacoor, Cavite a Complaint for a Sum of Money and
Damages against herein petitioners for the latter’s unpaid purchases of various construction
materials.
 In their Answer to Complaint, petitioners admitted having made purchases from respondent,
but alleged that they do not remember the exact amount thereof as no copy of the
documents evidencing the purchases were attached to the complaint. Petitioners,
nonetheless, claimed that
they have made payments to the respondent and they are willing to pay the balance of their
indebtedness after deducting the payments made and after verification of their account.
 In a Manifestation, petitioners stated that they were willing to pay respondent but without
interests and costs, and on installment basis. Respondent signified that it was amenable to
petitioners' offer to pay the principal amount but insisted that petitioners should also pay
interests, as well as litigation expenses and attorney's fees, and all incidental expenses.
 Respondent filed a Motion for Partial Judgment on the Pleadings contending that petitioners
were deemed to have admitted in their Answer that they owed respondent when they
claimed to have made partial payments.
 The RTC ruled that there is no clear and specific admission on the part of petitioners as to
the actual amount that they owe respondent.
 In their Answer to Amended Complaint, petitioners reiterated their allegations in their
Answer to Complaint.
 Respondent filed a Request for Admission asking that petitioners admit the genuineness of
various documents, such as statements of accounts, delivery receipts, invoices and demand
letter attached thereto as well as the truth of the allegations set forth therein.
 Respondent filed a Manifestation and Motion before the RTC praying that since petitioners
failed to timely file their comment to the Request for Admission, they be considered to have
admitted the genuineness of the documents described in and exhibited with the said
Request as well as the truth of the matters of fact set forth therein, in accordance with the
Rules of Court.
 Petitioners filed their Comments on the Request for Admission stating their objections to the
admission of the documents attached to the Request. Respondent filed its Second
Amended Complaint, again with leave of court. The amendment modified the period covered
by the complaint. The amendment also confirmed petitioners' partial payment in the sum of
P110,301.80, but alleged that this payment was applied to other obligations which
petitioners owe respondent. Respondent reiterated its allegation that, despite petitioners'
partial payment, the principal amount which petitioners owe remains P259,809.50.
 Petitioners filed their Answer to the Second Amended Complaint denying the allegations
therein and insisting that they have made partial payments.
 Respondent filed a Motion to Expunge with Motion for Summary Judgment . The RTC
granted the same. Petitioners filed a Motion for Reconsideration, but it was denied. The CA
rendered affirmed the RTC.
 Petitioners insist in arguing that respondent waived its Re8uest for 4dmission when it filed
its Second Amended Complaint; that all motions or requests based on the complaint, which
was amended, should no longer be considered.

ISSUE: WoN the filing of the Second Amended Complaint waived the respondent’s right to
Request for Admission.
RULING: NO.
The Court agrees with the CA in holding that respondent's Second Amended Complaint
supersedes only its Amended Complaint and nothing more. Section 8, Rule 10 of the Rules of
Court provides:
Sec. 8. Effect of amended pleading. – An amended pleading supersedes the pleading that it
amends. However, admissions in superseded pleadings may be received in evidence against
the pleader; and claims or defenses alleged therein not incorporated in the amended pleading
shall be deemed waived.
From the foregoing, it is clear that respondent's Request for Admission is not deemed
abandoned or withdrawn by the filing of the Second Amended Complaint.
This Court has ruled that if the factual allegations in the complaint are the very same allegations
set forth in the request for admission and have already been specifically denied, the required
party cannot be compelled to deny them anew. A request for admission that merely reiterates
the allegations in an earlier pleading is inappropriate under Rule 26 of the Rules of Court, which
as a mode of discovery, contemplates of interrogatories that would clarify and tend to shed light
on the truth or falsity of the allegations in the pleading. Rule 26 does not refer to a mere
reiteration of what has already been alleged in the pleadings. Nonetheless, consistent with the
abovementioned Rule, the party being requested should file an objection to the effect that the
request for admission is improper and that there is no longer any need to deny anew the
allegations contained therein considering that these matters have already been previously
denied.