RULE 7

forum shopping did not authorize the RTC to dismiss the proceeding
without motion and hearing. Specifically, the submission of a false

IN RE: RECONSTITUTION OF TRANSFER CERTIFICATES OF TITLE

certification of non-forum shopping did not automatically warrant the

NOS. 303168 AND 303169 AND ISSUANCE OF OWNERS DUPLICATE

dismissal of the proceeding, even if it might have constituted contempt of

CERTIFICATES OF TITLE IN LIEU OF THOSE LOST,

ROLANDO EDWARD G. LIM

court, for Section 5, Rule 7, of the 1997 Rules of Civil Procedure, has
been clear and forthright.

G.R. NO. 156797

July 6, 2010

WHEREFORE, The petition for the judicial reconstitution of the petitioners

Transfer Certificate of Title No. 303168 and Transfer Certificate of Title

FACTS:

No. 303169 of the Registry of Deeds for Quezon City, and for the

On December 29, 1998, Lim filed in the RTC his petition for judicial

issuance of the owners duplicate copies thereof, is reinstated. The

reconstitution of TCT No. 303168 and TCT No. 303169 of the Registry of

Regional Trial Court, Branch 226, in Quezon City is directed to forthwith

Deeds for Quezon City, and for the issuance of owners duplicate copies

resume proceedings thereon, and to render its decision on the merits as

of said TCTs. He alleged that he was a registered co-owner of the parcels

soon as practicable.

of land covered by the TCTs, and that he was filing the petition for the
beneficial interest of all the registered owners thereof; that the original
copies of the TCTs kept in the custody of the Registry of Deeds for

Formoso vs Philippine National Bank

Quezon City had been lost or destroyed as a consequence of the fire that

G.R. No. 154704

had burned certain portions of the Quezon City Hall, including the Office

June 1, 2011

of said Registry of Deeds, on July 11, 1988; that the originals of the
owners duplicates of the TCTs kept in his custody had also been lost or
destroyed in a fire that had gutted the commercial establishment located

FACTS:

at 250 Villalobos Street, Quiapo, Manila on February 24, 1998; and that
no co-owners, mortgagees, or lessees TCTs had ever been issued.

Nellie and her children executed a special power of attorney in favour of

The RTC dismissed Lims petition on the basis of the LRA Report stating

Primitivo Malacaba authorising him, among others, to secure all papers

that the subject titles are also applied for reconstitution of titles under

and documents including the owners copies of the titles of real properties

Administrative Reconstitution Proceedings which is tantamount to forum

pertaining to the loan with real estate mortgage originally secured by

shopping. Lims motion for reconsideration was denied for lack of merit.

Nellie and her late husband, Benjamin, from the PNB, Vigan Branch.

Hence, this appeal directly to the Court via petition for review on

Subsequently, the Formosos sold the subject mortgaged real properties

certiorari.

to Malacaba through a Deed of Absolute Sale. Thereafter, Malacba and

his lawyer went to PNB to fully pay the loan obligation. PNB, however,

ISSUE:
Whether or not the RTC correctly dismiss the petition of Lim on the
ground of forum shopping.

RULING:
No. Lim was not guilty of forum shopping, because the factual bases of

allegedly refused to accept Malacabas tender of payment and to release

the mortgage or surrender the titles of the subject mortgaged real
properties.

Petitioners filed a Complaint for specific performance against PNB before

the RTC.

his application for the administrative reconstitution of the TCTs and of his
petition for their judicial reconstitution, and the reliefs thereby sought

The RTC rendered its decision in favour of petitioner but denied their

were not identical. For forum shopping to exist, both actions must involve

prayer for exemplary or corrective damages, attorneys fees, and annual

the same transaction, same essential facts and circumstances and must

interest and daily interest due to lack of evidence.

raise identical causes of action, subject matter and issues. Clearly, it does
not exist where different orders were questioned, two distinct causes of
action and issues were raised, and two objectives were sought.

The petitioners received their copy of the decision on November 26,

1999, and on January 25, 2001, they filed their Petition for Relief from
Judgment questioning the RTC decision that there was no testimonial

The motu proprio dismissal of the petition for judicial reconstitution by the

evidence presented to warrant the award for moral and exemplary

RTC although the Government did not file a motion to dismiss grounded

damages. They reasoned out that they could not then file a motion for

on the petitioners supposed failure to comply with the contents of the

reconsideration because they could not get hold of a copy of the

required certification was yet another glaring error of the RTC. A violation

transcripts of stenographic notes. In its August 6, 2001 Order, the RTC

of the rule against forum-shopping other than a willful and deliberate

denied the petition for lack of merit.

1 | Page

Failure to comply with the foregoing requirements shall not be curable by

On September 7, 2001, the petitioners moved for reconsideration but it
was denied by the RTC in its Omnibus Order of September 26, 2001.

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

The petitioners filed a petition for certiorari before the CA but it dismissed
the petition stating that the verification and certification of non-forum
shopping was signed by only one (Malacaba) of the many petitioners
which was contrary to the rules provided by law.

ISSUE:
Whether or not all the petitioners must sign the verification and
certification of non-forum shopping in a petition for certiorari wherein only
questions of law are involved.

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. x x x.

Admittedly, among the seven (7) petitioners mentioned, only Malcaba

signed the verification and certification of non-forum shopping in the
subject petition. There was no proof that Malcaba was authorized by his
co-petitioners to sign for them. There was no special power of attorney
shown by the Formosos authorizing Malcaba as their attorney-in-fact in

HELD:

filing a petition for review on certiorari. Neither could the petitioners give

Yes. Certiorari is an extraordinary, prerogative remedy and is never

at least a reasonable explanation as to why only he signed the

issued as a matter of right. Accordingly, the party who seeks to avail of it

verification and certification of non-forum shopping.

must strictly observe the rules laid down by law.

The acceptance of a petition for certiorari as well as the grant of due
course thereto is, in general, addressed to the sound discretion of the
court. Although the Court has absolute discretion to reject and dismiss a
petition for certiorari, it does so only (1) when the petition fails to
demonstrate grave abuse of discretion by any court, agency, or branch of
the government; or (2) when there are procedural errors, like violations of
the Rules of Court or Supreme Court Circulars.

In the case at bench, the petitioners claim that the petition for certiorari
that they filed before the CA substantially complied with the requirements
provided for under the 1997 Rules of Civil Procedure on Verification and
Certification of Non-Forum Shopping.

The petitioners were given a chance by the CA to comply with the Rules
when they filed their motion for reconsideration, but they refused to do so.
Despite the opportunity given to them to make all of them sign the
verification and certification of non-forum shopping, they still failed to
comply. Thus, the CA was constrained to deny their motion and affirm the
earlier resolution.

Indeed, liberality and leniency were accorded in some cases. In these

cases, however, those who did not sign were relatives of the lone
signatory, so unlike in this case, where Malcaba is not a relative who is
similarly situated with the other petitioners and who cannot speak for
them.
METROBANK v ABAD-SANTOS

SEC. 5. Certification against forum shopping. The plaintiff or principal

DECEMBER 15, 2009

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: (a) 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.

FACTS:
Respondent Manfred De Koning obtained a loan from Metrobank worth P
2.19M. As a security, he issued a promissory note and a real estate
mortgage in favour of Metrobank over a condominium unit in Makati City.
When De Koning failed to pay despite demands, Metrobank instituted
extrajudicial foreclosure proceedings against the REM, where Metrobank
was the highest bidder. De Koning failed to redeem the property within
the prescribed redemption period but he nevertheless refused to turn
over the possession of the property. Metrobank then filed an ex parte
petition for a writ of possession over the foreclosed property. De Koning
filed a motion to dismiss on the ground that Metrobanks petition violated
Section 5 Rule 7 of the RoC which requires the attachment of a

2 | Page

certification against forum shopping to a complaint or other initiatory

and its issuance to a purchaser in an extrajudicial foreclosure is merely a

pleading.

ministerial function.

Metrobank claims that an ex parte petition for the issuance of a writ of

Since a petition for a writ of possession under Section 7 of Act No. 3135,

possession is not an initiatory pleading asserting a claim. Rather, it is a

as amended, is neither a complaint nor an initiatory pleading, a certificate

mere incident in the transfer of title over the real property which was

against non-forum shopping is not required. The certificate that

acquired by Metrobank through an extrajudicial foreclosure sale, in

Metrobank attached to its petition is thus a superfluity that the lower court

accordance with Section 7 of Act No. 3135, as amended. Thus, the

should have disregarded.

petition is not covered by Section 5, Rule 7 of the Rules and a

certification against forum shopping is not required.

RULE 7

The RTC and the CA agreed with De Koning. The CA explained that Sec
5 Rule 7 is not limited to actions, but covers any initiatory pleading that
asserts a claim for relief. Since Metrobanks petition for writ of possession
is an initiatory pleading, it must perforce be covered by this rule. Thus,
Metrobanks failure to disclose in the verification and certification the
existence of the two cases filed by De Koning rendered the petition
dismissable.

ISSUE:
Whether or not an ex parte petition for the issuance of a writ of
possession is an initiatory pleading asserting a claim.

Mid-Pasig Land Development Corporation v Mario Tablante doing

business under the name and style ECRM ENTERPRISES;
ROCKLAND CONSTRUCTION COMPANY; LAURIE LITAM; and MC
HOME DEPOT, INC.,

FACTS:
Petitioner is the registered owner of a piece of land situated in Pasig City.
Petitioner, through its chairperson and president, and ECRM Enterprises
by its proprietor, Tablante executed agreement whereby the former would

HELD: NO.

lease to the latter an area (1hectare) for period of 3 months. On the date

A writ of possession is defined as "a writ of execution employed to

of expiration Lease Agreement, Tablante assigned all his rights and

enforce a judgment to recover the possession of land. It commands the

interests under the said agreement to respondents Laurie M. Litam

sheriff to enter the land and give its possession to the person entitled

and/or Rockland Construction Company, Inc. (Rockland) under a Deed of

under the judgment."

Assignment of the same date. Petitioner eventually learned that Tablante

had executed a Contract of Lease with respondent MC Home Depot, Inc.

There are three instances when a writ of possession may be issued: (a)
in land registration proceedings under Section 17 of Act No. 496; (b) in
judicial foreclosure, provided the debtor is in possession of the
mortgaged realty and no third person, not a party to the foreclosure suit,
had intervened; and (c) in extrajudicial foreclosure of a real estate

over the same parcel of land. Thereafter, respondent MC Home Depot,

Inc. constructed improvements on the land and subdivided the area,
which it leased to various entities. Upon the expiration of the lease on
March 6, 2000, petitioner demanded that respondents vacate the land. A
final demand was made in a letter dated December 20, 2000.

mortgage under Section 7 of Act No. 3135, as amended by Act No. 4118.
The present case falls under the third instance.

In order to forestall ejectment, Rockland filed a case for specific

performance with RTC Pasig (Civil Case No. 68213,) compelling

a writ of possession may issue either (1) within the one year redemption
period, upon the filing of a bond, or (2) after the lapse of the redemption
period, without need of a bond. In order to obtain a writ of possession, the
purchaser in a foreclosure sale must file a petition, in the form of an ex
parte motion, in the registration or cadastral proceedings of the registered
property.

petitioner to execute a new lease of contract for another 3 years.

Consequently, petitioner filed for unlawful detainer against respondents
raffled to MTC Pasig Branch 70, simultaneously filed supplemental
motion to dismiss Civil Case No. 68213, on the ground of litis pendentia.
Motion to dismiss was denied.
MTC held that it has no jurisdiction over the unlawful detainer (ejectment)
case. It ruled that the issue did not involve material or physical
possession, but rather, whether or not ECRM had the right to exercise an

The right to possess a property merely follows the right of ownership.

option to renew its lease contract. Issue involved is incapable of

Thus, after the consolidation of title in the buyers name for failure of the

pecuniary estimation, jurisdiction over case was vested in RTC.

mortgagor to redeem, the writ of possession becomes a matter of right

On appeal, CA dismissed petition on grounds:

3 | Page

The instant petition stemmed from an action for ejectment filed by herein
1)

verification and certification against non-forum shopping was

signed by a certain Antonio A. Merelos as General Manager of
the petitioner-corporation without attaching therewith a
Corporate Secretarys certificate or board resolution that he is
authorized to sign for and on behalf of the petitioner;

respondent Tong through his representative Ong against herein

petitioners.The suit was filed with the Municipal Trial Court in Cities
(MTCC), Branch 3, Iloilo City. It was alleged that Tong is the registered
owner of two parcels of land known as Lot Nos. 40 and 41 together with
the improvements thereon, located at Barangay Kauswagan, City Proper,
Iloilo City; herein petitioners are occupying the house standing on the

Issue:

said parcels of land without any contract of lease nor are they paying any

WON failure to attach Secretary's Certificate, attesting General

kind of rental and that their occupation thereof is simply by mere

Manager's authority to sign Verification and Certification of Non-Forum

tolerance of Tong; that in a letter dated December 1, 1999, Tong

shopping is fatal.

demanded that respondents vacate the house they are occupying, but
despite their receipt of the said letter they failed and refused to vacate the
same; Tong referred his complaint to the Lupon of Barangay Kauswagan,

Held:

to no avail

No.

In their Answer with Defenses and Counterclaim, herein petitioners

CA erred in dismissing the petition before it. The determination of the

alleged that Tong is not the real owner of the disputed property, but is

sufficiency of the authority was done on case to case basis. In many

only a dummy of a certain alien named Ong Se Fu, who is not qualified to

cases, authority of some corporate officers to sign verification and

own the said lot and, as such, Tong's ownership is null and void;

certification against forum shopping was recognized, being in a position

petitioners are the true and lawful owners of the property in question and

to verify the truthfulness and correctness of the allegations in petition.

by reason thereof they need not lease nor pay rentals to anybody; a case
docketed as CA-G.R. CV No. 52676 (RTC Civil Case No. 20181)

Failure to attach the Secretarys Certificate, attesting to General Manager

involving herein petitioner Pe and respondent is pending before the Court

Antonio Mereloss authority to sign the Verification and Certification of

of Appeals (CA) where the ownership of the subject property is being

Non-Forum Shopping, should not be considered fatal to the filing of the

litigated; respondent should wait for the resolution of the said action

petition. Nonetheless, the requisite board resolution was subsequently

instead of filing the ejectment case; petitioners also claimed that there

submitted to the CA, together with the pertinent documents. Considering

was, in fact, no proper barangay conciliation as Tong was bent on filing

that petitioner substantially complied with the rules, the dismissal of the

the ejectment case before conciliation proceedings could be validly

petition was, therefore, unwarranted.

made.
The MTCC rendered judgment in favor of herein respondent.
Aggrieved by the above-quoted judgment, petitioners appealed the

Dismissal of an appeal on a purely technical ground is frowned upon

decision of the MTCC with the RTC of Iloilo City.

especially if it will result in unfairness. The rules of procedure ought not to

In its presently assailed Decision, the RTC of Iloilo City, Branch 24

be applied in a very rigid, technical sense for they have been adopted to

affirmed in its entirety the appealed decision of the MTCC.

help secure, not override, substantial justice.

Hence, the instant petition for review on certiorari.

In view of the developments which have rendered the issue of the right of

ISSUE:

possession over the subject property moot and academic, the main case

Whether or not RTC erred in holding that the law authorizes an attorney-

is hereby considered CLOSED AND TERMINATED. Since the claimed

in-fact to execute the required certificate against forum shopping in behalf

lease contract had already expired as of July or August 2003, there

of his or her principal. Petitioners argue that Tong himself, as the

appears no reason why respondents should continue to have any claim

principal, and not Ong, should have executed the certificate against

to further possession of the property and respondent wasno longer in

forum shopping.

possession of subject property.

RULING: The Court is not persuaded.
It is true that the first paragraph of Section 5, Rule 7 of the Rules of
ANITA MONASTERIO-PE and the SPOUSES ROMULO TAN and
EDITHA PE-TAN, Petitioners, v. JOSE JUAN TONG, herein
represented by his Attorney-in-Fact, JOSE Y. ONG, Respondent.

Court, requires that the certification should be signed by the "petitioner or

principal party" himself. The rationale behind this is because only the
petitioner himself has actual knowledge of whether or not he has initiated
similar actions or proceedings in different courts or agencies. However,

G.R. No. 151369

March 23, 2011

the rationale does not apply where, as in this case, it is the attorney-infact who instituted the action. Such circumstance constitutes reasonable

FACTS:

cause to allow the attorney-in-fact to personally sign the Certificate of

Non-Forum Shopping. Indeed, the settled rule is that the execution of the

4 | Page

certification against forum shopping by the attorney-in-fact is not a

in the complaint. Failing which, the complaint stated no cause of action.

violation of the requirement that the parties must personally sign the

MR denied.

same. The attorney-in-fact, who has authority to file, and who actually
filed the complaint as the representative of the plaintiff, is a party to the
ejectment suit.14 In fact, Section 1, Rule 70 of the Rules of Court
includes the representative of the owner in an ejectment suit as one of
the parties authorized to institute the proceedings. In the present case,

ISSUES:
(1) Is the dismissal correct? (2) Did petitioner substantially comply with
verification?

there is no dispute that Ong is respondent's attorney-in-fact. Hence, the

Court finds that there has been substantial compliance with the rules

HELD:

proscribing forum shopping.

(1) No. A complaint states a cause of action if it avers the existence of

Petitioners also aver that the certificate against forum shopping attached

the three essential elements of a cause of action, namely: (a) The legal

to the complaint in Civil Case No. 2000(92) falsely stated that there is no

right of the plaintiff; (b) The correlative obligation of the defendant; and (c)

other case pending before any other tribunal involving the same issues

The act or omission of the defendant in violation of said right. The

as those raised therein, because at the time the said complaint was filed,

inclusion of Theresas co-heirs does not fall under any of the above

Civil Case No. 20181 was, in fact, still pending with the CA (CA-G.R. CV

elements. The infirmity is, in fact, not a failure to state a cause of action

No. 52676), where the very same issues of ejectment and physical

but a non-joinder of an indispensable party. As such, this is properly a

possession were already included.

non-joinder of indispensable party and not a failure of the complaint to

state a cause of action. The non-joinder of indispensable parties is not a
ground for the dismissal of an action. At any stage of a judicial
proceeding and/or at such times as are just, parties may be added on the
motion of a party or on the initiative of the tribunal concerned. If the

HEIRS OF MESINA vs. HEIRS OF FIAN

G.R. No. 201816
April 8, 2013

plaintiff refuses to implead an indispensable party despite the order of the

court, that court may dismiss the complaint for the plaintiffs failure to
comply with the order. The remedy is to implead the non-party claimed to
be indispensable. Thus, the dismissal of the case for failure to state a

FACTS:

cause of action is improper. The RTC should have directed petitioner

The late spouses Faustino and Genoveva Mesina, during their lifetime,

Norman Mesina to implead all the heirs of Domingo Fian, Sr. as

bought from the spouses Domingo Fian Sr. and Maria Fian 2 lots. 1st lot

defendants within a reasonable time from notice with a warning that his

has an area of 1,632 square meters, while the 2nd 3,730 sq. m. Both are

failure to do so shall mean dismissal of the complaint.

situated in Brgy. Gungab, Poblaciion, Albuera, Leyte. Upon the death of

(2) Yes. Sec. 4. Verification. Except when otherwise specifically

the spouses Fian, their heirs denied that their parents sold the property to

required by law or rule, pleadings need not be under oath, verified or

Spouses Mesina. When the spouses Mesina died, their heirs repeatedly

accompanied by affidavit. A pleading is verified by an affidavit that the

demanded the Heirs of Fian to vacate the lots and to turn possession

affiant has read the pleading and that the allegations therein are true and

over to the former, however, the latter refused. Hence, on August 8, 2005,

correct of his personal knowledge or based on authentic records.

Norman, as attorney-in-fact of his siblings Victor, Maria and Lorna, filed

The alleged defective verification states that:

an action for quieting of title and damages before RTC, Branch 14, Leyte

I, NORMAN S. MESINA, legal age, married, Filipino, and a resident of

against the Heirs of FIan, naming only Theresa Fian Yray as the

Poblacion, Albuera, Leyte, after having been duly sworn to in accordance

representative of the Heirs of Fian. Theresa filed a Motion to Dismiss

with law, hereby depose and say that: x x x x

alleging that the complaint states no cause of action and gross violation

2. The allegations herein are true and correct to the best of our

of Sec 1 and 2, Rule 3. Theresa claims that neither the Heirs of Mesina

knowledge;

nor the Heirs of Fian are juridical persons authorized by law to file an
action or to be defendants. Moreover, Theresa alleged that the failure to
individually name all the heirs of the spouses Fian makes the complaint
infirm. Hence, the complaint must be dismissed.
The RTC granted the MTD and held that the comlaint stated no cause of
action. It ruled that the Heirs of Mesina and the Heirs of Fian are
neither natural nor juridical persons as contemplated by the rules. Said
heirs being unnamed could not be real parties in interest. MR was
denied.
On appeal, the CA affirmed the RTC decision ruling that all heirs of
spouses Fian are indispensable parties and should have been impleaded

5 | Page

Both the RTC and the CA found said verification defective, since the
phrase "or based on authentic records," as indicated under the second
paragraph of Sec. 4, Rule 7 as afore-quoted, was omitted. The
verification of the complaint does not include the phrase "or based on
authentic records" does not make the verification defective. Notably, the
provision used the disjunctive word "or." As such, "personal knowledge"
and "authentic records" need not concur in a verification as they are to be
taken separately.
Also, verification, like in most cases required by the rules of procedure, is
a formal requirement, not jurisdictional. It is mainly intended to secure an

assurance that matters which are alleged are done in good faith or are
true and correct and not of mere speculation. Thus, when circumstances
so warrant, as in the case at hand, "the court may simply order the
correction of unverified pleadings or act on it and waive strict compliance

HELD:

with the rules in order that the ends of justice may thereby be served."

YES. It is true that the reply filed by Manuel alleging that the special
power of attorney is a forgery was not made under oath. However, the

RULE 8

complaint, which was verified by Manuel under oath, alleged that the sale
of the subject property executed by his wife, Martha, in favor of Titan was

Bartolome

without his knowledge, consent, and approval, express or implied; and

that there is nothing on the face of the deed of sale that would show that
Titan Construction Corporation vs. David

he gave his consent thereto.

G.R. No. 169548

March 15, 2010
FACTS:
Manuel David, Sr. and Martha David were married in 1957. In 1970, the
spouses acquired a lot at White Plains, Quezon City, which was
registered in the name of MARTHA S. DAVID, of legal age, Filipino,
married to Manuel A. David. In 1976, the spouses separated de facto,
and no longer communicated with each other.

Further, Titan did not object to the presentation of Atty. Desiderio Pagui,
who testified as an expert witness, on his Report finding that the
signature on the special power of attorney was not affixed by Manuel
based on his analysis of the questioned and standard signatures of the
latter, and even cross-examined said witness. Neither did Titan object to
the admission of said Report when it was offered in evidence by Manuel.
Where a party acted in complete disregard of or wholly overlooked
Section 8, Rule 8 and did not object to the introduction and admission of

Sometime in March 1995, Manuel discovered that Martha had previously

evidence questioning the genuineness and due execution of a document,

sold the property to Titan Construction Corporation. Thus Manuel filed a

he must be deemed to have waived the benefits of said Rule.

Complaint for Annulment of Contract and Recovenyance against Titan

Consequently, Titan is deemed to have waived the mantle of protection

before the RTC of Quezon City. Manuel alleged that the sale executed by

given [it] by Section 8, Rule 8

Martha in favor of Titan was without his knowledge and consent, and
therefore void.

In its Answer with Counterclaim, Titan claimed that it was a buyer in good
faith and for value because it relied on a Special Power of Attorney

RULE 9
REBECCA PACAA-CONTRERAS and ROSALIE PACAA

signed by Manuel which authorized Martha to dispose of the property on

behalf of the spouses. Titan thus prayed for the dismissal of the
complaint. In his unverified Reply, Manuel claimed that the SPA was

vs.
ROVILA WATER SUPPLY, INC., EARL U KOKSENG, LILIA TORRES,
DALLA P. ROMANILLOS and MARISSA GABUYA

spurious, and that the signature purporting to be his was a forgery;

hence, Martha was wholly without authority to sell the property.

G.R. No. 168979

December 2, 2013

FACTS:
Petitioners Rebecca Pacaa-Contreras and Rosalie Pacaa, children of

RTC and CA ruling: The property, being part of the conjugal property of

Lourdes Teves Pacaa and Luciano Pacaa, filed the present case

the spouses could only be sold upon the consent of both spouses. The

against Rovila Inc., Earl, Lilia, Dalla and Marisa for accounting and

Deed of Sale was invalidated because the signature of Manuel in the SPA

damages.The petitioners claimed that their family has long been known in

was not genuine.

the community to be engaged in the water supply business; they

operated the "Rovila Water Supply" from their family residence and were

Titan, however, claimed that because Manuel failed to specifically deny

the genuineness and due execution of the SPA in his Reply, he is
deemed to have admitted the veracity of said document, in accordance
with Rule 8, Sections 7 and 8, of the Rules of Court.

engaged in the distribution of water to customers in Cebu City. The

petitioners alleged that Lilia was a former trusted employee in the family
business who hid business records and burned and ransacked the family
files. Lilia also allegedly posted security guards and barred the members
of the Pacaa family from operating their business. She then claimed
ownership over the family business through a corporation named "Rovila
Water Supply, Inc." (Rovila Inc.) Upon inquiry with the Securities and

ISSUE:
Whether or not Manuel validly denied the genuineness and due execution
of the SPA

6 | Page

Exchange Commission (SEC), the petitioners claimed that Rovila Inc.

was surreptitiously formed with the respondents as the majority
stockholders. The respondents did so by conspiring with one another and

forming the respondent corporation to takeover and illegally usurp the

parents. Pursuant to jurisprudence, the petitioners should first be

family business registered name.

declared as heirs before they can be considered as the real parties in

In forming the respondent corporation, the respondents allegedly used

interest. This cannot be done in the present ordinary civil case but in a

the name of Lourdes as one of the incorporators and made it appear in

special proceeding for that purpose. The CA agreed with the respondents

the SEC documents that the family business was operated in a place

that they alleged the following issues as affirmative defenses in their

other than the Pacaa residence. Thereafter, the respondents used the

answer: 1) the petitioners are not the real parties in interest; and 2) that

Pacaa familys receipts and the deliveries and sales were made to

they had no legal right to institute the action in behalf of their parents.

appear as those of the respondent Rovila Inc.Using this scheme, the

Hence this petition.

respondents fraudulently appropriated the collections and payments.

The petitioners filed the complaint in their own names although Rosalie

ISSUE:

was authorized by Lourdes through a sworn declaration and special

WON the RTC acted with grave abuse of discretion in denying the

power of attorney (SPA). The respondents filed a first motion to dismiss

respondents motion to dismiss because the petitioners are not the real

on the ground that the RTC had no jurisdiction over an intra-corporate

parties in interest.

controversy. The RTC denied the motion. On September 26, 2000,

Lourdes diedand the petitioners amended their complaint, with leave of

RULING:

court, on October 2, 2000 to reflect this development. They still attached

No, the RTC correctly dismissed the motion of the respondents. The

to their amended complaint the sworn declaration with SPA, but the

history and development of the ground "fails to state a cause of action" in

caption of the amended complaint remained the same. On October 10,

the 1940, 1964 and the present 1997 Rules of Court Preliminarily, a suit

2000, Luciano also died

that is not brought in the name of the real party in interest is dismissible

At the subsequent pre-trial, the respondents manifested to the RTC that a

on the ground that the complaint "fails to state a cause of action.

substitution of the parties was necessary in light of the deaths of Lourdes

Pursuant to jurisprudence this is also the ground invoked when the

and Luciano. They further stated that they would seek the dismissal of the

respondents alleged that the petitioners are not the real parties in interest

complaint because the petitioners are not the real parties in interest to

because: 1) the petitioners should not have filed the case in their own

prosecute the case. The pre-trial pushed through as scheduled and the

names, being merely attorneys-in-fact of their mother; and 2) the

RTC directed the respondents to put into writing their earlier

petitioners should first be declared as heirs. A review of the 1940, 1964

manifestation. The RTC issued a pre-trial order where one of the issues

and the present 1997 Rules of Court shows that the fundamentals of the

submitted was whether the complaint should be dismissed for failure to

ground for dismissal based on "failure to state a cause of action" have

comply with Section 2, Rule 3 of the Rules of Court which requires that

drastically changed over time. Notably, in the present rules, there was a

every action must be prosecuted in the name of the real party in interest.

deletion of the ground of "failure to state a cause of action" from the list of

On January 23, 2002, the respondents again filed a motion to dismiss on

those which may be waived if not invoked either in a motion to dismiss or

the grounds, among others, that the petitioners are not the real parties in

in the answer. Another novelty introduced by the present Rules, which

interest to institute and prosecute the case and that they have no valid

was totally absent in its two precedents, is the addition of the period of

cause of action against the respondents. The RTC denied the

time within which a motion to dismiss should be filed as provided under

respondents motion to dismiss. It ruled that, save for the grounds for

Section 1, Rule 16. Thus, jurisprudence governed by the 1940 and 1964

dismissal which may be raised at any stage of the proceedings, a motion

Rules of Court to the effect that the ground for dismissal based on failure

to dismiss based on the grounds invoked by the respondents may only be

to state a cause of action may be raised anytime during the proceedings,

filed within the time for, but before, the filing of their answer to the

is already inapplicable to cases already governed by the present Rules of

amended complaint. Thus, even granting that the defenses invoked by

Court which took effect on July 1, 1997. As the rule now stands, the

the respondents are meritorious, their motion was filed out of time as it

failure to invoke this ground in a motion to dismiss or in the answer would

was filed only after the conclusion of the pre-trial conference.

result in its waiver. According to Oscar M. Herrera, the reason for the

Furthermore, the rule on substitution of parties only applies when the

deletion is that failure to state a cause of action may be cured under

parties to the case die, which is not what happened in the present case.

Section 5, Rule 10 and we quote.

The respondents filed a petition for certiorari under Rule 65 of the Rules

The motion to dismiss in the present case based on failure to state a

of Court with the CA, invoking grave abuse of discretion in the denial of

cause of action was not timely filed and was thus waived

their motion to dismiss. They argued that the deceased spouses Luciano

Applying Rule 16 of the Rules of Court which provides for the grounds for

and Lourdes, not the petitioners, were the real parties in interest. Thus,

the dismissal of a civil case, the respondents grounds for dismissal fall

the petitioners violated Section 16, Rule 3 of the Rules of Court on the

under Section 1(g) and (j), Rule 16 of the Rules of Court, particularly,

substitution of parties. The CA granted the petition and ruled that the RTC

failure to state a cause of action and failure to comply with a condition

committed grave abuse of discretion as the petitioners filed the complaint

precedent (substitution of parties), respectively. Rule 9 of the Rules of

and the amended complaint as attorneys-in-fact of their parents. As such,

Court which states that defenses and objections not pleaded either in a

they are not the real parties in interest and cannot bring an action in their

motion to dismiss or in the answer are deemed waived, except for the

own names. Neither are the petitioners suing as heirs of their deceased

following grounds: 1) the court has no jurisdiction over the subject matter;

7 | Page

2) litis pendencia; 3) res judicata; and 4) prescription. Therefore, the

complaint as indispensable parties because of their death during the

grounds not falling under these four exceptions may be considered as

pendency of the case. Upon their death, however, their ownership and

waived in the event that they are not timely invoked. As the respondents

rights over their properties were transmitted to their heirs, including

motion to dismiss was based on the grounds which should be timely

herein petitioners, pursuant to Article 774 in relation with Article 777 of the

invoked, material to the resolution of this case is the period within which

Civil Code. Therefore, to obviate further delay in the proceedings of the

they were raised. Both the RTC and the CA found that the motion to

present case and given the Courts authority to order the inclusion of an

dismiss was only filed after the filing of the answer and after the pre-trial

indispensable party at any stage of the proceedings, the heirs of the

had been concluded. Because there was no motion to dismiss before the

spouses Pacaa, except the petirioners who are already parties to the

filing of the answer, the respondents should then have at least raised

case are Lagrimas Pacaa-Gonzalez who intervened in the case, are

these grounds as affirmative defenses in their answer. The RTCs

hereby ordered impleaded as parties-plaintiffs. WHEREFORE, the

assailed orders did not touch on this particular issue but the CA ruled that

petition is GRANTED.

the respondents did, while the petitioners insist that the respondents did
not. Our examination of the records shows that the CA had no basis in its

DIONA VS. BALANGUE, ET AL.

finding that the respondents alleged the grounds as affirmative defenses

G.R. No. 173559

in their answer. The respondents merely stated in their petition for

January 7, 2013

certiorari that they alleged the subject grounds in their answer. However,
nowhere in the petition did they support this allegation; they did not even
attach a copy of their answer to the petition. It is basic that the

Facts:

respondents had the duty to prove by substantial evidence their positive

On March 21, 1999 respondents obtained a loan of P45K from petitioner

assertions. Considering that the petition for certiorari is an original and

payable in 6 months and secured by Real Estate Mortgage over their 202

not an appellate action, the CA had no records of the RTCs proceedings

sqm property located in Valenzuela and covered by TCT. When the debt

upon which the CA could refer to in order to validate the respondents

became due, respondents failed to pay despite demand. Thus, petitioner

claim. Clearly, other than the respondents bare allegations, the CA had

filed with RTC a complaint on Sept 17, 1999. Respondents were served

no basis to rule, without proof, that the respondents alleged the grounds

with summons thru respondent Sonny Balangue. On October 15, 1999,

for dismissal as affirmative defenses in the answer. The respondents, as

with the assistance of Atty. Arthur C. Coroza (Atty. Coroza) of the Public

the parties with the burden of proving that they timely raised their grounds

Attorneys Office, they filed a Motion to Extend Period to Answer but

for dismissal, could have at least attached a copy of their answer to the

respondents failed to file any responsive pleadings. Thus, upon motion of

petition. This simple task they failed to do. The rules are clear and require

the petitioner, the RTC declared them in default and allowed petitioner to

no interpretation. Pursuant to Section 1, Rule 9 of the Rules of Court, a

present her evidence ex parte. On October 17, 2000, the RTC granted

motion to dismiss based on the grounds invoked by the respondents may

petitioners Complaint.

be waived if not raised in a motion to dismiss or alleged in their answer.

Petitioner filed a Motion for Execution alleging that respondents did not

Other heirs of the spouses Pacaa to be impleaded in the case. It should

interpose a timely appeal despite receipt by their former counsel of the

be emphasized that insofar as the petitioners are concerned, the

RTCs Decision. Before it could be resolved, however, respondents filed a

respondents have waived the dismissal of the complaint based on the

Motion to Set Aside Judgment claiming that not all of them were duly

ground of failure to state a cause of action because the petitioners are

served with summons. They had no knowledge of the case because their

not the real parties in interest. At this juncture, a distinction between a

co-respondent Sonny did not inform them about it. They prayed that the

real party in interest and an indispensable party is in order. At the

RTCs October 17, 2000 Decision be set aside and a new trial be

inception of the present case, both the spouses Pacaa were not

conducted.

impleaded as parties-plaintiffs. The Court notes, however, that they are

But the RTC ordered the issuance of a Writ of Execution to implement its

indispensable parties to the case as the alleged owners of Rovila Water

October 17, 2000 Decision. However, since the writ could not be

Supply. Without their inclusion as parties, there can be no final

satisfied, petitioner moved for the public auction of the mortgaged

determination of the present case. They possess such an interest in the

property, which the RTC granted. In an auction sale conducted on

controversy that a final decree would necessarily affect their rights, so

November 7, 2001, petitioner was the only bidder in the amount of

that the courts cannot proceed without their presence. Their interest in

P420,000.00. Thus, a Certificate of Sale was issued in her favor and

the subject matter of the suit and in the relief sought is inextricably

accordingly annotated.

intertwined with that of the other parties. Mindful of the differing views of

Respondents then filed a Motion to Correct/Amend Judgment and To Set

the Court as regards the legal effects of the non-inclusion of

Aside Execution Sale dated December 17, 2001, claiming that the parties

indispensable parties, the Court clarified in Republic of the Philippines v.

did not agree in writing on any rate of interest and that petitioner merely

Sandiganbayan, et al., that the failure to implead indispensable parties is

sought for a 12% per annum interest in her Complaint. The RTC awarded

a curable error and the foreign origin of our present rules on

5% monthly interest (or 60% per annum) from March 2, 1991 until full

indispensable parties permitted this corrective measure. Obviously, in the

payment. Their indebtedness inclusive of the exorbitant interest from

present case, the deceased Pacaas can no longer be included in the

8 | Page

March 2, 1991 to May 22, 2001 ballooned from P124,400.00 to

Rules of Court is to safeguard defendants right to due process against

P652,000.00.

unforeseen and arbitrarily issued judgment. This, to the mind of this

Displeased with the RTCs May 7, 2002 Order, petitioner elevated the

Court, is akin to the very essence of due process. It embodies "the

matter to the CA via a Petition for Certiorari under Rule 65 of the Rules of

sporting idea of fair play" and forbids the grant of relief on matters where

Court. On August 5, 2003, the CA rendered a Decision declaring that the

the defendant was not given the opportunity to be heard thereon.

RTC exceeded its jurisdiction in awarding the 5% monthly interest but at

In the case at bench, the award of 5% monthly interest rate is not

the same time pronouncing that the RTC gravely abused its discretion in

supported both by the allegations in the pleadings and the evidence on

subsequently reducing the rate of interest to 12% per annum. However,

record. The Real Estate Mortgage executed by the parties does not

the proper remedy is not to amend the judgment but to declare that

include any provision on interest. When petitioner filed her Complaint

portion as a nullity.

before the RTC, she alleged that respondents borrowed from her "the

Respondents do not contest the existence of their obligation and the

sum of FORTY-FIVE THOUSAND PESOS (P45,000.00), with interest

principal amount thereof. They only seek quittance from the 5% monthly

thereon at the rate of 12% per annum" and sought payment thereof. She

interest or 60% per annum imposed by the RTC. Respondents contend

did not allege or pray for the disputed 5% monthly interest. Neither did

that Section (3)d of Rule 9 of the Rules of Court is clear that when the

she present evidence nor testified thereon. Clearly, the RTCs award of

defendant is declared in default, the court cannot grant a relief more than

5% monthly interest or 60% per annum lacks basis and disregards due

what is being prayed for in the Complaint. A judgment which transgresses

process. It violated the due process requirement because respondents

said rule, according to the respondents, is void for having been issued

were not informed of the possibility that the RTC may award 5% monthly

without jurisdiction and for being violative of due process of law.

interest. They were deprived of reasonable opportunity to refute and

present controverting evidence as they were made to believe that the

Issue:

complainant petitioner was seeking for what she merely stated in her

Whether or not the CA erred in its judgment.

Complaint.

Ruling:

RULE 10

The petition must fail.

We agree with respondents that the award of 5% monthly interest

RAFAEL BAUTISTA and LIGAYA ROSEL

violated their right to due process and, hence, the same may be set aside

vs.

in a Petition for Annulment of Judgment filed under Rule 47 of the Rules

MAYA-MAYA COTTAGES, INC.

of Court.

G.R. No. 148361 November 29, 2005

Grant of 5% monthly interest is way beyond the 12% per annum interest

FACTS:

sought in the Complaint and smacks of violation of due process.

Spouses Rafael and Ligaya Bautista, petitioners herein, are the

It is settled that courts cannot grant a relief not prayed for in the pleadings

registered owners of a 3,856-square meter lot located at Natipuan,

or in excess of what is being sought by the party. They cannot also grant

Nasugbu, Batangas, as evidenced by Original Certificate of Title (OCT)

a relief without first ascertaining the evidence presented in support

No. P-1436 issued in their names on January 15, 1989 by the Register of

thereof. Due process considerations require that judgments must conform

Deeds, same province. On May 13, 1996, Maya-Maya Cottages, Inc.

to and be supported by the pleadings and evidence presented in court.

(MMCI), respondent, filed with the Regional Trial Court (RTC) of

Notably, the Rules is even more strict in safeguarding the right to due

Nasugbu, Batangas a complaint for cancellation of petitioners title and

process of a defendant who was declared in default than of a defendant

damages, with application for a preliminary injunction, docketed as Civil

who participated in trial. For instance, amendment to conform to the

Case No. 371. Respondent alleged inter alia that "without any color of

evidence presented during trial is allowed the parties under the Rules.

right and through dubious means," petitioners were able to obtain OCT

But the same is not feasible when the defendant is declared in default

No. P-1436 in their names. On May 29, 1996, petitioners filed a motion to

because Section 3(d), Rule 9 of the Rules of Court comes into play and

dismiss the complaint on the ground that it does not state a cause of

limits the relief that may be granted by the courts to what has been

action. They averred that respondent is a private corporation, hence,

prayed for in the Complaint. It provides:

disqualified under the Constitution from acquiring public alienable lands

(d) Extent of relief to be awarded. A judgment rendered against a party

except by lease. Respondent cannot thus be considered a real party in

in default shall not exceed the amount or be different in kind from that

interest. In its Order dated August 30, 1996, the trial court granted the

prayed for nor award unliquidated damages.

motion to dismiss, holding that since the property is an alienable public

The raison dtre in limiting the extent of relief that may be granted is that

land, respondent is not qualified to acquire it except by lease. Thus, it has

it cannot be presumed that the defendant would not file an Answer and

no cause of action. Respondent then filed a motion for reconsideration

allow himself to be declared in default had he known that the plaintiff will

with motion for leave to file an amended complaint for quieting of title.

be accorded a relief greater than or different in kind from that sought in

Respondent alleged that the technical description in petitioners title does

the Complaint. No doubt, the reason behind Section 3(d), Rule 9 of the

not cover the disputed lot. Thereupon, petitioners filed their opposition,

9 | Page

contending that the amended complaint does not also state a cause of

The Solid Guaranty, Inc. (Solid), B.F. Homes, Inc. (BF Homes), Pilar

action and if admitted, respondents theory of the case is substantially

Development Corporation (PDC) and Tomas B. Aguirre (Aguirre). The

modified. On November 18, 1996, the trial court issued an Order denying

complaint alleges that: petitioner issued five separate Letters of

petitioners motion to dismiss, thus, reversing its Order of August 30,

Guarantee in favor of the Philippine National Bank (PNB) as security for

1996 dismissing the complaint in Civil Case No. 371. Petitioners then

various credit accommodations extended by PNB to respondent PII;

filed with the Court of Appeals a special civil action for certiorari and

respondents PII, BF Homes, PDC and Aguirre executed a Deed of

prohibition. They alleged that the amended complaint does not cure the

Undertaking binding themselves, jointly and severally, to pay or reimburse

defect in the original complaint which does not state a cause of action.

petitioner upon demand such amount of money or to repair the damages,

Clearly, in admitting respondents amended complaint, the trial court

losses or penalties which petitioner may pay or suffer on account of its

committed grave abuse of discretion amounting to lack or excess of

guarantees; as security for prompt payment by respondent PII, the latter

jurisdiction. On November 24, 2000, the Court of Appeals rendered a

submitted to petitioner, surety and performance bonds issued by

Decision dismissing the petition for certiorari and prohibition. Petitioners

respondents PBAC and Solid; on April 24, 1985, the PNB called on the

filed a motion for reconsideration but was denied by the Appellate Court

guarantees of petitioner, and so, the latter demanded from respondent PII

in its Resolution of May 30, 2001. Hence this petition.

the immediate settlement of P20,959, 529.36, representing the aggregate

amount of the guarantees of petitioner called by PNB and the further sum

ISSUE:

of P351,517.57 representing various fees and charges; PII refused to

WON the Court of Appeals erred in holding that the trial court did not

settle said obligations; petitioner likewise demanded payment from

commit grave abuse of discretion amounting to lack or excess of

respondents Solid and PBAC but they also refused to pay petitioner; and

jurisdiction in admitting respondents amended complaint.

because of the unjustified refusal of respondents to comply with their

respective obligations, petitioner was constrained to secure the services

RULING:

of counsel and incur expenses for the purpose of prosecuting its valid

No, the CA correctly upheld the ruling of the RTC. Under Section 2, Rule

claims against the respondents. It is prayed in the complaint that

10 of the 1997 Rules of Civil Procedure, as amended, provides: SEC. 2.

judgment be rendered ordering respondents PII, BF Homes, PDC and

Amendments as a matter of right. A party may amend his pleading once

Aguirre to pay petitioner the amount of P21,311,046.93 plus interest and

as a matter of right at any time before a responsive pleading is served or,

penalty charges thereon, ordering respondents Solid and PBAC to pay

in the case of a reply, at any time within ten (10) days after it is served."

P5,758,000.00 and P9,596,000.00, respectively, under their surety and/or

The above provision clearly shows that before the filing of any responsive

performance bonds and ordering respondents to pay petitioner the sums

pleading, a party has the absolute right to amend his pleading, regardless

of P2,000,000.00 as attorneys fees and expenses of litigation and

of whether a new cause of action or change in theory is introduced. It is

P50,000.00 as exemplary damages.

settled that a motion to dismiss is not the responsive pleading

Respondent BF Homes filed a Motion to Dismiss on the ground that it is

contemplated by the Rule.3 Records show that petitioners had not yet

undergoing rehabilitation receivership and pursuant to P.D. 902-A, the

filed a responsive pleading to the original complaint in Civil Case No. 371.

trial court has no jurisdiction to try the case. Respondent PII also filed a

What they filed was a motion to dismiss. It follows that respondent, as a

Motion to Dismiss on the ground that the complaint states no cause of

plaintiff, may file an amended complaint even after the original complaint

action since it does not allege that petitioner has suffered any damage,

was ordered dismissed, provided that the order of dismissal is not yet

loss or penalty because of the guarantees petitioner had extended for

final, as in this case. Verily, the Court of Appeals correctly held that in

and on behalf of respondent PII. The other respondents filed their

issuing the assailed Order admitting the amended complaint, the trial

respective responsive pleadings.

court did not gravely abuse its discretion. Hence, neither certiorari nor

Judge Roberto M. Lagman issued an Order suspending the case only as

prohibition would lie. As to petitioners contention that respondent

against respondent BF Homes and denying respondent PIIs motion to

corporation is barred from acquiring the subject lot, suffice it to say that

dismiss. Thereafter, hearing on the merits ensued. Petitioner presented

this is a matter of defense which can only be properly determined during

Rosauro Termulo, the treasury department manager of petitioner, who

the full-blown trial of the instant case.

testified that the amount of P19,035,256.57 was paid on July 28, 1990 by
petitioner to the PNB; and, Exhibit "LL," a debit memo issued by the PNB.
Consequently, petitioner filed a Motion to Amend Complaint to Conform to

Philippine Export and Foreign Loan Guarantee Corporation vs.

Evidence pursuant to Section 5, Rule 10 of the Revised Rules of Court,

Philippine Infrastructures, Inc,

seeking to amend Paragraph 17 and the pertinent portion of the prayer in

419 SCRA 6, G.R. No. 120384;

the complaint, to read as follows:

January 13, 2004

17. Because of the unjustified refusal of the defendants to comply with

FACTS:

their respective obligations, the plaintiffas guarantor has been

Petitioner filed a complaint for collection of sum of money before the

constrained to pay the Philippine National Bank thru the account of the

Regional Trial Court against herein respondents Philippine

National Treasury the amount of Nineteen Million Thirty-five Thousand

Infrastructures, Inc. (PII), Philippine British Assurance Co., Inc. (PBAC),

Two Hundred Fifty-six and 57/100 (P19,035,256.57) on July 28, 1990

10 | P a g e

representing payment of principal loan of P12,790,094.83 and interest

It is settled that even if the complaint be defective, but the parties go to

ofP6,245,111.54 due March 16, 1987 on the Philippine Infrastructure,

trial thereon, and the plaintiff, without objection, introduces sufficient

Inc./Philguaranty loan under the PNB Expanded Loan Collection

evidence to constitute the particular cause of action which it intended to

Program; and which amount was deducted from the equity share of the

allege in the original complaint, and the defendant voluntarily produces

National Government in Philguarantee. In view of defendants

witnesses to meet the cause of action thus established, an issue is joined

unwarranted failure and refusal to settle their respective accountabilities

as fully and as effectively as if it had been previously joined by the most

plaintiff was likewise constrained to secure the services of counsel and

perfect pleadings. Likewise, when issues not raised by the pleadings are

incur expenses in the process of prosecuting its just and valid claims

tried by express or implied consent of the parties, they shall be treated in

against the defendants; accordingly, the defendants should be held liable,

all respects as if they had been raised in the pleadings.

jointly and severally, to pay the plaintiff attorneys fees and expenses of

Evidently, herein respondents failure to object to the evidence at the time

litigation in the amount ofP2,000,000.00 or about ten (10%) percent of the

it is presented in court is fatal to their cause inasmuch as whatever

guaranteed obligations.

perceived defect the complaint had was cured by the introduction of

PRAYER

petitioners evidence proving actual loss sustained by petitioner due to

(a) Ordering defendant PII, BF Homes, PILAR and AGUIRRE to pay

payment made by it to PNB.

plaintiff, jointly and severally, the amount of P19,035,256.57 plus

Thus, the contention of respondents that the amendment would introduce

P351,517.57 extension guarantee fees and amendment fees, plus

a subsequently acquired cause of action as there was none at the time

interests and penalty charges thereon;

the original complaint was filed, is untenable.

Furthermore, petitioners cause of action against respondents stemmed

Acting on the motion to amend, the trial court, at that time presided by
Judge Joselito J. Dela Rosa, issued the assailed Order dated December
7, 1992, dismissing the case without prejudice on the ground of failure of
the complaint to state a cause of action.
A petition for review on certiorari was filed by petitioner against the
Regional Trial Court with this Court. On June 23, 1993, the Court issued
a Resolution resolving to REFER the case to the Court of Appeals, for
disposition considering that under Batas Pambansa Blg. 129, the Court of
Appeals now exercises exclusive appellate jurisdiction over all final
judgments, decisions, resolutions, orders or awards of Regional Trial
Courts and quasi-judicial agencies, instrumentalities, boards or
commissions,
The Court of Appeals promulgated the assailed Decision, dismissing the
petition. On May 19, 1995, the appellate court denied petitioners motion
for reconsideration. Hence, petitioner filed the present petition for review
on certiorari.

from the obligation of respondents PII, BF Homes, PDC and Aguirre

under their Deed of Undertaking that was secured by the surety and
performance bonds issued by respondents PBAC and Solid. It is a
condition of this instrument that failure of the OBLIGOR and COOBLIGORS to comply with this undertaking and to make good the
performance of the other obligations herein undertaken and/or promised,
shall be sufficient cause for the OBLIGEE to consider such failure as an
event of default which shall give to the OBLIGEE the right to take such
action against the OBLIGOR and/or CO-OBLIGORS for the protection of
the OBLIGEEs interests.
In the present petition, petitioner had become liable to pay the amounts
covered by said guarantees when, as the original complaint alleges, the
PNB called upon said guarantees. Respondents obligation under the
Deed of Undertaking to keep petitioner free and harmless from any
damage or liability then became operative as soon as the liability of
petitioner arose and there was no need for petitioner to first sustain actual
loss before it could have a cause of action against respondents. The
mere inclusion in petitioners original complaint of the allegation that the

ISSUE:

PNB had already called on the guarantees of petitioner is sufficient to

Whether the Court of Appeals erred in affirming the lower courts order

constitute a cause of action against respondents. Clearly therefore, the

dismissing the complaint on the ground that petitioner failed to state a

original complaint, by itself, stated a valid cause of action.

cause of action for not alleging loss or actual payment made by it to PNB

Verily, it was patently erroneous on the part of the trial court not to have

under its guarantees.

allowed the amendments as to make the complaint conform to

petitioners evidence that was presented without any objection from

HELD:
It should be stressed that amendment was sought after petitioner had
already presented evidence, more specifically, the testimony of
petitioners Treasury Department Manager and a debit memo from the
PNB (Exhibit "LL") proving that petitioner had paid the PNB in the amount
of P19,035,256.57 pursuant to the guarantees it accorded to respondent
PII.

11 | P a g e

respondents. The trial court likewise patently acted with grave abuse of
discretion or in excess of its jurisdiction amounting to lack of jurisdiction
when, acting on a mere motion to amend the complaint, it erroneously
dismissed the complaint on the ground of failure to state a cause of
action. Consequently, the Court of Appeals committed a reversible error
in sustaining the trial court.