G.R.No.

149624September29,2010
SPOUSES CONRADO ANTONIO and AVELYN ANTONIO, Petitioners,
vs.
JULITASAYMANVDA.DEMONJE,substitutedbyherheirs,namely:ANGELINAMONJEVILLAMOR,
LUZVISMINDA MONJECORTEL, MARRIETA MONJEORTICO, LEOPOLDO MONJE, CONCEPCION
SAYMANMONJE,andROLINDAMONJECALO,Respondents.
DECISION
PERALTA,J.:

AssailedinthepresentpetitionaretheDecision 1andResolution2oftheCourtofAppeals(CA)datedMay
4,2001andAugust3,2001,respectively.
Thefactsofthecase,assummarizedbytheCA,areasfollows:
SpousesCatalinoManguiobandAndreaPansaonweretheoriginalownersofthesubjectparcelofcoconut
land,consistingof15,903squaremeters,particularlyknownasLotNo.1coveredbyOriginalCertificateof
TitleNo.1020oftheRegisterofDeedsofDavao.
On02September1962,AndreaPansaonwhosurvivedherhusbandCatalinoManguiob,togetherwith
someotherheirs,soldtoMacedonioMonjeSevenThousandFiveHundred(7,500)squaremetersonlyof
theaforesaidproperty.ThesaiddeedofabsolutesalewasdulynotarizedbyNotaryPublicRicardoReyes
andenteredinhisnotarialbookasDoc.No.48;page10;BookNo.5;Seriesof1962.
MacedonioMonjeimmediatelytookpossessionthereofandconstructedahouseworth 30,000.00.
On16January1967,theheirsofspousesCatalinoManguiobandAndreaPansaonwhoalsodied,soldthe
subjectpropertywhichwasalreadysoldtoMacedonioMonjein1962,infavorofNicanorManguioband
CarolinaV.Manguiob.
Immediatelythereafter,spousesNicanorManguiobandCarolinaV.Manguiobhadexecutedanabsolute
deedofsaleinfavoroftheformerssisterinlaw,AvelynB.Antonio,theentireLotNo.[1]consistingof
15,903squaremeters.ThesalewasenteredinthenotarialbookofNotaryPublicJuanitoT.Hernandezas
Doc.No.645;Page31;Book5,Seriesof1967.
MacedonioMonjeknewitonlyon11August1967whenhereceivedaletterfromAvelynB.Antonio,
informing him that she is now the registered owner of the subject property under a new Transfer
CertificateofTitleNo.TCTNo.T9643.
Aggrieved, Macedonio Monje filed on 12 October 1967 before the CFIof Baganga, Davao Oriental, a
complaintfortheannulmentofthedeedofsalebetweentheheirsofCatalinoManguiobandCarolina
Balanay/NicanorManguiob,aswellasthesubsequentdeedofabsolutesalebythelatterinfavor[of]
AvelynAntonioandthecancellationofTCTNo.T9643,docketedasCivilCaseNo.007125.
On27August1981,theaforesaidcourtrenderedadecisionthedecretalportionthereofreadsasfollows:
WHEREFORE,judgmentisherebyrendered,declaringthe2ndand3rddeedsofsaleofthepropertyin
question null and void and transfer certificate of title No. 9643 likewise null and void; ordering the
defendantsjointlyandsolidarilytopaytheplaintiffmoraldamagesof 30,000.00andactualdamagesof
20,000.00,withlegalinterestuntiltheamountisfullypaid;andtopaythecosts.
LetacopyofthisdecisionbeservedontheRegisterofDeedsatMati,DavaoOriental,forappropriate
action.
SOORDERED.
Plaintiffappellants,SpousesAntonioappealedtheabovementioneddecisionallthewaytotheSupreme
Court.On07December1992,theSupremeCourtinG.R.No.69696,renderedadecision,thepertinent
portionofwhichstatesasfollows:
Wefindthatwhiletheprincipleofresjudicataisbetterdisregardedifitsapplicationwouldinvolvethe
sacrificeofjustice to technicality;tosodisregard it nowand reopen the casewouldfurther delay its
disposition.However,thelowercourtshouldtakenoteofitserroneousordertodelivertoMonjeanarea
largerthanwhatheboughtfromtheheirsofManguiobandclaimedintheactionhehadfiled,inthe
eventualexecutionofitsdecision.Inthesamewaythatthepowerofthecourtintheexecutionofits
judgmentextendsonlyoverpropertiesbelongingtothejudgmentdebtor,thecourtbelowmaynot,inthe
executionofitsdecisionofAugust27,1981,delivertoMonjetheentireareacoveredbyTCTNo.T9643
asitismorethandoublethatofthepropertyhehadbought.(pp.1516,rollo).
PrescindingfromthedecisionoftheSupremeCourt,plaintiffappellants[hereinpetitioners]filedacase
forasumofmoney,accountingoftheproceedsofthecopra,damagesandattorneysfeesagainstherein
defendantappellees,docketedasCivilCaseNo.506beforetheRegionalTrialCourtofBaganga,Davao
Oriental,Branch7.
Intheaforesaidcomplaint,plaintiffsappellantsalleged,amongothersthat:
8. That the late Macedonio Monje has been in possession of this 15,903 square meters coconut land
coveredbyTCTNo.T9643since1967whichpossessionandenjoymentthereofhasbeencontinuedbythe
hereindefendantswhenMonjedied;
9.Thatasearlierpointedout,Monjeisonlyentitledto7,500squaremetersofthissubjectproperty,hence,
plaintiffsweredeprivedofthepossessionandproceedsofthecopraoftheirpropertyconsistingof8,403
squaremeterssince1967(theyearplaintiffsbecametheownerofthisproperty)continuouslyuptothe
present.
10.ThatthepossessionbyMacedonioMonjeandthedefendantsofthewhole15,903squaremetersofthe
aforesaidlandandtheirappropriationoftheproceedsofthecoprawasmadeinbadfaithfortheyknow
verywellthattheyareonlyentitledto7,500squaremetersportionofthelandwhichistheonlyareathey
boughtfromtheheirsofCatalinoManguiob.(PleaserefertoAnnex'B')
xxxx
12.Thatsince1967uptothepresentoraperiodof27years,Monjeandthedefendantsappropriatedunto
themselvestheproceedsofthecopraofthelandbelongingtotheplaintiffs(8,403squaremetersarea)in
theestimatednetamountof420,714.00);
xxxx
Defendantsappellees[herein respondents], instead of filingan answertothe aforesaid complaint had
optedtofileamotiontodismissonthegroundsofresjudicataandviolationofSupremeCourtCircular
No.0494onnonforumshopping.xxx 3
OnDecember16,1994,theRegionalTrialCourt(RTC)issuedanOrderdismissinghereinpetitioners'
complaintonthegroundofresjudicata.4
Aggrieved by the Order of the RTC, petitioners filed an appeal with the CA. Despite due notice,
respondents failed to file their appellees' brief. Consequently, the CA deemed the case submitted for
decisionwithoutthesaidbrief.
OnMay4,2001,theCArendereditspresentlyassailedDecisionaffirmingthejudgmentoftheRTCand
dismissingtheappealofhereinpetitioners.1avvphi1
PetitionersfiledaMotionforReconsideration,butthesamewasdismissedbytheCAinitsResolution
datedAugust3,2001.
Hence,theinstantpetitionraisingtheloneissueofwhetherornottheCAerredinapplyingtheprinciple
ofresjudicatawithrespecttoCivilCaseNo.007125andCivilCaseNo.506. 5
Attheoutset,theCourtnotesthatrespondentsfailedtofiletheircommentonthepresentpetition.As
borne by the records, several Court resolutions addressed to the respondents were returned either
unservedorunheeded.Thus,theCourtdispensedwiththefilingofrespondents'comment.
Goingtothemeritsofthecase,resjudicataisdefinedas"amatteradjudged;athingjudiciallyactedupon
ordecided;athingormattersettledbyjudgment." 6Accordingtothedoctrineofresjudicata,anexisting
finaljudgmentordecreerenderedonthemerits,andwithoutfraudorcollusion,byacourtofcompetent
jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the parties or their
privies,inallotheractionsorsuitsinthesameoranyotherjudicialtribunalofconcurrentjurisdictionon
thepointsandmattersinissueinthefirstsuit.7Tostatesimply,afinaljudgmentordecreeonthemerits
byacourtofcompetentjurisdictionisconclusiveoftherightsofthepartiesortheirpriviesinalllatersuits
onallpointsandmattersdeterminedintheformersuit.8
Theprincipleofresjudicataisapplicablebywayof(1)"barbypriorjudgment"and(2)"conclusivenessof
judgment."ThisCourthadoccasiontoexplainthedifferencebetweenthesetwoaspectsofresjudicataas
follows:
Thereis"barbypriorjudgment"when,asbetweenthefirstcasewherethejudgmentwasrenderedandthe
secondcasethatissoughttobebarred,thereisidentityofparties,subjectmatter,andcausesofaction.In
thisinstance,thejudgmentinthefirstcaseconstitutesanabsolutebartothesecondaction.Otherwiseput,
the judgment or decree of the court of competent jurisdiction on the merits concludes the litigation
betweentheparties,aswellastheirprivies,andconstitutesabartoanewactionorsuitinvolvingthe
samecauseofactionbeforethesameorothertribunal.
Butwherethereisidentityofpartiesinthefirstandsecondcases,butnoidentityofcausesofaction,the
firstjudgmentisconclusiveonlyastothosemattersactuallyanddirectlycontrovertedanddeterminedand
notastomattersmerelyinvolvedtherein.Thisistheconceptofresjudicataknownas"conclusivenessof
judgment." Stated differently, anyright,factormatterinissuedirectlyadjudicatedornecessarily
involvedinthedeterminationofanactionbeforeacompetentcourtinwhichjudgmentisrendered
onthemeritsisconclusivelysettledbythejudgmentthereinandcannotagainbelitigatedbetween
thepartiesandtheirprivieswhetherornottheclaim,demand,purpose,orsubjectmatterofthe
twoactionsisthesame.9
Stated differently, conclusiveness of judgment finds application when a fact or question has been
squarelyputinissue,judiciallypassedupon,andadjudgedinaformersuitbyacourtofcompetent
jurisdiction.10Thefactorquestionsettledbyfinaljudgmentororderbindsthepartiestothataction(and
persons in privity with them or their successorsininterest), and continues to bind them while the
judgmentororderremainsstandingandunreversedbyproperauthorityonatimelymotionorpetition;
theconclusivelysettledfactorquestioncannotagainbelitigatedinanyfutureorotheractionbetweenthe
samepartiesortheirpriviesandsuccessorsininterest,inthesameorinanyothercourtofconcurrent
jurisdiction,eitherforthesameorforadifferentcauseofaction. 11Thus,onlytheidentitiesofpartiesand
issuesarerequiredfortheoperationoftheprincipleofconclusivenessofjudgment. 12
Inthepresentcase,thereisnoquestionthatthereisidentityofpartiesinCivilCaseNo.007125andCivil
CaseNo.506.
However,astoidentityofissues,aperusaloftherecordsandotherpleadingswouldshowthattheissue
raisedinCivilCaseNo.007125iswhetherthesaletopetitionersofthe7,500squaremeterportionofLot
No.1beingcontestedbyrespondentsisvalid.Ontheotherhand,inCivilCaseNo.506,theissuesare
whetherpetitionersweredeprivedofpossessionoftheremaining8,403squaremeterportionofLotNo.1
whichwasvalidlysoldtothemandwhethertheyareentitledtoanaccountingoftheproceedsofthecopra
harvestedfromtheirpropertywhichwassupposedlyappropriatedbyrespondents.TheCourtfindsthat
thereisnoidentityofissuesastheissueraisedinCivilCaseNo.007125isdifferentfrom,anddoesnot
overlapwith,theissueraisedinCivilCaseNo.506.
RespondentsinsistintheirMotiontoDismissfiledwiththeRTCthatthecauseofactioninCivilCaseNo.
506isbarredbythepriorjudgmentrenderedinCivilCaseNo.007125.
TheCourtagrees,however,withtheCAthatthecausesofactioninthesecasesarenotidentical.
TheCourthaspreviouslyemployedvarioustestsindeterminingwhetherornotthereisidentityofcauses
ofactionastowarranttheapplicationoftheprincipleofresjudicata.Onetestofidentityisthe"absenceof
inconsistencytest"whereitisdeterminedwhetherthejudgmentsoughtwillbeinconsistentwiththeprior
judgment.13 Ifnoinconsistencyisshown,thepriorjudgmentshallnotconstituteabartosubsequent
actions.14 In theinstantcase,the reliefs prayedforin Civil CaseNo. 506 are thepaymentofa sum
representingtheproceedsofthecoprasupposedlyharvestedfrompetitioners'propertyandpurportedly
misappropriatedbyrespondents.Petitionersalsoprayfortheawardofmoralandexemplarydamages,as
wellasattorney'sfeesandlitigationexpenses.Intheeventthatajudgmentisrenderedinfavorofherein
petitioners,whoarethecomplainantsinCivilCaseNo.506,theCourtfindsnopossibleinconsistencyin
thejudgmentsoughtinCivilCaseNo.506withthejudgmentrenderedinCivilCaseNo.007125.
The more common approach in ascertaining identity of causes of action is the "same evidence test,"
wherebythefollowingquestionservesasasufficientcriterion:"wouldthesameevidencesupportand
establishboththepresentandformercausesofaction?" Iftheanswerisintheaffirmative,thentheprior
judgmentisabartothesubsequentaction;conversely,itisnot. 15Intheinstantcase,itisunmistakable
thatthepiecesofevidencethatwouldbackupthecauseofactioninCivilCaseNo.007125aredifferent
fromthesetofevidencethatwouldprovethecauseofactioninCivilCaseNo.506.
Asidefromthe"absenceofinconsistencytest"and"sameevidencetest,"wehavealsoruledthataprevious
judgmentoperatesasabartoasubsequentonewhenithad"touchedon[a]matteralreadydecided,"orif
thepartiesareineffect"litigatingforthesamething." 16 Areadingofthedecisionsofthelowerand
appellatecourtsinCivilCaseNo.007125wouldshowthattherewereneitherdiscussionsnordisposition
oftheissuesraisedinCivilCaseNo.506.
TheCourt,nevertheless,doesnotagreewiththeconclusionoftheRTCandtheCAthatCivilCaseNo.
007125andCivilCaseNo.506involvethesamesubjectmatter.
ThefinalandexecutoryjudgmentinCivilCaseNo.007125cannotbarthefilingofCivilCaseNo.506,
sincethesecasesinvolveentirelydifferentsubjectmatters.TheboneofcontentioninCivilCaseNo.007
125isconfinedtothe7,500squaremeterportionofLotNo.1boughtbythepredecessorininterestof
respondents,whilethesubjectmatterinCivilCaseNo.506istheremaining8,403squaremeterparcelof
thesamelot.Sincethereisnoidentityofsubjectmatterbetweenthetwocases,itisbutlogicaltoconclude
thatthereislikewisenoidentityofcausesofaction.17
BoththequestionedrulingsoftheRTCandtheCAmayhavearisenfromanapparentconfusionthatthe
wholeofLotNo.1,consistingof15,903squaremeters,isownedbyrespondents.Itisclear,however,from
theDecember7,1992rulingofthisCourtinG.R.No.69696 18thatrespondents'predecessorininterest
acquired only a 7,500 square meter portion of Lot No. 1 and not the entirety thereof and that the
remaining8,403squaremetersarestillownedbypetitioners.
Insum,theCourtfindsthatthereisnoresjudicatainthepresentcase.
Lastly,petitioners'claimsforaccountingandrecoveryoftheproceedsofthesaleofcopra,aswellasfor
damages,donottakethenatureofacompulsorycounterclaimthatshouldhavebeenbarredifnotsetup
in the action. These claims do not arise out of, or are necessarily connected with, the transaction or
occurrenceconstitutingthesubjectmatteroftherespondents'claim.Thus,petitioners'claimsmaybefiled
inaseparateaction,whichtheydid.
WHEREFORE,theinstantpetitionisGRANTED.TheDecisionoftheCourtofAppealsdatedMay4,2001
anditsResolutiondatedAugust3,2001inCAG.R.CVNo.49356areREVERSEDand SETASIDE.The
caseisREMANDEDforappropriateproceedingstothecourtoforigin,RegionalTrialCourt,Branch7,of
Baganga,DavaoOriental,whichisDIRECTEDtodecideonthemeritsWITHREASONABLEDISPATCH.
SOORDERED.

G.R.Nos.158090October4,2010
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), Petitioner,
vs.
HEIRS OF FERNANDO F. CABALLERO, represented by his daughter, JOCELYN G. CABALLERO,
Respondents.
DECISION
PERALTA,J.:
BeforethisCourtisapetitionforreviewoncertiorariunderRule45oftheRulesofCourtseekingtoset
asidetheDecision1andtheResolution,2datedDecember17,2002andApril29,2003,respectively,ofthe
CourtofAppeals(CA)inCAG.R.CV.No.49300.
Theantecedentsareasfollows:
RespondentFernandoC.Caballero(Fernando)wastheregisteredownerofaresidentiallotdesignatedas
LotNo.3355,Ts268,coveredbyTCTNo.T16035oftheRegisterofDeedsofCotabato,containingan
areaof800squaremetersandsituatedatRizalStreet,Mlang,Cotabato.Onthesaidlot,respondentbuilta
residential/commercialbuildingconsistingoftwo(2)stories.
OnMarch7,1968,Fernandoandhiswife,SylviaCaballero,securedaloanfrompetitionerGovernment
Service Insurance System (GSIS) in the amount of 20,000.00, as evidenced by a promissory note.
Fernandoandhiswifelikewiseexecutedarealestatemortgageonthesamedate,mortgagingtheafore
statedpropertyassecurity.
FernandodefaultedonthepaymentofhisloanwiththeGSIS.Hence,onJanuary20,1973,themortgage
coveringthe subject property wasforeclosed, andon March26, 1973, the same wassold at apublic
auctionwherethepetitionerwastheonlybidderintheamountof 36,283.00.ForfailureofFernandoto
redeemthesaidpropertywithinthedesignatedperiod,petitionerexecutedanAffidavitofConsolidationof
OwnershiponSeptember5,1975.Consequently,TCTNo.T16035wascancelledandTCTNo.T45874
wasissuedinthenameofpetitioner.
OnNovember26,1975,petitionerwrotealettertoFernando,informinghimoftheconsolidationoftitle
initsfavor,andrequestingpaymentofmonthlyrentalinviewofFernando'scontinuedoccupancyofthe
subjectproperty.Inreply,Fernandorequestedthathebeallowedtorepurchasethesamethroughpartial
payments.NegotiationastotherepurchasebyFernandoofthesubjectpropertywentonforseveralyears,
butnoagreementwasreachedbetweentheparties.
OnJanuary16,1989,petitionerscheduledthesubjectpropertyforpublicbidding.Onthescheduleddate
ofbidding,Fernando'sdaughter,JocelynCaballero,submittedabidintheamountof 350,000.00,while
CarmelitaMercantileTradingCorporation(CMTC)submittedabidintheamountof 450,000.00.Since
CMTC was the highest bidder, it was awarded the subject property. On May 16, 1989, the Board of
TrusteesoftheGSISissuedResolutionNo.199confirmingtheawardofthesubjectpropertytoCMTCfor
atotalconsiderationof450,000.00.Thereafter,aDeedofAbsoluteSalewasexecutedbetweenpetitioner
andCMTConJuly27,1989,transferringthesubjectpropertytoCMTC.Consequently,TCTNo.T45874
inthenameofGSISwascancelled,andTCTNo.T76183wasissuedinthenameofCMTC.
Duetotheforegoing,Fernando,representedbyhisdaughterandattorneyinfact,JocelynCaballero,filed
withtheRegionalTrialCourt(RTC)ofKabacan,CotabatoaComplaint 3againstCMTC,theGSISandits
responsibleofficers,andtheRegisterofDeedsofKidapawan,Cotabato.Fernandoprayed,amongothers,
thatjudgmentberendered:declaringGSISBoardofTrusteesResolutionNo.199,datedMay16,1989,
nullandvoid;declaringtheDeedofAbsoluteSalebetweenpetitionerandCMTCnullandvoid abinitio;
declaringTCTNo.76183oftheRegisterofDeedsofKidapawan,Cotabato,likewise,nullandvoid ab
initio; declaring the bid made by Fernando in the amount of 350,000.00 for the repurchase of his
propertyasthewinningbid;andorderingpetitionertoexecutethecorrespondingDeedofSaleofthe
subjectpropertyinfavorofFernando.Healsoprayedforpaymentofmoraldamages,exemplarydamages,
attorney'sfeesandlitigationexpenses.
Inhiscomplaint,Fernandoallegedthattherewereirregularitiesintheconductofthebidding.CMTC
misrepresenteditselftobewhollyownedbyFilipinocitizens.Itmisrepresenteditsworkingcapital.Its
representativeCarmelitaAngHaohadnopriorauthorityfromitsboardofdirectorsinanappropriate
boardresolutiontoparticipateinthebidding.Thecorporationisnotauthorizedtoacquirerealestateor
invest its funds for purposes other than its primary purpose. Fernando further alleged that the GSIS
allowedCMTCtobiddespiteknowledgethatsaidcorporationhasnoauthoritytodoso.TheGSISalso
disregarded Fernando's prior right to buy back his family home and lot in violation of the laws. The
RegisterofDeedsofCotabatoactedwithabuseofpowerandauthoritywhenitissuedtheTCTinfavorof
CMTCwithoutrequiringtheCMTCtosubmititssupportingpapersasrequiredbythelaw.

Petitioner and its officers filed their Answer with Affirmative Defenses and Counterclaim. 4 The GSIS
allegedthatFernandolosthisrightofredemption.Hewasgiventhechancetorepurchasetheproperty;
however,hedidnotavailofsuchoptioncompellingtheGSIStodisposeofthepropertybypublicbidding
asmandatedbylaw.Thereisalsono"priorrighttobuyback"thatcanbeexercisedbyFernando.Further,
it averred that the articles of incorporation and other papers of CMTC were all in order. In its
counterclaim,petitionerallegedthatFernandoowedpetitionerthesumof 130,365.81,representingback
rentals,includingadditionalinterestsfromJanuary1973toFebruary1987,andtheadditionalamountof
249,800.00, excluding applicable interests, representing rentals Fernando unlawfully collected from
CarmelitaAngHaofromJanuary1973toFebruary1988.

Aftertrial,theRTC,initsDecision5datedSeptember27,1994,ruledinfavorofpetitioneranddismissed
the complaint. In the same decision, the trial court granted petitioner's counterclaim and directed
Fernando to pay petitioner the rentals paid by CMTC in the amount of 249,800.00. The foregoing
amountwascollectedbyFernandofromtheCMTCandrepresentspaymentwhichwasnotturnedoverto
petitioner,whichwasentitledtoreceivetherentfromthedateoftheconsolidationofitsownershipover
thesubjectproperty.
Fernandofiledamotionforreconsideration,whichwasdeniedbytheRTCinanOrderdatedMarch27,
1995.

AggrievedbytheDecision,respondentfiledaNoticeofAppeal. 6TheCA,initsDecisiondatedDecember
17,2002,affirmedthedecisionoftheRTCwiththemodificationthattheportionofthejudgmentordering
Fernandotopayrentalsintheamountof 249,800.00,infavorofpetitioner,bedeleted.Petitionerfileda
motionforreconsideration,whichtheCAdeniedinaResolutiondatedApril29,2003.Hence,theinstant
petition.

An ExParte MotionforSubstitutionofParty, 7 datedJuly18,2003,wasfiledbythesurvivingheirsof

Fernando,whodiedonFebruary12,2002.Theyprayedthattheybeallowedtobesubstitutedforthe
deceased,asrespondentsinthiscase.
Petitionerenumeratedthefollowinggroundsinsupportofitspetition:
I
THEHONORABLECOURTOFAPPEALSCOMMITTEDANERROROFLAWINHOLDINGTHAT
GSIS' COUNTERCLAIM, AMONG OTHERS, OF 249,800.00 REPRESENTING RENTALS
COLLECTED BY PRIVATE RESPONDENT FROM CARMELITA MERCANTILE TRADING
CORPORATIONISINTHENATUREOFAPERMISSIVECOUNTERCLAIMWHICHREQUIREDTHE
PAYMENTBYGSISOFDOCKETFEESBEFORETHETRIALCOURTCANACQUIREJURISDICTION
OVERSAIDCOUNTERCLAIM.
II
THEHONORABLECOURTOFAPPEALSCOMMITTEDANERROROFLAWINHOLDINGTHAT
GSIS' DOCUMENTARY EVIDENCE SUPPORTING ITS CLAIM OF 249,800.00 LACKS PROPER
IDENTIFICATION.8
ThepetitionoftheGSISseeksthereviewoftheCA'sDecisioninsofarasitdeletedthetrialcourt'sawardof
249,800.00initsfavorrepresentingrentalscollectedbyFernandofromtheCMTC.
IntheirMemorandum,respondentsclaimthatCMTCcannotpurchaserealestateorinvestitsfundsinany
purposeotherthanitsprimarypurposeforwhichitwasorganizedintheabsenceofacorporateboard
resolution;thebidaward,deedofabsolutesaleandTCTNo.T76183,issuedinfavoroftheCMTC,should
benullified;thetrialcourterredinconcludingthatGSISpersonnelhaveregularlyperformedtheirofficial
dutywhentheyconductedthepublicbidding;Fernando,asformerownerofthesubjectpropertyand
formermemberoftheGSIS,hasthepreemptiverighttorepurchasetheforeclosedproperty.
TheseadditionalavermentscannotbetakencognizancebytheCourt,becausetheyweresubstantially
respondentsargumentsintheirpetitionforreviewon certiorari earlierfiledbeforeUsanddocketedas
G.R.No.156609.RecordsshowthatsaidpetitionwasdeniedbytheCourtinaResolution 9datedApril23,
2003,forpetitioners(respondentsherein)failuretosufficientlyshowthattheCourtofAppealscommitted
anyreversibleerrorinthechallengeddecisionastowarranttheexercisebythisCourtofitsdiscretionary
appellate jurisdiction.10 Said resolution becamefinaland executory on June9, 2003. 11 Respondents
attempt to relitigate claims already passed upon and resolved with finality by the Court in G.R. No.
156609cannotbeallowed.
Goingnowtothefirstassignederror,petitionersubmitsthatitscounterclaimfortherentalscollectedby
FernandofromtheCMTCisinthenatureofacompulsorycounterclaimintheoriginalactionofFernando
againstpetitionerforannulmentofbidaward,deedofabsolutesaleandTCTNo.76183.Respondents,on
theotherhand,allegedthatpetitioner'scounterclaimispermissiveanditsfailuretopaytheprescribed
docketfeesresultsintothedismissalofitsclaim.
Todeterminewhetheracounterclaimiscompulsoryornot,theCourthasdevisedthefollowingtests:(a)
Aretheissuesoffactandlawraisedbytheclaimandbythecounterclaimlargelythesame?(b)Wouldres
judicatabarasubsequentsuitondefendantsclaims,absentthecompulsorycounterclaimrule?(c)Will
substantiallythesameevidencesupportorrefuteplaintiffsclaimaswellasthedefendantscounterclaim?
and(d)Isthereanylogicalrelationbetweentheclaimandthecounterclaim?Apositiveanswertoallfour
questionswouldindicatethatthecounterclaimiscompulsory. 12
Tested against the abovementioned criteria, this Court agrees with the CA's view that petitioner's
counterclaimfortherecoveryoftheamountrepresentingrentalscollectedbyFernandofromtheCMTCis
permissive.TheevidenceneededbyFernandotocausetheannulmentofthebidaward,deedofabsolute
saleandTCTisdifferentfromthatrequiredtoestablishpetitioner'sclaimfortherecoveryofrentals.
Theissueinthemainaction,i.e.,thenullityorvalidityofthebidaward,deedofabsolutesaleandTCTin
favorofCMTC,isentirelydifferentfromtheissueinthecounterclaim,i.e.,whetherpetitionerisentitledto
receivetheCMTC'srentpaymentsoverthesubjectpropertywhenpetitionerbecametheownerofthe
subjectpropertybyvirtueoftheconsolidationofownershipofthepropertyinitsfavor.
Theruleinpermissivecounterclaimsisthatforthetrialcourttoacquirejurisdiction,thecounterclaimant
isboundtopaytheprescribeddocketfees. 13This,petitionerdidnotdo,becauseitassertedthatitsclaim
forthecollectionofrentalpaymentswasacompulsorycounterclaim.Sincepetitionerfailedtopaythe
docketfees,theRTCdidnotacquirejurisdictionoveritspermissivecounterclaim.Thejudgmentrendered
bytheRTC,insofarasitorderedFernandotopaypetitionertherentalswhichhecollectedfromCMTC,is
considerednullandvoid.Anydecisionrenderedwithoutjurisdictionisatotalnullityandmaybestruck
downatanytime,evenonappealbeforethisCourt.14
Petitionerfurtherarguesthatassumingthatitscounterclaimispermissive,thetrialcourthasjurisdiction
totryanddecidethesame,consideringpetitioner'sexemptionfromallkindsoffees.
InInRe:PetitionforRecognitionoftheExemptionoftheGovernmentServiceInsuranceSystemfromPayment
ofLegalFees,15theCourtruledthattheprovisionintheCharteroftheGSIS,i.e.,Section39ofRepublic
ActNo.8291,whichexemptsitfrom"alltaxes,assessments,fees,chargesordutiesofallkinds,"cannot
operate to exempt it from the payment of legal fees. This was because, unlike the 1935 and 1973
Constitutions,whichempoweredCongresstorepeal,alterorsupplementtherulesoftheSupremeCourt
concerningpleading,practiceandprocedure,the1987ConstitutionremovedthispowerfromCongress.
Hence,theSupremeCourtnowhasthesoleauthoritytopromulgaterulesconcerningpleading,practice
andprocedureinallcourts.
Insaidcase,theCourtruledthat:
The separation of powers among the three coequal branches of our government has erected an
impregnablewallthatkeepsthepowertopromulgaterulesofpleading,practiceandprocedurewithinthe
soleprovinceofthisCourt.Theotherbranchestrespassuponthisprerogativeiftheyenactlawsorissue
orders that effectively repeal, alter or modify any of the procedural rules promulgated by this Court.
Viewedfromthisperspective,theclaimofalegislativegrantofexemptionfromthepaymentoflegalfees
underSection39ofRA8291necessarilyfails.
CongresscouldnothavecarvedoutanexemptionfortheGSISfromthepaymentoflegalfeeswithout
transgressing another equally important institutional safeguard of the Court's independence fiscal
autonomy.FiscalautonomyrecognizesthepowerandauthorityoftheCourttolevy,assessandcollect
fees,includinglegalfees.Moreover,legalfeesunderRule141havetwobasiccomponents,theJudiciary
Development Fund (JDF) and the Special Allowance for the Judiciary Fund (SAJF). The laws which
establishedtheJDFandtheSAJFexpresslydeclaretheidenticalpurposeofthesefundsto"guaranteethe
independenceoftheJudiciaryasmandatedbytheConstitutionandpublicpolicy."Legalfeesthereforedo
notonlyconstituteavitalsourceoftheCourt'sfinancialresourcesbutalsocompriseanessentialelement
oftheCourt'sfiscalindependence.AnyexemptionfromthepaymentoflegalfeesgrantedbyCongressto
governmentownedorcontrolledcorporationsandlocalgovernmentunitswillnecessarilyreducetheJDF
andtheSAJF.Undoubtedly,suchsituationisconstitutionallyinfirmforitimpairstheCourt'sguaranteed
fiscalautonomyanderodesitsindependence.

PetitioneralsoinvokedourrulinginSunInsuranceOffice,Ltd.v.JudgeAsuncion,16wheretheCourtheld
that:
xxxx
3.Wherethetrialcourtacquiresjurisdictionoveraclaimbythefilingoftheappropriatepleadingand
paymentoftheprescribedfilingfeebut,subsequently,thejudgmentawardsaclaimnotspecifiedinthe
pleading,orifspecifiedthesamehasbeenleftfordeterminationbythecourt,theadditionalfilingfee
thereforshallconstitutealienonthejudgment.ItshallbetheresponsibilityoftheClerkofCourtorhis
dulyauthorizeddeputytoenforcesaidlienandassessandcollecttheadditionalfee.

In AyalaCorporationv.Madayag,17 theCourt,ininterpretingthethirdrulelaiddowninSunInsurance
Office,Ltd.v.JudgeAsuncionregardingawardsofclaimsnotspecifiedinthepleading,heldthatthesame
refers only to damages arising after the filing of the complaint or similar pleading as to which the
additionalfilingfeethereforshallconstitutealienonthejudgment.
Theamountofanyclaimfordamages,therefore,arisingonorbeforethefilingofthecomplaintorany
pleadingshouldbespecified.Whileitistruethatthedeterminationofcertaindamagesasexemplaryor
correctivedamagesislefttothesounddiscretionofthecourt,itisthedutyofthepartiesclaimingsuch
damagestospecifytheamountsoughtonthebasisofwhichthecourtmaymakeaproperdetermination,
andfortheproperassessmentoftheappropriatedocketfees.Theexceptioncontemplatedastoclaimsnot
specifiedortoclaimsalthough specified are leftfordetermination ofthe courtislimited only toany
damagesthatmayariseafterthefilingofthecomplaintorsimilarpleadingforthenitwillnotbepossible
fortheclaimanttospecifynorspeculateastotheamountthereof.(Emphasissupplied.)1avvphi1
Petitioner'sclaimforpaymentofrentalscollectedbyFernandofromtheCMTCdidnotariseafterthefiling
ofthecomplaint;hence,therulelaiddowninSunInsurancefindsnoapplicationinthepresentcase.
Due to the nonpayment of docket fees on petitioner's counterclaim, the trial court never acquired
jurisdictionoveritand,thus,thereisnoneedtodiscussthesecondissueraisedbypetitioner.
WHEREFORE,thepetitionis DENIED.TheDecisionandtheResolution,datedDecember17,2002and
April29,2003,respectively,oftheCourtofAppealsinCAG.R.CV.No.49300,areAFFIRMED.
SOORDERED
G.R.No.161838April7,2010
REPUBLIC OF THE PHILIPPINES, represented by DANTE QUINDOZA, in his capacity as Zone
Administrator of the Bataan Economic Zone, Petitioner,
vs.
COALBRINEINTERNATIONALPHILIPPINES,INC.andSHEILAF.NERI,Respondents.
DECISION
PERALTA,J.:

AssailedinthispetitionforreviewoncertiorarifiledbypetitioneristheDecision 1datedJanuary21,2004
oftheCourtofAppealsinCAG.R.SPNo74667,whichaffirmedtheOrder 2datedSeptember24,2002of
theRegionalTrialCourt(RTC)ofBalanga,Bataan,inCivilCaseNo.548ML,denyingpetitioner'sMotion
toDismiss.
TheExportProcessingZoneAuthority (EPZA),predecessorofthePhilippineEconomicZoneAuthority
(PEZA), is the owner of the Bataan Hilltop Hotel and Country Club, located at the Bataan Export
ProcessingZone,Mariveles,Bataan.DanteM.QuindozaistheZoneAdministratoroftheBataanEconomic
Zone.
OnAugust4,1994,EPZA,nowPEZA,andrespondentCoalbrineInternationalPhilippines,Inc.entered
intoacontractinwhichthelatterwouldrehabilitateandleasetheBataanHilltopHotel,GolfCourseand
Clubhousefortwentyfive(25)years,whichcommencedonJanuary1,1994,andrenewableforanother
twentyfive(25)yearsattheoptionofrespondentCoalbrine.RespondentSheilaF.NeriwastheManaging
Directorofthehotel.
OnJuly11,1996,thePEZABoardpassedResolutionNo.96231rescindingthecontracttorehabilitate
and lease, on the ground of respondent Coalbrine's repeated violations and nonperformance of its
obligationsasprovidedinthecontract.Subsequently,PEZAsentrespondentCoalbrineanoticetovacate
thepremisesandtopayitsoutstandingobligationstoit.
OnApril3,1998,respondentCoalbrinefiledwiththeRTCofManilaaComplaintforspecificperformance
withprayerfortheissuanceofatemporaryrestrainingorder(TRO)and/orwritofpreliminaryinjunction
with damages against PEZA and/or Bataan Economic Zone wherein respondent Coalbrine sought to
declarethatPEZAhadnovalidcausetorescindthecontracttorehabilitateandlease;andtoenjoinPEZA
fromtakingoverthehotelandcountryclubandfromdisconnectingthewaterandelectricservicestothe
hotel.ThecomplaintispendingwithBranch17oftheRTCofManila.
OnApril24,2002,respondentsCoalbrineandNerifiledwiththeRTCofBalanga,Bataan,aComplaintfor
damages with prayer for the issuance of a TRO and/or writ of preliminary prohibitory/mandatory
injunctionagainstZoneAdministratorQuindoza,docketedasCivilCaseNo.548ML.Respondentalleged
that:inOctober2001,Quindozastartedtoharassthehotel'soperationsbycausingtheexcavationofthe
entirewidthofacrosssectionoftheonlyroadleadingtothehotelforthesupposedprojectofputtingupa
one length steel pipe; that such project had been stopped, which, consequently, paralyzed the hotel's
operations;respondentNeriundertooktheconstructionofatemporarynarrowaccessrampinorderthat
thehotelguestsandtheirvehiclescouldpassthroughthewideexcavations;Quindozahadalsoplaceda
big"ROADCLOSED"signnearthehotel,whicheffectivelyblockedallaccesstoandfromthehoteland
createdanimpressionthatthehotelhadbeenclosed;inthelastweekofMarch2002,Quindozacutthe
pipelinesthatsuppliedwatertothehoteltothegreatinconvenienceofrespondentsandthehotelguests,
and,subsequently,thepipelineswerereconnected.Respondentsprayedforthepaymentofdamages,for
the issuance of a TRO and a writ of preliminary injunction to enjoin Quindoza from cutting or
disconnecting the reconnected water pipelines to the hotel and from committing further acts of
harassment;andtocausetheconstructionofareasonableaccessroadatQuindoza'sexpense.

Administrator Quindoza, through the Solicitor General, filed a Motion to Dismiss 3 on the following
grounds:
1.TheHonorableCourthasnojurisdictionovertheinstantcase;
2.TheHonorableCourtisanimpropervenuefortheinstantcase;
 3.Plaintiff(respondentCoalbrine)isguiltyofforumshopping;
4. With respect to plaintiff (respondent) Neri, the complaint statesno cause ofaction against
defendant;
5.Thecomplaintisfatallydefectiveforbeingunauthorized.

OnSeptember24,2002,theRTCissuedanOrder4denyingpetitioner'smotiontodismiss.

AdministratorQuindozafiledaMotionforReconsideration,whichtheRTCdeniedinitsOrder 5 dated
December9,2002.
OnJanuary2,2003,petitionerRepublicofthePhilippines,representedbyDanteQuindoza,inhiscapacity
asZoneAdministratoroftheBataanEconomicZone,filedwiththeCAapetitionforcertiorariunderRule
65seekingtoannultheRTCOrders,reiteratingthegroundsraisedbyAdministratorQuindozaintheRTC.
OnJanuary21,2004,theCAissueditsassailedDecisiondenyingpetitioner'spetitionfor certiorariforlack
ofmerit.
Hence,petitionerisnowbeforeusinapetitionforreviewoncertiorariraisingtheloneissueofrespondent
Neri'slackofproofofauthoritytofilethecomplaintintheRTCofBalanga,Bataan,whichwasdocketedas
CivilCaseNo.548ML.1avvphi1
IntheirComment,respondentsarguethattheRepublicofthePhilippineswasnotapartytothecivilcase
subjectofthispetition,hence,ithasnopersonalitytofiletheinstantpetitionforreview;thattheRTC
Orderdenyingthemotiontodismissthecomplaintwasamereinterlocutoryorder,thus,thesameisnot
appealableandnotapropersubjectofapetitionforcertiorariunlessitwasshownthattherewasagrave
abuse of discretion in its issuance; that petitioner had already filed an answer to the complaint
incorporatingthegroundsstatedintheirmotiontodismiss;andthatrespondentshadalreadypresented
theirevidencebywayofanoppositiontothemotiontodismissandinsupportoftheirapplicationforthe
issuanceofawritofpreliminarymandatoryinjunction.
InitsReply,petitionerarguesthatithasthepersonalitytofilethispetition,sinceAdministratorQuindoza
is being sued for damages for certain acts he performed in an official capacity; that the denial of
petitioner'smotiontodismisswastaintedwithgraveabuseofdiscretion,whichjustifiedthefilingofa
petitionfor certiorari withtheCA.Thepartiesfiledtheirrespectivememorandaasrequiredunderthe
ResolutiondatedJanuary26,2005.
InitsMemorandum,petitionerraisesthefollowingarguments,towit:
THECOMPLAINTISFATALLYDEFECTIVEFORBEINGUNAUTHORIZED.

PETITIONERREPUBLICOFTHEPHILIPPINES ISTHEREALPARTYININTERESTINTHE
CASEATBAR.

RESPONDENT JUDGE ACTED WITH GRAVE ABUSE OF DISCRETION IN DENYING

PETITIONER'SMOTIONTODISMISS,NECESSITATINGTHEFILINGOFAPETITIONFOR
CERTIORARIUNDERRULE65BEFORETHEHONORABLECOURTOFAPPEALS. 6

PetitionerclaimsthatrespondentNeri'ssignatureintheverificationandcertificationagainstnonforum
shoppingattachedtothecomplaintfiledbyrespondentsintheRTCwasdefective,sincetherewasno
proofofherauthoritytoinstitutethecomplaintonbehalfofthecorporation;andthatrespondentNeriis
notarealpartyininterest.
Weagree.
Theverificationandcertificationagainstnonforumshoppingreads:
xxxx

ThatIamtheManagingDirectorofBataanHilltopHotelandoneoftheplaintiffsinthiscase. 7
Notably,respondentNerisignedtheverification/certificationasoneoftheplaintiffs.However,wefind
thatrespondentNeriisnotarealpartyininterest.Section2,Rule3oftheRulesofCivilProcedure
provides:
SEC.2.Partiesininterest. Arealpartyininterestisthepartywhostandstobebenefitedorinjuredby
thejudgmentinthesuit,orthepartyentitledtotheavailsofthesuit.Unlessotherwiseauthorizedbylaw
ortheseRules,everyactionmustbeprosecutedordefendedinthenameoftherealpartyininterest.
And"interest,"withinthemeaningoftherule,meansmaterialinterest,aninterestinissueandtobe
affectedbythedecree,asdistinguishedfrommereinterestinthequestioninvolved,oramereincidental
interest.8Casesconstruingtherealpartyininterestprovisioncanbemoreeasilyunderstoodifitisborne
inmindthatthetruemeaningofrealpartyininterestmaybesummarizedasfollows:Anactionshallbe
prosecutedinthenameofthepartywho,bythesubstantivelaw,hastherightsoughttobeenforced. 9
The RTC based its conclusion that respondent Neri had a cause of action against petitioner on the
allegationsinthecomplaint.TheCA,however,didnotruleonthematterdespitethefactthatitwas
raisedinpetitioner'spetitionfor certiorari filedbeforeitandmerelysaidthattherewasnonecessityto
discusssuchissueafterdecidingtheothergroundsraisedinthepetition.
WefindtheRTCinerror.Areadingoftheallegationsinthecomplaintshowsthattheactscomplainedof
and said to have been committed by petitioner against respondents have solely affected the hotel's
operationswhererespondentNeriwasthehotel'sManagingDirectorandwhoseinterestinthesuitwas
incidental.Thus,wefindthatrespondentNerihasnocauseofactionagainstpetitioner.Consequently,the
plaintiffinthiscasewouldonlyberespondentCoalbrine.
Acorporationhasnopower,exceptthoseexpresslyconferredonitbytheCorporationCodeandthosethat
areimpliedorincidentaltoitsexistence.Inturn,acorporationexercisessaidpowersthroughitsboardof
directorsand/oritsdulyauthorizedofficersandagents. 10Thus,ithasbeenobservedthatthepowerofa
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
performedonlybynaturalpersonsdulyauthorizedforthepurposebycorporatebylawsorbyaspecific
actoftheboardofdirectors.11
Inthiscase,respondentCoalbrineisacorporation.However,whenrespondentNerifiledthecomplaintin
theRTC,therewasnoproofthatshewasauthorizedtosigntheverificationandthecertificationagainst
nonforumshopping.
TheCourthasconsistentlyheldthattherequirementregardingverificationofapleadingisformal,not
jurisdictional.Suchrequirementissimplyaconditionaffectingtheformofthepleading,noncompliance
withwhichdoesnotnecessarilyrenderthepleadingfatallydefective. 12Verificationissimplyintendedto
secureanassurancethattheallegationsinthepleadingaretrueandcorrect,andnottheproductofthe
imaginationoramatterofspeculation,andthatthepleadingisfiledingoodfaith.Thecourtmayorder
thecorrectionofthepleadingifverificationislackingoractonthepleadingalthoughitisnotverified,if
theattendingcircumstancesaresuchthatstrictcompliancewiththerulesmaybedispensedwithinorder
thattheendsofjusticemaytherebybeserved.13
Ontheotherhand,thelackofcertificationagainstnonforumshoppingisgenerallynotcurablebymere
amendmentofthecomplaint,butshallbeacauseforthedismissalofthecasewithoutprejudice. 14The
same rule applies to certifications against nonforum shopping signed by a person on behalf of a
corporationwhichareunaccompaniedbyproofthatsaidsignatoryisauthorizedtofilethecomplainton
behalfofthecorporation.15

In PhilippineAirlines,Inc.v.FlightAttendantsandStewardsAssociationofthePhilippines(FASAP),16 we
ruledthatonlyindividualsvestedwithauthoritybyavalidboardresolutionmaysignthecertificateof
nonforumshoppingonbehalfofacorporation.Wealsorequiredthatproofofsuchauthoritymustbe
attached.Failuretoprovideacertificateofnonforumshoppingissufficientgroundtodismissthepetition.
Likewise,thepetitionissubjecttodismissalifacertificationwassubmittedunaccompaniedbyproofof
signatory'sauthority.
Whiletherewereinstanceswherewehaveallowedthefilingofacertificateagainstnonforumshopping
bysomeoneonbehalfofacorporationwithouttheaccompanyingproofofauthorityatthetimeofits
filing, we did so on the basis of a special circumstanceor compelling reason. Moreover, there was a
subsequentcompliancebythesubmissionoftheproofofauthorityattestingtothefactthattheperson
whosignedthecertificationwasdulyauthorized.

InChinaBankingCorporationv.MondragonInternationalPhilippines,Inc.,17theCAdismissedthepetition
filedbyChinaBank,sincethelatterfailedtoshowthatitsbankmanagerwhosignedthecertification
against nonforum shopping was authorized to do so. We reversed the CA and said that the case be
decided on the merits despite the failure to attach the required proof of authority, since the board
resolutionwhichwassubsequentlyattachedrecognizedthepreexistingstatusofthebankmanagerasan
authorizedsignatory.

InAbayaInvestmentsCorporationv.MeritPhilippines,18wherethecomplaintbeforetheMetropolitanTrial
Court of Manila was instituted by petitioner's Chairman and President, Ofelia Abaya, who signed the
verification and certification against nonforum shopping without proof of authority to sign for the
corporation,wealsorelaxedtherule.Wedidsotakingintoconsiderationthemeritsofthecaseandto
avoidarelitigationoftheissuesandfurtherdelaytheadministrationofjustice,sincethecasehadalready
beendecidedbythelowercourtsonthemerits.Moreover,Abaya'sauthoritytosignthecertificationwas
ratifiedbytheBoard.
Inthepresentcase,theRTC,indenyingpetitioner'smotiontodismissthecomplaintwhenthelatterraised
respondentNeri'slackofauthoritytosignthecertification,foundthatrespondentNeritestifiedthatshe
wastheManagingDirectoroftheBataanHilltopHotelwhichwasbeingleasedbyrespondentCoalbrine,
andthatshewasauthorizedbytheCorporateSecretarytofilethecase.Notably,whilethematteroflack
ofauthoritywasraisedbypetitionerinitspetitionforcertiorarifiledwiththeCA,itchosenottotacklethe
issueafterdisposingoftheotherissuesraisedtherein.
Wecannotagreewith the RTC'sreasoning and find the certification signed by respondent Neritobe
defective.TheauthorityofrespondentNeritofilethecomplaintintheRTChadnotbeenproven.First,the
certificationagainstnonforumshoppingdidnotevencontainastatementthatshewasauthorizedbythe
corporatesecretarytofilethecaseonbehalfofCoalbrineassheclaimed.Moreimportantly,whileshe
testifiedthatshewasauthorizedbythecorporatesecretary,therewasnoshowingthattherewasavalid
boardresolutionauthorizingthecorporatesecretarytofiletheaction,andtoauthorizerespondentNerito
filetheaction.Infact,suchproofofauthorityhadnotbeensubmittedevenbelatedlytoshowsubsequent
compliance.Thus,therewasnoreasonfortherelaxationoftherule.
Astorespondents'claimthatpetitionerRepublicofthePhilippineswasnotapartytothecivilcasesubject
ofthispetitionsinceAdministratorQuindozawasthesoledefendantthereinand,thus,hasnopersonality
tofilethispetition,theirclaimisnotpersuasive.
Notably,AdministratorQuindozawassuedfordamagesforcertainactsthatheallegedlycommittedwhile
hewastheZoneAdministratoroftheBataanExportProcessingZone.Therefore,thecomplaintisinthe
natureofsuitagainsttheState,andtheRepublichasthepersonalitytofilethepetition.
Anentrespondents'claimthattheRTCOrderdenyingamotiontodismissisamereinterlocutoryorder,
thus,notappealableandmaynotbeasubjectofapetitionforcertiorarifiledbythepetitionerbeforethe
CA,thesameisalsonotmeritorious.
Whileindeed,thegeneralruleisthatthedenialofamotiontodismisscannotbequestionedinaspecial
civilactionforcertiorari,whichisnotintendedtocorrecteverycontroversialinterlocutoryruling, 19and
thattheappropriaterecourseistofileananswerandtointerposeasdefensestheobjectionsraisedinthe
motion,toproceedtotrial,and,incaseofanadverse

decision,toelevatetheentirecasebyappealinduecourse, 20thisruleisnotabsolute.
Even when appeal is available and is the proper remedy, the Supreme Court has allowed a writ of
certiorari(1)wheretheappealdoesnotconstituteaspeedyandadequateremedy;(2)wheretheorders
werealsoissuedeitherinexcessoforwithoutjurisdictionorwithgraveabuseofdiscretion;(3)forcertain
specialconsiderations,aspublicwelfareorpublicpolicy;(4)whereincriminalactions,thecourtrejects
rebuttalevidencefortheprosecutionas,incaseofacquittal,therecouldbenoremedy;(5)wherethe
orderisapatentnullity;and(6)wherethedecisioninthecertioraricasewillavoidfuturelitigations. 21
Inthiscase,wefindthattheRTCcommittedgraveabuseofdiscretionamountingtolackofjurisdiction
whenitfailedtoconsiderthelackofproofofauthorityofrespondentNeritofiletheactiononbehalfof
thecorporationaswehavediscussedabove.
WHEREFORE,thepetitionforreviewisGRANTED.TheDecisiondatedJanuary21,2004oftheCourtof
AppealsinCAG.R.SPNo74667isREVERSEDandSETASIDE.TheComplaintinCivilCaseNo.548ML
pendingintheRegionalTrialCourt,Branch4,Balanga,Bataan,isorderedDISMISSED.
SOORDERED.

G.R.No.168313October6,2010
BANK OF THE PHILIPPINE ISLANDS, Petitioner,
vs.
HON. COURT OF APPEALS, HON.ROMEO BARZA, in his capacity as the Presiding Judge of the
RegionalTrialCourtofMakatiCity,Br.61,FIRSTUNIONGROUPENTERPRISESandLINDAWUHU,
Respondents.
DECISION
BRION,J.:

Throughthepresentpetitionforreviewoncertiorari, 1petitionerBankofthePhilippineIslands(BPI)seeks
thereversalof:(1)theCourtofAppeals(CA)decisionofNovember2,2004, 2in"BankofthePhilippine
Islandsv.Hon.RomeoBarza,etal."docketedasCAG.R.SPNo.75350and(2)theCAresolutionofMay
25,20053 denyingBPIsMotionforReconsideration.TheassailedCArulingaffirmedtheOrderofthe
RegionalTrialCourt(RTC)ofMakatiCity,Branch61datedAugust26,2002, 4grantingFirstUnionGroup
Enterprises (First Union) and Linda Wu Hus (Linda) Motion to Dismiss dated March 26, 2002. A
subsequentMotionforReconsiderationwaslikewisedenied.5
THEFACTUALANTECEDENTS
First Union borrowed from BPI the sums of Five Million Pesos (PhP5,000,000.00) and One Hundred
TwentyThousandU.S.Dollarsand32cents(USD123,218.32),evidencedbyseparatepromissorynotes. 6
AspartialsecurityfortheloanobligationsofFirstUnion,defendantLindaandherspouse(EddyTien)
executed a RealEstate Mortgage Agreement dated August 29, 1997, 7 covering two (2) condominium
units.LindaexecutedaComprehensiveSuretyAgreementdatedApril14,1997 8wheresheagreedtobe
solidarilyliablewithFirstUnionforitsobligationstoBPI.
Despiterepeateddemandstosatisfytheloanobligationsuponmaturity,FirstUnionfailedtopayBPIthe
amountsdue.
On October 16, 2000, BPI initiated with the Office of the Sheriff of the RTC of Pasig extrajudicial
foreclosure proceedings against the two (2) mortgaged condominium units to satisfy First Union and
Lindassolidaryobligations.

Afterduenoticeandpublication,thepropertiesweresoldatpublicauctiononJune29,2001. 9BPIwas
thehighestbidder,havingsubmittedabidofFiveMillionSevenHundredNinetyEightThousandFour
Hundred Pesos (PhP5,798,400.00). The proceeds of the auction sale were applied to the costs and
expensesofforeclosure,andthereafter,toFirstUnionsobligationofFiveMillionPeso(PhP5,000,000.00).
Aftersoapplyingtheproceeds,FirstUnionstillowedBPIabalanceofFourMillionSevenHundredForty
TwoThousandNineHundredFortyNine&32/100Pesos(PhP4,742,949.32),inclusiveofinterestsand
penaltycharges,asofDecember21,2001.10 Additionally,FirstUnionsforeigncurrencyloanobligation
remainedunpaidand,asofDecember21,2001,amountedtoOneHundredSeventyFiveThousandThree
HundredTwentyFourThousand&35/100USDollars(USD175,324.35),inclusiveofinterestandpenalty
charges.
TheComplaintforCollectionofSumofMoney
FirstUnionsandLindascontinuedfailuretosettletheiroutstandingobligationspromptedBPItofile,on
January3,2002,acomplaintforcollectionofsumofmoneywiththeRTCofMakatiCity,Branch61. 11
ThecomplaintsverificationandcertificateofnonforumshoppingweresignedbyMa.CristinaF.Asis
(Asis)andKristineL.Ong(Ong).However,noSecretarysCertificateorBoardResolutionwasattachedto
evidenceAsisandOngsauthoritytofilethecomplaint.

OnApril1,2002,FirstUnionandLindafiledamotiontodismiss 12onthegroundthatBPIviolatedRule
7,Section5oftheRulesofCivilProcedure(Rules);BPIfailedtoattachtothecomplaintthenecessary
board resolution authorizing Asis and Ong to institute the collection action against First Union and
Linda.13

OnAugust7,2002,BPIfiledan"OppositiontotheMotiontoDismiss," 14arguingthattheverificationand
certificateofnonforumshoppingsufficientlyestablishedAsisandOngsauthoritytofilethecomplaint
andproofoftheirauthoritycouldbepresentedduringthetrial.Further,BPIallegedthatacomplaint"can
onlybedismissedunderSection5,Rule7ofthe1997RulesofCivilProcedureiftherewasnocertification
againstforumshopping."Theprovision,accordingtoBPI,"doesnotevenrequirethatthepersoncertifying
shouldshowproofofhisauthoritytodoso."15
Instead of submitting a board resolution, BPI attached a "Special Power of Attorney" (SPA) dated
December 20, 2001 executed by Zosimo A. Kabigting (Zosimo), VicePresident of BPI. 16 The SPA
authorizedAsisandOngoranylawyerfromtheBenedictoVersozaGealogoandBurkleyLawOfficesto
initiateanylegalactionagainstFirstUnionandLinda.

In their Comment17 to BPIs Opposition, First Union and Linda challenged BPIs reading of the law,
chargingthatitlackedjurisprudentialsupport.18 FirstUnionandLindaargued,invokingPublicEstates
Authority v. Elpidio Uy,19 that "an initiatory pleading which does not contain a board resolution
authorizing the person to show proof of his authority is equally guilty (sic) of not satisfying the
requirementsintheCertificationagainstNonForumShopping.Itisasifthough(sic)nocertificationhas
beenfiled."20Thus,accordingtoFirstUnionandLinda,BPIsfailuretoattachaboardresolution"shallnot
be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for
dismissalofthecasewithoutprejudicexxx." 21 FirstUnionandLindalikewisequestionedthebelated
submissionoftheSPA,whichinanycase,"isnottheboardresolutionenvisionedbytherulessincethe
plaintiffhereinisajuridicalperson."22

BPIsReply23totheCommentarguedthatthecitedPublicEstatesAuthoritycaseisnotauthoritativesince
"whatisproscribedistheabsenceofauthorityfromtheboardofdirectors,notthefailuretoattachthe
boardresolutiontotheinitiatorypleading." 24 BPIcontendedthatthe"primaryconsiderationiswhether
AsisandOngwereauthorizedbyBPI,notthefailuretoattachtheproofofauthoritytothecomplaint." 25
BPIalsobeggedthe"kindindulgenceoftheHonorableCourtasitinadvertentlyfailedtosubmitwiththe
SpecialPowerofAttorneytheCorporateSecretarysCertificatewhichauthorizedMr.ZosimoKabigtingto
appointhissubstitutes."26

OnAugust22,2002,theRTCissueditsassailedOrder 27 grantingFirstUnionsandLindasMotionto
Dismiss.28ThetrialcourtdeniedBPIsMotionforReconsideration29onNovember13,2002.30
ProceedingsbeforetheCA

BPI,onFebruary5,2003,filedapetitionforcertiorari 31underRule65oftheRulesofCourtbeforethe
CA.Itallegedthatthatlowercourtactedwithgraveabuseofdiscretionamountingtolackorexcessof
jurisdictionindismissingthecomplaintdespitethesubmissionoftheSPAandtheCorporateSecretarys
Certificate.32

IntheirCommenttothepetition,33 FirstUnionandLindasubmittedthatthepetitionisanimproper
remedysinceanordergrantingamotiontodismissisnotinterlocutory.Theycontendedthatthedismissal
isfinalinnature;hence,anappeal,notapetitionforcertiorariunderRule65,istheproperrecourse.
The CA disagreed with First Union and Lindas contention. The assailed order, according to the CA,
categoricallystatedthatthedismissalofthecomplaintwaswithoutprejudice. 34 Asadismissalwithout
prejudice,theorderisinterlocutoryinnatureandisnotafinalorder. 35
The CA, however, found that BPI failed to comply with the procedural requirements on nonforum
shopping.36CitingSec.5,Rule7oftheRulesofCourt,theCAruledthattherequirementthatapetition
shouldsignthecertificateofnonforumshoppingapplieseventocorporationssincetheRulesofCourtdo
notdistinguishbetweennaturalandcivilpersons.37DigitalMicrowaveCorp.v.CourtofAppeals,etal.38
holdsthat"whereapetitioneriscorporation,thecertificationagainstforumshoppingshouldbesignedby
itsdulyauthorizeddirectororrepresentative."
WhiletheCAdidnotquestiontheauthorityofAsisandOngasbankrepresentatives,theBankhowever
failedtoshowthroughanappropriateboardresolutionproofoftheirauthorityasrepresentatives.To
theCA,thisfailurewarrantedthedismissalofthecomplaint.39
The CA lastly refused to accord merit to BPIs argument that it substantially complied with the
requirementsofverificationandcertification;BPIonlysubmittedtheSPAandtheBoardResolutionafterit
hadfiledthecomplaint.40
THEPETITIONERSARGUMENTS
BPImaintainsinthepresentpetitionthatitattachedaverificationandcertificateofnonforumshopping
toitscomplaint.ContestingtheCAsinterpretationofShipsidev.CourtofAppeals, 41 itarguesthatthe
SupremeCourtactuallyexcusedShipsidesbelatedsubmissionofitsSecretarysCertificateandheldthatit
substantiallycompliedwiththerulerequiringthesubmissionofaverificationandcertificateofnonforum
shoppingasitdid,infact,makeasubmission.Fromthisstartingpoint,itnowaskstheCourttoexcuseits
belatedsubmission.42
BPIlikewisecontendsthatitisinabetterpositionthanthepetitionerinShipsidebecausethelatteronly
submittedasecretaryscertificatewhileitsubmittedaspecialpowerattorneysignedbyZosimo.Onthis
samepoint,BPIalsocitesGeneralMillingCorporationv.NationalLaborRelationsCommission 43 where
the Courtheld that GeneralMillingsbelated submission of adocument to provethe authority ofthe
signatoriestotheverificationandcertificateofnonforumshoppingwassubstantialcompliancewithRules
ofCourt.
BPIfinallyurgestheCourttoreverseandsetasidetheDecisionoftheCAandtoremandthecasetothe
RTC of Makati City for further proceedings under the principle that "technicality should not defeat
substantialjustice."44
THERESPONDENTSARGUMENTS

IntheirMemorandumdatedSeptember25,2009, 45FirstUnionandLindaallegethatBPIs"positionon
thesubmissionoftheBoardResolutionhasbeenoneofdefiance." 46BPIsfailuretosubmittherequired
boardresolutionisnotaninadvertencebutawilfuldisregardoftheRulesandablatantrefusaltoheedthe
orderoftheRTC.FirstUnionandLindapointtoBPIsoppositiontotheMotiontoDismissasproofofBPIs
wilfuldisregard.BPIarguedinthisoppositionthat(1)theRulesdonotrequirethepresentationofaboard
resolution,and(2)proofofsuchauthorityneednotbeattachedtotheinitiatorypleadingbutcanbe
presentedduringtrial.47

Further,insteadofsubmittingaboardresolution,BPIsubmittedaspecialpowerofattorney. 48Itwasonly
after First Union and Linda pointed out that the submitted special power of attorney cannot bind a
juridicalentitydidBPIchangeitsposition.OnlythendidBPIclaimthatitmerelyinadvertentlyfailedto
submittherequiredsecretaryscertificate.49
This belated change of position, according to First Union and Linda, does not entitle BPI to the
jurisprudentialexceptionestablishedbytheCourtinShipsidewheretheCourtheldthattherelaxationof
therulerequiringverificationandcertificationofnonforumshoppingisonlyfor"specialcircumstancesor
compellingreasons."50
THECOURTSRULING
Weruleintherespondentsfavor.
This Court has repeatedly emphasized the need to abide by the Rules of Court and the procedural
requirementsitimposes.Theverificationofacomplaintandtheattachmentofacertificateofnonforum
shoppingarerequirementsthataspointedoutbytheCourt,timeandagainarebasic,necessaryand
mandatoryforproceduralorderliness.
Thus,wecannotsimplyandinageneralwayapplygiventhefactualcircumstancesofthiscasethe
liberaljurisprudentialexceptioninShipsideanditslineofcasestoexcuseBPIsfailuretosubmitaboard
resolution.Whilewemayhaveexcusedstrictcomplianceinthepast,wedidsoonlyonsufficientand
justifiablegroundsthatcompelledaliberalapproachwhileavoidingtheeffectivenegationoftheintentof
theruleonnonforumshopping.Inotherwords,theruleforthesubmissionofacertificateofnonforum
shopping,properinformandsubstance,remainstobeastrictandmandatoryrule;anyliberalapplication
hastobejustifiedbyampleandsufficientreasonsthatmaintaintheintegrityof,anddonotdetractfrom,
themandatorycharacteroftherule.
Therule,itsrelaxationandtheirrationalewerediscussedbytheCourtatlengthinTible&TibleCompany,
Inc.v.RoyalSavingsandLoanAssociation 51wherewesaid:
Muchrelianceisplacedontherulethat"Courtsarenotslavesorrobotsoftechnicalrules,shornofjudicial
discretion.Inrenderingjustice,courtshavealwaysbeen,astheyoughttobe,conscientiouslyguidedbythe
normthatonbalance,technicalitiestakeabackseatagainstsubstantiverights,andnottheotherwayaround ."
Thisrulemustalwaysbeusedintherightcontext,lestinjustice,ratherthanjusticewouldbeitsendresult.
Itmustneverbeforgottenthat,generally,theapplicationoftherulesmustbeupheld,andthesuspension
orevenmererelaxationofitsapplication,istheexception.ThisCourtpreviouslyexplained:
TheCourtisnotimpervioustothefrustrationthatlitigantsandlawyersalikewouldattimesencounterin
proceduralbureaucracybutimperativejusticerequirescorrectobservanceofindispensabletechnicalities
preciselydesignedtoensureitsproperdispensation.Ithaslongbeenrecognizedthatstrictcompliance
withtheRulesofCourtisindispensableforthepreventionofneedlessdelaysandfortheorderlyand
expeditiousdispatchofjudicialbusiness.
Proceduralrulesarenottobedisdainedasmeretechnicalitiesthatmaybeignoredatwilltosuitthe
convenienceofaparty.Adjectivelawisimportantinensuringtheeffectiveenforcementofsubstantive
rightsthroughtheorderlyandspeedyadministrationofjustice.Theserulesarenotintendedtohamper
litigantsorcomplicatelitigationbut,indeedtoprovideforasystemunderwhichasuitormaybeheardin
thecorrectformandmannerandattheprescribedtimeinapeacefulconfrontationbeforeajudgewhose
authoritytheyacknowledge.
Itcannotbeoveremphasizedthatproceduralruleshavetheirownwholesomerationaleintheorderly
administrationofjustice.Justicehastobe administeredaccordingtotheRules inordertoobviate
arbitrariness,caprice,orwhimsicality.Wehavebeencautionedandremindedin Limpotv.Courtof
Appeals,etal.,that:
Rules of procedure are intended to ensure the orderly administration ofjustice and the protection of
substantiverightsinjudicialandextrajudicialproceedings.Itisamistaketoproposethatsubstantivelaw
andadjectivelawarecontradictorytoeachotheror,asoftensuggested,thatenforcementofprocedural
rulesshouldneverbepermittedifitwillresultinprejudicetothesubstantiverightsofthelitigants.Thisis
notexactlytrue;theconceptismuchmisunderstood.Asamatteroffact,thepolicyofthecourtsistogive
bothkindsoflaw,ascomplementingeachother,inthejustandspeedyresolutionofthedisputebetween
the parties. Observance of both substantive rights is equally guaranteed by dueprocess, whatever the
sourceofsuchrights,beittheConstitutionitselforonlyastatuteoraruleofcourt.
xxxx
xxx(T)heyarerequiredtobefollowedexceptonlywhenforthemostpersuasiveofreasonsthemmaybe
relaxedtorelievealitigantofaninjusticenotcommensuratewiththedegreeofhisthoughtlessnessinnot
complying with the procedure prescribed. x x x While it is true that a litigation is not a game of
technicalities,thisdoesnotmeanthattheRulesofCourtmaybeignoredatwillandatrandomtothe
prejudiceoftheorderlypresentationandassessmentoftheissuesandtheirjustresolution.Justiceeschews
anarchy.

Inparticular,onthematterofthecertificateofnonforumshoppingthatwassimilarlyatissue,Tible 52
pointedlysaid:
xxxtherequirementunderAdministrativeCircularNo.0494foracertificateofnonforumshoppingis
mandatory.The subsequentcompliancewithsaidrequirementdoesnotexcuseaparty'sfailureto
complytherewithinthefirstinstance.InthosecaseswherethisCourtexcusedthenoncompliancewith
therequirementofthesubmissionofacertificateofnonforumshopping,itfoundspecialcircumstances
orcompellingreasonswhichmadethestrictapplicationofsaidCircularclearlyunjustifiedorinequitable.
xxx[Emphasissupplied.]

ThissamerulewasechoedinMediservv.CourtofAppeals 53wherewesaidinthecourseofallowinga
liberaljustification:
Itissettledthatliberalconstructionoftherulesmaybeinvokedinsituationswheretheremaybesome
excusableformaldeficiencyorerrorinapleading,providedthatthesamedoesnotsubverttheessenceof
theproceedingandconnotesatleastareasonableattemptatcompliancewiththerules.Afterall,rulesof
procedure are not to be applied in a very rigid, technical sense; they are used only to help secure
substantialjustice.[Emphasissupplied.]
Tobesure,BPIscitedShipsidecasealsoinvolvedtheabsenceofproofattachedtothepetitionthatthe
filingofficerwasauthorizedtosigntheverificationandnonforumshoppingcertification.IntheMotion
forReconsiderationthatfollowedthedismissalofthecase,themovantattachedacertificateissuedbyits
boardsecretarystatingthatten(10)dayspriortothefilingofthepetition,thefilingofficerhadbeen
authorizedbypetitionersboardofdirectorstofilesaidpetition.Thus,properauthorityexistedbutwas
simplynotattachedtothepetition.Onthissubmission,thepetitionersoughtandtheCourtpositively
grantedrelief.
Inthepresentcase,wedonotseeasituationcomparabletothecitedShipside.BPIdidnotsubmitany
proofofauthorityinthefirstinstancebecauseitdidnotbelievethataboardresolutionevidencingsuch
authoritywasnecessary.Wenotethatinsteadofimmediatelysubmittinganappropriateboardresolution
aftertheFirstUnionandLindafiledtheirmotiontodismissBPIarguedthatitwasnotrequiredto
submitoneandevenarguedthat:
TheComplaintcanonlybedismissedunderSection5,Rule7ofthe1997RulesofCivilProcedureifthere
wasnocertificationagainstforumshopping.TheComplainthas.Theprovisionciteddoesnotevenrequire
thatthepersoncertifyingshowproofofhisauthoritytodosoxxx. 54
Infact,BPImerelyattachedtoitsoppositionaspecialpowerofattorneyissuedbyMr.Kabigting,abank
vicepresident,grantingAsisandOngtheauthoritytofilethecomplaint.Thus,nodirectauthoritytofilea
complaintwasinitiallyevergivenbyBPIthecorporateentityinwhosenameandbehalfthecomplaint
wasfiled.OnlyinitsReplytotheCommenttoplaintiffsOppositiontotheMotiontoDismissdidBPI"beg
thekindindulgenceoftheHonorableCourtasitinadvertentlyfailedtosubmitwiththeSpecialPowerof
Attorney the Corporate Secretarys Certificate which authorized Mr. Zosimo Kabigting to appoint his
substitutes."55Eventhissubmission,however,wasaroundaboutwayofauthorizingthefilingofficersto
filethecomplaint.
BPI,interestingly,neverelaboratednorexplaineditsbelatedlyclaimedinadvertenceinfailingtosubmita
corporatesecretaryscertificatedirectlyauthorizingitsrepresentativestofilethecomplaint;itparticularly
failedtospecifythecircumstancesthatledtotheclaimedinadvertence.Underthegivenfacts,wecannot
butconcludethat,ratherthananinadvertence,therewasaninitialunwaveringstancethatthesubmission
ofaspecificauthorityfromtheboardwasnotnecessary.Inblunterterms,theomissionoftherequired
board resolution in the complaint was neither an excusable deficiency nor an omission that occurred
throughinadvertence.Intheusualcourseinthehandlingofacase,thefailurewasamistakeofcounsel
thatBPInevercaredtoadmitbutwhichneverthelessbounditasaclient.Fromthisperspective,BPIscase
isdifferentfromShipsidesothattherulinginthiscitedcasecannotapply.
Underthecircumstances,whatappliestothepresentcaseisthesecondparagraphofSection5,Rule7of
theRulesofCourtwhichstates:
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaintorotherinitiatorypleadingbutshallbecauseforthedismissalofthecasewithoutprejudice,
unlessotherwiseprovided,uponmotionandafterhearing.
WethusholdthatthedismissalofthecaseistheappropriaterulingfromthisCourt,withoutprejudiceto
itsrefilingastheRulesallow.1avvphi1

WeendthisDecisionbyquotingourpartingwordsinMelov.CourtofAppeals: 56
Wearenotunmindfuloftheadverseconsequencetoprivaterespondentofadismissalofhercomplaint,
norofthetime,effort,andmoneyspentlitigatinguptothisCourtsolelyonasocalledtechnicalground.
Nonetheless,weholdthatcompliancewiththecertificationrequirementonnonforumshoppingshould
notbemadesubjecttoapartysafterthought,lestthepolicyofthelawbeundermined.
WHEREFORE,weDENYthepetitionerspetitionforreviewoncertiorari,andAFFIRMthedecisiondated
November2,2004oftheCourtofAppeals,inBankofthePhilippineIslandsv.Hon.RomeoBarza,etal.
(CAG.R.SPNo.75350),andthesubsequentresolutiondatedMay25,2005 57denyingBPIsMotionfor
Reconsideration. The complaint filed against the respondents is DISMISSED without prejudice. Costs
againstthepetitioner.
SOORDERED.

G.R.No.152266July2,2010
HEIRS OF PEDRO DE GUZMAN, Petitioners,
vs.
ANGELINAPERONAand HEIRS OFROSAURODEGUZMAN;BATAANDEVELOPMENTBANK;and
REPUBLICPLANTERSBANK,Respondents.
DECISION
PERALTA,J.:
ThisisapetitionforreviewoncertiorariunderRule45oftheRulesofCourtseekingtoreverseandset
asidetheDecision1andResolution2oftheCourtofAppeals(CA),datedMay30,2001andJanuary25,
2002,respectively,inCAG.R.CVNo.46144.
Theantecedentfactsareasfollows:
OnApril15,1985,PedrodeGuzmanfiledaComplaintwithapplicationfortemporaryrestrainingorder
andpreliminaryinjunctionagainstrespondentsbeforetheRegionalTrialCourt(RTC)ofBataandocketed
asCivilCaseNo.5247.Hesoughtreconveyanceofaparceloflandmeasuringabout300squaremeters
fromtheheirsofRosaurodeGuzmanandhissurvivingspouse,AngelinaPerona.
Pedroallegedthatthroughunlawfulmachination,fraud,deceit,andevidentbadfaith,respondentspouses
Rosauro and Angelina caused the cancellation of Original Certificate of Title (OCT) No. 10075 and
subdividedthesaidpropertyintothree(3)parcelsoflandcoveredbyseparateTransferCertificateofTitles
intheirname.

RecordsshowthatOCTNo.10075 3wasissuedbytheOfficeoftheRegisterofDeedsfortheProvinceof
BataanonJuly25,1933,containinganareaof3,242squaremeters,moreorless,halfofwhichwas
registered under the name of Andrea de Guzman, and the other half in the names of Servando de
Guzman'schildren,namely,Pablo(marriedtoAmeliaAlarcon),Jose,Canuto,Cirilo,Leopoldo,Davidand
Maximino.
In1942,Andrea,Cirilo,LeopoldoandDaviddiedintestate.OnJuly26,1950,apetitionfortheissuanceof
anewowner'sduplicateofOCTNo.10075wasfiledbyJosedeGuzman,oneoftheregisteredowners,
duetothelossoftheowner'scopyofOCTNo.10075.PursuanttotheOrder 4oftheCourtofFirstInstance
ofBataan,datedAugust22,1950,theRegisterofDeedsofBataanwasdirectedtoissueanewowner's
duplicateofOCTNo.10075.Thereafter,byvirtueofanExtrajudicialSettlementofEstate 5 executedon
October16,1952byPablo,Jose,Canuto,VeronicaCruz(survivingspouseofCiriloandinhercapacityas
legal administratix of their minor children, Ernesto, Rosauro and Mercedita), Rogelio and Maximino,
whereintheyagreedtodivideandadjudicateamongthemselves,inequalparts,thepropertycoveredby
OCTNo.10075,thelattertitlewascanceledandTCTNo.T3885wasissuedinitsstead.TCTNo.T3885
waslaterondividedintothreeparcelsoflandcoveredbyTCTNos.78181,78182and78183.

TCTNo.78181,6registeredinthenameofthespousesRosauroandAngelina,wasmortgagedbythesaid
SpousestoBataanDevelopmentBank(BDBank)onMarch25,1980. 7DuetothefailureoftheSpousesto
paytheirindebtednesstoBDBank,themortgagedpropertywasforeclosedandsoldtothebankasthe
highestbidder.

TCTNo.78182,8alsoregisteredinthenameofthespousesRosauroandAngelina,wassoldbythesaid
SpousestoacertainCarlitoPangilinanandCandidaRamosbyvirtueofaKasulatanngBilihangTuluyan,9
datedAugust12,1982.Byvirtueofthesale,TCTNo.78182wascanceledandsupersededbyTCTNo.
105347.

TCTNo.7818310inthenameofPablo,Canuto,Ernesto,Rosauro,Mercedita,RogelioandMaximino,all
surnamedDeGuzman,wascanceledandsupersededbyTCTNo.T92048 11andregisteredinthenameof
thespousesRosauroandAngelina.TCTNo.92048wasmortgagedbyRitaA.Paguio,attorneyinfactof
the spouses Rosauro and Angelina,12 to Republic Planters Bank (RP Bank) on August 11,
1982.131avvphi1
PedroallegedthatheisthegrandsonofoneZacariasdeGuzmanwhoisthebrotherofoneServandode
Guzman.ServandoisthegrandfatherofRosauro.Inotherwords,Pedro'sfather(Ildefonso)andRosauro's
father(Cirilo)arefirstcousins.Zacarias,Servando,andAndreaweresiblings.
Pedro,allegedlyactinginbehalfofhiscoheirs,maintainedthatheisentitledtoshareintheestateof
Andrea.Heclaimedthat,duringthelifetimeofAndrea,thehousewhichheoccupiedhadalreadybeen
adjudicatedinhisfavor.HesaidthathetookcareofAndrea,whodiedinhisownhouse.Heprayedthat
heberecognizedastheownerandlegitimatepossessorofaparcelofland,containinganareaof300
squaremeters,wherehishousestands.HeallegedthatBDBankacceptedthelandascollateralfromthe
spouses Angelina and Rosauro without conducting the necessary investigation and verification of the
actualstatusoftheland.Hefurtherprayedforthecancellationofthecorrespondingtitleortitlesissued,
whichmayaffecttheareawherehishousestands.He,likewise,prayedforpaymentofdamages.
RespondentAngelinaandtheheirsofRosaurodidnotanswerthecomplaintdespiteserviceofsummons,
hence,theyweredeclaredindefault.InitsAnswer, 14BDBankallegedthatPedro'scomplaintstatedno
causeofaction,astherewasnoclearallegationthattheparceloflandcoveredbyTCTNo.78181isthe
sameparceloflandoverwhichhehassomerightorinterest.ItalsofailedtoshowthatPedrowasanheir
ofAndreaandthathewasactinginbehalfofhiscoheirs.RPBank,initsdefense, 15allegedthatPedro
hadnocauseofactionagainstthebank.Thebankactedingoodfaithandexercisedduediligenceand
verifiedthatthemortgagorhasagoodtitleoverthepropertycoveredbyTCTNo.92048.

InitsDecision16datedApril14,1994,theRTCdismissedthecomplaint.AggrievedbytheDecision,Pedro
filedaNoticeofAppeal,17whichtheCAdismissedinaResolutiondatedMay30,2001,forlackofmerit.
Amotionforreconsiderationwasfiled,whichtheCAdeniedinaResolutiondatedJanuary25,2002.
Pedrodiedintheinterim,thus,hisheirsandsuccessorsininterest(hereinpetitioners)elevatedthecaseto
thisCourtviaPetitionforReviewonCertiorari18underRule45oftheRulesofCourt,withthefollowing
issues:
A.THECOURTOFAPPEALSERREDINNOTRULINGTHATTHEPETITIONERSHAVEACQUIRED
THE LAND COVERED BY TCT NO. 78181 AGAINST ANGELINA PERONA AND HEIRS OF
ROSAURODEGUZMANTHRUORALPARTITION.
B.THECOURTOFAPPEALSERREDINNOTHOLDINGTHATTHERESPONDENTBANKSARE
MORTGAGEESINBADFAITH.
Inthepresentcase,petitionersallegethatPedroacquiredthepropertysubjectofthiscasecoveredbyTCT
No.78181throughoralpartition.TheymaintainthatrespondentBDbankisamortgageeinbadfaith.
They,likewise,saidthatPedroacquiredownershipoverthepropertybyvirtueofadocumentexecutedby
Andreatransferringownershipofthepropertytohim.Finally,theyareaskingforthereconveyanceofa
parceloflandwherePedro'shouseissituated.
InitsComment,respondentBDBankallegesthattheissueonwhetherornotitisamortgageeinbadfaith
isaquestionoffact,anditisnotproperforappealunderRule45whichdealonlywithquestionsoflaw.
Thepetitionlacksmerit.
Thepetitionerraisestwoissuesinthiscase,however,uponperusalofthepetition,theonlyissueinthis
caseiswhetherornotrespondentBDBankisamortgageeinbadfaith.
PetitionersallegationthattheirpredecessorPedroacquiredthelandcoveredbyTCTNo.78181bymeans
oforalpartitioncannotbetakencognizancebythisCourt.Thisallegationwasneverraisedbeforethe
RTC.Inthetrialcourt,Pedro'stheorywasthatthepropertysubjectofthiscasewasadjudicatedtohimby
virtueofadocumentexecutedbyAndreainhisfavor.Wellsettledistherulethatissuesandarguments
notbroughtbeforethetrialcourtcannotberaisedforthefirsttimeonappeal.Basicconsiderationsofdue
processimpelthisrule.19
PedroalsoclaimsthatAndreatransferredtohimtheparceloflandmeasuringabout300squaremeters,
where his house was erected. However, as correctly pointed out by the CA, this claim was not
substantiatedbyevidence.
RecordsshowthatPedroonlypaidtherealpropertytaxesoverthepropertiesonMarch13,1984and
January16,1985.20Priorto1984,heneverpaidanytaxesoverthepropertywhichheallegedashis.The
Court, therefore, finds that Pedro's payment of real estate taxes in 1984 and 1985 was only an
afterthoughttogiveasemblanceofhisallegedrightovertheproperty,andinpreparationforthefilingof
thecomplaintforreconveyanceinApril15,1985.
Nonetheless,asbetweenrespondents'title,embodiedinacertificateoftitle,andPedro'stitle,evidenced
onlybyataxdeclaration,theformerisevidentlyfarsuperiorandisconclusiveandanindefeasibleproofof
respondentsownershipoverthepropertysubjectofthiscase.Respondents'certificateoftitleisbinding
uponthewholeworld.Timeandagain,theCourthasruledthattaxdeclarationsandcorrespondingtax
receipts cannot be used to prove title to or ownership of a real property inasmuch as they are not
conclusiveevidenceofthesame.21
Pedro's allegation that the spouses Rosauro and Angelina resorted to fraud when they caused the
cancellationofOCTNo.10075andtheissuanceofTCTNos.17181,17182and17183intheirnameis
equally unsupported by evidence. It must be stressed that mere allegations of fraud are insufficient.
Intentional acts to deceive and deprive another of his right, or in some manner injure him, must be
specificallyallegedandproved.22 Foranactionforreconveyancebasedonfraudtoprosper,theparty
seekingreconveyancemustprovebyclearandconvincingevidencehistitletothepropertyandthefactof
fraud.23
PetitionerslikewiseallegethattheheirsofRosauroandAngelina'sfailuretoanswerthecomplaintbefore
theRTCisanadmissionoftheallegationsinPedro'scomplaint.TheargumentdoesnotpersuadeUs.In
civil cases, basic is the rule that the party making allegations has the burden of proving them by a
preponderanceofevidence.Moreover,partiesmustrelyonthestrengthoftheirownevidence,notupon
the weakness of the defense offered by their opponent. This principle equally holds true, even if the
defendanthadnotbeengiventheopportunitytopresentevidencebecauseofadefaultorder.Theextent
ofthereliefthatmaybegrantedcanonlybeasmuchashasbeenallegedandprovedwithpreponderant
evidencerequiredunderSection1ofRule133oftheRevisedRulesonEvidence. 24

In Luxuria Homes, Inc., v. Court of Appeals,25 the Court held that a judgment by default against a
defendantdoesnotimplyawaiverofrights,exceptthatofbeingheardandofpresentingevidenceinhis
favor.Itdoesnotimplyadmissionbythedefendantofthefactsandcausesofactionoftheplaintiff,
becausethecodalsectionrequiresthelattertoadducehisevidenceinsupportofhisallegationsasan
indispensableconditionbeforefinaljudgmentcouldbegiveninhisfavor.Norcoulditbeinterpretedasan
admissionbythedefendantthattheplaintiffscausesofactionfindssupportinthelaw,orthatthelatteris
entitledtothereliefprayedfor.

Additionally,in Pascuav.Florendo,26 theCourtheldthatcomplainantsarenotautomaticallyentitledto

thereliefprayedfor,oncethedefendantsaredeclaredindefault.Favorablereliefcanbegrantedonlyafter
thecourthasascertainedthatthereliefiswarrantedbytheevidenceofferedandthefactsprovenbythe
presentingparty.Otherwise,itwouldbemeaninglesstorequirepresentationofevidenceifeverytimethe
other party is declared in default, a decision would automatically be rendered in favor of the non
defaultingpartyandexactlyaccordingtothetenorofhisprayer.ThisisnotcontemplatedbytheRulesnor
isitsanctionedbythedueprocessclause.
Clearly, the heirs of Rosauro and Angelina's failure to answer cannot be equivalent to an implied
admissionoftheallegationsinPedro'scomplaint.
Petitioners submission that respondents merely hold the title to the properties in trust for their
predecessor Pedro is without merit. Pedro failed to prove by clear and convincing evidence that the
spousesRosauroandAngelinamanaged,throughfraud,tohavetherealpropertiessubjectofthiscase
registeredintheirname.Intheabsenceoffraud,noimpliedtrustwasestablishedbetweenPedroandthe
spousesRosauroandAngelinaunderArticle1456 27oftheNewCivilCode.TCTNos.17181,17182and
17183aredeemedtobefairlyandregularlyissued.
Delvingnowonthemainissue,petitionersclaimthatrespondentBDBankisamortgageeinbadfaith,
becauseatthetimethepropertywasmortgagedbythespousesRosauroandAngelinatorespondentbank,
thesaidSpouseswerenotresidinginthemortgagedproperty.AscorrectlyarguedbyrespondentBDBank,
petitionsforreviewunderRule45oftheRulesofCourtmaybebroughtonlyonquestionsoflaw,noton
questions of fact.28 The question on whether the respondent is a mortgagee in bad faith is clearly a
questionoffactand,therefore,notproperforappealsunderRule45.
Further, the trial court found that respondent BD Bank made an inspection of the property that was
subsequentlyacceptedascollateralfortheloan, 29whichdefeatedpetitioners'argumentthatrespondent
BDBankdidnotexerciseduediligenceininspectingandascertainingthestatusofthemortgageproperty.
Thefactualfindingsoftrialcourtsareentitledtogreatweightandrespectonappeal,especiallywhen
established by unrebutted testimonial and documentary evidence. 30 The Court finds the foregoing
conclusion drawn by the trial court supported by documentary evidence. Records show that after the
spouses Rosauro and Angelina applied for a loan with respondent BD bank, the latter, through its
appraiserOscarM.Ronquillo,conductedaninspectionandappraisal 31 ofthepropertycoveredbyTCT
No.78181,togetherwiththeexistingimprovementsthereon.Afterthesaidinspectionandappraisalofthe
property,respondentBDBankapprovedtheloan 32 infavorofthespousesRosauroandAngelinaand,
thereafter,executedaRealEstateMortgage 33withthesaidSpouses.Clearly,respondentbankwasableto
presentsufficientevidencethatthemortgagecontractemanatedfromavalidandregulartransaction.
Respondentbank,beforeitacceptedthecollateral,exercisedduediligenceinverifyingtheownershipand
statusofthelandandtheimprovementsexistinginthepropertymortgaged.Fromtheabove,itiscrystal
clearthatnofraudcanbeattributedtorespondentBDBankinapprovingtheRealEstateMortgageand
lateronextrajudiciallyforeclosingthesubjectproperty.
WHEREFORE,thepetitionisDENIED.TheDecisionandResolutionoftheCourtofAppealsinCAG.R.CV
No.46144,datedMay30,2001andJanuary25,2002,respectively,areAFFIRMED.
SOORDERED.
G.R.No.161849July9,2010
WALLEM PHILIPPINES SHIPPING, INC., Petitioner,
vs.
S.R.FARMS,INC.,Respondent.
DECISION
PERALTA,J.:
AssailedinthepresentpetitionforreviewoncertiorariaretheDecision 1andResolution2oftheCourtof
Appeals(CA)datedJune2,2003andJanuary15,2004,respectively,inCAG.R.CVNo.65857.TheCA
DecisionreversedandsetasidetheDecision 3datedOctober8,1999oftheRegionalTrialCourt(RTC)of
Manila,Branch11,inCivilCaseNo.9365021,whiletheCAResolutiondeniedpetitionersMotionfor
Reconsideration.
Thefactsofthecase,asfoundbytheRTCandaffirmedbytheCA,areasfollows:
xxxOnMarch25,1992,ContinentalEnterprises,Ltd.loadedonboardthevesselM/V"HuiYang,"atBedi
Bunder, India, a shipment of Indian Soya Bean Meal, for transportation and delivery to Manila, with
plaintiff[hereinrespondent]asconsignee/notifyparty.Thesaidshipmentissaidtoweigh1,100metric
tonsandcoveredbyBillofLadingNo.BEDI4datedMarch25,1992(ExhibitA;alsoExhibitI).Thevessel
isownedandoperatedbydefendantContiFeed,withdefendant[hereinpetitioner]Wallemasitsship
agent.
ThesubjectcargoispartoftheentireshipmentofIndianSoyaBeanMeal/IndiaRapeseedMealloadedin
bulkonboardthesaidvesselfordeliverytoseveralconsignees.AmongtheconsigneeswereSanMiguel
CorporationandVitarichCorporation,includingthehereinplaintiff(ExhibitA;Exhibits1to6;TSN,p.13,
June28,1996).
OnApril11,1992,thesaidvessel,M/V"HuiYang"arrivedattheportofManila,Pier7SouthHarbor.
Thereafter, the shipmentwasdischarged andtransferred intothecustodyof thereceivingbarges, the
NorthFront333andNorthFront444.TheoffloadingoftheshipmentwentonuntilApril15,1992andwas
handledby[OceanTerminalServices,Inc.]OTSIusingitsownmanpowerandequipmentandwithoutthe
participationofthecrewmembersofthevessel.Allthroughouttheentireperiodofunloadingoperation,
goodandfairweatherconditionprevailed.
Attheinstanceoftheplaintiff,acargocheckofthesubjectshipmentwasmadebyoneLorenzoBituinof
ErneMaritimeandAlliedServices,Co.Inc.,whonotedashortageintheshipmentwhichwasplacedat
80.467metrictonsbasedondraftsurveymadeontheNorthFront33andNorthFront444showingthat
thequantityofcargounloadedfromthevesselwasonly1019.53metrictons.Thus,perthebilloflading,
therewasanestimatedshortageof80.467.
Upondiscoverythereof,thevesselchiefofficerwasimmediatelynotifiedofthesaidshortshipmentbythe
cargosurveyor,whoaccordinglyissuedthecorrespondingCertificateofDischargedatedApril15,1992
(Exhibit D). The survey conducted and the resultant findings thereon are embodied in the Report of
SuperintendencedatedApril21,1992(ExhibitsCtoC2)andintheBargeSurveyReportbothsubmitted
byLorenzoBituin(ExhibitsC3andC4).AstestifiedtobyLorenzoBituin,thisallegedshortageof80.467
metrictonswasarrivedatusingthedraftsurveymethodwhichcallsforthemeasurementofthelightand
loadedconditionofthebargeinrelationtotheweightofthewatersupposedlydisplaced. 4
Petitioner then filed a Complaint for damages against ContiFeed & Maritime Pvt. Ltd., a foreign
corporationdoingbusinessinthePhilippinesandtheownerofM/V"HuiYang";RCSShippingAgencies,
Inc., the ship agent of ContiFeed; Ocean Terminal Services, Inc. (OTSI), the arrastre operator at
AnchorageNo.7,SouthHarbor,Manila;andCargoTrade,thecustomsbroker. 5
On June 7, 1993, respondent filed an Amended Complaint impleading herein petitioner as defendant
allegingthatthelatter,andnotRCS,wastheonewhich,infact,actedasContiFeedsshipagent. 6
OnJune22,1993,thecomplaintagainstCargoTradewasdismissedattheinstanceofrespondentonthe
groundthatithasnocauseofactionagainsttheformer. 7
Subsequently,uponmotionofRCS,thecaseagainstitwaslikewisedismissedforlackofcauseofaction. 8

Meanwhile, defendant OTSIfiled itsAnswerwith Counterclaimand Crossclaim 9 denying thematerial

allegationsoftheComplaintandallegingthatitexercisedduecareanddiligenceinthehandlingofthe
shipmentfromthecarryingvesseluntothelighters;nodamageorlosswhatsoeverwassustainedbythe
cargo in question while being discharged by OTSI; petitioners claimhad been waived, abandoned or
barredbylachesorestoppels;liability,ifany,isattributabletoitscodefendants.
For its part, petitioner denied the allegations of respondent claiming, among others, that it is not
accountablenorresponsibleforanyallegedshortagesustainedbytheshipmentwhileinthepossessionof
itscodefendants;theallegedshortagewasduetonegligentorfaultyloadingorunloadingofthecargoby
thestevedores/shipper/consignee;theshortage,ifany,wasduetopreshipmentdamage,inherentnature,
viceordefectofthecargoforwhichhereinpetitionerisnotliable;respondentsclaimisalreadybarredby
lachesand/orprescription.10
ContiFeeddidnotfileanAnswer.
PreTrialConferencewasconducted,afterwhichtrialensued.

OnOctober8,1999,theRTCrendereditsDecision 11 dismissingrespondentscomplaint,aswellasthe
opposingpartiescounterclaimsandcrossclaims.
AggrievedbytheRTCDecision,respondentfiledanappealwiththeCA.
OnJune2,2003,theCArendereditspresentlyassailedDecisiondisposingasfollows:
WHEREFORE,thedecisionappealedfromisherebyREVERSEDandSETASIDEandanotheroneentered
orderingdefendantsappelleesContiFeedandMaritimePvt.Ltd.andWallemPhilippinesShipping,Inc.,to
paythesumrepresentingthevalueofthe80.467metrictonsofIndianSoyaBeansshortdelivered,with
legal interest from the time the judgment becomes final until full payment, plus attorneys fees and
expensesoflitigationof10,000.00,aswellasthecostofsuit.

SOORDERED.12
PetitionerfiledaMotionforReconsideration.

OnJuly8,2003,respondentfiledaMotionforaMoreDefiniteDispositivePortion 13 prayingthatthe
valueofthe80.467metrictonsofIndianSoyaBeans,whichpetitionerandContiFeedwereorderedto
pay,bespecifiedinthedispositiveportionoftheCADecision.

PetitionerfileditsComment/Opposition14toprivaterespondentsMotion.
OnJanuary15,2004,theCAissuedaResolutiondenyingpetitionersMotionforReconsiderationand
modifyingthedispositiveportionofitsDecision,thus:
WHEREFORE,thedecisionappealedfromisherebyREVERSEDandSETASIDEandanotheroneentered
orderingdefendantsappelleesContiFeedandMaritimePvt.Ltd.andWallemShipping,Inc.,topaythe
sumof$19,070.06representingthevalueofthe80.467metrictonsofIndianSoyaBeansshortdelivered,
withlegalinterestfromthetimethejudgmentbecomesfinaluntilfullpayment,plusattorneysfeesand
expensesoflitigationof10,000.00,aswellasthecostsofsuit.

SOORDERED.15
Hence,theinstantpetitionbasedonthefollowingAssignmentofErrors:
 I

THE COURT OF APPEALS ERRED IN APPLYING THE PRESUMPTION OF NEGLIGENCE

UNDERARTICLE1735OFTHECIVILCODE.THISPROVISIONDOESNOTAPPLYINTHIS
CASEBECAUSETHEREWASNOLOSSORSHORTAGEORSHORTDELIVERY.

II

THECOURTOFAPPEALSERREDINGIVINGDUECOURSETOTHECASECONSIDERING
THAT:

A. THE CLAIM WAS ALREADY TIMEBARRED WHEN THE CASE WAS FILED
AGAINSTHEREINPETITIONERON8MAY1993,ASPROVIDEDINSECTION3(6)
OF THE COGSA. THE ONEYEAR PRESCRIPTIVE PERIOD COMMENCED ON 15
APRIL 1992 WHEN THE SUBJECT SHIPMENT WAS DELIVERED TO PRIVATE
RESPONDENTANDLAPSEDON15APRIL1993;AND

B. [RESPONDENT] WAIVED ITS RIGHT OF ACTION WHEN IT DID NOT GIVE A

WRITTENNOTICEOFLOSSTOTHEPETITIONERWITHINTHREE(3)DAYSFROM
DISCHARGEOFTHESUBJECTSHIPMENTASPROVIDEDINSECTION3(6)OFTHE
COGSA.

III

INTHEREMOTEPOSSIBILITYOFLOSSORSHORTAGEORSHORTDELIVERY,THECOURT
OFAPPEALSERREDINIMPUTINGNEGLIGENCEAGAINSTTHEPETITIONERWHICHWAS
NOTRESPONSIBLEINLOADINGAND/ORDISCHARGINGTHESUBJECTSHIPMENT.

IV

THECOURTOFAPPEALSERREDINGRANTING[RESPONDENTS]MOTIONFORAMORE
DEFINITE DISPOSITIVE PORTION WITHOUT STATING IN THE DECISION, THE LEGAL
BASESFORDOINGSO.

THE COURT OF APPEALS ERRED IN GRANTING THE MOTION FOR A MORE DEFINITE
DISPOSITIVE PORTION BECAUSE [RESPONDENT] FILED SAID MOTION MORE THAN
FIFTEEN(15)DAYSAFTER[RESPONDENT]RECEIVEDTHEDECISIONOFTHECOURTOF
APPEALS. THE COURT OF APPEALS FURTHER ERRED IN INSERTING A DEFINITE
MONETARY VALUE OF THE ALLEGED SHORTAGE BECAUSE THERE WAS NO FACTUAL
FINDING, BOTH IN THE TRIAL COURT AND IN THE COURT OF APPEALS, AS TO THE
SPECIFICAMOUNTOFTHEALLEGEDSHORTDELIVEREDCARGO.16

TheCourtfindsitpropertoresolvefirstthequestionofwhethertheclaimagainstpetitionerwastimely
filed.
Withrespecttotheprescriptiveperiodinvolvingclaimsarisingfromshortage,lossofordamagetocargoes
sustainedduringtransit, thelawthat governs theinstantcaseisthe Carriageof Goods bySeaAct 17
(COGSA),Section3(6)ofwhichprovides:
Unlessnoticeoflossordamageandthegeneralnatureofsuchlossordamagebegiveninwritingtothe
carrierorhisagentattheportofdischargeoratthetimeoftheremovalofthegoodsintothecustodyof
thepersonentitledtodeliverythereofunderthecontractofcarriage,suchremovalshallbeprimafacie
evidenceofthedeliverybythecarrierofthegoodsasdescribedinthebilloflading.Ifthelossordamage
isnotapparent,thenoticemustbegivenwithinthreedaysofdelivery.
Saidnoticeoflossordamagemaybeendorseduponthereceiptforthegoodsgivenbythepersontaking
deliverythereof.
Thenoticeinwritingneednotbegivenifthestateofthegoodshasatthetimeoftheirreceiptbeenthe
subjectofjointsurveyorinspection.
Inanyevent,thecarrierandtheshipshallbedischargedfromallliabilityinrespectoflossordamage
unlesssuitisbroughtwithinoneyearafterdeliveryofthegoodsorthedatewhenthegoodsshouldhave
beendelivered;Provided,That,ifanoticeoflossordamage,eitherapparentorconcealed,isnotgivenas
providedforinthissection,thatfactshallnotaffectorprejudicetherightoftheshippertobringsuit
withinoneyearafterthedeliveryofthegoodsorthedatewhenthegoodsshouldhavebeendelivered.
In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all
reasonablefacilitiestoeachotherforinspectingandtallyingthegoods.
Petitionerclaimsthatpursuanttotheabovecitedprovision,respondentshouldhavefileditsNoticeofLoss
withinthreedaysfromdelivery.ItassertsthatthecargowasfullydischargedfromthevesselonApril15,
1992,butthatrespondentfailedtofileanywrittennoticeofclaim.Petitioneralsoaversthat,pursuantto
thesameprovisionoftheCOGSA,respondentsclaimhadalreadyprescribedbecausethecomplaintfor
damageswasfiledmorethanoneyearaftertheshipmentwasdischarged.
TheCourtagrees.
UnderSection3(6)oftheCOGSA,noticeoflossordamagesmustbefiledwithinthreedaysofdelivery.
Admittedly,respondentdidnotcomplywiththisprovision.
Under the same provision, however, a failure to file a notice ofclaim within three days will not bar
recoveryifasuitisnonethelessfiledwithinoneyearfromdeliveryofthegoodsorfromthedatewhenthe
goodsshouldhavebeendelivered.18

In Loadstar Shipping Co., Inc. v. Court of Appeals, 19 the Court ruled that a claim is not barred by
prescriptionaslongastheoneyearperiodhasnotlapsed.Thus,inthewordsoftheponente,ChiefJustice
HilarioG.DavideJr.:
InasmuchasneithertheCivilCodenortheCodeofCommercestatesaspecificprescriptiveperiodonthe
matter,theCarriageofGoodsbySeaAct(COGSA)whichprovidesforaoneyearperiodoflimitationon
claimsforlossof,ordamageto,cargoessustainedduringtransitmaybeappliedsuppletorilytothecase
atbar.20
Intheinstantcase,theCourtisnotpersuadedbyrespondentsclaimthatthecomplaintagainstpetitioner
wastimelyfiled.RespondentarguesthatthesuitfordamageswasfiledonMarch11,1993,whichis
withinoneyearfromthetimethevesselcarryingthesubjectcargoarrivedatthePortofManilaonApril
11,1993,orfromthetimetheshipmentwascompletelydischargedfromthevesselonApril15,1992.
ThereisnodisputethatthevesselcarryingtheshipmentarrivedatthePortofManilaonApril11,1992
andthatthecargowascompletelydischargedtherefromonApril15,1992.However,respondenterredin
arguingthatthecomplaintfordamages,insofarasthepetitionerisconcerned,wasfiledonMarch11,
1993.1awph!l
Astherecordswouldshow,petitionerwasnotimpleadedasadefendantintheoriginalcomplaintfiledon
March11,1993.21 ItwasonlyonJune7,1993thattheAmendedComplaint,impleadingpetitioneras
defendant,wasfiled.
RespondentcannotarguethatthefilingoftheAmendedComplaintagainstpetitionershouldretroactto
thedateofthefilingoftheoriginalcomplaint.
Thesettledruleisthatthefilingofanamendedpleadingdoesnotretroacttothedateofthefilingofthe
original;hence,thestatuteoflimitationrunsuntilthesubmissionoftheamendment. 22Itistruethat,as
an exception, this Court has held that an amendment which merely supplements and amplifies facts
originallyallegedinthecomplaintrelatesbacktothedateofthecommencementoftheactionandisnot
barred by the statute of limitations which expired after the service of the original complaint. 23 The
exception, however, would not apply to the party impleaded for the first time in the amended
complaint.24
Theruleonthenonapplicabilityofthecurativeandretroactiveeffectofanamendedcomplaint,insofaras
newlyimpleadeddefendantsareconcerned,hasbeenestablishedasearlyasinthecaseofAetnaInsurance
Co.v.LuzonStevedoringCorporation.25Inthesaidcase,thedefendantBarberLinesFarEastServicewas
impleaded for the first time in the amended complaint which was filed after the oneyear period of
prescription.Theorderofthelowercourtdismissingtheamendedcomplaintagainstthesaiddefendanton
groundofprescriptionwasaffirmedbythisCourt.
Intheinstantcase,petitionerwasonlyimpleadedintheamendedComplaintofJune7,1993,orone(1)
year,one(1)monthandtwentythree(23)daysfromApril15,1992,thedatewhenthesubjectcargowas
fullyunloadedfromthevessel.Hence,reckonedfromApril15,1992,theoneyearprescriptiveperiodhad
alreadylapsed.
Having ruled that the action against petitioner had already prescribed, the Court no longer finds it
necessarytoaddresstheotherissuesraisedinthepresentpetition.
WHEREFORE,thepetitionisPARTLYGRANTED.TheDecisionoftheCourtofAppealsdatedJune2,2003
anditsResolutiondatedJanuary15,2004inCAG.R.CVNo.65857areMODIFIEDbydismissingthe
complaintagainstpetitioner.Inallotherrespects,thechallengedDecisionandResolutionoftheCAare
AFFIRMED.
SOORDERED