Civpro Case Assignment

Republic of the Philippines
Supreme Court
Manila
FIRST DIVISION
VALLACAR TRANSIT, INC., G.R. No. 175512

Petitioner,
Present:
CORONA, C.J.,
Chairperson,
VELASCO, JR.,
- versus - LEONARDO-DE CASTRO,
PERALTA,* and
PEREZ, JJ.
Promulgated:
JOCELYN CATUBIG,
Respondent. May 30, 2011
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DECISION
LEONARDO-DE CASTRO, J.:
For review under Rule 45 of the Rules of Court is the Decision[1] dated November 17, 2005 and the
Resolution[2] dated November 16, 2006 of the Court Appeals in CA-G.R. CV No. 66815, which modified
the Decision[3] dated January 26, 2000 of the Regional Trial Court (RTC), Branch 30 of Dumaguete City,
in Civil Case No. 11360, an action for recovery of damages based on Article 2180, in relation to Article
2176, of the Civil Code, filed by respondent Jocelyn Catubig against petitioner Vallacar Transit, Inc.While
the RTC dismissed respondents claim for damages, the Court of Appeals granted the same.
The undisputed facts are as follows:
Petitioner is engaged in the business of transportation and the franchise owner of a Ceres Bulilit bus
with Plate No. T-0604-1348. Quirino C. Cabanilla (Cabanilla) is employed as a regular bus driver of
petitioner.
On January 27, 1994, respondents husband, Quintin Catubig, Jr. (Catubig), was on his way home
from Dumaguete City riding in tandem on a motorcycle with his employee, Teddy Emperado
(Emperado). Catubig was the one driving the motorcycle. While approaching a curve at kilometers 59 and
60, Catubig tried to overtake a slow moving ten-wheeler cargo truck by crossing-over to the opposite lane,
which was then being traversed by the Ceres Bulilit bus driven by Cabanilla, headed for the opposite
direction. When the two vehicles collided, Catubig and Emperado were thrown from the
motorcycle. Catubig died on the spot where he was thrown, while Emperado died while being rushed to the
hospital.
On February 1, 1994, Cabanilla was charged with reckless imprudence resulting in double
homicide in Criminal Case No. M-15-94 before the Municipal Circuit Trial Court (MCTC) of Manjuyod-
Bindoy-Ayungon of the Province of Negros Oriental. After preliminary investigation, the MCTC issued a
Resolution on December 22, 1994, dismissing the criminal charge against Cabanilla. It found that Cabanilla
was not criminally liable for the deaths of Catubig and Emperado, because there was no negligence, not
even contributory, on Cabanillas part.
Thereafter, respondent filed before the RTC on July 19, 1995 a Complaint for Damages against
petitioner, seeking actual, moral, and exemplary damages, in the total amount of P484,000.00, for the death
of her husband, Catubig, based on Article 2180, in relation to Article 2176, of the Civil Code. Respondent
alleged that petitioner is civilly liable because the latters employee driver, Cabanilla, was reckless and
negligent in driving the bus which collided with Catubigs motorcycle.
Petitioner, in its Answer with Counterclaim, contended that the proximate cause of the vehicular
collision, which resulted in the deaths of Catubig and Emperado, was the sole negligence of Catubig when
he imprudently overtook another vehicle at a curve and traversed the opposite lane of the road. As a special
and affirmative defense, petitioner asked for the dismissal of respondents complaint for not being verified
and/or for failure to state a cause of action, as there was no allegation that petitioner was negligent in the
selection or supervision of its employee driver.
In the Pre-Trial Order[4] dated June 10, 1997, the parties stipulated that the primary issue for trial
was whether or not petitioner should be held liable for Catubigs death.Trial then ensued.
Police Officer (PO) 2 Robert B. Elnas (Elnas),[5] Emilio Espiritu (Espiritu),[6] Dr. Norberto
Baldado, Jr. (Dr. Baldado),[7] Peter Cadimas (Cadimas),[8] and respondent[9]herself testified in support of
respondents complaint.
PO2 Elnas conducted an investigation of the collision incident. According to PO2 Elnas, the bus
was running fast, at a speed of 100 kilometers per hour, when it collided with the motorcycle which was
trying to overtake a truck. The collision occurred on the lane of the bus. Catubig was flung 21 meters away,
and Emperado, 11 meters away, from the point of impact. The motorcycle was totaled; the chassis broke
into three parts, and the front wheel and the steering wheel with the shock absorbers were found 26 meters
and 38 meters, respectively, from the collision point. In contrast, only the front bumper of the bus suffered
damage.
Cadimas personally witnessed the collision of the bus and the motorcycle. He recalled that he was
then waiting for a ride to Dumaguete City and saw the Ceres Bulilit bus making a turn at a curve. Cadimas
signaled the said bus to halt but it was running fast. Cadimas also recollected that there was a cargo truck
running slow in the opposite direction of the bus. Cadimas next heard a thud and saw that the bus already
collided with a motorcycle.
Espiritu was the photographer who took photographs of the scene of the accident. He identified the
five photographs which he had taken of Catubig lying on the ground, bloodied; broken parts of the
motorcycle; and the truck which Catubig tried to overtake.
Dr. Baldado was the medico-legal doctor who conducted the post-mortem examination of Catubigs
body. He reported that Catubig suffered from the following injuries: laceration and fracture of the right leg;
laceration and fracture of the left elbow; multiple abrasions in the abdominal area, left anterior chest wall,
posterior right arm, and at the back of the left scapular area; and contusion-hematoma just above the
neck. Dr. Baldado confirmed that Catubig was already dead when the latter was brought to the hospital,
and that the vehicular accident could have caused Catubigs instantaneous death.
Respondent herself testified to substantiate the amount of damages she was trying to recover from
petitioner for Catubigs death, such as Catubigs earning capacity; expenses incurred for the wake and burial
of Catubig, as well as of Emperado; the cost of the motorcycle; and the costs of the legal services and fees
respondent had incurred.
Respondents documentary exhibits consisted of her and Catubigs Marriage Contract dated August
21, 1982, their two childrens Certificate of Live Births, Catubigs College Diploma dated March 24, 1983,
the list and receipts of the expenses for Catubigs burial, the sketch of the collision site prepared by PO2
Elnas, the excerpts from the police blotter, the photographs of the collision,[10] and the Post Mortem
Report[11] on Catubigs cadaver prepared by Dr. Baldado.
In an Order[12] dated October 6, 1998, the RTC admitted all of respondents aforementioned
evidence.
On the other hand, Rosie C. Amahit (Amahit)[13] and Nunally Maypa (Maypa)[14] took the witness
stand for petitioner.
Amahit was a Court Stenographer at the MCTC who took the transcript of stenographic notes
(TSN) in Criminal Case No. M-15-94 against Cabanilla. Amahit verified that the document being presented
by the defense in the present case was a true and correct copy of the TSN of the preliminary investigation
held in Criminal Case No. M-15-94 on May 25, 1994, and another document was a duplicate original of
the MCTC Resolution dated December 22, 1994 dismissing Criminal Case No. M-15-94.
Maypa is the Administrative and Personnel Manager at the Dumaguete branch of petitioner. He
started working for petitioner on September 22, 1990 as a clerk at the Human Resources Development
Department at the Central Office of petitioner in Bacolod City. Sometime in November 1993, he became
an Administrative Assistant at the Dumaguete branch of petitioner; and in August 1995, he was promoted
to his current position at the same branch.
While he was still an Administrative Assistant, Maypa was responsible for the hiring of personnel
including drivers and conductors. Maypa explained that to be hired as a driver, an applicant should be 35
to 45 years old, have at least five years experience in driving big trucks, submit police, court, and medical
clearances, and possess all the necessary requirements for driving a motor vehicle of more than 4,500
kilograms in gross weight such as a professional drivers license with a restriction code of 3. The applicant
should also pass the initial interview, the actual driving and maintenance skills tests, and a written
psychological examination involving defensive driving techniques. Upon passing these examinations, the
applicant still had to go through a 15-day familiarization of the bus and road conditions before being
deployed for work. Maypa, however, admitted that at the time of his appointment as Administrative
Assistant at the Dumaguete branch, Cabanilla was already an employee driver of petitioner.
Maypa further explained the investigation and grievance procedure followed by petitioner in cases
of vehicular accidents involving the latters employee drivers. Maypa related that Cabanilla had been put on
preventive suspension following the vehicular accident on January 27, 1994 involving the bus Cabanilla
was driving and the motorcycle carrying Catubig and Emperado. Following an internal investigation of said
accident conducted by petitioner, Cabanilla was declared not guilty of causing the same, for he had not
been negligent.
Lastly, Maypa recounted the expenses petitioner incurred as a result of the present litigation.
The documentary exhibits of petitioner consisted of the TSN of the preliminary investigation in
Criminal Case No. M-15-94 held on May 25, 1994 before the MCTC of Manjuyod-Bindoy-Ayungon of the
Province of Negros Oriental; Resolution dated December 22, 1994 of the MCTC in the same case; and the
Minutes dated February 17, 1994 of the Grievance Proceeding conducted by petitioner involving
Cabanilla.[15]
The RTC, in its Order[16] dated November 12, 1999, admitted all the evidence presented by
petitioner.
On January 26, 2000, the RTC promulgated its Decision favoring petitioner. Based on the sketch
prepared by PO2 Elnas, which showed that the point of impact x x x occurred beyond the center lane near
a curve within the lane of the Ceres bus[;][17] plus, the testimonies of PO2 Elnas and Cadimas that the
motorcycle recklessly tried to overtake a truck near a curve and encroached the opposite lane of the road,
the RTC ruled that the proximate cause of the collision of the bus and motorcycle was the negligence of the
driver of the motorcycle, Catubig. The RTC, moreover, was convinced through the testimony of Maypa,
the Administrative and Personnel Manager of the Dumaguete branch of petitioner, that petitioner had
exercised due diligence in the selection and supervision of its employee drivers, including Cabanilla.
After trial, the RTC concluded:
WHEREFORE, finding preponderance of evidence in favor of the [herein

petitioner] that the [herein respondents] husband is the reckless and negligent driver and
not the driver of the [petitioner], the above-entitled case is hereby ordered dismissed.
[Petitioners] counterclaim is also dismissed for lack of merit.[18]
Respondent appealed to the Court of Appeals. In its Decision dated November 17, 2005, the
appellate court held that both Catubig and Cabanilla were negligent in driving their respective
vehicles. Catubig, on one hand, failed to use reasonable care for his own safety and ignored the hazard
when he tried to overtake a truck at a curve. Cabanilla, on the other hand, was running his vehicle at a high
speed of 100 kilometers per hour. The Court of Appeals also brushed aside the defense of petitioner that it
exercised the degree of diligence exacted by law in the conduct of its business. Maypa was not in a position
to testify on the procedures followed by petitioner in hiring Cabanilla as an employee driver considering
that Cabanilla was hired a year before Maypa assumed his post at the Dumaguete branch of petitioner.
Thus, the Court of Appeals decreed:

WHEREFORE, based on the foregoing, the assailed decision of the trial court is
modified. We rule that [herein petitioner] is equally liable for the accident in question
which led to the deaths of Quintin Catubig, Jr. and Teddy Emperado and hereby award to
the heirs of Quintin Catubig, Jr. the amount [of] P250,000.00 as full compensation for the
death of the latter.[19]
The Court of Appeals denied the motion for reconsideration of petitioner in a Resolution dated
November 16, 2006.
Hence, the instant Petition for Review.
Petitioner asserts that respondents complaint for damages should be dismissed for the latters failure
to verify the same. The certification against forum shopping attached to the complaint, signed by
respondent, is not a valid substitute for respondents verification that she has read the pleading and that the
allegations therein are true and correct of her personal knowledge or based on authentic
records.[20] Petitioner cited jurisprudence in which the Court ruled that a pleading lacking proper verification
is treated as an unsigned pleading, which produces no legal effect under Section 3, Rule 7 of the Rules of
Court.
Petitioner also denies any vicarious or imputed liability under Article 2180, in relation to Article
2176, of the Civil Code. According to petitioner, respondent failed to prove the culpability of Cabanilla,
the employee driver of petitioner. There are already two trial court decisions (i.e., the Resolution dated
December 22, 1994 of the MCTC of Manjuyod-Bindoy-Ayungon of the Province of Negros Oriental in
Criminal Case No. M-15-94 and the Decision dated January 26, 2000 of the RTC in the instant civil suit)
explicitly ruling that the proximate cause of the collision was Catubigs reckless and negligent act. Thus,
without the fault or negligence of its employee driver, no liability at all could be imputed upon petitioner.
Petitioner additionally argues, without conceding any fault or liability, that the award by the Court
of Appeals in respondents favor of the lump sum amount of P250,000.00 as total death indemnity lacks
factual and legal basis. Respondents evidence to prove actual or compensatory damages are all self-serving,
which are either inadmissible in evidence or devoid of probative value. The award of moral and exemplary
damages is likewise contrary to the ruling of the appellate court that Catubig should be equally held liable
for his own death.
Respondent maintains that the Court of Appeals correctly adjudged petitioner to be liable for
Catubigs death and that the appellate court had already duly passed upon all the issues raised in the petition
at bar.
The petition is meritorious.
At the outset, we find no procedural defect that would have warranted the outright dismissal of
respondents complaint.
Respondent filed her complaint for damages against petitioner on July 19, 1995, when the 1964
Rules of Court was still in effect. Rule 7, Section 6 of the 1964 Rules of Court provided:
SEC. 6. Verification.A pleading is verified only by an affidavit stating that the

person verifying has read the pleading and that the allegations thereof are true of his own
knowledge.
Verifications based on "information and belief," or upon "knowledge, information

and belief," shall be deemed insufficient.
On July 1, 1997, the new rules on civil procedure took effect. The foregoing provision was carried
on, with a few amendments, as Rule 7, Section 4 of the 1997 Rules of Court, viz:
SEC. 4. Verification. Except when otherwise specifically required by law or rule,

pleadings need not be under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleading and that
the allegations therein are true and correct of his knowledge and belief.
A pleading required to be verified which contains a verification based on

information and belief, or upon knowledge, information and belief, or lacks a proper
verification, shall be treated as an unsigned pleading.
The same provision was again amended by A.M. No. 00-2-10, which became effective on May 1,
2000. It now reads:
SEC. 4. Verification. - Except when otherwise specifically required by law or rule,

pleadings need not be under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleading and that
the allegations therein are true and correct of his personal knowledge or based on authentic
records.

information and belief or upon knowledge, information and belief, or lacks a proper
The 1997 Rules of Court, even prior to its amendment by A.M. No. 00-2-10, clearly provides that
a pleading lacking proper verification is to be treated as an unsigned pleading which produces no legal
effect. However, it also just as clearly states that [e]xcept when otherwise specifically required by law or
rule, pleadings need not be under oath, verified or accompanied by affidavit. No such law or rule
specifically requires that respondents complaint for damages should have been verified.
Although parties would often submit a joint verification and certificate against forum shopping, the
two are different.
In Pajuyo v. Court of Appeals,[21] we already pointed out that:
A partys failure to sign the certification against forum shopping is different from the
partys failure to sign personally the verification. The certificate of non-forum shopping
must be signed by the party, and not by counsel. The certification of counsel renders the
petition defective.
On the other hand, the requirement on verification of a pleading is a formal and not
a jurisdictional requisite. It is intended simply to secure an assurance that what are alleged
in the pleading are true and correct and not the product of the imagination or a matter of
speculation, and that the pleading is filed in good faith. The party need not sign the
verification. A partys representative, lawyer or any person who personally knows the truth
of the facts alleged in the pleading may sign the verification.[22]
In the case before us, we stress that as a general rule, a pleading need not be verified, unless there
is a law or rule specifically requiring the same. Examples of pleadings that require verification are: (1) all
pleadings filed in civil cases under the 1991 Revised Rules on Summary Procedure; (2) petition for review
from the Regional Trial Court to the Supreme Court raising only questions of law under Rule 41, Section
2; (3) petition for review of the decision of the Regional Trial Court to the Court of Appeals under Rule 42,
Section 1; (4) petition for review from quasi-judicial bodies to the Court of Appeals under Rule 43, Section
5; (5) petition for review before the Supreme Court under Rule 45, Section 1; (6) petition for annulment of
judgments or final orders and resolutions under Rule 47, Section 4; (7) complaint for injunction under Rule
58, Section 4; (8) application for preliminary injunction or temporary restraining order under Rule 58,
Section 4; (9) application for appointment of a receiver under Rule 59, Section 1; (10) application for
support pendente lite under Rule 61, Section 1; (11) petition for certiorari against the judgments, final
orders or resolutions of constitutional commissions under Rule 64, Section 2; (12) petition
for certiorari, prohibition, and mandamus under Rule 65, Sections 1 to 3; (13) petition for quo
warranto under Rule 66, Section 1; (14) complaint for expropriation under Rule 67, Section 1; (15) petition
for indirect contempt under Rule 71, Section 4, all from the 1997 Rules of Court; (16) all complaints or
petitions involving intra-corporate controversies under the Interim Rules of Procedure on Intra-Corporate
Controversies; (17) complaint or petition for rehabilitation and suspension of payment under the Interim
Rules on Corporate Rehabilitation; and (18) petition for declaration of absolute nullity of void marriages
and annulment of voidable marriages as well as petition for summary proceedings under the Family Code.
In contrast, all complaints, petitions, applications, and other initiatory pleadings must be
accompanied by a certificate against forum shopping, first prescribed by Administrative Circular No. 04-
94, which took effect on April 1, 1994, then later on by Rule 7, Section 5 of the 1997 Rules of Court. It is
not disputed herein that respondents complaint for damages was accompanied by such a certificate.
In addition, verification, like in most cases required by the rules of procedure, is a formal, not
jurisdictional, requirement, and 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. When circumstances warrant, the
court may simply order the correction of unverified pleadings or act on it and waive strict compliance with
the rules in order that the ends of justice may thereby be served.[23]
We agree with petitioner, nonetheless, that respondent was unable to prove imputable negligence
on the part of petitioner.
Prefatorily, we restate the time honored principle that in a petition for review under Rule 45, only
questions of law may be raised. It is not our function to analyze or weigh all over again evidence already
considered in the proceedings below, our jurisdiction is limited to reviewing only errors of law that may
have been committed by the lower court.The resolution of factual issues is the function of lower courts,
whose findings on these matters are received with respect. A question of law which we may pass upon must
not involve an examination of the probative value of the evidence presented by the litigants.[24]
The above rule, however, admits of certain exceptions. The findings of fact of the Court of Appeals
are generally conclusive but may be reviewed when: (1) the factual findings of the Court of Appeals and
the trial court are contradictory; (2) the findings are grounded entirely on speculation, surmises or
conjectures; (3) the inference made by the Court of Appeals from its findings of fact is manifestly mistaken,
absurd or impossible; (4) there is grave abuse of discretion in the appreciation of facts; (5) the appellate
court, in making its findings, goes beyond the issues of the case and such findings are contrary to the
admissions of both appellant and appellee; (6) the judgment of the Court of Appeals is premised on a
misapprehension of facts; (7) the Court of Appeals fails to notice certain relevant facts which, if properly
considered, will justify a different conclusion; and (8) the findings of fact of the Court of Appeals are
contrary to those of the trial court or are mere conclusions without citation of specific evidence, or where
the facts set forth by the petitioner are not disputed by respondent, or where the findings of fact of the Court
of Appeals are premised on the absence of evidence but are contradicted by the evidence on record.[25]
The issue of negligence is basically factual.[26] Evidently, in this case, the RTC and the Court of
Appeals have contradictory factual findings: the former found that Catubig alone was negligent, while the
latter adjudged that both Catubig and petitioner were negligent.
Respondent based her claim for damages on Article 2180, in relation to Article 2176, of the Civil
Code, which read:
Art. 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is
no pre-existing contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this Chapter.
Art. 2180. The obligation imposed by Article 2176 is demandable not only for ones
own acts or omissions, but also for those persons for whom one is responsible.
xxxx
Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even though the former
are not engaged in any business or industry.
xxxx
The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family to prevent
damage.
There is merit in the argument of the petitioner that Article 2180 of the Civil Code imputing fault
or negligence on the part of the employer for the fault or negligence of its employee does not apply to
petitioner since the fault or negligence of its employee driver, Cabanilla, which would have made the latter
liable for quasi-delict under Article 2176 of the Civil Code, has never been established by respondent. To
the contrary, the totality of the evidence presented during trial shows that the proximate cause of the
collision of the bus and motorcycle is attributable solely to the negligence of the driver of the motorcycle,
Catubig.
Proximate cause is defined as that cause, which, in natural and continuous sequence, unbroken by
any efficient intervening cause, produces the injury, and without which the result would not have
occurred. And more comprehensively, the proximate legal cause is that acting first and producing the injury,
either immediately or by setting other events in motion, all constituting a natural and continuous chain of
events, each having a close causal connection with its immediate predecessor, the final event in the chain
immediately effecting the injury as a natural and probable result of the cause which first acted, under such
circumstances that the person responsible for the first event should, as an ordinary prudent and intelligent
person, have reasonable ground to expect at the moment of his act or default that an injury to some person
might probably result therefrom.[27]
The RTC concisely articulated and aptly concluded that Catubigs overtaking of a slow-moving
truck ahead of him, while approaching a curve on the highway, was the immediate and proximate cause of
the collision which led to his own death, to wit:
Based on the evidence on record, it is crystal clear that the immediate and
proximate cause of the collision is the reckless and negligent act of Quintin Catubig,
Jr. and not because the Ceres Bus was running very fast. Even if the Ceres Bus is
running very fast on its lane, it could not have caused the collision if not for the fact
that Quintin Catubig, Jr. tried to overtake a cargo truck and encroached on the lane
traversed by the Ceres Bus while approaching a curve. As the driver of the motorcycle,
Quintin Catubig, Jr. has not observed reasonable care and caution in driving his motorcycle
which an ordinary prudent driver would have done under the circumstances. Recklessness
on the part of Quintin Catubig, Jr. is evident when he tried to overtake a cargo truck while
approaching a curve in Barangay Donggo-an, Bolisong, Manjuyod, Negros
Oriental. Overtaking is not allowed while approaching a curve in the highway (Section
41(b), Republic Act [No.] 4136, as amended). Passing another vehicle proceeding on the
same direction should only be resorted to by a driver if the highway is free from incoming
vehicle to permit such overtaking to be made in safety (Section 41(a), Republic Act [No.]
4136). The collision happened because of the recklessness and carelessness of [herein
respondents] husband who was overtaking a cargo truck while approaching a
curve. Overtaking another vehicle while approaching a curve constitute reckless driving
penalized not only under Section 48 of Republic Act [No.] 4136 but also under Article 365
of the Revised Penal Code.
The Court commiserate with the [respondent] for the untimely death of her
husband. However, the Court as dispenser of justice has to apply the law based on the facts
of the case. Not having proved by preponderance of evidence that the proximate cause of
the collision is the negligence of the driver of the Ceres bus, this Court has no other option
but to dismiss this case.[28](Emphases supplied.)
The testimonies of prosecution witnesses Cadimas and PO2 Elnas that Cabanilla was driving the
bus at a reckless speed when the collision occurred lack probative value.
We are unable to establish the actual speed of the bus from Cadimass testimony for he merely stated
that the bus did not stop when he tried to flag it down because it was running very fast.[29]
PO2 Elnas, on the other hand, made inconsistent statements as to the actual speed of the bus at the
time of the collision. During the preliminary investigation in Criminal Case No. M-15-94 before the MCTC,
PO2 Elnas refused to give testimony as to the speed of either the bus or the motorcycle at the time of the
collision and an opinion as to who was at fault.[30] But during the trial of the present case before the RTC,
PO2 Elnas claimed that he was told by Cabanilla that the latter was driving the bus at the speed of around
100 kilometers per hour.[31]
As the RTC noted, Cadimas and PO2 Elnas both pointed out that the motorcycle encroached the
lane of the bus when it tried to overtake, while nearing a curve, a truck ahead of it, consistent with the fact
that the point of impact actually happened within the lane traversed by the bus. It would be more reasonable
to assume then that it was Catubig who was driving his motorcycle at high speed because to overtake the
truck ahead of him, he necessarily had to drive faster than the truck. Catubig should have also avoided
overtaking the vehicle ahead of him as the curvature on the road could have obstructed his vision of the
oncoming vehicles from the opposite lane.
The evidence shows that the driver of the bus, Cabanilla, was driving his vehicle along the proper
lane, while the driver of the motorcycle, Catubig, had overtaken a vehicle ahead of him as he was
approaching a curvature on the road, in disregard of the provision of the law on reckless driving, at the risk
of his life and that of his employee, Emperado.
The presumption that employers are negligent under Article 2180 of the Civil Code flows from the
negligence of their employees.[32] Having adjudged that the immediate and proximate cause of the collision
resulting in Catubigs death was his own negligence, and there was no fault or negligence on Cabanillas
part, then such presumption of fault or negligence on the part of petitioner, as Cabanillas employer, does
not even arise. Thus, it is not even necessary to delve into the defense of petitioner that it exercised due
diligence in the selection and supervision of Cabanilla as its employee driver.
WHEREFORE, premises considered, the petition is GRANTED. The Decision dated November
17, 2005 and Resolution dated November 16, 2006 of the Court Appeals in CA-G.R. CV No. 66815
are SET ASIDE and the Decision dated January 26, 2000 of the Regional Trial Court, Branch 30 of
Dumaguete City, dismissing Civil Case No. 11360 is REINSTATED.
SO ORDERED.
Supreme Court
Manila
SECOND DIVISION
NELLIE VDA. DE FORMOSO and her G.R. No. 154704

children, namely, MA. THERESA
FORMOSO-PESCADOR, ROGER
FORMOSO, MARY JANE FORMOSO,
BERNARD FORMOSO and PRIMITIVO
MALCABA,
Petitioners,
Present:
CARPIO, J., Chairperson,

- versus -
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.
PHILIPPINE NATIONAL BANK, FRANCISCO ARCE,
ATTY. BENJAMIN BARBERO, and ROBERTO
NAVARRO,
Respondents.
Promulgated:
June 1, 2011
x -----------------------------------------------------------------------------------------------------x
DECISION
MENDOZA, J.:
Assailed in this petition are the January 25, 2002 Resolution[1] and the August 8, 2002
Resolution[2] of the Court of Appeals (CA) which dismissed the petition for certiorari filed by the
petitioners on the ground that the verification and certification of non-forum shopping was signed by only
one of the petitioners in CA G.R. SP No. 67183, entitled Nellie P. Vda. De Formoso, et al. v. Philippine
National Bank, et al.
The Factual and
Procedural Antecedents
Records show that on October 14, 1989, Nellie Panelo Vda. De Formoso (Nellie) and her children
namely: Ma. Theresa Formoso-Pescador, Roger Formoso, Mary Jane Formoso, Bernard Formoso, and
Benjamin Formoso, executed a special power of attorney in favor of Primitivo
Malcaba (Malcaba) authorizing him, among others, to secure all papers and documents including the
owners copies of the titles of real properties pertaining to the loan with real estate mortgage originally
secured by Nellie and her late husband, Benjamin S. Formoso, from Philippine National Bank, Vigan
Branch (PNB) on September 4, 1980.
On April 20, 1990, the Formosos sold the subject mortgaged real properties to Malcaba through
a Deed of Absolute Sale. Subsequently, on March 22, 1994, Malcaba and his lawyer went to PNB to fully
pay the loan obligation including interests in the amount of ₱2,461,024.74.
PNB, however, allegedly refused to accept Malcabas tender of payment and to release the
mortgage or surrender the titles of the subject mortgaged real properties.
On March 24, 1994, the petitioners filed a Complaint for Specific Performance against PNB before
the Regional Trial Court of Vigan, Ilocos Sur (RTC) praying, among others, that PNB be ordered to accept
the amount of ₱2,461,024.74 as full settlement of the loan obligation of the Formosos.
After an exchange of several pleadings, the RTC finally rendered its decision[3] on October 27,
1999 favoring the petitioners. The petitioners prayer for exemplary or corrective damages, attorneys fees,
and annual interest and daily interest, however, were denied for lack of evidence.
PNB filed a motion for reconsideration but it was denied for failure to comply with Rule 15, Section 5 of
the 1997 Rules of Civil Procedure. PNB then filed a Notice of Appeal but it was dismissed for being filed
out of time.
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[4] questioning the RTC decision that there was no
testimonial evidence presented to warrant the award for moral and exemplary damages. They reasoned
out that they could not then file a motion for reconsideration because they could not get hold of a copy
of the transcripts of stenographic notes. In its August 6, 2001 Order, the RTC denied the petition for lack
of merit.[5]
On September 7, 2001, the petitioners moved for reconsideration but it was denied by the RTC in its
Omnibus Order of September 26, 2001.[6]
Before the Court of Appeals
On November 29, 2001, the petitioners filed a petition for certiorari before the CA challenging the RTC
Order of August 6, 2001 and its Omnibus Order dated September 26, 2001.
In its January 25, 2002 Resolution, the CA dismissed the petition stating that:
The verification and certification of non-forum shopping was signed by

only one (Mr. Primitivo Macalba) of the many petitioners. In Loquias v. Office of
the Ombudsman, G.R. No. 139396, August 15, 2000, it was ruled that all
petitioners must be signatories to the certification of non-forum shopping unless
the one who signed it is authorized by the other petitioners. In the case at bar, there
was no showing that the one who signed was empowered to act for the rest.
Therefore, it cannot be presumed that the one who signed knew to the best of his
knowledge whether his co-petitioners had the same or similar claims or actions
filed or pending. The ruling in Loquias further declared that substantial
compliance will not suffice in the matter involving strict observance of the Rules.
Likewise, the certification of non-forum shopping requires personal knowledge of
the party who executed the same and that petitioners must show reasonable cause
for failure to personally sign the certification. Utter disregard of the Rules cannot
just be rationalized by harping on the policy of liberal construction.
Aggrieved, after the denial of their motion for reconsideration, the petitioners filed this petition for review
anchored on the following
GROUNDS
THE COURT OF APPEALS PATENTLY ERRED IN RULING THAT 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.
ALTERNATIVELY, THE COURT OF APPEALS PATENTLY ERRED IN

DISMISSING THE WHOLE PETITION WHEN AT THE VERY LEAST THE
PETITION INSOFAR AS PETITIONER MALCABA IS CONCERNED BEING
THE SIGNATORY THEREOF SHOULD HAVE BEEN GIVEN DUE COURSE.
THE COURT OF APPEALS PATENTLY ERRED IN GIVING MORE WEIGHT

ON TECHNICALITIES WHEN THE PETITION BEFORE IT WAS CLEARLY
MERITORIOUS.[7]
The petitioners basically argue that they have substantially complied with the requirements
provided under the 1997 Rules of Civil Procedure on Verification and Certification of Non-Forum Shopping.
The petitioners are of the view that the rule on Verification and Certification of Non-Forum Shopping that
all petitioners must sign should be liberally construed, since only questions of law are raised in a petition
for certiorari and no factual issues that require personal knowledge of the petitioners.
The petitioners further claim that they have a meritorious petition because contrary to the ruling
of the RTC, their Petition for Relief clearly showed that, based on the transcript of stenographic notes,
there was enough testimonial evidence for the RTC to grant them damages and attorneys fees as prayed
for.
On the other hand, PNB counters that the mandatory rule on the certification against forum
shopping requires that all of the six (6) petitioners must sign, namely: Nellie Vda. De Formoso and her
children Ma. Theresa Formoso-Pescador, Roger Formoso, Mary Jane Formoso, and Bernard Formoso, and
Primitivo Malcaba. Therefore, the signature alone of Malcaba on the certification is insufficient.
PNB further argues that Malcaba was not even a party or signatory to the contract of loan entered
into by his co-petitioners. Neither was there evidence that Malcaba is a relative or a co-owner of the
subject properties. It likewise argues that, contrary to the stance of the petitioners, the issue raised before
the CA, as to whether or not the petitioners were entitled to moral and exemplary damages as well as
attorneys fees, is a factual one.
Finally, PNB asserts that the body of the complaint filed by the petitioners failed to show any
allegation that Macalba alone suffered damages for which he alone was entitled to reliefs as prayed for.
PNB claims that the wordings of the complaint were clear that all the petitioners were asking for moral
and exemplary damages and attorneys fees.
OUR RULING
The petition lacks merit.
Certiorari is an extraordinary, prerogative remedy and is never issued as a matter of right.

Accordingly, the party who seeks to avail of it must strictly observe the rules laiddown by law.[8] Section
1, Rule 65 of the 1997 Rules of Civil Procedure provides:
SECTION 1. Petition for certiorari.- When any tribunal, board or officer

exercising judicial or quasi-judicial functions has acted without or in excess of its
or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in
the ordinary course of law, a person aggrieved thereby may file a verified petition
in the proper court, alleging the facts with certainty and praying that judgment be
rendered annulling or modifying the proceedings of such tribunal, board or officer,
and granting such incidental reliefs as law and justice may require.
The petition shall be accompanied by a certified true copy of the judgment,

order or resolution subject thereof, copies of all pleadings and documents relevant
and pertinent thereto, and a sworn certification of non-forum shopping as provided
in the third paragraph of Section 3, Rule 46. [Emphasis supplied]
Under Rule 46, Section 3, paragraph 3 of the 1997 Rules of Civil Procedure, as amended, petitions
for certiorari must be verified and accompanied by a sworn certification of non-forum shopping.
SECTION 3. Contents and filing of petition; effect of non-compliance with

requirements. The petition shall contain the full names and actual addresses of all
the petitioners and respondents, a concise statement of the matters involved, the
factual background of the case, and the grounds relied upon for the relief prayed
for.
In actions filed under Rule 65, the petition shall further indicate the
material dates showing when notice of the judgment or final order or resolution
subject thereof was received, when a motion for new trial or reconsideration, if any,
was filed and when notice of the denial thereof was received.
It shall be filed in seven (7) clearly legible copies together with proof of
service thereof on the respondent with the original copy intended for the court
indicated as such by the petitioner, and shall be accompanied by a clearly legible
duplicate original or certified true copy of the judgment, order, resolution, or
ruling subject thereof, such material portions of the record as are referred to
therein, and other documents relevant or pertinent thereto. The certification shall
be accomplished by the proper clerk of court or his duly authorized representative,
or by the proper officer of the court, tribunal, agency or office involved or by his
duly authorized representative. The other requisite number of copies of the
petition shall be accompanied by clearly legible plain copies of all documents
attached to the original.
The petitioner shall also submit together with the petition a sworn
certification that he has not theretofore commenced any other action involving the
same issues in the Supreme Court, the Court of Appeals or different divisions
thereof, or any other tribunal or agency; if there is such other action or proceeding,
he must state the status of the same; and if he should thereafter learn that a similar
action or proceeding has been filed or is pending before the Supreme Court, the
Court of Appeals, or different divisions thereof, or any other tribunal or agency, he
undertakes to promptly inform the aforesaid courts and other tribunal or agency
thereof within five (5) days therefrom.
The petitioner shall pay the corresponding docket and other lawful fees to
the clerk of court and deposit the amount of P500.00 for costs at the time of the
filing of the petition.
The failure of the petitioner to comply with any of the foregoing requirements
shall be sufficient ground for the dismissal of the petition. [Emphases supplied]
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.[9] [Emphasis supplied]
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 Court disagrees.

Sections 4 and 5 of Rule 7 of the 1997 Rules of Civil Procedure provide:
SEC. 4. Verification. Except when otherwise specifically required by law or

rule, pleadings need not be under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleadings
and that the allegations therein are true and correct of his personal knowledge or
based on authentic records.

information and belief or upon knowledge, information and belief or lacks a proper
SEC. 5. Certification against forum shopping. The plaintiff or principal party

shall certify under oath in the complaint or other initiatory pleading asserting a
claim for relief, or in a sworn certification annexed thereto and simultaneously
filed therewith: (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.
Failure to comply with the foregoing requirements shall not be curable by

mere amendment of the complaint or other initiatory pleading but shall be cause
for the dismissal of the case without prejudice, unless otherwise provided, upon
motion and after hearing. The submission of a false certification or non-
compliance with any of the undertakings therein shall constitute indirect contempt
of court, without prejudice to the corresponding administrative and criminal
actions. If the acts of the party or his counsel clearly constitute willful and
deliberate forum shopping, the same shall be ground for summary dismissal with
prejudice and shall constitute direct contempt, as well as a cause for administrative
sanctions. x x x.
In this regard, the case of Oldarico S. Traveno v. Bobongon Banana Growers Multi-Purpose
Cooperative,[10] is enlightening:
Respecting the appellate courts dismissal of petitioners appeal due to the

failure of some of them to sign the therein accompanying verification and
certification against forum-shopping, the Courts guidelines for the bench and bar
in Altres v. Empleo, which were culled from jurisprudential pronouncements, are
instructive:
For the guidance of the bench and bar, the Court restates in capsule form
the jurisprudential pronouncements already reflected above respecting non-
compliance with the requirements on, or submission of defective, verification and
certification against forum shopping:
1) A distinction must be made between non-compliance with the

requirement on or submission of defective verification, and non-compliance with
the requirement on or submission of defective certification against forum
shopping.
2) As to verification, non-compliance therewith or a defect therein does not

necessarily render the pleading fatally defective. The Court may order its
submission or correction or act on the pleading if the attending circumstances are
such that strict compliance with the Rule may be dispensed with in order that the
ends of justice may be served thereby.
3) Verification is deemed substantially complied with when one who has

ample knowledge to swear to the truth of the allegations in the complaint or
petition signs the verification, and when matters alleged in the petition have been
made in good faith or are true and correct.
4) As to certification against forum shopping, non-compliance therewith or

a defect therein, unlike in verification, is generally not curable by its subsequent
submission or correction thereof, unless there is a need to relax the Rule on the
ground of substantial compliance or presence of special circumstances or
compelling reasons.
5) The certification against forum shopping must be signed by all the

plaintiffs or petitioners in a case; otherwise, those who did not sign will be dropped
as parties to the case. Under reasonable or justifiable circumstances, however, as
when all the plaintiffs or petitioners share a common interest and invoke a
common cause of action or defense, the signature of only one of them in the
certification against forum shopping substantially complies with the Rule.
6) Finally, the certification against forum shopping must be executed by the

party-pleader, not by his counsel. If, however, for reasonable or justifiable reasons,
the party-pleader is unable to sign, he must execute a Special Power of Attorney
designating his counsel of record to sign on his behalf.
The petition for certiorari filed with the CA stated the following names as petitioners: Nellie Panelo Vda.
De Formoso, Ma. Theresa Formoso-Pescador, Roger Formoso, Mary Jane Formoso, Bernard Formoso,
Benjamin Formoso, and Primitivo Malcaba.
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 filing a petition for review on certiorari. Neither
could the petitioners give at least a reasonable explanation as to why only he signed the verification and
certification of non-forum shopping. In Athena Computers, Inc. and Joselito R. Jimenez v. Wesnu A. Reyes,
the Court explained that:
The verification of the petition and certification on non-forum
shopping before the Court of Appeals were signed only by Jimenez. There is no
showing that he was authorized to sign the same by Athena, his co-petitioner.
Section 4, Rule 7 of the Rules states that a pleading is verified by an affidavit
that the affiant has read the pleading and that the allegations therein are true and
correct of his knowledge and belief. Consequently, the verification should have
been signed not only by Jimenez but also by Athenas duly authorized
representative.
In Docena v. Lapesura, we ruled that the certificate of non-forum shopping
should be signed by all the petitioners or plaintiffs in a case, and that the signing by only
one of them is insufficient. The attestation on non-forum shopping requires personal
knowledge by the party executing the same, and the lone signing petitioner cannot be
presumed to have personal knowledge of the filing or non-filing by his co-petitioners of
any action or claim the same as similar to the current petition.
The certification against forum shopping in CA-G.R. SP No. 72284 is fatally

defective, not having been duly signed by both petitioners and thus warrants the
dismissal of the petition for certiorari. We have consistently held that the
certification against forum shopping must be signed by the principal parties. With
respect to a corporation, the certification against forum shopping may be signed
for and on its behalf, by a specifically authorized lawyer who has personal
knowledge of the facts required to be disclosed in such document.
While the Rules of Court may be relaxed for persuasive and weighty reasons
to relieve a litigant from an injustice commensurate with his failure to comply with
the prescribed procedures, nevertheless they must be faithfully followed. In the
instant case, petitioners have not shown any reason which justifies relaxation of
the Rules. We have held that procedural rules are not to be belittled or dismissed
simply because their non-observance may have prejudiced a partys substantive
rights. Like all rules, they are required to be followed except for the most
persuasive of reasons when they may be relaxed. Not one of these persuasive
reasons is present here.
In fine, we hold that the Court of Appeals did not err in dismissing the
petition for certiorari in view of the procedural lapses committed by
petitioners.[11] [Emphases supplied]
Furthermore, the petitioners argue that the CA should not have dismissed the whole petition but
should have given it due course insofar as Malcaba is concerned because he signed the certification. The
petitioners also contend that the CA should have been liberal in the application of the Rules because they
have a meritorious case against PNB.
The Court, however, is not persuaded.
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.[12]
Indeed, liberality and leniency were accorded in some cases.[13] 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. In the case of Heirs of
Domingo Hernandez, Sr. v. Plaridel Mingoa, Sr.,[14] it was written:
In the instant case, petitioners share a common interest and defense

inasmuch as they collectively claim a right not to be dispossessed of the subject lot
by virtue of their and their deceased parents construction of a family home and
occupation thereof for more than 10 years. The commonality of their stance to
defend their alleged right over the controverted lot thus gave petitioners xxx
authority to inform the Court of Appeals in behalf of the other petitioners that they
have not commenced any action or claim involving the same issues in another
court or tribunal, and that there is no other pending action or claim in another
court or tribunal involving the same issues.
Here, all the petitioners are immediate relatives who share a common
interest in the land sought to be reconveyed and a common cause of action raising
the same arguments in support thereof. There was sufficient basis, therefore, for
Domingo Hernandez, Jr. to speak for and in behalf of his co-petitioners when he
certified that they had not filed any action or claim in another court or tribunal
involving the same issues. Thus, the Verification/Certification that Hernandez, Jr.
executed constitutes substantial compliance under the Rules. [Emphasis supplied]
The same leniency was accorded to the petitioner in the case of Oldarico S. Traveno v. Bobongon
Banana Growers Multi-Purpose Cooperative,[15] where it was stated:
The same leniency was applied by the Court in Cavile v. Heirs of Cavile,
because the lone petitioner who executed the certification of non-forum shopping
was a relative and co-owner of the other petitioners with whom he shares a
common interest. x x x[16]
Considering the above circumstances, the Court does not see any similarity at all in the case at
bench to compel itself to relax the requirement of strict compliance with the rule regarding the
certification against forum shopping.
At any rate, the Court cannot accommodate the petitioners request to re-examine the testimony of
Malcaba in the transcript of stenographic notes of the April 25, 1999 hearing concerning his alleged
testimonial proof of damages for obvious reasons.
Primarily, Section 1, Rule 45 of the Rules of Court categorically states that the petition filed shall
raise only questions of law, which must be distinctly set forth. A question of law arises when there is doubt
as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises as
to the truth or falsity of the alleged facts.For a question to be one of law, the same must not involve an
examination of the probative value of the evidence presented by the litigants or any of them. The
resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once
it is clear that the issue invites a review of the evidence presented, the question posed is one of fact.[17]
In this case, the petition clearly raises a factual issue. As correctly argued by PNB, the substantive
issue of whether or not the petitioners are entitled to moral and exemplary damages as well as attorneys
fees is a factual issue which is beyond the province of a petition for review on certiorari.
Secondly, even if the Court glosses over the technical defects, the petition for relief cannot be
granted. A perusal of the Petition for Relief of Judgment discloses that there is no fact constituting fraud,
accident, mistake or excusable negligence which are the grounds therefor. From the petition itself, it
appears that the petitioners counsel had a copy of the transcript of stenographic notes which was in his
cabinet all along and only discovered it when he was disposing old and terminated cases.[18] If he was only
attentive to his records, he could have filed a motion for reconsideration or a notice of appeal in behalf
of the petitioners.
WHEREFORE, the petition is DENIED.
SO ORDERED.
FIRST DIVISION
CEFERINA ARGALLON-JOCSON G.R. No. 162836
and RODOLFO TUISING,
Petitioners, Present:
PUNO, C.J., Chairperson,

- versus - CARPIO,
CORONA,
COURT OF APPEALS, LEONARDO-DE CASTRO, and
HON. BONIFACIO T. ONG, in his capacity as BERSAMIN, JJ.
the acting Presiding Judge of the Regional Trial
Court of Roxas, Isabela, Branch 23, MARIA
CRISTINA FERTILIZER CORP., and
MARCELO STEEL CORP.,
Respondents. Promulgated:
July 30, 2009
x--------------------------------------------------x
DECISION
CARPIO, J.:
The Case
This is a petition for review[1] of the Decision[2] dated 16 January 2004 and the Resolution dated 25 March
2004 of the Court of Appeals in CA-G.R. SP No. 79179. The Court of Appeals affirmed the Order dated
14 April 2003 of the Regional Trial Court of Roxas, Isabela, Branch 23 (trial court), in Civil Case No. Br.
23-377.
The Facts
On 10 August 1992, petitioner Ceferina Argallon-Jocson (Jocson) filed a complaint for Reconveyance and
Damages against Marcelo Steel Corporation and Maria Cristina Fertilizer Corporation (MCFC), which were
represented by Jose Marcelo as president of both companies.
On 24 February 1999, the trial court rendered a decision, the dispositive portion of which reads:
AS A CONSEQUENCE OF ALL THE FOREGOING, judgment is hereby rendered in

favor of the plaintiff [Jocson] and against the defendants [Marcelo Steel Corporation and
MCFC]: (1) Ordering the defendants to pay the plaintiff the balance of P2,004,810.42, with
legal interest from 1976 up to the present; (2) attorneys fees in the amount of P20,000.00;
and (3) to pay the costs.[3]
Marcelo Steel Corporation and MCFC (private respondents) appealed to the Court of Appeals, which
affirmed the trial courts decision. Private respondents did not appeal the Court of Appeals decision, which
became final and executory. Jocson then filed a Motion for Issuance of a Writ of Execution. On 9 December
2002, the trial court issued an order for the issuance of a writ of execution in accordance with the tenor of
the decision.
On 20 December 2002, a Writ of Execution[4] (writ) was issued to the Sheriff of the Office of the Clerk of
Court of Manila, commanding the Sheriff to implement the writ upon private respondents in accordance
with the tenor of the decision. The writ was indorsed to Sheriffs Levy Duka, Luis Alina, Andreil Garcia,
and Nathaniel Abaya, who levied upon the properties of Marcelo Steel Corporation in full satisfaction of
the judgment debt. The execution sale was then scheduled on 17 February 2003. On 14 February 2003,
Midas International Development Corporation (Midas Corp.) filed a third-party claim, alleging that some
of the levied properties were previously mortgaged to Midas Corp. The execution sale was postponed to 21
February 2003. On 20 February 2003, Jocson posted a P36 million indemnity bond[5] so that the levied
properties would not be released to claimant Midas Corp. The Sheriffs then proceeded with the execution
sale on 21 February 2003 and sold the properties of Marcelo Steel Corporation for the full satisfaction of
the judgment against private respondents. A certificate of sale[6] was issued to petitioner Rodolfo Tuising
(Tuising), who was the highest bidder at the auction sale for P9.9 million.
On 28 February 2003, Jocson filed with the trial court a Very Urgent Ex-Parte Motion for Issuance of a
Break-Open Order and Petition for Contempt of Court.[7] On 3 March 2003, Marcelo Steel Corporation
filed an Extremely Urgent Omnibus Motion,[8] praying for the annulment of the execution sale and for the
issuance of an order directing the Sheriffs not to deliver the properties sold to Tuising pending resolution
of Marcelo Steel Corporations motion. Marcelo Steel Corporation alleged that its obligation was merely
joint with MCFC and that the total price of the properties sold on execution was unconscionably inadequate.
On 14 April 2003, the trial court issued an order, the dispositive portion of which reads:
WHEREFORE, premises considered, the execution sale of the properties of the defendant
Marcelo Steel Corporation, namely: Seven (7) dilapidated warehouses, detachable metal
structural steel with scattered machineries, metal scraps, metal G.I. Pipes, wires and post,
held on February 21, 2003, is hereby declared null and void and the Certificate of Sale
dated February 21, 2003 issued pursuant thereto is hereby set aside and cancelled.
The motion for the issuance of a break-open order is hereby denied for lack of merit and basis.[9]
Jocson moved for reconsideration of the trial courts order, claiming that the nature of the obligation to pay
the balance of the purchase price was solidary. Tuising filed a Motion for Intervention with Leave of Court
with Motion for Reconsideration and Entry of Appearance. On the other hand, Marcelo Steel Corporation
filed, on 7 May 2003, a Manifestation and Motion on Satisfaction of Judgment, depositing with the trial
court a Managers Check in the amount of P4,260,198.11 representing full satisfaction of Marcelo Steel
Corporations obligation to Jocson. On 14 July 2003, the trial court denied Jocsons motion for
reconsideration and Tuisings motion for intervention and reconsideration, and granted Marcelo Steel
Corporations prayer for entry of satisfaction of judgment on its behalf.[10]
On 18 August 2003, Jocson filed with the trial court a Notice of Appeal, which she later withdrew on 4
September 2003, and in lieu thereof, petitioners Jocson and Tuising filed a Petition for Certiorari with the
Court of Appeals.[11] The Court of Appeals dismissed the petition for lack of merit. Jocson and Tuising filed
a motion for reconsideration,[12]which the Court of Appeals denied on 25 March 2004. Hence, this petition.
Meanwhile, on 23 February 2004, Jocson filed with the trial court a Motion for Issuance of Alias Writ of
Execution to implement the decision as against MCFC, stating that in view of the Court of Appeals decision,
there is a need to execute the decision as against the other defendant MCFC.[13]
The Trial Courts Ruling
In its Order dated 14 April 2003, the trial court ruled that the liability of Marcelo Steel Corporation was
limited to its proportional share in the entire money judgment. Considering that the dispositive portion of
the Decision dated 24 February 1999 in this case did not state that the obligation of private respondents was
solidary, then their obligation was merely joint. Citing the case of PH Credit Corporation v. Court of
Appeals,[14] the trial court held that being made to pay for an obligation in its entirety when ones liability is
merely for a portion is a sufficient ground to contest an execution sale. It would be the height of inequity if
we allow judgment obligors to shoulder entire monetary judgments when their legal liabilities are limited
only to their proportionate shares in the entire obligation.
The Court of Appeals Ruling
The Court of Appeals held that in consonance with Section 1, Rule 65 of the Rules of Civil
Procedure,[15] certiorari is not a substitute for lost appeal. Moreover, the Court of Appeals found that
the assigned issues were factual issues not proper in a petition for certiorari, which is limited to the
issues of jurisdiction and grave abuse of discretion.
The Court of Appeals found no grave abuse of discretion on the part of the respondent judge. On the merits
of the case, the Court of Appeals held that the obligation of private respondents to Jocson was merely joint.
The Court of Appeals noted that the trial courts Decision dated 24 February 1999 was silent as to the nature
of the liability. Solidary obligations are not presumed in the absence of an express determination thereof in
the judgment. When the judgment does not provide that the defendants are liable to pay jointly and severally
a certain amount of money, none of them may be compelled to satisfy in full said judgment.
The Court of Appeals found that the Sheriffs disregarded the trial courts 24 February 1999 Decision, and
deviated from the trial courts Order dated 9 December 2002 and the writ of execution dated 20 December
2002, which directed them to execute the writ in accordance with the tenor of the decision.
The Issues
Petitioners contend that:
1. THE HONORABLE COURT OF APPEALS ERRED IN DECIDING THAT

PETITIONERS WITHDRAWAL OF THEIR NOTICE OF APPEAL AND
SUBSTITUTING IT BY PETITION FOR CERTIORARI IS
PROCEDURALLY IMPERMISSIBLE.
2. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECIDING

THAT THE RESPONDENT JUDGE GRAVELY ABUSED HIS
DISCRETION WHEN HE DECLARED THE OBLIGATION OF THE
DEFENDANTS IN CIVIL CASE NO. 23-377 AS JOINT AND NOT
SOLIDARY.
3. THE HONORABLE COURT OF APPEALS ERRED IN [NOT] DECIDING

DISCRETION IN DENYING THE MOTION FOR A BREAK-OPEN AND
DECLARING THE EXECUTION SALE CONDUCTED ON FEBRUARY
21, 2003 NULL AND VOID AND THE CERTIFICATE OF SALE
AWARDED TO PETITIONER TUISING CANCELLED.

DISCRETION IN GRANTING THE PRAYER FOR SATISFACTION OF
JUDGMENT DESPITE RECEIPT OF PETITIONER JOCSON OF THE
PROCEEDS OF THE SALE AS EVIDENCED BY THE
ACKNOWLEDGMENT RECEIPT.

DISCRETION IN DENYING THE MOTION FOR INTERVENTION AND
IN NOT CONSIDERING THE SAME AS PRO INTERESSE SUO.[16]
The Ruling of the Court
We find the petition without merit.

At the outset, the Court notes that the petition supposedly filed by petitioners Jocson and Tuising was not
signed by Jocsons counsel. It was Tuisings counsel who signed in behalf of Jocsons counsel.
Tuisings counsel had no authority to sign the petition in behalf of Jocson. The records are bereft of any
proof that Jocson ever authorized Tuisings counsel to be her counsel or to act in her behalf. Under Section
3, Rule 7 of the Rules of Civil Procedure,[17] every pleading must be signed by the party or counsel
representing him, otherwise the pleading produces no legal effect.
Furthermore, only Tuising signed the Verification and Certification for Non-Forum Shopping. Jocson did
not sign the Verification and Certification. Section 1, Rule 45 of the Rules of Civil Procedure requires the
petition for review on certiorari to be verified.[18] A pleading required to be verified which lacks proper
verification shall be treated as an unsigned pleading.[19] Although Tuising belatedly filed on 24 September
2004 a Special Power of Attorney allegedly signed by Jocson and authorizing Tuising to file the petition
for review and to verify and to certify the petition, no explanation was given by Tuising why the Special
Power of Attorney was belatedly filed four months after the petition for review was filed on 12 May 2004.
The lack of a certification against forum shopping or a defective certification is generally not curable by its
subsequent submission or correction, unless there is a need to relax the rule under special circumstances or
for compelling reasons.[20] We find no compelling reason for a liberal application of the rules especially in
this case where the petitioner who did not sign the verification and certification for non-forum shopping
already filed with the trial court a Motion for Issuance of Alias Writ of Execution. By filing the Motion for
Issuance of Alias Writ of Execution, Jocson was in effect abiding by the Court of Appeals Decision dated
16 January 2004.
In Athena Computers, Inc. v. Reyes,[21] the Court held that the appellate court was correct in dismissing the
petition where the verification and certification for non-forum shopping were signed by only one of the two
petitioners. The Court held:
The verification of the petition and certification on non-forum shopping before the Court
of Appeals were signed only by Jimenez. There is no showing that he was authorized to
sign the same by Athena, his co-petitioner.
Section 4, Rule 7 of the Rules states that a pleading is verified by an affidavit that the affiant has read the
pleading and that the allegations therein are true and correct to his knowledge and belief. Consequently, the
verification should have been signed not only by Jimenez but also by Athenas duly authorized
representative.
In Docena v. Lapesura, we ruled that the certificate of non-forum shopping should be signed by all the
petitioners or plaintiffs in a case, and that the signing by only one of them is insufficient. The attestation on
non-forum shopping requires personal knowledge by the party executing the same, and the lone signing
petitioner cannot be presumed to have personal knowledge of the filing or non-filing by his co-petitioners
of any action or claim the same as similar to the current petition.[22]
In this case, the flaw is fatal considering that Jocson, the co-petitioner who did not sign the verification and
certification of non-forum shopping and whose counsel did not sign the petition, was the principal party in
the original case. Jocson was the plaintiff in the trial court who sought reconveyance of her properties while
her co-petitioner Tuising was not a party in the original case but was merely the highest bidder in the
execution sale which was declared void by the trial court.
The certification of non-forum shopping is rooted in the principle that a party-litigant should not be allowed
to pursue simultaneous remedies in different fora, such act being detrimental to an orderly judicial
procedure.[23] The petition, signed only by Tuisings counsel, conveniently failed to mention the fact that on
23 February 2004, prior to the filing of the petition, Jocson already filed with the trial court a Motion for
Issuance of Alias Writ of Execution which reads:
MOTION FOR ISSUANCE OF ALIAS WRIT OF EXECUTION
PLAINTIFF, by counsel, respectfully states:
1. The Court of Appeals had ruled finally that the DECISION can be implemented only as against defendant
Marcelo Steel Corporation and the RTC Sheriff of Manila, in levying the properties of the two defendant
corporations, violated the dispositive portion of the decision because there is no showing that their
liability is solidary. (CA-G.R. SP-No. 79179);
2. There is need, therefore, to execute the decision as against the other defendant MARIA CRISTINA
FERTILIZER CORPORATION.
WHEREFORE, premises considered, it is respectfully prayed that an ALIAS WRIT OF
EXECUTION be issued to implement the decision as against defendant MARIA
CRISTINA FERTILIZER CORPORATION.[24]
Clearly, such an action is incompatible with this petition for review. Even at the appellate courts level, the
Motion for Reconsideration[25] supposedly filed by petitioners Jocson and Tuising on 3 February 2004 was
also signed by Tuisings counsel only.[26] Jocsons filing of a Motion for Issuance of Alias Writ of
Execution to implement the decision as against MCFC clearly indicates that she already acceded to the
Court of Appeals Decision dated 16 January 2004 and no longer intended to move for its reconsideration,
much less appeal to this Court. Besides, a party should not be allowed to abuse and make a mockery of the
judicial process by pursuing simultaneous and incompatible remedies in different courts.
WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 16 January 2004 and the
Resolution dated 25 March 2004 of the Court of Appeals in CA-G.R. SP No. 79179.
SO ORDERED.
FIRST DIVISION
MARANAW HOTELS AND G.R. No. 149660
RESORT CORP.,
Petitioner,
Present:
PUNO, C.J., Chairperson,
- versus - CARPIO,
CORONA,
AZCUNA, and
LEONARDO-DE CASTRO, JJ.
COURT OF APPEALS, SHERYL
OABEL AND MANILA Promulgated:
RESOURCE DEVELOPMENT
CORP.,
Respondents. January 20, 2009

x-------------------------------------------------x
DECISION
PUNO, C.J.:
Before the Court is a petition for review on certiorari assailing a resolution issued by the Court of
Appeals. The resolution denied the petition for review filed by petitioner Maranaw Hotels and Resort
Corp.
The present proceedings emanate from a complaint for regularization, subsequently converted
into one for illegal dismissal, filed before Labor Arbiter Madjayran H. Ajan by private respondent Sheryl
Oabel.
It appears that private respondent Oabel was initially hired by petitioner as an extra beverage
attendant on April 24, 1995. This lasted until February 7, 1997.[1]Respondent worked in Century Park
Hotel, an establishment owned by the petitioner.
On September 16, 1996,[2] petitioner contracted with Manila Resource Development

[3]
Corporation. Subsequently, private respondent Oabel was transferred to MANRED, with the latter
deporting itself as her employer.[4] MANRED has intervened at all stages of these proceedings and has
consistently claimed to be the employer of private respondent Oabel. For the duration of her
employment, private respondent Oabel performed the following functions:
Secretary, Public Relations Department: February 10, 1997 March 6, 1997
Gift Shop Attendant: April 7, 1997 April 21, 1997
Waitress: April 22, 1997 May 20, 1997
Shop Attendant: May 21, 1997 July 30, 1998[5]

On July 20, 1998, private respondent filed before the Labor Arbiter a petition for
regularization of employment against the petitioner. On August 1, 1998, however, private respondent
Oabel was dismissed from employment.[6] Respondent converted her petition for regularization into
a complaint for illegal dismissal.
Labor Arbiter Madjayran H. Ajan rendered a decision on July 13, 1999, dismissing the
complaint against the petitioner. The decision held:
While complainant alleged that she has been working with the respondent hotel
in different department (sic) of the latter on (sic) various capacities (although not all
departments are part and parcel of the hotels), complainant never disputed the fact that
her work with the same were on a per function basis or on a need basis co-terminus with
the function she was hired for.Considering that complainant job (sic) with the respondent
hotel was on a per function basis or on a need basis, complainant could not even be
considered as casual employee or provisional employee. Respondent hotel consider (sic)
complainant, at most, a project employee which does not ripened (sic) into regular
employee (sic).[7]
Private respondent appealed before the National Labor Relations Commission (NLRC). The
NLRC reversed the ruling of the Labor Arbiter and held that: (1) MANRED is a labor-only contractor,
and (2) private respondent was illegally dismissed.
Of the first holding, the NLRC observed that under the very terms of the service contract,
MANRED shall provide the petitioner not specific jobs or services but personnel and that MANRED
had insufficient capitalization and was not sufficiently equipped to provide specific jobs.[8] The NLRC
likewise observed that the activities performed by the private respondent were directly related to and
usually necessary or desirable in the business of the petitioner.[9]
With respect to the termination of private respondents employment, the NLRC held that it
was not effected for a valid or just cause and was therefore illegal. The dispositive portion of the ruling
reads thus:
WHEREFORE, the decision appealed from is hereby REVERSED. xxxx Respondents

Century Park Hotel and Manila Resource Development Corporation are hereby declared
jointly and severally liable for the following awards in favor of complainant: 1) her full
backwages and benefits from August 1, 1998 up to the date of her actual reinstatement;
2) her salary differentials, share in the service charges, service incentive leave pay and
13th month pay from July 20, 1995 to July 31, 1998.
SO ORDERED.[10]
Petitioner subsequently appealed before the Court of Appeals. In a resolution, the appellate
court dismissed the petition on account of the failure of the petitioner to append the board resolution
authorizing the counsel for petitioner to file the petition before the Court of Appeals. The Court of
Appeals held:
After a careful perusal of the records of the case, We resolve to DISMISS the
present petition on the ground of non-compliance with the rule on certification against
forum shopping taking into account that the aforesaid certification was subscribed and
verified by the Personnel Director of petitioner corporation without attaching thereto his
authority to do so for and in behalf of petitioner corporation per board resolution or special
power of attorney executed by the latter.[11]
Petitioner duly filed its motion for reconsideration which was denied by the Court of Appeals in a
resolution dated August 30, 2001.[12]
In the present petition for review, the petitioner invokes substantial justice as justification for a reversal of
the resolution of the Court of Appeals.[13] Petitioner likewise contends that the filing of a motion for
reconsideration with the certificate of non-forum shopping attached constitutes substantial compliance with
the requirement.[14]
There is no merit to the petition.
Well-settled is the rule that the certificate of non-forum shopping is a mandatory requirement. Substantial
compliance applies only with respect to the contents of the certificate but not as to its presence in the
pleading wherein it is required.
Petitioners contention that the filing of a motion for reconsideration with an appended certificate of non
forum-shopping suffices to cure the defect in the pleading is absolutely specious. It negates the very purpose
for which the certification against forum shopping is required: to inform the Court of the pendency of any
other case which may present similar issues and involve similar parties as the one before it. The requirement
applies to both natural and juridical persons.
Petitioner relies upon this Courts ruling in Digital Microwave Corp. v. Court of Appeals[15] to show that
its Personnel Director has been duly authorized to sign pleadings for and in behalf of the petitioner.
Petitioner, however, has taken the ruling in Digital Microwave out of context. The portion of the ruling
in Digital Microwave upon which petitioner relies was in response to the issue of impossibility of
compliance by juridical persons with the requirements of Circular 28-91.[16] The Courts identification of
duly authorized officers or directors as the proper signatories of a certificate of non forum-shopping was in
response to that issue. The ruling does not, however, ipso facto clothe a corporate officer or director with
authority to execute a certificate of non-forum shopping by virtue of the formers position alone.
Any doubt on the matter has been resolved by the Courts ruling in BPI Leasing Corp. v. Court of
Appeals[17] where this Court emphasized that the lawyer acting for the corporation must be specifically
authorized to sign pleadings for the corporation.[18] Specific authorization, the Court held, could only come
in the form of a board resolutionissued by the Board of Directors that specifically authorizes the counsel
to institute the petition and execute the certification, to make his actions binding on his principal, i.e., the
corporation.[19]
This Court has not wavered in stressing the need for strict adherence to procedural requirements.
The rules of procedure exist to ensure the orderly administration of justice. They are not to be trifled with
lightly.
For this reason alone, the petition must already be dismissed. However, even if this grave
procedural infirmity is set aside, the petition must still fail. In the interest of averting further litigation
arising from the present controversy, and in light of the respective positions asserted by the parties in the
pleadings and other memoranda filed before this Court, the Court now proceeds to resolve the case on the
merits.
Petitioner posits that it has entered into a service agreement with intervenor MANRED. The latter,
in turn, maintains that private respondent Oabel is its employee and subsequently holds itself out as the
employer and offers the reinstatement of private respondent.
Notably, private respondents purported employment with MANRED commenced only in 1996,
way after she was hired by the petitioner as extra beverage attendant on April 24, 1995. There is thus much
credence in the private respondents claim that the service agreement executed between the petitioner and
MANRED is a mere ploy to circumvent the law on employment, in particular that which pertains on
regularization.
In this regard, it has not escaped the notice of the Court that the operations of the hotel itself do not
cease with the end of each event or function and that there is an ever present need for individuals to perform
certain tasks necessary in the petitioners business. Thus, although the tasks themselves may vary, the need
for sufficient manpower to carry them out does not. In any event, as borne out by the findings of the NLRC,
the petitioner determines the nature of the tasks to be performed by the private respondent, in the process
exercising control.
This being so, the Court finds no difficulty in sustaining the finding of the NLRC that MANRED
is a labor-only contractor.[20] Concordantly, the real employer of private respondent Oabel is the petitioner.
It appears further that private respondent has already rendered more than one year of service to the
petitioner, for the period 1995-1998, for which she must already be considered a regular employee, pursuant
to Article 280 of the Labor Code:
Art. 280. Regular and casual employment. The provisions of written agreement
to the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade of
the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is seasonal in
nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That any employee who has rendered at least one
year of service, whether such service is continuous or broken, shall be considered a
regular employee with respect to the activity in which he is employed and his
employment shall continue while such activity exists. (Emphasis supplied)
IN VIEW WHEREOF, the present petition is DENIED. The resolution of the Court of Appeals
dated June 15, 2001 is affirmed.
Costs against petitioner.
SO ORDERED.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No.197530 July 9, 2014
ABOITIZ EQUITY VENTURES, INC., Petitioner,

vs.
VICTOR S. CHIONGBIAN, BENJAMIN D. GOTHONG, and CARLOS A. GOTHONG LINES,
INC. (CAGLI),Respondents.
DECISION
LEONEN, J.:
This is a petition for review on certiorari with an application for the issuance of a temporary
restraining order and/or writ of preliminary injunction under Rule 45 of the Rules of Court. This
petition prays that the assailed orders dated May 5, 20111 and June 24, 20112 of the Regional
Trial Court, Cebu City, Branch 10 in Civil Case No. CEB-37004 be nullified and set aside and
that judgment be rendered dismissing with prejudice the complaint3 dated July 20, 2010 filed by
respondents Carlos A. Gothong Lines, Inc. ("CAGLI") and Benjamin D. Gothong. On January 8,
1996, Aboitiz Shipping Corporation ("ASC"), principally owned by the Aboitiz family, CAGLI,
principally owned by the Gothong family, and William Lines, Inc.("WLI"), principally owned by
the Chiongbian family, entered into anagreement (the "Agreement"),4 whereby ASC and CAGLI
would transfer their shipping assets to WLI in exchange for WLI’s shares of stock. 5 WLI, in turn,
would run their merged shipping businesses and, henceforth, be known as WG&A, Inc.
("WG&A").6
Sec. 11.06 of the Agreement required all disputes arising out of or in connection with the
Agreement tobe settled by arbitration:
11.06 Arbitration
All disputes arising out of or in connection with this Agreement including any issue as to this
Agreement’s validity or enforceability, which cannot be settled amicably among the parties, shall
be finally settled by arbitration in accordance with the Arbitration Law (Republic Act No. 876) by
an arbitration tribunal composed of four (4) arbitrators. Each of the parties shall appoint one (1)
arbitrator, the three (3) to appoint the fourth arbitrator who shall act as Chairman. Any award by
the arbitration tribunal shall be final and binding upon the parties and shall be enforced by
judgment of the Courts of Cebu or Metro Manila.7
Among the attachments to the Agreement was Annex SL-V.8 This was a letter dated January
8,1996, from WLI, through its President (herein respondent) Victor S. Chiongbian addressed to
CAGLI, through its Chief Executive Officer Bob D. Gothong and Executive Vice President for
Engineering (herein respondent) Benjamin D. Gothong. On its second page, Annex SL-V bore
the signatures ofBob D. Gothong and respondent Benjamin D. Gothong by way of a conforme
on behalf of CAGLI.
Annex SL-V confirmed WLI’s commitment to acquire certain inventories of CAGLI. These
inventories would havea total aggregate value of, at most, ₱400 million, "as determinedafter a
special examination of the [i]nventories."9Annex SL-V also specificallystated that such
acquisition was "pursuant to the Agreement."10
The entirety of Annex SL-V’s substantive portion reads:
We refer to the Agreement dated January 8, 1996 (the "Agreement") among William Lines, Inc.
("Company C"), Aboitiz Shipping Corporation ("Company A") and Carlos A. Gothong Lines, Inc.
("Company B") regarding the transfer of various assets of Company A and Company B to
Company C in exchangefor shares of capital stock of Company C. Terms defined in the
Agreement are used herein as therein defined.
This will confirm our commitment to acquire certain spare parts and materials inventory (the
"Inventories") of Company B pursuant to the Agreement.
The total aggregate value of the Inventories to be acquired shall not exceed ₱400 Million as
determined after a special examination of the Inventories as performed by SGV & Co. to be
completed on or before the Closing Date under the agreed procedures determined by the
parties.
Subject to documentation acceptable to both parties, the Inventories to be acquired shall be

determined not later than thirty (30) days after the Closing Date and the payments shall be
made in equal quarterly instalments over a period of two years with the first payment due on
March 31, 1996.11
Pursuant to Annex SL-V, inventories were transferred from CAGLI to WLI. These inventories
were assessed to have a value of 514 million, which was later adjusted to 558.89 million.12 Of
the total amount of 558.89 million, "CAGLIwas paid the amount of 400 Million." 13 In addition to
the payment of 400 million,petitioner Aboitiz Equity Ventures ("AEV") noted that WG&A shares
with a book value of 38.5 million were transferred to CAGLI.14
As there was still a balance, in2001, CAGLI sent WG&A (the renamed WLI) demand letters "for
the return of or the payment for the excess [i]nventories."15 AEV alleged that to satisfy CAGLI’s
demand, WLI/WG&A returned inventories amounting to 120.04 million.16 As proof of this, AEV
attached copies of delivery receipts signed by CAGLI’s representatives as Annex "K" of the
present petition.17
Sometime in 2002, the Chiongbian and Gothong families decided to leave the WG&A enterprise
and sell their interest in WG&A to the Aboitiz family. As such, a share purchase
agreement18 ("SPA") was entered into by petitioner AEV and the respective shareholders
groups of the Chiongbians and Gothongs. In the SPA, AEV agreedto purchase the Chiongbian
group's 40.61% share and the Gothong group's 20.66% share in WG&A’s issued and
outstanding stock.19
Section 6.5 of the SPA provided for arbitration as the mode of settling any dispute arising from
the SPA. It reads:
6.5 Arbitration. Should there be any dispute arising between the parties relating to this
Agreement including the interpretation or performance hereof which cannot beresolved by
agreement of the parties within fifteen (15) days after written notice by a party to another, such
matter shall then be finally settled by arbitration in Cebu City in accordance with the Philippine
Arbitration Law. Substantive aspects of the dispute shall be settled by applying the laws of the
Philippines. The decision of the arbitrators shall be final and binding upon the parties hereto and
the expense of arbitration (including without limitation the award of attorney’s fees to the
prevailing party) shall be paid as the arbitrators shall determine.20
Section 6.8 of the SPA further provided that the Agreement (of January 8, 1996) shall be
deemed terminated except its Annex SL-V. It reads:
6.8 Termination of Shareholders Agreement. The Buyer and the Sellers hereby agree that on
Closing, the Agreement among Aboitiz Shipping Corporation, Carlos A. Gothong Lines, Inc. and
William Lines, Inc. dated January 8, 1996, as the same has been amended from time to time
(the "Shareholders’ Agreement") shall all be considered terminated, except with respect to such
rights and obligations that the parties to the Shareholders’ Agreement have under a letter dated
January 8, 1996 (otherwise known as "SL-V") from William Lines, Inc. to Carlos A. Gothong
Lines, Inc. regarding certain spare parts and materials inventory, which rights and obligations
shall survive through the date prescribed by the applicable statute of limitations.21
As part of the SPA, the parties entered into an Escrow Agreement22 whereby ING Bank N.V.-
Manila Branch was to take custody of the shares subject of the SPA.23 Section 14.7 of the
Escrow Agreement provided that all disputes arising from it shall be settled through arbitration:
14.7 All disputes, controversies or differences which may arise by and among the parties hereto
out of, or in relation to, or in connection with this Agreement, orfor the breach thereof shall be
finally settled by arbitration in Cebu City in accordance with the Philippine Arbitration Law. The
award rendered by the arbitrator(s) shall be final and binding upon the parties concerned.
However, notwithstanding the foregoing provision, the parties reserve the right to seek redress
before the regular court and avail of any provisional remedies in the event of any misconduct,
negligence, fraud or tortuous acts which arise from any extra-contractual conduct that affects
the ability ofa party to comply with his obligations and responsibilities under this Agreement. 24
As a result of the SPA, AEV became a stockholder of WG&A. Subsequently, WG&A was
renamed Aboitiz Transport Shipping Corporation ("ATSC").25
Petitioner AEV alleged that in2008, CAGLI resumed making demands despite having already
received 120.04 million worth of excess inventories.26 CAGLI initially made its demand to ATSC
(the renamed WLI/WG&A) through a letter27 dated February 14, 2008. As alleged by AEV,
however, CAGLI subsequently resorted to a "shotgun approach"28 and directed its subsequent
demand letters to AEV29 as well as to FCLC30 (a company related to respondent Chiongbian).
AEV responded to CAGLI’s demands through several letters.31 In these letters, AEV rebuffed
CAGLI's demands noting that: (1) CAGLI already received the excess inventories;(2) it was not
a party to CAGLI's claim as it had a personality distinct from WLI/WG&A/ATSC; and (3) CAGLI's
claim was already barred by prescription.
In a reply-letter32 dated May 5, 2008, CAGLI claimed that it was unaware of the delivery to it of
the excess inventories and asked for copies of the corresponding delivery receipts.33 CAGLI
threatened that unless it received proof of payment or return ofexcess inventories having been
made on or before March 31, 1996, it would pursue arbitration.34
In letters written for AEV (the first dated October 16, 2008 by Aboitiz and Company, Inc.’s
Associate General Counsel Maria Cristina G. Gabutina35 and the second dated October 27,
2008 by SyCip Salazar Hernandez and Gatmaitan36), it was noted that the excess inventories
were delivered to GT Ferry Warehouse.37 Attached to these letters were a listing and/or
samples38 of the corresponding delivery receipts. In these letters it was also noted that the
amount of excess inventories delivered (120.04 million) was actually in excess of the value of
the supposedly unreturned inventories (119.89 million).39 Thus, it was pointed out that it was
CAGLI which was liable to return the difference between 120.04 million and 119.89 million.40 Its
claims not having been satisfied, CAGLI filed on November 6, 2008 the first of two applications
for arbitration ("first complaint")41 against respondent Chiongbian, ATSC, ASC, and petitioner
AEV, before the Cebu City Regional Trial Court, Branch 20. The first complaint was docketed as
Civil Case No. CEB-34951.
In response, AEV filed a motion to dismiss42 dated February 5, 2009. AEV argued that CAGLI
failed to state a cause of action as there was no agreement to arbitrate between CAGLI and
AEV.43 Specifically, AEV pointed out that: (1) AEV was never a party to the January 8, 1996
Agreement or to its Annex SL-V;44 (2) while AEV is a party to the SPA and Escrow Agreement,
CAGLI's claim had no connection to either agreement; (3) the unsigned and unexecuted SPA
attached to the complaint cannot be a source of any right to arbitrate;45 and (4) CAGLI did not
say how WLI/WG&A/ATSC's obligation to return the excess inventories can be charged to AEV.
On December 4, 2009, the Cebu City Regional Trial Court, Branch 20 issued an
order46 dismissing the first complaint with respect to AEV. It sustained AEV’s assertion that
there was no agreement binding AEV and CAGLI to arbitrate CAGLI’s claim.47 Whether by
motion for reconsideration, appeal or other means, CAGLI did not contest this dismissal.
On February 26, 2010, the Cebu CityRegional Trial Court, Branch 20 issued an order48 directing
the parties remaining in the first complaint (after the discharge of AEV) to proceed with
arbitration.
The February 26, 2010 order notwithstanding, CAGLI filed a notice of dismissal49 dated July 8,
2010, withdrawing the first complaint. In an order50 dated August 13, 2010, the Cebu City
Regional Trial Court, Branch 20 allowed this withdrawal.
ATSC (the renamed WLI/WG&A) filed a motion for reconsideration51 dated September 20, 2010
to the allowance of CAGLI's notice of dismissal. This motion was denied in an order52 dated
April 15, 2011.
On September 1, 2010, while the first complaint was still pending (n.b., it was only on April 15,
2011 that the Cebu City Regional Trial Court, Branch 20 denied ATSC’s motion for
reconsideration assailing the allowance of CAGLI’s notice of disallowance), CAGLI, now joined
by respondent Benjamin D. Gothong, filed a second application for arbitration ("second
complaint")53 before the Cebu City Regional Trial Court, Branch 10. The second complaint was
docketed as Civil Case No. CEB-37004 and was also in view of the return of the same excess
inventories subject of the first complaint.
On October 28, 2010, AEV filed a motion to dismiss54 the second complaint on the following
grounds:55 (1) forum shopping; (2) failure to state a cause of action; (3) res judicata; and (4) litis
pendentia.
In the first of the two (2) assailed orders dated May 5, 2011,56 the Cebu City Regional Trial
Court, Branch 10 denied AEV's motion to dismiss.
On the matter of litis pendentia, the Regional Trial Court, Branch 10 noted that the first
complaint was dismissed with respect to AEV on December 4, 2009, while the second complaint
was filed on September 1, 2010. As such, the first complaint was no longer pending at the time
of the filing of the second complaint.57 On the matter of res judicata, the trial court noted that the
dismissal without prejudice of the first complaint "[left] the parties free to litigate the matter in a
subsequent action, as though the dismiss[ed] action had not been commenced."58 It added that
since litis pendentia and res judicata did not exist, CAGLI could not be charged with forum
shopping.59 On the matter of an agreement to arbitrate, the Regional Trial Court, Branch 10
pointed to the SPA as "clearly express[ing] the intention of the parties to bring to arbitration
process all disputes, if amicable settlement fails."60 It further dismissed AEV’s claim that it was
not a party to the SPA, as "already touching on the merits of the case"61 and therefore beyond
its duty "to determine if they should proceed to arbitration or not."62
In the second assailed order63 dated June 24, 2011, the Cebu City Regional Trial Court, Branch
10 deniedAEV's motion for reconsideration.
Aggrieved, AEV filed the present petition.64 AEV asserts that the second complaint is barred by
res judicata and litis pendentia and that CAGLI engaged in blatant forum shopping.65 It insists
that it is not bound by an agreement to arbitrate with CAGLI and that, even assuming that it may
be required to arbitrate, it is being ordered to do so under terms that are "manifestly contrary to
the . . . agreements on which CAGLI based its demand for arbitration."66
For resolution are the following issues:

I. Whether the complaint in Civil Case No. CEB-37004 constitutes forum shopping and/or is
barred by res judicata and/or litis pendentia
II. Whether petitioner, Aboitiz Equity Ventures, Inc., is bound by an agreement to arbitrate with
Carlos A. Gothong Lines, Inc., with respect to the latter’s claims for unreturned inventories
delivered to William Lines, Inc./WG&A, Inc./Aboitiz Transport System Corporation
AEV availed of the wrong

remedy in seeking relief from
this court
Before addressing the specific mattersraised by the present petition, we emphasize that AEV is
in error inseeking relief from this court via a petition for review on certiorari under Rule45 of the
Rules of Court. As such, we are well in a position to dismiss the present petition outright.
Nevertheless, as the actions of the Cebu City Regional Trial Court, Branch 10 are tainted with
grave abuse of discretion amounting to lack or excess of jurisdiction, this court treats the
present Rule 45 petition as a Rule 65 petition and gives it due course.
A petition for review on certiorari under Rule 45 is a mode of appeal. This is eminently clear
from the very title and from the first section of Rule 45 (as amended by A.M. No. 07-7-12-SC):
Rule 45
APPEAL BY CERTIORARITO THE SUPREME COURT
SECTION 1. Filing of petition with Supreme Court. A party desiring to appeal by certiorarifrom a
judgment, final order or resolution of the Court of Appeals, the Sandiganbayan, the Court of Tax
Appeals, the Regional Trial Court or other courts, whenever authorized by law, may file with the
Supreme Court a verified petition for review on certiorari. The petition may include an
application for a writ of preliminary injunction or other provisional remedies and shall raise only
questions of law, which must be distinctly set forth. The petitioner may seek the same
provisional remedies by verified motion filed inthe same action or proceeding at any time during
its pendency. (Emphasis supplied)
Further, it is elementary that anappeal may only be taken from a judgment or final order that
completely disposes of the case.67 As such, no appeal may be taken from an interlocutory
order68 (i.e., "one which refers to something between the commencement and end of the suit
which decides some point or matter but it is not the final decision of the whole controversy"69).
As explained in Sime Darby Employees Association v. NLRC,70 "[a]n interlocutory order is not
appealable until after the rendition of the judgment on the merits for a contrary rule would delay
the administration of justice and unduly burden the courts."71
An order denying a motion to dismiss is interlocutory in character. Hence, it may not be the
subject of an appeal. The interlocutory nature of an order denying a motion to dismiss and the
remedies for assailing such an order were discussed in Douglas Lu Ym v. Nabua:72
An order denying a motion to dismiss is an interlocutory order which neither terminates nor
finally disposes of a case, as it leaves something to be done by the court before the case is
finally decided on the merits. As such, the general rule is that the denial of a motion to dismiss
cannot be questioned in a special civil action for certiorariwhich is a remedy designed to correct
errors ofjurisdiction and not errors of judgment. Neither can a denial of a motion todismiss be
the subject of an appeal unless and until a final judgment or order is rendered.In order to justify
the grant of the extraordinary remedy of certiorari, the denial of the motion to dismiss must have
been tainted with grave abuse of discretion amounting to lack or excess of
jurisdiction.73 (Emphasis supplied)
Thus, where a motion to dismiss is denied, the proper recourse is for the movant to file an
answer.74 Nevertheless, where the order denying the motion to dismiss is tainted with grave
abuse of discretion amounting to lack or excess of jurisdiction, the movant may assail such
order via a Rule 65 (i.e., certiorari, prohibition, and/or mandamus) petition. This is expressly
recognized in the third paragraph of Rule 41, Section 1 of the Rules of Court.75 Following the
enumeration in the second paragraph of Rule 41, Section 1 of the instances when an appeal
may not be taken, the third paragraph specifies that "[in] any of the foregoing circumstances, the
aggrieved party may file an appropriate special civil action as provided in Rule 65."76
Per these rules, AEV is in error for having filed what it itself calls a "Petition for Review on
Certiorari [Appeal by Certiorari under Rule 45 of the Rules of Court]."77 Since AEV availed of the
improper remedy, this court is well in a position to dismiss the present petition.
Nevertheless, there have been instances when a petition for review on certiorari under Rule 45
was treated by this court as a petition for certiorari under Rule 65. As explained in China
Banking Corporation v. Asian Construction and Development Corporation:78
[I]n many instances, the Court has treated a petition for review on certiorariunder Rule 45 as a
petition for certiorari under Rule 65 of the Rules of Court, such as in cases where the subject of
the recourse was one of jurisdiction, or the act complained of was perpetrated by a court with
grave abuse of discretion amounting to lack or excess of jurisdiction.79
In this case, the May 5, 2011 and June 24, 2011 orders of the Cebu City Regional Trial Court,
Branch 10 in Civil Case No. CEB-37004 are assailed for having denied AEV’s motion todismiss
despite: first, the second complaint having been filed in a manner constituting forum shopping;
second, the prior judgment on the merits made in Civil Case No. CEB-34951, thereby violating
the principle ofres judicata; and third, the (then) pendency of Civil Case No. CEB-34951 with
respect to the parties that, unlike AEV, were not discharged from the case, thereby violating the
principle of litis pendentia. The same orders are assailed for having allowed CAGLI’s application
for arbitration to continue despite supposedly clear and unmistakable evidence that AEV is not
bound by an agreement to arbitrate with CAGLI.
As such, the Cebu City, Regional Trial Court, Branch 10’s orders are assailed for having been
made with grave abuse of discretion amounting to lack or excess of jurisdiction in that the Cebu
City Regional Trial Court, Branch 10 chose to continue taking cognizance of the second
complaint, despite there being compelling reasons for its dismissal and the Cebu City, Regional
Trial Court Branch 20’s desistance. Conformably, we treat the present petition as a petition for
certiorari under Rule 65 of the Rules of Court and give it due course.
The complaint in Civil Case

No. CEB-37004 constitutes
forum shopping and is barred
by res judicata
The concept of and rationale against forum shopping were explained by this court in Top Rate
Construction & General Services, Inc. v. Paxton Development Corporation:80
FORUM SHOPPING is committed by a party who institutes two or more suits in different courts,
either simultaneously or successively, in order to ask the courts to rule on the same or related
causes or to grant the same or substantially the same reliefs, on the supposition that one or the
other court would make a favorabledisposition or increase a party's chances of obtaining a
favorable decision or action. It is an act of malpractice for it trifles with the courts, abuses their
processes, degrades the administration of justice and adds to the already congested court
dockets. What is critical is the vexation brought upon the courts and the litigants by a party who
asks different courts to rule on the same or related causes and grant the same or substantially
the same reliefs and in the process creates the possibility of conflicting decisions being
rendered by the different fora upon the same issues, regardless of whether the court in which
one of the suits was brought has no jurisdiction over the action.81
Equally settled is the test for determining forum shopping. As this court explained in Yap v.
Chua:82
To determine whether a party violated the rule against forum shopping, the most important
factor toask is whether the elements of litis pendentiaare present, or whether a final judgment in
one case will amount to res judicatain another; otherwise stated, the test for determining forum
shopping is whether in the two (or more) cases pending, there is identity of parties, rights or
causes of action, and reliefs sought.83
Litis pendentia "refers to that situation wherein another action is pending between the same
parties for the same cause ofaction, such that the second action becomes unnecessary and
vexatious."84 It requires the concurrence of three (3) requisites: "(1)the identity of parties, or at
least such as representing the same interests in both actions; (2) the identity of rights asserted
and relief prayed for,the relief being founded on the same facts; and (3) the identity of the two
cases such that judgment in one, regardless of which party issuccessful, would amount tores
judicatain the other."85
In turn, prior judgment or res judicata bars a subsequent case when the following requisites
concur: "(1) the former judgment is final; (2) it is rendered by a court having jurisdiction over the
subject matter and the parties; (3) it is a judgment or an order on the merits; (4) there is —
between the first and the second actions — identityof parties, of subject matter, and of causes
of action."86
Applying the cited concepts and requisites, we find that the complaint in Civil Case No. CEB-
37004 is barred byres judicata and constitutes forum shopping.
First, between the first and second complaints, there is identity of parties. The first complaint
was brought by CAGLI as the sole plaintiff against Victor S. Chiongbian, ATSC, and AEV as
defendants. In the second complaint, CAGLI was joined by Benjamin D. Gothong as (co-
)plaintiff. As to the defendants, ATSC was deleted while Chiongbian and AEV were retained.
While it is true that the parties to the first and second complaints are not absolutely identical,
this court has clarified that, for purposes of forum shopping, "[a]bsolute identity of parties is not
required [and that it] is enough that there is substantial identity of parties."87
Even as the second complaint alleges that Benjamin D. Gothong "is . . . suing in his personal
capacity,"88 Gothong failed to show any personal interest in the reliefs sought by the second
complaint. Ultimately, what is at stake in the second complaint is the extent to which CAGLI may
compel AEV and Chiongbian to arbitrate in order that CAGLI may then recover the value of its
alleged unreturned inventories. This claim for recovery is pursuant to the agreement evinced in
Annex SL-V. Annex SL-V was entered into by CAGLI and not by Benjamin D. Gothong. While it
is true that Benjamin D. Gothong, along with Bob D. Gothong, signed Annex SL-V, he did so
only in a representative, and not in a personal, capacity. As such, Benjamin D. Gothong cannot
claim any right that personally accrues to him on account of Annex SL-V. From this, it follows
that Benjamin D. Gothong is not a real party in interest — "one who stands to be benefitted or
injured by the judgment in the suit or the party entitled to the avails of the suit"89 — and that his
inclusion in the second complaint is an unnecessary superfluity.
Second, there is identity in subject matter and cause of action. There is identity in subject matter
as both complaints are applications for the same relief. There is identity in cause ofaction as
both complaints are grounded on the right to be paid for or to receive the value of excess
inventories (and the supposed corresponding breach thereof) as spelled out in Annex SL-V.
The first and second complaints are both applications for arbitration and are founded on the
same instrument — Annex SL-V. Moreover, the intended arbitrations in both complaintscater to
the sameultimate purpose, i.e., that CAGLI may recover the value of its supposedly unreturned
inventories earlier delivered to WLI/WG&A/ATSC.
In both complaints, the supposedpropriety of compelling the defendants to submit themselves to

arbitration are anchored on the same bases: (1) Section 6.8 of the SPA, which provides that the
January 8, 1996 Agreement shall be deemed terminatedbut that the rights and obligations
arising from Annex SL-V shall continue to subsist;90 (2) Section 6.5 of the SPA, which requires
arbitration as the mode for settling disputes relating to the SPA;91 and, (3) defendants’ refusal to
submit themselves to arbitration vis-a-vis Republic Act No. 876, which provides that "[a] party
aggrieved by the failure, neglect or refusal of another to perform under an agreement in writing
providing for arbitration may petition the court for an order directing that such arbitration proceed
in the manner provided for in such agreement."92
Both complaints also rely on the same factual averments:93
1. that ASC, CAGLI, and WLI entered into an agreement on January 8, 1996;
2. that under Annex SL-V of the Agreement, WLI/WG&A "committed to acquire certain
[inventories], the total aggregate value of which shall not exceed ₱400 Million";94
3. that after examination, it was ascertained that the value of the transferred inventories
exceeded ₱400 million;
4. that pursuant to Annex SL-V, WG&A paid CAGLI ₱400 million but that the former
failed to return or pay for spare parts representing a value in excess of ₱400 million;
5. "[t]hat on August 31, 2001, [CAGLI] wrote the WG&A through its AVP Materials
Management, Ms. Concepcion M. Magat, asking for the return of the excess spare
parts";95
6. that on September 5, 2001, WG&A’s Ms. Magat replied that the matter is beyond her
authority level and that she must elevate it to higher management;
7. that several communications demanding the return of the excess spare parts were
sent to WG&Abut these did not elicit any response; and
8. "[t]hat the issue of excess spare parts, was taken over by events, when on July 31,
2002,"96 the Chiongbians and Gothongs entered into an Escrow Agreement with AEV.
Third, the order dated December 4, 2009 of the Cebu City Regional Trial Court, Branch 20,
which dismissed the first complaint with respect to AEV, attained finality when CAGLI did not file
a motion for reconsideration, appealed, or, in any other manner, questioned the order.
Fourth, the parties did not dispute that the December 4, 2009 order was issued by a court
having jurisdiction over the subject matter and the parties. Specifically as to jurisdiction over the
parties,jurisdiction was acquired over CAGLI as plaintiff when it filed the first complaint and
sought relief from the Cebu City Regional Trial Court, Branch 20; jurisdiction over defendants
AEV, ATSC, and Victor S.Chiongbian was acquired with the service of summons upon them.
Fifth, the dismissal of the first complaint with respect to AEV was a judgment on the merits. As
explained in Cabreza, Jr. v. Cabreza:97
A judgment may be considered as one rendered on the merits "when it determines the rights
and liabilities of the parties based on the disclosed facts, irrespective of formal, technical or
dilatoryobjections"; or when the judgment is rendered "aftera determination of which party is
right, as distinguished from a judgment rendered upon some preliminary or formal or merely
technical point."98
Further, as this court clarified in Mendiola v. Court of Appeals,99 "[i]t is not necessary . . . that
there [be] a trial"100 in order that a judgment be considered as one on the merits.
Prior to issuing the December 4, 2009 order dismissing the first complaint with respect to AEV,
the Cebu City Regional Trial Court, Branch 20 allowed the parties the full opportunity to
establish the facts and to ventilate their arguments relevant to the complaint. Specifically, the
Cebu City Regional Trial Court, Branch 20 admitted: 1) AEV’s motion to dismiss;101 2) CAGLI’s
opposition to the motion to dismiss;102 3) AEV’s reply and opposition;103 4) CAGLI’s
rejoinder;104 and 5) AEV’s surrejoinder.105
Following these, the Cebu City Regional Trial Court, Branch 20 arrived at the following findings
and made a definitive determination that CAGLI had no right to compel AEV to subject itself to
arbitration with respect to CAGLI’s claims under Annex SL-V:
After going over carefully the contentions and arguments of both parties, the court has found
that no contract or document exists binding CAGLI and AEV to arbitrate the former’s claim. The
WLI Letter upon which the claim is based confirms only the commitment of William Lines, Inc.
(WLI) to purchase certain material inventories from CAGLI. It does not involve AEV. The court
has searched in vain for any agreement or document showing that said commitment was
passed on to and assumed by AEV. Such agreement or document, if one exists, being an
actionable document, should have been attached to the complaint. While the Agreement of
January 8, 1996 and the Share Purchase Agreement provide for arbitration of disputes, they
refer to disputes arising from or in connection with the Agreements themselves. No reference is
made, as included therein, to the aforesaid commitment of WLI or to any claim that CAGLI may
pursue based thereon or relative thereto. Section 6.8 of the Share Purchase Agreement, cited
by plaintiff CAGLI, does not incorporate therein, expressly or impliedly, the WLI commitment
above-mentioned. It only declares that the rights and obligations of the parties under the WLI
Letter shall survive even after the termination of the Shareholder’s Agreement. It does not speak
of arbitration. Finally, the complaint does not allege the existence of a contract obliging CAGLI
and AEV to arbitrate CAGLI’s claim under the WLI Letter. Consequently, there is no legal or
factual basis for the present complaint for application for arbitration.106 (Emphasis supplied)
In the assailed order dated May 5, 2011, the Cebu City Regional Trial Court, Branch 10 made
much of the Cebu City Regional Trial Court, Branch 20’s pronouncement in the latter’s
December 4, 2009 order that "the [first] complaint fails to state a cause of action."107 Based on
this, the Cebu City Regional Trial Court, Branch 10 concluded that the dismissal of the first
complaint was one made without prejudice, thereby "leav[ing] the parties free to litigate the
matter ina subsequent action, as though the dismissal [sic] action had not been commenced."108
The Cebu City Regional Trial Court, Branch 10 is in serious error. In holding that the second
complaint was not barred by res judicata, the Cebu City Regional Trial Court, Branch 10 ignored
established jurisprudence.
Referring to the earlier cases of Manalo v. Court of Appeals109 and Mendiola v. Court of
Appeals,110 this court emphasized in Luzon Development Bank v. Conquilla111 that dismissal for
failure to state a cause of action may very well be considered a judgment on the merits and,
thereby, operate as res judicata on a subsequent case:
[E]ven a dismissal on the ground of "failure to state a cause of action" may operate as res
judicata on a subsequent case involving the same parties, subject matter, and causes of action,
provided that the order of dismissalactually ruled on the issues raised.What appears to be
essential to a judgment on the merits is that it be a reasoned decision, which clearly states the
facts and the law on which it is based.112 (Emphasis supplied)
To reiterate, the Cebu City Regional Trial Court, Branch 20 made a definitive determination that
CAGLI had no right to compel AEV to subject itself to arbitrationvis-a-vis CAGLI’s claims under
Annex SL-V. This determination was arrived at after due consideration of the facts established
and the arguments advancedby the parties. Accordingly, the Cebu City Regional Trial Court,
Branch 20’s December 4, 2009 order constituted a judgment on the merits and operated as res
judicata on the second complaint.
In sum, the requisites for res judicata have been satisfied and the second complaint should,
thus, have been dismissed. From this, it follows that CAGLI committed an act of forum shopping
in filing the second complaint. CAGLI instituted two suits in two regional trial court branches,
albeit successively and not simultaneously. It asked both branches to rule on the exact same
cause and to grant the exact same relief. CAGLI did so after it had obtained an unfavorable
decision (at least with respect to AEV) from the Cebu City Regional Trial Court, Branch 20.
These circumstances afford the reasonable inference that the second complaint was filed in the
hopes of a more favorable ruling.
Notwithstanding our pronouncements sustaining AEV’s allegations that CAGLI engaged in

forum shopping and that the second complaint was barred by res judicata, we find that at the
time of the filing of the second complaint, AEV had already been discharged from the
proceedings relating to the first complaint. Thus, asbetween AEV and CAGLI, the first complaint
was no longer pending at the time of the filing of the second complaint. Accordingly, the second
complaint could not have been barred by litis pendentia.
There is no agreement
binding AEV to arbitrate
with CAGLI on the latter’s
claims arising from Annex SL-V
For arbitration to be proper, it is imperative thatit be grounded on an agreement between the

parties. This was adequately explained in Ormoc Sugarcane Planters’ Association,Inc. v. Court
of Appeals:113
Section 2 of R.A. No. 876 (the Arbitration Law) pertinently provides:
Sec. 2. Persons and matterssubject to arbitration. – Two or more persons or parties may submit
to the arbitration of one or more arbitrators any controversy existing between them at the time of
the submission and which may be the subject of an action, or the parties to any contract may in
such contract agree to settle by arbitration a controversy thereafter arising between them. Such
submission or contract shall be valid, enforceable and irrevocable, save upon such grounds as
exist at law for the revocation of any contract. . . . (Emphasis ours)
The foregoing provision speaks of two modes of arbitration: (a) an agreement to submit to
arbitration somefuture dispute, usually stipulated upon in a civil contract between the parties,
and known as an agreement to submit to arbitration, and (b) an agreement submitting an
existing matter of difference to arbitrators, termed the submission agreement. Article XX of the
milling contract is an agreement to submit to arbitrationbecause it was made in anticipation of a
dispute that might arise between the parties after the contract’s execution.
Except where a compulsory arbitration is provided by statute, the first step toward the
settlement of a difference by arbitration is the entry by the parties into a valid agreement to
arbitrate.An agreement to arbitrate is a contract, the relation ofthe parties is contractual, and the
rights and liabilities of the parties are controlled by the law of contracts. In an agreement for
arbitration, the ordinary elements of a valid contract must appear, including an agreement
toarbitrate some specific thing, and an agreement to abide by the award, either in express
language or by implication.114 (Emphasis supplied)
In this petition, not one of the parties — AEV, CAGLI, Victor S. Chiongbian, and Benjamin D.
Gothong — has alleged and/or shown that the controversy is properly the subject of
"compulsory arbitration [as] provided by statute."115 Thus, the propriety of compelling AEV to
submit itself to arbitration must necessarilybe founded on contract.
Four (4) distinct contracts have been cited in the present petition:
1. The January 8, 1996 Agreement in which ASC, CAGLI, and WLI merged their
shipping enterprises, with WLI (subsequently renamed WG&A) as the surviving entity.
Section 11.06 of this Agreement provided for arbitration as the mechanism for settling all
disputes arising out of or in connection with the Agreement.
2. Annex SL-V of the Agreement between CAGLI and WLI (and excluded ASC and any
other Aboitiz-controlled entity), and which confirmed WLI’s commitment to acquire
certain inventories, worth not more than 400 million, of CAGLI. Annex SL-V stated that
the acquisition was "pursuant to the Agreement."116 It did not contain an arbitration
clause.
3. The September 23, 2003 Share Purchase Agreement or SPA in which AEV agreed to
purchasethe Chiongbian and Gothong groups' shares in WG&A’s issued and
outstanding stock. Section 6.5 of the SPA provided for arbitration as the mode of settling
any dispute arising from the SPA. Section 6.8 of the SPA further provided that the
Agreement of January 8, 1996 shall be deemed terminatedexcept its Annex SL-V.
4. The Escrow Agreement whereby ING Bank N.V.-Manila Branch was to take custody
of the shares subject of the SPA. Section 14.7 of the Escrow Agreement provided that all
disputes arising from it shall be settled via arbitration.
The obligation for WLI to acquire certain inventories of CAGLI and which is the subject of the
present petition was contained in Annex SL-V. It is therefore this agreement which deserves
foremost consideration. As to this particular agreement, these points must be underscored: first,
that it has no arbitration clause; second, Annex SL-V is only between WLI and CAGLI.
On the first point, it is clear, pursuant to this court’s pronouncements in Ormoc Sugarcane
Planters’ Association, that neither WLI nor CAGLI can compel arbitration under Annex SL-V.
Plainly, there is no agreement to arbitrate.
It is of no moment that Annex SL-Vstates that it was made "pursuant to the Agreement" or that
Section 11.06 of the January 8, 1996 Agreement provides for arbitration as the mode of settling
disputes arising out of or in connection with the Agreement.
For one, to say that Annex SL-V was made"pursuant to the Agreement" is merely to
acknowledge: (1) the factual context in which Annex SL-V was executed and (2) that it was that
context that facilitated the agreement embodied in it. Absentany other clear or unequivocal
pronouncement integrating Annex SL-V into the January 8, 1996 Agreement, it would be too
much of a conjecture to jump to the conclusion that Annex SL-V is governed by the exact same
stipulations which govern the January 8, 1996 Agreement.
Likewise, a reading of the Agreement’s arbitration clause will reveal that it does not contemplate
disputes arising from Annex SL-V.
Section 11.06 of the January 8, 1996 Agreement requires the formation of an arbitration tribunal
composed of four (4) arbitrators. Each of the parties — WLI, CAGLI, and ASC — shall appoint
one (1) arbitrator, and the fourth arbitrator, who shall actas chairman, shall be appointed by the
three (3) arbitrators appointed by the parties. From the manner by which the arbitration tribunal
is to be constituted, the necessary implication is that the arbitration clause is applicable tothree-
party disputes — as will arise from the tripartite January 8, 1996 Agreement — and not to two-
party disputesas will arise from the two-party Annex SL-V.
From the second point — that Annex SL-V is only between WLI and CAGLI — it necessarily
follows that none but WLI/WG&A/ATSC and CAGLI are bound by the terms of Annex SL-V. It is
elementary that contracts are characterized by relativity or privity, that is, that "[c]ontracts take
effect only between the parties, their assigns and heirs."117 As such, one who is not a party to a
contract may not seek relief for such contract’s breach. Likewise, one who is not a party to a
contract may not be held liable for breach of any its terms.
While the principle of privity or relativity of contracts acknowledges that contractual obligations
are transmissible to a party’s assigns and heirs, AEV is not WLI’s successor-in-interest. In the
period relevant to this petition, the transferee of the inventories transferred by CAGLI pursuant
to Annex SL-V assumed three (3) names: (1) WLI, the original name of the entity that survived
the merger under the January 8, 1996 Agreement; (2) WG&A, the name taken by WLI in the
wake of the Agreement; and (3) ATSC, the name taken by WLI/WG&A inthe wake of the SPA.
As such, it is now ATSC that is liable under Annex SL-V.
Pursuant to the January 8, 1996 Agreement, the Aboitiz group (via ASC) and the Gothong
group (viaCAGLI) became stockholders of WLI/WG&A, along with the Chiongbiangroup (which
initially controlled WLI). This continued until, pursuant to the SPA, the Gothong group and the
Chiongbian group transferred their shares to AEV. With the SPA, AEV became a stockholder of
WLI/WG&A, which was subsequently renamed ATSC. Nonetheless, AEV’s status asATSC’s
stockholder does not subject it to ATSC’s obligations
It is basic that a corporation has a personality separate and distinct from that of its individual
stockholders. Thus, a stockholder does not automatically assume the liabilities of the
corporation of which he is a stockholder. As explained in Philippine National Bankv. Hydro
Resources Contractors Corporation:118
A corporation is an artificial entitycreated by operation of law. It possesses the right of

succession and such powers, attributes, and properties expressly authorized by law or incident
to its existence. It has a personality separate and distinct from that of its stockholders and from
that of other corporations to which it may be connected. As a consequence of its status as a
distinct legal entityand as a result of a conscious policy decision to promote capital formation, a
corporation incurs its own liabilities and is legally responsible for payment of its obligations. In
other words, by virtue of the separate juridical personality ofa corporation, the corporate debt or
credit is not the debt or credit of the stockholder. This protection from liability for shareholders is
the principle of limited liability.119
In fact, even the ownership by a single stockholder of all or nearly all the capital stock of a
corporation is not, in and of itself, a ground for disregarding a corporation’s separate personality.
As explained in Secosa v. Heirs of Francisco:120
It is a settled precept in this jurisdiction that a corporation is invested by law with a personality
separate from thatof its stockholders or members. It has a personality separate and distinct from
those of the persons composing it as well as from that of any other entity to which it may be
related. Mere ownership by a single stockholder or by another corporation of all or nearly all of
the capital stock of a corporation is not in itself sufficient ground for disregarding the separate
corporate personality.A corporation’s authority to act and its liability for its actions are separate
and apart from the individuals who own it.
The so-called veil of corporation fiction treats as separate and distinct the affairs of a
corporation and its officers and stockholders. As a general rule, a corporation will be looked
upon as a legal entity, unless and until sufficient reason to the contrary appears. When the
notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend
crime, the law will regard the corporation as an association of persons. Also, the corporate entity
may be disregarded in the interest of justice in such cases asfraud that may work inequities
among members of the corporation internally, involving no rights of the public or third persons.
In both instances, there must have been fraud and proof of it. For the separate juridical
personality of a corporation to be disregarded, the wrongdoing must be clearly and convincingly
established. It cannot be presumed.121 (Emphasis supplied)
AEV’s status as ATSC’s stockholder is, in and of itself, insufficient to make AEV liable for
ATSC’s obligations. Moreover, the SPA does not contain any stipulation which makes AEV
assume ATSC’s obligations. It is true that Section 6.8 of the SPA stipulates that the rights and
obligations arising from Annex SL-V are not terminated. But all that Section 6.8 does is
recognize that the obligations under Annex SL-V subsist despite the termination of the January
8, 1996 Agreement. At no point does the text of Section 6.8 support the position that AEV steps
into the shoes of the obligor under Annex SL-V and assumes its obligations.
Neither does Section 6.5 of the SPAsuffice to compel AEV to submit itself to arbitration. While it
is true that Section 6.5 mandates arbitration as the mode for settling disputes between the
parties to the SPA, Section 6.5 does not indiscriminatelycover any and all disputes which may
arise between the parties to the SPA. Rather, Section 6.5 is limited to "dispute[s] arising
between the parties relating tothis Agreement [i.e., the SPA]."122 To belabor the point, the
obligation which is subject of the present dispute pertains to Annex SL-V, not to the SPA. That
the SPA, in Section 6.8, recognizes the subsistence of Annex SL-Vis merely a factual
recognition. It does not create new obligations and does not alter or modify the obligations
spelled out in Annex SL-V.
AEV was drawn into the present controversy on account of its having entered into the SPA. This
SPA made AEV a stockholder of WLI/WG&A/ATSC. Even then, AEV retained a personality
separate and distinct from WLI/WG&A/ATSC. The SPA did not render AEV personally liable for
the obligations of the corporation whose stocks it held.
The obligation animating CAGLI’s desire to arbitrate is rooted in Annex SL-V. Annex SL-V is a
contractentirely different from the SPA. It created distinct obligations for distinctparties. AEV was
never a party to Annex SL-V. Rather than pertaining to AEV, Annex SL-V pertained to a
different entity: WLI (renamed WG&A then renamed ATSC). AEV is, thus, not bound by Annex
SL-V.
On one hand, Annex SL-V does not stipulate that disputes arising from it are to be settled via
arbitration.On the other hand, the SPA requires arbitration as the mode for settling disputes
relating to it and recognizes the subsistence of the obligations under Annex SL-V. But as a
separate contract, the mere mention of Annex SL-V in the SPA does not suffice to place Annex
SL-V under the ambit of the SPA or to render it subject to the SPA’s terms, such as the
requirement to arbitrate.
WHEREFORE, the petition is GRANTED. The assailed orders dated May 5, 2011 and June
24,2011 of the Regional Trial Court, Cebu City, Branch 10 in Civil Case No. CEB-37004 are
declared VOID. The Regional Trial Court, Cebu City, Branch 10 is ordered to DISMISSCivil
Case No. CEB-37004.
SO ORDERED.

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Republic of the Philippines

VALLACAR TRANSIT, INC., G.R. No. 175512

LEONARDO-DE CASTRO, J.:

The undisputed facts are as follows:

After trial, the RTC concluded:

WHEREFORE, finding preponderance of evidence in favor of the [herein

[Petitioners] counterclaim is also dismissed for lack of merit.[18]

Thus, the Court of Appeals decreed:

Hence, the instant Petition for Review.

SEC. 6. Verification.A pleading is verified only by an affidavit stating that the

Verifications based on "information and belief," or upon "knowledge, information

SEC. 4. Verification. Except when otherwise specifically required by law or rule,

A pleading required to be verified which contains a verification based on

SEC. 4. Verification. - Except when otherwise specifically required by law or rule,

A pleading required to be verified which contains a verification based on

In Pajuyo v. Court of Appeals,[21] we already pointed out that:

NELLIE VDA. DE FORMOSO and her G.R. No. 154704

CARPIO, J., Chairperson,

The Factual and

Before the Court of Appeals

The verification and certification of non-forum shopping was signed by

THE COURT OF APPEALS PATENTLY ERRED IN RULING THAT ALL THE

ALTERNATIVELY, THE COURT OF APPEALS PATENTLY ERRED IN

THE COURT OF APPEALS PATENTLY ERRED IN GIVING MORE WEIGHT

Certiorari is an extraordinary, prerogative remedy and is never issued as a matter of right.

SECTION 1. Petition for certiorari.- When any tribunal, board or officer

The petition shall be accompanied by a certified true copy of the judgment,

SECTION 3. Contents and filing of petition; effect of non-compliance with

The Court disagrees.

SEC. 4. Verification. Except when otherwise specifically required by law or

A pleading required to be verified which contains a verification based on

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

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

Respecting the appellate courts dismissal of petitioners appeal due to the

1) A distinction must be made between non-compliance with the

2) As to verification, non-compliance therewith or a defect therein does not

3) Verification is deemed substantially complied with when one who has

4) As to certification against forum shopping, non-compliance therewith or

5) The certification against forum shopping must be signed by all the

6) Finally, the certification against forum shopping must be executed by the

The certification against forum shopping in CA-G.R. SP No. 72284 is fatally

The Court, however, is not persuaded.

In the instant case, petitioners share a common interest and defense

WHEREFORE, the petition is DENIED.

PUNO, C.J., Chairperson,

July 30, 2009

AS A CONSEQUENCE OF ALL THE FOREGOING, judgment is hereby rendered in

The Trial Courts Ruling

The Court of Appeals Ruling

Petitioners contend that:

1. THE HONORABLE COURT OF APPEALS ERRED IN DECIDING THAT

2. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECIDING

3. THE HONORABLE COURT OF APPEALS ERRED IN [NOT] DECIDING

4. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECIDING

5. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECIDING

The Ruling of the Court

We find the petition without merit.

MOTION FOR ISSUANCE OF ALIAS WRIT OF EXECUTION

PLAINTIFF, by counsel, respectfully states:

MARANAW HOTELS AND G.R. No. 149660

PUNO, C.J., Chairperson,

LEONARDO-DE CASTRO, JJ.