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REPUBLIC VS.

SANDIGANBAYAN knowledge or they could not recall because it happened a


long time ago, and, as to Mrs. Marcos, the funds were
FACTS: lawfully acquired, without stating the basis of such
One of the foremost concerns of the Aquino Government assertions.
in February 1986 was the recovery of the unexplained or
Section 10, Rule 8 of the 1997 Rules of Civil Procedure,
ill-gotten wealth reputedly amassed by former President
provides:
and Mrs. Ferdinand E. Marcos, their relatives, friends and
business associates. Thus, the very first Executive Order A defendant must specify each material allegation of fact
(EO) issued by then President Corazon Aquino upon her the truth of which he does not admit and, whenever
assumption to office after the ouster of the Marcoses was practicable, shall set forth the substance of the matters
EO No. 1, issued on February 28, 1986. It created the upon which he relies to support his denial. Where a
Presidential Commission on Good Government (PCGG) defendant desires to deny only a part of an averment, he
and charged it with the task of assisting the President in shall specify so much of it as is true and material and shall
the "recovery of all ill-gotten wealth accumulated by deny the remainder. Where a defendant is without
former President Ferdinand E. Marcos, his immediate knowledge or information sufficient to form a belief as to
family, relatives, subordinates and close associates, the truth of a material averment made in the complaint, he
whether located in the Philippines or abroad, including shall so state, and this shall have the effect of a denial.[28]
the takeover or sequestration of all business enterprises
The purpose of requiring respondents to make a specific
and entities owned or controlled by them during his
denial is to make them disclose facts which will disprove
administration, directly or through nominees, by taking
the allegations of petitioner at the trial, together with the
undue advantage of their public office and/or using their
matters they rely upon in support of such denial. Our
powers, authority, influence, connections or
jurisdiction adheres to this rule to avoid and prevent
relationship."
unnecessary expenses and waste of time by compelling
In all the alleged ill-gotten wealth cases filed by the both parties to lay their cards on the table, thus reducing
PCGG, this Court has seen fit to set aside technicalities the controversy to its true terms. As explained in Alonso
and formalities that merely serve to delay or impede vs. Villamor,[29]
judicious resolution. This Court prefers to have such cases
A litigation is not a game of technicalities in which one,
resolved on the merits at the Sandiganbayan. But
more deeply schooled and skilled in the subtle art of
substantial justice to the Filipino people and to all parties
movement and position, entraps and destroys the other. It
concerned, not mere legalisms or perfection of form,
is rather a contest in which each contending party fully
should now be relentlessly and firmly pursued. Almost
and fairly lays before the court the facts in issue and then,
two decades have passed since the government initiated
brushing aside as wholly trivial and indecisive all
its search for and reversion of such ill-gotten wealth. The
imperfections of form and technicalities of procedure,
definitive resolution of such cases on the merits is thus
asks that justice be done upon the merits. Lawsuits, unlike
long overdue. If there is proof of illegal acquisition,
duels, are not to be won by a rapiers thrust.
accumulation, misappropriation, fraud or illicit conduct,
let it be brought out now. Let the ownership of these funds On the part of Mrs. Marcos, she claimed that the funds
and other assets be finally determined and resolved with were lawfully acquired. However, she failed to
dispatch, free from all the delaying technicalities and particularly state the ultimate facts surrounding the lawful
annoying procedural sidetracks. manner or mode of acquisition of the subject funds.
Simply put, she merely stated in her answer with the other
respondents that the funds were lawfully acquired without
RULING: detailing how exactly these funds were supposedly
acquired legally by them. Even in this case before us, her
Respondents Answer dated October 18, 1993. assertion that the funds were lawfully acquired remains
In their answer, respondents failed to specifically deny bare and unaccompanied by any factual support which
each and every allegation contained in the petition for can prove, by the presentation of evidence at a hearing,
forfeiture in the manner required by the rules. All they that indeed the funds were acquired legitimately by the
gave were stock answers like they have no sufficient Marcos family.

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Respondents denials in their answer at the Sandiganbayan being false, the truth being that Respondents aforesaid
were based on their alleged lack of knowledge or properties were lawfully acquired.[33]
information sufficient to form a belief as to the truth of
Evidently, this particular denial had the earmark of what
the allegations of the petition.
is called in the law on pleadings as a negative pregnant,
It is true that one of the modes of specific denial under the that is, a denial pregnant with the admission of the
rules is a denial through a statement that the defendant is substantial facts in the pleading responded to which are
without knowledge or information sufficient to form a not squarely denied. It was in effect an admission of the
belief as to the truth of the material averment in the averments it was directed at.[34] Stated otherwise, a
complaint. The question, however, is whether the kind of negative pregnant is a form of negative expression which
denial in respondents answer qualifies as the specific carries with it an affirmation or at least an implication of
denial called for by the rules. We do not think some kind favorable to the adverse party. It is a denial
so. In Morales vs. Court of Appeals,[30] this Court ruled pregnant with an admission of the substantial facts alleged
that if an allegation directly and specifically charges a in the pleading. Where a fact is alleged with qualifying or
party with having done, performed or committed a modifying language and the words of the allegation as so
particular act which the latter did not in fact do, perform qualified or modified are literally denied, has been held
or commit, a categorical and express denial must be made. that the qualifying circumstances alone are denied while
the fact itself is admitted.[35]
Here, despite the serious and specific allegations against
them, the Marcoses responded by simply saying that they In the instant case, the material allegations in paragraph
had no knowledge or information sufficient to form a 23 of the said petition were not specifically denied by
belief as to the truth of such allegations. Such a general, respondents in paragraph 22 of their answer. The denial
self-serving claim of ignorance of the facts alleged in the contained in paragraph 22 of the answer was focused on
petition for forfeiture was insufficient to raise an issue. the averment in paragraph 23 of the petition for forfeiture
Respondent Marcoses should have positively stated how that Respondents clandestinely stashed the countrys
it was that they were supposedly ignorant of the facts wealth in Switzerland and hid the same under layers and
alleged.[31] layers of foundations and corporate entities. Paragraph 22
of the respondents answer was thus a denial pregnant with
To elucidate, the allegation of petitioner Republic in
admissions of the following substantial facts:
paragraph 23 of the petition for forfeiture stated:
(1) the Swiss bank deposits existed and
23. The following presentation very clearly and
overwhelmingly show in detail how both respondents (2) that the estimated sum thereof was US$356 million as
clandestinely stashed away the countrys wealth to of December, 1990.
Switzerland and hid the same under layers upon layers of
Therefore, the allegations in the petition for forfeiture on
foundations and other corporate entities to prevent its
the existence of the Swiss bank deposits in the sum of
detection. Through their dummies/nominees, fronts or
about US$356 million, not having been specifically
agents who formed those foundations or corporate
denied by respondents in their answer, were deemed
entities, they opened and maintained numerous bank
admitted by them pursuant to Section 11, Rule 8 of the
accounts. But due to the difficulty if not the impossibility
1997 Revised Rules on Civil Procedure:
of detecting and documenting all those secret accounts as
well as the enormity of the deposits therein hidden, the Material averment in the complaint, xxx shall be deemed
following presentation is confined to five identified admitted when not specifically denied. xxx.[36]
accounts groups, with balances amounting to about $356-
M with a reservation for the filing of a supplemental or By the same token, the following unsupported denials of
separate forfeiture complaint should the need arise.[32] respondents in their answer were pregnant with
admissions of the substantial facts alleged in the
Respondents lame denial of the aforesaid allegation was: Republics petition for forfeiture:
22. Respondents specifically DENY paragraph 23 insofar 23. Respondents specifically DENY paragraphs 24, 25,
as it alleges that Respondents clandestinely stashed the 26, 27, 28, 29 and 30 of the Petition for lack of knowledge
countrys wealth in Switzerland and hid the same under or information sufficient to form a belief as to the truth of
layers and layers of foundations and corporate entities for the allegation since respondents were not privy to the
2
transactions regarding the alleged Azio-Verso-Vibur well as the averment in paragraph 52-a[39] of the said
Foundation accounts, except that, as to respondent Imelda petition with respect to the sum of the Swiss bank deposits
R. Marcos, she specifically remembers that the funds estimated to be US$356 million were again not
involved were lawfully acquired. specifically denied by respondents in their answer. The
respondents did not at all respond to the issues raised in
24. Respondents specifically DENY paragraphs 31, 32,
these paragraphs and the existence, nature and amount of
33, 34, 35, 36, 37, 38, 39, 40, 41 of the Petition for lack
the Swiss funds were therefore deemed admitted by
of knowledge or information sufficient to form a belief as
them. As held in Galofa vs. Nee Bon Sing,[40] if a
to the truth of the allegations since respondents were not
defendants denial is a negative pregnant, it is equivalent
privy to the transactions and as to such transactions they
to an admission.
were privy to, they cannot remember with exactitude the
same having occurred a long time ago, except as to Moreover, respondents denial of the allegations in the
respondent Imelda R. Marcos, she specifically remembers petition for forfeiture for lack of knowledge or
that the funds involved were lawfully acquired. information sufficient to form a belief as to the truth of
the allegations since respondents were not privy to the
25. Respondents specifically DENY paragraphs 42, 43,
transactions was just a pretense. Mrs. Marcos privity to
45, and 46 of the petition for lack of knowledge or
the transactions was in fact evident from her signatures on
information sufficient to from a belief as to the truth of
some of the vital documents[41]attached to the petition for
the allegations since respondents were not privy to the
forfeiture which Mrs. Marcos failed to specifically deny
transactions and as to such transaction they were privy to,
as required by the rules.[42]
they cannot remember with exactitude, the same having
occurred a long time ago, except that as to respondent It is worthy to note that the pertinent documents attached
Imelda R. Marcos, she specifically remembers that the to the petition for forfeiture were even signed personally
funds involved were lawfully acquired. by respondent Mrs. Marcos and her late husband,
Ferdinand E. Marcos, indicating that said documents were
26. Respondents specifically DENY paragraphs 49, 50,
within their knowledge. As correctly pointed out by
51 and 52 of the petition for lack of knowledge and
Sandiganbayan Justice Francisco Villaruz, Jr. in his
information sufficient to form a belief as to the truth of
dissenting opinion:
the allegations since respondents were not privy to the
transactions and as to such transaction they were privy to The pattern of: 1) creating foundations, 2) use of
they cannot remember with exactitude the same having pseudonyms and dummies, 3) approving regulations of
occurred a long time ago, except that as to respondent the Foundations for the distribution of capital and income
Imelda R. Marcos, she specifically remembers that the of the Foundations to the First and Second beneficiary
funds involved were lawfully acquired. (who are no other than FM and his family), 4) opening of
bank accounts for the Foundations, 5) changing the names
The matters referred to in paragraphs 23 to 26 of the
of the Foundations, 6) transferring funds and assets of the
respondents answer pertained to the creation of five
Foundations to other Foundations or Fides Trust, 7)
groups of accounts as well as their respective ending
liquidation of the Foundations as substantiated by the
balances and attached documents alleged in paragraphs
Annexes U to U-168, Petition [for forfeiture] strongly
24 to 52 of the Republics petition for
indicate that FM and/or Imelda were the real owners of
forfeiture. Respondent Imelda R. Marcos never
the assets deposited in the Swiss banks, using the
specifically denied the existence of the Swiss funds. Her
Foundations as dummies.[43]
claim that the funds involved were lawfully acquired was
an acknowledgment on her part of the existence of said How could respondents therefore claim lack of sufficient
deposits. This only reinforced her earlier admission of the knowledge or information regarding the existence of the
allegation in paragraph 23 of the petition for forfeiture Swiss bank deposits and the creation of five groups of
regarding the existence of the US$356 million Swiss bank accounts when Mrs. Marcos and her late husband
deposits. personally masterminded and participated in the
formation and control of said foundations? This is a fact
The allegations in paragraphs 47[37] and 48[38] of the
respondent Marcoses were never able to explain.
petition for forfeiture referring to the creation and amount
of the deposits of the Rosalys-Aguamina Foundation as

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Not only that. Respondents' answer also technically were plainly within its knowledge and it could not
admitted the genuineness and due execution of the logically pretend ignorance as to the same, therefore,
Income Tax Returns (ITRs) and the balance sheets of the failed to properly tender on issue.
late Ferdinand E. Marcos and Imelda R. Marcos attached
Thus, the general denial of the Marcos children of the
to the petition for forfeiture, as well as the veracity of the
allegations in the petition for forfeiture for lack of
contents thereof.
knowledge or information sufficient to form a belief as to
The answer again premised its denials of said ITRs and the truth of the allegations since they were not privy to the
balance sheets on the ground of lack of knowledge or transactions cannot rightfully be accepted as a defense
information sufficient to form a belief as to the truth of because they are the legal heirs and successors-in-interest
the contents thereof. Petitioner correctly points out that of Ferdinand E. Marcos and are therefore bound by the
respondents' denial was not really grounded on lack of acts of their father vis-a-vis the Swiss funds.
knowledge or information sufficient to form a belief but
was based on lack of recollection. By reviewing their own
records, respondent Marcoses could have easily MANUEL C. BUNGCAYAO, SR., ETC VS. FORT
determined the genuineness and due execution of the ILOCANDIA PROPERTY HOLDINGS AND
ITRs and the balance sheets. They also had the means and DEVELOPMENT CORP.
opportunity of verifying the same from the records of the
BIR and the Office of the President. They did not. FACTS:

When matters regarding which respondents claim to Manuel C. Bungcayao, Sr. (petitioner) claimed to
have no knowledge or information sufficient to form a be one of the two entrepreneurs who introduced
belief are plainly and necessarily within their knowledge, improvements on the foreshore area of Calayab Beach in
their alleged ignorance or lack of information will not be 1978 when Fort Ilocandia Hotel started its construction in
considered a specific denial.[44] An unexplained denial of the area. Thereafter, other entrepreneurs began setting up
information within the control of the pleader, or is readily their own stalls in the foreshore area. They later formed
accessible to him, is evasive and is insufficient to themselves into the DSierto Beach Resort Owners
constitute an effective denial.[45] Association, Inc. (DSierto).

The form of denial adopted by respondents must be In July 1980, six parcels of land in Barrio Balacad
availed of with sincerity and in good faith, and certainly (now Calayad) were transferred, ceded, and conveyed to
not for the purpose of confusing the adverse party as to the Philippine Tourism Authority (PTA) pursuant to
what allegations of the petition are really being Presidential Decree No. 1704. Fort Ilocandia Resort Hotel
challenged; nor should it be made for the purpose of was erected on the area. In 1992, petitioner and other
delay.[46] In the instant case, the Marcoses did not only DSierto members applied for a foreshore lease with the
present unsubstantiated assertions but in truth attempted Community Environment and Natural Resources Office
to mislead and deceive this Court by presenting an (CENRO) and was granted a provisional permit. On 31
obviously contrived defense. January 2002, Fort Ilocandia Property Holdings and
Development Corporation (respondent) filed a foreshore
Simply put, a profession of ignorance about a fact which application over a 14-hectare area abutting the Fort
is patently and necessarily within the pleaders knowledge Ilocandia Property, including the 5-hectare portion
or means of knowing is as ineffective as no denial at applied for by DSierto members. The foreshore
all.[47]Respondents ineffective denial thus failed to applications became the subject matter of a conflict case,
properly tender an issue and the averments contained in docketed Department of Environment and Natural
the petition for forfeiture were deemed judicially admitted Resources (DENR) Case No. 5473, between respondent
by them. and DSierto members. In an undated Order, DENR
Regional Executive Director Victor J. Ancheta denied the
As held in J.P. Juan & Sons, Inc. vs. Lianga Industries,
foreshore lease applications of the DSierto members,
Inc.:
including petitioner, on the ground that the subject area
Its specific denial of the material allegation of the petition applied for fell either within the titled property or within
without setting forth the substance of the matters relied the foreshore areas applied for by respondent. The
upon to support its general denial, when such matters DSierto members appealed the denial of their
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applications. In a Resolution dated 21 August 2003, then compulsory in the sense that it is within the
DENR Secretary Elisea G. Gozun denied the appeal on jurisdiction of the court, does not require for
the ground that the area applied for encroached on the its adjudication the presence of third parties
titled property of respondent based on the final over whom the court cannot acquire
verification plan. jurisdiction, and will be barred in the future if
not set up in the answer to the complaint in
Petitioner alleged that his son, Manuel
the same case. Any other counterclaim is
Bungcayao, Jr., who attended the meeting, manifested
permissive.
that he still had to consult his parents about the offer but
upon the undue pressure exerted by Atty. Marcos, he The criteria to determine whether the
accepted the payment and signed the Deed of counterclaim is compulsory or permissive are as follows:
Assignment, Release, Waiver and Quitclaim[6] in favor (a) Are issues of fact and law raised by the claim and by
of respondent. the counterclaim largely the same?; (b) Would res
judicata bar a subsequent suit on defendants claim, absent
Petitioner then filed an action for declaration of
the compulsory rule; (c) Will substantially the same
nullity of contract before the Regional Trial Court of
evidence support or refute plaintiffs claim as well as
Laoag, City, Branch 13 (trial court), docketed as Civil
defendants counterclaim?; (d) Is there any logical
Case Nos. 12891-13, against respondent. Petitioner
relations between the claim and the counterclaim? A
alleged that his son had no authority to represent him and
positive answer to all four questions would indicate that
that the deed was void and not binding upon him.
the counterclaim is compulsory.
In an Order dated 6 November 2003, the trial
In this case, the only issue in the complaint is
court confirmed the agreement of the parties to cancel the
whether Manuel, Jr. is authorized to sign the Deed of
Deed of Assignment, Release, Waiver and Quitclaim and
Assignment, Release, Waiver and Quitclaim in favor of
the return of P400,000 to respondent. Petitioners counsel,
respondent without petitioners express approval and
however, manifested that petitioner was still maintaining
authority. In an Order dated 6 November 2003, the trial
its claim for damages against respondent.
court confirmed the agreement of the parties to cancel the
Petitioner and respondent agreed to consider the Deed of Assignment, Release, Waiver and Quitclaim and
case submitted for resolution on summary judgment. the return of P400,000 to respondent. The only claim that
Thus, in its Order dated 28 November 2003, the trial court remained was the claim for damages against respondent.
considered the case submitted for resolution. Petitioner The trial court resolved this issue by holding that any
filed a motion for reconsideration, alleging that he damage suffered by Manuel, Jr. was personal to him. The
manifested in open court that he was withdrawing his trial court ruled that petitioner could not have suffered any
earlier manifestation submitting the case for resolution. damage even if Manuel, Jr. entered into an agreement
Respondent filed a Motion for Summary Judgment. with respondent since the agreement was null and void.

ISSUES
a. Whether respondents counterclaim is PHILTRANCO SERVICE ENTERPRISES, INC. VS.
compulsory FELIX PARAS AND INLAND TRAILWAYS, INC
ET AL.
b. Whether summary judgment is appropriate in
this case Facts:

HELD Felix Paras is engaged in the buy and sell of fish products.
Sometime on his way home to Manila from Bicol Region,
a. Yes. A compulsory counterclaim is any claim he boarded a bus owned and operated by Inland
for money or any relief, which a defending Trailways, Inc. and driven by its driver Calvin Coner.
party may have against an opposing party,
which at the time of suit arises out of, or is While the said bus was travelling, it was bumped at the
necessarily connected with, the same rear by another bus owned and operated by Philtranco
transaction or occurrence that is the subject Service Enterprises, Inc. As a result of the strong and
matter of the plaintiffs complaint. It is violent impact, the Inland bus was pushed forward and

5
smashed into a cargo truck parked along the outer right not a party to the action . . . for contribution, indemnity,
portion of the highway and the shoulder. Consequently, subrogation or any other relief in respect of his opponent's
the said accident bought considerable damage to the claim. From its explicit language it does not compel the
vehicles involved and caused physical injuries to the defendant to bring the third-parties into the litigation,
passengers and crew of the two buses, including the death rather it simply permits the inclusion of anyone who
of Coner. meets the standard set forth in the rule. The secondary or
derivative liability of the third-party is central whether the
Paras was not spared from the effects of the accident. He
basis is indemnity, subrogation, contribution, express or
was taken for an emergency treatment in the nearby
implied warranty or some other theory. The impleader of
hospital and thereafter taken to the National Orthopedic
new parties under this rule is proper only when a right
Hospital in which underwent several operations.
to relief exists under the applicable substantive law.
In view of financial constraints, Paras filed a complaint This rule is merely a procedural mechanism, and
for damages based on breach of contract of carriage cannot be utilized unless there is some substantive
against Inland to which it denied responsibility, by basis under applicable law.
alleging, among others, that its driver Coner had observed
Apart from the requirement that the third-party
an utmost and extraordinary care and diligence to ensure
complainant should assert a derivative or secondary
the safety of its passengers. In support of it, Inland
claim for relief from the third-party defendant there
invoked the Police Investigation Report which established
are other limitations on said partys ability to implead.
the fact that the Philtranco bus driver, Apolinar Miralles
The rule requires that the third-party defendant is not
was the one which violently bumped the rear portion of
a party to the action for otherwise the proper
the Inland bus, and therefore, the direct and proximate
procedure for asserting a claim against one who is
cause of Paras’ injuries.
already a party to the suit is by means of counterclaim
The RTC ruled in favor of Paras and held that Philtranco or cross-claim under sections 6 and 7 of Rule 6. In
and Apolinar Miralles jointly and severally liable for addition to the aforecited requirement, the claim
actual and moral damages including attorney’s fees against the third-party defendant must be based upon
plaintiff's claim against the original defendant (third-
On appeal to the CA, it affirmed the RTC’s ruling that no party claimant). The crucial characteristic of a claim
trace of negligence at the time of the accident was under section 12 of Rule 6, is that the original
attributable to Inland’s driver, rendering Inland not guilty defendant is attempting to transfer to the third-party
of breach of contract of carriage. defendant the liability asserted against him by the
RULING: original plaintiff.

Impleading Philtranco and its driver through the third- Accordingly, the requisites for a third-party action
party complaint filed on March 2, 1990 was correct. The are, firstly, that the party to be impleaded must not yet be
device of the third-party action, also known as a party to the action; secondly, that the claim against the
impleader, was in accord with Section 12, Rule 6 of third-party defendant must belong to the original
the Revised Rules of Court, the rule then applicable, viz: defendant; thirdly, the claim of the original defendant
against the third-party defendant must be based upon the
Section 12. Third-party complaint. A third-party plaintiffs claim against the original defendant;
complaint is a claim that a defending party may, with and, fourthly, the defendant is attempting to transfer to the
leave of court, file against a person not a party to the third-party defendant the liability asserted against him by
action, called the third-party defendant, for contribution, the original plaintiff.[14]
indemnity, subrogation or any other relief, in respect of
his opponents claim.[12] As the foregoing indicates, the claim that the third-party
complaint asserts against the third-party defendant must
Explaining the application of Section 12, Rule be predicated on substantive law. Here, the substantive
6, supra, the Court said in Balbastro v. Court of law on which the right of Inland to seek such other relief
Appeals,[13] to wit: through its third-party complaint rested were Article 2176
and Article 2180 of the Civil Code, which read:
Section 12 of Rule 6 of the Revised Rules of Court
authorizes a defendant to bring into a lawsuit any person
6
Article 2176. Whoever by act or omission causes damage Nor was it a pre-requisite for attachment of the liability to
to another, there being fault or negligence, is obliged to Philtranco and its driver that Inland be first declared and
pay for the damage done. Such fault or negligence, if there found liable to Paras for the breach of its contract of
is no pre-existing contractual relation between the parties, carriage with him.[17] As the Court has cogently
is called a quasi-delict and is governed by the provisions discoursed in Samala v. Judge Victor:[18]
of this chapter. (1902a)
Appellants argue that since plaintiffs filed a complaint for
Article 2180. The obligation imposed by article 2176 is damages against the defendants on a breach of contract of
demandable not only for ones own acts or omissions, but carriage, they cannot recover from the third-party
also for those of persons for whom one is responsible. defendants on a cause of action based on quasi-delict. The
third party defendants, they allege, are never parties liable
xxx
with respect to plaintiff s claim although they are with
Employers shall be liable for the damages caused by their respect to the defendants for indemnification,
employees and household helpers acting within the scope subrogation, contribution or other reliefs. Consequently,
of their assigned tasks, even though the former are not they are not directly liable to the plaintiffs. Their liability
engaged in any business or industry. commences only when the defendants are adjudged liable
and not when they are absolved from liability as in the
xxx case at bar.
The responsibility treated of in this article shall cease Quite apparent from these arguments is the misconception
when the persons herein mentioned prove that they entertained by appellants with respect to the nature and
observed all the diligence of a good father of a family to office of a third party complaint.
prevent damage. (1903a)
Section 16, Rule 6 of the Revised Rules of Court defines
a third party complaint as a claim that a defending party
Paras cause of action against Inland (breach of contract of may, with leave of court, file against a person not a party
carriage) did not need to be the same as the cause of action to the action, called the third-party defendant, for
of Inland against Philtranco and its driver (tort or quasi- contribution, indemnification, subrogation, or any other
delict) in the impleader. It is settled that a defendant in a relief, in respect of his opponents claim. In the case
contract action may join as third-party defendants those of Viluan vs. Court of Appeals, et al., 16 SCRA 742
who may be liable to him in tort for the plaintiffs claim [1966], this Court had occasion to elucidate on the
against him, or even directly to the plaintiff.[15] Indeed, subjects covered by this Rule, thus:
Prof. Wright, et al., commenting on the provision of ... As explained in the Atlantic Coast Line R. Co. vs. U.S.
the Federal Rules of Procedure of the United States from Fidelity & Guaranty Co., 52 F. Supp. 177 (1943:)
which Section 12, supra, was derived, observed so, to
wit:[16] From the sources of Rule 14 and the decisions herein
cited, it is clear that this rule, like the admiralty rule,
The third-party claim need not be based on the same covers two distinct subjects, the addition of parties
theory as the main claim. For example, there are cases in defendant to the main cause of action, and the bringing in
which the third-party claim is based on an express of a third party for a defendants remedy over. xxx
indemnity contract and the original complaint is framed
in terms of negligence. Similarly, there need not be any If the third party complaint alleges facts showing a
legal relationship between the third-party defendant and third partys direct liability to plaintiff on the claim set
any of the other parties to the action. Impleader also is out in plaintiffs petition, then third party shall make
proper even though the third partys liability is contingent, his defenses as provided in Rule 12 and his
and technically does not come into existence until the counterclaims against plaintiff as provided in Rule 13.
original defendants liability has been established. In In the case of alleged direct liability, no amendment
addition, the words is or may be liable in Rule 14(a) make (to the complaint) is necessary or required. The
it clear that impleader is proper even though the third- subject-matter of the claim is contained in plaintiff's
party defendants liability is not automatically established complaint, the ground of third partys liability on that
once the third-party plaintiffs liability to the original claim is alleged in third party complaint, and third
plaintiff has been determined. partys defense to set up in his answer to plaintiff's
7
complaint. At that point and without amendment, the situation (a) above wherein the third party defendant
plaintiff and third party are at issue as to their rights is being sued for contribution, indemnity or
respecting the claim. subrogation, or simply stated, for a defendant's
remedy over.[19]
The provision in the rule that, The third-party defendant
may assert any defense which the third-party plaintiff may
assert to the plaintiffs claim, applies to the other subject,
It is worth adding that allowing the recovery of damages
namely, the alleged liability of third party defendant. The
by Paras based on quasi-delict, despite his complaint
next sentence in the rule, The third-party defendant is
being upon contractual breach, served the judicial policy
bound by the adjudication of the third party plaintiffs
of avoiding multiplicity of suits and circuity of actions by
liability to the plaintiff, as well as of his own to the
disposing of the entire subject matter in a single
plaintiff or to the third-party plaintiff applies to both
litigation.[20]
subjects. If third party is brought in as liable only to
defendant and judgment is rendered adjudicating
plaintiff's right to recover against defendant and
defendants rights to recover against third party, he is FELIX MARTOS ET AL VS. NEW SAN JOSE
bound by both adjudications.That part of the sentence BUILDERS, INC.
refers to the second subject. If third party is brought in as FACTS:
liable to plaintiff, then third party is bound by the
adjudication as between him and plaintiff. That refers to New San Jose Builders, Inc. , is engaged in the
the first subject. If third party is brought in as liable to construction of road, bridges, buildings, and low cost
plaintiff and also over to defendant, then third party is houses. Private respondents were hired by the the
bound by both adjudications. xxx petitioner. Sometime in 2000, petitioner was constrained
to slow down and suspend most of the works on the SJPP
Under this Rule, a person not a party to an action may be project due to lack of funds of the National Housing
impleaded by the defendant either (a) on an allegation of Authority. Thus, the workers were informed that many of
liability to the latter; (b) on the ground of direct liability them [would] be laid off and the rest would be reassigned
to the plaintiff-; or, (c) both (a) and (b). The situation in to other projects. They refused to sign the appointment
(a) is covered by the phrase for contribution, indemnity or papers as project employees and subsequently refused to
subrogation; while (b) and (c) are subsumed under the continue to work. Three Complaints for Illegal Dismissal
catch all or any other relief, in respect of his opponents and for money claims were filed before the NLRC against
claim. petitioner and Jose Acuzar, by private respondents who
The case at bar is one in which the third party claimed to be the former employees of petitioner. LA
defendants are brought into the action as directly handed down a decision declaring, among others, that
liable to the plaintiffs upon the allegation that the petitioner Felix Martos was illegally dismissed and
primary and immediate cause as shown by the police entitled to separation pay, backwages and other monetary
investigation of said vehicular collision between (sic) benefits; and dismissing, without prejudice, the
the above-mentioned three vehicles was the complaints/claims of the other complainants (petitioners).
recklessness and negligence and lack of imprudence Both parties appealed the LA decision to the NLRC.
(sic) of the third-party defendant Virgilio (should be The NLRC resolved the appeal by dismissing the one filed
Leonardo) Esguerra y Ledesma then driver of the by respondent and partially granting that of the other
passenger bus. The effects are that plaintiff and third petitioners. The CA explained that the NLRC committed
party are at issue as to their rights respecting the claim grave abuse of discretion in reviving the complaints of
and the third party is bound by the adjudication as petitioners despite their failure to verify the same.
between him and plaintiff. It is not indispensable in the Petitioners basically argue that the CA was wrong in
premises that the defendant be first adjudged liable to affirming the dismissal of their complaints due to their
plaintiff before the third-party defendant may be held failure to verify their position paper. They insist that the
liable to the plaintiff, as precisely, the theory of lack of verification of a position paper is only a formal
defendant is that it is the third party defendant, and and not a jurisdictional defect. Hence, it was not fatal to
not he, who is directly liable to plaintiff. The situation
contemplated by appellants would properly pertain to
8
their cause of action considering that the CA could have PASCUAL AND SANTOS INC VS. THE MEMBERS
required them to submit the needed verification. OF THE TRAMO WAKAS NEIGHBORHOOD
ASSOCIATION INC
FACTS:
ISSUE:
The Director of the Land Managment Bureau (LMB)
WON the court erred in dismissing the complaints.
granted the petition of respondent, The Members of the
Tramo Wakas Neighborhood Association, Inc. (TRAMO
WAKAS) which prayed for the grant of ownership over
RULING: 3 parcels of land situated in Paranaque City. The same
NO. The liberal construction of the rules may be invoked property is being claimed by petitioner Pascual and
in situations where there may be some excusable formal Santos Inc. (PSI). PSI appealed the said decision to higher
deficiency or error in a pleading, provided that the same adjudicatory bodies but was denied and dismissed for lack
does not subvert the essence of the proceeding and it at of merit.
least connotes a reasonable attempt at compliance with The Court of Appeals (CA) likewise dismissed
the rules. Besides, fundamental is the precept that rules of the petition on the ground of Infirm Verification and
procedure are meant not to thwart but to facilitate the Certification of Non-forum Shopping for the same does
attainment of justice; hence, their rigid application may, not show proof that the persons who signed therein were
for deserving reasons, be subordinated by the need for an duly authorized by the corporation. The
apt dispensation of substantial justice in the normal Courtfurther ruled that the petition has not been filed on
course. They ought to be relaxed when there is subsequent time.
or even substantial compliance, consistent with the policy
of liberality espoused by Rule 1, Section 6.14 Not being ISSUE:
inflexible, the rule on verification allows for such
Whether or not the persons who executed
liberality. The petitioners were given a chance by the CA
the verification and certification of non-forum shopping
to comply with the Rules when they filed their motion for
attached to PSI‘s petition were authorized to do so
reconsideration, but they refused to do so. The Court
agrees with the CA that the dismissal of the other HELD:
complaints were brought about by the own negligence and
Section 6 (d) of Rule 43 in relation to Section 2 of Rule
passive attitude of the complainants themselves
42 of the Rules of Court mandates that a petition for
review shall contain a sworn certification against forum
shopping in which the Pascual and Santos Inc. shall attest
GEORGIA T. ESTEL VS. RECAREDO P. DIEGO, that he has not commenced any other action involving the
SR. ET AL. same issues in this Court, the Court of Appeals or
JURISPRUDENCE: different divisions thereof, or any other tribunal or
agency; if there is such other action or proceeding, he
Verification is deemed substantially complied with when, must state the status of the same; and if he should
as in the instant case, one who has ample knowledge to thereafter learn that a similar action or proceeding has
swear to the truth of the allegations in the complaint or been filed or is pending before this Court, the Court of
petition signs the verification, and when matters alleged Appeals, or different divisions thereof, or any other
in the petition have been made in good faith or are true tribunal or agency, he undertakes to promptly inform the
and correct. aforesaid courts and other tribunal or agency thereof
within five days therefrom.

ATTY. EMMANUEL AGUSTIN, ET AL. VS. For failure to comply with this mandate, Section 7 of Rule
ALEJANDRO CRUZ-HERRERA 43 provides that the failure of the petitioner to comply
with any of the foregoing requirements regarding the
payment of the docket and other lawful fees, the deposit
for costs, proof of service of the petition, and the contents
of and the documents which should accompany
9
the petition shall be sufficient ground for the petition for certiorari filed with the CA. They sought,
dismissal thereof. among other reliefs, the dismissal of the complaint for
injunction for violation of the rules on litis pendentia and
The Court has ruled that the subsequent submission of
forum shopping. On the matter of the absence of a motion
proof of authority to act on behalf of a petitioner
for reconsideration of the trial court's order before
corporation justifies the relaxation of the Rules for the
resorting to a petition for certiorari, the heirs explained
purpose of allowing its petition to be given due course.
that the implementation of the questioned writs rendered
It must also be kept in mind that while the requirement of their motion for reconsideration moot and academic. The
the certificate of non-forum shopping is mandatory, heirs argued that their case was within the exceptions to
nonetheless the requirements must not be interpreted too the general rule that a petition under Rule 65 will not lie
literally and thus defeat the objective of preventing the unless a motion for reconsideration is first filed.
undesirable practice of forum shopping.
CA NULLIFIED and SET ASIDE the ruling of RTC.
The CA ruled that the RTC gravely abused its
ELSA D. MEDADO VS. HEIRS OF THE LATE discretion in taking cognizance of Civil Case for
ANTONIO CONSING injunction during the pendency of Civil Case for
rescission and damages as this violates the rule against
FACTS: (Spouses Medado) and Estate of Consing forum shopping.
executed Deeds of Sale with Assumption of Mortgage of
the property identified as Hacienda. ISSUES:

As part of the deal, Spouses Medado undertook to assume Was the requirement for verification and certification
the estate's loan with (PNB). against forum shopping complied with by the heris of
consing when the same is solely signed by Soledad-
administratix?
Subsequent to the sale, however, the Estate of Consing Was the rule on forum shopping violated by (Sps
offered the subject lots to the government. Estate of Medado) when they filed the complaint for injunction
Consing also instituted with the RTC, an action for during the pendency of the action for rescission
rescission and damages against Spouses Medado due to and damages ( filed by the estate of Consing).
the alleged failure of the spouses to meet the conditions in
their agreement. HELD:

In the meantime while the case for rescission was The requirements for verification and certification
pending, Land Bank issued in favor of the Estate of against forum shopping in the CA petition were
Consing a certificate of deposit of cash as compensation substantially complied with, following
for the lots. settled jurisprudence.
It was signed on behalf of her co-petitioners by virtue of
a Special Power of Attorney:
Spouses Medado feared that LBP would release the full
proceeds thereof to the Estate of Consing, they institute To protect, sue, prosecute, defend and adopt
an action for injunction to restrain LBP from releasing whatever action necessary and proper relative and with
the remaining amount of the proceeds of the lots to Estate respect to our right, interest and participation over said
of Consing, and restraining the Estate of Consing from properties
receiving these proceeds
Purpose of Verification:
RTC granter the injunction (Medado) and the Writ of
verification requirement is simply intended to secure an
Preliminary Injunction was issued. The writ was
assurance that the allegations in the pleading are true
implemented 1 day before the hearing for the motion for
and correct, and not the product of the imagination or
reconsideration filed by Heirs of Consing
a matter of speculation, and that the pleading is filed
Feeling aggrieved, the heirs of the late Antonio in good faith.
Consing (Consing) questioned the RTC's order via a
10
The general rule is that the certificate of non- Forum-shopping exists when the elements of litis
forum shopping must be signed by all the plaintiffs in a pendentia concur. PRP-C
case and the signature of only one of them is
(1) identity of parties, or at least such parties as represent
insufficient. However, The rule of substantial
the same interests in both actions,
compliance may be availed of with respect to the contents
of the certification. Thus, under justifiable (2) identity of rights asserted and relief prayed for, the
circumstances, the Court has relaxed the rule requiring the relief being founded on the same facts, and
submission of such certification considering that
although it is obligatory, it is not jurisdictional. (3) the identity of the two proceeding particulars is such
that any judgment rendered in the other action will,
Settled doctrine: regardless of which party is successful, amount to res
judicata in the action under consideration;
Verification and certification agasint forum shopping
Substantially complied with because all the petitioners said requisites are also constitutive of the requisites
share a common interest and invoke a common cause for auter action pendant or lis pendens.[18] Applying
of action or defense. the foregoing, there was clearly a violation of the rule
against forum shopping
verification of a pleading is a formal, not a jurisdictional,
requirement intended to secure the assurance that the All elements of litis pendentia are present with the
matters alleged in a pleading are true and correct. filing of the two cases.
There are recognized exceptions permitting resort to
a special civil action of certiorari even without first identity of parties ==== both involving the estate and
filing a motion for reconsideration. heirs of the late Consing on one hand, and Spouses
Medado on the other. Primary litigants in the two action,
The general rule is that a motion for and their interests, are the same
reconsideration is a condition sine qua non before a identity of rights==== reliefs being founded on the same
petition for certiorari may lie, its purpose being to grant set of facts. In both cases, the parties claim their supposed
an opportunity for the court a quo to correct any error right as owners of the subject properties.--- with Spouses
attributed to it by re-examination of the legal and factual Medado as buyers and the heirs as sellers,
circumstances of the case.
identity of the two cases ====is such as would render the
exceptions : decision in the rescission case res judicata in the
injunction case, and vice versa.- (pag narescind- eh di
1. order is a patent nullity because the court a quo had no
yung heirs and owner, therefore the injunction case of sps
jurisdiction;
Medado would have no basis. On the other hand if the
2.urgent necessity for the resolution of the question, and injunction case prevails, it’s as if saying that Sps Medado
any further delay would prejudice the interests of the are the owners, thus there is no cause of action to rescind
Government or of the petitioner, the deed of sale. )
3. where, under the circumstances, a motion for The test of identity of causes of action lies not in the form
reconsideration would be useless; of an action but on whether the same evidence would
support and establish the former and the present causes
of action.
4. where the petitioner was deprived of due process and
Factors to determine which case should be dismissed,
there is extreme urgency of relief
As correctly held by the CA, a motion for
reconsideration had become useless---- naissue na ang (1) the date of filing, with preference generally given
writ of preliminary injunction and court had decided to the first action filed to be retained;
to implement the writs
(2) whether the action sought to be dismissed was filed
just a day before the scheduled hearing on said motion.
merely to preempt the latter action or to anticipate
its filing and lay the basis for its dismissal; and

11
(3) whether the action is the appropriate vehicle for from the time they were terminated on 31 October 2001
litigating the issues between the parties until the date when the LA upheld the validity of their
dismissal on 30 July 2002. Additionally, the NLRC
Ratio of res judicata requires that stability be accorded
pierced the veil of corporate fiction and ruled that Mar
to judgments. Controversies once decided on the merits
Fishing and Miramar were one and the same entity, since
shall remain in repose for there should be an end to
their officers were the same.Hence, both companies were
litigation which, without the doctrine, would be
ordered to solidarily pay the monetary claims.
endless.
On reconsideration, the NLRC modified its ruling by
imposing liability only on Mar Fishing.
VIVIAN T. RAMIREZ ET. AL. VS. MAR FISHING
CO, INC., ET AL Despite the award of separation pay and back wages,
FACTS: petitioners filed a Rule 65 Petition before the CA arguing
On 28 June 2001, Mar Fishing sold its principal assets to that both Mar Fishing and Miramar should be made liable
co-respondent Miramar Fishing Co., Inc. through public for their separation pay, and that their back wages should
bidding. In view of that transfer, Mar Fishing issued a be up to the time of their actual reinstatement. However,
Memorandum on October 23, 2001, informing all its finding that only 3 of the 228 petitioners signed the
workers that the company would cease to operate by the Verification and Certification against forum shopping, the
end of the month, thereafter, it also notified the DOLE of CA instantly dismissed the action for certiorari against the
the closure of its business operations. 225 other petitioners without ruling on the substantive
aspects of the case.
Mar Fishing labor union, Mar Fishing Workers Union ISSUE:
NFL and Miramar entered into a Memorandum of
Agreement, which provides that Miramar, shall absorb 1. Whether or not the CA gravely erred in dismissing
Mar Fishing regular rank and file employees whose their Petition for Review on the ground that their
performance was satisfactory, without loss of seniority pleading lacked a Verification and Certification against
rights and privileges previously enjoyed. forum shopping?
RULING:
Unfortunately, petitioners, who worked as rank and file
employees, were not hired or given separation pay by The Rules of Court provide that a petition for certiorari
Miramar.Thus, petitioners filed Complaints for illegal must be verified and accompanied by a sworn
dismissal with money claims before the Arbitration certification of non-forum shopping. Failure to comply
Branch of the NLRC. with these mandatory requirements shall be sufficient
ground for the dismissal of the petition.
The labor arbiter found that Mar Fishing had necessarily
closed its operations, considering that Miramar had Because of petitioner noncompliance with the
already bought the tuna canning plant. By reason of the requirements governing the certification of non-forum
closure, petitioners were legally dismissed for authorized shopping, no error could be validly attributed to the CA
cause. In addition, even if Mar Fishing reneged on when it ordered the dismissal of the special civil action
notifying the DOLE within 30 days prior to its closure, for certiorari. The lack of certification against forum
that failure did not make the dismissals void. shopping is not curable by mere amendment of a
Consequently, the LA ordered Mar Fishing to give complaint, but shall be a cause for the dismissal of the
separation pay to its workers. case without prejudice.Indeed, the general rule is that
subsequent compliance with the requirements will not
Aggrieved, petitioners pursued the action before the excuse a party's failure to comply in the first instance.
NLRC, which modified the LA Decision. Noting that Mar Thus, on procedural aspects, the appellate court correctly
Fishing notified the DOLE only two days before the dismissed the case.
business closed, the labor court considered
petitionersdismissal as ineffectual. Hence, it awarded,
apart from separation pay, full back wages to petitioners
12
ATTY. FE Q. PALMIANO SALVADOR VS. that Santiago and his agents be enjoined from - claiming
CONSTANTINO ANGELES possession and ownership over Lot No. 68 of the Tala
Estate Subdivision, Quezon City, covered by TCT No.
Facts: RT-90200 (334555); that Santiago and his agents be
This is a petition to reversed and set aside the decision of prevented from making use of the vacant lot as a jeepney
the CA dismissing the petition before them. terminal; that Santiago be ordered to pay Ceroferr
P650.00 daily as lost income for the use of the lot until
Respondent Angeles is one of the registered owners of a possession is restored to the latter; and that Santiago be
parcel of land located in Sampaloc, Manila. This land is directed to pay plaintiff Ceroferr moral, actual and
occupied by Galiga from 1979 to 1993 with a lease exemplary damages and attorneys fees, plus expenses of
contract. Salvador alleged that she bought the land from litigation.
Galiga who represented the owner.
In his answer, defendant Santiago alleged that the vacant
Angeles then sent a letter to Salvador demanding that lot referred to in the complaint was within Lot No. 90 of
Salvador to vacate the property. Angeles then filed a the Tala Estate Subdivision, covered by his TCT No. RT-
complaint for ejectment with the MTC of Manila. 78 110 (3538); that he was not claiming any portion of
MTC rendered its decision in favor of Angeles. Salvador Lot No. 68 claimed by Ceroferr; that he had the legal right
filed an appeal saying that Angeles had not authority at to fence Lot No. 90 since this belonged to him, and he had
the time of the filing of the suit. RTC denied the appeal. a permit for the purpose; that Ceroferr had no color of
Petitioner elevated the case to the CA, but CA affirmed right over Lot No. 90 and, hence, was not entitled to an
the RTC. Hence, this present petition. injunction to prevent Santiago from exercising acts of
ownership thereon; and that the complaint did not state a
Issue: Diaz's (respondent’s representative) failure to cause of action.
proof his authority to represent.
In the course of the proceedings, an important issue
Held: metamorphosed as a result of the conflicting claims of the
parties over the vacant lot actually used as a jeepney
"[i]f a complaint is filed for and in behalf of the plaintiff
terminal the exact identity and location thereof. There was
[by one] who is not authorized to do so, the complaint is
a verification survey, followed by a relocation survey,
not deemed filed. An unauthorized complaint does not
whereby it would appear that the vacant lot is inside Lot
produce any legal effect. Hence, the court should dismiss
No. 68. The outcome of the survey, however, was
the complaint on the ground that it has no jurisdiction over
vigorously objected to by defendant who insisted that the
the complaint and the plaintiff."
area is inside his lot. Defendant, in his manifestation
Pursuant to the foregoing rulings, therefore, the MeTC dated November 2, 1994, adverted to the report of a
never acquired jurisdiction over this case and all geodetic engineer. Mariano V. Flotildes, to the effect that
proceedings before it were null and void. The courts could the disputed portion is inside the boundaries of Lot No.
not have delved into the very merits of the case, because 90 of the Tala Estate Subdivision which is separate and
legally, there was no complaint to speak of. The court's distinct from Lot No. 68, and that the two lots are
jurisdiction cannot be deemed to have been invoked at all. separated by a concrete fence.

Petition is granted Because of the competing claims of ownership of the


parties over the vacant lot, it became inevitable that the
eye of the storm centered on the correctness of property
CEROTERR REALTY CORP VS. CA boundaries which would necessarily result in an inquiry
as to the regularity and validity of the respective titles of
FACTS: the parties. While both parties have been brandishing
separate certificates of title, defendant asserted a superior
On March 16, 1994, plaintiff (Ceroferr Realty
claim as against that of the plaintiff in that, according to
Corporation) filed with the Regional Trial Court, Quezon
defendant, his title has been confirmed through judicial
City, Branch 93, a complaint[7] against defendant Ernesto
reconstitution proceedings, whereas plaintiffs title does
D. Santiago (Santiago), for damages and injunction, with
not carry any technical description of the property except
preliminary injunction. In the complaint, Ceroferr prayed
13
only as it is designated in the title as Lot No. 68 of the RULING:
Tala Estate Subdivision.
We grant the petition.
It thus became clear, at least from the viewpoint of
The rules of procedure require that the complaint must
defendant, that the case would no longer merely involve a
state a concise statement of the ultimate facts or the
simple case of collection of damages and injunction
essential facts constituting the plaintiffs cause of action.
which was the main objective of the complaint - but a
A fact is essential if it cannot be stricken out without
review of the title of defendant vis--vis that of plaintiff.
leaving the statement of the cause of action inadequate. A
At this point, defendant filed a motion to dismiss the
complaint states a cause of action only when it has its
complaint premised primarily on his contention that the
three indispensable elements, namely: (1) a right in favor
trial court cannot adjudicate the issue of damages without
of the plaintiff by whatever means and under whatever
passing over the conflicting claims of ownership of the
law it arises or is created; (2) an obligation on the part of
parties over the disputed portion.
the named defendant to respect or not to violate such
On May 14, 1996, the trial court issued the order now right; and (3) an act or omission on the part of such
subject of this appeal which, as earlier pointed out, defendant violative of the right of plaintiff or constituting
dismissed the case for lack of cause of action and lack of a breach of the obligation of defendant to the plaintiff for
jurisdiction. The court held that plaintiff was in effect which the latter may maintain an action for recovery of
impugning the title of defendant which could not be done damages.[12] If these elements are not extant, the
in the case for damages and injunction before it. The court complaint becomes vulnerable to a motion to dismiss on
cited the hoary rule that a Torens certificate of title cannot the ground of failure to state a cause of action.[13]
be the subject of collateral attack but can only be
These elements are present in the case at bar.
challenged through a direct proceeding. It concluded that
it could not proceed to decide plaintiffs claim for damages The complaint[14] alleged that petitioner Ceroferr
and injunction for lack of jurisdiction because its owned Lot 68 covered by TCT No. RT-90200
judgment would depend upon a determination of the (334555). Petitioner Ceroferr used a portion of Lot 68 as
validity of defendants title and the identity of the land a jeepney terminal.
covered by it.
The complaint further alleged that
From this ruling, plaintiff appealed to this court insisting respondent Santiago claimed the portion of Lot 68 used
that the complaint stated a valid cause of action which was as a jeepney terminal since he claimed that the jeepney
determinable from the face thereof, and that, in any event, terminal was within Lot 90 owned by him and covered by
the trial court could proceed to try and decide the case TCT No. RT-781 10 (3538) issued in his name.
before it since, under present law, there is now no
substantial distinction between the general jurisdiction Despite clarification from petitioner Ceroferr that the
vested in a regional trial court and its limited jurisdiction jeepney terminal was within Lot 68 and not
when acting as a land registration court, citing Ignacio v. within Lot 90, respondent Santiago persisted in his plans
Court of Appeals 246 SCRA 242 (1995). to have the area fenced. He applied for and was issued a
fencing permit by the Building Official, Quezon City. It
On March 26, 1999, the Court of Appeals promulgated a was even alleged in the complaint that
decision dismissing the appeal.[8] On May 13, 1999, respondent- Santiago was preventing petitioner Ceroferr
petitioner filed with the Court of Appeals a motion for and its agents from entering the property under threats of
reconsideration of the decision.[9] On July 29, 1999, the bodily harm and destroying existing structures thereon.
Court of Appeals denied petitioners motion for
reconsideration for lack of merit.[10] A defendant who moves to dismiss the complaint on the
ground of lack of cause of action, as in this case,
Hence, this appeal.[11] hypothetically admits all the averments thereof. The test
of sufficiency of the facts found in a complaint as
ISSUE:
constituting a cause of action is whether or not admitting
whether Ceroferrs complaint states a sufficient cause of the facts alleged the court can render a valid judgement
action upon the same in accordance with the prayer thereof. The
hypothetical admission extends to the relevant and

14
material facts well pleaded in the complaint and The presentation of evidence for petitioner, however, was
inferences fairly deducible therefrom. Hence, if the deemed waived and terminated due to the repeated non-
allegations in the complaint furnish sufficient basis by appearance of petitioner and its counsel.[13]
which the complaint can be maintained, the same should
not be dismissed regardless of the defense that may be Petitioners Arguments
assessed by the defendants.[15] Petitioner argues that a charge or sales invoice is not an
actionable document; thus, petitioners failure to deny
In this case, petitioner Ceroferrs cause of action has been
under oath its genuineness and due execution does not
sufficiently averred in the complaint. If it were admitted
constitute an admission thereof.[20] Petitioner likewise
that the right of ownership of petitioner Ceroferr to the
insists that respondent was not able to prove her claim as
peaceful use and possession of Lot 68 was violated by
the invoices offered as evidence were not properly
respondent Santiagos act of encroachment and fencing of
authenticated by her witnesses.[21]Lastly, petitioner claims
the same, then petitioner Ceroferr would be entitled to
that the CA erred in affirming the award of attorneys fees
damages.
as the RTC Decision failed to expressly state the basis for
the award thereof.[22]
ASIAN CONSTRUCTION AND DEVELOPMENT Respondents Arguments
CORP. VS. LOURDES K. MENDOZA
Respondent, in her Comment,[23] prays for the dismissal
Factual Antecedents of the petition contending that the arguments raised by
petitioner are a mere rehash of those presented and
On January 6, 2000, respondent Lourdes K. Mendoza,
already passed upon by the CA.[24] She maintains that
sole proprietor of Highett Steel Fabricators (Highett),
charge invoices are actionable documents,[25] and that
filed before the Regional Trial Court (RTC)
these were properly identified and authenticated by
of Caloocan City, Branch 126, a Complaint[4] for a sum of
witness Tejero, who testified that upon delivery of the
money, docketed as Civil Case No. C-19100, against
supplies and materials, the invoices were stamped
petitioner Asian Construction and Development
received by petitioners employee.[26] Respondent
Corporation, a duly registered domestic corporation.
contends that the award of attorneys fees was justified as
In the complaint, respondent alleged that from the period the basis for the award was clearly established during the
August 7, 1997 to March 4, 1998, petitioner purchased trial.[27]
from Highett various fabricated steel materials and
RULING:
supplies amounting to P1,206,177.00, exclusive of
interests;[5] that despite demand, petitioner failed and/or The petition is partly meritorious.
refused to pay;[6] and that due to the failure and/or refusal
of petitioner to pay the said amount,respondent was The charge invoices are not actionable documents
compelled to engage the services of counsel.[7] Section 7 of Rule 8 of the Rules of Court states:
Petitioner moved for a bill of particulars on the ground SEC. 7. Action or defense based on document. Whenever
that no copies of the purchase orders and invoices were an action or defense is based upon a written instrument or
attached to the complaint to enable petitioner to prepare a document, the substance of such instrument or
responsive pleading to the complaint.[8] The RTC, document shall be set forth in the pleading, and the
however, in an Order dated March 1, 2000, denied the original or a copy thereof shall be attached to the
motion.[9] Accordingly, petitioner filed its Answer with pleading as an exhibit, which shall be deemed to be a
Counterclaim[10] denying liability for the claims and part of the pleading, or said copy may with like effect be
interposing the defense of lack of cause of action.[11] set forth in the pleading. (Emphasis supplied.)
To prove her case, respondent presented the testimonies Based on the foregoing provision, a document is
of (1) Artemio Tejero (Tejero), the salesman of Highett actionable when an action or defense is grounded upon
who confirmed the delivery of the supplies and materials such written instrument or document. In the instant case,
to petitioner, and (2) Arvin Cheng, the General Manager the Charge Invoices[28] are not actionable documents per
of Highett.[12] se as these only provide details on the alleged

15
transactions.[29] These documents need not be attached to Petitioners specifically denied the allegations of Alcazar
or stated in the complaint as these are evidentiary in and contended that the actionable document does not
nature.[30] In fact, respondents cause of action is not based reflect their real indebtedness as well as the true contract
on these documents but on the contract of sale between or intention of the parties. The document does not reflect
the parties. the correct amount which is only P600,000. Thus,
petitioners sought the dismissal of the Complaint.
Delivery of the supplies and materials was duly proved
Petitioners filed a Demurrer to Evidence and argued that
But although the Charge Invoices are not actionable the Acknowledgment presented in court was not an
documents, we find that these, along with the Purchase original copy, hence, inadmissible. Trial court denied
Orders,[31] are sufficient to prove that petitioner indeed petitioners’ demurrer and scheduled the presentation of
ordered supplies and materials from Highett and that these petitioners’ evidence. Thereafter, petitioners moved to
were delivered to petitioner. reset the scheduled on the ground that on the scheduled
hearing, their counsel was to appear in another scheduled
case. However, the trial court denied the motion to reset
Moreover, contrary to the claim of petitioner, the Charge for lack of merit and for violating Section 4, Rule 15 of
Invoices were properly identified and authenticated by the Rules of Civil Procedure. The trial court declared that
witness Tejero who was present when the supplies and the petitioners have waived their right to present evidence.
materials were delivered to petitioner and when the Petitioners filed a petition for certiorari to the CA and
invoices were stamped received by petitioners employee, questioned the denial of their demurrer but the CA
Roel Barandon.[32] sustained the TC’s denial of their demurrer.
It bears stressing that in civil cases, only a preponderance Regional Trial Court’s Decision: RTC rendered judgment
of evidence or greater weight of the evidence is in favor of respondent Alcazar and ordered petitioners to
required.[33] In this case, except for a bare denial, no other pay plaintiff the sum of 1,456,000 plus interest, litigation
evidence was presented by petitioner to refute and attorney’s fees. It held that petitioners admitted that
respondents claim. Thus, we agree with the CA that the they entered into transactions with Alcazar for the
evidence preponderates in favor of respondent. delivery of paint and construction materials and that from
Basis for the award of Attorneys fees must be stated in the Acknowledgment, petitioners admitted that their
the decision unpaid obligation is P1,456,000.

However, with respect to the award of attorneys fees to CA’s Decision: On appeal, the petitioners alleged that the
respondent, we are constrained to disallow the same RTC erred in allowing Alcazar to present her evidence ex
as the rationale for the award was not stated in parte.

the text of the RTC Decision but only in the dispositive It sustained the trial court’s denial of petitioners’
portion.[34] demurrer. The CA held that petitioners failed to deny
specifically under oath the genuineness and due execution
of the Acknowledgment, consequently, its genuineness
and due execution are deemed admitted, there was thus no
SPOUSES FERNANDO AND MARIA ELENA
need to present the original thereof, and petitioners’
SANTOS VS. LOLITA ALCAZAR
liability was sufficiently established.
FACTS: Respondent Alcazar was the proprieter of
ISSUE: Whether or not the Pre-trial Conference is a sham
Legazpi Color Center (LCC). Alcazar filed a complaint
as there are no records to show that it was conducted.
for sum of money against petitioners for the collection of
the value of paint and construction materials in the HELD: No. Court found them to be without merit. A pre-
amount of 1,456,000. The Acknowledgment executed by trial conference was held, and that petitioners'
Petitioner Fernando was the basis of Alcazar’s cause of representative was present therein. Moreover, the
action. Under the said Acknowledgment, Petitioner proceedings were covered by the required pre-trial order,
Fernando acknowledged his obligation with LCC to pay which may itself be considered a record of the pre-trial. In
the value of the paint and construction materials in the said order, the November 8, 2005 pre-scheduled hearing
amount of 1,456,000. was particularly specified. Thus, from the very start,
16
petitioners knew of the November 8 hearing; if they failed 1. YES. Bill of particulars must be granted.
to attend, no fault may be attributed to the trial court.

A complaint is defined as a concise statement of the


TANTUICO, JR. VS. REPUBLIC ultimate facts constituting the plaintiff's cause or causes
of action. Like all other pleadings allowed by the Rules of
Topic: Pleadings, Alleging Cause of Action Court, the complaint shall contain in a methodical and
Provisions: Sec. 1, Rule 12 logical form a plain, concise and direct statement of the
ultimate facts on which the plaintiff relies for his claim,
FACTS: omitting the statement of mere evidentiary facts. Its
July 31, 1987: The Republic filed a case (reconveyance, office, purpose or function is to inform the defendant
revision, accounting, restitution and damages) against clearly and definitely of the claims made against him so
Kokoy Romualdez, Ferdinand Marcos and Imelda that he may be prepared to meet the issues at the trial. The
Marcos. Petitioner Tantuico was also included based on a complaint should inform the defendant of all the material
couple of theories facts on which the plaintiff relies to support his demand;
it should state the theory of a cause of action which forms
(1) He acted in unlawful concert w/ other defendants the bases of the plaintiff's claim of liability.
in misappropriation of public funds
Where the complaint states ultimate facts that constitute
(2) Acted as dummy by allowing himself to be the three (3) essential elements of a cause of action,
incorporator, director among other capacities in namely: (1) the legal right of the plaintiff, (2) the
companies held by defendants correlative obligation of the defendant, and (3) the act or
omission of the defendant in violation of said legal right,
(3) Acted in flagrant breach of public trust and
the complaint states a cause of action, otherwise, the
fiduciary obligations as public officers
complaint must succumb to a motion to dismiss on that
(4) As COA chair, failed to do his duties ground of failure to state a cause of action. However,
where the allegations of the complaint are vague,
(5) Dummy as instrument of accumulated ill-gotten indefinite, or in the form of conclusions, the proper
wealth through the corporations recourse would be, not a motion to dismiss, but a motion
__________________________ for a bill of particulars. Thus, Section 1, Rule 12 of the
Rules of Court provides:
PROCEDURAL HISTORY:
Before responding to a pleading or, if no responsive
Sandiganbayan: pleading is permitted by these rules, within ten (10) days
after service of the pleading upon him, a party may move
Motion for production and inspection of documents
for a more definite statement or for a bill of particulars of
denied
any matter which is not averred with sufficient
Petitioner filed for Bill of Particulars, alleging that as he definiteness or particularity to enable him properly to
is being sued as public officer and private person, he prepare his responsive pleading or to prepare for trial.
deserves to have been furnished averments by plaintiff- Such motion shall point out the defects complained of and
denied stating that the grounds are evidentiary in nature the details desired.

SC: In this connection, the following allegations have been


held as mere conclusions of law, inferences from facts
Certiorari, prohibition, mandamus w/ prayer for issuance not alleged or opinion of the pleader:
of prelim injcunction and/or restraining order.
(a) the allegations that defendants appellees were
ISSUE: "actuated by ulterior motives, contrary to law and morals,
with abuse of their advantageous position as employers,
1. WON Sandiganbayan erred in not granting the bill of in gross and evident bad faith and without giving plaintiff
particulars as prayed for by the plaintiff (YES) . . . his due, wilfully, maliciously, unlawfully, and in
HELD: summary and arbitrary manner", are conclusions of law,
17
inferences from facts not alleged and expressions of D.M. FERRER & ASSOCIATES CORPORATION v.
opinion unsupported by factual premises; UNIVERSITY OF SANTO TOMAS G.R. No. 189496.
February 1, 2012.
(b) an allegation of duty in terms unaccompanied by a
statement of facts showing the existence of the duty, is a FACTS: Petitioner and University of Santo Tomas
mere conclusion of law, unless there is a relation set forth Hospital, Inc. entered into a Project Management
from which the law raises the duty; Contract for the renovation of the 4th and 5thfloors of the
Clinical Division Building, Nurse Call Room and Medical
(c) an averment . . . that an act was "unlawful" or
Records, Medical Arts Tower, Diagnostic Treatment
"wrongful" is a mere legal conclusion or opinion of the
Building and Pay Division Building.
pleader;
On various dates, petitioner demanded from USTHI the
(d) the allegation that there was a violation of trust was
payment of the construction costs amounting to
plainly a conclusion of law, for "a mere allegation that it
P17,558,479.39. However, UST, through its rector, Fr.
was the duty of a party to do this or that, or that he was
Rolando V. Dela Rosa, wrote a letter informing petitioner
guilty of a breach of duty, is a statement of a conclusion,
that its claim for payment had been denied, because the
not of a fact;"
Project Management Contract was without the required
(e) an allegation that a contract is valid or void, is a mere prior approval of the board of trustees. Thus, petitioner
conclusion of law; filed a Complaint for sum of money, breach of contract
and damages against herein respondent UST and USTHI
(f) the averment in the complaint that "defendant usurped when the latter failed to pay petitioner despite repeated
the office of Senator of the Philippines" is a conclusion of demands.
law — not a statement of fact — inasmuch as the
particular facts on which the alleged usurpation is In impleading respondent UST, petitioner alleged that the
predicated are not set forth therein; and former took complete control over the business and
operation of USTHI, as well as the completion of the
(g) the averment that "with intent of circumventing the construction project. It also pointed out that the Articles
constitutional prohibition that 'no officer or employee in of Incorporation of USTHI provided that, upon
the civil service shall be removed or suspended except for dissolution, all of the latter’s assets shall be transferred
cause as provided by law', respondents maliciously and without any consideration and shall inure to the benefit of
illegally for the purpose of political persecution and UST. It appears that USTHI passed a Resolution
political vengeance, reverted the fund of the salary item . dissolving the corporation by shortening its corporate
. . and furthermore eliminated or abolished the said term of existence.
position effective 1 July 1960" is a mere conclusion of law
unsupported by factual premises. Finally, petitioner alleged that respondent, through its
rector, Fr. Dela Rosa, O.P., verbally assured the former of
Dispositive: the payment of USTHIs outstanding obligations.
WHEREFORE, the petition is GRANTED and the Thus, petitioner posited in part that UST may be
resolutions dated 21 April 1989 and 29 May 1989 are impleaded in the case under the doctrine of piercing the
hereby ANNULLED and SET ASIDE. The respondents corporate veil, wherein respondent UST and USTHI
are hereby ordered to PREPARE and FILE a Bill of would be considered to be acting as one corporate entity,
Particulars containing the facts prayed for by petitioner and UST may be held liable for the alleged obligations
within TWENTY (20) DAYS from notice, and should due to petitioner.
they fail to submit the said Bill of Particulars, respondent
Sandiganbayan is ordered TO EXCLUDE the herein Subsequently, respondent filed its Motion to Dismiss. It
petitioner as defendant in Civil Case No. 0035. alleged that the Complaint failed to state a cause of action,
and that the claim was unenforceable under the provisions
SO ORDERED. of the Statute of Frauds.
RTC Quezon City granted the motion and dismissed the
Complaint insofar as respondent UST was concerned, on
the ground that respondent was not a real party-in-

18
interest, and that it was not privy to the contract executed ISSUE: (1) Whether the CA erred in dismissing the
between USTHI and petitioner. Second, the court pointed Petition for Certiorari by failing to consider the exception
out that the alleged verbal assurances of Fr. Dela Rosa in Sec. 1(g) of Rule 41 of the Rules of Court.
should have been in writing to make these assurances
(2) Whether the trial court committed grave abuse of
binding and demandable.
discretion when it held that the Complaint stated no cause
Petitioner sought a reconsideration of the RTC Order and of action.
asserted that only allegations of the Complaint, and not
HELD: (1) Yes.A petition for certiorari under Rule 65 is
the attached documents, should have been the basis of the
the proper remedy to question the dismissal of an action
trial court’s ruling, consistent with the rule that the cause
against one of the parties while the main case is still
of action can be determined only from the facts alleged in
pending.
the Complaint. It also insisted that the Statute of Frauds
was inapplicable, since USTHI’s obligation had already In Jan-Dec Construction Corp. v. Court of Appeals, the
been partially executed. Court ruled that the CA erred in dismissing petitioner's
petition for certiorari from the Order of the RTC
The Motion for Reconsideration filed by petitioner was
dismissing the complaint against respondent. While
dimissed, upholding the initial findings that respondent
Section 1, Rule 41 of the 1997 Rules of Civil Procedure
UST was not a real party-in-interest, and that Fr. Dela
states that an appeal may be taken only from a final order
Rosas alleged assurances of payment were unenforceable.
that completely disposes of the case, it also provides
Subsequently, petitioner filed a Petition for Certiorari several exceptions to the rule, to wit: (a) an order denying
under Rule 65 with the CA, alleging that the trial court a motion for new trial or reconsideration; (b) an order
committed grave abuse of discretion when it granted denying a petition for relief or any similar motion seeking
respondents Motion to Dismiss on the basis of the relief from judgment; (c) an interlocutory order; (d) an
documents submitted in support of the Complaint, and not order disallowing or dismissing an appeal; (e) an order
solely on the allegations stated therein. It pointed out that denying a motion to set aside a judgment by consent,
the allegations raised questions of fact and law, which confession or compromise on the ground of fraud,
should have been threshed out during trial, when both mistake or duress, or any other ground vitiating consent;
parties would have been given the chance to present (f) an order of execution; (g) a judgment or final order for
evidence supporting their respective allegations. or against one or more of several parties or in separate
claims, counterclaims, crossclaims and third-party
CA issued the assailed Resolution and dismissed the
complaints, while the main case is pending, unless the
Petition on the ground that a petition under Rule 65 is the
court allows an appeal therefrom; and (h) an order
wrong remedy to question the RTCs Order that
dismissing an action without prejudice. In the foregoing
completely disposes of the case. Instead, petitioner should
instances, the aggrieved party may file an appropriate
have availed itself of an appeal under Rule 41 of the Rules
special civil action for certiorari under Rule 65.
of Court.
(2) Yes. In Abacan v. Northwestern University, Inc., the
Petitioner moved for a reconsideration of the Resolution,
Court ruled that it is settled that the existence of a cause
pointing out that the present case falls under the
of action is determined by the allegations in the
enumerated exceptions of Rule 41, in particular, while the
complaint. In resolving a motion to dismiss based on the
main case is still pending, no appeal may be made from a
failure to state a cause of action, only the facts alleged in
judgment or final order for or against one or more of
the complaint must be considered. The test is whether the
several parties or in separate claims, counterclaims, cross-
court can render a valid judgment on the complaint based
claims and third-party complaints.
on the facts alleged and the prayer asked for. Indeed, the
CA denied the Motion for Reconsideration through its elementary test for failure to state a cause of action is
second assailed Resolution, holding that the motion raised whether the complaint alleges facts which if true would
no new issues or substantial grounds that would merit the justify the relief demanded. Only ultimate facts and not
reconsideration of the court. legal conclusions or evidentiary facts, which should not
be alleged in the complaint in the first place, are
considered for purposes of applying the test.

19
While it is admitted that respondent UST was not a party ISSUE: Whether or not La Mallorca (petitioner) is be
to the contract, petitioner posits that the former is liable.
nevertheless liable for the construction costs. In support
HELD: Yes. Although private respondents alighted at the
of its position, petitioner alleged that (1) UST and USTHI
designated place, insofar as the husband is concerned, the
are one and the same corporation; (2) UST stands to
relationship of passenger and carrier still subsisted due to
benefit from the assets of USTHI by virtue of the
the fact that the bayong which he was supposed to claim
latters Articles of Incorporation; (3) respondent controls was still in the bus. The issue to be determined is whether
the business of USTHI; and (4) USTs officials have the carrier was also liable for the safety of the child. The
performed acts that may be construed as an recognized rule is that the relation of carrier and passenger
acknowledgement of respondents liability to petitioner. does not automatically cease when the passenger alighted.
The latter must have had a reasonable time or opportunity
Obviously, these issues would have been best resolved
to leave the carrier’s premises. A “reasonableness” is to
during trial. The RTC therefore committed grave abuse of
be determined by the circumstances.
discretion when it dismissed the case against respondent
for lack of cause of action. The trial court relied on the It must be noted that the bus did not observe a carrier’s
contract executed between petitioner and USTHI, when obligation to exercise “utmost diligence” of a “very
the court should have instead considered merely the cautious person” when it commenced to leave without the
allegations stated in the Complaint. La Mallorca v. Court signal of the conductor. Also, the presence of private
of Appeals, Mariano Beltran, et al. G.R. No. L-20761. respondents near the bus was not unreasonable since they
July 27, 1966. still have a part of their baggage in the bus. Thus, they are
still to be considered as passengers and entitled to
FACTS: Private respondents (Mariano Beltran being the
protection under the contract of carriage.
husband, and his wife), with their three minor daughters
at about noontime, boarded a Pambusco Bus at San But assuming that the carrier-passenger relationship had
Fernando, Pampanga. It was owned and operated by already ceased, petitioner may still be held liable for
defendant. Private respondents were carrying with them negligence of its driver, which shall fall under quasi-
at the time four pieces of baggage. The conductor of the delict.
bus then issued tickets to them, except to two of the
daughters, who were below the height requirement at
which the fare was charged.When the bus reached Anao, LA MALLORCA VS. CA
it stopped there to allow the passengers bound therefor to
get down. Among these were the private respondents and - 2 CASES SA NET. CHECK NA LANG NATIN
their children. Private respondent husband went back to ANO DUN SA DALAWA
the bus to retrieve his bayong which he left behind.
However, he did not notice that one of his daughters
followed him. When he was waiting for the conductor to LEDDA V. BPI. G.R. NO. 200868. NOVEMBER 21,
hand him the bayong, the bus started to leave without the 2012.
signal of the conductor, then it stopped
FACTS: Anita Ledda was a client of Bank of the
again.Nevertheless, sensing that the bus is again about to
Philippine Islands (BPI) who was issued a pre-approved
move, private respondent husband veered away from the
credit card. This credit card and its terms and conditions
same. At the same time, he noticed people gathering
were delivered to Ledda; Ledda began to subsequently
around the body of a child who turned out to be his
use the credit card for various purchases of goods,
daughter, with her skull crushed and already without life.
services, and cash advances. Ledda defaulted in the
Thus, private respondents filed an action to recover payment of her credit card obligations. BPI sent a demand
damages, which was granted by the trial court for breach letter on September 26, 2007, but this was received in
of contract of carriage.On appeal, the Court of Appeals Ledda on October 2, 2007 who defaulted payment
agreed that the contract of carriage had already nonetheless. BPI thus filed a complaint of the collection
terminated, but still made petitioner liable on the basis of of a sum of money against Ledda, allegedly amounting to
quasi-delict. P548,143.73. BPI filed the complaint in the RTC of
Makati City. The RTC declared Ledda in default for
20
failing to file an Answer within the period prescribed credit card’s terms and conditions. It was also based on
despite the service of the complaint and summons. Ledda Ledda’s 1) acceptance of the credit card, 2) use of the
somehow managed to file a motion for reconsideration, credit card to purchase goods or services or advances in
which was granted by the RTC and thus allowed her to cash, and 3) her default in the payment of her obligations.
file her Answer Ad Cautelam. Ledda and her counsel, As such, BPI had a sufficient cause of action with or
however, failed to appear during the Pre-Trial. BPI was without the attachment of the credit card’s terms and
thus allowed to present evidence ex-parte. The RTC later conditions.
ruled in favor of BPI, making Ledda liable for the alleged
amount of P548,143.73 plus a 6% monthly interest. Ledda
appealed to the CA, which denied her appeal but modified ASIAN CONSTRUCTION & DEVELOPMENT
the RTC’s decision. The CA rejected Ledda’s argument CORP VS. LOURDES MENDOZA
that the credit card’s terms and conditions were actionable
documents governed by Rule 8, sec. 7 of the Rules of Lourdes K. Mendoza (Mendoza), sole proprietor of
Civil Procedure. The CA held that BPI’s cause of action Highett Steel Fabricators (Highett), a Complaint for a sum
sprang from Ledda’s availment of the bank’s credit of money against Asian Construction and Development
facilities via the credit card and her refusal to pay the Corporation (ACDC), a duly registered domestic
obligation it created. The CA used the case of Macalinao corporation.
vs BPI in order to reduce the payment of interest. The
Macalinao case also concerned the default in payment of
a credit card obligation, but the bank therein imposed a Mendoza alleged that ACDC purchased from Highett
9.25% interest per month penalty, amounting to 111% per various fabricated steel materials and supplies amounting
annum, which the court deemed exorbitant and to P1,206,177.00, exclusive of interests; that despite
unconscionable. The CA reduced Ledda’s credit card demand, ACDC failed and/or refused to pay.
obligations to P322, 138 as the principal by deducting
P225,000.15 as interests and charges from the original
P548,143.73 amount. The CA also granted Attorney’s Petitioner moved for a bill of particulars on the ground
fees to BPI as per the Macalinao case. Ledda moved to that no copies of the purchase orders and invoices were
reconsider, but was denied by the CA. Ledda went to the attached to the complaint to enable petitioner to prepare a
SC via a petition for Review. responsive pleading to the complaint, which motion was
denied by the court. Accordingly, ACDC filed its Answer
ISSUE: Did the CA err in holding that the credit card’s
with Counterclaim denying liability for the claims and
terms and conditions were not actionable documents
interposing the defense of lack of cause of action.
under Rule 8, sec. 7 of the Rules of Civil Procedure?
Mendoza presented the testimonies her salesman Artemio
HELD: No, the CA was correct in ruling that the credit
Tejero who confirmed the delivery of the supplies and
card’s terms and conditions were not actionable
materials to ACDC.
documents under the Rules of Civil Procedure.
Rule 8, section 7 provides:
The presentation of evidence for petitioner, however, was
Section 7. Action or defense based on document. —
deemed waived and terminated due to the repeated non-
Whenever an action or defense is based upon a written
appearance of ACDC and counsel.
instrument or document, the substance of such instrument
or document shall be set forth in the pleading, and the
original or a copy thereof shall be attached to the pleading
as an exhibit, which shall be deemed to be a part of the The Court ruled in favor of Mendoza, finding ACDC
pleading, or said copy may with like effect be set forth in liable for purchase price of the materials it ordered.
the pleading.
As the rule itself states, the cause of action must be based On appeal before the Supreme Court, ACDC argues that
on a document to be attached to the complaint. BPI’s a charge or sales invoice is not an actionable document;
cause of action, however, was not solely based on the thus, its failure to deny under oath its genuineness and due
21
execution does not constitute an admission thereof. On 24 September 2004, counsel for herein respondent
ACDC likewise insists that respondent was not able to was given a period of fifteen days within which to file a
prove her claim as the invoices offered as evidence were demurrer to evidence. However, on 7 October 2004,
not properly authenticated by her witnesses. respondent instead filed a motion to dismiss the
complaint, citing the following as grounds: (1)
ISSUE: W/N ACDC is liable for the materials ordered.
**********; (2) that the trial court did not acquire
RULING: Yes. jurisdiction over the person of Manuel pursuant to Section
5, Rule 86 of the Revised Rules of Court; (3) ******
A document is actionable when an action or defense is
grounded upon such written instrument or document. In The trial court, denied the motion to dismiss for having
the instant case, the Charge Invoices are not actionable been filed out of time, citing Section 1, Rule 16 of the
documents per se as these only provide details on the 1997 Rules of Court which Aggrieved, respondent filed
alleged transactions. These documents need not be a petition to the Court of Appeals alleging that the trial
attached to or stated in the complaint as these are court seriously erred and gravely abused its discretion in
evidentiary in nature. In fact, Mendoza’s cause of action denying her motion. CA granted the petition.
is not based on these documents but on the contract of sale
between the parties. Issue

Although the Charge Invoices are not actionable W/N the RTC acquired jurisdiction over the dead (Manuel
documents, these, along with the Purchase Orders, are Toledo) person?
sufficient to prove that ACDC indeed ordered supplies
Ruling: No. Jurisdiction over the person of a
and materials from Highett and that these were duly
defendant is acquired through a valid service of
delivered.
summons; trial court did not acquire jurisdiction over
Moreover, contrary to the claim of ACDC, the Charge the person of Manuel Toledo.
Invoices were properly identified and authenticated by
Citing the case of Sarsaba:
witness Tejero who was present when the supplies and
materials were delivered to ACDC and when the invoices “The court’s failure to acquire jurisdiction over one’s
were stamped received by its employee. person is a defense which is personal to the person
claiming it.Obviously, it is now impossible for Sereno to
invoke the same in view of his death.Neither can
BOSTON EQUITY RESOURCES, INC. VS. CA petitioner invoke such ground, on behalf of Sereno, so
as to reap the benefit of having the case dismissed
Facts: against all of the defendants. “
On 24 December 1997, petitioner filed a complaint for
sum of money with a prayer for the issuance of a writ of CONNECTED RULING:
preliminary attachment against the spouses Manuel and
Here, what respondent was questioning in her motion to
Lolita Toledo. Herein respondent filed an Answer dated
dismiss before the trial court was that court’s jurisdiction
19 March 1998 but on 7 May 1998, she filed a Motion for
over the person of defendant Manuel. Thus, the principle
Leave to Admit Amended Answer in which she alleged,
of estoppel by laches finds no application in this case.
among others, that her husband and co-defendant, Manuel
Instead, the principles relating to jurisdiction over the
Toledo (Manuel), is already dead. As a result, petitioner
person of the parties are pertinent herein.
filed a motion, dated 5 August 1999, to require respondent
to disclose the heirs of Manuel. Petitioner then filed a The Rules of Court provide:
Motion for Substitution, praying that Manuel be
RULE 9
substituted by his children as party-defendants. This
EFFECT OF FAILURE TO PLEAD
motion was granted by the trial court in an Order dated 9
October 2000.13 Section 1. Defenses and objections not pleaded. –
Defenses and objections not pleaded either in a motion to
dismiss or in the answer are deemed waived. However,
On 26 May 2004, the reception of evidence for herein when it appears from the pleadings or the evidence on
respondent was cancelled upon agreement of the parties.
22
record that the court has no jurisdiction over the subject FINANCIAL BUILDING CORPORATION,
matter, that there is another action pending between the petitioner, vs. FORBES PARK ASSOCIATION,
same parties for the same cause, or that the action is INC., respondent.
barred by a prior judgment or by statute of limitations, the
court shall dismiss the claim. FACTS:
The then Union of Soviet Socialist Republic (hereafter,
RULE 15
USSR) was the owner of a residential lot located at Forbes
MOTIONS
Park Village in Makati City. The USSR engaged the
Sec. 8. Omnibus motion. – Subject to the provisions of services of Financial Building for the construction of a
Section 1 of Rule 9, a motion attacking a pleading, order, multi-level building building at the said lot. Forbes Park
judgment, or proceeding shall include all objections then reminded the USSR of existing regulations authorizing
available, and all objections not so included shall be only the construction of a single-family residential
deemed waived. building in each lot within the village. It also elicited a
reassurance from the USSR that such restriction has been
Based on the foregoing provisions, the "objection on
complied with. Despite this, Financial Building submitted
jurisdictional grounds which is not waived even if not
to the Makati City Government a second building plan for
alleged in a motion to dismiss or the answer is lack of
the construction of a multi-level apartment building,
jurisdiction over the subject matter. x x x Lack of
which was different from the first plan for the
jurisdiction over the subject matter can always be raised
construction of a residential building submitted to Forbes
anytime, even for the first time on appeal, since
Park. Forbes Park discovered the second plan and
jurisdictional issues cannot be waived x x x subject,
subsequent ocular inspection confirmed the violation of
however, to the principle of estoppel by laches."36
the deed of restrictions. Thus, it enjoined further
Since the defense of lack of jurisdiction over the person construction work. Forbes Park suspended all permits of
of a party to a case is not one of those defenses which are entry for the personnel and materials of Financial
not deemed waived under Section 1 of Rule 9, such Building in the said construction site. The parties
defense must be invoked when an answer or a motion to attempted to meet to settle their differences but it did not
dismiss is filed in order to prevent a waiver of the push through. Financial Building filed in the Regional
defense.37 If the objection is not raised either in a motion Trial Court of Makati, Metro Manila, a Complaint for
to dismiss or in the answer, the objection to the Injunction and Damages with a prayer for Preliminary
jurisdiction over the person of the plaintiff or the Injunction against Forbes Park. The latter, in turn, filed a
defendant is deemed waived by virtue of the first sentence Motion to Dismiss on the ground that Financial Building
of the above-quoted Section 1 of Rule 9 of the Rules of had no cause of action because it was not the real party-
Court.38 in-interest. The trial court issued a writ of preliminary
injunction against Forbes Park but the Court of Appeals
The Court of Appeals, therefore, erred when it made a nullified it and dismissed the complaint. The Supreme
sweeping pronouncement in its questioned decision, Court affirmed the said dismissal in a Resolution. After
stating that "issue on jurisdiction may be raised at any Financial Building’s case was terminated with finality,
stage of the proceeding, even for the first time on appeal" Forbes Park sought to vindicate its rights by filing with
and that, therefore, respondent timely raised the issue in the Regional Trial Court of Makati a Complaint for
her motion to dismiss and is, consequently, not estopped Damages, against Financial Building arising from the
from raising the question of jurisdiction. As the question violation of its rules and regulations. The trial court
of jurisdiction involved here is that over the person of the rendered its decision in favor of Forbes Park. Financial
defendant Manuel, the same is deemed waived if not Building appealed the said decision to the Court of
raised in the answer or a motion to dismiss. In any case, Appeals, which affirmed the decision of the RTC.
respondent cannot claim the defense since "lack of
jurisdiction over the person, being subject to waiver, is a ISSUE: Whether or not Forbes Park is barred in claiming
personal defense which can only be asserted by the party damages?
who can thereby waive it by silence."39
HELD: Yes. The instant case is barred due to Forbes
Park’s failure to set it up as a compulsory counterclaim in

23
the prior injunction suit initiated by Financial Building counterclaim, he may still plead his ground for dismissal
against Forbes Park. as an affirmative defense in his answer.21 The latter
option is obviously more favorable to the defendant
A compulsory counterclaim is one which arises out of or
although such fact was lost on Forbes Park.The ground
is necessarily connected with the transaction or
for dismissal invoked by Forbes Park was lack of cause of
occurrence that is the subject matter of the opposing
action. There was no need to plead such ground in a
party’s claim.15 If it is within the jurisdiction of the court
motion to dismiss or in the answer since the same was not
and it does not require for its adjudication the presence of
deemed waived if it was not pleaded.22 Nonetheless,
third parties over whom the court cannot acquire
Forbes Park still filed a motion to dismiss and thus
jurisdiction, such compulsory counterclaim is barred if it
exercised bad judgment in its choice of remedies. Thus, it
is not set up in the action filed by the opposing party.
has no one to blame but itself for the consequent loss of
Thus, a compulsory counterclaim cannot be the subject of its counterclaim as a result of such choice.
a separate action but it should instead be asserted in the
same suit involving the same transaction or occurrence,
which gave rise to it.17 To determine whether a NATIVIDAD LIM VS. NATIONAL POWER
counterclaim is compulsory or not, we have devised the CORPORATION, AND SPOUSES ROBERTO LL.
following tests: (1) Are the issues of fact or law raised by ARCINUE AND ARABELA ARCINUE G.R. NO.
the claim and the counterclaim largely the same? (2) 178789. NOVEMBER 14, 2012.
Would res judicata bar a subsequent suit on defendant’s
claim absent the compulsory counterclaim rule? (3) Will FACTS:
substantially the same evidence support or refute Respondent National Power Corporation (NPC) filed an
plaintiff’s claim as well as the defendant’s counterclaim? expropriation suit against petitioner Natividad B. Lim
and (4) Is there any logical relation between the claim and (Lim) before the Regional Trial Court (RTC) of
the counterclaim? Affirmative answers to the above Lingayen, covering Lots 2373 and 2374 that the NPC
queries indicate the existence of a compulsory needed for its Sual Coal-Fired Thermal Power Project.
counterclaim. Since Lim was residing in the United States, the court
caused the service of summons on her through her tenant,
Second. Since Forbes Park filed a motion to dismiss in
a certain Wilfredo Tabongbong.The RTC ordered the
Civil Case No. 16540, its existing compulsory
issued writ of possession in NPC’s favor, however, Lim,
counterclaim at that time is now barred.A compulsory
represented by her husband Delfin, filed an omnibus
counterclaim is auxiliary to the proceeding in the original
motion to dismiss the action and to suspend the writ of
suit and derives its jurisdictional support therefrom.19 A possession, questioning the RTC’s jurisdiction over
counterclaim presupposes the existence of a claim against Lim’s person and the nature of the action.Respondent
the party filing the counterclaim. Hence, where there is no spouses Roberto and Arabela Arcinue (the Arcinues) filed
claim against the counterclaimant, the counterclaim is a motion for leave to admit complaint in intervention,
improper and it must dismissed, more so where the alleging that they owned and were in possession of Lot
complaint is dismissed at the instance of the 2374, one of the two lots subject of the expropriation. The
counterclaimant.20 In other words, if the dismissal of the RTC granted the Arcinues’ motion and required both the
main action results in the dismissal of the counterclaim NPC and Lim to answer the complaint-in-intervention
already filed, it stands to reason that the filing of a motion within 10 days from receipt of its order.When Lim and the
to dismiss the complaint is an implied waiver of the NPC still did not file their answers to the complaint-in-
compulsory counterclaim because the grant of the motion intervention after 10 months, the Arcinues filed a motion
ultimately results in the dismissal of the counterclaim. for judgment by default. Lim sought to expunge the
Thus, the filing of a motion to dismiss and the setting up motion on the ground that it lacked the requisite
of a compulsory counterclaim are incompatible remedies. explanation why the Arcinues resorted to service by
In the event that a defending party has a ground for registered mail rather than to personal service. At the
dismissal and a compulsory counterclaim at the same scheduled hearing of the motion, Lim’s counsel did not
time, he must choose only one remedy. If he decides to appear. The NPC for its part manifested that it did not file
file a motion to dismiss, he will lose his compulsory an answer since its interest lay in determining who was
counterclaim. But if he opts to set up his compulsory entitled to just compensation.The RTC issued an order of
24
default against both Lim and the NPC. The RTC pointed prefer personal service. But it does not altogether prohibit
out that the Arcinues’ failure to explain their resort to service by registered mail when such service, when
service by registered mail had already been cured by the adopted, ensures as in this case receipt by the adverse
manifestation of Lim’s counsel that he received a copy of party.
the Arcinues’ motion 10 days before its scheduled
hearing.Lim filed a motion for reconsideration to lift the
default order but the Court denied the motion, prompting MAGDIWANG REALTY CORPORATION,
Lim to file a petition for certiorari before the Court of RENATO P. DRAGON and ESPERANZA
Appeals. The CA rendered a decision that affirmed the TOLENTINO, Petitioners, vs. THE MANILA
RTC’s order of default. Lim filed a motion for BANKING CORPORATION, substituted by FIRST
reconsideration but the CA denied it, prompting her to file SOVEREIGN ASSET MANAGEMENT (SPV-AMC),
the present petition for review. INC., Respondent. G.R. No. 195592. September 5,
ISSUES: (1) Whether or not there is a valid order of 2012.
default of the RTC entered against Lim. FACTS: The case stems from a complaint for sum of
money filed on April 18, 2000 before the Regional Trial
(2) Whether or not there is grave abuse of discretion on
Court (RTC), Makati City by herein respondent, The
the part of the RTC in allowing respondent spouses’
Manila Banking Corporation (TMBC), against herein
failure to explain in their motion why they served a copy
petitioners, Magdiwang Realty Corporation
of it on the adverse party by registered mail rather than by
(Magdiwang), Renato P. Dragon (Dragon) and Esperanza
personal service.
Tolentino (Tolentino), after said petitioners allegedly
HELD: (1) No. Section 4, Rule 19 of the Rules of Civil defaulted in the payment of their debts under the five
Procedure requires the original parties to file an answer to promissory notes they executed in favor of TMBC, which
the complaint-in-intervention within 15 days from notice contained the following terms:
of the order admitting the same, unless a different period
Promissory Note No. 4953 December 27, 1976 (Maturity
is fixed by the court. This changes the procedure under
Date) Php500,000.00 (Amount)
the former rule where such an answer was regarded as
optional. Promissory Note No. 10045 March 27, 1982 (Maturity
Date) Php500,000.00 (Amount)
Thus, Lim’s failure to file the required answer can give
rise to default. She remained unable to show that her Promissory Note No. 10046 March 27, 1982 (Maturity
failure to file the required answer was due to fraud, Date) Php500,000.00 (Amount)
accident, mistake, or excusable negligence. And, although
she claimed that she had a meritorious defense, she was Promissory Note No. 10047 March 27, 1982 (Maturity
unable to specify what constituted such defense. Date) Php500,000.00 (Amount)

(2) No. The Court finds no such grave abuse of discretion, Promissory Note No. 10048 March 27, 1982 (Maturity
notwithstanding that the Arcinues' failed to explain their Date) Php500,000.00 (Amount)
resort to service by registered mail rather than by personal All promissory notes included stipulations on the
service, the fact is that Lim's counsel expressly admitted payment of interest and additional charges in case of
having received a copy of the Arcinues' motion for default by the debtors. Despite several demands for
judgment 10 days before its scheduled payment made by TMBC, the petitioners allegedly failed
hearing. This means that the Arcinues were diligent to heed to the bank’s demands, prompting the filing of the
enough to file their motion by registered mail long before complaint for sum of money.
the scheduled hearing. Instead of filing a responsive pleading with the trial court,
Personal service is required precisely because it often the petitioners filed on October 12, 2000, which was
happens that hearings do not push through because, while notably beyond the fifteen (15)-day period allowed for the
a copy of the motion may have been served by registered filing of a responsive pleading, a Motion for Leave to
mail before the date of the hearing, such is received by the Admit Attached Motion to Dismiss5 and a Motion to
adverse party already after the hearing. Thus, the rules Dismiss, raising therein the issues of novation, lack of

25
cause of action against individuals Dragon and Tolentino, On the issue of prescription, the CA cited the rule that the
and the impossibility of the novated contract due to a prescriptive period is interrupted in any of the following
subsequent act of the Congress. instances: (1) when an action is filed before the court; (2)
when there is a written extrajudicial demand by the
The motions were opposed by the respondent TMBC, via
creditors; and (3) when there is any written
its Opposition which likewise asked that the petitioners be
acknowledgment of the debt by the debtor.
declared in default for their failure to file their responsive
pleading within the period allowed under the law. The prescriptive period was legally interrupted on
September 19, 1984 when the defendants-appellants,
RTC Order – Declared the petitioners in default.
through several letters, proposed for the restructuring of
While this Court appreciates the efforts and tenacity their loans until the plaintiff-appellee sent its final
shown by defendants’ counsel for having prepared a demand letter on September 10, 1999. Indeed, the period
lengthy pleading for his clients in so short a time, the during which the defendants-appellants were seeking
Court will have to rule that the Motion to Dismiss was reconsideration for the non-settlement of their loans and
nonetheless filed out of time, hence, there is sufficient proposing payment schemes of the same should not be
basis to declare defendants in default. reckoned against it. When prescription is interrupted, all
the benefits acquired so far from the lapse of time cease
and, when prescription starts anew, it will be entirely a
The petitioners’ motion for reconsideration was denied by new one.
the trial court in its Order dated August 2, 2005. The ex This concept should not be equated with suspension
parte presentation of evidence by the bank before the trial where the past period is included in the computation being
court’s Presiding Judge was scheduled in the same added to the period after prescription is resumed.
Order.Unsatisfied with the RTC orders, the petitioners Consequently, when the plaintiff-appellee sent its final
filed with the CA a petition for certiorari.CA Ruling on demand letter to the defendants appellants, thus,
RTC’s Order of Default – Affirmed RTC’s order of foreclosing all possibilities of reaching a settlement of the
default, holding that the RTC did not commit grave abuse loans which could be favorable to both parties, the period
of discretion when it declared herein petitioners in default. of ten years within which to enforce the five promissory
The denial of petitioners’ motion for reconsideration notes under Article 1142 of the New Civil Code began to
prompted the filing of a petition for review on certiorari run again and, therefore, the action filed on April 18, 2000
before this Court, which, through its Resolutions dated to compel the defendants-appellants to pay their
March 5, 2008 and June 25, 2008, denied the petition for obligations under the promissory notes had not
lack of merit.In the meantime, TMBC’s presentation of prescribed.
evidence ex parte proceeded before Presiding Judge The defense of novation was also rejected by the CA,
Oscar B. Pimentel of the RTC of Makati City. citing the absence of two requirements for a valid
RTC ruled in favor of TMBC (May 20, 2007). novation, namely: (1) the clear and express release of the
original debtor from the obligation upon the assumption
Petitioner’s motion for reconsideration was denied by the by the new debtor of the obligation; and (2) the consent
trial co urt, hence, it filed an appeal with the of the creditor thereto.
CA. ISSUES: (1) Whether or not the prescriptive period was
legally interrupted on September 19, 1984 when
While appeal was pending before the appellate court,
petitioners proposed restructuring of their loans.
TMBC and First Sovereign Asset Management
(SPVAMC), Inc. (FSAMI) filed a Joint Motion for (2) Whether or not the principle of novation by the
Substitution, asking that TMBC be substituted by FSAMI substitution of debtors was erroneously employed by the
after the former executed in favor of the latter a Deed of petitioners to extricate themselves from the obligation to
Assignment covering all of its rights, title and interest the respondent.
over the loans subject of the case.
HELD: (1) Yes. The ten (10)-year prescriptive period to
CA Ruling – Dismissed the petitioner’s appeal (October file an action based on the subject promissory notes was
11, 2010) and AFFIRMED RTC’s decision. interrupted by the several letters exchanged between the
26
parties. This is in conformity with the second and third
circumstances under Article 1155 of the New Civil Code
(NCC) which provides that the prescription of actions is  Ong filed with the Regional Trial Court a motion
interrupted when: (1) they are filed before the court; (2) to declare the Spouses Manuel in default.
there is a written extrajudicial demand by the creditors; o Sheriff Joselito Sales attempted to
and (3) there is any written acknowledgment of the debt personally serve summons on the
by the debtor. In TMBC’s complaint against the Spouses Manuel at their address in
petitioners, the bank sufficiently made the allegations on Lower Bacong, Loacan, Itogon, Benguet.
its service and the petitioners’ receipt of the subject
demand letters, even attaching thereto copies thereof for o Spouses Manuel, however, requested that
the trial court’s consideration. service be made at another time
considering that petitioner Sandra
During the bank’s presentation of evidence ex parte, the Manuel's mother was then critically ill.
testimony of witness Mr. Megdonio Isanan was also
offered to further support the claim on the demand made o Sheriff Sales made another attempt at
by the bank upon the petitioners. In the absence of a personal service to petitioner Sandra
timely objection from the petitioners on these claims, no Manuel but she refused to sign and
error can be imputed on the part of the trial court, and even receive the summons and the complaint.
the appellate court, in taking due consideration thereof. Sheriff Sales was thus prompted to
merely tender the summons.
As against the bare denial belatedly made by the
petitioners of their receipt of the written extrajudicial o As the Spouses Manuel failed to file their
demands made by TMBC, especially of the letter of answer within the required 15-day
September 10, 1999 which was the written demand sent period, Ong asked that they be declared
closest in time to the institution of the civil case, the in default.
appreciation of evidence and pronouncements of the trial
 RTC: issued an order granting Ong's motion to
court in its Order dated November 5, 2007 shall stand.
declare the Spouses Manuel in default. RTC also
In addition to these, we take note that letters prior to the granted motion for ex parte presentation of
letter of September 1999 also form part of the case evidence.
records, and the existence of said letters were not directly
 Spouses Manuel filed a motion to lift the order of
denied by the petitioners.
default.
(2) No. No evidence was presented to adequately establish
o They claimed that it is the siblings of
that such novation ensued. What the letters being invoked
petitioner Sandra Manuel who resided in
by the petitioners as supposedly establishing novation
Lower Bacong, Itogon, Benguet so
only indicate that efforts on a repayment scheme were
summons could not have been properly
exerted by the parties. However, nowhere in the records
served on them in the former address.
is it indicated that such novation ever materialized.
 RTC: denied motion to lift order of default.
ISSUE: W/N the Spouses Manuel may be granted
SPOUSES MANUEL VS ONG
relief from the order of default? NO.
Facts:
RULING:
 Respondent Ramon Ong (Ong) filed with the
The requisites for declaring a party in default were
Regional Trial Court of La Trinidad, Benguet a
satisfied by respondent Ong.
complaint for accion reivindicatoria. Ong
charged the Spouses Manuel with having 1) the claiming party must file a motion asking the
constructed improvements — through force, court to declare the defending party in default;
intimidation, strategy, threats, and stealth — on a
property he supposedly owned. 2) the defending party must be notified of the
motion to declare him in default;
27
3) the claiming party must prove that the defending into a contract with Atlantic Erectors, Inc. (AEI) for the
party has failed to answer within the period construction of the Intramuros Golf Course Expansion
provided by the Rule." Projects for a contract price of P57,954,647.94. The civil
works of the project commenced. Since AEI was
It is not disputed that Ong filed a motion to declare the
incapable of constructing the golf course aspect of the
Spouses Manuel in default. It is also not disputed that the
project, it entered into a sub-contract agreement with
latter filed their answer after the fifteen-day period had
PHILGOLF, a duly organized domestic corporation, to
lapsed. It is similarly settled that the Spouses Manuel
build the golf course amounting to P27,000,000.00. The
were notified that a motion to declare them in default had
sub-contract agreement also provides that PHILGOLF
been filed.
shall submit its progress billings directly to PTA and, in
Not only were the requisites for declaring a party in turn, PTA shall directly pay PHILGOLF.
default satisfied, the Spouses Manuel’s motion to lift
PHILGOLF filed a collection suit against PTA amounting
order of default was also shown to be procedurally infirm.
to P11,820,550.53, plus interest, for the construction of
To lift the order of default, there are 3 requirements:
the golf course. Within the period to file a responsive
1.) the motion to lift order of default pleading, PTA filed a motion for extension of time to file
an answer. The RTC granted the motion for extension of
2.) an affidavit showing the invoked ground - fraud, time. PTA filed another motion for extension of time to
accident, mistake or excusable negligence file an answer. The RTC again granted the motion.
3.) the party's meritorious defense or defenses RTC Muntinlupa City Despite the RTCs liberality of
In this case, the Court of Appeals noted that the Spouses granting two successive motions for extension of time,
Manuel’s motion to lift order of default was not made PTA failed to answer the complaint. Thus, the RTC
under oath. We add that this motion was not accompanied rendered a judgment of default ruling in favor of the
by an affidavit of merit specifying the facts which would defendant which ordered the defendant to pay the plaintiff
show that their non-filing of an answer within fifteen (15) the said outstanding obligation plus interest of 12% per
days from March 16, 2010 was due to fraud, accident, annum, attorney’s fees, cost of litigation, moral damages,
mistake, or excusable negligence. nominal damages and exemplary damages.

Failing both in making their motion under oath and in Court of Appeals PTA seasonably appealed the case to the
attaching an affidavit of merits, the Spouses Manuel’s CA. But before the appeal of PTA could be perfected,
motion to lift order of default must be deemed pro-forma. PHILGOLF already filed a motion for execution pending
It is not even worthy of consideration. appeal with the RTC. The RTC granted the motion and a
writ of execution pending appeal was issued against PTA.
A notice of garnishment was issued against PTAs bank
account at the LBP NAIA-BOC Branch to fully satisfy the
PHILIPPINE TOURISM AUTHORITY VS.
judgment. PTA filed a petition for certiorari with the CA,
PHILIPPINE GOLF DEVELOPMENT &
imputing grave abuse of discretion on the part of the RTC
EQUIPTMENT. G.R. NO. 176628. MARCH 19, 2012.
for granting the motion for execution pending appeal. The
FACTS: CA ruled in favor of PTA and set aside the order granting
the motion for execution pending appeal.
The case at bar is a petition for Certiorari under Rule 65
of the 1997 Rules of Civil Procedure, to annul the decision PTA withdrew its appeal of the RTC decision and,
of the CA in which it dismissed the petition for annulment instead, filed a petition for annulment of judgment under
of judgment which sought to set aside the decision of the Rule 47 of the Rules of Court. The petition for annulment
RCT Muntinlupa City. The said RTC held that the of judgment was premised on the argument that the gross
Philippine Tourism Authority (PTA) liable for its unpaid negligence of PTAs counsel prevented the presentation of
obligation to Philippine Golf Development & Equipment, evidence before the RTC. CA dismissed the petition for
Inc. (PHILGOLF). annulment of judgment for lack of merit. PTA questions
this CA action in the present petition for certiorari.
PTA, an agency of the Department of Tourism, whose
main function is to bolster and promote tourism, entered

28
ISSUES: (1) Whether or not the negligence of the PTAs (3) No. Annulment of Judgment is not the proper remedy.
counsel amounted to an extrinsic fraud warranting an PTAs appropriate remedy was only to appeal the RTC
annulment of judgment. decision. Annulment of Judgment under Rule 47 of the
Rules of Court is a recourse equitable in character and
(2) Whether or not that since PTA is a government entity,
allowed only in exceptional cases where the ordinary
it should not be bound by the inactions or negligence of
remedies of new trial, appeal, petition for relief or other
its counsel.
appropriate remedies are no longer available through no
(3) Whether or not a petition for annulment of judgment fault of petitioner. In this case, appeal was an available
is a proper remedy. remedy. There is no extraordinary reason for a petition for
annulment of judgment, nor was there any adequate
HELD: explanation on why the remedy for new trial or petition
The Rules of Court specifically provides for deadlines in for relief could not be used. The Court is actually at a loss
actions before the court to ensure an orderly disposition why PTA had withdrawn a properly filed appeal and
of cases. PTA cannot escape these legal technicalities by substituted it with another petition, when PTA could have
simply invoking the negligence of its counsel. This merely raised the same issues through an ordinary appeal.
practice, if allowed, would defeat the purpose of the Rules Lastly, a special civil action under Rule 65 of the Rules of
on periods since every party would merely lay the blame Court is only available in cases when a tribunal, board or
on its counsel to avoid any liability. The rule is that a officer exercising judicial or quasi-judicial functions has
client is bound by the acts, even mistakes, of his counsel acted without or in excess of its or his jurisdiction, or with
in the realm of procedural technique,and unless such acts grave abuse of discretion amounting to lack or excess of
involve gross negligence that the claiming party can jurisdiction, and there is no appeal, or any plain, speedy,
prove, the acts of a counsel bind the client as if it had been and adequate remedy in the ordinary course of law. It is
the latters acts not a mode of appeal, and cannot also be made as a
(1) No. Extrinsic fraud refers to any fraudulent act of the substitute for appeal. It will not lie in cases where other
prevailing party in the litigation which is committed remedies are available under the law.
outside of the trial of the case, whereby the unsuccessful In sum, PTA had the remedy of appealing the RTC
party has been prevented from exhibiting fully his case, decision to the CA and, thereafter, to the Court. Under the
by fraud or deception practiced on him by his opponent. circumstances, the Court find no adequate reason to
Under the doctrine of this cited case, we do not see the justify the elevation of this case to the CA and then to the
acts of PTAs counsel to be constitutive of extrinsic fraud. Court, under Rule 65 of the Rules of Court.
The records reveal that the judgment of default was sent
via registered mail to PTAs counsel. However, PTA never
availed of the remedy of a motion to lift the order of
LETICIA DIONA, REPRESENTED BY HER
default. Since the failure of PTA to present its evidence
ATTORNEY-IN-FACT, MARCELINA DIONA, VS.
was not a product of any fraudulent acts committed
ROMEO A. BALANGUE, SONNY A. BALANGUE,
outside trial, the RTC did not err in declaring PTA in
REYNALDO A. BALANGUE, AND ESTEBAN A.
default.
BALANGUE, JR. G.R. NO. 173559. JANUARY 7,
(2) No. PTA was acting in a proprietary character. PTA 2013.
also erred in invoking state immunity simply because it is
FACTS:
a government entity. The application of state immunity is
proper only when the proceedings arise out of sovereign The great of a relief neither sought by the party in whose
transactions and not in cases of commercial activities or favor it was given not supported by the evidence
economic affairs. The State, in entering into a business presented violates the opposing party’s right to due
contract, descends to the level of an individual and is process and may be declared void ab initio in a proper
deemed to have tacitly given its consent to be sued. Since proceeding.Petitioner filed a Petition for Review on
the said project partakes of a proprietary character entered Certiorari assailing the resolution granting the Petition for
into between PTA and PHILGOLF, PTA cannot avoid its Annulment of Judgment filed by the respondents seeking
financial liability by merely invoking immunity from suit. to nullify that portion of the Regional Trial Court (RTC),
Branch 75, Valenzuela City awarding petitioner 5%
29
monthly interest rate for the principal amount of the loan RTC granted respondents’ motion and accordingly
respondent obtained from her. The Petition likewise modified the interest rate awarded from 5% monthly to
assails the CA’s Resolution denying petitioner’s Motion 12% per annum. Then, respondents deposited the total
for Reconsideration. amount of P126,650.00.
In 1991, respondents obtained a loan of P45,000.00 from Petitioner elevated the matter to the CA via a Petition for
petitioner payable in six months and secured by a Real Certiorari under Rule 65 of the Rules of Court. CA
Estate Mortgage over their property located in Marulas, declared that the RTC exceeded its jurisdiction in
Valenzuela. When the debt became due, respondents awarding the 5% monthly interest but at the same time
failed to pay notwithstanding demand. Thus, petitioner pronouncing that the RTC gravely abused its discretion in
filed with the RTC a Complaint praying that respondents subsequently reducing the rate of interest to 12% per
be ordered to pay the principal obligation, the damages,
annum. Furthermore, the court held that the proper
attorney’s fees, and to issue a decree of foreclosure for the
remedy is not to amend the judgment but to declare that
sale at public auction of the aforementioned parcel of
portion as a nullity. Void judgment for want of
land.
jurisdiction is no judgment at all, it cannot be the source
Respondents were served with summons thru respondent of any right nor the creator of any obligation, and no legal
Sonny A. Balangue (Sonny). With the assistance of Atty. rights can emanate from it. CA annulled the said order.
Arthur C. Coroza (Atty. Coroza) of the Public Attorney’s Respondents filed with the CA a Petition for Annulment
Office, they filed a Motion to Extend Period to Answer. of Judgment and Execution Sale with Damages,
Despite the requested extension, however, respondents contending that the portion of the RTC Decision granting
failed to file any responsive pleadings. Thus, upon motion petitioner 5% monthly interest rate is in gross violation of
of the petitioner, the RTC declared them in default and Section 3(d) of Rule 9 of the Rules of Court and of their
allowed petitioner to present her evidence ex parte. right to due process. According to respondents, the loan
did not carry any interest. Ruling of the Court of Appeals.
RTC decided in favour of the petitioner, ordering the
Initially, the CA denied due course to the Petition. Upon
respondents to pay the petitioner, among others, the sum
respondents’ motion, it reinstated and granted the Petition
of FORTY FIVE THOUSAND (P45,000.00) PESOS,
and set aside portions of the RTC’s Decision. The CA
representing the unpaid principal loan obligation plus
ruled that aside from being unconscionably excessive, the
interest at 5% per month.
monthly interest rate of 5% was not agreed upon by the
Subsequently, petitioner filed a Motion for Execution, parties and that petitioner’s Complaint clearly sought only
alleging that respondents did not interpose a timely the legal rate of 12% per annum. Following the mandate
appeal. However, respondents filed a Motion to Set Aside of Section 3(d) of Rule 9 of the Rules of Court, the CA
Judgment dated January 26, 2001, claiming that not all of concluded that the awarded rate of interest is void for
them were duly served with summons and that they had being in excess of the relief sought in the Complaint.
no knowledge of the case because their co-respondent
Petitioner’s motion for reconsideration was denied by the
Sonny did not inform them about it. They prayed that the
CA.
RTC’s Decision be set aside and a new trial be conducted.
ISSUE: Whether or not the CA erred when it granted
RTC ordered the issuance of a Writ of Execution. In order
respondents’ petition for annulment of judgment of the
to satisfy the writ, petitioner moved for the public auction
decision of the RTC despite the fact that said decision has
of the mortgaged property, which the RTC granted. The
become final and already executed contrary to the
property was sold in her favour for P420,000.00.
Doctrine of Immutability of Judgment.
Respondents filed a Motion to Correct/Amend Judgment
and To Set Aside Execution Sale, claiming that the parties HELD: No. The award of 5% monthly interest violated
did not agree in writing on any rate of interest and that respondent’s right to due process and, hence, the same
petitioner merely sought for a 12% per annum interest in may be set aside in a Petition for Annulment of Judgment
her Complaint. Surprisingly, the RTC awarded 5% filed under Rule 47 of the Rules of Court.
monthly interest (or 60% per annum) which increased
A Petition for Annulment of Judgment under Rule 47 of
their indebtedness from P124,400.00 to P652,000.00.
the Rules of Court is a remedy granted only under
exceptional circumstances where a party, without fault on
30
his part, has failed to avail of the ordinary remedies of refute and present controverting evidence as they were
new trial, appeal, petition for relief or other appropriate made to believe that the complainant petitioner was
remedies. Said rule explicitly provides that it is not seeking for what she merely stated in her Complaint.
available as a substitute for a remedy which was lost due
Neither can the grant of the 5% monthly interest be
to the party’s own neglect in promptly availing of the
considered subsumed by petitioner’s general prayer for
same. "The underlying reason is traceable to the notion
"other reliefs and remedies just and equitable under the
that annulling final judgments goes against the grain of
premises x x x." To repeat, the court’s grant of relief is
finality of judgment. Litigation must end and terminate
limited only to what has been prayed for in the Complaint
sometime and somewhere, and it is essential to an
or related thereto, supported by evidence, and covered by
effective administration of justice that once a judgment
the party’s cause of action. Besides, even assuming that
has become final, the issue or cause involved therein
the awarded 5% monthly or 60% per annum interest was
should be laid to rest."
properly alleged and proven during trial, the same remains
While under Section 2, Rule 47 of the Rules of Court a unconscionably excessive and ought to be equitably
Petition for Annulment of Judgment may be based only reduced in accordance with applicable jurisprudence.
on the grounds of extrinsic fraud and lack of jurisdiction,
Respondents’ former counsel was grossly negligent in
jurisprudence recognizes lack of due process as additional
handling the case of his clients; respondents did not lose
ground to annul a judgment. Grant of 5% monthly interest
ordinary remedies of new trial, petition for relief, etc.
is way beyond the 12% per annum interest sought in the
through their own fault. Ordinarily, the mistake,
Complaint and smacks of violation of due process. It is
negligence or lack of competence of counsel binds the
settled that courts cannot grant a relief not prayed for in
client. A recognized exception to the rule is when the
the pleadings or in excess of what is being sought by the
lawyers were grossly negligent in their duty to maintain
party. Due process considerations require that judgments
their client’s cause and such amounted to a deprivation of
must conform to and be supported by the pleadings and
their client’s property without due process of law. In
evidence presented in court. It is improper to enter an
which case, the courts must step in and accord relief to a
order which exceeds the scope of relief sought by the
client who suffered thereby. Had the counsel carefully
pleadings, absent notice which affords the opposing party
read the judgment it would have caught his attention and
an opportunity to be heard with respect to the proposed
compelled him to take the necessary steps to protect the
relief. The fundamental purpose of the requirement that
interest of his client. But he did not. Judging from how
allegations of a complaint must provide the measure of
respondents’ former counsel handled the cause of his
recovery is to prevent surprise to the defendant. The
clients, there is no doubt that he was grossly negligent in
reason behind Section 3(d), Rule 9 of the Rules of Court
protecting their rights, to the extent that they were
is to safeguard defendant’s right to due process against
deprived of their property without due process of law.
unforeseen and arbitrarily issued judgment. This is akin
to the very essence of due process. It embodies "the The Court is appalled by petitioner’s invocation of the
sporting idea of fair play" and forbids the grant of relief doctrine of immutability of judgment. Petitioner does not
on matters where the defendant was not given the contest as she even admits that the RTC made a glaring
opportunity to be heard thereon. mistake in awarding 5% monthly interest. Amazingly, she
wants to benefit from such erroneous award. The Court
In the case at bench, the award of 5% monthly interest rate
cannot allow this injustice to happen.
is not supported both by the allegations in the pleadings
and the evidence on record. The Real Estate Mortgage
executed by the parties does not include any provision on
interest. Clearly, the RTC’s award of 5% monthly interest ARQUERO VS. CA
or 60% per annum lacks basis and disregards due process. Facts:
It violated the due process requirement because
respondents were not informed of the possibility that the On October 2, 2003, petitioner filed the Petition for Quo
RTC may award 5% monthly interest. They were Warranto with Prayer for Issuance of Temporary
deprived of reasonable opportunity to Restraining Order and/or Injunctive Writ before the RTC
of Palawan against public and private respondents. The
case was docketed as Civil Case No. 3854.Petitioner

31
argued that the designation of private respondent deprived under the 1997 Rules, the Court did not hesitate to
her of her right to exercise her function and perform her expressly rely on the Lina doctrine, including the
duties in violation of her right to security of tenure. pronouncement that a defaulted defendant may appeal
Considering that petitioner was appointed in a permanent from the judgment rendered against him. Moreover,
capacity, she insisted that private respondent’s in Rural Bank of Sta. Catalina v. Land Bank of the
designation as OIC of the PNS is null and void there being Philippines,[40] the Court provided a comprehensive
no vacancy to the position. Petitioner thus prayed that the restatement of the remedies of the defending party
RTC issue an order granting the writ of quo warranto declared in default:
enjoining private respondent from assuming the position
It bears stressing that a defending party declared in default
of OIC of the PNS, declaring the questioned designation
loses his standing in court and his right to adduce
null and void and without operative effect, and declaring
evidence and to present his defense. He, however, has the
petitioner to be entitled to the office of the principal of the
right to appeal from the judgment by default and assail
PNS.
said judgment on the ground, inter alia, that the amount
RULING: of the judgment is excessive or is different in kind from
Petitioner insists that respondents could not have that prayed for, or that the plaintiff failed to prove the
appealed the RTC decision having been declared in material allegations of his complaint, or that the decision
default. She explains that the only issue that could have is contrary to law. Such party declared in default is
been raised is a purely legal question, therefore, the appeal proscribed from seeking a modification or reversal of the
should have been filed with the Court and not with the assailed decision on the basis of the evidence submitted
CA. by him in the Court of Appeals, for if it were otherwise,
he would thereby be allowed to regain his right to adduce
In Martinez v. Republic,[37] the Court has clearly
evidence, a right which he lost in the trial court when he
discussed the remedies of a party declared in default in
was declared in default, and which he failed to have
light of the 1964 and 1997 Rules of Court and a number
vacated. In this case, the petitioner sought the
of jurisprudence applying and interpreting said rules.
modification of the decision of the trial court based on the
Citing Lina v. Court of Appeals,[38] the Court enumerated
evidence submitted by it only in the Court of Appeals.[41]
the above-mentioned remedies, to wit:
Undoubtedly, a defendant declared in default retains the
a) The defendant in default may, at any time after
right to appeal from the judgment by default on the
discovery thereof and before judgment, file a motion,
ground that the plaintiff failed to prove the material
under oath, to set aside the order of default on the ground
allegations of the complaint, or that the decision is
that his failure to answer was due to fraud, accident,
contrary to law, even without need of the prior filing of a
mistake or excusable neglect, and that he has meritorious
motion to set aside the order of default except that he does
defenses; (Sec. 3, Rule 18)
not regain his right to adduce evidence.[42] The appellate
b) If the judgment has already been rendered when the court, in turn, can review the assailed decision and is not
defendant discovered the default, but before the same has precluded from reversing the same based solely on the
become final and executory, he may file a motion for new evidence submitted by the plaintiff.
trial under Section 1 (a) of Rule 37;
c) If the defendant discovered the default after the
BENGUET ELECTRIC COOPERATIVE, INC. VS.
judgment has become final and executory, he may file a
NLRC
petition for relief under Section 2 of Rule 38; and
Subject: The date of actual receipt by the court, and not
d) He may also appeal from the judgment rendered
the date of delivery to the private carrier, is deemed the
against him as contrary to the evidence or to the law, date of filing of the pleading; 10-day reglementary period
even if no petition to set aside the order of default has to perfect an appeal is mandatory and jurisdictional in
been presented by him. (Sec. 2, Rule 41)[39]
nature; Suspension and termination of services imposed
The Court explained in Martinez that the fourth remedy, by the Board members upon Cosalan was illegal;
that of appeal, is anchored on Section 2, Rule 41 of the Corporate officers and directors are not personally liable
1964 Rules. Even after the deletion of that provision for consequences of their corporate acts unless they act

32
with malice and bad faith; Section 31 of the Corporation In the course of the proceedings before the Labor Arbiter,
Code is applicable to cooperatives; Board members Cosalan filed a motion for reinstatement which was
solidarily liable with Beneco for the monetary award; granted. Beneco complied with the Labor Arbiter's order
Beneco has right to be reimbursed by the Board members through Resolution No. 10-90.
for any amount it is compelled to pay
The Labor Arbiter rendered a decision (a) confirming
Facts: Cosalan's reinstatement; (b) ordering payment to Cosalan
of his backwages and allowances by Beneco and the
Peter Cosalan was the General Manager of Benguet
Board members, jointly and severally, for a period of
Electric Cooperative, Inc. (Beneco), having been elected
three (3) years without deduction, and (3) ordering the
as such by the Board of Directors of Beneco, effective
individual Board members to pay, jointly and severally,
October 16, 1982.
to Cosalan moral damages of P50,000 plus attorney's fees
Cosalan received two Audit Memorandums (No. 1 and 2) of ten percent (10%) of the award.
issued by the Commission on Audit (COA). These
The Board members appealed to the NLRC. However,
Memorandums noted that the audit and treatment of cash
petitioner Beneco did not appeal, but moved to dismiss
advances, per diems and allowances received by officers
the appeal filed by the Board members and for execution
and employees of Beneco were not in compliance with the
of judgment. By this time, petitioner Beneco had a new
guidelines of the National Electrification Administration
set of directors.
(NEA). The Audit Memorandums directed the taking of
immediate remedial action in conformity with existing The NLRC modified the award rendered by the Labor
NEA regulations. Arbiter by declaring that petitioner Beneco alone, and not
the Board members, was liable for Cosalan's backwages
Cosalan initiated implementation of the remedial
and allowances, and by ruling that there was no legal basis
measures recommended by the COA. The members of the
for the award of moral damages and attorney's fees made
Board of Beneco reacted by adopting a series of
by the Labor Arbiter.
resolutions during the period from 23 June to 24 July
1984. These Board Resolutions abolished the housing and In the present Petition for Certiorari, Beneco (through its
other allowances of Cosalan, reduced his salary and struck new set of directors), allege that the NLRC had acted with
his name out as a principal signatory to transactions of grave abuse of discretion amounting to lack of jurisdiction
Beneco. when (a) it gave due course to the Board members' appeal
although such appeal had been filed out of time, and (b) it
The Beneco Board adopted another series of resolutions
held Beneco alone liable for payment of the backwages
which resulted in the ouster of Cosalan as General
and allowances due to Cosalan and releasing the Board
Manager as well as the withholding of his salary and
members from liability therefor.
allowances.
Held:
Cosalan nevertheless continued to work as General
Manager of Beneco, in the belief that he could be The date of actual receipt by the court, and not the date of
suspended or removed only by duly authorized officials delivery to the private carrier, is deemed the date of filing
of NEA, in accordance with provisions of P.D. No. 269, of the pleading
as amended by P.D. No. 1645 (NEA Charter).
1. Beneco Board members received the decision of the
Accordingly, on 5 October and 10 November 1984,
Labor Arbiter on 21 April 1988. Accordingly, and
Cosalan requested Beneco to release the compensation
because 1 May 1988 was a legal holiday, they had only
due him. Beneco, acting through its Board members,
up to 2 May 1988 within which to perfect their appeal by
denied the written request of Cosalan.
filing their memorandum on appeal. The Board members'
Cosalan then filed a complaint with the National Labor memorandum on appeal was posted by registered mail on
Relations Commissions (NLRC) against members of the 3 May 1988 and received by the NLRC the following day.
Beneco Board, challenging the legality of the Board Clearly, the memorandum on appeal was filed out of time.
resolutions which ordered his suspension and termination
2. The Board members insist that their Memorandum on
from the service and demanding payment of his salaries
Appeal was filed on time because it was delivered for
and allowances.
mailing on May 1, 1988 to the Garcia Communications
33
Company, a licensed private letter carrier. The Board 8. Third, the Board members failed to adduce any cause
members in effect contend that the date of delivery to which could reasonably be regarded as lawful cause for
Garcia Communications was the date of filing of their the suspension and dismissal of Cosalan from his position
appeal memorandum. as General Manager of Beneco. Cosalan was, in other
words, denied due process both procedural and
3. The established rule is that transmission through a
substantive.
private carrier or letter-forwarded - instead of the
Philippine Post Office - is not a recognized mode of filing 9. Fourth, the Board members failed to obtain the prior
pleadings. The established rule is that the date of delivery approval of the NEA of their suspension and dismissal of
of pleadings to a private letter-forwarding agency is not Cosalan, which prior approval was required under the
to be considered as the date of filing thereof in court, and subsisting loan agreement between the NEA and Beneco.
that in such cases, the date of actual receipt by the court, The requisite NEA approval was subsequently sought by
and not the date of delivery to the private carrier, is the Board members but no NEA approval was granted.
deemed the date of filing of the pleading.
10-day reglementary period to perfect an appeal is
mandatory and jurisdictional in nature SALVADOR O. MOJAR, ET AL VS. AGRO
COMMERCIAL SECURITY SERVICE AGENCY,
4. There was no reason grounded upon substantial justice INC
and the prevention of serious miscarriage of justice that
might have justified the NLRC in disregarding the ten-day FACTS:
reglementary period for perfection of an appeal by the
Petitioners were employed as security guards by
Board members. Accordingly, the applicable rule was that
respondent and assigned to the various branches of the
the ten-day reglementary period to perfect an appeal is
Bank of Commerce in Pangasinan, La Union and Ilocos
mandatory and jurisdictional in nature, that failure to file
Sur.
an appeal within the reglementary period renders the
assailed decision final and executory and no longer
In separate Office Orders dated 23 and 24 May 2002,
subject to review. The Board members had thus lost their
petitioners were relieved from their respective posts and
right to appeal from the decision of the Labor Arbiter and
directed to report to their new assignments in Metro
the NLRC should have forthwith dismissed their appeal
Manila effective 3 June 2002. They, however, failed to
memorandum. Suspension and termination of services
report for duty in their new assignments, prompting
imposed by the Board members upon Cosalan was illegal
respondent to send them a letter dated 18 June 2002. It
5. The appeal was likewise quite bereft of merit. Both the required a written explanation why no disciplinary action
Labor Arbiter and the NLRC had found that the indefinite should be taken against them, but the letter was not
suspension and termination of services imposed by the heeded.
Board members upon Cosalan was illegal.
On 15 February 2005, petitioners filed a Complaint for
| Page 3 of 4
illegal dismissal against respondent and the Bank of
6. First, the suspension of Cosalan was continued long Commerce, Dagupan Branch, before the National Labor
after expiration of the period of thirty (30) days, which is Relations Commission (NLRC). Petitioners claimed,
the maximum period of preventive suspension that could among others, that their reassignment was a scheme to
be lawfully imposed under Section 4, Rule XIV of the sever the employer-employee relationship and was done
Omnibus Rules Implementing the Labor Code. in retaliation for their pressing their claim for salary
differential, which they had earlier filed against
7. Second, Cosalan had been deprived of procedural due respondent and the Bank of Commerce before the NLRC.
process by the Board members. He was never informed of They also contended that the transfer to Manila was
the charges raised against him and was given no inconvenient and prejudicial, since they would incur
opportunity to meet those charges and present his side of additional expenses for board and lodging.
whatever dispute existed; he was kept totally in the dark
as to the reason or reasons why he had been suspended On 22 May 2006, the Labor Arbiter (LA) rendered a
and effectively dismissed from the service of Beneco. Decision finding that petitioners were illegally dismissed
34
which the NLRC affirmed. petition.

On 23 January 2008, respondent filed a Motion for This rule, however, is not absolute. In the 2011 case
Extension to file a Petition for Certiorari before the CA. Santos v. Litton Mills Incorporated, this Court ruled that
In a Resolution dated 20 February 2008, the latter granted where the petitioner clearly mentioned that the parties
the Motion for Extension, allowing respondent until 10 may be served with the courts notices or processes
February 2008 within which to file its Petition. On 9 through their respective counsels, whose addresses have
February 2008, respondent filed its Petition for Certiorari been clearly specified as in this case, this act would
before the appellate court. On 30 June 2008, the CA constitute substantial compliance with the requirements
issued a Resolution noting that no comment on the of Section 3, Rule 46. The Court further observed that the
Petition had been filed, and stating that the case was now notice required by law is notice to counsel if the party has
deemed submitted for resolution. already appeared by counsel, pursuant to Section 2, Rule
13 of the Rules of Court. The foregoing may thus be
On 21 July 2008, the CA rendered its Decision. Finding considered as substantial compliance with Section 3, Rule
merit in the Petition, it found the Orders transferring 46. In any case, and as will be discussed further below,
petitioners to Manila to be a valid exercise of management the CA had sufficient reason to take cognizance of the
prerogative. Petition.

On 1 August 2008, petitioner Mojar filed a Manifestation REMEDIAL LAW


before the CA, stating that he and the other petitioners had
not been served a copy of the CA Petition. He also said Section 3, Rule 46 provides that the petition for certiorari
that they were not aware whether their counsel before the should be filed together with the proof of service thereof
NLRC, Atty. Jose C. Espinas, was served a copy thereof, on the respondent. Under Section 13, Rule 13 of the Rules
since the latter had already been bedridden since of Court, if service is made by registered mail, as in this
December 2007 until his demise on 25 February 2008. case, proof shall be made by an affidavit of the person
Neither could their new counsel, Atty. Mario G. Aglipay, mailing and the registry receipt issued by the mailing
enter his appearance before the CA, as petitioners failed office. Section 3, Rule 46 further provides that the failure
to get the folder from the office of Atty. Espinas, as the to comply with any of the requirements shall be sufficient
folder can no longer be found. In a Resolution dated 16 ground for the dismissal of the petition. Indeed, while an
March 2009, the CA denied the Motion to Annul affidavit of service is required merely as proof that service
Proceedings. Hence, this Petition. has been made on the other party, it is nonetheless
essential to due process and the orderly administration of
ISSUE: justice.

Be that as it may, it does not escape the attention of this


Whether the CA should not have taken cognizance of the Court that in the CA Resolution dated 16 March 2009, the
petition as their actual addresses were not indicated appellate court stated that their records revealed that Atty.
therein Espinas, petitioners counsel of record at the time, was
duly served a copy of the following: CA Resolution dated
REMEDIAL LAW 20 February 2008 granting respondents Motion for
Extension of Time to file the CA Petition; CA Resolution
Petitioners contend that the CA should not have taken dated 24 April 2008 requiring petitioners to file their
cognizance of the Petition before it, as their actual Comment on the CA Petition; and CA Resolution dated
addresses were not indicated therein as required under 30 June 2008, submitting the case for resolution, as no
Section 3, Rule 46 of the Rules of Court, and pursuant to comment was filed.
Cenda v. Avila. In the 2008 case Cenda, this Court ruled
that the requirement that a petition forcertiorarimust Such service to Atty. Espinas, as petitioners counsel of
contain the actual addresses of all the petitioners and the record, was valid despite the fact he was already deceased
respondents is mandatory. The failure to comply with that at the time. If a party to a case has appeared by counsel,
requirement is a sufficient ground for the dismissal of a service of pleadings and judgments shall be made upon

35
his counsel or one of them, unless service upon the party herein petitioners Motion for Reconsideration and Motion
is specifically ordered by the court. It is not the duty of to Admit Amended Complaint, be reversed and set aside.
the courts to inquire, during the progress of a case,
The records reveal the following antecedent facts.
whether the law firm or partnership representing one of
the litigants continues to exist lawfully, whether the On August 13, 1999, petitioners filed a Complaint against
partners are still alive, or whether its associates are still respondents for Annulment of Mortgage with Prayer for
connected with the firm. Temporary Restraining Order & Preliminary Injunction
with Damages with the RTC of Legaspi City. Petitioner
It is the duty of party-litigants to be in contact with their Lolita A. Soriano alleged that she is a stockholder of
counsel from time to time in order to be informed of the petitioner Lisam Enterprises, Inc. (LEI) and a member of
progress of their case. It is likewise the duty of parties to its Board of Directors, designated as its Corporate
inform the court of the fact of their counsels death. Their Secretary. The Complaint also alleged the following:
failure to do so means that they have been negligent in the
protection of their cause. They cannot pass the blame to 4. Sometime in 1993, plaintiff LEI, in the
the court, which is not tasked to monitor the changes in course of its business operation, acquired by purchase a
the circumstances of the parties and their counsel. parcel of residential land with improvement situated at
Legaspi City, covered by Transfer Certificate of Title No.
REMEDIAL LAW 37866, copy attached as Annex A, which property is more
particularly described as follows:
Petitioners claim that Atty. Espinas passed away on 8 xxxx
February 2008. They further claim that he was already
bedridden as early as December 2007, and thus they failed
to get any information whether [he] was served with a
5. On or about 28 March 1996, defendant
copy of the [CA Petition].
Lilian S. Soriano and the late Leandro A. Soriano, Jr., as
husband and wife (hereafter Spouses Soriano), in their
Petitioners were negligent in the conduct of their
personal capacity and for their own use and benefit,
litigation. Having known that Atty. Espinas was already
obtained a loan from defendant PCIB (Legaspi Branch)
bedridden as early as December 2007, they should have
(now known as Banco de Oro Unibank, Inc.) in the total
already obtained new counsel who could adequately
amount of P20 Million;
represent their interests. The excuse that Atty. Aglipay
could not enter his appearance before the CA because 6. That as security for the payment of the
[petitioners] failed to get their folder from the office of aforesaid credit accommodation, the late Leandro A.
Atty. Espinas is flimsy at best. Soriano, Jr. and defendant Lilian S. Soriano, as president
and treasurer, respectively of plaintiff LEI, but without
The fact that petitioners were unable to obtain their folder authority and consent of the board of said plaintiff and
from Atty. Espinas is immaterial. Proof of service upon with the use of a falsified board resolution, executed a real
the lawyer to be substituted will suffice where the lawyers estate mortgage on 28 March 1996, over the above-
consent cannot be obtained. With respect to the records of described property of plaintiff LEI in favor of defendant
the case, these may easily be reconstituted by obtaining PCIB, and had the same registered with the Office of the
copies thereof from the various courts involved. Registry of Deeds, Legaspi City, copy of the Real Estate
Mortgage is hereto attached and marked as Annex B, and
made part hereof, to the prejudice of plaintiffs;
LISAM ENTERPRISES, INC. ETC VS. BDO, ET AL.
7. That specifically, the Spouses Soriano, with
FACTS: intent to defraud and prejudice plaintiff LEI and its
stockholders, falsified the signatures of plaintiff Lolita A.
This resolves the Petition for Review on Certiorari under Soriano as corporate secretary and director of plaintiff
Rule 45 of the Rules of Court, praying that the LEI, in a document denominated as board resolution
Resolution[1] of the Regional Trial Court of Legaspi City purportedly issued by the board of plaintiff LEI on 6
(RTC), dated November 11, 1999, dismissing petitioners November 1995, making it appear that plaintiff LEI's
complaint, and its Order[2] dated May 15, 2000, denying Board met and passed a board resolution on said date
36
authorizing the Spouses Soriano to mortgage or encumber were created nor granted thereunder by reason of its
all or substantially all of the properties of plaintiff LEI, nullity;
when in fact and in truth, no resolution of that nature was
11. Worst, sometime in August 1998, in order to
ever issued by the board of plaintiff LEI, nor a meeting
remedy the defects in the mortgage transaction entered by
was called to that effect, copy of the resolution in question
the Spouses Soriano and defendant PCIB, the former,
is hereto attached and marked as Annex C, and made part
with the unlawful instigation of the latter, signed a
hereof
document denominated as Deed of Assumption of Loans
8. That plaintiff Lolita A. Soriano as Corporate and Mortgage Obligations and Amendment of Mortgage;
Secretary of plaintiff LEI, had never signed a board wherein in said document, plaintiff LEI was made to
resolution nor issued a Secretary's Certificate to the effect assume the P20 Million personal indebtedness of the
that on 6 November 1995 a resolution was passed and Spouses Soriano with defendant PCIB, when in fact and
approved by plaintiff LEI authorizing the Spouses in truth it never so assumed the same as no board
Soriano as president and treasurer, respectively, to resolution duly certified to by plaintiff Lolita A. Soriano
mortgage the above-described property of plaintiff LEI, as corporate secretary was ever issued to that effect, copy
neither did she appear personally before a notary public of said Deed is hereto attached and marked as Annex D,
on 28 March 1996 to acknowledge or attest to the issuance and made part hereof;
of a supposed board resolution issued by plaintiff LEI on
12. Moreover, to make it appear that plaintiff LEI
6 November 1995
had consented to the execution of said deed of assumption
9. That defendant PCIB, knowing fully well of mortgage, the Spouses Soriano again, through the
that the property being mortgaged by the Spouses Soriano unlawful instigation and connivance of defendant PCIB,
belongs to plaintiff LEI, a corporation, negligently and falsified the signature of plaintiff Lolita A. Soriano as
miserably failed to exercise due care and prudence corporate secretary of plaintiff LEI in a document
required of a banking institution. Specifically, defendant denominated as Corporate Resolution to Borrow, to make
PCIB failed to investigate and to delve into the propriety it appear that plaintiff LEI so authorized the Spouses
of the issuance of or due execution of subject board Soriano to perform said acts for the corporation, when in
resolution, which is the very foundation of the validity of fact and in truth no such authority or resolution was ever
subject real estate mortgage. Further, it failed to verify the issued nor granted by plaintiff LEI, nor a meeting called
genuineness of the signatures appearing in said board and held for said purpose in accordance with its By-laws;
resolution nor to confirm the fact of its issuance with copy of which is hereto attached and marked as Annex E
plaintiff Lolita A. Soriano, as the corporate secretary of and made part hereof
plaintiff LEI. Furthermore, the height of its negligence
13. That said irregular transactions of defendant
was displayed when it disregarded or failed to notice that
Lilian S. Soriano and her husband Leandro A. Soriano,
the questioned board resolution with a Secretary's
Jr., on one hand, and defendant PCIB, on the other, were
Certificate was notarized only on 28 March 1996 or after
discovered by plaintiff Lolita A. Soriano sometime in
the lapse of more than four (4) months from its purported
April 1999. That immediately upon discovery, said
date of issue on 6 November 1995. That these
plaintiff, for herself and on behalf and for the benefit of
circumstances should have put defendant PCIB on notice
plaintiff LEI, made demands upon defendants Lilian S.
of the flaws and infirmities of the questioned board
Soriano and the Estate of Leandro A. Soriano, Jr., to free
resolution. Unfortunately, it negligently failed to exercise
subject property of plaintiff LEI from such mortgage lien,
due care and prudence expected of a banking institution;
by paying in full their personal indebtedness to defendant
10. That having been executed without authority PCIB in the principal sum of P20 Million. However, said
of the board of plaintiff LEI said real estate mortgage defendants, for reason only known to them, continued and
dated 28 March 1996 executed by the Spouses Soriano, as still continue to ignore said demands, to the damage and
officers of plaintiff LEI in favor of defendant PCIB, is the prejudice of plaintiffs;
null and void and has no legal effect upon said
14. Hence, on 25 June 1999, plaintiffs
plaintiff. Consequently, said mortgage deed cannot be
commenced a derivative suit against defendants Lilian S.
used nor resorted to by defendant PCIB against subject
Soriano and the Estate of Leandro A. Soriano, Jr., before
property of plaintiff LEI as no right or rights whatsoever
the Securities and Exchange Commission, docketed as
37
SEC Case No. 06-99-6339 for Fraudulent Scheme and
Unlawful Machination with Damages in order to protect
On September 28, 1999, respondent PCIB filed a Motion
and preserve the rights of plaintiffs, copy of said
to Dismiss the Complaint on grounds of lack of legal
complaint is hereto attached as AnnexF;
capacity to sue, failure to state cause of action, and litis
15. That plaintiffs, in order to seek complete pendencia.Petitioners filed an Opposition thereto, while
relief from the unauthorized mortgage transaction PCIB's co-defendants filed a Motion to Suspend Action
between the Spouses Soriano and defendant PCIB, were
On November 11, 1999, the RTC issued the first assailed
further compelled to institute this instant case to seek the
Resolution dismissing petitioners' Complaint. Petitioners
nullification of the real estate mortgage dated 28 March
then filed a Motion for Reconsideration of said
1999. Consequently, plaintiffs were forced to retain the
Resolution.While awaiting resolution of the motion for
services of a lawyer with whom they contracted to
reconsideration, petitioners also filed, on January 4, 2000,
pay P100,000.00 as and for attorney's fee;
a Motion to Admit Amended Complaint, amending
16. That unfortunately, the plaintiffs learned that paragraph 13 of the original complaint to read as follows:
on 30 July 1999, defendant Sarte, in his capacity as
13. That said irregular transactions of defendant Lilian S.
Notary Public of Daraga, Albay and upon application of
Soriano and her husband Leandro A. Soriano, Jr., on one
defendant PCIB, issued a notice of Auction/Foreclosure
hand, and defendant PCIB, on the other, were discovered
Sale of the property subject of the mortgage in question
by plaintiff Lolita A. Soriano sometime in April
and has set the auction sale on 7 September 1999 x x x;
1999. That immediately upon discovery, said plaintiff, for
17. That by reason of the fraudulent and herself and on behalf and for the benefit of plaintiff LEI,
surreptitious schemes perpetrated by defendant Lilian S. made demands upon defendant Lilian S. Soriano and the
Soriano and her husband, the late Leandro A. Soriano, Jr., Estate of Leandro A. Soriano, Jr., to free subject property
in unlawful connivance and through the gross negligence of plaintiff LEI from such mortgage lien, by paying in full
of defendant PCIB, plaintiff Lolita A. Soriano, as their personal indebtedness to defendant PCIB in the
stockholder, suffered sleepless nights, moral shock, principal sum of P20 Million. However, said defendants,
wounded feeling, hurt pride and similar injuries, hence, for reason only known to them, continued and still
should be awarded moral damages in the amount continue to ignore said demands, to the damage and
of P200,000.00. prejudice of plaintiffs; that plaintiff Lolita A. Soriano
likewise made demands upon the Board of Directors of
After service of summons on all defendants, the RTC
Lisam Enterprises, Inc., to make legal steps to protect the
issued a temporary restraining order on August 25, 1990
interest of the corporation from said fraudulent
and, after hearing, went on to issue a writ of preliminary
transaction, but unfortunately, until now, no such legal
injunction enjoining respondent PCIB (now known as
step was ever taken by the Board, hence, this action for
Banco de Oro Unibank, Inc.) from proceeding with the
the benefit and in behalf of the corporation;
auction sale of the subject property.
On May 15, 2000, the trial court issued the questioned
Respondents Lilian S. Soriano and the Estate of Leandro
Order denying both the Motion for Reconsideration and
A. Soriano, Jr. filed an Answer dated September 25, 1999,
the Motion to Admit Amended Complaint. The trial court
stating that the Spouses Lilian and Leandro Soriano, Jr.
held that no new argument had been raised by petitioners
were duly authorized by LEI to mortgage the subject
in their motion for reconsideration to address the fact of
property; that proceeds of the loan from respondent PCIB
plaintiffs' failure to allege in the complaint that petitioner
were for the use and benefit of LEI; that all notarized
Lolita A. Soriano made demands upon the Board of
documents submitted to PCIB by the Spouses Soriano
Directors of Lisam Enterprises, Inc. to take steps to
bore the genuine signature of Lolita Soriano; and that
protect the interest of the corporation against the
although the Spouses Soriano indeed received demands
fraudulent acts of the Spouses Soriano and PCIB. The
from petitioner Lolita Soriano for them to pay the loan,
trial court further ruled that the Amended Complaint can
they gave satisfactory explanations to the latter why her
no longer be admitted, because the same absolutely
demands could not be honored. It was, likewise, alleged
changed petitioners' cause of action.
in said Answer that it was respondent Lilian Soriano who
should be entitled to moral damages and attorney's fees.

38
RULING: when despite a substantial change or alteration in the
cause of action or defense, the amendments sought to be
The petition is impressed with merit.
made shall serve the higher interests of substantial justice,
The Court shall first delve into the matter of the propriety and prevent delay and equally promote the laudable
of the denial of the motion to admit amended objective of the rules which is to secure a "just, speedy
complaint. Pertinent provisions of Rule 10 of the Rules of and inexpensive disposition of every action and
Court provide as follows: proceeding.

Sec. 2. Amendments as a matter of right. − A party may The granting of leave to file amended pleading is a matter
amend his pleadings once as a matter of right at any time particularly addressed to the sound discretion of the trial
before a responsive pleading is served x x x. court; and that discretion is broad, subject only to the
limitations that the amendments should not substantially
Sec. 3. Amendments by leave of court. − Except as change the cause of action or alter the theory of the case,
provided in the next preceding section, substantial or that it was not made to delay the action. Nevertheless,
amendments may be made only upon leave of court. But as enunciated in Valenzuela, even if the amendment
such leave may be refused if it appears to the court that substantially alters the cause of action or defense, such
the motion was made with intent to delay. x x x amendment could still be allowed when it is sought to
It should be noted that respondents Lilian S. Soriano and serve the higher interest of substantial justice, prevent
the Estate of Leandro A. Soriano, Jr. already filed their delay, and secure a just, speedy and inexpensive
Answer, to petitioners' complaint, and the claims being disposition of actions and proceedings.
asserted were made against said parties. A responsive
pleading having been filed, amendments to the complaint The courts should be liberal in allowing amendments
may, therefore, be made only by leave of court and no to pleadings to avoid a multiplicity of suits and in
longer as a matter of right. However, in Tiu v. Philippine order that the real controversies between the parties
Bank of Communications,[4] the Court discussed this rule are presented, their rights determined, and the case
at length, to wit: decided on the merits without unnecessary delay. This
liberality is greatest in the early stages of a lawsuit,
x x x [A]fter petitioners have filed their answer, Section especially in this case where the amendment was made
3, Rule 10 of the Rules of Court specifically allows before the trial of the case, thereby giving the
amendment by leave of court. The said Section states petitioners all the time allowed by law to answer and
to prepare for trial.
SECTION 3. Amendments by leave of court. - Except as
provided in the next preceding section, substantial
Furthermore, amendments to pleadings are generally
amendments may be made only upon leave of court. But
favored and should be liberally allowed in furtherance of
such leave may be refused if it appears to the court that
justice in order that every case, may so far as possible, be
the motion was made with intent to delay. Orders of the
determined on its real facts and in order to speed up the
court upon the matters provided in this section shall be
trial of the case or prevent the circuitry of action and
made upon motion filed in court, and after notice to the
unnecessary expense. That is, unless there are
adverse party, and an opportunity to be heard.
circumstances such as inexcusable delay or the taking of
This Court has emphasized the import of Section 3, Rule the adverse party by surprise or the like, which might
10 of the 1997 Rules of Civil Procedure in Valenzuela v. justify a refusal of permission to amend.[5]
Court of Appeals, thus:
Since, as explained above, amendments are generally
Interestingly, Section 3, Rule 10 of the 1997 Rules of favored, it would have been more fitting for the trial court
Civil Procedure amended the former rule in such manner to extend such liberality towards petitioners by admitting
that the phrase "or that the cause of action or defense is the amended complaint which was filed before the order
substantially altered" was stricken-off and not retained in dismissing the original complaint became final and
the new rules. The clear import of such amendment in executory. It is quite apparent that since trial proper had
Section 3, Rule 10 is that under the new rules, "the not yet even begun, allowing the amendment would not
amendment may (now) substantially alter the cause of have caused any delay. Moreover, doing
action or defense." This should only be true, however,
39
so would have served the higher interest of justice as this MA. MERCEDES BARBA VS LICEO DE
would provide the best opportunity for the issues among CAGAYAN UNIVERSITY
all parties to be thoroughly threshed out and the rights of
all parties finally determined. Hence, the Court overrules FACTS:
the trial court's denial of the motion to admit the amended
Petitioner Dr. Ma. Mercedes L. Barba (Barba) was the
complaint, and orders the admission of the same.
Dean of the College of Physical Therapy of respondent
With the amendment stating that plaintiff Lolita A. Liceo de Cagayan University, Inc. (Liceo).
Soriano likewise made demands upon the Board of
Directors of Lisam Enterprises, Inc., to make legal steps In the school year 2003 to 2004, the College of Physical
to protect the interest of the corporation from said Therapy suffered a dramatic decline in the number of
fraudulent transaction, but unfortunately, until now, no enrollees from a total of 1,121 students in the school year
such legal step was ever taken by the Board, hence, this 1995 to 1996 to only 29 students in the first semester of
action for the benefit and in behalf of the corporation, school year 2003 to 2004. Due to the low number of
does the amended complaint now sufficiently state a enrollees, Liceo decided to freeze the operation of the
cause of action? In Hi-Yield Realty, Incorporated v. Court College of Physical Therapy indefinitely. Thereafter, the
of Appeals,[6] the Court enumerated the requisites for College of Physical Therapy ceased operations and Barba
filing a derivative suit, as follows: went on leave without pay starting. Subsequently, Liceo
sent Barba a letter dated April 27, 2005 instructing Barba
a) the party bringing the suit should be a shareholder as of
to return to work on and report to Ma. Chona Palomares,
the time of the act or transaction complained of, the
the Acting Dean of the College of Nursing, to receive her
number of his shares not being material;
teaching load and assignment as a full-time faculty
b) he has tried to exhaust intra-corporate member in that department. Barba did not report to
remedies, i.e., has made a demand on the board of Palomares and requested for the processing of her
directors for the appropriate relief but the latter has failed separation benefits in view of the closure of the College
or refused to heed his plea; and of Physical Therapy.

c) the cause of action actually devolves on the Another letter was sent to Barba but the latter still refused
corporation, the wrongdoing or harm having been, or to return to work. Hence, Liceo sent Barba a notice
being caused to the corporation and not to the particular terminating her services on the ground of abandonment.
stockholder bringing the suit.[7]
A reading of the amended complaint will reveal that all Barba filed a complaint before the Labor Arbiter for
the foregoing requisites had been alleged therein. Hence, illegal dismissal, payment of separation pay and
the amended complaint remedied the defect in the original retirement benefits againstLiceo. She alleged that her
complaint and now sufficiently states a cause of action. transfer to the College of Nursing as a faculty member is
a demotion amounting to constructive dismissal.
Respondent PCIB should not complain that admitting the
amended complaint after they pointed out a defect in the The LA ruled that Barba was not constructively
original complaint would be unfair to them. They should dismissed. The NLRC reversed the LA. Liceo went to the
have been well aware that due to the changes made by the CA and filed a Supplemental Petition raising for the first
1997 Rules of Civil Procedure, amendments may now time the issue of lack of jurisdiction of the Labor Arbiter
substantially alter the cause of action or defense. It should and the NLRC over the case. Liceo claimed that a College
not have been a surprise to them that petitioners would Dean is a corporate officer under its by-laws and Barba
redress the defect in the original complaint by was a corporate officer of Liceo since her appointment
substantially amending the same, which course of action was approved by the board of directors. Thus, Liceo
is now allowed under the new rules. maintained that the jurisdiction over the case is with the
regular courts and not with the labor tribunals.

In its original Decision, the CA reversed the NLRC


resolutions. The CA did not find merit in Liceos assertion
in its Supplemental Petition that the position of Barba as
40
College Dean was a corporate office. The CA further SPS. VILLUGA VS. KELLY HARDWARE &
found that no constructive dismissal occurred nor has CONSTRUCTION SUPPLY, ET AL.
Barba abandoned her work.
FACTS:
Unsatisfied, both Barba and Liceo sought reconsideration On March 3, 1995, herein respondent filed with the RTC
of the CA decision. Thereafter, the CA reversed its earlier of Bacoor, Cavite a Complaint for a Sum of Money and
ruling. Hence,Barba filed the present petition. Damages against herein petitioners alleging as follows:
ISSUE: xxxx
The decisive issue in the present petition is whether (3) During the period of November 19, 1992 to January 5,
petitioner was an employee or a corporate officer of 1993, defendants [herein petitioners] made purchases of
respondent university. Resolution of this issue resolves various construction materials from plaintiff corporation
the question of whether the appellate court was correct in [herein respondent] in the sum of P259,809.50, which has
ruling that the Labor Arbiter and the NLRC had no not been paid up to the present time, both principal and
jurisdiction over petitioner’s complaint for constructive stipulated interests due thereon.
dismissal against respondent
(4) Plaintiff made several demands, oral and written, for
RULING: the same defendants to pay all their obligations due
plaintiff herein, but defendants fail and refuse to comply
We grant the petition. Prefatorily, we first discuss the
with, despite demands made upon them, to the damage
procedural matter raised by respondent that the present
and prejudice of plaintiff.
petition is filed out of time. Respondent claims that
petitioner’s motion for reconsideration from the Amended xxxx
Decision is a second motion for reconsideration which is
a prohibited pleading. Respondent’s assertion, however, WHEREFORE, premises considered, it is most
is misplaced for it should be noted that the CA’s Amended respectfully prayed of this Honorable Court that judgment
Decision totally reversed and set aside its previous ruling. be rendered in favor of plaintiff and against defendants by
Section 2, Rule 52 of the 1997 Rules of Civil Procedure, ordering defendants to pay the sum of:
as amended, provides that no second motion for (1) P259,809.50 as principal obligation due plaintiff, plus
reconsideration of a judgment or final resolution by the interest due thereon at 14% interest per annum, until all
same party shall be entertained. This contemplates a sums due are paid in full.
situation where a second motion for reconsideration is
filed by the same party assailing the same judgment or (2) P64,952.38 by way of reimbursements of attorney's
final resolution. Here, the motion for reconsideration of fees plus P500.00 appearance fee in court.
petitioner was filed after the appellate court rendered an
(3) P26,000.00 for litigation and other related expenses.
Amended Decision totally reversing and setting aside its
previous ruling. Hence, petitioner is not precluded from And to pay the cost of suit.3
filing another motion for reconsideration from the
Amended Decision which held that the labor tribunals In their Answer to Complaint,4 petitioners admitted
lacked jurisdiction over petitioner’s complaint for having made purchases from respondent, but alleged that
constructive dismissal. The period to file an appeal should they do not remember the exact amount thereof as no copy
be reckoned not from the denial of her motion for of the documents evidencing the purchases were attached
reconsideration of the original decision, but from the date to the complaint. Petitioners, nonetheless, claimed that
of petitioner’s receipt of the notice of denial of her motion they have made payments to the respondent on March 4,
for reconsideration from the Amended Decision. And as 1994 and August 9, 1994 in the amounts of P110,301.80
petitioner received notice of the denial of her motion for and P20,000.00, respectively, and they are willing to pay
reconsideration from the Amended Decision on the balance of their indebtedness after deducting the
September 23, 2010 and filed her petition on November payments made and after verification of their account.
8, 2010, or within the extension period granted by the In a Manifestation5 dated July 18, 1995, petitioners stated
Court to file the petition, her petition was filed on time. that in order to buy peace, they were willing to pay

41
respondent the principal sum of P259,809.50, but without fact set forth therein, in accordance with the Rules of
interests and costs, and on installment basis. Court.
In its Counter Manifestation,6 respondent signified that it On June 6, 1996, petitioners filed their Comments on the
was amenable to petitioners' offer to pay the principal Request for Admission14 stating their objections to the
amount of P259,809.50. However, respondent insisted admission of the documents attached to the Request.
that petitioners should also pay interests, as well as
On January 24, 1997, respondent filed its Second
litigation expenses and attorney's fees, and all incidental
Amended Complaint,15 again with leave of court. The
expenses.
amendment modified the period covered by the
Subsequently, on August 11, 1995, respondent filed a complaint. Instead of October 1992 to January 5, 1993, it
Motion for Partial Judgment on the Pleadings7 contending was changed to July 29, 1992 until August 10, 1994. The
that petitioners were deemed to have admitted in their amendment also confirmed petitioners' partial payment in
Answer that they owed respondent the amount of the sum of P110,301.80 but alleged that this payment was
P259,809.50 when they claimed that they made partial applied to other obligations which petitioners owe
payments amounting to P130,301.80. Based on this respondent. Respondent reiterated its allegation that,
premise, respondent prayed that it be awarded the despite petitioners' partial payment, the principal amount
remaining balance of P129,507.70. Petitioners filed their which petitioners owe remains P259,809.50.
Opposition8 to the said Motion.
Petitioners filed their Answer to the Second Amended
On September 11, 1995, the RTC issued an Complaint16 denying the allegations therein and insisting
Order9 deferring resolution of respondent's Motion for that they have made partial payments.
Partial Judgment on the ground that there is no clear and
On September 4, 1997, respondent filed a Motion to
specific admission on the part of petitioners as to the
Expunge with Motion for Summary Judgment17 claiming
actual amount that they owe respondent.
that petitioners' Comments on respondent's Request for
On January 30, 1996, respondent filed an Amended Admission is a mere scrap of paper as it was signed by
Complaint,10 with leave of court, alleging that between petitioners' counsel and not by petitioners themselves and
October 1992 until January 5, 1993, petitioners purchased that it was filed beyond the period allowed by the Rules
from it (respondent) various construction materials and of Court. Respondent goes on to assert that petitioners, in
supplies, the aggregate value of which is P279,809.50; effect, were deemed to have impliedly admitted the
that only P20,000.00 had been paid leaving a balance of matters subject of the said request. Respondent also
P259,809.50. contended that it is already entitled to the issuance of a
summary judgment in its favor as petitioners not only
In their Answer to Amended Complaint,11 petitioners
failed to tender a genuine issue as to any material fact but
reiterated their allegations in their Answer to Complaint.
also did not raise any special defenses, which could
On March 8, 1996, respondent filed a Request for possibly relate to any factual issue.
Admission12 asking that petitioners admit the genuineness
In their Opposition to Motion to Expunge with Motion for
of various documents, such as statements of accounts,
Summary Judgment,18 petitioners argued that
delivery receipts, invoices and demand letter attached
respondent's request for admission is fatally defective,
thereto as well as the truth of the allegations set forth
because it did not indicate or specify a period within
therein.
which to answer; that verification by petitioners' counsel
Respondent basically asked petitioners to admit that the is sufficient compliance with the Rules of Court; that
latter's principal obligation is P279,809.50 and that only petitioners' request for admission should be deemed
P20,000.00 was paid. dispensed with and no longer taken into account as it only
relates to the Amended Complaint, which was already
On June 3, 1996, respondent filed a Manifestation and abandoned when the Second Amended Complaint was
Motion13 before the RTC praying that since petitioners filed; and that summary judgment is improper and without
failed to timely file their comment to the Request for legal basis, as there exists a genuine controversy brought
Admission, they be considered to have admitted the about by petitioners' specific denials and defenses.
genuineness of the documents described in and exhibited
with the said Request as well as the truth of the matters of
42
ISSUE: does not automatically mean that the filing or the service
of an answer or comment to the "Request" would be left
THE HONORABLE COURT SHOULD NOT HAVE
to the whims and caprices of defendants-appellants. It
DENIED DEFENDANTS-APPELLANTS'
must be reiterated that one of the main objectives of Rule
(PETITIONERS) COMMENT AND RULED THAT
26 is to expedite the trial of the case (Duque vs. Court of
THERE WAS IMPLIED ADMISSION CONTAINED IN
Appeals, 383,
THE REQUEST.
SCRA 520, 527 2002 ). Thus, it is also provided in the
RULING: second paragraph of Section 2 of Rule 26 of the Rules of
In their first assigned error, petitioners insist in arguing Court that "[o]bjections on the ground of irrelevancy or
that respondent waived its Request for Admission when it impropriety of the matter requested shall be promptly
filed its Second Amended Complaint; that all motions or submitted to the court for resolution."21
requests based on the complaint, which was amended,
Nonetheless, the Court takes exception to the ruling of the
should no longer be considered. Petitioners also contend
CA that by reason of the belated filing of petitioners'
that the Request for Admission was not in the form
Comments on the Request for Admission, they are
specified by the Rules of Court as it did not specify a
deemed to have impliedly admitted that they are indebted
period within which to reply as required by Section 1,
to respondent in the amount of P259,809.50.
Rule 26 of the same Rules.
A careful examination of the said Request for Admission
The petition lacks merit.
shows that the matters of fact set forth therein are simply
The Court agrees with the CA in holding that respondent's a reiteration of respondent's main allegation in its
Second Amended Complaint supersedes only its Amended Complaint and that petitioners had already set
Amended Complaint and nothing more. up the affirmative defense of partial payment with respect
to the above allegation in their previous pleadings.
Section 8, Rule 10 of the Rules of Court provides:
This Court has ruled that if the factual allegations in the
Sec. 8. Effect of amended pleading. – An amended complaint are the very same allegations set forth in the
pleading supersedes the pleading that it amends. request for admission and have already been specifically
However, admissions in superseded pleadings may be denied, the required party cannot be compelled to deny
received in evidence against the pleader; and claims or them anew.22 A request for admission that merely
defenses alleged therein not incorporated in the amended reiterates the allegations in an earlier pleading is
pleading shall be deemed waived. inappropriate under Rule 26 of the Rules of Court, which
From the foregoing, it is clear that respondent's Request as a mode of discovery, contemplates of interrogatories
for Admission is not deemed abandoned or withdrawn by that would clarify and tend to shed light on the truth or
the filing of the Second Amended Complaint. falsity of the allegations in the pleading.23 Rule 26 does
not refer to a mere reiteration of what has already been
The Court also finds no error when the CA ruled that alleged in the pleadings.24 Nonetheless, consistent with
petitioners' Comments on the Request for Admission was the abovementioned Rule, the party being requested
filed out of time, and quotes with approval the disquisition should file an objection to the effect that the request for
of the appellate court on this matter, to wit: admission is improper and that there is no longer any need
to deny anew the allegations contained therein
x x x Pursuant to the above-quoted Section 2 of Rule 26
considering that these matters have already been
of the Rules of Court, the party to whom the request is
previously denied.
directed must respond to the request within a period of not
less than ten (10) days after the service thereof, or upon
such further time the Court may allow on motion. In the
instant case, the plaintiff-appellee's herein respondent's
"Request" failed to designate any period for the filing of
the defendants-appellants' herein petitioners' response.
Neither did the trial court fix the period for the same upon
motion of the parties. However, such failure to designate

43
PLANTERS DEVELOPMENT BANK VS. JULIE fact, what was set forth therein was the substantial claim
CHANDUMAL that PDB failed to comply with the requirements of R.A.
No. 6552 on payment of cash surrender value, which
FACTS: already delves into the merits of PDB’s cause of action.
BF Homes and Julie Chandumal entered into a contract to In addition, Chandumal even appealed the RTC decision
sell a parcel of land located in Las Pinas. Later, BF Homes to the CA, an act which demonstrates her recognition of
sold to PDB all its rights over the contract. the trial court’s jurisdiction to render said judgment.

Chandumal paid her monthly amortizations until she (3) R.A. No. 6552 recognizes the right of the seller to
defaulted in her payments. So, PDB sent a notice to cancel the contract but any such cancellation must be done
Chandumal with a demand to vacate the land within in conformity with the requirements therein prescribed. In
30days, otherwise all of her rights will be extinguished addition to the notarial act of rescission, the seller is
and the contract will be terminated and deemed rescinded. required to refund to the buyer the cash surrender value of
In spite of the demand, Chandumal failed to settle her the payments on the property. The actual cancellation of
account. the contract can only be deemed to take place upon the
expiry of a thirty (30)-day period following the receipt by
PDB filed an action for judicial confirmation of notarial the buyer of the notice of cancellation or demand for
rescission and delivery of possession but still Chandumal rescission by a notarial act and the full payment of the
refused to do so. Summons were then issued and served cash surrender value.
by deputy sheriff Galing but its was unavailing as she was
always out of her house on the dates the summons were Petition is denied.
served.
RTC then issued an order granting the motion of PDB.
BIACO VS. PHILIPPINE COUNTRYSIDE RURAL
Chandumal filed an urgent motion to set aside order of
BANK
default and to admit attached answer. Chandumal said
that she did not receive the summons and was not notified FACTS:
of the same and her failure to file an answer within the
Ernesto Biaco, husband of Teresa Biaco, acquired several
reglementary period was due to fraud. RTC denied
loans from Philippine Countryside Rural Bank (PCRB)
Chandumal's motion to set aside the order of default.
from 1996 to 1998. To secure the loans, he mortgaged
Chandumal appealed to the CA. CA nullified the RTC's certain property in favor of the bank. He was able to pay
decision. loans from 1996 to 1997 but he defaulted in loans
obtained in 1998 which amounted to more than a million
Issue: (1) Whether there was valid substituted service of
pesos.
summons? (2) Whether Chandumal voluntarily submitted
to the jurisdiction of the RTC? (3) Whether there was Eventually, PCRB filed a complaint for foreclosure
proper rescission by notarial act of the contract to sell? against the spouses Biaco. Summons were issued by the
trial judge. The Sherriff served the summons to Ernesto at
Held: the latter’s office. No summons was served to Teresa.
(1) Correctly ruled that the sheriff’s return failed to justify
Ernesto did not file a responsive pleading (so did Teresa
a resort to substituted service of summons. According to
because she was not aware sans the summons being
the CA, the Return of Summons does not specifically
served her). The case was heard ex-parte and the spouses
show or indicate in detail the actual exertion of efforts or
were ordered to satisfy the debt and failure to do so will
any positive step taken by the officer or process server in
authorize the Sheriff to auction the mortgaged the
attempting to serve the summons personally to the
property.
defendant.
Eventually, the mortgaged property was auctioned for
(2) The Court notes that aside from the allegation that she
P150k which is not sufficient to cover the P1 M+ debt.
did not receive any summons, Chandumal’s motion to set
Upon motion by PCRB, a notice of levy was issued
aside order of default and to admit attached answer failed
against the personal properties of Teresa to satisfy the
to positively assert the trial court lack of jurisdiction. In
deficiency.
44
It was only at this point that Teresa learned of the previous his opponent, as by keeping him away from court, a false
ex parte proceedings. She then sought to have the promise of a compromise; or where the defendant never
judgment annulled as she now claims that she was had knowledge of the suit, being kept in ignorance by the
deprived of due process when she did not receive acts of the plaintiff; or where an attorney fraudulently or
summons; that it was only her husband who received the without authority assumes to represent a party and
summons; that there was extrinsic fraud because her connives at his defeat; or where the attorney regularly
husband deliberately hid the fact of the foreclosure employed corruptly sells out his client’s interest to the
proceeding. other side. The above is not applicable in the case of
Teresa. It was not PCRB which made any fraud. It should
PRCB argued that the foreclosure proceeding is an action
be noted that spouses Biaco were co-defendants in the
quasi in rem, hence Teresa’s participation is not required
case and shared the same interest.
so long as the court acquires jurisdiction over the res
which is what happened in the case at bar; that Teresa
cannot invoke extrinsic fraud because such situation
cannot occur in her case because she is a co-defendant of
Ernesto.
ISSUE: Whether or not the judgment of the trial court
should be annulled.
HELD: Yes. It is admitted that the proceeding is a quasi
in rem proceeding and that the presence of Teresa is not
required because the trial court was able to acquire
jurisdiction over the res (mortgaged property).
HOWEVER, her constitutional right to due process is
superior over the procedural matters mentioned. Her right
to due process was violated when she did not receive
summons. Teresa, as a resident defendant, who does not
voluntary appear in court must be personally served with
summons as provided under Section 6, Rule 14 of the
Rules of Court. Even if the action is quasi in
rem, personal service of summons is essential in order to
afford her due process. The substituted service made by
the sheriff at her husband’s office cannot be deemed
proper service absent any explanation that efforts had
been made to personally serve summons upon her but that
such efforts failed. Further, the order of the trial court
compelling Teresa to pay off the debt using her personal
property is a judgment in personam which the court
cannot do because it only acquired jurisdiction over the
res and not over the person of Teresa.
On the issue of extrinsic fraud, the Court of Appeals,
agreeing with PCRB, is correct that there is none in the
case at bar. Extrinsic fraud exists when there is a
fraudulent act committed by the prevailing party outside
of the trial of the case, whereby the defeated party was
prevented from presenting fully his side of the case by
fraud or deception practiced on him by the prevailing
party. Extrinsic fraud is present where the unsuccessful
party had been prevented from exhibiting fully his case,
by fraud or deception practiced on him by
45