VENUE OF ACTIONS the title to, or possession of, real property, or any interest therein . . .
the title to, or possession of, real property, or any interest therein . . ." in accordance with Section 19 (2) of Batas Pambansa Blg. 129. With
G.R. No. 74854 April 2, 1991
JESUS DACOYCOY, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT, HON. ANTONIO V. BENEDICTO, Executive Judge, Regional Trial Court, Branch LXXI, Antipolo,
Rizal, and RUFINO DE GUZMAN, respondents.
Ramon V. Sison for petitioner.
Public Attorney's Office for private respondent.
FERNAN, C.J.:
May the trial court motu proprio dismiss a complaint on the ground of improper venue? This is the issue confronting the Court in the case
at bar.
On March 22, 1983, petitioner Jesus Dacoycoy, a resident of Balanti, Cainta, Rizal, filed before the Regional Trial Court, Branch LXXI,
Antipolo, Rizal, a complaint against private respondent Rufino de Guzman praying for the annulment of two (2) deeds of sale involving a
parcel of riceland situated in Barrio Estanza, Lingayen, Pangasinan, the surrender of the produce thereof and damages for private
respondent's refusal to have said deeds of sale set aside upon petitioner's demand.
On May 25, 1983, before summons could be served on private respondent as defendant therein, the RTC Executive Judge issued an order
requiring counsel for petitioner to confer with respondent trial judge on the matter of venue. After said conference, the trial court
dismissed the complaint on the ground of improper venue. It found, based on the allegations of the complaint, that petitioner's action is a
real action as it sought not only the annulment of the aforestated deeds of sale but also the recovery of ownership of the subject parcel of
riceland located in Estanza, Lingayen, Pangasinan, which is outside the territorial jurisdiction of the trial court.
Petitioner appealed to the Intermediate Appellate Court, now Court of Appeals, which in its decision of April 11, 1986, 1 affirmed the order
of dismissal of his complaint.
In this petition for review, petitioner faults the appellate court in affirming what he calls an equally erroneous finding of the trial court that
the venue was improperly laid when the defendant, now private respondent, has not even answered the complaint nor waived the venue. 2
Petitioner claims that the right to question the venue of an action belongs solely to the defendant and that the court or its magistrate does
not possess the authority to confront the plaintiff and tell him that the venue was improperly laid, as venue is waivable. In other words,
petitioner asserts, without the defendant objecting that the venue was improperly laid, the trial court is powerless to dismiss the
case motu proprio.
Private respondent, on the other hand, maintains that the dismissal of petitioner's complaint is proper because the same can "readily be
assessed as (a) real action." He asserts that "every court of justice before whom a civil case is lodged is not even obliged to wait for the
defendant to raise that venue was improperly laid. The court can take judicial notice and motu proprio dismiss a suit clearly denominated
as real action and improperly filed before it. . . . the location of the subject parcel of land is controlling pursuant to Sec. 2, par. (a), Rule 4 of
the New Rules of Court . . .3
We grant the petition.
The motu proprio dismissal of petitioner's complaint by respondent trial court on the ground of improper venue is plain error, obviously
attributable to its inability to distinguish between jurisdiction and venue.
Questions or issues relating to venue of actions are basically governed by Rule 4 of the Revised Rules of Court. It is said that the laying of
venue is procedural rather than substantive. It relates to the jurisdiction of the court over the person rather than the subject matter.
Provisions relating to venue establish a relation between the plaintiff and the defendant and not between the court and the subject
matter. Venue relates to trial not to jurisdiction, touches more of the convenience of the parties rather than the substance of the case. 4
Jurisdiction treats of the power of the court to decide a case on the merits; while venue deals on the locality, the place where the suit may
be had.5
In Luna vs. Carandang,6 involving an action instituted before the then Court of First Instance of Batangas for rescission of a lease contract
over a parcel of agricultural land located in Calapan, Oriental Mindoro, which complaint said trial court dismissed for lack of jurisdiction
over the leased land, we emphasized:
(1) A Court of First Instance has jurisdiction over suits involving title to, or possession of, real estate wherever situated in the
Philippines, subject to the rules on venue of actions (Manila Railroad Company vs. Attorney General, etc., et al., 20 Phil. 523;
Central Azucarera de Tarlac vs. De Leon, et al., 56 Phil. 169; Navarro vs. Aguila, et al., 66 Phil. 604; Lim Cay, et al. vs. Del Rosario,
etc., et al., 55 Phil. 692);
(2) Rule 4, Section 2, of the Rules of Court requiring that an action involving real property shall be brought in the Court of First
Instance of the province where the land lies is a rule on venue of actions, which may be waived expressly or by implication.
In the instant case, even granting for a moment that the action of petitioner is a real action, respondent trial court would still have
jurisdiction over the case, it being a regional trial court vested with the exclusive original jurisdiction over "all civil actions which involve
respect to the parties, there is no dispute that it acquired jurisdiction over the plaintiff Jesus Dacoycoy, now petitioner, the moment he
filed his complaint for annulment and damages. Respondent trial court could have acquired jurisdiction over the defendant, now private
respondent, either by his voluntary appearance in court and his submission to its authority, or by the coercive power of legal process
exercised over his person.7
Although petitioner contends that on April 28, 1963, he requested the City Sheriff of Olongapo City or his deputy to serve the summons on
defendant Rufino de Guzman at his residence at 117 Irving St., Tapinac, Olongapo City, 8 it does not appear that said service had been
properly effected or that private respondent had appeared voluntarily in court 9 or filed his answer to the complaint. 10 At this stage,
respondent trial court should have required petitioner to exhaust the various alternative modes of service of summons under Rule 14 of
the Rules of Court, i.e., personal service under Section 7, substituted service under Section 8, or service by publication under Section 16
when the address of the defendant is unknown and cannot be ascertained by diligent inquiry.
Dismissing the complaint on the ground of improper venue is certainly not the appropriate course of action at this stage of the proceeding,
particularly as venue, in inferior courts as well as in the courts of first instance (now RTC), may be waived expressly or impliedly. Where
defendant fails to challenge timely the venue in a motion to dismiss as provided by Section 4 of Rule 4 of the Rules of Court, and allows the
trial to be held and a decision to be rendered, he cannot on appeal or in a special action be permitted to challenge belatedly the wrong
venue, which is deemed waived.11
Thus, unless and until the defendant objects to the venue in a motion to dismiss, the venue cannot be truly said to have been improperly
laid, as for all practical intents and purposes, the venue, though technically wrong, may be acceptable to the parties for whose
convenience the rules on venue had been devised. The trial court cannot pre-empt the defendant's prerogative to object to the improper
laying of the venue by motu proprio dismissing the case.
Indeed, it was grossly erroneous for the trial court to have taken a procedural short-cut by dismissing motu propriothe complaint on the
ground of improper venue without first allowing the procedure outlined in the Rules of Court to take its proper course. Although we are
for the speedy and expeditious resolution of cases, justice and fairness take primary importance. The ends of justice require that
respondent trial court faithfully adhere to the rules of procedure to afford not only the defendant, but the plaintiff as well, the right to be
heard on his cause.
WHEREFORE, in view of the foregoing, the decision of the Intermediate Appellate Court, now Court of Appeals, dated April 11, 1986, is
hereby nullified and set aside. The complaint filed by petitioner before the Regional Trial Court of Antipolo, Branch LXXI is revived and
reinstated. Respondent court is enjoined to proceed therein in accordance with law.
SO ORDERED.
G.R. No. 106847. March 5, 1993.
PATRICIO P. DIAZ, petitioner, vs. JUDGE SANTOS B. ADIONG, RTC, Br. 8, Marawi City, SULTAN MACORRO L. MACUMBAL, SULTAN LINOG M.
INDOL, MACABANGKIT LANTO and MOHAMADALI ABEDIN, respondents.
Rex J.M.A. Fernandez for petitioner.
Mangurun B. Batuampar for respondents.
SYLLABUS
1. REMEDIAL LAW; ACTIONS; VENUE OF LIBEL CASE WHERE OFFENDED PARTY IS AN PUBLIC OFFICIAL. — From the provision of Article 360,
third paragraph of the Revised Penal Code as amended by R.A. 4363, it is clear that an offended party who is at the same time a public
official can only institute an action arising from libel in two (2) venues: the place where he holds office, and the place where the alleged
libelous articles were printed and first published.
2. ID.; ID.; IMPROPER VENUE; MUST BE RAISED IN A NOTION TO DISMISS PRIOR TO A RESPONSIVE PLEADING. — Unless and until the
defendant objects to the venue in a motion to dismiss prior to a responsive pleading, the venue cannot truly be said to have been
improperly laid since, for all practical intents and purposes, the venue though technically wrong may yet be considered acceptable to the
parties for whose convenience the rules on venue had been devised.
3. ID.; ID.; ID.; WAIVED IN CASE AT BAR BY FILING ANSWER. — Petitioner Diaz then, as defendant in the court below, should have timely
challenged the venue laid in Marawi City in a motion to dismiss, pursuant to Sec. 4, Rule 4, of the Rules of Court. Unfortunately, petitioner
had already submitted himself to the jurisdiction of the trial court when he filed his Answer to the Complaint with Counterclaim. His
motion to dismiss was therefore belatedly filed and could no longer deprive the trial court of jurisdiction to hear and decide the instant
civil action for damages. Well-settled is the rule that improper venue may be waived and such waiver may occur by laches. Sec. 1 of Rule
16 provides that objections to improper venue must be made in a motion to dismiss before any responsive pleading is filed. Responsive
pleadings are those which seek affirmative relief and set up defenses. Consequently, having already submitted his person to the
jurisdiction of the trial court, petitioner may no longer object to the venue which, although mandatory in the instant case, is nevertheless
waivable. As such, improper venue must be seasonably raised, otherwise, it may be deemed waived.
4. ID.; ID.; ID.; RELATES TO TRIAL AND NOT TO JURISDICTION. — Indeed, the laying of venue is procedural rather than substantive, relating
as it does to jurisdiction of the court over the person rather than the subject matter. Venue relates to trial and not to jurisdiction.
DECISION
BELLOSILLO, J p:
VENUE in the instant civil action for damages arising from libel was improperly laid; nonetheless, the trial court refused to dismiss the
complaint. Hence, this Petition for Certiorari, with prayer for the issuance of a temporary restraining order, assailing that order of denial 1
as well as the order denying reconsideration. 2
The facts: On 16 July 1991, the Mindanao Kris, a newspaper of general circulation in Cotabato City, published in its front page the news
article captioned "6-Point Complaint Filed vs. Macumbal," and in its Publisher's Notes the editorial, "Toll of Corruption," which exposed
alleged anomalies by key officials in the Regional Office of the Department of Environment and Natural Resources. 3
On 22 July 1991, the public officers alluded to, namely, private respondents Sultan Macorro L. Macumbal, Sultan Linog M. Indol, Atty.
Macabangkit M. Lanto and Atty. Mohamadali Abedin, instituted separate criminal and civil complaints arising from the libel before the City
Prosecutor's Office and the Regional Trial Court in Marawi City. The publisher-editor of the Mindanao Kris, petitioner Patricio P. Diaz, and
Mamala B. Pagandaman, who executed a sworn statement attesting to the alleged corruption, were named respondents in both
complaints. 4
On 2 September 1991, the City Prosecutor's Office dismissed the criminal case thus 5 —
"WHEREFORE . . . this investigation in the light of Agbayani vs. Sayo case finds that it has no jurisdiction to handle this case and that the
same be filed or instituted in Cotabato City where complainant is officially holding office at the time respondents caused the publication of
the complained news item in the Mindanao Kris in Cotabato City, for which reason it is recommended that this charge be dropped for lack
of jurisdiction."
In the interim, the civil complaint for damages, docketed as Civil Case No. 385-91 and raffled to Branch 10 of the Regional Trial Court in
Marawi City, was set for Pre-Trial Conference. The defendants therein had already filed their respective Answers with Counterclaim.
On 18 November 1991, petitioner Diaz moved for the dismissal of the action for damages on the ground that the trial court did not have
jurisdiction over the subject matter. He vehemently argued that the complaint should have been filed in Cotabato City and not in Marawi
City. 6
Pending action on the motion, the presiding judge of Branch 10 inhibited himself from the case which was thereafter reraffled to the sala
of respondent judge.
On 15 June 1991, respondent judge denied petitioner's Motion to Dismiss for lack of merit. Diaz thereafter moved for reconsideration of
the order of denial. The motion was also denied in the Order of 27 August 1991, prompting petitioner to seek relief therefrom.
Petitioner Diaz contends that the civil action for damages could not be rightfully filed in Marawi City as none of the private respondents,
who are all public officers, held office in Marawi City; neither were the alleged libelous news items published in that city. Consequently, it
is petitioner's view that the Regional Trial Court in Marawi City has no jurisdiction to entertain the civil action for damages.
The petitioner is correct. Not one of the respondents then held office in Marawi City: respondent Macumbal was the Regional Director for
Region XII of the DENR and held office in Cotabato City; respondent Indol was the Provincial Environment and Natural Resources Officer of
Lanao del Norte and held office in that province; respondent Lanto was a consultant of the Secretary of the DENR and, as averred in the
complaint, was temporarily residing in Quezon City; and, respondent Abedin was the Chief of the Legal Division of the DENR Regional
Office in Cotabato City. 7 Indeed, private respondents do not deny that their main place of work was not in Marawi City, although they had
sub-offices therein.
Apparently, the claim of private respondents that they maintained sub-offices in Marawi City is a mere afterthought, considering that it
was made following the dismissal of their criminal complaint by the City Prosecutor of Marawi City. Significantly, in their complaint in civil
Case No. 385-91 respondents simply alleged that they were residents of Marawi City, except for respondent Lanto who was then
temporarily residing in Quezon City, and that they were public officers, nothing more. This averment is not enough to vest jurisdiction
upon the Regional Trial Court of Marawi City and may be properly assailed in a motion to dismiss.
The Comment of private respondents that Lanto was at the time of the commission of the offense actually holding office in Marawi City as
consultant of LASURECO can neither be given credence because this is inconsistent with their allegation in their complaint that respondent
Lanto, as consultant of the Secretary of the DENR, was temporarily residing in Quezon City.
Moreover, it is admitted that the libelous articles were published and printed in Cotabato City. Thus, respondents were limited in their
choice of venue for their action for damages only to Cotabato City where Macumbal, Lanto and Abedin had their office and Lanao del
Norte where Indol worked. Marawi City is not among those where venue can be laid.
The third paragraph of Art. 360 of the Revised Penal Code, as amended by R.A. No. 4363, specifically requires that —
"The criminal and civil action for damages in cases of written defamations as provided for in this chapter, shall be filed simultaneously or
separately with the Court of First Instance (now Regional Trial Court) of the province or city where the libelous article is printed and first
published or where any of the offended parties actually resides at the time of the commission of the offense: Provided, however, that
where one of the offended parties is a public officer . . . (who) does not hold office in the City of Manila, the action shall be filed in the
Court of First Instance (Regional Trial Court) of the province or city where he held office at the time of the commission of the offense or
where the libelous article is printed and first published and in case one of the the offended parties is a private individual, the action shall
be filed in the Court of First Instance of the province or city where he actually resides at the time of the commission of the offense or
where the libelous matter is printed and first published . . . . " (emphasis supplied)
From the foregoing provision, it is clear that an offended party who is at the same time a public official can only institute an action arising
from libel in two (2) venues: the place where he holds office, and the place where the alleged libelous articles were printed and first
published.
Private respondents thus appear to have misread the provisions of Art. 360 of the Revised Penal Code, as amended, when they filed their
criminal and civil complaints in Marawi City. They deemed as sufficient to vest jurisdiction upon the Regional Trial Court of Marawi City the
allegation that "plaintiffs are all of legal age, all married, Government officials by occupation and residents of Marawi City." 8 But they are
wrong.
Consequently, it is indubitable that venue was improperly laid. However, unless and until the defendant objects to the venue in a motion
to dismiss prior to a responsive pleading, the venue cannot truly be said to have been improperly laid since, for all practical intents and
purposes, the venue though technically wrong may yet be considered acceptable to the parties for whose convenience the rules on venue
had been devised. 9
Petitioner Diaz then, as defendant in the court below, should have timely challenged the venue laid in Marawi City in a motion to dismiss,
pursuant to Sec. 4, Rule 4, of the Rules of Court. Unfortunately, petitioner had already submitted himself to the jurisdiction of the trial
court when he filed his Answer to the Complaint with Counterclaim. 10
His motion to dismiss was therefore belatedly filed and could no longer deprive the trial court of jurisdiction to hear and decide the instant
civil action for damages. Well-settled is the rule that improper venue may be waived and such waiver may occur by laches. 11
Petitioner was obviously aware of this rule when he anchored his motion to dismiss on lack of cause of action over the subject matter,
relying on this Court's ruling in Time, Inc. v. Reyes. 12 Therein, We declared that the Court of First Instance of Rizal was without jurisdiction
to take cognizance of Civil Case No. 10403 because the complainants held office in Manila, not in Rizal, while the alleged libelous articles
were published abroad.
It may be noted that in Time, Inc. v. Reyes, the defendant therein moved to dismiss the case without first submitting to the jurisdiction of
the lower court, which is not the case before Us. More, venue in an action arising from libel is only mandatory if it is not waived by
defendant. Thus —
"The rule is that where a statute creates a right and provides a remedy for its enforcement, the remedy is exclusive; and where it confers
jurisdiction upon a particular court, that jurisdiction is likewise exclusive, unless otherwise provided. Hence, the venue provisions of
Republic Act No. 4363 should be deemed mandatory for the party bringing the action, unless the question of venue should be waived by
the defendant . . . . " 13
Withal, objections to venue in civil actions arising from libel may be waived; it does not, after all, involve a question of jurisdiction. Indeed,
the laying of venue is procedural rather than substantive, relating as it does to jurisdiction of the court over the person rather than the
subject matter. 14 Venue relates to trial and not to jurisdiction.
Finally, Sec. 1 of Rule 16 provides that objections to improper venue must be made in a motion to dismiss before any responsive pleading
is filed. Responsive pleadings are those which seek affirmative relief and set up defenses. Consequently, having already submitted his
person to the jurisdiction of the trial court, petitioner may no longer object to the venue which, although mandatory in the instant case, is
nevertheless waivable. As such, improper venue must be seasonably raised, otherwise, it may be deemed waived.
WHEREFORE, for lack of merit, the Petition for Certiorari is DISMISSED and the Temporary Restraining Order heretofore issued is LIFTED.
This case is remanded to the court of origin for further proceedings.
SO ORDERED.
G.R. No. 106920 December 10, 1993
PHILIPPINE BANKING CORPORATION, petitioner,
vs.
HON. SALVADOR S. TENSUAN, Judge of Regional Trial Court of Makati, National Capital Judicial Region, Branch 146; CIRCLE FINANCIAL
CORPORATION, AVELINO E. DEATO, JR., MIGUEL F. VIOLAGO, BENJAMIN F. SANTIAGO, SOCORRO R. GOMEZ, NERISSA T. GLORIA,
FILEMON C. MARQUEZ, DOMINGO SANTIAGO AND HILARIO P. LOPEZ, respondents.
Tomargo, Luzano & Associates for petitioner.
Edgardo V. Cruz for private respondents.
FELICIANO, J.:
In this Petition for Review on Certiorari, petitioner asks us to review and set aside the Order of Judge Salvador A. Tensuan dated 3 August
1992, dismissing petitioner's complaint in Civil Case No. 91-2220 entitled "Philippine Banking Corporation vs. Circle Financial Corporation,
et al."
Petitioner Philippine Banking Corporation (hereafter "Bank") is a commercial banking corporation with principal office at Makati, Metro
Manila. Petitioner Bank instituted a complaint for collection of a sum of money, with a prayer for preliminary attachment, at the Regional
Trial Court of Makati. It appears from the allegations of the Bank's complaint that respondent Circle Financial Co. (hereafter "Circle"),
sometime in 1983 and 1984, through its representatives, obtained several loans aggregating P1,000,000.00 from petitioner. Respondent
Circle, for value received, delivered to petitioner Bank four (4) promissory notes, each of which contained the stipulation that:
 I/We hereby expressly submit to the jurisdiction of the courts of Valenzuela any legal action which may arise out of
this promissory note.
As security for the re-payment by respondent Circle of the sums loaned by petitioner Bank, eight (8) individuals, who were impleaded as
defendants in the complaint — namely, Avelino Deato, Miguel Violago, Benjamin Santiago, Socorro Gomez, Nerissa Gloria, Filemon
Marquez, Domingo Santiago and Hilario Lopez — executed a Continuing Surety Agreement and undertook to
pay jointly and severally respondent Circle's obligations. Only five (5) out of eight (8) individual obligors are respondents in present case,
namely: Domingo Santiago, Hilario Lopez, Avelino Deato, Benjamin P. Santiago and Socorro Gomez.
On their due dates, Circle failed to pay its obligations under the promissory notes. Thereupon, petitioner Bank demanded payment from
the eight (8) individual sureties conformably with their promises contained in the Continuing Surety Agreement; the individual obligors,
however, also failed to pay.
Petitioner moved for issuance of a writ of preliminary attachment, alleging that respondent Circle had become insolvent and had been
placed under receivership by the Central Bank. The trial judge granted the motion and issued a writ of preliminary attachment. The
sheriff's return indicated, however, that no properties belonging to the respondent Circle and the individual obligors could be found. Per
sheriff's return, summons was served upon Domingo Santiago, 1 Hilario P. Lopez, 2 Avelino Deato, 3 Benjamin P. Santiago, 4 and Socorro
Gomez. 5 The sheriff failed to serve summons on (a) Miguel Violago, who had died; (b) Nerissa T. Gloria 6 and Filemon Marquez, 7 whose
whereabouts were unknown; and (c) Circle, which had ceased to engage in business at the address given by petitioner and could not be
located.
A motion to dismiss was filed by the respondents (Circle and the five [5] individual sureties served with summons) and averred that the
venue of the action was improperly laid since an agreement had fixed the venue of actions arising from the promissory notes in
Valenzuela, Metro Manila, only. Respondents called the trial court's attention to the stipulation contained in the promissory note,
quoted in limine.
Acting upon respondent's motion, respondent Judge Tensuan issued the challenged Order which read as follows:
Acting on defendant's motion to dismiss on grounds of improper venue in relation with actionable promissory notes
which stipulate that the parties "expressly submit to the jurisdiction of the Courts of Valenzuela, Metro Manila any
legal action which may arise", and,
Finding said motion to be impressed with merit consistent with
Sec. 13, Rule 14 of the Rules of Court as well as in line with the doctrinal rule in Bautista vs. Hon. Juan de Borja, et
al. (18 SCRA 474) that the proper venue for an action is that stipulated in a document "in case of any litigation
herefrom or in connection herewith" upon a rationale that had the parties intended to reserve the right to choose
venue under Section 2 (b), Rule 4 of the Rules of Court, such reservation should have been reflected in the
document as against the rationale in Polytrade Corporation vs. Blanco (30 SCRA 187) which should allow choice of
venue where an actionable document does not set forth qualifying or restrictive words in point, and
In order to more clearly define the parameters of the rule on proper venue vis-a-vis a clear perception that a
stipulation to "expressly submit to the jurisdiction of the Courts of Valenzuela, Metro Manila" amount to
unequivocal agreement to sue and be sued in Valenzuela, Metro Manila.
WHEREFORE, premises considered and finding the motion to be meritorious, same is hereby granted and the above-
entitled case is accordingly dismissed. Without pronouncement as to costs.
SO ORDERED.8
Petitioner moved for reconsideration of the above Order of the trial court, without success.
Hence, this Petition.
We consider that the Petition is meritorious.
It is settled in this jurisdiction that the parties, by written agreement, may change or transfer the venue of an action from one province to
another. 9 We have many times sustained the validity and enforceability of contractual stipulations concerning venue, it is, of course, the
tenor of their agreement which is of critical relevance. The relevant task, in other words, is determining the intent of the parties as
manifested in the words employed by them and, where such words are less than clear, in other recognized indicators of the will of the
contracting parties.
Petitioner Bank contends that the stipulation contained in the promissory notes is merely an agreement to add the courts of Valenzuela to
the tribunals to which the parties may resort. Petitioner thus insists that the venue stipulation set out in the notes did not restrict or limit
the permissible venue of actions arising out of those notes to the courts of Valenzuela, to the exclusion of all the other courts recourse to
any one of which is authorized or permitted under the Rules of Court. Thus, venue was properly laid by petitioner Bank in the place where
its principal offices are located: i.e., Makati, Metropolitan Manila.
Private respondents, in opposition, aver that the words used in the stipulation here involved are clear and unambiguous. A promise to
submit to the jurisdiction of a specific court, without an express reservation of the right to resort to one or more of the tribunals otherwise
accessible under the Rules of Court, is an agreement definitely fixing the permissible venue in only one place, i.e., Valenzuela, to the
exclusion of other competent courts.
A careful reading of the terms of the stipulation — "I/We hereby expressly submit to the jurisdiction of the courts of Valenzuela any legal
action which may arise out of this promissory note" — shows that the stipulation does not require the laying of venue in
Valenzuela exclusively or mandatorily. The plain or ordinary import of the stipulation is the authorizing of, or permission to bring, suit in
Valenzuela; there is not the slightest indication of an intent to bar suit in other competent courts.
Permissive stipulations like the one here considered have invariably received judicial approval and we have declared that either of the
parties is authorized to lay venue of an action in the court named in the stipulation. The stipulation her does not purport to deprive either
party of it right to elect, or option to have resort to, another competent court as expressly permitted by Section 2(b) of Rule 4 of the Rules
of Court, should such party choose to initiate a suit. The stipulation here merely operated to confer or confirm a right upon a party to elect
recourse to the courts of Valenzuela or, alternatively, to go before any of the tribunals envisaged by the rules on venue, i.e., the courts of
Makati, Quezon City and Bulacan. 10
In principle, the stipulation on venue here involved must be distinguished from stipulations which purport to require or compel the parties
to lay venue of an action in a specified place, and in that particular place only. The latter
type of venue stipulation must clearly indicate, through qualifying and restrictive words, that the parties deliberately intended to exclude
causes or actions from the operation of the ordinary permissive rules on venue, 11 and that they intended contractually to designate a
specific venue to the exclusion of any other court also competent and accessible to the parties under the ordinary rules on the venue of
actions. Stipulations of this exclusionary nature may, under certain circumstances, be characterized as unreasonable or as contrary to
public policy 12 and, accordingly, not judicially enforceable.
In practice, the task, as noted earlier, of this Court when confronted with issues of this kind is always basically that of contract
interpretation. In the case at bar, neither qualifying nor restrictive words (e.g., "must," "only" or "exclusively") were employed which could
yield an intent on the part of the parties mandatorily to restrict the venue of actions arising out of the promissory notes to the courts of
Valenzuela only. Private respondents suggest that the use of words "any legal action" expressed a supposed agreement to bar actions
before any court other than a Valenzuela court. We do not agree, for we see no necessary or customary connection between the words
"any legal action" and an intent strictly to limit permissible venue to the Valenzuela courts. Intent so to establish an inflexible restriction of
otherwise permissible venue to one single place is not lightly to be presumed or inferred from stipulations which, like that here before us,
include no qualifying or exclusionary terms. Express reservation of the right to elect venue under the ordinary rules was, accordingly,
unnecessary in the case at bar.
Such is the thrust of the great bulk of the caselaw of this Court where this issue was directly raised and discussed.
In Polytrade Corporation v. Blanco, 13 the stipulation on venue there involved read:
The parties agree to sue and be sued in the courts of Manila
The Court, in upholding that stipulation and ruling that venue had been properly laid in the then Court of First Instance of Bulacan (the
place of defendant's residence), speaking through Mr. Justice Sanchez, said:
. . . An accurate reading, however, of the stipulation, "The parties agree to sue and be sued in the Courts of Manila,"
does not preclude the filing of suits in the residence of plaintiff or defendant. The plain meaning is that the parties
merely consented to be sued in Manila. Qualifying or restrictive words which would indicate that Manila and Manila
alone is the venue are totally absent therefrom. We cannot read into that clause that plaintiff and defendant bound
themselves to file suits with respect to the last two transactions in question only or exclusively in Manila. For, that
agreement did not change or transfer venue. It simply is permissive. The parties solely agreed to add the courts of
Manila as tribunals to which they may resort. They did not waive their right to pursue remedy in the courts
specifically mentioned in Section 2 (b) of Rule 4. Renuntiatio non praesumitir. 14 (Emphasis supplied)
In Nicolas v. Reparations Commission, 15 the stipulation on venue provided that:
All legal actions arising out of this contract . . . may be brought in and submitted to the jurisdiction of the proper courts in the City of
Manila. 16
This Court read the above stipulation as merely permissive, relying upon and reinforcing Polytrade:
. . . the venue in personal actions is fixed for the convenience of the plaintiff and his witnesses and to promote the
ends of justice. We cannot conceive how the interests of justice may be served by confining the situs of the action to
Manila, considering that the residences or offices of all the parties, including the situs of the acts sought to be
restrained or required to be done, are all within the territorial jurisdiction of Rizal.
While the parties have agreed to submit their dispute to the jurisdiction of the Manila courts, there is nothing in the
language used . . . which clearly shows that the intention of the parties was to limit the venue of the action to the
City of Manila only. Such agreements should be construed reasonably and should not be applied in such a manner
that it would work more to the inconvenience of the parties without promoting the ends of justice . 17 (Emphasis
supplied)
In Lamis Enterprises v. Lagamon, 18 the promissory note sued on had the following stipulation:
In case of litigation, jurisdiction shall be vested in the courts of Davao City. 19
The collection suit was instituted in the then Court of First Instance of Tagum, Davao. The Supreme Court rejected the defense of improper
venue and held:
. . . it is alleged that the proper venue for Civil Case No. 1395 should be Davao City where the plaintiff resides and as
stipulated in the promissory note dated February 26, 1979 and in the chattel mortgage dated February 27, 1979.
However, the respondent judge found that Maningo has not only legal residence but also physical and actual
residence in Busaon, Tagum, Davao and we are not inclined to disturb this finding. Anent the claim that Davao City
had been stipulated as the venue, suffice it to say that a stipulation as to venue does not preclude the filing of suits
in the residence of plaintiff or defendant under Section 2(b), Rule 4, Rules of Court, in the absence of qualifying or
restrictive words in the agreement which would indicate that the place named is the only venue agreed upon by the
parties. The stipulation did not deprive Maningo of his right to pursue remedy in the court specifically mentioned in
Section 2(b) of Rule 4, Rules of Courts, Renuntiatio non praesumitir. . . . 20 (Emphasis supplied)
In Western Minolco v. Court of Appeals, 21 the clause on venue read:
The parties stipulate that the venue of the actions referred to in Section 12.01 [Article XII of the Agreement] shall be
in the City of Manila.
The initial action was commenced in the Court of First Instance of Baguio and Benguet. This Court took the occasion to reiterate once
more the Polytrade doctrine:
. . . In any event, it is not entirely amiss to restate the doctrine that stipulations in a contract, which specify a definite
place for the institution of an action arising in connection therewith, do not, as a rule, supersede the general rules on
the matter set out in Rule 4 of the Rules of Court, but should be construed merely as an agreement on an additional
forum, not as limiting venue to the specified place. 22 (Emphasis supplied)
It is not necessary top pretend that the decisions of the Supreme Court have been absolutely consistent in this regard. There have been a
few decisions — notably Bautista v. de Borja 23 and Hoechst Philippines v. Torres 24 — which are not easy to reconcile with the line of cases
beginning with Polytrade discussed above. It is useful therefore to make clear that to the extent Bautista and Hoechst Philippines are
inconsistent with Polytrade (an en banc decision later in time than Bautista) and subsequent cases
reiterating Polytrade, Bautista and Hoechst Philippines have been rendered obsolete by the Polytrade line of cases.
We note, finally, that no one of the private respondents has claimed to have been put to undue hardship or inconvenience as a result of
the institution of the action in Makati. Venue relates to the trial and touches more upon the convenience of the parties rather than upon
the substance or merits of the
case. 25
WHEREFORE, the Petition for Review on Certiorari is hereby GRANTED DUE COURSE and the Orders dated 3 August 1992 and 28 August
1992 of public respondent Judge Salvador S. Tensuan are hereby REVERSED and SET ASIDE. The case is hereby REMANDED to the court of
origin for resolution on the merits, with all deliberate dispatch. No pronouncements as to costs.
SO ORDERED.
Bidin, Romero, Melo and Vitug, JJ., concur.
[G.R. No. 119657. February 7, 1997]
UNIMASTERS CONGLOMERATION, INC., petitioner, vs. COURT OF APPEALS and KUBOTA AGRI-MACHINERY PHILIPPINES,
INC., respondents.
DECISION
NARVASA, C.J.:
The appellate proceeding at bar turns upon the interpretation of a stipulation in a contract governing venue of actions thereunder
arising.
On October 28, 1988 Kubota Agri-Machinery Philippines, Inc. (hereafter, simply KUBOTA) and Unimasters Conglomeration, Inc.
(hereafter, simply UNIMASTERS) entered into a "Dealership Agreement for Sales and Services" of the former's products in Samar and Leyte
Provinces.[1] The contract contained, among others:
1) a stipulation reading: "** All suits arising out of this Agreement shall be filed with / in the proper Courts of Quezon City," and
2) a provision binding UNIMASTERS to obtain (as it did in fact obtain) a credit line with Metropolitan Bank and Trust Co.-Tacloban Branch in
the amount of P2,000,000.00 to answer for its obligations to KUBOTA.
Some five years later, or more precisely on December 24, 1993, UNIMASTERS filed an action in the Regional Trial Court of Tacloban
City against KUBOTA, a certain Reynaldo Go, and Metropolitan Bank and Trust Company-Tacloban Branch (hereafter, simply METROBANK)
for damages for breach of contract, and injunction with prayer for temporary restraining order. The action was docketed as Civil Case No.
93-12-241 and assigned to Branch 6.
On the same day the Trial Court issued a restraining order enjoining METROBANK from "authorizing or effecting payment of any
alleged obligation of ** (UNIMASTERS) to defendant ** KUBOTA arising out of or in connection with purchases made by defendant Go
against the credit line caused to be established by ** (UNIMASTERS) for and in the amount of P2 million covered by defendant
METROBANK ** or by way of charging ** (UNIMASTERS) for any amount paid and released to defendant ** (KUBOTA) by the Head Office
of METROBANK in Makati, Metro-Manila **." The Court also set the application for preliminary injunction for hearing on January 10, 1994
at 8:30 o'clock in the morning.
On January 4, 1994 KUBOTA filed two motions. One prayed for dismissal of the case on the ground of improper venue (said motion
being set for hearing on January 11, 1994). The other prayed for the transfer of the injunction hearing to January 11, 1994 because its
counsel was not available on January 10 due to a prior commitment before another court.
KUBOTA claims that notwithstanding that its motion to transfer hearing had been granted, the Trial Court went ahead with the
hearing on the injunction incident on January 10, 1994 during which it received the direct testimony of UNIMASTERS' general manager,
Wilford Chan; that KUBOTA's counsel was "shocked" when he learned of this on the morning of the 11th, but was nonetheless instructed
to proceed to cross-examine the witness; that when said counsel remonstrated that this was unfair, the Court reset the hearing to the
afternoon of that same day, at which time Wilford Chan was recalled to the stand to repeat his direct testimony. It appears that cross-
examination of Chan was then undertaken by KUBOTA's lawyer with the "express reservation that ** (KUBOTA was) not (thereby) waiving
and/or abandoning its motion to dismiss;" and that in the course of the cross-examination, exhibits (numbered from 1 to 20) were
presented by said attorney who afterwards submitted a memorandum in lieu of testimonial evidence. [2]
On January 13, 1994, the Trial Court handed down an Order authorizing the issuance of the preliminary injunction prayed for, upon
a bond of P2,000,000.00.[3] And on February 3, 1994, the same Court promulgated an Order denying KUBOTA's motion to dismiss. Said the
Court:
"The plaintiff UNIMASTERS Conglomeration is holding its principal place of business in the City of Tacloban while the
defendant ** (KUBOTA) is holding its principal place of business in Quezon City. The proper venue therefore pursuant to Rules
of Court would either be Quezon City or Tacloban City at the election of the plaintiff. Quezon City and Manila (sic), as agreed
upon by the parties in the Dealership Agreement, are additional places other than the place stated in the Rules of Court. The
filing, therefore, of this complaint in the Regional Trial Court in Tacloban City is proper."
Both orders were challenged as having been issued with grave abuse of discretion by KUBOTA in a special civil action
of certiorari and prohibition filed with the Court of Appeals, docketed as CA-G.R. SP No. 33234. It contended, more particularly, that (1) the
RTC had "no jurisdiction to take cognizance of ** (UNIMASTERS') action considering that venue was improperly laid," (2) UNIMASTERS had
in truth "failed to prove that it is entitled to the ** writ of preliminary injunction;" and (3) the RTC gravely erred "in denying the motion to
dismiss."[4]
The Appellate Court agreed with KUBOTA that -- in line with the Rules of Court [5] and this Court's relevant rulings[6] -- the stipulation
respecting venue in its Dealership Agreement with UNIMASTERS did in truth limit the venue of all suits arising thereunder only and
exclusively to "the proper courts of Quezon City." [7] The Court also held that the participation of KUBOTA's counsel at the hearing on the
injunction incident did not in the premises operate as a waiver or abandonment of its objection to venue; that assuming that KUBOTA's
standard printed invoices provided that the venue of actions thereunder should be laid at the Court of the City of Manila, this was
inconsequential since such provision would govern "suits or legal actions between petitioner and its buyers" but not actions under the
Dealership Agreement between KUBOTA and UNIMASTERS, the venue of which was controlled by paragraph No. 7 thereof; and that no
impediment precludes issuance of a TRO or injunctive writ by the Quezon City RTC against METROBANK-Tacloban since the same "may be
served on the principal office of METROBANK in Makati and would be binding on and enforceable against, METROBANK branch in
Tacloban."
After its motion for reconsideration of that decision was turned down by the Court of Appeals, UNIMASTERS appealed to this
Court. Here, it ascribes to the Court of Appeals several errors which it believes warrant reversal of the verdict, namely: [8]
1) "in concluding, contrary to decisions of this ** Court, that the agreement on venue between petitioner (UNIMASTERS) and private
respondent (KUBOTA) limited to the proper courts of Quezon City the venue of any complaint filed arising from the dealership agreement
between ** (them);"
2) "in ignoring the rule settled in Philippine Banking Corporation vs. Tensuan,[9] that 'in the absence of qualifying or restrictive words, venue
stipulations in a contract should be considered merely as agreement on additional forum, not as limiting venue to the specified place;" and
in concluding, contrariwise, that the agreement in the case at bar "was the same as the agreement on venue in the Gesmundocase," and
therefore, the Gesmundo case was controlling; and
3) "in concluding, based solely on the self-serving narration of ** (KUBOTA that its) participation in the hearing for the issuance of a **
preliminary injunction did not constitute waiver of its objection to venue."
The issue last mentioned, of whether or not the participation by the lawyer of KUBOTA at the injunction hearing operated as a
waiver of its objection to venue, need not occupy the Court too long. The record shows that when KUBOTA's counsel appeared before the
Trial Court in the morning of January 11, 1994 and was then informed that he should cross-examine UNIMASTERS' witness, who had
testified the day before, said counsel drew attention to the motion to dismiss on the ground of improper venue and insistently attempted
to argue the matter and have it ruled upon at the time; and when the Court made known its intention (a) "to (resolve first the) issue (of)
the injunction then rule on the motion to dismiss," and (b) consequently its desire to forthwith conclude the examination of the witness
on the injunction incident, and for that purpose reset the hearing in the afternoon of that day, the 11th, so that the matter might be
resolved before the lapse of the temporary restraining order on the 13th, KUBOTA's lawyer told the Court: "Your Honor, we are not
waiving our right to submit the Motion to Dismiss." [10] It is plain that under these circumstances, no waiver or abandonment can be
imputed to KUBOTA.
The essential question really is that posed in the first and second assigned errors, i.e., what construction should be placed on the
stipulation in the Dealership Agreement that "(a)ll suits arising out of this Agreement shall be filed with/in the proper Courts of Quezon
City."
Rule 4 of the Rules of Court sets forth the principles generally governing the venue of actions, whether real or personal, or involving
persons who neither reside nor are found in the Philippines or otherwise. Agreements on venue are explicitly allowed. "By written
agreement of the parties the venue of an action may be changed or transferred from one province to another." [11] Parties may by
stipulation waive the legal venue and such waiver is valid and effective being merely a personal privilege, which is not contrary to public
policy or prejudicial to third persons. It is a general principle that a person may renounce any right which the law gives unless such
renunciation would be against public policy.[12]
Written stipulations as to venue may be restrictive in the sense that the suit may be filed only in the place agreed upon, or merely
permissive in that the parties may file their suit not only in the place agreed upon but also in the places fixed by law (Rule 4,
specifically). As in any other agreement, what is essential is the ascertainment of the intention of the parties respecting the matter.
Since convenience is the raison d'etre of the rules of venue,[13] it is easy to accept the proposition that normally, venue stipulations
should be deemed permissive merely, and that interpretation should be adopted which most serves the parties' convenience. In other
words, stipulations designating venues other than those assigned by Rule 4 should be interpreted as designed to make it more convenient
for the parties to institute actions arising from or in relation to their agreements; that is to say, as simply adding to or expanding the
venues indicated in said Rule 4.
On the other hand, because restrictive stipulations are in derogation of this general policy, the language of the parties must be so
clear and categorical as to leave no doubt of their intention to limit the place or places, or to fix places other than those indicated in Rule
4, for their actions. This is easier said than done, however, as an examination of precedents involving venue covenants will immediately
disclose.
In at least thirteen (13) cases, this Court construed the venue stipulations involved as merely permissive. These are:
1. Polytrade Corporation v. Blanco, decided in 1969.[14] In this case, the venue stipulation was as follows:
"The parties agree to sue and be sued in the Courts of Manila."
This Court ruled that such a provision "does not preclude the filing of suits in the residence of the plaintiff or the defendant. The plain
meaning is that the parties merely consented to be sued in Manila.Qualifying or restrictive words which would indicate that Manila and
Manila alone is the venue are totally absent therefrom. It simply is permissive. The parties solely agreed to add the courts of Manila as
tribunals to which they may resort. They did not waive their right to pursue remedy in the courts specifically mentioned in Section 2(b) of
Rule 4."
The Polytrade doctrine was reiterated expressly or implicitly in subsequent cases, numbering at least ten (10).
2. Nicolas v. Reparations Commission, decided in 1975.[15] In this case, the stipulation on venue read:
"** (A)ll legal actions arising out of this contract ** may be brought in and submitted to the jurisdiction of the proper courts in the City of
Manila."
This Court declared that the stipulation does not clearly show the intention of the parties to limit the venue of the action to the City of
Manila only. "It must be noted that the venue in personal actions is fixed for the convenience of the plaintiff and his witnesses and to
promote the ends of justice. We cannot conceive how the interest of justice may be served by confining the situs of the action to Manila,
considering that the residences or offices of all the parties, including the situs of the acts sought to be restrained or required to be done,
are all within the territorial jurisdiction of Rizal. ** Such agreements should be construed reasonably and should not be applied in such a
manner that it would work more to the inconvenience of the parties without promoting the ends of justice."
3. Lamis Ents. v. Lagamon, decided in 1981.[16] Here, the stipulation in the promissory note and the chattel mortgage specifed Davao City as
the venue.
The Court, again citing Polytrade, stated that the provision "does not preclude the filing of suits in the residence of plaintiff or defendant
under Section 2(b), Rule 4, Rules of Court, in the absence of qualifying or restrictive words in the agreement which would indicate that the
place named is the only venue agreed upon by the parties. The stipulation did not deprive ** (the affected party) of his right to pursue
remedy in the court specifically mentioned in Section 2(b) of Rule 4, Rules of Court. Renuntiato non praesumitur."
4. Capati v. Ocampo, decided in 1982.[17] In this case, the provision of the contract relative to venue was as follows:
" ** (A)ll actions arising out, or relating to this contract may be instituted in the Court of First Instance of the City of Naga."
The Court ruled that the parties "did not agree to file their suits solely and exclusively with the Court of First Instance of Naga;" they
"merely agreed to submit their disputes to the said court without waiving their right to seek recourse in the court specifically indicated in
Section 2 (b), Rule 4 of the Rules of Court."
5. Western Minolco v. Court of Appeals, decided in 1988.[18] Here, the provision governing venue read:
"The parties stipulate that the venue of the actions referred to in Section 12.01 shall be in the City of Manila."
The court restated the doctrine that a stipulation in a contract fixing a definite place for the institution of an action arising in connection
therewith, does not ordinarily supersede the general rules set out in Rule 4, and should be construed merely as an agreement on an
additional forum, not as limiting venue to the specified place.
6. Moles v. Intermediate Appellate Court, decided in 1989.[19] In this proceeding, the Sales Invoice of a linotype machine stated that the
proper venue should be Iloilo.
This Court held that such an invoice was not the contract of sale of the linotype machine in question; consequently the printed provisions
of the invoice could not have been intended by the parties to govern the sale of the machine, especially since said invoice was used for
other types of transactions. This Court said: "It is obvious that a venue stipulation, in order to bind the parties, must have been intelligently
and deliberately intended by them to exclude their case from the reglementary rules on venue. Yet, even such intended variance may not
necessarily be given judicial approval, as, for instance, where there are no restrictive or qualifying words in the agreement indicating that
venue cannot be laid in any place other than that agreed upon by the parties, and in contracts of adhesion."
7. Hongkong and Shanghai Banking Corp. v. Sherman, decided in 1989.[20] Here the stipulation on venue read:
" ** (T)his guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be
enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts in Singapore shall have jurisdiction
over all disputes arising under this guarantee **."
This Court held that due process dictates that the stipulation be liberally construed. The parties did not thereby stipulate that only the
courts of Singapore, to the exclusion of all the others, had jurisdiction. The clause in question did not operate to divest Philippine courts of
jurisdiction.
8. Nasser v. Court of Appeals, decided in 1990,[21] in which the venue stipulation in the promissory notes in question read:
" ** (A)ny action involving the enforcement of this contract shall be brought within the City of Manila, Philippines."
The Court's verdict was that such a provision does not as a rule supersede the general rule set out in Rule 4 of the Rules of Court, and
should be construed merely as an agreement on an additional forum, not as limiting venue to the specified place.
9. Surigao Century Sawmill Co., Inc. v. Court of Appeals, decided in 1993:[22] In this case, the provision concerning venue was contained in a
contract of lease of a barge, and read as follows:
" ** (A)ny disagreement or dispute arising out of the lease shall be settled by the parties in the proper court in the province of Surigao del
Norte."
The venue provision was invoked in an action filed in the Regional Trial Court of Manila to recover damages arising out of marine
subrogation based on a bill of lading. This Court declared that since the action did not refer to any disagreement or dispute arising out of
the contract of lease of the barge, the venue stipulation in the latter did not apply; but that even assuming the contract of lease to be
applicable, a statement in a contract as to venue does not preclude the filing of suits at the election of the plaintiff where no qualifying or
restrictive words indicate that the agreed place alone was the chosen venue.
10. Philippine Banking Corporation v. Hon. Salvador Tensuan, etc., Circle Financial Corporation, et al., decided in 1993.[23] Here, the
stipulation on venue was contained in promissory notes and read as follows:
"I/We hereby expressly submit to the jurisdiction of the courts of Valenzuela any legal action which may arise out of this promissory note."
This Court held the stipulation to be merely permissive since it did not lay the venue in Valenzuela exclusively or mandatorily. The plain or
ordinary import of the stipulation is the grant of authority or permission to bring suit in Valenzuela; but there is not the slightest indication
of an intent to bar suit in other competent courts. The Court stated that there is no necessary or customary connection between the
words "any legal action" and an intent strictly to limit permissible venue to the Valenzuela courts. Moreover, since the venue stipulations
include no qualifying or exclusionary terms, express reservation of the right to elect venue under the ordinary rules was unnecessary in the
case at bar. The Court made clear that "to the extent Bautista and Hoechst Philippines are inconsistent with Polytrade (an en banc decision
later in time than Bautista) and subsequent cases reiterating Polytrade, Bautista and Hoechst Philippines have been rendered obsolete by
the Polytrade line of cases."
11. Philippine Banking Corporation v. Hon. Salvador Tensuan, etc., Brinell Metal Works Corp., et al., decided in 1994:[24] In this case the
subject promissory notes commonly contained a stipulation reading:
"I/we expressly submit to the jurisdiction of the courts of Manila, any legal action which may arise out of this promissory note."
the Court restated the rule in Polytrade that venue stipulations in a contract, absent any qualifying or restrictive words, should be
considered merely as an agreement on additional forum, not limiting venue to the specified place. They are not exclusive, but rather,
permissive. For to restrict venue only to that place stipulated in the agreement is a construction purely based on technicality; on the
contrary, the stipulation should be liberally construed. The Court stated: "The later cases of Lamis Ents v. Lagamon [108 SCRA
1981], Capati v. Ocampo [113 SCRA 794 [1982], Western Minolco v. Court of Appeals [167 SCRA 592 [1988], Moles v. Intermediate
Appellate Court [169 SCRA 777 [1989], Hongkong and Shanghai Banking Corporation v. Sherman [176 SCRA 331], Nasser v. Court of
Appeals [191 SCRA 783 [1990] and just recently, Surigao Century Sawmill Co. v. Court of Appeals [218 SCRA 619 [1993], all treaded the
path blazed by Polytrade. The conclusion to be drawn from all these is that the more recent jurisprudence shall properly be deemed
modificatory of the old ones."
The lone dissent observed: "There is hardly any question that a stipulation of contracts of adhesion, fixing venue to a specified place only,
is void for, in such cases, there would appear to be no valid and free waiver of the venue fixed by the Rules of Courts. However, in cases
where both parties freely and voluntarily agree on a specified place to be the venue of actions, if any, between them, then the only
considerations should be whether the waiver (of the venue fixed by the Rules of Court) is against public policy and whether the parties
would suffer, by reason of such waiver, undue hardship and inconvenience; otherwise, such waiver of venue should be upheld as binding
on the parties. The waiver of venue in such cases is sanctioned by the rules on jurisdiction."
Still other precedents adhered to the same principle.
12. Tantoco v. Court of Appeals, decided in 1977.[25] Here, the parties agreed in their sales contracts that the courts of Manila shall have
jurisdiction over any legal action arising out of their transaction. This Court held that the parties agreed merely to add the courts of Manila
as tribunals to which they may resort in the event of suit, to those indicated by the law: the courts either of Rizal, of which private
respondent was a resident, or of Bulacan, where petitioner resided.
13. Sweet Lines, Inc. v. Teves, promulgated in 1987.[26] In this case, a similar stipulation on venue, contained in the shipping ticket issued by
Sweet Lines, Inc. (as Condition 14) --
" ** that any and all actions arising out or the condition and provisions of this ticket, irrespective of where it is issued, shall be filed in the
competent courts in the City of Cebu"
-- was declared unenforceable, being subversive of public policy. The Court explained that the philosophy on transfer of venue of actions is
the convenience of the plaintiffs as well as his witnesses and to promote the ends of justice; and considering the expense and trouble a
passenger residing outside of Cebu City would incur to prosecute a claim in the City of Cebu, he would most probably decide not to file the
action at all.
On the other hand, in the cases hereunder mentioned, stipulations on venue were held to be restrictive, or mandatory.
1. Bautista vs. De Borja, decided in 1966.[27] In this case, the contract provided that in case of any litigation arising therefrom or in
connection therewith, the venue of the action shall be in the City of Manila.This Court held that without either party reserving the right to
choose the venue of action as fixed by law, it can reasonably be inferred that the parties intended to definitely fix the venue of the action,
in connection with the contract sued upon in the proper courts of the City of Manila only, notwithstanding that neither party is a resident
of Manila.
2. Gesmundo v. JRB Realty Corporation, decided in 1994.[28] Here the lease contract declared that
" ** (V)enue for all suits, whether for breach hereof or damages or any cause between the LESSOR and LESSEE, and persons claiming
under each, ** (shall be) the courts of appropriate jurisdiction in Pasay City. . ."
This Court held that: "(t)he language used leaves no room for interpretation. It clearly evinces the parties' intent to limit to the 'courts of
appropriate jurisdiction of Pasay City' the venue for all suits between the lessor and the lessee and those between parties claiming under
them. This means a waiver of their right to institute action in the courts provided for in Rule 4, sec. 2(b)."
3. Hoechst Philippines, Inc. v. Torres,[29] decided much earlier, in 1978, involved a strikingly similar stipulation, which read:
" ** (I)n case of any litigation arising out of this agreement, the venue of any action shall be in the competent courts of the Province of
Rizal."
This Court held: "No further stipulations are necessary to elicit the thought that both parties agreed that any action by either of them
would be filed only in the competent courts of Rizal province exclusively."
4. Villanueva v. Mosqueda, decided in 1982.[30] In this case, it was stipulated that if the lessor violated the contract of lease he could be
sued in Manila, while if it was the lessee who violated the contract, the lessee could be sued in Masantol, Pampanga. This Court held that
there was an agreement concerning venue of action and the parties were bound by their agreement. "The agreement as to venue was not
permissive but mandatory."
5. Arquero v. Flojo, decided in 1988.[31] The condition respecting venue -- that any action against RCPI relative to the transmittal of a
telegram must be brought in the courts of Quezon City alone -- was printed clearly in the upper front portion of the form to be filled in by
the sender. This Court held that since neither party reserved the right to choose the venue of action as fixed by Section 2 [b], Rule 4, as is
usually done if the parties mean to retain the right of election so granted by Rule 4, it can reasonably be inferred that the parties intended
to definitely fix the venue of action, in connection with the written contract sued upon, in the courts of Quezon City only.
An analysis of these precedents reaffirms and emphasizes the soundness of the Polytrade principle. Of the essence is the ascertainment of
the parties' intention in their agreement governing the venue of actions between them. That ascertainment must be done keeping in mind
that convenience is the foundation of venue regulations, and that that construction should be adopted which most conduces
thereto.Hence, the invariable construction placed on venue stipulations is that they do not negate but merely complement or add to the
codal standards of Rule 4 of the Rules of Court. In other words, unless the parties make very clear, by employing categorical and suitably
limiting language, that they wish the venue of actions between them to be laid only and exclusively at a definite place, and to disregard
the prescriptions of Rule 4, agreements on venue are not to be regarded as mandatory or restrictive, but merely permissive, or
complementary of said rule. The fact that in their agreement the parties specify only one of the venues mentioned in Rule 4, or fix a place
for their actions different from those specified by said rule, does not, without more, suffice to characterize the agreement as a restrictive
one. There must, to repeat, be accompanying language clearly and categorically expressing their purpose and design that actions between
them be litigated only at the place named by them, [32] regardless of the general precepts of Rule 4; and any doubt or uncertainty as to the
parties' intentions must be resolved against giving their agreement a restrictive or mandatory aspect. Any other rule would permit of
individual, subjective judicial interpretations without stable standards, which could well result in precedents in hopeless inconsistency.
The record of the case at bar discloses that UNIMASTERS has its principal place of business in Tacloban City, and KUBOTA, in Quezon City.
Under Rule 4, the venue of any personal action between them is "where the defendant or any of the defendants resides or may be found,
or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff." [33] In other words, Rule 4 gives UNIMASTERS the option
to sue KUBOTA for breach of contract in the Regional Trial Court of either Tacloban City or Quezon City.
But the contract between them provides that " ** All suits arising out of this Agreement shall be filed with/in the proper Courts of Quezon
City," without mention of Tacloban City. The question is whether this stipulation had the effect of effectively eliminating the latter as an
optional venue and limiting litigation between UNIMASTERS and KUBOTA only and exclusively to Quezon City.
In light of all the cases above surveyed, and the general postulates distilled therefrom, the question should receive a negative
answer. Absent additional words and expressions definitely and unmistakably denoting the parties' desire and intention that actions
between them should be ventilated only at the place selected by them, Quezon City -- or other contractual provisions clearly evincing the
same desire and intention -- the stipulation should be construed, not as confining suits between the parties only to that one place, Quezon
City, but as allowing suits either in Quezon City or Tacloban City, at the option of the plaintiff (UNIMASTERS in this case).
One last word, respecting KUBOTA's theory that the Regional Trial Court had "no jurisdiction to take cognizance of ** (UNIMASTERS')
action considering that venue was improperly laid." This is not an accurate statement of legal principle. It equates venue with jurisdiction;
but venue has nothing to do with jurisdiction, except in criminal actions. This is fundamental.[34] The action at bar, for the recovery of
damages in an amount considerably in excess of P20,000.00, is assuredly within the jurisdiction of a Regional Trial Court. [35] Assuming that
venue were improperly laid in the Court where the action was instituted, the Tacloban City RTC, that would be a procedural, not a
jurisdictional impediment -- precluding ventilation of the case before that Court of wrong venue notwithstanding that the subject matter is
within its jurisdiction. However, if the objection to venue is waived by the failure to set it up in a motion to dismiss, [36] the RTC would
proceed in perfectly regular fashion if it then tried and decided the action.
This is true also of real actions. Thus, even if a case "affecting title to, or for recovery of possession, or for partition or condemnation of, or
foreclosure of mortgage on, real property" [37] were commenced in a province or city other than that "where the property or any part
thereof lies,"[38] if no objection is seasonably made in a motion to dismiss, the objection is deemed waived, and the Regional Trial Court
would be acting entirely within its competence and authority in proceeding to try and decide the suit.[39]
WHEREFORE, the appealed judgment of the Court of Appeals is REVERSED, the Order of the Regional Trial Court of Tacloban City,
Branch 6, dated February 3, 1994, is REINSTATED and AFFIRMED, and said Court is DIRECTED to forthwith proceed with Civil Case No. 93-
12-241 in due course.
SO ORDERED.
[G.R. No. 125027. August 12, 2002]
ANITA MANGILA, petitioner, vs. COURT OF APPEALS and LORETA GUINA, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition fore review on certiorari under Rule 45 of the Rules of Court, seeking to set aside the Decision [1] of the Court of
Appeals affirming the Decision[2] of the Regional Trial Court, Branch 108, Pasay City. The trial court upheld the writ of attachment and the
declaration of default on petitioner while ordering her to pay private respondent P109,376.95 plus 18 percent interest per annum, 25
percent attorneys fees and costs of suit.
The Facts
Petitioner Anita Mangila (petitioner for brevity) is an exporter of sea foods and doing business under the name and style of
Seafoods Products. Private respondent Loreta Guina (private respondent for brevity) is the President and General Manager of Air Swift
International, a single registered proprietorship engaged in the freight forwarding business.
Sometime in January 1988, petitioner contracted the freight forwarding services of private respondent for shipment of petitioners
products, such as crabs, prawns and assorted fishes, to Guam (USA) where petitioner maintains an outlet. Petitioner agreed to pay private
respondent cash on delivery. Private respondents invoice stipulates a charge of 18 percent interest per annum on all overdue accounts. In
case of suit, the same invoice stipulates attorneys fees equivalent to 25 percent of the amount due plus costs of suit. [3]
On the first shipment, petitioner requested for seven days within which to pay private respondent. However, for the next three
shipments, March 17, 24 and 31, 1988, petitioner failed to pay private respondent shipping charges amounting to P109, 376.95. [4]
Despite several demands, petitioner never paid private respondent. Thus, on June 10, 1988, private respondent filed Civil Case No.
5875 before the Regional Trial Court of Pasay City for collection of sum of money.
 On August 1, 1988, the sheriff filed his Sheriffs Return showing that summons was not served on petitioner. A woman found at
petitioners house informed the sheriff that petitioner transferred her residence to Sto. Nio, Guagua, Pampanga. The sheriff found out
further that petitioner had left the Philippines for Guam.[5]
Thus, on September 13, 1988, construing petitioners departure from the Philippines as done with intent to defraud her creditors,
private respondent filed a Motion for Preliminary Attachment. On September 26, 1988, the trial court issued an Order of Preliminary
Attachment[6] against petitioner. The following day, the trial court issued a Writ of Preliminary Attachment.
The trial court granted the request of its sheriff for assistance from their counterparts in RTC, Pampanga. Thus, on October 28, 1988,
Sheriff Alfredo San Miguel of RTC Pampanga served on petitioners household help in San Fernando, Pampanga, the Notice of Levy with the
Order, Affidavit and Bond.[7]
On November 7, 1988, petitioner filed an Urgent Motion to Discharge Attachment [8] without submitting herself to the jurisdiction of
the trial court. She pointed out that up to then, she had not been served a copy of the Complaint and the summons. Hence, petitioner
claimed the court had not acquired jurisdiction over her person. [9]
In the hearing of the Urgent Motion to Discharge Attachment on November 11, 1988, private respondent sought and was granted a
re-setting to December 9, 1988. On that date, private respondents counsel did not appear, so the Urgent Motion to Discharge Attachment
was deemed submitted for resolution.[10]
The trial court granted the Motion to Discharge Attachment on January 13, 1989 upon filing of petitioners counter-bond. The trial
court, however, did not rule on the question of jurisdiction and on the validity of the writ of preliminary attachment.
On December 26, 1988, private respondent applied for an alias summons, which the trial court issued on January 19, 1989. [11] It was
only on January 26, 1989 that summons was finally served on petitioner. [12]
On February 9, 1989, petitioner filed a Motion to Dismiss the Complaint on the ground of improper venue. Private respondents
invoice for the freight forwarding service stipulates that if court litigation becomes necessary to enforce collection xxx the agreed venue
for such action is Makati, Metro Manila. [13] Private respondent filed an Opposition asserting that although Makati appears as the stipulated
venue, the same was merely an inadvertence by the printing press whose general manager executed an affidavit [14] admitting such
inadvertence. Moreover, private respondent claimed that petitioner knew that private respondent was holding office in Pasay City and not
in Makati.[15] The lower court, finding credence in private respondents assertion, denied the Motion to Dismiss and gave petitioner five
days to file her Answer. Petitioner filed a Motion for Reconsideration but this too was denied.
Petitioner filed her Answer[16] on June 16, 1989, maintaining her contention that the venue was improperly laid.
On June 26, 1989, the trial court issued an Order setting the pre-trial for July 18, 1989 at 8:30 a.m. and requiring the parties to
submit their pre-trial briefs. Meanwhile, private respondent filed a Motion to Sell Attached Properties but the trial court denied the
motion.
On motion of petitioner, the trial court issued an Order resetting the pre-trial from July 18, 1989 to August 24, 1989 at 8:30 a.m..
On August 24, 1989, the day of the pre-trial, the trial court issued an Order [17] terminating the pre-trial and allowing the private
respondent to present evidence ex-parte on September 12, 1989 at 8:30 a.m.. The Order stated that when the case was called for pre-trial
at 8:31 a.m., only the counsel for private respondent appeared. Upon the trial courts second call 20 minutes later, petitioners counsel was
still nowhere to be found. Thus, upon motion of private respondent, the pre-trial was considered terminated.
On September 12, 1989, petitioner filed her Motion for Reconsideration of the Order terminating the pre-trial. Petitioner explained
that her counsel arrived 5 minutes after the second call, as shown by the transcript of stenographic notes, and was late because of heavy
traffic. Petitioner claims that the lower court erred in allowing private respondent to present evidence ex-parte since there was no Order
considering the petitioner as in default. Petitioner contends that the Order of August 24, 1989 did not state that petitioner was declared as
in default but still the court allowed private respondent to present evidence ex-parte. [18]
On October 6, 1989, the trial court denied the Motion for Reconsideration and scheduled the presentation of private respondents
evidence ex-parte on October 10, 1989.
On October 10, 1989, petitioner filed an Omnibus Motion stating that the presentation of evidence ex-parte should be suspended
because there was no declaration of petitioner as in default and petitioners counsel was not absent, but merely late.
On October 18, 1989, the trial court denied the Omnibus Motion. [19]
On November 20, 1989, the petitioner received a copy of the Decision of November 10, 1989, ordering petitioner to pay respondent
P109,376.95 plus 18 percent interest per annum, 25 percent attorneys fees and costs of suit. Private respondent filed a Motion for
Execution Pending Appeal but the trial court denied the same.
The Ruling of the Court of Appeals
On December 15, 1995, the Court of Appeals rendered a decision affirming the decision of the trial court. The Court of Appeals
upheld the validity of the issuance of the writ of attachment and sustained the filing of the action in the RTC of Pasay. The Court of Appeals
also affirmed the declaration of default on petitioner and concluded that the trial court did not commit any reversible error.
Petitioner filed a Motion for Reconsideration on January 5, 1996 but the Court of Appeals denied the same in a Resolution dated
May 20, 1996.
Hence, this petition.
The Issues
The issues raised by petitioner may be re-stated as follows:
I.
WHETHER RESPONDENT COURT ERRED IN NOT HOLDING THAT THE WRIT OF ATTACHMENT WAS IMPROPERLY ISSUED AND SERVED;
II.
WHETHER THERE WAS A VALID DECLARATION OF DEFAULT;
III.
WHETHER THERE WAS IMPROPER VENUE.
IV.
WHETHER RESPONDENT COURT ERRED IN DECLARING THAT PETITIONER IS OBLIGED TO PAY P109, 376.95, PLUS ATTORNEYS FEES. [20]
The Ruling of the Court
Improper Issuance and Service of Writ of Attachment
Petitioner ascribes several errors to the issuance and implementation of the writ of attachment. Among petitioners arguments are:
first, there was no ground for the issuance of the writ since the intent to defraud her creditors had not been established; second, the value
of the properties levied exceeded the value of private respondents claim. However, the crux of petitioners arguments rests on the question
of the validity of the writ of attachment. Because of failure to serve summons on her before or simultaneously with the writs
implementation, petitioner claims that the trial court had not acquired jurisdiction over her person and thus the service of the writ is void.
As a preliminary note, a distinction should be made between issuance and implementation of the writ of attachment. It is necessary
to distinguish between the two to determine when jurisdiction over the person of the defendant should be acquired to validly implement
the writ. This distinction is crucial in resolving whether there is merit in petitioners argument.
This Court has long settled the issue of when jurisdiction over the person of the defendant should be acquired in cases where a
party resorts to provisional remedies. A party to a suit may, at any time after filing the complaint, avail of the provisional remedies under
the Rules of Court. Specifically, Rule 57 on preliminary attachment speaks of the grant of the remedy at the commencement of the action
or at any time thereafter. [21] This phrase refers to the date of filing of the complaint which is the moment that marks the commencement
of the action. The reference plainly is to a time before summons is served on the defendant, or even before summons issues.
In Davao Light & Power Co., Inc. v. Court of Appeals,[22] this Court clarified the actual time when jurisdiction should be had:
It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of defendant -
issuance of summons, order of attachment and writ of attachment - these do not and cannot bind and affect the defendant until and
unless jurisdiction over his person is eventually obtained by the court, either by service on him of summons or other coercive process or
his voluntary submission to the courts authority. Hence, when the sheriff or other proper officer commences implementation of the writ of
attachment, it is essential that he serve on the defendant not only a copy of the applicants affidavit and attachment bond, and of the order
of attachment, as explicitly required by Section 5 of Rule 57, but also the summons addressed to said defendant as well as a copy of the
complaint xxx. (Emphasis supplied.)
Furthermore, we have held that the grant of the provisional remedy of attachment involves three stages: first, the court issues the order
granting the application; second, the writ of attachment issues pursuant to the order granting the writ; and third, the writ is
implemented. For the initial two stages, it is not necessary that jurisdiction over the person of the defendant be first
obtained. However, once the implementation of the writ commences, the court must have acquired jurisdiction over the defendant for
without such jurisdiction, the court has no power and authority to act in any manner against the defendant. Any order issuing from the
Court will not bind the defendant.[23]
In the instant case, the Writ of Preliminary Attachment was issued on September 27, 1988 and implemented on October 28,
1988. However, the alias summons was served only on January 26, 1989 or almost three months after the implementation of the writ of
attachment.
The trial court had the authority to issue the Writ of Attachment on September 27 since a motion for its issuance can be filed at the
commencement of the action. However, on the day the writ was implemented, the trial court should have, previously or simultaneously
with the implementation of the writ, acquired jurisdiction over the petitioner. Yet, as was shown in the records of the case, the summons
was actually served on petitioner several months after the writ had been implemented.
Private respondent, nevertheless, claims that the prior or contemporaneous service of summons contemplated in Section 5 of Rule
57 provides for exceptions. Among such exceptions are where the summons could not be served personally or by substituted service
despite diligent efforts or where the defendant is a resident temporarily absent therefrom x x x. Private respondent asserts that when she
commenced this action, she tried to serve summons on petitioner but the latter could not be located at her customary address in
Kamuning, Quezon City or at her new address in Guagua, Pampanga. [24] Furthermore, respondent claims that petitioner was not even in
Pampanga; rather, she was in Guam purportedly on a business trip.
Private respondent never showed that she effected substituted service on petitioner after her personal service failed. Likewise, if it
were true that private respondent could not ascertain the whereabouts of petitioner after a diligent inquiry, still she had some other
recourse under the Rules of Civil Procedure.
 The rules provide for certain remedies in cases where personal service could not be effected on a party. Section 14, Rule 14 of the
Rules of Court provides that whenever the defendants whereabouts are unknown and cannot be ascertained by diligent inquiry, service
may, by leave of court, be effected upon him by publication in a newspaper of general circulation x x x. Thus, if petitioners whereabouts
could not be ascertained after the sheriff had served the summons at her given address, then respondent could have immediately asked
the court for service of summons by publication on petitioner.[25]
Moreover, as private respondent also claims that petitioner was abroad at the time of the service of summons, this made petitioner
a resident who is temporarily out of the country. This is the exact situation contemplated in Section 16, [26] Rule 14 of the Rules of Civil
Procedure, providing for service of summons by publication.
In conclusion, we hold that the alias summons belatedly served on petitioner cannot be deemed to have cured the fatal defect in
the enforcement of the writ. The trial court cannot enforce such a coercive process on petitioner without first obtaining jurisdiction over
her person. The preliminary writ of attachment must be served after or simultaneous with the service of summons on the defendant
whether by personal service, substituted service or by publication as warranted by the circumstances of the case. [27] The subsequent
service of summons does not confer a retroactive acquisition of jurisdiction over her person because the law does not allow for
retroactivity of a belated service.
Improper Venue
Petitioner assails the filing of this case in the RTC of Pasay and points to a provision in private respondents invoice which contains
the following:
3. If court litigation becomes necessary to enforce collection, an additional equivalent (sic) to 25% of the principal amount will be charged.
The agreed venue for such action is Makati, Metro Manila, Philippines. [28]
Based on this provision, petitioner contends that the action should have been instituted in the RTC of Makati and to do otherwise
would be a ground for the dismissal of the case.
We resolve to dismiss the case on the ground of improper venue but not for the reason stated by petitioner.
The Rules of Court provide that parties to an action may agree in writing on the venue on which an action should be brought.
[29]
However, a mere stipulation on the venue of an action is not enough to preclude parties from bringing a case in other venues. [30] The
parties must be able to show that such stipulation is exclusive. Thus, absent words that show the parties intention to restrict the filing of a
suit in a particular place, courts will allow the filing of a case in any venue, as long as jurisdictional requirements are followed. Venue
stipulations in a contract, while considered valid and enforceable, do not as a rule supersede the general rule set forth in Rule 4 of the
Revised Rules of Court.[31] In the absence of qualifying or restrictive words, they should be considered merely as an agreement on
additional forum, not as limiting venue to the specified place.[32]
In the instant case, the stipulation does not limit the venue exclusively to Makati. There are no qualifying or restrictive words in the
invoice that would evince the intention of the parties that Makati is the only or exclusive venue where the action could be instituted. We
therefore agree with private respondent that Makati is not the only venue where this case could be filed.
Nevertheless, we hold that Pasay is not the proper venue for this case.
Under the 1997 Rules of Civil Procedure, the general rule is venue in personal actions is where the defendant or any of the
defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. [33] The exception
to this rule is when the parties agree on an exclusive venue other than the places mentioned in the rules. But, as we have discussed, this
exception is not applicable in this case. Hence, following the general rule, the instant case may be brought in the place of residence of the
plaintiff or defendant, at the election of the plaintiff (private respondent herein).
In the instant case, the residence of private respondent (plaintiff in the lower court) was not alleged in the complaint. Rather, what
was alleged was the postal address of her sole proprietorship, Air Swift International. It was only when private respondent testified in
court, after petitioner was declared in default, that she mentioned her residence to be in Better Living Subdivision, Paraaque City.
In the earlier case of Sy v. Tyson Enterprises, Inc., [34] the reverse happened. The plaintiff in that case was Tyson Enterprises, Inc., a
corporation owned and managed by Dominador Ti. The complaint, however, did not allege the office or place of business of the
corporation, which was in Binondo, Manila. What was alleged was the residence of Dominador Ti, who lived in San Juan, Rizal. The case
was filed in the Court of First Instance of Rizal, Pasig. The Court there held that the evident purpose of alleging the address of the
corporations president and manager was to justify the filing of the suit in Rizal, Pasig instead of in Manila. Thus, the Court ruled that there
was no question that venue was improperly laid in that case and held that the place of business of Tyson Enterpises, Inc. is considered as
its residence for purposes of venue. Furthermore, the Court held that the residence of its president is not the residence of the corporation
because a corporation has a personality separate and distinct from that of its officers and stockholders.
In the instant case, it was established in the lower court that petitioner resides in San Fernando, Pampanga [35] while private
respondent resides in Paraaque City.[36] However, this case was brought in Pasay City, where the business of private respondent is found.
This would have been permissible had private respondents business been a corporation, just like the case in Sy v. Tyson Enterprises,
Inc. However, as admitted by private respondent in her Complaint [37] in the lower court, her business is a sole proprietorship, and as such,
does not have a separate juridical personality that could enable it to file a suit in court. [38] In fact, there is no law authorizing sole
proprietorships to file a suit in court.[39]
A sole proprietorship does not possess a juridical personality separate and distinct from the personality of the owner of the
enterprise.[40] The law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit by a
single individual and requires its proprietor or owner to secure licenses and permits, register its business name, and pay taxes to the
national government.[41] The law does not vest a separate legal personality on the sole proprietorship or empower it to file or defend an
action in court.[42]
Thus, not being vested with legal personality to file this case, the sole proprietorship is not the plaintiff in this case but rather Loreta
Guina in her personal capacity. In fact, the complaint in the lower court acknowledges in its caption that the plaintiff and defendant are
Loreta Guina and Anita Mangila, respectively. The title of the petition before us does not state, and rightly so, Anita Mangila v. Air Swif
International, but rather Anita Mangila v. Loreta Guina. Logically then, it is the residence of private respondent Guina, the proprietor with
the juridical personality, which should be considered as one of the proper venues for this case.
All these considered, private respondent should have filed this case either in San Fernando, Pampanga (petitioners residence) or
Paraaque (private respondents residence). Since private respondent (complainant below) filed this case in Pasay, we hold that the case
should be dismissed on the ground of improper venue.
Although petitioner filed an Urgent Motion to Discharge Attachment in the lower court, petitioner expressly stated that she was
filing the motion without submitting to the jurisdiction of the court. At that time, petitioner had not been served the summons and a copy
of the complaint.[43] Thereafter, petitioner timely filed a Motion to Dismiss [44] on the ground of improper venue. Rule 16, Section 1 of the
Rules of Court provides that a motion to dismiss may be filed [W]ithin the time for but before filing the answer to the complaint or
pleading asserting a claim. Petitioner even raised the issue of improper venue in his Answer [45] as a special and affirmative defense.
Petitioner also continued to raise the issue of improper venue in her Petition for Review [46] before this Court. We thus hold that the
dismissal of this case on the ground of improper venue is warranted.
The rules on venue, like other procedural rules, are designed to insure a just and orderly administration of justice or the impartial
and evenhanded determination of every action and proceeding. Obviously, this objective will not be attained if the plaintiff is given
unrestricted freedom to choose where to file the complaint or petition.[47]
We find no reason to rule on the other issues raised by petitioner.
WHEREFORE, the petition is GRANTED on the grounds of improper venue and invalidity of the service of the writ of attachment. The
decision of the Court of Appeals and the order of respondent judge denying the motion to dismiss are REVERSED and SET ASIDE. Civil Case
No. 5875 is hereby dismissed without prejudice to refiling it in the proper venue. The attached properties of petitioner are ordered
returned to her immediately.
SO ORDERED.
Puno, (Chairman), and Panganiban, JJ., concur.
Sandoval-Gutierrez, J., on leave.
THIRD DIVISION
HYATT ELEVATORS AND G.R. No. 161026
ESCALATORS CORPORATION,
Petitioner, Present:
Panganiban, J.,
Chairman,
Sandoval-Gutierrez,
- versus - Corona,
Carpio Morales, and
Garcia, JJ
GOLDSTAR ELEVATORS, Promulgated:
PHILS., INC.,*
Respondent. October 24, 2005
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- x
DECISION
PANGANIBAN, J.:
W ell established in our jurisprudence is the rule that the residence of a corporation is the place where its principal office is located, as
stated in its Articles of Incorporation.
The Case
Before us is a Petition for Review [1] on Certiorari, under Rule 45 of the Rules of Court, assailing the June 26, 2003 Decision [2] and
the November 27, 2003 Resolution [3] of the Court of Appeals (CA) in CA-GR SP No. 74319. The decretal portion of the Decision reads as
follows:
WHEREFORE, in view of the foregoing, the assailed Orders dated May 27, 2002 and October 1, 2002 of
the RTC, Branch 213, Mandaluyong City in Civil Case No. 99-600, are hereby SET ASIDE. The said case is hereby
ordered DISMISSED on the ground of improper venue.[4]
The assailed Resolution denied petitioners Motion for Reconsideration.
The Facts
The relevant facts of the case are summarized by the CA in this wise:
Petitioner [herein Respondent] Goldstar Elevator Philippines, Inc. (GOLDSTAR for brevity) is a domestic
corporation primarily engaged in the business of marketing, distributing, selling, importing, installing, and
maintaining elevators and escalators, with address at 6th Floor, Jacinta II Building, 64 EDSA, Guadalupe, Makati City.
On the other hand, private respondent [herein petitioner] Hyatt Elevators and Escalators Company
(HYATT for brevity) is a domestic corporation similarly engaged in the business of selling, installing and
maintaining/servicing elevators, escalators and parking equipment, with address at the 6 th Floor, Dao I
Condominium, Salcedo St., Legaspi Village, Makati, as stated in its Articles of Incorporation.
On February 23, 1999, HYATT filed a Complaint for unfair trade practices and damages under Articles 19,
20 and 21 of the Civil Code of the Philippines against LG Industrial Systems Co. Ltd. (LGISC) and LG International
Corporation (LGIC), alleging among others, that: in 1988, it was appointed by LGIC and LGISC as the exclusive
distributor of LG elevators and escalators in the Philippines under a Distributorship Agreement; x x x LGISC, in the
latter part of 1996, made a proposal to change the exclusive distributorship agency to that of a joint venture
partnership; while it looked forward to a healthy and fruitful negotiation for a joint venture, however, the various
meetings it had with LGISC and LGIC, through the latters representatives, were conducted in utmost bad faith and
with malevolent intentions; in the middle of the negotiations, in order to put pressures upon it, LGISC and LGIC
terminated the Exclusive Distributorship Agreement; x x x [A]s a consequence, [HYATT] suffered P120,000,000.00 as
actual damages, representing loss of earnings and business opportunities, P20,000,000.00 as damages for its
reputation and goodwill, P1,000,000.00 as and by way of exemplary damages, and P500,000.00 as and by way of
attorneys fees.
On March 17, 1999, LGISC and LGIC filed a Motion to Dismiss raising the following grounds: (1) lack of
jurisdiction over the persons of defendants, summons not having been served on its resident agent; (2) improper
venue; and (3) failure to state a cause of action. The [trial] court denied the said motion in an Order dated January 7,
2000.
On March 6, 2000, LGISC and LGIC filed an Answer with Compulsory Counterclaim ex abundante cautela.
Thereafter, they filed a Motion for Reconsideration and to Expunge Complaint which was denied.
On December 4, 2000, HYATT filed a motion for leave of court to amend the complaint, alleging that
subsequent to the filing of the complaint, it learned that LGISC transferred all its organization, assets and goodwill,
as a consequence of a joint venture agreement with Otis Elevator Company of the USA, to LG Otis Elevator Company
(LG OTIS, for brevity). Thus, LGISC was to be substituted or changed to LG OTIS, its successor-in-interest. Likewise,
the motion averred that x x x GOLDSTAR was being utilized by LG OTIS and LGIC in perpetrating their unlawful and
unjustified acts against HYATT. Consequently, in order to afford complete relief, GOLDSTAR was to be additionally
impleaded as a party-defendant. Hence, in the Amended Complaint, HYATT impleaded x x x GOLDSTAR as a party-
defendant, and all references to LGISC were correspondingly replaced with LG OTIS.
On December 18, 2000, LG OTIS (LGISC) and LGIC filed their opposition to HYATTs motion to amend the
complaint. It argued that: (1) the inclusion of GOLDSTAR as party-defendant would lead to a change in the theory of
the case since the latter took no part in the negotiations which led to the alleged unfair trade practices subject of
the case; and (b) HYATTs move to amend the complaint at that time was dilatory, considering that HYATT was aware
of the existence of GOLDSTAR for almost two years before it sought its inclusion as party-defendant.
On January 8, 2001, the [trial] court admitted the Amended Complaint. LG OTIS (LGISC) and LGIC filed a
motion for reconsideration thereto but was similarly rebuffed on October 4, 2001.
On April 12, 2002, x x x GOLDSTAR filed a Motion to Dismiss the amended complaint, raising the following
grounds: (1) the venue was improperly laid, as neither HYATT nor defendants reside in Mandaluyong City, where the
original case was filed; and (2) failure to state a cause of action against [respondent], since the amended complaint
fails to allege with certainty what specific ultimate acts x x x Goldstar performed in violation of x x x Hyatts rights. In
the Order dated May 27, 2002, which is the main subject of the present petition, the [trial] court denied the motion
to dismiss, ratiocinating as follows:
Upon perusal of the factual and legal arguments raised by the movants-defendants, the court
finds that these are substantially the same issues posed by the then defendant LG Industrial
System Co. particularly the matter dealing [with] the issues of improper venue, failure to state
cause of action as well as this courts lack of jurisdiction. Under the circumstances obtaining,
the court resolves to rule that the complaint sufficiently states a cause of action and that the
venue is properly laid. It is significant to note that in the amended complaint, the same
allegations are adopted as in the original complaint with respect to the Goldstar Philippines to
enable this court to adjudicate a complete determination or settlement of the claim subject of
the action it appearing preliminarily as sufficiently alleged in the plaintiffs pleading that said
Goldstar Elevator Philippines Inc., is being managed and operated by the same Korean officers
of defendants LG-OTIS Elevator Company and LG International Corporation.
On June 11, 2002, [Respondent] GOLDSTAR filed a motion for reconsideration thereto. On June 18, 2002,
without waiving the grounds it raised in its motion to dismiss, [it] also filed an Answer Ad Cautelam. On October 1,
2002, [its] motion for reconsideration was denied.
From the aforesaid Order denying x x x Goldstars motion for reconsideration, it filed the x x x petition for
certiorari [before the CA] alleging grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
the [trial] court in issuing the assailed Orders dated May 27, 2002 and October 1, 2002.[5]
Ruling of the Court of Appeals
The CA ruled that the trial court had committed palpable error amounting to grave abuse of discretion when the latter denied
respondents Motion to Dismiss. The appellate court held that the venue was clearly improper, because none of the litigants resided in
Mandaluyong City, where the case was filed.
According to the appellate court, since Makati was the principal place of business of both respondent and petitioner, as stated
in the latters Articles of Incorporation, that place was controlling for purposes of determining the proper venue. The fact that petitioner
had abandoned its principal office in Makati years prior to the filing of the original case did not affect the venue where personal actions
could be commenced and tried.
Hence, this Petition.[6]
The Issue
In its Memorandum, petitioner submits this sole issue for our consideration:
Whether or not the Court of Appeals, in reversing the ruling of the Regional Trial Court, erred as a matter
of law and jurisprudence, as well as committed grave abuse of discretion, in holding that in the light of the peculiar
facts of this case, venue was improper[.][7]
This Courts Ruling
The Petition has no merit.
Sole Issue:
Venue
The resolution of this case rests upon a proper understanding of Section 2 of Rule 4 of the 1997 Revised Rules of Court:
Sec. 2. Venue of personal actions. All other actions may be commenced and tried where the plaintiff or
any of the principal plaintiff resides, or where the defendant or any of the principal defendant resides, or in the case
of a non-resident defendant where he may be found, at the election of the plaintiff.
Since both parties to this case are corporations, there is a need to clarify the meaning of residence. The law recognizes two
types of persons: (1) natural and (2) juridical. Corporations come under the latter in accordance with Article 44(3) of the Civil Code. [8]
Residence is the permanent home -- the place to which, whenever absent for business or pleasure, one intends to return.
[9]
Residence is vital when dealing with venue.[10] A corporation, however, has no residence in the same sense in which this term is applied
to a natural person. This is precisely the reason why the Court in Young Auto Supply Company v. Court of Appeals [11] ruled that for practical
purposes, a corporation is in a metaphysical sense a resident of the place where its principal office is located as stated in the articles of
incorporation.[12] Even before this ruling, it has already been established that the residence of a corporation is the place where its principal
office is established.[13]
This Court has also definitively ruled that for purposes of venue, the term residence is synonymous with domicile.
[14]
Correspondingly, the Civil Code provides:
Art. 51. When the law creating or recognizing them, or any other provision does not fix the domicile of
juridical persons, the same shall be understood to be the place where their legal representation is established or
where they exercise their principal functions.[15]
It now becomes apparent that the residence or domicile of a juridical person is fixed by the law creating or recognizing it. Under
Section 14(3) of the Corporation Code, the place where the principal office of the corporation is to be located is one of the required
contents of the articles of incorporation, which shall be filed with the Securities and Exchange Commission (SEC).
In the present case, there is no question as to the residence of respondent. What needs to be examined is that of petitioner.
Admittedly,[16] the latters principal place of business is Makati, as indicated in its Articles of Incorporation. Since the principal place of
business of a corporation determines its residence or domicile, then the place indicated in petitioners articles of incorporation becomes
controlling in determining the venue for this case.
Petitioner argues that the Rules of Court do not provide that when the plaintiff is a corporation, the complaint should be filed in
the location of its principal office as indicated in its articles of incorporation. [17] Jurisprudence has, however, settled that the place where
the principal office of a corporation is located, as stated in the articles, indeed establishes its residence. [18] This ruling is important in
determining the venue of an action by or against a corporation,[19] as in the present case.
Without merit is the argument of petitioner that the locality stated in its Articles of Incorporation does not conclusively indicate
that its principal office is still in the same place. We agree with the appellate court in its observation that the requirement to state in the
articles the place where the principal office of the corporation is to be located is not a meaningless requirement. That proviso would be
rendered nugatory if corporations were to be allowed to simply disregard what is expressly stated in their Articles of Incorporation. [20]
Inconclusive are the bare allegations of petitioner that it had closed its Makati office and relocated to Mandaluyong City, and
that respondent was well aware of those circumstances. Assuming arguendo that they transacted business with each other in the
Mandaluyong office of petitioner, the fact remains that, in law, the latters residence was still the place indicated in its Articles of
Incorporation. Further unacceptable is its faulty reasoning that the ground for the CAs dismissal of its Complaint was its failure to amend
its Articles of Incorporation so as to reflect its actual and present principal office. The appellate court was clear enough in its ruling that the
Complaint was dismissed because the venue had been improperly laid, not because of the failure of petitioner to amend the latters
Articles of Incorporation.
Indeed, it is a legal truism that the rules on the venue of personal actions are fixed for the convenience of the plaintiffs and
their witnesses. Equally settled, however, is the principle that choosing the venue of an action is not left to a plaintiffs caprice; the matter
is regulated by the Rules of Court. [21] Allowing petitioners arguments may lead precisely to what this Court was trying to avoid in Young
Auto Supply Company v. CA:[22] the creation of confusion and untold inconveniences to party litigants. Thus enunciated the CA:
x x x. To insist that the proper venue is the actual principal office and not that stated in its Articles of
Incorporation would indeed create confusion and work untold inconvenience. Enterprising litigants may, out of some
ulterior motives, easily circumvent the rules on venue by the simple expedient of closing old offices and opening
new ones in another place that they may find well to suit their needs.[23]
We find it necessary to remind party litigants, especially corporations, as follows:
The rules on venue, like the other procedural rules, are designed to insure a just and orderly
administration of justice or the impartial and evenhanded determination of every action and proceeding. Obviously,
this objective will not be attained if the plaintiff is given unrestricted freedom to choose the court where he may file
his complaint or petition.
The choice of venue should not be left to the plaintiffs whim or caprice. He may be impelled by some
ulterior motivation in choosing to file a case in a particular court even if not allowed by the rules on venue.[24]
WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and Resolution AFFIRMED. Costs against petitioner.
SO ORDERED.
ARTEMIO V. PANGANIBAN
Associate Justice
 Chairman, Third Division
Aggrieved by the dismissal of the complaint, respondent Lucio Tan filed an Omnibus Motion
dated February 24, 1999, seeking reconsideration of the dismissal and admission of the amended complaint. In par.
SECOND DIVISION 2.01.1 of the amended complaint, it is alleged that This article was printed and first published in the City
of Makati (p. 53, Rollo,CA-G.R. SP No. 55192), and in par. 2.04.1, that This caricature was printed and first published
in the City of Makati (p. 55, id.).
ARMAND NOCUM and THE PHILIPPINE DAILY G.R. No. 145022 The lower court, after having the case dismissed for improper venue, admitted the amended complaint
INQUIRER, INC., and deemed set aside the previous order of dismissal, supra, stating, inter alia, that:
P e t i t i o n e r s, Present:
The mistake or deficiency in the original complaint appears now to have been
PUNO, cured in the Amended Complaint which can still be properly admitted, pursuant to Rule 10 of
Chairman, the 1997 Rules of Civil Procedure, inasmuch as the Order of dismissal is not yet final. Besides,
AUSTRIA-MARTINEZ, there is no substantial amendment in the Amended Complaint which would affect the
- versus - CALLEJO, SR. defendants defenses and their Answers. The Amendment is merely formal, contrary to the
TINGA, and contention of the defendants that it is substantial.
CHICO-NAZARIO, JJ.

LUCIO TAN, Promulgated: Dissatisfied, petitioners, together with defendants Capt. Florendo Umali and the Airline Pilots Association of the Philippines, Inc. (ALPAP),
R e s p o n d e n t. appealed the RTC decision to the Court of Appeals. Two petitions for certiorari were filed, one filed by petitioners which was docketed as
September 23, 2005 CA-G.R. SP No. 55192, and the other by defendants Umali and ALPAP which was docketed as CA-G.R. SP No. 54894. The two petitions were
X--------------------------------------------------X consolidated.

On 19 April 2000, the Court of Appeals rendered its decision the dispositive portion of which reads:
DECISION
WHEREFORE, premises considered, the petition is hereby DENIED DUE COURSE and DISMISSED for lack of
merit. The Order of the court a quo is hereby AFFIRMED.
CHICO-NAZARIO, J.:

Assailed in a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure are the decision [1] of the Court of Appeals The motions for reconsideration filed by petitioners and by defendants Umali and ALPAP were likewise denied in a resolution dated 15
dated 19 April 2000 that affirmed the order of the Regional Trial Court (RTC) of Makati City, Branch 56, in Civil Case No. 98-2288, dated 19 September 2000.
April 1999, admitting respondent Lucio Tans Amended Complaint for Damages for the alleged malicious and defamatory imputations
against him in two (2) articles of the Philippine Daily Inquirer, and its Resolution [2] dated 15 September 2000 denying petitioners Armand Both petitioners and defendants Umali and ALPAP appealed to this Court. Under consideration is the petition for review filed by
Nocum and The Philippine Daily Inquirer, Inc.s motion for reconsideration. petitioners.

The antecedents are summarized by the Court of Appeals. On 11 December 2000, the Court required respondent Tan to comment on the petition filed by petitioners. [3]

On September 27, 1998, Lucio Tan filed a complaint against reporter Armand Nocum, Capt. Florendo
Umali, ALPAP and Inquirer with the Regional Trial Court of Makati, docketed as Civil Case No. 98-2288, seeking
moral and exemplary damages for the alleged malicious and defamatory imputations contained in a news article.
INQUIRER and NOCUM filed their joint answer, dated October 27, 1998, wherein they alleged that: (1) the complaint
failed to state a cause of action; (2) the defamatory statements alleged in the complaint were general conclusions
without factual premises; (3) the questioned news report constituted fair and true report on the matters of public
interest concerning a public figure and therefore, was privileged in nature; and (4) malice on their part was negated
by the publication in the same article of plaintiffs or PALs side of the dispute with the pilots union.
Respondent filed his comment on 22 January 2001[4] to which petitioners filed a reply on 26 April 2001.[5]
In a Manifestation filed on 19 February 2001, respondent stated that the petition [6] filed by defendants Umali and ALPAP has
already been denied by the Court in a resolution dated 17 January 2001.[7]
On 20 August 2003, the Court resolved to give due course to the petition and required the parties to submit their respective
memoranda within thirty (30) days from notice.[8] Both petitioners and respondent complied.[9]
Petitioners assigned the following as errors:

ALPAP and UMALI likewise filed their joint answer, dated October 31, 1998, and alleged therein that: (1) the
complaint stated no cause of action; (2) venue was improperly laid; and (3) plaintiff Lucio Tan was not a real party in
interest. It appeared that the complaint failed to state the residence of the complainant at the time of the alleged
commission of the offense and the place where the libelous article was printed and first published.
Thus, the Regional Trial Court of Makati issued an Order dated February 10, 1999, dismissing the
complaint without prejudice on the ground of improper venue.
A. THE COURT OF APPEALS ERRED IN RULING (1) THAT THE LOWER COURT HAD JURISDICTION OVER THE CASE
(ON THE BASIS OF THE ORIGINAL COMPLAINT) NOTWITHSTANDING THE FACT THAT THE LOWER COURT HAD
EARLIER DISMISSED THE ORIGINAL COMPLAINT FOR ITS FAILURE TO CONFER JURISDICTION UPON THJE
COURT; AND (2) THAT THE AMENDED COMPLAINT WAS PROPERLY ALLOWED OR ADMITTED BECAUSE
THE LOWER COURT WAS NEVER DIVESTED OF JURISDICTION OVER THE CASE;
 B. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE ORIGINAL COMPLAINT OF RESPONDENT WAS
AMENDED PURPOSELY TO CONFER UPON THE LOWER COURT JURISDICTION OVER THE CASE.[10]
Petitioners state that Article 360 of the Revised Penal Code vests jurisdiction over all civil and criminal complaints for libel on
the RTC of the place: (1) where the libelous article was printed and first published; or (2) where the complainant, if a private person,
resides; or (3) where the complainant, if a public official, holds office. They argue that since the original complaint only contained the
office address of respondent and not the latters actual residence or the place where the allegedly offending news reports were printed and
first published, the original complaint, by reason of the deficiencies in its allegations, failed to confer jurisdiction on the lower court.
The question to be resolved is: Did the lower court acquire jurisdiction over the civil case upon the filing of the original
complaint for damages?
We rule in the affirmative.
It is settled that jurisdiction is conferred by law based on the facts alleged in the complaint since the latter comprises a concise
statement of the ultimate facts constituting the plaintiff's causes of action.[11] In the case at bar, after examining the original complaint, we
find that the RTC acquired jurisdiction over the case when the case was filed before it. From the allegations thereof, respondents cause of
action is for damages arising from libel, the jurisdiction of which is vested with the RTC. Article 360 of the Revised Penal Code provides that
it is a Court of First Instance[12] that is specifically designated to try a libel case.[13]
Petitioners are confusing jurisdiction with venue. A former colleague, the Hon. Florenz D. Regalado, [14] differentiated jurisdiction
and venue as follows: (a) Jurisdiction is the authority to hear and determine a case; venue is the place where the case is to be heard or
tried; (b) Jurisdiction is a matter of substantive law; venue, of procedural law; (c) Jurisdiction establishes a relation between the court and
the subject matter; venue, a relation between plaintiff and defendant, or petitioner and respondent; and, (d) Jurisdiction is fixed by law
and cannot be conferred by the parties; venue may be conferred by the act or agreement of the parties.
In the case at bar, the additional allegations in the Amended Complaint that the article and the caricature were printed and first published
in the City of Makati referred only to the question of venue and not jurisdiction. These additional allegations would neither confer
jurisdiction on the RTC nor would respondents failure to include the same in the original complaint divest the lower court of its jurisdiction
over the case. Respondents failure to allege these allegations gave the lower court the power, upon motion by a party, to dismiss the
complaint on the ground that venue was not properly laid.
In Laquian v. Baltazar,[15] this Court construed the term jurisdiction in Article 360 of the Revised Penal Code as referring to the
place where actions for libel shall be filed or venue.
In Escribano v. Avila,[16] pursuant to Republic Act No. 4363, [17] we laid down the following rules on the venue of the criminal and
civil actions in written defamations.
1. General rule: The action may be filed in the Court of First Instance of the province or city where the libelous
article is printed and first published or where any of the offended parties actually resides at the time of the
commission of the offense.
2. If the offended party is a public officer with office in Manila at the time the offense was committed, the venue
is Manila or the city or province where the libelous article is printed and first published.
3. Where an offended party is a public official with office outside of Manila, the venue is the province or the city
where he held office at the time of the commission of the offense or where the libelous article is printed and first
published.
4. If an offended party is a private person, the venue is his place of residence at the time of the commission of the
offense or where the libelous article is printed and first published.
The common feature of the foregoing rules is that whether the offended party is a public officer or a private person,
he has always the option to file the action in the Court of First Instance of the province or city where the libelous
article is printed or first published.
We further restated [18] the rules on venue in Article 360 as follows:
1. Whether the offended party is a public official or a private person, the criminal action may be filed in
the Court of First Instance of the province or city where the libelous article is printed and first published.
2. If the offended party is a private individual, the criminal action may also be filed in the Court of First
Instance of the province where he actually resided at the time of the commission of the offense.
3. If the offended party is a public officer whose office is in Manila at the time of the commission of the
offense, the action may be filed in the Court of First Instance of Manila.
4. If the offended party is a public officer holding office outside of Manila, the action may be filed in the
Court of First Instance of the province or city where he held office at the time of the commission of the offense.
We fully agree with the Court of Appeals when it ruled:
We note that the amended complaint or amendment to the complaint was not intended to vest
jurisdiction to the lower court, where originally it had none. The amendment was merely to establish the proper
venue for the action. It is a well-established rule that venue has nothing to do with jurisdiction, except in criminal
actions. Assuming that venue were properly laid in the court where the action was instituted, that would be
procedural, not a jurisdictional impediment. In fact, in civil cases, venue may be waived.
Consequently, by dismissing the case on the ground of improper venue, the lower court had jurisdiction
over the case. Apparently, the herein petitioners recognized this jurisdiction by filing their answers to the
complaint, albeit, questioning the propriety of venue, instead of a motion to dismiss.
...
We so hold that dismissal of the complaint by the lower court was proper considering that the complaint,
indeed, on its face, failed to allege neither the residence of the complainant nor the place where the libelous article
was printed and first published. Nevertheless, before the finality of the dismissal, the same may still be amended as
in fact the amended complaint was admitted, in view of the court a quos jurisdiction, of which it was never divested.
In so doing, the court acted properly and without any grave abuse of discretion.[19]
It is elementary that objections to venue in CIVIL ACTIONS arising from libel may be waived since they do not involve a question
of jurisdiction. The laying of venue is procedural rather than substantive, relating as it does to jurisdiction of the court over the person
rather than the subject matter. Venue relates to trial and not to jurisdiction. [20] It is a procedural, not a jurisdictional, matter. It relates to
the place of trial or geographical location in which an action or proceeding should be brought and not to the jurisdiction of the court. [21] It
is meant to provide convenience to the parties, rather than restrict their access to the courts as it relates to the place of trial. [22] In
contrast, in CRIMINAL ACTIONS, it is fundamental that venue is jurisdictional it being an essential element of jurisdiction. [23]
Petitioners argument that the lower court has no jurisdiction over the case because respondent failed to allege the place where
the libelous articles were printed and first published would have been tenable if the case filed were a criminal case. The failure of the
original complaint to contain such information would be fatal because this fact involves the issue of venue which goes into the territorial
jurisdiction of the court. This is not to be because the case before us is a civil action where venue is not jurisdictional.

The cases[24] cited by petitioners are not applicable here. These cases involve amendments on complaints that confer
jurisdiction on courts over which they originally had none. This is not true in the case at bar. As discussed above, the RTC acquired
jurisdiction over the subject matter upon the filing of the original complaint. It did not lose jurisdiction over the same when it dismissed it
on the ground of improper venue. The amendment merely laid down the proper venue of the case.
WHEREFORE, the foregoing considered, the decision of the Court of Appeals dated 19 April 2000 is AFFIRMED in toto. No costs.
SO ORDERED.
G.R. No. 160053 August 28, 2006
SPS. RENATO & ANGELINA LANTIN, Petitioners,
vs.
HON. JANE AURORA C. LANTION, Presiding Judge of the Regional Trial Court of Lipa City, Fourth Judicial Region, Branch 13, PLANTERS
DEVELOPMENT BANK, ELIZABETH C. UMALI, ALICE PERCE, JELEN MOSCA, REGISTER OF DEEDS FOR LIPA CITY, BATANGAS, THE CLERK OF
COURT and EX-OFFICIO SHERIFF OF THE REGIONAL TRIAL COURT OF BATANGAS, Respondents.
DECISION
QUISUMBING, J.:
This is a petition for certiorari assailing the orders dated May 15, 2003 1 and September 15, 20032 in Civil Case No. 2002-0555 issued by
public respondent, Presiding Judge Jane Aurora C. Lantion, of the Regional Trial Court (RTC) of Lipa City, Batangas.
The facts of the case are as follows:
Petitioners Renato and Angelina Lantin took several peso and dollar loans from respondent Planters Development Bank and executed
several real estate mortgages and promissory notes to cover the loans. They defaulted on the payments so respondent bank foreclosed
the mortgaged lots. The foreclosed properties, in partial satisfaction of petitioners’ debt, were sold at a public auction where the
respondent bank was the winning bidder. On November 8, 2003, petitioners filed against Planters Development Bank and its officers
Elizabeth Umali, Alice Perce and Jelen Mosca (private respondents), a Complaint for Declaration of Nullity and/or Annulment of Sale
and/or Mortgage, Reconveyance, Discharge of Mortgage, Accounting, Permanent Injunction, and Damages with the RTC of Lipa City,
Batangas. Petitioners alleged that only their peso loans were covered by the mortgages and that these had already been fully paid, hence,
the mortgages should have been discharged. They challenged the validity of the foreclosure on the alleged non-payment of their dollar
loans as the mortgages did not cover those loans.
Private respondents moved to dismiss the complaint on the ground of improper venue since the loan agreements restricted the venue of
any suit in Metro Manila.
On May 15, 2003, the respondent judge dismissed the case for improper venue.
Petitioners sought reconsideration. They argued that the trial court in effect prejudged the validity of the loan documents because the trial
court based its dismissal on a venue stipulation provided in the agreement. The motion for reconsideration was denied and the lower
court held that the previous order did not touch upon the validity of the loan documents but merely ruled on the procedural issue of
venue.
Petitioners now come before us alleging that:
I SO ORDERED.
THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING
THAT THE VENUE STIPULATIONS IN THE "REAL ESTATE MORTGAGE" AND "PROMISSORY NOTES" FALL WITHIN THE PURVIEW OF SECTION
4(B) OF RULE 4 OF THE 1997 RULES OF CIVIL PROCEDURE IN THAT IT LIMITED THE VENUE OF ACTIONS TO A DEFINITE PLACE.
II
THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN NOT FINDING
THAT THE MERE USE OF THE WORD "EXCLUSIVELY" DOES NOT, BY ITSELF, MEAN THAT SUCH STIPULATIONS AUTOMATICALLY PROVIDE FOR
AN "EXCLUSIVE VENUE", AS CONTEMPLATED BY SECTION 4(B) OF RULE 4 OF THE 1997 RULES OF CIVIL PROCEDURE, SPECIALLY WHEN THE
TENOR OR LANGUAGE OF THE ENTIRE VENUE STIPULATION CLEARLY PROVIDES OTHERWISE.
III
THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
DISREGARDING THE FACT THAT HEREIN PETITIONERS’ COMPLAINT INVOLVES SEVERAL CAUSES OF ACTION WHICH
DO NOT ARISE SOLELY FROM THE "REAL ESTATE MORTGAGE" AND "PROMISSORY NOTES" AND WHICH OTHER CAUSES OF ACTION MAY BE
FILED IN OTHER VENUES UNDER SECTIONS 1 AND 2 OF RULE 4 OF THE 1997 RULES OF CIVIL PROCEDURE.
IV
THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
DISREGARDING THE PRINCIPLE THAT THE RULE ON VENUE OF ACTIONS IS ESTABLISHED FOR THE CONVENIENCE OF THE PLAINTIFFS. 3
The main issue in the present petition is whether respondent judge committed grave abuse of discretion when she dismissed the case for
improper venue.
Petitioners contend that, since the validity of the loan documents were squarely put in issue, necessarily this meant also that the validity
of the venue stipulation also was at issue. Moreover, according to the petitioners, the venue stipulation in the loan documents is not an
exclusive venue stipulation under Section 4(b) of Rule 4 of the 1997 Rules of Civil Procedure. 4 The venue in the loan agreement was not
specified with particularity. Besides, petitioners posit, the rule on venue of action was established for the convenience of the plaintiff,
herein petitioners. Further, petitioners also contend that since the complaint involves several causes of action which did not arise solely
from or connected with the loan documents, the cited venue stipulation should not be made to apply.
Private respondents counter that, in their complaint, petitioners did not assail the loan documents, and the issue of validity was merely
petitioners’ afterthought to avoid being bound by the venue stipulation. They also aver that the venue stipulation was not contrary to the
doctrine in Unimasters,5 which requires that a venue stipulation employ categorical and suitably limiting language to the effect that the
parties agree that the venue of actions between them should be laid only and exclusively at a definite place. According to private
respondents, the language of the stipulation is clearly exclusive.
At the outset, we must make clear that under Section 4 (b) of Rule 4 of the 1997 Rules of Civil Procedure, the general rules on venue of
actions shall not apply where the parties, before the filing of the action, have validly agreed in writing on an exclusive venue. The mere
stipulation on the venue of an action, however, is not enough to preclude parties from bringing a case in other venues. The parties must be
able to show that such stipulation is exclusive.6 In the absence of qualifying or restrictive words, the stipulation should be deemed as
merely an agreement on an additional forum, not as limiting venue to the specified place. 7
The pertinent provisions of the several real estate mortgages and promissory notes executed by the petitioner respectively read as follows:
18. In the event of suit arising out of or in connection with this mortgage and/or the promissory note/s secured by this mortgage, the
parties hereto agree to bring their causes of auction (sic) exclusively in the proper court of Makati, Metro Manila or at such other venue
chosen by the Mortgagee, the Mortgagor waiving for this purpose any other venue.8 (Emphasis supplied.)
I/We further submit that the venue of any legal action arising out of this note shall exclusively be at the proper court of Metropolitan
Manila, Philippines or any other venue chosen by the BANK, waiving for this purpose any other venue provided by the Rules of
Court.9 (Emphasis supplied.)
Clearly, the words "exclusively" and "waiving for this purpose any other venue" are restrictive and used advisedly to meet the
requirements.
Petitioners claim that effecting the exclusive venue stipulation would be tantamount to a prejudgment on the validity of the loan
documents. We note however that in their complaint, petitioners never assailed the validity of the mortgage contracts securing their peso
loans. They only assailed the terms and coverage of the mortgage contracts. What petitioners claimed is that their peso loans had already
been paid thus the mortgages should be discharged, and that the mortgage contracts did not include their dollar loans. In our view, since
the issues of whether the mortgages should be properly discharged and whether these also cover the dollar loans, arose out of the said
loan documents, the stipulation on venue is also applicable thereto.
Considering all the circumstances in this controversy, we find that the respondent judge did not commit grave abuse of discretion, as the
questioned orders were evidently in accord with law and jurisprudence.
WHEREFORE, the petition is DISMISSED. The assailed orders dated May 15, 2003 and September 15, 2003 of the Regional Trial Court of
Lipa City, Batangas, in Civil Case No. 2002-0555 are AFFIRMED.
Costs against petitioners.
LEONARDO A. QUISUMBING
Associate Justice
WE CONCUR:
UNIFORM PROCEDURE IN TRIAL COURTS
SECOND DIVISION
[G.R. No. 133119. August 17, 2000]
FINANCIAL BUILDING CORPORATION, petitioner, vs. FORBES PARK ASSOCIATION, INC., respondent.
DECISION
DE LEON, JR., J.:
Before us is petition for review on certiorari of the Decision[1] dated March 20, 1998 of the Court of Appeals[2] in CA-GR CV No.
48194 entitled Forbes Park Association, Inc. vs. Financial Building Corporation, finding Financial Building Corporation (hereafter, Financial
Building) liable for damages in favor of Forbes Park Association, Inc. (hereafter, Forbes Park), for violating the latters deed of restrictions on
the construction of buildings within the Forbes Park Village, Makati.
The pertinent facts are as follows:
 The then Union of Soviet Socialist Republic (hereafter, USSR) was the owner of a 4,223 square meter residential lot located at No.
10, Narra Place, Forbes Park Village in Makati City.On December 2, 1985, the USSR engaged the services of Financial Building for the
construction of a multi-level office and staff apartment building at the said lot, which would be used by the Trade Representative of the
USSR.[3] Due to the USSRs representation that it would be building a residence for its Trade Representative, Forbes Park authorized its
construction and work began shortly thereafter.
On June 30, 1986, Forbes Park reminded the USSR of existing regulations [4] authorizing only the construction of a single-family
residential building in each lot within the village. It also elicited a reassurance from the USSR that such restriction has been complied with.
[5]
Promptly, the USSR gave its assurance that it has been complying with all regulations of Forbes Park. [6] Despite this, Financial Building
submitted to the Makati City Government a second building plan for the construction of a multi-level apartment building, which was
different from the first plan for the construction of a residential building submitted to Forbes Park.
Forbes Park discovered the second plan and subsequent ocular inspection of the USSRs subject lot confirmed the violation of the
deed of restrictions. Thus, it enjoined further construction work. On March 27, 1987, Forbes Park suspended all permits of entry for the
personnel and materials of Financial Building in the said construction site. The parties attempted to meet to settle their differences but it
did not push through.
Instead, on April 9, 1987, Financial Building filed in the Regional Trial Court of Makati, Metro Manila, a Complaint [7] for Injunction
and Damages with a prayer for Preliminary Injunction against Forbes Park docketed as Civil Case No. 16540. The latter, in turn, filed a
Motion to Dismiss on the ground that Financial Building had no cause of action because it was not the real party-in-interest.
On April 28, 1987, the trial court issued a writ of preliminary injunction against Forbes Park but the Court of Appeals nullified it and
dismissed the complaint in Civil Case No. 16540 altogether. We affirmed the said dismissal in our Resolution, [8] promulgated on April 6,
1988, in G.R. No. 79319 entitled Financial Building Corporation, et al. vs. Forbes Park Association, et al.
After Financial Buildings case, G.R. No. 79319, was terminated with finality, Forbes Park sought to vindicate its rights by filing on
October 27, 1989 with the Regional Trial Court of Makati a Complaint [9] for Damages, against Financial Building, docketed as Civil Case No.
89-5522, arising from the violation of its rules and regulations. The damages claimed are in the following amounts: (a) P3,000,000.00 as
actual damages; (b) P1,000,000.00 as moral damages; (c) P1,000,000.00 as exemplary damages; and (d) P1,000,000.00 as attorneys fees.
[10]
On September 26, 1994, the trial court rendered its Decision [11] in Civil Case No. 89-5522 in favor of Forbes Park and against Financial
Building, the dispositive portion of which reads, to wit:
WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of the plaintiff and against the defendant:
(1) Ordering the defendant to remove/demolish the illegal structures within three (3) months from the time this judgment
becomes final and executory, and in case of failure of the defendant to do so, the plaintiff is authorized to
demolish/remove the structures at the expense of the defendant;
(2) Ordering the defendant to pay damages, to wit:
(a) P3,000,000.00 as actual damages by way of demolition expenses;
(b) P1,000,000.00 as exemplary damages;
(c) P500,000.00 as attorneys fees;
(d) the costs of suit.
SO ORDERED.
Financial Building appealed the said Decision of the trial court in Civil Case No. 89-5522 by way of a petition for review
on certiorari[12] entitled Financial Building Corporation vs. Forbes Park Association, Inc. to the Court of Appeals and docketed therein as CA-
GR CV No. 48194. However, the Court of Appeals affirmed it in its Decision [13] dated March 20, 1998, the dispositive portion of which reads:
WHEREFORE, the Decision dated September 26, 1994 of the Regional Trial Court of Makati is AFFIRMED with the modification that the
award of exemplary damages, as well as attorneys fees, is reduced to fifty thousand pesos (P50,000.00) each.
Hence, this petition, wherein Financial Building assigns the following errors:
I. THE COURT OF APPEALS GRAVELY ERRED IN NOT DISMISSING THE COMPLAINT FILED BY RESPONDENT FPA DESPITE THE
FACT THAT ITS ALLEGED CLAIMS AND CAUSES OF ACTION THEREIN ARE BARRED BY PRIOR JUDGMENT AND/OR ARE
DEEMED WAIVED FOR ITS FAILURE TO INTERPOSE THE SAME AS COMPULSORY COUNTERCLAIMS IN CIVIL CASE NO.
16540;
II. THE COURT OF APPEALS GRAVELY ERRED IN NOT DISMISSING THE COMPLAINT FILED BY RESPONDENT FPA AGAINST
PETITIONER FBC SINCE RESPONDENT FPA HAS NO CAUSE OF ACTION AGAINST PETITIONER FBC;
III. THE COURT OF APPEALS GRAVELY ERRED IN AWARDING DAMAGES IN FAVOR OF RESPONDENT FPA DESPITE THE FACT
THAT ON THE BASIS OF THE EVIDENCE ON RECORD, RESPONDENT FPA IS NOT ENTITLED THERETO AND PETITIONER FBC
IS NOT LIABLE THEREFOR;
IV. THE COURT OF APPEALS ERRED IN ORDERING THE DEMOLITION OF THE ILLEGAL STRUCTURES LOCATED AT NO. 10 NARRA
PLACE, FORBES PARK, MAKATI CITY, CONSIDERING THAT THE SAME ARE LOCATED ON DIPLOMATIC PREMISES [14]
We grant the petition.
First. The instant case is barred due to Forbes Parks failure to set it up as a compulsory counterclaim in Civil Case No. 16540, the
prior injunction suit initiated by Financial Building against Forbes Park.
A compulsory counterclaim is one which arises out of or is necessarily connected with the transaction or occurrence that is the
subject matter of the opposing partys claim. [15] If it is within the jurisdiction of the court and it does not require for its adjudication the
presence of third parties over whom the court cannot acquire jurisdiction, such compulsory counterclaim is barred if it is not set up in the
action filed by the opposing party.[16]
Thus, a compulsory counterclaim cannot be the subject of a separate action but it should instead be asserted in the same suit
involving the same transaction or occurrence, which gave rise to it. [17] To determine whether a counterclaim is compulsory or not, we have
devised the following tests: (1) Are the issues of fact or law raised by the claim and the counterclaim largely the same? (2) Would res
judicata bar a subsequent suit on defendants claim absent the compulsory counterclaim rule? (3) Will substantially the same evidence
support or refute plaintiffs claim as well as the defendants counterclaim? and (4) Is there any logical relation between the claim and the
counterclaim? Affirmative answers to the above queries indicate the existence of a compulsory counterclaim. [18]
Undoubtedly, the prior Civil Case No. 16540 and the instant case arose from the same occurrence the construction work done by
Financial Building on the USSRs lot in Forbes Park Village. The issues of fact and law in both cases are identical. The factual issue is whether
the structures erected by Financial Building violate Forbes Parks rules and regulations, whereas the legal issue is whether Financial
Building, as an independent contractor working for the USSR, could be enjoined from continuing with the construction and be held liable
for damages if it is found to have violated Forbes Parks rules.
As a result of the controversy, Financial Building seized the initiative by filing the prior injunction case, which was anchored on the
contention that Forbes Parks prohibition on the construction work in the subject premises was improper. The instant case on the other
hand was initiated by Forbes Park to compel Financial Building to remove the same structures it has erected in the same premises involved
in the prior case and to claim damages for undertaking the said construction. Thus, the logical relation between the two cases is patent
and it is obvious that substantially the same evidence is involved in the said cases.
Moreover, the two cases involve the same parties. The aggregate amount of the claims in the instant case is within the jurisdiction
of the regional trial court, had it been set up as a counterclaim in Civil Case No. 16540. Therefore, Forbes Parks claims in the instant case
should have been filed as a counterclaim in Civil Case No. 16540.
Second. Since Forbes Park filed a motion to dismiss in Civil Case No. 16540, its existing compulsory counterclaim at that time is now
barred.
A compulsory counterclaim is auxiliary to the proceeding in the original suit and derives its jurisdictional support therefrom. [19] A
counterclaim presupposes the existence of a claim against the party filing the counterclaim. Hence, where there is no claim against the
counterclaimant, the counterclaim is improper and it must dismissed, more so where the complaint is dismissed at the instance of the
counterclaimant.[20] In other words, if the dismissal of the main action results in the dismissal of the counterclaim already filed, it stands to
reason that the filing of a motion to dismiss the complaint is an implied waiver of the compulsory counterclaim because the grant of the
motion ultimately results in the dismissal of the counterclaim.
Thus, the filing of a motion to dismiss and the setting up of a compulsory counterclaim are incompatible remedies. In the event that
a defending party has a ground for dismissal and a compulsory counterclaim at the same time, he must choose only one remedy. If he
decides to file a motion to dismiss, he will lose his compulsory counterclaim. But if he opts to set up his compulsory counterclaim, he may
still plead his ground for dismissal as an affirmative defense in his answer. [21] The latter option is obviously more favorable to the defendant
although such fact was lost on Forbes Park.
The ground for dismissal invoked by Forbes Park in Civil Case No. 16540 was lack of cause of action. There was no need to plead
such ground in a motion to dismiss or in the answer since the same was not deemed waived if it was not pleaded. [22] Nonetheless, Forbes
Park still filed a motion to dismiss and thus exercised bad judgment in its choice of remedies. Thus, it has no one to blame but itself for the
consequent loss of its counterclaim as a result of such choice.
Inasmuch as the action for damages filed by Forbes Park should be as it is hereby dismissed for being barred by the prior judgment
in G.R. No. 79319 (supra) and/or deemed waived by Forbes Park to interpose the same under the rule on compulsory counterclaims, there
is no need to discuss the other issues raised by the herein petitioner.
WHEREFORE, the instant petition is hereby GRANTED and the Decision dated March 20, 1998 of the Court of Appeals in CA-G.R. CV
No. 48194 is hereby REVERSED and SET ASIDE.
Costs against respondent Forbes Park Association, Inc. .
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing and Buena, JJ., concur.
G.R. No. 204528 February 19, 2013
SECRETARY LEILA M. DE LIMA, DIRECTOR NONNATUS R. ROJAS and DEPUTY DIRECTOR REYNALDO 0. ESMERALDA, Petitioners,
vs.
MAGTANGGOL B. GATDULA, Respondent.
RESOLUTION
LEONEN, J.:
Submitted for our resolution is a prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction to enjoin
"the Regional Trial Court, Branch 26, in Manila from implementing its Decision x x x in Civil Case No. 12-127405 granting respondent's
application for the issuance of inspection and production orders x x x." 1 This is raised through a Petition for Review on Certiorari under Rule
45 from the "Decision" rendered by the Regional Trial Court dated 20 March 2012.
From the records, it appears that on 27 February 2012, respondent Magtanggol B. Gatdula filed a Petition for the Issuance of a Writ of
Amparo in the Regional Trial Court of Manila. 2 This case was docketed as In the Matter of the Petition for Issuance of Writ of Amparo of
Atty. Magtanggol B. Gatdula, SP No. 12-127405. It was raffled to the sala of Judge Silvino T. Pampilo, Jr. on the same day.
The Amparo was directed against petitioners Justice Secretary Leila M. De Lima, Director Nonnatus R. Rojas and Deputy Director Reynaldo
O. Esmeralda of the National Bureau of Investigation (DE LIMA, ET AL. for brevity). Gatdula wanted De Lima, et al. "to cease and desist
from framing up Petitioner [Gatdula] for the fake ambush incident by filing bogus charges of Frustrated Murder against Petitioner
[Gatdula] in relation to the alleged ambush incident."3
Instead of deciding on whether to issue a Writ of Amparo, the judge issued summons and ordered De Lima, et al. to file an Answer. 4 He
also set the case for hearing on 1 March 2012. The hearing was held allegedly for determining whether a temporary protection order may
be issued. During that hearing, counsel for De Lima, et al. manifested that a Return, not an Answer, is appropriate for Amparo cases.5
In an Order dated 2 March 2012,6 Judge Pampilo insisted that "[s]ince no writ has been issued, return is not the required pleading but
answer".7 The judge noted that the Rules of Court apply suppletorily in Amparo cases.8 He opined that the Revised Rules of Summary
Procedure applied and thus required an Answer. 9
Judge Pampilo proceeded to conduct a hearing on the main case on 7 March 2012. 10 Even without a Return nor an Answer, he ordered the
parties to file their respective memoranda within five (5) working days after that hearing. Since the period to file an Answer had not yet
lapsed by then, the judge also decided that the memorandum of De Lima, et al. would be filed in lieu of their Answer. 11
On 20 March 2012, the RTC rendered a "Decision" granting the issuance of the Writ of Amparo. The RTC also granted the interim reliefs
prayed for, namely: temporary protection, production and inspection orders. The production and inspection orders were in relation to the
evidence and reports involving an on-going investigation of the attempted assassination of Deputy Director Esmeralda. It is not clear from
the records how these pieces of evidence may be related to the alleged threat to the life, liberty or security of the respondent Gatdula.
In an Order dated 8 October 2012, the RTC denied the Motion for Reconsideration dated 23 March 2012 filed by De Lima, et al.
Petitioners Sec. De Lima, et al. thus came to this Court assailing the RTC "Decision" dated 20 March 2012 through a Petition for Review on
Certiorari (With Very Urgent Application for the Issuance of a Temporary Restraining Order/Writ of Preliminary Injunction) via Rule 45, as
enunciated in Section 19 of the Rule on the Writ of Amparo (A.M. No. 07-9- 12-SC, 25 September 2007), viz:
SEC. 19. Appeal. – Any party may appeal from the final judgment or order to the Supreme Court under Rule 45. The appeal may raise
questions of fact or law or both. x x x (Emphasis supplied).
It is the Court’s view that the "Decision" dated 20 March 2012 granting the writ of Amparo is not the judgment or final order contemplated
under this rule. Hence, a Petition for Review under Rule 45 may not yet be the proper remedy at this time.
The RTC and the Parties must understand the nature of the remedy of Amparo to put its procedures in the proper context.
The remedy of the Writ of Amparo is an equitable and extraordinary remedy to safeguard the right of the people to life, liberty 12 and
security13 as enshrined in the 1987 Constitution. 14 The Rule on the Writ of Amparo was issued as an exercise of the Supreme Court's power
to promulgate rules concerning the protection and enforcement of constitutional rights. 15 It aims to address concerns such as, among
others, extrajudicial killings and enforced disappearances. 16
Due to the delicate and urgent nature of these controversies, the procedure was devised to afford swift but decisive relief. 17 It is initiated
through a petition18 to be filed in a Regional Trial Court, Sandiganbayan, the Court of Appeals, or the Supreme Court. 19 The judge or justice
then makes an "immediate" evaluation20 of the facts as alleged in the petition and the affidavits submitted "with the attendant
circumstances detailed". 21 After evaluation, the judge has the option to issue the Writ of Amparo22 or immediately dismiss the case.
Dismissal is proper if the petition and the supporting affidavits do not show that the petitioner's right to life, liberty or security is under
threat or the acts complained of are not unlawful. On the other hand, the issuance of the writ itself sets in motion presumptive judicial
protection for the petitioner. The court compels the respondents to appear before a court of law to show whether the grounds for more
permanent protection and interim reliefs are necessary.
The respondents are required to file a Return23 after the issuance of the writ through the clerk of court. The Return serves as the
responsive pleading to the petition.24 Unlike an Answer, the Return has other purposes aside from identifying the issues in the case.
Respondents are also required to detail the actions they had taken to determine the fate or whereabouts of the aggrieved party.
If the respondents are public officials or employees, they are also required to state the actions they had taken to: (i) verify the identity of
the aggrieved party; (ii) recover and preserve evidence related to the death or disappearance of the person identified in the petition; (iii)
identify witnesses and obtain statements concerning the death or disappearance; (iv) determine the cause, manner, location, and time of
death or disappearance as well as any pattern or practice that may have brought about the death or disappearance; and (vi) bring the
suspected offenders before a competent court.25 Clearly these matters are important to the judge so that s/he can calibrate the means and
methods that will be required to further the protections, if any, that will be due to the petitioner.
There will be a summary hearing26 only after the Return is filed to determine the merits of the petition and whether interim reliefs are
warranted. If the Return is not filed, the hearing will be done ex parte.27 After the hearing, the court will render the judgment within ten
(10) days from the time the petition is submitted for decision.28
If the allegations are proven with substantial evidence, the court shall grant the privilege of the writ and such reliefs as may be proper and
appropriate.29 The judgment should contain measures which the judge views as essential for the continued protection of the petitioner in
the Amparo case. These measures must be detailed enough so that the judge may be able to verify and monitor the actions taken by the
respondents. It is this judgment that could be subject to appeal to the Supreme Court via Rule 45. 30 After the measures have served their
purpose, the judgment will be satisfied. In Amparo cases, this is when the threats to the petitioner’s life, liberty and security cease to exist
as evaluated by the court that renders the judgment. Parenthetically, the case may also be terminated through consolidation should a
subsequent case be filed – either criminal or civil. 31 Until the full satisfaction of the judgment, the extraordinary remedy of Amparo allows
vigilant judicial monitoring to ensure the protection of constitutional rights.
The "Decision" dated 20 March 2012 assailed by the petitioners could not be the judgment or final order that is appealable under Section
19 of the Rule on the Writ of Amparo. This is clear from the tenor of the dispositive portion of the "Decision", to wit:
The Branch Clerk of Court of Court [sic] is hereby DIRECTED to issue the Writ of Amparo.
Likewise, the Branch Clerk of Court is hereby DIRECTED to effect the service of the Writ of Amparo in an expeditious manner upon all
concerned, and for this purpose may call upon the assistance of any military or civilian agency of the government.
This "Decision" pertained to the issuance of the writ under Section 6 of the Rule on the Writ of Amparo, not the judgment under Section
18. The "Decision" is thus an interlocutory order, as suggested by the fact that temporary protection, production and inspection orders
were given together with the decision. The temporary protection, production and inspection orders are interim reliefs that may be
granted by the court upon filing of the petition but before final judgment is rendered. 32
The confusion of the parties arose due to the procedural irregularities in the RTC.
First, the insistence on filing of an Answer was inappropriate. It is the Return that serves as the responsive pleading for petitions for the
issuance of Writs of Amparo. The requirement to file an Answer is contrary to the intention of the Court to provide a speedy remedy to
those whose right to life, liberty and security are violated or are threatened to be violated. In utter disregard of the Rule on the Writ
of Amparo, Judge Pampilo insisted on issuing summons and requiring an Answer.
Judge Pampilo’s basis for requiring an Answer was mentioned in his Order dated 2 March 2012:
Under Section 25 of the same rule [on the Writ of Amparo], the Rules of Court shall apply suppletorily insofar as it is not inconsistent with
the said rule.
Considering the summary nature of the petition, Section 5 of the Revised Rules of Summary Procedure shall apply.
Section 5. Answer – Within ten (10) days from service of summons, the defendant shall file his Answer to the complaint and serve a copy
thereof on the plaintiff. x x x
WHEREFORE, based on the foregoing, the respondents are required to file their Answer ten (days) from receipt of this Order. 33
The 1991 Revised Rules of Summary Procedure is a special rule that the Court has devised for the following circumstances:
SECTION 1. Scope. – This rule shall govern the summary procedure in the Metropolitan Trial Courts, the Municipal Trial Courts in Cities, the
Municipal Trial Courts, and the Municipal Circuit Trial Courts in the following cases falling within their jurisdiction:
A. Civil Cases:
(1) All cases of forcible entry and unlawful detainer, x x x.
(2) All other cases, except probate proceedings, where the total amount of the plaintiff’s claim does not exceed x x x.
B. Criminal Cases:
(1) Violations of traffic laws, rules and regulations;
(2) Violations of the rental law;
(3) Violations of municipal or city ordinances;
(4) All other criminal cases where the penalty prescribed by law for the offense charged is imprisonment not
exceeding six months, or a fine not exceeding one thousand pesos (P1,000.00), or both, x x x.
xxxx
It is clear from this rule that this type of summary procedure only applies to MTC/MTCC/MCTCs. It is mind-boggling how this rule could
possibly apply to proceedings in an RTC. Aside from that, this Court limited the application of summary procedure to
certain civil and criminal cases. A writ of Amparo is a special proceeding. It is a remedy by which a party seeks to establish a status, a right
or particular fact.34 It is not a civil nor a criminal action, hence, the application of the Revised Rule on Summary Procedure is seriously
misplaced.
The second irregularity was the holding of a hearing on the main case prior to the issuance of the writ and the filing of a Return. Without a
Return, the issues could not have been properly joined.
Worse, is the trial court’s third irregularity: it required a memorandum in lieu of a responsive pleading (Answer) of De Lima, et al.
The Return in Amparo cases allows the respondents to frame the issues subject to a hearing. Hence, it should be done prior to the hearing,
not after. A memorandum, on the other hand, is a synthesis of the claims of the party litigants and is a final pleading usually required
before the case is submitted for decision. One cannot substitute for the other since these submissions have different functions in
facilitating the suit.
More importantly, a memorandum is a prohibited pleading under the Rule on the Writ of Amparo.35
The fourth irregularity was in the "Decision" dated 20 March 2012 itself. In the body of its decision, the RTC stated:
"Accordingly this court GRANTS the privilege of the writ and the interim reliefs prayed for by the petitioner." (Emphasis supplied).
This gives the impression that the decision was the judgment since the phraseology is similar to Section 18 of the Rule on the Writ
of Amparo:
"SEC. 18. Judgment. — The court shall render judgment within ten (10) days from the time the petition is submitted for decision. If the
allegations in the petition are proven by substantial evidence, the court shall grant the privilege of the writ and such reliefs as may be
proper and appropriate; otherwise, the privilege shall be denied." (Emphasis supplied).
The privilege of the Writ of Amparo should be distinguished from the actual order called the Writ of Amparo. The privilege includes
availment of the entire procedure outlined in A.M. No. 07-9-12-SC, the Rule on the Writ of Amparo. After examining the petition and its
attached affidavits, the Return and the evidence presented in the summary hearing, the judgment should detail the required acts from the
respondents that will mitigate, if not totally eradicate, the violation of or the threat to the petitioner's life, liberty or security.
A judgment which simply grants "the privilege of the writ" cannot be executed.1âwphi1 It is tantamount to a failure of the judge to
intervene and grant judicial succor to the petitioner. Petitions filed to avail of the privilege of the Writ of Amparo arise out of very real and
concrete circumstances. Judicial responses cannot be as tragically symbolic or ritualistic as "granting the privilege of the Writ of Amparo."
The procedural irregularities in the RTC affected the mode of appeal that petitioners used in elevating the matter to this Court.
It is the responsibility of counsels for the parties to raise issues using the proper procedure at the right time. Procedural rules are meant to
assist the parties and courts efficiently deal with the substantive issues pertaining to a case. When it is the judge himself who disregards
the rules of procedure, delay and confusion result.
The Petition for Review is not the proper remedy to assail the interlocutory order denominated as "Decision" dated 20 March 2012. A
Petition for Certiorari, on the other hand, is prohibited. 36 Simply dismissing the present petition, however, will cause grave injustice to the
parties involved. It undermines the salutary purposes for which the Rule on the Writ of Amparo were promulgated.
In many instances, the Court adopted a policy of liberally construing its rules in order to promote a just, speedy and inexpensive
disposition of every action and proceeding. 37 The rules can be suspended on the following grounds: (1) matters of life, liberty, honor or
property, (2) the existence of special or compelling circumstances, (3) the merits of the case, (4) a cause not entirely attributable to the
fault or negligence of the party favored by the suspension of the rules, (5) a lack of any showing that the review sought is merely frivolous
and dilatory, and (6) the other party will not be unjustly prejudiced thereby. 38
WHEREFORE, in the interest of justice, as a prophylactic to the irregularities committed by the trial court judge, and by virtue of its powers
under Article VIII, Section 5 (5) of the Constitution, the Court RESOLVES to:
(1) NULLIFY all orders that are subject of this Resolution issued by Judge Silvino T. Pampilo, Jr. after respondent Gatdula filed
the Petition for the Issuance of a Writ of Amparo;
(2) DIRECT Judge Pampilo to determine within forty-eight (48) hours from his receipt of this Resolution whether the issuance of
the Writ of Amparo is proper on the basis of the petition and its attached affidavits.
The Clerk of Court is DIRECTED to cause the personal service of this Resolution on Judge Silvino T. Pampilo, Jr. of Branch 26 of the Regional
Trial Court of Manila for his proper guidance together with a WARNING that further deviation or improvisation from the procedure set in
A.M. No. 07-9-12-SC shall be meted with severe consequences.
G.R. No. 189532 June 11, 2014
VIRGINIA S. DIO and H.S. EQUITIES, LTD., Petitioners,
vs.
SUBIC BAY MARINE EXPLORATORIUM, INC., represented by its Chairman and Chief Executive Officer, TIMOTHY DESMOND, Respondents.
DECISION
PEREZ, J.:
This is a Petition for Review on Certiorari 1 pursuant to Rule 45 of the Revised Rules of Court, assailing the 3 April 2009 Order 2 of the
Regional Trial Court (RTC) of Balanga City, Bataan, on pure question of law. In its assailed Order, the RTC denied the motion filed by
petitioners to set their counterclaims for hearing on the ground that the main case was already dismissed with finality by the Court of
Appeals in CA-G.R. CV No. 87117.
In an Order3 dated 26 August 2009, the RTC refused to reconsider its earlier disposition.
The Facts
Petitioner H.S. Equities, Ltd., (HSE) is a foreign corporation duly organized and existing under the laws of the British Virgin Islands, with
registered address at Akara Building, 24 De Castro Street, Wickhams Cay I, Road Town, Tortola, British Virgin Islands. It entered into an
isolated transaction subject of the instant case. It is represented in this action by petitioner Virginia S. Dio (Dio).
Respondent Subic Bay Marine Exploratorium, Inc. (SBME) is a domestic corporation, duly organized and existing under the Philippine laws
and is represented in this action by its Chief Executive Officer, respondent Timothy Desmond (Desmond).
In 2002, SBME decided to expand its business by operating a beach resort inside the property administered by the Subic Bay Metropolitan
Authority (SBMA). For the business venture to take off, SBME needed to solicit investors who are willing to infuse funds for the
construction and operation of the beach resort project. HSE (formerly known as Westdale Assets Limited) thru its authorized director, Dio,
agreed to invest the amount of US$2,500,000.00 with SBME by purchasing 750,000 common shares with a par value of ₱100 per share
from the increase in its authorized capital stock. The agreement was reduced into writing wherein HSE, in order to protect its interest in
the company, was afforded minority protection rights such as the right to appoint a member of the board of directors and the right to veto
certain board resolutions. After HSE initially paid US$200,000.00 for its subscription, it refused to further lay out money for the expansion
project of the SBME due to the alleged mismanagement in the handling of corporate funds.
Consequently, SBME initiated an intra-corporate dispute before the RTC of Balanga City, Bataan against petitioners HSE and Dio. 4 Before
petitioners could file their answer to the complaint, respondents impleaded its Corporate Secretary, Atty. Winston Ginez, as additional
defendant. In their Amended Complaint 5 docketed as Civil Case No. 7572, SBME essentially alleged that HSE unjustly refused to pay the
balance of its unpaid subscription effectively jeopardizing the company’s expansion project. Apart from their refusal to honor their
obligation under the subscription contract, it was further alleged by SBME that Dio tried to dissuade local investors and financial
institutions from putting in capital to SBME by imputing defamatory acts against Desmond. To protect the interest of the corporation and
its stockholders, SBME sought that petitioners be enjoined from committing acts inimical to the interest of the company.
To refute the claims of respondents, petitioners maintained in their Answer with Compulsory Counterclaim 6 that it would be highly
preposterous for them to dissuade investors and banks from putting in money to SBME considering that HSE and Dio are stakeholders of
the company with substantial investments therein. In turn, petitioners countered that their reputation and good name in the business
community were tarnished as a result of the filing of the instant complaint, and thus prayed that they be indemnified in the amount of
US$2,000,000.00 as moral damages. Constrained to litigate to protect their rights, petitioners asked that they be indemnified in the
amount of₱1,000,000.00 in litigation expenses. Petitioners likewise sought to recover their investment of US$1,500,000.00 since they were
purportedly inveigled by Desmond into putting in money to SBME under the pretext that they will be accorded with minority protection
rights. It was alleged that after the filing of the instant complaint, Desmond, in collusion with other Board of Directors of SBME, managed
to unjustly deny HSE and Dio their rights under the Subscription Agreement. To curb similar socially abhorrent actions, petitioners prayed
that SBME and its Board of Directors, namely, Desmond, John Corcoran, Gaile Laule and Gregorio Magdaraog, be jointly and severally held
liable to pay exemplary damages in the amount of US$2,000,000.00.
After petitioners filed their Answer with Compulsory Counterclaim, the RTC, instead of setting the case for pre-trial, issued an Order 7 dated
15 August 2005 motu proprio dismissing Civil Case No. 7572. The dismissal was grounded on the defective certificate of non-forum
shopping which was signed by Desmond without specific authority from the Board of Directors of SBME.
Armed with a board resolution specifically authorizing Desmond to sign the certificate of non-forum shopping on behalf of SBME,
respondents moved that Civil Case No. 7572 be reinstated and further proceedings thereon be conducted. A copy of such authority was
attached by respondents to their Motion for Reconsideration.
For lack of merit, RTC denied respondents’ motion and affirmed the dismissal in an Order 8 dated 22 September 2005. In refusing to
reinstate respondents’ complaint, the court a quo ruled that the belated submission of a board resolution evidencing Desmond’s authority
to bind the corporation did not cure the initial defect in the complaint and declared that strict compliance with procedural rules is
enjoined for the orderly administration of justice.
Aggrieved by the lower court’s refusal to reinstate their complaint, respondents elevated the matter before the Court of Appeals assailing
the propriety of the 15 August 2005 and 22 September 2005 RTC Orders via Petition for Review which was docketed as CA-G.R. CV No.
87117.
For failure of the respondents to file their appellants’ brief, the appellate court proceeded to dismiss CA-G.R.CV No. 87117 and considered
the case closed and terminated in its Resolution9 dated 2 January 2007.
After respondents failed to seasonably move for the reconsideration of the aforementioned Resolution, the dismissal of CA-G.R. CV No.
87117 became final and executory, as shown in the Entry of Judgment10 dated 3 May 2007.
The procedural incidents before the appellate court having been resolved with finality, petitioners went back to the RTC to file a motion to
set their counterclaims for hearing 11 which was opposed by the respondents on the ground that the filing of the compulsory counterclaims
was not accompanied by payment of the required docket fees precluding the court from acquiring jurisdiction over the case. 12
Acting on the motions filed by the opposing parties, the RTC, in an Order 13 dated 3 April 2009 granted the motion of the respondents,
thereby directing the dismissal of petitioners’ counterclaims but not on the ground of non-payment of docket fees. In disallowing
petitioners’ counterclaims to proceed independently of respondents’ complaint, the lower court pointed out that in view of the dismissal
of the main case, which has already been affirmed with finality by the appellate court, it has already lost its jurisdiction to act on
petitioners’ counterclaim, the compulsory counterclaim being merely ancillary to the principal controversy.
In an Order14 dated 26 August 2009, the RTC refused to reconsider its earlier disposition. Petitioners filed this instant Petition for Review on
Certiorari15 on pure question of law seeking the reversal of the 3 April 2009 and 26 August 2009 RTC Orders on the ground that:
THE TRIAL COURT COMMITTED AN ERROR OF LAW WHEN IT REFUSED TO SET [PETITIONERS’] COUNTERCLAIMS FOR HEARING ON THE
GROUND THATTHE CASE WAS DEEMED "CLOSED AND TERMINATED" BYTHE COURT OF APPEALS AFTER THE LATTER DISMISSED
RESPONDENTS’ APPEAL BECAUSE OF THEIR FAILURE TOFILE THEIR APPELLANTS’ BRIEF. 16
The Court’s Ruling
Petitioners argue that despite the dismissal of the main case, the counterclaim may still remain for independent adjudication under
Section 6, Rule 16 of the Revised Rules of Court. 17 Petitioners pointed out that while the dismissal of respondents’ complaint is a
confirmation of Desmonds’ lack of legal personality to file the case, this does not, however, mean that they also do not have the
qualification to pursue their counterclaim. To fault petitioners for the fatal infirmity in the respondents’ complaint would not only work
injustice to the former but would result to an absurd situation where the fate of their counterclaims is placed entirely in the hands of the
respondents.
For their part, respondents posit that, in directly assailing the adverse RTC Orders before the Court, petitioners erroneously availed
themselves of an erroneous remedy arguing that this petition should have been initially filed with the appellate court. By seeking relief
directly from the Court, petitioners ignored the judicial hierarchy warranting the peremptory dismissal of their petition. Unless special and
important reasons were clearly and specifically set out in the petition, and in this case it was not, a direct invocation of this Court’s original
jurisdiction may not be allowed.
The established policy of strict observance of the judicial hierarchy of courts, as a rule, requires that recourse must first be made to the
lower ranked court exercising concurrent jurisdiction with a higher court. A regard for judicial hierarchy clearly indicates that petitions for
the issuance of extraordinary writs against first level courts should be filed in the RTC and those against the latter should be filed in the
Court of Appeals. The rule is not iron-clad, however, as it admits of certain exceptions. 18
Thus, a strict application of the rule is unnecessary when cases brought before the appellate courts do not involve factual but purely legal
questions.19 In fact, Rule 41, Section 2(c) 20 of the Revised Rules of Court provides that a decision or order of the RTC may as it was done in
the instant case, be appealed to the Supreme Court by petition for review on certiorari under Rule 45, provided that such petition raises
only questions of law.
A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or
when the issue does not call for the examination of the probative value of the evidence presented, the truth or falsehood of facts being
admitted. A question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the query invites
calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding
circumstances, as well as their relation to each other and to the whole, and the probability of the whole situation. 21 Thus, the test of
whether a question is one of law or of fact is not the appellation given to such question by the party raising the same; rather, it is whether
the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law;
otherwise it is a question of fact.22
Petitioners here raise the solitary issue of the propriety of the dismissal of their counterclaim on the basis of the reasoning of the lower
court that the counterclaim derives its jurisdictional support from the complaint which has already been dismissed. Petitioners maintain
that the court a quo erred in arriving at the legal conclusion that the counterclaim can no longer stand for independent adjudication after
the main case was already dismissed with finality. In order to resolve this issue, the Court need only to look into the pleadings,
depositions, admissions, and affidavits submitted by the respective parties without going into the truth or falsity of such documents.
Consequently, the petitioners’ remedy for assailing the correctness of the dismissal of their counterclaims, involving as it does a pure
question of law, indeed lies with this Court. Now to the issue of the propriety of the dismissal of the counterclaim.
The dismissal of the complaint resulted from respondents’ failure to append to the complaint a copy of the board resolution authorizing
Desmond to sign the certificate of non-forum shopping on behalf of SBME. The subsequent dismissal of the counterclaim, in turn,
erroneously proceeded from the ratio that since the main action has already been dismissed with finality by the appellate court, the lower
court has lost its jurisdiction to grant any relief under the counterclaim.
In the significant case of Pinga v. Heirs of German Santiago, 23 this Court speaking through Justice Dante Tinga, resolved the nagging
question as to whether or not the dismissal of the complaint carries with it the dismissal of the counterclaim. Putting to rest the remaining
confusion occasioned by Metals Engineering Resources Corp. v. Court of Appeals 24 and BA Finance Corporation v. Co,25 the Court
articulated that, in light of the effectivity of the 1997 Rules of Civil Procedure, the correct and prevailing doctrine is as follows:
To be certain, when the Court promulgated the 1997 Rules of Civil Procedure, including the amended Rule17, those previous jural
doctrines that were inconsistent with the new rules incorporated in the 1997 Rules of Civil Procedure were implicitly abandoned insofar as
incidents arising after the effectivity of the new procedural rules on 1 July 1997. BA Finance, or even the doctrine that a counterclaim may
be necessarily dismissed along with the complaint, clearly conflicts with the 1997 Rules of Civil Procedure. The abandonment of BA
Finance as doctrine extends as far back as 1997, when the Court adopted the new Rules of Civil Procedure. If, since then, such
abandonment has not been affirmed in jurisprudence, it is only because no proper case has arisen that would warrant express
confirmation of the new rule. That opportunity is here and now, and we thus rule that the dismissal of a complaint due to fault of the
plaintiff is without prejudice to the right of the defendant to prosecute any pending counterclaims of whatever nature in the same or
separate action. We confirm that BA Finance and all previous rulings of the Court that are inconsistent with this present holding are now
abandoned.
xxxx
Thus, the present rule embodied in Sections 2 and 3 of Rule 17 ordains a more equitable disposition of the counterclaims by ensuring that
any judgment thereon is based on the merit of the counterclaim itself and not on the survival of the main complaint. Certainly, if the
counterclaim is palpably without merit or suffers jurisdictional flaws which stand independent of the complaint, the trial court is not
precluded from dismissing it under the amended rules, provided that the judgment or order dismissing the counterclaim is premised on
those defects. At the same time, if the counterclaim is justified, the amended rules now unequivocally protect such counterclaim from
peremptory dismissal by reason of the dismissal of the complaint. 26 Reviewing the vacated position, in Metals Engineering Resources
Corp., severance of causes of action was not be permitted in order to prevent circuity of suits and to avert the possibility of inconsistent
rulings based on the same set of facts, viz:
For all intents and purposes, such proposition runs counter to the nature of a compulsory counterclaim in that it cannot remain pending
for independent adjudication by the court. This is because a compulsory counterclaim is auxiliary to the proceeding in the original suit and
derives its jurisdictional support therefrom, inasmuch as it arises out of or is necessarily connected with the transaction or occurrence that
is the subject matter of the complaint. It follows that if the court does not have jurisdiction to entertain the main action of the case and
dismisses the same, then the compulsory counterclaim, being ancillary to the principal controversy, must likewise be dismissed since no
jurisdiction remained for any grant of relief under the counterclaim.
The aforementioned doctrine is in consonance with the primary objective of a counterclaim which is to avoid and prevent circuity of action
by allowing the entire controversy between the parties to be litigated and finally determined in one action, wherever this can be done with
entire justice to all parties before the court. The philosophy of the rule is to discourage multiplicity of suits.1âwphi1 It will be observed that
the order of the trial court allowing herein private respondent to proceed with the presentation of his evidence in support of the latter's
counterclaim is repugnant to the very purpose and intent of the rule on counterclaims. 27
In BA Finance Corporation, we likewise refused to entertain the compulsory counterclaim after the trial court lost its jurisdiction in the
main case, thus:
The rule is that a compulsory counterclaim cannot "remain pending for independent adjudication by the court." This is because a
compulsory counterclaim is auxiliary to the proceeding in the original suit and merely derives its jurisdictional support therefrom.
Thus, it necessarily follows that if the trial court no longer possesses jurisdiction to entertain the main action of the case, as when it
dismisses the same, then the compulsory counterclaim being ancillary to the principal controversy, must likewise be similarly dismissed
since no jurisdiction remains for the grant of any relief under the counterclaim. 28
As the rule now stands, the nature of the counterclaim notwithstanding, the dismissal of the complaint does not ipso jure result in the
dismissal of the counterclaim, and the latter may remain for independent adjudication of the court, provided that such counterclaim,
states a sufficient cause of action and does not labor under any infirmity that may warrant its outright dismissal. Stated differently, the
jurisdiction of the court over the counterclaim that appears to be valid on its face, including the grant of any relief thereunder, is not
abated by the dismissal of the main action. The court’s authority to proceed with the disposition of the counterclaim independent of the
main action is premised on the fact that the counterclaim, on its own, raises a novel question which may be aptly adjudicated by the court
based on its own merits and evidentiary support.
In Perkin Elmer Singapore Pte Ltd. v. Dakila Trading Corporartion, 29 a case on all fours with the present one, we expounded our ruling in
Pinga and pointed out that the dismissal of the counterclaim due to the fault of the plaintiff is without prejudice to the right of the
defendant to prosecute any pending counterclaims of whatever nature in the same or separate action, thus: Based on the aforequoted
ruling of the Court, if the dismissal of the complaint somehow eliminates the cause of the counterclaim, then the counterclaim cannot
survive. Conversely, if the counterclaim itself states sufficient cause of action then it should stand independently of and survive the
dismissal of the complaint. Now, having been directly confronted with the problem of whether the compulsory counterclaim by reason of
the unfounded suit may prosper even if the main complaint had been dismissed, we rule in the affirmative.
It bears to emphasize that petitioner's counterclaim against respondent is for damages and attorney's fees arising from the unfounded
suit. While respondent's Complaint against petitioner is already dismissed, petitioner may have very well already incurred damages and
litigation expenses such as attorney's fees since it was forced to engage legal representation in the Philippines to protect its rights and to
assert lack of jurisdiction of the courts over its person by virtue of the improper service of summons upon it. Hence, the cause of action of
petitioner's counterclaim is not eliminated by the mere dismissal of respondent's complaint. 30 (Emphasis theirs).
Once more, we allow the counterclaim of the petitioners to proceed independently of the complaint of the respondents.
WHEREFORE, premises considered, the petition is GRANTED. The assailed R TC Orders dated 3 April 2009 and 26 August 2009 are hereby
REVERSED and SET ASIDE. The case is REMANDED to the Regional Trial Court of Balanga City, Bataan for further proceedings, on the matter
of petitioners Virginia S. Dio and H.S. Equities, Ltd. 's counterclaims. No pronouncement as to costs.
SO ORDERED.
G.R. No. 207376 August 6, 2014
AIDA PADILLA, Petitioner,
vs.
GLOBE ASIATIQUE REALTY HOLDINGS CORPORATION, FILMAL REALTY CORPORATION, DELFIN S. LEE and DEXTER L. LEE, Respondents.
DECISION
VILLARAMA, JR., J.:
Assailed in this petition for review under Rule 45 are the Orders 1 dated November 12, 2012 denying the motion to set the counterclaim for
pre-trial and May 8, 2013 denying petitioner's motion for reconsideration, issued by the Regional Trial Court (RTC) of Pasig City, Branch 155
in Civil Case No. 73132.
Factual Antecedents
From the years 2005 to 2008, Philippine National Bank (PNB) entered into several Contracts to Sell (CTS) Facility Agreements 2 with
respondents Globe Asiatique Realty Holdings Corporation (Globe Asiatique) and Filmal Realty Corporation (Filmal) represented by Delfin S.
Lee and Dexter L. Lee, President and Vice-President, respectively, of the two corporations. PNB thereby agreed to make available toGlobe
Asiatique and Filmal CTS Facility in the amount not exceeding Two Hundred Million Pesos (₱200,000,000.00) to finance the purchase of
certain Accounts Receivables or the in-house installment receivables of respondents arising from the sale of subdivision houses in their
real estate/housing projects as evidenced by contracts to sell. These availments werelater increased to a total amount of One Billion Two
Hundred Million Pesos (₱1,200,000,000.00).3
Pursuant to and as a condition for the CTS Facility availments, respondents executed in favor of PNB several Deeds of Assignment 4 covering
accounts receivables in the aggregate amount of One Billion One Hundred Ninety-Five Million Nine Hundred Twenty-Six Thousand Three
Hundred Ninety Pesos and Seventy-two centavos (₱1,195,926,390.72). In the said instruments, respondents acknowledged the total
amount of One Billion Three Hundred Ninety FiveMillion Six Hundred Sixty-Five Thousand Five Hundred Sixty-FourPesos and Sixty-nine
centavos (₱1,395,665,564.69) released to themby PNB in consideration of the aforesaid accounts receivables. 5
Sometime in the first quarter of 2010, respondents defaulted in the payment of their outstanding balance and delivery to PNB of transfer
certificates of title corresponding to the assigned accounts receivables, for which PNB declared them in default under the CTS Facility
Agreements. Subsequently, respondents made partial payments and made proposals for paying in full its obligation to PNB as shown in the
exchange of correspondence between respondents and PNB.
In a letter dated August 5, 2010,6 PNB made a formal and final demand upon respondents to pay/settle the total amount of
₱974,377,159.10 representing their outstanding obligation.In the course of credit monitoring and verification, PNB claimed it discovered
231 out of 240 Contracts to Sell to have either inexistent addresses ofbuyers or the names of the buyers are non-existent or both.
Thereafter, PNB instituted Civil Case No. R-PSY-10-04228-CV (Philippine National Bank v. Globe Asiatique Realty Holdings Corporation,
Filmal Realty Corporation, Delfin S. Lee and Dexter L. Lee) for recovery of sum of money and damages with prayerfor writ of preliminary
attachment before the RTC of Pasay City.
In their complaint, PNB alleged in detail the fraudulent acts and misrepresentations committed by respondents in obtaining PNB’s
conformity to the CTS Facility Agreements and the release of various sums to respondents in the total amountof ₱974,377,159.10. PNB
accused respondents of falsely representing that they have valid and subsisting contracts to sell, which evidently showed they had no
intention to pay their loan obligations. The Verification and Certification of Non-Forum Shopping attached to the complaint was signed
byPNB’s Senior Vice-president of the Remedial Management Group, Aida Padilla, who likewise executed an "Affidavit in Support of the
Application for the Issuance of the Writ of Preliminary Attachment."
Proceedings in the Pasay
City RTC (Civil Case No.
R-PSY-10-04228-CV)
On August 25, 2010, the Pasay City RTC issued an Order 7 granting PNB’s application for issuance of preliminary attachment after finding
that defendants Globe Asiatique and Filmal "through the active participation or connivance/conspiracy of defendants Delfin and Dexter
Lee from the revealing evidence presented by plaintiff are guilty of fraud in contracting their outstanding loan applications to plaintiff
Philippine National Bank (PNB)."8 The writ of preliminary attachment was accordingly issued on August 27, 2010 after PNB complied
withthe posting of attachment bond as ordered by the court.9
Defendants Delfin Lee and DexterLee filed their Answer with Counterclaim with motion to dismiss,arguing that PNB has no cause of action
against them as there is nothing in the CTS Facility Agreements that suggest they are personally liable or serve as guarantors for Globe
Asiatique and Filmal, and that they were just sued as signatories of the CTS Facility Agreements. They likewise filed a motion to discharge
preliminary attachment.10
Defendants Globe Asiatique and Filmalalso filed their Answer with Counterclaim denying PNB’s allegationsof fraud and misrepresentation
particularly after PNB had accepted payments from the corporations. In their motion to discharge preliminary attachment, Globe Asiatique
and Filmal asserted that the allegations of fraud in the complaint are without basis and no proof was presented by plaintiff on the
existence of preconceived fraud and lack of intention to pay their obligations, citing their timely payments made to PNB. They further
assailed the affidavit executed by Aida Padilla who they claimed has no personal knowledge of the subject transactions and there being no
allegation of threat or possibility that defendant corporations will dispose oftheir properties in fraud of their creditors. 11
In its Order12 dated April 29, 2011, the Pasay City RTC denied defendants’ motion to dismiss, motions to discharge preliminary attachment
and to expunge or suspend proceedings, as well as PNB’s motion to expunge.
In succession, the parties in Civil Case No. R-PSY-10-04228-CV filed the following motions:
1) Defendants’ Motion for Reconsideration of the Order dated April 29, 2011 filed on May 27, 2011;
2) Plaintiff’s Motion to Set Case for Pre-trial Conference filed on June 8, 2011;
3) Plaintiff’s Motion for Summary Judgment filed on June 28, 2011;
4) Defendants’ Motion for Leave to Admit Attached Amended Answer with Compulsory Counterclaim filed on July 12, 2011;
5) Defendants’ Omnibus Motion (a) to discharge the writ of attachment on the ground of newly discovered evidence; (b) set
preliminary hearing on affirmative defenses pleaded in the amended answer; (c) issue preliminary attachment against plaintiff
on account of fraud in incurring the obligation as alleged in the amended answer; and (d) render partial summary judgment on
the compulsory counterclaim, filed on July 26, 2011;
6) Defendants’ Motion for Reconsideration of the Order dated July 29, 2011, with Motion to Continue with the Proceedings
Involving Defendants’ Omnibus Motion, filed on August 31, 2011; 7) Defendants’ Motion to Set for Hearing their earlier motion
to discharge the writ of attachment filed on January 24, 2012; and
8) Plaintiff’s Motion to Expunge defendants’ Reply (on defendants’ motion to set hearing) filed on April 30, 2012.
Meanwhile, and before the Pasay City RTC could act upon the foregoing motions, defendants Globe Asiatique, Filmal, Delfin S. Lee and
Dexter L. Lee filed on August 10, 2011 a complaint 13 for Damages in the RTC of Pasig City, Branch 155 docketed as Civil Case No. 73132.
On May 18, 2012, the Pasay City RTC issued an Order14 resolving the pending motions, as follows:
WHEREFORE, the motion for reconsideration of the Order dated 27 May 2011 is denied insofar as the prayer to reconsider denial of the
motion to dismiss. However, the prayer to expunge the Manifestation filed on 26 November 2010 is granted thus, the Manifestation is
expunged.
The motion for leave and to admit amended answer is denied. The motion for reconsideration of the Order dated 29 July 2011 is likewise
denied. The other prayers in the omnibus motion to set preliminary hearing of affirmative defenses in the amended answer, issuance of
preliminary attachment based thereon and for partial summary judgment on the compulsory counterclaims in the amended answer are
denied. Plaintiff’s motion to expunge defendants’ reply is likewise denied.
Hearing on plaintiff’s motion for summary judgment is set on 19 June 2012 at 8:30 a.m., while hearing on defendants’ motion to discharge
the writ of preliminary attachmentis set on 26 June 2012 at 8:30 a.m.
Action on plaintiff’s motion to set the case for pre-trial is deferred until after resolution of the motion for summary judgment.
SO ORDERED.15
Pasig City RTC Case
(Civil Case No. 73132)
In their Complaint against Judge Pedro De Leon Gutierrez and Aida Padilla (both sued in their personal capacity), respondents claimed that
Globe Asiatique and Filmal are well-known and successful real estate developers whose projects were "being continuously supported by
various banks and other financial institutions prior to the malicious and devastating unfounded civil action" filed by AidaPadilla (petitioner)
which wrought havoc to their businesses and lives. As to the CTS Facility Agreements with PNB, respondents alleged that these were
already novated by the parties who agreed upon a term loan starting May 31, 2010 and to expire on April 30, 2012. But despite her
knowledge of such novation and that the obligation was not yet due and demandable, petitioner with malice and evident bad faith still
executed a "perjured" Affidavit in support of the application for writ of preliminary attachment before the Pasay City RTC. Respondents
likewise sought to hold Judge Gutierrez personally liable for issuing the writ of preliminary attachment in favor of PNB notwithstanding
that the obligation subject of PNB’s complaint was sufficiently secured by the value of realproperties sold to it by virtue of the CTS Facility
Agreements and deeds ofassignment of accounts receivables.
They further contended that Judge Gutierrez blindly approved the attachment bond offered by PNB’s sister company, PNB General Insurers
Company, Inc. despite the fact that from its submitted documents, said insurer’s authorized capital stock isonly ₱400 million while its paid-
up capital is only ₱312.6 million, which is way below the ₱974,377,159.10 attachment bond it issued.
Respondents thus prayed for a judgment ordering petitioner and Judge Gutierrez to pay moral damages, exemplary damages, litigation
expenses, attorney’s fees and cost of suit.
Judge Gutierrez moved to dismiss 16 the complaint against him on the following grounds: (1) respondents haveno cause of action against
him; and (2) the Pasig City court has no jurisdiction over the case and his person, movant being of co-equal and concurrent jurisdiction.
Petitioner filed her Answer With Compulsory Counterclaims, 17 praying for the dismissal of respondents’ complaint on the following
grounds: (1) submission of a false certification of non-forum shopping by respondents and their blatant commission of willful, deliberate
and contumacious forum shopping (respondents failed to disclose a criminal complaint entitled "Tbram Cuyugan v. Aida Padilla and
Members of the Board of Directors of PNB", docketed as I.S. No. XV-13-INV-11-H-01208 pending before the office of the CityProsecutor of
Pasay City); (2) litis pendentia; (3) respondents’ failure to attach the alleged actionable document, i.e.the supposed "new term loan",
inviolation of Section 7, Rule 8 of the Rules of Court; (4) failure to state a cause of action against petitioner; and (5) petitioner cannot be
held personally liable for her official acts done for and in behalf of PNB.
On January 5, 2012, petitioner filed a motion for preliminary hearing on affirmative defenses, contending that respondents are parroting
the very same arguments raised and relying on the same evidence they presented before the Pasay City RTC to establish the alleged
novation and purported insufficiency of the attachment bond,which issues are still pending in the said court. It was thus stressed that
respondents are evidently guilty of forum shopping.18
Respondents filed their Comment/Opposition,19 arguing that there is nothing in their complaint that would slightly suggest they are asking
the Pasig City RTC to issue any injunction or otherwise issue an order setting aside the writ of preliminary attachmentissued by the Pasay
City RTC, and neither did they ask for a ruling on whether said writ is illegal or whether Judge Gutierrez committed a grave abuse of
discretion.They asserted that what they seek from the Pasig City RTC is to allow them to recover damages from Judge De Leon for his
tortious action in approving PNB’s attachment bond. They also insisted that forum shopping and litis pendentiaare absent in this case,
contrary to petitioner’s claims. Respondents likewise opposed 20 the motion to dismiss filed by Judge Gutierrez, citing this Court’s ruling in J.
King & Sons Company, Inc. v. JudgeAgapito L. Hontanosas, Jr. 21 in support of their position that the separate complaint before another
forum against the judge for his actionable wrong in a pending case before him can proceed independently without necessarily interfering
with the court’s jurisdiction, as what happened in the said case where the judge was merely penalized for gross misconduct and gross
ignorance of the law without actually invalidating the judge’s order approving the counter-bond without reviewing the documents
presented.
In her Reply, 22 petitioner reiterated her previous arguments and additionally contended that in any event, there is no basis for
respondents’ claim for damages arising from the issuance of the writ of preliminary attachment before the Pasay City RTC considering that
PNBGEN Bond No. SU-JC14-HO-10-0000001-00 is valid and sufficient to secure and answer for whatever damages respondents may have
suffered by reason of such issuance should it be finally decided that PNB was not entitled to the said bond.
On April 2, 2012, the RTC of Pasig City issued an Order 23 dismissing Civil Case No. 73132 for lack of jurisdiction.
On May 7, 2012, petitioner filed a Motion to Set Counterclaims for Pre-Trial Conference. 24
On October 22, 2012, the Pasig CityRTC denied respondents’ motion for reconsideration of the April 2, 2012 Order dismissing their
complaint.25 Respondents filed a Notice of Appeal26 under Section 1(a), Rule 41 of the Rules of Court.
On November 12, 2012, the Pasig City RTC issued the first questioned Order, which reads:
xxxx
Records show that this Court, through then Acting Presiding Judge Amorfina Cerrado-Cezar, issued an Order dated April 2, 2012, dismissing
the case on the ground that issues involved in this case already impinge upon the validity of the Order dated August 25, 2010 and Writ of
Attachment dated August 27, 2010 issued by the Regional Trial Court, Branch 119, Pasay City, a court of concurrent and coordinate
jurisdiction, in Civil Case No. R-PSY-10-04228 entitled "Philippine National Bank vs. Globe Asiatique Realty Holdings Corp. et al." The ruling
in said Order dated April 2, 2012, was affirmed by this Court per its Order dated October 22, 2012, whereby it reiterated that acting on the
plaintiffs’ Complaint is a brazen violation of the principle of judicial stability, which essentially states that the judgment or order of a court
of competent jurisdiction may not be interfered with by any court of concurrent jurisdiction for the simple reason that the power to open,
modify or vacate the said order is not only possessed but is restricted to the court in which the judgment or order is rendered or issued.
(Cojuangco vs. Villegas, 184 SCRA 374)
The foregoing principles are equally applicable to the counterclaims of Aida Padilla. Indeed, to hear the counterclaims of defendant Aida
Padilla will open the door, so to speak, for the plaintiffs to interpose as ostensibledefenses its claims regarding the alleged illegality of the
aforesaid orders and writ of attachment issued by the RTC of Pasay City. In effect this Court will be forced to dwell upon issues involving
the pending civil case in the RTC Branch 199, Pasay City, thereby interfering, albeit indirectly, with said issues.This is precisely the very evil
which the Court sought to avoid when it dismissed the plaintiffs’ complaint. Therefore, upholding once more the principle of judicial
stability, this Court is impelled to refuse to hear the counterclaims of defendant Padilla.
WHEREFORE, premises considered, the instant Motion filed by defendant Aida Padilla is DENIED without prejudice to the re-filing of
defendant Aida Padilla’s causes of action against herein plaintiffs after final resolution of Civil Case No. R-PSY-10-04228 entitled "Philippine
National Bank vs. Globe Asiatique Realty Holdings Corp, et al."
SO ORDERED. (Emphasis supplied.)
Petitioner’s motion for reconsideration was likewise denied under the second assailed Order 27 dated May 8, 2013, as follows:
xxxx
Defendant Padilla argues that this Court has jurisdictional competence and authority to resolve her counterclaims notwithstanding the
dismissal of the Complaint dated August 10, 2011 for violation of the principle of judicial stability. The resolution of her compulsory
counterclaims will not require this Court to look into or pass upon the validity of the acts of the Regional Trial Court of Pasay City, Branch
119 in issuing the Writ of Attachment dated August 27, 2010. Defendant Padilla’s counterclaims arose directly from the malicious filing by
the plaintiffs of the Complaint and are compulsory counterclaims which must be raised and resolved in the same action as the Complaint.
The Court remains unpersuaded of the propriety of proceeding to hear defendant Padilla’s counterclaims.
As movant herself stated, the grant of her counterclaim calls for the determination of the issue of whether or not herein plaintiffs had
maliciously filed the above-entitled Complaint against defendants. Necessarily, the Court in threshing out such issue would be constrained
to rule on whether the plaintiffs filed their complaint with a sinister design knowing fully wellthat their cause of action was baseless. Thus,
the Court would have to pass upon the veracity or genuineness of plaintiffs’ claims thatthey were unjustly injured by the orders and
processes issued by RTC Branch 119, Pasay City, in Civil Case No. R-PSY-10-04228entitled "Philippine National Bank vs. Globe Asiatique
Realty Holdings Corp. et al." Hence, whatever ruling this Court may arrive at on said issues would inevitably impinge upon matters already
pending before the RTC Branch 119, Pasay City.
Once more, under the principle of juridical stability, the Court is constrained to refuse to hear defendant Padilla’s counterclaims. Verily, this
Court cannot allow itself to interfere – either directly, as desired by plaintiff, or indirectly, as defendant Padilla would have it – with the acts
of a co-equal court.
WHEREFORE, premises considered, the instant Motion for Reconsideration filed by defendant Aida Padilla is hereby DENIED without
prejudice to the re-filing of defendant Aida Padilla’s causes of action against herein plaintiffs after resolution of Civil Case No. R-PSY-10-
04228 entitled "Philippine National Bank vs. Globe Asiatique Realty Holdings Corp. et al."
SO ORDERED. (Emphasis supplied.)
The Petition
Petitioner came directly to this Court raising the primordial legal issue of whether or not a court can take cognizance of a compulsory
counterclaim despite the fact that the corresponding complaint was dismissed for lack of jurisdiction.
The present petition was de-consolidated from seven other petitions involving respondents and their transactions with Home
Development Mutual Fund, as well as the pending criminal complaints arising therefrom. 28
The Court’s Ruling
Before we resolve the legal question presented, we first address the issue of propriety of petitioner’s resort to Rule 45.
Respondents are incorrect in arguing that petitioner adopted the wrong mode of appeal, stating that the remedy from the dismissal of her
counterclaims without prejudice is a petition for certiorari under Rule 65 and not an appeal under Rule 45.
There is no dispute with respect to the fact that when an appeal raises only pure questions of law, this Court has jurisdiction to entertain
the same.29 Section 1, Rule 45 of the 1997 Rules of Civil Procedure, as amended, provides:
SECTION 1. Filing of petition with Supreme Court. – A party desiring to appeal by certiorari from a judgment or final order or resolution of
the Court of Appeals,the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme
Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.
In Republic v. Sunvar Realty Development Corporation,30 this Court held:
Respondent Sunvar argued that petitioners’ resort to a Rule 45 Petition for Review on Certioraribefore this Court is an improper mode of
review of the assailed RTC Decision. Allegedly, petitioners should have availed themselves of a Rule 65 Petition instead, since the RTC
Decision was an order of dismissal of the Complaint, from which no appeal can be taken except by a certiorari petition.
The Court is unconvinced of the arguments of respondent Sunvar and holds that the resortby petitioners to the present Rule 45 Petition is
perfectly within the bounds of our procedural rules.
As respondent Sunvar explained, noappeal may be taken from an order of the RTC dismissing an action without prejudice, but the
aggrieved party may file a certiorari petition under Rule 65. Nevertheless, the Rules do not prohibit any of the parties fromfiling a Rule 45
Petition with this Court, in case only questions of law are raised or involved. This latter situation was one that petitioners found themselves
in when they filed the instant Petition to raise only questions of law. In Republic v. Malabanan, the Court clarified the three modes of
appeal from decisions of the RTC, to wit: (1) by ordinary appeal or appeal by writ of error under Rule 41, whereby judgment was rendered
in a civil or criminal action by the RTC in the exercise of its original jurisdiction; (2) by a petition for review under Rule 42, whereby
judgment was rendered by the RTC in the exercise of its appellate jurisdiction; and (3) by a petition for review on certioraribefore the
Supreme Court under Rule 45. "The first mode of appeal istaken to the [Court of Appeals] on questions of fact or mixed questions of fact
and law. The second mode of appeal is brought to the CA on questions of fact, of law, or mixed questions of fact and law. The third mode
of appeal is elevated to the Supreme Court only on questions of law." (Emphasis supplied.)
There is a question of law when the issue does not call for an examination of the probative value of the evidence presented or of the truth
or falsehood of the facts being admitted, and the doubt concerns the correct application of law and jurisprudence on the matter. The
resolution of the issue must rest solely on what the law provides on the given set of circumstances.
In the instant case, petitioners raise only questions of law with respect to the jurisdiction of the RTC to entertain a certioraripetition filed
against the interlocutory order of the MeTC in an unlawful detainer suit. At issue in the present case is the correct application of the Rules
on Summary Procedure; or, more specifically, whether the RTC violated the Rules when it took cognizance and granted the
certioraripetition against the denial by the MeTC of the Motion to Dismiss filed by respondent Sunvar. This is clearly a question of law that
involves the proper interpretation of the Rules on Summary Procedure. Therefore, the instant Rule 45 Petition has been properly lodged
with this Court.
In this case, petitioner raises the lone issue of whether the Pasig City RTC was correct in refusing to hear her counterclaims after the
dismissal of respondents’ complaint for lack of jurisdiction. Said issue involves the proper interpretation of the 1997 Rules of Civil
Procedure, as amended, specifically on whether the dismissal of the complaint automatically results in the dismissal of counterclaims
pleaded by the defendant. Since this is clearly a question of law, petitioner appropriately filed in thisCourt a Rule 45 petition.
On the lone issue raised in the petition, we rule for the petitioner.
A counterclaim is any claim which a defending party may have against an opposing party. 31 It is in the nature of a cross-complaint; a distinct
and independent cause of action which, though alleged in the answer, is not part of the answer. 32
Counterclaims may be either compulsory or permissive. Section 7, Rule 6 of the 1997 Rules of Civil Procedure provides:
SEC. 7. Compulsory counterclaim.– A compulsory counterclaim is one which, being cognizable by the regular courts of justice, arises out of
or is connected with the transaction or occurrence constituting the subject matter of the opposing party’s claim and does not require for
its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. Such a counterclaim must be within the
jurisdiction of the court both as to the amount and the nature thereof, except that in an original action before the Regional Trial Court, the
counterclaim may be considered compulsory regardless of the amount.
In this case, petitioner’s counterclaim for damages raised in her answer before the Pasig City RTC iscompulsory, alleging suffering and
injury caused to her as a consequence of the unwarranted filing of the baseless complaint filed byrespondents. Said court, however,
dismissed her counterclaim upon the same ground of lackof jurisdiction as its resolution supposedly would entail passing upon the validity
of orders and processes still pending before the Pasay City RTC. In Metals Engineering Resources Corp. v. Court of Appeals, 33 we reversed
the trial court’s order allowing private respondent to proceed with the presentation of his evidence in support of his counterclaim after the
complaint was dismissed for not paying the correct docket fee and hence the trial court did not acquire jurisdiction over the case. We held
that if the court does not have jurisdiction to entertain the main action of the case and dismisses the same, then the
compulsorycounterclaim, being ancillary to the principal controversy, must likewise be dismissed since no jurisdiction remained for any
grant of relief under the counterclaim. 34
Under the 1997 Rules of Civil Procedure, it is now explicitly provided that the dismissal of the complaint due tofailure of the plaintiff to
prosecute his case is "without prejudice to the rightof the defendant to prosecute his counterclaim in the same or in a separate
action."35 The effect of this amendment on previous rulings on whether the dismissal of a complaint carries with it the dismissal of the
counterclaims as well, was discussed in the case of Pinga v. The Heirs of German Santiago, 36 thus:
Similarly, Justice Feria notes that "the present rule reaffirms the right of the defendant to move for the dismissal of the complaint and to
prosecute his counterclaim, as stated in the separate opinion [of Justice Regalado in BA Finance.] Retired Court of Appeals Justice Herrera
pronounces that the amendment to Section 3, Rule 17 settles that "nagging question" whether the dismissal of the complaint carries with
it the dismissal of the counterclaim, and opines that by reason of the amendments, the rulings in Metals Engineering, International
Container, and BA Finance"may be deemed abandoned." On the effect of amendment to Section 3, Rule 17, the commentators are in
general agreement, although there is less unanimity of views insofar as Section 2, Rule 17 is concerned.
To be certain, when the Court promulgated the 1997 Rules of Civil Procedure, including the amended Rule 17, those previous jural
doctrines that were inconsistent with the new rules incorporated in the 1997 Rules of Civil Procedure were implicitly abandoned insofar as
incidents arising after the effectivity of the new procedural rules on 1 July 1997. BA Finance, or even the doctrine that a counterclaim may
be necessarily dismissed along with the complaint, clearly conflicts with the 1997 Rules of Civil Procedure. The abandonment of BA
Financeas doctrine extends as far back as 1997, when the Court adopted the new Rules of Civil Procedure. … we thus rule that the
dismissal of a complaint due to fault of the plaintiff is without prejudice to the right of the defendant to prosecute any pending
counterclaims ofwhatever nature in the same or separate action. We confirm that BA Financeand all previous rulings of the Court that are
inconsistent with this present holding are now abandoned. (Emphasis supplied.)
Subsequently, in Perkin Elmer Singapore Pte Ltd. v. Dakila Trading Corporation 37 this Court held that while the declaration in Pinga refers to
instances covered by Section 3, Rule 17 on dismissal of complaints due to the fault of plaintiff, it does not preclude the application of the
same rule when the dismissal was upon the instance of defendant who correctly argued lack of jurisdiction over its person.Further, in stark
departure from Metals Engineering, we declared that the court’s jurisdiction over respondent’s complaint is not to be confusedwith
jurisdiction over petitioner’s counterclaim, viz:
….Petitioner seeks to recover damages and attorney’s fees as a consequence of the unfounded suitfiled by respondent against it. Thus,
petitioner’s compulsory counterclaim isonly consistent with its position that the respondent wrongfully filed a case against it and the RTC
erroneously exercised jurisdiction over its person.
Distinction must be made in Civil Case No. MC99-605 as to the jurisdiction of the RTC over respondent’s complaint and over petitioner’s
counterclaim – while it may have no jurisdiction over the former, it may exercise jurisdiction over the latter. The compulsory counterclaim
attached to petitioner’s Answer ad cautelamcan be treated as a separate action, wherein petitioner is the plaintiff while respondent is the
defendant. Petitioner could have instituted a separate action for the very same claims but, for the sake of expediency and to avoid
multiplicity of suits, it chose to demand the samein Civil Case No. MC99-605. Jurisdiction of the RTC over the subject matter and the
parties in the counterclaim must thus be determined separately and independently from the jurisdiction of the samecourt in the same
case over the subject matter and the parties in respondent’s complaint. 38 (Emphasis supplied.)
Still anchored on the pronouncement in Pinga, we then categorically ruled that a counterclaim arising from the unfounded suit may
proceed despite the dismissal of the complaint for lack of jurisdiction over the person of defendant-counterclaimant, thus:
Also in the case of Pinga v. Heirs of German Santiago, the Court discussed the situation wherein the very filing of the complaint by the
plaintiff against the defendant caused the violation of the latter’s rights. As to whether the dismissal of such a complaint should also
include the dismissal of the counterclaim, the Court acknowledged that said matter is still debatable, viz:
Whatever the nature of the counterclaim, it bears the same integral characteristics as a complaint; namely a cause (or causes) of action
constituting an act or omission by which a party violates the right of another. The main difference lies in that the cause of action in the
counterclaim is maintained bythe defendant against the plaintiff, while the converse holds true with the complaint. Yet, as with a
complaint, a counterclaim without a cause of action cannot survive.
x x x if the dismissal of the complaint somehow eliminates the cause(s) of the counterclaim, then the counterclaim cannot survive. Yet that
hardly is the case, especially as a general rule. More often than not, the allegations that form the counterclaim are rooted in an act or
omission of the plaintiff other than the plaintiff’s very act of filing the complaint. Moreover, such acts or omissions imputed to the plaintiff
are often claimed to have occurred prior to the filing of the complaint itself.The only apparent exception to thiscircumstance is if it is
alleged in the counterclaim that the very act of the plaintiff in filing the complaint precisely causes the violation of the defendant’s rights.
Yet even in such an instance, it remains debatable whether the dismissal or withdrawal of the complaint is sufficient to obviate the
pending cause of action maintained by the defendant against the plaintiff.
Based on the aforequoted ruling of the Court, if the dismissal of the complaint somehow eliminates the cause of the counterclaim, then
the counterclaim cannot survive. Conversely, if the counterclaim itself states sufficient cause of action then it should stand independently
of and survive the dismissal of the complaint. Now, having been directly confronted with the problem of whether the compulsory
counterclaim by reason of the unfounded suit may prosper even if the maincomplaint had been dismissed, we rule in the affirmative.
It bears to emphasize that petitioner’s counterclaim against respondent is for damages and attorney’s fees arising from the unfounded
suit. While respondent’s Complaint against petitioner is already dismissed, petitioner may have very well already incurred damages and
litigation expenses such as attorney’s fees since it was forced to engage legal representation in the Philippines to protect its rights and to
assert lack of jurisdiction of the courts over its person by virtue of the improper service of summons upon it. Hence, the cause of action of
petitioner’s counterclaim is not eliminated by the mere dismissal of respondent’s complaint.
It may also do well to rememberthat it is this Court which mandated that claims for damages and attorney’s fees based on unfounded suit
constitute compulsory counterclaim which must be pleaded in the same action or, otherwise, it shall be barred. It will then be iniquitous
and the height of injustice to require the petitioner to make the counterclaim in the present action, under threat of losing his right to claim
the same ever again in any other court, yet make his right totally dependent on the fate of the respondent’s complaint.
If indeed the Court dismisses petitioner’s counterclaim solely on the basis of the dismissal of respondent’s Complaint, then what remedy is
left for the petitioner? It can be said that he can still file a separate action to recover the damages and attorney’s fees based on the
unfounded suit for he cannot be barred from doing so since he did file the compulsory counterclaim in the present action, only that it was
dismissed when respondent’s Complaint was dismissed. However, this reasoning is highly flawed and irrational considering that petitioner,
already burdened by the damages and attorney’s fees itmay have incurred in the present case, must again incur more damages and
attorney’s fees in pursuing a separate action, when, in the first place, it should not have been involved in any case at all.
Since petitioner’s counterclaim iscompulsory in nature and its cause of action survives that of the dismissal of respondent’s complaint,
then it should be resolved based on its own merits and evidentiary support.39 (Additional emphasis supplied.)
The above ruling was applied in Rizal Commercial Banking Corporation v. Royal Cargo Corporation 40 where we granted petitioner’s prayer
for attorney’s fees under its Compulsory Counterclaim notwithstanding the dismissal of the complaint.
In the present case, the RTC of Pasig City should have allowed petitioner’s counterclaim to proceed notwithstanding the dismissal of
respondents’ complaint, the same being compulsory in nature and with its cause not eliminated by such dismissal.It bears stressing that
petitioner was hailed to a separate court (Pasig City RTC) even while the dispute between PNB and respondents was still being litigated,
and she already incurred expenses defending herself, having beensued by respondents in her personal capacity. The accusations hurled
against her were serious (perjury and misrepresentation in executing the affidavit in support of the application for writ of attachment
before the Pasay City RTC) – with hints at possible criminal prosecution apart from that criminal complaint already lodged in the Pasig City
Prosecutor’s Office. The Pasig City RTC clearly erred in refusing to hear the counterclaims upon the same ground for dismissal of the
complaint, i.e.,lack of jurisdiction in strictobservance of the policy against interference with the proceedings of a co-equal court.
Respondents contend that if petitioner is allowed to prove her counterclaims before the Pasay City RTC, they have no choice but to justify
their action in filing their case beforethe Pasig City RTC by going back to the allegations in their complaint that they are merely vindicating
themselves against the perjured affidavit executed by petitioner which led to the issuance of the illegal orders of the Pasay City RTC that
resulted to the damage and injury sustained by respondents. Obviously, respondents are invoking the same principle of judicialstability
which we find inapplicable insofar as petitioner’s counterclaim arising from respondents’ unfounded suit. As petitioner set forth in her
Compulsory Counterclaim, there is actually no necessity for the Pasig City RTC, in ruling on the merits of the counterclaim, to pass upon
the validity ofthe writ of attachment and related orders issued by the Pasay City RTC. Precisely, petitioner faulted the respondents in
prematurely, and in a contumacious act of forum shopping, filing a separate damage suit when there is no final judicial determination yet
of any irregularity in the attachment proceedings before the Pasay City RTC.
5.95. In this regard, it must be noted that in filing the present suit, plaintiffs’ goal is to have the Honorable Court reexamine and review the
pronouncements made by defendant JudgeGutierrez in the Pasay case.
With all due respect, the Honorable Court certainly has no such power over the Pasay Court which is a co-equal court. While the power to
determine whether or not a judgment or order is unjust is a judicial function, the hierarchy of courts should be respected:
"To belabor the obvious, the determination of whether or not a judgment or order is unjust – or was (or was not) rendered within the
scope of the issuing judge’s authority, or that the judge had exceeded his jurisdiction and powers or maliciously delayed the disposition of
a case – is an essentially judicial function, lodged by existing law and immemorial practice in a hierarchy of courts and ultimately in the
highest court of the land. To repeat, no other entity or official of the Government, not the prosecution or investigation service or any other
branch, nor any functionary thereof, has competence to review a judicial order or decision – whether final and executory or not – and
pronounce it erroneous soas to lay the basis for a criminal or administrative complaint for rendering an unjust judgment or order. That
prerogative belongs to the courts alone." [Emphasis supplied]
5.96. Accordingly, since there is no "final judicial pronouncement" yet on whether the filing of the PNB Complaintand the issuance of the
writ of preliminary attachment violate any law, neither is there any basis for defendant Padilla to be held liable for damages on account of
her official acts as Head of the Remedial Management Group of PNB.1âwphi1
5.97. Clearly, the filing of this baseless, if not contemptuous, suit is nothing but a continuation of plaintiffs’ fraudulent attempt to evade
the payment of undeniably due and demandable obligations. Accordingly, the complaint against defendant Padilla should be dismissed for
utter lack of merit.41 (Emphasis supplied.)
Ironically, while it is the respondents who erroneously and maliciously asked the Pasig City RTC to pass upon these issues still pending in a
co-equal court, for which reason the said court dismissed their complaint, petitioner was notallowed to prove her counterclaim by reason
of the unfounded suit in the same case aspurportedly it will entail verifying respondents’ claim that they were prejudiced by the orders
and processes in the Pasay City RTC. This situation exemplifies the rationale in Perkin Elmer Singapore Pte Ltd. 42 on requiring the petitioner
to make the counterclaim in the present action, under threat of losing such right to claim the same ever again any other court, yet make
such right of the petitioner totally dependent on the fate of the respondents’ complaint.
As fittingly expressed by petitioner in her Reply:
Pertinently, it is relevant to note that respondents never denied in their Commentthat the institution of the case a quowas premature and
violated the principle of judicial stability. Stated otherwise, respondents admit that they are the ones who have invited the court a quo to
interfere with the rulings of the Pasay Court, which fortunately, the former refused to do so. To allow the respondents to cite their own
unlawful actions as a shield against the harm that they have inflicted upon petitioner Padilla would indubitably allow the respondents to
profit from their own misdeeds. With due respect, this cannot be countenanced by the Honorable Court. 43 WHEREFORE, the petition is
GRANTED. The Orders dated November 12, 2012 and May 8, 2013 of the Regional Trial Court of Pasig City, Branch 155 in Civil Case No.
73132 are hereby REVERSED and SET ASIDE. Said court is hereby directed to proceed with the presentation of evidence in support of the
compulsory counterclaim of petitioner Aida Padilla.
SO ORDERED.
G.R. No. 197380, October 08, 2014
ELIZA ZUÑIGA-SANTOS,* REPRESENTED BY HER ATTORNEY-IN FACT, NYMPHA Z. SALES, Petitioners, v. MARIA DIVINA GRACIA SANTOS-
GRAN** AND REGISTER OF DEEDS OF MARIKINA CITY, Respondents.
DECISION
PERLAS-BERNABE, J.:
Before the Court is a petition for review on certiorari1 assailing the Decision2 dated January 10, 2011 and the Resolution 3 dated June 22,
2011 of the Court of Appeals (CA) in CA-G.R. CV No. 87849 which affirmed the Order 4 dated July 6, 2006 of the Regional Trial Court of San
Mateo, Rizal, Branch 76 (RTC) in Civil Case No. 2018-06, dismissing the Amended Complaint for annulment of sale and revocation of title
on the ground of insufficiency of factual basis.
The Facts
On January 9, 2006, petitioner Eliza Zuñiga-Santos (petitioner), through her authorized representative, Nympha Z. Sales, 5 filed a
Complaint6 for annulment of sale and revocation of title against respondents Maria Divina Gracia Santos-Gran (Gran) and the Register of
Deeds of Marikina City before the RTC, docketed as Civil Case No. 2018-06. The said complaint was later amended 7 on March 10, 2006
(Amended Complaint).
In her Amended Complaint,8 petitioner alleged, among others, that: (a) she was the registered owner of three (3) parcels of land located in
the Municipality of Montalban, Province of Rizal, covered by Transfer Certificate of Title (TCT) Nos. N-5500, 9 224174,10 and N-
423411 (subject properties) prior to their transfer in the name of private respondent Gran; (b) she has a second husband by the name of
Lamberto C. Santos (Lamberto), with whom she did not have any children; (c) she was forced to take care of Lamberto’s alleged daughter,
Gran, whose birth certificate was forged to make it appear that the latter was petitioner’s daughter; (d) pursuant to void and voidable
documents, i.e., a Deed of Sale, Lamberto succeeded in transferring the subject properties in favor of and in the name of Gran; (e) despite
diligent efforts, said Deed of Sale could not be located; and (f) she discovered that the subject properties were transferred to Gran
sometime in November 2005. Accordingly, petitioner prayed, inter alia, that Gran surrender to her the subject properties and pay
damages, including costs of suit. 12cralawlawlibrary
For her part, Gran filed a Motion to Dismiss, 13 contending, inter alia, that (a) the action filed by petitioner had prescribed since an action
upon a written contract must be brought within ten (10) years from the time the cause of action accrues, or in this case, from the time of
registration of the questioned documents before the Registry of Deeds; 14 and (b) the Amended Complaint failed to state a cause of action
as the void and voidable documents sought to be nullified were not properly identified nor the substance thereof set forth, thus,
precluding the RTC from rendering a valid judgment in accordance with the prayer to surrender the subject properties. 15cralawlawlibrary
The RTC Ruling
In an Order16 dated July 6, 2006, the RTC granted Gran’s motion and dismissed the Amended Complaint for its failure to state a cause of
action, considering that the deed of sale sought to be nullified – an “essential and indispensable part of [petitioner’s] cause of action” 17 –
was not attached. It likewise held that the certificates of title covering the subject properties cannot be collaterally attacked and that since
the action was based on a written contract, the same had already prescribed under Article 1144 of the Civil Code. 18cralawlawlibrary
Dissatisfied, petitioner elevated the matter to the CA.
The CA Ruling
In a Decision19 dated January 10, 2011, the CA sustained the dismissal of petitioner’s Amended Complaint but on the ground of
insufficiency of factual basis.
It disagreed with the RTC’s finding that the said pleading failed to state a cause of action since it had averred that: ( a) petitioner has a right
over the subject properties being the registered owner thereof prior to their transfer in the name of Gran; ( b) Lamberto succeeded in
transferring the subject properties to his daughter, Gran, through void and voidable documents; and (c) the latter’s refusal and failure to
surrender to her the subject properties despite demands violated petitioner’s rights over them. 20 The CA likewise ruled that the action has
not yet prescribed since an action for nullity of void deeds of conveyance is imprescriptible. 21 Nonetheless, it held that since the Deed of
Sale sought to be annulled was not attached to the Amended Complaint, it was impossible for the court to determine whether petitioner’s
signature therein was a forgery and thus, would have no basis to order the surrender or reconveyance of the subject
properties.22cralawlawlibrary
Aggrieved, petitioner moved for reconsideration 23 and attached, for the first time, a copy of the questioned Deed of Sale 24 which she
claimed to have recently recovered, praying that the order of dismissal be set aside and the case be remanded to the RTC for further
proceedings.
In a Resolution25 dated June 22, 2011, the CA denied petitioner’s motion and held that the admission of the contested Deed of Sale at this
late stage would be contrary to Gran’s right to due process.
Hence, the instant petition.
The Issue Before the Court
The primordial issue for the Court’s resolution is whether or not the dismissal of petitioner’s Amended Complaint should be sustained.
The Court’s Ruling
Failure to state a cause of action and lack of cause of action are distinct grounds to dismiss a particular action. The former refers to the
insufficiency of the allegations in the pleading, while the latter to the insufficiency of the factual basis for the action. Dismissal for failure to
state a cause of action may be raised at the earliest stages of the proceedings through a motion to dismiss under Rule 16 of the Rules of
Court, while dismissal for lack of cause of action may be raised any time after the questions of fact have been resolved on the basis of
stipulations, admissions or evidence presented by the plaintiff. 26 In Macaslang v. Zamora, 27 the Court, citing the commentary of Justice
Florenz D. Regalado, explained:chanRoblesvirtualLawlibrary
Justice Regalado, a recognized commentator on remedial law, has explained the distinction:chanroblesvirtuallawlibrary
x x x What is contemplated, therefore, is a failure to state a cause of action which is provided in Sec. 1(g) of Rule 16. This is a matter of
insufficiency of the pleading. Sec. 5 of Rule 10, which was also included as the last mode for raising the issue to the court, refers to the
situation where the evidence does not prove a cause of action. This is, therefore, a matter of insufficiency of evidence. Failure to state a
cause of action is different from failure to prove a cause of action. The remedy in the first is to move for dismissal of the pleading, while
the remedy in the second is to demur to the evidence, hence reference to Sec. 5 of Rule 10 has been eliminated in this section. The
procedure would consequently be to require the pleading to state a cause of action, by timely objection to its deficiency; or, at the trial, to
file a demurrer to evidence, if such motion is warranted.28
In the case at bar, both the RTC and the CA were one in dismissing petitioner’s Amended Complaint, but varied on the grounds thereof – While the Amended Complaint does allege that petitioner was the registered owner of the subject properties in dispute, nothing in the
that is, the RTC held that there was failure to state a cause of action while the CA ruled that there was insufficiency of factual basis. said pleading or its annexes would show the basis of that assertion, either through statements/documents tracing the root of petitioner’s
title or copies of previous certificates of title registered in her name. Instead, the certificates of title covering the said properties that were
At once, it is apparent that the CA based its dismissal on an incorrect ground. From the preceding discussion, it is clear that “insufficiency attached to the Amended Complaint are in the name of Gran. At best, the attached copies of TCT Nos. N-5500 and N-4234 only mention
of factual basis” is not a ground for a motion to dismiss. Rather, it is a ground which becomes available only after the questions of fact have petitioner as the representative of Gran at the time of the covered property’s registration when she was a minor. Nothing in the pleading,
been resolved on the basis of stipulations, admissions or evidence presented by the plaintiff. The procedural recourse to raise such ground however, indicates that the former had become any of the properties’ owner. This leads to the logical conclusion that her right to the
is a demurrer to evidence taken only after the plaintiff’s presentation of evidence. This parameter is clear under Rule 33 of the Rules of properties in question – at least through the manner in which it was alleged in the Amended Complaint – remains ostensibly unfounded.
Court:chanRoblesvirtualLawlibrary Indeed, while the facts alleged in the complaint are hypothetically admitted for purposes of the motion, it must, nevertheless, be
RULE 33 remembered that the hypothetical admission extends only to the relevant and material facts well pleaded in the complaint as well as to
Demurrer to Evidence inferences fairly deductible therefrom. 35 Verily, the filing of the motion to dismiss assailing the sufficiency of the complaint does not
hypothetically admit allegations of which the court will take judicial notice of to be not true, nor does the rule of hypothetical admission
Section 1. Demurrer to evidence. — After the plaintiff has completed the presentation of his evidence, the defendant may move for apply to legally impossible facts, or to facts inadmissible in evidence, or to facts that appear to be unfounded by record or document
dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. If his motion is denied he shall have the included in the pleadings.36cralawlawlibrary
right to present evidence. If the motion is granted but on appeal the order of dismissal is reversed he shall be deemed to have waived the
right to present evidence. Aside from the insufficiency of petitioner’s allegations with respect to her right to the subject properties sought to be recovered, the
ultimate facts supposedly justifying the “annulment of sale,” by which the reconveyance of the subject properties is sought, were also
At the preliminary stages of the proceedings, without any presentation of evidence even conducted, it is perceptibly impossible to assess insufficiently pleaded. The following averments in the Amended Complaint betray no more than an insufficient narration of
the insufficiency of the factual basis on which the plaintiff asserts his cause of action, as in this case. Therefore, that ground could not be facts:chanRoblesvirtualLawlibrary
the basis for the dismissal of the action. 6. That pursuant to a voidable [sic] and void documents, the second husband of the plaintiff succeed [sic] in transferring the
above TITLES in the name of MARIA DIVINAGRACIA SANTOS, who is (sic) alleged daughter of LAMBERTO C. SANTOS in violation
However, the Amended Complaint is still dismissible but on the ground of failure to state a cause of action, as correctly held by the RTC. of Article 1409, Par. 2 of the Civil Code;
Said ground was properly raised by Gran in a motion to dismiss pursuant to Section 1, Rule 16 of the Rules of 7. That the said properties [were] transferred to the said defendant by a Deed of Sale (DOS) to the said MARIA DIVINAGRACIA
Court:chanRoblesvirtualLawlibrary SANTOS through a void documents [sic] considering that the seller is the alleged mother of defendant is also the buyer of the
RULE 16 said properties in favor of defendant;
Motion to Dismiss 8. x x x.
9. That the alleged sale and transfer of the said properties in favor of defendant was only discovered by [plaintiff’s] daughter
Section 1. Grounds. — Within the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss CYNTHIA BELTRAN-LASMARIAS when [plaintiff] has been requesting for financial assistance, considering that the said mother of
may be made on any of the following grounds:chanRoblesvirtualLawlibrary plaintiff [sic] has so many properties which is now the subject of this complaint;
10. That plaintiff then return on [to] the Philippines sometime [in] November, 2005 and discovered that all [plaintiff’s] properties
x x x x [had] been transferred to defendant MARIA DIVINAGRACIA SANTOS who is not a daughter either by consanguinity or affinity to
the plaintiff mother [sic];
(g) That the pleading asserting the claim states no cause of action; 11. That the titles that [were] issued in the name of MARIA DIVINAGRACIA SANTOS by virtue of the said alleged voidable and void
documents, should be annulled and cancelled as the basis of the transfer is through void and voidable documents;
xxxx
x x x x37
A complaint states a cause of action if it sufficiently avers the existence of the three (3) essential elements of a cause of action, namely: ( a)
a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; ( b) an obligation on the part of the Clearly, the claim that the sale was effected through “voidable and void documents” partakes merely of a conclusion of law that is not
named defendant to respect or not to violate such right; and (c) an act or omission on the part of the named defendant violative of the supported by any averment of circumstances that will show why or how such conclusion was arrived at. In fact, what these “voidable and
right of the plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which the latter may maintain an action for void documents” are were not properly stated and/or identified. In Abad v. Court of First Instance of Pangasinan, 38 the Court pronounced
recovery of damages.29 If the allegations of the complaint do not state the concurrence of these elements, the complaint becomes that:chanRoblesvirtualLawlibrary
vulnerable to a motion to dismiss on the ground of failure to state a cause of action. 30cralawlawlibrary A pleading should state the ultimate facts essential to the rights of action or defense asserted, as distinguished from mere conclusions
of fact, or conclusions of law. General allegations that a contract is valid or legal, or is just, fair, and reasonable, are mere conclusions of
It is well to point out that the plaintiff’s cause of action should not merely be “stated” but, importantly, the statement thereof should be law. Likewise, allegations that a contract is void, voidable,invalid, illegal, ultra vires, or against public policy, without stating facts showing
“sufficient.” This is why the elementary test in a motion to dismiss on such ground is whether or not the complaint alleges facts which if its invalidity, are mere conclusions of law.39 (Emphases supplied)
true would justify the relief demanded.31 As a corollary, it has been held that only ultimate facts and not legal conclusions or evidentiary
facts are considered for purposes of applying the test. 32 This is consistent with Section 1, Rule 8 of the Rules of Court which states that the Hence, by merely stating a legal conclusion, the Amended Complaint presented no sufficient allegation upon which the Court could grant
complaint need only allege the ultimate facts or the essential facts constituting the plaintiff’s cause of action. A fact is essential if they the relief petitioner prayed for. Thus, said pleading should be dismissed on the ground of failure to state cause of action, as correctly held
cannot be stricken out without leaving the statement of the cause of action inadequate. 33 Since the inquiry is into the sufficiency, not the by the RTC.
veracity, of the material allegations, it follows that the analysis should be confined to the four corners of the complaint, and no
other.34cralawlawlibrary That a copy of the Deed of Sale adverted to in the Amended Complaint was subsequently submitted by petitioner does not warrant a
different course of action. The submission of that document was made, as it was purportedly “recently recovered,” only on reconsideration
A judicious examination of petitioner’s Amended Complaint readily shows its failure to sufficiently state a cause of action. Contrary to the before the CA which, nonetheless, ruled against the remand of the case. An examination of the present petition, however, reveals no
findings of the CA, the allegations therein do not proffer ultimate facts which would warrant an action for nullification of the sale and counter-argument against the foregoing actions; hence, the Court considers any objection thereto as waived.
recovery of the properties in controversy, hence, rendering the same dismissible.
In any event, the Court finds the Amended Complaint’s dismissal to be in order considering that petitioner’s cause of action had already
prescribed. LEONARDO-DE CASTRO, J.:

It is evident that petitioner ultimately seeks for the reconveyance to her of the subject properties through the nullification of their
supposed sale to Gran. An action for reconveyance is one that seeks to transfer property, wrongfully registered by another, to its rightful For review under Rule 45 of the Rules of Court is the Decision [1] dated November 17, 2005 and the Resolution [2] dated
and legal owner. 40 Having alleged the commission of fraud by Gran in the transfer and registration of the subject properties in her name, November 16, 2006 of the Court Appeals in CA-G.R. CV No. 66815, which modified the Decision [3] dated January 26, 2000 of the Regional
there was, in effect, an implied trust created by operation of law pursuant to Article 1456 of the Civil Code which Trial Court (RTC), Branch 30 of Dumaguete City, in Civil Case No. 11360, an action for recovery of damages based on Article 2180, in
provides:chanRoblesvirtualLawlibrary relation to Article 2176, of the Civil Code, filed by respondent Jocelyn Catubig against petitioner Vallacar Transit, Inc.While the RTC
Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied dismissed respondents claim for damages, the Court of Appeals granted the same.
trust for the benefit of the person from whom the property comes.
The undisputed facts are as follows:
To determine when the prescriptive period commenced in an action for reconveyance, the plaintiff’s possession of the disputed property is
material. If there is an actual need to reconvey the property as when the plaintiff is not in possession, the action for reconveyance Petitioner is engaged in the business of transportation and the franchise owner of a Ceres Bulilit bus with Plate No. T-0604-
based on implied trust prescribes in ten (10) years, the reference point being the date of registration of the deed or the issuance of the 1348. Quirino C. Cabanilla (Cabanilla) is employed as a regular bus driver of petitioner.
title. On the other hand, if the real owner of the property remains in possession of the property, the prescriptive period to recover title
and possession of the property does not run against him and in such case, the action for reconveyance would be in the nature of a suit for On January 27, 1994, respondents husband, Quintin Catubig, Jr. (Catubig), was on his way home from Dumaguete City riding in
quieting of title which is imprescriptible.41cralawlawlibrary tandem on a motorcycle with his employee, Teddy Emperado (Emperado). Catubig was the one driving the motorcycle. While approaching
a curve at kilometers 59 and 60, Catubig tried to overtake a slow moving ten-wheeler cargo truck by crossing-over to the opposite lane,
In the case at bar, a reading of the allegations of the Amended Complaint failed to show that petitioner remained in possession of the which was then being traversed by the Ceres Bulilit bus driven by Cabanilla, headed for the opposite direction. When the two vehicles
subject properties in dispute. On the contrary, it can be reasonably deduced that it was Gran who was in possession of the subject collided, Catubig and Emperado were thrown from the motorcycle. Catubig died on the spot where he was thrown, while Emperado died
properties, there being an admission by the petitioner that the property covered by TCT No. 224174 was being used by Gran’s mother-in- while being rushed to the hospital.
law.42 In fact, petitioner’s relief in the Amended Complaint for the “surrender” of three (3) properties to her bolsters such stance. 43 And
since the new titles to the subject properties in the name of Gran were issued by the Registry of Deeds of Marikina on the following dates: On February 1, 1994, Cabanilla was charged with reckless imprudence resulting in double homicide in Criminal Case No. M-15-
TCT No. 224174 on July 27, 1992,44TCT No. N-5500 on January 29, 1976,45 and TCT No. N-4234 on November 26, 1975,46 the filing of the 94 before the Municipal Circuit Trial Court (MCTC) of Manjuyod-Bindoy-Ayungon of the Province of Negros Oriental. After preliminary
petitioner’s complaint before the RTC on January 9, 2006 was obviously beyond the ten-year prescriptive period, warranting the Amended investigation, the MCTC issued a Resolution on December 22, 1994, dismissing the criminal charge against Cabanilla. It found that
Complaint’s dismissal all the same. Cabanilla was not criminally liable for the deaths of Catubig and Emperado, because there was no negligence, not even contributory, on
Cabanillas part.
WHEREFORE, the petition is DENIED. The Decision dated January 10, 2011 and the Resolution dated June 22, 2011 of the Court of Appeals
in CA-G.R. CV No. 87849 are hereby AFFIRMED with MODIFICATION in that the Amended Complaint be dismissed on the grounds of (a) Thereafter, respondent filed before the RTC on July 19, 1995 a Complaint for Damages against petitioner, seeking actual, moral,
failure to state a cause of action, and (b) prescription as herein discussed. and exemplary damages, in the total amount of P484,000.00, for the death of her husband, Catubig, based on Article 2180, in relation to
Article 2176, of the Civil Code. Respondent alleged that petitioner is civilly liable because the latters employee driver, Cabanilla, was
SO ORDERED.cralawred reckless and negligent in driving the bus which collided with Catubigs motorcycle.

PARTS OF PLEADINGS Petitioner, in its Answer with Counterclaim, contended that the proximate cause of the vehicular collision, which resulted in the
deaths of Catubig and Emperado, was the sole negligence of Catubig when he imprudently overtook another vehicle at a curve and
VALLACAR TRANSIT, INC., G.R. No. 175512 traversed the opposite lane of the road. As a special and affirmative defense, petitioner asked for the dismissal of respondents complaint
Petitioner, for not being verified and/or for failure to state a cause of action, as there was no allegation that petitioner was negligent in the selection
Present: or supervision of its employee driver.

CORONA, C.J., In the Pre-Trial Order [4] dated June 10, 1997, the parties stipulated that the primary issue for trial was whether or not petitioner
Chairperson, should be held liable for Catubigs death.Trial then ensued.
VELASCO, JR.,
- versus - LEONARDO-DE CASTRO, Police Officer (PO) 2 Robert B. Elnas (Elnas), [5] Emilio Espiritu (Espiritu), [6] Dr. Norberto Baldado, Jr. (Dr. Baldado),[7] Peter Cadimas
PERALTA,* and (Cadimas),[8] and respondent[9]herself testified in support of respondents complaint.
PEREZ, JJ.
PO2 Elnas conducted an investigation of the collision incident. According to PO2 Elnas, the bus was running fast, at a speed of
100 kilometers per hour, when it collided with the motorcycle which was trying to overtake a truck. The collision occurred on the lane of
Promulgated: the bus. Catubig was flung 21 meters away, and Emperado, 11 meters away, from the point of impact. The motorcycle was totaled; the
JOCELYN CATUBIG, chassis broke into three parts, and the front wheel and the steering wheel with the shock absorbers were found 26 meters and 38 meters,
Respondent. May 30, 2011 respectively, from the collision point. In contrast, only the front bumper of the bus suffered damage.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
Cadimas personally witnessed the collision of the bus and the motorcycle. He recalled that he was then waiting for a ride
to Dumaguete City and saw the Ceres Bulilit bus making a turn at a curve. Cadimas signaled the said bus to halt but it was running
DECISION fast. Cadimas also recollected that there was a cargo truck running slow in the opposite direction of the bus. Cadimas next heard a thud
and saw that the bus already collided with a motorcycle.
 Espiritu was the photographer who took photographs of the scene of the accident. He identified the five photographs which he
had taken of Catubig lying on the ground, bloodied; broken parts of the motorcycle; and the truck which Catubig tried to overtake.
Dr. Baldado was the medico-legal doctor who conducted the post-mortem examination of Catubigs body. He reported that
Catubig suffered from the following injuries: laceration and fracture of the right leg; laceration and fracture of the left elbow; multiple
abrasions in the abdominal area, left anterior chest wall, posterior right arm, and at the back of the left scapular area; and contusion-
hematoma just above the neck. Dr. Baldado confirmed that Catubig was already dead when the latter was brought to the hospital, and
that the vehicular accident could have caused Catubigs instantaneous death.
Respondent herself testified to substantiate the amount of damages she was trying to recover from petitioner for Catubigs
death, such as Catubigs earning capacity; expenses incurred for the wake and burial of Catubig, as well as of Emperado; the cost of the
motorcycle; and the costs of the legal services and fees respondent had incurred.
Respondents documentary exhibits consisted of her and Catubigs Marriage Contract dated August 21, 1982, their two childrens
Certificate of Live Births, Catubigs College Diploma dated March 24, 1983, the list and receipts of the expenses for Catubigs burial, the
sketch of the collision site prepared by PO2 Elnas, the excerpts from the police blotter, the photographs of the collision, [10] and the Post
Mortem Report[11] on Catubigs cadaver prepared by Dr. Baldado.
In an Order[12] dated October 6, 1998, the RTC admitted all of respondents aforementioned evidence.
On the other hand, Rosie C. Amahit (Amahit) [13] and Nunally Maypa (Maypa)[14] took the witness stand for petitioner.
Amahit was a Court Stenographer at the MCTC who took the transcript of stenographic notes (TSN) in Criminal Case No. M-15-
94 against Cabanilla. Amahit verified that the document being presented by the defense in the present case was a true and correct copy of
the TSN of the preliminary investigation held in Criminal Case No. M-15-94 on May 25, 1994, and another document was a duplicate
original of the MCTC Resolution dated December 22, 1994 dismissing Criminal Case No. M-15-94.
Maypa is the Administrative and Personnel Manager at the Dumaguete branch of petitioner. He started working for petitioner
on September 22, 1990 as a clerk at the Human Resources Development Department at the Central Office of petitioner
in Bacolod City. Sometime in November 1993, he became an Administrative Assistant at the Dumaguete branch of petitioner; and in
August 1995, he was promoted to his current position at the same branch.
While he was still an Administrative Assistant, Maypa was responsible for the hiring of personnel including drivers and
conductors. Maypa explained that to be hired as a driver, an applicant should be 35 to 45 years old, have at least five years experience in
driving big trucks, submit police, court, and medical clearances, and possess all the necessary requirements for driving a motor vehicle of
more than 4,500 kilograms in gross weight such as a professional drivers license with a restriction code of 3. The applicant should also pass
the initial interview, the actual driving and maintenance skills tests, and a written psychological examination involving defensive driving
techniques. Upon passing these examinations, the applicant still had to go through a 15-day familiarization of the bus and road conditions
before being deployed for work. Maypa, however, admitted that at the time of his appointment as Administrative Assistant at the
Dumaguete branch, Cabanilla was already an employee driver of petitioner.
Maypa further explained the investigation and grievance procedure followed by petitioner in cases of vehicular accidents
involving the latters employee drivers. Maypa related that Cabanilla had been put on preventive suspension following the vehicular
accident on January 27, 1994 involving the bus Cabanilla was driving and the motorcycle carrying Catubig and Emperado. Following an
internal investigation of said accident conducted by petitioner, Cabanilla was declared not guilty of causing the same, for he had not been
negligent.
Lastly, Maypa recounted the expenses petitioner incurred as a result of the present litigation.
The documentary exhibits of petitioner consisted of the TSN of the preliminary investigation in Criminal Case No. M-15-94 held
on May 25, 1994 before the MCTC of Manjuyod-Bindoy-Ayungon of the Province of Negros Oriental; Resolution dated December 22, 1994
of the MCTC in the same case; and the Minutes dated February 17, 1994 of the Grievance Proceeding conducted by petitioner involving
Cabanilla.[15]
The RTC, in its Order[16] dated November 12, 1999, admitted all the evidence presented by petitioner.
On January 26, 2000, the RTC promulgated its Decision favoring petitioner. Based on the sketch prepared by PO2 Elnas, which
showed that the point of impact x x x occurred beyond the center lane near a curve within the lane of the Ceres bus[;] [17] plus, the
testimonies of PO2 Elnas and Cadimas that the motorcycle recklessly tried to overtake a truck near a curve and encroached the opposite
lane of the road, the RTC ruled that the proximate cause of the collision of the bus and motorcycle was the negligence of the driver of the
motorcycle, Catubig. The RTC, moreover, was convinced through the testimony of Maypa, the Administrative and Personnel Manager of
the Dumaguete branch of petitioner, that petitioner had exercised due diligence in the selection and supervision of its employee drivers,
including Cabanilla.
After trial, the RTC concluded:
WHEREFORE, finding preponderance of evidence in favor of the [herein petitioner] that the [herein
respondents] husband is the reckless and negligent driver and not the driver of the [petitioner], the above-entitled
case is hereby ordered dismissed.
[Petitioners] counterclaim is also dismissed for lack of merit. [18]
Respondent appealed to the Court of Appeals. In its Decision dated November 17, 2005, the appellate court held that both
Catubig and Cabanilla were negligent in driving their respective vehicles. Catubig, on one hand, failed to use reasonable care for his own
safety and ignored the hazard when he tried to overtake a truck at a curve. Cabanilla, on the other hand, was running his vehicle at a high
speed of 100 kilometers per hour. The Court of Appeals also brushed aside the defense of petitioner that it exercised the degree of
diligence exacted by law in the conduct of its business. Maypa was not in a position to testify on the procedures followed by petitioner in
hiring Cabanilla as an employee driver considering that Cabanilla was hired a year before Maypa assumed his post at the Dumaguete
branch of petitioner.
Thus, the Court of Appeals decreed:
WHEREFORE, based on the foregoing, the assailed decision of the trial court is modified. We rule that
[herein petitioner] is equally liable for the accident in question which led to the deaths of Quintin Catubig, Jr. and
Teddy Emperado and hereby award to the heirs of Quintin Catubig, Jr. the amount [of] P250,000.00 as full
compensation for the death of the latter. [19]
The Court of Appeals denied the motion for reconsideration of petitioner in a Resolution dated November 16, 2006.
Hence, the instant Petition for Review.
Petitioner asserts that respondents complaint for damages should be dismissed for the latters failure to verify the same. The
certification against forum shopping attached to the complaint, signed by respondent, is not a valid substitute for respondents verification
that she has read the pleading and that the allegations therein are true and correct of her personal knowledge or based on authentic
records.[20] Petitioner cited jurisprudence in which the Court ruled that a pleading lacking proper verification is treated as an unsigned
pleading, which produces no legal effect under Section 3, Rule 7 of the Rules of Court.
Petitioner also denies any vicarious or imputed liability under Article 2180, in relation to Article 2176, of the Civil
Code. According to petitioner, respondent failed to prove the culpability of Cabanilla, the employee driver of petitioner. There are already
two trial court decisions (i.e., the Resolution dated December 22, 1994 of the MCTC of Manjuyod-Bindoy-Ayungon of the Province of
Negros Oriental in Criminal Case No. M-15-94 and the Decision dated January 26, 2000 of the RTC in the instant civil suit) explicitly ruling
that the proximate cause of the collision was Catubigs reckless and negligent act. Thus, without the fault or negligence of its employee
driver, no liability at all could be imputed upon petitioner.
Petitioner additionally argues, without conceding any fault or liability, that the award by the Court of Appeals in respondents
favor of the lump sum amount of P250,000.00 as total death indemnity lacks factual and legal basis. Respondents evidence to prove actual
or compensatory damages are all self-serving, which are either inadmissible in evidence or devoid of probative value. The award of moral
and exemplary damages is likewise contrary to the ruling of the appellate court that Catubig should be equally held liable for his own
death.
 Respondent maintains that the Court of Appeals correctly adjudged petitioner to be liable for Catubigs death and that the
appellate court had already duly passed upon all the issues raised in the petition at bar.
The petition is meritorious.
At the outset, we find no procedural defect that would have warranted the outright dismissal of respondents complaint.
Respondent filed her complaint for damages against petitioner on July 19, 1995, when the 1964 Rules of Court was still in
effect. Rule 7, Section 6 of the 1964 Rules of Court provided:
SEC. 6. Verification.A pleading is verified only by an affidavit stating that the person verifying has read the
pleading and that the allegations thereof are true of his own knowledge.
Verifications based on "information and belief," or upon "knowledge, information and belief," shall be
deemed insufficient.
On July 1, 1997, the new rules on civil procedure took effect. The foregoing provision was carried on, with a few amendments,
as Rule 7, Section 4 of the 1997 Rules of Court, viz:
SEC. 4. Verification. Except when otherwise specifically required by law or rule, pleadings need not be
under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein
are true and correct of his knowledge and belief.
A pleading required to be verified which contains a verification based on information and belief, or upon
knowledge, information and belief, or lacks a proper verification, shall be treated as an unsigned pleading.
The same provision was again amended by A.M. No. 00-2-10, which became effective on May 1, 2000. It now reads:
SEC. 4. Verification. - Except when otherwise specifically required by law or rule, pleadings need not be
under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein
are true and correct of his personal knowledge or based on authentic records.
A pleading required to be verified which contains a verification based on information and belief or upon
knowledge, information and belief, or lacks a proper verification, shall be treated as an unsigned pleading.
The 1997 Rules of Court, even prior to its amendment by A.M. No. 00-2-10, clearly provides that a pleading lacking proper
verification is to be treated as an unsigned pleading which produces no legal effect. However, it also just as clearly states that [e]xcept
when otherwise specifically required by law or rule, pleadings need not be under oath, verified or accompanied by affidavit. No such law
or rule specifically requires that respondents complaint for damages should have been verified.
Although parties would often submit a joint verification and certificate against forum shopping, the two are different.
In Pajuyo v. Court of Appeals,[21] we already pointed out that:
A partys failure to sign the certification against forum shopping is different from the partys failure to sign
personally the verification. The certificate of non-forum shopping must be signed by the party, and not by
counsel. The certification of counsel renders the petition defective.
On the other hand, the requirement on verification of a pleading is a formal and not a jurisdictional
requisite. It is intended simply to secure an assurance that what are alleged in the pleading are true and correct and
not the product of the imagination or a matter of speculation, and that the pleading is filed in good faith. The party
need not sign the verification. A partys representative, lawyer or any person who personally knows the truth of the
facts alleged in the pleading may sign the verification. [22]
In the case before us, we stress that as a general rule, a pleading need not be verified, unless there is a law or rule specifically
requiring the same. Examples of pleadings that require verification are: (1) all pleadings filed in civil cases under the 1991 Revised Rules on
Summary Procedure; (2) petition for review from the Regional Trial Court to the Supreme Court raising only questions of law under Rule
41, Section 2; (3) petition for review of the decision of the Regional Trial Court to the Court of Appeals under Rule 42, Section 1; (4)
petition for review from quasi-judicial bodies to the Court of Appeals under Rule 43, Section 5; (5) petition for review before the Supreme
Court under Rule 45, Section 1; (6) petition for annulment of judgments or final orders and resolutions under Rule 47, Section 4; (7)
complaint for injunction under Rule 58, Section 4; (8) application for preliminary injunction or temporary restraining order under Rule 58,
Section 4; (9) application for appointment of a receiver under Rule 59, Section 1; (10) application for support pendente lite under Rule 61,
Section 1; (11) petition for certiorari against the judgments, final orders or resolutions of constitutional commissions under Rule 64,
Section 2; (12) petition for certiorari, prohibition, and mandamus under Rule 65, Sections 1 to 3; (13) petition for quo warranto under Rule
66, Section 1; (14) complaint for expropriation under Rule 67, Section 1; (15) petition for indirect contempt under Rule 71, Section 4, all
from the 1997 Rules of Court; (16) all complaints or petitions involving intra-corporate controversies under the Interim Rules of Procedure
on Intra-Corporate Controversies; (17) complaint or petition for rehabilitation and suspension of payment under the Interim Rules on
Corporate Rehabilitation; and (18) petition for declaration of absolute nullity of void marriages and annulment of voidable marriages as
well as petition for summary proceedings under the Family Code.
In contrast, all complaints, petitions, applications, and other initiatory pleadings must be accompanied by a certificate against
forum shopping, first prescribed by Administrative Circular No. 04-94, which took effect on April 1, 1994, then later on by Rule 7, Section 5
of the 1997 Rules of Court. It is not disputed herein that respondents complaint for damages was accompanied by such a certificate.
In addition, verification, like in most cases required by the rules of procedure, is a formal, not jurisdictional, requirement, and
mainly intended to secure an assurance that matters which are alleged are done in good faith or are true and correct and not of mere
speculation. When circumstances warrant, the court may simply order the correction of unverified pleadings or act on it and waive strict
compliance with the rules in order that the ends of justice may thereby be served. [23]
We agree with petitioner, nonetheless, that respondent was unable to prove imputable negligence on the part of petitioner.
Prefatorily, we restate the time honored principle that in a petition for review under Rule 45, only questions of law may be
raised. It is not our function to analyze or weigh all over again evidence already considered in the proceedings below, our jurisdiction is
limited to reviewing only errors of law that may have been committed by the lower court.The resolution of factual issues is the function of
lower courts, whose findings on these matters are received with respect. A question of law which we may pass upon must not involve an
examination of the probative value of the evidence presented by the litigants. [24]
The above rule, however, admits of certain exceptions. The findings of fact of the Court of Appeals are generally conclusive but
may be reviewed when: (1) the factual findings of the Court of Appeals and the trial court are contradictory; (2) the findings are grounded
entirely on speculation, surmises or conjectures; (3) the inference made by the Court of Appeals from its findings of fact is manifestly
mistaken, absurd or impossible; (4) there is grave abuse of discretion in the appreciation of facts; (5) the appellate court, in making its
findings, goes beyond the issues of the case and such findings are contrary to the admissions of both appellant and appellee; (6) the
judgment of the Court of Appeals is premised on a misapprehension of facts; (7) the Court of Appeals fails to notice certain relevant facts
which, if properly considered, will justify a different conclusion; and (8) the findings of fact of the Court of Appeals are contrary to those of
the trial court or are mere conclusions without citation of specific evidence, or where the facts set forth by the petitioner are not disputed
by respondent, or where the findings of fact of the Court of Appeals are premised on the absence of evidence but are contradicted by the
evidence on record.[25]
The issue of negligence is basically factual.[26] Evidently, in this case, the RTC and the Court of Appeals have contradictory factual
findings: the former found that Catubig alone was negligent, while the latter adjudged that both Catubig and petitioner were negligent.
Respondent based her claim for damages on Article 2180, in relation to Article 2176, of the Civil Code, which read:
 Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between
the parties, is called a quasi-delict and is governed by the provisions of this Chapter.
Art. 2180. The obligation imposed by Article 2176 is demandable not only for ones own acts or
omissions, but also for those persons for whom one is responsible.
xxxx
Employers shall be liable for the damages caused by their employees and household helpers acting
within the scope of their assigned tasks, even though the former are not engaged in any business or industry.
xxxx
The responsibility treated of in this article shall cease when the persons herein mentioned prove that
they observed all the diligence of a good father of a family to prevent damage.
There is merit in the argument of the petitioner that Article 2180 of the Civil Code imputing fault or negligence on the part of
the employer for the fault or negligence of its employee does not apply to petitioner since the fault or negligence of its employee driver,
Cabanilla, which would have made the latter liable for quasi-delict under Article 2176 of the Civil Code, has never been established by
respondent. To the contrary, the totality of the evidence presented during trial shows that the proximate cause of the collision of the bus
and motorcycle is attributable solely to the negligence of the driver of the motorcycle, Catubig.
Proximate cause is defined as that cause, which, in natural and continuous sequence, unbroken by any efficient intervening
cause, produces the injury, and without which the result would not have occurred. And more comprehensively, the proximate legal cause
is that acting first and producing the injury, either immediately or by setting other events in motion, all constituting a natural and
continuous chain of events, each having a close causal connection with its immediate predecessor, the final event in the chain immediately
effecting the injury as a natural and probable result of the cause which first acted, under such circumstances that the person responsible
for the first event should, as an ordinary prudent and intelligent person, have reasonable ground to expect at the moment of his act or
default that an injury to some person might probably result therefrom. [27]
The RTC concisely articulated and aptly concluded that Catubigs overtaking of a slow-moving truck ahead of him, while
approaching a curve on the highway, was the immediate and proximate cause of the collision which led to his own death, to wit:
Based on the evidence on record, it is crystal clear that the immediate and proximate cause of the
collision is the reckless and negligent act of Quintin Catubig, Jr. and not because the Ceres Bus was running very
fast. Even if the Ceres Bus is running very fast on its lane, it could not have caused the collision if not for the fact
that Quintin Catubig, Jr. tried to overtake a cargo truck and encroached on the lane traversed by the Ceres Bus
while approaching a curve. As the driver of the motorcycle, Quintin Catubig, Jr. has not observed reasonable care
and caution in driving his motorcycle which an ordinary prudent driver would have done under the
circumstances. Recklessness on the part of Quintin Catubig, Jr. is evident when he tried to overtake a cargo truck
while approaching a curve in Barangay Donggo-an, Bolisong, Manjuyod, Negros Oriental. Overtaking is not allowed
while approaching a curve in the highway (Section 41(b), Republic Act [No.] 4136, as amended). Passing another
vehicle proceeding on the same direction should only be resorted to by a driver if the highway is free from incoming
vehicle to permit such overtaking to be made in safety (Section 41(a), Republic Act [No.] 4136). The collision
happened because of the recklessness and carelessness of [herein respondents] husband who was overtaking a
cargo truck while approaching a curve. Overtaking another vehicle while approaching a curve constitute reckless
driving penalized not only under Section 48 of Republic Act [No.] 4136 but also under Article 365 of the Revised
Penal Code.
The Court commiserate with the [respondent] for the untimely death of her husband. However, the Court
as dispenser of justice has to apply the law based on the facts of the case. Not having proved by preponderance of
evidence that the proximate cause of the collision is the negligence of the driver of the Ceres bus, this Court has no
other option but to dismiss this case.[28](Emphases supplied.)
The testimonies of prosecution witnesses Cadimas and PO2 Elnas that Cabanilla was driving the bus at a reckless speed when
the collision occurred lack probative value.
We are unable to establish the actual speed of the bus from Cadimass testimony for he merely stated that the bus did not stop
when he tried to flag it down because it was running very fast.[29]
PO2 Elnas, on the other hand, made inconsistent statements as to the actual speed of the bus at the time of the
collision. During the preliminary investigation in Criminal Case No. M-15-94 before the MCTC, PO2 Elnas refused to give testimony as to
the speed of either the bus or the motorcycle at the time of the collision and an opinion as to who was at fault. [30] But during the trial of
the present case before the RTC, PO2 Elnas claimed that he was told by Cabanilla that the latter was driving the bus at the speed of around
100 kilometers per hour.[31]
As the RTC noted, Cadimas and PO2 Elnas both pointed out that the motorcycle encroached the lane of the bus when it tried to
overtake, while nearing a curve, a truck ahead of it, consistent with the fact that the point of impact actually happened within the lane
traversed by the bus. It would be more reasonable to assume then that it was Catubig who was driving his motorcycle at high speed
because to overtake the truck ahead of him, he necessarily had to drive faster than the truck. Catubig should have also avoided overtaking
the vehicle ahead of him as the curvature on the road could have obstructed his vision of the oncoming vehicles from the opposite lane.
The evidence shows that the driver of the bus, Cabanilla, was driving his vehicle along the proper lane, while the driver of the
motorcycle, Catubig, had overtaken a vehicle ahead of him as he was approaching a curvature on the road, in disregard of the provision of
the law on reckless driving, at the risk of his life and that of his employee, Emperado.
The presumption that employers are negligent under Article 2180 of the Civil Code flows from the negligence of their
employees.[32] Having adjudged that the immediate and proximate cause of the collision resulting in Catubigs death was his own
negligence, and there was no fault or negligence on Cabanillas part, then such presumption of fault or negligence on the part of petitioner,
as Cabanillas employer, does not even arise. Thus, it is not even necessary to delve into the defense of petitioner that it exercised due
diligence in the selection and supervision of Cabanilla as its employee driver.
WHEREFORE, premises considered, the petition is GRANTED. The Decision dated November 17, 2005 and Resolution
dated November 16, 2006 of the Court Appeals in CA-G.R. CV No. 66815 are SET ASIDE and the Decision dated January 26, 2000 of the
Regional Trial Court, Branch 30 of Dumaguete City, dismissing Civil Case No. 11360 is REINSTATED.
SO ORDERED.
NELLIE VDA. DE FORMOSO and her children, namely, MA. G.R. No. 154704
THERESA FORMOSO-PESCADOR, ROGER FORMOSO, MARY JANE
FORMOSO, BERNARD FORMOSO and PRIMITIVO MALCABA,
Petitioners,
Present:
- versus - CARPIO, J., Chairperson,
NACHURA,
PERALTA,
ABAD, and
PHILIPPINE NATIONAL BANK, FRANCISCO ARCE, ATTY. BENJAMIN MENDOZA, JJ.
BARBERO, and ROBERTO NAVARRO,
Respondents.
Promulgated:
June 1, 2011
x -----------------------------------------------------------------------------------------------------x
DECISION
MENDOZA, J.:
Assailed in this petition are the January 25, 2002 Resolution[1] and the August 8, 2002 Resolution [2] of the Court of
Appeals (CA) which dismissed the petition for certiorari filed by the petitioners on the ground that the verification and certification of non-
forum shopping was signed by only one of the petitioners in CA G.R. SP No. 67183, entitled Nellie P. Vda. De Formoso, et al. v. Philippine
National Bank, et al.
The Factual and
Procedural Antecedents
Records show that on October 14, 1989, Nellie Panelo Vda. De Formoso (Nellie) and her children namely: Ma. Theresa
Formoso-Pescador, Roger Formoso, Mary Jane Formoso, Bernard Formoso, and Benjamin Formoso, executed a special power of attorney in
favor of Primitivo Malcaba (Malcaba) authorizing him, among others, to secure all papers and documents including the owners copies of
the titles of real properties pertaining to the loan with real estate mortgage originally secured by Nellie and her late husband, Benjamin S.
Formoso, from Philippine National Bank, Vigan Branch (PNB) on September 4, 1980.
On April 20, 1990, the Formosos sold the subject mortgaged real properties to Malcaba through a Deed of Absolute Sale.
Subsequently, on March 22, 1994, Malcaba and his lawyer went to PNB to fully pay the loan obligation including interests in the amount of
₱2,461,024.74.
PNB, however, allegedly refused to accept Malcabas tender of payment and to release the mortgage or surrender the titles of
the subject mortgaged real properties.
On March 24, 1994, the petitioners filed a Complaint for Specific Performance against PNB before the Regional Trial Court of
Vigan, Ilocos Sur (RTC) praying, among others, that PNB be ordered to accept the amount of ₱2,461,024.74 as full settlement of the loan
obligation of the Formosos.
After an exchange of several pleadings, the RTC finally rendered its decision [3] on October 27, 1999 favoring the petitioners. The
petitioners prayer for exemplary or corrective damages, attorneys fees, and annual interest and daily interest, however, were denied for
lack of evidence.
PNB filed a motion for reconsideration but it was denied for failure to comply with Rule 15, Section 5 of the 1997 Rules of Civil
Procedure. PNB then filed a Notice of Appeal but it was dismissed for being filed out of time.
The petitioners received their copy of the decision on November 26, 1999, and on January 25, 2001, they filed their Petition for
Relief from Judgment[4] questioning the RTC decision that there was no testimonial evidence presented to warrant the award for moral and
exemplary damages. They reasoned out that they could not then file a motion for reconsideration because they could not get hold of a
copy of the transcripts of stenographic notes. In its August 6, 2001 Order, the RTC denied the petition for lack of merit.[5]
On September 7, 2001, the petitioners moved for reconsideration but it was denied by the RTC in its Omnibus Order of September 26,
2001.[6]
Before the Court of Appeals
On November 29, 2001, the petitioners filed a petition for certiorari before the CA challenging the RTC Order of August 6, 2001 and its
Omnibus Order dated September 26, 2001.
In its January 25, 2002 Resolution, the CA dismissed the petition stating that:
The verification and certification of non-forum shopping was signed by only one (Mr. Primitivo Macalba)
of the many petitioners. In Loquias v. Office of the Ombudsman, G.R. No. 139396, August 15, 2000, it was ruled that
all petitioners must be signatories to the certification of non-forum shopping unless the one who signed it is
authorized by the other petitioners. In the case at bar, there was no showing that the one who signed was
empowered to act for the rest. Therefore, it cannot be presumed that the one who signed knew to the best of his
knowledge whether his co-petitioners had the same or similar claims or actions filed or pending. The ruling in
Loquias further declared that substantial compliance will not suffice in the matter involving strict observance of the
Rules. Likewise, the certification of non-forum shopping requires personal knowledge of the party who executed the
same and that petitioners must show reasonable cause for failure to personally sign the certification. Utter disregard
of the Rules cannot just be rationalized by harping on the policy of liberal construction.
Aggrieved, after the denial of their motion for reconsideration, the petitioners filed this petition for review anchored on the following
GROUNDS
THE COURT OF APPEALS PATENTLY ERRED IN RULING THAT ALL THE PETITIONERS MUST SIGN THE VERIFICATION
AND CERTIFICATION OF NON-FORUM SHOPPING IN A PETITION FOR CERTIORARI WHEREIN ONLY QUESTIONS OF
LAW ARE INVOLVED.
ALTERNATIVELY, THE COURT OF APPEALS PATENTLY ERRED IN DISMISSING THE WHOLE PETITION WHEN AT THE
VERY LEAST THE PETITION INSOFAR AS PETITIONER MALCABA IS CONCERNED BEING THE SIGNATORY THEREOF
SHOULD HAVE BEEN GIVEN DUE COURSE.
THE COURT OF APPEALS PATENTLY ERRED IN GIVING MORE WEIGHT ON TECHNICALITIES WHEN THE PETITION
BEFORE IT WAS CLEARLY MERITORIOUS.[7]
The petitioners basically argue that they have substantially complied with the requirements provided under the 1997 Rules of
Civil Procedure on Verification and Certification of Non-Forum Shopping. The petitioners are of the view that the rule on Verification and
Certification of Non-Forum Shopping that all petitioners must sign should be liberally construed, since only questions of law are raised in a
petition for certiorari and no factual issues that require personal knowledge of the petitioners.
The petitioners further claim that they have a meritorious petition because contrary to the ruling of the RTC, their Petition for
Relief clearly showed that, based on the transcript of stenographic notes, there was enough testimonial evidence for the RTC to grant
them damages and attorneys fees as prayed for.
On the other hand, PNB counters that the mandatory rule on the certification against forum shopping requires that all of the six
(6) petitioners must sign, namely: Nellie Vda. De Formoso and her children Ma. Theresa Formoso-Pescador, Roger Formoso, Mary Jane
Formoso, and Bernard Formoso, and Primitivo Malcaba. Therefore, the signature alone of Malcaba on the certification is insufficient.
PNB further argues that Malcaba was not even a party or signatory to the contract of loan entered into by his co-petitioners.
Neither was there evidence that Malcaba is a relative or a co-owner of the subject properties. It likewise argues that, contrary to the
stance of the petitioners, the issue raised before the CA, as to whether or not the petitioners were entitled to moral and exemplary
damages as well as attorneys fees, is a factual one.
Finally, PNB asserts that the body of the complaint filed by the petitioners failed to show any allegation that Macalba alone
suffered damages for which he alone was entitled to reliefs as prayed for. PNB claims that the wordings of the complaint were clear that all
the petitioners were asking for moral and exemplary damages and attorneys fees.
OUR RULING
 The petition lacks merit.
Certiorari is an extraordinary, prerogative remedy and is never issued as a matter of right. Accordingly, the party who seeks to
avail of it must strictly observe the rules laiddown by law.[8] Section 1, Rule 65 of the 1997 Rules of Civil Procedure provides:
SECTION 1. Petition for certiorari.- When any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack
or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of
law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and
praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and
granting such incidental reliefs as law and justice may require.
The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject
thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-
forum shopping as provided in the third paragraph of Section 3, Rule 46. [Emphasis supplied]
Under Rule 46, Section 3, paragraph 3 of the 1997 Rules of Civil Procedure, as amended, petitions for certiorari must be verified
and accompanied by a sworn certification of non-forum shopping.
SECTION 3. Contents and filing of petition; effect of non-compliance with requirements. The petition shall
contain the full names and actual addresses of all the petitioners and respondents, a concise statement of the
matters involved, the factual background of the case, and the grounds relied upon for the relief prayed for.
In actions filed under Rule 65, the petition shall further indicate the material dates showing when notice
of the judgment or final order or resolution subject thereof was received, when a motion for new trial or
reconsideration, if any, was filed and when notice of the denial thereof was received.
It shall be filed in seven (7) clearly legible copies together with proof of service thereof on the
respondent with the original copy intended for the court indicated as such by the petitioner, and shall be
accompanied by a clearly legible duplicate original or certified true copy of the judgment, order, resolution, or ruling
subject thereof, such material portions of the record as are referred to therein, and other documents relevant or
pertinent thereto. The certification shall be accomplished by the proper clerk of court or his duly authorized
representative, or by the proper officer of the court, tribunal, agency or office involved or by his duly authorized
representative. The other requisite number of copies of the petition shall be accompanied by clearly legible plain
copies of all documents attached to the original.
The petitioner shall also submit together with the petition a sworn certification that he has not
theretofore commenced any other action involving the same issues in the Supreme Court, the Court of Appeals or
different divisions thereof, or any other tribunal or agency; if there is such other action or proceeding, he must state
the status of the same; and if he should thereafter learn that a similar action or proceeding has been filed or is
pending before the Supreme Court, the Court of Appeals, or different divisions thereof, or any other tribunal or
agency, he undertakes to promptly inform the aforesaid courts and other tribunal or agency thereof within five (5)
days therefrom.
The petitioner shall pay the corresponding docket and other lawful fees to the clerk of court and deposit
the amount of P500.00 for costs at the time of the filing of the petition.
The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient
ground for the dismissal of the petition. [Emphases supplied]
The acceptance of a petition for certiorari as well as the grant of due course thereto is, in general, addressed to the sound
discretion of the court. Although the Court has absolute discretion to reject and dismiss a petition for certiorari, it does so only (1) when
the petition fails to demonstrate grave abuse of discretion by any court, agency, or branch of the government; or (2) when there are
procedural errors, like violations of the Rules of Court or Supreme Court Circulars.[9] [Emphasis supplied]
In the case at bench, the petitioners claim that the petition for certiorari that they filed before the CA substantially complied
with the requirements provided for under the 1997 Rules of Civil Procedure on Verification and Certification of Non-Forum Shopping.
The Court disagrees.
Sections 4 and 5 of Rule 7 of the 1997 Rules of Civil Procedure provide:
SEC. 4. Verification. Except when otherwise specifically required by law or rule, pleadings need not be
under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleadings and that the allegations
therein are true and correct of his personal knowledge or based on authentic records.
A pleading required to be verified which contains a verification based on information and belief or upon
knowledge, information and belief or lacks a proper verification, shall be treated as an unsigned pleading.
SEC. 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in
the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and
simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving
the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other
action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the
present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or
is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or
initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless
otherwise provided, upon motion and after hearing. The submission of a false certification or non-compliance with
any of the undertakings therein shall constitute indirect contempt of court, without prejudice to the corresponding
administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate
forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct
contempt, as well as a cause for administrative sanctions. x x x.
In this regard, the case of Oldarico S. Traveno v. Bobongon Banana Growers Multi-Purpose Cooperative, [10] is enlightening:
Respecting the appellate courts dismissal of petitioners appeal due to the failure of some of them to sign
the therein accompanying verification and certification against forum-shopping, the Courts guidelines for the bench
and bar in Altres v. Empleo, which were culled from jurisprudential pronouncements, are instructive:
For the guidance of the bench and bar, the Court restates in capsule form the jurisprudential
pronouncements already reflected above respecting non-compliance with the requirements on, or submission of
defective, verification and certification against forum shopping:
1) A distinction must be made between non-compliance with the requirement on or submission of
defective verification, and non-compliance with the requirement on or submission of defective certification against
forum shopping.
2) As to verification, non-compliance therewith or a defect therein does not necessarily render the
pleading fatally defective. The Court may order its submission or correction or act on the pleading if the attending
circumstances are such that strict compliance with the Rule may be dispensed with in order that the ends of justice
may be served thereby.
 3) Verification is deemed substantially complied with when one who has ample knowledge to swear to
the truth of the allegations in the complaint or petition signs the verification, and when matters alleged in the
petition have been made in good faith or are true and correct.
4) As to certification against forum shopping, non-compliance therewith or a defect therein, unlike in
verification, is generally not curable by its subsequent submission or correction thereof, unless there is a need to
relax the Rule on the ground of substantial compliance or presence of special circumstances or compelling reasons.
5) The certification against forum shopping must be signed by all the plaintiffs or petitioners in a case;
otherwise, those who did not sign will be dropped as parties to the case. Under reasonable or justifiable
circumstances, however, as when all the plaintiffs or petitioners share a common interest and invoke a common
cause of action or defense, the signature of only one of them in the certification against forum shopping
substantially complies with the Rule.
6) Finally, the certification against forum shopping must be executed by the party-pleader, not by his
counsel. If, however, for reasonable or justifiable reasons, the party-pleader is unable to sign, he must execute a
Special Power of Attorney designating his counsel of record to sign on his behalf.
The petition for certiorari filed with the CA stated the following names as petitioners: Nellie Panelo Vda. De Formoso, Ma. Theresa
Formoso-Pescador, Roger Formoso, Mary Jane Formoso, Bernard Formoso, Benjamin Formoso, and Primitivo Malcaba.
Admittedly, among the seven (7) petitioners mentioned, only Malcaba signed the verification and certification of non-forum
shopping in the subject petition. There was no proof that Malcaba was authorized by his co-petitioners to sign for them. There was no
special power of attorney shown by the Formosos authorizing Malcaba as their attorney-in-fact in filing a petition for review on
certiorari. Neither could the petitioners give at least a reasonable explanation as to why only he signed the verification and certification of
non-forum shopping. In Athena Computers, Inc. and Joselito R. Jimenez v. Wesnu A. Reyes, the Court explained that:
The verification of the petition and certification on non-forum shopping before the Court of Appeals were
signed only by Jimenez. There is no showing that he was authorized to sign the same by Athena, his co-petitioner.
Section 4, Rule 7 of the Rules states that a pleading is verified by an affidavit that the affiant has read the
pleading and that the allegations therein are true and correct of his knowledge and belief. Consequently, the
verification should have been signed not only by Jimenez but also by Athenas duly authorized representative.
In Docena v. Lapesura, we ruled that the certificate of non-forum shopping should be signed by all the
petitioners or plaintiffs in a case, and that the signing by only one of them is insufficient. The attestation on non-
forum shopping requires personal knowledge by the party executing the same, and the lone signing petitioner
cannot be presumed to have personal knowledge of the filing or non-filing by his co-petitioners of any action or
claim the same as similar to the current petition.
The certification against forum shopping in CA-G.R. SP No. 72284 is fatally defective, not having been
duly signed by both petitioners and thus warrants the dismissal of the petition for certiorari. We have consistently
held that the certification against forum shopping must be signed by the principal parties. With respect to a
corporation, the certification against forum shopping may be signed for and on its behalf, by a specifically authorized
lawyer who has personal knowledge of the facts required to be disclosed in such document.
While the Rules of Court may be relaxed for persuasive and weighty reasons to relieve a litigant from an
injustice commensurate with his failure to comply with the prescribed procedures, nevertheless they must be
faithfully followed. In the instant case, petitioners have not shown any reason which justifies relaxation of the
Rules. We have held that procedural rules are not to be belittled or dismissed simply because their non-observance
may have prejudiced a partys substantive rights. Like all rules, they are required to be followed except for the most
persuasive of reasons when they may be relaxed. Not one of these persuasive reasons is present here.
In fine, we hold that the Court of Appeals did not err in dismissing the petition for certiorari in view of the
procedural lapses committed by petitioners.[11] [Emphases supplied]
Furthermore, the petitioners argue that the CA should not have dismissed the whole petition but should have given it due
course insofar as Malcaba is concerned because he signed the certification. The petitioners also contend that the CA should have been
liberal in the application of the Rules because they have a meritorious case against PNB.
The Court, however, is not persuaded.
The petitioners were given a chance by the CA to comply with the Rules when they filed their motion for reconsideration, but
they refused to do so. Despite the opportunity given to them to make all of them sign the verification and certification of non-forum
shopping, they still failed to comply. Thus, the CA was constrained to deny their motion and affirm the earlier resolution. [12]
Indeed, liberality and leniency were accorded in some cases. [13] In these cases, however, those who did not sign were relatives of the lone
signatory, so unlike in this case, where Malcaba is not a relative who is similarly situated with the other petitioners and who cannot speak
for them. In the case of Heirs of Domingo Hernandez, Sr. v. Plaridel Mingoa, Sr., [14] it was written:
In the instant case, petitioners share a common interest and defense inasmuch as they collectively claim
a right not to be dispossessed of the subject lot by virtue of their and their deceased parents construction of a
family home and occupation thereof for more than 10 years. The commonality of their stance to defend their
alleged right over the controverted lot thus gave petitioners xxx authority to inform the Court of Appeals in behalf of
the other petitioners that they have not commenced any action or claim involving the same issues in another court
or tribunal, and that there is no other pending action or claim in another court or tribunal involving the same issues.
Here, all the petitioners are immediate relatives who share a common interest in the land sought to be
reconveyed and a common cause of action raising the same arguments in support thereof. There was sufficient
basis, therefore, for Domingo Hernandez, Jr. to speak for and in behalf of his co-petitioners when he certified that
they had not filed any action or claim in another court or tribunal involving the same issues. Thus, the
Verification/Certification that Hernandez, Jr. executed constitutes substantial compliance under the Rules. [Emphasis
supplied]
The same leniency was accorded to the petitioner in the case of Oldarico S. Traveno v. Bobongon Banana Growers Multi-
Purpose Cooperative,[15] where it was stated:
The same leniency was applied by the Court in Cavile v. Heirs of Cavile, because the lone petitioner who
executed the certification of non-forum shopping was a relative and co-owner of the other petitioners with whom
he shares a common interest. x x x[16]
Considering the above circumstances, the Court does not see any similarity at all in the case at bench to compel itself to relax
the requirement of strict compliance with the rule regarding the certification against forum shopping.
At any rate, the Court cannot accommodate the petitioners request to re-examine the testimony of Malcaba in the transcript of
stenographic notes of the April 25, 1999 hearing concerning his alleged testimonial proof of damages for obvious reasons.
Primarily, Section 1, Rule 45 of the Rules of Court categorically states that the petition filed shall raise only questions of law,
which must be distinctly set forth. A question of law arises when there is doubt as to what the law is on a certain state of facts, while there
is a question of fact when the doubt arises as to the truth or falsity of the alleged facts.For a question to be one of law, the same must not
involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the issue must
rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence
presented, the question posed is one of fact.[17]
In this case, the petition clearly raises a factual issue. As correctly argued by PNB, the substantive issue of whether or not the
petitioners are entitled to moral and exemplary damages as well as attorneys fees is a factual issue which is beyond the province of a
petition for review on certiorari.
Secondly, even if the Court glosses over the technical defects, the petition for relief cannot be granted. A perusal of the Petition
for Relief of Judgment discloses that there is no fact constituting fraud, accident, mistake or excusable negligence which are the grounds
therefor. From the petition itself, it appears that the petitioners counsel had a copy of the transcript of stenographic notes which was in his
cabinet all along and only discovered it when he was disposing old and terminated cases. [18] If he was only attentive to his records, he could
have filed a motion for reconsideration or a notice of appeal in behalf of the petitioners.
WHEREFORE, the petition is DENIED.
 SO ORDERED. 21 February 2003 and sold the properties of Marcelo Steel Corporation for the full satisfaction of the judgment against private
CEFERINA ARGALLON-JOCSON G.R. No. 162836 respondents. A certificate of sale [6] was issued to petitioner Rodolfo Tuising (Tuising), who was the highest bidder at the auction sale
and RODOLFO TUISING, for P9.9 million.
Petitioners, Present:
On 28 February 2003, Jocson filed with the trial court a Very Urgent Ex-Parte Motion for Issuance of a Break-Open Order and Petition for
PUNO, C.J., Chairperson, Contempt of Court.[7] On 3 March 2003, Marcelo Steel Corporation filed an Extremely Urgent Omnibus Motion,[8] praying for the annulment
- versus - CARPIO, of the execution sale and for the issuance of an order directing the Sheriffs not to deliver the properties sold to Tuising pending resolution
CORONA, of Marcelo Steel Corporations motion. Marcelo Steel Corporation alleged that its obligation was merely joint with MCFC and that the total
COURT OF APPEALS, LEONARDO-DE CASTRO, and price of the properties sold on execution was unconscionably inadequate.
HON. BONIFACIO T. ONG, in his capacity as the acting Presiding BERSAMIN, JJ.
Judge of the Regional Trial Court of Roxas, Isabela, Branch 23, On 14 April 2003, the trial court issued an order, the dispositive portion of which reads:
MARIA CRISTINA FERTILIZER CORP., and MARCELO STEEL CORP.,
Respondents. WHEREFORE, premises considered, the execution sale of the properties of the defendant Marcelo Steel Corporation,
namely: Seven (7) dilapidated warehouses, detachable metal structural steel with scattered machineries, metal
Promulgated: scraps, metal G.I. Pipes, wires and post, held on February 21, 2003, is hereby declared null and void and the
Certificate of Sale dated February 21, 2003 issued pursuant thereto is hereby set aside and cancelled.
July 30, 2009
The motion for the issuance of a break-open order is hereby denied for lack of merit and basis. [9]
x--------------------------------------------------x
Jocson moved for reconsideration of the trial courts order, claiming that the nature of the obligation to pay the balance of the purchase
DECISION price was solidary. Tuising filed a Motion for Intervention with Leave of Court with Motion for Reconsideration and Entry of Appearance. On
the other hand, Marcelo Steel Corporation filed, on 7 May 2003, a Manifestation and Motion on Satisfaction of Judgment, depositing with
CARPIO, J.: the trial court a Managers Check in the amount of P4,260,198.11 representing full satisfaction of Marcelo Steel Corporations obligation to
Jocson. On 14 July 2003, the trial court denied Jocsons motion for reconsideration and Tuisings motion for intervention and
The Case reconsideration, and granted Marcelo Steel Corporations prayer for entry of satisfaction of judgment on its behalf. [10]

This is a petition for review [1] of the Decision[2] dated 16 January 2004 and the Resolution dated 25 March 2004 of the Court of Appeals in On 18 August 2003, Jocson filed with the trial court a Notice of Appeal, which she later withdrew on 4 September 2003, and in lieu
CA-G.R. SP No. 79179. The Court of Appeals affirmed the Order dated 14 April 2003 of the Regional Trial Court of Roxas, Isabela, Branch 23 thereof, petitioners Jocson and Tuising filed a Petition for Certiorari with the Court of Appeals.[11] The Court of Appeals dismissed the
(trial court), in Civil Case No. Br. 23-377. petition for lack of merit. Jocson and Tuising filed a motion for reconsideration, [12]which the Court of Appeals denied on 25 March 2004.
The Facts Hence, this petition.

On 10 August 1992, petitioner Ceferina Argallon-Jocson (Jocson) filed a complaint for Reconveyance and Damages against Marcelo Steel
Corporation and Maria Cristina Fertilizer Corporation (MCFC), which were represented by Jose Marcelo as president of both companies.
On 24 February 1999, the trial court rendered a decision, the dispositive portion of which reads:
AS A CONSEQUENCE OF ALL THE FOREGOING, judgment is hereby rendered in favor of the plaintiff [Jocson] and
against the defendants [Marcelo Steel Corporation and MCFC]: (1) Ordering the defendants to pay the plaintiff the
balance of P2,004,810.42, with legal interest from 1976 up to the present; (2) attorneys fees in the amount
of P20,000.00; and (3) to pay the costs.[3]
Marcelo Steel Corporation and MCFC (private respondents) appealed to the Court of Appeals, which affirmed the trial courts decision.
Private respondents did not appeal the Court of Appeals decision, which became final and executory. Jocson then filed a Motion for
Issuance of a Writ of Execution. On 9 December 2002, the trial court issued an order for the issuance of a writ of execution in accordance
with the tenor of the decision.
Meanwhile, on 23 February 2004, Jocson filed with the trial court a Motion for Issuance of Alias Writ of Execution to implement the
decision as against MCFC, stating that in view of the Court of Appeals decision, there is a need to execute the decision as against the other
defendant MCFC.[13]
The Trial Courts Ruling
In its Order dated 14 April 2003, the trial court ruled that the liability of Marcelo Steel Corporation was limited to its proportional share in
the entire money judgment. Considering that the dispositive portion of the Decision dated 24 February 1999 in this case did not state that
the obligation of private respondents was solidary, then their obligation was merely joint. Citing the case of PH Credit Corporation v. Court
of Appeals,[14] the trial court held that being made to pay for an obligation in its entirety when ones liability is merely for a portion is a
sufficient ground to contest an execution sale. It would be the height of inequity if we allow judgment obligors to shoulder entire
monetary judgments when their legal liabilities are limited only to their proportionate shares in the entire obligation.
The Court of Appeals Ruling

On 20 December 2002, a Writ of Execution [4] (writ) was issued to the Sheriff of the Office of the Clerk of Court of Manila, commanding the
Sheriff to implement the writ upon private respondents in accordance with the tenor of the decision. The writ was indorsed to Sheriffs
Levy Duka, Luis Alina, Andreil Garcia, and Nathaniel Abaya, who levied upon the properties of Marcelo Steel Corporation in full satisfaction
of the judgment debt. The execution sale was then scheduled on 17 February 2003. On 14 February 2003, Midas International
Development Corporation (Midas Corp.) filed a third-party claim, alleging that some of the levied properties were previously mortgaged to
Midas Corp. The execution sale was postponed to 21 February 2003. On 20 February 2003, Jocson posted a P36 million indemnity
bond[5] so that the levied properties would not be released to claimant Midas Corp. The Sheriffs then proceeded with the execution sale on
The Court of Appeals held that in consonance with Section 1, Rule 65 of the Rules of Civil Procedure, [15] certiorari is not a substitute for
lost appeal. Moreover, the Court of Appeals found that the assigned issues were factual issues not proper in a petition for certiorari,
which is limited to the issues of jurisdiction and grave abuse of discretion.
The Court of Appeals found no grave abuse of discretion on the part of the respondent judge. On the merits of the case, the Court of
Appeals held that the obligation of private respondents to Jocson was merely joint. The Court of Appeals noted that the trial courts
Decision dated 24 February 1999 was silent as to the nature of the liability. Solidary obligations are not presumed in the absence of an
express determination thereof in the judgment. When the judgment does not provide that the defendants are liable to pay jointly and
severally a certain amount of money, none of them may be compelled to satisfy in full said judgment.
The Court of Appeals found that the Sheriffs disregarded the trial courts 24 February 1999 Decision, and deviated from the trial courts
Order dated 9 December 2002 and the writ of execution dated 20 December 2002, which directed them to execute the writ in accordance
with the tenor of the decision.
The Issues
Petitioners contend that:
1. THE HONORABLE COURT OF APPEALS ERRED IN DECIDING THAT PETITIONERS WITHDRAWAL OF
THEIR NOTICE OF APPEAL AND SUBSTITUTING IT BY PETITION FOR CERTIORARI IS PROCEDURALLY
IMPERMISSIBLE.
2. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECIDING THAT THE RESPONDENT JUDGE
GRAVELY ABUSED HIS DISCRETION WHEN HE DECLARED THE OBLIGATION OF THE DEFENDANTS IN
CIVIL CASE NO. 23-377 AS JOINT AND NOT SOLIDARY.
3. THE HONORABLE COURT OF APPEALS ERRED IN [NOT] DECIDING THAT THE RESPONDENT JUDGE
GRAVELY ABUSED HIS DISCRETION IN DENYING THE MOTION FOR A BREAK-OPEN AND DECLARING
THE EXECUTION SALE CONDUCTED ON FEBRUARY 21, 2003 NULL AND VOID AND THE CERTIFICATE
OF SALE AWARDED TO PETITIONER TUISING CANCELLED.
4. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECIDING THAT THE RESPONDENT JUDGE
GRAVELY ABUSED HIS DISCRETION IN GRANTING THE PRAYER FOR SATISFACTION OF JUDGMENT
DESPITE RECEIPT OF PETITIONER JOCSON OF THE PROCEEDS OF THE SALE AS EVIDENCED BY THE
ACKNOWLEDGMENT RECEIPT.
5. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECIDING THAT THE RESPONDENT JUDGE
GRAVELY ABUSED HIS DISCRETION IN DENYING THE MOTION FOR INTERVENTION AND IN NOT
CONSIDERING THE SAME AS PRO INTERESSE SUO.[16]
The Ruling of the Court
We find the petition without merit.
At the outset, the Court notes that the petition supposedly filed by petitioners Jocson and Tuising was not signed by Jocsons counsel. It
was Tuisings counsel who signed in behalf of Jocsons counsel. Tuisings counsel had no authority to sign the petition in behalf of Jocson.
The records are bereft of any proof that Jocson ever authorized Tuisings counsel to be her counsel or to act in her behalf. Under Section 3,
Rule 7 of the Rules of Civil Procedure, [17] every pleading must be signed by the party or counsel representing him, otherwise the pleading
produces no legal effect.
Furthermore, only Tuising signed the Verification and Certification for Non-Forum Shopping. Jocson did not sign the Verification and
Certification. Section 1, Rule 45 of the Rules of Civil Procedure requires the petition for review on certiorari to be verified. [18] A pleading
required to be verified which lacks proper verification shall be treated as an unsigned pleading. [19] Although Tuising belatedly filed on 24
September 2004 a Special Power of Attorney allegedly signed by Jocson and authorizing Tuising to file the petition for review and to verify
and to certify the petition, no explanation was given by Tuising why the Special Power of Attorney was belatedly filed four months after the
petition for review was filed on 12 May 2004. The lack of a certification against forum shopping or a defective certification is generally not
curable by its subsequent submission or correction, unless there is a need to relax the rule under special circumstances or for compelling
reasons.[20] We find no compelling reason for a liberal application of the rules especially in this case where the petitioner who did not sign
the verification and certification for non-forum shopping already filed with the trial court a Motion for Issuance of Alias Writ of Execution.
By filing the Motion for Issuance of Alias Writ of Execution, Jocson was in effect abiding by the Court of Appeals Decision dated 16 January
2004.
In Athena Computers, Inc. v. Reyes,[21] the Court held that the appellate court was correct in dismissing the petition where the verification
and certification for non-forum shopping were signed by only one of the two petitioners. The Court held:
The verification of the petition and certification on non-forum shopping before the Court of Appeals were signed
only by Jimenez. There is no showing that he was authorized to sign the same by Athena, his co-petitioner.
Section 4, Rule 7 of the Rules states that a pleading is verified by an affidavit that the affiant has read the pleading and that the allegations
therein are true and correct to his knowledge and belief. Consequently, the verification should have been signed not only by Jimenez but
also by Athenas duly authorized representative.
In Docena v. Lapesura, we ruled that the certificate of non-forum shopping should be signed by all the petitioners or plaintiffs in a case,
and that the signing by only one of them is insufficient. The attestation on non-forum shopping requires personal knowledge by the party
executing the same, and the lone signing petitioner cannot be presumed to have personal knowledge of the filing or non-filing by his co-
petitioners of any action or claim the same as similar to the current petition.[22]
In this case, the flaw is fatal considering that Jocson, the co-petitioner who did not sign the verification and certification of non-forum
shopping and whose counsel did not sign the petition, was the principal party in the original case. Jocson was the plaintiff in the trial court
who sought reconveyance of her properties while her co-petitioner Tuising was not a party in the original case but was merely the highest
bidder in the execution sale which was declared void by the trial court.
The certification of non-forum shopping is rooted in the principle that a party-litigant should not be allowed to pursue simultaneous
remedies in different fora, such act being detrimental to an orderly judicial procedure. [23] The petition, signed only by Tuisings counsel,
conveniently failed to mention the fact that on 23 February 2004, prior to the filing of the petition, Jocson already filed with the trial court
a Motion for Issuance of Alias Writ of Execution which reads:
MOTION FOR ISSUANCE OF ALIAS WRIT OF EXECUTION
PLAINTIFF, by counsel, respectfully states:
1. The Court of Appeals had ruled finally that the DECISION can be implemented only as against defendant Marcelo Steel Corporation and
the RTC Sheriff of Manila, in levying the properties of the two defendant corporations, violated the dispositive portion of the decision
because there is no showing that their liability is solidary. (CA-G.R. SP-No. 79179);
2. There is need, therefore, to execute the decision as against the other defendant MARIA CRISTINA FERTILIZER CORPORATION.
WHEREFORE, premises considered, it is respectfully prayed that an ALIAS WRIT OF EXECUTION be issued to
implement the decision as against defendant MARIA CRISTINA FERTILIZER CORPORATION. [24]
Clearly, such an action is incompatible with this petition for review. Even at the appellate courts level, the Motion for
Reconsideration[25] supposedly filed by petitioners Jocson and Tuising on 3 February 2004 was also signed by Tuisings counsel only.
[26]
Jocsons filing of a Motion for Issuance of Alias Writ of Execution to implement the decision as against MCFC clearly indicates that she
already acceded to the Court of Appeals Decision dated 16 January 2004 and no longer intended to move for its reconsideration, much
less appeal to this Court. Besides, a party should not be allowed to abuse and make a mockery of the judicial process by pursuing
simultaneous and incompatible remedies in different courts.
WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 16 January 2004 and the Resolution dated 25 March 2004 of the
Court of Appeals in CA-G.R. SP No. 79179.
SO ORDERED.
MARANAW HOTELS AND G.R. No. 149660
RESORT CORP.,
Petitioner,
Present:

PUNO, C.J., Chairperson,
- versus - CARPIO,
CORONA,
AZCUNA, and
LEONARDO-DE CASTRO, JJ.
COURT OF APPEALS, SHERYL
OABEL AND MANILA Promulgated:
RESOURCE DEVELOPMENT
CORP.,
Respondents. January 20, 2009
x-------------------------------------------------x
DECISION
PUNO, C.J.:
Before the Court is a petition for review on certiorari assailing a resolution issued by the Court of Appeals. The resolution
denied the petition for review filed by petitioner Maranaw Hotels and Resort Corp.
The present proceedings emanate from a complaint for regularization, subsequently converted into one for illegal dismissal,
filed before Labor Arbiter Madjayran H. Ajan by private respondent Sheryl Oabel.
It appears that private respondent Oabel was initially hired by petitioner as an extra beverage attendant on April 24, 1995.
This lasted until February 7, 1997.[1]Respondent worked in Century Park Hotel, an establishment owned by the petitioner.
On September 16, 1996,[2] petitioner contracted with Manila Resource Development Corporation. [3] Subsequently, private respondent
Oabel was transferred to MANRED, with the latter deporting itself as her employer. [4] MANRED has intervened at all stages of these
proceedings and has consistently claimed to be the employer of private respondent Oabel. For the duration of her employment, private
respondent Oabel performed the following functions:
Secretary, Public Relations Department: February 10, 1997 March 6, 1997
Gift Shop Attendant: April 7, 1997 April 21, 1997
Waitress: April 22, 1997 May 20, 1997
Shop Attendant: May 21, 1997 July 30, 1998[5]
On July 20, 1998, private respondent filed before the Labor Arbiter a petition for regularization of employment against the
petitioner. On August 1, 1998, however, private respondent Oabel was dismissed from employment. [6] Respondent converted her
petition for regularization into a complaint for illegal dismissal.
Labor Arbiter Madjayran H. Ajan rendered a decision on July 13, 1999, dismissing the complaint against the petitioner. The
decision held:
While complainant alleged that she has been working with the respondent hotel in different department
(sic) of the latter on (sic) various capacities (although not all departments are part and parcel of the hotels),
complainant never disputed the fact that her work with the same were on a per function basis or on a need basis co-
terminus with the function she was hired for.Considering that complainant job (sic) with the respondent hotel was
on a per function basis or on a need basis, complainant could not even be considered as casual employee or
provisional employee. Respondent hotel consider (sic) complainant, at most, a project employee which does not
ripened (sic) into regular employee (sic).[7]
Private respondent appealed before the National Labor Relations Commission (NLRC). The NLRC reversed the ruling of the
Labor Arbiter and held that: (1) MANRED is a labor-only contractor, and (2) private respondent was illegally dismissed.
Of the first holding, the NLRC observed that under the very terms of the service contract, MANRED shall provide the
petitioner not specific jobs or services but personnel and that MANRED had insufficient capitalization and was not sufficiently
equipped to provide specific jobs. [8] The NLRC likewise observed that the activities performed by the private respondent were directly
related to and usually necessary or desirable in the business of the petitioner. [9]
With respect to the termination of private respondents employment, the NLRC held that it was not effected for a valid or
just cause and was therefore illegal. The dispositive portion of the ruling reads thus:
WHEREFORE, the decision appealed from is hereby REVERSED. xxxx Respondents Century Park Hotel and
Manila Resource Development Corporation are hereby declared jointly and severally liable for the following awards
in favor of complainant: 1) her full backwages and benefits from August 1, 1998 up to the date of her actual
reinstatement; 2) her salary differentials, share in the service charges, service incentive leave pay and 13 th month
pay from July 20, 1995 to July 31, 1998.
SO ORDERED.[10]
Petitioner subsequently appealed before the Court of Appeals. In a resolution, the appellate court dismissed the petition
on account of the failure of the petitioner to append the board resolution authorizing the counsel for petitioner to file the petition
before the Court of Appeals. The Court of Appeals held:
After a careful perusal of the records of the case, We resolve to DISMISS the present petition on the
ground of non-compliance with the rule on certification against forum shopping taking into account that the
aforesaid certification was subscribed and verified by the Personnel Director of petitioner corporation without
attaching thereto his authority to do so for and in behalf of petitioner corporation per board resolution or special
power of attorney executed by the latter.[11]
Petitioner duly filed its motion for reconsideration which was denied by the Court of Appeals in a resolution dated August 30,
2001.[12]
In the present petition for review, the petitioner invokes substantial justice as justification for a reversal of the resolution of the Court of
Appeals.[13] Petitioner likewise contends that the filing of a motion for reconsideration with the certificate of non-forum shopping attached
constitutes substantial compliance with the requirement.[14]
There is no merit to the petition.
Well-settled is the rule that the certificate of non-forum shopping is a mandatory requirement. Substantial compliance applies only with
respect to the contents of the certificate but not as to its presence in the pleading wherein it is required.
Petitioners contention that the filing of a motion for reconsideration with an appended certificate of non forum-shopping suffices to cure
the defect in the pleading is absolutely specious. It negates the very purpose for which the certification against forum shopping is required:
to inform the Court of the pendency of any other case which may present similar issues and involve similar parties as the one before it.
The requirement applies to both natural and juridical persons.
Petitioner relies upon this Courts ruling in Digital Microwave Corp. v. Court of Appeals [15] to show that its Personnel Director has been duly
authorized to sign pleadings for and in behalf of the petitioner. Petitioner, however, has taken the ruling in Digital Microwave out of
context. The portion of the ruling in Digital Microwave upon which petitioner relies was in response to the issue of impossibility of
compliance by juridical persons with the requirements of Circular 28-91. [16] The Courts identification of duly authorized officers or directors
as the proper signatories of a certificate of non forum-shopping was in response to that issue. The ruling does not, however, ipso
facto clothe a corporate officer or director with authority to execute a certificate of non-forum shopping by virtue of the formers position
alone.
Any doubt on the matter has been resolved by the Courts ruling in BPI Leasing Corp. v. Court of Appeals[17] where this Court emphasized
that the lawyer acting for the corporation must be specifically authorized to sign pleadings for the corporation. [18] Specific authorization,
the Court held, could only come in the form of a board resolutionissued by the Board of Directors that specifically authorizes the counsel
to institute the petition and execute the certification, to make his actions binding on his principal, i.e., the corporation.[19]
This Court has not wavered in stressing the need for strict adherence to procedural requirements. The rules of procedure exist
to ensure the orderly administration of justice. They are not to be trifled with lightly.

For this reason alone, the petition must already be dismissed. However, even if this grave procedural infirmity is set aside, the
petition must still fail. In the interest of averting further litigation arising from the present controversy, and in light of the respective
positions asserted by the parties in the pleadings and other memoranda filed before this Court, the Court now proceeds to resolve the
case on the merits.
Petitioner posits that it has entered into a service agreement with intervenor MANRED. The latter, in turn, maintains that
private respondent Oabel is its employee and subsequently holds itself out as the employer and offers the reinstatement of private
respondent.
Notably, private respondents purported employment with MANRED commenced only in 1996, way after she was hired by the
petitioner as extra beverage attendant on April 24, 1995. There is thus much credence in the private respondents claim that the service
agreement executed between the petitioner and MANRED is a mere ploy to circumvent the law on employment, in particular that which
pertains on regularization.
In this regard, it has not escaped the notice of the Court that the operations of the hotel itself do not cease with the end of
each event or function and that there is an ever present need for individuals to perform certain tasks necessary in the petitioners business.
Thus, although the tasks themselves may vary, the need for sufficient manpower to carry them out does not. In any event, as borne out by
the findings of the NLRC, the petitioner determines the nature of the tasks to be performed by the private respondent, in the process
exercising control.
This being so, the Court finds no difficulty in sustaining the finding of the NLRC that MANRED is a labor-only contractor.
[20]
Concordantly, the real employer of private respondent Oabel is the petitioner.
It appears further that private respondent has already rendered more than one year of service to the petitioner, for the period
1995-1998, for which she must already be considered a regular employee, pursuant to Article 280 of the Labor Code:
Art. 280. Regular and casual employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the engagement of the
employee or where the work or service to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That any employee who has rendered at least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which he is employed and his employment
shall continue while such activity exists. (Emphasis supplied)
IN VIEW WHEREOF, the present petition is DENIED. The resolution of the Court of Appeals dated June 15, 2001 is
affirmed.
Costs against petitioner.
SO ORDERED.
G.R. No.197530 July 9, 2014
ABOITIZ EQUITY VENTURES, INC., Petitioner,
vs.
VICTOR S. CHIONGBIAN, BENJAMIN D. GOTHONG, and CARLOS A. GOTHONG LINES, INC. (CAGLI),Respondents.
DECISION
LEONEN, J.:
This is a petition for review on certiorari with an application for the issuance of a temporary restraining order and/or writ of preliminary
injunction under Rule 45 of the Rules of Court. This petition prays that the assailed orders dated May 5, 2011 1 and June 24, 20112 of the
Regional Trial Court, Cebu City, Branch 10 in Civil Case No. CEB-37004 be nullified and set aside and that judgment be rendered dismissing
with prejudice the complaint 3 dated July 20, 2010 filed by respondents Carlos A. Gothong Lines, Inc. ("CAGLI") and Benjamin D. Gothong.
On January 8, 1996, Aboitiz Shipping Corporation ("ASC"), principally owned by the Aboitiz family, CAGLI, principally owned by the
Gothong family, and William Lines, Inc.("WLI"), principally owned by the Chiongbian family, entered into anagreement (the
"Agreement"),4 whereby ASC and CAGLI would transfer their shipping assets to WLI in exchange for WLI’s shares of stock. 5 WLI, in turn,
would run their merged shipping businesses and, henceforth, be known as WG&A, Inc. ("WG&A"). 6
Sec. 11.06 of the Agreement required all disputes arising out of or in connection with the Agreement tobe settled by arbitration:
11.06 Arbitration
All disputes arising out of or in connection with this Agreement including any issue as to this Agreement’s validity or enforceability, which
cannot be settled amicably among the parties, shall be finally settled by arbitration in accordance with the Arbitration Law (Republic Act
No. 876) by an arbitration tribunal composed of four (4) arbitrators. Each of the parties shall appoint one (1) arbitrator, the three (3) to
appoint the fourth arbitrator who shall act as Chairman. Any award by the arbitration tribunal shall be final and binding upon the parties
and shall be enforced by judgment of the Courts of Cebu or Metro Manila. 7
Among the attachments to the Agreement was Annex SL-V. 8 This was a letter dated January 8,1996, from WLI, through its President (herein
respondent) Victor S. Chiongbian addressed to CAGLI, through its Chief Executive Officer Bob D. Gothong and Executive Vice President for
Engineering (herein respondent) Benjamin D. Gothong. On its second page, Annex SL-V bore the signatures ofBob D. Gothong and
respondent Benjamin D. Gothong by way of a conforme on behalf of CAGLI.
Annex SL-V confirmed WLI’s commitment to acquire certain inventories of CAGLI. These inventories would havea total aggregate value of,
at most, ₱400 million, "as determinedafter a special examination of the [i]nventories." 9Annex SL-V also specificallystated that such
acquisition was "pursuant to the Agreement."10
The entirety of Annex SL-V’s substantive portion reads:
We refer to the Agreement dated January 8, 1996 (the "Agreement") among William Lines, Inc. ("Company C"), Aboitiz Shipping
Corporation ("Company A") and Carlos A. Gothong Lines, Inc. ("Company B") regarding the transfer of various assets of Company A and
Company B to Company C in exchangefor shares of capital stock of Company C. Terms defined in the Agreement are used herein as therein
defined.
This will confirm our commitment to acquire certain spare parts and materials inventory (the "Inventories") of Company B pursuant to the
Agreement.
The total aggregate value of the Inventories to be acquired shall not exceed ₱400 Million as determined after a special examination of the
Inventories as performed by SGV & Co. to be completed on or before the Closing Date under the agreed procedures determined by the
parties.
Subject to documentation acceptable to both parties, the Inventories to be acquired shall be determined not later than thirty (30) days
after the Closing Date and the payments shall be made in equal quarterly instalments over a period of two years with the first payment
due on March 31, 1996.11
Pursuant to Annex SL-V, inventories were transferred from CAGLI to WLI. These inventories were assessed to have a value of 514 million,
which was later adjusted to 558.89 million. 12 Of the total amount of 558.89 million, "CAGLIwas paid the amount of 400 Million." 13 In
addition to the payment of 400 million,petitioner Aboitiz Equity Ventures ("AEV") noted that WG&A shares with a book value of 38.5
million were transferred to CAGLI.14
As there was still a balance, in2001, CAGLI sent WG&A (the renamed WLI) demand letters "for the return of or the payment for the excess
[i]nventories."15 AEV alleged that to satisfy CAGLI’s demand, WLI/WG&A returned inventories amounting to 120.04 million. 16 As proof of
this, AEV attached copies of delivery receipts signed by CAGLI’s representatives as Annex "K" of the present petition. 17
Sometime in 2002, the Chiongbian and Gothong families decided to leave the WG&A enterprise and sell their interest in WG&A to the
Aboitiz family. As such, a share purchase agreement 18 ("SPA") was entered into by petitioner AEV and the respective shareholders groups
of the Chiongbians and Gothongs. In the SPA, AEV agreedto purchase the Chiongbian group's 40.61% share and the Gothong group's
20.66% share in WG&A’s issued and outstanding stock.19
Section 6.5 of the SPA provided for arbitration as the mode of settling any dispute arising from the SPA. It reads:
6.5 Arbitration. Should there be any dispute arising between the parties relating to this Agreement including the interpretation or
performance hereof which cannot beresolved by agreement of the parties within fifteen (15) days after written notice by a party to
another, such matter shall then be finally settled by arbitration in Cebu City in accordance with the Philippine Arbitration Law. Substantive
aspects of the dispute shall be settled by applying the laws of the Philippines. The decision of the arbitrators shall be final and binding
upon the parties hereto and the expense of arbitration (including without limitation the award of attorney’s fees to the prevailing party)
shall be paid as the arbitrators shall determine.20
Section 6.8 of the SPA further provided that the Agreement (of January 8, 1996) shall be deemed terminated except its Annex SL-V. It
reads:
6.8 Termination of Shareholders Agreement. The Buyer and the Sellers hereby agree that on Closing, the Agreement among Aboitiz
Shipping Corporation, Carlos A. Gothong Lines, Inc. and William Lines, Inc. dated January 8, 1996, as the same has been amended from
time to time (the "Shareholders’ Agreement") shall all be considered terminated, except with respect to such rights and obligations that
the parties to the Shareholders’ Agreement have under a letter dated January 8, 1996 (otherwise known as "SL-V") from William Lines, Inc.
to Carlos A. Gothong Lines, Inc. regarding certain spare parts and materials inventory, which rights and obligations shall survive through
the date prescribed by the applicable statute of limitations.21
As part of the SPA, the parties entered into an Escrow Agreement 22 whereby ING Bank N.V.-Manila Branch was to take custody of the
shares subject of the SPA.23 Section 14.7 of the Escrow Agreement provided that all disputes arising from it shall be settled through
arbitration:
14.7 All disputes, controversies or differences which may arise by and among the parties hereto out of, or in relation to, or in connection
with this Agreement, orfor the breach thereof shall be finally settled by arbitration in Cebu City in accordance with the Philippine
Arbitration Law. The award rendered by the arbitrator(s) shall be final and binding upon the parties concerned. However, notwithstanding
the foregoing provision, the parties reserve the right to seek redress before the regular court and avail of any provisional remedies in the
event of any misconduct, negligence, fraud or tortuous acts which arise from any extra-contractual conduct that affects the ability ofa
party to comply with his obligations and responsibilities under this Agreement.24
As a result of the SPA, AEV became a stockholder of WG&A. Subsequently, WG&A was renamed Aboitiz Transport Shipping Corporation
("ATSC").25
Petitioner AEV alleged that in2008, CAGLI resumed making demands despite having already received 120.04 million worth of excess
inventories.26 CAGLI initially made its demand to ATSC (the renamed WLI/WG&A) through a letter 27 dated February 14, 2008. As alleged by
AEV, however, CAGLI subsequently resorted to a "shotgun approach" 28 and directed its subsequent demand letters to AEV 29 as well as to
FCLC30 (a company related to respondent Chiongbian).
AEV responded to CAGLI’s demands through several letters. 31 In these letters, AEV rebuffed CAGLI's demands noting that: (1) CAGLI already
received the excess inventories;(2) it was not a party to CAGLI's claim as it had a personality distinct from WLI/WG&A/ATSC; and (3)
CAGLI's claim was already barred by prescription.
In a reply-letter32 dated May 5, 2008, CAGLI claimed that it was unaware of the delivery to it of the excess inventories and asked for copies
of the corresponding delivery receipts. 33 CAGLI threatened that unless it received proof of payment or return ofexcess inventories having
been made on or before March 31, 1996, it would pursue arbitration.34
In letters written for AEV (the first dated October 16, 2008 by Aboitiz and Company, Inc.’s Associate General Counsel Maria Cristina G.
Gabutina35 and the second dated October 27, 2008 by SyCip Salazar Hernandez and Gatmaitan 36), it was noted that the excess inventories
were delivered to GT Ferry Warehouse. 37 Attached to these letters were a listing and/or samples38 of the corresponding delivery receipts. In
these letters it was also noted that the amount of excess inventories delivered (120.04 million) was actually in excess of the value of the
supposedly unreturned inventories (119.89 million). 39 Thus, it was pointed out that it was CAGLI which was liable to return the difference
between 120.04 million and 119.89 million. 40 Its claims not having been satisfied, CAGLI filed on November 6, 2008 the first of two
applications for arbitration ("first complaint") 41 against respondent Chiongbian, ATSC, ASC, and petitioner AEV, before the Cebu City
Regional Trial Court, Branch 20. The first complaint was docketed as Civil Case No. CEB-34951.
In response, AEV filed a motion to dismiss 42 dated February 5, 2009. AEV argued that CAGLI failed to state a cause of action as there was
no agreement to arbitrate between CAGLI and AEV. 43 Specifically, AEV pointed out that: (1) AEV was never a party to the January 8, 1996
Agreement or to its Annex SL-V; 44 (2) while AEV is a party to the SPA and Escrow Agreement, CAGLI's claim had no connection to either
agreement; (3) the unsigned and unexecuted SPA attached to the complaint cannot be a source of any right to arbitrate; 45 and (4) CAGLI
did not say how WLI/WG&A/ATSC's obligation to return the excess inventories can be charged to AEV.
On December 4, 2009, the Cebu City Regional Trial Court, Branch 20 issued an order 46 dismissing the first complaint with respect to AEV. It
sustained AEV’s assertion that there was no agreement binding AEV and CAGLI to arbitrate CAGLI’s claim. 47 Whether by motion for
reconsideration, appeal or other means, CAGLI did not contest this dismissal.
On February 26, 2010, the Cebu CityRegional Trial Court, Branch 20 issued an order 48 directing the parties remaining in the first complaint
(after the discharge of AEV) to proceed with arbitration.
The February 26, 2010 order notwithstanding, CAGLI filed a notice of dismissal 49 dated July 8, 2010, withdrawing the first complaint. In an
order50 dated August 13, 2010, the Cebu City Regional Trial Court, Branch 20 allowed this withdrawal.
ATSC (the renamed WLI/WG&A) filed a motion for reconsideration 51 dated September 20, 2010 to the allowance of CAGLI's notice of
dismissal. This motion was denied in an order52 dated April 15, 2011.
On September 1, 2010, while the first complaint was still pending (n.b., it was only on April 15, 2011 that the Cebu City Regional Trial
Court, Branch 20 denied ATSC’s motion for reconsideration assailing the allowance of CAGLI’s notice of disallowance), CAGLI, now joined
by respondent Benjamin D. Gothong, filed a second application for arbitration ("second complaint") 53 before the Cebu City Regional Trial
Court, Branch 10. The second complaint was docketed as Civil Case No. CEB-37004 and was also in view of the return of the same excess
inventories subject of the first complaint.
On October 28, 2010, AEV filed a motion to dismiss 54 the second complaint on the following grounds: 55 (1) forum shopping; (2) failure to
state a cause of action; (3) res judicata; and (4) litis pendentia.
In the first of the two (2) assailed orders dated May 5, 2011, 56 the Cebu City Regional Trial Court, Branch 10 denied AEV's motion to
dismiss.
On the matter of litis pendentia, the Regional Trial Court, Branch 10 noted that the first complaint was dismissed with respect to AEV on
December 4, 2009, while the second complaint was filed on September 1, 2010. As such, the first complaint was no longer pending at the
time of the filing of the second complaint. 57 On the matter of res judicata, the trial court noted that the dismissal without prejudice of the
first complaint "[left] the parties free to litigate the matter in a subsequent action, as though the dismiss[ed] action had not been
commenced."58 It added that since litis pendentia and res judicata did not exist, CAGLI could not be charged with forum shopping. 59 On the
matter of an agreement to arbitrate, the Regional Trial Court, Branch 10 pointed to the SPA as "clearly express[ing] the intention of the
parties to bring to arbitration process all disputes, if amicable settlement fails." 60 It further dismissed AEV’s claim that it was not a party to
the SPA, as "already touching on the merits of the case" 61 and therefore beyond its duty "to determine if they should proceed to
arbitration or not."62
In the second assailed order63 dated June 24, 2011, the Cebu City Regional Trial Court, Branch 10 deniedAEV's motion for reconsideration.
Aggrieved, AEV filed the present petition.64 AEV asserts that the second complaint is barred by res judicata and litis pendentia and that
CAGLI engaged in blatant forum shopping. 65 It insists that it is not bound by an agreement to arbitrate with CAGLI and that, even assuming
that it may be required to arbitrate, it is being ordered to do so under terms that are "manifestly contrary to the . . . agreements on which
CAGLI based its demand for arbitration."66
For resolution are the following issues:
I. Whether the complaint in Civil Case No. CEB-37004 constitutes forum shopping and/or is barred by res judicata and/or litis pendentia
II. Whether petitioner, Aboitiz Equity Ventures, Inc., is bound by an agreement to arbitrate with Carlos A. Gothong Lines, Inc., with respect
to the latter’s claims for unreturned inventories delivered to William Lines, Inc./WG&A, Inc./Aboitiz Transport System Corporation
AEV availed of the wrong
remedy in seeking relief from
this court
Before addressing the specific mattersraised by the present petition, we emphasize that AEV is in error inseeking relief from this court via a
petition for review on certiorari under Rule45 of the Rules of Court. As such, we are well in a position to dismiss the present petition
outright. Nevertheless, as the actions of the Cebu City Regional Trial Court, Branch 10 are tainted with grave abuse of discretion amounting
to lack or excess of jurisdiction, this court treats the present Rule 45 petition as a Rule 65 petition and gives it due course.
A petition for review on certiorari under Rule 45 is a mode of appeal. This is eminently clear from the very title and from the first section of
Rule 45 (as amended by A.M. No. 07-7-12-SC):
Rule 45
APPEAL BY CERTIORARITO THE SUPREME COURT
SECTION 1. Filing of petition with Supreme Court. A party desiring to appeal by certiorarifrom a judgment, final order or resolution of the
Court of Appeals, the Sandiganbayan, the Court of Tax Appeals, the Regional Trial Court or other courts, whenever authorized by law, may
file with the Supreme Court a verified petition for review on certiorari. The petition may include an application for a writ of preliminary
injunction or other provisional remedies and shall raise only questions of law, which must be distinctly set forth. The petitioner may seek
the same provisional remedies by verified motion filed inthe same action or proceeding at any time during its pendency. (Emphasis
supplied)
Further, it is elementary that anappeal may only be taken from a judgment or final order that completely disposes of the case. 67 As such,
no appeal may be taken from an interlocutory order 68 (i.e., "one which refers to something between the commencement and end of the
suit which decides some point or matter but it is not the final decision of the whole controversy" 69). As explained in Sime Darby Employees
Association v. NLRC,70 "[a]n interlocutory order is not appealable until after the rendition of the judgment on the merits for a contrary rule
would delay the administration of justice and unduly burden the courts."71
An order denying a motion to dismiss is interlocutory in character. Hence, it may not be the subject of an appeal. The interlocutory nature
of an order denying a motion to dismiss and the remedies for assailing such an order were discussed in Douglas Lu Ym v. Nabua: 72
An order denying a motion to dismiss is an interlocutory order which neither terminates nor finally disposes of a case, as it leaves
something to be done by the court before the case is finally decided on the merits. As such, the general rule is that the denial of a motion
to dismiss cannot be questioned in a special civil action for certiorariwhich is a remedy designed to correct errors ofjurisdiction and not
errors of judgment. Neither can a denial of a motion todismiss be the subject of an appeal unless and until a final judgment or order is
rendered.In order to justify the grant of the extraordinary remedy of certiorari, the denial of the motion to dismiss must have been tainted
with grave abuse of discretion amounting to lack or excess of jurisdiction. 73 (Emphasis supplied)
Thus, where a motion to dismiss is denied, the proper recourse is for the movant to file an answer. 74 Nevertheless, where the order
denying the motion to dismiss is tainted with grave abuse of discretion amounting to lack or excess of jurisdiction, the movant may assail
such order via a Rule 65 (i.e., certiorari, prohibition, and/or mandamus) petition. This is expressly recognized in the third paragraph of Rule
41, Section 1 of the Rules of Court. 75 Following the enumeration in the second paragraph of Rule 41, Section 1 of the instances when an
appeal may not be taken, the third paragraph specifies that "[in] any of the foregoing circumstances, the aggrieved party may file an
appropriate special civil action as provided in Rule 65."76
Per these rules, AEV is in error for having filed what it itself calls a "Petition for Review on Certiorari [Appeal by Certiorari under Rule 45 of
the Rules of Court]."77 Since AEV availed of the improper remedy, this court is well in a position to dismiss the present petition.
Nevertheless, there have been instances when a petition for review on certiorari under Rule 45 was treated by this court as a petition for
certiorari under Rule 65. As explained in China Banking Corporation v. Asian Construction and Development Corporation: 78
[I]n many instances, the Court has treated a petition for review on certiorariunder Rule 45 as a petition for certiorari under Rule 65 of the
Rules of Court, such as in cases where the subject of the recourse was one of jurisdiction, or the act complained of was perpetrated by a
court with grave abuse of discretion amounting to lack or excess of jurisdiction. 79
In this case, the May 5, 2011 and June 24, 2011 orders of the Cebu City Regional Trial Court, Branch 10 in Civil Case No. CEB-37004 are
assailed for having denied AEV’s motion todismiss despite: first, the second complaint having been filed in a manner constituting forum
shopping; second, the prior judgment on the merits made in Civil Case No. CEB-34951, thereby violating the principle ofres judicata; and
third, the (then) pendency of Civil Case No. CEB-34951 with respect to the parties that, unlike AEV, were not discharged from the case,
thereby violating the principle of litis pendentia. The same orders are assailed for having allowed CAGLI’s application for arbitration to
continue despite supposedly clear and unmistakable evidence that AEV is not bound by an agreement to arbitrate with CAGLI.
As such, the Cebu City, Regional Trial Court, Branch 10’s orders are assailed for having been made with grave abuse of discretion
amounting to lack or excess of jurisdiction in that the Cebu City Regional Trial Court, Branch 10 chose to continue taking cognizance of the
second complaint, despite there being compelling reasons for its dismissal and the Cebu City, Regional Trial Court Branch 20’s desistance.
Conformably, we treat the present petition as a petition for certiorari under Rule 65 of the Rules of Court and give it due course.
The complaint in Civil Case
No. CEB-37004 constitutes
forum shopping and is barred
by res judicata
The concept of and rationale against forum shopping were explained by this court in Top Rate Construction & General Services, Inc. v.
Paxton Development Corporation:80
FORUM SHOPPING is committed by a party who institutes two or more suits in different courts, either simultaneously or successively, in
order to ask the courts to rule on the same or related causes or to grant the same or substantially the same reliefs, on the supposition that
one or the other court would make a favorabledisposition or increase a party's chances of obtaining a favorable decision or action. It is an
act of malpractice for it trifles with the courts, abuses their processes, degrades the administration of justice and adds to the already
congested court dockets. What is critical is the vexation brought upon the courts and the litigants by a party who asks different courts to
rule on the same or related causes and grant the same or substantially the same reliefs and in the process creates the possibility of
conflicting decisions being rendered by the different fora upon the same issues, regardless of whether the court in which one of the suits
was brought has no jurisdiction over the action.81
Equally settled is the test for determining forum shopping. As this court explained in Yap v. Chua:82
To determine whether a party violated the rule against forum shopping, the most important factor toask is whether the elements of litis
pendentiaare present, or whether a final judgment in one case will amount to res judicatain another; otherwise stated, the test for
determining forum shopping is whether in the two (or more) cases pending, there is identity of parties, rights or causes of action, and
reliefs sought.83
Litis pendentia "refers to that situation wherein another action is pending between the same parties for the same cause ofaction, such
that the second action becomes unnecessary and vexatious." 84 It requires the concurrence of three (3) requisites: "(1)the identity of
parties, or at least such as representing the same interests in both actions; (2) the identity of rights asserted and relief prayed for,the relief
being founded on the same facts; and (3) the identity of the two cases such that judgment in one, regardless of which party issuccessful,
would amount tores judicatain the other." 85
In turn, prior judgment or res judicata bars a subsequent case when the following requisites concur: "(1) the former judgment is final; (2) it
is rendered by a court having jurisdiction over the subject matter and the parties; (3) it is a judgment or an order on the merits; (4) there is
— between the first and the second actions — identityof parties, of subject matter, and of causes of action." 86
Applying the cited concepts and requisites, we find that the complaint in Civil Case No. CEB-37004 is barred byres judicata and constitutes
forum shopping.
First, between the first and second complaints, there is identity of parties. The first complaint was brought by CAGLI as the sole plaintiff
against Victor S. Chiongbian, ATSC, and AEV as defendants. In the second complaint, CAGLI was joined by Benjamin D. Gothong as
(co-)plaintiff. As to the defendants, ATSC was deleted while Chiongbian and AEV were retained.
While it is true that the parties to the first and second complaints are not absolutely identical, this court has clarified that, for purposes of
forum shopping, "[a]bsolute identity of parties is not required [and that it] is enough that there is substantial identity of parties." 87
Even as the second complaint alleges that Benjamin D. Gothong "is . . . suing in his personal capacity," 88 Gothong failed to show any
personal interest in the reliefs sought by the second complaint. Ultimately, what is at stake in the second complaint is the extent to which
CAGLI may compel AEV and Chiongbian to arbitrate in order that CAGLI may then recover the value of its alleged unreturned inventories.
This claim for recovery is pursuant to the agreement evinced in Annex SL-V. Annex SL-V was entered into by CAGLI and not by Benjamin D.
Gothong. While it is true that Benjamin D. Gothong, along with Bob D. Gothong, signed Annex SL-V, he did so only in a representative, and
not in a personal, capacity. As such, Benjamin D. Gothong cannot claim any right that personally accrues to him on account of Annex SL-V.
From this, it follows that Benjamin D. Gothong is not a real party in interest — "one who stands to be benefitted or injured by the
judgment in the suit or the party entitled to the avails of the suit" 89 — and that his inclusion in the second complaint is an unnecessary
superfluity.
Second, there is identity in subject matter and cause of action. There is identity in subject matter as both complaints are applications for
the same relief. There is identity in cause ofaction as both complaints are grounded on the right to be paid for or to receive the value of
excess inventories (and the supposed corresponding breach thereof) as spelled out in Annex SL-V.
The first and second complaints are both applications for arbitration and are founded on the same instrument — Annex SL-V. Moreover,
the intended arbitrations in both complaintscater to the sameultimate purpose, i.e., that CAGLI may recover the value of its supposedly
unreturned inventories earlier delivered to WLI/WG&A/ATSC.
In both complaints, the supposedpropriety of compelling the defendants to submit themselves to arbitration are anchored on the same
bases: (1) Section 6.8 of the SPA, which provides that the January 8, 1996 Agreement shall be deemed terminatedbut that the rights and
obligations arising from Annex SL-V shall continue to subsist; 90 (2) Section 6.5 of the SPA, which requires arbitration as the mode for
settling disputes relating to the SPA; 91 and, (3) defendants’ refusal to submit themselves to arbitration vis-a-vis Republic Act No. 876, which
provides that "[a] party aggrieved by the failure, neglect or refusal of another to perform under an agreement in writing providing for
arbitration may petition the court for an order directing that such arbitration proceed in the manner provided for in such agreement." 92
Both complaints also rely on the same factual averments: 93
1. that ASC, CAGLI, and WLI entered into an agreement on January 8, 1996;
2. that under Annex SL-V of the Agreement, WLI/WG&A "committed to acquire certain [inventories], the total aggregate value
of which shall not exceed ₱400 Million";94
3. that after examination, it was ascertained that the value of the transferred inventories exceeded ₱400 million;
4. that pursuant to Annex SL-V, WG&A paid CAGLI ₱400 million but that the former failed to return or pay for spare parts
representing a value in excess of ₱400 million;
5. "[t]hat on August 31, 2001, [CAGLI] wrote the WG&A through its AVP Materials Management, Ms. Concepcion M. Magat,
asking for the return of the excess spare parts";95
6. that on September 5, 2001, WG&A’s Ms. Magat replied that the matter is beyond her authority level and that she must
elevate it to higher management;
7. that several communications demanding the return of the excess spare parts were sent to WG&Abut these did not elicit any
response; and
8. "[t]hat the issue of excess spare parts, was taken over by events, when on July 31, 2002," 96 the Chiongbians and Gothongs
entered into an Escrow Agreement with AEV.
Third, the order dated December 4, 2009 of the Cebu City Regional Trial Court, Branch 20, which dismissed the first complaint with respect
to AEV, attained finality when CAGLI did not file a motion for reconsideration, appealed, or, in any other manner, questioned the order.
Fourth, the parties did not dispute that the December 4, 2009 order was issued by a court having jurisdiction over the subject matter and
the parties. Specifically as to jurisdiction over the parties,jurisdiction was acquired over CAGLI as plaintiff when it filed the first complaint
and sought relief from the Cebu City Regional Trial Court, Branch 20; jurisdiction over defendants AEV, ATSC, and Victor S.Chiongbian was
acquired with the service of summons upon them. Fifth, the dismissal of the first complaint with respect to AEV was a judgment on the
merits. As explained in Cabreza, Jr. v. Cabreza: 97
A judgment may be considered as one rendered on the merits "when it determines the rights and liabilities of the parties based on the
disclosed facts, irrespective of formal, technical or dilatoryobjections"; or when the judgment is rendered "aftera determination of which
party is right, as distinguished from a judgment rendered upon some preliminary or formal or merely technical point." 98
Further, as this court clarified in Mendiola v. Court of Appeals, 99 "[i]t is not necessary . . . that there [be] a trial" 100 in order that a judgment
be considered as one on the merits.
Prior to issuing the December 4, 2009 order dismissing the first complaint with respect to AEV, the Cebu City Regional Trial Court, Branch
20 allowed the parties the full opportunity to establish the facts and to ventilate their arguments relevant to the complaint. Specifically,
the Cebu City Regional Trial Court, Branch 20 admitted: 1) AEV’s motion to dismiss; 101 2) CAGLI’s opposition to the motion to dismiss; 102 3)
AEV’s reply and opposition;103 4) CAGLI’s rejoinder;104 and 5) AEV’s surrejoinder. 105
Following these, the Cebu City Regional Trial Court, Branch 20 arrived at the following findings and made a definitive determination that
CAGLI had no right to compel AEV to subject itself to arbitration with respect to CAGLI’s claims under Annex SL-V:
After going over carefully the contentions and arguments of both parties, the court has found that no contract or document exists binding
CAGLI and AEV to arbitrate the former’s claim. The WLI Letter upon which the claim is based confirms only the commitment of William
Lines, Inc. (WLI) to purchase certain material inventories from CAGLI. It does not involve AEV. The court has searched in vain for any
agreement or document showing that said commitment was passed on to and assumed by AEV. Such agreement or document, if one
exists, being an actionable document, should have been attached to the complaint. While the Agreement of January 8, 1996 and the Share
Purchase Agreement provide for arbitration of disputes, they refer to disputes arising from or in connection with the Agreements
themselves. No reference is made, as included therein, to the aforesaid commitment of WLI or to any claim that CAGLI may pursue based
thereon or relative thereto. Section 6.8 of the Share Purchase Agreement, cited by plaintiff CAGLI, does not incorporate therein, expressly
or impliedly, the WLI commitment above-mentioned. It only declares that the rights and obligations of the parties under the WLI Letter
shall survive even after the termination of the Shareholder’s Agreement. It does not speak of arbitration. Finally, the complaint does not
allege the existence of a contract obliging CAGLI and AEV to arbitrate CAGLI’s claim under the WLI Letter. Consequently, there is no legal or
factual basis for the present complaint for application for arbitration.106 (Emphasis supplied)
In the assailed order dated May 5, 2011, the Cebu City Regional Trial Court, Branch 10 made much of the Cebu City Regional Trial Court,
Branch 20’s pronouncement in the latter’s December 4, 2009 order that "the [first] complaint fails to state a cause of action." 107 Based on
this, the Cebu City Regional Trial Court, Branch 10 concluded that the dismissal of the first complaint was one made without prejudice,
thereby "leav[ing] the parties free to litigate the matter ina subsequent action, as though the dismissal [sic] action had not been
commenced."108
The Cebu City Regional Trial Court, Branch 10 is in serious error. In holding that the second complaint was not barred by res judicata, the
Cebu City Regional Trial Court, Branch 10 ignored established jurisprudence.
Referring to the earlier cases of Manalo v. Court of Appeals 109 and Mendiola v. Court of Appeals,110 this court emphasized in Luzon
Development Bank v. Conquilla 111 that dismissal for failure to state a cause of action may very well be considered a judgment on the merits
and, thereby, operate as res judicata on a subsequent case:
[E]ven a dismissal on the ground of "failure to state a cause of action" may operate as res judicata on a subsequent case involving the same
parties, subject matter, and causes of action, provided that the order of dismissalactually ruled on the issues raised.What appears to be
essential to a judgment on the merits is that it be a reasoned decision, which clearly states the facts and the law on which it is
based.112 (Emphasis supplied)
To reiterate, the Cebu City Regional Trial Court, Branch 20 made a definitive determination that CAGLI had no right to compel AEV to
subject itself to arbitrationvis-a-vis CAGLI’s claims under Annex SL-V. This determination was arrived at after due consideration of the facts
established and the arguments advancedby the parties. Accordingly, the Cebu City Regional Trial Court, Branch 20’s December 4, 2009
order constituted a judgment on the merits and operated as res judicata on the second complaint.
In sum, the requisites for res judicata have been satisfied and the second complaint should, thus, have been dismissed. From this, it
follows that CAGLI committed an act of forum shopping in filing the second complaint. CAGLI instituted two suits in two regional trial court
branches, albeit successively and not simultaneously. It asked both branches to rule on the exact same cause and to grant the exact same
relief. CAGLI did so after it had obtained an unfavorable decision (at least with respect to AEV) from the Cebu City Regional Trial Court,
Branch 20. These circumstances afford the reasonable inference that the second complaint was filed in the hopes of a more favorable
ruling.
Notwithstanding our pronouncements sustaining AEV’s allegations that CAGLI engaged in forum shopping and that the second complaint
was barred by res judicata, we find that at the time of the filing of the second complaint, AEV had already been discharged from the
proceedings relating to the first complaint. Thus, asbetween AEV and CAGLI, the first complaint was no longer pending at the time of the
filing of the second complaint. Accordingly, the second complaint could not have been barred by litis pendentia.
There is no agreement
binding AEV to arbitrate
with CAGLI on the latter’s
claims arising from Annex SL-V
For arbitration to be proper, it is imperative thatit be grounded on an agreement between the parties. This was adequately explained in
Ormoc Sugarcane Planters’ Association,Inc. v. Court of Appeals: 113
Section 2 of R.A. No. 876 (the Arbitration Law) pertinently provides:
Sec. 2. Persons and matterssubject to arbitration. – Two or more persons or parties may submit to the arbitration of one or more
arbitrators any controversy existing between them at the time of the submission and which may be the subject of an action, or the parties
to any contract may in such contract agree to settle by arbitration a controversy thereafter arising between them. Such submission or
contract shall be valid, enforceable and irrevocable, save upon such grounds as exist at law for the revocation of any contract. . . .
(Emphasis ours)
The foregoing provision speaks of two modes of arbitration: (a) an agreement to submit to arbitration somefuture dispute, usually
stipulated upon in a civil contract between the parties, and known as an agreement to submit to arbitration, and (b) an agreement
submitting an existing matter of difference to arbitrators, termed the submission agreement. Article XX of the milling contract is an
agreement to submit to arbitrationbecause it was made in anticipation of a dispute that might arise between the parties after the
contract’s execution.
Except where a compulsory arbitration is provided by statute, the first step toward the settlement of a difference by arbitration is the entry
by the parties into a valid agreement to arbitrate.An agreement to arbitrate is a contract, the relation ofthe parties is contractual, and the
rights and liabilities of the parties are controlled by the law of contracts. In an agreement for arbitration, the ordinary elements of a valid
contract must appear, including an agreement toarbitrate some specific thing, and an agreement to abide by the award, either in express
language or by implication.114 (Emphasis supplied)
In this petition, not one of the parties — AEV, CAGLI, Victor S. Chiongbian, and Benjamin D. Gothong — has alleged and/or shown that the
controversy is properly the subject of "compulsory arbitration [as] provided by statute." 115 Thus, the propriety of compelling AEV to submit
itself to arbitration must necessarilybe founded on contract.
Four (4) distinct contracts have been cited in the present petition:
1. The January 8, 1996 Agreement in which ASC, CAGLI, and WLI merged their shipping enterprises, with WLI (subsequently
renamed WG&A) as the surviving entity. Section 11.06 of this Agreement provided for arbitration as the mechanism for settling
all disputes arising out of or in connection with the Agreement.
2. Annex SL-V of the Agreement between CAGLI and WLI (and excluded ASC and any other Aboitiz-controlled entity), and which
confirmed WLI’s commitment to acquire certain inventories, worth not more than 400 million, of CAGLI. Annex SL-V stated that
the acquisition was "pursuant to the Agreement."116 It did not contain an arbitration clause.
3. The September 23, 2003 Share Purchase Agreement or SPA in which AEV agreed to purchasethe Chiongbian and Gothong
groups' shares in WG&A’s issued and outstanding stock. Section 6.5 of the SPA provided for arbitration as the mode of settling
any dispute arising from the SPA. Section 6.8 of the SPA further provided that the Agreement of January 8, 1996 shall be
deemed terminatedexcept its Annex SL-V.
4. The Escrow Agreement whereby ING Bank N.V.-Manila Branch was to take custody of the shares subject of the SPA. Section
14.7 of the Escrow Agreement provided that all disputes arising from it shall be settled via arbitration.
The obligation for WLI to acquire certain inventories of CAGLI and which is the subject of the present petition was contained in Annex SL-V.
It is therefore this agreement which deserves foremost consideration. As to this particular agreement, these points must be underscored:
first, that it has no arbitration clause; second, Annex SL-V is only between WLI and CAGLI.
On the first point, it is clear, pursuant to this court’s pronouncements in Ormoc Sugarcane Planters’ Association, that neither WLI nor
CAGLI can compel arbitration under Annex SL-V. Plainly, there is no agreement to arbitrate.
It is of no moment that Annex SL-Vstates that it was made "pursuant to the Agreement" or that Section 11.06 of the January 8, 1996
Agreement provides for arbitration as the mode of settling disputes arising out of or in connection with the Agreement.
For one, to say that Annex SL-V was made"pursuant to the Agreement" is merely to acknowledge: (1) the factual context in which Annex
SL-V was executed and (2) that it was that context that facilitated the agreement embodied in it. Absentany other clear or unequivocal
pronouncement integrating Annex SL-V into the January 8, 1996 Agreement, it would be too much of a conjecture to jump to the
conclusion that Annex SL-V is governed by the exact same stipulations which govern the January 8, 1996 Agreement.
Likewise, a reading of the Agreement’s arbitration clause will reveal that it does not contemplate disputes arising from Annex SL-V.
Section 11.06 of the January 8, 1996 Agreement requires the formation of an arbitration tribunal composed of four (4) arbitrators. Each of
the parties — WLI, CAGLI, and ASC — shall appoint one (1) arbitrator, and the fourth arbitrator, who shall actas chairman, shall be
appointed by the three (3) arbitrators appointed by the parties. From the manner by which the arbitration tribunal is to be constituted, the
necessary implication is that the arbitration clause is applicable tothree-party disputes — as will arise from the tripartite January 8, 1996
Agreement — and not to two-party disputesas will arise from the two-party Annex SL-V.
From the second point — that Annex SL-V is only between WLI and CAGLI — it necessarily follows that none but WLI/WG&A/ATSC and
CAGLI are bound by the terms of Annex SL-V. It is elementary that contracts are characterized by relativity or privity, that is, that
"[c]ontracts take effect only between the parties, their assigns and heirs." 117 As such, one who is not a party to a contract may not seek
relief for such contract’s breach. Likewise, one who is not a party to a contract may not be held liable for breach of any its terms.
While the principle of privity or relativity of contracts acknowledges that contractual obligations are transmissible to a party’s assigns and
heirs, AEV is not WLI’s successor-in-interest. In the period relevant to this petition, the transferee of the inventories transferred by CAGLI
pursuant to Annex SL-V assumed three (3) names: (1) WLI, the original name of the entity that survived the merger under the January 8,
1996 Agreement; (2) WG&A, the name taken by WLI in the wake of the Agreement; and (3) ATSC, the name taken by WLI/WG&A inthe
wake of the SPA. As such, it is now ATSC that is liable under Annex SL-V.
Pursuant to the January 8, 1996 Agreement, the Aboitiz group (via ASC) and the Gothong group (viaCAGLI) became stockholders of
WLI/WG&A, along with the Chiongbiangroup (which initially controlled WLI). This continued until, pursuant to the SPA, the Gothong group
and the Chiongbian group transferred their shares to AEV. With the SPA, AEV became a stockholder of WLI/WG&A, which was
subsequently renamed ATSC. Nonetheless, AEV’s status asATSC’s stockholder does not subject it to ATSC’s obligations
It is basic that a corporation has a personality separate and distinct from that of its individual stockholders. Thus, a stockholder does not
automatically assume the liabilities of the corporation of which he is a stockholder. As explained in Philippine National Bankv. Hydro
Resources Contractors Corporation:118
A corporation is an artificial entitycreated by operation of law. It possesses the right of succession and such powers, attributes, and
properties expressly authorized by law or incident to its existence. It has a personality separate and distinct from that of its stockholders
and from that of other corporations to which it may be connected. As a consequence of its status as a distinct legal entityand as a result of
a conscious policy decision to promote capital formation, a corporation incurs its own liabilities and is legally responsible for payment of its
obligations. In other words, by virtue of the separate juridical personality ofa corporation, the corporate debt or credit is not the debt or
credit of the stockholder. This protection from liability for shareholders is the principle of limited liability. 119
In fact, even the ownership by a single stockholder of all or nearly all the capital stock of a corporation is not, in and of itself, a ground for
disregarding a corporation’s separate personality. As explained in Secosa v. Heirs of Francisco: 120
It is a settled precept in this jurisdiction that a corporation is invested by law with a personality separate from thatof its stockholders or
members. It has a personality separate and distinct from those of the persons composing it as well as from that of any other entity to
which it may be related. Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a
corporation is not in itself sufficient ground for disregarding the separate corporate personality.A corporation’s authority to act and its
liability for its actions are separate and apart from the individuals who own it.
The so-called veil of corporation fiction treats as separate and distinct the affairs of a corporation and its officers and stockholders. As a
general rule, a corporation will be looked upon as a legal entity, unless and until sufficient reason to the contrary appears. When the
notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, the law will regard the
corporation as an association of persons. Also, the corporate entity may be disregarded in the interest of justice in such cases asfraud that
may work inequities among members of the corporation internally, involving no rights of the public or third persons. In both instances,
there must have been fraud and proof of it. For the separate juridical personality of a corporation to be disregarded, the wrongdoing must
be clearly and convincingly established. It cannot be presumed.121 (Emphasis supplied)
AEV’s status as ATSC’s stockholder is, in and of itself, insufficient to make AEV liable for ATSC’s obligations. Moreover, the SPA does not
contain any stipulation which makes AEV assume ATSC’s obligations. It is true that Section 6.8 of the SPA stipulates that the rights and
obligations arising from Annex SL-V are not terminated. But all that Section 6.8 does is recognize that the obligations under Annex SL-V
subsist despite the termination of the January 8, 1996 Agreement. At no point does the text of Section 6.8 support the position that AEV
steps into the shoes of the obligor under Annex SL-V and assumes its obligations.
Neither does Section 6.5 of the SPAsuffice to compel AEV to submit itself to arbitration. While it is true that Section 6.5 mandates
arbitration as the mode for settling disputes between the parties to the SPA, Section 6.5 does not indiscriminatelycover any and all
disputes which may arise between the parties to the SPA. Rather, Section 6.5 is limited to "dispute[s] arising between the parties relating
tothis Agreement [i.e., the SPA]."122 To belabor the point, the obligation which is subject of the present dispute pertains to Annex SL-V, not
to the SPA. That the SPA, in Section 6.8, recognizes the subsistence of Annex SL-Vis merely a factual recognition. It does not create new
obligations and does not alter or modify the obligations spelled out in Annex SL-V.
AEV was drawn into the present controversy on account of its having entered into the SPA. This SPA made AEV a stockholder of
WLI/WG&A/ATSC. Even then, AEV retained a personality separate and distinct from WLI/WG&A/ATSC. The SPA did not render AEV
personally liable for the obligations of the corporation whose stocks it held.
The obligation animating CAGLI’s desire to arbitrate is rooted in Annex SL-V. Annex SL-V is a contractentirely different from the SPA. It
created distinct obligations for distinctparties. AEV was never a party to Annex SL-V. Rather than pertaining to AEV, Annex SL-V pertained
to a different entity: WLI (renamed WG&A then renamed ATSC). AEV is, thus, not bound by Annex SL-V.
On one hand, Annex SL-V does not stipulate that disputes arising from it are to be settled via arbitration.On the other hand, the SPA
requires arbitration as the mode for settling disputes relating to it and recognizes the subsistence of the obligations under Annex SL-V. But
as a separate contract, the mere mention of Annex SL-V in the SPA does not suffice to place Annex SL-V under the ambit of the SPA or to
render it subject to the SPA’s terms, such as the requirement to arbitrate.
WHEREFORE, the petition is GRANTED. The assailed orders dated May 5, 2011 and June 24,2011 of the Regional Trial Court, Cebu City,
Branch 10 in Civil Case No. CEB-37004 are declared VOID. The Regional Trial Court, Cebu City, Branch 10 is ordered to DISMISSCivil Case
No. CEB-37004.
SO ORDERED.