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VERIFICATION

WHEN
REQUIRED;
FORMAL,
NOT
JURISDICTIONAL
1. Kilusan-Olalia v CA 528 S 45 (2007)
FACTS: Within the freedom period after CBA between Kimberly
Clark (Company) and the incumbent UKCEO-PTGWO (United
Kimberly Clark Employees Union) had expired, KILUSAN-OLALIA, a
newly-formed labor organization filed a certification election with
DOLE-QC. Thereafter, DOLE declared the incumbent Union as the
exclusive bargaining representative of Kimberlys employees,
having garnered the highest votes in the election. though remained
uncounted were 64 challenged votes by 64 casual workers whose
regularization was in question.
During the pendency of Kilusan-Olalias petition for certiorari
assailing the DOLE Order, Kimberly dismissed several employees
thereby impelling Kilusan to stage a strike charging the company
thereby with Unfair Labor practice, union-busting and refusal to
bargain. NLRC rendered decision in favor of Kimberly. Aggrieved,
Kilusan-Olalia instituted with CA a Petition for Certiorari but CA
dismissed Kilusans petition on procedural grounds:
The verification was signed only by petitioners president, sans
any board resolution or power of attorney authorizing anybody to
sign the same and the certificate on non-forum shopping.
ISSUE: W/N the disputed requirements of Verification &
Certification against Forum Shopping was sufficient in form
(therefore the respondent CA committed error in dismissing the case
based on sheer technicality and in the merit of the petition itself)
SC: We find as sufficient in form the disputed verification and
certification against forum shopping.
Verification is a formal, not a jurisdictional requisite, as it is mainly
intended to secure an assurance that the allegations therein made
are done in good faith or are true and correct and not mere
speculation.
The Court may order the correction of the pleading, if not verified, or
act on the unverified pleading if the attending circumstances are
such that a strict compliance with the rule may be dispensed with in
order that the ends of justice may be served
In the instant case, despite the fact that Ernesto Facundo, the union
president, was not shown to have been duly authorized to sign the
verification on behalf of the other petitioners, the CA should not
have been too strict in the application of the Rules.
Necessarily, Facundo, being the union president, was in a position
to verify the truthfulness and correctness of the allegations in the

petition. Further, the petition was signed by the unions lawyer, who
had been authorized by a majority of the petitioners to represent
them and to sign on their behalf all pleadings and appeals relative
to the labor dispute.
With regard to the certification against forum shopping, suffice
it to state that in Cavile v. Heirs of Cavile,[46] we took cognizance of
a petition although its certification was executed and signed by only
one of several petitioners, thus:
The rule is that the certificate of non-forum shopping must be
signed by all the petitioners or plaintiffs in a case and the signing
by only one of them is insufficient. However, the Court has also
stressed that the rules on forum shopping, which were designed to
promote and facilitate the orderly administration of justice, should
not be interpreted with such absolute literalness as to subvert its
own ultimate and legitimate objective. The rule of substantial
compliance may be availed of with respect to the contents of the
certification.
This is because the requirement of strict compliance with the
provisions regarding the certification of non-forum shopping merely
underscores its mandatory nature in that the certification cannot be
altogether dispensed with or its requirements completely
disregarded. It does not thereby interdict substantial compliance
with its provisions under justifiable circumstances.
The petition is PARTIALLY GRANTED. The petition is REMANDED to
the Court of Appeals for adjudication on the merits.
VERIFICATION BY COUNSEL
2) IN-N-OUT BURGER, INC. v. SEHWANI, INCORPORATED
AND/OR BENITAS FRITES, INC.
G.R. No. 179127
December 24, 2008 J. Chico-Nazario
NATURE: Petition for Review on Certiorari under Rule 45 of the
Rules of Court, seeking to reverse the Decision rendered by the
Court of Appeals, which reversed the Decision of the Director
General of IPO. CA decreed that the IPO Director of Legal Affairs and
the IPO Director General do not have jurisdiction over cases
involving unfair competition.
FACTS:
1) Petitioner, In-N-Out Burger, Inc. is a business entity incorporated
under the laws of California, mainly engaged in the restaurant
business which never engaged in busines in the Philippines while
Respondents Sehwani, Inc and Benita Frites, Inc. are corporations
organized in the Philippines.

2) In-N-Out Burger, Inc. filed trademark and service mark


applications (1997) with the Bureau of Trademarks of IPO for IN-NOUT and IN-N-OUT Burger & Arrow design but through Action
Papers issued by IPO, it found out that such mark was already
registered to Sehwani, Inc. and is used by Benitas Frites, Inc. by
virtue of a licensing agreement.
3) Petitioner filed before the Bureau of Legal Aggairs of the IPO an
administrative complaint (2001) against respondents for unfair
competition and cancellation of trademark registration arguing that
the these marks are: a) Registered in the Office of the US and
internationally well-known in various parts of the world; and b)
Petitioners use misleads ordinary and unsuspecting consumers
that they are purchasing petitioners products.
4) In-N-Out Burger, Inc. then sent a demand letter to Sehwani, Inc.
to cease and desist from caliming ownership of the mark and to
voluntarily cancel its trademark registration. Sehwani, Inc., in its
reply, refused to accede to the demand but expressed willingness
to surrended for a fair and reasonable consideration.
5) Respondents, on their part, filed an Answer with Counterclaim,
asserting that: a) They have been using the mark in the Philippines
since 1982; b) Such mark was registered in the name of Sehwani,
Inc. as early as 1991; c) They were issued a certificate of
registration by the IPO; d) There is presumption of valid registration
in their favor; and e) In-N-Out Burger, Inc. had no legal capacity to
sue because it never operated in the Philippines.
6) IPO Director of Legal Affairs, Estrelita Beltran-Abelardo decided in
favor of petitioner In-N-Out Burger, Inc. and held that petitioner had
legal capacity to sue in the Philippines since its country of origin
was a member and signatory of the Convention of Paris on
Protection of Industrial Property and that the mark was widely
known in this country and are internationally well-known, given the
world-wide registration of the mark. However, it also ruled that
respondents used the mark in good faith and were not guilty of
unfair competition.
7) Both parties filed their respective Motions for Reconsideration.
Both motions were denied which thus led to two separate cases.
8) Case by respondents Sehwani, Inc. and Benitas Frites,
Inc. (G.R. No. 171053)

Upon receipt of Resolution denying their Motion for


Reconsideration, respondents filed an appeal to the IPO
Director General, which was later dismissed.
An appeal was filed before the CA. CA later ordered the
cancellation of the registration of Sehwani, Inc. and to
enjoin respondents from using the same.
Motion for Reconsideration was subsequently denied
hence, Sehwani, Inc. filed a Petition for Review under Rule
45 before the Supreme Court.
SC held that:
a) In-N-Out Burger, Inc. had legal capacity to sue for
protection of its trademarks even though it was not
doing business in the Philippines;
b) Appeal for the decision of IPO Director General
was out of time;
c) Registration in favor of Sehwani, Inc. must be
cancelled.
Another Motion for Reconsideration was filed by
respondents but it was later denied with finality in a
Resolution by the Court (2008).

9) Case by petitioner In-N-Out Burger, Inc. (G.R. No. 179127)

In-N-Out Burger, Inc. was able to file a timely appeal before


the IPO Director General;
During the pendency of the appeal, CA rendered a decision
dismissing respondents petition.
IPO Director General later held that Sehwani, Inc. and
Benitas Frites, Inc. were guilty of unfair competition as the
sole distinction of having a star inside the O was
insufficient and the non-use of the mark was immaterial.
In-N-Out Burger, Inc. was entitled to actual and exemplary
damages and attorneys fees.

10) Respondents filed another Petition for Review under Rule 43


before the Court of Appeals which ruled that IPO did not have
jurisdiction to try the case because Article 168 of the IP Code
provides that the regular courts, not the BLA-IPO, had sole
jurisdiciton to thear and decide cases involving provisions of the IP
Code, particularly trademarks.
CA granted the petition by Sehwani, Inc., reversed the decision of
the IPO Director General and dismissed the claims by In-N-Out
Burger, Inc.

11) Hence, the present petition by In-N-Out Burger, Inc.


12) As one of the defenses of respondent Sehwani, Inc., it raised
questions pertaining to formal defects in the present petition
by In-N-Out Burger, Inc. and argued that due to In-N-Out Burger,
Inc.s failure to comply with formal requisites, the petition must be
dismissed outrightly.
Respondents
contend
that
the
Verification/Certification
executed by Atty. Edmund Barranda attached to the present
petition is defective because the Secretarys Certification executed
by Arnold Wensinger, stating that petitioner had authorized lawyers
of Villaraza & Angangco to represent it in the present Petition and
to sign the Verification and Certification against Forum Shopping,
was not properly notarized and hence are invalid.
ISSUE: Whether the petition by In-N-Out Burger, Inc. contained
formal defects, which can cause its outright dismissal by the Court.
(Verification by Counsel)
RULING: NO.
The Secretarys Certificate was valid because it requires only a
jurat and not an acknowledgment. (Discussion about difference
between jurat and acknowlegment)
However, assuming arguendo that the Secretarys Certificate was
flawed, Atty. Barranda may still sign the Verification
attached to the present Petition because a partys
representative, lawyer or any other person who personally
knows the truth of the facts alleged in the pleading may
sign the Verification.
The purpose of the Verification is to secure an assurance that the
allegations of the petiion has been made in good faith or are true
and correct, not merely speculative. 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.
Atty. Barranda, as In-N-Out Burger, Inc.s counsel, was in the
position to verify the truth and correctness of the
allegations of the present petition. Hence, the Verification
signed by Atty. Barranda substantialy complies with the formal
requirements for such.

Finally, the SC ruled that verification is only a formal, not a


jurisdictional requirement. In the interest of substantial justice,
strict observance of procedural rules may be dispensed with for
compelling reasons.
WHEREFORE, petition is hereby GRANTED. The assailed decision of
the CA is hereby REVERSED and the decision of IPO Director
General is REINSTATED IN PART.
CERTIFICATION AGAINST FORUM SHOPPING IN INITIATORY
PLEADING;
DEFINITION OF FORUM SHOPPING
3. TOKIO MARINE MALAYAN INSURANCE V JORGE VALDEZ
JANUARY 28, 2008 SANDOVAL-GUTIERREZ, J:
FACTS: Tokio Marine Malayan Insurance Company Incorporated is a
domestic corporation engaged in the insurance business. The
individual petitioners are its corporate officers.
Jorge Valdez (respondent) was a former unit manager of Tokio
Marine pursuant to a Unit Management Contract entered into
between them on August 16, 1977.
On October 15, 1998, respondent filed with the RTC a complaint for
damages against petitioners, docketed as Civil Case No. 98-91356.
He alleged therein that petitioners violated the terms of the Unit
Management Contract by refusing to pay him, among others, his
commissions, and bonuses.
Petitioners filed their separate motions to dismiss the complaint.
On December 17, 1998, respondent manifested before the trial
court that he filed various criminal complaint against petitioners
with the Office of the City Prosecutor of Makati City.
Trial Court denied petitioners motions to dismiss.
TC and CA did not find respondent guilty of forum shopping.
ISSUE: WON respondent is guilty of forum shopping.
HELD: NO. Respondent is guilty of forum shopping.
Forum shopping is described as:
the act of a litigant who repetitively availed of several judicial
remedies in different courts, simultaneously or successively, all
substantially founded on the same transactions and the same
essential facts and circumstances, and all raising substantially the
same issues either pending in, or already resolved adversely by

some other court to increase his chances of obtaining a favorable


decision of not in one court, then in another. Differently put, it is
the filing of multiple suits involving the same parties for the same
cause of action, either simultaneously or for the purpose of
obtaining favorable judgment.
The rationale against forum shopping is that a party should not
be allowed to pursue simultaneous remedies in two different courts
as it constitutes abuse of court processes, which tends to degrade
the administration of justice, wreaks havoc upon orderly judicial
procedure, and adds to the congestion of the heavily burdened
dockets.
Section 5, Rule 7 provides:
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:
(c) if he should thereafter learn that 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.
The Court took not that in respondents certification against forum
shopping, respondent manifested that he filed criminal charges
against petitioners.
SC agreed with CA that the certification of respondent is a
substantial compliance with Section 5 Rule 7. Moreover, it should
be recalled that respondent manifested before the trial court on
December 16, 1998 that he actually filed criminal charges against
petitioners.

4. Negros Slashers v Teng 666 S 629 G.R. No. 187122; February


22, 2012
FACTS: Respondent Alvin Teng is a basketball player for the Negros
Slashers team of the now defunct Metropolitan Basketball
Association (MBA). Because of below par performance, he was
pulled from the line up in the middle of the game and "untied his
shoelaces". In the succeeding game, he called in sick, to the
consternation of his teammates. Negros Slashers consequently
terminated Teng. On July 28, 2001, Teng filed a complaint with the

Commissioner of the MBA. Later, on November 6, 2001, and


because of the inaction of the MBA commissioner, Teng filed a case
for illegal dismissal with the Labor Arbiter. The Labor Arbiter ruled
in favor of Teng. The NLRC however dismissed the case for being
premature considering that there was a pending arbitration case
before the MBA commissioner. The Court of Appeals reversed and
reinstated the decision of the Labor Arbiter. Hence this petition.
ISSUE: Whether or not Teng violated the rule on forum shopping.
HELD: NO.
There was no forum shopping. The following are the elements need
to be present for there to be forum shopping:
a. There must be identity of the parties, or at least the parties
represent the same interests in both actions;
b. There must be identity of the rights asserted and the reliefs
prayed for, the relief being founded on the same facts;
c. Any judgement in one of the two actions will, regardless of
which party is successful, amount to res judicata for the
other.
The first two elements in this case, however, the third element, res
judicata is missing. Any judgement of the MBA commissioner will
not render a bar preventing redress in other courts.
Under the doctrine of res judicata, an existing final judgement or
decree rendered on the merits by a court of competent
jurisdiction, upon any matter within its jurisdiction, is conclusive
upon the rights of the parties and their privies in all later suits on all
points and matters determined in the former suit. Res judicata
must contain the following elements:
a. Judgement sought to bar the new action must be final;
b. Decision must be made by a court with jurisdiction over the
subject matter and the parties;
c. Disposition must be a judgement on the merits; and
d. There must be as between the actions, identity of the
parties, subject matter and causes of action.
The arbitration commission of the MBA is not a court of competent
jurisdiction, therefore, any decision it renders cannot produce res
judicata therefore, there is no forum shopping.
CERTIFICATION AGAINST FORUM SHOPPING IN INITIATORY
PLEADING;

COUNSEL CANNOT SIGN CERTIFICATION; EXCEPTION


5. Digital Microwave Corp. vs. CA
Facts:
Asian High Tech Corp. filed a complaint for Sum of Money
and Damages against Digital Microwave
Digital Microwave filed a Motion to Dismiss but was deniedFiled an MR but was likewise denied by Court
Hence Petitioner filed Petition for Certiorari with the CA
CA denied the same for its failure to comply with Revised
Circular No. 28-91, as amended by Administrative Circular
No. 04-94 requiring that the Petition must be accompanied
by a Certification against Non-Forum Shopping signed by
the Petitioner
In this case, the Petition of Digital Microwave was
signed by its counsel hence it was dismissed by CA
Petitioner then filed an MR and submitted a
Certification against Non-Forum Shopping
signed
this time by the Corporations Senior Officer but the
CA still dismissed the MR for failure to explain its
failure to comply with the Circular at the onset
Issue: WON the Court erred in denying the petitioners MR and for
disallowing the new Certification against Non-Forum Shopping?
Held: NO. The petitioner and NOT the Counsel must sign the
Certification against Non-Forum Shopping. It is the petitioner who
has actual knowledge whether or not he initiated a similar action in
different courts or agencies. The petitioner also failed to explain
why the first certification was not signed by the Corporate Officer
and why the same should be justified. The Court held that the
petitioner cannot disregard the strict compliance of the circular and
the subsequent filing of the correct certification does not cure its
defect.
6. Guy v Court of Appeals GR 163707, September 15, 2006
Facts:
1. The special proceeding case concerns the settlement of the
estate of Sima Wei (a.k.a. Rufina Guy Susim). Private-respondents
Karen and Kamille alleged that they are the acknowledged
illegitimate children of Sima Wei who died intestate. The minors
were represented by their mother Remedios Oanes who filed a
petition for the issuance of letters of administration before the RTC
of Makati City.

2. Petitioner who is one of the children of the deceased with his


surviving spouse, filed for the dismissal of the petition alleging that
his father left no debts hence, his estate may be settled without the
issuance of letters administration. The other heirs filed a joint
motion to dismiss alleging that the certification of nonforum shopping should have been signed by Remedios and
not by counsel.
3. Petitioners further alleged that the claim has been paid and
waived by reason of a Release of Claim or waiver stating that in
exchange for financial and educational assistance from the
petitioner, Remedios and her minor children discharged the estate
of the decedent from any and all liabilities.
4. The lower court denied the joint motion to dismiss as well as the
supplemental motion ruling that the mother is not the duly
constituted guardian of the minors hence, she could not have
validly signed the waiver. It also rejected the petitioner's objections
to the certificate of non-forum shopping. The Court of Appeals
affirmed the orders of the lower court. Hence, this petition.
Issue: whether private respondents' petition should be dismissed
for failure to comply with the rules on certification of non-forum
shopping;
Held:
Rule 7, Section 5 of the Rules of Court provides that the certification
of non-forum shopping should be executed by the plaintiff or the
principal party. Failure to comply with the requirement shall be
cause for dismissal of the case. However, a liberal application of the
rules is proper where the higher interest of justice would be served.
In Sy Chin v. Court of Appeals, we ruled that while a petition may
have been flawed where the certificate of non-forum shopping was
signed only by counsel and not by the party, this procedural lapse
may be overlooked in the interest of substantial justice. So it is in
the present controversy where the merits of the case and the
absence of an intention to violate the rules with impunity should be
considered as compelling reasons to temper the strict application of
the rules.
7. Sy Chin v Court of Appeals GR 136233, November 23,
2000
In 1952, the brothers Tang Chin, Feliciano Tang, Ricardo Alonzo
a.k.a. Tang Kong Suy, Tang Chin Heng and William Tang a.k.a. Tang

Kong Sia formed a partnership under the name of Tan Chin Heng &
Company.
After the death of Tang Chin, Feliciano Tang and Tang Kong Suy, the
parties agreed to refer the matter to the Federation of Filipino
Chinese Chamber of Commerce via an agreement they executed on
March 11, 1975.
On February 5, 1991, the petitioners filed a petition for dissolution
and liquidation of the partnership with the SEC.
On February 9, 1993, the Hearing Officer of the SEC
rendered a decision affirming the list of the partnerships properties
which shall be distributed to the partners/heirs in proportion to their
contribution in accordance with the Articles of the Partnership.

action. All other motions filed in relation herewith are, by this


DECISION, likewise referred to the Securities Investigation and
Clearing Department of (sic) its disposition.
SO ORDERED.
A Motion for Reconsideration/Clarification was filed by the
private respondents but this was denied by the SEC Commission en
banc.
A petition for certiorari was consequently filed with the
Court of Appeals assailing the SEC decision. On August 18, 1998,
the CA ruled that the SEC acted in excess of its
jurisdiction. The dispositive portion of the decision reads as
follows:

The petitioners moved for partial reconsideration contending


that the properties should be divided equally in accordance with
the 1975 Agreement. The motion was denied by the hearing officer
on August 11, 1993.

WHEREFORE, finding merit in the petition, the Court issues


the writ of certiorari and annuls the Decision dated December 6,
1995 and the Resolution dated July 25, 1997 of the respondent
Commission.[6]

The petitioners filed a Notice of Appeal but this was not


perfected due to their failure to file the Memorandum on Appeal
and to pay the docket fees within the period provided for by the
Revised Rules of Procedure of the SEC.

The subsequent motion for reconsideration was, likewise,


denied. Hence, this petition

Consequently, a motion for execution was filed by


respondents on October 28, 1993 which was granted by the
hearing officer on January 5, 1994. Petitioners filed an opposition
thereto asserting that there was a need to check/investigate the
information that some of the partnership properties were already
adjudicated to Feliciano Tangs heirs in an Intestate Proceeding
before the then Court of First Instance of Manila in 1964. The
Opposition was denied.
Thus, petitioners went up to the Commission En Banc.
Private respondents filed an opposition asserting that the SEC no
longer had jurisdiction over the case considering that the decision
of the hearing officer had already become final and executory.
The SEC, nonetheless, took cognizance of the case and
disposed it in this wise:
Since the alleged CFI adjudication in the Intestate
Proceeding has not, as yet, been duly established however, and this
appeal, having been treated as an action to annul the questioned
orders of the hearing officer, we are constrained, as we HEREBY
RESOLVE to remand the case to the department of origin for proper

Issue related to topic: W/N THE RESPONDENT COURT OF


APPEALS ERRED WHEN IT FAILED TO DISMISS AND/OR DENY DUE
COURSE TO PRIVATE RESPONDENTS PETITION
Held:
The Decision of the Hearing Officer rendered on February 9, 1993 to
which a timely motion for partial reconsideration was filed had
already become final and executory for petitioners failure to perfect
their appeal to the SEC en banc.
Section 3. How Appeal is Taken: When Perfected Appeal may be
taken by filing with the Hearing Officer who promulgated the
decision, order or ruling within thirty (30) days from notice thereof,
and serving upon the adverse party, notice of appeal and a
memorandum on appeal and paying the corresponding docket fee
therefor. The appeal shall be considered perfected upon the filing of
the memorandum on the appeal and payment of the docket fee
within the period hereinabove fixed. (Amended).
It is clear that the appeal to the SEC en banc was not
perfected and resultantly, the Decision of February 9, 1993 has
become final and executory. There was, therefore, nothing for the
SEC en banc to review.

It must be noted that petitioners appeal to the Commission en


banc was an appeal on the order of execution which is not
permissible under the rules. The order granting the motion for writ
of execution is not appealable as provided under Rule 41, Section 1.
Clearly, therefore, the SEC committed grave abuse of
discretion tantamount to lack of jurisdiction when it entertained
petitioners appeal and treated it as a direct attack against the
orders of the hearing officer. This in effect re-opened the case that
has already become final and executory.
A careful perusal of the records reveal that the list of
partnership properties was never an issue in this case. No one
questioned the list of properties or asserted that some of the
properties belong to any of the heirs particularly to the heirs of
Feliciano Tang. In the March 11, 1975 Agreement executed before
the Federation of Filipino-Chinese Chamber of Commerce and
notarized by Atty. Eriberto H. Decena, the parties acknowledged
that the properties listed therein are partnership assets commonly
owned by the partners although the titles thereto may have been
placed in the names of one or more of them. The prefatory clause
of said agreement reads as follows:
WHEREAS, the above parties are the common owners of the
following properties, both real and personal, although the titles
thereto may have been in the names of one or more of them.

CO-OWNER OR CO-PARTY MAY SIGN IN BEHALF OF COOWNERS OR CO-PARTIES


8. Cavile v. Heirs of Clarita Cavile GR No. 148635 April 1,
2003 Puno, J.
Nature: Petition for review on certiorari of a decision of the Court
of
Appeals
Doctrine: The execution by one of the petitioners of the certificate
of non-forum shopping constitutes substantial compliance with the
Rules where all the petitioners, being relatives and co-owners of the
properties in dispute, share a common interest.
Facts:
Bernardo Cavile contracted 3 marriages and acquired 6
parcels of land now being disputed
1. Ines Dumat-ol 1 child (Simplicia)
2. Orfia Colalho 2 children (Fortunato and Vevencia)
3. Tranquilina Galon 3 children (Castor, Susana and
Benedicta)

NOTE: THE ONLY PART PERTINENT TO THE TOPIC, COUNSEL


CANNOT SIGN CERTIFICATION; EXCEPTION WAS TACKLED
FLEETINGLY AND ONLY ON THE LAST PARAGRAPH BEFORE THE
DISPOSITIVE PORTION OF THE CASE:
Finally,the petitioners aver that the respondent court should
have outrightly dismissed the petition for certiorari for failure to
comply with the requirements on non-forum shopping. While it is
true that the petition may have been flawed as the certificate of
non-forum shopping was signed only by counsel and not by the
party, suffice it to say that this procedural lapse may be overlooked
in the interest of substantial justice. Given the facts and
circumstances of the case, we likewise find no reversible error with
the respondent courts evaluation that there is prima facie merit in
the petition.

CERTIFICATION AGAINST FORUM-SHOPPING IN INITIATORY


PLEADINGS;

Oct 1977 descendants of his 1 st and 2nd marriage (herein


respondents) filed a complaint for partition against the
descendants of his 3rd marriage (herein petitioners).
Allegation:
- They are co-owners of the properties in
question having inherited them from Bernardo
- Upon the death of Bernardo, his son by 3 rd
marriage (Castor) took possession of the
properties as administrator for and in behalf
of his co-owners
- When Castor died, his children took
possession of the land but no longer as
administrators. They claimed the properties
and their fruits as their own and repeatedly
refused respondents demand for partition.
Among the evidence proferred was a notarized Deed of
Partition executed by the heirs of Bernardo Cavile in 1937.
Trial court dismissed the petition for partition.
Upon appeal, CA reversed the decision saying the trial court
erred in admitting the Deed of Partition as evidence without
proof of its authenticity and due execution.
Hence, this petition.

The respondents pray for the denial of the petition on two


grounds: it violates the rule on the certification against
forum shopping; and the CA did not commit any error in its
assailed decision.
The respondents harp on the fact that only one of the 22
petitioners, Thomas George Cavile, Sr. executed and signed
the certification against forum shopping when the Rules
require that said certification must be signed by all the
petitioners.

Issue: Was the certification against forum shopping signed by only


one of the petitioners sufficient to meet the Rules? Yes
Ruling:
The rule is that the certificate of non-forum shopping must
be signed by all the petitioners or plaintiffs in a case and the
signing by only one of them is insufficient.
However, the rules on forum shopping, which were designed
to promote and facilitate the orderly administration of
justice, should not be interpreted with such absolute
literalness as to subvert its own and legitimate objective.
The rule of substantial compliance may be availed of with
respect to the contents of the certification.
The requirement of strict compliance with the provisions
regarding the certification of non-forum shopping merely
underscores its mandatory nature in that the certification
cannot be altogether dispensed with or its requirements
completely disregarded.
The execution by Thomas George Cavile, Sr. in behalf of all
the other petitioners of the certificate of non-forum
shopping constitutes substantial compliance with the Rules.
All the petitioners, being relatives and co-owners of the
properties in dispute, share a common interest, and share a
common defense in the complaint for partition. When they
filed the petition, they filed it as a collective, raising only
one argument to defend their rights over the properties in
question.
There is sufficient basis for Thomas George Cavile to speak
for and in behalf of his co-petitioners.
The trial court was correct in dismissing the complaint for
partition, it appearing that the lawful heirs of Bernardo
Cavile have already divided the properties among
themselves, as evidenced by the Deed of Partition.
The document (Deed of Partition) speaks for itself. It was
acknowledged before the Notary Public and recorded in his

notarial book. Documents acknowledged before notaries


public are public documents which are admissible in
evidence without necessity of preliminary proof as to their
authenticity and due execution. They enjoy the presumption
of regularity. It is a prima facie evidence of the facts stated
therein.
The respondents failed to overcome the presumption of
regularity.

The properties left by Bernardo


partitioned among his heirs

Cavile

have

already

been

DISTINCTION BETWEEN NON-COMPLIANCE OF VERIFICATION


AND CERTIFICATION AGAINST NON-FORUM SHOPPING
REQUIREMENT
9. Sari-sari Group of Companies, Inc. v Piglas Kamao 561 S
569 (2008)
FACTS: Mariko Novel Wares, Inc. (petitioner) began its retail outlet
operations under the name Sari-Sari in the basement of Robinsons Galleria
in Quezon City. Among its employees were: Head Checker Ronnie Tamayo,
Checker Jose del Carmen, Section Heads Jocylene Padua, Vicky Bermeo,
and Elizabeth Matutina (respondents), all of whom were assigned at the
Robinsons Galleria branch. respondents organized a union known
as Piglas Kamao (Sari-Sari Chapter). Respondents claim that petitioner,
through its President, Rico Ocampo, interfered with the formation of the
union.
Meanwhile, respondents were informed of the petitioners plan to
close the basement level store to give way to the opening of a Sari-Sari
outlet on the third floor of Robinsons Galleria.Respondents were supposed
to be absorbed in other Sari-Sari store branches.
Later, petitioners managerial staff approached union members to
express disapproval of the union membership.
As a result, respondent union filed an unfair labor practice case
with the Labor Arbiter (LA) against the petitioner for harassment, coercion,
and interference with the workers right to self-organization.
Petitioner notified DOLE and the respondents of the closure of the Galleria
branch due to irreversible losses and non-extension of the lease of the
store premises and respondents would not be absorbed in the other
branches of the petitioner because of redundancy.

LABOR ARBITER
1. Dismissed the complaint for illegal dismissal, unfair labor practices
and damages for lack of merit.
2. Petitioner to pay the respondents separation pay and
proportionate 13th month pay.
***During the pendency of the appeal, respondents Bermeo, Matutina,
and Padua separately filed their respective manifestations and Motions to
Dismiss, praying that the appeal be dismissed as to them due to their
having already executed their respective quitclaims releasing Mariko from
liability
NLRC: Affirmed the decision of the LA but dismissed the claims
of Bermeo, Matutina and Padua as they had executed quitclaims.
COURT OF APPEALS
Petition for Certiorari Partly Granted.
1. No irreversible substantial losses warranting the closure of the
Galleria branch.
2. ULP was a question of fact that was beyond the ambit of the
present recourse for certiorari.
3. Release
and
quitclaims
executed
by
respondents
Padua, Bermeo and Matutina did not preclude them from assailing
their termination.
ISSUE: WHETHER OR NOT COURT OF APPEALS SERIOUSLY ERRED IN
TAKING COGNIZANCE OF THE PETITION INSOFAR AS THE FOUR OTHER
ALLEGED PETITIONERS THEREIN WERE CONCERNED, CONSIDERING ONLY
JOSE DEL CARMEN SIGNED AND VERIFIED THE PETITION.
RULING:
Section 1 of Rule 65 in relation to Section 3 of Rule 46 of the Rules of Court
requires that a petition for review filed with the CA should be verified and
should contain a certificate of non-forum shopping.
VERIFICATION
The purpose of requiring verification is to secure an assurance that the
allegations of the petition have been made in good faith, or are true and
correct, not merely speculative. As to Verification, non-compliance
therewith does not necessarily render the pleading fatally defective;
hence, the court may:
1. order a correction if Verification is lacking; or
2. act on the pleading although it is not verified, if the attending
circumstances are such that strict compliance with the Rules may
be dispensed with in order that the ends of justice may thereby be
served

Moreover, many authorities consider the absence of Verification a


mere formal, not jurisdictional defect, the absence of which does not of
itself justify a court in refusing to allow and act on the case.
Substantial Compliance
Here, the problem was not lack of Verification, but the adequacy of one
executed by Del Carmen only. As ruled in Torres v. Specialized Packing
Development Corporation, when the verification was executed by only two
of the twenty-five petitioners:
These two signatories are unquestionably real parties in interest, who
undoubtedly have sufficient knowledge and belief to swear to the truth of
the allegations in the Petition. This verification is enough assurance that
the matters alleged therein have been made in good faith or are true and
correct, not merely speculative. The requirement of verification has thus
been substantially complied with.
Based on the foregoing, the lone Verification of respondent Jose del
Carmen is sufficient compliance with the requirements of the law.
CERTIFICATE OF NON-FORUM SHOPPING
On the other hand, the rule against forum shopping is rooted in the
principle that a party-litigant shall not be allowed to pursue simultaneous
remedies in different fora, as this practice is detrimental to orderly judicial
procedure.
GENERAL RULE: The lack of a Certificate of Non-Forum Shopping is not
curable by the submission thereof after the filing of the petition. The
submission of a certificate against forum shopping is thus deemed
obligatory, albeit not jurisdictional.
EXCEPTION: The rule may, however, be also relaxed on;
1. grounds of SUBSTANTIAL COMPLIANCE:
A. if there is a common interest among the petitioners
B. common defense
C. acting collectively;
2. special circumstances; or
3. compelling reasons.
In the case at bar, respondent Jose del Carmen shares a common
interest with the other respondents as to the resolution of the labor dispute
between them and the petitioner. They collectively sued the petitioner for
illegal dismissal and unfair labor practices and have collectively appealed
the NLRC decision. Similarly, there is sufficient basis for Jose del Carmen to

speak on behalf of his co-respondents in stating that they have not filed
any action or claim involving the same issues in another court or tribunal,
nor is there any other pending action or claim in another court or tribunal
involving the same issues. Thus, even if only respondent Jose del Carmen
signed the Certificate of Non-Forum Shopping, the rule on substantial
compliance applies.

non-forum shopping because his authority came only at


a later date. In effect, there is no valid and effective
verification and certification by plaintiff in its Complaint.
TC: denied MCCs Motion to Dismiss but denied spouses Leys
motion to dismiss for being premature. MR denied.

10. Median Container Corp. v Metropolitan Bank & Trust Co.


561 S 622 (2008)

CA: (brought only by MCC) Affirmed TC. Held that Atty. Mendoza
was properly authorized to sign the verification and certification
thru a Board Resolution dated June 3, 2003.

Respondent Metrobank filed a complaint for sum of money on June


23, 2003 before the RTC of Makati against petitioner Median and
the spouses Ley (Vice President/Treasurer of MCC) for failure of MCC
to settle the amount of more than P5,000,000 representing the
outstanding balance of loans contracted by MCC, represented by
Fely Ley.

ISSUE: WON the complaint should be dismissed for failure to


comply with the verification and certification requirements.

Summonses the defendants were issued.


2003 Process Servers Return:
no date of filing of which is indicated
process server de Castro stated that Summons was served
on MCC on August 7, 2003 at its given address upon Ong as
shown by Ongs signature at the left bottom portion of the
Summons, below which signature the process server wrote
the words "General Manager."
he was unable to serve the Summons upon the spouses Ley
at their given address as they were no longer residing there.
Summons was eventually served upon the spouses Ley.
On August 28, 2003, petitioner MCC and Sps Ley filed a MTD
Grounds: DEFECTIVE SERVICE OF SUMMONS OVER IT AND
DEFECTIVE VERIFICATION AND CERTIFICATE AGAINST NONFORUM SHOPPING.
o Ong, on whom the Summons was served, was not its
General Manager but merely a former employee who
had resigned as of July 2002.
o MCC questioned the authority of Atty. Mendoza to
accomplish the same on behalf of Metrobank was given
only on June 03, 2003 but he verified the complaint
and signed the certification against forum shopping on
May 28, 2003. Therefore, it is clear that Atty. Mendoza
did not have the proper authorization when he
executed the verification and certification against

HELD: NO. PETITION DENIED


VERIFICATION
a formal, not jurisdictional, requirement
intended to secure an assurance that
the allegations in the pleading are true
and correct, and that the pleading is
filed in good faith.
court may order the correction of the
pleading if verification is lacking, or act
on the pleading although it is not
verified, if the attending circumstances
are such that strict compliance with the
rules may be dispensed with in order to
serve the ends of justice

CERTIFICATION
failure to comply therewi
not
curable
by
its
subsequent to the filing
nor by amendment, and
dismissal.
signed by a person on
corporation which is unac
proof that the signatory i
file the petition is gen
cause for dismissal.
In several cases, howev
relaxed
the
applicatio
requirements upon ap
attendant special circu
compelling reasons.

In the case at bar, simultaneous with the filing of the complaint,


Metrobank submitted both a certification of non-forum shopping
and proof that Atty. Mendoza who signed it on its behalf was
authorized to do so. The proof of authorization of Atty. Mendoza was
dated later than the date of his signing of the certification of nonforum shopping, however, thus giving the impression that he, at
the time he affixed his signature, was not authorized to do so. The
passing on June 3, 2004 of a Board Resolution of authorization
before the actual filing on June 23, 2004 of the complaint, however,
is deemed a ratification of Atty. Mendozas prior execution on May
28, 2004 of the verification and certificate of non-forum shopping,
thus curing any defects thereof.

SUBSTANTIAL REQUIREMENTS OF PLEADINGS;


SUFFICIENCY OF ALLEGATIONS; ULTIMATE FACTS ONLY
11. ALFREDO REMITERE, ET AL. vs. REMEDIOS MONTINOLA
VDA. DE YULO, ET AL.
G.R. No. L-19751
February 28, 1966 Ponente: ZALDIVAR, J.:
EN BANC
CASE: Appeal from the order of the Court of First Instance
dismissing the complaint
FACTS:
- Alfredo Remitere, et al. filed a complaint before the CFI for the
recovery of two lots registered in the name of Remedies
Montinola Viuda de Yulo.
-

He alleged in his complaint that Gregorio Remitere was the


registered owner of two lots in question; that upon the
demise of Gregorio Remitere in 1914, his wife was appointed
as administratrix of his estate; that in 1918, the provincial
sheriff conducted a public auction sale over the said parcels
of land; that a deed of sale and new TCT was issued in favor
of Mariano Yulo of Binalbagan; that said TCT were cancelled
and another TCT was registered registered in the name of
Remedios Montinola Vda. de Yulo by virtue of a deed of sale;
that the public sale, however, was and still is absolutely a
void sale, and certainly did not pass titles and ownership of
said lots, starting from its primitive owner, now being
represented by the plaintiffs herein, as surviving heirs
thereto, until it reaches the possession by the defendant;
and that by reason of its invalidity, all and every benefits
that the transferees, including the defendant herein, had
acquired from the parcels of land in question, should be
indemnified to the plaintiffs.
The defendants-appellees filed a motion to dismiss the
complaint on the ground that the complaint does not state a
cause of action because it contains no narration of ultimate
facts.

CFI: Dismissed the complaint precisely on the grounds relied


upon by the defendants-appellees.

Hence this appeal. In this appeal, the plaintiffs-appellants


contend that the trial court erred: (1) in declaring that the
complaint contains no narration of facts; (2) in holding that
complaint states no cause of action.

ISSUE: Whether or not the complaint state a narration of ultimate


facts.
RULING: No. The complaint contains no narration of ultimate facts
which may constitute the basis of plaintiffs-appellants rights which
had been violated are alleged. Neither are there allegations of
ultimate facts showing acts or omissions on the part of the
defendants-appellees which constitute a violation of the rights of
plaintiffs-appellants. It contains merely a conclusion of law or
inference from facts not stated in the pleading. Hence, it lacks a
cause of action.
The lack of a cause of action as a ground for dismissal must appear
on the face of the complaint, and to determine whether the
complaint states a cause of action only the facts alleged therein,
and no other, should be considered.
A pleading should state the ultimate facts essential to the rights of
action or defense asserted, as distinguished from mere conclusion
of fact, or conclusion of law. An allegation that a contract is valid, or
void, as in the instant case, is a mere conclusion of law. Not being
statements of ultimate facts which constitute the basis of a right of
the plaintiffs-appellants, nor are they statements of ultimate facts
which constitute the wrongful acts or omissions of the defendantsappellees that violated the right of the plaintiffs-appellants the
allegations of the complaint in the present case have not fulfilled
the requirements of Section 3, Rule 6 of the Revised Rules of Court
(Sec. 1, Rule 6 of the former Rules of Court) that the complaint
should contain a "concise statement of the ultimate facts
constituting the plaintiff's cause or causes of action."
A cause of action has been defined by the Supreme Court as an act
or omission of one party in violation of the legal right or rights of
the other; and its essential elements are legal right of the plaintiff,
correlative obligations of the defendant, and act or omission of the
defendant in violation of said legal right.

The term "ultimate facts" means the essential facts constituting the
plaintiff's cause of action. A fact is essential if it cannot be stricken
out without leaving the statement of the cause of action
insufficient.
12. PHILIPPINES STOCK EXCHANGE VS MANILA BANKING
CORPORATION
FACTS: TMBC acquired Manila Stock Exchange (MSE) Seat No. 97,
registered in the name of Roberto K. Recio (Recio), through an
execution sale which arose from a levy on execution to satisfy a
loan obligation of Recio to TMBC. Thereafter, TMBC requested MSE
to record its ownership of MSE Seat No. 97 in MSEs membership
books. Initially, MSE refused to register TMBC in its membership
books and contested the latters ownership of said seat. According
to MSE, its by-laws allow only individuals or corporations engaged
primarily in the business of stocks and bonds brokers and dealers in
securities to be a member or to hold a seat in the MSE. In the end,
TMBC settled for a mere acknowledgment from MSE of its legal or
naked ownership of, or proprietary right over, MSE Seat No. 97
which was done by MSE through its Acknowledgment Letter.
Before the aforementioned acknowledgment of MSEs title, the
Philippine Stock Exchange, Inc. (PSEI) was incorporated unifying the
MSE and the Makati Stock Exchange (MKSE) into one exchange. The
PSEI issued a certificate of membership to Recio as Member No. 29.
Believing that MSE Seat No. 97 became PSE Seat No. 29 of the
unified exchanges and that the certificate of membership to PSEI
was issued to Recio on the basis of his previous ownership of MSE
Seat No. 97, TMBC sought to rectify the PSEIs listing of Recio as a
member without any reservation or annotation therein that TMBC
owns proprietary rights over PSE Seat No. 29. Armed with MSEs
acknowledgment of its legal ownership or naked title over MSE Seat
No. 97, TMBC sought PSEIs recognition of its legal ownership of PSE
Seat No. 29. However, TMBCs efforts were met with PSEIs
repeated refusal.
TMBC lodged a Petition for Mandamus with Claim for Damages, at
the SEC SICD, against herein petitioners PSEI and its Board of
Governors. The petition prayed that the SEC order the PSEI to
acknowledge TMBCs proprietary interest or legal or naked
ownership of PSE Seat No. 29 to enable TMBC to register said seat
to a qualified nominee or otherwise sell the same to a qualified
vendee.

Petitioners filed a motion to dismiss on the grounds: the SEC had no


jurisdiction to try and hear the same; the petition failed to state
TMBCs cause of action against petitioners; and the remedy of
mandamus was improper. SEC through its SICD Hearing Panel
denied said motion to dismiss and subsequent motion for
reconsideration. Petitioners elevated the case to the SEC en banc
by way of a petition for certiorari. SEC en banc denied the petition.
HELD: The hearing panel held that although it entertains doubts as
to the truth of the facts averred, it shall not dismiss the complaint.
We believe that the hearing panel exercised its judgment within its
proper limits in issuing said order. On the contrary, the factual
issues of the case are not merely confined to the question of
membership, but also to the existence of the devices and schemes
amounting to fraud as alleged by the petitioner below [TMBC]. If it
is convinced that there are factual issues which should be
discussed in the answer and ventilated during the trial on the
merits, such as whether or not the transferor of the MSE was a PSE
member, the rights of the successor-in-interest of a purported
member of the PSE, Inc., and the evidence supporting the
allegations of herein respondent [TMBC] regarding bad faith and
fraud committed by PSE against TMBC, it is within the limits of its
power considering the fact that there are evidence supporting its
ruling.
We cannot fault the SICD Hearing Panel in requiring a more in-depth
and thorough determination of issues raised before it. After all, the
allegations in the mandamus petition sufficiently stated a cause of
action against the petitioners. Verily, the complaint should contain
a concise statement of ultimate facts. Ultimate facts refer to the
principal, determinative, constitutive facts upon which rest the
existence of the cause of action. The term does not refer to details
of probative matter or particulars of evidence which establish the
material elements. Section 6 of the SEC Revised Rules of Procedure
merely requires, thus:
SECTION 6. Complaint - The complaint shall contain the names and
residences of the parties, a concise statement of the ultimate facts
constituting the complainants cause or causes of action. It shall
specify the relief/s sought, but it may add a general prayer further
or other relief/s as may be deemed just and equitable.
In a number of cases, this Court has repeatedly held that so rigid is
the prescribed norm that if the Court should doubt the truth of the

facts averred, it must not dismiss the complaint but require an


answer and proceed to hear the case on the merits.
It is axiomatic that jurisdiction over the subject matter is conferred
by law and is determined by the allegations of the complaint or the
petition irrespective of whether the plaintiff is entitled to all or
some of the claims or reliefs asserted therein. The three tribunals
below are unanimous in appreciating TMBCs cause of action
against petitioners and that the same falls within the ambit of
Section 5(a) of P.D. 902-A
TESTS OF SUFFICIENCY OF COMPLAINT;
IS BILL OF PARTICULARS APPLICABLE?
13. Philippine Bank of Communications vs. Trazo, GR No.
165500, August 30, 2006
Doctrine: In determining whether allegations of a complaint are
sufficient to support a cause of action, the complaint does not have
to establish or allege the facts proving the existence of a cause of
action at the outset; this will have to be done at the trial on the
merits of the case.
Nature of Action Petition for review on certiorari under Rule
45 of the ROC;
Petitioner Philippine Bank of Communications (PBCOM);
Respondent Elenita B. Trazo, former IT project manager of
PBCOM;
Facts:
1. Respondent opened a payroll account with China Banking
Corporation (CBC) in order to facilitate the payment of her
salaries and other monetary benefits from her employer,
petitioner PBCOM;
2. On or about December 29, 1997, Petitioner Romeo Dela
Rosa, PBCOM AVP, instructed CBC to credit all accounts
under its payroll with the medical and clothing subsidy for
the year 1998. CBC complied with the request and credited
Php 7,000 for such annual subsidy;
3. Respondent resigned from PBCOM on December 31, 1997.
And since respondent severed her employment with PBCOM
effective January 1, 1998, she was no longer entitled to the
said company benefit.
4. Hence, Petitioner PBCOM wrote William Lim, CBC Sr. AVP,
AUTHORIZING/DIRECTING the latter to debit the sum of Php
7,000 from respondents current account on January 5,

1997. Acting upon such instructions, CBC debited the said


amount from respondents current account on the same
date.
5. Respondent drew checks against her current account in
favor of Bliss Development Corp, and the House of Sara Lee
Phils. However, the checks were dishonored by CBC due to
insufficiency of funds, which was occasioned by the Php
7,000 debit from her current account;
6. Averring that PBCOM and CBC had no authority to make
such debit without her express knowledge and consent
resulting in the dishonor of her checks, respondent
instituted an action for damages before the RTC of Quezon
City;
7. Summons were served on CBC May 19, 1998. And on
PBCOM May 27, 1998. Before the expiration of the
reglementary period for filing their answers, both parties for
a motion for a 15-day extension of time;
8. On June 8, 1998, Respondent filed his opposition to the
motion/s and to order defendants in default;
9. On June 16, 1998 CBC filed a MTD case on the ground of
improper venue. On June 24, 1998 PBCOM filed a MTD on
the ground the complaint failed to state a cause of action;
10. RTC On October 7, 1998, issued an OMNIBUS Order
granting the MTDs and declaring the motions to declare
defendants in default MOOT and ACADEMIC. Dismissed the
complaint for LACK OF CAUSE OF ACTION;
11. CA On appeal, CA ruled in favor of respondent, reversing
and setting aside the order of the RTC and reinstating the
complaint. MRs were filed but were denied subsequently;
Issue: WON the CA erred in ruling that the complaint stated a
cause of action against the petitioners? NO
Ratio: The complaint should state only ultimate facts, not
conclusions of law, nor evidentiary facts. In determining
whether the allegations of a complaint are sufficient to support
a cause of action, the complaint does not have to establish or
allege the facts proving the existence of a cause of action at the
outset; this will have to be done at the trials of the merits of the
case. Ultimate facts refer to principal, determinative,
constitutive facts upon existence of which the cause of action
rests. The term does not refer to details of probative matter or
particulars evidence which establishes the material ingredients.
Petitioners allegations are in the nature of defenses, and, thus,
cannot be considered in determining the sufficiency of the
cause of action. For the complaint to be dismissed for failure to

state the cause of action, the insufficiency of the cause of


action must appear on the face of the complaint. If the
allegations in complaint can furnish a sufficient basis by which
the complaint can be maintained, the same should not be
dismissed regardless of the defenses that may be assessed by
the defendants.
WHEREFORE, the instant petition is DENIED for lack of merit.
TEST OF SUFFICIENCY OF RESPONSIVE PLEADING;
MUST SPECIFICALLY DENY MATERIAL ALLEGATIONS LEST
THEY BE DEEMED ADMITTED
14. SPOUSES NAPOLEON L. GAZA and EVELYN GAZA,
SPOUSES RENATO PETIL and MELY PETIL, BRGY. SEC.
VICTORIO A. CONDUCTO and BRGY. TANOD ARTURO ALAON
vs. RAMON J. LIM and AGNES J. LIM
G.R. No. 126863
January 16, 2003 SANDOVAL-GUTIERREZ, J.:
Procedural History: The present petition for review on certiorari
seeks to set aside the Decision and the Resolution of the Court of
Appeals reversing the Decision of the Regional Trial Court of Quezon
for forcible entry.
Facts: Napoleon Gaza purchased a parcel of land with an area of
5,270 square meters from Angeles Vda. de Urrutia. The Register of
Deeds of Lucena City then cancelled the latters title and issued
Transfer Certificate of Title in favor of Napoleon Gaza.
Thereafter, Napoleon Gaza and his wife Evelyn, they engaged in the
lumber business. In 1975, they ceased engaging in business. They
padlocked the gates of the property, leaving it to the care of
Numeriano Ernesto. When he died in 1991, spouses Gaza
designated Renato Petil as the new caretaker of the land.
On the other hand, Ramon and Agnes Lim, both half-siblings of
Napoleon Gaza, claimed that they have used the same lot for their
lumber and copra business since 1975, as shown by Lumber
Certificate of Registration No. 2490, PCA Copra Business
Registration No. 6265/76 and Mayor's Permit dated December 31,
1976.
On November 28, 1993, the padlock of the main gate was
destroyed. According to Napoleon Gaza, the siblings Ramon and
Agnes Lim and Emilio Herrera, entered the property by breaking the
lock of the main gate. Thereafter, they occupied a room on the

second floor of the warehouse without the consent of Renato Petil


who was then outside the premises.
For their part, Ramon and Agnes Lim maintain that on November
28, 1993, spouses Gaza detained Emilio Herrera and his daughter
inside the compound and destroyed the padlocks of the gates.
Thereafter, said spouses forcibly opened Agnes Lim's quarters at
the second floor of the warehouse and occupied it.
On December 13, 1993, Spouses Lim filed with the Municipal Trial
Court (MTC) of Calauag, Quezon an action for forcible entry against
spouses Napoleon and Evelyn Gaza.
On December 21, 1993, spouses Gaza filed with the same court
their answer with compulsory counterclaim.
On June 1, 1994,
counterclaim.

the

MTC

dismissed

the

complaint

and

On appeal, the Regional Trial Court (RTC) affirmed the MTC with the
awarded for damages in favor of the spouses Spouses Gaza.
The Court of Appeals rendered a decision in favor of the
respondents hence the present case.
Issue: Whether or not there was an implied admission on the part of
the Spouses Gaza
Held:
Section 11, Rule 8 of the 1997 Rules of Civil Procedure, as
amended, provides that material averments in the complaint, other
than those as to the amount of unliquidated damages, shall be
deemed admitted when not specifically denied. Section 10 of the
same Rule provides the manner in which specific denial must be
made:
"Section 10. Specific Denial. A defendant must specify each
material allegation of fact the truth of which he does not admit and,
whenever practicable, shall set forth the substance of the matters
upon which he relies to support his denial. Where a defendant
desires to deny only a part of an averment, he shall specify so
much of it as is true and material and shall deny only the
remainder. Where a defendant is without knowledge or information
sufficient to form a belief as to the truth of a material averment
made in the complaint, he shall so state, and this shall have the
effect of a denial."

Three (3) modes of specific denial are contemplated by the above


provisions, namely: (1) by specifying each material allegation of the
fact in the complaint, the truth of which the defendant does not
admit, and whenever practicable, setting forth the substance of the
matters which he will rely upon to support his denial; (2) by
specifying so much of an averment in the complaint as is true and
material and denying only the remainder; (3) by stating that the
defendant is without knowledge or information sufficient to form a
belief as to the truth of a material averment in the complaint, which
has the effect of a denial.
Respondents' reliance on Warner Barnes and Co., Ltd. vs. Reyes in
maintaining that petitioners made an implied admission in
their answer is misplaced. In the cited case, the defendants'
answer merely alleged that they were "without knowledge or
information sufficient to form a belief as to the truth of the material
averments of the remainder of the complaint" and "that they
hereby reserve the right to present an amended answer with
special defenses and counterclaim." In the instant case, petitioners
enumerated their special and affirmative defenses in their answer.
They also specified therein each allegation in the complaint being
denied by them. They particularly alleged they are the
registered owners and lawful possessors of the land and
denied having wrested possession of the premises from the
respondents through force, intimidation, threat, strategy
and stealth. They asserted that respondents' purported
possession is "questionable from all aspects." They also averred
that they own all the personal properties enumerated in
respondents' complaint, except the two carabaos. Indeed, nowhere
in the answer can we discern an implied admission of the
allegations of the complaint, specifically the allegation that
petitioners have priority of possession.
WHEREFORE, the petition is GRANTED and the assailed Decision of
the Court of Appeals in CA-G. R. SP No. 36997 dated March 12,
1996 is REVERSED and SET ASIDE. The Decision of the RTC, Branch
63, Calauag, Quezon in Civil Case No. C-1031 affirming the MTC
Decision dismissing respondents complaint is REINSTATED, with
modification in the sense that the award of moral and exemplary
damages in favor of petitioners is deleted. SO ORDERED.
COUNTERCLAIMS;
COUNTERCLAIM

TEST

TO

DETERMINE

NATURE

OF

15. Namarco v Federation of United Namarco Distributors


Inc., 49 S 238
FACTS: On November 16, 1959, the NAMARCO and the FEDERATION
entered into a Contract of Sale stipulating among others that Two
Hundred Thousand Pesos (P200,000.00) be paid as part payment,
and FEDERATION deposits with the NAMARCO upon signing of the
items and/or merchandise a cash basis payment upon delivery of
the duly indorsed negotiable shipping document covering the
same. To insure payment of the goods by the FEDERATION, the
NAMARCO accepted three domestic letters of credit which is an
accepted draft and duly executed trust receipt approved by the
Philippine National Bank.
Upon arrival of the goods in Manila in January, 1960, the NAMARCO
billed FEDERATION Statement of Account for P277,357.91, covering
shipment of the 2,000 cartons of PK Chewing Gums, 1,000 cartons
of Juicy Fruit Chewing Gums, and 500 cartons of Adams Chicklets;
Statement of Account of P135,891.32, covering shipment of the
168 cartons of Blue Denims; and Statement of Account of
P197,824.12, covering shipment of the 183 bales of Khaki Twill, or a
total of P611,053.35. Subsequently, it was received by FEDERATION
on January 29, 1960. However, on March 2, 1960 FEDERATION filed
a complaint against Namarco for undelivery of some items
contained in the contract of sale. FEDERATION refuses to pay
acknowledge the domestic letters of credit until full delivery is done
by NAMARCO.
ISSUE: WON this action of NAMARCO for the collection of the
payment of the merchandise delivered to, but not yet paid by, the
FEDERATION, is already barred as a consequence of the failure of
NAMARCO to set it up as a counterclaim in the previous case.
HELD:
The rule on compulsory counterclaim is "mandatory" because the
failure of the corresponding party to set it up will bar his right to
interpose it in a subsequent litigation.
Under this Rule,
counterclaim not set up shall be barred if the following
circumstances are present:
(1) that it arises out of, or is necessarily connected with, the
transaction or occurrence that is the subject matter of the
opposing party's claim
(2) that it does not require for its adjudication the presence
of third parties of whom the court cannot acquire
jurisdiction; and
(3) that the court has jurisdiction to entertain the claim.

Conversely, a counterclaim is merely permissive and hence is not


barred if not set up, where it has logical relation with the
transaction or occurrence that is the subject matter of the opposing
party's claim, or even where there is such connection, the court has
no jurisdiction to entertain the claim or it requires for its
adjudication the presence of third persons of whom the court
cannot acquire jurisdiction.
The first requisite that the claim should arise out of or is necessarily
connected with the transaction or occurrence that is the subject
matter of the opposing party's claim, may give rise to the critical
question: What constitutes a "transaction" or "occurrence"?
Criteria or tests by which the compulsory or permissive nature of
specific counterclaims can be determined:
1. Are the issues of fact and law raised by the claim and
counterclaim largely the same?
2. Would res judicata bar a subsequent suit on defendant's claim
absent the compulsory counterclaim rule?
3. Will substantially the same evidence support or refute plaintiff's
claim as well as defendant's counter-claim?
4. Is there any logical relation between the claim and the counterclaim?
An affirmative answer to each of the foregoing questions suggests
that the counterclaim is compulsory. These tests or standards have
been the object of extensive analysis and criticisms, as follows:
The first test: identity of issues had been considered of doubtful
utility for it assumes that, in order to protect himself from
inadvertently losing the right to present his claim in a later action,
defendant will be both motivated and able to determine before
answering whether his claim must be asserted as a compulsory
counterclaim. ... Yet, no one can be certain what the issues are until
after the pleadings are closed and discovery is underway, and in
many instances the issues are not really formulated until the pretrial conference.
The second test: that the counterclaim is compulsory if it would be
barred by res judicata, has been judicially recognized by some
courts as "the acid test" for distinguishing compulsory from
permissive counterclaim. As aptly stated by Judge Frank in a
dissenting opinion:
... Everyone agrees, too, that, if a counterclaim is not "compulsory"'
it is "permissive" and that the following is the acid test in
distinguishing the two: If a defendant fails to set up a "compulsory"

counterclaim, he cannot in a later suit assert it against the plaintiff,


since it is barred by res judicata; but if it is "permissive", then it is
not thus barred. To put it differently, if a counterclaim is the kind
not thus barred, it is "permissive." This criterion has however been
found inadequate as an overall standard.
The third test: same evidence or substantial identity in the
evidence relating to the claim and counterclaim has been
considered satisfactory if used with caution. A test based on
similarity of evidence appears reasonable considering that the very
purpose of making certain types of counterclaims compulsory is to
prevent the relitigation of the same set of fact. However, it has
been shown that some counterclaims may be compulsory even if
they do not meet this test. For instance in an action to void an
insurance policy on the ground of fraud, in which there is a
counterclaim for the amount of the loss covered by the policy, the
evidence of fraud is apt to be entirely different from the evidence
as to the loss suffered by the insured or an action for earned freight
with counterclaims for damages to cargo, demurrage and expenses
due to the unseaworthiness of the vessel.
The fourth test: the logical relationship between the claim and
counterclaim has been called "the one compelling test of
compulsoriness" It was enunciated in the leading case of Moore v.
New York Cotton Exchange. Under this test, any claim a party has
against an opposing party that is logically related to the claim
being asserted by the opposing party and that is not within the
exceptions to the rule, is a compulsory counterclaim. Its
outstanding quality is its flexibility. On the other hand, this flexibility
necessarily entails some uncertainty in its application because of
its looseness and potentially over broad scope. This difficulty
notwithstanding, of the four judicially formulated criteria it has by
far attained the widest acceptance among the courts.
A review of decided cases in this jurisdiction on compulsory
counterclaims likewise demonstrates the nexus between plaintiff's
claim and defendant's counterclaim showing the "logical relation"
between the two. Thus in actions for ejectment, or for the recovery
of possession of real property, it is well settled that the defendant's
claims for value of the improvements on the property or necessary
expenses for its preservation are required to be interposed in the
same action as compulsory counterclaims. In such cases it is the
refusal of the defendant to vacate or surrender possession of the
premises that serves as the vital link in the chain of facts and
events, that constitutes the transaction upon which the plaintiff
bases his cause of action. It is likewise an "important part of the

transaction constituting the subject matter of the counterclaim" of


defendant for the value of the improvements or the necessary
expenses incurred for the preservation of the property. For they are
off-shoots of the same basic controversy between the parties which
is the right of either to the possession of the property.
While the refusal of NAMARCO to deliver the remainder of the
goods contracted for in its "trade assistance agreement" with
FEDERATION, is the important link in the chain of facts and events
that constituted the transaction upon which Federation's cause of
action was based in Civil Case No. 42684, it is not even a part of
the transaction constituting the subject matter of NAMARCO's
present suit. For the action of FEDERATION on March 2, 1960, to
compel NAMARCO to recognize the validity of their agreement and
deliver the remainder of the goods to be paid "on cash basis" in no
way involved the payment of the merchandise worth P609,014.73,
already delivered and paid for in cash by means of the domestic
letters of credit. When the domestic letters of credit were
subsequently dishonored by the Philippine National Bank on May
19, 1960 compelling NAMARCO to send on June 7, 1960 a letter of
demand for payment to FEDERATION which the latter received on
July 5, 1960, but which it apparently ignored and because of such
inaction NAMARCO therefore sued FEDERATION for payment on
January 25, 1961, such non-payment by FEDERATION was a matter
which was distinct and separate from and had no logical
relationship with the subject matter of FEDERATION's own suit.
These two claims are separate and distinct, as they involve totally
different factual and legal issues and do not represent the same
"basic controversy".
A counterclaim has been held to be compulsory if there is a logical
relationship between it and the main claim.
16. Bungcayao Sr v Fort Ilocandia 618 S 381
17. Calibre Traders Inc v Bayer Philippines G.R. No. 161431
October 13, 2010 J. Del Castillo
NATURE: Petition for review on certiorari assailing the Decision and
Resolution of CA that denied petitioners action for damages
against respondent and instead granted the latters counterclaim.
FACTS:
1) Calibre was one of Bayerphils authorized dealers or distributors
of its agricultural chemicals within the provinces of Pangasinan and

Tarlac until Bayerphil stopped delivering stocks to Calibre on July


1989 after Calibre failed settle its unpaid accounts totaling to
P1,751,064.56.
2) Thereafter, the parties had disagreements as to the
computations of discounts and rebates, which Calibre was entitled
to. Calibre thus withheld payment to compel Bayerphil to reconcile
its accounts.
3) First attempt to settle accounts was made between Bayerphils
credit and collection officer Leon Abesamis and Calibres General
Manager, herein petitioner Mario Sebastian. The attempt to settle
failed.
4) The second attempt to settle took part between Bayerphils
Sales Manager Vidal Lingan and Mario Sebastian. This time, they
came up with a sort of agreement which was later put in writing
through a letter (November 17 1989) by Bayerphil addressed to
Calibre. This letter was sent by Assistant Sales Manager Rene
Garcia to Sebastian, who in turn wrote to Bayerphil to confirm the
offer. Bayerphil wrote another letter (November 21 1989) to specify
additional claims and clarified other claims.
5) Sebastian then wrote another letter (December 8 1989)
expressing his discontent in Bayerphils refusal to credit his claims
in full and underscored the alleged inaction of Bayerphil in
reconciling Calibres accounts. This was followed by a demand
letter requiring Bayerphil to pay P10 Million for the damages it had
allegedly caused Calibre.
6) Bayerphils reply merely reminded Calibre of its P1,272,103.07
remaining balance. Hence, Calibre filed a suit for damages against
Bayerphil before the RTC of Pasig for maliciously breaching the
distributorship agreement by manipulating Calibres accounts,
withholding discounts and rebates, charging unwarranted penalties,
refusing to supply goods and favoring new dealers to drive it out of
business. Calibre prayed for actual damages, damages to its
goodwill and reputation, exemplary damages and attorneys fees.
7) Bayerphil filed an Answer with Counterclaim wherein it denied all
of Calibres allegations and argued that its acts were valid and legal
as part of business practice and were done in good faith with the
sole purpose of maintaining the business.
8) Bayerphil also moved that spouses Mario Sebastian and his wife
Minda Sebastian be impleaded as co-defendants, considering that

the Sebastians bound themselves as solidary debtors under the


distributorship agreement. Bayerphil contends that both causes of
action arose from the same contract of distributorship and the
inclusion of Sebastians was necessary in order to obtain a full
adjudication of Bayerphils counterclaim.
9) Calibre opposed Bayerphils motion to implead the Sebastians,
reasoning that the spouses are not parties in its suit against
Bayerphil and the issues between the damages suit and the
counterclaim for collection of money were totally unrelated.
10) The trial court granted the motion to implead the Sebastians as
co-defendants. Spouses Sebastian filed an Answer adopting the
allegations and defenses of Calibre and in addition raised the issue
that the counterclaim was permissive and since Bayerphil failed to
pay the required docket fees, the trial court has no jurisdiction over
the counterclaim.
11) RTC Pasig:

Favoring Calibre, the trial court ruled that withholding


payment was justified because there was deliberate
inaction and employment of dilatory tactics on the part of
Bayerphil to reconcile accounts and Bayerphil is thus liable
for abuse of rights and unfair competition under Articles
19, 20 and 28 of the NCC.
The
counterclaim
was
unmeritorious
and
was
permissive hence Bayerphils failure to pay the required
docket fees necessarily caused its dismissal.

12) Court of Appeals:

Reversed the trial court ruling and held that Calibre had no
cause of action against Bayerphil as there was honest
difference in the computations, which were evidenced by:
a) Bayerphils actual examination of records; b) Bayerphils
sending of its representatives to meet with Calibre; c)
Bayerphils exerted efforts to arrive at a compromise; and
d) Bayerphils willingness to grant several concessions to
Calibre.
Bayerphils counterclaim was compulsory hence it need not
pay the docket and filing fees as it rose from the same
distributorship agreement from which the claims of Calibre
in its complain were likewise based.

Calibre Traders and/or Mario Sebastian and Minda


Sebastian are liable to Bayerphil in the amount of
P1,272,103.07 with interest.
Motion for reconsideration was also subsequently denied.

ISSUE: Whether the counterclaim filed by Bayerphil was


compulsory and hence no longer require the payment of docket and
filing fees.
RULING: NO.
A compulsory counterclaim is any claim for money or other
relief, which a defending party may have against an opposing
party, which at the time of suit arises out of, or is necessarily
connected with, the same transaction or occurrence that is
the subject matter of plaintiffs complaint. It is compulsory in
the sense that it is within the jurisdiction of the court, does not
require for its adjudication the presence of third parties over whom
the court cannot acquire jurisdiction, and will be barred x x x if not
set up in the answer to the complaint in the same case. Any other
claim is permissive.
Test to determine whether a counterclaim is compulsory or
not:
(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 defendant's
claims, absent the compulsory counterclaim rule?
(3) Will substantially the same evidence support or refute
plaintiff's claim as well as the defendant's counterclaim?
(4) Is there any logical relation between the claim and the
counterclaim, such that the conduct of separate trials of the
respective claims of the parties would entail a substantial
duplication of effort and time by the parties and the court?
(Compelling test of compulsoriness)
Respondent Bayerphils counterclaim was only permissive as it
involved factual issues distinct from those involved in petitioners
suit. The counterclaim for collection of money is not intertwined
with or contingent on Calibres own claim for damages, which was
based on the principle of abuse of rights.
Further, the actions involve the presentation of different pieces of
evidence. Calibres suit had to present evidence of malicious intent,
while Bayerphils objective was to prove nonpayment of purchases.

The allegations highlighting bad faith are different from the


transactions constituting the subject matter of the collection suit.
Respondents counterclaim was only permissive. Hence, the CA
erred in ruling that Bayerphils claim against the petitioners
partakes of a compulsory counterclaim.
However, be that as it may, the trial court was incorrect in
dismissing Bayerphils counterclaim for non-payment of
docket fees.
All along, Bayerphil has never evaded payment of the docket fees
on the honest belief that its counterclaim was compulsory. It
has always argued against Calibres contention that its
counterclaim was permissive ever since the latter opposed
Bayerphils motion before the RTC to implead the Sebastian
spouses. Lastly, Bayerphils belief was reinforced by Judge Claravalls
October 24, 1990 Resolution when she denied Calibres motion to
strike out Bayerphils counterclaim.
Elements of compulsory counterclaim:
1) That it arises out of the, or is necessarily
connected with the transaction or occurrence that is
the subject matter of the opposing partys claim;
2) That it does not require for its adjudication the
presence of third parties of whom the court cannot
acquire jurisdiction; and
3) That the court has jurisdiction to entertain the
claim.
It must also be noted that:
Sec. 8, Rule 6. Counterclaim or cross-claim
in the answer. The answer may contain any
counterclaim or crossclaim which a party may
have at the time against the opposing party or a
co-defendant provided, that the court has
jurisdiction to entertain the claim and can, if the
presence of third parties is essential for its
adjudication, acquire jurisdiction of such parties.
The rules and jurisprudence do not require that the parties to the
counterclaim be the original parties only. In fact, the presence of
third parties is allowed, the only provision being their capacity to be
subjected under the courts jurisdiction. As regards the nature of the
claims of the parties, neither is it required that they be of the same
nature, only that they arise from the same transaction or

occurrence.
It is a settled doctrine that although the payment of the prescribed
docket fees is a jurisdictional requirement, its non-payment x x x
should not result in the automatic dismissal of the case
provided the docket fees are paid within the applicable
prescriptive period. The prescriptive period therein mentioned
refers to the period within which a specific action must be filed. It
means that in every case, the docket fee must be paid before the
lapse of the prescriptive period.
In accordance with the aforementioned rules on payment of docket
fees, the trial court upon a determination that Bayerphils
counterclaim was permissive, should have instead ordered
Bayerphil to pay the required docket fees for the permissive
counterclaim, giving it reasonable time but in no case
beyond the reglementary period. At the time Bayerphil filed its
counter-claim against Calibre and the spouses Sebastian without
having paid the docket fees up to the time the trial court rendered
its Decision, Bayerphil could still be ordered to pay the docket fees
since no prescription has yet set in. Besides, Bayerphil should not
suffer from the dismissal of its case due to the mistake of the trial
court.
Finally, the SC held that it was more inclined to affirm the CAs ruling
anent Bayerphils counterclaim and ruled that Bayerphil was entitled
to the collection of money it prayed for, with interests.
WHEREFORE, Decision of the Court of Appeals is AFFIRMED.
Considering that the counterclaim is permissive, respondent Bayer
Philippines, Inc. is ORDERED to pay the prescribed docket fees with
the Regional Trial Court of Pasig City within fifteen (15) days from
receipt of this Decision.
AMENDED/SUPPLEMENTAL PLEADINGS;
WHEN
ISSUES
JOINED,
SUBSTANTIAL
AMENDMENTS
DISCRETIONARY AND SUBJECT TO THERULE THAT THE CAUSE
OF ACTION IS NOT SUBSTANTIALLY CHANGED OR THE
THEORY ALTERED
18. PLANTERS DEVELOPMENT BANK V LZK HOLDINGS AND
DEVELOPMENT CORPORATION APRIL 15, 2005 CALLEJO, SR.,
J:
FACTS: LHDC is a duly organized corporation, Planters
Development Bank is a banking institution duly-organized.

On December 16, 1996, LHDC through its CEO and the PDB entered
into a Loan Agreement in the amount of P40,000,000.00.
To secure the loan, LHDC executed in favor of PDB a real estate
mortgage. The latter executed 2 PNs in favor of PDB. Thereafter,
LHDC executed a Deed of Assignment in favor of the PDB, wherein
it assigned to the latter all its rental incomes from its AGZ Building.
For non-payment of loan, non-compliance with Deed of Assignment
and failure to comply with the conditions of the PNs, PDB cause the
extra-judicial foreclosure of the REM.
On April 5, 1999, LHDC filed with RTC of Makati City a complaint
against PDB for Annulment of Extrajudicial Foreclosure, Mortgage
Contract, PNs and for Damages. It alleged that REM was void
because it was executed a day before the title of the property was
issued and two months before the execution of the PNs.
PDB filed in due course its answer. Thereafter LHDC moved that the
case be set for a pre-trial conference.
Before the scheduled pre-trial, LHDC filed a Motion for Leave to file
a Supplemental Complaint to cover occurrences subsequent to the
original complaint. It alleged that after the filing of the original
complaint, it agreed in principle to enter into a contract of lease
with AMA Computer College. LHDC wrote to PDB regarding the
contract, however, the latter gave unreasonable conditions,
resulting to AMAs backing out.
PDB opposed the supplement complaint, it argued that what goes
against its admission is the fact that the supplemental matters
involved therein would bring into the case new causes of action,
distinct from those mentioned in the original complaint.
TC found the supplement complaint to be just and proper. CA found
no grave abuse of discretion on the part of TC in admitting the
supplemental complaint.

thereof, at the time the mortgage was


executed on 16 December 1996
The PNs are allegedly invalid in view of the
claimed lack of valuable consideration
The
extrajudicial
foreclosure
should
allegedly be declared as invalid or void from
the very beginning, inasmuch as LZK
allegedly did not violate the terms and
conditions of the PNS
PDB is allegedly liable to LZK for moral and
exemplary damages plus attorneys fees

AMA Computer College

The alleged unilateral and un


of PDB to stop paying its mo
The demand of PDB upon the
AGZ Building to remit their r
to PDB instead of paying to L

A supplemental pleading only serves to bolster or adds something


to the primary pleading. Its usual office is to set up new facts which
justify enlarge or change the kind of relief with respect to the same
subject matter as the controversy referred to in the original
complaint.
The purpose of the supplemental pleading is to bring into record
the new facts which will enlarge or change the kind of relief to
which the plaintiff is entitled.
In the present case, the issue as to whether the petitioner stopped
the payment of rentals and the application thereof on the perceived
loan deficiency of the respondent is a new matter that occurred
after the filing of the original complaint. However, the relief for
damages, the collective rentals and the application thereof by the
petitioner to the perceived loan deficiency of the respondent are
germane to, and are in fact, intertwined with the cause of action of
nullification of the real estate mortgage and the extrajudicial
foreclosure thereof, as well as the sale at public auction.

19. Young vs. Sy


FACTS: Petitioner Young filed a complaint for the nullification of an
extrajudicial settlement, mortgage, foreclosure sale and tax
ISSUE: WON it is proper to admit the supplemental complaint.
declaration. Petitioner claims that at the time the extrajudicial
settlement was made, the petitioner was only 15 years old, and had
HELD: YES. Original and supplemental complaint reads:
no court approval, thus the partition made in her favor, as well as
the secondary contracts of mortgage, foreclosure sale, etc. are all
ORIGINAL
SUPPLEMENTAL
void. After the partition was made, Petitioners mother mortgaged
The mortgage is allegedly null and void ab The alleged imposition the
of property
unfair subject
and
of the extrajudicial settlement in favor spouses
initio, as the mortgagor, LZK, was not the unreasonable conditions by
PDB
to
the
Sy.
registered owner of the subject matter impending lease agreement between LZK and

After the petition was filed, the petitioner filed a motion to admit a
supplemental complaint.
In the supplemental complaint, the
petitioner invoked her right as a co-owner of the partitioned
property to legal redemption. The RTC denied this petition. On
petition for certiorari, the Court of Appeals denied the petition, it
held that the supplemental complaint is entirely different from the
original complaint, hence this petition for certiorari.
ISSUE: Whether or not the reliefs in the supplemental complaint
merely developed and extended the original causes of action.
HELD: YES. The supplemental complaint was not a substantial
amendment of the original complaint.
As the name suggests, a supplemental pleading only serves to
bolster or add something to the primary pleading. A supplement
exists side by side with the original, it does not replace the latter. It
is considered a continuation of the complaint.
In Leobrera vs. Court of Appeals, the court ruled that when the
cause of action stated in the supplemental complaint is different
from the causes of action mentioned in the original complaint, the
court should not admit the supplemental complaint. However, in
Planters Development Bank vs. LZK Holdings, the court relaxed the
rule: While a matter stated in a supplemental complaint should
have some relation to the cause of action stated in the original
pleading, the fact that the supplemental pleading states a new
cause of action should not be a bar to its allowance , but only a
factor to be considered by the court in the exercise of its
jurisdiction.
In this case, when the respondents proceeded to consolidate their
title over the property which the petitioner claims co-ownership
over, was a new matter which occurred after the filing of the
original complaint. The relief prayed for in the supplemental
complaint (legal redemption) is germane to and intertwined with
the cause of action in the original complaint (nullification of the
extrajudicial partition).
Specifically, the right of petitioner to
redeem is dependent on the nullification of the partition. Hence,
petitioners cause of action in the supplemental complaint stems
directly from and is an extension of her rights as co-owner of the
property subject of the complaint.
Should the supplemental complaint not be admitted, the result
would be a multiplicity of suits.

Note further that the respondents also have a right to file a


supplemental answer to the supplemental complaint as provided
for in Sec. 7, Rule 11.
20. PPA vs WG&A
Facts: Petitioner William Gothong & Aboitiz, Inc. (WG&A for
brevity), is a duly organized domestic corporation engaged in the
shipping industry. Respondent Philippine Ports Authority (PPA for
brevity), upon the other hand, is a government-owned and
controlled company mandated under its charter to operate and
administer the country's sea port and port facilities.
After the expiration of the lease contract of Veterans Shipping
Corporation over the Marine Slip Way in the North Harbor on
December 31, 2000, petitioner WG&A requested respondent PPA for
it to be allowed to lease and operate the said facility. Pursuant to a
Memorandum issued by Estrada, the request of respondent was
granted and a contract of lease was prepared stipulating that the
lease of the area shall take effect on January 1 to June 30, 2001 or
until such time that PPA turns over its operation to the winning
bidder for the North Harbor modernization and that all
structures/improvements introduced in the leased premises shall be
turned over to PPA and the contract was signed.
Believing that the said lease already expired on June 30, 2001,
respondent PPA subsequently sent a letter to petitioner WG&A
directing the latter to vacate the contested premises not later than
November 30, 2001 and to turnover the improvements made
therein pursuant to the terms and conditions agreed upon in the
contract. WG&A urged for the reconsideration of the ejectment but
it was denied by PPA. WG&A commenced an Injunction suit before
the RTC Manila praying for the issuance of a temporary restraining
order to arrest the evacuation. In its complaint, it also sought
recovery of damages for breach of contract and attorney's fees.
WG&A amended its complaint for the first time. The complaint was
still denominated as one for Injunction with prayer for TRO. In the
said amended pleading, the petitioner incorporated statements to
the effect that PPA is already estopped from denying that the
correct period of lease is "until such time that the North Harbor
Modernization Project has been bidded out to and operations turned
over to the winning bidder and if forced to vacate, be refunded for
the value of the improvements. The TRO was denied so WG&A
then filed a Motion to Admit Attached Second Amended Complaint.
This time, however, the complaint was already captioned as one for
Injunction with Prayer for Temporary Restraining Order and/or Writ

of Preliminary Injunction and damages and/or for Reformation of


Contract. Also, it included as its fourth cause of action and
additional relief in its prayer, the reformation of the contract as it
failed to express or embody the true intent of the contracting
parties. The opposition of PPA alleged that the reformation sought
for by the petitioner constituted substantial amendment, which if
granted, will substantially alter the latter's cause of action and
theory of the case. RTC denied the amended complaint hence this
Certiorari filed by WG&A.

patently constitutes grave abuse of discretion. Hence petition is


denied. Judgment in favor of WG&A.

AMENDED/SUPPLEMENTAL PLEADINGS;
SUPPLEMENTAL PLEADINGS NOT A MATTER OF RIGHT
21. Leobrera v CA 170 S 711 (1989)

Issue: WON the second amended complaint must be denied on the


ground that it substantially alters the cause of action of WG&A.
Held:
The RTC applied the old Section 3, Rule 10 of the Rules of Court
instead of the provisions of the 1997 Rules of Civil Procedure,
amending Section 3, Rule 10 deleting the phrase or that the cause
of action or defense is substantially altered hence the new
provision now reads:
SECTION 3. Amendments by leave of court. Except as
provided in the next preceding section, substantial
amendments may be made only upon leave of court.
But such leave may be refused if it appears to the
court that the motion was made with intent to
delay. Orders of the court upon the matters provided in this
section shall be made upon motion filed in court, and after
notice to the adverse party, and an opportunity to be heard.
Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil Procedure
amended the former rule in such manner that the phrase "or that
the cause of action or defense is substantially altered" was
stricken-off and not retained in the new rules. The clear import of
such amendment in Section 3, Rule 10 is that under the new
rules, "the amendment may (now) substantially alter the
cause of action or defense." This should only be true, however,
when despite a substantial change or alteration in the cause of
action or defense, the amendments sought to be made shall serve
the higher interests of substantial justice, and prevent delay and
equally promote the laudable objective of the rules which is to
secure a "just, speedy and inexpensive disposition of every action
and proceeding."The application of the old Rules by the RTC almost
five years after its amendment by the 1997 Rules of Civil Procedure

1. The petitioner was granted a credit facility and revolving fund by


BPI consisting of several amounts. Both were secured by a
mortgage. The facility was granted as part of an amicable
settlement between BPI and Leobrera wherein the latter agreed to
drop his claims for damages against the former for its alleged
failure to deliver on time three export letters of credit opened in
Leobrera's favor. In 1984, the facility was entirely converted into a
revolving promissory note line. The line was last renewed on 21
March 1986 evidenced by two 90-day promissory notes.
2. Leobrera also obtained from BPI a separate three-year term loan
in the amount of P 500,000.00 evidenced by Promissory Note. This
three-year term loan was secured by a third real estate
mortgage. Upon maturity of the 90-day notes, BPI and Leobrera
negotiated on the terms of their renewal. No agreement having
been reached by them, so BPI demanded the full payment of the
loan.
3. Leobrera failed to settle his loan account thus BPI prepared to
foreclose the real estate mortgages securing the same. Before BPI
could institute foreclosure proceedings however, Leobrera filed on 6
January 1987 a complaint for damages with a prayer for the
issuance of a writ of preliminary injunction seeking to enjoin BPI
from foreclosing the mortgages.
4. The trial court issued an order restraining BPI from foreclosing
the real estate mortgages securing the 90 day loans and, after
hearing, issued a writ of preliminary injunction. Meanwhile, on 9
February 1987, the bank wrote Leobrera claiming that he failed to
pay the amortization due on the three-year term loan, as a result of
which, BPI opted to accelarate the maturity of the loan and called
the entire loan due and demandable. Leobrera likewise failed to
remit the amount due and BPI thus threatened to foreclose the real
estate mortgage securing the loan.

5. Before BPI could foreclose the mortgage, petitioner filed with the
trial court on 11 March 1987 a "Motion to File Supplemental
Complaint," attaching the supplemental complaint which prayed for
the issuance of an injunction to restrain BPI from foreclosing the
third mortgage. The next day, 12 March 1987, the trial court
granted Leobrera's motion to file the supplemental complaint and
issued a restraining order enjoining BPI from proceeding with
any "Legal, court or other action" arising from the promissory note
evidencing the three-year term loan.
Issue: Whether or not the court erred in admitting the supplemental
complaint. YES.
1. The Court ruled that when the cause of action stated in the
supplemental complaint is different from the causes of action
mentioned in the original complaint, the court should not admit the
supplemental complaint; the parties may file supplemental
pleadings only to supply deficiencies in aid of an original pleading,
but not to introduce new and independent causes of action.
As to the supplemental complaint, what likewise militates against
its admission is the fact that the matters involved therein are
entirely different from the causes of action mentioned in the
original complaint.
2. The petitioner's main cause of action in the original complaint
filed in Civil Case No. 15644 concerned BPI's threat to foreclose two
real estate mortgages securing the two 90 day promissory notes
executed by petitioner in 1986. Petitioner alleges that this
threatened foreclosure violated the terms of the 1980 amicable
settlement between BPI and petitioner.While the supplemental
complaint alleged acts of harassment committed by BPI in
unreasonably opting to declare petitioner in default and in
demanding full liquidation of the 1985 three-year term loan. This
three-year term loan, as previously mentioned, was entirely distinct
and separate from the two promissory notes. It was independent of
the 1980 amicable settlement between petitioner and BPI which
gave rise to the credit facility subject of the original complaint.
Although there is Identity in the remedies asked for in the original
and supplemental complaints, i.e. injunction, petitioner's
subsequent cause of action giving rise to the claim for damages in
the supplemental complaint is unrelated to the amicable settlement
which brought about the grant of the credit facilities, the breach of
which settlement is alleged to be the basis of the original
complaint.

As the allegations reveal, the P 500,000.00 three-year term loan is


a transaction independent of the P 800,000.00 credit facility and
BPI's questioned act of threatening to foreclose the properties
securing said loan was the result of an alleged default by petitioner
in the payment of the amortization due for 9 February 1987 and not
because of any circumstance related to the 1980 amicable
settlement.
The two causes of action being entirely different, the latter one
could not be successfully pleaded by supplemental complaint.
22. Quirao v Quirao GR 148120, October 24, 2003
Facts:
Respondents Lydia Quirao and Leopoldo Quirao, Jr. filed before the
trial court a complaint for recovery of possession, ownership and
damages against petitioners Rodrigo Quirao, Monica Quirao,
Roberto Quirao, Edilberto Quirao,
Gerardo Quirao,
Jesus Gole, Lamberto Valdez, Federico Quirao and Avelino Ngitngit.
Respondents claimed that the late Leopoldo Quirao was the owner
of
the sugarland,
subject
matter
of
the
controversy.
Respondent Lydia is his widow, while Leopoldo, Jr. is his legitimate
son and compulsory heir. They alleged that in 1988, petitioners
forcibly took possession of the sugarland and appropriated for
themselves its income. They prayed for the issuance of a writ of
Preliminary Mandatory Injunction for petitioners to vacate the
property.
In their Answer, petitioners claimed that the subject property
was owned by their grandfather, Segundo Clarito; that petitioner
Rodrigo Quirao had been in possession of the land even before the
Second World War; and that Leopoldo Quirao never possessed it.
They
further
alleged
that
petitioners
Jesus Gole, Avelino Ngitngit and Lamberto Valdez were recipients of
Emancipation Patents issued by the government.
A few months after their Answer, petitioners filed a Motion to
Dismiss the complaint citing a Deed of Extra-Judicial Partition
with Sale of the subject property purportedly executed by
respondents in favor of a certain Carlito de Juan (de Juan).
Petitioners contended that since respondents no longer own the
property, they lack the standing to file the complaint.They further
alleged that it was only after they filed their Answer that they

learned of the existence of the deed. The trial court denied the
motion to dismiss for lack of merit
Petitioners second counsel, who took over the case, filed an
amended pre-trial brief which reiterated the allegation that
respondents were not the real parties in interest as they had sold
the property to de Juan. Trial ensued and after respondents
rested their case, petitioners filed a Motion for Leave of Court to
Admit Attached Amended Answer. They sought the amendment of
their Answer by adding the alternative defense that even if
respondents were the owners of the property by inheritance from
Leopoldo Quirao, they (respondents) executed a Deed of ExtraJudicial Partition of Property with Sale in favor of de Juan. They
further claimed that in turn, de Juan sold part of the property to
them. The second sale appears to be evidenced by a Deed of Sale
involving part of the subject property executed by de Juan and
petitioners. It also appears that Rodrigo made a partial payment
of P50,000.00, evidenced by the receipt signed by de Juan.
Respondents opposed the motion on the grounds that: (1) it is
dilatory and (2) the amendments are substantial and cannot be
allowed as the parties have already undergone a pre-trial
conference.
The motion was again denied by the trial court on the ground
that the amendments will prejudice the respondents since they had
already rested their case and the alleged facts were already
existing and known to the petitioners when they filed their answer.
Petitioners motion for reconsideration was likewise denied.
Petitioners appealed to the Court of Appeals which also
dismissed their petition for lack of merit. The appellate court ruled
that the amendments are basically the same issues raised in their
motion to dismiss and are substantial ones which may properly be
refused. It cited Batara vs. Court of Appeals,where we held that
the negligence and ignorance of petitioners previous counsels
cannot qualify as transcendental matters which can outweigh
technicalities. Petitioners filed a motion for reconsideration but
were again denied.
Issue: Whether the amended answer should be admitted.
Held: Yes.

Petitioners filed their motion for leave of court to admit amended


answer only after respondents have rested their case. Petitioners
argue that the error was due to the oversight of the three previous
counsels. Petitioners fourth counsel also claims that he learned of
the alternative defense late as his clients (petitioners herein) did
not inform him of the Deed of Sale., they relied on the advice of
their previous counsels that the said deed of sale was a mere scrap
of paper because it was not signed by Carlito de Juan Respondents
contend that petitioners motion is too late in the day.
Petitioners motion for admission of amended answer may be a
little tardy but this by itself is not a cause for its denial.
Their amended answer alleges that respondents no longer own the
subject property having sold the same to de Juan who, in turn, sold
the property to petitioners. These allegations, if correct, are vital to
the disposition of the case at bar. The interest of justice and
equity demand that they be considered to avoid a result
that is iniquitous. Truth cannot be barred by technical rules. For
this reason, our ruling case law holds that amendments to
pleadings are generally favored and should be liberally
allowed in furtherance of justice so that every case may so
far as possible be determined on its real facts and in order
to prevent the circuity of action.
We should always bear in mind that rules of procedure are mere
tools designed to facilitate the attainment of justice. Their strict and
rigid application especially on technical matters, which tends to
frustrate rather than promote substantial justice, must be avoided.
Technicality, when it deserts its proper office as an aid to justice
and becomes its great hindrance and chief enemy, deserves scant
consideration from the courts.
Petition granted.

AMENDED/SUPPLEMENTAL PLEADINGS;
EFFECT OF AMENDED PLEADINGS
SUPERSEDES ORIGINAL PLEADING

AS
A
CONSEQUENCE,
JUDICIAL
ADMISSIONS
MADE
IN
ORIGINAL
PLEADINGS NEED TO BE OFFERED IN
EVIDENCE
23. Director of Lands v Ca G.R. No. L-31408 April 22, 1991
NARVASA, J.:
Facts: Petition for review of a decision of the Court of Appeals.
In October 1956 the corporation R. Borromeo Bros. Estate, Inc.
instituted in the Court of First Instance of Leyte original proceedings
for confirmation and registration of title in its favor of a parcel of
land fronting the sea in the coastal town of San Isidro, Leyte with an
area of 130,537 square meters. The application alleged that the
land was bounded on the North, East and South by property of the
applicant and on the West by San Isidro Bay; that it had been
formed by accretion of sediments carried from the highlands by the
natural action of the Si-ong and Sinubdan Rivers when these
overflowed their banks during the rainy season; that it had been
publicly, openly, continuously and adversely possessed by the
applicant for 20 years prior to the filing of the application; and that
to the applicant's knowledge there existed no mortgage, lien or
other adverse claim on the land.
Two oppositions to the application were filed. One, filed by the
Director of Lands, asserted that the land applied for was part of the
public domain, and that the applicant or its predecessors-in-interest
had no sufficient title to the land, by way of either composition of
possessory information, or by virtue of open, public, adverse and
continuous possession under claim of ownership since July 26,
1894.
The other opposition, filed by the Municipality of San Isidro, echoed
the contention of the Director of Lands that the land formed part of
the public domain, alleging that it was classified as Timber Block-J,
Leyte Project No. 40; denied the applicant's claim of open, adverse,
continuous and exclusive possession and averred that the land was
occupied by other parties who had waived their claims in favor of
said oppositor; and alleged, further, that it (oppositor) needed the
land for municipal expansion, having in fact adopted resolutions
requesting the Government to reserve the land for that purpose,
and that the applicant had applied for, but had been denied, a

lease of the land after it had been released for private occupation
by the Bureau of Forestry.
The case was then heard. It would appear that after the applicant
had presented its evidence, it sought and was allowed to amend its
application, which originally alleged that the land applied for had
been formed of alluvium deposited by the action of the sea in order
to allege, as said appellant's evidence had tended to establish, that
said land had been formed instead from accretions of soil and
sediment carried from higher places by the currents of the Si-ong
and Sinubdan Creeks.
Thereafter, evidence for the oppositors also having been presented,
the Trial Court rendered judgment denying the application and
declaring the land applied for public land formed by the action of
the sea and not of any river.
The applicant then appealed to the Court of Appeals, which
reversed the decision of the Trial Court, sustained the applicant's
contention as to the origin of the land, on that basis declared the
land to be private land of said applicant and decreed its registration
in the applicant's name.
Issue: W/N the applicant is bound by the averment in its original
application that the land was formed by the natural action of the
sea.
Ruling:
The Court of Appeals also correctly overruled the petitioner's
contention that the averment in the original application for
registration attributing the origin of the land to the action of the
sea, which averment, with leave of court, was later superseded by
an amendment to the effect that the land was formed by the action
of rivers, was binding on the private respondent as a judicial
admission. Pleadings that have been amended disappear from the
record, lose their status as pleadings and cease to be judicial
admissions. While they may nonetheless be utilized against the
pleader as extra-judicial admissions, they must, in order to have
such effect, be formally offered in evidence. It does not appear that
the original application for registration containing the averment in
question, or that particular averment itself, was offered or received
in evidence for the petitioner in the Trial Court.

WHEREFORE, the Decision of the Court of Appeals subject of the


petition for review is AFFIRMED, without pronouncement as to
costs.
24. Dionisio v Linsangan GR 178159 March 2, 2011
FACTS: Gorgonio M. Cruz (Cruz) owned agricultural lands in San
Rafael, Bulacan, that his tenant, Romualdo San Mateo (Romualdo)
cultivated. Upon Romualdos death, his widow, Emiliana, got Cruzs
permission to stay on the property provided she would vacate it
upon demand.
Spouses Vicente and Anita Dionisio (the Dionisios) bought
the property from Cruz. the Dionisios found out that Emiliana had
left the property and that it was already Wilfredo Linsangan
(Wilfredo) who occupied it under the strength of a "Kasunduan ng
Bilihan ng Karapatan". After an unheeded demand to vacate, the
Dionisios filed an eviction suit.
At the pre-trial, the Dionisios orally asked leave to amend
their complaint. Despite initial misgivings over the amended
complaint, Wilfredo asked for time to respond to it. The Dionisios
filed their amended complaint on August 5, 2003 while Wilfredo
maintained his original answer.
MTC: It ordered Wilfredo to vacate the land and remove his house
from it.
RTC: Affirmed MTC holding that the case was one for forcible entry.
CA: Reversed and dismissed Dionisios action.
1. By amending their complaint, the Dionisios effectively
changed their cause of action from unlawful detainer to
recovery of possession which fell outside the jurisdiction of
the MTC.
2. Since the amendment introduced a new cause of action, its
filing on August 5, 2003 marked the passage of the one year
limit from demand required in ejectment suits.
3. Since jurisdiction over actions for possession depended on
the assessed value of the property and since such assessed
value was not alleged, the CA cannot determine what court
has jurisdiction over the action.
ISSUES:

1. Whether or not the Dionisios amendment of their


complaint effectively changed their cause of action from one
of ejectment to one of recovery of possession; and
2. Whether or not the MTC had jurisdiction over the action
before it.
RULING:
1. An amended complaint that changes the plaintiffs cause of
action is technically a new complaint. Consequently, the action
is deemed filed on the date of the filing of such amended
pleading, not on the date of the filing of its original version.
Thus, the statute of limitation resumes its run until it is arrested
by the filing of the amended pleading. The Court acknowledges,
however, that an amendment which does not alter the cause of
action but merely supplements or amplifies the facts previously
alleged, does not affect the reckoning date of filing based on
the original complaint. The cause of action, unchanged, is not
barred by the statute of limitations that expired after the filing
of the original complaint.
Here, the amended complaint has essentially identical
allegations. To determine if an amendment introduces a different
cause of action, the test is whether such amendment now requires
the defendant to answer for a liability or obligation which is
completely
different
from
that
stated
in
the
original
complaint. Here, both the original and the amended complaint
required Wilfredo to defend his possession based on the allegation
that he had stayed on the land after Emiliana left out of the owners
mere tolerance and that the latter had demanded that he leave.
Indeed, Wilfredo did not find the need to file a new answer.
2. Wilfredo points out that the MTC has no jurisdiction to hear and
decide the case since it involved tenancy relation which comes
under the jurisdiction of the DARAB. But the jurisdiction of the
court over the subject matter of the action is determined by the
allegations of the complaint.
Is the action one for unlawful detainer? An action is for unlawful
detainer if the complaint sufficiently alleges the following:
(1) initially, the defendant has possession of property by
contract with or by tolerance of the plaintiff;
(2) eventually, however, such possession became illegal
upon plaintiffs notice to defendant, terminating the
latters right of possession;

(3) still, the defendant remains in possession, depriving


the plaintiff of the enjoyment of his property; and
(4) within a year from plaintiffs last demand that
defendant vacate the property, the plaintiff files a
complaint for defendants ejectment.
If the defendant had possession of the land upon mere
tolerance of the owner, such tolerance must be present
at the beginning of defendants possession.
Here, based on the allegations of the amended complaint,
the Dionisios allowed Emiliana, tenant Romualdos widow, to stay
on the land for the meantime and leave when asked to do so. But,
without the knowledge or consent of the Dionisios, she sold her
"right of tenancy" to Wilfredo.
Hence, the court has jurisdiction.
RESPONSIVE PLEADINGS;
ANSWER JUDICIAL ADMISSIONS BINDING ON PARTY
25. Sps. Santos v Sps Lumbao 519 S 408 (2007)
Respondents are the alleged owners of the 107-square meter lot
(subject property), which they purportedly bought on 2 occasions
from Rita during her lifetime. Such property was a part of Ritas
share in the estate of her deceased mother, Maria. Both sales were
evidenced by a document (Bilihan ng Lupa).
After acquiring the property, respondents took actual possession
thereof and erected a house which they have been occupying as
exclusive owners up to the present. As the exclusive owners of the
subject property, respondents made several verbal demands upon
Rita, during her lifetime, and thereafter upon petitioners, for them
to execute the necessary documents to effect the issuance of a
separate title in favor of respondents insofar as the subject
property is concerned. Respondents alleged that prior to her death,
Rita informed respondent that since the entire property has not yet
been partitioned, she could not deliver the title.
On 2 May 1986, the Respondents claimed that petitioners, acting
fraudulently and in conspiracy with one another, executed a Deed
of Extrajudicial Settlement, adjudicating and partitioning among
themselves and the other heirs, the estate left by Maria, which
included the subject property already sold to respondents and now
covered by TCT No. 81729.

On 15 June 1992, respondents sent a formal demand letter to


petitioners but despite demand, petitioners still failed and refused
to reconvey the subject property to them.
Respondents filed a Complaint for Reconveyance with Damages
before the RTC of Pasig City.
Petitioners, in their Answer, DENIED that the subject property had
beed sold to the respondents and that there was fraud in the
execution of the Deed of EJ settlement. They prayed for the
dismissal of the Complaint for lack of cause of action because
respondents failed to comply with the Revised Katarungang
Pambarangay Law (RA 7160) requiring first resort to barangay
conciliation.
Respondents amended their Complaint:

upon discovery that on 16 February 1990, without


their knowledge, petitioners executed a Deed of Real
Estate Mortgage in favor of Julieta Esplana for
P30,000.00, and such REM was annotated at the
back of TCT on 26 April 1991.
Also, in answer to the allegation of the petitioners
that they failed to comply with the mandate of the
Revised Katarungang Pambarangay Law, respondents
said that the Complaint was filed directly in court so
that prescription or the Statute of Limitations may
not set in.

TC: Denied complaint


CA: Reversed TC. Reconveyed the property to respondents. MR
denied
ISSUE: WON the admissions made are admissible and binding.
HELD: YES.
As a general rule, facts alleged in a partys pleading are deemed
admissions of that party and are binding upon him, but this is not
an absolute and inflexible rule. An answer is a mere statement of
fact which the party filing it expects to prove, but it is not evidence.
And in spite of the presence of judicial admissions in a partys
pleading, the trial court is still given leeway to consider other
evidence presented. However, in the case at bar, as the Court of
Appeals mentioned in its Decision, "[herein petitioners] had not
adduced any other evidence to override the admission made in
their Answer that petitioners Virgilio and Tadeo actually signed the

Bilihan ng Lupa dated 17 August 1979 except that they were just
misled as to the purpose of the document, x x x." Virgilios answers
were unsure and quibbled. Hence, the general rule that the
admissions made by a party in a pleading are binding and
conclusive upon him applies in this case.
In petitioners Answer and Amended Answer to the Complaint for
Reconveyance with Damages, both petitioners Virgilio and Tadeo
made an admission that indeed they acted as witnesses in the
execution of the "Bilihan ng Lupa," dated 17 August 1979. However,
in order to avoid their obligations in the said "Bilihan ng Lupa,"
petitioner Virgilio, in his cross-examination, denied having
knowledge of the sale transaction and claimed that he could not
remember the same as well as his appearance before the notary
public due to the length of time that had passed. Noticeably,
petitioner Virgilio did not categorically deny having signed the
"Bilihan ng Lupa," dated 17 August 1979.
RESPONSIVE PLEADINGS;
ANSWER JUDICIAL ADMISSIONS NOT BINDING ON
PARTY
26. Gardner v CA 131 S 585
CASE: Petition for the review of the Resolutions of the Court of
Appeals which affirmed in toto the judgment of the Court of First
Instance .
FACTS:
-

A chain of successive transfers of real property, five in all, is


involved.

Petitioner Ruby H. GARDNER was the registered owner of


two lands in question.

The GARDNERS and the spouses SANTOS entered into an


agreement for the subdivision of the two parcels, with the
SANTOSES binding themselves to advance to the GARDNERS
the amount of P93,000.00 in installments. For the protection
of both parties they executed the following documents all on
the same date and referring to the same parcels of land: (1)
Absolute Deed of Sale in favor of the SANTOSES (2)
Subdivision Joint Venture Agreement; and (3) Supplemental
Agreement. Despite the "sale,", the GARDNERS were still

denominated in the Subdivision Joint Venture Agreement


and in the Supplemental Agreement as "owners" and Ariosto
SANTOS merely as "broker". It appears from the evidence
that the sale to the SANTOSES was one "in trust" for the
protection of the SANTOSES who had obligated themselves
to give cash advances to the GARDNERS from time to time.
On December 5, 1961, new titles were issued in favor of the
SANTOSES
-

Unknown to the GARDNERS, the SANTOSES transferred Lots


to CUENCAS

Upon learning of the Transfer of the properties to the


CUENCAS, petitioner 'Ruby GARDNER, caused the inscription
of an Adverse Claim on the titles of the CUENCAS

CUENCAS transferred the lots to VERROYA.

VERROYA transfer
NATIVIDADS

NATIVIDADS transferred the lots to BAUTISTAS) No titles


were issued to the them.

It should be noted that from the titles of the CUENCAS to the


titles of the NATIVIDADS the Adverse Claim of the
GARDNERS continued to be carried, and that throughout the
successive transfers, or over a span of approximately six
years, the GARDNERS continued to remain in possession,
cultivation and occupation of the disputed properties.

Aggrieved by the series of transfers, the GARDNERS filed


suit for "Declaration of Nullity, Rescission and Damages"
against the Five Transferees before the Court of First
Instance and prayed for the declaration of nullity of all the
Five Transfers and the cancellation of all titles issued
pursuant thereto on the ground that they were all simulated,
fictitious, and without consideration.

In their ANSWER, the SANTOSES claimed, in brief, that the


sale to them was conditional in the sense that the properties
were to be considered as the investment of the GARDNERS
in the subdivision venture and that in the event that this did
not materialize they were to reconvey the lots to the

of

the

properties

to

respondent

GARDNERS upon reimbursement by the latter of all sums


advanced to them; and that the deed of sale was to be
registered for the protection of the SANTOSES considering
the moneys that the latter would be advancing.
-

The GARDNERS presented defendant Ariosto SANTOS as an


adverse witness who testified that the GARDNERS did not
receive from him any consideration

Defendant Ariosto SANTOS did not testify on his behalf but


merely adopted as his own evidence the declaration he had
given as an adverse witness.

declarations in open Court differed will not militate against the


findings herein made nor support the reversal by respondent Court.
As Ariosto SANTOS himself, in open Court, had repudiated the
defenses he had raised in his Answer and against his own interest,
his testimony is deserving of weight and credence. Both the Trial
Court and the Appellate Court believed in his credibility and we find
no reason to overturn their findings thereon.
RESPONSIVE PLEADINGS; WHEN TO FILE?

CFI: Rendered judgment in favor of the GARDNERS declaring


as null and void the five Transfers; rescinding the
Subdivision Joint Venture Agreement as well as the
Supplemental Agreement for being fictitious and simulated
sale.

27. San Pedro Cineplex v Heirs of Enano GR 190754


November 17, 2010
FACTS: Respondents filed on a complaint for quieting of title with
damages against petitioner before the RTC of San Pedro, Laguna,
which complaint was raffled to Branch 93 thereof.

The respondents NATIVIDADS appealed to the then Court of


Appeals, which affirmed in toto the judgment of the Trial
Court.

Petitioner filed a Motion to Dismiss on the ground that the RTC did
not validly acquire jurisdiction over it due to improper service of
summons. It argued that, among other things, there was no
observance of the rule that service of summons on a defendantcorporation must be made upon its president, general manager,
corporate secretary, treasurer or in-house counsel.

Respondent Court reversed its original Decision holding that


the testimonies of Ariosto Santos under oath on the witness
stand cannot prevail over the allegations in Santos' answer
and, regarding which there is no substantial conflict or
variance.

Respondents contended, however, that the Officers Return showed


that the summons addressed to petitioner was served upon and
received by Jay Orpiada (Orpiada), its manager. They thus moved to
declare petitioner in default for failure to file an Answer within the
reglementary period.

Hence this petition.

ISSUE: Whether or not Judicial admissions in a pleading is binding to


Aristio Santos.
RULING: No, As a general rule, facts alleged in a party's pleading
are deemed admissions of that party and binding upon it, but this is
not an absolute and inflexible rule. An Answer is a mere statement
of fact which the party filing it expects to prove, but it is not
evidence.
In its Resolution reversing the original Decision, respondent Court
discredited the testimony of Ariosto SANTOS for being at variance
with the allegations in his Answer. The fact, however, that the
allegations made by Ariosto SANTOS in his pleadings and in his

Close to 11 months after petitioner filed a Motion to Dismiss, it filed


a Motion to Withdraw Motion to Dismiss and to Admit Answer. On
even date, the trial court denied petitioners motion to dismiss and,
acting on the motion of respondents which they had filed after
petitioners filing of the Motion to Dismiss, declared petitioner in
default.
Petitioner challenged the trial courts order of default via certiorari,
prohibition and mandamus before the Court of Appeals. CA
dismissed the petition, holding that, among other things, the trial
court properly acquired jurisdiction over petitioner via manager
Orpiada; any flaw in the service of summons was cured by
petitioners voluntary submission to the trial courts jurisdiction
when it filed the Motion to Withdraw Motion to Dismiss and to Admit
Answer; and the trial court unerringly declared petitioner in default
for failure to file an Answer within the reglementary period.

Petitioner sought relief from this Court via petition for review on
certiorari.
HELD: Petitioner correctly points out that the rule is that a
defendant's answer should be admitted where it is filed before a
declaration of default and no prejudice is caused to the
plaintiff. Indeed, where the answer is filed beyond the reglementary
period but before the defendant is declared in default and there is
no showing that defendant intends to delay the case, the answer
should be admitted.[13]
In the case at bar, it is inconsequential that the trial court declared
petitioner in default on the same day that petitioner filed its
Answer. As reflected above, the trial court slept on petitioners
Motion to Dismiss for almost a year, just as it also slept on
respondents Motion to Declare petitioner in Default. It was only
when petitioner filed a Motion to Withdraw Motion to Dismiss and to
Admit Answer that it denied the Motion to Dismiss, and acted
on/granted respondents Motion to Declare petitioner in
Default. This is procedurally unsound.
The policy of the law is to have every litigant's case
tried on the merits as much as possible. Hence,
judgments by default are frowned upon. A case is
best decided when all contending parties are able to
ventilate their respective claims, present their
arguments and adduce evidence in support
thereof. The parties are thus given the chance to be
heard fully and the demands of due process are
subserved. Moreover, it is only amidst such an
atmosphere that accurate factual findings and
correct legal conclusions can be reached by the
courts.
RESPONSIVE PLEADINGS;
REMEDIES OF PARTY DECLARED IN DEFAULT
28. Roberto Otero vs. Roger Tan, GR No. 200134, August 15,
2012
Doctrine:
GR: A defendant who fails to file an answer may, upon motion,
be declared by the court in default; a party in default loses his
right to present his defense, control the proceedings, and
examine or cross-examine witness. He has no right to expect

that his pleadings would be acted upon by the court nor may be
object to or refute evidence or motions filed against him.
A defendant who has been declared in default is precluded from
raising any other ground in his appeal from the judgment by
default since, otherwise, he would then be allowed to adduce
evidence in his defense, which right he had lost after he was
declared in default.
In the case of LINA vs. CA, et. Al, this Court enumerated the
remedies available to a party who has been declared in default:
(a) The defendant in default may, at any time after discovery
thereof and before judgment, file a motion, under oath, to
set aside the order of default on the ground that his failure
to answer was due to fraud, accident, mistake or excusable
neglect (FAME), and that he has meritorious defenses (Sec
3, R18);
(b) If the judgment has already been rendered when the
defendant discovered the default, but before the same has
become final and executory, he may file a motion for new
trial (MNT) under Sec 1(a), R37);
(c) If the defendant discovered the default after the judgment
has become final and executory, he may file a petition for
relief under Sec 2, R38;
(d) He may also appeal the judgment rendered against him as
contrary to the evidence or to the law, even if no petition to
set aside the order of default has been presented by him
(Sec 2, R41).

Nature of Action Petition for review on certiorari under


Rule 45;
Petitioner Roberto Otero;
Respondent Roger Tan

FACTS:
1. A complaint for collection of sum of money and damages
was filed by respondent Tan with the MTCC of Cagayan De
Oro on July 28, 2005 against Roberto Otero;
2. Respondent alleged that Otero made purchases on credit
petroleum products from his Petron outlet in Valencia City,
Bukidnon in the aggregate amount of Php 270,818. And that
despite several verbal demands, Otero failed to settle his
obligations;
3. Summons were served through Oteros wife, Grace Otero on
August 31, 2005, yet petitioner failed to file his answer with
the MTCC of CDO;

4. Respondent then filed a motion with the MTCC to declare


Otero in default on November 18, 2005. Otero opposed the
motion, claiming that he did not receive a copy of the
summons and a copy of the complaint;
5. Hearing on the motion was set on Jan 25, 2006 but was later
reset to March 8, 2006. Otero failed to appear at the next
scheduled hearing causing the MTCC to issue an order
declaring him in DEFAULT. A copy of the said order was sent
to Otero on May 9, 2006. Respondent Tan was then allowed
to present his evidence EX PARTE;
6. Evidence presented by respondent: (a) Testimonies of
Rosemarie Doblado and Zita Sara, his employees at his
Petron outlet who attended Otero when the latter made
purchases of petroleum products; (b) various statement of
accounts pertaining to the Petroleum products purchased by
Otero. The said SOA were prepared and checked by a certain
Lito Betache, likewise an employee of the respondent;
7. MTCC rendered a decision directing Otero to pay the
respondent the outstanding obligation, attorneys fees,
litigation expenses and cost. MTCC opined that Oteros
failure to file an answer despite notice is a tacit admission of
Tans claim;
8. RTC on appeal made by Otero, the RTC affirmed the
judgment made by the MTCC, and held that the evidence
presented was overwhelmingly enough to prove that Otero
is indeed indebted to the respondent;
9. CA denied the petition for review filed by Otero. Rejected
Oteros allegation with regard to the genuineness and due
execution of the statement of account presented by Tan. The
CA held that any defense which Otero may have against
Tans claim is already deemed waived due to Oteros failure
to file his answer. MR was also denied.
Issue/s:
1. WON Otero, having been declared in default by the MTCC,
may, in the appellate proceedings, still raise the failure of
Tan to authenticate the statements of account which he
adduced in evidence? - YES

b. A defendant who was declared in default MAY nevertheless


appeal from Judgment by default; albeit on limited grounds
Lina vs. CA, et. Al;
c. A defending party declared in default retains the right to
appeal from the judgment by default. However, the grounds
that may be raised in such appeal are restricted to the any
of the following: (1) the failure of plaintiff to prove material
allegations of the complaint; (2) the decision is contrary to
law; (3) the amount of judgment is excessive or different in
kind from that prayed for. In these cases, the appellate
tribunal should only consider the pieces of evidence
presented by the plaintiff during the EX PARTE Presentation.
d. In this case, the respondent presented SOAs which were
private documents. Considering that these documents do
not fall among the aforementioned exceptions, the said
documents should not have been admitted against Otero. It
was thus error for the lower tribunals to have considered the
same assessing the merits of the respondents complaint.
2nd Issue:
a. Whether the respondent was able to prove thru the pieces of
evidence adduced during the EX PARTE presentation, the
material allegations of his complaint against Otero, we rule
in the affirmative;
b. In civil cases, it is a basic rule that the party making the
allegations has the burden of proving them by a
preponderance of evidence. The parties must rely on the
strength of their own evidence and not upon the weakness
of the defense offered by their opponent. This rule holds
true especially when the latter has had no opportunity to
present evidence because of default order. Notwithstanding
the inadmissibility of the said SOAs, this court finds that Tan
was still able to prove by a PREPONDERANCE of evidence
the material allegations of his complaint against Otero.
c. WHEREFORE,
in
consideration
of
the
foregoing
disqualification, the petition is DENIED.

2. WON respondent was able to prove the material allegation


of his complain? - YES

FILING AND SERVICE OF PLEADINGS AND JUDICIAL PAPERS;


IMPROPER SERVICE IS INEFFECTUAL AND DOES NOT
BIND PARTY

RATIO:
1ST Issue:
a. A defendant who fails to file an answer loses his standing in
court, Sec 3, Rule 9;

29. Cabili v Badelles, 6 S 190


Procedural History: This is an appeal by certiorari from the
decision of the Court of Appeals which ordered the Court of First

Instance of Lanao del Norte to give due course to an appeal filed by


Mariano Ll. Badelles, respondent herein, in Civil Case No. 288 of
that court entitled "Badelles vs. Cabili."
Facts: In the elections of November 10, 1959, Mariano Ll. Badelles
and Camilo P. Cabili were rival candidates for the office of city
mayor of Iligan City, Cabili was proclaimed elected and thereafter
assumed office, succeeding Badelles, then the incumbent.
Badelles filed before the Court of First Instance of Lanao del Norte
Election Case No. 288, for quo warranto, questioning Cabili's right
to hold the office (of City Mayor of Iligan City) on the ground that he
was not a resident of the City for at least one year prior to his
election.
The petition was filed by the law firm of San Juan, Africa and
Benedicto, as counsel for Badelles. Badelles was also represented
by several other lawyers but the senior counsel was Attorney Jose
L. Africa of the above-mentioned law office, who, in the initial
hearing, explained that he is the one in charge of the case, and
therefore, requested that all pleadings, notices, orders and other
papers be served at his office at 480 Padre Faura St., Manila.
In order to avoid any confusion in the service of pleadings and
orders, he made of record that only service at the given address
will be considered as service on petitioner Badelles and counsel.
The Court took note of said request of Attorney Africa.
Trial having been held, the lower court on December 19, 1959,
entered judgment dismissing the petition. Copy of the
decision was sent by registered air mail on December 24, 1959 to
the law firm of Atty. Africa and the same was received at their
Manila office on January 4, 1960.
It appears however, that, in the interim, i.e. on December 28, 1959,
Badelles, who was then in Iligan City, requested the judge for a
copy of the decision. Badelles, was given a copy but refused to sign
a receipt therefor.
The judge ordered his court interpreter to record the fact of said
delivery of a copy to Badelles. This order was complied with. The
judge also telegraphed the law of Atty. Africa in Manila on
December 28, 1959 that copy of the decision was sent to them on
December 1959 and that petitioner Badelles personally was
furnished a copy also on that same day.

The telegram was received by Atty. Africa on December 29, 1959.


Upon receipt of the decision on January 4, 1960, the Africa Law
Office, counsel for Badelles, sent a notified appeal by registered
mail on the same date. On January 5, 1960, Badelles filed his own
notice of appeal to with a corresponding cash appeal bond.
Counsel for Cabili objected to the appeal on the ground that it was
filed beyond the period therefor. On February 15 and 19, 1960,
respectively, the court dismissed appeals filed by Badelles and his
counsel on the ground that the same were filed beyond the five-day
statutory period for appeal, as provided in Section 178 of the
improvised Election Code, and on the further ground that sixty
pesos appeal bond was insufficient.
A motion for reconsideration filed by counsel for Badelles was
denied for lack of merit, so Badelles filed the petition for certiorari
and mandamus in the Court of Appeals, docketed as CA-G.R. No.
27428-R, to annul and set aside the orders aforesaid and to give
due course to the appeal. The petition was granted by the Court of
Appeal September 30, 1960.
The Court of Appeals held that the receipt by petitioner of a copy of
the decision which was given to the party himself, who in his
curiosity desired to be formed in advance of the decision of his
case, should not be considered as service under the rules.
Issue: Whether or not the receipt by the Badelles of the judgment
is considered service
Held: No. It is to be noted that while the Rules of Court are not
applicable in election cases, in general, they are of a
suppletory character whenever practicable and convenient.
As there is no provision in the Election Law about the manner in
which the parties should be notified of the proceedings or pleadings
or decisions in election cases, the Rules of Court should be followed
in such matters. In accordance with the provisions of Rule 27,
Section 2, service of decisions should be made to the
lawyers on record and not to parties. In a long line of
decisions, We have held that when a party appears by an attorney
who makes of record his appearance, service of pleadings is
required to be made upon said attorney and not upon the party;
that a notice given to the client and not to his attorney is
not a notice in law; that service upon a party who has an
attorney of record is not a compliance with Rule 27, Sec. 2,
which makes service upon counsel mandatory; and that
personal information by a party of the rendition of a

decision does not satisfy the right of counsel to receive a


copy of the decision rendered.
The decision of the Court of Appeals appealed from should be, as it
is hereby, affirmed, with costs against petitioner.