Fortune Motors, Inc.

v CA (Civil procedure)

Fortune Motors, Inc. v. CA, Metropolitan Bank and Trust Company

Facts:
Private respondent extended various loans to petitioner for a total sum of P32,500,000.00;
Due to financial difficulties, and economic recession, the petitioner was not able to pay the loan which became due;
The respondent bank initiated extrajudicial foreclosure proceedings, the mortgaged property was sold at public auction
where respondent was the highest bidder;
3 days before the expiration of the redemption period, petitioner filed a complaint for the annulment of the extrajudicial
foreclosure sale at the RTC of Manila, alleging that:
(a) the foreclosure was premature because its obligation to the Bank was not yet due,
(b) the publication of the notice of sale was incomplete, there was no public auction,
(c) thhe price for which was “shockingly low”;
Respondent filed a motion to dismiss the complaint on the ground that the venue of the action was improperly laid in
Manila for the realty covered by the real estate mortgages is situated in Makati, therefore the action to annul the
foreclosure sale should be filed in the RTC of Makati;
Petitioner argued that its action is a personal action and that the issue is the validity of the extrajudicial foreclosure
proceedings so that it may have a new one year period to redeem the same.
Lower court rulings:
RTC: reserved the resolution of the Bank’s motion to dismiss until after the trial on the merits

CA: on petition for certiorari and prohibition, granted the petitions and dismissed the case without prejudice to the filing of
the case before the proper courts

*Reconsideration was denied, hence the petition before the SC

Issue: WON petitioner’s action for annulment of the real estate mortgage extrajudicial foreclosure sale of Fortune Building
is personal action or a real action for venue purposes

Ruling: Yes, the action is a real action which should have been filed before the RTC of Makati.

Real actions or actions affecting title to, or for the recovery of possession, or for the partition or condemnation of or
foreclosure of mortgage on real property, must be instituted in the CFI of the province where the property or any part
thereof lies.

Personal actions upon the other hand, may be instituted in the CFI where the defendant resides or may be found, or
where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff.

An action for the annulment or rescission of contract does not operate to efface the true objectives and nature of action
which is to recover real property.

An action for annulment or rescission of sale of real property is a real action; its prime objective is to recover said real
property.

An action to annul a real estate mortgage foreclosure is no different from an action to annul a private sale of real property.

Hence, the petition is denied for lack of merit. The decision of CA is affirmed.
CLAVECILLA Radio System v. Hon. Agustin Antillon

Facts:

1. New Cagayan Grocery (NECAGRO) filed a complaint for damages against Clavecilla Radio system. They alleged that
Clavecilla omitted the word “NOT ― in the letter addressed to NECAGRO for transmittal at Clavecilla Cagayan de
Oro Branch.

2. NECAGRO alleged that the omission of the word “not ― between the word WASHED and AVAILABLE altered the
contents of the same causing them to suffer from damages.

3. Clavecilla filed a motion to dismiss on the ground of failure to state a cause of action and improper venue.

4. City Judge of CDO denied the MTD. Clavecilla filed a petition for prohibition with preliminary Injunction with the CFI
praying that the City Judge be enjoined from further proceeding with the case because of improper venue.

5. CFI – dismissed the case and held that Clavecilla may be sued either in Manila (principal office) or in CDO (branch
office). 6. Clavecilla appealed to the SC contending that the suit against it should be filed in Manila where it holds its
principal office.

Issue:

WON the present case against Clavecilla should be filed in Manila where it holds its principal office.

Held:

YES It is clear that the case from damages is based upon a written contract. Under par. (b)(3) Sec. 1 Rule 4 of the New
Rules of Court, when an action is not upon a written contract then the case should be filed in the municipality where the
defendant or any of the defendant resides or maybe served upon with summons. In corpo. Law, the residence of the
corporation is the place where the principal office is established. Since Clavecilla ’s principal office is in Manila, then
the suit against it may properly be file in the City of Manila. As stated in Evangelista v. Santos, the laying of the venue of
an action is not left to plaintiff ’s caprice because the matter is regulated by the Rules of Court.
Young Auto Supply vs CA Case Digest
Young Auto Supply vs. Court of Appeals
[GR 104175, 25 June 1993]

Facts: On 28 October 1987, Young Auto Supply Co. Inc. (YASCO) represented by Nemesio Garcia, its president, Nelson
Garcia and Vicente Sy, sold all of their shares of stock in Consolidated Marketing & Development Corporation (CMDC) to
George C. Roxas. The purchase price was P8,000,000.00 payable as follows: a down payment of P4,000,000.00 and the
balance of P4,000,000.00 in four postdated checks of P1,000,000.00 each. Immediately after the execution of the
agreement, Roxas took full control of the four markets of CMDC. However, the vendors held on to the stock certificates of
CMDC as security pending full payment of the balance of the purchase price. The first check of P4,000,000.00,
representing the down payment, was honored by the drawee bank but the four other checks representing the balance of
P4,000,000.00 were dishonored. In the meantime, Roxas sold one of the markets to a third party. Out of the proceeds of
the sale, YASCO received P600,000.00, leaving a balance of P3,400,000.00.

Subsequently, Nelson Garcia and Vicente Sy assigned all their rights and title to the proceeds of the sale of the CMDC
shares to Nemesio Garcia. On 10 June 1988, YASCO and Garcia filed a complaint against Roxas in the Regional Trial
Court, Branch 11, Cebu City, praying that Roxas be ordered to pay them the sum of P3,400,000.00 or that full control of
the three markets be turned over to YASCO and Garcia. The complaint also prayed for the forfeiture of the partial
payment of P4,600,000.00 and the payment of attorney's fees and costs. Failing to submit his answer, and on 19 August
1988, the trial court declared Roxas in default. The order of default was, however, lifted upon motion of Roxas. On 22
August 1988, Roxas filed a motion to dismiss. After a hearing, wherein testimonial and documentary evidence were
presented by both parties, the trial court in an Order dated 8 February 1991 denied Roxas' motion to dismiss. After
receiving said order, Roxas filed another motion for extension of time to submit his answer. He also filed a motion for
reconsideration, which the trial court denied in its Order dated 10 April 1991 for being pro-forma. Roxas was again
declared in default, on the ground that his motion for reconsideration did not toll the running of the period to file his
answer. On 3 May 1991, Roxas filed an unverified Motion to Lift the Order of Default which was not accompanied with the
required affidavit of merit. But without waiting for the resolution of the motion, he filed a petition for certiorari with the Court
of Appeals. The Court of Appeals dismissal of the complaint on the ground of improper venue. A subsequent motion for
reconsideration by YASCO was to no avail. YASCO and Garcia filed the petition.

Issue: Whether the venue for the case against YASCO and Garcia in Cebu City was improperly laid.

Held: A corporation has no residence in the same sense in which this term is applied to a natural person. But for practical
purposes, a corporation is in a metaphysical sense a resident of the place where its principal office is located as stated in
the articles of incorporation. The Corporation Code precisely requires each corporation to specify in its articles of
incorporation the "place where the principal office of the corporation is to be located which must be within the Philippines."
The purpose of this requirement is to fix the residence of a corporation in a definite place, instead of allowing it to be
ambulatory. Actions cannot be filed against a corporation in any place where the corporation maintains its branch offices.
The Court ruled that to allow an action to be instituted in any place where the corporation has branch offices, would create
confusion and work untold inconvenience to said entity. By the same token, a corporation cannot be allowed to file
personal actions in a place other than its principal place of business unless such a place is also the residence of a co-
plaintiff or a defendant. With the finding that the residence of YASCO for purposes of venue is in Cebu City, where its
principal place of business is located, it becomes unnecessary to decide whether Garcia is also a resident of Cebu City
and whether Roxas was in estoppel from questioning the choice of Cebu City as the venue. The decision of the Court of
Appeals was set aside.
Dr. Antonio Lizares vs. Hon. Hermogenes Caluag (QC- CFI Judge) and Flaviano Cacnio

Facts: Flaviano Cacnio alleged that he brought from petitioner Lizares on installment Lot 4, Block 1 of the Sinkang
Subdivision in Bacolod City. Cacnio received a letter of demand from Lizares representing arrears in the payment of
installment plus regular and overdue interest. Cacnio then sent a check drawn by one Antonio Bernardo in favor of
Lizares. But according to Cacnio, Lizares refused the check and returned it. Cacnio instituted a civil case in the CFI of
Quezon City, praying for compensatory damages plus attorney’s fees. Petitioner Lizares moved to dismiss the case
on the ground that the venue is improperly laid, for the action affects title to or possession of real property locates in
Bacolod City which was the subject matter of the contract. This was denied by the respondent court upon the ground that
the action was in personam.

Issue: Whether or not the venue was properly laid

Held: Negative. Although the immediate remedy sought by Cacnio is to compel petitioner to accept payment made by the
former, it is obvious that this relief is merely the first step to establish Cacnio’s title to the property. Moreover,
Cacnio’s complaint is a means resorted to by him in order that he could retain the possession of said property. In
short, venue in the main case was improperly laid and the CFI of QC should have properly granted the motion to dismiss.
Capati v. Ocampo Case Digest

Capati v. Ocampo
G.R. No. L-28742 (April 30, 1982)

FACTS:
Plaintiff, a resident of Pampanga, entered into a sub-contract with the Defendant, a resident of Naga City. The
Defendant completed a construction job for the Plaintiff. However, the construction was completed on a date later than
what was agreed in their contract. Hence, Plaintiff filed in the CFI of Pampanga an action for recovery of
consequential damages due to the delay. Defendant filed a motion to dismiss the complaint on the ground that venue of
action was improperly laid. The CFI of Pampanga dismissed the Plaintiff's complaint on ground of improper venue.
VIRGILIO CAPATI, plaintiff-appellant, vs. DR. JESUS P. OCAMPO, defendant-appellee. Filemon Catajor for plaintiff-
appellant. Jose R. Garcia for defendant-appellee. SYNOPSIS Appellant, a resident of Pampanga and a contractor,
entered into a sub-contract with appellee for the construction of vault walls, exterior walls and columns of the Feati Bank
building in Iriga, Camarines Sur. The parties agreed that the same should be completed on or before June 5, 1967. The
subcontract also contained a stipulation that all actions arising out or relating to the contract "may" be instituted in the
Court of First Instance of Naga City. Since appellee finished the construction only in June 20, 1967, appellant filed an
action against the former for recovery of consequential damages for the delay with the Court of First Instance of
Pampanga. Appellee filed a motion to dismiss on the ground of improper venue contending that the case can only be filed
in Naga City as stipulated in their agreement. Appellant opposed the motion claiming that their agreement to hold the
venue in Naga City was merely optional. Upholding the appellee, the lower court dismissed the complaint. Hence, this
appeal.
ISSUE:
W/N the dismissal of the complaint on the ground of improper venue was correct.

HELD:
No. The rule on venue of personal actions cognizable by the CFI is found in Sec. 2(b), Rule 4 of the Rules of Court,
which provides that such "actions may be commenced and tried where the Defendant or any of the Defendants
resides or may be found, or where the Plaintiff or any of the Plaintiffs resides, at the election of the Plaintiff." The word
"may" is merely permissive and operates to confer discretion upon a party. Under ordinary circumstances, the term "may
be" connotes possibility; it does not connote certainty. "May" is an auxillary verb indicating liberty, opportunity,
permission or possibility.
 UNIMASTERS CONGLOMERATION, INC. vs. COURT OF APPEALS

Kubota Agri-Machinery Philippines, Inc. and Unimasters Conglomeration, Inc. entered into a Dealership Agreement for
Sales and Services of the former's products in Samar and Leyte Provinces. The Agreement contained a stipulation that
“All suits arising out of this Agreement shall be filed with the proper Courts of Quezon City.”

Five years later, Unimasters filed an action in the RTC of Tacloban against Kubota, Reynaldo Go and Metrobank for
damages and breach of contracts, and injunction with prayer for temporary restraining order.

Kubota filed two motions, one for the dismissal of the case on the ground of improper venue, the other prayed for the
transfer of the injunction hearing because its counsel is unavailable on the given date.

The court issued an order allowing the issuance of preliminary injunction. Also, said court denied the motion to dismiss on
the reason that Unimasters’ place of business is in Tacloban City while Kubota’s principal place of business is in Quezon
City. In accordance with the Rules of Court, the proper venue would either be Quezon City or Tacloban City at the election
of the plaintiff. Hence, the filing in the RTC of Tacloban is proper.

Kubota appealed to both orders on the grounds they were issued with grave abuse of discretion in a special action for
certiorari and prohibition filed with the CA. Kubota asserted that RTC of Tacloban had no jurisdiction was improperly laid.

The Court of Appeals decided in favor of Kubota and it held that: “the stipulation respecting venue in its Dealership
Agreement with Unimasters did in truth limit the venue of all suits arising thereunder only and exclusively to the proper
courts of Quezon City.”Subsequently, Unimasters filed a motion for reconsideration, but was turned down by the appellate
court.

ISSUE: Whether the venue stipulated in the contract has the effect of limiting the venue to a specified place.

HELD: NO.

The Polytrade doctrine was applied in the case at bar. This doctrine enunciated that as long as the stipulation does not set
forth qualifying or restrictive words to indicate that the agreed place alone and none other is the venue of the action, the
parties do not lose the option of choosing the venue.

According to the court, in the absence of qualifying or restrictive words, venue stipulations in a contract should be
considered merely as agreement on additional forum, not as limiting venue to the specified place. Unless the parties make
it clear, by employing categorical and suitably limiting language, that they wish the venue of actions between them be laid
only and exclusively at a definite place, and to disregard the prescriptions of Rule 4, agreements on venue are not to be
regarded as mandatory or restrictive, but merely permissive, or complementary of said rule.

In light of all the cases surveyed, and the general postulates distilled therefrom, the question should receive a negative
answer. Absent additional words and expressions definitely and unmistakably denoting the parties' desire and intention
that actions between them should be ventilated only at the place selected by them, Quezon City -- or other contractual
provisions clearly evincing the same desire and intention -- the stipulation should be construed, not as confining suits
between the parties only to that one place, Quezon City, but as allowing suits either in Quezon City or Tacloban City, at
the option of the plaintiff.

Kubota's theory that the RTC had no jurisdiction considering that the venue was improperly laid is not an accurate
statement of legal principle. It equates venue with jurisdiction; but venue has nothing to do with jurisdiction, except in
criminal actions. This is fundamental.

The action at bar, for the recovery of damages in an amount considerably in excess of P20,000.00, is assuredly within the
jurisdiction of a Regional Trial Court. Assuming that venue was improperly laid in the Court where the action was
instituted, the Tacloban City RTC, that would be a procedural, not a jurisdictional impediment -- precluding ventilation of
the case before that Court of wrong venue notwithstanding that the subject matter is within its jurisdiction. However, if the
objection to venue is waived by the failure to set it up in a motion to dismiss, the RTC would proceed in perfectly regular
fashion if it then tried and decided the action.
DACOYCOY V. IAC G.R. # 74854

FACTS

 On March 22, 1983, Dacoycoy, a resident of Balanti, Cainta, Rizal, filed before the Rizal RTC, a complaint against
private respondent de Guzman praying for the annulment of 2 deeds of sale involving a parcel of riceland in
Barrio Estanza, Lingayen, Pangasinan, the surrender of the produce thereof and damages for private
respondent's refusal to have said deeds of sale set aside upon petitioner's demand.
 On May 25, 1983, before summons could be served on de Guzman, the RTC Executive Judge issued an order
requiring counsel for petitioner to confer with respondent trial judge on the matter of venue. After said conference,
the RTC dismissed the complaint on the ground of improper venue.
o It found, based on the allegations of the complaint, that petitioner's action is a real action as it sought not only
the annulment of the aforestated deeds of sale but also the recovery of ownership of the subject parcel of
riceland located in Pangasinan, outside its’ territorial jurisdiction.
 Petitioner appealed to the IAC, which affirmed the order of dismissal of his complaint.

ISSUE
 W/N the trial court may motu proprio dismiss a complaint on the ground of improper venue?? NO
HELD

 The motu proprio dismissal of petitioner's complaint by the RTC on the ground of improper venue is plain error,
attributable to its inability to distinguish between jurisdiction and venue.
 Questions or issues relating to venue of actions are basically governed by Rule 4 of the Revised Rules of Court. It
is said that the laying of venue is procedural rather than substantive. It relates to the jurisdiction of the
court over the person rather than the subject matter. Provisions relating to venue establish a relation
between the plaintiff and the defendant and not between the court and the subject matter. Venue relates
to trial not to jurisdiction, touches more of the convenience of the parties rather than the substance of the case.
 Jurisdiction treats of the power of the court to decide a case on the merits; while venue deals on the locality, the
place where the suit may be had.
 In Luna vs. Carandang, we emphasized:
1. A Court of First Instance has jurisdiction over suits involving title to, or possession of, real estate wherever
situated in the Philippines, subject to the rules on venue of actions;
2. Rule 4, Section 2, of the Rules of Court requiring that an action involving real property shall be brought in
the Court of First Instance of the province where the land lies is a rule on venue of actions, which may be
waived expressly or by implication.
 In the instant case, even granting for a moment that the action of petitioner is a real action, respondent trial
court would still have jurisdiction over the case, it being a regional trial court vested with the exclusive
original jurisdiction over "all civil actions which involve the title to, or possession of, real property, or any
interest therein . . ." in accordance with Section 19 (2) of Batas Pambansa Blg. 129. With respect to the
parties, there is no dispute that it acquired jurisdiction over the plaintiff Dacoycoy, the moment he filed his
complaint for annulment and damages. Respondent trial court could have acquired jurisdiction over the
defendant either by his voluntary appearance in court and his submission to its authority, or by the
coercive power of legal process exercised over his person.
o Although petitioner contends that, he requested the City Sheriff of Olongapo City or his deputy to serve the
summons on de Guzman at his residence, it does not appear that said service had been properly effected or
that private respondent had appeared voluntarily in court or filed his answer to the complaint. At this stage,
respondent trial court should have required petitioner to exhaust the various alternative modes of service of
summons under Rule 14 of the Rules of Court, i.e., personal service under Section 7, substituted service
under Section 8, or service by publication under Section 16 when the address of the defendant is unknown
and cannot be ascertained by diligent inquiry.
o Dismissing the complaint on the ground of improper venue is certainly not the appropriate course of action at
this stage of the proceeding, particularly as venue, in inferior courts as well as in the CFI (now RTC), may be
waived expressly or impliedly. Where defendant fails to challenge timely the venue in a motion to
dismiss as provided by Section 4 of Rule 4 of the Rules of Court, and allows the trial to be held and a
decision to be rendered, he cannot on appeal or in a special action be permitted to challenge
belatedly the wrong venue, which is deemed waived.
 Thus, unless and until the defendant objects to the venue in a motion to dismiss, the venue cannot be
truly said to have been improperly laid, as for all practical intents and purposes, the venue, though technically
wrong, may be acceptable to the parties for whose convenience the rules on venue had been devised. The trial
 court cannot pre-empt the defendant's prerogative to object to the improper laying of the venue by motu
proprio dismissing the case.

IAC decision is reversed and set aside. The complaint before the RTC is revived and reinstated.
Diaz vs. Adiong, March 5, 1993

Facts:

1. On July 6, 1991, the Mindanao Kris, published in Cotabato City, published a news article entitled “Toll of
Corruption” which exposed alleged anomalies by key officials in the Regional Office of DENR;
2. Public officials alluded instituted a separate civil and criminal actions arising from libel before City Prosecutor
Office and Regional Trial Court in Marawi City against petitioner;
3. The City Prosecutor’s Office dismissed the criminal case complaint for lack of jurisdiction since the said complaint
should be filed in Cotabato City;
4. As for the civil complaint it was docketed in the RTC of Marawi City, and that the defendant had filed their
respective answers w/ counterclaim;
5. Diaz moved for the dismissal of the case on the ground of lack of jurisdiction, it was their contention that the case
should be filed in RTC of Cotabato since it is where the private 1. respondents who are all public officers held
their office, similarly the libelous publication was published in that place

Issue: WON, RTC Marawi City has jurisdiction over the said case

Held: No, not one of the respondents held office in Marawi City

1. An offended party who is at the same time a public official can only institute an action arising from libel in 2
venues: the place where he holds office and place where the alleged libelous articles were published;
2. The venue is improperly laid. However, unless and until the defendant objects to the venue in a motion to dismiss
prior to a responsive pleading, the venue cannot be truly be said to have been improperly laid, since the venue
though technically wrong may yet be considered acceptable to the parties for whose convenience the rules on
venue had been devised;
3. In this case, Diaz, should have timely challenged the venue in Marawi City in a motion to dismiss, pursuant to Sec
4, Rule 4 of the Rules of Court. Unfortunately, petitioner had already submitted himself to the jurisdiction of the TC
when he filed his Answer to the Complaint with Counterclaim. His motion to dismiss was therefore belatedly filed
and could no longer deprive the trial court of jurisdiction to hear and decide the said case;
4. While objections to venue in civil actions arising from libel can be waived; it does not after all, involve a question
of jurisdiction. Indeed, the laying of venue is procedural rather than substantive. Venue relates to trial and not to
jurisdiction.
Davao Light v. Court of Appeals
Facts
The Davao Light and Power Co., Inc. ("Davao Light") filed a collection suit against Queensland Hotel ("Queensland") and
Teodorico Adarna ("Adarna") with an ex parte application for a writ of preliminary attachment. On 3 May 1989, the trial
court issued an Order of Attachment, and the corresponding Writ of Attachment on 11 May 1989. On 12 May 1989, the
summons, a copy of the complaint, and the writ of attachment was served upon Queensland and Adarna. Queensland
and Adarna filed a motion to discharge the attachment on the ground that at the time the Order of Attachment and Writ of
Attachment were issued, the trial court has yet to acquire jurisdiction over the cause of action and over the persons of the
defendants.

Issue
Whether or not the writ of preliminary attachment was validly issued.

Held
Yes. A writ of preliminary attachment may be issued before the court acquires jurisdiction over the person of the
defendant.

Ratio Decidendi
The court may validly issue a writ of preliminary injunction prior to the acquisition of jurisdiction over the person of the
defendant. There is an appreciable period of time between the commencement of the action (takes place upon the filing of
an initiatory pleading) and the service of summons to the defendant. In the meanwhile, there are a number of actions
which the plaintiff or the court may validly take, including the application for and grant of the provisional remedy of
preliminary attachment. There is nothing in the law which prohibits the court from granting the remedy prior to the
acquisition of jurisdiction over the person of the defendant. In fact, Rule 57 of the Rules of Court allows the granting of a
writ of preliminary injunction at the commencement of the suit. In the cases of Toledo v. Burgos and Filinvest Credit
Corporation v. Relova, it was held that notice and hearing are not prerequisites to the issuance of a writ of preliminary
attachment. Further, in the case of Mindanao Savings & Loan Association, Inc. v. Court of Appeals, it was ruled that giving
notice to the defendant would defeat the purpose of the remedy by affording him or her the opportunity to dispose of his
properties before the writ can be issued.
A preliminary attachment may be discharged with the same ease as obtaining it. In any case, the ease of availing the
provisional remedy of preliminary attachment is matched by the ease with which it can be remedied by either the posting
of a counterbond, or by a showing of its improper or irregular issuance. The second means of defeating a preliminary
attachement, however, may not be availed of if the writ was issued upon a ground which is at the same time the
applicant's cause of action.
Preliminary attachment not binding until jurisdiction over the person of the defendant is acquired. The writ of preliminary
attachment, however, even though validly issued, is not binding upon the defendant until jurisdiction over his person is
first acquired.
Mangila vs CA (Remedial Law)

Anita MANGILA V. CA and Loreta Guina

G.R. No. 125027 | AUGUST 12, 2002

FACTS:

Anita Mangila is an exporter of seafoods and doing business under the name of Seafoods Products. Private respondent
Loreta Guina is the President and General Manager of Air Swift International, a single registered proprietorship engaged
in the freight forwarding business.

In January 1988, Mangila contracted the freight forwarding services of Guina for shipment of petitioner’s products, such as
crabs, prawns and assorted fishes, to Guam (USA) where petitioner maintains an outlet. Mangila agreed to pay cash on
delivery. Guina’s invoice stipulates a charge of 18 percent interest per annum on all overdue accounts, and in case of suit,
stipulates attorney’s fees equivalent to 25 percent of the amount due plus costs of suit.

On the first shipment, Mangila requested for 7 days within which to pay private Guina. However, for the next three
shipments, March 17, 24 and 31, 1988, petitioner failed to pay private respondent shipping charges amounting to P109,
376.95.

Despite several demands, Mangila never paid. Thus, on June 10, 1988, Guina filed before the RTC Pasay City an action
for collection of sum of money.

The Sheriff’s Return showed that summons was not served on Mangila. A woman found at Mangila’s house informed the
sheriff that petitioner transferred her residence to Guagua, Pampanga. The sheriff found out further that petitioner had left
the Philippines for Guam.

Thus, on September 1988, construing petitioner’s departure from the Philippines as done with intent to defraud her
creditors, Ginua filed a Motion for Preliminary Attachment, which the court subsequently granted. A Writ of Preliminary
Attachment was thereafter issued.

Through the assistance of the sheriff of RTC Pampanga, the Notice of Levy with the Order, Affidavit and Bond was served
on Mangila’s household help in San Fernando, Pampanga on October 1988.

On November 1988, Mangila filed an Urgent Motion to Discharge Attachment without submitting herself to the jurisdiction
of the trial court. She pointed out that up to then, she had not been served a copy of the Complaint and the summons.
Hence, petitioner claimed the court had not acquired jurisdiction over her person.

After the hearing on the motion, RTC granted the same on January 13, 1989 upon filing of petitioner’s counter-bond. The
trial court, however, did not rule on the question of jurisdiction and on the validity of the writ of preliminary attachment.

Thereafter, Guina applied for an alias summons and on January 26, 1989 summons was finally served on petitioner.

On February 1989, Mangila moved for the dismissal of the case on the ground of improper venue, claiming that as
stipulated in the invoice of Guina’s freight services, the venue in case a complaint is filed would be in Makati and not
Pasay. For her part, Guina explained that although “Makati” appears as the stipulated venue, the same was merely an
inadvertence by the printing press whose general manager executed an affidavit admitting such inadvertence. Moreover,
Guina claimed that Mangila knew that private respondent was holding office in Pasay City and not in Makati.

The RTC ave credence to Guina’s Opposition, denied the Motion to Dismiss, and gave petitioner 5 days to file her
Answer. Petitioner filed an MR but this too was denied. Thus she filed her Answer on June 1989, maintaining her
contention that the venue was improperly laid.

The case was set for pre-trial. Meanwhile, Guina filed a Motion to Sell Attached Properties but the trial court denied the
motion.
On motion of Mangila, the RTC reset the pre-trial but Mangila failed to appear on the rescheduled date. Without declaring
Mangila to be in default, the court allowed Guina to present evidence ex parte.

Mangila filed an MR of the order terminating the pre-trial, and argued that there was no order decalring him in default and
that his attorney was only late but not absent during the rescheduled pre-trial.

Nevertheless, the RTC ruled in favor of Guina and ordered petitioner to pay respondent P109,376.95 plus 18 percent
interest per annum, 25 percent attorney’s fees and costs of suit. Mangila appealed to the CA while Guina filed a Motion for
Execution Pending Appeal but the trial court denied the same.

The CA affirmed the RTC decision. The Court of Appeals upheld the validity of the issuance of the writ of attachment and
sustained the filing of the action in the RTC of Pasay. The Court of Appeals also affirmed the declaration of default on
petitioner and concluded that the trial court did not commit any reversible error.

ISSUES:

WON the CA erred in affirming the validity of the issuance of the writ of Preliminary Attachment

WON the venue was improperly laid

HELD:

1) Yes, because there was no proper service of summons, order, and the writ of attachment.

*Improper Issuance and Service of Writ of Attachment. In Davao Light & Power Co., Inc. v. Court of Appeals, this Court
clarified the actual time when jurisdiction should be had:

“It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person
of defendant – issuance of summons, order of attachment and writ of attachment – these do not and cannot bind and
affect the defendant until and unless jurisdiction over his person is eventually obtained by the court, either by service on
him of summons or other coercive process or his voluntary submission to the court’s authority. Hence, when the sheriff or
other proper officer commences implementation of the writ of attachment, it is essential that he serve on the defendant not
only a copy of the applicant’s affidavit and attachment bond, and of the order of attachment, as explicitly required by
Section 5 of Rule 57, but also the summons addressed to said defendant as well as a copy of the complaint xxx.”

Furthermore, we have held that the grant of the provisional remedy of attachment involves three stages: first, the court
issues the order granting the application; second, the writ of attachment issues pursuant to the order granting the writ; and
third, the writ is implemented. For the initial two stages, it is not necessary that jurisdiction over the person of the
defendant be first obtained. However, once the implementation of the writ commences, the court must have acquired
jurisdiction over the defendant for without such jurisdiction, the court has no power and authority to act in any manner
against the defendant. Any order issuing from the Court will not bind the defendant.

2) Yes.
*Improper Venue. The Rules of Court provide that parties to an action may agree in writing on the venue on which an
action should be brought. However, a mere stipulation on the venue of an action is not enough to preclude parties from
bringing a case in other venues. The parties must be able to show that such stipulation is exclusive. Thus, absent words
that show the parties’ intention to restrict the filing of a suit in a particular place, courts will allow the filing of a case in any
venue, as long as jurisdictional requirements are followed. Venue stipulations in a contract, while considered valid and
enforceable, do not as a rule supersede the general rule set forth in Rule 4 of the Revised Rules of Court. In the absence
of qualifying or restrictive words, they should be considered merely as an agreement on additional forum, not as limiting
venue to the specified place.

In the instant case, the stipulation does not limit the venue exclusively to Makati. There are no qualifying or restrictive
words in the invoice that would evince the intention of the parties that Makati is the “only or exclusive” venue where the
action could be instituted. We therefore agree with private respondent that Makati is not the only venue where this could
be filed.

The case was dismissed without prejudice.

Antonio Chua vs. Total Office Products & Services (Topros) Inc

Facts:

Respondent Total Office Products and Services, Inc., (TOPROS) lodged a complaint for annulment of contracts of
loan and real estate mortgage against herein petitioner Antonio T. Chua before the Regional Trial Court of Pasig City.

The said suit sought to annul a loan contract allegedly extended by petitioner to respondent TOPROS in the amount of ten
million four hundred thousand pesos (P10,400,000) and the accessory real estate mortgage contract covering two parcels
of land situated in Quezon City as collateral, alleging that there was no authority granted to Chua (its president) by the
corporation to enter into a contract of loan. It was alleged that the contracts were fictitious.

Petitioner Chua filed a motion to dismiss on the ground of improper venue. He contended that the action filed by
TOPROS affects title to or possession of the parcels of land subject of the real estate mortgage. Thus should have been
filed in the Regional Trial Court of Quezon City where the encumbered real properties are located, instead of Pasig City
where the parties reside.

RTC Judge deny motion to dismiss. She reasoned that the action to annul the loan and mortgage contracts is a
personal action and thus, the venue was properly laid in the RTC of Pasig City where the parties reside.

Petitioner moved for a reconsideration of the said order, which Judge denied. Hence, petitioner filed with the CA
however CA dismissed said petition.

CA applied Hernandez v. Rural Bank of Lucena, Inc. and ruled that an action for the cancellation of a real estate
mortgage is a personal action if the mortgagee has not foreclosed the mortgage and the mortgagor is in possession of the
premises, as neither the mortgagor’s title to nor possession of the property is disputed.

Undeterred, petitioner elevated before SC a petition for review raising the following issue:

ISSUE: Whether or not an action to annul a loan and mortgage contract duly alleged as fictitious with absolutely no
consideration is a personal action or real action.

Held:

In affirming the CA, the SC ruled….it is a personal Action.

Well – settled is the rule that an action to annul a contract of loan and its
accessory real estate mortgage is a personal action. In personal action the plaintiff seeks the recovery of personal
property, the enforcement of a contract or the recovery of damages. In contrast, in a real action, the plaintiff seeks the
recovery of real property, or, as indicated in Section 2(a), Rule 4 of the then Rules of Court, a real action is an action
affecting title to real property or for the recovery of possession, or for partition or condemnation of, or foreclosure
of mortgage on real property.
In this case, ownership of the parcels of land subject of the questioned real estate mortgage was never
transferred to petitioner, but remained with TOPROS. Thus, no real action for the recovery of real property is involved.
This being the case, TOPROS’ action for annulment of the contracts of loan and real estate mortgage remains a personal
action.

And thus falls under the catch-all provision on personal actions under paragraph (b) of the above-cited section, to
wit:

SEC. 2 (b) Personal actions. – All other actions may be commenced and tried where the defendant or any of the
defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the
plaintiff.

In the same vein, the action for annulment of a real estate mortgage in the present case must fall under Section 2 of Rule
4, to wit:
 SEC. 2. Venue of personal actions. – All other actions may be commenced and tried where the plaintiff or any of
the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of
a non-resident defendant where he may be found, at the election of the plaintiff.

Thus, Pasig City, where the parties reside, is the proper venue of the action to nullify the subject loan and real
estate mortgage contracts. The Court of Appeals committed no reversible error in upholding the orders of the Regional
Trial Court denying petitioner’s motion to dismiss the case on the ground of improper venue.
PERLAS-BERNABE, J.:
Assailed in this petition for certiorari[1] are the Decision[2] dated March 5, 2012 and the Resolution[3] dated October 4, 2012
of the Court of Appeals(CA) in CA-G.R. SP No. 117474, which annulled the Orders dated September 20, 2010 [4] and
October 22, 2010[5] of the Regional Trial Court of Manila, Branch 173 (RTC) in Civil Case No. 10-124040, denying private
respondent Cash Asia Credit Corporation's (Cash Asia) motion to dismiss on the ground of improper venue.

The Facts

The instant case arose from a Complaint[6] dated August 2, 2010 filed by Virgilio C. Briones (Briones) for Nullity of
Mortgage Contract, Promissory Note, Loan Agreement, Foreclosure of Mortgage, Cancellation of Transfer Certificate of
Title (TCT) No.290846, and Damages against Cash Asia before the RTC.[7] In his complaint, Briones alleged that he is the
owner of a property covered by TCT No. 160689 (subject property),and that, on July 15, 2010, his sister informed him that
his property had been foreclosed and a writ of possession had already been issued in favor of Cash Asia. [8] Upon
investigation, Briones discovered that: (a) on December 6, 2007, he purportedly executed a promissory note,[9] loan
agreement,[10] and deed of real estate mortgage[11]covering the subject property (subject contracts) in favor of Cash Asia
in order to obtain a loan in the amount of P3,500,000.00 from the latter; [12] and (b) since the said loan was left unpaid,
Cash Asia proceeded to foreclose his property. [13] In this relation, Briones claimed that he never contracted any loans from
Cash Asia as he has been living and working in Vietnam since October 31, 2007. He further claimed that he only went
back to the Philippines on December 28, 2007 until January 3, 2008 to spend the holidays with his family, and that during
his brief stay in the Philippines, nobody informed him of any loan agreement entered into with Cash Asia. Essentially,
Briones assailed the validity of the foregoing contracts claiming his signature to be forged. [14]

For its part, Cash Asia filed a Motion to Dismiss[15] dated August 25, 2010, praying for the outright dismissal of Briones's
complaint on the ground of improper venue.[16] In this regard, Cash Asia pointed out the venue stipulation in the subject
contracts stating that "all legal actions arising out of this notice in connection with the Real Estate Mortgage subject hereof
shall only be brought in or submitted to the jurisdiction of the proper court of Makati City." [17] In view thereof, it contended
that all actions arising out of the subject contracts may only be exclusively brought in the courts of Makati City, and as
such, Briones's complaint should be dismissed for having been filed in the City of Manila. [18]

In response, Briones filed an opposition,[19] asserting, inter alia, that he should not be covered by the venue stipulation in
the subject contracts as he was never a party therein. He also reiterated that his signatures on the said contracts were
forgeries.[20]

The RTC Ruling

In an Order[21] dated September 20, 2010, the RTC denied Cash Asia's motion to dismiss for lack of merit. In denying the
motion, the RTC opined that the parties must be afforded the right to be heard in view of the substance of Briones's cause
of action against Cash Asia as stated in the complaint.[22]

Cash Asia moved for reconsideration[23] which was, however, denied in an Order[24] dated October 22, 2010. Aggrieved, it
filed a petition for certiorari[25] before the CA.

The CA Ruling

In a Decision[26] dated March 5, 2012, the CA annulled the RTC Orders, and accordingly, dismissed Briones's complaint
without prejudice to the filing of the same before the proper court in Makati City. [27] It held that the RTC gravely abused its
discretion in denying Cash Asia's motion to dismiss, considering that the subject contracts clearly provide that actions
arising therefrom should be exclusively filed before the courts of Makati City only. [28] As such, the CA concluded that
Briones's complaint should have been dismissed outright on the ground of improper venue,[29] this, notwithstanding
Briones's claim of forgery.

Dissatisfied, Briones moved for reconsideration,[30] which was, however, denied in a Resolution[31] dated October 4, 2012,
hence, this petition.
 The Issue Before the Court

The primordial issue for the Court's resolution is whether or not the CA gravely abused its discretion in ordering the
outright dismissal of Briones's complaint on the ground of improper venue.

The Court's Ruling

The petition is meritorious.

At the outset, the Court stresses that "[t]o justify the grant of the extraordinary remedy of certiorari, [the petitioner] must
satisfactorily show that the court or quasi-judicial authority gravely abused the discretion conferred upon it. Grave abuse
of discretion connotes judgment exercised in a capricious and whimsical manner that is tantamount to lack of jurisdiction.
To be considered 'grave,' discretion must be exercised in a despotic manner by reason of passion or personal hostility,
and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty
enjoined by or to act at all in contemplation of law."[32]

Guided by the foregoing considerations, the Court finds that the CA gravely abused its discretion in ordering the outright
dismissal of Briones's complaint against Cash Asia, without prejudice to its re-filing before the proper court in Makati City.

Rule 4 of the Rules of Court governs the rules on venue of civil actions, to wit:

Rule 4
VENUE OF ACTIONS

SECTION 1. Venue of real actions. Actions affecting title to or possession of real property, or interest therein, shall be
commenced and tried in the proper court which has jurisdiction over the area wherein the real property involved, or a
portion thereof, is situated.

Forcible entry and detainer actions shall be commenced and tried in the municipal trial court of the municipality or city
wherein the real property involved, or a portion thereof, is situated.

SEC. 2. Venue of personal actions. All other actions may be commenced and tried where the plaintiff or any of the
principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-
resident defendant where he may be found, at the election of the plaintiff.

SEC. 3. Venue of actions against nonresidents. If any of the defendants does not reside and is not found in the
Philippines, and the action affects the personal status of the plaintiff, or any property of said defendant located in the
Philippines, the action may be commenced and tried in the court of the place where the plaintiff resides, or where the
property or any portion thereof is situated or found.

SEC. 4. When Rule not applicable. This Rule shall not apply

(a) In those cases where a specific rule or law provides otherwise; or

(b) Where the parties have validly agreed in writing before the filing of the action on the exclusive venue thereof.

Based therefrom, the general rule is that the venue of real actions is the court which has jurisdiction over the area wherein
the real property involved, or a portion thereof, is situated; while the venue of personal actions is the court which has
jurisdiction where the plaintiff or the defendant resides, at the election of the plaintiff. As an exception, jurisprudence
in Legaspi v. Rep. of the Phils.[33]instructs that the parties, thru a written instrument, may either introduce another venue
where actions arising from such instrument may be filed, or restrict the filing of said actions in a certain exclusive
venue, viz.:

The parties, however, are not precluded from agreeing in writing on an exclusive venue, as qualified by Section 4 of the
same rule. Written stipulations as to venue may be restrictive in the sense that the suit may be filed only in the
place agreed upon, or merely permissive in that the parties may file their suit not only in the place agreed upon
but also in the places fixed by law. As in any other agreement, what is essential is the ascertainment of the intention of
the parties respecting the matter.
As regards restrictive stipulations on venue, jurisprudence instructs that it must be shown that such stipulation
is exclusive. In the absence of qualifying or restrictive words, such as "exclusively," "waiving for this purpose any
other venue," "shall only" preceding the designation of venue, "to the exclusion of the other courts," or words of similar
import, the stipulation should be deemed as merely an agreement on an additional forum, not as limiting venue to
the specified place.[34] (Emphases and underscoring supplied)

In this relation, case law likewise provides that in cases where the complaint assails only the terms, conditions, and/or
coverage of a written instrument and not its validity, the exclusive venue stipulation contained therein shall still be binding
on the parties, and thus, the complaint may be properly dismissed on the ground of improper venue. [35] Conversely,
therefore, a complaint directly assailing the validity of the written instrument itself should not be bound by the exclusive
venue stipulation contained therein and should be filed in accordance with the general rules on venue.To be sure, it would
be inherently consistent for a complaint of this nature to recognize the exclusive venue stipulation when it, in fact,
precisely assails the validity of the instrument in which such stipulation is contained.

In this case, the venue stipulation found in the subject contracts is indeed restrictive in nature, considering that it
effectively limits the venue of the actions arising therefrom to the courts of Makati City. However, it must be emphasized
that Briones's complaint directly assails the validity of the subject contracts, claiming forgery in their execution. Given this
circumstance, Briones cannot be expected to comply with the aforesaid venue stipulation, as his compliance therewith
would mean an implicit recognition of their validity. Hence, pursuant to the general rules on venue, Briones properly filed
his complaint before a court in the City of Manila where the subject property is located.

In conclusion, the CA patently erred and hence committed grave abuse of discretion in dismissing Briones's complaint on
the ground of improper venue.

WHEREFORE, the petition is GRANTED. Accordingly, the Decision dated March 5, 2012 and the Resolution dated
October 4, 2012 of the Court of Appeals in CA-G.R. SP No. 117474 are hereby ANNULLED and SET ASIDE. The Orders
dated September 20, 2010 and October 22, 2010 of the Regional Trial Court of Manila, Branch 173 in Civil Case No. 10-
124040 are REINSTATED.

SO ORDERED.
EVANGELINE ALDAY, petitioner, vs. FGU INSURANCE CORPORATION, respondent.

Facts:

FGU Insurance Corporation filed a complaint with the RTC of Makati alleging that Alday owed it P114,650.76,
representing unliquidated cash advances, unremitted costs of premiums and other charges incurred as an insurance
agent. Respondent also prayed for exemplary damages, attorneys fees, and costs of suit. Petitioner filed her answer and
by way of counterclaim, asserted her right for the payment of P104,893.45, representing direct commissions, profit
commissions and contingent bonuses and for accumulated premium reserves amounting to P500,000.00. In addition,
petitioner prayed for attorneys fees, litigation expenses, moral damages and exemplary damages for the allegedly
unfounded action filed by respondent.

Respondent filed a Motion to Strike Out Answer With Compulsory Counterclaim And To Declare Defendant In Default
because petitioners answer was allegedly filed out of time. However, the trial court denied the motion. A few weeks later,
respondent filed a motion to dismiss petitioners counterclaim, contending that the trial court never acquired jurisdiction
over the same because of the non-payment of docket fees by petitioner. In response, petitioner asked the trial court to
declare her counterclaim as exempt from payment of docket fees since it is compulsory and that respondent be declared
in default for having failed to answer such counterclaim.

The trial court granted the motion to dismiss. The court found petitioners counterclaim to be merely permissive and held
that petitioners failure to pay docket fees prevented the court from acquiring jurisdiction over the same. The Court of
Appeals sustained the trial court.

Issues:

1. Whether or not the respondent is estopped from questioning her non-payment of docket fees because it did not
raise this particular issue when it filed its first motion.
2. Whether or not the Court of Appeals had jurisdiction to entertain the appeal of the petitioner.
3. Whether or not the counterclaim was permissive or compulsory

Held:

1. Estoppel by laches arises from the negligence or omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned or declined to assert it. In the case at bar,
respondent cannot be considered as estopped from assailing the trial court’s jurisdiction over petitioners
counterclaim since this issue was raised by respondent with the trial court itself the body where the action is
pending - even before the presentation of any evidence by the parties and definitely, way before any judgment
could be rendered by the trial court.
2. This objection to the CA’s jurisdiction is raised for the first time before this Court. Although the lack of jurisdiction
of a court may be raised at any stage of the action, a party may be estopped from raising such questions if he has
actively taken part in the very proceedings which he questions, belatedly objecting to the court’s jurisdiction in the
event that that the judgment or order subsequently rendered is adverse to him. In this case, respondent actively
took part in the proceedings before the CA by filing its appellees brief with the same. Its participation, when taken
together with its failure to object to the jurisdiction during the entire duration of the proceedings before such court,
demonstrates a willingness to abide by the resolution of the case by such tribunal and accordingly, respondent is
now most decidedly estopped.
3. BOTH. A compulsory counterclaim is one which, being cognizable by the regular courts of justice, arises out of or
is connected with the transaction or occurrence constituting the subject matter of the opposing parties’ claim and
does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. In
Valencia v. Court of Appeals, this Court set the criteria to determine whether a counterclaim is compulsory or
permissive,

a. Are the issues of fact and law raised by the claim and counterclaim largely the same?
b. Would res judicata bar a subsequent suit on defendants claim absent the compulsory counterclaim
rule?chanroblesvirtuallawlibrary
c. Will substantially the same evidence support or refute plaintiffs claim as well as defendants
counterclaim?chanroblesvirtuallawlibrary
d. Is there any logical relation between the claim and the counterclaim?chanroblesvirtuallawlibrary
Another test, applied in Quintanilla v. Court of Appeals, is the compelling test of compulsoriness which
requires a logical relationship between the claim and counterclaim, that is, where conducting separate trials of the
respective claims of the parties would entail a substantial duplication of effort and time by the parties and the
court.

Petitioner’s counterclaim for commissions, bonuses, and accumulated premium reserves is merely permissive.
The evidence required to prove petitioners claims differs from that needed to establish respondent’s demands for
the recovery of cash accountabilities from petitioner, such as cash advances and costs of premiums. This
conclusion is further reinforced by petitioners own admissions since she declared in her answer that respondents
cause of action, unlike her own, was not based upon the Special Agents Contract.

However, petitioners claims for damages, allegedly suffered as a result of the filing by respondent of its complaint,
are compulsory.

The rule on the payment of filing fees has been laid down by the Court in the case of Sun Insurance Office, Ltd. v.
Hon. Maximiano Asuncion

a. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed
docket fee, that vests a trial court with jurisdiction over the subject-matter or nature of the action. Where the
filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment
of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary
period.chanroblesvirtuallawlibrary

b. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall not
be considered filed until and unless the filing fee prescribed therefor is paid. The court may allow payment of
said fee within a reasonable time but also in no case beyond its applicable prescriptive or reglementary
period.chanroblesvirtuallawlibrary

c. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of
the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if
specified the same has been left for determination by the court, the additional filing fee therefor shall
constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or his duly authorized
deputy to enforce said lien and assess and collect the additional fee.chanroblesvirtuallawlibrary

In Suson v. Court of Appeals, the Court explained that although the payment of the prescribed docket fees is a
jurisdictional requirement, its non-payment does not result in the automatic dismissal of the case provided the
docket fees are paid within the applicable prescriptive or reglementary period. Coming now to the case at bar, it
has not been alleged by respondent and there is nothing in the records to show that petitioner has attempted to
evade the payment of the proper docket fees for her permissive counterclaim. As a matter of fact, after
respondent filed its motion to dismiss petitioners counterclaim based on her failure to pay docket fees, petitioner
immediately filed a motion with the trial court, asking it to declare her counterclaim as compulsory in nature and
therefore exempt from docket fees and, in addition, to declare that respondent was in default for its failure to
answer her counterclaim. The trial court should have instead given petitioner a reasonable time, but in no case
beyond the applicable prescriptive or reglementary period, to pay the filing fees for her permissive counterclaim.
LAFARGE CEMENT PHILIPPINES, INC vs CONTINENTAL CEMENT CORPORATION (CCC)

G.R. No. 155173, November 23, 2004

PANGANIBAN, J.:

FACTS:

On August 11, 1998, a letter of intent was executed by both parties, Lafarge and CCC. Lafarge agreed to purchase
the cement business of CCC. On October 21, 1998, they entered into a Sale and Purchase Agreement (SPA). The
petiitioners, at the time of such transactions were aware of the pending case of CCC with the Supreme Court
entitled Asset Privatization Trust (APT) v. Court of Appeals and Continental Cement Corporation. In anticipation
of the liability that the High Tribunal might adjudge against CCC, the parties, under Clause 2 (c) of the SPA,
allegedly agreed to retain from the purchase price a portion of the contract price in the amount of
P117,020,846.84 -- the equivalent of US$2,799,140. This amount was to be deposited in an interest-bearing
account in the First National City Bank of New York (Citibank) for payment to APT.However, petitioners allegedly
refused to apply the sum to the payment to APT, after the finality of the judgment in the case of CCC. Fearful that
nonpayment to APT would result in the foreclosure, of several properties, CCC filed before the RTC a “Complaint
with Application for Preliminary Attachment" against petitioners. The Complaint prayed, that petitioners be
directed to pay the "APT Retained Amount" referred to in Clause 2 (c) of the SPA.

Petitioners moved to dismiss the Complaint on the ground that it violated the prohibition on forum-shopping.
Respondent CCC had allegedly made the same claim it was raising in another action, which involved the same
parties and which was filed earlier before the International Chamber of Commerce. After the trial court denied the
Motion to Dismiss in its November 14, 2000 Order, petitioners elevated the matter before the Court of Appeals .

In the meantime, to avoid being in default and without prejudice to the outcome of their appeal, petitioners filed
their Answer and Compulsory Counterclaims ad Cautelam before the trial court. In their Answer, they denied the
allegations in the Complaint. They prayed -- by way of compulsory counterclaims against Respondent CCC, its
majority stockholder and president Gregory T. Lim, and its corporate secretary Anthony A. Mariano -- for the
sums of (a) P2,700,000 each as actual damages, (b) P100,000,000 each as exemplary damages, (c) P100,000,000
each as moral damages, and (d) P5,000,000 each as attorney's fees plus costs of suit.

Petitioners alleged that CCC, through Lim and Mariano, had filed the "baseless" Complaint andprocured the Writ
of Attachment in bad faith. Relying on this Court's pronouncement in Sapugay v. CA,5 petitioners prayed that
both Lim and Mariano be held "jointly and solidarily" liable with Respondent CCC.On behalf of Lim and Mariano
who had yet to file any responsive pleading, CCC moved to dismiss petitioners' compulsory counterclaims on
grounds that essentially constituted the very issues for resolution in the instant Petition.

RTC ruled that the counterclaims of the petitioners against Lim and Mariano were not compulsory, that the ruling
in Sapugay was not applicable and that the petitioner’s answer with counterclaims violated the procedural rules
on joinder of actions.

ISSUES:

1. Whether or not the counterclaims of the petitioners against Lim and Mariano were not compulsory.
2. Whether or not the ruling in Sapugay was not applicable.
3. Whether or not the petitioner’s answer with counterclaims violated the procedural rules on joinder of
actions.
4. Whether or not CCC has the personality to move to dismiss the compulsory counter claims on behalf of
Lim and Mariano.

HELD:

1st issue: Petitioner’s counterclaims Compulsory.

A counterclaim may either be permissive or compulsory. It is permissive "if it does not arise out of or is not necessarily
connected with the subject matter of the opposing party's claim." A permissive counterclaim is essentially an independent
claim that may be filed separately in another case.A counterclaim is compulsory when its object "arises out of or is
necessarily connected with the transaction or occurrence constituting the subject matter of the opposing party's claim and
does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction." Unlike
permissive counterclaims, compulsory counterclaims should be set up in the same action; otherwise, they would be
barred forever.

NAMARCO v. Federation of United Namarco Distributors:

Criteria to determine whether a counterclaim is compulsory or permissive:

1) Are issues of fact and law raised by the claim and by the 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 counterclaim?
4) Is there any logical relation between the claim and the counterclaim?
A positive answer to all four questions would indicate that the counterclaim is compulsory.

Quintanilla v. CA:

"Compelling test of compulsoriness" characterizes a counterclaim as compulsory if there should exist a "logical
relationship" between the main claim and the counterclaim. There exists such a relationship when conducting separate
trials of the respective claims of the parties would entail substantial duplication of time and effort by the parties and the
court; when the multiple claims involve the same factual and legal issues; or when the claims are offshoots of the same
basic controversy between the parties.

Tiu Po vs Bautista

"Compensatory, moral and exemplary damages, allegedly suffered by the creditor in consequence of the debtor's action,
are also compulsory counterclaim barred by the dismissal of the debtor's action. They cannot be claimed in a subsequent
action by the creditor against the debtor."

The allegations of the petitioner show that its conterclaims for damages were the result of respondents’ (Lim and
Mariano) act of filing the Complaint and securing the Writ of attachment in bad faith. Furthermore, using the
"compelling test of compulsoriness," we find that, clearly, the recovery of petitioners' counterclaims is
contingent upon the case filed by respondents; thus, conducting separate trials thereon will result in a
substantial duplication of the time and effort of the court and the parties.Since the counterclaim for damages is
compulsory, it must be set up in the same action.

2nd issue: Sapugay vs CA is applicable to the case at bar.

The inclusion of Lim and Mariano is based on the allegations of fraud and bad faith on the part of the corporate
officer or stockholder. These allegations may warrant the piercing of the veil of corporate fiction, so that the said
individual may not seek refuge therein, but may be held individually and personally

Sapugay vs CA

Among the issues raised in Sapugay was whether Cardenas, who was not a party to the original action, might
nevertheless be impleaded in the counterclaim. We disposed of this issue as follows:

"A counterclaim is defined as any claim for money or other relief which a defending party may have against an opposing
party. However, the general rule that a defendant cannot by a counterclaim bring into the action any claim against persons
other than the plaintiff admits of an exception under Section 14, Rule 6 which provides that 'when the presence of parties
other than those to the original action is required for the granting of complete relief in the determination of a counterclaim
or cross-claim, the court shall order them to be brought in as defendants, if jurisdiction over them can be obtained.' The
inclusion, therefore, of Cardenas in petitioners' counterclaim is sanctioned by the rules."

3rd issue: The the procedural rules on joinder of actions were not violated.
In joining Lim and Mariano in the compulsory counterclaim, petitioners are being consistent with the solidary nature of the
liability alleged therein. The procedural rules are founded on practicality and convenience. They are meant to discourage
duplicity and multiplicity of suits.

4th issue: CCC has no personality to move to dismiss the compulsory counter claims on behalf of Lim and
Mariano.

A perusal of CCC’s Motion to Dismiss the counterclaims shows that Respondent CCC filed it on behalf of Co-respondents
Lim and Mariano; it did not pray that the counterclaim against it be dismissed. While Respondent CCC can move to
dismiss the counterclaims against it by raising grounds that pertain to individual defendants Lim and Mariano, it lacks the
requisite authority to do so. A corporation has a legal personality entirely separate and distinct from that of its officers and
cannot act for and on their behalf, without being so authorized. Thus, unless expressly adopted by Lim and Mariano, the
Motion to Dismiss the compulsory counterclaim filed by Respondent CCC has no force and effect as to them.
 WEE VS GALVEZ

NATURE
For review is the decision of the CA which denied special civil action for certiorari, prohibition, and mandamus filed by
petitioners Manuel and Rosemarie Wee.
Wees sought to:
(1) annul and set aside the Order of the RTC denying their MTD and MR
(2) order the trial court to desist from further proceedings in Civil Case No. Q-99-37372; and
(3) order the trial court to dismiss the said action.
(4) CA resolution denying their MR.

facts
Rosemarie Wee and Rosario D. Galvez are sisters.
Rosemarie lives with her husband, Manuel Wee, in Balanga, Bataan, while Rosario resides in New York, U.S.A. The
present controversy stemmed from an investment agreement between the two sisters, which had gone sour along the
way.
Rosario, represented by Grace Galvez (daughter) as her attorney-in-fact, filed a complaint before the RTC to collect a
sum of money from Manuel and Rosemarie Wee. The amount for collection was US$20,000 at the exchange rate
of P38.30 per dollar.
The complaint alleged that Rosario and Rosemarie entered into an agreement whereby Rosario would send
Rosemarie US$20,000, half of said amount to be deposited in a savings account while the balance could be
invested in the money market. The interest to be earned therefrom would be given to Rosario’s son, Manolito
Galvez, as his allowance.
Rosario sent five (5) Chemical Bank checks ($20,050.00)
All of the checks were deposited and encashed by Rosemarie, except for the first check, Chemical Bank Check No.
97, which was issued to one Zenedes Mariano, who gave the cash equivalent of US$2,000 to Rosemarie.
Rosemarie gave Manolito his monthly allowance ranging from P2,000 to P4,000 a month from 1993 to Jan 1999.
In 1995, Rosario asked for the return of the US$20,000 and for an accounting.
Rosario sent Rosemarie a written demand for her US$20,000 and an accounting.
MTD
Wees moved to dismiss on the following grounds:
o lack of allegation in the complaint that earnest efforts toward a compromise (FC 151
o failure to state a valid cause of action, the action being premature in the absence of previous earnest efforts toward a
compromise
o certification against forum shopping was defective, having been executed by an attorney-in-fact and not the
plaintiff, (Rule 7.5)

Rosario amended her complaint with the addition of the following par:
9-A. Earnest efforts towards (sic) have been made but the same have failed. Plaintiff thru her daughter as Attorney-In-
Fact caused the sending of a Demand Letter dated Jan 4, 1999and the last par of which reads as follows:
Trusting this will merit your utmost peaches preferential attention and consideration in as much as you and our client are
sisters and in order that [earnest] efforts toward a compromise could be obtained.
Wees opposed Rosario’s motion to have the Amended Complaint admitted. They contended that said motion
was a mere scrap of paper for being in violation of the 3-day notice requirement of Rule 15, Section 4 of the 1997 Rules of
Civil Procedure and for having the notice of hearing addressed to the Clerk of Court and not to the adverse party
as required by Section 5 of the same Rule.
Trial court denied the MTD of the Wees for being “moot and academic”
Wees MR denied by the lower court.
court ofappeals
Wees brought it to CA via a special civil action for certiorari, prohibition, and mandamus. (TC acted with GAD
amounting to lack or excess of jurisdiction for issuing the interlocutory orders instead of granting the MTD.
CA Galvez’ amended complaint sufficiently stated a cause of action.
The questioned certification against forum shopping appended thereto was not so defective as to warrant the
dismissal of the complaint.
 MR at CA denied
WON THE CERTIFICATION OF NON-FORUM SHOPPING EXECUTED BY THE PLAINTIFF’S ATTORNEY-IN-FACT IS
DEFECTIVE
wee:
Certification against forum shopping was invalid since it was NOT Rosario who executed and signed the same, but
her attorney-in-fact, Grace Galvez.
there was nothing in the SPA which expressly conferred upon the latter the authority to execute and sign, on
behalf of the former, the CNFS.
BA Savings Bank v. Sia: where the parties in an action are natural persons, the party himself is required to sign the
certification, and where a representative is allowed in case of artificial persons, he must be specifically authorized to
execute and sign the certification.
Galvez failed to show any justifiable reason why her attorney-in-fact should be the one to sign the certification against
forum shopping, instead of herself as the party, as required by Santos v. CA.
galvez:
In the SPA, Grace Galvez is given the authority to institute both civil and criminal actions against any person, natural
or juridical, who may be obliged or answerable to the respondent.
Corollary with this power is the authority to sign all papers, documents, and pleadings necessary for the
accomplishment of the said purpose.
Since Grace Galvez is the one authorized to file any action in the PHs on behalf of her principal, she is in the best
position to know whether there are other cases involving the same parties and the same subject matter instituted
with or pending before any other court or tribunal in this jurisdiction.
As an attorney-in-fact, Grace Galvez is deemed to be a party, pursuant to Rule 3.3
supreme court
Galvez is already a resident of the US.
It was proper for her to appoint her daughter, Grace Galvez, to act as her attorney-in-fact in the PHs.
SPA grants the ff:
1. To ask, demand and claim any sum of money that is duly [due] from any person natural, juridical and/or CORP in
the PHs;
2. To file criminal and/or civil complaints before the courts of justice in the PHs to enforce my rights and interest[s];
3. To attend hearings and/or Preliminary Conference[s], to make stipulations, adjust claims, to settle and/or enter into
Compromise Agreement[s], to litigate and to terminate such proceedings; [and]
4. To sign all papers, documents and pleadings necessary for the accomplishment of the above purposes.
Grace Galvez was duly authorized and empowered not just to initiate complaints but is specifically authorized to
sign all “papers, documents, and pleadings” necessarily connected with the filing of a complaint.
discussion about forum shopping
Forum shopping “occurs when a party attempts to have his action tried in a particular court or jurisdiction
where he feels he will receive the most favorable judgment or verdict.”
It has taken the form of filing multiple petitions or complaints involving the same issues before two or more
tribunals or agencies in the hope that one or the other court would make a favorable disposition.
There is also forum shopping when, because of an adverse decision in one forum, a party seeks a favorable opinion
(other than by appeal or certiorari) in another.
Rule 7, Section 5 of the Rules of Court, requires that the certification should be signed by the “petitioner or principal
party” himself. The rationale behind this is “because only the petitioner himself has actual knowledge of WON he
has initiated similar actions or proceedings in different courts or agencies.”
The rationale does not apply where, as in this case, it is the attorney-in-fact who instituted the action.
Grace Galvez has actual and personal knowledge whether she initiated similar actions or proceedings before various
courts on the same issue on respondent’s behalf.
There has been proper compliance with the rule proscribing forum shopping
The fact that the Circular requires that it be strictly complied with merely underscores its mandatory nature in that it
cannot be dispensed with or its requirements altogether disregarded, but it does not thereby interdict substantial
compliance with its provisions under justifiable circumstances.
AC No. 04-94 is now incorporated in the 1997 Rules of Civil Procedure, as Rule 7, Section 5. The Rules “shall be
liberally construed in order to promote their objective of securing a just, speedy and inexpensive disposition of every
action and proceeding.”
 The rule requiring a certification of forum shopping to accompany every initiatory pleading, “should not be interpreted
with such absolute literalness as to subvert its own ultimate and legitimate objective or the goal of all rules of procedure –
which is to achieve substantial justice as expeditiously as possible.”
WON THE AMENDED COMPLAINT BEFORE THE RTC SUFFICIENTLY STATES A CAUSE OF ACTION AGAINST
THE DEFENDANTS.
Wee
amended complaint violates Rule 8.1 as there is no plain and direct statement of the ultimate facts on which the
plaintiff relies for her claim.
the allegation in par 9-A of the amended complaint that “Earnest efforts towards have been made but the same have
failed” is clearly insufficient.
The sentence is incomplete, thus requires the reader of the pleading to engage in deductions or inferences in order to
get a complete sense of the cause of action, according to petitioners.
galvez
amended complaint as well as the annexes attached to the pleadings should be taken in their entirety in determining
whether a cause of action was validly stated in the complaint.
supreme court
FC 151: a suit between members of the same family shall not be entertained, unless it is alleged in the complaint or
petition that the disputants have made earnest efforts to resolve their differences through compromise, but these efforts
have not succeeded.
Rule 8.3 provides that conditions precedent may be generally averred in the pleadings.
Par 9-A of the Amended Complaint shows that respondent has complied with this requirement of a general
averment.
It is true that the lead sentence of par 9-A, which reads “Earnest efforts towards have been made but the same have
failed” may be incomplete or even grammatically incorrect as there might be a missing word or phrase, but to our
mind, a lacking word like “compromise” could be supplied by the rest of the par.
There is no need for guesswork or complicated deductions in order to derive the point that earnest efforts to
compromise the differences between the disputants were made but to no avail.
The Amended Complaint in its entirety as well as the documents attached thereto, following the rule that documents
attached to a pleading are considered both as evidence and as part of the pleading.
WON THE INSTANT PETITION FOR REVIEW ON CERTIORARI UNDER RULE 45 IS THE PROPER REMEDY FOR
PETITIONERS UPON THE DENIAL OF THEIR PETITION FOR CERTIORARI, PROHIBITION AND MANDAMUS BY
THE CA
wee
a petition for review under Rule 45.1 could be brought before us, regardless of whether the assailed decision of the
CA involves an appeal on the merits from the trial court’s judgment or the dismissal of a special civil action questioning an
interlocutory order of the trial court.
What is important is that the assailed decision of the CA is final and that the petition before this Court should raise
only questions of law.
galvez
dismissal by the CA of special civil action for certiorari, prohibition, and mandamus is not the final judgment or order,
which could be the subject of an appeal by certiorari under Rule 45.
certiorari as a mode of appeal involves the review of a judgment, final order, or award on the merits.
CA’s ruling did not dispose of the case on the merits, as the orders of the trial court were all interlocutory.
SC
Present petition is proper remedy to challenge the CA’s judgment.
CA’s decision on said petition is final for it disposes of the original action for certiorari, prohibition, and mandamus
directed against the interlocutory orders of the RTC.
there is nothing more left to be done as far as the CA is concerned.
In special civil actions for certiorari the only issue before the CA is whether the lower court acted without or in excess
of jurisdiction, or with GAD amounting to lack or excess of jurisdiction.
in a certiorari petition the CA is not tasked to adjudicate the merits of the respondent’s claims before the trial court.
CA properly ruled that the trial court committed no GAD amounting to lack or excess of jurisdiction so as to warrant
the issuance of writs of certiorari, prohibition, and mandamus that petitioners sought.

Petition denied. CA AFFIRMED.

HEIRS OF FRANCISCO RETUYA ET AL V. COURT OF APPEALS
G.R. 163039

FACTS:
 Severo Retuya (Severo) and Maxima Mayol Retuya (Maxima) were husband and wife without any children.
 Severo left several parcels of land registered under his name which are located in Mandaue City.
 Severo died intestate, survived by his wife Maxima and by Severo's full blood brothers and sisters, namely, Nicolas,
Francisco, Quintin, Eulogio, Ruperto, Epifania, Georgia and the Heirs of Juan Retuya (Severo’s brother who had died
earlier), as well as Severo's half-blood siblings, namely, Romeo, Leona, Rafaela, Fidela, Severina and Martina.
 Sometime in 1971, Maxima also died intestate, survived by her siblings, namely, Fructuoso, Daniel, Benjamin,
Lorenzo, Concepcion and Teofila.
 In 1996, Severo and Maxima's siblings and their nephews and nieces, herein petitioners, filed with the RTC of
Mandaue City, an action for judicial partition of the real properties registered under the names of Severo and Maxima,
and the accounting of the rentals derived there from against Severo's two other brothers, respondents Nicolas and his
son Procopio Villanueva, and Eulogio, who was represented by the latter's heirs.
 RTC declared the heirs of EULOGIO Retuya as owners of 1/16 share of Severo to the ½ of the subject properties
representing the shares of Severo, which he inherited from his father and later on sold to Eulogio.
 Petitioners filed with the CA a petition for annulment of Judgment of the RTC, claiming that the question order was a
patent nullity for want of jurisdiction and lack of due process.
 CA dismissed the petition.
o Three of the petitioners did not sign the certificate of non-forum shopping.
o Payment of docket fee was short of P480.00.
 Parties filed for a motion for reconsideration but was dismissed by the CA on the ground that the petitioners failed to
comply with the certification of non-forum shopping due to their alleged dishonesty by claiming that on of the principal
parties signed the said certification when if fact he passed away before the petition was filed.

ISSUE:
WON CA erred in dismissing the petition(s).

HELD/RATIO:
NO. The decisions of the CA are AFFIRMED.
 Petitioners’ actuation showed their lack of forthrightness to the CA which the latter correctly found to be a dishonest
act committed against it.
o There was a signature above the typewritten name of Quintin.
o Written below the signature of Quintin was CTC No. 06570132, issued on January 8, 2003 in Mandaue City.
o It would appear that Quintin, who was already dead at the time the petition was filed, had signed the verification
and certification of non-forum shopping and he was even in possession of a CTC.
 CA correctly denied the motion for Reconsideration on the ground that the Atty. Dela Cerna, representative of the
party had no right to represent the petitioners.
o Section 26, Rule 138 of the Rules of Court on the requirements of a valid substitution of counsel:
 The filing of a written application for substitution;
 The client’s written consent;
 The consent of the substituted lawyer if such consent can be obtained;
  and, in case such written consent cannot be procured, a proof of service of notice of such motion on the
attorney to be substituted in the manner required by the Rules.
o In this case, petitioners failed to comply with the above requirements.
 NEMESIO I. YABUT
 Appeal on a question of law from the judgment of the Court of First Instance of Rizal in its Civil Case. No. Q-9869.
 On March 1, 1966, Capitol Motors Corporations filed a complaint against Nemesio I. Yabut. It was therein averred
that on April 24, 1965, the defendant executed in favor of the plaintiff a promissory note (copy of which was
attached to the complaint) for the sum of P30,134.25, payable in eighteen (18) equal monthly installments with
interest at 12% per annum, the first installment to become due on June 10, 1965, that it was stipulated in the
promissory note that should the defendant fail to pay two (2) successive installments, the principal sum remaining
unpaid would immediately become due and demandable and the defendant would, by way of attorney's fees and
costs of collection, be obligated to the plaintiff for an additional sum equivalent to 25% of the principal and interest
due; that as of February 23, 1966, the sum remaining unpaid on the promissory note was P30,754.79, including
accrued interest; that the defendant defaulted in the payment of two (2) successive installments, and likewise
failed to pay the interest due on the promissory note; and that in spite of demands by the plaintiff, the defendant
failed and refused to pay the said principal sum and interest due. Prayer was made that the defendant be ordered
to pay the plaintiff the sum of P30,754.79, as well as the interest due thereon from February 23, 1966, and an
additional sum equivalent to 25% of the amount due, plus costs.
 On April 27, 1966, and within the reglementary period, the defendant, through his counsel, filed an answer which
reads:
 DEFENDANT through counsel alleges:
 1. Paragraph 1 of the complaint is admitted.
 2. Paragraphs 2, 3, 4, 5, 6 and 7 of the complaint are specifically denied for lack of knowledge sufficient to form a
belief as to the truth thereof.
 WHEREFORE, it is respectfully prayed that the Complaint be dismissed with costs against the plaintiff.
 On June 16, 1966, the plaintiff filed a motion for judgment on the pleadings, on the ground that the defendant, not
having set forth in his answer the substance of the matters relied upon by him to support his denial, had failed to
deny specifically the material allegations of the complaint, hence, must be deemed to have admitted them. The
defendant did not file an opposition to the motion. On September 13, 1966, after hearing on the motion, the court
issued an order granting the said motion and considering the case submitted for decision on the basis of the
pleadings; and on January 9, 1967, the court rendered judgment granting in toto the plaintiff's prayer in its
complaint.
 In this appeal, defendant-appellant contends that the court a quo erred in considering him as having failed to deny
specifically the material allegations of the complaint, and, consequently, in deciding the case on the basis of the
pleadings. Citing Moran, Comments on the Rules of Court, Vol. I, 1963 Ed., p. 281, he argues that since Section
10, Rule 8 of the Revised Rules of Court, recognizes three (3) modes of specific denial, namely: (1) by specifying
each material allegation of 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 or (2) by
specifying so much of an averment in the complaint as is true and material and denying only the remainder or (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, and he has adopted the third mode of specific
denial, his answer tendered an issue, and, consequently the court a quo could not render a valid judgment on the
pleadings.
 This appeal is without merit.
 We agree with defendant-appellant that one of the modes of specific denial contemplated in Section 10, Rule 8, is
a denial 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. The question, however, is whether paragraph 2 of defendant-appellant's
answer constitutes a specific denial under the said rule. We do not think so. In Warner Barnes & Co., Ltd. vs.
Reyes, et al., G.R. No. L-9531, May 14, 1958 (103 Phil., 662), this Court said that the rule authorizing an answer
to the effect that the defendant has no knowledge or information sufficient to form a belief as to the truth of an
averment and giving such answer the effect of a denial, does not apply where the fact as to which want of
knowledge is asserted, is so plainly and necessarily within the defendant's knowledge that his averment of
ignorance must be palpably untrue. In said case the suit was one for foreclosure of mortgage, and a copy of the
deed of mortgage was attached to the complaint; thus, according to this Court, it would have been easy for the
defendants to specifically allege in their answer whether or not they had executed the alleged mortgage. The
same thing can be said in the present case, where a copy of the promissory note sued upon was attached to the
complaint. The doctrine in Warner Barnes & Co., Ltd. was reiterated in J. P. Juan & Sons, Inc. vs. Lianga
Industries, Inc., G.R. No. L-25137, July 28, 1969 (28 SCRA 807).And in Sy-quia vs. Marsman, G.R. No. L-23426,
March 1, 1968 (22 SCRA 927), this Court said:
 With regard to the plea of lack of knowledge or information set up in paragraph 3 of the answer, this Court's
decision in Warner Barnes vs. Reyes, 103 Phil. 662, 665, is authority for the proposition that this form of denial
must be availed of with sincerity and good faith, not for the purpose of confusing the other party, nor for purposes
of delay. Yet, so lacking in sincerity and good faith is this part of the answer that defendants-appellants go to the
limit of denying knowledge or information as to whether they (defendants) were in the premises (Marsman Bldg.)
on January 4, 1961, as averred in paragraph 4 of the complaint. Yet whether such a fact was or was not true
could not be unknown to these defendants.
 In National Marketing Corporation vs. De Castro, 106 Phil. 803 (1959), this Court held:
 Furthermore, in his answer to the appellee's complaint, he merely alleged that 'he has no knowledge or
information sufficient to form a belief as to the truth of the matters contained in paragraphs 3, 4, 5 and 6 so much
so that he denies specifically said allegations.' A denial is not specific simply because it is so qualified. (Sections 6
and 7, Rule 9; El Hogar Filipino vs. Santos Investments, Inc., 74 Phil. 79; Baetamo vs. Amador, 74 Phil. 735;
Dacanay vs. Lucero, 76 Phil. 139; Lagrimas vs. Lagrimas, 95 Phil. 113). Material averments in a complaint, other
than those as to the amount of damage, are deemed admitted when not specifically denied. (Section 8, Rule 9,)
The court may render judgment upon the pleadings if material averments in the complaint are admitted. (Section
10, Rule 35; Baetamo vs. Amador, supra, Lichauco vs. Guash, 76 Phil. 5; Lati vs. Valmores, G.R. No. L-6877, 30
March 1954.)
 It becomes evident from all the above doctrines that a mere allegation of ignorance of the facts alleged in the
complaint, is insufficient to raise an issue; the defendant must aver positively or state how it is that he is ignorant
of the facts so alleged. (Francisco, The Revised Rules of Court in the Philippines, Vol. I, p. 417, citing Wood vs.
Staniels, 3 Code Rep. 152 and Vassalt vs. Austin, 32 Cal. 597.)
 Thus, in at least two (2) cases where this Court ruled that judgment on the pleadings was not proper, it will be
seen that the reason was that in each case the defendants did something more than merely alleging lack of
knowledge or information sufficient to form a belief. In Arrojo vs. Caldoza, et al., G.R. No. L-17454, July 31, 1963
(8 SCRA 547), the defendants, in their answer to the complaint for recovery of possession of a parcel of land, did
not merely allege that they had no knowledge or information sufficient to form a belief as to the truth of the
material allegations in the complaint, but added the following: "The truth of the matter is that the defendants have
not occupied or taken any property belonging to the plaintiff. They took possession and ownership only of the land
belonging to them, which properties were possessed and owned originally by their predecessors-in-interest, who
were the parents of the defendants ...." In Benavides vs. Alabastro, G.R. No. L-19762, December 23, 1964 (12
SCRA 553), the defendant's answer did not only deny the material allegations of the complaints but also set up
certain special and affirmative defenses the nature of which called for presentation of evidence.
 There are two other reasons why the present appeal must fail. First. The present action is founded upon a written
instrument attached to the complaint, but defendant-appellant failed to deny under oath the genuineness and due
execution of the instrument; hence, the same are deemed admitted. (Section 8, Rule 8 of the Revised Rules of
Court; Songo vs. Sellner, 37 Phil. 254; Philippine Commercial & Industrial Bank vs. ELRO Development
Corporation, et al., G.R. No. L-30830, August 22, 1969 [29, SCRA 38]; J. P. Juan & Sons, Inc. vs. Lianga
Industries, Inc., supra.) Second. Defendant-appellant did not oppose the motion for judgment on the pleadings
filed by plaintiff appellee; neither has he filed a motion for reconsideration of the order of September 13, 1966,
which deemed the case submitted for decision on the pleadings, or of the decision rendered on January 9, 1967.
In Santiago vs. Basilan Lumber Company, G.R. No. L-15532, October 31, 1963 (9 SCRA 349), this Court said:
 It appears that when the plaintiff moved to have the case decided on the pleadings, the defendant interposed no
objection and has practically assented thereto. The defendant, therefore, is deemed to have admitted the
allegations of the complaint, so that there was no necessity for the plaintiff to submit evidence of his claim.
 PREMISES CONSIDERED, the judgment appealed from is affirmed, with cost against defendant-appellant.

FLUOR DANIEL, INC.-PHILIPPINES, Petitioner, vs. E.B. VILLAROSA & PARTNERS CO., LTD., Respondent (2007)

Doctrine: The complaint may be dismissed for lack of cause of action if it is obvious from the complaint and its annexes
that the plaintiff is not entitled to any relief.

Facts: Petitioner Fluor Daniel, Inc.-Philippines [FDIP] entered into an agreement with Fil-Estate Properties, Inc. [Fil-
Estate] for the construction of the Fairways & Bluewater, Newcoast Island Resort in Boracay Island.
- FDIP engaged with E.B. Villarosa & Partners Co., Ltd. [respondent] as one of the contractors to provide services for the
said project. They executed separate contracts for: (1) civil structure and architecture; (2) plumbing and fire protection;
and (3) millworks. Each contract has a recurring provision which states: Payment of the billings shall be subject to the
timely receipt of similar payments from the client by FDIP.
- However, Fil-Estate failed to satisfy petitioner monthly progress billing. Hence, petitioner did not pay respondent.
- FDIP suspended the project and issued a notice of suspension of work to Villarosa. Thus, the latter demanded payment
for suspension cost and works so far performed.
- Villarosa, believing that FDIP was in bad faith, filed a complaint with RTC of Makati City for sum of money and damages.
FDIP however filed a motion to dismiss on the ground that the complaint failed to state a cause of action.
- Trial Court denied the motion to dismiss as well as the motion for reconsideration. The court declared that the filing of
the last pleading and the consequent joinder of issues has ripened the case for pre-trial.
- Subsequently, trial court granted Villarosa’s motion to amend complaint with leave of court. But it denied FDIP’s motion
to suspend proceedings.
- FDIP filed with the Court of Appeals a special civil action for certiorari. CA affirmed orders of lower court denying the
motion to dismiss and the reconsideration thereof. Hence, this petition for review on certiorari.
- Petitioner contended that: (1) the complaint failed to state the operative facts which would give rise to a cause of action
against it; (2) the annexes attached to respondent’s complaint show its admission that payment of its billings was subject
to the condition of timely receipt of similar payments and that those annexes should be considered in determining
respondent’s cause of action.
- Respondent argued that: (1) the three elements of a cause of action are all present [namely: (i) legal right of respondent
to demand payment from petitioner; (ii) obligation of petitioner to pay respondent; and (iii) failure of petitioner to pay
respondent]; (2) the annexes attached to the complaint bear no relevance, not having been admitted by stipulation.

Issue: WON the complaint, taken with the annexed contracts attached to it, has insufficient allegations of all the operative
facts which would give rise to a cause of action against FDIP. [Yes, there is insufficient allegations-> no cause of action->
motion to dismiss shall be granted.]

Held/Ratio: The essential elements of a cause of action are as follows: 1) A right in favor of the plaintiff by whatever
means and under whatever law it arises or is created; 2) An obligation on the part of the defendant not to violate such
right; and 3) An act or omission on the part of the defendant in violation of the right of the plaintiff or constituting a breach
of the obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of damages or
other relief. The occurrence of the last element that a cause of action arises gives the plaintiff a right to file an action in
court for recovery of damages or other relief. The test of sufficiency of facts alleged in the complaint as constituting a
cause of action is whether or not admitting the facts alleged, the court could render a valid verdict in accordance with the
prayer of the complaint. In determining sufficiency of cause of action, the court takes into account only the material
allegations of the complaint and no other; but in some cases, the court considers the documents attached to the complaint
to truly determine sufficiency of cause of action.

- We have ruled that a complaint should not be dismissed for insufficiency of cause of action if it appears clearly from the
complaint and its attachments that the plaintiff is entitled to relief. The converse is also true. The complaint may be
dismissed for lack of cause of action if it is obvious from the complaint and its annexes that the plaintiff is not entitled to
any relief. In this case, we note that records show that recurring in each of the three contracts is the provision that
payment by petitioner shall be subject to its timely receipt of similar payments from Fil-Estate. On their face, the said
attached contracts clearly require a specific condition before petitioner may be held liable for payment. The complaint,
however, failed to state that the said condition had been fulfilled. Without the said condition having taken place,
petitioner cannot be said to have breached its obligation to pay.