Rules 1 12 Final

Rule 1 - 2
1. Swagman v. Court of Appeals,

G.R. No. 161135, 8 April 2005, 455 SCRA 175
2. Danfoss, Inc. v. Continental Cement Corp.,

G.R. No. 143788, 9 September 2005, 469 SCRA 505
FACTS: Mechatronics Instruments and Controls, Inc. (MINCI) is an agent of Danfoss, Inc.’s products here
in the Philippines. On September 1997, CCC ordered two unit 132 KW Danfoss Brand Frequency
Converter/Inverter from MINCI to be used in the Finish Mill of its Cement Plant in Bulacan. In the terms
of conditions of the original purchase order, the two unit Frequency Converter shall be delivered by
Danfoss within 8 to 10 weeks from the opening of the letter of credit. The letter of credit opened by CCC
in favour of Danfoss on September 9, 1997.
On September 17, 1997, MINCI informed CCC that its order are already ready for shipment and MINCI
requested to amend the letter of credit changing the port of origin/loading from Singapore to Denmark
(Singapore is the Asian Regional Office of Danfoss, the Head Office of the company is Denmark). CCC
complied and the port of origin in the letter of credit was changed.
Upon receiving the relayed information, CCC surmised that Danfoss would not be able to deliver their
order. There was also no definite commitment of the delivery from Danfoss and MINCI, so CCC informed
MINCI that they intend to cancel its order. The order was cancelled on November 13, 1997.
Hence the complaint for damages filed by CCC with the RTC of Quezon City against Danfoss and MINCI
on November 5, 1998. In reply, Danfoss filed a motion to dismiss the complaint.
ISSUE: Whether there was a cause of action in the complaint filed by respondent.
HELD: No, there was no cause of action in the complaint for damages filed by CCC.
“In order to sustain a dismissal on the ground of lack of cause of action, the insufficiency must appear on
the face of the complaint. And the test of the sufficiency of the facts alleged in the complaint to
constitute a cause of action is whether or not, admitting the facts alleged, the court can render a valid
judgment thereon in accordance with the prayer of the complaint. For this purpose, the motion to
dismiss must hypothetically admit the truth of the facts alleged in the complaint.”
The RTC erred in ruling that “the issue of whether or not the defendants incurred delay in the delivery of
the equipment within the period stipulated was a debatable question.” How could Danfoss be liable for
damages when Danfoss had not yet breached his obligation to deliver the order of CCC, aside from the
fact that the obligation was already negated when CCC cancelled the order before the prestation
became due and demandable? Thus, there was no breach and there was no damage caused by Danfoss.
The principle of anticipatory breach cannot be applied here because the obligation was single and
indivisible – to deliver two units of frequency converter by November 19, 1997. There was no showing
that Danfoss refused to deliver, and on the contrary, Danfoss made an effort to make good in its
obligation by looking for other suppliers who could provide the parts needed to make the timely
delivery of the order. Thus, the case was prematurely filed.
CCC’s fear that Danfoss might not be able to deliver its order on time was not the cause of action
referred to by the Rules and jurisprudence.
PETITION GRANTED. THE CA’S DECISIONS ARE REVERSED AND SET ASIDE.
3. Ceroferr v. Court of Appeals,

G.R. No. 139539, 5 February 2002, 376 SCRA 144
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FACTS: Petitioner Ceroferr Realty Corporation filed a suit against private respondent Ernesto Santiago
for damages and injunction from dispute over the ownership of a land located in Quezon City. The
complaint alleged that Santiago was occupying, without any right, a portion of a parcel of land belonging
to Petitioner, which was being used by the former as a jeepney terminal. Private respondent, for his
part, countered that he had the legal title to the land, thus, he had the right to utilize the land as such.
During the trial, it was found out that the main issue of the case revolved around the actual bounds of
the land owned by Petitioner. It appears that the title held by Petitioner merely referred to the land by
its lot number, while the title held by private respondent was replete with technical descriptions and
the accompanying metes and bounds of the lot.
Private respondent then filed a motion to dismiss Petitioner’s complaint, on the ground that the trial
court cannot pass upon the issue of damages without first determining the true ownership of the lot in
question. The trial court then issued an order denying Petitioner’s complaint for lack of cause of action
and lack of jurisdiction, holding that a Torrens certificate of title cannot be the subject of a collateral
attack. Petitioner appealed then to the Court of appeals, insisting that the complaint stated a cause of
action which was determinable on its face. Such appeal was dismissed by the CA.
ISSUE: Whether the petitioner complaint states a sufficient cause of action.
HELD: Yes. The Supreme Court held that the complaint stated a valid cause of action which was
determinable from the face thereof, and that the trial court proceed to try and decide the case before it
since respondent Santiago may be considered estopped to question the jurisdiction of the trial court for
he took an active part in the case. It was only when a second survey report showed results adverse to his
case that he submitted a motion to dismiss questioning the jurisdiction of the court.
The rules of procedure require that the complaint must state a concise statement of the ultimate facts
or the essential facts constituting the plaintiffs cause of action. A fact is essential if it cannot be stricken
out without leaving the statement of the cause of action inadequate. A complaint states a cause of
action only when it has its three indispensable elements, namely:
(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 named defendant to respect or not to violate such right; and
(3) an act or omission on the part of such defendant violative of the right of plaintiff or constituting a
breach of the obligation of defendant to the plaintiff for which the latter may maintain an action for
recovery of damages.
If these elements are not extant, the complaint becomes vulnerable to a motion to dismiss on the
ground of failure to state a cause of action. These elements are present in the case at bar.
4. Riviera v. CCA,
G.R. No. 173783, 17 June 2015, 758 SCRA 691
FACTS: Riviera Golf, a domestic corporation, is the owner of Riviera Golf Club (Club), a 36-hole golf
course and recreational facility in Silang, Cavite. On October 11, 1996, Riviera Golf entered into a
Management Agreement with CCA Holdings, B.V. (CCA Holdings), a foreign corporation, for the
management and operation of the Club.
The Management Agreement was for a period of five (5) years. Under this agreement, Riviera Golf
would pay CCA Holdings a monthly Base Management Fee of 5.5% of the Adjusted Gross Revenue
equivalent to US$16,500.00 per month, adjusted to4.5% per month from the opening date, plus an
incentive Management Fee of 10% of the Gross Operating Profit.
The parties also entered into a co-terminous Royalty Agreement that would allow Riviera Golf and the
Club’s developer, Armed Forces of the Philippines’ Retirement and Separation Benefits System (AFP-
RSBS), to use CCA Holdings’ name and facilities to market the Club’s shares. In consideration of the
license to use CCA Holdings’ name, Riviera Golf and AFP-RSBS will pay CCA Holdings a gross licensing fee
of 1% on all membership fees paid in the sale of shares, an additional gross licensing fee of 4% on all
club shares, and 7% on non-golf memberships sold.
On October 29, 1999, Riviera Golf sent CCA Holdings a letter informing the latter that it was pre-
terminating the Management Agreement purportedly to alleviate the financial crisis that the AFP-RSBS
was experiencing. The Royalty Agreement was also deemed pre-terminated.
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CCA Holdings protested the termination of the agreement and demanded that Riviera Golf settle its
unpaid management and royalty fees. Riviera Golf however refused on the ground that CCA Holdings
violated the terms of the agreement.
In April 2001, CCA Holdings filed before the Regional Trial Court (RTC), Branch 146, Makati City, a
complaint for sum of money with damages docketed as Civil Case No. 01-611 (first complaint) against
Riviera Golf. During the pendency of the case, the parties tried to extrajudicially settle their differences
and executed a Compromise Agreement.
Subsequently, or on November 22, 2002, CCA Holdings again sent a letter to Riviera Golf, this time,
demanding the sum of US$390,768.00 representing the projected net income or expected business
profits it was supposed to derive for the unexpired two-year term of the Management Agreement.
Noting that the first and second complaints involve the same parties, the same subject matter, and the
same causes of action, Riviera Golf filed on August 6, 2003, a Motion to Dismiss on the grounds of res
judicata and violation of the rule against splitting of causes of action. CCA Holdings opposed the motion
contending that there is no splitting of causes of action since the two cases are entirely independent of
each other. CCA Holdings also justified its belated filing of the second complaint, arguing that the
needed financial records were in Riviera Golf’s possession.
ISSUE: Wherther CCA Holdings villolated the prohibitions against res judicara and splitting a single
cause of action?
HELD: Yes. Res judicata requires the concurrence of the following requisites: (1) the former judgment
must be final; (2) it must have been rendered by a court having jurisdiction of the subject matter and the
parties; (3) it must be a judgment on the merits; and (4) there must be, between the first and second
actions (a) identity of parties, (b) identity of subject matter, and (c) identity of causes of action.
All the Elements of Res Judicata are Present. A cause of action may give rise to several reliefs, but only
one action can be filed.8 A single cause of action or entire claim or demand cannot be split up or divided
into two or more different actions. The rule on prohibiting the splitting of a single cause of action is
clear. Section 4, Rule 2 of the Rules of Court expressly states:
Section 4. Splitting a single cause of action; effect of. – If two or more suits are instituted on the basis of
the same cause of action, the filing of one or a judgment upon the merits in any one is available as a
ground for the dismissal of the others.
In both Civil Case No. 01-611 and Civil Case No. 03-399, CCA Holdings imputed the same wrongful act –
the alleged violations of the terms and conditions of the Management and Royalty Agreements. In Civil
Case No. 01-611, CCA Holdings’ cause of action rests on Riviera Golf’s failure to pay the licensing fees,
reimbursement claims, and monthly management and incentive fees. In Civil Case No. 03-399 on the
other hand, CCA Holdings’ cause of action hinges on the damages it allegedly incurred as a result of
Riviera Golf’s premature termination of the Management and Royalty Agreements (i.e., the expected
business profits it was supposed to derive for the unexpired two-year term of the Management
Agreement). Although differing in form, these two cases are ultimately anchored on Riviera Golf’s
breach of the Management and Royalty Agreements. Thus, we conclude that they have identical causes
of action.
5. Marilag v. Martinez,
G.R. No. 201892, 22 July 2015, 763 SCRA 533
FACTS:
On July 30, 1992, Rafael Martinez (Rafael), respondent's father, obtained from petitioner a loan in the
amount of P160,000.00, with a stipulated monthly interest of five percent (5%), payable within a period
of six (6) months. The loan was secured by a real estate mortgage over a parcel of land. However, Rafael
failed to settle his obligation upon maturity and despite repeated demands, prompting petitioner to file
a Complaint for Judicial Foreclosure of Real Estate Mortgage.
RTC issued a Decision dated January 30, 1998, in the foreclosure case, declaring the stipulated 5%
monthly interest to be usurious and reducing the same to 12% per annum. Accordingly, it ordered Rafael
to pay petitioner the amount of P229,200.00, consisting of the principal of P160,000.00 and accrued
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interest of P59,200.00 from July 30, 1992 to September 30, 1995. Records do not show that this Decision
had already attained finality. Meanwhile, respondent agreed to pay Rafael's obligation to petitioner
which was pegged at P689,000.00. After making a total payment of P400,000.00, he executed a
promissory note dated February 20, 1998 binding himself to pay on or before March 31, 1998 the
amount of P289,000.00, "representing the balance of the agreed financial obligation of his father to
petitioner. After learning of the January 30, 1998 Decision, respondent refused to pay the amount
covered by the promissory note despite demands, prompting petitioner to file a complaint for sum of
money and damages.
TC ruled in favor of the respondents, upon motion of the petitioner the appellate court reversed its
decision, prompting the respondent to elevate the matter to CA.
It held that the doctrine of res judicata finds application in the instant case, considering that both the
judicial foreclosure and collection cases were filed as a consequence of the non-payment of Rafael's
loan, which was the principal obligation secured by the real estate mortgage and the primary
consideration for the execution of the subject PN.
ISSUE: whether or not the CA committed reversible error in upholding the dismissal of the collection
case.
HELD: A case is barred by prior judgment or res judicata when the following elements concur: (a) the
judgment sought to bar the new action must be final; (b) the decision must have been rendered by a
court having jurisdiction over the subject matter and the parties; (c) the disposition of the case must be
a judgment on the merits; and (d) there must be as between the first and second action, identity of
parties, subject matter, and causes of action
the Court finds the principle of res judicata to be inapplicable to the present case. This is because the
records are bereft of any indication that the August 28, 2003 Decision in the judicial foreclosure case
had already attained finality, evidenced, for instance, by a copy of the entry of judgment in the said
case. Accordingly, with the very first element of res judicata missing, said principle cannot be made to
obtain.
6. BPI Family v. Vda. De Coscolluela,

G.R. No. 167724, 27 June 2006, 493 SCRA 472
7. Sps. Plaza v. Lustiva,

G.R. No. 172909, 5 March 2014, 718 SCRA 19
FACTS: Among her other siblings, Barbara was declared by the CA as the owner of the subject property
in question. Consequently, her successors in interest, herein respondents, have continued to occupy the
property. The son of one of Barbaras siblings filed a complaint for injunction with prayer for writ of
preliminary injunction against the respondents and the city government of Butuan. They prayed that
respondents be enjoined from unlawfully taking the subject property. According to petitioners, they
acquired the property from Virginia Tuazon who was the sole bidder in a tax delinquency sale conducted
by the City of Butuan on December 1997.
In their answer, respondents contended that they were never delinquent in paying the land taxes and
that Tuazon is a government employee who is disqualified to bid in the public auction as provided under
the Local Government Code and such sale, if ever there was, is void.
The RTC denied the petition, holding that there was indeed an irregularity in the auction sale since the
highest bidder was a government employee disqualified under the LGC. Petitioners challenged the RTC
decision through a petition for review on certiorari under Rule 65. While such petition is pending,
petitioners filed an action for specific performance against the City of Butuan. The CA affirmed RTC
decision and found petitioners guilty of forum shopping.
ISSUE: Whether or not CA erred in dismissing the petition.
HELD: Remedial Law- A writ of preliminary injunction may be issued only upon clear showing of an
actual existing right to be protected during the pendency of the principal action.
As the lower courts correctly found, Tuazon had no ownership to confer to the petitioners despite the
latters reimbursement of Tuazons purchase expenses. Because they were never owners of the property,
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the petitioners failed to establish entitlement to the writ of preliminary injunction.When the
complainants right or title is doubtful or disputed, he does not have a clear legal right and, therefore,
the issuance of injunctive relief is not proper. Likewise, upon the dismissal of the main case by the RTC
on August 8, 2013, the question of issuance of the writ of preliminary injunction has become moot and
academic.
Remedial Law - Forum Shopping
The cause of action in the present case is the petitioners claim of ownership of the land when they
bought it, either from the City Government of Butuan or from Tuazon. This ownership is the petitioners
basis in enjoining the respondents from dispossessing them of the property. On the other hand, the
specific performance case prayed that the City Government of Butuan be ordered to issue the
petitioners the certificate of sale grounded on the petitioners ownership of the land when they had
bought it, either from the City Government of Butuan or from Tuazon.
Noticeable among these three types of forum shopping isthe identity of the cause of actionin the
different cases filed. While it may appear that the main relief prayed for in the present injunction case is
different from what was prayed for in the specific performance case, the cause of action which serves as
the basis for the reliefs remains the same the petitioners alleged ownership of the property after its
purchase in a public auction.
Thus, the petitioners subsequent filing of the specific performance action is forum shopping of the third
kind-splitting causes of action or filing multiple cases based on the same cause of action, but with
different prayers.
8. Umale v. Canoga,
G.R. No. 167246, 20 July 2011, 654 SCRA 15
FACTS: On January 4, 2000, the parties entered into a Contract of Lease. They agreed to lease an eight
hundred sixty (860)-square-meter prime lot located in Ortigas Center, Pasig City owned by the respondent
for a period of 2 years staring from January 16, 2000. The respondent acquired the subject lot from Ortigas
& Co. Ltd. Partnership through a Deed of Absolute Sale, subject to the following conditions: (1) that no
shopping arcades or retail stores, restaurants, etc. shall be allowed to be established on the property,
except with the prior written consent from Ortigas & Co. and (2) that the respondent and/or its
successors-in-interest shall become member/s of the Ortigas Center Association, Inc., and shall abide by
its rules and regulations.
Before the lease contract expired, the respondent filed an unlawful detainer case for the ground of
ejectment the petitioner’s violation of stipulations in the lease contract regarding the use of the property.
The petitioner, however, constructed restaurant and commercial establishments on the lot, without
securing written consent from the respondent, and the necessary permits from the Association and the
Ortigas & Co. Ltd. Partnership. The petitioner also subleased the property to various merchants-tenants
in violation of the lease contract
The MTC decided on the ejectment case in favor of the respondent. On appeal, the RTC affirmed the MTC’s
decision. The case, however, was re-raffled to the other RTC-Branch because the Presiding Judge of the
RTC-Branch 155, upon motion, inhibited himself from resolving the petitioners motion for
reconsideration. The RTC-Branch 267 reversing and setting aside the MTC and was dismissed for being
prematurely filed. Thus, the respondent filed a petition for review with the CA on April 10, 2002. During
the pendency of the petition for review, the respondent filed another case for unlawful detainer against
the petitioner before the MTC-Branch 71, Pasig City. This time, the respondent used as a ground for
ejectment the expiration of the parties lease contract.
ISSUE: WON the two complaints involve single cause of action.
HELD: No, the court ruled that the two (2) civil cases filed involve different cause of action. Generally, a
suit may only be instituted for a single cause of action. If two or more suits are instituted on the basis of
the same cause of action, the filing of one or a judgment on the merits in any one is ground for the
dismissal of the others. Several tests exist to ascertain whether two suits relate to a single or common
cause of action, such as whether the same evidence would support and sustain both the first and second
causes of action (also known as the same evidence test),or whether the defenses in one case may be used
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to substantiate the complaint in the other. Also fundamental is the test of determining whether the cause
of action in the second case existed at the time of the filing of the first complaint. The restatement does
not result in substantial identity between the two cases. Even if the respondent alleged violations of the
lease contract as a ground for ejectment in the second complaint, the main basis for ejecting the petitioner
in the second case was the expiration of the lease contract. If not for this subsequent development, the
respondent could no longer file a second complaint for unlawful detainer because an ejectment
complaint may only be filed within one year after the accrual of the cause of action, which, in the second
case, was the expiration of the lease contract.
Rule 3 - Parties to Civil Actions
1. Carlos v. Sandoval,
G.R. No. 179922, 16 December 2008, 574 SCRA 116
FACTS: Spouses Felix Carlos and Felipa Elemia died intestate. They left six parcels of land to their
compulsory heirs, Teofilo Carlos and petitioner Juan De Dios Carlos. Teofilo died intestate. He was
survived by respondents Felicidad and their son, Teofilo II. Upon Teofilo’s death, 2 parcel of land were
registered in the name of respondent Felicidad and co-respondent, Teofilo II.
An action was instituted by the petitioner against respondents regarding the shares of the land which lead
to compromise agreements in relation to the divisions of proceeds in the sale of the lands. Subsequently,
in 1995, petitioner commenced an action against respondents before the RTC for, among
others, declaration of nullity of marriage of his late brother Teofilo and respondent Felicidad in view of
the absence of the required marriage license. The reason for the action is that petitioner alleges that the
marriage is null and void, thus the lands should be reconveyed to him.
Respondents contended in their answer that the lack of details regarding the requisite marriage license
did not invalidate Felicidad’s marriage to Teofilo. They prayed for the dismissal of the case on the grounds
of lack of cause of action and lack of jurisdiction over subject matter.
RTC rendered judgment, granting petitioner’s counter motion for summary judgment. Declaring the
marriage between defendant Felicidad Sandoval and Teofilo Carlos null and void ab initio for lack of the
requisite marriage license.
In the appeal, respondents argued, inter alia, that the trial court acted without or in excess of jurisdiction
in rendering summary judgment annulling the marriage of Teofilo, Sr. and Felicidad.
CA reversed and set aside the RTC ruling. Basis: The Civil Code expressly prohibit the rendition of decree
of annulment of a marriage upon a stipulation of facts or a confession of judgment. Hence this appeal.
ISSUE: Whether or not petitioner Juan De Dios Carlos is a real party interest in the annulment of the
marriage between his brother Teofilo and Felicidad.
RULING: No.
Under the Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages
which became effective on March 15, 2003, the petition for declaration of absolute nullity of marriage
may not be filed by any party outside of the marriage. Exceptions:
1. Nullity of marriage cases commenced before the effectivity of (or before March 15, 2003); and
2. Marriages celebrated during the effectivity of the Civil Code.
Petitioner commenced the nullity of marriage case against respondent Felicidad in 1995. The marriage in
controversy was celebrated on May 14, 1962. Which law would govern depends upon when the marriage
took place.
The marriage having been solemnized prior to the effectivity of the Family Code which took effect
on August 3, 1988, the applicable law is the Civil Code which was the law in effect at the time of its
celebration.
But the Civil Code is silent as to who may bring an action to declare the marriage
void. Does this mean that any person can bring an action for the declaration of nullity of marriage?
SC responded in the negative. The absence of a provision in the Civil Code cannot be construed as a
license for any person to institute a nullity of marriage case. Such person must appear to be the party
who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the
suit. Elsewise stated, plaintiff must be the real party-in-interest. For it is basic in procedural law that
every action must be prosecuted and defended in the name of the real party-in-interest.
Interest within the meaning of the rule means material interest or an interest in issue to be affected by
the decree or judgment of the case, as distinguished from mere curiosity about the question involved or
a mere incidental interest. One having no material interest to protect cannot invoke the jurisdiction of
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the court as plaintiff in an action. When plaintiff is not the real party-in-interest, the case is dismissible
on the ground of lack of cause of action.
2. Relucio v. Lopez,
G.R. No. 138497, 16 January 2002, 373 SCRA 578
3. Metrobank v. Alejo,
A cloud on a title is defined as “a semblance of title which appears in some legal form but which is in fact
unfounded.” Where a title was previously held null and void already, an action to quiet title is not the proper
remedy because the TCT (as basis of the right) is not, on its face or otherwise, valid in the first place.
FACTS: Spouses Raul and Cristina Acampado obtained loans from Metropolitan Bank and Trust Company in
the amounts of 5k and 2k. As security for the payment, Spouses Acampados executed in favor of the bank a
Real Estate Mortgage over a parcel of land registered in their names. Subsequently a Complaint for
Declaration of Nullity of the TCT of the spouses was filed by Sy Tan Se in the RTC of Valenzuela.
Despite being the mortgagee of the real property, the bank was not made a party to the said civil
case(complaint for declaration of nullity of TCT.) They weren’t notified as well.
The spouses defaulted in the payment of their loan and extrajudicial foreclosure proceedings were initiated.
The bank submitted the highest and winning bid. A certificate of sale was issued in their favor.
When they were about to get their TCT from the Register of Deeds, petitioner was informed of the existence
of the decision in the aforementioned civil case (complaint for declaration of nullity of TCT) declaring the
Spouses Acampados’s TCT null and void.
The bank filed with the CA a petition for the annulment of the RTC Decision. The CA dismissed their petition
and ruled that the bank should have filed a petition for relief from judgment or an action for quieting of title.
ISSUES:
1. Whether or not a petition for annulment of judgment is the proper remedy available to the bank
2. Whether or not the judgment of the trial court (declaring the Spouses Acampados TCT null and void)
should be declared null and void
HELD: 1. Yes. Petition for annulment of judgment was the proper remedy available to the bank. It precisely
alleged that Sy Tan Se purposely concealed the case by excluding petitioner as a defendant to the civil case
even if he was an indispensable party. This deprived the bank of its duly registered property right without
due process of the law. The allegation of extrinsic fraud may be the basis for annulling a judgment.
Petition for relief (what the CA recommended) was not available to the bank since it was never a party to the
civil case.
An action for quieting of the title was also not available to the bank. An action for quieting of title is filed only
when there is a cloud on title to real property or any interest therein. A cloud on a title is defined as a
semblance of title which appears in some legal form but which is in fact unfounded. The subject judgment
cannot be considered as a cloud on petitioner’s title or interest over the real property covered by TCT, which
does not even have a semblance of being a title.
It would not be proper to consider the subject judgment as a cloud that would warrant the filing of an action
to quiet title because to do so would require the court hearing the action to modife or interfere with the
judgment of another co-equal court. Well-entrenched in our jurisdiction is the doctrine that our court has no
power to do so, as that action may lead to confusion and seriously hinder the administration of justice.
Clearly, an action for quieting of title is not an appropriate remedy in this case.
Bank can’t also intervene to a case that he has no knowledge of.
2. Yes. The judgment of the trial court should also be declared null and void because the bank, which is an
indispensable party, was not impleaded in the civil case.
The absence of an indispensable party renders all subsequent actuations of the court null and void, for want
of authority to act, not only as to the absent parties but even as to those present.
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4. Law firm of Laguesma v. COA,
FACTS: Sometime in 2001, officers of Clark Development Corporation, a government-owned and

controlled corporation, approached the law firm of Laguesma Magsalin Consulta and Gastardo for its
possible assistance in handling the corporation’s labor cases. However, the request was denied then the
Office of the Government Corporate Counsel, through Government Corporate Counsel Amado D. Valdez,
reconsidered the request and approved the engagement of Laguesma Magsalin Consulta and Gastardo. It
also furnished Clark Development Corporation a copy of a pro-forma retainership contract. containing the
suggested terms and conditions of the retainership. It instructed Clark Development Corporation to
submit a copy of the contract to the Office of the Government Corporate Counsel after all the parties
concerned have signed it.
Said law firm commenced rendering legal services to Clark Development Corporation. At this point, said
corporation had yet to secure the authorization and clearance from the Office of the Government
Corporate Counsel or the concurrence of the Commission on Audit of the retainership contract. According
to the law firm, Clark Development Corporation’s officers assured the law firm that it was in the process
of securing the approval of the Commission on Audit.
According to the law firm, it was only in 2005 when Clark Development Corporation informed them that
the Commission on Audit required the clearance and approval of the Office of the Government Corporate
Counsel before it could approve the release of Clark Development Corporation’s funds to settle the legal
fees due to the law firm.
Clark Development Corporation and Laguesma Magsalin Consulta and Gastardo separately filed motions
for reconsideration, which the Commission on Audit denied in the assailed resolution dated November 5,
2008. The resolution also disallowed the payment of legal fees to the law firm on the basis of quantum
meruit since the Commission on Audit Circular No. 86-255 mandates that the engagement of private
counsel without prior approval shall be a personal liability of the officials concerned.
ISSUES: WON the petitioner is the real-party- interest.
HELD: Yes, petitioner is a real party-in-interest, as defined in Rule 3, Section 2 of the 1997 Rules of Civil
Procedure: Judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized
by law or these Rules, every action must be prosecuted or defended in the name of the real party in
interest.
Petitioner does not have a "mere incidental interest," and its interest is not "merely
consequential." Respondents mistakenly narrow down the issue to whether they erred in denying Clark
Development Corporation’s request for clearance of the retainership contract. In doing so, they argue
that the interested parties are limited only to Clark Development Corporation and respondents.
The issue at hand, however, relates to the assailed decision and resolution of respondents, which
disallowed the disbursement of public funds for the payment of legal fees to petitioner. Respondents
admit that legal services were performed by petitioner for which payment of legal fees are due. The
question that they resolved was which among the parties, the government, or the officials of Clark
Development Corporation were liable.
5. Sumaljag v. Literato,
G.R. No. 149787, 18 June 2008, 555 SCRA 53
Facts:
Josefa Maglasang, filed a complaint for the nullity of the deed of sale of real property dated October 15,
1971 against spouses Diosdidit and Menendez Literato for the reason that it was spurious. Menendez and
Josefa are siblings. They were two (2) of the six (6) heirs who inherited equal parts of a 6.3906-hectare
property (Lot 1220) passed on to them by their parents Cristito and Inecita Diano Maglasang. Lot 1220-D
was partitioned to Josefa, while Lot 1220-E was given to Menendez.
The respondent spouses’ response to the complaint was an amended answer with counterclaim denying
that the deed of sale was falsified. They impleaded the petitioner with Josefa as counterclaim defendant
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on the allegation that the petitioner, at the instance of Josefa, occupied Lot 1220-D and Lot 1220-E without
their authority; Lot 1220-E is theirs by inheritance while 1220-D had been sold to them by Josefa. They
also alleged that the petitioner acted in bad faith in acquiring the two (2) lots because he prepared and
notarized on September 26, 1986 the contract of lease over the whole of Lot 1220 between all the
Maglasang heirs (but excluding Josefa) and Vicente Tolo, with the lease running from 1986 to 1991; thus,
the petitioner then knew that Josefa no longer owned Lot 1220-D.
When Josefa died, her lawyer submitted to the court the notice of death and substitution of party (Judge
Sumaljag). The RTC granted the motion in an order dated August 13, 1999. On August 26, 1999,
Atty. Puray filed with the RTC a notice of death and substitution of party, praying that Josefa – in his
capacity as plaintiff and third party counterclaim defendant – be substituted by the petitioner. The
submission alleged that prior to Josefa’s death, she executed a Quitclaim Deed over Lot 1220-D in favor
of Remismundo D. Maglasang who in turn sold this property to the petitioner.
The petition was, however, opposed by the respondents for the reason that it was submitted beyond the
30-day period. Instead, the respondents recommended that she be substituted by her full-blooded sister,
Michaeles Maglasang Rodrigo.
RTC denied the petition of the lawyer and order that Michaeles be the substitute. CA dismissed the
petition of Sumaljag for lack of merit.
Issue: Whether or not the court my substitute third party to replace to the obligation of the third party.
Held: YES
The rule on substitution in case of death of a party is governed by Section 16, Rule 3 of the 1997 Rules of
Civil Procedure, as amended, which provides:
Section 16. Death of a party; duty of counsel. –Whenever a party to a pending action dies, and
the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court
within thirty (30) days after such death of the fact thereof, and to give the name and address of
his legal representative or representatives. Failure of counsel to comply with this duty shall be
a ground for disciplinary action.
The heirs of the deceased may be allowed to be substituted for the deceased, without
requiring the appointment of an executor or administrator and the court may appoint a
guardian ad litem for the minor heirs.
The court shall forthwith order said legal representative or representatives to appear and be
substituted within a period of thirty (30) days from notice.
If no legal representative is named by the counsel for the deceased party, or if the one so named
shall fail to appear within the specified period, the court may order the opposing party, within
a specified time, to procure the appointment of an executor or administrator for the estate of
the deceased, and the latter shall immediately appear for and on behalf of the deceased. The
court charges in procuring such appointment, if defrayed by the opposing party, may be
recovered as costs.
The purpose behind this rule is the protection of the right to due process of every party to the litigation
who may be affected by the intervening death. The deceased litigant is herself or himself protected as
he/she continues to be properly represented in the suit through the duly appointed legal representative
of his estate.
6. Sps. Algura v. LGU,

G.R. No. 150135, 30 October 2006, 506 SCRA 81
FACTS: On September 1, 1999, spouses Antonio F. Algura and Lorencita S.J. Algura filed a Verified
Complaint dated August 30, 19994 for damages against the Naga City Government and its officers, arising
from the alleged illegal demolition of their residence and boarding house. Simultaneously, petitioners
filed an Ex-Parte Motion to Litigate as Indigent Litigants. As a result of respondent Naga City Government's
demolition of a portion of petitioners' house, the Alguras allegedly lost a monthly income of PHP 7,000.00
9
from their boarders' rentals. With the loss of the rentals, the meager income from Lorencita Algura's sari-
sari store and Antonio Algura's small take home pay became insufficient for the expenses of the Algura
spouses and their six (6) children for their basic needs including food, bills, clothes, and schooling, among
others.
On October 13, 1999, respondents filed an Answer with Counterclaim arguing that the defenses of the
petitioners in the complaint had no cause of action, the spouses' boarding house blocked the road right
of way, and said structure was a nuisance per se.
ISSUE: WON the spouses should be disqualified as pauper-litigants.
HELD: No, there was no hearing on the matter hence the case was remanded back to the lower court.
In this case, the Supreme Court reconciled the provisions of Sec. 21, Rule 3 and Sec. 19, Rule 141 (then
Sec. 16, Rule 141).
Sec. 21, Rule 3, merely provides a general statement that indigent litigants may not be required to pay
the filing fees. On the other hand, Sec. 19, Rule 141 provides the specific standards that a party must meet
before he can be qualified as an indigent party and thus be exempt from paying the required fees.
If Sec. 19, Rule 141 (in this case, then Sec. 16, Rule 141) is strictly applied, then the spouses could not
qualify because their income exceeds P1.5k, which was the threshold prior to 2000. But if Sec. 21, Rule 3
is to be applied, the applicant (the Spouses) should be given a chance in a hearing to satisfy the court that
notwithstanding the evidence presented by the opposing party (Naga), they have no money or property
sufficient and available for food, shelter and other basic necessities for their family, and are thus, qualified
as indigent litigants under said Rule. Therefore, the court should have conducted a trial in order to let the
spouses satisfy the court that indeed the income they’re having, even though above the P1.5k limit, was
not sufficient to cover food, shelter, and their other basic needs.
7. Van Zuiden Bros. v. GTVL Manufacturing,

G.R. No. 147905, 28 May 2007, 523 SCRA 233
FACTS: Plaintiff, ZUIDEN, is a corporation, incorporated under the laws of Hong Kong. ZUIDEN is not
engaged in business in the Philippines, but is suing before the Philippine Courts. In its complaint,
petitioner alleged that it is engaged in the importation and exportation of several products, including lace
products. Petitioner asserted that on several occasions, respondent purchased lace products from
it. Petitioner also claimed that respondent instructed it to deliver the purchased goods to Kenzar, which
is a Hong Kong company based in Hong Kong. Upon Kenzars receipt of the goods, the products were
considered sold. Kenzar, in turn, had the obligation to deliver the lace products to the Philippines. In other
words, the sale of lace products was consummated in Hong Kong.Instead of filing an Answer, GTVL
Manufacturing (GVTL) filed a Motion to Dismiss
ISSUE: WON petitioner, an unlicensed foreign corporation, has legal capacity to sue before Philippine
courts.
HELD: No. Section 133 of the Corporation Code provides: Doing business without license. No foreign
corporation transacting business in the Philippines without a license, or its successors or assigns, shall be
permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency
of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or
administrative tribunals on any valid cause of action recognized under Philippine laws.
The law is clear. An unlicensed foreign corporation doing business in the Philippines cannot sue before
Philippine courts. On the other hand, an unlicensed foreign corporation not doing business in the
Philippines can sue before Philippine courts.
To be doing or transacting business in the Philippines for purposes of Section 133 of the Corporation Code,
the foreign corporation must actually transact business in the Philippines, that is, perform specific
business transactions within the Philippine territory on a continuing basis in its own name and for its own
account. Actual transaction of business within the Philippine territory is an essential requisite for the
Philippines to acquire jurisdiction over a foreign corporation and thus require the foreign corporation to
secure a Philippine business license. If a foreign corporation does not transact such kind of business in the
Philippines, even if it exports its products to the Philippines, the Philippines has no jurisdiction to require
such foreign corporation to secure a Philippine business license.
10
Considering that petitioner is not doing business in the Philippines, it does not need a license in order to
initiate and maintain a collection suit against respondent for the unpaid balance of respondents
purchases.
8. Sui Man Hui Chan v. Court of Appeals,

G.R. No. 147999, 27 February 2004, 424 SCRA 127
FACTS: November 14, 1988, Napoleon C. Medalla as lessor and Ramon Chan as lessee entered into a
Lease Contract[3] over a hotel building located at No. 29 Abanao Street, Baguio City. Chan would use the
leased premises as a restaurant named Cypress Inn. Petitioner Gonzalo Co was employed by Ramon
Chan as the general manager of Cypress Inn and acted as his agent in all his dealings with Napoleon
Medalla.
On August 5, 1989, Ramon Chan died. He was survived by his wife, petitioner Sui Man Hui Chan, who
continued to operate the restaurant.
On July 17, 1996, Napoleon Medalla died. Among his heirs is private respondent Oscar Medalla, who
succeeded him as owner and lessor of the leased premises. The contract was neither amended nor
terminated after the death of the original parties but was continued by their respective successors-in-
interest pursuant to the terms thereof. Petitioners Chan and Co, the latter, in his capacity as agent and
general manager, continued to deal with private respondent Medalla in all transactions pertaining to the
contract.
On various occasions, petitioners failed to pay the monthly rentals due on the leased premises. Despite
several Statements of Accounts sent by Medalla, petitioners failed to pay the rentals due but,
nonetheless, continued to use and occupy the leased premises.
On January 1999, petitioners vacated the premises but without paying their unpaid rentals and realty
taxes. Aggrieved by petitioners refusal to pay the amounts owing, which had reached P4,147,901.80 by
March 1999, private respondent Medalla instituted Civil Case No. MC99-666. Petitioners filed a
Supplemental Answer with Motion to Dismiss alleging that they were neither parties nor privies to the
Contract of Lease, hence they are not the real parties-in-interest.
The CA and RTC ruled in favor of private respondents.
ISSUE: Whether respondent CA committed serious error of law in affirming the RTC denying motion to
dismiss.
HELD: No. It bears stressing that petitioners Motion to Dismiss was filed after an Answer had already
been filed. This alone warranted an outright dismissal of the motion for having been filed in
contravention of the clear and explicit mandate of Section 1, Rule 16, of the Revised Rules of Civil
Procedure. Under this section, a motion to dismiss shall be filed within the time for but before filing the
answer to the complaint or pleading asserting a claim.[9] Here, petitioners filed their Supplemental
Answer with Motion to Dismiss almost two months after filing their Answer, in clear contravention of
the aforecited rule.
At any rate, we find no merit to petitioners contention that they are not real parties-in-interest since
they are not parties nor signatories to the contract and hence should not have been impleaded as
defendants. It is undeniable that petitioner Chan is an heir of Ramon Chan and, together with petitioner
Co, was a successor-in-interest to the restaurant business of the late Ramon Chan. Both continued to
operate the business after the death of Ramon. Thus, they are real parties-in-interest in the case filed by
private respondent, notwithstanding that they are not signatories to the Contract of Lease.
Rule 4 – Venue of Action
1. Heirs of Bautista v. Lindo,

G.R. No. 208232, 10 March 2014, 718 SCRA 321
11
Facts: Alfredo R. Bautista (Bautista), petitioner’s predecessor, inherited in 1983 a free-patent land
located in Davao Oriental and covered by OCT No. (1572) P-6144.A few years later, he subdivided the
property and sold it to several vendees, herein respondents, via a notarized deed of absolute sale dated
May 30, 1991. Two months later, OCT No.(1572) P-6144 was canceled and Transfer Certificates of Title
(TCTs) were issued in favor of the vendees.
On August 1994, Bautista filed a complaint for repurchase against respondents before the RTC,
anchoring his cause of action on Section 119 of Commonwealth Act No. (CA) 141, otherwise known as
the “Public Land Act,” which reads:
“SECTION 119. Every conveyance of land acquired under the free patent or homestead provisions, when
proper, shall be subject to repurchase by the applicant, his widow, or legal heirs, within a period of five
years from the date of the conveyance.”
During the pendency of the action, Bautista died and was substituted by petitioner, Efipania.
Respondents, Sps. Lindo entered into a compromise agreement with petitioners, whereby they agree to
cede to Epifania 3,230 sq.m..portion of the property as well as to waive, abandon, surrender, and
withdraw all claims and counterclaims against each other. RTC approve the compromise agreement on
January 2011.
Other respondents, filed a Motion to Dismissed on February 2013 alleging lack of jurisdiction of the RTC
on the ground that the complaint failed to state the value of the property sought to be recovered and
alleges that the total value of the properties in issue is only P16,500 pesos. RTC ruled in favor of the
respondent dismissing the case.
Issue: Whether or not the RTC erred in granting the motion for the dismissal of the case on the ground
of lack of jurisdiction over the subject matter.
Ratio: Yes. Jurisdiction of courts is granted by the Constitution and pertinent laws. Jurisdiction of RTCs,
as may be relevant to the instant petition, is provided in Sec. 19 of BP 129.
Issue: Whether the action filed by petitioners is one involving title to or possession of real property or
any interest therein or one incapable of pecuniary estimation.
Ratio: The Court rules that the complaint to redeem a land subject of a free patent is a civil action
incapable of pecuniary estimation.
It is a well-settled rule that jurisdiction of the court is determined by the allegations in the complaint and
the character of the relief sought. In this regard, the Court, in Russell v. Vestil, wrote that "in
determining whether an action is one the subject matter of which is not capable of pecuniary estimation
this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy
sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary
estimation, and whether jurisdiction is in the municipal courts or in the RTCs would depend on the
amount of the claim." But where the basic issue is something other than the right to recover a sum of
money, where the money claim is purely incidental to, or a consequence of, the principal relief sought,
this Court has considered such actions as cases where the subject of the litigation may not be estimated
in terms of money, and, hence, are incapable of pecuniary estimation.
Decision: WHEREFORE, premises considered, the instant petition is hereby GRANTED. The
April 25, 2013 and July 3, 2013 Orders of the Regional Trial Court in Civil Case No. (1798)-021
are hereby REVERSED and SET ASIDE.
The Regional Trial Court, Branch 32 in Lupon, Davao Oriental is ORDERED to proceed with
dispatch in resolving Civil Case No. (1798)-021.
No pronouncement as to costs.
12
2. BPI v. Hontanosas,
G.R. No. 157163, 25 June 2014
FACTS: On May 22, 2001, respondents Spouses Silverio and Zosima Borbon, Spouses Xerxes and
Erlinda Facultad,and XM Facultad and Development Corporation commenced Civil Case No. CEB-26468
to seek the declaration of the nullity of the promissory notes,real estate and chattel mortgages and
continuing surety agreement they had executed in favor of the petitioner. They further sought damages
and attorney’s fees, and applied for a temporary restraining order (TRO) or writ of preliminary injunction
to prevent the petitioner from foreclosing on the mortgages against their properties.
The complaint alleged that the respondents had obtained a loan from the petitioner, and had executed
promissory notes binding themselves, jointly and severally, to pay the sum borrowed; that as security
for the payment of the loan, they had constituted real estate mortgages on several parcels of land in
favor of the petitioner; and that they had been made to sign a continuing surety agreement and a
chattel mortgage on their Mitsubishi Pajero.
It appears that the respondents’ obligation to the petitioner had reached ₱17,983,191.49, but they had
only been able to pay ₱13 Million because they had been adversely affected by the economic turmoil in
Asia in 1997. The petitioner required them to issue postdated checks to cover the loan under threat of
foreclosing on the mortgages. Thus, the complaint sought a TRO or a writ of preliminary injunction to
stay the threatened foreclosure.
On June 6, 2001, the petitioner filed its answer with affirmative defenses and counterclaim, as well as
its opposition to the issuance of the writ of preliminary injunction, contending that the foreclosure of
the mortgages was within its legal right to do. The RTC granted the application for preliminary
injunction. Dissatisfied, the petitioner assailed the orders of the RTC by petition for certiorari in the CA.
The CA held that the petitioner’s averment of non-payment of the proper docket fee by the
respondents as the plaintiffs in Civil Case No. CEB-26468 was not substantiated; that even if the correct
docket fee was not in fact paid, the strict application of the rule thereon could be mitigated in the
interest of justice;9 and that Civil Case No. CEB-26468, being a personal action, was properly filed in
Cebu City where respondent XM Facultad and Development Corporation’s principal office was located.
ISSUE: Whether or not Civil Case No. CEB-26468 should be dismissed for (a) non-payment of the correct
amount of docket fee; and (b) improper venue.
HELD: The CA and the RTC held that Civil Case No. CEB-26468, being for the declaration of the nullity of
a contract of loan and its accompanying continuing surety agreement, and the real estate and chattel
mortgages, was a personal action; hence, its filing in Cebu City, the place of business of one of the
plaintiffs, was correct under Section 2, Rule 4 of the Rules of Court.
The petitioner contends, however, that Civil Case No. CEB-26468 was a real action that should be
commenced and tried in the proper court having jurisdiction over the area wherein the real property
involved, or a portion thereof, was situated; and that consequently the filing and docket fees for
the complaint should be based on the value of the property as stated in the certificate of sale attached
thereto.
We sustain the lower courts’ holdings.
The determinants of whether an action is of a real or a personal nature have been fixed by the Rules
of Court and relevant jurisprudence. According to Section 1, Rule 4 of the Rules of Court, a real action is
one that affects title to or possession of real property, or an interest therein. Such action is to be
involved, ora portion thereof, is situated, which explains why the action is also referred to as a local
action. In contrast, the Rules of Court declares all other action as personal actions.15 Such actions may
include those brought for the recovery of personal property, or for the enforcement of some contract or
recovery of damages for its breach, or for the recovery of damages for the commission of an injury to
the person or property.16 The venue of a personal action is the place 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,17 for which
reason the action is considered a transitory one.
13
3. BPI Family v. Yujuico,
G.R. No. 175796, 22 July 2015, 763 SCRA 486
FACTS: City of Manila filed a complaint against the respondents for the expropriation of five parcels of
land located in Tondo, Manila and registered in the name of respondent Teresita Yujuico. Two of the
parcels of land were previously mortgaged to City trust Banking Corporation, the petitioner's predecessor-
in-interest, under a First Real Estate Mortgage Contract. Manila RTC rendered its judgment declaring the
five parcels of land expropriated for public use. The judgment became final and executory and was
entered in the book of entries of judgment. The petitioner subsequently filed a Motion to Intervene in
Execution with Partial Opposition to Defendant's Request to Release, but the RTC denied the motion for
having been "filed out of time." Hence, the petitioner decided to extrajudicially foreclose the mortgage
constituted on the two parcels of land subject of the respondents' loan. After holding the public auction,
the sheriff awarded the two lots to the petitioner as the highest bidder.
Claiming a deficiency, the petitioner sued the respondents to recover such deficiency in the Makati RTC.
The respondents moved to dismiss the complaint on several grounds, namely: that the suit was barred by
res judicata; that the complaint stated no cause of action; and that the plaintiffs claim had been waived,
abandoned, or extinguished. RTC denied the respondents' motion to dismiss. Respondent moved for
reconsideration, reiterating their grounds earlier made in their motion to dismiss. In turn, the petitioner
adopted its comment/opposition to the motion to dismiss.
The respondents then filed their reply, in which they raised for the first time their objection on the ground
of improper venue. They contended that the action for the recovery of the deficiency, being a
supplementary action of the extrajudicial foreclosure proceedings, was a real action that should have
been brought in the Manila RTC because Manila was the place where the properties were located.
ISSUE: Whether or not the venue was improperly laid.
RULING: No. It is basic that the venue of an action depends on whether it is a real or a personal action.
The determinants of whether an action is of a real or a personal nature have been fixed by the Rules of
Court and relevant jurisprudence. According to Section 1, Rule 4 of the Rules of Court, a real action is one
that affects title to or possession of real property, or an interest therein. Thus, an action for partition or
condemnation of, or foreclosure of mortgage on, real property is a real action. The real action is to be
involved, or a portion thereof, is situated, which explains why the action is also referred to as a local
action. In contrast, the Rules of Court declares all other actions as personal actions, such actions may
include those brought for the recovery of personal property, or for the enforcement of some contract or
recovery of damages for its breach, or for the recovery of damages for the commission of an injury to the
person or property. The venue of a personal action is the place 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, for which reason the
action is considered a transitory one.
Based on the distinctions between real and personal actions, an action to recover the deficiency after the
extrajudicial foreclosure of the real property mortgage is a personal action, for it does not affect title to
or possession of real property, or any interest therein.
The petitioner correctly brought the case in the Makati RTC because Makati was the place where the main
office of the petitioner was located.
4. Gochan v. Gochan,
FACTS:
 Respondents were stockholders of the Felix Gochan and Sons Realty Corporation and
the Mactan Realty Development Corporation. Respondents offered to sell their shares in the
14
two corporations to the individual petitioners in consideration of the sum of
P200,000,000:00. Petitioners accepted and paid the said amount to respondents.
 Respondents, through Crispo Gochan, Jr., required individual petitioners to execute a
"promissory note. The former drafted the promissory note in his own handwriting and had
the same signed by the petitioners. Unbeknown to petitioners, Crispo Gochan, Jr. inserted in
the "promissory note" a phrase that says, "Said amount is in partial consideration of
the sale."6
 Respondents filed a complaint against petitioners for specific performance and damages
alleging that the petitioners that offered to buy their shares of stock,in consideration of
P200M and multiple properties. Accordingly, respondents claimed that they are entitled to
the conveyance of the properties, in addition to the amount of P200,000,000.00, which they
acknowledge to have received from petitioners plus damages.
 Petitioners filed their answer, raising the following affirmative defences one of which is the
lack of jurisdiction by the trial court for non-payment of the correct docket fees;
 Trial court ruled in favor of the defendants. It cited that respondents paid the necessary filing
and docket fees of at least P165K.
 MR denied. Petition for certiorari with CA dismissed. MR denied. Hence this petition.
ISSUE:
1. Did the respondent filed and paid the necessary docket fees to warrant court’s
jurisdiction?
2. What is the real nature of the case?
3. What should be the basis for the assessment of the correct docket fees?
HELD:
1. NO
2. Real action not specific performance
3. Assessed value of the property, or the estimated value
The rule is well-settled that the court acquires jurisdiction over any case only upon the payment
of the prescribed docket fees. In the case of Sun Insurance Office, Ltd. (SIOL) v. Asuncion,12 this
Court held that 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.
Petitioners, that the complaint is in the nature of a real action which affects title to real
properties; hence, respondents should have alleged therein the value of the real properties
which shall be the basis for the assessment of the correct docket fees.
It is necessary to determine the true nature of the complaint in order to resolve the issue of
whether or not respondents paid the correct amount of docket fees therefor. In this jurisdiction,
the dictum adhered to is that the nature of an action is determined by the allegations in the body
of the pleading or complaint itself, rather than by its title or heading. The caption of the complaint
below was denominated as one for "specific performance and damages." The relief sought,
however, is the conveyance or transfer of real property, or ultimately, the execution of deeds of
conveyance in their favor of the real properties enumerated in the provisional memorandum of
agreement. Under these circumstances, the case below was actually a real action, affecting as it
does title to or possession of real property.
Real action is one where the plaintiff seeks the recovery of real property or, as indicated in section
2(a) of Rule 4 (now Section 1, Rule 4 of the 1997 Rules of Civil Procedure), a real action is an
action affecting title to or recovery of possession of real property.
In the case at bar, therefore, the complaint filed with the trial court was in the nature of a real
action, although ostensibly denominated as one for specific performance. Consequently, the
15
basis for determining the correct docket fees shall be the assessed value of the property, or the
estimated value thereof as alleged by the claimant
We are not unmindful of our pronouncement in the case of Sun Insurance, to the effect that in
case 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 period. However, the liberal interpretation of the rules relating to the payment of
docket fees as applied in the case of Sun Insurance cannot apply to the instant case as
respondents have never demonstrated any willingness to abide by the rules and to pay the
correct docket fees. Instead, respondents have stubbornly insisted that the case they filed was
one for specific performance and damages and that they actually paid the correct docket fees
therefor at the time of the filing of the complaint.
NOTE: The parties in the Sun Insurance case expressed willingness to pay the correct docket fees
5. Marcos-Araneta v. Court of Appeals,

G.R. No. 154096, 22 August 2008, 563 SCRA 41
The Facts
 Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto, now deceased, and his
business associates (Benedicto Group) organized Far East Managers and Investors, Inc.
(FEMII) and Universal Equity Corporation (UEC), respectively.
 Irene Marcos-Araneta would later allege, both corporations were organized pursuant to
a contract whereby Benedicto, as trustor, placed in his name and in the name of his
associates, as trustees, the shares of stocks of FEMII and UEC with the obligation to hold
those shares and their fruits in trust and for the benefit of Irene to the extent of 65% of
such shares. Several years after, Irene demanded the reconveyance of said 65%
stockholdings, but the Benedicto Group refused to oblige.
 In March 2000, Irene filed before the RTC two similar complaints for conveyance of
shares of stock, accounting and receivership against the Benedicto Group with prayer
for the issuance of a temporary restraining order (TRO).
 In a consolidated opposition, Benedicto, moved to dismiss on 5 grounds, among which
were: (2) venue was improperly laid
 During the preliminary proceedings on their motions to dismiss, Benedicto presented
the Joint Affidavit of Gilmia B. Valdez, Catalino A. Bactat, and Conchita R. Rasco who all
attested being employed as household staff at the Marcos’ Mansion in Brgy. Lacub,
Batac, Ilocos Norte and that Irene did not maintain residence in said place as she in fact
only visited the mansion twice in 1999; that she did not vote in Batac in the 1998
national elections; and that she was staying at her husband’s house in Makati City.
 Irene presented her community tax certificateissued on “11/07/99” in Curimao, Ilocos
Norte to support her claimed residency in Batac, Ilocos Norte.
 RTC dismissed both complaints, stating that these partly constituted “real action,” and
that Irene did not actually reside in Ilocos Norte, and, therefore, venue was improperly
laid.
 The RTC eventually entertained an amended complaint filed by Irene, dispositively
stating: (1) Irene may opt to file, as a matter of right, an amended complaint. (2) The
inclusion of additional plaintiffs, one of whom was a Batac, an Ilocos Norte resident, in
the amended complaint setting out the same cause of action cured the defect of
improper venue. (3) Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4 allow the filing
of the amended complaint in question in the place of residence of any of Irene’s co-
plaintiffs.
16
 The Benedictos filed on April 10, 2001 their Answer to the amended complaint but also
went the CA via a petition for certiorari, seeking to nullify the following RTC orders. The
CA rendered a Decision, setting aside the assailed RTC orders and dismissing the
amended complaints in Civil Case Nos. 3341-17 and 3342-17.
Issue/s on Venue
(4) Did the respondents (Benedictos) waive improper venue by their subsequent acts of filing
numerous pleadings; and (5) Was Irene a resident of Batac, Ilocos Norte and if any of the
principal parties are residents of Ilocos Norte?
Held: SC affirms, but not for all the reasons set out in, the CA’s decision.
Fourth Issue: Private Respondents did not Waive Improper Venue

Venue essentially concerns a rule of procedure which, in personal actions, is fixed for the
greatest convenience possible of the plaintiff and his witnesses. The ground of improperly laid
venue must be raised seasonably, else it is deemed waived. Where the defendant failed to
either file a motion to dismiss on the ground of improper venue or include the same as an
affirmative defense, he is deemed to have waived his right to object to improper venue. In the
case at bench, Benedicto and Francisca raised at the earliest time possible, meaning “within the
time for but before filing the answer to the complaint,” the matter of improper venue. They
would thereafter reiterate and pursue their objection on venue, first, in their answer to the
amended complaints and then in their petition for certiorari before the CA. Any suggestion,
therefore, that Francisca and Benedicto or his substitutes abandoned along the way improper
venue as ground to defeat Irene’s claim before the RTC has to be rejected.
Fifth Issue: The RTC Has No Jurisdiction on the Ground of Improper Venue
Subject Civil Cases are Personal Actions
According to the Benedictos, venue was in this case improperly laid since the suit in question
partakes of a real action involving real properties located outside the territorial jurisdiction of
the RTC in Batac.
This contention is not well-taken. In a personal action, the plaintiff seeks the recovery of
personal property, the enforcement of a contract, or the recovery of damages. Real actions, on
the other hand, are those affecting title to or possession of real property, or interest therein. In
accordance with the wordings of Sec. 1 of Rule 4, the venue of real actions shall be the proper
court which has territorial jurisdiction over the area wherein the real property involved, or a
portion thereof, is situated. The venue of personal actions is the court 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.
Irene seeks to compel recognition of the trust arrangement she has with the Benedicto Group.
The amended complaint is an action in personam, it being a suit against Francisca and the late
Benedicto (now represented by Julita and Francisca), on the basis of their alleged personal
liability to Irene upon an alleged trust constituted in 1968 and/or 1972. They are not actions in
rem where the actions are against the real properties instead of against persons.
Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of Rule 4
SC: Irene, as categorically and peremptorily found by the RTC after a hearing, is not a resident
of Batac, Ilocos Norte, as she claimed. Accordingly, Irene cannot, in a personal action,
contextually opt for Batac as venue of her reconveyance complaint. As to her, Batac, Ilocos
Norte is not what Sec. 2, Rule 4 of the Rules of Court adverts to as the place “where the plaintiff
or any of the principal plaintiffs resides” at the time she filed her amended complaint. That
Irene holds CTC No. 17019451[41] issued sometime in June 2000 in Batac, Ilocos Norte and in
which she indicated her address as Brgy. Lacub, Batac, Ilocos is really of no moment since it can
easily be procured from the BIR with the necessary desired information.
Petitioners, in an attempt to establish that the RTC in Batac, Ilocos Norte is the proper court
venue, asseverate that Batac, Ilocos Norte is where the principal parties reside. Pivotal to the
17
resolution of the venue issue is a determination of the status of Irene’s co-plaintiffs in the
context of Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4,
Venue is Improperly Laid

There can be no serious dispute that the real party-in-interest plaintiff is Irene. As self-styled
beneficiary of the disputed trust, she stands to be benefited or entitled to the avails of the
present suit. It is undisputed too that petitioners Daniel Rubio, Orlando G. Reslin, and Jose G.
Reslin, all from Ilocos Norte, were included as co-plaintiffs in the amended complaint as Irene’s
new designated trustees. As trustees, they can only serve as mere representatives of Irene.
Sec. 2 of Rule 4 indicates quite clearly that when there is more than one plaintiff in a personal
action case, the residences of the principal parties should be the basis for determining proper
venue. Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342-17, Irene stands
undisputedly as the principal plaintiff, the real party-in-interest. Following Sec. 2 of Rule 4, the
subject civil cases ought to be commenced and prosecuted at the place where Irene resides.
Principal Plaintiff not a Resident in Venue of Action

As earlier stated, no less than the RTC in Batac declared Irene as not a resident of Batac, Ilocos
Norte. Withal, that court was an improper venue for her conveyance action. The Court can
concede that Irene’s three co-plaintiffs are all residents of Batac, Ilocos Norte. But it ought to
be stressed in this regard that not one of the three can be considered as principal party-
plaintiffs . In the final analysis, the residences of Irene’s co-plaintiffs cannot be made the basis
in determining the venue of the subject suit. Irene was a resident during the period material
of Forbes Park, Makati City. She was not a resident of Brgy. Lacub, Batac, Ilocos Norte, although
jurisprudence[44] has it that one can have several residences, if such were the established fact.
The Court will not speculate on the reason why petitioner Irene, for all the inconvenience and
expenses she and her adversaries would have to endure by a Batac trial, preferred that her case
be heard and decided by the RTC in Batac. On the heels of the dismissal of the original
complaints on the ground of improper venue, three new personalities were added to the
complaint doubtless to insure, but in vain as it turned out, that the case stays with the RTC in
Batac.
6. Hi-Yield Realty, Inc. v. Court of Appeals,

G.R. No. 168863, 23 June 2009, 590 SCRA 548
Facts: Respondents entered into a loan contract amounting to PHP100,000 with Petitioner
thereby mortgaging a parcel of land located in Lumang Dayap, Cainta, Rizal. Upon respondent's
failure to pay the loan upon demand petitioner, thereafter moved for the extrajudicial
foreclosure of the said property and a new TCT was transferred in its name.
Respondent claims that he made an offer to pay twice during the redemption period but was
refused by petitioner hence, on the last day of redemption period he filed an action to the
court. When all the interest and other charges were fixed. The court asks respondent to pay
the redemption price to petitioner on a specified date (On or before April 8, 1994) but
petitioner instead thereafter seeks the extension of 45days for it has no sufficient money. At
first the court denied the extension but in another order contradicting its previous order it
allowed respondent the extension to pay within 45 days.
Frustrated, petitioner seeks this court to review the decision of the trial court.
Issue: whether or not the extension of the redemptive period by the trial court was well within
private respondent’s preserved right to redeem?
Held: It was serious error to make the final redemption of the foreclosed property dependent
on the financial condition of private respondent. It may have been difficult for private
respondent to raise the money to redeem the property but financial hardship is not a ground to
extend the period of redemption. The opportunity to redeem the subject property was never
18
denied to private respondent. His timely formal offer through judicial action to redeem was
likewise recognized. But that is where it ends. The court cannot sanction and grant every
succeeding motion or petition — specially if frivolous or unreasonable — filed by him because
this would manifestly and unreasonably delay the final resolution of ownership of the subject
property.
As a result of the trial court’s grant of a 45-day extended period to redeem, almost nine (9)
years have elapsed with both parties’ claims over the property dangling in limbo, to the serious
impairment of petitioner’s rights. This court calls the trial court’s attention to the prejudice it
has wittingly or unwittingly caused the petitioner. It was really all too simple. The trial court
should have seen, as in fact it had already initially seen, that the 45-day extension sought by
private respondent on April 8, 1994 was just a play to cover up his lack of funds to redeem the
foreclosed property.
The right of redemption should be exercised within the specified time limit, which is one year
from the date of registration of the certificate of sale. Moreover, the redemptioner should
make an actual tender in good faith of the full amount of the purchase price as provided above,
which means the auction price of the property plus the creditor’s other legitimate expenses like
taxes, registration fees, etc.
Redemptioner’s option when the redemption period is about to expire and the redemption
cannot take place on account of disagreement over the redemption price: may preserve his
right of redemption through judicial action which in every case must be filed within the one-
year period of redemption. The filing of the court action to enforce redemption, being
equivalent to a formal offer to redeem, would have the effect of preserving his redemptive
rights and “freezing” the expiration of the one-year period provided the action is filed on time
and in good faith, the redemption price is finally determined and paid within a reasonable time,
and the rights of the parties are respected.
Three critical dimensions:

(1) timely redemption or redemption by expiration date (or, as what happened in this case,
the redemptioner was forced to resort to judicial action to “freeze” the expiration of the
redemption period);
(2) good faith as always, meaning, the filing of the private respondent’s action on August
13, 1993 must have been for the sole purpose of determining the redemption price and
not to stretch the redemptive period indefinitely; and
(3) once the redemption price is determined within a reasonable time, the redemptioner
must make prompt payment in full.
7. Spouses Lantin v. Judge Lantion,

G.R. No. 160053, 28 August 2006, 499 SCRA 718
Petitioners Renato and Angelina Lantin

• Loaned in dollar and peso from respondent PDB and executed several real estate
mortgages and promissory notes to cover saidloans.
• Defaulted on the payments which lead to the foreclosure of the mortgaged lots.
o sold at a public auction where PDB was the winning bidder.
• Filed against PDB and its officers Elizabeth Umali, Alice Perce and Jelen Mosca (private
respondents), a Complaint for Declaration of Nullity and/or Annulment of Sale and/or
Mortgage, Reconveyance, Discharge of Mortgage, Accounting, Permanent Injunction,
and Damages with the RTC of Lipa City, Batangas.
o Alleged: Only their peso loans were covered by the mortgages and that these had
already been fully paid, hence, the mortgages should have been discharged
Private respondents
19
• Moved to dismiss the complaint
o Ground: Improper venue since the loan agreements restricted the venue of any
suit in Metro Manila.
Respondent judge
• Dismissed the case for improper venue.
Petitioners
• Filed a motion for reconsideration
o Argument: The trial court prejudged the validity of the loan documents because
the dismissal on a venue stipulation provided in the agreement.
• Motion was denied and the court held that the previous order did not touch upon the
validity of the loan documents but merely ruled on the procedural issue of venue.
ISSUE: WON RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION WHEN SHE
DISMISSED THE CASE FOR IMPROPER VENUE
HELD: NO.
Pursuant to Section 4 (b) of Rule 4 of the 1997 Rules of Civil Procedure, the general rules on venue
of actions shall not apply where the parties, before the filing of the action, have validly agreed in
writing on an exclusive venue. The mere stipulation on the venue of an action, however, is not
enough to preclude parties from bringing a case in other venues. The parties must be able to
show that such stipulation is exclusive. In the absence of qualifying or restrictive words, the
stipulation should be deemed as merely an agreement on an additional forum, not as limiting
venue to the specified place.
The pertinent provisions of the several real estate mortgages and promissory notes executed by
the petitioner respectively read as follows:
• In the event of suit arising out of or in connection with this mortgage and/or the
promissory note/s secured by this mortgage, the parties hereto agree to bring their
causes of auction (sic) exclusively in the proper court of Makati, Metro Manila or at such
other venue chosen by the Mortgagee, the Mortgagor waiving for this purpose any other
venue.
• We further submit that the venue of any legal action arising out of this note shall
exclusively be at the proper court of Metropolitan Manila, Philippines or any other venue
chosen by the BANK, waiving for this purpose any other venue provided by the Rules of
Court.
Clearly, the words "exclusively" and "waiving for this purpose any other venue" are restrictive
and used advisedly to meet the requirements.
• Considering all the circumstances in this controversy, we find that the respondent judge
did not commit grave abuse of discretion, as the questioned orders were evidently in
accord with law and jurisprudence.
DECISION: Wherefore, the petition is DISMISSED. The assailed orders of the Regional Trial
Court of Lipa City, Batangas are AFFIRMED.
20
Rule 6 - Kinds of Pleadings
1. Financial Building Corp. v. FPA, G.R. No. 133119, 17 August 2000, 338
SCRA 346
FACTS:
Calibre was one of Bayer’s distributors/dealers in Pangasinan and Tarlac. The distributorship
agreement was supposed to be effective from June 1989 to June 1991. However, Bayer stopped
delivering stocks to Calibre on July 1989 after the latter failed to settle its unpaid accounts.
Bayer and Calibre tried to reach a settlement agreement but Mario Sebastian expressed
discontent in Bayer’s refusal to credit his claims in full and underscored the alleged inaction of
Bayer in reconciling Calibre's accounts. Calibre filed a suit for damages before the Pasig RTC.
Damages prayed for include actual damages for losses and profits, damage to goodwill and
business reputation, and exemplary damages. Bayer filed an answer with Counterclaim, denying
its alleged wanton appointment of other distributors and that Calibre filed the damage suit to
avoid paying its overdue accounts. Bayer also moved that the Sebastians be impleaded as co-
defendants, considering that they bound themselves as solidary debtors under the
distributorship/dealership agreement. Calibre opposed Bayerphil’s motion to implead the
Sebastians and move to strike out the counterclaim, reasoning that spouses are not parties in its
suit against Bayer and thus are not proper parties to the counterclaim.
The TC rendered judgment favoring Calibre. It held that Calibre was justified in withholding
payment because there was deliberate inaction/employment of dilatory tactics on the part of
Bayerphil to reconcile accounts making it liable for damages for ‘abuse of rights’ and ‘unfair
competition’ under Articles 19, 20, and 28 of the Civil Code. The CA reversed the TC’s factual
findings.
ISSUES: Whether the granting of relief to Bayerphil’s counterclaim is permissive?
HELD:
Bayerphil’s counterclaim is permissive, but the trial court should have given it the opportunity to
pay the docket fees since it did not avoid paying said fees.
"A compulsory counterclaim is any claim for money or other relief, which a defending party may
have against an opposing party, which at the time of suit arises out of, or is necessarily connected
with, the same transaction or occurrence that is the subject matter of plaintiff’s complaint. It is
compulsory in the sense that it is within the jurisdiction of the court, does not require for its
adjudication the presence of third parties over whom the court cannot acquire jurisdiction, and
will be barred x x x if not set up in the answer to the complaint in the same case. Any other claim
is permissive.The Court has already laid down the following tests to determine whether a
counterclaim is compulsory or not, to wit:
(1) Are the issues of fact or law raised by the claim and the counterclaim largely the same?
(2) Would res judicata bar a subsequent suit on defendant's claims, absent the compulsory
counterclaim rule?
(3) Will substantially the same evidence support or refute plaintiff's claim as well as the
defendant's counterclaim? and
(4) Is there any logical relation between the claim and the counterclaim, such that the conduct of
separate trials of the respective claims of the parties would entail a substantial duplication of
effort and time by the parties and the court? The fourth test is the ‘compelling test of
compulsoriness’.
The elements of a compulsory counterclaim are thus given:
A counterclaim is compulsory and is considered barred if not set up where the following
circumstances are present: 1) that it arises out of the, or is necessarily connected with the
transaction or occurrence that is the subject matter of the opposing party’s claim, 2) that it does
not require for its adjudication the presence of third parties of whom the court cannot acquire
jurisdiction, and 3) that the court has jurisdiction to entertain the claim. (Javier vs. IAC, 171
SCRA 605)
2. Calibre Traders v. Bayer Philippines, G.R. No. 161432, 13 October 2010, 633
SCRA 34
FACTS: Calibre was one of Bayer’s distributors/dealers in Pangasinan and Tarlac. The
distributorship agreement was supposed to be effective from June 1989 to June 1991. However,
21
Bayer stopped delivering stocks to Calibre on July 1989 after the latter failed to settle its unpaid
accounts. Bayer and Calibre tried to reach a settlement agreement but Mario Sebastian expressed
discontent in Bayer’s refusal to credit his claims in full and underscored the alleged inaction of
Bayer in reconciling Calibre's accounts. Calibre filed a suit for damages before the Pasig RTC.
Damages prayed for include actual damages for losses and profits, damage to goodwill and
business reputation, and exemplary damages. Bayer filed an answer with Counterclaim, denying
its alleged wanton appointment of other distributors and that Calibre filed the damage suit to
avoid paying its overdue accounts. Bayer also moved that the Sebastians be impleaded as co-
defendants, considering that they bound themselves as solidary debtors under the
distributorship/dealership agreement. Calibre opposed Bayerphil’s motion to implead the
Sebastians and move to strike out the counterclaim, reasoning that spouses are not parties in its
suit against Bayer and thus are not proper parties to the counterclaim.
The TC rendered judgment favoring Calibre. It held that Calibre was justified in withholding
payment because there was deliberate inaction/employment of dilatory tactics on the part of
Bayerphil to reconcile accounts making it liable for damages for ‘abuse of rights’ and ‘unfair
competition’ under Articles 19, 20, and 28 of the Civil Code. The CA reversed the TC’s factual
findings.
ISSUES: Whether the granting of relief to Bayerphil’s counterclaim is permissive?
HELD: Bayerphil’s counterclaim is permissive, but the trial court should have given it the
opportunity to pay the docket fees since it did not avoid paying said fees.
"A compulsory counterclaim is any claim for money or other relief, which a defending party may
have against an opposing party, which at the time of suit arises out of, or is necessarily connected
with, the same transaction or occurrence that is the subject matter of plaintiff’s complaint. It is
compulsory in the sense that it is within the jurisdiction of the court, does not require for its
adjudication the presence of third parties over whom the court cannot acquire jurisdiction, and
will be barred x x x if not set up in the answer to the complaint in the same case. Any other claim
is permissive.The Court has already laid down the following tests to determine whether a
counterclaim is compulsory or not, to wit:
(1) Are the issues of fact or law raised by the claim and the counterclaim largely the same?
(2) Would res judicata bar a subsequent suit on defendant's claims, absent the compulsory
counterclaim rule?
(3) Will substantially the same evidence support or refute plaintiff's claim as well as the
defendant's counterclaim? and
(4) Is there any logical relation between the claim and the counterclaim, such that the conduct of
separate trials of the respective claims of the parties would entail a substantial duplication of
effort and time by the parties and the court? The fourth test is the ‘compelling test of
compulsoriness’.
The elements of a compulsory counterclaim are thus given:
A counterclaim is compulsory and is considered barred if not set up where the following
circumstances are present: 1) that it arises out of the, or is necessarily connected with the
transaction or occurrence that is the subject matter of the opposing party’s claim, 2) that it does
not require for its adjudication the presence of third parties of whom the court cannot acquire
jurisdiction, and 3) that the court has jurisdiction to entertain the claim. (Javier vs. IAC, 171
SCRA 605)
3. Alba, Jr. v. Malapajo, G.R. No. 198752, 13 January 2016, 780 SCRA 534
 On October 19, 2009, P filed with the RTC, a Complaint against R for recovery of
ownership and/or declaration of nullity or cancellation of title and damages alleging that
he was the previous registered owner of a parcel of land situated in Bolo, Roxas City,
covered by TCT; that his title was canceled by virtue of a deed of sale he allegedly
executed in favor of respondents for P500,000.00; that new TCT was issued in the name
of R; that the deed of sale was a forged document which R were the co-authors of.
 R filed their Answer with Counterclaim contending that they were innocent
purchasers for value and that the deed was a unilateral document which was presented
to them already prepared and notarized.
 P filed a Reply to Answer stating that the court had no jurisdiction over the nature
of R's permissive counterclaim; and, that assuming without admitting that the two real
22
estate mortgages are valid, the rate of (5%) per month is unconscionable and must be
reduced.
 P filed a Motion to Set the Case for Preliminary Hearing as if a Motion to Dismiss
had been Filed alleging that R counterclaims are permissive, thus, there must be payment
of docket fees and filing of a certification against forum shopping; and, that the supposed
loan extended by R’s mother to P, must also be dismissed as R is not the real parties-in-
interest. R filed their Opposition
 RTC issued an Order denying petitioner's motion finding that respondents’
counterclaims are compulsory. Petitioner’s motion for reconsideration was denied.
 P filed a petition for certiorari with the CA. However, CA dismissed the petition
for certiorari. P again filed a motion for reconsideration which the CA denied,
 P filed with the Petition his Affidavit of Service and incorporated the registry
receipts, P still failed to comply with the requirement on proper proof of service. Post office
receipt is not the required proof of service by registered mail. Section 10, Rule 13 of the
1997 Rules of Civil Procedure specifically stated that service by registered mail is
complete upon actual receipt by the addressee, or after five (5) days from the date he
received the first notice of the postmaster, whichever is earlier. Verily, registry receipts
cannot be considered sufficient proof of service; they are merely evidence of the mail
matter with the post office of the sender, not the delivery of said mail matter by the post
office to the addressee. Moreover, Section 13, Rule 13 of the 1997 Rules of Civil
Procedure specifically stated that the proof of personal service in the form of an affidavit
of the party serving shall contain a full statement of the date, place and manner of service,
which was not true in the instant petition.
ISSUE: W/N R counterclaim is permissive in nature.
HELD: No. The court ruled that it is compulsory. When R counterclaimed that, in case the
deed of sale is declared null and void, they are paid the loan P obtained from them plus
the agreed monthly interest which was covered by a real estate mortgage on the subject
property executed by P in favor of R. There is a logical relationship between the claim
and the counterclaim, as the counterclaim is connected with the transaction or occurrence
constituting the subject matter of the opposing party's claim. Notably, the same evidence
to sustain respondents' counterclaim would disprove petitioner's case. In the event that R
could convincingly establish that P actually executed the promissory note and the real
estate mortgage over the subject property in their favor then petitioner's complaint might
fail. P claim is so related logically to respondents' counterclaim, such that conducting
separate trials for the claim and the counterclaim would result in the substantial
duplication of the time and effort of the court and the parties.
Since respondents' counterclaim is compulsory, it must be set up in the same action; otherwise,
it would be barred forever. If it is filed concurrently with the main action but in a different
proceeding, it would be abated on the ground of litis pendentia; if filed subsequently, it would meet
the same fate on the ground of res judicata. There is, therefore, no need for R to pay docket fees
and to file a certification against forum shopping for the court to acquire jurisdiction over the said
counterclaim.
To determine whether a counterclaim is compulsory or permissive, we have

devised the following tests: (a) Are the issues of fact and law raised by the claim
and by the counterclaim largely the same? (b) Would res judicata bar a subsequent
suit on defendants’ claims, absent the compulsory counterclaim rule? (c) Will
substantially the same evidence support or refute plaintiffs’ claim as well as the
defendants’ counterclaim? and (d) 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.
4. Reillo v. San Jose, G.R. No. 166393, 18 June 2009, 589 SCRA 458
23
FACTS: Quiterio San Jose and Antonina Espiritu Santo are husband and wife. Both died
intestate in 1970 and 1976 respectively. They have five children, to wit: Virginia, Virgilio,
Galicano, Victoria, and Catalina.
In 1998, Virginia with the help of her husband(Zosimo Fernando, Sr.) and her children
(Cristina Reillo et al) executed a Deed of Extrajudicial Settlement of Estate where they made
it appear that Virginia was the only heir of the spouses Quiterio and Antonina. They
adjudicated among themselves the estate and then later sold it to Ma. Teresa Piñon.
Later, the other siblings found out about what Virginia did and so in October 1999, they
filed a complaint in RTC-Rizal for the annulment of the deed of extrajudicial settlement as
well as the subsequent deed of sale.
In their answer, Reillo et al (children of the now deceased Virginia) admitted that their
grandparents (Quiterio and Antonina) indeed had five children and that their mom isn’t the
only heir. However, they alleged that what their mom adjudicated to herself is her
inheritance; that other than the parcel of land their mom adjudicated to herself, their
grandparents have 12 other parcels of land which are under the possession of Galicano et al;
that as such, they are filing a “compulsory” counterclaim for the partition of the other 12
parcels of land.
Galicano et al then filed a motion for the court to render judgment on the pleadings. The trial
court granted the motion. The RTC ruled that the admission of Reillo et al that there are 4
other heirs is proof that the extrajudicial settlement is void because the other heirs were
excluded. The RTC also ruled that Reillo et al’s counterclaim is not compulsory but rather it
is a permissive counterclaim. As such, Reillo et al should have paid docket fees therefor but
they failed to do so hence their counterclaim is dismissed. The RTC then ordered the heirs to
partition the estate according to the laws of intestate succession. On appeal, the Court of
Appeals (CA) affirmed the decision of the RTC.
Reillo et al appealed the decision of the CA on the ground that the judgment on the pleading
is void; that it is the RTC’s fault why they failed to pay the docket fees for its failure to direct
them; and that the order for partition is void because it does not come with an order of
publication pursuant to Rule 74 of the Rules of Court.
ISSUE: Whether or not the order for partition issued by the trial court is void because there
was no corresponding order for publication pursuant to the provisions of Rule 74 of the
Rules of Court.
HELD: No. The applicable rule is Rule 69 of the Rules of Court. Since the extrajudicial
settlement is void, the property is reverted back to its previous state which is: that it is part
of the estate of Quiterio and Antonina. As such, the estate is deemed undivided among the
heirs. And every action to end an indivision among heirs is deemed an action for partition.
Therefore Rule 69 applies and under this rule, there is no need to publish the partition in a
newspaper of general circulation.
Anent the issue of the judgment on the pleadings, the same is valid because Reillo et al failed
to raise an issue when they already admitted that there are other heirs which were excluded
in the deed of extrajudicial settlement. Their allegation that the parcel of land adjudicated by
their mother is her inheritance is not tenable because the same was not indicated in the deed
of extrajudicial settlement. In fact, what was stated was that she was the sole heir.
Anent the issue of the counterclaim, Reillo et al’s counterclaim is permissive in nature and
not a compulsory one because their claim is not “necessarily connected with the transaction
or occurrence constituting the subject matter of the opposing party’s claim”. Their
counterclaim consists of a claim that there are 12 other parcels of land owned by Quiterio
and Antonina. Such allegation is already entirely different from the action brought by
Galicano et al., hence it is permissive and it can even be brought in a separate proceeding. As
a permissive pleading, it requires the payment of docket fees and the RTC cannot be faulted
for not directing Reillo et al to do so. The payment is incumbent upon Reillo et al and the
obligation cannot be shifted to the RTC.
5. Banco de Oro v. Court of Appeals, G.R. No. 160354, 25 August 2005, 468
SCRA 166
24
FACTS:
Having failed to comply with the Credit Line Agreement (CLA) obligation, Banco de
Oro Universal Bank filed before the Regional Trial Court of Quezon City (RTC) an application
for an extrajudicial foreclosure of the mortgaged properties against Gabriel and Ma. Geraldine
Locsin. Subsequently, the Locsins filed a complaint against BDO, the RTC Clerk of Court and
Ex-Oficio Sheriff of Quezon City, and Sheriff VI Marino V. Cahero, for Specific Performance,
Tort and Damages with Prayer for the Issuance of a Temporary Restraining Order (TRO) and a
Writ of Preliminary Injunction. The RTC denied the issuance of a TRO.
A Supplemental Complaint was filed by the Locsins. They repleaded in toto the allegations
in their Complaint and additionally alleged that BDO proceeded with the public auction of the
properties covered by the mortgage in the CLA “contrary to law.”BDO admitted that the public
auction took place but it denied that it was contrary to law
More than eight months after the Locsins filed their Supplemental Complaint, BDO filed a
complaint against them before the Mandaluyong RTC for Collection of Sum of Money. To such,
the Locsins filed a Motion to Dismiss on the ground that it should have been raised as compulsory
counterclaim in their complaint and by failing to raise it as such, it is now “barred by the rules.”
The RTC denied the same.
The Locsins appealed to the Court of Appeals which reversed the decision of the
Mandaluyong RTC finding that BDO‘s complaint was a compulsory counterclaim which should
have been raised in its Answer to the Locsins‘ complaint, and having failed to do so, it is now
barred.
ISSUE:
Whether or not BDO‘s complaint is barred for failure to raise it as a compulsory counterclaim in
its Answer to the Locsins‘ complaint
HELD:
The Court held that until after the Locsins allegedly refused and failed to settle the alleged
deficiency amount of their outstanding obligation, despite BDO‘s letter of demand sent to the
Locsins, BDO‘s cause of action had not arisen. BDO could not, therefore, have set its claim
assuming arguendo that it is a compulsory counterclaim.
The counterclaim must be existing at the time of the filing of the answer, though not at the
commencement of action-a premature counterclaim cannot be set in the answer. The party who
fails to interpose a counterclaim although arising out of or is necessarily connected with the
transaction or occurrence of the plaintiff‘s suit but which did not exist or mature at the time said
party files his answer is not thereby barred from interposing such claim in a future litigation.
The setting up of such “after-acquired counterclaim,” is merely permissive, not compulsory. At all
events, even if the claim of BDO is a compulsory counterclaim which should have been set up in
its Answer to the Locsins‘ Supplemental Complaint, technicality should give way to justice and
equity to enable BDO to pursue its “after-acquired” claim against the Locsins.
6. Asian Construction v. Court of Appeals, G.R. No. 160242, 17 May 2005, 458
SCRA 750
FACTS:
On March 13, 2001, Monark Equipment Corporation (MEC) filed a Complaint[1] for a
sum of money with damages against the Asian Construction and Development Corporation
(ACDC) with the Regional Trial Court (RTC) of Quezon City. Herein respondent alleged that
ACDC leased Caterpillar generator sets and Amida mobile floodlighting systems from MEC
during the period of March 13 to July 15, 1998 but failed, despite demands, to pay the rentals
therefor in the total amount of P4,313,935.00; from July 14 to August 25, 1998, various
25
equipments from MEC were, likewise, leased by ACDC for the latters power plant in Mauban,
Quezon, and that there was still a balance of P456,666.67; and ACDC also purchased and took
custody of various equipment parts from MEC for the agreed price of P237,336.20 which, despite
demands, ACDC failed to pay.
Petitioner filed a motion to file and admit answer with third-party complaint against
Becthel Overseas Corporation (Becthel). ACDC admitted its indebtedness to MEC in the amount
of P5,071,335.86 but alleged that defendant has incurred an obligation with plaintiff, in the amount
of P5,071,335.86. But third-party defendant fails and refuses to pay its overdue obligation in
connection with the leased equipment used by defendant to comply with its contracted services;
The equipment covered by the lease were all used in the construction project of Becthel in Mauban,
Quezon, and Expo in Pampanga and defendant was not yet paid of its services that resulted to the
non-payment of rentals on the leased equipment.
And by way of third-party complaint against Becthel as third-party defendant, ACDC
alleged that Third-party plaintiff repleads the foregoing allegations in the preceding paragraphs as
may be material and pertinent hereto; Third-party BECTHEL OVERSEAS CORPORATION
(herein called Becthel) is a corporation duly organized and existing under the laws of the United
States of America but may be served with summons at Barangay Cagsiay I, Mauban, Quezon 4330,
Philippines; Third-party plaintiff rendered and complied with its contracted works with third-party
defendant using plaintiffs (Monark) rented equipment. But, third-party defendant BECTHEL did
not pay for the services of third-party plaintiff ASIAKONSTRUKT that resulted to the non-
payment of plaintiff Monarks claim; Despite repeated demands, third-party defendant failed and
refused to pay its overdue obligation to third-party plaintiff ASIAKONSTRUKT, and third-party
defendant needs to be impleaded in this case for contribution, indemnity, subrogation or other
reliefs to off-set or to pay the amount of money claim of plaintiff Monark on the leased equipment
used in the Mauban, Quezon project in the total amount of P456,666.67;
ACCORDINGLY, this Court finds defendant Asian Construction and Development
Corporation liable to pay plaintiff Monark Equipment Corporation and is hereby ordered
to pay plaintiff the amount of FIVE MILLION SEVENTY-ONE THOUSAND AND
THREE HUNDRED THIRTY-FIVE & 86/100 PESOS (P5,071,335.86) plus 12% interest
from the filing of the complaint until fully paid.
ACDC appealed the resolution to the Court of Appeals (CA).
On July 18, 2001, the CA rendered judgment dismissing the appeal and affirming the
assailed decision. The appellate court ruled that since MEC had prayed for judgment on the
pleadings, it thereby waived its claim for damages other than the amount of P5,071,335.86; hence,
there was no longer a genuine issue to be resolved by the court which necessitated trial. The
appellate court sustained the disallowance of the third-party complaint of ACDC against Becthel
on the ground that the transaction between the said parties did not arise out of the same transaction
on which MECs claim was based.
ISSUE:
WHETHER OR NOT A THIRD-PARTY COMPLAINT IS PROPER?
HELD:
Section 11, Rule 6 of the Rules of Court provides:
Sec. 11. Third (fourth, etc.)-party complaint. A third (fourth, etc.) party complaint is a claim that
a defending party may, with leave of court, file against a person not a party to the action, called
the third (fourth, etc.) party defendant, for contribution, indemnity, subrogation or any other relief,
in respect of his opponents claim. The purpose of Section 11, Rule 6 of the Rules of Court is to
permit a defendant to assert an independent claim against a third-party which he, otherwise, would
assert in another action, thus preventing multiplicity of suits. All the rights of the parties concerned
would then be adjudicated in one proceeding. This is a rule of procedure and does not create a
substantial right. Neither does it abridge, enlarge, or nullify the substantial rights of any
litigant. This right to file a third-party complaint against a third-party rests in the discretion of the
trial court. The third-party complaint is actually independent of, separate and distinct from the
plaintiffs complaint, such that were it not for the rule, it would have to be filed separately from the
original complaint.
A prerequisite to the exercise of such right is that some substantive basis for a third-party
claim be found to exist, whether the basis be one of indemnity, subrogation, contribution or other
substantive right. The bringing of a third-party defendant is proper if he would be liable to the
plaintiff or to the defendant or both for all or part of the plaintiffs claim against the original
26
defendant, although the third-party defendants liability arises out of another transaction. The
defendant may implead another as third-party defendant (a) on an allegation of liability of the latter
to the defendant for contribution, indemnity, subrogation or any other relief; (b) on the ground of
direct liability of the third-party defendant to the plaintiff; or (c) the liability of the third-party
defendant to both the plaintiff and the defendant. There must be a causal connection between the
claim of the plaintiff in his complaint and a claim for contribution, indemnity or other relief of the
defendant against the third-party defendant.
The third-party complaint does not have to show with certainty that there will be recovery
against the third-party defendant, and it is sufficient that pleadings show possibility of recovery. In
determining the sufficiency of the third-party complaint, the allegations in the original complaint
and the third-party complaint must be examined. A third-party complaint must allege facts
which prima facie show that the defendant is entitled to contribution, indemnity, subrogation or
other relief from the third-party defendant.
Rule 7 - Parts of a Pleading
1. Munsalud v. NHA, G.R. No. 167181, 23 December 2008, 575 SCRA 144
FACTS: Petitioner Winnie Munsalud is the daughter and one of the compulsory heirs of the late
Lourdes Bulado (Bulado) who died on December 8, 1985. During the lifetime of Bulado,
respondent National Housing Authority (NHA) awarded her a lot located at 942 R. Higgins St.,
CAA Compound, Bgy. 185, Pasay City. The award was made pursuant to the "Land for the
Landless" program of respondent. She resided at the said property until her death.
When Bulado died, petitioner Winnie assumed the obligation to pay the monthly
amortizations. Respondent NHA recognized petitioner spouses’ assumption of obligations as
their names were reflected in the receipts. They were allowed to occupy the lot up to the present.
To prove their occupancy over the lot, petitioners offered as evidence the several documents
such as Tag Card No. 77-02830-03, Application and Contract for Water Services No. 295319,
Tax Declaration No. B-007-27667, ect.
On September 14, 1989, petitioners completed the payments of the amortizations due on
the property. Reflected on the left side portion of the official receipt evidencing full payment is
the annotation "full payment." Consequently, petitioners demanded that respondent NHA issue
in their favor a deed of sale and a title over the property. Respondent, however, refused.
On January 28, 2003, petitioners, by counsel, sent respondent a letter to issue a deed of sale and
title. Despite receipt, respondent did not issue the requested documents. On March 6, 2003,
respondent wrote petitioners informing them that petitioner Winnie’s name does not appear as
beneficiary. Petitioners replied that Winnie was representing her mother, the late Lourdes
Bulado. Respondent did not respond to the reply. Left with no recourse, petitioners instituted a
complaint for mandamus before the court a quo. RTC dismissed the complaint. CA affirmed the
decision of the CA.
ISSUE: Whether in giving due course to an action, the court is fenced within the parameters of
the title given by plaintiff to the case without regard to the averments of the pleading.
HELD: A pleading is sufficient in form when it contains the following:
1. A Caption, setting forth the name of the court, the title of the action indicating the names of
the parties, and the docket number which is usually left in blank, as the Clerk of Court has to
assign yet a docket number;
2. The Body, reflecting the designation, the allegations of the party’s claims or defenses, the
relief prayed for, and the date of the pleading;
3. The Signature and Address of the party or counsel;
4. Verification. This is required to secure an assurance that the allegations have been made in
good faith, or are true and correct and not merely speculative;
5. A Certificate of Non-forum Shopping, which although not jurisdictional, the same is
obligatory;
27
6. An Explanation in case the pleading is not filed personally to the Court. Likewise, for pleading
subsequent to the complaint, if the same is not served personally to the parties affected, there
must also be an explanation why service was not done personally.
Likewise, for all other pleadings, not initiatory in nature, there must be:
A Proof of Service, which consists in the written admission of the party served, or the official
return of the server, or the affidavit of the party serving, containing a full statement of the date,
place and manner of service. If the service is by ordinary mail, proof thereof shall consist of an
affidavit of the person mailing. If service is by registered mail, proof shall be made by such
affidavit and the registry receipt issued by the mailing office.
In case a party is represented by counsel de parte, additional requirements that go into the
form of the pleading should be incorporated, viz.:
1. The Roll of Attorney’s Number;
2. The Current Professional Tax Receipt Number; and
3. The IBP Official Receipt No. or IBP Lifetime Membership Number.
4. MCLE Compliance or Exemption Certificate Number and Date of Issue (effective January 1,
2009).
In the case at bench, a naked perusal of the complaint docketed as Civil Case No. Q03-
49278 designated by petitioners as mandamus reveals that it is sufficient in form. It has the
caption with the name of the court, the name of the parties, and the docket number. The
complaint contains allegations of petitioners’ claims. It has a prayer and the date when it was
prepared. The signature page shows the signature and name of petitioners’ counsel, the counsel’s
IBP, PTR and Roll of Attorney’s Numbers. The complaint was also verified and accompanied by
a certificate of non-forum shopping and signed by petitioners as plaintiffs. It was filed personally
with the office of the clerk of court.
Now, is the petition insufficient in substance?

Substance is that which is essential and is used in opposition to form.20 It is the most important
element in any existence, the characteristic and essential components of anything, the main part,
the essential import, and the purport. It means not merely subject of act, but an intelligible
abstract or synopsis of its material and substantial elements, though it may be stated without
recital of any details. It goes into matters which do not sufficiently appear or prejudicially affect
the substantial rights of parties who may be interested therein and not to mere informalities.
As used in reference to substance of common-law actions, substance comprehends all of
the essential or material elements necessary to sufficiently state a good cause of action
invulnerable to attack by general demurrer.
Substance is one which relates to the material allegations in the pleading. It is determinative of
whether or not a cause of action exists. It is the central piece, the core, and the heart constituting
the controversy addressed to the court for its consideration. It is the embodiment of the essential
facts necessary to confer jurisdiction upon the court.
2. Republic v. Kenrick Dev. Corp., G.R. No. 149576, 8 August 2006, 498
SCRA 220
 This case stemmed from the construction by R of a concrete perimeter fence around some
parcels of land located behind the Civil Aviation Training Center of the Air Transportation Office
(ATO) which was dispossessed by the latter of some 30,228 square meters of prime land.
 R justified its action with a claim of ownership over the property when it presented TCTs
issued in its name and which allegedly originated from TCT registered in the name of one Alfonso
Concepcion.
 ATO verified the authenticity of respondents titles with the Land Registration Authority
(LRA) and found no record.
 The land allegedly covered by R titles was also found to be within Villamor Air Base in
Pasay City.
 The Solicitor General filed a complaint for revocation, annulment and cancellation of
certificates of title in behalf of the Republic of the Philippines (as represented by LRA) against R
and Alfonso Concepcion
 On December 5, 1996, respondent filed its answer which was allegedly signed by Atty.
Onofre Garlitos, Jr. as counsel for respondent.
28
 Since Alfonso Concepcion could not be located and served with summons, the trial court
ordered the issuance of an alias summons by publication against him.
 The case was thereafter punctuated by various incidents relative to modes of discovery,
pre-trial, postponements or continuances, motions to dismiss, motions to declare defendants in
default and other procedural matters.
 During the pendency of the case, the Senate Blue Ribbon Committee and Committee on
Justice and Human Rights conducted a hearing in aid of legislation on the matter of land
registration and titling.
 During the congressional hearing held, one of those summoned was Atty. Garlitos, R’s
former counsel. He testified that he prepared R answer and transmitted an unsigned draft to R
president, Mr. Victor Ong. The signature appearing above his name was not his. He authorized
no one to sign in his behalf either. And he did not know who finally signed it.
 With Atty. Garlitos revelation, the Republic filed an urgent motion to declare R in default,
based on its failure to file a valid answer. The Republic argued that, since the person who signed
the answer was neither authorized by Atty. Garlitos nor even known to him, the answer was
effectively an unsigned pleading. Pursuant to Section 3, Rule 7 of the Rules of Court, it was a
mere scrap of paper and produced no legal effect.
 Trial court issued a resolution granting the Republics motion. It found R answer to be sham
and false and intended to defeat the purpose of the rules. The trial court ordered the answer
stricken from the records, declared respondent in default and allowed the Republic to present its
evidence ex parte.
 R sought reconsideration resolution but the trial court denied it. R raised the matter to the
CA via a petition for certiorari and was granted.
ISSUE: W/N R failed to file a valid answer on the ground that its pleading was unsigned by its
counsel Atty. Garlitos.
HELD: Yes. Pursuant to Sec. 3, Rule 7, a pleading must be “signed by the party or counsel
representing him.” The law is clear, and the counsel’s duty and authority to sign a pleading is
personal to him and may not be delegated to just any person.
The signature of counsel constitutes an assurance by him that he has read the pleading;
that, to the best of his knowledge, information and belief, there is a good ground to support
it; and that it is not interposed for delay. Under the Rules of Court, it is counsel alone, by
affixing his signature, who can certify to these matters.
No doubt, Atty. Garlitos could not have validly given blanket authority for just anyone to sign the
answer. The trial court correctly ruled that respondents answer was invalid and of no legal effect
as it was an unsigned pleading. Respondent was properly declared in default and the Republic
was rightly allowed to present evidence ex parte.
Respondent insists on the liberal application of the rules. It maintains that even if it were true that
its answer was supposedly an unsigned pleading, the defect was a mere technicality that could
be set aside.
PETITION IS HEREBY GRANTED
3. Mid-Pasig Land v. Tablante, G.R. No. 162924, 4 February 2010, 611 SCRA
528
Facts: Mid-Pasig leased its land to Tablante. When the lease expired, it wanted Tablante
and other sub-lessees (respondents) to vacate. When they did not, Mid-Pasig filed an
unlawful detainer case. MTC dismissed for lack of jurisdiction and CA dismissed because of
an error in Mid-Pasig’s certificate of non-forum shopping (CA says Mid-Pasig had to attach
the company’s board resolution attesting to the person’s authority to sign the cert of non-
forum shopping).
• Mid-Pasig leased 1 hectare of its Pasig land to ECRM Ent (represented by ECRM
proprietor Tablante) for 3 months.
29
• On the date of the expiration of the lease (March 6, 2000): o Tablante assigned all
his rights and interests to Litam and Rockland Company under a Deed of
Assignment.
o Mid-Pasig demanded that Tablante vacate.
• Eventually, Mid-Pasig learned that Tablante leased the same land to MC Home Depot
and that MC Home Depot constructed 59 commercial stalls. These stalls were leased
to various entities.
• 2001: Rockland filed a Specific Performance case with RTC-Pasig to compel Mid-
Pasig to execute a new contract of lease for another 3 yrs commencing July 2000.
• 2001: Mid-Pasig - Filed an unlawful detainer case against Tabante and other
respondents in MTC-Pasig.
• MTC-Pasig dismissed: o Ruled that the issue did not involve physical possession,
but whether ECRM had the right to exercise an option to renew its lease contract.
o Ruled that the issue was incapable of pecuniary estimation so jurisdiction
was vested in the RTC 2003: Mid-Pasig appealed but RTC-Pasig
affirmed.
• 2003: On Mid-Pasig petition for certiorari to CA, CA dismissed because: o The
certification of non-forum shopping was signed by a certain Mercelos as General
Manager of Mid-Pasig but the Corporate Secretary’s certificate or board resolution
that Mercelos was authorized to sign, was not attached.
o There was a lack of pertinent and necessary documents which are material
portions of the record as required by Section 2, Rule 42 of the Rules of Civil
Procedure
• MR denied.
Issues/Held:
• Did the verification and certification against forum-shopping in the petition fail to
attach the Board Resolution showing the authority of the affiant? NO, there was no
failure to attach.
• Did the petition lack the pertinent and necessary documents required by the rules?
NO
Ratio:
Some corporate officers have the authority to sign the verification and certification against
forum shopping.
• Cagayan Valley Drug Corp v. Commission of Internal Revenue: Sec. 23, in relation to
Sec. 25 of the Corporation Code, states that all corporate powers are exercised, all
business conducted, and all properties controlled by the board of directors. A
corporation has a separate and distinct personality from its directors, and officers
can ONLY exercise its corporate powers through the board of directors.
• BUT in Mactan Cebu International Airport Authority v. CA: SC recognized the
authority of a general manager or acting general manager to sign the verification
and certificate against forum shopping
• In some cases, the following officials/employees can sign the verification and
certification without need of a board resolution:
1. Chairperson of the Board of Directors,
2. President of a corporation,
3. General Manager or Acting General Manager,
4. Personnel Officer, and
5. an Employment Specialist in a labor case
• The determination of the sufficiency of the authority was done on a case to case
basis. The rationale was that they were in a position to verify the truthfulness and
correctness of the allegations in the petition.
• And so in this case, the failure to attach the Secretary’s Certificate attesting to
Merelos’s authority to sign the Certification of Non-Forum Shopping is not fatal to
30
the filing of the petition. (Even so, the board resolution was subsequently submitted
to the CA, together with the pertinent documents)
• Considering that petitioner substantially complied with the rules, the dismissal of
the petition was, therefore, unwarranted.
Dismissal of an appeal on a purely technical ground is frowned upon especially if it
will result in unfairness.
• The rules of procedure should not to be applied in a rigid, technical sense for they
were adopted to help secure, not override, substantial justice.
CA erred in dismissing the petition BUT in light of recent developments, remand is no

longer necessary.
• Mid-Pasig (in its Memo dated Oct 28, 2005) alleged that Tablante’s and other
respondents’ possessory claims had lapsed and so became moot and academic.
• Rockland prayed for a 3-year lease period but since the lease contract already
expired as of July or Aug 2003, there is no reason why Tablante should continue to
have any claim to further possession of the property.
Petition granted.
Rule 8 - Manner of Making Allegations in Pleadings
1. Filipinas Textile v. Court of Appeals,

G.R. No. 119800, 12 November 2003, 415 SCRA 635
Doctrine: In order to constitute an extension discharging the surety, it should appear that the
extension was for a definite period, pursuant to an enforceable agreement between the
principal and the creditor, and that it was made without the consent of the surety or with a
reservation of rights with respect to him. The contract must be one which precludes the creditor
from, or at least hinders him in, enforcing the principal contract within the period during which
he could otherwise have enforced it, and precludes the surety from paying the debt.
Facts: Filtex applied to SIHI for domestic letters of credit to finance the purchase of raw materials
for its textile business. SIHI accepted.
Villanueva executed a comprehensive surety agreement, where he guaranteed, jointly and
severally with Filtex, the payment at maturity to SIHI of all the indebtedness of Filtex.
To ensure payment of the sight drafts, Filtex issued to SIHI several trust covering the merchandise
sold. Under the trust receipts, Filtex agreed to hold the merchandise in trust for SIHI, with liberty
to sell the same for SIHIs account but without authority to make any other disposition of the said
goods.
Because of Filtex’s failure to pay its outstanding obligation despite demand, SIHI filed a Complaint
praying that the petitioners be ordered to pay, jointly and severally, the principal amount.
Filtex: trust receipts and surety agreement don’t reflect true intention of parties; obligation was
fully paid; no cause of action
Villanueva: same special and affirmative defenses and added that the comprehensive surety
agreement is null and void
 The petitioners, however, failed to specifically deny under oath the genuineness and due
execution of the actionable documents upon which the Complaint was based
RTC: Filtex and Villanueva jointly and severally liable to SIHI
On appeal to CA, Filtex and Villanueva argued that they have fully paid their indebtedness to SIHI
and asserting that the letters of credit, sight drafts, trust receipts and comprehensive surety
agreement upon which the Complaint is based are inadmissible in evidence supposedly
because of non-payment of documentary stamp taxes as required by the Internal Revesue
Code. In addition, Villanueva asserted that the comprehensive surety agreement which he
executed is null and void, inadmissible in evidence and contains material alterations. Thus, he
claimed that he should not be held solidarily liable with Filtex.
CA: Upheld RTC. Petitioners had in effect, admitted the genuineness and due execution of said
documents because of their failure to have their answers placed under oath, the complaint being
31
based on actionable documents in line with Section 7, Rule 8 of the Rules of Court. The CA also
ruled that there remained an unpaid balance for which Filtex and Villanueva are solidarily liable.
(MR denied)
Issues: WON the letters of credit, sight drafts, trust receipts and comprehensive surety
agreement shouldn’t have been admitted as evidence because of lack of the requisite
documentary stamps
Held: NO, they should be admitted. The Answer with Counterclaim and Answer of Filtex and
Villanueva, respectively, did not contain any specific denial under oath of the said documents
upon which SIHIs Complaint was based, thus giving rise to the implied admission of the
genuineness and due execution of these documents. Under Sec. 8, Rule 8 of the Rules of Court,
when an action or defense is founded upon a written instrument, copied in or attached to the
corresponding pleading as provided in the preceding section, the genuineness and due execution
of the instrument shall be deemed admitted unless the adverse party, under oath, specifically
denies them, and sets forth what he claims to be the facts.
Moreover, under Section 173 of the Internal Revenue Code the liability for payment of the stamp
taxes is imposed on the person making, signing, issuing, accepting, or transferring the document.
As correctly pointed out by SIHI, Filtex was the issuer and acceptor of the trust receipts and sight
drafts, respectively, while the letters of credit were issued upon its application. On the other
hand, Villanueva signed the comprehensive surety agreement. Thus, being among the parties
obliged to pay the documentary stamp taxes, the petitioners are estopped from claiming that the
documents are inadmissible in evidence for non-payment thereof
Petitioners questioned the admissibility of these documents rather belatedly, at the appeal stage
even. The rule is well-settled that points of law, theories, issues and arguments not adequately
brought to the attention of the trial court need not, and ordinarily will not, be considered by a
reviewing court as they cannot be raised for the first time on appeal because this would be
offensive to the basic rules of fair play, justice and due process.
Issue: WON the obligation has been fully paid
Yes. This Court shall not depart from the findings of the TC and the CA, supported by the
preponderance of evidence and unsatisfactorily refuted by the petitioners, as they are
Issue: WON Villanueva should be held to the comprehensive surety agreement
Villanueva: comprehensive surety agreement is null and void for lack of consent of Filtex and
SIHI. Also, SIHI materially altered the terms and conditions of the comprehensive surety
agreement by granting Filtex an extension of the period for payment thereby releasing him from
his obligation as surety.
Held: The consent of Filtex to the surety may be assumed from the fact that Villanueva was the
signatory to the sight drafts and trust receipts on behalf of Filtex. Moreover, Filtex admitted the
execution of the comprehensive surety agreement with the only qualification that it was not a
means to induce SIHI to issue the domestic letters of credit. SIHIs consent to the surety is also
understood from the fact that it demanded payment from both Filtex and Villanueva.
The extension of time granted to Filtex to pay its obligation did not release Villanueva from his
liability
The neglect of the creditor to sue the principal at the time the debt falls due does not discharge
the surety, even if such delay continues until the principal becomes insolvent
The raison detre for the rule is that there is nothing to prevent the creditor from proceeding
against the principal at any time. At any rate, if the surety is dissatisfied with the degree of activity
displayed by the creditor in the pursuit of his principal, he may pay the debt himself and become
subrogated to all the rights and remedies of the creditor.
It may not be amiss to add that leniency shown to a debtor in default, by delay permitted by the
creditor without change in the time when the debt might be demanded, does not constitute an
extension of the time of payment, which would release the surety. In order to constitute an
32
extension discharging the surety, it should appear that the extension was for a definite period,
pursuant to an enforceable agreement between the principal and the creditor, and that it was
made without the consent of the surety or with a reservation of rights with respect to him. The
contract must be one which precludes the creditor from, or at least hinders him in, enforcing the
principal contract within the period during which he could otherwise have enforced it, and
precludes the surety from paying the debt.
Dispositive: Petition denied, CA decision affirmed
2. Casent Realty v. Philbanking,

Facts: Casent Realty Developmet Corp. executed two promissory notes in favor of Rare Realty.
These promissory notes were used by Rare Realty as a security for a loan that Rare Realty
obtained from Philbanking wherein a Deed of Assignment was executed. When Rare Realty failed
to pay its debt, the bank went after the security of the loan. The bank demanded payment based
on the promissory notes issued by Casent Realty Corp to Rare Realty by virtue of the deed of
assignment. On a separate loan with Philbanking, Casent Realty satisfied its obligation by
executing a Dacion en pago. Philbanking filed for a complaint for the collection of payment
against Casent based on the promissory notes. Casent Realty, in its answer, raised that a Dacion
en pago was already executed which extinguished its obligation. Philbanking failed to file a reply.
Casent Realty points out that the defense of Dacion and Confirmation Statement, which were
submitted in the Answer, should have been specifically denied under oath by respondent in
accordance with Rule 8, Section 8 of the Rules of Court. Its failure to reply constituted an
admission on the part of the bank.
Issue: Whether or not failure to file a Reply and deny the Dacion and Confirmation Statement
under oath constitute a judicial admission of the genuineness and due execution of these
documents
Held: Yes. Since respondent failed to file a Reply, in effect, respondent admitted the genuineness
and due execution of said documents. This judicial admission should have been considered by
the appellate court in resolving the demurrer to evidence. Since respondent failed to deny the
genuineness and due execution of the Dacion and Confirmation Statement under oath, then
these are deemed admitted and must be considered by the court in resolving the demurrer to
evidence.
3. Warner Barnes v. Reyes,

L-9531, 14 May 1958, 103 Phil 662
FACTS:
The plaintiff-appellee filed against the defendants-appellants an action for foreclosure of
mortgage on August 20, 1954. The deed of mortgage sued upon was attached to the complaint
as Annex "A". After having been granted an extension, the appellants filed an answer on
September 30, 1954, alleging:
1. That they admit paragraph 1 of the complaint;
2. That the defendants are without knowledge or information sufficient to form a belief as to the
truth of the material averments of the remainder of the complaint; and
3. That they hereby reserve the right to present an amended answer with special defenses and
counterclaim.
As the appellants did not file any amended answer, the appellee moved on November 15, 1954
for judgment on the pleadings on the ground that the answer failed to tender an issue. The lower
33
court granted appellee's motion in the order dated December 28, 1954 and thereafter (on
December 29, 1954) rendered judgment in favor of the appellee. In granting the motion for
judgment on the pleadings, the lower court held "that the denial by the defendants of the
material allegations of the complaint under the guise of lack of knowledge is a general denial so
as to entitle the plaintiff to judgment on the pleadings."
ISSUE: Whether the allegation of want of knowledge or information as to the truth of the material
averments of the complaint amounts to a mere general denial warranting judgment on the
pleadings or is sufficient to tender a triable issue.
HELD: Section 7 of Rule 9 of the Rules of court, in allowing the defendant to controvert material
averments not within his knowledge or information, provides that "where the defendant is
without knowledge or information sufficient to form a belief as to the truth of material averment,
he shall so state and this shall have the effect of a denial. This form of denial was explained in
one case as follows:
Just as the explicit denials of an answer should be either general or specific, so all denials
of knowledge or information sufficient to form a belief should refer either generally to all
the averments of the complain" thus intended to be denied, or specifically to such as are
to be denied by that particular form of plea. The would be so definite and certain in its
allegation that the pleaders' adversary should not be left in doubt as to what is admitted,
what is denied, and what is covered by denials of knowledge or information sufficient to
form a belief. Under this form of denial employed by the defendant, it would be difficult,
if not impossible to convict him of perjury if it should transpire that some of his denials of
knowledge, etc., were false, for he could meet the charge by saying that his denials
referred only to matters of which he had in fact no knowledge or information.
(Kirachbaum Eschmann, 98 NE 328, 329-330.).
This is a foreclosure suit. It is alleged that the severally indebted in the sum of P9,906.88, secured
by a mortgage. A copy of the mortgaged deed was attached and made a part of the complaint.
There are also allegations of partial payments, defaults in the payment of outstanding balance,
and a covenant to pay interest and attorney's fees. It is hard to believe that the appellants could
not have had knowledge or information as to the truth or falsity of any of said allegations. As a
copy of the deed of mortgage formed part of the complaint, it was easy for and within the power
of the appellants, for instance, to determine and so specifically allege in their answer whether or
not they had executed the alleged mortgage. The appellants could be aided in the matter by an
inquiry or verification as to its registration in the Registry of Deeds. "An unexplained denial of
information and belief of a matter of records, the means of information concerning which are
within the control of the pleader, on are readily accessible to him, is evasive and is insufficient to
constitute an effective denial. (41 Am. Juris., 399, citing Dahlstrom vs. Gemunder, 92, NE 106.)
It is noteworthy that the answer was filed after an extension granted by the lower court, and that
while a reservation was made to file an amended answer, no such pleading was presented. If
these show anything, it is that the appellants obviously did not have any defense or wanted to
delay the proceedings.
The form of denial adopted by the appellants, although allowed by the Rules of Court, must be
availed of with sincerity and in good faith,—certainly neither for the purpose of confusing the
adverse party as to what allegations of the complaint are really put in issue nor for, the purpose
of delay.
. . . no court will permit its process to be trifled with and its intelligence affronted by the offer of
pleadings which any reasoning person knows can not possibly be true. . . ."The general rule that
the Court is not bound to accept statements in pleadings which are, to the common knowledge
of all intelligent persons, untrue, applies just as well to the provisions of Rule 8(b), 28 U.S.C.A.
following section 723c, as to pleadings under the, State statute." (Nieman vs. Long, 51 F. Supp.
30, 31.)
This rule, specifically authorizing an answer that defendant has no knowledge or information
sufficient to form a belief his to the truth of an averment and giving such answer is not the effect
of a denial, does not apply where the fact as to which want of knowledge is asserted is to the
knowledge of the court as plainly and necessarily within the defendants knowledge that his
34
averment of ignorance must be palpably untrue. (Icle Plant Equipment Co. vs. Martocello, D.C.
Pa. 1941, 43 F. Supp. 281.)
Wherefore, the decision appealed from is hereby affirmed with costs against the appellants.
So ordered.
4. Gaza et al v. Lim,
G.R. 126863, 16 January 2003, 395 SCRA 261
Facts: On February 20, 1961, P purchased a parcel of land located in Barangay Sta. Maria,
Calauag, Quezon. The Register of Deeds of Lucena City issued Transfer Certificate of Title in the
name of Napoleon Gaza.
Thereafter, spouses’ petitioner engaged in lumber and copra business and used the purchased
property as storage. However, the operation was ceased and the gates of said property were
padlocked.
Ramon and Agnes Lim, both half-siblings of Napoleon Gaza, claimed that they have used the same
lot for their lumber and copra business since 1975, as shown by Lumber Certificate, PCA Copra
Business Registration and Mayor's Permit.
Both of them assigned their respective care taker; Renato Petil for SPS Gaza and Emilio Herrera
for Ramon and Agnes Lim.
The padlock of the main gate was destroyed and according to Napoleon Gaza, the siblings Ramon
and Agnes Lim and Emilio Herrera, entered the property by breaking the lock. Thereafter, they
occupied a room of the warehouse without the consent of Renato Petil. On the other hand, P
detained Emilio Herrera and his daughter inside the compound and destroyed the padlocks of
the gates. Thereafter, said spouses forcibly opened Agnes Lim's quarters at the second floor of
the warehouse and occupied it.
R filed with the MTC an action for forcible entry against SPS Gaza. Thus, P filed their answer with
compulsory counterclaim.
MTC- dismissed the complaint and counterclaim.
RTC – affirmed the MTC decision with modification that Respondents are ordered to pay SPS Gaza
for exemplary damages.
CA- reversed the decision. Ordered the P to vacate the premises and surrender its possession.
SPS Gaza – filed MR. Denied.
Issue: W/N the CA erred in failing to rule that there was no implied admission on the part of
petitioners that private respondents had been in prior and actual physical possession of subject
property since 1975.
Held: YES. In an action for forcible entry, the plaintiff must prove that he was in prior possession
of the land or building and that he was deprived thereof by means of force, intimidation, threat,
strategy or stealth. It must be stressed, though, that he cannot succeed where it appears that, as
between himself and the defendant, the latter had a possession antedating his own. To ascertain
this, it is proper to look at the situation as it existed before the first act of spoliation occurred.
Accordingly, "Section 10. Specific Denial. A defendant must specify each material allegation of
fact the truth of which he does not admit and, whenever practicable, shall set forth the substance
of the matters upon which he relies to support his denial. Where a defendant desires to deny
only a part of an averment, he shall specify so much of it as is true and material and shall deny
only the remainder. Where a defendant is without knowledge or information sufficient to form
a belief as to the truth of a material averment made in the complaint, he shall so state and this
shall have the effect of a denial."
35
Three (3) modes of specific denial are contemplated by the above provisions, namely: (1) by
specifying each material allegation of the fact in the complaint, the truth of which the defendant
does not admit, and whenever practicable, setting forth the substance of the matters which he
will rely upon to support his denial; (2) by specifying so much of an averment in the complaint as
is true and material and denying only the remainder; (3) by stating that the defendant is without
knowledge or information sufficient to form a belief as to the truth of a material averment in the
complaint, which has the effect of a denial.[6]
Where a dispute over possession arises between two persons, the person first having actual
possession is the one who is entitled to maintain the action granted by law; otherwise, a mere
usurper without any right whatever, might enter upon the property of another and, by allowing
himself to be ordered off, could acquire the right to maintain the action of forcible entry and
detainer, however momentary his intrusion might have been.
In this case, evidence clearly shows that the petitioners are the true owners and, therefore, the
lawful possessors of the land. Verily, respondent’s allegation of actual possession and those
petitioners deprived them of such possession by means of force; intimidation and threat are
clearly untenable.
5. Galofa v. Nee Bon Sing,

G.R. No. L-22018, 17 January 1968, 22 SCRA 48
FACTS:
The plaintiff Apolonio Galofa filed a complaint against the defendant Nee Bon Sing
for the recovery of possession of and to quiet title over a certain parcel of land, alleging
the prior ownership and possession of the land by his late father, Francisco Galofa. The
complaint further alleges that plaintiff, despite the foregoing, was unable to take actual
possession of the said property due to an unwarranted adverse claim of rights of
ownership and possession by the defendant or his tenant and the sale by a certain Fe
Nicolas of said property to defendant, which if true, had no right whatsoever to legally
dispose the property not being the owner thereof, aside from the fact that the defendant
is not allowed under the law to own and possess real properties being an alien, and that
the defendant was compelled ventilate the matter in the court and retain services of a
council.
In his answer, defendant Nee Bong Sing, denies the material averments of the
complaint, that the defendant never asserted title of ownership to the property described
in the Complaint to anybody, much less to the herein plaintiff in virtue of any deed of
conveyance executed in favor of the defendant by one Fe Nicolas, nor claimed any right
over the said property, either by himself or another. And fact the plaintiff had contracted
a complaint, the services of counsel was occasioned by the institution of the action, the
same is his own personal responsibility, for defendant denies any part and assumes no
liability therefor in any manner whatsoever.
Upon motion by the plaintiff that the defendant's answer failed to tender an issue,
the lower court rendered judgment on the pleadings, declaring the plaintiff the owner of
the property.
Issue:
Despite the denial of the defendant of all the facts that could lead for his right of
possession and had denied that he deprive the plaintiff of the possession of the
property, is there still an issue?
36
RULING:
No. The defendant's motion for reconsideration and/or new trial furnished no
justification to the lower court to set aside or reconsider its judgment. Said motion
prayed that the defendant be allowed to amend his answer, but annexed to it is the
defendant's own affidavit (Annex A, Rec. on Appeal, p. 57) reiterating that he had "no
real right or interest whatsoever not having been involved in any way with any
transaction affecting the title or possession of the same. Definitely, therefore, there was
no issue to be tried and the court's denial of the motion was proper. And why should
the defendant resist the judgment when he simultaneously asserts that he has no right
to the land?
It is to be noted that, to the plaintiff's allegation of his inability to take actual possession
of the parcel of land due to "an unwarranted adverse claim of rights of ownership and
possession by the defendant . . .", followed by an allegation of how such claim was
exercised, the defendant's denial is as to "the materials averments contained in
paragraph 4 of the Complaint, . . ." conjoined with his disclaimer or dominical or
possessory rights in the manner alleged in the complaint. The defendant's denial is,
therefore, a negative pregnant, which is equivalent to an admission.
As to the plaintiff's allegations of his having contracted a lawyer for a fee, the defendant
does not deny the alleged fact; what he denies in his liability therefor, which is an issue
of law. Since the defendant neither denies nor admits the material allegation about the
services of plaintiff's counsel, judgment on the pleadings is proper. (Alemany vs.
Sweeney, 3 Phil. 114)
The defendant, however, had specifically denied the plaintiff's allegations in

paragraphs 5, 6 and 7 of the complaint. He traversed these allegations in his answer by
stating that he "does not possess any knowledge or information sufficient to form a
belief as to the truth of the allegations contained in paragraphs 5, 6 and 7 of the
(original) Complaint and therefore, denies the same." But paragraphs 6 and 7 of the
Complaint referred to damages, while paragraph 5 of the complaint merely alleged a
conclusion (that by defendant's acts a cloud over plaintiff's title had been raised) so that
the defendant's specific denials served no purpose at all. As to the amount of damages,
alleged in paragraph 6 of the complaint (P2,000.00 per agricultural year) and specifically
denied by the defendant, as aforesaid, a specific denial is not required by the Rules.
(Sec. 1, Rule 9, Rules of Court) At any rate, the appealed judgment did not condemn the
defendant-appellant to pay damages.
A denial in the form of a negative pregnant is an ambiguous pleading, since it cannot be

ascertained whether it is the fact or only the qualification that is intended to be denied.
Rule 9 - Effect of Failure to Plead
1. Monzon v. Sps. Relova,

Doctrine: A cause of action is the act or omission by which a party violates the right of
another. A cause of action exists if the elements are present:
1. Right in favor of plaintiff by whatever means and under whatever law it arises or is
created
37
2. An obligation on the part of the named defendant to respect or not to violate such
right
3. An act or omission on the part of such defendant violative of the right of plaintiff
or constituting breach of the obligation of defendant to the plaintiff for which the
latter may maintain an action for recovery of damages
Fast Recit: Spouses Relova and Perez filed a petition for injunction since Monzon issued
promissory notes to the respective spouses with lots as security (2A- Perez, Lot 2B-
Relova). Monzon was indebted to Coastal Lending which foreclosed the property due to
the non-payment of Monzon’s 3.4 million debt. Addio was the highest bidder in the sale.
There was an excess of 1.6 M from Addio’s payment of 5M. The Spouses contend that
they should be given the residue as stated in Rule 68, Sec 4. The residue money is with
Atty. Luna (clerk of court). However, case at bar involves Extrajudicial Foreclosure (Act
3135) and not Rule 68’s judicial foreclosure. Spouses do not have cause of action against
Atty. Luna. Case is remanded back to trial court to check if motion for injunction is to be
treated as complaint for collection of money.
Facts:
 Spouses Relova and Perez filed a petition for Injunction. They allege that Monzon
issued a promissory note in favor of sps. Perez. The amount was P600K and secured
by Lot2A in Brgy Kaybagal, Tagaytay City with about 300 sqm. A deed of absolute
sale over the parcel of land was later executed in favor of the Perez spouses.
 The same thing happened with sps. Relova wherein a promissory note in the
amount of P200k was issued secured by Lot2B with about 200 sqm. There was a
5% interest per month. A deed of conditional sale over the parcel of land was later
issued in favor of sps. Relova.
 Monzon was indebted to the Coastal Lending Corporation. Coastal Lending then
extrajudicially foreclosed the property of Monzon which included Lots 2A and 2B.
The winning bidder in this extrajudicial foreclosure was Addio properties. Of the
amount paid by Addio, there was a residue of roughly P1.6M (indebtedness of
Monzon was only around P3.4M while Addio paid P5M for the property that‘s why
there‘s an excess). This residue is in the custody of Atty. Luna as Branch Clerk of
Court.
 Monzon argues that she has already fulfilled her obligation to the spouses via
dacion en pago evidenced by the Deed of Conditional Sale and the Deed of
Absolute Sale.
RTC:
 Due to Monzon and counsel’s absence on said hearing date despite due notice,
granted an oral Motion by the respondents by issuing an Order allowing the ex
parte presentation of evidence by respondents.
 Atty. Luna should deliver the residue to spouses Relova and Perez. At this point in
time, Addio properties intervened.
CA: Affirmed RTC, denied Monzon’s appeal re : violation of due process since she was not
allowed to present in court again after not appearing in first hearing (order of default)
Issue: Whether or not there was a cause of action against Atty Luna.
38
Held: NO
SC : Reversed and set aside the ruling of the CA. Atty. Luna should not deliver the residue
to the spouses since Rule 68 governs judicial foreclosure and the issue at bar is under Act
3135 Extrajudicial Foreclosure.
Also, the SC ruled that the Failure to file a responsive pleading within the reglementary
period is the sole ground for an order of default and not the non-appearance during oral
motion.
The case is remanded back to trial court for respondents to submit a manifestation where
the petition for injunction should be treated as complaint for the collection of money.
Ratio:
Rule 68 governs judicial foreclosure of mortgages. Extrajudicial foreclosure of mortgages
which was what transpired in the case at bar is governed by Act 3135. Unlike Rule 68, Act
3135 does not grant to junior encumbrancers the right to receive the balance of the
purchase price. The only right given to second mortgagees in said issuances is the right to
redeem foreclosed property pursuant to Sec 6 of Act 3135 “any person having lien on the
property subsequent to mortgage or deed of trust under which the property is sold, may
redeem the same at any time within the term of one yr from and after date of the sale.
A cause of action is the act or omission by which a party violates the right of another. A
cause of action exists if the elements are present:
1. Right in favor of plaintiff by whatever means and under whatever law it arises or is
created
2. An obligation on the part of the named defendant to respect or not to violate such
right
3. An act or omission on the part of such defendant violative of the right of plaintiff
or constituting breach of the obligation of defendant to the plaintiff for which the
latter may maintain an action for recovery of damages
In view of the foregoing, the respondent spouses do not have a cause of action against
Atty Luna for the delivery of amounts. The case should be dismissed in so far Atty Luna is
concerned but the same is not necessarily true with respect to Monzon.
The case is remanded back to trial court for respondents to submit a manifestation where
the petition for injunction should be treated as complaint for the collection of money. If
respondents answer in affirmative, case shall proceed with presentation of evidence for
defense. If Monzon successful in proving defense of dacion en pago, there would be
double sales with Addio. The remedy of respondent is to recover possession. If Addio is
entitled to properties, respondents’ remedy is to file action for damages against Monzon.
If respondents answer in negative, the case shall be dismissed without prejudice to the
exercise of respondents’ rights as mortgage creditors. They will be first mortgagor if their
mortgage was executed prior to execution of contract with Addio.
2. Gomez v. Montalban,
G.R. No. 174414, 14 March 2008, 548 SCRA 693
When a party has another remedy available to him, which may be either a motion for new
trial or appeal from an adverse decision of the trial court, and he was not prevented by
fraud, accident, mistake or excusable negligence from filing such motion or taking such
appeal, he cannot avail himself of this petition.
Facts:
39
Lita Montalban obtained a loan from Elmer Gomez in the amount of P40,000 with a
voluntary proposal on her part to pay 15% interest per month. Montalban failed to
comply with her obligation so Gomez filed a complaint in the RTC for sum of money.
Summons was served but despite her receipt, she still failed to file an Answer. She was
declared in default and upon motion, Gomez was allowed to present evidence ex parte.
The RTC rendered a decision ordering Montalban to pay Gomez.
Thereafter, respondent filed a Petition for Relief from Judgment alleging that there was
no proper service of summons since there was no personal service. She alleged that one
Mrs. Alicia Dela Torre was not authorized to receive summons and that her failure to file
an Answer was due to fraud, accident, mistake, excusable negligence (FAME). The
Petition was set for hearing but counsel for respondent failed to appear before the
court hence the dismissal of the Petition.
Montalban filed for a Motion for Reconsideration of the dismissal of the Petition stating
that counsel’s failure to appeal was unintentional to which the RTC granted. To this
instance, Gomez filed a Petition for Reconsideration.
Issue:
Whether or not the granting of Petition for Relief from Judgment by the RTC is proper.
Held:
NO. The RTC committed an error in doing so. A Petition for Relief under Rule 38 is only
available against a final and executory judgment and the grounds include fraud,
accident, mistake or excusable negligence.
Discussion on Grounds:
"Mistake" refers to mistake of fact, not of law, which relates to the case. The word
"mistake," which grants relief from judgment, does not apply and was never intended to
apply to a judicial error which the court might have committed in the trial. Such errors
may be corrected by means of an appeal. This does not exist in the case at bar, because
respondent has in no wise been prevented from interposing an appeal.
"Fraud," on the other hand, must be extrinsic or collateral, that is, the kind which
prevented the aggrieved party from having a trial or presenting his case to the court,or
was used to procure the judgment without fair submission of the controversy. This is
not present in the case at hand as respondent was not prevented from securing a fair
trial and was given the opportunity to present her case.
Negligence to be excusable must be one which ordinary diligence and prudence could
not have guarded against. Under Section 1 Rule 38, the "negligence" must be excusable
and generally imputable to the party because if it is imputable to the counsel, it is
binding on the client. To follow a contrary rule and allow a party to disown his counsel's
conduct would render proceedings indefinite, tentative, and subject to reopening by the
mere subterfuge of replacing counsel. What the aggrieved litigant should do is seek
administrative sanctions against the erring counsel and not ask for the reversal of the
court's ruling.
In Tuason v CA, the court explained the nature of a Petition for Relief from Judgment:
“A petition for relief from judgment is an equitable remedy that is allowed only in
exceptional cases where there is no other available or adequate remedy. When a party
has another remedy available to him, which may be either a motion for new trial or
40
appeal from an adverse decision of the trial court, and he was not prevented by fraud,
accident, mistake or excusable negligence from filing such motion or taking such appeal,
he cannot avail himself of this petition. Indeed, relief will not be granted to a party who
seeks avoidance from the effects of the judgment when the loss of the remedy at law
was due to his own negligence; otherwise the petition for relief can be used to revive
the right to appeal which had been lost thru inexcusable negligence.”
In the case, Montalban contended that judgment was entered against her through
mistake or fraud because she was not duly served summons. However, under the
discussion of the following grounds, the SC sees no merit in her petition.
*Petition for Relief from Judgment is set aside.
3. Gajudo v. Traders Royal Bank,

G.R. 151098, 21 March 2006, 485 SCRA 108
Doctrine: The mere Fact that a defendant is declared in default does not automatically result in
the grant of the prayers of the plaintiff. To win, the latter must still present the same quantum
of evidence that would be required if the defendant were still present. A party that defaults is
not deprived of its rights, except the right to be heard and to present evidence to the trial
court. If the evidence presented does not support a judgment for the plaintiff, the complaint
should be dismissed, even if the defendant may not have been heard or allowed to present any
countervailing evidence.
FACTS: Chua obtained a loan from TRB in the amount of P75, 000 secured by a Real Estate
Mortgage of a property owned in common by Chua and the Gajudos. They failed to settle the
loan and thus there was an extrajudicial foreclosure of the property in which the winning
bidder was the bank. The petitioners contend that they were allowed by the bank to
repurchase the property but it was sold to another. The petitioners state that that said new
defendants they included in their amended complaint conspired with the bank in canceling the
notice of lis pendens by falsifying a letter sent to and filed with the office of the Register of
Deeds of Queon City, purportedly for the cancellation of said notice so now they are claiming
for damages. Summonses were served on the bank but they failed to file their answer. Thus,
the petitioners were allowed to present ex parte to claim for damages. The petitioners contend
that since the bank was declared in default the pieces of evidence they presented must already
be sufficient for them to have a favorable judgment. But evidence presented not sufficient.
Hence, the petition.
ISSUE: Whether the Respondent Court of Appeals erred in failing to apply the provisions of
Section 3, Rule 9 of the 1997 Rules of Civil Procedure [and in applying instead] the rule on
preponderance of evidence under Section 1, Rule 133 of the Rules of Court.
HELD: Between the two rules, there is no incompatibility that would preclude the application of
either one of them. To begin with, Section 3 of Rule 9 governs the procedure which the trial
court is directed to take when a defendant fails to file an answer. According to this provision,
the court shall proceed to render judgment granting the claimant such relief as his pleading
may warrant, subject to the courts discretion on whether to require the presentation of
evidence ex parte. The same provision also sets down guidelines on the nature and extent of
the relief that may be granted. In particular, the courts judgment shall not exceed the amount
or be different in kind from that prayed for nor award unliquidated damages.
As in other civil cases, basic is the rule that the party making allegations has the burden of
proving them by a preponderance of evidence. Moreover, parties must rely on the strength of
their own evidence, not upon the weakness of the defense offered by their opponent. This
principle holds true, especially when the latter has had no opportunity to present evidence
because of a default order. Needless to say, the extent of the relief that may be granted can
41
only be as much as has been alleged and proved with preponderant evidence required under
Section 1 of Rule 133.
Regarding judgments by default, it was explained in Pascua v. Florendo that complainants are
not automatically entitled to the relief prayed for, once the defendants are declared in default.
Favorable relief can be granted only after the court has ascertained that the relief is warranted
by the evidence offered and the facts proven by the presenting party. In Pascua, this Court
ruled that x x x it would be meaningless to require presentation of evidence if every time the
other party is declared in default, a decision would automatically be rendered in favor of the
non-defaulting party and exactly according to the tenor of his prayer. This is not contemplated
by the Rules nor is it sanctioned by the due process clause.
In sum, while petitioners were allowed to present evidence ex parte under Section 3 of Rule 9,
they were not excused from establishing their claims for damages by the required quantum of
proof under Section 1 of Rule 133. Stated differently, any advantage they may have gained from
the ex parte presentation of evidence does not lower the degree of proof required. Clearly
then, there is no incompatibility between the two rules.
Rule 10– Amended and Supplemental Pleadings
1. PPA v. Gothong and Aboitiz,

Facts: William Gothong & Aboitiz, Inc/ WG&A for brevity), is domestic corporation
engaged in the shipping industry while Philippine Ports Authority/PPA, is a government-
owned and controlled company created and existing by virtue of the provisions of P.D.
No. 87 and mandated under its charter to operate and administer the country's sea port
and port facilities.
WG&A requested respondent PPA for it to be allowed to lease and operate over the
Marine Slip Way in the North Harbor.
Thereafter, Pres Estrada issued a memorandum approving the request of the WG&A to
lease the Marine Slip Way.
Pursuant to the said Memorandum, a Contract of Lease was prepared by respondent PPA
containing the following terms:
1. The lease of the area shall take effect on January 1 to June 30, 2001 or until
such time that PPA turns over its operation to the winning bidder for the North Harbor
modernization;
The said contract was eventually conformed to and signed by WG&A, through its CEO
Endika Aboitiz, Jr. After the stipulations made in the lease agreement, PPA surrendered
possession of the Marine Slip Way in favor of WG&A.
PPA subsequently sent a letter to petitioner WG&A dated November 12, 2001 directing
the latter to vacate the contested premises not later than November 30, 2001 and to turn
over the improvements made therein pursuant to the terms and conditions agreed upon
in the contract.
WG&A asked for reconsideration. PPA denied.
42
WG&&A filed an injunction suit claiming that PPA was unjustly, illegally and prematurely
terminated the lease contract. It likewise prayed for the issuance of a temporary
restraining order to arrest the evacuation. In its complaint, petitioner also sought
recovery of damages for breach of contract and attorney's fees.
1st amended complaint - WG&A incorporated statements to the effect that PPA is already
estopped from denying that the correct period of lease is "until such time that the North
Harbor Modernization Project has been bided out to and operations turned over to the
winning bidder.
PPA later moved for the reconsideration of the said Order on February 11, 2002. Then
PPA filed a Motion to Admit Attached Second Amended Complaint. This time, however,
the complaint was already captioned as Writ of Preliminary Injunction and damages
and/or for Reformation of Contract. Also, it included as its fourth cause of action and
additional relief in its prayer, the reformation of the contract as it failed to express or
embody the true intent of the contracting parties.
The admission of the second amended complaint met strong opposition from the
respondent PPA. It postulated that the reformation sought for by the petitioner
constituted substantial amendment, which if granted, will substantially alter the latter's
cause of action and theory of the case.
CA- granted WG&A‘s petition, setting aside the decision of RTC

Issue: W/N the CA erred in ruling that the RTC committed grave abuse of discretion when
it denied the admission of the second amended complaint.
Held: No. The CA did not err in finding that the RTC committed grave abuse of discretion
in issuing the Order dated March 22, 2002 denying the admission of respondent's second
amended complaint.
The RTC applied the old Section 3, Rule 10 of the Rules of Court:
Section 3. Amendments by leave of court. – after the case is set for hearing, substantial
amendments may be made only upon leave of court. But such leave may be refused if it
appears to the court that the motion was made with intent to delay the action or that the
cause of action or defense is substantially altered. Orders of the court upon the matters
provided in this section shall be made upon motion filed in court, and after notice to the
adverse party, and an opportunity to be heard.
Instead of the provisions of the 1997 Rules of Civil Procedure, amending Section 3, Rule
10, to wit:
SECTION 3. Amendments by leave of court. Except as provided in the next preceding

section, substantial amendments may be made only upon leave of court. But such leave
may be refused if it appears to the court that the motion was made with intent to
delay. Orders of the court upon the matters provided in this section shall be made upon
motion filed in court, and after notice to the adverse party, and an opportunity to be
heard.
2. Rosario v. Carandang,
G.R. No. L-7076, 28 April 1955, 96 Phil 845
43
FACTS:
On October 16, 1952, plaintiffs Eriberto P. Rosario and Paz Untalan de Rosario filed
a complaint against defendant Filomeno Carangdang, alleging that plaintiffs-appellants
are the owners and possessors of a parcel of land in Labrador, Pangasinan; that they have
applied for the registration thereof, that the defendants filed an opposition; that on or
about October 3, 1952, defendants illegally entered into the premises, destroyed the nipa
plants thereon, and made dikes to convert the place into a fishpond; that in spite of
warnings and notices from plaintiffs, defendants continued to possess and occupy the
premises; and that as a result of defendants' entry into and possession of the land in
question, plaintiffs have suffered damages in the amount of P2,000.
The defendants moved for the dismissal of the complaint, claiming (1) that the
Court had no jurisdiction of the case because it is one of “forcible entry and detainer”
exclusively cognizable by the Justice of the Peace Court, and furthermore, because the
demand for damages does not exceed P2,000; and (2) that there is another pending
between the same parties and for the same cause, in which the title and ownership of the
parcel in question is involved and contested. Plaintiffs opposed the motion to dismiss,
alleging that the Court of First Instance acting as a registration court, cannot award
damages resulting from defendants' alleged illegal entry into and possession of the land
in question.
The lower Court found the motion to dismiss meritorious, and ordered the
dismissal of the complaint. Plaintiffs moved for the reconsideration of the order of
dismissal, and prayed as well for the admission of an amended complaint, wherein they
make specific allegation for the first time that the defendants are claiming of the land in
question in the two registration case previously mentioned. Defendants opposed the
mention for reconsideration and the admission of an amended complaint, upon the
ground that the amended complaint would convert plaintiffs' action from one of forcible
entry and detainer to one of recovery of ownership and possession. Again, defendants'
position was sustained by the Court below; and later, it denied a motion for the
reconsideration of the order of dismissal. Hence, this appeal by the plaintiffs to this Court.
ISSUE:
WON the amendment of the complaint by the plaintiff wherein they made specific
allegation for the first is valid.
HELD:
While it is true that the under the liberal provisions of our Rules of Court,
amendments to pleading are favored and liberally allowed in the furtherance of justice,
it is obvious that when it appears from the very face of the complaint that the Court has
no jurisdiction over the subject-matter of the case, an amendment of the complaint
cannot be allowed so to confer jurisdiction upon the Court.
Appellants' original complaint, as we have already determined, is one for forcible entry
and detainer, over which the Court below has no jurisdiction. Not having acquired
jurisdiction over the case by the filing of the original complaint, the lower court has
neither the power nor the jurisdiction to act on the motion for the admission of the
amended complaint, much less to allow such amendment, since it is elementary that the
court must first acquire jurisdiction over the case in order to act validly therein.
The case might be different had the amendments been made before an answer or a
motion to dismiss had been filed, since the original complaint was then amendable, and
the amendment could supersede the original pleading, as of right, without leave of court
being required, and without the Court taking cognizance at all of the original complaint.
44
3. Marcos-Araneta v. Court of Appeals,
G.R. No. 154096, 22 August 2008, 563 SCRA 41
Facts:
Ambassador Roberto Benedicto and his business associates (Benedicto Group) organized
Far east Managers and Investors, Inc. (FEMII) and Universal Equity Corp. (UEC) pursuant
to an agreement whereby Benedicto, as trustor, placed in his name and in the names of
his associates, trustees, the shares of stocks of FEMII and UEC with the obligation to hold
the shares in trust for the benefit of Irene to the extent of 65%.
Then, Irene’s husband, Gregorio Araneta III, demanded the reconveyance of the shares
but Benedicto refused.
Irene filed an action before the RTC of Batac, Ilocos Norte for the conveyance of shares
against Benedicto Group.
Francisca Benedicto and Roberto, father and daughter, filed a motion to dismiss on
ground that the venue was improperly laid and that RTC has no jurisdiction because it was
an intra-corporate dispute over which SEC has jurisdiction.
Francisca and Benedicto presented members of household staff at Mansion Mansion
attesting that Irene did not maintain residence in Batac as she only visited twice and did
not vote in Batac elections and that she was staying in Makati.
RTC dismissed the complaints stating that venue was improperly laid because Irene did
not reside in Batac, Ilocos Norte.
Then, Irene filed a motion to admit an amended complaint where the names of Rubio,
Orland and Jose Reslin appeared as additional parties. They all reside in Batac and were
Irene’s new trustees.
RTC admitted the amended complaint on ground that improper venue was cured because
of the inclusion of other plaintiffs who reside in Batac. Francisca and Julita, Roberto’s wife,
filed a petition for certiorari before the CA. CA granted petition and declared the amended
complaint as void.
Issue: 1. WON amended complaint should be admitted

2. WON RTC has no jurisdiction on ground of improper venue
3. WON Francisca and Julita waived improper venue
Held:
1.
Based on Rule 10, sec. 2, plaintiff may amend his complaint once as a matter of right,
without leave of court, before any responsive pleading is filed or served. A motion to
dismiss is not a responsive pleading for purposes of this rule. In other words, the trial
court’s duty to admit the amended complaint was purely ministerial. In fact, respondent
should not have filed a motion to admit her amended complaint.
 RTC did not err in admitting Irene’s amended complaint, Julita and Francisca not
having yet answered the original complaints when the amended complaint was
filed. At that precise moment, Irene, by force of said Sec. 2 of Rule 10, had, as a
matter of right, the option of amending her complaints. As observed by the RTC,
Irene’s motion to admit amended complaint was not even necessary.
45
 It may be argued that the original complaints had been dismissed through the June
29, 2000 RTC order. However, the finality of such dismissal order had not set in
when Irene filed the amended complaint on July 17, 2000, she having meanwhile
seasonably sought reconsideration thereof. Irene’s MR was only resolved on
August 25, 2000.
2.
Francisca and Julita claims that venue was improperly laid because the suit is a real action
involving real properties located outside the territorial jurisdiction of Batac RTC.
The court ruled that the amended complaint is an action in personam, it being a suit
against Francisca and the late Benedicto (now represented by Julita and Francisca), on the
basis of their alleged personal liability to Irene upon an alleged trust.
However, venue is improperly laid based on Rule 3, secs. 2 and 3, and Rule 4, sec, 2.
 The real party-in-interest plaintiff is Irene. As self-styled beneficiary of the disputed
trust, she stands to be benefited or entitled to the avails of the present suit. It is
undisputed too that petitioners Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin,
all from Ilocos Norte, were included as co-plaintiffs in the amended complaint as
Irene’s new designated trustees. As trustees, they can only serve as mere
representatives of Irene.
Sec. 2 of Rule 4 indicates quite clearly that when there is more than one plaintiff in a
personal action case, the residences of the principal parties should be the basis for
determining proper venue. The word ‘principal’ has been added in order to prevent the
plaintiff from choosing the residence of a minor plaintiff or defendant as the venue.
The RTC in Batac declared Irene as not a resident of Batac, Ilocos Norte. Withal, that court
was an improper venue for her conveyance action.
 Irene’s three co-plaintiffs are all residents of Batac, Ilocos Norte. But it ought to
be stressed in this regard that not one of the three can be considered as principal
party-plaintiffs as they were included only as trustees of Irene, the principal. As
trustees, they may be accorded, by virtue of Sec. 3 of Rule 3, the right to prosecute
a suit, but only on behalf of the beneficiary who must be included in the title of the
case and shall be deemed to be the real party-in-interest. Thus, the residences of
Irene’s co-plaintiffs cannot be made the basis in determining the venue of the
subject suit.
 Irene was a resident during the period material of Forbes Park, Makati City. She
was not a resident of Brgy. Lacub, Batac, Ilocos Norte. The fact that Irene presented
a certificate of residence in Batac is immaterial. One can easily secure a basic
residence certificate practically anytime in any Bureau of Internal Revenue or
treasurer’s office and dictate whatever relevant data one desires entered.
3
There is no waiver of improper venue.
The ground of improperly laid venue must be raised seasonably, else it is deemed waived.
Where the defendant failed to either file a motion to dismiss on the ground of improper
venue or include the same as an affirmative defense, he is deemed to have waived his
right to object to improper venue.
 In this case, Benedicto and Francisca raised at the earliest time possible, meaning
“within the time for but before filing the answer to the complaint” the matter of
improper venue. They would thereafter reiterate and pursue their objection on
46
venue, first, in their answer to the amended complaints and then in their petition
for certiorari before the CA.
4. Do-All Metals Industries, Inc. v. Security Bank et al,

Non-payment of additional filing fees due on additional claims do not divest the Court of the
jurisdiction it already had over the case. However, after-judgment lien for said unpaid filing fees
only applies to cases (1) where the filing fees were incorrectly assessed or paid or (2) where the
court has discretion to fix the amount of the award. None of these are present in this case and
award was in fact already specified. Also, ONLY the Supreme Court can grant exemptions to the
payment of the fees due the courts. Parties or even the trial court cannot waive payment of fees.
Facts: Spouses Lim took a loan from Security Bank. Unable to pay on time, the Lims assigned to
the Bank their real properties including a building and lot. The Bank then offered to lease said
property to the Lims through Do-All Metals Industries, Inc. (DMI) primarily for business and partly
as Lim's residence. A 2-year lease contract was executed on the condition that the Bank has the
right to pre-terminate the lease and should the Bank decide to sell the property, DMI shall have
the right of first refusal.
Months before the lease was up, the Bank notified DMI that it was pre-terminating it. While
negotiations were ongoing, the Lims claim that they continued to use the property but the Bank
posted security guards at the said place and the guards, on instructions of the Bank, padlocked
the entrances and barred the Lims and DMI’s employees from entering, even pointing gun at one
employee. Because of this, DMI was unable to close several projects with potential clients and
Lims were unable to retrieve personal items left at the property. DMI and Lims (DMI) then filed
a complaint with RTC Pasig for damages with prayer for the issuance of a TRO or preliminary
injunction against the Bank.
RTC directed the Bank to allow DMI to enter the building and get their machineries, equipment
and personal things but DMI was unable to find their properties. In a supplemental complaint,
DMI alleged that the Bank surreptitiously took such properties, resulting in additional actual
damages of over P27M. RTC ruled in favor of DMI, ordering the Bank to pay the P27M actual
damages, + moral damages, exemplary damages, and attorney’s fees.
The Bank moved for reconsideration of the decision, questioning among other things the RTC’s
authority to grant damages considering DMI’s failure to pay the filing fees on their
supplemental complaint. The RTC denied the motion. On appeal, CA ruled in favor of the Bank
and denied the subsequent MR, hence this petition.
Issues:
1. W/N the RTC acquired JURISDICTION on the supplemental complaint against the Bank
considering DMI and Lims' failure to pay the filing fees on the amounts of damages they claim
in it; YES.
2. Whether or not the Bank is liable for the intimidation and harassment committed against DMI.
YES.
3. W/N the Bank is LIABLE to DMI for the machineries, equipment, and other properties they
allegedly lost after they were barred from the property. NO.
Held:
(1) YES. The RTC acquired jurisdiction over their action from the moment they filed the original
complaint accompanied by the payment of the filing fees due on the same. Their non-payment
47
of the additional filing fees due on their additional claims did not divest the RTC of the
jurisdiction it already had over the case.
(2) YES. The Bank belittles the testimonies of the DMI’s witnesses for having been presented ex
parte but the ex parte hearing, having been properly authorized, cannot be assailed as less
credible. It was the Bank’s fault that it was unable to attend the hearing. It cannot profit from its
lack of diligence. Employees of DMI testified regarding the Bank guards’ unmitigated use of their
superior strength and firepower and such were never refuted. Police testified finding Lim locked
in the building and being told by a Bank representative that they had instructions to prevent
anyone from taking any property out of the premises. While the lease may have already lapsed,
the Bank had no business harassing and intimidating the Lims and DMI employees.
(3) NO. DMI's stand is that the RTC correctly admitted the supplemental complaint even if they
had not paid the filing fees due on it since such fees constituted a lien anyway on the judgment
award. But this after-judgment lien, which implies that payment depends on a successful
execution of the judgment, applies to cases (1) where the filing fees were incorrectly assessed
or paid or (2) where the court has discretion to fix the amount of the award. NONE of these
circumstances are present in this case.
Here, the supplemental complaint specified from the beginning the actual damages that DMI
sought against the Bank. Still DMI paid no filing fees on the same and gave no reason for their
omission nor offered to pay the same, merely saying that they did not yet pay the fees because
the RTC had not assessed them for it. But a supplemental complaint is like any complaint and
the rule is that the filing fees due on a complaint need to be paid upon its filing. The rules DO
NOT require the court to make special assessments in cases of supplemental complaints.
Although the Bank brought up the question of their failure to pay additional filing fees in its
motion for reconsideration, DMI made no effort to make at least a late payment before decision.
Consequently, the trial court should have treated their Supplemental Complaint as not filed.
DMI argues that the Bank raised the issue of non-payment of additional filing fees only after the
RTC had rendered its decision, thus waiving its objection. But it is not for a party to the case or
even for the trial court to waive the payment of the additional filing fees due on the
supplemental complaint. Only the Supreme Court can grant exemptions to the payment of the
fees due the courts and these exemptions are embodied in its rules.
Court reinstated the RTC decision and ordered the bank to pay damages, but deleted the claim
for the P27M actual damages in the supplemental complaint.
Rule 12 - Bill of Particulars
1. Bantillo v. IAC,
G.R. No. 75311, 18 October 1988, 166 SCRA 508
Doctrine: Knowledge of the identity or identities of petitioner’s alleged co-heirs and co-
plaintiffs and of the basis of petitioner’s claimed authority to represent the latter, would
obviously be useful to respondent in preparation of a responsive pleading.
Summary: Bantillo claims a lot by virtue of her being an heir of the original owners. Sumcad
claims the same lot under an Original Cerificate of Title. A complaint for reconveyance was filed
by Bantillo. Sumcad filed a “Motion for Bill of Particulars” asking to specify the legal capacity
of Bantillo as an heir of the original owners. Bantillo stated that such matters are not proper
subjects of a motion for bill of particulars. The court held that it was a proper subject. The court
also stated that it should be filed within from notice. However, in the interest of substantial and
expeditious justice, the court held that Amended complaint should not have been dismissed and
ordered stricken from the record.
48
FACTS: A complaint for Reconveyance, dated 19 April 1982 was filed by Bantillo against
respondent Sumcad with the Court of First Instance of North Cotabato. Rosita Zafra Bantillo was
alleged to be ,the “Surviving heir” of the deceased spouses Candido Zafra and Maria Pimentel
Zafra. She has been in the possession of Lot No. 63 lot under the claim of ownership since 1950
or ever since the death of the spouses. She also represents the Zafra spouses and the heirs of the
spouses as a surviving heir and that she has been in open and continuos possession of the lot.
Elsa Maniquis-Sumcad, by virtue of an Original Certicate of Title issued in her name, claims
ownership. She sought to remove Bantillo from possession.
Respondent Sumcad filed a "Motion for Bill of Particulars 3 in response to the complaint. In that
motion, respondent Sumcad requested that petitioner Bantillo be directed by the court: (a) 'to
specify what kind of surviving heir she is ...;" and (b) "to specify by what right or authority she
represents the so-called 'heirs of the spouses Candido Zafra and Maria Pimentel Zafra ... and [to
show] the papers under which she is authorized to represent them in court, and also (to specify
and Identify these other heirs by name and the nature of their heirship. On 16 June 1982,
petitioner Bantillo questioned the propriety of respondent Sumcad's motion. Petitioner Bantillo
alleged that the matters mentioned in the "Motion for Bill of Particulars" were not essential to
enable respondent Sumcad to file an answer to the complaint, that such matters are not proper
subjects of a motion for bill of particulars. The appellate court denied the motion. Subsequently,
counsel of the defendants filed a motion to dismiss.
Not to be outdone, plaintiff through her counsel filed a Rejoinder to the Opposition to the Motion
to Dismiss, arguing that the late compliance to [sic] the lower court's July 5, 1982 Order was
excusable under Section 1, Rule 10 of the Rules of Court which allows amendment of pleadings
without regard for mere technicalities.
The trial and appellate courts both held that dismissal of petitioner Bantillo's complaint in this
case was warranted as she had been "guilty of an unreasonable delay in complying with the July
5, 1982 Order of the (trial] court.' The appellate court cited in this connection Section l(c) of
Rule 12 of the Revised Rules of Court under which petitioner Bantillo had ten (10) days from
notice of the trial court's Order of 5 July 1982—or until 15 July 1982—within which to comply
with the directives contained in that order. In addition, both courts held that the amended
complaint should have been filed, at the very least, within a "seasonable" time and in a manner
consistent with "[petitioner's] agreement as embodied in the Order of the [trial] court dated July
5, 1982." Finally, it was noted that the alleged vacancy at Branch 18 of the Regional Trial Court
(which succeeded Branch 2 of the Court of First Instance) of North Cotabato at Midsayap lasted
only from 18 January 1983 until 29 March 1983, or for a period of just a little over two (2)
months. This latter circumstance further convinced the two (2) courts that petitioner Bantillos
amended complaint, which was submitted to the trial court on 22 June 1983, had not been filed
seasonably.
ISSUE: Whether the period in Section 1, Rule 12 should be applied when the Court Order states
the submission of an amended complaint and not a bill of particulars.
HELD: YES. The 10 day period should be applied. The trial court did not in its order dated July
5, 1982 expressly direct Bantillo to submit a bill of particulars. As pointed out by petitioner in
her Memorandum, the trial court did not in its Order of 5 July 1982 expressly direct petitioner
Bantillo to submit a bill of particulars. What was in fact required of petitioner was an amended
complaint, which would incorporate the "amendments" mentioned in the first paragraph of the
Order. This singular circumstance, however, does not preclude application in this case of Rule
12, Section l(c) of which provides:
xxx xxx xxx
(c) Refusal.—If an order of the court to make a pleading more definite and certain or for a bill of
particulars is not obeyed within ten (10) days after notice of the order or within such other time
as the court may fix, the court may order the striking out of the pleading to which the motion was
directed or make such other order as it deems just. It may, upon motion, set aside the order, or
modify it in the interest of justice. (Emphasis supplied)
Under the above provision, the court may upon motion in appropriate cases direct the adverse
party (a) to file a bill of particulars, or (b) to make the pleading referred to in the motion more
definite and certain, either by amending or supplementing the same. The trial court's disputed
Order of 5 July 1982 falls squarely within the second category. As the Order itself did not
specify the period for compliance with its terms, petitioner Bantillo was bound to comply
therewith within ten (10) days from notice thereof, i.e., on or before 15 July 1982.
49
2. Republic v. SB and Marcos,
FACTS: The administration of President Corazon C. Aquino successively sued former President
Ferdinand E. Marcos and his wife and their alleged cronies or dummies before the anti-graft court
to recover the alleged ill-gotten wealth that they amassed during the former president's 20-year
rule.
On July 21, 1987, the Presidential Commission on Good Government (PCGG), through the Office
of the Solicitor General, filed a Complaint alleging that Cruz and the Marcoses stole public assets
and invested them in several institutions here and abroad.
On September 18, 1987, Cruz filed an Omnibus Motion to Dismiss, strike out averments in the
complaint, and for a bill of particulars.
On April 18, 1988, the court ordered that alias summonses be served on the Marcoses who were
then in exile in Hawaii.
On November 10, 1988, the alias summonses were served in Honolulu, Hawaii. The Marcoses,
however, failed to file an answer and were declared in default. Marcoses upheld the validity of
their default status for failure to file an answer within 60 days from November 10, 1988 when the
alias summonses were validly served in their house address in Hawaii.
On September 29, 1989, former President Marcos died in Hawaii. He was substituted by his
estate, represented by Mrs. Marcos and their three children, upon the motion of the PCGG.
On July 13, 1992, Mrs. Marcos filed a Motion to Set Aside Order of Default.
The Court affirmed the resolution of the anti-graft court, ruling that Mrs. Marcos had a meritorious
defense, and that failure of a party to properly respond to various complaints brought about by
the occurrence of circumstances which ordinary prudence could not have guarded against, such
as being barred from returning to the Philippines, numerous civil and criminal suits in the United
States, deteriorating health of her husband, and the complexities of her legal battles, is considered
as due to fraud, accident and excusable negligence.
On September 6, 1995, Mrs. Marcos filed her answer, arguing that the former President Marcos'
wealth is not ill-gotten and that the civil complaints and proceedings are void for denying them
due process. She also questioned the legality of the PCGG's acts and asked for P20 billion moral
and exemplary damages and P10 million attorney's fees.
On January 11, 1999, the court directed former President Marcos' children to appear before it or
it will proceed with pre-trial and subsequent proceedings.
On March 16, 1999, Marcos Jr filed a Motion for Leave to File a Responsive Pleading as executor
of his late father's estate.
Instead of filing an answer, respondent filed on July 16, 1999, a Motion For Bill of
Particulars, praying for clearer statements of the allegations which he called "mere conclusions
of law, too vague and general to enable defendants to intelligently answer."
The PCGG opposed the motion, arguing that the requested particulars were evidentiary matters;
that the motion was dilatory; and that it contravened the May 28, 1999 Resolution granting
respondent's Motion for Leave to File a Responsive Pleading.
The anti-graft court, however, upheld respondent, explaining that the allegations against former
President Marcos were vague, general, and were mere conclusions of law.
ISSUE: W/N The motion for bill of particulars is patently dilatory and bereft of any basis.
HELD: The grant of motion to file a responsive pleading and bill of particulars has the effect of
lifting the default order.
Default judgments are frowned upon, and the Supreme Court has been advising the courts below
to be liberal in setting aside default orders to give both parties every chance to present their case
50
fairly without resort to technicality; Judicial experience shows that resort to motions for bills of
particulars is sometimes intended for delay or, even if not intended, actually result in delay since
the reglementary period for filing a responsive pleading is suspend and the subsequent are
likewise set back in the meantime.
Bill of particulars, is not a motion to dismiss, as the remedy for perceived ambiguity or vagueness
of a complaint for the recoveryof ill-gotten wealth.
51

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Rule 1 - 2

1. Swagman v. Court of Appeals,

2. Danfoss, Inc. v. Continental Cement Corp.,

3. Ceroferr v. Court of Appeals,

ISSUE: Whether the petitioner complaint states a sufficient cause of action.

6. BPI Family v. Vda. De Coscolluela,

7. Sps. Plaza v. Lustiva,

ISSUE: Whether or not CA erred in dismissing the petition.

Remedial Law - Forum Shopping

ISSUE: WON the two complaints involve single cause of action.

Rule 3 - Parties to Civil Actions

Bank can’t also intervene to a case that he has no knowledge of.

FACTS: Sometime in 2001, officers of Clark Development Corporation, a government-owned and

ISSUES: WON the petitioner is the real-party- interest.

6. Sps. Algura v. LGU,

ISSUE: WON the spouses should be disqualified as pauper-litigants.

7. Van Zuiden Bros. v. GTVL Manufacturing,

8. Sui Man Hui Chan v. Court of Appeals,

The CA and RTC ruled in favor of private respondents.

Rule 4 – Venue of Action

1. Heirs of Bautista v. Lindo,

We sustain the lower courts’ holdings.

ISSUE: Whether or not the venue was improperly laid.

5. Marcos-Araneta v. Court of Appeals,

Fourth Issue: Private Respondents did not Waive Improper Venue

Venue is Improperly Laid

Principal Plaintiff not a Resident in Venue of Action

6. Hi-Yield Realty, Inc. v. Court of Appeals,

Three critical dimensions:

7. Spouses Lantin v. Judge Lantion,

Petitioners Renato and Angelina Lantin

ISSUE: W/N R counterclaim is permissive in nature.

To determine whether a counterclaim is compulsory or permissive, we have

Rule 7 - Parts of a Pleading

HELD: A pleading is sufficient in form when it contains the following:

Now, is the petition insufficient in substance?

PETITION IS HEREBY GRANTED

CA erred in dismissing the petition BUT in light of recent developments, remand is no

Rule 8 - Manner of Making Allegations in Pleadings

1. Filipinas Textile v. Court of Appeals,

Issue: WON Villanueva should be held to the comprehensive surety agreement

2. Casent Realty v. Philbanking,

3. Warner Barnes v. Reyes,

5. Galofa v. Nee Bon Sing,

The defendant, however, had specifically denied the plaintiff's allegations in

A denial in the form of a negative pregnant is an ambiguous pleading, since it cannot be

Rule 9 - Effect of Failure to Plead

1. Monzon v. Sps. Relova,

*Petition for Relief from Judgment is set aside.

3. Gajudo v. Traders Royal Bank,

Rule 10– Amended and Supplemental Pleadings

1. PPA v. Gothong and Aboitiz,

WG&A asked for reconsideration. PPA denied.

CA- granted WG&A‘s petition, setting aside the decision of RTC

SECTION 3. Amendments by leave of court. Except as provided in the next preceding

Issue: 1. WON amended complaint should be admitted

4. Do-All Metals Industries, Inc. v. Security Bank et al,

Rule 12 - Bill of Particulars

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