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xxxxxBOSTON EQUITY VS CAxxxxxx the pending case filed before the RTC-Makati and the

consequent violation of the rule on litis pendentia.


xxxxxGSIS VS VILLAVIZAxxxxx
Chevron, ACCRAIN and ACCRALAW then
SPOUSES MARASIGAN VS CHEVRON filed their Answer with Compulsory Counterclaim
alleging, among others, that the foreclosure sale was
FACTS: conducted in accordance with law and that the
complaint in Civil Case No. 2448-G violated the rule
Records disclose Spouses Marasigan were on forum shopping and litis pendentia.
operators of a gasoline station in Montalban, Rizal,
while Chevron is a corporation engaged in the On January 4, 2005, the RTC-Gumaca
business of refining, manufacturing, storing, rendered a decision in favor of Spouses Marasigan
distributing, and marketing of fuels, lubricants and and against Chevron, ACCRAIN and ACCRALAW
other petroleum products. Spouses Marasigan and
Chevron entered into a dealership and distributorship Chevron, ACCRAIN and ACCRALAW
agreement wherein the former can purchase appealed to the CA and it ruled in their favor. The CA
petroleum products from the latter on credit. To ruled that Spouses Marasigan committed forum
complete said agreement, Spouses Marasigan shopping and that all the elements of litis
executed deeds of real estate mortgage over their pendentia are present. Accordingly, Civil Case No.
properties, as collateral, in favor of 2448-G, filed by Spouses Marasigan in the RTC-
Chevron. Gumaca was dismissible on the grounds of forum
shopping and litis pendentia. The CA ruled as follows:
Records further show that by September 30,
1993, Spouses Marasigan exceeded their credit line ISSUE:
and owed Chevron the amount of ₱12,075,261.02. Whether or not litis pendentia exist.
Spouses Marasigan failed to pay the obligation
despite oral and written demands from SC RULING:
Chevron. Chevron, through ACCRALAW, was able to Yes, Litis pendentia exists.
foreclose all the real estate mortgages on Spouses
Marasigan’s subject properties. Chevron, however, The essence of forum shopping is the filing
was only able to recover the total amount of by a party against whom an adverse judgment has
₱4,925,000.00 from the public auction sales of the been rendered in one forum, seeking another and
mortgaged properties including the sale of the possibly favorable opinion in another suit other than
167.1597 hectare coconut farm property located in by appeal or special civil action for certiorari. It is the
Mulanay, Quezon, which was sold for ₱130,000.00 to act of filing of multiple suits involving the same parties
the only bidder, ACCRA for the same cause of action, either simultaneously or
Investments,Corp. (ACCRAIN). successively for the purpose of obtaining a favorable
judgment. Forum shopping exists where the elements
Chevron filed a complaint against Spouses of litis pendentia are present or where a final
Marasigan before the RTC, Branch judgment in one case will amount to res judicata in
136, Makati City to recover the deficiency in the the action under consideration.[5]
amount of ₱7,667,188.10. Chevron basically alleged
therein that Spouses Marasigan’s outstanding Litis pendentia is a Latin term, which literally
obligation as of October 15, 1995 was ₱7,667,188.10 means "a pending suit" and is variously referred to in
and that said obligation remained unpaid. some decisions as lis pendens and auter action
pendant. As a ground for the dismissal of a civil
In their Answer, Spouses Marasigan mainly action, it refers to the situation where two actions are
alleged that they were greatly prejudiced because the pending between the same parties for the same
foreclosure sales on the subject mortgaged properties cause of action, so that one of them becomes
were illegal and that the bid price of the Mulanay unnecessary and vexatious. It is based on the policy
property in particular was shockingly low. against multiplicity of suits.[6]

Spouses Marasigan filed a complaint against Litis pendentia requires the concurrence of
Chevron, ACCRAIN and ACCRALAW and Sheriff the following requisites: (1) identity of parties, or at
Romeo Villafranca before the RTC-Gumaca. Spouses least such parties as those representing the same
Marasigan principally alleged therein that the bid price interests in both actions; (2) identity of rights asserted
was grossly inadequate and shockingly low which and reliefs prayed for, the reliefs being founded on the
rendered the foreclosure sale fatally defective and the same facts; and (3) identity with respect to the two
foreclosure proceedings invalid and illegal. Chevron, preceding particulars in the two cases, such that any
ACCRAIN and ACCRALAW filed a motion to dismiss judgment that may be rendered in the pending case,
citing as ground Spouses Marasigan’s failure to regardless of which party is successful, would amount
disclose in their certification against forum shopping to res judicata in the other case.
The test to determine identity of causes of
What is pivotal in determining whether forum action is to ascertain whether the same
shopping exists or not is the vexation caused to the evidence necessary to sustain the second
courts and parties-litigants by a party who asks cause of action is sufficient to authorize a
different courts and/or administrative agencies to rule recovery in the first, even if the forms or the
on the same or related cases and/or grant the same nature of the two (2) actions are different
or substantially the same reliefs, in the process from each other. If the same facts or
creating the possibility of conflicting decisions being evidence would sustain both, the two (2)
rendered by the different courts and/or administrative actions are considered the same within the
agencies upon the same issues.[7] rule that the judgment in the former is a bar
to the subsequent action; otherwise, it is not.
In the case at bench, all the requisites of litis This method has been considered the most
pendentia are present. The first element, identity of accurate test as to whether a former
parties, or at least representing the same interest in judgment is a bar in subsequent proceedings
both actions, exists. The Court agrees with the ruling between the same parties. It has even been
of the CA that Chevron and Spouses Marasigan are designated as infallible.
the same parties in the RTC-Makati Case and the
RTC-Gumaca Case. Unquestionably, the plaintiff and As to subject matter, the rights asserted by both
the defendants in the RTC-Makati Case are Chevron parties are based on the same credit lines and real
and Spouses Marasigan as well as Mareal Co., Inc., estate mortgages. In the Makati RTC case, appellant
respectively. On the other hand, the plaintiffs in the Chevron has to prove that deliveries of Chevron
RTC-Gumaca Case are the Spouses Marasigan and products were made pursuant to the credit lines and
the defendants therein are Chevron, ACCRAIN and the real estate mortgages securing the same; and that
ACCRALAW. The absence of ACCRAIN and the subsequent foreclosure are valid but there is still a
ACCRALAW as party plaintiffs in the RTC-Makati deficiency after deducting the proceeds of the
case and their additional presence as party foreclosure sale from appellees’ obligation. In the
defendants in the RTC-Gumaca case would not instant case, appellees seek to evade or diminish
unfavorably affect the respondents because the rule their liability under the credit lines and real estate
does not require absolute identity of parties. A mortgages by either having the foreclosure sale of the
substantial identity of parties is enough to qualify Mulanay property annulled or by collecting the alleged
under the first requisite. What is important here is that discrepancy between the market value of the property
the principal parties – Chevron and Spouses and the bid price offered by ACCRAIN. Thus,
Marasigan – are the same in both cases. although the instant case pertains only to the Mulanay
property, the resolution of both cases would require a
In this case, the first requisite, identity of determination of the validity and enforceability of the
parties or at least such as represent the deliveries made by Chevron of the real estate
same interest in both actions, is present. The mortgages and foreclosure proceedings. In both
Court of Appeals correctly ruled that the fact cases, the same evidence would be presented and
that there is no absolute identity of parties in the same subject matter would be litigated. The
both cases will not preclude the application difference in the form of actions is of no moment as
of the rule of litis pendentia, since only the test of identity of causes of action lies not in the
substantial and not absolute identity of form of an action but on whether the same evidence
parties is required for litis pendentia to lie. would support and establish the former and the
present causes of action.
The second element, identity of rights
asserted and reliefs prayed for, the reliefs being Finally, the presence of the third element, that the
founded on the same facts, likewise subsists here. It identity of the two cases should be such that the
cannot be denied that the complaint filed in the RTC- judgment that may be rendered in one would,
Makati was for a Sum of Money while that filed in the regardless of which party is successful, amount to res
RTC-Gumaca was for Declaration of Nullity and/or judicata in the other, cannot be disputed either.
Annulment of Foreclosure with Damages. Although
both cases differ in form or nature, the same facts Spouses Marasigan do not deny the fact that the
would be alleged and the same evidence would be affirmative defense that they raised in the RTC-Makati
presented considering that the resolution of both case was the illegality of the foreclosure sale of the
cases would be based on the validity and Mulanay property.[10] They raised the same issue in
enforceability of the same credit lines, real estate the RTC-Gumaca case.[11] As correctly ruled by the
mortgages and foreclosure proceedings. Indeed, the CA, the judgment in the RTC-Makati with regard to
true test in determining the identity of causes of action the validity of the foreclosure sale of the Mulanay
lies not in the form or nature of the actions but rather property will constitute res judicata in the case, and
in the evidence that would be presented. vice versa. The Court also agrees with its ruling that
the RTC-Makati case should be the priority case
because it was filed earlier and, therefore, the
appropriate vehicle for litigating all issues in this We find that litis pendentia as a ground for the
case. dismissal of a civil action does not apply in the
present case.
The Court having ruled that the CA properly
dismissed the petitioners’ complaint due to the Litis pendentia refers to the situation where another
presence of litis pendentia and the violation of the action is pending between the same parties for the
rule on forum shopping, there is no need to rule same cause of action so that one of these actions is
further on the other issues raised by the petitioners unnecessary and vexatious.11 The dismissal of a civil
and the respondents in this case. action on the ground of litis pendentiais based on the
policy that a party is not allowed to vex another more
than once regarding the same subject matter and for
the same cause of action in order that possible
QUITO V STOP AND SAVE CORPORATION conflicting judgments may be avoided for the sake of
the stability of the rights and statuses of persons.12
FACTS:
To constitute litis pendentia, the following requisites
On March 11, 2005, Dominga Quito filed before the
must be present: (1) identity of the parties in the two
MCTC a complaint for unlawful detainer6 against Stop actions; (2) substantial identity in the causes of action
& Save and its sub-lessees/co-respondents Roberto and in the reliefs sought by the parties; (3) and the
Buan, Henry Co, Angelina Lumotan, Rodel Pineda identity between the two actions should be such that
and Rose Calma. She alleged that Stop & Save failed any judgment that may be rendered in one case,
to pay the agreed monthly rentals since June 2003 regardless of which party is successful, would amount
and, despite repeated verbal and written demands, to res judicata in the other.13
refused to pay and vacate the leased building, in
violation of their April 4, 2002 Lease Agreement. In its Indisputably, the requisite identity of parties is met in
the present case. The disputed point is whether there
answer to the complaint, Stop & Save denied that it
is substantial identity in the causes of action and in
committed a violation of the lease contract, but merely the reliefs sought in the cases for annulment of lease
suspended its payment of rent because of Dominga’s contract filed by Stop and Save and for unlawful
failure to comply with their subsequent agreement detainer filed by Dominga.
dated November 15, 2003;
We find that no substantial identity exists.
The MCTC ruled in favor of plaintiff.
"The test to determine whether the causes of action
On appeal, the RTC set aside the MCTC’s decision are identical is to ascertain whether the same
and ordered the dismissal of Dominga’s unlawful evidence will sustain both actions, or whether there is
detainer complaint due to the pending case for an identity in the facts essential to the maintenance of
annulment of lease contract filed by Stop & Save with the two actions. If the same facts or evidence would
the same RTC, docketed as Civil Case No. 695. It sustain both, the two actions are considered the
appeared that Stop & Save had earlier filed, on same, and a judgment in the first case is a bar to the
subsequent action."14
January 13, 2005, a case to annul its April 4, 2002
Lease Agreement with Dominga allegedly due to her
In the present case, while there is an identity in the
misrepresentations on the leased building’s condition
facts between the two actions, involving as they do
and ownership. the same lease contract, the issues and the relief
prayed for are different so that the causes of action
Dominga filed a petition for review with the CA. In its remain entirely distinct from each other.
June 30, 2008 decision, the CA dismissed Dominga’s
petition for review for lack of merit, which, in effect, The issue of physical possession in the action for
affirmed the RTC’s decision dismissing Dominga’s unlawful detainer cannot be identical with the issues
unlawful detainer complaint. of ownership and validity of contract in the action for
annulment. From these essential differences, the lack
ISSUE: of required identity in the causes of action for litis
pendentia to exist cannot be denied.
Whether or not the CA correctly dismissed the subject
unlawful detainer case on the ground of litis Since the causes of action in the subject case for
pendentia. unlawful detainer and annulment of lease contract are
entirely different, a judgment in one case would not
RULING: amount to res judicata in the other. "[F]or res
judicatato bar the institution of a subsequent action[,] Annulment of Contract and Checks with
the following requisites must concur: (1) the former Prayer for Preliminary Injunction and
judgment must be final; (2) it must have been Temporary Restraining Order against
rendered by a court having jurisdiction of the subject Salvador; his counsel, Atty. Nepthalie
matter and the parties; (3) it must be a judgment on Segarra; Almar Danguilan; and Cris
the merits; and (4) there must be[,] between the first Marcelino, before the Regional Trial Court,
and second actions[,] (a) identity of parties; (b) Branch 80, Morong, Rizal (RTC-Morong). 
identity of subject matter; and (c) identity of cause of DENIED BY RTC ANTIPOLO ON JULY 31,
action. 2000
 A pre-trial conference was scheduled on
G.R. No. 173331 December 11, 2013 May 2, 2001 but she and her counsel failed
to appear despite due notice. Resultantly,
upon motion, Salvador was allowed by the
FLORPINA BENAVIDEZ, Petitioner, trial court to present evidence ex parte.
vs.  On June 1, 2001, RTC-Antipolo decided the
NESTOR SALVADOR, Respondent.
subject case for Salvador. It found that
indeed Benavidez obtained a loan from
Facts: Salvador in the amount of P1,500,000.00. It
also noted that up to the time of the rendition
 Sometime in February 1998, petitioner of the judgment, she had failed to settle her
Florpina Benavidez (Benavidez) approached obligation despite having received oral and
and asked respondent Nestor written demands from Salvador. Also, the
Salvador (Salvador) for a loan that she trial court pointed out that the evidence had
would use to repurchase her property in shown that as of January 11, 2000,
Tanay, Rizal which was foreclosed by the Benavidez’s obligation had already reached
Farmers Savings and Loan Bank, the total amount of P4,810,703.21.4 
Inc. (Farmers Savings). MOTION FOR RECONSIDERTION WAS
 After inspecting the said property, Salvador FILED BY BENAVIDEZ BUT THIS WAS
agreed to lend the money subject to certain DENIED FOR LACK OF MERIT
conditions.  Frustrated, Benavidez appealed the June 1,
 To secure the loan, Benavidez was required 2001 Decision and the August 10, 2001
to execute a real estate mortgage, a Order of RTC-Antipolo to the CA. She
promissory note and a deed of sale. She argued, in chief, that early on, the trial court
was also required to submit a special power should have dismissed the complaint for
of attorney (SPA) executed and signed by collection of sum of money filed by Salvador
Benavidez’s daughter, Florence B. on grounds of litis pendentia and erroneous
Baning (Baning), whom she named as the certification against forum shopping. She
vendee in the deed of absolute sale of the claimed that prior to the filing of the said
repurchased property. complaint against her, she had already filed
a complaint for the annulment of the
 Pursuant to the agreement, Salvador issued
promissory note evidencing her obligation
a manager’s check in favor of Benavidez in
against Salvador. According to her, there
the amount of P1,000,000.00 and released
was substantial identity in the causes of
P500,000.00 in cash. For the loan obtained,
action and any result of her complaint for
Benavidez executed a promissory note,
annulment would necessarily affect the
dated March 11, 1998.
complaint for collection of sum of money filed
 Benavidez, however, failed to deliver the
against her. She added that Salvador never
required SPA. defaulted in her obligation
informed RTC-Antipolo about the pending
under the promissory note and all postdated
case before RTC-Morong, rendering his
checks which she had issued to pay for the
certification on forum shopping
interests were dishonored.
erroneous.7Benavidez also argued that RTC-
 This prompted Salvador to send a demand Antipolo erred in refusing to re-open the
letter.Unfortunately, the demand fell on deaf case for pre-trial conference and disallowing
ears which constrained Salvador to file a
her to present evidence. She added that the
complaint for sum of money with absence of her counsel on the scheduled
damages with prayer for issuance of
pre-trial conference caused her substantial
preliminary attachment. prejudice.  THE CA WAS NOT MOVED
 On May 4, 2000, Benavidez filed a motion to AND AFFIRMED IN TOTO THE DECISION
dismiss on the ground of litis pendentia. She OF RTC-ANTIPOLO.12
averred that prior to the filing of the case  Feeling aggrieved by the affirmance,
before the RTC-Antipolo, she had filed Benavidez filed a motion for reconsideration
a Complaint for Collection for Sum of Money, on the ground that the same was contrary to
law and jurisprudence; that litis In the present controversy, the Court is of the view
pendentia existed which resultantly made his that litis pendentia exists. All the elements are
certification on non-forum shopping present: first,both Benavidez and Salvador are parties
untruthful; and, that her absence during the in both cases; second, both complaints are concerned
pre-trial was justified. with the same promissory note; and third, the
 On June 08, 2006, the CA issued judgment in either case would be determinative of the
the Amended Decision, holding that the other.
motion was partly meritorious. Accordingly, it
modified its earlier decision by deleting the With the foregoing, which case then should be
award of exemplary damages and attorney’s dismissed? At first glance, it would seem that Civil
fees because the award thereof was not Case No. 00-5660 or the complaint filed with RTC-
supported by any factual, legal and equitable Antipolo should have been dismissed applying the
justification. "priority-in-time rule." This rule, however, is not
 Still unsatisfied, Benavidez comes before the ironclad. The rule is not applied if the first case was
Court via a petition for review under Rule 45 filed merely to pre-empt the later action or to
of the Rules of Court, raising the following anticipate its filing and lay the basis for its dismissal.
issues:14 A crucial consideration is the good faith of the parties.
In recent rulings, the more appropriate case is
Issue: preferred and survives. In Spouses Abines v.
BPI,23 it was written:
Whether or not the present case should have
been dismissed on the ground of litis pendentia. There is no hard and fast rule in determining
which of the actions should be abated on the
ground of litis pendentia, but through time, the
Ruling:
Supreme Court has endeavored to lay down certain
criteria to guide lower courts faced with this legal
In litis pendentia, there is no dilemma. As a rule, preference is given to the first
hard and fast rule in action filed to be retained. This is in accordance
determining which of the two with the maxim Qui prior est tempore, potior est
actions should be abated jure. There are, however, limitations to this rule.
Hence, the first action may be abated if it was filed
Litis pendentia is a Latin term, which literally means "a merely to pre-empt the later action or to anticipate its
pending suit" and is variously referred to in some filing and lay the basis for its dismissal. Thus,
decisions as lis pendens and auter action pendant. As the bona fides or good faith of the parties is a crucial
a ground for the dismissal of a civil action, it refers to element. A later case shall not be abated if not
the situation where two actions are pending between brought to harass or vex; and the first case can be
the same parties for the same cause of action, so that abated if it is merely an anticipatory action or, more
one of them becomes unnecessary and vexatious. It appropriately, an anticipatory defense against an
is based on the policy against multiplicity of suits.19 expected suit – a clever move to steal the march from
the aggrieved party.
Litis pendentia exists when the following
REQUISITES are present: identity of the parties in the Another exception to the priority in time rule is
two actions; substantial identity in the causes of the criterion of the more appropriate action. Thus,
action and in the reliefs sought by the parties; and the an action, although filed later, shall not be dismissed if
identity between the two actions should be such that it is the more appropriate vehicle for litigating the
any judgment that may be rendered in one case, issues between the parties. [Underscoring supplied]
regardless of which party is successful, would amount
to res judicata in the other.20 In the relatively recent case of Dotmatrix Trading v.
Legaspi,24 the Court had the occasion to extensively
On the other hand, forum shopping exists when, as a discuss the various rules and consideration in
result of an adverse decision in one forum, or in determining which case to dismiss in such situations.
anticipation thereof, a party seeks a favorable opinion It included its analysis of Abines. Thus:
in another forum through means other than appeal
or certiorari.21 Early on, we applied the principle of Qui prior est
tempore, potior est jure (literally, he who is before in
There is forum shopping when the elements of litis time is better in right) in dismissing a case on the
pendentia are present or where a final judgment in ground of litis pendentia. This was exemplified in the
one case will amount to res judicata in another.22 relatively early case of Del Rosario v. Jacinto where
two complaints for reconveyance and/or recovery of
the same parcel of land were filed by substantially the
same parties, with the second case only impleading Under the established jurisprudence on litis
more party-plaintiffs. The Court held that "parties who pendentia, the following considerations predominate
base their contention upon the same rights as the in the ascending order of importance in determining
litigants in a previous suit are bound by the judgment which action should prevail: (1) the date of filing, with
in the latter case." Without expressly saying so in litis preference generally given to the first action filed to
pendentia terms, the Court gave priority to the suit be retained; (2) whether the action sought to be
filed earlier. dismissed was filed merely to preempt the later action
or to anticipate its filing and lay the basis for its
Ago Timber Corporation v. Ruiz offered an dismissal; and (3) whether the action is the
insightful reason after both parties had each pleaded appropriate vehicle for litigating the issues between
the pendency of another action between the same the parties.25
parties for the same cause. The Court ruled that the
second action should be dismissed, "not only as Considering the nature of the transaction between the
a matter of comity with a coordinate and co-equal parties, the Court believes that the case for collection
court (Laureta & Nolledo, Commentaries & of sum of money filed before RTC-Antipolo should be
Jurisprudence on Injunction, p. 79, citing Harrison v. upheld as the more appropriate case because the
Littlefield, 57 Tex. Div. A. 617, 619, 124 SW 212), but judgment therein would eventually settle the issue in
also to prevent confusion that might seriously the controversy - whether or not Benavidez should be
hinder the administration of justice. (Cabigao, et made accountable for the subject loan. In the
al. v. Del Rosario, et al., 44 Phil. 182)." complaint that she filed with RTC- Morong, Benavidez
never denied that she contracted a loan with
In all these cases, we gave preference to the first Salvador.
action filed to be retained. The "priority-in-time
rule," however, is not absolute. It is clear that there was an amount of money
borrowed from Salvador which was used in the
In the 1956 case of Teodoro v. Mirasol, we deviated repurchase of her foreclosed property. Whether or not
from the "priority-in-time rule" and applied the "more it was Atty. Segarra who arranged the loan is
appropriate action test" and the "anticipatory immaterial. The fact stands that she borrowed from
test." Salvador and she benefited from it. Her insistence
that the remaining balance of P450,000.00 of the
money loaned was never handed to her by Atty.
The "more appropriate action test" considers the Segarra is a matter between the two of them. As far
real issue raised by the pleadings and the ultimate as she and Salvador are concerned, there is
objective of the parties; the more appropriate admittedly an obligation. Whether the promissory note
action is the one where the real issues raised can was void or not could have been proven by her during
be fully and completely settled. In Teodoro, the the trial but she forfeited her right to do so when she
lessee filed an action for declaratory relief to fix the and her lawyer failed to submit a pre-trial brief and to
period of the lease, but the lessor moved for its appear at the pre-trial as will be discussed hereafter.
dismissal because he had subsequently filed an
action for ejectment against the lessee. We noted that
the unlawful detainer suit was the more appropriate At this point, to dismiss Civil Case No. 00-5660 would
action to resolve the real issue between the parties - only result in needless delay in the resolution of the
whether or not the lessee should be allowed to parties' dispute and bring them back to square one.
continue occupying the land under the terms of the This consequence will defeat the public policy
lease contract; this was the subject matter of the reasons behind litis pendentia which, like the rule on
second suit for unlawful detainer, and was also the forum shopping, aim to prevent the unnecessary
main or principal purpose of the first suit for burdening of our courts and undue taxing of the
declaratory relief. manpower and financial resources of the Judiciary; to
avoid the situation where co-equal courts issue
conflicting decisions over the same cause; and to
In the "anticipatory test," the bona fides or good preclude one party from harassing the other party
faith of the parties is the critical element.1âwphi1 If through the filing of an unnecessary or vexatious
the first suit is filed merely to preempt the later suit.27
action or to anticipate its filing and lay the basis
for its dismissal, then the first suit should be
dismissed. In Teodoro, we noted that the first action, WHEREFORE, the petition is DENIED. The
declaratory relief, was filed by the lessee to anticipate November 22, 2005 Decision and the June 8, 2006
the filing of the second action, unlawful detainer, Amended Decision of the Court of Appeals
considering the lessor's letter informing the lessee are AFFIRMED with MODIFICATION.
that the lease contract had expired.
Rule 9, Section 1
HEIRS OF SOTTO V. PALICTE on November 25, 1992 expressly waiving her rights in
G.R. NO. 159691, JUNE 13, 2013 the four properties covered by the deed of
redemption, changed her mind and decided to file on
FACTS: September 23, 1996 in the RTC in Cebu City a
Filemon had four children, namely: Marcelo Sotto complaint to seek the nullification of her waiver of
(Marcelo), Pascuala Sotto-Pahang (Pascuala), Miguel rights, and to have herself be declared as a co-
Barcelona (Miguel), and Matilde. Marcelo was the redemptioner of the four properties (Civil Case No.
administrator of the Estate of Sotto. Marcelo and CEB-19338). However, the RTC dismissed Civil Case
Miguel were the predecessors-in-interest of No. CEB-19338 on the ground of its being barred by
petitioners. laches. Pascuala then assailed the dismissal of Civil
Case No. CEB-19338 in the CA through a petition
In June 1967, Pilar Teves (Pilar) and other heirs of forcertiorari (C.A.-G.R. SP No. 44660), which the CA
Carmen Rallos (Carmen), the deceased wife of dismissed on November 21, 1997. Undeterred,
Filemon, filed in the Court of First Instance (CFI) of Pascuala appealed the dismissal of her petition
Cebu City a complaint against the Estate of Sotto ( for certiorari (G.R. No. 131722), but the Court denied
Civil Case No. R-10027 ) seeking to recover certain due course to her petition on February 4, 1998
properties that Filemon had inherited from Carmen, because of her failure to pay the docket fees and
and damages. The CFI rendered judgment awarding because of her certification against forum shopping
to Pilar and other heirs of Carmen damages of P having been signed only by her counsel.
233,963.65, among other reliefs . To satisfy the
monetary part of the judgment, levy on execution was In November 1998, the heirs of Miguel filed a motion
effected against six parcels of land and two residential for reconsideration in Civil Case No. R-10027 of the
houses belonging to the Estate of Sotto . The levied RTC of Cebu City, Branch 16, praying that the order
assets were sold at a public auction . Later on , issued on October 5, 1989 be set aside, and that they
Matilde redeem ed four of the parcels of land in her be included as Matilde’s co-redemptioners. After the
own name (i.e., Lots No. 1049, No. 1051, No. 1052 RTC denied the motion for reconsideration for its lack
and No. 2179-C) , while her sister Pascuala redeem of merit on April 25, 2000, they assailed the denial by
ed one of the two houses because her family was petition for certiorari and prohibition (C.A.-G.R. SP
residing there . On July 9, 1980, the Deputy Provincial No. 60225). The CA dismissed the petition
Sheriff of Cebu executed a deed of redemption in for certiorari and prohibition on January 10, 2002.
favor of Matilde, which the Clerk of Court approved. Thereafter, they elevated the matter to the
Court via petition for certiorari (G.R. No. 154585),
On July 24, 1980, Matilde filed in Civil Case No. R- which the Court dismissed on September 23, 2002 for
10027 a motion to transfer to her name the title to the being filed out of time and for lack of merit.
four properties. However, the CFI denied her motion,
and instead declared the deed of redemption issued On September 10, 1999, the heirs of Marcelo,
in her favor null and void, holding that Matilde, specifically: Lolibeth Sotto Noble, Danilo C. Sotto,
although declared in Special Proceedings No. 2706-R Cristina C. Sotto, Emmanuel C. Sotto, Filemon C.
as one of the heirs of Filemon, did not qualify as a Sotto, and Marcela C. Sotto; and the heirs of Miguel,
successor-in-interest with the right to redeem the four namely: Alberto, Arturo and Salvacion, all surnamed
properties. Matilde directly appealed the adverse Barcelona (herein petitioners), instituted the present
ruling to the Court via petition for review, and on action for partition against Matilde in the RTC of Cebu
September 21, 1987, the Court, reversing the CFI’s City, Branch 20 (Civil Case No. CEB-
ruling, granted Matilde’s petition for review but 24293).2 Alleging in their complaint that despite the
allowed her co-heirs the opportunity to join Matilde as redemption of the four properties having been made
co-redemptioners for a period of six months before in the sole name of Matilde, the four properties still
the probate court (i.e., RTC of Cebu City, Branch 16) rightfully belonged to the Estate of Sotto for having
would grant her motion to transfer the title to her furnished the funds used to redeem the properties,
name. they prayed that the RTC declare the four properties
as the assets of the Estate of Sotto, and that the RTC
The other heirs of Filemon failed to exercise their direct their partition among the heirs of Filemon.
option granted in the decision of September 21, 1987
to join Matilde as co-redemptioners within the six- It is notable at this juncture that the heirs of Pascuala
month period. Accordingly, on October 5, 1989, the did not join the action for partition whether as plaintiffs
trial court issued an order in Civil Case No. R-10027 or defendants.
approving Matilde’s motion to transfer the title of the
four lots to her name, and directing the Register of Instead of filing her answer, Matilde moved to dismiss
Deeds of Cebu to register the deed of redemption and the complaint,4 stating that: (a) petitioners had no
issue new certificates of title covering the four cause of action for partition because they held no
properties in Matilde’s name. interest in the four properties; (b) the claim was
already barred by prior judgment, estoppel and
It appears that Pascuala, who executed a document laches; (c) the court had no jurisdiction over the
action; and (d) a similar case entitled Pahang v. actions (i) identity of parties or at least such as
Palicte (Civil Case No. 19338) had been dismissed representing the same interest in both actions; (ii)
with finality by Branch 8 of the RTC in Cebu City. identity of subject matter, or of the rights asserted and
relief prayed for, the relief being founded on the same
On November 15, 1999, the RTC granted Matilde’s facts; and, (iii) identity of causes of action in both
motion to dismiss and dismissed the actions such that any judgment that may be rendered
complaint,5holding that Civil Case No. CEB-24293 in the other action will, regardless of which party is
was already barred by prior judgment considering that successful, amount to res judicata in the action under
the decision in G.R. No. 55076, the order dated consideration.
October 5, 1989 of the RTC in Civil Case No. R-
10027, and the decision in G.R. No. 131722 had all The first three elements were present. The decision of
become final, and that the cases had involved the the Court in G.R. No. 55076 (the first case), the
same parties, the same subject matter, the same decision of the Court in G.R. No. 131722 (the second
causes of action, and the same factual and legal case), the order dated October 5, 1989 of the RTC in
issues. The RTC observed that it was bereft of Civil Case No. R-10027 as upheld by the Court in
jurisdiction to annul the rulings of co-equal courts that G.R. No. 154585 (the third case), and the decision in
had recognized Matilde’s exclusive ownership of the G.R. No. 158642 (the fourth case) – all of which dealt
four properties. with Matilde’s right to the four properties – had upheld
Matilde’s right to the four properties and had all
Following the denial by the RTC of their motion for become final. Such rulings were rendered in the
reconsideration,6 petitioners appealed the dismissal of exercise of the respective courts’ jurisdiction over the
Civil Case No. CEB-24293 to the CA, which subject matter, and were adjudications on the merits
promulgated its judgment on November 29, 2002 of the cases.
affirming the dismissal.7 After the CA denied
petitioners’ motion for reconsideration,8 they brought What remains to be determined is whether Civil Case
this present appeal to the Court. No. CEB-24293 and the previous cases involved the
same parties, the same subject matter, the same
In the meantime, the Estate of Sotto, through the causes of action, and the same factual and legal
administrator, moved in the probate court (Special issues.
Proceedings No. 2706-R) to require Matilde to
account for and turn over the four properties that We find that, indeed, Civil Case No. CEB-24293 was
allegedly belonged to the estate, presenting no different from the previous cases as far as parties,
documentary evidence showing that Matilde had subject matter, causes of action and issues were
effected the redemption of the four properties with the concerned. In other words, Civil Case No. CEB-24293
funds of the estate in accordance with the express was an undisguised relitigation of the same settled
authorization of Marcelo.9 The probate court granted matter concerning Matilde’s ownership of the four
the motion, but subsequently reversed itself upon properties.
Matilde’s motion for reconsideration. Hence, the
Estate of Sotto appealed (G.R. No. 158642), but the First of all, petitioners, as plaintiffs in Civil Case No.
Court promulgated its decision on September 22, CEB-24293, were suing in their capacities as the
2008 adversely against the Estate of Sotto. successors-in-interest of Marcelo and Miguel. Even in
such capacities, petitioners’ identity with the parties in
ISSUE: the previous cases firmly remained. In G.R. No. L-
55076 (the first case), in which Matilde was the
Whether or not the present action for partition was petitioner while her brother Marcelo, the administrator
already barred by prior judgment. of the Estate of Sotto, was one of the respondents,
the Court affirmed Matilde’s redemption of the four
RULING: properties notwithstanding that it gave the other heirs
of Filemon the opportunity to join as co-redemptioners
YES. The present action for partition was already within a period of six months. When the other heirs
barred by prior judgment. Res judicata was applicable did not ultimately join as Matilde’s co-redemptioners
to bar petitioners’ action for partition of the four within the period allowed by the Court, the trial court
properties. in Civil Case No. R-10027 rightly directed the Register
of Deeds to issue new certificates of title covering the
Res judicata exists when as between the action properties in Matilde’s name. In Civil Case No. CEB-
sought to be dismissed and the other action these 19338 (the second case), the action Pascuala brought
elements are present, namely; (1) the former against Matilde for the nullification of Pascuala’s
judgment must be final; (2) the former judgment must waiver of rights involving the four properties, the trial
have been rendered by a court having jurisdiction of court dismissed the complaint upon finding Pascuala
the subject matter and the parties; (3) the former barred by laches from asserting her right as Matilde’s
judgment must be a judgment on the merits; and (4) co-redemptioner. The CA and, later on, the Court
there must be between the first and subsequent itself (G.R. No. 131722) affirmed the dismissal by the
trial court. In Civil Case No. R-10027, the trial court
denied the motion of the heirs of Miguel (who are (b) In other cases, the judgment or final order is, with
petitioners herein) to include them as co- respect to the matter directly adjudged or as to any
redemptioners of the properties on the ground of other matter that could have been raised in relation
laches and res judicata. Again, the CA and, later on, thereto, conclusive between the parties and their
the Court itself (G.R. No. 154585) affirmed the denial. successors in interest by title subsequent to the
In G.R. No. 158642 (the fourth case), the Court commencement of the action or special proceeding,
upheld the ruling of the probate court in Special litigating for the same thing and under the same title
Proceedings No. 2706-R denying the administrator’s and in the same capacity; and
motion to require Matilde to turn over the four real
properties to the Estate of Sotto. xxxx
The doctrine of res judicata is an old axiom of law,
In all the five cases (Civil Case No. CEB-24293 dictated by wisdom and sanctified by age, and
included), a n identity of parties existed because the founded on the broad principle that it is to the interest
parties were the same, or there was privity among of the public that there should be an end to litigation
them, or some of the parties were successors-in- by the same parties over a subject once fully and
interest litigating for the same thing and under the fairly adjudicated. It has been appropriately said that
same title and in the same capacity.15 An absolute the doctrine is a rule pervading every well-regulated
identity of the parties was not necessary, because a system of jurisprudence, and is put upon two grounds
shared identity of interest sufficed for res judicatato embodied in various maxims of the common law: one,
apply.16 Moreover, mere substantial identity of parties, public policy and necessity, which makes it to the
or even community of interests between parties in the interest of the State that there should be an end to
prior and subsequent cases, even if the latter were litigation –interest reipublicae ut sit finis litium; the
not impleaded in the first case, would be other, the hardship on the individual that he should be
sufficient.17 As such, the fact that a previous case was vexed twice for one and the same cause – nemo
filed in the name of the Estate of Sotto only was of no debet bis vexari pro una et eadem causa. A contrary
consequence. doctrine would subject the public peace and quiet to
the will and neglect of individuals and prefer the
Secondly, the subject matter of all the actions (Civil gratification of the litigious disposition on the part of
Case No. CEB-24293 included), was the same, that suitors to the preservation of the public tranquillity and
is, Matilde’s right to the four properties. On the one happiness.19 The doctrine is to be applied with rigidity
hand, Matilde insisted that she had the exclusive right because:
to them, while, on the other hand, the other declared
heirs of Filemon, like petitioners’ predecessors-in- x x x the maintenance of public order, the repose of
interest, maintained that the properties belonged to society, and the quiet of families require that what has
the Estate of Sotto. been definitely determined by competent tribunals
shall be accepted as irrefragable legal truth. So
Under the doctrine of res judicata, a final judgment or deeply is this principle implanted in xxx jurisprudence
decree on the merits rendered by a court of that commentators upon it have said, the res
competent jurisdiction is conclusive about the rights of judicata renders white that which is black and straight
the parties or their privies in all later suits and on all that which is crooked. Facit excurvo rectum, ex albo
points and matters determined in the previous suit. nigrum. No other evidence can afford strength to the
The foundation principle upon which the doctrine rests presumption of truth it creates, and no argument can
is that the parties ought not to be permitted to litigate detract from its legal efficacy.20nadc
the same issue more than once; that when a right or
fact has been judicially tried and determined by a What we have seen here is a clear demonstration of
court of competent jurisdiction, so long as it remains unmitigated forum shopping on the part of petitioners
unreversed, it should be conclusive upon the parties and their counsel. It should not be enough for us to
and those in privity with them in law or estate. just express our alarm at petitioners’ disregard of the
doctrine of res judicata. We do not justly conclude this
Section 47 (b) Rule 39 of the Rules of decision unless we perform one last unpleasant task,
Court institutionalizes the doctrine of res judicata in which is to demand from petitioners’ counsel, Atty.
the concept of bar by prior judgment, viz: Makilito B. Mahinay, an explanation of his role in this
pernicious attempt to relitigate the already settled
Section 47. Effect of judgments and final orders.— issue regarding Matilde’s exclusive right in the four
The effect of a judgment or final order rendered by a properties. He was not unaware of the other cases in
court of the Philippines, having jurisdiction to which the issue had been definitely settled
pronounce the judgment or final order, may be as considering that his clients were the heirs themselves
follows: of Marcelo and Miguel. Moreover, he had represented
the Estate of Sotto in G.R. No. 158642 (The Estate of
xxxx Don Filemon Y. Sotto v. Palicte).
Under the circumstances, Atty. Mahinay appears to and (c) to cite Lydia Yu in contempt of Court.
have engaged in the prejudicial practice of forum Judge denied motion in its September1998 Order.
shopping as much as any of his clients had been. If
he was guilty, the Court would not tolerate it, and Before the CA, petitioners assailed the trial court’s
would sanction him. In this regard, forum shopping, refusal to dismiss the complaint on the ground of non-
according to Ao-as v. Court of Appeals,21 may be
committed as follows: compliance with the requirements of a certification of
forum-shopping and declaring
As the present jurisprudence now stands, forum the petitioners in default without first resolving this mo
shopping can be committed in three ways: (1) filing tion to dismiss which was filed ahead of bank’s motion
multiple cases based on the same cause of action to declare them in default.CA ruled that the Omnibus
and with the same prayer, the previous case not Motion to Lift Order of Default was “fatally flawed,” as
having been resolved yet (litis pendentia); (2) filing
it was filed beyond the extended periods to file
multiple cases based on the same cause of action
and the same prayer, the previous case having been answer granted by the court, was not under oath, and
finally resolved (res judicata); and (3) filing multiple was not accompanied by a proper affidavit of merit.
cases based on the same cause of action but with
different prayers (splitting of causes of action, where
the ground for dismissal is also either litis
pendentia or res judicata). If the forum shopping is not Issue: whether or not the court a quo’s decision was
considered willful and deliberate, the subsequent not in accordance with law and SC decisions when it
cases shall be dismissed without prejudice on one of avoided to rule on the issue of respondent bank’s
the two grounds mentioned above. However, if the
failure to comply with the essential requirement of a
forum shopping is willful and deliberate, both (or all, if
there are more than two) actions shall be dismissed certification against forum shopping and instead
with prejudice. declared the petitioners in default.

Held: No. Petition is unmeritorious. Court agrees that


xxxxxSPS ANTONIO VS SAYMANxxxx the Omnibus Motion was fatally flawed although
the Omnibus Motion insofar as it seeks the lifting of
MEDISERV vs CHINABANK the order of default, may have been seasonably filed
two months after petitioners were already declared in
Facts:
default for failure to file motion to dismiss within the
extended period granted by the court. However, the
China Banking Corporation filed a complaint for a sum
said Omnibus Motion was not under oath as required
of money to recover deficiency judgment in
in Rule 9, Sec. 3 (b), and the Affidavit of Merit is
foreclosure proceedings against petitioners. Yu, the
defective in that it failed to aver any fact which
Assistant VP of the bank, signed the certification
constitutes movant’s good and substantial defense
against forum shopping .Petitioners filed a Motion for
nor allege circumstances constituting defendants’
Extension of Time to File Motion to Dismiss/answer,
mistake or excusable negligence as contemplated by
which was granted. They were given 15 days.
the Rules. Petitioners have conspicuously failed to
However, because their counsel withdrew their
traverse these factual findings of the court on
appearance, they again filed another motion for
these defects, whether in its Petition, its Reply to
extension for another 15 days. This was again
Comment and Memorandum, and instead seek to
granted by the Judge Makasiar, with a warning that
focus their attack on respondent’s complaint on the
no further extension would be entertained. Despite
ground of alleged violation of the rule on forum
the warning, petitioners yet filed another motion,
shopping. A party declared in default is deprived of
which was denied.10 days after the last day granted
the right to take part in the trial and forfeits his rights
by the Judge for petitioners to file a motion to dismiss,
as a party litigant except the right to receive notice of
the petitioners filed a motion to dismiss the complaint
subsequent proceedings. To obtain relief from an
on the ground of litis pendentia (pending suit),lack of
order of default, the said party may at any time after
cause of action and payment of claim. Private
notice thereof and before judgment file a motion
respondents filed a motion to declare petitioners in
under oath to set aside order of default upon proper
default, and to strike out the motion to dismiss. Judge
showing that his failure to answer was due to fraud,
granted the motion .Petitioners filed an Omnibus
accident, mistake or excusable negligence and that
Motion; (a) to lift the order of default; (b) to dismiss
he has a meritorious defense. If not accompanied by
the complaint with prejudice for violation of the
an affidavit of merit, the trial court has no authority to
requirement of certification against forum-shopping;
consider the same. Petitioners failed to set aside the
order of default and must suffer the consequences laymen, they were unaware of the fifteen-day period
thereof. PETITION DENIED
within which to file the answer and that their failure to
do so was due to the unavailability of Atty. Pantojan
Rule 9, Sec. 3 (default; declaration of)
who was then “always out of town.” They attached to
Sps. de los Santos v. Hon. Carpio
their motion an “Affidavit of Merits” which restated the
G.R. No. 153696 , Sept. 11, 2006
contents of the motion.
Facts:
On March 2, 2001, respondent judge issued an order
On January 3, 2001, Metropolitan Bank and Trust
holding in abeyance the ex-parte reception of
Company filed a complaint for sum of money against
evidence pending resolution of petitioners’ motion to
spouses delos Santos before the RTC of Davao City
lift the order of default.
Branch 16.
On March 5, 2001, respondent judge issued an order
On January 22, 2001, petitioners were served with the
denying petitioners’ motion to lift the order of default
summons, together with a copy of the complaint. As
and setting the reception of Metrobank’s evidence on
petitioners failed to file an answer within the
March 7, 2001, as previously scheduled. On that date
reglementary period, Metrobank, on February 8,
(March 7, 2001), Metrobank presented its evidence
2001, filed a motion to declare them in default. The
and the case was submitted for decision. Petitioners
motion was set for hearing on February 16, 2001.
moved for reconsideration of the March 5, 2001 order
Acting on the motion, the lower court, presided over but their motion was denied on March 21, 2001.
by Hon. Emmanuel C. Carpio issued an order dated
Aggrieved, petitioners filed a Petition for Certiorari
February 12, 2001 declaring petitioners in default and
with the CA ascribing grave abuse of discretion
setting the ex-parte presentation of Metrobank’s
committed by the trial court amounting to lack of
evidence on March 7, 2001.
jurisdiction in issuing the Orders dated February 12
On February 15, 2001, petitioners filed an opposition and 16, 2001, declaring them in default and denying
to Metrobank’s motion to declare them in default, their Opposition to Metrobank's Motion to Declare
claiming that upon receipt of the summons, they them in Default, respectively; and the Orders dated
immediately sought the services of Atty. Philip March 5 and 21, 2001 denying their Motion to Lift the
Pantojan but it was only on February 12, 2001 that Order of Default and their Motion for Reconsideration,
they were able to meet with him. respectively.

On the same date, February 15, 2001, petitioners filed On April 30, 2002, the CA denied the petition for lack
a motion to admit answer, as well as the answer. In of merit and accordingly dismissed the same.
an order dated February 16, 2001, respondent judge
Hence,petitioners filed a petition for review on
disregarded petitioners’ opposition to Metrobank’s
certiorari under Rule 45.
motion for default and stood pat on his previous
Issue:
default order.
Whether or not the CA erred in upholding the Orders
On February 19, 2001, Metrobank filed an opposition
of the trial court declaring petitioners in default and
to petitioners’ motion to admit answer, arguing that
denying their Motion to Lift Order of Default.
said motion was rendered moot and academic by the
February 12, 2001 order. In an order dated February
Ruling:
20, 2001, the motion to admit answer was denied.
The Court ruled in the affirmative.
On February 27, 2001, petitioners filed a motion to lift
the order of default; Metrobank opposed the motion. Section 3, Rule 9 of the Rules of Court provides:
In their motion, petitioners reiterated that, being
Sec. 3. Default; declaration of — If the defending that his right be not affected without an opportunity to
party fails to answer within the time allowed therefor, be heard.
the court shall, upon motion of the claiming party with Therefore, as the present rule on default requires the
notice to the defending party, and proof of such filing of a motion and notice of such motion to the
failure, declare the defending party in default.
defending party, it is not enough that the defendant
Thereupon, the court shall proceed to render
failed to answer the complaint within the reglementary
judgment granting the claimant such relief as his
period to be a sufficient ground for declaration in
pleading may warrant, unless the court in its default. The motion must also be heard.
discretion requires the claimant to submit evidence.
In this case, it is not disputed that petitioners were
Such reception of evidence may be delegated to the
served summons on January 22, 2001. Under Section
clerk of court.
1, Rule 11 of the Rules of Court, the defendant shall
file his answer to the complaint within 15 days after
Clearly, there are three requirements which must be service of summons, unless a different period is fixed
complied with by the claiming party before the court
by the court. Petitioners’ answer was due on February
may declare the defending party in default, to wit: (1)
6, 2001, but no answer was filed by petitioners. Thus,
the claiming party must file a motion asking the court
Metrobank filed a Motion to declare petitioners in
to declare the defending party in default; (2) the default on February 9, 2001, setting the hearing
defending party must be notified of the motion to thereof on February 16, 2001. However, four days
declare him in default; (3) the claiming party must before the scheduled hearing, the trial court issued
prove that the defending party has failed to answer
the Order datedFebruary 12, 2001, declaring
within the period provided by the Rule.
petitioners in default.
In filing motions, Section 4, Rule 15 of the Rules of We could not see any justifiable reason why the trial
Court, specifically provides:
court chose not to hear the petitioners on the date
Sec. 4. Hearing of motion. – Except for motions which and time fixed inMetrobank’s motion, and instead,
the court may act upon without prejudicing the rights hastily granted the motion before it could be heard on
of the adverse party, every written motion shall be set the ground that it had found the motion to be
for hearing by the applicant. impressed with merit. Indeed, in totally disregarding
the purpose for which the filing of a motion and notice
xxxx
to defending party are required by the Rules, the trial
court had acted in a despotic manner that is correctly
Prior to the present rule on default introduced by the
assailed through a petition for certiorari which
1997 Rules of Civil Procedure, as amended, Section
petitioners have seasonably filed with the CA.
1 of the former Rule 18 on default is silent on whether
or not there is need for a notice of a motion to declare Again, respondent Judge acted capriciously when he

defendant in default. The Court then ruled that there totally ignored petitioners’ Opposition to Metrobank’s
Motion to Declare them in Default and denied their
is no need. However, the present rule expressly
Motion to Admit Answer, both filed on February 15,
requires that the motion of the claiming party should
2001, a day before the scheduled hearing, which
be with notice to the defending party. The purpose of
a notice of a motion is to avoid surprises on the showed their desire to be heard before the motion to

opposite party and to give him time to study and meet declare them in default is resolved by the trial court.

the arguments. The notice of a motion is required A mere perusal of the Answer attached to the Motion
when the party has the right to resist the relief sought to Admit Answer would readily reveal that petitioners
by the motion and principles of natural justice demand raised a special and affirmative defense the other
action pending between the same parties for the of hearing on the Motion to Declare Petitioners in
same cause. xxxx Default, showing that petitioners had no intention to

Thus, the trial court is deemed to have been apprised delay the case.

of the affirmative defense of litis pendentia. Instead of Under Rule 9, the trial court may motu proprio dismiss
unceremoniously discarding petitioners’ Opposition the claim when it appears from the pleadings or
and Motion to Admit Answer which were filed before evidence on the record that there is another cause of
the scheduled date of hearing of the motion to declare action pending between the same parties for the
petitioners in default, it behooved upon the trial court same cause. With the alleged affirmative defense of
to delve into the merits of the Opposition and the litis pendentia, the trial court had justifiable compelling
Answer. reason to recall its premature Order declaring

The trial court then should have been guided by petitioners in default.

Section 11, Rule 11 of the Rules of Court, to wit: In a case, we found the trial court to have gravely
abused its discretion when it declared defendants in
Sec. 11. Extension of time to plead. - Upon motion
and on such terms as may be just, the court may default; that the answer should be admitted because it

extend the time to plead provided in these Rules. had been filed before it was declared in default and
no prejudice was caused to plaintiff; and that the
The court may also, upon like terms, allow an answer
hornbook rule is that default judgments are generally
or other pleading to be filed after the time fixed by
disfavored.
these Rules.
In this case, since the Order dated February 12, 2001
declaring petitioners in default is null and void, the
and Section 1, Rule 9 of the 1997 Rules of Procedure
filing of the Answer may be considered as having
which provides:
been filed before petitioners were declared in default
Sec. 1. Defenses and objections not pleaded. - and therefore no prejudice was caused to Metrobank
Defenses and objections not pleaded either in a and there was no undue delay on the part of
motion to dismiss or in the answer are deemed petitioners.
waived. However, when it appears from the pleadings
Basic elementary sense of fairness, liberality and
or the evidence on record that the court has no
substantial justice so dictate that the premature Order
jurisdiction over the subject matter, that there is
be considered as null and void. It is the avowed policy
another action pending between the same parties for
of the law to accord both parties every opportunity to
the same cause, or that the action is barred by a prior
pursue and defend their cases in the open and
judgment or by statute of limitations, the court shall
relegate technicality to the background in the interest
dismiss the claim.
of substantial justice.

Since the Order dated February 12, 2001 was null


Under Rule 11, it is within the discretion of the trial
and void, the trial court likewise committed grave
court to permit the filing of defendant’s answer even
abuse of discretion in issuing the Orders dated March
beyond thereglementary period, provided there is
5, 2001 and March 21, 2001 denying petitioners’
justification for the belated action, and there was no
Motion to Lift Order of Default and Motion for
showing that the defendant intended to delay the
Reconsideration, respectively.
case. Petitioners may be considered to have
committed excusable negligence when they waited for We reiterate the ruling in Akut v. Court of Appeals,

the counsel of their choice who was out of town which where we found that the trial court committed grave
abuse of discretion in declaring therein petitioners in
caused the delay in filing their Answer; and the Motion
to Admit Answer was filed before the scheduled date
default and in denying their motion to set aside the  On 24 February 1999, petitioner Jose R.
Martinez (Martinez) filed a petition for the
order of default, thus:
registration in his name of three (3) parcels
The controlling principle ignored by respondent court of land included in the Cortes, Surigao del
is that it is within sound judicial discretion to set aside Sur Cadastre. (Lot No. 464-A, Lot No. 464-B,
and Lot No. 370, Cad No. 597).
an order of default and to permit a defendant to file
 The case was docketed as Land Registration
his answer and to be heard on the merits even after Case No. N-30 and raffled to the Regional
the reglementary period for the filing of the answer Trial Court (RTC) of Surigao del Sur, Branch
has expired. This discretion should lean towards 27.
giving party-litigants every opportunity to properly  The Office of the Solicitor General (OSG)
was furnished a copy of the petition. The trial
present their conflicting claims on the merits of the
court set the case for hearing and directed
controversy without resorting to technicalities. Courts the publication of the corresponding Notice
should be liberal in setting aside orders of default, for of Hearing in the Official Gazette.
default judgments are frowned upon, and unless it  On 30 September 1999, the OSG, in behalf
clearly appears that reopening of the case is intended of the Republic of the Philippines,
opposed the petition on the grounds that
for delay, it is best that the trial courts give both
appellee's possession was not in accordance
parties every chance to fight their case fairly and in with Section 48(b) of Commonwealth Act No.
the open, without resort to technicality. x x x 141; that his muniments of title were
insufficient to prove bona-fide acquisition
x x x Moreover, petitioners' answer shows that they
and possession of the subject parcels; and
have a prima facie meritorious defense. They should, that the properties formed part of the public
therefore, be given their day in court to avoid the domain and thus not susceptible to private
danger of committing a grave injustice if they were appropriation.
 the RTC issued an order of general
denied an opportunity to introduce evidence in their
default, This ensued when during the
behalf. hearing of even date, no party appeared
Our ruling in Mercader v. Bonto and the copious before the Court to oppose Martinez's
petition.3
precedents therein cited that "considering that the late
 the trial court proceeded to receive
filing of defendants' answer was due to excusable Martinez's oral and documentary evidence in
negligence and that they appear to have a meritorious support of his petition AND rendered a
defense; that defendants filed an answer before they Decision4 concluding that Martinez and his
were declared in default; and that the late filing of the predecessors-in-interest had been for over
100 years in possession characterized as
answer did not in any way prejudice or deprive the
continuous, open, public, and in the concept
plaintiff of any substantial right, nor was there of an owner. The RTC thus decreed the
intention to unduly delay the case, WE hold that the registration of the three (3) lots in the name
respondent judge committed an abuse of discretion in of Martinez.
declaring the defendants in default and in refusing to  the OSG filed a Notice of Appeal which was
approved by the RTC.
set aside the order of default" is fully applicable to the
 the Court of Appeals promulgated the
case at bar. assailed Decision,8 reversing the RTC and
instead ordering the dismissal of the petition
for registration concluding that the oral
[G.R. NO. 160895 : October 30, 2006]
evidence presented by Martinez merely
JOSE R. MARTINEZ, Petitioner, consisted of general declarations of
ownership.
v. REPUBLIC OF THE PHILIPPINES, Respondents.  No motion for reconsideration have been
filed with the Court of Appeals by Martinez,
FACTS: who instead directly assailed its Decision
before this Court through the present order of default upon proper showing that his failure to
petition. answer was due to fraud, accident, mistake or
excusable negligence and that he has a meritorious
ISSUE: defense. In such case, the order of default may be set
aside on such terms and conditions as the judge may
WON OSG no longer had personality to oppose the impose in the interest of justice.
petition, or appeal its allowance by the RTC, following
the order of general default. (c) Effect of partial default. When a pleading asserting
a claim states a common cause of action against
several defending parties, some of whom answer and
RULING:
the others fail to do so, the court shall try the case
against all upon the answers thus filed and render
NO.OSG can still file an appeal.
judgment upon the evidence presented.
Lim Toco vs Go Fray ruling (1948)
(d) Extent of relief to be awarded. A judgment
rendered against a party in default shall not exceed
“ where a divided Court pronounced that a defendant
the amount or be different in kind from that prayed for
in default had no right to appeal the judgment nor award unliquidated damages.
rendered by the trial court, except where a motion to
set aside the order of default had been filed”
xxx
However, Sec. 2, Rule 41 of the 1964 Rules of Court
It cannot be escaped that the old provision
made the Lim Toco ruling as moot. "[a] party who
expressly guaranteeing the right of a defendant
has been declared in default may likewise appeal declared in default to appeal the adverse decision
from the judgment rendered against him as was not replicated in the 1997 Rules of Civil
contrary to the evidence or to the law, even if no Procedure.
petition for relief to set aside the order of default
has been presented by him in accordance with However, in Lina v. Court of Appeals (1997), it
Rule 38." provides remedies for a party who has been declared
in default.
In the present rule, the prior warrant that a defaulted
defendant had the right to appeal was removed from
a) The defendant in default may, at any time after
Section 2, Rule 41 of the 1997 Rules of Civil discovery thereof and before judgment, file a motion,
Procedure. under oath, to set aside the order of default on the
ground that his failure to answer was due to fraud,
Section 3 of Rule 9 of the 1997 Rules incorporated accident, mistake or excusable neglect, and that he
the particular effects on the parties of an order of has meritorious defenses; (Sec 3, Rule 18)
default:
b) If the judgment has already been rendered when
Sec. 3. Default; declaration of. If the defending party the defendant discovered the default, but before the
fails to answer within the time allowed therefor, the same has become final and executory, he may file a
court shall, upon motion of the claiming party with motion for new trial under Section 1(a) of Rule 37;
notice to the defending party, and proof of such
failure, declare the defending party in default. c) If the defendant discovered the default after the
Thereupon, the court shall proceed to render judgment has become final and executory, he may file
judgment granting the claimant such relief as his a petition for relief under Section 2 of Rule 38;
pleading may warrant, unless the court in its andcralawlibrary
discretion requires the claimant to submit evidence.
Such reception of evidence may be delegated to the d) He may also appeal from the judgment rendered
clerk of court.
against him as contrary to the evidence or to the law,
even if no petition to set aside the order of default has
(a) Effect of order of default. A party in default shall be been presented by him. (Sec. 2, Rule 41)31
entitled to notice of subsequent proceedings but shall
not take part in the trial. The fourth remedy, that of appeal, is anchored on
Section 2, Rule 41 of the 1964 Rules. Yet even
(b) Relief from order of default. A party declared in after that provision's deletion under the 1997
default may any time after notice thereof and before
Rules, the Court did not hesitate to expressly rely
judgment file a motion under oath to set aside the
again on the Lina doctrine, including the
pronouncement that a defaulted defendant may lost in the trial court when he was
appeal from the judgment rendered against him. declared in default, and which he
failed to have vacated. In this case,
the petitioner sought the
Former Court of Appeals Justice Herrerra likewise modification of the decision of the
reiterates the Lina doctrine, though with the caveat trial court based on the evidence
that an appeal from an order denying a petition for submitted by it only in the Court of
relief from judgment was no longer appealable under Appeals.40
Section 1, Rule 41 of the 1997 Rules.37 Herrera
further adds:
If it cannot be made any clearer, we hold that a
defendant party declared in default retains the right to
Section 2, paragraph [2] of the former Rule 41, which appeal from the judgment by default on the ground
allows an appeal from a denial of a petition for relief, that the plaintiff failed to prove the material allegations
was deleted from the present Rule, and confined of the complaint, or that the decision is contrary to
appeals to cases from a final judgment or final order law, even without need of the prior filing of a motion to
that completely disposes of the case, or of a particular set aside the order of default. We reaffirm that
matter therein, when declared by these rules to be the Lim Toco doctrine, denying such right to
appealable. A judgment by default may be appeal unless the order of default has been set
considered as one that completely disposes of aside, was no longer controlling in this
the case.38 jurisdiction upon the effectivity of the 1964 Rules
of Court, and up to this day.
Yet even if it were to assume the doubtful proposition
that this contested right of appeal finds no anchor in Petition is DISMISSED.
the 1997 Rules, the doctrine still exists, applying
the principle of stare decisis. jurisprudence Heirs of Medrano vs. De Vera
applying the 1997 Rules has continued to
acknowledge the Lina doctrine which embodies this FACTS:
right to appeal as among the remedies of a This case concerns a 463-square meter parcel of land
defendant, and no argument in this petition persuades covered of Flaviana De Gracia. When Flaviana died
the Court to rule otherwise. intestate in 1980, leaving her half sisters Hilaria and
Elena as her compulsory heirs, Hilaria and Elena, by
In Rural Bank of Sta. Catalina v. Land Bank of the virtue of a private document waived all their hereditary
Philippines,39 the Court, through Justice Callejo, Sr., rights to Flaviana’s land in favor of Francisco
again provided a comprehensive restatement of the Medrano in consideration of the expenses that she
remedies of the defending party declared in default,
incurred for Flaviana’s medication, hospitalization,
which we adopt for purposes of this decision:
wake and burial. Some of their children affirmed the
contents of the private document executed by their
It bears stressing that a defending
party declared in default loses his deceased mothers. To that end, they executed
standing in court and his right to separate Deeds of Confirmation of Private Document
adduce evidence and to present his and Renunciation of rights in favor of Medrano.
defense. He, however, has the right
to appeal from the judgment by Due to the refusal of the other children to sign a
default and assail said judgment on similar renunciation, Medrano filed a complaint in
the ground, inter alia, that the
2001 for quieting of title, reconveyance, reformation of
amount of the judgment is
excessive or is different in kind from instrument, and/or partition with damages against
that prayed for, or that the plaintiff Pelagia, Faustina, Jesus, Veranda, and Estrellita
failed to prove the material before the RTC of Urdaneta, Pangasinan.
allegations of his complaint, or that
the decision is contrary to law. Such On April 2, 2002, respondent De Vera filed an answer
party declared in default is with counterclaim presented himself as a real party in
proscribed from seeking a
interest. He maintained that the private document in
modification or reversal of the
assailed decision on the basis of favor of Medrano was null and void for want of
the evidence submitted by him in consideration. Thus, while some children affirmed the
the Court of Appeals, for if it were renunciation of their deceased mothers rights’ of the
otherwise, he would thereby be lot in favor of Medrano, the other children renounced
allowed to regain his right to their rights in favor of de Vera.
adduce evidence, a right which he
Effect of partial default. –
The RTC ruled in favor of the petitioners, allowing an When a pleading asserting a claim
ex parte presentation of evidence. The RTC explained states a common cause of action
it would have allowed de Vera to present his evidence against several defending parties, some
in the case had he complied with the courts’ order to of whom answer and the others fail to
file a pleading-in-intervention. Upon appeal to the CA, do so, the court shall try the case
the appellate court agreed with de Vera. The CA against all upon the answers thus filed
pointed out that the trial court should have exercised and render judgment upon the
its authority to order the substitution of the original evidence presented.
defendants instead of requiring de Vera to file a
pleading-in-intervention. This is allowed under Rule 3, To proceed with the ex parte presentation of evidence
Section 19 of the Rules of Court. Since a transferee against the named defendants after De Vera’s answer
pendent lite is a proper party to the case, the court had been admitted would not only be a violation of Rule
can order its outright substitution for the original 9, Section 3(c), but would also be a gross disregard of De
defendants. The petitioners filed a motion for Vera’s right to due process. This is because the ex
reconsideration, which was denied by the appellate parte presentation of evidence would result in a default
court, hence this petition. judgment which would bind not just the defaulting
defendants, but also De Vera, precisely because he is a
ISSUE: transferee pendente lite. This would result in an anomaly
1. Whether De Vera could participate in the Civil Case wherein De Vera would be bound by a default judgment
without filing a motion to intervene even if he had filed an answer and expressed a desire to
2. Whether De Vera is bound by the judgment against his participate in the case.
transferors
Given the Court’s finding that the ex parte presentation of
RULING: evidence constituted a violation of due process rights, the
trial court’s judgment by default cannot bind De Vera. A
The trial court’s approach is seriously flawed because De void judgment cannot attain finality and its execution has
Vera’s interest is not independent of or severable from the no basis in law. The case should be remanded to the trial
interest of the named defendants. De Vera is court for trial based on De Vera’s answer and with his
a transferee pendente lite of the named defendants (by participation.
virtue of the Deed of Renunciation of Rights that was
executed in his favor during the pendency of Civil Case No.
U-7316). His rights were derived from the named WALLEM PHILIPPINES SHIPPING, INC. VS S.R. FARMS,
defendants and, as transfereependente lite, he would be INC.
bound by any judgment against his transferors under the
rules of res judicata.
FACTS:
It was therefore wrong for the trial court to have tried
Medrano’s case against the named defendants (by On March 25, 1992, Continental Enterprises,
allowing Medrano to present evidence ex parte against Ltd. loaded on board the vessel M/V “Hui Yang,” a
them) after it had already admitted De Vera’s shipment of Indian Soya Bean Meal weighing 1,100
answer. What the trial court should have done is to treat metric tons, for transportation and delivery from India
De Vera as having been joined as a party-defendant, and to Manila, with SR Farms as consignee. The vessel is
to try the case on the basis of the answer De Vera had owned and operated by Conti-Feed, with petitioner
filed and with De Vera’s participation. As Wallem as its ship agent. On April 11, 1992, the said
transferee pendente lite, De Vera may be allowed to join vessel, M/V “Hui Yang” arrived at the port of Manila
the original defendants under Rule 3, Section 19. and was discharged and transferred into the custody
of the receiving barges. Upon checking the cargo, a
As there was a transferee pendente lite whose answer had shortage in the shipment of 80.467 metric tons was
already been admitted, the trial court should have tried the found.
case on the basis of that answer, based on Rule 9, Section
3(c): Petitioner then filed a Complaint for
damages against Conti-Feed & Maritime Pvt. Ltd., a
foreign corporation doing business in the Philippines
and the owner of M/V “Hui Yang”; RCS Shipping ISSUE:
Agencies, Inc., the ship agent of Conti-Feed; Ocean
Terminal Services, Inc. (OTSI), the arrastre operator 1. Whether or not the filing of the Amended
at Anchorage No. 7, South Harbor, Manila; and Cargo Complaint against petitioner should
retroact to the date of the filing of the
Trade, the customs broker.
original complaint.
Respondent filed an Amended Complaint
impleading herein petitioner as defendant alleging HELD:
that the latter, and not RCS, was the one which, in
fact, acted as Conti-Feed’s ship agent. NO.

The complaint against Cargo Trade and As the records would show, petitioner was
RCS was dismissed at the instance of respondent on not impleaded as a defendant in the original complaint
the ground that it has no cause of action. Meanwhile, filed on March 11, 1993. It was only on June 7, 1993
defendant OTSI filed its Answer with Counterclaim that the Amended Complaint, impleading petitioner as
and Crossclaim. For its part, petitioner denied the defendant, was filed.
allegations of respondent claiming, among others,
that it is not accountable nor responsible for any Respondent cannot argue that the filing of
alleged shortage sustained by the shipment while in the Amended Complaint against petitioner should
the possession of its co-defendants; the alleged retroact to the date of the filing of the original
shortage was due to negligent or faulty loading or complaint.
unloading of the cargo by the
stevedores/shipper/consignee; the shortage, if any, The settled rule is that the filing of an
was due to pre-shipment damage, inherent nature, amended pleading does not retroact to the date of the
vice or defect of the cargo for which herein petitioner filing of the original; hence, the statute of limitation
is not liable; respondent’s claim is already barred by runs until the submission of the amendment. It is true
laches and/or prescription. Conti-Feed did not file an that, as an exception, this Court has held that an
Answer. amendment which merely supplements and amplifies
facts originally alleged in the complaint relates back to
The RTC rendered its Decision dismissing the date of the commencement of the action and is
respondent’s complaint, as well as the opposing not barred by the statute of limitations which
parties’ counterclaims and crossclaims. Aggrieved by expired after the service of the original complaint. The
the RTC Decision, respondent filed an appeal with the exception, however, would not apply to the
CA. party impleaded for the first time in the amended
complaint.
The CA rendered its presently assailed
Decision REVERSING and SETTING ASIDE and The rule on the non-applicability of the
another one entered ordering defendants-appellees curative and retroactive effect of an amended
Conti-Feed and Maritime Pvt. Ltd. and Wallem complaint, insofar as newly impleaded defendants are
Philippines Shipping, Inc., to pay the sum concerned, has been established as early as in the
representing the value of the 80.467 metric tons of case of Aetna Insurance Co. v. Luzon Stevedoring
Indian Soya Beans short delivered. Corporation.In the said case, the defendant Barber
Lines Far East Service was impleaded for the first
Petitioner filed a Motion for Reconsideration. time in the amended complaint which was filed after
Respondent filed a Motion for a More Definite the one-year period of prescription. The order of the
Dispositive Portion. lower court dismissing the amended complaint
against the said defendant on ground of prescription
Petitioner filed its Comment/Opposition to was affirmed by this Court.
private respondent’s Motion. On January 15, 2004,
the CA issued a Resolution denying petitioner’s In the instant case, petitioner was only
Motion for Reconsideration and modifying the impleaded in the amended Complaint of June 7,
dispositive portion of its Decision. Hence, the instant 1993, or one (1) year, one (1) month and twenty-three
petition. (23) days from April 15, 1992, the date when the
subject cargo was fully unloaded from the vessel.
Hence, reckoned from April 15, 1992, the one-year decision of the RTC Denying the motion to dismiss
prescriptive period had already lapsed.
wherein it held that the aggregate amount demanded
WHEREFORE, the petition is PARTLY should be the basis for jurisdiction. CA additionally
GRANTED. The Decision of the Court of Appeals ruled that respondent can amend her complaint of the
dated June 2, 2003 and its Resolution dated January ground that the trial court has jurisdiction over the
15, 2004 in CA-G.R. CV No. 65857 are MODIFIED by
original complaint and respondent is entitled to amend
dismissing the complaint against petitioner. In all
other respects, the challenged Decision and the same as a matter of right. Hence present petition
Resolution of the CA are AFFIRMED.
ISSUE: WON respondent has the right to amend the
SO ORDERED.
original complaint.

RULING:
xxxSPS. DIONISIO VS LINSANGANxxx yes the respondent can amend the same on the
ground that the original complaint is within the
xxxxxxxxARANETA VS CAxxxxxxxx
jurisdiction of RTC. BP 129 as amended states that
the MTC has jurisdiction over cases in which the
IRENE SANTE VS HON. EDILBERTO CLARAVALL
demand does not exceed P300,000. however it is
GR 173915
provided for under Administrative circular no. 09-94
FACTS : that in cases where the claim for damages is the main
respondent filed before the RTC of Baguio a cause of action, the amount of such claim shall be
complaint for damages against the petitioner for considered in determining the jurisdiction of the court.
alleged malicious conduct committed by the latter. In In the instant case it is clear from the allegations of
said complaint respondent prayed that the petitioner the complaint that the respondent's main cause of
be held liable for damages in the amount of action is for damages. Hence the other form of
P300,000, P50,000 as exemplary damages, P50,000 damages claimed for are not merely incidental to the
attorney's fees and P20,000. Petitioner filed a motion main cause of action but constitute primary relief. In
to dismiss on the ground that it was the MTC who has Mendoza vs soriano the court ruled that the total
the jurisdiction over the said complaint arguing that amount of monetary claims including the claims for
the amount for damages claimed for by the damages was the basis for determining the
respondent was not more than the jurisdictional jurisdiction. Considering that the total amount of
amount of P300,000 because the claim for exemplary damages claimed was P420,000 CA was correct in its
damages should not be included in the computation. ruling that RTC has jurisdiction over the case. It is a
Trial court denied the motion. Petitioner filed then a basic jurisprudential principle that an amendment
petition for certiorari and prohibition before the CA on cannot be allowed when the court has no jurisdiction
August 20 2004. Meanwhile respondent filed over the original complaint. Here RTC Clearly had
amended complaint increasing the claim to jurisdiction over the original complaint hence
P1,000,000. Petitioner filed a motion to dismiss but amendment was then still a matter of right
was denied by the trial court.
On January 23, 2006 CA as to the petition for
Rule 10, Sec 3
certiorari held that RTC committed grave abuse of
discretion on the ground that the case falls under the
jurisdiction of the MTCC as the allegation shows that
Tiu vs. PBCom
the moral damages claimed by the respondent was
only P300,000 and that the totality rule will not apply G.R. No. 151932
in the case at bar.
on January 31 2006 CA in CA gr 87563 affirmed the
Facts: Because of this development, PBCOM’s counsel
searched for and retrieved the file copy of the Surety
In June 1993, Asian Water Resources, Inc. (AWRI), Agreement. The notarial copy showed that the words
represented by herein petitioners, applied for a real “In his personal capacity” did not appear on page two
estate loan with the Philippine Bank of of the Surety Agreement.
Communications (PBCOM) to fund its purified water
distribution business.

The loan was guaranteed by collateral over the PBCOM subsequently discovered that the insertion
property covered by Transfer Certificate of Title No. was ordered by the bank auditor. It alleged that when
T-13020. The loan was eventually approved. the Surety Agreement was inspected by the bank
auditor, he called the attention of the loans clerk,
Kenneth Cabahug, as to why the words “In his
personal capacity” were not indicated under the
In August 1996, AWRI applied for a bigger loan from signature of each surety, in accordance with bank
PBCOM for additional capitalization using the same standard operating procedures. The auditor then
Board Resolution, but without any additional real ordered Mr. Cabahug to type the words “In his
estate collateral. Considering that the proposed personal capacity” below the second signatures of
additional loan was unsecured, PBCOM required all petitioners. However, the notary public was
the members of the Board of Directors of AWRI to
become sureties. Thus, on August 16, 1996, a Surety never informed of the insertion.[14] Mr. Cabahug
Agreement was executed. subsequently executed an affidavit attesting to the
circumstances why the insertion was made.

Thereafter, AWRI informed the bank of its desire to


surrender PBCOM then filed a Reply and Answer to
Counterclaim with Motion for Leave of Court to
and/or assign in its favor, all the present properties of Substitute Annex “A” of the Complaint, wherein it
the former to apply as dacion en pago for AWRI’s attached the duplicate original copy retrieved from the
existing loan obligation to the bank. PBCOM sent a file of the notary public.
reply

denying the request. On May 12, 1999, PBCOM sent


a letter to petitioners demanding full payment of its Issue:
obligation to the bank.
Whether or not PBCom has a right to amend its
complaint.

Its demands having remained unheeded, PBCOM


instructed its counsel to file a complaint for collection
against petitioners. Rulings:

Yes. After petitioners have filed their answer, Section


3, Rule 10 of the Rules of Court specifically allows
On July 3, 1999, petitioners filed their Answer. In amendment by leave of court. The said Section
support of their allegations, petitioners attached to states:
their Answer a certified photocopy of the Surety
Agreement issued on March 25, 1999 by the Records
Management and Archives Office in Davao City,
showing that the words “In his personal capacity” SECTION 3. Amendments by leave of court. Except
were not found at the foot of page two of the as provided in the next preceding section, substantial
document where their signatures appeared. 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 mistake on their part to have submitted it in the first
after notice to the adverse party, and an opportunity place instead of the original agreement. It also
to be heard. admitted that, through inadvertence, the copy that
was attached to the complaint was the copy wherein
the words “IN HIS PERSONAL CAPACITY” were
inserted to conform to the bank’s standard practice.
This Court has emphasized the import of Section 3, This alteration was made without the knowledge of
Rule 10 of the 1997 Rules of Civil Procedure in the notary public. PBCOM’s counsel had no idea that
Valenzuela v. Court of Appeals, thus: what it submitted was the altered document, thereby
necessitating the substitution of the surety agreement
with the original thereof, in order that the case would
Interestingly, Section 3, Rule 10 of the 1997 Rules of be judiciously resolved.
Civil Procedure amended the former rule in such
manner that the phrase “or that the cause of action or
defense is substantially altered” was stricken­off and PHIL. PORTS AUTHORITY VS. WG&A
not retained in the new rules. The clear import of such G.R. No. 158401, Jan. 28, 2008
amendment in Section 3, Rule 10 is that under the
new rules, “the amendment may (now) substantially FACTS:
alter the cause of action or defense.” This should only
be true, however, when despite a substantial change Private respondent William Gothong &
or alteration in the cause of action or defense, the Aboitiz, Inc. (WG&A) entered into a contract of lease
amendments sought to be made shall serve the with the Philippine Port Authority (PPA)to lease the
higher interests of substantial justice, and prevent Marine Slip Way in the North Harbor which is owned
delay and equally promote the laudable objective of by PPA. The term of the contract was for 6 months
the rules which is to secure a “just, speedy and wherein parties to the contract stipulated therein that
inexpensive disposition of every action and “the lease of the area shall take effect on Jan. 1, 2001
proceeding.” to Jun. 30, 2001 or until such time that the PPA
turns over its operation to the winning bidder for
the North Harbor modernization.” The said
The granting of leave to file amended pleading is a contract was eventually conformed to and signed by
matter particularly addressed to the sound discretion WG&A through its President. Thereafter, in
of the trial court; and that discretion is broad, subject accordance with the stipulations made in the lease
only to the limitations that the amendments should not agreement, PPA surrendered possession of the
substantially change the cause of action or alter the Marine Slip Way in favor of WG&A.
theory of the case, or that it was not made to delay
the action. Nevertheless, as enunciated in However, believing that the said contract
Valenzuela, even if the amendment substantially already expired on Jun. 30, 2001, PPA subsequently
alters the cause of action or defense, such sent a letter to WG&A dated Nov. 12, 2001 directing
amendment could still be allowed when it is sought to the latter to vacate the contested premises not later
serve the higher interest of substantial justice; prevent than Nov. 30, 2001. In response, WG&A wrote to PPA
delay; and secure a just, speedy and inexpensive on Nov. 27, 2001 urging the latter to reconsider its
disposition of actions and proceedings. decision to eject the former but said request was
denied by PPA.
The courts should be liberal in allowing amendments
to pleadings to avoid a multiplicity of suits and in order Thus, on Nov. 28, 2001 WG&A filed an
that the real controversies between the parties are Injunction suit with the RTC of Manila wherein it
presented, their rights determined, and the case claims therein that the PPA unjustly, illegally and
decided on the merits without unnecessary delay. prematurely terminated the lease contract. It likewise
prayed for the issuance of a TRO to arrest the
evacuation. In its complaint, it also sought recovery of
damages for breach of contract and attorney’s fees.
In the present case, there was no fraudulent intent on
the part of PBCOM in submitting the altered surety
agreement. In fact, the bank admitted that it was a
On Dec. 11, 2001, WG&A amended its order denying the admission of the second amended
complaint for the first time. The complaint was still complaint filed by WG&A.
denominated as one for Injunction with prayer for
TRO. In the said pleading, it incorporated statements The RTC applied the old Sec. 3, Rule 10 of
to the effect that PPA is already stopped from denying the Rules of Court which says that: “Sec. 3.
that the correct period of lease is “until such time that Amendments by leave of Court. – after the case is set
the North Harbor Modernization project has been for hearing, substantial amendments may be made
bidded out to and operations turned over to the only upon leave of court. But such leave may be
winning bidder.” It likewise included, as its third refused if it appears to the court that the motion was
cause of action, the additional relief in its prayer, made with intent to delay the action or that the cause
that should it be forced to vacate said facility, it of action or defense is substantially altered. Orders of
should be deemed as entitled to be refunded of the court upon the matters provided in this section
the value of the improvements it introduced in the shall be made upon motion filed in court, and after
leased property. Following the first amendment in notice to the adverse party, and an opportunity to be
the complaint of WG&A, PPA submitted its answer on heard,” instead of the provisions of the 1997 Rules of
Jan. 23, 2001. Meanwhile, the TRO sought by WG&A Civil Procedure, amending Sec. 3, Rule 10, to wit:
was denied by the RTC. Then it moved for
reconsideration on Feb. 11, 2002. Sec. 3. Amendments by leave of court. Except as
provided in the next preceding section, substantial
Shortly thereafter, it filed a Motion to Admit amendments may be made only upon leave of
Attached Second Amended Complaint. This time, court. But such leave may be refused if it appears
however, the complaint was already captioned as one to the court that the motion was made with intent
for Injunction with Prayer for TRO and/or Writ of to delay. Orders of the court upon the matters
Preliminary Injunction and damages and/or for provided in this section shall be made upon motion
reformation of contract. Also, it included as its filed in court, and after notice to the adverse party,
fourth cause of action and additional relief in its and an opportunity to be heard.
prayer, the reformation of the contract as it failed
to express or embody the true intent of the The court has emphasized the import of Sec.
contracting parties. The PPA opposed its 3, Rule 10 of the 1997 Rules of Civil Procedure in
admission and argued that the reformation sought for Valenzuela vs. CA, thus:
by WG&A constituted substantial amendment, which
if granted, will substantially alter the latter’s cause of Interestingly, section 3, Rule 10 of the 1997
action and theory of the case. Rules of Civil Procedure amended the former rule in
such manner that the phrase “or that the cause of
The RTC denied the admission of the action or defense is substantially altered” was
second amended complaint, and its motion for stricken-off and not retained in the new rules. The
reconsideration was also denied. And so it filed a clear import of such amendment in section 3, Rule
petition for certiorari with the CA. The CA granted the 10 is that under the new rules, “the amendment
petition and nullified the order and directed the RTC may (now) substantially alter the cause of action
to admit the second amended complaint pursuant to or defense.” This should only be true, however,
Sec. 3, Rule 10 of the 1997 Rules of Civil Procedure. when despite a substantial change or alteration in the
cause of action or defense, the amendments sought
ISSUE: to be made shall serve to the higher interests of
substantial justice, and prevent delay and equally
Whether or not the CA erred in ruling that the promote the laudable objective of the rules which is to
RTC committed grave abuse of discretion when it secure a “just, speedy and inexpensive disposition of
denied the admission of the second amended every cause of action and proceding.”
complaint.
The application of the old rules by the RTC
HELD: almost 5 years after its amendment by the 1997 Rules
of Civil Procedure patently constitutes grave abuse of
No. The CA did no err in finding that the RTC discretion.
committed grave abuse of discretion in issuing the
remaining P300,000.00 which
[G. R. No. 138085. November 11, 2004] impaired the timetable of the project
AZOLLA FARMS and FRANCISCO R. and inevitably affected the viability
YUSECO, petitioners, vs. COURT OF APPEALS of the project resulting in its
and SAVINGS BANK OF MANILA, respondents. collapse, and resulted in their
failure to pay off the loan. Thus,
 Petitioner Francis R. Yuseco, Jr., is the petitioners pray for P1,000,000.00
Chairman, President and Chief Operating as actual damages, among
Officer of petitioner Azolla Farms others.[10]
International Philippines (Azolla Farms), a  Respondent Savings Bank filed its Answer
corporation duly organized under existing denying the allegations in the complaint.
laws and engaged in the development, o It contends that there was evidence
exploitation, production, manufacturing, that Yuseco was using the loan
promotion, marketing, and sale of natural, proceeds for expenses totally
organic minerals, including its by-products, unrelated to the project and they
with the ultimate objective of utilizing said decided to withhold the remaining
products for the promotion of food amount until Yuseco gave the
production. assurance that the diversion of the
 In 1982, Azolla Farms undertook to funds will be stopped. Respondent
participate in the National Azolla Production bank believed that the 90-day
Program wherein it will purchase all the interval between the
Azolla produced by the Azolla beneficiaries two tranches could not have
in the amount not exceeding the peso value impaired the operation of the
of all the inputs provided to them. project, and petitioners’ subsequent
 To finance its participation, petitioners receipt of the proceeds confirmed
applied for a loan with Credit Manila, Inc., their agreement to the terms of the
which the latter endorsed to its sister loan.
company, respondent Savings Bank of  Respondent, as defendant, rested its case.
Manila (Savings Bank).  Petitioners filed a Motion to Admit Amended
 The Board of Directors of Azolla Farms, Complaint alleging that the testimony of
passed a board resolution, authorizing defense witness Jesus Venturina raised the
Yuseco to borrow from Savings Bank in an issue of the invalidity of the promissory notes
amount not exceeding P2,200,000.00.[3] and the real estate mortgage.[11]
 The loan having been approved, Yuseco Petitioners sought the
executed a promissory note, promising to amendment of the complaint to conform
pay Savings Bank the sum to the issues and evidence presented.
of P1,400,000.00. The net proceeds In their motion to amend complaint,
of P1,225,443.31 was released to FNCB petitioners allege that:
Finance, the mortgagee of a 548- square During the direct
meter lot with residential house owned by
examination of defendant
Yuseco. With the release of the proceeds,
FNCB Finance released the mortgage,[5] and bank’s witness Jesus
in turn, the property was mortgaged to Venturina, the testimony of
Savings Bank as collateral for the defense witness raised
loan.[6] Yuseco and Francisco Bargas also the issue of the invalidity
executed an assignment of their shares of of the promissory notes
stock in Azolla Farms as additional and the real estate
security.[7] Yuseco then executed two other
mortgage and that the
promissory notes on September 27,
1982[8] and January 4, 1983,[9] both for the pleadings in this case, the
amount of P300,000.00. complaint, be amended to
 However, the Azolla Farms project conform to the issues
collapsed. raised and the evidence
presented;
Filing of the Case
 Petitioners Yuseco and Azolla Farms filed > The trial court granted the motion and admitted the
with the Regional Trial Court of Manila
Amended Complaint.
(Branch 25), a complaint for
damages(blaming savings bank):
o Their complaint alleges that > The Court of Appeals, however, ruled that the trial
Savings Bank unjustifiably refused court should not have admitted the Amended
to promptly release the Complaint because it altered petitioners’ cause of
action. Apparently, the Court of Appeals treated In cases where an objection is made, the
petitioners’ amendment of the complaint as one court may nevertheless admit the evidence
involving amendments after the case is set for hearing where the adverse party fails to satisfy the
under Section 3, Rule 10 of the Rules of Court, which court that the admission of the evidence
is not however applicable to the present case. would prejudice him in maintaining his
defense upon the merits, and the court may
Hence, the herein petition filed. grant him a continuance to enable him to
meet the new situation created by the
ISSUE: evidence.
WON the trial court erred in admitting petitioners’ As can be gleaned from the records, it was
amended complaint; petitioners’ belief that respondent’s evidence
WON the trial court erred in nullifying the promissory justified the amendment of their
notes, the real estate mortgage, and its extrajudicial complaint. The trial court agreed thereto and
foreclosure. admitted the amended complaint. On this
score, it should be noted that courts are
RULING: given the discretion to allow amendments of
 The trial court cannot be faulted for admitting pleadings to conform to the evidence
the amended complaint as it had the presented during the trial.
discretion to do so.
However, whether the evidence introduced by In Bank of America, NT and SA vs. American Realty
respondent, indeed, supported the finding that the Corporation, the Court stated:
promissory notes, the real estate mortgage and the There have been instances where the Court has held
foreclosure sale, are invalid, is a different matter that even without the necessary amendment, the
altogether. amount proved at the trial may be validly awarded,

The amendment of the complaint was made pursuant In Tuazon v. Bolanos (95 Phil. 106), where we said
to Section 5, Rule 10 of the Rules of Court, governing that if the facts shown entitled plaintiff to relief other
amendment of pleadings to conform to evidence, to than that asked for, no amendment to the complaint
wit: was necessary, especially where defendant had
SEC. 5. Amendment to conform to or authorize himself raised the point on which recovery was
presentation of evidence .—When issues not raised based.The appellate court could treat the pleading as
by the pleadings are tried by express or implied amended to conform to the evidence although the
consent of the parties, they shall be treated in all pleadings were actually not amended. Amendment is
respects, as if they had been raised in the pleadings. also unnecessary when only clerical error or non
Such amendment of the pleadings as may be substantial matters are involved, as we held in Bank
necessary to cause them to conform to the evidence of the Philippine Islands vs. Laguna (48 Phil. 5). In
and to raise these issues may be made upon motion Co Tiamco vs. Diaz (75 Phil. 672), we stressed that
of any party at any time, even after judgment; but the rule on amendment need not be applied rigidly,
failure so to amend does not affect the result of the particularly where no surprise or prejudice is caused
trial of these issues. If evidence is objected to at the the objecting party. And in the recent case of
trial on the ground that it is not within the issues made National Power Corporation vs. Court of Appeals (113
by the pleadings, the court may allow the pleadings to SCRA 556), we held that where there is a variance in
be amended and shall do so freely when the the defendant’s pleadings and the evidence adduced
presentation of the merits of the action will be by it at the trial, the Court may treat the pleading as
subserved thereby and the objecting party fails to amended to conform with the evidence.
satisfy the court that the admission of such evidence
would prejudice him in maintaining his action or  The Court of Appeals disagreed with the trial
defense upon the merits. The court may grant a court and held that there was no novation,
continuance to enable the objecting party to meet hence, the promissory notes and the real
such evidence. estate mortgage are valid and binding.

In Mercader vs. Development Bank of the Phils. The Supreme Court agree with the appellate
(Cebu Branch),[21] court.
the Court explained that the foregoing provision
envisions two scenarios – Novation is the extinguishment of an obligation by the
first, when evidence is introduced on an issue not substitution or change of the obligation by a
alleged in the pleadings and no objection was subsequent one which extinguishes or modifies the
interjected and first, either by changing the object or principal
second, when evidence is offered on an issue not conditions, or, by substituting another in place of the
alleged in the pleadings but this time an objection was debtor, or by subrogating a third person in the rights
interpolated. of the creditor.[27] In order for novation to take place,
the concurrence of the following requisites is action and the ends of substantial justice will be
indispensable:[28] subserved thereby. The court may grant a
1. there must be a previous valid obligation, continuance to enable the amendment to be made.
2. there must be an agreement of the parties
concerned to a new contract,
3. there must be the extinguishment of the old
contract, and
4. there must be the validity of the new contract. G.R. No. 172825 October 11, 2012
SPOUSES MINIANO B. DELA CRUZ and LETA L.
All these requisites are patently lacking in DELA CRUZ, Petitioners,
this case. vs.
ANA MARIE CONCEPCION, Respondent.
In the first place, there is no new obligation that
supposedly novated the promissory notes or the real
estate mortgage, or a pre-existing obligation that was
Facts: A petition for review on certiorari under Rule
novated by the promissory notes and the real estate
45 of the Rules of Court was filed by petitioners
mortgage.
spouses Miniano B. Dela Cruz and Leta L. Dela Cruz
against respondent Ana Marie Concepcion on the
What transpired was an application for loan was filed
decision of the Court of Appeals (CA) dated March 31,
by plaintiffs with Credit Manila in an amount greater
2005 and Resolution dated May 24, 2006 in CA-G.R.
than the P2 million eventually granted. This loan
CV No. 83030.
application was endorsed to defendant Savings Bank
of Manila, processed by the latter and eventually On March 25, 1996, petitioners (as vendors)
approved by it in the amount of P2 million. entered into a Contract to Sell with respondent (as
vendee) involving a house and lot in Cypress St.,
Petitioner Yuseco being himself a banker, cannot Phase I, Town and Country Executive Village, Antipolo
pretend to have been unaware of banking procedures City for a consideration of P2,000,000.00 subject to
that normally recognize a “loan application” as just the following terms and conditions:
that, a mere application. Only upon the bank’s
approval of the loan application in the amount and a) That an earnest money of P100,000.00
under such terms it deems viable and acceptable, that shall be paid immediately;
a binding and effective loan agreement comes into b) That a full down payment of Four Hundred
existence. Without any such first or original “loan Thousand Pesos (P400,000.00) shall be paid
agreement” as approved in the amount and under on February 29, 1996;
specified terms by the bank, there can be nothing
whatsoever that can be subsequently novated. c) That Five Hundred Thousand Pesos
(P500,000.00) shall be paid on or before May
The promissory notes signed by Yuseco were 5, 1996; and
respondent Savings Bank’s promissory notes, and the d) That the balance of One Million Pesos
real estate mortgage was likewise respondent (P1,000,000.00) shall be paid on installment
Savings Bank’s standard real estate mortgage with interest of Eighteen Percent (18%) per
form. Obviously, this case is an attempt by petitioners annum or One and a half percent (1-1/2 %)
to extricate themselves from their obligations; but they interest per month, based on the diminishing
cannot be allowed to have their cake and eat it, too. balance, compounded monthly, effective May
6, 1996. The interest shall continue to run
until the whole obligation shall have been
fully paid. The whole One Million Pesos shall
Rule 10, Section 5. Amendment to conform to or be paid within three years from May 6, 1996;
authorize presentation of evidence. — When issues
not raised by the pleadings are tried with the express e) That the agreed monthly amortization of
or implied consent of the parties they shall be treated Fifty Thousand Pesos (P50,000.00), principal
in all respects as if they had been raised in the and interest included, must be paid to the
pleadings. Such amendment of the pleadings as may Vendors, without need of prior demand, on or
be necessary to cause them to conform to the before May 6, 1996, and every month
evidence and to raise these issues may be made thereafter. Failure to pay the monthly
upon motion of any party at any time, even after amortization on time, a penalty equal to Five
judgment; but failure to amend does not effect the Percent (5%) of the amount due shall be
result of the trial of these issues. If evidence is imposed, until the account is updated. In
objected to at the trial on the ground that it is not addition, a penalty of One Hundred Pesos
within the issues made by the pleadings, the court per day shall be imposed until the account is
may allow the pleadings to be amended and shall do updated;
so with liberality if the presentation of the merits of the f) That after receipt of the full payment, the
Vendors shall execute the necessary WHEREFORE, premises considered, this
Absolute Deed of Sale covering the house case is hereby DISMISSED. The plaintiff is hereby
and lot mentioned above x x x ordered to pay the defendant’s counterclaim,
amounting to wit:
Thereon, Respondent made the following
payments, to wit: a) P300,000 as moral damages; and
(1) P500,000.00 by way of b) P100,000 plus P2,000 per court
downpayment; appearance as attorney’s fees.
(2) P500,000.00 on May 30, 1996; SO ORDERED.
(3) P500,000.00 paid on January The RTC noted that the evidence formally
22, 1997; and offered by petitioners have not actually been marked
as none of the markings were recorded. Thus, it found
(4) P500,000.00 bounced check no basis to grant their claims, especially since the
dated June 30, 1997 which was subsequently amount claimed in the complaint is different from that
replaced by another check of the same amount, testified to. The court, on the other hand, granted
dated July 7, 1997. respondent’s counterclaim.
Respondent was, therefore, able to pay a On appeal, the CA affirmed the decision with
total of P2,000,000.00. modification by deleting the award of moral damages
Before respondent issued the P500,000.00 and attorney’s fees in favor of respondent. It agreed
replacement check, she told petitioners that based on with the RTC that the evidence presented by
the computation of her accountant as of July 6, 1997, petitioners cannot be given credence in determining
her unpaid obligation which includes interests and the correct liability of respondent. Considering that the
penalties was only P200,000.00. Petitioners agreed purchase price had been fully paid by respondent
with respondent and said "if P200,000.00 is the ahead of the scheduled date agreed upon by the
correct balance, it is okay with us." parties, petitioners were not awarded the excessive
penalties and interests. The CA thus maintained that
Meanwhile, the title to the property was respondent’s liability is limited to P200,000.00 as
transferred to respondent. Petitioners later reminded claimed by respondent and originally admitted by
respondent to pay P209,000.00 within three months. petitioners. This amount, however, had already been
They claimed that the said amount remained unpaid, paid by respondent and received by petitioners’
despite the transfer of the title to the property to representative. Finally, the CA pointed out that the
respondent. Several months later, petitioners made RTC did not explain in its decision why moral
further demands stating the supposed correct damages and attorney’s fees were awarded.
computation of respondent’s liabilities. Despite Considering also that bad faith cannot be attributed to
repeated demands, petitioners failed to collect the petitioners when they instituted the collection suit, the
amounts they claimed from respondent. CA deleted the grant of their counterclaims.
Hence, the Complaint for Sum of Money Aggrieved, petitioners come before the Court
With Damages filed with the Regional Trial Court in this petition for review on certiorari under Rule 45 of
(RTC) of Antipolo, Rizal. The case was docketed as the Rules of Court.
Civil Case No. 98-4716.
In her Answer with Compulsory
Counterclaim, respondent claimed that her unpaid Issue: WON the failure of a party to amend a
obligation to petitioners is only P200,000.00 as earlier pleading to conform to the evidence adduced during
confirmed by petitioners and not P487,384.15 as later trial will preclude adjudication by the court on the
alleged in the complaint. Respondent thus prayed for basis of such evidence which may embody new
the dismissal of the complaint. By way of issues not raised in the pleadings.
counterclaim, respondent prayed for the payment of
moral damages and attorney’s fees. During the
presentation of the parties’ evidence, in addition to Ruling: Invoking the rule on judicial admission,
documents showing the statement of her paid petitioners insist that respondent admitted in her
obligations, respondent presented a receipt Answer with Compulsory Counterclaim that she had
purportedly indicating payment of the remaining paid only a total amount of P2 million and that her
balance of P200,000.00 to Adoracion Losloso unpaid obligation amounts to P200,000.00. They thus
(Losloso) who allegedly received the same on behalf maintain that the RTC and the CA erred in concluding
of petitioners. that said amount had already been paid by
respondent. Petitioners add that respondent’s total
On March 8, 2004, the RTC rendered a liability as shown in the latter’s statement of account
Decision in favor of respondent, the dispositive was erroneously computed for failure to compound
portion of which reads: the monthly interest agreed upon. Petitioners also
claim that the RTC and the CA erred in giving It is, thus, necessary to discuss the effect of
credence to the receipt presented by respondent to failure of respondent to plead payment of its
show that her unpaid obligation had already been obligations.
paid having been allegedly given to a person who was
not armed with authority to receive payment. Section 1, Rule 9 of the Rules of Court
states that "defenses and objections not pleaded
The petition is without merit. either in a motion to dismiss or in the answer are
deemed waived." Hence, respondent should have
It is undisputed that the parties entered into been barred from raising the defense of payment of
a contract to sell a house and lot for a total the unpaid P200,000.00. However, Section 5, Rule
consideration of P2 million. Considering that the 10 of the Rules of Court allows the amendment to
property was payable in installment, they likewise conform to or authorize presentation of evidence, to
agreed on the payment of interest as well as penalty wit:
in case of default. It is likewise settled that respondent
was able to pay the total purchase price of P2 million Section 5. Amendment to
ahead of the agreed term. Afterwhich, they agreed on conform to or authorize presentation of evidence.
the remaining balance by way of interest and – When issues not raised by the pleadings are
penalties which is P200,000.00. Considering that the tried with the express or implied consent of the
term of payment was not strictly followed and the parties, they shall be treated in all respects as if they
purchase price had already been fully paid by had been raised in the pleadings. Such
respondent, the latter presented to petitioners her amendment of the pleadings as may be necessary to
computation of her liabilities for interests and cause them to conform to the evidence and to
penalties which was agreed to by petitioners. raise these issues may be made upon motion of any
Petitioners also manifested their conformity to the party at any time, even after judgment; but failure to
statement of account prepared by respondent. amend does not affect the result of the trial
of these issues. If evidence is objected to at the trial
In paragraph (9) of petitioners’ Complaint, on the ground that it is not within the issues made by
they stated that: the pleadings, the court may allow the pleadings to be
9) That the Plaintiffs answered the Defendant as amended and shall do so with liberality if the
follows: "if P200,000 is the correct balance, it is okay presentation of the merits of the action and the ends
with us." x x x of substantial justice will be subserved thereby. The
court may grant a continuance to enable the
But in paragraph (17) thereof, petitioners amendment to be made.
claimed that defendant’s outstanding liability as of
November 6, 1997 was P487,384.15. Different The foregoing provision envisions two
amounts, however, were claimed in their demand scenarios, namely, when evidence is introduced in an
letter and in their testimony in court. issue not alleged in the pleadings and no objection
was interjected; and when evidence is offered on an
With the foregoing factual antecedents, issue not alleged in the pleadings but this time an
petitioners cannot be permitted to assert a different objection was raised. When the issue is tried without
computation of the correct amount of respondent’s the objection of the parties, it should be treated in all
liability. respects as if it had been raised in the pleadings. On
It is noteworthy that in answer to petitioners’ the other hand, when there is an objection, the
claim of her purported unpaid obligation, respondent evidence may be admitted where its admission will
admitted in her Answer with Compulsory not prejudice him.
Counterclaim that she paid a total amount of P2 Thus, while respondent judicially admitted in
million representing the purchase price of the subject her Answer that she only paid P2 million and that she
house and lot. She then manifested to petitioners and still owed petitioners P200,000.00, respondent
conformed to by respondent that her only balance claimed later and, in fact, submitted an evidence to
was P200,000.00. Nowhere in her Answer did she show that she already paid the whole amount of her
allege the defense of payment. However, during the unpaid obligation. It is noteworthy that when
presentation of her evidence, respondent submitted a respondent presented the evidence of payment,
receipt to prove that she had already paid the petitioners did not object thereto. When the receipt
remaining balance. Both the RTC and the CA was formally offered as evidence, petitioners did not
concluded that respondent had already paid the manifest their objection to the admissibility of said
remaining balance of P200,000.00. Petitioners now document on the ground that payment was not an
assail this, insisting that the court should have issue. Apparently, petitioners only denied receipt of
maintained the judicial admissions of respondent in said payment and assailed the authority of Losloso to
her Answer with Compulsory Counterclaim, especially receive payment. Since there was an implied consent
as to their agreed stipulations on interests and on the part of petitioners to try the issue of payment,
penalties as well as the existence of outstanding even if no motion was filed and no amendment of the
obligations. pleading has been ordered, the RTC cannot be
faulted for admitting respondent’s testimonial and
documentary evidence to prove payment. the creditor or through error induced by fraud of a
third person.
As stressed by the Court in Royal Cargo
Corporation v. DFS Sports Unlimited, Inc., In general, a payment in order to be effective
to discharge an obligation, must be made to the
The failure of a party to amend a pleading to conform proper person. Thus, payment must be made to the
to the evidence adduced during trial does not obligee himself or to an agent having authority,
preclude adjudication by the court on the basis of express or implied, to receive the particular payment.
such evidence which may embody new issues not Payment made to one having apparent authority to
raised in the pleadings. x x x Although, the pleading receive the money will, as a rule, be treated as though
may not have been amended to conform to the actual authority had been given for its receipt.
evidence submitted during trial, judgment may Likewise, if payment is made to one who by law is
nonetheless be rendered, not simply on the basis of authorized to act for the creditor, it will work a
the issues alleged but also on the issues discussed discharge. The receipt of money due on a judgment
and the assertions of fact proved in the course of the by an officer authorized by law to accept it will,
trial. The court may treat the pleading as if it had been therefore, satisfy the debt.
amended to conform to the evidence, although it had
not been actually amended. x x x Clearly, a court may Admittedly, payment of the remaining
rule and render judgment on the basis of the evidence balance of P200,000.00 was not made to the creditors
before it even though the relevant pleading had not themselves. Rather, it was allegedly made to a certain
been previously amended, so long as no surprise or Losloso. Respondent claims that Losloso was the
prejudice is thereby caused to the adverse party. Put authorized agent of petitioners, but the latter dispute
a little differently, so long as the basic requirements of it.
fair play had been met, as where the litigants were
given full opportunity to support their respective Losloso’s authority to receive payment was
contentions and to object to or refute each other's embodied in petitioners’ Letter addressed to
evidence, the court may validly treat the pleadings as respondent, dated August 7, 1997, where they
if they had been amended to conform to the evidence informed respondent of the amounts they advanced
and proceed to adjudicate on the basis of all the for the payment of the 1997 real estate taxes. In said
evidence before it. letter, petitioners reminded respondent of her
remaining balance, together with the amount of taxes
To be sure, petitioners were given ample paid. Taking into consideration the busy schedule of
opportunity to refute the fact of and present evidence respondent, petitioners advised the latter to leave the
to prove payment. payment to a certain "Dori" who admittedly is Losloso,
or to her trusted helper. This is an express authority
With the evidence presented by the given to Losloso to receive payment.
contending parties, the more important question to
resolve is whether or not respondent’s obligation had Moreover, as correctly held by the CA:
already been extinguished by payment.
Furthermore, that Adoracion Losloso was
We rule in the affirmative as aptly held by the indeed an agent of the appellant spouses is borne out
RTC and the CA. by the following admissions of plaintiff-appellant Atty.
Miniano dela Cruz, to wit:
Respondent’s obligation consists of payment
of a sum of money. In order to extinguish said Q: You would agree with me that
obligation, payment should be made to the proper you have authorized this Doiry Losloso to receive
person as set forth in Article 1240 of the Civil Code, to payment of whatever balance is due you
wit: coming from Ana Marie Concepcion, that is correct?
Article 1240. Payment shall be A: In one or two times but not total
made to the person in whose favor the obligation has authority, sir.
been constituted, or his successor in interest, or
any person authorized to receive it. Q: Yes, but you have authorized her
to receive payment?
The Court explained in Cambroon v. City of
Butuan, cited in Republic v. De Guzman, to whom A: One or two times, yes
payment should be made in order to extinguish an Thus, as shown in the receipt signed by
obligation: petitioners’ agent and pursuant to the authority
Payment made by the debtor to the person granted by petitioners to Losloso, payment made to
of the creditor or to one authorized by him or by the the latter is deemed payment to petitioners. We find
law to receive it extinguishes the obligation. When no reason to depart from the RTC and the CA
payment is made to the wrong party, however, the conclusion that payment had already been made and
obligation is not extinguished as to the creditor who is that it extinguished respondent's obligations.
without fault or negligence even if the debtor acted in WHEREFORE, premises considered, the
utmost good faith and by mistake as to the person of petition is DENIED for lack of merit. The Court of
Appeals Decision dated March 31, 2005 and with interest of Eighteen Percent (18%) per
Resolution dated May 24, 2006 in CA-G.R. CV No. annum or One and a half percent (1-1/2 %)
83030, are AFFIRMED. interest per month, based on the diminishing
balance, compounded monthly, effective May
SO ORDERED. 6, 1996. The interest shall continue to run
until the whole obligation shall have been
fully paid. The whole One Million Pesos shall
Rule 10, Section 5. Amendment to conform to or be paid within three years from May 6, 1996;
authorize presentation of evidence. — When issues
e) That the agreed monthly amortization of
not raised by the pleadings are tried with the express
Fifty Thousand Pesos (P50,000.00), principal
or implied consent of the parties they shall be treated
and interest included, must be paid to the
in all respects as if they had been raised in the
Vendors, without need of prior demand, on or
pleadings. Such amendment of the pleadings as may
before May 6, 1996, and every month
be necessary to cause them to conform to the
thereafter. Failure to pay the monthly
evidence and to raise these issues may be made
amortization on time, a penalty equal to Five
upon motion of any party at any time, even after
Percent (5%) of the amount due shall be
judgment; but failure to amend does not effect the
imposed, until the account is updated. In
result of the trial of these issues. If evidence is
addition, a penalty of One Hundred Pesos
objected to at the trial on the ground that it is not
per day shall be imposed until the account is
within the issues made by the pleadings, the court
updated;
may allow the pleadings to be amended and shall do
so with liberality if the presentation of the merits of the f) That after receipt of the full payment, the
action and the ends of substantial justice will be Vendors shall execute the necessary
subserved thereby. The court may grant a Absolute Deed of Sale covering the house
continuance to enable the amendment to be made. and lot mentioned above x x x
Thereon, Respondent made the following
payments, to wit:
(1) P500,000.00 by way of
G.R. No. 172825 October 11, 2012
downpayment;
SPOUSES MINIANO B. DELA CRUZ and LETA L.
(2) P500,000.00 on May 30, 1996;
DELA CRUZ, Petitioners,
vs. (3) P500,000.00 paid on January
ANA MARIE CONCEPCION, Respondent. 22, 1997; and
(4) P500,000.00 bounced check
dated June 30, 1997 which was subsequently
Facts: A petition for review on certiorari under Rule
replaced by another check of the same amount,
45 of the Rules of Court was filed by petitioners
dated July 7, 1997.
spouses Miniano B. Dela Cruz and Leta L. Dela Cruz
against respondent Ana Marie Concepcion on the Respondent was, therefore, able to pay a
decision of the Court of Appeals (CA) dated March 31, total of P2,000,000.00.
2005 and Resolution dated May 24, 2006 in CA-G.R.
CV No. 83030. Before respondent issued the P500,000.00
replacement check, she told petitioners that based on
On March 25, 1996, petitioners (as vendors) the computation of her accountant as of July 6, 1997,
entered into a Contract to Sell with respondent (as her unpaid obligation which includes interests and
vendee) involving a house and lot in Cypress St., penalties was only P200,000.00. Petitioners agreed
Phase I, Town and Country Executive Village, Antipolo with respondent and said "if P200,000.00 is the
City for a consideration of P2,000,000.00 subject to correct balance, it is okay with us."
the following terms and conditions:
Meanwhile, the title to the property was
a) That an earnest money of P100,000.00 transferred to respondent. Petitioners later reminded
shall be paid immediately; respondent to pay P209,000.00 within three months.
They claimed that the said amount remained unpaid,
b) That a full down payment of Four Hundred
despite the transfer of the title to the property to
Thousand Pesos (P400,000.00) shall be paid
respondent. Several months later, petitioners made
on February 29, 1996;
further demands stating the supposed correct
c) That Five Hundred Thousand Pesos computation of respondent’s liabilities. Despite
(P500,000.00) shall be paid on or before May repeated demands, petitioners failed to collect the
5, 1996; and amounts they claimed from respondent.
d) That the balance of One Million Pesos Hence, the Complaint for Sum of Money
(P1,000,000.00) shall be paid on installment With Damages filed with the Regional Trial Court
(RTC) of Antipolo, Rizal. The case was docketed as the Rules of Court.
Civil Case No. 98-4716.
In her Answer with Compulsory
Issue: WON the failure of a party to amend a
Counterclaim, respondent claimed that her unpaid
obligation to petitioners is only P200,000.00 as earlier pleading to conform to the evidence adduced during
confirmed by petitioners and not P487,384.15 as later trial will preclude adjudication by the court on the
alleged in the complaint. Respondent thus prayed for basis of such evidence which may embody new
the dismissal of the complaint. By way of issues not raised in the pleadings.
counterclaim, respondent prayed for the payment of
moral damages and attorney’s fees. During the
presentation of the parties’ evidence, in addition to Ruling: Invoking the rule on judicial admission,
documents showing the statement of her paid petitioners insist that respondent admitted in her
obligations, respondent presented a receipt Answer with Compulsory Counterclaim that she had
purportedly indicating payment of the remaining paid only a total amount of P2 million and that her
balance of P200,000.00 to Adoracion Losloso unpaid obligation amounts to P200,000.00. They thus
(Losloso) who allegedly received the same on behalf maintain that the RTC and the CA erred in concluding
of petitioners. that said amount had already been paid by
respondent. Petitioners add that respondent’s total
On March 8, 2004, the RTC rendered a liability as shown in the latter’s statement of account
Decision in favor of respondent, the dispositive was erroneously computed for failure to compound
portion of which reads: the monthly interest agreed upon. Petitioners also
WHEREFORE, premises considered, this claim that the RTC and the CA erred in giving
case is hereby DISMISSED. The plaintiff is hereby credence to the receipt presented by respondent to
ordered to pay the defendant’s counterclaim, show that her unpaid obligation had already been
amounting to wit: paid having been allegedly given to a person who was
not armed with authority to receive payment.
a) P300,000 as moral damages; and
The petition is without merit.
b) P100,000 plus P2,000 per court
appearance as attorney’s fees. It is undisputed that the parties entered into
a contract to sell a house and lot for a total
SO ORDERED. consideration of P2 million. Considering that the
property was payable in installment, they likewise
The RTC noted that the evidence formally agreed on the payment of interest as well as penalty
offered by petitioners have not actually been marked in case of default. It is likewise settled that respondent
as none of the markings were recorded. Thus, it found was able to pay the total purchase price of P2 million
no basis to grant their claims, especially since the ahead of the agreed term. Afterwhich, they agreed on
amount claimed in the complaint is different from that the remaining balance by way of interest and
testified to. The court, on the other hand, granted penalties which is P200,000.00. Considering that the
respondent’s counterclaim. term of payment was not strictly followed and the
On appeal, the CA affirmed the decision with purchase price had already been fully paid by
modification by deleting the award of moral damages respondent, the latter presented to petitioners her
and attorney’s fees in favor of respondent. It agreed computation of her liabilities for interests and
with the RTC that the evidence presented by penalties which was agreed to by petitioners.
petitioners cannot be given credence in determining Petitioners also manifested their conformity to the
the correct liability of respondent. Considering that the statement of account prepared by respondent.
purchase price had been fully paid by respondent In paragraph (9) of petitioners’ Complaint,
ahead of the scheduled date agreed upon by the they stated that:
parties, petitioners were not awarded the excessive
penalties and interests. The CA thus maintained that 9) That the Plaintiffs answered the Defendant as
respondent’s liability is limited to P200,000.00 as follows: "if P200,000 is the correct balance, it is okay
claimed by respondent and originally admitted by with us." x x x
petitioners. This amount, however, had already been
paid by respondent and received by petitioners’ But in paragraph (17) thereof, petitioners
representative. Finally, the CA pointed out that the claimed that defendant’s outstanding liability as of
RTC did not explain in its decision why moral November 6, 1997 was P487,384.15. Different
damages and attorney’s fees were awarded. amounts, however, were claimed in their demand
Considering also that bad faith cannot be attributed to letter and in their testimony in court.
petitioners when they instituted the collection suit, the With the foregoing factual antecedents,
CA deleted the grant of their counterclaims. petitioners cannot be permitted to assert a different
Aggrieved, petitioners come before the Court computation of the correct amount of respondent’s
in this petition for review on certiorari under Rule 45 of liability.
It is noteworthy that in answer to petitioners’ evidence may be admitted where its admission will
claim of her purported unpaid obligation, respondent not prejudice him.
admitted in her Answer with Compulsory
Counterclaim that she paid a total amount of P2 Thus, while respondent judicially admitted in
million representing the purchase price of the subject her Answer that she only paid P2 million and that she
house and lot. She then manifested to petitioners and still owed petitioners P200,000.00, respondent
conformed to by respondent that her only balance claimed later and, in fact, submitted an evidence to
was P200,000.00. Nowhere in her Answer did she show that she already paid the whole amount of her
allege the defense of payment. However, during the unpaid obligation. It is noteworthy that when
presentation of her evidence, respondent submitted a respondent presented the evidence of payment,
receipt to prove that she had already paid the petitioners did not object thereto. When the receipt
remaining balance. Both the RTC and the CA was formally offered as evidence, petitioners did not
concluded that respondent had already paid the manifest their objection to the admissibility of said
remaining balance of P200,000.00. Petitioners now document on the ground that payment was not an
assail this, insisting that the court should have issue. Apparently, petitioners only denied receipt of
maintained the judicial admissions of respondent in said payment and assailed the authority of Losloso to
her Answer with Compulsory Counterclaim, especially receive payment. Since there was an implied consent
as to their agreed stipulations on interests and on the part of petitioners to try the issue of payment,
penalties as well as the existence of outstanding even if no motion was filed and no amendment of the
obligations. pleading has been ordered, the RTC cannot be
faulted for admitting respondent’s testimonial and
It is, thus, necessary to discuss the effect of documentary evidence to prove payment.
failure of respondent to plead payment of its
obligations. As stressed by the Court in Royal Cargo
Corporation v. DFS Sports Unlimited, Inc.,
Section 1, Rule 9 of the Rules of Court
states that "defenses and objections not pleaded The failure of a party to amend a pleading to conform
either in a motion to dismiss or in the answer are to the evidence adduced during trial does not
deemed waived." Hence, respondent should have preclude adjudication by the court on the basis of
been barred from raising the defense of payment of such evidence which may embody new issues not
the unpaid P200,000.00. However, Section 5, Rule raised in the pleadings. x x x Although, the pleading
10 of the Rules of Court allows the amendment to may not have been amended to conform to the
conform to or authorize presentation of evidence, to evidence submitted during trial, judgment may
wit: nonetheless be rendered, not simply on the basis of
the issues alleged but also on the issues discussed
Section 5. Amendment to and the assertions of fact proved in the course of the
conform to or authorize presentation of evidence. trial. The court may treat the pleading as if it had been
– When issues not raised by the pleadings are amended to conform to the evidence, although it had
tried with the express or implied consent of the not been actually amended. x x x Clearly, a court may
parties, they shall be treated in all respects as if they rule and render judgment on the basis of the evidence
had been raised in the pleadings. Such before it even though the relevant pleading had not
amendment of the pleadings as may be necessary to been previously amended, so long as no surprise or
cause them to conform to the evidence and to prejudice is thereby caused to the adverse party. Put
raise these issues may be made upon motion of any a little differently, so long as the basic requirements of
party at any time, even after judgment; but failure to fair play had been met, as where the litigants were
amend does not affect the result of the trial given full opportunity to support their respective
of these issues. If evidence is objected to at the trial contentions and to object to or refute each other's
on the ground that it is not within the issues made by evidence, the court may validly treat the pleadings as
the pleadings, the court may allow the pleadings to be if they had been amended to conform to the evidence
amended and shall do so with liberality if the and proceed to adjudicate on the basis of all the
presentation of the merits of the action and the ends evidence before it.
of substantial justice will be subserved thereby. The
court may grant a continuance to enable the To be sure, petitioners were given ample
amendment to be made. opportunity to refute the fact of and present evidence
to prove payment.
The foregoing provision envisions two
scenarios, namely, when evidence is introduced in an With the evidence presented by the
issue not alleged in the pleadings and no objection contending parties, the more important question to
was interjected; and when evidence is offered on an resolve is whether or not respondent’s obligation had
issue not alleged in the pleadings but this time an already been extinguished by payment.
objection was raised. When the issue is tried without We rule in the affirmative as aptly held by the
the objection of the parties, it should be treated in all RTC and the CA.
respects as if it had been raised in the pleadings. On
the other hand, when there is an objection, the Respondent’s obligation consists of payment
of a sum of money. In order to extinguish said Q: You would agree with me that
obligation, payment should be made to the proper you have authorized this Doiry Losloso to receive
person as set forth in Article 1240 of the Civil Code, to payment of whatever balance is due you
wit: coming from Ana Marie Concepcion, that is correct?
Article 1240. Payment shall be A: In one or two times but not total
made to the person in whose favor the obligation has authority, sir.
been constituted, or his successor in interest, or
any person authorized to receive it. Q: Yes, but you have authorized her
to receive payment?
The Court explained in Cambroon v. City of
Butuan, cited in Republic v. De Guzman, to whom A: One or two times, yes
payment should be made in order to extinguish an Thus, as shown in the receipt signed by
obligation: petitioners’ agent and pursuant to the authority
Payment made by the debtor to the person granted by petitioners to Losloso, payment made to
of the creditor or to one authorized by him or by the the latter is deemed payment to petitioners. We find
law to receive it extinguishes the obligation. When no reason to depart from the RTC and the CA
payment is made to the wrong party, however, the conclusion that payment had already been made and
obligation is not extinguished as to the creditor who is that it extinguished respondent's obligations.
without fault or negligence even if the debtor acted in WHEREFORE, premises considered, the
utmost good faith and by mistake as to the person of petition is DENIED for lack of merit. The Court of
the creditor or through error induced by fraud of a Appeals Decision dated March 31, 2005 and
third person. Resolution dated May 24, 2006 in CA-G.R. CV No.
In general, a payment in order to be effective 83030, are AFFIRMED.
to discharge an obligation, must be made to the SO ORDERED.
proper person. Thus, payment must be made to the
obligee himself or to an agent having authority,
express or implied, to receive the particular payment.
Payment made to one having apparent authority to Rule 10 Sec 6 - Supplemental Pleadings
receive the money will, as a rule, be treated as though
actual authority had been given for its receipt. MA. MERCEDES L. BARBA vs LICEO DE CAGA Y
Likewise, if payment is made to one who by law is AN UNIVERSITY
authorized to act for the creditor, it will work a
discharge. The receipt of money due on a judgment G .R. No. 193857 11/28/2012
by an officer authorized by law to accept it will,
therefore, satisfy the debt. FACTS:
Petitioner Dr. Ma. Mercedes L. Barba was the Dean
Admittedly, payment of the remaining
balance of P200,000.00 was not made to the creditors of the College of Physical Therapy of respondent
themselves. Rather, it was allegedly made to a certain Liceo de Cagayan University, Inc., a private
Losloso. Respondent claims that Losloso was the
authorized agent of petitioners, but the latter dispute educational institution located at Carmen, Cagayan
it. de Oro City.
Losloso’s authority to receive payment was Petitioner started working for respondent on July 8,
embodied in petitioners’ Letter addressed to
respondent, dated August 7, 1997, where they 1993 as medical officer/school physician for a period
informed respondent of the amounts they advanced of one school year or until March 31, 1994. In July
for the payment of the 1997 real estate taxes. In said
1994, she was chosen by respondent to be the
letter, petitioners reminded respondent of her
remaining balance, together with the amount of taxes recipient of a scholarship grant to pursue a three-year
paid. Taking into consideration the busy schedule of residency training in Rehabilitation Medicine at the
respondent, petitioners advised the latter to leave the
payment to a certain "Dori" who admittedly is Losloso, Veterans Memorial Medical Center (VMMC).
or to her trusted helper. This is an express authority
After completing her residency training, petitioner
given to Losloso to receive payment.
returned to continue working for respondent. She was
Moreover, as correctly held by the CA:
appointed as Acting Dean of the College of Physical
Furthermore, that Adoracion Losloso was
Therapy and at the same time designated as Doctor-
indeed an agent of the appellant spouses is borne out
by the following admissions of plaintiff-appellant Atty. In-Charge of the Rehabilitation Clinic of the Rodolfo
Miniano dela Cruz, to wit: N. Pelaez Hall, City Memorial Hospital.
On June 19, 2002, petitioner’s appointment as Nursing was not a demotion tantamount to
Doctor-In-Charge of the Rehabilitation Clinic was constructive dismissal.
renewed and she was appointed as Dean of the Petitioner appealed to NLRC, NLRC reversed LA’s
College of Physical Therapy by respondent’s decision holding the petitioner was illegally dismissed.
President, Dr. Jose Ma. R. Golez.
Respondent, Liceo de Cagayan, filed a motion for
Petitioner accepted her appointment and assumed reconsideration but was denied.
the position of Dean of the College of Physical Respondent went to the CA on a petition for certiorari
Therapy. In the school year 2003 to 2004, the College
alleging that the NLRC committed grave abuse of
of Physical Therapy suffered a dramatic decline in the
discretion when it declared that petitioner’s transfer to
number of enrollees from a total of 1,121 students in
the College of Nursing as full-time professor but
the school year 1995 to 1996 to only 20 students without diminution of salaries and without loss of
enrolled for school year 2004-2005. seniority rights amounted to constructive dismissal
Due to the low number of enrollees, respondent because there was a demotion involved in the transfer
decided to freeze the operation of the College of and because petitioner was compelled to accept her
Physical Therapy indefinitely. Respondent’s President new assignment.
Dr. Rafaelita Pelaez-Golez wrote petitioner a letter Respondent also filed a Supplemental Petition raising
dated March 16, 2005 informing her that her services
for the first time the issue of lack of jurisdiction of the
as dean of the said college will end at the close of the
Labor Arbiter and the NLRC over the case.
school year. Thereafter, the College of Physical
Respondent claimed that a College Dean is a
Therapy ceased operations on March 31, 2005, and corporate officer under its by-laws and petitioner was
petitioner went on leave without pay starting on April a corporate officer of respondent since her
9, 2005. appointment was approved by the board of directors.
Subsequently, respondent’s Executive Vice President, Respondent posited that petitioner was a corporate
Dr. Mariano M. Lerin, through Dr. Glory S. Magdale, officer since her office was created by the by-laws
respondent’s Vice President for Academic Affairs, and her appointment, compensation, duties and
sent petitioner a letter dated April 27, 2005 instructing functions were approved by the board of directors.
petitioner to return to work on June 1, 2005 and report Thus, respondent maintained that the jurisdiction over
to Ma. Chona Palomares, the Acting Dean of the the case is with the regular courts and not with the
College of Nursing, to receive her teaching load and labor tribunals.
assignment as a full-time faculty member in that In CA’s original decision, it set aside the decision of
department for the school year 2005-2006. the NLRC but did not find merit in the in respondent’s
In reply, petitioner informed Dr. Lerin that she had not assertion in its Supplemental Petition that the position
committed to teach in the College of Nursing and that of petitioner as College Dean was a corporate office.
as far as she can recall, her employment is not On the issue of alleged lack of jurisdiction, the CA
dependent on any teaching load. She then requested
observed that respondent never raised the issue of
for the processing of her separation benefits in view of
jurisdiction before the Labor Arbiter and the NLRC
the closure of the College of Physical Therapy. She
and respondent even actively participated in the
did not report to Palomares on June 1, 2005. proceedings below. Hence, respondent is estopped
Petitioner filed a complaint with the Labor Arbiter for from questioning the jurisdiction of the labor tribunals.
constructive dismissal. LA found that petitioner was
Unsatisfied, both petitioner and respondent sought
not illegally dismissed because petitioner’s reconsideration of the CA decision. Petitioner prayed
assignment as full-time professor in the College of for the reversal of the ruling that there was no
constructive dismissal. Respondent meanwhile Undoubtedly, petitioner is not a College Director and
maintained that the labor tribunals have no jurisdiction she is not a corporate officer but an employee of
over the case, petitioner being a corporate officer. respondent. Applying the four-fold test concerning (1)

On reconsideration, CA set aside its earlier ruling and the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal; (4)
held that the position of a College Dean is a corporate
the employer’s power to control the employee with
office and therefore the labor tribunals had no
respect to the means and methods by which the work
jurisdiction over the complaint for constructive
dismissal. Petitioner filed a motion for reconsideration is to be accomplished, it is clear that there exists an

but was denied. Hence this petition. employer-employee relationship between petitioner
and respondent.
ISSUE:
Records show that petitioner was appointed to her
Whether petitioner was an employee or a corporate
position as Dean by Dr. Golez, the university
officer of respondent university. Resolution of this
president and was paid a salary of P32,500 plus
issue resolves the question of whether the appellate
transportation allowance. It was evident that
court was correct in ruling that the Labor Arbiter and
respondent had the power of control over petitioner as
the NLRC had no jurisdiction over petitioner’s
one of its deans. It was also the university president
complaint for constructive dismissal against
who informed petitioner that her services as Dean of
respondent.
the College of Physical Therapy was terminated
HELD: effective March 31, 2005 and she was subsequently

As a general rule, only questions of law may be directed to report to the Acting Dean of the College of

allowed in a petition for review on certiorari. Nursing for assignment of teaching load. Thus,

Considering that the CA reversed its earlier decision petitioner, being an employee of respondent, her

and made a complete turnaround from its previous complaint for illegal/constructive dismissal against

ruling, and consequently set aside both the findings of respondent was properly within the jurisdiction of the

the Labor Arbiter and the NLRC for allegedly having Labor Arbiter and the NLRC. Article 217 of the Labor

been issued without jurisdiction, it is necessary for the Code.

Court to reexamine the records and resolve the Moreover, we agree with the CA’s earlier
conflicting rulings. pronouncement that since respondent actively

After a careful review and examination of the records, participated in the proceedings before the Labor
we find that the CA’s previous ruling that petitioner Arbiter and the NLRC, it is already estopped from

was respondent’s employee and not a corporate belatedly raising the issue of lack of jurisdiction. In

officer is supported by the totality of the evidence and this case, respondent filed position papers and other

more in accord with law and prevailing jurisprudence. supporting documents to bolster its defense before
the labor tribunals but in all these pleadings, the issue
Corporate officers are elected or appointed by the
of lack of jurisdiction was never raised. It was only in
directors or stockholders, and are those who are
its Supplemental Petition filed before the CA that
given that character either by the Corporation Code or
respondent first brought the issue of lack of
by the corporation’s by-laws. Section 25 of the
jurisdiction. We have consistently held that while
Corporation Code enumerates corporate officers as
jurisdiction may be assailed at any stage, a party’s
the president, the secretary, the treasurer and such
active participation in the proceedings will estop such
other officers as may be provided for in the by-laws.
party from assailing its jurisdiction. It is an undesirable
In Matling Industrial and Commercial Corporation v.
practice of a party participating in the proceedings
Coros, the phrase “such other officers as may be
and submitting his case for decision and then
provided for in the by-laws” has been clarified.
accepting the judgment, only if favorable, and Ten days later, TADECO filed through another
counsel Dominguez Paderna & Tan Law Offices
attacking it for lack of jurisdiction, when adverse. (Dominguez Law Office) a motion to withdraw notice
of dismissal without prejudice of third party complaint
Under Section 6, Rule 10 of the 1997 Rules of Civil only against Pioneer Insurance & Surety Corporation
Procedure, as or motion for reconsideration,6 alleging that the notice
of dismissal without prejudice etc. filed by ACCRA
amended, governing supplemental pleadings, the
Law Office had been made without its consent. On
court “may” admit supplemental pleadings, such as June 29, 2000, the RTC granted the notice of
the supplemental petition filed by respondent before dismissal without prejudice etc.7
the appellate court, but the admission of these
Nearly a month later, the RTC also granted the
pleadings remains in the sound discretion of the court. motion to withdraw notice of dismissal without
Nevertheless, we have already found no credence in prejudice of third party complaint only against Pioneer
Insurance & Surety Corporation or motion for
respondent’s claim that petitioner is a corporate
reconsideration, and set aside the dismissal of the
officer, consequently, the alleged lack of jurisdiction third party complaint against Pioneer.
asserted by respondent in the supplemental petition is
bereft of merit. Following the grant of its motion to withdraw the
notice of dismissal etc., TADECO, still through
Petition is granted Dominguez Law Office, filed a motion to admit third
party complaint in substitution of the third party
complaint filed by the third party plaintiff’s former
AIR ADS INCORPORATED, Petitioner, counsel,8 explaining that the substitute third party
complaint was being filed to avoid putting ACCRA
vs.
Law Office in an awkward situation, and to avoid the
TAGUM AGRICULTURAL DEVELOPMENT appearance that new counsel Dominguez Law Office
CORPORATION (TADECO), Respondent was merely adopting the previous third party
complaint.
Facts:
It is noted that the substitute third party complaint
Assailed via petition for review on certiorari are the contained allegations pertaining only to Pioneer as
two resolutions promulgated on February 24, third party defendant.
20031 and November 13, 2003,2 whereby the Court of
Appeals (CA) respectively dismissed the petitioner’s On August 28, 2000, the RTC granted the motion to
petition for certiorari and prohibition, and denied the
admit third party complaint in substitution of the third
petitioner’s motion for reconsideration of the
dismissal. party complaint filed by the third party plaintiff’s former
counsel,
This case stemmed from Civil Case No. 27802-2000
of the Regional Trial Court, Branch 15, in Davao City Air Ads then filed a motion to dismiss against the third
(RTC) entitled Elva O. Pormento v. Tagum party complaint,11 averring that it had been dropped
as third party defendant under TADECO’s substitute
Agricultural Development Corporation and Edwin
third party complaint; and arguing that the filing of the
Yap, an action to recover damages for the death of substitute third party complaint had the effect of
the plaintiff’s husband and attorney’s fees. entirely superseding the original third party complaint,
which should consequently be stricken out from the
On April 6, 2000, respondent Tagum Agricultural records.
Development Corporation (TADECO), as defendant,
filed through counsel ACCRA Law Office an answer On July 25, 2002, the RTC denied Air Ads’ motion to
with compulsory counterclaims and motion for leave dismiss,13 holding that the notice of dismissal etc. filed
to file third party complaint,3 impleading petitioner Air by ACCRA Law Office did not have the effect of
Ads, Inc. and Pioneer Insurance and Surety
dropping Air Ads as a third party defendant due to the
Corporation (Pioneer) as third-party defendants. The
RTC admitted TADECO’s third party complaint on notice of dismissal etc. being expressly restrictive
April 14, 2000.4 On June 16, 2000, however, ACCRA about the dismissal being only with respect to
Law Office, upon realizing that Pioneer was a client of Pioneer.
its Makati Office, filed a notice of dismissal without
prejudice to third party complaint only against Pioneer
Insurance and Surety Corporation.5
Air Ads filed a motion for reconsideration,14 but the (a) that he has not theretofore commenced
RTC denied the motion for reconsideration on any action or filed any claim involving the
September 20, 2002. same issues in any court, tribunal or quasi-
judicial agency and, to the best of his
knowledge, no such other action or claim is
After receiving the order of denial on October 4, pending therein; (b) if there is such other
2002,16 Air Ads brought a petition for certiorari and pending action or claim, a complete
prohibition docketed in the CA (C.A.-G.R. SP No. statement of the present status thereof; and
73418).17 However, on November 13, 2002, the CA (c) if he should thereafter learn that the same
dismissed the petition for failure to attach the board or similar action or claim has been filed or is
resolution designating the petitioner’s duly authorized pending, he shall report that fact within five
representative to sign the verification and certification (5) days therefrom to the court wherein his
against forum shopping in its behalf.18 aforesaid complaint or initiatory pleading has
been filed.
Instead of filing a motion for reconsideration, Air Ads
filed a new petition for certiorari and prohibition on Failure to comply with the foregoing
December 2, 2002 in the CA (C.A.-G.R. SP No. requirements shall not be curable by mere
74152),19 already including the proper board amendment of the complaint or other
certificate. initiatory pleading but shall be cause for the
dismissal of the case without prejudice,
While C.A.-G.R. SP No. 74152 was pending, the CA’s unless otherwise provided, upon motion and
resolution dismissing C.A.-G.R. SP No. 73418 after hearing. The submission of a false
became final and executory on December 10, 2002 certification or non-compliance with any of
the undertakings therein shall constitute
indirect contempt of court, without prejudice
ACCORDINGLY, the petition was DENIED due
to the corresponding administrative and
course and DISMISSED and so was the Motion for criminal actions. If the acts of the party or his
Reconsideration. counsel clearly constitute willful and
deliberate forum shopping, the same shall be
Issue/s: ground for summary dismissal with prejudice
and shall constitute direct contempt, as well
1. Whether or not the filing of an identical as a cause for administrative sanctions. (n)
petition following the dismissal of the first
petition on the grounds of defective and The first sentence of the second paragraph
insufficient verification and certification expressly provides that the dismissal of a
constitute forum shopping. petition due to failure to comply with the
requirements therein is without
2. Whether or not a substitute third party prejudice unless otherwise provided by the
complaint have the effect of superseding the court. Accordingly, the plaintiff or petitioner is
original third party complaint. not precluded from filing a similar action in
order to rectify the defect in the certification
where the court states in its order that the
action is dismissed due to such defect,
Held: unless the court directs that the dismissal is
with prejudice, in which case the plaintiff is
1. No, refilling of the petition for certiorari did barred from filing a similar action by res
judicata. In the context of the aforequoted
not constitute forum shopping or res judicata.
rule, the dismissal of C.A.-G.R. SP No.
73418, being without any qualification, was a
dismissal without prejudice, plainly indicating
Section 5, Rule 7 of the 1997 Rules of Civil that Air Ads could not be barred from filing
Procedure, defines the effect of the failure to the second petition.
comply with the requirements for the
certification against forum shopping, viz: We have no doubt that it was within the CA’s
power and prerogative to issue what either
Section 5. Certification against forum resolution decreed without committing an
shopping. — The plaintiff or principal party abuse of discretion amounting to lack of
shall certify under oath in the complaint or excess of jurisdiction. In the first May 5, 2003
other initiatory pleading asserting a claim for Resolution, the CA correctly dismissed the
relief, or in a sworn certification annexed petition for the deficiency it found in the non-
thereto and simultaneously filed therewith: forum shopping certification. Section 5, Rule
7 of the Revised Rules of Court provides that other respect. A perusal of the original and
"Failure to comply with the foregoing the substitute third party complaints shows
requirements shall not be curable by mere that their averments are substantially the
amendment of the complaint or other same; and that the substitute third party
initiatory pleading but shall be cause for the complaint did not strike out any allegation of
dismissal of the case without prejudice, the prior one.
unless otherwise provided, upon motion and
after hearing." On the other hand, the It is not the caption of the pleading that
requirement specific to petitions filed with the determines the nature of the complaint but
appellate court simply provides as a penalty rather its allegations.37 Although Air Ads’
that the failure of the petitioner to comply observation that the substitute third party
with the listed requirements, among them the complaint contained allegations only against
need for a certification against forum Pioneer is correct, sight should not be lost of
shopping, "shall be sufficient ground for the the fact that Dominguez Law Office
dismissal of the petition." Thus, the Ninth represented TADECO in its third party
Division correctly dismissed the petition complaint only against Pioneer, which was
without prejudice. precisely why the substitute third party
complaint referred only to Pioneer.
Thus, we cannot say that it forum
shopped by filing another petition while WHEREFORE, we deny the petition for review on
the first petition was pending. Insofar as certiorari, and affirm the resolutions the Court of
it was concerned, its first petition had Appeals promulgated on February 24, 2003 and
been dismissed without prejudice; hence, November 13, 2003.
there was no bar, either by way of forum
shopping, litis pendentia or res
adjudicata, to the petition it re-filed.

2. No, substitute third party complaint did not


supersede original third party complaint.

The records indicate that: firstly, both


TADECO and Pioneer were clients of
ACCRA Law Office; secondly, TADECO
engaged Dominguez Law Office as its
counsel in lieu of ACCRA Law Office with
respect only to its third party complaint
against Pioneer; thirdly, the RTC dismissed
the third party complaint only against
Pioneer upon the notice of withdrawal filed
by TADECO through ACCRA Law Office;
and fourthly, the RTC granted the motion to
admit the substitute third party complaint
only against Pioneer. These rendered it plain
and clear that the substitute third party
complaint merely replaced the third party
complaint earlier filed against Pioneer.

The substitution of the third party complaint


could not produce the effect that an
amendment of an existing pleading
produces. Under Section 1,36 Rule 10 of the
Rules of Court, an amendment is done by
adding or striking out an allegation or the
name of any party, or by correcting a
mistake in the name of a party or a mistaken
or inadequate allegation or description in any