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CERTIFICATION AGAINST NON-FORUM SHOPPING

G.R. No. 172590 January 7, 2013

MARY LOUISE R. ANDERSON, Petitioner,


vs.
ENRIQUE HO, Respondent.

DECISION

DEL CASTILLO, J.:

As her petition for review was dismissed by the Court of Appeals (CA) on a technical
ground, petitioner now invokes the liberal application of the rules of procedure.

Assailed in this Petition for Review on Certiorari1 is the July 14, 2005 Resolution2 of the
CA in CA-G.R. SP No. 89793 which dismissed the petition for review of petitioner Mary
Louise R. Anderson (Anderson) because the certification against forum shopping
attached thereto was signed by counsel on her behalf without the proper authority.
Likewise assailed is the CA’s May 4, 2006 Resolution3 denying the motion for
reconsideration thereof.

Factual Antecedents

On June 5, 2003, Anderson filed a Complaint4 for Ejectment against respondent


Enrique Ho (Ho) before the Metropolitan Trial Court (MeTC) of Quezon City. 5 She
alleged that through her mere tolerance, Ho is in possession of her parcel of land at
Roosevelt Avenue, Quezon City covered by Transfer Certificate of Title No. N-
1933686(Roosevelt property). As she was already in need of the said property,
Anderson served upon Ho a Demand Letter to Vacate but despite receipt thereof, Ho
refused. Because of this, Anderson prayed that the MeTC order Ho to vacate the
Roosevelt property and pay her damages and attorney’s fees.

In his Answer with Compulsory Counterclaim,7 Ho denied that his occupation of the
Roosevelt property is through Anderson’s mere tolerance. He claimed that since
Anderson is an American citizen, he managed her affairs in the Philippines and
administered her properties in Quezon City and Cebu. When Anderson sought his
assistance in ejecting her relatives from the Roosevelt property and in demolishing the
St. Anthony de Padua Church built thereon, Ho (1) secured the services of a lawyer to
file an ejectment case against the occupants of the property; (2) dutifully appeared in
court on Anderson’s behalf who was then in the United States of America (U.S.A.); and
(3) was able to secure a judgment from the court in favor of Anderson. For all these,
Anderson did not pay Ho a single centavo and instead executed a written document
dated January 14, 19998 which states that as partial payment for Ho’s services,
Anderson is authorizing him "to make use of the Roosevelt property as his residence
free of charge provided he vacates [it] if there is a buyer for the lot" and "that the
balance of Ho’s compensation shall consist of 10% of the proceeds of the sale of any
or all of her properties located in Roosevelt Avenue, M.H. del Pilar Street and Ana
Maria Street, all in Quezon City; Cebu City; and Cebu province". In view of this, Ho
averred that he possesses the property not through mere tolerance but as part of his
compensation for services rendered to Anderson. Hence, he is entitled to the
continued possession thereof until such time that the property is sold and he is paid the
10% of the proceeds of its sale.

Ruling of the Metropolitan Trial Court

On June 25, 2004, the MeTC rendered a Decision9 dismissing the case for lack of
cause of action. It gave much weight to the written document executed by Anderson
wherein she gave her consent for Ho to occupy the Roosevelt property provided that
the latter shall vacate the same if there is already a buyer for the lot. There being no
allegation that the said property already has a buyer, she could not eject Ho therefrom.

Ruling of the Regional Trial Court

On appeal, the Regional Trial Court (RTC) in its Decision10 of January 21, 2005 ruled
as follows:

The evidence of the parties thus stands upon an equipoise. With the equiponderance
of evidence, the Court is inclined to consider the dismissal of the complaint as without
prejudice depending on the outcome of the determination in the proper forum whether
or not the written document dated January 14, 1999 x x x was falsified.

WHEREFORE, the Court modifies the Decision dated June 25, 2004 of the
Metropolitan Trial Court of Quezon City in Civil Case No. 30840 by dismissing the
complaint without prejudice.

SO ORDERED.11

Anderson moved for reconsideration,12 but the same was denied by the RTC in an
Order13 dated April 1, 2005, a copy of which was received by her counsel on May 5,
2005.14

Ruling of the Court of Appeals

Intending to file with the CA a Petition for Review under Rule 42 of the Rules of Court,
Anderson’s counsel, Atty. Rommel V. Oliva (Atty. Oliva), filed a Motion for Extension of
Time of 15 days from May 20, 2005 or until June 4, 2005 within which to file a
petition15 allegedly due to the revisions required in the initial draft and on account of
heavy pressure of work. This was granted by the CA in a Minute Resolution16 dated
May 31, 2005. Subsequently, said counsel sought another extension of 15 days or until
June 19, 2005,17 this time claiming that the petition had already been finalized and sent
to Anderson in Hawaii, U.S.A. for her to read as well as sign the certification and
verification portion thereof. However, as of the last day of the extended period on June
4, 2005, the petition has not yet been sent back, hence, the additional extension being
sought. In the interest of justice, the CA once again granted the said motion for
extension.18 On June 20, 2005,19 Atty. Oliva was finally able to file the Petition for
Review20 but the certification against forum shopping attached thereto was signed by
him on Anderson’s behalf without any accompanying authority to do so. Hence, the CA
issued a Resolution21 on July 14, 2005, viz:

The Court resolves to DISMISS herein Petition for Review as the certification against
forum shopping was executed not by the petitioner herself but by her counsel without
attaching therewith any special authority to sign on her behalf.

SO ORDERED.22

Anderson filed a Motion for Reconsideration.23 During its pendency, she also filed a
Manifestation24 to which was attached an Affidavit25 and a Special Power of Attorney
(SPA)26 authorizing her counsel to cause the preparation and filing of the Petition for
Review and to sign and execute the verification and certification against forum
shopping on her behalf. She explained in the Affidavit that at the time the petition was
filed, her health condition hindered her from going to the proper authority to execute
the necessary SPA so she just verbally instructed her lawyer to draft the petition and
cause the filing of the same. Nevertheless, upon learning of the dismissal of her case,
she returned to the Philippines even against her doctor’s advice and executed an SPA
in favor of her counsel. She thus prayed that the subsequently submitted documents
be considered in resolving her pending Motion for Reconsideration.

The CA, however, remained unswayed and denied the Motion for Reconsideration in a
Resolution27 dated May 4, 2006.

Hence, this Petition for Review on Certiorari.

The Parties’ Arguments

Anderson prays for the relaxation of the rules on certification against forum shopping
and cites a number of jurisprudence wherein the Court considered the subsequent
submission or correction of a certificate of non-forum shopping as substantial
compliance. One in particular is Donato v. Court of Appeals28 which she claims to be
on all fours with the present case. Moreover, Anderson stresses that the merits of the
case should at all times prevail over the rigid application of technical rules. She then
proceeds to discuss her arguments relating to the substantial merits of her petition.

On the other hand, Ho points out that despite the extensions granted by the CA within
which to file the Petition for Review, Anderson still failed to sign the certification against
forum shopping. This, he avers, demonstrates Anderson’s brazen disregard of
technical rules. Anent the argument of substantial compliance, Ho cites Mendigorin v.
Cabantog29 where the Court reiterated its earlier pronouncement that substantial
compliance will not suffice in a matter involving strict observance of the rule regarding
a certificate of non-forum shopping.30 At any rate, Ho insists that Anderson has no
sufficient cause of action for ejectment and damages against him.

Our Ruling

The petition has no merit.

No justifiable reason exists in this case

as to relax the rule on certification

against forum shopping.

The need to abide by the Rules of Court and the procedural requirements it imposes
has been constantly underscored by this Court. One of these procedural requirements
is the certificate of non-forum shopping which, time and again, has been declared as
basic, necessary and mandatory for procedural orderliness.31

In Vda. De Formoso v. Philippine National Bank,32 the Court reiterated the guidelines
respecting non-compliance with or submission of a defective certificate of non-forum
shopping, the relevant portions of which are as follows:

4) As to certification against forum shopping, non-compliance therewith or a defect


therein, x x x, is generally not curable by its subsequent submission or correction
thereof, unless there is a need to relax the Rule on the ground of ‘substantial
compliance’ or presence of ‘special circumstances or compelling reasons’.

xxxx

6) Finally, the certification against forum shopping must be executed by the party-
pleader, not by his counsel. If, however, for reasonable or justifiable reasons, the party-
pleader is unable to sign, he must execute a Special Power of Attorney designating his
counsel of record to sign on his behalf.33 (Emphasis supplied)

The requirement that it is the petitioner, not her counsel, who should sign the certificate
of non-forum shopping is due to the fact that a "certification is a peculiar personal
representation on the part of the principal party, an assurance given to the court or
other tribunal that there are no other pending cases involving basically the same
parties, issues and causes of action."34 "Obviously, it is the petitioner, and not always
the counsel whose professional services have been retained for a particular case, who
is in the best position to know whether sheactually filed or caused the filing of a petition
in that case."35 Per the above guidelines, however, if a petitioner is unable to sign a
certification for reasonable or justifiable reasons, she must execute an SPA
designating her counsel of record to sign on her behalf. "A certification which had been
signed by counsel without the proper authorization is defective and constitutes a valid
cause for the dismissal of the petition."36

In this light, the Court finds that the CA correctly dismissed Anderson’s Petition for
Review on the ground that the certificate of non-forum shopping attached thereto was
signed by Atty. Oliva on her behalf sans any authority to do so. While the Court notes
that Anderson tried to correct this error by later submitting an SPA and by explaining
her failure to execute one prior to the filing of the petition, this does not automatically
denote substantial compliance. It must be remembered that a defective certification is
generally not curable by its subsequent correction. And while it is true that in some
cases the Court considered such a belated submission as substantial compliance, it
"did so only on sufficient and justifiable grounds that compelled a liberal approach
while avoiding the effective negation of the intent of the rule on non-forum shopping."37

Unlike in Donato38 and the other cases cited by Anderson, no sufficient and justifiable
grounds exist in this case as to relax the rules on certification against forum shopping.

In Donato, the CA dismissed therein petitioner’s Petition for Review on the ground,
among others, that the certification against forum shopping was signed by his counsel.
In filing a motion for reconsideration, petitioner submitted a certification duly signed by
himself. However, the CA ruled that his subsequent compliance did not cure the defect
of the instant petition and denied his Motion for Reconsideration. When the case
reached this Court, it was held, viz:

The petition for review filed before the CA contains a certification against forum
shopping but said certification was signed by petitioner’s counsel. In submitting the
certification of non-forum shopping duly signed by himself in his motion for
reconsideration, petitioner has aptly drawn the Court’s attention to the physical
impossibility of filing the petition for review within the 15-day reglementary period to
appeal considering that he is a resident of 1125 South Jefferson Street, Roanoke,
Virginia, U.S.A. where he needs to personally accomplish and sign the verification.

We fully agree with petitioner that it was physically impossible for the petition to have
been prepared and sent to the petitioner in the United States, for him to travel from
Virginia, U.S.A. to the nearest Philippine Consulate in Washington, D.C., U.S.A. in
order to sign the certification before the Philippine Consul, and for him to send back the
petition to the Philippines within the 15-day reglementary period. Thus, we find that
petitioner has adequately explained his failure to personally sign the certification which
justifies relaxation of the rule.

We have stressed that the rules on forum shopping, which were precisely designed to
promote and facilitate the orderly administration of justice, should not be interpreted
with such absolute literalness as to subvert its own ultimate and legitimate objective
which is simply to prohibit and penalize the evils of forum-shopping. The subsequent
filing of the certification duly signed by the petitioner himself should thus be deemed
substantial compliance, pro hac vice.39

While at first blush Donato appears to be similar with the case at bench, a deeper and
meticulous comparison of the two cases reveals essential differences. In Donato, the
Court held that it was impossible for the petition to have been prepared and sent to the
therein petitioner in the USA; for him to travel from Virginia to the nearest Philippine
Consulate in Washington D.C.; and for the petition to be sent back to the Philippines
within the 15-day reglementary period. The same could not, however, be said in this
case. It must be remembered that on top of the 15-day reglementary period to file the
petition, Atty. Oliva sought and was granted a total extension of 30 days to file the
same. Hence, Anderson had a total of 45 days to comply with the requirements of a
Petition for Review as against the 15 days afforded to the petitioner in Donato. To this
Court, the said period is more than enough time for Anderson to execute an SPA
before the nearest Philippine Consulate, which again unlike in Donato, was located in
the same state where Anderson was (Hawaii), and thereafter to send it to the
Philippines. Anent her allegation that her health condition at that time hindered her
from going to the proper authorities to execute an SPA, the same deserves scant
consideration as no medical certificate was submitted to support this. "Indeed, the age-
old but familiar rule is that he who alleges must prove his allegations."40

Moreover, simultaneous with the filing of a Motion for Reconsideration, the proper
certificate of non-forum shopping was submitted by the petitioner in Donato. Notably in
this case, the SPA was submitted two months after the filing of Anderson’s Motion for
Reconsideration. It took that long because instead of executing an SPA before the
proper authorities in Hawaii and sending the same to the Philippines, Anderson still
waited until she came back to the country and only then did she execute one. It thus
puzzles the Court why Anderson opted not to immediately submit the SPA despite her
awareness that the same should have been submitted simultaneously with the Petition
for Review. Hence, it cannot help but conclude that the delay in the submission of the
SPA is nothing but a product of Anderson’s sheer laxity and indifference in complying
with the rules. It is well to stress that "rules are laid down for the benefit of all and
should not be made dependent upon a suitor’s sweet time and own bidding."41 They
should be faithfully complied with42 and may not simply be ignored to suit the
convenience of a party.43 Although they are liberally construed in some situations,
there must, however, be a showing of justifiable reasons and at least a reasonable
attempt at compliance therewith,44 which unfortunately are not obtaining in this case.

In view of the foregoing, this Court affirms the CA’s dismissal of Anderson’s Petition for
Review.1âwphi1

As a final note, the Court reiterates that:

x x x procedural rules are designed to facilitate the adjudication of cases. Courts and
litigants alike are enjoined to abide strictly by the rules. While in certain instances, we
allow a relaxation in the application of the rules, we never intend to forge a weapon for
erring litigants to violate the rules with impunity. The liberal interpretation and
application of rules apply only in proper cases of demonstrable merit and under
justifiable causes and circumstances. While it is true that litigation is not a game of
technicalities, it is equally true that every case must be prosecuted in accordance with
the prescribed procedure to ensure an orderly and speedy administration of justice.
Party litigants and their counsels are well advised to abide by rather than flaunt,
procedural rules for these rules illumine the path of the law and rationalize the pursuit
of justice.45

WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed


Resolution dated July 14, 2005 and May 4, 2006 of the Court of Appeals in CA-G.R.
SP No. 89793 are AFFIRMED.

SO ORDERED.

G.R. No. 200191 August 20, 2014

LOURDES C. FERNANDEZ, Petitioner,


vs.
NORMA VILLEGAS and any person acting in her behalf including her
family, Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Resolutions dated June 22,
20112 and December 28, 20113of the Court of Appeals (CA) in CA-G.R. SP No.
116143 which dismissed the petition for review under Rule 42 of the Rules of
Court4 (CA petition) due to defective verification and certification against forum
shopping.

The Facts

On August 21, 2008, petitioner Lourdes C. Fernandez (Lourdes) and her sister, Cecilia
Siapno (Cecilia), represented by her attorney-in-fact, Imelda S. Slater (Imelda), filed a
Complaint for Ejectment5 before the Municipal Trial Court in Cities, Branch 1, Dagupan
City(MTCC), docketed as Civil Case No. 15980, against respondent Norma Villegas
(Norma) and any person acting in her behalf including her family (respondents),
seeking to recover possession of a parcel of land situated in Guilig Street, Dagupan
City covered by Transfer Certificate of Title (TCT) No. 191706(subject property).

In their complaint, Lourdes and Cecilia(plaintiffs) averred that they are the registered
owners of the subject property on which both Lourdes and respondents previously
lived under oneroof. However, when their house was destroyed by typhoon "Cosme,"
Lourdes transferred to a nipahut on the same lot, while Norma, Cecilia’s daughter-in-
law, and her family were advised to relocate but, in the meantime, allowed to use a
portion thereof.7 Instead, respondents erecteda house thereon over plaintiffs’
objections and, despite demands, refused to vacate and surrender possession of the
subject property.8 The dispute was referred to the Barangay Office of Pugo9 Chico and
the Public Attorney’s Office, both of Dagupan City, but no settlement was reached. 10

For their part, respondents, in their Answer,11 averred that the complaint stated no
cause of action,considering that Lourdes has no standing to question their possession
ofthe subject property as she had already donated her portion in favor of
Cecilia,12 adding too that the latter is bound by her declaration that"the house and lot
belong[s] to Eddie," who is Norma’s late husband.13 Respondents further asserted that
there was no compliance with the required conciliation and mediation under the
Katarungang Pambarangay Law14 as no Certificate to File Action was attached to the
complaint,15 thereby rendering the complaint dismissible.

The MTCC Ruling

In a Decision16 dated September 30, 2009,the MTCC found that respondents failed to
impugn the validity of plaintiffs’ ownership over the subject property. As owners,
plaintiffs therefore have the right to enjoy the use and receive the fruits from the
saidproperty, as well as to exclude one from its enjoyment pursuant to Articles 428 and
429 of the Civil Code.17 Accordingly, the MTCC ordered respondents to: (a) vacate the
subject property and pay plaintiffs the amount of ₱1,000.00 per month as reasonable
compensation for the use and occupation of the portion of the lot occupied by them,
reckoned from the filing of the complaint; (b) pay plaintiffs ₱10,000.00 as attorney’s
fees; and (c) pay the cost of suit.18

Dissatisfied with the MTCC’s ruling, respondents filed an appeal19 before the Regional
Trial Court ofDagupan City (RTC), Branch 40, docketed as Civil Case No. 2009-0224-
D.

The RTC Ruling

In a Decision20 dated March 16, 2010, the RTC, Branch 40 granted respondents’
appeal and ordered the dismissal of plaintiffs’ complaint based on the following
grounds: (a) there was no substantial compliance with the mandatory conciliation and
mediation process before the barangay, especially considering that the parties are very
close relatives;21 and (b) respondents are builders in good faith and cannot be
summarily ejected from the subject property without compliance with the provisions of
Articles 448, 546, and 548 of the Civil Code.22

The RTC, Branch 40 further ordered plaintiffs to jointly and severally pay respondents
the amount of ₱50,000.00 as attorney’s fees.23
Aggrieved, plaintiffs filed a motion for reconsideration24 which was denied by the RTC,
Branch 4425 in a Resolution26dated August 18, 2010, prompting the filing of the CA
petition.

The CA Proceedings

In response to plaintiffs’ CA petition, respondents filed a Motion to Dismiss Appeal on


the grounds that: (a) Cecilia failed to personally verify the petition; and (b) the appeal is
dilatory.27 In their comment, plaintiffs maintained that Lourdes, as co-owner of the
subject property, has the right tofile an ejectment case by herself, without joining her
co-owner, Cecilia, as provided under Article 487 of the Civil Code. Moreover, Lourdes
was specially authorized by Imelda to file the CA petition.28

In a Resolution29 dated June 22, 2011, the CA granted respondents’ Motion to Dismiss
Appeal, holding that the verification and certification30 against forum shopping attached
to the CA petition was defective since it was signed only by Lourdes, one of the
plaintiffs in the case, in violation of Section 5,31 Rule 7 of the Rules of Court which
requires all the plaintiffs to sign the same.32 There was also no showing that Lourdes
was authorized by her co-plaintiff, Cecilia, to represent the latter and to sign the said
certification, and neither did the submission of the special powers of attorney of Cecilia
and Imelda to that effect constitute substantial compliance with the rules.33 The CA
further noted that plaintiffs failed to comply with its prior Resolution dated October 11,
2010 requiring the submission of an amended verification/certification against forum
shopping within five (5) days from notice, warranting the dismissal of the CA petition on
this score.34

At odds with the CA’s resolution, plaintiffs sought reconsideration35 but the same was
denied in a Resolution36 dated December 28, 2011, hence, the instant petition filed by
Lourdes alone.

The Issue Before the Court

The primordial issue in this case is whether or not the CA erred in dismissing outright
the CA petition due to a defective verification and certification against forum shopping
attached to the CA petition.

The Court’s Ruling

The present petition has merit.

The Court laid down the following guidelines with respect to noncompliance with the
requirements on or submission of a defective verification and certification against
forum shopping, viz.:
1) A distinction must be madebetween non-compliance with the requirement on
or submission of defective verification, and noncompliance with the requirement
on or submission of defective certification against forum shopping.

2) As to verification, non-compliance therewith or a defect therein does not


necessarily render the pleading fatally defective. The court may order its
submission or correction or act on the pleading if the attending circumstances are
such that strictcompliance with the Rule may be dispensed with in order that the
endsof justice may be served thereby.

3) Verification is deemed substantially compliedwith when one who has ample


knowledge to swear tothe truth of the allegations in the complaint or petition
signs the verification, and when matters alleged in the petition have been made
in goodfaith or are true and correct.

4) As to certification against forum shopping, non-compliance therewith or a


defect therein, unlike in verification, is generally not curable by its subsequent
submission orcorrection thereof, unless there is a need to relax the Rule on the
ground of "substantial compliance" or presence of "special circumstances or
compelling reasons."

5) The certification against forum shopping must be signed by all the plaintiffs or
petitioners in a case; otherwise, those who did not sign will be dropped as parties
to the case. Under reasonable or justifiable circumstances, however, as when all
the plaintiffs or petitioners share a common interestand invoke a common cause
of action or defense, the signature of only one of them in the certification against
forum shopping substantially complies with the Rule.

6) Finally, the certification against forum shopping must be executed by the


party-pleader, not by his counsel. If, however, for reasonable or justifiable
reasons, the party-pleader is unable to sign, he must execute a Special Power of
Attorney designating his counsel of record to sign on his behalf.37 (Emphases
supplied)

Applying these guidelines to the caseat bar, particularly, those stated in paragraphs 3
and 5 highlighted above, the Court finds that the CA committed reversible error in
dismissing the CA petition due to a defective verification and certification against forum
shopping.

A. Substantial Compliance with the Verification Requirement.

It is undisputed that Lourdes is not only a resident of the subject property but is a co-
owner thereof together with her co-plaintiff/sister, Cecilia. As such, she is "one who has
ample knowledge to swear to the truth of the allegations in the x x x [CA] petition" and
is therefore qualified to "sign x x x the verification" attached thereto in view of
paragraph 3 of the above-said guidelines.1âwphi1

In fact, Article 487 of the Civil Code explicitly provides that any of the co-owners may
bring an action for ejectment, without the necessity of joining all the other co-owners as
co-plaintiffs because the suit is deemed to be instituted for the benefit of all. 38 To
reiterate, both Lourdes and Cecilia are co-plaintiffs in the ejectment suit. Thus, they
share a commonality of interest and cause of action as against respondents. Notably,
even the petition for review filed before the CA indicated that they are the petitioners
therein and that the same was filed on their behalf. Hence, the lone signature of
Lourdes on the verification attached to the CA petition constituted substantial
compliance with the rules.39 As held in the case of Medado v. Heirs of the Late Antonio
Consing:40

[W]here the petitioners are immediate relatives, who share a common interestin the
property subject of the action, the fact that only one of the petitioners executed the
verification or certification of forum shopping will not deter the court from proceeding
with the action.41 (Emphases and underscoring supplied)

Besides, it is settled that the verification of a pleading is only a formal, not a


jurisdictional requirement intended to secure the assurance that the matters alleged in
a pleading are true and correct. Therefore, the courts may simply order the correction
of the pleadings oract on them and waive strict compliance with the rules,42 as in this
case.

B. Substantial Compliance with the Certification Against Forum Shopping


Requirement.

Following paragraph 5 of the guidelinesas aforestated, there was also substantial


compliance with the certification against forum shopping requirement, notwithstanding
the fact that only Lourdes signed the same.

It has been held that under reasonable or justifiable circumstances - as in this case
where the plaintiffs or petitioners share a common interest and invoke a common
cause of action or defense - the rule requiring all such plaintiffs or petitioners to sign
the certification against forum shopping may be relaxed.43 Consequently, the CA erred
in dismissing the petition on this score.

Similar to the rules on verification, the rules on forum shopping are designed to
promote and facilitate the orderly administration of justice; hence, it should not be
interpreted with such absolute literalness as to subvert its own ultimate and legitimate
objectives. The requirement of strict compliance with the provisions on certification
against forum shopping merely underscores its mandatory nature to the effect that the
certification cannot altogether be dispensed with or its requirements completely
disregarded. It does not prohibit substantial compliance with the rules under justifiable
circumstances,44 as also in this case.

As there was substantial compliance with the above-discussed procedural


requirements at the onset, plaintiffs' subsequent failure to file an amended verification
and certification, as directed by the October 11, 2010 CA Resolution, should not have
warranted the dismissal of the CA petition.

WHEREFORE, the petition is GRANTED. The Resolutions dated January 22, 2011
and December 28, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 116143 are
hereby REVERSED and SET ASIDE. Accordingly, the case is REINSTATED and
REMANDED to the CA for proper and immediate disposition.

SO ORDERED.

NELLIE VDA. DE FORMOSO and G.R. No. 154704


her children, namely, MA.
THERESA FORMOSO-
PESCADOR, ROGER FORMOSO,
MARY JANE FORMOSO, Present:
BERNARD FORMOSO and
PRIMITIVO MALCABA, CARPIO, J., Chairperson,
Petitioners, NACHURA,
PERALTA,
ABAD, and
- versus - MENDOZA, JJ.

PHILIPPINE NATIONAL BANK,


FRANCISCO ARCE, ATTY.
BENJAMIN BARBERO, and
ROBERTO NAVARRO, Promulgated:
Respondents.
June 1, 2011
x -----------------------------------------------------------------------------------------------------x

DECISION

MENDOZA, J.:

Assailed in this petition are the January 25, 2002 Resolution[1] and the August 8,
2002 Resolution[2] of the Court of Appeals (CA) which dismissed the petition for certiorari
filed by the petitioners on the ground that the verification and certification of non-forum
shopping was signed by only one of the petitioners in CA G.R. SP No. 67183,
entitled Nellie P. Vda. De Formoso, et al. v. Philippine National Bank, et al.

The Factual and


Procedural Antecedents

Records show that on October 14, 1989, Nellie Panelo Vda. De


Formoso (Nellie) and her children namely: Ma. Theresa Formoso-Pescador, Roger
Formoso, Mary Jane Formoso, Bernard Formoso, and Benjamin Formoso, executed a
special power of attorney in favor of Primitivo Malcaba (Malcaba) authorizing him,
among others, to secure all papers and documents including the owners copies of the
titles of real properties pertaining to the loan with real estate mortgage originally secured
by Nellie and her late husband, Benjamin S. Formoso, from Philippine National Bank,
Vigan Branch (PNB) on September 4, 1980.

On April 20, 1990, the Formosos sold the subject mortgaged real properties to
Malcaba through a Deed of Absolute Sale. Subsequently, on March 22, 1994, Malcaba
and his lawyer went to PNB to fully pay the loan obligation including interests in the
amount of ₱2,461,024.74.

PNB, however, allegedly refused to accept Malcabas tender of payment and to


release the mortgage or surrender the titles of the subject mortgaged real properties.

On March 24, 1994, the petitioners filed a Complaint for Specific Performance
against PNB before the Regional Trial Court of Vigan, Ilocos Sur (RTC) praying, among
others, that PNB be ordered to accept the amount of ₱2,461,024.74 as full settlement of
the loan obligation of the Formosos.

After an exchange of several pleadings, the RTC finally rendered its


decision[3] on October 27, 1999 favoring the petitioners. The petitioners prayer for
exemplary or corrective damages, attorneys fees, and annual interest and daily interest,
however, were denied for lack of evidence.

PNB filed a motion for reconsideration but it was denied for failure to comply with Rule
15, Section 5 of the 1997 Rules of Civil Procedure. PNB then filed a Notice of Appeal
but it was dismissed for being filed out of time.
The petitioners received their copy of the decision on November 26, 1999, and
on January 25, 2001, they filed their Petition for Relief from Judgment[4] questioning the
RTC decision that there was no testimonial evidence presented to warrant the award for
moral and exemplary damages. They reasoned out that they could not then file a motion
for reconsideration because they could not get hold of a copy of the transcripts of
stenographic notes. In its August 6, 2001 Order, the RTC denied the petition for lack of
merit.[5]

On September 7, 2001, the petitioners moved for reconsideration but it was denied by
the RTC in its Omnibus Order of September 26, 2001.[6]

Before the Court of Appeals

On November 29, 2001, the petitioners filed a petition for certiorari before the CA
challenging the RTC Order of August 6, 2001 and its Omnibus Order dated September
26, 2001.

In its January 25, 2002 Resolution, the CA dismissed the petition stating that:

The verification and certification of non-forum shopping was signed by


only one (Mr. Primitivo Macalba) of the many petitioners. In Loquias v. Office
of the Ombudsman, G.R. No. 139396, August 15, 2000, it was ruled that all
petitioners must be signatories to the certification of non-forum shopping
unless the one who signed it is authorized by the other petitioners. In the
case at bar, there was no showing that the one who signed was empowered
to act for the rest. Therefore, it cannot be presumed that the one who signed
knew to the best of his knowledge whether his co-petitioners had the same
or similar claims or actions filed or pending. The ruling in Loquias further
declared that substantial compliance will not suffice in the matter involving
strict observance of the Rules. Likewise, the certification of non-forum
shopping requires personal knowledge of the party who executed the same
and that petitioners must show reasonable cause for failure to personally
sign the certification. Utter disregard of the Rules cannot just be rationalized
by harping on the policy of liberal construction.

Aggrieved, after the denial of their motion for reconsideration, the petitioners filed this
petition for review anchored on the following

GROUNDS
THE COURT OF APPEALS PATENTLY ERRED IN RULING THAT ALL
THE PETITIONERS MUST SIGN THE VERIFICATION AND
CERTIFICATION OF NON-FORUM SHOPPING IN A PETITION FOR
CERTIORARI WHEREIN ONLY QUESTIONS OF LAW ARE INVOLVED.

ALTERNATIVELY, THE COURT OF APPEALS PATENTLY ERRED IN


DISMISSING THE WHOLE PETITION WHEN AT THE VERY LEAST THE
PETITION INSOFAR AS PETITIONER MALCABA IS CONCERNED
BEING THE SIGNATORY THEREOF SHOULD HAVE BEEN GIVEN DUE
COURSE.

THE COURT OF APPEALS PATENTLY ERRED IN GIVING MORE


WEIGHT ON TECHNICALITIES WHEN THE PETITION BEFORE IT WAS
CLEARLY MERITORIOUS.[7]

The petitioners basically argue that they have substantially complied with the
requirements provided under the 1997 Rules of Civil Procedure on Verification and
Certification of Non-Forum Shopping. The petitioners are of the view that the rule on
Verification and Certification of Non-Forum Shopping that all petitioners must sign should
be liberally construed, since only questions of law are raised in a petition for certiorari
and no factual issues that require personal knowledge of the petitioners.

The petitioners further claim that they have a meritorious petition because contrary
to the ruling of the RTC, their Petition for Relief clearly showed that, based on the
transcript of stenographic notes, there was enough testimonial evidence for the RTC to
grant them damages and attorneys fees as prayed for.

On the other hand, PNB counters that the mandatory rule on the certification
against forum shopping requires that all of the six (6) petitioners must sign, namely:
Nellie Vda. De Formoso and her children Ma. Theresa Formoso-Pescador, Roger
Formoso, Mary Jane Formoso, and Bernard Formoso, and Primitivo Malcaba. Therefore,
the signature alone of Malcaba on the certification is insufficient.

PNB further argues that Malcaba was not even a party or signatory to the contract
of loan entered into by his co-petitioners. Neither was there evidence that Malcaba is a
relative or a co-owner of the subject properties. It likewise argues that, contrary to the
stance of the petitioners, the issue raised before the CA, as to whether or not the
petitioners were entitled to moral and exemplary damages as well as attorneys fees, is
a factual one.

Finally, PNB asserts that the body of the complaint filed by the petitioners failed to
show any allegation that Macalba alone suffered damages for which he alone was
entitled to reliefs as prayed for. PNB claims that the wordings of the complaint were clear
that all the petitioners were asking for moral and exemplary damages and attorneys fees.

OUR RULING

The petition lacks merit.

Certiorari is an extraordinary, prerogative remedy and is never issued as a matter


of right. Accordingly, the party who seeks to avail of it must strictly observe the
rules laiddown by law.[8] Section 1, Rule 65 of the 1997 Rules of Civil
Procedure provides:

SECTION 1. Petition for certiorari.- When any tribunal, board or officer


exercising judicial or quasi-judicial functions has acted without or in excess
of its or his jurisdiction, or with grave abuse of discretion amounting to lack
or excess of jurisdiction, and there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law, a person aggrieved thereby
may file a verified petition in the proper court, alleging the facts with certainty
and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental
reliefs as law and justice may require.

The petition shall be accompanied by a certified true copy of the


judgment, order or resolution subject thereof, copies of all pleadings and
documents relevant and pertinent thereto, and a sworn certification of
non-forum shopping as provided in the third paragraph of Section 3, Rule
46. [Emphasis supplied]

Under Rule 46, Section 3, paragraph 3 of the 1997 Rules of Civil Procedure, as
amended, petitions for certiorari must be verified and accompanied by a sworn
certification of non-forum shopping.

SECTION 3. Contents and filing of petition; effect of non-compliance


with requirements. The petition shall contain the full names and actual
addresses of all the petitioners and respondents, a concise statement of the
matters involved, the factual background of the case, and the grounds relied
upon for the relief prayed for.

In actions filed under Rule 65, the petition shall further indicate the
material dates showing when notice of the judgment or final order or
resolution subject thereof was received, when a motion for new trial or
reconsideration, if any, was filed and when notice of the denial thereof was
received.

It shall be filed in seven (7) clearly legible copies together with proof of
service thereof on the respondent with the original copy intended for the court
indicated as such by the petitioner, and shall be accompanied by a clearly
legible duplicate original or certified true copy of the judgment, order,
resolution, or ruling subject thereof, such material portions of the record as
are referred to therein, and other documents relevant or pertinent
thereto. The certification shall be accomplished by the proper clerk of court
or his duly authorized representative, or by the proper officer of the court,
tribunal, agency or office involved or by his duly authorized
representative. The other requisite number of copies of the petition shall be
accompanied by clearly legible plain copies of all documents attached to the
original.

The petitioner shall also submit together with the petition a sworn
certification that he has not theretofore commenced any other action
involving the same issues in the Supreme Court, the Court of Appeals or
different divisions thereof, or any other tribunal or agency; if there is such
other action or proceeding, he must state the status of the same; and if he
should thereafter learn that a similar action or proceeding has been filed or
is pending before the Supreme Court, the Court of Appeals, or different
divisions thereof, or any other tribunal or agency, he undertakes to promptly
inform the aforesaid courts and other tribunal or agency thereof within five
(5) days therefrom.

The petitioner shall pay the corresponding docket and other lawful fees
to the clerk of court and deposit the amount of P500.00 for costs at the time
of the filing of the petition.

The failure of the petitioner to comply with any of the foregoing


requirements shall be sufficient ground for the dismissal of the
petition. [Emphases supplied]
The acceptance of a petition for certiorari as well as the grant of due course thereto
is, in general, addressed to the sound discretion of the court. Although the Court has
absolute discretion to reject and dismiss a petition for certiorari, it does so only (1) when
the petition fails to demonstrate grave abuse of discretion by any court, agency, or
branch of the government; or (2) when there are procedural errors, like violations of
the Rules of Court or Supreme Court Circulars.[9] [Emphasis supplied]

In the case at bench, the petitioners claim that the petition for certiorari that they
filed before the CA substantially complied with the requirements provided for under the
1997 Rules of Civil Procedure on Verification and Certification of Non-Forum Shopping.

The Court disagrees.

Sections 4 and 5 of Rule 7 of the 1997 Rules of Civil Procedure provide:

SEC. 4. Verification. Except when otherwise specifically required by


law or rule, pleadings need not be under oath, verified or accompanied by
affidavit.

A pleading is verified by an affidavit that the affiant has read the


pleadings and that the allegations therein are true and correct of his personal
knowledge or based on authentic records.

A pleading required to be verified which contains a verification based


on information and belief or upon knowledge, information and belief or lacks
a proper verification, shall be treated as an unsigned pleading.

SEC. 5. Certification against forum shopping. The plaintiff or


principal party shall certify under oath in the complaint or other initiatory
pleading asserting a claim for relief, or in a sworn certification annexed
thereto and simultaneously filed therewith: (a) that he has not theretofore
commenced any action or filed any claim involving the same issues in any
court, tribunal or quasi-judicial agency and, to the best of his knowledge, no
such other action or claim is pending therein; (b) if there is such other
pending action or claim, a complete statement of the present status thereof;
and (c) if he should thereafter learn that the same or similar action or claim
has been filed or is pending, he shall report that fact within five (5) days
therefrom to the court wherein his aforesaid complaint or initiatory pleading
has been filed.

Failure to comply with the foregoing requirements shall not be curable


by mere amendment of the complaint or other initiatory pleading but shall be
cause for the dismissal of the case without prejudice, unless otherwise
provided, upon motion and after hearing. The submission of a false
certification or non-compliance with any of the undertakings therein shall
constitute indirect contempt of court, without prejudice to the corresponding
administrative and criminal actions. If the acts of the party or his counsel
clearly constitute willful and deliberate forum shopping, the same shall be
ground for summary dismissal with prejudice and shall constitute direct
contempt, as well as a cause for administrative sanctions. x x x.

In this regard, the case of Oldarico S. Traveno v. Bobongon Banana Growers Multi-
Purpose Cooperative,[10] is enlightening:

Respecting the appellate courts dismissal of petitioners appeal due to


the failure of some of them to sign the therein accompanying verification and
certification against forum-shopping, the Courts guidelines for the bench and
bar in Altres v. Empleo, which were culled from jurisprudential
pronouncements, are instructive:

For the guidance of the bench and bar, the Court restates in capsule
form the jurisprudential pronouncements already reflected above respecting
non-compliance with the requirements on, or submission of defective,
verification and certification against forum shopping:

1) A distinction must be made between non-compliance with the


requirement on or submission of defective verification, and non-compliance
with the requirement on or submission of defective certification against forum
shopping.

2) As to verification, non-compliance therewith or a defect therein does


not necessarily render the pleading fatally defective. The Court may order its
submission or correction or act on the pleading if the attending
circumstances are such that strict compliance with the Rule may be
dispensed with in order that the ends of justice may be served thereby.

3) Verification is deemed substantially complied with when one who


has ample knowledge to swear to the truth of the allegations in the complaint
or petition signs the verification, and when matters alleged in the petition
have been made in good faith or are true and correct.

4) As to certification against forum shopping, non-compliance


therewith or a defect therein, unlike in verification, is generally not curable by
its subsequent submission or correction thereof, unless there is a need to
relax the Rule on the ground of substantial compliance or presence of special
circumstances or compelling reasons.

5) The certification against forum shopping must be signed by all the


plaintiffs or petitioners in a case; otherwise, those who did not sign will be
dropped as parties to the case. Under reasonable or justifiable
circumstances, however, as when all the plaintiffs or petitioners share a
common interest and invoke a common cause of action or defense, the
signature of only one of them in the certification against forum shopping
substantially complies with the Rule.

6) Finally, the certification against forum shopping must be executed


by the party-pleader, not by his counsel. If, however, for reasonable or
justifiable reasons, the party-pleader is unable to sign, he must execute a
Special Power of Attorney designating his counsel of record to sign on his
behalf.

The petition for certiorari filed with the CA stated the following names as petitioners:
Nellie Panelo Vda. De Formoso, Ma. Theresa Formoso-Pescador, Roger Formoso, Mary
Jane Formoso, Bernard Formoso, Benjamin Formoso, and Primitivo Malcaba.
Admittedly, among the seven (7) petitioners mentioned, only Malcaba signed the
verification and certification of non-forum shopping in the subject petition. There was no
proof that Malcaba was authorized by his co-petitioners to sign for them. There was no
special power of attorney shown by the Formosos authorizing Malcaba as their attorney-
in-fact in filing a petition for review on certiorari. Neither could the petitioners give at least
a reasonable explanation as to why only he signed the verification and certification of
non-forum shopping. In Athena Computers, Inc. and Joselito R. Jimenez v. Wesnu A.
Reyes, the Court explained that:
The verification of the petition and certification on non-forum
shopping before the Court of Appeals were signed only by Jimenez. There
is no showing that he was authorized to sign the same by Athena, his co-
petitioner.
Section 4, Rule 7 of the Rules states that a pleading is verified by an
affidavit that the affiant has read the pleading and that the allegations therein
are true and correct of his knowledge and belief. Consequently, the
verification should have been signed not only by Jimenez but also by
Athenas duly authorized representative.
In Docena v. Lapesura, we ruled that the certificate of non-forum
shopping should be signed by all the petitioners or plaintiffs in a case,
and that the signing by only one of them is insufficient. The attestation
on non-forum shopping requires personal knowledge by the party
executing the same, and the lone signing petitioner cannot be
presumed to have personal knowledge of the filing or non-filing by his
co-petitioners of any action or claim the same as similar to the current
petition.
The certification against forum shopping in CA-G.R. SP No. 72284
is fatally defective, not having been duly signed by both petitioners and
thus warrants the dismissal of the petition for certiorari. We have
consistently held that the certification against forum shopping must be signed
by the principal parties. With respect to a corporation, the certification against
forum shopping may be signed for and on its behalf, by a specifically
authorized lawyer who has personal knowledge of the facts required to be
disclosed in such document.
While the Rules of Court may be relaxed for persuasive and weighty
reasons to relieve a litigant from an injustice commensurate with his failure
to comply with the prescribed procedures, nevertheless they must be
faithfully followed. In the instant case, petitioners have not shown any reason
which justifies relaxation of the Rules. We have held that procedural rules
are not to be belittled or dismissed simply because their non-observance
may have prejudiced a partys substantive rights. Like all rules, they are
required to be followed except for the most persuasive of reasons when they
may be relaxed. Not one of these persuasive reasons is present here.
In fine, we hold that the Court of Appeals did not err in dismissing the
petition for certiorari in view of the procedural lapses committed by
petitioners.[11] [Emphases supplied]

Furthermore, the petitioners argue that the CA should not have dismissed the
whole petition but should have given it due course insofar as Malcaba is concerned
because he signed the certification. The petitioners also contend that the CA should
have been liberal in the application of the Rules because they have a meritorious case
against PNB.

The Court, however, is not persuaded.

The petitioners were given a chance by the CA to comply with the Rules when they
filed their motion for reconsideration, but they refused to do so. Despite the opportunity
given to them to make all of them sign the verification and certification of non-forum
shopping, they still failed to comply. Thus, the CA was constrained to deny their motion
and affirm the earlier resolution.[12]

Indeed, liberality and leniency were accorded in some cases. [13] In these cases,
however, those who did not sign were relatives of the lone signatory, so unlike in this
case, where Malcaba is not a relative who is similarly situated with the other petitioners
and who cannot speak for them. In the case of Heirs of Domingo Hernandez, Sr. v.
Plaridel Mingoa, Sr.,[14] it was written:
In the instant case, petitioners share a common interest and defense
inasmuch as they collectively claim a right not to be dispossessed of the
subject lot by virtue of their and their deceased parents construction of a
family home and occupation thereof for more than 10 years. The
commonality of their stance to defend their alleged right over the
controverted lot thus gave petitioners xxx authority to inform the Court of
Appeals in behalf of the other petitioners that they have not commenced any
action or claim involving the same issues in another court or tribunal, and
that there is no other pending action or claim in another court or tribunal
involving the same issues.
Here, all the petitioners are immediate relatives who share a
common interest in the land sought to be reconveyed and a common cause
of action raising the same arguments in support thereof. There was sufficient
basis, therefore, for Domingo Hernandez, Jr. to speak for and in behalf of his
co-petitioners when he certified that they had not filed any action or claim in
another court or tribunal involving the same issues. Thus, the
Verification/Certification that Hernandez, Jr. executed constitutes substantial
compliance under the Rules. [Emphasis supplied]
The same leniency was accorded to the petitioner in the case of Oldarico S.
Traveno v. Bobongon Banana Growers Multi-Purpose Cooperative,[15] where it was
stated:

The same leniency was applied by the Court in Cavile v. Heirs of


Cavile, because the lone petitioner who executed the certification of non-
forum shopping was a relative and co-owner of the other petitioners with
whom he shares a common interest. x x x[16]

Considering the above circumstances, the Court does not see any similarity at all
in the case at bench to compel itself to relax the requirement of strict compliance with
the rule regarding the certification against forum shopping.

At any rate, the Court cannot accommodate the petitioners request to re-examine the
testimony of Malcaba in the transcript of stenographic notes of the April 25, 1999 hearing
concerning his alleged testimonial proof of damages for obvious reasons.

Primarily, Section 1, Rule 45 of the Rules of Court categorically states that the
petition filed shall raise only questions of law, which must be distinctly set forth. A
question of law arises when there is doubt as to what the law is on a certain state of
facts, while there is a question of fact when the doubt arises as to the truth or falsity of
the alleged facts. For a question to be one of law, the same must not involve an
examination of the probative value of the evidence presented by the litigants or any of
them. The resolution of the issue must rest solely on what the law provides on the given
set of circumstances. Once it is clear that the issue invites a review of the evidence
presented, the question posed is one of fact.[17]

In this case, the petition clearly raises a factual issue. As correctly argued by PNB,
the substantive issue of whether or not the petitioners are entitled to moral and
exemplary damages as well as attorneys fees is a factual issue which is beyond the
province of a petition for review on certiorari.

Secondly, even if the Court glosses over the technical defects, the petition for relief
cannot be granted. A perusal of the Petition for Relief of Judgment discloses that there
is no fact constituting fraud, accident, mistake or excusable negligence which are the
grounds therefor. From the petition itself, it appears that the petitioners counsel had a
copy of the transcript of stenographic notes which was in his cabinet all along and only
discovered it when he was disposing old and terminated cases.[18] If he was only
attentive to his records, he could have filed a motion for reconsideration or a notice of
appeal in behalf of the petitioners.

WHEREFORE, the petition is DENIED.

SO ORDERED.

VERIFICATION

G.R. No. 175512 May 30, 2011

VALLACAR TRANSIT, INC., Petitioner,


vs.
JOCELYN CATUBIG, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

For review under Rule 45 of the Rules of Court is the Decision1 dated November 17,
2005 and the Resolution2dated November 16, 2006 of the Court Appeals in CA-G.R.
CV No. 66815, which modified the Decision3 dated January 26, 2000 of the Regional
Trial Court (RTC), Branch 30 of Dumaguete City, in Civil Case No. 11360, an action for
recovery of damages based on Article 2180, in relation to Article 2176, of the Civil
Code, filed by respondent Jocelyn Catubig against petitioner Vallacar Transit, Inc.
While the RTC dismissed respondent’s claim for damages, the Court of Appeals
granted the same.

The undisputed facts are as follows:

Petitioner is engaged in the business of transportation and the franchise owner of a


Ceres Bulilit bus with Plate No. T-0604-1348. Quirino C. Cabanilla (Cabanilla) is
employed as a regular bus driver of petitioner.

On January 27, 1994, respondent’s husband, Quintin Catubig, Jr. (Catubig), was on his
way home from Dumaguete City riding in tandem on a motorcycle with his employee,
Teddy Emperado (Emperado). Catubig was the one driving the motorcycle. While
approaching a curve at kilometers 59 and 60, Catubig tried to overtake a slow moving
ten-wheeler cargo truck by crossing-over to the opposite lane, which was then being
traversed by the Ceres Bulilit bus driven by Cabanilla, headed for the opposite
direction. When the two vehicles collided, Catubig and Emperado were thrown from the
motorcycle. Catubig died on the spot where he was thrown, while Emperado died while
being rushed to the hospital.

On February 1, 1994, Cabanilla was charged with reckless imprudence resulting in


double homicide in Criminal Case No. M-15-94 before the Municipal Circuit Trial Court
(MCTC) of Manjuyod-Bindoy-Ayungon of the Province of Negros Oriental. After
preliminary investigation, the MCTC issued a Resolution on December 22, 1994,
dismissing the criminal charge against Cabanilla. It found that Cabanilla was not
criminally liable for the deaths of Catubig and Emperado, because there was no
negligence, not even contributory, on Cabanilla’s part.

Thereafter, respondent filed before the RTC on July 19, 1995 a Complaint for
Damages against petitioner, seeking actual, moral, and exemplary damages, in the
total amount of ₱484,000.00, for the death of her husband, Catubig, based on Article
2180, in relation to Article 2176, of the Civil Code. Respondent alleged that petitioner is
civilly liable because the latter’s employee driver, Cabanilla, was reckless and
negligent in driving the bus which collided with Catubig’s motorcycle.

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

In the Pre-Trial Order4 dated June 10, 1997, the parties stipulated that the primary
issue for trial was whether or not petitioner should be held liable for Catubig’s death.
Trial then ensued.
Police Officer (PO) 2 Robert B. Elnas (Elnas),5 Emilio Espiritu (Espiritu),6 Dr. Norberto
Baldado, Jr. (Dr. Baldado),7Peter Cadimas (Cadimas),8 and respondent9 herself
testified in support of respondent’s complaint.

PO2 Elnas conducted an investigation of the collision incident. According to PO2


Elnas, the bus was running fast, at a speed of 100 kilometers per hour, when it collided
with the motorcycle which was trying to overtake a truck. The collision occurred on the
lane of the bus. Catubig was flung 21 meters away, and Emperado, 11 meters away,
from the point of impact. The motorcycle was totaled; the chassis broke into three
parts, and the front wheel and the steering wheel with the shock absorbers were found
26 meters and 38 meters, respectively, from the collision point. In contrast, only the
front bumper of the bus suffered damage.

Cadimas personally witnessed the collision of the bus and the motorcycle. He recalled
that he was then waiting for a ride to Dumaguete City and saw the Ceres Bulilit bus
making a turn at a curve. Cadimas signaled the said bus to halt but it was running fast.
Cadimas also recollected that there was a cargo truck running slow in the opposite
direction of the bus. Cadimas next heard a thud and saw that the bus already collided
with a motorcycle.

Espiritu was the photographer who took photographs of the scene of the accident. He
identified the five photographs which he had taken of Catubig lying on the ground,
bloodied; broken parts of the motorcycle; and the truck which Catubig tried to overtake.

Dr. Baldado was the medico-legal doctor who conducted the post-mortem examination
of Catubig’s body. He reported that Catubig suffered from the following injuries:
laceration and fracture of the right leg; laceration and fracture of the left elbow; multiple
abrasions in the abdominal area, left anterior chest wall, posterior right arm, and at the
back of the left scapular area; and contusion-hematoma just above the neck. Dr.
Baldado confirmed that Catubig was already dead when the latter was brought to the
hospital, and that the vehicular accident could have caused Catubig’s instantaneous
death.

Respondent herself testified to substantiate the amount of damages she was trying to
recover from petitioner for Catubig’s death, such as Catubig’s earning capacity;
expenses incurred for the wake and burial of Catubig, as well as of Emperado; the cost
of the motorcycle; and the costs of the legal services and fees respondent had
incurred.

Respondent’s documentary exhibits consisted of her and Catubig’s Marriage Contract


dated August 21, 1982, their two children’s Certificate of Live Births, Catubig’s College
Diploma dated March 24, 1983, the list and receipts of the expenses for Catubig’s
burial, the sketch of the collision site prepared by PO2 Elnas, the excerpts from the
police blotter, the photographs of the collision,10 and the Post Mortem Report11 on
Catubig’s cadaver prepared by Dr. Baldado.
In an Order12 dated October 6, 1998, the RTC admitted all of respondent’s
aforementioned evidence.

On the other hand, Rosie C. Amahit (Amahit)13 and Nunally Maypa (Maypa)14 took the
witness stand for petitioner.

Amahit was a Court Stenographer at the MCTC who took the transcript of stenographic
notes (TSN) in Criminal Case No. M-15-94 against Cabanilla. Amahit verified that the
document being presented by the defense in the present case was a true and correct
copy of the TSN of the preliminary investigation held in Criminal Case No. M-15-94 on
May 25, 1994, and another document was a duplicate original of the MCTC Resolution
dated December 22, 1994 dismissing Criminal Case No. M-15-94.

Maypa is the Administrative and Personnel Manager at the Dumaguete branch of


petitioner. He started working for petitioner on September 22, 1990 as a clerk at the
Human Resources Development Department at the Central Office of petitioner in
Bacolod City. Sometime in November 1993, he became an Administrative Assistant at
the Dumaguete branch of petitioner; and in August 1995, he was promoted to his
current position at the same branch.

While he was still an Administrative Assistant, Maypa was responsible for the hiring of
personnel including drivers and conductors. Maypa explained that to be hired as a
driver, an applicant should be 35 to 45 years old, have at least five years experience in
driving big trucks, submit police, court, and medical clearances, and possess all the
necessary requirements for driving a motor vehicle of more than 4,500 kilograms in
gross weight such as a professional driver’s license with a restriction code of 3. The
applicant should also pass the initial interview, the actual driving and maintenance
skills tests, and a written psychological examination involving defensive driving
techniques. Upon passing these examinations, the applicant still had to go through a
15-day familiarization of the bus and road conditions before being deployed for work.
Maypa, however, admitted that at the time of his appointment as Administrative
Assistant at the Dumaguete branch, Cabanilla was already an employee driver of
petitioner.

Maypa further explained the investigation and grievance procedure followed by


petitioner in cases of vehicular accidents involving the latter’s employee drivers. Maypa
related that Cabanilla had been put on preventive suspension following the vehicular
accident on January 27, 1994 involving the bus Cabanilla was driving and the
motorcycle carrying Catubig and Emperado. Following an internal investigation of said
accident conducted by petitioner, Cabanilla was declared not guilty of causing the
same, for he had not been negligent.

Lastly, Maypa recounted the expenses petitioner incurred as a result of the present
litigation.
The documentary exhibits of petitioner consisted of the TSN of the preliminary
investigation in Criminal Case No. M-15-94 held on May 25, 1994 before the MCTC of
Manjuyod-Bindoy-Ayungon of the Province of Negros Oriental; Resolution dated
December 22, 1994 of the MCTC in the same case; and the Minutes dated February
17, 1994 of the Grievance Proceeding conducted by petitioner involving Cabanilla.15

The RTC, in its Order16 dated November 12, 1999, admitted all the evidence presented
by petitioner.

On January 26, 2000, the RTC promulgated its Decision favoring petitioner. Based on
the sketch prepared by PO2 Elnas, which showed that "the point of impact x x x
occurred beyond the center lane near a curve within the lane of the Ceres
bus[;]"17 plus, the testimonies of PO2 Elnas and Cadimas that the motorcycle
recklessly tried to overtake a truck near a curve and encroached the opposite lane of
the road, the RTC ruled that the proximate cause of the collision of the bus and
motorcycle was the negligence of the driver of the motorcycle, Catubig. The RTC,
moreover, was convinced through the testimony of Maypa, the Administrative and
Personnel Manager of the Dumaguete branch of petitioner, that petitioner had
exercised due diligence in the selection and supervision of its employee drivers,
including Cabanilla.

After trial, the RTC concluded:

WHEREFORE, finding preponderance of evidence in favor of the [herein petitioner]


that the [herein respondent’s] husband is the reckless and negligent driver and not the
driver of the [petitioner], the above-entitled case is hereby ordered dismissed.

[Petitioner’s] counterclaim is also dismissed for lack of merit.18

Respondent appealed to the Court of Appeals. In its Decision dated November 17,
2005, the appellate court held that both Catubig and Cabanilla were negligent in driving
their respective vehicles. Catubig, on one hand, failed to use reasonable care for his
own safety and ignored the hazard when he tried to overtake a truck at a curve.
Cabanilla, on the other hand, was running his vehicle at a high speed of 100 kilometers
per hour. The Court of Appeals also brushed aside the defense of petitioner that it
exercised the degree of diligence exacted by law in the conduct of its business. Maypa
was not in a position to testify on the procedures followed by petitioner in hiring
Cabanilla as an employee driver considering that Cabanilla was hired a year before
Maypa assumed his post at the Dumaguete branch of petitioner.

Thus, the Court of Appeals decreed:

WHEREFORE, based on the foregoing, the assailed decision of the trial court is
modified. We rule that [herein petitioner] is equally liable for the accident in question
which led to the deaths of Quintin Catubig, Jr. and Teddy Emperado and hereby award
to the heirs of Quintin Catubig, Jr. the amount [of] ₱250,000.00 as full compensation
for the death of the latter.19

The Court of Appeals denied the motion for reconsideration of petitioner in a


Resolution dated November 16, 2006.

Hence, the instant Petition for Review.

Petitioner asserts that respondent’s complaint for damages should be dismissed for the
latter’s failure to verify the same. The certification against forum shopping attached to
the complaint, signed by respondent, is not a valid substitute for respondent’s
verification that she "has read the pleading and that the allegations therein are true and
correct of her personal knowledge or based on authentic records."20 Petitioner cited
jurisprudence in which the Court ruled that a pleading lacking proper verification is
treated as an unsigned pleading, which produces no legal effect under Section 3, Rule
7 of the Rules of Court.

Petitioner also denies any vicarious or imputed liability under Article 2180, in relation to
Article 2176, of the Civil Code. According to petitioner, respondent failed to prove the
culpability of Cabanilla, the employee driver of petitioner. There are already two trial
court decisions (i.e., the Resolution dated December 22, 1994 of the MCTC of
Manjuyod-Bindoy-Ayungon of the Province of Negros Oriental in Criminal Case No. M-
15-94 and the Decision dated January 26, 2000 of the RTC in the instant civil suit)
explicitly ruling that the proximate cause of the collision was Catubig’s reckless and
negligent act. Thus, without the fault or negligence of its employee driver, no liability at
all could be imputed upon petitioner.

Petitioner additionally argues, without conceding any fault or liability, that the award by
the Court of Appeals in respondent’s favor of the lump sum amount of ₱250,000.00 as
total death indemnity lacks factual and legal basis. Respondent’s evidence to prove
actual or compensatory damages are all self-serving, which are either inadmissible in
evidence or devoid of probative value. The award of moral and exemplary damages is
likewise contrary to the ruling of the appellate court that Catubig should be equally held
liable for his own death.

Respondent maintains that the Court of Appeals correctly adjudged petitioner to be


liable for Catubig’s death and that the appellate court had already duly passed upon all
the issues raised in the petition at bar.

The petition is meritorious.

At the outset, we find no procedural defect that would have warranted the outright
dismissal of respondent’s complaint.
Respondent filed her complaint for damages against petitioner on July 19, 1995, when
the 1964 Rules of Court was still in effect. Rule 7, Section 6 of the 1964 Rules of Court
provided:

Sec. 6. Verification.—A pleading is verified only by an affidavit stating that the person
verifying has read the pleading and that the allegations thereof are true of his own
knowledge.

Verifications based on "information and belief," or upon "knowledge, information and


belief," shall be deemed insufficient.

On July 1, 1997, the new rules on civil procedure took effect. The foregoing provision
was carried on, with a few amendments, as Rule 7, Section 4 of the 1997 Rules of
Court, viz:

SEC. 4. Verification. – Except when otherwise specifically required by law or rule,


pleadings need not be under oath, verified or accompanied by affidavit.

A pleading is verified by an affidavit that the affiant has read the pleading and that the
allegations therein are true and correct of his knowledge and belief.

A pleading required to be verified which contains a verification based on "information


and belief," or upon "knowledge, information and belief," or lacks a proper verification,
shall be treated as an unsigned pleading."

The same provision was again amended by A.M. No. 00-2-10, which became effective
on May 1, 2000. It now reads:

SEC. 4. Verification. - Except when otherwise specifically required by law or rule,


pleadings need not be under oath, verified or accompanied by affidavit.

A pleading is verified by an affidavit that the affiant has read the pleading and that the
allegations therein are true and correct of his personal knowledge or based on
authentic records.

A pleading required to be verified which contains a verification based on "information


and belief" or upon "knowledge, information and belief," or lacks a proper verification,
shall be treated as an unsigned pleading.

The 1997 Rules of Court, even prior to its amendment by A.M. No. 00-2-10, clearly
provides that a pleading lacking proper verification is to be treated as an unsigned
pleading which produces no legal effect. However, it also just as clearly states that
"[e]xcept when otherwise specifically required by law or rule, pleadings need not be
under oath, verified or accompanied by affidavit." No such law or rule specifically
requires that respondent’s complaint for damages should have been verified.
Although parties would often submit a joint verification and certificate against forum
shopping, the two are different.

In Pajuyo v. Court of Appeals,21 we already pointed out that:

A party’s failure to sign the certification against forum shopping is different from the
party’s failure to sign personally the verification. The certificate of non-forum shopping
must be signed by the party, and not by counsel. The certification of counsel renders
the petition defective.

On the other hand, the requirement on verification of a pleading is a formal and not a
jurisdictional requisite. It is intended simply to secure an assurance that what are
alleged in the pleading are true and correct and not the product of the imagination or a
matter of speculation, and that the pleading is filed in good faith. The party need not
sign the verification. A party’s representative, lawyer or any person who personally
knows the truth of the facts alleged in the pleading may sign the verification.22

In the case before us, we stress that as a general rule, a pleading need not be verified,
unless there is a law or rule specifically requiring the same. Examples of pleadings that
require verification are: (1) all pleadings filed in civil cases under the 1991 Revised
Rules on Summary Procedure; (2) petition for review from the Regional Trial Court to
the Supreme Court raising only questions of law under Rule 41, Section 2; (3) petition
for review of the decision of the Regional Trial Court to the Court of Appeals under
Rule 42, Section 1; (4) petition for review from quasi-judicial bodies to the Court of
Appeals under Rule 43, Section 5; (5) petition for review before the Supreme Court
under Rule 45, Section 1; (6) petition for annulment of judgments or final orders and
resolutions under Rule 47, Section 4; (7) complaint for injunction under Rule 58,
Section 4; (8) application for preliminary injunction or temporary restraining order under
Rule 58, Section 4; (9) application for appointment of a receiver under Rule 59, Section
1; (10) application for support pendente lite under Rule 61, Section 1; (11) petition for
certiorari against the judgments, final orders or resolutions of constitutional
commissions under Rule 64, Section 2; (12) petition for certiorari, prohibition, and
mandamus under Rule 65, Sections 1 to 3; (13) petition for quo warranto under Rule
66, Section 1; (14) complaint for expropriation under Rule 67, Section 1; (15) petition
for indirect contempt under Rule 71, Section 4, all from the 1997 Rules of Court; (16)
all complaints or petitions involving intra-corporate controversies under the Interim
Rules of Procedure on Intra-Corporate Controversies; (17) complaint or petition for
rehabilitation and suspension of payment under the Interim Rules on Corporate
Rehabilitation; and (18) petition for declaration of absolute nullity of void marriages and
annulment of voidable marriages as well as petition for summary proceedings under
the Family Code.

In contrast, all complaints, petitions, applications, and other initiatory pleadings must
be accompanied by a certificate against forum shopping, first prescribed by
Administrative Circular No. 04-94, which took effect on April 1, 1994, then later on by
Rule 7, Section 5 of the 1997 Rules of Court. It is not disputed herein that respondent’s
complaint for damages was accompanied by such a certificate.

In addition, verification, like in most cases required by the rules of procedure, is a


formal, not jurisdictional, requirement, and mainly intended to secure an assurance that
matters which are alleged are done in good faith or are true and correct and not of
mere speculation. When circumstances warrant, the court may simply order the
correction of unverified pleadings or act on it and waive strict compliance with the rules
in order that the ends of justice may thereby be served.23

We agree with petitioner, nonetheless, that respondent was unable to prove imputable
negligence on the part of petitioner.

Prefatorily, we restate the time honored principle that in a petition for review under
Rule 45, only questions of law may be raised. It is not our function to analyze or weigh
all over again evidence already considered in the proceedings below, our jurisdiction is
limited to reviewing only errors of law that may have been committed by the lower
court. The resolution of factual issues is the function of lower courts, whose findings on
these matters are received with respect. A question of law which we may pass upon
must not involve an examination of the probative value of the evidence presented by
the litigants.24

The above rule, however, admits of certain exceptions. The findings of fact of the Court
of Appeals are generally conclusive but may be reviewed when: (1) the factual findings
of the Court of Appeals and the trial court are contradictory; (2) the findings are
grounded entirely on speculation, surmises or conjectures; (3) the inference made by
the Court of Appeals from its findings of fact is manifestly mistaken, absurd or
impossible; (4) there is grave abuse of discretion in the appreciation of facts; (5) the
appellate court, in making its findings, goes beyond the issues of the case and such
findings are contrary to the admissions of both appellant and appellee; (6) the
judgment of the Court of Appeals is premised on a misapprehension of facts; (7) the
Court of Appeals fails to notice certain relevant facts which, if properly considered, will
justify a different conclusion; and (8) the findings of fact of the Court of Appeals are
contrary to those of the trial court or are mere conclusions without citation of specific
evidence, or where the facts set forth by the petitioner are not disputed by respondent,
or where the findings of fact of the Court of Appeals are premised on the absence of
evidence but are contradicted by the evidence on record.25

The issue of negligence is basically factual.26 Evidently, in this case, the RTC and the
Court of Appeals have contradictory factual findings: the former found that Catubig
alone was negligent, while the latter adjudged that both Catubig and petitioner were
negligent.

Respondent based her claim for damages on Article 2180, in relation to Article 2176, of
the Civil Code, which read:
Art. 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is
no pre-existing contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this Chapter.

Art. 2180. The obligation imposed by Article 2176 is demandable not only for one’s
own acts or omissions, but also for those persons for whom one is responsible.

xxxx

Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are not
engaged in any business or industry.

xxxx

The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family to
prevent damage.

There is merit in the argument of the petitioner that Article 2180 of the Civil Code –
imputing fault or negligence on the part of the employer for the fault or negligence of its
employee – does not apply to petitioner since the fault or negligence of its employee
driver, Cabanilla, which would have made the latter liable for quasi-delict under Article
2176 of the Civil Code, has never been established by respondent. To the contrary, the
totality of the evidence presented during trial shows that the proximate cause of the
collision of the bus and motorcycle is attributable solely to the negligence of the driver
of the motorcycle, Catubig.

Proximate cause is defined as that cause, which, in natural and continuous sequence,
unbroken by any efficient intervening cause, produces the injury, and without which the
result would not have occurred. And more comprehensively, the proximate legal cause
is that acting first and producing the injury, either immediately or by setting other
events in motion, all constituting a natural and continuous chain of events, each having
a close causal connection with its immediate predecessor, the final event in the chain
immediately effecting the injury as a natural and probable result of the cause which first
acted, under such circumstances that the person responsible for the first event should,
as an ordinary prudent and intelligent person, have reasonable ground to expect at the
moment of his act or default that an injury to some person might probably result
therefrom.27

The RTC concisely articulated and aptly concluded that Catubig’s overtaking of a slow-
moving truck ahead of him, while approaching a curve on the highway, was the
immediate and proximate cause of the collision which led to his own death, to wit:
Based on the evidence on record, it is crystal clear that the immediate and proximate
cause of the collision is the reckless and negligent act of Quintin Catubig, Jr. and not
because the Ceres Bus was running very fast. Even if the Ceres Bus is running very
fast on its lane, it could not have caused the collision if not for the fact that Quintin
Catubig, Jr. tried to overtake a cargo truck and encroached on the lane traversed by
the Ceres Bus while approaching a curve. As the driver of the motorcycle, Quintin
Catubig, Jr. has not observed reasonable care and caution in driving his motorcycle
which an ordinary prudent driver would have done under the circumstances.
Recklessness on the part of Quintin Catubig, Jr. is evident when he tried to overtake a
cargo truck while approaching a curve in Barangay Donggo-an, Bolisong, Manjuyod,
Negros Oriental. Overtaking is not allowed while approaching a curve in the highway
(Section 41(b), Republic Act [No.] 4136, as amended). Passing another vehicle
proceeding on the same direction should only be resorted to by a driver if the highway
is free from incoming vehicle to permit such overtaking to be made in safety (Section
41(a), Republic Act [No.] 4136). The collision happened because of the recklessness
and carelessness of [herein respondent’s] husband who was overtaking a cargo truck
while approaching a curve. Overtaking another vehicle while approaching a curve
constitute reckless driving penalized not only under Section 48 of Republic Act [No.]
4136 but also under Article 365 of the Revised Penal Code.

The Court commiserate with the [respondent] for the untimely death of her
husband.1avvphi1 However, the Court as dispenser of justice has to apply the law
based on the facts of the case. Not having proved by preponderance of evidence that
the proximate cause of the collision is the negligence of the driver of the Ceres bus,
this Court has no other option but to dismiss this case.28 (Emphases supplied.)

The testimonies of prosecution witnesses Cadimas and PO2 Elnas that Cabanilla was
driving the bus at a reckless speed when the collision occurred lack probative value.

We are unable to establish the actual speed of the bus from Cadimas’s testimony for
he merely stated that the bus did not stop when he tried to flag it down because it was
"running very fast."29

PO2 Elnas, on the other hand, made inconsistent statements as to the actual speed of
the bus at the time of the collision. During the preliminary investigation in Criminal
Case No. M-15-94 before the MCTC, PO2 Elnas refused to give testimony as to the
speed of either the bus or the motorcycle at the time of the collision and an opinion as
to who was at fault.30 But during the trial of the present case before the RTC, PO2
Elnas claimed that he was told by Cabanilla that the latter was driving the bus at the
speed of around 100 kilometers per hour.31

As the RTC noted, Cadimas and PO2 Elnas both pointed out that the motorcycle
encroached the lane of the bus when it tried to overtake, while nearing a curve, a truck
ahead of it, consistent with the fact that the point of impact actually happened within
the lane traversed by the bus. It would be more reasonable to assume then that it was
Catubig who was driving his motorcycle at high speed because to overtake the truck
ahead of him, he necessarily had to drive faster than the truck. Catubig should have
also avoided overtaking the vehicle ahead of him as the curvature on the road could
have obstructed his vision of the oncoming vehicles from the opposite lane.

The evidence shows that the driver of the bus, Cabanilla, was driving his vehicle along
the proper lane, while the driver of the motorcycle, Catubig, had overtaken a vehicle
ahead of him as he was approaching a curvature on the road, in disregard of the
provision of the law on reckless driving, at the risk of his life and that of his employee,
Emperado.

The presumption that employers are negligent under Article 2180 of the Civil Code
flows from the negligence of their employees.32 Having adjudged that the immediate
and proximate cause of the collision resulting in Catubig’s death was his own
negligence, and there was no fault or negligence on Cabanilla’s part, then such
presumption of fault or negligence on the part of petitioner, as Cabanilla’s employer,
does not even arise. Thus, it is not even necessary to delve into the defense of
petitioner that it exercised due diligence in the selection and supervision of Cabanilla
as its employee driver.

WHEREFORE, premises considered, the petition is GRANTED. The Decision dated


November 17, 2005 and Resolution dated November 16, 2006 of the Court Appeals in
CA-G.R. CV No. 66815 are SET ASIDE and the Decision dated January 26, 2000 of
the Regional Trial Court, Branch 30 of Dumaguete City, dismissing Civil Case No.
11360 is REINSTATED.

SO ORDERED.

SPECIFIC DENIAL

G.R. No. 180157 February 8, 2012

EQUITABLE CARDNETWORK, INC., Petitioner,


vs.
JOSEFA BORROMEO CAPISTRANO, Respondent.

DECISION

ABAD, J.:

This case is about the sufficiency of the defendant’s allegations in the answer denying
the due execution and genuineness of the plaintiff’s actionable documents and the kind
of evidence needed to prove forgery of signature.

The Facts and the Case


Petitioner Equitable Cardnetwork, Inc. (ECI) alleged in its complaint that in September
1997 respondent Josefa B. Capistrano (Mrs. Capistrano) applied for membership at
the Manila Yacht Club (MYC) under the latter’s widow-membership program. Since the
MYC and ECI had a credit card sponsorship agreement in which the Club would solicit
for ECI credit card enrollment among its members and dependents, Mrs. Capistrano
allegedly applied for and was granted a Visa Credit Card by ECI.

ECI further alleged that Mrs. Capistrano authorized her daughter, Valentina C. Redulla
(Mrs. Redulla), to claim from ECI her credit card and ATM application form.1 Mrs.
Redulla signed the acknowledgment receipt2 on behalf of her mother, Mrs. Capistrano.
After Mrs. Capistrano got hold of the card, she supposedly started using it. On
November 24, 1997 Mrs. Redulla personally issued a ₱45,000.00 check as partial
payment of Mrs. Capistrano’s account with ECI. But Mrs. Redulla’s check bounced
upon deposit.

Because Mrs. Capistrano was unable to settle her ₱217,235.36 bill, ECI demanded
payment from her. But she refused to pay, prompting ECI to file on February 30, 1998
a collection suit against her before the Regional Trial Court (RTC) of Cebu City.

Answering the complaint, Mrs. Capistrano denied ever applying for MYC membership
and ECI credit card; that Mrs. Redulla was not her daughter; and that she never
authorized her or anyone to claim a credit card for her. Assuming she applied for such
a card, she never used it. Mrs. Redulla posed as Mrs. Capistrano and fooled ECI into
issuing the card to her. Consequently, the action should have been brought against
Mrs. Redulla. Mrs. Capistrano asked the court to hold ECI liable to her for moral and
exemplary damages, attorney’s fees, and litigation expenses.

After trial, the RTC3 ruled that, having failed to deny under oath the genuineness and
due execution of ECI’s actionable documents that were attached to the complaint, Mrs.
Capistrano impliedly admitted the genuineness and due execution of those documents.
In effect she admitted: 1) applying for membership at the MYC;4 2) accomplishing the
MYC membership information sheet5 which contained a request for an ECI Visa card;
3) holding herself liable for all obligations incurred in the use of such card; 4)
authorizing Mrs. Redulla to receive the Visa card issued in her name;6 5) applying for
an ATM Card with ECI; 7 and 6) using the credit card in buying merchandise worth
₱217,235.36 as indicated in the sales slips.

The RTC said that when an action is founded upon written documents, their
genuineness and due execution shall be deemed admitted unless the defendant
specifically denies them under oath and states what he claims to be the facts. 8 A mere
statement that the documents were procured by fraudulent representation does not
raise any issue as to their genuineness and due execution.9 The RTC rejected Mrs.
Capistrano’s argument that, having verified her answer, she should be deemed to have
denied those documents under oath. The RTC reasoned that she did not, in her
verification, deny signing those documents or state that they were false or fabricated.
The RTC added that respondent Mrs. Capistrano could no longer raise the defense of
forgery since this had been cut-off by her failure to make a specific denial. Besides,
said the RTC, Mrs. Capistrano failed to present strong and convincing evidence that
her signatures on the document had been forged. She did not present a handwriting
expert who could attest to the forgery. The trial court ordered Mrs. Capistrano to pay
ECI’s claim of ₱217,235.36 plus interests, attorney’s fees and litigation expenses. Mrs.
Capistrano appealed the decision to the Court of Appeals (CA).

On May 10, 2007 the CA reversed the trial court’s decision and dismissed ECI’s
complaint.10 The CA ruled that, although Mrs. Capistrano’s answer was somewhat
infirm, still she raised the issue of the genuineness and due execution of ECI’s
documents during trial by presenting evidence that she never signed any of them.
Since ECI failed to make a timely objection to its admission, such evidence cured the
vagueness in her answer. Further, the CA ruled that Mrs. Capistrano sufficiently
proved by evidence that her signatures had been forged.

The Issues Presented

The issues presented are:

1. Whether or not the CA correctly ruled that, although Mrs. Capistrano failed to
make an effective specific denial of the actionable documents attached to the
complaint, she overcame this omission by presenting parol evidence to which
ECI failed to object; and

2. Whether or not the CA correctly ruled that Mrs. Capistrano presented clear
and convincing evidence that her signatures on the actionable documents had
been forged.

Ruling of the Court

One. An answer to the complaint may raise a negative defense which consists in
defendant’s specific denial of the material fact that plaintiff alleges in his complaint,
which fact is essential to the latter’s cause of action.11 Specific denial has three modes.
Thus:

1) The defendant must specify each material allegation of fact the truth of which
he does not admit and whenever practicable set forth the substance of the
matters on which he will rely to support his denial;

2) When the defendant wants to deny only a part or a qualification of an


averment in the complaint, he must specify so much of the averment as is true
and material and deny the remainder; and
3) When the defendant is without knowledge and information sufficient to form a
belief as to the truth of a material averment made in the complaint, he shall so
state and this shall have the effect of a denial.

But the rule that applies when the defendant wants to contest the documents attached
to the claimant’s complaint which are essential to his cause of action is found in
Section 8, Rule 8 of the Rules of Court, which provides:

SECTION 8. How to contest such documents. —When an action or defense is founded


upon a written instrument, copied in or attached to the corresponding pleading as
provided in the preceding Section, the genuineness and due execution of the
instrument shall be deemed admitted unless the adverse party, under oath, specifically
denies them, and sets forth what he claims to be the facts; but the requirement of an
oath does not apply when the adverse party does not appear to be a party to the
instrument or when compliance with an order for an inspection of the original
instrument is refused.

To determine whether or not respondent Mrs. Capistrano effectively denied the


genuineness and due execution of ECI’s actionable documents as provided above, the
pertinent averments of the complaint and defendant Capistrano’s answer are here
reproduced.

ECI’s complaint:

3. That sometime in 1997, defendant applied for membership, as widow of a deceased


member of the Manila Yacht Club;

4. That in connection with her application for membership in the Manila Yacht Club,
defendant applied for and was granted a Manila Yacht Club Visa Card in accordance
with Credit Card Sponsorship Agreement entered into between the plaintiff and the
Manila Yacht Club wherein Manila Yacht Club shall solicit applications for the Manila
Yacht Club Visa Cards from Manila Yacht Club members and dependents. Copy of the
Manila Yacht Club Information Sheet is hereto attached as Annex "A";

Mrs. Capistrano’s answer:

3. She specifically denies paragraph[s] 3 and 4 of the complaint for want of sufficient
knowledge to form a belief as to the veracity of the allegations contained therein and
for the reasons stated in her special and affirmative defenses.

xxxx

ECI’s complaint:

5. That defendant authorized her daughter, Mrs. Valentina Redulla to get the said
credit card including her ATM application form from the plaintiff which enabled the
defendant to avail of the cash advance facility with the use of said card; Copy of the
authorization letter, application form and acknowledgment receipt showing that
Valentina C. Redulla received the said credit card are hereto attached as Annexes "B",
"C", and "D", respectively;

Mrs. Capistrano’s answer:

4. She specifically denies paragraph 5 of the complaint for want of sufficient knowledge
to form a belief as to the allegations contained therein. She never authorized any
person to get her card. Valentina Redulla is not her daughter.

xxxx

ECI’s complaint:

6. That with the use of the said Manila Yacht Club Visa Card, defendant could
purchase goods and services from local and accredited stores and establishments on
credit and could make cash advances from ATM machines since it is the plaintiff who
pays first the said obligations and later at a stated period every month, the plaintiff will
send a statement of account to defendant showing how much she owes the plaintiff for
the payments it previously made on her behalf. Copy of the monthly statement of
accounts for the months of November and December 1997 are hereto attached as
Annexes "E" and "F", respectively;

Mrs. Capistrano’s answer:

5. She specifically denies paragraph 6 of the complaint for want of sufficient knowledge
to form a belief as to the veracity of the allegations contained therein and for the
reasons as stated in her special and affirmative defenses.

xxxx

ECI’s complaint:

7. That it is the agreement of the parties that in the event that an account is overdue,
interest at 1.75% per month and service charge at 1.25% will be charged to the
defendant;

Mrs. Capistrano’s answer:

6. She specifically denies paragraph 7 of the complaint for want of sufficient knowledge
to form a belief as to the veracity of the allegations contained therein.

xxxx

ECI’s complaint:
8. That on November 24, 1997, defendant’s daughter, Mrs. Valentina C. Redulla
issued Solidbank Check No. 0127617 dated November 24, 1997 in the amount of
₱45,000.00 in partial payment of defendant’s account with the plaintiff;

9. That when the said check was deposited in the bank, the same was dishonored for
the reason "Account Closed." Copy of said said check is hereto attached as Annex "G";

Mrs. Capistrano’s answer:

7. She denies paragraph[s] 8 and 9 for want of sufficient knowledge to form a belief as
to the veracity of the allegations contained therein and for the reasons aforestated. It is
quite peculiar that herein defendant’s alleged account would be paid with a personal
check of somebody not related to her.

xxxx

ECI’s complaint:

10. That defendant has an unpaid principal obligation to the plaintiff in the amount of
₱217,235.326;

Mrs. Capistrano’s answer:

8. She denies paragraph 10 for want of sufficient knowledge as to the veracity of the
allegations contained therein and for the reasons stated in her special and affirmative
defenses. Granting ex gratia argumenti that defendant did indeed apply for a card, still,
she vehemently denies using the same to purchase goods from any establishment on
credit.

xxxx

ECI’s complaint

11. That plaintiff made demands on the defendant to pay her obligation but despite
said demands, defendant has failed and refused to pay her obligation and still fails and
refuses to pay her obligation to the plaintiff and settle her obligation, thus, compelling
the plaintiff to file the present action and hire the services of counsel for the amount of
₱53,998.84 and incur litigation expenses in the amount of ₱30,000.00;

12. That it is further provided as one of the terms and conditions in the issuance of the
Manila Yacht Club Card that in the event that collection is enforced through court
action, 25% of the amount due of ₱53,998.84 will be charged as attorney’s fees and
₱53,998.84 will be charged as liquidated damages;

Mrs. Capistrano’s answer


9. She denies paragraph[s] 11 and 12 for want of sufficient knowledge to form a belief
as to the veracity of the allegations therein. If ever there was any demand sent to
herein defendant the same would have been rejected on valid and lawful grounds.
Therefore, any damage or expense, real or imaginary, incurred or sustained by the
plaintiff should be for its sole and exclusive account.

xxxx

Further, Mrs. Capistrano’s special and affirmative defenses read as follows:

10. Defendant repleads by reference all the foregoing allegations which are
relevant and material hereto.

11. Defendant denies having applied for membership with the Equitable
Cardnetwork, Inc. as a widow of a deceased member of the Manila Yacht Club.

12. She has never authorized anyone to get her alleged card for the preceding
reason. Therefore, being not a member, she has no obligation, monetary or
otherwise to herein plaintiff.

13. Plaintiff has no cause of action against herein answering defendant.

14. This Valentina C. Redulla is not her daughter. In all modesty, defendant
being a member of one of the prominent families of Cebu and being a board
member of the Borromeo Brothers Estate whose holdings include Honda Cars
Cebu as well as other prestigious establishments, it would be totally uncalled for
if she would not honor a valid obligation towards any person or entity.

15. She surmises that this Valentina Redulla has been posing as Josefa
Capistrano. Therefore, plaintiff’s cause of action should have been directed
towards this Redulla.

16. Even granting for the sake of argument that herein answering defendant did
indeed authorized somebody to pick up her card, still, she never made any
purchases with the use thereof. She, therefore, vehemently denies having used
the card to purchase any merchandise on credit.

In substance, ECI’s allegations, supported by the attached documents, are that Mrs.
Capistrano applied through Mrs. Redulla for a credit card and that the former used it to
purchase goods on credit yet Mrs. Capistrano refused to pay ECI for them. On the
other hand, Mrs. Capistrano denied these allegations "for lack of knowledge" as to their
truth.12 This mode of denial is by itself obviously ineffectual since a person must surely
know if he applied for a credit card or not, like a person must know if he is married or
not. He must also know if he used the card and if he did not pay the card company for
his purchases. A person’s denial for lack of knowledge of things that by their nature he
ought to know is not an acceptable denial.
In any event, the CA ruled that, since ECI did not object on time to Mrs. Capistrano’s
evidence that her signatures on the subject documents were forged, such omission
cured her defective denial of their genuineness and due execution. The CA’s ruling on
this point is quite incorrect.

True, issues not raised by the pleadings may be tried with the implied consent of the
parties as when one of them fails to object to the evidence adduced by the other
concerning such unimpleaded issues.13 But the CA fails to reckon with the rule that a
party’s admissions in the course of the proceedings, like an admission in the answer of
the genuineness and true execution of the plaintiff’s actionable documents, can only be
contradicted by showing that defendant made such admission through palpable
mistake.14 Here, Mrs. Capistrano never claimed palpable mistake in the answer she
filed.

It is of no moment that plaintiff ECI failed to object to Mrs. Capistrano’s evidence at the
trial that the subject documents were forgeries. As the Court ruled in Elayda v. Court of
Appeals,15 the trial court may reject evidence that a party adduces to contradict a
judicial admission he made in his pleading since such admission is conclusive as to
him. It does not matter that the other party failed to object to the contradictory evidence
so adduced.

Notwithstanding the above, the Court holds that the CA correctly ordered the dismissal
of ECI’s action since, contrary to the RTC’s finding, Mrs. Capistrano effectively denied
the genuineness and due execution of ECI’s actionable documents. True, Mrs.
Capistrano denied ECI’s actionable documents merely "for lack of knowledge" which
denial, as pointed out above, is inadequate since by their nature she ought to know the
truth of the allegations regarding those documents. But this inadequacy was cured by
her quick assertion that she was also denying the allegations regarding those
actionable documents "for the reasons as stated in her special and affirmative
defenses."

In the "Special and Affirmative Defenses" section of her answer, Mrs. Capistrano in fact
denied ECI’s documented allegations that she applied for a credit card, was given one,
and used it. She said:

11. Defendant denies having applied for membership with the Equitable Cardnetwork,
Inc. as a widow of a deceased member of the Manila Yacht Club.

12. She has never authorized anyone to get her alleged card for the preceding
reason.1âwphi1 Therefore, being not a member, she has no obligation, monetary or
otherwise to herein plaintiff.

Neither the RTC nor the CA can ignore Mrs. Capistrano’s above additional reasons
denying ECI’s allegations regarding its actionable documents. Such reasons form part
of her answer. Parenthetically, it seems that, when Mrs. Capistrano denied the
transactions with ECI "for lack of knowledge," it was her way of saying that such
transactions took place without her knowing. And, since Mrs. Capistrano in fact verified
her claim that she had no part in those transactions, she in effect denied under oath
the genuineness and due execution of the documents supporting them. For this
reason, she is not barred from introducing evidence that those documents were forged.

Two. Here, apart from presenting an officer who identified its documents, ECI
presented no other evidence to support its claim that Mrs. Capistrano did business with
it. On the other hand, the evidence for the defense shows that it was not likely for Mrs.
Capistrano to have applied for a credit card since she was already 81 years old, weak,
bedridden, and suffering from senility at the time in question.16 What is more, she had
been staying in Cagayan de Oro under the care of his son Mario; whereas she made
the alleged cash advances and purchases using the credit card in different malls in
Cebu City, Bohol, and Muntinlupa City.17

Further, as the CA found, Mrs. Capistrano’s specimen signatures on a Deed of


Sale,18 an Extra-judicial Settlement of Estate of Deceased Person,19 a Waiver of
Rights,20 and a handwritten note,21 executed at about the time in question, clearly
varied from the signatures found on ECI’s documents.22 The testimony of a handwriting
expert, while useful, is not indispensable in examining or comparing handwritings or
signatures.23 The matter here is not too technical as to preclude the CA from examining
the signatures and ruling on whether or not they are forgeries. The Court finds no
reason to take exception from the CA’s finding.

WHEREFORE, the Court DISMISSES the petition and AFFIRMS the order of the Court
of Appeals in CA-G.R. CV 79424 dated May 10, 2007 that directed the dismissal of the
complaint against respondent Josefa B. Capistrano.

SO ORDERED.

G.R. NO. 140608 September 23, 2004

PERMANENT SAVINGS AND LOAN BANK, petitioner,


vs.
MARIANO VELARDE, respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

In a complaint for sum of money filed before the Regional Trial Court of Manila (Branch
37), docketed as Civil Case No. 94-71639, petitioner Permanent Savings and Loan
Bank sought to recover from respondent Mariano Velarde, the sum of ₱1,000,000.00
plus accrued interests and penalties, based on a loan obtained by respondent from
petitioner bank, evidenced by the following: (1) promissory note dated September 28,
1983;1 (2) loan release sheet dated September 28, 1983;2 and (3) loan disclosure
statement dated September 28, 1983.3 Petitioner bank, represented by its Deputy
Liquidator after it was placed under liquidation, sent a letter of demand to respondent
on July 27, 1988, demanding full payment of the loan.4 Despite receipt of said demand
letter,5 respondent failed to settle his account. Another letter of demand was sent on
February 22, 1994,6 and this time, respondent’s counsel replied, stating that the
obligation "is not actually existing but covered by contemporaneous or subsequent
agreement between the parties …"7

In his Answer, respondent disclaims any liability on the instrument, thus:

2. The allegations in par. 2, Complaint, on the existence of the alleged loan of


₱1-Million, and the purported documents evidencing the same, only the signature
appearing at the back of the promissory note, Annex "A" seems to be that of
herein defendant. However, as to any liability arising therefrom, the receipt of the
said amount of P1-Million shows that the amount was received by another
person, not the herein defendant. Hence, no liability attaches and as further
stated in the special and affirmative defenses that, assuming the promissory note
exists, it does not bind much less is there the intention by the parties to bind the
herein defendant. In other words, the documents relative to the loan do not
express the true intention of the parties.8

Respondent’s Answer also contained a denial under oath, which reads:

I, MARIANO Z. VELARDE, of age, am the defendant in this case, that I caused


the preparation of the complaint and that all the allegations thereat are true and
correct; that the promissory note sued upon, assuming that it exists and bears
the genuine signature of herein defendant, the same does not bind him and that
it did not truly express the real intention of the parties as stated in the defenses;
…9

During pre-trial, the issues were defined as follows:

1. Whether or not the defendant has an outstanding loan obligation granted by


the plaintiff;

2. Whether or not the defendant is obligated to pay the loan including interests
and attorney’s fees;

3. Whether or not the defendant has really executed the Promissory Note
considering the doubt as to the genuineness of the signature and as well as the
non-receipt of the said amount;

4. Whether or not the obligation has prescribed on account of the lapse of time
from date of execution and demand for enforcement; and
5. Whether or not the defendant is entitled to his counterclaim and other
damages.10

On September 6, 1995, petitioner bank presented its sole witness, Antonio Marquez,
the Assistant Department Manager of the Philippine Deposit Insurance Corporation
(PDIC) and the designated Deputy Liquidator for petitioner bank, who identified the
Promissory Note11 dated September 28, 1983, the Loan Release Sheet12 dated
September 28, 1983, and the Disclosure Statement of Loan Credit Transaction.13

After petitioner bank rested its case, respondent, instead of presenting evidence, filed
with leave of court his demurrer to evidence, alleging the grounds that:

(a) PLAINTIFF FAILED TO PROVE ITS CASE BY PREPONDERANCE OF


EVIDENCE.

(b) THE CAUSE OF ACTION, CONCLUDING ARGUENTI THAT IT EXISTS, IS


BARRED BY PRESCRIPTION AND/OR LACHES.14

The trial court, in its Decision dated January 26, 1996, found merit in respondent’s
demurrer to evidence and dismissed the complaint including respondent’s
counterclaims, without pronouncement as to costs.15

On appeal, the Court of Appeals agreed with the trial court and affirmed the dismissal
of the complaint in its Decision16 dated October 27, 1999.17 The appellate court found
that petitioner failed to present any evidence to prove the existence of respondent’s
alleged loan obligations, considering that respondent denied petitioner’s allegations in
its complaint. It also found that petitioner bank’s cause of action is already barred by
prescription.18

Hence, the present petition for review on certiorari under Rule 45 of the Rules Court,
with the following assignment of errors:

4.1

THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER FAILED


TO ESTABLISH THE GENUINENESS, DUE EXECUTION AND AUTHENTICITY
OF THE SUBJECT LOAN DOCUMENTS.

4.2

THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER’S


CAUSE OF ACTION IS ALREADY BARRED BY PRESCRIPTION AND OR
LACHES.19

Before going into the merits of the petition, the Court finds it necessary to reiterate the
well-settled rule that only questions of law may be raised in a petition for review
on certiorari under Rule 45 of the Rules of Court, as "the Supreme Court is not a trier
of facts."20 It is not our function to review, examine and evaluate or weigh the probative
value of the evidence presented.21

There are, however, exceptions to the rule, e.g., when the factual inferences of the
appellate court are manifestly mistaken; the judgment is based on a misapprehension
of facts; or the CA manifestly overlooked certain relevant and undisputed facts that, if
properly considered, would justify a different legal conclusion.22 This case falls under
said exceptions.

The pertinent rule on actionable documents is found in Rule 8, Section 7 of the Rules
of Court which provides that when the cause of action is anchored on a document, the
genuineness or due execution of the instrument shall be deemed impliedly admitted
unless the defendant, under oath, specifically denies them, and sets forth what he
claims to be the facts.

It was the trial court’s opinion that:

The mere presentation of supposed documents regarding the loan, but absent
the testimony of a competent witness to the transaction and the documentary
evidence, coupled with the denial of liability by the defendant does not suffice to
meet the requisite preponderance of evidence in civil cases. The documents,
standing alone, unsupported by independent evidence of their existence, have no
legal basis to stand on. They are not competent evidence. Such failure leaves
this Court without ample basis to sustain the plaintiff’s cause of action and other
reliefs prayed for. The loan document being challenged. (sic) Plaintiff did not
exert additional effort to strengthen its case by the required preponderance of
evidence. On this score, the suit must be dismissed.23

The Court of Appeals concurred with the trial court’s finding and affirmed the dismissal
of the complaint, viz.:

… The bank should have presented at least a single witness qualified to testify
on the existence and execution of the documents it relied upon to prove the
disputed loan obligations of Velarde. … This falls short of the requirement
that (B)efore any private writing may be received in evidence, its due execution
and authenticity must be proved either: (a) By anyone who saw the writing
executed; (b) By evidence of the genuineness of the handwriting of the maker; or
(c) By a subscribing witness. (Rule 132, Sec. 21, Rules of Court) …

It is not true, as the Bank claims, that there is no need to prove the loan and its
supporting papers as Velarde has already admitted these. Velarde had in fact
denied these in his responsive pleading. And consistent with his denial, he
objected to the presentation of Marquez as a witness to identify the Exhibits of
the Bank, and objected to their admission when these were offered as evidence.
Though these were grudgingly admitted anyway, still admissibility of evidence
should not be equated with weight of evidence. …24

A reading of respondent’s Answer, however, shows that respondent did not


specifically deny that he signed the loan documents. What he merely stated in
his Answer was that the signature appearing at the back of the promissory note
seems to be his. Respondent also denied any liability on the promissory note as
he allegedly did not receive the amount stated therein, and the loan documents
do not express the true intention of the parties.25 Respondent reiterated these
allegations in his "denial under oath," stating that "the promissory note sued
upon, assuming that it exists and bears the genuine signature of herein
defendant, the same does not bind him and that it did not truly express the real
intention of the parties as stated in the defenses …"26

Respondent’s denials do not constitute an effective specific denial as contemplated by


law. In the early case of Songco vs. Sellner,27 the Court expounded on how to deny the
genuineness and due execution of an actionable document, viz.:

… This means that the defendant must declare under oath that he did not sign
the document or that it is otherwise false or fabricated. Neither does the
statement of the answer to the effect that the instrument was procured by
fraudulent representation raise any issue as to its genuineness or due execution.
On the contrary such a plea is an admission both of the genuineness and due
execution thereof, since it seeks to avoid the instrument upon a ground not
affecting either.

In fact, respondent’s allegations amount to an implied admission of the due execution


and genuineness of the promissory note. The admission of the genuineness and due
execution of a document means that the party whose signature it bears admits that he
voluntarily signed the document or it was signed by another for him and with his
authority; that at the time it was signed it was in words and figures exactly as set out in
the pleading of the party relying upon it; that the document was delivered; and that any
formalities required by law, such as a seal, an acknowledgment, or revenue stamp,
which it lacks, are waived by him.28 Also, it effectively eliminated any defense relating
to the authenticity and due execution of the document, e.g., that the document was
spurious, counterfeit, or of different import on its face as the one executed by the
parties; or that the signatures appearing thereon were forgeries; or that the signatures
were unauthorized.29

Clearly, both the trial court and the Court of Appeals erred in concluding that
respondent specifically denied petitioner’s allegations regarding the loan documents,
as respondent’s Answer shows that he failed to specifically deny under oath the
genuineness and due execution of the promissory note and its concomitant
documents. Therefore, respondent is deemed to have admitted the loan documents
and acknowledged his obligation with petitioner; and with respondent’s implied
admission, it was not necessary for petitioner to present further evidence to establish
the due execution and authenticity of the loan documents sued upon.

While Section 22, Rule 132 of the Rules of Court requires that private documents be
proved of their due execution and authenticity before they can be received in
evidence, i.e., presentation and examination of witnesses to testify on this fact; in the
present case, there is no need for proof of execution and authenticity with respect to
the loan documents because of respondent’s implied admission thereof.30

Respondent claims that he did not receive the net proceeds in the amount of
₱988,333.00 as stated in the Loan Release Sheet dated September 23, 1983.31 The
document, however, bears respondent’s signature as borrower.32Res ipsa
loquitur.33 The document speaks for itself. Respondent has already impliedly admitted
the genuineness and due execution of the loan documents. No further proof is
necessary to show that he undertook the obligation with petitioner. "A person cannot
accept and reject the same instrument."34

The Court also finds that petitioner’s claim is not barred by prescription.

Petitioner’s action for collection of a sum of money was based on a written contract
and prescribes after ten years from the time its right of action arose. 35 The prescriptive
period is interrupted when there is a written extrajudicial demand by the
creditors.36 The interruption of the prescriptive period by written extrajudicial demand
means that the said period would commence anew from the receipt of the demand.37

Thus, in the case of The Overseas Bank of Manila vs. Geraldez,38 the Court
categorically stated that the correct meaning of interruption as distinguished from
mere suspension or tolling of the prescriptive period is that said period would
commence anew from the receipt of the demand. In said case, the respondents
Valenton and Juan, on February 16, 1966, obtained a credit accommodation from the
Overseas Bank of Manila in the amount of ₱150,000.00. Written extrajudicial demands
dated February 9, March 1 and 27, 1968, November 13 and December 8, 1975 and
February 7 and August 27, 1976 were made upon the respondents but they refused to
pay. When the bank filed a case for the recovery of said amount, the trial court
dismissed the same on the ground of prescription as the bank's cause of action
accrued on February 16, 1966 (the date of the manager's check for ₱150,000.00
issued by the plaintiff bank to the Republic Bank) and the complaint was filed only on
October 22, 1976. Reversing the ruling of the trial court, the Court ruled:

An action upon a written contract must be brought within ten years from the time
the right of action accrues (Art. 1144[1], Civil Code). "The prescription of actions
is interrupted when they are filed before the court, when there is a written
extrajudicial demand by the creditors, and when there is any written
acknowledgment of the debt by the debtor" (Art. 1155, Ibid, applied in Gonzalo
Puyat & Sons, Inc. vs. City of Manila, 117 Phil. 985, 993; Philippine National
Bank vs. Fernandez, L-20086, July 10, 1967, 20 SCRA 645, 648; Harden vs.
Harden, L-22174, July 21, 1967, 20 SCRA 706, 711).

A written extrajudicial demand wipes out the period that has already elapsed and
starts anew the prescriptive period. Giorgi says: "La interrupcion difiere de la
suspension porque borra el tiempo transcurrido anteriormente y obliga a la
prescripcion a comenzar de nuevo" (9 Teoria de las Obligaciones, 2nd Ed., p.
222). "La interrupcion . . . quita toda eficacia al tiempo pasado y abre camino a
un computo totalmente nuevo, que parte del ultimo momento del acto
interruptivo, precisamente, como si en aquel momento y no antes hubiese nacido
el credito" (8 Giorgi, ibid pp. 390-2).

That same view as to the meaning of interruption was adopted in Florendo vs.
Organo, 90 Phil. 483, 488, where it ruled that the interruption of the ten-year
prescriptive period through a judicial demand means that "the full period of
prescription commenced to run anew upon the cessation of the suspension".
"When prescription is interrupted by a judicial demand, the full time for the
prescription must be reckoned from the cessation of the interruption" (Spring vs.
Barr, 120 So. 256 cited in 54 C.J.S. 293, note 27). That rule was followed in
Nator and Talon vs. CIR, 114 Phil. 661, Sagucio vs. Bulos, 115 Phil. 786 and
Fulton Insurance Co. vs. Manila Railroad Company, L-24263, November 18,
1967, 21 SCRA 974, 981.

Interruption of the prescriptive period as meaning renewal of the original term


seems to be the basis of the ruling in Ramos vs. Condez, L-22072, August 30,
1967, 20 SCRA 1146, 1151. In that case the cause of action accrued on June 25,
1952. There was a written acknowledgment by the vendors on November 10,
1956 of the validity of the deed of sale.

In National Marketing Corporation vs. Marquez, L-25553, January 31, 1969, 26 SCRA
722, it appears that Gabino Marquez executed on June 24, 1950 a promissory note
wherein he bound himself to pay to the Namarco ₱12,000 in installments within the
one-year period starting on June 24, 1951 and ending on June 25, 1952. After making
partial payments on July 7, 1951 and February 23, 1952, Marquez defaulted.

His total obligation, including interest, as of October 31, 1964, amounted to


₱19,990.91. Written demands for the payment of the obligation were made upon
Marquez and his surety on March 22, 1956, February 16, 1963, June 10, September
18 and October 13, 1964. Marquez did not make any further payment.
The Namarco sued Marquez and his surety on December 16, 1964. They contended
that the action had prescribed because the ten-year period for suing on the note
expired on June 25, 1962. That contention was not sustained. It was held that the
prescriptive period was interrupted by the written demands, copies of which were
furnished the surety.

Respondent’s obligation under the promissory note became due and demandable on
October 13, 1983. On July 27, 1988, petitioner’s counsel made a written demand for
petitioner to settle his obligation. From the time respondent’s obligation became due
and demandable on October 13, 1983, up to the time the demand was made, only 4
years, 9 months and 14 days had elapsed. The prescriptive period then commenced
anew when respondent received the demand letter on August 5, 1988.39 Thus, when
petitioner sent another demand letter on February 22, 1994,40 the action still had not
yet prescribed as only 5 years, 6 months and 17 days had lapsed. While the records
do not show when respondent received the second demand letter, nevertheless, it is
still apparent that petitioner had the right to institute the complaint on September 14,
1994, as it was filed before the lapse of the ten-year prescriptive period.

Lastly, if a demurrer to evidence is granted but on appeal the order of dismissal is


reversed, the movant shall be deemed to have waived the right to present
evidence.41 The movant who presents a demurrer to the plaintiff’s evidence retains the
right to present their own evidence, if the trial court disagrees with them; if the trial
court agrees with them, but on appeal, the appellate court disagrees with both of them
and reverses the dismissal order, the defendants lose the right to present their own
evidence. The appellate court shall, in addition, resolve the case and render judgment
on the merits, inasmuch as a demurrer aims to discourage prolonged
litigations.42 Thus, respondent may no longer offer proof to establish that he has no
liability under the loan documents sued upon by petitioner.

The promissory note signed and admitted by respondent provides for the loan amount
of ₱1,000,000.00, to mature on October 13, 1983, with interest at the rate of 25% per
annum. The note also provides for a penalty charge of 24% per annum of the amount
due and unpaid, and 25% attorney’s fees. Hence, respondent should be held liable for
these sums.

WHEREFORE, the petition is GRANTED. The Decisions of the Regional Trial Court of
Manila (Branch 37) dated January 26, 1996, and the Court of Appeals dated October
27, 1999 are SET ASIDE. Respondent is ordered to pay One Million Pesos
(₱1,000,000.00) plus 25% interest and 24% penalty charge per annum beginning
October 13, 1983 until fully paid, and 25% of the amount due as attorney’s fees.

Costs against respondent.

SO ORDERED.
AMENDMENT OF COMPLAINT

G.R. Nos. 121662-64 July 6, 1999

VLASON ENTERPRISES CORPORATION, petitioner,


vs.
COURT OF APPEALS and DURAPROOF SERVICES, represented by its General
Manager, Cesar Urbino Sr., respondents.

PANGANIBAN, J.:

Summons to a domestic or resident corporation should be served on officers, agents or


employees, who are responsible enough to warrant the presumption that they will
transmit to the corporation notice of the filing of the action against it. Rules on the
service of motions should be liberally construed in order to promote the ends of
substantial justice. A rigid application that will result in the manifest injustice should be
avoided. A default judgment against several defendants cannot affect the rights of one
who was never declared in default. In any event, such judgment cannot include award
not prayed for in the complaint, even if proven ex parte.

The Case

These principles were used by this Court in resolving this Petition for Review
on Certiorari before us, assailing the July 19, 1993 Decision 1 and the August 15
Resolution 2 promulgated by the Court of Appeals. The assailed Decision disposed as
follows: 3

ACCORDINGLY, in view of the foregoing disquisitions, all the three (3)


consolidated petitions for certiorari are hereby GRANTED.

THE assailed Order of respondent Judge Arsenio Gonong of the Regional


Trial Court of Manila, Branch 8, dated April 5, 1991, in the first petition
for certiorari (CA-G.R. SP No. 24669); the assailed Order of Judge
Bernardo Pardo, Executive Judge of the Regional Trial Court of Manila,
Branch 8, dated July 6, 1992, in the second petition for certiorari (CA-G.R.
SP No. 28387); and finally, the assailed order or Resolution en banc of the
respondent Court of Tax Appeals Judges Ernesto Acosta, Ramon de Veyra
and Manuel Gruba, under date of October 5, 1992, in the third petition
for certiorari (CA-G.R. SP No. 29317) are all hereby NULLIFIED and SET
ASIDE thereby giving way to the entire decision dated February 18, 1991 of
the respondent Regional Trial Court of Manila, Branch 8, in Civil Case No.
89-51451 which remains valid, final and executory, if not yet wholly
executed.
THE writ of preliminary injunction heretofore issued by this Court on March
6, 1992 and reiterated on July 22, 1992 and this date against the named
respondents specified in the dispositive portion of the judgment of the
respondent Regional Trial Court of Manila, Branch 8 in the first petition
for certiorari, which remains valid, existing and enforceable, is hereby
MADE PERMANENT without prejudice (1) to the [private respondent's]
remaining unpaid obligations to the herein party-intervenor in accordance
with the Compromise Agreement or in connection with the decision of the
respondent lower court in CA-G.R. SP No. 24669 and (2) to the
government, in relation to the forthcoming decision of the respondent Court
of Tax Appeals on the amount of taxes, charges, assessments or
obligations that are due, as totally secured and fully guaranteed payment
by the [private respondent's] bond, subject to the relevant rulings of the
Department of Finance and other prevailing laws and jurisprudence.

The assailed Resolution ruled:

ACCORDINGLY, in the light of the foregoing disquisitions, as well as


considering these clarifications, the three (3) motions aforementioned are
hereby DENIED.

The Facts

Poro Point Shipping Services, then acting as the local agent of Omega Sea Transport
Company of Honduras & Panama, a Panamanian company, (hereafter referred to as
Omega), requested permission for its vessel M/V Star Ace, which had engine trouble,
to unload its cargo and to store it at the Philippine Ports Authority (PPA) compound in
San Fernando, La Union while awaiting transshipment to Hongkong. The request was
approved by the Bureau of Customs. 4 Despite the approval, the customs personnel
boarded the vessel when it docked on January 7, 1989, on suspicion that it was the
hijacked M/V Silver Med owned by Med Line Philippines Co., and that its cargo would
be smuggled into the country. 5 The district customs collector seized said vessel and its
cargo pursuant to Section 2301, Tariff and Customs Code. A notice of hearing of SFLU
Seizure Identification No. 3-89 was served on its consignee, Singkong Trading Co. of
Hongkong, and its shipper, Dusit International Co., Ltd. of Thailand.

While seizure proceedings were ongoing, La Union was hit by three typhoons, and the
vessel ran aground and was abandoned. On June 8, 1989, its authorized
representative, Frank Cadacio, entered into a salvage agreement with private
respondent to secure and repair the vessel at the agreed consideration of $1 million
and "fifty percent (50%) [of] the cargo after all expenses, cost and taxes." 6

Finding that no fraud was committed, the District Collector of Customs, Aurelio M.
Quiray, lifted the warrant of seizure on July 16, 1989. 7 However, in a Second
Indorsement dated November 11, 1989, then Customs Commissioner Salvador M.
Mison declined to issue a clearance for Quiray's Decision; instead, he forfeited the
vessel and its cargo in accordance with Section 2530 of the Tariff and Customs
Code. 8 Accordingly, acting District Collector of Customs John S. Sy issued a Decision
decreeing the forfeiture and the sale of the cargo in favor of the government.9

To enforce its preferred salvor's lien, herein Private Respondent Duraproof Services
filed with the Regional Trial Court of Manila a Petition for Certiorari, Prohibition
and Mandamus 10 assailing the actions of Commissioner Mison and District Collector
Sy. Also impleaded as respondents were PPA Representative Silverio Mangaoang and
Med Line Philippines, Inc.

On January 10, 1989, private respondent amended its Petition 11 to include former
District Collector Quiray; PPA Port Manager Adolfo Ll. Amor Jr; Petitioner Vlason
Enterprises as represented by its president, Vicente Angliongto; Singkong Trading
Company as represented by Atty. Eddie Tamondong; Banco Du Brasil; Dusit
International Co., Inc.; Thai-Nan Enterprises Ltd. and Thai-United Trading Co.,
Ltd. 12 In both Petitions, private respondent plainly failed to include any allegation
pertaining to petitioner, or any prayer for relief against it.1âwphi1.nêt

Summonses for the amended Petition were served on Atty. Joseph Capuyan for Med
Line Philippines: Angliongto (through his secretary, Betty Bebero), Atty. Tamondong
and Commissioner Mison. 13 Upon motion of the private respondent, the trial court
allowed summons by publication to be served upon the alien defendants who were not
residents and had no direct representatives in the country. 14

On January 29, 1990, private respondent moved to declare respondents in default, but
the trial court denied the motion in its February 23, 1990 Order, 15 because Mangaoang
and Amor had jointly filed a Motion to Dismiss, while Mison and Med Line had moved
separately for an extension to file a similar motion. 16 Later it rendered an Order dated
July 2, 1990, giving due course to the motions to dismiss filed by Mangaoang and
Amor on the ground of litis pendentia, and by the commissioner and district collector of
customs on the ground of lack of jurisdiction. 17 In another Order, the trial court
dismissed the action against Med Line Philippines on the ground of litis pendentia. 18

On two other occasions, private respondent again moved to declare the following in
default: petitioner, Quiray, Sy and Mison on March 26, 1990; 19 and Banco Du Brazil,
Dusit International Co., Inc., Thai-Nan Enterprises Ltd. and Thai-United Trading Co.,
Ltd. on August 24, 1990. 20 There is no record, however, that the trial court acted upon
the motions. On September 18, 1990, petitioner filed another Motion for leave to
amend the petition, 21 alleging that its counsel failed to include the following "necessary
and/or indispensable parties": Omega represented by Cadacio; and M/V Star Ace
represented by Capt. Nahon Rada, relief captain. Aside from impleading these
additional respondents, private respondent also alleged in the Second (actually, third)
Amended
Petition 22 that the owners of the vessel intended to transfer and alienate their rights
and interests over the vessel and its cargo, to the detriment of the private respondent.

The trial court granted leave to private respondent to amend its Petition, but only to
exclude the customs commissioner and the district collector. 23 Instead, private
respondent filed the "Second Amended Petition with Supplemental Petition" against
Singkong Trading Company; and Omega and M/V Star Ace, 24 to which Cadacio and
Rada filed a Joint Answer. 25

Declared in default in an Order issued by the trial court on January 23, 1991, were the
following: Singkong Trading Co., Commissioner Mison, M/V Star Ace and
Omega. 26 Private respondent filed, and the trial court granted, an ex parte Motion to
present evidence against the defaulting respondents. 27 Only private respondent, Atty.
Tamondong, Commissioner Mison, Omega and M/V Star Ace appeared in the next
pretrial hearing; thus, the trial court declared the other respondents in default and
allowed private respondent to present evidence against them. 28 Cesar Urbino, general
manager of private respondent, testified and adduced evidence against the other
respondents, including herein petitioner. As regards petitioner, he declared: "Vlason
Enterprises represented by Atty. Sy and Vicente Angliongto thru constant intimidation
and harassment of utilizing the PPA Management of San Fernando, La Union . . .
further delayed, and [private respondent] incurred heavy overhead expenses due to
direct and incidental expenses . . . causing irreparable damages of about P3,000,000
worth of ship tackles, rigs, and appurtenances including radar antennas and
apparatuses, which were taken surreptitiously by persons working for Vlason
Enterprises or its agents[.] 29

On December 29, 1990, private respondent and Rada, representing Omega, entered
into a Memorandum of Agreement stipulating that Rada would write and notify Omega
regarding the demand for salvage fees of private respondent; and that if Rada did not
receive any instruction from his principal, he would assign the vessel in favor of the
salvor. 30

On February 18, 1991, the trial court disposed as follows:

WHEREFORE, IN VIEW OF THE FOREGOING, based on the allegations,


prayer and evidence adduced, both testimonial and documentary, the Court
is convinced, that, indeed, defendants/respondents are liable to [private
respondent] in the amount as prayed for in the petition for which it renders
judgment as follows:

1. Respondent M/V Star Ace, represented by Capt. Nahum Rada, [r]elief


[c]aptain of the vessel and Omega Sea Transport Company, Inc.,
represented by Frank Cadacio[,] is ordered to refrain from alienating or
transferring the vessel M/V Star Ace to any third parties;
2. Singkong Trading Company to pay the following:

a. Taxes due the government;

b. Salvage fees on the vessel in the amount of $1,000,000.00


based on . . . Form of Salvage Agreement;

c. Preservation, securing and guarding fees on the vessel in the


amount of $225,000.00;

d. Maintenance fees in the amount P2,685,000.00;

e. Salaries of the crew from August 16, 1989 to December 1989


in the amount of $43,000.00 and unpaid salaries from January
1990 up to the present.

f. Attorney's fees in the amount of P656,000.00;

3. [Vlason] Enterprises to pay [private respondent] in the amount of


P3,000,000.00 for damages;

4. Banco [Du] Brazil to pay [private respondent] in the amount of


$300,000.00 in damages; and finally,

5. Costs of [s]uit.

Subsequently, upon the motion of Omega, Singkong Trading Co. and private
respondent, the trial court approved a Compromise Agreement 31 among the movants,
reducing by 20 percent the amounts adjudged. For their part, respondents-movants
agreed not to appeal the Decision. 32 On March 8, 1991, private respondent moved for
the execution of judgment, claiming that the trial court Decision had already become
final and executory. 33 The Motion was granted 34 and a Writ of Execution was
issued. 35 To satisfy the Decision, Sheriffs Jorge Victorino, Amado Sevilla and Dionisio
Camañgon were deputized on March 13, 1991 to levy and to sell on execution the
defendant's vessel and personal property.

On March 14, 1991, petitioner filed, by special appearance, a Motion for


Reconsideration on the grounds that it was allegedly not impleaded as a defendant,
served summons or declared in default; that private respondent was not authorized to
present evidence against it in default; that the judgment in default was fatally defective,
because private respondent had not paid filing fees for the award; and that private
respondent had not prayed for such award. 36 Private respondent opposed the Motion,
arguing that it was a mere scrap of paper due to its defective notice of hearing.

On March 18, 1991, the Bureau of Customs also filed an ex parte Motion to recall the
execution, and to quash the notice of levy and the sale on execution. 37 Despite this
Motion, the auction sale was conducted on March 21, 1991 by Sheriff Camañgon, with
private respondent submitting the winning
bid. 38 The trial court ordered the deputy sheriffs to cease and desist from implementing
the Writ of Execution and from levying on the personal property of the
defendants. 39 Nevertheless, Sheriff Camañgon issued the corresponding Certificate of
Sale on March 27, 1991. 40

On April 12, 1991, 41 private respondent filed with the Court of Appeals (CA) a Petition
for Certiorari and Prohibition to nullify the cease and desist orders of the trial
court. 42 Respondent Court issued on April 26, 1991 a Resolution which reads: 43

MEANWHILE, in order to preserve the status quo and so as not to render


the present petition moot and academic, a TEMPORARY RESTRAINING
ORDER is hereby ISSUED enjoining the respondent Judge, the Honorable
Arsenio M. Gonong, from enforcing and/or implementing the Orders dated
22 March 1991 and 5 April 1991 which ordered respondent Sheriff to cease
and desist from implementing the writ of execution and the return thereof,
the quashing of the levy . . . on [the] execution [and sale] of the properties
levied upon and sold at public auction by the Sheriff, for reason of grave
abuse of discretion and in excess of jurisdiction, until further orders from
this Court.

WITHIN ten (10) days from notice hereof, respondents [petitioner included]
are also required to SHOW CAUSE why the prayer for a writ of preliminary
injunction should not be granted.

On May 8, 1991, petitioner received from Camañgon a notice to pay private


respondent P3 million to satisfy the trial court Decision. Not having any knowledge of
the CA case to which it was not impleaded, petitioner filed with the trial court a Motion
to Dismiss ex abutandi ad cautelam on the grounds that (1) the Petition of private
respondent stated no cause of action against it, (2) the trial court had no jurisdiction
over the case, and (3) litis pendentia barred the suit.44

On May 10, 1991, Camañgon levied on petitioner's properties, which were scheduled
for auction later on May 16, 1991. Specific descriptions of the properties are as
follows: 45

a) Motor Tugboat — "DEN DEN" ex Emerson-l.

Length: 35.67 ms. Breadth: 7.33 ms.

Depth: 3.15 ms Gross Tons: 205.71

Net tons: 67.48 ms Official Number: 213551

Material: Steel Class license: CWL


License No. 4424

b) Barge — "FC99" ex YD-153

Length: 34.15 ms. Breadth: 15.85 m.s.

Depth: 2.77 m.s. Gross Tons: 491.70

Net Tons: 491.70 Official Number: 227236

Material: Steel Class License: CWL

License No. 83-0012

c) Barge — "LAWIN" ex "Sea Lion 2".

Length: 66.92 ms. Breadth: 11.28 ms.

Depth: 4.52 m.s. Gross Tons: 1,029.56

Net Tons: 1,027/43 Official Number: 708069

Material: Steel Class License: Coastwise

License No. 81-0059

Petitioner also filed a special appearance before the CA. It prayed for the lifting of the
levy on its properties or, alternatively, for a temporary restraining order against their
auction until its Motion for Reconsideration was resolved by the trial court. 46

Acting on petitioner's Motion for Reconsideration, the trial court reversed its Decision of
February 18, 1991, holding in its May 22, 1991 Resolution as follows: 47

. . . [T]hat . . . Motion for Reconsideration [of petitioner] was filed on March


14, 1991 (see: page 584, records, Vol. 2) indubitably showing that it was
seasonably filed within the 15-day time-frame. Therefore, . . . said default-
judgment ha[d] not yet become final and executory when the Writ of
Execution was issued on March 13, 1991 . . . The rules [provide] that [the
e]xecution shall issue as a matter of right upon the expiration of the period
of appeal from a judgment if no appeal has been duly perfected (Sec. 1, R-
39, RRC). That being the case, VEC has all the right to file as it
did . . . the aforementioned reconsideration motion calling [the] attention of
the Court and pointing therein its supposed error and its correction if,
indeed, any [error was] committed. It is in this light that this Court made an
in-depth reflection and assessment of the premises or reasons raised by
[petitioner], and after a re-examination of the facts and evidence spread on
the records, it has come to the considered conclusion that the questioned
default-judgment has been improvidently issued. By the records, the claim
of [private respondent] that his January 29, 1990 Ex-Parte Motion To
Declare Defendants In Default (pp. 174-177, records, Vol. 1) including VEC
had been granted is belied by the February 23, 1990 Order (pp. 214-215,
records, ibid) par. 2, thereof, reading to wit:

By the foregoing, for reasons stated thereunder respectively,


this Court, in the exercise of its judicious discretion, in the
sense that the rules should be liberally construed in order to
promote their object and to assist the parties, resolves to DENY
petitioner's Motion to have the Commissioner of Customs AND
OTHER ENUMERATED RESPONDENTS DECLARED IN
DEFAULT. [Emphasis ours].

Not even [private respondent's] November 23, 1990 "Ex-Parte Motion To


Present [Evidence] Against Defaulting Defendants" (page 489, records,
Vol. 2) [can] be deemed as a remedy of the fact that there never was
issued an order of default against respondents including [petitioner] VEC.
Having thus established that there [had] been no order of default against
VEC as contemplated by Sec. 1, Rule 18, in relation to Sec. 9, Rule 13,
Revised Rules of Court, there could not have been any valid default-
judgment rendered against it. The issuance of an order of default is a
condition sine qua non in order [that] a judgment by default be clothed with
validity. Further, records show that this Court never had authorized [private
respondent] to adduce evidence ex-parte against [petitioner] VEC. In sum,
the February 18, 1991 decision by default is null and void as against
[petitioner] VEC. With this considered conclusion of nullity of said default
judgment in question, this Court feels there is no more need for it to resolve
Arguments I-A & I-B, as well as III-A & III-B, of the March 14, 1991 Motion
for Reconsideration. The Court agrees, however, with said discussions on
the non-compliance [with] Sec. 2, Rule 7 (Title of Complaint) and Sec. I,
Rule 8 on the requirement of indicating in the complaint the ultimate facts
on which the party pleading relies for his claim of defense [--] which is
absent in the January 9, Amended Petition (pp. 122-141, records, Vol. I) [--]
for it merely mentioned [petitioner] VEC in par. 5 thereof and no more. It
abides, likewise, with [Argument] III-B that the Decision in suit award[ed]
amounts never asked for in instant petition as regards VEC (Sec. 5, Rule
18, RRC). . . . .

WHEREFORE, in view of the foregoing consideration, and as prayed for,


the February 18, 1991 Judgment by Default is hereby reconsidered and
SET ASIDE.
On June 26, 1992, then Executive Judge Bernardo P. Pardo 48 of the Regional Trial
Court of Manila issued an Order 49 annulling the Sheriff's Report/Return dated April 1,
1991, and all proceedings taken by Camañgon.

The CA granted private respondent's Motion to file a Supplemental Petition impleading


petitioner in CA-GR 24669. 50 In view of the rampant pilferage of the cargo deposited at
the PPA compound, private respondent obtained from the appellate court a Writ of
Preliminary Injunction dated March 6, 1992. The Writ: reads: 51

ACCORDINGLY, in view of the foregoing disquisitions, the urgent verified


motion for preliminary injunction dated February 11, 1992 is hereby
GRANTED. Therefore, let a writ of preliminary injunction forthwith issue
against the respondents and all persons or agents acting in their behalf,
enjoining them not to interfere in the transferring of the aforementioned
vessel and its cargoes, or in removing said cargoes . . . from [the] PPA
compound.

On September 15, 1992, Sheriff Amado Sevilla seized petitioner's motor tugboat Den
Den by virtue of the Order 52dated April 3, 1992, issued by the RTC of Manila, Branch
26. 53

On August 6, 1992, the CA consolidated CA-GR SP No. 28387 54 with CA-GR SP No.
24669. 55 The Court of Tax Appeals issued on October 5, 1992, a Resolution in CTA
Case Nos. 4492, 4494 and 4500, which disposed as follows:

Confirming the order in open court on October 5, 1992, the Court hereby
RESOLVES to:

1. Order Respondent Commissioner of Customs to assign or detail [a]


sufficient number of customs police and guards aboard, and around the
vicinity of, the vessel "M/V Star Ace" now in anchor at Mariveles, Bataan or
elsewhere, in order to ensure its safety during the pendency of these
cases;

2. Direct him to assign personnel and/or representatives to conduct an


inventory of part of the vessel's cargo now in the possession of Mr. Cesar
S. Urbino, Sr. at 197 Heroes del "96 Street, Caloocan City, which inventory
may be participated in by all the parties interested in said cargo."

To enjoin the CTA from enforcing said Order, private respondent filed before the Court
of Appeals another Petition for Certiorari, 56 which was later also consolidated with CA-
GR SP No. 24669.

On July 19, 1993, the CA rendered the assailed Decision. Petitioner filed (1) a Motion
for Clarification, praying for a declaration that the trial court Decision against it was not
valid; and (2) a partial Motion for Reconsideration, seeking to set aside the assailed
Decision insofar as the latter affected it.
57
On July 5, 1995, the Court of Appeals issued the following Resolution:

Pending resolution of the motions for reconsideration, filed by Vlason


Enterprises Corporation and Banco [Du] Brazil, and considering [private
respondent's] Motion for Entry of Judgment with respect to respondent PPA
having already been granted by this Court as far back as June 17, 1994,
pursuant to the resolution of the Supreme Court dated December 8, 1993
in G.R. No. 111270-72 (Philippine Ports Authority vs. Court of Appeals, et
al.) informing the parties in the said case that the judgment sought to be
reviewed has now become final and executory, the lower court may now
take appropriate action on the urgent ex-parte motion for issuance a writ of
execution, filed by [private respondent] on July 15, 1994.

On August 28, 1995, the Regional Trial Court of Manila, Branch 26, issued a Writ of
Possession which resulted in private respondent taking possession of petitioner's
barge Lawin (formerly Sea Lion 2) on September 1, 1995. 58

Hence, this Petition. 59

Ruling of the Respondent Court

As already adverted to, Respondent Court granted the Petition for Certiorari of the
private respondent, which was consolidated with the latter's two other Petitions. The
court a quo issued the following rulings:

1. The trial court had jurisdiction over the salvor's claim or


admiralty case pursuant to Batas Pambansa Bilang 129.

2. Since the Decision of the trial court became final and


executory, never having been disputed or appealed to a higher
court, the trial judge committed grave abuse of discretion in
recalling the Writ of Execution and in quashing the levy and the
execution of the sale of M/V Star Ace and its cargo.

2. Such acts constituted an alteration or a modification of a final


and executory judgment and could never be justified under law
and jurisprudence.

3. Civil Case 59-51451 dealt only with the salvor's claim without
passing upon the legality or the validity of the undared Decision
of the Commissioner of Customs in the seizure proceeding.
4. Petitioner and his co-respondents could not invoke the
jurisdiction of a court to secure affirmative relief against their
opponent and, after failing to obtain such relief, question the
court's jurisdiction.

5. Petitioner had no recourse through any of the following


judicially accepted means to question the final judgment:

a. a petition for relief from judgment under Rule 38,

b. a direct action to annul and enjoin the


enforcement of the questioned judgment, and

c. a collateral attack against the questioned


judgment which appears void on its face.

6. A court which has already acquired jurisdiction over a case


cannot be ousted by a coequal court; the res in this case — the
vessel and its cargo— were placed under the control of the trial
court ahead of the CTA.

7. The admiralty Decision had attained finality while the issue of


the validity of the seizure proceedings was still under
determination.

In the assailed Resolution, Respondent Court clarified that there was no need to serve
summons anew on petitioner, since it had been served summons when the Second
Amended Petition (the third) was filed; and that petitioner's Motion for Reconsideration
was defective and void, because it contained no notice of hearing addressed to the
counsel of private respondent in violation of Rule 16, Section 4 of the Rules of Court.

To this second motion, [private respondent] contends that there was no


need to serve summons anew to VEC when the second amended petition
was filed impleading VEC, pursuant to the ruling of the Supreme Court
in Asiatic Travel Corp. vs. CA (164 SCRA 623); and that finally, the
decision of the court a quo o[n] February 18, 1991 became final and
executory, notwithstanding the timely filing of the motion for reconsideration
of VEC for the reason that the said motion for reconsideration was
defective or void, there being no notice of hearing addressed to the counsel
of petitioner. In fact, no motion such as this instant one can be acted upon
by the Court without proof of service of the notice thereof, pursuant to Rule
16, Section 4 of the Rules of Court.

xxx xxx xxx


Finally, we should never lose sight of the fact that the instant petition
for certiorari is proper only to correct errors of jurisdiction committed by the
lower court, or grave abuse of discretion which is tantamount to lack of
jurisdiction Where the error is not one of jurisdiction but an error of law or of
fact which is a mistake of judgment, appeal is the remedy (Salas vs.
Castro. 216 SCRA 198). Here, respondents failed to appeal. Hence, the
decision dated February 18, 1991 of the lower court has long become final,
executory and unappealable. We do not and cannot therefore review the
instant case as if it were on appeal and direct actions on these motions.
While the proper remedy is appeal, the action for certiorari will not be
entertained. Indeed, certiorari is not a substitute for lapsed appeal.

At any rate, the decision dated July 19, 1993 of this Court on the main
petition for certiorari is not yet final (except with respect to respondent
PPA), the Bureau of Customs having filed a petition for certiorari and
prohibition, under Rule 65 of the Rules of Court, with the Supreme Court,
necessitating prudence on Our part to await its final verdict. 60

Assignment of Errors

Before us, petitioner submits the following assignment of errors on the part of
Respondent Court: 61

The Court of Appeals committed serious error in ruling that the entire
decision of the trial court in Civil Case No. 89-51451 dated 18 February
1991 became final and executory because it "was never disputed or
appealed".

A VEC filed a motion for reconsideration of the said decision


two days before deadline, which motion was granted by the trial
court.

B The trial court correctly granted VEC's motion for


reconsideration and set aside the 18 February 1991 decision . .
. against VEC, for:

1. The trial court never acquired jurisdiction over the


person of VEC as to enable it to render any
judgment against it:

(i) VEC was not impleaded as a


respondent in Civil Case No. 89- 51451;

(ii) Summons was not served on VEC;


2. The trial court improperly rendered judgment by
default against VEC;

(i) The trial court never issued an order


of default against VEC;

(ii) The trial court never authorized ex-


parte presentation of evidence against
VEC.

3. The Judgment by default was fatally defective


because:

(i) No filing fee was paid by [private


respondent) for the staggering amount
of damages awarded by the trial court.

(ii) The 18 February 1991 decision


violates the Revised Rules of Court,
which prescribe that a judgment by
default cannot decree a relief not prayed
for.

II

Since the 18 February 1991 Decision in Civil Case No. 89-51451 is void as
against VEC, the recall of the writ of execution was valid, as far as VEC is
concerned.

The Court believes that the issues can be simplified and restated as follows:

1. Has the February 18, 1991 RTC Decision become final and
executory in regard to petitioner?

2. Did the trial court acquire jurisdiction over the petitioner?

3. Was the RTC default judgment binding on petitioner?

4. Was the grant of damages against petitioner procedurally


proper?

5. Was private respondent entitled to a writ of execution?

This Court's Ruling

The petition is meritorious.


First Issue: Finality of the RTC Decision

A judgment becomes "final and executory" by operation of law. Its finality becomes a
fact when the reglementary period to appeal lapses, and no appeal is perfected within
such period. 62 The admiralty case filed by private respondent with the trial court
involved multiple defendants. This being the case, it necessarily follows that the period
of appeal of the February 18, 1991 RTC Decision depended on the date a copy of the
judgment was received by each of the defendants. Elsewise stated, each defendant
had a different period within which to appeal, depending on the date of receipt of the
Decision. 63

Omega, Singkong Trading Co. and M/V Star Ace chose to enter into a compromise
agreement with private respondent. As to these defendants, the trial court Decision
had become final, and a writ of execution could be issued against them. 64 Doctrinally,
a compromise agreement is immediately final and executory. 65

Petitioner, however, is not in the same situation. Said Decision cannot be said to have
attained finality as to the petitioner, which a party to the compromise. Moreover,
petitioner filed a timely Motion for Reconsideration with the trial court, thirteen days
after it received the Decision or two days before the lapse of the reglementary period to
appeal. 66 Thus, as to petitioner, the trial court Decision had not attained finality.

Exception to the Rule

on Notice of Hearing

Respondent Court and private respondent argue that, although timely filed, petitioner's
Motion for Reconsideration was a mere scrap of paper, because (1) it did not contain a
notice of hearing addressed to the current counsel of private respondent, and (2) the
notice of hearing addressed to and served on private respondent's deceased counsel
was not sufficient. Admittedly, this Motion contained a notice of hearing sent to Atty.
Jesus C. Concepcion who, according to private respondent, had already died and had
since been substituted by its new counsel, Atty. Domingo Desierto. Therefore, the
appellate court ruled that the said Motion did not toll the reglementary period to appeal
and that the trial court Decision became final.

This Court disagrees. Rule 15 of the Rules of Court states:

Sec. 4. Notice. — Notice of a motion shall be served by the applicant to all


parties concerned, at least three (3) days before the hearing thereof,
together with a copy of the motion, and of any affidavits and other papers
accompanying it. The court, however, for good cause may hear a motion
on shorter notice, specially on matters which the court may dispose of on
its own motion.
Sec. 5. Contents of notice. — The notice shall be directed to the parties
concerned, and shall state the time and place for the hearing of the
motion. 67

Ideally, the foregoing Rule requires the petitioner to address and to serve on the
counsel of private respondent the notice of hearing of the Motion for Reconsideration.
The case at bar, however, is far from ideal. First, petitioner was not validly summoned
and it did not participate in the trial of the case in the lower court; thus, it was
understandable that petitioner would not be familiar with the parties and their
counsels. Second, Atty. Desierto entered his appearance only as collaborating
counsel, 68 who is normally not entitled to notices even from this Court. Third, private
respondent made no manifestation on record that Atty. Concepcion was already dead.
Besides, it was Atty. Concepcion who signed the Amended Petition, wherein petitioner
was first impleaded as respondent and served a copy thereof. Naturally, petitioner's
attention was focused on this pleading, and it was within its rights to assume that the
signatory to such pleading was the counsel for private respondent.

The Court has consistently held that a motion which does not meet the requirements of
Sections 4 and 5 of Rule 15 of the Rules of Court is considered a worthless piece of
paper, which the clerk of court has no right to receive and the trial court has no
authority to act upon. Service of a copy of a motion containing a notice of the time and
the place of hearing of that motion is a mandatory requirement, and the failure of
movants to comply with these requirements renders their motions fatally
defective. 69 However, there are exceptions to the strict application of this rule. These
exceptions are as
follows: 70

. . . Liberal construction of this rule has been allowed by this Court in cases
(1) where a rigid application will result in a manifest failure or miscarriage of
justice; 71 especially if a party successfully shows that the alleged defect in
the questioned final and executory judgment is not apparent on its face or
from the recitals contained therein; (2) where the interest of substantial
justice will be served; 72 (3) where the resolution of the motion is addressed
solely to the sound and judicious discretion of the court; 73 and (4) where
the injustice to the adverse party is not commensurate [to] the degree of his
thoughtlessness in not complying with the procedure prescribed. 74

The present case falls under the first exception. Petitioner was not informed of any
cause of action or claim against it. All of a sudden, the vessels which petitioner used in
its salvaging business were levied upon and sold in execution to satisfy a supposed
judgment against it. To allow this to happen simply because of a lapse in fulfilling the
notice requirement — which, as already said, was satisfactorily explained — would be
a manifest failure or miscarriage of justice.
A notice of hearing is conceptualized as an integral component of procedural due
process intended to afford the adverse parties a chance to be heard before a motion is
resolved by the court. Through such notice, the adverse party is permitted time to
study and answer the arguments in the motion.

Circumstances in the case at bar show that private respondent was not denied
procedural due process, and that the very purpose of a notice of hearing had been
served. On the day of the hearing, Atty. Desierto did not object to the said Motion for
lack of notice to him; in fact, he was furnished in open court with a copy of the motion
and was granted by the trial court thirty days to file his opposition to it. These
circumstances clearly justify a departure from the literal application of the notice of
hearing rule. 75 In other cases, after the trial court learns that a motion lacks such
notice, the prompt resetting of the hearing with due notice to all the parties is held to
have cured the defect. 76

Verily, the notice requirement is not a ritual to be followed blindly. Procedural due
process is not based solely on a mechanistic and literal application that renders any
deviation inexorably fatal. Instead, procedural rules are liberally construed to promote
their objective and to assist in obtaining a just, speedy and inexpensive determination
of any action and proceeding. 77 For the foregoing reasons, we believe that
Respondent Court committed reversible error in holding that the Motion for
Reconsideration was a mere scrap of paper.

Second Issue: Jurisdiction Over Petitioner

Service of Summons

on a Corporation

The sheriff's return shows that Angliongto who was president of petitioner corporation,
through his secretary Betty Bebero, was served summons on January 18,
1990. 78 Petitioner claims that this service was defective for two reasons: (1) Bebero
was an employee of Vlasons Shipping, Inc., which was an entity separate and distinct
from Petitioner Vlason Enterprises Corporation (VEC); and (2) the return pertained to
the service of summons for the amended Petition, not for the "Second Amended
Petition with Supplemental Petition," the latter pleading having superseded the former.

A corporation may be served summons through its agents or officers who under the
Rules are designated to accept service of process. A summons addressed to a
corporation and served on the secretary of its president binds that corporation. 79 This
is based on the rationale that service must be made on a representative so integrated
with the corporation sued, that it is safe to assume that said representative had
sufficient responsibility and discretion to realize the importance of the legal papers
served and to relay the same to the president or other responsible officer of the
corporation being sued. 80 The secretary of the president satisfies this criterion. This
rule requires, however, that the secretary should be an employee of the corporation
sought to be summoned. Only in this manner can there be an assurance that the
secretary will "bring home to the corporation [the] notice of the filing of the action"
against it.

In the present case, Bebero was the secretary of Angliongto, who was president of
both VSI and petitioner, but she was an employee of VSI, not of petitioner. The
piercing of the corporate veil cannot be resorted to when serving
summons. 81 Doctrinally, a corporation is a legal entity distinct and separate from the
members and stockholders who compose it. However, when the corporate fiction is
used as a means of perpetrating a fraud, evading an existing obligation, circumventing
a statute, achieving or perfecting a monopoly or, in generally perpetrating a crime, the
veil will be lifted to expose the individuals composing it. None of the foregoing
exceptions has been shown to exist in the present case. Quite the contrary, the
piercing of the corporate veil in this case will result in manifest injustice. This we cannot
allow. Hence, the corporate fiction remains.

Effect of Amendment of

Pleading on Jurisdiction

Petitioner claims that the trial court did not acquire jurisdiction over it, because the
former had not been served summons anew for the Second Amended Petition or for
the Second Amended Petition with Supplemental Petition. In the records, it appears
that only Atty. Tamondong, counsel for Singkong Trading, was furnished a copy of the
Second Amended Petition. 82 The corresponding sheriff's return indicates that only
Omega, M/V Star Ace and Capt. Rada were served summons and copies of said
Petition. 83

We disagree. Although it is well-settled that an amended pleading supersedes the


original one, which is thus deemed withdrawn and no longer considered part of the
record, it does not follow ipso facto that the service of a new summons for amended
petitions or complaints is required. Where the defendants have already appeared
before the trial court by virtue of a summons on the original complaint, the amended
complaint may be served upon them without need of another summons, even if new
causes of action are alleged. 84 After it is acquired, a court's jurisdiction continues until
the case is finally terminated. Conversely, when defendants have not yet appeared in
court and no summons has been validly served, new summons for the amended
complaint must be served on them. 85 It is not the change of cause of action that gives
rise to the need to serve another summons for the amended complaint, but rather the
acquisition of jurisdiction over the persons of the defendants. If the trial court has not
yet acquired jurisdiction over them, a new service of summons for the amended
complaint is required.1âwphi1.nêt
In this case, the trial court obviously labored under the erroneous impression that
petitioner had already been placed under its jurisdiction since it had been served
summons through the secretary of its president. Thus, it dispensed with the service on
petitioner of new summons for the subsequent amendments of the Petition. We have
already ruled, however, that the first service of summons on petitioner was invalid.
Therefore, the trial court never acquired jurisdiction, and the said court should have
required a new service of summons for the amended Petitions.

Impleading a Party in the

Title of the Complaint

Petitioner further claims that the trial court failed to acquire jurisdiction to render
judgment against it because (1) the title of the three Petitions filed by private
respondent never included petitioner as a party-defendant, in violation of Rule 7; and
(2) the Petitions failed to state any allegation of ultimate facts constituting a cause of
action against petitioner.

We disagree with petitioner on the first ground. The judicial attitude has always been
favorable and liberal in allowing amendments to pleadings. Pleadings shall be
construed liberally so as to render substantial justice to the parties and to determine
speedily and inexpensively the actual merits of the controversy with the least regard to
technicalities. 86

The inclusion of the names of all the parties in the title of a complaint is a formal
requirement under Section 3, Rule 7. However, the rules of pleadings require courts to
pierce the form and go into the substance and not to be misled by a false or wrong
name given to a pleading. The averments in the complaint, not the title, controlling.
Although the general rule requires the inclusion of the names of all the parties in the
title of a complaint, the non-inclusion of one or some of them is not fatal to the cause of
action of a plaintiff, provided there is a statement in the body of the petition indicating
that a defendant was made a party to such action.

Private respondent claims that petitioner has always been included in the caption of all
the Petitions it filed, which included Antonio Sy, field manager of petitioner. We
checked and noted that in the caption and the body of the Amended Petition and
Second Amended Petition with Supplemental Petition, Antonio Sy alleged to be
representing Med Line Philippines, not petitioner. Because it was private respondent
who was responsible for the errors, the Court cannot excuse it from compliance, for
such action will prejudice petitioner, who had no hand in the preparation of these
pleadings. In any event, we reiterate that, as a general rule, mere failure to include the
name of a party in the title of a complaint is not fatal by itself.

Stating a Cause of Action


in the Complaint

The general rule is allegata et probata — a judgment must conform to the pleadings
and the theory of the action under which the case was tried. 87 But a court may also
rule and render judgment on the basis of the evidence before it, even though the
relevant pleading has not been previously amended, so long as no surprise or
prejudice to the adverse party is thereby caused. 88

In the case at bar, the liability of petitioner was based not on any allegation in the four
Petitions filed with the trial court, but on the evidence presented ex parte by the private
respondent. Since the trial court had not validly acquired jurisdiction over the person of
petitioner, there way for the latter to have validly and knowingly waived its objection to
the private respondent's presentation of evidence against it.

Third Issue: Judgment by Default

The trial court Decision holding petitioner liable for damages is basically a default
judgment. In Section 18, judgment by default is allowed under the following
condition: 89

Sec. 1. Judgment by default.— If the defendant fails to answer within the


time specified in these rules, the court shall, upon motion of the plaintiff and
proof of such failure, declare the defendant in default. Thereupon the court
shall proceed to receive the plaintiff's evidence and render judgment
granting him such relief as the complaint and the facts proven may warrant.
....

Thus, it becomes crucial to determine whether petitioner was declared in default, and
whether the reception of evidence ex parte against it was procedurally valid.

Petitioner Was Never

Declared In Default

Petitioner insists that the trial court never declared it in default.

We agree. The trial court denied the January 29, 1990 Motion of private respondent to
declare all the defendants in default, but it never acted on the latter's subsequent
Motion to declare petitioner likewise. During the pretrial on January 23, 1993, the RTC
declared in default only "Atty. Eddie Tamondong, as well as the other defendants Hon.
Salvador Mison, M/V Star Ace, Omega Sea Transport Co., Inc. of Panama and
Sinkong Trading Co., [but] despite . . . due notice to them, [they] failed to
appear. 90 Even private respondent cannot pinpoint which trial court order held
petitioner in default.
More important, the trial court, in its Resolution dated May 22, 1991, admitted that it
never declared petitioner in default, viz.:

. . . It is in this light that this [c]ourt made an in-depth reflection and


assessment of the premises or reasons raised by [petitioner] VEC[;] and
after a re-examination of the facts and evidence spread on the records, it
has come to the considered conclusion that the questioned default-
judgment has been improvidently issued. [Based on] the records, the claim
of [private respondent] that [its] January 29, 1990 Ex-Parte Motion to
Declare Defendants In Default (pp. 174-177, records, Vol. 1) including VEC
had been granted is belied by the February 23, 1990 Order (pp. 214-215,
records, ibid.) par. 2, thereof, . . .

xxx xxx xxx

Not even petitioner's November 23, 1990 "Ex-Parte Motion To Present


Evidence Against Defaulting Defendants" (page 489, records, Vol. 2) [can]
be deemed as a remedy [for] the fact that there never was issued an order
of default against respondents including [petitioner] VEC. Having thus
established that there ha[d] been no order of default against VEC as
contemplated by Sec. 1, Rule 18, in relation to Sec. 9, Rule 13, Revised
Rules of Court, there could not have been any valid default-judgment
rendered against it. The issuance of an order [o]f default is a condition sine
qua non in order [that] a judgment by default be clothed with validity.
Further, records show that this [c]ourt never had authorized [private
respondent] to adduce evidence ex-parte against [Petitioner] VEC. In sum,
the February 18, 1991 decision by default is null and void as against
[Petitioner] VEC. . . .

The aforementioned default judgment refers to the February 18, 1989 Decision, not to
the Order finding petitioner in default as contended by private respondent.
Furthermore, it is a legal impossibility to declare a party-defendant to be in default
before it was validly served summons.

Trial Court Did Not Allow

Presentation of Evidence

Ex Parte Against Petitioner

The Order of December 10, 1990, which allowed the presentation of evidence ex
parte against the defaulting defendants, could not have included petitioner, because
the trial court granted private respondent's motion praying for the declaration of only
the foreign defendants in default. So too, private respondent's ex parte Motion to
present evidence referred to the foreign defendants only. 91
Furthermore, the reception of evidence ex parte against a non-defaulting party is
procedurally indefensible. Without a declaration that petitioner is in default as required
in Section 1, Rule 18, the trial court had no authority to order the presentation of
evidence ex parte against petitioner to render judgment against it by default. The trial
judge must have thought that since it failed to summons and was in default, it
effectively waived any objection to the presentation of evidence against it. This rule,
however, would have applied only if petitioner had submitted itself to the jurisdiction of
the trial court. The latter correctly declared, in the Resolution just cited, that the default
judgment against the former had been improvidently rendered.

Fourth Issue: Award Not Paid and Prayed For

Additional Filing Fees as

Lien on the Judgment

Had the trial court validly acquired jurisdiction over petitioner, nonpayment of docket
fees would not have prevented it from holding petitioner liable for damages. The Court,
in Manchester Development Corporation v. Court of Appeals, 92 ruled that a court
acquires jurisdiction over any case only upon the payment of the prescribed docket
fee, not upon the amendment of the complaint or the payment of the docket fees based
on the amount sought in the amended pleading. This ruling, however, was modified
in Sun Insurance Office, Ltd. v. Asuncion, 93 which added:

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

Filing fees for damages and awards that cannot be estimated constitute liens on the
awards finally granted by the trial court. Their nonpayment alone is not a ground for the
invalidation of the award.

Judgment by Default Cannot

Grant Relief Prayed For

A declaration or order of default is issued as a punishment for unnecessary delay in


joining issues. In such event, defendants lose their standing in court, they cannot
expect the trial court to act upon their pleadings, and they are not entitled to notice of
the proceeding until the final termination of the
case. 94 Thus, the trial court proceeds with the reception of the plaintiff's evidence upon
which a default judgment is rendered.

Section 1 of Rule 18 provides that after the defendant has been declared in default,
"the court shall proceed to receive the plaintiff's evidence and render judgment granting
him such relief as the complaint and the facts proven may warrant." The reliefs that
may be granted, however, are restricted by Section 5, which provides that a judgment
entered against a party in default shall not exceed the amount or be different in kind
from that prayed for.

In other words, under Section 1, a declaration of default is not an admission of the truth
or the validity of the plaintiff's claims. 95 The claimant must still prove his claim and
present evidence. In this sense the law gives defaulting parties some measure of
protection because plaintiffs, despite the default of defendants, are still required to
substantiate their allegations in the complaint. The judgment of default against
defendants who have not appeared or filed their answers does not imply a waiver of all
their rights, except their right to be heard and to present evidence in their favor. Their
failure to answer does not imply their admission of the facts and the causes of action of
the plaintiffs, because the latter are required to adduce evidence to support their
allegations.

Moreover, the trial court is not allowed by the Rules to receive evidence that tends to
show a relief not sought or specified in the pleadings. 96 The plaintiff cannot be granted
an award greater than or different in kind from that specified in the complaint. 97

This case should be distinguished, however, from that of defendants, who filed an
answer but were absent during trial. In that case, they can be held liable for an amount
greater than or different from that originally prayed for, provided that the award is
warranted by the proven facts. This rule is premised on the theory that the adverse
party failed to object to evidence relating to an issue not raised in the pleadings.

The latter rule, however, is not applicable to the instant case. Admittedly, private
respondent presented evidence that would have been sufficient to hold petitioner liable
for damages. However, it did not include in its amended Petitions any prayer for
damages against petitioner. Therefore, the trial court could not have validly held the
latter liable for damages even if it were in default.

Fifth Issue: Execution of Final Judgment

Section 1 of Rule 39 provides that execution shall issue only upon a judgment that
finally disposes of the action or proceeding. Such execution shall issue as a matter of
right upon the expiration of the period to appeal it, if no appeal has been duly
perfected. 98
In the present case, however, we have already shown that the trial court's Decision has
not become final and executory against petitioner. In fact, the judgment does not even
bind it. Obviously, Respondent Court committed serious reversible errors when it
allowed the execution of the said judgment against petitioner.

WHEREFORE, the appeal is hereby GRANTED, and the assailed Decision and
Resolution of the Court of Appeals are REVERSED and SET ASIDE insofar as they
affect petitioner. The levy and the sale on execution of petitioner's properties are
declared NULL and VOID. Said properties are ordered RESTORED to petitioner. No
pronouncement as to costs.

G.R. No. L-7076 April 28, 1955

ERIBERTO P. ROSARIO and PAZ UNTALAN DE ROSARIO, plaintiffs-appellants,


vs.
FILOMENO CARANGDANG, ET AL., defendants-appellees.

Primicias, Abad, Mencias and Castillo for plaintiffs and appellants.


Brigido G. Estrada for appellees.

REYES, J.B.L., J.:

This is an appeal from two orders of the Court of First Instance of Pangasinan in Civil
Case No. 12316, the first dismissing plaintiffs' complaint, and the second denying
plaintiffs' complaint, and the second denying plaintiffs' motion for reconsideration and
for the administration of an amended complaint.

On October 16, 1952, plaintiffs Eriberto P. Rosario and Paz Untalan de Rosario filed a
complaint against defendant Filomeno Carangdang, et al., specifically alleging therein
that plaintiffs-appellants are the owners and possessors of a parcel of land (lot No. 2,
plan Psu-123111) in Labrador, Pangasinan; that they have applied for the registration
thereof in Registration case No. 658, G.L.R.O. No. 2610, wherein defendants filed an
opposition; that on or about October 3, 1952, defendants illegally entered into the
premises, destroyed the nipa plants thereon, and made dikes to convert the place into
a fishpond; that in spite of warnings and notices from plaintiffs-appellants, defendants
continued to possess and occupy the premises; and that as a result of defendants'
entry into and possession of the land in question, plaintiffs have suffered damages in
the amount of P2,000.

On November 3, 1952, defendants moved for the dismissal of the complaint, claiming
(1) that the Court had no jurisdiction of the case because it is one of forcible entry and
detainer exclusively cognizable by the Justice of the Peace Court, and furthermore,
because the demand for damages does not exceed P2,000; and (2) that there is
another pending between the same parties and for the same cause (Land Registration
Case No. 658, G.L.R.O. No. 2610, wherein plaintiffs are the applicants and defendants
are the oppositors, and Land Registration Case No. 602, G.L.R.O. No. 2313, wherein
defendants are the applicants and plaintiffs are the oppositors) in which the title and
ownership of the parcel in question is involved and contested. Plaintiffs opposed the
motion to dismiss, alleging that the Court of First Instance acting as a registration
court, can not award damages resulting from defendants' alleged illegal entry into and
possession of the land in question.

The lower Court found the motion to dismiss meritorious, and on November 7, 1952
ordered the dismissal of the complaint. Plaintiffs moved for the reconsideration of the
order of dismissal, and prayed as well for the admission of an amended complaint,
wherein they make specific allegation for the first time that the defendants are claiming
of the land in question in the two registration case previously mentioned. Defendants
opposed the mention for reconsideration and the admission of an amended complaint,
upon the ground that the amended complaint would convert plaintiffs' action from one
of forcible entry and detainer to one of recovery of ownership and possession. Again,
defendants' position was sustained by the Court below; and later, it denied a motion for
the reconsideration of the order of dismissal. Hence, this appeal by the plaintiffs to this
Court.

We see no error in the lower Court's dismissal of appellants' original complaints. It was
filed on October 16, 1952, barely two weeks from and after the alleged entry into and
illegal of possession of the land in question by the defendants. The case pleaded was
a clear action for forcible entry and detainer, where plaintiffs allege prior possession of
the premises in question and to have been deprived thereof within the period of one
year, by other persons, who excluded them therefrom and withheld possession without
right — a case falling within the exclusive and original jurisdiction of the justice of the
peace court (Rule 72, Sec. 1, Rule of Court: Sec, 88, Rep, Act 296).

Appellants insist that their action is not for forcible entry and detainer but for
declaration of ownership or quieting of title, with claim for damages in the sum of
P2,500. This argument is untenable. There is no averment in the complaint that the
defendants claim or dispute the ownership of the parcel in question. The simple
allegation therein that defendants have filed an opposition in the case where plaintiffs
have applied for the registration of said parcel, does not amount to an allegation that
the defendants are claiming ownership thereof, since an opposition in a registration
case may be based on claims or interest other than ownership in the land sought to be
registered. And neither does the fact that appellants pray in their complaint that they be
declared owners of the parcel in question convert their action from one of forcible entry
into one for declaration of ownership or quieting of title; for the prayer is not a material
part of the complaint (Vda. de Lacson vs. Diaz, 87 Phil., 150, 47 Off. Gaz., [Supp.]
337), and it is the allegations of the complaint, and not the prayer, that not only
determine the jurisdiction of the court, but confer that jurisdiction
(Fernandez contra Gala-Sison, supra, p. 282; Infante vs. Dulay, 97 Phil., 259).
Plaintiffs also insist that their action falls within the jurisdiction of the Court of First
Instance because their claim for damages amounts to P2,500. This argument is
untenable. In the first place, settled is the rule that justice of the peace courts have
exclusive jurisdiction over forcible entry and detainer cases, regardless of the amount
claimed therein as damages (Lao Seng Hian, et al. vs. Honorable Natividad Almeda
Lopez, et al., 83 Phil., 617; 46 Off. Gaz., [11] 70). In the second place, it appears from
the allegations of the complaint that only the amount of P2,000 is claimed to have been
suffered by appellants as damages as a result of defendants' illegal possession and
destruction of the land in question (par. 8 of the complaint, Rec. on App., p. 4), the
additional claim of P500 being allegedly for "additional expenses, besides the damages
stated above", meaning expenses incurred due to the filing of this case. Considering
that the expenses for the filing of the suit, viz, costs and attorneys' fees, are excluded
from the jurisdictional amount that confer jurisdiction upon courts, the additional
amount of P500 claimed by appellants in their complaint would not take their case out
of the jurisdiction of the justice of the peace no other factor than the amount sought to
be recovered in the complaint.

Under their second assignment of error, appellants contend that the lower Court erred
in denying their motion for reconsideration and in refusing to admit their amended
complaint. Again we find this assignment of error to be without merit. While it is true
that the under the liberal provisions of our Rules of Court, amendments to pleading are
favored and liberally allowed in the furtherance of justice, it is obvious that when it
appears from the very face of the complaint that the Court has no jurisdiction over the
subject-matter of the case, an amendment of the complaint can not be allowed so to
confer jurisdiction upon the Court. In Alvarez, et al. vs. Commonwealth of the Phil., et
al., 65 Phil., 302, this Court held:

Under this section (Sec. 101 of the Code of Civ. Pro. the amendment of a
pleading, after a demurrer is sustained, is not an absolute right of the pleader;
the amendment rests rather in the sound discretion of the court. Generally when
a demurrer is sustained, the party who presented the defective pleading is
afforded an opportunity to amend it under conditions which the court may fix; and
this should be done when it appears clearly that the defect is remediable by
amendments (Molina vs. La Electricista, 6 Phil., 519; Serrano vs.Serrano, 9 Phil.,
142; Segovia vs. Provincial Board of Albay, 13 Phil., 331;
Balderrama vs. Compañia General de Tabacos, 13 Phil., 609;
Macapinlac vs. Gutierrez Repide, 43 Phil., 770). But when it is evident that the
court has no jurisdiction over the person at the subject matter that the pleading is
so fatally defective as not to be susceptible of amendment, or that to permit such
amendment would radically alter the theory and the nature of the action, then the
court may refuse the amendment of the defective pleading and order the
dismissal of the case (49 C.J., sec. 563, p. 457; San Joaquin etc., Canal, etc.,
Co. vs. Stanislaus Country, 155 Cal., 21; Bell. vs. California Bank, 153 cal., 234;
Ridgway vs. Pogan, 2 Cal. Unrep. Cas., 718; Schlecht vs.Schlecht, 277 F. 1065;
Beal vs. United Properties Co., 46 Cal. A., 287; Bemartini vs. Marini, 45 Cal. A.,
418; Lentz vs. Clough, 39 Cal. A., 430; Burki vs. Pleasanton School District., 18
Cal. A., 493; Patterson vs. Steele, 93 Neb., 209; Cox vs. Georgia R., etc. Co.,
139 Ga., 532; Peo vs. McHatton, 7 III., 731; Higgins vs. Degney, 25 Misc., 248;
55 N.Y.S., 59; Wood vs. Anderson, 25 Pa., 407). Section 101 authorizing the
amendment of a defective pleading should be liberally construed and the courts,
whenever possible, should incline in favor of the amendment; but when it
appears patent that the pleading is not susceptible of amendment upon the
grounds above set out, the appellate courts should not hold that the former have
abused their discretion in not permitting the amendment and in dismissing the
case.

Appellants' original complaint, as we have already determined, is one for forcible entry
and detainer, over which the Court below has no jurisdiction. Not having acquired
jurisdiction over the case by the filing of the original complaint, the lower court has
neither the power nor the jurisdiction to act on the motion for the admission of the
amended complaint, much less to allow such amendment, since it is elementary that
the court must first acquire jurisdiction over the case in order to act validly therein.
Wherefore, the Court below did not err in refusing to admit plaintiffs-appellants'
amended complaint.

The case might be different had the amendments been made before an answer or a
motion to dismiss had been filed, since the original complaint was then amendable,
and the amendment could supersede the original pleading, as of right, without leave of
court being required, and without the Court taking cognizance at all of the original
complaint.

In view of the foregoing, the orders appealed from are affirmed, without prejudice to
appellants' filing another case for reivindicacion. Costs against appellants.