xxxxxBOSTON EQUITY VS CAxxxxxx
consequent violation of the rule on litis pendentia.
xxxxxGSIS VS VILLAVIZAxxxxx
SPOUSES MARASIGAN VS CHEVRON
FACTS:
Records disclose Spouses Marasigan were
operators of a gasoline station in Montalban, Rizal,
while Chevron is a corporation engaged in the
business of refining, manufacturing, storing,
distributing, and marketing of fuels, lubricants and
other petroleum products. Spouses Marasigan and
Chevron entered into a dealership and distributorship
agreement wherein the former can purchase
petroleum products from the latter on credit. To
complete said agreement, Spouses Marasigan
executed deeds of real estate mortgage over their
properties, as collateral, in favor of
Chevron.
Records further show that by September 30,
1993, Spouses Marasigan exceeded their credit line
and owed Chevron the amount of ₱12,075,261.02.
Spouses Marasigan failed to pay the obligation
despite oral and written demands from
Chevron. Chevron, through ACCRALAW, was able to
foreclose all the real estate mortgages on Spouses
Marasigan’s subject properties. Chevron, however,
was only able to recover the total amount of
₱4,925,000.00 from the public auction sales of the
mortgaged properties including the sale of the
167.1597 hectare coconut farm property located in
Mulanay, Quezon, which was sold for ₱130,000.00 to
the only bidder, ACCRA
Investments,Corp. (ACCRAIN).
Chevron filed a complaint against Spouses
Marasigan before the RTC, Branch
136, Makati City to recover the deficiency in the
amount of ₱7,667,188.10. Chevron basically alleged
therein that Spouses Marasigan’s outstanding
obligation as of October 15, 1995 was ₱7,667,188.10
and that said obligation remained unpaid.
In their Answer, Spouses Marasigan mainly
alleged that they were greatly prejudiced because the
foreclosure sales on the subject mortgaged properties
were illegal and that the bid price of the Mulanay
property in particular was shockingly low.
Spouses Marasigan filed a complaint against
Chevron, ACCRAIN and ACCRALAW and Sheriff
Romeo Villafranca before the RTC-Gumaca. Spouses
Marasigan principally alleged therein that the bid price
was grossly inadequate and shockingly low which
rendered the foreclosure sale fatally defective and the
foreclosure proceedings invalid and illegal. Chevron,
ACCRAIN and ACCRALAW filed a motion to dismiss
citing as ground Spouses Marasigan’s failure to
disclose in their certification against forum shopping
the pending case filed before the RTC-Makati and the
Chevron, ACCRAIN and ACCRALAW then
filed their Answer with Compulsory Counterclaim
alleging, among others, that the foreclosure sale was
conducted in accordance with law and that the
complaint in Civil Case No. 2448-G violated the rule
on forum shopping and litis pendentia.
On January 4, 2005, the RTC-Gumaca
rendered a decision in favor of Spouses Marasigan
and against Chevron, ACCRAIN and ACCRALAW
Chevron, ACCRAIN and ACCRALAW
appealed to the CA and it ruled in their favor. The CA
ruled that Spouses Marasigan committed forum
shopping and that all the elements of litis
pendentia are present. Accordingly, Civil Case No.
2448-G, filed by Spouses Marasigan in the RTC-
Gumaca was dismissible on the grounds of forum
shopping and litis pendentia. The CA ruled as follows:
ISSUE:
Whether or not litis pendentia exist.
SC RULING:
Yes, Litis pendentia exists.
The essence of forum shopping is the filing
by a party against whom an adverse judgment has
been rendered in one forum, seeking another and
possibly favorable opinion in another suit other than
by appeal or special civil action for certiorari. It is the
act of filing of multiple suits involving the same parties
for the same cause of action, either simultaneously or
successively for the purpose of obtaining a favorable
judgment. Forum shopping exists where the elements
of litis pendentia are present or where a final
judgment in one case will amount to res judicata in
the action under consideration.[5]
Litis pendentia is a Latin term, which literally
means "a pending suit" and is variously referred to in
some decisions as lis pendens and auter action
pendant. As a ground for the dismissal of a civil
action, it refers to the situation where two actions are
pending between the same parties for the same
cause of action, so that one of them becomes
unnecessary and vexatious. It is based on the policy
against multiplicity of suits.[6]
Litis pendentia requires the concurrence of
the following requisites: (1) identity of parties, or at
least such parties as those representing the same
interests in both actions; (2) identity of rights asserted
and reliefs prayed for, the reliefs being founded on the
same facts; and (3) identity with respect to the two
preceding particulars in the two cases, such that any
judgment that may be rendered in the pending case,
regardless of which party is successful, would amount
to res judicata in the other case.

What is pivotal in determining whether forum
shopping exists or not is the vexation caused to the
courts and parties-litigants by a party who asks
different courts and/or administrative agencies to rule
on the same or related cases and/or grant the same
or substantially the same reliefs, in the process
creating the possibility of conflicting decisions being
rendered by the different courts and/or administrative
agencies upon the same issues.[7]
In the case at bench, all the requisites of litis
pendentia are present. The first element, identity of
parties, or at least representing the same interest in
both actions, exists. The Court agrees with the ruling
of the CA that Chevron and Spouses Marasigan are
the same parties in the RTC-Makati Case and the
RTC-Gumaca Case. Unquestionably, the plaintiff and
the defendants in the RTC-Makati Case are Chevron
and Spouses Marasigan as well as Mareal Co., Inc.,
respectively. On the other hand, the plaintiffs in the
RTC-Gumaca Case are the Spouses Marasigan and
the defendants therein are Chevron, ACCRAIN and
ACCRALAW. The absence of ACCRAIN and
ACCRALAW as party plaintiffs in the RTC-Makati
case and their additional presence as party
defendants in the RTC-Gumaca case would not
unfavorably affect the respondents because the rule
does not require absolute identity of parties. A
substantial identity of parties is enough to qualify
under the first requisite. What is important here is that
the principal parties – Chevron and Spouses
Marasigan – are the same in both cases.
In this case, the first requisite, identity of
parties or at least such as represent the
same interest in both actions, is present. The
Court of Appeals correctly ruled that the fact
that there is no absolute identity of parties in
both cases will not preclude the application
of the rule of litis pendentia, since only
substantial and not absolute identity of
parties is required for litis pendentia to lie.
The second element, identity of rights
asserted and reliefs prayed for, the reliefs being
founded on the same facts, likewise subsists here. It
cannot be denied that the complaint filed in the RTC-
Makati was for a Sum of Money while that filed in the
RTC-Gumaca was for Declaration of Nullity and/or
Annulment of Foreclosure with Damages. Although
both cases differ in form or nature, the same facts
would be alleged and the same evidence would be
presented considering that the resolution of both
cases would be based on the validity and
enforceability of the same credit lines, real estate
mortgages and foreclosure proceedings. Indeed, the
true test in determining the identity of causes of action
lies not in the form or nature of the actions but rather
in the evidence that would be presented.
The test to determine identity of causes of
action is to ascertain whether the same
evidence necessary to sustain the second
cause of action is sufficient to authorize a
recovery in the first, even if the forms or the
nature of the two (2) actions are different
from each other. If the same facts or
evidence would sustain both, the two (2)
actions are considered the same within the
rule that the judgment in the former is a bar
to the subsequent action; otherwise, it is not.
This method has been considered the most
accurate test as to whether a former
judgment is a bar in subsequent proceedings
between the same parties. It has even been
designated as infallible.
As to subject matter, the rights asserted by both
parties are based on the same credit lines and real
estate mortgages. In the Makati RTC case, appellant
Chevron has to prove that deliveries of Chevron
products were made pursuant to the credit lines and
the real estate mortgages securing the same; and that
the subsequent foreclosure are valid but there is still a
deficiency after deducting the proceeds of the
foreclosure sale from appellees’ obligation. In the
instant case, appellees seek to evade or diminish
their liability under the credit lines and real estate
mortgages by either having the foreclosure sale of the
Mulanay property annulled or by collecting the alleged
discrepancy between the market value of the property
and the bid price offered by ACCRAIN. Thus,
although the instant case pertains only to the Mulanay
property, the resolution of both cases would require a
determination of the validity and enforceability of the
deliveries made by Chevron of the real estate
mortgages and foreclosure proceedings. In both
cases, the same evidence would be presented and
the same subject matter would be litigated. The
difference in the form of actions is of no moment as
the test of identity of causes of action lies not in the
form of an action but on whether the same evidence
would support and establish the former and the
present causes of action.
Finally, the presence of the third element, that the
identity of the two cases should be such that the
judgment that may be rendered in one would,
regardless of which party is successful, amount to res
judicata in the other, cannot be disputed either.
Spouses Marasigan do not deny the fact that the
affirmative defense that they raised in the RTC-Makati
case was the illegality of the foreclosure sale of the
Mulanay property.[10] They raised the same issue in
the RTC-Gumaca case.[11] As correctly ruled by the
CA, the judgment in the RTC-Makati with regard to
the validity of the foreclosure sale of the Mulanay
property will constitute res judicata in the case, and
vice versa. The Court also agrees with its ruling that
the RTC-Makati case should be the priority case
because it was filed earlier and, therefore, the
appropriate vehicle for litigating all issues in this
case.
The Court having ruled that the CA properly
dismissed the petitioners’ complaint due to the
presence of litis pendentia and the violation of the
rule on forum shopping, there is no need to rule
further on the other issues raised by the petitioners
and the respondents in this case.
QUITO V STOP AND SAVE CORPORATION
FACTS:
On March 11, 2005, Dominga Quito filed before the
MCTC a complaint for unlawful detainer6 against Stop
& Save and its sub-lessees/co-respondents Roberto
Buan, Henry Co, Angelina Lumotan, Rodel Pineda
and Rose Calma. She alleged that Stop & Save failed
to pay the agreed monthly rentals since June 2003
and, despite repeated verbal and written demands,
refused to pay and vacate the leased building, in
violation of their April 4, 2002 Lease Agreement. In its
answer to the complaint, Stop & Save denied that it
committed a violation of the lease contract, but merely
suspended its payment of rent because of Dominga’s
failure to comply with their subsequent agreement
dated November 15, 2003;
The MCTC ruled in favor of plaintiff.
On appeal, the RTC set aside the MCTC’s decision
and ordered the dismissal of Dominga’s unlawful
detainer complaint due to the pending case for
annulment of lease contract filed by Stop & Save with
the same RTC, docketed as Civil Case No. 695. It
appeared that Stop & Save had earlier filed, on
January 13, 2005, a case to annul its April 4, 2002
Lease Agreement with Dominga allegedly due to her
misrepresentations on the leased building’s condition
and ownership.
Dominga filed a petition for review with the CA. In its
June 30, 2008 decision, the CA dismissed Dominga’s
petition for review for lack of merit, which, in effect,
affirmed the RTC’s decision dismissing Dominga’s
unlawful detainer complaint.
ISSUE:
Whether or not the CA correctly dismissed the subject
unlawful detainer case on the ground of litis
pendentia.
RULING:
We find that litis pendentia as a ground for the
dismissal of a civil action does not apply in the
present case.
Litis pendentia refers to the situation where another
action is pending between the same parties for the
same cause of action so that one of these actions is
unnecessary and vexatious.11 The dismissal of a civil
action on the ground of litis pendentiais based on the
policy that a party is not allowed to vex another more
than once regarding the same subject matter and for
the same cause of action in order that possible
conflicting judgments may be avoided for the sake of
the stability of the rights and statuses of persons.12
To constitute litis pendentia, the following requisites
must be present: (1) identity of the parties in the two
actions; (2) substantial identity in the causes of action
and in the reliefs sought by the parties; (3) and the
identity between the two actions should be such that
any judgment that may be rendered in one case,
regardless of which party is successful, would amount
to res judicata in the other.13
Indisputably, the requisite identity of parties is met in
the present case. The disputed point is whether there
is substantial identity in the causes of action and in
the reliefs sought in the cases for annulment of lease
contract filed by Stop and Save and for unlawful
detainer filed by Dominga.
We find that no substantial identity exists.
"The test to determine whether the causes of action
are identical is to ascertain whether the same
evidence will sustain both actions, or whether there is
an identity in the facts essential to the maintenance of
the two actions. If the same facts or evidence would
sustain both, the two actions are considered the
same, and a judgment in the first case is a bar to the
subsequent action."14
In the present case, while there is an identity in the
facts between the two actions, involving as they do
the same lease contract, the issues and the relief
prayed for are different so that the causes of action
remain entirely distinct from each other.
The issue of physical possession in the action for
unlawful detainer cannot be identical with the issues
of ownership and validity of contract in the action for
annulment. From these essential differences, the lack
of required identity in the causes of action for litis
pendentia to exist cannot be denied.
Since the causes of action in the subject case for
unlawful detainer and annulment of lease contract are
entirely different, a judgment in one case would not
amount to res judicata in the other. "[F]or res
judicatato bar the institution of a subsequent action[,]
the following requisites must concur: (1) the former
judgment must be final; (2) it must have been
rendered by a court having jurisdiction of the subject
matter and the parties; (3) it must be a judgment on
the merits; and (4) there must be[,] between the first
and second actions[,] (a) identity of parties; (b)
identity of subject matter; and (c) identity of cause of
action.
G.R. No. 173331 December 11, 2013
FLORPINA BENAVIDEZ, Petitioner,
vs.
NESTOR SALVADOR, Respondent.
Facts:
 Sometime in February 1998, petitioner
Florpina Benavidez (Benavidez) approached
and asked respondent Nestor
Salvador (Salvador) for a loan that she
would use to repurchase her property in
Tanay, Rizal which was foreclosed by the
Farmers Savings and Loan Bank,
Inc. (Farmers Savings).
 After inspecting the said property, Salvador
agreed to lend the money subject to certain
conditions.
 To secure the loan, Benavidez was required
to execute a real estate mortgage, a
promissory note and a deed of sale. She
was also required to submit a special power
of attorney (SPA) executed and signed by
Benavidez’s daughter, Florence B.
Baning (Baning), whom she named as the
vendee in the deed of absolute sale of the
repurchased property.
 Pursuant to the agreement, Salvador issued
a manager’s check in favor of Benavidez in
the amount of P1,000,000.00 and released
P500,000.00 in cash. For the loan obtained,
Benavidez executed a promissory note,
dated March 11, 1998.
 Benavidez, however, failed to deliver the
required SPA. defaulted in her obligation
under the promissory note and all postdated
checks which she had issued to pay for the
interests were dishonored.
 This prompted Salvador to send a demand
letter.Unfortunately, the demand fell on deaf
ears which constrained Salvador to file a
complaint for sum of money with
damages with prayer for issuance of
preliminary attachment.
 On May 4, 2000, Benavidez filed a motion to
dismiss on the ground of litis pendentia. She
averred that prior to the filing of the case
before the RTC-Antipolo, she had filed
a Complaint for Collection for Sum of Money,
Annulment of Contract and Checks with
Prayer for Preliminary Injunction and
Temporary Restraining Order against
Salvador; his counsel, Atty. Nepthalie
Segarra; Almar Danguilan; and Cris
Marcelino, before the Regional Trial Court,
Branch 80, Morong, Rizal (RTC-Morong). 
DENIED BY RTC ANTIPOLO ON JULY 31,
2000
 A pre-trial conference was scheduled on
May 2, 2001 but she and her counsel failed
to appear despite due notice. Resultantly,
upon motion, Salvador was allowed by the
trial court to present evidence ex parte.
 On June 1, 2001, RTC-Antipolo decided the
subject case for Salvador. It found that
indeed Benavidez obtained a loan from
Salvador in the amount of P1,500,000.00. It
also noted that up to the time of the rendition
of the judgment, she had failed to settle her
obligation despite having received oral and
written demands from Salvador. Also, the
trial court pointed out that the evidence had
shown that as of January 11, 2000,
Benavidez’s obligation had already reached
the total amount of P4,810,703.21.4 
MOTION FOR RECONSIDERTION WAS
FILED BY BENAVIDEZ BUT THIS WAS
DENIED FOR LACK OF MERIT
 Frustrated, Benavidez appealed the June 1,
2001 Decision and the August 10, 2001
Order of RTC-Antipolo to the CA. She
argued, in chief, that early on, the trial court
should have dismissed the complaint for
collection of sum of money filed by Salvador
on grounds of litis pendentia and erroneous
certification against forum shopping. She
claimed that prior to the filing of the said
complaint against her, she had already filed
a complaint for the annulment of the
promissory note evidencing her obligation
against Salvador. According to her, there
was substantial identity in the causes of
action and any result of her complaint for
annulment would necessarily affect the
complaint for collection of sum of money filed
against her. She added that Salvador never
informed RTC-Antipolo about the pending
case before RTC-Morong, rendering his
certification on forum shopping
erroneous.7Benavidez also argued that RTC-
Antipolo erred in refusing to re-open the
case for pre-trial conference and disallowing
her to present evidence. She added that the
absence of her counsel on the scheduled
pre-trial conference caused her substantial
prejudice.  THE CA WAS NOT MOVED
AND AFFIRMED IN TOTO THE DECISION
OF RTC-ANTIPOLO.12
 Feeling aggrieved by the affirmance,
Benavidez filed a motion for reconsideration
on the ground that the same was contrary to
 law and jurisprudence; that litis
pendentia existed which resultantly made his
certification on non-forum shopping
untruthful; and, that her absence during the
pre-trial was justified.
 On June 08, 2006, the CA issued
the Amended Decision, holding that the
motion was partly meritorious. Accordingly, it
modified its earlier decision by deleting the
award of exemplary damages and attorney’s
fees because the award thereof was not
supported by any factual, legal and equitable
justification.
 Still unsatisfied, Benavidez comes before the
Court via a petition for review under Rule 45
of the Rules of Court, raising the following
issues:14
Issue:
Whether or not the present case should have
been dismissed on the ground of litis pendentia.
Ruling:
In litis pendentia, there is no
hard and fast rule in
determining which of the two
actions should be abated
Litis pendentia is a Latin term, which literally means "a
pending suit" and is variously referred to in some
decisions as lis pendens and auter action pendant. As
a ground for the dismissal of a civil action, it refers to
the situation where two actions are pending between
the same parties for the same cause of action, so that
one of them becomes unnecessary and vexatious. It
is based on the policy against multiplicity of suits.19
Litis pendentia exists when the following
REQUISITES are present: identity of the parties in the
two actions; substantial identity in the causes of
action and in the reliefs sought by the parties; and the
identity between the two actions should be such that
any judgment that may be rendered in one case,
regardless of which party is successful, would amount
to res judicata in the other.20
On the other hand, forum shopping exists when, as a
result of an adverse decision in one forum, or in
anticipation thereof, a party seeks a favorable opinion
in another forum through means other than appeal
or certiorari.21
There is forum shopping when the elements of litis
pendentia are present or where a final judgment in
one case will amount to res judicata in another.22
In the present controversy, the Court is of the view
that litis pendentia exists. All the elements are
present: first,both Benavidez and Salvador are parties
in both cases; second, both complaints are concerned
with the same promissory note; and third, the
judgment in either case would be determinative of the
other.
With the foregoing, which case then should be
dismissed? At first glance, it would seem that Civil
Case No. 00-5660 or the complaint filed with RTC-
Antipolo should have been dismissed applying the
"priority-in-time rule." This rule, however, is not
ironclad. The rule is not applied if the first case was
filed merely to pre-empt the later action or to
anticipate its filing and lay the basis for its dismissal.
A crucial consideration is the good faith of the parties.
In recent rulings, the more appropriate case is
preferred and survives. In Spouses Abines v.
BPI,23 it was written:
There is no hard and fast rule in determining
which of the actions should be abated on the
ground of litis pendentia, but through time, the
Supreme Court has endeavored to lay down certain
criteria to guide lower courts faced with this legal
dilemma. As a rule, preference is given to the first
action filed to be retained. This is in accordance
with the maxim Qui prior est tempore, potior est
jure. There are, however, limitations to this rule.
Hence, the first action may be abated if it was filed
merely to pre-empt the later action or to anticipate its
filing and lay the basis for its dismissal. Thus,
the bona fides or good faith of the parties is a crucial
element. A later case shall not be abated if not
brought to harass or vex; and the first case can be
abated if it is merely an anticipatory action or, more
appropriately, an anticipatory defense against an
expected suit – a clever move to steal the march from
the aggrieved party.
Another exception to the priority in time rule is
the criterion of the more appropriate action. Thus,
an action, although filed later, shall not be dismissed if
it is the more appropriate vehicle for litigating the
issues between the parties. [Underscoring supplied]
In the relatively recent case of Dotmatrix Trading v.
Legaspi,24 the Court had the occasion to extensively
discuss the various rules and consideration in
determining which case to dismiss in such situations.
It included its analysis of Abines. Thus:
Early on, we applied the principle of Qui prior est
tempore, potior est jure (literally, he who is before in
time is better in right) in dismissing a case on the
ground of litis pendentia. This was exemplified in the
relatively early case of Del Rosario v. Jacinto where
two complaints for reconveyance and/or recovery of
the same parcel of land were filed by substantially the
same parties, with the second case only impleading
more party-plaintiffs. The Court held that "parties who
base their contention upon the same rights as the
litigants in a previous suit are bound by the judgment
in the latter case." Without expressly saying so in litis
pendentia terms, the Court gave priority to the suit
filed earlier.
Ago Timber Corporation v. Ruiz offered an
insightful reason after both parties had each pleaded
the pendency of another action between the same
parties for the same cause. The Court ruled that the
second action should be dismissed, "not only as
a matter of comity with a coordinate and co-equal
court (Laureta & Nolledo, Commentaries &
Jurisprudence on Injunction, p. 79, citing Harrison v.
Littlefield, 57 Tex. Div. A. 617, 619, 124 SW 212), but
also to prevent confusion that might seriously
hinder the administration of justice. (Cabigao, et
al. v. Del Rosario, et al., 44 Phil. 182)."
In all these cases, we gave preference to the first
action filed to be retained. The "priority-in-time
rule," however, is not absolute.
In the 1956 case of Teodoro v. Mirasol, we deviated
from the "priority-in-time rule" and applied the "more
appropriate action test" and the "anticipatory
test."
The "more appropriate action test" considers the
real issue raised by the pleadings and the ultimate
objective of the parties; the more appropriate
action is the one where the real issues raised can
be fully and completely settled. In Teodoro, the
lessee filed an action for declaratory relief to fix the
period of the lease, but the lessor moved for its
dismissal because he had subsequently filed an
action for ejectment against the lessee. We noted that
the unlawful detainer suit was the more appropriate
action to resolve the real issue between the parties -
whether or not the lessee should be allowed to
continue occupying the land under the terms of the
lease contract; this was the subject matter of the
second suit for unlawful detainer, and was also the
main or principal purpose of the first suit for
declaratory relief.
In the "anticipatory test," the bona fides or good
faith of the parties is the critical element.1âwphi1 If
the first suit is filed merely to preempt the later
action or to anticipate its filing and lay the basis
for its dismissal, then the first suit should be
dismissed. In Teodoro, we noted that the first action,
declaratory relief, was filed by the lessee to anticipate
the filing of the second action, unlawful detainer,
considering the lessor's letter informing the lessee
that the lease contract had expired.
Under the established jurisprudence on litis
pendentia, the following considerations predominate
in the ascending order of importance in determining
which action should prevail: (1) the date of filing, with
preference generally given to the first action filed to
be retained; (2) whether the action sought to be
dismissed was filed merely to preempt the later action
or to anticipate its filing and lay the basis for its
dismissal; and (3) whether the action is the
appropriate vehicle for litigating the issues between
the parties.25
Considering the nature of the transaction between the
parties, the Court believes that the case for collection
of sum of money filed before RTC-Antipolo should be
upheld as the more appropriate case because the
judgment therein would eventually settle the issue in
the controversy - whether or not Benavidez should be
made accountable for the subject loan. In the
complaint that she filed with RTC- Morong, Benavidez
never denied that she contracted a loan with
Salvador.
It is clear that there was an amount of money
borrowed from Salvador which was used in the
repurchase of her foreclosed property. Whether or not
it was Atty. Segarra who arranged the loan is
immaterial. The fact stands that she borrowed from
Salvador and she benefited from it. Her insistence
that the remaining balance of P450,000.00 of the
money loaned was never handed to her by Atty.
Segarra is a matter between the two of them. As far
as she and Salvador are concerned, there is
admittedly an obligation. Whether the promissory note
was void or not could have been proven by her during
the trial but she forfeited her right to do so when she
and her lawyer failed to submit a pre-trial brief and to
appear at the pre-trial as will be discussed hereafter.
At this point, to dismiss Civil Case No. 00-5660 would
only result in needless delay in the resolution of the
parties' dispute and bring them back to square one.
This consequence will defeat the public policy
reasons behind litis pendentia which, like the rule on
forum shopping, aim to prevent the unnecessary
burdening of our courts and undue taxing of the
manpower and financial resources of the Judiciary; to
avoid the situation where co-equal courts issue
conflicting decisions over the same cause; and to
preclude one party from harassing the other party
through the filing of an unnecessary or vexatious
suit.27
WHEREFORE, the petition is DENIED. The
November 22, 2005 Decision and the June 8, 2006
Amended Decision of the Court of Appeals
are AFFIRMED with MODIFICATION.
Rule 9, Section 1
 HEIRS OF SOTTO V. PALICTE
G.R. NO. 159691, JUNE 13, 2013
FACTS:
Filemon had four children, namely: Marcelo Sotto
(Marcelo), Pascuala Sotto-Pahang (Pascuala), Miguel
Barcelona (Miguel), and Matilde. Marcelo was the
administrator of the Estate of Sotto. Marcelo and
Miguel were the predecessors-in-interest of
petitioners.
In June 1967, Pilar Teves (Pilar) and other heirs of
Carmen Rallos (Carmen), the deceased wife of
Filemon, filed in the Court of First Instance (CFI) of
Cebu City a complaint against the Estate of Sotto (
Civil Case No. R-10027 ) seeking to recover certain
properties that Filemon had inherited from Carmen,
and damages. The CFI rendered judgment awarding
to Pilar and other heirs of Carmen damages of P
233,963.65, among other reliefs . To satisfy the
monetary part of the judgment, levy on execution was
effected against six parcels of land and two residential
houses belonging to the Estate of Sotto . The levied
assets were sold at a public auction . Later on ,
Matilde redeem ed four of the parcels of land in her
own name (i.e., Lots No. 1049, No. 1051, No. 1052
and No. 2179-C) , while her sister Pascuala redeem
ed one of the two houses because her family was
residing there . On July 9, 1980, the Deputy Provincial
Sheriff of Cebu executed a deed of redemption in
favor of Matilde, which the Clerk of Court approved.
On July 24, 1980, Matilde filed in Civil Case No. R-
10027 a motion to transfer to her name the title to the
four properties. However, the CFI denied her motion,
and instead declared the deed of redemption issued
in her favor null and void, holding that Matilde,
although declared in Special Proceedings No. 2706-R
as one of the heirs of Filemon, did not qualify as a
successor-in-interest with the right to redeem the four
properties. Matilde directly appealed the adverse
ruling to the Court via petition for review, and on
September 21, 1987, the Court, reversing the CFI’s
ruling, granted Matilde’s petition for review but
allowed her co-heirs the opportunity to join Matilde as
co-redemptioners for a period of six months before
the probate court (i.e., RTC of Cebu City, Branch 16)
would grant her motion to transfer the title to her
name.
The other heirs of Filemon failed to exercise their
option granted in the decision of September 21, 1987
to join Matilde as co-redemptioners within the six-
month period. Accordingly, on October 5, 1989, the
trial court issued an order in Civil Case No. R-10027
approving Matilde’s motion to transfer the title of the
four lots to her name, and directing the Register of
Deeds of Cebu to register the deed of redemption and
issue new certificates of title covering the four
properties in Matilde’s name.
It appears that Pascuala, who executed a document
on November 25, 1992 expressly waiving her rights in
the four properties covered by the deed of
redemption, changed her mind and decided to file on
September 23, 1996 in the RTC in Cebu City a
complaint to seek the nullification of her waiver of
rights, and to have herself be declared as a co-
redemptioner of the four properties (Civil Case No.
CEB-19338). However, the RTC dismissed Civil Case
No. CEB-19338 on the ground of its being barred by
laches. Pascuala then assailed the dismissal of Civil
Case No. CEB-19338 in the CA through a petition
forcertiorari (C.A.-G.R. SP No. 44660), which the CA
dismissed on November 21, 1997. Undeterred,
Pascuala appealed the dismissal of her petition
for certiorari (G.R. No. 131722), but the Court denied
due course to her petition on February 4, 1998
because of her failure to pay the docket fees and
because of her certification against forum shopping
having been signed only by her counsel.
In November 1998, the heirs of Miguel filed a motion
for reconsideration in Civil Case No. R-10027 of the
RTC of Cebu City, Branch 16, praying that the order
issued on October 5, 1989 be set aside, and that they
be included as Matilde’s co-redemptioners. After the
RTC denied the motion for reconsideration for its lack
of merit on April 25, 2000, they assailed the denial by
petition for certiorari and prohibition (C.A.-G.R. SP
No. 60225). The CA dismissed the petition
for certiorari and prohibition on January 10, 2002.
Thereafter, they elevated the matter to the
Court via petition for certiorari (G.R. No. 154585),
which the Court dismissed on September 23, 2002 for
being filed out of time and for lack of merit.
On September 10, 1999, the heirs of Marcelo,
specifically: Lolibeth Sotto Noble, Danilo C. Sotto,
Cristina C. Sotto, Emmanuel C. Sotto, Filemon C.
Sotto, and Marcela C. Sotto; and the heirs of Miguel,
namely: Alberto, Arturo and Salvacion, all surnamed
Barcelona (herein petitioners), instituted the present
action for partition against Matilde in the RTC of Cebu
City, Branch 20 (Civil Case No. CEB-
24293).2 Alleging in their complaint that despite the
redemption of the four properties having been made
in the sole name of Matilde, the four properties still
rightfully belonged to the Estate of Sotto for having
furnished the funds used to redeem the properties,
they prayed that the RTC declare the four properties
as the assets of the Estate of Sotto, and that the RTC
direct their partition among the heirs of Filemon.
It is notable at this juncture that the heirs of Pascuala
did not join the action for partition whether as plaintiffs
or defendants.
Instead of filing her answer, Matilde moved to dismiss
the complaint,4 stating that: (a) petitioners had no
cause of action for partition because they held no
interest in the four properties; (b) the claim was
already barred by prior judgment, estoppel and
laches; (c) the court had no jurisdiction over the
action; and (d) a similar case entitled Pahang v.
Palicte (Civil Case No. 19338) had been dismissed
with finality by Branch 8 of the RTC in Cebu City.
On November 15, 1999, the RTC granted Matilde’s
motion to dismiss and dismissed the
complaint,5holding that Civil Case No. CEB-24293
was already barred by prior judgment considering that
the decision in G.R. No. 55076, the order dated
October 5, 1989 of the RTC in Civil Case No. R-
10027, and the decision in G.R. No. 131722 had all
become final, and that the cases had involved the
same parties, the same subject matter, the same
causes of action, and the same factual and legal
issues. The RTC observed that it was bereft of
jurisdiction to annul the rulings of co-equal courts that
had recognized Matilde’s exclusive ownership of the
four properties.
Following the denial by the RTC of their motion for
reconsideration,6 petitioners appealed the dismissal of
Civil Case No. CEB-24293 to the CA, which
promulgated its judgment on November 29, 2002
affirming the dismissal.7 After the CA denied
petitioners’ motion for reconsideration,8 they brought
this present appeal to the Court.
In the meantime, the Estate of Sotto, through the
administrator, moved in the probate court (Special
Proceedings No. 2706-R) to require Matilde to
account for and turn over the four properties that
allegedly belonged to the estate, presenting
documentary evidence showing that Matilde had
effected the redemption of the four properties with the
funds of the estate in accordance with the express
authorization of Marcelo.9 The probate court granted
the motion, but subsequently reversed itself upon
Matilde’s motion for reconsideration. Hence, the
Estate of Sotto appealed (G.R. No. 158642), but the
Court promulgated its decision on September 22,
2008 adversely against the Estate of Sotto.
ISSUE:
Whether or not the present action for partition was
already barred by prior judgment.
RULING:
YES. The present action for partition was already
barred by prior judgment. Res judicata was applicable
to bar petitioners’ action for partition of the four
properties.
Res judicata exists when as between the action
sought to be dismissed and the other action these
elements are present, namely; (1) the former
judgment must be final; (2) the former judgment must
have been rendered by a court having jurisdiction of
the subject matter and the parties; (3) the former
judgment must be a judgment on the merits; and (4)
there must be between the first and subsequent
actions (i) identity of parties or at least such as
representing the same interest in both actions; (ii)
identity of subject matter, or of the rights asserted and
relief prayed for, the relief being founded on the same
facts; and, (iii) identity of causes of action in both
actions such that any judgment that may be rendered
in the other action will, regardless of which party is
successful, amount to res judicata in the action under
consideration.
The first three elements were present. The decision of
the Court in G.R. No. 55076 (the first case), the
decision of the Court in G.R. No. 131722 (the second
case), the order dated October 5, 1989 of the RTC in
Civil Case No. R-10027 as upheld by the Court in
G.R. No. 154585 (the third case), and the decision in
G.R. No. 158642 (the fourth case) – all of which dealt
with Matilde’s right to the four properties – had upheld
Matilde’s right to the four properties and had all
become final. Such rulings were rendered in the
exercise of the respective courts’ jurisdiction over the
subject matter, and were adjudications on the merits
of the cases.
What remains to be determined is whether Civil Case
No. CEB-24293 and the previous cases involved the
same parties, the same subject matter, the same
causes of action, and the same factual and legal
issues.
We find that, indeed, Civil Case No. CEB-24293 was
no different from the previous cases as far as parties,
subject matter, causes of action and issues were
concerned. In other words, Civil Case No. CEB-24293
was an undisguised relitigation of the same settled
matter concerning Matilde’s ownership of the four
properties.
First of all, petitioners, as plaintiffs in Civil Case No.
CEB-24293, were suing in their capacities as the
successors-in-interest of Marcelo and Miguel. Even in
such capacities, petitioners’ identity with the parties in
the previous cases firmly remained. In G.R. No. L-
55076 (the first case), in which Matilde was the
petitioner while her brother Marcelo, the administrator
of the Estate of Sotto, was one of the respondents,
the Court affirmed Matilde’s redemption of the four
properties notwithstanding that it gave the other heirs
of Filemon the opportunity to join as co-redemptioners
within a period of six months. When the other heirs
did not ultimately join as Matilde’s co-redemptioners
within the period allowed by the Court, the trial court
in Civil Case No. R-10027 rightly directed the Register
of Deeds to issue new certificates of title covering the
properties in Matilde’s name. In Civil Case No. CEB-
19338 (the second case), the action Pascuala brought
against Matilde for the nullification of Pascuala’s
waiver of rights involving the four properties, the trial
court dismissed the complaint upon finding Pascuala
barred by laches from asserting her right as Matilde’s
co-redemptioner. The CA and, later on, the Court
itself (G.R. No. 131722) affirmed the dismissal by the
trial court. In Civil Case No. R-10027, the trial court
denied the motion of the heirs of Miguel (who are
petitioners herein) to include them as co-
redemptioners of the properties on the ground of
laches and res judicata. Again, the CA and, later on,
the Court itself (G.R. No. 154585) affirmed the denial.
In G.R. No. 158642 (the fourth case), the Court
upheld the ruling of the probate court in Special
Proceedings No. 2706-R denying the administrator’s
motion to require Matilde to turn over the four real
properties to the Estate of Sotto.
In all the five cases (Civil Case No. CEB-24293
included), a n identity of parties existed because the
parties were the same, or there was privity among
them, or some of the parties were successors-in-
interest litigating for the same thing and under the
same title and in the same capacity.15 An absolute
identity of the parties was not necessary, because a
shared identity of interest sufficed for res judicatato
apply.16 Moreover, mere substantial identity of parties,
or even community of interests between parties in the
prior and subsequent cases, even if the latter were
not impleaded in the first case, would be
sufficient.17 As such, the fact that a previous case was
filed in the name of the Estate of Sotto only was of no
consequence.
Secondly, the subject matter of all the actions (Civil
Case No. CEB-24293 included), was the same, that
is, Matilde’s right to the four properties. On the one
hand, Matilde insisted that she had the exclusive right
to them, while, on the other hand, the other declared
heirs of Filemon, like petitioners’ predecessors-in-
interest, maintained that the properties belonged to
the Estate of Sotto.
Under the doctrine of res judicata, a final judgment or
decree on the merits rendered by a court of
competent jurisdiction is conclusive about the rights of
the parties or their privies in all later suits and on all
points and matters determined in the previous suit.
The foundation principle upon which the doctrine rests
is that the parties ought not to be permitted to litigate
the same issue more than once; that when a right or
fact has been judicially tried and determined by a
court of competent jurisdiction, so long as it remains
unreversed, it should be conclusive upon the parties
and those in privity with them in law or estate.
Section 47 (b) Rule 39 of the Rules of
Court institutionalizes the doctrine of res judicata in
the concept of bar by prior judgment, viz:
Section 47. Effect of judgments and final orders.—
The effect of a judgment or final order rendered by a
court of the Philippines, having jurisdiction to
pronounce the judgment or final order, may be as
follows:
xxxx
(b) In other cases, the judgment or final order is, with
respect to the matter directly adjudged or as to any
other matter that could have been raised in relation
thereto, conclusive between the parties and their
successors in interest by title subsequent to the
commencement of the action or special proceeding,
litigating for the same thing and under the same title
and in the same capacity; and
xxxx
The doctrine of res judicata is an old axiom of law,
dictated by wisdom and sanctified by age, and
founded on the broad principle that it is to the interest
of the public that there should be an end to litigation
by the same parties over a subject once fully and
fairly adjudicated. It has been appropriately said that
the doctrine is a rule pervading every well-regulated
system of jurisprudence, and is put upon two grounds
embodied in various maxims of the common law: one,
public policy and necessity, which makes it to the
interest of the State that there should be an end to
litigation –interest reipublicae ut sit finis litium; the
other, the hardship on the individual that he should be
vexed twice for one and the same cause – nemo
debet bis vexari pro una et eadem causa. A contrary
doctrine would subject the public peace and quiet to
the will and neglect of individuals and prefer the
gratification of the litigious disposition on the part of
suitors to the preservation of the public tranquillity and
happiness.19 The doctrine is to be applied with rigidity
because:
x x x the maintenance of public order, the repose of
society, and the quiet of families require that what has
been definitely determined by competent tribunals
shall be accepted as irrefragable legal truth. So
deeply is this principle implanted in xxx jurisprudence
that commentators upon it have said, the res
judicata renders white that which is black and straight
that which is crooked. Facit excurvo rectum, ex albo
nigrum. No other evidence can afford strength to the
presumption of truth it creates, and no argument can
detract from its legal efficacy.20nadc
What we have seen here is a clear demonstration of
unmitigated forum shopping on the part of petitioners
and their counsel. It should not be enough for us to
just express our alarm at petitioners’ disregard of the
doctrine of res judicata. We do not justly conclude this
decision unless we perform one last unpleasant task,
which is to demand from petitioners’ counsel, Atty.
Makilito B. Mahinay, an explanation of his role in this
pernicious attempt to relitigate the already settled
issue regarding Matilde’s exclusive right in the four
properties. He was not unaware of the other cases in
which the issue had been definitely settled
considering that his clients were the heirs themselves
of Marcelo and Miguel. Moreover, he had represented
the Estate of Sotto in G.R. No. 158642 (The Estate of
Don Filemon Y. Sotto v. Palicte).
Under the circumstances, Atty. Mahinay appears to
have engaged in the prejudicial practice of forum
shopping as much as any of his clients had been. If
he was guilty, the Court would not tolerate it, and
would sanction him. In this regard, forum shopping,
according to Ao-as v. Court of Appeals,21 may be
committed as follows:
As the present jurisprudence now stands, forum
shopping can be committed in three ways: (1) filing
multiple cases based on the same cause of action
and with the same prayer, the previous case not
having been resolved yet (litis pendentia); (2) filing
multiple cases based on the same cause of action
and the same prayer, the previous case having been
finally resolved (res judicata); and (3) filing multiple
cases based on the same cause of action but with
different prayers (splitting of causes of action, where
the ground for dismissal is also either litis
pendentia or res judicata). If the forum shopping is not
considered willful and deliberate, the subsequent
cases shall be dismissed without prejudice on one of
the two grounds mentioned above. However, if the
forum shopping is willful and deliberate, both (or all, if
there are more than two) actions shall be dismissed
with prejudice.
and (c) to cite Lydia Yu in contempt of Court.
Judge denied motion in its September1998 Order.
Before the CA, petitioners assailed the trial court’s
refusal to dismiss the complaint on the ground of non-
compliance with the requirements of a certification of
forum-shopping and declaring
the petitioners in default without first resolving this mo
tion to dismiss which was filed ahead of bank’s motion
to declare them in default.CA ruled that the Omnibus
Motion to Lift Order of Default was “fatally flawed,” as
it was filed beyond the extended periods to file
answer granted by the court, was not under oath, and
was not accompanied by a proper affidavit of merit.
Issue: whether or not the court a quo’s decision was
not in accordance with law and SC decisions when it
avoided to rule on the issue of respondent bank’s
failure to comply with the essential requirement of a
certification against forum shopping and instead
declared the petitioners in default.

Held: No. Petition is unmeritorious. Court agrees that

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

On the same date, February 15, 2001, petitioners filed On April 30, 2002, the CA denied the petition for lack
a motion to admit answer, as well as the answer. In of merit and accordingly dismissed the same.
an order dated February 16, 2001, respondent judge
Hence,petitioners filed a petition for review on
disregarded petitioners’ opposition to Metrobank’s
certiorari under Rule 45.
motion for default and stood pat on his previous
Issue:
default order.
Whether or not the CA erred in upholding the Orders
On February 19, 2001, Metrobank filed an opposition
of the trial court declaring petitioners in default and
to petitioners’ motion to admit answer, arguing that
denying their Motion to Lift Order of Default.
said motion was rendered moot and academic by the
February 12, 2001 order. In an order dated February
Ruling:
20, 2001, the motion to admit answer was denied.
The Court ruled in the affirmative.
On February 27, 2001, petitioners filed a motion to lift
the order of default; Metrobank opposed the motion. Section 3, Rule 9 of the Rules of Court provides:
In their motion, petitioners reiterated that, being
Sec. 3. Default; declaration of — If the defending
party fails to answer within the time allowed therefor,
the court shall, upon motion of the claiming party with
notice to the defending party, and proof of such
failure, declare the defending party in default.
Thereupon, the court shall proceed to render
judgment granting the claimant such relief as his
pleading may warrant, unless the court in its
discretion requires the claimant to submit evidence.
Such reception of evidence may be delegated to the
clerk of court.
Clearly, there are three requirements which must be
complied with by the claiming party before the court
may declare the defending party in default, to wit: (1)
the claiming party must file a motion asking the court
to declare the defending party in default; (2) the
defending party must be notified of the motion to
declare him in default; (3) the claiming party must
prove that the defending party has failed to answer
within the period provided by the Rule.
In filing motions, Section 4, Rule 15 of the Rules of
Court, specifically provides:
Sec. 4. Hearing of motion. – Except for motions which
the court may act upon without prejudicing the rights
of the adverse party, every written motion shall be set
for hearing by the applicant.
xxxx
Prior to the present rule on default introduced by the
1997 Rules of Civil Procedure, as amended, Section
1 of the former Rule 18 on default is silent on whether
or not there is need for a notice of a motion to declare
defendant in default. The Court then ruled that there
is no need. However, the present rule expressly
requires that the motion of the claiming party should
be with notice to the defending party. The purpose of
a notice of a motion is to avoid surprises on the
opposite party and to give him time to study and meet
the arguments. The notice of a motion is required
when the party has the right to resist the relief sought
by the motion and principles of natural justice demand
that his right be not affected without an opportunity to
be heard.
Therefore, as the present rule on default requires the
filing of a motion and notice of such motion to the
defending party, it is not enough that the defendant
failed to answer the complaint within the reglementary
period to be a sufficient ground for declaration in
default. The motion must also be heard.
In this case, it is not disputed that petitioners were
served summons on January 22, 2001. Under Section
1, Rule 11 of the Rules of Court, the defendant shall
file his answer to the complaint within 15 days after
service of summons, unless a different period is fixed
by the court. Petitioners’ answer was due on February
6, 2001, but no answer was filed by petitioners. Thus,
Metrobank filed a Motion to declare petitioners in
default on February 9, 2001, setting the hearing
thereof on February 16, 2001. However, four days
before the scheduled hearing, the trial court issued
the Order datedFebruary 12, 2001, declaring
petitioners in default.
We could not see any justifiable reason why the trial
court chose not to hear the petitioners on the date
and time fixed inMetrobank’s motion, and instead,
hastily granted the motion before it could be heard on
the ground that it had found the motion to be
impressed with merit. Indeed, in totally disregarding
the purpose for which the filing of a motion and notice
to defending party are required by the Rules, the trial
court had acted in a despotic manner that is correctly
assailed through a petition for certiorari which
petitioners have seasonably filed with the CA.
Again, respondent Judge acted capriciously when he
totally ignored petitioners’ Opposition to Metrobank’s
Motion to Declare them in Default and denied their
Motion to Admit Answer, both filed on February 15,
2001, a day before the scheduled hearing, which
showed their desire to be heard before the motion to
declare them in default is resolved by the trial court.
A mere perusal of the Answer attached to the Motion
to Admit Answer would readily reveal that petitioners
raised a special and affirmative defense the other
action pending between the same parties for the
same cause. xxxx
Thus, the trial court is deemed to have been apprised
of the affirmative defense of litis pendentia. Instead of
unceremoniously discarding petitioners’ Opposition
and Motion to Admit Answer which were filed before
the scheduled date of hearing of the motion to declare
petitioners in default, it behooved upon the trial court
to delve into the merits of the Opposition and the
Answer.
The trial court then should have been guided by
Section 11, Rule 11 of the Rules of Court, to wit:
Sec. 11. Extension of time to plead. - Upon motion
and on such terms as may be just, the court may
extend the time to plead provided in these Rules.
The court may also, upon like terms, allow an answer
or other pleading to be filed after the time fixed by
these Rules.
and Section 1, Rule 9 of the 1997 Rules of Procedure
which provides:
Sec. 1. Defenses and objections not pleaded. -
Defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed
waived. However, when it appears from the pleadings
or the evidence on record that the court has no
jurisdiction over the subject matter, that there is
another action pending between the same parties for
the same cause, or that the action is barred by a prior
judgment or by statute of limitations, the court shall
dismiss the claim.
Under Rule 11, it is within the discretion of the trial
court to permit the filing of defendant’s answer even
beyond thereglementary period, provided there is
justification for the belated action, and there was no
showing that the defendant intended to delay the
case. Petitioners may be considered to have
committed excusable negligence when they waited for
the counsel of their choice who was out of town which
caused the delay in filing their Answer; and the Motion
to Admit Answer was filed before the scheduled date
of hearing on the Motion to Declare Petitioners in
Default, showing that petitioners had no intention to
delay the case.
Under Rule 9, the trial court may motu proprio dismiss
the claim when it appears from the pleadings or
evidence on the record that there is another cause of
action pending between the same parties for the
same cause. With the alleged affirmative defense of
litis pendentia, the trial court had justifiable compelling
reason to recall its premature Order declaring
petitioners in default.
In a case, we found the trial court to have gravely
abused its discretion when it declared defendants in
default; that the answer should be admitted because it
had been filed before it was declared in default and
no prejudice was caused to plaintiff; and that the
hornbook rule is that default judgments are generally
disfavored.
In this case, since the Order dated February 12, 2001
declaring petitioners in default is null and void, the
filing of the Answer may be considered as having
been filed before petitioners were declared in default
and therefore no prejudice was caused to Metrobank
and there was no undue delay on the part of
petitioners.
Basic elementary sense of fairness, liberality and
substantial justice so dictate that the premature Order
be considered as null and void. It is the avowed policy
of the law to accord both parties every opportunity to
pursue and defend their cases in the open and
relegate technicality to the background in the interest
of substantial justice.
Since the Order dated February 12, 2001 was null
and void, the trial court likewise committed grave
abuse of discretion in issuing the Orders dated March
5, 2001 and March 21, 2001 denying petitioners’
Motion to Lift Order of Default and Motion for
Reconsideration, respectively.
We reiterate the ruling in Akut v. Court of Appeals,
where we found that the trial court committed grave
abuse of discretion in declaring therein petitioners in
default and in denying their motion to set aside the
order of default, thus:
The controlling principle ignored by respondent court
is that it is within sound judicial discretion to set aside
an order of default and to permit a defendant to file
his answer and to be heard on the merits even after
the reglementary period for the filing of the answer
has expired. This discretion should lean towards
giving party-litigants every opportunity to properly
present their conflicting claims on the merits of the
controversy without resorting to technicalities. Courts
should be liberal in setting aside orders of default, for
default judgments are frowned upon, and unless it
clearly appears that reopening of the case is intended
for delay, it is best that the trial courts give both
parties every chance to fight their case fairly and in
the open, without resort to technicality. x x x
x x x Moreover, petitioners' answer shows that they
have a prima facie meritorious defense. They should,
therefore, be given their day in court to avoid the
danger of committing a grave injustice if they were
denied an opportunity to introduce evidence in their
behalf.
Our ruling in Mercader v. Bonto and the copious
precedents therein cited that "considering that the late
filing of defendants' answer was due to excusable
negligence and that they appear to have a meritorious
defense; that defendants filed an answer before they
were declared in default; and that the late filing of the
answer did not in any way prejudice or deprive the
plaintiff of any substantial right, nor was there
intention to unduly delay the case, WE hold that the
respondent judge committed an abuse of discretion in
declaring the defendants in default and in refusing to
set aside the order of default" is fully applicable to the
case at bar.
[G.R. NO. 160895 : October 30, 2006]
JOSE R. MARTINEZ, Petitioner,
v. REPUBLIC OF THE PHILIPPINES, Respondents.
FACTS:
 On 24 February 1999, petitioner Jose R.
Martinez (Martinez) filed a petition for the
registration in his name of three (3) parcels
of land included in the Cortes, Surigao del
Sur Cadastre. (Lot No. 464-A, Lot No. 464-B,
and Lot No. 370, Cad No. 597).
 The case was docketed as Land Registration
Case No. N-30 and raffled to the Regional
Trial Court (RTC) of Surigao del Sur, Branch
27.
 The Office of the Solicitor General (OSG)
was furnished a copy of the petition. The trial
court set the case for hearing and directed
the publication of the corresponding Notice
of Hearing in the Official Gazette.
 On 30 September 1999, the OSG, in behalf
of the Republic of the Philippines,
opposed the petition on the grounds that
appellee's possession was not in accordance
with Section 48(b) of Commonwealth Act No.
141; that his muniments of title were
insufficient to prove bona-fide acquisition
and possession of the subject parcels; and
that the properties formed part of the public
domain and thus not susceptible to private
appropriation.
 the RTC issued an order of general
default, This ensued when during the
hearing of even date, no party appeared
before the Court to oppose Martinez's
petition.3
 the trial court proceeded to receive
Martinez's oral and documentary evidence in
support of his petition AND rendered a
Decision4 concluding that Martinez and his
predecessors-in-interest had been for over
100 years in possession characterized as
continuous, open, public, and in the concept
of an owner. The RTC thus decreed the
registration of the three (3) lots in the name
of Martinez.
 the OSG filed a Notice of Appeal which was
approved by the RTC.
 the Court of Appeals promulgated the
assailed Decision,8 reversing the RTC and
instead ordering the dismissal of the petition
for registration concluding that the oral
evidence presented by Martinez merely
consisted of general declarations of
ownership.
 No motion for reconsideration have been
filed with the Court of Appeals by Martinez,
who instead directly assailed its Decision
 before this Court through the present
petition.
ISSUE:
WON OSG no longer had personality to oppose the
petition, or appeal its allowance by the RTC, following
the order of general default.
RULING:
NO.OSG can still file an appeal.
Lim Toco vs Go Fray ruling (1948)
“ where a divided Court pronounced that a defendant
in default had no right to appeal the judgment
rendered by the trial court, except where a motion to
set aside the order of default had been filed”
However, Sec. 2, Rule 41 of the 1964 Rules of Court
made the Lim Toco ruling as moot. "[a] party who
has been declared in default may likewise appeal
from the judgment rendered against him as
contrary to the evidence or to the law, even if no
petition for relief to set aside the order of default
has been presented by him in accordance with
Rule 38."
In the present rule, the prior warrant that a defaulted
defendant had the right to appeal was removed from
Section 2, Rule 41 of the 1997 Rules of Civil
Procedure.
Section 3 of Rule 9 of the 1997 Rules incorporated
the particular effects on the parties of an order of
default:
Sec. 3. Default; declaration of. If the defending party
fails to answer within the time allowed therefor, the
court shall, upon motion of the claiming party with
notice to the defending party, and proof of such
failure, declare the defending party in default.
Thereupon, the court shall proceed to render
judgment granting the claimant such relief as his
pleading may warrant, unless the court in its
discretion requires the claimant to submit evidence.
Such reception of evidence may be delegated to the
clerk of court.
(a) Effect of order of default. A party in default shall be
entitled to notice of subsequent proceedings but shall
not take part in the trial.
(b) Relief from order of default. A party declared in
default may any time after notice thereof and before
judgment file a motion under oath to set aside the
order of default upon proper showing that his failure to
answer was due to fraud, accident, mistake or
excusable negligence and that he has a meritorious
defense. In such case, the order of default may be set
aside on such terms and conditions as the judge may
impose in the interest of justice.
(c) Effect of partial default. When a pleading asserting
a claim states a common cause of action against
several defending parties, some of whom answer and
the others fail to do so, the court shall try the case
against all upon the answers thus filed and render
judgment upon the evidence presented.
(d) Extent of relief to be awarded. A judgment
rendered against a party in default shall not exceed
the amount or be different in kind from that prayed for
nor award unliquidated damages.
xxx
It cannot be escaped that the old provision
expressly guaranteeing the right of a defendant
declared in default to appeal the adverse decision
was not replicated in the 1997 Rules of Civil
Procedure.
However, in Lina v. Court of Appeals (1997), it
provides remedies for a party who has been declared
in default.
a) The defendant in default may, at any time after
discovery thereof and before judgment, file a motion,
under oath, to set aside the order of default on the
ground that his failure to answer was due to fraud,
accident, mistake or excusable neglect, and that he
has meritorious defenses; (Sec 3, Rule 18)
b) If the judgment has already been rendered when
the defendant discovered the default, but before the
same has become final and executory, he may file a
motion for new trial under Section 1(a) of Rule 37;
c) If the defendant discovered the default after the
judgment has become final and executory, he may file
a petition for relief under Section 2 of Rule 38;
andcralawlibrary
d) He may also appeal from the judgment rendered
against him as contrary to the evidence or to the law,
even if no petition to set aside the order of default has
been presented by him. (Sec. 2, Rule 41)31
The fourth remedy, that of appeal, is anchored on
Section 2, Rule 41 of the 1964 Rules. Yet even
after that provision's deletion under the 1997
Rules, the Court did not hesitate to expressly rely
again on the Lina doctrine, including the
pronouncement that a defaulted defendant may
appeal from the judgment rendered against him.
Former Court of Appeals Justice Herrerra likewise
reiterates the Lina doctrine, though with the caveat
that an appeal from an order denying a petition for
relief from judgment was no longer appealable under
Section 1, Rule 41 of the 1997 Rules.37 Herrera
further adds:
Section 2, paragraph [2] of the former Rule 41, which
allows an appeal from a denial of a petition for relief,
was deleted from the present Rule, and confined
appeals to cases from a final judgment or final order
that completely disposes of the case, or of a particular
matter therein, when declared by these rules to be
appealable. A judgment by default may be
considered as one that completely disposes of
the case.38
Yet even if it were to assume the doubtful proposition
that this contested right of appeal finds no anchor in
the 1997 Rules, the doctrine still exists, applying
the principle of stare decisis. jurisprudence
applying the 1997 Rules has continued to
acknowledge the Lina doctrine which embodies this
right to appeal as among the remedies of a
defendant, and no argument in this petition persuades
the Court to rule otherwise.
In Rural Bank of Sta. Catalina v. Land Bank of the
Philippines,39 the Court, through Justice Callejo, Sr.,
again provided a comprehensive restatement of the
remedies of the defending party declared in default,
which we adopt for purposes of this decision:
It bears stressing that a defending
party declared in default loses his
standing in court and his right to
adduce evidence and to present his
defense. He, however, has the right
to appeal from the judgment by
default and assail said judgment on
the ground, inter alia, that the
amount of the judgment is
excessive or is different in kind from
that prayed for, or that the plaintiff
failed to prove the material
allegations of his complaint, or that
the decision is contrary to law. Such
party declared in default is
proscribed from seeking a
modification or reversal of the
assailed decision on the basis of
the evidence submitted by him in
the Court of Appeals, for if it were
otherwise, he would thereby be
allowed to regain his right to
adduce evidence, a right which he
lost in the trial court when he was
declared in default, and which he
failed to have vacated. In this case,
the petitioner sought the
modification of the decision of the
trial court based on the evidence
submitted by it only in the Court of
Appeals.40
If it cannot be made any clearer, we hold that a
defendant party declared in default retains the right to
appeal from the judgment by default on the ground
that the plaintiff failed to prove the material allegations
of the complaint, or that the decision is contrary to
law, even without need of the prior filing of a motion to
set aside the order of default. We reaffirm that
the Lim Toco doctrine, denying such right to
appeal unless the order of default has been set
aside, was no longer controlling in this
jurisdiction upon the effectivity of the 1964 Rules
of Court, and up to this day.
Petition is DISMISSED.
Heirs of Medrano vs. De Vera
FACTS:
This case concerns a 463-square meter parcel of land
covered of Flaviana De Gracia. When Flaviana died
intestate in 1980, leaving her half sisters Hilaria and
Elena as her compulsory heirs, Hilaria and Elena, by
virtue of a private document waived all their hereditary
rights to Flaviana’s land in favor of Francisco
Medrano in consideration of the expenses that she
incurred for Flaviana’s medication, hospitalization,
wake and burial. Some of their children affirmed the
contents of the private document executed by their
deceased mothers. To that end, they executed
separate Deeds of Confirmation of Private Document
and Renunciation of rights in favor of Medrano.
Due to the refusal of the other children to sign a
similar renunciation, Medrano filed a complaint in
2001 for quieting of title, reconveyance, reformation of
instrument, and/or partition with damages against
Pelagia, Faustina, Jesus, Veranda, and Estrellita
before the RTC of Urdaneta, Pangasinan.
On April 2, 2002, respondent De Vera filed an answer
with counterclaim presented himself as a real party in
interest. He maintained that the private document in
favor of Medrano was null and void for want of
consideration. Thus, while some children affirmed the
renunciation of their deceased mothers rights’ of the
lot in favor of Medrano, the other children renounced
their rights in favor of de Vera.

The RTC ruled in favor of the petitioners, allowing an
ex parte presentation of evidence. The RTC explained
it would have allowed de Vera to present his evidence
in the case had he complied with the courts’ order to
file a pleading-in-intervention. Upon appeal to the CA,
the appellate court agreed with de Vera. The CA
pointed out that the trial court should have exercised
its authority to order the substitution of the original
defendants instead of requiring de Vera to file a
pleading-in-intervention. This is allowed under Rule 3,
Section 19 of the Rules of Court. Since a transferee
pendent lite is a proper party to the case, the court
can order its outright substitution for the original
defendants. The petitioners filed a motion for
reconsideration, which was denied by the appellate
court, hence this petition.
ISSUE:
1. Whether De Vera could participate in the Civil Case
without filing a motion to intervene
2. Whether De Vera is bound by the judgment against his
transferors
RULING:
The trial court’s approach is seriously flawed because De
Vera’s interest is not independent of or severable from the
interest of the named defendants. De Vera is
a transferee pendente lite of the named defendants (by
virtue of the Deed of Renunciation of Rights that was
executed in his favor during the pendency of Civil Case No.
U-7316). His rights were derived from the named
defendants and, as transfereependente lite, he would be
bound by any judgment against his transferors under the
rules of res judicata.
It was therefore wrong for the trial court to have tried
Medrano’s case against the named defendants (by
allowing Medrano to present evidence ex parte against
them) after it had already admitted De Vera’s
answer. What the trial court should have done is to treat
De Vera as having been joined as a party-defendant, and
to try the case on the basis of the answer De Vera had
filed and with De Vera’s participation. As
transferee pendente lite, De Vera may be allowed to join
the original defendants under Rule 3, Section 19.
As there was a transferee pendente lite whose answer had
already been admitted, the trial court should have tried the
case on the basis of that answer, based on Rule 9, Section
3(c):
Effect of partial default. –
When a pleading asserting a claim
states a common cause of action
against several defending parties, some
of whom answer and the others fail to
do so, the court shall try the case
against all upon the answers thus filed
and render judgment upon the
evidence presented.
To proceed with the ex parte presentation of evidence
against the named defendants after De Vera’s answer
had been admitted would not only be a violation of Rule
9, Section 3(c), but would also be a gross disregard of De
Vera’s right to due process. This is because the ex
parte presentation of evidence would result in a default
judgment which would bind not just the defaulting
defendants, but also De Vera, precisely because he is a
transferee pendente lite. This would result in an anomaly
wherein De Vera would be bound by a default judgment
even if he had filed an answer and expressed a desire to
participate in the case.
Given the Court’s finding that the ex parte presentation of
evidence constituted a violation of due process rights, the
trial court’s judgment by default cannot bind De Vera. A
void judgment cannot attain finality and its execution has
no basis in law. The case should be remanded to the trial
court for trial based on De Vera’s answer and with his
participation.
WALLEM PHILIPPINES SHIPPING, INC. VS S.R. FARMS,
INC.
FACTS:
On March 25, 1992, Continental Enterprises,
Ltd. loaded on board the vessel M/V “Hui Yang,” a
shipment of Indian Soya Bean Meal weighing 1,100
metric tons, for transportation and delivery from India
to Manila, with SR Farms as consignee. The vessel is
owned and operated by Conti-Feed, with petitioner
Wallem as its ship agent. On April 11, 1992, the said
vessel, M/V “Hui Yang” arrived at the port of Manila
and was discharged and transferred into the custody
of the receiving barges. Upon checking the cargo, a
shortage in the shipment of 80.467 metric tons was
found.
Petitioner then filed a Complaint for
damages against Conti-Feed & Maritime Pvt. Ltd., a
foreign corporation doing business in the Philippines
and the owner of M/V “Hui Yang”; RCS Shipping
Agencies, Inc., the ship agent of Conti-Feed; Ocean
Terminal Services, Inc. (OTSI), the arrastre operator
at Anchorage No. 7, South Harbor, Manila; and Cargo
Trade, the customs broker.
Respondent filed an Amended Complaint
impleading herein petitioner as defendant alleging
that the latter, and not RCS, was the one which, in
fact, acted as Conti-Feed’s ship agent.
The complaint against Cargo Trade and
RCS was dismissed at the instance of respondent on
the ground that it has no cause of action. Meanwhile,
defendant OTSI filed its Answer with Counterclaim
and Crossclaim. For its part, petitioner denied the
allegations of respondent claiming, among others,
that it is not accountable nor responsible for any
alleged shortage sustained by the shipment while in
the possession of its co-defendants; the alleged
shortage was due to negligent or faulty loading or
unloading of the cargo by the
stevedores/shipper/consignee; the shortage, if any,
was due to pre-shipment damage, inherent nature,
vice or defect of the cargo for which herein petitioner
is not liable; respondent’s claim is already barred by
laches and/or prescription. Conti-Feed did not file an
Answer.
The RTC rendered its Decision dismissing
respondent’s complaint, as well as the opposing
parties’ counterclaims and crossclaims. Aggrieved by
the RTC Decision, respondent filed an appeal with the
CA.
The CA rendered its presently assailed
Decision REVERSING and SETTING ASIDE and
another one entered ordering defendants-appellees
Conti-Feed and Maritime Pvt. Ltd. and Wallem
Philippines Shipping, Inc., to pay the sum
representing the value of the 80.467 metric tons of
Indian Soya Beans short delivered.
Petitioner filed a Motion for Reconsideration.
Respondent filed a Motion for a More Definite
Dispositive Portion.
Petitioner filed its Comment/Opposition to
private respondent’s Motion. On January 15, 2004,
the CA issued a Resolution denying petitioner’s
Motion for Reconsideration and modifying the
dispositive portion of its Decision. Hence, the instant
petition.
ISSUE:
1. Whether or not the filing of the Amended
Complaint against petitioner should
retroact to the date of the filing of the
original complaint.
HELD:
NO.
As the records would show, petitioner was
not impleaded as a defendant in the original complaint
filed on March 11, 1993. It was only on June 7, 1993
that the Amended Complaint, impleading petitioner as
defendant, was filed.
Respondent cannot argue that the filing of
the Amended Complaint against petitioner should
retroact to the date of the filing of the original
complaint.
The settled rule is that the filing of an
amended pleading does not retroact to the date of the
filing of the original; hence, the statute of limitation
runs until the submission of the amendment. It is true
that, as an exception, this Court has held that an
amendment which merely supplements and amplifies
facts originally alleged in the complaint relates back to
the date of the commencement of the action and is
not barred by the statute of limitations which
expired after the service of the original complaint. The
exception, however, would not apply to the
party impleaded for the first time in the amended
complaint.
The rule on the non-applicability of the
curative and retroactive effect of an amended
complaint, insofar as newly impleaded defendants are
concerned, has been established as early as in the
case of Aetna Insurance Co. v. Luzon Stevedoring
Corporation.In the said case, the defendant Barber
Lines Far East Service was impleaded for the first
time in the amended complaint which was filed after
the one-year period of prescription. The order of the
lower court dismissing the amended complaint
against the said defendant on ground of prescription
was affirmed by this Court.
In the instant case, petitioner was only
impleaded in the amended Complaint of June 7,
1993, or one (1) year, one (1) month and twenty-three
(23) days from April 15, 1992, the date when the
subject cargo was fully unloaded from the vessel.
Hence, reckoned from April 15, 1992, the one-year
prescriptive period had already lapsed.
WHEREFORE, the petition is PARTLY
GRANTED. The Decision of the Court of Appeals
dated June 2, 2003 and its Resolution dated January
15, 2004 in CA-G.R. CV No. 65857 are MODIFIED by
dismissing the complaint against petitioner. In all
other respects, the challenged Decision and
Resolution of the CA are AFFIRMED.
SO ORDERED.
xxxSPS. DIONISIO VS LINSANGANxxx
xxxxxxxxARANETA VS CAxxxxxxxx
IRENE SANTE VS HON. EDILBERTO CLARAVALL
GR 173915
FACTS :
respondent filed before the RTC of Baguio a
complaint for damages against the petitioner for
alleged malicious conduct committed by the latter. In
said complaint respondent prayed that the petitioner
be held liable for damages in the amount of
P300,000, P50,000 as exemplary damages, P50,000
attorney's fees and P20,000. Petitioner filed a motion
to dismiss on the ground that it was the MTC who has
the jurisdiction over the said complaint arguing that
the amount for damages claimed for by the
respondent was not more than the jurisdictional
amount of P300,000 because the claim for exemplary
damages should not be included in the computation.
Trial court denied the motion. Petitioner filed then a
petition for certiorari and prohibition before the CA on
August 20 2004. Meanwhile respondent filed
amended complaint increasing the claim to
P1,000,000. Petitioner filed a motion to dismiss but
was denied by the trial court.
On January 23, 2006 CA as to the petition for
certiorari held that RTC committed grave abuse of
discretion on the ground that the case falls under the
jurisdiction of the MTCC as the allegation shows that
the moral damages claimed by the respondent was
only P300,000 and that the totality rule will not apply
in the case at bar.
on January 31 2006 CA in CA gr 87563 affirmed the
decision of the RTC Denying the motion to dismiss
wherein it held that the aggregate amount demanded
should be the basis for jurisdiction. CA additionally
ruled that respondent can amend her complaint of the
ground that the trial court has jurisdiction over the
original complaint and respondent is entitled to amend
the same as a matter of right. Hence present petition
ISSUE: WON respondent has the right to amend the
original complaint.
RULING:
yes the respondent can amend the same on the
ground that the original complaint is within the
jurisdiction of RTC. BP 129 as amended states that
the MTC has jurisdiction over cases in which the
demand does not exceed P300,000. however it is
provided for under Administrative circular no. 09-94
that in cases where the claim for damages is the main
cause of action, the amount of such claim shall be
considered in determining the jurisdiction of the court.
In the instant case it is clear from the allegations of
the complaint that the respondent's main cause of
action is for damages. Hence the other form of
damages claimed for are not merely incidental to the
main cause of action but constitute primary relief. In
Mendoza vs soriano the court ruled that the total
amount of monetary claims including the claims for
damages was the basis for determining the
jurisdiction. Considering that the total amount of
damages claimed was P420,000 CA was correct in its
ruling that RTC has jurisdiction over the case. It is a
basic jurisprudential principle that an amendment
cannot be allowed when the court has no jurisdiction
over the original complaint. Here RTC Clearly had
jurisdiction over the original complaint hence
amendment was then still a matter of right
Rule 10, Sec 3
Tiu vs. PBCom
G.R. No. 151932
Facts:
In June 1993, Asian Water Resources, Inc. (AWRI),
represented by herein petitioners, applied for a real
estate loan with the Philippine Bank of
Communications (PBCOM) to fund its purified water
distribution business.
The loan was guaranteed by collateral over the
property covered by Transfer Certificate of Title No.
T-13020. The loan was eventually approved.
In August 1996, AWRI applied for a bigger loan from
PBCOM for additional capitalization using the same
Board Resolution, but without any additional real
estate collateral. Considering that the proposed
additional loan was unsecured, PBCOM required all
the members of the Board of Directors of AWRI to
become sureties. Thus, on August 16, 1996, a Surety
Agreement was executed.
Thereafter, AWRI informed the bank of its desire to
surrender
and/or assign in its favor, all the present properties of
the former to apply as dacion en pago for AWRI’s
existing loan obligation to the bank. PBCOM sent a
reply
denying the request. On May 12, 1999, PBCOM sent
a letter to petitioners demanding full payment of its
obligation to the bank.
Its demands having remained unheeded, PBCOM
instructed its counsel to file a complaint for collection
against petitioners.
On July 3, 1999, petitioners filed their Answer. In
support of their allegations, petitioners attached to
their Answer a certified photocopy of the Surety
Agreement issued on March 25, 1999 by the Records
Management and Archives Office in Davao City,
showing that the words “In his personal capacity”
were not found at the foot of page two of the
document where their signatures appeared.
Because of this development, PBCOM’s counsel
searched for and retrieved the file copy of the Surety
Agreement. The notarial copy showed that the words
“In his personal capacity” did not appear on page two
of the Surety Agreement.
PBCOM subsequently discovered that the insertion
was ordered by the bank auditor. It alleged that when
the Surety Agreement was inspected by the bank
auditor, he called the attention of the loans clerk,
Kenneth Cabahug, as to why the words “In his
personal capacity” were not indicated under the
signature of each surety, in accordance with bank
standard operating procedures. The auditor then
ordered Mr. Cabahug to type the words “In his
personal capacity” below the second signatures of
petitioners. However, the notary public was
never informed of the insertion.[14] Mr. Cabahug
subsequently executed an affidavit attesting to the
circumstances why the insertion was made.
PBCOM then filed a Reply and Answer to
Counterclaim with Motion for Leave of Court to
Substitute Annex “A” of the Complaint, wherein it
attached the duplicate original copy retrieved from the
file of the notary public.
Issue:
Whether or not PBCom has a right to amend its
complaint.
Rulings:
Yes. After petitioners have filed their answer, Section
3, Rule 10 of the Rules of Court specifically allows
amendment by leave of court. The said Section
states:
SECTION 3. Amendments by leave of court. Except
as provided in the next preceding section, substantial
amendments may be made only upon leave of court.
But such leave may be refused if it appears to the
court that the motion was made with intent to delay.
Orders of the court upon the matters provided in this
section shall be made upon motion filed in court, and
after notice to the adverse party, and an opportunity
to be heard.
This Court has emphasized the import of Section 3,
Rule 10 of the 1997 Rules of Civil Procedure in
Valenzuela v. Court of Appeals, thus:
Interestingly, Section 3, Rule 10 of the 1997 Rules of
Civil Procedure amended the former rule in such
manner that the phrase “or that the cause of action or
defense is substantially altered” was stricken­off and
not retained in the new rules. The clear import of such
amendment in Section 3, Rule 10 is that under the
new rules, “the amendment may (now) substantially
alter the cause of action or defense.” This should only
be true, however, when despite a substantial change
or alteration in the cause of action or defense, the
amendments sought to be made shall serve the
higher interests of substantial justice, and prevent
delay and equally promote the laudable objective of
the rules which is to secure a “just, speedy and
inexpensive disposition of every action and
proceeding.”
The granting of leave to file amended pleading is a
matter particularly addressed to the sound discretion
of the trial court; and that discretion is broad, subject
only to the limitations that the amendments should not
substantially change the cause of action or alter the
theory of the case, or that it was not made to delay
the action. Nevertheless, as enunciated in
Valenzuela, even if the amendment substantially
alters the cause of action or defense, such
amendment could still be allowed when it is sought to
serve the higher interest of substantial justice; prevent
delay; and secure a just, speedy and inexpensive
disposition of actions and proceedings.
The courts should be liberal in allowing amendments
to pleadings to avoid a multiplicity of suits and in order
that the real controversies between the parties are
presented, their rights determined, and the case
decided on the merits without unnecessary delay.
In the present case, there was no fraudulent intent on
the part of PBCOM in submitting the altered surety
agreement. In fact, the bank admitted that it was a
mistake on their part to have submitted it in the first
place instead of the original agreement. It also
admitted that, through inadvertence, the copy that
was attached to the complaint was the copy wherein
the words “IN HIS PERSONAL CAPACITY” were
inserted to conform to the bank’s standard practice.
This alteration was made without the knowledge of
the notary public. PBCOM’s counsel had no idea that
what it submitted was the altered document, thereby
necessitating the substitution of the surety agreement
with the original thereof, in order that the case would
be judiciously resolved.
PHIL. PORTS AUTHORITY VS. WG&A
G.R. No. 158401, Jan. 28, 2008
FACTS:
Private respondent William Gothong &
Aboitiz, Inc. (WG&A) entered into a contract of lease
with the Philippine Port Authority (PPA)to lease the
Marine Slip Way in the North Harbor which is owned
by PPA. The term of the contract was for 6 months
wherein parties to the contract stipulated therein that
“the lease of the area shall take effect on Jan. 1, 2001
to Jun. 30, 2001 or until such time that the PPA
turns over its operation to the winning bidder for
the North Harbor modernization.” The said
contract was eventually conformed to and signed by
WG&A through its President. Thereafter, in
accordance with the stipulations made in the lease
agreement, PPA surrendered possession of the
Marine Slip Way in favor of WG&A.
However, believing that the said contract
already expired on Jun. 30, 2001, PPA subsequently
sent a letter to WG&A dated Nov. 12, 2001 directing
the latter to vacate the contested premises not later
than Nov. 30, 2001. In response, WG&A wrote to PPA
on Nov. 27, 2001 urging the latter to reconsider its
decision to eject the former but said request was
denied by PPA.
Thus, on Nov. 28, 2001 WG&A filed an
Injunction suit with the RTC of Manila wherein it
claims therein that the PPA unjustly, illegally and
prematurely terminated the lease contract. It likewise
prayed for the issuance of a TRO to arrest the
evacuation. In its complaint, it also sought recovery of
damages for breach of contract and attorney’s fees.
 On Dec. 11, 2001, WG&A amended its
complaint for the first time. The complaint was still
denominated as one for Injunction with prayer for
TRO. In the said pleading, it incorporated statements
to the effect that PPA is already stopped from denying
that the correct period of lease is “until such time that
the North Harbor Modernization project has been
bidded out to and operations turned over to the
winning bidder.” It likewise included, as its third
cause of action, the additional relief in its prayer,
that should it be forced to vacate said facility, it
should be deemed as entitled to be refunded of
the value of the improvements it introduced in the
leased property. Following the first amendment in
the complaint of WG&A, PPA submitted its answer on
Jan. 23, 2001. Meanwhile, the TRO sought by WG&A
was denied by the RTC. Then it moved for
reconsideration on Feb. 11, 2002.
Shortly thereafter, it filed a Motion to Admit
Attached Second Amended Complaint. This time,
however, the complaint was already captioned as one
for Injunction with Prayer for TRO and/or Writ of
Preliminary Injunction and damages and/or for
reformation of contract. Also, it included as its
fourth cause of action and additional relief in its
prayer, the reformation of the contract as it failed
to express or embody the true intent of the
contracting parties. The PPA opposed its
admission and argued that the reformation sought for
by WG&A constituted substantial amendment, which
if granted, will substantially alter the latter’s cause of
action and theory of the case.
The RTC denied the admission of the
second amended complaint, and its motion for
reconsideration was also denied. And so it filed a
petition for certiorari with the CA. The CA granted the
petition and nullified the order and directed the RTC
to admit the second amended complaint pursuant to
Sec. 3, Rule 10 of the 1997 Rules of Civil Procedure.
ISSUE:
Whether or not the CA erred in ruling that the
RTC committed grave abuse of discretion when it
denied the admission of the second amended
complaint.
HELD:
No. The CA did no err in finding that the RTC
committed grave abuse of discretion in issuing the
order denying the admission of the second amended
complaint filed by WG&A.
The RTC applied the old Sec. 3, Rule 10 of
the Rules of Court which says that: “Sec. 3.
Amendments by leave of Court. – after the case is set
for hearing, substantial amendments may be made
only upon leave of court. But such leave may be
refused if it appears to the court that the motion was
made with intent to delay the action or that the cause
of action or defense is substantially altered. Orders of
the court upon the matters provided in this section
shall be made upon motion filed in court, and after
notice to the adverse party, and an opportunity to be
heard,” instead of the provisions of the 1997 Rules of
Civil Procedure, amending Sec. 3, Rule 10, to wit:
Sec. 3. Amendments by leave of court. Except as
provided in the next preceding section, substantial
amendments may be made only upon leave of
court. But such leave may be refused if it appears
to the court that the motion was made with intent
to delay. Orders of the court upon the matters
provided in this section shall be made upon motion
filed in court, and after notice to the adverse party,
and an opportunity to be heard.
The court has emphasized the import of Sec.
3, Rule 10 of the 1997 Rules of Civil Procedure in
Valenzuela vs. CA, thus:
Interestingly, section 3, Rule 10 of the 1997
Rules of Civil Procedure amended the former rule in
such manner that the phrase “or that the cause of
action or defense is substantially altered” was
stricken-off and not retained in the new rules. The
clear import of such amendment in section 3, Rule
10 is that under the new rules, “the amendment
may (now) substantially alter the cause of action
or defense.” This should only be true, however,
when despite a substantial change or alteration in the
cause of action or defense, the amendments sought
to be made shall serve to the higher interests of
substantial justice, and prevent delay and equally
promote the laudable objective of the rules which is to
secure a “just, speedy and inexpensive disposition of
every cause of action and proceding.”
The application of the old rules by the RTC
almost 5 years after its amendment by the 1997 Rules
of Civil Procedure patently constitutes grave abuse of
discretion.

[G. R. No. 138085. November 11, 2004]
AZOLLA FARMS and FRANCISCO R.
YUSECO, petitioners, vs. COURT OF APPEALS
and SAVINGS BANK OF MANILA, respondents.
 Petitioner Francis R. Yuseco, Jr., is the
Chairman, President and Chief Operating
Officer of petitioner Azolla Farms
International Philippines (Azolla Farms), a
corporation duly organized under existing
laws and engaged in the development,
exploitation, production, manufacturing,
promotion, marketing, and sale of natural,
organic minerals, including its by-products,
with the ultimate objective of utilizing said
products for the promotion of food
production.
 In 1982, Azolla Farms undertook to
participate in the National Azolla Production
Program wherein it will purchase all the
Azolla produced by the Azolla beneficiaries
in the amount not exceeding the peso value
of all the inputs provided to them.
 To finance its participation, petitioners
applied for a loan with Credit Manila, Inc.,
which the latter endorsed to its sister
company, respondent Savings Bank of
Manila (Savings Bank).
 The Board of Directors of Azolla Farms,
passed a board resolution, authorizing
Yuseco to borrow from Savings Bank in an
amount not exceeding P2,200,000.00.[3]
 The loan having been approved, Yuseco
executed a promissory note, promising to
pay Savings Bank the sum
of P1,400,000.00. The net proceeds
of P1,225,443.31 was released to FNCB
Finance, the mortgagee of a 548- square
meter lot with residential house owned by
Yuseco. With the release of the proceeds,
FNCB Finance released the mortgage,[5] and
in turn, the property was mortgaged to
Savings Bank as collateral for the
loan.[6] Yuseco and Francisco Bargas also
executed an assignment of their shares of
stock in Azolla Farms as additional
security.[7] Yuseco then executed two other
promissory notes on September 27,
1982[8] and January 4, 1983,[9] both for the
amount of P300,000.00.
 However, the Azolla Farms project
collapsed.
Filing of the Case
 Petitioners Yuseco and Azolla Farms filed
with the Regional Trial Court of Manila
(Branch 25), a complaint for
damages(blaming savings bank):
o Their complaint alleges that
Savings Bank unjustifiably refused
to promptly release the
remaining P300,000.00 which
impaired the timetable of the project
and inevitably affected the viability
of the project resulting in its
collapse, and resulted in their
failure to pay off the loan. Thus,
petitioners pray for P1,000,000.00
as actual damages, among
others.[10]
 Respondent Savings Bank filed its Answer
denying the allegations in the complaint.
o It contends that there was evidence
that Yuseco was using the loan
proceeds for expenses totally
unrelated to the project and they
decided to withhold the remaining
amount until Yuseco gave the
assurance that the diversion of the
funds will be stopped. Respondent
bank believed that the 90-day
interval between the
two tranches could not have
impaired the operation of the
project, and petitioners’ subsequent
receipt of the proceeds confirmed
their agreement to the terms of the
loan.
 Respondent, as defendant, rested its case.
 Petitioners filed a Motion to Admit Amended
Complaint alleging that the testimony of
defense witness Jesus Venturina raised the
issue of the invalidity of the promissory notes
and the real estate mortgage.[11]
Petitioners sought the
amendment of the complaint to conform
to the issues and evidence presented.
In their motion to amend complaint,
petitioners allege that:
During the direct
examination of defendant
bank’s witness Jesus
Venturina, the testimony of
defense witness raised
the issue of the invalidity
of the promissory notes
and the real estate
mortgage and that the
pleadings in this case, the
complaint, be amended to
conform to the issues
raised and the evidence
presented;
> The trial court granted the motion and admitted the
Amended Complaint.
> The Court of Appeals, however, ruled that the trial
court should not have admitted the Amended
Complaint because it altered petitioners’ cause of
action. Apparently, the Court of Appeals treated
petitioners’ amendment of the complaint as one
involving amendments after the case is set for hearing
under Section 3, Rule 10 of the Rules of Court, which
is not however applicable to the present case.
Hence, the herein petition filed.
ISSUE:
WON the trial court erred in admitting petitioners’
amended complaint;
WON the trial court erred in nullifying the promissory
notes, the real estate mortgage, and its extrajudicial
foreclosure.
RULING:
 The trial court cannot be faulted for admitting
the amended complaint as it had the
discretion to do so.
However, whether the evidence introduced by
respondent, indeed, supported the finding that the
promissory notes, the real estate mortgage and the
foreclosure sale, are invalid, is a different matter
altogether.
The amendment of the complaint was made pursuant
to Section 5, Rule 10 of the Rules of Court, governing
amendment of pleadings to conform to evidence, to
wit:
SEC. 5. Amendment to conform to or authorize
presentation of evidence .—When issues not raised
by the pleadings are tried by express or implied
consent of the parties, they shall be treated in all
respects, as if they had been raised in the pleadings.
Such amendment of the pleadings as may be
necessary to cause them to conform to the evidence
and to raise these issues may be made upon motion
of any party at any time, even after judgment; but
failure so to amend does not affect the result of the
trial of these issues. If evidence is objected to at the
trial on the ground that it is not within the issues made
by the pleadings, the court may allow the pleadings to
be amended and shall do so freely when the
presentation of the merits of the action will be
subserved thereby and the objecting party fails to
satisfy the court that the admission of such evidence
would prejudice him in maintaining his action or
defense upon the merits. The court may grant a
continuance to enable the objecting party to meet
such evidence.
In Mercader vs. Development Bank of the Phils.
(Cebu Branch),[21]
the Court explained that the foregoing provision
envisions two scenarios –
first, when evidence is introduced on an issue not
alleged in the pleadings and no objection was
interjected and
second, when evidence is offered on an issue not
alleged in the pleadings but this time an objection was
interpolated.
In cases where an objection is made, the
court may nevertheless admit the evidence
where the adverse party fails to satisfy the
court that the admission of the evidence
would prejudice him in maintaining his
defense upon the merits, and the court may
grant him a continuance to enable him to
meet the new situation created by the
evidence.
As can be gleaned from the records, it was
petitioners’ belief that respondent’s evidence
justified the amendment of their
complaint. The trial court agreed thereto and
admitted the amended complaint. On this
score, it should be noted that courts are
given the discretion to allow amendments of
pleadings to conform to the evidence
presented during the trial.
In Bank of America, NT and SA vs. American Realty
Corporation, the Court stated:
There have been instances where the Court has held
that even without the necessary amendment, the
amount proved at the trial may be validly awarded,
In Tuazon v. Bolanos (95 Phil. 106), where we said
that if the facts shown entitled plaintiff to relief other
than that asked for, no amendment to the complaint
was necessary, especially where defendant had
himself raised the point on which recovery was
based.The appellate court could treat the pleading as
amended to conform to the evidence although the
pleadings were actually not amended. Amendment is
also unnecessary when only clerical error or non
substantial matters are involved, as we held in Bank
of the Philippine Islands vs. Laguna (48 Phil. 5). In
Co Tiamco vs. Diaz (75 Phil. 672), we stressed that
the rule on amendment need not be applied rigidly,
particularly where no surprise or prejudice is caused
the objecting party. And in the recent case of
National Power Corporation vs. Court of Appeals (113
SCRA 556), we held that where there is a variance in
the defendant’s pleadings and the evidence adduced
by it at the trial, the Court may treat the pleading as
amended to conform with the evidence.
 The Court of Appeals disagreed with the trial
court and held that there was no novation,
hence, the promissory notes and the real
estate mortgage are valid and binding.
The Supreme Court agree with the appellate
court.
Novation is the extinguishment of an obligation by the
substitution or change of the obligation by a
subsequent one which extinguishes or modifies the
first, either by changing the object or principal
conditions, or, by substituting another in place of the
debtor, or by subrogating a third person in the rights
of the creditor.[27] In order for novation to take place,
the concurrence of the following requisites is
indispensable:[28]
1. there must be a previous valid obligation,
2. there must be an agreement of the parties
concerned to a new contract,
3. there must be the extinguishment of the old
contract, and
4. there must be the validity of the new contract.
All these requisites are patently lacking in
this case.
In the first place, there is no new obligation that
supposedly novated the promissory notes or the real
estate mortgage, or a pre-existing obligation that was
novated by the promissory notes and the real estate
mortgage.
What transpired was an application for loan was filed
by plaintiffs with Credit Manila in an amount greater
than the P2 million eventually granted. This loan
application was endorsed to defendant Savings Bank
of Manila, processed by the latter and eventually
approved by it in the amount of P2 million.
Petitioner Yuseco being himself a banker, cannot
pretend to have been unaware of banking procedures
that normally recognize a “loan application” as just
that, a mere application. Only upon the bank’s
approval of the loan application in the amount and
under such terms it deems viable and acceptable, that
a binding and effective loan agreement comes into
existence. Without any such first or original “loan
agreement” as approved in the amount and under
specified terms by the bank, there can be nothing
whatsoever that can be subsequently novated.
The promissory notes signed by Yuseco were
respondent Savings Bank’s promissory notes, and the
real estate mortgage was likewise respondent
Savings Bank’s standard real estate mortgage
form. Obviously, this case is an attempt by petitioners
to extricate themselves from their obligations; but they
cannot be allowed to have their cake and eat it, too.
Rule 10, Section 5. Amendment to conform to or
authorize presentation of evidence. — When issues
not raised by the pleadings are tried with the express
or implied consent of the parties they shall be treated
in all respects as if they had been raised in the
pleadings. Such amendment of the pleadings as may
be necessary to cause them to conform to the
evidence and to raise these issues may be made
upon motion of any party at any time, even after
judgment; but failure to amend does not effect the
result of the trial of these issues. If evidence is
objected to at the trial on the ground that it is not
within the issues made by the pleadings, the court
may allow the pleadings to be amended and shall do
so with liberality if the presentation of the merits of the
action and the ends of substantial justice will be
subserved thereby. The court may grant a
continuance to enable the amendment to be made.
G.R. No. 172825 October 11, 2012
SPOUSES MINIANO B. DELA CRUZ and LETA L.
DELA CRUZ, Petitioners,
vs.
ANA MARIE CONCEPCION, Respondent.
Facts: A petition for review on certiorari under Rule
45 of the Rules of Court was filed by petitioners
spouses Miniano B. Dela Cruz and Leta L. Dela Cruz
against respondent Ana Marie Concepcion on the
decision of the Court of Appeals (CA) dated March 31,
2005 and Resolution dated May 24, 2006 in CA-G.R.
CV No. 83030.
On March 25, 1996, petitioners (as vendors)
entered into a Contract to Sell with respondent (as
vendee) involving a house and lot in Cypress St.,
Phase I, Town and Country Executive Village, Antipolo
City for a consideration of P2,000,000.00 subject to
the following terms and conditions:
a) That an earnest money of P100,000.00
shall be paid immediately;
b) That a full down payment of Four Hundred
Thousand Pesos (P400,000.00) shall be paid
on February 29, 1996;
c) That Five Hundred Thousand Pesos
(P500,000.00) shall be paid on or before May
5, 1996; and
d) That the balance of One Million Pesos
(P1,000,000.00) shall be paid on installment
with interest of Eighteen Percent (18%) per
annum or One and a half percent (1-1/2 %)
interest per month, based on the diminishing
balance, compounded monthly, effective May
6, 1996. The interest shall continue to run
until the whole obligation shall have been
fully paid. The whole One Million Pesos shall
be paid within three years from May 6, 1996;
e) That the agreed monthly amortization of
Fifty Thousand Pesos (P50,000.00), principal
and interest included, must be paid to the
Vendors, without need of prior demand, on or
before May 6, 1996, and every month
thereafter. Failure to pay the monthly
amortization on time, a penalty equal to Five
Percent (5%) of the amount due shall be
imposed, until the account is updated. In
addition, a penalty of One Hundred Pesos
per day shall be imposed until the account is
updated;
f) That after receipt of the full payment, the
 Vendors shall execute the necessary
Absolute Deed of Sale covering the house
and lot mentioned above x x x
Thereon, Respondent made the following
payments, to wit:
(1) P500,000.00 by way of
downpayment;
(2) P500,000.00 on May 30, 1996;
(3) P500,000.00 paid on January
22, 1997; and
(4) P500,000.00 bounced check
dated June 30, 1997 which was subsequently
replaced by another check of the same amount,
dated July 7, 1997.
Respondent was, therefore, able to pay a
total of P2,000,000.00.
Before respondent issued the P500,000.00
replacement check, she told petitioners that based on
the computation of her accountant as of July 6, 1997,
her unpaid obligation which includes interests and
penalties was only P200,000.00. Petitioners agreed
with respondent and said "if P200,000.00 is the
correct balance, it is okay with us."
Meanwhile, the title to the property was
transferred to respondent. Petitioners later reminded
respondent to pay P209,000.00 within three months.
They claimed that the said amount remained unpaid,
despite the transfer of the title to the property to
respondent. Several months later, petitioners made
further demands stating the supposed correct
computation of respondent’s liabilities. Despite
repeated demands, petitioners failed to collect the
amounts they claimed from respondent.
Hence, the Complaint for Sum of Money
With Damages filed with the Regional Trial Court
(RTC) of Antipolo, Rizal. The case was docketed as
Civil Case No. 98-4716.
In her Answer with Compulsory
Counterclaim, respondent claimed that her unpaid
obligation to petitioners is only P200,000.00 as earlier
confirmed by petitioners and not P487,384.15 as later
alleged in the complaint. Respondent thus prayed for
the dismissal of the complaint. By way of
counterclaim, respondent prayed for the payment of
moral damages and attorney’s fees. During the
presentation of the parties’ evidence, in addition to
documents showing the statement of her paid
obligations, respondent presented a receipt
purportedly indicating payment of the remaining
balance of P200,000.00 to Adoracion Losloso
(Losloso) who allegedly received the same on behalf
of petitioners.
On March 8, 2004, the RTC rendered a
Decision in favor of respondent, the dispositive
portion of which reads:
WHEREFORE, premises considered, this
case is hereby DISMISSED. The plaintiff is hereby
ordered to pay the defendant’s counterclaim,
amounting to wit:
a) P300,000 as moral damages; and
b) P100,000 plus P2,000 per court
appearance as attorney’s fees.
SO ORDERED.
The RTC noted that the evidence formally
offered by petitioners have not actually been marked
as none of the markings were recorded. Thus, it found
no basis to grant their claims, especially since the
amount claimed in the complaint is different from that
testified to. The court, on the other hand, granted
respondent’s counterclaim.
On appeal, the CA affirmed the decision with
modification by deleting the award of moral damages
and attorney’s fees in favor of respondent. It agreed
with the RTC that the evidence presented by
petitioners cannot be given credence in determining
the correct liability of respondent. Considering that the
purchase price had been fully paid by respondent
ahead of the scheduled date agreed upon by the
parties, petitioners were not awarded the excessive
penalties and interests. The CA thus maintained that
respondent’s liability is limited to P200,000.00 as
claimed by respondent and originally admitted by
petitioners. This amount, however, had already been
paid by respondent and received by petitioners’
representative. Finally, the CA pointed out that the
RTC did not explain in its decision why moral
damages and attorney’s fees were awarded.
Considering also that bad faith cannot be attributed to
petitioners when they instituted the collection suit, the
CA deleted the grant of their counterclaims.
Aggrieved, petitioners come before the Court
in this petition for review on certiorari under Rule 45 of
the Rules of Court.
Issue: WON the failure of a party to amend a
pleading to conform to the evidence adduced during
trial will preclude adjudication by the court on the
basis of such evidence which may embody new
issues not raised in the pleadings.
Ruling: Invoking the rule on judicial admission,
petitioners insist that respondent admitted in her
Answer with Compulsory Counterclaim that she had
paid only a total amount of P2 million and that her
unpaid obligation amounts to P200,000.00. They thus
maintain that the RTC and the CA erred in concluding
that said amount had already been paid by
respondent. Petitioners add that respondent’s total
liability as shown in the latter’s statement of account
was erroneously computed for failure to compound
the monthly interest agreed upon. Petitioners also
claim that the RTC and the CA erred in giving
credence to the receipt presented by respondent to
show that her unpaid obligation had already been
paid having been allegedly given to a person who was
not armed with authority to receive payment.
The petition is without merit.
It is undisputed that the parties entered into
a contract to sell a house and lot for a total
consideration of P2 million. Considering that the
property was payable in installment, they likewise
agreed on the payment of interest as well as penalty
in case of default. It is likewise settled that respondent
was able to pay the total purchase price of P2 million
ahead of the agreed term. Afterwhich, they agreed on
the remaining balance by way of interest and
penalties which is P200,000.00. Considering that the
term of payment was not strictly followed and the
purchase price had already been fully paid by
respondent, the latter presented to petitioners her
computation of her liabilities for interests and
penalties which was agreed to by petitioners.
Petitioners also manifested their conformity to the
statement of account prepared by respondent.
In paragraph (9) of petitioners’ Complaint,
they stated that:
9) That the Plaintiffs answered the Defendant as
follows: "if P200,000 is the correct balance, it is okay
with us." x x x
But in paragraph (17) thereof, petitioners
claimed that defendant’s outstanding liability as of
November 6, 1997 was P487,384.15. Different
amounts, however, were claimed in their demand
letter and in their testimony in court.
With the foregoing factual antecedents,
petitioners cannot be permitted to assert a different
computation of the correct amount of respondent’s
liability.
It is noteworthy that in answer to petitioners’
claim of her purported unpaid obligation, respondent
admitted in her Answer with Compulsory
Counterclaim that she paid a total amount of P2
million representing the purchase price of the subject
house and lot. She then manifested to petitioners and
conformed to by respondent that her only balance
was P200,000.00. Nowhere in her Answer did she
allege the defense of payment. However, during the
presentation of her evidence, respondent submitted a
receipt to prove that she had already paid the
remaining balance. Both the RTC and the CA
concluded that respondent had already paid the
remaining balance of P200,000.00. Petitioners now
assail this, insisting that the court should have
maintained the judicial admissions of respondent in
her Answer with Compulsory Counterclaim, especially
as to their agreed stipulations on interests and
penalties as well as the existence of outstanding
obligations.
It is, thus, necessary to discuss the effect of
failure of respondent to plead payment of its
obligations.
Section 1, Rule 9 of the Rules of Court
states that "defenses and objections not pleaded
either in a motion to dismiss or in the answer are
deemed waived." Hence, respondent should have
been barred from raising the defense of payment of
the unpaid P200,000.00. However, Section 5, Rule
10 of the Rules of Court allows the amendment to
conform to or authorize presentation of evidence, to
wit:
Section 5. Amendment to
conform to or authorize presentation of evidence.
– When issues not raised by the pleadings are
tried with the express or implied consent of the
parties, they shall be treated in all respects as if they
had been raised in the pleadings. Such
amendment of the pleadings as may be necessary to
cause them to conform to the evidence and to
raise these issues may be made upon motion of any
party at any time, even after judgment; but failure to
amend does not affect the result of the trial
of these issues. If evidence is objected to at the trial
on the ground that it is not within the issues made by
the pleadings, the court may allow the pleadings to be
amended and shall do so with liberality if the
presentation of the merits of the action and the ends
of substantial justice will be subserved thereby. The
court may grant a continuance to enable the
amendment to be made.
The foregoing provision envisions two
scenarios, namely, when evidence is introduced in an
issue not alleged in the pleadings and no objection
was interjected; and when evidence is offered on an
issue not alleged in the pleadings but this time an
objection was raised. When the issue is tried without
the objection of the parties, it should be treated in all
respects as if it had been raised in the pleadings. On
the other hand, when there is an objection, the
evidence may be admitted where its admission will
not prejudice him.
Thus, while respondent judicially admitted in
her Answer that she only paid P2 million and that she
still owed petitioners P200,000.00, respondent
claimed later and, in fact, submitted an evidence to
show that she already paid the whole amount of her
unpaid obligation. It is noteworthy that when
respondent presented the evidence of payment,
petitioners did not object thereto. When the receipt
was formally offered as evidence, petitioners did not
manifest their objection to the admissibility of said
document on the ground that payment was not an
issue. Apparently, petitioners only denied receipt of
said payment and assailed the authority of Losloso to
receive payment. Since there was an implied consent
on the part of petitioners to try the issue of payment,
even if no motion was filed and no amendment of the
pleading has been ordered, the RTC cannot be
faulted for admitting respondent’s testimonial and
documentary evidence to prove payment.
As stressed by the Court in Royal Cargo
Corporation v. DFS Sports Unlimited, Inc.,
The failure of a party to amend a pleading to conform
to the evidence adduced during trial does not
preclude adjudication by the court on the basis of
such evidence which may embody new issues not
raised in the pleadings. x x x Although, the pleading
may not have been amended to conform to the
evidence submitted during trial, judgment may
nonetheless be rendered, not simply on the basis of
the issues alleged but also on the issues discussed
and the assertions of fact proved in the course of the
trial. The court may treat the pleading as if it had been
amended to conform to the evidence, although it had
not been actually amended. x x x Clearly, a court may
rule and render judgment on the basis of the evidence
before it even though the relevant pleading had not
been previously amended, so long as no surprise or
prejudice is thereby caused to the adverse party. Put
a little differently, so long as the basic requirements of
fair play had been met, as where the litigants were
given full opportunity to support their respective
contentions and to object to or refute each other's
evidence, the court may validly treat the pleadings as
if they had been amended to conform to the evidence
and proceed to adjudicate on the basis of all the
evidence before it.
To be sure, petitioners were given ample
opportunity to refute the fact of and present evidence
to prove payment.
With the evidence presented by the
contending parties, the more important question to
resolve is whether or not respondent’s obligation had
already been extinguished by payment.
We rule in the affirmative as aptly held by the
RTC and the CA.
Respondent’s obligation consists of payment
of a sum of money. In order to extinguish said
obligation, payment should be made to the proper
person as set forth in Article 1240 of the Civil Code, to
wit:
Article 1240. Payment shall be
made to the person in whose favor the obligation has
been constituted, or his successor in interest, or
any person authorized to receive it.
The Court explained in Cambroon v. City of
Butuan, cited in Republic v. De Guzman, to whom
payment should be made in order to extinguish an
obligation:
Payment made by the debtor to the person
of the creditor or to one authorized by him or by the
law to receive it extinguishes the obligation. When
payment is made to the wrong party, however, the
obligation is not extinguished as to the creditor who is
without fault or negligence even if the debtor acted in
utmost good faith and by mistake as to the person of
the creditor or through error induced by fraud of a
third person.
In general, a payment in order to be effective
to discharge an obligation, must be made to the
proper person. Thus, payment must be made to the
obligee himself or to an agent having authority,
express or implied, to receive the particular payment.
Payment made to one having apparent authority to
receive the money will, as a rule, be treated as though
actual authority had been given for its receipt.
Likewise, if payment is made to one who by law is
authorized to act for the creditor, it will work a
discharge. The receipt of money due on a judgment
by an officer authorized by law to accept it will,
therefore, satisfy the debt.
Admittedly, payment of the remaining
balance of P200,000.00 was not made to the creditors
themselves. Rather, it was allegedly made to a certain
Losloso. Respondent claims that Losloso was the
authorized agent of petitioners, but the latter dispute
it.
Losloso’s authority to receive payment was
embodied in petitioners’ Letter addressed to
respondent, dated August 7, 1997, where they
informed respondent of the amounts they advanced
for the payment of the 1997 real estate taxes. In said
letter, petitioners reminded respondent of her
remaining balance, together with the amount of taxes
paid. Taking into consideration the busy schedule of
respondent, petitioners advised the latter to leave the
payment to a certain "Dori" who admittedly is Losloso,
or to her trusted helper. This is an express authority
given to Losloso to receive payment.
Moreover, as correctly held by the CA:
Furthermore, that Adoracion Losloso was
indeed an agent of the appellant spouses is borne out
by the following admissions of plaintiff-appellant Atty.
Miniano dela Cruz, to wit:
Q: You would agree with me that
you have authorized this Doiry Losloso to receive
payment of whatever balance is due you
coming from Ana Marie Concepcion, that is correct?
A: In one or two times but not total
authority, sir.
Q: Yes, but you have authorized her
to receive payment?
A: One or two times, yes
Thus, as shown in the receipt signed by
petitioners’ agent and pursuant to the authority
granted by petitioners to Losloso, payment made to
the latter is deemed payment to petitioners. We find
no reason to depart from the RTC and the CA
conclusion that payment had already been made and
that it extinguished respondent's obligations.
WHEREFORE, premises considered, the
petition is DENIED for lack of merit. The Court of
Appeals Decision dated March 31, 2005 and
Resolution dated May 24, 2006 in CA-G.R. CV No.
83030, are AFFIRMED.
SO ORDERED.
Rule 10, Section 5. Amendment to conform to or
authorize presentation of evidence. — When issues
not raised by the pleadings are tried with the express
or implied consent of the parties they shall be treated
in all respects as if they had been raised in the
pleadings. Such amendment of the pleadings as may
be necessary to cause them to conform to the
evidence and to raise these issues may be made
upon motion of any party at any time, even after
judgment; but failure to amend does not effect the
result of the trial of these issues. If evidence is
objected to at the trial on the ground that it is not
within the issues made by the pleadings, the court
may allow the pleadings to be amended and shall do
so with liberality if the presentation of the merits of the
action and the ends of substantial justice will be
subserved thereby. The court may grant a
continuance to enable the amendment to be made.
G.R. No. 172825 October 11, 2012
SPOUSES MINIANO B. DELA CRUZ and LETA L.
DELA CRUZ, Petitioners,
vs.
ANA MARIE CONCEPCION, Respondent.
Facts: A petition for review on certiorari under Rule
45 of the Rules of Court was filed by petitioners
spouses Miniano B. Dela Cruz and Leta L. Dela Cruz
against respondent Ana Marie Concepcion on the
decision of the Court of Appeals (CA) dated March 31,
2005 and Resolution dated May 24, 2006 in CA-G.R.
CV No. 83030.
On March 25, 1996, petitioners (as vendors)
entered into a Contract to Sell with respondent (as
vendee) involving a house and lot in Cypress St.,
Phase I, Town and Country Executive Village, Antipolo
City for a consideration of P2,000,000.00 subject to
the following terms and conditions:
a) That an earnest money of P100,000.00
shall be paid immediately;
b) That a full down payment of Four Hundred
Thousand Pesos (P400,000.00) shall be paid
on February 29, 1996;
c) That Five Hundred Thousand Pesos
(P500,000.00) shall be paid on or before May
5, 1996; and
d) That the balance of One Million Pesos
(P1,000,000.00) shall be paid on installment
with interest of Eighteen Percent (18%) per
annum or One and a half percent (1-1/2 %)
interest per month, based on the diminishing
balance, compounded monthly, effective May
6, 1996. The interest shall continue to run
until the whole obligation shall have been
fully paid. The whole One Million Pesos shall
be paid within three years from May 6, 1996;
e) That the agreed monthly amortization of
Fifty Thousand Pesos (P50,000.00), principal
and interest included, must be paid to the
Vendors, without need of prior demand, on or
before May 6, 1996, and every month
thereafter. Failure to pay the monthly
amortization on time, a penalty equal to Five
Percent (5%) of the amount due shall be
imposed, until the account is updated. In
addition, a penalty of One Hundred Pesos
per day shall be imposed until the account is
updated;
f) That after receipt of the full payment, the
Vendors shall execute the necessary
Absolute Deed of Sale covering the house
and lot mentioned above x x x
Thereon, Respondent made the following
payments, to wit:
(1) P500,000.00 by way of
downpayment;
(2) P500,000.00 on May 30, 1996;
(3) P500,000.00 paid on January
22, 1997; and
(4) P500,000.00 bounced check
dated June 30, 1997 which was subsequently
replaced by another check of the same amount,
dated July 7, 1997.
Respondent was, therefore, able to pay a
total of P2,000,000.00.
Before respondent issued the P500,000.00
replacement check, she told petitioners that based on
the computation of her accountant as of July 6, 1997,
her unpaid obligation which includes interests and
penalties was only P200,000.00. Petitioners agreed
with respondent and said "if P200,000.00 is the
correct balance, it is okay with us."
Meanwhile, the title to the property was
transferred to respondent. Petitioners later reminded
respondent to pay P209,000.00 within three months.
They claimed that the said amount remained unpaid,
despite the transfer of the title to the property to
respondent. Several months later, petitioners made
further demands stating the supposed correct
computation of respondent’s liabilities. Despite
repeated demands, petitioners failed to collect the
amounts they claimed from respondent.
Hence, the Complaint for Sum of Money
With Damages filed with the Regional Trial Court
(RTC) of Antipolo, Rizal. The case was docketed as
Civil Case No. 98-4716.
In her Answer with Compulsory
Counterclaim, respondent claimed that her unpaid
obligation to petitioners is only P200,000.00 as earlier
confirmed by petitioners and not P487,384.15 as later
alleged in the complaint. Respondent thus prayed for
the dismissal of the complaint. By way of
counterclaim, respondent prayed for the payment of
moral damages and attorney’s fees. During the
presentation of the parties’ evidence, in addition to
documents showing the statement of her paid
obligations, respondent presented a receipt
purportedly indicating payment of the remaining
balance of P200,000.00 to Adoracion Losloso
(Losloso) who allegedly received the same on behalf
of petitioners.
On March 8, 2004, the RTC rendered a
Decision in favor of respondent, the dispositive
portion of which reads:
WHEREFORE, premises considered, this
case is hereby DISMISSED. The plaintiff is hereby
ordered to pay the defendant’s counterclaim,
amounting to wit:
a) P300,000 as moral damages; and
b) P100,000 plus P2,000 per court
appearance as attorney’s fees.
SO ORDERED.
The RTC noted that the evidence formally
offered by petitioners have not actually been marked
as none of the markings were recorded. Thus, it found
no basis to grant their claims, especially since the
amount claimed in the complaint is different from that
testified to. The court, on the other hand, granted
respondent’s counterclaim.
On appeal, the CA affirmed the decision with
modification by deleting the award of moral damages
and attorney’s fees in favor of respondent. It agreed
with the RTC that the evidence presented by
petitioners cannot be given credence in determining
the correct liability of respondent. Considering that the
purchase price had been fully paid by respondent
ahead of the scheduled date agreed upon by the
parties, petitioners were not awarded the excessive
penalties and interests. The CA thus maintained that
respondent’s liability is limited to P200,000.00 as
claimed by respondent and originally admitted by
petitioners. This amount, however, had already been
paid by respondent and received by petitioners’
representative. Finally, the CA pointed out that the
RTC did not explain in its decision why moral
damages and attorney’s fees were awarded.
Considering also that bad faith cannot be attributed to
petitioners when they instituted the collection suit, the
CA deleted the grant of their counterclaims.
Aggrieved, petitioners come before the Court
in this petition for review on certiorari under Rule 45 of
the Rules of Court.
Issue: WON the failure of a party to amend a
pleading to conform to the evidence adduced during
trial will preclude adjudication by the court on the
basis of such evidence which may embody new
issues not raised in the pleadings.
Ruling: Invoking the rule on judicial admission,
petitioners insist that respondent admitted in her
Answer with Compulsory Counterclaim that she had
paid only a total amount of P2 million and that her
unpaid obligation amounts to P200,000.00. They thus
maintain that the RTC and the CA erred in concluding
that said amount had already been paid by
respondent. Petitioners add that respondent’s total
liability as shown in the latter’s statement of account
was erroneously computed for failure to compound
the monthly interest agreed upon. Petitioners also
claim that the RTC and the CA erred in giving
credence to the receipt presented by respondent to
show that her unpaid obligation had already been
paid having been allegedly given to a person who was
not armed with authority to receive payment.
The petition is without merit.
It is undisputed that the parties entered into
a contract to sell a house and lot for a total
consideration of P2 million. Considering that the
property was payable in installment, they likewise
agreed on the payment of interest as well as penalty
in case of default. It is likewise settled that respondent
was able to pay the total purchase price of P2 million
ahead of the agreed term. Afterwhich, they agreed on
the remaining balance by way of interest and
penalties which is P200,000.00. Considering that the
term of payment was not strictly followed and the
purchase price had already been fully paid by
respondent, the latter presented to petitioners her
computation of her liabilities for interests and
penalties which was agreed to by petitioners.
Petitioners also manifested their conformity to the
statement of account prepared by respondent.
In paragraph (9) of petitioners’ Complaint,
they stated that:
9) That the Plaintiffs answered the Defendant as
follows: "if P200,000 is the correct balance, it is okay
with us." x x x
But in paragraph (17) thereof, petitioners
claimed that defendant’s outstanding liability as of
November 6, 1997 was P487,384.15. Different
amounts, however, were claimed in their demand
letter and in their testimony in court.
With the foregoing factual antecedents,
petitioners cannot be permitted to assert a different
computation of the correct amount of respondent’s
liability.
 It is noteworthy that in answer to petitioners’
claim of her purported unpaid obligation, respondent
admitted in her Answer with Compulsory
Counterclaim that she paid a total amount of P2
million representing the purchase price of the subject
house and lot. She then manifested to petitioners and
conformed to by respondent that her only balance
was P200,000.00. Nowhere in her Answer did she
allege the defense of payment. However, during the
presentation of her evidence, respondent submitted a
receipt to prove that she had already paid the
remaining balance. Both the RTC and the CA
concluded that respondent had already paid the
remaining balance of P200,000.00. Petitioners now
assail this, insisting that the court should have
maintained the judicial admissions of respondent in
her Answer with Compulsory Counterclaim, especially
as to their agreed stipulations on interests and
penalties as well as the existence of outstanding
obligations.
It is, thus, necessary to discuss the effect of
failure of respondent to plead payment of its
obligations.
Section 1, Rule 9 of the Rules of Court
states that "defenses and objections not pleaded
either in a motion to dismiss or in the answer are
deemed waived." Hence, respondent should have
been barred from raising the defense of payment of
the unpaid P200,000.00. However, Section 5, Rule
10 of the Rules of Court allows the amendment to
conform to or authorize presentation of evidence, to
wit:
Section 5. Amendment to
conform to or authorize presentation of evidence.
– When issues not raised by the pleadings are
tried with the express or implied consent of the
parties, they shall be treated in all respects as if they
had been raised in the pleadings. Such
amendment of the pleadings as may be necessary to
cause them to conform to the evidence and to
raise these issues may be made upon motion of any
party at any time, even after judgment; but failure to
amend does not affect the result of the trial
of these issues. If evidence is objected to at the trial
on the ground that it is not within the issues made by
the pleadings, the court may allow the pleadings to be
amended and shall do so with liberality if the
presentation of the merits of the action and the ends
of substantial justice will be subserved thereby. The
court may grant a continuance to enable the
amendment to be made.
The foregoing provision envisions two
scenarios, namely, when evidence is introduced in an
issue not alleged in the pleadings and no objection
was interjected; and when evidence is offered on an
issue not alleged in the pleadings but this time an
objection was raised. When the issue is tried without
the objection of the parties, it should be treated in all
respects as if it had been raised in the pleadings. On
the other hand, when there is an objection, the
evidence may be admitted where its admission will
not prejudice him.
Thus, while respondent judicially admitted in
her Answer that she only paid P2 million and that she
still owed petitioners P200,000.00, respondent
claimed later and, in fact, submitted an evidence to
show that she already paid the whole amount of her
unpaid obligation. It is noteworthy that when
respondent presented the evidence of payment,
petitioners did not object thereto. When the receipt
was formally offered as evidence, petitioners did not
manifest their objection to the admissibility of said
document on the ground that payment was not an
issue. Apparently, petitioners only denied receipt of
said payment and assailed the authority of Losloso to
receive payment. Since there was an implied consent
on the part of petitioners to try the issue of payment,
even if no motion was filed and no amendment of the
pleading has been ordered, the RTC cannot be
faulted for admitting respondent’s testimonial and
documentary evidence to prove payment.
As stressed by the Court in Royal Cargo
Corporation v. DFS Sports Unlimited, Inc.,
The failure of a party to amend a pleading to conform
to the evidence adduced during trial does not
preclude adjudication by the court on the basis of
such evidence which may embody new issues not
raised in the pleadings. x x x Although, the pleading
may not have been amended to conform to the
evidence submitted during trial, judgment may
nonetheless be rendered, not simply on the basis of
the issues alleged but also on the issues discussed
and the assertions of fact proved in the course of the
trial. The court may treat the pleading as if it had been
amended to conform to the evidence, although it had
not been actually amended. x x x Clearly, a court may
rule and render judgment on the basis of the evidence
before it even though the relevant pleading had not
been previously amended, so long as no surprise or
prejudice is thereby caused to the adverse party. Put
a little differently, so long as the basic requirements of
fair play had been met, as where the litigants were
given full opportunity to support their respective
contentions and to object to or refute each other's
evidence, the court may validly treat the pleadings as
if they had been amended to conform to the evidence
and proceed to adjudicate on the basis of all the
evidence before it.
To be sure, petitioners were given ample
opportunity to refute the fact of and present evidence
to prove payment.
With the evidence presented by the
contending parties, the more important question to
resolve is whether or not respondent’s obligation had
already been extinguished by payment.
We rule in the affirmative as aptly held by the
RTC and the CA.
Respondent’s obligation consists of payment
of a sum of money. In order to extinguish said
obligation, payment should be made to the proper
person as set forth in Article 1240 of the Civil Code, to
wit:
Article 1240. Payment shall be
made to the person in whose favor the obligation has
been constituted, or his successor in interest, or
any person authorized to receive it.
The Court explained in Cambroon v. City of
Butuan, cited in Republic v. De Guzman, to whom
payment should be made in order to extinguish an
obligation:
Payment made by the debtor to the person
of the creditor or to one authorized by him or by the
law to receive it extinguishes the obligation. When
payment is made to the wrong party, however, the
obligation is not extinguished as to the creditor who is
without fault or negligence even if the debtor acted in
utmost good faith and by mistake as to the person of
the creditor or through error induced by fraud of a
third person.
In general, a payment in order to be effective
to discharge an obligation, must be made to the
proper person. Thus, payment must be made to the
obligee himself or to an agent having authority,
express or implied, to receive the particular payment.
Payment made to one having apparent authority to
receive the money will, as a rule, be treated as though
actual authority had been given for its receipt.
Likewise, if payment is made to one who by law is
authorized to act for the creditor, it will work a
discharge. The receipt of money due on a judgment
by an officer authorized by law to accept it will,
therefore, satisfy the debt.
Admittedly, payment of the remaining
balance of P200,000.00 was not made to the creditors
themselves. Rather, it was allegedly made to a certain
Losloso. Respondent claims that Losloso was the
authorized agent of petitioners, but the latter dispute
it.
Losloso’s authority to receive payment was
embodied in petitioners’ Letter addressed to
respondent, dated August 7, 1997, where they
informed respondent of the amounts they advanced
for the payment of the 1997 real estate taxes. In said
letter, petitioners reminded respondent of her
remaining balance, together with the amount of taxes
paid. Taking into consideration the busy schedule of
respondent, petitioners advised the latter to leave the
payment to a certain "Dori" who admittedly is Losloso,
or to her trusted helper. This is an express authority
given to Losloso to receive payment.
Moreover, as correctly held by the CA:
Furthermore, that Adoracion Losloso was
indeed an agent of the appellant spouses is borne out
by the following admissions of plaintiff-appellant Atty.
Miniano dela Cruz, to wit:
Q: You would agree with me that
you have authorized this Doiry Losloso to receive
payment of whatever balance is due you
coming from Ana Marie Concepcion, that is correct?
A: In one or two times but not total
authority, sir.
Q: Yes, but you have authorized her
to receive payment?
A: One or two times, yes
Thus, as shown in the receipt signed by
petitioners’ agent and pursuant to the authority
granted by petitioners to Losloso, payment made to
the latter is deemed payment to petitioners. We find
no reason to depart from the RTC and the CA
conclusion that payment had already been made and
that it extinguished respondent's obligations.
WHEREFORE, premises considered, the
petition is DENIED for lack of merit. The Court of
Appeals Decision dated March 31, 2005 and
Resolution dated May 24, 2006 in CA-G.R. CV No.
83030, are AFFIRMED.
SO ORDERED.
Rule 10 Sec 6 - Supplemental Pleadings
MA. MERCEDES L. BARBA vs LICEO DE CAGA Y
AN UNIVERSITY
G .R. No. 193857 11/28/2012
FACTS:
Petitioner Dr. Ma. Mercedes L. Barba was the Dean
of the College of Physical Therapy of respondent
Liceo de Cagayan University, Inc., a private
educational institution located at Carmen, Cagayan
de Oro City.
Petitioner started working for respondent on July 8,
1993 as medical officer/school physician for a period
of one school year or until March 31, 1994. In July
1994, she was chosen by respondent to be the
recipient of a scholarship grant to pursue a three-year
residency training in Rehabilitation Medicine at the
Veterans Memorial Medical Center (VMMC).
After completing her residency training, petitioner
returned to continue working for respondent. She was
appointed as Acting Dean of the College of Physical
Therapy and at the same time designated as Doctor-
In-Charge of the Rehabilitation Clinic of the Rodolfo
N. Pelaez Hall, City Memorial Hospital.
On June 19, 2002, petitioner’s appointment as
Doctor-In-Charge of the Rehabilitation Clinic was
renewed and she was appointed as Dean of the
College of Physical Therapy by respondent’s
President, Dr. Jose Ma. R. Golez.
Petitioner accepted her appointment and assumed
the position of Dean of the College of Physical
Therapy. In the school year 2003 to 2004, the College
of Physical Therapy suffered a dramatic decline in the
number of enrollees from a total of 1,121 students in
the school year 1995 to 1996 to only 20 students
enrolled for school year 2004-2005.
Due to the low number of enrollees, respondent
decided to freeze the operation of the College of
Physical Therapy indefinitely. Respondent’s President
Dr. Rafaelita Pelaez-Golez wrote petitioner a letter
dated March 16, 2005 informing her that her services
as dean of the said college will end at the close of the
school year. Thereafter, the College of Physical
Therapy ceased operations on March 31, 2005, and
petitioner went on leave without pay starting on April
9, 2005.
Subsequently, respondent’s Executive Vice President,
Dr. Mariano M. Lerin, through Dr. Glory S. Magdale,
respondent’s Vice President for Academic Affairs,
sent petitioner a letter dated April 27, 2005 instructing
petitioner to return to work on June 1, 2005 and report
to Ma. Chona Palomares, the Acting Dean of the
College of Nursing, to receive her teaching load and
assignment as a full-time faculty member in that
department for the school year 2005-2006.
In reply, petitioner informed Dr. Lerin that she had not
committed to teach in the College of Nursing and that
as far as she can recall, her employment is not
dependent on any teaching load. She then requested
for the processing of her separation benefits in view of
the closure of the College of Physical Therapy. She
did not report to Palomares on June 1, 2005.
Petitioner filed a complaint with the Labor Arbiter for
constructive dismissal. LA found that petitioner was
not illegally dismissed because petitioner’s
assignment as full-time professor in the College of
Nursing was not a demotion tantamount to
constructive dismissal.
Petitioner appealed to NLRC, NLRC reversed LA’s
decision holding the petitioner was illegally dismissed.
Respondent, Liceo de Cagayan, filed a motion for
reconsideration but was denied.
Respondent went to the CA on a petition for certiorari
alleging that the NLRC committed grave abuse of
discretion when it declared that petitioner’s transfer to
the College of Nursing as full-time professor but
without diminution of salaries and without loss of
seniority rights amounted to constructive dismissal
because there was a demotion involved in the transfer
and because petitioner was compelled to accept her
new assignment.
Respondent also filed a Supplemental Petition raising
for the first time the issue of lack of jurisdiction of the
Labor Arbiter and the NLRC over the case.
Respondent claimed that a College Dean is a
corporate officer under its by-laws and petitioner was
a corporate officer of respondent since her
appointment was approved by the board of directors.
Respondent posited that petitioner was a corporate
officer since her office was created by the by-laws
and her appointment, compensation, duties and
functions were approved by the board of directors.
Thus, respondent maintained that the jurisdiction over
the case is with the regular courts and not with the
labor tribunals.
In CA’s original decision, it set aside the decision of
the NLRC but did not find merit in the in respondent’s
assertion in its Supplemental Petition that the position
of petitioner as College Dean was a corporate office.
On the issue of alleged lack of jurisdiction, the CA
observed that respondent never raised the issue of
jurisdiction before the Labor Arbiter and the NLRC
and respondent even actively participated in the
proceedings below. Hence, respondent is estopped
from questioning the jurisdiction of the labor tribunals.
Unsatisfied, both petitioner and respondent sought
reconsideration of the CA decision. Petitioner prayed
for the reversal of the ruling that there was no
constructive dismissal. Respondent meanwhile
maintained that the labor tribunals have no jurisdiction
over the case, petitioner being a corporate officer.
On reconsideration, CA set aside its earlier ruling and
held that the position of a College Dean is a corporate
office and therefore the labor tribunals had no
jurisdiction over the complaint for constructive
dismissal. Petitioner filed a motion for reconsideration
but was denied. Hence this petition.
ISSUE:
Whether petitioner was an employee or a corporate
officer of respondent university. Resolution of this
issue resolves the question of whether the appellate
court was correct in ruling that the Labor Arbiter and
the NLRC had no jurisdiction over petitioner’s
complaint for constructive dismissal against
respondent.
HELD:
As a general rule, only questions of law may be
allowed in a petition for review on certiorari.
Considering that the CA reversed its earlier decision
and made a complete turnaround from its previous
ruling, and consequently set aside both the findings of
the Labor Arbiter and the NLRC for allegedly having
been issued without jurisdiction, it is necessary for the
Court to reexamine the records and resolve the
conflicting rulings.
After a careful review and examination of the records,
we find that the CA’s previous ruling that petitioner
was respondent’s employee and not a corporate
officer is supported by the totality of the evidence and
more in accord with law and prevailing jurisprudence.
Corporate officers are elected or appointed by the
directors or stockholders, and are those who are
given that character either by the Corporation Code or
by the corporation’s by-laws. Section 25 of the
Corporation Code enumerates corporate officers as
the president, the secretary, the treasurer and such
other officers as may be provided for in the by-laws.
In Matling Industrial and Commercial Corporation v.
Coros, the phrase “such other officers as may be
provided for in the by-laws” has been clarified.
Undoubtedly, petitioner is not a College Director and
she is not a corporate officer but an employee of
respondent. Applying the four-fold test concerning (1)
the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal; (4)
the employer’s power to control the employee with
respect to the means and methods by which the work
is to be accomplished, it is clear that there exists an
employer-employee relationship between petitioner
and respondent.
Records show that petitioner was appointed to her
position as Dean by Dr. Golez, the university
president and was paid a salary of P32,500 plus
transportation allowance. It was evident that
respondent had the power of control over petitioner as
one of its deans. It was also the university president
who informed petitioner that her services as Dean of
the College of Physical Therapy was terminated
effective March 31, 2005 and she was subsequently
directed to report to the Acting Dean of the College of
Nursing for assignment of teaching load. Thus,
petitioner, being an employee of respondent, her
complaint for illegal/constructive dismissal against
respondent was properly within the jurisdiction of the
Labor Arbiter and the NLRC. Article 217 of the Labor
Code.
Moreover, we agree with the CA’s earlier
pronouncement that since respondent actively
participated in the proceedings before the Labor
Arbiter and the NLRC, it is already estopped from
belatedly raising the issue of lack of jurisdiction. In
this case, respondent filed position papers and other
supporting documents to bolster its defense before
the labor tribunals but in all these pleadings, the issue
of lack of jurisdiction was never raised. It was only in
its Supplemental Petition filed before the CA that
respondent first brought the issue of lack of
jurisdiction. We have consistently held that while
jurisdiction may be assailed at any stage, a party’s
active participation in the proceedings will estop such
party from assailing its jurisdiction. It is an undesirable
practice of a party participating in the proceedings
and submitting his case for decision and then
accepting the judgment, only if favorable, and
attacking it for lack of jurisdiction, when adverse.
Under Section 6, Rule 10 of the 1997 Rules of Civil
Procedure, as
amended, governing supplemental pleadings, the
court “may” admit supplemental pleadings, such as
the supplemental petition filed by respondent before
the appellate court, but the admission of these
pleadings remains in the sound discretion of the court.
Nevertheless, we have already found no credence in
respondent’s claim that petitioner is a corporate
officer, consequently, the alleged lack of jurisdiction
asserted by respondent in the supplemental petition is
bereft of merit.
Petition is granted
AIR ADS INCORPORATED, Petitioner,
vs.
TAGUM AGRICULTURAL DEVELOPMENT
CORPORATION (TADECO), Respondent
Facts:
Assailed via petition for review on certiorari are the
two resolutions promulgated on February 24,
20031 and November 13, 2003,2 whereby the Court of
Appeals (CA) respectively dismissed the petitioner’s
petition for certiorari and prohibition, and denied the
petitioner’s motion for reconsideration of the
dismissal.
This case stemmed from Civil Case No. 27802-2000
of the Regional Trial Court, Branch 15, in Davao City
(RTC) entitled Elva O. Pormento v. Tagum
Agricultural Development Corporation and Edwin
Yap, an action to recover damages for the death of
the plaintiff’s husband and attorney’s fees.
On April 6, 2000, respondent Tagum Agricultural
Development Corporation (TADECO), as defendant,
filed through counsel ACCRA Law Office an answer
with compulsory counterclaims and motion for leave
to file third party complaint,3 impleading petitioner Air
Ads, Inc. and Pioneer Insurance and Surety
Corporation (Pioneer) as third-party defendants. The
RTC admitted TADECO’s third party complaint on
April 14, 2000.4 On June 16, 2000, however, ACCRA
Law Office, upon realizing that Pioneer was a client of
its Makati Office, filed a notice of dismissal without
prejudice to third party complaint only against Pioneer
Insurance and Surety Corporation.5
Ten days later, TADECO filed through another
counsel Dominguez Paderna & Tan Law Offices
(Dominguez Law Office) a motion to withdraw notice
of dismissal without prejudice of third party complaint
only against Pioneer Insurance & Surety Corporation
or motion for reconsideration,6 alleging that the notice
of dismissal without prejudice etc. filed by ACCRA
Law Office had been made without its consent. On
June 29, 2000, the RTC granted the notice of
dismissal without prejudice etc.7
Nearly a month later, the RTC also granted the
motion to withdraw notice of dismissal without
prejudice of third party complaint only against Pioneer
Insurance & Surety Corporation or motion for
reconsideration, and set aside the dismissal of the
third party complaint against Pioneer.
Following the grant of its motion to withdraw the
notice of dismissal etc., TADECO, still through
Dominguez Law Office, filed a motion to admit third
party complaint in substitution of the third party
complaint filed by the third party plaintiff’s former
counsel,8 explaining that the substitute third party
complaint was being filed to avoid putting ACCRA
Law Office in an awkward situation, and to avoid the
appearance that new counsel Dominguez Law Office
was merely adopting the previous third party
complaint.
It is noted that the substitute third party complaint
contained allegations pertaining only to Pioneer as
third party defendant.
On August 28, 2000, the RTC granted the motion to
admit third party complaint in substitution of the third
party complaint filed by the third party plaintiff’s former
counsel,
Air Ads then filed a motion to dismiss against the third
party complaint,11 averring that it had been dropped
as third party defendant under TADECO’s substitute
third party complaint; and arguing that the filing of the
substitute third party complaint had the effect of
entirely superseding the original third party complaint,
which should consequently be stricken out from the
records.
On July 25, 2002, the RTC denied Air Ads’ motion to
dismiss,13 holding that the notice of dismissal etc. filed
by ACCRA Law Office did not have the effect of
dropping Air Ads as a third party defendant due to the
notice of dismissal etc. being expressly restrictive
about the dismissal being only with respect to
Pioneer.
Air Ads filed a motion for reconsideration,14 but the
RTC denied the motion for reconsideration on
September 20, 2002.
After receiving the order of denial on October 4,
2002,16 Air Ads brought a petition for certiorari and
prohibition docketed in the CA (C.A.-G.R. SP No.
73418).17 However, on November 13, 2002, the CA
dismissed the petition for failure to attach the board
resolution designating the petitioner’s duly authorized
representative to sign the verification and certification
against forum shopping in its behalf.18
Instead of filing a motion for reconsideration, Air Ads
filed a new petition for certiorari and prohibition on
December 2, 2002 in the CA (C.A.-G.R. SP No.
74152),19 already including the proper board
certificate.
While C.A.-G.R. SP No. 74152 was pending, the CA’s
resolution dismissing C.A.-G.R. SP No. 73418
became final and executory on December 10, 2002
ACCORDINGLY, the petition was DENIED due
course and DISMISSED and so was the Motion for
Reconsideration.
Issue/s:
1. Whether or not the filing of an identical
petition following the dismissal of the first
petition on the grounds of defective and
insufficient verification and certification
constitute forum shopping.
2. Whether or not a substitute third party
complaint have the effect of superseding the
original third party complaint.
Held:
1. No, refilling of the petition for certiorari did
not constitute forum shopping or res judicata.
Section 5, Rule 7 of the 1997 Rules of Civil
Procedure, defines the effect of the failure to
comply with the requirements for the
certification against forum shopping, viz:
Section 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. (n)
The first sentence of the second paragraph
expressly provides that the dismissal of a
petition due to failure to comply with the
requirements therein is without
prejudice unless otherwise provided by the
court. Accordingly, the plaintiff or petitioner is
not precluded from filing a similar action in
order to rectify the defect in the certification
where the court states in its order that the
action is dismissed due to such defect,
unless the court directs that the dismissal is
with prejudice, in which case the plaintiff is
barred from filing a similar action by res
judicata. In the context of the aforequoted
rule, the dismissal of C.A.-G.R. SP No.
73418, being without any qualification, was a
dismissal without prejudice, plainly indicating
that Air Ads could not be barred from filing
the second petition.
We have no doubt that it was within the CA’s
power and prerogative to issue what either
resolution decreed without committing an
abuse of discretion amounting to lack of
excess of jurisdiction. In the first May 5, 2003
Resolution, the CA correctly dismissed the
petition for the deficiency it found in the non-
forum shopping certification. Section 5, Rule
 7 of the Revised Rules of Court provides that
"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." On the other hand, the
requirement specific to petitions filed with the
appellate court simply provides as a penalty
that the failure of the petitioner to comply
with the listed requirements, among them the
need for a certification against forum
shopping, "shall be sufficient ground for the
dismissal of the petition." Thus, the Ninth
Division correctly dismissed the petition
without prejudice.
Thus, we cannot say that it forum
shopped by filing another petition while
the first petition was pending. Insofar as
it was concerned, its first petition had
been dismissed without prejudice; hence,
there was no bar, either by way of forum
shopping, litis pendentia or res
adjudicata, to the petition it re-filed.
other respect. A perusal of the original and
the substitute third party complaints shows
that their averments are substantially the
same; and that the substitute third party
complaint did not strike out any allegation of
the prior one.
It is not the caption of the pleading that
determines the nature of the complaint but
rather its allegations.37 Although Air Ads’
observation that the substitute third party
complaint contained allegations only against
Pioneer is correct, sight should not be lost of
the fact that Dominguez Law Office
represented TADECO in its third party
complaint only against Pioneer, which was
precisely why the substitute third party
complaint referred only to Pioneer.
WHEREFORE, we deny the petition for review on
certiorari, and affirm the resolutions the Court of
Appeals promulgated on February 24, 2003 and
November 13, 2003.

2. No, substitute third party complaint did not

supersede original third party complaint.

The records indicate that: firstly, both

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

The substitution of the third party complaint

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