Planters Development Bank v.

Spouses Ramos

(VENUE: Venue of Personal Actions)

FACTS:

Spouses Victoriano and Melanie Ramos (Spouses Ramos) applied for several credit lines with
Planters Development Bank (PDB) for the construction of a warehouse in Barangay Santo
Tomas, Nueva Ecija. The said application was approved for P40,000,000.00, secured by Real
Estate Mortgage over 2 properties owned by the spouses.

Spouses Ramos requested for additional loan and PDB allegedly promised to extend them a
further loan of P140,000,000.00, the amount they supposed was necessary for the completion of
the construction of the warehouse with a capacity of 250,000 cavans of palay. Despite assurance
of the bank, only P25,000,000.00 in additional loan was approved and released by PDB, which
was secured by a Real Estate Mortgage over 4 real properties owned by the spouses.

Spouses Ramos were not able to pay their obligations as they fell due. They appealed to PDB for
the deferment of debt servicing and requested for a restructuring scheme, but to no avail.

PDB filed a Petition for Extra-judicial Foreclosure of Real Estate Mortgage before the RTC of
San Jose City, Nueva Ecija. A Notice to Parties of Sheriff's Public Auction Sale was thereafter
issued.

Spouses Ramos filed a Complaint for Annulment of Real Estate Mortgages and Promissory
Notes, Accounting and Application of Payments, Injunction with Preliminary Injunction and
TRO against PDB and its officers, also before the RTC of San Jose City, Nueva Ecija.

Instead of filing an Answer, PDB filed an Urgent Motion to Dismiss, alleging that the venue of
the action was improperly laid considering that the real estate mortgages signed by the parties
contained a stipulation that any suit arising therefrom shall be filed in Makati City only. It further
noted that the complaint failed to state a cause of action and must therefore be dismissed.

PROCEDURAL HISTORY:

RTC - denied the Urgent Motion to Dismiss.

CA - denied the Petition, affirmed RTC.

Petition for Review on Certiorari under Rule 45.

ISSUE: WON the stipulation on venue should govern the parties

HELD: YES. Petition is meritorious.

The Rules of Court mandates that there should be a general rule as regards the venue of civil
cases: (a) for real actions, it shall be commenced and tried in the proper court which has
jurisdiction over the area wherein the real property involved, or a portion thereof, is situated; (b)
for personal actions, it shall be commenced and tried where the plaintiff or any of the principal
plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case
of a non-resident defendant where he may be found, at the election of the plaintiff. However, this
admits of exceptions as per Section 4, Rule 4: “where a specific rule or law provides otherwise,
or when the parties agreed in writing before the filing of the action on the exclusive venue
thereof.”

Stipulations on venue, however, may either be permissive or restrictive. Written stipulations as to

venue may be restrictive in the sense that the suit may be filed only in the place agreed upon, or
merely permissive in that the parties may file their suit not only in the place agreed upon but also
in the places fixed by law. In view of the predilection to view a stipulation on venue as merely
permissive, the parties must therefore employ words in the contract that would clearly evince a
contrary intention.

In the instant case, there is an identical stipulation in the real estate mortgages executed by the
parties, pertaining to venue. It reads as follows: “In the event of suit arising from out of or in
connection with this mortgage and/or the promissory note/s secured by this mortgage, the
parties hereto agree to bring their causes of action exclusively in the proper court/s of Makati,
Metro Manila, the MORTGAGOR waiving for this purpose any other venue.”

In Spouses Lantin, Court ruled that "the words exclusively and waiving for this purpose any
other venue is restrictive." Therefore, the employment of the same language in the subject
mortgages signifies the clear intention of the parties to restrict the venue of any action or suit that
may arise out of the mortgage to a particular place, to the exclusion of all other jurisdictions.

In the present case, Spouses Ramos had validly waived their right to choose the venue for any
suit or action arising from the mortgages or promissory notes when they agreed to the limit the
same to Makati City only and nowhere else. True enough, the stipulation on the venue was
couched in a language showing the intention of the parties to restrict the filing of any suit or
action to the designated place only. It is crystal clear that the intention was not just to make the
said place an additional forum or venue but the only jurisdiction where any suit or action
pertaining to the mortgage contracts may be filed. There being no showing that such waiver was
invalid or that the stipulation on venue was against public policy, the agreement of the parties
should be upheld.

WHEREFORE, the Decision of the Court of Appeals is REVERSED and SET ASIDE.
Civil Case is hereby DISMISSED on the ground of improper venue.
PILIPINAS SHELL PETROLEUM CORPORATION, PETITIONER, VS. ROYAL
FERRY SERVICES, INC., RESPONDENT
FACTS:
• Royal Ferry Services Inc. (Royal Ferry) is a corporation duly organized and existing
under Philippine law. According to its Articles of Incorporation, Royal Ferry's principal place of
business is located at 2521 A. Bonifacio Street, Bangkal, Makati City. However, it currently
holds office at Room 203, BF Condominium Building, Andres Soriano corner Solano Streets,
Intramuros, Manila.
• Royal Ferry filed a verified Petition for Voluntary Insolvency before the Regional Trial
Court of Manila. It alleged that in 2000, it suffered serious business losses that led to heavy
debts.
• The Regional Trial Court declared Royal Ferry insolvent in its Order
• On December 23, 2005, Pilipinas Shell Petroleum Corporation filed before the Regional
Trial Court of Manila a Formal Notice of Claim and a Motion to Dismiss. In the Notice of Claim,
Pilipinas Shell asserted that Royal Ferry owed them the amount of P2,769,387.67. In its Motion
to Dismiss, Pilipinas Shell alleged that the Petition was filed in the wrong venue. It argued that
the Insolvency Law provides that a petition for insolvency should be filed before the court with
territorial jurisdiction over the corporation's residence. Since Royal Ferry's Articles of
Incorporation stated that the corporation's principal office is located at 2521 A. Bonifacio St.,
Bangkal, Makati City, the Petition should have been filed before the Regional Trial Court of
Makati and not before the Regional Trial Court of Manila.
• The RTC of Manila denied Pilipinas Shell’s Motion to Dismiss for lack of merit.
• However, the RTC reconsidered the denial of the Motion to Dismiss. It held that a
corporation cannot change its place of business without amending its Articles of Incorporation.
• The RTC thus granted the dismissal of the Petition for Voluntary Insolvency.
• Royal Ferry then filed a Notice of Appeal
• The CA reinstated the insolvency proceedings
• On the alleged jurisdictional defects of Royal Ferry's Petition for Voluntary Insolvency,
the Court of Appeals found that "the [Manila Regional Trial Court] has jurisdiction over the
instant case, and therefore, has the authority to render a decision on it."[32] It likewise found that
Manila was the proper venue for the case because "the cities of Makati and Manila are part of
one region, or even a province, city or municipality, if Section 51 of the Corporation Code of the
Philippines is taken by analogy.
• Pilipinas Shell moved for a reconsideration but the motion was denied. Hence, the
petition before the SC
ISSUE: Whether the Petition for Insolvency was properly filed.
RULING: YES. The Petition for Insolvency was properly filed before the Regional Trial Court
of Manila. The first insolvency law, Republic Act No. 1956, was entitled “An Act Providing for
the Suspension of Payments, the Relief of Insolvent Debtors, the Protection of Creditors, and the
Punishment of Fraudulent Debtors (Insolvency Law)”. With the enactment of Republic Act No.
10142, otherwise known as the Financial Rehabilitation and Insolvency Act of 2010 (FRIA), the
Insolvency Law was expressly repealed on July 18, 2010. The FRIA is currently the special law
that governs insolvency. However, because the relevant proceedings in this case took place
before the enactment of the FRIA, the case needs to be resolved under the provisions of the
Insolvency Law. Royal Ferry argues that the Regional Trial Court of Manila obtained
jurisdiction because in its Petition for Voluntary Insolvency, Royal Ferry alleged that its
principal office was then found in Manila. On the other hand, Pilipinas Shell argues that filing
the petition before the Regional Trial Court of Manila was a patent jurisdictional defect as the
Regional Trial Court of Manila did not have territorial jurisdiction over respondent’s residence.
Pilipinas Shell confuses the concepts of jurisdiction and venue. Wrong venue is merely a
procedural infirmity, not a jurisdictional impediment. Jurisdiction is a matter of substantive law,
while venue is a matter of procedural law.
Petitioner confuses the concepts of jurisdiction and venue. In City of Lapu-Lapu v. Phil.
Economic Zone Authority:
On the one hand, jurisdiction is "the power to hear and determine cases of the general class to
which the proceedings in question belong." Jurisdiction is a matter of substantive law. Thus, an
action may be filed only with the court or tribunal where the Constitution or a statute says it can
be brought. Objections to jurisdiction cannot be waived and may be brought at any stage of the
proceedings, even on appeal. When a case is filed with a court which has no jurisdiction over the
action, the court shall motu proprio dismiss the case.

On the other hand, venue is "the place of trial or geographical location in which an action or
proceeding should be brought." In civil cases, venue is a matter of procedural law. A party's
objections to venue must be brought at the earliest opportunity either in a motion to dismiss or in
the answer; otherwise the objection shall be deemed waived. When the venue of a civil action is
improperly laid, the court cannot motu proprio dismiss the case
Jurisdiction is acquired based on the allegations in the complaint.
Section 14 of the Insolvency Law specifies that the proper venue for a petition for voluntary
insolvency is the Regional Trial Court of the province or city where the insolvent debtor has
resided in for six (6) months before the filing of the petition.[85] In this case, the issue of which
court is the proper venue for respondent's Petition for Voluntary Insolvency comes from the
confusion on an insolvent corporation's residence.
As there is a specific law that covers the rules on venue, the Rules of Court do not apply.
The old Insolvency Law provides that in determining the venue for insolvency proceedings, the
insolvent corporation should be considered a resident of the place where its actual place of
business is located six (6) months before the filing of the petition.
If there is a conflict between the place stated in the articles of incorporation and the physical
location of the corporation’s main office, the actual place of business should control. Requiring a
corporation to go back to a place it has abandoned just to file a case is the very definition of
inconvenience. There is no reason why an insolvent corporation should be forced to exert
whatever meager resources it has to litigate in a city it has already left. Moreover, the six (6)-
month qualification of the law’s requirement of residence shows intent to find the most accurate
location of the debtor’s activities. If the address in a corporation’s articles of incorporation is
proven to be no longer accurate, then legal fiction should give way to fact.
We cannot sustain the ruling of the Court of Appeals that the “petition for voluntary insolvency
[was filed] in the proper venue since the cities of Makati and Manila are part of one region[.]”
This is untenable. Section 14 of Batas Pambansa Blg. 129 provides several judges to preside over
the different branches assigned to Manila and Makati. Thus, the two venues are distinct. Despite
being in the same region, Makati and Manila are treated as two distinct venues. To deem them as
interchangeable venues for being in the same region has no basis in law.
Royal Ferry is a resident of Manila. The law should be read to lay the venue of the insolvency
proceeding in the actual location of the debtor’s activities. If it is uncontroverted that Royal
Ferry’s address in its Articles of Incorporation is no longer accurate, legal fiction should give
way to fact. Thus, the Petition was correctly filed before the Regional Trial Court of Manila.
PAGLAUM MANAGEMENT & DEVELOPMENT CORP. and HEALTH MARKETING
TECHNOLOGIES, INC. vs. UNION BANK OF THE PHILIPPINES, NOTARY PUBLIC
JOHN DOE, and REGISTER OF DEEDS of Cebu City and Cebu Province Respondents.
J. KING & SONS CO., INC. Intervenor.
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
assailing the Decision dated 31 May 20071 and Resolution dated 24 July 20072 issued by the
Court of Appeals (CA).
FACTS:
• Union Bank of the Philippines (Union Bank) extended HealthTech a credit line in the
amount of ₱ 10,000,000.To secure this obligation, PAGLAUM executed three Real Estate
Mortgages (all properties located in Cebu) on behalf of HealthTech and in favor of Union Bank.
• Under the said REM, there is a stipulation providing that;
o Section 9. Venue. – The venue of all suits and actions arising out of or in connection with
this Mortgage shall be in Makati, Metro Manila or in the place where any of the Mortgaged
Properties is located, at the absolute option of the Mortgagee, the parties hereto waiving any
other venue.
• However, under the two Real Estate Mortgages dated 11 February 1994, the following
version appears:
o Section 9. Venue. – The venue of all suits and actions arising out of or in connection with
this Mortgage shall be in Cebu City Metro Manila or in the place where any of the Mortgaged
Properties is located, at the absolute option of the Mortgagee, the xxxxxxxxxxxxx any other
venue.
• 11 December 1998, both parties entered into a Restructuring Agreement,16 which states
that any action or proceeding arising out of or in connection therewith shall be commenced in
Makati City, with both parties waiving any other venue.
• Despite the Restructuring Agreement, HealthTech failed to pay its obligation, prompting
Union Bank to send a demand letter dated 9 October 2000, stating that the latter would be
constrained to institute foreclosure proceedings, unless HealthTech settled its account in full.
• This prompted HealthTech to file a Complaint for Annulment of Sale and Titles and
Damages against Union Bank before the Makati City RTC.
• The petitioner’s argument is that the Restructuring Agreement governs the choice of
venue between the parties, and the agreement on the choice of venue must be interpreted with the
convenience of the parties in mind and the view that any obscurity therein was caused by Union
Bank.
• Respondents, however, contends that the Restructuring Agreement is applicable only to
the contract of loan, and not to the Real Estate Mortgage
ISSUE: WoN RTC of Makati is the proper venue to assail the foreclosure of the subject real
estate mortgage.
RULING: YES.
• According to the Rules, real actions shall be commenced and tried in the court that has
jurisdiction over the area where the property is situated. In this case, all the mortgaged properties
are located in the Province of Cebu. Thus, following the general rule, PAGLAUM and
HealthTech should have filed their case in Cebu, and not in Makati.
• However, the Rules provide an exception, in that real actions can be commenced and
tried in a court other than where the property is situated in instances where the parties have
previously and validly agreed in writing on the exclusive venue thereof. In the case at bar, the
parties claim that such an agreement exists. The only dispute is whether the venue that should be
followed is that contained in the Real Estate Mortgages, as contended by Union Bank, or that in
the Restructuring Agreement, as posited by PAGLAUM and HealthTech. This Court rules that
the venue stipulation in the Restructuring Agreement should be controlling.
• All three mortgage contracts contain a dragnet clause, which secures succeeding
obligations, including renewals, extensions, amendments or novations thereof, incurred by
HealthTech from Union Bank.
• However, the Restructuring Agreement was entered into by HealthTech and Union Bank
to modify the entire loan obligation. Meanwhile, Section 20 of the Restructuring Agreement as
regards the venue of actions state:
o 20. Venue – Venue of any action or proceeding arising out of or connected with this
Restructuring Agreement, the Note, the Collateral and any and all related documents shall be in
Makati City, [HealthTech] and [Union Bank] hereby waiving any other venue.
• The phrase “waiving any other venue” plainly shows that the choice of Makati City as the
venue for actions arising out of or in connection with the Restructuring Agreement and the
Collateral, with the Real Estate Mortgages being explicitly defined as such, is exclusive.
• Following the ruling in Sps. Lantin, in the absence of qualifying or restrictive words, the
venue stipulation should only be deemed as an agreement on an additional forum, and not as a
restriction on a specified place.
G.R. No. 198718 November 27, 2013
SPOUSES TEODORO and ROSARIO SARAZA and FERNANDO SARAZA, Petitioners,
vs.
WILLIAM FRANCISCO, Respondent.

Facts:
• This is a petition for review on Certiorari under Rule 45 of the Rules of Court, which
assails the Decision dated June 28, 2011 and Resolution dated September 30, 2011 of the Court
of Appeals (CA) in CA-G.R. CV No. 93961.
• The respondent alleged in his complaint that he and Fernando executed an Agreement
that provided for the latter’s sale of his 100-square meter share in a lot situated in Makati City,
which at that time was still registered in the name of one Emilia Serafico and covered by TCT
40376 (later covered by TCT No. 220530), for a total consideration of ₱3,200,000.00.
• The amount of ₱1,200,000.00 was paid upon the Agreement’s execution, while the
balance of ₱2,000,000.00 was to be paid on installments to the Philippine National Bank (PNB),
to cover a loan of Spouses Saraza, Fernando’s parents, with the bank. A final deed of sale
conveying the property was to be executed by Fernando upon full payment of the PNB loan.
• It was also agreed upon that should the parties fail for any reason to transfer the subject
property to the respondent’s name, Rosario and Fernando’s 136-sq m property covered by TCT
No. 156126 and encumbered to PNB to secure the loan that was to be paid by the respondent
shall be considered a collateral in favor of the respondent.
• When the remaining balance of the PNB loan reached ₱226,582.13, the respondent asked
for the petitioners’ issuance of a Special Power of Attorney (SPA) that would authorize him to
receive from PNB the owner’s duplicate copy of TCT No. 156126 upon full payment of the loan.
• The petitioners denied the request. Upon inquiry from PNB, the respondent found out
that the petitioners had instead executed an Amended Authority, which provided that the owner’s
copy of TCT No. 156126 should be returned to the mortgagors upon full payment of the loan.
Spouses Saraza also caused the eviction of the respondent from the property covered by TCT No.
156126.
• These prompted the respondent to institute the civil case for specific performance, sum of
money and damages with the RTC of Imus, Cavite.
• The RTC held that contrary to the petitioners’ claim, the respondent’s full payment of the
₱3,200,000.00 consideration provided in the Agreement was supported by: (1) the petitioners’
acknowledgment in the Agreement that they received the amount of ₱1,200,000.00 upon its
execution; and (2) the Certification from PNB that the full amount of Spouses Saraza’s loan with
the bank had been fully paid. In addition to the defenses which he raised during the proceedings
before the RTC, he argued that the RTC of Imus lacked jurisdiction over the case as it involved
an adjudication of ownership of a property situated in Makati City.
• On the issue of jurisdiction, the CA cited Fernando’s failure to seasonably file before the
lower court a motion to dismiss stating that the action should have been filed in Makati City.
More importantly, the Court explained that the case was a personal action since it did not involve
a claim of ownership of the subject property, but only sought Fernando’s execution of a deed of
sale in the respondent’s favor. Thus, the venue for the action was the residence of the plaintiff or
the defendant, at the plaintiff’s option.
Issue:
Whether the CA erred in declaring that the RTC of Makati has the jurisdiction over the case.
Ruling:
The Court ruled that petitioners’ argument that the action should have been instituted with the
RTC of Makati City, and not the RTC of Imus, Cavite, is misplaced.
Although the end result of the respondent’s claim was the transfer of the subject property to his
name, the suit was still essentially for specific performance, a personal action, because it sought
Fernando’s execution of a deed of absolute sale based on a contract which he had previously
made.
Section 2, Rule 4 of the Rules of Court then governs the venue for the respondent’s action. It
provides that personal actions "may be commenced and tried where the plaintiff or any of the
principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or
in the case of a non-resident defendant where he may be found, at the election of the plaintiff."
Considering the respondent’s statement in his complaint that he resides in Imus, Cavite, the filing
of his case with the RTC of Imus was proper.
Ruling on substantial issue
The respondent’s obligation under the Agreement pertains to the payment of the ₱3,200,000.00
consideration for Fernando’s corresponding duty of executing a Deed of Sale over the property
formerly covered by TCT No. 40376. To dispute the respondent’s claim that he has satisfied said
obligation, the petitioners now raise factual issues which the Court however emphasizes are not
for the Court to reassess. For one, the issue of whether or not the respondent’s obligation to pay
has already been satisfied is a factual question.
We consider the fact that both the RTC and the CA have determined that there has been a full
payment by the respondent of his ₱3,200,000.00 obligation under the Agreement. Upon review,
the Court finds no reason to deviate from this finding of the courts, especially as it is supported
by substantial evidence. To begin with, the petitioners do not deny the authenticity and their
execution of the subject Agreement, a matter that is also sufficiently established by the fact that
the document was acknowledged before a notary public. As both the RTC and CA correctly held,
such Agreement sufficiently proves the fact of the respondent’s payment to the petitioners of the
agreed initial payment of ₱1,200,000.00, as it states:
That, for and in consideration of the agreed purchase price of THREE MILLION TWO
HUNDRED THOUSAND PESOS ([P]3,200,000.00), Philippine currency, of which the sum of
ONE MILLION TWO HUNDRED THOUSAND PESOS ([P]1,200,000.00), has been paid by
the buyer upon execution of this instrument x x x.
Given this categorical statement, the petitioners’ denial that they have received the amount
necessitated concrete and substantial proof. A perusal of the case records shows that the
petitioners failed in this regard. Even their unsubstantiated claim that the document’s
notarization was irregularly made cannot prevail over the presumption that the notary public’s
duty has been regularly performed. The CA also correctly held that the parol evidence rule
applies to this case. Unsubstantiated testimony, offered as proof of verbal agreements which tend
to vary the terms of the written agreement, is inadmissible under the rule.
LEY CONSTRUCTION AND DEVELOPMENT CORPORATION vs MARVIN MEDEL
SEDANO,
G.R. No. 222711 | 2017-08-23

Facts:
• On March 13, 2012, petitioner filed a Complaint for Collection of Sum of Money and
Damages[4] against respondent Marvin Medel Sedano (respondent), doing business under the
name and style "Lola Taba Lolo Pato Palengke at Paluto sa Seaside," before the Valenzuela-
RTC, docketed as Civil Case No. 40-V-12.
• petitioner alleged that on January 14, 2005, it leased[5] a 50,000-square meter (sq.m.)
parcel of land located at Financial Center Area, Pasay City (now, Lot 5-A Diosdado Macapagal
Boulevard, Pasay City) from respondent third-party defendant, the Philippine National
Construction Corporation (PNCC).[6]
• petitioner subleased the 14,659.80-sq.m. portion thereof to respondent for a term often
(10) years beginning November 15, 2005, for a monthly rent of P1,174,780.00, subject to a ten
percent (10%) increase beginning on the third year and every year thereafter (lease contract).[8]
Respondent allegedly failed to pay the rent due for the period August 2011 to December 2011,
amounting to a total of P8,828,025.46, and despite demands,[9] refused to settle his obligations;
[10] hence, the complaint.
• In his Answer with Third-Party Complaint, respondent countered that he religiously paid
rent to petitioner until PNCC demanded[12] that the rent be paid directly to it, in view of the
petitioner's eviction from the subject property by virtue of a court order. Respondent maintained
that the RTC should hold PNCC liable to reimburse to him the amounts he paid as rentals; hence,
the third-party complaint.
• Respondent likewise pointed out that the venue was improperly laid since Section 2 of
the lease contract provides that "[a]ll actions or case[s] filed in connection with this case shall be
filed with the Regional Trial Court of Pasay City, exclusive of all others." Hence, the complaint
should be dismissed on the ground of improper venue.
• Petitioner argued that Section 21 of the lease contract is not a stipulation as to venue, but
a stipulation on jurisdiction which is void.[20] This is because such stipulation deprives other
courts, i.e., the Municipal Trial Courts, of jurisdiction over cases which, under the law, are
within its exclusive original jurisdiction, such as an action for unlawful detainer.Petitioner
further posited that respondent had already submitted himself to the jurisdiction of the
Valenzuela-RTC and had waived any objections on venue, since he sought affirmative reliefs
from the said court when he asked several times for additional time to file his responsive
pleading, set-up counterclaims against petitioner, and impleaded PNCC as a third-party
defendant.
• The Valenzuela-RTC ruled that granted respondent's motion and dismissed the complaint
on the ground of improper venue.

ISSUE: Whether or not the Valenzuela-RTC erred in ruling that venue was improperly laid.
(NO)
RULING:
• It is undisputed that petitioner’s action was one for collection of sum of money in an
amount that falls within the exclusive jurisdiction of the RTC. Since the lease contract already
provided that all actions or cases involving the breach thereof should be filed with the RTC of
Pasay City, and that petitioner’s complaint purporting the said breach fell within the RTC’s
exclusive original jurisdiction, the latter should have then followed the contractual stipulation
and filed its complaint before the RTC of Pasay City. However, it is undeniable that petitioner
filed its complaint with the Valenzuela-RTC; hence, the same is clearly dismissible on the
ground of improper venue, without prejudice, however, to its refiling in the proper court.
• The venue for personal actions shall as a general rule — lie with the court which has
jurisdiction where the plaintiff or the defendant resides, at the election of the plaintiff. As an
exception, parties may, through a written instrument, restrict the filing of said actions in a certain
exclusive venue.—The venue for personal actions shall — as a general rule — lie with the court
which has jurisdiction where the plaintiff or the defendant resides, at the election of the plaintiff.
As an exception, parties may, through a written instrument, restrict the filing of said actions in a
certain exclusive venue. In Briones v. Court of Appeals, 746 SCRA 240 (2015), the Court
explained: Written stipulations as to venue may be restrictive in the sense that the suit may be
filed only in the place agreed upon, or merely permissive in that the parties may file their suit not
only in the place agreed upon but also in the places fixed by law. As in any other agreement,
what is essential is the ascertainment of the intention of the parties respecting the matter. As
regards restrictive stipulations on venue, jurisprudence instructs that it must be shown that such
stipulation is exclusive. In the absence of qualifying or restrictive words, such as “exclusively,”
“waiving for this purpose any other venue,” “shall only” preceding the designation of venue, “to
the exclusion of the other courts,” or words of similar import, the stipulation should be deemed
as merely an agreement on an additional forum, not as limiting venue to the specified place.
• The Court held that an exclusive venue stipulation is valid and binding, provided, that: (a)
the stipulation on the chosen venue is exclusive in nature or in intent; (b) it is expressed in
writing by the parties thereto; and (c) it is entered into before the filing of the suit. After a
thorough study of the case, the Court is convinced that all these elements are present and that the
questioned stipulation in the lease contract, i.e., Section 21 thereof, is a valid venue stipulation
that limits the venue of the cases to the courts of Pasay City. The above provision in the lease
contract clearly shows the parties’ intention to limit the place where actions or cases arising from
a violation of the terms and conditions of the contract of lease may be instituted. This is evident
from the use of the phrase “exclusive of all others” and the specification of the locality of Pasay
City as the place where such cases may be filed.
• It is fundamental that jurisdiction is conferred by law and not subject to stipulation of the
parties. Hence, following the rule that the law is deemed written into every contract, the said
stipulation should not be construed as a stipulation on jurisdiction but rather, one which merely
limits venue. Moreover, “[t]he parties are charged with knowledge of the existing law at the time
they enter into the contract and at the time it is to become operative.” Thus, without any clear
showing in the contract that the parties intended otherwise, the questioned stipulation should be
considered as a stipulation on venue (and not on jurisdiction), consistent with the basic principles
of procedural law.
POLYTRADE CORPORATION, plaintiff-appellee, vs. VICTORIANO BLANCO, defendant-
appellant.
G.R. No. L-27033 | 1969-10-31

FACTS:
• Plaintiff filed suits before the Court of First Instance of Bulacan on four causes of action
to recover the purchase price of rawhide delivered by plaintiff to defendant.
• Plaintiff corporation has its principal office and place of business in Makati, Rizal.
Defendant is a resident of Meycauayan, Bulacan.
• Defendant moved to dismiss upon the ground of improper venue. He claims that a
contract suit may only be lodged in the courts of Manila. According to the defendant, plaintiff
and defendant, by written contracts covering the four causes of action, stipulated that: "The
parties agree to sue and be sued in the Courts of Manila."
• CFI – declared defendant in default. Hence, this appeal.
• The defendant relies on Section 3, Rule 4 of the ROC which states that venue may be
stipulated by written agreement - "By written agreement of the parties the venue of an action
may be changed or transferred from one province to another." And that due to their agreement,
he can only be sued in the courts of Manila.

ISSUE: W/N the venue was properly laid in the province of Bulacan.

HELD: YES.
• For the first and second cause of action, no such stipulation appears in the contracts.
Hence, the general rule set forth in Section 2(b), Rule 4, governs, and as to said two causes of
action, venue was properly laid in Bulacan, the province of defendant's residence.
 Section 2(b), Rule 4 of the Rules of Court on venue of personal actions triable by courts
of first instance - and this is one - provides that such "actions may be commenced and tried
where the defendant or any of the defendants resides or may be found, or where the plaintiff or
any of the plaintiffs resides, at the election of the plaintiff."
• The stipulation adverted to is only found in the agreements covering the third and fourth
causes of action. An accurate reading, however, of the stipulation, "The parties agree to sue and
be sued in the Courts of Manila," does not preclude the filing of suits in the residence of plaintiff
or defendant. The plain meaning is that the parties merely consented to be sued in Manila.
Qualifying or restrictive words which would indicate that Manila and Manila alone is the venue
are totally absent therefrom. We cannot read into that clause that plaintiff and defendant bound
themselves to file suits with respect to the last two transactions in question only or exclusively in
Manila. For, that agreement did not change or transfer venue. It simply is permissive. The parties
solely agreed to add the courts of Manila as tribunals to which they may resort. They did not
waive their right to pursue remedy in the courts specifically mentioned in Section 2(b) of Rule 4.
Renuntiatio non praesumitur.
• Illuminating on this point is Engel vs. Shubert Theatrical Co., 151 N.Y.S. 593, 594. And
this, became there the stipulation as to venue is along lines similar to the present. Said stipulation
reads: "In case of dispute, both contracting parties agree to submit to the jurisdiction of the
Vienna courts." And the ruling is: "By the clause in question the parties do not agree to submit
their disputes to the jurisdiction of the Viennese court, and to those courts only. There is nothing
exclusive in the language used. They do agree to submit to the Viennese jurisdiction, but they
say not a word in restriction of the jurisdiction of courts elsewhere; and whatever may be said on
the subject of the legality of contracts to submit controversies to courts of certain jurisdictions
exclusively, it is entirely plain that such agreements should be strictly construed, and should not
be extended by implication."
Go vs Distinction Properties
FACTS:
• Philip L. Go, Pacifico Q. Lim and Andrew Q. Lim (petitioners) are registered individual
owners of condominium units in Phoenix Heights Condominium located at H. Javier/Canley
Road, Bo. Bagong Ilog, Pasig City, Metro Manila.
• March 1999, petitioner Pacifico Lim, as president of DPDCI, filed an Application for
Alteration of Plan4 pertaining to the construction of 22 storage units in the spaces adjunct to the
parking area of the building. The application, however, was disapproved as the proposed
alteration would obstruct light and ventilation.
• In August 2004, through its Board,5 PHCC approved a settlement offer from DPDCI for
the set-off of the latter’s association dues arrears with the assignment of title over CCT Nos.
21030 and PT-27396/C-136-II and their conversion into common areas. Thus, CCT Nos. PT-
43400 and PT-43399 were issued by the Registrar of Deeds of Pasig City in favor of PHCC in
lieu of the old titles. The said settlement between the two corporations likewise included the
reversion of the 22 storage spaces into common areas. With the conformity of PHCC, DPDCI’s
application for alteration (conversion of unconstructed 22 storage units and units GF4-A and
BAS from saleable to common areas) was granted by the Housing and Land Use Regulatory
Board (HLURB).
• In August 2008, petitioners, as condominium unit-owners, filed a complaint7 before the
HLURB against DPDCI for unsound business practices and violation of the MDDR. The case
was docketed as REM- 080508-13906. They alleged that DPDCI committed misrepresentation in
their circulated flyers and brochures as to the facilities or amenities that would be available in the
condominium and failed to perform its obligation to comply with the MDDR.
• In defense, DPDCI denied that it had breached its promises and representations to the
public concerning the facilities in the condominium. It alleged that the brochure attached to the
complaint was “a mere preparatory draft” and not the official one actually distributed to the
public, and that the said brochure contained a disclaimer as to the binding effect of the supposed
offers therein. Also, DPDCI questioned the petitioners’ personality to sue as the action was a
derivative suit. After due hearing, the HLURB rendered its decision8 in favor of petitioners.
• The CA ruled that the HLURB had no jurisdiction over the complaint filed by petitioners
as the controversy did not fall within the scope of the administrative agency’s authority under
P.D. No. 957. The HLURB not only relied heavily on the brochures which, according to the CA,
did not set out an enforceable obligation on the part of DPDCI, but also erroneously cited
Section 13 of the MDDR to support its finding of contractual violation.

ISSUE: Whether or not the HLURB has jurisdiction over the complaint filed by petitioners.
RULING:
The petition fails.
Basic as a hornbook principle is that jurisdiction over the subject matter of a case is conferred by
law and determined by the allegations in the complaint which comprise a concise statement of
the ultimate facts constituting the plaintiff’s cause of action. The nature of an action, as well as
which court or body has jurisdiction over it, is determined based on the allegations contained in
the complaint of the plaintiff, irrespective of whether or not the plaintiff is entitled to recover
upon all or some of the claims asserted therein. The averments in the complaint and the character
of the relief sought are the ones to be consulted. Once vested by the allegations in the complaint,
jurisdiction also remains vested irrespective of whether or not the plaintiff is entitled to recover
upon all or some of the claims asserted therein. Thus, it was ruled that the jurisdiction of the
HLURB to hear and decide cases is determined by the nature of the cause of action, the subject
matter or property involved and the parties.
In this case, the complaint filed by petitioners alleged causes of action that apparently are not
cognizable by the HLURB considering the nature of the action and the reliefs sought. A perusal
of the complaint discloses that petitioners are actually seeking to nullify and invalidate the duly
constituted acts of PHCC – the April 29, 2005 Agreement27 entered into by PHCC with DPDCI
and its Board Resolution28 which authorized the acceptance of the proposed
offsetting/settlement of DPDCI’s indebtedness and approval of the conversion of certain units
from saleable to common areas. All these were approved by the HLURB.
*whether PHCC is an indispensable party
From all indications, PHCC is an indispensable party and should have been impleaded, either as
a plaintiff or as a defendant,34 in the complaint filed before the HLURB as it would be directly
and adversely affected by any determination therein. To belabor the point, the causes of action,
or the acts complained of, were the acts of PHCC as a corporate body. Note that in the judgment
rendered by the HLURB, the dispositive portion in particular, DPDCI was ordered (1) to pay ₱
998,190.70, plus interests and surcharges, as condominium dues in arrears and turnover the
administration office to PHCC; and (2) to refund to PHCC ₱ 1,277,500.00, representing the cost
of the deep well, with interests and surcharges. Also, the HLURB declared as illegal the
agreement regarding the conversion of the 22 storage units and Units GF4-A and BAS, to which
agreement PHCC was a party.
Evidently, the cause of action rightfully pertains to PHCC. Petitioners cannot exercise the same
except through a derivative suit. In the complaint, however, there was no allegation that the
action was a derivative suit. In fact, in the petition, petitioners claim that their complaint is not a
derivative suit.35 In the cited case of Chua v. Court of Appeals,36 the Court ruled:
For a derivative suit to prosper, it is required that the minority stockholder suing for and on
behalf of the corporation must allege in his complaint that he is suing on a derivative cause of
action on behalf of the corporation and all other stockholders similarly situated who may wish to
join him in the suit. It is a condition sine qua non that the corporation be impleaded as a party
because not only is the corporation an indispensable party, but it is also the present rule that it
must be served with process. The judgment must be made binding upon the corporation in order
that the corporation may get the benefit of the suit and may not bring subsequent suit against the
same defendants for the same cause of action. In other words, the corporation must be joined as
party because it is its cause of action that is being litigated and because judgment must be a res
adjudicata against it. (Underscoring supplied)
 Republic v. Sandiganbayan

(PLEADINGS: Answer [Negative defenses, Affirmative defenses, negative pregnant])

FACTS:

Republic, through the PCGG, filed a petition for forfeiture before the Sandiganbayan, pursuant to
RA 1379. The petition sought the declaration of the amount of US$356 million (now estimated
to be more than US$658 million inclusive of interest) deposited in escrow in the PNB, as ill-
gotten wealth of the Marcos family. The funds were previously deposited in Swiss banks under
the name of various foreign foundations.

Before case was set for pre-trial, Marcos children and PCGG Chairman Magtanggol Gunigundo
executed a “General Agreement and the Supplemental Agreements” for a global settlement of
the assets of the Marcos family. The Agreement specified in its whereas clause that the
Philippine government had "obtained a judgment from the Swiss Federal Tribunal that the
US$356 million belongs in principle to the Republic of the Philippines provided certain
conditionalities are met.”

Subsequently, the Marcos children filed a motion for the approval of said Agreements. While
hearings were being conducted on the said motion, the Republic filed a motion for summary
judgment and/or judgment on the pleadings.

Sandiganbayan initially granted Republic's motion for summary judgment on the ground that
“there is no issue of fact which calls for the presentation of evidence.” However, it reversed itself
and denied the motion for summary judgment on the ground that the original copies of the
authenticated Swiss decisions and their "authenticated translations" have not been submitted.

ISSUE:

WON respondents raised genuine issue of fact which would justify or negate summary judgment

HELD: NO. Respondent Marcoses failed to raise any genuine issue of fact in their pleadings.
Thus, on motion of petitioner Republic, summary judgment should take place as a matter of
right.

In Auman vs. Estenzo, summary judgment was described as a judgment which a court may
render before trial but after both parties have pleaded. It is ordered by the court upon application
by one party, supported by affidavits, depositions or other documents, with notice upon the
adverse party who may in turn file an opposition supported also by affidavits, depositions or
other documents. This is after the court summarily hears both parties with their respective proofs
and finds that there is no genuine issue between them.
Summary judgment is proper when there is clearly no genuine issue as to any material fact in the
action. The theory of summary judgment is that, although an answer may on its face appear to
tender issues requiring trial, if it is demonstrated by affidavits, depositions or admissions that
those issues are not genuine but sham or fictitious, the Court is justified in dispensing with the
trial and rendering summary judgment for petitioner Republic.

Court finds that respondent Mrs. Marcos and the Marcos children indubitably failed to tender
genuine issues in their answer to the petition for forfeiture. A genuine issue is an issue of fact
which calls for the presentation of evidence as distinguished from an issue which is fictitious and
contrived, set up in bad faith or patently lacking in substance so as not to constitute a genuine
issue for trial. Respondents' defenses of "lack of knowledge for lack of privity" or "(inability to)
recall because it happened a long time ago" or, on the part of Mrs. Marcos, that "the funds were
lawfully acquired" are fully insufficient to tender genuine issues. Respondent Marcoses' defenses
were a sham and evidently calibrated to compound and confuse the issues.

In their answer, respondents failed to specifically deny every allegation contained in the petition
for forfeiture in the manner required by the rules. All they gave were stock answers like "they
have no sufficient knowledge" or "they could not recall because it happened a long time ago,"
and, as to Mrs. Marcos, "the funds were lawfully acquired," without stating the basis of such
assertions. The purpose of requiring respondents to make a specific denial is to make them
disclose facts which will disprove the allegations of petitioner at the trial, together with the
matters they rely upon in support of such denial. Our jurisdiction adheres to this rule to avoid and
prevent unnecessary expenses and waste of time by compelling both parties to lay their cards on
the table, thus reducing the controversy to its true terms.

Here, despite the serious and specific allegations against them, the Marcoses responded by
simply saying that they had no knowledge or information sufficient to form a belief as to the
truth of such allegations. Such a general, self-serving claim of ignorance of the facts alleged in
the petition for forfeiture was insufficient to raise an issue. Respondent Marcoses should have
positively stated how it was that they were supposedly ignorant of the facts alleged.

This denial is what is called in the law on pleadings as a negative pregnant, that is, a denial
pregnant with the admission of the substantial facts in the pleading responded to which are not
squarely denied. It was in effect an admission of the averments it was directed at. Stated
otherwise, a negative pregnant is a form of negative expression which carries with it an
affirmation or at least an implication of some kind favorable to the adverse party. It is a denial
pregnant with an admission of the substantial facts alleged in the pleading. Where a fact is
alleged with qualifying or modifying language and the words of the allegation as so qualified or
modified are literally denied, has been held that the qualifying circumstances alone are denied
while the fact itself is admitted.

A profession of ignorance about a fact which is patently and necessarily within the pleader's
knowledge or means of knowing is as ineffective as no denial at all. Respondents' ineffective
denial failed to properly tender an issue and the averments contained in the petition for forfeiture
were deemed judicially admitted by them. General denial of respondents cannot rightfully be
accepted as a defense because they are the legal heirs and successors-in-interest of Ferdinand E.
Marcos and are therefore bound by the acts of their father vis-a-vis the Swiss funds.

MANUEL C. BUNGCAYAO, SR., represented in this case by his Attorney-in-fact ROMEL R.

BUNGCAYAO, Petitioner, v. FORT ILOCANDIA PROPERTY HOLDINGS, AND
DEVELOPMENT CORPORATION, Respondent.
FACTS:
• Manuel C. Bungcayao, Sr. (petitioner) claimed to be one of the two entrepreneurs who
introduced improvements on the foreshore area of Calayab Beach in 1978 when Fort Ilocandia
Hotel started its construction in the area. Thereafter, other entrepreneurs began setting up their
own stalls in the foreshore area. They later formed themselves into the D'Sierto Beach Resort
Owner's Association, Inc. (D'Sierto).
• In July 1980, six parcels of land in Barrio Balacad (now Calayad) were transferred,
ceded, and conveyed to the Philippine Tourism Authority (PTA) pursuant to Presidential Decree
No. 1704. Fort Ilocandia Resort Hotel was erected on the area. Petitioner and other D’Sierto
members applied for a foreshore lease and was granted a provisional permit.
• Fort Ilocandia Property Holdings and Development Corporation (respondent) filed a
foreshore application over a 14-hectare area abutting the Fort Ilocandia Property, including the 5-
hectare portion applied for by D’Sierto members. The foreshore applications became the subject
matter of a conflict case. DENR Regional Executive Director Victor J. Ancheta denied the
foreshore lease applications of the D’Sierto members, including petitioner, on the ground that the
subject area applied for fell either within the titled property or within the foreshore areas applied
for by respondent.
• Respondent, through its Public Relations Manager Arlene de Guzman, invited the
D’Sierto members to a luncheon meeting to discuss common details beneficial to all parties
concerned. Petitioner alleged that his son, Manuel Bungcayao, Jr., who attended the meeting,
manifested that he still had to consult his parents about the offer but upon the undue pressure
exerted by Atty. Marcos, he accepted the payment and signed the Deed of Assignment, Release,
Waiver and Quitclaim in favor of respondent.
• Petitioner then filed an action for declaration of nullity of contract before the Regional
Trial Court of Laoag. The trial court ruled that the alleged pressure on petitioner’s sons could not
constitute force, violence or intimidation that could vitiate consent. As regards respondent’s
counterclaim, the trial court ruled that based on the pleadings and admissions made, it was
established that the property occupied by petitioner was within the titled property of respondent.
• The CA affirmed the decision in toto. The Court of Appeals ruled that the counterclaims
raised by respondent were compulsory in nature, as they arose out of or were connected with the
transaction or occurrence constituting the subject matter of the opposing party’s claim and did
not require for its adjudication the presence of third parties of whom the court could not acquire
jurisdiction. The Court of Appeals ruled that respondent was the rightful owner of the subject
property and as such, it had the right to recover its possession from any other person to whom the
owner has not transmitted the property, including petitioner.
ISSUE: Whether respondent’s counterclaim is compulsory.
RULING: YES. A compulsory counterclaim is any claim for money or any relief, which a
defending party may have against an opposing party, which at the time of suit arises out of, or is
necessarily connected with, the same transaction or occurrence that is the subject matter of the
plaintiff's complaint. It is compulsory in the sense that it is within the jurisdiction of the court,
does not require for its adjudication the presence of third parties over whom the court cannot
acquire jurisdiction, and will be barred in the future if not set up in the answer to the complaint in
the same case. Any other counterclaim is permissive.
The Court has ruled that the compelling test of compulsoriness characterizes a counterclaim as
compulsory if there should exist a logical relationship between the main claim and the
counterclaim. The Court further ruled that there exists such a relationship when conducting
separate trials of the respective claims of the parties would entail substantial duplication of time
and effort by the parties and the court; when the multiple claims involve the same factual and
legal issues; or when the claims are offshoots of the same basic controversy between the parties.
The criteria to determine whether the counterclaim is compulsory or permissive are as follows:
(a) Are issues of fact and law raised by the claim and by the counterclaim largely the same?
(b) Would res judicata bar a subsequent suit on defendant's claim, absent the compulsory rule?
(c) Will substantially the same evidence support or refute plaintiff's claim as well as defendant's
counterclaim?
(d) Is there any logical relations between the claim and the counterclaim?
A positive answer to all four questions would indicate that the counterclaim is compulsory.1
In this case, the only issue in the complaint is whether Manuel, Jr. is authorized to sign the Deed
of Assignment, Release, Waiver and Quitclaim in favor of respondent without petitioner's
express approval and authority. In an Order dated 6 November 2003, the trial court confirmed
the agreement of the parties to cancel the Deed of Assignment, Release, Waiver and Quitclaim
and the return of P400,000 to respondent. The only claim that remained was the claim for
damages against respondent. The trial court resolved this issue by holding that any damage
suffered by Manuel, Jr. was personal to him. The trial court ruled that petitioner could not have
suffered any damage even if Manuel, Jr. entered into an agreement with respondent since the
agreement was null and void.
Respondent filed three counterclaims. The first was for recovery of the P400,000 given to
Manuel, Jr.; the second was for recovery of possession of the subject property; and the third was
for damages. The first counterclaim was rendered moot with the issuance of the 6 November
2003 Order confirming the agreement of the parties to cancel the Deed of Assignment, Release,
Waiver and Quitclaim and to return the P400,000 to respondent. Respondent waived and
renounced the third counterclaim for damages. The only counterclaim that remained was for the
recovery of possession of the subject property. While this counterclaim was an offshoot of the
same basic controversy between the parties, it is very clear that it will not be barred if not set up
in the answer to the complaint in the same case. Respondent's second counterclaim, contrary to
the findings of the trial court and the Court of Appeals, is only a permissive counterclaim. It is
not a compulsory counterclaim. It is capable of proceeding independently of the main case.
The rule in permissive counterclaim is that for the trial court to acquire jurisdiction, the
counterclaimant is bound to pay the prescribed docket fees. Any decision rendered without
jurisdiction is a total nullity and may be struck down at any time, even on appeal before this
Court. In this case, respondent did not dispute the non-payment of docket fees. Respondent only
insisted that its claims were all compulsory counterclaims. As such, the judgment by the trial
court in relation to the second counterclaim is considered null and void a without prejudice to a
separate action which respondent may file against petitioner.
PHILTRANCO SERVICE ENTERPRISES, INC., PETITIONER, VS. FELIX PARAS AND
INLAND TRAILWAYS, INC., AND HON. COURT OF APPEALS, RESPONDENTS.
In an action for breach of contract of carriage commenced by a passenger against his common
carrier, the plaintiff can recover damages from a third-party defendant brought into the suit by
the common carrier upon a claim based on tort or quasi-delict. The liability of the third-party
defendant is independent from the liability of the common carrier to the passenger.
FACTS:
• Felix Paras is engaged in the buy and sell of fish products. Sometime on his way home to
Manila from Bicol Region, he boarded a bus owned and operated by Inland Trailways, Inc. and
driven by its driver Calvin Coner.
• While it was travelling along Maharlika Highway, Tiaong, Quezon, it was bumped at the
rear by a Philtranco bus driven by Apolinar Miralles which caused the Inland bus to smash to a
parked cargo truck.
• Paras was not spared from the effects of the accident. He was taken for an emergency
treatment in the nearby hospital and thereafter taken to the National Orthopedic Hospital in
which underwent several operations.
• In view of financial constraints, Paras filed a complaint for damages based on breach of
contract of carriage against Inland to which it denied responsibility, by alleging, among others,
that its driver Coner had observed an utmost and extraordinary care and diligence to ensure the
safety of its passengers. In support of it, Inland invoked the Police Investigation Report which
established the fact that the Philtranco bus driver, Apolinar Miralles was the one which violently
bumped the rear portion of the Inland bus, and therefore, the direct and proximate cause of Paras’
injuries.
• Inland filed a third-party complaint against Philtranco and Apolinar Miralles.
• RTC ruled that Philtranco and Apolinar Miralles are liable. The CA affirmed the decision
and denied the subsequent motion for reconsideration.
• Petitioner argues that Paras could not recover moral damages directly from it
(Philtranco), considering that it was only being subrogated for Inland.
ISSUE: WoN Philtranco, a third-party defendant, is liable to Paras.
RULING: YES.
There is no question that Inland filed its third-party complaint against Philtranco and its driver in
order to establish in this action that they, instead of Inland, should he directly liable to Paras for
the physical injuries he had sustained because of their negligence.
The apparent objective of Inland was not to merely subrogate the third-party defendants for
itself, as Philtranco appears to suggest, but, rather, to obtain a different relief whereby the third-
party defendants would be held directly, fully and solely liable to Paras and inland for whatever
damages each had suffered from the negligence committed by Philtranco and its driver. In other
words, Philtranco and its driver were charged here as joint tortfeasors who would be jointly and
severally be liable to Paras and Inland. Impleading Philtranco and its driver through the third-
party complaint filed on March 2, 1990 was correct. Paras' cause of action against Inland (breach
of contract of carriage) did not need to be the same as the cause of action of Inland against
Philtranco and its driver (tort or quasi-delict) in the impleader. It is settled that a defendant in a
contract action may join as third-party defendants those who may be liable to him in tort for the
plaintiffs claim against him, or even directly to the plaintiff.
Accordingly, the requisites for a third-party action are, firstly, that the party to be impleaded
must not yet be a party to the action; secondly, that the claim against the third-party defendant
must belong to the original defendant; thirdly, the claim of the original defendant against the
third-party defendant must be based upon the plaintiffs claim against the original defendant; and,
fourthly, the defendant is attempting to transfer to the third-party defendant the liability asserted
against him by the original plaintiff.
G.R. No. 179488 : April 23, 2012
COSCO PHILIPPINES SHIPPING, INC., petitioner, VS. KEMPER INSURANCE COMPANY,
respondent
Facts:
• This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
reverse and set aside the Decision[1] and Resolution[2] of the Court of Appeals (CA), in CA-
G.R. CV No. 75895, entitled Kemper Insurance Company v. Cosco Philippines Shipping, Inc.
• Respondent Kemper Insurance Company is a foreign insurance company based in
Illinois, United States of America (USA) with no license to engage in business in the Philippines,
as it is not doing business in the Philippines, except in isolated transactions; while petitioner is a
domestic shipping company organized in accordance with Philippine laws.
• Respondent insured the shipment of imported frozen boneless beef (owned by Genosi,
Inc.), which was loaded at a port in Brisbane for shipment to Genosi, Inc. (the importer-
consignee) in the Philippines. However, upon arrival at the Manila port, a portion of the
shipment was rejected by Genosi, Inc. by reason of spoilage arising from the alleged temperature
fluctuations of petitioner's reefer containers.
• Genosi, Inc. filed a claim against both petitioner shipping company and respondent
Kemper Insurance Company. The claim was referred to McLarens Chartered for investigation,
evaluation, and adjustment of the claim. After processing the claim documents, McLarens
Chartered recommended a settlement of the claim in the amount of $64,492.58, which Genosi,
Inc. (the consignee-insured) accepted.
• Respondent paid the claim of Genosi, Inc. Consequently, Genosi, Inc. executed a Loss
and Subrogation Receipt stating that Genosi, Inc. received from respondent the full and final
satisfaction compromise, and discharges respondent of all claims for losses and expenses
sustained by the property insured, under various policy numbers, due to spoilage brought about
by machinery breakdown and, in consideration thereof, subrogates respondent to the claims of
Genosi, Inc. to the extent of the said amount.
• Respondent filed a Complaint for Insurance Loss and Damages against petitioner before
the trial court. Respondent alleged that despite repeated demands to pay and settle the total
amount of $64,492.58, representing the value of the loss, petitioner failed and refused to pay the
same, thereby causing damage and prejudice to respondent.
• Respondent prayed that after due hearing, judgment be rendered in its favor and that
petitioner be ordered to pay the amount of US$64,492.58, or its equivalent in Philippine currency
at the prevailing foreign exchange rate, or a total of P2,594,513.00, with interest thereon at the
legal rate from date of demand, 25% of the whole amount due as attorney's fees, and costs.
• Petitioner insisted, among others, that respondent had no capacity to sue since it was
doing business in the Philippines without the required license.
• The RTC dismissed the case ruling that it is mandatory that the certification must be
executed by the petitioner himself, and not by counsel. Since respondent's counsel did not have a
Special Power of Attorney (SPA) to act on its behalf, hence, the certification against forum
shopping executed by said counsel was fatally defective and constituted a valid cause for
dismissal of the complaint but the CA reversed and set aside the said decision.
• The CA ruled that the required certificate of non-forum shopping is mandatory and that
the same must be signed by the plaintiff or principal party concerned and not by counsel; and in
case of corporations, the physical act of signing may be performed in behalf of the corporate
entity by specifically authorized individuals. However, the CA pointed out that the factual
circumstances of the case warranted the liberal application of the rules and, as such, ordered the
remand of the case to the trial court for further proceedings.
• Petitioner alleged that respondent failed to submit any board resolution or secretary's
certificate authorizing Atty. Lat to institute the complaint and sign the certificate of non-forum
shopping on its behalf. Petitioner submits that since respondent is a juridical entity, the signatory
in the complaint must show proof of his or her authority to sign on behalf of the corporation.
Further, the SPA submitted by Atty. Lat, which was notarized before the Consulate General of
Chicago, Illinois, USA, allegedly authorizing him to represent respondent in the pre-trial and
other stages of the proceedings was signed by one Brent Healy (respondent's underwriter), who
lacks authorization from its board of directors.
• Respondent admitted that it failed to attach in the complaint a concrete proof of Atty.
Lat's authority to execute the certificate of non-forum shopping on its behalf. However, there was
subsequent compliance as respondent submitted an authenticated SPA empowering Atty. Lat to
represent it in the pre-trial and all stages of the proceedings.
Issue:
Whether Atty. Lat was properly authorized by respondent to sign the certification against forum
shopping on its behalf.
Ruling:
The Court ruled that the petition is meritorious, Atty. Lat was not properly authorized.
We have consistently held that the certification against forum shopping must be signed by the
principal parties. If, for any reason, the principal party cannot sign the petition, the one signing
on his behalf must have been duly authorized. With respect to a corporation, the certification
against forum shopping may be signed for and on its behalf, by a specifically authorized lawyer
who has personal knowledge of the facts required to be disclosed in such document. A
corporation has no power, except those expressly conferred on it by the Corporation Code and
those that are implied or incidental to its existence. In turn, a corporation exercises said powers
through its board of directors and/or its duly authorized officers and agents. Thus, it has been
observed that the power of a corporation to sue and be sued in any court is lodged with the board
of directors that exercises its corporate powers. In turn, physical acts of the corporation, like the
signing of documents, can be performed only by natural persons duly authorized for the purpose
by corporate by-laws or by a specific act of the board of directors.
Only individuals vested with authority by a valid board resolution may sign the certificate of
non-forum shopping on behalf of a corporation. We also required proof of such authority to be
presented. The petition is subject to dismissal if a certification was submitted unaccompanied by
proof of the signatory's authority.
In the present case, since respondent is a corporation, the certification must be executed by an
officer or member of the board of directors or by one who is duly authorized by a resolution of
the board of directors; otherwise, the complaint will have to be dismissed. The lack of
certification against forum shopping is generally not curable by mere amendment of the
complaint, but shall be a cause for the dismissal of the case without prejudice. The same rule
applies to certifications against forum shopping signed by a person on behalf of a corporation
which are unaccompanied by proof that said signatory is authorized to file the complaint on
behalf of the corporation.

There is no proof that respondent, a private corporation, authorized Atty. Lat, through a board
resolution, to sign the verification and certification against forum shopping on its behalf.
Accordingly, the certification against forum shopping appended to the complaint is fatally
defective, and warrants the dismissal of respondent's complaint for Insurance Loss and Damages
against petitioner.
Contrary to the CA's finding, the Court finds that the circumstances of this case do not
necessitate the relaxation of the rules. There was no proof of authority submitted, even
belatedly, to show subsequent compliance with the requirement of the law. Neither was there a
copy of the board resolution or secretary's certificate subsequently submitted to the trial court
that would attest to the fact that Atty. Lat was indeed authorized to file said complaint and sign
the verification and certification against forum shopping, nor did respondent satisfactorily
explain why it failed to comply with the rules. Thus, there exists no cogent reason for the
relaxation of the rule on this matter. Obedience to the requirements of procedural rules is needed
if we are to expect fair results therefrom, and utter disregard of the rules cannot justly be
rationalized by harking on the policy of liberal construction.

Moreover, the SPA dated May 11, 2000, submitted by respondent allegedly authorizing Atty. Lat
to appear on behalf of the corporation, in the pre-trial and all stages of the proceedings, signed by
Brent Healy, was fatally defective and had no evidentiary value. It failed to establish Healy's
authority to act in behalf of respondent, in view of the absence of a resolution from respondent's
board of directors or secretary's certificate proving the same. Like any other corporate act, the
power of Healy to name, constitute, and appoint Atty. Lat as respondent's attorney-in-fact, with
full powers to represent respondent in the proceedings, should have been evidenced by a board
resolution or secretary's certificate.
Respondent's allegation that petitioner is estopped by laches from raising the defect in
respondent's certificate of non-forum shopping does not hold water.
Jurisdiction is the power with which courts are invested for administering justice; that is, for
hearing and deciding cases. In order for the court to have authority to dispose of the case on the
merits, it must acquire jurisdiction over the subject matter and the parties. Courts acquire
jurisdiction over the plaintiffs upon the filing of the complaint, and to be bound by a decision, a
party should first be subjected to the court's jurisdiction. Clearly, since no valid complaint was
ever filed with the RTC, Branch 8, Manila, the same did not acquire jurisdiction over the person
of respondent.

Since the court has no jurisdiction over the complaint and respondent, petitioner is not estopped
from challenging the trial court's jurisdiction, even at the pre-trial stage of the proceedings. This
is so because the issue of jurisdiction may be raised at any stage of the proceedings, even on
appeal, and is not lost by waiver or by estoppel.
FELIX MARTOS, et. al Petitioners, vs. NEW SAN JOSE BUILDERS, INC., Respondent.
G.R. No. 192650, October 24, 2012, THIRD DIVISION, MENDOZA, J.

FACTS:
• Questioned in this petition for review is the July 31, 2009 Decision of the Court of
Appeals (CA) and its June 17, 2010 Resolutions
• New San Jose Builders, Inc. is a domestic corporation duly organized and existing under
the laws of the Philippines and is engaged in the construction of road, bridges, buildings, and low
cost houses primarily for the government. One of the projects of petitioner is the San Jose Plains
Project, which is also known as the "Erap City" calls for the construction of low cost housing,
which are being turned over to the National Housing Authority to be awarded to deserving poor
families.
• Private respondents alleged that, on various dates, petitioner hired them on different
positions. Sometime in 2000, petitioner was constrained to slow down and suspend most of the
works on the
• SJPP project due to lack of funds of the National Housing Authority. Thus, the
workers were informed that many of them [would] be laid off and the rest would be reassigned
to other projects. Juan Villaber, et al, were among those who were retained and were issued new
appointment papers to their respective assignments, indicating therein that they are project
employees. However, they refused to sign the appointment papers as project employees and
subsequently refused to continue to work.
• Three Complaints for Illegal Dismissal and for money claims were filed before the
NLRC against petitioner and Jose Acuzar, by private respondents who claimed to be the former’s
employees.
• Petitioner denies that private respondents were illegally dismissed, and alleged that they
were project employees, whose employments were automatically terminated upon completion of
the project for which they were hired. Private respondents claim that petitioner hired them as
regular employees, continuously and without interruption, until their dismissal on February 28,
2002.
• Subsequently, the three Complaints were consolidated and assigned to Labor Arbiter
Facundo Leda. On May 23, 2003, the LA handed down a decision declaring, among others, that
petitioner Felix Martos was illegally dismissed and entitled to separation pay, backwages and
other monetary benefits; and dismissing, without prejudice, the complaints/claims of the other
complainants.
• Both parties appealed the LA decision to the NLRC. Petitioners appealed that part which
dismissed all the complaints, without prejudice, except that of Martos. New San Jose Builders,
Inc. appealed that part which held that Martos was its regular employee and that he was illegally
dismissed.
• The NLRC dismissed the appeal filed by respondent and partially granting that of the
other petitioners.
• After the denial of its motion for reconsideration, respondent filed before the CA a
petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.
• CA rendered a decision reversing and setting aside Decision and the Resolution of the
NLRC and reinstating the Decision of the LA.

• The CA explained that the NLRC committed grave abuse of discretion in reviving the
complaints of petitioners despite their failure to verify the same. The CA also held that the
NLRC gravely abused its discretion when it took cognizance of petitioners’ appeal because Rule
41, Section 1(h) of the 1997 Rules of Civil Procedure, as amended, which is suppletory, provides
that no appeal may be taken from an order dismissing an action without prejudice.
• With respect to Martos, the CA ruled that he was a regular employee of respondent and
his termination was illegal.
• Not in conformity with the CA decision, petitioners filed this petition.
ISSUE:
Whether or not the CA was correct in dismissing the complaints filed by those petitioners who
failed to verify their position papers. (YES)
RULING:
• SEC. 4. Verification. – Except when otherwise specifically required by law or rule,
pleadings need not be under oath, verified or accompanied by affidavit.
• A pleading is verified by an affidavit that the affiant has read the pleadings and that the
allegations therein are true and correct of his personal knowledge or based on authentic records.
• A pleading required to be verified which contains a verification based on "information
and belief" or upon "knowledge, information and belief" or lacks a proper verification, shall be
treated as an unsigned pleading.
• SEC. 5. Certification against forum shopping. – The plaintiff or principal party shall
certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a
sworn certification annexed thereto and simultaneously filed therewith:
• 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.
• The verification requirement is significant, as it is intended to secure an assurance that
the allegations in the pleading are true and correct and not the product of the imagination or a
matter of speculation, and that the pleading is filed in good faith. Verification is deemed
substantially complied with when, as in this case, one who has ample knowledge to swear to the
truth of the allegations in the complaint or petition signs the verification, and when matters
alleged in the petition have been made in good faith or are true and correct.
• The absence of a proper verification is cause to treat the pleading as unsigned and
dismissible.
• The lone signature of Martos would have been sufficient if he was authorized by his co-
petitioners to sign for them. Unfortunately, petitioners failed to adduce proof that he was so
authorized.
• The liberal construction of the rules may be invoked in situations where there may be
some excusable formal deficiency or error in a pleading, provided that the same does not subvert
the essence of the proceeding and it at least connotes a reasonable attempt at compliance with the
rules. Besides, fundamental is the precept that rules of procedure are meant not to thwart but to
facilitate the attainment of justice; hence, their rigid application may, for deserving reasons, be
subordinated by the need for an apt dispensation of substantial justice in the normal course. They
ought to be relaxed when there is subsequent or even substantial compliance, consistent with the
policy of liberality espoused by Rule 1, Section 6.14 Not being inflexible, the rule on verification
allows for such liberality.
• Considering that the dismissal of the other complaints by the LA was without prejudice,
the other complainants should have taken the necessary steps to rectify their procedural mistake
after the decision of the LA was rendered. They should have corrected this procedural flaw by
immediately filing another complaint with the correct verification this time. Surprisingly, they
did not even attempt to correct this technical blunder. Worse, they committed the same
procedural error when they filed their appeal with the NLRC.
GEORGIA T. ESTEL, Petitioner, vs. RECAREDO P. DIEGO, SR. and RECAREDO R.
DIEGO, JR., Respondents.
G.R. No. 174082 | 2012-01-16

FACTS:
• Respondents filed a Complaint for Forcible Entry, Damages and Injunction with the
MTCC of Gingoog City, Misamis Oriental. Respondents alleged that on April 1991, they entered
a contract of sale of a parcel of land with petitioner and had been in actual, adverse, and
uninterrupted possession of the subject lot since then.
• That in the morning of July 20, 1995, the petitioner, together with her two grown-up sons
and five other persons, uprooted the fence surrounding the disputed lot, after which they entered
its premises and then cut and destroyed the trees and plants found therein.
• MTCC – in favor of respondents; ordered the plaintiffs to vacate the premises and return
the same to the plaintiffs.
• RTC – affirmed MTCC
• CA – affirmed RTC. Hence, this petition.
• Petitioner avers that the complaint states no cause of action because the verification and
certificate of non-forum shopping accompanying the complaint are defective and, as such, the
complaint should be treated as an unsigned pleading. As to the verification, petitioner contends
that it should be based on respondent's personal knowledge or on authentic record and not simply
upon "knowledge, information and belief."

ISSUE: W/N the complaint should be treated as an unsigned pleading.

HELD: NO.
• Anent respondents' alleged defective verification, the Court again notes that this issue
was not raised before the MTCC. Even granting that this matter was properly raised before the
court a quo, the Court finds that there is no procedural defect that would have warranted the
outright dismissal of respondents' complaint as there is compliance with the requirement
regarding verification.
• Section 4, Rule 7 of the Rules of Court, as amended by A.M. No. 00-2-10-SC provides:
Sec. 4. Verification. Except when otherwise specifically required by law or rule, pleadings need
not be under oath, verified or accompanied by affidavit. A pleading is verified by an affidavit
that the affiant has read the pleading and that the allegations therein are true and correct of his
personal knowledge or based on authentic records. A pleading required to be verified which
contains a verification based on "information and belief" or upon "knowledge, information and
belief" or lacks a proper verification, shall be treated as an unsigned pleading.
• A reading of respondents' verification reveals that they complied with the above quoted
procedural rule. Respondents confirmed that they had read the allegations in the Complaint
which were true and correct based on their personal knowledge. The addition of the words "to
the best" before the phrase "of our own personal knowledge" did not violate the requirement
under Section 4, Rule 7, it being sufficient that the respondents declared that the allegations in
the complaint are true and correct based on their personal knowledge. Verification is deemed
substantially complied with when, as in the instant case, one who has ample knowledge to swear
to the truth of the allegations in the complaint or petition signs the verification, and when matters
alleged in the petition have been made in good faith or are true and correct.

OTHER ISSUES:
• Petitioner contends that since respondents failed to allege the location of the disputed
parcel of land in their complaint, the MTCC did not acquire jurisdiction over the subject matter
of the said complaint.
 A review of the records shows that petitioner did not raise the issue of jurisdiction or
venue in her Answer filed with the MTCC. The CA correctly held that even if the geographical
location of the subject property was not alleged in the Complaint, petitioner failed to seasonably
object to the same in her Affirmative Defense, and even actively participated in the proceedings
before the MTCC. In fact, petitioner did not even raise this issue in her appeal filed with the
RTC. Thus, she is already estopped from raising the said issue in the CA or before this Court.
• Petitioner also avers that the MTCC did not acquire jurisdiction over the case for failure
of respondents to specifically allege facts constitutive of forcible entry.
 In the present case, it is clear that respondents sufficiently alleged in their Complaint the
material facts constituting forcible entry, as they explicitly claimed that they had prior physical
possession of the subject property since its purchase from petitioner, who voluntarily delivered
the same to them. They also particularly described in their complaint how petitioner, together
with her two sons and five other persons, encroached upon the subject property and dispossessed
them of the same. Unlawfully entering the subject property and excluding therefrom the prior
possessor would necessarily imply the use of force and this is all that is necessary. In the instant
case, it is, thus, irrefutable that respondents sufficiently alleged that the possession of the subject
property was wrested from them through violence and force.
• With respect to the certificate of non-forum shopping, petitioner claims that its defect
consists in respondents' failure to make an undertaking therein that “if they should learn that a
similar action or proceeding has been filed or is pending before the Supreme Court, the Court of
Appeals or any other tribunal or agency, they shall report that fact within five (5) days therefrom
to the court or agency wherein the original pleading and sworn certification have been filed.”
 It is settled that with respect to the contents of the certification against forum shopping,
the rule of substantial compliance may be availed of.22 This is because the requirement of strict
compliance with the provisions regarding the certification of non-forum shopping merely
underscores its mandatory nature in that the certification cannot be altogether dispensed with or
its requirements completely disregarded.23 It does not thereby interdict substantial compliance
with its provisions under justifiable circumstances, as the Court finds in the instant case.
Agustin v Cruz-Herrera
FACTS:
• Respondent Herrera was the President of Podden while complainants were assemblers
and/or line leader assigned at the production department.3 In 1993, the complainants were
terminated from employment due to financial reverses. Upon verification, however, with the
Department of Labor and Employment, no such report of financial reverses or even retrenchment
was filed. This prompted the complainants to file a complaint for illegal dismissal, monetary
claims and damages against Podden and Herrera.4 They engaged the services of Atty. Emmanuel
D. Agustin (Atty. Agustin) to handle the case5 upon the verbal agreement that he will be paid on
a contingency basis at the rate of ten percent (10%) of the final monetary award or such amount
of attorney’s fees that will be finally determined.
• The complainants, thru Atty. Agustin, obtained a favorable ruling before the Labor
Arbiter (LA). [Podden and Herrera] are hereby directed/ordered to immediately reinstate the
complainants to their former positions without loss of seniority rights and other privileges with
full backwages from date of dismissal up to actual date of reinstatement.
• March 20, 1999, Herrera filed a Manifestation and Motion to deny issuance of the writ
stating, among others, that Podden ceased operations on December 1, 1994 or almost four years
before judgment was rendered by the LA on the illegal dismissal complaint and that nine of the
eleven employees have executed Waivers and Quitclaims rendering any execution of the
judgment inequitable.
• Atty. Agustin opposed Herrera’s motion and argued that the issuance of a writ of
execution is ministerial because the LA decision has long been final and executory there being
no appeal taken therefrom. He further claimed that the alleged Waivers and Quitclaims were part
of a scheme adopted by Podden to evade its liability and defraud the complainants
• NLRC reversed the LA Order dated May 15, 2000 for the reason that it unlawfully
amended, altered and modified the final and executory LA Decision dated September 27, 1998.
The quitclaims were also held invalid based on the unconscionably low amount received by each
of the complainants thereunder which ranged between ₱10,000.000 and ₱20,000.00 as against
the judgment award of ₱238,680.00 for each individual complainant. This factor was found by
the NLRC to be a clear proof that the quitclaims were indeed wangled from the unsuspecting
complainants.
• On August 6, 2004, Herrera filed a petition for certiorari before the CA assailing the
issuances of the NLRC. During the pendency of the petition or on August 30, 2005, a joint
compromise agreement was submitted to the CA. CA found the joint compromise agreement
consistent with law, public order and public policy, and consequently stamped its approval
thereon and entered judgment in accordance therewith.
• Atty. Agustin, with the complainants named as his co-petitioners, interposed the present
recourse contending that the resolutions of the CA violated the principle of res judicata because
they amended and altered the final and executory LA Decision dated September 27, 1998 and
NLRC Resolution dated May 7, 2003 on the basis of an unconscionable compromise agreement
that was executed without his knowledge and consent. Atty. Agustin prays that the joint
compromise agreement be set aside, the LA Decision dated September 27, 1998 executed and
Herrera ordered to pay him ₱335,844.18 as attorney’s fees pursuant to the final and executory
monetary award originally obtained by the complainants before the LA.
ISSUE: Did the CA err in approving the joint compromise agreement executed by respondent
Herrera and the former employees of Podden?
RULING:
Atty. Agustin ought to be reminded that his professional relation with his clients is one of agency
under the rules thereof "[t]he acts of an agent are deemed the acts of the principal only if the
agent acts within the scope of his authority." J-Phil Marine Inc. v. NLRC, 583 Phil 671.It is clear
that under the circumstances of this case, Atty. Agustin is acting beyond the scope of his
authority in questioning the compromise agreement between the complainants, Podden and
Herrera.
It is settled that parties may enter into a compromise agreement without the intervention of their
lawyer. This precedes from the equally settled rule that a client has an undoubted right to settle a
suit without the intervention of his lawyer for he is generally conceded to have the exclusive
control over the subject-matter of the litigation and may, at any time before judgment, if acting in
good faith, compromise, settle, and adjust his cause of action out of court without his attorney’s
intervention, knowledge, or consent, even though he has agreed with his attorney not to do so.
Hence, the absence of a counsel’s knowledge or consent does not invalidate a compromise
agreement.
Neither can a final judgment preclude a client from entering into a compromise. Rights may be waived
through a compromise agreement, notwithstanding a final judgment that has already settled the rights of
the contracting parties provided the compromise is shown to have been voluntarily, freely and
intelligently executed by the parties, who had full knowledge of the judgment. Additionally, it must not
be contrary to law, morals, good customs and public policy.
In the present case, the allegations of vitiated consent proffered by Atty. Agustin are all presumptions and
suppositions that have no bearing as evidence. There is no proof that the complainants were forced,
intimidated or defrauded into executing the quitclaims.
It must be noted that the complainants were laborers who desired to contest their dismissal for being
illegal. With no clear means to pay for costly legal services, they hired Atty. Agustin whose remuneration
was subject to the success of the illegal dismissal suit. Before a judgment was rendered in their favor,
however, the company closed down and settlement of the suit for an amount lesser than their monetary
claims, instead of execution of the favorable judgment, guaranteed the atonement for their illegal
termination. To make the complainants liable for theP335,844.18 attorney’s fees adjudged in the LA
Decision would be allowing Atty. Agustin to get a lion’s share of theP385,000.00 received by the former
from the compromise agreement that terminated the suit; to allow that to happen will contravene the
raison d're for contingent fee arrangements.
More importantly, Atty. Agustin was not totally deprived of his fees. Under the joint settlement
agreement, he is entitled to receive ten percent (10%) of the total settlement.
 Pascual and Santos, Inc. v. The Members of the Tramo Wakas Neighborhood Association

(PLEADINGS: Certificate Against Forum Shopping)

FACTS:

Members of Tramo Wakas Neighborhood Association (respondents) lodged at the Presidential

Action Center a petition praying that ownership over 3 parcels of land situated in Barangay San
Dionisio, Parañaque, with an aggregate area of 35,195 sqm. be awarded to them. They alleged
that petitioner claims ownership of the subject lots which they have occupied since 1957.

Land Management Bureau (LMB) ruled against the respondents. Their MR is also denied. They
lodged an appeal before the DENR, which dismissed the appeal for lack of merit and affirmed in
toto the decision of the Director of the LMB. They filed an MR to the OP, which was likewise
dismissed their petition for lack of merit and affirmed in toto the decision of the DENR. They
now filed a Petition for Review before the CA, which dismissed the appeal due to infirm
Verification and Certification of non-forum shopping and belated filing. They filed an MR but
was still denied.

CA ruled by stating that “any person who claims authority to sign, on behalf of another, the
Certificate of Non-Forum Shopping, as required by the rules, must show sufficient proof thereof.
Bare allegations are not proof, and the representation of one who acts on behalf of another
cannot, by itself, serve as proof of his authority to act as agent or of the extent of his authority as
agent. Thus, absent such clear proof, the Court cannot accept at face value, such authority to sign
on behalf of the corporation”.

ISSUE:

WON THE PERSONS WHO EXECUTED THE VERIFICATION AND CERTIFICATION OF

NON-FORUM SHOPPING ATTACHED TO PSI'S MANIFESTATION/PETITION FOR
REVIEW FILED WITH THE COURT OF APPEALS WERE AUTHORIZED TO DO SO

HELD: YES

Rules of Court mandates that a petition for review shall contain a sworn certification against
forum shopping in which the petitioner shall attest that he has not commenced any other action
involving the same issues in this Court, CA or different divisions thereof, or any other tribunal or
agency; if there is such other action or proceeding, he must state the status of the same; and if he
should thereafter learn that a similar action or proceeding has been filed or is pending before this
Court, CA, or different divisions thereof, or any other tribunal or agency, he undertakes to
promptly inform the aforesaid courts and other tribunal or agency thereof within five days
therefrom. For failure to comply with this mandate, shall be sufficient ground for the dismissal
thereof.

The requirement that the petitioner should sign the certificate of non-forum shopping applies
even to corporations, considering that the mandatory directives of the Rules of Court make no
distinction between natural and juridical persons.

In the case at bar, CA dismissed the petition before it on the ground that Lombos and Pascual,
the signatories to the verification and certification on non-forum shopping, failed to show proof
that they were authorized by petitioner's board of directors to file such a petition.

Except for the powers which are expressly conferred on it by the Corporation Code and those
that are implied by or are incidental to its existence, a corporation has no powers. It exercises its
powers through its board of directors and/or its duly authorized officers and agents. Thus, its
power to sue and be sued in any court is lodged with the board of directors that exercises its
corporate powers. Physical acts, like the signing of documents, can be performed only by natural
persons duly authorized for the purpose by corporate by-laws or by a specific act of the board of
directors.

It is undisputed that when the petition for certiorari was filed with the CA, there was no proof
attached thereto that Lombos and Pascual were authorized to sign the verification and non-forum
shopping certification. Subsequent to CA's dismissal of the petition, however, petitioner filed a
motion for reconsideration to which it attached a certificate issued by its board secretary stating
that prior to the filing of the petition, Lombos and Pascual had been authorized by petitioner's
board of directors to file the petition before the CA.

This Court has ruled that the subsequent submission of proof of authority to act on behalf of a
petitioner corporation justifies the relaxation of the Rules for the purpose of allowing its petition
to be given due course.

It must also be kept in mind that while the requirement of the certificate of non-forum shopping
is mandatory, nonetheless the requirements must not be interpreted too literally and thus defeat
the objective of preventing the undesirable practice of forum shopping.

WHEREFORE, petition is GRANTED. Resolutions of CA are SET ASIDE. Case is

REMANDED to CA which is hereby directed to give due course to the appeal of petitioner.
MALAYAN INSURANCE CO., INC., YVONNE S. YUCHENGCO, ATTY. EMMANUEL
G. VILLANUEVA, SONNY RUBIN,1 ENGR. FRANCISCO MONDELO, and MICHAEL
REQUIJO,2 Petitioners.

vs.

EMMA CONCEPCION L. LIN,3 Respondent.

FACTS:

• Respondent, Emma Lin is a client of both RCBC and Malayan Insurance Co., Inc.
Acquired through various loans from RCBC, she had insured five of the properties which were
six clustered warehouses located at Plaridel, Bulacan to Malayan Insurance Co. The insurance
was purposed specifically against occurrence of fire for P 56 million and P2 million for the
remaining warehouse.

• On February 24, 2008 five warehouses were gutted by fire and 2 months after on April 8,
2008, the Bureau of Fire Protection (BFP) issued a Fire Clearance Certification to respondent
after having determined that the cause of fire was accidental.

• Despite the foregoing, her demand for payment of her insurance claim was denied since
the forensic investigators hired by Malayan claimed that the cause was arson instead of accident.
Respondent then sought assistance from the Insurance Commission (IC) which, after a
reinvestigation into the cause of fire, recommended that Malayan should pay Lin’s insurance
claim to accord with BFP’s findings. Nevertheless, Malayan still refused to do so. As against
RCBC, Lin averred that notwithstanding of the loss of mortgaged properties, the bank refused to
go after Malayan and instead insisted that she herself must pay the loans to the RCBC. The latter
also added that foreclosure proceedings would ensue if the former would not comply; to add
insult to injury, RCBC has been compounding the interest on her loans, despite the former’s
refusal to after Malayan.

• Following the aforementioned, respondent then filed a petition to order the petitioners to
pay her insurance claim plus interest on the amounts owing her; that the loans and mortgage to
RCBC be enjoined from foreclosing the mortgage on the properties put up as collaterals.

• Later on June 17, 2010, while the case was being filed, Lin filed an administrative case
before the Insurance Commission (IC) against the Malayan represented by Yvonne, thus
docketed as Administrative Case No. 431. The purpose is to put Malayan under liability for
unfair claim settlement practice under Section 241 in relation to Section 247 of the Insurance
Code. Thus, alleging that Malayan’s license to operate as a non-life insurance company should
be revoked or suspended until it fully complies with the IC Resolution.

• On August 17, 2010, Malayan filed a motion to dismiss Civil Case No. 10-122738 based
on forum shopping arguing that the administrative case’s purpose is to prompt IC into ordering
the former to pay her claim and that the elements of forum shopping are present; specifically the
identity of parties shared the same interests and were represented in both civil and administrative
cases.

• Motion to dismiss the Civil Case was denied by the RTC for lack of merit. Petitioners
then sued out a petition for Certiorari and Prohibition before the CA, whereas it upheld the
decision of the RTC. Petitioner moved for a motion for reconsideration which was also denied by
CA.

• Hence, this petition.

ISSUE: Whether or not Lin committed forum shopping.

RULING: NO. The SC held that the case at bar is to be governed by the case law rulings in the
Go and Almendras cases where it was stressed that an administrative case for unfair claim
settlement practice may proceed simultaneously with the civil case for collection of the
insurance proceeds filed by at the same claimant since a judgment in one will not amount to res
judicata to the other, and vice versa, due to the variance or differences in the issues, in the
quantum of evidence, and in the procedure to be followed in prosecuting the cases.

In the present case, petitioners basically insist that Lin committed willful and deliberate forum
shopping which warrants the dismissal of her civil case because it is not much different from the
administrative case in terms of the parties involved, the causes of action pleaded, and the reliefs
prayed for. Petitioners also posit that another ground warranting the dismissal of the civil case
was Lin’s failure to notify the RTC about the pendency of the administrative case within five
days from the filing thereof.

These above-mentioned arguments will not avail. The proscription against forum
shopping is found in Section 5, Rule 7 of the Rules of Court which cover the very essence of
forum shopping itself. It is the filing of multiple suits involving the same parties for the same
cause of action, either simultaneously, for the purpose of obtaining a favorable judgment. It
exists where the elements of litis pendentia are present or where a final judgment in one case will
amount to res judicata in another. The settled rule is that criminal and civil cases are altogether
different from administrative matters as postulated in Almendras Mining Corporation v. Office
of the Insurance Commission.

The Office of the Ombudsman further reiterated and enunciated in the decision that a
civil case before the trial court involving recovery of payment of the insured’s insurance claim
plus damages, can proceed simultaneously with an administrative case before the I.C. As the
afore cited cases are analogous in many aspects to the present case, both in respect to their
factual backdrop and in their jurisprudential teachings, the case law ruling in the Almendras and
in the Go cases must apply with implacable force to the present case. Consistency alone
demands----because of justice cannot be inconsistent, that the final authoritative mandate in the
cited cases must produce and end result not much different from the present case.

The essence of forum shopping is the 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. It exists where the elements of litis pendentia are present or where a final
judgment in one case will amount to res judicata in another. On the other hand, for litis pendentia
to be a ground for the dismissal of an action, the following requisites must concur: (a) identity of
parties, or at least such parties who represent the same interests in both actions; (b) identity of
rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the
identity with respect to the two preceding particulars in the two cases is 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.