CivPro Counterclaim Rules

CivPro; February 07-08, 2014
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RULE 6 Kinds of Pleadings

Financial Building Corporation vs. Forbes Park Association, Inc. G.R.
No. 133119, August 17, 2000, 338 SCRA 346 CAMERINO

DOCTRINE: Section 6, Rule 6. Counterclaim. -- A counterclaim is any claim
which a defending party may have against an opposing party.;
Section 7, Rule 6. Compulsory Counterclaim. -- a compulsory counterclaim
is one which, being cognizable by the regular courts of justice, arises out of
or is connected with the transaction or occurrence constituting the subject
matter of the opposing partys claim and does not require for its adjudication
the presence of third parties of whom the court cannot acquire jurisdiction.
Such a counterclaim must be within the jurisdiction of the court both as to
the amount and the nature thereof, except that in an original action before
the Regional Trial Court, the counterclaim may be considered compulsory
regardless of the amount.

FACTS: The then Union of Soviet Socialist Republic (USSR) engaged
Financial Building to construct a multi-level office and staff apartment
building at its residential lot in Forbes Park Village, Makati.

However, based on its existing regulations, Forbes Park only authorized the
construction of a single-family residential building. Yet, construction of a
multi-level apartment building proceeded.

Financial Building submitted to the Makati City Government a second plan
for the construction of a multi-level apartment building, which was different
from the first plan for the construction of a residential building submitted to
Forbes Park.

Forbes Park discovered the second plan, enjoined further construction work.
Later, Forbes Park restricted entry (personnel and materials) of Financial
Building in the construction site.Upon a failed attempt to settle their
differences, Financial Building instead filed a Complaint for Injunction and
Damages. Forbes Park, in turn, filed a Motion to Dismiss on the ground that
Financial Building had no cause of action because it was not the real party-
in-interest.

The trial court issued a writ of preliminary injunction against Forbes Park but
the Court of Appeals nullified it and dismissed the complaint altogether. SC
affirmed the said dismissal.

After case was terminated with finality, Forbes Park sought to vindicate its
rights by filing a Complaint for Damages, against Financial Building.

TRIAL COURTS DECISION: ruled in favor of Forbes Park and against
Financial Building, ordering defendant to remove/demolish the illegal
structures and to pay damages.

CA's DECISION: Affirmed trial court's decision.

ISSUE: WON claims and causes of action by Forbes Park are barred by
prior judgment and/or are deemed waived for its failure to interpose the
same as compulsory counterclaims in the original case.

HELD: The Supreme Court held that the instant case is barred due to
Forbes Parks failure to set it up as a compulsory counterclaim in the original
case.

A compulsory counterclaim is one which arises out of or is necessarily
connected with the transaction or occurrence that is the subject matter of the
opposing partys claim.If it is within the jurisdiction of the court and it does
not require for its adjudication the presence of third parties over whom the
court cannot acquire jurisdiction, such compulsory counterclaim is barred if it
is not set up in the action filed by the opposing party.

Thus, a compulsory counterclaim cannot be the subject of a separate action
but it should instead be asserted in the same suit involving the same
transaction or occurrence, which gave rise to it.To determine whether a
counterclaim is compulsory or not, we have devised the following tests: (1)
Are the issues of fact or law raised by the claim and the counterclaim largely
the same? (2) Would res judicata bar a subsequent suit on defendants claim
absent the compulsory counterclaim rule? (3) Will substantially the same
evidence support or refute plaintiffs claim as well as the defendants
counterclaim? and (4) Is there any logical relation between the claim and the
counterclaim? Affirmative answers to the above queries indicate the
existence of a compulsory counterclaim.

Undoubtedly, the prior case (the original case) and the instant case arose
from the same occurrence the construction work done by Financial
Building on the USSRs lot in Forbes Park Village. The issues of fact and law
in both cases are identical. The factual issue is whether the structures
erected by Financial Building violate Forbes Parks rules and regulations,
whereas the legal issue is whether Financial Building, as an independent
contractor working for the USSR, could be enjoined from continuing with the
construction and be held liable for damages if it is found to have violated
Forbes Parks rules.

As a result of the controversy, Financial Building seized the initiative by filing
the prior injunction case, which was anchored on the contention that Forbes
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Parks prohibition on the construction work in the subject premises was
improper. The instant case on the other hand was initiated by Forbes Park to
compel Financial Building to remove the same structures it has erected in
the same premises involved in the prior case and to claim damages for
undertaking the said construction. Thus, the logical relation between the two
cases is patent and it is obvious that substantially the same evidence is
involved in the said cases.

Moreover, the two cases involve the same parties. The aggregate amount of
the claims in the instant case is within the jurisdiction of the regional trial
court, had it been set up as a counterclaim in the original case. Therefore,
Forbes Parks claims in the instant case should have been filed as a
counterclaim in the original case.

Second. Since Forbes Park filed a motion to dismiss in the original case, its
existing compulsory counterclaim at that time is now barred.

A compulsory counterclaim is auxiliary to the proceeding in the original suit
and derives its jurisdictional support therefrom. A counterclaim presupposes
the existence of a claim against the party filing the counterclaim. Hence,
where there is no claim against the counterclaimant, the counterclaim is
improper and it must dismissed, more so where the complaint is dismissed
at the instance of the counterclaimant. In other words, if the dismissal of the
main action results in the dismissal of the counterclaim already filed, it
stands to reason that the filing of a motion to dismiss the complaint is an
implied waiver of the compulsory counterclaim because the grant of the
motion ultimately results in the dismissal of the counterclaim.

Thus, the filing of a motion to dismiss and the setting up of a compulsory
counterclaim are incompatible remedies. In the event that a defending party
has a ground for dismissal and a compulsory counterclaim at the same time,
he must choose only one remedy. If he decides to file a motion to dismiss,
he will lose his compulsory counterclaim. But if he opts to set up his
compulsory counterclaim, he may still plead his ground for dismissal as an
affirmative defense in his answer.The latter option is obviously more
favorable to the defendant although such fact was lost on Forbes Park.

The ground for dismissal invoked by Forbes Park in the original case was
lack of cause of action. There was no need to plead such ground in a motion
to dismiss or in the answer since the same was not deemed waived if it was
not pleaded. Nonetheless, Forbes Park still filed a motion to dismiss and
thus exercised bad judgment in its choice of remedies. Thus, it has no one to
blame but itself for the consequent loss of its counterclaim as a result of
such choice.

WHEREFORE, the instant petition is hereby GRANTED and the Decision of
the Court of Appeals is hereby REVERSED and SET ASIDE.

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Arenas vs. Court of Appeals G. R. No. 126640, November 23, 2000, 345
SCRA 617 CHING

Doctrine: A counterclaim is compulsory where: (1) it arises out of, or is
necessary connected with, the transaction or occurrence that is the subject
matter of the opposing partys claim; (2) it does not require the presence of
third parties of whom the court cannot acquire jurisdiction; and (3) the trial
court has jurisdiction to entertain the claim.

Facts:

Case 1
In 1970, Rosalina Rojas, who the owner of a 2-story building in Calasiao,
Pangasinan, verbally leased the ground floor of the building to Marcelo
Arenas, who used it as an optical clinic. The lease was on a month-to-month
basis.

In 1990, wanting to demolish and reconstruct the building, Rojas terminated
the lease and demanded Arenas to vacate. However, Arenas refused.

Rojas filed a case of unlawful detainer with the MTC. MTC ruled in favor of
Rojas and ordered Arenas to vacate the place. The case was appealed to
the RTC wherein the RTC affirmed the decision of the MTC.

Case 2
Arenas alleged that, after filing Case 1 and before the decision of the MTC in
Case 1, Rojas has been harassing him to vacate the place, doing such
things as (i) removing the signboard of the clinic (ii) cutting of his electricity
(iii) dumping gravel and sand in front of their clinic. Due to this, Arenas filed
a case for Damages with the RTC.

Rojas filed a motion to dismiss on the ground of forum shopping. However,
the RTC denied her motion to dismiss. Eventually, the RTC ruled in favor of
Arenas and ordered Rojas to pay for damages.

The case was appealed to the CA. CA reversed the decision of the RTC and
dismissed Arenas complaint. The CA reasoned that Arenas already filed a
compulsory counterclaim in Case 1. Thus, he is barred from filing Case 2.

RTC: The RTC ruled in favor of Arenas and ordered Rojas to pay for
damages.

CA: CA reversed the decision of the RTC and dismissed Arenas complaint.

Issue: W/N the causes of action in Case 2 were in the nature of compulsory
counterclaims that must be pleaded in Case 1.

Held: No. The causes of action in Case 2 were not compulsory
counterclaims. That must be pleaded in Case 1.

Rule 11 of the Rules of Court defines a compulsory counterclaim as a claim
the defendant has at the time he files his answer. Thus, a counterclaim is
compulsory where: (1) it arises out of, or is necessary connected with, the
transaction or occurrence that is the subject matter of the opposing partys
claim; (2) it does not require the presence of third parties of whom the court
cannot acquire jurisdiction; and (3) the trial court has jurisdiction to entertain
the claim.

The following are the tests by which the compulsory nature of a counterclaim
can be determined: (1) Are the issues of fact and law raised by the claim and
counterclaim largely the same? (2) Would res judicata bar a subsequent suit
on defendants claim absent the compulsory counterclaim rule? (3) Will
substantially the same evidence support or refute plaintiffs claim as well as
defendants counterclaim? (4) Is there any logical relation between the claim
and counterclaim?

In this case, the cause of action in Case 1 is for unlawful detainer. In Case 2,
the cause of actions were for damages due to (i) removing the signboard of
the clinic (ii) cutting of his electricity (iii) dumping gravel and sand in front of
their clinic, all of which happened after filing the Answer.

SC Ruling: SC set aside the decision of the CA and remanded the case to
the RTC.

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Korean Technologies v. Alberto Lerma, G.R. No. 143581, January 7,
2008 DORIA

Doctrine:
Payment of docket fees: effective August 16, 2004 under Sec. 7, Rule 141
docket fees are now required to be paid in compulsory counterclaim or
cross-claims.
Certificate of non-forum shopping: an Answer is a responsive pleading, not
an initiatory pleading which requires a certification against forum shopping

Facts:
Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation
engaged in the supply and installation of Liquefied Petroleum Gas (LPG)
Cylinder manufacturing plants. Private respondent Pacific General Steel
Manufacturing Corp. (PGSMC) is a domestic corporation.
On March 5, 1997, PGSMC and KOGIES executed a Contract
whereby KOGIES would set up an LPG Cylinder Manufacturing Plant in
Carmona, Cavite, a property leased by PGSMC for PhP 322,560/month from
Worth Properties. The contract was executed in the Philippines.
On April 7, 1997, the parties executed, in Korea, an Amendment for
the prior contract amending the terms of payment. The contract and its
amendment stipulated that KOGIES will ship the machinery and facilities
necessary for manufacturing LPG cylinders, for which PGSMC would pay
$1,224,000. KOGIES would install and initiate the operation of the plant, for
which PGSMC would pay $306,000. The total contract price amounted to
$1,530,000.
The machineries, equipment, and facilities for the manufacture of
LPG cylinders were shipped, delivered, and installed in the Carmona plant.
PGSMC paid KOGIES $1,224,000. However, after the installation of the
plant, the initial operation could not be conducted as PGSMC encountered
financial difficulties affecting the supply of materials, thus forcing the parties
to agree that KOGIES would be deemed to have completely complied with
the terms and conditions of the March 5, 1997 contract.
For the remaining balance of $306,000 for the installation and initial
operation of the plant, PGSMC issued two postdated checks. When KOGIES
deposited the checks, these were dishonored for the reason "PAYMENT
STOPPED." KOGIES sent a demand letter threatening criminal action for
violation of BP 22 in case of nonpayment.
Thereafter, the wife of PGSMCs President faxed a letter to
KOGIES President complaining that not only did KOGIES deliver a different
brand of hydraulic press from that agreed upon but it had not delivered
several equipment parts already paid for. PGSMC informed KOGIES that
PGSMC was canceling their Contract on the ground that KOGIES had
altered the quantity and lowered the quality of the machineries and
equipment it delivered to PGSMC, and that PGSMC would dismantle and
transfer the machineries, equipment, and facilities installed in the Carmona
plant.
KOGIES wrote PGSMC informing the latter that it could not
unilaterally rescind their contract nor dismantle and transfer the machineries
and equipment on mere imagined violations by KOGIES. It also insisted that
their disputes should be settled by arbitration as agreed upon in Article 15,
the arbitration clause of their contract.
KOGIES filed a Complaint for Specific Performance against
PGSMC before the Muntinlupa City RTC. The RTC granted a TRO. In its
complaint, KOGIES alleged that PGSMC had initially admitted that the
checks that were stopped were not funded but later on claimed otherwise.
KOGIES averred that PGSMC violated Art. 15 of their Contract by
unilaterally rescinding the contract without resorting to arbitration. KOGIES
also asked that PGSMC be restrained from dismantling and transferring the
machinery and equipment installed in the plant.
PGSMC filed an opposition to the TRO arguing that KOGIES was
not entitled to the TRO since Art. 15 of the arbitration clause, was null and
void for being against public policy as it ousts the local courts of jurisdiction
over the instant controversy. PGSMC filed its Answer with Compulsory
Counterclaim asserting that it had the full right to dismantle and transfer the
machineries and equipment because it had paid for them in full; that
KOGIES was not entitled to PhP 9,000,000 for failing to completely install
and make the plant operational; and that KOGIES was liable for damages
amounting to PhP 4,500,000 for altering the quantity and lowering the quality
of the machineries and equipment.

Trial courts decision/TC:
The RTC denied the application for a writ of preliminary injunction,
reasoning that PGSMC had paid KOGIES the value of the machineries and
equipment as shown in the contract such that KOGIES no longer had
proprietary rights over them. And that, Art. 15 of the Contract was invalid as
it tended to oust the trial court or any other court jurisdiction over any dispute
that may arise between the parties.
KOGIES filed its Reply to Answer and Answer to Counterclaim.
KOGIES denied it had altered the quantity and lowered the quality of the
machinery, equipment, and facilities it delivered. It averred that whatever
was unfinished was PGSMCs fault since it failed to procure raw materials
due to lack of funds. KOGIES, relying on Chung Fu Industries (Phils.), Inc. v.
Court of Appeals, insisted that the arbitration clause was without question
valid.
Afterwhich, KOGIES filed a Supplemental Memorandum with
Motion to Dismiss answering PGSMCs memorandum and counterclaims. It
also filed its Motion for Reconsideration of the order denying its application
for a writ of preliminary injunction.
The RTC issued an order denying KOGIES motion to dismiss
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PGSMCs compulsory counterclaims as these counterclaims fell within the
requisites of compulsory counterclaims.
KOGIES filed an Urgent Motion for Reconsideration of the RTC
Order granting inspection of the plant and denying dismissal of PGSMCs
compulsory counterclaims. Without waiting for the resolution of its urgent
motion for reconsideration, KOGIES filed before the CA a petition for
certiorari seeking annulment of the RTC Orders.

CAs decision/CA:
The CA affirmed the RTC Orders and dismissed the petition for
certiorari filed by KOGIES. The CA found that the RTC did not gravely abuse
its discretion.
On the issue of the validity of the arbitration clause, the CA agreed
with the lower court that an arbitration clause which provided for a final
determination of the legal rights of the parties to the contract by arbitration
was against public policy.
On the issue of nonpayment of docket fees and non-attachment of
a certificate of non-forum shopping by PGSMC, the CA held that the
counterclaims of PGSMC were compulsory ones and payment of docket
fees was not required since the Answer with counterclaim was not an
initiatory pleading. For the same reason, the CA said a certificate of non-
forum shopping was also not required.
Furthermore, the CA held that the petition for certiorari had been
filed prematurely. According to the CA, the RTC must be given the
opportunity to correct any alleged error it has committed, and that since the
assailed orders were interlocutory, these cannot be the subject of a petition
for certiorari.
Hence, this Petition for Review on Certiorari under Rule 45.

Issue: W/N the payment of docket fees and submission of a certificate of
non-forum shopping were necessary in the filing of PGSMCs compulsory
counterclaim?

Held: NO

SCs ruling:
KOGIES strongly argues that when PGSMC filed the
counterclaims, it should have paid docket fees and filed a certificate of non-
forum shopping, and that its failure to do so was a fatal defect.
We disagree with KOGIES.
As aptly ruled by the CA, the counterclaims of PGSMC were
incorporated in its Answer with Compulsory Counterclaim dated July 17,
1998 in accordance with Section 8 of Rule 11, 1997 Revised Rules of Civil
Procedure, the rule that was effective at the time the Answer with
Counterclaim was filed. Sec. 8 on existing counterclaim or cross-claim
states, "A compulsory counterclaim or a cross-claim that a defending party
has at the time he files his answer shall be contained therein."
On July 17, 1998, at the time PGSMC filed its Answer incorporating
its counterclaims against KOGIES, it was not liable to pay filing fees for said
counterclaims being compulsory in nature. We stress, however, that
effective August 16, 2004 under Sec. 7, Rule 141, as amended by A.M. No.
04-2-04-SC, docket fees are now required to be paid in compulsory
counterclaim or cross-claims.
As to the failure to submit a certificate of forum shopping, PGSMCs
Answer is not an initiatory pleading which requires a certification against
forum shopping under Sec. 5 of Rule 7, 1997 Revised Rules of Civil
Procedure. It is a responsive pleading, hence, the courts a quo did not
commit reversible error in denying KOGIES motion to dismiss PGSMCs
compulsory counterclaims.

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RULE 7 Parts of a Pleading

General Milling Corporation vs. NLRC G.R. No. 153199, December 17,
2002 FRANCISCO
Doctrine:
The rules of procedure are intended to promote, rather than frustrate, the
ends of justice, and while the swift unclogging of court dockets is a laudible
objective, it, nevertheless, must not be met at the expense of substantial
justice.

This is a petition for review on certiorari of a decision of the CA.

Facts:
This is to assail the resolution, dated 28 September 2001, of the
Court of Appeals dismissing the petition filed before it by herein
petitioner (GMC) for not having been accompanied by a board
resolution and/or a certification by the corporate secretary that
would show that the person who has signed the Certification of
Non-Forum Shopping is the person duly authorized by the
corporation to represent it in the case. Likewise challenged is the
resolution of the appellate court denying petitioners motion for
reconsideration.
The case originated from a complaint for illegal dismissal filed by
private respondent Cacho against petitioner General Milling
Corporation (GMC).
The Labor Arbiter found private respondent to have been
illegally dismissed by petitioner.
On appeal before it, the NLRC affirmed the findings of the
Labor Arbiter.
GMC appealed to the CA but the petition was denied for
the failure of GMC to attach the board resolution to prove
that the person who signed the Certification of Non-Forum
Shopping was duly authorized by the board of directors of
GMC.
In its motion for reconsideration, GMC explained that the
signatory of the Certification of Non-Forum Shopping was
duly authorized to make it. The corresponding board
resolution to establish that fact was attached to its motion
for reconsideration before the appellate court. Its plea for
reconsideration having been denied, the instant petition for
review was brought up to this Court.

LA: found Cacho to have been illegally dismissed by GMC
NLRC: affirmed LAs findings
CA: dismissed the petition filed by the GMC

Issue: Whether or not GMC substantially complied with the procedural
requirement.

Held:
YES, GMC complied with procedural requirement but not that substantial.
When asked to comment, private respondent bewailed the
belated submission of the required certification. Private
respondent cited the case of Melo vs. Court of Appeals to the effect
that x x x compliance with the certification requirement of non-
forum shopping should not be made subject to a partys
afterthought, lest the policy of the law be undermined.
The Court grants the petition.
Unlike the case of Melo vs. Court of Appeals where there was a
complete failure to attach a Certification of Non-forum Shopping, in
this instance, however, GMC complied with this procedural
requirement except that it was not accompanied by a board
resolution or a secretarys certificate that the person who signed it
was duly authorized by petitioner to represent it in the case. It
would appear that the signatory of the certification was, in fact,
duly authorized as so evidenced by a board resolution
attached to petitioners motion for reconsideration before the
appellate court. It could thus be said that there was at least
substantial compliance with, and that there was no attempt to
ignore, the prescribed procedural requirements.
The rules of procedure are intended to promote, rather than
frustrate, the ends of justice, and while the swift unclogging of court
dockets is a laudable objective, it, nevertheless, must not be met at
the expense of substantial justice. Technical and procedural rules
are intended to help secure, not suppress, the cause of justice and
a deviation from the rigid enforcement of the rules may be allowed
to attain that prime objective for, after all, the dispensation of justice
is the core reason for the existence of courts.

SC: petition is GRANTED

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Spouses Hontiveros vs. RTC of Iloilo, Branch 25 G.R. No. 125465, June
29, 1999, 309 SCRA 340 GATCHALIAN

DOCTRINE: Under the rules, if there is no controverted matter in the case
after the answer is filed, the trial court has the discretion to grant a motion for
judgment on the pleadings filed by a party. When there are actual issues
raised in the answer, such as one involving damages, which require the
presentation of evidence and assessment thereof by the trial court, it is
improper for the judge to render judgment based on the pleadings alone.

FACTS:

In a land registration case, the court ruled in favor of the Petitioners stating
that the private respondents withheld possession of the land from petitioners
in bad faith. Consequently, the petitioners-spouses filed a complaint for
damages against private respondents Gregorio Hontiveros and Teodora
Ayson. Petitioners alleged that they are the owners of a parcel of land and
were deprived of income from the land as a result of the filing of the land
registration case. Private respondents denied the allegations, denied that
private respondents are married and prayed for dismissal of the complaint.

An Amended Complaint was filed by the petitioners insert therein an
allegation that "earnest efforts towards a compromise have been made
between the parties but the same were unsuccessful." In due time, private
respondents filed an Answer to Amended Complaint with Counterclaim,
which they denied the allegation. (NOTE: Gregorio and Augusto are
brothers and pursuant to Art 151 of the Family code, No suit between
members of the same family shall prosper unless it should appear from the
verified complaint or petition that earnest efforts toward a compromise have
been made, but that the same have failed. It if is shown that no such efforts
were in fact made, the case must be dismissed)

Petitioners moved for a judgment on the pleadings on the ground that private
respondents' answer did not tender an issue or that it otherwise admitted the
material allegations of the complaint. Private respondents opposed the
motion alleging that they had denied petitioners' claims and thus tendered
certain issues of fact which could only be resolved after trial.

TC: Trial court denied petitioners' motion. At the same time, however, it
dismissed the case on the ground that the complaint was not verified as
required by Art. 151 of the Family Code and, therefore, it did not believe that
earnest efforts had been made to arrive at a compromise

Petitioners contend that the trial court erred in dismissing the complaint
when no motion to that effect was made by any of the parties. They point out
that, in opposing the motion for judgment on the pleadings, private
respondents did not seek the dismissal of the case but only the denial of
petitioners' motion. Indeed, what private respondents asked was that trial be
held on the merits.

ISSUE: WON the court was correct in dismissing the case

HELD: NO
There are instances when the trial court may order the dismissal of the case
even without a motion to that effect filed by any of the parties. . In Baja v.
Macandog,
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this Court mentioned these cases, to wit:

The court cannot dismiss a case motu proprio without violating the
plaintiff's right to be heard, except in the following instances: if the
plaintiff fails to appear at the time of the trial; if he fails to prosecute
his action for unreasonable length of time; or if he fails to comply
with the rules or any order of the court; or if the court finds that it
has no jurisdiction over the subject matter of the suit.

However, none of these exceptions appears in this case.

Rule 19 of the Rules of Court provides:
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Sec. 1. Judgment on the pleadings. Where an answer fails to
tender an issue, or otherwise admits the material allegation of the
adverse party's pleadings, the court may, on motion of the party,
direct judgment on such pleading. But in actions for annulment of
marriage or for legal separation the material facts alleged in the
complaint shall always be proved.

Under the rules, if there is no controverted matter in the case after the
answer is filed, the trial court has the discretion to grant a motion for
judgment on the pleadings filed by a party. When there are actual issues
raised in the answer, such as one involving damages, which require the
presentation of evidence and assessment thereof by the trial court, it is
improper for the judge to render judgment based on the pleadings alone. In
this case, aside from the amount of damages, the following factual issues
have to be resolved, namely, (1) private respondent Teodora Ayson's
participation and/or liability, if any to petitioners and (2) the nature, extent,
and duration of private respondents' possession of the subject property. The
trial court, therefore, correctly denied petitioners' motion for judgment on the
pleadings.

However, the trial court erred in dismissing petitioners' complaint on the
ground that, although it alleged that earnest efforts had been made toward
the settlement of the case but they proved futile, the complaint was not
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verified for which reason the trial court could not believe the veracity of the
allegation.
The absence of the verification required in Art. 151 does not affect the
jurisdiction of the court over the subject matter of the complaint. The
verification is merely a formal requirement intended to secure an assurance
that matters which are alleged are true and correct. If the court doubted the
veracity of the allegations regarding efforts made to settle the case among
members of the same family, it could simply have ordered petitioners to
verify them. As this Court has already ruled, the court may simply order the
correction of unverified pleadings or act on it and waive strict compliance
with the rules in order that the ends of justice may be served.Otherwise,
mere suspicion or doubt on the part of the trial court as to the truth of the
allegation that earnest efforts had been made toward a compromise but the
parties' efforts proved unsuccessful is not a ground for the dismissal of an
action. Only if it is later shown that such efforts had not really been exerted
would the court be justified in dismissing the action

Other issues:

WON the petitioners adopted the correct mode of appeal (Rule 45) YES
WON Art 151 of the Family Code applies to this case although Teodora
Ayson is not a family member NO

SC: The petition is GRANTED and the Order, dated November 23, 1995 of
the Regional Trial Court of Iloilo City, Branch 25 is SET ASIDE and the case
is remanded to the trial court for further proceedings not inconsistent with
this decision.

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Five Star Bus Co. vs. Court of Appeals G.R. No. 127064, August 31,
1999, 313 SCRA 367 GAUDIEL

Doctrine:
Certification of Non-Forum Shopping Should Be Signed by Plaintiff
NOT Counsel

Facts:
One night in November 1991 at about 11pm, Ignacio Torres, while
driving a bus owned by Five Star Bus Company collided with a mini-van
driven by Samuel King Sagaral II. Sagaral filed a civil action for damages
against Five Star Bus Company and Torres.
The civil case dragged for four years by reason of the bus
companys lawyers repeated request to reset the hearing of the case. Until
the trial court issued an order which considered the case submitted for
resolution. The bus companys lawyer filed for a motion for reconsideration
but it was denied.
The bus companys lawyer then filed a petition for certiorari before
the Court of Appeals but the latter court summarily dismissed the petition
because said petitions affidavit of non-forum shopping was not signed by
the plaintiff or any of its representatives but rather it was signed by the
lawyer.
The lawyer explained that his signing was an oversight and that he
was in a haste to submit the petition at the earliest possible time in order to
protect his clients interest.

Trial Court Ruling:

The trial court issuedits Order denying petitioners motion for
reconsideration of its Order dated 16 July 1996 which considered the case
submitted for resolution. The lower court noted that the case had been
pending for more than four (4) years and it had always been at the "mercy"
of petitioners when it acted favorably on their motions. There would be no
end to this litigation if the court would give due course to this motion.

CAs decision/CA:

Petitioners moved for reconsideration which the Court of Appeals
rejected in its Resolution. Petitioners are now before us contending that the
appellate court erred in affirming the Order of the trial court and in dismissing
their petition for non-compliance with the requirement of Circular No. 28-91.
They pray that the appellate court remand the case to the court of origin for
further proceedings.

Circular No. 28-91, which took effect on 1 April 1994, provides inter
alia

(1) (I)n every petition filed with the Supreme Court or the Court of Appeals,
the petitioner, aside from complying with the pertinent provisions of the
Rules of Court and existing circulars, must certify under oath all of the
following facts or undertakings . . .;

(2) Any violation of this revised Circular will entail the following sanctions: (a)
it shall be a cause for the summary dismissal of the multiple petitions or
complaints; . . . (Emphasis supplied).

Circular No. 28-91 has its roots in the rule that a party-litigant shall
not be allowed to pursue simultaneous remedies in two (2) different fora, for
such practice works havoc upon orderly judicial procedure. Forum shopping
has been characterized as an act of malpractice that is prohibited and
condemned as trifling with the courts and abusing their processes. It
constitutes improper conduct which tends to degrade the administration of
justice. It has also been aptlUndeterred, petitioners sought recourse in the
Court of Appeals through a petition for certiorari. But in the assailed
Resolution dated 23 September 1996 the appellate court summarily
dismissed their petition on the ground that the affidavit of non-forum
shopping was signed and executed by counsel for petitioners and not by
petitioners themselves, or one of them, as required by Circular No. 28-91 of
the Supreme Court.

Nonetheless, we are not unmindful of this Courts ruling in
Gabionza v. Court of Appeals, 18 Loyola v. Court of Appeals, 19 and Kavinta
v. Castillo, Jr. 20 that substantial compliance with Circular No. 28-91 is
sufficient:

It is scarcely necessary to add that Circular No. 28-91 must be so
interpreted and applied to achieve the purposes projected by the Supreme
Court when it promulgated that circular. Circular No. 28-91 was designed to
serve as an instrument to promote and facilitate the orderly administration of
justice and should not be interpreted with such absolute literalness as to
subvert its own ultimate and legitimate objective or the goal of all rules of
procedure which is to achieve substantial justice as expeditiously as
possible.

The fact that the Circular requires that it be strictly complied with
merely underscores its mandatory nature in that it cannot be dispensed with
or its requirements altogether disregarded, but it does not thereby interdict
substantial compliance with its provisions under justifiable
circumstances.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
10

In the instant case, we cannot apply the "substantial compliance"
rule to petitioners and be as liberal minded. For one thing, counsel for
petitioners gave a rather frail excuse for his non-compliance, i.e., oversight
and haste in ensuring that the petition would be filed at the earliest possible
time for the protection of his clients interests thereby overlooking the
aforesaid circular.

Issue:

Whether the Court of Appeals can summarily dismiss a petition on
the ground that the certification on non-forum shopping required by Supreme
Court Circular No. 28-91 was signed by counsel and not by petitioners
themselves.

Held:
No

SCs ruling:

Circular No. 28-91 issued by the Supreme Court requiring that the
affidavit of non-forum shopping should be executed and signed by the
plaintiff is a strict requirement. Circular No. 28-91 has its roots in the rule that
a party-litigant shall not be allowed to pursue simultaneous remedies in two
different tribunals, for such practice works havoc upon orderly judicial
procedure.

Forum shopping has been characterized as an act of malpractice
that is prohibited and condemned as trifling with the courts and abusing their
processes. It constitutes improper conduct which tends to degrade the
administration of justice. It has also been aptly described as deplorable
because it adds to the congestion of the already heavily burdened dockets of
the courts.

But the Supreme Court has relaxed this rule several times prior to
this case when there is substantial compliance, why is it not relaxed in this
case?

It is true that said Circular requires that it be strictly complied with
but such merely underscores its mandatory nature in that it cannot be
dispensed with or its requirements altogether disregarded, but it does not
thereby interdict substantial compliance with its provisions under justifiable
circumstances.

In the case at bar however, the reasons provided by Five Stars
lawyer are flimsy and frail. Further, the case has been dragging on for years
and such delay is mostly attributed to Five Stars lawyer.

11
Digital Microwave Corporation vs. Court of Appeals G.R. No. 1399396,
March 16, 2000, 328 SCRA 286 LESAVA

Doctrine: We have ruled that this Court will not interfere with the
Ombudsmans exercise of his constitutionally mandated investigatory and
prosecutory powers. Otherwise stated, it is beyond the ambit of this Court to
review the exercise of discretion of the Ombudsman in prosecuting or
dismissing a complaint filed before it. Such initiative and independence are
inherent in the Ombudsman who, beholden to no one, acts as the champion
of the people and preserver of the integrity of the public service.

Private Respondents: Dr. Jose Pepito H. Dalogdog, Dr. Aurora Beatriz A.
Romano, Maria Teresita C. Abastar, Jessica S. Allan and Maria Teresa
Aniversario charged herein petitioners Efren O. Loquias, Antonio V. Din, Jr.,
Angelito I. Martinez II, Lovelyn J. Biador and Gregorio Faciol, Jr.

- Respondents were officers of the Association of Municipal Health
Office Personnel of Zamboanga del Sur who instituted the said
complaint in behalf of the 490 members of the said Association

Petitioners: Efren O. Loquias (Mayor), Antonio V. Din, Jr. (Vice Mayor),
Angelito I. Martinez II, Lovelyn J. Biador (member of the Sangguniang Bayan
of the said municipality) and Gregorio Faciol, Jr. (member of the
Sangguniang Bayan of the said municipality)

Synopsis:

Before this Court is a petition for certiorari under Rule 65 assailing the
Resolution charging herein petitioners for violation of Section 3, paragraph e
of R.A. No. 3019 (Anti-Graft and Corrupt Practices Act) which was issued by
the Office of the Ombudsman for Mindanao and approved by Ombudsman
Aniano A. Desierto, and the Memorandum wherein Ombudsman Desierto
disapproved the recommendation of the Special Prosecutor dismissing the
Criminal Case.

Facts:

Private respondents charged herein petitioners with violation of RA No. 3019
for their alleged failure to give the salary increases and benefits provided in
Section 20 of the Magna Carta of Public Health Workers (R.A. 7305) and
Local Budget Circulars Nos. 54, 54-A, 56, 60 and 64 for the health personnel
of the local government of San Miguel, Zamboanga del Sur. The complaint
was filed in the Ombudsman-Mindanao.

Ombudsmans decision: Ombudsman Desierto found "probable cause to
conclude that the crime of violation of Section 3 (e) of RA 3019 has been
committed by respondents Mayor, Vice-Mayor, members of the
Sangguniang Bayan and Budget Officer of San Miguel, Zamboanga del Sur"
and that accordingly, the appropriate Information be filed with the
Sandiganbayan.

Petitioners filed a Motion for Reinvestigation with prayer to defer arraignment
and pre-trial alleging that they recognize the salary increases of the health
personnel as a mandatory statutory obligation but the salary increases could
not be implemented because of lack of funds and the municipality had
incurred overdrafts. They further argue that the failure to give salary
increases and other Magna Carta benefits were due to circumstances
beyond their control and not due to any manifest partiality, evident bad faith
or gross inexcusable negligence on their part.

In a Memorandum, Special Prosecution Officer I Jacqueline J. Ongpauco-
Cortel recommended the dismissal of the case which recommendation was
approved by Deputy Special Prosecutor Kallos and concurred in by Special
Prosecutor Tamayo. Recommendation was disapproved by Ombudsman
Desierto stating in his handwriting that "(T)he crime had obviously been
committed, per OMB Mindanao findings, long before the payment granting
that the accused latters claim/allegation is true."

Meanwhile, petitioners filed a Motion for Reconsideration on the Resolution
of the Office of the Ombudsman-Mindanao alleging that there is no probable
cause in holding that they violated Section 3 (e) of the Anti-Graft and Corrupt
Practices Act. Among other thingsl, petitioners also allege that the order
disapproving the dismissal of the case constitutes a denial of their motion for
reconsideration.

Alleging that the order disapproving the dismissal of the case constituted
denial of the motion for reconsideration, petitioners filed the present petition
assailing the Resolution and the Memorandum.

Issue: WON the Ombudsman committed grave abuse of discretion
amounting to lack or in excess of jurisdiction for approving the resolution
charging petitioners and for disapproving the memorandum that
recommends the dismissal of the criminal case against petitioners?

Held: SC will not interfere with the Ombudsmans exercise of his
constitutionally mandated investigatory and prosecutory powers. Otherwise
stated, it is beyond the ambit of this Court to review the exercise of
discretion of the Ombudsman in prosecuting or dismissing a complaint filed
12
before it. Such initiative and independence are inherent in the Ombudsman
who, beholden to no one, acts as the champion of the people and preserver
of the integrity of the public service.

As held in the Ocampo case:
"x x x The rule is based not only upon respect for the
investigatory and prosecutory powers granted by the Constitution
to the Office of the Ombudsman but upon practicality as well.
Otherwise, the functions of the courts will be grievously
hampered by innumerable petitions assailing the dismissal of
investigatory proceedings conducted by the Office of the
Ombudsman with regard to complaints filed before it, in much the
same way that the courts would be extremely swamped if they
could be compelled to review the exercise of discretion on the
part of the fiscals or prosecuting attorneys each time they decide
to file an information in court or dismiss a complaint by a private
complainant."

Addnl issue: With respect to the joint affidavits of waiver allegedly executed
by private complainants for the purpose of requesting the Special Prosecutor
to move for the dismissal of the criminal case.

This Court ruled in Alba vs. Nitorreda that a joint affidavit of desistance is not
binding on the Office of the Ombudsman and cannot prevail over the
provision of law which categorically allows the Office of the Ombudsman to
investigate and prosecute on its own any act or omission of a public officer
or employee, office or agency which appears to be illegal, unjust, improper
or inefficient.

13
Iglesia ni Kristo v. Ponferrada, G.R. No. 168943, October 27, 2006 LIM

FACTS:
On October 24, 2001, Alicia, Alfredo, Roberto, Enrique and Susan, all
surnamed Santos, and Sonia Santos-Wallin, represented by Enrique G.
Santos, filed a complaint for Quieting of Title and/or Accion Reinvindicatoria
before the Regional Trial Court (RTC) of Quezon City against the Iglesia Ni
Cristo (INC), defendant therein.

Plaintiffs alleged therein that, during his lifetime, Enrique Santos was the
owner of a 936-square-meter parcel of land located in Tandang Sora,
Quezon City.

He had been in possession of the owners duplicate of said title and had
been in continuous, open, adverse and peaceful possession of the property.
He died on February 9, 1970 and was survived by his wife, Alicia Santos,
and other plaintiffs, who were their children. Thereafter, plaintiffs took
peaceful and adverse possession of the property, and of the owners
duplicate of said title.

When the Office of the Register of Deeds of Quezon City was burned on
June 11, 1988, the original copy of said title was burned as well. The
Register of Deeds had the title reconstituted based on the owners duplicate.

Sometime in February 1996, plaintiffs learned that defendant was claiming
ownership over the property based on a TCT issued on September 18, 1984
under the name of the Philippine National Bank, which allegedly cancelled
TCT No. 252070 in the names of the spouses Marcos and Romana dela
Cruz. They insisted that TCT Nos. 321744, 320898 and 252070 were not
among the titles issued by the Register of Deeds of Quezon City and even if
the Register of Deeds issued said titles, it was contrary to law. Enrique
Santos, during his lifetime, and his heirs, after his death, never encumbered
or disposed the property. In 1996, plaintiffs had the property fenced but
defendant deprived them of the final use and enjoyment of their property.

As gleaned from the caption of the complaint, plaintiffs appear to be the
heirs of Enrique Santos, represented by Enrique G. Santos. The latter
signed the Verification and Certificate of Non-Forum Shopping alone. (i.e.
only his name and signature appeared on the verification and certificate.)

Defendant moved to dismiss plaintiffs complaint on the following grounds:
(1) plaintiffs failed to faithfully comply with the procedural requirements set
forth in Section 5, Rule 7 of the 1997 Rules of Civil Procedure; (2) the action
(either Quieting of Title or Accion Reinvindicatoria) had prescribed, the same
having been filed only on October 24, 2001 beyond the statutory ten-year
period therefor; and (3) that the complaint is defective in many respects.

Defendant asserted that the case involved more than one plaintiff but the
verification and certification against forum shopping incorporated in the
complaint was signed only by Enrique Santos. Although the complaint
alleges that plaintiffs are represented by Enrique Santos, there is no
showing that he was, indeed, authorized to so represent the other plaintiffs
to file the complaint and to sign the verification and certification of non-forum
shopping. Thus, plaintiffs failed to comply with Section 5, Rule 7 of the Rules
of Court. Defendant cited the ruling of this Court in Loquias v. Office of the
Ombudsman.

Defendant maintained that the complaint is defective in that, although there
is an allegation that Enrique Santos represents the other heirs, there is
nothing in the pleading to show the latters authority to that effect; the
complaint fails to aver with particularity the facts showing the capacity of
defendant corporation to sue and be sued; and the pleading does not state
the address of plaintiffs.

In their Comment on the motion, plaintiffs averred that the relationship of a
co-owner to the other co-owners is fiduciary in character; thus, anyone of
them could effectively act for another for the benefit of the property without
need for an authorization. Consequently, Enrique Santos had the authority to
represent the other heirs as plaintiffs and to sign the verification and
certification against forum shopping.

In its reply, defendant averred that absent any authority from his co-heirs,
Enrique Santos must implead them as plaintiffs as they are indispensable
parties. In response, plaintiffs aver that a co-owner of a property can execute
an action for quieting of title without impleading the other co-owners.

The trial court issued an Order

denying defendants motion to dismiss. It
declared that since Enrique Santos was one of the heirs, his signature in the
verification and certification constitutes substantial compliance with the
Rules. The court cited the ruling of this Court in Dar v. Alonzo-Legasto. The
court, likewise, held that prescription had not set in and that failure to state
the address of plaintiffs in the complaint does not warrant the dismissal of
the complaint.

Defendant filed a motion for reconsideration, which the court likewise denied
in an Order dated July 10, 2002. Unsatisfied, defendant, as petitioner, filed a
Petition for Certiorari and Prohibition with Prayer for the Issuance of a
Temporary Restraining Order and/or Preliminary Injunction before the CA.

The CA affirmed the RTC decision.
14

ISSUE: W/N a verification issued by only one of the plaintiffs is sufficient
enough to render the same valid

HELD: DENIED.

The purpose of verification is simply to secure an assurance that the
allegations of the petition (or complaint) have been made in good faith; or
are true and correct, not merely speculative. This requirement is simply a
condition affecting the form of pleadings, and noncompliance therewith does
not necessarily render it fatally defective. Indeed, verification is only a
formal, not a jurisdictional requirement.

This Court held in Ateneo de Naga University v. Manalo, that the verification
requirement is deemed substantially complied with when, as in the present
case, only one of the heirs-plaintiffs, who has sufficient knowledge and belief
to swear to the truth of the allegations in the petition (complaint), signed the
verification attached to it. Such verification is deemed sufficient assurance
that the matters alleged in the petition have been made in good faith or are
true and correct, not merely speculative.

The same liberality should likewise be applied to the certification against
forum shopping. The general rule is that the certification must be signed by
all plaintiffs in a case and the signature of only one of them is insufficient.
However, the Court has also stressed in a number of cases that the rules on
forum shopping were designed to promote and facilitate the orderly
administration of justice and thus should not be interpreted with such
absolute literalness as to subvert its own ultimate and legitimate objective.
The rule of substantial compliance may be availed of with respect to the
contents of the certification. This is because the requirement of strict
compliance with the provisions merely underscores its mandatory nature in
that the certification cannot be altogether dispensed with or its requirements
completely disregarded.

It is noteworthy that the Court applied the rule on substantial compliance
because of the commonality of interest of all the parties with respect to the
subject of the controversy in many past similar cases.

The CA did not err in affirming the application of the rule on substantial
compliance. In the instant case, the property involved is a 936-square-meter
real property. Both parties have their respective TCTs over the property.
Respondents herein who are plaintiffs in the case below have a common
interest over the property being the heirs of the late Enrique Santos, the
alleged registered owner of the subject property as shown in one of the
TCTs. As such heirs, they are considered co-owners pro indiviso of the
whole property since no specific portion yet has been adjudicated to any of
the heirs. Consequently, as one of the heirs and principal party, the lone
signature of Enrique G. Santos in the verification and certification is sufficient
for the RTC to take cognizance of the case. The commonality of their
interest gave Enrique G. Santos the authority to inform the RTC on behalf of
the other plaintiffs therein that they have not commenced any action or claim
involving the same issues in another court or tribunal, and that there is no
other pending action or claim in another court or tribunal involving the same
issues. Hence, the RTC correctly denied the motion to dismiss filed by
petitioner.
Considering that at stake in the present case is the ownership and
possession over a prime property in Quezon City, the apparent merit of the
substantive aspects of the case should be deemed as a special
circumstance or compelling reason to allow the relaxation of the rule.

Time and again, this Court has held that rules of procedure are established
to secure substantial justice. Being instruments for the speedy and efficient
administration of justice, they may be used to achieve such end, not to derail
it. In particular, when a strict and literal application of the rules on non-forum
shopping and verification will result in a patent denial of substantial justice,
these may be liberally construed.
28
The ends of justice are better served
when cases are determined on the merits after all parties are given full
opportunity to ventilate their causes and defenses rather than on
technicality or some procedural imperfections.
Indeed, this Court strictly applied the rules on verification and
certification against forum shopping in cases where the commonality of
interest between or among the parties is wanting.
Anent the issue of the authority of Enrique G. Santos to represent
his co-heirs/co-plaintiffs, we find no necessity to show such authority.
Respondents herein are co-owners of the subject property. As such co-
owners, each of the heirs may properly bring an action for ejectment, forcible
entry and detainer, or any kind of action for the recovery of possession of the
subject properties. Thus, a co-owner may bring such an action, even without
joining all the other co-owners as co-plaintiffs, because the suit is deemed to
be instituted for the benefit of all.
We uphold the validity of the complaint because of the following
circumstances: (1) the caption of the instant case is Heirs of Enrique Santos
v. Iglesia ni Cristo; (2) the opening statement of the complaint states that
plaintiffs are the heirs of Enrique Santos and likewise names the particular
heirs of the latter who instituted the complaint below; (3) the case involves a
property owned by the predecessor-in-interest of plaintiffs therein; and (4)
the verification signed by Enrique G. Santos clearly states that he is one of
the children of the late Enrique Santos and that he represents the heirs of
said Enrique Santos.

15
Vallacar Transit, Inc. v. Jocelyn Catubig, G.R. No. 175512, May 30, 2011
MAGSUMBOL
DOCTRINE: A pleading lacking proper verification is to be treated as an
unsigned pleading which produces no legal effect

FACTS: Petitioner is engaged in the business of transportation and the
franchise owner of a Ceres Bulilit bus. Quirino C. Cabanilla (Cabanilla) is
employed as a regular bus driver of petitioner.

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

Cabanilla was charged with reckless imprudence resulting in double
homicide before the MCTC of Manjuyod-Bindoy-Ayungon of the Province of
Negros Oriental. After preliminary investigation, the MCTC issued a
Resolution dismissing the criminal charge against Cabanilla. It found that
Cabanilla was not criminally liable for the deaths of Catubig and Emperado,
because there was no negligence, not even contributory, on Cabanillas part.

Thereafter, respondent filed before the RTC a Complaint for Damages
against petitioner, seeking actual, moral, and exemplary damages, in the
total amount of P484,000.00, for the death of her husband, Catubig, based
on Article 2180, in relation to Article 2176, of the Civil Code. Respondent
alleged that petitioner is civilly liable because the latters employee driver,
Cabanilla, was reckless and negligent in driving the bus which collided with
Catubigs motorcycle.
Petitioner, in its Answer with Counterclaim, contended that the proximate
cause of the vehicular collision, which resulted in the deaths of Catubig and
Emperado, was the sole negligence of Catubig when he imprudently
overtook another vehicle at a curve and traversed the opposite lane of the
road. As a special and affirmative defense, petitioner asked for the
dismissal of respondents complaint for not being verified and/or for failure to
state a cause of action, as there was no allegation that petitioner was
negligent in the selection or supervision of its employee driver.

In the Pre-Trial Order, the parties stipulated that the primary issue for trial
was whether or not petitioner should be held liable for Catubigs death. Trial
then ensued.

PO2 Robert B. Elnas (Elnas), Emilio Espiritu (Espiritu), Dr. Norberto
Baldado, Jr. (Dr. Baldado), Peter Cadimas (Cadimas), and respondent

herself testified in support of respondents complaint.

PO2 Elnas conducted an investigation of the collision incident. According to
PO2 Elnas, the bus was running fast, at a speed of 100 kilometers per hour,
when it collided with the motorcycle which was trying to overtake a truck.
The collision occurred on the lane of the bus. Catubig was flung 21 meters
away, and Emperado, 11 meters away, from the point of impact. The
motorcycle was totaled; the chassis broke into three parts, and the front
wheel and the steering wheel with the shock absorbers were found 26
meters and 38 meters, respectively, from the collision point. In contrast, only
the front bumper of the bus suffered damage.

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

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

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

Respondent herself testified to substantiate the amount of damages she was
trying to recover from petitioner for Catubigs death, such as Catubigs
earning capacity; expenses incurred for the wake and burial of Catubig, as
well as of Emperado; the cost of the motorcycle; and the costs of the legal
services and fees respondent had incurred.
16

Respondents documentary exhibits consisted of her and Catubigs Marriage
Contract dated August 21, 1982, their two childrens Certificate of Live
Births, Catubigs College Diploma dated March 24, 1983, the list and
receipts of the expenses for Catubigs burial, the sketch of the collision site
prepared by PO2 Elnas, the excerpts from the police blotter, the
photographs of the collision, and the Post Mortem Report on Catubigs
cadaver prepared by Dr. Baldado.

RTC admitted all of respondents aforementioned evidence.

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

Amahit was a Court Stenographer at the MCTC who took the transcript of
stenographic notes (TSN) in the Criminal Case against Cabanilla. Amahit
verified that the document being presented by the defense in the present
case was a true and correct copy of the TSN of the preliminary investigation
held in the Criminal Case, and another document was a duplicate original of
the MCTC Resolution dated December 22, 1994 dismissing the Criminal
Case.

Maypa is the Administrative and Personnel Manager at the Dumaguete
branch of petitioner. He started working for petitioner as a clerk at the
Human Resources Development Department at the Central Office of
petitioner in Bacolod City. He became an Administrative Assistant at the
Dumaguete branch of petitioner; and then, was promoted to his current
position at the same branch.

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

Maypa further explained the investigation and grievance procedure followed
by petitioner in cases of vehicular accidents involving the latters employee
drivers. Maypa related that Cabanilla had been put on preventive
suspension following the vehicular accident involving the bus Cabanilla was
driving and the motorcycle carrying Catubig and Emperado. Following an
internal investigation of said accident conducted by petitioner, Cabanilla was
declared not guilty of causing the same, for he had not been negligent.

Lastly, Maypa recounted the expenses petitioner incurred as a result of the
present litigation.

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

The RTC, in its Order
,
admitted all the evidence presented by petitioner.

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

CA DECISION: The Court of Appeals denied the motion for reconsideration
of petitioner.

ISSUE: W/N a pleading lacking proper verification is treated as an unsigned
pleading, which produces no legal effect under Section 3, Rule 7 of the
Rules of Court?

HELD: Petition is granted.

SC RULING: At the outset, we find no procedural defect that would have
warranted the outright dismissal of respondents complaint.

17
Respondent filed her complaint for damages against petitioner on July 19,
1995, when the 1964 Rules of Court was still in effect. Rule 7, Section 6 of
the 1964 Rules of Court provided:

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

Verifications based on "information and belief," or upon
"knowledge, information and belief," shall be deemed insufficient.

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

SEC. 4. Verification. Except when otherwise specifically required
by law or rule, pleadings need not be under oath, verified or
accompanied by affidavit.

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

A pleading required to be verified which contains a verification
based on information and belief, or upon knowledge, information
and belief, or lacks a proper verification, shall be treated as an
unsigned pleading.

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

SEC. 4. Verification. - Except when otherwise specifically required
by law or rule, pleadings need not be under oath, verified or
accompanied by affidavit.

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

A pleading required to be verified which contains a verification
based on information and belief or upon knowledge, information
and belief, or lacks a proper verification, shall be treated as an
unsigned pleading.

The 1997 Rules of Court, even prior to its amendment by A.M. No. 00-2-10,
clearly provides that a pleading lacking proper verification is to be treated as
an unsigned pleading which produces no legal effect. However, it also just
as clearly states that except when otherwise specifically required by law or
rule, pleadings need not be under oath, verified or accompanied by affidavit.
No such law or rule specifically requires that respondents complaint for
damages should have been verified.

Although parties would often submit a joint verification and certificate against
forum shopping, the two are different.

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

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

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

In the case before us, we stress that as a general rule, a pleading
need not be verified, unless there is a law or rule specifically requiring the
same.
In contrast, all complaints, petitions, applications, and other
initiatory pleadings must be accompanied by a certificate against forum
shopping, first prescribed by Administrative Circular No. 04-94, which took
effect on April 1, 1994, then later on by Rule 7, Section 5 of the 1997 Rules
of Court. It is not disputed herein that respondents complaint for damages
was accompanied by such a certificate.
In addition, verification, like in most cases required by the rules of
procedure, is a formal, not jurisdictional, requirement, and mainly intended to
secure an assurance that matters which are alleged are done in good faith
or are true and correct and not of mere speculation. When circumstances
warrant, the court may simply order the correction of unverified pleadings or
act on it and waive strict compliance with the rules in order that the ends of
justice may thereby be served.

18
RULE 8 Manner of Making Allegations in the Pleading

Kalilid Wood Industries Corporation vs. IAC G.R. No. 75502, November
12, 1987, 155 SCRA 594 MORA

Doctrine:

Facts:
Joaquin Miguel de Jesus and Alfredo T. Salonga, President-General
Manager and Comptroller, respectively, of P.B. De Jesus and Company,
Inc., executed a promissory note (PBC No. 1202-76) in favor of respondent
Philippine Banking Corporation in the amount of P600,000.00, the obligation
maturing on 29 December 1976. Similarly, a second promissory note (PBC
No. 1255-76) was executed this time in the amount of P300,000.00, payable
on or before 3 January 1977. These two instruments were executed to
document or reflect loans secured from respondent Bank and were signed
by Messrs. de Jesus and Salonga.

P.D. De Jesus and Company, Inc., by vote of its stockholders, changed its
corporate name to Kalilid Wood Industries Corporation (hereafter "Kalilid"),
an act subsequently validated by the Securities and Exchange Commission.
Thereafter, respondent Bank served several letters of demand upon
petitioner Kalilid for payment by the latter of the obligations contracted under
promissory notes PBC No. 1202-76 and PBC No. 1255-76 which had
apparently remained unsettled. Petitioner Kalilid, however, disowned its
alleged indebtedness under both promissory notes.

The Bank filed a Complaint for collection against Kalilid, and Messrs. de
Jesus and Salonga in the Court of First Instance of Rizal. In its complaint,
respondent Bank alleged that petitioner Kalilid, as principal, should be held
solidarily liable under promissory notes PBC No. 1202-76 and PBC No.
125576 together with Messrs. de Jesus and Salonga, both of whom had
signed said promissory notes for and in behalf of the petitioners company,
as well as in their own personal capacities. Respondent Bank further alleged
that, as of 30 April 1981, the total amount of the indebtedness of the obligors
under the two promissory notes had risen to Pl,780,253.08i.e., PI
18649696 with respect to promissory note PBC No. 120276, and
P593,756.12 with respect to promissory note PBC No. 125176 The Bank
submitted in substantiation of these claimed amounts two separate
Statements of Account (one for each promissory note), which had been
prepared by respondent Bank and attached to the complaint as Annexes "C"
and "D" thereof. Promissory notes PBC No. 1202-76 and IBC No. 1255-76
were likewise attached to the complaint as its Annexes "A" and "B",
respectively.

In its Answer, petitioner Kalilid alleged that it "ha[d] no knowledge or
information sufficient to form a belief as to the truth of [the material
allegations in the complaint]. As its affirmative defense, petitioner Kalilid
asserted that the authority to borrow money or contract loans on its behalf
had not been granted to Messrs. de Jesus and Salonga who, it was further
asserted, should be held solely liable under the two promissory notes. The
answer of petitioner Kalilid, however, was not verified.

CFIs decision:
The complaint was dismissed without prejudice, with respect to de Jesus
and Salonga whose whereabouts can not then be ascertained.

The trial courts decision:
The parties were unable to arrive at an amicable settlement during pre-trial.
Thus, a motion for summary judgment was filed by the respondent Bank to
which Kalilid raised neither objection nor opposition.

The trial court found Kalilid liable to the Bank for the obligations contracted
under the promissory notes.

The trial Judge based his decision primarily on two factors: (1) the failure of
petitioner Kalilid to verify its answer, which failure the trial Judge considered
as amounting to an admission by petitioner Kalilid of the genuineness and
due execution of promissory notes PBC No. 1202-76 and PBC No. 1255-76,
which were annexed to respondent Bank's complaint; and (2) the fact that
the two disputed promissory notes were signed by Messrs. de Jesus and
Salonga both for and in behalf of the former P.B. de Jesus and Company,
Inc. (now petitioner Kalilid) and in their own personal capacities.

IACs decision:
The judgment of the lower court was affirmed in toto.

The statements of account Annexes A and B are also attached to the same
complaint as integral part thereof. Annex A pertains to the promissory note
No. 1202-76 with the principal of P600,000.00 while Annex B pertains to the
promissory note No. 125576 with the principal of P300,000.00. Explained in
said statements of account are the charges for past due interest and penalty
charges and the total of said obligation as of April 30, 1981 showed a total of
principal, interest and penalty charges of P1,780,253.08. The genuineness
and due execution of said promissory notes and statements of account are
deemed admitted by the failure to deny under oath said documents. ...

Issue:
19
In the present Petition for Review, petitioner Kalilid no longer denies its
liabilities and obligations under the two promissory notes executed in
favor of respondent Bank. It would, however, contest the correctness of the
aggregate amount of its indebtedness, as claimed by respondent Bank. In
this respect, petitioner Kalilid contends that although it may have
impliedly admitted the genuineness and due execution of promissory
notes PBC No. 1202-76 and PBC No. 125576Annexes "A" and "B" of the
Complaintas a result of its failure to deny specifically and under oath
the material allegations in respondent Bank's complaint, such
admission cannot be made to extend and apply to the two
aforementioned Statements of AccountAnnexes "C" and "D" of the
Complaint-since none of petitioner Kalilid's duly authorized
representatives had participated in the preparation thereof.
Furthermore, in the computations appearing therein, amounts
corresponding to service charges, penalty charges, and interest
charges on past due interest were included which, petitioner Kalilid
claims, are not part of its undertakings under either promissory note.

Held:
The SC agree with the ruling of the trial Judge and the respondent appellate
court that petitioner Kalilid, due to its failure to verify its answer, is deemed to
have admitted by implication the authenticity and due execution of
promissory notes PBC No. 1202-76 and PBC No. 1255-76, which were both
annexed to and made the basis for respondent Bank's complaint.
Consequently, defenses relating to the genuineness and due execution of
the notes, such as that the instruments are spurious counterfeit, or of
different import on their faces from the ones executed by the parties; or that
the signatures appearing therein are forgeries; or that said signatures were
unauthorized as in the case of an agent signing for his principal or one
signing in behalf of a partnership or corporation; or that the corporation was
not authorized under its charter to sign the instruments; or that the party
charged signed the instruments in some capacity other than that set out in
the instruments; or that the instruments were never delivered, are effectively
cut off, placing petitioner Kalilid in estoppel from disclaiming liability under
those promissory notes. No genuine issue having been raised in the trial
court by petitioner Kalilid regarding the existence and validity of its liabilities
under promissory notes PBC No. 1202-76 and PBC No. 1255-76, summary
judgment was properly and appropriately rendered in the case at bar.

In respect, however, of the amount of petitioner Kalilid's total indebtedness
to respondent Bank under the two promissory notes, it was error for the
appellate court (as for the trial Judge) to have expanded the scope of
petitioner Kalilid's implied admission of genuineness and due execution so
as to include the two Statements of Account annexed to the complaint. On
this point, Rule 8, Section 8 of the Revised Rules of Court is quite specific.

Section 8. How to contest genuineness of such documents.When
an action or defense is founded upon a written instrument, copied in or
attached to the corresponding pleading as provided in the preceding section,
the genuineness and due execution of the instrument shall be deemed
admitted unless the adverse party, under oath, specifically denies them, and
sets forth what he claims to be the facts; but this provision does not apply
when the adverse party does not appear to be a party to the instrument or
when compliance with an order for an inspection of the original instrument is
refused. (Emphasis supplied.)

An examination of the two disputed Statements of Account reveals that both
documents (1) were printed under the official letterhead of respondent Bank,
(2) were prepared by the Loans and Discounting Department of respondent
Bank, and (3) bore the signature of approval of respondent Bank's
authorized officer. No other signature appears on the face of either
document. In other words, both Statements of Account were prepared
exclusively by respondent Bank. It follows that petitioner Kalilid, not having
been privy thereto, did not admit the genuineness and due execution of the
Statements in spite of its failure to verify its answer to the complaint, and that
petitioner is not conclusively bound by the charges nor by the computations
of amounts set out therein

SCs ruling:
The decisions of the IAC are AFFIRMED as to the extent that they refer to
the principal amounts and stipulated interest due under PBS 1202-76 and
PBC 1255-76. However, the case is REMANDED to the trial court for the
determination of whether or not service charges and penalty charges in case
of late payment are due from petitioner (Kalilid Wood) to respondent
(Philippine Banking Corp), and if so, the amount thereof, as well as for the
determination of the amount of interest on past due interest, due and
payable by petitioner to respondent Bank.

20
Permanent Savings Bank v. Velarde, G.R. No. 140608, September 23,
2004 PABALAN

Doctrine:
When the cause of action is anchored on a document, the
genuineness or due execution of the instrument shall be deemed
impliedly admitted unless the defendant, under oath, specifically
denies them, and sets forth what he claims to be the facts.
In a specific denial, the defendant must declare under oath that he
did not sign the document or that it is otherwise false or fabricated.
The admission of the genuineness and due execution of a
document effectively eliminates any defense relating to the
authenticity and due execution of the document.

Facts:
Petitioner Bank filed action to recover 1M plus interest & penalties
from respondent Mariano Velarde for failure of respondent to pay
loan indicated in a promissory note dated September 28,1983.
Alleged facts of the loan are as follows:
Oct 13, 1983 Promisorry Note was due and demandable
Jul 27, 1988 Petitioner banks counsel made a written
demand
Aug 5, 1988 Respondent received demand letter
Feb 22, 1994 Petitioner sent another demand letter
1995 Filing of the case
Respondent disclaims any liability on the instrument, the receipt of
the said amount of P1-Million shows that the amount was received
by another person, not the herein defendant. Hence, no liability
attaches and as further stated in the special and affirmative
defenses that, assuming the promissory note exists, it does not
bind much less is there the intention by the parties to bind the
herein defendant. In other words, the documents relative to the loan
do not express the true intention of the parties.
On September 6, 1995, petitioner bank presented its sole witness,
Antonio Marquez, who identified the Promissory Note dated
September 28, 1983.
The respondent, instead of presenting evidence, filed with leave of
court his demurrer to evidence, alleging the grounds that:
(a) PLAINTIFF FAILED TO PROVE ITS CASE BY
PREPONDERANCE OF
EVIDENCE.
(b) THE CAUSE OF ACTION, CONCLUDING ARGUENTI
THAT IT EXISTS, IS BARRED BY PRESCRIPTION AND/OR
LACHES.14

TC: Ruled in favor of respondent. Found merit in demurrer to evidence and
dismissed the complaint including respondents counterclaims, without
pronouncement as to costs.

CA: Affirmed the TC and the dismissal of the complaint. The appellate court
found that petitioner failed to present any evidence to prove the existence of
respondents alleged loan obligations, considering that respondent denied
petitioners allegations in its complaint. It also found that petitioner banks
cause of action is already barred by prescription.

Issue:
1. WON demurrer to evidence was correctly sustained NO
2. WON cause of action is barred by prescription NO

Held:
1. NO. The petitioner bank need not present further evidence to
prove the genuineness or authenticity of Promissory note because the
respondent did not specifically deny the facts alleged regarding the loan
documents. In fact, he impliedly admitted the same. Because of this implied
admission, the respondent can no longer use any defense relating to the
authenticity and due execution of the document; and therefore, the demurrer
to evidence filed should have been dismissed.

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

Respondents denials do not constitute an effective specific denial as
contemplated by law. In the early case of Songco vs. Sellner, the Court
expounded on how to deny the genuineness and due execution of an
actionable document, viz.:
This means that the defendant must declare under oath that he did not
sign the
document or that it is otherwise false or fabricated. Neither does the
statement of the answer to the effect that the instrument was procured by
fraudulent representation raise any issue as to its genuineness or due
execution. On the contrary such a plea is an admission both of the
genuineness and due execution thereof, since it seeks to avoid the
instrument upon a ground not affecting either.

In fact, respondents allegations amount to an implied admission of the due
execution and genuineness of the promissory note. The admission of the
genuineness and due execution of a document means that the party whose
21
signature it bears admits that he voluntarily signed the document or it was
signed by another for him and with his authority -- that at the time it was
signed it was in words and figures exactly as set out in the pleading of the
party relying upon it; that the document was delivered; and that any
formalities required by law, such as a seal, an acknowledgment, or revenue
stamp, which it lacks, are waived by him. Also, it effectively eliminated any
defense relating to the authenticity and due execution of the document.

Clearly, both the trial court and the Court of Appeals erred in concluding that
respondent specifically denied petitioners allegations regarding the loan
documents.

2. NO. The Court also finds that petitioners claim is not barred by
prescription. Petitioners action for collection of a sum of money was based
on a written contract and prescribes after ten years from the time its right of
action arose. The prescriptive period is interrupted when there is a written
extrajudicial demand by the creditors. The interruption of the prescriptive
period by written extrajudicial demand means that the said period would
commence anew from the receipt of the demand.

Respondents obligation under the promissory note became due and
demandable on October 13, 1983. On July 27, 1988, petitioners counsel
made a written demand for petitioner to settle his obligation. From the time
respondents obligation became due and demandable on October 13, 1983,
up to the time the demand was made, only 4 years, 9 months and 14 days
had elapsed. The prescriptive period then commenced anew when
respondent received the demand letter on August 5, 1988. Thus, when
petitioner sent another demand letter on February 22, 1994, the action still
had not yet prescribed as only 5 years, 6 months and 17 days had lapsed

22
RULE 9 Effect of Failure to Plead

Sps. Juan J. Diaz and Elizabeth Diaz vs. Jose Diaz and Court of
Appeals G.R. No. 135885, April 28, 2000, 331 SCRA 302 PEREZ

FACTS
Action for a sum of money was filed before the Regional Trial Court
of by private respondent Jose Diaz against petitioners Juan and Elizabeth
Diaz. The complaint stemmed from a property bought in Greenhills by
Elizabeth Diaz. It was bought with money of a previous sale of lot both co-
owned by Jose and Elizabeth. The Greenhills property was effectively and
partly held in trust by Elizabeth for Jose.
Jose demands P2 million for his part of the lot taking into account
the current value of the lot.

On September 19, 1997, private respondent filed an action for sum
of money with the Regional Trial Court of Mandaluyong City.
On October 7, 1997, petitioners filed a Motion to Dismiss8 on the ground
that private respondents Complaint failed to state a cause of action, and
assuming that private respondent had a cause of action against them, it was
already barred by prescription and laches. Private respondent filed his
Opposition to the Motion to Dismiss, to which petitioners responded by filing
a Reply.

TC: In its Order dated November 27, 1997, the trial court denied
petitioners Motion to Dismiss as the points invoked and the arguments
advanced were contentious and evidentiary in nature which could not be
established by mere allegations in the pleadings but must be proved during
the trial on the merits. The trial court denied the Motion for Reconsideration
of petitioners in its Order dated January 14, 1998.

CA: Court of Appeals affirming the denial of petitioners Motion to Dismiss is
AFFIRMED

ISSUE: Should the SC uphold the CA and TC?
HELD: Yes.

SC RULING: The decision of the Court of Appeals affirming the denial of
petitioners Motion to Dismiss is AFFIRMED. The Motion to Set Aside Order
of Default and to Admit Attached Answer is hereby GRANTED; and the
default judgment rendered by the trial court on March 11, 1999 is SET
ASIDE. The trial court is directed to proceed with the trial of the case, and to
resolve the same with dispatch. The Court of Appeals is hereby ordered to
remand the records of the case to the trial court within fifteen (15) days from
notice hereof. Both the trial court and the appellate court are ordered to
immediately inform this Court of their compliance with these orders.

Although the invocation of Article 1452 is a conclusion of law, its
inclusion in the Complaint does not render the same infirm since statements
of law made by parties to a case are not binding on the courts.Petitioners
argue that private respondents invocation of Article 1452 of the Civil Code is
a mere conclusion of law which is not allowed to be alleged in the Complaint.
Petitioners also dispute the applicability of Article 1452 as there was never
any agreement between the parties for the purchase of the Greenhills
property and for registration of the title in their name. We agree with
petitioners that private respondents invocation of Article 1452 is a
conclusion of law. However, the inclusion thereof does not render the
Complaint infirm since statements of law made by parties to a case are not
binding on the courts. Similarly, doubtful veracity of the allegations in the
Complaint is not a ground for granting a motion to dismiss. The existence or
nonexistence of an agreement between petitioners and private respondent is
a matter that should be threshed out during the trial of the case.

Under the rules of pleading, a party is not required to specify the provisions
of law or contract relied upon by the pleader.Petitioners further contend
that private respondents vacillating cause of action indicated an inability to
allege an actionable cause which should have impelled the Court of Appeals
to grant their Motion to Dismiss. Petitioners ask this Court to take notice of
the fact that private respondent first cited the implied trust provisions of
Article 1452 of the Civil Code in his Complaint then shifted to implied trust
under Article 1455 in his Opposition to the Motion to Dismiss, and finally, co-
ownership in his Comment before the Court of Appeals. Petitioners correctly
pointed out that in determining the existence of a cause of action, only the
statements in a complaint may properly be considered, and that it is error for
the courts to take cognizance of external facts or hold preliminary hearings
to determine its existence. Petitioners will, however, concede that private
respondents Opposition to the Motion to Dismiss and Comment are
extraneous matters which we are proscribed from considering for purposes
of determining the sufficiency of private respondents Complaint. Whether or
not the provision of law cited by private respondent is applicable to the case
at bar is immaterial. Under the rules of pleading, a party is not required to
specify the provisions of law or contract relied upon by the pleader. If he
does so, and is mistaken, this will not preclude him from obtaining relief
under a different conception of the case, provided always that the facts
stated and proved justify such relief.
23

A special civil action for certiorari is a remedy designed for the correction of
errors of jurisdiction and not errors of judgment.As to petitioners argument
that the Court of Appeals erred in ruling that a special civil action for
certiorari is not the appropriate remedy to question the denial of their motion
to dismiss, it need not be gainsaid that a special civil action for certiorari is a
remedy designed for the correction of errors of jurisdiction and not errors of
judgment. To justify the grant of such extraordinary remedy, the abuse of
discretion must be grave and patent, and it must be shown that discretion
was exercised arbitrarily or despotically. In this case, no such circumstances
attended the denial of petitioners Motion to Dismiss.

The filing of the Petition for Certiorari does not interrupt the reglementary
period for filing an answer.Petitioners received on January 22, 1998 a
copy of the trial courts Order dated October 8, 1997, denying
reconsideration of its ruling on their Motion to Dismiss. Petitioners had only
five (5) days from receipt of said Order, or until January 27, 1998, within
which to file an answer. When petitioners filed their first Petition for Certiorari
with the Court of Appeals on February 6, 1998, they were already in default.
Hence, the filing of said Petition for Certiorari cannot be considered as
having interrupted the reglementary period for filing an answer. More
importantly, Section 7, Rule 65 of the Rules provides that: SEC. 7.
Expediting proceedings; injunctive relief. The court in which the petition is
filed may issue orders expediting the proceedings, and it may also grant a
temporary restraining order or a writ of preliminary injunction for the
preservation of the rights of the parties pending such proceedings. The
petition shall not interrupt the course of the principal case unless a
temporary restraining order or writ of preliminary injunction has been issued
against the public respondent from further proceeding in the case. (

24
Vlason Enterprises Corporation vs. Court of Appeals and Duraproof
Services G.R. Nos. 121662-64, July 6, 1999, 310 SCRA 26 SANA

Mediserv, Inc. Hernando B. Delizo, M.D. and Marissa c. Delizo, M.D. vs.
China Banking Corporation G.R. No. 140755, April 17, 2001, 356 SCRA
616 SUPAPO

Note: The case was tried not on the merits but on technicalities. (My
apology. The case is quite long.)

Synopsis: A bank filed a case agianst a company to recover the deficiency
from a foreclosed land. The company didn't file their motion immediately.
They requested to have an extension twice which was granted. On it's 3rd
request, it was denied. Afterwards, they file their motion to dismiss. The
bank filed a motion to declare the company in default. The court declared the
company in default. The company filed an omnibus motion but was denied.

Doctrine:
A party declared in default is deprived of the right to take part in the trial and
forfeits his rights as a party litigant except the right to receive notice of
subsequent proceedings. (Not sure)

Facts:
The case itself is about the collection of sum of money to recover deficiency
judgment in foreclosure proceedings against Mediserv.

The case: Mediserv executed 3 promissory notes for P18 Million. It
was secured by a real mortgage. Upon default of Mediserv (the
debt is now P23 million), the land was foreclosed. However the
proceeds are not sufficient. Hence, the complaint.

Trial court's decision: (Note: the case involves multiple motions filed by both
parties.)

Actions taken: (In order)
1. China Banking Corp. (China) filed a complaint for a sum of
money to recover deficiency judgment in foreclosure proceedings
against Mediserv.

2. Mediserv filed a Motion for Extension of Time to File Motion to
Dismiss and/or Answer (1st extension) for an additional period of
15 days within which to file their appropriate pleading or motion.
Motion GRANTED.

Before the motion was granted, law firm of Guerrero,
Alambra, Viernes and Margarejo withdrew its appearance
as counsel for Mediserv.

25
3. Mediserv filed another motion for extension (2nd extension) for
an additional 15 days, averring that they were shopping for a new
counsel, with the defendant Hernando Delizo himself signing the
same. Motion GRANTED (with a warning of no further extension
would be entertained)

4. Mediserv filed for a last extension of time to file their motion to
dismiss and/or Answer, seeking yet another 10 days claiming anew
that they were still looking for a new counsel, with the defendant
Hernando Delizo once more signing the motion. Motion DENIED.

5. 10 days later from the 2nd extension, Mediserv filed a motion to
dismiss the complaint on the ground of litis pendentia, lack of cause
of action and payment of claim.

In support thereof, the Mediserv alleged that they had
earlier filed a case against the China on for Declaration of
Nullity of Auction Sale and all incidents thereto, Specific
Performance and Damages with prayer for a Temporary
Restraining Order and/or writ of Preliminary Injunction.

6. Private respondents (Chinas party) filed a Motion to Declare
Mediserv and Co. in default, and another Motion to Strike Out the
Motion to Dismiss.

7. Thereafter (June 16, 1998), Respondent judge issued an order
denying the defendants Mediservs motion to dismiss, and
declaring the defendants (Mediserv) in default.

8. Mediservs attorney filed his withdrawal of appearance as its
counsel motion GRANTED.

9. Mediserv filed an Omnibus Motion; (a) to lift the order of default;
(b) to dismiss the complaint with prejudice for violation of the
requirement of certification against forum-shopping; and (c) to cite
Lydia Yu in contempt of Court. motion DENIED. MR DENIED.

CA: petition DISMISSED for being absolutely devoid of merit. It ruled that
the Omnibus Motion to Lift Order of Default filed by defendant bank was
fatally flawed, as it was filed beyond the extended periods to file answer
granted by the court, was not under oath, and was not accompanied by a
proper affidavit of merit. MR DENIED.

Mediserv stressed that their Motion to Dismiss was filed ahead of
respondent banks Motion to Declare Defendants in Default, and petitioners
had accordingly not yet lost their standing in court when they filed their
motion to dismiss. Also, they insist that the complaint against them must be
dismissed for failure to comply with the essential requirement of a
certification against forum shopping.

Petitioners stated that while it is not disputed that they were declared in
default, the issue is whether granting that they already lost personality in the
case below, the trial court is mandated to dismiss the case motu propio upon
being apprised of a false certification in the certificate against forum
shopping.

Issue:
Whether the court a quo decided a question of substance evidently not in
accord with law and with the decisions of this honorable court in avoiding to
rule on the glaring and obviously staring issue of respondent banks failure to
comply with the essential requirement of a certification against forum-
shopping by declaring instead, petitioners in default.
(Whether the trial court acted with grave abuse of discretion amounting to
want or excess of jurisdiction in issuing the impugned order which denied the
Omnibus Motion in question.)

Held: NO.
We agree that the Omnibus Motion was fatally flawed although the Omnibus
Motion insofar as it seeks the lifting of the order of default, may have been
seasonably filed on August 20, 1998, or two (2) months after petitioners
were already declared in default for failure to file answer/motion to dismiss
within the extended period granted by the court to do so. However, the said
Omnibus Motion was not under oath as required in Rule 9, Sec. 3 (b), and
the Affidavit of Merit is defective in that it failed to aver any fact which
constitutes movants good and substantial defense nor allege circumstances
constituting defendants mistake or excusable negligence as contemplated
by the Rules. Petitioners have conspicuously failed to traverse these factual
findings of the court on these defects, whether in its Petition, its Reply to
Comment and Memorandum, and instead seek to focus their attack on
respondents complaint on the ground of alleged violation of the rule on
forum shopping.

CA observed that as of June 16, 1998, petitioners were already declared in
default, which, not having been set aside (in fact it was even ratified by the
respondent judge in his order of January 12, 1999, after the petitioners had
filed a motion for reconsideration after almost two (2) months from the
issuance of the default order) resulted in the petitioners loss of standing in
court, and worked the forfeiture of their right to present their defense and
control the proceedings, as well as the deprivation of any hope or
26
expectation that their pleadings will be acted upon

We agree with the appellate court that the trial court did not act with grave
abuse of discretion amounting to want or excess of jurisdiction in issuing the
impugned order dated September 30, 1998 which denied the Omnibus
Motion in question.

A party declared in default is deprived of the right to take part in the trial and
forfeits his rights as a party litigant except the right to receive notice of
subsequent proceedings. To obtain relief from an order of default, the said
party may at any time after notice thereof and before judgment file a motion
under oath to set aside order of default upon proper showing that his failure
to answer was due to fraud, accident, mistake or excusable negligence and
that he has a meritorious defense. If not accompanied by an affidavit of
merit, the trial court has no authority to consider the same. Petitioners failed
to set aside the order of default and must suffer the consequences thereof.

Petitioners submission that their Motion to Dismiss, having been filed ahead
of respondent banks Motion to Declare Defendants in Default, must take
precedence and should have been resolved first, does not impress us.
Petitioners period to file responsive pleading had expired, and was
overtaken by respondents motion to declare them in default, which was filed
eight (8) days later. There is no rule or jurisprudence that mandates that
both incidents cannot be resolved together. In fact, an order of default can
be made only upon motion of the claiming party and the motion herein was
precisely based on the defendants failure to file his responsive
pleading/motion to dismiss on time. The second motion to dismiss
contained in the Omnibus Motion and the Motion to Cite for Contempt
cannot be entertained until the default order is lifted and the petitioners
standing as party litigant is restored.

Petitioners claim that respondent bank slept on its rights apparently
because it did not immediately file its motion to declare petitioners in default.
But they committed a more serious delay, fatal to their rights, by filing a
motion to dismiss way beyond the forty five (45) days granted for them to do
so, and without any satisfactory explanation under oath for their late action,
despite the courts warning that no further extension would be granted after
the earlier motions for extension were granted, nor any showing that they
have a meritorious defense. The defective Omnibus Motion was correctly
denied and the reliefs sought therein could not be granted as petitioners
failed to purge themselves of the effects of a declaration of default.

SC ruling: petition for review on certiorari DENIED.

27
Martinez v. Republic, G.R. No. 160895, October 30, 2006 TABAG

DOCTRINE: A judgment by default may be considered as one that
completely disposes of the case and thus Appeal is allowed by the rules of
Court.

FACTS:
- Petitioner Jose R. Martinez filed a petition for the registration in his name of
three (3) parcels of land included in the Cortes, Surigao del Sur Cadastre.
(Equivalent to 3,700 sqm.)
- Martinez alleges that he purchased the lots from his uncle, whose
predecessors-in-interest were traceable up to 1870s. He also claims he was
in continuous possession.
- Case was raffled to RTC in Surigao.
- OSG opposed the petition on the grounds that appellees possession was
not in accordance with Section 48(b) of Commonwealth Act No. 141; that his
muniments of title were insufficient to prove bona-fide acquisition and
possession of the subject parcels; and that the properties formed part of the
public domain and thus not susceptible to private appropriation.
- Despite this, RTC issued am order of general default since no party
appeared in Court to oppose Martinez's petition.

TC: Issued an order of general default. It also received Martinez's oral and
documentary evidence.

CA: Reversed RTC. Dismissed Martinez's petition.

ISSUE: W/N an order of general default issued by a trial court in a land
registration case bars the Republic of the Philippines, through the Office of
the Solicitor General, from interposing an appeal from the trial courts
subsequent decision in favor of the applicant.

HELD: NO. OSG can appeal.

In the 1965 case of Antonio, et al. v. Jacinto,24 the Court acknowledged that
the prior necessity of a ruling setting aside the order of default "however,
was changed by the Revised Rules of Court. Under Rule 41, section 2,
paragraph 3, a party who has been declared in default may likewise appeal
from the judgment rendered against him as contrary to the evidence or to the
law, even if no petition for relief to set aside the order of default has been
presented by him in accordance with Rule 38."

Annotated textbooks on the 1997 Rules of Civil Procedure similarly
acknowledge that even under the new rules, a defaulted defendant retains
the right to appeal as previously confirmed under the old Section 2, Rule 41.

Section 2, paragraph [2] of the former Rule 41, which allows an appeal from
a denial of a petition for relief, was deleted from the present Rule, and
confined appeals to cases from a final judgment or final order that
completely disposes of the case, or of a particular matter therein, when
declared by these rules to be appealable. A judgment by default may be
considered as one that completely disposes of the case.

If it cannot be made any clearer, we hold that a defendant party declared in
default retains the right to appeal from the judgment by default on the ground
that the plaintiff failed to prove the material allegations of the complaint, or
that the decision is contrary to law, even without need of the prior filing of a
motion to set aside the order of default. We reaffirm that the Lim Toco
doctrine, denying such right to appeal unless the order of default has been
set aside, was no longer controlling in this jurisdiction upon the effectivity of
the 1964 Rules of Court, and up to this day.

SC RULING: Petition is dismissed.

28
Republic v. Hidalgo, G.R. No. 161657, October 04, 2007 VELASCO

DOCTRINE
On Due Process; Declaring in Default - A disposition directing the
Republic to pay an enormous sum without the trial court hearing its side
does not, without more, vitiate, on due procedural ground, the validity of the
default judgment. The petitioner may have indeed been deprived of such
hearing, but this does not mean that its right to due process had been
violated. (See: Sec 3, Rule 9 ROC)

On Awards; Rules of Court - While a defaulted defendant may be
said to be at the mercy of the trial court, the Rules of Court and certainly the
imperatives of fair play see to it that any decision against him must be in
accordance with law. In the abstract, this means that the judgment must not
be characterized by outrageous one-sidedness, but by what is fair, just and
equitable that always underlie the enactment of a law. (See: Sec 3(d), Rule
9 ROC)

FACTS
Sometime in June 1999, Mendoza filed a suit with the RTC of
Manila for reconveyance and the corresponding declaration of nullity of a
deed of sale and title against the Republic, the Register of Deeds of Manila
and one Atty. Fidel Vivar. In her complaint, Mendoza essentially alleged
being the owner of the disputed Arlegui property which the Republic forcibly
dispossessed her of and over which the Register of Deeds of Manila issued
TCT No. 118911 in the name of the Republic.

Answering, the Republic set up, among other affirmative defenses,
the States immunity from suit. The RTC of Manila dismissed Mendozas
complaint. On a petition for certiorari, the CA reversed the trial courts
decision. It remanded the case to the court a quo for further proceedings. On
appeal, the SC in GR No. 155231 sustained the CAs decision.

Upon the Courts decision, the case was re-raffled to RTC Manila
Branch 37 presided by the respondent judge.

On May 5, 2003, Mendoza filed a Motion for Leave of Court to file a
Third Amended Complaint. Here, Mendoza sought the declaration of nullity
of a supposed deed of sale dated July 15, 1975 in the name of the Republic.
Mendoza averred that, since time immemorial, she and her predecessors-in-
interest had been in peaceful and adverse possession of the property as well
as of the owners duplicate copy of the original title.

Such possession continued until the first week of July 1975 when a
group of armed men representing themselves to be members of the
Presidential Security Group [PSG] of the then President Ferdinand E.
Marcos, had forcibly entered [her] residence and ordered [her] to turn over to
them her Copy of TCT No. 118525 and compelled her and the
members of her household to vacate the same ; thus, out of fear for their
lives, [she] handed her Owners Duplicate Certificate Copy of TCT No.
118527 and had left and/or vacated the subject property.

Mendoza further alleged that as per verification, the original title
had already been cancelled by virtue of a deed of sale in favor of the
Republic executed by her and her deceased husband on July 15, 1975,
acknowledged before Fidel Vivar; and that this deed of sale is fictitious.

RTC DECISION
The Republic was declared in default by the RTC allowing the
private respondent to present her evidence ex-parte. It rendered a judgment
in favor of Mendoza, and held that the Republic had veritably confiscated
Mendozas property, and deprived her not only of the use thereof but also
denied her of the income she could have had otherwise realized during all
the years she was illegally dispossessed of the same.

The Republic moved for a new trial, but was denied.
Reconsideration was also not given.

CA DECISION
None, the case was elevated to the Supreme Court by virtue of a
petition for certiorari.

ISSUE
WON the Republic was in default
WON the award granted by the RTC was proper

HELD
(1) DEFAULT: YES
Petitioner contends that the respondent judge committed serious
jurisdictional error when he proceeded to hear the case and eventually
awarded the private respondent a staggering amount without so much as
giving the petitioner the opportunity to present its defense. This stance is
simply without merit.

Deprivation of procedural due process is obviously the petitioners
threshold theme. Due process, in its procedural aspect, guarantees in the
minimum the opportunity to be heard. Grave abuse of discretion, however,
cannot plausibly be laid at the doorstep of the respondent judge on account
of his having issued the default order against the petitioner, then proceeding
with the hearing and eventually rendering a default judgment.
29

Section 3, Rule 9 of the Rules of Court reads:

SEC. 3. Default; declaration of.- If the
defending party fails to answer within the time
allowed therefor, the court shall, upon motion of the
claiming party with notice to the defending party,
and proof of such failure, declare the defending
party in default. Thereupon, the court shall proceed
to render judgment granting the claimant such relief
as his pleading may warrant, unless the court in its
discretion requires the claimant to submit evidence

While the ideal lies in avoiding orders of default, the policy of the law
being to have every litigated case tried on its full merits, the act of the
respondent judge in rendering the default judgment after an order of default
was properly issued cannot be struck down as a case of grave abuse of
discretion.

The term grave abuse of discretion, in its juridical sense, connotes
capricious, despotic, oppressive or whimsical exercise of judgment as is
equivalent to lack of jurisdiction. The abuse must be of such degree as to
amount to an evasion of a positive duty or a virtual refusal to perform a duty
enjoined by law, as where the power is exercised in a capricious manner.
The word capricious, usually used in tandem with arbitrary, conveys the
notion of willful and unreasoning action.

Under the premises, the mere issuance by the trial court of the
order of default followed by a judgment by default can easily be sustained as
correct and doubtless within its jurisdiction. Surely, a disposition directing the
Republic to pay an enormous sum without the trial court hearing its side
does not, without more, vitiate, on due procedural ground, the validity of the
default judgment. The petitioner may have indeed been deprived of such
hearing, but this does not mean that its right to due process had been
violated.

(2) AWARD: NO
On issue of the award given by the trial court, the SC held that it
was erroneous.

Private respondent fixed the assessed value of her Arlegui property at
P2,388,990.00. In its assailed decision, the trial court ordered the petitioner
to pay private respondent the total amount of over P1.48 Billion representing
the reasonable rental for the property, the interest rate thereon at the legal
rate and the opportunity cost. This figure is on top of the P143,600,000.00
which represents the acquisition cost of the disputed property. The trial court
would have the Republic pay the total amount of about P1.624 Billion,
exclusive of interest. This is not to mention the award of attorneys fees in an
amount equivalent to 15% of the amount due the private respondent.

The respondent judge brazenly went around the explicit command
of Rule 9, Section 3(d) of the Rules of Court which defines the extent of the
relief that may be awarded in a judgment by default, i.e., only so much as
has been alleged and proved. The court acts in excess of jurisdiction if it
awards an amount beyond the claim made in the complaint or beyond that
proved by the evidence. While a defaulted defendant may be said to be at
the mercy of the trial court, the Rules of Court and certainly the imperatives
of fair play see to it that any decision against him must be in accordance with
law. In the abstract, this means that the judgment must not be characterized
by outrageous one-sidedness, but by what is fair, just and equitable that
always underlie the enactment of a law.

30
RULE 10 Amended and Supplemental Pleadings

Siasoco vs. Court of Appeals G.R. No. 132753, February 15, 1999, 303
SCRA 186 VILLAFUERTE

Doctrine: Notwithstanding the filing of a responsive pleading by one
defendant, the complaint may still be amended once, as a matter of right, by
the plaintiff in respect to claims against the non-answering defendant(s).
The Court also reiterates that certiorari is not the proper remedy to contest a
lower courts final adjudication, since appeal is available as a recourse.

Facts: Petitioners were the registered owners of nine parcels of land located
in Montalban, Rizal. In December 1994, they began to offer the subject
properties for sale. Subsequently, Iglesia ni Cristo (INC) negotiated with the
petitioners, but the parties failed to agree on the terms of the purchase. In
their letter dated January 8, 1997, petitioners claimed that the INC had not
really accepted the offer, adding that, prior to their receipt of the
aforementioned reply on December 24, 1996, they had already contracted
with Carissa for the sale of the said properties due to the absence of any
response to their offer from INC.
Maintaining that a sale had been consummated, INC demanded that the
corresponding deed be executed in its favor. Petitioners refused. The
ensuing events were narrated by the Court of Appeals, as follows:

On January 14, 1997, private respondent filed a civil suit for [s]pecific
[p]erformance and [d]amages against petitioners and Carissa Homes and
Development & Properties, Inc (Carissa).

Petitioners filed therein a Motion to Dismiss on the ground of improper
venue and lack of capacity to sue.
Carissa Homes filed its answer to the complaint on February 24, 1997.

Pending resolution of petitioners Motion to Dismiss, private respondent
negotiated with Carissa Homes which culminated in the purchase of the
subject properties of Carissa Homes by private respondent.

On April 24, 1997, private respondent filed an [A]mended [C]omplaint,
dropping Carissa Homes as one of the defendants and changing the nature
of the case to a mere case for damages.

Petitioners filed a Motion to Strike Out Amended Complaint, contending
that the complaint cannot be amended without leave of court, since a
responsive pleading has been filed.

On August 11, 1997, the first assailed order denying petitioners Motion to
Strike Out Amended Complaint was rendered.

On August 31, 1997, petitioners filed a Motion for Suspension of
Proceeding pending the resolution [by] the respondent court of the Motion to
Dismiss earlier filed.

On September 11, 1997, the second assailed order denying petitioners
Motion to Suspend Proceeding was rendered[;] the Order reads:

Filed also last September 1, 1997 [was] a Motion for Suspension by the
defendant Siasoco thru their counsel Atty. Clara Dumandang-Singh.
Although the court could not consider the motion filed because it violates the
new rules on personal service, in the interest of justice, the court will resolve
the motion. In the resolution of this court dated August 11, 1997, it state[d]
that defendants [were being] given a period of five (5) days within which to
file [an] answer to the Amended Complaint. The defendants here obviously
refer to the defendants Mario Siasoco, et. al. In the Motion for Suspension
filed by the defendants Siasoco, et al., the latter insist on the court resolving
the motion to dismiss. As stated in the resolution, the motion to dismiss is
now moot and academic because of the Amended Complaint from Specific
Performance with Damages to just Damages. For this court to resolve the
Motion to Dismiss xxx the first complaint, would be an exercise in futility. The
main complaint now is damages and no longer Specific Performance with
damages which [was] actually what the Resolution dated August 11, 1997
[was] all about. Be that as it may, the court gives defendants Siasoco, et al.
fifteen (15) days from receipt of this Order to file their respective Answers to
the Amended Complaint, not from the receipt of the resolution of the Motion
to Dismiss which will not be forthcoming.

RTCs Decision: RTC (1) admitted the Amended Complaint; (2) dropped
Defendant Carissa from the Complaint; and (3) denied the Motion to Declare
Defendants Siasoco et al. (herein petitioners) in Default. The second Order
denied the Motion for Suspension filed by defendants and directed them to
file their answer to plaintiffs Amended Complaint.

CAs Decision: The Court of Appeals (CA) ruled that although private
respondent could no longer amend its original Complaint as a matter of right,
it was not precluded from doing so with leave of court. Thus, the CA
concluded that the RTC had not acted with grave abuse of discretion in
admitting private respondents Amended Complaint.

Petitioners argued that the trial court where the original Complaint for
specific performance had been filed was not the proper venue. Debunking
petitioners argument, the CA explained that the RTC nevertheless had
31
jurisdiction over the said Complaint. The CA also held that the Amended
Complaint did not substantially alter private respondents cause of action,
since petitioners were not being asked to answer a legal obligation different
from that stated in the original Complaint.

Issue: WON CA erred in affirming the two Orders of the RTC which had
allowed the Amended Complaint?

Held/ SCs Decision: No.
The petition is devoid of merit. We sustain the Court of Appeals, but for
reasons different from those given in the assailed Decision.

Admission of Amended Complaint

Petitioners argue that the lower courts erred in admitting the Amended
Complaint. Under the Rules, a party may amend his pleading once as a
matter of right at any time before a responsive pleading is served xxx.
When private respondent filed its Amended Complaint, Carissa, the other
party-defendant in the original Complaint, had already filed its Answer.
Because a responsive pleading had been submitted, petitioners contend that
private respondent should have first obtained leave of court before filing its
Amended Complaint. This it failed to do. In any event, such leave could not
have been granted, allegedly because the amendment had substantially
altered the cause of action.

This argument is not persuasive. It is clear that plaintiff (herein private
respondent) can amend its complaint once, as a matter of right, before a
responsive pleading is filed. Contrary to the petitioners contention, the fact
that Carissa had already filed its Answer did not bar private respondent from
amending its original Complaint once, as a matter of right, against herein
petitioners. Indeed, where some but not all the defendants have answered,
plaintiffs may amend their Complaint once, as a matter of right, in respect to
claims asserted solely against the non-answering defendants, but not as to
claims asserted against the other defendants.

The rationale for the aforementioned rule is in Section 3, Rule 10 of the
Rules of Court, which provides that after a responsive pleading has been
filed, an amendment may be rejected when the defense is substantially
altered. Such amendment does not only prejudice the rights of the
defendant; it also delays the action. In the first place, where a party has not
yet filed a responsive pleading, there are no defenses that can be altered.
Furthermore, the Court has held that [a]mendments to pleadings are
generally favored and should be liberally allowed in furtherance of justice in
order that every case may so far as possible be determined on its real facts
and in order to speed the trial of cases or prevent the circuity of action and
unnecessary expense, unless there are circumstances such as inexcusable
delay or the taking of the adverse party by surprise or the like, which might
justify a refusal of permission to amend.

In the present case, petitioners failed to prove that they were prejudiced by
private respondents Amended Complaint. True, Carissa had already filed
its own Answer. Petitioners, however, have not yet filed any. Moreover,
they do not allege that their defense is similar to that of Carissa. On the
contrary, private respondents claims against the latter and against
petitioners are different. Against petitioners, whose offer to sell the subject
parcels of land had allegedly been accepted by private respondent, the latter
is suing for specific performance and damages for breach of contract.
Although private respondent could no longer amend, as a matter of right, its
Complaint against Carissa, it could do so against petitioners who, at the
time, had not yet filed an answer.

The amendment did not prejudice the petitioners or delay the action. On the
contrary, it simplified the case and tended to expedite its disposition.
The Amended Complaint became simply an action for damages, since the
claims for specific performance and declaration of nullity of the sale have
been deleted.

WHEREFORE, the Petition is hereby DENIED. Costs against petitioners.

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