1
Republic of the Philippines produced P17,000,000 which, Vicar claims, should have been
SUPREME COURT
THIRD DIVISION
G.R. No. 157195. April 22, 2005
VICAR INTERNATIONAL CONSTRUCTION, INC., and
CARMELITA V. LIM, Petitioners,
vs.
FEB LEASING AND FINANCE CORPORATION (now
BPI LEASING CORPORATION), Respondents.
DECISION
PANGANIBAN, J.:
Once more, the Court stresses that procedural rules must be
used to promote, not obstruct, substantial justice. The failure
to attach the Resolution authorizing herein individual
petitioner to represent herein corporate petitioner is, under
the circumstances, excusable. The immediate correction of
the defect should have been deemed sufficient compliance
with the rules.
The Case
Before us is a Petition for Review on Certiorari1 pursuant to
Rule 45 of the Rules of Court, seeking to reverse and set
aside two Resolutions2 of the Court of Appeals (CA) dated
October 23, 20023 and February 7, 2003,4 in CA-GR SP No.
73117. The earlier Resolution reads:
"The instant petition for certiorari is hereby DISMISSED for
lack of proper verification and certification against forum
shopping as the same was executed by Carmelita V. Lim, one
of the petitioners, without showing any authority from
petitioner corporation to sign for and on its behalf."5
The second assailed Resolution denied petitioners "Omnibus
Motion for Reconsideration and for Admission of the
Attached Secretarys Certificate."
The Facts
This controversy originated from a Complaint6 for unjust
enrichment and damages, filed in the Regional Trial Court of
Makati by herein petitioner, Vicar International Construction,
Inc. (Vicar), against Respondent FEB Leasing and Finance
Corporation (now BPI Leasing Corporation) and the Far East
Bank and Trust Company. In turn, FEB Leasing and Finance
Corporation filed a Complaint7 against Vicar, Carmelita
Chaneco Lim and one John Doe, for a sum of money,
damages and replevin.
These Complaints stemmed from loans obtained from FEB
by Vicar, a corporation engaged in the construction business,
for the purchase of certain heavy equipment. In obtaining
the loans, Deeds of Absolute Sale with a "lease-back"
provision were executed by the parties. In those Deeds, Vicar
appears to have sold to FEB the equipment purchased with
the loan proceeds and, at the same time, leased them back.8
For the total loan of P30,315,494, Vicar claims to have paid
FEB an aggregate amount of P19,042,908 in monthly
amortizations.
Nevertheless, FEB maintains that Vicar still had an
outstanding balance of about P22,000,000, despite the
extrajudicial foreclosure of sixty-three (63) subdivision lots.
These lots, comprising an aggregate area of 20,300 square
meters in Calamba, Laguna, were used by the corporation as
additional collateral. As a consequence, the auction sale
applied to its loans.
In the course of the second (replevin) case, the trial court
issued several Orders pertaining to the possession/custody
of eight (8) units of the subject equipment. In an Order
dated August 2, 2002, the regional trial court (RTC) quashed
the property counterbond filed by Vicar and denied the
latters Motion to Dismiss the Complaint, which was
grounded on forum shopping. In an Order dated September
30, 2002, the RTC denied the corporations Motion for
Reconsideration and Motion for Voluntary Inhibition of the
trial judge.
On October 3, 2002, Vicar filed a Petition for Certiorari before
the Court of Appeals, to stop the implementation of the Writ
of Replevin issued against the subject equipment.
Ruling of the Court of Appeals
The Petition was, however, instantly dismissed by the CA in
its herein assailed Resolution dated October 23, 2002,
because the Verification and the Certification against forum
shopping had been executed by Petitioner Carmelita V. Lim
without any showing that she had the authority to sign for
and on behalf of petitioner-corporation.
On November 23, 2003, the day after receiving its copy of
the Resolution, Vicar filed an "Omnibus Motion for
Reconsideration and for Admission of the Attached
Secretarys Certificate." Nevertheless, the CA denied the
Omnibus Motion in this wise:
"The belated filing by the petitioners of the Certification of
their Corporate Secretary, to the effect that petitioner
Carmelita Lim has been duly authorized by petitioner
corporation to file the subject petition for certiorari, did not
cure the defect of said petition. Absent any compelling
reason for petitioners failure to comply at the first instance
with the required certification, we cannot, therefore, accept
their subsequent compliance."9
Hence, this Petition.10
The Issues
Petitioners raise the following issues for our consideration:
"A.
Whether compelling reasons exist which warrant the liberal
construction of the Petition for Certiorari.
"B.
Whether petitioners subsequent submission of the
secretarys certificate is a sufficient compliance with the
requirement of the law.
"C.
Whether the policy of the law is to afford a party the fullest
opportunity to establish the merits of his case."11
In short, the principal issue is whether the Court of Appeals
erred in summarily dismissing the Petition for Certiorari.
The Courts Ruling
The present Petition for Review is meritorious.
 2
Main Issue:
Propriety of Summary Dismissal
Petitioners assert that Carmelita V. Lim was duly authorized
to execute, for and on behalf of Vicar, the Verification and
Certification against forum shopping. Attached to the Petition
and signed by Petitioner Lim was the
Verification/Certification, in which was explicitly stated the
authorization and affirmation, as follows:
"x x x. I am likewise duly authorized to execute this
Verification/Certification in behalf of petitioner Vicar
International Construction, Inc. x x x."
This statement was supported by Vicars board of directors,
who unanimously approved a Resolution dated October 2,
2002, which reads thus:
"NOW THEREFORE, BE IT RESOLVED, as it is hereby
resolved, that the Corporation be authorized to file a Petition
for Certiorari before the Court of Appeals for the purpose of
annulling or setting aside the Orders dated 2 August 2002
and 30 September 2002 rendered by Branch 150 of the
Regional Trial Court of Makati in connection with Civil Case
No. 02-357 entitled FEB Leasing & Finance Corporation,
Plaintiff vs. Vicar International Construction, Inc. et al.,
Defendants.
"RESOLVED further, that the President/General Manager
Carmelita V. Lim is hereby authorized to execute and sign
any and all documents necessary for filing of the Petition for
Certiorari, including the verification and certification against
forum shopping."12
Petitioners candidly admit that they inadvertently failed to
attach the above Resolution to their CA Petition. In preparing
the Petition, their counsel supposedly worked overnight
without sleep. She wanted to file it immediately to avoid the
trial courts quashal of their counterbond and, thus, the
immediate seizure of their equipment -- their only means of
livelihood.
Their counsel allegedly believed in good faith that the
secretarys Certificate was attached to the Petition. When
they received a copy of the October 23, 2002 CA Resolution
on November 11, 2002, they lost no time in filing the
following day their "Omnibus Motion for Reconsideration and
for Admission of the Attached Secretarys Certificate."
Petitioners submit that the foregoing circumstances
constitute compelling reasons to justify setting aside the
procedural defect, pursuant to Ramos v. Court of Appeals.13
Further, citing Yap v. Baldado,14 they contend that their
posthaste submission of the secretarys Certificate, albeit
after the filing of their Petition, constitutes substantial
compliance with the requirements of the law. Finally, they
aver that pursuant to the policy of the law to afford parties
the fullest opportunity to establish the merits of their case,
the CA should have given due course to their Petition.
On the other hand, Respondent FEB asserts that the CAs
dismissal of the Petition -- arising from petitioners failure to
attach a duly executed verification and certification against
forum shopping -- is well within the appellate courts
authority, pursuant to Sections 3 and 5 of Rule 46 of the
Revised Rules of Civil Procedure.15 Respondent also claims
that petitioners present action before this Court seeks to
correct a perceived erroneous application by the CA of a
procedural rule that is not correctible by certiorari.
Finally, respondent alleges that the instant Petition, being
based on the ground of excusable negligence, is actually a
motion for new trial. As such, the Petition must allegedly fail,
because petitioners did not execute and attach an affidavit
of merits.
The issue before us is not novel; neither are the factual
circumstances that gave rise to it.
In Shipside Incorporated v. Court of Appeals,16 the petitioner
had not attached any proof that its resident manager was
authorized to sign the Verification and the non-forum
shopping Certification, as a consequence of which the
Petition was dismissed by the Court of Appeals. Subsequent
to the dismissal, however, the petitioner filed a motion for
reconsideration, to which was already attached a Certificate
issued by its board secretary who stated that, prior to the
filing of the Petition, the resident manager had been
authorized by the board of directors to file the Petition.
Citing several cases17 excusing noncompliance with the
requirement of a certificate of non-forum shopping, the
Court held that "with more reason should x x x the instant
petition [be allowed,] since petitioner herein did submit a
certification on non-forum shopping, failing only to show
proof that the signatory was authorized to do so." The Court
further said that the subsequent submission of the
Secretarys Certificate, attesting that the signatory to the
certification was authorized to file the action on behalf of
petitioner, mitigated the oversight.
Similarly, in General Milling Corporation v. NLRC,18 the Court
of Appeals dismissed the Petition, which was not
accompanied by any board resolution or certification by the
corporate secretary showing that the person who had signed
the Certification of Non-Forum Shopping was duly authorized
to represent the petitioner-corporation in the case. In the
Motion for Reconsideration, however, the petitioner attached
a board Resolution stating that the signatory of the
Certification had been duly authorized to do so.
Under those circumstances, the Court held that "there was
at least substantial compliance with, and that there was no
attempt to ignore, the prescribed procedural requirements,"
except that the petition "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."19
Also, in BA Savings Bank v. Sia,20 the Court of Appeals denied
due course to a Petition for certiorari filed by BA Savings
Bank. The CAs action was grounded on the fact that the
Certification on anti-forum shopping incorporated in the
Petition had been signed merely by the banks counsel, not
by a duly authorized representative, as required under
Supreme Court Circular No. 28-91. Subsequently filed by the
petitioner was a Motion for Reconsideration, to which was
attached a Certificate issued by the corporate secretary. The
Certificate showed that the Resolution promulgated by the
board of directors had authorized the lawyers of petitioner
"to represent it in any action or proceeding before any court,
tribunal or agency; and to sign, execute and deliver the
certificate of non-forum shopping," among others.
Nevertheless, the Court of Appeals denied the Motion on the
ground that Supreme Court Revised Circular No. 28-91
"requires that it is the petitioner, not the counsel, who must
certify under oath to all of the facts and undertakings
required therein."
The Court again reversed the appellate court and ruled thus:
"Circular 28-91 was prescribed by the Supreme Court to
prohibit and penalize the evils of forum shopping. We see no
circumvention of this rationale if the certificate was signed
 3
by the corporations specifically authorized counsel, who had
personal knowledge of the matters required in the Circular.
In Bernardo v. NLRC,21 we explained that a literal
interpretation of the Circular should be avoided if doing so
would subvert its very rationale. Said the Court:
x x x. Indeed, while the requirement as to certificate of non-
forum shopping is mandatory, nonetheless the requirements
must not be interpreted too literally and thus defeat the
objective of preventing the undesirable practice of forum-
shopping."22
Guided by the above pronouncements, the Court deems it
proper and justifiable to grant the present Petition. Clearly,
petitioners did not deliberately ignore SC Circular 28-91. In
fact, a "Verification/Certification," stating the information
required under the Circular, was attached to the Petition for
Certiorari filed before the CA. In that
Verification/Certification signed by Petitioner Lim, she
attested as follows:
"1. x x x I am likewise duly authorized to execute this
Verification/Certification in behalf of petitioner Vicar
International Construction, Inc.
"2. In my personal capacity and as a duly authorized
representative of Vicar International Construction, Inc., I
caused the preparation of the foregoing Petition for
Certiorari."
xxxxxxxxx
Petitioners merely missed attaching to their Petition a
concrete proof of Lims authority from Vicar to execute the
said Verification/Certification on its behalf. The latter,
however, lost no time in submitting its corporate secretarys
Certificate attesting to the fact that, indeed, Petitioner Vicars
board of directors had unanimously approved a Resolution
on October 2, 2002, authorizing its president and general
manager, Carmelita V. Lim, to file the Petition and "to
execute and sign x x x the verification and certification
against forum shopping."
The Certificate was submitted to the CA on the day right after
it had denied the Petition. Such swiftness of action indicates
that the Resolution -- authorizing Petitioner Lim to file the
Petition and execute the Verification and the Certification
against forum shopping on behalf of Petitioner Vicar -- did
exist at the time the Petition was filed. Such fact also lends
credence to the assertion of petitioners that it was only due
to inadvertence and oversight that they failed to attach the
Secretarys Certificate to their Petition for Certiorari.
In closing, the Court stresses once more that technical rules
of procedure should be used to promote, not frustrate,
justice. While the swift unclogging of court dockets is a
laudable objective, the granting of substantial justice is an
even more urgent ideal.23 Rules of procedure are but tools
designed to facilitate, not obstruct, the attainment of justice.
WHEREFORE, the Petition is GRANTED, and the appealed
Resolutions are REVERSED and SET ASIDE. The case is
REMANDED to the Court of Appeals, which is directed to
continue the proceedings in CA-GR SP No. 73117 with
deliberate speed. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 71479 October 18, 1990
MELLON BANK, N.A., petitioner,
vs.
HON. CELSO L. MAGSINO, in his capacity as
Presiding Judge of Branch CLIX of the Regional Trial
Court at Pasig; MELCHOR JAVIER, JR., VICTORIA
JAVIER; HEIRS OF HONORIO POBLADOR, JR.,
namely: Elsa Alunan Poblador, Honorio Poblador III,
Rafael Poblador, Manuel Poblador, Ma. Regina
Poblador, Ma. Concepcion Poblador & Ma. Dolores
Poblador; F.C. HAGEDORN & CO., INC.; DOMINGO
JHOCSON, JR.; JOSE MARQUEZ; ROBERTO GARINO;
ELNOR INVESTMENT CO., INC.; PARAMOUNT
FINANCE CORPORATION; RAFAEL CABALLERO; and
TRI-ARC INVESTMENT and MANAGEMENT CO., INC.
respondents.
FERNAN, C.J.:
The issue in the instant special civil action of certiorari is
whether or not, by virtue of the principle of election of
remedies, an action filed in California, U.S.A., to recover real
property located therein and to constitute a constructive
trust on said property precludes the filing in our jurisdiction
of an action to recover the purchase price of said real
property.
On May 27, 1977, Dolores Ventosa requested the transfer of
$1,000 from the First National Bank of Moundsville, West
Virginia, U.S.A. to Victoria Javier in Manila through the
Prudential Bank. Accordingly, the First National Bank
requested the petitioner, Mellon Bank, to effect the transfer.
Unfortunately the wire sent by Mellon Bank to Manufacturers
Hanover Bank, a correspondent of Prudential Bank, indicated
the amount transferred as "US$1,000,000.00" instead of
US$1,000.00. Hence Manufacturers Hanover Bank
transferred one million dollars less bank charges of $6.30 to
the Prudential Bank for the account of Victoria Javier.
On June 3, 1977, Javier opened a new dollar account (No.
343) in the Prudential Bank and deposited $999,943.70.
Immediately their, Victoria Javier and her husband, Melchor
Javier, Jr., made withdrawals from the account, deposited
them in several banks only to withdraw them later in an
apparent plan to conceal, "launder" and dissipate the
erroneously sent amount.
On June 14, 1977, Javier withdrew $475,000 from account
No. 343 and converted it into eight cashier's checks made
out to the following: (a) F.C. Hagedorn & Co., Inc., two
cheeks for the total amount of P1,000,000; (b) Elnor
Investment Co., Inc., two checks for P1,000,000; (c)
Paramount Finance Corporation, two checks for P1,000,000;
and (d) M. Javier, Jr., two checks for P496,000. The first six
checks were delivered to Jose Marquez and Honorio
Poblador, Jr.
It appears that Melchor Javier, Jr. had requested Jose
Marquez, a realtor, to look for properties for sale in the
United States. Marquez offered a 160-acre lot in the Mojave
desert in California City which was owned by Honorio
Poblador, Jr. Javier, without having seen the property,
agreed to buy it for P3,236,800 (US$437,405) although it
was actually appraised at around $38,500. Consequently, as
Poblador's agent, Marquez executed in Makati a deed of
absolute sale in favor of the Javiers and had the document
notarized in Manila before an associate of Poblador. Marquez
executed another deed of sale indicating receipt of the
purchase price and sent the deed to the Kern County
Registrar in California for registration.
Inasmuch as Poblador had requested that the purchase price
should not be paid directly to him, the payment of
 4
P3,000,000 was coursed through Elnor Investment Co., Inc.,
allegedly Poblador's personal holding company; Paramount
Finance, allegedly headed by Poblador's brother, and F.C.
Hagedorn, allegedly a stock brokerage with extensive
dealings with Poblador. The payment was made through the
aforementioned six cashier's checks while the balance of
P236,000 was paid in cash by Javier who did not even ask
for a receipt.
The two checks totalling P1,000,000 was delivered by
Poblador to F.C. Hagedorn with specific instructions to
purchase Atlas, SMC and Philex shares. The four checks for
P2,000,000 with Elnor Investment and Paramount Finance
as payees were delivered to the latter to purchase "bearer"
notes.
Meanwhile, in July, 1977, Mellon Bank filed a complaint
docketed as No. 148056 in the Superior Court of California,
County of Kern, against Melchor Javier, Jane Doe Javier,
Honorio Poblador, Jrn, and Does I through V. In its first
amended complaint to impose constructive trust dated July
14, 1977, 1 Mellon Bank alleged that it had mistakenly and
inadvertently cause the transfer of the sum of $999,000.00
to Jane Doe Javier; that it believes that the defendants had
withdrawn said funds; that "the defendants and each of
them have used a portion of said funds to purchase real
property located in Kern County, California"; and that
because of defendants' knowledge of Mellon Bank's mistake
and inadvertence and their use of the funds to purchase the
property, they and "each of them are involuntary or
constructive trustees of the real property and of any profits
therefrom, with a duty to convey the same to plaintiff
forthwith." It prayed that the defendants and each of them
be declared as holders of the property in trust for the
plaintiff; that defendants be compelled to transfer legal title
and possession of the property to the plaintiff; that
defendants be made to pay the costs of the suit, and that
other reliefs be granted them.
On July 29, 1977, Mellon Bank also filed in the Court of First
Instance of Rizal, Branch X, a complaint against the Javier
spouses, Honorio Poblador, Jr., Domingo L. Jhocson, Jr.,
Jose Marquez, Roberto Gario, Elnor Investment Co., Inc.,
F.C. Hagedorn & Co., Inc. and Paramount Finance
Corporation. After its amendment, Rafael Caballero and Tri-
Arc Investment & Management Company, Inc. were also
named defendants. 2
The amended and supplemental complaint alleged the facts
set forth above and added that Roberto Gario, chief
accountant of Prudential Bank, and who was the reference
of Mrs. Ventosa's dollar remittances to Victoria Javier,
immediately informed the Javiers of the receipt of
US$1,000,000.00; that knowing the financial circumstances
of Mrs. Ventosa and the fact that a mistake had been
committed, the Javiers, with undue haste, took unlawful
advantage of the mistake, withdrew the whole amount and
transferred the same to a "343 dollar account"; that, aided
and abetted by Poblador and Domingo L. Jhocson, the
Javiers "compounded and completed the conversion" of the
funds by withdrawing from the account dollars or pesos
equivalent to US $975,000; that by force of law, the Javiers
had been constituted trustees of an implied trust for the
benefit of Mellon Bank with a clear duty to return to said
bank the moneys mistakenly paid to them; that, upon
request of Mellon Bank and Manufacturers Hanover Bank,
Prudential Bank informed the Javiers of the erroneous
transmittal of one million dollars first orally and later by
letter-demand; that conferences between the
representatives of the Javiers, led by Jhocson and Poblador,
in the latter's capacity as legal and financial counsel, and
representatives of Mellon Bank, proved futile as the Javiers
claimed that most of the moneys had been irretrievably
spent; that the Javiers could only return the amount if the
Mellon Bank should agree to make an absolute quitclaim and
waiver of future rights against them, and that in a scheme
to conceal and dissipate the funds, through the active
participation of Jose Marquez, the Javiers bought the
California property of Poblador.
It further alleged that trust fund moneys totalling
P3,000,000.00 were made payable to Hagedorn Paramount
and Elnor; that Hagedorn on instructions of Poblador,
purchased shares of stock at a stock exchange for
P1,000,000.00 but later, it hastily sold said shares at a loss
of approximately P150,000.00 to the prejudice of the
plaintiff; that proceeds of the sale were deposited by
Hagedorn in the name of Poblador and/or the law office of
Poblador, Nazareno, Azada, Tomacruz and Paredes; that
dividends declared on the shares were delivered by
Hagedorn to Caballero after the complaint had been filed and
thereafter, Caballero deposited the dividends in his personal
account; that after receiving the P1,000,000.00 trust money,
Paramount issued promissory notes upon maturity of which
Paramount released the amount to unknown persons; that
Elnor also invested P1,000,000.00 in Paramount for which
the latter also issued promissory notes; that after the filing
of the complaint, counsel for plaintiff requested Paramount
not to release the amount after maturity; that in evident bad
faith, Elnor transferred the non-negotiable Paramount
promissory notes to Tri-Arc. that when the notes matured,
Paramount delivered the proceeds of P1,000,000.00 to Tri-
Arc; that Poblador knew or should have known that the
attorney's fees he received from the Javiers came from the
trust funds; and that despite formal demands even after the
filing of the complaint, the defendants refused to return the
trust funds which they continued concealing and dissipating.
It prayed that: (a) the Javiers, Poblador, Elnor, Jhocson and
Gario be ordered to account for and pay jointly and
severally unto the plaintiff US$999,000.00 plus increments,
additions, fruits and interests earned by the funds from
receipt thereof until fully paid; (b) the other defendants be
ordered to account for and pay unto the plaintiff jointly and
severally with the Javiers to the extent of the amounts which
each of them may have received directly or indirectly from
the US$999,000.00 plus increments, additions, fruits and
interests; (c) Marquez be held jointly and severally liable with
Poblador for the amount received by the latter for the sale
of the 160-acre lot in California City; and (d) defendants be
likewise held liable jointly and severally for attomey's fees
and litigation expenses plus exemplary damages.
In due course, the defendants filed their answers and
hearing of the case ensued. In his testimony, Jose Marquez
stated that Prudential Bank and Trust Company checks Nos.
2530 and 2531 in the respective amounts of P100,000 and
P900,000 payable to F. C. Hagedorn were delivered to him
by Melchor Javier, Jr. as partial consideration for the sale of
Poblador's property in California. After receiving the checks,
Hagedorn purchased shares of Atlas Mining, Philex,
Marcopper and San Miguel Corporation for Account No.
3000, which, according to Fred Hagedorn belonged to the
law office of Poblador. 3
F.C. Hagedorn & Co., Inc. then sold the shares for
P874,490.75 as evidenced by HSBC check No. 339736 for
P400,000 and HSBC check No. 339737 for P474,490.75
payable to "cash". Mellon Bank traced these checks to
Account 2825-1 of the Philippine Veterans Bank in the name
of Cipriano Azada, Poblador's law partner and counsel to the
Javiers. 4
An employee of the Philippine Veterans Bank thereafter
introduced the specimen signature cards for Account No.
2825-1 thereby confirming Azada's ownership of the
account. Defendants objected to this testimony on the
grounds of Azada's absence, the confidentiality of the bank
account, and the best evidence rule. The court overruled the
objection. Another employee of the Philippine Veterans Bank
 5
then presented the ledger card for Account No. 2825-1, a
check deposit slip and a daily report of returned items. The
defendants objected but they were again overruled by the
court.
Mellon Bank then subpoenaed Erlinda Baylosis of the
Philippine Veterans Bank to show that Azada deposited HSBC
checks No. 339736 and 339737 amounting to P874,490.75
in his personal current account with said bank. It also
subpoenaed Pilologo Red, Jr. of Hongkong & Shanghai
Banking Corporation to prove that said amount was returned
by Azada to Hagedorn.
The testimonies of these witnesses were objected to by the
defense on the grounds of res inter alios acta, immateriality,
irrelevancy and confidentiality. To resolve the matter, the
court ordered the parties to submit memoranda. The
defendants' objections were also discussed at the hearing on
July 13, 1982. For the first time, Poblador's counsel raised
the matter of "election of remedies." 5
At the July 20, 1982 hearing, the lower court, then presided
by Judge Eficio Acosta, conditionally allowed the testimonies
of Baylosis and Red. Baylosis afffirmed that Azada deposited
checks Nos. 339736 and 339737 in the total amount of
P874,490.75 in his personal account with the Philippine
Veterans Bank but almost simultaneously, Azada issued his
PVB check for the same amount in favor of Hagedorn
Consequently, Azada's check initially bounced. For his part,
Red testified that Azada's check for P874,490.75 was
received by the Hongkong & Shanghai Banking Corporation
and credited to the account of Hagedorn .
The defendants then moved to strike off the testimonies of
Baylosis and Red from the record. Defendant Paramount
Finance Corporation, which is not a party to the California
case, thereafter filed its memorandum raising the matter of
"election of remedies". It averred that inasmuch as the
Mellon Bank had filed in California an action to impose
constructive trust on the California property and to recover
the same, Mellon Bank can no longer try to regain the
purchase price of the same property through Civil Case No.
26899. The other defendants adopted Paramount's stand.
After Mellon Bank filed its reply to the memorandum of
Paramount, on September 10, 1982, Judge Acosta issued a
resolution ordering that the testimonies of Baylosis and Red
and the documents they testified on, which were
conditionally allowed, be stricken from the records. 6 Judge
Acosta explained:
After a judicious evaluation of the
arguments of the parties the Court is of
the view that in cases where money held
in trust was diverted by the trustee, under
the "rule of trust pursuit" the beneficiary
"may elect whether to accept the trust
estate in its new form or hold the trustee
responsible for it in its original condition"
(Lathrop vs. Hampton, 31 Cal. 17; Zodos
vs. Marefalos 48 Idaho 291; Bahle vs.
Hasselbrach 64 NW Eq. 334, 51 Sections
508-76 Am Jur. 2d p. 475), and that "an
election to pursue one remedy waives and
bars pursuit of any inconsistent
remedy"(76 Am Jur. 2d S253). The instant
complaint among others is for the
recovery of the purchase price of the Kern
property as held in trust for the plaintiff
while in the California case the plaintiff
maintains that the Kern property is held in
trust for the plaintiff, which positions are
inconsistent with each other. Neither can
the plaintiff now abandon his complaint for
the recovery of the Kern property and
pursue his complaint for the recovery of
the purchase price of said property for "if
he has first sought to follow the res, the
plaintiff cannot thereafter hold the trustee
personally responsible" and "when once
there has been an election to do one of
two things, you cannot retract it and do
the other thing. The election once made is
finally made." (Fowler vs. Bowvery
Savings Bank 113 N.Y. 450, 21 N.E. 172,
4 LRA 145, 10 Am. S.R. 479. 2 Silv. 280,
23, Abb. N. Cos. 133065 C. J. p. 980 Note
32).
The fact that the California case has been
stayed pending determination of the
instant case only means that should this
case be dismissed, the California case can
proceed to its final determination.
Furthermore, when the plaintiff filed the
California case for the transfer of legal title
and possession of the Kern property to the
plaintiff it in effect ratified the transaction
for "by taking the proceeds or product of
a wrongful transfer of trust property or
funds, the beneficiary ratifies the
transaction" (Board of Commissioner vs.
Strawn [CA6 Ohio] 157 F. 49, 76 Am Jur.
2d Section 253). Consequently the
purchase price of the California property
received by defendant Poblador from
Javier is no longer the proper subject
matter of litigation and the movement and
disposition of the purchase price is
therefore within the scope of the
absolutely confidential nature of bank
deposits as provided by Sec. 2, R.A. 1405
as amended by PD No. 1792.
Mellon Bank moved for reconsideration, alleging that said
order prevented the presentation of evidence on the
purchase price of the California property; that the California
case cannot be considered a waiver of the pursuit of the
purchase price as even if said case was filed fifteen days prior
to the filing of the original complaint in this case, except for
the Javiers, no other defendants raised in their answers the
affirmative defense of the filing of the California case; that
after the amendment of the complaint, none of the
defendants raised the matter of "election of remedies" in
their answers; that realizing this procedural error, Paramount
sought the amendment of its answer to reflect the "defence"
of "election of remedies"; that, disregarding its previous
orders allowing evidence and testimonies on Account No.
2825-1, the court made a turnabout and ruled that the
testimonies on said account were irrelevant and confidential
under Republic Act No. 1405; that Philippine law and
jurisprudence does not require the election of remedies for
they favor availment of all remedies; that even United States
jurisprudence frowns upon election of remedies if it will lead
to an inequitable result; that, as held by this Court in
Radiowealth vs. Javier, 7 there can be no binding election of
remedies before the decision on the merits is had; that until
Mellon Bank gets full recovery of the trust moneys, any
contention of election of remedy is premature, and that, the
purchase price being the subject of litigation, inquiring into
its movement, including its deposit in banks, is allowed under
Republic Act No. 1405.
Defendants filed their respective comments and oppositions
to the motion for reconsideration. In its reply, the Mellon
Bank presented proof to the effect that in the California case,
defendants filed motions to stake out the cross-complaint of
Mellon Bank, for summary judgment and to stay or dismiss
 6
the action on the ground of inconvenient forum but the first
two motions and the motion to dismiss were denied "without
prejudice to renew upon determination of the Philippine
action." The motion to stay proceedings was "granted until
determination of the Philippine action." 8
On October 28, 1983, the lower court, through Judge Acosta,
denied the motion for reconsideration and ordered the
continuation of the hearing (Rollo, p. 182). The plaintiff filed
a motion for the reconsideration of both the September 10,
1982 and October 28, 1983 orders. After the parties had filed
comments, opposition and reply, the court, through Judge
Celso L. Magsino, denied Mellon Bank's second motion for
reconsideration on the ground that it was "prescribed by the
1983 Interim Rules of Court" in an order dated July 9, 1985.
9
The court ruled that the determination of the relevancy of
the testimonies of Baylosis and Red was "premised directly
and principally" on whether or not Mellon Bank could still
recover the purchase price of the California property
notwithstanding the filing of the case in California to recover
title and possession of the said property. After quoting the
resolution of September 10, 1982, the Court ruled that it was
a "final order or a definitive judgment with respect to the
claim of plaintiff for the recovery" of the purchase price of
the California property. It stated:
The adjudication in the Order of
September 10, 1982 and the Order of
October 28, 1983, which has the effect of
declaring that plaintiff has no cause of
action against the defendants for the
recovery of the proceeds of the sale of
Kern property in the amount of Three
Million Three Hundred Fifty Thousand
Pesos (P3,500,000.00 [sic]) for having
filed a complaint for the recovery of the
Kern property in the Superior Court of
California, County of Kern is a final and
definitive disposition of the claim of the
plaintiff to recover in the instant action the
proceeds of sale of said property against
the defendants. The issue of "election of
remedy" by the plaintiff was lengthily and
thoroughly discussed and argued by the
parties before the rendition of the
resolution of September 10, 1982, and in
the motion for reconsideration and
oppositions thereto before its resolution in
the Order of October 28, 1983. Such issue
is a substantive one as it refers to the
existence of plaintiffs cause of action to
recover the proceeds of the sale of the
Kern property in this action, and that issue
was presented to the Court as if a motion
to dismiss or a preliminary hearing of an
affirmative defense on the ground that
plaintiff has no cause of action, and was
resolved against plaintiff in the Order of
September 10, 1982, after a full hearing
of all the parties. Said Order of September
10, 1982 has the effect of putting an end
to the controversy between the parties as
to the right of plaintiff to claim or recover
the proceeds of the sale of the Kern
property from the defendants. It is
therefore an adjudication upon the merits.
10
Hence, Mellon Bank filed the instant petition for certiorari
claiming that the resolution of September 10, 1982 and the
orders of October 28, 1983 and July 9, 1985 are void for
being unlawful and oppressive exercises of legal authority,
subversive of the fair administration of justice, and in excess
of jurisdiction. The petition is founded on its allegations that:
(a) the resolution of September 10, 1982 is interlocutory as
it does not dispose of Civil Case No. 26899 completely: (b)
the evidence stricken from the records is relevant on the
basis of the allegations of the amended and supplemental
complaint, and (c) the doctrine of election of remedies,
which has long been declared obsolete in the United States,
is not applicable in this case.
With the exception of the Javiers, all the respondents filed
their respective comments on the petition. Having failed to
file said comment, the Javiers' counsel of record, Azada,
Tomacruz & Cacanindin, 11 was required to show cause why
disciplinary action should not be taken against it. And, having
also failed to show cause, it was fined P300.
In his motion for reconsideration of the resolution imposing
said fine, Cipriano Azada alleged that in Civil Case No. 26899,
the Javiers were indeed represented by the law firm of
Poblador, Azada, Tomacruz & Cacanindin but he was never
the lawyer of the Javiers' in his personal capacity; that after
the death of Honorio Poblador, Jr., he had withdrawn from
the partnership; that he is the counsel of the Administratrix
of the Estate of Honorio Poblador, Jr. for which he had filed
a comment, and that should the Court still require him to file
comment for the Javiers despite the lack of client-lawyer
relationship, he would adopt the comment he had filed for
the said Administratrix. 12
In its effort to locate the Javiers so that their side could be
heard, we required the petitioner to furnish us with the
Javiers' address as well as the name and address of their
counsel. 13 In compliance therewith, counsel for petitioner
manifested that the Javiers had two known addresses in San
Juan, Metro Manila and in Sampaloc, Manila; that since their
conviction in Crim. Case No. CCC-VII 2369-P.C. of the Pasig
Regional Trial Court, the Javiers had gone into hiding and
warrants for their arrest still remain unserved; 14 that the
Javiers' counsel of record in Civil Case No. 26899 is Atty.
Cipriano Azada; that the same counsel appeared for the
Javiers in Criminal Case No. 39851 of the Pasig Regional Trial
Court which is a tax evasion case filed by the Republic of the
Philippines, and that during the hearings of the civil and tax
evasion cases against the Javiers, Atty. Cipriano Azada, Jr.
represented them. 15
Inasmuch as copies of the resolution requiring comment on
the petition and the petition itself addressed to Melchor
Javier were returned with the notations "moved" and
"deceased", the Court required that said copies be sent to
Mrs. Javier herself and that petitioner should inform the
Court of the veracity of Javier's death. 16 A copy of the
resolution addressed to Mrs. Javier was returned also with
the notation "deceased." 17
Counsel for petitioner accordingly informed the Court that he
learned that the Javiers had fled the country and that he had
no way of verifying whether Melchor Javier had indeed died.
18
In view of these circumstances, the Javiers' comment on the
petition shall be dispensed with as the Court deems the
pleadings filed by the parties sufficient bases for resolving
this case. The Javiers shall be served copies of this decision
in accordance with Section 6, Rule 13 of the Rules of Court
by delivering said copies to the clerk of court of the lower
court, with proof of failure of both personal service and
service by mail.
We hold that the lower court gravely abused its discretion in
ruling that the resolution of September 10, 1982 is a "final
and definitive disposition" of petitioner's claim for the
purchase price of the Kern property. The resolution is
interlocutory and means no more than what it states in its
 7
dispositive portion-the testimonies of Baylosis and Red and
the documents they testified on, should be stricken from the
record.
That the resolution discusses the common-law principle of
election of remedies, a subject matter which shall be dealt
with later, is beside the point. It is interlocutory because the
issue resolved therein is merely the admissibility of the
plaintiff's evidence. 19 As such, it does not dispose of the
case completely but leaves something more to be done upon
its merits. 20 There are things left undone in Civil Case No.
26899 after the issuance of the September 10, 1982
resolution not only because of its explicit dispositive portion
but also due to the fact that even until now, the case is still
pending and being heard. 21
Furthermore, the lower court's holding in its July 9, 1985
order that petitioner's second motion for reconsideration is
proscribed by the 1983 Interim Rules of Court which
disallows such motion on a final order or judgment, should
be rectified. As explained above, the resolution of September
10, 1982 is not a final one. It also contains conclusions on
procedural matters which, if left unchecked, would prejudice
petitioner's substantive rights.
In effect, therefore, the July 9, 1985 order is a shortcut
disposition of Civil Case No. 26899 in total disregard of
petitioner's right to a thorough ventilation of its claims. By
putting a premium on procedural technicalities over the
resolution of the merits of the case, the lower court rode
roughshod over the basic judicial tenet that litigations
should, as much as possible, be decided on their merits and
not on technicalities. 22 The trial court's patent grave abuse
of discretion therefore forces us to exercise supervisory
authority to correct its errors notwithstanding the fact that
ordinarily, this Court would not entertain a petition for
certiorari questioning the legality and validity of an
interlocutory order. 23
Respondents' principal objection to the testimonies of
Baylosis and Red is their alleged irrelevance to the issues
raised in Civil Case No. 26899. The fallacy of this objection
comes to fore upon a scrutiny of the complaint. Petitioner's
theory therein is that after the Javiers had maliciously
appropriated unto themselves $999,000, the other private
respondents conspired and participated in the concealment
and dissipation of said amount. The testimonies of Baylosis
and Red are therefore needed to establish the scheme to
hide the erroneously sent amount.
Private respondents' protestations that to allow the
questioned testimonies to remain on record would be in
violation of the provisions of Republic Act No. 1405 on the
secrecy of bank deposits, is unfounded. Section 2 of said law
allows the disclosure of bank deposits in cases where the
money deposited is the subject matter of the litigation. 24
Inasmuch as Civil Case No. 26899 is aimed at recovering the
amount converted by the Javiers for their own benefit,
necessarily, an inquiry into the whereabouts of the illegally
acquired amount extends to whatever is concealed by being
held or recorded in the name of persons other than the one
responsible for the illegal acquisition. 25
We view respondents' reliance on the procedural principle of
election of remedies as part of their ploy to terminate Civil
Case No. 26899 prematurely. With the exception of the
Javiers, respondents failed to raise it as a defense in their
answers and therefore, by virtue of Section 2, Rule 9 of the
Rules of Court, such defense is deemed waived. 26
Notwithstanding its lengthy and thorough discussion during
the hearing and in pleadings subsequent to the answers, the
issue of election of remedies has not, contrary to the lower
court's assertion, been elevated to a "substantive one."
Having been waived as a defense, it cannot be treated as if
it has been raised in a motion to dismiss based on the
nonexistence of a cause of action.
Moreover, granting that the defense was properly raised, it
is inapplicable in this case. In its broad sense, election of
remedies refers to the choice by a party to an action of one
of two or more coexisting remedial rights, where several
such rights arise out of the same facts, but the term has
been generally limited to a choice by a party between
inconsistent remedial rights, the assertion of one being
necessarily repugnant to, or a repudiation of, the other. In
its technical and more restricted sense, election of remedies
is the adoption of one of two or more coexisting remedies,
with the effect of precluding a resort to the others. 27
As a technical rule of procedure, the purpose of the doctrine
of election of remedies is not to prevent recourse to any
remedy, but to prevent double redress for a single wrong. 28
It is regarded as an application of the law of estoppel, upon
the theory that a party cannot, in the assertion of his right
occupy inconsistent positions which form the basis of his
respective remedies. However, when a certain state of facts
under the law entitles a party to alternative remedies, both
founded upon the Identical state of facts, these remedies are
not considered inconsistent remedies. In such case, the
invocation of one remedy is not an election which will bar
the other, unless the suit upon the remedy first invoked shall
reach the stage of final adjudication or unless by the
invocation of the remedy first sought to be enforced, the
plaintiff shall have gained an advantage thereby or caused
detriment or change of situation to the other. 29 It must be
pointed out that ordinarily, election of remedies is not made
until the judicial proceedings has gone to judgment on the
merits. 30
Consonant with these rulings, this Court, through Justice
J.B.L. Reyes, opined that while some American authorities
hold that the mere initiation of proceedings constitutes a
binding choice of remedies that precludes pursuit of
alternative courses, the better rule is that no binding election
occurs before a decision on the merits is had or a detriment
to the other party supervenes. 31 This is because the
principle of election of remedies is discordant with the
modern procedural concepts embodied in the Code of Civil
Procedure which Permits a party to seek inconsistent
remedies in his claim for relief without being required to elect
between them at the pleading stage of the litigation. 32
It should be noted that the remedies pursued in the
California case and in Civil Case No. 26899 are not exactly
repugnant or inconsistent with each other. If ever, they are
merely alternative in view of the inclusion of parties in the
latter case who are not named defendants in the former. The
causes of action, although they all stem from the erroneous
transmittal of dollars, are distinct as shown by the complaints
lengthily set out above. The bar of an election of remedies
does not apply to the assertion of distinct causes of action
against different persons arising out of independent
transactions. 33
As correctly pointed out by the petitioner, the doctrine of
election of remedies is not favored in the United States for
being harsh. 34 Its application with regard to two cases filed
in two different jurisdictions is also circumscribed by
jurisprudence on abatement of suits. Thus, in Brooks
Erection Co. v. William R. Montgomery & Associates, Inc., 35
it is held:
The pendency of an action in the courts of
one state or country is not a bar to the
institution of another action between the
same parties and for the same cause of
action in a court of another state or
country, nor is it the duty of the court in
 8
which the latter action is brought to stay
the same pending a determination of the
earlier action, even though the court in
which the earlier action is brought has
jurisdiction sufficient to dispose of the
entire controversy. Nevertheless,
sometimes stated as a matter of comity
not of right, it is usual for the court in
which the later action is brought to stay
proceedings under such circumstances
until the earlier action is determined.
However, in view of the fact that the California court wherein
the case for recovery of the Kern property was first filed
against the Javiers had stayed proceedings therein until after
the termination of Civil Case No. 26899, the court below can
do no less than expedite the disposition of said case.
We cannot dispose of this case without condemning in the
strongest terms possible the acts of chicanery so apparent
from the records. The respective liabilities of the respondents
are still being determined by the court below. We must warn,
however, against the use of technicalities and obstructive
tactics to delay a just settlement of this case. The taking
advantage of the petitioner's mistake to gain sudden and
undeserved wealth is marked by circumstances so brazen
and shocking that any further delay will reflect poorly on the
kind of justice our courts dispense. The possible involvement
of lawyers in this sorry scheme stamps a black mark on the
legal profession. The Integrated Bar of the Philippines (IBP)
must be made aware of the ostensible participation, if not
instigation, in the spiriting away of the missing funds. The
IBP must take the proper action at the appropriate time
against all lawyers involved in any misdeeds arising from this
case.
WHEREFORE, the resolution of September 10, 1982 and the
orders of October 28, 1982 and July 9, 1985 are hereby
annulled. The lower court is ordered to proceed with dispatch
in the disposition of Civil case No. 26899, considering that
thirteen (13) years have gone by since the original erroneous
remittance.
Service of this decision on the Javier spouses shall be in
accordance with Section 6, Rule 13 of the Rules of Court. A
copy of this decision shall be served on the Integrated Bar
of the Philippines.
The decision is immediately executory. Costs against private
respondents.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 200868 November 12, 2012
ANITA A. LEDDA, Petitioner,
vs.
BANK OF THE PHILIPPINE ISLANDS, Respondent.
DECISION
CARPIO, J.:
The Case
This petition for rebiew1 assails the 15 July 2011 Decision2
and 9 February 2012 Resolution3 of the Court of Appeals in
CA-G.R. CV No. 93747. The Court of Appeals partially
granted the appeal filed by petitioner Anita A. Ledda (Ledda)
and modified the 4 June 2009 Decision4 of the Regional Trial
Court, Makati City, Branch 61. The Court of Appeals denied
the motion for reconsideration.
The Facts
This case arose from a collection suit filed by respondent
Bank of the Philippine Islands (BPI) against Ledda for the
latters unpaid credit card obligation.
BPI, through its credit card system, extends credit
accommodations to its clientele for the purchase of goods
and availment of various services from accredited
merchants, as well as to secure cash advances from
authorized bank branches or through automated teller
machines.
As one of BPIs valued clients, Ledda was issued a pre-
approved BPI credit card under Customer Account Number
020100-9-00-3041167. The BPI Credit Card Package, which
included the Terms and Conditions governing the use of the
credit card, was delivered at Leddas residence on 1 July
2005. Thereafter, Ledda used the credit card for various
purchases of goods and services and cash advances.
Ledda defaulted in the payment of her credit card obligation,
which BPI claimed in their complaint amounted to
P548,143.73 per Statement of Account dated 9 September
2007.5 Consequently, BPI sent letters6 to Ledda demanding
the payment of such amount, representing the principal
obligation with 3.25% finance charge and 6% late payment
charge per month.
Despite BPIs repeated demands, Ledda failed to pay her
credit card obligation constraining BPI to file an action for
collection of sum of money with the Regional Trial Court,
Makati City, Branch 61. The trial court declared Ledda in
default for failing to file Answer within the prescribed period,
despite receipt of the complaint and summons. Upon Leddas
motion for reconsideration, the trial court lifted the default
order and admitted Leddas Answer Ad Cautelam.
While she filed a Pre-Trial Brief, Ledda and her counsel failed
to appear during the continuation of the Pre-Trial. Hence,
the trial court allowed BPI to present its evidence ex-parte.
In its Decision of 4 June 2009, the trial court ruled in favor
of BPI, thus:
WHEREFORE, premises duly considered, the instant
"Complaint" of herein plaintiff Bank of the Philippine Islands
(BPI) is hereby given DUE COURSE/GRANTED.
Accordingly, judgment is hereby rendered against herein
defendant ANITA A. LEDDA and in favor of the plaintiff.
Ensuably, the herein defendant ANITA A. LEDDA is hereby
ordered to pay the herein plaintiff Bank of the Philippine
Islands (BPI) the following sums, to wit:
1. Five Hundred Forty-Eight Thousand One Hundred Forty-
Three Pesos and Seventy-Three Centavos (P548,143.73) as
and for actual damages, with finance and late-payment
charges at the rate of three and one-fourth percent (3.25%)
and six percent (6%) per month, respectively, to be counted
from 19 October 2007 until the amount is fully paid;
 9
2. Attorneys fees equivalent to twenty-five percent (25%)
of the total obligation due and demandable, exclusive of
appearance fee for every court hearing, and
3. Costs of suit.
SO ORDERED.7 (Emphasis in the original)
The Ruling of the Court of Appeals
The Court of Appeals rejected Leddas argument that the
document containing the Terms and Conditions governing
the use of the BPI credit card is an actionable document
contemplated in Section 7, Rule 8 of the 1997 Rules of Civil
Procedure. The Court of Appeals held that BPIs cause of
action is based on "Leddas availment of the banks credit
facilities through the use of her credit/plastic cards, coupled
with her refusal to pay BPIs outstanding credit for the cost
of the goods, services and cash advances despite lawful
demands."
Citing Macalinao v. Bank of the Philippine Islands,8 the Court
of Appeals held that the interest rates and penalty charges
imposed by BPI for Leddas non-payment of her credit card
obligation, totalling 9.25% per month or 111% per annum,
are exorbitant and unconscionable. Accordingly, the Court of
Appeals reduced the monthly finance charge to 1% and the
late payment charge to 1%, or a total of 2% per month or
24% per annum.
The Court of Appeals recomputed Leddas total credit card
obligation by deducting P226,000.15, representing interests
and charges, from P548,143.73, leaving a difference of
P322,138.58 as the principal amount, on which the reduced
interest rates should be imposed.
The Court of Appeals awarded BPI P10,000 attorneys fees,
pursuant to the ruling in Macalinao.
The dispositive portion of the Court of Appeals Decision
reads:
WHEREFORE, premises considered, the appeal is PARTLY
GRANTED, and accordingly the herein assailed June 4, 2009
Decision of the trial court is hereby MODIFIED, ordering
defendant-appellant Anita Ledda to pay plaintiff-appellee BPI
the amount of Php322,138.58, with 1% monthly finance
charges from date of availment of the plaintiffs credit
facilities, and penalty charge at 1% per month of the amount
due from the date the amount becomes due and payable,
until full payment. The award of attorneys fees is fixed at
Php10,000.00.
SO ORDERED.9 (Emphasis in the original)
The Issues
Ledda raises the following issues:
1. Whether the Court of Appeals erred in holding
that the document containing the Terms and
Conditions governing the issuance and use of the
credit card is not an actionable document
contemplated in Section 7, Rule 8 of the 1997 Rules
of Civil Procedure.
2. Whether the Court of Appeals erred in applying
Macalinao v. Bank of the Philippine Islands instead
of Alcaraz v. Court of Appeals10 as regards the
imposition of interest and penalty charges on the
credit card obligation.
3. Whether the Court of Appeals erred in awarding
attorneys fees in favor of BPI.
The Ruling of the Court
The petition is partially meritorious.
I.
Whether the document containing the
Terms and Conditions is an actionable document.
Section 7, Rule 8 of the 1997 Rules of Civil Procedure
provides:
SEC. 7. Action or defense based on document. Whenever
an action or defense is based upon a written instrument or
document, the substance of such instrument or document
shall be set forth in the pleading, and the original or a copy
thereof shall be attached to the pleading as an exhibit, which
shall be deemed to be a part of the pleading, or said copy
may with like effect be set forth in the pleading.
Clearly, the above provision applies when the action is based
on a written instrument or document.
In this case, the complaint is an action for collection of sum
of money arising from Leddas default in her credit card
obligation with BPI. BPIs cause of action is primarily based
on Leddas (1) acceptance of the BPI credit card, (2) usage
of the BPI credit card to purchase goods, avail services and
secure cash advances, and (3) non-payment of the amount
due for such credit card transactions, despite demands.11 In
other words, BPIs cause of action is not based only on the
document containing the Terms and Conditions
accompanying the issuance of the BPI credit card in favor of
Ledda. Therefore, the document containing the Terms and
Conditions governing the use of the BPI credit card is not an
actionable document contemplated in Section 7, Rule 8 of
the 1997 Rules of Civil Procedure. As such, it is not required
by the Rules to be set forth in and attached to the complaint.
At any rate, BPI has sufficiently established a cause of action
against Ledda, who admits having received the BPI credit
card, subsequently used the credit card, and failed to pay
her obligation arising from the use of such credit card.12
II.
Whether Alcaraz v. Court of Appeals,
instead of Macalinao v. BPI, is applicable.
Ledda contends that the case of Alcaraz v. Court of
Appeals,13 instead of Macalinao v. Bank of the Philippine
Islands14 which the Court of Appeals invoked, is applicable in
the computation of the interest rate on the unpaid credit card
obligation. Ledda claims that similar to Alcaraz, she was a
"pre-screened" client who did not sign any credit card
application form or terms and conditions prior to the issuance
of the credit card. Like Alcaraz, Ledda asserts that the
provisions of the Terms and Conditions, particularly on the
interests, penalties and other charges for non-payment of
any outstanding obligation, are not binding on her as such
Terms and Conditions were never shown to her nor did she
sign it.
We agree with Ledda. The ruling in Alcaraz v. Court of
Appeals15 applies squarely to the present case. In Alcaraz,
petitioner there, as a pre-screened client of Equitable Credit
Card Network, Inc., did not submit or sign any application
form or document before the issuance of the credit card.
There is no evidence that petitioner Alcaraz was shown a
copy of the terms and conditions before or after the issuance
of the credit card in his name, much less that he has given
his consent thereto.
 10
In this case, BPI issued a pre-approved credit card to Ledda
who, like Alcaraz, did not sign any credit card application
form prior to the issuance of the credit card. Like the credit
card issuer in Alcaraz, BPI, which has the burden to prove its
affirmative allegations, failed to establish Leddas agreement
with the Terms and Conditions governing the use of the
credit card. It must be noted that BPI did not present as
evidence the Terms and Conditions which Ledda allegedly
received and accepted.16 Clearly, BPI failed to prove Leddas
conformity and acceptance of the stipulations contained in
the Terms and Conditions. Therefore, as the Court held in
Alcaraz, the Terms and Conditions do not bind petitioner
(Ledda in this case) "without a clear showing that x x x
petitioner was aware of and consented to the provisions of
such document."17
On the other hand, Macalinao v. Bank of the Philippine
Islands,18 which the Court of Appeals cited, involves a
different set of facts. There, petitioner Macalinao did not
challenge the existence of the Terms and Conditions
Governing the Issuance and Use of the BPI Credit Card and
her consent to its provisions, including the imposition of
interests and other charges on her unpaid BPI credit card
obligation. Macalinao simply questioned the legality of the
stipulated interest rate and penalty charge, claiming that
such charges are iniquitous. In fact, one of Macalinaos
assigned errors before this Court reads: "The reduction of
interest rate, from 9.25% to 2%, should be upheld since the
stipulated rate of interest was unconscionable and iniquitous,
and thus illegal."19 Therefore, there is evidence that
Macalinao was fully aware of the stipulations contained in
the Terms and Conditions Governing the Issuance and Use
of the Credit Card, unlike in this case where there is no
evidence that Ledda was aware of or consented to the Terms
and Conditions for the use of the credit card.
Since there is no dispute that Ledda received, accepted and
used the BPI credit card issued to her and that she defaulted
in the payment of the total amount arising from the use of
such credit card, Ledda is liable to pay BPI P322,138.58
representing the principal amount of her unpaid credit card
obligation.20
Consistent with Alcaraz, Ledda must also pay interest on the
total unpaid credit card amount at the rate of 12% per
annum since her credit card obligation consists of a loan or
forbearance of money.21 In Eastern Shipping Lines, Inc. v.
Court of Appeals,22 the Court explained:
1. When an obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or forbearance of
money, the interest due should be that which may have been
stipulated in writing. Furthermore, the interest due shall itself
earn legal interest from the time it is judicially demanded. In
the absence of stipulation, the rate of interest shall be 12%
per annum to be computed from default, i.e., from judicial
or extrajudicial demand under and subject to the provisions
of Article 1169 of the Civil Code.
We reject Leddas contention that, since there was no written
agreement to pay a higher interest rate, the interest rate
should only be 6%. Ledda erroneously invokes Article 2209
of the Civil Code.23 Article 2209 refers to indemnity for
damages and not interest on loan or forbearance of money,
which is the case here. In Sunga-Chan v. Court of Appeals,24
the Court held:
Eastern Shipping Lines, Inc. synthesized the rules on the
imposition of interest, if proper, and the applicable rate, as
follows: The 12% per annum rate under CB Circular No. 416
shall apply only to loans or forbearance of money, goods, or
credits, as well as to judgments involving such loan or
forbearance of money, goods, or credit, while the 6% per
annum under Art. 2209 of the Civil Code applies "when the
transaction involves the payment of indemnities in the
concept of damage arising from the breach or a delay in the
performance of obligations in general," with the application
of both rates reckoned "from the time the complaint was filed
until the adjudged amount is fully paid." In either instance,
the reckoning period for the commencement of the running
of the legal interest shall be subject to the condition "that
the courts are vested with discretion, depending on the
equities of each case, on the award of interest. (Emphasis
supplied)
In accordance with Eastern Shipping Lines, Inc., the 12%
legal interest shall be reckoned from the date BPI
extrajudicially demanded from Ledda the payment of her
overdue credit card obligation. Thus, the 12% legal interest
shall be computed from 2 October 2007, when Ledda,
through her niece Sally D. Gancea,25 received BPIs letter26
dated 26 September 2007 demanding the payment of the
alleged overdue amount of P548,143.73.
III.
Whether the award of attorneys fees is proper.
Ledda assails the award of attorneys fees in favor of BPI on
the grounds of (1) erroneous reliance by the Court of Appeals
on the case of Macalinao and (2) failure by the trial court to
state the reasons for the award of attorneys fees.
Settled is the rule that the trial court must state the factual,
legal or equitable justification for the award of attorneys
fees.27 The matter of attorneys fees cannot be stated only
in the dispositive portion of the decision.28 The body of the
courts decision must state the reasons for the award of
attorneys fees.29 In Frias v. San Diego-Sison,30 the Court
held:
Article 2208 of the New Civil Code enumerates the instances
where such may be awarded and, in all cases, it must be
reasonable, just and equitable if the same were to be
granted. Attorneys fees as part of damages are not meant
to enrich the winning party at the expense of the losing
litigant. They are not awarded every time a party prevails in
a suit because of the policy that no premium should be
placed on the right to litigate. The award of attorneys fees
is the exception rather than the general rule.1wphi1 As
such, it is necessary for the trial court to make findings of
facts and law that would bring the case within the exception
and justify the grant of such award. The matter of attorneys
fees cannot be mentioned only in the dispositive portion of
the decision. They must be clearly explained and justified by
the court in the body of its decision. On appeal, the CA is
precluded from supplementing the bases for awarding
attorneys fees when the trial court failed to discuss in its
Decision the reasons for awarding the same. Consequently,
the award of attorneys fees should be deleted.1wphi1
In this case, the trial court failed to state in the body of its
decision the factual or legal reasons for the award of
attorneys fees in favor of BPI. Therefore, the same must be
deleted.
WHEREFORE, we GRANT the petition IN PART. Petitioner
Anita A. Ledda is ORDERED to pay respondent Bank of the
Philippine Islands the amount of .P322, 138.58, representing
her unpaid credit card obligation, with interest thereon at the
rate of 12% per annum to be computed from 2 October
2007, until full payment thereof. The award of attorney's
fees is DELETED for lack of basis.
SO ORDERED.
 11
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 107824 July 5, 1996
SUPERCLEAN SERVICES CORPORATION, petitioner,
vs.
COURT OF APPEALS and HOME DEVELOPMENT
MUTUAL FUND, respondents.
MENDOZA, J.:p
The question in this case is the propriety of filing a
Supplemental Complaint in order to seek a different relief in
view of developments rendering the original relief impossible
of attainment.
The facts are as follows:
On November 8, 1989, petitioner Superclean Services filed
with the Regional Trial Court of Manila a complaint for
Mandamus/Certiorari with Preliminary Injunction And/Or
Restraining Order against private respondent Home
Development and Mutual Fund. Petitioner alleged that at the
public bidding for janitorial services for the year 1990 it was
the "lowest or best bidder," but private respondent refused
without just cause to award the contract to it and instead
caused the publication on October 23, 1989 of a Notice of
Rebidding to be held on November 9, 1989.
In its answer private respondent defended its action on the
ground that not a single bid submitted complied with the
terms and conditions agreed upon in the pre-bidding
conference held on September 6, 1989.
The trial court thereafter set petitioner's application for
preliminary injunction for hearing and in the meantime
ordered private respondent to desist from conducting a
rebidding. At the same time, the court granted leave to
private respondent on January 4, 1990 to hire janitorial
services on a month-to-month basis to insure the
maintenance of its offices.
On July 24, 1991, petitioner moved for the admission of a
"Supplemental Complaint." 1 Petitioner alleged that because
the contract of services was for the furnishing of janitorial
service for the previous year 1990, the delay in the decision
of the case had rendered the case moot and academic
"without [petitioner] obtaining complete relief to redress the
wrong committed against it by [private respondent], which
relief consists in unrealized profits, exemplary damages and
attorney's fees." Accordingly, instead of pursuing its prayer
for a writ of mandamus, petitioner sought the payment of
damages to it.
On August 23, 1991, the trial court denied petitioner's
motion, finding "no merit in and no basis supporting it" and
set the continuation of the trial on September 19, 1991.
Petitioner filed a motion for reconsideration, but its motion
was likewise denied. In its order dated November 25, 1991,
the trial court said that admission of the "Supplemental
Complaint" would "not only radically but substantially
[change] the issues" by "materially var[ying] the grounds of
relief, and would operate unjustly to the prejudice of the
rights of [private respondent]."
Petitioner filed a petition for certiorari in the Court of Appeals
which, on August 5, 1992, rendered a decision, finding no
grave abuse of discretion to have been committed by the
trial court in not admitting petitioner's "Supplemental
Complaint" and denying the motion for reconsideration of its
order. Its ruling was based on the fact that the relief sought
in the "Supplemental Complaint" was different from that
contained in the original complaint which sought to compel
private respondent to recognize petitioner as the lowest
qualifying bidder. In addition, the appellate court held that
the original complaint had been rendered moot and
academic by supervening events and that a supplemental
complaint was inappropriate since "supplemental pleadings
are meant to supply the deficiency in aid of the original
pleading, not to entirely substitute the latter."
Petitioner moved for a reconsideration, but its motion was
denied in a resolution of the Court of Appeals dated October
30, 1992. Hence, this petition for review on certiorari.
First. The "Supplemental Complaint" appears to have been
filed under Rule 10 of the Rules of Court which provides:
6 Matters Subject of Supplemental
Pleadings. -- Upon motion of a party the
court may, upon reasonable notice and
upon such terms as are just, permit him to
serve a supplemental pleading setting
forth transactions, occurrence or events
which have happened since the date of
the pleading sought to be supplemented.
If the court deems it advisable that the
adverse party should plead thereto, it shall
so order, specifying the time therefor.
The transaction, occurrence or event happening since the
filing of the pleading, which is sought to be supplemented,
must be pleaded in aid of a party's right or defense as the
case may be. 2 But in the case at bar, the supervening event
is not invoked for that purpose but to justify the new relief
sought.
To begin with, what was alleged as a supervening event
causing damage to petitioner was the fact that the year for
which the contract should have been made had passed
without the resolution of the case. Only incidentally was it
claimed that because of the award of a contract for janitorial
services, on a month-to-month basis to a third party,
petitioner failed to realize profits. In its "Supplemental
Complaint" petitioner alleged:
1. Supervening events not attributable to
anybody which consist in the delay in the
early disposition of the case within the one
(1) year period life span of the contract for
janitorial services, have rendered the case
moot and academic, without plaintiff
obtaining complete relief to redress the
wrong committed against it by defendant,
which is the unjustified and/or unlawful
refusal of defendant to recognize plaintiff
as the lowest qualifying bidder for
janitorial services for the year 1990;
2. By reason of the unjustified refusal of
defendant to recognize the result of the
public bidding held in September 1989 and
to award to plaintiff the contract for
janitorial services as the lowest qualifying
bidder favorable and advantageous to the
defendant for the year 1990, and by hiring
 12
another entity to perform janitorial
services during the pendency of the suit,
plaintiff suffered unrealized profits in the
sum of P158,117.28;
The supervening event was therefore cited not to reinforce
or aid the original demand, which was for the execution of a
contract in petitioner's favor, but to say that, precisely
because of it, petitioner's demand could no longer be
enforced, thus justifying petitioner in changing the relief
sought to one for recovery of damages. This being the case,
petitioner's remedy was not to supplement, but rather to
amend its complaint.
Indeed the new relief sought (payment of damages in lieu of
an award of the contract for janitorial services) is actually an
alternative remedy to which petitioner was entitled even
before at the time of the filing of its original complaint. If
petitioner was entitled to the award of the contract, as it
claimed it was, it could have asked either for an award of the
contract for janitorial services or for damages. The fact that
it opted for the first does not preclude it from subsequently
claiming damages because through no fault of its own, the
year passed without an award in its favor, with the result
that it could no longer demand the execution of a contract
in its favor after that year.
Be that as it may, the so-called Supplemental Complaint filed
by petitioner should simply be treated as embodying
amendments to the original complaint or petitioner may be
required to file an amended complaint.
Second. But, it is contended, such an amendment of the
complaint would change the theory of the case. Three
reasons were cited by the Court of Appeals why it thought
the trial court correctly refused to admit the so-called
Supplemental Complaint of petitioner: (1) change in the
reliefs prayed for; (2) change in the issues of the case; and
(3) prejudice to the rights of private respondent.
The contention has no merit. An amendment to change the
relief sought does not change the theory of a case. What is
prohibited is a change in the cause of action. Thus in Arches
v. Villarruz, 3 it was held:
The lower court denied the admission of the amended
complaint on the ground that the plaintiff therein has
changed the action alleged in the original complaint, but
upon comparing the two complaints, we find that,
essentially, there was no change of action for, in both
the original and the amended complaints, the action was
for the collection of the value of the same promissory
notes and the only difference between the original and
the amended complaints is with regard to the
consideration of said promissory notes, for while in the
original complaint it was alleged that these were
executed by defendant Villarruz for money obtained
from plaintiff Arches and with which the former paid for
labor and materials for the construction and completion
of the Ivisan Bridge, in the amended complaint it was
alleged that said promissory notes were executed for
materials supplied to William Villarruz and actually used
in the construction of the Ivisan Bridge. While the rule
allowing amendments to a pleading is subject to the
general limitation that the cause of action should not be
substantially changed or that the theory of the case
should not be altered, in the furtherance of justice,
amendments to a pleading should be favored and the
rules thereon should be liberally construed. In the
present case, we find justification for allowing the
admission of the amended complaint in order that the
real question between the parties may be properly and
justly threshed out, in a single proceeding, and thus
avoid multiplicity of actions.
In Vda. de Villaruel v. Manila Motor Co., Inc., 4 plaintiffs, as
lessors of a property, filed an action for the rescission of the
contract of lease for alleged refusal of defendants to pay
rentals. While the case was pending, the buildings leased
were destroyed by fire. Plaintiffs filed a supplemental
complaint for the recovery of the value of the burned
buildings. In holding the supplemental complaint proper, this
Court held:
This action was inceptionally instituted for the
rescission of the contract of lease and for the recovery
of unpaid rentals before and after liberation. When the
leased buildings were destroyed, the plaintiffs-lessors
demanded from the defendants-lessees, instead, the
value of the burned premises, basing their right to do
so on defendants' alleged default in the payment of
post-liberation rentals (which was also their basis in
formerly seeking for rescission). This cannot be
considered as already altering the theory of the case
which is merely a change in the relief prayed for,
brought about by circumstances occurring during the
pendency of the action, and is not improper. (Southern
Pacific Co. vs. Conway, 115 F. 2d 746; Suburban
Improvement Company vs. Scott Lumber Co., 87 A.L.R.
555, 59 F. 2d 711). The filing of the supplemental
complaint can well be justified also under Section 2,
Rule 17 of the Rules of Court (on amendments) "to the
end that the real matter in dispute and all matters in
the action in dispute between the parties may, as far
as possible be completely determined in a single
proceeding". It is to be noted furthermore, that the
admission or rejection of this kind of pleadings is within
the sound discretion of the court that will not be
disturbed on appeal in the absence of abuse thereof
(see Sec. 5, Rule 17, Rules of Court), especially so, as
in this case, where no substantial procedural prejudice
is caused to the adverse party. 5
In this case, the original complaint for Mandamus/Certiorari
With Preliminary Injunction And/Or Restraining Order
alleged, as cause of action, private respondent's unjustifiable
refusal to award the contract to petitioner despite the fact
that the latter was the "lowest and best qualifying bidder."
On the basis of this allegation, it was prayed that:
1. Upon filing [of] this Complaint, a
restraining order be issued to enjoin
[private respondent] from implementing
[or] proceeding with its Notice of
Rebidding which is scheduled on
November 9, 1989 at 10:00 A.M.;
2. After trial on the merits, judgment be
rendered
a. ordering [private respondent] to recognize
[petitioner] as the lowest qualifying responsive
bidder at the public bidding held on September 22,
1989 and therefore its right to the award of the
contract for janitorial services;
b. declaring that [private respondent] in
publishing its "Notice of Rebidding" acted with
grave abuse of discretion amounting to excess
and/or lack of jurisdiction;
c. declaring the restraining order or temporary writ
of injunction to be permanent; and
d. for costs of suit.
These same allegations constitute petitioner's cause of
action for damages, to wit:
 13
1. the sum of P158,117.28 as unrealized
profits;
2. the sum of P50,000.00 as exemplary
damages;
3. the sum equivalent to twenty-five
(25%) percent of the total amount due
and demandable, plus P1,000.00 for every
appearance of counsel in court;
4. the costs of suit.
As already stated, the change in the relief sought was
necessitated by a supervening event which rendered the first
relief sought impossible of attainment.
Because the cause of action on which the complaint for
mandamus and injunction and the so-called Supplemental
Complaint are based is one and the same, the issue raised is
the same, namely, whether private respondent was justified
in refusing to award the contract for janitorial services to
petitioner.
Nor would admission of the amended complaint prejudice
the rights of private respondent as defendant in the action
below, as the Court of Appeals held. Indeed neither the trial
court nor the appellate court showed in what way the rights
of private respondent would be prejudiced by the allowance
of the amendment in question. There will be no unfairness
or surprise to private respondent, because after all private
respondent will have a right to file an amended answer and
present evidence in support thereof. 6
Third. The Court of Appeals also held that the action for
mandamus and/or injunction had become moot and
academic and consequently there was no longer any
complaint to be supplemented. It is true that a supplemental
or an amended pleading presupposes the existence of a
pleading. What was rendered moot and academic, however,
was not petitioner's cause of action but only its prayer for
the writ of mandamus. There was still an alternative remedy
left to petitioner of seeking damages in lieu of an award of
the contract. The situation is similar to an action for illegal
dismissal in labor law. If reinstatement is no longer possible,
because the position has been abolished and there is no way
the dismissed employee can be reinstated to a comparable
position, the employee's action is not thereby rendered moot
and academic. He can instead ask for separation pay.
Indeed, what is important is that, as already stated, the basic
allegations of fact in the original and in the amended
complaints are the same, namely, that private respondent,
without justification, refused to award the contract of
services to petitioner. Through no fault of petitioner, the year
for which janitorial services were to be rendered expired
without the resolution of petitioner's case. It would be to
exalt technicality over substance to require that petitioner
file a new complaint. It would best serve the interests of
justice if the so-called Supplemental Complaint is simply
considered as embodying amendments to the original
complaint. In fact it appears that the court ordered a
continuation of the trial on September 19, 1991, despite
petitioner's statement in its Supplemental Complaint that the
original case had become moot and academic.
WHEREFORE, the decision of the Court of Appeals is
REVERSED and the case is REMANDED to the trial court with
instructions to admit the "Supplemental Complaint" and to
treat it as an amendment to the original complaint or to
require petitioner to file an amended complaint, merging the
relevant allegations of its original complaint and
"Supplemental Complaint," and thereafter to allow private
respondent to file an answer.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 119511 November 24, 1998
WILFREDO P. VERZOSA and PILAR MARTINEZ,
petitioners,
vs.
COURT OF APPEALS, HON. NICODEMO FERRER, and
FE GIRON USON, respondents.
PANGANIBAN, J.:
What constitutes the status quo ante in the application of an
injunctive writ, in the event a complaint's subsequently
amended?
The Case
This is the main question raised in the present Petition for
Review seeking to set aside the consolidated January 31,
1994 Decision 1 of the Court of Appeals 2 in CA-GR SP No.
26626 and CA-GR SP No. 27300, which dismissed the
petitions in this wise:
Succinctly put, petitioners have failed to
show any grave abuse of discretion, or any
act without or in excess of jurisdiction, on
the part of respondent judge in issuing the
assailed orders.
WHEREFORE, the instant petitions are
hereby dismissed for lack of merit.
Also assailed is the public respondent's February 28, 1995
Reconsideration 3 denying the Motion for Reconsideration.
Facts of the Case
The undisputed facts, as narrated by the Court of Appeals
(CA) and reiterated by petitioners, are as follows: 4
Records reveal that Fe Giron Uson is the owner of a
parcel of land consisting of 19,955 square meters
located at Baquioen, Sual, Pangasinan, covered by
O.C.T. No. 12783. She mortgaged the land to Wilfredo
Verzosa.
Fe Uson failed to pay her entire obligation to Verzosa,
prompting the latter to have the mortgage foreclosed.
On July 21, 1988, the Provincial Sheriff of Pangasinan
set the foreclosure sale on August 17, 1988 at 10:00
A.M.
To prevent the Office of the Provincial Sheriff from
proceeding with the foreclosure sale, Fe Uson, on
August 12, 1988, filed with the Regional Trial Court,
Branch 37, Lingayen, Pangasinan, a complaint against
Wilfredo Verzosa and the Provincial Sheriff, docketed as
Civil Case No. 16590, for annulment of mortgage with
prayer for the issuance of a writ of preliminary
injunction.
 14
On August 22, 1988, defendant Verzosa filed a motion
to dismiss the complaint.
On June 8, 1989, the complaint was dismissed on the
ground that it was not personally verified by plaintiff Fe
Uson.
On June 27, 1989, Fe Uson filed a motion for
reconsideration which was granted by the court.
On June 29, 1989, she filed her amended complaint
which bears the proper verification.
Meantime, Verzosa wrote the Provincial Sheriff to
proceed with the foreclosure of mortgage.
Whereupon, Fe Uson, through counsel, wrote the
Provincial Sheriff requesting him to discontinue the
foreclosure sale in deference to "the said pending case
and to the action to be taken by the Honorable Presiding
Judge of the Court.
On July 4, 1989, the foreclosure sale was conducted by
the sheriff. The property was sold to Verzosa being the
highest bidder. Thereafter, the Sheriff's Certificate of
Sale was approved by Executive Judge Antonio Belen
and issued to Verzosa.
On September 5, 1989, the trial court issued an order
admitting the amended complaint of Fe Uson.
At this point, Verzosa filed with the Court of Appeals
CA-G.R. SP No. 18898 for certiorari. He alleged that
the said order, admitting the amended complaint was
issued with grave abuse of discretion.
On June 20, 1990, the Sheriffs Certificate of Sale was
registered in the Registry of Deeds of Alaminos,
Pangasinan.
On July 5, 1990, or after the expiration of the
redemption period of one year, the defendant Sheriff
issued the Sheriff's Final Deed of Sale. Thus, O.C.T.
No. 12783 in Fe Uson's name was cancelled and in
lieu thereof, T.C.T. No. 11087 was issued in the name
of Wilfredo Verzosa.
On July 12, 1990, Verzosa sold the land to Pilar
Martinez. As a result, Verzosa's T.C.T. No. 11087 was
cancelled and T.C.T. No. 11107 was issued to
Martinez.
Meantime, on October 16, 1990, or after one year
from the filing of Verzosa's petition for certiorari with
the Court of Appeals, the said court dismissed the
petition, thus sustaining the validity of respondent
court's order dated September 5, 1989 admitting Fe
Uson's amended complaint.
On May 20, 1991, Fe Uson filed her second amended
complaint impleading as additional defendants the
Register of Deeds of Alaminos, Pangasinan and Pilar
Martinez and praying, among others, the annulment
of the latter's title T.C.T. No. 11107.
On August 20, 1991, upon Uson's application for
preliminary injunction embodied in her Second
Amended Complaint (which was opposed by Verzosa
and Martinez), respondent court issued an order
directing the latter to cease and desist from entering,
making constructions and performing any act of
possession or ownership over the land in question
covered by O.C.T. No. 12783, upon posting by
plaintiff Uson of a bond of P10,000.00.
Defendant Martinez filed a motion for consideration
which was denied on September 18, 1991.
On October 30, 1991, after hearing and upon posting
of a bond in the amount of P10,000.00 by Uson,
respondent Judge issued an order directing
defendants Verzosa and Martinez and/or any and
other persons acting under their command to desist
and cease from entering, intruding and making
constructions on the land covered by O.C.T. No.
12783.
On November 22, 1991, respondent judge, acting on
Verzosa's motion for clarification of the order dated
September 18, 1991, issued an order to the effect that
the status quo being maintained is the possession of
plaintiff Fe Uson of the land and that such status quo
does not refer to defendant Pilar Martinez being the
registered owner of T.C.T. No. 11107.
It should be noted that the Complaint alleged that Private
Respondent Uson mortgaged the property to Verzosa for
P25,000, and that the remaining, unpaid balance was
P915.75, an amount she was willing to consign to the trial
court. 5
Petitioners challenged by certiorari the two orders of the trial
court. Because the CA dismissed their petition, petitioners
availed themselves of the present recourse. 6
Public Respondent's Ruling
In dismissing the petition for certiorari, the Court of Appeals
held that "the last peaceable uncontested status that
preceded the controversy [was] that point . . . when private
respondent Fe Uson was the registered owner of the land in
dispute mortgaged to petitioner Verzosa. As owner of this
property, Fe Uson has every right to protect her rights as
such. Clearly, the issuance of the writ would certainly
preserve that status quo." 7
In debunking petitioners' theory that the status quo referred
to the period when Martinez had already purchased the
property from Verzosa, the Court of Appeals held that "the
property was registered in her name two years after the start
of the controversy, or when private respondent filed her
complaint against Verzosa." 8 Thus, the CA sustained the
following findings of the trial court: 9
For as long as the instant case (Civil Case
No. 16590) remains pending, no act of the
defendants subsequent to the filing of this
case can make TCT No. 11107 in the name
of defendant Pilar Martinez, and the
alleged possession of the latter of the
property in question, valid and be
considered the status quo."
Issues
Petitioners raise the following issues for the consideration of
the Court: 10
I The Court of Appeals erred in not taking into
account or dealing squarely with the nature, effects
and proper interpretation and/or application of the
doctrine on amendment of pleadings/complaints to
the instant case.
 15
II The Court of Appeals erred when it concurred with
the Respondent judge that the status quo should be
reckoned at the time of the filing of the original
complaint.
III The Court of Appeals erred when it completely
disregarded the legal implications and effects of
foreclosure, foreclosure sale, expiration of the
redemption period, the consolidation of ownership to
your petitioner and the sale to Pilar Martinez.
IV The Court of Appeals erred when it concurred with
the respondent judge in granting an injunction to
restrain consummated acts, and in forcing a transfer
of possession from Pilar Martinez to private
respondent Fe Uson who has not shown her right
thereto.
The present controversy hinges on two questions. First, is
private respondent entitled to an injunctive writ? Second,
what is the status quo ante that the said writ seeks to
preserve?
The Court's Ruling
The petition is devoid of merit.
First Issue:
Issuance of the Injunctive Writ
Petitioners primarily allege that the injunctive writ was
wrongfully issued in favor of private respondent, as the latter
had a doubtful, unclear and unadjudicated right for recovery
of the property which had been mortgaged, foreclosed and
sold to a third party. We disagree.
An injunctive writ may be issued when the following
requisites are established:
1. The invasion of the right is material and substantial;
2. The right of complainant is clear and unmistakable;
3. There is an urgent and permanent necessity for the writ
to prevent serious damage. 11
The foregoing requisites are present in this case. The
undisputed owner of the property which was mortgaged to
Petitioner Verzosa was private respondent who, upon
learning of the scheduled foreclosure, immediately filed a
Complaint to annul the mortgage, praying that a restraining
order be issued to restrain such foreclosure. Private
respondent insisted that she had paid her P25,000 debt,
except for the remaining unpaid balance of P915.75 which
she was willing to consign to the court. In other words, she
had title to and possession of the property and she claimed
to have paid her obligation, except for the nominal unpaid
balance which she was willing to consign judicially. Hence,
she had a clear and unmistakable right to protect her title to
and possession of the mortgaged property by enjoining the
foreclosure sale.
Given the above factual allegations, it is clear that private
respondent was entitled to the injunctive writ.
Second Issue: Status Quo Ante
The "status quo" is the last actual peaceful uncontested
situation which precedes a controversy, and its preservation
is the office of an injunctive writ. 12 Petitioners insist that the
status quo refers to the point when Pilar Martinez was
already the owner of the property, having purchased it from
Verzosa.
We cannot sustain the petitioners, for Martinez' claim to the
property is precisely the bone of contention. Private
respondent, the origin owner of the property, filed a
Complaint against Wilfredo Verzosa and the provincial sheriff
for the annulment of mortgage and the issuance of an
injunctive writ to prevent the foreclosure of the property and
the subsequent transfer of ownership. Although the
Complaint was subsequently amended, the controversy
began when the first Complaint was filed.
Nevertheless, Petitioner Verzosa and the sheriff proceeded
with the foreclosure before the filing of the Amended
Complaint. Worse, Verzosa sold the property to Martinez one
week later. Now, Verzosa and Martinez claim that the status
quo to be preserved refers to the time before the filing of
the second Complaint and after Martinez had acquired the
property from Verzosa.
Petitioners contend that the controversy started only when
the Amended Complaint was filed, because the previous
Complaints were expunged from the records. Petitioners
invoke Ruymann v. Director of Lands, 13 in which the Court
ruled that the filing of an amended pleading does not
retroact to the date of the filing of the original. Citing other
jurisprudence, such as Waje v. Court of Appeals 14 and
Paradise v. Ng, 15 petitioners contend that the original
pleading is deemed abandoned when it is amended.
The cited cases offer scant support to the thesis of
petitioners. In Ruymann, the Court held that "an amendment
to a complaint which introduces a new or different cause of
action, making a new or different demand, is equivalent to a
fresh suit upon a new cause of action, and the statute of
limitations continues to run until the amendment is filed." 16
In the said case, a complaint for injunction was amended to
include a larger tract of land which had not been included in
the original suit. The Court held that "the suit will be deemed
to have been commenced upon the date of amendment, in
determining whether the defendant had acquired title by
adverse possession to the portion of the tract of land not
included in the original complaint (Montgomery v. Shaver, 40
Oregon 244)." 17 It is clear therein that the Complaint was
amended to include a new or different cause of action or
demand; hence, it was as if a new complaint was filed.
It follows that when the amended complaint does not
introduce new issues, causes of action, or demands, the suit
is deemed to have commenced on the date the original
complaint was filed, not on the date of the filing of the
amended complaint. In other words, for demands already
included in the original complaint, the suit is deemed to have
commenced upon the filing of such original complaint. In
short, for purposes of determining the commencement of a
suit, the original, complaint is deemed abandoned and
superseded by the amended complaint only if the amended
complaint introduces a new or different cause of action or
demand.
Hence, it has been held that "an amendment which merely
supplements and amplifies the facts originally alleged relates
back to the date of the commencement of the action and is
not barred by the statute of limitations, the period of which
expires after service of the original complaint but before
service of amendment." 18 It is the actual filing in court that
controls and not the date of the formal admission of the
amended pleading. 19 The Court in Republic v. Marsman 20
elucidated:
While in the procedural sense, especially in relation to
the possible necessity of and time for the filing of
responsive and other corresponding pleadings, an
 16
amended complaint is deemed filed only as of the date
of its admission, . . ., the self-evident proposition [is]
that for practical reasons and to avoid the
complications that may arise from undue delays in the
admission thereof, such an amended complaint must
be considered as filed, for the purpose of such a
substantive matter as prescription, on the date it is
actually filed with the court, regardless of when it is
ultimately formally admitted by the court. After all, the
only purpose of requiring leave of and formal
admission by the court of an amended pleading after
issues have already been joined as to the original ones
is to prevent the injection of other issues which ought
either to be considered as barred already or made the
subject of another proceeding, if they are not anyway
indispensable for the resolution of the original ones and
no unnecessary multiplicity of suits would result; so,
when the court ultimately admits the amendment, the
legal effect, for substantive purposes, of such
admission retroacts as a rule to the date of its actual
filing.
In the instant case, the Amended Complaint did not
introduce a new or different cause of action or demand. The
original Complaint was amended only to rectify the lack of
verification and thereafter to implead Martinez, who had
purchased the contested property from Verzosa.
In the same vein, Waje and Paradise do not apply because
the Amended Complaints therein alleged new causes of
action.
Similarly unavailing is petitioners' contention that the
injunctive writ was applied retroactively and, hence, violative
of Ruymann and other subsequent cases. To repeat,
Ruymann was wrongly applied by petitioners. There being
no new issues introduced in the Amended Complaint herein,
the present suit is deemed to have commenced on the date
of the filing of the original Complaint. Hence, the CA was
correct in upholding the trial court that the status quo was
the situation of the parties at the time of the filing of the
original Complaint.
Finally, petitioners assert that Respondent Court violated the
well-entrenched doctrine that consummated acts can no
longer be restrained by injunction. As earlier noted, despite
the fact that Pilar Martinez already had title to and
possession of the disputed property, the CA affirmed the
order of the trial court enjoining her from "entering, intruding
and making construction and/or performing any act of
ownership or possession and any activity over the
land . . .; " Petitioners cite the following ruling in Reyes v.
Harty: 21
It is a universal principle of the law that an
injunction will not issue to restrain the
performance of an act already done. It is
undisputed proof in this case, presented
by the plaintiffs themselves, that, at the
time this [case] was tried, the plaintiffs
had been completely dispossessed, the
defendant being in full and complete
possession of the lands in question . . . .
Again, the case cited by petitioner is incongruous with the
factual milieu of the present controversy. In that case, the
party praying for an injunctive writ had been completely
dispossessed of the land in question prior to the
commencement of the action. In the case at bar, private
respondent was still the owner and was in possession of the
property at the time the original Complaint was filed. The
rule is that a court should not by means of preliminary
injunction transfer the property in litigation from the
possession of one party to another where the legal title is in
dispute and the party having possession asserts ownership
thereto. 22 When private respondent filed the original
Complaint, she had title to and possession of the property
and was asserting ownership thereto.
Where the acts have been performed prior to the filing of the
injunction suit, the general rule is that consummated acts
can no longer be restrained by injunction. However, "where
the acts are performed after the injunction suit is brought, a
defendant may not as [a matter] of right proceed to perform
the acts sought to be restrained and then be heard to assert
in the suit that the injunction will not lie because he has
performed these acts before final hearing has been had, but
after the beginning of the action. A defendant thus acts at
his peril." 23 It has been held that "[t]he general rule of law
is that, where a defendant completes, after the beginning of
an action, the act thereby sought to be restrained, and
before the issue of any final order or decree, the court has
the power to, and may, compel, by a mandatory injunction,
the restoration of the former condition of things and thereby
prevent the giving of an advantage by reason of the wrongful
act. And where a defendant does an act thus sought to be
restrained, he proceeds at his peril, and the court in which
the action is pending may compel a restoration of the former
status or grant to the plaintiff such relief as may be proper."
24
In this case, an action was brought to enjoin Petitioner
Verzosa from proceeding with the mortgage sale, yet he
proceeded to do so while the action was still pending. Such
conduct is reprehensible. "If one in the face of a pending suit
for injunction, does the thing sought to be enjoined, he
cannot thus outwit equity and the court, but must restore
the status quo. . . . Even where an injunction has not been
issued, if the suit is one for injunction, the defendant, if he
does the thing sought to be enjoined does so at his peril." 25
Hence, in proceeding with the mortgage sale and
subsequently selling the property to Pilar Martinez, Petitioner
Verzosa was acting at his peril.
Clearly, the Respondent Court did not err in sustaining the
Decision of the lower court that the status quo to be
maintained was the situation when title to and possession of
the property were still with Private Respondent Uson. The
precise ruling of the appellate court is aptly reproduced
hereunder:
When the present Civil Case No. 16590 was commenced
on August 12, 1988, the property in dispute was still
covered by Original Certificate of Title No. 12783, in the
name of plaintiff Fe Giron Uson, and there is no dispute
that the possession of the said property was still with the
plaintiff. That is the status quo sought to be maintained
in the questioned preliminary injunction. It is, therefore,
incorrect for defendant Wilfredo P. Verzosa to claim that
the status quo refers to Transfer Certificate of Title No.
11107 in the name of Pilar Martinez, which is precisely
what is sought to be annul[l]ed in the present case, and
that the possessor of the property is defendant Pilar
Martinez who may possibly have entered into the
property while the present case has long been pending,
and by virtue of the purported sale of the same to her by
defendant Verzosa, whose claim of ownership thereof is,
in turn, based on the sheriff's sale which is also the very
subject matter of the present case for annulment. 26
WHEREFORE, the petition is DENIED for lack of merit and
the assailed Decision of the Court of Appeals is AFFIRMED.
SO ORDERED.