Republic of the Philippines

REGIONAL TRIAL COURT

7th Judicial Region
Branch 31
Dumaguete City, Negros Oriental

ABC Incorporated, represented

by its President Mr. X CIVIL CASE NO.____________
Plaintiff FOR: Specific Performance
and
Claim for Damages with Prayer for
Writ of Preliminary Attachment and
versus Temporary Restraining Order (TRO)

Mr. DEF
Defendant

X----------------------------------------------/

COMPLAINT

PLAINTIFF, through the undersigned counsel, unto this Honorable Court, respectfully
alleges that:

1. Allegations Common to All Causes of Action:

1.1. ABC Inc., (“PLAINTIFF”) is a corporation duly organized and existing under
and by virtue of the laws of the Republic of the Philippines, with its principal place
of business at 3F Portal West Building, 104 Hibbard Avenue, Dumaguete City,
Negros Oriental. ABC Inc. is represented by its President Mr. X, of legal age,
married, and with residence at El Pueblo Genovivo, Lower Candau-ay, Dumaguete
City, Negros Oriental. A copy of the Secretary’s Certificate of the Board
Resolution authorizing Mr. X to represent ABC Inc., in this case, is hereto attached
as Annex “A”;
1.1.1. The Plaintiff, ABC, Inc. is the lot owner of a prime parcel of land
in Calindagan. Such parcel of land has an area of 10,000 square meters
or one (1) hectare, as evidenced by the lot title attached as Annex “B”;
1.2. The Defendant, Mr. DEF, is of legal age, married, and with residence at
Cimafranca Subdivision, Daro, Dumaguete City, Negros Oriental, where he may be
served with summons and other court processes;
1.2.1 The Defendant, Mr. DEF, is an investor and developer herein.
2. Affirmative Allegations:
2.1. The DEFENDANT slowly established friendship with the PLAINTIFF by
inviting the latter for dinner and having a drinking spree together with common
friends;
2.2. Eventually, the DEFENDANT, by means of deceit, enticed the PLAINTIFF to
invest in the Joint Venture and led the latter to believe as to the latter’s business
dealings and tie-up;
2.3. Thus, on or about January 21, 2018, at about 10:00 in the morning, in the City
of Dumaguete, Philippines, the PLAINTIFF, ABC, Inc. through its President Mr. X
agreed to enter into a Joint Venture Agreement in writing with DEF
(“DEFENDANT”) to develop a planned community of condominiums, malls, and
service centers. A copy of the agreement is hereto attached as Annex “C” and plays
an integral part of this complaint. Pictures showing the execution of the Joint
Venture are collectively attached hereto as Annex “D”.

2.4. In the said Joint Venture Agreement, the PLAINTIFF’S exposure shall only be
limited to its contribution of the one (1) hectare prime parcel of land that it owns in
Calindagan. On the other hand, the DEFENDANT shall finance the development
exclusively from its own resources, without utilizing the land as collateral for a
loan.

2.5. To pursue the Joint Venture, the parties organized a new corporation,
Montecillo Arms Development Corporation (the “Corporation”), with PLAINTIFF
holding 30% and DEFENDANT owning 70% of the equity. Attached herein is the
Articles of Incorporation of Montecillo Arms Development as Annex “E”.

2.6. The terms of the Joint Venture provide that DEFENDANT shall finance the
development from its own resources, without utilizing the land as collateral for a
loan. The agreed start date of the development project was June 1, 2018, but as of
the date hereof, DEFENDANT has not fulfilled its obligations to develop the
promised community of condominiums, malls and service centers.

2.7. For establishing the Joint Venture, the PLAINTIFF was induced to part with
his property solely and entirely by pretenses which were false. The PLAINTIFF
relied on false pretense or fraudulent act of the DEFENDANT who had guaranteed
that development will commence on June 1, 2018 and to fulfill in good faith the
improvements as stated in the agreement.

2.8. On July 20, 2018, a few months after the joint venture agreement is formed,
DEFENDANT requires PLAINTIFF to assign its land to the Corporation. Midst the
reluctance of PLAINTIFF, as it would like the DEFENDANT to first put in a
substantial portion of capital for the project as a counterpart first, the PLAINTIFF
was induced and defrauded into assigning its land to the Corporation.

2.9. On August 29, 2018, around 8:00 o’clock in the evening at the
DEFENDANT’S residence, PLAINTIFF assigns the subject land to the
Corporation through a Contract of Assignment, herein attached as Annex “F”.

2.10.As a result of the assignment of the land, 60% of the Corporation’s equity
was added on top of PLAINTIFF’S original 30% equity. Such change was due to
the equivalent equity of the PHP 15,000,000.00 worth of land assigned by
PLAINTIFF to the corporation. Thus, PLAINTIFF now owns 90% of the
corporation and DEFENDANT owns 10%. A certification from the Commission
of Internal Revenue (CIR) is attached herein to prove the valuation of the land:
Annex “G”
2.11.Shares of the Corporation have been sold by DEFENDANT to independent
investors and proceeds of these sales are deposited in the personal account of the
DEFENDANT. A notarized affidavit signed by Ms. Y, the secretary of the
defendant, is attached herein as Annex “H”. Such affidavit details that the
DEFENDANT instructed its secretary to deposit the money to his personal bank
account instead of the Corporation’s.

2.12.PLAINTIFF also consistently demanded from DEFENDANT to transfer the

proceeds of the sold unsubscribed shares to the Corporation’s bank account, but
to no avail, DEFENDANT was noncompliant. Attached herein are copies of the
demand letters, collectively labeled as Annex “I”.

2.13.Because of the change in equity, now 90-10 in favor of PLAINTIFF, the

DEFENDANT has no right to most of the shares sold.

2.14.In order to validly sell those shares, the DEFENDANT needs the
authorization of the Board of Directors of the Corporation. DEFENDANT did not
seek such authorization from the Board. Thus, the DEFENDANT acted in
evident bad faith, committed fraud, and is in ultra vires when he sold the
questioned unsubscribed shares. An affidavit is signed by seven (7) members of
the Board of Directors evidencing herein the failure of DEFENDANT to seek its
authorization: Annex “J”.

2.15.One year from the Joint Venture Agreement, on January 23, 2019, the
PLAINTIFF demanded for a status report on the progress of the promised
improvements on the property but DEFENDANT only made up reasons why
there are no improvements on the property yet. He insists that his contractors are
still working on the development plan and they are currently negotiating. A copy
of the demand letter is herein attached as Annex “K”.

2.16.PLAINTIFF, on several attempts, tried to contact the DEFENDANT and

demanded for the status of the promised developments that have already become
due, with the latter simply promising that he will provide an update the following
week. Later on, the DEFENDANT was no longer responding to the
communications sent and initiated by the PLAINTIFF. But the PLAINTIFF never
stopped sending messages to DEFENDANT about the Joint Venture Agreement.
Attached hereto are the screenshots of communication between the PLAINTIFF
and DEFENDANT collectively labeled as Annex “L”.

2.17.The unreasonable delay of the promised improvements and unsupported

reasons of DEFENDANT led PLAINTIFF to oust the former’s representatives in
the Company’s board. In effect, PLAINTIFF takes control of the company.

2.18.Assets of the Corporation consist solely of the land contributed by

PLAINTIFF, and DEFENDANT is not entitled to any ownership interest in or to
such land, as DEFENDANT has made little and unsubstantial capital contribution
to the development or to the Corporation. DEFENDANT wasn’t able to fulfill its
 reciprocal obligation in the Joint Venture Agreement.

3. First Cause of Action:

3.1 The foregoing allegations are repleaded herein by reference.

3.2 DEFENDANT failed to satisfy its obligation to contribute financing for the
development exclusively from its own resources.

3.3 DEFENDANTS failure to satisfy its obligation amounts to evident bad faith
and breach of reciprocal obligations in the joint venture agreement.

3.4 PLAINTIFF, as the injured party, has the statutory right to demand specific
performance of the obligations defined in Annex “C” pursuant to Article 1191 of
the Civil Code and claim damages.

4. Second Cause of Action:

4.1 The foregoing allegations are repleaded herein by reference.

4.2 The damage suffered by PLAINTIFF includes, but is not limited to the proceeds
of the unsubscribed sales of which have been deposited into DEFENDANT’S
bank account

4.3 Such amount the DEFENDANT must surrender to the Corporation in full by
means of transferring the amount to the Corporation’s Landbank Account: SA
0966 1620 23, immediately.

5. Third Cause of Action:

5.1 The foregoing allegations are repleaded herein by reference.

5.2 The evident breach of contract by the DEFENDANT resulted to the stagnation
of the prime parcel of land owned by the PLAINTIFF from the execution of the
contract on January 21, 2018 until to date, December 10, 2019. PLAINTIFF
could have used this prime parcel of land for other commercial and profitable
purpose. The DEFENDANT must be made to pay actual damages for lost of
profit.

5.3 Actual damages computed:

Attached herein as Annex “G” is a certification from the Commissioner

of the Internal Revenue (CIR) determining the value of the subject
property (1 hectare) which is located in Calindagan, Dumaguete City at
PHP 15,000,000.00. The CIR fixed the value of the land at 1,500 per
square meter.
 The computation for the actual damages is hereby shown:

1,500 per square meter

10,000 square meter (equivalent of 1 hectare)

__________________________________________

15,000,000.00 = Value of the Property

The computed profit lost for two (2) years of a land worth PHP
15,000,000.00 is PHP 2,000,000.00.

Thus, PLAINTIFF’S actual damages from the loss of profit are computed to
be at PHP 2,000,000.00 or 13.33 % of the land’s original value.

6. Fourth Cause of Action:

6.1 The foregoing allegations are repleaded herein by reference.

6.2 As a consequence of the acts of the DEFENDANT, which are contrary to good
customs and public morals, DEFENDANT must be made to pay Exemplary
Damages of PHP 500,000.00, Philippine currency, to serve as an example for
the public good and prevent this performing such injurious acts in the future.

7. Fifth Cause of Action:

7.1 The foregoing allegations are repleaded herein by reference.

7.2 By reason of DEFENDANT’s actions, PLAINTIFF was constrained to hire the

services of a lawyer for which the legal fees have been set at PHP200,000.00
Philippine currency.

7.3 DEFENDANT must be made to pay Legal Fees in the amount of

PHP200,000.00 Philippine currency.

8. Sixth Cause of Action

8.1 The foregoing allegations are repleaded herein by reference.

8.2 Allegations in support for the issuance of writ of preliminary attachment:

8.2.1 A sufficient cause of action exists against the defendant;

8.2.2 The DEFENDANT is guilty of fraud in persuading PLAINTIFF

in assigning its land to the Corporation without first putting in a
substantial portion of capital for the project as capital; and the
fraudulent scheme becoming more evident when it failed to deliver its
promised developments after a year, and even after consistent demands
 from PLAINTIFF;

8.2.3 DEFENDANT willfully committed fraud in approaching

PLAINTIFF to enter into Joint Venture Agreement without intent to
contribute in the capital and without intent to deliver agreed
developments. Defendant failed to settle without justifiable ground his
just and demandable obligation;

8.2.4 DEFENDANT has sold unsubscribed shares when it has no

right to do so. Worse, it has deposited the proceeds to its personal bank
account instead of the Company’s bank account.

8.2.5 There is no sufficient security for the claim sought to be enforced

by the present action;

8.2.6 The amount due to the plaintiff in the above-entitled case is

P2,700,000.00, for which amount an order of attachment is being
sought above all legal counterclaims against the DEFENDANTS;

8.3 PLAINTIFF is ready and willing to give a bond to be fixed by this

Honorable Court, executed to the DEFENDANT, to answer for all costs which
may be adjudged to the latter, and all damages which DEFENDANT may
sustain by reason of the attachment prayed for, if the court shall finally adjudge
that PLAINTIFF is not entitled thereto;

8.4 In support of the foregoing allegations, the PLAINTIFF has attached herein
his affidavit as Annex “M”.

9. Seventh Cause of Action

9.1. PLAINTIFF is left with no speedy and adequate remedy at law except the
issuance of a TEMPORARY RESTRAINING ORDER (TRO). Unless a
TRO is issued, the PLAINTIFF is certain to suffer grave injustice,
irreparable injury and damage.
9.2. Allegations in support for the issuance of temporary restraining order:
9.2.1. DEFENDANT has engaged in, and is likely to engage in the
future, acts and practices that violate the Joint Venture
Agreement, and that the PLAINTIFF is therefore likely to
prevail on the merits of this action;
9.2.2. An immediate and irreparable damage to the Court's ability to
grant effective final relief for PLAINTIFF in the form of
monetary restitution will occur from the sale, transfer, or other
disposition or concealment by DEFENDANT of their assets,
documents or records absent the TRO on bank accounts of
DEFENDANT and the Corporation, and a prohibition from
 destroying documents and records;
9.2.3. Weighing the equities and considering the PLAINTIFF’S
likelihood of ultimate success, this temporary restraining order is
in the best interest of the Court and the parties;
9.2.4. It is clear that the injury which PLAINTIFF stand to suffer by
cannot be adequately compensated and therefore, there exists an
"irreparable injury," as defined above which would necessitate
the issuance of the TRO sought for.
9.3. The court must issue a TRO which provides for the following:
9.3.1 Temporarily restrain and enjoin DEFENDANT and any of his
representatives from withdrawing or transferring funds from
his personal bank account and from Corporation’s bank
account to maintain and preserve Corporation funds and assets;
9.3.2 Restrain and enjoin DEFENDANT and any of his
representatives from destroying or concealing documents;
9.3.3 Authorizing expedited discovery from DEFENDANT and third
parties, for the purpose of discovering information about
DEFENDANT’s identities, assets, and/or business activities;

10. Eighth Cause of Action:

10.1. Other reliefs as may be proper and just in the premises are likewise prayed
for.

PRAYER

WHEREFORE, PLAINTIFF respectfully prays for judgment to be rendered in its

favor:

(1) Ordering DEFENDANT to perform its obligations defined under the Joint
Venture Agreement, Annex “C”, immediately after finality of judgment.
(2) Ordering DEFENDANT that all funds belonging to Corporation be
deposited to the bank account of the Corporation immediately;
(3) An order of attachment be immediately issued by this Honorable Court,
requiring the sheriff to attach properties of the DEFENDANT which are not
exempt from execution or so much thereof as may be sufficient to satisfy
PLAINTIFF’S demand which is in the total amount of P2,700,000.00; and
after hearing;
(4) A Temporary Restraining Order towards DEFENDANT and any of his
representatives as specified above;
(5) An order directing the DEFENDANT to pay to the PLAINTIFF damages, as
follows:
a. Actual damages in the amount of PHP 2,000,000.00;
b. Exemplary damages in the amount of PHP 500,000.00;
c. Attorney’s fees in the amount of PHP 200,000.00;
 (6) Such other reliefs as may be just and proper in the premises.

RESPECTFULLY SUBMITTED.

Counsel for the Complainant