Riviera Golf vs. CCA, GR No.

173783 (June 17, 2015)

BRION, J.:
Before the Court is the petition for review on certiorari[1] filed by Riviera Golf Club,
Inc. (Riviera Golf) assailing the January 11, 2006 decision[2] and the July 5, 2006
resolution[3] of the Court of Appeals (CA) in CA-G.R.CV No. 83824.

Background Facts

Riviera Golf, a domestic corporation, is the owner of Riviera Golf Club (Club), a 36-
hole golf course and recreational facility in Silang, Cavite. On October 11, 1996,
Riviera Golf entered into a Management Agreement with CCA Holdings, B.V. (CCA
Holdings), a foreign corporation, for the management and operation of the Club.

The Management Agreement was for a period of five (5) years. Under this agreement,
Riviera Golf would pay CCA Holdings a monthly Base Management Fee of 5.5% of the
Adjusted Gross Revenue equivalent to US$16,500.00 per month, adjusted to 4.5%
per month from the opening date, plus an incentive Management Fee of 10% of the
Gross Operating Profit.

The parties also entered into a co-terminous Royalty Agreement that would allow

Riviera Golf and the Club's developer, Armed Forces of the Philippines' Retirement
and Separation Benefits System (AFP-RSBS), to use CCA Holdings' name and facilities
to market the Club's shares. In consideration of the license to use CCA Holdings'
name, Riviera Golf and AFP-RSBS will pay CCA Holdings a gross licensing fee of 1%
on all membership fees paid in the sale of shares, an additional gross licensing fee of
4% on all club shares, and 7% on non-golf memberships sold.

Riviera Golf initially paid the agreed fees, but defaulted in its payment of the licensing
fees and the reimbursement claims in September 1997. Riviera Golf likewise failed to
pay the monthly management and incentive fees in June 1999, prompting CCA
Holdings to demand the amounts due under both agreements.

On October 29, 1999, Riviera Golf sent CCA Holdings a letter informing the latter that
it was pre-terminating the Management Agreement purportedly to alleviate the
financial crisis that the AFP-RSBS was experiencing. The Royalty Agreement was also
deemed pre-terminated.

CCA Holdings protested the termination of the agreement and demanded that Riviera
Golf settle its unpaid management and royalty fees. Riviera Golf however refused on
the ground that CCA Holdings violated the terms of the agreement.

In April 2001, CCA Holdings filed before the Regional Trial Court (RTC), Branch 146,
Makati City, a complaint for sum of money with damages docketed as Civil Case No.
01-611 (first complaint) against Riviera Golf. During the pendency of the case, the
parties tried to extrajudicially settle their differences and executed a Compromise
Agreement.
On April 25, 2002, the RTC rendered a decision[4] approving the parties' Compromise
Agreement. Paragraph 4 of the agreement reads:
4) It is understood that the execution of this compromise agreement or
the payment of the aforementioned sum of money shall not be
construed as a waiver of or with prejudice to plaintiffs
rights/cause of action, if any, arising from or relative to the pre-
termination of the parties' Management and Royalty
Agreements by the defendant subject to whatever claims and defenses
may have relative thereto; (Emphasis supplied.)

Subsequently, or on November 22, 2002, CCA Holdings again sent a letter to Riviera
Golf, this time, demanding the sum of US$390,768.00 representing the projected net
income or expected business profits it was supposed to derive for the unexpired two-
year term of the Management Agreement. As its demands went unheeded, CCA
Holdings filed another complaint for sum of money and damages docketed as Civil
Case No. 03-399 (second complaint) before Branch 57 of the RTC of Makati City.

Noting that the first and second complaints involve the same parties, the same
subject matter, and the same causes of action, Riviera Golf filed on August 6, 2003, a
Motion to Dismiss on the grounds of res judicata and violation of the rule against
splitting of causes of action. CCA Holdings opposed the motion contending that there
is no splitting of causes of action since the two cases are entirely independent of each
other. CCA Holdings also justified its belated filing of the second complaint, arguing
that the needed financial records were in Riviera Golfs possession.

The RTC Ruling

The RTC, Branch 57, Makati City granted the motion to dismiss, holding that the first
and second complaints have identical causes of action and subject matter. Since the
claims in Civil Case No. 01-611 and Civil Case No. 03-399 arose from alleged
violations of the terms and conditions of the Management and Royalty Agreements,
the rules on res judicata and splitting of causes of action apply.

The RTC also noted that CCA Holdings had every opportunity to raise the issue of pre-
termination when it filed Civil Case No. 01-611. That CCA Holdings did not do so and
opted instead to reserve it for future litigation only show that it was speculating on
the results of the litigation.

The RTC likewise pointed out that the reservation clause or the "nonwaiver clause"
that the parties inserted in the Compromise Agreement was qualified by the
phrase subject to whatever claims and defenses the defendant may have relative
thereto. The RTC held that the defenses that Riviera Golf could raise are not limited
only to those relating to the legality of the pre-termination of the agreements, but
could also include all other claims and defenses such as res judicata and splitting of a
single cause of action.

CCA Holdings appealed the dismissal of its complaint to the CA.

The CA Ruling

In its decision dated January 11, 2006, the CA set aside the order granting the
motion to dismiss, and remanded the case to the RTC for adjudication on the merits.
The CA held that res judicata and splitting of a single cause of action were not
committed based on the following reasons:

First, there is no identity of causes of action in the two civil cases.

The test to determine the identity of causes of action is to ascertain whether the
same evidence is necessary to sustain the two suits. In this case, the sets of evidence
in the two complaints were different.

Second, there is no splitting of a single cause of action because Riviera Golf

violated separate primary rights of CCA Holdings under the management contract.

Third, Riviera Golf recognized CCA Holdings' right to seek damages arising

from or relative to the premature termination of the Management Agreement. This
view is evident from the literal interpretation of Paragraph 4 (or the "non waiver
clause") of the parties' compromise agreement.

Riviera Golf moved for the reconsideration of the decision, but the CA denied its
motion in its resolution of July 5, 2006; hence, the present recourse to us pursuant to
Rule 45 of the Rules of Court.

The Petition

Riviera Golf asks the Court to set aside the CA decision, contending that the appellate
court committed a grave error in not holding that the filing of the second complaint
amounted to res judicata and splitting of a single cause of action. Riviera Golf submits
that based on the allegations in the two complaints, the facts that are necessary to
support the second case (Civil Case No. 03-399) would have been sufficient to
authorize recovery in the first case (Civil Case No. 01-611).

Moreover, the documentary evidence that CCA Holdings submitted to support both
complaints are also the same. Thus, both civil cases involve not only the same facts
and the same subject matter, but also the same cause of action, i.e., breach of the
Management and Royalty Agreements.

Riviera Golf also argued that although there seems to be several rights violated, there
is only one delict or wrong committed and consequently, only one cause of action that
should have been alleged in a single complaint. Since the alleged breach of contract
in this case was already total at the time of the filing of Civil Case No. 01-
611, the filing of the second complaint for the recovery of damages for the pre-
termination of the Management and Royalty Agreements constitutes splitting a single
cause of action that is expressly prohibited by the Rules of Court.

Riviera Golf likewise disagrees with the CA's interpretation of the non-waiver clause.
It argues that the phrase if any and the condition that the causes of action
are subject to whatever claims and defenses the defendant may have relative
thereto in the non-waiver clause limited its recognition of CCA Holdings' rights and
causes of action. It also maintains that the filing of the motion to dismiss based
on res judicata and splitting of causes of action clearly falls within the non-waiver
clause's limitation.

The Case for the Respondent

CCA Holdings reiterates that there was absolutely no identity of subject matter and
causes of action because the first case sought the payment for the services it already
rendered, while the second case sought the recovery of damages representing the
projected net income that it failed to realize by reason of the unilateral and premature
termination of the Management and Royalty Agreements. Thus, the principles of res
judicata and splitting of a single cause of action do not apply.

Even assuming that the prohibition against res judicata operates in this case, CCA
Holdings contends that Riviera Golf is already estopped from questioning the filing of
the second complaint in view of the non-waiver clause inserted in the compromise
agreement.

The Issues

As defined by the parties, the issues before us are limited to:

1. Whether the CCA Holdings violated the prohibitions against res judicata and

splitting a single cause of action when it filed the claim for damages for unrealized
profits; and

2. Whether the CA's interpretation of paragraph 4 of the compromise agreement is

correct. If in the affirmative, whether the parties may stipulate on an agreement
violating the prohibitions against res judicata and splitting a single cause of action.

Our Ruling

We find the petition meritorious.

The Second Complaint is Barred by Res Judicata

Res judicata is defined as a matter adjudged; a thing judicially acted upon or decided;
or a thing or matter settled by judgment. Under this rule, a final judgment or decree
on the merits by a court of competent jurisdiction is conclusive as to the rights of the
parties or their privies in all later suits, and on all points and matters determined in
the former suit.[5]

The concept of res judicata is embodied in Section 47(b) and (c) of Rule 39 of the
Rules of Court, which reads:
 SEC. 47. Effect of judgments or final orders. — The effect of a judgment
or final order rendered by a court of the Philippines, having jurisdiction to
pronounce the judgment or final order, may be as follows:

(a) In case of a judgment or final order against a specific thing or in

respect to the probate of a will, or the administration of the estate of a
deceased person, or in respect to the personal, political, or legal condition
or status of a particular person or his relationship to another, the
judgment or final order is conclusive upon the title to the thing, the will or
administration, or the condition, status or relationship of the person;
however, the probate of a will or granting of letters of administration shall
only be prima facie evidence of the death of the testator or intestate;

(b) In other cases, the judgment or final order is, with respect to the
matter directly adjudged or as to any other matter that could have been
raised in relation thereto, conclusive between the parties and their
successors in interest by title subsequent to the commencement of the
action or special proceeding, litigating for the same thing and under the
same title and in the same capacity; and,

(c) In any other litigation between the same parties or their successors in
interest, that only is deemed to have been adjudged in a former judgment
or final order which appears upon its face to have been so adjudged, or
which was actually and necessarily included therein or necessary thereto.

Res judicata requires the concurrence of the following requisites: (1) the former
judgment must be final; (2) it must have been rendered by a court having jurisdiction
of the subject matter and the parties; (3) it must be a judgment on the merits; and
(4) there must be, between the first and second actions (a) identity of parties, (b)
identity of subject matter, and (c) identity of causes of action.[6]

All the Elements of Res Judicata are Present

There is no dispute as to the presence of the first three elements in the present case.
The decision in Civil Case No. 01-611 is a final judgment on the merits rendered by a
court which had jurisdiction over the subject matter and over the parties. Since a
judicial compromise operates as an adjudication on the merits, it has the force of law
and the effect of res judicata.[7]

With respect to the fourth element, a careful examination of the allegations in the two
complaints shows that the cases involve the same parties and the same subject
matter. While Civil Case No. 01-611 is for the collection of unpaid management and
royalty fees, and Civil Case No. 03-399 on the other hand, is for recovery of damages
for the premature termination of the parties' agreements, both cases were
nevertheless filed on the basis of the same Management and Royalty Agreements.
Thus, we agree that these two cases refer to the same subject matter.

The Court is also convinced that there is identity of causes of action between the first
and the second complaints.
A cause of action may give rise to several reliefs, but only one action can be filed.
[8] A single cause of action or entire claim or demand cannot be split up or divided
into two or more different actions. The rule on prohibiting the splitting of a single
cause of action is clear. Section 4, Rule 2 of the Rules of Court expressly states:
Section 4. Splitting a single cause of action; effect of. - If two or more
suits are instituted on the basis of the same cause of action, the filing of
one or a judgment upon the merits in any one is available as a ground for
the dismissal of the others.

In both Civil Case No. 01-611 and Civil Case No. 03-399, CCA Holdings imputed the
same wrongful act - the alleged violations of the terms and conditions of the
Management and Royalty Agreements. In Civil Case No. 01-611, CCA Holdings'
cause of action rests on Riviera Golfs failure to pay the licensing fees, reimbursement
claims, and monthly management and incentive fees. In Civil Case No. 03-399 on the
other hand, CCA Holdings' cause of action hinges on the damages it allegedly incurred
as a result of Riviera Golfs premature termination of the Management and Royalty
Agreements (i.e., the expected business profits it was supposed to derive for the
unexpired two-year term of the Management Agreement). Although differing in form,
these two cases are ultimately anchored on Riviera Golfs breach of the Management
and Royalty Agreements. Thus, we conclude that they have identical causes of action.

Same Evidence Support and Establish Both the Present and the Former
Cause of Action

It is a settled rule that the application of the doctrine of res judicata to identical
causes of action does not depend on the similarity or differences in the forms of the
two actions. A party cannot, by varying the form of the action or by adopting a
different method of presenting his case, escape the operation of the doctrine of res
judicata.[9] The test of identity of causes of action rests on whether the same
evidence would support and establish the former and the present causes of action.
[10]

We held in Esperas v. The Court of Appeals[11] that the ultimate test in determining

the presence of identity of cause of action is to consider whether the same evidence
would support the cause of action in both the first and the second cases. Under
the same evidence test, when the same evidence support and establish both the
present and the former causes of action, there is likely an identity of causes of action.
[12]

The pleadings and record of the present case show that there is a glaring similarity
in the documentary evidence submitted to prove the claims under the two
complaints. The pieces of evidence both in the collection of unpaid management and
royalty fees, and the recovery of damages for the expected business profits aim at
establishing the breach of the Management and Royalty Agreements.

Furthermore, the evidence in the first complaint will have to be reexamined to

support the cause of action in the second complaint. We specifically note that at least
four (4) documents were presented in both actions, namely:
(1) the Management Agreement between Riviera Golf and CCA Holdings;

(2) the Royalty Agreement between Riviera Golf and CCA Holdings;

the Fees Receivable Report of CCA Holdings as of October 1999, amounting to

(3)
USD 97,122.00; and

the letter dated October 29, 1999, stating the termination of the Management
(4)
Agreement.
Based on the allegations in the two complaints, the facts that are necessary to
support the second complaint would have been sufficient to allow CCA Holdings to
recover in the first complaint. The similarity in the pieces of evidence in these two
cases therefore strongly suggests the identity of their causes of action.

We held in this regard in Stilianopulos v. The City of Legaspi:[13]

The underlying objectives or reliefs sought in both the quieting-of-title
and the annulment-of-title cases are essentially the same adjudication of
the ownership of the disputed lot and nullification of one of the two
certificates of title. Thus, it becomes readily apparent that the same
evidence or set of facts as those considered in the quieting-of-title case
would also be used in this Petition.

The difference in form and nature of the two actions is immaterial and is
not a reason to exempt petitioner from the effects of res judicata. The
philosophy behind this rule prohibits the parties from litigating the same
issue more than once. When a right or fact has been judicially tried and
determined by a court of competent jurisdiction or an opportunity for such
trial has been given, the judgment of the court, as long as it remains
unreversed, should be conclusive upon the parties and those in privity
with them. Verily, there should be an end to litigation by the same parties
and their privies over a subject, once it is fully and fairly adjudicated.
(Citations omitted.)

At the Time the First Complaint was Filed

The Breach of the Agreements was Already Total

We likewise note that the non-payment of fees and the premature termination of the
contract occurred as early as 1999. In other words, the violation of both the
Management and Royalty Agreements preceded the filing of the first complaint.
Consequently, when CCA Holdings filed its first complaint in 2001, the breach of the
agreements was already complete and total; and the ground for the recovery of
damages was available and in existence. Thus, allowing CCA Holdings now to file two
separate and independent claims anchored on the same breach of contract (i.e.,
breach of the Management and Royalty Agreements), constitutes a blatant disregard
of our prohibition against res judicata and splitting of a single cause of action.

In contracts providing several obligations, each obligation may give rise to a single
and independent cause of action. But if several obligations have matured, or if
the entire contract is breached at the time of the filing of the complaint, all
obligations are integrated into one cause of action. Hence, the claim arising
from such cause of action that is not included in the complaint is barred forever. The
Court's explanation in Blossom and Company, Inc. v. Manila Gas Corporation,
[14] citing US jurisprudence on the matter, is instructive, viz:
34 Corpus Juris, p. 839, it is said:

As a general rule[,] a contract to do several things at several

times in its nature, so as to authorize successive actions; and
a judgment recovered for a single breach of a continuing
contract or covenant is no bar to a suit for a subsequent
breach thereof. But where the covenant or contract is entire,
and the breach total, there can be only one action, and [the]
plaintiff must therein recover all his damages.

In the case of Rhoelm v. Horst, 178 U. U., 1; 44 Law. ed., 953, that court
said:
An unqualified and positive refusal to perform a contract,
though the performance thereof is not yet due, may, if the
renunciation goes to the whole contract, be treated as a
complete breach which will entitle the injured party to bring
his action at once.

In the present case, CCA Holdings' claim for the unpaid management and royalty fees
as well as the damages for its expected business profits constituted an indivisible
demand. Verily, CCA Holdings should have included and alleged the recovery of
damages for its expected business profits as a second cause of action in Civil Case
No. 01-611. CCA Holdings cannot be permitted to split up a single cause of action and
make that single cause of action the basis of several suits.

All told, the Court finds that the filing of the second complaint is barred by res
judicata.

The "Non-Waiver Clause" Stipulated

in the Compromise Agreement is Null and Void

CCA Holdings contends that Riviera Golf is already estopped from questioning the
filing of the second complaint because the non-waiver clause of the Compromise
Agreement recognized CCA Holdings' prerogative to seek damages arising from the
premature termination of the Management Agreement.

We do not see any merit in this contention.

A compromise is a contract whereby the parties, by making reciprocal concessions,
avoid a litigation or put an end to one already commenced.[15] Like any other
contract, a compromise agreement must be consistent with the requisites and
principles of contracts. While it is true that the agreement is binding between the
parties and becomes the law between them, it is also a rule that to be valid, a
compromise agreement must not be contrary to law, morals, good customs, and
public policy.[16]

In the present case, a reading of paragraph 4 of the Compromise Agreement shows

that it allows the filing of complaints based on the same cause of action (i.e.,
breach of the Management and Royalty Agreements), to wit:
4) It is understood that the execution of this compromise agreement or
the payment of the aforementioned sum of money shall not be
construed as a waiver of or with prejudice to plaintiffs
rights/cause of action, if any, arising from or relative to the pre-
termination of the parties' Management and Royalty
Agreements by the defendant subject to whatever claims and defenses
may have relative thereto; (Emphasis supplied.)

Since paragraph 4 allows the splitting of causes of action and res judicata, this
provision of the Compromise Agreement should be invalidated for being repugnant to
our public policy.

The well-settled rule is that the principle or rule of res judicata is primarily one of
public policy. It is based on the policy against multiplicity of suits,[17] whose primary
objective is to avoid unduly burdening the dockets of the courts.

Speaking through Justice J.B.L. Reyes, the Court in Aguila v. J.M. Tuason & Co., Inc.
[18] held that:
Public policy is firmly set against unnecessary multiplicity of suits;
the rule of res judicata, like that against splitting causes of action,
are all applications of the same policy, that matters once settled by a
Court's final judgment should not thereafter be invoked against.
Relitigation of issues already settled merely burdens the Courts and the
taxpayers, creates uneasiness and confusion, and wastes valuable time
and energy that could be devoted to worthier cases. As the Roman maxim
goes, Non bis in idem.[19] (Emphasis supplied.)

Because it is contrary to our policy against multiplicity of suits, we cannot uphold

paragraph 4 of the Compromise Agreement to be valid, for we would then render
legitimate the splitting of causes of action and negate the prohibition against res
judicata. Under Article 1409 of the Civil Code, contracts which are contrary to public
policy and those expressly prohibited or declared void by law are considered
inexistent and void from the beginning.

In sum, we declare paragraph 4 of the Compromise Agreement null and void for being
contrary to public policy.
WHEREFORE, premises considered, we GRANT the petition. The decision dated
January 11, 2006, of the Court of Appeals in CA-G.R. CV No. 83824 is
hereby REVERSED and SET ASIDE. Accordingly, the decision dated September 29,
2004, of the Regional Trial Court, Branch 57, Makati City, in Civil Case No. 03-399
is REINSTATED.

SO ORDERED.

LAJAVE AGRICULTURAL MANAGEMENT v. SPS. AGUSTIN JAVELLANA AND

FLORENCE APILIS-JAVELLANA, GR No. 223785, 2018-11-07
Facts:
On July 7, 1987, Agustin Javellana's (Agustin) father, the late Justice Luis Javellana,
executed a Deed of Absolute Sale transferring ownership of a property containing an
area of forty-nine (49) hectares located in Silay City, Negros Occidental in favor of
Agustin and his six (6) siblings. The ownership over the remaining area of the Silay
City property was transferred to Agustin and his co-owners through intestate
succession when the late Justice Javellana passed away on August 25, 1993 without
leaving any last will and testament.
On May 13, 1998, for the purpose of planting sugarcane and other agricultural crops,
petitioner Lajave Agricultural Management and Development Enterprises, Inc.
(Lajave) entered into a Contract of Lease[4] with Agustin for the lease of the latter's
portion of the property
When the contract of lease expired after the crop year 1997-1998, Lajave continued
to use and occupy the sugar farms in Hacienda San Isidro in Silay City without any
renewal or extension of the contract. Agustin alleged that Lajave's occupancy was
merely tolerated. Lajave paid Agustin the annual compensation for the use and
occupancy of the said properties, but the latter alleged that they were never apprised
of how the annual rental was determined and the payment of lease rentals was more
often delayed.
Thus, on March 1, 2010, Agustin sent a demand letter[6] to Lajave to vacate the
property in Silay City. The same demand to vacate was reiterated in a letter[7] dated
March 5, 2012. Subsequently, on March 5, 2012, Agustin also sent a demand letter[8]
to Lajave to vacate the property in Talisay City. However, despite demands to vacate
the subject properties, Lajave continued to occupy the latter... unlawful detainer in
the Municipal Trial Court in Cities (MTCC), Silay City, docketed as Civil Case No.
1149-C, involving the property in Hacienda San Isidro, Silay City
Consequently, on September 24, 2012, albeit the pendency of the unlawful detainer
cases, Agustin and his wife also filed a Complaint[11] for collection of sum of money,
docketed as Civil Case No. 12-41648 representing the deficiency in rentals paid for
Lajave's use and occupancy of the properties covering the period 2000-2001 up to
2008-2009.
Issues:
n July 16, 2012, Agustin filed another Complaint [10] for unlawful detainer in the
MTCC, Talisay City, docketed as Civil Case No. (12)-925, pertaining to the property in
Hacienda Sta. Maria, Talisay City
On October 29, 2012, Lajave filed a Motion to Dismiss[12] on the following grounds:
(1) the complaint violates the rules against splitting a single cause of action under
Rule 2, Section 4 of the Rules of Court and litis pendentia
Lajave asserted that the complaint for collection of sum of money violated the rules
against splitting a single cause of action. It argued that the complaint for collection of
money should be dismissed on the ground of litis pendentia because the parties, the
rights asserted and reliefs sought in the complaint for collection of sum of money
were one and the same with the unlawful detainer cases pending before the courts in
Silay City and Talisay City.
In a nutshell, the issue is whether, during the pendency of Agustin's complaints for
unlawful detainer, he can also independently maintain an action for collection of sum
of money which allegedly stemmed from incidents occurring before the possession by
Lajave of the leased properties became unlawful, without violating the prohibition on
splitting of a single cause of action, litis pendentia and forum shoppin
Ruling:
oth cases were dismissed for lack of jurisdiction to try the case (Civil Case No. 1149-
C) and lack of cause of action and jurisdiction (Civil Case No. 12-925
However, in determining whether a party violated the rule against forum shopping,
the most important factor to consider is whether the elements of litis pendentia
concur, to reiterate: "(a) [there is] identity of parties, or at least, such parties who
represent the same interests in both actions; (b) [there is] identity of rights asserted
and relief prayed for, the relief being founded on the same facts; and (c) [that] the
identity with respect to the two preceding particulars in the two cases is such that any
judgment that may be rendered in the pending case, regardless of which party is
successful, would amount to res judicata in the other case."In the instant case, a
perusal of the records shows that the second and third requirements are lacking.
While the complaints appear to involve the the same parties and properties, we find,
however, no identity of causes of action. In the unlawful detainer cases filed by
Agustin, in view of Lajave's failure to vacate the subject properties and non-payment
of rentals, his cause of action stemmed from the prejudice he suffered due to the loss
of possession of his properties and the damages incurred after the dispossession.
Ada vs. Ylon, GR No. 182435 (Aug. 13, 2012)
Facts

Florentino and Maximina Baylon died in 1961 and 1974, respectively. They were
survived by their children Rita, Victoria, Dolores, Panfila, Ramon, and Lilia. Victoria
died in 1981, survived by a daughter, Luz Adanza, one of the petitioners. Ramon, on
the other hand, was survived by respondent Florante Baylon when he died in 1989.

The petitioners allege that Florentino and Maximina Baylon owned 43 parcels of land
in their lifetime and that Rita took possession of the said parcels of land,
appropriating for herself the income from the same. They further allege that Rita used
the income to buy two parcels of land. Because of this, the petitioners wanted to
include those two parcels of land in the partition by filing a civil case.

During the pendency of the case, Rita executed a Deed of Donation dated July 6,
1997, in favor of her nephew Florante Baylon. The petitioners now seek to rescind the
Deed of Donation.

Issue

Should rescission be granted?

Ruling

Yes. Pursuant to Article 1381 (4) of the Civil Code, contracts which “refer to things
under litigation, if they have been entered into by the defendant without the
knowledge and approval of the litigants or of competent judicial authority, are
rescissible.” The rescission of such a contract requires the concurrence of the
following:

1. The defendant, during the pendency of the case, enters into a contract which refers
to the thing subject of litigation

2. The said contract was entered into without the knowledge and approval of the
litigants or of a competent judicial authority

The purpose of Article 1381 (4) is to secure the possible effectivity of the impending
judgment by a court with respect to the thing subject of litigation. The rescission not
preconditioned upon the judicial determination as to the ownership of the thing
subject of litigation. Rita’s failure to inform and seek the approval of the petitioners or
the RTC regarding the conveyance gave the petitioners the right to rescind the said
donation.

Fedman Development Corp. v. Agcaoili

G.R. No. 165025
31 August 2011
SUBJECT : Remedial Law
TOPIC : Filing Fees
FACTS :
Fedman Development Corporation (“FDC”) was the owner and developer of Fedman
Suites Building (“FSB”) in Makati City. Interchem Laboratories Incorporated
(“Interchem”) purchased FSB’s Unit 411 under a contract to sell. Subsequently,
Interchem, with FDC’s consent, transferred all its rights in Unit 411 to Agcaoili.

A dispute between FDC and Agcaoili arose when FDC failed to repair the broken
centralized air-conditioning unit of FSB’s fourth floor. This prompted Agcaoili to
suspend the payment of his condominium dues and the monthly amortizations on the
contract to sell. In response, FDC cut off the electricity supply to Unit 411. Agcaoili
then sued FDC for injunction and damages. The parties subsequently settled and
executed a compromise agreement with the court’s approval.

Sometime after, FDC once again disconnected the electricity supply of Unit 411 for
Agcaoili’s failure to pay his monthly amortizations despite repeated demands. Agcaoili
then lodged a complaint for damages against FDC in the Regional Trial Court (“RTC”),
Makati which was raffled to Branch 150.

The clerk of court assessed the docket fees based on the Agcaoili’s complaint which
however did not specify the amount of moral damages, exemplary damages, and
attorney’s fees. Agcaoili paid the assessed fees.

After trial, the RTC ruled in favor of Agcaoili. On appeal, the Court of Appeals (“CA”)
affirmed the RTC judgment.

Before the Supreme Court, FDC argued that there was a failure to pay the correct
amount of docket fees because the complaint, which was the basis for the assessment
of docket fees, did not specify the amounts of moral damages, exemplary damages,
and attorney's fees; and that the payment of the correct amount of docket fees was
necessary for the RTC to acquire jurisdiction over the case.
ISSUE/S :
Whether or not the RTC has jurisdiction over the case?
HELD :
Yes, the RTC has jurisdiction over the case.

As a rule, the non-payment of the prescribed filing fees at the time of the filing of the
complaint or other initiatory pleading fails to vest jurisdiction over the case in the trial
court.

But where the complainant has paid the amount of filing fees assessed by the clerk of
court, and the amount paid turns out to be deficient, the trial court still acquires
jurisdiction over the case, subject to the payment by the plaintiff of the deficiency
assessment.

Here, Agcaoili had paid the docket fees as assessed by the clerk of court.
Notwithstanding the subsequent finding of deficiency in the docket fees, the RTC
acquired jurisdiction over the case, subject to payment by Agcaoili of the deficiency
assessment.

Hence, the RTC has jurisdiction. The clerk of court is directed to assess and collect the
additional docket fees as fees in lien in accordance with Section 2, Rule 141 of the
Rules of Court.

EDEN BALLATAN AND SPS. BETTY MARTINEZ AND CHONG CHY LING v. CA,
GR No. 125683, 1999-03-02
Facts:
The instant case arose from a dispute over forty-two (42) square meters of residential
land belonging to petitioners.
The parties herein are owners of adjacent lots
Lot No. 24,... 414 square meters in area,... is registered in the name of petitioners
Eden Ballatan
Lots Nos. 25 and 26,... , are registered in the name of... respondent Gonzalo Go
On Lot No. 25, respondent Winston Go, son of Gonzalo Go, Sr., constructed his
house.
etitioner Ballatan constructed her house on Lot No. 24.
he noticed that the concrete fence and side pathway of the adjoining house of
respondent Winston Go encroached on the entire length of the eastern side of her
property.
Her building contractor informed her that the area of her lot was actually less than
that described in the title. Forthwith, Ballatan informed respondent Go of this
discrepancy and his encroachment on her property.
Respondent Go, however, claimed that his house,... including its fence and pathway,
were built within the parameters of his father's lot; and that this lot was surveyed by
Engineer
Jose Quedding, the authorized surveyor of the Araneta Institute of Agriculture (AIA)
Ballatan called the attention of the AIA to the discrepancy of the land area in her title
and the actual land area received from them. The AIA authorized another survey
Engineer Quedding found that the lot area of petitioner Ballatan was less by a few
meters and that of respondent Li Ching Yao, which was three lots away, increased by
two (2) meters.
Engineer Quedding declared that he made a verification... survey of Lots... of
respondents Go... and allegedly found the boundaries to have been in their proper
position. He, however, could not explain the reduction in Ballatan's area since he was
not present at the time respondents Go constructed their boundary... walls.
Engineer Quedding made a third relocation survey upon request of the parties. He
found that Lot No. 24 lost approximately 25 square meters... that Lot No. 25,
although found to have encroached on Lot No. 24, did not lose nor gain any area;...
petitioner Ballatan made a written demand on respondents Go to remove and
dismantle their improvements on Lot No. 24. Respondents Go refused.
Failing to agree amicably, petitioner Ballatan brought the issue before the barangay.
Respondents Go did not appear... petitioner Ballatan instituted against respondents
Go Civil Case... for recovery of possession before the Regional Trial Court,... the trial
court decided in favor of petitioners.
Respondents Go appealed.
the Court of Appeals modified the decision of the trial court. It affirmed the dismissal
of the third-party complaint against the AIA but reinstated the complaint against Li
Ching Yao and Jose Quedding. Instead of ordering respondents
Go to demolish their improvements on the subject land, the appellate court ordered
them to pay petitioner Ballatan,... Hence, this petition. Petitioners allege that:
Issues:
UNDER THE GUISE OF APPLYING EQUITY BUT IN EFFECT A VERY APPARENT
PARTIALITY AND FAVOR TO RESPONDENTS GO, IT ORDERED PAYMENT OF THE
ENCROACHED AREA AT THE VALUE AT THE TIME OF ITS TAKING AND NOT THE
VALUE AT THE TIME OF PAYMENT, THEREBY ENRICHING THE GO'S BUT DEPRIVING
PETITIONERS OF THE FRUITS OR INCREASE IN VALUE OF THEIR PROPERTY TO
WHICH THEY ARE ENTITLED UNDER THE LAW AS THE REGISTERED OWNERS WITH
TORRENS TITLE IN THEIR NAMES.
Ruling:
The appellate court, however, found that it was the erroneous survey by Engineer
Quedding that... triggered these discrepancies. And it was this survey that respondent
Winston Go relied upon in constructing his house on his father's land. He built his
house in the belief that it was entirely within the parameters of his father's land.
All the parties are presumed to have acted in good faith. Their rights must, therefore,
be determined in accordance with the appropriate provisions of the Civil Code on
property.
Article 448 of the Civil Code provides:
"Art. 448. The owner of the land on which anything has been built, sown or planted in
good faith, shall have the right to appropriate as his own the works, sowing or
planting, after payment of the indemnity provided for in Articles 546 and 548,[27] or
to oblige the one who built or planted to pay the price of the land, and the one who
sowed the proper rent. However, the builder or planter cannot be obliged to buy the
land if its value is considerably more than that of the building or trees. In such case,
he... shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties shall agree upon
the terms of the lease and in case of disagreement, the court shall fix the terms
thereof."
The owner of the land on which anything has been built, sown or planted in good faith
shall have the right to appropriate as his own the building, planting or sowing, after
payment to the builder, planter or sower of the necessary and useful expenses, and in
the proper case,... expenses for pure luxury or mere pleasure. The owner of the land
may also oblige the builder, planter or sower to purchase and pay the price of the
land. If the owner chooses to sell his land, the builder, planter or sower must
purchase the land, otherwise the owner may remove... the improvements thereon.
The builder, planter or sower, however, is not obliged to purchase the land if its value
is considerably more than the building, planting or sowing. In such case, the builder,
planter or sower must pay rent to the owner of the land. If the parties... cannot come
to terms over the conditions of the lease, the court must fix the terms thereof. The
right to choose between appropriating the improvement or selling the land on which
the improvement stands to the builder, planter or sower, is given to the owner of
the... lan
Article 448 has been applied to improvements or portions of improvements built by
mistaken belief on land belonging to the adjoining owner.[29]
On the basis of these facts, we held that:
"The Court, therefore, concludes that the plaintiffs are builders in good faith and the
relative rights of the defendant Mamerta Cabral as owner of the land and of the
plaintiffs as owners of the building is governed by Article 361 of the Civil Code

Proton Pilipinas Corporation et. al. v. Banque Nationale de Paris

G.R. No. 151242
15 June 2005
SUBJECT : Remedial Law
TOPIC : Filing Fees
FACTS :
Proton Pilipinas Corporation (“Proton”) availed of credit facilities of Banque Nationale
de Paris (“BNP”). To guarantee the payment of Proton’s obligation, co-petitioners
Automotive Corporation Philippines (“Automotive”), Asea One Corporation (“Asea”),
and Autocorp Group (“Autocorp”) executed a corporate guarantee to the extent of
US$2,000,000.00. Subsequently, Proton and BNP entered into three trust receipt
agreements.

Under the terms of the trust receipt agreements, Proton would receive imported
passenger motor vehicles and hold them in trust for BNP. Proton would be free to sell
the vehicles subject to the condition that it would deliver the proceeds of the sale to
BNP, to be applied to its obligations to it. In case the vehicles are not sold, Proton
would return them to BNP, together with all the accompanying documents of title.

Allegedly, Proton failed to deliver the proceeds of the sale and return the unsold
motor vehicles. Pursuant to the corporate guarantee, BNP demanded from
Automotive, Asea and Autocorp the payment of the amount of US$1,544,984.40
representing Proton's total outstanding obligations. These guarantors refused to pay.

Hence, BNP filed a complaint before the Regional Trial Court (“RTC”), Makati praying
that the petitioners be ordered to pay (1) US$1,544,984.40 plus accrued interest and
other related charges thereon until fully paid and (2) an amount equivalent to 5% of
all sums due from petitioners as attorney's fees.

The clerk of court assessed the filing fees based on the amount prayed for but
exclusive of interest.

Proton et. al. filed a motion to dismiss on the ground of lack of jurisdiction due to
incorrect payment of filing fees. Proton claimed that interest should have been
included in the computation of filing fees. The RTC denied the motion to dismiss
stating that the correct filing fees were paid. The Court of Appeals upheld the denial.
ISSUE/S :
Whether or not the correct filing fees were assessed and paid?

Whether or not the RTC acquired jurisdiction over the case?

HELD :
FILING FEES

No, the correct filing fees were not paid. For the instant complaint, the Rules of Court
requires that the computation of filing fees be inclusive of interest.

Here, the clerk of court should have assessed the filing fee by taking into
consideration the total sum claimed, inclusive of interest, damages of whatever kind,
attorney's fees, litigation expenses, and costs, or the stated value of the property in
litigation.

JURISDICTION

Yes, the RTC acquired jurisdiction over the case. Notwithstanding the incorrect
assessment and payment of filing fees, the RTC acquired jurisdiction over the case
because the complainant had no intention to defraud the government.

In case of incorrect assessment and payment of filing fees, the trial court does not
acquire jurisdiction only when it is shown that the complainant intended to defraud
the government. Absent such intent, the complainant should be given a reasonable
time to pay the deficient filing fees.

Hence, the clerk of court of the RTC is ordered to reassess and determine the filing
fees that should be paid by BNP which must pay the same within fifteen (15) days,
provided the applicable prescriptive or reglementary period has not yet expired.
Thereafter, the trial court is ordered to proceed with the case with utmost dispatch.

Spouses Algura v.The Local Government Spouses Algura v.The Local Government Unit
of the City of Naga: Unit of the City of Naga:* Access to Justice by the Impoverished
Algura v. The Local Government Unit of the City of Naga was a case that involved the
litigants’ privilege as indigents to seek exemption from the payment of docket and
legal fees. The Court recognized that “one of the most precious rights which may be
shielded and secured is the unhampered access to the justice system by the poor, the
underprivileged, and the marginalized.” Filing fees, though essential in court
procedures, should not be an obstacle to poor litigants’ opportunity to seek redress
for their grievances before the courts. The Facts On September 1, 1999, Spouses
Antonio F. Algura and Lorencita S. J. Algura filed a Verified Complaint for damages
against the Naga City government and its officers. They alleged that the defendants
had caused the illegal demolition of their residence, thus depriving them of income in
the form of monthly rentals amounting to P7,000 paid by their boarders.
Accompanying the Complaint was petitioners’ ex parte Motion to institute action as
indigent litigants. To this Motion was appended Antonio Algura’s pay slip showing a
gross monthly income of P10,474.00 and a net pay of P3,616.99 for the month of July
1999. Also attached was a certification by the Office of the City Assessor of Naga City,
stating that petitioners had no property declared in their names for taxation purposes.
The city government filed a Motion to Disqualify the spouses for nonpayment of filing
fees. Respondents had asserted that in addition to the net income of Antonio, who
was a member of the Philippine National Police, Lorencita had a ministore and a
computer shop on the ground floor of their residence. Allegedly, petitioners were not
indigent litigants, as they also derived additional income from several boarders who
paid them rentals, according to respondents. On April 14, 2000, the Naga City RTC
issued an Order disqualifying petitioners from being recognized as indigent litigants.
They had allegedly failed to substantiate their claim for exemption from payment of
legal fees and from compliance with the third paragraph of Section 18 of Rule 141 of
the Revised Rules of Court, directing them to pay the requisite filing fees. Petitioners
filed a Motion for Reconsideration. On May 5, 2000, the trial court issued an Order
giving them the opportunity to comply with Section 18 of Rule 141, which had laid
down the requisites for qualifying as an indigent litigant. Petitioners subsequently
submitted their Compliance, to which was attached the Affidavits of Petitioner
Lorencita Algura and one Erlinda Bangate. In her Affidavit, Lorencita claimed that the
demolition of their small dwelling deprived them of a monthly income amounting to
P7,000. This situation forced them, including their six minor children, to rely mainly
on her husband’s P3,500 monthly salary as a policeman. She said that the family’s
basic necessities could not be covered sufficiently by this salary, the meager income
from her small sari-sari store, and the rentals from some boarders. Furthermore, they
did not own any real property, as certified by the Naga City assessor’s office. On the
other hand, Erlinda Bangate attested under oath that she personally knew the Algura
spouses, who were her neighbors. She corroborated Lorencita’s statements.
Petitioners’ Motion for Reconsideration was denied by the Naga City RTC. The lower
court held that the gross income or total earnings of the Alguras amounted to
P10,474, which was over and above the amount of P3,000 a month set under Rule
141, Section 18, for pauper litigants residing outside Metro Manila. Nowhere in her
Affidavit did Lorencita deny that she and her immediate family earned a gross income
of P3,000. The Issue The Alguras raised the solitary issue of whether they should be
considered indigent litigants qualified for exemption from the payment of filing fees.
The Court’s Ruling Tracing the history of the Rules of Court on suits in forma pauperis
(pauper litigant), the High Court, through Justice Presbitero J. Velasco Jr.,[1] clarified
the pertinent rules as follows: 1. When an application to litigate as an indigent party
is filed, the court shall scrutinize the affidavits and supporting documents submitted,
in order to determine if the income and property standards prescribed in the present
Section 19 of Rule 141 have been met. The court must determine if: (1) the
applicant’s gross income and that of the immediate family do not exceed an amount
double the monthly minimum wage of an employee; and (2) the applicant does not
own real property with a fair market value of more than P300,000. If the trial court
finds that these income and property requirements have been met, it automatically
grants the applicant the authority to litigate as an indigent litigant, and the grant is a
matter of right. 2. If the trial court finds that one or both requirements have not been
met, it shall set a hearing to enable the presentation of proof that the applicant has
“no money or property sufficient and available for food, shelter and basic necessities
for himself and his family.” In that hearing, the adverse party may adduce
countervailing evidence to disprove the evidence presented by the applicant.
Afterwards, the trial court will rule on the application, depending on these
presentations. Section 21 of Rule 3 also provides that the adverse party may still
contest the grant of the authority later, at any time before judgment is rendered by
the trial court. This challenge may be based on newly discovered evidence not
obtained at the time the application was heard. If the court determines after hearing
that the party declared as an indigent is in fact a person with sufficient income or
property, the proper docket and other lawful fees shall be assessed and collected by
the clerk of court. If payment is not made within the time fixed by the court,
execution shall issue or the payment of prescribed fees shall be made, without
prejudice to other sanctions the court may impose. In the instant case, the Affidavits
and Certifications submitted by Petitioners Algura showed that they did not own real
property; hence, the property requirement was met. With respect to the income
requirement, however, it was clear that the combined gross monthly incomes of
Antonio and Lorencita -- in the amounts of P10,474 and P3,000 respectively -- were
above the P1,500 monthly income threshold prescribed by the earlier Rule 141. As
the income requirement was not satisfied, the trial court should have set a hearing to
give the Alguras the opportunity to prove that they had “no money or property
sufficient and available for food, shelter and basic necessities for himself and his
family.” Because of the failure of the RTC to set a hearing for the Motion of the
spouses to litigate as paupers, its Orders disqualifying them from doing so were set
aside by the Supreme Court. * GR No. 150153, October 30, 2006

Maranaw Hotels and Resort Corporation v. Court of Appeals

G.R. No. 149660, 20 January 2009

FACTS:

Private respondent Oabel was initially hired by petitioner as an extra beverage

attendant in Century Park Hotel, an establishment owned by the petitioner. Petitioner
then contracted with Manila Resource Development Corporation.

Subsequently, private respondent Oabel was transferred to MANRED, with the latter
deporting itself as her employer.
Private respondent filed before the Labor Arbiter a petition for regularization of
employment against the petitioner. However, private respondent Oabel was dismissed
from employment such that she converted her petition for regularization into a
complaint for illegal dismissal.

The Labor Arbiter dismissed the complaint but was overturned by NLRC. Petitioner
subsequently appealed before the Court of Appeals but the same was dismissed since
the certification of non-forum shopping was only subscribed and verified by the
Personnel Director of petitioner corporation without attaching thereto his authority to
do so for and in behalf of petitioner corporation per board resolution or special power
of attorney executed by the latter.

ISSUE:

Whether the certification which was subscribed and verified by the Personnel Director
of petitioner corporation constitutes substantial compliance.

RULING:

No.Petitioner relies upon this Court’s ruling in Digital Microwave Corp. v. Court of
Appeals to show that its Personnel Director has been duly authorized to sign
pleadings for and in behalf of the petitioner. Petitioner, however, has taken the ruling
in Digital Microwave out of context. The portion of the ruling in Digital
Microwave upon which petitioner relies was in response to the issue of impossibility
of compliance by juridical persons with the requirements of Circular 28-91.The Court’s
identification of duly authorized officers or directors as the proper signatories of a
certificate of nonforum-shopping was in response to that issue. The ruling does not,
however, ipso facto clothe a corporate officer or director with authority to execute a
certificate of non-forum shopping by virtue of the former’s position alone.

Any doubt on the matter has been resolved by the Court’s ruling in BPI Leasing
Corp. v. Court of Appeals where this Court emphasized that the lawyer acting for
the corporation must be specifically authorized to sign pleadings for the corporation.
Specific authorization, the Court held, could only come in the form of a board
resolution issued by the Board of Directors that specifically authorizes the counsel to
institute the petition and execute the certification, to make his actions binding on his
principal, i.e., the corporation.

FIVE STAR BUS COMPANY, INC. vs. COURT OF APPEALS G.R. No.
127064, August 31, 1999

Facts: A civil case for damages was filed against petitioners when the passenger  bus
owned and operated by the petitioner company collided with a Mini-Van. When
amicable settlement failed, trial ensued. The presentation of evidence by petitioners
was rescheduled for six times for failure of the petitioner’s counsel to appear on time,
for  conflict of schedule of their counsel, among others. The court then issued the
disputed order – “There being no certainty as to what time defendants’ counsel would
be in court, x x x the defendants’ right to present their evidence is deemed waived
and the case is how submitted for decision x x x.”
Issue: Can the petitioner’s counsel be held liable for the delay in the proceedings of 
the case?

Held: YES. The fact that a party is represented by a law firm means that any of its
members could lawfully act as his counsel during the trial. As such petitioner’s
frequent motions to reset hearings by reason of their counsel’s unavailability should
be cautiously considered to make sure that these were not mere dilatory tactics. As
observed by the lower court, a perusal of the records shows that the case has been
pending for a long period of time, with the court often accommodating petitioners.
Thus there could be no grave abuse of discretion when the trial court finally ordered
petitioner’s right to present evidence as waived to put an end to their footdragging.

Remedial Law (Cases Penned by J. Velasco) Dean’s Circle 2016 which transpired after
the filing of the first CA Petition. The causes of action are clearly distinct. Although
private respondent PKE alleged in both petitions that there was grave abuse of
discretion of the acting presiding judge, that prayer alone does not imply that there
are similar facts, issues, and causes of action. CAGAYAN VALLEY DRUG
CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE G.R. No. 151413,
February 13, 2008, Velasco J. The following officials or employees of the company can
sign the verification and certification without need of a board resolution: (1) the
Chairperson of the Board of Directors, (2) the President of a corporation, (3) the
General Manager or Acting General Manager, (4) Personnel Officer, and (5) an
Employment Specialist in a labor case. Facts: Cagayan Valley Drug Corporation
granted 20% discount to senior citizens and treated the same as deductions from the
gross sales instead of treating them as tax credit in order to arrive at the net sales.
However, the corporation filed with BIR a claim for tax refund/credit of the full
amount of the 20% sas discount it granted to senior citizens for the year 1995. Due
to the inaction of BIR, the corporation appealed to CTA in order to forestall the 2-year
prescriptive period provided by the law, but the CTA dismissed the petition.
Aggrieved, the corporation elevated the matter to CA which dismissed the petition on
procedural grounds. It held that the person who signed the verification and
certification of absence of forum shopping, a certain Jacinto J. Concepcion, President
of petitioner, failed to adduce proof that he was duly authorized by the board of
directors to do so. Issue: Whether or not the verification and certification of non-
forum shopping signed by the President of the corporation without the approval of the
Board of Directors is a sufficient compliance with the rules. Ruling: Yes. The following
officials or employees of the company can sign the verification and certification
without need of a board resolution: (1) the Chairperson of the Board of Directors, (2)
the President of a corporation, (3) the General Manager or Acting General Manager,
(4) Personnel Officer, and (5) an Employment Specialist in a labor case. While the
above cases do not provide a complete listing of authorized signatories to the
verification and certification required by the rules, the determination of the sufficiency
of the authority was done on a case to case basis. The rationale applied in the
foregoing cases is to justify the authority of corporate officers or representatives of
the corporation to sign the verification or certificate against forum shopping, being "in
a position to verify the truthfulness and correctness of the allegations in the petition."
In the case at bar, we so hold that the corporation substantially complied with Secs. 4
and 5, Rule 7 of the 1997 Revised Rules on Civil Procedure. First, the requisite board
resolution has been submitted albeit belatedly by petitioner. Second, we apply our
ruling in Lepanto with the rationale that the President of petitioner is in a position to
verify the truthfulness and correctness of the allegations in the petition. Third, the
President of petitioner has signed the complaint before the CTA at the inception of
this judicial claim for refund or tax credit.

FCD PAWNSHOP vs. UNION BANK

FCD PAWNSHOP AND MERCHANDISING COMPANY, ET AL. VS. UNION BANK
OF THE PHILIPPINES, ET AL.
G.R. NO. 207914
JANUARY 18, 2017

FACTS:

Together with Felicitas Dionisio-Juguilon and Adelaida Dionisio, petitioners Fortunato

C. Dionisio, Jr, and Franklin C. Dionisio owned FCD Pawnshop and Merchandising
Company, which in turn was the registered owner of a pared of fond in Makati under
Transfer Certificate of Title No. (168302) S-3664, or TCT (168302) S-3664.
In 2009, Fortunato and Franklin entrusted the original owner’s copy of TCT (168302)
S-3664 to Atty. Rowena Dionisio. It was later discovered that the said title was used
as collateral by Sunyang Mining Corporation to obtain a ₱20 million loan from
respondent Union Bank of the Philippines (UBP).
Civil Case No. 11-116 – for annulment of mortgage
On February 9, 2011, Fortunato and Franklin filed against UBP, Sunyang, the Registry
of Deeds of Makati, and several others Civil Case No. 11-116, a Petition to annul the
Sunyang mortgage and claim for damages, based on the premise that TCT (168302)
S-3664 was fraudulently mortgaged.
Civil Case No. 11-1192 – for annulment of foreclosure sale and certificate of sale
On account of perceived irregularities in the foreclosure and sale proceedings,
Fortunato and Franklin filed in December 2011 a Complaint against UBP, the Registry
of Deeds of Makati, and several others for annulment of the extrajudicial foreclosure
and certificate of sale issued, with injunctive relief.
In a written opposition, UBP claimed that the filing of Civil Case No. 11-1192 violated
the rule against forum shopping. On March 26, 2012, Branch 133 issued an Order
dismissing Civil Case No. 11-1192 on the ground of forum shopping. Fortunato and
Franklin moved to reconsider, but the trial court, in a June 14, 2012, held its ground,
Petitioners filed an original Petition for Certiorari before the CA docketed as CA-G.R.
SP. No. l26075. However, claiming that there is no forum shopping. On February 28,
2013, the CA rendered the assailed Decision dismissing the Petition.
A Motion for Reconsideration was filed, but the same was denied in a June 28, 2013
Resolution of the CA.
ISSUES:
Whether in maintaining Civil Case Nos. 11-116 and 11-1192, Petitioners are not guilty
of forum shopping, nor did they violate the rule on litis pendentia.
RULING OF THE COURT:
It so happened that the assigned ponente has had the occasion to rule on a case
where a party instituted two cases against the same set of defendants – one for the
annulment of a real estate mortgage, and a second for injunction and nullification of
the extrajudicial foreclosure and consolidation of title, rooted in the same real estate
mortgage – who moved to dismiss the second case on the ground of forum shopping,
claiming that both cases relied on a determination of the same issue: that is, the
validity of the real estate mortgage. The trial court dismissed the second case, but
the CA ordered its reinstatement. The ponente affirmed the trial court, declaring as
follows:
There is forum shopping ‘when a party repetitively avails of several judicial remedies
in different courts, simultaneously or successively, all substantially founded on the
same transactions and the same essential facts and circumstances, and all raising
substantially the same issues either pending in or already resolved adversely by some
other court.’ The different ways by which forum shopping may be committed were
explained in Chua v. Metropolitan Bank & Trust Company:
Forum shopping can be committed in three ways: (1) filing multiple cases based on
the same cause of action and with the same prayer, the previous case not having
been resolved yet (where the ground for dismissal is litis pendentia); (2) filing
multiple cases based on the same cause of action and the same prayer, the previous
case having been finally resolved (where the ground for dismissal is res judicata); and
(3) filing multiple cases based on the same cause of action but with different prayers
(splitting causes of action, where the ground for dismissal is also either litis pendentia
or res judicata).
The factual milieu in the present case is the same as in the above-cited cases. The
plaintiffs in both cases first filed a case for annulment of the mortgage, followed by
the case for annulment of the foreclosure proceedings. For this reason, the underlying
principle in these previously decided cases must apply equally to the instant case.
Thus, the Court completely agrees with the CA’s findings that in the event that the
court in Civil Case No. 11-116 (annulment of mortgage case) should nullify the
Sunyang mortgage, then subsequent proceedings based thereon, including the
foreclosure, shall also be nullified. Notably as well, the CA’s observation in Civil Case
No. 11-1192 (case for annulment of foreclosure and sale) – that since the complaint
therein repeatedly makes reference to an “unlawful” and “fraudulent” Sunyang
mortgage, then the same evidence in Civil Case No. 11-116 will have to be utilized- is
well-taken.
Petitioners maintain that Civil Case No. 11-1192 (case for annulment of foreclosure
and sale) is grounded on specific irregularities committed during the foreclosure
proceedings. However, their Complaint in said case reiterates the supposed illegality
of the Sunyang mortgage, thus presenting the court in said case with the opportunity
and temptation to resolve the issue of validity of the mortgage. There is therefore a
danger that a decision might be rendered by the court in Civil Case No. 11-1192 that
contradicts the eventual ruling in Civil Case No. 11-116, or the annulment of
mortgage case.
The rules of procedure are geared toward securing a just, speedy, and inexpensive
disposition of every action and proceeding. “Procedural law has its own rationale in
the orderly administration of justice, namely, to ensure the effective enforcement of
substantive rights by providing for a system that obviates arbitrariness, caprice,
despotism, or whimsicality in the settlement of disputes.” With these principles in
mind, the Court would rather have petitioners try their cause of action in Civil Case
No. 11-116, rather than leave the trial court in danger of committing error by issuing
a decision or resolving an issue in Civil Case No. 11-1192 that should properly be
rendered or resolved by the court trying Civil Case No. 11-116.
The Court denied the petition, and the February 28, 2013 Decision and June 28, 2013
Resolution of the Court of Appeals in CA-G.R. SP. No. 126075 are affirmed. Digested
by jsg

Bacolor et, al. vs. Makabali Memorial Hospital Inc. – G.R. No. 204325, April
18, 2016

Facts:
The case stemmed from an amended Complaint for illegal dismissal and money claims
filed by Petitioners against the Respondents, Allegedly, the Hospital engaged the
Petitioners as resident physicians assigned in its ER for one year, Despite the
expiration of their contracts, the Hospital continued to employ the Petitioner. The
Respondent then after instructed them to resign, and re-apply to the Hospital as
resident physicians under a one year fixed term contract. They further alleged that
Respondent  later directed them to sign a waiver and offered them “gratitude” pay of
₱27,000.00 but they refused to resign; and because of their refusal, respondents
demoted them as assistant physicians in the Operating Room (OR) of the Hospital.

Additionally, petitioners insisted that to compel them to resign, respondents issued

notices to explain to Petitioner. In particular, Petitioners were charged various
reasons. Consequently, petitioners filed a case for constructive illegal dismissal
against respondents. They argued that despite their complaint, respondents still
conducted an administrative investigation against them.

Petitioner received notices of termination from the Hospital. Petitioners contended

that they were constructively dismissed when respondents demoted them as assistant
physicians in the OR of the Hospital. They stated that such demotion was neither
necessary nor temporary, and was arbitrarily done to force them to resign.

LA rendered a Decision finding respondents guilty of illegally dismissing petitioners as

well as ordering respondents to pay them backwages from the time of their dismissal
until finality of the Decision, and separation pay. The Hospital appealed to the
National Labor Relations Commission Ruling of the National Labor Relations
Commission, the NLRC reversed and set aside the LA Decision and dismissed the
complaints. NLRC denied petitioners motion for reconsideration.

Aggrieved, petitioners filed a Petition for Certiorari with the CA ascribing grave abuse
of discretion on the part of the NLRC in giving due course to the appeal despite its
alleged lack of appeal bond; and in reversing the LA Decision. The Petition was
accompanied by three separate Verifications/Certificates of Non-Forum Shopping
signed by only 3 Petitioner and their Lawyer instead of all six.

CA issued the assailed Resolution dismissing the Petition for Certiorari for containing a
defective Verification/Certification of Non-Forum Shopping.

Issue:
 Whether the CA erred in outright dismissing the Petition for being filing of defective
verification and certificate against forum shopping

Held:

Yes, the Court summarized the basic tenets involving noncompliance with the
requirements on or filing of defective verification and certificate against forum
shopping, to wit:

1. A distinction must be made between non-compliance with the requirement on

or submission of defective verification, and non-compliance with the requirement
on or submission of defective certification against forum shopping.
2. As to verification, non-compliance therewith or a defect therein does not
necessarily render the pleading fatally defective. The court may order its submission
or correction or act on the pleading if the attending circumstances are such that strict
compliance with the Rule may be dispensed with in order that the ends of justice may
be served thereby.
3. Verification is deemed substantially complied with when one who has ample
knowledge to swear to the truth of the allegations in the complaint or petition signs
the verification, and when matters alleged in the petition have been made in good
faith or are true and correct.
4. As to certification against forum shopping, non-compliance therewith or a defect
therein, unlike in verification, is generally not curable by its subsequent submission or
correction thereof, unless there is a need to relax the Rule on the ground of
“substantial compliance” or presence of “special circumstances or compelling
reasons”.
5. The certification against forum shopping must be signed by all the plaintiffs or
petitioners in a case; otherwise, those who did not sign will be dropped as parties to
the case. Under reasonable or justifiable circumstances, however, as when all the
plaintiffs or petitioners share a common interest and invoke a common cause of
action or defense, the signature of only one of them in the certification against forum
shopping substantially complies with the Rule.
6. Finally, the certification against forum shopping must be executed by the party-
pleader, not by his counsel. If, however, for reasonable or justifiable reasons, the
party-pleader is unable to sign, he must execute a Special Power of Attorney
designating his counsel of record to sign on his behalf.

Nonetheless, the CA failed to consider the concept of “substantial compliance” to the

requirements of verification and certificate of non-forum shopping, as it has been
shown that three of the six petitioners executed their own verification and certificate
against forum shopping.
The verification of a pleading is a formal and not a jurisdictional requirement. It is
intended to assure that the allegations in a pleading are true and correct. As such,
the court may order the correction of unverified pleadings, or it may act on them and
waive strict compliance with the rules.

The verification requirement is deemed substantially complied with when a person

who has sufficient knowledge to swear to the truth of the allegations in the complaint
or petition signs the verification; and matters alleged therein have been made in good
faith or are true and correct. Thus, there is substantial compliance if at least one of
the petitioners makes a proper verification.