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Manchester Development vs Court of Appeals

May 7, 1987

A complaint for specific performance was filed by Manchester Development Corporation against City Land
Development Corporation to compel the latter to execute a deed of sale in favor Manchester. Manchester also alleged
that City Land forfeited the formers tender of payment for a certain transaction thereby causing damages to
Manchester amounting to P78,750,000.00. This amount was alleged in the BODY of their Complaint but it was not
reiterated in the PRAYER of same complaint. Manchester paid a docket fee of P410.00 only. Said docket fee is
premised on the allegation of Manchester that their action is primarily for specific performance hence it is incapable of
pecuniary estimation. The court ruled that there is an under assessment of docket fees hence it ordered Manchester to
amend its complaint. Manchester complied but what it did was to lower the amount of claim for damages to P10M.
Said amount was however again not stated in the PRAYER.

ISSUE: Whether or not the amended complaint should be admitted.

HELD: No. The docket fee, its computation, should be based on the original complaint. A case is deemed filed only
upon payment of the appropriate docket fee regardless of the actual date of filing in court. Here, since the proper
docket fee was not paid for the original complaint, its as if there is no complaint to speak of. As a consequence, there
is no original complaint duly filed which can be amended. So, any subsequent proceeding taken in consideration of the
amended complaint is void.

Manchesters defense that this case is primarily an action for specific performance is not merited. The Supreme Court
ruled that based on the allegations and the prayer of the complaint, this case is an action for damages and for specific
performance. Hence, it is capable of pecuniary estimation.

Further, the amount for damages in the original complaint was already provided in the body of the complaint. Its
omission in the PRAYER clearly constitutes an attempt to evade the payment of the proper filing fees. To stop the
happenstance of similar irregularities in the future, the Supreme Court ruled that from this case on, all complaints,
petitions, answers and other similar pleadings should specify the amount of damages being prayed for not only in the
body of the pleading but also in the prayer, and said damages shall be considered in the assessment of the filing fees in
any case. Any pleading that fails to comply with this requirement shall not bib accepted nor admitted, or shall
otherwise be expunged from the record.
Vlason Enterprises vs. CA
330 SCRA 26 (1999) G.R. Nos. 121662-64. July 6, 1999.

Facts:
Ruling that the judgment sought to be reviewed has become final and executory, the Court of Appeals ordered the
Regional Trial Court to take appropriate action on the urgent ex parte motion for issuance of a writ of execution filed
by private respondent. Pursuant thereto, the Regional Trial Court of Manila issued a writ of possession thus placing
private respondent in possession of petitioner's barge Lawin. Hence, this petition.

The case filed by private respondent with the trial court involved multiple defendants. Several defendants entered into a
compromise agreement with private respondent. A compromise agreement is immediately final and executory. As to
these defendants therefore, the trial court Decision had become final. Nevertheless, said decision cannot be said to have
attained finality as to petitioner, which was not a party to the compromise. Moreover, petitioner filed a Motion for
Reconsideration two days before the lapse of the reglementary period to appeal. Execution shall issue as matter of right
upon the expiration of the period to appeal if no appeal has been duly perfected.

Issue:
Whether or not the trial court acquired jurisdiction over the petitioner in this case.

Held:
NO. The sheriff's return showed that the president of petitioner corporation was served summons through his secretary.
A summons addressed to a corporation and served on the secretary of the President binds that corporation. The
secretary however, should be an employee of the corporation sought to be summoned. In the case at bar, the secretary
was not an employee of petitioner but of Vlasons Shipping, Inc.

Acting under the impression that petitioner had been placed under its jurisdiction, the trial court dispensed with the
service on petitioner of new summons for the subsequent amendments of the petition. But the first service of summons
on petitioner was invalid. Thus, the trial court never acquired jurisdiction over the petitioner. Not having been validly
served summons, it would be legally impossible to declare petitioner to be in default. A default judgment cannot affect
the rights of a party who was never declared in default.
PHILIPPINE BANK OF COMMUNICATIONS, Petitioner, v.
SPOUSES JOSE C. GO and ELVY T. GO, Respondents.
February 14, 2011

FACTS:
Respondent Jose C. Go obtained two loans from PBCom, evidenced by two promissory notes, embodying his
commitment to pay P17,982,222.22 for the first loan, and P80 million for the second loan, within a ten-year period
from September 30, 1999 to September 30, 2009. To secure the two loans, Go executed two pledge agreements,
both dated September 29, 1999, covering shares of stock in Ever Gotesco Resources and Holdings, Inc. The first
pledge, valued at P27,827,122.22, was to secure payment of the first loan, while the second pledge, valued at
P70,155,100.00, was to secure the second loan.

Later, PBCom filed before the RTC a complaint for sum of money with prayer for a writ of preliminary attachment
against Go and his wife, Elvy T. Go. PBCom alleged that Spouses Go defaulted on the two (2) promissory notes,
having paid only three (3) installments on interest paymentscovering the months of September, November and
December 1999. Consequently, the entire balance of the obligations of Go became immediately due and
demandable. PBCom made repeated demands upon Spouses Go for the payment of said obligations, but the
couple imposed conditions on the payment, such as the lifting of garnishment effected by the Bangko Sentral ng
Pilipinas (BSP) on Gos accounts.
Spouses Go filed their Answer with Counterclaim denying the material allegations in the complaint and stating,
among other matters, that:

8. The promissory note referred to in the complaint expressly state that the loan obligation is payable within the
period of ten (10) years. Thus, from the execution date of September 30, 1999, its due date falls on September 30,
2009 (and not 2001 as erroneously stated in the complaint). Thus, prior to September 30, 2009, the loan
obligations cannot be deemed due and demandable.

In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already
acquired, shall depend upon the happening of the event which constitutes the condition. (Article 1181, New
Civil Code)

9. Contrary to the plaintiffs proferrence, defendant Jose C. Go had made substantial payments in terms of his
monthly payments. There is, therefore, a need to do some accounting works (sic) to reconcile the records of
both parties.

10. While demand is a necessary requirement to consider the defendant to be in delay/default, such has not
been complied with by the plaintiff since the former is not aware of any demand made to him by the
latter for the settlement of the whole obligation.

11. Undeniably, at the time the pledge of the shares of stock were executed, their total value is more than the
amount of the loan or at the very least, equal to it. Thus, plaintiff was fully secured insofar as its exposure
is concerned.

12. And even assuming without conceding, that the present value of said shares x x x went down, it cannot
be considered as something permanent since the prices of stocks in the market either increases (sic) or
decreases (sic) depending on the market forces. Thus, it is highly speculative for the plaintiff to consider said
shares to have suffered tremendous decrease in its value. More so, it is unfair for the plaintiff to renounce or
abandon the pledge agreements.

PBCom contended that the Answer interposed no specific denials on the material averments in paragraphs 8 to 11
of the complaint such as the fact of default, the entire amount being already due and demandable by reason of default,
and the fact that the bank had made repeated demands for the payment of the obligations.
The RTC held in favor PBCom ordering the defendants to pay plaintiff jointly and severally the following; the total
amount of P117,567,779.75, plus interests and penalties as stipulated in the two promissory notes; a sum
equivalent to 10% of the amount involved in this case, by way of attorneys fees; and the costs of suit.

On appeal, the CA reversed and set aside the assailed judgment of the RTC, denied PBComs motion for
summary judgment, and ordered the remand of the records to the court of origin for trial on the merits. Hence, this
petition.

ISSUES:
Whether the CA erred or acted in grave abuse of discretion amounting to lack, or excess of jurisdiction in ruling
that there exists a genuine issue as to material facts in the action in spite of the unequivocal admissions made in
the pleadings by respondent.

Whether the CA erred or acted in grave abuse of jurisdiction in holding that issues were raised about the fact or
default, the amount of the obligation, and the existence of prior demand, even when the pleading clearly points to
the contrary.
HELD: The decision of the Court of Appeals is sustained.
REMEDIAL LAW genuine issue
The CA correctly ruled that there exist genuine issues as to three material facts, which have to be addressed
during trial: first, the fact of default; second, the amount of the outstanding obligation, and third, the existence of
prior demand.

Under the Rules, following the filing of pleadings, if, on motion of a party and after hearing, the pleadings,
supporting affidavits, depositions and admissions on file show that, "except as to the amount of damages, there is no
genuine issue as to any material fact, and that the moving party is entitled to a judgment as a matter of
law," summary judgment may be rendered.
This rule was expounded in Asian Construction and Development Corporation v. Philippine Commercial
International Bank, G.R. No. 153827,
April 25, 2006 where it was written:
Under Rule 35 of the 1997 Rules of Procedure, as amended, except as to the amount of damages, when there is no
genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law, summary
judgment may be allowed. Summary or accelerated judgment is a procedural technique aimed at weeding
out sham claims or defenses at an early stage of litigation thereby avoiding the expense and loss of time
involved in a trial.

Under the Rules, summary judgment is appropriate when there are no genuine issues of fact which call for
the presentation of evidence in a full-blown trial. Even if on their face the pleadings appear to raise issues, when
the affidavits, depositions and admissions show that such issues are not genuine, then summary judgment as
prescribed by the Rules must ensue as a matter of law. The determinative factor, therefore, in a motion for
summary judgment, is the presence or absence of a genuine issue as to any material fact.

A "genuine issue" is an issue of fact which requires the presentation of evidence as distinguished from a
sham, fictitious, contrived or false claim. When the facts as pleaded appear uncontested or undisputed, then there is
no real or genuine issue or question as to the facts, and summary judgment is called for. The party who moves for
summary judgment has the burden of demonstrating clearly the absence of any genuine issue of fact, or that the
issue posed in the complaint is patently unsubstantial so as not to constitute a genuine issue for trial. Trial courts
have limited authority to render summary judgments and may do so only when there is clearly no genuine
issue as to any material fact. When the facts as pleaded by the parties are disputed or contested, proceedings for
summary judgment cannot take the place of trial.

Juxtaposing the Complaint and the Answer discloses that the material facts here are not undisputed so as to
call for the rendition of a summary judgment. While the denials of Spouses Go could have been phrased
more strongly or more emphatically, and the Answer more coherently and logically structured in order to overthrow
any shadow of doubt that such denials were indeed made, the pleadings show that they did in fact raise material issues
that have to be addressed and threshed out in a full-blown trial.

Rule 8, Section 10 of the Rules of Civil Procedure contemplates three (3) modes of specific denial, namely: 1)
by specifying each material allegation of the fact in the complaint, the truth of which the defendant does not admit,
and whenever practicable, setting forth the substance of the matters which he will rely upon to support his
denial; (2) by specifying so much of an averment in the complaint as is true and material and denying only
the remainder; (3) by stating that the defendant is without knowledge or information sufficient to form a belief as
to the truth of a material averment in the complaint, which has the effect of a denial.

Spouses Gaza. v. Ramon J. Lim and Agnes J. Lim, 443 Phil. 337 (2003).

In this case, however, Spouses Go are not disclaiming knowledge of the transaction or the execution
of the promissory notes or the pledge agreements sued upon. The matters in contention are, as the
CA stated, whether or not respondents were in default, whether there was prior demand, and the
amount of the outstanding loan. These are the matters that the parties disagree on and by which
reason they set forth vastly different allegations in their pleadings which each will have to prove by
presenting relevant and admissible evidence during trial.

Furthermore, in stark contrast to the cited cases where one of the parties disclaimed knowledge of something so
patently within his knowledge, in this case, respondents Spouses Go categorically stated in the Answer that there was
no prior demand, that they were not in default, and that the amount of the outstanding loan would have to be
ascertained based on official records.
The Petition is denied.
Prince Transport, Inc. and Mr. Renato Claros v. Diosdado Garcia, Luisito Garcia, Et. Al.
G.R. No. 167291, January 12, 2011

FACTS:
Prince Transport, Inc. (PTI), is a company engaged in the business of transporting passengers by land; respondents
were hired either as drivers, conductors, mechanics or inspectors, except for respondent Diosdado Garcia (Garcia), who
was assigned as Operations Manager. Sometime in October 2007 the commissions received by the respondents were
reduced to 7 to 9% from 8 to 10%. This led respondents and other employees of PTI to hold a series of meetings to
discuss the protection of their interests as employees. Ranato Claros, president of PTI, made known to Garcia his
objections to the formation of a union and in order to block the continued formation of the union, PTI caused the
transfer of all union members and sympathizers to one of its sub-companies, Lubas Transport (Lubas). The business of
Lubas deteriorated because of the refusal of PTI to maintain and repair the units being used therein, which resulted in
the virtual stoppage of its operations and respondents' loss of employment. Hence, the respondent-employees filed
complaints against PTI for illegal dismissal and unfair labor practice. PTI contended that it has nothing to do with the
management and operations of Lubas as well as the control and supervision of the latter's employees.

ISSUE:
Whether or not the order to reinstate respondents was valid considering that the issue of reinstatement was never
brought up before the CA and respondents never questioned the award of separation pay.

HELD:
YES. It is clear from the complaints filed by respondents that they are seeking reinstatement. Section 2 (c), Rule 7 of
the Rules of Court provides that a pleading shall specify the relief sought, but may add a general prayer for such further
or other reliefs as may be deemed just and equitable. Under this rule, a court can grant the relief warranted by the
allegation and the proof even if it is not specifically sought by the injured party; the inclusion of a general prayer may
justify the grant of a remedy different from or together with the specific remedy sought, if the facts alleged in the
complaint and the evidence introduced so warrant. The general prayer is broad enough to justify extension of a
remedy different from or together with the specific remedy sought. Even without the prayer for a specific remedy,
proper relief may be granted by the court if the facts alleged in the complaint and the evidence introduced so
warrant. The court shall grant relief warranted by the allegations and the proof even if no such relief is prayed for. The
prayer in the complaint for other reliefs equitable and just in the premises justifies the grant of a relief not otherwise
specifically prayed for. In the instant case, aside from their specific prayer for reinstatement, respondents, in their
separate complaints, prayed for such reliefs which are deemed just and equitable.
G.R. No. 149576 August 8, 2006

REPUBLIC OF THE PHILIPPINES, represented by the Land Registration Authority, Petitioner, vs.
KENRICK DEVELOPMENT CORPORATION, Respondent.

FACTS:

This case stemmed from the construction by respondent Kenrick Development Corporation of a concrete
perimeter fence around some parcels of land located behind the Civil Aviation Training Center of the Air
Transportation Office (ATO). Parcels of land were allegedly registered in the name of Alfonso Concepcion. As
a result, the ATO was dispossessed of some 30,228 square meters of prime land. Respondent justified its action
with a claim of ownership over the property.

The Solicitor General filed a complaint for revocation, annulment and cancellation of certificates of title in
behalf of the Republic of the Philippines (as represented by the LRA) against respondent and Alfonso
Concepcion.

On December 5, 1996, respondent filed its answer which was purportedly signed by Atty. Onofre Garlitos, Jr.
as counsel for respondent.

Since Alfonso Concepcion could not be located and served with summons, the trial court ordered the issuance
of an alias summons by publication against him on February 19, 1997.

The case was thereafter punctuated by various incidents relative to modes of discovery, pre-trial,
postponements or continuances, motions to dismiss, motions to declare defendants in default and other
procedural matters.

During the congressional hearing held on November 26, 1998, one of those summoned was Atty. Garlitos,
respondents former counsel. He testified that he prepared respondents answer and transmitted an unsigned
draft to respondents president, Mr. Victor Ong. The signature appearing above his name was not his. He
authorized no one to sign in his behalf either. And he did not know who finally signed it.

With Atty. Garlitos revelation, the Republic promptly filed an urgent motion on December 3, 1998 to declare
respondent in default, predicated on its failure to file a valid answer. The Republic argued that, since the person
who signed the answer was neither authorized by Atty. Garlitos nor even known to him, the answer was
effectively an unsigned pleading. Pursuant to Section 3, Rule 7 of the Rules of Court, 3 it was a mere scrap of
paper and produced no legal effect.

RTC: Granted Republics motion, declared defendant in default, allowed Republic to present evidence ex parte.
It found respondents answer to be sham and false and intended to defeat the purpose of the rules.

Motion for Reconsideration by Respondent: Denied. Petition for certiorari.

CA: Reversed RTC

ISSUE:

Whether or not an answer can be admitted despite the lack of signature by the counsel
RULING:

Only the signature of either the party himself or his counsel operates to validly convert a pleading from one that
is unsigned to one that is signed. Counsels authority and duty to sign a pleading are personal to him. He may
not delegate it to just any person. Procedural requirements which have been labeled as mere technicalities have
their own valid raison d eitre. To summarily brush them aside may result in arbitrariness and injustice.
Procedural rules are promulgated into law designed to facilitate the adjudication of cases and while the court
related the rules from time to time, it must not let it be the last bastion for erring litigants.

The signature of counsel constitutes an assurance by him that he has read the pleading; that, to the best of his
knowledge, information and belief, there is a good ground to support it; and that it is not interposed for delay. Under
the Rules of Court, it is counsel alone, by affixing his signature, who can certify to these matters
.
The preparation and signing of a pleading constitute legal work involving practice of law which is reserved exclusively
for the members of the legal profession. Counsel may delegate the signing of a pleading to another lawyer but cannot
do so in favor of one who is not.

The Code of Professional Responsibility provides:


Rule 9.01 A lawyer shall not delegate to any unqualified person the performance of any task which by law may only
be performed by a member of the Bar in good standing.

Therefore, the blanket authority respondent claims Atty. Garlitos entrusted to just anyone was void. Any act taken
pursuant to that authority was likewise void. There was no way it could have been cured or ratified by Atty. Garlitos
subsequent acts.

Moreover, the transcript of the November 26, 1998 Senate hearing shows that Atty. Garlitos consented to the signing of
the answer by another "as long as it conformed to his draft." We give no value whatsoever to such self-serving
statement. No doubt, Atty. Garlitos could not have validly given blanket authority for just anyone to sign the answer.
The trial court correctly ruled that respondents answer was invalid and of no legal effect as it was an unsigned
pleading. Respondent was properly declared in default and the Republic was rightly allowed to present evidence ex
parte.

The Courts pronouncement in Garbo v. Court of Appeals is relevant:


Procedural rules are [tools] designed to facilitate the adjudication of cases. Courts and litigants alike are thus
[enjoined] to abide strictly by the rules. And while the Court, in some instances, allows a relaxation in the application
of the rules, this, we stress, was never intended to forge a bastion for erring litigants to violate the rules with impunity.
The liberality in the interpretation and application of the rules applies only in proper cases and under justifiable
causes and circumstances. While it is true that litigation is not a game of technicalities, it is equally true that every
case must be prosecuted in accordance with the prescribed procedure to insure an orderly and speedy administration
of justice.

Like all rules, procedural rules should be followed except only when, for the most persuasive of reasons, they may be
relaxed to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying
with the prescribed procedure. In this case, respondent failed to show any persuasive reason why it should be
exempted from strictly abiding by the rules. As a final note, the Court cannot close its eyes to the acts committed by
Atty. Garlitos in violation of the ethics of the legal profession. Thus, he shou
VDA DE FORMOSO V. PNB

DOCTRINE:
The Certificate of Non-Forum Shopping should be signed by all the Petitioners or Plaintiffs in a case, and that the
signing by only one of them is insufficient.
The attestation on Non-Forum Shopping requires personal knowledge by the party executing the same, and the lone
signing Petitioner cannot be presumed to have personal knowledge of the filing or non-filing by his co-petitioners of
any action or claim the same as similar to the current petition.

EMERGENCY RECIT:
Nellie and her late husband obtained a loan from PNB, secured by a real estate mortgage. After some time, Nellie and
her 5 children executed an SPA in favor or Malcaba, authorizing him to secure all papers and documents pertaining to
the loan with real estate mortgage. The Fromosos eventually sold the mortgaged real properties to Malcaba. Malcaba
went to PNB to pay the loan and satisfy the obligation of the Formosos. PNB refused the tender of payment. This
prompted Petitioners to filed a complaint for specific performance against PNB, for it to accept the payment tendered.
RTC, ruled in favor of Petitioners. However, Petitioners still filed a Petition for Relief. RTC, denied the petition.
Petitioners appealed to the CA but the latter denied the petition for failure to comply with rule on the Verification and
Certification of Non-Forum Shopping.

FACTS:
Nellie Panelo Vda. De Formoso (Nellie) and her 5 children executed a Special Power of Attorney (SPA) in favor of
Primitivo Malcaba (Malcaba) authorizing him, among others, to secure all papers and documents including the owners
copies of the titles of real properties pertaining to the loan with Real Estate Mortgage originally secured by Nellie and
her late husband, Benjamin, from PNB.
The Formosos sold the subject mortgaged real properties to Malcaba though a Deed of Absolute Sale. Subsequently,
Malcaba and his lawyer went to PNB to fully pay the loan obligation including interests.
PNB, however, allegedly refused to accept Malcabas tender of payment and to release the mortgage or surrender the
titles of the subject mortgaged real properties.
Petitioners filed a complaint for Specific Performance against PNB in the RTC, praying, among others, that PNB be
ordered to accept the amount tendered by Malcaba, as full settlement of the loan obligation of the Formosos.
OCT. 1999: RTC: Rendered a decision in favor of Petitioners.
o Prayer to order PNB to accept the amount tendered GRANTED
o Prayer for exemplary or corrective damages, attorneys fees, and annual interest, and daily interest, were
DENIED for lack of evidence
PNB:
o Filed a Motion for Reconsideration but it was denied for failure to comply with Rule 15, Sec. 5 of the 1997
Rules of Civil Procedure (ROCP).
o Filed a Notice of Appeal but it was dismissed for being filed out of time.
NOV. 1999: Petitioners received their copy of the decision,
JAN. 2001: Petitioners filed their Petition for Relief questioning the RTC decision, that there was no testimonial
evidence presented to warrant the award for moral and exemplary damages.
o They reasoned out that they could not then file a motion for reconsideration because they could not get hold
of a copy of the transcript of stenographic notes.
AUG. 2001: RTC: Denied the petition for lack of merit.
Petitioners moved for reconsideration but it was denied by the RTC.
Petitioners appealed to the CA challenging the RTC order dated AUG. 2001.
CA: Dismissed the petition.
o The Verification and Certification of Non-forum shopping was signed by only one (Macalba) of the many
Petitioners.
o There was no shooing that the one who signed was empowered to act for the rest.
o Therefore, it cannot be presumed that the one who signed knew to the best of his knowledge whether his co-
petitioners had the same or similar claims or actions filed or pending.
o The certification of non-forum shopping requires personal knowledge of the party who executed the same
and that Petitioners must show reasonable cause for failure to personally sign the certification.
Petitioners filed a motion for reconsideration but was denied. Hence, the present petition.

ISSUE:
1. WON the Petitioners petition for certiorari that they filed before the CA substantially complied with the
requirements provided for under the 1997 ROCP on Verification and Certification of Non-Forum Shopping?
2. WON the CA erred in dismissing the Petition for Certiorari when it should have the petition due course in so far as
Malcaba is concerned because he signed the certification?

HELD/RATIO:
1. NO.
The Petition for Certiorari filed with the CA stated the following names as Petitoners: Nellie Vda. De Fromoso, Ma.
Theresa Formoso-Pescador, Roger Fromoso, Mary Jane Formoso, Bernard Formoso, Benjamin Formoso, and Primitivo
Malcaba.
Admittedly, among the 7 petitioners mentioned, only Malcaba signed the Verification and Certification of Non-forum
Shopping in the subject petition.
There was no proof that Malcaba was authorized by his co-petitioners to sign for them.
There was no SPA shown by the Formosos authorizing Malcaba as their attorney-infact in filing a Petition for Review
on Certiorari. Neither could the Petitioners give at least a reasonable explanation as to why only he signed the
verification and certification of non-forum shopping.
In Docena vs. Lapsesura, the Court ruled that:
o The Certificate of Non-Forum Shopping should be signed by all the Petitioners or Plaintiffs in a case, and
that the signing by only one of them is insufficient.
o The attestation on Non-Forum Shopping requires personal knowledge by the party executing the same, and
the lone signing Petitioner cannot be presumed to have personal knowledge of the filing or non-filing by his
co-petitioners of any action or claim the same as similar to the current petition.
In Athena Computers Inc., and Joselito R. Jimenez vs. Wesnu, the Court ruled that:
o The certification against forum shopping is fatally defective, not having been duly signed by both Petitioners and
thus warrants the dismissal of the Petition for Certiorari.
2. CA did not err in its decision.
The Petitioners were given a chance by the CA to comply with the Rules when they filed their motion for
reconsideration, but they refused to so.
o Despite the opportunity given to them to make them all sign the verification and certification of non-forum
shopping, they still failed to comply.
o Thus, the CA was constrained to deny their motion and affirm the earlier resolution.
Indeed, liberality and leniency were accorded in some cases.
o In these cases, however, those who did not sign were relatives of the lone signatory, so unlike in this case,
where Malcaba is not a relative who is similarly situated with the other Petitioners and who cannot speak for
them.
o In the case of Heirs of Domingo Hernandez, Sr. vs. Plaridel Mingoa, Sr. the Court ruled that:
Here, all the Petitioners are immediate relatives who share a common interest in the land sought to
be recovered and a common cause of action raising the same arguments in support thereof.
There was sufficient basis, therefore for Domingo Hernandez, Jr. to speak for and in behalf of his
co-petitioners when he certified that they had not filed any action or claim in another Court or Tribunal
involving the same issues.
Thus, the Verification/Certification that Hernandez, Jr. executed constitutes substantial compliance
under the Rules.
ROBERN DEVELOPMENT CORP. VS. QUITAIN
315 SCRA 150 (1999)

Facts: P filed a complaint for eminent domain against D. Instead of filing an answer, D countered with a Motion to
Dismiss, alleging, among other things, that the choice of property to be expropriated was improper.

Issue: Whether the Motion to Dismiss should prosper.

Held: No. The issues raised by D are affirmative defenses that should be alleged in an answer, since they require
presentation of evidence aliunde. Section 3 of the Rules of Court provides that if a defendant has any objections to the
filing of or the allegations in the complaint, or any objection or defense to the taking of his property, he should include
them in his answer. Naturally, these issues will have to be fully ventilated in a full-blown trial and hearing. Dismissal
of an action upon a motion to dismiss constitutes a denial of due process if, from a consideration of the pleadings, it
appears that there are issues that cannot be decided without a trial of the case on the merits.
Juaban vs Espina

FACTS
- This stemmed from 3 interlinked cases.
- Heirs of Bancale sued for the recovery of certain properties against Eva Paras and others (Case No. 1).
- Petitioners Juaban and Zosa were their counsels. The heirs then entered into an Agreement to Sell and to Buy with
respondent Espina, where they agreed to sell the subject property to respondent or his assignee with the amount of P2M
as advance payment on the purchase price.
-Espina duly paid the said amount. He then designated respondent Cebu Bay Discovery Properties, Inc. (CDPI) as the vendee.
- Subsequently, respondents found out that Juaban and Zosa had filed a motion to fix their attorneys fees which was
granted and fixed by the RTC at P9M.
- The heirs moved for reconsideration but were denied. They filed a Notice of Appeal which was indirectly overruled when
the court granted the motion for execution filed by petitioners. A writ of execution was then issued followed by the sale of
the subject properties to petitioners for P9M, despite the express instruction of the writ that the attorneys fees were to be
taken from the money due from the buyer to the sellers under the agreement.
- However, the RTC, under a new presiding judge, reversed and granted the MR of the heirs.
- Meanwhile, petitioners were able to obtain a final deed of sale from Sheriff Gato on the ground that no redemption of the
subject properties was made (Thus, an administrative complaint against the sheriff was filed for allegedly acting with
manifest bias and partiality [Case No. 2]).
- Respondents also filed an injunction and damages case to enjoin the sale in a public auction by Sheriff Gato, allegedly
unaware, at the time of the filing of said case, that the properties had already been sold (Case No. 3).
- The court granted petitioners Motion to Dismiss. On appeal, CA reversed and ordered the writ of preliminary injunction
to be made permanent.

ISSUE
- 1. Whether respondent Espina has authority to file the case. YES
- 2. Whether the certificate of non-forum shopping is invalid given that it was only signed by one of the
plaintiffs, i.e. respondent Espina. (Ergo, whether the complaint should be dismissed due to non-compliance
with the requirements of the Rules.) NO & NO

Held:
Petitioners claimed that the complaint should have been dismissed because Espina no longer had personal interest in
the case as he had assigned his rights to CDPI and that he was not authorize to file on behalf of CDPI. However, citing
Rule 3 Sec. 2 of the ROC, SC ruled that Espina is a real party-in-interest in this case. Thus, respondents right to the
properties is based on the Agreement to Sell and to Buy executed between the heirs and respondent Espina. The said
agreeement is the very source of the right, the violation which constituted the cause of action in respondents complaint
for injunction before the court a qui. It was respondent Espina who entered intp the agreement, and his rights as a party to the
said contract were not extinguished just because he designated his co-respondent CDPI as vendee of the subject properties.
- Having established as a real party-in-interest, respondent Espina has not only the personality to file the complaint in
the third case, but also the authority to sign the certification against forum shopping as a plaintiff therein.
- Citing several cases, SC held that the certification against forum shopping must be signed by the plaintiff or any of
the principal parties and not by counsel.
- The GR is that the certificate must be signed by all the plaintiffs in a case and the signature of only one of them is
insufficient. Nevertheless, the rules on forum shopping which were designed to promote and facilitate the orderly
administration of justice, sjpuld not be interpreted with such absolute literalness as to subvert their own ultimate and
legitimate objective. Strict compliance with the provisions regarding the certificate of non-forum shopping merely
inerscores its mandatory nature in that the certifaction cannot be althogether dispensed woth or its requirements
completely disregarded. Thus when all the 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 rules.

BAUTISTA vs. MAYA-MAYA COTTAGES, INC.


G.R. No. 148361 November 29, 2005

FACTS:

Respondent Maya-Maya Cottages filed a complaint for the cancellation of title of a lot owned by petitioners spouses
Rafael and Ligaya Bautista in Nasugbu, Batangas. Petitioners filed a motion to dismiss on the grounds that respondent
has no cause of action. The trial court granted the motion and dismissed the case. Respondent then filed a motion for
reconsideration with motion for leave to file an amended complaint for quieting of title. Petitioners opposed the motion
contending that if admitted, respondents theory of the case is substantially modified. The trial court granted the motion
and issued an Order denying petitioners' motion to dismiss, thus, reversing its previous order of dismissal. Petitioners'
subsequent petition for certiorari and prohibition filed with the Court of Appeals was also denied.

ISSUE:

Whether or not the filing of a motion to dismiss constitutes a bar for the amendment of a complaint as a matter of right.

RULING:

No. Section 2, Rule 10 of the 1997 Rules of Civil Procedure, as amended, shows that before the filing of any
responsive pleading, a party has the absolute right to amend his pleading, regardless of whether a new cause of action
or change in theory is introduced. A motion to dismiss is not the responsive pleading contemplated by the Rule. In this
case, records show that petitioners had not yet filed a responsive pleading to the original complaint. What they filed
was a motion to dismiss. Therefore, Maya-Maya may file an amended complaint even after the original complaint was
ordered dismissed, provided that the order of dismissal is not yet final, as in this case.
Remington Industrial Sales Corp vs CA

Remington Industrial Sales Corp vs CA : 133657

FACTS: Petitioner filed a complaint for sum of money and damages arising from breach of contract. Impleaded as
principal defendant therein was Industrial Steels, Ltd. (ISL), with Ferro Trading GMBH (Ferro) and respondent British
Steel as alternative defendants. ISL and respondent British Steel separately moved for the dismissal of the complaint
on the ground that it failed to state a cause of action against them RTC denied the motions to dismiss, as well as the
ensuing motion for reconsideration. On the other hand, respondent British Steel filed a petition for certiorari and
prohibition before the Court of Appeals. ISL then filed its answer to the complaint. Meanwhile, petitioner sought to
amend its complaint by incorporating therein additional factual allegations constitutive of its cause of action against
respondent. Pursuant to Section 2, Rule 10 of the Rules of Court, petitioner maintained that it can amend the complaint
as a matter of right because respondent has not yet filed a responsive pleading thereto.

ISSUE: Can a complaint still be amended as a matter of right before an answer has been filed, even if there was a
pending proceeding for its dismissal before the higher court?

HELD: Section 2, Rule 10 of the Revised Rules of Court explicitly states that a pleading may be amended as a matter
of right before a responsive pleading is served. This only means that prior to the filing of an answer, the plaintiff has
the absolute right to amend the complaint whether a new cause of action or change in theory is introduced. Substantial
amendment of the complaint is not allowed without leave of court after an answer has been served, because any
material change in the allegations contained in the complaint could prejudice the rights of the defendant who has
already set up his defense in the answer. In such an event, the defendant has not presented any defense that can be
altered or affected by the amendment of the complaint in accordance with Section 2 of Rule 10. Considerable leeway is
thus given to the plaintiff to amend his complaint once, as a matter of right, prior to the filing of an answer by the
defendant. The right granted to the plaintiff under procedural law to amend the complaint before an answer has been
served is not precluded by the filing of a motion to dismiss or any other proceeding contesting its sufficiency.
Moreover, amendment of pleadings is favored and should be liberally allowed in the furtherance of justice in order to
determine every case as far as possible on its merits without regard to technicalities. The fact that the other defendants
below has filed their answers to the complaint does not bar petitioners right to amend the complaint as against
respondent. Indeed, where some but not all the defendants have answered, the plaintiff may still amend its complaint
once, as a matter of right, in respect to claims asserted solely against the non-answering defendant, but not as to claims
asserted against the other defendants.
[G.R. No. L-6208. December 29, 1953.]
DOLORES BUENAVENTURA, Administratrix of the Intestate Estate of the deceased Escolastico
Buenaventura, Plaintiff-Appellant, v. CELESTINO BUENAVENTURA and ANGELES
BUENAVENTURA, Defendants-Appellees.

1. PLEADING AND PRACTICE; AMENDMENTS TO COMPLAINT; NECESSITY OF COURTS PERMISSION TO


MAKE THE AMENDMENT. It appearing that the amended complaint was filed after defendants had already filed their
answer, the admission thereof had to be with the leave of court under section 2 of Rule 17. As the amended complaint was
filed without such leave and even without notice to the adverse party, the court acted within its authority in ordering it
stricken from the record. With the amended complaint stricken out, it becomes unnecessary to decide whether the said
amended complaint constituted a collateral attack on an original certificate of title.

2. ID.; DISMISSAL OF CASE "MOTU PROPRIO" BY THE COURT. A case should not be dismissed motu proprio for
the reason only that the parties had failed to file their promised agreed statement of facts and memoranda within the period
fixed for the purpose; otherwise, it would be within the power of one party to have a case dismissed by simply not signing
any stipulation of facts which his adversary might propose. Under the circumstances, the ends of justice would be better
served by setting the case for hearing and permitting the parties to present evidence on those matters where no agreement
could be reached.

FACTS:
This is an action brought by the administratrix of the deceased Escolastico Buenaventura to recover a piece of land allegedly
belonging to the latter, the complaint alleging that the said piece of land was among those entrusted by the deceased to his
brother Celestino for his administration; that after the death of Escolastico in 1948, Celestino, together with his daughter
Angeles, claim ownership of the land and refused to give the estate of the deceased its share of the products thereof.
Defendants admit that the land in question was among those entrusted to Celestino for administration but that on
November 7, 1946, it was sold by Escolastico to defendant Angeles Buenaventura and by virtue of the deed covering
the sale, an original certificate of title was issued in favor of the vendee in Cadastral Case No. 7, G. L. R. O. No. 759.
Replying to this allegation, plaintiff specifically denied under oath the genuineness and due execution of the alleged
deed of sale.
Upon the case being called for trial, the court ordered the clerk to produce the record of the cadastral case above-mentioned,
and having verified from said record that title had really been issued to Angeles, the court motu proprio dismissed the
complaint in open court for lack of cause of action. The court, however, on the same occasion upon motion of plaintiff
revoked its order of dismissal and ordered the parties to file an agreed statement of facts with memoranda within ten days
from June 22, 1950. Acting on this order, counsel for plaintiff, then in Manila, sent counsel for defendants, then in Dipolog,
Zamboanga, a proposed agreed statement of facts dated June 26, 1950. But counsel for defendants would not sign the
proposed agreement, and plaintiff filed an amended complaint, dated June 28, 1950, alleging that the land in question had
already been adjudicated in favor of the deceased Escolastico Buenaventura on June 4, 1940 and an order promulgated on
August 20, for the issuance of the corresponding decree and certificate of title, but that defendants, through a fraudulent
document of sale purportedly signed by the deceased Escolastico, had illegally secured the issuance of the original certificate
of title in favor of the defendant Angeles Buenaventura. This amended complaint was received by the clerk of court on July
6, but it was not accompanied by any motion for leave of court.
This was the state of affairs when on July 14, 1950, the court handed down an order dismissing the case on the ground
that the parties were not able to file an agreed statement of facts and memoranda despite the warning that the case
would be dismissed upon their failure to do so. The amended complaint was also ordered stricken from the record as
having been filed without leave of court and notice to the opposing party.
Reconsideration of this order having been denied, plaintiff appealed to the Court of Appeals, but that court has certified
the case here on the ground that the appeal only involves questions of law.
Appellant contends that the trial court erred (1) in dismissing the original complaint for failure of the parties to enter
into an agreed statement of facts and submit their memoranda; (2) in disallowing plaintiffs amended complaint; and
(3) in holding that the amended complaint constituted a collateral attack on a Torrens certificate of title. It appearing
that the amended complaint was filed after defendants had already filed their answer, the admission thereof had to be
with the leave of court under section 2, Rule 17, Rules of Court. As the amended complaint was filed without such
leave and even without notice to the adverse party, the court acted within its authority in ordering it stricken from the
record. With the amended complaint stricken out, it becomes unnecessary to decide whether the said amended
complaint constituted a collateral attack on an original certificate of title.
We believe, however, that the trial court acted rather hastily in ordering the dismissal of the case. There was no motion
for that purpose. The reason given by the court was that the parties had failed to file their promised agreed statement of
facts and memoranda within a period of ten days. As counsel for appellant rightly observes in his brief, the courts
reasoning would put it within the power of one party to have a case dismissed by simply not signing any stipulation of
facts which his adversary might propose. We think that the ends of justice would have been better served had the trial
court, upon being apprised that the parties could not agree on the facts, set the case for hearing and permitted them to
present evidence on those matters where no agreement could be reached.
In view of the foregoing, the order of dismissal is hereby revoked and the case ordered remanded to the court below for
further proceedings in which plaintiff should be given an opportunity to ask for leave for the filing of her amended
complaint as provided in the Rules. Without costs.
SIASOCO V. CA
DOCTRINE
Notwithstanding the filing of a responsive pleading by one defendant, the complaint may still be amended once, as a
matter of right, by the plaintiff in respect to claims against the non-answering defendant(s).
FACTS
Petitioners were the registered owners of nine parcels of land located in Montalban, Rizal. They began to offer the
subject properties for sale. Subsequently, Iglesia ni Cristo (INC) negotiated with the petitioners, but the parties failed to
agree on the terms of the purchase.
More than a year later, both parties revived their discussions. In a letter, petitioners made a final offer to the INC. The
latters counsel sent a reply received by Petitioner Mario Siasoco stating that the offer was accepted, but that the INC
was not amenable to your proposal to an undervaluation of the total consideration. In their letter, petitioners claimed
that the INC had not really accepted the offer, adding that, prior to their receipt of the aforementioned reply they had
already contracted with Carissa Homes and Development & Properties, Inc. for the sale of the said properties due to
the absence of any response to their offer from INC.
Maintaining that a sale had been consummated, INC demanded that the corresponding deed be executed in its favor.
Petitioners refused.
INC filed a civil suit for specific performance and damages against petitioners and Carissa Homes and Development &
Properties, Inc.
Petitioners filed therein a Motion to Dismiss on the ground of improper venue and lack of capacity to sue.
Carissa Homes filed its answer to the complaint.
Pending resolution of petitioners Motion to Dismiss, INC negotiated with Carissa Homes which culminated in the
purchase of the subject properties of Carissa Homes by INC.
INC filed an Amended Complaint, dropping Carissa Homes as one of the defendants and changing the nature of the
case to a mere case for damages.
Petitioners filed a Motion to Strike Out Amended Complaint, contending that the complaint cannot be amended
without leave of court, since a responsive pleading has been filed.
An order denying petitioners Motion to Strike Out Amended Complaint was rendered by the trial court.
CA ruled that although private respondent could no longer amend its original Complaint as a matter of right, it was not
precluded from doing so with leave of court. Thus, the CA concluded that the RTC had not acted with grave abuse of
discretion in admitting INCs Amended Complaint. The CA also held that the Amended Complaint did not substantially
alter private respondents cause of action, since petitioners were not being asked to answer a legal obligation different
from that stated in the original Complaint.
ISSUE
WON CA gravely erred in holding that the respondent Judges admission of INCs Amended Complaint was proper.
HELD
SC sustained the Court of Appeals.
Where some but not all the defendants have answered, plaintiffs may amend their
Complaint once, as a matter of right, in respect to claims asserted solely against the non-answering defendants, but not as to
claims asserted against the other defendants.It is clear that plaintiff (herein private respondent) can amend its complaint
once, as a matter of right, before a responsive pleading is filed. Contrary to the petitioners contention, the fact that Carissa
had already filed its Answer did not bar private respondent from amending its original Complaint once, as a matter of right,
against herein petitioners.
Indeed, where some but not all the defendants have answered, plaintiffs may amend their Complaint once, as a matter of right, in
respect to claims asserted solely against the non-answering defendants, but not as to claims asserted against the other defendants.
After a responsive pleading has been filed, an amendment may be rejected when the defense is substantially altered since
such amendment does not only prejudice the rights of the defendant but also delays the action; Amendments to pleadings are
generally favored and should be liberally allowed in furtherance of justice.The rationale for the aforementioned rule is in
Section 3, Rule 10 of the Rules of Court, which provides that after a responsive pleading has been filed, an amendment may
be rejected when the defense is substantially altered. Such amendment does not only prejudice the rights of the defendant; it
also delays the action. In the first place, where a party has not yet filed a responsive pleading, there are no defenses that can
be altered. Furthermore, the Court has held that [a]mendments to pleadings are generally favored and should be liberally
allowed in furtherance of justice in order that every case may so far as possible be determined on its real facts and in order to
speed the trial of cases or prevent the circuity of action and unnecessary expense, unless there are circumstances such as
inexcusable delay or the taking of the adverse party by surprise or the like, which might justify a refusal of permission to amend.
In the present case, petitioners failed to prove that they were prejudiced by private respondents Amended Complaint. True,
Carissa had already filed its own Answer. Petitioners, however, have not yet filed any. Moreover, they do not allege that their
defense is similar to that of Carissa. On the contrary, private respondents claims against the latter and against petitioners are
different. Against petitioners, whose offer to sell the subject parcels of land had allegedly been accepted by private
respondent, the latter is suing for specific performance and damages for breach of contract. Although private respondent
could no longer amend, as a matter of right, its Complaint against Carissa, it could do so against petitioners who, at the time,
had not yet filed an answer.
The amendment did not prejudice the petitioners or delay the action. Au contraire, it simplified the case and tended to
expedite its disposition. The Amended Complaint became simply an action for damages, since the claims for specific
performance and declaration of nullity of the sale have been deleted.
Philippine Export and Foreign Loan Guarantee Corporation vs. Philippine Infrastructures, Inc,
419 SCRA 6, G.R. No. 120384; January 13, 2004

FACTS:
Petitioner filed a complaint for collection of sum of money before the Regional Trial Court against herein respondents
Philippine Infrastructures, Inc. (PII), Philippine British Assurance Co., Inc. (PBAC), The Solid Guaranty, Inc. (Solid), B.F.
Homes, Inc. (BF Homes), Pilar Development Corporation (PDC) and Tomas B. Aguirre (Aguirre). The complaint alleges
that: petitioner issued five separate Letters of Guarantee in favor of the Philippine National Bank (PNB) as security for
various credit accommodations extended by PNB to respondent PII; respondents PII, BF Homes, PDC and Aguirre executed
a Deed of Undertaking binding themselves, jointly and severally, to pay or reimburse petitioner upon demand such amount
of money or to repair the damages, losses or penalties which petitioner may pay or suffer on account of its guarantees; as
security for prompt payment by respondent PII, the latter submitted to petitioner, surety and performance bonds issued by
respondents PBAC and Solid; on April 24, 1985, the PNB called on the guarantees of petitioner, and so, the latter demanded
from respondent PII the immediate settlement of P20,959, 529.36, representing the aggregate amount of the guarantees of
petitioner called by PNB and the further sum of P351,517.57 representing various fees and charges; PII refused to settle said
obligations; petitioner likewise demanded payment from respondents Solid and PBAC but they also refused to pay
petitioner; and because of the unjustified refusal of respondents to comply with their respective obligations, petitioner was
constrained to secure the services of counsel and incur expenses for the purpose of prosecuting its valid claims against the
respondents. It is prayed in the complaint that judgment be rendered ordering respondents PII, BF Homes, PDC and Aguirre
to pay petitioner the amount of P21,311,046.93 plus interest and penalty charges thereon, ordering respondents Solid and
PBAC to pay P5,758,000.00 and P9,596,000.00, respectively, under their surety and/or performance bonds and ordering
respondents to pay petitioner the sums of P2,000,000.00 as attorneys fees and expenses of litigation and P50,000.00 as
exemplary damages.
Respondent BF Homes filed a Motion to Dismiss on the ground that it is undergoing rehabilitation receivership and
pursuant to P.D. 902-A, the trial court has no jurisdiction to try the case. Respondent PII also filed a Motion to
Dismiss on the ground that the complaint states no cause of action since it does not allege that petitioner has suffered
any damage, loss or penalty because of the guarantees petitioner had extended for and on behalf of respondent PII. The
other respondents filed their respective responsive pleadings.
Judge Roberto M. Lagman issued an Order suspending the case only as against respondent BF Homes and denying
respondent PIIs motion to dismiss. Thereafter, hearing on the merits ensued. Petitioner presented Rosauro Termulo, the
treasury department manager of petitioner, who testified that the amount of P19,035,256.57 was paid on July 28, 1990
by petitioner to the PNB; and, Exhibit "LL," a debit memo issued by the PNB. Consequently, petitioner filed a Motion
to Amend Complaint to Conform to Evidence pursuant to Section 5, Rule 10 of the Revised Rules of Court, seeking
to amend Paragraph 17 and the pertinent portion of the prayer in the complaint, to read as follows:
17. Because of the unjustified refusal of the defendants to comply with their respective obligations, the
plaintiffas guarantor has been constrained to pay the Philippine National Bank thru the account of the National
Treasury the amount of Nineteen Million Thirty-five Thousand Two Hundred Fifty-six and 57/100
(P19,035,256.57) on July 28, 1990 representing payment of principal loan of P12,790,094.83 and interest
ofP6,245,111.54 due March 16, 1987 on the Philippine Infrastructure, Inc./Philguaranty loan under the PNB
Expanded Loan Collection Program; and which amount was deducted from the equity share of the National
Government in Philguarantee. In view of defendants unwarranted failure and refusal to settle their respective
accountabilities plaintiff was likewise constrained to secure the services of counsel and incur expenses in the
process of prosecuting its just and valid claims against the defendants; accordingly, the defendants should be
held liable, jointly and severally, to pay the plaintiff attorneys fees and expenses of litigation in the amount
ofP2,000,000.00 or about ten (10%) percent of the guaranteed obligations.
PRAYER
(a) Ordering defendant PII, BF Homes, PILAR and AGUIRRE to pay plaintiff, jointly and severally, the
amount of P19,035,256.57 plus P351,517.57 extension guarantee fees and amendment fees, plus interests and
penalty charges thereon;
Acting on the motion to amend, the trial court, at that time presided by Judge Joselito J. Dela Rosa, issued the assailed
Order dated December 7, 1992, dismissing the case without prejudice on the ground of failure of the complaint to state
a cause of action.
A petition for review on certiorari was filed by petitioner against the Regional Trial Court with this Court. On June 23,
1993, the Court issued a Resolution resolving to REFER the case to the Court of Appeals, for disposition considering
that under Batas Pambansa Blg. 129, the Court of Appeals now exercises exclusive appellate jurisdiction over all final
judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions,
Tthe Court of Appeals promulgated the assailed Decision, dismissing the petition. On May 19, 1995, the appellate
court denied petitioners motion for reconsideration. Hence, petitioner filed the present petition for review on certiorari.

ISSUE:
Whether the Court of Appeals erred in affirming the lower courts order dismissing the complaint on the ground that
petitioner failed to state a cause of action for not alleging loss or actual payment made by it to PNB under its
guarantees.

HELD:
It should be stressed that amendment was sought after petitioner had already presented evidence, more specifically, the
testimony of petitioners Treasury Department Manager and a debit memo from the PNB (Exhibit "LL") proving that
petitioner had paid the PNB in the amount of P19,035,256.57 pursuant to the guarantees it accorded to respondent PII.
It is settled that even if the complaint be defective, but the parties go to trial thereon, and the plaintiff, without
objection, introduces sufficient evidence to constitute the particular cause of action which it intended to allege in the
original complaint, and the defendant voluntarily produces witnesses to meet the cause of action thus established, an
issue is joined as fully and as effectively as if it had been previously joined by the most perfect pleadings. Likewise,
when issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all
respects as if they had been raised in the pleadings.
Evidently, herein respondents failure to object to the evidence at the time it is presented in court is fatal to their cause
inasmuch as whatever perceived defect the complaint had was cured by the introduction of petitioners evidence
proving actual loss sustained by petitioner due to payment made by it to PNB.
Thus, the contention of respondents that the amendment would introduce a subsequently acquired cause of action as
there was none at the time the original complaint was filed, is untenable.
Furthermore, petitioners cause of action against respondents stemmed from the obligation of respondents PII, BF
Homes, PDC and Aguirre under their Deed of Undertaking that was secured by the surety and performance bonds
issued by respondents PBAC and Solid. It is a condition of this instrument that failure of the OBLIGOR and CO-
OBLIGORS to comply with this undertaking and to make good the performance of the other obligations herein
undertaken and/or promised, shall be sufficient cause for the OBLIGEE to consider such failure as an event of default
which shall give to the OBLIGEE the right to take such action against the OBLIGOR and/or CO-OBLIGORS for the
protection of the OBLIGEEs interests.
In the present petition, petitioner had become liable to pay the amounts covered by said guarantees when, as the
original complaint alleges, the PNB called upon said guarantees. Respondents obligation under the Deed of
Undertaking to keep petitioner free and harmless from any damage or liability then became operative as soon as the
liability of petitioner arose and there was no need for petitioner to first sustain actual loss before it could have a cause
of action against respondents. The mere inclusion in petitioners original complaint of the allegation that the PNB had
already called on the guarantees of petitioner is sufficient to constitute a cause of action against respondents. Clearly
therefore, the original complaint, by itself, stated a valid cause of action.
Verily, it was patently erroneous on the part of the trial court not to have allowed the amendments as to make the
complaint conform to petitioners evidence that was presented without any objection from respondents. The trial court
likewise patently acted with grave abuse of discretion or in excess of its jurisdiction amounting to lack of jurisdiction
when, acting on a mere motion to amend the complaint, it erroneously dismissed the complaint on the ground of failure
to state a cause of action. Consequently, the Court of Appeals committed a reversible error in sustaining the trial court.
G.R. No. L-18453 September 29, 1962
CAMPOS RUEDA CORPORATION, petitioner, vs. HON. JOSE S. BAUTISTA, as Presiding Judge,
HON. BALTAZAR M. VILLANUEVA, HON. ARSENIO I. MARTINEZ, HON. AMANDO C. BUGAYONG, as
Associate Judges, COURT OF INDUSTRIAL RELATIONS, and MANUEL MUYOT, respondents.

Respondent Muyot was employed by petitioner at its gasoline station located at 1012 Azcarraga St. (now Recto
Avenue), Manila, at a monthly salary of P200.00 from May 21, 1949 to May 31, 1953, and at P230.00 from June 1 to
December 31, 1953. On November 26, 1958 he filed a complaint against petitioner with the Court of Industrial
Relations (Case No. 1140-V) to recover compensation for alleged overtime, Sunday and holiday services rendered
during said period.

On December 8, 1958 petitioner moved to dismiss the complaint on the following grounds: that the claims set forth
therein were barred by (a) the statute of limitations; (b) the decision rendered by Regional Office No. 1, Department of
Labor in Case No. C-4364 entitled "Manuel Muyot Complainant, vs. Super Service and Auto Supply, Jose A. Campos,
Manager, Respondent"; and by the decisions of the Court of First Instance of Manila in Civil Case No. 30138 entitled
"Manuel Muyot, Plaintiff, vs. Campos Rueda Corporation, Defendant", and in Civil Corporation, Civil Case No. 36060
entitled "Campos Rueda petitioner, vs. Juliano E. Estrella, etc., et al., Respondents".

Respondent Muyot opposed said motion to dismiss alleging that, as the decisions relied upon therein were rendered by
courts that had no jurisdiction over the subject-matter, the same did not constitute res judicata; that his causes of action
were not barred by the statute of limitations because the legal period provided for in Section 7-A of Commonwealth
Act No. 444, as amended by Republic Act No. 1993, was interrupted when he filed a case with the Department of
Labor on October 27, 1955 and another with the Court of First Instance on July 7, 1956.

On March 17, 1959, petitioner filed a supplementary motion to dismiss alleging that the Court had no jurisdiction over
the subject-matter because the complaint did not seek the reinstatement of Muyot who, according to the complaint,
ceased to be an employee of petitioner since December 31, 1953. In other words, the claim merely involved collection
of pay for overtime, Sunday and holiday work.

On August 3, 1959, the Court of Industrial Relations, through Judge Arsenio I. Martinez, denied petitioner's motion to
dismiss and required him to answer the complaint. In its order of August 15, 1959, the respondent court, in banc, also
denied petitioner's motion for reconsideration.

On November 11, 1959, petitioner filed its answer denying respondent's claim for overtime and Sunday and holiday
services pay. Among other affirmative defenses it reasserted its contention that respondent court had no jurisdiction
over the subject matter of the case.

During the trial, upon motion of respondent Muyot, respondent court issued a subpoena duces tecum requiring the
petitioner "to bring the Daily Time Records of employees working at the Super Service Station for the years 1952-
1953".

Petitioner filed a motion to quash the subpoena on the ground that (a) it did not reasonably designate the particular
employee or employees' daily time record concerned, but gave a blanket description which the rules do not allow; (b)
that the records sought to be produced did not appear to be prima facie relevant to the issue involved in the case and (c)
that the respondent in whose behalf the subpoena duces tecum was issued had not offered or tendered to advance the
reasonable cost of producing the records sought to be produced.

On June 24, 1960, the respondent court, through Judge Jose S. Bautista, denied the motion to quash, and on July 11,
1960, the court, in banc, also denied petitioner's motion for reconsideration.1awphl.nt

Hence the present original action for Certiorari, and Prohibition filed by Campos Rueda Corporation, to annul the
respondent court's orders of August 3 and 15, 1959, June 24 and July 11, 1960 mentioned heretofore.
The allegations made in Muyot's complaint against petitioner show conclusively that his employment with the latter
was terminated on December 31, 1953 almost five years before said complaint was filed; that, without asking for his
reinstatement, neither directly nor indirectly, he only sought to collect what, in his opinion, was due and payable to him
for overtime Sunday and holiday services he had rendered to his former employer during the period of his employment.

In Roman Catholic Archbishop, etc. vs. Jimenez Yanson, et al., G.R. Nos. L-12341 and L-12345 decided on April 30,
1958, we held:

In the present case, it is apparent that the petition below is simply for the collection of unpaid salaries and
wages alleged to be due for services rendered years ago. No labor dispute appears to be presently involved
since the petition itself indicates that the employment has long terminated and petitioners are not asking that
they be reinstated. Clearly, the petition does not fall under any of the cases enumerated in the law as coming
within the jurisdiction of the Industrial Court, so that it was error for that court not to have ordered its
dismissal.

In the Mindanao Bus Employees, etc. vs. The Court of Industrial Relations, et al., we also held:

The petitioner union claims, that its members employed by the respondent company are entitled to overtime
wages which have not been paid notwithstanding repeated demands, and prays 'that after due hearing,
respondent employer be ordered to pay for the herein claims and for such other relief as justice and equity may
merit.' It is clear that the case is for collection of overtime wages claimed to be due and unpaid and does not
involve hours of employment under Commonwealth Act No. 444. Hence the Court does not have jurisdiction
over the case and correctly dismissed the petition.

Again, in Price Stabilization Corporation vs. Court of Industrial Relations, et al., G.R. No. L-13806, decided on May
23, 1960, we clearly and unequivocably restated the same view as follows:

. . . where the employer-employee relationship is still existing or is sought to be reestablished because of its
wrongful severance (as where the employee seeks reinstatement), the Court of Industrial Relations has
jurisdiction over all claims arising out of, or in connection with employment, such as those related to the
Minimum Wage Law and the Eight-Hour Labor Law. After the termination of the relationship and no
reinstatement is sought, such claims become mere money claims, and come within the jurisdiction of the
regular courts.

We are aware that in 2 cases, Mindanao Bus Employees Labor Union (PLUM) v. Mindanao Bus Co., et al.,
G.R. No. L-9795, prom. December 28, 1957; Gomez v. North Camarines Lumber Co., Inc., G.R. No. L-11945,
prom. August 18, 1958, some statements implying a different view have been made but we now hold and
declare the principle set forth in the next preceding paragraph as the one governing all cases of this nature.

Three days after the promulgation of the decision in the Price Stabilization case (supra), we again held in Sta. Cecilia
Saw Mills Co. vs. Court of Industrial Relations, et al., G.R. Nos. L-14254-55:

It appears from the "compliance" of the respondents . . . that they are no longer in the service of the petitioner, .
. . and that they are not seeking reinstatement to their respective positions. Hence no labor dispute is involved
in the case and for that reason the Court of Industrial Relations has no jurisdiction to hear and determine the
respondents' petition.

The decisions abovequoted apply squarely to the present case, making it clear and beyond question that the Court of
Industrial Relations does not have jurisdiction over respondent Muyot's claims subject matter of case No. 1140-V filed
with said court.
Respondent Muyot must have finally realized that the Court of Industrial Relations had no jurisdiction over his claims
for, according to his answer filed in the present case, he had filed on July 14, 1961 more than two years after the
filing of his action a motion for leave to amend his complaint and to admit the amended complaint attached to his
motion, the amendment consisting precisely in the addition of a third cause of action where inter alia, he alleged that on
May 31, 1953, he was illegally dismissed by herein petitioner and that, as a consequence he was entitled to
reinstatement, with back wages from the date of his illegal dismissal up to his actual reinstatement.

Obviously the purpose of the amendment was to make his case fall within the jurisdiction of the respondent court. This
attempt is in our opinion, of no avail.

It is settled in this jurisdiction that the jurisdiction of a court is determined by the allegations made in the complaint or
petition. On the other hand, we have also held heretofore that this principle applies to proceedings in the Court of
Industrial Relations (Administrator, etc. vs. Alberto, et al., G.R. No. L-12133, October 31, 1958).

The insufficiency of the allegations of Muyot's complaint to place his action within the jurisdiction of the respondent
court could not be cured by amendment, for in Rosario vs. Carandang, we clearly held that "a complaint can not be
amended so as to confer jurisdiction on the court in which it is filed, if the cause of action originally set forth was not
within the court's jurisdiction." (51 O.G. 2387, April 28, 1955).

Moreover, the record does not show at all that the Court of Industrial Relations had admitted the amended complaint.

In the light of our view on the question of jurisdiction, we deem it unnecessary, for the purpose of this decision, to
decide the questions of res judicata and prescription of the causes of action raised in the petition under consideration.

WHEREFORE the writs prayed for are granted and, as a consequence, the orders complained of are annulled. With
costs.
[G.R. Nos. 121662-64. July 6, 1999]
VLASON ENTERPRISES CORPORATION, petitioner, vs. COURT OF APPEALS and DURAPROOF SERVIC
ES, represented by its General Manager, CesarUrbino Sr., respondents.
Summons to a domestic or resident corporation should be served on officers, agents or employees, who are responsible
enough to warrant the presumption that they will transmit to the corporation notice of the filing of the action against it. Rules
on the service of motions should be liberally construed in order to promote the ends of substantial justice. A rigid application
that will result in the manifest injustice should be avoided. A default judgment against several defendants cannot affect the
rights of one who was never declared in default. In any event, such judgment cannot include an award not prayed for in the
complaint, even if proven ex parte.
The Case
These principles were used by this Court in resolving this Petition for Review on Certiorari before us, assailing the July
19, 1993 Decision[1] and the August 15, 1995 Resolution,[2] both promulgated by the Court of Appeals. The assailed Decision
disposed as follows:[3]

ACCORDINGLY, in view of the foregoing disquisitions, all the three (3) consolidated petitions for certiorari are hereby
GRANTED.

THE assailed Order of respondent Judge Arsenio Gonong of the Regional Trial Court of Manila, Branch 8, dated April 5,
1991, in the first petition for certiorari (CA-G.R. SP No. 24669); the assailed Order of Judge Bernardo Pardo, Executive
Judge of the Regional Trial Court of Manila, Branch 8, dated July 6, 1992, in the second petition for certiorari (CA-G.R.
SP No. 28387); and finally, the assailed order or Resolution en banc of the respondent Court of Tax Appeals Judges Ernesto
Acosta, Ramon de Veyra and Manuel Gruba, under date of October 5, 1992, in the third petition for certiorari (CA-
G.R. SP No.29317) are all hereby NULLIFIED and SET ASIDE thereby giving way to the entire decision dated February
18, 1991 of the respondent Regional Trial Court of Manila, Branch 8, in Civil Case No. 89-51451 which
remains valid, final and executory, if not yet wholly executed.

THE writ of preliminary injunction heretofore issued by this Court on March 6, 1992 and reiterated on July 22, 1992 and this
date against the named respondents specified in the dispositive portion of the judgment of the respondent Regional Trial
Court of Manila, Branch 8 in the first petition for certiorari, which remains valid, existing and enforceable, is hereby MADE
PERMANENT without prejudice (1) to the [private respondents] remaining unpaid obligations to the herein party-
intervenor in accordance with the Compromise Agreement or in connection with the decision of the respondent lower court
in CA-G.R. SP No. 24669 and (2) to the government, in relation to the forthcoming decision of the respondent Court of Tax
Appeals on the amount of taxes, charges, assessments or obligations that are due, as totally secured and fully guaranteed
payment by the [private respondents] bond, subject to the relevant rulings of the Department of Finance and other prevailing
laws and jurisprudence.

The assailed Resolution ruled:

ACCORDINGLY, in the light of the foregoing disquisitions, as well as considering these clarifications, the three (3) motions
aforementioned are hereby DENIED.

The Facts
Poro Point Shipping Services, then acting as the local agent of Omega Sea Transport Company of Honduras & Panama,
a Panamanian company, (hereafter referred to as Omega), requested permission for its vessel M/V Star Ace, which had
engine trouble, to unload its cargo and to store it at the Philippine Ports Authority (PPA) compound in San Fernando, La
Union while awaiting transhipment to Hongkong. The request was approved by the Bureau of Customs. [4] Despite the
approval, the customs personnel boarded the vessel when it docked on January 7, 1989, on suspicion that it was the
hijacked M/V Silver Med owned by Med Line Philippines Co., and that its cargo would be smuggled into the country.[5] The
district customs collector seized said vessel and its cargo pursuant to Section 2301, Tariff and Customs Code. A notice of
hearing of SFLU Seizure Identification No. 3-89 was served on its consignee, Singkong Trading Co. of Hongkong, and its
shipper, Dusit International Co., Ltd. of Thailand.
While seizure proceedings were ongoing, La Union was hit by three typhoons, and the vessel ran aground and was
abandoned. On June 8, 1989, its authorized representative, Frank Cadacio, entered into a salvage agreement with private
respondent to secure and repair the vessel at the agreed consideration of $1 million and fifty percent (50%) [of] the cargo
after all expenses, cost and taxes.[6]
Finding that no fraud was committed, the District Collector of Customs, Aurelio M. Quiray, lifted the warrant of seizure
on July 16, 1989.[7] However, in a Second Indorsement dated November 11, 1989, then Customs Commissioner Salvador M.
Mison declined to issue a clearance for Quirays Decision; instead, he forfeited the vessel and its cargo in accordance with
Section 2530 of the Tariff and Customs Code. [8] Accordingly, acting District Collector of Customs John S. Sy issued a
Decision decreeing the forfeiture and the sale of the cargo in favor of the government. [9]
To enforce its preferred salvors lien, herein Private Respondent Duraproof Services filed with the Regional Trial Court
of Manila a Petition for Certiorari, Prohibition and Mandamus[10] assailing the actions of Commissioner Mison and District
Collector Sy. Also impleaded as respondents were PPA Representative Silverio Mangaoang and Med Line Philippines, Inc.
On January 10, 1989, private respondent amended its Petition [11] to include former District Collector Quiray; PPA Port
Manager Adolfo Ll. Amor Jr; Petitioner Vlason Enterprises as represented by its president, Vicente Angliongto; Singkong
Trading Company as represented by Atty. Eddie Tamondong; Banco Du Brasil; Dusit International Co., Inc.; Thai-Nan
Enterprises Ltd. and Thai-United Trading Co., Ltd. [12] In both Petitions, private respondent plainly failed to include any
allegation pertaining to petitioner, or any prayer for relief against it.
Summonses for the amended Petition were served on Atty. Joseph Capuyan for Med Line Philippines: Angliongto
(through his secretary, Betty Bebero), Atty. Tamondong and Commissioner Mison. [13]Upon motion of the private respondent,
the trial court allowed summons by publication to be served upon the alien defendants who were not residents and had no
direct representatives in the country.[14]
On January 29, 1990, private respondent moved to declare respondents in default, but the trial court denied the motion
in its February 23, 1990 Order,[15] because Mangaoang and Amor had jointly filed a Motion to Dismiss, while Mison and
Med Line had moved separately for an extension to file a similar motion. [16] Later it rendered an Order dated July 2, 1990,
giving due course to the motions to dismiss filed by Mangaoang and Amor on the ground of litis pendentia, and by the
commissioner and district collector of customs on the ground of lack of jurisdiction. [17] In another Order, the trial court
dismissed the action against Med Line Philippines on the ground of litis pendentia.[18]
On two other occasions, private respondent again moved to declare the following in default: petitioner, Quiray, Sy and
Mison on March 26, 1990;[19] and Banco Du Brazil, Dusit International Co., Inc., Thai-Nan Enterprises Ltd. and Thai-United
Trading Co., Ltd. on August 24, 1990. [20] There is no record, however, that the trial court acted upon the motions. On
September 18, 1990, petitioner filed another Motion for leave to amend the petition, [21] alleging that its counsel failed to
include the following necessary and/or indispensable parties: Omega represented by Cadacio; and M/V Star Ace represented
by Capt. Nahon Rada, relief captain. Aside from impleading these additional respondents, private respondent also alleged in
the Second (actually, third) Amended Petition [22] that the owners of the vessel intended to transfer and alienate their rights
and interests over the vessel and its cargo, to the detriment of the private respondent.
The trial court granted leave to private respondent to amend its Petition, but only to exclude the customs commissioner
and the district collector.[23] Instead, private respondent filed the Second Amended Petition with Supplemental Petition
against Singkong Trading Company; and Omega and M/V Star Ace,[24] to which Cadacio and Rada filed a Joint Answer.[25]
Declared in default in an Order issued by the trial court on January 23, 1991, were the following: Singkong Trading
Co., Commissioner Mison, M/V Star Ace and Omega.[26] Private respondent filed, and the trial court granted, an ex
parte Motion to present evidence against the defaulting respondents.[27] Only private respondent, Atty. Tamondong,
Commissioner Mison, Omega and M/V Star Ace appeared in the next pretrial hearing; thus, the trial court declared the other
respondents in default and allowed private respondent to present evidence against them. [28] Cesar Urbino, general manager of
private respondent, testified and adduced evidence against the other respondents, including herein petitioner. As regards
petitioner, he declared: Vlason Enterprises represented by Atty. Sy and Vicente Angliongto thru constant intimidation and
harassment of utilizing the PPA Management of San Fernando, La Union x x x further delayed, and [private respondent]
incurred heavy overhead expenses due to direct and incidental expenses xxx causing irreparable damages of
about P3,000,000 worth of ship tackles, rigs, and appurtenances including radar antennas and apparatuses, which were taken
surreptitiously by persons working for Vlason Enterprises or its agents[.] [29]
On December 29, 1990, private respondent and Rada, representing Omega, entered into a Memorandum of Agreement
stipulating that Rada would write and notify Omega regarding the demand for salvage fees of private respondent; and that if
Rada did not receive any instruction from his principal, he would assign the vessel in favor of the salvor.[30]
On February 18, 1991, the trial court disposed as follows:

WHEREFORE, IN VIEW OF THE FOREGOING, based on the allegations, prayer and evidence adduced, both testimonial
and documentary, the Court is convinced, that, indeed, defendants/respondents are liable to [private respondent] in the
amount as prayed for in the petition for which it renders judgment as follows:

1. Respondent M/V Star Ace, represented by Capt. Nahum Rada, [r]elief [c]aptain of the vessel and Omega Sea Transport
Company, Inc., represented by Frank Cadacio[,] is ordered to refrain from alienating or [transferring] the vessel M/V Star
Ace to any third parties;

2. Singkong Trading Company to pay the following:


a. Taxes due the government;
b. Salvage fees on the vessel in the amount of $1,000,000.00 based on xxx Lloyds Standard Form of Salvage Agreement;
c. Preservation, securing and guarding fees on the vessel in the amount of $225,000.00;
d. Maintenance fees in the amount of P2,685,000.00;
e. Salaries of the crew from August 16, 1989 to December 1989 in the amount of $43,000.00 and unpaid salaries from
January 1990 up to the present;
f. Attorneys fees in the amount of P656,000.00;

3. [Vlason] Enterprises to pay [private respondent] in the amount of P3,000,000.00 for damages;

4. Banco [Du] Brazil to pay [private respondent] in the amount of $300,000.00 in damages; and finally,

5. Costs of [s]uit.

Subsequently, upon the Motion of Omega, Singkong Trading Co. and private respondent, the trial court approved a
Compromise Agreement[31] among the movants, reducing by 20 percent the amounts adjudged. For their part, respondents-
movants agreed not to appeal the Decision. [32] On March 8, 1991, private respondent moved for the execution of judgment,
claiming that the trial court Decision had already become final and executory.[33] The Motion was granted[34] and a Writ of
Execution was issued.[35] To satisfy the Decision, Sheriffs Jorge Victorino, Amado Sevilla and Dionisio Camagon were
deputized on March 13, 1991 to levy and to sell on execution the defendants vessel and personal property.
On March 14, 1991, petitioner filed, by special appearance, a Motion for Reconsideration, on the grounds that it was
allegedly not impleaded as a defendant, served summons or declared in default; that private respondent was not authorized to
present evidence against it in default; that the judgment in default was fatally defective, because private respondent had not
paid filing fees for the award; and that private respondent had not prayed for such award. [36] Private respondent opposed the
Motion, arguing that it was a mere scrap of paper due to its defective notice of hearing.
On March 18, 1991, the Bureau of Customs also filed an ex parte Motion to recall the execution, and to quash the
notice of levy and the sale on execution. [37] Despite this Motion, the auction sale was conducted on March 21, 1991 by
Sheriff Camagon, with private respondent submitting the winning bid. [38] The trial court ordered the deputy sheriffs to cease
and desist from implementing the Writ of Execution and from levying on the personal property of the defendants.
[39]
Nevertheless, Sheriff Camagon issued the corresponding Certificate of Sale on March 27, 1991. [40]
On April 12, 1991,[41] private respondent filed with the Court of Appeals (CA) a Petition for Certiorari and Prohibition
to nullify the cease and desist orders of the trial court. [42] Respondent Court issued on April 26, 1991 a Resolution which
reads:[43]

MEANWHILE, in order to preserve the status quo and so as not to render the present petition moot and academic, a
TEMPORARY RESTRAINING ORDER is hereby ISSUED enjoining the respondent Judge, the Honorable Arsenio M.
Gonong, from enforcing and/or implementing the Orders dated 22 March 1991 and 5 April 1991 which ordered respondent
Sheriff to cease and desist from implementing the writ of execution and the return thereof, the quashing of the levy xxx on
[the] execution [and sale] of the properties levied upon and sold at public auction by the Sheriff, for reason of grave abuse of
discretion and in excess of jurisdiction, until further orders from this Court.

WITHIN ten (10) days from notice hereof, respondents [petitioner included] are also required to SHOW CAUSE why the
prayer for a writ of preliminary injunction should not be granted.

On May 8, 1991, petitioner received from Camagon a notice to pay private respondent P3 million to satisfy the trial
court Decision. Not having any knowledge of the CA case to which it was not impleaded, petitioner filed with the trial court
a Motion to Dismiss ex abutandi ad cautelam on the grounds that (1) the Petition of private respondent stated no cause of
action against it, (2) the trial court had no jurisdiction over the case, and (3) litis pendentia barred the suit.[44]
On May 10, 1991, Camagon levied on petitioners properties, which were scheduled for auction later on May 16,
1991. Specific descriptions of the properties are as follows:[45]
a) Motor Tugboat DEN DEN ex Emerson-I b) Barge - FC99" ex YD-153
Length: 35.67 ms. Breadth: 7.33 ms. Length: 34.15 ms. Breadth: 15.85 m.s.
Depth: 3.15 ms. Gross Tons: 205.71 Depth: 2.77 m.s. Gross Tons: 491.70
Net tons: 67.78 Official Number 213551 Net Tons: 491.70 Official Number 227236
Material: Steel Class License: CWL Material: Steel Class License: CWL
License No. 4424 License No. 83-0012
c) Barge LAWIN ex Sea Lion 2
Length: 66.92 ms. Breadth: 11.28 ms.
Depth: 4.52 m.s. Gross Tons: 1,029.56
Net Tons: 1,027/43 Official Number 708069
Material: Steel Class License: Coastwise
License No. 81-0059
Petitioner also filed a special appearance before the CA. It prayed for the lifting of the levy on its properties or,
alternatively, for a temporary restraining order against their auction until its Motion for Reconsideration was resolved by the
trial court.[46]
Acting on petitioners Motion for Reconsideration, the trial court reversed its Decision of February 18, 1991, holding in
its May 22, 1991 Resolution as follows:[47]

xxx [T]hat xxx Motion For Reconsideration [of the petitioner] was filed on March 14, 1991 (See: page 584, records, Vol.2)
indubitably showing that it was seasonably filed within the 15-day time-frame.Therefore, xxx said default-judgment ha[d]
not yet become final and executory when the Writ of Execution was issued on March 13, 1991 xxx The rules [provide] that
[the e]xecution shall issue as a matter of right upon the expiration of the period of appeal from a judgment if no appeal has
been duly perfected (Sec. 1, R-39, RRC). That being the case, VEC has all the right to file as it did xxx the aforementioned
reconsideration motion calling [the] attention of the Court and pointing therein its supposed error and its correction if,
indeed, any [error was] committed. It is in this light that this Court made an in-depth reflection and assessment of the
premises or reasons raised by [petitioner], and after a re-examination of the facts and evidence spread on the records, it has
come to the considered conclusion that the questioned default-judgment has been improvidently issued. By the records, the
claim of [private respondent] that his January 29, 1990 Ex-Parte Motion To Declare Defendants In Default (pp. 174-177,
records, Vol. 1) including VEC had been granted is belied by the February 23, 1990 Order (pp. 214-215, records, ibid) par. 2,
thereof, reading to wit:

By the foregoing, for reasons stated thereunder respectively, this Court, in the exercise of its judicious discretion, in the sense
that the rules should be liberally construed in order to promote their object and to assist the parties, resolves to DENY
petitioners Motion to have the Commissioner of Customs AND OTHER ENUMERATED RESPONDENTS DECLARED IN
DEFAULT. [Emphasis ours].

Not even [private respondents] November 23, 1990 Ex-Parte Motion To Present [Evidence] Against Defaulting Defendants
(page 489, records, Vol.2) [can] be deemed as a remedy of the fact that there never was issued an order of default against
respondents including [petitioner] VEC. Having thus established that there [had] been no order of default against VEC as
contemplated by Sec. 1, Rule 18, in relation to Sec. 9, Rule 13, Revised Rules of Court, there could not have been any valid
default-judgment rendered against it. The issuance of an order of default is a condition sine qua non in order [that] a
judgment by default be clothed with validity. Further, records show that this Court never had authorized [private respondent]
to adduce evidence ex-parte against [petitioner] VEC. In sum, the February 18, 1991 decision by default is null and void as
against [petitioner] VEC. With this considered conclusion of nullity of said default judgment in question, this Court feels
there is no more need for it to resolve Arguments I-A & I-B, as well as III-A & III-B, of the March 14, 1991 Motion for
Reconsideration. The Court agrees, however, with said discussions on the non-compliance [with] Sec. 2, Rule 7 (Title of
Complaint) and Sec. I, Rule 8 on the requirement of indicating in the complaint the ultimate facts on which the party
pleading relies for his claim of defense [--] which is absent in the January 9, Amended Petition (pp. 122-141, records, Vol. I)
[--] for it merely mentioned [petitioner] VEC in par. 5 thereof and no more. It abides, likewise, with [Argument] III-B that
the Decision in suit award[ed] amounts never asked for in instant petition as regards VEC (Sec. 5, Rule 18, RRC). xxx.

WHEREFORE, in view of the foregoing consideration, and as prayed for, the February 18, 1991 Judgment by Default is
hereby reconsidered and SET ASIDE.

On June 26, 1992, then Executive Judge Bernardo P. Pardo [48] of the Regional Trial Court of Manila issued an
Order[49] annulling the Sheriffs Report/Return dated April 1, 1991, and all proceedings taken by Camagon.
The CA granted private respondents Motion to file a Supplemental Petition impleading petitioner in CA-GR 24669.
[50]
In view of the rampant pilferage of the cargo deposited at the PPA compound, private respondent obtained from the
appellate court a Writ of Preliminary Injunction dated March 6, 1992. The Writ reads:[51]

ACCORDINGLY, in view of the foregoing disquisitions, the urgent verified motion for preliminary injunction dated
February 11, 1992 is hereby GRANTED. Therefore, let a writ of preliminary injunction forthwith issue against the
respondents and all persons or agents acting in their behalf, enjoining them not to interfere in the transferring of the
aforementioned vessel and its cargoes, or in removing said cargoes xxx from [the] PPA compound.

On September 15, 1992, Sheriff Amado Sevilla seized petitioners motor tugboat Den Den by virtue of the
Order[52] dated April 3, 1992, issued by the RTC of Manila, Branch 26.[53]
On August 6, 1992, the CA consolidated CA-GR SP No. 28387 [54] with CA-GR SP No. 24669.[55] The Court of Tax
Appeals issued on October 5, 1992, a Resolution in CTA Case Nos. 4492, 4494 and 4500, which disposed as follows:

Confirming the order in open court on October 5, 1992, the Court hereby RESOLVES to:

1. Order Respondent Commissioner of Customs to assign or detail [a] sufficient number of customs police and guards
aboard, and around the vicinity of, the vessel M/V Star Ace now in anchor at Mariveles, Bataan or elsewhere, in order to
ensure its safety during the pendency of these cases;

2. Direct him to assign personnel and/or representatives to conduct an inventory of part of the vessels cargo now in the
possession of Mr. Cesar S. Urbino, Sr. at 197 Heroes del 96 Street, Caloocan City, which inventory may be participated in by
all the parties interested in said cargo.

To enjoin the CTA from enforcing said Order, private respondent filed before the Court of Appeals another Petition
for Certiorari,[56] which was later also consolidated with CA-GR SP No. 24669.
On July 19, 1993, the CA rendered the assailed Decision. Petitioner filed (1) a Motion for Clarification, praying for a
declaration that the trial court Decision against it was not valid; and (2) a partial Motion for Reconsideration, seeking to set
aside the assailed Decision insofar as the latter affected it.
On July 5, 1995, the Court of Appeals issued the following Resolution:[57]

Pending resolution of the motions for reconsideration, filed by Vlason Enterprises Corporation and Banco [Du] Brazil, and
considering [private respondents] Motion for Entry of Judgment with respect to respondent PPA having already been granted
by this Court as far back as June 17, 1994, pursuant to the resolution of the Supreme Court dated December 8, 1993 in G.R.
No. 111270-72 (Philippine Ports Authority vs. Court of Appeals, et al.) informing the parties in said case that the judgment
sought to be reviewed has now become final and executory, the lower court may now take appropriate action on the urgent
ex-parte motion for issuance of a writ of execution, filed by [private respondent] on July 15, 1994.

On August 28, 1995, the Regional Trial Court of Manila, Branch 26, issued a Writ of Possession which resulted in
private respondent taking possession of petitioners barge Lawin (formerly Sea Lion 2)on September 1, 1995.[58]
Hence, this Petition.[59]
Ruling of the Respondent Court
As already adverted to, Respondent Court granted the Petition for Certiorari of the private respondent, which was
consolidated with the latters two other Petitions. The court a quo issued the following rulings:
1. The trial court had jurisdiction over the salvors claim or admiralty case pursuant to Batas Pambansa Bilang 129.
2. Since the Decision of the trial court became final and executory, never having been disputed or appealed to a
higher court, the trial judge committed grave abuse of discretion in recalling the Writ of Execution and in
quashing the levy and the execution of the sale of M/V Star Ace and its cargo.
2. Such acts constituted an alteration or a modification of a final and executory judgment and could never be
justified under law and jurisprudence.
3. Civil Case 59-51451 dealt only with the salvors claim without passing upon the legality or the validity of the
undated Decision of the Commissioner of Customs in the seizure proceeding.
4. Petitioner and his co-respondents could not invoke the jurisdiction of a court to secure affirmative relief against
their opponent and, after failing to obtain such relief, question the courts jurisdiction.
5. Petitioner had no recourse through any of the following judicially accepted means to question the final
judgment:

a. a petition for relief from judgment under Rule 38,

b. a direct action to annul and enjoin the enforcement of the questioned judgment, and

c. a collateral attack against the questioned judgment which appears void on its face.

6. A court which has already acquired jurisdiction over a case cannot be ousted by a coequal court; the res in this
casethe vessel and its cargowere placed under the control of the trial court ahead of the CTA.
7. The admiralty Decision had attained finality while the issue of the validity of the seizure proceedings was still
under determination.
In the assailed Resolution, Respondent Court clarified that there was no need to serve summons anew on petitioner,
since it had been served summons when the Second Amended Petition (the third) was filed; and that petitioners Motion for
Reconsideration was defective and void, because it contained no notice of hearing addressed to the counsel of private
respondent in violation of Rule 16, Section 4 of the Rules of Court.

To this second motion, [private respondent] contends that there was no need to serve summons anew to VEC when the
second amended petition was filed impleading VEC, pursuant to the ruling of the Supreme Court in Asiatic Travel Corp. vs.
CA (164 SCRA 623); and that finally, the decision of the court a quo o[n] February 18, 1991 became final and executory,
notwithstanding the timely filing of the motion for reconsideration of VEC for the reason that the said motion for
reconsideration was defective or void, there being no notice of hearing addressed to the counsel of petitioner. In fact, no
motion such as this instant one can be acted upon by the Court without proof of service of the notice thereof, pursuant to
Rule 16, Section 4 of the Rules of Court.

Finally, we should never lose sight of the fact that the instant petition for certiorari is proper only to correct errors of
jurisdiction committed by the lower court, or grave abuse of discretion which is tantamount to lack of jurisdiction. Where the
error is not one of jurisdiction but an error of law or of fact which is a mistake of judgment, appeal is the remedy ( Salas vs.
Castro, 216 SCRA 198). Here, respondents failed to appeal. Hence, the decision dated February 18, 1991 of the lower court
has long become final, executory and unappealable. We do not and cannot therefore review the instant case as if it were on
appeal and direct actions on these motions. While the proper remedy is appeal, the action for certiorari will not be
entertained. Indeed, certiorari is not a substitute for lapsed appeal.

At any rate, the decision dated July 19, 1993 of this Court on the main petition for certiorari is not yet final (except with
respect to respondent PPA), the Bureau of Customs having filed a petition for certiorari and prohibition, under Rule 65 of
the Rules of Court, with the Supreme Court, necessitating prudence on Our part to await its final verdict. [60]

Assignment of Errors
Before us, petitioner submits the following assignment of errors on the part of Respondent Court: [61]

I The Court of Appeals committed serious error in ruling that the entire decision of the trial court in Civil Case No.
89-51451 dated 18 February 1991 became final and executory because it was never disputed or appealed.

A. VEC filed a motion for reconsideration of the said decision two days before deadline, which motion was granted by the
trial court.

B. The trial court correctly granted VECs motion for reconsideration and set aside the 18 February 1991 decision xxx against
VEC, for:

1. The trial court never acquired jurisdiction over the person of VEC as to enable it to render any judgment against it:
(i) VEC was not impleaded as a respondent in Civil Case No. 89-51451;
(ii) Summons was not served on VEC;
2. The trial court improperly rendered judgment by default against VEC;
(i) The trial court never issued an order of default against VEC;
(ii) The trial court never authorized ex-parte presentation of evidence against VEC.
3. The Judgment by default was fatally defective because:
(i) No filing fee was paid by [private respondent] for the staggering amount of damages awarded by the trial court.
(ii) The 18 February 1991 decision violates the Revised Rules of Court, which prescribe that a judgment by default cannot
decree a relief not prayed for.

II Since the 18 February 1991 Decision in Civil Case No. 89-51451 is void as against VEC, the recall of the writ of
execution was valid, as far as VEC is concerned.

The Court believes that the issues can be simplified and restated as follows:
1. Has the February 18, 1991 RTC Decision become final and executory in regard to petitioner?
2. Did the trial court acquire jurisdiction over the petitioner?
3. Was the RTC default judgment binding on petitioner?
4. Was the grant of damages against petitioner procedurally proper?
5. Was private respondent entitled to a writ of execution?
This Courts Ruling
The petition is meritorious.
First Issue: Finality of the RTC Decision
A judgment becomes final and executory by operation of law. Its finality becomes a fact when the reglementary period
to appeal lapses, and no appeal is perfected within such period. [62] The admiralty case filed by private respondent with the
trial court involved multiple defendants. This being the case, it necessarily follows that the period of appeal of the February
18, 1991 RTC Decision depended on the date a copy of the judgment was received by each of the defendants. Elsewise
stated, each defendant had a different period within which to appeal, depending on the date of receipt of the Decision. [63]
Omega, Singkong Trading Co. and M/V Star Ace chose to enter into a compromise agreement with private
respondent. As to these defendants, the trial court Decision had become final, and a writ of execution could be issued against
them.[64] Doctrinally, a compromise agreement is immediately final and executory.[65]
Petitioner, however, is not in the same situation. Said Decision cannot be said to have attained finality as to the
petitioner, which was not a party to the compromise. Moreover, petitioner filed a timely Motion for Reconsideration with the
trial court, thirteen days after it received the Decision or two days before the lapse of the reglementary period to appeal. A
motion for reconsideration tolls the running of the period to appeal. [66] Thus, as to petitioner, the trial court Decision had not
attained finality.
Exception to the Rule on Notice of Hearing
Respondent Court and private respondent argue that, although timely filed, petitioners Motion for Reconsideration was
a mere scrap of paper, because (1) it did not contain a notice of hearing addressed to the current counsel of private
respondent, and (2) the notice of hearing addressed to and served on private respondents deceased counsel was not
sufficient. Admittedly, this Motion contained a notice of hearing sent to Atty. Jesus C. Concepcion who, according to private
respondent, had already died and had since been substituted by its new counsel, Atty. Domingo Desierto. Therefore, the
appellate court ruled that the said Motion did not toll the reglementary period to appeal and that the trial court Decision
became final.
This Court disagrees. Rule 15 of the Rules of Court states:

SEC. 4. Notice.Notice of a motion shall be served by the applicant to all parties concerned, at least three (3) days before the
hearing thereof, together with a copy of the motion, and of any affidavits and other papers accompanying it. The court,
however, for good cause may hear a motion on shorter notice, specially on matters which the court may dispose of on its own
motion.

SEC. 5. Contents of notice.The notice shall be directed to the parties concerned, and shall state the time and place for the
hearing of the motion. [67]

Ideally, the foregoing Rule requires the petitioner to address and to serve on the counsel of private respondent the notice
of hearing of the Motion for Reconsideration. The case at bar, however, is far from ideal. First, petitioner was not validly
summoned and it did not participate in the trial of the case in the lower court; thus, it was understandable that petitioner
would not be familiar with the parties and their counsels. Second, Atty. Desierto entered his appearance only as collaborating
counsel,[68] who is normally not entitled to notices even from this Court. Third, private respondent made no manifestation on
record that Atty. Concepcion was already dead. Besides, it was Atty. Concepcion who signed the Amended Petition, wherein
petitioner was first impleaded as respondent and served a copy thereof.Naturally, petitioners attention was focused on this
pleading, and it was within its rights to assume that the signatory to such pleading was the counsel for private respondent.
The Court has consistently held that a motion which does not meet the requirements of Sections 4 and 5 of Rule 15 of
the Rules of Court is considered a worthless piece of paper, which the clerk of court has no right to receive and the trial court
has no authority to act upon. Service of a copy of a motion containing a notice of the time and the place of hearing of that
motion is a mandatory requirement, and the failure of movants to comply with these requirements renders their motions
fatally defective.[69] However, there are exceptions to the strict application of this rule. These exceptions are as follows:[70]

xxx Liberal construction of this rule has been allowed by this Court in cases (1) where a rigid application will result in a
manifest failure or miscarriage of justice;[71] especially if a party successfully shows that the alleged defect in the questioned
final and executory judgment is not apparent on its face or from the recitals contained therein; (2) where the interest of
substantial justice will be served;[72] (3) where the resolution of the motion is addressed solely to the sound and judicious
discretion of the court;[73] and (4) where the injustice to the adverse party is not commensurate [to] the degree of his
thoughtlessness in not complying with the procedure prescribed. [74]

The present case falls under the first exception. Petitioner was not informed of any cause of action or claim against
it. All of a sudden, the vessels which petitioner used in its salvaging business were levied upon and sold in execution to
satisfy a supposed judgment against it. To allow this to happen simply because of a lapse in fulfilling the notice requirement
which, as already said, was satisfactorily explained would be a manifest failure or miscarriage of justice.
A notice of hearing is conceptualized as an integral component of procedural due process intended to afford the adverse
parties a chance to be heard before a motion is resolved by the court. Through such notice, the adverse party is permitted
time to study and answer the arguments in the motion.
Circumstances in the case at bar show that private respondent was not denied procedural due process, and that the very
purpose of a notice of hearing had been served. On the day of the hearing, Atty. Desierto did not object to the said Motion for
lack of notice to him; in fact, he was furnished in open court with a copy of the motion and was granted by the trial court
thirty days to file his opposition to it.These circumstances clearly justify a departure from the literal application of the notice
of hearing rule.[75] In other cases, after the trial court learns that a motion lacks such notice, the prompt resetting of the
hearing with due notice to all the parties is held to have cured the defect.[76]
Verily, the notice requirement is not a ritual to be followed blindly. Procedural due process is not based solely on a
mechanistic and literal application that renders any deviation inexorably fatal. Instead, procedural rules are liberally
construed to promote their objective and to assist in obtaining a just, speedy and inexpensive determination of any action and
proceeding.[77] For the foregoing reasons, we believe that Respondent Court committed reversible error in holding that the
Motion for Reconsideration was a mere scrap of paper.
Second Issue: Jurisdiction Over Petitioner
Service of Summons on a Corporation
The sheriffs return shows that Angliongto who was president of petitioner corporation, through his secretary Betty
Bebero, was served summons on January 18, 1990. [78] Petitioner claims that this service was defective for two reasons: (1)
Bebero was an employee of Vlasons Shipping, Inc., which was an entity separate and distinct from Petitioner Vlason
Enterprises Corporation (VEC); and (2) the return pertained to the service of summons for the amended Petition, not for the
Second Amended Petition with Supplemental Petition, the latter pleading having superseded the former.
A corporation may be served summons through its agents or officers who under the Rules are designated to accept
service of process. A summons addressed to a corporation and served on the secretary of its president binds that corporation.
[79]
This is based on the rationale that service must be made on a representative so integrated with the corporation sued, that it
is safe to assume that said representative had sufficient responsibility and discretion to realize the importance of the legal
papers served and to relay the same to the president or other responsible officer of the corporation being sued. [80] The
secretary of the president satisfies this criterion. This rule requires, however, that the secretary should be an employee of the
corporation sought to be summoned. Only in this manner can there be an assurance that the secretary will bring home to the
corporation [the] notice of the filing of the action against it.
In the present case, Bebero was the secretary of Angliongto, who was president of both VSI and petitioner, but she was
an employee of VSI, not of petitioner. The piercing of the corporate veil cannot be resorted to when serving summons.
[81]
Doctrinally, a corporation is a legal entity distinct and separate from the members and stockholders who compose
it. However, when the corporate fiction is used as a means of perpetrating a fraud, evading an existing obligation,
circumventing a statute, achieving or perfecting a monopoly or, in generally perpetrating a crime, the veil will be lifted to
expose the individuals composing it. None of the foregoing exceptions has been shown to exist in the present case. Quite the
contrary, the piercing of the corporate veil in this case will result in manifest injustice. This we cannot allow. Hence, the
corporate fiction remains.
Effect of Amendment of Pleadings on Jurisdiction
Petitioner claims that the trial court did not acquire jurisdiction over it, because the former had not been served
summons anew for the Second Amended Petition or for the Second Amended Petition with Supplemental Petition. In the
records, it appears that only Atty. Tamondong, counsel for Singkong Trading, was furnished a copy of the Second Amended
Petition.[82] The corresponding sheriffs return indicates that only Omega, M/V Star Ace and Capt. Rada were served summons
and copies of said Petition.[83]
We disagree. Although it is well-settled that an amended pleading supersedes the original one, which is thus deemed
withdrawn and no longer considered part of the record, it does not follow ipso factothat the service of a new summons for
amended petitions or complaints is required. Where the defendants have already appeared before the trial court by virtue of
a summons on the original complaint, the amended complaint may be served upon them without need of another summons,
even if new causes of action are alleged. [84] After it is acquired, a courts jurisdiction continues until the case is finally
terminated. Conversely, when defendants have not yet appeared in court and no summons has been validly served, new
summons for the amended complaint must be served on them. [85] It is not the change of cause of action that gives rise to the
need to serve another summons for the amended complaint, but rather the acquisition of jurisdiction over the persons of the
defendants. If the trial court has not yet acquired jurisdiction over them, a new service of summons for the amended
complaint is required.
In this case, the trial court obviously labored under the erroneous impression that petitioner had already been placed
under its jurisdiction since it had been served summons through the secretary of its president. Thus, it dispensed with the
service on petitioner of new summons for the subsequent amendments of the Petition. We have already ruled, however, that
the first service of summons on petitioner was invalid. Therefore, the trial court never acquired jurisdiction, and the said
court should have required a new service of summons for the amended Petitions.
Impleading a Party in the Title of the Complaint
Petitioner further claims that the trial court failed to acquire jurisdiction to render judgment against it because (1) the
title of the three Petitions filed by private respondent never included petitioner as a party-defendant, in violation of Rule 7;
and (2) the Petitions failed to state any allegation of ultimate facts constituting a cause of action against petitioner.
We disagree with petitioner on the first ground. The judicial attitude has always been favorable and liberal in allowing
amendments to pleadings. Pleadings shall be construed liberally so as to render substantial justice to the parties and to
determine speedily and inexpensively the actual merits of the controversy with the least regard to technicalities. [86]
The inclusion of the names of all the parties in the title of a complaint is a formal requirement under Section 3, Rule
7. However, the rules of pleadings require courts to pierce the form and go into the substance, and not to be misled by a false
or wrong name given to a pleading. The averments in the complaint, not the title, are controlling. Although the general rule
requires the inclusion of the names of all the parties in the title of a complaint, the non-inclusion of one or some of them is
not fatal to the cause of action of a plaintiff, provided there is a statement in the body of the petition indicating that a
defendant was made a party to such action.
Private respondent claims that petitioner has always been included in the caption of all the Petitions it filed, which
included Antonio Sy, field manager of petitioner. We checked and noted that in the caption and the body of the Amended
Petition and Second Amended Petition with Supplemental Petition, Antonio Sy was alleged to be representing Med Line
Philippines, not petitioner. Because it was private respondent who was responsible for the errors, the Court cannot excuse it
from compliance, for such action will prejudice petitioner, who had no hand in the preparation of these pleadings. In any
event, we reiterate that, as a general rule, mere failure to include the name of a party in the title of a complaint is not fatal by
itself.
Stating a Cause of Action in the Complaint
The general rule is allegata et probata -- a judgment must conform to the pleadings and the theory of the action under
which the case was tried.[87] But a court may also rule and render judgment on the basis of the evidence before it, even
though the relevant pleading has not been previously amended, so long as no surprise or prejudice to the adverse party is
thereby caused.[88]
In the case at bar, the liability of petitioner was based not on any allegation in the four Petitions filed with the trial
court, but on the evidence presented ex parte by the private respondent. Since the trial court had not validly acquired
jurisdiction over the person of petitioner, there was no way for the latter to have validly and knowingly waived its objection
to the private respondents presentation of evidence against it.
Third Issue: Judgment By Default
The trial court Decision holding petitioner liable for damages is basically a default judgment. In Section 18, judgment
by default is allowed under the following condition:[89]

SEC. 1. Judgment by default.If the defendant fails to answer within the time specified in these rules, the court shall, upon
motion of the plaintiff and proof of such failure, declare the defendant in default.Thereupon the court shall proceed to receive
the plaintiffs evidence and render judgment granting him such relief as the complaint and the facts proven may
warrant. xxxx.

Thus, it becomes crucial to determine whether petitioner was ever declared in default, and whether the reception of
evidence ex parte against it was procedurally valid.
Petitioner Was Never Declared In Default
Petitioner insists that the trial court never declared it in default.
We agree. The trial court denied the January 29, 1990 Motion of private respondent to declare all the defendants in
default, but it never acted on the latters subsequent Motion to declare petitioner likewise. During the pretrial on January 23,
1993, the RTC declared in default only Atty. Eddie Tamondong, as well as the other defendants Hon. Salvador Mison, M/V
Star Ace, Omega Sea Transport Co., Inc. of Panama and Sinkong Trading Co., [but] despite xxx due notice to them, [they]
failed to appear.[90] Even private respondent cannot pinpoint which trial court order held petitioner in default.
More important, the trial court, in its Resolution dated May 22, 1991, admitted that it never declared petitioner in
default, viz.:

xxx It is in this light that this [c]ourt made an in-depth reflection and assessment of the premises or reasons raised by
[petitioner] VEC[;] and after a re-examination of the facts and evidence spread on the records, it has come to the considered
conclusion that the questioned default-judgment has been improvidently issued. [Based on] the records, the claim of [private
respondent] that [its] January 29, 1990 Ex-Parte Motion to Declare Defendants In Default (pp. 174-177, records, Vol. 1)
including VEC had been granted is belied by the February 23, 1990 Order (pp. 214-215, records, ibid) par. 2, thereof, xxx

Not even petitioners November 23, 1990 Ex-Parte Motion To Present Evidence Against Defaulting Defendants (page 489,
records, Vol. 2) [can] be deemed as a remedy [for] the fact that there never was issued an order of default against respondents
including [petitioner] VEC. Having thus established that there ha[d] been no order of default against VEC as contemplated
by Sec. 1, Rule 18, in relation to Sec. 9, Rule 13, Revised Rules of Court, there could not have been any valid default-
judgment rendered against it. The issuance of an order [o]f default is a condition sine qua non in order [that] a judgment by
default be clothed with validity. Further, records show that this [c]ourt never had authorized [private respondent] to adduce
evidence ex-parte against [Petitioner] VEC. In sum, the February 18, 1991 decision by default is null and void as against
[Petitioner] VEC. xxxx.

The aforementioned default judgment refers to the February 18, 1989 Decision, not to the Order finding petitioner in
default as contended by private respondent. Furthermore, it is a legal impossibility to declare a party-defendant to be in
default before it was validly served summons.
Trial Court Did Not Allow Presentation of Evidence Ex Parte Against Petitioner
The Order of December 10, 1990, which allowed the presentation of evidence ex parte against the defaulting
defendants, could not have included petitioner, because the trial court granted private respondents motion praying for the
declaration of only the foreign defendants in default. So too, private respondents ex parte Motion to present evidence
referred to the foreign defendants only.[91]
Furthermore, the reception of evidence ex parte against a non-defaulting party is procedurally indefensible. Without a
declaration that petitioner is in default as required in Section 1, Rule 18, the trial court had no authority to order the
presentation of evidence ex parte against petitioner to render judgment against it by default. The trial judge must have
thought that since it failed to appear despite summons and was in default, it effectively waived any objection to the
presentation of evidence against it. This rule, however, would have applied only if petitioner had submitted itself to the
jurisdiction of the trial court. The latter correctly declared, in the Resolution just cited, that the default judgment against the
former had been improvidently rendered.
Fourth Issue: Awards Not Paid and Prayed For
Additional Filing Fees as Lien on the Judgment
Had the trial court validly acquired jurisdiction over petitioner, nonpayment of docket fees would not have prevented it
from holding petitioner liable for damages. The Court, in Manchester Development Corporation v. Court of Appeals, [92] ruled
that a court acquires jurisdiction over any case only upon the payment of the prescribed docket fee, not upon the amendment
of the complaint or the payment of the docket fees based on the amount sought in the amended pleading. This ruling,
however, was modified in Sun Insurance Office, Ltd. v. Asuncion,[93] which added:

3. Where the trial court acquires jurisdiction over a claim [through] the filing of the appropriate pleading and payment of the
prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same
has been left for determination by the court, the additional filing fee therefor shall constitute a lien on the judgment. It shall
be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the
additional fee.

Filing fees for damages and awards that cannot be estimated constitute liens on the awards finally granted by the trial
court. Their nonpayment alone is not a ground for the invalidation of the award.
Judgment by Default Cannot Grant Relief Not Prayed For
A declaration or order of default is issued as a punishment for unnecessary delay in joining issues. In such event,
defendants lose their standing in court, they cannot expect the trial court to act upon their pleadings, and they are not entitled
to notice of the proceeding until the final termination of the case. [94] Thus, the trial court proceeds with the reception of the
plaintiffs evidence upon which a default judgment is rendered.
Section 1 of Rule 18 provides that after the defendant has been declared in default, the court shall proceed to receive the
plaintiffs evidence and render judgment granting him such relief as the complaint and the facts proven may warrant. The
reliefs that may be granted, however, are restricted by Section 5, which provides that a judgment entered against a party in
default shall not exceed the amount or be different in kind from that prayed for.
In other words, under Section 1, a declaration of default is not an admission of the truth or the validity of the plaintiffs
claims.[95] The claimant must still prove his claim and present evidence. In this sense the law gives defaulting parties some
measure of protection because plaintiffs, despite the default of defendants, are still required to substantiate their allegations
in the complaint. The judgment of default against defendants who have not appeared or filed their answers does not imply a
waiver of all their rights, except their right to be heard and to present evidence in their favor. Their failure to answer does not
imply their admission of the facts and the causes of action of the plaintiffs, because the latter are required to adduce evidence
to support their allegations.
Moreover, the trial court is not allowed by the Rules to receive evidence that tends to show a relief not sought or
specified in the pleadings.[96] The plaintiff cannot be granted an award greater than or different in kind from that specified in
the complaint.[97]
This case should be distinguished, however, from that of defendants, who filed an answer but were absent during
trial. In that case, they can be held liable for an amount greater than or different from that originally prayed for, provided that
the award is warranted by the proven facts. This rule is premised on the theory that the adverse party failed to object to
evidence relating to an issue not raised in the pleadings.
The latter rule, however, is not applicable to the instant case. Admittedly, private respondent presented evidence that
would have been sufficient to hold petitioner liable for damages. However, it did not include in its amended Petitions any
prayer for damages against petitioner. Therefore, the trial court could not have validly held the latter liable for damages even
if it were in default.
Fifth Issue: Execution of Final Judgment
Section 1 of Rule 39 provides that execution shall issue only upon a judgment that finally disposes of the action or
proceeding. Such execution shall issue as a matter of right upon the expiration of the period to appeal it, if no appeal has
been duly perfected.[98]
In the present case, however, we have already shown that the trial courts Decision has not become final and executory
against petitioner. In fact, the judgment does not even bind it. Obviously, Respondent Court committed serious reversible
errors when it allowed the execution of the said judgment against petitioner.
WHEREFORE, the appeal is hereby GRANTED, and the assailed Decision and Resolution of the Court of Appeals
are REVERSED and SET ASIDE insofar as they affect petitioner. The levy and the sale on execution of petitioners properties
are declared NULL and VOID. Said properties are ordered RESTORED to petitioner. No pronouncement as to cost.
SO ORDERED.