208080592 remedial-cases-2

Get Homework/Assignment Done
Homeworkping.com
Homework Help
https://www.homeworkping.com/
Research Paper help
Online Tutoring
click here for freelancing tutoring sites
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 156187 November 11, 2004
JIMMY T. GO, petitioner,
vs.
UNITED COCONUT PLANTERS BANK, ANGELO V. MANAHAN, FRANCISCO C. ZARATE, PERLITAA.
URBANO and ATTY. EDWARD MARTIN, respondents.
D E C I S I O N
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari1
assailing the Decision2
dated 31 July 2002 of the Court of
Appeals in CA-G.R. SP No. 62625, the decretal portion of which reads:

WHEREFORE, the petition is GRANTED and the assailed orders dated June 7, 2000, August 9, 2000
and November 8, 2000 are SET ASIDE.
Respondent judge is directed to DISMISS Civil Case No. 67878 on the ground of improper venue.3
Petitioner Jimmy T. Go and Alberto T. Looyuko are co-owners of Noah’s Ark International, Noah’s Ark Sugar
Carriers, Noah’s Ark Sugar Truckers, Noah’s Ark Sugar Repacker, Noah’s Ark Sugar Insurers, Noah’s Ark
Sugar Terminal, Noah’s Ark Sugar Building, and Noah’s Ark Sugar Refinery.4
Sometime in August 1996, petitioner Jimmy T. Go and Alberto T. Looyuko applied for an Omnibus Line
accommodation with respondent United Coconut Planters Bank (UCPB) in the amount of Nine Hundred Million
(P900,000,000) Pesos,5
and was favorably acted upon by the latter.
The transaction was secured by Real Estate Mortgages over parcels of land, covered by Transfer Certificate of
Title (TCT) No. 64070, located at Mandaluyong City with an area of 24,837 square meters, and registered in
the name of Mr. Looyuko; and TCT No. 3325, also located at Mandaluyong City with an area of 14,271 square
meters, registered in the name of Noah’s Ark Sugar Refinery.
On 21 July 1997, the approved Omnibus Line accommodation granted to petitioner was subsequently
cancelled6
by respondent UCPB. As a consequence, petitioner Jimmy T. Go demanded from UCPB the return
of the two (2) TCTs (No. 64070 and No. 3325) covered by Real Estate Mortgages earlier executed. UCPB
refused to return the same and proceeded to have the two (2) pre-signed Real Estate Mortgages notarized on
22 July 1997 and caused the registration thereof before the Registry of Deeds of Mandaluyong City on 02
September 1997.
On 15 June 1999, respondent UCPB filed with the Office of the Clerk of Court and Ex-Officio Sheriff of
Mandaluyong City an extrajudicial foreclosure of real estate mortgage7
covered by TCT No. 64070, for
nonpayment of the obligation secured by said mortgage. As a result, the public auction sale of the mortgaged
property was set on 11 April 2000 and 03 May 2000.
To protect his interest, petitioner Jimmy T. Go filed a complaint for Cancellation of Real Estate Mortgage and
damages, with prayer for temporary restraining order and/or writ of preliminary injunction, against respondent
bank and its officers, namely, Angelo V. Manahan, Francisco C. Zarate, Perlita A. Urbano and Atty. Edward E.
Martin, together with Ex-Officio Sheriff Lydia G. San Juan and Sheriff IV Helder A. Dyangco, with the Regional
Trial Court of Pasig City, Branch 266, docketed as Civil Case No. 67878. The complaint was subsequently
amended8
on 22 May 2000. The amended complaint alleged, among other things, the following: that petitioner
Jimmy T. Go is a co-owner of the property covered by TCT No. 64070, although the title is registered only in
the name of Looyuko; that respondent bank was aware that he is a co-owner as he was asked to sign two
deeds of real estate mortgage covering the subject property; that the approved omnibus credit line applied for
by him and Looyuko did not materialize and was cancelled by respondent bank on 21 July 1997, so that the
pre-signed real estate mortgages were likewise cancelled; that he demanded from respondent bank that TCTs
No. 64070 and No. 3325 be returned to him, but respondent bank refused to do so; that despite the
cancellation of the omnibus credit line on 21 July 1997, respondent bank had the two deeds of real estate
mortgage dated and notarized on 22 July 1997 and caused the extrajudicial foreclosure of mortgage
constituted on TCT No. 64070; that the auction sale scheduled on 11 April 2000 and 03 May 2000 be enjoined;
that the two real estate mortgages be cancelled and TCTs No. 64070 and No. 3325 be returned to him; and
that respondent bank and its officers be ordered to pay him moral and exemplary damages and attorney’s
fees.
On 07 June 2000, respondent bank, instead of filing an answer, filed a motion to dismiss9
based on the
following grounds: 1) that the court has no jurisdiction over the case due to nonpayment of the proper filing and
docket fees; 2) that the complaint was filed in the wrong venue; 3) an indispensable party/real party in interest
was not impleaded and, therefore, the complaint states no cause of action; 4) that the complaint was
improperly verified; and 5) that petitioner is guilty of forum shopping and submitted an insufficient and false
certification of non-forum shopping.

On 07 June 2000, the trial court issued an order10
granting petitioner’s application for a writ of preliminary
injunction. Correspondingly, the auction sale, scheduled on 11 April 2000 and 03 May 2000, was enjoined.
On 09 August 2000, the trial court denied11
respondent bank’s motion to dismiss Civil Case No. 67878. A
motion for reconsideration12
was filed, but the same was likewise denied in an Order13
dated 08 November
2000.
Respondent bank questioned said orders before the Court of Appeals via a petition for certiorari14
dated 03
January 2001, alleging that the trial court acted without or in excess of jurisdiction or with grave abuse of
discretion in issuing an order denying the motion to dismiss and the motion for reconsideration thereof.
On 31 July 2002, the Court of Appeals15
set aside the Orders dated 07 June 2000, 09 August 2000 and 08
November 2000 issued by the trial court and directed the trial court to dismiss Civil Case No. 67878 on the
ground of improper venue.
A motion for reconsideration was filed by petitioner,16
which was denied in an order dated 14 November
2002.17
Hence, this petition for review on certiorari.18
On 16 June 2003, the Court gave due course to the petition, and required19
the parties to file their respective
memoranda. Respondents filed their Joint Memorandum on 27 August 2003, while petitioner filed his on 25
September 2003 upon prior leave of court for extension. With leave of this Court, private respondents filed their
reply to petitioner’s memorandum.
In his memorandum, petitioner raised a lone issue:
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHENIT
FAILED TO APPLY THE LAW AND ESTABLISHED JURISPRUDENCE ON THE MATTER BY
ISSUING THE QUESTIONED RESOLUTIONS FINDING THAT THE CASE A QUO IS A "REAL
ACTION."
Simply put, the issue to be resolved in this case is whether petitioner’s complaint for cancellation of real estate
mortgage is a personal or real action for the purpose of determining venue.
In a real action, the plaintiff seeks the recovery of real property, or as provided for in Section 1, Rule 4,20
a real
action is an action affecting title to or possession of real property, or interest therein. These include partition or
condemnation of, or foreclosure of mortgage on, real property. The venue for real actions is the same for
regional trial courts and municipal trial courts -- the court which has territorial jurisdiction over the area where
the real property or any part thereof lies.21
Personal action is one brought for the recovery of personal property, for the enforcement of some contract or
recovery of damages for its breach, or for the recovery of damages for the commission of an injury to the
person or property.22
The venue for personal actions is likewise the same for the regional and municipal trial
courts -- the court of the place where the plaintiff or any of the principal plaintiffs resides, or where the
defendant or any of the principal defendants resides, at the election of the plaintiff, as indicated in Section 2 of
Rule 4.23
It is quite clear then that the controlling factor in determining venue for cases of the above nature is the primary
objective for which said cases are filed. Thus:
1. In Commodities Storage & Ice Plant Corp. v. Court of Appeals,24
this Court ruled that "an action to
redeem by the mortgage debtor affects his title to the foreclosed property. If the action is seasonably
made, it seeks to erase from the title of the judgment or mortgage debtor the lien created by registration
of the mortgage and sale. If not made seasonably, it may seek to recover ownership to the land since

the purchaser’s inchoate title to the property becomes consolidated after [the] expiration of the
redemption period. Either way, redemption involves the title to the foreclosed property. It is a real
action."
2. In Fortune Motors, (Phils.), Inc., v. Court of Appeals,25
this Court quoting the decision of the Court of
Appeals ruled that "since an extrajudicial foreclosure of real property results in a conveyance of the title
of the property sold to the highest bidder at the sale, an action to annul the foreclosure sale is
necessarily an action affecting the title of the property sold. It is therefore a real action which should be
commenced and tried in the province where the property or part thereof lies."
3. In Punsalan, Jr. v. Vda. de Lacsamana,26
this court ruled that "while it is true that petitioner does not
directly seek the recovery . . . of the property in question, his action for annulment of sale and his claim
for damages are closely intertwined with the issue of ownership of the building which, under the law, is
considered immovable property, the recovery of which is petitioner’s primary objective. The prevalent
doctrine is that an action for the annulment or rescission of a sale of real property does not operate to
efface the fundamental and prime objective and nature of the case, which is to recover said real
property. It is a real action. Respondent Court, therefore, did not err in dismissing the case on the
ground of improper venue which was timely raised."
4. In Ruiz v. J. M. Tuason Co., Inc., et al.,27
the court ruled that "although [a] complaint is entitled to be
one for specific performance, yet the fact that [complainant] asked that a deed of sale of a parcel of
land . . . be issued in his favor and that a transfer certificate of title covering said land be issued to him,
shows that the primary objective and nature of the action is to recover the parcel of land itself because
to execute in favor of complainant the conveyance requested there is need to make a finding that he is
the owner of the land which in the last analysis resolves itself into an issue of ownership. Hence, the
action must be commenced in the province where the property is situated . . . ."
5. In Dr. Antonio A. Lizares, Inc. v. Hon. Hermogenes Caluag,28
this Court ruled that "an action praying
that defendant be ordered `to accept the payment being made’ by plaintiff for the lot which the latter
contracted to buy on installment basis from the former, to pay plaintiff compensatory damages and
attorney’s fees and to enjoin defendant and his agents from repossessing the lot in question, is one that
affects title to the land under Section 3 of Rule 5, of the Rules of Court, and ‘shall be commenced and
tried in the province where the property or any part thereof lies,’ because, although the immediate
remedy is to compel the defendant to accept the tender of payment allegedly made, it is obvious that
this relief is merely the first step to establish plaintiff’s title to [the] real property."
6. In Land Tenure Administration, et al. v. The Honorable Higinio B. Macadaeg and Alejandro T.
Lim,29
this Court ruled that "where the lessee seeks to establish an interest in an hacienda that runs
with the land and one that must be respected by the purchaser of the land even if the latter is not a
party to the original lease contract, the question of whether or not the standing crop is immovable
property become[s] irrelevant, for venue is determined by the nature of the principal claim. Since the
lessee is primarily interested in establishing his right to recover possession of the land for the purpose
of enabling him to gather his share of the crops, his action is real and must be brought in the locality
where the land is situated."
7. In Espineli & Mojica v. Hon. Santiago and Vda. de Ramirez,30
the court ruled that "although the main
relief sought in the case at bar was the delivery of the certificate of title, said relief, in turn, entirely
depended upon who, between the parties, has a better right to the lot in question. As it is not possible
for the court to decide the main relief, without passing upon the claim of the parties with respect to the
title to and possession of the lot in question, the claim shall be determined x x x in the province where
[the] said property or any part thereof lies."
The case of Carandang v. Court of Appeals,31
is more particularly instructive. There, we held that an action for
nullification of the mortgage documents and foreclosure of the mortgaged property is a real action that affects
the title to the property. Thus, venue of the real action is before the court having jurisdiction over the territory in
which the property lies, which is the Court of First Instance of Laguna.

Petitioner in this case contends that a case for cancellation of mortgage is a personal action and since he
resides at Pasig City, venue was properly laid therein. He tries to make a point by alluding to the case of
Francisco S. Hernandez v. Rural Bank of Lucena.32
Petitioner’s reliance in the case of Francisco S. Hernandez v. Rural Bank of Lucena33
is misplaced. Firstly, said
case was primarily an action to compel the mortgagee bank to accept payment of the mortgage debt and to
release the mortgage. That action, which is not expressly included in the enumeration found in Section 2(a) of
Rule 4 of the Old Civil Procedure and now under Section 1, Rule 4 of the 1997 Rules of Civil Procedure, does
not involve titles to the mortgaged lots. It is a personal action and not a real action. The mortgagee has not
foreclosed the mortgage. The plaintiffs’ title is not in question. They are in possession of the mortgaged lots.
Hence, the venue of the plaintiffs’ personal action is the place where the defendant or any of the defendants
resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. In
the case at bar, the action for cancellation of real estate mortgage filed by herein petitioner was primarily an
action to compel private respondent bank to return to him the properties covered by TCTs No. 64070 and No.
3325 over which the bank had already initiated foreclosure proceedings because of the cancellation by the said
respondent bank of the omnibus credit line on 21 July 1997. The prime objective is to recover said real
properties. Secondly, Carandang distinctly articulated that the ruling in Hernandez does not apply where the
mortgaged property had already been foreclosed. Here, and as correctly pointed out by the appellate court,
respondent bank had already initiated extrajudicial foreclosure proceedings, and were it not for the timely
issuance of a restraining order secured by petitioner Go in the lower court, the same would have already been
sold at a public auction.
In a relatively recent case, Asset Privatization Trust v. Court of Appeals,34
it was succinctly stated that the
prayer for the nullification of the mortgage is a prayer affecting real property, hence, is a real action.
In sum, the cancellation of the real estate mortgage, subject of the instant petition, is a real action, considering
that a real estate mortgage is a real right and a real property by itself.35
An action for cancellation of real estate
mortgage is necessarily an action affecting the title to the property. It is, therefore, a real action which should
be commenced and tried in Mandaluyong City, the place where the subject property lies.
WHEREFORE, the instant petition is DENIED for lack of merit. The assailed decision dated 31 July 2002 and
the Order dated 14 November 2002 denying the motion for reconsideration are hereby AFFIRMED. With costs.
SO ORDERED.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 160053 August 28, 2006
SPS. RENATO & ANGELINA LANTIN, Petitioners,
vs.
HON. JANE AURORA C. LANTION, Presiding Judge of the Regional Trial Court of Lipa City, Fourth
Judicial Region, Branch 13, PLANTERS DEVELOPMENT BANK, ELIZABETH C. UMALI, ALICE PERCE,
JELEN MOSCA, REGISTER OF DEEDS FOR LIPACITY, BATANGAS, THE CLERK OF COURT and EX-
OFFICIO SHERIFF OF THE REGIONAL TRIAL COURT OF BATANGAS, Respondents.
D E C I S I O N
QUISUMBING, J.:
This is a petition for certiorari assailing the orders dated May 15, 20031
and September 15, 20032
in Civil Case
No. 2002-0555 issued by public respondent, Presiding Judge Jane Aurora C. Lantion, of the Regional Trial
Court (RTC) of Lipa City, Batangas.
The facts of the case are as follows:
Petitioners Renato and Angelina Lantin took several peso and dollar loans from respondent Planters
Development Bank and executed several real estate mortgages and promissory notes to cover the loans. They
defaulted on the payments so respondent bank foreclosed the mortgaged lots. The foreclosed properties, in
partial satisfaction of petitioners’ debt, were sold at a public auction where the respondent bank was the
winning bidder. On November 8, 2003, petitioners filed against Planters Development Bank and its officers
Elizabeth Umali, Alice Perce and Jelen Mosca (private respondents), a Complaint for Declaration of Nullity
and/or Annulment of Sale and/or Mortgage, Reconveyance, Discharge of Mortgage, Accounting, Permanent
Injunction, and Damages with the RTC of Lipa City, Batangas. Petitioners alleged that only their peso loans
were covered by the mortgages and that these had already been fully paid, hence, the mortgages should have
been discharged. They challenged the validity of the foreclosure on the alleged non-payment of their dollar
loans as the mortgages did not cover those loans.
Private respondents moved to dismiss the complaint on the ground of improper venue since the loan
agreements restricted the venue of any suit in Metro Manila.
On May 15, 2003, the respondent judge dismissed the case for improper venue.
Petitioners sought reconsideration. They argued that the trial court in effect prejudged the validity of the loan
documents because the trial court based its dismissal on a venue stipulation provided in the agreement. The
motion for reconsideration was denied and the lower court held that the previous order did not touch upon the
validity of the loan documents but merely ruled on the procedural issue of venue.
Petitioners now come before us alleging that:
I
THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN HOLDING THAT THE VENUE STIPULATIONS IN THE "REAL ESTATE
MORTGAGE" AND "PROMISSORY NOTES" FALL WITHIN THE PURVIEW OF SECTION 4(B) OF RULE 4

OF THE 1997 RULES OF CIVIL PROCEDURE IN THAT IT LIMITED THE VENUE OF ACTIONS TO A
DEFINITE PLACE.
II
EXCESS OF JURISDICTION IN NOT FINDING THAT THE MERE USE OF THE WORD "EXCLUSIVELY"
DOESNOT, BYITSELF, MEAN THAT SUCH STIPULATIONS AUTOMATICALLY PROVIDE FOR AN
"EXCLUSIVE VENUE", AS CONTEMPLATED BY SECTION 4(B) OF RULE 4 OF THE 1997 RULES OF CIVIL
PROCEDURE, SPECIALLY WHEN THE TENOR OR LANGUAGE OF THE ENTIRE VENUE STIPULATION
CLEARLY PROVIDES OTHERWISE.
III
EXCESS OF JURISDICTION IN DISREGARDING THE FACT THAT HEREIN PETITIONERS’ COMPLAINT
INVOLVES SEVERAL CAUSES OF ACTION WHICH DO NOT ARISE SOLELY FROM THE "REAL ESTATE
MORTGAGE" AND "PROMISSORY NOTES" AND WHICH OTHER CAUSES OF ACTION MAY BE FILED IN
OTHER VENUES UNDER SECTIONS 1 AND 2 OF RULE 4 OF THE 1997 RULES OF CIVIL PROCEDURE.
IV
EXCESS OF JURISDICTION IN DISREGARDING THE PRINCIPLE THAT THE RULE ON VENUE OF
ACTIONS IS ESTABLISHED FOR THE CONVENIENCE OF THE PLAINTIFFS.3
The main issue in the present petition is whether respondent judge committed grave abuse of discretion when
she dismissed the case for improper venue.
Petitioners contend that, since the validity of the loan documents were squarely put in issue, necessarily this
meant also that the validity of the venue stipulation also was at issue. Moreover, according to the petitioners,
the venue stipulation in the loan documents is not an exclusive venue stipulation under Section 4(b) of Rule 4
of the 1997 Rules of Civil Procedure.4
The venue in the loan agreement was not specified with particularity.
Besides, petitioners posit, the rule on venue of action was established for the convenience of the plaintiff,
herein petitioners. Further, petitioners also contend that since the complaint involves several causes of action
which did not arise solely from or connected with the loan documents, the cited venue stipulation should not be
made to apply.
Private respondents counter that, in their complaint, petitioners did not assail the loan documents, and the
issue of validity was merely petitioners’ afterthought to avoid being bound by the venue stipulation. They also
aver that the venue stipulation was not contrary to the doctrine in Unimasters,5
which requires that a venue
stipulation employ categorical and suitably limiting language to the effect that the parties agree that the venue
of actions between them should be laid only and exclusively at a definite place. According to private
respondents, the language of the stipulation is clearly exclusive.
At the outset, we must make clear that under Section 4 (b) of Rule 4 of the 1997 Rules of Civil Procedure, the
general rules on venue of actions shall not apply where the parties, before the filing of the action, have validly
agreed in writing on an exclusive venue. The mere stipulation on the venue of an action, however, is not
enough to preclude parties from bringing a case in other venues. The parties must be able to show that such
stipulation is exclusive.6
In the absence of qualifying or restrictive words, the stipulation should be deemed as
merely an agreement on an additional forum, not as limiting venue to the specified place.7
The pertinent provisions of the several real estate mortgages and promissory notes executed by the petitioner
respectively read as follows:

18. In the event of suit arising out of or in connection with this mortgage and/or the promissory note/s secured
by this mortgage, the parties hereto agree to bring their causes of auction (sic) exclusively in the proper court
of Makati, Metro Manila or at such other venue chosen by the Mortgagee, the Mortgagor waiving for this
purpose any other venue.8
(Emphasis supplied.)
I/We further submit that the venue of any legal action arising out of this note shall exclusively be at the proper
court of Metropolitan Manila, Philippines or any other venue chosen by the BANK, waiving for this purpose any
other venue provided by the Rules of Court.9
(Emphasis supplied.)
Clearly, the words "exclusively" and "waiving for this purpose any other venue" are restrictive and used
advisedly to meet the requirements.
Petitioners claim that effecting the exclusive venue stipulation would be tantamount to a prejudgment on the
validity of the loan documents. We note however that in their complaint, petitioners never assailed the validity
of the mortgage contracts securing their peso loans. They only assailed the terms and coverage of the
mortgage contracts. What petitioners claimed is that their peso loans had already been paid thus the
mortgages should be discharged, and that the mortgage contracts did not include their dollar loans. In our
view, since the issues of whether the mortgages should be properly discharged and whether these also cover
the dollar loans, arose out of the said loan documents, the stipulation on venue is also applicable thereto.
Considering all the circumstances in this controversy, we find that the respondent judge did not commit grave
abuse of discretion, as the questioned orders were evidently in accord with law and jurisprudence.
WHEREFORE, the petition is DISMISSED. The assailed orders dated May 15, 2003 and September 15, 2003
of the Regional Trial Court of Lipa City, Batangas, in Civil Case No. 2002-0555 are AFFIRMED.
Costs against petitioners.
SO ORDERED.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 123555 January 22, 1999
PROGRESSIVE DEVELOPMENT CORPORATION, INC., petitioner,
vs.
COURT OF APPEALS and WESTIN SEAFOOD MARKET, INC. respondents.
BELLOSILLO, J.:
May the lessee which instituted before the Metropolitan Trial Court an action for forcible entry with damages
against its lessor file a separate suit with the Regional Trial Court against the same lessor for moral and
exemplary damages plus actual and compensatory damages based on the same forcible entry?
On grounds of litis pendencia and forum-shopping petitioner invokes established jurisprudence that a party
cannot by varying the form of action or adopting a different method of presenting his case evade the principle
that the same cause of action shall not be litigated twice between the same parties or their privies. 1
Petitioner
therefore prays for reversal of the decision of the Court of Appeals dated 27 May 1995, as well as its
Resolution dated 17 January 1996 denying reconsideration, which upheld the denial by the Regional Trial
Court of petitioner's motion to dismiss private respondent's damage suit.
The antecedents: On 27 May 1991 petitioner leased to private, respondent Westin Seafood Market, Inc., a
parcel of land with a commercial building thereon located at Aranet Center, Cubao, Quezon City, for a period of
nine (9) years and three (3) months, i.e., from 2 January 1989 to 30 April 1998, with a monhtly rental of
approximately P600,000.00. The contract contained, among others, the following pertinent terms and
conditions:
EFFECT OF VIOLATIONS
25. LESSEE hereby agrees that all the provisions contained in this Contract shall be deemed as
conditions, as-well as covenants, and that this Contract shall be automatically terminated and
cancelled without resorting to court action should LESSEE violate any or all said conditions,
including the payment of Rent, CUSA and other charges indicated in the FLP when due within
the time herein stipulated and in any such cases, LESSEE hereby irrevocably appoints
LESSOR, its authorized agents, employees and/or representatives as his duly authorized
attorney-in-fact, even after the termination, expiration or cancellation of this Contract, with full
power and authority to open, enter, repossess, secure, enclose, fence and otherwise take full
and complete physical possession and control of the leased premises and its contents without
resorting to court action and/or to summarily disconnect electrical and/or water services thereof,
and that LESSEE hereby irrevocably empowers LESSOR, his authorized agents, employees
and/or representatives to take inventory and possession of whatever equipment, furniture,
articles, merchandise, appliances, etc., found therein belonging to LESSEE, consignors and/or
to any other persons and to place the same in LESSOR's warehouse or any other place at
LESSOR's discretion for safekeeping; charging LESSEE the corresponding storage fees
therefor; that in case LESSEE fails to claim-said equipment, furniture, articles, merchandise,
appliances, etc. from storage and simultaneously liquidate any liability with LESSOR within
seven (7) days from date of said transfer to LESSOR's warehouse, LESSOR is likewise hereby
expressly authorized and empowered by LESSEE to dispose of said property/properties in a
public sale through a Notary Public of LESSOR's choice and to apply the proceeds thereof to

whatever liability and/or indebtedness LESSEE may have to LESSOR plus reasonable
expenses for the same, including storage fees, and the balance, if any, shall be turned over to
LESSEE; that LESSEE hereby expressly agrees that any or all acts performed by LESSOR, his
authorized agents, employees and/or representatives under the provisions of this Section may
not be the subject of any petition for a Writ of Preliminary Injunction or Mandatory Injunction in
court, and that LESSOR and/or his authorized agents, employees, and/or representatives shall
be free from any civil and/or criminal liability or responsibility whatsoever therefor.
TERMINATION OF LEASE
26. Upon-the automatic termination of this lease contract, as the case may be, LESSEE shall
immediately vacate and redeliver physical possession of the leased premises, including the
keys appertaining thereto, to LESSOR in good, clean and sanitary condition, reasonable wear
and tear excepted, devoid of all occupants,. equipment, furnitures articles, merchandise, etc.,
belonging to LESSEE or to any other person except those belonging to LESSOR; that should
LESSEE fail to comply with this provision, LESSOR is hereby given the same rights and power
to proceed against LESSEE as expressly granted in the immediately; preceding section.
Private respondent failed to pay rentals despite several demands by petitioner. As of 19 October 1992 the
arrearages amounted to P8,608,284.66. Admittedly, non-payment of rentals constituted breach of their
contract; thus, pursuant to the express authority granted petitioner under the above-quoted Secs. 25 and 26 of
the lease agreement, petitioner on 31 October 1992 repossessed the leased premises, inventoried the
movable properties found within and owned by private respondent and scheduled public auction for the sale of
the movables on 19 August 1993 with notice to private respondent.
On 26 November 1992 private respondent filed with the Metropolitan Trial Court of Quezon City a complaint
against petitioner for forcible entry with damages and a prayer for a temporary restraining order and/or writ of
preliminary injunction. 2
The case was raffled to Branch 40 presided over by Judge Guillermo L. Loja Jr. who
issued a temporary restraining order enjoining petitioner from selling private respondent's properties at a public
auction.
On 9 December 1992 Judge Loja inhibited himself from trying the case and directed its transfer to Branch 34
presided over by Judge Joselito SD Generoso. Soon after, petitioner filed an urgent motion for the inhibition of
Judge Generoso and the immediate reraffle of the case arguing that the summary transfer of the case to Judge
Generoso was irregular as it was not done by raffle.
The motion was granted and the case went to Branch 36 presided over by Judge Francisco D. Villanueva.
Thereafter, on 22 December 1992, at the continuation of the hearing on the issuance of a writ preliminary
mandatory injunction, the parties agreed, among others, on the following: (a) private respondent would deposit
with the Philippine Commercial and Industrial Bank in the name of the Metropolitan Trial Court, Branch 36, the
amount of P8,000,000.00 to guarantee the payment of its back rentals; (b) petitioner would defer the sale of
the personal properties of the Westin Seafood Market, Inc., until a final settlement of the case had been
arrived, at; (c) petitioner shall allow private respondent to retrieve all the perishable goods from inside the
leased premises like frozen meat, vegetables and fish, all properly receipted for; (d) petitioner shall allow three
(3) maintenance personnel of private respondent to enter the premises at reasonable working hours to
maintain the restaurant equipment; and (e) the parties shall negotiate for the restoration of the premises to
private respondent, and if no settlement be arrived at on or before January 8, 1993, the hearing on the merits
of the case shall proceed and the disposition of the amount deposited representing the rental arrearages shall
be left to the. discretion of the court.
This agreement was incorporated in the order of the court dated 22 December 1992 3
which in effect
terminated for all intents and purposes the incident on the issuance of a preliminary writ of injunction.
Private respondent did not comply with its undertaking to deposit with the designated bank the amount
representing its back rentals. Instead, with the forcible entry case still pending with the MeTC, private

respondent instituted on 9 June 1993 another action for damages against petitioner with the Regional Trial
Court of Quezon City. The case was raffled to Branch 101 presided over by Judge Pedro T. Santiago. 4
Petitioner filed a motion, to dismiss the damage suit on the ground of litis pendencia and forum shopping. On 2
July 1993, instead of ruling on the motion, Judge Santiago issued an order archiving the case pending the
outcome of the forcible entry case being heard at the MeTC for the reason that "the damages is (sic) principally
anchored on whether or not the defendants (petitioner herein) have committed forcible entry." 5
On 2 August
1993 petitioner moved for reconsideration of the order and reiterated its motion to dismiss the suit for
damages.
Before petitioner's motion to dismiss could be resolved, private respondent filed with the RTC on 18 August
1993 an amended complaint for damages. On 14 September 1993 it also filed an Urgent Ex-Parte Motion for
the Issuance of a Temporary Restraining Order and Motion for the Grant of a Preliminary Prohibitory and
Preliminary Mandatory Injunction. On the very same day, Judge Santiago issued an order (a) denying
petitioner's motion to dismiss, (b) admitting private respondent's amended complaint, and (c) granting private
respondent's application for a temporary restraining order against petitioner.
Thus, petitioner filed with the Court of Appeals a special civil action for certiorari and prohibition on the ground
that Judge Santjago acted in excess of his jurisdiction and/or committed grave abuse of discretion amounting
to lack of jurisdiction in admitting, the amended complaint of private respondent and issuing a restraining order
against petitioner; in allowing private respondent to engage in forum shopping; and, taking cognizance of the
action; for damages despite lack of jurisdiction. 6
But the Court of Appeals dismissed the petition due to the failure of petitioner to file a motion for
reconsideration of Judge Santiago's order of 14 September 1993 which, it explained, was a prerequisite to the
institution of a petition for certiorari and prohibition. It also found that the elements of litis pendencia were
lacking to justify the dismissal of the action for damages with the RTC because despite the pendency of the
forcible entry case with the MeTC the only damages recoverable thereat were those caused by the loss of the
use and occupation of the property and not the kind of damages being claimed before the RTC which had no
direct relation to loss of material possession. It clarified that since the damages prayed for in the amended
complaint with the RTC were those caused by the alleged high-handed manner with which petitioner
reacquired possession of the leased premises and the sale of private respondent's movables found therein, the
RTC and not the MeTC had jurisdiction over the action of damages. 7
Petitioner, aggrieved by the decision of the appellate court, filed the instant petition for review
on certiorari under Rule 45 of the Rules of Court alleging that it erred in (a) finding that petitioner failed to avail
of its plain, speedy and adequate remedy of a prior motion for reconsideration with the RTC; (b) ruling that, the
trial judge did not act with grave abuse of discretion in taking cognizance of the action for damages and
injunction despite the pendency of the forcible entry case with the MeTC; and, (c) ruling that private respondent
did not commit forum shopping since the causes of action before the RTC and MeTC were not identical with
each other.
There is merit in the petition. While generally a motion for reconsideration must first be filed before resorting
tocertiorari in order to give the lower court an opportunity to correct the errors imputed to it 8
this rule admits of
exceptions and is not intended to be applied without considering the circumstances of the case. 9
The filing of
the motion for reconsideration before availing of the remedy of certiorari is not sine qua non when the issue
raised is one purely of law, 10
or where the error is patent or the disputed order is void, 11
or the questions
raised on certiorari are the same as those already squarely presented to and passed upon by the lower court
In its motion for dismissal of the action for damages with the RTC petitioner raised the ground that another
action for forcible entry was pending at the MeTC between the same parties involving the same matter and
cause of action. Outrightly rejected by the RTC, the same issue was elevated by petitioner on certiorari before
the Court of Appeals. Clearly, under the prevailing circumstance, any motion for reconsideration of the trial
court would have been a pointless exercise. 12

We now turn to the issue of whether an action for damages filed with the Regional Trial Court by the lessee
against the lessor should be dismissed on the ground of pendency of another action for forcible entry and
damages earlier filed by the same lessee against the same lessor before the Metropolitan Trial Court.
Sec. 1 of Rule 70 of the Rules of Court provides that any person deprived of the possession of any land or
building by force, indimidation, threat, strategy or stealth, or against whom thepossession of any land or
building is unlawfully withheld, may bring an action in the proper Municipal Trial Court against the person or
persons unlawfully withholding or depriving of possession, together with damages and costs. The mandate
under this rule is categorical: that all cases for forcible entry or unlawful detainer shall be filed before the
Municipal Trial Court which shall include not only the plea for restoration of possession but also all claims for
damages and costs arising therefrom. Otherwise expressed, no claim for damages arising out of forcible entry
or unlawful detainer may be filed separately and independently of the claim for restoration of possession.
This is consistent with the principle laid down in Sec. 1, par. (e), of Rule 16 of the Rules of Court which states
that the pendency of another action between the same parties for the same cause is a ground for dismissal of
an action. Res adjudicata requires that there must be between the action sought to be dismissed and the other
action the following elements: (a) identity of parties or at least such as representing the same interest in both
actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and, (c)
the identity in the two (2) preceding particulars should be such that any judgment which may be rendered on
the other action will, regardless of which party is successful, amount to res adjudicata in the action under
consideration. 13
It is likewise basic under Sec. 3 of Rule 2 of the Revised Rules of Court, as amended, that a party may not
institute more than one suit for a single cause of action. Under Sec. 4 of the same Rule, if two or more suits are
instituted on the basis of the same cause of action, the filing of one or a judgment upon the merits in any one is
available as a ground for the dismissal of the other or others. "Cause of action" is defined by Sec. 2 of Rule 2
as the act of omission by which a party violates a right of another. 14
These premises obtaining, there is no
question at all that private respondent's cause of action in the forcible entry case and in the suit for damages is
the alleged illegal retaking of possession of the leased premises by the lessor, petitioner herein, from which all
legal reliefs arise. Simply stated, the restoration of possession and demand for actual damages in the case
before the MeTC and the demand for damages with the RTC both arise from the same cause of action, i.e., the
forcible entry by petitioner into the least premises.
A comparative study of the two (2) complaints filed by private respondent against petitioner before the two (2)
trial courts shows that not only are the elements of res adjudicata present, at least insofar as the claim for
actual and compensatory damages is concerned, but also that the claim for damages — moral and exemplary
in addition to actual and compensatory — constitutes splitting a single cause of action. Since this runs counter
to the rule against multiplicity of suits, the dismissal of the second action becomes imperative.
The complaint for forcible entry contains the following pertinent allegations —
2.01 On 02 January 1989, plaintiff entered, into a contract of lease with defendant PDC over a
property designated as Ground Floor, Seafood Market (hereinafter "Subject Premises") situated
at the corner of EDSA, corner MacArthur Street, Araneta Center, Cubao, Quezon City, for a
period of ten (10) years from 02 January 1989 to 30 April 1998.
2.02 Immediately after having acquired actual physical possession of the Subject Premises,
plaintiff established and now operates thereon the now famous Seafood Market Restaurant.
Since then, plaintiff had been in actual, continuous, and peaceful physical possession of the
Subject Premises until 31 October 1992.
xxx xxx xxx

3.02 Plaintiff, being the lessee of the Subject Premises, is entitled to the peaceful occupation
and enjoyment of the Subject Premises to the exclusion of all others, including defendants
herein.
3.03 Defendants' resort to strong arms tactics to forcibly wrest possession of the Subject
Premises from plaintiff and maintain possession thereof through the use of force, threat,
strategy and intimidation by the use of superior number of men and arms amounts to the taking
of the law into their own hands.
3.04 Thus, defendants' act of unlawfully evicting out plaintiff from the Subject Premises it is
leasing from defendant PDC and depriving it of possession thereof through the use of force,
threat, strategy and intimidation should be condemned and declared illegal for being contrary; to
public order and policy.
3.05 Consequently, defendants should be enjoined from continuing with their illegal acts and be
ordered to vacate the Subject Premises and restore possession thereof, together with its
contents, to plaintiff.
xxx xxx xxx
4.07 Considering that defendants' act of forcibly grabbing possession of the Subject Premises
from plaintiff is illegal and null and void, defendant should be adjudged liable to plaintiff for all
the aforedescribed damages which plaintiff incurred as a result thereof.
The amended complaint for damages filed by private respondent alleges basically the same factual
circumstances and issues as bases for the relief prayed for, to wit:
4. On May 28, 1991, plaintiff and defendant PDC entered into a Contract of Lease for a period
of ten years or from January 2, 1989 up to April 30, 1998 over a property designated as Ground
Floor, Seafood Market (hereinafter referred to as Subject Premises) situated at the corner of
EDSA corner McArthur Street, Araneta Center, Cubao, Quezon City. A copy of the lease
contract is attached hereto as Annex "A".
5. Immediately thereafter, plaintiff took over actual physical possession of Subject Premises,
and established thereon the now famous "Seafood Market Restaurant."
xxx xxx xxx
7 On October 31, 1992 at around 8:30 p.m., defendant PDC, without the benefit of any writ of
possession or any lawful court order and with the aid of approximately forty (40) armed security
guards and policemen under the supervision of defendant Tejam, forcibly entered the subject
premises through force, intimidation, threats and stealth and relying on brute force and in a
thunderboltish manner and against plaintiff's will, unceremoniously drew away all of plaintiff's
men out of the subject premises, thereby depriving herein plaintiff of its actual, physical and
natural possession of the subject premises. The illegal, high-handed manner and gestapo like
take-over by defendants of subject premises is more particularly described as follows: . . .
8. To date, defendants continue to illegally possess and hold the Subject Premises, including all
the multi-million improvements, fixtures and equipment therein owned by plaintiff, all to the
damage and prejudice of plaintiff. The actuations of defendants constitute an unlawful
appropriation, seizure and taking of property against the will and consent of plaintiff. Worse,
defendants are threatening to sell at public auction and without the consent of plaintiff and
without lawful authority, the multi-million fixtures and equipment of plaintiff and at prices way
below the market value thereof. Plaintiff hereby attaches as Annex "B" the letter from
defendants dated August 6, 1993 addressed to plaintiff, informing the latter that the former

intends to sell at an auction on August 19, 1993 at 2:00 p.m. properties of the plaintiff presently
in defendants' possession.
xxx xxx xxx
12. Defendants' unlawful takeover of the premises constitutes a violation of its obligation under
Art. 1654 of the New Civil Code requiring the lessor to maintain the lessee in peaceful and
adequate enjoyment of the lease for the entire duration of the contract. Hence, plaintiff has filed
the present suit for the recovery of damages under Art. 1659 of the New Civil Code. . . .
Restated in its bare essentials, the forcible entry case has one cause of action, namely, the alleged unlawful
entry by petitioner into the leased premises out of which three (3) reliefs (denominated by private respondent
as is causes of action) arose: (a) the restoration by the lessor (petitioner herein) of the possession of the
leased premises to the lessee; (b) the claim for actual damages due to the losses suffered by private
respondent such as the deterioration of perishable foodstuff stored inside the premises and the deprivation of
the use of the premises causing loss of expected profits; and, (c) the claim for attoney's fees and cost of suit.
On the other hand, the complaint for damages prays for a monetary award consisting of (a) moral damages of
P500,000.00 and exemplary damages of another P500,000.00; (b) actual damages of P20,000,000.00 and
compensatory damages of P1,000,000.00 representing unrealized profits; and, (c) P200,000.00 for attorney's
fees and costs, all based on the alleged forcible takeover of the leased premises by petitioner. Since actual
and compensatory damages were already prayed for in the forcible entry case before the MeTC, it is obvious
that this cannot be relitigated in the damage suit before the RTC by reason of res adjudicata.
The other claims for moral and exemplary damages cannot also succeed considering that these sprung from
the main incident being heard before the MeTC. Jurisprudence is unequivocal that when a single delict or
wrong is committed — like the unlawful taking or detention of the property of the another — there is but one
single cause of action regardless of the number of rights that may have been violated, and all such rights
should be alleged in a single complaint as constituting one single cause of action. 15
In a forcible entry case,
the real issue is the physical possession of the real property. The question of damages is merely secondary or
incidental, so much so that the amount thereof does not affect the jurisdiction of the court. In other words, the
unlawful act of a deforciant in taking possession of a piece of land by means of force and intimidation against
the rights of the party actually in possession thereof is a delict or wrong, or a cause of action that gives rise to
two (2) remedies, namely, the recovery of possession and recovery of damages arising from the loss of
possession, but only to one action. For obvious reasons, both remedies cannot be the subject of two (2)
separate and independent actions, one for recovery of posssession only, and the other, for the recovery of
damages. That would inevitably lead to what is termed in law as splitting up a cause of action. 16
In David v. de
la Cruz 17
we observed —
Herein tenants have but one cause of action against their landlord, their illegal ejectment or
removal from their landholdings, which cause of action however entitles them to two (2) claims
or remedies — for reinstatement of damages. As both claims arise from the same cause of
action, they should be alleged in a single complaint.
A claim cannot be divided in such a way that a part of the amount of damages may be recovered in one case
and the rest, in another. 18
In Bacharach v. Icarangal 19
we explained that the rule was aimed at preventing
repeated litigations betweent the same parties in regard to the same subject of the controversy and to protect
the defendant from unnecessary vexation. Nemo debet bis vexari pro una et eadem causa.
What then is the effect of the dismissal of the other action? Since the rule is that all such rights should be
alleged in a single complaint, it goes without saying that those not therein included cannot be the subject of
subsequent complaints for they are barred forever. 20
If a suit is brought for a part of a claim, a judgment
obtained in that action precludes the plaintiff from bringing a second action for the residue of the claim,
notwithstanding that the second form of action is not identical with the first or different grounds for relief are set
for the second suit. This principle not only embraces what was actually determined, but also extends to every
matter which the parties might have litigated in the case. 21
This is why the legal basis upon which private

respondent anchored its second claim for damages, i.e., Art. 1659 in relation to Art. 1654 of the Civil
Code, 22
not otherwise raised and cited by private respondent in the forcible entry case, cannot be used as
justification for the second suit for damages. We note, not without some degree of displeasure, that by filing a
second suit for damages, private respondent was not only able to press a claim for moral and exemplary
damages which by its failure to allege the same in its suit before the MeTC foreclosed its right to sue on it, but
it was also able to obtain from the RTC, by way of another temporary restraining order, a second reprieve from
an impending public auction sale of its movables which could not anymore secure from the MeTC before which
the matter of the issuance of a preliminary writ of injunction was already closed.
The foregoing discussions provide sufficient basis to petitioner's charge that private respondent and its counsel
in the trial courts committed forum shopping. In Crisostomo v. Securities and Exchange Commission 23
we
ruled —
There is forum-shopping whenever, as a result of an adverse opinion in one forum, party seeks
a favorable opinion (other than by appeal or certiorari) in another. The principle applies . . . with
respect to suits filed in the courts . . . in connection with litigations commenced in the court . . .
in anticipation of an unfavorable . . . ruling and a favorable case where the court in which the
second suit was brought, has no jurisdiction.
This Court likewise elucidated in New Pangasinan Review, Inc. v. National Labor Relations Commission 24
that
there is forum-shopping when the actions involve the same transactions, the same essential facts and
circumstances. The reason behind the proscription of forum shopping is obvious. This unnecessarily burdens
our courts with heavy caseloads, unduly taxes the manpower and financial resources of the judiciary and trifles
with and mocks our judicial processes, thereby adversely affecting the efficient administration of justice. This
condemnable conduct has prompted the Court to issue circulars 25
ordering among others that a violation
thereof shall be cause for the dismissal of the case or cases without prejudice to the taking of appropriate
action against the counsel or party concerned.
The records ineluctably show that the complaint lodged, by private respondent with the Regional Trial Court of
Quezon City contained no certification of non-forum shopping. When petitioner filed a motion to dismiss the
case raising among others the ground of forum shopping it pointed out the absence of the required
certification. The amended complaint, as well as the second and third amended complaints, attempted to
rectify the error by invariably stating that there was no other action pending between the parties involving the
same causes of action although there was actually a forcible entry case pending before the MTC of Quezon
City. By its admission of a pending forcible entry case, it is obvious that private respondent was indulging in
forum shopping. While private respondent conveniently failed to inform the RTC that it had likewise sought
damages in the MTC on the basis of the same forcible entry, the fact remains that it precisely did so, which
stratagem was being duplicated in the second case. This is a compelling reason to dismiss the second case.
WHEREFORE, the Petition is GRANTED. The questioned Decision of the Court of Appeals dated 27
September 1995 and the Order of the Regional Trial Court of Quezon City dated 24 September 1993 are
REVERSED and SET ASIDE. The Regional Trial Court of Quezon City is directed to dismiss Civil Case No. Q-
93-16409, "Westin Seafood Market, Inc. v. Progressive Development Corporation, et al.," and the Metropolitan
Trial Court of Quezon City to proceed with the proper disposition of Civil Case No. 6589, "Westin Seafood
Market, Inc. v. Progressive Development Corporation, et al.," with dispacth considering the summary nature of
the case. Treble costs against private respondent.1âwphi1.nêt
SO ORDERED

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 78343 May 21, 1988
HEIRS OF RICARDO OLIVAS, represented byPOMPEYO F. OLIVAS, petitioners,
vs.
THE HON. FLORENTINO A. FLOR (Presiding Judge, Regional Trial Court, Fourth Judicial Region,
Branch 79, Morong, Rizal), JOSE A. MATAWARAN, respondents.
Belo, Abiera & Associates for petitioners.
Domingo Z. Legaspi for respondents.
R E S O L U T I O N
MELENCIO-HERRERA, J.:
This Petition for Review on certiorari seeks to set aside the Decision of the respondent Regional Trial Court,
Branch 79, Morong, Rizal, in the ejectment case entitled "Heirs of Ricardo Olivas vs. Jose Matawaran" (Civil
Case No. 227-M), which affirmed the Order of the Municipal Trial Court of Morong, Rizal ordering the dismissal
of said case.
The background facts disclose that:
On 16 May 1986, petitioners filed a complaint for Forcible Entry before the Municipal Trial Court of Morong,
Rizal (MTC, for short), alleging that private respondent, through stealth and strategy, urlawfully took
possession of the disputed property and ousted petitioners from their possession thereof.
The MTC issued summons stating that the Rule on Summary Procedure in Special Cases shall apply. On 29
May 1986, private respondent filed an Answer with Counterclaim stating, inter alia:
3. Paragraph 4 of the complaint is admitted insofar as the fact that defendant did complain to
the Barangay Chairman regarding the repeated attempts of plaintiff to unlawfully grab
possession of the property owned by defendant and his other brothers and sisters.
On 30 June 1986, the MTC granted the Temporary Restraining Order petitioners prayed for.
On 15 August 1986, the MTC required the parties to submit position papers within ten (10) days.
On 19 September 1986, or approximately four (4) months after the filing of the Answer, private respondent filed
a Motion to Dismiss alleging that the case should be dismissed outright for failure to state a cause of action.
Petitioners submitted an Opposition contending that a Motion to Dismiss is a prohibited pleading under the
Rule on Summary Procedure.
On 29 December 1986, the MTC dismissed the case for failure of petitioners' Complaint to state a cause of
action in that it failed to Identify sufficiently the land subject matter of this case.

An appeal was seasonably interposed by petitioners to respondent Regional Trial Court (RTC), Branch 79,
Morong, Rizal.
On 28 April 1987, Respondent RTC rendered a Decision affirming in toto the dismissal of the case by the MTC.
Before us now, petitioners maintain that the MTC Decision is violative of the Rule on Summary Procedure, and
that Respondent RTC erred in affirming the MTC's dismissal of the case.
We resolved to give due course to the Petition finding, as we do, merit in the foregoing submissions.
Compliance by the MTC with the Rules on Summary Procedure in Special Cases was wanting. For example, 'a
preliminary conference during which the Court must clarify and define the issues of the case, which must be
clearly and distinctly set forth in the Order to be issued immediately after such preliminary conference" (Section
6), was not -followed. Neither was Section 7 thereof which further requires that within ten (10) days from
receipt of the said order, "the parties shall submit the affidavits of witnesses and other evidences on the factual
issues defined therein, together with a brief statement of their positions setting forth the law and the facts relied
upon by them."
In the guise of a position paper, private respondent filed a Motion to Dismiss. While this is, indeed, a prohibited
pleading (Sec. 15[a], Rule on Summary Procedure) it should be noted that the Motion was filed after an
Answer had already been submitted within the reglementary period. In essence, therefore, it is not the pleading
prohibited by the Rule on Summary Procedure. What the Rule prescribes is a Motion to Dismiss, which would
stop the running of the period to file an Answer and cause undue delay.
Be that as it may, dismissal of the case by the MTC, as affirmed by Respondent RTC, for failure to state a
cause of action, is not in order. The description of the land in the Complaint, quoted hereunder, may, indeed,
have been wanting:
Bounded on the North, by Francisco Ramos; on the East by Ramon Aquino & Cipriano Aquino;
on the South by Felisa Aquino; on the West by Casimiro, Francisco & Benito Ramos.
Nonetheless, private respondent's Answer (paragraph 3, supra) left no room for doubt that the parties were
acquainted with the Identity of the disputed property. It would be sheer technicality, destructive of the ends of
substantial justice, were the case to be dismissed on the ground of lack of particularity of the disputed property.
In fact, if the Rule on Summary Procedure had been followed, such additional data as were needed to define
the issues of the case could have been threshed out in the preliminary conference. 1
It is true that the Rule on Summary Procedure allows the dismissal of a case outright due to failure to state a
cause of action. 2
However, such dismissal is a permissible upon the filing of the complaint from a
consideration by the Court of the allegations thereof. In this case, the proceedings had gone far afield. The
outright dismissal was not ordered upon the filing of the complaint. On the contrary, the MTC made a
determination that the case falls under summary procedure, issued summons stating that fact, and
subsequently even issued a Temporary Restraining Order.
ACCORDINGLY, the Decision under review is hereby SET ASIDE and this case is hereby ordered remanded
to the Municipal Trial Court of Morong, Rizal, for further proceedings on the merits . No costs.
SO ORDERED.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 101883 December 11, 1992
SPOUSES LYDIAand VIRGILIO MELITON,* petitioners,
vs.
COURT OF APPEALS and NELIA A. ZIGA, represented by her Attorney-in-Fact RAMON A.
AREJOLA,**respondents.
REGALADO, J.:
In its judgment in CA-G.R. No. 25091 1
promulgated on August 9, 1991, respondent Court of Appeals annulled
and set aside the orders dated February 22, 1991 and March 18, 1991 of the Regional Trial Court of Naga
City, Branch 27, in Civil Case No. RTC 89-1942 thereof and ordered the dismissal of petitioner's complaint filed
herein, hence this appeal by certiorari.
On June 22, 1988, private respondent Nelia Ziga, in her own behalf and as attorney-in-fact of Alex A. Ziga and
Emma A. Ziga-Siy, filed a complaint, docketed as Civil Case No. RTC 88-1480 of the Regional Trial Court,
Branch 27, Naga City, 2
against herein petitioner Lydia Meliton for rescission of a contract of lease over a
parcel of land situated at Elias Angeles Street, Naga City. Alleged as grounds therefor were said petitioner's
failure, as lessee, to deposit the one month rental and to pay the monthly rentals due; her construction of a
concrete wall and roof on the site of a demolished house on the leased premises without the lessor's written
consent; and here unauthorized sublease of the leased property to a third party.
On July 29, 1988, petitioner Lydia Meliton filed an answer to the complaint denying the material averments
thereof and setting up three counterclaims for recovery of the value of her kitchenette constructed on the
leased parcel of land and which was demolished by private respondent, in the amount of P34,000.00; the value
of the improvements introduced in the kitchenette to beautify it, in the amount of P10,000.00, plus the value of
the furniture and fixtures purchased for use in the kitchenette in the amount of P23,000.00; and moral
damages in the amount of P20,000.00 aside from attorney's fees of P5,000.00 and P250.00 per court
appearance, with litigation expenses in the amount of P1,000.00. 3
On May 29, 1989, the trial court, on motion of private respondent contending that her cause of action had
already become moot and academic by the expiration of the lease contract on February 7, 1989, dismissed the
complaint. The counterclaims of petitioner Lydia Meliton were also dismissed for non-payment of the docket
fees, ergo the trial court's holding that thereby it had not acquired jurisdiction over the same. 4
On December 6, 1989, petitioners Lydia Meliton and Virgilio Meliton filed a complaint against private
respondent for recovery of the same amounts involved and alleged in their counterclaims in Civil Case No.
RTC 88-1480, which complaint was docketed as Civil Case No. RTC 89-1942 5
and likewise assigned to
Branch 27 of the same trial court.
On February 15, 1991, private respondent filed a motion to dismiss the complaint on the ground that the cause
of action therein was barred by prior judgment in Civil Case No. RTC 88-1480, the order of dismissal wherein
was rendered on May 29, 1989. 6
On February 22, 1991, the court below denied private respondent's motion to dismiss the complaint in Civil
Case No. RTC 89-1942 on the ground that the dismissal of the petitioner's counterclaims in Civil Case No.
RTC 88-1480 is not an adjudication on the merits as the court did not acquire jurisdiction over the

counterclaims for failure of petitioner Lydia Meliton to pay the docket fees, hence the said dismissal does not
constitute a bar to the filing of the later complaint. 7
Private respondent's motion for reconsideration of the foregoing order was denied by the lower court for lack of
merit in its order of March 18, 1991. 8 Dissatisfied therewith, private respondent filed a petition
for certiorari with this Court. In our resolution dated April 29, 1991, we referred this case to the Court of
Appeals for proper determination and disposition pursuant to Section 9, paragraph 1, of B.P. Blg. 129, 9
where
it was docketed as CA-G.R. SP No. 25093.
In a decision promulgated on August 9, 1991, the Court of Appeals granted the petition, the pertinent part of
which reads:
xxx xxx xxx
The respondents' counterclaim against the petitioner in Civil Case No. RTC 88-1480 (Annex E,
petition) is a compulsory counterclaim, it having (arisen) out of or being necessarily connected
with the transaction or occurrence subject matter of the petitioner's complaint. The failure of the
respondents to seek a reconsideration of the dismissal of their counterclaim or to take an appeal
therefrom rendered the dismissal final. Such dismissal barred the prosecution of their
counterclaim by another action (Section 4, Rule 9, Revised Rules of Court; Javier vs. IAC, 171
SCRA 605).
The respondent Court, therefore, in issuing the orders complained of (Annexes G and I,
petition), gravely abused its discretion amounting to lack of jurisdiction.
WHEREFORE, the petition for certiorari is GRANTED. Accordingly, the orders complained of
(Annexes G and I, petition) are annulled and set aside and the respondents' complaint in Civil
Case No. RTC 89-1942 before the respondent Court, DISMISSED. Costs against the
respondents, except the respondent Court.10
Petitioners are now before use, assailing the said judgment of the Court of Appeals and praying for the
annulment thereof.
The present petition requires the resolution of two principal issues, to wit: (1) whether or not the counterclaims
of petitioners are compulsory in nature; and (2) whether or not petitioners, having failed to seek reconsideration
of or to take an appeal from the order of dismissal of their counterclaims, are already barred from asserting the
same in another action.
1. Considering Section 4 of Rule 9 of the Rules of Court, a counterclaim is compulsory if (a) it arises out of, or
is necessarily connected with, the transaction or occurrence which is the subject matter of the opposing party's
claim; (b) it does not require for its adjudication the presence of third parties of whom the court cannot acquire
jurisdiction; and (c) the court has jurisdiction to entertain the claim.
It has been postulated that while a number of criteria have been advanced for the determination of whether the
counterclaim is compulsory or permissive, the "one compelling test of compulsoriness" is the logical
relationship between the claim alleged in the complaint and that in the counterclaim, that is, where conducting
separate trials of the respective claims of the parties would entail a substantial duplication of effort and time, as
where they involve many of the same factual and/or legal issues.
The phrase "logical relationship" is given meaning by the purpose of the rule which it was designed to
implement. Thus, a counterclaim is logically related to the opposing party's claim where, as already stated,
separate trials of each of their respective claims would involve a substantial duplication of effort and time by
the parties and the courts. Where multiple claims involve many of the same factual issues, or where they are
offshoots of the same basic controversy between the parties, fairness and considerations of convenience and
of economy require that the counterclaimant be permitted to maintain his cause of action. 11

In the aforesaid Civil Case No. 88-1480, all the requisites of a compulsory counterclaim are present. The
counterclaims, as this term is now broadly defined, are logically related to the complaint. Private respondent's
complaint was for rescission of the contract of lease due to petitioner Lydia Meliton's breach of her obligations
under the said contract. On the other hand, petitioner's counterclaims were for damages for unlawful
demolition of the improvements she introduced pursuant to her leasehold occupancy of the premises, as well
as for the filing of that civil suit which is contended to be clearly unfounded.
Both the claims therein of petitioners and private respondent arose from the same contract of lease. The rights
and obligations of the parties, as well as their potential liability for damages, emanated from the same
contractual relation. Petitioners' right to claim damages for the unlawful demolition of the improvements they
introduced on the land was based on their right of possession under the contract of lease which is precisely the
very same contract sought to be rescinded by private respondent in her complaint. The two actions are but the
consequences of the reciprocal obligations imposed by law upon and assumed by the parties under their
aforesaid lease contract. That contract of lease pleaded by private respondent constitutes the foundation and
basis relied on by both parties for recovery of their respective claims.
The relationship between petitioners' counterclaims and private respondent's complaint is substantially the
same as that which exists between a complaint for recovery of land by the owner and the claim for
improvements introduced therein by the possessor. As we have ruled, in actions for ejectment or for recovery
of possession of real property, it is well settled that the defendant's claims for the value of the improvements on
the property or necessary expenses for its preservation are required to be interposed in the same action as
compulsory couterclaims. In such cases, it is the refusal of the defendant to vacate or surrender possession of
the premises that serves as the vital link in the chain of facts and events, and which constitutes the transaction
upon which the plaintiff bases his cause of action. It is likewise an "important part of the transaction constituting
the subject matter of the counterclaim" of defendant for the value of the improvements or the necessary
expenses incurred for the preservation of the property. They are offshoots of the same basic controversy
between the parties, that is, the right of either to the possession of the property. 12
On the foregoing considerations, respondent Court of Appeals correctly held that the counterclaims of
petitioners are compulsory in nature.
2. Petitioners having alleged compulsory counterclaims, the next point of inquiry is whether or not petitioners
are already barred from asserting said claims in a separate suit, the same having been dismissed in the
preceding one. The answer is in the negative.
It is indeed the rule, embodied in Section 4, Rule 9 of the Rules of Court, that a counterclaim not set up shall
be barred if it arises out of or is necessarily connected with the transaction or occurrence that is the subject
matter of the opposing party's claim and does not require for its adjudication the presence of third parties of
whom the court cannot acquire jurisdiction. However, said rule is not applicable to the case at bar.
Contrary to the claim of private respondent, it cannot be said that therein petitioners failed to duly interpose
their causes of action as counterclaims in the previous action. Petitioners' claims were duly set up as
counterclaims in the prior case but the same were dismissed by reason of non-payment of docket fees. The
ruling of respondent Court of Appeals to the effect that the failure of petitioners to appeal or to move for
reconsideration of the said order of dismissal bars them from asserting their claims in another action cannot be
upheld.
Firstly, where a compulsory counterclaim is made the subject of a separate suit, it may be abated upon a plea
of auter action pendant or litis pendentia and/or dismissed on the ground of res judicata, 13
depending on the
stage or status of the other suit.
Both defenses are unavailing to private respondent. The present action cannot be dismissed either on the
ground of litis pendentia since there is no other pending action between the same parties and for the same
cause, nor on the ground of res judicata.

In order that a prior judgment will constitute a bar to a subsequent case, the following requisites must concur:
(1) the judgment must be final; (2) the judgment must have been rendered by a court having jurisdiction over
the subject matter and the parties; (3) the judgment must be on the merits; and (4) there must be between the
first and second actions, identity of parties, of subject matter, and of causes of action. 14
The first case, Civil Case No. RTC 88-1480, was dismissed upon motion of private respondent, plaintiff therein,
under Section 2 of Rule 17. Dismissal thereunder is without prejudice, except when otherwise stated in the
motion to dismiss or when stated to be with prejudice in the order of the court. 15
The order of dismissal of the
first case was unqualified, hence without prejudice and, therefore, does not have the effect of an adjudication
on the merits. On a parity of rationale, the same rule should apply to a counterclaim duly interposed therein
and which is likewise dismissed but not on the merits thereof.
Moreover, in the same order of dismissal of the complaint, the counterclaims of herein petitioners were
dismissed by reason of the fact the court a quo had not acquired jurisdiction over the same for non-payment of
the docket fees. On that score, the said dismissal was also without prejudice,
since a dismissal on the ground of lack of jurisdiction does not constitute res judicata, 16
there having been no
consideration and adjudication of the case on the merits.
The dismissal of the case without prejudice indicates the absence of a decision on the merits and leaves the
parties free to litigate the matter in a subsequent action as though the dismissal action had not been
commenced. 17
The discontinuance of a case not on the merits does not bar another action on the same
subject matter. 18
Evidently, therefore, the prior dismissal of herein petitioners' counterclaims is not res
judicataand will not bar the filing of another action based on the same causes of action.
Secondly, a reading of the order of dismissal will show that the trial court, in dismissing the complaint of private
respondent, did not intend to prejudice the claims of petitioners by barring the subsequent judicial enforcement
thereof. As stated therein, "(t)he court in dismissing the counterclaim(s) has taken into account the fact that a
counterclaim partakes of the nature of a complaint and/or a cause of action against the plaintiffs." 19
This is a
clear indication, deducible by necessary implication, that the lower court was aware of the fact that petitioners
could avail of the causes of action in said counterclaims in a subsequent independent suit based thereon and
that there was no legal obstacle thereto. That this was the import and intendment of that statement in its order
dismissing petitioners' counterclaims in Civil Case No. RTC 88-1480 was categorically confirmed by the very
same court, wherein Civil Case No. RTC 89-1942 was also subsequently filed, in its assailed orders denying
private respondent's motion to dismiss the latter case on the ground of res judicata.
This is also concordant with the rule governing dismissal of actions by the plaintiff after the answer has been
served as laid down in Rule 17 of the Rules of Court, which is summarized as follows: An action shall not be
dismissed at the request of the plaintiff after the service of the answer, except by order of the court and upon
such terms and conditions as the court deems proper. The trial court has the judicial discretion in ruling on a
motion to dismiss at the instance of the plaintiff. It has to decide whether the dismissal of the case should be
allowed, and if so, on what terms and conditions. 20
In dismissing private respondent's complaint, the trial court could not but have reserved to petitioners, as a
condition for such dismissal, the right to maintain a separate action for damages. Petitioners' claims for
damages in the three counterclaims interposed in said case, although in the nature of compulsory
counterclaims but in light of the aforesaid reservation in the dismissal order, are consequently independent
causes of action which can be the subject of a separate action against private respondent.
An action for damages specifically applicable in a lessor-lessee relationship is authorized in Article 1659 of the
Civil Code which provides that:
Art. 1659. If the lessor or the lessee should not comply with the obligations set forth in articles
1654 and 1657, the aggrieved party may ask for the rescission of the contract and
indemnification for damages, or only the latter, allowing the contract to remain in force.

Paragraph 3 of Article 1654 of the same Code requires that the lessor must "maintain the lessee in the
peaceful and adequate enjoyment of the lease for the entire duration of the contract." 21
The aggrieved party
has the alternative remedies, in case of contractual breach, of rescission with damages, or for damages only,
"allowing the contract to remain in force."
The act of private respondent in demolishing the structures introduced by petitioners on the property leased
and the improvements therein during the existence of the lease contract is a clear violation by her, as lessor, of
her obligation mandated by paragraph 3, Article 1654 of the Civil Code. The said violation gave rise to a cause
of action for damages in favor of herein petitioners.
Lastly, even assuming arguendo that the bar under the rule on compulsory counterclaims may be invoked, the
peculiar circumstances of this case irresistibly and justifiedly warrant the relaxation of such rule.
The court a quo dismissed petitioners' counterclaims for non-payment of docket fees pursuant to our then
ruling in Manchester Development Corporation, et al. vs. Court of Appeals, et al., 22
before its modification. The
failure of petitioners to seek reconsideration of or to take an appeal from the order of dismissal of the
counterclaim should not prejudice their right to file their claims in a separate action because they were thereby
made to understand and believe that their counterclaims were merely permissive and could be the subject of a
separate and independent action. Under the Rules, there is no need to pay docket fees for a compulsory
counterclaim. 23
The ruling in Manchester applies specifically to permissive counterclaims only, thereby
excluding compulsory counterclaims from its purview, 24
and that was the ruling of the court below to which the
litigants therein submitted. Had the trial court correctly specified that petitioners' counterclaims were
compulsory, petitioners could have objected to the dismissal sought by private respondent on the ground that
said counterclaims could not remain pending for independent adjudication. 25
Furthermore, under the Manchester doctrine, the defect cannot be cured by an amendment of the complaint or
similar pleadings, much less the payment of the docket fee. Hence, the only remedy left for the petitioners was
to file a separate action for their claims and to pay the prescribed docket fees therein within the applicable and
reglementary period, which is what they did in the case at bar in obedience and deference to the judicial
mandate laid down in their case. At any rate, the ambivalent positions adopted by the lower court can be
considered cured by what we have construed as effectively a reservation in its order of dismissal for the filing
of a complaint based on the causes of action in the dismissed counterclaims.
This, then, is one case where it is necessary to heed the injunction that the rules of procedure are not to be
applied in a rigid and technical sense. After all, rules of procedure are used only to help secure substantial
justice. They cannot be applied to prevent the achievement of that goal. Form cannot and should not prevail
over substance. 26
Absent a specific requirement for stringent application, the Rules of Court are to be liberally
construed to the end that no party shall be deprived of his day in court on technicalities. The courts in our
jurisdiction are tribunals both of law and equity. Hence, under the antecedents of this case, we are persuaded
that even if only to approximate that desirable measure of justice we are sworn to dispense, this controversy
should be resolved on the merits.
WHEREFORE, the questioned judgment of respondent Court of Appeals is hereby REVERSED and SET
ASIDE. Civil Case No. RTC 89-1942 is hereby REINSTATED and the Regional Trial Court of Naga City,
Branch 27, or wherever the case has been assigned, is directed to proceed with deliberate dispatch in the
adjudication thereof.
SO ORDERED.
Narvasa, C.J., Feliciano, Nocon and Campos, Jr., JJ., concur.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 146595 June 20, 2003
CARLO A. TAN, petitioner,
vs.
KAAKBAY FINANCE CORPORATION, DENNISS. LAZARO and ROLDAN M. NOYNAY, respondents.
R E S O L U T I O N
QUISUMBING, J.:
Petitioner seeks the review and reversal of the decision of the Court of Appeals, dated August 22, 2000 in CA-
G.R. SP No. 58379,1
which affirmed the orders of the Regional Trial Court (RTC), Branch 37, Calamba,
Laguna, dated February 8, 2000 and March 29, 2000 in Civil Case No. 2881-2000-C entitled "Carlo A. Tan v.
Kaakbay Finance Corporation, Dennis S. Lazaro and Roldan M. Noynay"2
for declaration of nullity of the
Promissory Note purportedly attached to the Real Estate Mortgage, the usurious and unlawful or exorbitant
and unconscionable rates of interest and fees therein, and the Deed of Sale Under Pacto de Retro. Likewise,
assailed is the appellate court’s resolution3
dated December 20, 2000, denying petitioner’s motion for
reconsideration.
The facts, as culled from the records, are as follows:
In the latter part of 1995, petitioner Carlo4
A. Tan applied for and was granted a loan of four million pesos
(P4,000,000.00) by private respondent Kaakbay Finance Corporation (Kaakbay), as represented by its
president, private respondent Dennis S. Lazaro. As collateral, a real estate mortgage5
on petitioner Tan’s
parcel of land with the improvements therein all covered by Transfer Certificate Title No. T-2071256
located
along Rizal St., Calamba, Laguna was executed. Petitioner alleged that the stipulated interest was 12% per
annum until fully paid, which amount however, was not stated in the mortgage when he signed it on November
16, 1995. The amount loaned was released to him in two installments of P2,500,000.00 and P1,500,000.00 on
November 23, 1995 and December 23, 1995, respectively.
As of November 22, 1996, petitioner failed to pay his obligation. He claimed that Kaakbay never furnished him
a copy of the real estate mortgage; that, according to Kaakbay, his obligation had now reached P5,570,000.00
because the actual interest was 0.3925% for a period of less than one year instead of the agreed-upon interest
of 12% per annum; and that he was made to issue two postdated checks to guarantee his obligation, namely:
UCPB Check No. CBA 052985 in the amount of P5,570,000.00 postdated to November 5, 1996; and UCPB
Check No. CBA 095215 in the amount of P6,175,000.00 postdated to January 31, 1997.7
Petitioner further alleged that he negotiated with Kaakbay for a further extension of time to pay his obligation,
which the latter agreed to. It was agreed that petitioner and Kaakbay would sign, execute, and acknowledge a
Deed of Sale Under Pacto de Retro upon the expiration of a two-year period starting January 8, 1998 to
January 8, 2000. Petitioner was then given a blank Deed of Sale Under Pacto de Retro on January 8, 1998
which he signed.8
His suspicions that Kaakbay was charging him usurious rates of interest were confirmed
when he obtained a Statement of Account stating that his obligation had now reached P13,333,750.00.9
On October 21, 1999, petitioner learned of the existence of an accomplished Deed of Sale Under Pacto de
Retro, which appeared that the same was signed by him and his wife Maria Rosario Delmo Tan, on one hand,
and private respondent Lazaro on the other, and was allegedly notarized by private respondent Atty. Roldan M.
Noynay on February 5, 1998,10
when in truth and in fact, he, his wife, and their witness Charito Morales did not
sign it on said date, nor did they execute it before Atty. Noynay or any other notary public on said date.

On January 5, 2000, petitioner filed a complaint for Declaration of Nullity, Invalidity and Unenforceability or
Annulment of the Promissory Notes purportedly attached to the Real Estate Mortgage dated November 16,
1995, the usurious and void rates of interest and other fees therein appearing, and the Deed of Sale
Under Pacto De Retro purportedly dated February 5, 1998, and damages, with prayer for Preliminary
Injunction and/or Temporary Restraining Order against respondents Kaakbay Finance Corporation, Dennis S.
Lazaro and Roldan M. Noynay,11
with the RTC Calamba, Laguna, and docketed as Civil Case No. 2881-2000-
C. The complaint essentially prayed that herein petitioner’s obligation to Kaakbay Finance Corporation in the
amount ofP4,000,000.00 be subject to interest of only 12% per annum from November 23, 1995; that the
promissory notes attached to his Real Estate Mortgage dated November 16, 1995 be declared null and void;
that the Deed of Sale Under Pacto de Retro dated February 5, 1998 be declared unenforceable; and that
respondents pay moral and exemplary damages in the amount of P200,000.00 and P50,000.00, respectively,
as well as attorney’s fees.
On the same date, petitioner filed a Notice of Lis Pendens with the Registry of Deeds of Calamba, Laguna,
which was annotated on TCT No. 207125.12
On January 17, 2000, respondents, through their counsel, Atty. Roldan M. Noynay, filed their ‘Consolidated
Answer With Compulsory Counterclaim And Opposition To Temporary Restraining Order (TRO) and
Preliminary Injunction.’13
During the hearing of petitioner’s application for the issuance of a TRO, the parties agreed in open court that
petitioner would withdraw his application for a TRO, while respondents in turn would hold in abeyance the
registration of the Deed of Sale Under Pacto de Retro until the case was terminated. The trial court issued an
order to that effect, dated January 17, 2000.14
Later, the law firm of Ortega, Del Castillo, Bacorro, Odulio, Calma, and Carbonell entered its appearance as
counsel for respondents.15
Said counsel requested for an extension of time to file an Answer, and also moved
for the withdrawal of the ‘Consolidated Answer’16
filed by Atty. Noynay insofar as respondents Kaakbay and
Lazaro are concerned.17
Respondents also filed a ‘Supplemental Opposition To The Prayer For Preliminary
Injunction Or To Temporary Injunction.’18
On February 3, 2000, respondents, through the new counsel, filed their Answer with Counterclaim,19
praying
that petitioner pay them four million pesos (P4,000,000.00) representing the principal amount of the loan, nine
million three hundred thirty three thousand seven hundred fifty pesos (P9,333,750.00) representing the
‘compounded monthly interest and annual penalty interest’, two hundred fifty thousand pesos (P250,000.00) as
litigation expenses, and five hundred thousand pesos (P500,000.00) as attorney’s fees.
In addition, respondents filed a Motion for Admission of Counterclaim Without Payment of Fees, on the ground
that their counterclaim is compulsory in nature, hence it may be admitted without payment of fees.20
On February 21, 2000, petitioner filed an Urgent Motion to Expunge Motions and Pleadings Filed by
Defendants Kaakbay Finance Corporation and Dennis S. Lazaro, Particularly Their Answer with Counterclaim
and Motion for Admission of Counterclaim both Dated February 3, 2000 and/or Comment/Opposition (To Said
Defendants’ Manifestation and Supplemental Opposition to their Prayer for Preliminary Injunction and to
Temporary Injunction Dated January 24, 2000 and February 3, 2000 Respectively.)21
In this motion, petitioner
pointed out that the respondents were being represented by their counsel, the law firm of Ortega, Del Castillo,
Bacorro, Odulio, Calma, and Carbonell without stating if said law firm is in collaboration with or in substitution
of their previous counsel, respondent Atty. Roldan M. Noynay. Petitioner argued that the procedure laid down
in the rules concerning the change or substitution of counsel of a party litigant had not been properly complied
with by the respondents, and thus the motions filed by the said law firm should be expunged. In addition,
petitioner argued that respondents’ Answer with Counterclaim should not be admitted, as it partook of the
nature of a permissive counterclaim, which required the payment of the prescribed filing fees; and since the
fees were not paid, the lower court did not acquire jurisdiction over said Answer.
In its order of February 8, 2000, the trial court granted respondents’ motion for admission of counterclaim
without payment of fees.22

Petitioner then filed a "Supplemental Motion by Way of Motion for Reconsideration" but this was denied.
Petitioner seasonably appealed to the Court of Appeals where he maintained that the trial court committed
grave abuse of discretion in admitting the answer with counterclaim, which contains a permissive counterclaim
the correct filing fees of which have not been paid by respondents Kaakbay and Lazaro to the trial court. Thus,
petitioner insisted that the trial court had not acquired jurisdiction over the said answer with counterclaim.
Alternatively, petitioner urged that said answer be expunged from the record of the case a quo.
On August 22, 2000, the appellate court promulgated its decision, decreeing as follows:
WHEREFORE, the instant petition is DENIED for lack of merit, and accordingly, DISMISSED.23
Petitioner then moved for reconsideration, but the appellate court denied it in the resolution dated December
20, 2000.
Hence, this instant petition, where petitioner now contends that the Court of Appeals committed the following
errors, in:
(a) ITS HOLDING THAT "XXX THE LOWER COURT DID NOT COMMIT GRAVE ABUSE OF
DISCRETION IN DECLARING THE COUNTERCLAIM OF PRIVATE RESPONDENTS KAAKBAY
FINANCE CORPORATION AND DENNIS S. LAZARO AS COMPULSORY, REQUIRING NO
PAYMENT OF LEGAL FEES XXX" WHEN EVEN THE YULIENCO VS. COURT OF APPEALS CASE
(G.R. NO. 131692, JUNE 10, 1999, 308 SCRA206) IT CITED IN ITS DECISION FAVORABLY
SUPPORTS THE ASSERTION OF PETITIONER THAT THE COUNTERCLAIM IN RESPONDENTS’
ANSWER IN THE CASE A QUO IS A PERMISSIVE COUNTERCLAIM.
(b) ITS FAILURE TO RULE IN THE ASSAILED DECISION THAT HON. JUDGE JUANITA T.
GUERRERO HAS ACTED WITHOUT OR IN EXCESS OF JURISDICTION, OR WITH GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING THE
ORDERS OF FEBRUARY 8, 2000 AND MARCH 29, 2000 CONSIDERING THAT THE COLLECTION
OF THE TOTAL AMOUNT OF P14,083,750.00 REPRESENTING UNPAID LOAN AND ACCRUED
INTEREST THEREIN BY WAY OF COUNTERCLAIM IS COMPULSORY AND THAT THE ANSWER
MAY BE ADMITTED WITHOUT NECESSITY OF PAYING THE DOCKET FEES.
(c) ITS FAILURE TO DECLARE IN THE ASSAILED DECISION THAT THE MOTION FOR ADMISSION
OF COUNTERCLAIM WITHOUT PAYMENT OF FEES IS A MERE SCRAP OF PAPER AND
VIOLATIVE OF SECTIONS 4, 5 AND 6, RULE 15 OF THE 1997 RULES OF CIVIL PROCEDURE.24
The basic issue for resolution in this case is whether the counterclaim of respondents is compulsory or
permissive in nature.
Petitioner assails the Court of Appeals for affirming the trial court’s order that the counterclaim of respondents
is compulsory in nature, thus requiring no payment of legal fees. Petitioner contends that his complaint against
the respondents is predicated on the unauthorized application of usurious, unconscionable and exorbitant rates
of interest and other fees by respondents Kaakbay and Lazaro to petitioner’s loan without the latter’s
knowledge, as well as the approval and the falsification of the promissory note supposed to be attached to the
Real Estate Mortgage and the Deed of Sale Under Pacto de Retro.
According to petitioner, he did not attempt to prevent the foreclosure of the mortgage because what he
questions is the validity of the promissory note and the void rates of interest. He insists that these were
falsified. He likewise assails the genuineness of the deed of sale in dispute. Since the evidence to be
presented by the respondents to support the genuineness and due execution of the questioned promissory
note and the Deed of Sale Under Pacto de Retro as a ground for the specific performance thereof, is not the
same as the evidence to be presented by the petitioner as plaintiff in the case below to support his claim of
fraud employed by respondents, petitioner asserts the counterclaim cannot be deemed compulsory. He adds

that since the respondents demand the payment of the loan and the interests pursuant to the contract of loan,
completely inconsistent with his claim that subject documents were a nullity, what respondents had filed is not
a compulsory counterclaim.
For their part, respondents contend that their counterclaims are for payment of the unpaid loan of the petitioner
in the amount of P4,000,000.00, the compounded interest with annual penalty equivalent to P9,333,750.00,
litigation expenses of P250,000 and attorney’s fees of P500,000. The respondents say these are all
compulsory and not permissive counterclaims. Petitioner admitted in his complaint his indebtedness to
respondent Kaakbay Finance Corporation in the amount of P4,000,000.00 and his liability for interest at the
rate of 12% per annum only. These admissions arise out of, or are necessarily connected with, or have a
logical relation to the transaction or occurrence forming the subject matter of the petitioner’s claim.
Consequently, respondents conclude that the trial court did not err in ruling that payment of the docket fees is
no longer necessary as their counterclaims are compulsory in nature.
In Intestate Estate of Dalisay v. Hon. Marasigan,25
we held that a counterclaim is compulsory where: (1) it
arises out of, or is necessarily connected with the transaction or occurrence that is the subject matter of the
opposing party’s claim; (2) it does not require the presence of third parties of whom the court cannot acquire
jurisdiction; and (3) the trial court has jurisdiction to entertain the claim. To determine whether a counterclaim is
compulsory or not, we have devised the following tests: (1) Are the issues of fact or law raised by the claim and
the counterclaim largely the same? (2) Would res judicata bar a subsequent suit on defendant’s claims absent
the compulsory counterclaim rule? (3) Will substantially the same evidence support or refute plaintiff’s claim as
well as the defendant’s counterclaim? and (4) Is there any logical relation between the claim and the
counterclaim?26
In Quintanilla v. Court of Appeals, we said a "compelling test of compulsoriness" is whether there is "a logical
relationship between the claim and counterclaim, that is, where conducting separate trials of the respective
claims of the parties would entail a substantial duplication of effort and time by the parties and the court."27
Tested against the abovementioned standards, we agree with the appellate court’s view that respondents’
counterclaims are compulsory in nature. Petitioner’s complaint was for declaration of nullity, invalidity or
annulment of the promissory notes purportedly attached to the Real Estate Mortgage dated November 16,
1995 and the usurious and void interest rates appearing therein and the Deed of Sale Under Pacto De Retro.
Respondents’ counterclaim was for the payment of the principal amount of the loan, compounded monthly
interest and annual penalty interest arising out of the non-payment of the principal loan, litigation expenses and
attorney’s fees. There is no dispute as to the principal obligation of P4,000,000, but there is a dispute as to the
rate and amount of interest. Petitioner insists that the amount of interest is only 12% yearly until fully paid,
while respondents insist on 3.5% monthly. Also, respondents allege that petitioner owes them P9,333,750.00
representing the compounded monthly interest and annual penalty, which is disputed by petitioner. Petitioner
further seeks the nullification of the Deed of Sale Under Pacto de Retro for being falsified, while respondents
aver the deed is valid. It thus appears that the evidence required to prove petitioner’s claims is similar or
identical to that needed to establish respondents’ demands for the payment of unpaid loan from petitioner such
as amount of interest rates. In other words, petitioner’s claim is so related logically to respondents’
counterclaim, such that conducting separate trials for the claim and the counterclaim would result in the
substantial duplication of the time and effort of the court and the parties. Clearly, this is the situation
contemplated under the "compelling test of compulsoriness." The counterclaims of respondents herein are
obviously compulsory, not permissive. As aptly held by the Court of Appeals, the issues of fact and law raised
by both the claim and counterclaim are largely the same, with a logical relation, considering that the two claims
arose out of the same circumstances requiring substantially the same evidence. Any decision the trial court will
make in favor of petitioner will necessarily impinge on the claim of respondents, and vice versa. In this light,
considering that the counterclaims of respondents are compulsory in nature, payment of docket fees is not
required. The CA did not err in holding that the trial court had acquired jurisdiction on the matter.28
WHEREFORE, the petition is hereby DENIED for lack of merit, and the assailed decision of the Court of
Appeals dated August 22, 2000 and its resolution dated December 20, 2000, in CA-G.R. SP No. 58379,
are AFFIRMED. No pronouncement as to costs.

208080592 remedial-cases-2

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (17)

Andere mochten auch

Andere mochten auch (8)

Ähnlich wie 208080592 remedial-cases-2

Ähnlich wie 208080592 remedial-cases-2 (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

208080592 remedial-cases-2