G.R. No.

L-34840 July 20, 1982

MARIO RODIS MAGASPI, JUSTINO R. MAGASPI, BALDOMERA M. ALEJANDRO, and MANOLITA M. CORTEZ, petitioners,
vs.
HONORABLE JOSE R. RAMOLETE, Judge of the Court of First Instance of Cebu, ESPERANZA V. GARCIA, Clerk of Court of First Instance of Cebu,
THE SHELL COMPANY OF THE PHILIPPINES LIMITED and/or THE SHELL REFINING COMPANY (Phil.) INC., CENTRAL VISAYAN REALTY &
INVESTMENTS CO., INC., CEBU CITY SAVINGS & LOAN ASSOCIATION and the GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES,
respondents.

This is a petition for certiorari to review the actuations of the Court of First Instance of Cebu in Civil Case No.R-11882 in respect of the correct
amount to be paid for the filing of the case as provided in Sec. 5, par. (a), Rule 141 of the Rules of Court.

FACTS:

On September 16, 1970, the petitioners filed a complaint for the recovery of ownership and possession of a parcel of land with damages against
The Shell Co. of the Philippines, Ltd. and/or The Shell Refining Co. (Phil.) Inc., Central Visayan Realty & Investment Co., Inc. and Cebu City
Savings & Loan Association in the Court of First Instance of Cebu. Upon filing and the payment of P60.00 as docketing fee and P10.00 for sheriff
fees, the complaint was assigned Civil Case No. R11882.

On September 18, 1970, Central Visayan Realty & Investment Co., Inc. and Cebu City Savings and Loan Assn. filed a motion to compel the
plaintiffs to pay the correct amount for docket fee.

1. That the complaint of the plaintiffs contains or states two, if not three alternative causes of action:

a) Reconveyance of real property. —

b) Recovery of the value of the land and Damages. —

c) Cancellation of Titles. —

The motion was opposed by the plaintiffs (petitioners herein) who claimed that the main cause of action was the recovery of a piece of land
and on the basis of its assessed valued, P60.00 was the correct docketing fee and that although the Revised Rules of Court do not exclude
damages in the computation of the docket fee, damages are nonetheless still to be excluded.

On October 14, 1970, Judge Mateo Canonoy issued the following order:

This is a motion of the defendants to order the plaintiffs to pay a filing fee of P6,730.00 on the ground that the total
demand of the said plaintiffs (the value of the land, which is P17,280.00, plus the damages amounting to P3,390,633.24)
should be the basis for computing the filing fee and not the value of the land alone. The plaintiffs paid the amount of
P60.00 as filing fee in this case.

Examining the allegations of the complaint, the Court is constrained to sustain the Manifestation or contention of the
Clerk of Court, dated October 14, 1970. The damages are not merely incidental or ancillary but are principal demands.
Besides, Rule 141, Sec. 5 (a) of the new Rules of Court no longer excludes damages, like interest, from computing the
filing fees. (The Old Rules of Court, Rule 130, Sec. 5 (a), expressly includes damages and interest in the exemption.) The
exclusion of damages from the exemption in the computation of the filing fees in the new Rules of Court is intentional,
since oftentimes, as in the present case, the claim for damages far exceeds the value of the land. To thus exempt the
plaintiffs from paying the filing fee for damages is against reason. Besides, in determining the jurisdiction of the court, the
amount of damages claimed is taken into account.

The opinion of Undersecretary Guillermo Santos that the Court ought to be left alone to determine the question of the
filing fee of cases pending therein without any interference from the Secretary of Justice (Attorney General) is
commendable.

On October 19, 1970, the Shell companies filed their respective answers.
On October 23, 1970, Central Visayan Realty and Cebu City Savings filed the following manifestation: it prayed that in the computation of the
correct docket fee, besides the sum of P3,104.00, an additional sum of Pl,000.00 be imposed in accordance with Sec. 5 (Par. 9) Rule 141 of the
Rules of Court; and should the plaintiffs within a period fixed by this Honorable Court fail to pay the same, the complaint be dismissed with
prejudice, and for such other reliefs as this Honorable Court may deem just under the premises.

On November 3, 1970, the plaintiffs filed a motion for leave to amend the complaint so as to include the Government of the Republic of the
Philippines as a defendant. The amended complaint still sought the return of the lot in question but the pecuniary claim was limited to the
following:

8. To order the defendants jointly and solidarily except the Government of the Republic of the Philippines moral damages
in such amount as this Court may determine and attorney's fees in the amount of P100,000.00 and the cost of this action;

9. Exemplary damages be imposed on the defendants jointly and solidarily except the Government of the Republic of the
Philippines in the amount as this Court may deem just and proper as an example and deterrent to any similar acts in the
future. (Emphasis supplied.)

On November 12, 1970, the defendants (herein respondents filed an opposition to the admission of the amended complaint. They based their
opposition on the following grounds:

1. That while the only reason given for the amendment of the complaint is the inclusion of the Government of the
Philippines as an indispensable party; the plaintiffs have taken the improper liberty of amending portions of the
allegations in the complaint and even has eliminated entire paragraph, thus:

a) By not mentioning the previously alleged value of the land at P1,250,000.00 in paragraph 19;

b) By not mentioning the previously averred to monthly rentals due at P3,500.00 from June 2,
1948, or computed at P890,633.24;

c) By eliminating completely the claim for moral damages of P500.000.00 and reducing attorney's
fees from P250,000.00 to P100,000.00 under par. 21;

d) By not mentioning the amount previously claimed as exemplary damages in the sum of
P500,000.00, as alleged in par. 21:

substituting thereto, the averment that, the amount of these various claims for damages will be proven during the trial of
the case;

2. That these amendments are obviously intended to circumvent, it not entirely subvert, the lawful Order of this
Honorable Court for the plaintiff to pay the amount of P3,104.00 as docket fee, on the basis of the total amount claimed
for damages (plus Pl,000.00 docket fee on the P500,000.00 exemplary damages, pending resolution before this
Honorable Court);

3. That if the amended complaint is admitted as it is, plaintiffs would effect, have their cakes and eat it too, in the manner
of speaking;

4. That the payment of the correct and in this case, by an Order of this Honorable Court of the docket fee, is a condition
precedent for the complaint, amended or otherwise, of the plaintiff to be given due course;

On November 16, 1970, Judge Canonoy admitted the amended complaint although the plaintiffs had not yet complied with his Order of October
14, 1970, that they should pay an additional P3,104.00 docket fee.

On December 2, 1970, Central Visayan Realty and Cebu City Savings filed a motion and respectfully prayed that the plaintiffs be ordered to pay
the additional docket fee within seven (7) days, otherwise the complaint will be dismissed with prejudice.
The above motion was opposed by the plaintiffs on the ground that the amended complaint which had been admitted by the court had replaced
the original complaint.

On February 12, 1971, the Republic filed its answer to the amended complaint and the plaintiffs filed a reply on February 23, 1971.

On March 13, 1971, Central Visayan Realty and Cebu City Savings filed a petition to have their motion of December 2, 1970, resolved by the court.
On April 3, 1971, Judge Jose R. Ramolete who had replaced Judge Canonoy issued the following order:

This is a petition of the defendants praying for the resolution of their motion dated December 3, 1970. This motion was
brought about by virtue of the order of this Court dated October 14, 1970, ordering the plaintiffs to pay additional docket
fees of P3,104.00.

Going over the record of the case, it appears that after the issuance of the above order, the plaintiffs filed their amended
complaint which was also admitted on November 16, 1970.

At the hearing of tills petition the parties supported their respective positions with oral arguments after which they
submitted the matter for resolution.

It is a rule that the correct docket fee must be paid before the Court will act on the petition or complaint. The Court of
Justice is not called upon to act on a complaint or a petition in the absence of payment of a corresponding docket fee.
(Garcia vs. Vasquez, 28 SCRA 330, 331.) Before the payment of the docket fee, the case is not deemed registered and
docketed (Lazaro vs. Endencia, 57 Phil., 552; Malimit vs. Degamo, 12 SCRA 454; Lee vs. Republic, 10 SCRA, 67).

In the light of the above rulings on the matter, the original complaint, up to the present, is not deemed registered or
docketed. It follows, therefore, that there is likewise no amended complaint deemed to have been filed and admitted.

The Court, therefore, is of the view that up to the present the parties are in the same situation as they were before this
proceeding was started. It cannot also order the plaintiffs to comply with the order of this Court dated October 14, 1970,
because it has not yet acquired jurisdiction over them neither can it order the dismissal of the complaint for non-
compliance of the order of October 14, 1970, by the plaintiffs, for obvious reasons. The plaintiffs are given the choice to
pay the docket fee assessed or to forego this proceeding.

The petitioners assail the above order. They insist that they had correctly paid the docketing fee in the amount of P60.00, or in the alternative,
that if they are to pay an additional docketing fee, it should be based on the amended complaint.

Issue:

whether or not Civil Case No. 11882 may be considered as having been filed and docketed when P60.00 was paid to the Clerk of Court even on
the assumption that said payment was not sufficient in amount.

Whether or not plaintiffs paid the correct amount to be paid as docket fee.

Ruling:

1. Yes.

The case at bar can be distinguished from the Lazaro case in at least two respects, namely: (a) The Lazaro case involved the timeliness of the
perfection of the appeal which was made to depend in turn on the timeliness of the full payment of the docket fee whereas the instant case does
not involve an appeal nor the timeliness of the payment of the docket fee; and (b) in the Lazaro case, the amount (P8.00) which was initially paid
was palpably inadequate, whereas in the case at bar there is an honest difference of opinion as to the correct amount to be paid as docket fee.

The Garcia case, supra, appears to favor the petitioners. In that case, a will was sought to be probated in Special Proceeding No. 62818. Docket
fees amounting to P940.00 were paid. Later, a second will was sought to be probated in the same special proceeding. This Court held that there
was no need to pay a separate docket fee because the probate of the second will was not sought in another proceeding.

We hold that under the circusmtances, Civil Case No. R. 11882 was docketed upon the payment of P60.00 although said amount is insufficient.
Accordingly, the trial court had acquired jurisdiction over the case and the proceedings thereafter had were proper and regular.
 2. NO.

Judge Canonoy on October 14, 1970, ordered the payment of P3,104.00 as additional docket fee based on the original complaint. However, the
petitioners assert as an alternative view, that the docket fee be based on the amended complaint which was admitted on November 14, 1970,
also by Judge Canonoy.

The petitioners have a point. "When a pleading is amended, the original pleading is deemed abandoned. The original ceases to perform any
further function as a pleading. The case stands for trial on the amended pleading only. " (1 Moran, Rules of Court, 363 119701, citing Reynes v.
Compania General de Tobacos de Filipinas, 21 Phil. 417; Reyman v. Director of Lands, 34 Phil, 428.)

On the basis of the foregoing, the additional docket fee to be paid by the petitioners should be based on their amended complaint.

G.R. No. L-54526 August 25, 1986

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, Petitioner, vs. THE COURT OF APPEALS and THE CITY OF DAGUPAN, Respondents.

This is a petition for review on certiorari of the decision of the Court of Appeals which affirmed the decision of the then Court of First Instance of
Pangasinan.

FACTS:

The City of Dagupan (hereinafter referred to as the CITY) filed a complaint against the former National Waterworks and Sewerage Authority
(hereinafter referred to as the NAWASA), now the Metropolitan Waterworks and Sewerage System (hereinafter referred to as MWSS), for
recovery of the ownership and possession of the Dagupan Waterworks System. NAWASA interposed as one of its special defenses R.A. 1383
which vested upon it the ownership, possession and control of all waterworks systems throughout the Philippines and as one of its counterclaims
the reimbursement of the expenses it had incurred for necessary and useful improvements amounting to P255,000.00. Judgment was rendered
by the trial court in favor of the CITY on the basis of a stipulation of facts. The trial court found NAWASA to be a possessor in bad faith and hence
not entitled to the reimbursement claimed by it. NAWASA appealed to the then Court of Appeals and argued in its lone assignment of error that
the CITY should have been held liable for the amortization of the balance of the loan secured by NAWASA for the improvement of the Dagupan
Waterworks System. The appellate court affirmed the judgment of the trial court.

Petitioner-Appellant MWSS, successor-in-interest of the NAWASA, appealed to this Court raising the sole issue of whether or not it has the right
to remove all the useful improvements introduced by NAWASA to the Dagupan Waterworks System, notwithstanding the fact that NAWASA was
found to be a possessor in bad faith. In support of its claim for removal of said useful improvements, MWSS argues that the pertinent laws on the
subject, particularly Articles 546, 547 and 549 of the Civil Code of the Philippines, do not definitely settle the question of whether a possessor in
bad faith has the right to remove useful improvements. To bolster its claim MWSS further cites the decisions in the cases of Mindanao Academy,
Inc. vs. Yap (13 SCRA 190) and Carbonell vs. Court of Appeals (69 SCRA 99).chanroblesvirt

The CITY in its brief questions the raising of the issue of the removal of useful improvements for the first time in this Court, inasmuch as it was
not raised in the trial court, much less assigned as an error before the then Court of Appeals. The CITY further argues that petitioner, as a
possessor in bad faith, has absolutely no right to the useful improvements; that the rulings in the cases cited by petitioner are not applicable to
the case at bar; that even assuming that petitioner has the right to remove the useful improvements, such improvements were not actually
identified, and hence a rehearing would be required which is improper at this stage of the proceedings; and finally, that such improvements, even
if they could be identified, could not be separated without causing substantial injury or damage to the Dagupan Waterworks System.

Petitioner, however, argues that although such issue of removal was never pleaded as a counterclaim nevertheless it was joined with the implied
consent of the CITY, because the latter never filed a counter-manifestation or objection to petitioner's manifestation wherein it stated that the
improvements were separable from the system, and quotes the first part of Sec. 5 of Rule 10 of the Rules of Court to support its contention. Said
provision reads as follows:

SEC. 5. Amendment to conform to or authorize presentation of evidence.-When issues not raised by the pleadings are tried by express or
implied consent of the parties, they shall be treated in all respects, as if they had been raised in the pleadings. Such amendment of the
pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at
any time, even after judgment; but failure so to amend does not affect the result of the trial of these issues

Issue:
Whether or not MWSS/NAWASA is correct that though issue of removal was not raised in its counterclaim, it is deemed accepted as CITY failed
to file an objection.

Ruling:

NO.

This argument is untenable because the above-quoted provision is premised on the fact that evidence had been introduced on an issue not raised
by the pleadings without any objection thereto being raised by the adverse party. In the case at bar, no evidence whatsoever had been introduced
by petitioner on the issue of removability of the improvements and the case was decided on a stipulation of facts. Consequently, the pleadings
could not be deemed amended to conform to the evidence.

The procedural objection of the CITY is technically correct. NAWASA should have alleged its additional counterclaim in the alternative-for the
reimbursement of the expenses it had incurred for necessary and useful improvements or for the removal of all the useful improvements it had
introduced.

G.R. No. L-68636 February 29,1988

NORTHERN CEMENT CORPORATION, petitioner-appellant,

vs.
INTERMEDIATE APPELLATE COURT and SHIPSIDE INCORPORATED, respondents-appellees.

FACTS:

In connection with its exportation of cement, NCC contracted the arrastre, stevedoring and other related services of Shipside beginning
September 14, 1973.5 The understanding was that for the latter's "integrated services," the former would pay it at the fixed rate of P0.41 per bag
of cement, which amount was, after Shipside had started rendering its services, later increased to P0.46 by agreement of the parties.6
Subsequently, Shipside advised NCC of another increase in this rate 7 and billed it accordingly, as well as for "regular and overtime stand-by,
lighting, equipment rental, gears, empty bags, and other charges."8 NCC apparently acceded to the new arrangement but about two years later
questioned this billing, contending that the agreed integrated rate of P0.46 covered all the services rendered by Shipside and that such rate could
not be increased unilaterally. 9 Shipside said that only arrastre and stevedoring services were included; all other services were subject to separate
billings; and, moreover, NCC had not earlier objected to the billing.10 In the end, as no agreement could be reached, Shipside flied its complaint
for collection of the amount allegedly due from NCC.11

The trial judge2 dismissed the complaint and also ruled in favor of the defendant on its counterclaims. 3 The decision was appealed to and, after
extensive exchange of pleadings, reversed by the Intermediate Appellate Court.4 The respondent court is now faulted for grave abuse of discretion
in this appeal under Rule 45 of the Rules of Court.

It is contended that the respondent court erred in limiting the refund to the amount specified by the petitioner in its counterclaim. The trial court
had allowed the refund in the sum of P526,280.53 on the justification that this had been established by the evidence adduced at the trial. On
appeal, however, the respondent court reversed, holding that this refund should be limited to the sum of P31,652.62, which was the amount
claimed in the counterclaim. In support, it cited a number of cases, including Malayan Insurance Company v. Manila Port Services, 19 where it was
held:

The contention is meritorious. In its complaint, the appellee asked for, 'the sum of P3,236.46 on all causes of action, plus
interest thereon from the time of first demand until complete and full payment thereof; the sum of P500.00 by way of
attorney's fees, and costs." The trial court, however, awarded to the appellee the total amount of P4,564.77, with
interests thereon at the rate of 6% per annum from the filing of the complaint; attorney's fees in the amount of P300.00;
and the costs of suit. In the case of J.M. Tuason & Co. v. Santiago, 20 this court ruled that where the plaintiff failed to
amend the prayer of its complaint as to the amount of damages so as to make it conform to the evidence, the amount
demanded in the complaint should be awarded as damages. There having been no amendment to the prayer in the
complaint to conform with evidence, the award to the appellee should be reduced to the sum of P3,235.46, on all causes
of action, plus interest thereon at the rate of 6% per annum from the filing of the complaint.

Issue:

Whether or not the CA is correct in limiting the award based on the counterclaim.
Ruling:

NO.

The applicable rule is Rule 10, Section 5, providing as follows:

SEC. 5. Amendment to conform to or authorize presentation of evidence — When issues not raised by the pleadings are
tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the
pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise
these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not
affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the
issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the
presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that
the admission of such evidence would prejudice him in maintaining his action or defense upon the merits. The court may
grant a continuance to enable the objecting party to meet such evidence.

There have been instances where the Court has held that even without the necessary amendment, the amount proved at the trial may be
validly awarded, as in Tuazon v. Bolanos, 21 where we said that if the facts shown entitled plaintiff to relief other than that asked for, no
amendment to the complaint was necessary, especially where defendant had himself raised the point on which recovery was based. The
appellate court could treat the pleading as amended to conform to the evidence although the pleadings were not actually amended.
Amendment is also unnecessary when only clerical errors or non-substantial matters are involved, as we held in Bank of the Philippine Islands v.
Laguna. 22 In Co Tiamco v. Diaz, 23 we stressed that the rule on amendment need not be applied rigidly, particularly where no surprise or
prejudice is caused the objecting party. And in the recent case of National Power Corporation v. Court of Appeals, 24 we held that where there is
a variance in the defendant's pleadings and the evidence adduced by it at the trial, the Court may treat the pleading as amended to conform
with the evidence.

It is the view of the Court that pursuant to the abovementioned rule and in light of the decisions cited, the trial court should not be precluded
from awarding an amount higher than that claimed in the pleadings notwithstanding the absence of the required amendment. But this is upon
the condition that the evidence of such higher amount has been presented properly, with full opportunity on the part of the opposing parties to
support their respective contentions and to refute each other's evidence.

We find in the case at bar that there was a failure of the above-stated condition. The record discloses that although NCC was allowed to adduce
evidence in support of its claim for refund beyond the amount indicated in its counterclaim, Shipside's rebuttal evidence was practically
brushed aside on the ground that it was not permitted by the stipulation of facts earlier entered into by the parties, besides being hearsay and
self-serving. This was not consistent with due process and therefore vitiated the findings of the trial court based on the unilateral assertions of
the petitioner.

On the said stipulation of facts, Shipside says it was limited only to allowing NCC to prove additional payments of the accountabilities covered
by Shipside's claims. If it did not object to the presentation of evidence regarding the alleged excess payments of NCC, it was because it was led
to believe that such evidence would refer only to the payments covered by the complaint. We agree that under the Aldanese ruling cited by the
respondent court below, it could present rebuttal evidence on the petitioner's counterclaim.

To remedy the virtual disregard by the trial court of the rebuttal evidence of Shipside, the respondent court sought to consider the same and in
the end admitted all the 142 exhibits without much analysis and without giving NCC a chance to refute them. This approach was also, to use its
own word, simplistic. We have the feeling that even as the trial court was precipitate in rejecting this evidence altogether, there was a similar
lack of care on the part of the respondent court in going to the other extreme, as it were, and accepting such evidence in toto. A more thorough
review of this matter is, as the Court sees it, called for in the interest of justice.

To this end, the Court finds it necessary to remand this case to the respondent court in accordance with Section 9 of B.P. Blg. 129 for the reception
and a more careful evaluation of the evidence, from both the petitioner and the private respondent, regarding the claimed excess payments and,
if necessary, for the corresponding amendment of the pleadings. This should be done in accordance with the principles enunciated and the
decisions cited above. The evidence adduced should be the basis of its ascertainment of whether or not the counterclaim should be allowed, and
if so, in what amount. We also direct that, in arriving at the awards to be made, to whichever party it may be due, the respondent court should
provide for legal interest at the rate of 6% only in accordance with the recent decisions of this Court.

G.R. No. 169551 January 24, 2007

SPOUSES ORLANDO M. LAMBINO and CARMELITA C. LAMBINO, Petitioners,

vs.
HON. PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH 172, Valenzuela City, and BPI FAMILY BANK, Respondents.
Before the Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure of the Decision1 and the Resolution2 of
the Court of Appeals (CA) in CA-G.R. SP No. 63512. The CA affirmed the Order3 of the Regional Trial Court (RTC) of Valenzuela City, Branch 172, in
Civil Case No. 4664-V-95, which denied the motion of petitioners to admit the supplemental complaint.

FACTS:

On July 21, 1994, petitioners Orlando M. Lambino, a lawyer, and his wife, Carmelita C. Lambino, secured a housing loan of P600,000.00 from
private respondent BPI Family Savings Bank, Inc. (BPI). The interest rate was 19% per annum payable in 180 monthly installments of
P10,097.26. Petitioners executed a Mortgage Loan Agreement (MLA)4 over their property covered by Transfer Certificate of Title No. V-31431
as security for the loan.

However, petitioners failed to pay the monthly amortizations from January 15, 1995 to May 15, 1995. On May 22, 1995, private respondent
filed a petition for the extrajudicial foreclosure of the MLA with the Ex-Officio Sheriff of the RTC of Valenzuela City and sought to have the
property sold to satisfy the balance of petitioners’ loan account. The public auction was set at 10:00 a.m. on July 11, 1995.

On June 26, 1995, petitioners filed a complaint for annulment of the MLA and the extrajudicial foreclosure sale with a prayer for a Temporary
Restraining Order (TRO) before the RTC of Valenzuela City.

In the meantime, the court suspended pretrial to enable the parties to settle the matter amicably.

Private respondent furnished petitioners with statements of their account dated June 5, 1996, November 15, 1996 and August 15, 1998. It appears
that the following additional charges were imposed on petitioners’ account: interests, late payment charges of P25,035.36, MRI of P19,980.00,
attorney’s fees of P118,010.24, liquidated damages of P118,010.24 and foreclosure expenses of P24,006.73.lavvphil.net

Petitioners objected to the aforecited damages. The updated statement of petitioners’ account, dated August 15, 1998, showed that petitioners
owed private respondent P1,243,919.60, inclusive of MRI, foreclosure expenses, attorney’s fees, and liquidated damages.

The hearing for petitioners to adduce their evidence was set on September 17, 1998. On July 10, 2000, petitioners filed a Motion to Admit their
Supplemental Complaint, among others:

The foreclosure and/or liability of plaintiffs should be limited only to the amount in the mortgage [REM] and can not include other items, such as
late payment charges, liquidated damages and attorney’s fees in accordance with the ruling of the Supreme Court:

"The mortgage provision relied upon by the petitioner is known in American jurisprudence as a ‘dragnet’" clause, which is specifically phrased to
subsume all debts of past or future origin. Such clauses are ‘carefully scrutinized and strictly construed.’

The mortgage contract is also one of adhesion as it was prepared solely by the petitioner and the only participation of the other party was the
affixing of his signature or his ‘adhesion’ thereto. Being a contract of adhesion, the mortgage is to be strictly construed against the petitioner, the
party which prepared the agreement.

A reading not only of the earlier quoted provision, but of the entire mortgage contract yields no mention of penalty charges. Construing this
silence strictly against the petitioner, it can fairly be concluded that the petitioner did not intend to include the penalties on the promissory notes
in the secured amount. This explains the finding by the trial court, as affirmed by the Court of Appeals, That ‘penalties and charges are not due
for want of stipulations in the mortgage contract.’

Indeed, a mortgage must sufficiently describe the debt sought to be secured, which description must not be such to mislead or deceive, and an
obligation is not secured by a mortgage unless it comes fairly within the terms of the mortgage. In this case, the mortgage contract provides that
it secures notes and other evidences of indebtedness. Under the rule of ejusdem generis, where a description of things of a particular class or
kind is accompanied by words of a generic character, the generic words will usually be limited to things of a kindred nature with those particularly
enumerated. A penalty charge does not belong to the species of obligations enumerated in the mortgage; hence, the said contract cannot be
understood to secure the penalty.

There is also sufficient authority to declare that any ambiguity in a contract whose terms are susceptible of different interpretations must be read
against the party who drafted it.’ [Philippine Bank of Communications v. Court of Appeals, G.R. No. 118552, February 5, 1996, 253 SCRA 253-354].

Petitioners prayed that, after due proceedings, judgment be rendered in their favor.

On August 11, 2000, the trial court issued an Order11 denying the motion of petitioners in its finding that the alleged escalating and arbitrary
rate of interest and other charges imposed by private respondent had accrued long before the complaint was filed. It held that under Section 6,
Rule 10 of the Revised Rules of Court, only transactions, occurrences, or events which accrued after the date of the complaint may be set
forth in the supplemental complaint.

Petitioners filed a motion for reconsideration of the Order, alleging therein that the escalating, arbitrary rate of interest, and other charges
referred to under paragraphs III, IV and V of their supplemental complaint took place after the filing of their complaint. They insist that it was
discovered for the first time only after they had been furnished with the statements of account by defendant during pretrial.

However, on January 2, 2001, the court issued an Order12 denying the motion of petitioners.

Petitioners filed a petition for certiorari with the CA seeking to nullify the Orders of the RTC. They alleged that the RTC committed grave abuse of
its discretion amounting to excess or lack of jurisdiction in issuing the Orders.

Petitioners reiterated that they came to know of the escalating and arbitrary charges, liquidated damages, and attorney’s fees only when they
received the statements of account dated June 5, 1996, November 15, 1996, and August 15, 1998, after the filing of their original complaint;
hence, they could not have been alleged as an integral part of their causes of action in their original complaint.

On March 7, 2005, the CA rendered judgment dismissing the petition.

Petitioners filed a motion for reconsideration which the appellate court denied.

Issue:

Whether or not Trial court and CA is correct in denying the motion of the petitioners to admit supplemental complaint.

Ruling:

YES.

The pertinent provision of the Rules of Court is Section 6 of Rule 10 which reads:

Sec. 6. Matters subject of supplemental pleadings. – Upon motion of a party, the court may, upon reasonable notice and upon such terms as are
just, permit him to serve a supplemental pleading setting forth transactions, occurrences or events which have happened since the date of the
pleading sought to be supplemented. If the court deems it advisable that the adverse party should plead thereto, it shall so order, specifying the
time therefor.

The rule is a useful device which enables the court to award complete relief in one action and to avoid the cost delay and waste of separate
action.27 Thus, a supplemental pleading is meant to supply deficiencies in aid of the original pleading and not to dispense with or substitute the
latter.28

A supplemental complaint must be consistent with, and in aid of, the cause of action set forth in the original complaint. A new and independent
cause of action cannot be set up by such complaint.29 The supplemental complaint must be based on matters arising subsequent to the original
complaint related to the claim or defense presented therein, and founded on the same cause of action. However, although the facts occur before
the commencement of the suit if a party does not learn of their existence until after he has filed his pleading, he may file a supplemental
pleading.30

As a general rule, leave will be granted to file a supplemental complaint which alleges any material fact which happened or came within plaintiff’s
knowledge since the original complaint was filed, such being the office of a supplemental complaint. 31 The purpose of the rule is that the entire
controversy might be settled in one action; to avoid unnecessary litigation; prevent delay, unnecessary repetition of effort; unwarranted expense
of litigants; to broaden the scope of the issues in an action owing to the light thrown on it by facts, events and occurrences which have accrued
after the filing of the original pleading; to bring into record the facts enlarging or charging the kind of relief to which plaintiff is entitled. It is the
policy of the law to grant relief as far as possible for wrongs complained of growing out of the same transaction and thus put an end to litigation.

The admission or non-admission of a supplemental pleading is not a matter of right but is discretionary on the court.32 Among the factors that
the court will consider are: (1) resulting prejudice to the parties; and (2) whether the movant would be prejudiced if the supplemental pleading
were to be denied. What constitutes prejudice to the opposing party depends upon the particular circumstance of each case. An opposing party
who has had notice of the general nature of the claim or matter asserted in the supplemental pleading from the beginning of the action will not
be prejudiced by the granting of leave to file a supplemental pleading. A motion for leave to file a supplemental pleading may be denied if he is
guilty of undue delay or laches which causes substantial prejudice to the opposing party.33
It bears stressing, however, that the substantial rights of the parties and the merits of the case are not to be considered and resolved in a mere
motion for leave to file a supplemental complaint.

Before they filed their original complaint, petitioners were already aware of the deductions made on the proceeds of the loan, for interest charges,
MRI premium, and fire insurance premium in the total amount of P44,952.88. They received notices on the following dates: July 25, 1994,
September 5, 1994, October 24, 1994, and November 15, 1994. And because petitioners had alleged all these charges in the petition for
extrajudicial foreclosure sale, it behooved petitioners to have incorporated in their original complaint as a cause of action the alleged
"illegal/unauthorized and unconscionable" charges for MRI, escalating interest charges, liquidated damages, attorney’s fees, and foreclosure
expenses. They should have sought to nullify such charges in the original complaint, but they did not. They are thus proscribed from incorporating
the same via a supplemental complaint.

We also note that the pretrial was terminated on July 23, 1998 following the failure of the parties to settle the case amicably. Petitioners filed
their Motion to Admit their Supplemental Complaint on July 10, 2000, or almost two (2) years after pretrial was concluded and following their
repeated failure to present their testimonial and documentary evidence. Petitioners likewise failed to put forth a meritorious justification from
their abject inaction that caused a delay of almost two years. There is, thus, factual basis for private respondent’s claim that petitioners’ motion
for the admission of their supplemental complaint was merely dilatory.

G.R. No. 158401 January 28, 2008

PHILIPPINE PORTS AUTHORITY, petitioner,

vs.
WILLIAM GOTHONG & ABOITIZ (WG&A), INC., respondent.

This resolves the Petition for Review on Certiorari filed by the Philippine Ports Authority (petitioner) seeking the reversal of the Decision1 of the
Court of Appeals (CA) promulgated on October 24, 2002 and its Resolution dated May 15, 2003.

FACTS:

Petitioner William Gothong & Aboitiz, Inc. (WG&A for brevity), is a duly organized domestic corporation engaged in the shipping industry.
Respondent Philippine Ports Authority (PPA for brevity), upon the other hand, is a government-owned and controlled company created and
existing by virtue of the provisions of P.D. No. 87 and mandated under its charter to operate and administer the country's sea port and port
facilities.

After the expiration of the lease contract of Veterans Shipping Corporation over the Marine Slip Way in the North Harbor on December 31, 2000,
petitioner WG&A requested respondent PPA for it to be allowed to lease and operate the said facility. Thereafter, then President Estrada issued
a memorandum dated December 18, 2000 addressed to the Secretary of the Department of Transportation and Communication (DOTC) and the
General Manager of PPA, stating to the effect that in its meeting held on December 13, 2000, the Economic Coordinating Council (ECC) has
approved the request of petitioner WG&A to lease the Marine Slip Way from January 1 to June 30, 2001 or until such time that respondent PPA
turns over its operations to the winning bidder for the North Harbor Modernization Project.

Pursuant to the said Memorandum, a Contract of Lease was prepared by respondent PPA.

The said contract was eventually conformed to and signed by the petitioner company, through its President/Chief Executive Officer Endika Aboitiz,
Jr. Thereafter, in accordance with the stipulations made in the lease agreement, PPA surrendered possession of the Marine Slip Way in favor of
the petitioner.

However, believing that the said lease already expired on June 30, 2001, respondent PPA subsequently sent a letter to petitioner WG&A dated
November 12, 2001 directing the latter to vacate the contested premises not later than November 30, 2001 and to turnover the improvements
made therein pursuant to the terms and conditions agreed upon in the contract.

In response, petitioner WG&A wrote PPA on November 27, 2001 urging the latter to reconsider its decision to eject the former. Said request was
denied by the PPA via a letter dated November 29, 2001.

On November 28, 2001, petitioner WG&A commenced an Injunction suit before the Regional Trial Court of Manila. Petitioner claims that the PPA
unjustly, illegally and prematurely terminated the lease contract. It likewise prayed for the issuance of a temporary restraining order to arrest the
evacuation. In its complaint, petitioner also sought recovery of damages for breach of contract and attorney's fees.

On December 11, 2001, petitioner WG&A amended its complaint for the first time. The complaint was still denominated as one for Injunction
with prayer for TRO. In the said amended pleading, the petitioner incorporated statements to the effect that PPA is already estopped from
denying that the correct period of lease is "until such time that the North Harbor Modernization Project has been bidded out to and operations
turned over to the winning bidder. It likewise included, as its third cause of action, the additional relief in its prayer, that should the petitioner be
forced to vacate the said facility, it should be deemed as entitled to be refunded of the value of the improvements it introduced in the leased
property.

Following the first amendment in the petitioner's complaint, respondent PPA submitted its answer on January 23, 2002. Meanwhile, the TRO
sought by the former was denied by the trial court by way of an order dated January 16, 2002.

Petitioner later moved for the reconsideration of the said Order on February 11, 2002. Shortly thereafter, petitioner filed a Motion to Admit
Attached Second Amended Complaint. This time, however, the complaint was already captioned as one for Injunction with Prayer for Temporary
Restraining Order and/or Writ of Preliminary Injunction and damages and/or for Reformation of Contract. Also, it included as its fourth cause of
action and additional relief in its prayer, the reformation of the contract as it failed to express or embody the true intent of the contracting parties.

The admission of the second amended complaint met strong opposition from the respondent PPA. It postulated that the reformation sought for
by the petitioner constituted substantial amendment, which if granted, will substantially alter the latter's cause of action and theory of the case.

The respondent judge issued an Order denying the Admission of the Second Amended Complaint. Petitioner filed a motion for reconsideration
of the aforesaid order but the same was again denied.

the CA granted respondent's petition, thereby setting aside the RTC orders and directing the RTC to admit respondent's second amended
complaint pursuant to Section 3, Rule 10 of the 1997 Rules of Civil Procedure. Petitioner moved for reconsideration but the same was denied per
Resolution dated May 15, 2003.

Issue:

whether the CA erred in ruling that the RTC committed grave abuse of discretion when it denied the admission of the second amended complaint.

Ruling:

NO.

The CA did not err in finding that the RTC committed grave abuse of discretion in issuing the Order dated March 22, 2002 denying the admission
of respondent's second amended complaint.

The RTC applied the old Section 3, Rule 10 of the Rules of Court:

Section 3. Amendments by leave of court. – after the case is set for hearing, substantial amendments may be made only upon leave
of court. But such leave may be refused if it appears to the court that the motion was made with intent to delay the action or that
the cause of action or defense is substantially altered. Orders of the court upon the matters provided in this section shall be made
upon motion filed in court, and after notice to the adverse party, and an opportunity to be heard.

instead of the provisions of the 1997 Rules of Civil Procedure, amending Section 3, Rule 10, to wit:

SECTION 3. Amendments by leave of court. Except as provided in the next preceding section, substantial amendments may be made
only upon leave of court. But such leave may be refused if it appears to the court that the motion was made with intent to delay.
Orders of the court upon the matters provided in this section shall be made upon motion filed in court, and after notice to the
adverse party, and an opportunity to be heard.

The Court has emphasized the import of Section 3, Rule 10 of the 1997 Rules of Civil Procedure in Valenzuela v. Court of Appeals,3 thus:

Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil Procedure amended the former rule in such manner that the phrase "or
that the cause of action or defense is substantially altered" was stricken-off and not retained in the new rules. The clear import of
such amendment in Section 3, Rule 10 is that under the new rules, "the amendment may (now) substantially alter the cause of
action or defense." This should only be true, however, when despite a substantial change or alteration in the cause of action or
defense, the amendments sought to be made shall serve the higher interests of substantial justice, and prevent delay and equally
promote the laudable objective of the rules which is to secure a "just, speedy and inexpensive disposition of every action and
proceeding."4
The application of the old Rules by the RTC almost five years after its amendment by the 1997 Rules of Civil Procedure patently constitutes grave
abuse of discretion.